INDUSTRONICS BERHAD ("INDUSTRONICS" OR "THE COMPANY") PROPOSED DISPOSAL OF PROPERTY INTRODUCTION The Board of Directors of Industronics is pleased to announce that the Company has on 19 November 2014 entered into a Sale and Purchase Agreement ( SPA ) with UPTOWNACE (M) SDN. BHD. (Company No. 301897-P) ( the Purchaser ) to dispose a two (2) storey factory with office and guardhouse bearing postal address of No. 6, Jalan Perusahaan Utama, Taman Industri Selesa Jaya, 43300 Kajang, Selangor Darul Ehsan ( the Property ) to the Purchaser for a total consideration of Ringgit Malaysia Eight Million and One Hundred Thousand (RM8,100,000.00) only ( Proposed Disposal ). INFORMATION ON THE VENDOR The Vendor, Industronics Berhad (Company No. 23669-X), is a company incorporated under the Companies Act, 1965 on 18 July 1975, with its business address at No. 9, Jalan Tanming 3, Taman Tanming Jaya, 43300 Seri Kembangan, Selangor Darul Ehsan. The authorised share capital of Industronics is Ringgit Malaysia One Hundred Million (RM100,000,000) comprising Two Hundred Million (200,000,000) ordinary shares of RM0.50 each of which Ringgit Malaysia Fifty One Million Three Hundred Eighty One Thousand and Four Hundred (RM51,381,400) comprising One Hundred and Two Million Seven Hundred Sixty Two Thousand and Eight Hundred (102,762,800) ordinary shares of RM0.50 each has been issued and fully paid-up. Its principal activity include the design, manufacturing and installation of electronics and microprocessor controlled products, telecommunication system, audio video multimedia systems, intelligent transportation systems and information communication technology related system. INFORMATION ON THE PURCHASER The Purchaser, Uptownace (M) Sdn. Bhd. (Company No. 301897-P) is a company incorporated under the Companies Act, 1965 on 27 May 1994, with its principal place of business at No. 18, Jalan Cempaka 15, Taman Cempaka, 68000 Ampang, Selangor Darul Ehsan. The authorised share capital of the Purchaser is Ringgit Malaysia Twenty Five Million (RM25 million) comprising Twenty Five Million (RM25 million) ordinary shares of RM1.00 each of which 11.8 million has been issued and fully paid-up. Its principal activity is taxi operators, bus operators and other public transportation, trading in used motor vehicles and money lending. The directors and shareholders of the Purchaser are: Directors Name 1. Yong Kok Yee 2. Yong Kok Kim 3. Choo May Yoke 4. Lee Shook Mun @ Lee Yue Yee 5. Dennis De Witt 1
Share holders Name No. of Shares 1. Yong Kok Yee 456,542 2. Yong Kok Kim 90,306 3. Thavaratnam A/L S. Kumarasamy 456,542 4. New Supercab Corporation Sdn Bhd 10,069,610 5. Mohd Ariffin Bin Abdullah 100,000 6. Bakti Raya Sdn Bhd 30,000 7. Effiscope Travel & Tours (M) Sdn Bhd 150,000 8. Gerak Ganda Sdn Bhd 150,000 9. Masemawa Sdn Bhd 240,000 10. Silvertop Taxi Sdn Bhd 57,000 INFORMATION ON THE PROPERTY The particulars of the Property are as follows:- Postal address No. 6, Jalan Perusahaan Utama, Taman Industri Selesa Jaya, 43300 Seri Kembangan, Selangor Darul Ehsan Title Particulars H.S.(M) 16489, PT No. 25949, Mukim Kajang, Daerah Hulu Langat and Negeri Selangor Darul Ehsan Type of property Two (2) Storey Factory with Office and Guardhouse Total land area approximately 38,430 square feet / 3,570.147 square metres Total built-up area 32,600 square feet The existing used Vacant Age of the Property 103 years Land Tenure Freehold Name of independent Stocker Roberts and Gupta Sdn Bhd registered valuer Date & method of valuation Comparison method on the basis of open market value Date of valuation: 31 December 2013 Quantification of the Open Market Value market value Net book value based Revalued amount: RM9,200,000 on audited financial statements for the financial year ended 31 December 2013 Encumbrance Nil BASIS OF ARRIVING AT THE SALE CONSIDERATION The total sale consideration for the Property of RM8.1 million was arrived at on a willing buyer willing seller basis. No independent valuation was carried out on the Lands for the purpose of the Proposed Disposal. 2
SALIENT TERMS OF THE AGREEMENT (i) (ii) (iii) The Company is the registered proprietor of the Property. The Property is free from encumbrances and not charged to any bank or financial institution as security for any loan. The said Property is subject to the following express condition(s):- "Perusahaan / Perindustrian" (iv) (v) The Purchaser had on or before the date hereof seen and inspected the said Property and is satisfied with the state and condition thereof. The sale consideration of RM8.1 million shall be settled in the following manners:- Items Amount Period of Payment Earnest Money RM160,000/- Paid to the Vendor RPGT Retention Sum RM162,000/- Paid to the Purchaser s solicitors as stakeholder Balance Deposit RM488,000/- Upon execution of the SPA Balance Purchase Price RM7,290,000/- Within three (3) calendar months from the SPA s Date ( Completion Date ) with an extension of one (1) calendar month with an interest rate of eight per centum (8%) per annum calculated on a daily basis from the day next following the expiry of the Completion Date until the date of full payment LIABILITIES AND GUARANTEE TO BE ASSUMED There is no specific liability, contingent liability or guarantees to be assumed by the Company arising from the Proposed Disposal. UTILISATION OF PROCEEDS The Proposed Disposal is expected to result in a loss on disposal of approximately RM1.2 million after taking into consideration the audited net book value of the Property, real estate commission and professional fees. The proceeds from the Proposed Disposal will be utilised for the working capital such as payment for trade and other creditors, salaries and other operating expenses of the Industronics and its subsidiaries ( Group ) and the expected timeframe for full utilisation of the said proceeds is within six (6) months from the completion date of the Proposed Disposal. The Company has not determined the proportion of the sale consideration to be used for the working capital at this juncture. ORIGINAL COST OF INVESTMENT The Company acquired the Property on 25 May 1992 for RM864,067.50. 3
RATIONALE FOR THE PROPOSED DISPOSAL The Property are previously used by the subsidiary of the Company, namely TTE Electronics Sdn Bhd, which has become dormant since the end of 2013. As such, the Property is no longer required for the Group s usage. Further, The Proposed Disposal will enable the Company to unlock the value of the Property, thus enhancing the financial position of the company. The Proposed Disposal will also enable the Company to raise proceed for its working capital requirements without incurring interest cost as opposed to bank borrowings. CASH COMPANY OR PRACTICE NOTE ( PN ) 17 COMPANY The Proposed Disposal is not expected to result in Industronics becoming a cash company or PN17 company. ESTIMATED TIMEFRAME FOR COMPLETION Barring unforeseen circumstances, the Proposed Disposal is expected to be completed within three (3) calendar months from the SPA s Date. FINANCIAL EFFECTS AND CONDITION(S) OF THE PROPOSED DISPOSAL (i) Share Capital and Substantial Shareholders' Shareholdings The Proposed Disposal is not expected to have any effect on the share capital and substantial shareholders' shareholdings in Industronics as the Proposed Disposal does not involve any issuance of new shares of the Company. (ii) Earnings per share ("EPS") Upon completion of the Proposed Disposal, a one-off loss of approximately RM1.2 million will be reflected in the Company s consolidated financial statements for the financial year ending 31 December 2014. This will in turn translate into a decrease in EPS of RM0.01. (iii) Net Assets ("NA") and gearing The Proposed Disposal is expected to have the following effects on the NA per share and gearing of the Industronics Group: Audited as at 31 December 2013 After The Proposed Disposal # NA per share (sen) 0.62 0.60 Gearing (time) 0.04 0.04 Notes: # After taking into consideration the expected loss of approximately RM1.2 million arising from the Proposed Disposal. 4
RISK FACTORS Save for the approvals required prior to the completion, the Board of Directors of Industronics is not aware of any risk factors arising from the Proposed Disposal. However, in the event the necessary approvals are not obtained within the stipulated timeframe, it may result in the SPA being terminated. APPROVAL REQUIRED The Proposed Disposal does not require the approval of any government authority or Industronics shareholders. HIGHEST PERCENTAGE RATIO Based on Industronics Group s Audited Financial Statements for the financial year ended 31 December 2013, the highest percentage ratio pursuant to paragraph 10.02(g) of the Bursa Securities Main Market Listing Requirements that is applicable to the said Proposed Disposal is 14.8%. DIRECTORS AND MAJOR SHAREHOLDERS INTEREST To the best knowledge of the directors, none of the directors, major shareholders or persons connected to directors and major shareholders of the Company has any interest, direct or indirect, in the Proposed Disposal. STATEMENT BY THE BOARD OF DIRECTORS The Board, having considered all relevant aspects of the Proposed Disposal including but not limited to the rationale and the effects of the Proposed Disposal, is of the opinion that the Proposed Disposal is in the best interest of Industronics Group and its shareholders. DOCUMENTS AVAILABLE FOR INSPECTION The SPA can be inspected at the principle place of business of Industronics at No. 9, Jalan Taming 3, Taman Tanming Jaya, 43300 Seri Kembangan, Selangor Darul Ehsan during the normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement. This announcement is dated 20 November 2014. 5