1 bintai kinden corporation berhad - Bursa Malaysia

BINTAI KINDEN CORPORATION BERHAD (“BKCB” OR “COMPANY”) (I) (II)

PROPOSED ACQUISITION; AND PROPOSED DIVERSIFICATION.

1.

INTRODUCTION On behalf of the Board of Directors of BKCB (“Board”), KAF Investment Bank Berhad (“KAF IB”) wishes to announce the following:(a)

proposed acquisition by BKCB of the entire 100% equity interest in Optimal Property Management Sdn Bhd (“OPM”) comprising 100,000 ordinary shares of RM1.00 each in OPM (“OPM Shares” or “Sale Shares”) for a purchase consideration of RM15.0 million (“Purchase Consideration”) to be satisfied via issuance of 75,000,000 new ordinary shares of RM0.20 each in BKCB (“BKCB Shares”) at an issue price of RM0.20 each (“Proposed Acquisition”); and

(b)

proposed diversification of the existing business of BKCB and its subsidiaries (“BKCB Group” or “Group”) to include concession arrangements business (“Proposed Diversification”).

The Proposed Acquisition and Proposed Diversification shall hereinafter collectively be referred to as the “Proposals”. The details on the Proposals are set out in the ensuing sections of this announcement.

2.

THE PROPOSED ACQUISITION

2.1

Details on the Proposed Acquisition On 17 November 2016, BKCB entered into a conditional share sale agreement (“SSA”) with Nusankota Development Sdn Bhd (“Nusankota”), Haryati Binti Zaharuddin and Amirul Arifin Sopiee Bin Md. Noordin (collectively referred to as “Vendors”) for the Proposed Acquisition. The salient terms of the SSA are set out in Section 2.2 of this announcement. Pursuant to the SSA, the Purchase Consideration shall be satisfied via an issuance and allotment of 75,000,000 new BKCB Shares (“Consideration Shares”) at an issue price of RM0.20 each (“Issue Price”) in the following manner:-

Vendors

Nusankota Haryati Binti Zaharuddin Amirul Arifin Sofiee Bin Md. Noordin Total

No. of Sale Shares to be acquired

% of equity interest to be acquired

No. of Purchase Consideration consideration Shares (RM)

66,700 16,650

66.70 16.65

10,005,000 2,497,500

50,025,000 12,487,500

16,650

16.65

2,497,500

12,487,500

100,000

100.00

15,000,000

75,000,000

Further details on OPM and the Vendors are set out in Sections 2.3 and 2.5 of this announcement respectively.

1

2.2

Salient terms of the SSA The salient terms and conditions of the SSA include, amongst others, the following:(a)

Sale of Sale Shares Subject to the terms of the SSA, the fulfilment of the conditions precedent set out in Section 2.2(c) of this announcement and the Company being satisfied with the results of the due diligence audit, the Vendors shall sell and the Company shall purchase the Sale Shares free from any encumbrances and with all rights now or hereafter attaching thereto or accruing thereon including without limitation, all bonuses, rights, dividends and other distributions declared, paid or made thereof hereinafter for the consideration and upon the terms and conditions specified in the SSA.

(b)

(c)

Purchase Consideration (i)

In consideration for the Sale Shares, the Company agrees to pay the Vendor the Purchase Consideration in accordance with the terms and conditions of the SSA.

(ii)

The Purchase Consideration shall be wholly satisfied by the allotment and issue of the Consideration Shares at the Issue Price to the Vendors or their nominees which shall rank equally in all respects with the existing issued and paid-up share capital of the Company at that time except such Consideration Shares shall not be entitled to any rights, allotment, distribution or dividends where the entitlement date to such rights, allotment, distribution or dividends precedes the allotment date of the Consideration Shares to the Vendors or their nominees.

(iii)

Such Consideration Shares allotted and issued shall be fully paid-up and free from any encumbrances.

(iv)

The Purchase Consideration shall be deemed to be fully settled and satisfied upon the crediting of the Consideration Shares into the Vendor’s or their nominees central depository accounts.

Conditions precedents The sale and purchase of the Sale Shares shall be subject to and conditional upon the fulfilment of the following conditions precedent being fulfilled within 90 days from the date of the SSA or by such extension of time as the Company and Vendors (collectively, the “Parties”) may mutually agree in writing (“Conditions Period”):(i)

all relevant or necessary consents and approvals, if any, being granted and not withdrawn or revoked by Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other third parties (if applicable) (including without limitation, government bodies, stock exchange(s) and other relevant authorities having relevant jurisdiction) for the listing of and quotation for the Consideration Shares on the Main Market of Bursa Securities and if such consents are obtained subject to any condition(s) affecting any of the Parties, such condition(s) being fulfilled;

(ii)

the approval of the Board to purchase the Sale Shares upon terms and conditions set out in the SSA;

(iii)

the approval of the shareholders of the Company at a general meeting convened for the purchase of the Sale Shares upon the terms and conditions of the SSA;

2

(iv)

the approval of the financial institutions which have granted credit facilities to OPM for the sale and transfer of the Sale Shares to the Company, if so required;

(v)

the approval(s) of the relevant public authorities, if so required;

(vi)

completion of the due diligence exercise undertaken by the Company on OPM, the Concession (as defined in Section 2.4 below) and the results of which are satisfactory to the Company,

(hereinafter collectively referred to as the “Conditions Precedent”). In the event the Conditions Precedent or any of them is not fulfilled or is pending upon the expiration of the Conditions Period or if the Parties had agreed to an extension of time then upon the expiration of such extension, the SSA shall be terminated and neither Party shall have any claim against the other under it, save for any claim arising from antecedent breaches of the terms and conditions of the SSA. The SSA shall be deemed to be unconditional on the date the last of the Conditions Precedent is fulfilled, being a date within the Conditions Period (“Unconditional Date”). The Company and the Vendors may waive or modify, by written agreement by them, any of the Conditions Precedent whereupon such Conditions Precedent shall be deemed to be (as applicable) waived or modified and any Conditions Precedent agreed to be waived by the Parties will be deemed as a satisfaction or fulfilment of that Condition Precedent. (d)

(e)

Completion (i)

The Company shall as soon as practicable and in any event no later than 5 business days following the Unconditional Date procure and cause the Consideration Shares to be credited into the Vendors’, or their nominee’s securities account in accordance with the rules and regulations of the Bursa Securities and Bursa Malaysia Depository Sdn Bhd and the Company’s solicitors are hereby expressly and irrevocably authorised by the Parties hereto release the stake documents as set out in the SSA to the Company.

(ii)

Upon completion of the matters referred to in Section 2.2(d)(i) above, the SSA shall be completed and the legal and beneficial ownership of the Sale Shares shall be transferred to the Company.

Default and termination In the event that the Company shall fail to complete the sale and purchase of the Sale Shares in accordance with the SSA, the Vendors shall be entitled either to:(i)

the remedy at law for specific performance of the SSA against the Company; or

(ii)

terminate the SSA by giving 30 days' notice in writing to the Company and the SSA shall at the expiry of the said notice be determined.

Provided always that the Vendors shall not be entitled to terminate the SSA if the Company shall make good and remedy such breach within the period of the aforesaid thirty (30) days’ notice. Upon the termination of the SSA, the Company’s Solicitors are irrevocably authorised by the Parties to return the stake documents as set out in the SSA to the Vendors.

3

In the event that the Vendors or any of them shall commit any breach of the SSA and/or that any of the representations warranties or covenants of the Vendors contained in the SSA shall be false incorrect or misrepresented the Company shall be entitled either to:(i)

the remedy at law for specific performance of the SSA against the Vendors; or

(ii)

terminate the SSA by giving 30 days' notice in writing to the Vendors and the SSA shall at the expiry of the said 30 days’ notice be determined.

Provided always that the Company shall not be entitled to terminate the SSA if the Vendors shall make good and remedy such breach within the period of the aforesaid 30 days’ notice. Upon the termination of the SSA, the Company’s Solicitors are hereby irrevocably authorised by the Parties hereto to return the stake documents as set out in the SSA to the Vendors. (f)

Governing law The SSA shall be governed by and construed in accordance with the laws of Malaysia.

2.3

Information on OPM OPM is a special purpose vehicle incorporated in Malaysia on 20 February 2014 under the Companies Act, 1965 (“Act”) as a private limited company. OPM is principally involved in property management. As at 7 November 2016, being the latest practicable date prior to this announcement (“LPD”), the authorised share capital of OPM is RM400,000 comprising of 400,000 OPM Shares of which RM100,000 comprising 100,000 OPM Shares have been issued and fully paid-up. As at the LPD, the directors of OPM are Haryati Binti Zaharuddin, Amirul Arifin Sofiee Bin Md. Noordin and Ariff Farhan Doss. As at the LPD, the substantial shareholders of OPM and their respective shareholdings in OPM are as follows:Substantial shareholders Nusankota Haryati Binti Zaharuddin Amirul Arifin Sofiee Bin Md. Noordin

No. of OPM Shares

%

66,700 16,650 16,650

66.70 16.65 16.65

The selected audited financial information of OPM for the financial years ended 31 May 2015 and 31 May 2016 are set out below:Audited 31 May 2015 31 May 2016 (RM'000) (RM'000)

Financial years ended Revenue Loss before taxation Loss after taxation Shareholders' funds / Net assets (“NA”) / Net liabilities Borrowings Gearing (times)

4

(8) (8) 92 -

(104) (104) (12) -

2.4

Information on the Concession Pursuant to the concession agreement entered into between Kolej Teknologi Islam Melaka Berhad (“KTIMB”) and OPM on 3 December 2015 (“Concession Agreement”), OPM was awarded with a 25-year concession to design, construct, complete, operate and maintain the entire in-campus accommodation for Kolej Teknologi Islam Melaka (“KUIM”) (“Concession”) and shall be constructed on lands identified as Title No. PT 2142 and 2143 located in Mukim Kuala Linggi, District of Alor Gajah, State of Malacca (“Land”), consisting the following:   

9 blocks of 4-storeys each of student hostels; 6 units of single storey warden/fellow houses; 1 student centre comprising 22 food court outlets and 8 units of shop lots (“Student Centre”); and wireless internet connection access/facility at the Student Centre and ‘Hot Spot’ access at the student’s activity area at the hostels.

The salient terms of the Concession Agreement are set out below:(a)

The Concession shall be for a period of 25 years inclusive of the construction period of 36 months from the construction commencement date and issuance of the certificate of compliance and completion and shall expire on the Concession expiry date (“Concession Period”);

(b)

OPM shall undertake the planning, design, construction, development and completion of the Concession located at the Land in accordance with the contract building specifications within the construction period of 36 months from the construction commencement date at OPM’s own expense without any recourse to KTIMB at a total cost of RM121.0 million (“Concession Cost”);

(c)

OPM shall operate the Student Centre whereby 2 units of the food court outlets and 2 units of student representative council meeting rooms shall be provided to KTIMB without any charge;

(d)

OPM shall undertake the maintenance of the entire facilities excluding any operation and administration of such facilities pursuant to the Concession and the right to demand, collect and retain mutually agreed charges throughout the Concession Period;

(e)

OPM shall relinquish and transfer the Concession and the Land to KTIMB on the expiry date of the Concession Period on an “as is where is basis wear and tear accepted” in accordance with the terms of the Concession Agreement and thereafter OPM shall bear no further liabilities and responsibility towards the Concession and the Land;

(f)

OPM shall be granted with an extension to the Concession Period in the event OPM is unable to recover the costs of the construction works, cost of funds and reasonable profit within the Concession Period after producing the audited financial statements of OPM as proof of account to KTIMB in substantiating the inability to recover the abovementioned costs and reasonable profit;

(g)

KTIMB shall pay the following charges to OPM within the Concession Period:(i)

monthly hostel charges and maintenance charges at a base rate of RM1,008,288 per month for a total of 12 months of each calendar year throughout the Concession Period commencing and chargeable only from the date of the certificate of compliance and completion; and

5

(ii)

(h)

annual collegiate fee at the base rate of RM1,008,288 only during the Concession Period commencing and chargeable only from the date of the certificate of compliance and completion; and

The Concession Agreement shall be governed by and construed in accordance with the laws of Malaysia.

Background information on KUIM Based on publicly available information, KUIM is private higher learning institution wholly owned by the State Government of Melaka and was established under the Private Higher Educational Institutions Act 1996. KUIM has introduced a platform in education by combining the area of Islamic studies which is incorporated with science and psychology discipline. In an effort to rebrand, KUIM has made psychology as its niche area and it has made KUIM as the first private Islamic university in Malaysia that develops and focuses psychology in the tertiary level. Other areas of studies at KUIM include business Islamic banking, Syaria’ laws, nursing, biotechnology and information technology which conform to the accreditation by the Malaysian Qualifications Agency. 2.5

Information on the Vendors (a)

Nusankota Nusankota was incorporated in Malaysia under the Act on 5 April 2011 as a private limited company. The principal activity of Nusankota is of investment holding. The registered office of Nusankota is located at D12, Tingkat 1, Plaza Pekeliling, No. 2 Jalan Tun Razak, 50400 Kuala Lumpur. As at the LPD, Nusankota has an authorised share capital of RM100,000 comprising 100,000 ordinary shares of RM1.00 each of which RM100 comprising 100 ordinary shares of RM1.00 each have been issued and fully paid-up. The Directors of Nusankota are Ariff Farhan Doss, Hamzah Bin Kammapu and Cheong Chee Meng. The substantial shareholder of Nusankota is Ariff Farhan Doss who holds 99% equity interest in Nusankota.

(b)

Haryati Binti Zaharuddin Haryati Binti Zaharuddin, aged 39, a Malaysian, is a director and shareholder of OPM. She was appointed to the board of directors of OPM on 20 April 2015. She holds a degree from Universiti Teknologi MARA in Hotel Management. She started her career with Malaysian Airlines Systems and subsequently joint several public relations and advertising companies. She has extensive experience in managing project organisations and she is currently responsible towards the corporate and public relations of OPM.

(c)

Amirul Arifin Sopiee Bin Md. Noordin Amirul Arifin Sopiee Bin Md. Noordin, aged 38, a Malaysian, is a director and shareholder of OPM. He was appointed to the board of directors of OPM on 16 April 2015. He graduated with a Bachelor of Science, majoring in Financial Analysis and International Business from State University of New York, United States of America. He started his career as an executive director of Third Side of The Coin Sdn Bhd and was responsible for managing clients and assets of the company.

6

In 2003, he co-founded Noordin Sopiee & Associates (“NSA”) with the late Tan Sri Dato’ Seri Prof. Dr. Noordin Sopiee, a boutique consulting house with niche market employing a dynamic consulting process and NSA has had the privileged of serving various ministries, state agencies, public listed companies as well as foreign governments and organisations. He currently serves as group managing director at AMDi Brunsfield Mediprecinct Sdn Bhd, AMDi Resources Sdn Bhd and Third Side of The Coin Sdn Bhd. He is also a director of Ketara Media Sdn Bhd and Sodaco Sdn Bhd. 2.6

Basis and justification of arriving at the Purchase Consideration The Purchase Consideration was arrived at on a willing-buyer willing-seller basis, after taking into consideration, among others, the following:(a)

the net liabilities of OPM based on its audited financial statements for the financial year ended 31 May 2016 of approximately RM0.01 million;

(b)

the future prospects of OPM as set out in Section 6.3 of this announcement and its future earnings potential to be derived from the Concession; and

(c)

valuation range of the Concession of between RM24.5 million and RM26.7 million as ascribed by Messrs Russ Ooi & Associates as detailed below.

The Company had on 4 October 2016 appointed Messrs Russ Ooi & Associates (“Valuer”) as the independent valuer to conduct a valuation on the Concession. The Valuer has adopted the discounted cash flow method of valuation (“DCF”) which it considered as the most appropriate method in arriving at the valuation of the Concession. The DCF is an investment appraisal approach technique, which is to value the expected future free cash flows (“FCF”) which are generated by a company over time. The FCF represents the cash flows available to equity shareholders after any investment in assets. In order to value the Concession using FCF, the Valuer has to discount the future FCF over time using a specific discount rate to arrive at the net present value. Based on the valuation report dated 16 November 2016 prepared and issued by the Valuer (“Valuation Report”), the valuation range of between RM24.5 million and RM26.7 million as ascribed by the Valuer, which is above the Purchase Consideration, was arrived at by discounting the FCF of the Concession to the present value at the discount rates based on the adjusted weighted average cost of capital of between 10% and 11%. The Purchase Consideration represents a discount of 38.8% to 43.8% to the said valuation range of the Concession. 2.7

Basis of arriving at the Issue Price The Issue Price was arrived at after taking into consideration the par value of the BKCB Shares of RM0.20 each and the 5-day volume weighted average market price (“VWAMP”) of BKCB Shares up to and including 16 November 2016, being the last market day prior to the date of the SSA of RM0.18. The Issue Price represents a premium of RM0.02 or approximately 11.1% to the VWAMP.

2.8

Ranking of the Consideration Shares The Consideration Shares shall, upon allotment and issuance, rank pari passu in all respects with the existing BKCB Shares, save and except that they shall not be entitled to any dividends, rights, allotment and/or other distributions which are declared, made or paid for which the entitlement date for the said distributions precedes the date of allotment and issuance of the Consideration Shares.

7

2.9

Listing of the Consideration Shares An application will be made to Bursa Securities for the listing of and quotation for the Consideration Shares on the Main Market of Bursa Securities.

2.10

Liabilities to be assumed Save for the liabilities to be incurred in the ordinary course of business of OPM, there are no other liabilities including contingent liabilities and guarantees of OPM to be assumed by BKCB pursuant to the Proposed Acquisition.

2.11

Additional financial commitment Upon the completion of the Proposed Acquisition, OPM will become a wholly-owned subsidiary of BKCB and OPM shall be responsible towards the Concession Cost as disclosed in Section 2.4(b) of this announcement. The Concession Cost is expected to be financed via a combination of bank borrowings and/or internally generated funds (which may include advances from BKCB Group). The breakdown of funding for the Concession Cost will be determined later and will depend on, amongst others, the cash reserves and future funding requirement. Save for the Concession Cost, BKCB is not expected to incur any other additional financial commitment in relation to the Proposed Acquisition.

3.

PROPOSED DIVERSIFICATION The BKCB Group is principally involved in the provision of mechanical and electrical engineering services. Upon the completion of the Proposed Acquisition, the Group, via OPM, shall be involved in concession arrangements business i.e. the maintenance and management of the entire incampus accommodation and related facilities for KUIM under the Concession in accordance with the terms and conditions as set out in the Concession Agreement. In return, the Group will be paid availability charges by KTIMB in the form of monthly hostel and maintenance charges as well as annual collegiate fee over the Concession Period. Such income constitutes a new source of income to the Group over the Concession Period. The Board anticipates that the concession arrangements business of the Group may contribute more than 25% of the net profit of the Group based on the annual income (hostel and maintenance charges) receivable in respect of the Concession. As such, pursuant to Paragraph 10.13(1) of the Main Market Listing Requirements of Bursa Securities (“Listing Requirements”), the Company will be seeking its shareholders’ approval at a general meeting for the Proposed Diversification. Notwithstanding the Proposed Diversification, the Group intends to continue with its existing business in largely the same manner.

[The rest of this page is intentionally left blank]

8

4.

RATIONALE FOR THE PROPOSALS

4.1

Proposed Acquisition The Proposed Acquisition will enable the Company to participate and be entitled to the future recurring income streams from the concession arrangements business i.e. the provision of management and maintenance services to KUIM over the tenure of the Concession. As such, the Proposed Acquisition is expected to be beneficial to the BKCB Group in view of the expected future earnings to be derived. Premised on the above, the Board is of the view that the issuance of the Consideration Shares is the most appropriate means to satisfy the Purchase Consideration in view that the expected benefits to be derived would be in the form of future earnings. Thus, notwithstanding the audited consolidated cash and cash equivalents of BKCB as at 31 March 2016 of RM24.19 million, the Board is of the view the Group’s cash reserves should be conserved in line with the nature of its construction business which is capital intensive and on project basis. This serves to ensure that there would be adequate cash flows for the Group’s construction business which would include construction costs such as raw materials cost, payments to sub-contractors and suppliers, payment of professional fees to consultants and surveyors and other related construction costs.

4.2

Proposed Diversification The Group intends to diversify and expand its business activities to enhance its prospects through the Proposed Diversification. The Board believes that the Proposed Diversification would contribute positively to its future earnings and improve the financial position of the Group as well as reduce its dependency on its existing core business. In addition, the Proposed Diversification is expected to complement the Group’s existing business in property development whilst offering an advantage for the Group in the long term as the Group is able to offer a full-range of services in its business of property development, construction and project management. The Board believes that the Proposed Diversification shall enhance the Group's future prospects and is in line with the Group’s strategy of achieving growth. The additional revenue contribution from the concession arrangements business over the Concession Period will provide the Group with additional source of earnings which is expected to enhance the Group’s profitability and returns on shareholders’ funds.

5.

RISKS FACTORS The risk factors relating to the Proposed Acquisition, which may not be exhaustive, include but not limited to the following:-

5.1

Non-completion of the Proposed Acquisition The completion of the Proposed Acquisition is subject to, amongst others, the fulfilment of the Conditions Precedent or occurrence of any of the termination events as disclosed in Section 2.2(e) of this announcement. There is no assurance that the Conditions Precedent will be fulfilled and/or waived by the stipulated timeframe and/or in the event of any breach of the terms and conditions set out in the SSA, the SSA will be terminated and become null and void. Nevertheless, the Company shall use its best endeavours to obtain the requisite approvals and will continue to take all reasonable and necessary steps to ensure the Conditions Precedent are fulfilled within the stipulated timeframe to facilitate the completion of the Proposed Acquisition.

9

5.2

Risk relating to concession arrangements business The provision of management services to KUIM would include setting the programmes/schedules and carrying out of servicing and maintenance works in relation to the management of the facilities and infrastructure in order to maintain functionality, objective and intent within their expected life span in the most cost effective manner during the Concession Period. There is no assurance however that OPM will be able to maintain and manage the entire in-campus accommodation for KUIM effectively. In mitigating such risk, BKCB would ensure that there would be designated full-time employees to manage and maintain the entire in-campus accommodation including all facilities and infrastructure. Furthermore, the BKCB Group being in the construction industry will have the required skills and experience to perform any major rectification works, if required.

5.3

Non-payment of hostel and maintenance charges OPM would be subject to the risks of late and/or non-payment from KTIMB due to reasons such as dissatisfaction with the management services provided by OPM, cash flows constraints of KTIMB and/or other situations whereby KTIMB is unable to pay OPM the relevant availability charges as stipulated in the Concession Agreement. This may affect the cash flows position and financial performance of OPM in the event bad debts or provisions for doubtful debts are required to be made. If delay in payment is due to fault of OPM, the Group seeks to limit and address such risk by practising continuous review and improvements of its operations and adequate emphasis on personnel and human resources development to ensure that the quality of management services provided by OPM would be at the required/desired level.

5.4

Failure to obtain banking facilities As disclosed in Section 2.11 of this announcement, OPM may be seeking financing facilities to fund the Concession Cost. In the event that OPM is unable to obtain the required banking facilities or if obtained, the terms and conditions may not be favourable, it will affect the future financial performance of OPM and the BKCB Group ultimately. Any failure in securing the necessary financing facilities may adversely affect the ability of OPM to fund the Concession Cost and potentially result in the delay of completion. Nonetheless, the Group will seek to limit these risks through, inter-alia, sourcing for financing facilities with terms and conditions most favourable to the Group pursuant to the Concession and to undertake proactive measures such as careful cash flow planning.

5.5

Political, economic and regulatory risks Adverse changes in political, economic and regulatory conditions in Malaysia could materially affect the financial and prospects of the Group and OPM. Amongst the political, economic and regulatory uncertainties are the changes in the risks of economic downturn, unfavourable monetary and fiscal policy changes, exchange control regulations and introduction of new rules and regulation, changes in interest rates, inflation and taxation, changes in political leadership and unfavourable changes in the governments' policies on the construction and education industries. In mitigating such risk, the Group will continue to review its business development strategies in response to the changes in political, economic and regulatory conditions. However, there can be no assurance that adverse political, economic and regulatory changes in Malaysia will not materially affect the Group's business.

10

6.

INDUSTRY OVERVIEW AND PROSPECTS

6.1

Overview and outlook of the Malaysian economy The Malaysian economy expanded by 4.3% in the third quarter of 2016 (2Q 2016: 4.0%), underpinned mainly by continued expansion in private sector spending and additional support from net exports. On the supply side, growth continued to be driven by the major economic sectors. On a quarter-on-quarter seasonally-adjusted basis, the economy recorded a growth of 1.5% (2Q 2016: 0.7%). Overall, domestic demand grew at a more moderate pace, as the sustained growth in private sector activity was more than offset by the slower growth in public spending. Private consumption grew by 6.4% (2Q 2016: 6.3%), supported by continued wage and employment growth as well as the increase in minimum wage effective 1 July 2016. Private investment registered a growth of 4.7% in the third quarter (2Q 2016: 5.6%), supported primarily by continued capital spending in the services and manufacturing sectors. Growth of public consumption moderated to 3.1% during the quarter (2Q 2016: 6.5%) due to lower spending on supplies and services, which partially offset the higher spending on emoluments. Public investment growth contracted by 3.8% (2Q 2016: 7.5%), attributable mainly to lower spending on fixed assets by the Federal Government. On the supply side, growth in the third quarter was supported mainly by the services and manufacturing sectors, while the agriculture sector remained weak. The expansion in the services sector was underpinned primarily by private consumption activity, while growth in the manufacturing sector was supported by export-oriented industries. In the construction sector, growth continued to be driven by civil engineering activity, while the mining sector expanded at a faster pace on account of higher crude oil production. Growth in the agriculture sector, however, remained in contraction, attributable largely to the lagged impact of El Niño on crude palm oil (CPO) yields. Inflation, as measured by the annual change in the Consumer Price Index (CPI), moderated further to 1.3% in the third quarter of 2016 (2Q 2016: 1.9%). During the quarter, inflation in the food and non-alcoholic beverages category was lower at 3.4% (2Q 2016: 4.2%). Inflation in the transport category also registered a larger decline of 7.4% in the third quarter of 2016 (2Q 2016: 6.6%). The ringgit depreciated against most major and regional currencies during the quarter. This was a reflection of the shift in investor sentiments and the rebalancing activity of portfolio investors throughout the quarter, driven mainly by external events. While all regional currencies were affected by the continued uncertainty over the timing of US interest rate normalisation, the ringgit and the currencies of other commodity-exporting countries were faced with additional adjustments due to the highly volatile global crude oil prices during the quarter. Overall, the ringgit depreciated by 3.0% against the US dollar during the quarter. The ringgit also depreciated against the euro (-3.9%), the Japanese yen (-4.2%) and the Australian dollar (-5.5%), but appreciated against the pound sterling (0.2%). The ringgit also depreciated against all regional currencies except the Philippine peso, by between 1.8% and 7.3%. The Malaysian economy is expected to expand by 4-4.5% in 2016. Domestic demand, particularly private sector activity will continue to be the key driver of growth. Private consumption is expected to remain supported by wage and employment growth, with additional impetus coming from announced Government measures to increase disposable income. Investment activity will continue to be anchored by the on-going implementation of infrastructure projects and capital spending in the manufacturing and services sectors. On the external front, export growth is expected to remain weak following subdued demand from Malaysia’s key trading partners. Overall, while domestic conditions remain resilient, uncertainties in the external environment may pose downside risks to Malaysia’s growth prospects. (Source: Bank Negara Malaysia, Quarterly Economic Bulletin on the Economic and Financial Developments in the Malaysian Economy in the Third Quarter of 2016)

11

Malaysia progressed further towards its vision of a high-income and advanced nation despite heightened uncertainties in the external environment. Global growth remains moderate, weighed down by volatility in the financial market, prolonged low commodity prices and slower growth in advanced economies. Given the degree of openness, these uncertainties, to a certain extent, will impact the Malaysian economy through trade and financial channels. Against this backdrop, on 28 January 2016, the Government took pre-emptive measures to recalibrate the 2016 Budget to sustain economic growth and more importantly safeguard the wellbeing of the rakyat. With the addition of 11 new measures to the 2016 Budget, coupled with the nation's strong economic fundamentals, gross domestic product (GDP) will remain on its growth trajectory, recording 4% 4.5% in 2016. Malaysia's 4.1% growth in the first half of 2016 (January June 2015: 5.3%) was mainly driven by domestic demand, which grew at a steady pace of 5% (January - June 2015: 6.3%) on account of private sector spending. Private consumption expanded 5.8% (January – June 2015: 7.7%), mainly driven by the stable labour market and income growth. Gross fixed capital formation (GFCF) increased 3.2% (January - June 2015: 3.9%), mainly led by private investment activity, which grew 4% (January - June 2015: 7.4%). The surplus in the goods and services account of the balance of payments narrowed to RM31.8 billion (January - June 2015: RM42.8 billion) following weak global demand and declining commodity prices. Given the nation’s strong economic fundamentals coupled with the 2017 Budget strategies and programmes, the economy is expected to expand between 4% and 5% in 2017. The expansion translates into gross national income (GNI) per capita growth of 5% from RM37,812 to RM39,699. On the demand side, growth will emanate from domestic demand, particularly private consumption and private investment expenditures which are expected to expand 6.3% and 5.7%, respectively. In tandem with higher investment activities, the savings-investment gap is expected to narrow to 0.5% - 1.5% of GNI (2016: 1% - 1.5%). Inflation will remain manageable, while the economy are expected to contribute to growth, with the services and manufacturing sectors spearheading the expansion. With the Government’s commitment to enhancing revenue and rein in expenditure, the fiscal deficit is expected to improve further to 3% of GDP. These developments will strengthen the economic fundamentals and augurs well for a nation in transition from an upper-middle to a high-income and advanced nation. (Source: Ministry of Finance, Economic Report 2017) 6.2

Overview and outlook of the Malaysian property/construction sector The construction sector grew by 7.9% (2Q 2016: 8.8%), supported mainly by activity in the civil engineering sub-sector following progress in existing petrochemical, transport and utility projects. The residential sub-sector recorded higher growth, supported by new and ongoing construction activity in the mass-market housing segments, while growth in the non-residential sub-sector was affected by the lower activity for commercial projects. In the special trade sub-sector, growth moderated reflecting slower early-work activities, such as earthworks and land reclamation works. (Source: Bank Negara Malaysia, Quarterly Economic Bulletin on the Economic and Financial Developments in the Malaysian Economy in the Third Quarter of 2016) Value-added of the construction sector recorded a strong growth of 8.4% during the first half of 2016 (January – June 2015: 7.6%). The acceleration of civil engineering works and sustained expansion in residential activities outweighed the tapering growth in the non-residential subsector. Overall, these three property subsectors contributed the highest share (more than 80%) of all construction activities. Total value of construction works completed during the first half of 2016 expanded 11.4% to RM62 billion with 11,881 projects (January – June 2015: 11.6%; RM56 billion; 12,158 projects). The civil engineering subsector contributed 33.2% to the total value of construction works, followed by non-residential (32.1%), residential (29.8%) and specialised construction activities (4.9%) subsectors. The private sector continued to dominate construction activity with a share of 66.3% in the first half of 2016. For the year, the construction sector is expected to expand 8.7% (2015: 8.2%).

12

The civil-engineering subsector recorded a double-digit growth of 21.4%, supported by investment in petrochemical industries and ongoing infrastructure works (January – June 2015: 2.9%). These include the construction of Refinery and Petrochemical integrated Development (RAPID); Independent Deepwater Petroleum Terminal Phase 2 Pengerang; and Petronas LNG Complex Bintulu. The upgrading of Klang Valley Double Track Rawang – Salak Selatan Line; construction of new Deep water Terminal at Kuantan Port, Pan Borneo Highway Phase 1 and Water Supply Scheme Kuala Terengganu North; as well as road upgrading works, especially in Selangor, Pahang and Johor are expected to further augment the growth of this subsector. Construction activity in the non-residential subsector grew at a moderate pace of 3% (January – June 2015: 19.8%). This was mainly due to a further decline in construction starts particularly in the industrial (-77,1%), shopping complexes (-43.6%) and shops (-36.5%) segments (January – June 2015: -21.5%; 618.7%; 156.7%). The Purpose-Built Office (PBO) segment improved with the incoming supply rebounding 28.4% to 2 million square metres (sm), while planned supply increased sharply by 56% to 1 million sm (January – June 2015: -15.9%; 1.6 million sm; 36.6%; 0.7 million sm). Shop segment recorded 6,513 transactions worth RM4.7 billion during the first half of 2016, constituting 56% of total commercial property transactions (January – June 2015: 10,045 transactions; RM7.9 billion). Johor contributed the highest market volume of 17.5% followed by Se|angor (16.1%). The shop overhang increased 22.6% to 5,024 units valued at RM2.5 billion during the period following a more cautious sentiment among businesses (January – June 2015: -14.8%; 4,097 units; RM1.7 billion). However, demand for commercial buildings remained favourable with the average occupancy rate of retail space at 82.2% and office (83.5%), reflecting sustained demand for commercial space in prime areas. As at end-June 2016, the existing stock of shopping complexes and industrial segment stood at 14.2 million sm and 106,453 units, respectively (end-June 2015: 13.4 million sm; 103,103 units). The Purpose-Built Office Rent Index Wilayah Persekutuan Kuala Lumpur increased 4% to 128.7 points in the second quarter of 2016 (Q2 2015: 3.5%; 123.7 points). Kuala Lumpur City Center recorded the highest rental increase of 4.2% to RM4.73 per square feet (psf), surpassing the average rate of RM4.62 psf in Wilayah Persekutuan Kuala Lumpur. (Source: Ministry of Finance, Economic Report 2017) 6.3

Prospects of OPM The BKCB Group is principally involved in the provision of mechanical and electrical engineering services, which is considered a sub-unit within the property/construction sector. Hence, the overall outlook of the mechanical and electrical engineering services would be mainly depended on the development and impact of property/construction sector within Malaysia as well as the ASEAN region where the Group has operations in. With more than 40 years’ experience in the property/construction sector, the Board and management of BKCB endeavour to continue their efforts to strengthen and improve the future performance of the Group. With the Proposed Acquisition, BKCB expects to expand its principal activities to include concession arrangements business, i.e. the provision of management and maintenance services to KUIM upon the completion of the construction project pursuant to the Concession and in return having the right to entitle to the future recurring income streams from the Concession. As such, the Proposed Acquisition is expected to provide future recurring income streams payable by KTIMB to the BKCB Group. In addition, the Board expects the Proposed Diversification to provide an alternative source of income, in addition to the existing core business of the Group. Premised on the above, the prospects of the BKCB Group is expected to be reasonably favourable and positive. The Proposed Acquisition will also further strengthen the Group’s profile and place the Group in a stronger financial footing in securing future projects. As such, the prospects of the enlarged BKCB Group, including OPM, are expected to be reasonably optimistic going forward.

13

7.

FINANCIAL EFFECTS OF THE PROPOSALS The Proposed Diversification will not have any effect on the share capital, NA, gearing, earnings, earnings per BKCB Share (“EPS”) and substantial shareholders’ shareholdings of the Company and/or the Group (whichever applicable). The proforma effects of the Proposed Acquisition on the share capital, NA, gearing, earnings, EPS and substantial shareholders’ shareholdings of the Company and/or the Group (whichever applicable) are set out below for illustration purpose only.

7.1

Issued and paid-up share capital The proforma effects of the Proposed Acquisition on the issued and paid-up share capital of BKCB are as follows:-

7.2

No. of BKCB Shares

RM

Issued and paid-up share capital as at LPD To be issued pursuant to the Proposed Acquisition

212,594,140 75,000,000

42,518,828 15,000,000

Enlarged issued and paid-up share capital

287,594,140

57,518,828

NA and gearing Based on the audited consolidated financial statements of BKCB as at 31 March 2016, the proforma effects of the Proposed Acquisition on the consolidated NA and gearing of the Group is as follows:Audited as at 31 March 2016 (RM’000)

After the Proposed Acquisition (RM’000)

42,918 1,593 21,039 10,070 (2,946) 10,784 (3,462) (23,717)

57,918 1,593 21,039 10,070 (2,946) 10,784 (3,462) * (24,417)

Shareholders’ funds / NA

56,279

70,579

No. of BKCB Shares (’000) NA per BKCB Share (RM) Borrowings (RM’000) Gearing (times)

214,591 0.26 195,214 3.47

289,591 0.24 195,214 2.77

Share capital Share premium Capital reserves Warrant reserve Fair value reserve Foreign exchange reserve Treasury shares Accumulated losses

Note:*

After deducting the estimated expenses of RM0.70 million for the Proposals. 14

7.3

Earnings and EPS The Proposed Acquisition is not expected to have any material effect on the Group’s consolidated earnings for the financial year ending 31 March 2017 as the Proposed Acquisition is expected to be completed by the first half of 2017. However, the Proposed Acquisition is expected to contribute positively to the future earnings of the BKCB Group when the expected income in relation to the Concession is realised.

[The rest of this page is intentionally left blank]

15

7.4

Substantial shareholders' shareholding The proforma effects of the Proposed Acquisition on the substantial shareholders’ shareholdings of BKCB are as follows:As at LPD

Substantial shareholders Bintai Holdings (M) Sdn Bhd Kinden Corporation Kenyalang Property Development Sdn Bhd Ong Puay Koon Ong Choon Lui Nusankota Ariff Farhan Doss

Direct No. of BKCB Shares

After the Proposed Acquisition

Indirect No. of (a) % BKCB Shares

Direct No. of (a) % BKCB Shares

Indirect No. of (a) % BKCB Shares

(a)

%

41,800,000 21,348,750 15,300,000

19.66 10.04 7.20

-

-

41,800,000 21,348,750 15,300,000

14.53 7.42 5.32

-

-

845,500 -

0.40 -

(b) 43,130,000

20.29 20.69 -

845,500 50,025,000 -

0.29 17.39 -

(b) 43,130,000

15.00 15.29 17.39

(c) 43,975,500

-

(c) 43,975,500

(d) 50,025,000

Notes:(a)

Computed based on the issued and paid-up share capital which excludes 1,997,600 treasury shares held by the Company as at the LPD.

(b)

Deemed interested via his shareholdings in Bintai Holdings (M) Sdn Bhd and Bin Tai Holdings Pte Ltd pursuant to Section 6A of the Act.

(c)

Ong Choon Lui is deemed interested in the BKCB Shares held by Ong Puay Koon by virtue of him being a person connected to him.

(d)

Deemed interested via his shareholdings in Nusankota pursuant to Section 6A of the Act.

16

8.

APPROVALS REQUIRED AND INTER-CONDITIONALITY The Proposals are subject to the following approvals being obtained:(a)

Bursa Securities for the listing of and quotation for the Consideration Shares on the Main Market of Bursa Securities;

(b)

the shareholders of BKCB at an extraordinary general meeting to be convened for the Proposals; and

(c)

any other relevant authorities, if required.

Both the Proposed Acquisition and the Proposed Diversification are inter-conditional upon each other. The Proposals are not conditional upon any other proposals undertaken or to be undertaken by the Company.

9.

INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED None of the Directors and/ or major shareholders of BKCB and/or persons connected to them have any interest, direct or indirect, in the Proposals.

10.

DIRECTORS' STATEMENT The Board after having considered all aspects of the Proposals including the rationale, future prospects of OPM and the risks factors relating to the Proposed Acquisition is of the opinion that the Proposals are in the best interest of the Group.

11.

APPLICATION TO THE AUTHORITIES The application to Bursa Securities for the listing of and quotation for the Consideration Shares is expected to be submitted to Bursa Securities within two (2) months from the date of this announcement.

12.

ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances and subject to all requisite approvals being obtained, the Board expects the Proposals to be completed by the first half of 2017.

13.

ADVISER KAF IB has been appointed by the Company to act as the Adviser for the Proposals.

14.

HIGHEST PERCENTAGE RATIO The highest percentage ratio applicable to the Proposed Acquisition pursuant to paragraph 10.02(g) of the Listing Requirements is 39.2%.

17

15.

DOCUMENTS FOR INSPECTION The SSA and the Valuation Report will be made available for inspection at the Registered Office of BKCB at No. 430, Jalan Sultan Azlan Shah, 51200 Kuala Lumpur during normal business hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement.

This announcement is dated 17 November 2016.

18