09:25 FOUNDER HOLD<00418> - Announcement (2) Founder Japan, which in turn is the holding company of a group of companies incorporated in Japan, the PRC, South Korea and Canada respectively, the principal businesses of which are software development and systems integration in electronic publishing systems and solutions which are mainly carried on in Japan. Except for Media Champion Holdings Limited, a company owned by a director of Founder Japan and which holds approximately 11.95% of its issued share capital, the other shareholders of Founder Japan are Independent Third Parties. Founder Japan was set up in 1996 as an indirect subsidiary of the Company to develop the Group's business in Japan and South Korea. Since the establishment of Founder Japan, the Founder Japan Group has been principally engaged in software development and systems integration in electronic publishing systems and solutions. The relevant financial information for the respective periods on True Luck is set out below: True Luck Year ended Year ended 6 months ended 31 December 2002 31 December 2003 30 June 2004 HK$ million HK$ million HK$ million (Note) (Note) (Unaudited) Consolidated loss before taxation and minority interests 29.9 6.1 6.9 Consolidated loss after taxation and minority interests 24.4 2.8 6.0 Consolidated net asset deficit 0.8 3.1 9.1 Note: The above financial information on True Luck has been reviewed and confirmed by the Company's auditors in performing the audit work for preparing the Group's consolidated accounts for the respective periods. Being an intermediate holding company, no audited consolidated accounts of True Luck have been prepared. Consideration The consideration for the Disposal and the Loan Assignment is JPY623,520,600 and JPY70,000,000 respectively, and the total consideration for the transactions contemplated under the Agreement amounts to JPY693,520,600 (equivalent to approximately HK$51,667,285), which shall be paid by the Purchaser upon Completion. Peking Founder has agreed to assume the payment obligation of the Purchaser under the Agreement if the Purchaser fails to perform such obligation. The Disposal As at the date of the Agreement, the entire issued share capital of True Luck is comprised of one share of US$1.00. As at the date of the Agreement, apart from the Shareholders' Loan, True Luck is also indebted to Founder Hong Kong in the amount of HK$23,559,004 on current account. It is provided in the Agreement that, prior to Completion, all amounts outstanding from True Luck to Founder Hong Kong other than the Shareholders' Loan will be capitalised into fully-paid shares of True Luck which will form part of the issued share capital of True Luck to be sold to the Purchaser under the Disposal. The principal asset of True Luck is its interest in Founder Japan. The sale of the entire issued share capital of True Luck under the Disposal would effectively amount to the disposal of the Company's entire holding, through True Luck, of 1,987 shares in Founder Japan, representing approximately 71.29% of its issued share capital. The consideration payable for the Disposal totaling JPY623,520,600 would therefore amount to the equivalent of JPY 313,800 (equivalent to approximately HK$23,378) per share of Founder Japan which would represent a premium of approximately 121.20% over the audited consolidated net asset value per share of Founder Japan as at 31 December 2003 of approximately JPY 141,865 (equivalent to approximately HK$10,569). The above effective consideration under the Disposal of JPY313,800 per share of Founder Japan would also represent a premium of approximately 182.43% over the unaudited consolidated net asset value per share of Founder Japan as at 30 June 2004 of approximately JPY 111,107 (equivalent to approximately HK$8,277). The consideration for the Disposal was determined after arm's length negotiation between the parties with reference in particular to a number of past transactions including (i) the cost of investment at JPY300,000 per share of Founder Japan paid by True Luck for the subscription of 1,000 new shares, representing 44.39% of the then enlarged issued share capital of Founder Japan, in November 2003, which investment cost had been determined with reference to the unaudited net asset value of