Bursa Announcement

1.        INTRODUCTION

The Board of Directors of AEON (“Board”) wishes to announce that the Company has on 29th June 2017 entered into a Sale and Purchase Agreement (“SPA”) with Foremost Wealth Management Sdn. Bhd. (Company No. 1065970-V) having its registered office at No. 40-1, First Floor, Jalan Manis 1, Taman Segar, Cheras, Kuala Lumpur (“Purchaser”) in respect of the disposal of a piece of freehold land held under H.S.(D) 142740, PT No Plot 55919, Mukim of Cheras, District of Ulu Langat and State of Selangor measuring approximately 28,328 square metres (“Land”) together with a 2-storey retail Shopping Centre known as AEON Mahkota Cheras Shopping Centre constructed thereon (“Building”) at a sale consideration of Ringgit Malaysia Eighty Seven Million Eight Hundred Thousand (RM87,800,000.00) Only (“Sale Consideration”) in accordance with all the terms and conditions as stipulated in the SPA (“Proposed Disposal”). The Land and Building are collectively referred to as the “Property”.

2.        INFORMATION ON PURCHASER

The Purchaser is an investment holding company incorporated in Malaysia with its place of business at No. 2B, Jalan BM 1/2, Taman Bukit Mayang Emas, 47801 Petaling Jaya, Selangor with a paid-up share capital of RM1,000,000.00.

3.        INFORMATION OF THE PROPERTY

The Property comprising a Land which is a freehold land, held under an individual title H.S.(D) 142740, PT No Plot 55919, Mukim of Cheras, District of Ulu Langat and State of Selangor measuring approximately 28,328 square metres in area and the Building erected thereon and bearing the postal address of Jalan Temenggung 21/9, Persiaran Mahkota Cheras 1, Bandar Mahkota Cheras, 43200 Cheras, Selangor Darul Ehsan is currently used for the purpose of operating of a shopping centre with car parks and departmental stores cum supermarket. The Net Book Value of the Property for the financial year ended 31st December 2016 is RM67,400,000.00 and the age of the Building is 7 years.

4.        DETAILS OF THE PROPOSED DISPOSAL

4.1     The Company is the registered, legal and beneficial owner of the Land together with the Building erected thereon including all fittings and fixtures.

4.2     The Property is presently free from encumbrances.

4.3     The Property is not subject to express conditions and restrictions in interest.

4.4     The Company has agreed to sell and the Purchaser has agreed to purchase the Property on an as is where is basis free from all encumbrances with a Sale Consideration of Ringgit Malaysia Eighty Seven Million Eight Hundred Thousand (RM87,800,000.00) Only upon the terms and conditions therein contained in the SPA.

5.         BASIS OF DETERMINING THE VALUE OF THE PROPERTY

The consideration for the Proposed Disposal amounting to Ringgit Malaysia Eighty Seven Million Eight Hundred Thousand (RM87,800,000.00) Only was based on a total area of 28,328 square metres which was arrived on a “willing-buyer willing-seller basis” in an arm’s length transaction after taking into consideration the potential development of the Company, the range of market values for similar lands in the vicinity and the valuation carried out by the valuer, Henry Butcher Malaysia Sdn. Bhd. (160636-P) which adopted the Investment Method that considers the Market Value of the Property as an income generating commercial property.

6.         SALIENT FEATURES OF THE AGREEMENT

The salient terms and conditions of the SPA, among others, are as follows:-

6.1   The Proposed Disposal shall be conditional upon the Company making a proper announcement therefor or obtaining the approval from its shareholder for the transfer of the Property, if required within two (2) months commencing from the date of the SPA or such other extended period that shall be mutually agreed by the parties upon the terms and conditions of the SPA.

6.2   One percent (1%) of the Sale Consideration has been paid by the Purchaser as the tender deposit prior the execution of the SPA and it will be converted and treated as the earnest deposit. Nine percent (9%) of the Sale Consideration shall be paid by the Purchaser upon execution of the SPA as balance deposit. The remaining Ninety percent (90%) of the Sale Consideration shall be paid by the Purchaser to the Company from the unconditional date until 30th September 2017 subject to an additional two (2) weeks interest free grace period calculated thereon (“Completion Period”) or further one (1) month from the expiry date of Completion Period in accordance with the terms and conditions of the SPA (“Extended Completion Period”).

7.         COMPLETION OF THE PROPOSED DISPOSAL

The completion of the SPA of the Property hereunder shall take place on the day when the stakeholder receives the remaining Ninety percent (90%) of the Sale Consideration with the late payment interest, if any within the Completion Period or the Extended Completion Period (“Completion Date”) according to the terms and conditions therein contained in the SPA.

8.         RATIONALE OF THE PROPOSED DISPOSAL

The Proposed Disposal is in line with AEON’s corporate strategy of focusing and developing its future retail business.

9.         THE EXPECTED GAINS OR LOSSES ARISING FROM THE PROPOSED DISPOSAL

Upon the completion, the Proposed Disposal is expected to give rise to an estimated gain of RM17,000,000.00 after adjusting for necessary expenses and taxes for the financial year ending 31st December 2017.

10.       ASSUMPTION OF LIABILITIES FOR THE PROPOSED DISPOSAL

            The Proposed Disposal will not have any effect on the liabilities of the Company.

11.       UTILISATION OF PROCEED

The cash proceed are intended to be used as working capital of the Company and to reduce its borrowings.

12.       EFFECT OF PROPOSED DISPOSAL

12.1     Share capital and Substantial Shareholders’ Shareholdings

The Proposed Disposal will not have any effect on the share capital of the Company or the shareholdings of substantial shareholders.

12.2     Earnings and earnings per share

Upon the completion, the Proposed Disposal is expected to give rise to an estimated gain of RM17,000,000.00 for the financial year ending 31st December 2017.

12.3     Net assets and gearing 

The Proposed Disposal is not expected to have any material effect on net assets and gearing of the company.

13.       DIRECTORS’AND MAJOR SHAREHOLDERS’ INTERESTS

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

14.       DIRECTORS’ RECOMMENDATIONS

The Board having considered all aspects of the Proposed Disposal, the Board is of the opinion that the Proposed Disposal is in the best interests of the Company.

15.       APPROVALS REQUIRED

The necessary approvals for the Proposed Disposal are as stated in item 6 above and the Proposed Disposal do not require the approval of the shareholders of the Company.

16.       ESTIMATED TIMEFRAME FOR COMPLETION

Unless otherwise agreed by the parties, the completion date is expected to be four (4) months from the date of the Agreement or such other date to be agreed between the Company and the Purchaser.

17.       DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the SPA executed on 29th June 2017 and the valuation report by Henry Butcher Malaysia Sdn. Bhd. (160636-P) dated 17th February 2017 are available for inspection at the registered office of AEON at 3rd Floor, AEON Taman Maluri Shopping Centre, Jalan Jejaka, Taman Maluri, Cheras, 55100 Kuala Lumpur during normal office hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement.

This is a voluntary announcement made under Paragraph 10.05(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

This announcement is dated 29th day of June 2017