HUA YANG BERHAD ( HYB or the Company ) -Proposed acquisition of land by Prop Park Sdn Bhd 1. INTRODUCTION The Board of Directors of HYB wishes to announce that the wholly-owned subsidiary of the Company, Prop Park Sdn Bhd ( PPSB ) had today entered into a conditional sale and purchase agreement (SPA) with Amazing Borneo Sdn Bhd, a company incorporated in Malaysia with its registered office at No. 22-3 3 rd Floor, Pusat Niaga Metro Prima, Jalan Prima 2, Metro Prima Kepong, 52100 Kuala Lumpur.(the Vendor ) for the purpose of acquiring a piece of leasehold land at Sri Kembangan, more particularly described below, for a total cash consideration of RM56,911,050.00 ( Purchase Price ) (the Proposed Land Acquisition ). Further details of the Proposed Land Acquisition are set out in the following sections: 2. THE PROPOSED LAND ACQUISITION 2.1 Details of the Proposed Land Acquisition Title Location Size Description HSD 185485, PT 334 in Mukim Pekan Baru Sg. Besi, Daerah Petaling, Negeri Selangor Darul Ehsan ( the Land ). The Land is located within Klang Valley, just to the south of Kuala Lumpur in Seri Kembangan and accessible through two major highways (SILK highway and BESRAYA highway). The Land is within walking distance approximately 300m from Serdang KTM commuter station and approximately 120m to the Mines Shopping Fair via a tunnel. Opposite the Land is The Heritage Service Apartment. Approximately 3.73 acres The Land is generally flat in terrain and almost rectangular in shape. The Land is currently occupied by a night bazaar called Mines Downtown. The Land is surrounded by mature residential and commercial development, hotel and shopping mall. Proposed Development 2 blocks of serviced apartment and retail units
Tenure Leasehold expiring on 28 May 2102 Net book value based on latest audited financial statements of Vendor Information on Vendor s Directors and shareholders The Vendor has not provided any information on the net book value of the land The Directors of the Vendor are:- (i) Loke Kim Wan (ii) Lim Wee Hang The shareholders of the Vendor and their shareholding are:- No. of shares Wonderful Portfolio Sdn Bhd 2,911,000 (100%) Details of development The proposed development has an estimated Total Gross Development Value of RM285 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 Land. The development cost of the Land will be funded by internally generated funds and bank borrowings. 2.2 Salient terms of the SPA 2.2.1 Conditions Precedent The Vendors shall at its own cost and expenses to obtain the followings:- a) To obtain State Authority Consent to Transfer of the Land, and b) To obtain relevant letter(s) of discharge and release by the consultant with no claim whatsoever against the Purchaser and/or the Land. 2.2.2 Mode of Payment a) 10% of Purchase Price upon execution of SPA; b) Balance of Purchase price within 3 months from the date of unconditional date. 2.2.3 The Vendor shall sell the Land free of all encumbrances and shall do everything necessary to remove any caveat, charges, liens whatsoever, squatters, tenants, occupants, licencees, and structures with vacant possession.
2.2.4 Purchase price of the Land is subject to adjustment upon vendor confirmation of the final measurement by certified surveyor within one (1) month from the SPA date. Any differences shall be adjusted at the rate of RM350.00 per square foot has been acknowledged and agreed by the Vendor. 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 Land and also making comparisons with the market value of the matured properties surrounding the Land. 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 Land Acquisition. 3. RATIONALE OF THE PROPOSED LAND ACQUISITION The Proposed Land Acquisition is in line with the HYB Group s objective to expand our existing land bank in order to sustain our core business as a property developer as well as to enhance our future revenue and earnings. The Land is also located very near to our existing on-going integrated development at One South, Seri Kembangan, hence enhancing the Group s profile in that area as a noteable developer in the affordable homes segments. 4. EFFECTS OF THE PROPOSED LAND ACQUISITION 4.1 Share capital and substantial shareholders shareholdings The Proposed Land Acquisition will not have any effect on the issued and paid-up share capital and substantial shareholders shareholdings of the Company as the Proposed Land Acquisition does not involve any issuance of shares of HYB 4.2 Net assets per share and earnings per share The Proposed Land Acquisition is not expected to have any material effect in the net assets per share of HYB Group for the financial year ending 31 March 2014. The Proposed Land 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 Land Acquisition on the gearing cannot be ascertained at this juncture. 5. PROSPECT Given the prominent location of the Property in the middle of three matured towns namely Serdang, Kajang and Bangi and easy accessibility via major highways linking up the entire Klang Valley as well as public transport via KTM commuter stations where the demand for residential and commercial development in the surrounding area is expected to be positive in the immediate future. Furthermore, the Land is situated nearby notable landmarks such as Mines Shopping Fair, Palace of Golden Horses, South City Plaza, Jusco Balakong, University Putra Malaysia, Segi College, Australia International School and Columbia Asia Hospital Balakong. 6. RISK FACTORS HYB Group s core business is in the property sector. As such, the Proposed Land 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 Land 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 Land Acquisition to be completed by the third quarter of the financial year ending 31 March 2014.
9. HIGHEST PERCENTAGE RATIO APPLICABLE The highest percentage ratio applicable to the transaction is 21.39%. 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 Land Acquisition. 11. DIRECTORS RECOMMENDATION The Board, having considered all aspects of the Proposed Land Acquisition, is of the opinion that the Proposed Land Acquisition are in the best interest of the HYB Group. 12. DOCUMENTS FOR INSPECTION The SPA dated 17 June 2013 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 17 June 2013.