PRG Holdings Bhd’s 54.19% subsidiary Furniweb Holdings Limited is acquiring the remaining 62.75% equity interest in smart saving solutions company, Energy Solution Global Ltd (ESGL) for HK$58.19mil (RM31.42mil) from Dato’ Ng Yan Cheng.
This proposed acquisition will be satisfied via cash and the issuance of new Furniweb shares.
A filing with Bursa Malaysia showed that upon completion of this acquisition, ESGL will be a wholly-owned subsidiary of Furniweb and will hence allow Furniweb to fully recognize ESGL’s earnings.
As it is anticipated that ESGL’s business will likely contribute more than 25% of PRG’s profits in the future, PRG is also proposing a diversification of its business to include the energy efficiency business.
To recall, back on Nov 1, 2021, PRG had announced the acquisition by Furniweb of a 37.25% equity interest in ESGL for up to HK$9.56mil via cash from vendors, Pua Lay Cheng and Lee Eng Lock. That initial acquisition has been completed on Dec 13, 2021.
For this further purchase, PRG is looking to satisfy this acquisition via a combination of shares and cash. Some 25% of the purchase consideration in the sum of HK$14.55mil (RM7.86mil) shall be satisfied by the allotment and issuance of 41,565,600 Furniweb shares at an issue price of HK$0.35 per consideration share.
The next 25% of the purchase consideration in the sum of HK$14.55mil (RM7.86mil) shall be paid by cash on a date six months from the completion date.
Lastly, the remaining 50% of the purchase consideration or HK$29.1mil (RM15.71mil) shall be paid if and only if ESGL achieves the profit guarantee that the audited consolidated profit after tax of ESGL for the period from Jan 1, 2022 to Dec 31, 2023 is not less than RM18.6mil (HK$34.5mil).
If ESGL fails to achieve the profit guarantee, the vendor shall compensate Furniweb for the differences.
Commenting on the latest corporate exercise, PRG’s Group Executive Vice Chairman Dato’ Lua Choon Hann said: “ESGL is an Energy Services Company accredited by the National Environment Agency (NEA) of Singapore with an orderbook of approximately SG$50 million.
This comprises job wins from datacentre projects such as AirTrunk, and contracts from big corporations in Singapore such as Changi Airport and Systems on Silicon Manufacturing Company Pte. Ltd. This proposed acquisition is part of the group’s long-term strategy to venture into the energy efficiency business and improve the financial position of PRG Group.
As energy prices will be on the rise in the future, saving energy will be the main focus of many companies as their cost-cutting measures. Moreover, reducing energy consumption is also a sustainability initiative as it helps to reduce the greenhouse gases that contribute to global warming.”
On the financial performance,PRG’s revenue for 1QFY22 showed a marginal increase to RM59.5 million from RM58.1 million registered in the corresponding period in the previous year. However, the Group’s profit after tax (“PAT”) recorded a significant increase of four times to RM4.09 million, as compared to RM0.94 million posted in the corresponding period last year.
The Group said the improved results were mainly due to the increase in progress billings from its property development project, Embayu @ Damansara West (“Embayu project”) which has recorded excellent sales figures. The growth in PAT was also contributed by the lower administrative expenses incurred after the disposal of its security brokerage business and the closure of retail stores in the second quarter of 2021.