HUA YANG BERHAD ( HYB or the Company ) -Proposed acquisition of land by Agro-Mod Industries Sdn Bhd 1. INTRODUCTION The Board of Directors of HYB wishes to announce that the wholly-owned subsidiary of the Company, Agro-Mod Industries Sdn Bhd ( AMISB ) had today entered into conditional sale and purchase agreements (SPA) with B&F Trading Sdn Bhd, a company incorporated in Malaysia with its registered office at Lot 35384, Jalan Gopeng (8 KM), 31300 Ipoh, Perak (the Vendor ) for the purpose of acquiring 4 parcels of land, more particularly described below, for a total cash consideration of RM25,145,364.00 ( Purchase Price ) (the Proposed Acquisition ). Further details of the Proposed Acquisition are set out in the following sections: 2. THE PROPOSED ACQUISITION 2.1 Details of the Proposed Acquisition Title Location Size Description Proposed Development Tenure Net book value based on latest audited financial statements of Vendor Lot 2919, 29056, 29057 and 102133 all in Mukim Hulu Kinta, Daerah Kinta, Perak Darul Ridzuan ( the Property ). The Property is located 3.5km away from Ipoh town centre and accessible through Persiaran Pasir Puteh and Jalan Pasir Puteh. It located within the established area of Pasir Putih Baharu and Taman Sinfar. Approximately 7.2 acres The land is generally flat and earmarked as commercial zone. Currently a portion of the land was tenanted and used as food court centre, retail and car accessories shop. Development of 86 units of commercial shop lots Lot 2919, 29056 & 29057 Freehold Lot 102133 Leasehold, expiring on 2081 The Vendor has not provided any information on the net book value of the land
Information on Vendor s Directors and shareholders The Directors of the Vendor are:- (i) Chin Fook Nyaan @ Chin Fook Yen, (ii) Yap Booi Lek, and (iii) Yap Kean Lye The shareholders of the Vendor and their shareholding are:- No. of shares (i) Yap Kean Teck 324,000 (ii) Yap Kean Lye 324,000 (iii) Thow Nyuk Min 23,000 (iv) Yap Book Lek 1,629,000 Details of development The proposed development has an estimated Gross Development Value of RM84 million. However, it is currently too preliminary to ascertain the total development cost, the expected commencement date of the development and the expected profits to be derived from the development of the Property. The development cost of the Property will be funded by internally generated funds. 2.2 Salient terms of the SPAs 2.2.1 Mode of Payment a) 10% of Purchase Price upon execution of SPA; b) Balance of Purchase price within 3 months from the date of SPA. 2.2.2 The Vendor shall sell the Property free of all encumbrances and shall do everything necessary to remove any caveat that has been placed on the Property. 2.3 Basis of arriving at the Purchase Price The Purchase Price was arrived at based on a willing buyer willing seller basis after taking into consideration the development potential of the Property and also making comparisons with the market value of the matured properties surrounding the Property. No formal valuation was commissioned as the Board views that the market comparisons suffice for this purpose.
2.4 Source of funding and mode of satisfaction The Purchase Price will be funded through internally generated funds and/or bank borrowings. There would be no liabilities assumed by the HYB Group arising from the Proposed Acquisition. 3. RATIONALE OF THE PROPOSED ACQUISITION The Proposed Acquisition is in line with the HUAYANG Group s objective to expand it presence in Perak. This Proposed Acquisition will enable AMISB to replenish its landbank with more prime land in Ipoh town. The Group currently has an on-going township development at Bandar Universiti Seri Iskandar and Bercham, Ipoh. 4. EFFECTS OF THE PROPOSED ACQUISITION 4.1 Share capital and substantial shareholders shareholdings The Proposed Acquisition will not have any effect on the issued and paid-up share capital and substantial shareholders shareholdings of the Company as the Proposed Acquisition does not involve any issuance of shares of HYB 4.2 Net assets per share and earnings per share The Proposed Acquisition is not expected to have any material effect in the net assets per share of HYB Group. The Proposed Acquisition is expected to contribute positively to the future earnings of HYB Group. 4.3 Gearing As the Purchase Price is to be satisfied by internally generated funds and/or bank borrowings and the exact manner in which the Purchase Price will be satisfied has not been finalised at this juncture, hence, the effect of the Proposed Acquisition on the gearing cannot be ascertained at this juncture. Nonetheless, there would be no material effect to the gearing of the Group. 5. PROSPECT As HYB Group s core business is in property development and with an existing Branch operation in Perak for the established township development project known as Bandar Universiti Seri Iskandar BUSI and Bercham, Ipoh, the Proposed Acquisition will further enhance the Group s on-going operations and also add on new product ranges to complement the current offerings. Further, the
growth and development of Ipoh city is expected to have a positive effect on the Group s development there. 6. RISK FACTORS HYB Group s core business is in the property sector. As such, the Proposed Acquisition will not materially change the risks of the Company s business as the Group would still be exposed to the same business, operational, financial and investment risk inherent in the property sector. These risks are inherent risk due to timely commencement or completion of projects, obtaining required approvals, satisfactory performance of contractors and adverse economic events or recession. In addition, any material escalation of cost of cement and other building materials as well as increase in petrol prices may contribute to a higher overall development cost thereby impacting the profit margins of any development project. The Management shall endeavour to limit the abovementioned risks through, inter-alia, careful planning and identification of the type of developments, innovative pricing strategies, more prudent financial policy, a close supervision on any property development project and effective management. 7. APPROVALS REQUIRED The Proposed Acquisition is not subject to the approval of the shareholders of HYB. 8. ESTIMATED TIME FRAME FOR THE COMPLETION Barring any unforeseen circumstances, the Board of HYB expects the Proposed Acquisition to be completed by the third quarter of the financial year ending 31 March 2015. 9. HIGHEST PERCENTAGE RATIO APPLICABLE The highest percentage ratio applicable to the transaction is 6.50%. 10. INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND / OR PERSONS CONNECTED TO THEM None of the directors, major shareholders of HYB and/or persons connected to them has any interest, direct or indirect in the Proposed Acquisition.
11. DIRECTORS RECOMMENDATION The Board, having considered all aspects of the Proposed Acquisition, is of the opinion that the Proposed Acquisition is in the best interest of the HYB Group. 12. DOCUMENTS FOR INSPECTION The SPAs dated 25 August 2014 is available for inspection at HYB s registered office at 123A, Jalan Raja Permaisuri Bainun (Jalan Kampar), 30250 Ipoh, Perak Darul Ridzuan during normal office hours from Monday to Friday (except public holidays) for a period of three months. This announcement is dated 26 August 2014.