Elitegroup Computer : Announcing board of directors resolution to spin off the Company's IPC & IOT Business to a 100% owned subsidiary.

Close

Today's Information

Provided by: Elitegroup Computer Systems Co.,Ltd.
SEQ_NO	4	Date of announcement	2022/08/05	Time of announcement	20:02:02
Subject	Announcing board of directors resolution to spin off the Company's IPC & IOT Business to a 100% owned subsidiary.
Date of events	2022/08/05	To which item it meets	paragraph 11
Statement	1.Type of merger and acquisition (e.g.merger, spin-off, acquisition, or share transfer):spin-off 2.Date of occurrence of the event:2022/08/05 3.Names of companies participating in the merger and acquisition (e.g., name of the other company participating in the merger, newly established company in a spin-off, acquired company, or company whose shares are transferred): (1)The spin off company: The company.(Elitegroup computer systems Co., Ltd.) (2)Transferee company: ECS Industrial Computer Co., Ltd.(hereinafter referred to as "ECS Industrial") 4.Trading counterparty (e.g., name of the other company participating in the merger, company spinning off, or trading counterparty to the acquisition or share transfer): ECS Industrial; 100% owned subsidiary of the Company 5.Whether the counterparty of the current transaction is a related party: YES 6.Relationship between the trading counterparty and the Company (investee company in which the Company has re-invested and has shareholding of XX%), explanation of the reasons for the decision to acquire from or transfer shares to an affiliated enterprise or related party, and whether it will affect shareholders' equity: (1)ECS Industrial is a 100% owned subsidiary of the Company. (2)This business spin-off is a mere group reorganization. The value of the business to be acquired by ECS Industrial is equal to the value of ECS Industrial shares, and thus the spin-off do not impact the interest of the shareholders of the Company. 7.Purpose of the merger and acquisition:Organizational reorganization and professional division of labor in order to improve overall operational performance and market competitiveness 8.Anticipated benefits of the merger and acquisition:Integrate internal and external resources to deepen vertical application market capabilities. 9.Effect of the merger and acquisition on net worth per share and earnings per share: This spin-off is transferred to a 100%-owned subsidiary of the Company, and thus has no impact on the net value per share and earnings per share in the Company's consolidated financial statements. 10.Follow-up procedures for mergers and acquisitions, including the time and method of payment of the consideration for mergers and acquisitions, etc.: Time to pay the consideration: The Spin-off date, set on Oct. 1, 2022 The method of paying the consideration: The Company spins off with an estimated value of NT150,000,000, in exchanges for newly issued 15,000,000 common shares in ECS Industrial at their par value NT 10 per share. 11.Types of consideration for mergers and acquisitions and sources of funds: Type of consideration for the merger: ECS Industrial common stock.Source of funding for mergers and acquisitions: Not applicable. 12.Share exchange ratio and calculation assumptions: (1)Share exchange ratio: The company Spins off the division to be Spins off, and its business value is NT$150,000,000. Each business value is about NT$10 in exchange for 1 ordinary share issued by ECS Industrial, and the ECS exchange for a total of 1 share. ECS Industrial issued 15,000,000 new ordinary shares, each with a par value of NT$10. If there is insufficient exchange for one share,ECS Industrial shall pay the elite one time in cash equivalent to the business value of the insufficient exchanged shares within 30 days after the completion of the change registration. (2)Calculation basis: The calculation of the number of new shares issued in the previous disclosure is based on the rationality of the book value, net value per share and split-to-share ratio of the split-transfer assets and liabilities statement as of June 30, 2022. It shall be determined by the independent expert opinion. 13.Whether the CPA, lawyer or securities underwriter issued an unreasonable opinion regarding the transaction:No 14.Name of accounting, law or securities firm:WeTec International CPAs. 15.Name of CPA or lawyer:賴明陽會計師 16.Practice certificate number of the CPA:北市會證 字第2123號 17.The content of the independent expert opinion on the reasonableness of the share exchange ratio, cash or other assets allotted to shareholders in this merger and acquisition: With reference to the relevant Q&A and explanation letter of the Accounting Research and Development Foundation of the Republic of China, the accountant adopts the book value method for accounting treatment, and takes the original book value of the transferred assets and liabilities as the cost of acquiring the assets and liabilities. Based on the net worth of both. According to the proposed balance sheet provided by the management of the ECS on the evaluation base date, after performing the necessary evaluation and analysis, the business value of the evaluation targt is NT$150,000,000.As of the evaluation base date, ECS Industrial intends to issue 15,000,000 ordinary shares (with a face value of NT$10 per share) to ECS at NT$10 per share as consideration. After verification, the net value after the above assessment and analysis is equal, and there is no profit or loss, and ECS Industrial is a 100% subsidiary of ECS before and after the transfer. This division has no impact on the rights and interests of ECS shareholders. Therefore, the accountant believes that this division assigns the relevant business at the book value. It should be reasonable to exchange shares for the consideration. 18.Estimated date of completion:The spin off date is set on Oct.1,2022. If it is necessary to adjust the base date of division, It is proposed to be adjusted by agreement between the boards of directors of both parties or a person authorized by the board of directors. 19.Matters related to the assumption of corporate rights and obligations of the dissolving company (or spin-off) by the existing or newly-established company: (1) As for the assets and liabilities assigned by ECS to ECS Industrial under this division plan, its rights and obligations shall be generally assumed by ECS Industrial from the spin off date of division. If it is necessary to go through the relevant transfer procedures, ECS shall cooperate with it. The maintenance cost of the relevant rights after the spin off date shall be borne by ECS Industrial. (2)Except for the adjustment items of shareholders' equity related to assets transferred from the spin off, ECS Industrial,which is transferred to the business after the spin off, except that the debts arising from the spin off business and the debts of the ECS are separable, the ECS Industrial shall settle the business before the Spin off. The debts borne by ECS shall be jointly and severally repaid with ECS within the scope of capital contribution of its assigned business. However, the creditor's claim for joint and several liability for repayment shall be extinguished if it is not exercised within two years from the base date of division. 20.Basic information of companies participating in the merger:NA 21.Matters related to the spin-off (including estimated value of the business and assets planned to be transferred to the existing company or new company.The total number of shares to be acquired by the spun-off company or its shareholders, and their respective types and no.Matters related to the reduction, if any, in capital of the spun-off company)(note: not applicable for announcements unrelated to spin-offs): (1)The estimated value of the business to be spinned off: NT150,000,000. (2)The estimated value of the assets to be transferred: NT595,510,000. (3)The estimated value of the liabilities to be transferred NT445,510,000. (4)The total number of shares to be acquired by the Company: 15,000,000 common shares (par value NT10 per share) in ECS Industrial at NT10 per share. (5)The values of the business, assets and liabilities mentioned above,are calculated based on their book value in the audited, subject to changes calculated based on their actual book value on spin off date. (6)If it is necessary to adjust the assets and liabilities of the spin off and transfer as stipulated in the previous announcement, the Company and the ECS Industrial Board may authorize the board of directors to adjust them. The same applies to any adjustments to the business value or the number of shares to be issued by ECS Industrial. 22.Conditions and restrictions for future transfer of shares resulting from the merger and acquisition:None 23.The plan after the merger and acquisition is completed: ECS Industrial is a 100% subsidiary of the Company before and after the spin off date. 24.Other important terms and conditions: (1)If any of the terms of this plan conflict with relevant laws and regulations and become invalid, only the conflicting part is invalid, but other terms are still valid. As for some clauses that are invalid due to violation of relevant laws and regulations,the board of directors of ECS and ECS Industrial shall negotiate separately within the legal scope in accordance with the provisions of relevant laws and regulations. (2)If any terms of this plan need to be changed according to the approval of the relevant competent authority, they shall be revised according to the content approved by the relevant competent authority or by the board of directors of ECS and ECS Industrial according to the approval of the relevant competent authority. (3)This plan will take effect only after it has been submitted to ECS and the board of directors of ECS Industrial for approval. However, if this plan fails to obtain the approval or permission of the relevant competent authority, the plan will not be produced from the beginning potency. (4)In this division plan, when ECS divides the property assigned to ECS Industrial, the registration of changes in its rights shall be registered six months after Party B completes the division registration, unless other laws require a longer period of time or force majeure factors. 25.Other major matters related to the mergers and acquisitions: Before and after the spin off base date, ECS Industrial is a 100% subsidiary of the Company. 26.Any objections from directors to the transaction:No 27.Information on interested directors involved in the mergers and acquisitions: 1.Important content of self-interest: The company holds 100% equity of ECS Industrial and all the directors of ECS Industrial are appointed by the company. Among them, director Chung I-Wen also serves as the chairman of the company. 2.Reasons for approving the spin off resolution: In order to facilitate the integration of the Group's resources and bring into play the synergy of operations, and based on the company's interests, Chairman Chung I-Wen approves the division. 3.Exercise of voting rights in the split proposal: The spin off is an organizational adjustment of the group, and the directors of ECS Industrial are all legal representative directors appointed by the company. In this case, according to the provisions of Article 35 Item 13 and Article 18 Item 6 of the Enterprise Mergers and Acquisitions Act, although Chairman Chung I-Wen also serves as a director of ECS Industrial. For the benefit of the company, the voting rights can still be exercised when the resolution on this division is made, and there is no need to withdraw. 28.Whether the transaction involved in change of business model: No 29.Details on change of business model:NA 30.Details on transactions with the counterparty for the past year and the expected coming year:No major transactions 31.Source of funds:NA 32.Any other matters that need to be specified:None