PROPOSED ACQUISITION OF BUSINESS ASSETS FROM NETNION TECHNOLOGY SDN BHD

Transcription

1 REV ASIA BERHAD ( REV ASIA OR THE COMPANY ) PROPOSED ACQUISITION OF BUSINESS ASSETS FROM NETNION TECHNOLOGY SDN BHD 1. INTRODUCTION The Board of Directors of Rev Asia ( Board ) wishes to announce that Rev Digital Sdn Bhd, a 70%-owned subsidiary of the Company ( Purchaser ) had on 5 August 2016, entered into a sale and purchase agreement ( SPA ) with (1) Netnion Technology Sdn Bhd ( Seller ) and (2) Mr Toh Lean Seng and Alistair Winston Robertson (collectively, Covenantors ) for the proposed acquisition of the Business Assets (as defined under section 3 below) from the Seller ( Proposed Acquisition ) for a purchase consideration of up to RM5,000,000 ( Purchase Consideration ). The Purchaser, Covenantors and Seller shall collectively be known as the Parties. 2. INFORMATION ON THE SELLER The Seller was incorporated in Malaysia under the Companies Act, 1965 on 22 March 2013 as a private limited company. As at 2 August 2016, being the latest practicable date prior to this Announcement ( LPD ), the authorised share capital of the Seller is divided into 500,000 ordinary shares of RM1.00 each and the issued and paid-up share capital of the Seller comprises of 500,000 ordinary shares of RM1.00 each. The principal activities of Seller are engaging in the business of online media and public relations marketing activities. The shareholders and directors of the Seller and their respective shareholdings in the Seller as at the LPD are as follows: Directors / Shareholders Toh Lean Seng Alistair Winston Robertson < Direct shareholding > No. of ordinary shares % 450, , As at the LPD, Seller does not has any subsidiary and/or associate company. 3. INFORMATION OF BUSINESS ASSETS 3.1 The Business Assets are assets owned by the Seller which relate exclusively to the business carried on by the Seller relating exclusively to the Viralcham and Rojaklah brands ( Target Brands ) and any and all business activities associated with the Target Brands Websites (as defined below) ( Business ), which include the following: business intellectual property, which includes: (i) (ii) (iii) (iv) the internet websites/domains known as ( Viralcham Website ) and ( Rojaklah Website ); its Facebook pages ( Target Brands Facebook Pages ) and all associated Facebook Pages; Viralcham Youtube page ( Viralcham Youtube Page ); and all other platforms or online accounts related, associated or in respect of the Target Brands, as well as all content relating thereto, (items no. (i) to (iv) shall collectively be known as, the Target Brands Websites ) (v) (vi) any content produced by the Seller and the Covenantors in relation to the Target Brand Websites before or after the date of the SPA; the domain name licences relating to the Business; and 1

2 (vii) the right to take action against third parties for infringement of any intellectual property rights relating to the Business whether occurring before or after the date of the SPA; (c) (d) (e) (f) (g) (h) (i) plant and equipment; agreements in respect of the Business of which services are wholly or partly to be rendered to the customers after the Completion Date, whether or not the customers have paid for the services ( Contracts ); all licences, consents, rights, permits and certificates relating exclusively to any aspect of the Business issued by any government authority statutory agency or a body certifying compliance with Syariah law ( Statutory Licences ); the receivables in respect of the Business yet to be collected from customers as at the completion of the sale and purchase of the Business Assets under the SPA ("Completion ) ( Accounts Receivables ); the prepayments in respect of the Business which are collected in advance from customers prior to services being rendered as at the Completion ( Prepayment from Clients ); all original and certified copies of the books, records, documents, information, accounts and data owned by the Seller relating to the Business ( Business Records ); the trademarks in relation to the Business (whether registered or not); and all other tangible or intangible assets owned by the Seller which relate to the Business; 3.2 All receivables in respect of the Business for which services have been rendered by the Seller but payment has not been received by the Seller as at the Completion shall be accorded and belong to the Seller. In addition, all receivables in respect of the Business for which services have not been rendered by the Seller and payment has not been received by the Seller as at the Completion shall be accorded and belong absolutely to the Purchaser with effect on Completion. 3.3 All prepayments in respect of the Business collected in advance from customers for which services have been rendered by the Seller as at the Completion shall be accorded and belong to the Seller. In addition, all prepayments in respect of the Business collected in advance from customers for which services have not been rendered by the Seller as at the Completion shall be accorded and belong absolutely to the Purchaser with effect on Completion. A summary of the financial information of the Business Assets for the financial period from 1 January 2015 to 31 December 2015 ( FPE 31 December 2015 ) and the financial period from 1 January 2016 to 31 May 2016 ( FPE 31 May 2016 ) is set out as follows: Audited Unaudited FPE 31 December FPE 31 May RM RM Revenue 760, ,260 Net (loss)/profit for the period ( (NL)/NP ) (53,107) 227,212 Net (liabilities)/assets ( (NL)/NA ) (53,107) 171,497 Total borrowings - - Gearing (times) - - 2

3 Commentary on past performance:- FPE 31 December 2015 In FPE 31 December 2015, the Business Assets recorded revenue of RM760,597 from its Small Medium Enterprise ( SME ) content offering. However, the Business Assets recorded NL of RM53,107 which were mainly due to its administrative expenses during the FPE 31 December 2015 that comprises human resources expenses (approximately RM368,000), sales commission (approximately 62,000), marketing expenses (approximately RM183,000) and office overheads (approximately RM48,000). FPE 31 May 2016 In FPE 31 May 2016, the Business Assets recorded revenue of RM915,260 from its SME content offering. In this respect, the Business Assets registered NP of RM227,212 which were due mainly to higher revenue that manage to cover its administrative expenses during the FPE 31 May The administrative expenses comprises human resources expenses (approximately RM365,000), sales commission (approximately RM99,000), marketing expenses (approximately RM94,000) and office overheads (approximately RM19,000). The total number of traffic visits (unique visitors) and the total number of page views on and for the period from 1 July 2015 to 31 December 2015 and from 1 January 2016 to 30 June 2016 are as follows: 1 July to 31 December January to 30 June 2016 ( million) ( million) Total number of traffic visits (unique visitors) (i) (ii) Total number of page views (i) (ii) (Source: Google Analytics ) 4. BASIS AND JUSTIFICATION OF ARRIVING AT THE PURCHASE CONSIDERATION The Purchase Consideration of up to RM5,000,000 was arrived at on a willing buyer willing seller basis, after taking into account the following: the expected synergistic benefits to be derived from the Proposed Acquisition as disclosed in Section 8 of this Announcement; and the adjustment (if any) to the Purchase Price based on the Agreed Benchmark (as defined in Section (c)) to be achieved in respect of the Target Brands Websites for the period of twenty four (24) months commencing on the first day of the calendar month immediately after the Completion Date. 5. MODE OF SETTLEMENT The Purchase Consideration will be fully satisfied by way of cash to be paid in accordance with the SPA as set out in Section 7.2 of the Announcement. Rev Asia and its group of companies ( Rev Asia Group or Group ) intends to fully fund the Purchase Consideration from internally generated funds and bank borrowings or interestbearing advances from a Director of the Company, the proportions of which are likely to be approximately Ringgit Malaysia One Million (RM1,000,000) and Ringgit Malaysia Four Million (RM4,000,000), respectively. Accordingly, the gearing ratio of the Rev Asia Group is expected 3

4 to increase from 0.06 times (as at 31 December 2015) to 0.13 times after the Proposed Acquisition. 6. LIABILITIES TO BE ASSUMED BY REV ASIA Save for the obligations and liabilities arising in and arising from, pursuant to or in connection with the SPA, there are no other liabilities including contingent liabilities and guarantee to be assumed by Rev Asia arising from the Proposed Acquisition. 7. SALIENT TERMS OF THE SPA 7.1 Sale and Purchase of the Business Assets The Seller agrees to irrevocably and unconditionally sell, transfer and/ or otherwise assign and the Purchaser, in full reliance upon the undertakings, representations and warranties given by the Seller and Covenantors, agrees to purchase all, but not part, of the Business Assets, on a willing buyer willing seller basis, free from any security interest and with all rights attaching to the Business Assets and accruing as at and from a day which is not later than seven (7) days from the fulfilment of the last Condition Precedent (as defined in Section 7.3 of this Announcement) ( Completion Date ) at the Purchase Consideration and on the terms and conditions contained in the SPA The Purchaser shall, prior to or within seven (7) days of the Completion Date, offer continuity of employment to all employees employed by the Seller for the operation of the Business ( Employees ) on the terms and conditions no less favourable than those applicable to the Employees employment with the Seller immediately prior to the Completion Date with no break in the continuity of service or benefits and with full recognition of the Employees period of service. 7.2 Payments Terms The Purchaser will pay the Purchase Consideration to the Seller in the following manner: (c) Ringgit Malaysia Two Million Five Hundred Thousand (RM2,500,000) only paid to the Seller on the date falling three (3) days following the Completion Date ("First Payment Date ) ( First Tranche ) in accordance with Section of this Announcement and subject to fulfilment of the Seller s obligations on the Completion Date; Ringgit Malaysia One Million (RM1,000,000) only paid in immediately available funds to the Seller no later than twelve (12) months after the Completion Date provided always that the Seller and Covenantors are not in breach of any of the terms and conditions as set out in the SPA; and up to Ringgit Malaysia One Million Five Hundred Thousand (RM1,500,000) only ( Final Tranche ) provided always that the Seller and Covenantors are not in breach of any of the terms and conditions as set out in the SPA and subject to the achievement of an average audited Profit Before Tax ( PBT ) per annum for the Target Brands Websites during the period of twenty four (24) months commencing on the first day of the calendar month immediately after the Completion Date ( Performance Period ) of not less than Ringgit Malaysia One Million (RM1,000,000) per annum (the Agreed Benchmark ). The Agreed Benchmark shall include all advertising contracts closed by the Seller prior to the Completion Date but recognised for the periods after the Completion Date which are accorded and belong absolutely to the Purchaser The First Tranche shall be set off against all Prepayment from Clients which have been collected in advance from customers for which services have not been rendered by the Seller as at the Completion, which shall be accorded 4

5 and belong absolutely to the Purchaser and such amount to be set-off shall be based on a report provided by the Seller and Covenantors and accepted and verified by the Purchaser as accurate information, which sets out the amount of the Prepayment from Clients as at the Completion Date. The Purchaser will pay the balance of the First Tranche, if any, to the Seller in immediately available funds on the First Payment Date In the event the average audited PBT per annum achieved for the Target Brands Websites during the Performance Period is less than the Agreed Benchmark, the Purchaser shall be absolutely entitled to reduce the Final Tranche in proportion to the shortfall in the Agreed Benchmark ( Benchmark Shortfall ) to take into account the Benchmark Shortfall. For illustration purposes, if the average audited PBT per annum for the Target Brands Websites during the Performance Period is only RM800,000, the payment to the Seller shall be 80% of the Final Tranche The Parties shall appoint an independent accounting firm to be nominated by the Purchaser to calculate and provide a finalised report ( Report ) on the average audited PBT per annum achieved for the Target Brands Websites during the Performance Period. The Report must be completed within sixty (60) days after the expiry of the Performance Period. The Purchaser shall pay the Final Tranche, if any, within thirty (30) days of receipt of the Report by the Purchaser. 7.3 Conditions Precedent The sale and purchase of the Business Assets are subject to the following conditions precedent ( Conditions Precedent ) being fulfilled within the period of sixty (60) days commencing from the date of the SPA or such extended period as may be agreed between the Seller and the Purchaser ( Condition Period ); (c) (d) (e) (f) (g) the completion of due diligence on the Business Assets, Seller and Covenantors by the Purchaser and its advisors, authorised agents and representatives and the Purchaser being satisfied with the findings of such due diligence; the approval of the board of directors of the Purchaser for the purchase of the Business Assets upon the terms and conditions set out in the SPA; the approval of the shareholders of the Purchaser for the purchase of the Business Assets upon the terms and conditions set out in the SPA, if required; the approval of the board of directors of the Seller for the sale of the Business Assets upon the terms and conditions set out in the SPA; the approval of the shareholders of the Seller for the sale of the Business Assets upon the terms and conditions set out in the SPA; The execution of an undated employment agreement between Alistair Winston Robertson and the Purchaser; and the approval or waiver, if required, of any relevant party or authority. 7.4 Due Diligence Confirmation The Purchaser will conduct a due diligence audit on the Business Assets, Seller and Covenantors. The Purchaser s obligation to purchase the Business Assets will also be subject to the Purchaser and its advisors, authorised agents and representatives finalising a due diligence review and analysis of the Business Assets, Seller and Covenantors ( Purchaser s Due Diligence ) including, without limitation, by establishing: 5

6 that all material liabilities (actual or potential) of the Business Assets are as reflected in the Accounts; the legal and beneficial ownership of the Business Assets; and the results and findings of the Purchaser s Due Diligence confirm the aforesaid If upon completion of the Purchaser s Due Diligence within the Condition Period and the results and findings of such Purchaser s Due Diligence are not satisfactory, the Purchaser shall be entitled (but not obligated) at its discretion, by notice in writing to the Seller to: immediately terminate the SPA on the expiry of the Condition Period and to return or cause to return the Seller s documents to the Seller; or re-negotiate in good faith and amend the terms and conditions to the terms of the SPA. 7.5 Non-Fulfilment of the Conditions Precedent In the event any of the Conditions Precedent is not fulfilled by the expiration of the Condition Period, the Seller and the Purchaser may mutually agree in writing to an extended period ( Extended Condition Period ) to fulfil the Conditions Precedent. In the alternative, the Seller and the Purchaser may elect to waive one or more Conditions Precedent Subject to Section of this Announcement, if any of the Conditions Precedent is not fulfilled and not waived by the Seller or the Purchaser by the expiration of the Condition Period or the Extended Condition Period, as the case may be, the SPA will terminate and thereafter be of no effect except for surviving clauses of this SPA whereupon none of the Parties will have any further rights against the other nor will the Seller have the obligation to sell the Business Assets or will the Purchaser have the obligation to purchase the Business Assets save for the rights and obligations of the Parties pursuant to any antecedent breach of the SPA Notwithstanding the above, in the event any of the Conditions Precedent is not fulfilled by the Purchaser by the expiration of the Condition Period, the SPA will terminate and thereafter be of no effect. 7.6 Agreement Becoming Unconditional The SPA will become unconditional upon the satisfaction or fulfilment of all Conditions Precedent, on or before the Condition Period or Extended Condition Period, as the case may be. Any Condition Precedent agreed to be waived by the Seller and the Purchaser, as the case may be, will be deemed as a satisfaction or fulfilment of that Condition Precedent. 7.7 Completion The Completion shall take place at noon (Malaysian time) or at such other time as the Parties may agree on the Completion Date The Completion will be deemed to have taken place on the Completion Date upon the Parties compliance with their respective obligations on the Completion Date and subject to payment of the First Tranche in accordance with Section of this Announcement. 7.8 Indemnity Each of the Seller and the Covenantors agrees to indemnify the Purchaser and hold the Purchaser harmless from and against any damages, deficiencies, losses, costs, liabilities and expenses and in particular from and against any depletion or diminution 6

7 of the Business Assets, resulting directly or indirectly, from or arising out of any breach of the undertakings, representations and warranties given by the Seller and Covenantors. 7.9 Termination of SPA If, before or on the Completion Date: (c) (d) there is a breach of any material terms or conditions of the SPA or a failure to perform or observe any material undertaking, obligation or agreement in the SPA by the Seller or the Covenantors; a petition for winding up is presented against the Seller or an order is made or a member s resolution is passed for the winding up of the Seller; any of the Covenantors are declared bankrupt or subject to any proceedings, whether current, threatened and/or pending, against them under any bankruptcy laws, whether within or outside Malaysia; or an administrator, a receiver and/or manager is appointed by the court or pursuant to any statute or regulation or by any creditor pursuant to a debenture or any other security document in favour of such creditor over the Business Assets or any part of it; 7.10 Governing Law then provided where the default is, in the opinion of the Purchaser capable of being remedied, not remedied within fourteen (14) days from the date the Purchaser gives written notice to the Seller and the Covenantors and to the satisfaction of the Purchaser, the Purchaser may terminate the SPA with immediate effect by giving written notice to the Seller and the Covenantors before or on the Completion Date and after service of such notice, the Seller and the Purchaser shall not have any further obligation to buy or sell the Business Assets. Such right of termination by the Purchaser will not in any way limit the Purchaser from pursuing its other rights and remedies at law as may be applicable. The SPA is governed by the laws of Malaysia. 8. RATIONALE FOR THE PROPOSED ACQUISITION The Proposed Acquisition is the first step by Rev Asia Group into the online Chinese audience segment presenting the Group with an opportunity to dominate the Chinese social news and content vertical. It also adds to a growing audience that Rev Asia Group already has, and takes Rev Asia Group a step closer in its quest of becoming Malaysia s No. 1 Digital Media Group. 9. PROSPECT AND FUTURE PLANS OF THE BUSINESS ASSETS Both the websites, i.e. and are one of Malaysia s news and information resource for trending and social news in the lifestyle industry and entertainment related content, focusing particularly on social news in Malaysia, Hong Kong, China and Hollywood. Viralcham Website and Rojaklah Website are consistently placed in the Top 20 websites visited by Malaysian Internet users according to Internet analytics provider, ComScore. Google Analytics reports total of approximately 18.4 million pageviews and 3.6 million Unique Visitors for the websites for the month of June 2016 (source: Google Analytics); capturing a massive 53% of the total Chinese population in Malaysia. Malaysia has a total Chinese population of approximately 6.8 million people (Malaysia s population as of July 2014 is 30,073,353 (source: 7

8 Both websites have a SME content offering within the Klang Valley; and with the injection of Rev Asia Group s operational structure, these offerings will be expanded to key market centres in Malaysia. In addition, a full suite of sponsored content offerings will also be developed for multinational corporate brands which the sales team of Seller previously did not have access to. The management of Rev Asia Group is of the view that with the Group s existing extensive social media distribution platform in 8Share, the introduction of sponsored content will put Rev Asia Group in the driving seat to capture and enlarge a significant piece of Malaysia s rapidly growing content marketing spend. (Source: Management of Rev Asia Group) 10. RISK FACTORS 10.1 Financial risks As the Proposed Acquisition is expected to be funded by internally generated funds of Rev Asia Group and bank borrowings or interest-bearing advances from a director of the Company, this would expose Rev Asia Group to the cost of financing and the continuing willingness of banks to provide borrowings or the director to provide interest-bearing advances. In the event where funding is available in unfavourable terms, it may pose a challenge for Rev Asia Group to meet its capital needs and take advantage of available business opportunities. This could have a material and adverse effect on Rev Asia Group s business, financial condition and results of operations. However, if funds are not secured for the Proposed Acquisition within the permitted time period, resulting in Rev Asia Group not being able to pay the Purchase Consideration within the time specified in the SPA, this would amount to a breach of term of the SPA by the Purchaser. In such instance, the Seller may be entitled to remedies and damages for breach of contract as may be awarded by a court. Rev Asia Group will use its best endeavour to source for funds based on favourable terms and conditions to settle the Purchase Consideration in accordance with the SPA. It would also ensure that the interest rates of bank borrowings or the director s interest-bearing advances would be favourable to Rev Asia Group such that the best rates are obtained from financial institutions or the director Acquisition risks The Board believes that Rev Asia Group will derive benefits from the Proposed Acquisition. However, there is no assurance that the anticipated benefits of the Proposed Acquisition will be realised or that the Company will be able to generate sufficient revenues from the Proposed Acquisition to offset the associated acquisition costs incurred. The Proposed Acquisition may place significant strain on our management, employees and resources and may not perform in line with expectations to justify the expenses of the acquisition. Furthermore, it may not be able to achieve the desired level of synergy benefits on integration of new businesses and/or the cost of achieving those benefits may exceed the expected cost. However, the Company has mitigated this risk by adopting prudent investment strategies by conducting operation and business due diligence prior to making its investment decisions. Further, the Board believes that their experience in the online media industry should allow them to integrate the Proposed Acquisition with their existing businesses without great difficulties Information and Communication Technology ( ICT ) industry risks The performance of the Business Assets is subject to risks inherent in the ICT industry. These may include, amongst others, entry of new players, shortage of skilled workforce, increase in labour cost, cost of operations, changes in government policies affecting the industry, changes in general economic, business, credit and interest rate condition and introduction of new technology and new products. Whilst Rev Asia Group seeks to mitigate these risks by employing skilled technical personnel, implementing prudent business strategies and carrying out continuous 8

9 review of its operations, there is no assurance that any change to the above factors, which are beyond Rev Asia Group s control, will not materially affect its business Competition risks The Business Assets may face intense competition from existing competitors and new entrants into the market in the future, both locally and internationally which offer similar products and services. In view of the competitive market environment, the Rev Asia Group intends to enhance its competitive edge by continually developing new measures to counter competition which will include, amongst others, products differentiation and innovation in products and services. However, there can be no assurance that the Rev Asia Group would be able to sustain its competitiveness against current and future competitors Rapid technology change The performance of Business Assets will be adversely affected if it fails to respond effectively and on a timely basis to rapid technology change. The internet industry is characterised by rapidly changing technology, evolving industry standards, frequent new product and service announcements, introductions and enhancements, and changing consumer demands. The future success will depend on the ongoing ability of the Business Assets to improve the performance, features, reliability and creativity of the Business Assets advertising products in response to the competitors product, feature and service offerings and the evolving demands of the marketplace. New services, products and technologies may be superior to the services and technologies that are being used and may render the services and technologies obsolete or require substantial expenditures to modify or adapt the services offered. As such, Rev Asia Group is dependent on its ability to keep pace with technological changes to address the needs of the customers such as developing new and creative advertisement solutions to meet its customers demands and continuously enhancing existing technologies and applications as part of the Rev Asia Group s continuous improvement efforts. Nonetheless, no assurance can be given that Rev Asia Group can successfully implement the future plans of the Business Assets or that unanticipated expenses or problems that may not occur Dependency on SME The performance of the Business Assets will be dependent on the Purchaser s relationship with SME. In this respect, all revenue for the FPE 31 December 2015 and FPE 31 May 2016 are from the SME. If the Purchaser is unable to maintain its relationship with the SME, there may be a material impact on the Business Assets. The Board believes that subsequent to the Proposed Acquisition, Rev Asia Group s direct customers and/or advertising agencies from its existing businesses will have access to the Business Assets and hence this would mitigate this risk Interest rate risk The Rev Asia Group will fund the Purchase Consideration of up to RM5,000,000 for the Proposed Acquisition via internally generated funds and bank borrowings or interest-bearing advances from a director of the Company. As such, the Rev Asia Group may be exposed to fluctuation in interest rates which could affect the interest charges incurred on the bank borrowings and hence affect the Rev Asia Group s future financial performance. In order to mitigate such risks, Rev Asia Group has been and will continue to review the Company s debt portfolio and will take into consideration the Company s gearing level, interest cost as well as the Company s cash flows in achieving an optimal capital structure. 9

10 10.8 Completion risk The Proposed Acquisition is conditional upon fulfillment of the Conditions Precedent as disclosed in Section 7.3 of this Announcement. In the event that the said Conditions Precedent are not fulfilled within the stipulated time period, the Parties may either mutually agree to an extended period to fulfil the Conditions Precedent or elect to waive the Conditions Precedent. If any of the Conditions Precedent is not fulfilled and not waived by the expiration of the Condition Period or the Extended Condition Period, as the case may be, the SPA will terminate. There is no assurance that the Proposed Acquisition can be completed within the time period permitted under the SPA. The Parties shall endeavour to ensure that there is no delay in fulfilling all the Conditions Precedent as disclosed in Section 7.3 of this Announcement for the Proposed Acquisition and should there be any delay beyond the agreed time period, the Parties shall negotiate with each other to mutually extend the said period prior to its expiry. 11. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION The financial effects of the Proposed Acquisition are as follows: 11.1 Issued and paid-up share capital As the Proposed Acquisition will be wholly satisfied in cash, it will not have any effect on the issued and paid-up share capital of our Company Net assets ( NA ) and gearing The Proposed Acquisition is not expected to have any material effect on the NA for the financial year ending ("FYE ) 31 December The gearing ratio of the Rev Asia Group is expected to increase from 0.06 times (as at 31 December 2015) to 0.13 times after the Proposed Acquisition Earnings and earnings per share The Proposed Acquisition is not expected to have any material effect on the earnings of the Rev Asia Group for the FYE 31 December 2016 as the Proposed Acquisition is expected to be completed by the third quarter of the calendar year Barring unforeseen circumstances, the Proposed Acquisition is expected to contribute positively to the future earnings of the Rev Asia Group Dividends The Proposed Acquisition is not expected to have any immediate effect on the dividends to be declared (if any) by the Company. Any dividends to be declared and paid by Rev Asia in the future will depend on, amongst others, the profitability and cash flow position of the enlarged Rev Asia Group Substantial shareholders shareholdings The Proposed Acquisition has no material effect to the substantial shareholders shareholding. 12. HIGHEST PERCENTAGE RATIOS The highest percentage ratio applicable to the Proposed Acquisition under Rule 10.02(g) of the ACE Market Listing Requirement of Bursa Malaysia Securities Berhad is 9.7% based on the latest audited financial statements of Rev Asia for the FYE APPROVALS REQUIRED The Proposed Acquisition is not subject to the approval from the shareholders of Rev Asia or any relevant authorities. 10

11 14. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED None of the Directors and/or major shareholders of the Company and/or any persons connected with them have any interest, whether direct or indirect, in the Proposed Acquisition. 15. DIRECTORS STATEMENT The Board after having considered all aspects of the Proposed Acquisition, including its rationale, prospects, risk factors and financial effects as set out in Sections 8, 9, 10 and 11 respectively of this Announcement, is of the opinion that the Proposed Acquisition is in the best interest of Rev Asia and the terms and conditions of the SPA are fair and reasonable. 16. APPLICATION TO THE AUTHORITIES No approval from any other authorities is required. Therefore, no application is to be made to any authorities. 17. ESTIMATED TIMEFRAME TO COMPLETION Barring any unforeseen circumstances, the Board expects the Proposed Acquisition to be completed by the third quarter of the calendar year DOCUMENTS FOR INSPECTION The SPA dated 5 August 2016 is available for inspection during normal office hours at the registered office of Rev Asia located at Lot 6.05, Level 6, KPMG Tower, 8, First Avenue, Bandar Utama, Petaling Jaya, Selangor Darul Ehsan from Mondays to Fridays (except public holidays) for a period of three (3) months from date of this Announcement. This Announcement is dated 5 August