Sinostar PEC : Response To SGX Queries

SINOSTAR PEC HOLDINGS LIMITED

(Incorporated in the Republic of Singapore)

(Company Registration No.: 200609833N)

RESPONSE TO SGX QUERY ON EXTENSION OF INTERIM LOAN AGREEMENT AS AN INTERESTED PERSON TRANSACTION AS ANNOUNCED ON 8th OCTOBER 2020

The Board of Directors (the "Board") of Sinostar Pec Holdings Limited ("Company" and together with its subsidiaries, the "Group") refers to the queries raised by the Singapore Exchange Securities Trading Limited ("SGX-ST") (the "Queries") on 21 October 2020 in relation to the Company's announcement of the Extension Of Interim Loan Agreement as an Interested Person Transaction dated 8 October 2020 (the "Announcement"), and wishes to provide the following information in response to the Queries. Unless otherwise defined herein, all capitalised terms shall have the meanings ascribed to them in the Announcement.

1. Paragraph 1.3 - "The total amount of interest paid and payable to the Lender under the Extended Interim Loan Agreement is RMB 23,419,312.50, which represents approximately 2.4% of the Group's Latest Audited NTA."
   SGX: Are there any other payables in relation to the extended loan, aside from interest?
   Company's response:
   Save for interest pursuant to the Extended Interim Loan Agreement, as disclosed in the Announcement, there are no other payables in relation to the extended loan.
2. Paragraph 1.3 - "For completeness, the total amount of interest paid and payable to the Lender in FY2020 is RM 33,873,812.50, representing 3.4% of the Group's Latest Audited NTA. While the value at risk represents less than 3.0% of the Group's Latest Audited NTA, and the Extended Interim Loan Agreement is not subject to the announcement requirements pursuant to Rule 905(1) of the Listing Manual"
   SGX: If the total amount of interest paid and payable is 3.4% of NTA, why is the value at risk less than 3%? Listing Rule 905(2) requires the aggregate value of all transactions entered into with the same interested person during the same financial year. Please explain how the IPTs have been aggregated, and why the value at risk is below 3% of NTA.

Company's response:

1. Value of the Extended Interim Loan Agreement

Pursuant to Rule 905(1) of the Listing Manual, an issuer must make an immediate announcement of any interested person transaction of a value equal to, or more than, 3% of the group's latest audited NTA. As stated in paragraph 1.3 of the Announcement, the total amount of interest paid and payable to the Lender under the Extended Interim Loan Agreement is RMB 23,419,312.50, which represents approximately 2.4% of the Group's Latest Audited NTA. The value at risk under the Extended Interim Loan Agreement is therefore less than 3% of the Group's Latest Audited NTA, and the Extended Interim Loan Agreement is not subject to theannouncement requirements pursuant to Rule 905(1) of the Listing Manual.

1. Aggregate value of all transactions entered into with the Lender in FY2020

Pursuant to Rule 905(2) of the Listing Manual, if the aggregate value of all transactions entered into with the same interested person during the same financial year amounts to 3% or more of the group's latest audited NTA, the issuer must make an immediate announcement of the latest transaction and all future transactions entered into with that same interested person during that financial year. As stated in paragraph 1.4 of the Announcement, the aggregate value of all interested person transactions entered into by the Group with the Lender and its subsidiaries for FY2020 (not including transactions below S$100,000 and transactions previously approved by shareholders) is approximately RMB 26,090,543.50 representing 2.6% of the Group's Latest Audited NTA. As the aggregate value of all transactions entered into with the Lender during FY2020 amounts to less than 3% of the Group's Latest Audited NTA, the announcement requirements pursuant to Rule 905(1) of the Listing Manual do not apply.

1. Total amount of interest paid and payable to the Lender in FY2020

In paragraph 1.3 of the Announcement, the Company had highlighted, for completeness, that the total amount of interest paid and payable to the Lender in FY2020 is RM 33,873,812.50, representing 3.4% of the Group's Latest Audited NTA. The Company wishes to clarify that such amount includes interest paid and payable by the Group to the Lender pursuant to agreements that were entered into in previous financial years. The value of transactions entered into in previous financial years is excluded for the purpose of the calculation under Rule 905(1) of the Listing Manual as such rule pertains only to transactions entered into in the same financial year. As further stated in paragraph 1.3 of the Announcement, while the Extended Interim Loan Agreement is not subject to the announcement requirements pursuant to Rule 905 of the Listing Manual, the Company had announced the entry into the Extended Interim Loan Agreement in view of the total interest paid to the Lender in FY2020 (which includes interest paid under loanagreements entered into between the Group and the Lender in previous financial years).

By Order of the Board

Zhang Liucheng

CEO and Executive Director

21 October 2020