The Board of Directors of Eonmetall Group Berhad announced the incorporation of a subsidiary known as Shaanxi Longxing Steel Co. Ltd. under the laws of the People's Republic of China ("PRC") ("Investment"). Shaanxi Longxing was incorporated as a limited liability company on 24 October 2018 and is wholly owned by a 51% owned subsidiary, Eonmetall China Sdn. Bhd. (formerly known as Grand Hill Assets Sdn. Bhd.) ("Eonmetall China"). Shaanxi Longxing was incorporated with registered/authorised capital of USD 20,000,000 with principal business activities of production, sales, import and export of steel products, machinery and equipment. The incorporation of Shaanxi Longxing will not have any effect on the issued share capital of the Company and the shareholding of the substantial shareholders as no ordinary shares will be issued by EGB. The Investment is part of the Group's strategy to directly invest and participate in downstream steel production activities in PRC which will allow the Group to expand its market presence in PRC. The Investment will not have material impact on the earnings of the Group for the financial year ending 31 December 2019 until the commencement of the intended business activities of the Investment and save for the interest costs associated with the drawdown of bank borrowings to fund the Investment. The Investment will not have any material effect on the net assets of the Group for 2019. The gearing ratio for 2019 is expected to increase in proportion to the drawdown of borrowings during the year.