HK Bourse: Announcement From Leyou Technologies Holdings Ltd.


 
    Following is the related link: 
http://www.hkexnews.hk/listedco/listconews/sehk/2016/0810/LTN20160810934.pdf 
 
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. 
 
 
 
 
       LEYOU TECHNOLOGIES HOLDINGS LIMITED 
 
                    (Incorporated in the Cayman Islands with limited liability) 
 
 
 
               VERY SUBSTANTIAL DISPOSAL 
                           AND 
          CONNECTED TRANSACTIONS RELATING TO 
         DISPOSAL OF THE ENTIRE EQUITY INTEREST 
                 IN THE TARGET COMPANY 
                           AND 
            PROVISION OF FINANCIAL ASSISTANCE 
                 TO A CONNECTED PERSON 
 
 THE SALE AND PURCHASE AGREEMENT 
 
 On 10 August 2016 (after trading hours), the Company and the Purchaser entered into the 
 Sale and Purchase Agreement, pursuant to which, the Company conditionally agreed to 
 sell and the Purchaser conditionally agreed to purchase the entire issued share capital of 
 the Target Company at a consideration of RMB215,000,000 (equivalent to approximately 
 HK$258,000,000), subject to the terms and conditions of the Sale and Purchase Agreement. 
 Upon Completion, the Target Company and its subsidiaries will cease to be subsidiaries of 
 the Company. 
 
 
 
 
                                                 1 
 
SETTLEMENT OF THE CURRENT ACCOUNT BALANCE 
 
As at the date of this announcement, the Target Company was indebted to other 
members of the Group for approximately RMB236,111,000 (equivalent to approximately 
HK$283,333,200), being the Current Account Balance. Pursuant to the Sale and Purchase 
Agreement, the Purchaser shall procure the Target Company to repay the Current Account 
Balance and any interests accrued thereon within one month (which can be extended upon 
agreement between the Company and the Purchaser) from the date of Completion. The 
Company will be entitled to an interest of 10% per annum on the outstanding amount of 
the Current Account Balance from the date of the Completion until the Current Account 
Balance is fully repaid. 
 
 
LISTING RULES IMPLICATIONS 
 
As the applicable percentage ratio for the transaction contemplated under the Sale and 
Purchase Agreement is more than 75%, the Disposal constitutes a very substantial disposal 
of the Company under Chapter 14 of the Listing Rules. 
 
 
Since the Purchaser is an associate of an executive Director, Mr. Lin Qinglin, being a 
connected person of the Company, the Purchaser is a connected person of the Company 
pursuant to Rule 14A.07 the Listing Rules. Accordingly, the Disposal constitutes a 
connected transaction of the Company under Chapter 14A of the Listing Rules. 
 
 
In addition, upon Completion, the Target Company, being a company wholly-owned by 
the Purchaser, who is the spouse of Mr. Lin Qinglin, an executive Director, will become a 
connected person of the Company. Accordingly, the outstanding Current Account Balance 
owed by the Target Company to the Company will constitute financial assistance provided 
by the Company to a connected person pursuant to Chapters 14 and 14A of the Listing 
Rules. 
 
 
Therefore, the Disposal and the extension of the Current Account Balance are subject to 
reporting, announcement and independent shareholders' approval requirements under the 
Listing Rules and will be subject to the approval of the Independent Shareholders taken on a 
poll at the EGM. 
 
 
 
 
                                             2 
 
 
 
 
 
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The Company has been informed by the Stock Exchange that, based on the information 
available to them, it has concerns that the transaction contemplated under the Main SPA, 
and (i) the acquisition of the 97% equity interest in Digital Extremes in aggregate, which 
were completed on 21 July 2015 and 22 May 2016, respectively; (ii) the acquisition of 
the equity interests of Huizhou Zhibin Technology Ltd.* 
                                                                                       as 
disclosed in the Company's announcement dated 10 March 2016; and (iii) the Disposal, 
taken together, may constitute a reverse takeover under Rule 14.06(6) of the Listing 
Rules and an attempt to list the Company's video gaming business. The Company is in 
communication with the Stock Exchange in this regard and will provide further updates to 
Shareholders and potential investors by way of announcement(s) as and when appropriate. 
 
As the Disposal, extension of the Current Account Balance and/or any other 
transactions contemplated under the Main SPA may or may not proceed to completion, 
Shareholders and potential investors are advised to exercise caution when dealing 
in the Shares. If Shareholders and potential investors are in any doubt about their 
position, they should consult their professional advisers. 
 
GENERAL 
 
A EGM will be convened as soon as practicable at which ordinary resolution(s) will be 
proposed for the Independent Shareholders to consider, and if thought fit, to approve 
the Sale and Purchase Agreement and the transactions contemplated thereunder, and the 
extension of the Current Account Balance. 
 
 
A circular containing, among others, (i) further details of the Disposal, (ii) financial and 
other information of the Target Company, (iii) unaudited pro forma financial information of 
the Group upon Completion, (iv) a letter of recommendation from the Independent Board 
Committee to the Independent Shareholders; (v) a letter of advice from the Independent 
Financial Advisor to the Independent Board Committee and the Independent Shareholders; 
and (vi) a notice of EGM, will be despatched to the Shareholders as soon as practicable, 
which is currently expected to be on or about 30 September 2016, which is more than 15 
Business Days after the publication of this announcement, to allow sufficient time for the 
preparation of the relevant information to be included in the circular. 
 
 
 
 
                                             3 
 
THE DISPOSAL 
 
The sale and purchase agreement 
 
 
The principal terms of the Sale and Purchase Agreement are as follows: 
 
 
Date:           10 August 2016 (after trading hours) 
 
 
Parties:        (1)   the Company as the vendor; and 
 
 
                (2)   Ms. Fu Jianping as the Purchaser 
 
Assets to be disposed of 
 
Immediately before Completion, the Target Company was owned as to 100% by the Company. 
The Purchaser has agreed to acquire, and the Company has agreed to sell the entire issued 
share capital of the Target Company. 
 
 
Conditions Precedent 
 
Completion shall be conditional upon and subject to: 
 
 
(A) the clearance of all announcement(s) and circular(s) (if required) to be issued by the 
    Company under the Listing Rules and granting of all approvals, if necessary by the 
    Stock Exchange or by the Shareholders in respect of all transactions contemplated by the 
    Sale and Purchase Agreement; 
 
 
(B) the Purchaser undertaking a due diligence investigation in respect of the Target Company 
    and its business including but not limited to the financial affairs, business, assets, 
    results, legal and financing structure of the Target Group and the Purchaser being in its 
    reasonable discretion satisfied with the results of such due diligence investigation; 
 
 
(C) the Stock Exchange not deemed the Company to be a "cash company" for the purpose of 
    the Listing Rules or having insufficient operations under Rules 14.82, 14.83 and 14.84 
    of the Listing Rules; 
 
 
 
 
                                              4 
 
 
 
 
 
 

 
 
(D) no event having occurred since the date of signing of the Sale and Purchase Agreement 
    to Completion, the consequence of which is to materially and adversely affect the 
    financial position, business or property, results of operations or business prospects of the 
    Target Group and such material adverse effect shall not have been caused; 
 
 
(E)   the passing by the Shareholders at EGM to be convened and held of an ordinary 
      resolution to approve the Sale and Purchase Agreement and the transactions 
      contemplated hereunder; 
 
 
(F)   the representations and warranties set out in the Sale and Purchase Agreement remaining 
      true and accurate and not misleading at Completion as if repeated at Completion 
      and at all times between the date of signing of the Sale and Purchase Agreement and 
      Completion; 
 
 
(G) all reasonably relevant approvals, consents, licences and/or permits in relation to the 
    transaction contemplated hereunder, having been obtained; 
 
 
(H) all approvals, consents, qualifications having been obtained by the Target Company; and 
 
 
(I)   the necessary filing in the Commerce Department and other necessary departments in the 
      PRC department for the transfer of ultimate shareholder the Target Company which is a 
      sino-foreign JV company. 
 
 
To the best knowledge of the Directors, no specific approvals, consents, licenses and/or 
permits in relation to the transaction contemplated under the Sale and Purchase Agreement is 
required. 
 
 
If the Conditions Precedent (other than condition (A)) have not been fulfilled or waived by 
the Purchaser on or before 30 September 2016 (or such other date as the parties may agree), 
the Sale and Purchase Agreement (other than the clauses regarding condition precedents, 
announcements, costs, notices and governing law and service of process) shall lapse and 
thereafter none of the parties shall have any obligations and liabilities towards each other 
under the Sale and Purchase Agreement. 
 
 
 
 
                                               5 
 
Consideration 
 
The Consideration payable by the Purchaser for the Disposal shall be RMB215,000,000 
(equivalent to approximately HK$258,000,000) in cash and shall be settled on the date of 
Completion. 
 
 
The Consideration was determined after arm's length negotiations between the Company and 
the Purchaser on normal commercial terms, taking into account: (i) the unaudited net asset 
value of the Target Group of approximately RMB198,822,000 (equivalent to approximately 
HK$238,586,400) as at 31 March 2016, (ii) a preliminary valuation of the fair value of 
the Target Group as at 31 March 2016 of approximately RMB147,000,000 (equivalent to 
approximately HK$176,400,000) performed by Grant Sherman Appraisal Limited (the 
"Valuer"), an independent professional valuer, and (iii) the cost incurred by the Group in 
relation to the Disposal. In arriving at the valuation, the Valuer has adopted the adjusted net 
asset value method under the asset-based approach. The Consideration for the Disposal was 
determined after arm's length negotiations which is higher than the net asset value of the 
Target Group and the preliminary fair value of the Target Group from the valuation conducted 
by the Valuer. 
 
 
Completion 
 
Subject to fulfillment of the Conditions Precedent, Completion shall take place at the 
Company's office on the fifth Business Day after the fulfillment or waiver of the last of the 
Conditions Precedent or at such other place or time as the parties agree. 
 
 
Upon Completion, the Target Company and its subsidiaries will cease to be subsidiaries of the 
Company. 
 
 
 
 
                                               6 
 
 
 
 
 
 

 
 
SETTLEMENT OF THE CURRENT ACCOUNT BALANCE 
 
As at the date of this announcement, the Target Company was indebted to other 
members of the Group for approximately RMB236,111,000 (equivalent to approximately 
HK$283,333,200), being the Current Account Balance. Pursuant to the Sale and Purchase 
Agreement, the Purchaser shall procure the Target Company to repay the Current Account 
Balance and any interests accrued thereon within one month (which can be extended upon 
agreement between the Company and the Purchaser) from the date of Completion. The 
Company will be entitled to an interest of 10% per annum on the outstanding amount of the 
Current Account Balance from the date of the Completion until the Current Account Balance 
is fully repaid. 
 
 
INFORMATION ON THE TARGET GROUP 
 
The Target Company is a company incorporated in the BVI on 5 April 2000 and, together with 
its subsidiaries, are principally engaged in the trading, manufacturing and supply of chicken 
meat products in Fujian. 
 
 
The Target Company and its subsidiaries are also the supplier of chicken meat to KFC, Dicos 
and Mckey and other retail and quick-service restaurants with customers mainly from Fujian 
in the PRC. 
 
 
The following information is a summary of the net profit before and after tax of the Target 
Group for the financial year ended 31 December 2014 and 2015: 
 
 
                                                                  For the            For the 
                                                              year ended         year ended 
                                                            31 December        31 December 
                                                                    2014               2015 
                                                              (unaudited)        (unaudited) 
                                                              RMB( '000)         RMB( '000) 
                                                                (approx.)          (approx.) 
 
Net profit/(loss) before tax                                       12,740            (52,686) 
Net profit/(loss) after tax                                        12,231            (55,981) 
 
As at 31 December 2015 and 31 March 2016, the unaudited consolidated net asset value of the 
Target Group were approximately RMB206,520,000 and RMB198,822,000, respectively. 
 
 
                                              7 
 
The capacity and the utilization rate of the Target Group's production facilities as at 31 
December 2014 and 2015 respectively, are as follows: 
 
 
                                                            31 December        31 December 
                                                                   2014               2015 
 
 
Slaughtering and processing plant 
  - production capacity (broilers)                            33,480,000          37,900,000 
  - utilization rate                                                93%             105.28% 
 
 
Broiler breeding farms 
  - production capacity (sets)                                  5,260,000          5,780,000 
  - utilization rate                                              73.16%             80.39% 
 
 
Hatching facility 
 - production capacity (chicken breeds)                       36,960,000          40,630,000 
 - utilization rate                                              68.37%              75.16% 
 
 
Animal feeds production facility 
  - production capacity (tonnes)                                 148,000             151,000 
  - utilization rate                                             82.22%              83.89% 
 
Notwithstanding the capacity and utilization rate of the Target Group's production facilities 
were higher in 2015, as compared to that of 2014, the Target Group suffered loss for the year 
ended 31 December 2015 primarily due to the impacts on avian influenza and competition 
from fastgrowing chicken, which was consistent with the widespread loss experienced by 
the broiler industry in 2015, and such loss was not caused by the Directors scaling down the 
business of the Target Group during 2015. 
 
INFORMATION OF THE GROUP 
 
As at the date of this announcement, the Group is principally engaged in the trading, 
manufacturing and supply of chicken meat product, animal feeds and chicken breeds and 
development of video games and video games related products. 
 
 
 
 
                                              8 
 
 
 
 
 
 

 
 
BACKGROUND OF, REASONS FOR AND BENEFITS OF THE 
DISPOSAL 
 
The poultry business has been the principal business of the Group since the Company's 
listing in 2011, and represented the largest portion of the revenue of the Group for the year 
ended 31 December 2015. As mentioned in the interim results announcement of the Company 
for the six months ended 30 June 2014, the Group's financial and business performance 
were adversely affected by the outbreak of H7N9 virus, which occurred in the first half of 
2013. The price and overall demand for the Group's chicken meat products had decreased. 
To mitigate negative impact from future unexpected bird flu epidemics or other poultry 
virus outbreaks, the Group diversified its business into video gaming business by acquiring 
58% of Digital Extremes Ltd. in October 2014, the completion of which took place in July 
2015. Since then, the performance of the gaming business has been encouraging and adding 
confidence to the Board as to the future prospects and development of the Group. 
 
For the year ended 31 December 2015, the gross profit attributable by the video gaming 
business amounted to approximately RMB170.21 million (2014: nil), accounted for 
approximately 70% of the overall gross profit of the Group in 2015. On the contrary, 
notwithstanding the utilization rates of the production facilities of the poultry business have 
increased in 2015 as compared to that of 2014, the performance of the poultry business of the 
Group has been deteriorating. For each of the years ended 31 December 2014 and 2015, the 
aggregate revenue of the poultry business amounted to approximately RMB1,226.08 million 
and RMB1,283.14 million, respectively, representing an increase of approximately 4.65%, 
while the gross profit of the poultry business has decreased from approximately RMB110.47 
million in 2014 to approximately RMB74.06 million in 2015, representing a decrease of 
approximately 32.96%. In light of the continuously and increasingly poor performance of 
the poultry business and the better than expected performance of the video games business, 
toward the end of April 2016, the Board had a discussion about the future direction and 
prospect of the Group, weighed the costs and benefits of continuing or discontinuing the 
poultry business, and considered different alternatives to minimize the loss of the poultry 
business, including scaling down or disposing the poultry business. 
 
By the end of April 2016, the Purchaser, the spouse of Mr. Lin Qinglin, an executive Director, 
approached the Board and expressed her interest in acquiring the poultry business from the 
Group. As the Purchaser considered that the different elements of the poultry business of the 
Group are integral parts of the same value chain, she indicated to the Group that she would 
only be interested to acquire the poultry business of the Group in its entirety. After further 
discussions and negotiations between the Company and the Purchaser to finalise the commercial 
terms thereof, the parties entered into the Sale and Purchase Agreement on 10 August 2016. 
 
 
 
                                              9 
 
Despite that the offer from the Purchaser was the only offer received by the Board, the Board 
is fully aware of its fiduciary duties in assessing the merits of the terms of the Sale and 
Purchase Agreement and due procedures has been and will be followed. At the board meeting 
of the Company held for considering the Disposal, Mr. Lin Qinglin had abstained from voting. 
When arriving at the terms of the Disposal, the Board has also taken into account of the 
financial performance and estimated book value of the Target Group as at 31 March 2016 and 
has engaged the Valuer, being an independent professional appraiser, to conduct a preliminary 
valuation of the Target Group. 
 
The Directors consider that divesting the loss-making poultry business by way of the Disposal 
is a responsible decision to efficiently manage the resources of the Group, and represents 
a lucrative opportunity for the Group to realise its investment in the business of supply of 
chicken meat products so as to enable the Group to re-allocate and focus more financial 
resources on its businesses of electronic products, software and hardware of computer and 
game. It also improves the Company's profitability by removing the loss incurred from the 
poultry business. Furthermore, the Consideration is higher than the net asset value of the 
Target Group as at 31 March 2016 and the preliminary valuation conducted by the Valuer of 
the Target Group as at 31 March 2016. 
 
In view of the above, the Directors (other than the independent non-executive Directors whose 
view will be provided in the circular pending advice from the Independent Financial Adviser) 
are of the view that the terms of the Sale and Purchase Agreement are fair and reasonable and 
taking into account, in particular, the expected gain to be recorded from the Disposal, the Sale 
and Purchase Agreement are in the interest of the Company and the Shareholders as a whole. 
 
FINANCIAL EFFECT OF THE DISPOSAL 
 
Upon Completion, the Target Group will cease to be subsidiaries of the Group and their 
financial results will cease to be consolidated into the financial statements of the Group. 
 
It is expected that the Group will record a gain on disposal of approximately RMB34,000,000 
(equivalent to approximately HK$40,800,000) as a result of the Disposal which represents 
the difference between the Consideration to be received by the Company from the Disposal 
after the deduction of estimated transaction cost for the Disposal and the net asset value of the 
Target Group and the release of the relevant reserves as at 31 March 2016. 
 
The actual gain or loss in connection with the Disposal may be different from the above and 
will be assessed after Completion and is subject to the review by auditors. 
 
 
 
                                               10 
 
 
 
 
 
 

 
 
USE OF PROCEEDS 
 
It is expected that the Company will receive net cash proceeds of approximately 
RMB212,000,000 (equivalent to approximately HK$254,400,000) from the Disposal. The 
Group intends to apply RMB200,000,000 (equivalent to approximately HK$240,000,000) 
of such proceeds for the redemption of the fixed coupon redeemable bond as disclosed in 
the announcement made by the Company dated 28 April 2016 in relation to the issuance 
of redeemable bond and the remaining RMB12,000,000 (equivalent to approximately 
HK$14,400,000) will be used as general working capital of the Group in the businesses of 
electronic products, software and hardware of computer and game. 
 
FUTURE INTENTION OF THE COMPANY 
 
Acquisitions 
 
The Company will continue to look for investing opportunities in relation to the gaming 
business which have synergies with the current gaming business of the Group or to increase its 
market share in the global gaming business. The Company also intends to invest in the current 
gaming business and open up greater markets for its current products. As at the date of this 
announcement, the Group has entered into the following agreements and/or arrangements for 
potential acquisition of businesses: 
 
1.   as disclosed in the announcement of the Company dated 1 April 2015, the Company 
     has entered into a term sheet dated 31 March 2015 with Ledo Millennium Co., Ltd., 
     in relation to a potential investment in a renowned Japanese video game developer. As 
     disclosed in the announcement of the Company dated 10 August 2015, such possible 
     acquisition was terminated on 10 August 2015; 
 
2.   as disclosed in the announcements of the Company dated 28 July 2015, 30 May 2016 
     and 3 July 2016, the Company, Radius Maxima Limited (a wholly-owned subsidiary of 
     the Company, as the purchaser.) and Paul Wedgwood (as the vendor) has entered into a 
     conditional sale and purchase agreement (i.e. the Main SPA) pursuant to which Radius 
     Maxima Limited has conditionally agreed to acquire from Paul Wedgwood the entire 
     issued share capital of Splash Damage Limited, Fireteam Limited and Warchest Limited, 
     which companies are principally engaged in the business of video game development 
     and video game server technology. Such acquisition constitutes a major acquisition 
     of the Company and is subject to the reporting, announcement and Shareholders' 
     approval requirements under Chapter 14 of the Listing Rules. As at the date of this 
     announcement, the Company is in communication with the Stock Exchange in relation 
     to the Listing Rules implications in connection with the Main SPA and the transactions 
     contemplated thereunder, and also in the process of (i) addressing the concerns from 
 
 
 
                                              11 
 
     the Stock Exchange in respect of the reverse takeover implications of such acquisition; 
     and (ii) preparing and finalising the content of the relevant circular to be despatched to 
     the Shareholders. The Company will keep Shareholders and potential investors updated 
     of the latest development in this regard by way of announcement(s) as and when 
     appropriate; 
 
3.   as disclosed in the announcement of the Company dated 3 September 2015, the 
     Company has entered into a term sheet dated 3 September 2015 in relation to the 
     possible acquisition of an European video game developer and publisher. As at the date 
     of this announcement, there has been little progress on this possible acquisition; and 
 
4.   the Company has entered into a letter of intent dated 28 January 2016 and subsequently 
     a equity transfer agreement dated 10 March 2016 as disclosed in the announcements of 
     the Company dated 28 January 2016 and 10 March 2016, respectively, in relation the 
     acquisition of Huizhou Zhibin Technology Ltd. As at the date of this announcement, 
     the Group is in the process of registering the equity transfer agreement with the local 
     Administration of Industry and Commerce and obtaining the new business licenses of 
     the target company; 
 
5.   as disclosed in the announcement of the Company dated 4 July 2016, Dream Beyond 
     Holdings Limited (a wholly-owned subsidiary of the Company, as the purchaser) and Mr. 
     Xu Liang (as the vendor) has entered into a memorandum of understanding in respect 
     of the possible acquisition of Global Parade Investment Limited, which indirectly owns 
     a company incorporated in the PRC which is the potential purchaser of Beijing Jiaxin 
     Hesheng Yidong Tongxin Keji Co., Ltd.* 
                                                                                         , 
     being a company incorporated in the PRC which is principally engaged in provision of 
     high technology services to mobile game developers and online gaming companies in 
     the PRC. As at the date of this announcement, negotiations among the parties are still 
     ongoing and further announcement(s) will be made as and when appropriate. 
 
Save for the aforesaid, the Board has no other arrangement or agreement on any injection of 
other new business to the Group as at the date of this announcement. 
 
To the best knowledge and information of the Directors, the counterparties of each of the 
agreements disclosed above are independent third parties not connected with the Company 
and its connected person; and not connected with each other. 
 
 
 
 
                                              12 
 
 
 
 
 
 

 
 
Fund Raising and Shareholding Structure 
 
The Group explores acquisition and business cooperation opportunities and discusses and 
negotiates with different parties on potential business opportunities from time to time. If any 
such transactions would be materialized, the Board may consider different capital raising 
alternatives to finance such transactions, including debt and/or equity financing, and if an 
equity financing method such as placement of Shares is adopted, the shareholding structure 
of the Company will change. Nevertheless, the Company has no current plan to conduct any 
equity fund raising as at the date of this announcement. 
 
In addition, as confirmed by Mr. Hsiao Shih Jin ("Mr. Hsiao"), the single largest Shareholder 
as at the date of this announcement, he has no intention to increase his shareholding in the 
Company. Mr. Hsiao and each of the vendors (the "DE Vendors") of Digital Extremes who 
disposed of their respective shareholdings of Digital Extremes to the Company dated 14 
October 2014 and 28 April 2016 respectively further confirmed that there is no relationship 
between Mr. Hsiao and the DE Vendors. 
 
Board Structure 
 
In addition, no Director has current intention to resign from the Board before or within 12 
months after completion. The Board also has no current intention to appoint any additional 
Directors. 
 
LISTING RULES IMPLICATIONS 
 
As the applicable percentage ratio for the transaction contemplated under the Sale and 
Purchase Agreement is more than 75%, the Disposal constitutes a very substantial disposal of 
the Company under Chapter 14 of the Listing Rules. 
 
Since the Purchaser is an associate of an executive Director, Mr. Lin Qinglin, being a 
connected person of the Company, the Purchaser is a connected person of the Company 
pursuant to Rule 14A.07 of the Listing Rules. Accordingly, the Disposal constitutes a 
connected transaction of the Company under Chapter 14A of the Listing Rules. 
 
In addition, upon Completion, the Target Company, being a company wholly-owned by 
the Purchaser, who is the spouse of Mr. Lin Qinglin, an executive Director, will become a 
connected person of the Company. Accordingly, the outstanding Current Account Balance 
owed by the Target Company to the Company will constitute financial assistance provided by 
the Company to a connected person pursuant to Chapters 14 and 14A of the Listing Rules. 
 
 
 
                                              13 
 
Therefore, the Disposal and the extension of the Current Account Balance are subject to 
reporting, announcement and independent shareholders' approval requirements under the 
Listing Rules and the resolution(s) approving the Disposal and the extension of the Current 
Account Balance will be voted on by the Independent Shareholders by poll at the EGM. 
 
 
The Company has been informed by the Stock Exchange that, based on the information 
available to them, it has concerns that the transaction contemplated under the Main SPA, and 
(i) the aggregate acquisition of the 97% equity interest in Digital Extremes Ltd. which were 
completed on 21 July 2015 and 22 May 2016, respectively; (ii) the acquisition of the equity 
interests of Huizhou Zhibin Technology Ltd.*  disclosed in 
                                                                             as 
the Company's announcement dated 10 March 2016; and (iii) the Disposal, taken together, 
may constitute a reverse takeover under Rule 14.06(6) of the Listing Rules and an attempt 
to list the Company's video gaming business. The Company is in communication with the 
Stock Exchange in this regard and will provide further updates to Shareholders and potential 
investors by way of announcement(s) as and when appropriate. 
 
 
As the Disposal, extension of the Current Account Balance and/or any other transactions 
contemplated under the Main SPA may or may not proceed to completion, Shareholders 
and potential investors are advised to exercise caution when dealing in the Shares. If 
Shareholders and potential investors are in any doubt about their position, they should 
consult their professional advisers. 
 
GENERAL 
 
The Independent Board Committee comprising all independent non-executive Directors has 
been established by the Company to advise the Independent Shareholders in respect of the 
Sale and Purchase Agreement and the transactions contemplated thereunder, and the extension 
of the Current Account Balance. An Independent Financial Adviser will be appointed by the 
Company to advise the Independent Board Committee and the Independent Shareholders as 
to whether the terms of the Sale and Purchase Agreement, and the extension of the Current 
Account Balance are fair and reasonable so far as the Independent Shareholders are concerned 
and are in the interests of the Company and the Shareholders as a whole. An announcement 
will be made by the Company upon the appointment of the Independent Financial Adviser. 
 
The EGM will be convened as soon as practicable at which ordinary resolution(s) will be 
proposed for the Independent Shareholders to consider, and if thought fit, to approve among 
other things, the Sale and Purchase Agreement and the transactions contemplated thereunder. 
 
 
 
 
                                             14 
 
 
 
 
 
 

 
 
A circular containing, among others, (i) further details of the Disposal, (ii) financial and 
other information of the Target Company, (iii) unaudited pro forma financial information of 
the Group upon Completion, (iv) a letter of recommendation from the Independent Board 
Committee to the Independent Shareholders; (v) a letter of advice from the Independent 
Financial Advisor to the Independent Board Committee and the Independent Shareholders; 
and (vi) a notice of EGM, will be despatched to the Shareholders as soon as practicable, 
which is currently expected to be on or about 30 September 2016, which is more than 15 
Business Days after the publication of this announcement, to allow sufficient time for the 
preparation of the relevant information to be included in the circular. 
 
 
DEFINITIONS 
 
In this announcement, unless the context otherwise requires, the following words and 
expressions shall have the following meanings when used herein: 
 
"Board"                         the board of Directors 
 
"Business Day(s)"               a day, not being a Saturday or a Sunday, on which banks are 
                                open for business (including for dealings in foreign currency 
                                deposits and exchange) in Hong Kong 
 
"BVI"                           the British Virgin Islands 
 
"Company"                       L ey o u Te c h n o l o g i e s H o l d i n g s L i m i t e d , a c o m p a ny 
                                incorporated in the Cayman Islands with limited liability 
                                whose shares are listed on the Main Board of the Stock 
                                Exchange 
 
"Completion"                    completion of the Disposal 
 
"Condition(s) Precedent"        condition(s) precedent to the Completion under the Sale and 
                                Purchase Agreement 
 
"connected person(s)"           has the same meaning ascribed to it under the Listing Rules 
 
"Consideration"                 RMB215,000,000 (equivalent to HK$258,000,000) payable 
                                by the Purchaser to the Company in cash on Completion 
 
 
 
                                                15 
 
"Current Account Balance"   the amount of approximately RMB236,111,000 (equivalent 
                            to approximately HK$283,333,000) due from the Target 
                            Group to the Company 
 
"Digital Extremes"          Digital Extremes Ltd., a 97% indirect non-wholly owned 
                            subsidiary of the Company 
 
"Director(s)"               the director(s) of the Company 
 
"Disposal"                  the disposal of the Target Company, together with its 
                            subsidiaries, by the Company to the Purchaser pursuant to 
                            the terms of the Sale and Purchase Agreement 
 
"EGM"                       the extraordinary general meeting of the Company to be 
                            convened to, among others, considering and if thought 
                            fit, approving the Sale and Purchase Agreement and the 
                            transactions contemplated thereunder 
 
"Group"                     the Company and its subsidiaries 
 
"HK$"                       Hong Kong dollar, the lawful currency of Hong Kong 
 
"Hong Kong"                 the Hong Kong Special Administrative of the PRC 
 
"Independent Board          an independent board committee of the Board comprising 
  Committee"                all the independent non-executive Directors, who have no 
                            material interest in the Disposal, namely, Mr. Hu Chung 
                            Ming, Mr. Chau On Ta Yuen, Mr. Chan Chi Yuen and Mr. 
                            Yang Chia Hung 
 
"Independent Financial      the independent financial adviser to be appointed by the 
  Adviser"                  Company to advise the Independent Board Committee and 
                            the Independent Shareholders in relation to the entering into 
                            of the Sale and Purchase Agreement and the transactions 
                            contemplated thereunder 
 
 
 
 
                                        16 
 
 
 
 
 
 

 
 
"Independent         the Shareholders who are not interested in or involved 
  Shareholders"      in the Sale and Purchase Agreement and the transactions 
                     contemplated thereunder 
 
"Listing Rules"      the Rules Governing the Listing of Securities on the Stock 
                     Exchange 
 
"Main SPA"           the conditional sale and purchase agreement dated 1 
                     July 2016 entered into between Paul Wedgwood, Radius 
                     Maxima Limited and the Company in respect of the sale and 
                     purchase of the equity interests in Splash Damage Limited, 
                     Fireteam Limited and Warchest Limited respectively. Further 
                     information of which is set out in the announcement of the 
                     Company dated 3 July 2016 
 
"poultry business"   comprising the three business segments of the Group namely 
                     chicken meat products, animal feeds and chicken breeds 
 
"PRC"                the People's Republic of China, for the purpose of this 
                     announcement excludes Hong Kong, Macau Special 
                     Administration Region of the People's Republic of China 
                     and Taiwan 
 
"Purchaser"          Ms. Fu Jianping, the spouse of an executive Director, Mr. 
                     Lin Qinglin, being a connected person of the Company 
 
"Sale and Purchase   a sale and purchase agreement dated 10 August 2016 entered 
  Agreement"         into between the Purchaser and the Company in relation to 
                     the proposed disposal of the entire equity interests in the 
                     Target Company 
 
"Shareholder(s)"     the holder(s) of the shares of the Company 
 
"Stock Exchange"     The Stock Exchange of Hong Kong Limited 
 
 
 
 
                                 17 
 
"subsidiary"                        has the meaning ascribed to it in section 15 of the 
                                    Companies Ordinance (Chapter 622 of the Laws of Hong 
                                    Kong) 
 
"Target Company"                    Sumpo International Holdings Limited, a company 
                                    incorporated in the BVI on 5 April 2000 
 
"Target Group"                      the Target Company and its subsidiaries from time to time 
 
"%"                                 per cent 
 
For illustration purposes, the exchange rate of approximately RMB1 = HK$1.20 is used 
throughout this announcement. This exchange rate does not constitute a representation that 
any amounts have been, could have been, or may be exchanged at this or other rate at all. 
 
 
 
Source: Hong Kong Exchanges & Clearing