(1) THE PROPOSED ACQUISITION BY THE COMPANY OF THE ENTIRE ISSUED AND PAID-UP SHARE CAPITAL OF GOLD IMPACT LIMITED; AND

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1 EUROPTRONIC GROUP LTD (Company Registration Number K) (Incorporated in the Republic of Singapore on 18 November 2000) (1) THE PROPOSED ACQUISITION BY THE COMPANY OF THE ENTIRE ISSUED AND PAID-UP SHARE CAPITAL OF GOLD IMPACT LIMITED; AND (2) THE PROPOSED DISPOSAL BY THE COMPANY OF ITS ENTIRE INTERESTS IN ITS EXISTING SUBSIDIARIES, ASSOCIATED COMPANIES, AFFILIATED COMPANIES AND BUSINESSES TO MR. HUANG CHIEN HUNG (EXECUTIVE DIRECTOR AND CHIEF EXECUTIVE OFFICER OF THE COMPANY) OR HIS NOMINEE 1. INTRODUCTION 1.1. The Board of Directors (the Board ) of Europtronic Group Ltd (the Company and together with its subsidiaries, the Group ) refers to the announcements dated 4 March 2013 and 17 April 2013 (collectively, the Announcements ) wherein the Company announced, inter alia, that the Company had entered into a memorandum of understanding dated 4 March 2013 with Gold Impact Limited ( Gold Impact ), All Sincere Limited, Manbon Limited, Longbest Co., Limited, and Regalis Investments Pte Ltd in respect of the following:- (a) (b) the proposed acquisition by the Company of the entire issued and paid-up share capital of Gold Impact; and the proposed disposal by the Company of its entire interests in its existing subsidiaries, associated companies, affiliated companies and businesses to Mr. Huang Chien Hung ( Mr. Huang ) (Executive Director and Chief Executive Officer of the Company) or his nominee Definitive Agreement Further to the Announcements, the Board is pleased to announce that the Company had on 29 July 2013, entered into a conditional sale and purchase agreement (the SPA ) with (i) All Sincere Limited, Manbon Limited, Longbest Co., Limited, Regalis Investments Pte Ltd, Mr. Max Tong, Ms. Lu Hong and Mr. Low Yew Shen (collectively, the Vendors and each a Vendor ); and (ii) Mr. Huang, for the following:- (a) the proposed acquisition by the Company of 12,595 ordinary shares of HK$1.00 each in the capital of Gold Impact (the Sale Shares ), representing the entire issued and paid-up share capital of Gold Impact, from the Vendors for an aggregate consideration of S$160 million (the Consideration ) which shall be satisfied in full by the allotment and issuance of the Consideration Shares (as defined in paragraph X2.3.2X(c)X below) at the Issue Price (as defined in paragraph X2.3.2X(b)X below) (the Proposed Acquisition ); and 1

2 (b) the proposed disposal by the Company of the Existing Business (as defined in paragraph X3.2.1X below) to Mr. Huang or his nominee (the Proposed Disposal ). In connection with the Proposed Acquisition, the Company proposes to undertake the Proposed Share Consolidation (as defined in paragraph X2.3.3X below). The shareholders of the Company (the Shareholders ) are advised to read this announcement in its entirety, in particular, the Cautionary Statement as set out in paragraph 14 of this announcement. 2. THE PROPOSED ACQUISITION 2.1. Information on Gold Impact and the Vendors Gold Impact and its subsidiaries (collectively, the Target Group Companies ) (a) Gold Impact, an investment holding company, was incorporated in Hong Kong on 3 August It is the registered and beneficial owner of 100% equity interest in Zhejiang Godard Mining Technology Development Co., Ltd 浙江高德矿业技术开发有限公司 ( Zhejiang Godard ) which in turn is the registered and beneficial owner of 100% equity interest in Jiangxi Topgold Co., Ltd 江西中部黄金有限公司 ( Jiangxi Topgold ). (b) Zhejiang Godard was established in the People s Republic of China ( PRC ) on 23 September It is principally engaged in the business of providing consultancy services in respect of exploitation, exploration and mining activities in the PRC. (c) Jiangxi Topgold was established in the PRC on 26 July It is mainly involved in the mining, exploration and processing of gold in the PRC. It currently has exploration rights and mining rights in relation to two gold mines in the Jiangxi Province, the PRC (collectively, the Gold Mines ) in the manner as set out below:- (i) (ii) the exploration rights, under an exploration licence in respect of Tao Jin Mine, for gold at a mining concession area of approximately square kilometers located at Jiangxi Province, Suichuan County; and the exclusive mining rights, under a mining licence in respect of Cao Lin Mine, for gold at a mining concession area of approximately square kilometers located at Jiangxi Province, Suichuan County. (d) The Target Group Companies intend to (i) upgrade the facilities and equipment of Jiangxi Topgold to increase production at the Cao Lin Mine; (ii) carry out further exploration of the Gold Mines and obtain the mining rights for the Tao Jin Mine which has a much larger concession area than the Cao Lin Mine; and (iii) carry out acquisitions of other gold mines especially those in the neighbouring location of the Gold Mines. 2

3 (e) As at the date of the SPA, the shareholders of Gold Impact, being the Vendors, and their respective shareholdings in Gold Impact are as follows:- Name Number of Sale % Shares All Sincere Limited 5, Manbon Limited 3, Longbest Co., Limited 1, Regalis Investments Pte Ltd 1, Max Tong Lu Hong Low Yew Shen , (1) Note:- (1) Percentages in the table do not add up to 100.0% due to rounding Vendors The information relating to each Vendor is as follows:- (a) All Sincere Limited is an investment holding company incorporated in Samoa on 30 June It has an issued and paid-up share capital of US$5.00 comprising five (5) ordinary shares. The sole shareholder and director of All Sincere Limited is Mr. Tang Shaojun who is a businessman; (b) Manbon Limited is an investment holding company incorporated in Samoa on 25 January It has an issued and paid-up share capital of US$1.00 comprising one (1) ordinary share. The sole shareholder and director of Manbon Limited is Mr. Yuan Guoxing who is a businessman; (c) Longbest Co., Limited is an investment holding company incorporated in Samoa on 24 March It has an issued and paid-up share capital of US$1.00 comprising one (1) ordinary share. The sole shareholder and director of Longbest Co., Limited is Mr. Guo Lijun who is a businessman; (d) (e) (f) Regalis Investments Pte Ltd is a company incorporated in Singapore on 18 February It has an issued and paid-up share capital of S$500,000 comprising 500,000 ordinary shares. Mdm Tong Yoke Chan, a private equity investor, is the sole shareholder and a director of Regalis Investments Pte Ltd. Mr. Low Yew Shen, son of Mdm Tong Yoke Chan, is the other director of Regalis Investments Pte Ltd, and further details of him are set out in sub-paragraph (g) below; Mr. Max Tong is a businessman and is one of the consultants to the founding shareholders of Gold Impact, being All Sincere Limited, Manbon Limited and Longbest Co., Limited (collectively, the Founding Shareholders of Gold Impact ); Ms. Lu Hong is a certified accountant in the PRC and has been actively involved in private equity investments. Ms. Lu Hong is also one of the consultants to the Founding 3

4 Shareholders of Gold Impact; and (g) Mr. Low Yew Shen, an Advocate and Solicitor of the Supreme Court of Singapore, is a partner of Elitaire Law LLP. Mr. Low is also a director of Regalis Investments Pte Ltd. None of the Vendors are related to any of the Company s Directors, Chief Executive Officer, controlling Shareholders or their respective associates. One of the Vendors, Mr. Low Yew Shen, is an existing shareholder of the Company and holds approximately 2.64% of the existing voting share capital of the Company. He shall undertake to abstain and procure his associates to abstain from voting at the EGM (as defined in paragraph X2.5X) on the Proposed Acquisition, the Proposed Disposal and the Proposed Share Consolidation (resolutions of which shall be inter-conditional), in respect of their shareholdings in the Company at the time of the EGM Technical Report and Valuation Report in Connection with the Proposed Acquisition In conjunction with the Proposed Acquisition, Gold Impact has appointed SRK Consulting China Ltd ( SRK ) to prepare the Technical Report 1 (as defined in paragraph X2.3.4X(k)X). SRK is part of an independent international consulting group that offers specialist services to mining and exploration companies for the entire life cycle of a mining project, from exploration of a mine to mine closure. In addition, Gold Impact will appoint an independent professional valuer to undertake a valuation of the Gold Mines (the Valuation Report ). Further information relating to SRK and the professional valuer to be appointed together with the Technical Report 1 and the Valuation Report will be included in the Circular (as defined in paragraph 12.1 below) to be despatched to Shareholders in due course Key terms of the Proposed Acquisition Acquisition of the Sale Shares Pursuant to the terms of the SPA, the Vendors have agreed to sell to the Company and the Company has agreed to purchase from the Vendors all the Sale Shares, free from all encumbrances and together with all rights, benefits and entitlements attaching thereto as at Completion Date (as defined in paragraph X2.3.10X) Consideration for the Proposed Acquisition (a) (b) The Consideration of S$160 million was arrived at on a willing-buyer and willing-seller basis. The Consideration was agreed upon by the parties to the SPA (the Parties and each a Party ) based on the current internal estimates by the Vendors of the valuation of the total resources and reserves of the Gold Mines, and is subject to the findings of the Technical Report 1, which will comply with the relevant requirements of the Singapore Exchange Securities Trading Limited ( SGX-ST ). The Consideration shall be satisfied in full by the allotment and issuance of the Consideration Shares (as defined in paragraph X2.3.2X(c)X) (after the completion of the Proposed Share Consolidation) at the issue price of S$0.50 for each new 4

5 Consolidated Share (the Issue Price ) to the Vendors. (c) The Consideration Shares shall be an aggregate of 320,000,000 new Consolidated Shares (as defined in paragraph 2.3.3) (the Consideration Shares ) to be allotted and issued by the Company to the Vendors at the Issue Price on Completion Date in consideration for the acquisition of the Sale Shares, such shares to rank pari passu in all respects with the then existing Consolidated Shares, save that they will not rank for any dividends, rights, allotments or any distribution, the record date of which falls before the date of issue of the Consideration Shares. Upon completion of the sale and purchase of all the Sale Shares (the Completion ), including the allotment and issuance of the Consideration Shares and Arrangement Shares (as defined in paragraph X2.3.7X below), the Vendors will collectively hold 320,000,000 Consolidated Shares, representing approximately 70.05% of the enlarged voting share capital of the Company of 456,785,450 Consolidated Shares Proposed Share Consolidation Under Rule 1015(3)(d) of the Listing Manual of the SGX-ST (the Listing Manual ), the issue price of each share after adjusting for any share consolidation must not be lower than S$0.50. Under Rule 1015(3)(c) of the SGX-ST Listing Manual Section B: Rules of Catalist (the Catalist Rules ), the issue price of each share after adjusting for any share consolidation must not be lower than S$0.20. Accordingly, in connection with the Proposed Acquisition and subject to the approval of the Shareholders, the Company proposes to undertake a share consolidation of seven (7) ordinary shares of the Company (the Shares ) into one (1) new Share (the Consolidated Share ) to be effected upon Completion, on such terms to be determined by the Board at its discretion (the Proposed Share Consolidation ) Conditions Precedent The obligation of the Company and the Vendors to complete the Proposed Acquisition is conditional upon the following:- (a) (b) The Company being satisfied with the results of its due diligence investigations into the financial, business, legal, contractual, tax and trading position and prospects of each of the Target Group Companies and the titles of each of the Target Group Companies to its respective properties and assets (including intellectual property); Gold Impact being satisfied with the results of its due diligence investigations into the financial, business, legal, contractual, tax and trading position and prospects of the Company (excluding its subsidiaries and associated companies) including the removal of any guarantees executed by the Company provided always that nothing in this subparagraph (b) shall require or oblige the Company to disclose to Gold Impact any information that will cause the Company to be in breach of any laws or of the rules and regulations of the Listing Manual; 5

6 (c) (d) (e) (f) (g) (h) the Proposed Acquisition, upon the terms of the SPA and subject to the Company fulfilling the relevant requirements prescribed by the SGX-ST in the Listing Manual at Completion which would allow the Company to maintain its listing on the Main Board of the SGX-ST (the Main Board Listing ) or the transfer of the quotation and listing of the Company s shares from the Main Board of the SGX-ST to Catalist (as defined in paragraph X2.3.4X(d)X below) and the admission of the Company to Catalist (the Listing Transfer ) being approved by the SGX-ST and/or any other relevant authorities and where such approval is obtained subject to any conditions, such conditions being reasonably acceptable to the Parties; subject to the Main Board Listing (as applicable), approval being given and not having been withdrawn by the SGX-ST for the admission to the sponsor-supervised listing platform of the SGX-ST ( Catalist ) and the dealing and quotation of the Consolidated Shares, the Consideration Shares, the Arrangement Shares and the Performance Shares (as defined in paragraph X2.3.8X below) upon allotment and issue to the Vendors or the Arrangers (as defined in paragraph below), as the case may be, and if there are any conditions attached to such approval, such conditions being reasonably acceptable to the Parties; the Securities Industry Council ( SIC ) having granted the Vendors and their concert parties, and not having revoked or repealed such grant, a waiver of their obligation to make a mandatory offer under Rule 14 of the Singapore Code on Take-overs and Mergers (the Code ) for the Shares not held by them and their concert parties and from having to comply with the requirements of Rule 14 of the Code including but not limited to pre-clearance from the SIC on any issues in connection with the Proposed Acquisition that the Vendors and/or the Company may consider necessary, subject to (i) any conditions that the SIC may impose which are reasonably acceptable to the Parties; and (ii) the Shareholders approving at a general meeting of the Company the whitewash resolution for the waiver of the rights of the independent shareholders of the Company to receive a mandatory takeover offer from the Vendors and persons acting in concert with them for all the Shares not already owned by them and persons acting in concert with them (the Whitewash Resolution ) as a result of the transactions contemplated in the SPA, provided that they and any persons not independent of them, abstain from voting on the Whitewash Resolution at the EGM; the Whitewash Resolution being duly passed at the EGM; the approval of the Shareholders for the Proposed Share Consolidation, the Proposed Acquisition, the Listing Transfer (if applicable), the Proposed Disposal and the allotment and issue of the Arrangement Shares, the Consideration Shares and the Performance Shares, and all such other approvals required from the Shareholders as may be necessary for the aforesaid transactions being obtained at the EGM; (i) all approvals, authorisations, clearances, confirmations, consents, exemptions, grants, licences, orders, permissions, recognitions and waivers as may be required or appropriate for or in connection with the sale and purchase of the Sale Shares or the transactions contemplated in the SPA and to carry on the business of the Target Group Companies from all relevant government, governmental, quasi-governmental, supranational, statutory, regulatory, administrative, fiscal or judicial agency, authority, body, court, commission, department, exchange, tribunal or entity in any jurisdiction 6

7 having been obtained and not withdrawn or revoked, and where any such approvals, authorisations, clearances, confirmations, consents, exemptions, grants, licences, orders, permissions, recognitions and waivers are obtained subject to any conditions, such conditions being reasonably acceptable to the Parties; and (ii) all necessary or appropriate filings having been made and all appropriate waiting periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated, in each case for or in connection with the sale and purchase of the Sale Shares and to carry on the business of the Target Group Companies; (i) (j) (k) (l) the Company being satisfied in its reasonable discretion with the presentation, method of preparation of and bases for the audited consolidated accounts of Gold Impact for the financial year ended or ending 31 December, as the case may be ( FY ), for FY2010, FY2011 and FY2012 as well as the latest available unaudited consolidated accounts of Gold Impact that may be required for disclosure in the Circular and the results of the performance and the financial position of the Target Group Companies as shown by those accounts; Gold Impact having obtained a report from an independent professional valuer, acceptable to the Company, that the value of the Gold Mines shall be approximately S$160 million, such report to be reasonably acceptable to the Company (in consultation with a continuing sponsor who is authorised by the SGX-ST to conduct continuing activities of an issuer (the Sponsor )) and which complies with the relevant requirements of the SGX-ST; Gold Impact having obtained an independent technical report on the assessment of resources and reserves, production schedule, projected capital requirements, operating cost and estimate of the mine life of the Gold Mines, such report to be reasonably acceptable to the Company (in consultation with the Sponsor) and which complies with the relevant requirements of the SGX-ST (the Technical Report 1 ); the acceptance by the Company, acting reasonably, of the exceptions to the Vendors representations and warranties in the SPA as disclosed in:- (i) (ii) the letter (satisfactory in form and substance to the Company) to be signed and given by the Vendors to the Company by the earlier of (i) 30 days after the date of the SPA or (ii) 10 Business Days (as defined below) prior to the date of submission of the Circular by the Company to the SGX-ST (or, where the Circular is to be lodged with such relevant regulatory authority or is to be lodged for inspection in such forum other than the SGX-ST, then such other authority or forum) as informed by the Company to the Vendors at least three (3) Business Days in advance, disclosing information constituting exceptions to the representations and warranties given by the Vendors in the SPA as at the date of the said letter. Business Day means a day, other than a Saturday, Sunday or public holiday in Singapore, Hong Kong or PRC on which banks are open for business in Singapore, Hong Kong or PRC; and the letter (satisfactory in form and substance to the Company) to be signed and given by the Vendors to the Company five (5) Business Days prior to the Completion Date disclosing information constituting exceptions to the 7

8 representations and warranties given by the Vendors in the SPA as at the date of the said letter Provided Always that if anything or any event shall occur between the date of the said letter and Completion Date that will constitute a material breach of the representations and warranties given by the Vendors in the SPA, the Vendors shall be entitled to up-date the said letter with additional information up to the date prior to Completion Date; (m) (n) (o) (p) the Shares remaining listed on the Main Board of the SGX-ST and not having been halted or suspended from trading for a continuous period of more than five (5) market days unless such trading halt or suspension is voluntary or in circumstances where such trading halt or suspension is in connection with the SPA or is imposed by the SGX-ST by reason of insufficient information being provided in relation to the transactions referred to in the SPA; the Proposed Share Consolidation being duly effected to the satisfaction of the Parties; subject to the Main Board Listing (as applicable), the appointment of a Sponsor by the Company in respect of its Listing Transfer; and there being no material breach by any Party of the representations, warranties or covenants contained in the SPA Undertaking, Representations and Warranties The Proposed Acquisition is subject to such further undertakings, representations and warranties from the Company and each of the Vendors as are customary for transactions of similar nature Waiver of Conditions Precedent A Party shall be solely entitled to (but not bound to) waive such of the conditions precedent as set out in paragraph X2.3.4X above as are inserted in the SPA for its sole benefit, and where any condition precedent above is inserted for the benefit of all the Parties, such condition precedent may be waived by mutual agreement of all the Parties, provided that such waiver is permissible under law and does not contravene the Code, the Listing Manual or the Catalist Rules, as the case may be, and other applicable rules and regulations. For the purposes of the foregoing, the Parties acknowledge and agree that:- (a) (b) other than the conditions precedent stated in paragraph X(b)X, paragraph X(c)X, paragraph X(d)X, paragraph X(e)X, paragraph (f), paragraph (m), paragraph (n), paragraph (o) and paragraph (p), all the conditions precedent set out in paragraph X2.3.4X are inserted for the sole benefit of the Company; and the conditions precedent stated in paragraph X(c)X, paragraph X(d)X, paragraph X(e)X, paragraph X(f)X, paragraph (n), paragraph (o) and paragraph (p) are inserted for the benefit of all the Parties. 8

9 Arrangement Shares The Parties have agreed that, subject to Completion, the Company shall issue an aggregate of 26,222,000 new Consolidated Shares (the Arrangement Shares ) at the Issue Price (of S$0.50 per Consolidated Share) as follows:- (a) (b) 18,622,000 Arrangement Shares to Cresco Investments Pte. Ltd. ( CIPL ) (or its nominee); and 7,600,000 Arrangement Shares to Ms. Zhou XueQing ( Ms. Zhou ) (or her nominee), as consideration for assisting the Company in, inter alia, identifying businesses for potential acquisitions pursuant to the separate consultancy agreements both dated 10 February 2013 (collectively, the Arrangers Agreement ) executed by the Company with each of CIPL and Ms. Zhou (collectively, the Arrangers ). For the avoidance of doubt, the Arrangement Shares shall be issued after the Proposed Share Consolidation and any other consolidation of the Company s share capital that may be undertaken in connection with the Proposed Acquisition, and following Completion. Pursuant to the Arrangers Agreement, as supplemented by separate supplemental agreements both dated 29 July 2013, the Arrangers will place out such number of Arrangement Shares as shall be necessary to comply with the public float requirement under the Listing Manual or Catalist Rules, as the case may be, after Completion. For the avoidance of doubt, the Arrangers may place out more Arrangement Shares than necessary to comply with the public float requirement under the Listing Manual or Catalist Rules. The information relating to each Arranger is as follows:- (a) (b) CIPL was incorporated in Singapore on 9 November 2012, and is principally engaged in the business of providing consultancy services. It has an issued and paid-up share capital of S$300,000 comprising 300,000 ordinary shares. The sole shareholder and director of CIPL is Mr. Andrew Quah Tzy Ming, a private investor who has previously held various positions in the legal, banking and fund management industries; and Ms. Zhou is a consultant to various agricultural companies in the PRC and was formerly a lecturer at Shanghai Vocational College of Agriculture and Forestry Performance Shares The Parties have agreed that, subject to Completion and the terms and conditions of the SPA, the Company shall issue such number of new Consolidated Shares (the Performance Shares ) to the Founding Shareholders of Gold Impact at the Issue Price in proportion to their respective shareholdings in Gold Impact, as provided under paragraph 2.1.1(e) of this announcement. The number of Performance Shares to be issued by the Company shall be determined by the percentage increase in quantity of the Gold Mine s proven and probable reserves to be reported in the Technical Report 2 (as defined below) as compared to the Gold Mines 9

10 proven and probable reserves as reported in Technical Report 1, as follows:- Percentage increase in the Gold Mines proven and probable reserves (within a two (2) year period after Completion) Number of Performance Shares (a) 100% or more 18% x A Where :- (b) Less than 100% (B x 18%) x A 100 A is the total number of shares in the capital of the Company at the time of allotment and issue of the Performance Shares Where :- B is the percentage increase (being less than 100%) of the Gold Mines proven and probable reserves within a two (2) year period after Completion The quantity of the increased Gold Mines proven and probable reserves shall be published in the technical report to be prepared (the Technical Report 2 ), to the extent required by the SGX-ST and/or the requirements of the Listing Manual or the Catalist Rules (where applicable), by a competent person or qualified person referred to in paragraph X2.3.4X(k)X. The Parties agree that the Technical Report 2 shall be prepared and circulated to the relevant Parties no later than the date falling 24 months after the Completion Date, for the purposes of determining the number of Performance Shares to be issued. The Performance Shares, if any, are to be allotted and issued to each of the Founding Shareholders of Gold Impact within five (5) Business Days after the expiry of a period of two (2) years following Completion Long-Stop Date If any one of the conditions precedent set out in paragraph X2.3.4X is not fulfilled or waived such that Completion does not take place, or if for any reason Completion does not take place, on or before the date falling twelve (12) months from the date of the SPA, or such other extended period as may be agreed to by the Parties in writing, the SPA shall ipso facto cease and determine. Upon such cessation and determination of the SPA, none of the Parties shall have any claim against the others for costs, damages, compensation or otherwise in respect of the non-completion of the SPA. 10

11 Completion Date The Proposed Acquisition will be completed on the date falling five (5) Business Days after the date of despatch of a notice by the Company informing the Vendors that the last of the outstanding conditions precedent set out in paragraph X2.3.4X has been fulfilled or waived by the relevant Party as per paragraph X2.3.6X, or such other date as the Parties may agree in writing (the Completion Date ) Transaction Costs (a) (b) (c) (d) (e) Each Party shall bear its own costs and expenses incurred in the preparation, negotiation and execution of the SPA. The Company shall bear all fees, costs and expenses relating to (i) the Company s appointment of financial adviser, legal advisers and the independent financial adviser in connection with the transactions contemplated under the SPA; (ii) the issuance and listing of the Arrangement Shares, Consideration Shares and Performance Shares including listing fees, perusal fees and administrative fees payable to the SGX-ST, The Central Depository (Pte) Limited and, if applicable, the Sponsor; (iii) stamp duties in respect of the transfer of the Sale Shares; and (iv) the convening of the EGM including the printing of the Circular and publication of the notice of the EGM. In the event that the Proposed Acquisition is terminated as a result of a breach of obligations on the part of any of the Parties, the Party in breach shall be responsible for all professional costs associated with the Proposed Acquisition and Proposed Disposal which is incurred by the innocent Party. For the purposes of this paragraph, the Parties hereby agree that any failure to agree on necessary changes as a result of the final valuation of Gold Impact being materially different from Gold Impact s valuation as set out above shall not be considered a breach of obligations by any of the Parties. The Vendors shall bear all fees, costs and expenses relating to (i) the Vendors appointment of legal advisers, the reporting accountants and other professional parties in connection with the transactions contemplated under the SPA; (ii) commissioning an independent valuer referred to in paragraph X2.3.4X(j)X and Technical Report 1; and (iii) procuring the approvals, authorisations, clearances, confirmations, consents, exemptions, grants, licences, orders, permissions, recognition or waivers from all relevant government, agency, authority, body, commission, department or entity in connection with the sale of the Sale Shares. All fees, costs and expenses relating to the Technical Report 2 shall be borne by the Company Moratorium Each Vendor has undertaken under the SPA to comply with any applicable moratorium requirements imposed by the SGX-ST (namely, not to sell, assign, transfer or otherwise dispose of any of the Consideration Shares allotted and issued to it on Completion, for the applicable period after Completion), unless such applicable moratorium requirements have 11

12 been reduced or lifted by the SGX-ST. Without prejudice to the foregoing and unless otherwise directed or consented to by the SGX-ST or any other competent authority, each Vendor has undertaken not to sell, assign, transfer or otherwise dispose of any of its Consideration Shares for a period of twelve (12) months commencing from the date that the Consideration Shares are listed on the Catalist and not more than 50% of their respective shareholdings for the next six (6) months thereafter The Proposed Acquisition as a Very Substantial Acquisition or Reverse Takeover The relative figures of the Proposed Acquisition computed on the bases set out in Rule 1006(a) to (d) of the Listing Manual are as follows:- Rule 1006(a) Net asset value ( NAV ) of the assets to be disposed of, compared with the Group s NAV. Rule 1006(b) Net profits attributable to the assets acquired or disposed of, compared with the Group s net profits. Not applicable to an acquisition Not meaningful (1) Rule 1006(c) Aggregate value of the consideration given, compared with the Company s market capitalisation based on the total number of issued Shares excluding treasury shares. 317% (2) Rule 1006(d) The number of securities issued by the Company as consideration for the Proposed Acquisition, compared with the number of equity securities previously in issue 289% (3) Notes:- (1) The net profits attributable to the assets acquired amounted to approximately US$1,421,000 in FY2012, based on the unaudited consolidated net profit before tax of the Target Group Companies. However, as the Group made a net loss in FY2012, this basis under Rule 1006(b) of the Listing Manual is not meaningful. (2) The market capitalisation of the Company of approximately S$50,461,000 was determined by multiplying the existing number of issued Shares of the Company of 773,944,154 Shares (pre-consolidation and excluding such Shares which are held as treasury shares) by the volume-weighted average price of the Shares of S$ per Share transacted on 26 July 2013, being the last market day immediately preceding the date of the SPA. Accordingly, the relative figure under Rule 1006(c) of the Listing Manual was determined by dividing the Consideration of S$160 million, by the market capitalisation of the Company of approximately S$50,461,000. (3) The relative figure under Rule 1006(d) was determined by dividing the number of Consideration Shares, being 320,000,000 Consolidated Shares, by 110,563,450 Consolidated Shares (assuming that the Proposed Share Consolidation has taken place and based on the number of the existing issued Shares of the Company of 773,944,154 Shares (excluding Shares which are currently held as treasury shares)). As the relative figures under Rules 1006(c) and 1006(d) of the Listing Manual exceed 100%, the Proposed Acquisition constitutes a Very Substantial Acquisition or Reverse Takeover as defined in Rule 1015 of the Listing Manual. 12

13 Accordingly, the Proposed Acquisition shall be conditional upon, inter alia, the approval of the SGX-ST and the Shareholders being obtained pursuant to Rule 1015 of the Listing Manual Waiver from a General Take-over Offer from the Securities Industry Council As the Vendors will own more than 30% of the enlarged voting share capital of the Company upon completion of the Proposed Acquisition, the Vendors and their concert parties will be required, under Rule 14 of the Code, to make a general offer for the remaining Consolidated Shares not owned or controlled by the Vendors and their concert parties at the highest price paid or agreed to be paid by any of them for the Consolidated Shares in the preceding six (6) months. It is a condition precedent of the Proposed Acquisition that the SIC grants the Vendors and their concert parties, and does not revoke or repeal such grant, a waiver of their obligation to make a general offer under Rule 14 of the Code for all the Consolidated Shares not held by them and their concert parties, and that the independent Shareholders approve a resolution for the waiver of their right to receive such a mandatory offer from the Vendors and their concert parties at the extraordinary general meeting of the Shareholders to be convened for the purpose of approving, inter alia, the Proposed Acquisition ( EGM ). 3. THE PROPOSED DISPOSAL 3.1. Information on Mr. Huang Mr. Huang is an Executive Director and the Chief Executive Officer of the Company. As at the date of this announcement, he holds approximately 1.60% of the existing voting share capital of the Company. Mr. Huang is the son of the controlling shareholders of the Company, namely Mr. Huang Shih-An (Chairman of the Company) and Mrs. Huang Chuang Shueh-Ou (Vice Chairman of the Company). The aggregate shareholdings of Mr. Huang Shih-An and Mrs. Huang Chuang Shueh-Ou amount to approximately 40.08% of the existing voting share capital of the Company as at the date of this announcement. Mr. Huang was appointed to the Board since 3 August 2009, and is currently responsible for the Group s day-to-day operations and undertakes management oversight for financial, operational, administrative and legal functions Key Terms of the Proposed Disposal Sale and Purchase In connection with the Proposed Acquisition, the Parties have agreed that subject to Completion having occurred, Mr. Huang or his nominee shall purchase from the Company its entire interests in the existing subsidiaries, associated companies, affiliated companies and businesses as at the date of the SPA, details of which are set out in Appendix 1 to this announcement (the Existing Business ), at the Disposal Consideration (as defined in paragraph X3.2.2X below) and the completion of the Proposed Disposal shall take place on or before the Disposal Completion Date (as defined in paragraph X3.2.3X below) provided always 13

14 F that Mr. Huang shall make payment of the Disposal Consideration by cashier s order in favour of the Company in the following manner:- (a) (b) (c) payment of the sum of S$3,000,000 within two (2) business days after the Completion Date; payment of the sum of S$3,500,000 within fourteen (14) days after the Completion Date; and payment of the balance sum of S$6,500,000 within ninety (90) days after the Completion Date. The Parties agreed, inter alia, that on Completion Date, the Company and Mr. Huang or his nominee shall procure the Existing Business to execute a deed of novation which terms shall include, inter alia, the novation by the Company to Mr. Huang or his nominee of the existing liabilities owing by the Company to the Existing Business as at 31 December Following the execution of the deed of novation, the Disposal Consideration payable by Mr. Huang or his nominee to the Company shall be reduced by an amount equal to the net amount of inter-company debts owing by the Company to the Existing Business as at 31 December 2013 (the Existing Liabilities ), by way of set-off. The Existing Business relates to the existing operating businesses of the Group. Following the completion of the Proposed Disposal and the Proposed Acquisition, the principal activities of the Group will be that of the Target Group Companies as set out in paragraph of this announcement Consideration for the Proposed Disposal The consideration for the Proposed Disposal (the Disposal Consideration ) shall be an amount equal to the aggregate of (i) the sum of S$13,000,000 to be satisfied in cash; and (ii) the amount of the Existing Liabilities as at 31 December 2013, to be set-off. The Disposal Consideration was arrived at on a willing-buyer, willing-seller basis after taking into consideration the unaudited net tangible assets (the NTA ) of the Existing Business as at 31 March 2013 of approximately S$3,197,000 (equivalent to approximately US$2,526,000, 1 based on the exchange ratef of US$0.79 to S$1.00). It is intended that the net proceeds arising from the Proposed Disposal will be used as working capital for the new business of the Group. Pending the deployment of the net proceeds for such purposes, the net proceeds may be placed in deposits with financial institutions or invested in short term money market instruments as the then directors of the Company may, in their absolute discretion, deem fit. 1 Based on the exchange rate on 30 June 2013, extracted from the website, Hwww.oanda.com/convert/fxdailyH. 14

15 The following values are based on the unaudited consolidated financial statements of the Group for the three-month financial period ended 31 March 2013, and assuming that the Proposed Disposal was completed on 31 March 2013:- (US$ 000) NAV of the Existing Business as at 31 March ,526 Excess of the Disposal Consideration (1) over the NAV of the Existing Business as at 31 March ,754 Net profits attributable to the Existing Business as at 31 March Gain on the Proposed Disposal 13,754 Note:- (1) The value of the Disposal Consideration is the aggregate of the sum of S$13,000,000 and such amount of the Existing Liabilities as at 31 December For the purpose of illustrating the amount of the Disposal Consideration, it is assumed that the Existing Liabilities as at 31 December 2013 is equivalent to the unaudited amount of the Existing Liabilities as at 31 March 2013 of approximately S$7,608,000. Based on the above assumption, the value of the Disposal Consideration shall be approximately S$20,608,000 (equivalent to approximately US$16,280,000, based on an exchange rate 1 of US$0.79 to S$1.00) Disposal Completion Date The Parties agreed that the completion of the Proposed Disposal shall be the date immediately after the Completion Date or such other date as may be agreed between the Company and Mr. Huang subject to the full payment of the Disposal Consideration being made in accordance with the provisions of the SPA (the Disposal Completion Date ) The Proposed Disposal as a Major Transaction The relative figures of the Proposed Disposal computed on the bases set out in Rule 1006(a) to (d) of the Listing Manual are as follows:- Rule 1006(a) NAV of the assets to be disposed of, compared with the Group s NAV. 21% (1) Rule 1006(b) Net profits attributable to the assets disposed of, compared with the Group s net profits. 1,626% (2) Rule 1006(c) Aggregate value of the consideration given or received, compared with the Company s market capitalisation based on the total number of issued Shares excluding treasury shares. Rule 1006(d) Number of equity securities issued by the Company as consideration for an acquisition, compared with the number of equity securities previously in issue 15 41% (3) Not applicable to a disposal

16 Notes:- (1) Based on the unaudited consolidated NAV of the Existing Business as at 31 March 2013 of approximately US$2,526,000, as compared to the unaudited consolidated NAV of the Group as at 31 March 2013 of approximately US$12,220,000. (2) Based on the unaudited consolidated net profit before tax of the Existing Business of approximately US$634,000 for the three-month financial period ended 31 March 2013, as compared to the unaudited consolidated net profit before tax of the Group of approximately US$39,000 for the same period. (3) The value of the Disposal Consideration is the aggregate of the sum of S$13,000,000 and such amount of the Existing Liabilities as at 31 December For the purpose of illustrating the amount of the Disposal Consideration, it is assumed that the Existing Liabilities as at 31 December 2013 is equivalent to the unaudited amount of the Existing Liabilities as at 31 March 2013 of approximately S$7,608,000. Based on the above assumption, the value of the Disposal Consideration shall be approximately S$20,608,000. The market capitalisation of the Company of approximately S$50,461,000 was determined by multiplying the existing number of issued Shares of the Company of 773,944,154 Shares (pre-consolidation and excluding such Shares which are held as treasury shares) by the volume-weighted average price of the Shares of S$ per Share transacted on 26 July 2013, being the last market day immediately preceding the date of the SPA. Accordingly, the relative figure under Rule 1006(c) of the Listing Manual was determined by dividing the Disposal Consideration of approximately S$20,608,000, by the market capitalisation of the Company of approximately S$50,461,000. As the relative figures under Rules 1006(a), (b) and (c) of the Listing Manual exceed 20%, the Proposed Disposal constitutes a Major Transaction as defined in Rule 1014 of the Listing Manual. Accordingly, the Proposed Disposal shall be conditional upon, inter alia, the approval of the Shareholders being obtained at the EGM pursuant to Rule 1014 of the Listing Manual Interested Person Transaction Mr. Huang is the Executive Director and Chief Executive Officer of the Company, and is the son of the controlling shareholders of the Company, namely Mr. Huang Shih-An (Chairman of the Company) and Mrs. Huang Chuang Shueh-Ou (Vice Chairman of the Company). Accordingly, Mr. Huang is considered to be an interested person and the Proposed Disposal is therefore considered to be an interested person transaction for the purposes of Chapter 9 of the Listing Manual. Based on the latest audited accounts of the Group for the financial year ended 31 December 2012, the Group s NTA as at 31 December 2012 was approximately US$12,354,000. The value of the Disposal Consideration is the aggregate of the sum of S$13,000,000 and such amount of the Existing Liabilities as at 31 December For the purpose of illustrating the amount of the Disposal Consideration, it is assumed that the Existing Liabilities as at 31 December 2013 is equivalent to the unaudited amount of the Existing Liabilities as at 31 March 2013 of approximately S$7,608,000. Based on the above assumption, the value of the Disposal Consideration shall be approximately S$20,608,000 (equivalent to approximately US$16,280,000, based on an exchange rate 1 of US$0.79 to S$1.00), representing approximately % of the audited NTA of the Group for the financial year ended 31 December As the value of the Proposed Disposal is more than 5% of the latest audited NTA of the 16

17 Group, the Proposed Disposal shall be conditional upon, inter alia, the approval of the Shareholders being obtained at the EGM pursuant to Rule 906 of the Listing Manual. Mr. Huang shall, and ensure that his associates and nominees will, abstain from voting on the Proposed Disposal in respect of their respective shareholdings in the Company. As the Proposed Disposal, the Proposed Acquisition and the Proposed Share Consolidation are inter-conditional, Mr. Huang and his associates and nominees will also abstain from voting on these resolutions, which will therefore be subject to the approval of the independent Shareholders. The Audit Committee of the Company will be obtaining an opinion from an independent financial adviser to be appointed by the Company, before forming its view in relation to the Proposed Disposal, which is to be set out in the Circular to be despatched to Shareholders in due course Total value of all Interested Person Transactions The current total value of all interested person transactions, excluding transactions which are less than S$100,000, with (a) Mr. Huang and his associates; and (ii) all interested persons of the Company, for the period from 1 January 2013 to the date of this announcement (prior to and including the Proposed Disposal), and the percentage of the Group s audited NTA as at 31 December 2012 represented by such values, are as follows:- Prior to the Proposed Disposal Including the Proposed Disposal Amount (US$ 000) Percentage of audited NTA of the Group (%) Amount (US$ 000) Percentage of audited NTA of the Group (%) Total value of all transactions with Mr. Huang (1) Total value of all transactions with all interested persons of the Company (1) , , Note:- (1) The value of the Disposal Consideration is the aggregate of the sum of S$13,000,000 and such amount of the Existing Liabilities as at 31 December For the purpose of illustrating the amount of the Disposal Consideration, it is assumed that the Existing Liabilities as at 31 December 2013 is equivalent to the unaudited amount of the Existing Liabilities as at 31 March 2013 of approximately S$7,608,000. Based on the above assumption, the value of the Disposal Consideration shall be approximately S$20,608,000 (equivalent to approximately US$16,280,000 based on an exchange rate 1 of US$0.79 to S$1.00). 17

18 4. RATIONALE FOR THE PROPOSED ACQUISITION AND PROPOSED DISPOSAL The Directors believe that the Proposed Acquisition is an investment opportunity that would be in the best interests of the Company. The Group has been facing increasing challenges in the electronic components market, and had reported net losses of approximately S$20.8 million and S$6.7 million in the financial years ended 31 December 2012 and 31 December 2011 respectively. Pursuant to the Proposed Disposal, the Company intends to divest its entire interests in the Existing Business such that the Group s principal business will be in gold mining and exploration upon the completion of the Proposed Acquisition and Proposed Disposal. The Proposed Acquisition, if successful, will transform the principal business of the Group into a gold mining and exploration business which will provide the Group with the opportunity to participate in the gold mining business. It is expected that the business potential and prospects of the Company will improve. Furthermore, given the future plans as set out in paragraph 2.1.1(d), there will be room for further expansion in the gold mining business. 5. FINANCIAL INFORMATION OF THE TARGET GROUP COMPANIES The unaudited consolidated financial statements of the Target Group Companies for the financial years ended 31 December 2010, 2011 and 2012, have been prepared in accordance with China Accounting Standards for Business Enterprises and have not been restated in accordance with the Singapore Financial Reporting Standards ( SFRS ). A summary of the unaudited consolidated financial statements of the Target Group Companies for the financial years ended 31 December 2010, 2011 and 2012 is set out below:- Income Statements Unaudited (US$ 000) Revenue 786 1,190 2,546 Gross profit ,739 Profit before tax ,421 Income tax expense Net profit after tax ,420 18

19 Balance Sheet Unaudited (US$ 000) As at 31 December 2012 Current assets 3,434 Non-current assets 852 Total assets 4,286 Current liabilities 2,896 Non-current liabilities - Total liabilities 2,896 Shareholders equity 1, PROFORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP AFTER THE PROPOSED ACQUISITION AND THE PROPOSED DISPOSAL (THE ENLARGED GROUP ) The proforma financial information of the Enlarged Group has been prepared, for illustrative purposes only, based on the audited financial statements of the Group for the financial year ended 31 December 2012 and the unaudited consolidated financial statements of the Target Group Companies for the financial year ended 31 December Income Statements Financial Year Ended (US$ 000) 31 December 2012 Revenue 2,546 Gross profit 1,739 Profit/(loss) before tax (4,248) Income tax expenses 52 Net profit/(loss) after tax (4,300) Balance Sheet As at (US$ 000) 31 December 2012 Non-current assets 23,448 Current assets 14,084 Current liabilities 3,115 Non-current liabilities - Shareholders equity 34,417 The consolidated financial statements of the Target Group Companies (to be restated in accordance with SFRS) and the unaudited consolidated proforma financial statements of the Enlarged Group will be reviewed by the Company s independent reporting accountants, and set out in the Circular. Shareholders should note that the figures set out above may vary from the final unaudited consolidated proforma financial statements of the Enlarged Group due to certain adjustments that may arise. 19