RADIANT GLOBALTECH BERHAD ( RADIANT GLOBALTECH OR THE COMPANY ) (I) PROPOSED ACQUISITION OF 650,000 ORDINARY SHARES IN INFOCONNECT COMMERCE SDN. BHD. ( ICSB ), REPRESENTING THE ENTIRE EQUITY INTEREST, FOR A TOTAL PURCHASE CONSIDERATION OF RM650,000 TO BE FULLY SATISFIED VIA CASH; AND (II) PROPOSED ACQUISITION OF 1,400,000 ORDINARY SHARES IN ADAPTIVE POS SDN. BHD. ( APSB ), REPRESENTING 70% EQUITY INTEREST, FOR A TOTAL PURCHASE CONSIDERATION OF RM1,400,000 TO BE FULLY SATISFIED VIA CASH 1. INTRODUCTION The Board of Directors of Radiant Globaltech ( Board ) wishes to announce that the Company had on 19 December 2018 entered into the following agreements:- (i) Share sale agreement with Chong Jen Tsin for the proposed acquisition of 650,000 ordinary shares, representing the entire equity interest in ICSB, for a total purchase consideration of RM650,000 to be fully satisfied via cash ( Proposed Acquisition I ) ( ICSB SSA ); and (ii) Share sale agreement with Iconpos Sdn. Bhd. ( Iconpos ) for the proposed acquisition of 1,400,000 ordinary shares, representing 70% equity interest in APSB, for a total purchase consideration of RM1,400,000 to be fully satisfied via cash ( Proposed Acquisition II ) ( APSB SSA ). (Proposed Acquisition I and Proposed Acquisition II are collectively referred to as Proposed Acquisitions ) Further details on the Proposed Acquisitions are set out in the ensuing sections. 2. DETAILS OF THE PROPOSED ACQUISITIONS 2.1 Proposed Acquisition I 2.1.1 Information on ICSB ICSB (Company No. 1278041-X) was incorporated in Malaysia on 25 April 2018 as a private limited company and having its registered address at Third Floor, No. 79 (Room A), Jalan SS 21/60, Damansara Utama, 47400 Petaling Jaya, Selangor, Malaysia. ICSB is principally engaged in the business of computer programming activities and computer consultancy. ICSB s business involves provision of e-ordering software solution, software integration and related services. As at 14 December 2018, being the latest practicable date prior to the date of this Announcement ( LPD ), the issued share capital of ICSB is RM650,000 comprising 650,000 ordinary shares. The sole shareholder and director of ICSB is Chong Jen Tsin. As at the LPD, ICSB does not have any subsidiary or associate company.
2.1.2 Information on the vendor Chong Jen Tsin, a Malaysian, aged 40, is the sole director and shareholder of ICSB since its incorporation. He graduated with a Bachelor of Information Technology from Charles Sturt University in Australia in 1999. He has more than 15 years of experience in software application design and development as well as working directly with customers in a consulting capacity throughout the full software life cycle. 2.1.3 Basis and justification for the purchase consideration The purchase consideration of RM650,000 was arrived at on a willing buyerwilling seller basis and after taking into consideration of ICSB s order book status and future cash flow generation. The Board is of the view that the purchase consideration is justified in view of the potential synergistic benefits from the Proposed Acquisition I. 2.1.4 Source of funding The purchase consideration will be satisfied wholly in cash via internally generated funds. 2.1.5 Liabilities to be assumed There are no liabilities, including contingent liabilities and guarantees, to be assumed by the Company pursuant to the Proposed Acquisition I. 2.1.6 Additional financial commitment Save for the purchase consideration, there are no additional financial commitments required by the Company to put the assets/businesses of ICSB onstream. As set out in Section 2.1.1 of this Announcement, ICSB is an on-going business entity. 2.2 Proposed Acquisition II 2.2.1 Information on APSB APSB (Company No. 1278231-M) was incorporated in Malaysia on 26 April 2018 as a private limited company and having its registered address at Third Floor, No. 79 (Room A), Jalan SS 21/60, Damansara Utama, 47400 Petaling Jaya, Selangor, Malaysia. APSB is principally engaged in the business of computer programming and computer consultancy. APSB s business involves provision of point of sales software system for food and beverage sector. As at the LPD, the issued share capital of APSB is RM2,000,000 comprising 2,000,000 ordinary shares. Iconpos holds 2,000,000 ordinary shares in APSB and the sole director of APSB is Chong Jen Tsin. As at the LPD, APSB does not have any subsidiary or associate company.
2.2.2 Information on the vendor Iconpos (Company No. 931083-T) was incorporated in Malaysia on 26 January 2011 as a private limited company. Iconpos is principally engaged in the business of information technology, networking, system development and IT consultant. The Directors and shareholders of Iconpos are as below:- Name of Director and Nationality No. of shares Shareholding shareholder Chong Jen Tsin Malaysian 445,000 98.89% Tio Hooi Siang Malaysian 5,000 1.11% 2.2.3 Basis and justification for the purchase consideration The purchase consideration of RM1,400,000 was arrived at on a willing buyerwilling seller basis and after taking into consideration of APSB s order book status and future cash flow generation. The Board is of the view that the purchase consideration is justified in view of the potential synergistic benefits from the Proposed Acquisition II. 2.2.4 Source of funding The purchase consideration will be satisfied wholly in cash via internally generated funds. 2.2.5 Liabilities to be assumed There are no liabilities, including contingent liabilities and guarantees, to be assumed by the Company pursuant to the Proposed Acquisition II. 2.2.6 Additional financial commitment Save for the purchase consideration, there is no additional financial commitments required by the Company to put the assets/businesses of APSB on-stream. As set out in Section 2.2.1 of this Announcement, APSB is an on-going business entity.
3. SALIENT TERMS OF ICSB SSA AND APSB SSA The salient terms of the share sale agreements are as follows:- 3.1.1 Sale and purchase of sale shares Subject to the terms and conditions of the ICSB SSA, Chong Jen Tsin, as the legal and beneficial owner of the ICSB shares, shall sell and Radiant Globaltech relying on the warranties and representations by Chong Jen Tsin, shall purchase the shares, free from any and all encumbrances and with all rights, benefits and advantages now or thereafter attaching thereto, including all bonuses, rights, dividends and distributions declared, made and paid as from the completion date of the share sale agreement for the purchase consideration to be fully satisfied in cash. 3.1.2 Terms of payment The payment shall be by way of making direct payment to the vendors within 14 days from the date of the ICSB SSA. 3.1.3 Termination clause If Chong Jen Tsin fails to complete the sale and purchase of the shares in accordance with the ICSB SSA and/or breaches any of the terms and/or warranties of the ICSB SSA, then Radiant Globaltech shall be entitled to either:- (i) (ii) Claim for specific performance of the ICSB SSA; or Terminate the ICSB SSA, and upon such termination, all monies paid towards the purchase consideration shall be refunded to Radiant Globaltech free of interest. 3.1.4 Completion Completion shall take place when the payment of the purchase consideration has been made in full by Radiant Globaltech to Chong Jen Tsin and registration of the shares in favour of Radiant Globaltech in accordance with the terms and conditions of the ICSB SSA. 3.2 Salient terms of the APSB SSA 3.2.1 Sale and purchase of sale shares Subject to the terms and conditions of the APSB SSA, Iconpos, as the legal and beneficial owner of the APSB shares, shall sell and Radiant Globaltech relying on the warranties and representations by Iconpos, shall purchase the sale shares, free from any and all encumbrances and with all rights, benefits and advantages now or thereafter attaching thereto, including all bonuses, rights, dividends and distributions declared, made and paid as from the completion date of the share sale agreement for the purchase consideration to be fully satisfied in cash.
3.2.2 Terms of payment The payment shall be by way of making direct payment to the vendors within 14 days from the date of the APSB SSA. 3.2.3 Termination clause If the vendor fails to complete the sale and purchase of the shares in accordance with the APSB SSA and/or breaches any of the terms and/or warranties of the APSB SSA, then Radiant Globaltech shall be entitled to either:- (i) (ii) Claim for specific performance of the APSB SSA; or Terminate the APSB SSA, and upon such termination, all monies paid towards the purchase consideration shall be refunded to Radiant Globaltech free of interest. 3.2.4 Completion Completion shall take place when the payment of the purchase consideration has been made in full by Radiant Globaltech to Iconpos and registration of the sale shares in favour of Radiant Globaltech in accordance with the terms and conditions of the APSB SSA. 4. RATIONALE AND BENEFITS OF THE PROPOSED ACQUISITIONS Radiant Globaltech is an investment holding company and its subsidiaries ( Radiant Globaltech Group or the Group ) are principally involved in the provision of retail technology solutions, which consists of providing hardware and software for retail industry as well as maintenance and technical support services for related hardware and software. The Proposed Acquisitions are in line with Radiant Globaltech Group s strategy to expand its businesses by extending its range of software solutions where the Group will be able to cross sell its products to the existing customers. In addition, there will be no major research and development cost to be further incurred pursuant to the Proposed Acquisitions. The Proposed Acquisitions shall complement Radiant Globaltech Group s existing business and is expected to contribute positively to the future business development and growth of the Group. 5. PROSPECTS OF THE PROPOSED ACQUISITIONS 5.1 Prospects of ICSB The principal activity of ICSB involves portal software, software integration and related services. ICSB offers web-based customer portal software ( Portal ) to help businesses make improvements in ordering process. With the use of this Portal, customer can log in orders easily with the distributor / manufacturer via the Portal. The Proposed Acquisition I will allow Radiant Globaltech Group to further expand its existing business operations into the business of web-based Customer Portal software to help businesses make improvements in ordering process. The synergistic benefits expected to be derived from the Proposed Acquisition I are amongst others, technology and knowledge sharing, cross-marketing of products and services and referral of customers within the enlarged Radiant Globaltech Group.
5.2 Prospects of APSB The principal activity of APSB involves software development and sales of point-of-sale software to customers in the food and beverage sector. APSB offers complete solutions for food and beverage business consisting of Cloud ready Back-end System, Front-end System and other add-on systems such as Digital Menu and Queue System. This Proposed Acquisition II shall allow Radiant Globaltech Group to further expand its software business into the business of point-of-sales software system for food and beverage sector. The synergistic benefits expected to be derived from the Proposed Acquisition II are, amongst others, technology and knowledge sharing, cross-marketing of products and services and referral of customers within the enlarged Radiant Globaltech Group. The pervasive nature of digital platforms makes it hard to capture the full extent of digitalisation in Malaysia. A useful start is the performance of the Information and Communication Technology (ICT) sector, where technology intensity is high and digital activities are concentrated. From 2011-2016, the ICT sector s value-added growth outpaced that of non-ict sectors (ICT: 7.8% vs non-ict: 6.9%). Of note, e-commerce activities almost doubled over the same period (2016: RM74.6 billion; 2011: RM44.6 billion). This reflects the rising prominence of digital platforms and, more broadly, the role of technology in driving economic activity. (Source: Annual Report 2017, Bank Negara Malaysia) Overall, the Proposed Acquisitions are in line with the Group's strategy to constantly search and explore new opportunities which may potentially enable the Group to gain wider and better recognition in the retail technology solutions industry. The Proposed Acquisitions shall complement the Group s current business and is expected to contribute positively to the future development and growth of the Group. 6. RISK FACTORS The risk factors in relation to the Proposed Acquisitions, which may not be exhaustive, are set out below:- 6.1 Industry risk The performance of ICSB and APSB are subject to risks inherent in the IT industry. These may include, amongst others, entry of new players, increased competition, changes in general economic and business condition, and introduction of new technology. Whilst the Company seeks to mitigate these risks through its continued initiative in research and development for new products, implementing prudent business strategies and carrying out continuous review of its operations, there is no assurance that any change to the above factors, which are beyond the Company s control, will not materially affect its business.
6.2 Investment risk Although the Board anticipates that the Company may derive benefits from the Proposed Acquisitions, there can be no assurance that the anticipated benefits of the Proposed Acquisitions will be realised or that the Company will be able to generate sufficient revenue from the Proposed Acquisitions to offset the associated investment costs incurred. There is also no assurance that the Company will be able to maintain or improve the standards of quality and services of its businesses with the anticipated benefits to be derived from the Proposed Acquisitions. Nevertheless, the Board has exercised due care in considering the potential risks and benefits associated with the Proposed Acquisitions prior to making its investment decisions. 6.3 Dependency on key personnel The future success of ICSB and APSB will depend upon its ability to attract and retain its key personnel after the Proposed Acquisitions. The potential loss of key personnel of ICSB and APSB may have an unfavourable and material impact on the performance of ICSB and APSB as the continued success of the business is considerably dependent on the experience and technical knowledge of the management team of ICSB and APSB. As such, the Company will undertake measures to recruit new personnel where necessary and retain the key personnel of ICSB and APSB by providing competitive remunerations for continued good performance of its staff. The Company will also assign its Head of Software to oversee the business of ICSB and APSB and ensure competency in all aspects. 7. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITIONS 7.1 Issued share capital and substantial shareholders shareholdings The Proposed Acquisitions will not have any effect on the issued share capital and the substantial shareholders shareholdings of the Company as the purchase consideration of the Proposed Acquisitions will be wholly satisfied in cash. 7.2 Net assets, gearing and earnings The Proposed Acquisitions are not expected to have any material impact on the net assets, gearing and earnings of the Company for the financial year ending 31 December 2018. 8. APPROVAL REQUIRED The Proposed Acquisitions are not subject to the approval of the shareholders of the Company and/or any regulatory authorities.
9. HIGHEST PERCENTAGE RATIO The highest percentage ratio applicable to the Proposed Acquisition I and Proposed Acquisition II pursuant to Rule 10.02(g) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad is 2.36% and 5.12% respectively, calculated based on the audited financial statements of Radiant Globaltech Group for the financial year ended 31 December 2017. 10. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/ OR PERSONS CONNECTED WITH THEM None of the Directors, major shareholders and/or persons connected with them has any interest, whether direct or indirect, in the Proposed Acquisitions. 11. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Acquisitions are expected to complete by 1 st quarter of 2019. 12. DIRECTORS' STATEMENT The Board, having considered all relevant aspects of the Proposed Acquisitions (including but not limited to the rationale, prospects of ICSB and APSB and the risk factors as set out in Sections 4, 5 and 6 respectively) and after careful deliberation, is of the opinion that the Proposed Acquisitions are in the best interests of the Company and not detrimental to the interest of its shareholders. 13. DOCUMENT AVAILABLE FOR INSPECTION A copy each of the ICSB SSA and APSB SSA dated 19 December 2018 will be made available for inspection at the registered office of the Company at Third Floor, No. 79 (Room A), Jalan SS 21/60, Damansara Utama, 47400 Petaling Jaya, Selangor, Malaysia, during normal business hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this Announcement. This Announcement is dated 19 December 2018.