1.0 Introduction. The SHA and DRA are hereinafter referred to as the Proposals. 2.0 Information on HSLD, TTDI KL and GSSB 2.1 HSLD

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1 Hap Seng Consolidated Berhad ( HSCB or the Company ) (I) Shareholders Agreement between Hap Seng Land Development Sdn Bhd, TTDI KL Metropolis Sdn Bhd and Golden Suncity Sdn Bhd; and (II) Development Rights Agreement between TTDI KL Metropolis Sdn Bhd and Golden Suncity Sdn Bhd 1.0 Introduction Pursuant to paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( LR ), the Board of Directors of HSCB wishes to announce that its wholly-owned subsidiary, Hap Seng Land Development Sdn Bhd (94612-T) ( HSLD ), has on even date entered into a shareholders agreement ( SHA ) with TTDI KL Metropolis Sdn Bhd ( U) ( TTDI KL or the Proprietor ) and Golden Suncity Sdn Bhd ( K) ( GSSB or the Developer ) to regulate their relationship inter-se as shareholders of GSSB, pursuant to the terms and subject to the conditions as set out in the SHA. Simultaneous with the execution of the SHA, the Developer has on even date entered into a development rights agreement ( DRA ) with the Proprietor, pursuant to which the Proprietor as the registered and beneficial proprietor of all that parcel of a leasehold land held under PN52352, Lot 80928, Mukim Batu, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan KL measuring 8.95 acres (approximately 389,862 square feet) (the Land ) has agreed to grant to the Developer, the exclusive rights to develop the Land ( Proposed Development ) at the consideration of RM467,834, ( Consideration Sum ), pursuant to the terms and subject to the conditions as set out in the DRA. The SHA and DRA are hereinafter referred to as the Proposals. 2.0 Information on HSLD, TTDI KL and GSSB 2.1 HSLD HSLD is a private limited company incorporated in Malaysia under the Companies Act, 1965 on 20 December HSLD is a wholly-owned subsidiary of Hap Seng Land Sdn Bhd, which is in turn a wholly-owned subsidiary of HSCB. HSLD is principally involved in investment holding. As at the date hereof, HSLD has an authorised share capital of RM20,000,000 comprising 19,500,000 ordinary shares of RM1.00 each and 500,000 redeemable preference shares of RM1.00 each, of which RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each have been issued and fully paid-up. 1

2 2.2 TTDI KL 2.3 GSSB TTDI KL is a private limited company incorporated in Malaysia under the Companies Act, 1965 on 29 January TTDI KL is a wholly-owned subsidiary of Naza TTDI Sdn Bhd and is principally involved in property development. As at the date hereof, TTDI KL has an authorised share capital of RM50,000,000 comprising 50,000,000 ordinary shares of RM1.00 each, of which RM25,500,000 comprising 25,500,000 ordinary shares of RM1.00 each have been issued and fully paid-up. GSSB is a private limited company incorporated in Malaysia under the Companies Act, 1965 on 19 January GSSB is a subsidiary of HSLD, which is in turn a subsidiary of HSCB. As at the date hereof, GSSB has an authorised share capital of RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each, of which RM1,000,000 comprising 1,000,0000 ordinary shares of RM1.00 each have been issued and fully paid-up. GSSB is currently dormant. 3.0 Information on the Land 3.1 TTDI KL is the registered proprietor of all that parcel of a ninety nine (99) year leasehold land (with the lease expiring on 11 August 2109) held under Pajakan Negeri (WP) 52352, Lot 80928, Mukim Batu, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan KL and identified as Plot 5A, KL Metropolis measuring 8.95 acres. 3.2 The Land is currently charged ( Existing Charge ) to a financial institution ( Existing Chargee ) as security for banking facilities granted to the Proprietor. 3.3 The category of land use is Building. 3.4 The Land is subject to the following express condition: Tanah ini hendaklah digunakan hanya untuk tapak bangunan perdagangan sahaja. 2

3 4.0 Details on the Proposals 4.1 Salient terms of the SHA As at the date hereof, the issued and paid-up share capital of GSSB is RM1,000,000 comprising 1,000,000 ordinary shares of RM1.00 each with HSLD having subscribed to 70% thereof which is equivalent to 700,000 ordinary shares of RM1.00 each and TTDI KL having subscribed to 30% thereof which is equivalent to 300,000 ordinary shares of RM1.00 each; The shareholding by HSLD and TTDI KL shall at times be maintained at the above ratio of 7:3 unless either party shall default under the SHA; HSLD shall be entitled to appoint 4 directors whereas TTDI KL shall be entitled to appoint 2 directors onto the board of GSSB; and HSLD and TTDI KL will not without prior written consent of the other, transfer all or any part of the shares held by it to any person or persons except to its permitted transferees or pursuant to an event of default within the period commencing from the date of the Proposals until the completion of the final phase of the Proposed Development HSLD and TTDI KL agree that HSLD shall procure and arrange for an intercompany loan in cash for the Deposit ( Inter-Company Loan ) from HSLD's related corporation as defined in the Companies Act 1965 ( HSLD's related company ), and GSSB agrees to repay on demand to HSLD's related company the total amount of the Inter-Company Loan advanced to the Company together with interest, which shall be at a rate of 4.05% plus the base rate of Maybank at the time on the amount of Inter-Company Loan on a per annum basis from the date of the disbursement of the Inter-Company Loan until (and including) the date GSSB repays HSLD's related company in full. 4.2 Salient terms of the DRA In consideration of the Developer s undertaking to comply with its payment obligations under the DRA, the Proprietor has agreed to grant to the Developer the following rights and interests: (a) (b) (c) the right to design, develop, build and complete the Proposed Development on the Land; the right to manage and implement the Proposed Development including the appointment of all consultants, advisers, contractors and suppliers in relation thereto; the right to dispose of the components comprised in the Proposed Development; 3

4 (d) (e) the right to receive, collect and demand all proceeds and/or profits derived from the sale of the units comprised in the Proposed Development and to any other form of revenue derived from the Proposed Development; and the right to charge the Land Upon execution of the DRA, the Developer shall pay to the Proprietor 10% of the Consideration Sum amounting to RM46,783,440 ( Deposit ), which payment shall not form part of the Consideration Sum until the DRA becomes unconditional in accordance with the terms contained therein. Simultaneous with and in exchange for the Deposit, the Proprietor shall deliver to the Developer a restricted, limited and irrevocable power of attorney for the sole purpose of enabling the Developer to apply for and obtain the development order at the Developer s own cost and expense The DRA is conditional upon fulfillment of the following conditions precedent ( CPs ) within 12 months (or such other extended period mutually agreed) from the date of the DRA ( Conditional Period ): (a) (b) (c) (d) the Proprietor having obtained the relevant approval and consent for the relocation of the existing suction tank and pump house from the Land; the Proprietor having obtained the Consent to Charge; The Proprietor having completed the construction of the main sewerage reticulation lines for the Developer to connect from the agreed tapping points to the Land; and the Developer having submitted the application for the development order and shall not have received any material adverse conditions. The DRA shall become unconditional on the date of the last of the CPs is obtained or waived ( Unconditional Date ) In the event that any of the CPs could not be fulfilled for any reasons whatsoever and the same has not been waived by the Developer, the Proprietor shall refund to the Developer, the Deposit together with interest having accrued thereon at the rate of 4.2% p.a. until date of full payment. 4

5 4.2.5 Manner of Payment of the Consideration Sum The Consideration Sum shall be paid as follows: (a) the payment of Deposit in accordance with Clause above; (b) the Developer, shall within 3 months from the Unconditional Date, effect payment of the further 45% of the Consideration Sum amounting to RM210,525,480 ( First Payment ), with part thereof to be paid directly to the Existing Chargee to secure the discharge of the Existing Charge and the balance thereof to be paid to the Proprietor; and (c) the balance 45% of the Consideration Sum amounting to RM210,525,480 ( Second Payment ) shall be paid in the following manner: (i) on or before the expiry of the Conditional Period, the Proprietor shall be entitled to select from the units to be developed and completed on the Land, provided that such selected units shall be approved by the Developer; and (ii) the purchase price of the selected units is to be mutually agreed between the Proprietor and the Developer and that the same shall be deducted from and set-off against the Second Payment. Such deduction and/or setoff shall be effected at the time, in the manner and upon the terms and conditions of the sale and purchase agreements of the selected Units. (iii) failing selection of the units as stated in (i) and (ii) above, the Developer shall pay the Second Payment in cash to the Proprietor upon expiration of 7 years from the Unconditional Date In exchange for and simultaneous with the First Payment, the Proprietor shall deliver to the Developer an irrevocable power of attorney granting the full rights to the Developer to do any and/or all things in respect of the Land as if it is the legal and beneficial owner of the Land. 5.0 Rationale and Benefits for the Proposals The Proposals are in line with the Group s strategy to establish itself as a prominent player in the property development sector, particularly in the prime locations of the Klang Valley. In view of the development potential of the Land (for reasons set out in Section 6 below), the Proposals will contribute positively to the Group s revenue and profitability when the Proposed Development comes on stream. 5

6 6.0 Prospects of the Proposals The Land is accessible via Jalan Kuching and Jalan Tuanku Abdul Halim (formerly Jalan Duta) connecting to the Kuala Lumpur City Centre and KL Sentral. Located along Jalan Dutamas 2 and fronting the soon-to-complete Malaysia International Trade and Exhibition Centre (MITEC), the Land forms part of the 75.5-acre commercial master plan development known as KL Metropolis. In addition, the Land is surrounded by prime established residential and commercial areas such as Mont Kiara, Publika, Damansara Heights and Bangsar. Based on the foregoing, the Group is confident with the positive prospects of the Land to be developed into an integrated mixed development comprising components such as retail, office tower, serviced apartments and hotel, within a period of ten years. 7.0 Risk factors in relation to the Proposals Save as disclosed below, the Proposals will not expose HSCB Group to any other new business and operational risks as HSLD is already involved in the property development business: 7.1 Non-completion of the Proposals In the event the CPs are not fulfilled or waived (where applicable), the Proposals will not be completed. The non-completion will result in the Developer s failure to acquire the Land, and accordingly, the inability to realize the benefits set out in Section 5 of this announcement. The Developer shall work closely with the Proprietor pursuant to the DRA to facilitate fulfillment of the CPs. 7.2 Delay in the Completion of the Proposed Development The Proposed Development is subject to various approvals to be obtained from the relevant authorities. In the event of delay in obtaining such approvals and/or unfavourable property market sentiment, the Proposed Development or part thereof may have to be delayed. On or after the Unconditional Date, the Developer will expeditiously undertake all such applications as may be necessary and continue to undertake extensive market analysis before embarking on various phases of the Proposed Development. 6

7 7.3 Development risks The Proposed Development is subject to certain risks inherent to property development, such as oversupply of the properties to be developed on the Land, changes in demand for types of residential and commercial properties, labour and material supply shortages, deterioration in prevailing market conditions and fluctuation in building materials prices and labour costs and/or less than satisfactory performance of the appointed building contractors. However, the Developer will seek to mitigate such risks by closely monitoring the progress of the Proposed Development by leveraging on the competence and capabilities of its dedicated management team. 7.4 Interest rate risks The Developer proposes to finance the Proposals via internally generated funds and/or bank borrowings. In the event of bank borrowings, interest rate hikes could increase interest charges to be borne by the Developer to finance both the Consideration Sum and/or the Proposed Development, which will erode the profitability of the Proposed Development. In mitigating this risk, the Developer shall undertake a regular and active review of its debt portfolio by taking into account the level and nature of borrowings to optimise its cost effective capital structure and will review the pricing strategy of the Proposed Development in order to ensure that it is competitively priced. 7.5 Political, regulatory and economic risks The property market is cyclical in nature influenced by the general economic conditions of Malaysia. Adverse developments in political, regulatory and economic conditions in Malaysia may affect the property industry in the country. In mitigating such risk, the Developer will continue to review its business strategies in response to the changes in political, regulatory and economic conditions. 8.0 Source of Funding The Proposals shall be funded by external financings or shareholders loans. 7

8 9.0 Effects of the Proposals 9.1 Earnings per share ( EPS ) The Proposals would not have any effect on the EPS of HSCB Group based on the audited consolidated financial statements of HSCB Group for the financial year ended 31 December 2014, assuming that the Proposals had been effected at the end of that financial year. 9.2 NA per share The Proposals would not have any effect on the NA per share of HSCB Group based on the audited consolidated financial statements of HSCB Group for the financial year ended 31 December 2014 and its accounting policies thereon, assuming that the Proposals had been effected at the end of that financial year. 9.3 Gearing Based on the audited consolidated financial statements of HSCB Group for the financial year ended 31 December 2014 and assuming that the Proposals had been effected at the end of that financial year, the gearing of HSCB Group would have increased from 0.66 to Share capital and substantial shareholders shareholdings of HSCB The Proposals would not have any effect on the issued and paid-up share capital of HSCB as the Proposals do not involve any issuance of new shares by HSCB Highest percentage ratio applicable to the Proposals pursuant to paragraph 10.02(g) of the LR Pursuant to paragraph 10.02(g) of the LR, the highest percentage ratio applicable to the Proposals is 11.84% Approvals required The Proposals are not subject to shareholders approval of HSCB to be obtained, except for the procurement of all requisite approvals from the relevant authorities for the Land and the Proposed Development. 8

9 12.0 Interest of Directors and major shareholders None of the Directors and/or major shareholders of HSCB, and/or persons connected with them, has any interest, direct or indirect, in the Proposals Statement by directors The Board of Directors of HSCB, having considered all aspects of the Proposals (including but not limited to the rationale and the financial effects of the Proposals), is of the opinion that the Proposals are in the best interest of HSCB Group Estimated timeframe for completion Barring any unforeseen circumstances and subject to the approval of the relevant authorities and fulfillment of all conditions precedent, the Proposed Development is expected to be completed within 10 years from the Unconditional Date Documents available for inspection The SHA and the DRA will be available for inspection at the registered office of the Company at 21 st Floor, Menara Hap Seng, Jalan P. Ramlee, Kuala Lumpur, during normal business hours from Mondays to Fridays (except during public holidays) for a period of three months from the date of this announcement. 9