1. Introduction

HEB is pleased to announce that on 30 June 2024, a joint venture (“JV”) comprising HSS Engineering Sdn Bhd (“HSSE”), and Consultant HSS, L.L.C (“CHSS”), entered into a Contract with the Mayoralty of Baghdad for the provision of Project Management Consultancy and Supervision Services for the Metro Project within the Capital City Baghdad (“Project”).

HSSE, a wholly-owned subsidiary of HEB, holds a 50% stake in the JV. CHSS, registered in the United Arab Emirates, has been a long-standing collaborative partner of the HEB Group, working together on engineering consultancy projects throughout the Middle East.

2. Information on the Project

* The Estimated Services Value comprises two components: the Project Management Scope and the Construction Supervision Scope. The value for each scope is calculated as a percentage of the estimated construction costs, with the Project Management Consultancy (PMC) Scope priced at 0.6% and the Construction Supervision at 1.2%. The estimated construction costs are USD 17,549,500,000.00 (equivalent to RM82,833,640,000.00, using the Applied Exchange Rate). These estimates are subject to the final construction costs to be determined at the relevant time. The JV is exempted from all taxes under the Contract.

Under the Contract, HSSE's scope of work includes design review, overseeing the pre-qualification stage, auditing surveying activities, reviewing project performance specifications, conducting project schedule reviews, and providing supervision.

The Contract provides that, 30 days upon execution, the JV will receive a lump sum advance payment of 15% for the PMC Scope, totaling USD 15,794,550.00 (equivalent to RM74,550, 276.00, based on the Applied Exchange Rate). This advance payment will be evenly recouped against all subsequent payment milestones for the PMC Scope.

3. Financial Effects

The Contract is expected to contribute positively to the revenue, earnings and net assets of HEB Group for financial years ending 31 December 2024 to 31 December 2029.

The Contract will not have any impact on the share capital and/or shareholding structure of HEB.

The Contract is expected to be funded via internally generated funds and/or external borrowings.

4. Risk Factors

The risk factors affecting the Contract include, but not limited to execution risks, such as dependency on the schedule of implementation and progress of the Project. Nonetheless, HEB Group has, throughout the years, established its track record and expertise in undertaking such projects. As such, the Board of Directors believes that HEB Group is able to mitigate the aforesaid risk factors.

5. Approval Required

The Contract, being part of the ordinary course of business of HEB Group, is not subject to the approval of shareholders of HEB or any relevant authorities.

6. Directors’ and/or Major Shareholders’ Interests

None of the Directors and/or Major Shareholders of HEB and persons connected to them has any interest, direct or indirect, in the Contract.

7. Directors’ Statement

The Board of Directors, after considering all the relevant factors, is of the opinion that the acceptance of the Contract is in the best interest of HEB Group.

This announcement is dated 1 July 2024.