General Announcement::Response to the Questions from SIAS

JUBILEE INDUSTRIES HOLDINGS LTD.

(Company Registration No. 200904797H)

(Incorporated in the Republic of Singapore)

RESPONSE TO THE QUESTIONS FROM SIAS

The Board of Directors (the "Board" or "Directors") of the Jubilee Industries Holdings Ltd (the "Company", and together with its subsidiaries, the "Group") sets out the Company's response to the queries raised by the Securities Investors Association (Singapore) ("SIAS") in relation to annual report of the Group for the financial year ended 31 March 2021. The Company wishes to provide its response to the queries below:

Query 1

The majority of the group's revenue (82.7%) was derived from the Electronics Business Unit ("EBU") segment and the remaining 17.3% was contributed by the Mechanical Business Unit ("MBU") segment.

As noted in the company profile, the group represents internationally renowned principals with an extensive array of active, passive and electromechanical products including memory devices, radio frequency modules, power management integrated circuits, microcontrollers, transistors, crystal oscillators and connectors. In addition, the EBU segment also provides high-end industrial power solutions, design-in services and integration to meet customers' specific requirements.

The customers are mainly Original Design Manufacturers, Original Equipment Manufacturers and Electronics Manufacturers in diverse market segments throughout the Asia-Pacific region.

1. What is the business model for the EBU segment and how does it create and capture value for shareholders? Please identify EBU's key value drivers.

Company's Response

Please refer to Q1(ii) for our response.

1. In addition, to help shareholders better understand EBU's operations, please disclose the major projects and services, and some of its key customers and their underlying products.

Company's Response

The EBU acts as distributor for our suppliers ("principals") to connect with our customers, which are mainly telecomputing, mobile and industrial commercial customers. Our telecomputing and mobile customers include Original Design Manufacturers ("ODM"), Original Equipment Manufacturers ("OEM"), Electronics Manufacturers ("EM"), and smaller engineering firms, while commercial customers are primarily OEMs.

EBU has a team of dedicated product managers, field engineers and localised sales support teams. The sales teams focus on an extensive portfolio of products and services to support customers' material management and production needs, including connecting customers to the company's

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field application engineers for technical support. Each sales team works a specific customer segment, particular product lines or a specific geography, and provide end-to-end product offerings and solutions with an emphasis on helping customers introduce innovative products, reduce their time to market, and enhance their overall competitiveness.

The company believes that many of the products it sells are available from other sources at competitive prices. The main driver for the company is the provision of focused support, extensive product knowledge, and customised services for customers and principals.

With our integrated supply chain system and distribution centres in Singapore and Hong Kong, we serve over 500 customers with various programmes including vendor managed inventory, third- party logistic hubs and back-to-back deliveries.

Key customer details and their underlying projects are commercially sensitive information.

1. What are the long-term prospects in India and Vietnam?

Company's Response

India, similar to China, has a vast captive market. However, local branding and manufacturing are still in the developmental stage due to lack of infrastructure, concrete government strategy and the current pandemic situation. Nevertheless, India should emerge from the pandemic with brighter long-term prospects. As of 31 March 2021, the Company successfully secured two of the largest Indian high-tech OEMs in the mobile industry. While the near-term outlook remains uncertain, EBU is focused on strengthening its relationships with customers and providing strong technical support to maintain its foothold in the Indian market.

The electronics industry in Vietnam is growing with more foreign investments and companies entering Vietnam, capitalising on the pool of young talents and low costs to build manufacturing facilities. Currently, many of the manufacturing companies in Vietnam have an overseas presence through which electronic components and materials are purchased and consigned to Vietnam. We continue to monitor the local market and anticipate significant demand from Vietnam in the next 3 years. The Company plans to step up its current presence in Vietnam by expanding its own existing Vietnam office, adding more manpower to the local team as demand picks up.

Other than achieving a gross profit margin of 7.5% in FY2019, EBU's gross profit margin ranged from 4.2% to 4.4% for FY2018, FY2020 and FY2021.

1. With such thin gross profit margin, what is management's strategy to better manage its costs, scale up its volume and to achieve better pricing? What are the levers available to the group given the competitiveness of the segment?

Company's Response

Pricing in the electronics market is pre-dominantly influenced by demand and supply in the market. Therefore, our strategy to increase revenue and manage the costs are:

1. Expanding our supplier relationships and product portfolio with higher distribution margins.
2. Focusing on high growth areas such as 5G and Hi-Speed Data Centres.
3. Strengthening and building strong alliances with our new and existing customers to capture more higher value business opportunities especially in countries where there is huge potential domestic demand such as China, India and Vietnam.
4. Restructuring our cost structures by de-layering supply chain processes, workflows and back-end operations and continued assessment of operating efficiencies arising from the cost containment measures put in place during the COVID-19 pandemic.

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In the MBU segment, revenue increased marginally to $25.1 million for FY2021, due to higher sales of consumer and medical products as well as customers who are shifting their source of purchase to the ASEAN region amidst US-China trade tensions. The performance was impacted by the subdued sales for automotive and construction products.

1. Similarly, can management help shareholders understand the main products/classes of products in the MBU segment? What are the profiles of the major MBU customers?

Company's Response

MBU has two manufacturing operations managed by our subsidiaries, We Total Engineering ("WETE") in Malaysia and PT HonFoong Plastic ("PTHF") in Indonesia.

Each subsidiary has its own set of customers and suppliers in the different market segments for risk diversification and has remained resilient during unforeseen and volatile economy.

Key customer details and their underlying projects are commercially sensitive information.

The management remains cautious in evaluating the market trends and will focus on products with longer life cycles and higher growth potential. The Company also continues to seek new business opportunities in line with the Company's objectives.

1. How is the group positioning itself to tap on the trend of the global supply chain shifting out of China to South East Asia?

Company's Response

The global supply chain has shifted from China to South East Asia partially due to the on-going trade war between China and the US. WETE and PTHF have benefitted from this shift and continue to receive enquiries and orders from customers affected by the China-US trade war, despite the challenging times amidst the COVID-19 pandemic.

Our readiness and flexibility coupled with our extensive capacity distinguishes us from our competitors and allows us to adapt very quickly to shift towards customers' demands. In addition, we have established long-term partnerships with our diversified customers.

The management continues to seek and embrace technology in the Company's business processes, while sharpening competitiveness through better tooling costs and plastic product pricings. On top of its core expertise in precision tool designing/fabrication and injection moulding, MBU also offers comprehensive capabilities which include secondary processes such as silk screen printing, ultrasonic welding, heat staking, spray painting as well as sub-assembly.

1. What is the group's strategy to acquire new customers?

Company's Response

MBU's strategy lies on our strong belief in building a beneficial and exclusive relationship with our customers. We seek to expand our customers through our existing network of customers. Our superior service has resulted in a positive reputation for reliability within the plastic injection

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moulding industry, which is very helpful in acquiring new partnerships as we have proven to be a trustworthy partner.

MBU's philosophy is always to be a step ahead of the markets by inventing new technology. As at this very moment, MBU is at the stage of assessing a new technology in 5-axis CNC. The new technology shortens the R&D process cycle and supports faster time to market environment. Furthermore, the moulding division is developing its so-called "no man operation" to improve efficiency, and provide a more sustainable and better-quality product with minimum supervision on control orders.

As at 31 March 2015, the group was in an accumulated loss position of $(9.45) million. For the financial year ended 31 March 2021, the accumulated losses have increased to $(42.6) million.

1. Would the board consider it opportune to carry out a strategic review of the group's core strengths and capabilities, management depth, its strategy, cost structure and the competitive landscape in the core businesses so as to safeguard shareholders' interest and to refocus and reposition the group for long-term value creation? Mr Tea was first appointed as executive director & chief executive officer of the company on 30 June 2014, and appointed as managing director on 29 May 2015. He was then redesignated as the executive chairman (and CEO) on 6 August 2019. Has the board reviewed the performance of management? Is the board satisfied with the long-term performance of management at creating shareholder value?

Company's Response

Under Mr Tea's leadership, the Company has weathered significant challenges and positioned itself for growth. The Group's revenue has steadily grown from S$84.6 million for the financial year ended 31 March 2016 ("FY2016") to S$145.0 million for the financial year ended 31 March 2021 ("FY2021").

In 2015, the Company acquired WE Components, an electronic components distributor, to enable us to provide one-stop solutions for the electronics manufacturing industry. This has grown into what is now the Group's EBU which accounts for the majority of the Group's revenue, at 82.7% for FY2021.

The Company's management also successfully identified and completed the strategic acquisition of Honfoong Plastics Industries Pte Ltd. in 2018 to grow its MBU segment. Following the acquisition, MBU revenue more than doubled for the financial year ended 31 March 2019 ("FY2019").

Mr Tea has also been instrumental in the Company's efforts to secure financing. In 2016, the Company secured a convertible loan from strategic shareholder Accrelist Ltd. to support its growth. He has also led the Company's fundraising efforts to enable us to capitalise on growth opportunities for long-term value creation.

Mr Tea's efforts to turn the Group around was successful in the financial year ended 31 March 2018 ("FY2018") as the Company returned to black and the turnaround was further sustained in FY2019 when the Company's net profit tripled.

While the impact of COVID-19 was a temporary setback in the financial year ended 31 March 2020 ("FY2020"), the Company has since bounced back from the initial impact of COVID-19 to achieve higher revenue and gross profit following the efforts of the Company's management to mitigate the impact of the pandemic. This includes the Company's successful expansion in regional markets like India and Vietnam.

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Based on the milestones achieved amidst external headwinds, the Board is satisfied with the long- term performance of the management at creating shareholder value. In addition, Mr Tea, as Chief Executive Officer and a substantial shareholder of Company, remains committed to improving the Group's performance.

Query 2

As disclosed in Note 19 (page 97), management has assessed that the group has lost its significant influence over EG Industries as the group no longer has representation on the board of EG Industries. Accordingly, the investment in EG Industries was derecognised as an associated company and it has been re-classified as a financial asset and measured at fair value through profit or loss.

1. Can management elaborate further on the strategic value of EG Industries Berhad in the group's long-term plans?

Company's Response

The Company believes that there is significant strategic and synergistic value in its ties with EG Industries Berhad ("EG Industries") as EG Industries' industry focus is aligned with Group's, enabling collaborative efforts to build long-term shareholder value.

The scale of EG Industries' operations is significantly larger, recording more than RM1.0 billion in revenue for four consecutive years (approximately S$321.6 million). EG Industries has also made significant progress in embracing Industry 4.0 with the launch of its smart manufacturing plant. Group's stake in EG Industries can lead to greater synergies between both businesses, as we leverage EG Industries' economies of scale and expertise through collaboration.

1. How is the group safeguarding its investments in EG Industries now that the group has lost significant influence?

Company's Response

Although the Group has lost significance influence in EG Industries, the Group continues to closely monitor the developments in EG Industries and cordially engages with its management. The Company also continues to explore potential options to maximise the value of its investment in EG Industries for shareholders.

1. Has the board been monitoring the developments in EG and deliberated on the options available to the group to protect its interests?

Company's Response

Please refer to Q2(ii) for our response.

1. Can the board clarify if the non-executive director, Dato' Alex Kang Pang Kiang, represents the group in EG Industries?

Company's Response

No, the Board is of the view that Dato' Alex Kang Pang Kiang does not represent the Group in EG Industries.

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