MERCURY INDUSTRIES BERHAD ( MERCURY OR COMPANY ) PROPOSED DISPOSAL BY MERCURY TO INTERGLOBAL DYNASTY SDN BHD OF ITS EQUITY INTEREST IN SILVERLIGHT PROSPECTS SDN BHD ( SILVERLIGHT ), A WHOLLY-OWNED SUBSIDIARY OF MERCURY FOR A TOTAL CASH CONSIDERATION OF RM50,500,000 ( PROPOSED DISPOSAL ) This announcement is dated 23 November 2016 ( Announcement ). 1. INTRODUCTION On behalf of the Board of Directors of Mercury ( Board ), AmInvestment Bank Berhad ( AmInvestment Bank ) wishes to announce that the Company had on 23 November 2016, entered into a conditional share sale agreement ( SSA ) with Interglobal Dynasty Sdn Bhd ( IDSB or Purchaser ) for the proposed disposal of 10,000,000 ordinary shares of RM1.00 each in Silverlight ( Sale Shares or Silverlight Shares ) representing 100% equity interest in Silverlight for a total cash consideration of RM50,500,000 ( Sale Consideration ). The Proposed Disposal is deemed a related party transaction in view of the interest of Dato Tiong Kwing Hee ( Dato Tiong ) as set out in Section 8 of this Announcement. 2. DETAILS OF THE PROPOSED DISPOSAL The Proposed Disposal entails the divestment of the Mercury Group s (as defined herein) entire auto refinish business via the disposal of the Company s entire equity interest in Silverlight at the Sale Consideration of RM50,500,000. The diagram below sets out the group structure of Mercury upon completion of the Proposed Disposal. Mercury Construction business Auto refinish business (Silverlight Group) 70% 100% Paramount Bounty Sdn Bhd ( PBSB ) Silverlight 100% 100% 100% 100% 100% Brilliant Paints Sdn Bhd ( BPSB ) Heap Seng Heng (M) Sdn Bhd ( HSHM ) Heap Seng Heng Paints Sdn Bhd ( HSHP ) Mercury Paints Factory Sdn Bhd ( MPFSB ) Good Frontier Sdn Bhd ( GFSB )
MERCURY INDUSTRIES BERHAD PROPOSED DISPOSAL PAGE 2 OF 10 For information, the breakdown of the consolidated revenue and earnings contribution of Silverlight and its subsidiaries ( Silverlight Group ) to Mercury and its subsidiaries ( Mercury Group ) for the financial year ended ( FYE ) 31 December 2015 and the nine (9)-month financial period ended ( FPE ) 30 September 2016 are as follows:- <-----------Audited----------> <----------Unaudited---------> 9-month FYE 31 December 2015 FPE 30 September 2016 RM 000 % RM 000 % Revenue:- Silverlight Group 43,064 64.84 29,620 35.64 Construction business 23,347 35.16 53,500 64.36 Mercury Group s total revenue 66,411 100.00 83,120 100.00 Profit After Tax and Minority Interests ( PATMI ):- Silverlight Group 5,401 68.01 3,031 44.65 Construction business 2,541 31.99 3,758 55.35 Total PATMI from auto refinish and construction business 7,942 100.00 6,789 100.00 Investment holding (2,370) (1,742) Mercury Group s total PATMI 5,572 5,047 Upon completion of the Proposed Disposal, the Mercury Group will focus on its construction business. The Proposed Disposal will not result in Mercury becoming a cash company or a Practice Note 17 company in accordance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) ( Listing Requirements ). The Proposed Disposal is subject to the terms and conditions set out in the SSA, the salient terms and conditions of which are set out in Section 2.3 of this Announcement. 2.1 Silverlight Group 2.1.1 Silverlight Silverlight was incorporated in Malaysia on 2 May 1997 under the Companies Act, 1965 ( Act ) as a private limited company. Silverlight is a wholly-owned subsidiary of Mercury. Silverlight s principal activity is that of investment holding. The principal activities of its subsidiaries are set out in Sections 2.1.2, 2.1.3, 2.1.4, 2.1.5 and 2.1.6 below. As at 18 November 2016, being the latest practicable date prior to this Announcement ( LPD ), the authorised share capital of Silverlight is RM10,000,000 comprising 10,000,000 Silverlight Shares, all of which have been issued and fully paid-up. As at the LPD, the directors of Silverlight are Dato Tiong and Lim Yoou Kong. Please refer to Section 1 of Appendix I for further information on Silverlight.
MERCURY INDUSTRIES BERHAD PROPOSED DISPOSAL PAGE 3 OF 10 2.1.2 BPSB 2.1.3 HSHM 2.1.4 HSHP BPSB was incorporated in Malaysia on 14 February 2002 under the Act as a private limited company. BPSB is a wholly-owned subsidiary of Silverlight. BPSB is principally involved in the business of trading, marketing and distribution of paint products for the automotive industry. As at the LPD, the authorised share capital of BPSB is RM500,000 comprising 500,000 ordinary shares of RM1.00 each in BPSB ( BPSB Shares ) of which RM10,000 comprising 10,000 BPSB Shares have been issued and fully paid-up. As at the LPD, the directors of BPSB are Dato Tiong and Lim Yoou Kong. Please refer to Section 2 of Appendix I for further information on BPSB. HSHM was incorporated in Malaysia on 16 December 1975 under the Act as a private limited company. HSHM is a wholly-owned subsidiary of Silverlight. HSHM s principal activities is that of marketing of paints and related products. As at the LPD, the authorised share capital of HSHM is RM5,000,000 comprising 5,000,000 ordinary shares of RM1.00 each in HSHM ( HSHM Shares ) of which RM4,400,000 comprising 4,400,000 HSHM Shares have been issued and fully paid-up. As at the LPD, the directors of HSHM are Dato Tiong and Lim Yoou Kong. Please refer to Section 3 of Appendix I for further information on HSHM. HSHP was incorporated in Malaysia on 3 February 1982 under the Act as a private limited company. HSHP is a wholly-owned subsidiary of Silverlight. HSHP s principal activities are that of marketing of paints and related products. As at the LPD, the authorised share capital of HSHP is RM6,000,000 comprising 6,000,000 ordinary shares of RM1.00 each in HSHP ( HSHP Shares ) of which RM4,700,006 comprising 4,700,006 HSHP Shares have been issued and fully paid-up. As at the LPD, the directors of HSHP are Dato Tiong and Lim Yoou Kong. Please refer to Section 4 of Appendix I for further information on HSHP.
MERCURY INDUSTRIES BERHAD PROPOSED DISPOSAL PAGE 4 OF 10 2.1.5 MPFSB 2.1.6 GFSB 2.2 IDSB MPFSB was incorporated in Malaysia on 29 October 1975 under the Act as a private limited company. MPFSB is a wholly-owned subsidiary of Silverlight. MPFSB s principal activities are that of manufacturing and sales of putty, hardener, underseal and paints. As at the LPD, the authorised share capital of MPFSB is RM4,000,000 comprising 4,000,000 ordinary shares of RM1.00 each in MPFSB ( MPFSB Shares ) of which RM3,450,000 comprising 3,450,000 MPFSB Shares have been issued and fully paid-up. As at the LPD, the directors of MPFSB are Dato Tiong and Lim Yoou Kong. Please refer to Section 5 of Appendix I for further information on MPFSB. GFSB was incorporated in Malaysia on 21 August 2009 under the Act as a private limited company. GFSB is a wholly-owned subsidiary of Silverlight. GFSB is authorised to engage in general trading. It has not commenced operation and is currently dormant. As at the LPD, the authorised share capital of GFSB is RM100,000 comprising 100,000 ordinary shares of RM1.00 each in GFSB ( GFSB Shares ) of which RM2 comprising 2 GFSB Shares have been issued and fully paid-up. As at the LPD, the directors of GFSB are Dato Tiong and Lim Yoou Kong. Please refer to Section 6 of Appendix I for further information on GFSB. IDSB was incorporated in Malaysia on 19 October 2016 under the Act as a private limited company. It is principally involved in investment holding. As at the LPD, the authorised share capital of IDSB is RM400,000 comprising 400,000 ordinary shares of RM1.00 each in IDSB ( IDSB Shares ) of which RM100 comprising 100 IDSB Shares have been issued and fully paid-up. The shareholders of IDSB and their respective shareholdings in IDSB as at the LPD are set out below:- Shareholder No. of IDSB Shares held % shareholding Dato Tiong 55 55.0 Liau Hiean Kheng 27 27.0 Leau Kim Pun @ Liau Kim Pun 18 18.0 Total 100 100.0 As at the LPD, the directors of IDSB are Dato Tiong, Liau Hiean Kheng and Leau Kim Pun @ Liau Kim Pun. Dato Tiong is an Executive Director and substantial shareholder of Mercury whilst Leau Kim Pun @ Liau Kim Pun is a substantial shareholder of Mercury.
MERCURY INDUSTRIES BERHAD PROPOSED DISPOSAL PAGE 5 OF 10 2.3 Salient terms of the SSA Mercury agrees to sell and IDSB agrees to purchase the Sale Shares free from all encumbrances together with all interest, rights, benefits and entitlements attached thereto, and all dividends, rights and distributions, declared, paid or made in respect thereof on or after the completion date, at the Sale Consideration on a willing buyer willing seller basis. 2.3.1 Sale Consideration The Sale Consideration of RM50,500,000 shall be paid by IDSB in the following manner:- (a) A sum of RM5,050,000, being the refundable deposit ( Deposit ) and part payment of the Sale Consideration shall be paid by IDSB to Mercury, as follows:- (i) (ii) Upon the execution of the SSA, the sum of RM2,525,000 shall be payable; and The balance of RM2,525,000 shall be payable on the completion of the condition precedent set out in section 2.3.2(a) below; the parties hereby agree and confirm that in the event there is a receipt of the termination notice given by either party in the event the conditions in the SSA cannot be fulfilled, Mercury shall refund to IDSB the Deposit (or any part which has been received) free of interest within fourteen (14) days from the date of the receipt of the notice. (b) The balance of the Sale Consideration of RM45,450,000 ( Balance ) is payable to Mercury on the completion of the SSA. 2.3.2 Conditions Precedent The SSA shall be conditional upon the approval of the following being obtained, procured and/or fulfilled within six (6) months from the date of the SSA ( the Conditional Period ), failing which the SSA shall become null and void:- (a) (b) Mercury shall have obtained its shareholders approval for the disposal of the Sale Shares; and other consents/approvals as shall be necessary under the relevant laws or from any relevant regulatory authority/financiers for the completion of the transaction. In the event that any party becomes aware that any of the conditions precedent is not fulfilled or incapable of being fulfilled/waived at any time during the Conditional Period, either party shall be entitled to terminate the SSA, after Mercury has been granted at least the Conditional Period or such additional period as may be agreed in writing to fulfil any of the conditions precedent, by giving notice to that effect to the other party; then the SSA shall be terminated and cease to be of any further effect. Mercury shall refund the Deposit free of interest to the Purchaser in accordance with the SSA and neither Party shall have any claim thereafter. Although it is intended that the transaction set out in the SSA shall only be implemented upon all the conditions precedent being satisfied, the parties may with mutual consent of each other and to the extent permissible by law, proceed with waiving any one or more of such conditions precedent in writing and any condition precedent so waived shall be deemed to have been fulfilled and satisfied.
MERCURY INDUSTRIES BERHAD PROPOSED DISPOSAL PAGE 6 OF 10 2.3.3. Completion Completion shall take place no later than three (3) months from the date when all the conditions precedent are fulfilled or waived, whichever applicable ( Completion Date ). On Completion Date, in exchange for the transfer documents (inter alia, the memorandum of transfer for the Sale Shares, original share certificates in respect of the Sale Shares, and the relevant directors and members resolutions of Silverlight approving the transfer of the Sale Shares to IDSB), IDSB shall satisfy the Balance to Mercury. 2.4 Basis and justification at arriving at the Sale Consideration The Sale Consideration of RM50.50 million was arrived at on a willing-buyer willing-seller basis after taking into consideration the following:- (a) the historical earnings of the Silverlight Group for the FYE 31 December 2015 and the twelve (12)-months trailing earnings up to 30 September 2016. For information, the Sale Consideration represents the following enterprise value ( EV ) over earnings before interest, tax, depreciation and amortisation ( EBITDA ) ratio:- Silverlight Group EV EBITDA EV/EBITDA (RM mil) (RM mil) (times) FYE 31 December 2015 41.30 (i) 7.85 5.26 12-months trailing up to 30 September 2016 45.94 (ii) 5.11 9.00 Notes:- (i) (ii) Computed by netting off the Sale Consideration against Silverlight Group s net cash balance as at 31 December 2015 of RM9.20 million. Computed by netting off the Sale Consideration against Silverlight Group s net cash balance as at 30 September 2016 of RM4.56 million. (b) the revalued net tangible assets value ( RNTAV ) of the Silverlight Group of approximately RM50.4 million which was arrived at based on the following:- RM 000 Unaudited net assets of Silverlight Group as at 30 September 2016 38,358 Less: Goodwill (10,878) Unaudited net tangible assets of Silverlight Group 27,480 Add: Net revaluation surplus on properties held by Silverlight Group * 22,914 RNTAV of Silverlight Group 50,394 Note:- * Derived based on valuation ascribed by Rahim & Co International Sdn. Bhd. for the properties held by the Silverlight Group of RM30.03 million. The net revaluation surplus is computed after deducting the net book value of the above properties of RM5.91 million as at 30 September 2016 and potential deferred tax asset of approximately RM1.21 million arising from the revaluation.
MERCURY INDUSTRIES BERHAD PROPOSED DISPOSAL PAGE 7 OF 10 2.5 Liabilities to be assumed by IDSB Other than the liabilities in the Silverlight Group, there are no other liabilities, including contingent liabilities and guarantees to be assumed by the Purchaser pursuant to the Proposed Disposal. 2.6 Original date and cost of investment Mercury s total cost of investment in the Silverlight Group which was made over the period from 1989 to 2010 is approximately RM26.43 million. The unaudited consolidated net assets ( NA ) of the Silverlight Group as at 30 September 2016 is approximately RM38.36 million. Based on the Sale Consideration of RM50.50 million against the unaudited consolidated NA of the Silverlight Group as at 30 September 2016 of approximately RM38.36 million and estimated expenses of RM0.85 million, the Mercury Group expects to record a gain on disposal of approximately RM11.29 million from the Proposed Disposal. 3. UTILISATION OF PROCEEDS Mercury intends to utilise the proceeds from the Proposed Disposal for, amongst others, repayment of bank borrowings as well as for working capital purposes for its construction business. As at the LPD, Mercury has yet to finalise the breakdown of the utilisation of proceeds from the Proposed Disposal and further details will be disclosed in the circular. 4. RATIONALE FOR THE PROPOSED DISPOSAL Mercury Group s construction business has been the major contributor to the Mercury Group s earnings for year to-date. Based on the unaudited nine (9)-months financial period ended 30 September 2016, the construction business contributed RM3.76 million (55.35%) whilst the auto refinish business contributed RM3.03 million (44.65%) towards the PATMI of the Mercury Group. With a remaining order book of approximately RM144 million as at 30 September 2016, the Board believes that Mercury Group s construction business will continue to be the key contributor to its earnings. On the contrary, Mercury notes that its auto refinish business has become increasingly challenging as a result of the slowing domestic economy, uncertainties in the global economies and weaker Ringgit. Concurrently, the management of the auto refinish business has indicated their intention to leave Mercury and their interest to acquire Mercury Group s auto refinish business. The Board, taking into consideration the intention of the management of the auto refinish business and recognising the potential of its construction business, views the Proposed Disposal as an opportunity for the Mercury Group to unlock its investment in the auto refinish business. Additionally, the proceeds stemming from the Sale Consideration will provide Mercury Group with immediate cash flows to fund its working capital and repay its bank borrowings. Pursuant to the Proposed Disposal, the construction business will be the sole business of the Mercury Group. The Mercury Group will be able to focus its resources to grow its construction business. The Board believes that, barring unforeseen circumstances, Mercury should be able to continue to leverage on the experience of its construction business team to secure contracts, thereby contributing positively towards the earnings of the Mercury Group going forward.
MERCURY INDUSTRIES BERHAD PROPOSED DISPOSAL PAGE 8 OF 10 5. RISK FACTORS FOR THE PROPOSED DISPOSAL The risk factors in relation to the Proposed Disposal include inter-alia, completion risk in view that the Proposed Disposal is conditional upon fulfilment of the conditions precedent as stated in Section 2.3 above as well as risk associated with the loss of contribution from the Silverlight Group post Proposed Disposal. 6. FINANCIAL EFFECTS OF THE PROPOSED DISPOSAL 6.1 Share Capital and Substantial Shareholders Shareholdings The Proposed Disposal will not have any effect on the issued and paid-up share capital and substantial shareholders shareholdings of the Company as the Proposed Disposal does not involve the issuance of new shares in Mercury. 6.2 Earnings and Earnings Per Share ( EPS ) The Proposed Disposal is expected to be completed in the second (2 nd ) quarter of the calendar year 2017. Based on Mercury Group s unaudited net assets as at 30 September 2016, the Mercury Group is expected to record a gain on disposal of approximately RM11.29 million from the Proposed Disposal. Pursuant to the Proposed Disposal, Mercury will cease to receive any earnings from the Silverlight Group. Mercury is expected to derive interest savings from the repayment of its bank borrowings. 6.3 NA and Gearing Based on the audited consolidated financial statements of Mercury Group for the FYE 31 December 2015, the proforma effects of the Proposed Disposal on the consolidated NA and gearing position of Mercury Group assuming the Proposed Disposal was effected on 31 December 2015, are as set out below:- As at 31 December 2015 RM 000 After Proposed Disposal RM 000 Share capital 40,182 40,182 Share premium 81,819 81,819 Accumulated losses (63,249) (a) (57,327) NA attributable to shareholders 58,752 64,674 No. of shares ( 000) 40,182 40,182 NA per share (RM) 1.46 1.61 Borrowings (interest bearing) (RM 000) 31,644 (b) 1,644 Gearing (times) 0.54 0.03 Notes:- (a) (b) After including the proforma gain on disposal of approximately RM5.92 million (computed based on Silverlight Group s NA as at 31 December 2015 and after deducting estimated expenses of approximately RM0.85 million pursuant to the Proposed Disposal). Assuming repayment of RM30.00 million bank borrowings using proceeds received from the Proposed Disposal.
MERCURY INDUSTRIES BERHAD PROPOSED DISPOSAL PAGE 9 OF 10 7. APPROVALS REQUIRED The Proposed Disposal is conditional upon the following approvals being obtained:- (a) (b) shareholders of Mercury at an extraordinary general meeting ( EGM ) to be convened; and consents/approvals from any other relevant regulatory authority/financier, if required. The Proposed Disposal is not conditional upon any other corporate proposals undertaken or to be undertaken by the Company. 8. DIRECTORS AND MAJOR SHAREHOLDERS INTEREST Dato Tiong, an Executive Director and substantial shareholder of Mercury, is interested in the Proposed Disposal by virtue of him being a director and controlling shareholder of IDSB. Dato Tiong s shareholding in Mercury as at the LPD is set out below:- Name Direct No. of shares Indirect % No. of shares % Dato Tiong 2,791,100 6.95 58,900* 0.15 Note:- * Being the direct shareholding of Dato Tiong s daughter as disclosed by him pursuant to Section 134(12)(c) of the Act. Dato Tiong has abstained and will continue to abstain from all deliberations and decision at the Board meetings relating to the Proposed Disposal. Dato Tiong will abstain from voting in respect of his direct and/or indirect shareholdings in Mercury on the resolution to be tabled in relation to the Proposed Disposal at the forthcoming EGM of the Company and shall undertake to ensure that persons connected to him shall abstain from voting in respect of their direct and/or indirect shareholdings (if any) in Mercury on the resolution pertaining to the Proposed Disposal to be tabled at the forthcoming EGM of the Company. Liau Hiean Kheng and Leau Kim Pun @ Liau Kim Pun, being respectively a shareholder and substantial shareholder of Mercury, are directors and major shareholders of IDSB ( Interested Shareholders ). Their shareholdings in Mercury as at the LPD are set out below:- Direct Indirect* Name No. of shares % No. of shares % Liau Hiean Kheng 314,700 0.78 - - Leau Kim Pun @ Liau Kim Pun 2,096,700 5.22 - - Note:- * Pursuant to Section 6A of the Act. The Interested Shareholders undertake that they will also abstain from voting in respect of their direct and/or indirect shareholdings (if any) in Mercury on the resolution to be tabled in relation to the Proposed Disposal at the forthcoming EGM of the Company and shall undertake to ensure that persons connected to them shall abstain from voting in respect of their direct and/or indirect shareholdings (if any) in Mercury on the resolution pertaining to the Proposed Disposal to be tabled at the forthcoming EGM of the Company.
MERCURY INDUSTRIES BERHAD PROPOSED DISPOSAL PAGE 10 OF 10 9. TRANSACTION WITH THE SAME RELATED PARTY FOR THE PRECEDING 12 MONTHS There were no transactions entered into between Mercury Group with Dato Tiong and/or the Interested Shareholders or persons connected with them for the preceding twelve (12) months from the date of this Announcement. 10. ADVISERS AmInvestment Bank has been appointed as the Principal Adviser to the Company for the Proposed Disposal. The Proposed Disposal is deemed a related party transaction pursuant to paragraph 10.08 of the Listing Requirements. In this regard, BDO Capital Consultants Sdn Bhd ( Independent Adviser ) has been appointed by the Company to act as the Independent Adviser to advise the non-interested Directors and non-interested shareholders of Mercury on the fairness and reasonableness of the Proposed Disposal, whether or not the Proposed Disposal is to the detriment of the non-interested shareholders of Mercury and whether or not the non-interested shareholders of Mercury should vote in favour of the resolution in respect of the Proposed Disposal. 11. AUDIT COMMITTEE S STATEMENT The Audit Committee of the Company, after having considered all relevant aspects of the Proposed Disposal (including but not limited to the terms of the SSA, rationale and financial effects of the Proposed Disposal), is of the opinion that the Proposed Disposal is in the best interest of the Company, fair, reasonable and on normal commercial terms, and not detrimental to the interest of the minority shareholders of the Company. 12. DIRECTORS STATEMENT The Board (save for Dato Tiong) after having considered all relevant aspects of the Proposed Disposal (including but not limited to the terms of the SSA, rationale and financial effects of the Proposed Disposal), is of the opinion that the Proposed Disposal is fair, reasonable, on normal commercial terms, not detrimental to the interest of the minority shareholders and is in the best interest of the Company. 13. HIGHEST PERCENTAGE RATIOS The highest percentage ratio applicable to the Proposed Disposal pursuant to paragraph 10.02(g) of the Listing Requirements is 96.93% derived by dividing the audited PATMI of the Silverlight Group for the FYE 31 December 2015 of RM5.40 million over the audited PATMI of Mercury Group for the FYE 31 December 2015 of RM5.57 million. 14. ESTIMATED TIMEFRAME FOR THE COMPLETION OF THE PROPOSED DISPOSAL The Proposed Disposal is expected to be completed in the second (2 nd ) quarter of 2017. 15. DOCUMENTS AVAILABLE FOR INSPECTION The SSA is available for inspection by the shareholders of the Company at the Registered Office of the Company at Suite 11.1A, Level 11, Menara Weld, 76, Jalan Raja Chulan, 50200 Kuala Lumpur during normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this Announcement.
APPENDIX I INFORMATION ON SILVERLIGHT GROUP 1. SILVERLIGHT Silverlight was incorporated in Malaysia on 2 May 1997 under the Act as a private limited company. Silverlight is a wholly-owned subsidiary of Mercury. 1.1 Principal activities Silverlight s principal activity is that of investment holding. Silverlight s primary source of income is dividend received from its subsidiaries. 1.2 Summary of key financial data A summary of the financial information of Silverlight for the past three (3) financial years up to FYE 31 December 2015 is set out below:- FYE 31 December 2013 2014 2015 (RM 000) (RM 000) (RM 000) Revenue 3,768 4,258 18,605 Profit before tax ( PBT )/ Loss before tax ( LBT ) 3,762 4,252 18,598 Taxation (542) - - Profit after tax ( PAT )/ Loss after tax ( LAT ) 3,220 4,252 18,598 Shareholders fund / NA 30,354 30,406 39,204 Total borrowings - - - Gearing - - - (Source: Audited financial statements of Silverlight) Commentary: FYE 31 December 2013 For the FYE 31 December 2013, revenue increased by approximately 438.3% or RM3.07 million to RM3.77 million, as compared to RM0.70 million for the FYE 31 December 2012. This is due to higher gross dividends received from its subsidiaries of RM3.77 million for the FYE 31 December 2013. The PAT of Silverlight increased by RM3.43 million to RM3.22 million for the FYE 31 December 2013, as compared to the LAT of RM0.21 million for the FYE 31 December 2012. This increase is mainly attributable to the increase in dividend received from its subsidiaries and a RM0.90 million impairment of its loan advances to GFSB being recorded for the FYE 31 December 2012 whereas no such impairment loss was recorded for the FYE 31 December 2013.
APPENDIX I INFORMATION ON SILVERLIGHT GROUP(CONT D) FYE 31 December 2014 For the FYE 31 December 2014, revenue of Silverlight increased by RM0.49 million or approximately 13.0% to RM4.26 million, as compared to RM3.77 million for the FYE 31 December 2013, from higher dividends received from its subsidiaries. In tandem with the increase in revenue during the financial year, the PAT of Silverlight increased by approximately 32.0% to RM4.25 million for the FYE 31 December 2014, as compared to RM3.22 million PAT for the FYE 31 December 2013. FYE 31 December 2015 For the FYE 31 December 2015, revenue of Silverlight increased by RM14.35 million or approximately 336.9% to RM18.60 million as dividends received from its subsidiaries increased from RM4.26 million for the FYE 31 December 2014 to RM18.61 million for the FYE 31 December 2015. The increase in dividends received from the subsidiaries was to enable Silverlight to declare a higher dividend to MIB in order for MIB to partially finance the acquisition of the 70% equity interest in Paramount Bounty Sdn Bhd. The PAT of Silverlight increased by approximately 337.4% to RM18.60 million for the FYE 31 December 2015, as compared to RM4.25 million PAT for the FYE 31 December 2014, which was in tandem with the increase in revenue during the financial year. The increase in the NA of Silverlight as at FYE 31 December 2015 as compared to the previous financial year was a result of an increase in the retained earnings from dividend income received during the financial year.
APPENDIX I INFORMATION ON SILVERLIGHT GROUP(CONT D) 2.0 BPSB BPSB was incorporated in Malaysia on 14 February 2002 under the Act as a private limited company. BPSB is a wholly-owned subsidiary of Silverlight. 2.1 Principal activities BPSB is principally involved in the business of trading, marketing and distribution of paint products for the automotive industry. 2.2 Summary of key financial data A summary of the financial information of BPSB for the past three (3) financial years up to FYE 31 December 2015 is set out below:- FYE 31 December 2013 2014 2015 (RM 000) (RM 000) (RM 000) Revenue 22,951 20,675 18,012 PBT/(LBT) 3,947 3,417 2,923 Taxation (939) (857) (712) PAT/(LAT) 3,008 2,560 2,211 Shareholders fund / NA 10,100 11,060 8,070 Total borrowings - - - Gearing - - - (Source: Audited financial statements of BPSB) Commentary: FYE 31 December 2013 For the FYE 31 December 2013, the revenue of BPSB decreased marginally by RM0.91 million or approximately 3.8% to RM22.95 million, as compared to RM23.86 million for the FYE 31 December 2012 as a result of a weakened automotive refinish industry on the back of an economic slowdown during the year. Moving in tandem with the drop in revenue during the financial year, the PAT of BPSB decreased marginally by approximately 2.5% to RM3.01 million for the FYE 31 December 2013, as compared to RM3.09 million PAT for the FYE 31 December 2012. FYE 31 December 2014 For the FYE 31 December 2014, the revenue of BPSB decreased by RM2.28 million or approximately 9.9% to RM20.68 million, as compared to RM22.95 million for the FYE 31 December 2013. The decrease was partly due to the implementation of stricter credit controls whereby BPSB stopped or restricted supply to customers with long outstanding debts, in view of the uncertainties in the economy arising from the weakening Ringgit, subsidies rationalisation and falling commodities prices.
APPENDIX I INFORMATION ON SILVERLIGHT GROUP(CONT D) Following the drop in revenue during the financial year, the PAT of BPSB decreased by RM0.45 million or approximately 14.9% to RM2.56 million for the FYE 31 December 2014, as compared to RM3.01 million PAT for the FYE 31 December 2013. FYE 31 December 2015 For the FYE 31 December 2015, the revenue of BPSB decreased by RM2.66 million or approximately 12.9% to RM18.01 million, as compared to RM20.67 million for the FYE 31 December 2014. The decrease was attributable to the slowdown in consumer spending due to lower commodities prices, the weakening of the Ringgit and the higher cost of living arising from the implementation of the goods and services tax ( GST ). The PAT of BPSB recorded an approximate 13.6% decrease of RM0.35 million to RM2.21 million for the FYE 31 December 2015, as compared to RM2.56 million PAT for the FYE 31 December 2014. This is mainly due to a drop in revenue during the financial year, an increase in impairment losses on receivables of RM0.11 million and increase in operating expenses of RM0.25 million. The lower NA of BPSB of RM8.07 million as at 31 December 2015 was a result of a RM3.60 million increase in dividend payments to holding company, Silverlight, as compared to FYE 31 December 2014.
APPENDIX I INFORMATION ON SILVERLIGHT GROUP(CONT D) 3.0 HSHM HSHM was incorporated in Malaysia on 16 December 1975 under the Act as a private limited company. HSHM is a wholly-owned subsidiary of Silverlight. 3.1 Principal activities HSHM s principal activities is that of marketing of paints and related products. 3.2 Summary of key financial data A summary of the financial information of HSHM for the past three (3) financial years up to FYE 31 December 2015 is set out below:- FYE 31 December 2013 2014 2015 (RM 000) (RM 000) (RM 000) Revenue 6,950 7,008 6,473 PBT/(LBT) 469 667 479 Taxation (117) (146) (131) PAT/(LAT) 352 521 348 Shareholders fund / NA 7,844 8,057 5,104 Total borrowings 54-35 Gearing 0.01-0.01 (Source: Audited financial statements of HSHM) Commentary: FYE 31 December 2013 For the FYE 31 December 2013, the revenue of HSHM decreased by RM0.15 million or approximately 2.2% to RM6.95 million, as compared to RM7.10 million for the FYE 31 December 2012 as a result of a weakened automotive refinish industry on the back of an economic slowdown during the year. The PAT of HSHM decreased by approximately 15.2% to RM0.35 million for the FYE 31 December 2013, as compared to RM0.42 million PAT for the FYE 31 December 2012. Apart from the drop in revenue during the financial year, the drop in PAT of HSHM was also attributable to the lower gross profit margin arising from the higher purchase cost of trading merchandise.
APPENDIX I INFORMATION ON SILVERLIGHT GROUP(CONT D) FYE 31 December 2014 For the FYE 31 December 2014, the revenue of HSHM increased by RM0.06 million or approximately 0.8% to RM7.01 million, as compared to RM6.95 million for the FYE 31 December 2013. The increase was mainly due to upward adjustments in the selling prices of HSHM s sales products mix. Despite the marginal increase in revenue during the financial year, the PAT of HSHM increased significantly by approximately 48.0% to RM0.52 million for the FYE 31 December 2014, as compared to RM0.35 million PAT for the FYE 31 December 2013. The increase in PAT is attributable to improved gross profit margin arising from upward adjustments in its selling prices and net reversal of impairment losses on receivables amounting to RM0.12 million. FYE 31 December 2015 For the FYE 31 December 2015, the revenue of HSHM decreased by RM0.54 million or approximately 7.6% to RM6.47 million, as compared to RM7.01 million revenue for the FYE 31 December 2014. The decrease was attributable to the slowdown in consumer spending as a result of lower commodities prices, the weakening of the Ringgit and the higher cost of living arising from the implementation of GST. The PAT of HSHM decreased by RM0.17 million or approximately 33.2% to RM0.35 million for the FYE 31 December 2015, as compared to RM0.52 million PAT for the FYE 31 December 2014. The drop in PAT is mainly attributable to the net increase in impairment losses on receivables amounting to RM0.16 million. The decrease in NA of HSHM from RM8.01 million as at 31 December 2014 to RM5.10 million as at 31 December 2015 was primarily as a result of a RM2.99 million increase in dividend payment to holding company, Silverlight during the year.
APPENDIX I INFORMATION ON SILVERLIGHT GROUP(CONT D) 4.0 HSHP HSHP was incorporated in Malaysia on 3 February 1982 under the Act as a private limited company. HSHP is a wholly-owned subsidiary of Silverlight. 4.1 Principal activities HSHP s principal activities are that of marketing of paints and related products. 4.2 Summary of key financial data A summary of the financial information of HSHP for the past three (3) financial years up to FYE 31 December 2015 is set out below:- FYE 31 December 2013 2014 2015 (RM 000) (RM 000) (RM 000) Revenue 19,635 18,270 15,178 PBT/(LBT) 2,506 1,764 1,061 Taxation (563) (419) (276) PAT/(LAT) 1,943 1,345 785 Shareholders fund / NA 17,384 16,379 7,059 Total borrowings 11 - - Gearing * - - (Source: Audited financial statements of HSHP) Commentary: FYE 31 December 2013 For the FYE 31 December 2013, the revenue of HSHP decreased by RM1.01 million or approximately 4.9% to RM19.64 million, as compared to RM20.65 million for the FYE 31 December 2012. The decrease in revenue was a result of the weakened automotive refinish industry on the back of an economic slowdown during the year. The drop in PAT of HSHP of RM0.75 million or approximately 27.8% to RM1.94 million for the FYE 31 December 2013, as compared to RM2.69 million PAT for the FYE 31 December 2012, was attributable to the lower revenue, lower margin of export sales, net increase in write-down of inventories and impairment loss on receivables amounting to RM0.13 million and increase in other operating overheads of RM0.13 million.
APPENDIX I INFORMATION ON SILVERLIGHT GROUP(CONT D) FYE 31 December 2014 For the FYE 31 December 2014, the revenue of HSHP decreased by RM1.37 million or approximately 7.0% to RM18.27 million, as compared to RM19.64 million for the FYE 31 December 2013. The decrease was mainly due to the competitive environment in the export market. In tandem with the drop in revenue and an increase in operating overheads of RM0.14 million during the financial year, the PAT of HSHP decreased by RM0.60 million or approximately 30.8% to RM1.35 million for the FYE 31 December 2014, as compared to RM1.94 million PAT for the FYE 31 December 2013. FYE 31 December 2015 For the FYE 31 December 2015, the revenue of HSHP decreased by RM3.09 million or approximately 16.9% to RM15.18 million, as compared to RM18.27 million for the FYE 31 December 2014. The decrease was partly due to the competitive pricing environment, the implementation of stricter credit control whereby HSHP stopped or restricted supply to customers with long outstanding debts in view of the slowdown in consumer spending due to lower commodities prices, the weakening of the Ringgit and the higher cost of living arising from the implementation of GST. The PAT of HSHP decreased by RM0.56 million or approximately 41.6% to RM0.79 million for the FYE 31 December 2015, as compared to RM1.35 million PAT for the FYE 31 December 2014. The decrease was due to the reduction in revenue, reduction in interest income of RM0.06 million, increase in operating overheads of RM0.29 million and increase in inventory write-downs of RM0.09 million. NA of HSHP of RM7.06 million as at 31 December 2015 was a result of a RM7.76 million increase in dividend payments to holding company, Silverlight, as compared to FYE 31 December 2014.
APPENDIX I INFORMATION ON SILVERLIGHT GROUP(CONT D) 5.0 MPFSB MPFSB was incorporated in Malaysia on 29 October 1975 under the Act as a private limited company. MPFSB is a wholly-owned subsidiary of Silverlight. 5.1 Principal activities MPFSB s principal activities are that of manufacturing and sales of putty, hardener, underseal and paints. 5.2 Summary of key financial data A summary of the financial information of MPFSB for the past three (3) financial years up to FYE 31 December 2015 is set out below:- FYE 31 December 2013 2014 2015 (RM 000) (RM 000) (RM 000) Revenue 22,604 22,831 24,112 PBT/(LBT) 1,758 771 2,686 Taxation (437) (299) (623) PAT/(LAT) 1,321 472 2,063 Shareholders fund / NA 10,330 10,802 12,865 Total borrowings 280 321 293 Gearing 0.03 0.03 0.02 (Source: Audited financial statements of MPFSB) Commentary: FYE 31 December 2013 For the FYE 31 December 2013, the revenue of MPFSB decreased by RM0.24 million or approximately 1.1% to RM22.60 million, as compared to RM22.85 million for the FYE 31 December 2012 as a result of lower sales generated from certain customers in the export market. The PAT of MPFSB increased by RM0.17 million or approximately 14.9% to RM1.32 million for the FYE 31 December 2013, as compared to RM1.15 million PAT for the FYE 31 December 2012, due to higher gross margin arising from lower materials cost, and a RM0.18 million drop in impairment losses on receivables as compared to the previous financial year.
APPENDIX I INFORMATION ON SILVERLIGHT GROUP(CONT D) FYE 31 December 2014 For the FYE 31 December 2014, the revenue of MPFSB experienced a marginal increase of approximately 1.0% to RM22.83 million, as compared to RM22.60 million for the FYE 31 December 2013 as a result of higher sales in the export market arising from new customers and gains in foreign currencies conversions due to the weaker Ringgit. The PAT of MPFSB decreased by RM0.85 million or approximately 64.3% to RM0.47 million for the FYE 31 December 2014, as compared to RM1.32 million PAT for the FYE 31 December 2013. The drop in PAT is attributable to a RM0.35 million write-down to inventory and property, plant and equipment and an increase in other operating overheads of RM0.79 million. FYE 31 December 2015 For the FYE 31 December 2015, the revenue of MPFSB increased by RM1.28 million or approximately 5.6% to RM24.11 million as compared to RM22.83 million for the FYE 31 December 2014. The increase was due to the higher export revenue arising from gains in foreign currencies conversions due to the weaker Ringgit. The PAT of MPFSB increased by RM1.59 million or approximately 337.1% to RM2.06 million for the FYE 31 December 2015, as compared to RM0.47 million PAT for the FYE 31 December 2014. The increase was due to the significant increase in the gains on foreign exchange of RM0.96 million and the reduction in operating overheads of RM0.32 million.
APPENDIX I INFORMATION ON SILVERLIGHT GROUP(CONT D) 6.0 GFSB GFSB was incorporated in Malaysia on 21 August 2009 under the Act as a private limited company. GFSB is a wholly-owned subsidiary of Silverlight. 6.1 Principal activities GFSB was authorised to engage in general trading. It has not commenced operation and is currently dormant. 6.2 Summary of key financial data A summary of the financial information of GFSB for the past three (3) financial years up to FYE 31 December 2015 is set out below:- FYE 31 December 2013 2014 2015 (RM 000) (RM 000) (RM 000) Revenue - - - PBT/(LBT) (3) (3) (1) Taxation - - - PAT/(LAT) (3) (3) (1) Shareholders fund / NA (924) (927) (927) Total borrowings - - - Gearing - - - (Source: Audited financial statements of GFSB) Commentary: GFSB has remained dormant throughout the past three (3) financial years up to FYE 31 December 2015.