Reference is made to the Company’s announcement dated 10 November 2023 (“Announcement”) and query letter from Bursa Malaysia Securities Berhad dated 15 November 2023 (Reference No. IQL-15112023-00001) in relation to the above subject matter (“Bursa Query”). Unless otherwise stated, the terms used throughout this announcement shall have the same meanings as defined in the Announcement.

The Company wishes to furnish additional information as per Bursa Query for public release:
 

1. The details of the relevant authorities’ approvals, permits and licences (where applicable) required for the battery assembly plant and lithium battery production and the status todate.

The proposed battery assembly plant and lithium battery production will require approvals including a manufacturing license from MIDA and MITI, SIRIM approval, certification from the International Electrotechnical Commission, UN38.3 certification, Approved Permit(s) from Customs, and a business license from the local authority. JVCO is applying for a manufacturing license and will apply for a business license soon, but applications for the other license(s) will depend on the products to be manufactured – confirmation of these products is pending market research.

2. Whether the venture into lithium battery business signifies a diversification in operations of GUH pursuant to Paragraph 10.13 of the Main Market Listing Requirements which require shareholders’ approval, together with the basis and justification.
This venture will not signify a diversification in GUH’s operations requiring shareholders’ approval, as the investment is not significant and will not exceed 5% of GUH group’s net tangible assets.

3. The specific geographical markets for the lithium battery products instead of merely stating outside China.
It is currently envisaged that the plant will supply the ASEAN market, in particular Malaysia, Indonesia, Thailand and Vietnam.

4. The types of lithium battery products to be manufactured and the nature of services to be offered by the joint venture company (“JVCO”), and the target markets/users of the products and services.
It is currently envisaged that the JVCO will manufacture cylindrical-based batteries, providing minimal (if any) after market services. The target market is currently businesses in the automobile and manufacturing industries, and any other viable markets to be identified.

5. The date of commencement of business operations of Shenzhen Xixin Electronic Technology Co. Ltd. (“Xixin”).

Shenzhen Xixin Electronic Technology Co. Ltd. (“Xixin”) commenced business operations on 22nd October 2020.

6. The major shareholders of Xixin and their shareholdings.

The major shareholders of Xixin and their shareholdings are as follows:

7. The relationship between Shenzhen Shiwei Electronic Technology Co. Ltd. (“Shenzhen Shiwei”) and Xixin.
Xie Zhen Quan, who owns 70% of Shenzhen Shiwei, is the cousin of Yi Fang, who founded both Shenzhen Shiwei and Xixin.

8. The details of intellectual properties owned by Shenzhen Shiwei and Xixin.
Shenzhen Shiwei and Xixin design and produce batteries and therefore own, inter alia, trade marks and patents relating to batteries.

9. The details of arrangement to license/sublicense the intellectual properties to the JVCO.
Shenzhen Shiwei and Xixin have granted to the JVCO a general license to use all intellectual property owned by Shenzhen Shiwei and Xixin. This general license will enable JVCO to produce and market its products without seeking further intellectual property licenses for products to be manufactured at a later juncture.

10. The rationale and justification for Xixin to be exempted from legal liability and debts arising from the JVCO given that it has 25% interest in the JVCO.
Xixin will be exempted from liability as Xixin is transferring technology and know-how to the JVCO but will not be involved in the operation of the JVCO. Xixin will also not be entitled to dividends from the JVCO until after the JVCO makes and retains profits equivalent to the amount invested by GUH Capital into the JVCO.

11. The breakdown of the initial cost of investment of RMB20 million.

12. The estimated total cost for the entire battery assembly plant and the source of funds.

It is foreseen that the JVCO will rent a factory for its operations. Capital expenditure (including purchase of machinery and renovations) is estimated at RMB12 million. The total of RMB20 million will be generated internally by GUH Group and through borrowings, if necessary.

This announcement is dated 16 November 2023.