DKLS is the holder of 802 units of AUD1 each in DKLS Aust Trust.

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1 DKLS INDUSTRIES BERHAD ( P) PROPOSED DISPOSAL OF A PROPERTY IN MELBOURNE, AUSTRALIA BY DKLS AUST PTY LTD ON BEHALF OF DKLS AUST TRUST FOR A TOTAL CONSIDERATION OF AUD15,000,000 (EQUIVALENT TO RM MILLION) 1.0 INTRODUCTION On behalf of DKLS Industries Berhad ( DKLS or the Company ), we wish to inform that DKLS Aust Pty Ltd ( Vendor ), as a trustee for DKLS Aust Trust, has on 6 September 2013 entered into a Contract of Sale with ZYTT Pty Ltd ( Purchaser ) to dispose of a commercial property in Melbourne, Australia ( Property ) for a total consideration of AUD15,000,000 (equivalent to approximately RM million using the exchange rate of AUD1 : RM3.0334) ( Proposed Disposal ). 2.0 BACKGROUND INFORMATION 2.1 Information on the Vendor DKLS Aust Trust is a unit trust set up on 2 November 2011 in Victoria, Australia, solely for the purpose of owning the Property. The total number of units issued is 1,000 units of AUD1 each and the total allotment price amounts to AUD1,000. DKLS is the holder of 802 units of AUD1 each in DKLS Aust Trust. DKLS Aust Pty Ltd, a company limited by shares and a proprietary company under the Corporations Act 2001 in Victoria, Australia, acts as the trustee for DKLS Aust Trust to administer and manage the business aspect of the Property. As the trustee, the Vendor is the registered owner of the Property, holding the Property in trust for and on behalf of the unit holders of DKLS Aust Trust who are the beneficiaries and equitable owners of the Property. 2.2 Information on Purchaser ZYTT Pty Ltd, was registered as a company limited by shares and a proprietary company under the Corporations Act 2001 in Victoria, Australia on 10 February The total number of ordinary shares issued is 4,000 of AUD1 each and the total issued and paid up share capital amounts to AUD4, Information on the Property The Property bearing address as Bourke Street, Melbourne, Australia is registered under Certificate of Title Volume Folio 896 being Lot 1 on title Plan J (formerly known as part of Crown Allotment 6 Section 19 City of Melbourne Parish of Melbourne North), Parent Title Volume Folio 832. The Property is located under zoning Capital City 1 which occupies a prominent central location in central business district ( CBD ) on the corner of Bourke Street and Little Queen Street, close to both the legal and financial Precincts. The location also provides excellent access to retail and entertainment precincts and to all modes of public transport. The Property comprises an existing building erected on a piece of freehold land measuring approximately 1,162 m 2 (12,507 sq ft) in area. There is potential for further future development at the rear of the site of the existing building. 1

2 The existing building was completed in 1931, approximate age 82, and it was utilised as Barristers Chambers and is rich in legal history. The existing building comprises five (5) levels plus basement, mezzanine and a rooftop caretakers unit. There are also two (2) prime Bourke Street shops and six (6) on site car parks. The gross building area of the existing building is measuring approximately 5,228 m 2 (56,274 sq ft) in area. The existing building is currently vacant except for the two (2) Bourke Street shops which have been leased to two (2) separate retail tenancies. A summary of the building areas of the existing building is attached in Appendix A. 3.0 INFORMATION ON THE PROPOSED DISPOSAL The total consideration for the Proposed Disposal of AUD15,000,000 (exclusive of 10% GST) was arrived at on a willing buyer-willing seller basis after taking into consideration the prevailing market value of the Property and the commercial properties in the surrounding areas. The acquisition for the Property was completed by DKLS Aust Trust on 29 January The original cost of investment of the Property based on the audited financial statements of DKLS Aust Trust as at 31 December 2012 was AUD12,715,741 (equivalent to approximately RM38,571,929). An assessment of fair value for financial reporting purposes on the Property was carried out by Messrs Charter Keck Cramer on 16 January 2013 ( Assessment Report ). The fair value of the Property was assessed at AUD12,075,000 (exclusive of GST) (equivalent to approximately RM36,628,305). The Board of Directors of DKLS is of the view that the total consideration for the Property is fair and reasonable. The Property shall be sold free from all charges and encumbrances and with all rights, benefits, title and interest attached thereto on as-is-where-is basis with vacant possession except for two (2) retail tenancies. The Property is presently charged to the National Australia Bank Limited, Singapore. There are no other liabilities, including contingent liability and guarantee, to be assumed by the Purchaser arising from the Proposed Disposal. 3.1 Terms of payment of the consideration for the Proposed Disposal The total consideration for the Proposed Disposal shall be paid by the Purchaser in cash in the following manner: a) 10% of the total consideration was paid upon the signing of the Contract of Sale; b) the balance of 90% of the total consideration to be paid by 5 October RATIONALE OF THE PROPOSED DISPOSAL The Proposed Disposal provides an opportunity for DKLS to unlock the capital resources of the Property which is currently not generating any income to DKLS Group and to realise the Property at a fair market value whilst enhancing the Group s working capital. DKLS Aust Trust will primarily utilise the net proceeds from the Proposed Disposal for the repayment of bank borrowings and advances from its unit holders and other related company within DKLS Group within a period of twelve (12) months from the completion of the Proposed Disposal. 2

3 5.0 RISK FACTORS FOR THE PROPOSED DISPOSAL Other than the transaction risk pertaining to the Proposed Disposal, the Board of Directors of DKLS does not foresee any other significant risk arising from the Proposed Disposal. 6.0 FINANCIAL EFFECTS OF THE PROPOSED DISPOSAL 6.1 Earnings and Earnings Per Share The Proposed Disposal is not expected to have any material effect on the earnings of the DKLS Group for the financial year ending 31 December 2013 except that, on completion of the Proposed Disposal, it is expected to give rise to a gain arising from the disposal of approximately RM5.2 million and reversal of impairment loss amounting to RM1.9 million provided in the previous year at the company level and approximately RM4.2 million and RM1.56 million respectively at group level. The Proposed Disposal is expected to contribute positively to the earnings per share by approximately 0.05 sen per share for the financial year ending 31 December Net Assets and Gearings Based on the audited financial statements of DKLS Group for the financial year ended 31 December 2012, the proforma effect of the Proposed Disposal on the net assets of DKLS Group is expected to increase by approximately 1.5% and will reduce the Group s gearing ratio from 0.29 to Share Capital and Substantial Shareholders Shareholding The Proposed Disposal is not expected to have any effect on the issued and paid-up share capital of DKLS and the substantial shareholders shareholdings in the Company. 7.0 APPROVALS REQUIRED The Proposed Disposal is not subject to the approval of the shareholders of DKLS. 8.0 HIGHEST PERCENTAGE RATIO APPLICABLE The highest percentage ratio applicable to the Proposed Disposal pursuant to paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 12.9%. 9.0 INTEREST OF THE DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM None of the Directors, major shareholders of DKLS and/or persons connected to them has any interest, direct or indirect, in the Proposed Disposal STATEMENT BY THE BOARD OF DIRECTORS The Board of DKLS, having considered all aspects of the Proposed Disposal, is of the opinion that the Proposed Disposal is in the best interest of the Company. 3

4 11.0 ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Disposal is expected to be completed within one (1) month from the date of the Contract of Sale DOCUMENTS FOR INSPECTION The Contract of Sale and Assessment Report are available for inspection during the office hours from 9.00 a.m. to 5.00 p.m. from Monday to Friday (except for public holidays) at the registered office of the Company at D-3-7 Greentown Square, Jalan Dato Seri Ahmad Said, Ipoh, Perak Darul Ridzuan for a period of three (3) months from the date of this announcement. This announcement is dated 9 September Copy to: Issues & Investment Division Securities Commission No. 3 Persiaran Bukit Kiara Bukit Kiara Kuala Lumpur (Attention: Mr Eugene Wong Weng Soon) 4

5 APPENDIX A A summary of the building areas of the existing building is as follows: Building Area and Tenancy Schedule Level GLA *1 (m 2 ) Status Annual rental (AUD) Lease commence Term (year) Basement Vacant Bourke Street Shop Leased 58, August expiring on 14 August 2016 Bourke Street Shop Leased 77, November *2 expiring on 14 November 2013 Ground Floor Vacant Front Mezzanine (South) Vacant Mezzanine (Central) Vacant Rear Mezzanine (North) Vacant Level Vacant Level Vacant Level Vacant Level Vacant Caretakers unit Vacant TOTAL 5, Notes: *1 GLA : Gross land area *2 Option to renew for another term of years 5