Sinopharm Tech Holdings Limited — M&A Activity 2011

Oct 14, 2011

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of contents of this announcement.

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 8156)

DISCLOSEABLE TRANSACTION ACQUISITION OF 55% INTEREST IN CHONGQING LIGHTSOFT TECHNOLOGY DEVELOPMENT CO. LTD.

The Board announces that on 14 October 2011 (after trading hours), Bozone entered into the Share Transfer Agreement with CCDDT, pursuant to which, inter alia, Bozone has agreed to acquire and CCDDT has agreed to sell its 55% equity interest of Lightsoft for the consideration of RMB3,751,000 (equivalent to approximately HK$4,589,000) to be satisfied fully in cash. The purchase price is equivalent to a historic PE ratio of 2.6, based on the unaudited 12 month net profits of Lightsoft to 30 June 2011.

Lightsoft is a leading video-on-demand equipment supplier headquartered in Chongqing. Over the past two years it has developed a state of the art set-top box based in-room song selection system which is also capable of provision of valued added services such as advertising and provision of lottery games. The system was successfully launched in the second half of 2010 and was well received by the market.

The acquisition of Lightsoft is an important part of the Group’s strategy to rollout value added services in karaoke venues.

GEM LISTING RULES IMPLICATIONS

As the applicable ratios for the Acquisition exceed 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company pursuant to Chapter 19 of the GEM Listing Rules and is subject to the reporting and announcement requirements under the GEM Listing Rules.

1

THE SHARE TRANSFER AGREEMENT

Date: 14 October 2011, after trading hours

Parties:

Purchaser: Bozone Vendor: CCDDT, holder of 55% equity interest in Lightsoft

The Company holds 49% equity interest in CCDDT. In addition, the Company is also holding a 9.991% equity interest in CCD (CCD being the 51% shareholder of CCDDT). Therefore, the Company has an effective equity interest of 54.1% in CCDDT and CCDDT is accounted for as a jointly controlled entity of the Company and therefore, is an associate of the Company.

On 15 March 2011 the Company announced the conditional sale and purchase of an additional 30% effective equity interest in CCD. As of the date of this announcement the transactions has not been completed. For details please refer to the announcement of the Company dated 15 March 2011 and the circular dated 30 March 2011.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, save as disclosed above, the ultimate beneficial owners of CCDDT are Independent Third Parties to the Company.

Assets to be acquired

Pursuant to the Share Transfer Agreement, Bozone has agreed to acquire and CCDDT has agreed to sell its 55% equity interest in Lightsoft.

Consideration

The consideration payable by Bozone to CCDDT pursuant to the Share Transfer Agreements is RMB3,751,000 (equivalent to approximately HK$4,589,000) which is equivalent to the current 55% paid up share capital of Lightsoft as contributed by CCDDT at a premium of 10%. The Consideration was arrived at after arm’s length negotiations between the parties.

Pursuant to the Share Transfer Agreements, the Consideration shall be payable in cash by Bozone upon the completion of the transfer of the relevant equity interests under the Share Transfer Agreement.

CONDITIONS PRECEDENT

Completion of the Acquisition is subject to the following:

1. a shareholders’ meeting of Lightsoft passing the resolutions in relation to the Acquisition and the waiver of the pre-emptive right;

2

1. amending the articles of association of Lightsoft to reflect the change of shareholders; and

2. the Share Transfer Agreement having been filed with the Chongqing Ministry of Commerce.

The above conditions are incapable of being waived. The Share Transfer Agreement shall be terminated forthwith in the event that the above conditions cannot be fulfilled within three (3) months from the date of the Share Transfer Agreement, unless all parties to the Share Transfer Agreement agree otherwise in writing.

INFORMATION ON LIGHTSOFT

Lightsoft is principally engaged in the development of video-on-demand equipment in Chongqing and was incorporated on 22 December 2003 in the PRC with limited liability.

Lightsoft is at the forefront of the karaoke equipment supply industry and it has successfully developed the industry’s first VAS and lottery capable set top box based in-room song selection system. Not only is the system state of the art in terms of song selection, audio and video output, special effects and drinks and food ordering, it is also capable of linking to the Welfare Lottery Issuing Centre (in approved areas) for lottery game play and it is also capable of running advertising in multiple advertising formats on the song selection screen, the screen where the songs are being displayed or another totally dedicated screen for advertising.

The Group believes that this system, which would be placed in each room of a karaoke venue, is much more than a song selection system, but will become a room’s lottery, video game and multimedia entertainment hub to revolutionize and enrich the experience of karaoke patrons whilst enhancing the revenue of venue owners.

Set out in the below is the unaudited financial information on Lightsoft Group for the two financial year ended 30 June 2011 and 30 June 2010:

	For the	year ended	year ended
	30	June
	2011		2010
	(RMB ’000)	(RMB	’000)
Profit before taxation	3,083		457
Profit for the year	2,621		361

The unaudited net assets of Lightsoft Group as at 30 June 2011 were approximately RMB9,254,000.

Upon completion of the Acquisition, Lightsoft will become a subsidiary of the Company and its financial statements will be consolidated into the Group.

3

INFORMATION ON THE GROUP

The Group is principally engaged in the provision of lottery-related software, equipment and services to the Welfare Lottery Issuing Centres in China and also the provision of value added services, such as royalty collection and equipment supply (amongst others), to the entertainment industry in China.

REASONS FOR THE ACQUSITION

The Acquisition is priced at very attractive levels, equivalent to a historic PE ratio of 2.6, based on the unaudited 12 month net profits of Lightsoft to 30 June 2011, and will thus provide a good return on the funds invested. It is the Group’s strategy to rollout value added services in karaoke venues and Lightsoft’s equipment and software is integral to this strategy. Thus gaining greater control over Lightsoft and increasing our exposure to its earnings is highly strategic and logical given our positive outlook for Lightsoft’s business and our value added services business segment.

Taking into account the benefits of the Acquisition, the Board is of the view that the terms of the Acquisition are fair and reasonable and the Acquisition is in the interests of the Group and the Shareholders as a whole.

GEM LISTING RULES IMPLICATION

As the applicable ratios for the Acquisition exceed 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company pursuant to Chapter 19 of the GEM Listing Rules and is subject to the reporting and announcement requirements under the GEM Listing Rules.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms have the following meaning:

“Acquisition”	the acquisition of the 55% equity interest in Lightsoft
“Board”	the board of Directors
“Bozone”	Shenzhen Bozone I.T Co., Ltd.,深圳市博眾信息技術
	有限公司, a limited liability company incorporated
	in the PRC and a wholly-owned subsidiary of the
	Company
“CCD”	China Culture Development Co., Ltd.北京中文發文化
	發展有限公司, a limited liability company established
	in the PRC and holding 51% equity interest in CCDDT.
	The Company currently holds 9.991% equity interest in
	CCD.

4

• “CCDDT” China Culture Development Digital Technology Co., Ltd.北京中文發數字科技有限公司, a limited liability company established in the PRC and is owned as to 49% and 51% by the Company and CCD respectively

• “Consideration” RMB3,751,000 (equivalent to HK$4,589,000), being the total consideration payable by Bozone to CCDDT for the Acquisition

• “Company” China Vanguard Group Limited (眾彩科技股份有 限公司*), an exempted company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the GEM Board

• “connected persons” has the meaning ascribed thereto in the GEM Listing Rules

• “Directors” directors of the Company

• “GEM Board” the Growth Enterprise Market of the Stock Exchange

• “GEM Listing Rules”

• the Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange

• “Group” the Company and its subsidiaries

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “Independent Third Parties”

• any person(s) or company(ies) and their respective ultimate beneficial owner(s), to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, are third parties independent of the Company (as the case may be) and connected persons of Company (as the case may be)

• “Lightsoft” Chongqing Lightsoft Technology Development Co. Ltd. 重慶禮光博軟科技發展有限公司 , a limited liability company established in the PRC and owned as to 55% by CCDDT, 34.1% by 2 connected persons of the Group and the remaining 10.9% owned by 5 Independent Third Parties

• “Ligthsoft Group”

Lightsoft and its subsidiary

5

“PRC” the People’s Republic of China which, for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan “Share Transfer Agreement” the share transfer agreement of the 55% equity interest in Lightsoft entered into by Bozone and CCDDT dated 14 October 2011 “Stock Exchange” The Stock Exchange of Hong Kong Limited “HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent.

For the purposes of illustration, amounts in this announcement expressed in the RMB have been translated into HK$ at the rate of RMB1.00 = HK$1.2235

By Order of the Board China Vanguard Group Limited 眾彩科技股份有限公司* CHAN Siu Sarah Director

Hong Kong, 14 October 2011

As at the date of this announcement, the board of directors of the Company comprises five executive directors, being Madam Cheung Kwai Lan, Mr. Chan Ting, Ms. Chan Siu Sarah, Mr. Chan Tung Mei and Mr. Lau Hin Kun; and four independent non-executive directors, being Mr. Tian He Nian, Mr. Zhang Xiu Fu, Mr. Yang Qing Cai and Mr. To Yan Ming Edmond.

This announcement, for which the directors of the Company collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Company. The directors of the Company, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive and there are no other matters the omission of which would make any statement herein or this announcement misleading.

This announcement will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for a minimum period of 7 days from the date of its posting and on the website of the Company at www.cvg.com.hk.

* For identification purposes only

6