General Announcement::AGM TO BE HELD ON 27 JULY 2021 - RESPONSES TO QUESTIONS FROM SHAREHOLDERS AND SIAS

GP Industries Limited

(Incorporated in the Republic of Singapore)

Co. Reg. No. 199502128C

ANNUAL GENERAL MEETING TO BE HELD ON 27 JULY 2021 -

RESPONSES TO SUBSTANTIAL AND RELEVANT QUESTIONS FROM SHAREHOLDERS AND

THE SECURITIES INVESTORS ASSOCIATION (SINGAPORE)

The board of directors (the "Board") of GP Industries Limited (the "Company" and together with its subsidiaries, the "Group") refers to its Notice of Annual General Meeting convening the annual general meeting of the Company to be held by way of electronic means on Tuesday, 27 July 2021, at 2:30 p.m. (Singapore time) (the "AGM"), and the announcement on alternative arrangements for the AGM, each dated 12 July 2021. The Company has received several questions from shareholders and the Securities Investors Association (Singapore) in relation to the resolutions to be tabled for approval at the AGM. The Company appreciates the questions raised and is releasing the responses to substantial and relevant questions, save for those requested information which are of a confidential nature or commercially sensitive and the disclosure of which may affect the Group's competitiveness in the Group's markets. The questions and responses are set out in the Appendix to this announcement.

By Order of the Board

Lee Tiong Hock

Company Secretary

26 July 2021

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Appendix

Responses to Substantial and Relevant Questions from Shareholders and the

Securities Investors Association (Singapore)

Q1. As noted in the chairman's statement, FY2021 was one of the most challenging years faced by the group with the onset of the COVID-19 pandemic in the first half of the financial year and then the logistics capacity shortages in the second half.

Despite the challenges, the group's consumer batteries segment reported a 18.8% year-on- year increase in revenue, with growth coming from all major markets. The increases were 36.8%, 22.1% and 5.1% in the Americas, Asia and Europe markets respectively (page 11). The batteries segment remains by far the most significant operating segment of the group, accounting for 80% of the total revenue.

1. Can management help shareholders understand if the growth in the batteries segment is sustainable? How much of it could be attributed to the COVID-19 pandemic? In addition, what are the reasons for the significant increase in revenue (36.8%) from the Americas?
   The growth of 18.8% over previous year is mainly contributed by the surge of batteries demand for computer peripheral products which benefited from particularly "Stay-at-Home /Work-from-Home" economy. Increase in "home improvements" and "medical & cleaning" segments also contributed to the growth in the Covid-19 environment. We expect the strong demand will continue to last for a period of time, but may not be at the same growth rate as last year.
   The sales growth in the Americas market of 36.8% was due mainly to (a) overall demand growth; and (b) new business including the peripheral products mentioned above captured during the year.
2. Can the company provide shareholders with greater clarity on the group's production facilities, including location, production capacity, product type, floor area, manpower etc. in the various countries (China, Malaysia and Vietnam)? The group has stated that it continues to make progress in rationalising its production facilities and have shifted its production capacity out of China to Malaysia and Vietnam.
   An overview of the location of the current production facilities of the Group is set out below:

Location	Product type
Dongguan, Huizhou and	Automotive wire harness products
Shenzhen, China	Electronics and acoustics products
	Primary specialty and rechargeable batteries
	products
Ningbo, China	Primary cylindrical and specialty batteries
	products
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Location	Product type
Malaysia	Primary specialty and rechargeable batteries
	products
Thailand	Electronics and acoustics products
Vietnam	Primary cylindrical batteries products

The detailed information on production capacity, floor area and manpower are commercially sensitive which may affect the Group's competitiveness in the Group's markets and the Group therefore does not disclose such information.

The group produces "primary specialty", "primary cylindrical" and "rechargeable & others" batteries (page 3). For instance, management has mentioned alkaline cylindrical batteries, Nickel Metal Hydride ("NiMH") rechargeable batteries, Lithium rechargeable batteries (customised and mainly for use in digital lifestyle products such as wireless headphones and wearable electronic products) and Carbon Zinc cylindrical batteries/Carbon Zinc 9- volt batteries.

1. What is the breakdown in revenue for the major battery product groups?
   The revenue breakdown for the major battery product groups are commercially sensitive which may affect the Group's competitiveness in the Group's markets and the Group therefore does not disclose such information.
2. For the benefit of new and long-standing shareholders, can management elaborate further on the applications and the growth drivers in each of the different battery types?
   Shareholders can visithttps://international.gpbatteries.comfor more information on the complete product range of the Group's batteries products. In addition to marketing and sales of these batteries products under the Group's GP brand, the Group also manufactures such products for its private label customers. The main driver is the growth of the Group's eCommerce sale channel, new application of the Group's batteries products in medical and cleaning segments, computer peripheral products and home improvement equipment.
3. Is the group able to tap the growth in the electric vehicle market?
   Currently the electric vehicles are primarily powered by Lithium-ion rechargeable batteries. The Group does not manufacture Lithium-ion rechargeable batteries for use in electric vehicles.
4. As seen in the consolidated statement of cash flows (page 42), although profit before tax was higher in FY2021 at $56.3 million, net cash generated from operating activities was significantly lower at $12.4 million due to $47.7 million and $78.9 million in cash out flows for inventories and "receivables and prepayments" respectively while trade and other payables, and contract liabilities increased by $95.0 million (cash inflow). In particular, trade receivables from third parties increased from $138.5 million to $202.4 million (page 83), an increase of 46%. What are the reasons for the significant increase in trade receivables due from third parties? What are the profiles of the debtors

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with significant outstanding trade receivables? As at 31 March 2021, the group recognised $61.3 million in gross trade receivables that are deemed "average risk" (page 104).

May I ask the Audit Committee how much of the $202.395m trade receivables have been collected so far?

As explained in the Company's announcement of unaudited results for the financial year ended 31 March 2021 ("FY2021") released on 27 May 2021, "increase in the Group's receivables and prepayments was due mainly to an increase in trade receivables, as a result of a significant increase in revenue for the financial quarter ended 31 March 2021 ("4QFY2021") when compared to that for the financial quarter ended 31 March 2020 ("4QFY2020"). The Group's operations was adversely affected during 4QFY2020 due to the outbreak of COVID-19". As at 31 March 2021, trade receivables classified with "average risk" comprised mainly new customers of the Group.

The credit ratings of the trade receivables are disclosed in paragraph d) of Note 37 of the annual report for FY2021.

The financial information of the Group subsequent to 31 March 2021, including the trade receivable position, will be released in the subsequent financial reporting period of the Group.

Q2. For FY2021, revenue for the Automotive Wire Harness Business segment decreased by 6.1% as it was first affected by automotive factory shutdowns followed by component shortages and shipment capacity limitations.

On 31 May 2021, the company announced the proposed sale of the wire harness business to Time Interconnect Investment Limited. The proposed disposal constitutes an "interested person transaction (IPT)" under Chapter 9 of the SGX-ST Listing Manual.

The net asset value and book value of the disposal group as at 31 March 2021 was HK$72,171,000 (approximately S$12,343,000) and HK$73,751,000 (approximatelyS$12,613,000) respectively.

The consideration for the proposed disposal is HK$69,000,000 (equivalent to approximately S$11,800,000), subject to certain conditions. The company has also stated that no shareholder's approval is required as the value of the transaction is below 5% of the latest audited consolidated NTA of the group even though the proposed disposal (as an IPT) will result in a loss of S$813,000 based on the unaudited book value as at 31 March 2021.

1. Given that the automotive wire harness segment has been profitable, would management justify the proposed disposal at a loss, given that the proposed disposal is deemed an IPT?
   As explained in the Company's announcement of proposed disposal of GP
   Industries Marketing Limited ("GPIM") and Huizhou GP Wiring Technology Ltd. ("GPWT") (the "Proposed Disposal") released on 31 May 2021, paragraph 5.1 (Financial Impact of the Proposed Disposal), the financial impact included (a) a deficit of S$813,000, representing the difference between the Consideration and the book value of the Target Group, based on

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the Unaudited Book Value as at 31 March 2021, and (b) the aggregate cumulative exchange translation deficit attributable to GPIM and GPWT of S$2,037,000 as at 31 March 2021, which was an non-cash item.

The rationale and benefit of the Proposed Disposal is set out in paragraph 2.5 of the announcement dated 31 May 2021.

Management would also like to point out that (a) the consideration of HK$69 million represented a 6.9 times price earnings ratio ("PER") based on the profit before taxation of the Automotive Wire Harness Business for FY2021;

1. 1. on a profit after tax basis the implied PER based on a HK$69 million consideration is estimated to be about eight times; and (c) dividend declared by GPWT, the subsidiary incorporated in China, is subject to withholding tax, whereas the proceeds from the Proposed Disposal is not expected to be subject to any taxation. Thus, the Proposed Disposal enables the Group to monetarize the non-core business more efficiently and therefore is in the interest of the Company.
2. What role did the independent directors play, if any, in safeguarding the interests of shareholders?
3. 
   Please see our reply to Q2 (iii) below.
4. Did the independent directors approve the proposed disposal at the board level? What is the justification to support the proposed disposal at a consideration that is below the net asset value of a profitable business?
5. 
   The Audit and Risk Committee, which comprised Non-Executive Independent Directors, reviewed the terms of the transactions and after considering, inter alia, the rationale for the proposed disposal, the business strategy of the Group, the relative insignificance of the contribution of the Automotive Wire Harness Business and management's assessment, were of the opinion that the Proposed Disposal was on normal commercial terms and not prejudicial to the interest of the Company and its minority shareholders. With the recommendation of the Audit and Risk Committee, the Board, with Mr. Victor Lo Chung Wing abstained from voting on the matter, approved the Proposed Disposal.
6. Given that the proposed disposal is an IPT, did the independent directors consider it appropriate to appoint an independent valuer to value the automotive wire harness business?
7. 
   Please see our reply to Q2 (iii) above.
8. In addition, would the company consider seeking shareholders' approval on the proposed disposal?
9. 
   The Proposed Disposal does not require approval by shareholders of the Company according to the rules of the Listing Manual of the Singapore Exchange Securities Trading Limited.

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