Rudy Chan

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Rudy Chan Chief Executive Officer
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Agenda

• Investment criteria
• Newpalm deal structure
• Newpalm deal process
• Special mention HKSEx
• Issues facing MA in China

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Investment Criteria
Stringent criteria for acquisition
EBITDA Enhancing
Recurring Revenue
Material Added Revenue
IP Rights
Growth Potential
20 EBITDA Margin
10 Profit Margin
Strong Management
Single Digit PE Multiple
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Acquisition of Newpalm April 2003
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Investment Criteria Newpalm
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Deal Structure Newpalm

• Acquire 100 of the company, earn-out based
  structure, payment by installment
• VC shareholders got most of the initial payment
  and management shareholders stay for 24 months
• Estimated P/E to be less than 9

Consideration (USMillion)
Installment 1
14
9.4 x 2003 Net Profit x 0.3797
Installment 2
9.4 x 2004 Net Profit x 0.1203
Installment 3
55
CAP
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How we got the girl
Apr 03
Mar 03
Feb 03
Jan 03
Nov/ Dec 02
Oct 02
First Meeting
Wedding Bells
Dated a few times to get to know each other

• DD Completed
• Concluded negotiation
• Final agreement signed

Drafting of prenuptial agreement (term sheet)

• Signed prenuptial agreement
• DD began
• Preparation of SPA
• Further negotiation

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Special Mention - HKSEx

• Originally, there was no cap for total
  consideration
• Due to the GEM regulation, a cap of US55 million
  was added to satisfy the rule
• Otherwise, shareholder approval would required
  which would take longer time to close the deal

• RPT clearance
• Support consideration

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Issues facing MA in China
Quality of the company

• Financial reporting structure usually based on
  cash flow
• Accounting rules do not meet international
  standard
• No/Less legal compliances
• Quality of the management team important to
  have global enterprise experience

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Business Portfolio
Expanding Business Portfolio by Acquisitions
Media
Entertainment Online game - thesa.com.cn
Wireless
Portal Platform hongkong.com, china.com,
taiwan.com
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Questions Answers
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Thank You!