Reference is made to the announcements dated 28 December 2016, 26 January 2017 and 17 February 2017 in relation to the Proposed CGSB Acquisition (“Announcements”). Unless otherwise defined, the definitions set out in the Announcements shall apply herein.

On behalf of the Board of SCIB, IPS wishes to announce that the Value of Factory and Contract certified pursuant to clause 3.6 of the SSA ranges between RM9.08 million and 9.18 million (“Valuation Range”) which is less than the Purchase Consideration of RM9.5 million by approximately between RM0.32 million and RM0.42 million respectively.

Pursuant to clause 3.6 of the SSA, on behalf of the Board, IPS wishes to announce that SCIB has elected to proceed with the Proposed CGSB Acquisition with no adjustment to the Purchase Consideration after having taken into consideration the following:

1. CGSB owns and operates an interlocking block IBS factory located on land held under title particulars Country Lease Title No. 175346666, Locality of Woodford Estate, District of Beaufort, State of Sabah and has been awarded the Supply and Installation Contract by SEPC for the supply and installation of interlocking blocks and associated structural and finishing works to SEPC for its project to construct 620 residential units together with necessary amenities, utilities, facilities and infrastructure at Woodford Estate, Beaufort District, Sabah. The development at Beaufort in Woodford Estate is planned to be a continuing development of both affordable and general housing units being developed over a 20-year development program. In view of CGSB’s interlocking block IBS factory is located at Beaufort in Woodfort Estate, CGSB will be in a prime and preferred position to deliver its interlocking block IBS to these developments. The interlocking block IBS factory also has the capacity to deliver blocks to other developments in the Beaufort and Kimanis areas, which are growing quickly as a result of the Sabah Oil & Gas Terminal in Kimanis;
2. the profit guarantee given by the Sellers of CGSB to SCIB pursuant to the SSA that the aggregate unqualified audited profit before tax earned from the Supply and Installation Contract, excluding extraordinary income and profits earned from activities that are deemed to be not in the ordinary course of business of CGSB in respect of the financial period commencing from the completion date of the Proposed CGSB Acquisition up to and including the date of the financial year ended 31 December 2018 shall not be less than RM7,191,236;
3. the Board is of the view that the difference between the Purchase Consideration and the Valuation Range of approximately between 3.4% and 4.4% is not material and is compensated by the factors in (i) and (ii) above and the future expected earnings contribution from the Proposed CGSB Acquisition; and
4. presently, the SCIB Group is principally engaged in the manufacturing of concrete products for use in the construction and infrastructure sectors. The Proposed CGSB Acquisition pave the way for SCIB to penetrate into the residential sector of IBS supply and installation market where the Government undertakes to plan, develop and construct affordable housing projects in East Malaysia. In this regard, the Proposed CGSB Acquisition is expected to provide SCIB with the opportunity to diversify and include revenue and earnings sourced from the residential projects sector. Further, the Board is of the view that the management team of SCIB has the expertise based on its experience in IBS related products to manage and grow CGSB’s business.

This announcement is dated 2 March 2017.