RYOBI KISO HOLDINGS LTD. (Incorporated in the Republic of Singapore) (Company Registration No. 200803985D) ACQUISITION OF: (I) 70% OF THE ISSUED SHARE CAPITAL OF COMPILE AUSTRALIA PTY LIMITED ( COMPILE AUSTRALIA ); AND (II) 70% OF THE ISSUED SHARE CAPITAL OF COMPILE-RYOBI AUSTRALIA PTY LIMITED ( COMPILE RYOBI ) (THE ACQUISITION ) A. Introduction The Board of Directors (the Board ) of Ryobi Kiso Holdings Ltd. (the Company ) wishes to announce that its wholly-owned subsidiary, Ryobi Ground Engineering Pte. Ltd. has incorporated a wholly-owned subsidiary, Ryobi Compile Holdings Pty Ltd ( Purchaser ) in Australia, with an issued and paid up capital of A$1, consisting of one ordinary share. The principal activity of the Purchaser is that of an investment holding company, to hold the Company s businesses in Australia. The incorporation of the Purchaser was funded through internal sources and is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of the Group for the current financial year ending 30 June 2012. In addition, the Board further wishes to announce that the Purchaser has on 15 March 2012 entered into two sale and purchase agreements, namely: (a) (b) a sale and purchase agreement entered into with Mr Graham Hargrave Menz ( Compile Australia Vendor ) (as trustee for the Compile Trust) for the acquisition of seven (7) shares in the capital of Compile Australia ( Compile Australia Sale Shares ), representing 70% of the issued share capital of Compile Australia ( Compile Australia SPA ); and a sale and purchase agreement entered into with (i) Ryobi Investment (Aust) Pty Limited ( Ryobi Investment ); and (ii) G.F.S. Management Services Pty Ltd (as trustee for the Menz Family Trust or on its own account) ( GFS ) (collectively, Compile Ryobi Vendors ) for the acquisition of one hundred and forty (140) and fifty six (56) shares respectively of Compile Australia (together the Compile Ryobi Sale Shares ), representing 50% and 20% respectively of the issued share capital of Compile Ryobi ( Compile Ryobi SPA ). Vendors and Interested Persons The Compile Australia Shares are held by the Compile Australia Vendor in his capacity as trustee for the benefit of the Compile Trust, which is a trust fund related to the Compile Australia Vendor. The Compile Australia Vendor is an unrelated third party. Of the Compile Ryobi Shares held by GFS, 120 Compile Ryobi Shares are held in their capacity as trustee for the benefit of the Menz Family Trust, which is a trust fund related to the Compile Australia Vendor. The remaining 20 Compile Ryobi Shares are legally and beneficially owned by GFS. The Compile Australia Vendor is the ultimate owner of G.F.S. Management Services Pty Ltd. 1
Ryobi Investment is a 50% shareholder of Compile Ryobi. The Chief Executive Officer and Executive Director of the Company, Mr Ong Tiong Siew, is the 66.7% shareholder of Ryobi Investment. The remaining 33.3% is held by Mr Shuntaro Shiga, who is a non-executive director of certain subsidiaries of the Company, and also a shareholder of the Company. Mr Ong Tiong Siew is also a director of Compile Ryobi, but is not involved in its management. As such, Ryobi Investment is deemed an interested person as defined under Chapter 9 of the Singapore Exchange Securities Trading Limited ( SGX-ST ) Listing Manual ( Listing Manual ). However, as the aggregate Compile Ryobi Consideration (as defined below) payable to Ryobi Investment falls below 3% of the Group s latest audited net tangible assets ( NTA ), the acquisition of the Compile Ryobi Sale Shares is not a discloseable interested person transactions under Chapter 9 of the Listing Manual. B. Compile Ryobi Compile Ryobi, a private company limited by shares, is incorporated in Australia, and as at the date of the Compile Ryobi SPA, has an issued and paid-up share capital of 280 shares ( Compile Ryobi Shares ), held by the Compile Ryobi Vendors in the manner set out in the table below: Name of holder Number of Shares held GFS 140 Ryobi Investment 140 Rule 1006 of the SGX-ST Listing Manual The relative figures in relation to the acquisition of the Compile Ryobi Sale Shares pursuant to Rule 1006 of the Singapore Exchange Securities Trading Limited ( SGX-ST ) Listing Manual, using the latest audited accounts of the Company and its subsidiaries (the Group ) for the financial year ended 30 June 2011, are: (a) net asset value of the assets to be disposed of, compared with the group s net asset value. This basis is not applicable to an acquisition of assets Not applicable (b) net loss attributable to the assets acquired, compared with the group s net profits (c) aggregate value of the consideration given or received, compared with the issuer s market capitalisation based on the total number of issued shares excluding treasury shares as at 12 March 2012, being the market day immediately preceding the date of the Compile Ryobi SPA (d) number of equity securities issued by the issuer as consideration for an acquisition, compared with the number of equity securities previously in issue (9.4)% (1) 1.3% (2) Not applicable 2
Notes: (1) The audited consolidated net profit before income tax and non-controlling interests of the Company and its group ( Group ) for the financial year ended 30 June 2011 is S$10,606,772. Based on the unaudited financial statements of Compile Ryobi for the financial year ended 30 June 2011, Compile Ryobi recorded a net loss of A$765,088, equivalent to S$1,002,265 (based on the exchange rate of A$1 : S$1.310 as at 30 June 2011). As such, the computation of the relative figure under Rule 1006 (b) of the Listing Manual produces a negative figure. (2) Based on the aggregate value of the Compile Ryobi Consideration (as defined below) of approximately S$1,170,524 (being A$882,748, based on the exchange rate of A$1 : S$1.326 as at 14 March 2012) and the market capitalisation of the Company of S$92,420,763 as at 14 March 2012 (being the market day preceding the date of the Compile Ryobi SPA). Under Rule 1002(5) of the Listing Manual, the market capitalisation of Company is determined by multiplying the number of shares in issue being 757,547,240 shares by the weighted average price of S$0.122 of such shares transacted on 14 March 2012 (being the market day preceding the date of the Compile Ryobi SPA). As of the relative figures under Rule 1006 (b) produces a negative figure exceeding 5%, the SGX-ST has ruled that the acquisition of the Compile Ryobi Sale Shares constitutes a Discloseable Transaction as defined in Chapter 10 of the Listing Manual and accordingly, an announcement under Rule 1010 of the Listing Manual should be made. Information to be announced under Rule 1010 of the Listing Manual (1) Particulars of the assets acquired, including the name of any company or business, where applicable Pursuant to the Compile Ryobi SPA, the Purchaser shall acquire, free from all encumbrances and together with all rights and benefits attaching thereto, the Compile Ryobi Sale Shares. Such rights and benefits include all rights and interests and all legal and beneficial titles to all of the Compile Ryobi Sale Shares as at the date of the Compile Ryobi SPA. The details of the Compile Ryobi Sale Shares are as set out above. (2) A description of the trade carried on, if any Compile Ryobi s principal business activity is design works, deep soil mixing, jet grouting, bored pile and continuous flight auger pile. (3) The aggregate value of the consideration, including factors taken into consideration in arriving at it and how it will be satisfied, including the terms of payment Compile Ryobi Consideration The aggregate cash consideration for the Compile Ryobi Sale Shares is A$196 ( Compile Ryobi Cash Consideration ). The Compile Ryobi Consideration is payable in the manner set out in the table below: Name of holder Purchase Price (A$) GFS 56 Ryobi Investment 140 3
The Compile Ryobi Consideration was arrived at arm s length on a willing buyer willing seller basis, taking into consideration the income, revenue and net assets of both companies, the prevailing market conditions based on the discounted cash flow of both companies, and by comparing other companies and transactions of similar size and nature. The Compile Ryobi Cash Consideration is payable by the Purchaser to the Compile Ryobi Vendors upon completion of the Compile Ryobi SPA. In addition, the Company had extended a loan amount of A$588,000 to Compile Ryobi, for purposes of funding Compile Ryobi s working capital requirements ( Compile Ryobi Loan ). The acquisition of the Compile Ryobi Shares would also result in the Purchaser assuming Compile Ryobi s net liability position. Based on the latest unaudited accounts of Compile Ryobi as at 31 October 2011, Compile Ryobi s net liability position is the amount of A$882,552, which includes the Compile Ryobi Loan. The balance net liability amount of A$294,552, after deducting the Compile Ryobi Loan, will also be assumed by the Company. The final amount of the net liability position of Compile Ryobi to be assumed by the Purchaser will be determined only upon completion of the financial audit on Compile Ryobi. Based on the above, the aggregate consideration for the acquisition of the Compile Ryobi Sale Shares as at the date of this Announcement is A$882,748 ( Compile Ryobi Consideration ). (4) Whether there are any material conditions attaching to the transaction including a put, call or other option and details thereof Compile Ryobi SPA Salient Terms Completion of the Compile Ryobi SPA is conditional upon the following being satisfied: (a) the Purchaser being reasonably satisfied following an investigation by it, that the books, accounts, records and other documents of Compile Ryobi: (i) (ii) (iii) (iv) (v) comply with the Corporations Act of Australia and other relevant statutes; are prepared and maintained in accordance with the accounting standards in force under the Corporations Act of Australia; give a true and fair view of its state of affairs and profits; fully disclose all of its assets, liabilities and security interests; and disclose no material adverse change in the business, financial or trading position, assets, liabilities or prospects from those contained in or disclosed by the audited balance sheet of Compile Ryobi as at 31 October 2011. (b) audits of Compile Ryobi conducted in respect of the following periods: (i) the financial year ending 30 June 2010; (ii) the financial year ending 30 June 2011; and (iii) the period between 1 July 2011 and 31 October 2011, are completed before the completion date of the Compile Ryobi SPA and the Purchaser is satisfied with the results of such audits in its absolute discretion. 4
(c) (d) the Purchaser being satisfied that the Compile Australia Vendor has entered into a service contract in form and substance satisfactory to the Purchaser, on or before the completion date of the Compile Ryobi SPA. the Purchaser being satisfied as at the completion date of the Compile Ryobi SPA that: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) the Compile Ryobi Vendors not having breached the Compile Ryobi SPA; the Purchaser having received all required government and regulatory approvals in respect of the transactions contemplated by the Compile Ryobi SPA; the Purchaser being satisfied with the results of its due-diligence on Compile Ryobi in its sole and absolute discretion; the board of directors of the Purchaser approving the entry into and performance of the Compile Ryobi SPA by the Purchaser; if required, the passing by the shareholders of the Purchaser of a resolution approving the Purchaser s entry into and performance of the Compile Ryobi SPA; none of the warranties given by the Compile Ryobi Vendors under the Compile Ryobi SPA is or has become false, misleading or incorrect; all employees of Compile Ryobi having entered into binding contracts of employment with Compile Ryobi; GFS and the Purchaser have entered into the shareholders agreement in form and substance satisfactory to the Purchaser; the Compile Ryobi Vendors having procured the Compile Australia Vendor to enter into licence agreements in relation to all of the intellectual property rights required to conduct the businesses of Compile Ryobi in the form satisfactory to the Purchaser; and there having been no material adverse change affecting Compile Ryobi or the financial or trading position or prospects of Compile Ryobi since 31 October 2011. If any of the conditions precedent set out above is not satisfied or waived on or before 31 July 2012, the Purchaser may by not less than 2 Business Days written notice to the Compile Ryobi Vendors, terminate the Compile Ryobi SPA. If any of the conditions precedent set out in items (d)(ii), (iv) and (v) above is not satisfied or waived on or before 31 July 2012, the Compile Ryobi Vendors may by not less than 2 Business Days written notice to the Compile Ryobi Vendors, terminate the Compile Ryobi SPA. 5
(5) The value (book value, net tangible asset value and the latest available open market value) of the assets being acquired, and in respect of the latest available valuation the value placed on the assets, the party who commissioned the valuation and the basis and date of such valuation Both the book value and unaudited net tangible liabilities of Compile Ryobi as at 30 June 2011 is A$501,594, which is equivalent to S$657,088 (based on the exchange rate of A$1 : S$1.310 as at 30 June 2011). (6) The source(s) of funds for the acquisition The acquisition of the Compile Ryobi Sale Shares is to be funded via internal sources. (7) The net profits attributable to the assets being acquired Based on the unaudited financial statements of Compile Ryobi for the financial year ended 30 June 2011, Compile Ryobi recorded a net loss of A$765,088, which is equivalent to S$1,002,265 (based on the exchange rate of A$1 : S$1.310 as at 30 June 2011). (8) The effect of the transaction on the net tangible assets per share of the issuer for the most recently completed financial year, assuming that the transaction had been effected at the end of that financial year Assuming that the acquisition of the Compile Ryobi Sale Shares had been effected on 30 June 2011, the NTA per share of the Company and the Group as at 30 June 2011 would be as follows: As at 30 June 2011 Before the Acquisition After the Acquisition NTA (S$ 000) 119,194 118,537 Number of shares excluding treasury 761,277 761,277 shares ( 000) NTA per share (Singapore cents) 15.66 15.57 (9) The effect of the transaction on the earnings per share of the issuer for the most recently completed financial year, assuming that the transaction had been effected at the beginning of that financial year The financial effect of the acquisition of the Compile Ryobi Sale Shares on the earnings per share ( EPS ) of the Company for the financial year ended 30 June 2011 assuming that the Acquisition had been effected on 1 July 2010 would be as follows: As at 30 June 2011 Before the Acquisition After the Acquisition Net profit attributable to shareholders 7,813 6,811 (S$ 000) Weighted average number of shares 764,805 764,805 used in the computation of basic EPS ( 000) Basic EPS (Singapore cents) (1) 1.02 0.89 6
Notes: (1) Basic EPS is computed based on the weighted average number of shares for the full financial year ended 30 June 2011. (10) The rationale for the transaction including the benefits which are expected to accrue to the issuer as a result of the transaction The Company is of the view that the acquisition of the Compile Ryobi Sale Shares will be in the best interests of the Company for the following reasons: (a) (b) (c) there has been an increase in large government and private sector contracts in Australia in the recent years. Compile Ryobi has tendered for these projects but currently lacks the resources to undertake them. The Company and the Group s financial support will strengthen Compile Ryobi s ability to undertake and deliver these projects through capital funding for on-going expansion and the use of the Group s specialised equipment; the Group s involvement in the Compile Ryobi will allow it to expand and diversify into piling, geotechnical and ground improvement works and to compete more effectively against other piling companies already present in the region. the acquisition of the Compile Ryobi Sale Shares will allow the Group to participate in the increased activities in the Australian resources and mining sectors, which have been growing on the back of demand driven by China. (11) Whether any director or controlling shareholder has any interest, direct or indirect, in the transaction and the nature of such interests Save as disclosed under the paragraph entitled Vendors and Interested Persons above, no Director or controlling shareholder of the Company has any interest, direct or indirect, in the acquisition of the Compile Ryobi Sale Shares. (12) Details of any service contracts of the directors proposed to be appointed to the issuer in connection with the transaction No director is proposed to be appointed to the Company in connection with the acquisition of the Compile Ryobi Sale Shares. C. Compile Australia Compile Australia, a private company limited by shares, is incorporated in Australia, and as at the date of the Compile Australia SPA, has and issued and paid-up share capital of 10 ordinary shares ( Compile Australia Shares ), which are wholly owned by the Compile Australia Vendor. Compile Australia s principal business activity is sheet pile, ground anchor, in-situ concrete walls, soil nail wall and permeation grouting. The acquisition of the Compile Australia Sale Shares would be funded by internal resources and is not expected to have any material impact on the net earnings per share and net tangible assets per share of the Company for the financial year ending 30 June 2012. None of the substantial shareholders of the Company or Directors has any interest, direct or indirect, in the acquisition of the Compile Australia Sale Shares. 7
Information to be announced under Rule 704 (17) (c) of the Listing Manual (1) The aggregate value of the consideration, including factors taken into consideration in arriving at it and how it will be satisfied, including the terms of payment Compile Australia Consideration The aggregate consideration for the Compile Australia Sale Shares ( Compile Australia Consideration ) is A$2,000,000, plus or minus (as the case may be) 70% of the audited net debt of Compile Australia determined, as at the 31 October 2011, by reference to the assets and liabilities of Compile Australia ( Compile Australia Net Debt ). As at the date of this Announcement, the Compile Australia Net Debt is A$100,284, As such, for the purpose of this Announcement, the amount of the Compile Australia Consideration is A$1,929,801, which is equivalent to S$2,558,916 (based on the exchange rate of A$1 : S$1.326 as at 14 March 2012). However, the final Compile Australia Net Debt, and in consequence, the Compile Australia Consideration, is subject to completion of audit of Compile Australia. The Compile Australia Consideration is payable by the Purchaser to the Compile Australia Vendor upon completion of the Compile Australia SPA. The Compile Australia Consideration was arrived at arm s length on a willing buyer willing seller basis, taking into consideration the income, revenue and net assets of both companies, the prevailing market conditions based on the discounted cash flow of both companies, and by comparing other companies and transactions of similar size and nature. (2) The value (book value, net tangible asset value and the latest available open market value) of the assets being acquired, and in respect of the latest available valuation the value placed on the assets, the party who commissioned the valuation and the basis and date of such valuation The net book value of Compile Australia as at 30 June 2011 is A$390,810, which is equivalent to S$511,961 (based on the exchange rate of A$1 : S$1.310 as at 30 June 2011). The net tangible asset value of Compile Australia as at 30 June 2011 is A$376,696, which is equivalent to S$493,472 (based on the exchange rate of A$1 : S$1.310 as at 30 June 2011). Documents for Inspection The Compile Ryobi SPA and Compile Australia SPA will be available for inspection during normal business hours at the Company s registered address at 58A Sungei Kadut Loop, Ryobi Industrial Building Singapore 729505 for three (3) months from the date hereof. By Order of the Board Ong Tiong Siew Chief Executive Officer and Executive Director 15 March 2012 8