1.0       INTRODUCTION

The Board of Directors of V.S. Industry Berhad (“VSIB”) wishes to announce that the Company’s wholly-owned subsidiary, V.S. Plus Sdn. Bhd. (“VSP”) had on 10 April 2023 entered into a Sale and Purchase Agreement (“SPA”) with ACME Zone Sdn. Bhd.  (“AZSB”) to acquire two (2) parcels of 60-year leasehold land together with a unit of Single Storey Detached factory with an attached Double-Storey office erected thereon for a total consideration of RM6,000,000.00 (Ringgit Malaysia: Six Million) (“Purchase Consideration”) only and as per the terms and conditions stipulated in the SPA (hereinafter referred to as “Acquisition”).

2.0      DETAILS OF THE ACQUISITION

The details of the two (2) parcels of 60-year leasehold land to be acquired by VSP are as follows:

Presently, the Property A and Property B are tenanted to third party and are used for light medium manufacturing activities. The existing tenant is expected to vacate the premises in July 2023.

3.0       INFORMATION ON VSP AND AZSB

3.1       VSP is a company incorporated in Malaysia on 16 October 1995. Its present issued capital is RM50,000,000.00 comprising 50,000,000 ordinary shares.  The principal business of VSP is manufacturing, assembly and sale of electrical products and plastic moulded components and parts.  The current Directors of VSP are Datuk Beh Kim Ling, Datuk Gan Sem Yam and Dato’ Gan Tiong Sia who are also Directors of VSIB.  Datuk Beh Kim Ling and Datuk Gan Sem Yam are also the substantial shareholders of VSIB.

3.2       AZSB is a company incorporated in Malaysia on 16 November 1996. Its present issued capital is RM100,000.00 comprising 100,000 ordinary shares. The principal business of AZSB relates to investment in properties. The existing directors of AZSB are Datuk Beh Kim Ling and Datuk Gan Sem Yam. Datuk Beh Kim Ling and Datuk Gan Sem Yam are also directors of VSIB and VSP.

The existing shareholders of AZSB are as follows:

The Acquisition constitute Related Party Transaction for the Company in accordance with Paragraph 10.08, Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. Both Datuk Beh Kim Ling and Datuk Gan Sem Yam being the Executive Directors of VSIB declared their interest in the transaction and person connected to them who are also directors of the Company, namely Dato’ Gan Tiong Sia, Mr Beh Chern Wei (Ma Chengwei) and Mr Gan Pee Yong by virtue of their family relationship with Datuk Beh Kim Ling and Datuk Gan Sem Yam accordingly, have abstained from all deliberations and voting on board resolution on the Acquisition.

4.0       Basis of and justification of Determining the Purchase Consideration

The Purchaser hereby agrees to purchase the Property on an “as-is-where-is” basis without vacant possession free from all encumbrances, caveats, liens and restraints but subject to all Condition and restrictions in interest expressed or implied in the document of title to the Property at the purchase price of Ringgit Malaysia Six Million (RM6,000,000.00) only made up as follows:-

Property A

Ringgit Malaysia Three Million (RM3,000,000-00) only

Property B

Ringgit Malaysia Three Million (RM3,000,000-00) only

The Purchase Consideration was arrived with reference to the market value of the property (valued by a registered professional valuer) as at 31 January 2023.

5.0       Salient terms of the SPA

The purchase of the Property by the Purchaser shall be subject to the fulfilment of the Condition Precedent in which the Vendor applying for and obtaining, at the Vendor’s costs and expense, the approval of Johor State Authority to the sale and transfer of the Property to the Purchaser within a period of six (6) months from the date of this Agreement or such other date to be mutually agreed between the Parties.

In the event the Condition Precedent is not satisfied within the Condition Precedent Period, the SPA shall, unless extended by mutual agreement of the Parties in writing, terminate whereupon, within fourteen (14) days of such termination:-

(a)        the Vendor shall cause to be refunded to the Purchaser the Deposit (with interest earned); and

(b)        the Purchaser shall return or cause to be returned to the Vendor all documents delivered to the Purchaser and/or the Purchaser’s Solicitors with the interest of the Vendor in the Land as registered proprietor intact and free from the Purchaser’s encumbrances and thereafter neither Party shall have any claims against the other save for any antecedent breach.

6.0       LIABILITIES TO BE ASSUMED

There are no contingent liabilities, guarantee and other liabilities to be assumed by VSIB arising from the Acquisition.

7.0        SOURCE OF FUNDING

The Purchase Consideration will be funded through internally generated funds.

8.0        RATIONALE OF THE ACQUISITION

The Acquisition will increase the Group’s production capacity to serve a future and potential customer.

9.0        FINANCIAL EFFECTS

9.1        Share capital and Substantial Shareholdings    

The Acquisition will not have any effect on the share capital and substantial shareholder’s shareholdings of VSIB as the said acquisition does not involve any issuance of VSIB’s securities.

9.2        Earnings per share, Net Assets and Gearing        

The Acquisition does not have any material impact on the earnings per share, net assets and gearings of the VSIB for the financial year ending 31 July 2023.

10.0      APPROVAL REQUIRED       

The Acquisition is not subject to the approval of the shareholders of VSIB and/or any other relevant authorities except stated in Clause 5.0 of this announcement. 

11.0      ESTIMATED TIME FRAME FOR COMPLETION OF THE ACQUISITION        

Barring any unforeseen circumstances, the Acquisition is expected to be completed by September 2023.

12.0      INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSON(S) CONNECTED WITH THEM

Save as Related Party Transaction disclosed in item 3 as above, none of the other Directors and/or major shareholders and/or persons connected to the Directors and major shareholders of VSIB, have any interest, direct or indirect, in the Acquisition.

13.0      STATEMENT BY THE AUDIT COMMITTEE

The Audit Committee of VSIB, after having considered all aspects of the Acquisition, including but not limited to market value of the subject Property, the rationale and benefits of the Acquisition, salient terms of the SPA, basis of and justification for the Purchase Consideration and the effects of the Acquisition, is of the view that the Acquisition is in the best interest of VSIB, fair, reasonable and on normal commercial terms, and not detrimental to the interest of the minority shareholders and non-interested shareholders of VSIB.

14.0      STATEMENT BY DIRECTORS

The Board of Directors of VSIB with the exclusion of the interested Directors, namely Datuk Beh Kim Ling and Datuk Gan Sem Yam and person(s) connected to them namely Dato’ Gan Tiong Sia, Mr Beh Chern Wei (Ma Chengwei) and Mr Gan Pee Yong, having considered all aspects of the Acquisition, is of the opinion that the Acquisition is in the best interest of the Company.

15.0      HIGHEST PERCENTAGE RATIO APPLICABLE TO THE ACQUSITION

Based on VSIB’s audited financial statements for the financial year ended 31 July 2022, the highest percentage ratio applicable under paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 0.27%.

16.0      DOCUMENTS AVAILABLE FOR INSPECTION

The SPA and the valuation report dated 31 January 2023 are available for inspection at the Registered Office of VSIB at Level 9, Suite 9D, Menara Ansar, 65 Jalan Trus, 80000 Johor Bahru, Johor during normal office hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement.