The Proposed Disposals comprise the following: the proposed disposal by SRB of its entire 49% equity interest in APU

Transcription

1 SAPURA RESOURCES BERHAD ( SRB OR COMPANY ) I. PROPOSED DISPOSAL BY SRB OF ITS ENTIRE 49% EQUITY INTEREST IN APIIT SDN BHD ( APIIT ) TO ILMU EDUCATION GROUP SDN BHD ( ILMU ) AFTER THE PROPOSED REORGANISATION (AS DEFINED BELOW) FOR A TOTAL CASH CONSIDERATION OF RM58,000,000 ( PROPOSED DISPOSAL OF APIIT ); II. III. PROPOSED DISPOSAL BY SRB OF ITS ENTIRE 49% EQUITY INTEREST IN ASIA PACIFIC UNIVERSITY SDN BHD ( APU ) TO ILMU FOR A TOTAL CASH CONSIDERATION OF RM161,988,000 ( PROPOSED DISPOSAL OF APU ); AND PROPOSED DISPOSAL BY SRB OF ITS ENTIRE 37.61% INTEREST IN ASIA PACIFIC INSTITUTE OF INFORMATION TECHNOLOGY LANKA (PVT) LIMITED ( APIIT LANKA ) TO ILMU FOR A TOTAL CASH CONSIDERATION OF RM27,000,000 ( PROPOSED DISPOSAL OF APIIT LANKA ) (The above are collectively referred to as Proposed Disposals ) Unless otherwise stated, the exchange rate of Sri Lankan Rupee ( LKR ) = RM1.00, being the rate on 9 March 2016 (Source: Central Bank of Sri Lanka), is used throughout this announcement for purposes of translation of LKR into RM. 1. INTRODUCTION On behalf of the Board of Directors ( Board ) of SRB, CIMB Investment Bank Berhad ( CIMB ) wishes to announce that on 16 March 2016, SRB entered into a conditional share sale agreement ( SSA ) with ILMU in relation to the Proposed Disposals. 2. DETAILS OF THE PROPOSED DISPOSALS 2.1 Introduction The Proposed Disposals comprise the following: (i) (ii) (iii) the proposed disposal by SRB of its entire 49% equity interest in APIIT comprising 1,225,001 ordinary shares of RM1.00 each in APIIT ( APIIT Shares ) plus 1,225,000 new APIIT Shares to be issued pursuant to the Proposed Reorganisation (as described below), to ILMU for a total cash consideration of RM58,000,000; the proposed disposal by SRB of its entire 49% equity interest in APU comprising 9,800,001 ordinary shares of RM1.00 each in APU ( APU Shares ), to ILMU for a total cash consideration of RM161,988,000; and the proposed disposal by SRB of its entire 37.61% interest in APIIT Lanka comprising its beneficial interest in 4,343,401 ordinary shares in APIIT Lanka ( APIIT Lanka Shares ), to ILMU for a total cash consideration of RM27,000,000; (APIIT Shares, APU Shares and APIIT Lanka Shares are collectively referred to as the Sale Shares ). 1

2 The Proposed Reorganisation will involve the disposal by APIIT to ILMU of 100% equity interest in Asia Pacific Schools Sdn Bhd ( APS ) comprising 2,500,002 ordinary shares of RM1.00 each in APS held by APIIT representing 100% of the issued and paid up share capital in APS ( APS Shares ) for a total consideration of RM138,800,000. Thereafter, APIIT will declare dividends to its shareholders (i.e. ILMU and SRB), whereby ILMU and SRB will be entitled to dividends of RM70,788,000 and RM68,012,000, respectively. Subsequently, APIIT will undertake a bonus issue of 2,500,000 new APIIT Shares to its shareholders. 2.2 Basis and justification of arriving at the sale consideration The sale consideration for the Proposed Disposals was arrived at on a willing-buyer willing-seller basis after taking into consideration, amongst others, the following: (i) audited net assets ( NA ) of APIIT of RM87.7 million as at 31 December 2014 and the earnings potential of APIIT; (ii) (iii) (iv) audited NA of APU of RM103.9 million as at 31 December 2014 and the earnings potential of APU; audited NA of APIIT Lanka of LKR652.9 million (equivalent to RM18.8 million) as at 31 December 2014 and the earnings potential of APIIT Lanka; audited profit after tax ( PAT ) of APIIT of RM9.6 million for the financial year ended ( FYE ) 31 December 2014; (v) audited PAT of APU of RM27.1 million for the FYE 31 December 2014; (vi) (vii) (viii) (ix) audited PAT of APIIT Lanka of LKR162.9 million (equivalent to RM4.7 million) for the FYE 31 December 2014; earnings before interest, tax, depreciation and amortisation ( EBITDA ) of APIIT of RM15.8 million for the FYE 31 December 2014; EBITDA of APU of RM38.2 million for the FYE 31 December 2014; and EBITDA of APIIT Lanka of LKR195.0 million (equivalent to RM5.6 million) for the FYE 31 December The sale consideration of APS under the Proposed Reorganisation was arrived at on a willing-buyer willing-seller basis after taking into consideration, amongst others, the earnings potential of APS, net liabilities of APS of RM21.7 million as at 31 December 2014 and PAT and EBITDA of APS of RM5.1 million and RM7.0 million, respectively for the FYE 31 December Liabilities to be assumed There are no liabilities, including contingent liabilities and guarantees, to be assumed by ILMU pursuant to the Proposed Disposals. 2

3 2.4 Original cost of investment The original cost of investment of SRB in the Sale Shares is as follows: Original cost of investment Date of investment Effective interest held by SRB RM mil % APIIT November % APU November 2004 to 26 April % APIIT Lanka November % The original cost of investment of APIIT in APS was RM0.5 million, which was made on 28 March 2005 and 25 April Other salient terms of the SSA The other salient terms of the SSA are as follows: Sale Consideration The sale consideration shall be paid by ILMU to SRB in the following manner: (a) within 5 business days from the date of the SSA, ILMU shall pay RM24,698,800 being 10% of the sale consideration ( Deposit ) to an escrow agent mutually appointed by SRB and ILMU to receive and deal with the Deposit upon the terms and subject to the conditions of an escrow agreement ( Escrow Agent ). The Deposit (and accrued interest) shall be released to SRB upon completion of the sale and purchase of APIIT Shares, APU Shares and APIIT Lanka Shares (collectively the Sale Shares ) in accordance with the SSA ( Completion ); and (b) on the Completion Date, ILMU shall pay RM222,289,200 being 90% of the sale consideration ( Balance Purchase Consideration ) less the agreed cost and taxes to be borne by SRB in accordance with the SSA to SRB by way of a bank draft or telegraphic transfer to a bank account in Malaysia to be designated by SRB and notified in writing to ILMU at least 10 days prior to the Completion Date Conditions Precedent The Proposed Disposals shall be conditional upon the fulfillment of the following conditions (unless waived) within 3 months commencing from the date of the SSA or such other extended period as may be mutually agreed ( Conditional Period ): (a) (b) the approval of the shareholders of SRB for the sale and transfer of the Sale Shares upon terms and conditions in the SSA; the approval of the shareholders of APIIT for the sale and transfer of the APS Shares; 3

4 (c) (d) (e) (f) (g) (h) (i) the approval of the shareholders of ILMU for the purchase of the Sale Shares and the APS Shares upon terms and conditions in the SSA and in the definitive transaction agreement in respect of the APS Shares, respectively; the approval from the Ministry of Higher Education ( MOHE ) in respect of the transfer of the APU Shares and APIIT Shares and the approval of the Ministry of Education ( MOE ) in respect of the transfer of the APS Shares; the approvals of the financiers of APIIT and APU for the sale and transfer of the Sale Shares; the approval of Staffordshire University for the change in ownership arising from the sale and transfer of the APU Shares; the approvals of the financiers of SRB for the sale and transfer of the Sale Shares; the striking off of City Asia Pacific Institute of Information Technology Pakistan (Private) Limited (Registration number K-09134) ( APIIT Pakistan ) from the Register of Companies maintained by the Securities and Exchange Commission of Pakistan at no cost, penalty, liability or expense to ILMU or APIIT or the transfer of all shares in City Asia Pacific Institute of Information Technology Pakistan (Private) Limited held by APIIT to SRB or any other party for a purchase consideration of RM1 and all costs and transfers related to the said transfer (including stamp duty) shall be borne by SRB; and APIIT transferring the APS Shares to ILMU for a purchase consideration of RM138,800,000 comprising of cash consideration amounting to RM68,012,000 ( APS Cash Consideration ) payable on the completion date of such sale and purchase, and the balance consideration amounting to RM70,788,000 ( APS Deferred Consideration ) payable in the manner set out in Section 2.5.4(a)(iv), (collectively, Conditions Precedent ). In the event the Conditions Precedent are not met within the Conditional Period, the Deposit with all interest accrued will be returned to the Purchaser. Upon the full refund of the Deposit with all interest accrued, the SSA shall lapse and be of no further effect and neither Party shall have any further claim against the other, save in respect of any antecedent breach Completion (a) (b) Completion shall take place 14 days from the last of the Conditions Precedent being fulfilled, satisfied or waived ( Completion Date ). The completion of the SSA shall be conditional upon all the Sale Shares (and not part thereof) being sold by SRB, all the Sale Shares (and not part thereof) being purchased by ILMU and SRB and ILMU performing all their respective obligations under the SSA. 4

5 2.5.4 Completion Obligation (a) On Completion, ILMU must: (i) (ii) pay the Balance Purchase Consideration less the agreed cost and taxes to be borne by SRB in accordance with the SSA to SRB; pay or procure to pay to SRB, with respect to APIIT Lanka: (1) the dividends declared by APIIT Lanka for the financial years 2013 and 2014 but have yet to be paid to SRB, as beneficial owner, of a sum in Ringgit Malaysia which is equivalent to LKR22,828, based on the exchange rate set by the Central Bank of Sri Lanka 1 day prior to the Completion Date; and (2) the dividends to be declared by APIIT Lanka for the financial year 2015 but will be declared and paid to SRB, as beneficial owner, of a sum in Ringgit Malaysia which is equivalent to LKR7,818, based on the exchange rate set by the Central Bank of Sri Lanka 1 day prior to the Completion Date; (iii) (iv) (v) (vi) procure that APIIT declares a special cash dividend amounting to RM68,012,000 to SRB based on its 49% shareholding in APIIT (as at the date of Completion but prior to the transfer of the APIIT Shares to ILMU) upon or after receiving the APS Cash Consideration but in any event no later than the Completion Date; procure that APIIT declares a special dividend amounting to RM70,788,000 to ILMU based on its 51% shareholding in APIIT upon or after receiving the APS Cash Consideration which amount shall be set-off against the APS Deferred Consideration; procure that APIIT increases its authorised share capital to RM10,000,000 comprising of 10,000,000 ordinary shares of RM1.00 each; and subsequent to APIIT declaring the special dividend under Section 2.5.4(a)(iii) and the increase in authorised share capital in Section 2.5.4(a)(v), procure that APIIT allots and issues in aggregate 2,500,000 bonus shares of RM1.00 each to SRB and ILMU in proportion to their shareholding in APIIT (as at the date of Completion but prior to the transfer of the APIIT Shares to ILMU) i.e. 1,225,000 bonus shares to SRB and 1,275,000 bonus shares to ILMU, which will be capitalised from its retained profits. The new APIIT ordinary shares to be issued pursuant to the bonus issue shall upon allotment and issue, rank equally in all respects with the existing APIIT ordinary shares, save and except that the new APIIT ordinary shares shall not be entitled to participate in any rights, allotments, dividends and/or other distributions, the entitlement date of which is before the date of allotment of the new APIIT ordinary shares. 5

6 2.5.5 Indemnity in respect of APIIT Lanka (a) SRB shall indemnify (proportionate to its 37.61% beneficial interest of the issued and paid up share capital in APIIT Lanka) APIIT and ILMU from and against any and all losses, damage, costs and expenses and proceedings (including but not limited to any diminution in the value of the assets of APIIT Lanka and any payment made or required to be made by APIIT, APIIT Lanka and/or ILMU, as the case may be) as a direct result of or in direct connection with any of the following matters, in respect of any indemnity claim made by APIIT and/or ILMU within a period of up to 6 years from the Completion Date: (i) the fulfillment of any claim pursuant to any ruling/determination that may be issued by the tax authority, in connection with the appeal filed by APIIT Lanka with the Tax Appeals Commission on the payment of Value Added Tax by APIIT Lanka - APP NO: APP/12/07 ( VAT Appeal ) including but not limited to any amounts, fines, penalties and interests payable by APIIT Lanka in respect of the VAT Appeal, up to a total aggregate amount of up to RM3,000,000; and (ii) the failure of APIIT to set up or open a Securities Investment Account regulated by the Central Bank of Sri Lanka for its shareholding in APIIT Lanka in accordance with the applicable exchange control laws and regulations of the Republic of Sri Lanka, up to a total aggregate amount of up to RM22,000,000 or the sale consideration in respect of the APIIT Lanka Shares, whichever is lower. (b) (c) Save and except for the VAT Appeal which will continue to be controlled by ILMU, APIIT or APIIT Lanka, where an indemnity claim is made pursuant to Section 2.5.5(a), SRB shall, at its own cost, have the right to assume and take full control of the proceeding and/or matter via ILMU, APIIT and/or APIIT Lanka (as the case may be) including settling, negotiating, defending and/or appealing the proceeding and/or matter and ILMU shall ensure that ILMU, APIIT and APIIT Lanka (as the case may be) abide by the instructions of SRB with respect to the same. ILMU, APIIT and APIIT Lanka (as the case may) shall not make any admission of liability, waive its rights, make any settlement and/or promise to pay without the prior written consent of SRB. In the event SRB decides not to or fails to exercise its right to assume and take control of the proceedings and/or matter, ILMU, APIIT and APIIT Lanka (as the case may be) shall be entitled to assume and take control of the proceedings and/or matter and to make any admission of liability, waive its rights, make any settlement and/or promise to pay without the prior written consent of SRB. 6

7 2.5.6 Indemnity in respect of APIIT Pakistan (a) (b) (c) (d) SRB shall indemnify and keep ILMU and APIIT fully indemnified against any loss, liability, demand, claim, payment, damage, expenses and cost that may be made against, suffered or incurred by ILMU and/or APIIT in respect of, or in connection with Section 2.5.2(h) and/or the operation of the APIIT Pakistan prior to the transfer of the shares in APIIT Pakistan to SRB and/or the striking off of the APIIT Pakistan from the Register of Companies maintained by the Securities and Exchange Commission of Pakistan provided that any indemnity claim is made by ILMU and/or APIIT within a period of 6 years from the Completion Date. The indemnity under Section 2.5.6(a) shall immediately lapse and cease to have further force and effect upon the completion of the striking off of the APIIT Pakistan. Where an indemnity claim is made pursuant to Section 2.5.6(a), SRB shall, at its own cost, have the right to assume and take full control of the proceeding and/or matter via ILMU and/or APIIT including settling, negotiating, defending and/or appealing the proceeding and/or matter and ILMU shall ensure that ILMU and APIIT abide by the instructions of SRB with respect to the same. ILMU and APIIT (as the case may) shall not make any admission of liability, waive its rights, make any settlement and/or promise to pay without the prior written consent of SRB. In the event SRB decides not to or fails to exercise its right to assume and take control of the proceedings and/or matter, ILMU and APIIT (as the case may be) shall be entitled to assume and take control of the proceedings and/or matter and to make any admission of liability, waive its rights, make any settlement and/or promise to pay without the prior written consent of SRB Undertaking by ILMU (a) ILMU hereby undertakes and agrees with SRB that in the event that it or its related corporation (as defined in the Companies Act 1965) wishes to sell all or any of its shares in APIIT, APS, APU and APIIT Lanka to a bona fide third party purchaser, in an independent transaction that is not part of a transaction or series of transactions that includes the sale by ILMU or its related corporation of any of its other subsidiaries apart from APIIT, APS, APU and APIIT Lanka, ILMU or its related corporation shall first issue a sale notice ("Sale Notice") in respect of the sale shares to SRB that it desires to sell the same, offering the sale shares to SRB at the price at which ILMU proposes to sell the sale shares. SRB shall have a period of 60 days from the date of the Sale Notice ("Offer Period") to accept ILMU's or its related corporation s offer to sell the sale shares subject to approval of relevant governmental or regulatory authorities. If the SRB does not accept the offer under the Sale Notice within the Offer Period, it will be deemed to have rejected the offer and ILMU or its related corporation may proceed to sell the sale shares to a third party purchaser on a price and terms and conditions which are not more favourable than those offered to SRB. ILMU shall procure its related corporation to comply with the obligations under Section

8 (b) Section 2.5.7(a) shall cease to apply upon the occurrence of any of the following: (i) (ii) (iii) ILMU has registered the prospectus for the listing of ILMU on any recognized stock exchange or ILMU is listed on any recognized stock exchange; the effective shareholding of Ekuinas Capital Sdn. Bhd. and its related corporations (as defined in the Companies Act 1965) in ILMU falls below 51%; or a period of 18 months from the Completion Date has lapsed. (c) For the avoidance of doubt, Section 2.5.7(a) shall not apply in the event that the shares in ILMU are sold (in whole or in part) to a third party purchaser who is not a related corporation of ILMU. 2.6 Information on ILMU ILMU was incorporated in Malaysia under the Companies Act, 1965 ( Act ) as a private limited company on 29 September 2010 under the name of Ontime Direction Sdn Bhd. On 22 May 2013, ILMU assumed its present name. The principal activity of ILMU is to carry on the business of an investment holding company. The subsidiaries of ILMU are primarily involved in the provision of educational courses. As at 21 December 2015, it has an authorised share capital of RM1,500,000,000 divided into 1,498,910,000 ordinary shares of RM1.00 each ( ILMU Shares ), 9,000,000 redeemable preference shares of RM0.01 each ( ILMU RPS ) and 100,000,000 Class B redeemable preference shares of RM0.01 each of which 283,607,678 ILMU Shares and 1,500,000 ILMU RPS have been issued and paid-up or credited as fully paid-up. The shareholders of ILMU are Simbol Minda Sdn Bhd ( Simbol Minda ) and E-Cap (Internal) Two Sdn Bhd ( E-Cap 2 ). Simbol Minda is a wholly-owned subsidiary of E- Cap (Internal) One Sdn Bhd ( E-Cap 1 ). E-Cap 1 and E-Cap 2 are wholly-owned by Ekuinas Capital Sdn Bhd ( ECSB ), which is in turn a wholly-owned subsidiary of Yayasan Ekuiti Nasional ( YEN ). YEN also has a 100% equity interest in Ekuiti Nasional Berhad ( Ekuinas ). The shareholding structure of ILMU is as follows: YEN 100% Ekuinas ECSB 100% 100% E-Cap % 100% E-Cap 1 100% Simbol Minda 71.78% ILMU 8

9 ECSB was incorporated in Malaysia under the Act as a private limited company on 23 October The principal activities of ECSB are to carry on the business of an investment holding company, to invest in private equity investments and to acquire the shares of or invest in any company. Ekuinas was incorporated in Malaysia under the Act as a public limited company on 13 August 2009 and is a government-linked private equity fund management company that promotes equitable and sustainable Bumiputera economic participation via the creation of Malaysia s next generation leading companies. YEN has been given a grant by the Malaysian Government to be held in trust. ECSB is the fund company where the capital to be invested resides while Ekuinas provides private equity fund management services to ECSB. 2.7 Proposed utilisation of proceeds Based on the sale consideration of RM246,988,000, SRB intends to utilise the gross proceeds from the Proposed Disposals in the following manner: Purpose Estimated timeframe for utilisation RM 000 Future expansion and general working capital requirements of SRB and its subsidiaries ( SRB Group ) (1) Within 48 months from the date of receipt of proceeds from the Proposed Disposals 90,808 Repayment of bank borrowings (2) Immediately upon receipt of the proceeds from the Proposed Disposals 144,600 Proposed special dividend (3) Within 3 months from the date of receipt of the proceeds from the Proposed Disposals 6,980 Estimated expenses for the Proposed Disposals (4) Within 3 months from the date of receipt of the proceeds from the Proposed Disposals 4,600 Total 246,988 SRB intends to utilise the dividends to be received from APIIT amounting to RM68,012,000 under the Proposed Reorganisation in the following manner: Purpose Estimated timeframe for utilisation RM 000 Future expansion and general working capital requirements of SRB and its subsidiaries ( SRB Group ) (1) Within 48 months from the date of receipt of proceeds from the Proposed Disposals 68,012 Notes: (1) SRB intends to utilise part of the proceeds to fund the SRB Group s future expansion. This would include potential projects within the core businesses of the SRB Group. SRB will from time to time identify and evaluate these investment opportunities, with a view to strengthen and grow its businesses. In the event that no suitable investments are identified by the SRB Group, the excess amount will be allocated to working capital. 9

10 The working capital requirements of the SRB Group include, among others, payment to trade creditors, for administrative expenses and for any costs, claims or indemnities provided under the SSA. The administrative expenses of the SRB Group include, among others, business development and staff related expenses, and corporate and statutory expenses. As the actual utilisation will depend on the SRB Group s operating needs at or near the time the proceeds are received, the breakdown of the proposed utilisation of proceeds for each category of working capital is not shown. (2) Part of the proceeds raised from the Proposed Disposals will be used to partly repay the outstanding term loan(s) of SRB. As at 29 February 2016, SRB has outstanding term loans of RM127.8 million. If the actual redemption amount is different from the amount allocated, the excess or shortfall will be adjusted to/from working capital. (3) After the completion of the Proposed Disposals, the Board of SRB proposes to distribute part of the proceeds from the Proposed Disposals as special dividends amounting to RM0.05 per share, within 3 months from the receipt of the proceeds from the Proposed Disposals. Based on the number of ordinary shares in issue of million as at 9 March 2016, the proposed dividends to be distributed will amount to about RM6.98 million. (4) The estimated expenses include, among others, professional fees and fees to the relevant authorities. If the actual expenses related to the Proposed Disposals are lower than the estimated amount above, the excess will be allocated to working capital and vice versa. Pending the utilisation of the proceeds allocated for the above, the proceeds will be placed in deposits with financial institutions or short-term money market instrument(s). 3. RATIONALE FOR THE PROPOSED DISPOSALS In 2011, SRB disposed of a 51% stake in APIIT and APU (collectively APIIT Group ) to ILMU in order to benefit from a tie-up with a strong and strategic investor to spur the next growth of its education business. Although SRB retained a minority investment in the APIIT Group, the SRB Group had since benefited from the growth of the education business through the profits generated and the dividends it had received over the last 4 years and it was able to equity account its investment in the education business. Notwithstanding the above, the Company is aware of challenges that need to be addressed in the near to middle term in the education business. Although the APIIT Group s education business has been able to generate profits and declared dividends to its shareholders in the previous 4 years, it is now entering the next phase of long-term development and growth, which requires significant investment for the construction of APU s new campus in Technology Park Malaysia ( TPM Campus ) which is expected to be completed by The need to conserve cash for its campus development and new courses offerings has affected the APIIT Group s dividend payout for the FYE 31 December Furthermore, if a cash call by the APIIT Group is required, SRB will need to make a capital contribution in line with its equity interest or otherwise have its shareholding in the APIIT Group diluted. The Company believes that, strategically, it would be more value accretive in the long-run for SRB to unlock the value of its non-controlling stakes in the APIIT Group and utilise its funds to grow its property-related businesses, in particular its Lot 91 KLCC development (which entails the construction and development of an office tower, a convention centre, a retail podium and basement car parks) as well as its aviation business. As a result of the Proposed Disposals, the SRB Group will realise a one-off pro forma gain of about RM192.2 million based on the audited financial statements of the SRB Group for the FYE 31 January RISK FACTORS 4.1 Completion risk The Proposed Disposals are subject to completion risk. 10

11 The Proposed Disposals are conditional upon the approvals and/or consent/waiver being obtained from the relevant authorities and/or parties, as disclosed in Section 6 below, and are further subject to the other conditions precedent as set out in Section above. There is no assurance that the conditions precedent can be fulfilled and the Proposed Disposals can be completed within the time period permitted under the SSA. In the event the conditions precedent are not fulfilled or waived within the permitted time period, it may be mutually extended failing which the Deposit with all interest accrued shall be released to ILMU and thereafter the SSA will lapse and be of no further effect and neither Party shall have any further claim against the other, save in respect of any antecedent breach. However, SRB will continue to take all reasonable steps to ensure that all its approvals are obtained and conditions precedent fulfilled in a timely manner to facilitate the completion of the Proposed Disposals. 4.2 Loss of profits and dividend income from APIIT, APU and APIIT Lanka During the FYE 31 January 2015, SRB had equity accounted profit of approximately RM8.0 million, RM14.3 million and RM2.0 million from APIIT, APU and APIIT Lanka, respectively. Further, during the FYE 31 January 2015, SRB had also received dividend income from APU of approximately RM7.4 million in respect of the APU Shares held by SRB while approximately LRK5.5 million (equivalent to RM0.2 million) in dividend had been accrued to SRB in respect of SRB s interest in APIIT Lanka. Upon completion of the Proposed Disposals, SRB will no longer be equity accounting profits attributable to APIIT, APU and APIIT Lanka as well as receiving dividends attributable to its interest in the APIIT Shares, APU Shares and APIIT Lanka Shares. Further, with the Proposed Disposals, the SRB Group will no longer be able to benefit from any future growth in the education sector. 5. EFFECTS OF THE PROPOSED DISPOSALS 5.1 Issued and paid-up share capital The Proposed Disposals will not have any effect on the issued and paid-up share capital of SRB. 5.2 Shareholdings of the substantial shareholders The Proposed Disposals will not have any effect on the substantial shareholders shareholdings in SRB. 5.3 NA, NA per share and gearing The pro forma effects of the Proposed Disposals on the NA, NA per share and gearing of the SRB Group are set out in Table D. 5.4 Earnings and earnings per share ( EPS ) The Proposed Disposals are expected to increase the earnings and EPS of the SRB Group for the financial year ending 31 January The SRB Group expects to realise a gain on disposal arising from the Proposed Disposals. However, APIIT, APS, APU and APIIT Lanka will no longer contribute to the future earnings of the SRB Group upon completion of the Proposed Disposals. For illustrative purpose and based on the audited financial statements of the SRB Group for the FYE 31 January 2015, the Proposed Disposals would result in a pro forma gain on disposal of about RM192.2 million to the SRB Group. 11

12 6. APPROVALS REQUIRED The Proposed Disposals are subject to approvals and/or consents being obtained from the following: (i) (ii) (iii) (iv) shareholders of SRB at an extraordinary general meeting to be convened; MOHE and MOE; Existing financier(s) of the SRB Group, APIIT and APU; and any other relevant authorities and/or parties, if required. 7. INTERESTS OF DIRECTORS AND MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED None of the Directors and/or major shareholders of SRB or persons connected with them has any interests, direct or indirect, in the Proposed Disposals. 8. STATEMENT BY THE BOARD After having considered all aspects of the Proposed Disposals, including the rationale for the Proposed Disposals as set out in Section 3 above, the Board of SRB is of the opinion that the Proposed Disposals are in the best interests of SRB. 9. ADVISER CIMB has been appointed as the Adviser to the Company for the Proposed Disposals. 10. HIGHEST PERCENTAGE RATIOS The highest percentage ratio applicable to the Proposed Disposals pursuant to Paragraph 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 93.3%. 11. ESTIMATED TIMEFRAME FOR COMPLETION Subject to all the required approvals being obtained, SRB expects the Proposed Disposals to be completed by the third quarter of APPLICATIONS TO THE RELEVANT AUTHORITIES The applications to the relevant authorities in relation to the Proposed Disposals are expected to be made within 3 months from the date of this announcement. 13. DOCUMENT FOR INSPECTION The SSA is available for inspection at SRB s registered office at Sapura@Mines, No. 7 Jalan Tasik, The Mines Resort City, Seri Kembangan, Selangor Darul Ehsan, from Mondays to Fridays (except public holidays) for a period of 3 months from the date of this announcement. This announcement is dated 16 March

13 Table A Information on APIIT 1. History and business APIIT was incorporated in Malaysia under the Act on 7 April 1993 as a private limited company under the name of Abid Mara Sdn Bhd. On 15 February 1994, it assumed its present name. The principal activity of APIIT is that of providing information technology ( IT ) related educational courses. APIIT commenced operations in 1993 in Kuala Lumpur in response to the Malaysian Government's initiative to address the critical shortage of IT professionals in Malaysia and the region. APIIT currently has a campus which is situated in Technology Park Malaysia, Kuala Lumpur, Malaysia where the Asia Pacific University College of Technology and Innovation operates. APIIT has a wholly-owned subsidiary, APS. APS was incorporated in Malaysia under the Act on 9 December 2004 as a private limited company under the name of APIIT Smart School Sdn Bhd. On 5 November 2009, the company changed its name to Sapura Smart School Sdn Bhd. On 10 December 2012, APS assumed its present name. The principal activity of APS is that of providing smart teaching and learning curriculum in a group of schools. The school is located in Subang Jaya, Malaysia and offers Malaysian National School Curriculum and Cambridge International General Certificate of Secondary Education (IGCSE) through Asia Pacific Smart School and Asia Pacific International School, respectively. 2. Key financial data of APIIT The key financial data of APIIT is set out below: FYE 31 December 2012 (1) 2013 RM 000 (2) 2014 Revenue 27,351 24,690 30,492 Profit before taxation ( PBT ) 13,121 12,581 14,309 Taxation (3,536) (1,457) (4,715) PAT 9,585 11,124 9,594 Number of APIIT Shares in issue (000) 2,500 2,500 2,500 NA/ Shareholders funds 66,985 78,108 87,703 NA per APIIT Share (RM) Total borrowings Gearing ratio (times) Notes: (1) The decrease in revenue by 10% to RM24.7 million in the FYE 31 December 2013 was mainly due to lower student enrolments. The PAT increased by 16% to RM11.1 million mainly due to lower operating expenses arising from lower student enrolments and lower building rental expenses as well as lower tax expenses incurred for the FYE 31 December (2) The increase in revenue by 23% to RM30.5 million in the FYE 31 December 2014 was mainly due to higher student enrolments. The PAT decreased by 14% to RM9.6 million mainly due to higher tax expenses incurred for the FYE 31 December

14 3. Key financial data of APS The key financial data of APS is set out below: FYE 31 December 2012 (1) 2013 RM 000 (2) 2014 Revenue 12,986 16,570 24,314 (Loss before taxation)/pbt (1,371) 230 5,093 Taxation (Loss after taxation)/pat (1,371) 230 5,093 Number of APS Shares in issue (000) 2,500 2,500 2,500 Net liabilities (27,068) (26,838) (21,745) Net liabilities per APS Share (RM) (10.83) (10.74) (8.70) Total borrowings Gearing ratio (times) Notes: (1) The increase in revenue by 28% to RM16.6 million in the FYE 31 December 2013 was mainly due to increase in student enrolment numbers. The PAT of RM0.2 million in 2013 as compared to the loss after taxation of RM1.4 million in the FYE 31 December 2013 was mainly due to the increase in revenue and higher operating margins. (2) The increase in revenue by 47% to RM24.3 million in the FYE 31 December 2014 was mainly due to higher student enrolment numbers. The PAT increased by 2,114% to RM5.1 million mainly due to the increase in revenue and higher operating margins. 14

15 Table B Information on APU 1. History and business APU was incorporated in Malaysia under the Act on 10 November 2004 as a private limited company under the name of Asia Pacific UCTI Sdn Bhd. On 29 April 2013, APU assumed its present name. The principal activity of APU is that of providing higher educational courses and APU operates through its campus located in Technology Park Malaysia, Kuala Lumpur. APU offers a wide range of diploma, undergraduate and postgraduate programmes to Malaysian and international students with technology as a common core. APU (through Asia Pacific Institute of Information Technology) was Malaysia s first institution to achieve Multimedia Super Corridor ( MSC ) Company Status in 1997 and was awarded the MSC Research and Development Grant in Upon APIIT achieving University College status in 2004, it resulted in the formation of the Asia Pacific University College of Technology & Innovation ( UCTI ). UCTI developed into one of Malaysia s international universities for Technology, Business and Engineering, which has itself evolved into what is now known as the Asia Pacific University of Technology & Innovation, with its attainment of full University status in APU does not have any interest in a subsidiary or associated company. 2. Key financial data The key financial data of APU is set out below: FYE 31 December 2012 (1) 2013 RM 000 (2) 2014 Revenue 73,681 77,623 86,414 PBT 34,463 31,896 35,633 Taxation (6,676) (2,004) (8,487) PAT 27,787 29,892 27,146 Number of APU Shares in issue (000) 20,000 20,000 20,000 NA/ Shareholders funds 75,463 92, ,947 NA per APU Share (RM) Total borrowings ,380 Gearing ratio (times) Notes: (1) The increase in revenue by 5% to RM77.6 million in 2013 was mainly due to an increase in student enrolment numbers. The PAT increased by 8% to RM29.9 million mainly due to the lower tax expenses incurred for the FYE 31 December 2013 which offset the higher operating expenses incurred in the same year. (2) The increase in revenue by 11% to RM86.4 million in the FYE 31 December 2014 was mainly due to an increase in student enrolment numbers. The PAT decreased by 9% to RM27.1 million mainly due to higher tax expenses incurred for the FYE 31 December

16 Table C Information on APIIT Lanka 1. History and business APIIT Lanka was incorporated in Sri Lanka under the Companies Act, No. 7 of 2007 of Sri Lanka on 28 March 2008 as a private limited company under the name of Asia Pacific Institute of Information Technology Lanka (Private) Limited. The principal activity of APIIT Lanka is to conduct training programmes in Computing/IT, Business Management and Law. APIIT Lanka is a higher education institution established in partnership with Staffordshire University, in the UK and Asia Pacific University of Technology and Innovation, in Malaysia. APIIT Lanka conducts the Staffordshire University, UK degree programmes (both undergraduates and masters) in Business Management, Computing/IT and Law. APIIT Lanka s city campus and law school are located in Colombo, Sri Lanka. APIIT Lanka does not have any interest in a subsidiary or associated company. 2. Key financial data The key financial data of APIIT Lanka is set out below: 2012 FYE 31 March (1) 2013 LKR 000 FYE 31 December (2) Revenue 463, , , ,100 PBT 114, , , ,453 Taxation (16,656) (17,243) (24,840) (32,576) PAT 98, , , ,877 Number of APIIT Lanka Shares in issue (000) 11,547 11,547 11,547 11,547 NA/ Shareholders funds 417, , , ,925 NA per share (LKR) Total borrowings 20,267 20,267 20,267 20,267 Gearing ratio (times) Notes: (1) The increase in revenue by 7% to LKR498 million for the FYE 31 March 2013 as compared to the previous year was mainly due to higher student enrolment numbers. The PAT increased by 54% to LKR151 million mainly due to the increase in revenue, higher operating margin and higher other operating income. (2) The increase in revenue by 3% to LKR511 million for the FYE 31 March 2014 as compared to the previous year was mainly due to higher student enrolment numbers. The PAT decreased by 9% to LKR137 million mainly due to higher direct and administrative expenses including the diminution in value of investment as well as higher tax expenses incurred for the FYE 31 March

17 Table D Pro forma effects of the Proposed Disposals on the NA, NA per share and gearing of the SRB Group I II III Audited as at 31 January 2015 After the Proposed Disposal of APIIT (1) RM 000 After I and the Proposed Disposal of APU After II and the Proposed Disposal of APIIT Lanka Share capital 139, , , ,600 Other reserves 2,581 2,581 2,581 2,581 Retained earnings 227,405 (3) 309, ,910 (3) (4) 415,004 NA 369, , , ,185 Number of ordinary shares of RM1.00 each in SRB ( SRB Shares ) in issue (000) 139, , , ,600 NA per SRB Share (RM) Total borrowings (RM 000) 129, , , ,979 Total cash and bank balances (RM 000) 44, , , ,095 Gearing (times) Net gearing (times) (2) - (2) - (2) Notes: (1) After incorporating the effects of the Proposed Reorganisation. (2) Net cash position. (3) After deducting estimated expenses in relation to the Proposed Disposals. (4) Assuming the provision for the indemnities as described in Section 2.5.5(a) is made against the pro forma gain on disposal. 17