Tex Cycle Further Enhances Portfolio with Strategic Acquisition of Accredited Safety & Environmental Laboratory

Continuous Strengthening the Group’s Capabilities in Environmental and Safety Compliance with Profit Guarantee

KUALA LUMPUR, 19 AUGUST 2024 – Tex Cycle Technology (M) Berhad (“Tex Cycle” or the “Group”), an established waste management and recycling solutions provider, is delighted to announce the acquisition of a 60.0% equity interest in Safety & Environmental Laboratory Sdn. Bhd. (“SEL”), further enhancing its environmental testing and compliance services.

SEL, established to meet the growing needs for Environmental, Health & Safety (“EHS”) Monitoring and Laboratory Analysis Services, brings over a decade of experience and a broad range of services including environment monitoring, Department of Environment (“DOE”) approvals, and safety training. This acquisition enables Tex Cycle to expand its offerings to include comprehensive environment, health, and safety services through SEL’s expert team and accredited laboratory services.

Under the terms of the agreement, this acquisition that is priced at approximately RM8.4 million for 60.0% of SEL, allows Tex Cycle to secure a profit guarantee from SEL with an audited profit after taxation (“PAT”) not to be less than RM2.0 million for each of the financial years ended 2024 and 2025. Additionally, SEL guarantees a net tangible asset value not less than RM4.4 million at the completion date.

This strategic acquisition is expected to enhance Tex Cycle’s capabilities significantly, promoting a broader geographical and operational reach, solidifying its position as a comprehensive provider of environmental solutions, and creating synergy by strengthening our internal capabilities for chemical, waste, and environmental sample analysis as well as EHS services. This synergy will enable us to better meet the evolving demands of our clients and drive innovation in our service offerings.

Mr. Gary Dass A/L Anthony Francis, Group Chief Executive Officer of Tex Cycle commented, "We are looking forward to this strategic acquisition, which introduces laboratory testing services into our portfolio, opening up extensive new business opportunities for Tex Cycle. Integrating SEL’s expertise and services into our operations allows us to offer comprehensive environmental, health, and safety solutions. This expansion not only strengthens our position in the market but also aligns with our strategic goals of enhancing service diversity and operational excellence, ensuring we continue to meet the evolving needs of our clients."

"We are thrilled to join forces with Tex Cycle, a move that marks a significant milestone for both our companies," stated Kaliswaran A/L Palanisamy, Managing Director of SEL. "This collaboration not only enhances our capabilities but also broadens our reach, allowing us to offer our specialised laboratory testing services to a wider market. The integration presents substantial cross-selling opportunities, enabling both companies to leverage each other's strengths to deliver greater value and innovative solutions to our clients."

As at 5:00 P.M., 19 August 2024, the share price of Tex Cycle closed at RM1.220, representing a market capitalisation of RM343.1 million.