1. INTRODUCTION

The Board of Directors of the Company wishes to announce that the Company’s wholly-owned subsidiary, K.S. Chin Minerals Sdn Bhd (“KSCM”) has on 5 August 2019 entered into a Share Sale Agreement (“SSA”) with East Rock Sdn Bhd (Company No. 1202112-W) (“ERSB”) for the purpose of disposing its 4,340,100 ordinary shares in the share capital of Gebeng Quarry Sdn Bhd (“GQSB”), representing 51% of the issued and paid up share capital of Gebeng Quarry Sdn Bhd (“Sale Shares”) to ERSB for a total consideration of RM7,000,000.00 only (the “Disposal”).

Upon completion, GQSB shall cease to be an indirect subsidiary of the Company.

2. DETAILS OF THE DISPOSAL

(a) Information of KSCM

KSCM was incorporated in Malaysia on 5 March 1984 as a private company limited by shares under the Companies Act, 1965. As at the date of this announcement, the total issued share capital of KSCM is RM2,500,100 comprising of 2,500,100 ordinary shares. KSCM is principally engaged in provision of turnkey and specialised quarry services and rental of machinery. The Directors of KSCM are Mr Chin Leong Choy (“CLC”) and Mr Yee Kon Sin (“YKS”). KSCM is a wholly-owned subsidiary of MRB.

(b) Information of ERSB

ERSB was incorporated in Malaysia on 19 September 2016 as a private company limited by shares under the Companies Act, 1965. As at the date of this announcement, the total issued share capital of ERSB is RM400,000 comprising of 400,000 ordinary shares. ERSB is principally engaged in investment holding company and carry on the business of quarry, mining, smelting and refining company. The Directors of ERSB are Dato’ Chia Kee Mong, Tan Seow Leng and Wong Kian Foong while the shareholders of ERSB and their respective shareholdings are as follows:

(c) Information of GQSB

GQSB was incorporated in Malaysia on 24 October 2005 as a private company limited by shares under the Companies Act, 1965. As at the date of this announcement, the total issued share capital of GQSB is RM8,510,000 comprising 8,510,000 ordinary shares.GQSB is principally engaged in quarry activities and trading of quarry products.

3. SALIENT TERMS OF THE SSA

(a) Disposal

KSCM agrees to sell and ERSB agrees to purchase the Sale Shares:-

(i) free from all liens, charges and encumbrances and with full legal and beneficial title;

(ii) with all rights attaching thereto (including all dividends and distributions (if any) declared in respect thereof) with effect from the date of this agreement;

(iii) on the basis of the warranties as set out in the SSA; and

(iv) conditional upon the entry into & signing and completion of the SSA simultaneously with the entry into & signing and completion of the sale of shares agreement for sale and purchase of 2 ordinary shares, representing 100% of the total issued share capital in Dwibio Sarjana Sdn. Bhd. (Company No. 701926-A) (“DSSB”) (“DSSB Sale Shares”) between Yasmin Hayati Binti Mohd Muda and Suhaidi Bin Abd Ghapar and M & P Setia Sdn Bhd (Company No: 733111-U). ERSB shall not be obliged to complete the purchase of the Sale Shares unless the DSSB Sale Shares are completed simultaneously therewith. Notwithstanding this, ERSB is entitled to complete the Sale Shares but shall still be obligated and bounded to complete the DSSB Sale Shares.

(b) Pre-Completion

Pending completion, KSCM must ensure and procure that, except with the prior written consent of ERSB or as expressly required or permitted by the SSA:-

(i) Does not do anything that is not in DSSB’s ordinary course of business;

(ii) Do or omit to do any act or thing which would result in a breach of any of the representations, warranties or undertakings set out in the SSA;

(a) knowingly permit any of its normal insurances to lapse or do anything to make any policy of insurance void or voidable;

(b) enter into any capital expenditure commitments, hire purchase, leasing, rental or conditional sale agreements other than those already budgeted for or in those to be incurred in the ordinary course of business;

(c) enter into any agreement which is outside the ordinary course of its business or which is of an onerous nature;

(d) give any financial or other guarantees, securities or indemnities for any purpose other than performance bonds, advance payment guarantees or similar securities;

(e) commence any litigation or compromise or settle or waive any claim, dispute or other matter in which it is involved; and

(f) pay or agree to pay its directors or officers or any of them any remuneration or other emoluments or benefits whatsoever other than those disclosed and agreed by the ERSB; and

(iii) No act is performed or omission allowed which would result in any of the warranties being breached or becoming misleading at any time up to and including completion of the sale and purchase of GQSB Sale Shares by the performance by the parties of their respective obligations under the SSA.

4. BASIS AND JUSTIFICATION OF ARRIVING AT THE CONSIDERATION

The consideration was arrived at on a willing-buyer willing-seller basis, after taking into consideration of the net assets of GQSB based on its audited financial statements for the financial year ended 31 March 2018 (“FYE 31 March 2018”) of RM12,642,689.

The consideration of RM7,000,000.00 will be paid by ERSB in the following manner:-

(i) ERSB shall on the date of execution of the SSA pay to KSCM 30% of the consideration equivalent to RM2,100,000.00; and

(ii) The remaining 70% of RM4,900,000 will be settled by way of instalments in the following manner:-

5. ORIGINAL DATE AND COST OF INVESTMENT

Based on the investment made from 1 December 2016 to date of this announcement, the total cost of investment by KSCM for its 51% equity interest is approximately RM4,340,100.

6. EFFECTS OF THE DISPOSAL

The Disposal will not have any effect on the earnings per share, net assets per share, gearing, share capital and substantial shareholders’ shareholding of the Company.

The Disposal is expected to generate an estimated one-off loss of approximately RM678,097 to the Group based on total owner's equity, after taking into consideration the estimated expenses of RM50,000 in relation to the Disposal.

7. COMPLETION OF THE SSA

The Disposal shall reach completion upon clearance of the Balance Consideration from ERSB to KSCM by January 2020.

8. UTILISATION OF PROCEEDS FROM THE DISPOSAL

The proceeds of RM7,000,000.00 arising from the Disposal is intended to be utilised for working capital of the Company and defraying estimated expenses in relation to the Disposal within 6 months from the completion of the Disposal.

9. RATIONALE FOR THE DISPOSAL

The Disposal provides an opportunity for MRB Group to unlock the value and monetise its investment in GQSB. The proceeds from Disposal will be used as working capital of the Company and/or for investments in the existing businesses of MRB Group and/or future investment opportunities to be identified as well as further repayment of borrowings of MRB Group.

10. HIGHEST PERCENTAGE RATIO APPLICABLE TO THE DISPOSAL

Pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the highest percentage ratio applicable to the Disposal is 15.87%.

11. APPROVALS REQUIRED

The Disposal is not subject to the approval of the shareholders of MRB and any other regulatory authorities.

12. DIRECTORS’ RECOMMENDATION

The Board of Directors, after considering amongst others, the potential financial benefits arising from the Disposal, is of the opinion that the Disposal is in the best interest of the MRB Group.

13. RISK FACTORS

The Disposal is not expected to pose any risk factors which could materially and/or adversely affect the business opportunities and financial performance of MRB Group.

14. DIRECTORS’ AND/OR MAJOR SHAREHOLDER’ INTEREST AND/OR PERSONS CONNECTED WITH THEM

None of the Directors and/or major shareholders and/or persons connected to Directors and/or major shareholders of the Company and the Group has any interest, direct or indirect, in the Disposal.

15. DOCUMENTS FOR INSPECTION

The SSA is available for shareholders’ inspection at the registered office of the Company at Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan during normal business hours from Monday to Friday (except for public holidays) for a period of three (3) months from the date of this announcement.

This announcement is dated 5 August 2019.