1. INTRODUCTION

HEB wishes to announce that on 6 September 2023, HSS Technologies Sdn Bhd (“HSS Technologies”), a wholly owned subsidiary of HEB has entered into a binding Heads of Agreement (“HOA”) with ProPick Digital Solutions & Consulting Sdn Bhd (“ProPick”) for the incorporation of a joint vehicle (“JV”) in Malaysia to provide comprehensive drone services and intellectual technology solutions, focused on data collection, analysis, reporting for diverse industries, specialized infrastructure inspections, and engaging in innovative research and development in drone technology (“the Collaboration”).

The JV will be incorporated under the name “HSS ProPick Technologies Sdn Bhd”.

2. INFORMATION ON PROPICK DIGITAL SOLUTIONS & CONSULTING SDN BHD

ProPick is a private company limited by shares, incorporated and registered in Malaysia on 5 November 2020. The principal business of ProPick is to offer digital transformation solutions for various business sectors including but not limited to the agriculture, telecommunications, energy, construction and healthcare industries.

As at the date of this announcement, the Directors of ProPick are Puan Mumtaz Binti Aycob and Mr Satyananda Arunasalam. Its day-to-day operations is led and spearheaded by its Chief Executive Officer, Mr Sreenath G. 

3. RATIONALE FOR COLLABORATION

The Collaboration and strategic partnership between HEB via its subsidiary HSS Technologies, and ProPick is a significant stepping stone for the HEB Group and is line with its overall growth strategy to expand and diversify its operations into various industries within the digital solutions sector.  

This Collaboration allows HEB and its subsidiaries (“HEB Group”) to venture into the rapidly growing tech-centric domain, which presents opportunities for growth and market penetration and provides the opportunity to tap into new customer segments. HEB aims to leverage its core competencies and expertise in Engineering Design and Project Management within this market.

The Collaboration will also enable HEB to share its respective expertise, knowledge, and technologies, thereby creating a synergy that will facilitate our growth and development in the marketplace. Beyond market exploration, the Collaboration is expected to enhance HEB’s brand recognition and credibility in the industry, strengthening its position as a trusted and reliable partner for our customers and stakeholders.

4. SALIENT TERMS OF THE HOA

The salient terms of the are as follows:-

(a) Equity Ownership & Directorship: HSS Technologies is to own seventy percent (70%) ordinary shares in the JV with the remaining thirty percent (30%) ordinary shares is vested in ProPick. There will be 3 directors sitting at the JV’s Board, with 2 to be nominated by HSS Technologies and the remaining 1 by ProPick.

(b) Total Paid Up Capital: The total paid-up capital of the JV will be RM100,000.00 comprising of 100,000 ordinary shares at RM1.00 each.

(c) Transfer of Proprietary Assets: ProPick possesses unique and valuable proprietary knowledge, expertise, skills, and intellectual property ("Proprietary Assets”) which includes strategies, methods, processes, and all intellectual property rights, patents, copyrights, trademarks, trade secrets, and other proprietary rights related to the Proprietary Assets. ProPick agreed to transfer and assign all their rights, title, and interests in and to its Proprietary Assets to the JV.

(d) Assignment of all Contracts & Ongoing Projects: All ongoing projects and prospective endeavors, currently undertaken by ProPick, including but not limited to research and development, client contracts, product development, and intellectual property creation, bid proposals, and prospective projects, shall be transferred and assigned to the JV.

(e) Non-Assignment of Liabilities: The transfer of Proprietary Assets and Ongoing Projects to the JV shall not include the transfer to the JV of any liabilities, debts, or obligations of ProPick. ProPick shall remain solely responsible for any and all such liabilities, debts, and obligations.

(f) Dividend Policy: The Board shall have the authority to establish the dividend policy of the JV.

5. FINANCIAL EFFECTS

The JV and/or the HOA will not have any effect on the issued and paid-up share capital and shareholding structure of HEB and is not expected to have any material impact on the earnings and net assets of Group for the financial year ending 31 December 2023. However, the JV is expected to contribute positively to the future revenue, earnings and net assets of HEB Group as the JV will allow the Company to expand into the digital solutions sector and any dividend policy established by the JV allows for repatriation of profits to the HEB Group.

The HOA will not have any impact on the share capital and/or shareholding structure of HEB.

6. SOURCE OF FUNDING

The operation of the JV is expected to be funded via internally generated funds and/or external borrowings.

7. RISK FACTORS

HEB does not expect any material risk arising from the Collaboration other than the normal operational risk associated with it which HEB would take appropriate measures to mitigate it.

8. APPROVAL REQUIRED

The execution of the HOA, being part of the ordinary course of business of HEB Group, is not subject to the approval of shareholders of HEB or any relevant authorities. The Board of Directors had approved the incorporation of the JV at its meeting held on 16 August 2023.

9. DIRECTORS’ AND/OR MAJOR SHAREHOLDERS’ INTERESTS AND/OR PERSONS CONNECTION THEM

None of the Directors and/ or Major Shareholders of HEB and persons connected to them has any interest, direct or indirect, in the HOA and the Collaboration.

10. DIRECTORS’ STATEMENT

The Board of Directors, after considering the terms and conditions of the HOA and all aspects of the Collaboration, is of the opinion that the incorporation of the JV and the execution of the HOA are in the best interest of HEB Group and is in line with the Group’s overall growth strategy, embarking into the digital solutions sector while complementing and utilising HEB’s core expertise in Engineering Design and Project Management.

11. DOCUMENTS FOR INSPECTION

The HOA is available for shareholders’ inspection at the registered office of the Company at 12th Floor, Menara Symphony, No. 5, Jalan Professor Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor Darul Ehsan during normal business hours from Monday to Friday (except for public holidays) for a period of 3 months from the date of this announcement.

This announcement is dated 6 September 2023.