Digital Domain : SHARE PREMIUM REDUCTION

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DIGITAL DOMAIN HOLDINGS LIMITED

數字王國集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 547)

SHARE PREMIUM REDUCTION

The Board proposes to put forward to the Shareholders a proposal to reduce the Share Premium Account to nil and to transfer the credit arising therefrom to the Contributed Surplus Account whereupon it will be applied to set-off the entire amount of the accumulated losses of the Company as at 31 December 2020.

The Share Premium Reduction is subject to, among other things, the passing of special resolution by the Shareholders to approve the Share Premium Reduction at the AGM.

A circular containing, among other things, details of the Share Premium Reduction together with a notice convening the AGM will be despatched to the Shareholders as soon as possible in accordance with the Listing Rules.

SHARE PREMIUM REDUCTION

The Board proposes to put forward to the Shareholders a proposal for the Share Premium Reduction pursuant to the laws of Bermuda and the bye-laws of the Company. The credit arising from the Share Premium Reduction will be transferred to the Contributed Surplus Account whereupon it will be applied to set-off the entire amount of the accumulated losses of the Company as at 31 December 2020.

As at 31 December 2020, the amount standing to the credit of the Share Premium Account of the Company was approximately HK$1,984,774,557.63 and the accumulated losses of the Company was approximately HK$2,757,368,366. The entire amount standing to the credit of the Share Premium Account will be reduced to nil and the credit arising from the reduction of the Share Premium Account will be transferred to the Contributed Surplus Account and the Directors will be authorised to apply the amount standing to the credit of the Contributed Surplus Account to set-off the entire amount of the accumulated losses of the Company as at 31 December 2020.

Upon the Share Premium Reduction becoming effective, the credit balance in the Share Premium Account would be reduced to nil.

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Reasons for the Share Premium Reduction

The Share Premium Reduction and the subsequent transfer of the credit arising therefrom to the Contributed Surplus Account will be set off against the accumulated losses of the Company by the amount of such credits, and can give the Company greater flexibility in relation to its distribution policy at the earliest opportunity in the future as and when the Board considers appropriate. The Board considers that it is in the best interests of the Company and its Shareholders as a whole to implement the Share Premium Reduction.

Effects of the Share Premium Reduction

The Share Premium Reduction does not involve any reduction in the authorised or issued share capital of the Company, nor does it involve any reduction in the nominal value of the Shares or trading arrangements concerning the Shares.

Save for the expenses to be incurred in relation to the Share Premium Reduction which are considered to be immaterial, the Board considers that the implementation of the Share Premium Reduction will not, in itself, have a material adverse effect on the underlying assets, business operations, management, financial position of the Company or the interests of the Shareholders as a whole. There are no reasonable grounds for believing that the Company is, or after the Share Premium Reduction would be, unable to pay its liabilities as they become due.

Conditions of the Share Premium Reduction

The Share Premium Reduction is conditional upon:

1. the passing of a special resolution approving the Share Premium Reduction by Shareholders at the AGM; and
2. compliance with Section 46(2) of the Companies Act, including but not limited to (i) the publication of a notice in relation to the Share Premium Reduction in an appointed newspaper in Bermuda on a date not more than 30 days and not less than 15 days before the Effective Date; and (ii) the Board being satisfied that on the Effective Date, there are no reasonable grounds for believing that the Company is, or after the Share Premium Reduction would be, unable to pay its liabilities as they become due.

Assuming the above conditions are fulfilled, it is expected that the Share Premium Reduction will become effective on the next business day immediately following the date of passing of the special resolution to approve the Share Premium Reduction at the AGM.

A circular containing, among other things, details of the Share Premium Reduction together with a notice convening the AGM will be despatched to the Shareholders as soon as possible in accordance with the Listing Rules. To the extent that the Company is aware having made all reasonable enquiries and as none of the Shareholders has any interest in the Share Premium Reduction that is different from the other Shareholders, no Shareholder is required to abstain from voting on the resolutions proposed to consider and approve the Share Premium Reduction.

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DEFINITIONS

In this announcement, the following terms and expressions (unless the context otherwise requires) shall have the following meanings:

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By Order of the Board

DIGITAL DOMAIN HOLDINGS LIMITED

Seah Ang

Executive Director and Chief Executive Officer

Hong Kong, 23 April 2021

As at the date of this announcement, Mr. Seah Ang is the executive Director; Mr. Jiang Yingchun, Mr. Cui Hao, Mr. Wang Wei-Chung and Mr. Sergei Skatershchikov are the non-executive Directors; and Ms. Lau Cheong, Mr. Duan Xiongfei, Mr. Wong Ka Kong Adam and Dr. Elizabeth Monk Daley are the independent non-executive Directors.

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