General Announcement::Ratification of Disposal, Appointment of Auditors, Disposal of Property, Adoption of Constitution

1. THE PROPOSED RATIFICATION OF THE DISPOSAL OF UPRIGHT STRATEGY
2. THE PROPOSED APPOINTMENT OF NEW AUDITORS
3. THE PROPOSED DISPOSAL OF THE PROPERTY
4. THE PROPOSED ADOPTION OF THE NEW CONSTITUTION OF THE COMPANY

1. INTRODUCTION

The Board of Directors (the "Board") of Regal International Group Ltd. (the "Company", and together with its subsidiaries, the "Group") wishes to announce that the Company is proposing to convene an extraordinary general meeting ("EGM") to seek approval from shareholders of the Company ("Shareholders") for the following transactions:

1. the Proposed Ratification of the Disposal of Upright Strategy;
2. the Proposed Appointment of New Auditors;
3. the Proposed Disposal of the Property; and
4. the Proposed Adoption of the New Constitution of the Company,

(collectively, the "Proposed Transactions").

2. THE PROPOSED RATIFICATION OF THE DISPOSAL OF UPRIGHT STRATEGY

2.1 Background

2.1.1 The Board refers to the following announcements:

1. the Company's announcement dated 31 December 2019 in relation to a wholly-owned indirect subsidiary of the Company, Bellanova Sdn Bhd (the "Vendor of Upright Strategy") entering into a shares sale agreement on 31 December 2019 (the "Shares Sale Agreement") with Twin Revenue Sdn Bhd (the "Purchaser of Upright Strategy") in relation to the disposal of 1,000,000 ordinary shares (the "Sale Shares") in the share capital of Upright Strategy Sdn Bhd ("Upright Strategy") held by the Vendor of Upright Strategy to the Purchaser of Upright Strategy, representing the entire issued and paid-up share capital of Upright Strategy (the "Disposal of Upright Strategy") (the "Disposal Announcement");
2. the Company's announcement dated 4 August 2020 in relation to its unaudited financial results for the financial year ended 31 December 2019 which states, inter alia, that the Company had completed the Disposal of Upright Strategy on 31 December 2019 for a cash consideration of RM2,500,000;
3. the Company's announcement dated 8 February 2021 in relation to, inter alia, the Company's annual report and the Company's auditor's comments of accounts for the financial year ended 31 December 2019 (the "8 February 2021 Announcement"); and
4. the Company's announcement dated 18 February 2021 in relation to the Company's responses to the queries issued by the Singapore Exchange Securities Trading Limited (the "SGX-ST") on the 8 February 2021 Announcement (the "18 February 2021 Announcement").

2.1.2 In the 18 February 2021 Announcement, the Company its responses to the queries issued by the SGX- ST on the 8 February 2021 Announcement. The Company announced, inter alia, that:

1. 1. At the time the Disposal Announcement was made by the Company, Listing Rule 1007 stated, inter alia, that "If any of the relative figures computed pursuant to Rule 1006 is a negative figure, this Chapter may still be applicable to the transaction at the discretion of the Exchange, and issuers should consult the Exchange". As the relative figures computed on the bases set out in Listing Rules 1006(a) and 1006(b) for the Disposal of Upright Strategy are negative, the Company consulted the SGX-ST and the SGX-ST has informed the Company that although the relative figures computed on the bases set out in Listing Rules 1006(a) and 1006(b) are negative and the relative figures computed on the bases set out in Listing Rule 1006(c) does not exceed 20%, Listing Rule 1014 is still applicable to the Disposal of Upright Strategy.
   2. The Disposal of Upright Strategy was completed on 31 December 2019.
   3. Twin Revenue Sdn Bhd is not an interested person as defined under Listing Rule 904(4)(a).
2. The Disposal of Upright Strategy is classified as a "major transaction" under Chapter 10 of the Listing Manual and accordingly, must be made conditional upon approval by Shareholders in general meeting pursuant to Listing Rule 1014(2). As the Disposal of Upright Strategy was completed on 31 December 2019, the Company will be convening the EGM to seek Shareholders' approval for, inter alia, the ratification of the Disposal of Upright Strategy (the "Proposed Ratification of the Disposal of Upright Strategy").
3. Prior to the completion of the Disposal of Upright Strategy on 31 December 2019, Upright Strategy was a wholly-owned subsidiary of the Vendor of Upright Strategy and a wholly-owned indirect subsidiary of the Group. Following the completion of the Disposal of Upright Strategy on 31 December 2019, Upright Strategy has ceased to be a subsidiary of the Group
4. Given the passage of time from the Disposal Announcement, the Company has set out in this announcement the information required in relation to the Disposal of Upright Strategy in accordance with Listing Rule 1010.

2.2 Information on the Purchaser of Upright Strategy

The information on the Purchaser of Upright Strategy provided below was provided to the Company by the Purchaser of Upright Strategy. In respect of such information, the Board has not conducted an independent review or verification of the accuracy and correctness of the statements and information below. The Board's responsibility is limited to the proper extraction and reproduction herein in the context that is being disclosed in this announcement.

2.2.1 At the time the Disposal Announcement was made by the Company, the Purchaser of Upright Strategy:

1. was a private company limited by shares incorporated in Malaysia on 16 May 2021, and had an issued and paid-up share capital of RM750,000 comprising 750,000 shares;
2. was principally in the business of investments, construction works and property development; and
3. was a substantial shareholder of the Company and was interested in 24,803,192 shares in the capital of the Company ("Shares").

2.3 Information on Upright Strategy

2.3.1 Corporate Information

At the time the Disposal Announcement was made by the Company, Upright Strategy:

1. was a private company limited by shares incorporated in Malaysia on 17 July 2008, with a registered and paid-up capital of RM1,000,000, comprising 1,000,000 ordinary shares; and

1. was principally in the business of construction and property development.

2.3.2 Financial Information

Based on the unaudited consolidated financial statements of the Group for the financial period ended 30 September 2019, being the latest announced consolidated financial statements prior to the date of the Disposal Announcement:

1. the book value of the Sale Shares, representing the entire issued and paid-up share capital of Upright Strategy, was approximately negative RM15,440,000 as at 30 September 2019;
2. the NTL value represented by the Sale Shares, representing the entire issued and paid-up share capital of Upright Strategy, was approximately RM15,440,000 as at 30 September 2019; and
3. the net losses attributable to the Sale Shares, representing the entire issued and paid-up share capital of Upright Strategy, was approximately RM1,006,000 as at 30 September 2019.

Accordingly, at the time the Disposal Announcement was made by the Company, the estimated gain on disposal after completion of the Disposal of upright Strategy amounted to approximately RM17,940,000, based on the unaudited consolidated financial statements of the Group for the financial period ended 30 September 2019.

Based on the audited consolidated financial statements of the Group for the financial year ended 31 December 2019 ("FY2019"):

1. the book value of the Sale Shares, representing the entire issued and paid-up share capital of Upright Strategy, was approximately negative RM20,206,000 as at 31 December 2019;
2. the NTL value represented by the Sale Shares, representing the entire issued and paid-up share capital of Upright Strategy, was approximately RM20,206,000 as at 31 December 2019; and
3. the net losses attributable to the Sale Shares, representing the entire issued and paid-up share capital of Upright Strategy, was approximately RM7,720,000 as at 31 December 2019.

Accordingly, the gain on disposal after completion of the Disposal of Upright Strategy amounted to approximately RM22,706,000.

2.3.3 Valuation

Pursuant to Listing Rule 1014(5), the Company must appoint a competent and independent valuer to value the Sale Shares as one of the relative figures computed on the bases set out in Listing Rule 1006 for the Disposal of Upright Strategy exceeds 75%.

The Company has commissioned AVA Associates Limited (the "Independent Valuer for Upright Strategy"), to conduct an independent valuation of the market value of the Sale Shares, representing the entire issued and paid-up share capital of Upright Strategy.

According to the valuation report issued by the Independent Valuer for Upright Strategy on 5 July 2021 (the "Valuation Report"):

1. The Sale Shares, representing the entire issued and paid-up share capital of Upright Strategy had nil market value as at a valuation date of 31 December 2019.
2. The Independent Valuer for Upright Strategy valued the Sale Shares using the cost approach as the primary method of valuation. The cost approach was adopted by preparing an adjusted balance sheet that excluded amounts owed to related parties to reflect an adjusted net asset/liability position of Upright Strategy. Despite the adjustments, Upright Strategy continued to be in a net liability

position due to past operating losses. The net liability position of Upright Strategy, coupled with no cash flows expected from Upright Strategy, led the Independent Valuer for Upright Strategy to determine that there is no market value to the Sale Shares as at the valuation date of 31 December 2019.

2.4 Rationale for the Disposal of Upright Strategy

2.4.1 Upright Strategy has been a loss-making company and based on its performance up to the date of the Disposal Announcement, the Board believes that it is unlikely to be able to turn profitable in the foreseeable future. The Board further believes that the Disposal of Upright Strategy will enable the Group to, inter alia, rationalise its financial and capital resources and allow the Group to concentrate on and align its resources on other ongoing and incoming projects and developments

2.5 Consideration for the Disposal of Upright Strategy

1. The consideration for the Disposal of Upright Strategy is RM2,500,000. The consideration for the Disposal of Upright Strategy shall be paid in cash and shall be satisfied in the following manner:
2. 1. a sum of RM1,000,000 shall be paid by the Purchaser of Upright Strategy to the Vendor of Upright Strategy upon the signing of the Shares Sale Agreement (i.e. on 31 December 2019);
   2. a sum of RM1,000,000 shall be paid within 6 months from the date of the Shares Sale Agreement; and
   3. the final balance of RM500,000 shall be paid within 6 months from the date of the payment of item
      (b) above.
3. The consideration for the Disposal of Upright Strategy was arrived at arm's length and on a willing- buyer-willing-seller basis, after taking into account, inter alia, the following:
4. 1. The book value, NTL value and net losses attributable to the Sale Shares as at 30 September 2019.
   2. The prevailing economic conditions.
5. As at the date of this announcement, the Vendor of Upright Strategy has received full payment of the consideration for the Disposal of Upright Strategy.

2.6 Intended Use of Net Proceeds from the Disposal of Upright Strategy

1. The consideration for the Disposal of Upright Strategy of RM2,500,000 represents an excess of approximately RM17,940,000 over the negative book value of the Sale Shares of RM15,440,000, based on the unaudited consolidated financial statements of the Group for the financial period ended 30 September 2019, being the latest announced consolidated financial statements prior to the date of the Disposal announcement.
2. The estimated costs and expenses incurred in connection with the Disposal of Upright Strategy is approximately RM16,000. Based on the consideration for the Disposal of Upright Strategy of RM2,500,000 and after deducting the estimated costs and expenses incurred in connection with the Disposal of Upright Strategy, the net proceeds from the Disposal of Upright Strategy is approximately RM2,484,000.
3. The net proceeds from the Disposal of Upright Strategy have been applied towards funding of the projects and business plans of the Group and the repayment of debts and borrowings of the Group.
4. As at the date of this announcement, the Company has fully utilised the net proceeds from the Disposal of Upright Strategy.

2.7 Principal Terms of the Shares Sale Agreement

1. Conditions Precedent
   Completion of the Disposal of Upright Strategy is conditional upon the following conditions precedent:
2. 1. all necessary approvals, consents and/or waivers from any third party and governmental or regulatory consents, approvals and waivers where required for the Disposal of Upright Strategy having been granted or obtained, and being in full force and effect and not having been withdrawn, amended or revoked, and if such approvals, consents and/or waivers are granted or obtained subject to any conditions, and where such condition(s) affect any of the Vendor of Upright Strategy or the Purchaser of Upright Strategy (each a "Party" and collectively the "Parties"), such condition(s) being acceptable to the Party concerned and if such condition(s) are required to be fulfilled before the completion of the Disposal of Upright Strategy (the "Completion"), such condition(s) being fulfilled before Completion;
   2. the due diligence process for the Disposal of Upright Strategy having been carried out and the Purchaser of Upright Strategy being satisfied with the results thereof and having given the written confirmation of the same;
   3. all warranties provided by the Purchaser of Upright Strategy and the Vendor of Upright Strategy under the Shares Sale Agreement being complied with, true, accurate and correct as at the date of the Shares Sale Agreement and each day up to and including the Completion Date (as defined below); and
   4. the execution and performance of the Shares Sale Agreement by the Parties not being prohibited, restricted, curtailed, hindered, impaired or otherwise adversely affected by any relevant statute, order, rule, directive or regulation promulgated by any legislative, executive or regulatory body or authority.
3. Effect of Non-Fulfilment of Conditions Precedent
4. 1. Each of the Parties undertakes to use its best endeavours to ensure the satisfaction of the conditions precedent set out in paragraph 2.7.1 of this announcement.
   2. At any time on or before the Completion Date, the Purchaser and/or the Vendor may agree to waive any of the conditions precedent set out in paragraph 2.7.1 of this announcement by written notice to the other Party.
   3. If any of the conditions precedents set out in paragraph 2.7.1 of this announcement are not fulfilled or waived on the Completion Date, the Shares Sale Agreement shall ipso facto cease and determine and none of the Parties shall have any claim against the other for costs, damages, compensation or otherwise, save for any claim by a Party against the other arising from antecedent breaches of the terms of the Shares Sale Agreement and save that the Parties' obligation in relation to confidentiality under the terms of the Shares Sale Agreement shall survive the termination of the Shares Sale Agreement.
5. Completion
6. 1. Subject to the terms set out in paragraphs 2.7.1 and 2.7.2 of this announcement, the Sale Shares shall have been deemed to have been sold and transferred to the Purchaser of Upright Strategy on the agreed date of 31 December 2019 ("Completion Date")
   2. On or before the Completion Date, the Vendor of Upright Strategy shall deliver to the Purchaser of Upright Strategy the duly executed share transfer forms in respect of the Sale Shares in favour of the Purchaser of Upright Strategy.