1. INTRODUCTION

HEB is pleased to announce that on 15 November 2023, HSS International Sdn Bhd (“HSS International”), a wholly owned subsidiary of HEB, entered into a binding Heads of Agreement (“HOA”) with Engineering and Development Corporation of the Philippines (“EDCOP”) for the incorporation of a joint venture vehicle (“JVC”) in Philippines and to regulate their rights in relation to the same (“the Collaboration”).

The JVC will be incorporated under the name “EDCOP-HSS”.

(HSS International and EDCOP are collectively known as “the Parties”).

2. INFORMATION ON ENGINEERING AND DEVELOPMENT CORPORATION OF THE PHILIPPINES

EDCOP was incorporated and founded on 23 February 1955. EDCOP was established to conduct general engineering business, including management, consultation, designing, construction, supervision and/or engagement in any project for hydro-electric and steam power, irrigation, roads and highways, buildings and structures, manufacturing and industrial plants.

Since incorporation, EDCOP has gained national prominence with its track record of providing specialized professional consulting services for land, water and energy resources development. To date, EDCOP has completed more than 1,000 construction projects, serving more than one hundred clients, some of whom have engaged EDCOP’s services on repeated occasions and in different projects.

As at the date of this announcement, EDCOP boasts a distinguished roster of professional directors and key officers, with leadership primarily entrusted to the Chairman of the Board of Directors Perry Y UY, Vice Chairman Eriberto R. Calubaquib, Director Angel M. Stantiago Jr and Executive Committee Chairman Bryan A. Richards.

3. INFORMATION ON JVC

The JVC will be a company incorporated and registered under the name “EDCOP-HSS” in Philippines. The principal activity of the JVC will be to provide advanced Building Information Modeling (BIM) services and solutions, focused on 3D modeling, clash detection, and comprehensive project management for the infrastructure sector, while also engaging in innovative research and development in BIM technologies.

The total paid-up capital of the JVC will be PHP300,000.00 comprising 300,000 ordinary shares of PHP1.00 each with the following shareholding percentage:-

4. RATIONALE FOR COLLABORATION

The Collaboration between HEB via its subsidiary HSS International, and EDCOP represents a significant milestone for the HEB and its subsidiaries (“HEB Group”) while aligning seamlessly with HEB’s overarching growth strategy. The core objective of this Collaboration is to diversify HEB’s client base and enhance its reputation within the BIM sector in the Philippines market, a region with tremendous growth potential in the field of construction and infrastructure development.

The Collaboration will empower HEB Group to leverage its existing expertise and industry-leading BIM services in the Philippines by capitalizing on EDCOP’s client base, industry influence and local market insights. Furthermore, HEB intends to harness its core competencies and unrivaled proficiency in Engineering Design and Project Management to thrive in this dynamic marketplace.

The Collaboration will also foster knowledge exchange, enabling HSS and EDCOP to share their respective expertise and technologies, leading to a synergistic approach that propels growth and development in the marketplace. Moreover, this Collaboration is anticipated to drive innovation in the BIM sector, paving the way for the introduction of cutting-edge solutions that not only benefits the Parties’ existing clients but also contributes to the industry's technological advancement.

5. SALIENT TERMS OF THE HOA

This HOA constitutes a binding agreement amongst the Parties and sets forth the principal terms and conditions agreed upon by the Parties for the Shareholder's Agreement to be executed after incorporation of the JVC.

The HOA provides for the membership of the Board of the JVC which shall comprise a minimum number of three (3) Directors, made up of two (2) Directors from EDCOP (“EDCOP Director”) and one (1) Director from HSS International (“HSSI Director”). The post of chairperson shall be held by an EDCOP Director who shall not possess a casting vote.

Upon signing the HOA, the Parties will collaboratively draft and agree on an initial 12-months budget for the JVC (“the Budget”). The Budget serves as a schedule of anticipated operating expenses including rent, equipment, inventory costs, marketing, payroll, legal, accountancy, insurance costs, research and development (“Operating Expenses”) to be incurred by the JVC for a period of twelve months from the date of the HOA. The Board of Directors may amend and revise the Budget from time to time.

EDCOP and HSS International shall finance the Operating Expenses in respective proportions unless the Parties mutually agree otherwise in writing.

6. FINANCIAL EFFECTS

i. Share Capital and Substantial Shareholders’ shareholdings

The Collaboration will not have any effect on the issued and paid-up share capital and the substantial shareholders’ shareholdings of HEB Group as it does not involve any issuance of new shares by HEB Group.

ii. Earnings Per Share

The Collaboration is not expected to have any material effect on the earnings per share of HEB Group for the financial year ending 31 December 2023.

iii. Net Assets Per Share and Gearing

The Collaboration will not have any material effect on the net assets per share and gearing of the HEB Group.

7.LIABILITIES TO BE ASSUMED

HEB will not be assuming any liabilities pursuant to the Collaboration.

8. SOURCE OF FUNDING

The operation of the JVC is expected to be funded via internally generated funds and/or external borrowings.

9. RISK FACTORS

The Company does not expect any material risk arising from the Collaboration other than the normal operational risk associated with it which HEB would take appropriate measures to mitigate it.

10. APPROVAL REQUIRED

The execution of the HOA and Collaboration, being part of the ordinary course of business of HEB Group, is not subject to the approval of the shareholders of HEB and any relevant authorities.

11. DIRECTORS’ AND/OR MAJOR SHAREHOLDERS’ INTERESTS AND/OR PERSONS CONNECTION THEM

None of the Directors and/ or major shareholders of HEB and persons connected to them has any interest, direct or indirect, in the HOA and the Collaboration.

12. DIRECTORS’ STATEMENT

The Board of HEB, after considering the terms and conditions of the HOA and all aspects of the Collaboration, is of the opinion that the HOA and the Collaboration are in the best interest of HEB Group and the terms and conditions of the HOA is fair, reasonable and on terms that are not detrimental to the interest of the minority shareholders of the Company.

13.DOCUMENTS FOR INSPECTION

The HOA is available for shareholders’ inspection at the registered office of the Company at 12th Floor, Menara Symphony, No. 5, Jalan Professor Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor Darul Ehsan during normal business hours from Monday to Friday (except for public holidays) for a period of 3 months from the date of this announcement.

This announcement is dated 15 November 2023.