The various legal suits, disputes and claims of which the HoA serves as the Global Settlement framework consist of:-

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1 BENALEC HOLDINGS BERHAD ( BENALEC OR THE COMPANY ) PROPOSED RATIFICATION OF THE HEADS OF AGREEMENT ( HoA ) FOR THE GLOBAL SETTLEMENT BETWEEN THE COMPANY, DATUK LEAW TUA CHOON ( DLTC ), DATUK LEAW AH CHYE ( DLAC ) AND LEAW YONGENE ( LYG ) ( PROPOSED HoA RATIFICATION ) 1. INTRODUCTION We refer to the announcements made by the Company on 5 December 2013, 10 January 2014 and 13 March 2014 in relation to the above matter wherein the Board of Directors ( BOD ) announced that the Company, on behalf of itself and all its subsidiaries ( Benalec Group or the Group ), had entered into a HoA with DLTC, DLAC and LYG on 4 December 2013, to set out the framework for settlement of all legal suits, disputes and claims between the Group and the aforesaid parties i.e. the Global Settlement. The various legal suits, disputes and claims of which the HoA serves as the Global Settlement framework consist of:- i. The Land Suit ii. The Citypoint Suit iii. The Pulau Indah Suit iv. The Sunshine Bistro Restaurant Vacant Possession v. The Access Road vi. The Vimix Batching Plant vii. The Benalec Shipyard viii. Resignation of Directors ix. Other Matters For information purposes, at the time of entering into the HoA, both DLTC and DLAC were Non- Independent Non-Executive Directors and major shareholders of Benalec, whilst LYG is the son of DLTC. Therefore, the HoA (and hence the corresponding Global Settlement) is deemed to be a related party transaction in accordance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities )( Listing Requirements ) and shall be subject to the shareholders ratification. Further to that, the major settlement agreed between the parties as part of the Global Settlement relates to the Land Suit, being KL High Court Civil Suit No. 22NCVC /2013 where the Company and Benalec Sdn Bhd ( BSB ) were claiming against, inter alia, DLTC, DLAC and LYG for certain reliefs in respect of the sale and purchase agreements ( SPA(s) ) for the disposal of four (4) parcels of vacant leasehold land held under PT 1801 to PT 1804, H.S.(D) to H.S.(D) (Lots no to 12467), all of Kawasan Bandar VI, Melaka Tengah, Melaka measuring in aggregate approximately 93,250 square metres ( )( the Land ) by Strategic Land Sdn Bhd ( SLSB ) to Sunshine 2000 Sdn Bhd ( Sunshine 2000 ) and Seaside Synergy Sdn Bhd ( Seaside Synergy ) for a total sale consideration of RM28,067, ( the Land SPAs ) satisfied entirely in cash. The Global Settlement with regards to the Land Suit requires DLTC and DLAC to procure Sunshine 2000 and Seaside Synergy (the purchasers pursuant to the Land SPAs or the Land Purchasers ) to consent to the rescission and cancellation of the Land SPAs and following thereto, to restore the titles of the subject parcels of land to SLSB (the vendor pursuant to the Land SPAs or the Land Vendor ) and the purchase monies shall be refunded to Sunshine 2000 and Seaside Synergy. Therefore, due to the terms of the settlement of the Land Suit between the Company on the one part and DLTC, DLAC and LYG on the other part, the Land SPAs are also deemed as a related party transaction in accordance with the Listing Requirements and on this basis, the Land SPAs together with the HoA shall collectively be subject to the shareholders ratification ( Proposed HoA Ratification ). 1

2 2. THE LAND SUIT 2.1 Background Information January/March 2012 November 2013 December 2013 Execution of the Land SPAs for the sale of the Land by SLSB, a wholly-owned subsidiary of BSB, which in turn is a whollyowned subsidiary of Benalec, to Sunshine 2000 and Seaside Synergy. The details and salient terms of the Land SPAs are set out in Section 2A below. As announced on 18 November 2013, Benalec and SLSB had commenced the Land Suit on 6 November 2013 against DLTC, DLAC, LYG, Sunshine 2000, Seaside Synergy, Su Seong Lin, Low Kim Yeok and Pong Kim Siew for, inter alia, loss and damage as well as an account for secret profits arising from the Land SPAs and as against DLTC and DLAC, for loss and damage and an account of all secret profits, arising from a breach of their obligations as Executive Directors of Benalec and SLSB in respect of the Land. As announced on 5 December 2013, the parties signed the HoA for Global Settlement which contains settlement provisions as set out in Section 2.2 on 4 December Subsequently, on 26 December 2013, the parties entered into a consent judgment (refer to Section 2.2 below) which would effectively reverse all transactions pursuant to the Land SPAs and restore the original position of each party as if the Land SPAs had never existed. The consent judgment is legally binding upon all the parties. 2.2 Settlement Provisions in HoA Provisions DLTC and DLAC shall procure Sunshine 2000 and Seaside Synergy to consent to an order that the Land SPAs shall be rescinded and cancelled and the Land shall be restored to SLSB and the purchase monies shall be returned to Sunshine 2000 and Seaside Synergy respectively; Pursuant to such rescissions, DTLC and DLAC shall at their own cost procure Sunshine 2000 and Seaside Synergy to transfer the Land titles and ensure that the Land shall as soon as reasonably possible be re-registered in the name of SLSB as legal and beneficial owner; Status Completed. As announced on 10 January 2014, the consent judgment was recorded, on a withoutadmission-of-liability basis, before the Judicial Commissioner of Kuala Lumpur High Court as between the plaintiffs and the defendants on 26 December 2013 (and amended on 30 January 2014) wherein the Land SPAs were rescinded and cancelled with the restoration of land titles and refund of sales consideration to follow in due course. Completed. The titles to the Land were successfully re-registered, free from any encumbrances, under the name of SLSB on 19 February 2014 with no cost incurred by the Group. 2

3 Provisions SLSB shall refund the purchase monies paid under the Land SPAs to Sunshine 2000 and Seaside Synergy within twenty-one (21) days of the issued documents of title for the Land being delivered to SLSB showing that it has been re-registered as the lawful proprietor of the Land; DLTC and DLAC shall as soon as reasonably possible procure Pong Kim Siew to refund the commission sum of RM561, in full to Benalec; and The aforesaid consent judgment shall be entered on the basis that Benalec shall withdraw and shall cause BSB and SLSB to withdraw all other claims against the defendants in the Land Suit except as provided for herein with no admission as to liability, no order as to costs and no liberty to file afresh. DLTC and DLAC shall procure the other defendants to agree to the aforesaid consent judgment and withdrawal. Status Pending. As at 31 March 2014, SLSB had partially refunded the sales consideration, after deducting commission, of RM10,280, and RM10,280, to Sunshine 2000 and Seaside Synergy respectively. The management is in discussions with Sunshine 2000 and Seaside Synergy to extend the refund period of 21 days. Completed. As agreed between the parties pursuant to the consent judgment, this commission sum of RM561, had been deducted in full as at 7 March 2014 against refund of sales consideration to Sunshine 2000 and Seaside Synergy. Completed. As mentioned above, all the plaintiffs and the defendants had consented to the consent judgment on the basis of no admission as to liability, no order as to costs and no liberty to file afresh. Besides that, there were no other claims between the parties. Based on the above, the settlement in relation to the Land Suit has been completed save for the refund of balance sales consideration of RM3,753, and RM3,752, to Sunshine 2000 and Seaside Synergy respectively. The management of Benalec expects to settle these remaining amounts by 1st half of For information purposes, subsequent to the recovery of the titles to the Land, the Group received several offers for the Land. As announced on 13 March 2014, SLSB entered into a SPA for the disposal of this Land at RM48 per square foot or a total sales consideration of RM48,115, to a third party purchaser, Teobros Development Sdn Bhd ( Subsequent Sale ). The said sale consideration was arrived at on a willing-buyer willing-seller basis after taking into consideration the preliminary aggregate open market value within the vicinity. The Subsequent Sale is not subject to the shareholders approval. 3

4 2A THE LAND SPAs 2A.1 Details of the Land The Land comprises four (4) parcels of vacant 99-year leasehold land (leases expiring on 21 July 2110) measuring in aggregate approximately 93,250 with its express conditions of land use being for commercial buildings only. The Land was held by SLSB under four (4) separate issue documents of title. The Land was reclaimed land received by the Group for works it had completed in Melaka in relation to the construction and maintenance of reclamation and shore protection works for 180 acres of reclaimed land for Strategic Oscar Sdn Bhd by way of settlement in-kind. The said project commenced in year 2009 and was completed in year The Land is located in the mixed development locality of Kota Shah Bandar and Taman Kota Laksamana and is situated within 3.3 kilometres west of Melaka City Centre and approximately 9.0 kilometres southwest of Ayer Keroh Town. Access from the Melaka City centre is via Jalan Hang Tuah, Jalan Ong Kim Wee, Jalan Syed Abdul Aziz and finally turning right onto Lebuhraya Pantai (Coastal Highway) leading to where the Land is located. It is also accessible from Mahkota Parade via Jalan Syed Abdul Aziz and finally onto Lebuhraya Pantai (Coastal Highway) leading to where the Land is located. The Land is directly accessible from the Lebuhraya Pantai (Coastal Highway) which links Duyong Mahkota Parade Kota Laksamana Klebang. The Land is free from encumbrances. 4

5 Further details of the Land are as set out below:- Title particulars Registered owner Land area (approximately) Land cost/ Net book value ( NBV )* (RM) Approximate market value^ (RM) Expiry date of lease (i) H.S.(D) No , PT No (Lot no ), Kawasan Bandar VI, Daerah Melaka Tengah, Melaka SLSB 23,320 3,753, ,530, July 2110 (ii) H.S.(D) No , PT No (Lot no ), Kawasan Bandar VI, Daerah Melaka Tengah, Melaka 23,310 3,753, ,527, July 2110 (iii) H.S.(D) No , PT No (Lot no ), Kawasan Bandar VI, Daerah Melaka Tengah, Melaka 23,310 3,753, ,272, July 2110 (iv) H.S.(D) No , PT No (Lot no ), Kawasan Bandar VI, Daerah Melaka Tengah, Melaka 23,310 3,897, ,272, July 2110 TOTAL 93,250 15,158, ,602, Notes:- * Based on Benalec s audited financial statements for the financial year ended 30 June 2011 ^ Based on the rate of approximately RM30 per square foot for (i) and (ii) above and RM25 per square foot for (iii) and (iv) above as ascribed by the Land Valuer in its valuation report dated 19 March 2014 for valuation dates of 1 March 2012 and 1 January 2012 respectively 5

6 2A.2 Details and Salient Terms of the Land SPAs The Land SPAs entails the disposal of the Land, free from all encumbrances, held by SLSB, a wholly-owned subsidiary of BSB, which in turn is a wholly-owned subsidiary of Benalec, to Sunshine 2000 and Seaside Synergy, of which the details are summarised below:- Date of agreement 18 January March 2012 Vendor SLSB SLSB Purchaser Sunshine 2000 Seaside Synergy Lot no. & Land area 1 Two (2) parcels of land:- 1) H.S.(D) PT 1803 (Lot no ) of 23,310 (250, square feet) 2) H.S.(D) PT 1804 (Lot no ) of 23,310 (250, square feet) Two (2) parcels of land:- 1) H.S.(D) PT 1801 (Lot no ) of 23,320 (251, square feet) 2) H.S.(D) PT 1802 (Lot no ) of 23,310 (250, square feet) Land type Vacant land with its express conditions of land use being for commercial buildings only Vacant land with its express conditions of land use being for commercial buildings only Location Kawasan Bandar VI, Daerah Melaka Tengah, Melaka Kawasan Bandar VI, Daerah Melaka Tengah, Melaka Tenure 99-year leasehold, expiring on 21 July year leasehold, expiring on 21 July 2110 Selling price RM28 per square foot RM28 per square foot Total sales RM14,033, RM14,033, consideration Mode of settlement Cash Cash Note:- 1 The lot no. and land area are based on a final survey carried out by the Jabatan Ukur and Pemetaan Malaysia and its certified plan no dated 12 October A.2.1 Payment Terms and Mode of Settlement The total sale price of the Land was RM28,067, comprising the following:- Lot No. Purchaser Vendor Amount (RM) i. H.S.(D) PT 1801 (Lot no ), Kawasan Bandar VI, Daerah Melaka Seaside Synergy SLSB 7,016, Tengah, Melaka ii. H.S.(D) PT 1802 (Lot no ), Kawasan Bandar VI, Daerah Melaka Seaside Synergy SLSB 7,016, Tengah, Melaka iii. H.S.(D) PT 1803 (Lot no ), Kawasan Bandar VI, Daerah Melaka Tengah, Melaka Sunshine 2000 SLSB 7,016, iv. H.S.(D) PT 1804 (Lot no ), Kawasan Bandar VI, Daerah Melaka Tengah, Melaka Sunshine 2000 SLSB 7,017,

7 The sale price was to be settled in the following manner:- Payment manner Salient terms SPA with Sunshine 2000 (RM) The deposit paid for the sale of the Land to the Land Vendor A portion of deposit sum was, at the request of the Land Vendor and for the account of the Land Vendor, paid by the Land Purchasers to the Land Vendor s land broker, Pong Kim Siew, the receipt of which the Land Vendor hereby acknowledged; and 280, SPA with Seaside Synergy (RM) 280, The balance deposit sum shall be paid within one (1) month from the date of these Land SPAs or such date as may be agreed in writing between the parties. 1,122, ,122, The balance of sale price of the Land payable to the Land Vendor The balance sale price shall be paid within three (3) months from the date of these Land SPAs. In the event that any of the Land Purchasers was unable to complete the sale and purchase within the stipulated time, then the Land Vendor shall, at the request of the said Land Purchaser, grant an extension of one (1) month from the expiration of the stipulated three (3) months subject to the said Land Purchaser paying an interest at the rate of eight per centum (8%) per annum on the balance sum or any amounts thereof remaining unpaid to the Land Vendor calculated from the commencement of the one (1) month extension until the date of full settlement all within the extended payment period. 12,630, ,629, Total sale price 14,033, ,033, A.2.2 Delivery of Vacant Possession The Land was sold with vacant possession. The date of delivery of vacant possession of the Land would be upon full payment of the balance sale price. 2A.2.3 Transfer of Rights and Ownership Upon the Land Vendor receiving the balance of the sale price, the Land Purchasers shall be entitled to possession of, and receipt of rents and profits from, obtained and arising out of and in respect of the Land. 7

8 2A.2.4 Default by the Land Vendor In addition and not in derogation to any other rights or remedies which the Land Purchasers may be entitled to against the Land Vendor, in the event of any breach by the Land Vendor of any of the provisions of these Land SPAs or in the event the Land Vendor shall refuse or fail to complete this transaction for any reason, the Land Purchasers shall be entitled to the remedy at law for specific performance against the Land Vendor and all costs and expenses incurred by the Land Purchasers in connection therewith shall be borne and paid by the Land Vendor. 2A.2.5 Default by the Land Purchasers In the event any of the Land Purchasers fails to pay the Land Vendor the balance sum of the sale price in the manner and within the time stipulated in the Land SPAs, the respective Land SPA may be terminated by the Land Vendor in writing whereupon the Land Vendor shall be entitled to the sum of RM1.4 million in relation to each of the Land SPAs as agreed liquidated ascertained damages ( LAD ). 2A.2.6 Consequence of Non-Registration In the event the relevant documents necessary for effecting the transfer of the Land to the Land Purchasers cannot be registered without any default, wilful neglect, omission or blameworthy conduct of the parties or their respective solicitors, and provided that the Land Purchasers return or cause to be returned to the Land Vendor the original document of title to the respective Land, all the relevant documents in its possession and the vacant possession of the said Land (if it had already been delivered to the said Land Purchaser) at the said Land Purchaser s own costs and expenses, the Land Vendor shall, upon receipt of the same, simultaneously refund all monies paid by the said Land Purchaser pursuant to the provisions of the respective Land SPA without any interest or compensation and this said Land SPA shall be deemed to be terminated. 2A.2.7 Obligation of the Land Vendor Upon the execution of the Land SPAs, the Land Vendor was under the obligation to evict all occupiers and/or squatters before delivering vacant possession of the Land to the Land Purchasers. 2A.3 Basis and Justification of Arriving at the Sales Consideration The sales consideration was arrived at on a willing-buyer willing-seller basis after taking into consideration, amongst others, the Group s previous sales of lands in the vicinity and the prevailing market price during that period, as well as the general market sentiment and property market conditions in Melaka vis-à-vis the location of the Land. The sales consideration represents a premium of RM12.91 million or 85.2% over the last audited NBV of the Land as at 30 June For information purposes, based on the valuation report dated 19 March 2014, the sales consideration of RM28.1 million or approximately RM28 per square foot was higher than the aggregate open market value of the Land as at 1 January 2012 and 1 March 2012 as ascribed by the Land Valuer, amounting to a total of RM27.6 million with the Land value ranging from RM25 per square foot to RM30 per square foot. Therefore, the sales consideration represents a premium of RM467, or 1.7% over the aggregate valuation of RM27.6 million accorded by the Land Valuer. 8

9 2A.4 Original Cost and Date of Investment by the Land Vendor Lot No. Original Cost of Investment RM Date of Investment i. H.S.(D) PT 1801 (Lot no ), Kawasan Bandar VI, Daerah Melaka Tengah, Melaka 3,753, July 2011 ii. H.S.(D) PT 1802 (Lot no ), Kawasan 3,753, July 2011 Bandar VI, Daerah Melaka Tengah, Melaka iii. H.S.(D) PT 1803 (Lot no ), Kawasan 3,753, July 2011 Bandar VI, Daerah Melaka Tengah, Melaka iv. H.S.(D) PT 1804 (Lot no ), Kawasan 3,897, July 2011 Bandar VI, Daerah Melaka Tengah, Melaka TOTAL 15,158, A.5 Utilisation of Proceeds The gross proceeds of RM28.07 million arising from the Land SPAs was utilised by the Group mainly for working capital purposes. Working capital consists of general operating expenses and land reclamation activities which includes payment of staff salaries, income taxes and other administrative expenses as well as purchase of materials and payment for sub-contracted services. 2A.6 Liabilities to be Assumed The Land Purchasers did not assume any liabilities including contingent liabilities and guarantees of the Group pursuant to the Land SPAs. 2A.7 Background Information on the Land Purchasers Sunshine 2000 Sunshine 2000 was incorporated in Malaysia on 6 September 1999 under the Companies Act, 1965 ( the Act ) as a private limited company. Sunshine 2000 is principally involved in property investment holding. As at 31 March , the authorised share capital of Sunshine 2000 is RM100,000 comprising 100,000 ordinary shares of RM1.00 each of which 2 ordinary shares of RM1.00 each have been issued and fully paid-up. The shareholders and directors of Sunshine 2000 and their direct and indirect shareholdings in Sunshine 2000 as at the date of SPA with Sunshine 2000 and as at 31 March 2014 are as follows:- Direct Indirect Shareholders and Directors Nationality No. of shares % No. of shares % As at the date of SPA Su Seong Lin Malaysian Low Kim Yeok Malaysian As at 31 March 2014 Chong Ah Lan Malaysian Chew Chong Weng Malaysian Note:- 1 These details remain unchanged since the date of the respective Land SPAs 9

10 Seaside Synergy Seaside Synergy was incorporated in Malaysia on 15 February 2012 under the Act as a private limited company. Seaside Synergy is principally involved in property investment holding. As at 31 March , the authorised share capital of Seaside Synergy is RM100,000 comprising 100,000 ordinary shares of RM1.00 each of which 2 ordinary shares of RM1.00 each have been issued and fully paid-up. The shareholders of Seaside Synergy and their direct and indirect shareholdings in Seaside Synergy as at the date of SPA with Seaside Synergy are as follows:- Direct Indirect Shareholders Nationality No. of shares % No. of shares % Abdul Mutalib bin Hassan Malaysian Mahzani bin Mat Rizki Malaysian As at the date of SPA with Seaside Synergy, Wan Bak Choi and Abdul Mutalib bin Hassan are directors of Seaside Synergy, of which the former does not have any interests in Seaside Synergy. As at 31 March 2014, the shareholders and directors of Seaside Synergy and their direct and indirect shareholdings in Seaside Synergy are as follows:- Direct Indirect Shareholders and Directors Nationality No. of shares % No. of shares % Chong Ah Lan Malaysian Chew Chong Weng Malaysian Note:- 1 These details remain unchanged since the date of the respective Land SPAs 3. THE CITYPOINT SUIT 3.1 Background Information May 2012 August 2012 November 2013 On 16 May 2012, Benalec Diversity Sdn Bhd ( BDSB ), a whollyowned subsidiary of BSB, which in turn is a wholly-owned subsidiary of Benalec, had signed a letter of award granting Citypoint Engineering Sdn Bhd ( Citypoint ) a two (2)-year contract for transporting and unloading sea sand at designated stockpile areas in Melaka. An addendum was signed on 13 August 2012 to award Citypoint further contract works for the extraction of sea sand at designated sand concession area and discharging of the said sea sand onto barge and/or sand carrier. Subsequently, disputes arose, inter alia, on the quantum and value of work actually carried out by Citypoint. As announced on 18 November 2013, Benalec and BDSB had commenced a civil suit via a Writ of Summons on 6 November 2013 against DLTC, DLAC, LYG and Citypoint for, inter alia, a declaration that the Letter of Award was void and for loss and damage as well as for an account of secret profits arising from a breach of DLTC s and DLAC s obligations as Executive Directors of Benalec and BDSB in respect of certain dealings concerning Citypoint ( the Citypoint Suit ). 10

11 A separate Originating Summons was also filed against Citypoint to dispute inter alia, the demanded sum of RM18,804, for the cost of services rendered, on the grounds that the sum was unjustified. In a counter response, Citypoint had, on 19 November 2013, served a winding up notice on BDSB, demanding payment of the said demanded sum. December 2013 Pursuant to the HoA, Benalec reached a settlement with Citypoint in respect of its claims under the said Writ of Summons. On 2 December 2013, the final settlement amount was reached. Both the winding up notice and Originating Summons were withdrawn by Citypoint and Benalec on 9 December 2013, respectively. The agreed sum at RM15,983, shall be settled in installments, as set out below, until 2 July Settlement Provisions in HoA Period of settlement Amount (RM) Within two (2) weeks after Citypoint s solicitors writing 9,000, to Benalec s and BDSB s solicitors confirming that:- i. Citypoint will withdraw the winding up notice; ii. Citypoint will not proceed to file any winding up petition against BDSB; iii. Both parties agree to withdraw the Originating Summons with no order as to costs; and iv. RM15,983, being the final settlement sum By 2 January ,000, By 2 February ,000, By 2 March ,000, By 2 April ,000, By 2 May ,000, By 2 June ,000, By 2 July , Total sum 15,983, As at 31 March 2014, a sum of RM12 million had been paid to Citypoint. Provisions Benalec shall cause BDSB to withdraw the Citypoint Suit against DLTC, DLAC and LYG with no admission as to liability, no order as to costs and no liberty to file afresh. Status Completed. On 10 January 2014, the Citypoint Suit was withdrawn. Other than the remainder balance of RM3,983, to be paid in accordance with the settlement schedule, the Citypoint Suit is deemed resolved. 11

12 4. THE PULAU INDAH SUIT 4.1 Background Information June/July 2010 Execution of SPAs for the purchase of land by the Pulau Indah Purchasers, as set out below, all being companies related to DLTC and DLAC, from Central Spectrum (M) Sdn Bhd ( CSSB or the Pulau Indah Vendor ). The details of these agreements are set out below:- Date of agreement 25 June June July July 2010 Vendor CSSB CSSB CSSB CSSB Purchaser Atlantic Property Sdn Bhd Oceanfront Land Sdn Bhd Oceanic Sdn Bhd Oceanview Property Sdn Bhd Lot no. & Land area Land type One (1) plot of land:- 1) Lot 7C, P.N 7932 Lot No of acres / hectares ( Atlantic Land ) Vacant land with its category of land use being for development/industrial Pulau Indah Industrial Park, Port Klang, Klang 99-year leasehold, expiring on 24 February 2097 One (1) plot of land:- 1) Lot 7D, P.N 7932 Lot No of acres / hectares ( Oceanfront Land ) Vacant land with its category of land use being for development/industrial Pulau Indah Industrial Park, Port Klang, Klang 99-year leasehold, expiring on 24 February 2097 One (1) plot of land:- 1) Lot 7A, P.N 7932 Lot No of acres / hectares ( Oceanic Land ) Vacant land with its category of land use being for development/industrial Pulau Indah Industrial Park, Port Klang, Klang 99-year leasehold, expiring on 24 February 2097 One (1) plot of land:- 1) Lot 7B, P.N 7932 Lot No of acres / hectares ( Oceanview Land ) Vacant land with its category of land use being for development/industrial Location Pulau Indah Industrial Park, Port Klang, Klang Tenure 99-year leasehold, expiring on 24 February 2097 Purchase RM8,896, RM9,397, RM9,835, RM8,000, consideration Mode of settlement Cash Cash Cash Cash September 2010 Prior to the listing of the Group, Benalec had entered into Land Reclamation Agreements with the Pulau Indah Purchasers. The details of these agreements, which were also disclosed in the listing prospectus dated 28 December 2010, are summarised below:- Nature Construction, completion and maintenance of reclamation and shore protection works on Atlantic Land Construction, completion and maintenance of reclamation and shore protection works on Oceanfront Land Construction, completion and maintenance of reclamation and shore protection works on Oceanic Land Construction, completion and maintenance of reclamation and shore protection works on Oceanview Land Date of agreement 1 September September September September 2010 Parties to the agreement 1) Atlantic Property Sdn Bhd 2) BSB 1) Oceanfront Land Sdn Bhd 2) BSB 1) Oceanic Sdn Bhd 2) BSB 1) Oceanview Property Sdn Bhd 2) BSB Land area acres acres acres acres Location Pulau Indah Industrial Park, Port Klang, Klang Pulau Indah Industrial Park, Port Klang, Klang Pulau Indah Industrial Park, Port Klang, Klang Pulau Indah Industrial Park, Port Klang, Klang Duration Three (3) years with a further extension of three (3) years Three (3) years with a further extension of three (3) years Three (3) years with a further extension of three (3) years Three (3) years with a further extension of three (3) years Contract sum RM18,467,900 RM19,507,800 RM20,417,700 RM16,606,600 Mode of settlement 67% of reclaimed land i.e acres 67% of reclaimed land i.e acres 67% of reclaimed land i.e acres 67% of reclaimed land i.e acres 12

13 November 2013 December 2013 As announced on 26 November 2013, Benalec and BSB, a wholly-owned subsidiary of Benalec, had commenced a civil suit on 21 November 2013 against DLTC, DLAC, the Pulau Indah Purchasers and Oriental Grandeur Sdn Bhd for, inter alia, orders for the Pulau Indah Purchasers to deposit, with the stakeholder, Messrs Wong Beh & Toh, the remainder purchase consideration under their respective SPAs for lands acquired from CSSB and their obligations under the respective Land Reclamation Agreements awarded to BSB ( the Pulau Indah Suit ). HoA was entered into wherein the settlement arrangements in relation to the Pulau Indah Suit are as set out below. 4.2 Settlement Provisions in HoA Provisions The sum of RM22 million held by Messrs Wong Beh & Toh shall be paid to CSSB to complete the SPAs; The Pulau Indah Purchasers shall execute Powers of Attorney in reasonable terms to be agreed to enable the plaintiffs to the Pulau Indah Suit to carry out and perform the terms of the aforesaid agreements without delay including but not limited to the subdivision and allocation of land to the respective parties. The said Land Reclamation Agreements be specifically performed by the parties thereto; Benalec shall and shall cause BSB to withdraw the Pulau Indah Suit against all the defendants in the Pulau Indah Suit with no admission of liability, no order as to costs and no liberty to file afresh. Status Completed. As announced on 10 January 2014, BSB was authorised by the Pulau Indah Purchasers, via a consent judgment on 8 January 2014, to deal with the sum of RM22 million 1 held by the stakeholder, for the payment of balance contractual sum to CSSB as and when it falls due. Completed. On 27 January 2014, a Power of Attorney was registered in the Kuala Lumpur High Court giving BSB full mandate and power to manage the Pulau Indah project on behalf of the Pulau Indah Purchasers. Completed. Pursuant to the consent judgment and Powers of Attorney executed in favour of BSB, Benalec would be able to safeguard its contract consideration and ensure timely completion of the Pulau Indah project. As at 31 March 2014, the amount due from contract customers in respect of the Pulau Indah project is RM29,672,342. Completed. The Pulau Indah Suit was withdrawn on 16 January Note:- 1 The Pulau Indah Purchasers have paid approximately 40% of the total purchase consideration to CSSB. The sum of RM22 million represents the balance payable to CSSB, being approximately 60% of the Pulau Indah Purchasers obligations under their respective SPAs which would be released to CSSB pending approval of sub-division of the lands and issuance of the individual qualified document of title by the relevant authorities. Following from the above, the Pulau Indah Suit has now been resolved. 13

14 5. THE SUNSHINE BISTRO RESTAURANT VACANT POSSESSION 5.1 Background Information The Sunshine Bistro Restaurant, known as Sunset Bistro, was a restaurant built on one of the Group s lands situated at Dataran 1Malaysia, Pantai Klebang, Melaka. Its structure was that of a typical beach café with several wooden huts erected along the Klebang beach. As announced on 17 December 2013, this parcel of land, H.S.(D) PT 556 of Pekan Klebang Seksyen II, Daerah Melaka Tengah, Melaka, was sold to Faithview Concept Development Sdn Bhd. In view of the disposal, the Sunshine Bistro Restaurant had to be vacated and demolished in order for Oceanfront Property Sdn Bhd, a wholly-owned subsidiary of BSB, which in turn is a wholly-owned subsidiary of Benalec, to deliver vacant possession of the said land to Faithview Concept Development Sdn Bhd. As such, the parties agreed to settle the matter in accordance with settlement provisions in the HoA set out below. 5.2 Settlement Provisions in HoA Provisions DLTC shall cause the premises occupied by Sunshine Bistro Restaurant to be vacated and demolished within 3 calendar months from the date of this HoA; DLTC shall cause vacant possession of the lands upon which the Sunshine Bistro Restaurant is located to be delivered to Benalec within 3 calendar months from the date of this HoA. Status Completed. As at to-date, the Sunshine Bistro Restaurant had been vacated and demolished. Completed. With the demolition of the Sunshine Bistro Restaurant, the vacant possession of the land was delivered to Benalec. The settlement provisions in the HoA in relation to this matter have been completed. 14

15 6. THE ACCESS ROAD 6.1 Background Information December 2012 Execution of SPAs for the sale of lands by few subsidiaries of Benalec to certain companies in which DLTC and LYG have substantial financial interest. The details of these transactions, as announced on 21 December 2012, are summarised below:- Date of agreement 21 December December December 2012 Vendor(s) 1) Oceanview Project Sdn Bhd Heritage Land Sdn Bhd Heritage Property Sdn Bhd 2) Oceanview Realty Sdn Bhd Purchaser Oceancove Development Sdn Bhd Strategic Property Sdn Bhd Oceanfront Development Sdn Bhd Lot no. & Land area Three (3) parcels of land:- 1) H.S.(D) PT 1800 of 20,400 2) H.S.(D) PT 1797 of 19,280 3) H.S.(D) PT 1798 of 20,400 Land type Vacant land with its express conditions of land use being for residential houses only Kawasan Bandar VI, Daerah Melaka Tengah, Melaka 99-year leasehold, expiring on 21 July 2110 Seven (7) parcels of land:- 1) H.S.(D) PT 1832 of 22,646 2) H.S.(D) PT 1833 of 20,187 3) H.S.(D) PT 1834 of 18,664 4) H.S.(D) PT 1835 of 22,997 5) H.S.(D) PT 1836 of 18,504 6) H.S.(D) PT 1837 of 20,014 7) H.S.(D) PT 1838 of 23,124 Vacant land with its express conditions of land use being for residential houses only Six (6) parcels of land:- 1) H.S.(D) PT 1839 of 16,334 2) H.S.(D) PT 1840 of 19,104 3) H.S.(D) PT 1841 of 21,949 4) H.S.(D) PT 1842 of 19,250 5) H.S.(D) PT 1843 of 18,006 6) H.S.(D) PT 1844 of 20,844 Vacant land with its express conditions of land use being for residential houses only Location Kawasan Bandar VI, Daerah Melaka Kawasan Bandar VI, Daerah Melaka Tengah, Melaka Tengah, Melaka Tenure 99-year leasehold, expiring on 24 April 99-year leasehold, expiring on 24 April Selling price RM28 per square foot RM28 per square foot RM28 per square foot Total sales RM18,100, RM44,042, RM34,809, consideration Mode of settlement Cash Cash Cash June 2013 At an Extraordinary General Meeting ( EGM ) held on 11 June 2013, the proposed land disposal transactions were approved by the non-interested shareholders. October 2013 The transactions were completed on 10 October

16 For information purposes, one of the salient terms contained in the SPAs above is for the vendors to build access roads on those lands ( Access Road ) for the purchasers. In the event that such Access Road could not be completed by 20 June 2014, being eighteen (18) months from the date of the said SPAs, a three (3)-month interest-free extension period shall be granted. Any delay in completion exceeding the said extension period would attract interest at the rate of eight per centum (8%) per annum on the sales consideration, calculated on the actual number of days elapsed in a 365-day year from the said completion date to the date of actual completion of such Access Road. The cost to undertake this construction was estimated to be RM12.7 million. This sum had been taken into consideration in arriving at the sales consideration of those lands being disposed. Pursuant to the HoA signed on 4 December 2013, all parties agreed to ensure completion of the Access Road. The relevant provisions in HoA are set out below. 6.2 Settlement Provisions in HoA Provisions DLTC shall cause the purchasers to grant an extension of 24 months from the date of this HoA for the Access Road to be built as provided in the SPAs without imposing any LAD; All parties shall co-operate in good faith and use all reasonable efforts to persuade Ultra Green Sdn Bhd ( Ultra Green ) to agree to surrender the requisite land for the Access Road; Status Completed. The purchasers have agreed to grant the said extension to the Group without imposing any LAD. Pending. The negotiation with Ultra Green is currently ongoing. For information purposes, Ultra Green is the owner of the land adjacent to the purchasers lands where the Access Road is proposed to be built. If the Access Road cannot be built within 24 months from the date of this HoA for the reason that Ultra Green will not or cannot surrender the requisite land in due time, then the parties shall negotiate on good faith to resolve the matter amicably and to find a mutually acceptable solution which may include that the Access Road be built on the purchasers land. Pending. The negotiation with Ultra Green is currently ongoing. The settlement of this matter would be upon the completion of the Access Road. 16

17 7. THE VIMIX BATCHING PLANT 7.1 Background Information Under concession arrangement with the State Government of Melaka in respect of land reclamation works in Melaka, the State Government shall be entitled to a certain portion of the nett saleable area of the reclaimed lands. On dates which the Company was unable to ascertain, Vimix Concrete Sdn Bhd had erected a cement batching plant, the Vimix Batching Plant ( VBP ), on a particular portion of land belonging, but pending official handing over, to the State Government. As the said land was under the care and control of the Company, it was responsible to ensure that the land was free from and clear of any unnecessary structures prior to delivery to the State Government. In order to ensure fulfillment of the matter, the parties to the HoA agreed to undertake their parts as set out in settlement provisions below. 7.2 Settlement Provisions in HoA Provisions DLTC shall procure the proprietor of VBP to give an undertaking to Benalec that:- The proprietor of VBP will dismantle and remove all buildings and/or structures erected on the present site; VBP will be relocated from the present site within 30 days from the date of this HoA; and A confirmation from the proprietor of VBP that the parties (Benalec and proprietor of VBP) shall have no claim whatsoever against each other after the relocation of VBP. Status Completed. An undertaking was provided by Vimix Concrete Sdn Bhd on 6 December 2013 that it was willing and ready to dismantle and relocate the VBP and to deliver the vacant possession of the land to the Company by 31 December BSB, a wholly-owned subsidiary of Benalec, had then reverted in agreement, on 16 December 2013, that upon removal of all relevant buildings and structures from the land and delivery of vacant possession of the land by 31 December 2013, both parties shall have no further claims in respect of the abovementioned matter. For information purpose, with the dismantling of the VBP, the vacant possession was successfully recovered on 25 February DLTC shall use all reasonable efforts to enable Benalec to remove the VBP from the site presently occupied by the VBP. Completed. On 25 February 2014, Vimix Concrete Sdn Bhd, at its own costs, had dismantled all fixtures in relation to the VBP and had vacated the said land. For information purpose, the vacant possession of this land had been delivered to the State Government thereafter. Pursuant thereto, this matter has been completed satisfactorily. 17

18 8. THE BENALEC SHIPYARD 8.1 Background Information DLAC was the Executive Director in-charge of the Benalec Shipyard, safeguarding and maintaining records of the shipyard inventories. Prior to his departure from the Group on 4 December 2013, the management had requested his assistance to ascertain the whereabouts of certain equipment and to reconcile the Shipyard s inventory and equipment. In addition to his assistance in the inspection and verification, DLAC had given his undertaking in the HoA that he would continue to assist Benalec in this matter whenever his assistance is required. For information purposes, the NBV of shipyard inventories, based on the latest audited financial statements for financial year ended 30 June 2013, is RM2.9 million. 8.2 Settlement Provisions in HoA Provisions DLAC has already rendered his assistance by briefing Mr. Bernard Boey and Mr. Deric Cheong, both staff of Benalec, on whereabouts and the current status of the items; and DLAC will continue to render his assistance as and when he is required to assist Benalec in respect of the matters related to this issue. Status Completed. On 1 December 2013, a joint inspection and verification was conducted and the report was satisfactory. All items had been accounted for and they were in good condition. Completed. Currently, Mr. Deric Cheong is in-charge of safeguarding these shipyard items and there have been no necessity for DLAC s further assistance. Hence, this matter is deemed completed. 9. RESIGNATION OF DIRECTORS 9.1 Background Information October 2013 As announced on 6 November 2013, the Company received a requisition dated 29 October 2013 from two (2) Independent Non- Executive Directors of the Company namely, Mr. Koo Hoong Kwan and Mr. Wong Yoke Nyen, of their proposal for the Company to convene an EGM for the purpose of removing both DLTC and DLAC as Directors of the Company, pursuant to Section 128 of the Act and Article 73 of the Company s Articles of Association. The BOD resolved in a Special Board Meeting held on 6 November 2013 to convene an EGM in due course, for the purpose of passing the ordinary resolutions for removing DLTC and DLAC as Directors of the Company. December 2013 As announced on 4 December 2013, both DLTC and DLAC, with no admission of liability, voluntarily resigned from the Group as directors on even date as a gesture of goodwill to facilitate a smooth transition in the management of the Group. As such, the intended EGM was called off. 18

19 9.2 Settlement Provisions in HoA Provisions DLTC and DLAC shall voluntarily resign with immediate effect as a Director of Benalec and its subsidiaries upon receiving confirmation that Benalec has procured the necessary approval and signed this HoA. Status Completed. Notwithstanding, DLTC and DLAC had voluntarily resigned from the Group on 4 December The settlement provision was completed pursuant to the voluntary departure of DLTC and DLAC from the Group. 10. OTHER MATTERS 10.1 Settlement provisions in HoA Provisions DLTC, DLAC and LYG will withdraw all suits, and/or actions filed by them against Benalec and/or its subsidiaries and/or its Directors with no order as to costs with no liberty to file afresh; and DLTC, DLAC and LYG will, where required, confirm to any relevant authorities (such as the Industrial Relation Department) that they do not wish to proceed with any complaint filed by them against Benalec and/or its subsidiaries and/or its Directors. Benalec will, where required, confirm to any relevant authorities that they do not wish to proceed with any complaint filed by them against DLTC, DLAC and LYG or any defendant to the aforesaid civil suits. Benalec, DLTC and DLAC hereby acknowledge that DLTC and DLAC are not bound by any restraint of trade arrangement upon their departure from Benalec. Status Completed. No suits have been filed and served on Benalec and/or its subsidiaries. Completed. By signing the HoA, they had undertaken to give such confirmation, wherever necessary. Completed. By signing the HoA, Benalec had undertaken to give such confirmation, wherever necessary. Completed. By signing the HoA on a basis of without admission of liabilities, no restriction would be placed on either party. All other matters are deemed to be completed. For information purposes, there are no other claims between the parties of the HoA other than those specified in Sections 2 to 9 above. 11. RATIONALE AND BENEFITS OF THE PROPOSED HoA RATIFICATION The sale of the Land pursuant to the Land SPAs is in line with the Group s business model to dispose of reclaimed lands, which are received by the Group as payment in-kind in relation to Benalec s principal activity of land reclamation works. Disposal of such lands held for sale is in the ordinary course of Benalec s business under the segment of marine construction services. The BOD is of the view that the sales consideration of RM28.07 million received pursuant to the Land SPAs was fair and reasonable as it was arrived at on a willing-buyer willing-seller basis after taking into consideration, amongst others, the Group s previous sales of lands in the vicinity and the prevailing market price during that period. The sales consideration represents a premium of RM12.91 million or 85.2% over the last audited NBV of the Land. After commission expense of RM561, and tax expense of RM3,086,873.58, this translates into an after-tax profit of RM9,260,

20 However, in order to avoid a long drawn-out litigation under the Land Suit and other suits filed by the Company (as announced on 18 November 2013, 21 November 2013, 27 November 2013 and 5 December 2013), which would inevitably consume significant time, effort and resources, the disputing parties have amicably arrived at a Global Settlement via the HoA which was entered into by the parties, strictly without any admission of liability and/or not to be construed as an admission of any allegations in any manner whatsoever. The BOD wishes to inform that the HoA was entered into by Benalec as soon as the other parties consented to the proposed terms and conditions, without any delays and without first seeking shareholders approval, due to the time-sensitive nature of the deal. The willingness of the other parties in entering into the HoA presented a window of opportunity to Benalec, which the BOD accepted immediately, to resolve the aforesaid matters in its favour. The HoA, once completed successfully, is beneficial to, and is in the best interests of, the shareholders of the Company for the following reasons:- (i) (ii) (iii) Additional profits earned. The rescission of sale of the Land to Sunshine 2000 and Seaside Synergy and the title reversion of this Land to SLSB provides an opportunity for the Group to now dispose the Land to Teobros Development Sdn Bhd at a substantially higher price of RM48 per square foot or a total sales consideration of RM48,115, (as compared to the Land SPAs with a selling price of RM28 per square foot or a total sales consideration of RM28,067,190.77). After deducting selling expenses of RM962,303.92, the Subsequent Sale will contribute an after-tax profit of RM23,995, to the operating results of the Group, which is substantially higher than the previous sale pursuant to the Land SPAs under which the gain recognised was only RM9,260, Settlement of legal matters and achieving the Group s objectives. The HoA provides Benalec with the reliefs sought after in the various legal suits filed by the Group. The resolution of these legal matters by way of the HoA would avoid inherent complications, uncertainties, unnecessary time and resources spent as well as unproductive efforts expended, in a long drawn-out litigation, especially when it involves former directors and major shareholders. Freeing up management resources to focus on growing business. With the resolution of all legal issues surrounding the Group, the BOD and the management can now re-group and focus all their energies on the business and the growth of the Group without the interruptions. 12. EFFECTS OF THE PROPOSED HoA RATIFICATION 12.1 Share capital and major shareholders shareholding The Proposed HoA Ratification (which includes the Land SPAs), will not have any effect on the issued and paid-up share capital of Benalec as well as the major shareholders shareholdings Earnings and earnings per share ( EPS ) The Land SPAs contributed an after-tax profit of RM9,260, or an EPS of RM0.01 based on 730,000,000 ordinary shares of RM0.25 each as at 30 June Pursuant to the Proposed HoA Ratification, the said after-tax profit of RM9.3 million would be derecognised and the Land would be restated at its NBV in the current financial year ending 30 June 2014 resulting from the rescission and cancellation of the Land SPAs. As a direct result of the Proposed HoA Ratification, the Group was able to enter into the Subsequent Sale which would realise an after-tax profit of RM23,995, For information purposes, the Company would be entitled for a refund of the tax paid of RM3,086, in relation to the Land SPAs. 20

21 12.3 Net assets and gearing Apart from the increase in earnings set out in Section 12.2 above, there are no other material effects on the Group s net assets arising from the Proposed HoA Ratification. For information purposes, the net assets per share, after the Subsequent Sale, increased from RM0.69 to RM0.71 based on 806,303,600 ordinary shares of RM0.25 each (excluding 1,344,900 treasury shares) as of 30 June The increase in earnings has only marginal effects on the gearing of Benalec. 13. RISK FACTOR IN RELATION TO THE PROPOSED HoA RATIFICATION Below is the potential risk factor relating to the Proposed HoA Ratification, which may not be exhaustive and should be considered carefully by the shareholders of Benalec before voting on the resolution to give effect to the Proposed HoA Ratification: Risk of failure Despite the signing of the HoA, there can be no assurance that the HoA will proceed to completion as the parties may not be able to fulfill all the terms and conditions stated therein. Moreover, there can also be no assurance that the HoA can be completed within the expected time frame as set out in Section 19 below. However, almost all of the settlement arrangements under the HoA have been satisfactorily completed save for the following:- Matters The Land Suit The Citypoint Suit The Access Road Settlement provisions yet to be fulfilled Refund of remainder sales consideration to Sunshine 2000 and Seaside Synergy Full settlement of amount owing to Citypoint Negotiation with Ultra Green and completion of the Access Road The management and BOD will endeavour to take all steps necessary to complete the HoA by ensuring that all terms and conditions of the HoA which are within the Group s control are fulfilled on a timely basis. 14. APPROVALS REQUIRED As set out in Section 1 above, the Proposed HoA Ratification which comprises the HoA that serves as the Global Settlement framework as well as the Land SPAs, is deemed to be a related party transaction and shall be subject to the shareholders ratification. The Proposed HoA Ratification is not conditional or inter-conditional upon any other corporate exercise being undertaken or proposed to be undertaken by the Company. 21