THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional advisers immediately. Bursa Malaysia Securities Berhad ( Bursa Securities ) takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular. This Circular has been reviewed and approved by TA Securities Holdings Berhad, who is the Adviser to Inix Technologies Holdings Berhad ( Inix or Company ) for the Proposed Par Value Reduction (as defined herein) and Proposed Share Consolidation (as defined herein). INIX TECHNOLOGIES HOLDINGS BERHAD (Company No. 665797-D) (Incorporated in Malaysia under the Companies Act, 1965) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE (I) PROPOSED REDUCTION OF THE ISSUED AND PAID-UP SHARE CAPITAL OF INIX VIA THE CANCELLATION OF RM0.05 OF THE PAR VALUE OF EVERY EXISTING ORDINARY SHARE OF RM0.10 EACH IN INIX TO RM0.05 EACH IN INIX PURSUANT TO SECTION 64 OF THE COMPANIES ACT, 1965 ( PROPOSED PAR VALUE REDUCTION ); AND (II) PROPOSED SHARE CONSOLIDATION OF EVERY TWO (2) ORDINARY SHARES OF RM0.05 EACH IN INIX INTO ONE (1) NEW ORDINARY SHARE OF RM0.10 EACH IN INIX AFTER THE PROPOSED PAR VALUE REDUCTION ( PROPOSED SHARE CONSOLIDATION ) AND NOTICE OF EXTRAORDINARY GENERAL MEETING Adviser The Notice of Extraordinary General Meeting ( EGM ) of the Company, to be held at Kelab Shah Alam Selangor, Jalan Aerobik 13/43, 40000 Shah Alam, Selangor Darul Ehsan on Thursday, 23 June 2016 at 10.30 a.m. or any adjournment thereof, together with the Form of Proxy are enclosed in this Circular. A shareholder entitled to attend and vote at the EGM is entitled to appoint one (1) or more proxies to attend and vote instead of him. The Form of Proxy must be lodged at the Registered Office of the Company at Level 2, Tower 1, Avenue 5, Bangsar South City, 59200 Kuala Lumpur, not later than forty-eight (48) hours before the time set for the EGM or at any adjournment thereof. The lodgement of the Form of Proxy will not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. Last day, date and time for lodging the Form of Proxy Day, date and time of the EGM : Tuesday, 21 June 2016 at 10.30 a.m. : Thursday, 23 June 2016 at 10.30 a.m. This Circular is dated 31 May 2016
DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout this Circular and the accompanying appendices: 5D-VWAP : Five (5)-day volume weighted average market price ABH : Dr. Azman bin Hussin, Chief Executive Officer and Executive Director of the Company Act : Companies Act, 1965 as amended, modified or re-enacted from time to time Announcement : The announcement of the Proposals dated 9 May 2016 Board : Board of Directors of the Company Bursa Depository : Bursa Malaysia Depository Sdn Bhd Bursa Securities : Bursa Malaysia Securities Berhad Circular : This circular to the Company s shareholders dated 31 May 2016 Consolidated Shares : New ordinary shares of RM0.10 each in Inix after the Proposed Share Consolidation Deed Poll : The deed poll dated 9 October 2015 governing the Warrants 2015/2020 Director : A natural person who holds a directorship in the Company, whether in an executive or non-executive capacity, and shall have the meaning given in Section 4 of the Act and Section 2(1) of the Capital Markets and Services Act 2007 EDS : encoral Digital Solutions Sdn Bhd, a major shareholder of the Company Effective Date : The date of lodgement of an office copy of the order of the High Court of Malaya confirming the cancellation of share capital of Inix with the ROC EGM : Extraordinary general meeting of the Company Entitlement Date : 5.00 p.m. on a date to be determined by the Board and announced later in which shareholders who are registered in the Company s Record of Depositors are entitled to the Consolidated Shares EPS : Earnings per Share FYE : Financial year ended/ending, as the case may be Inix or Company : Inix Technologies Holdings Berhad Inix Group or Group : Inix and its subsidiaries Inix Shares or Shares : Ordinary shares of RM0.10 each in Inix (before the Proposed Par Value Reduction and after the Proposed Share Consolidation) or ordinary shares of RM0.05 each in Inix (after the Proposed Par Value Reduction but before the Proposed Share Consolidation), as the case may be LAT : Loss after tax i
DEFINITIONS (cont d) LBT : Loss before tax Listing Requirements : ACE Market Listing Requirements of Bursa Securities, including any amendments, modifications and additions thereto LPD : 24 May 2016, being the latest practicable date prior to the printing of this Circular LPS : Loss per Share Market Day : Any day on which Bursa Securities is open for official trading of securities Maximum Scenario : Assuming all the Outstanding Warrants 2015/2020 are exercised into Inix Shares of RM0.10 each Minimum Scenario : Assuming none of the Outstanding Warrants 2015/2020 is exercised into Inix Shares of RM0.10 each NA : Net assets attributable to ordinary equity holders Outstanding Warrants 2015/2020 : 208,634,250 Warrants 2015/2020 which are still outstanding as at the LPD PAT : Profit after tax PBT : Profit before tax Proposals : Proposed Par Value Reduction and Proposed Share Consolidation, collectively Proposed Par Value Reduction : Proposed reduction of the Company s issued and paid-up share capital of via the cancellation of RM0.05 of the par value of every existing ordinary share of RM0.10 each in Inix to RM0.05 each in Inix pursuant to Section 64 of the Act Proposed Share Consolidation : Proposed share consolidation of every two (2) ordinary shares of RM0.05 each in Inix into one (1) new ordinary share of RM0.10 each in Inix after the Proposed Par Value Reduction Record of Depositors : A record of depositors established by Bursa Depository under the Rules of Bursa Depository Rights Issue of Shares with Warrants : Rights issue of 278,179,000 Inix Shares with 208,634,250 free detachable Warrants 2015/2020, which was completed on 24 November 2015 RM and sen : Ringgit Malaysia and sen, respectively ROC : Registrar of the Companies Commission of Malaysia Rules of Bursa Depository : The rules of Bursa Depository as issued pursuant to the Securities Industry (Central Depositories) Act, 1991 including any amendments therefor issued by Bursa Depository from time to time SIS : Share issuance scheme, which was implemented on 26 November 2015 SIS Options : Options to subscribe for new Inix Shares of up to thirty (30%) of the Company s total issued and paid-up share capital (excluding treasury shares), to be granted pursuant to the SIS TA Securities : TA Securities Holdings Berhad ii
DEFINITIONS (cont d) Warrants 2015/2020 : Warrants of the Company constituted by the Deed Poll, which will expire on 16 November 2020 and the exercise price is RM0.10 per warrant. Words incorporating the singular shall, where applicable, include the plural and vice versa and words incorporating the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Reference to persons shall include a corporation, unless otherwise specified. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any reference to a time of day in this Circular shall be a reference to Malaysian time, unless otherwise specified. [The rest of the page is intentionally left blank] iii
TABLE OF CONTENTS PAGE LETTER TO THE SHAREHOLDERS OF INIX CONTAINING: 1. INTRODUCTION... 1 2. DETAILS OF THE PROPOSALS... 1 3. RATIONALE FOR THE PROPOSALS... 4 4. EFFECTS OF THE PROPOSALS... 5 5. HISTORICAL SHARE PRICES... 11 6. APPROVALS REQUIRED... 12 7. CORPORATE EXERCISES ANNOUNCED BUT PENDING COMPLETION... 12 8. CONDITIONALITY... 12 9. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM... 12 10. DIRECTORS STATEMENT AND RECOMMENDATION... 12 11. ESTIMATED TIME FRAME FOR COMPLETION... 12 12. EGM... 13 13. FURTHER INFORMATION... 13 APPENDICES I HISTORICAL FINANCIAL INFORMATION OF THE INIX GROUP 14 II FURTHER INFORMATION 16 NOTICE OF EGM FORM OF PROXY ENCLOSED ENCLOSED iv
INIX TECHNOLOGIES HOLDINGS BERHAD (Company No. 665797-D) (Incorporated in Malaysia under the Companies Act, 1965) Registered Office: Level 2, Tower 1, Avenue 5 Bangsar South City 59200 Kuala Lumpur 31 May 2016 Board of Directors Dato Megat Fairouz Junaidi Bin Megat Junid (Independent Non-Executive Chairman) Dr. Azman Bin Hussin (Chief Executive Officer / Executive Director) Mohd Anuar Bin Mohd Hanadzlah (Executive Director) Dato Zaidi Bin Mat Isa @ Hashim (Executive Director) Dato' Sri Syed Ismail B. Dato' Hj Syed Azizan (Independent Non-Executive Director) Yeo Wee Kiat (Independent Non-Executive Director) To: Shareholders of Inix Dear Sir/Madam, (I) (II) PROPOSED PAR VALUE REDUCTION; AND PROPOSED SHARE CONSOLIDATION 1. INTRODUCTION On 9 May 2016, TA Securities announced on behalf of the Board that the Company proposed to undertake the Proposals. Bursa Securities had vide its letter dated 27 May 2016 approved the Proposed Share Consolidation. THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE SHAREHOLDERS OF INIX WITH THE RELEVANT INFORMATION ON THE PROPOSALS, TO SET OUT THE BOARD S RECOMMENDATION AND TO SEEK APPROVAL OF THE SHAREHOLDERS OF INIX FOR THE RESOLUTIONS PERTAINING TO THE PROPOSALS TO BE TABLED AT THE FORTHCOMING EGM. THE NOTICE OF EGM TOGETHER WITH THE FORM OF PROXY ARE ENCLOSED IN THIS CIRCULAR. SHAREHOLDERS OF INIX ARE ADVISED TO READ AND CONSIDER THE CONTENTS OF THIS CIRCULAR TOGETHER WITH THE APPENDICES CONTAINED HEREIN CAREFULLY BEFORE VOTING ON THE RESOLUTIONS PERTAINING TO THE PROPOSALS TO BE TABLED AT THE FORTHCOMING EGM. 2. DETAILS OF THE PROPOSALS 2.1 Proposed Par Value Reduction The Proposed Par Value Reduction involves a cancellation of RM0.05 of the existing par value of every ordinary share of RM0.10 each to RM0.05 each in Inix pursuant to Section 64 of the Act. 1
As at the LPD, the Company has an issued and paid-up share capital of RM41,726,850 comprising 417,268,500 Inix Shares of RM0.10 each. In the event any of the Outstanding Warrants 2015/2020 are exercised into new Inix Shares of RM0.10 each and the corresponding new Inix Shares of RM0.10 each are credited into the securities accounts of the warrants holders prior to the Effective Date of the Proposed Par Value Reduction, the new Inix Shares of RM0.10 each arising therefrom shall also be subject to the Proposed Par Value Reduction. On 26 November 2015, the Company implemented a SIS. However, none of the SIS Options has been granted as at the LPD. The Company envisages that the SIS Options will only be granted after the completion of the Proposals. Upon the effective date of the Proposed Par Value Reduction, which is upon lodgement of an office copy of the order of the High Court of Malaya confirming the cancellation of share capital of Inix with the ROC, the par value of all existing Inix Shares will be reduced from RM0.10 each to RM0.05 each. The Proposed Par Value Reduction will result in the reduction or elimination of the accumulated losses of Inix at the Company level (as illustrated below). The surplus after such elimination shall be credited to the retained earnings account of the Company, for the purposes of being capitalised for future corporate exercises such as paying up unissued shares to be issued as fully paid bonus shares or set-off against any future accumulated losses, as will be determined by the Board and as permitted under relevant and applicable laws and the Memorandum and Articles of Association of the Company. The effects of the Proposed Par Value Reduction on the accumulated losses of Inix are as illustrated below: Minimum Scenario (Audited) As at 31 July 2015 (Unaudited) As at 31 January 2016 Company level Group level Company level Group level (RM) (RM) (RM) (RM) Accumulated losses (19,873,834) (15,153,008) (21,520,113) (17,480,647) Less: Estimated expenses (1) (800,000) (800,000) - - Less: Credit arising from the 20,863,425 20,863,425 20,863,425 20,863,425 Proposed Par Value Reduction Less: Estimated expenses (2) (200,000) (200,000) (200,000) (200,000) Resultant (accumulated losses) / retained earnings (10,409) 4,710,417 (856,688) 3,182,778 [The rest of the page is intentionally left blank] 2
Maximum Scenario (Audited) As at 31 July 2015 (Unaudited) As at 31 January 2016 Company level Group level Company level Group level (RM) (RM) (RM) (RM) Accumulated losses (19,873,834) (15,153,008) (21,520,113) (17,480,647) Less: Estimated expenses (1) (800,000) (800,000) - - Less: Credit arising from the 31,295,137* 31,295,137* 31,295,137* 31,295,137* Proposed Par Value Reduction Less: Estimated expenses (2) (200,000) (200,000) (200,000) (200,000) Resultant retained earnings 10,421,303 15,142,129 9,575,024 13,614,490 Notes: (1) After deducting the estimated expenses of RM800,000 for, amongst others, the Rights Issue of Shares with Warrants. (2) After deducting estimated expenses of RM200,000 for the Proposals. * Rounded down from RM31,295,137.50. The summary of the financial information of the Inix Group for the past three (3) audited financial years as well as the six (6)-month period ended 31 January 2016 and six (6)-month period ended 31 January 2015 is set out in Appendix I of this Circular. The Proposed Par Value Reduction will not result in any adjustment to the market price and the number of Inix Shares of RM0.05 each (after the Proposed Par Value Reduction but before the Proposed Share Consolidation) held by the shareholders of Inix. 2.2 Proposed Share Consolidation The Company proposes to consolidate every two (2) Inix Shares of RM0.05 each into one (1) Consolidated Share subsequent to the Proposed Par Value Reduction. For illustration purposes, under the Minimum Scenario, the 417,268,500 Inix Shares of RM0.05 each (after the Proposed Par Value Reduction) will be consolidated into 208,634,250 Consolidated Shares pursuant to the Proposed Share Consolidation. Fractional entitlements arising from the Proposed Share Consolidation shall be disregarded and dealt with by the Board in such manner at its absolute discretion as it may deem fit or expedient and in the best interest of the Company. The actual number of Consolidated Shares to be issued pursuant to the Proposed Share Consolidation will be determined based on the issued and paid-up share capital of the Company as at the entitlement date to be determined later after taking into consideration any new Inix Shares that may be issued pursuant to the exercise of any Outstanding Warrants 2015/2020. The Proposed Share Consolidation will result in the adjustments to the market price and the number of Inix Shares of RM0.10 each (after the Proposed Share Consolidation) held by the shareholders of Inix. 3
For illustration purposes, based on the market price of Inix Shares of RM0.055 as at the LPD, the theoretical adjusted market price and number of the Inix Shares upon completion of the Proposed Share Consolidation are as follows: Assumed number of Inix Shares held Par value (RM) Market price per Inix Share (RM) Total market value of Inix Shares (RM) As at the LPD 2 0.10 0.055 0.110 After the Proposed Par Value Reduction 2 0.05 0.055 0.110 After the Proposed Share Consolidation 1 0.10 0.110 0.110 Based on the above illustration, the Proposed Share Consolidation will increase the market price for Inix Shares of RM0.10 each (after the Proposed Share Consolidation) from RM0.055 to RM0.110 but it will not have any impact on the total market value of the Inix Shares of RM0.05 each (after the Proposed Par Value Reduction but before the Proposed Share Consolidation) and Inix Shares of RM0.10 each (after the Proposed Share Consolidation) held by the shareholders of Inix. 2.2.1 Ranking of the Consolidated Shares Upon allotment and issuance, the Consolidated Shares shall rank pari passu in all respects with one another. 2.2.2 Procedures for the implementation of the Proposed Share Consolidation As Inix Shares of RM0.10 each (after the Proposed Share Consolidation) are prescribed securities, the Consolidated Shares will be credited directly into the respective central depository system accounts of the entitled shareholders whose name appeared in the Record of Depositors of the Company on the Entitlement Date and no physical share certificate will be issued. In addition, the trading of Inix Shares of RM0.05 each (after the Proposed Par Value Reduction but before the Proposed Share Consolidation) will not be suspended for the purpose of implementing the Proposed Share Consolidation. The Consolidated Shares will be listed and quoted on the ACE Market of Bursa Securities on the next Market Day after the Entitlement Date. The notices of allotment will be issued and despatched to the entitled shareholders within four (4) Market Days after the date of listing and quotation for the Consolidated Shares. 3. RATIONALE FOR THE PROPOSALS The Proposed Par Value Reduction will allow the Company to reduce or eliminate its existing accumulated losses through the utilisation of the credit arising from the reduction of the share capital. In addition, Inix Shares of RM0.10 each have been trading below its existing par value of RM0.10 each since December 2015. The closing market price of Inix Shares of RM0.10 each as at the LPD was RM0.055. As the Company cannot issue new Shares at an issue price below its par value based on the requirements of the Act and it is the intention of Inix to maintain the par value of Inix Shares at RM0.10 each, the Proposed Par Value Reduction and Proposed Share Consolidation will provide the Company with greater flexibility to implement corporate proposals in the future which may entail the issuance of new Inix Shares of RM0.10 each (after the Proposed Share Consolidation) closer to the market price after the upward share price adjustment as a result of the Proposed Share Consolidation as illustrated in Section 2.2 of this Circular. Notwithstanding the Proposed Share Consolidation will reduce the number of Inix Shares of RM0.10 each (after the Proposed Share Consolidation), the Consolidated Shares will have the same market value as the Inix Shares of RM0.05 each prior to the Proposed Share Consolidation. 4
4. EFFECTS OF THE PROPOSALS 4.1 Issued and paid-up share capital The pro forma effects of the Proposals on the Company s issued and paid-up share capital are as follows: Issued and paid-up share Par Minimum Scenario Maximum Scenario capital of Inix value (RM) Shares RM Shares RM As at the LPD 0.10 417,268,500 41,726,850 417,268,500 41,726,850 Assuming full exercise of 0.10 - - 208,634,250 20,863,425 Outstanding Warrants 2015/2020 ^ 0.10 417,268,500 41,726,850 625,902,750 62,590,275 To be cancelled pursuant to the 0.05 - (20,863,425) - (31,295,137)* Proposed Par Value Reduction 0.05 417,268,500 20,863,425 625,902,750 31,295,138 To be consolidated pursuant to the 0.10 (208,634,250) - (312,951,375) - Proposed Share Consolidation Resultant 0.10 208,634,250 20,863,425 312,951,375 31,295,138 Notes: * Rounded down from RM31,295,137.50. ^ Based on the Minimum Scenario and pursuant to Section 4.5 of this Circular, the 208,634,250 Outstanding Warrants 2015/2020 will be adjusted to 104,317,125 Outstanding Warrants 2015/2020 at the adjusted exercise price of RM0.10 per Warrant 2015/2020 after the Proposals, which are exercisable into 104,317,125 new Inix Shares of RM0.10 each. [The rest of the page is intentionally left blank] 5
4.2 NA and gearing The pro forma effects of the Proposals on the NA and gearing of the Group are as follows: Minimum Scenario (Audited) (I) (II) (III) As at 31 July 2015 After subsequent event (1) After (I) and the Proposed Par Value Reduction After (II) and the Proposed Share Consolidation (RM) (RM) (RM) (RM) Share capital 13,908,950 41,726,850 20,863,425 20,863,425 Share premium 8,910,750 8,910,750 8,910,750 8,910,750 Other reserves - (12,079,923) (12,079,923) (12,079,923) Warrants reserves - 12,079,923 12,079,923 12,079,923 (Accumulated losses) / Retained earnings (15,153,008) (15,953,008) (2) 4,710,417 (3) 4,710,417 Shareholders funds / NA 7,666,692 34,684,592 34,484,592 34,484,592 Shares in issue 139,089,500 (4) 417,268,500 (4) 417,268,500 (5) 208,634,250 (6) NA per Inix Share (RM) 0.06 (4) 0.08 (4) 0.08 (5) 0.17 (6) Total borrowings (RM) - - - - Gearing (times) - - - - Notes: (1) After adjustments for subsequent event, i.e. Rights Issue of Shares with Warrants. The free detachable Warrants 2015/2020 are assumed to have a fair value of RM0.0579 each derived using the Black-Scholes option pricing model. (2) After deducting the estimated expenses of RM800,000 for, amongst others, the Rights Issue of Shares with Warrants. (3) After deducting estimated expenses of RM200,000 for the Proposals. (4) Based on the existing par value of RM0.10. (5) Based on the par value of RM0.05 (after the Proposed Par Value Reduction but before the Proposed Share Consolidation). (6) Based on the par value of RM0.10 (after the Proposed Share Consolidation). 6
Maximum Scenario (Audited) (I) (II) (III) As at 31 July 2015 After subsequent event (1) After (I) and assuming full exercise of Warrants 2015/2020 (2) After (II) and the Proposed Par Value Reduction (RM) (RM) (RM) (RM) Share capital 13,908,950 41,726,850 62,590,275 31,295,138 Share premium 8,910,750 8,910,750 8,910,750 8,910,750 Other reserves - (12,079,923) - - Warrants reserves - 12,079,923 - - (Accumulated losses) / Retained earnings (15,153,008) (15,953,008) (3) (15,953,008) 15,142,129 (4) Shareholders funds / NA 7,666,692 34,684,592 55,548,017 55,348,017 Shares in issue 139,089,500 (5) 417,268,500 (5) 625,902,750 (5) 625,902,750 (6) NA per Inix Share (RM) 0.06 (5) 0.08 (5) 0.09 (5) 0.09 (6) Total borrowings (RM) - - - - Gearing (times) - - - - (IV) After (III) and the Proposed Share Consolidation (RM) Share capital 31,295,138 Share premium 8,910,750 Other reserves - Warrants reserves - (Accumulated losses) / Retained earnings 15,142,129 Shareholders funds / NA 55,348,017 Shares in issue 312,951,375 (7) NA per Inix Share (RM) 0.18 (7) Total borrowings (RM) - Gearing (times) - 7
Notes: (1) After adjustments for subsequent event, i.e. the Rights Issue of Shares with Warrants. The free detachable Warrants 2015/2020 are assumed to have a fair value of RM0.0579 each derived using the Black- Scholes option pricing model. (2) Assuming 208,634,250 Warrants 2015/2020 are exercised into new Inix Shares at the existing par value of RM0.10 each at the exercise price of RM.0.10 per Warrants 2015/2020. (3) After deducting the estimated expenses of RM800,000 for, amongst others, the Rights Issue of Shares with Warrants. (4) After deducting estimated expenses of RM200,000 for the Proposals. (5) Based on the existing par value of RM0.10. (6) Based on the par value of RM0.05 (after the Proposed Par Value Reduction but before the Proposed Share Consolidation). (7) Based on the par value of RM0.10 (after the Proposed Share Consolidation). 4.3 Earnings and EPS The Proposals will not have any material effect on the earnings of the Inix Group for the FYE 31 July 2016 and FYE 31 July 2017. The Proposed Par Value Reduction will not have any effect on the EPS of Inix Group as there will be no change to the number of Inix Shares of RM0.05 each (after the Proposed Par Value Reduction) in issue. However, the lower number of Consolidated Shares in issue upon completion of the Proposed Share Consolidation will result in a corresponding increase for the EPS of the Inix Group. [The rest of the page is intentionally left blank] 8
4.4 Substantial shareholders shareholdings The pro forma effects of the Proposals on the substantial shareholders shareholdings in Inix as at the LPD are set out in the table below: Minimum Scenario Name (I) (II) After (I) and Proposed Share Consolidation As at the LPD After Proposed Par Value Reduction Direct Indirect Direct Indirect Direct Indirect Shares (1) % Shares (1) % Shares (2) % Shares (2) % Shares (3) % Shares (3) % EDS 53,747,900 12.88 - - 53,747,900 12.88 - - 26,873,950 12.88 - - ABH - - 53,747,900 (4) 12.88 - - 53,747,900 (4) 12.88 - - 26,873,950 (4) 12.88 Maximum Scenario Name (I) Assuming full exercise of Warrants 2015/2020 (II) After (I) and the Proposed Par Value Reduction As at the LPD Direct Indirect Direct Indirect Direct Indirect Shares (1) % Shares (1) % Shares (1) % Shares (1) % Shares (2) % Shares (2) % EDS 53,747,900 12.88 - - 53,747,900 8.59 - - 53,747,900 8.59 - - ABH - - 53,747,900 (4) 12.88 - - 53,747,900 (4) 8.59 - - 53,747,900 (4) 8.59 Name (III) After (II) and the Proposed Share Consolidation Direct Indirect Shares (4) % Shares (4) % EDS 26,873,950 8.59 - - ABH - - 26,873,950 (4) 8.59 9
Notes: (1) Based on the existing par value of RM0.10. (2) Based on the par value of RM0.05 (after the Proposed Par Value Reduction but before the Proposed Share Consolidation). (3) Based on the par value of RM0.10 (after the Proposed Share Consolidation). (4) Deemed interested by virtue of his interest through EDS pursuant to Section 6A of the Act. 4.5 Convertible securities Save for the Outstanding Warrants 2015/2020 which are exercisable into new Inix Shares at the par value of RM0.10 each, the Company does not have any other outstanding warrants, options, convertible securities and uncalled capital as at the LPD. Inix has implemented the SIS but none of the SIS Options has been granted. The Company envisages that the SIS Options will only be granted after the completion of the Proposals. In accordance with Clause (A) of the Fifth Schedule of the Deed Poll, if and whenever a share by reason of any consolidation or subdivision or conversion shall have a different par value, then the exercise price of the Outstanding Warrants 2015/2020 shall be adjusted by multiplying it by the revised par value and dividing the result by the former par value and the number of Outstanding Warrants 2015/2020 shall be adjusted by multiplying the existing number of Outstanding Warrants 2015/2020 held by each warrant holder by the former par value and dividing the result by the revised par value. Consequent to the Proposals, the exercise price and number of the Outstanding Warrants 2015/2020 (which are not exercised prior to the effective date of the Proposals) will be adjusted in accordance with the provisions of the Deed Poll. The Company has appointed Sierac Corporate Advisers Sdn Bhd to advise on the adjustments and will issue notices accordingly to the holders of the Outstanding Warrants 2015/2020 to inform them of such adjustments at a later date. For illustration purposes, the adjustments to the exercise price and number of the Outstanding Warrants 2015/2020 are as follows: (i) After Proposed Par Value Reduction (a) Adjustment to the exercise price of the Outstanding Warrants 2015/2020 New exercise price after the Proposed Par Value Reduction = Revised par value of each Inix Share Former par value of each Inix Share X Existing exercise price of the Warrants 2015/2020 = RM0.05 X RM0.10 RM0.10 = RM0.05 (b) Adjustment to the number of Outstanding Warrants 2015/2020 There is no adjustment to the number of the outstanding Warrants 2015/2020 as a consequence to the Proposed Par Value Reduction as the Proposed Par Value Reduction is not expected to result in any dilutive effects on the Warrant 2015/2020 holders since the number of Inix Shares in issue remains unchanged after the Proposed Par Value Reduction. 10
(ii) After Proposed Share Consolidation (a) Adjustment to the exercise price of the Outstanding Warrants 2015/2020 New exercise price after the Proposed Share Consolidation = Revised par value of each Inix Share Former par value of each Inix Share X Existing exercise price of the Warrants 2015/2020 = RM0.10 X RM0.05 RM0.05 = RM0.10 (b) Adjustment to the number of Outstanding Warrants 2015/2020 Adjusted number of Outstanding Warrants 2015/2020 = Former par value of each Inix Share Revised par value of each Inix Share X Existing number of Outstanding Warrants 2015/2020 = RM0.05 X 208,634,250 RM0.10 = 104,317,125 5. HISTORICAL SHARE PRICES The monthly high and low transacted prices of Inix Shares of RM0.10 each for the past twelve (12) months are as follows: High RM 2015 May 0.116 0.099 June 0.102 0.088 July 0.141 0.084 August 0.116 0.088 September 0.120 0.088 October 0.150 0.102 November 0.140 0.070 December 0.075 0.065 2016 January 0.075 0.060 February 0.065 0.055 March 0.070 0.045 April 0.055 0.045 Last transacted market price on 6 May 2016 (being the last trading date prior to the Announcement as mentioned in Section 1 of this Circular) was RM0.045 per Inix Share of RM0.10 each. Last transacted market price on the LPD was RM0.055 per Inix Share of RM0.10 each. (Source: Bloomberg Finance L.P.) Low RM 11
6. APPROVALS REQUIRED The Proposals are subject to and conditional upon approvals being obtained from the following: (i) Bursa Securities for the Proposed Share Consolidation which was obtained on 27 May 2016; (ii) (iii) shareholders of Inix at an EGM to be convened for the Proposals; and confirmation of the High Court of Malaya for the Proposed Par Value Reduction. 7. CORPORATE EXERCISES ANNOUNCED BUT PENDING COMPLETION Save for the Proposals, the Board is not aware of any other outstanding corporate proposal which has been announced but is pending implementation or completion prior to the printing of this Circular. 8. CONDITIONALITY The Proposed Share Consolidation is conditional upon the Proposed Par Value Reduction but not vice versa. Save for the above, the Proposals are not conditional upon any other corporate proposal undertaken or to be undertaken by the Company. 9. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM None of the Directors and/or major shareholders of the Company and/or persons connected with them have any interest, direct or indirect, in the Proposals, save for their respective entitlements under the Proposed Share Consolidation, for which all the existing shareholders of Inix are also entitled to. 10. DIRECTORS STATEMENT AND RECOMMENDATION The Board, after having considered all aspects of the Proposals, is of the opinion that the Proposals are in the best interest of the Company and accordingly recommend you to vote IN FAVOUR of the resolutions in respect of the Proposals to be tabled at the Company s forthcoming EGM. 11. ESTIMATED TIME FRAME FOR COMPLETION Barring any unforeseen circumstances and subject to the approvals of the relevant authorities being obtained, the Board expects the Proposals to be completed in the second (2 nd ) half of 2016. Tentative date Events 23 June 2016 EGM Mid June 2016 Submission of documents to the High Court of Malaya for the Proposed Par Value Reduction Mid August 2016 Obtained confirmation from the High Court of Malaya for the Proposed Par Value Reduction / Lodgement of the Court Order with the ROC for the Proposed Par Value Reduction to take effect /Completion of the Proposed Par Value Reduction End August 2016 Listing and quotation of the Consolidated Shares 12
12. EGM The Company s EGM, the notice of which is set out in this Circular, will be held at Kelab Shah Alam Selangor, Jalan Aerobik 13/43, 40000 Shah Alam, Selangor Darul Ehsan, on Thursday, 23 June 2016 at 10.30 a.m. or any adjournment thereof, for the purpose of considering and if thought fit, passing with or without modifications, the resolutions to give effect to the Proposals. If you are unable to attend and vote in person at the Company s EGM, you should complete and return the enclosed Form of Proxy in accordance with the instruction provided thereon so as to arrive at the Registered Office of the Company at Level 2, Tower 1, Avenue 5, Bangsar South City, 59200 Kuala Lumpur not later than forty-eight (48) hours before the time set for holding the EGM or any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. 13. FURTHER INFORMATION You are advised to refer to the Appendices set out in this Circular for further information. Yours faithfully, For and on behalf of the Board INIX TECHNOLOGIES HOLDINGS BERHAD DATO MEGAT FAIROUZ JUNAIDI BIN MEGAT JUNID Independent Non-Executive Chairman 13
APPENDIX I HISTORICAL FINANCIAL INFORMATION OF THE INIX GROUP The summary of financial information of the Inix Group for the past three (3) audited financial years as well as the six (6)-month periods ended 31 January 2015 and 31 January 2016 is as follows: Revenue: - Supply of hardware and software - Software development and system integration (Audited) (Unaudited) FYE 31 July 2013 FYE 31 July 2014 FYE 31 July 2015 Six (6)-month period ended 31 January 2015 Six (6)-month period ended 31 January 2016 (RM 000) (RM 000) (RM 000) (RM 000) (RM 000) - - - 269-4,641 4,935 4,784 2,109 1,208 - Sale of e-books 17 6 2 1 2 - Corporate (Investment 11 11 444 35 - holding and others) 4,669 4,952 5,230 2,414 1,210 PBT/ (LBT) 124 (1,390) (45) 55 (2,329) PAT/ (LAT) 124 (1,390) (48) 55 (2,329) Cash and cash equivalents 192 661 123 511 13,142 NA 7,587 7,715 7,667 7,770 33,157 Share capital 12,645 13,909 13,909 13,909 41,727 Weighted average number of Inix 126,445 132,768 139,090 139,090 243,407 Shares ( 000) (1) Number of Inix Shares in issue 126,445 139,090 139,090 139,090 417,269 ( 000) (1) NA per Inix Share (RM) (2) 0.0600 0.0555 0.0551 0.0559 0.0795 Basic EPS / (LPS) (sen) (3) 0.10 (1.05) (0.03) 0.04 (0.96) (Source: Inix s annual reports for the FYE 31 July 2014 and FYE July 2015, unaudited consolidated financial results for the six (6)- month period ended 31 January 2015 and six (6)-month period ended 31 January 2016) Notes: (1) Based on the existing par value of RM0.10 each. (2) Calculated based on NA over number of Inix Shares in issue for the respective financial years and periods. (3) Calculated based on PAT/LAT over weighted average number of Inix Shares for the respective years and periods. The diluted LPS are not applicable for FYE 31 July 2013 to FYE 31 July 2015 and six (6) month period ended 31 January 2015 as the Rights Issue of Shares with Warrants was completed on 24 November 2015. The diluted LPS is not disclosed for the six (6) month period ended 31 January 2016 as the effects on the assumed exercise of the Warrants 2015/2020 is anti-dilutive. Commentaries: (i) FYE 31 July 2014 vs FYE 31 July 2013 Revenue for Inix Group increased by approximately RM0.28 million or 6.06% from approximately RM4.67 million for the FYE 31 July 2013 to approximately RM4.95 million for the FYE 31 July 2014 mainly due to the increase in revenue contribution from software development and system integration. The increased revenue was due to the new contracts secured by the Group for the software development and system integration. 14
APPENDIX I HISTORICAL FINANCIAL INFORMATION OF THE INIX GROUP (Cont d) Nevertheless, the Group recorded a LAT of RM1.39 million for the FYE 31 July 2014 compared to a PAT of approximately RM0.12 million for the FYE 31 July 2013. The loss for the FYE 31 July 2014 was mainly due to the increase in operating/workforce expenses incurred for the project implementation and development of new software solutions. The development efforts were mainly focused on the e-commerce portal, new software integrated solution with mobile applications function and also enhancing some software developed while integrating and implementing a customer-specific project into a product for higher resale value opportunities. (ii) FYE 31 July 2015 vs FYE 31 July 2014 Revenue for Inix Group increased by approximately RM0.28 million or 5.61% from approximately RM4.95 million for the FYE 31 July 2014 to approximately RM5.23 million for the FYE 31 July 2015, mainly due to higher revenue contribution from software development and system integration derived by the Company. The Group secured a mobile applications and system integration consultancy project with a contract value of RM0.66 million during the FYE 31 July 2015. The portion of the said contract value attributable to the Company (for mobile applications) was RM0.44 million while the balance of RM0.22 million was for system integration carried out by its other subsidiaries. For the FYE 31 July 2015, the Group recorded a LAT of approximately RM0.05 million compared to a LAT of approximately RM1.39 million for the FYE 31 July 2014. The said improvement in the financial results was mainly attributable to the higher revenue as well as lower administrative and research and development expenses (i.e. operating/workforce expenses directly attributable for project implementation and development of new software solutions) recorded for the for the FYE 31 July 2015. (iii) Six (6)-month period ended 31 January 2016 vs six (6)-month period ended 31 January 2015 Inix Group recorded lower revenue by approximately RM1.20 million or 49.88% from approximately RM2.41 million during the six (6)-month period ended 31 January 2015 to approximately RM1.21 million for the six (6)- month period ended 31 January 2016 mainly due to lower revenue contribution from software development and system integration as the existing projects/ contracts were at the tail-end (i.e., approaching completion) thus most of the revenue attributable to the projects have been recognised earlier and there was no revenue from the supply of hardware and software. Revenue derived from software development and system integration are on project basis in which the Inix Group provides the services and/or solutions to the customers in accordance with the customers request and requirements within a contractual period. In addition, the supply of hardware and software are provided by Inix Group upon customers request. As such, revenue derived from software development and system integration and supply of hardware and software fluctuate based on the services and/or solutions and/or products requested by the customers. Nevertheless, the Inix Group endeavours to minimise such impact by securing new projects yearly. For the six (6)-month period ended 31 January 2016, the Group recorded a LAT of approximately RM2.33 million compared to a PAT of approximately RM0.06 million for the six (6)-month period ended 31 January 2015. The loss for the FYE 31 July 2015 was mainly due to: (a) (b) increase in professional and consultancy fees which was mainly incurred in relation to the completed corporate exercises for, amongst others, the acquisition of 30% equity interest in Galactic Maritime (M) Sdn Bhd, SIS and Rights Issue of Shares with Warrants; and increase in administrative (operating/workforce expenses) as well as research and development expenses incurred for project implementation and development which were mainly focused on the e-commerce portal, new software integrated solution with mobile applications function and also enhancing some software developed while integrating and implementing a customer-specific project into a product for higher resale value opportunity. The increases in the NA per share and share capital during the six (6)-month period ended 31 January 2016 were mainly due to the completion of the Rights Issue of Shares with Warrants on 25 November 2015. 15
APPENDIX II FURTHER INFORMATION 1. DIRECTORS RESPONSIBILITY STATEMENT This Circular has been seen and approved by the Board and they collectively and individually accept full responsibility for the accuracy of the information given and confirm that, after having made all reasonable enquiries and to the best of their knowledge and belief, there are no false or misleading statements or information contained in this Circular, and there are no other facts and information the omission of which would make any statement in this Circular false or misleading. 2. CONSENTS TA Securities, being the Adviser for the Proposals, has given and has not subsequently withdrawn its written consent to the inclusion in this Circular of its name and all references in the form and context in which they appear in this Circular. 3. CONFLICT OF INTERESTS TA Securities has confirmed that it is not aware of any conflict of interest which exist or are likely to exist in its capacity as the Adviser for the Proposals. 4. MATERIAL CONTRACTS Save as disclosed below, as at the LPD, neither the Company nor the Group have entered into any contracts which are or may be material (not being contracts entered into in the ordinary course of business of the Group) during the two (2) years immediately preceding the date of this Circular: (i) the Deed Poll constituting the Warrants 2015/2020; (ii) (iii) the sale of shares agreement dated 16 March 2015 entered into by Inix and Galactic Yield Enterprises Ltd to acquire thirty percent (30%) equity interest in Galactic Maritime (M) Sdn Bhd for a purchase consideration of RM7.20 million. The acquisition was completed on 11 December 2015; and the sale of shares agreement dated 22 March 2016 entered into by Inix with Lim Choon Chong and Li Bin to acquire twenty five percent (25%) equity interest in HyperQB Sdn Bhd for a purchase consideration of RM7.70 million. The acquisition was completed on 1 April 2016. 5. MATERIAL LITIGATIONS, CLAIMS AND ARBITRATION As at the LPD, neither the Company nor the Group is engaged in any material litigations, claims or arbitration, either as plaintiff or defendant, and the Board does not have any knowledge of any proceedings, pending or threatened, against the Company or the Group or of any facts likely to give rise to any proceedings which may materially and adversely affect the financial position or business of the Group. 6. MATERIAL COMMITMENTS As at the LPD, the Board is not aware of any material commitments incurred or known to be incurred by the Company or the Group, which may have a material impact on the financial position of the Group. 16
APPENDIX II FURTHER INFORMATION (Cont d) 7. CONTINGENT LIABILITIES As at the LPD, the Board is not aware of any contingent liabilities incurred or known to be incurred by the Company or the Group, which upon enforceable, may have a material impact on the financial position of the Group. 8. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents are available for inspection at the Company s Registered Office at Level 2, Tower 1, Avenue 5, Bangsar South City, 59200 Kuala Lumpur during normal business hours from 9.00 a.m. to 5.00 p.m. from Monday to Friday (excluding public holidays) for the period commencing from the date of this Circular up to and including the date of the Company s forthcoming EGM: (i) (ii) (iii) (iv) Memorandum and Articles of Associations of the Company; the audited financial statements of the Group for the past two (2) FYE 31 July 2014 and FYE 31 July 2015, and unaudited consolidated financial results for the six (6)-month period ended 31 January 2016; the letter of consent and conflict of interest as referred to in Sections 2 and 3 above; and the material contracts as referred to in Section 4 above. [The rest of this page has been intentionally left blank] 17
INIX TECHNOLOGIES HOLDINGS BERHAD (Company No. 665797-D) (Incorporated in Malaysia under the Companies Act, 1965) NOTICE OF EXTRAORDINARY GENERAL MEETING NOTICE IS HEREBY GIVEN THAT an Extraordinary General Meeting of Inix Technologies Holdings Berhad ( Inix or the Company ) will be held at Kelab Shah Alam Selangor, Jalan Aerobik 13/43, 40000 Shah Alam, Selangor Darul Ehsan, on Thursday, 23 June 2016 at 10.30 a.m. or any adjournment thereof, for the purpose of considering and if thought fit to pass the following resolutions, with or without any modifications: SPECIAL RESOLUTION PROPOSED REDUCTION OF THE ISSUED AND PAID-UP SHARE CAPITAL OF INIX VIA THE CANCELLATION OF RM0.05 OF THE PAR VALUE OF EVERY EXISTING ORDINARY SHARES OF RM0.10 EACH IN INIX TO RM0.05 EACH IN INIX PURSUANT TO SECTION 64 OF THE COMPANIES ACT, 1965 ( ACT ) ( PROPOSED PAR VALUE REDUCTION ) THAT subject to and conditional upon the sanction of the High Court of Malaya pursuant to Section 64 of the Act and approvals being obtained from the relevant authorities and parties, approval be and is hereby given to the Company to effect a reduction in the par value of the ordinary shares of RM0.10 each in Inix to RM0.05 each in Inix and the credit arising therefrom shall be applied towards reducing or eliminating the accumulated losses of the Company as at the effective date of the Proposed Par Value Reduction and the balance arising thereafter will be credited to the retained earnings account of the Company which may be utilised in such manner as the Board of Directors of the Company ( Board ) deems fit and as permitted by relevant and applicable laws in Malaysia; AND THAT the Board be and is hereby authorised to do all such acts and things that they may consider necessary or expedient in the best interest of the Company to give effect to the Proposed Par Value Reduction with full power to assent to any term, condition, modification, variation and/or amendment as may be imposed or required by the relevant authorities and/or the High Court of Malaya. ORDINARY RESOLUTION PROPOSED SHARE CONSOLIDATION OF EVERY TWO (2) ORDINARY SHARES OF RM0.05 EACH IN INIX INTO ONE (1) NEW ORDINARY SHARE OF RM0.10 EACH IN INIX ( CONSOLIDATED SHARES ) AFTER THE PROPOSED PAR VALUE REDUCTION ( PROPOSED SHARE CONSOLIDATION ) THAT subject to and conditional upon the passing of the Special Resolution above and also the approvals being obtained from the relevant authorities, approval be and is hereby given to the Company to give effect to the Proposed Share Consolidation; THAT the Consolidated Shares to be issued shall, upon allotment and issue, rank pari passu in all respects with each other. Fractional entitlements arising from the Proposed Share Consolidation, if any, shall be disregarded and dealt with by the Board in such manner at their absolute discretion as they may deem fit or expedient and in the best interest of the Company; AND THAT the Board be and are hereby authorised with full powers to take all steps and do all such acts and matters as they may deem fit, necessary, expedient and/or appropriate in order to finalise, implement and/or give full effect to the Proposed Share Consolidation and with all preparatory steps taken and things done to date by the Board (if any) in respect of the Proposed Share Consolidation to be hereby duly ratified, with full powers to assent to any conditions, modifications, variations and/or amendments whether required by the relevant authorities or otherwise deemed to be in the best interest of the Company.
By Order of the Board WONG YOUN KIM (MAICSA 7018778) Company Secretary Kuala Lumpur 31 May 2016 Notes: 1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 2. If the appointer is a corporation, the proxy form must be executed under its common seal or under the hand of an officer or an attorney duly authorized. 3. A member shall not be entitled to appoint more than two proxies to attend and vote at the same meeting. Where a member appoint two proxies, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy in a poll and the proxy who shall be entitled to vote on a show of hands. 4. Where a Member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds. 5. The instrument appointing a proxy must be deposited at the registered office of the Company, situated at Level 2, Tower 1, Avenue 5, Bangsar South City, 59200 Kuala Lumpur not less than forty-eight (48) hours before the time holding the meeting or adjournment meeting. 6. Only depositors whose names appear in the Record of depositors as at 15 June 2016 shall be registered as members and be entitled to attend the Extraordinary General Meeting or appoint proxy(ies) to attend and vote on his/her behalf.
INIX TECHNOLOGIES HOLDINGS BERHAD (Company No. 665797-D) (Incorporated in Malaysia under the Companies Act, 1965) CDS account no. FORM OF PROXY No. of shares held I/We,......... [Full Name in block, NRIC no./company no.] of.... [Address]..... being the shareholder(s) of Inix Technologies Holdings Berhad, hereby appoint: Full name (in block) NRIC/Passport no. Proportion of shareholdings No. of shares % Address and/or (delete as appropriate) Full name (in block) NRIC/Passport no. Proportion of shareholdings No. of shares % Address or failing him/her, the Chairman of the Meeting as my/our proxy to attend and to vote for me/us and on my/our behalf at the Extraordinary General Meeting of the Company to be held at Kelab Shah Alam Selangor, Jalan Aerobik 13/43, 40000 Shah Alam, Selangor Darul Ehsan on Thursday, 23 June 2016 at 10.30 a.m. or any adjournment thereof, and to vote as indicated below: Resolution Agenda FOR AGAINST Special Resolution Proposed Par Value Reduction Ordinary Resolution Proposed Share Cosolidation Signed on this day of.. 2016 Notes:..... Signature of Shareholder(s) 1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 2. If the appointer is a corporation, the proxy form must be executed under its common seal or under the hand of an officer or an attorney duly authorized. 3. A member shall not be entitled to appoint more than two proxies to attend and vote at the same meeting. Where a member appoint two proxies, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy in a poll and the proxy who shall be entitled to vote on a show of hands. 4. Where a Member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds. 5. The instrument appointing a proxy must be deposited at the registered office of the Company, situated at Level 2, Tower 1, Avenue 5, Bangsar South City, 59200 Kuala Lumpur not less than forty-eight (48) hours before the time holding the meeting or adjournment meeting. 6. Only depositors whose names appear in the Record of depositors as at 15 June 2016 shall be registered as members and be entitled to attend the Extraordinary General Meeting or appoint proxy(ies) to attend and vote on his/her behalf.