HUA YANG BERHAD ( HYB or the Company ) (1) Proposed acquisition of Company by Hua Yang Bhd (2) Proposed acquisition of Land by G Land Development Sdn Bhd 1. INTRODUCTION The Board of Directors of HYB wishes to announce that the Company ( HYB ) had today entered into a conditional Shares Sales Agreement (SSA) with Phuah Cheng Peng and Ng Kok Kheng to acquire its entire paid up share capital of G Land Development Sdn Bhd ( GLDSB ), a company incorporated in Malaysia with its registered office at G-15 Kompleks Sempilai Jaya, Jalan Sempilai, 13700 Seberang Jaya, Penang and its business address at No. 2473 & 2474, Jalan Kulim, 14000 Bukit Mertajam, Penang for a total cash consideration of RM16,552,338.51 (the Proposed Acquisition 1 ). Upon completion of Proposed Acquisition 1, wholly owned subsidiary of the Company, GLDSB shall entered into conditional Sale and Purchase Agreement (SPA) with GIM Standard Development Sdn Bhd ( Vendor or GIM ) a company incorporated in Malaysia with its registered office at G-15 Kompleks Sempilai Jaya, Jalan Sempilai, 13700 Seberang Jaya, Penang and its business address at No. 2473 & 2474, Jalan Kulim, 14000 Bukit Mertajam, Penang for the purpose of acquiring 6 parcel of freehold land more particularly described below, for a total cash consideration of RM25,000,000.00 ( Purchase Price ) (the Proposed Acquisition 2 ). Further details of the Proposed Acquisition 1 and 2 are set out in the following sections: 2. THE PROPOSED ACQUISITION 2.1 Details of the Proposed Acquisition Descriptions Proposed Acquisition 1 Proposed Acquisition 2 Title N/A Lot No. 904 held under Geran Mukim No. 269, Lot No. 915 held under Geran Mukim No. 110, Lot No. 916 held under Geran Mukim No. 270, Lot No. 1941 held under Geran Mukim No. 1110, Lot No. 5831 held under Geran Mukim No. 1487, Lot No. 10321 held under No. H.S.(M) 1604 (formerly known as part of Lot 901) all situated in Mukim 6, Daerah Seberang Perai Tengah, Negeri Pulau Pinang.
Descriptions Proposed Acquisition 1 Proposed Acquisition 2 Location N/A The Property is located 3.0km away from Penang Bridge and accessible through Federal Road (Jalan Baru). It located within the established area of Prai. Size N/A Approximately 8.59 acres, after subdivided net land area approximately 6.98 acres Description N/A The land is generally flat and earmark as commercial and residential with plot ratio of 4 and density of 60 units per acre respectively. Proposed Development N/A Development of 480 units of service apartment, 148 units of condominium and 16 units of 2 storey shop. Tenure N/A Freehold Net book value based on latest audited financial statements of Vendor Information on Vendor s Directors and shareholders N/A The Directors of the Vendor are:- (i) Phuah Cheng Peng (ii) Ng Kok Kheng The shareholders of the Vendor and their shareholding are:- No. of shares (i) Phuah Cheng Peng, 199,999 (ii) Ng Kok Kheng, 1 The net book value of the land is RM7,979,683.59. The Directors of the Vendor are:- (i) Khor Chong Hai (ii) Khor Chong Guan (iii) Ng Siew Hui The shareholders of the Vendor and their shareholding are:- No. of shares (i) Khor Chong Hai, 500,000 (ii) Khor Chong Guan, 350,000 (iii) Phuah Cheng Peng, 150,000
Descriptions Proposed Acquisition 1 Proposed Acquisition 2 Details of development N/A The proposed development has an estimated Gross Development Value of RM311.0 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 SSA and SPA 2.2.1 Condition Precedent The Vendor shall at its own cost and expenses to the issuance of subdivided block titles. 2.2.2 Mode of Payment a) 10% of Purchase Price upon execution of SSA and SPA; b) For SSA, balance of Purchase price within 21 days from the date of execution. c) For SPA, balance of Purchase price within 3 months from the date of unconditional date. 2.2.3 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 liabilities assumed of RM3,447,661.49 by HYB Group arising from the Proposed Acquisition 1. 3. RATIONALE OF THE PROPOSED ACQUISITION The Proposed Acquisition is in line with the HUAYANG Group s objective to expand into mainland Penang at the established area. 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 The land is situated in Prai, a strategic and well connected area of mainland Penang, where the demand for affordable residential and commercial development is expected to be remained positive and encouraging. The location is easily accessible by roads and within reach of Prai area. Furthermore, the location is surrounded by amenities such as hospital, schools, financial institutions, F&B restaurants and hypermarkets.
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, interalia, 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 fourth quarter of the financial year ending 31 March 2016. 9. HIGHEST PERCENTAGE RATIO APPLICABLE The highest percentage ratio applicable to the transaction is 9.66%. 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 are in the best interest of the HYB Group.
12. DOCUMENTS FOR INSPECTION The SPAs dated 4 December 2015 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 4 December 2015.