ENRA Group Berhad Annual Report 2019

88 ENRA GROUP BERHAD ∞ Annual Report 2019 page Notes to the Financial Statement 31 March 2019 7. INVESTMENTS IN SUBSIDIARIES Company 2019 RM’000 2018 RM’000 Unquoted equity shares, at cost 15,147 13,748 Less: Impairment losses - (499) 15,147 13,249 Equity contributions to subsidiaries 53,064 - 68,211 13,249 (a) Investments in subsidiaries, which are eliminated on consolidation, are stated in the separate financial statements of the Company at cost less impairment losses, if any. (b) Equity contributions to subsidiaries are unsecured, interest-free and settlement is neither planned nor likely to occur in the foreseeable future for the purposes of providing the subsidiaries with a long term source of additional capital. (c) Acquisition/Incorporation of subsidiaries and subscription of shares in subsidiaries (i) Incorporation of ENRA Kimia (Australia) Pty Ltd (“EKA”) On 4 June 2018, EKA was incorporated with an issued and paid-up share capital of AUD100 made up of 100 ordinary shares of AUD1 each which are all held by ENRA Kimia Sdn. Bhd., a wholly-owned indirect subsidiary of the Company. (ii) Acquisition of International Chemicals Engineering Pty Ltd (“ICE”) On 13 June 2018, EKA had entered into a Share Sale Agreement (“SSA”) to acquire 10,000 ordinary shares representing 100% equity interests in ICE, in the proportion of 70% from Mr. Christopher Johs Ulrik and 30% from Mr. Kenneth Inglis Lardner, for a cash consideration of up to AUD2,900,000 or approximately RM8,700,000 and the assumption of AUD1,600,000 or approximately RM4,700,000 of existing shareholders’ loans in ICE. The maximum aggregate of these amounts is AUD4,500,000 or approximately RM13,500,000 (“Total Consideration”). The Total Consideration will be satisfied in the following manner: (a) AUD2,700,000 or approximately RM8,400,000 in cash upon completion of the sale and purchase of the shares (on 24 July 2018 representing AUD1,600,000 shareholders’ loan to be subsequently recovered from ICE and the first consideration of AUD1,100,000 for the shares); and (b) The balance AUD1,800,000 (“contingent consideration”) for the shares in cash up to AUD600,000 for each of the next three (3) years (“Earn Out Payment”) payable in proportion to ICE meeting the target of achieving earnings before interest, tax, depreciation and amortisation (“EBITDA”) in excess of the EBITDA Guarantee of AUD500,000 per year for the next three (3) years and up to AUD830,000. Subsequently, ICE becomes an indirect wholly-owned subsidiary of the Company with effect from 24 July 2018 upon the completion of relevant sale and purchase conditions set out in the SSA. The potential undiscounted amount of all future payments that the Group could be required to make under the contingent consideration arrangement is between RM Nil to RM5,190,000.