Key Highlights of the Announcement

• ISOTeam Ltd. has entered into a joint venture agreement via its wholly-owned subsidiary, Raymond Construction Pte. Ltd. (“RC”), with Elite Engineering Specialist Pte. Ltd. (“EES”) and Global Training Services Pte. Ltd. (“GTS”).
• The joint venture results in the incorporation of a new subsidiary, ISO-Global Academy Pte. Ltd. (“JV Company”), to operate a training centre for the built environment sector, focusing on upgrading foreign workers’ skills.
• The JV Company is incorporated in Singapore with an initial paid-up capital of S\$100, which will be increased to S\$100,000 upon opening its bank account.
• Shareholding structure: RC holds 51%, EES holds 49% of the JV Company, with GTS providing a performance guarantee for EES’s obligations.
• The JV Company’s board will consist of up to 3 directors: RC appoints 2, EES appoints 1.

Detailed Information for Investors

Purpose and Strategic Rationale

ISOTeam’s move to establish this JV is designed to expand its business capabilities and reduce costs related to manpower procurement. The JV aims to address workforce skill upgrades, a key operational requirement in the construction and built environment sector, which could enhance ISOTeam’s competitiveness and operational efficiency.

Salient Terms of the JV Agreement

• Capital Structure: The JV will have an initial paid-up capital of S\$100,000 divided into 100,000 ordinary shares, held 51% by RC and 49% by EES.
• Business Activities: The JV Company will operate a training centre and may expand to other related businesses as deemed fit.
• Board Control: RC holds majority board control with the right to appoint 2 out of 3 directors.
• Reserved Matters: Major corporate actions (e.g., constitutional amendments, share variations, winding up) require at least two-thirds voting rights, ensuring minority protection.
• Performance Undertaking: GTS commits to fulfill EES’s obligations in case of any default, reducing operational risk for RC.
• Financing: Shareholders are required to support JV funding via loans according to their shareholding proportions. If guarantees are required, shareholders provide indemnities to each other proportionally.
• Pre-emptive Rights and Transfer Restrictions: Shareholders have first rights on new share issuances and on transfers, ensuring control remains within the original JV partners.

Financial Effects and Material Interests

• Funding: ISOTeam’s subscription in the JV will be funded internally and is not expected to have a significant effect on net tangible assets per share or earnings per share for the financial year ending 30 June 2026.
• Related Party Disclosure: Dr Teo Ho Pin, an independent director of ISOTeam, is an adviser to GTS but has recused himself from all decisions relating to this JV. No other directors or substantial shareholders have interests in the JV outside their ISOTeam shareholdings.

Investor Considerations and Potential Price Sensitivity

• Pivotal Strategic Move: This JV is a key step in ISOTeam’s strategy to secure more cost-effective and skilled manpower, giving it a potential edge in future projects and tenders. If the JV is successful in training and supplying skilled workers, it could lead to operational savings and improved margins.
• Growth Prospects: The JV Company may expand into other business areas within the built environment sector, opening up new revenue streams for ISOTeam.
• Risk Mitigation: GTS’s performance guarantee and the funding arrangement reduce risks associated with JV partner default and financial shortfalls.
• Shareholder Control: The agreement’s transfer restrictions and pre-emptive rights protect existing shareholders from dilution and unwanted changes in ownership or control.
• Limited Immediate Financial Impact: The JV is not expected to materially affect ISOTeam’s earnings or net assets in the short term, but longer-term impacts could arise as the JV’s training centre ramps up operations.

Additional Information

A copy of the Joint Venture Agreement is available for inspection at ISOTeam’s registered office for three months from the announcement date. Shareholders are advised to exercise caution and consult professional advisers if in doubt about the implications of the JV on their investment.

Disclaimer

This article is prepared for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and seek advice from professional advisors before making any investment decisions. The information is based on the latest company announcement and may be subject to change. ISOTeam Ltd. and its sponsor are not liable for any actions taken based on this report.

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