The good response is believed to be a result of the Group's recent successful roadshows in the US and the investors are satisfied with the Group's steady performance and growth over the last three years. The market capitalisation has also increased from HK$500 million (US$64 million) at the time of listing in June 2004 to HK$2.2 billion (US$282 million) based on the closing price of the last trading day, representing a significant growth of more than 500%. More importantly, it also reflects the optimism and confidence of the international institutional investors over the Group's ability to develop TV related business in Mainland China.
Dr Leung Anita Fung Yee, CEO of the Group, said that the purpose of the latest new share placement is to finance its advertising business since the Group has obtained the related nationwide business license. Moreover, the funds also help enrich the Group's TV programmes and script library through strengthening of production and acquisition drama library.
Qin Jia Yuan (China) Advertising Company Limited ("勤加緣（中國）廣告有限公司"), a wholly owned foreign enterprise of the Group, in addition to developing its core TV advertising business, can extend its advertising placement, creation and production services to a range of media including magazine, internet, outdoor billboard and radio. The Group will focus on the acquisition of media resources, rights and interests as well as on establishing collaborations with advertising clients and 4A and local advertising agents. This unique business model will not only enhance the Group's business scope and sales, but also strengthen its relationship with 4A and local agents to achieve a win-win situation, in order to stay attuned to the special investment conditions and advertising policies in China. The Group is enjoying a lead in this industry landscape. By further enriching its film archive, the Group is able to pursue more exclusive advertising agency rights from TV stations in future.
The Group also announces that the Board of Directors and Dr. Leung have reached an agreement wherein the terms of Dr. Leung's employment contract will be amended. The amendment will be tabled to an extraordinary general meeting for shareholders' approval within a reasonable period of time. The amended terms include: 1). Dr. Leung cannot cancel the employment contract unilaterally during the period from now to 31 December 2010 while under the original terms only a 6-month advanced notice is required. 2). Dr. Leung's housing allowance in cash will be cut, and her annual salary will be reduced to HK$390,000.00 (US$50,000), in which tax incurred is borne by the Group. This compares with her previous total monetary benefit of up to around HK$7,400,000.00 (US$949,000), including salary, housing allowance in cash and related tax payment. 3). Upon the termination of the contract, Dr. Leung can get a bonus, which will range from 2% to 10% of the Group's total post-tax profit over the last three years. 4). If, within the amended contract period, the Board of Directors dismisses Dr. Leung or she is no longer the Group's controlling shareholder, the Group shall make financial compensation to her, of which details will be set out on the amended contract.
Dr. Leung said: "I am pleased to accept this substantial pay cut, which can ease the cash flow of the Group. The significant savings of nearly HK$8,000,000 (around US$1,000,000) in cash can be re-deployed for the engagement of advertising professionals to prepare for the future development of our TV and advertising businesses. We are now engaged in negotiations with heavyweight advertising professionals to join the Group and help reform and enhance our management."
Dr. Leung indicates that her future remuneration will be tied in to the Group's net profit. Being the majority shareholder and the Group's decision maker, she is pleased to accept the package because it will imply a tie-in of her own benefits with that of the shareholders. Due to China's huge advertising market valued at several hundred billions and the Government's favorable policies on the domestic TV industry, Dr. Leung is confident that she can obtain a favourable return which may exceed her previous salary levels..
About Qin Jia Yuan
Qin Jia Yuan Media Services Company Limited (HKEx: 2366) is a China-focused one-stop shop for TV media services, providing integrated programme, distribution, advertising and marketing and public relations services to production houses, advertising agencies and advertisers. The Group was listed on the main board of the Stock Exchange of Hong Kong on June 30, 2004 following a successful initial public offering. Its strategic shareholders include Aegis Group plc, a public company listed on the London Stock Exchange and one of the world's five largest media groups.