Top Standard Corporation — M&A Activity 2021

Jun 7, 2021

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 the contents of this announcement.

Top Standard Corporation

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 8510)

DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF 90% EQUITY INTERESTS IN THE TARGET COMPANY

THE ACQUISITION

The Board is pleased to announce that after the trading hours on 7 June 2021, the Purchaser entered into the Sale and Purchase Agreement with the Vendor, an Independent Third Party, in respect of the Acquisition whereby the Purchaser has conditionally agreed to acquire from the Vendor the Sale Shares at the Consideration of HK$130,000. The Sale Shares represent 90% equity interests of the Target Company.

The Target Company is a company incorporated in Hong Kong with limited liability and principally engaged in the operation of restaurant in Hong Kong.

GEM LISTING RULES IMPLICATIONS

As certain of the applicable percentage ratios (as defined in the GEM Listing Rules) in relation to the Acquisition are more than 5% but all of them are less than 25%, the Acquisition constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 19 of the GEM Listing Rules.

THE ACQUISITION

The Board is pleased to announce that after the trading hours on 7 June 2021, the Purchaser entered into the Sale and Purchase Agreement with the Vendor, an Independent Third Party, in respect of the Acquisition whereby the Purchaser has conditionally agreed to acquire from the Vendor the Sale Shares at the Consideration of HK$130,000. The Sale Shares represent 90% of the equity interests of the Target Company.

THE SALE AND PURCHASE AGREEMENT

Date

• 7 June 2021 (after trading hours)

Parties

• Purchaser : VIVA JOY HOLDINGS LIMITED, a company incorporated in the BVI with limited liability and an indirect wholly-owned subsidiary of the Company and principally engaged in investment holding.

• Vendor : Mr. Wong Kwong Sum, an individual. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Vendor is an Independent Third Party.

The Vendor holds the entire equity interests of Target Company as at the date of the Sale and Purchase Agreement.

Assets to be acquired

The Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, the Sale Shares free from all encumbrances together with all rights now or hereafter attaching thereto, including all dividends or distributions which may be paid, declared or made in respect thereof at any time on or after the Completion. The Sale Shares represent 90% of the issued shares of the Target Company.

Consideration

The aggregate Consideration for the sale and purchase of the Sale Shares was HK$130,000, which will be paid by the Purchaser to the Vendor in cash at Completion.

The Consideration will be funded by the Group’s internal resources.

The Consideration was arrived at after arm’s length negotiations between the Company and the Purchaser on normal commercial terms by taking into account (i) the unaudited consolidated net assets of the Target Company as at 31 March 2021 of approximately HK$1.4 million; and (ii) the reasons for the Acquisition as discussed in the paragraph headed “REASONS FOR AND BENEFITS OF THE SALE AND PURCHASE AGREEMENT” in this announcement.

Having considered the above factors, the Directors (including the independent non-executive Directors) consider that the Consideration, which was arrived at after arm’s length negotiations, is fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

Conditions precedent

Completion of the Agreement is conditional upon, inter alia:

• (a) the obtaining of the Vendors of all authorizations, consents and approvals in connection with the transactions;

• (b) the representations and warranties given by the Vendors and the Target Company remain true, accurate and not misleading;

• (c) no material adverse change on the operation, prospects, income, indebtedness, assets, taxes and financial conditions of the Target Company has arised; and

• (d) the Agreement and the transactions contemplated thereunder are not restricted nor prohibited by any applicable laws and regulations.

None of conditions above can be waived by the parties to the Acquisition Agreement. As at the date of this announcement, all of the above conditions precedent have been fulfilled.

Completion

Completion shall take place on the date on which the fulfilment of all the conditions precedent under the Agreement or on such other date as may be agreed between the Vendors and the Purchaser.

The Company intends to pay the Consideration by the internal resources of the Group.

INFORMATION ON THE TARGET COMPANY

The Target Company is a company incorporated in Hong Kong with limited liability and principally engaged in the operation of restaurant in Hong Kong.

Set out below is certain financial information of the Target Company, as extracted from the financial statements of the Target Company for the financial years ended 31 March 2020 (audited) and 31 March 2021 (unaudited) which were prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRS ”):

	For the year ended	31 March
	2020	2021
	HK$’000	HK$’000
	(Audited)	(Unaudited)
Net (loss) before taxation	(2,835)	(1,671)
Net (loss) after taxation	(2,835)	(1,671)

Based on the unaudited financial statements of the Target Company as at 31 March 2021 prepared in accordance with HKFRS, the unaudited net assets value of the Target Company as at 31 March 2021 amounted to approximately HK$1.4 million.

fCompletion, the Target Company will become a subsidiary of the Company and the financial results of the Target Company will be consolidated into those of the Group.

REASONS FOR AND BENEFITS OF THE SALE AND PURCHASE AGREEMENT

The Group is principally engaged in the in the operation of full-service restaurants under our self-owned brands in Hong Kong.

As disclosed in the Group’s annual report for the nine months ended 31 December 2020, the Management of the Company believes the catering businesses will be recovered upon the COVID-19 is being properly managed. The Group takes active initiative to re-organise its operations by reducing the heavy financial burden on unperforming subsidiaries and seeking for new catering operation to create new source of income and improve the profitability and cash flows of the Group. The Management considered that the Acquisition could improve the Group’s liquidity and therefore could help to address the Audit Qualification to be removed in the next financial year.

In view of the above, the Directors consider that the terms of the Acquisition are on normal commercial terms and fair and reasonable, and the Acquisition and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole.

GEM LISTING RULES IMPLICATIONS

As certain of the applicable percentage ratios (as defined in the GEM Listing Rules) in relation to the Acquisition are more than 5% but all of them are less than 25%, the Acquisition constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 19 of the GEM Listing Rules.

DEFINITIONS

Unless the context otherwise requires, the following terms shall have the meanings set out below:

“Acquisition”	the acquisition of the Sale Shares by the Vendor to
	the Purchaser contemplated under the Sale and
	Purchase Agreement
“Board”	the board of Directors
“Company”	Top Standard Corporation, a company
	incorporated in the Cayman Islands with limited
	liability and the Shares of which are listed on the
	GEM (Stock Code: 8510)
“Completion”	completion of the sale and purchase of the Sale
	Shares pursuant to the Sale and Purchase
	Agreement
“connected person(s)”	has the meaning ascribed to it under the GEM
	Listing Rules

“Director(s)	the director(s) of the Company
“GEM”	GEM operated by the Stock Exchange
“GEM Listing Rules”	the Rules Governing the Listing of Securities on
	GEM
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong
	Kong
“Hong Kong”	the Hong Kong Special Administrative Region of
	the People’s Republic of China
“Purchaser”	VIVA JOY HOLDINGS LIMITED, a company
	incorporated in the British Virgin Islands with
	limited liability
“Sale and Purchase Agreement”	the sale and purchase agreement dated 7 June 2021
	entered into among the Vendor and the Purchaser
	in relation to the Acquisition
“Sale Shares”	90,000 ordinary shares in the capital of the Target
	Company, representing its 90% of the equity
	interests held by the Vendor
“Share(s)”	ordinary share(s) HK$0.01 each in the share
	capital of the Company
“Shareholder(s)”	holder(s) of Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target Company”	Code Entertainment Limited, a company
	established in Hong Kong with limited liability
	and the entire issued share capital of which is
	legally and beneficially owned by the Vendor prior
	to the entering into of the Sale and Purchase
	Agreement
“Vendor”	Mr. Wong Kwong Sum (黃江森), an Independent
	Third Party, who owns 100% equity interest in the
	Target Company prior to the entering into of the
	Sale and Purchase Agreement

“%”

per cent.

By order of the Board of Top Standard Corporation Chuk Stanley Chairman and Executive Director

Hong Kong, 7 June 2021

As at the date of this announcement, the executive Directors are Mr. Chuk Stanley and Mr. Ying Kan Man, and the independent non-executive Directors are Mr. Wong Ching Wan, Mr. Tang Chiu Ming, Jeremy and Mr. Yip Ki Chi, Luke.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the GEM of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquires, 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 GEM website of The Stock Exchange of Hong Kong Limited at http://www.hkgem.com and The Stock Exchange of Hong Kong Limited’s website at www.hkexnews.hk “Latest Listed Company Information” page for at least seven days from the date of its posting. This announcement will also be published on the website of the Company at www.topstandard.com.hk.