Details of the Proposed Disposal are set out in the ensuing sections.

Transcription

1 SYF RESOURCES BERHAD ( SYF OR THE COMPANY ) PROPOSED DISPOSAL BY SYF OF THE ENTIRE ISSUED SHARE CAPITAL IN GREAT PLATFORM SDN BHD ( GREAT PLATFORM ), A WHOLLY-OWNED SUBSIDIARY OF SYF, COMPRISING 5,000,000 ORDINARY SHARES TO MIECO CHIPBOARD BERHAD ( MIECO ) FOR A CASH DISPOSAL CONSIDERATION OF RM7,063,341 AND THE SETTLEMENT BY MIECO OF THE SHAREHOLDER S ADVANCES OWING BY GREAT PLATFORM TO SYF OF RM51,528, INTRODUCTION M&A Securities Sdn Bhd ( M&A Securities ), on behalf of the Board of Directors of SYF ( Board ) wishes to announce that on 26 July 2017, SYF has entered into a conditional share sale agreement ( SSA ) with Mieco Chipboard Berhad ( Mieco or Purchaser ) for the proposed disposal by SYF of its entire equity interest in Great Platform Sdn Bhd ( Great Platform ) for RM7,063,341 ( Proposed Share Disposal ) together with the settlement by Mieco of the shareholder s advances owing by Great Platform to SYF amounting to RM51,528,809 ( Shareholder s Advances ), for a total cash consideration of RM58,592,150 ( Proposed Disposal ). In view of the interests of Dato Sri Ng Ah Chai in both Mieco and SYF, the Proposed Disposal is deemed a related party transaction pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Listing Requirements ). In this respect, the Board has appointed FHMH Corporate Advisory Sdn Bhd ( FHCA ) to act as the Independent Adviser to advise the non-interested directors and non-interested shareholders of SYF as to whether the Proposed Disposal is fair and reasonable so far as the non-interested directors and non-interested shareholders of SYF are concerned, and whether the Proposed Disposal is detrimental to the interest of the non-interested shareholders of SYF. Please refer to Section 8 of this announcement for further details on the interests of Dato Sri Ng Ah Chai. Details of the Proposed Disposal are set out in the ensuing sections. 2. DETAILS OF THE PROPOSED DISPOSAL Great Platform is a wholly-owned subsidiary of SYF. The Board intends to dispose 5,000,000 ordinary shares in Great Platform ( Sale Shares ), representing SYF s entire equity interest in Great Platform to Mieco for a cash consideration of RM7,063,341 ( Share Disposal Consideration ). In conjunction with the Proposed Share Disposal, Mieco will fully settle the Shareholder s Advances amounting to RM51,528,809 on behalf of Great Platform. The parties agree that the Purchaser/SYF is only obliged to complete the purchase/sale of the whole of the Sale Shares of Great Platform and not part thereof. Upon completion of the Proposed Disposal, Great Platform will cease to be a wholly-owned subsidiary of SYF.

2 2.1 Information on Great Platform Great Platform was incorporated in Malaysia on 19 December 2011 as a private limited company. Great Platform is principally involved in the manufacturing and trading of particle board and medium high-density fibre board. It currently operates from 2 production plants located at Gemas, Negeri Sembilan ( Gemas Plant ) and Simpang Pertang, Negeri Sembilan ( SP Plant ) with a combined capacity of 180,000 cubic metres per annum. Great Platform s principal market is Malaysia. On 24 October 2014, Great Platform obtained the pioneer status under the Promotions of Investment Act 1986 from the Malaysian Investment Development Authority, of which 70% of the statutory income from the manufacturing of particle board is exempted from tax for a period of 5 years commencing 1 August 2013 to 31 July On 15 May 2017, Great Platform had completed the acquisition of 3 parcels of freehold industrial land, measuring in aggregate approximately 8.68 hectares, together with buildings and structures erected at Batu 103, Jalan Klian Intan, Gerik, all of Tempat Intan Road, Mukim of Gerik, District of Hulu Perak, Perak for a purchase consideration of RM15.50 million ( Gerik Land & Building ). Subsequently, on 13 June 2017, Great Platform had also completed the acquisition of 7 parcels of freehold agriculture land measuring in aggregate approximately hectares together with factory/warehouse erected at Lots 436 and 437, Jalan Rompin, Kilang, Batu Kikir and Lot 488, Jalan Rompin, Bahau, all of Mukim of Rompin, District of Jempol, Negeri Sembilan for a purchase consideration of RM13.75 million ( Rompin Land & Building ). As at the date of this announcement, the share capital of Great Platform is RM5,000,000 comprising 5,000,000 issued Great Platform shares which have been fully paid-up. Currently, Great Platform does not have any subsidiary or associate company. The Directors of Great Platform are Dato Sri Ng Ah Chai and Dato Sri Chee Hong Leong, JP. The original cost and date of investment by SYF in Great Platform are as follows:- Date of investment No. of Great Plaform shares Investment amount (RM) ,999,998 1,999, ,000,000 3,000,000 Total 5,000,000 5,000,000 Please refer to Appendix I for the summary of financial information of Great Platform. 2.2 Key terms of the SSA (i) Disposal of the Sale Shares The Sale Shares are to be disposed free from all encumbrances and together with all rights and benefits that attach (or may in future attach) to them as at the completion of the sale and purchase for the Sale Shares ( Completion ).

3 (ii) Mode of settlement of the Share Disposal Consideration and Shareholder s Advances The disposal consideration of Great Platform comprises the Share Disposal Consideration and the settlement of the Shareholder s Advances. The Share Disposal Consideration and Shareholder s Advances are to be satisfied/settled in cash in the following manner:- Date of settlement RM 000 Deposit (being 10% of the Share Disposal Consideration) Upon execution of the SSA (1) 706 Balance payment On Completion Date (2) 6,357 Share Disposal Consideration 7,063 Settlement of the Shareholder s Advances On Completion Date 51,529 Total cash consideration 58,592 Notes:- (1) The Deposit will be held by the Purchaser s solicitor and will be released to SYF on the date the conditions precedent of the SSA is fulfilled. Any interest accrued shall be for SYF. (2) As defined in Section 2.2(iv) below. If the balance payment is not paid in full before the Completion Date, SYF will automatically grant the Purchaser an extension of 30 days provided that the Purchaser pays SYF an interest of 8% per annum, calculated on a daily basis, on the amount outstanding. (iii) Conditions precedent The Proposed Disposal is subject to the following conditions precedent having been obtained or fulfilled in accordance with the SSA within 6 months from the date of the SSA, with an automatic extension of 2 months or such other extended date mutually agreed by the parties ( Unconditional Date ):- (c) (d) (e) the conduct and completion of a legal due diligence by the Purchaser s solicitors on Great Platform, its business, operations and affairs to the satisfaction of the Purchaser; the shareholders of SYF having approved the disposal of the Sale Shares; the shareholders of Mieco having approved the acquisition of the Sale Shares; if applicable, SYF to procure that Great Platform obtains the relevant approval/consent under licenses granted to Great Platform by the relevant authorities for the changes in the shareholding and board of directors of Great Platform subsequent to the acquisition of the Sale Shares by the Purchaser from SYF; the written consents and approvals from the following financiers of SYF and/or Great Platform for the sale of the Sale Shares to Mieco (if necessary):-

4 (i) (ii) (iii) (iv) (v) Public Bank Berhad pursuant to the term loan facilities granted to Great Platform; OCBC Bank (Malaysia) Berhad pursuant to the term loan, bills and industrial hire purchase-i facilities granted to Great Platform; Affin Islamic Bank Berhad pursuant to the Ijarah term financing-i, cash line-i, bank guarantee-i and FX FER-i facilities granted to Great Platform; Al-Rajhi Banking & Investment Corporation (Malaysia) Berhad pursuant to the structured commodity financing-i facilities granted to Great Platform; and BMW Credit (M) Sdn Bhd pursuant to the hire purchase facility granted to Great Platform. (f) (g) the release (whether or not subject to conditions of closing or satisfaction of the other conditions precedent) of SYF from the securities, guarantees or indemnities given by or binding upon SYF in respect of any liability of Great Platform; and the procurement by SYF of the certificate of completion and compliance from the relevant authorities for the building and extension structures of the Gemas Plant identified as Block B and Block C (Extension). (iv) Completion On the completion date of the SSA, being 14 days from the Unconditional Date ( Completion Date ), the Purchaser shall:- (i) (ii) pay or cause its financier to release the balance payment for the Sale Shares to SYF in accordance with the terms of the SSA; and on behalf of Great Platform, pay or cause the Purchaser s financier to pay the Shareholder s Advances to SYF. Following the Completion:- (i) (ii) SYF is to provide to the Purchaser within 14 days from the Completion Date, the interim management accounts of Great Platform for the month immediately preceding the Completion Date duly verified and confirmed by an independent auditor to be appointed by the parties ( Interim Accounts ); the Purchaser is to within 7 days from the date of receipt of the Interim Accounts, inform SYF whether it is agreeable with the Interim Accounts. If it is not agreeable with the Interim Accounts, it shall notify SYF in writing and the parties shall enter into discussions to reach an amicable solution and to finalise an amended Interim Accounts ( Amended Interim Accounts ), within 7 days from the date of receipt of the said notice by SYF;

5 (iii) based on the Interim Accounts or the Amended Interim Accounts, as the case may be:- (aa) (ab) if there is a profit from 31 July 2016 (being the last accounts date) until the date of the Interim Accounts or the Amended Interim Accounts, the Purchaser is to within 7 days from the date the parties agree on the Interim Accounts or the Amended Interim Accounts (as the case may be), procure Great Platform to declare and pay SYF a dividend with an amount equivalent to the said profit provided always that such declaration shall leave the Company with sufficient working capital; or if there is a loss from 31 July 2016 (being the last accounts date) until the date of the Interim Accounts or the Amended Interim Accounts, SYF is to within 7 days from the date the parties agree on the Interim Accounts or the Amended Interim Accounts (as the case may be), pay the Purchaser an amount equivalent to the said loss as compensation. (v) SYF s covenants and undertakings SYF covenants and undertakes amongst others that:- (c) it shall not from the date of the SSA until the Completion Date, create, extend or grant or agree to create, extend or grant any encumbrances over the Sale Shares; it shall from the date of the SSA until the Completion Date, procure Great Platform to terminate or restructure to an arms-length commercial basis all existing related party transactions; it shall within 12 months from the Completion Date or such other extended period as may be mutually agreed by the parties, obtain the certificates of completion and compliance for the side extension to Block A; extension in between Blocks A and B; and the side and back terrace extensions to Block C of the Gemas Plant identified as the Excluded Structures and the open-sided workshops/sheds of the Gemas Plant identified as Block E and Block F and deliver the said certificates to the Purchaser upon issuance by the relevant authorities; Until the said certificates are obtained, SYF agrees, covenants and undertakes to fully indemnify and keep the Purchaser fully indemnified against all liabilities, claims, loss, costs, damages, fines, penalties, proceedings, demands, actions and expenses which may be brought, suffered or levied against the Purchaser resulting from the non-availability of the said certificates. SYF further covenants and undertakes that if the said certificates cannot be obtained from the relevant authorities upon the expiry of the 12 months period or such other further extended period as may be mutually agreed by the parties, SYF shall within 6 months upon receipt of a notice from the Purchaser, demolish the Excluded Structures, Block E and Block F at its sole cost and expense.

6 (vi) Default/Termination If any party:- (i) (ii) neglects or by willful defaults, fails or refuses or be unable to complete the transaction in accordance with the terms of the SSA; or materially breaches any of the provisions of the SSA; the non-defaulting party is entitled at its absolute discretion to elect either to: (aa) (ab) give notice for termination to the defaulting party and if the defaulting party fails to remedy the breach(es) within 14 business days of receipt of the notice, the non-defaulting party may without further reference to the defaulting party, terminate the SSA; or alternatively; complete the SSA, without any prejudice to the non-defaulting party s right or rights to claim against the defaulting party, any damages, losses, costs, expenses or outgoings whatsoever arising from or in connection with the events of clauses 2.2 (vi)(i) and/or 2.2 (vi)(ii) above. (c) (d) If the SSA is terminated according with clause 2.2 (vi)(aa) above, the defaulting party shall, within 14 business days from the date after the expiration of the notice for termination, pay the non-defaulting party all the professional fees, disbursements and expenses incurred and paid or payable by the nondefaulting party in connection with the SSA. In the event the defaulting party fails to pay any of the aforesaid monies within the said 14 business days period, then the defaulting party shall be further liable to pay interest on any amount remaining unpaid at the end of the 14 business days period, interest at 8% per annum, calculating on a daily basis, from the end of the 14 business days period until the date of actual payment of the outstanding amount. If SYF is the defaulting party, SYF is to refund to the Purchaser the Deposit received free from interest and SYF is to pay the Purchaser the amount equivalent to the Deposit as agreed liquidated damages. If the Purchaser is the defaulting party, the Deposit paid by the Purchaser to SYF with any accrued interest shall be forfeited by SYF as agreed liquidated damages. 2.3 Basis and justification on arriving at the Share Disposal Consideration The Board arrived at the Share Disposal Consideration on a willing-buyer willing-seller basis after taking into account the following:- (i) the adjusted net assets ( NA ) of Great Platform of RM7.06 million based on its audited financial statements as at 31 July 2016, as well as taking into account the fair market valuation of the land and building (together with the plant and machineries contained within) for the Gemas Plant and SP Plant, as appraised by Raine & Horne International Zaki & Partners Sdn Bhd ( Raine & Horne ) on 20 June 2017;

7 The computation of the adjusted NA is as follows:- RM 000 Audited NA of Great Platform as at 31 July ,934 Add: Net valuation surplus for the Gemas Plant and SP Plant 1,485 Less: Deferred tax (356) Adjusted NA of Great Platform 7,063 Notes:- The acquisitions of the Gerik Land & Building and Rompin Land & Building were completed recently on 15 May 2017 and 13 June 2017, respectively, which acquisition value equates its market value and as such, these properties were not revalued. The net surplus arising from the revaluation is computed as follows:- Carrying value Fair market value Surplus/(deficit) RM 000 RM 000 RM 000 Gemas Plant - Land 5,079 5,000 (c) (79) - Buildings 10,611 11,200 (c) Plant & machinery 13,268 14,875 (d) 1,607 28,958 31,075 2,117 SP Plant - Land 2,080 2,200 (c) Buildings 6,708 10,300 (c) 3,592 - Plant & machinery 25,594 21,250 (d) (4,344) 34,382 33,750 (632) 63,340 64,825 1,485 (c) The market valuation was arrived based on the cost method of valuation which entails determining the value of the land and building separately with the value of the land as an improved site is added to the depreciated replacement cost of buildings and other improvements to arrive at the market value. The value of the land is determined by the comparison method which entails analysing recent transactions of vacant industrial land in the locality for comparison purposes and adjustments made for location, tenure, time, land area and improvements to the land. The value of the building is determined by the depreciated replacement cost method where the buildings are taken as equal the cost of replacing the buildings with similar construction and finishes and depreciating for its age and condition. The land and building values are then summated to arrive at the market value of the subject property. (d) The market valuation was arrived based on the cost method of valuation which entails determining the value of the plant and machinery assets by the depreciated replacement cost method where the plant and machinery assets are taken as equal the cost of replacing them new with similar capacity and specifications and depreciating for its age, economic functionality and wear and tear.

8 2.3.1 Basis and justification for the total disposal consideration The Board arrived at the total disposal consideration on a willing-buyer willing-seller basis after taking into account the following:- (i) (ii) the aggregate of the Share Disposal Consideration and the Shareholder s Advances; the audited profit after tax ( PAT ) of Great Platform for the financial year ended ( FYE ) 31 July 2016 of approximately RM3.00 million, which translates to an implied price-to-earnings ( P/E ) multiple of times; (iii) the annualised unaudited PAT of Great Platform for the financial year ending ( FYE ) 31 July 2017 of RM5.46 million, based on the latest management accounts of Great Platform for the 9-month financial period ended 30 April 2017, which translates to an implied forward P/E multiple of times; (iv) (v) the total disposal consideration is in line with internal assessment of the management based on common methodologies such as P/E, price-to-book and enterprise value over earnings before interest, tax, depreciation and amortisation multiples of public listed companies with principal activities which are considered broadly comparable to the business of Great Platform; and the rationale and benefit for the Proposed Disposal as set out in Section 3 of this announcement. 2.4 Information on the Gemas Plant The Gemas Plant is located at Batu 4, Gemas-Tampin main road, Gemas, Negeri Sembilan, approximately 6.5 kilometres west of Gemas town centre, 21 kilometres north-east from Pekan Gemencheh, 33.8 kilometres south-east from Bahau town centre and 47.7 kilometres north-east from Tampin town centre. The Gemas Plant is accessible from the Gemas town centre via the Gemas-Tampin main road. Properties in the immediate vicinity of the Gemas Plant comprise sawmills and individually designed detached factories which include the premises of Heveaboard Berhad, Perkayuan Bersatu Jaya Sdn Bhd, Sembilan Electric Sawmills Company Sdn Bhd, Mitmas Holdings Sdn Bhd, Syarikat Kilang Papan Gemas and Lee Wah Sawmill Sdn Bhd. Housing/commercial schemes located in the vicinity include Bandar Baru Gemas (on-going development), Taman Sentosa, Taman Gemas Jaya, Taman Damai, Taman Desa Permai, Kampung Sri Gemas, Taman Pinggiran Sg Kelamah, Taman Molek, Taman Moris, Gemas Heights, Gemas Town, Taman Gemas Indah, Taman Sungai Gemas, Gemas Baharu and Kampung Tiong. The site for the Gemas Plant is an almost trapezoidal shaped detached industrial lot having a final surveyed land area of approximately 51,750 square metres. Generally, the site is flat in terrain and lies about the same level as the frontage metalled road, the Jalan Tampin main road. PT 1150 has been amalgamated from Lot Nos , and PT 1672 (formerly known as Lot Nos. 1778, 1779 and 1777), all in the Mukim of Gemas, District of Tampin, Negeri Sembilan. Erected upon the land are 4 units of single storey detached factories identified as Blocks A, B, C and D and 2 units of workshop/shed identified as Blocks E and F, together with a double storey office/canteen, boiler house and guard house.

9 Please refer to Appendix II for further details of the Gemas Plant. 2.5 Information on the SP Plant The SP Plant is located along an unnamed metalled road within an industrial area known as Kawasan Perindustrian Simpang Pertang, Negeri Sembilan. Kawasan Perindustrian Simpang Pertang is located approximately 1.0 kilometre north-west from Pekan Simpang Pertang and 26 kilometres east from the Kuala Kelawang town centre. The SP Plant is accessible from the Kuala Kelawang town centre via the Kuala Kelawang-Simpang Pertang main road for a distance of about 25.6 kilometres and finally turning left onto an unnamed metalled road for about for 400 metres. Properties in the immediate vicinity of the SP Plant comprise small holder s oil palm and rubber plantations, orchard plantations and vacant industrial lots. Kawasan Perindustrian Simpang Pertang is an industrial scheme which comprise mainly of detached factories of various sizes and designs as well as vacant parcels of industrial lands which include the premises of Simpang Pertang Timber Trading, Adventure Knights Sdn Bhd and Seng Yip Furniture Sdn Bhd. Housing/commercial schemes located in the vicinity include Pekan Pertang, Taman Sri Desa, Taman Simpang Jaya, Taman Sri Perdana, Taman Seri Pertang and Rumah Rakyat Simpang Pertang. The site is an irregular shaped detached industrial lot having a nett land area of approximately 25,761 square metres. Generally, the site is flat in terrain and lies about the same level as the frontage, the Kuala Kelawang-Simpang Pertang main road. Erected upon the land is a single storey factory, a single storey warehouse with an annexed single storey office identified as Block A, a single storey warehouse identified as Block B and 3 units of single storey open-sided factories identified as Sheds A, B and C, together with a loading area, toilets, surau and an electrical sub-station. Please refer to Appendix III for further details of the SP Plant. 2.6 Assumption of liabilities Save for the Shareholder s Advances and the obligations and liabilities arising from or in connection with the SSA pursuant to the Proposed Disposal, there are no other liabilities, contingent liabilities and/or guarantees to be assumed by Mieco. 2.7 Information on Mieco Mieco was incorporated in Malaysia on 26 September 1972 as a private limited company under the name of Mieco Industries Sdn Bhd. On 7 July 1973, it changed its name to Mieco Chipboard Company Sdn Bhd. Subsequently on 7 September 1991, it converted into a public limited company under the name of Mieco Chipboard Company Berhad. On 6 January 1992, Mieco assumed its present name and was listed on the Main Board of the Kuala Lumpur Stock Exchange (now known as the Main Market of Bursa Securities) on 26 May The principal activities of Mieco are that of investment holding and provision of management services whilst its subsidiaries are primarily involved in the manufacturing, selling and marketing of chipboards and related products. As at the date of this announcement, the share capital of Mieco is RM210,000,000 comprising 525,000,000 issued shares which have been fully paid-up.

10 The directors of Mieco and their shareholdings are as follows: Direct Indirect Name Designation No of shares % No of shares % Y.A.M. Tengku Puteri Seri Kemala Pahang Tengku Aishah Binti Sultan Haji Ahmad Shah Independent Non- Executive Chairman Dato Sri Ng Ah Chai Group Managing Director Cheam Tow Yong Independent Non- Executive Director Dato Abdul Rashid Bin Mat Amin Independent Non- Executive Director 298,045, , Kajendra A/L Pathmanathan Non-Independent Non-Executive Director Dato Sri Ng Ah Chai is also the major shareholder of Mieco. 2.8 Utilisation of proceeds The Proposed Disposal expects to raise gross proceeds of RM58.59 million to be used in the following manner:- RM 000 Notes Expected time frame (from the completion of the Proposed Disposal) Repayment of bank borrowings 40,000 Within 6 months To fund future acquisition of land bank 15,000 Within 18 months Working capital 3,092 (c) Within 3 months Estimated expenses for the Proposed Disposal 500 (d) Within 1 month Total estimated proceeds 58,592 Notes:- (c) The Group proposes to utilise RM40.00 million of the proceeds to repay part of SYF and its subsidiaries ( SYF Group or Group ) s existing bank borrowings amounting to approximately RM97.77 million as at 30 April The proposed repayment is expected to result in annual interest savings of approximately RM2.65 million based on average interest rate of 6.08% per annum; The Group proposes to utilise RM15.00 million for the acquisition of land bank or joint venture of future projects relating to its property development segment. The relevant required information will be announced on Bursa Securities as and when they are identified and where the relevant agreements are entered into. At this juncture, the Board has not identified any new joint ventures or land to be acquired. However, the proposed allocation of up to RM15.00 million is intended to serve as a standby funding for the Group to embark on future property development projects; Working capital requirements comprising primarily of payments for trade payables;

11 (d) The estimated expenses consist of fees payable to the relevant authorities, advisory, valuation fees and other miscellaneous expenses. If the actual expense incurred pursuant to the Proposed Disposal is higher than the amount budgeted, the deficit will be funded out of the portion allocated for working capital. Conversely, if the actual expense is lower than the amount budgeted, the excess will be utilised for working capital. Until the proceeds raised from the Proposed Disposal are fully used, the Company will place these proceeds (including accrued interest, if any) in interest-bearing deposit accounts with licensed financial institutions or in short-term money market instruments. The interest from the deposits with financial institutions or any gains from the short-term money market instruments will be used as additional working capital for the Group. 3. RATIONALE AND BENEFIT FOR THE PROPOSED DISPOSAL The SYF Group is in the business of manufacturing furniture and furniture parts; and property development. The Group also processes rubberwood and timber which are used as materials for its manufacture of furniture and furniture parts. The particle board and medium-density fibre board (collectively, Boards ) business through Great Platform was started to complement the Group as a materials supplier. Particle boards and medium-density fibre boards are reconstituted wood panel derived from rubberwood residues and waste-timber products (e.g. wood chips, wood fibres, sawmill shavings or saw dust). The by-products of the Group s sawmills and timber extraction activities is used as feed for the manufacture of the Boards, enhancing the utilisation of raw materials from rubberwood processing and timber extraction activities. The Boards business was commenced by the Group with expectation that it would create longterm value and bring synergistic effect to its existing assets and operations. Although for the larger part of the FYE 31 July 2016, the Boards business has started to generate returns as the Gemas Plant is now operating at full capacity and the SP Plant is starting to increase production capacity, the Group s Boards plants are still facing teething technical issues, reporting a low current ratio of 0.22 times based on its latest audited financial statements as at 31 July Since commencing the Boards business in 2013, SYF has provided advances to Great Platform of RM51.53 million, whilst the Boards segment only contributed a modest PAT of RM3.00 million to the Group for the latest FYE 31 July The decision to sell Great Platform is part of SYF s strategic business rationalisation exercise. The Company is of the view that the Boards business requires a bigger platform, specialised skills and increased management focus than the SYF Group can provide it to grow effectively, and wishes to exit this business to focus its resources and capital for allocation to its other core businesses. The Board believes that Mieco, having established a foothold in the particle board business in Malaysia, is well placed over the medium to long term to maximise the potential value of Great Platform, as part of its broader particle board and melamine faced board offerings. The sale enables the Company to re-strategise its financial and capital resources and will assist the Group to improve its overall financial position and liquidity, allowing the Board to focus more on its efforts to weather the tough economic climate which is squeezing revenue and earnings. The proceeds from the Proposed Disposal will provide future cash flow for the Group s working capital purposes, reduce its borrowings and/or for partial payment to acquire land bank for expansion of its property development segment. In view of the foregoing, the Board (save for Dato Sri Ng Ah Chai, Dato Sri Chee Hong Leong, JP and Cheong Yee Kiong) is unanimously of the opinion that the Proposed Disposal is in the best interests of and not prejudicial to the Company and its shareholders.

12 4. RISK FACTORS Save as disclosed below, the Board believes that the Proposed Disposal will not result in a material change in the risk profile of the Group as:- the disposal of such a non-core asset is not expected to have a significant effect on the existing operations of the Company; and the Proposed Disposal will not have a significant adverse impact on the Group s earnings and working capital. Therefore, it is reasonable to expect that the Proposed Disposal would not change the nature of the Group s core activities or risk profile SYF and the Mieco may not be able to complete the transaction within the agreed time period The completion of the Proposed Disposal is conditional upon the conditions precedent under the SSA as set out in Section 2.2(iii) of this announcement, being obtained or fulfilled. There is no assurance that the Proposed Disposal can be completed within the time period permitted under the SSA. In the event that the conditions precedent are not obtained or fulfilled within the stipulated time period or in the event any approvals shall contain terms which are not acceptable to the parties to the SSA, the said parties may either mutually extend the stipulated period or terminate the SSA. Nevertheless, SYF and Mieco anticipate that this risk can be mitigated by proactively engaging with third parties to obtain all the necessary documents required for the completion of the Proposed Disposal within the timeframe stipulated in the SSA. However, should there be any delay beyond the agreed timeframe, the Board shall endeavour to negotiate to mutually extend the timeframe prior to its expiry. 5. EFFECTS OF THE PROPOSED DISPOSAL The effects of the Proposed Disposal on the issued share capital, NA, gearing level, earnings, substantial shareholders shareholdings, dividend policy and convertible securities of the Company are set out below:- 5.1 Issued share capital and substantial shareholders shareholding The Proposed Disposal will not have any effect on the issued share capital of SYF and the substantial shareholders shareholdings in SYF. 5.2 NA and gearing Based on the audited consolidated financial statements of SYF as at 31 July 2016, the pro forma effects of the Proposed Disposal on the consolidated NA and gearing of SYF are as follows:- (I) Audited as at 31 July 2016 RM 000 (II) After the Proposed Disposal RM 000 Share capital 153, ,014 Treasury shares (5) (5) Revaluation reserve 39,307 39,307

13 (I) Audited as at 31 July 2016 RM 000 (II) After the Proposed Disposal RM 000 Retained profit 88,273 87,773 (c) Equity attributable to owners of the parent 280, ,089 No. of shares ( 000) 619, ,229 NA per share (RM) Borrowings 123,436 47,217 Gearing ratio (times) Notes:- (c) The number of SYF Shares as at the date of this announcement, net of 10,000 treasury shares. After excluding the interest bearings borrowings of Great Platform of RM36.22 million as at 30 April 2017 and after proposed repayment of bank borrowings of RM40.00 million. After deducting estimated expenses for the corporate exercise amounting to approximately RM0.50 million charged to retained profit. 5.3 Earnings and EPS The Group is expected to realise a net gain of approximately RM1.13 million from the Proposed Share Disposal against the Group s NA as at 31 July 2016 of RM5.93 million, whilst at the Company level, SYF expects to realise a net gain of approximately RM2.06 million from the Proposed Share Disposal, against its cost of investment amounting to RM5.00 million as at 31 July Dividend The Proposed Disposal is not expected to affect the dividend policy, if any, of the Company as future dividend payable by the Company would depend on inter-alia, the future profitability and cashflow position of the SYF Group. 5.5 Convertible securities Other than the outstanding warrants 2014/2019 ( Warrants ), the Company does not have any other existing convertible securities as at the date of this announcement. The Proposed Disposal will not have any effect on the convertible securities in issue as the Proposed Disposal does not involve any issuance in SYF Shares. 6. OTHER INFORMATION REQUIRED UNDER THE LISTING REQUIREMENTS (i) (ii) The highest percentage ratio applicable to the Proposed Disposal under Paragraph 10.02(g) of the Listing Requirements is 20.88%. Based on the percentage ratio and as the Proposed Disposal is deemed a related party transaction pursuant to the Listing Requirements, the Proposed Disposal requires the approval of the shareholders of SYF. As at the date of this announcement, the Company does not have any other corporate exercises which have been announced but yet to be implemented.

14 7. APPROVALS REQUIRED The Proposed Disposal is subject to the approvals and/or consents being obtained from the following:- Shareholders of SYF at an extraordinary general meeting ( EGM ) to be convened; and Any other relevant authorities and/or parties, if required. The Proposed Disposal is not conditional upon any other corporate exercise/scheme undertaken or to be undertaken by SYF. 8. INTERESTS OF DIRECTORS AND MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED Save as disclosed below, none of the Directors and major shareholders of SYF, and persons connected with them has any interests, direct or indirect in the Proposed Disposal:- Dato Sri Ng Ah Chai is the Executive Chairman & Chief Executive Officer as well as the major shareholder of SYF. He is also a Director of Great Platform. In addition, Dato Sri Ng Ah Chai is also the Group Managing Director and major shareholder of Mieco. The Proposed Disposal is deemed a related party transaction pursuant to Paragraph of the Listing Requirements by virtue of Dato Sri Ng Ah Chai s common directorship and substantial shareholdings in Mieco and SYF. Accordingly, Dato Sri Ng Ah Chai has abstained and will continue to abstain from all deliberations and voting in relation to the Proposed Disposal at the relevant Board meetings. Dato Sri Ng Ah Chai will abstain from voting in respect of his direct and/or indirect shareholdings in SYF and has undertaken to ensure that persons connected to him will abstain from voting in respect of their direct and/or indirect shareholdings in SYF on the resolution pertaining to the Proposed Disposal to be tabled at the EGM to be convened. As at the date of this announcement, the direct and indirect shareholdings of Dato Sri Ng Ah Chai in SYF are set out below: Direct Indirect Name No. of Shares % No. of Shares % Dato Sri Ng Ah Chai 315,276, ,920, Notes:- Based on the issued share capital of 619,229,012 SYF Shares (after excluding 10,000 SYF Shares held as treasury shares). Disclosure made pursuant to Section 59(11)(c) of the Companies Act, 2016 on interest held by his spouse.

15 9. DIRECTORS STATEMENT After considering all aspects of the Proposed Disposal, including the rationale and benefit and basis and justification of arriving at the total disposal consideration, the Board (save for Dato Sri Ng Ah Chai, Dato Sri Chee Hong Leong, JP and Cheong Yee Kiong who have abstained from deliberating and voting in respect of the Proposed Disposal at the relevant Board meetings) is of the opinion that the Proposed Disposal is in the best interest of the SYF Group and its shareholders. Dato Sri Chee Hong Leong, JP is a substantial shareholder and Executive Director in SYF. As at the date of this announcement, Dato Sri Chee Hong Leong, JP also owns 22,965,750 ordinary shares in Mieco (or 4.37% equity interest in Mieco). Cheong Yee Kiong is the Executive Director in SYF and as at the date of this announcement, he owns 1,868,250 ordinary shares in Mieco (or 0.36% equity interest in Mieco). Although Dato Sri Chee Hong Leong, JP and Cheong Yee Kiong are not parties to the Proposed Disposal, in line with best practices of corporate governance, they have voluntarily abstained and will continue to abstain from deliberating and voting in respect of the Proposed Disposal at the relevant Board meetings. 10. STATEMENT BY AUDIT COMMITTEE The Audit Committee of SYF, having considered all aspects of the Proposed Disposal, including but not limited to the rationale and the effects, as well as having sought the advice of the Independent Adviser, is of the opinion that the Proposed Disposal is:- (i) (ii) (iii) (iv) in the best interest of the SYF Group; fair, reasonable and on normal commercial terms; the Proposed Disposal is at arm s length and on terms not more favourable to the related party than those generally available to the public; and not detrimental to the interest of the non-interested shareholders of SYF. In arriving at the above view, the Audit Committee of SYF had taken into consideration, among others, the following:- (i) (ii) (iii) (iv) the rationale and benefit for the Proposed Disposal; the basis and justification of arriving at the Disposal Consideration; the salient terms of the SSA; and the effects of the Proposed Disposal. 12. TOTAL AMOUNT OF RELATED PARTY TRANSACTIONS WITH THE SAME RELATED PARTY FOR THE PRECEDING 12 MONTHS There is no other transaction entered into between SYF and the related party, namely Dato Sri Ng Ah Chai, for the 12 months preceding the date of this announcement.

16 13. ADVISERS M&A Securities has been appointed as Adviser for the Proposed Disposal. In view of the interests of Dato Sri Ng Ah Chai in Mieco and SYF, the Proposed Disposal is deemed a related party transaction pursuant to Paragraph of the Listing Requirements. Accordingly, FHCA has been appointed as the Independent Adviser to advise the non-interested directors and non-interested shareholders of SYF on the Proposed Disposal in accordance with the Listing Requirements. 14. APPLICATIONS TO THE RELEVANT AUTHORITIES AND ESTIMATED TIMEFRAME FOR COMPLETION The Board expects the applications to the relevant authorities in respect of the Proposed Disposal to be submitted within 2 months from the date of this announcement. Barring any unforeseen circumstances, the Board expects the Proposed Disposal to complete by the 4th quarter of DOCUMENTS AVAILABLE FOR INSPECTION Copies of the SSA and valuation certificates for the Gemas Plant and SP Plant can be inspected at SYF s registered office at Suite 10.03, Level 10, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur during normal office hours from Monday to Friday (except public holidays) for a period of 3 months from the date of this announcement. This announcement is dated 26 July 2017.

17 APPENDIX I INFORMATION ON GREAT PLATFORM 1. HISTORICAL FINANCIAL INFORMATION OF GREAT PLATFORM The financial information of Great Platform based on its audited financial statements for the FYEs 31 July 2014, 31 July 2015 and 31 July 2016 are set out below:- Audited FYE 31 July RM RM RM Revenue 14,747,282 33,233,004 51,148,511 Gross profit ( GP ) (226,945) 4,295,669 7,163,450 Profit/(Loss) before taxation ( PBT )/( LBT ) (1,029,525) 702,307 2,992,004 Profit/(Loss) after taxation ( PAT )/( LAT ) (1,020,385) 667,876 2,999,433 Profit/(Loss) after taxation and minority (1,020,385) 667,876 2,999,433 interest ( PATAMI ) GP margin (%) (1.54) PBT/(LBT) margin (%) (6.92) Shareholders funds 2,249,211 2,917,087 5,934,800 NA per share Advances from holding company 29,603,810 35,841,898 43,922,306 Borrowings 7,683,927 21,712,556 35,164,565 Gearing ratio (times) Current ratio (times) Financial commentaries:- FYE 31 July 2014 Great Platform recorded revenue of RM14.75 million, a significant increase as compared to the preceding financial year s revenue of RM0.16 million. The higher revenue was mainly attributable to the completion of the testing phase for the Gemas Plant and the gradual increase in output for the year. In the preceding year, the Gemas Plant was being installed and testing was being carried out. As such, output volume from the testing phase was minimal, reflecting the little revenue recorded. For the FYE 31 July 2014, with the completion of the testing and the start-up, and teething technical and quality issues having been resolved, output and sales volume started increasing. Accordingly, Great Platform registered a lower LBT of RM1.03 million, an improvement by RM2.67 million as compared to the preceding year s LBT of RM3.70 million. For the FYE 31 July 2014, NA per share increased from RM0.13 per share to RM0.45 per share, mainly due to capital injection of RM3.00 million by SYF, resulting in the issuance of 3,000,000 new Great Platform Shares during the year. Advances from SYF, the holding company also increased by RM6.49 million to RM29.60 million as compared to RM23.11 million as at 31 July Borrowings stood at RM7.68 million, with gearing at 3.42 times. The advances and borrowings were incurred primarily for the purchase of property, plant and equipment. With the successful implementation of the first plant, the Group focused on the installation phase for the second production line which was targeted to commence production in mid-2015 at the SP Plant.

18 FYE 31 July 2015 For the FYE 31 July 2015, revenue increased by % to RM33.23 million. The higher revenue was mainly attributable to the Gemas Plant which almost reached full output capacity. In line with the improvement in revenue, GP margin increased from a gross loss of 1.54% in the preceding year to 12.93% for the FYE 31 July Despite the significant improvement in revenue, a PBT of only RM0.70 million was recorded as compared to the preceding year s LBT of RM1.03 million. The marginal improvement was due primarily to one-off non-recurring costs which included the RM1.00 million realised and unrealised foreign exchange losses arising from the import of the machinery from China and the absorption of start-up expenses of the SP Plant. Advances from SYF, the holding company further increased during the year by RM6.24 million to RM35.84 million as compared to RM29.60 million as at 31 July Borrowings further increased by RM14.03 million from RM7.68 million to RM21.71 million. The increases in advances and borrowings were in line with the increase in capital expenditure for property, plant and equipment. FYE 31 July 2016 For the FYE 31 July 2016, revenue increased 53.91% to RM51.15 million from RM33.23 million due to the increase in revenue derived from the Gemas Plant as it was operating at full capacity. In addition, the SP Plant, which was a medium density board plant (as opposed to the Gemas Plant which manufactures chipboard) was installed and testing was carried out. Output volume from the testing stage contributed approximately 25% of Great Platform s revenue for the year. GP margin further increased from 12.93% in the FYE 31 July 2015 to 14.00% in the FYE 31 July The marginal increase in GP margin was due to higher efficiency as the Gemas Plant is operating at full capacity. In line with the increased in revenue, Great Platform recorded an increase of % in PBT to RM3.00 million as compared to RM0.70 million in the preceding year. Advances from SYF, the holding company further increased during the year by RM8.15 million to RM43.92 million as compared to RM35.84 million as at 31 July Borrowings further increased by RM13.45 million from RM21.71 million to RM35.16 million. The increases in advances and borrowings were in line with the increase in capital expenditure for property, plant and equipment. Gearing however improved to 5.93 times as at 31 July 2016 as compared to 7.44 times as at 31 July 2015 due to lower accumulated losses reported during the year from RM4.19 million to RM1.16 million.

19 APPENDIX II INFORMATION ON THE GEMAS PLANT Title details : Lot No. PT 1150, held under Title No. HSD 17592, Bandar Gemas, District of Tampin, Negeri Sembilan Address : Lot 1778 and Lot 1779, Batu 4, Jalan Tampin, Gemas, Negeri Sembilan Registered proprietor : Great Platform Sdn Bhd Tenure : Freehold Land area : 51,750 square metres Description & existing use : Description: Industrial land erected with:- 4 units of single storey detached factories identified as Blocks A, B, C and D; 2 units of workshop/shed identified as Blocks E and F; and a double storey office/canteen, boiler house and guard house Existing use: Age of buildings : Between 6-18 years Total gross floor area : 21,975 square metres Category of land use : Perusahaan/Perindustrian The property is occupied by Great Platform for the manufacturing of particle board Express conditions : Tanah in hendaklah digunakan untuk perusahaan sahaja Restrictions-in-interest : Tanah yang dibermilik inti tidak boleh dipindahmilik, dipajak, digadai melainkan dengan kebenaran bertulis daripada Pihak Berkuasa Negeri Encumbrances : Charged to Public Bank Berhad Endorsement : Nil Net book value : Land and building : RM15,689,599 Plant & machinery : RM13,268,605 Fair market value : Land and building : RM16,200,000 Plant & machinery : RM14,875,000 Notes:- The subject property is identified as new Lot and has a final surveyed land area of 51,750 square metres. As at 31 July 2016 based on the latest audited financial statements of Great Platform.

20 APPENDIX III INFORMATION ON THE SP PLANT Title details : Lot No held under Title No. PN Pekan Simpang Pertang, District of Jelebu, Negeri Sembilan Address : Lot 7056, Kawasan Perindustrian Simpang Pertang, Simpang Pertang, Negeri Sembilan Registered proprietor : Great Platform Sdn Bhd Tenure : Leasehold interest for a term of 99 years expiring on 18 June 2094 with a remaining lease of 77 years Land area : 25,761 square metres Description & existing use : Description: Industrial land erected with:- a single storey factory; a single storey warehouse with an annexed single storey office identified as Block A; a single storey warehouse identified as Block B; and 3 units of single storey open-sided factories identified as Sheds A, B and C, together with a loading area, toilets, surau and an electrical substation Existing use: Age of buildings : 3 years Total gross floor area : 10,691 square metres Category of land use : Perusahaan/Perindustrian The property is occupied by Great Platform for the manufacturing of medium high-density fibre board Express conditions : Tanah in hendaklah digunakan untuk perusahaan sahaja Restrictions-in-interest : Tanah yang dibermilik inti tidak boleh dipindahmilik, dipajak, digadai melainkan dengan kebenaran bertulis daripada Pihak Berkuasa Negeri Encumbrances : Charged to OCBC Bank (Malaysia) Berhad Endorsement : Nil Net book value : Land and building : RM8,788,111 Plant & machinery : RM25,593,762 Current market value : Land and building : RM12,500,000 Plant & machinery : RM21,250,000 Notes:- Based on the nett land area size of 25,761 square metres after taking into consideration a portion of the land measuring 409 square metres that must be surrendered as reserve land for irrigation and drainage. As at 31 July 2016 based on the latest audited financial statements of Great Platform.