We refer to the Company's announcements made on 1 October 2021 and 5 October 2021 (“Announcements”) in relation to the Shares Sale Agreement (“SSA”) for the acquisition of 51% equity interest in RZAC Immunesafe Sdn Bhd (“RZAC”) by HS Bio Sdn Bhd (“HS Bio”) (a wholly-owned subsidiary of the Company) for a total Purchase Consideration of RM20 million (“Acquisition”). Unless otherwise stated, defined terms used in this announcement shall carry the same meanings as defined in the Announcements.

The Acquisition has been completed on 30 November 2021 upon payment of Cash Consideration in the sum of RM2 million by HS Bio to the Vendors and thereafter RZAC has become a 51% owned subsidiary of HS Bio on 30 November 2021, save and except pending the fulfilment of the Conditions Subsequent (“CS”) by the Vendors as set out in the SSA, amongst others, delivery of Profit Guarantee by the Vendors on or before 30 September 2022 (“CS Fulfillment Period”). Upon fulfilment of the CS by the Vendors, HS Bio shall satisfy the remaining sum of RM18 million via the allotment and issuance of new ordinary shares in HS Bio to the Vendors. 

RZAC’s business in the distribution of antibody test kits did not perform as expected due to the lack of market demand for the antibody test and thus no profit was generated by RZAC as at the date of this announcement. As such, the Vendors are unable to meet the Profit Guarantee, as part of the fulfillment by the Vendors under the CS. In view of the aforementioned and notwithstanding that the CS Fulfillment Period has yet to be due, the Board wishes to announce that HS Bio has on 28 September 2022 entered into a Letter of Termination with the Vendors and the Parties have mutually agreed to terminate the SSA subject to the terms and conditions of the Letter of Termination (“Termination”).

Pursuant to the Termination, the Vendors shall within 14 days from the date of Termination refund and repay the sum of RM2 million to HS Bio, being the Cash Consideration, which was previously paid by HS Bio to the Vendors under the SSA. In addition, the Vendors have agreed to pay an additional sum of RM2 million (equivalent to 10% of the total Purchase Consideration of RM20 million under the SSA) being the termination costs to HS Bio within 14 days from the date of Termination. Thereafter, HS Bio shall return the Sale Shares (i.e., 51% equity interest in RZAC) to the Vendors in accordance with the terms and conditions as stated in the Letter of Termination and RZAC would then cease to be a subsidiary of HS Bio upon thereof.

There are no liabilities, including contingent liabilities and guarantees, in relation to the Termination which will remain with Hong Seng Group and there are no any guarantees given by Hong Seng Group to the Vendors/RZAC in relation to the Termination. 

The Termination is not expected to have any material effect on the Company’s earnings, net assets and gearing for the financial year ending 30 September 2022. 

None of the Directors, major shareholders and/or chief executive of Hong Seng and persons connected with them has any interest, direct or indirect, in the Termination.

This announcement is dated 28 September 2022.