HUA YANG BERHAD (“HYB” or the “Company”) -Proposed acquisition of land by Yoon Lian Realty Sdn Bhd (“YLRSB”)

1. INTRODUCTION

The Board of Directors of HYB wishes to announce that the wholly-owned subsidiary of the Company, YLRSB had today entered into a conditional Sale and Purchase Agreement (SPA) with Bumi Semarak Development Sdn Bhd, a company incorporated in with its registered office at No.81 (2nd Floor) Jalan Market, 30000 , Darul Ridzuan and its business address at No. 25, Medan Istana 6, Bandar Ipoh Raya, 30000 Ipoh, Perak Darul Ridzuan (the “Vendor” or “BSDSB”) for the purpose of acquiring one parcel of land, more particularly described below, for a total cash consideration of RM15,313,005.00 (“Purchase Price”) (the “Proposed Acquisition”).

Further details of the Proposed Acquisition are set out in the following sections:

2. THE PROPOSED ACQUISITION

2.1 Details of the Proposed Acquisition

Title H.S.(D) 204382, PT 245009, Mukim Hulu Kinta, Daerah Kinta, Perak Darul Ridzuan (“the Property”).

Location The Property is located 8.0km away from Ipoh town centre and accessible through Persiaran Meru Raya 1 and North South Expressway. It is located within the established area of and Government Offices of Perak.

Size Approximately 3.8 acres

Description The land is generally flat and earmarked as commercial zone. Currently the subject land is vacant.

Proposed Development Development of 720 units of Serviced Apartments and 72 units of commercial shop lots.

Tenure Freehold

Restrictions-in-interest Tanah ini boleh dipindahmilik atau dipajak dengan kebenaran bertulis oleh Pihak Berkuasa Negeri.

Original cost of The Property was acquired by the Vendor on investment to the 26 Dec 2012 for a cost of RM10,262,736. vendor

Information on The Directors of the Vendor are:- Vendor’s Directors and (i) Sheikh Ahmad Bin Sheikh Long, shareholders (ii) Noraini Bt Jaafar, and (iii) Sheikh Izat Azhar Bin Sheikh Ahmad

The shareholders of the Vendor and their shareholdings are:- No. of shares (i) Sheikh Ahmad Bin Sheikh Long 100,000 (ii) Noraini Bt Jaafar 200,000 (iii) Ho Mook Sing 300,000

Details of development The proposed development has an estimated Gross Development Value of RM295.1 million. However, it is currently too preliminary to ascertain the total development cost, the expected commencement date of the development and the expected profits to be derived from the development of the Property.

The development cost of the Property will be funded by internally generated funds.

2.2 Salient terms of the SPAs

2.2.1 Mode of Payment

a) 10% of Purchase Price upon execution of SPA; b) Balance of Purchase Price within 3 months from the date of SPA becoming unconditional with fulfilment of all conditions precedent.

2.2.2 The Vendor shall sell the Property free of all encumbrances and shall do everything necessary to remove any caveat that has been placed on the Property.

2.3 Basis of arriving at the Purchase Price

The Purchase Price was arrived at based on a willing buyer willing seller basis after taking into consideration the market value as ascribed by Jordan Lee & Jaafar (“the Valuer”) in the Valuation Report dated 8 December 2016 (“Independent Valuation”).

The Valuer had on 30 November 2016 inspected the Property and determined the market value as a freehold commercial development at RM15,700,000. In arriving to the market value, the Valuer had adopted the comparison method of valuation. The Purchase Price represents a discount of 2.47% over the market value as assessed by the Valuer.

2.4 Source of funding and mode of satisfaction

The Purchase Price will be funded through internally generated funds and/or bank borrowings. There would be no liabilities assumed by the HYB Group arising from the Proposed Acquisition.

3. RATIONALE OF THE PROPOSED ACQUISITION

The Proposed Acquisition is in line with the HYB Group’s objective to expand its presence in Perak. This Proposed Acquisition will enable HYB to replenish its landbank with more prime land in Ipoh as its current township development at Bandar Universiti “BUSI” and , Ipoh has 7 years remaining for development.

4. EFFECTS OF THE PROPOSED ACQUISITION

4.1 Share capital and substantial shareholders’ shareholdings

The Proposed Acquisition will not have any effect on the issued and paid- up share capital and substantial shareholders’ shareholdings of the Company as the Proposed Acquisition does not involve any issuance of shares of HYB

4.2 Net assets per share and earnings per share

The Proposed Acquisition is not expected to have any material effect in the net assets per share of HYB Group for the financial year ending 31 March 2017.

The Proposed Acquisition is expected to contribute positively to the future earnings of HYB Group.

4.3 Gearing

As the Purchase Price is to be satisfied by internally generated funds and/or bank borrowings and the exact manner in which the Purchase Price will be satisfied has not been finalised at this juncture, hence, the effect of the Proposed Acquisition on the gearing cannot be ascertained at this juncture. Nonetheless, there would be no material effect to the gearing of the Group for the financial year ending 31 March 2017. 5. PROSPECT

As HYB Group’s core business is in property development and with an existing Branch operation in Perak for the established township development project at BUSI and Bercham, Ipoh, the Proposed Acquisition will further enhance the Group’s on-going operations and also add on new product ranges to complement the current offerings. Further, the growth and development of Ipoh is expected to have a positive effect on the Group’s development there.

6. RISK FACTORS

HYB Group’s core business is in the property sector. As such, the Proposed Acquisition will not materially change the risks of the Company’s business as the Group would still be exposed to the same business, operational, financial and investment risk inherent in the property sector. These risks are inherent risk due to timely commencement or completion of projects, obtaining required approvals, satisfactory performance of contractors and adverse economic events or recession. In addition, any material escalation of cost of cement and other building materials as well as increase in petrol prices may contribute to a higher overall development cost thereby impacting the profit margins of any development project.

The Management shall endeavour to limit the abovementioned risks through, inter-alia, careful planning and identification of the type of developments, innovative pricing strategies, more prudent financial policy, a close supervision on any property development project and effective management.

7. APPROVALS REQUIRED

The Proposed Acquisition is not subject to the approval of the shareholders of HYB.

8. ESTIMATED TIME FRAME FOR THE COMPLETION

Barring any unforeseen circumstances, the Board of HYB expects the Proposed Acquisition to be completed by the Second Quarter of the Financial Year ending 31 March 2018.

9. HIGHEST PERCENTAGE RATIO APPLICABLE

The highest percentage ratio applicable to the transaction pursuant to paragraph 10.02(g) of the Main Market Listing Requirements is 2.83%.

10. INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND / OR PERSONS CONNECTED TO THEM

None of the directors, major shareholders of HYB and/or persons connected to them has any interest, direct or indirect in the Proposed Acquisition except as disclosed below:-

a) The Company’s Directors and major shareholders, namely Mdm Chew Po Sim (“CPS”) and Mr Ho Wen Yan (“HWY”) is the sister-in-law and nephew respectively of Mr Ho Mook Sing, a Director and shareholder of BSDSB b) The Company’s Director, Mr Ho Mook Leong (“HML”) is the brother of Mr Ho Mook Sing; and c) The Company’s Director, Mr Chew Hoe Soon (“CHS”) is the brother of Mdm Chew Po Sim.

CPS, HWY, HML and CHS (collectively referred to as “Interested Directors”) interested in the Proposed Acquisition.

The Interested Directors have abstained from deliberating and voting on the Proposed Acquisition at the Board meeting of HYB.

11. STATEMENT BY AUDIT COMMITTEE

The Audit Committee of the Company, save for Mr Chew Hoe Soon who abstained from deliberation and voting, having reviewed and considered the rationale for the Proposed Acquisition is of the view that the Proposed Acquisition is in the best interest of HYB Group and the terms are fair, reasonable and on normal commercial terms and not detrimental to the interest of the minority shareholders of the Company.

In forming its view, the Audit Committee has taken into consideration, among others the Valuation Report, the rationale and benefits of the Proposed Acquisition, the salient terms of the Agreement, the basis and justification for the Purchase Consideration, the effects of the Proposed Acquisition and the prospects of the Land.

Other than the independent valuation, the Audit Committee did not seek other independent advice in forming its view in respect of the Proposed Acquisition. The Audit Committee does not have differing opinion from the independent valuer

12. TRANSACTION WITH RELATED PARTY FOR THE PRECEEDING 12 MONTHS

Save for the Proposed Acquisition, the HYB Group has not entered into any other transaction with Bumi Semarak Development Sdn Bhd for the preceding 12 months. 13. STATEMENT BY DIRECTORS

The Board of Directors (save for Interested Directors), having considered all aspects of the Proposed Acquisition, is of the opinion that the Proposed Acquisition is in the best interest of the HYB Group AND THE TERMS ARE FAIR, REASONABLE AND ON NORMAL COMMERCIAL TERMS AND NOT DETRIMENTAL TO THE INTEREST OF THE MINORITY SHAREHOLDERS. Other than the independent valuation, the Board, other than the Interested Directors, had not sought other independent advice and do not have differing opinion from the independent valuer and the Audit Committee.

14. DOCUMENTS FOR INSPECTION

The SPA dated 5th May 2017 and Valuation Report is available for inspection at HYB’s registered office at C-21, Jalan Medan Selayang 1, Medan Selayang, 68100 Batu Caves, Selangor Darul Ehsan during normal office hours from Monday to Friday (except public holidays) for a period of three months.

This announcement is dated 5th May 2017.