Further details of the Proposed Share Capital Reduction are set out in the ensuing sections.

Transcription

1 KEY ASIC BERHAD ( KEY ASIC OR THE COMPANY ) PROPOSED REDUCTION OF THE ISSUED SHARE CAPITAL OF KEY ASIC PURSUANT TO SECTION 116 OF THE COMPANIES ACT 2016 ( ACT ) ( PROPOSED SHARE CAPITAL REDUCTION ) 1. INTRODUCTION On behalf of the Board of Directors of Key ASIC ( Board ), TA Securities Holdings Berhad ( TA Securities ) wishes to announce that the Company proposes to undertake the Proposed Share Capital Reduction. Further details of the Proposed Share Capital Reduction are set out in the ensuing sections. 2. DETAILS OF THE PROPOSED SHARE CAPITAL REDUCTION The Proposed Share Capital Reduction entails the reduction of RM46.00 million of the issued share capital of Key ASIC pursuant to Section 116 of the Act. The corresponding credit of RM46.00 million arising from such cancellation will be utilised to eliminate the accumulated losses of the Company and any balance will be credited to the retained earnings account of the Company which may be utilised in such manner as the Board deems fit and as permitted by the relevant and applicable laws and the Company s Constitution. As at 24 September 2018, being the latest practicable date ( LPD ) prior to this announcement, the issued share capital of Key ASIC was RM73,741,642 comprising 930,569,000 ordinary shares in Key ASIC ( Key ASIC Shares or Shares ). In addition, as at the LPD, the Company has 406,000 outstanding options pursuant to the Company s employee share option scheme ( ESOS ) ( ESOS Options ) ( Outstanding ESOS Options ), which can be exercised into 406,000 new Shares at the exercise price of RM0.145 each. Key ASIC does not have any treasury share as at the LPD. The Company had on 26 January 2018 and 27 February 2018 obtained approval from Bursa Malaysia Securities Berhad and its shareholders, respectively for the placement of up to 222,743,750 Key ASIC Shares ( Private Placement ). As at the LPD, 40,000,000 Key ASIC Shares had been issued pursuant to the Private Placement. For illustration purpose, the Proposed Share Capital Reduction will have the following effects: (Audited) As at 31 May 2018 Company level Group level (RM) (RM) Accumulated losses (45,711,881) (42,216,524) Add: Credit arising from the Proposed Share 46,000,000 46,000,000 Capital Reduction Less: Estimated expenses for the Proposed (120,000) (120,000) Share Capital Reduction Resultant retained earnings 168,119 3,663,476 The summary and commentaries of the financial information of Key ASIC and its subsidiaries ( Key ASIC Group or Group ) for the past 3 financial years are set out in Appendix I of this announcement. An order by the High Court of Malaya ( Court ) will be sought to confirm the Proposed Share Capital Reduction pursuant to Section 116 of the Act after receipt of approval from the shareholders of the Company at an extraordinary general meeting ( EGM ) to be convened. The effective date of the Proposed Share Capital Reduction will be the date of the lodgement of a sealed copy of the order of the Court with the Companies Commission of Malaysia confirming the cancellation of the share capital of Key ASIC. 1

2 The Proposed Share Capital Reduction will not result in any adjustment to the market price and the number of Shares held by the Company s shareholders. 3. RATIONALE FOR THE PROPOSED SHARE CAPITAL REDUCTION The Proposed Share Capital Reduction will enable the Company to rationalise its statement of financial position by eliminating its accumulated losses. The elimination of accumulated losses in the statements of financial position of the Company may enhance its credibility with customers, suppliers and investors. 4. EFFECTS OF THE PROPOSED SHARE CAPITAL REDUCTION Minimum Scenario : Assuming none of the Outstanding ESOS Option is exercised into new Key ASIC Share and the Proposed Share Capital Reduction is completed prior to the issuance of 182,743,750 Key ASIC Share pursuant to the Private Placement ( Private Placement Shares ) Maximum Scenario : Assuming all of the Outstanding ESOS Options are exercised into new Key ASIC Shares and the Proposed Share Capital Reduction is completed after the issuance of the Private Placement Shares 4.1. Earnings and earnings per Key ASIC Share ( EPS ) The Proposed Share Capital Reduction will not have any material effect on the earnings and EPS of the Key ASIC Group for the financial year ending 31 May [The rest of this page has been intentionally left blank] 2

3 4.2. Share capital The pro forma effects of the Proposed Share Capital Reduction on the share capital of Key ASIC are as follows: Minimum Scenario Maximum Scenario Issued share capital as at the LPD Assuming full exercise of the Outstanding ESOS Options Assuming full issuance of the Private Placement Shares Reduction of issued share capital pursuant to the Proposed Share Capital Reduction After the Proposed Share Capital Reduction No. of Key ASIC Shares RM No. of Key ASIC Shares RM 930,569,000 73,741,642 (1) 930,569,000 73,741,642 (1) ,000 97,339 (2) ,743,750 38,376,188 (3) 930,569,000 73,741,642 1,113,718, ,215,169 - (46,000,000) - (46,000,000) 930,569,000 27,741,642 1,113,718,750 66,215,169 Notes: (1) The Act, which come into operation on 31 January 2017, abolished the concept of authorised share capital and par value of share capital. Consequently, the amounts standing to the credit of the share premium account of RM20,170,383 become part of the Company s share capital pursuant to the transitional provisions set out in Section 618(2) of the Act. (2) Assuming 406,000 ESOS Options were exercised at RM (3) Assuming 182,743,750 Private Placement Shares were placed out at the issue price of RM0.21 per Share (being the illustrative issue price in the circular to shareholders dated 12 February 2018 pursuant to the Private Placement). [The rest of this page has been intentionally left blank] 3

4 4.3 Net assets attributable to ordinary equity holders of Key ASIC ( NA ) and gearing The pro forma effects of the Proposed Share Capital Reduction on the NA and gearing of Key ASIC Group are illustrated below: Minimum Scenario (Audited) (I) After subsequent (II) After (I) and the Proposed Share Capital Reduction As at 31 May 2018 events up to LPD RM RM RM Share capital 67,471,642 (1) 73,741,642 (2) 27,741,642 Share option reserve 38,469 38,469 38,469 Foreign currency translation reserve (645,007) (645,007) (645,007) (Accumulated losses) / Retained earning (42,216,524) (42,216,524) 3,663,476 (3) Shareholders funds / NA 24,648,580 30,918,580 30,798,580 No. of Shares in issue 890,569, ,569, ,569,000 NA per Shares (RM) Total borrowings (RM) Gearing (times) Notes: (1) The Act, which come into operation on 31 January 2017, abolished the concept of authorised share capital and par value of share capital. Consequently, the amounts standing to the credit of the share premium account of RM20,170,383 become part of the Company s share capital pursuant to the transitional provisions set out in Section 618(2) of the Act. (2) After taking into consideration of: (a) the listing of 20,000,000 Key ASIC Shares pursuant to the Private Placement at an issue price of RM each on 6 June 2018; and (b) the listing of 20,000,000 Key ASIC Shares pursuant to the Private Placement at an issue price of RM each on 31 July (3) After deducting the estimated expenses of RM120,000 for the Proposed Share Capital Reduction. 4

5 Maximum Scenario (Audited) (I) (II) (III) (IV) After (I) and assuming After (II) and full exercise of the assuming full issuance Outstanding ESOS of Private Placement After subsequent As at 31 May 2018 events up to the LPD Options Shares RM RM RM RM RM 5 After (III) and the Proposed Share Capital Reduction Share capital 67,471,642 (1) 73,741,642 (2) 73,838,981 (3) 112,215,169 (4) 66,215,169 Share option reserve 38,469 38, Foreign currency translation reserve (645,007) (645,007) (645,007) (645,007) (645,007) (Accumulated losses) / Retained earning (42,216,524) (42,216,524) (42,216,524) (42,216,524) 3,663,476 (5) Shareholders funds / NA 24,648,580 30,918,580 30,977,450 69,353,638 69,233,638 No. of Shares in issue 890,569, ,569, ,975,000 1,113,718,750 1,113,718,750 NA per Shares (RM) Total borrowings (RM) Gearing (times) Notes: (1) The Act, which come into operation on 31 January 2017, abolished the concept of authorised share capital and par value of share capital. Consequently, the amounts standing to the credit of the share premium account of RM20,170,383 become part of the Company s share capital pursuant to the transitional provisions set out in Section 618(2) of the Act. (2) After taking into consideration of: (a) the listing of 20,000,000 Key ASIC Shares pursuant to the Private Placement at an issue price of RM each on 6 June 2018; and (b) the listing of 20,000,000 Key ASIC Shares pursuant to the Private Placement at an issue price of RM each on 31 July (3) Assuming 406,000 ESOS Options were exercised at RM (4) Assuming 182,743,750 Private Placement Shares were placed out at the issue price of RM0.21 per Share (being the illustrative issue price in the circular to shareholders dated 12 February 2018 pursuant to the Private Placement). (5) After deducting the estimated expenses of RM120,000 for the Proposed Share Capital Reduction.

6 4.4 Substantial shareholders shareholdings The Proposed Share Capital Reduction will not have any effect on the substantial shareholders shareholdings in the Company. 4.5 Convertible securities Save for the 406,000 Outstanding ESOS Options which are exercisable into Key ASIC Shares, the Company does not have any other outstanding convertible securities as at the LPD. 5. APPROVALS REQUIRED The Proposed Share Capital Reduction is subject to and conditional upon the following approvals being obtained: (i) (ii) the shareholders of Key ASIC for the Proposed Share Capital Reduction at an EGM to be convened; and order of the Court pursuant to Section 116 of the Act for the Proposed Share Capital Reduction. 6. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the Directors, major shareholders and/or persons connected with them has any interest, direct and indirect, in the Proposed Share Capital Reduction. 7. DIRECTORS STATEMENT After having considered all aspects of the Proposed Share Capital Reduction, the Board is of the opinion that the Proposed Share Capital Reduction is in the best interest of the Company. 8. ESTIMATED TIME FRAME FOR COMPLETION Barring any unforeseen circumstances, the Board expects the Proposed Share Capital Reduction to be completed by the 1 st quarter of ADVISER TA Securities has been appointed as the Adviser in relation to the Proposed Share Capital Reduction. This announcement is dated 2 October

7 APPENDIX I SUMMARY AND COMMENTARIES OF FINANCIAL INFORMATION OF KEY ASIC GROUP The summary of the financial information of the Group for the past 3 financial years is as follows: (Audited) Financial Year Ended ( FYE ) 17-month financial period ended ( FPE ) FYE 31 December 2015 (RM 000) 31 May 2017 (RM 000) 31 May 2018 (RM 000) Revenue 19,253 24,817 29,417 Profit/Losses after taxation attributable to the owners of the Company ( PAT ) or ( LAT ) (13,928) (9,993) 3,715 Shareholders funds / NA 23,087 16,393 24,649 Share capital 41,423 62,739 67,472 Weighted average number of Key ASIC Shares in issue ( 000) 802, , ,921 No. of Key ASIC Shares in issue ( 000) 828, , ,569 NA per Key ASIC Share (RM) EPS/losses per Key ASIC Share ( LPS ) (sen) (1) (1.73) (1.19) 0.43 Diluted EPS/LPS (sen) (1) N/A (2) N/A (2) 0.43 Notes: (1) Based on weighted average number of Key ASIC Shares. (2) There is no diluted loss per share as the Group and Company does not have any dilutive potential ordinary shares during the financial period. (i) FYE 31 December 2015 vs FYE 31 December 2014 Key ASIC Group s revenue for the FYE 31 December 2015 increased by 12.90% to approximately RM19.25 million (FYE 31 December 2014: approximately RM17.05 million). The increase in revenue was mainly due to the Group s additional revenue of RM4.73 million incurred by licensing an Intellectual Property ( IP ) to one of its existing customers, a company that provides a full range of services such as development, prototype production and serial product supply. In line with the increase in revenue, and coupled with the increase in gross profit margins of 23.25% to 41.90% in FYE 31 December 2015 (FYE 31 December 2014: approximately 18.65%) due mainly to licensing of IP to its customers which have higher gross profit margins and decrease in impairment loss on intangible assets of 76.67% to RM3.88 million (FYE 31 December 2014: approximately RM16.63 million) and the decrease in the amortisation of intangible assets of 75.88% to RM0.48 million in FYE 31 December 2015 (FYE 31 December 2014: approximately RM1.99 million), the Group recorded a decrease in LAT of 59.33% to RM13.93 million in FYE 31 December 2015 (FYE 31 December 2014: approximately RM34.25 million). The Group recorded a decline in NA of approximately 30.39% to RM23.09 as at 31 December 2015 (as at 31 December 2014: approximately RM33.17 million) mainly due to the LAT incurred by the Key ASIC Group of RM13.93 million in the FYE 31 December

8 APPENDIX I (ii) Annualised FPE 31 May 2017 vs FYE 31 December 2015 Key ASIC Group s revenue for the annualised FPE 31 May 2017 decreased by 8.99% to approximately RM17.52 million (FYE 31 December 2015: approximately RM19.25 million). The decrease in revenue for was mainly due to the cease of the recognition of the revenue in licensing an IP to the customer as mentioned above as the said customer stop licensing the said IP from the Group. Notwithstanding the decrease in revenue, Key ASIC Group recorded a decrease in LAT of 49.39% to RM7.05 million in the annualised FPE 31 May 2017 (FYE 31 December 2015: approximately RM13.93 million) mainly due to the absence of the impairment loss on intangible assets in the FPE 31 May 2017 and decrease in the electronic design automation tool charges of 57.78% to RM2.82 million in the annualised FPE 31 May 2017 (FYE 31 December 2015: approximately RM6.68 million) mainly due to cost cutting measures implemented by the Company by reducing the number of copies of the licenses. The Group recorded a decline in NA of 29.02% to approximately RM16.39 million as at 31 May 2017 (as at 31 December 2015: approximately RM23.09 million) due to the LAT incurred by the Key ASIC Group of RM9.99 million in the FPE 31 May (iii) FYE 31 May 2018 vs annualised FPE 31 May 2017 Key ASIC Group s revenue for the FYE 31 May 2018 increased by 67.92% to approximately RM29.42 million (annualised FPE 31 May 2017: RM17.52 million) mainly due to new purchase orders from Russian customers. In line with the increase in revenue, and coupled with the increase in gross profit margins of 16.44% to 49.67% in FYE 31 May 2018 (annualised FPE 31 May 2017: 33.23%) mainly due to non-recurring engineering revenue which have higher gross profit margin, decrease in depreciation and amortisation of intangible assets of 8.33% to RM0.99 million in FYE 31 May 2018 (annualised FPE 31 May 2017: RM1.08 million) and absence of adjustment on exceptional items made to impairment of trade receivables in FYE 31 May 2018 (annualised FPE 31 May 2017: RM1.20 million), the Group recorded PAT of approximately RM3.71 million for the FYE 31 May 2018 (annualised FPE 31 May 2017: LAT of RM7.05 million). The Group recorded an increase in NA of 50.40% to approximately RM24.65 million as at 31 May 2018 (as at 31 May 2017: approximately RM16.39 million) due to the listing of 38,393,000 Key ASIC Shares at an issue price of RM0.12 each pursuant to private placement exercise representing approximately 10% of the share capital of Key ASIC which was completed on 16 June 2017 and the listing of 250,000 Key ASIC Shares at an issue price of RM0.145 each on 15 November 2017 pursuant to the exercise of ESOS Options. [The rest of this page has been intentionally left blank] 8