Vision Values Holdings Ltd. — M&A Activity 2001

Jan 4, 2001

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

ASIA LOGISTICS TECHNOLOGIES LIMITED

亞洲物流科技有限公司*

(Incorporated in the Cayman Islands with limited liability)

PROPOSED ACQUISITION

This announcement is made pursuant to paragraph 2 of the Company’s listing agreement with the Stock Exchange.

On 3rd January, 2001, the Acquisition Agreement was entered into between the Vendor and the Purchaser (a wholly owned subsidiary of the Company) pursuant to which the Vendor agreed to procure that Sinohelp (a company approximately 68% owned by the Vendor) transfer its Business to WFOE (which prior to completion will be established in the PRC as a wholly foreign owned enterprise by the Company). Under the Acquisition Agreement, the Vendor will procure that Sinohelp executes the Transfer of Business Agreement with BVI 3 (the intended joint venture company between the Purchaser and the Vendor) on or before 6th January, 2001. The Transfer of Business Agreement substantially reflects the terms of the Acquisition Agreement and is being entered into to give effect to the terms of the Acquisition Agreement.

The consideration under the Acquisition Agreement is to be satisfied by the Purchaser paying to the Vendor RMB3 million (or HK$2.778 million) within one month of the date of the Acquisition Agreement, and at completion by paying a further RMB2.5 million (or HK$2.315 million) and procuring that BVI 3 shall issue 49% of its enlarged share capital to BVI 2 (whose shareholders shall include the Vendor). After completion, if certain revenue and profit targets are achieved by WFOE during the 12 months following completion, the Purchaser will pay or procure the payment to the Vendor of RMB4.5 million (or HK$4.167 million). In addition, 6 months after completion, the Purchaser will subscribe for HK$9,260,000 of 1 year 5% interest bearing convertible notes in BVI 3 so as to provide additional capital to BVI 3.

At completion, WFOE (which will then own the Business) will be 100% owned by BVI 3 which will in turn be 51% owned by the Company and 49% owned by the Vendor and the other existing shareholders of Sinohelp.

The consideration under the Transfer of Business Agreement is to be satisfied by BVI 3 procuring that WFOE pay the amount of RMB5 million (or HK$4.63 million) to Sinohelp.

Acquisition Agreement dated 3rd January, 2001

Parties:	Vendor, Dr. Houch Zhang - an Independent Third Party
	Purchaser, Vision On-Line Limited - a wholly owned subsidiary of the Company
Summary:	The Vendor has agreed to procure that Sinohelp (which is controlled by the Vendor) shall transfer its Business to WFOE as a going concern free from all encumbrances.
	In connection therewith, the Vendor will procure that Sinohelp will sign the Transfer of Business Agreement with BVI 3 before 6th January, 2001. The Transfer of Business Agreement is being entered into to record the formalities of the transfer of the Business and the terms of the Transfer of Business Agreement substantially reflect the terms of the Acquisition Agreement.
Conditions:	The Acquisition Agreement is conditional upon, amongst other things:
	(a) Sinohelp providing evidence, to the satisfaction of the Purchaser, that all third parties to the business contracts which are to be assigned to WFOE have given their consent to the novation of such contracts from Sinohelp to WFOE;
	(b) a PRC legal opinion in a form satisfactory to the Purchaser confirming the transactions contemplated in the Transfer of Business Agreement are legal, valid and binding under PRC laws;
	(c) the Purchaser undertaking a due diligence review of Sinohelp and its subsidiaries and being satisfied with such review in all respects; and
	(d) all necessary approvals have been obtained for the incorporation of WFOE and to enable WFOE to acquire the Business.
	If the conditions are not satisfied by 31st March, 2001 then the Acquisition Agreement will terminate as will the Transfer of Business Agreement.
Completion:	5 business days after the date on which the foregoing conditions are satisfied or waived by the Purchaser. Completion of the Acquisition Agreement will occur on or after completion of the Transfer of Business Agreement.
Consideration:	The consideration under the Acquisition Agreement is to be satisfied by the Purchaser paying to the Vendor RMB3 million (or HK$2.778 million) within one month of the date of the Acquisition Agreement, and at completion by paying a further RMB2.5 million (or HK$2.315 million) and procuring that BVI 3 (which has an existing issued share capital of 1 ordinary share held by the Purchaser) shall issue 49% of its enlarged share capital to BVI 2 (whose shareholders shall include the Vendor).
	The consideration under the Transfer of Business Agreement is to be satisfied by BVI 3 procuring that WFOE pay the amount of RMB5 million (or HK$4.63 million) to Sinohelp.
	If the audited revenue of WFOE for the Target Period is RMB 150 million (or HK$138.9 million) or greater and the profit after taxation of WFOE for the Target Period is RMB 30 million (or HK$27.78 million) or greater, the Purchaser shall pay or procure payment, within a month of completion of the audited accounts for WFOE for the Target Period, of the sum of RMB 4,500,000 (or HK$4.167 million) to the Vendor.
	In addition, 6 months after completion, the Purchaser will subscribe for HK$9,260,000 of convertible notes in BVI 3 so as to provide additional capital to BVI 3. The convertible notes will be for a term of 1 year, will bear interest at 5% per annum and will be convertible into shares in BVI 3 based on the market value of BVI 3 determined at the time of conversion. Any outstanding principal amount of the convertible notes will be automatically redeemed by BVI 3 on the first anniversary of their date of issue.

The consideration was determined after arms length negotiations between the parties and has been agreed after consideration by the Company of the expected future earnings of the Business. The consideration will be funded from the internal resources of the Group and there will be only a minimal impact on the working capital of the Group.

The Vendor, BVI 2, the other parties to the Transfer of Business Agreement (being 孔宇、陳軍曉、北京用友軟件股份有限公司及北京漢普管理諮詢有限公司) and their respective associates (as defined under the Listing Rules) are all Independent Third Parties and none of them are intended to be appointed to the board of the Company as a result of the entering into and completion of the Acquisition Agreement. However, immediately following completion of the Acquisition Agreement, the Vendor is intended to be appointed a director of BVI 3 and WFOE.

Sinohelp’S Business

Sinohelp carries on the business of consultancy services and sale of software management solutions. All of its business and assets are being transferred to WFOE.

The net profits before and after tax and extraordinary items attributable to the Business based on Sinohelp’s unaudited financial statements for the financial years ended 31st December, 1998 and 31st December, 1999 are as follows:

	31st December		31st December
	1998		1999
	RMB		RMB
net profit before tax and extraordinary items	393,370		658,442
net profit after tax and extraordinary items	393,370		658,442

The net asset value of Sinohelp based on its unaudited financial statements as at 31st October, 2000 is RMB 5,106,029.

Company’s business and post completion structure

The principal activities of the Group are bowling recreational business and the provision of logistics-related services, including logistics application service consultancy and the offering of logistics-related software solutions.

Following completion of the Acquisition Agreement and the Transfer of Business Agreement, the Business will be held by WFOE which will in turn be held in the following manner.

Reasons and benefits of transaction

The Company has previously announced its intention to expand its business interests into consultancy work and selling software (including logistics consultancy as carried on by the Business). The Directors believe that the acquisition of the Business will have a positive effect on the Group’s future profits.

General

This announcement is made pursuant to paragraph 2 of the Company’s listing agreement with the Stock Exchange.

Definitions

In this announcement, the following terms have the following meanings :

“Acquisition Agreement”	the acquisition agreement dated 3rd January, 2001 between the Vendor and the Purchaser relating to the transfer of the Business
“Assets”	all the assets comprising or used in conjunction with the Business
“Business”	the business of consultancy services and sale of software management solutions carried on by Sinohelp and including the Assets
“BVI 2”	Starling Technology Limited, a company incorporated in the British Virgin Islands having its registered office at P.O. Box 3444, Road Town, Tortola, British Virgin Islands being wholly-owned by the Vendor
“BVI 3”	Han International Consulting Company Limited, a company incorporated in the British Virgin Islands having its registered office at P.O. Box 3444, Road Town, Tortola, British Virgin Islands presently being a wholly-owned subsidiary of the Purchaser
“Company”	Asia Logistics Technologies Limited
“Directors”	the directors of the Company
“Group”	the Company and its subsidiaries
“Independent Third Party”	an independent third party not connected with the Directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates as defined under the Listing Rules
“Listing Rules”	The Rules Governing the Listing of Securities on the Stock Exchange
“PRC”	The People’s Republic of China
“Purchaser”	Vision On-Line Limited, a company incorporated in the British Virgin Islands having its registered office at P.O. Box 3444, Road Town, Tortola, British Virgin Islands and is a wholly-owned subsidiary of the Company
“RMB”	Renminbi, the lawful currency of the PRC
“Sinohelp”	北京漢普管理諮詢有限公司,a company incorporated in the PRC, having its registered office at 北京市西城區阜城門外大街甲28號and 68% beneficially owned by the Vendor
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target Period”	the period of 12 months from completion of the Acquisition Agreement
“Transfer of Business Agreement”	the transfer of business agreement in the form attached to the Acquisition Agreement, relating to the transfer of the Business and to be entered into prior to 6th January, 2001 between Sinohelp and BVI 3 and孔宇、陳軍曉、北京用友軟件股份有限公司簽訂
“Vendor”	Dr. Houch Zhang
“WFOE”	a wholly foreign owned enterprise to be established in the PRC by the Company and which will, prior to completion of the Acquisition Agreement, have a registered and paid up capital of RMB20 million and be wholly owned by BVI 3

By Order of the Board

Asia Logistics Technologies Limited

Chan Ki

Director and Chief Executive Officer

Hong Kong, 3rd January, 2001

Please also refer to the published version of this announcement in the i Mail dated 4/1/2001.