Upon completion of the Proposed Acquisition, N osairis will be a 64.0%-owned subsidiary company of SMRT.

Transcription

1 SMRT HOLDINGS BERHAD ( SMRT OR COMPANY) PROPOSED ACQUISITION OF 1,152,000 ORDINARY SHARES OF RM1.00 EACH IN N OSAIRIS TECHNOLOGY SOLUTIONS SDN BHD (COMPANY NO A) ( N OSAIRIS ) ( N OSAIRIS SHARES ) REPRESENTING 64.0% EQUITY INTEREST IN N OSAIRIS FOR A PURCHASE CONSIDERATION OF RM6.0 MILLION ( PROPOSED ACQUISITION ) 1. INTRODUCTION The Board of Directors of SMRT ( Board ) wishes to announce that the Company had on 5 February 2016 entered into a conditional Share Sale Agreement ( SSA ) with Priority Digit Sdn Bhd (Company No P) ( Vendor ) to acquire 1,152,000 N osairis Shares representing 64.0% of the issued and paid-up share capital in N osairis ( Sale Shares ) for a purchase consideration of RM6.0 million. Upon completion of the Proposed Acquisition, N osairis will be a 64.0%-owned subsidiary company of SMRT. 2. INFORMATION ON N OSAIRIS N osairis was incorporated in Malaysia under the Companies Act 1965 ( Companies Act ) on 23 December The authorised share capital of N osairis is RM5.0 million comprising 5,000,000 ordinary shares of RM1.00 each, of which 1,800,000 N osairis Shares have been issued and fully paid-up. N osairis is principally involved in the provision of information technology ( IT ) managed services, IT support services, IT consulting, IT risk assessment services and managed connectivity services focusing in the Internet of things ( IoT ) and machine-to-machine ( M2M ) industry. As at the date of this announcement, the shareholders and directors of N osairis are as follows:- Nationality / place of Incorporation No. of N osairis Shares Equity interest (%) Director and shareholder Stalin Thangaiah A/L Vijaya Kamaraj ( Stalin ) Malaysian 216, Navindra A/L Sivaratnam Malaysian 216, Balasubramaniam A/L Manikam Malaysian 216, Shareholder Priority Digit Sdn Bhd Malaysia 1,152, Director Haslina binti Mohd Nazir ( Haslina ) Malaysian - - Based on the unaudited consolidated financial statements for the financial year ended ( FYE ) 31 December 2015, the net profit and net asset of N osairis are approximately RM1,860,986 and RM3,447,419 respectively. Please refer to Appendix I for a summary of the financial information of N osairis. 1

2 (Source: Unaudited consolidated financial statements of N osairs for the FYE 31 December 2015 and statutory documents of N osairis) N osairis has only one (1) wholly-owned subsidiary, namely Teknologi Bumi Era Q Sdn Bhd (Company No T) ( Bumi EQT ). Bumi EQT was incorporated in Malaysia under the Companies Act on 28 July The authorised share capital of Bumi EQT is RM500,000 comprising 500,000 ordinary shares of RM1.00 each, of which 100,000 ordinary shares have been issued and fully paid-up. Bumi EQT is principally involved in the provision of IT solutions related to the communication industry. Stalin and Haslina are directors of Bumi EQT. 3. PROPOSED ACQUISITION 3.1 Details of the Proposed Acquisition SMRT proposes to acquire 1,152,000 N osairis Shares representing 64.0% of the issued and paid-up share capital in N osairis for a purchase consideration of RM6.0 million ( Purchase Consideration ). The Purchase Consideration shall be satisfied via the issuance of 25,210,100 ordinary shares of RM0.10 each in SMRT ( SMRT Shares ) ( SMRT Consideration Shares ), to be issued at the issue price of RM0.238 per SMRT Consideration Share ( Issue Price ). The SMRT Consideration Shares represents 9.96% of the issued and paid-up share capital of SMRT as at 4 February 2016, being the latest practicable date prior to this announcement ( LPD ). 3.2 Other salient terms of the SSA The salient terms of the SSA include, amongst others, the following:- (i) Purchase Consideration The purchase consideration for the Proposed Acquisition shall be RM6.0 million, which shall be satisfied via issuance of the SMRT Consideration Shares, subject to the provisions of the SSA, as follows:- (a) (b) allotment and issuance of such relevant number of SMRT Shares equivalent to the consideration of RM4.8 million to the Vendor; allotment and issuance of such relevant number of SMRT Shares equivalent to the consideration of RM1.2 million to the pledged securities account operated by the trustee duly appointed the Vendor and SMRT ( Trustee ), as security for the profit guarantee described below ( Security Shares ), (ii) Conditions precedent The Proposed Acquisition is conditional upon and subject to the following conditions precedent ( Conditions Precedent ) being fulfilled within 30 business days from the date of the SSA or such other period as may be mutually agreed in writing by SMRT and the Vendor ( Parties ) ( Approval Period ):- 2

3 (a) (b) all relevant or necessary consents and approvals, if any, being granted and not withdrawn or revoked by Bursa Malaysia Securities Berhad ( Bursa Securities ) and any other third parties (if applicable) (including without limitation, government bodies, stock exchange(s) and other relevant authorities having relevant jurisdiction) for the listing of and quotation for the SMRT Consideration Shares on the ACE Market of Bursa Securities and if such consents are obtained, subject to any condition(s) affecting any of the Parties, such condition(s) being fulfilled; and the results of the legal and financial due diligence inquiry of N osairis being satisfactory to SMRT in its sole and absolute discretion. SMRT shall as soon as possible undertake to procure fulfilment of the Conditions Precedent. The Vendor agrees and undertakes to use necessary endeavours to assist SMRT in procuring such consents and approvals. In the event the Conditions Precedent cannot be satisfied and fulfilled within the Approval Period or any extended period as may be mutually agreed between the Parties, unless otherwise agreed by the Parties in writing, the SSA shall be null and void and of no further effect whatsoever. Save for antecedent breach, the Parties shall not have any claims against each other in respect of the SSA. The SSA shall become unconditional on the date of which the last of the Condition Precedent is fulfilled ( Unconditional Date ). (iii) Profit guarantee Notwithstanding the completion of the SSA and in consideration of the terms and conditions thereunder, the Vendor irrevocably and unconditionally undertakes, covenants with and guarantees that N osairis shall attain and achieve an audited and consolidated profit after tax ( PAT ) of not less than RM1.5 million ( Profit Guarantee ) for the FYE 31 December 2016 ( Profit Guarantee Period ). For the purposes of securing such Profit Guarantee, the Vendor shall deposit the Security Shares (free of any encumbrances and moratorium) into the pledged securities account operated by the Trustee throughout the Profit Guarantee Period. The following shall ensue on the date of adoption of the audited and consolidated financial statements of N osairis for the FYE 31 December 2016 ( Adoption Date ):- (a) if the audited and consolidated profit after tax for the FYE 30 December 2016 is equivalent to or more than the Profit Guarantee, the Trustee shall release all security interest over the Security Shares to the Vendor; and (b) if there is a shortfall between the Profit Guarantee and the audited and consolidated PAT for the FYE 31 December 2016, then the Trustee shall hereby be authorised to sell all or part of the Security Shares (as the case may be) up to the amount equivalent to the shortfall. The proceeds of the sale shall be applied as follows:- (A) (B) firstly, payment of the costs arising from the sale of the Security Shares; secondly, all monies due to the Trustee; and 3

4 (C) thirdly, payment of the shortfall to SMRT, whereupon, the remaining Security Shares (if any) shall be released to the Vendor. If the proceeds of sale is insufficient to pay the shortfall, the Vendor shall be liable to pay SMRT such differential sum in cash. SMRT may at its sole and absolute discretion carry out a separate audit exercise for the purpose of determining the PAT for the FYE 31 December The Parties agree that SMRT shall bear the costs for appointing such external auditor for the purpose of the audit exercise. In such event that an external auditor is appointed, the certification of such external auditor shall be binding and exclusive on all parties and shall not be questioned on any grounds whatsoever, save and except for manifest error. Notwithstanding completion of the SSA, if the Vendor shall breach any of its obligations in relation to the Profit Guarantee, SMRT shall at its sole and absolute discretion have the rights to specific performance and/or damages in addition to any other remedies as may be available to it under the law and at equity. The Vendor further agrees to save harmless and keep SMRT fully indemnified against all costs, charges and expenses incurred or suffered by SMRT arising from such breach. (iv) Completion The Company shall as soon as practicable and in any event no later than three (3) business days following the Unconditional Date procure and cause the relevant number of SMRT Consideration Shares to be credited into the Vendor s, Trustee s or their nominees securities account in accordance with the rules and regulations of the Bursa Securities and Bursa Malaysia Depository Sdn Bhd. (v) Ranking of the SMRT Consideration Shares The SMRT Consideration Shares allotted and issued shall be fully paid-up, free from any encumbrances and ranked pari passu in all respects with, and carry all rights attaching to all existing SMRT Shares in issue. 3.3 Issuance of SMRT Consideration Shares The SMRT Consideration Shares will be issued in accordance with the general mandate pursuant to Section 132D of the Companies Act, obtained from the shareholders of SMRT in its annual general meeting convened on 17 June Basis of and justification for the Purchase Consideration The Purchase Consideration of RM6.0 million was arrived on a willing-buyer willingseller basis, after taking into consideration the following:- (a) (b) the historical track records of PAT RM1.2 million based on the audited consolidated financial statements of N osairis for the FYE 31 December 2014 and PAT RM1.8 million on unaudited consolidated financial statements of N osairis for the FYE 31 December 2015; the Vendor s Profit Guarantee for the FYE 31 December 2016, as set out in Section 3.2(iii) above; and (c) the favourable overview and outlook of the IT sector as set out in Section 6.2 below. 4

5 3.5 Basis of and justification for issue price of the SMRT Consideration Shares The SMRT Consideration Shares will be issued at the Issue Price each, which is approximately at a 1.08% discount to the five (5)-day volume weighted average price ( VWAP ) of SMRT Shares up to and including the LPD of RM A comparison of the Issue Price against the market prices of SMRT Shares is as follows:- Market price Premium / (discount) to the market price RM RM % Last transacted price on the LPD Five (5)-day VWAP up to and including the LPD One (1)-month VWAP up to and including the LPD Three (3)-month VWAP up to and including the LPD Six (6)-month VWAP up to and including the LPD (0.0273) (11.35) (0.0349) (14.51) (Source: Bloomberg) 3.6 Liabilities to be assumed SMRT will not assume any liabilities of N osairis, including any contingent liabilities and/or guarantees, pursuant to the Proposed Acquisition. The existing liabilities of N osairis shall remain in its books and will be settled by N osairis in its ordinary course of business. 3.7 Financial commitment The Company does not expect to incur any material financial commitments pursuant to the Proposed Acquisition. 3.8 Listing of and quotation for the SMRT Consideration Shares An application will be made to Bursa Securities for the listing of and quotation for the SMRT Consideration Shares on the ACE Market of Bursa Securities. 3.9 Information on the Vendor Priority Digit Sdn Bhd was incorporated in Malaysia under the Companies Act on 20 May The authorised share capital of the Vendor is RM100,000 comprising 100,000 ordinary shares of RM1.00 each, of which all have been issued and fully paid-up. The Vendor is an investment holding company. [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 5

6 As at the date of this announcement, the shareholders and directors of the Vendor are as follows:- Nationality / place of Incorporation No. of ordinary shares Equity interest (%) Director and shareholder Tan Sri Datuk Seri Dr Zulkurnain bin Awang Malaysian 50, Haslina binti Mohd Nazir Malaysian 50, RATIONALE FOR THE PROPOSED ACQUISITION The Proposed Acquisition represents a new business opportunity for SMRT and its subsidiaries ( SMRT Group ) to expand its business in the IT segment and hence provide an additional income stream for the SMRT Group. The Proposed Acquisition serves to complement SMRT's existing software development activities by leveraging on N osairis existing customer base, strength and technical expertise and vice versa, given that the principal customers of SMRT and N osairis are within similar business segment. The Purchase Consideration will be satisfied wholly via the SMRT Consideration Shares. After due consideration of the various avenues to satisfy the Purchase Consideration, the Board is of the view that satisfaction of the Purchase Consideration via issuance of the SMRT Consideration Shares is the most appropriate avenue as it will enable the Company flexibility to utilise its cash flows and financial resources for its existing business operations, to pursue other opportunities and not to incur additional interest cost if funded via bank borrowings. 5. RISK FACTORS 5.1 Political, economic and regulatory risk Similar to all business entities, adverse changes in political, economic and regulatory conditions in Malaysia could materially and unfavourably affect the financial and business prospects of N osairis. These risks include, amongst others, risks of war, changes in political state, changes in economic conditions, changes in interest rates and changes in governmental policies such as method of taxation, currency exchange rules and introduction of new regulations. The Board takes cognisance of this matter and will take effective measures to mitigate the aforementioned risks such as prudent financial management and ensuring relevancy of N osairis range of products / services to changing demands and conditions. However, there is no assurance that adverse political, economic and regulatory conditions will not materially affect the business activities of N osairis. 6

7 5.2 Industry risks N osairis principal businesses are subject to certain risks inherent in the IT industry, such as, but not limited to, government regulations, inflation, taxation and interest rates as well as changes in business conditions such as, but not limited to, deterioration in market conditions, increasing competition from industry players, constraints in labour supply, rising cost of labour and difficulties in obtaining approvals or licenses form the relevant authorities. In mitigating such risks, the Group will continue to review its business development strategies in order to adapt to the changes in economic policies and market conditions. 5.3 Dependence of key personnel The future success of N osairis will depend upon its ability to attract and retain its key personnel after completion of the Proposed Acquisition. Any loss of key personnel may have an unfavourable and material impact on the performance of N osairis as the continued success of the business is considerably dependent on the combined efforts of the key personnel and management team of N osairis. Therefore, every effort will be made to develop and retain junior and middle management for succession planning to ensure smooth transition should any changes occur. 5.4 Acquisition risks This Proposed Acquisition is expected to contribute positively to the SMRT Group based on the rationale and justifications set out in Section 4 and the prospects set out in Section 6 of this announcement. However, there is no assurance that the anticipated benefits of the Proposed Acquisition will be realised or that the Company will be able to generate sufficient income from the Proposed Acquisition to offset the associated acquisition costs incurred. Nevertheless, the Company will mitigate such risk by adopting prudent investment strategies prior to making its investment decisions and completing the Proposed Acquisition. 5.5 Non-completion risks The completion of the Proposed Acquisition is subject to the Condition Precedent, which is beyond the control of SMRT. There is no assurance that the Proposed Acquisition will be completed as contemplated but the Board will take reasonable steps that are within its control to ensure that the Condition Precedent is fulfilled within the Approval Period as set out in Section 3.2(ii) of this Announcement. 6. PROSPECTS 6.1 Overview and outlook of Malaysian economy The Malaysian economy expanded by 4.7% during the third quarter of 2015 (Q1 2015: 4.9%). Growth was supported by both domestic and export-oriented activities, despite a challenging external environment. On the supply side, all sectors posted positive growth. The services sector remained the key driver of growth, expanding by 4.4% (Q2 2015: 5%) supported mainly by wholesale and retail trade, information and communication as well as business services activities. [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 7

8 The Malaysian economy is expected to remain on its growth trajectory in the fourth quarter of 2015, underpinned by strong macroeconomic fundamentals, pro-growth fiscal and accommodative monetary policies. This is reflected in the Leading Index, which grew by an average of 0.95% from January to August Amid the uncertainties in the external environment, domestic demand will continue to be the main engine of growth supported by private sector activity. The economy continues to operate under conditions of full employment and inflation is expected to remain manageable. (Source: Quarterly Update on the Malaysian Economy 3 rd Quarter 2015, Ministry of Finance Malaysia) Private sector expenditure continued to be the key driver of growth (4.4%; Q2 2015: 5.7%), and contributed towards the expansion in domestic demand. While downside risks to growth remain, the Malaysian economy is expected to expand within the region of % in 2015 and 4 5% in As a result of structural adjustments that have been steadily undertaken over the years, the economy is now supported by diversified sources of growth. With the external sector performance expected to be modest, domestic demand will continue to be the main driver of growth, supported mainly by the private sector activity. (Source: Economic and Financial Development in Malaysia in the Third Quarter of 2015, BNM) 6.2 Overview and outlook of the IT sector and N osairis In the information and communication sub-sector, growth remained robust (9.5%; Q2 2015: 9.3%), underpinned by continued strong demand for data communication services. (Source: Economic and Financial Development in Malaysia in the Third Quarter of 2015, BNM) During the first half of 2015, growth in the information and communication subsector remained robust at 9.5% (January June 2014: 9.8%) led by strong demand for mobile internet, especially data and computer services. Growth was also supported by higher demand for GST software and sustained demand for communication services. The information and communication subsector is expected to increase by 9.6% (2015: 9.7%) on sustained demand for cellular and broadband services, on account of more affordable rates and promotions by industry players. Growth of the broadband segment is expected to remain buoyant supported by the Government s various measures to strengthen and upgrade the quality of broadband services across the country. These include the National Broadband Initiative (NBI) that addresses the provision of infrastructure and facilities through the implementation of High-Speed Broadband (HSBB) and Broadband to General Population (BBGP). The Government through the public-private partnership (PPP) initiative with Telekom Malaysia (TM) has implemented HSBB projects in the inner Klang Valley, Iskandar Malaysia and selected industrial areas. (Source: Economic Report 2015/2016, Ministry of Finance Malaysia) Out of all the initiatives under Universal Service Provision (USP), the well-known namely are 1Malaysia Internet Centre (PI1M), 1Malaysia Wireless Village (KTW1M) and Telecommunications Tower (Time 3), have been included as a Key Performance Indicator (KPI) under the Communications, Content and Infrastructure (CCI) sector under the country s Economic Transformation Programme (ETP). 8

9 Time 3 project is an initiative to expand the geographical cellular coverage across the country. It involves the construction of new telecommunication towers since A total of 1,000 telecommunication towers have been planned in rural and remote areas with a population density of 80 persons per square kilometer. Until end of 2014, a total of 949 towers have been built and are fully operational, providing 2G mobile services across the country. Of the total, 250 new towers were completed in Constructions of the towers are on-going and when completed, Time 3 is expected to improve the national cellular population coverage to 97%. (Source: Annual Report 2014, Universal Service Provision, Malaysian Communications and Multimedia Commission) The phrase the Internet of Things (also known as the Internet of Objects) refers to the networked interconnection of everyday objects. It is generally viewed as a selfconfiguring wireless network of sensors whose purpose would be to interconnect all things. Generally, Malaysia has an encouraging environment and a strong starting point to foster and spur IoT within the domestic market, proven by the following evidence:- (i) (ii) (iii) (iv) (v) Mobile penetration per 100 inhabitants in Malaysia is beyond 100 percent and clocked at percent in Q1 2014, and multi-handset ownership is observed; 65.8 percent of Malaysians are Internet users; Relatively active online behaviour where 59 percent of Malaysian Internet users download mobile apps compared to the Southeast Asian average at 67 percent; Annually, Malaysians spend an average of USD2,000 on online purchases; and Close to one in every two Malaysians are active in social networking and lead to 45 percent social penetration. Globally, the number of Internet-connected devices had surpassed the number of human beings in 2011, and by 2020, Internet connected devices are expected to number between 26 billion and 50 billion. In the case of IoT, people will not just be interacting with other people and things, but the things themselves will also interact with one another. With the increasing use of mobile devices and wider penetration of the Internet, Malaysia will become fertile ground for IoT implementation. It is forecasted that the initial IoT potential in Malaysia will register RM9.5 billion by 2020, which tops up values on the traditional ICT industry and leverages on existing economic initiatives such as the Economic Transformation Programme (ETP), Government Transformation Programme (GTP), Digital Malaysia (DM) and Digital Lifestyle Malaysia (DLM). Supported by continuous promotional campaigns and strengthened by market value appreciation, IoT in Malaysia is expected to experience exponential growth beyond 2020 and reach RM42.5 billion in IoT growth will outmanoeuvre the traditional ICT market by 2025 and subsequently reshape Internet usage behaviour and generate Internet growth in Malaysia. This is on the assumption that the IoT growth rate in the Asia Pacific region at 34.1 percent. Technology opportunities that can be created by IoT in Malaysia are concentrated in applications and services, and analytical related technologies, with forecast technology opportunities amounting to RM34 billion in 2025, compared to RM7.5 billion for Second to application and services, and analytics technologies is the revenue generated by device producers which are projected at RM4.3 billion. 9

10 Besides delivering financial impact to the nation, the potential of IoT can serve as a good platform for the research community to commercialise R&D outputs. As of 2012, there are 146 potential patents from Malaysia which can be licensed to investors to enhance the competitiveness of their IoT applications and services. Furthermore, the growth of IoT in the Malaysian market is projected to generate a total of 14,270 high-skilled employment opportunities by Entrepreneurs who create unique value on top of commodity hardware, connectivity and cloud services will reap profits in IoT. The demand for IoT technology will not come from a single killer application, but from thousands of unexpected new use cases by solution developers who pull intelligence from data which is fundamental in making IoT a big, profitable market. (Source: National Internet of Things (IoT) Strategic Roadmap, Ministry of Science, Technology and Innovation Malaysia and MIMOS Berhad) In conclusion, given the positive outlook of the IT sector and IoT, the overall prospect for N osairis is favourable. 7. FINANCIAL EFFECTS 7.1 Share capital The effects of the Proposed Acquisition on the issued and paid-up share capital of SMRT are set out below:- No. of SMRT Share capital Shares 000 RM 000 Issued and paid-up share capital (excluding treasury shares) as at the LPD SMRT Consideration Shares to be issued pursuant to the Proposed Acquisition Issued and paid-up share capital after the Proposed Acquisition Assuming full exercise of SMRT s existing warrants^ Enlarged issued and paid-up share capital 253,083 25,308 25,210 2, ,293 27,829 74,712 7, ,005 35,300 Note:- ^ Assuming full exercise of SMRT s 74,712,468 warrants 2012/2017 of SMRT which was issued on 2 August 2012 and constituted by the deed poll dated 17 July 2012 ( Warrants 2012/2017 ). [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 10

11 7.2 Substantial shareholders shareholdings The effects of the Proposed Acquisition on the substantial shareholders shareholdings in SMRT are set out below:- Substantial shareholders As at the LPD After the Proposed Acquisition Direct Indirect Direct Indirect No. of SMRT Shares % No. of SMRT Shares % No. of SMRT Shares % No. of SMRT Shares % Special Flagship Holdings Sdn Bhd 58,827, ,827, Fikir Wawasan Sdn Bhd 28,704, ,704, Goldleaf Pavilion Sdn Bhd Dato Dr Palaniappan A/L Ramanathan Chettiar Datin Valliammai A/P Malayandi 17,252, ,252, ,248, ,837,318 (1) (1) 7,248, ,837,318 (1) (1) 9, ,076,769 (2) (2) 9, ,076,769 (2) (2) Vendor ,210, Notes:- 1. Deemed interested by virtue of his shareholdings in Special Flagship Holdings Sdn Bhd and his spouse, Datin Valliammai A/P Malayandi s shareholdings in the Company pursuant to Sections 6A and 122A of the Companies Act; and 2. Deemed interested by virtue of her shareholdings in Special Flagship Holdings Sdn Bhd and her husband, Dato Dr Palaniappan A/L Ramanathan Chettiar s shareholdings in the Company pursuant to Sections 6A and 122A of the Companies Act. [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 11

12 7.3 Earnings and earnings per share ( EPS ) The Proposed Acquisition is expected to contribute positively to the earnings of SMRT Group for the FYE 31 December For illustrative purposes only, assuming that the net earnings of the SMRT Group for the FYE 31 December 2014 remains unchanged, the EPS of the SMRT Group will be reduced proportionately with the increase in the number of SMRT Shares in issue pursuant to the Proposed Acquisition. 7.4 Net assets ( NA ) and gearing Based on the audited consolidated statement of financial position of SMRT as at 31 December 2014, the proforma effects of the Proposed Acquisition on the NA and gearing of the SMRT Group are as follows:- Audited as at 31 December 2014 After adjusting for subsequent After the Proposed Acquisition events (i) RM 000 RM 000 RM 000 Share capital 23,517 26,029 28,550 Share premium 21,257 30,547 34,026 Treasury shares (2,376) (2,431) (2,431) Share based payment reserve Revaluation 2,327 2,327 2,327 reserve Foreign currency 1,385 1,385 1,385 translation reserve Statutory reserve Retained 32,557 32,557 32,327 (ii) earnings / (accumulated lossed) Shareholders 78,916 90,618 96,388 funds / NA No. of SMRT 235, , ,505 Shares in issue excluding the treasury shares ( 000) NA per SMRT Share (sen) Total borrowing 21,764 21,764 21,764 Gearing (times) Note:- (i) The subsequent events include the following transactions:- (a) Exercise of 50,000 employee share option scheme ( ESOS ) options on 14 January 2015 under the ESOS implemented by the Company in 2010 ( ESOS 2010 ); (b) Exercise of 50,000 ESOS options on 23 January 2015 under the ESOS 2010; (c) Placement of 23,527,400 SMRT Shares on 20 March 2015; (d) Exercise of 70,000 ESOS options on 9 April 2015 under the ESOS 2010; (e) Exercise of 35,000 ESOS options on 17 April 2015 under the ESOS 2010; (f) Exercise of 60,000 ESOS options on 30 April 2015 under the ESOS 2010; (g) Exercise of 50,000 ESOS options on 6 May 2015 under the ESOS 2010; 12

13 (ii) (h) Exercise of 315,000 ESOS options on 20 May 2015 under the ESOS 2010; (i) Exercise of 75,000 ESOS options on 21 May 2015 under the ESOS 2010; (j) Exercise of 755,000 ESOS options on 25 May 2015 under the ESOS 2010; (k) Exercise of 112,333 ESOS options on 27 May 2015 under the ESOS 2010; (l) Exercise of 20,000 ESOS options on 28May 2015 under the ESOS 2010; (m) Shares-buy back of 5,000 SMRT Shares on 3 March 2015; (n) Shares-buy back of 12,300 SMRT Shares on 10 March 2015; (o) Shares-buy back of 2,4000 SMRT Shares on 31 March 2015 (p) Shares-buy back of 2,100 SMRT Shares on 9 April 2015; (q) Shares-buy back of 45,000 SMRT Shares on 7 May 2015; (r) Shares-buy back of 15,000 SMRT Shares on 1 June 2015; (s) Shares-buy back of 15,000 SMRT Shares on 15 June 2015; and (t) Shares-buy back of 5,000 SMRT Shares on 17 September 2015; After adjusting for the estimated expenses for Proposed Acquisition of approximately RM0.23 million. 7.5 Existing convertible securities As at the LPD, SMRT has existing 74,712,468 Warrants 2012/2017 convertible at a ratio of one (1) Warrant 2012/2017 for one (1) ordinary share of RM0.10 each at an exercise price of RM0.18 per share. The Proposed Acquisition will not result in any adjustment to the exercise price and number of existing Warrants 2012/2017 of the Company. 8. HIGHEST PERCENTAGE RATIO APPLICABLE Pursuant to Rule 10.02(g) of the ACE Market Listing Requirements of Bursa Securities ( Listing Requirements ), the highest percentage ratio for the Proposed Acquisition is 10.82%, calculated based on 64% net profits of N osairis, compared with the net profits attributable to SMRT Group for the FYE 31 December APPROVALS REQUIRED AND CONDITIONALITY OF THE PROPOSED ACQUISITION The Proposed Acquisition is subject to the following approvals being obtained:- (i) (ii) Bursa Securities for the listing of and quotation for the SMRT Consideration Shares; and any relevant bodies, persons, courts, authorities or regulatory bodies, as may be necessary. For information purposes, the Proposed Acquisition is not subject to the approval of the shareholders of SMRT as the SMRT Consideration Shares will be issued in accordance with the general mandate pursuant to Section 132D of the Companies Act, obtained from the shareholders of SMRT in its annual general meeting convened on 17 June The Proposed Acquisition is not conditional upon any other proposals. 10. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the Directors and major shareholders of the Company or persons connected with them have any interest, direct and/or indirect, in the Proposed Acquisition. 13

14 11. DIRECTORS STATEMENT Having considered and deliberated all the relevant aspects of the Proposed Acquisition, including the rationale and the financial effects of the Proposed Acquisition, the Board is of the opinion that the Proposed Acquisition is in the best interest of the Company. 12. APPLICATION TO THE RELEVANT AUTHORITIES Barring any unforeseen circumstances, the application to the Bursa Securities in respect of the listing of and quotation for the SMRT Consideration Shares is expected to be submitted within one (1) month from the date of this announcement. 13. ESTIMATED TIME FRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Acquisition is expected to be completed by the first (1 st ) quarter of the calendar year ADVISER SMRT had on 3 December 2015 appointed TA Securities Holdings Berhad to be the Adviser to submit the application to Bursa Securities in respect of the listing of and quotation for the SMRT Consideration Shares. 15. DOCUMENTS AVAILABLE FOR INSPECTION A copy of the SSA is available for shareholders inspection at the registered office of the Company at Suite 2A-23-1, Block 2A, Level 23, Plaza Sentral, Jalan Stesen Sentral 5, Kuala Lumpur Sentral, Kuala Lumpur during normal office hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement. This announcement is dated 5 February

15 Appendix I SUMMARY FINANCIAL INFORMATION OF N OSAIRIS Audited Unaudited FYE 31 December 2014 FYE 31 December 2015 (RM 000) (RM 000) Revenue 5,657 10,557 Cost of sales (3,874) (5,959) Gross profit 1,783 4,598 Other operating income 6 - Administrative expenses (559) (2,062) Profit before tax 1,230 2,536 Taxation (42) (675) Profit after tax 1,188 1,861 Attributable to:- - Equity holder 1,188 1,861 - Non-controlling interests - - Issued and paid-up share 1,800 1,800 capital (Accumulated losses) / (214) 1,647 retained earnings Total equity / NA 1,586 3,447 No. of shares in issue ( 000) 1,800 1,800 NA per share (RM) EPS (RM) Gross dividend rate (RM) - - Total borrowings - - Gearing (times) - - (Source: Audited consolidated financial statements of N osairis for the FYE 31 December 2014 and the unaudited consolidated financial statements of N osairis for the FYE 31 December 2015.