No. of Sale Shares to be acquired. % of the Vendors

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1 FOUNDPAC GROUP BERHAD ( FPG OR COMPANY ) - PROPOSED ACQUISITION OF 187,500 ORDINARY SHARES, REPRESENTING 75% EQUITY INTEREST IN DYNAMIC STENCIL SDN BHD FOR A TOTAL CASH CONSIDERATION OF RM16.50 MILLION. 1. INTRODUCTION The Board of Directors of FPG ( Board ) wishes to announce that the Company had on 25 September 2017 entered in to a Share Sale Agreement ( Agreement ) with Lim Seng Chiew and Lim Seng Choon (collectively, the Vendors ) in relation to the acquisition of 187,500 ordinary shares ( Sale Shares ) representing 75% equity interests in Dynamic Stencil Sdn Bhd ( DSSB ) for a total cash consideration of RM16,500,000 ( Purchase Consideration ), subject to the terms and conditions in the Agreement ( Proposed Acquisition ). 2. DETAILS OF THE PROPOSED ACQUISITION 2.1 Background information on the Proposed Acquisition The Sale Shares will be acquired free from all encumbrances together with all rights attached thereto and all dividends and distributions declared or paid or made in respect thereof on and after the Completion Date (as defined below) for the Purchase Consideration in the following manner: - No. of Sale Shares to be acquired Purchase Consideration (RM) % of the Vendors shareholdings Lim Seng Chiew 175, ,400, Lim Seng Choon 12, ,100, Total 187, ,500, FPG shall be entitled to nominate its wholly-owned subsidiary company to be the transferee and holder of the Sale Shares. Upon completion of the Proposed Acquisition, DSSB will be a 75%-owned subsidiary of FPG. 2.2 Information on DSSB DSSB is a private limited company incorporated in Malaysia on 23 January 2014 under the Companies Act As at the date of this announcement, the share capital of DSSB is RM250, comprising 250,000 ordinary shares. DSSB is principally engaged in the manufacture and sale of laser stencils, having its principal place of business at 8, Lintang Beringin 1, Off Permatang Damar Laut, Batu Maung, Pulau Pinang. As at the date of this announcement, the directors and shareholders of DSSB, all of whom are Malaysian, and their respective shareholdings are as follows:- Name Directors/Shareholders No. of shares held % of shareholdings Lim Seng Chiew Director & Shareholder 225, KhooYuet Boon Director - - Lim Seng Choon Shareholder 25, Total 250,

2 2.2 Information on DSSB (Continued ) The total assets, net assets and net profit of DSSB based on its latest audited financial statements for the year ended 31 May 2017 are as follows:- RM Total assets 8,234,070 Net assets 5,021,616 Net profit 1,897, SALIENT TERMS OF THE AGREEMENT 3.1 Consideration and mode of payment The Purchase Consideration shall be RM16,500,000 only and to be paid by FPG to the Vendors in the following manner: - upon the execution of the Agreement: (a) the sum of RM825,000 only constituting 5% of the Purchase Consideration (hereinafter referred to as the Earnest Sum ) shall be paid to the Vendors provided that if any of the conditions precedent referred to in Section 3.2 of this announcement ( Conditions ) is not fulfilled by the last day of the Due Diligence Period, the Earnest Sum shall be refunded to FPG without interest; (b) the sum of RM825,000 only constituting 5% of the Purchase Consideration ( Balance Deposit ) shall be deposited with FPG s solicitors as stakeholder pending the fulfillment of the conditions precedent referred to in Section 3.2 of this announcement; (ii) the balance sum of RM14,850,000 of the Purchase Consideration ( Balance Sum ) shall be paid on the Completion Date (as defined below) as follows: - (a) a retention sum of RM4,500,000 to be retained as security for the profit guarantee and paid to FPG s solicitors as stakeholder; and (b) the remaining sum of RM10,350,000 shall be paid to the Vendors by way of bank draft or telegraphic transfer or inter-bank transfer or by such other means agreed by the Vendors. 3.2 Conditions precedent Completion of the sale and purchase of the Sale Shares is conditional upon the following Conditions having been fulfilled within one (1) month from the due diligence commencement date or such date as may be extended by mutual agreement of both parties ( Due Diligence Period ). FPG shall have: - completed the legal and financial due diligence in relation to DSSB and shall be satisfied with the result thereof and which shall not disclose: - (1) any material breach of any of the Vendors warranties; and (2) the net assets of DSSB shall not be below RM5,000,000. (ii) been satisfied that the financial position of the Company has not been materially adversely derogated since the last accounting date, i.e. 31 May 2017 and there is not in existence any change or development reasonably likely to result in any adverse change in the financial position, business operations or conditions (financial or otherwise) of the Company (including the coming into force of any law or governmental regulation or directive which seriously affects or is likely to seriously affect the business which is material to FPG. 2

3 3.2 Conditions precedent (Continued ) (iii) Lapse of Agreement In the event that the Agreement has not become unconditional upon the expiry of the Due Diligence Period, then either FPG or the Vendors may terminate the Agreement immediately by written notice to the other parties in which case the parties shall not be bound to proceed with the sale and purchase of the Sale Shares under the Agreement and the Agreement shall cease to be of any effect. The Vendors shall refund the Earnest Sum without interest to FPG and FPG s solicitors shall release the Balance Deposit (together with interests accrued thereon) to FPG. (iv) Completion The completion of the sale and purchase of the Sale Shares shall take place within thirty (30) days from the date on which the last of the conditions precedent are satisfied ( Completion Date ). On Completion Date, FPG shall pay the Balance Sum to the Vendors and the Vendors shall deliver or cause to be delivered to FPG the following: - (ii) a valid and registrable instrument (subject only to due stamping) of transfer duly executed in favour of FPG or its nominee in respect of the Sale Shares accompanied by the original share certificates thereto together with all other documents relating thereto; all other documents specified in Clause 5.2 of the Agreement. (v) Profit guarantee The Vendors hereby jointly and severally represent, warrant and give a profit guarantee to FPG that the certified profit after tax ( PAT ) of DSSB for the period of two (2) years, commencing from the first (1 st ) day of the next calendar month after the Completion Date ( Guaranteed Period ), shall not be less than the aggregated guarantee profits of RM9.00 million ( Aggregate Guaranteed Profits ). In the event the Aggregate Guaranteed Profits are not achieved, the Vendors shall be liable to pay the shortfall to FPG. The shortfall shall be calculated as follows:- Profit Guarantee Shortfall = Aggregate Guaranteed Profits - Certified PAT In the event the aggregate guarantee profits are not achieved and there is a profit guarantee shortfall, the Vendor shall be liable to pay the compensation sum to the purchaser in the following formula: - Compensation Sum = [Profit guarantee shortfall 2] Price-to-Earnings Ratio ( PE ) of % 3

4 4. BASIS AND JUSTIFICATION OF ARRIVING AT THE PURCHASE CONSIDERATION The Purchase Consideration was arrived at based on willing-buyer willing-seller basis and agreed upon after taken into consideration, inter-alia, the following: - the profit guarantee by the Vendors that the PAT of DSSB for the Guaranteed Period, shall not be less than the Aggregated Guaranteed Profits of RM9.00 million, yielding an average annual guaranteed profit of RM4.5 million; (ii) a PE ratio of approximately 4.89 times (based on the average annual guaranteed profit of RM4.5 million), yielding a valuation of RM22.00 million for 100% equity interest in DSSB; (iii) the rationale for the Proposed Acquisition as set out in Section 7 of this announcement; and (iv) the future prospects of DSSB as set out in Section 8.3 of this announcement. 5. SOURCE OF FUNDING The Purchase Consideration is to be funded from internally-generated funds. 6. LIABILITIES TO BE ASSUMED Save for the obligations and liabilities arising in and from the Agreement and for the liabilities arising from the ordinary course of business of DSSB, there are no other liabilities, including contingent liabilities and/or guarantees, to be assumed by FPG arising from the Proposed Acquisition. 7. RATIONALE FOR THE PROPOSED ACQUISITION FPG and its subsidiaries ( FPG Group or Group ) is principally involved in the design, development, manufacture, marketing and sale of precision engineering parts, namely, stiffeners, test sockets, hand lids and related accessories. These precision engineering parts are sold to semiconductor manufacturers and OSATs (Outsourced Semiconductor Assembly and Test Companies), or for printed circuit board (PCB) design houses or fabless semiconductor companies which are used to facilitate the testing of integrated circuits. The Proposed Acquisition is an opportune venture for FPG market laser stencils which serve as a complementary component to be marketed to FPG s customers. Concurrently, FPG may also cross-sell its products to DSSB s customers. The Group s long term growth plan includes growing of its semiconductor business as well as expanding its business portfolio into other viable and incomegenerating business. In view of the attractive prospects of DSSB and the electrical and electronic ( E&E ) sector, the Board reasonably believes that the manufacturing of laser stencils is an attractive business proposition. Post-Proposed Acquisition, FPG Group and DSSB may leverage on each other s customer base to increase their revenues. On these bases, the Board believes that the Proposed Acquisition would contribute positively to the Group s future earnings and financial position of the Group. The additional revenue contribution will also provide the Group with an additional stream of earnings which is expected to enhance the Group s profitability and returns on shareholders funds. 4

5 8. FUTURE PROSPECTS 8.1 Overview of Malaysia s economy The Malaysian economy recorded a stronger growth of 5.8% in the second quarter of 2017 (1Q 2017: 5.6%). Private sector spending continued to be the main driver of growth. On the external front, growth was further supported by the robust expansion in real exports of goods and services (9.6%; 1Q 2017: 9.8%) following strong demand for manufactured and commodity products. Real imports moderated slightly to 10.7% (1Q 2017: 12.9%) following more moderate expansion in investment. On a quarter-on-quarter seasonally adjusted basis, the economy recorded a growth of 1.3% (1Q 2017: 1.8%). (Source: BNM Quarterly Bulletin, second quarter 2017) 8.2 Overview of E&E industry Manufactured goods comprising about 83% of total exports rose to RM413.3 billion during the first eight months of 2016 (January-August 2015: 80.3%; 3%; and RM398.1 billion), mainly led by the expansion in electrical & electronics ( E&E ) as well as chemicals and chemical products. Major export markets were Singapore, the US, China, Japan and Hong Kong. E&E exports grew 2.2% mainly supported by sustained demand for semiconductor devices (1.2%) and a sharp increase in telecommunication equipment (10.9%) (January-August 2015: 7.4%; 10.3%; 0.1%). Exports of semiconductor devices, which increased significantly by 30.2%, particularly to the US. This was mainly due to the extension of investment tax credit for solar and renewable energy projects. Meanwhile higher receipts from telecommunication equipment segment were mainly due to strong demand from the US, Mexico, Singapore and Germany. On the contrary, exports of electronic integrated circuits and automatic data processing machines declined 2.5% and 3.8% respectively. Overall, demand for E&E products remained favorable mainly from the US, Singapore, Germany, and Mexico. (Source: Economic Report 2016/2017) 8.3 Prospects of DSSB The Proposed Acquisition will serve as an opportunity for the FPG Group to further enhance its current business portfolio and provide for additional income stream to the Group. Leveraging on DSSB s good track record for the past three (3) years and the Aggregate Guaranteed Profits made by the Vendors to FPG for the Guarantee Period, the Board is optimistic that the prospect for the coming years would be positive. Henceforth, the Board envisages that the Proposed Acquisition will contribute to the future earnings and growth of the FPG Group. 9. RISK FACTORS 9.1 Non-completion of the Proposed Acquisition The completion of the Proposed Acquisition is subject to the fulfilment of all terms and conditions under the Agreement. In the event that FPG or the Vendors breach such terms and conditions, and the Agreement terminates, the Proposed Acquisition will not be completed. Notwithstanding the above, FPG will take all reasonable steps to ensure all terms and conditions under the Agreement are fulfilled to complete the Proposed Acquisition. 5

6 9.2 Financial risk The Group intends to finance the Acquisition through internally-generated funds. Utilisation of internally generated funds may result in a reduction of funds available for working capital purposes. As such, the Proposed Acquisition may reduce the cash flow position of the Group. Nevertheless, the Group shall use its best endeavours to manage its cash flow position and funding requirements. 10. EFFECTS OF THE PROPOSED ACQUISITION 10.1 Share capital and shareholders shareholdings The Proposed Acquisition will not have any effect on the issued share capital and substantial shareholders shareholdings of FPG as it does not involve any issuance of new shares in the Company Net assets ( NA ), NA per share and gearing The Proposed Acquisition is not expected to have any material effect on the NA and NA per share of the Group for the financial year ending 30 June 2018 except for the consolidation of the DSSB upon completion of the Proposed Acquisition which may increase the NA and the NA per share of the Group. As set out in Section 5, the Proposed Acquisition will be funded through internally-generated funds. Hence, there is no impact on the gearing of the Group Earnings and earnings per share ( EPS ) The actual impact of the Proposed Acquisition on the consolidated earnings and EPS of FPG moving forward will be dependent on Completion Date. In addition, the Vendors have provided a profit guarantee with an Aggregate Guaranteed Profits of RM9.00 million within the Guaranteed Period. Therefore, the Proposed Acquisition is expected to be earnings accretive and is expected to contribute positively to the future earnings of the FPG Group after completion. 11. HIGHEST PERCENTAGE RATIO APPLICABLE The highest percentage ratio applicable to the Proposed Acquisition pursuant to Paragraph 10.02(g) of the Main Market Listing Requirement of Bursa Malaysia Securities Berhad is 24.44%, derived from the Purchase Consideration compared with the net assets of the Group based on its latest audited financial statements as at 30 June APPROVAL REQUIRED The Proposed Acquisition is not subject to the approval of the shareholders of FPG or any other relevant authorities. The Proposed Acquisition is not conditional upon any other corporate proposals undertaken or to be undertaken by the Company. 13. DIRECTORS AND MAJOR SHAREHOLDERS INTEREST None of the Directors, major shareholders of FPG and/or persons connected with them have any interest, whether direct or indirect, in the Proposed Acquisition. 6

7 14. DIRECTORS STATEMENT After having considered all aspects of the Proposed Acquisition, the Board is of the opinion that the Proposed Acquisition is in the best interest of the Company. 15. ESTIMATED TIME FRAME FOR COMPLETION Barring unforeseen circumstances and subject to the Conditions being fulfilled, the Proposed Acquisition is expected to be completed by the fourth (4 th ) quarter of DOCUMENTS FOR INSPECTION The Agreement is available for inspection at the registered office of FPG at 57-G, Persiaran Bayan Indah, Bayan Bay, Sungai Nibong, Penang from 9.00 a.m. to 5.00 p.m., from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement This announcement is dated 25 September