ISEC Healthcare : PROPOSED ACQUISITION AND PROPOSED SUBSCRIPTION OF SHARES

ISEC HEALTHCARE LTD.

(Company Registration No. 201400185H) (Incorporated in Singapore on 2 January 2014)

PROPOSED TRANSACTION IN RELATION TO:

• (I) THE ACQUISITION OF 100.0% OF THE ISSUED AND PAID-UP CAPITAL OF EACH OF (1) IE CENTRE SDN. BHD., AND (2) KAMPAR EYE SDN. BHD.; AND

• (II) THE SUBSCRIPTION OF ORDINARY SHARES IN EACH OF (1) ME CENTRE SDN BHD, (2) TE CENTRE SDN BHD, AND (3) TAIPING EYE SDN BHD, COMPRISING 50.0% PLUS 1 ORDINARY SHARE OF THE ENLARGED SHARE CAPITAL OF EACH OF THE AFORESAID COMPANIES

• 1. INTRODUCTION

• 1.1. The board of directors (the "Board") of ISEC Healthcare Ltd. (the "Company", and together with its subsidiaries, the "Group") wishes to announce that its wholly-owned subsidiary, ISEC Sdn.

  Bhd. (the "Purchaser"), has on 6 April 2022 entered into a share purchase and subscription agreement ("SPSA") with Shin Hoy Choong ("Dr Shin"), Tan Hooi Ngea ("THN"), Yong Ked Sheong ("Dr Yong"), Cheng Heng Liang ("Dr Cheng"), Chan Suet Mei ("Dr Chan") and Jane Foo Mei Li ("Dr Foo") (collectively, the "Vendors"), ME Centre Sdn Bhd ("ME Centre"), TE Centre Sdn Bhd ("TE Centre"), and Taiping Eye Sdn Bhd ("Taiping Eye"), pursuant to which:

  • (a) the Vendors have agreed to sell, and the Purchaser has agreed to purchase, 100,000 ordinary shares and 1,200,000 ordinary shares representing 100.0% of the issued and paid-up share capital of IE Centre Sdn. Bhd. ("IE Centre") and Kampar Eye Sdn. Bhd.

    ("Kampar Eye") respectively (collectively, the "Sale Shares"), for an aggregate purchase consideration of RM56,745,000.03 (the "Purchase Consideration"), subject to adjustment following Completion (as defined below) if there are any Pre-Completion Losses (as defined below) (collectively, "Proposed Acquisition"); and

  • (b) the Purchaser has agreed to subscribe for 500,001 ordinary shares in each of ME Centre, TE Centre and Taiping Eye, comprising 50.0% plus 1 ordinary share of the enlarged share capital of each of the aforesaid companies (collectively, the "Proposed Subscription" and the subscription shares comprised therein shall collectively be referred to as the "Subscription Shares"),

  subject to the terms and conditions of the SPSA (the Proposed Acquisition and the Proposed Subscription shall collectively be referred to as "Proposed Transaction").

• 1.2. Under the terms of the SPSA, the Proposed Acquisition and the Proposed Subscription shall be completed simultaneously. Please refer to Paragraph 4.4 of this announcement for further details and completion is expected to take place by end of the first half year of 2022.

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• 2. INFORMATION ON IE CENTRE, KAMPAR EYE, ME CENTRE, TE CENTRE, TAIPING EYE AND THE VENDORS

• 2.1. IE Centre is a company incorporated in Malaysia on 4 April 2008 and has an issued and paid-up share capital of RM100,000 comprising 100,000 ordinary shares. IE Centre is in the business of operating a specialist eye clinic in Ipoh. The Vendors are the legal and beneficial owners of the entire issued and paid-up share capital in IE Centre.

  IE Centre's audited financial statements as at 30 June 2021 recorded net profit before and after tax of approximately RM5,774,000 and RM4,362,000 respectively, for the financial year ended 30 June 2021, and net book value and net tangible assets ("NTA") of approximately RM6,652,000 as at 30 June 2021, and RM3,409,000 as at 31 December 2021.

• 2.2. Kampar Eye is a company incorporated in Malaysia on 4 December 2017 and has an issued and paid-up share capital of RM1,200,000 consisting of 1,200,000 ordinary shares. Kampar Eye is in the business of operating a specialist eye clinic in Kampar. The Vendors are the legal and beneficial owners of the entire issued and paid-up share capital in Kampar Eye.

  Kampar Eye's audited financial statements as at 31 December 2021 recorded net profit before and after tax of approximately RM1,063,000 and RM855,000 respectively, for the financial year ended 31 December 2021, and net book value and NTA of approximately RM2,211,000 as at 31 December 2021.

• 2.3. ME Centre is a company incorporated in Malaysia on 24 September 2020 and has an issued and paid-up share capital of RM500,000 consisting of 500,000 ordinary shares. ME Centre is in the business of operating a specialist eye clinic in Manjung. However, as at the date of this announcement, ME Centre has not conducted any business yet as it has applied for but has not obtained the licence to operate or provide a private healthcare facility or service pursuant to the Private Healthcare Facilities and Services Act 1998 of Malaysia ("PHFSA").

  ME Centre's net loss after tax for the 12 months ended 31 December 2021 is approximately RM173,000, and ME Centre's net tangible assets as at 31 December 2021 is approximately RM324,000, based on ME Centre's unaudited financial statements as at 31 December 2021.

• 2.4. TE Centre is a company incorporated in Malaysia on 11 November 2020 and has an issued and paid-up share capital of RM500,000 consisting of 500,000 ordinary shares. TE Centre is in the business of operating a specialist eye clinic in Teluk Intan. However, as at the date of this announcement, TE Centre has not conducted any business yet as it has applied for but has not obtained the licence to operate or provide a private healthcare facility or service pursuant to the PHFSA.

  TE Centre's net loss after tax for the 12 months ended 31 December 2021 is approximately RM78,000, and TE Centre's net tangible assets as at 31 December 2021 is approximately RM419,000, based on TE Centre's unaudited financial statements as at 31 December 2021.

• 2.5. Taiping Eye is a company incorporated in Malaysia on 25 June 2021 and has an issued and paid-up share capital of RM500,000 consisting of 500,000 ordinary shares. Taiping Eye is in the business of operating a specialist eye clinic in Taiping. However, as at the date of this announcement, Taiping

Eye has not conducted any business yet as it has applied for but has not obtained the licence to operate or provide a private healthcare facility or service pursuant to the PHFSA.

Taiping Eye's net loss after tax for the 7 months ended 31 December 2021 is approximately RM102,000, and Taiping Eye's net tangible liabilities as at 31 December 2021 is approximately RM102,000, based on Taiping Eye's unaudited financial statements as at 31 December 2021.

• 2.6. Based on IE Centre's audited financial statements as at 30 June 2021, Kampar Eye's audited financial statements as at 31 December 2021, each of ME Centre's, TE Centre's and Taiping Eye's unaudited financial statements as at 31 December 2021, the net profits attributable to the assets acquired for the Proposed Transaction is approximately RM4,301,000.

• 2.7. The Vendors are business partners and independent third parties, unrelated to any of the Company's directors, controlling shareholders of the Company ("Shareholders") or their respective associates. As at the date of this announcement, none of the Vendors hold any shares in the capital of the Company ("Shares") directly or indirectly.

• 3. RATIONALE FOR THE PROPOSED TRANSACTION

  IE Centre has maintained a stable increase in income stream and profit track record for the last three financial years respectively. IE Centre and Kampar Eye recorded approximately RM4,362,000 and RM855,000 respectively in audited profits after tax for the financial years ended 30 June 2021 and 31 December 2021 respectively. Further, the Proposed Transaction is beneficial to the Company as it increases the Company's core capabilities given that the principal activities of IE Centre and Kampar Eye are complementary and synergistic with the Company's business.

  IE Centre and Kampar Eye are expected to provide the Group with a growing stream of recurring income and cash flow in Malaysia where the demand for specialised and quality medical eye care services is expected to increase. The Group's further venture into eye clinics is also well-placed in the strategic roadmap for the Group's expansion and can potentially accelerate the revenue growth and execution of the business strategies of the Group.

  The Group considers partial settlement of the Purchase Consideration by way of the allotment and issue of Consideration Shares to be advantageous to the Group as it would conserve the Group's cash reserves and delivers long-term benefit to the Company.

• 4. PRINCIPAL TERMS OF THE SPSA

• 4.1. Proposed Acquisition

• 4.1.1 Proposed Acquisition

  The Vendors shall sell, and the Purchaser shall purchase, the Sale Shares free from all encumbrances and together with all rights and advantages now and hereafter attaching thereto including all dividends and distributions declared, made or paid on or after the Completion Date (as defined below).

The Purchaser shall not be obliged to purchase only some and not all of the Sale Shares and further, shall not be entitled to any dividends declared and paid on the Sale Shares in accordance with the SPSA, prior to the Completion Date (as defined below).

4.1.2 Purchase Consideration

The Purchase Consideration was arrived at by the Purchaser and the Vendors on a willing buyer willing seller basis, based on:

• (a) in relation to IE Centre, approximately a multiple of twelve and a half (12.5) times of IE Centre's adjusted and normalised profit after tax based on its audited accounts for the period between 1 July 2020 to 30 June 2021 and on the basis that (i) IE Centre's NTA as at 30 November 2021 and 31 December 2021 shall be no less than RM2,910,000; (ii) the Vendors shall not be entitled to any dividends arising from earnings of IE Centre between the period from 31 December 2021 until Completion; and (iii) if IE Centre incurs losses between the period from 31 December 2021 until Completion ("IE Centre Pre-Completion Losses"), the Vendors shall refund to the Purchaser, an amount equivalent to the IE Centre Pre-Completion Losses. In connection with this Paragraph 4.1.2(a), IE Centre's NTA as at 30 November 2021 will be subject to special audit forthwith after the date of the SPSA; and

• (b) in relation to Kampar Eye, approximately a multiple of twelve and a half (12.5) times of Kampar Eye's adjusted and normalised profit after tax based on its management accounts for the period between 1 January 2021 to 31 December 2021 and on the basis that (i) Kampar Eye's NTA as at 30 November 2021 and 31 December 2021 shall be no less than RM500,000; (ii) the Vendors shall not be entitled to any dividends arising from earnings of Kampar Eye between the period from 31 December 2021 until Completion; and (iii) if Kampar Eye incurs losses between the period from 31 December 2021 until Completion ("Kampar Eye Pre-Completion Losses", together with the IE Centre Pre-Completion Losses, "Pre-Completion Losses"), the Vendors shall refund to the Purchaser, an amount equivalent to the Kampar Eye Pre-Completion Losses. In connection with this Paragraph 4.1.2(b), Kampar Eye's NTA as at 30 November 2021 will be subject to special audit forthwith after the date of the SPSA.

The Purchase Consideration for the Sale Shares will be satisfied by the Purchaser in the following manner and as set out below:

(a)a cash portion of RM36,125,750.03 ("Cash Portion") shall be payable by banker's cheque and/or telegraphic transfer in the following manner and as set out in the table below:

• (i) on the date of the SPSA, the Purchaser shall pay RM250,000 or 1.5% of the Cash Portion, whichever is the lower, to Dr Shin and RM250,000 or 1.5% of the Cash Portion, whichever is the lower, to THN (collectively, "First Tranche Cash Portion");

• (ii) on the Completion Date (as defined below), the Purchaser shall pay RM21,648,450.00 less the First Tranche Cash Portion, to the Vendors (in proportion to their respective shareholding to each other in IE Centre and Kampar Eye) and Dr Shin will be entitled to an additional RM45,000.03 for his portion of the Purchase Consideration;

• (iii) within twelve (12) months after Completion (as defined below), the Purchaser shall pay RM10,824,225.00 to the Vendors (in proportion to their respective shareholding to each other in IE Centre and Kampar Eye); and

• (iv) within twenty-four (24) months after Completion (as defined below), the Purchaser shall pay RM3,608,075.00 to the Vendors (in proportion to their respective shareholding to each other in IE Centre and Kampar Eye); and

(b)

RM20,619,250.00 of the Purchase Consideration shall be satisfied by way of issue and allotment of an aggregate of 21,881,135 fully paid-up ordinary shares in the capital of the Company ("Consideration Shares") on the Completion Date (as defined below) and at the Issue Price (as defined below) as set out in the table below:

IE Centre

Name of Vendor (1)	No. of Sale Shares & % of total issued and paid up share capital of IE Centre (2)	Purchase Consideratio n entitlement (RM) (3)	Cash Portion (RM) (4)	No. of Consideration Shares to be issued and allotted (5)	Percentage of Shares held out of the enlarged share capital of the Company following Completion (6)
No. of Considerati on Shares to be represente d by physical share scrips (5A)	No. of Consideratio n Shares to be represented by scripless shares (5B)
Shin Hoy Choong	42,500 (42.5%)	20,368,500.03	9,935,179.66	8,857,465	2,214,367	1.9%
Tan Hooi Ngea	42,500 (42.5%)	20,323,500.00	20,323,500.00	-	-	-
Yong Ked Sheong	7,500 (7.5%)	3,586,500.00	108,164.29	2,952,965	738,243	0.6%
Cheng Heng Liang	4,500 (4.5%)	2,151,900.00	64,898.57	1,771,780	442,945	0.4%
Chan Suet Mei	2,000 (2.0%)	956,400.00	28,843.81	787,458	196,864	0.2%
Jane Foo Mei Li	1,000 (1.0%)	478,200.00	14,421.90	393,729	98,432	0.1%
TOTAL	100,000 (100%)	47,865,000.03	30,475,008.23	14,763,397	3,690,851	3.2%

Kampar Eye