TIDMVCBC
RNS Number : 6288V
Vertu Capital Limited
19 April 2016
possible acquisition- EXECUTION OF LETTER OF INTENT
THIS ANNOUNCMENT AND THE INFORMATION HEREIN IS NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY IN OR INTO AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF
SOUTH AFRICA OR THE UNITED STATES OR ANY OTHER JURISDICTION IN
WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL
Vertu Capital Limited
Proposed Acquisition of VCB Malaysia Berhad
Vertu Capital Limited ("Vertu" or "the Company") is pleased to
announce that it has entered into a non-binding letter of intent
("LOI") with BVS Trinity Sdn Bhd ("the Seller") for the proposed
acquisition of the entire issued share capital of VCB Malaysia
Berhad ("Target"), a company incorporated in Malaysia. Under the
LOI, the Target will be acquired for a consideration of GBP350,000
payable in cash on completion (the "Proposed Acquisition").
The Company's stated strategy, as set out in the prospectus
produced at the time of listing, is to look for acquisition
opportunities in the financial services sector. The directors of
the Company ("the Directors") believe that in the Target they have
identified a business that fits with this strategy.
The Proposed Acquisition is subject to certain conditions in the
LOI, including:
-- satisfactory due diligence in respect of the Target and its group;
-- approval of the Proposed Acquisition by the board of
directors of the Company, Seller and Target;
-- execution by the Seller and the Company of a detailed share acquisition agreement; and
-- the re-admission of the Company to a Standard Listing on the
Official List and to trading on the Main Market of the London Stock
Exchange on completion of the Proposed Acquisition.
Accordingly, while discussions regarding the proposed
acquisition continue in accordance with the terms of the LOI, there
can be no certainty that any transaction will occur.
The Proposed Acquisition would constitute a reverse takeover
requiring compliance with the relevant provisions in the Listing
Rules.
Under Listing Rule 5.6, Vertu is required to provide certain
information regarding the Target to ensure that there is sufficient
information available to the public with regard to the proposed
transaction in order to avoid suspension of the Company's shares.
As the Target is not listed on any stock exchange and is not
subject to any public disclosure regime, the information required
under LR 5.6.15G is set out below.
1. Background on The Target
1.1 Introduction
The Target was established in Malaysia in 1999. The Target is a
management consulting firm that provides financial consultancy and
support services in the areas of corporate finance and investment
banking. The Target provides advice to high net worth individuals
seeking growth and steady income from their capital as well as
providing corporate finance advice to growth companies. The Target
has a wholly owned subsidiary VCB Investment Berhad which operates
the Target group's private equity investment business.
The Target divested its interest (of 100% of the equity share
capital) of VCB Capital Sdn Bhd ("VCBC") in December 2015. VCBC is
a licensed capital market representative in Malaysia in the area of
fund management. Although the Target has divested its interest in
VCBC, it continues to have a business relationship with VCBC where
it requires a partner to carry out new business in the area of
licensed fund management activities.
1.2 Business Operations
The Target's services cover the following areas:
1.2.1 Support Services - providing support services to
enterprises in relation to raising funds from debt and/or equity
markets, in house private equity participation, external
debt/equity as well as on mergers and acquisitions;
1.2.2 Management Consultancy - providing consultancy services to
small and medium enterprises in developing business plans,
realigning business operations and human resource management as
well as developing policy and procedures, processes and enterprise
resource management;
1.2.3 Investor Relations - assisting enterprises manage investor
relations including but not limited to maintaining an investor
relation desk (as an out-sourced service);
1.2.4 Wealth Management -providing wealth management services to
qualified investors (mostly high net worth individuals) and/or
private companies through VCBC or through the Target's licensed
business partners; and
1.2.5 Specialised Capital Market Services - providing
alternative investment strategy(ies) as part of the fund management
services offered through the Target's licensed business
partners.
1.3 Key non-financial operating or performance measures
The key non-financial operating and performance measures for the
Target are the number of clients it represents, the number and
value of transactions or projects it is mandated on by clients and
the number and value of transactions or projects it successfully
completes.
Details of clients and new mandates on which the Target has been
instructed since 31 December 2014 are set out below:
No Date engaged Client Description Mandate Contracted Remarks
Description revenue
RM
Note (1)
------- --------------- ------------------- ------------------ ----------- --------------
Telco Managed Contract
1. 03.09.12 Service Provider Investment 440,000 end 03.09.17
------- --------------- ------------------- ------------------ ----------- --------------
Consultancy
Property - Business Renewable
2. 23.12.13 & IT Company Plan & Operation 1,200,000 yearly
------- --------------- ------------------- ------------------ ----------- --------------
Renewable Service - Renewable
3. 23.12.14 Energy Company Business Plan 100,000 yearly
------- --------------- ------------------- ------------------ ----------- --------------
Service -
Machinery Financial Renewable
4. 29.12.14 Rental Company Management 100,000 yearly
------- --------------- ------------------- ------------------ ----------- --------------
Engineering Consultancy Renewable
5. 01.01.15 Company - Operation 180,000 yearly
------- --------------- ------------------- ------------------ ----------- --------------
Engineering Renewable
6. 01.01.15 Company Investment 400,000 yearly
------- --------------- ------------------- ------------------ ----------- --------------
Engineering Renewable
7. 16.01.16 Company Investment 250,000 yearly
------- --------------- ------------------- ------------------ ----------- --------------
Note Contracted revenue is the revenue during the fixed
(1) contract term or the annual fee payable under yearly
renewable contracts as applicable. The contracted
amount may not be fully earned during the year
2015.
During the year ended 31 December 2015, the Target continued to
act on mandates for the clients set out above. The Target provided
financial consultancy and support services to four clients and
investment to two clients. In total it generated revenue of RM
2,628,161 for the Target group for the year ended 31 December 2015.
In January 2016, the Target has entered another investment mandate
of RM2.5 million (as set out in paragraph 7 of the table above) in
respect of which a fee of 10% of the investment amount is
payable.
The Target has a pipeline of consultancy and investment mandates
for the current financial year from companies in Thailand, Hong
Kong, China and Singapore which are in the process of being signed
up.
The Target continues to receive many enquiries for fundraising
activities in areas of information technology, telecommunication,
energy, construction and property development.
The Target foresees that business will continue to improve this
year and next based on the demands seen especially by clients
seeking to list companies in Thailand, Hong Kong and the UK.
1.4 Trends in the market
Malaysia continues to show strong macro-economic indications
which directly translates to strong economy. The weak commodities
market especially the oil and gas sector had impacted the Ringgit
but it had also benefited outer industries as Malaysia remain one
of the big exporters of manufactured products especially in
industries related to rubber, palm oil, timber and electronics.
Malaysia is a leader in Islamic financing, which has given
advantage to its local companies to participate in Islamic
fundraising activities which has grown in popularity in the recent
decade.
The bond market remains strong and the directors believe there
are good opportunities to develop the business of the Target.
(MORE TO FOLLOW) Dow Jones Newswires
April 19, 2016 05:02 ET (09:02 GMT)
The directors believe that the weaker Malaysian Ringgit with
strong economic fundamentals in Malaysia will contribute to higher
foreign direct investment, hence increasing the opportunities in
financial sector especially in the related sectors the Target is
operating in.
Globalisation of Malaysian companies has also opened new
opportunities for the Target to provide its services.
1.5 Reasons for the Proposed Acquisition and development of the Target
The Directors believe they will be able to develop the business
of the Target if the Proposed Acquisition is completed. They
believe the Proposed Acquisition and the ownership of the Target by
a UK listed company will assist the Target in pursuing cross border
business opportunities from overseas markets such as the United
Kingdom, Singapore, Thailand and Indonesia.
The Directors believe that they will be able to leverage on the
successful transactions executed by the Target and the combined
business contacts of the Company and the Target to further develop
the business.
The Directors intend to develop the Target to become a leading
management consulting services provider in the growth SME segment
as well as a leading player in alternative investment strategies in
wealth management.
2. Financial Information On The Target
The audited consolidated financial statements of the Target for
the years ended 31 December 2013, 2014, and 2015 are set out in the
Appendix to this announcement.
The table below contains summary financial information of the
Target's group for the three years ended 31 December 2015 extracted
from the financial information in the Appendix. Please note that
this information includes consolidated financial results of VCBC.
For clarity, the Target has divested its interest in VCBC in
December 2015.
2013 2014 2015
(RM) (RM) (RM)
Revenue 4,471,294 1,852,312 2,628,161
Cost & Expenses 3,503,915 1,511,873 1,991,794
Profit before tax 474,171 1,109,753 636,367
Net profit 474,470 971,803 603,882
Total assets 13,962,238 14,341,171 17,396,284
Net current assets 4,495,727 4,841,880 4,100,474
Cash and bank balance 4,989,819 1,655,896 1,688,149
Shareholders' equity 12,505,113 12,848,658 3,223,692
The Target's consolidated result will improve with the
divestment of VCBC as there were contributing losses totalling in
excess of RM900,000 for the years 2013, 2014 and 2015 respectively.
For ease of reference and comparison, the following table is
prepared for the three years ended 31 December 2015 after removing
VCBC's financial results for each of the years in consideration to
better reflect the Target's financial position.
2013 2014 2015
(RM) (RM) (RM)
Revenue 5,326,130 2,475,408 2,665,173
Other Income 896,125 - 263,892
Interest expenses (559,088) (766,571) (864,083)
General expenses (4,426,326) (739,506) (2,099,049)
Profit before tax 1,236,841 969,331 (34,067)
Net profit 1,237,140 832,381 (66,552)
Total assets 13,487,987 14,429,301 17,614,834
Net current assets 4,586,687 6,284,581 4,753,025
Cash and bank balance 2,611,318 1,143,936 1,688,149
Shareholders' equity 3,151,240 3,983,621 3,317,069
Total Liabilities 10,336,747 10,445,680 14,297,765
Net Cash from/(used
in) operating activities (2,076,682) (2,239,124) 4,809,780
3. Key Differences in Accounting Policies
The Target prepares its financial statements in accordance with
Malaysian Financial Reporting Standards and the Companies Act 1965
in Malaysia.
The Company prepares its financial information in accordance
with International Financial Reporting Standards as adopted by the
European Union ("IFRS").
There are no material differences between Malaysian Financial
Reporting Standards and IFRS which would result in any differences
in the financial statements for the Target if they were prepared in
accordance with IFRS.
There are no material differences between the accounting
policies adopted by the Company and those adopted by the
Target.
Confirmations
In accordance with Listing Rule 5.6.15G(3), the Directors
confirm that they consider that this announcement contains
sufficient information about the Target and its group to provide a
properly informed basis for assessing its financial position.
In accordance with Listing Rule 5.6.15(G)(4) the Directors
confirm that the Company has made the necessary arrangements with
the Seller to enable it to keep the market informed without delay
of any developments concerning the Target and its group that would
be required to be released were the Target part of the Company.
The Directors also confirm that until such time as a prospectus
is published in relation to the Proposed Acquisition or discussions
between the parties are terminated (or such other date as required
by the UK Listing Authority), the Company will make any
announcement that would be required in order to be compliant with
its obligations under the Disclosure and Transparency Rules of the
Financial Conduct Authority on developments in relation to the
Target as if the Target were already acquired by the Company.
Enquiries
For any enquiries please contact William Du at Vertu Capital
Limited +603 5613 3388
IMPORTANT NOTICE
The information contained in this announcement is not for
release, publication or distribution to persons in Australia,
Canada, Japan, the Republic of South Africa or the United States or
in any jurisdiction where to do so would breach any applicable law.
No public offer of securities is being made by virtue of this
announcement.
This announcement has been prepared for the purposes of
complying with the applicable law and regulation of the United
Kingdom and the information disclosed may not be the same as that
which would have been disclosed if this announcement had been
prepared in accordance with the laws and regulations of any
jurisdiction outside of the United Kingdom.
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements may be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These forward
looking statements include all matters that are not historical
facts and involve predictions. Forward-looking statements may and
often do differ materially from actual results. Any forward-looking
statements reflect the Company's current view with respect to
future events and are subject to risks relating to future events
and other risks, uncertainties and assumptions relating to the
Company's business, results of operations, financial position,
liquidity, prospects, growth or strategies and the industry in
which it operates. Forward-looking statements speak only as of the
date they are made and cannot be relied upon as a guide to future
performance. Save as required by law or regulation, the Company
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements in this
announcement that may occur due to any change in its expectations
or to reflect events or circumstances after the date of this
announcement.
Certain figures contained in this announcement, including
financial information, have been subject to rounding adjustments.
Accordingly, in certain instances, the sum or percentage change of
the numbers contained in this announcement may not conform exactly
with the total figure given.
Except as explicitly stated, neither the content of the
Company's website, nor any website accessible by hyperlinks on the
Company's website is incorporated in, or forms part of, this
announcement.
References in this announcement to RM means Ringgit Malaysia,
the lawful currency of Malaysia.
Appendix
The audited consolidated financial statements of the Target for
the years ended 31 DECEMBER 2013, 2014, and 2015
The financial statements can be viewed here:
http://www.rns-pdf.londonstockexchange.com/rns/6288V_-2016-4-19.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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