Introduction

Reference is made to the following Company’s earlier announcements:

In its announcement of 3 May 2019, the Company announced that the resumption of the First Contract is expected to contribute positively to the revenue and earnings of the Company. However, the Company will only be able to assess the actual financial effects upon finalisation of HSSI’s scope of services and fees.

With the finalisation of the new alignment for ECRL, China Communications Construction (ECRL) Sdn Bhd (“Client”) has finalised the scope of services and fees in respect of the First Contract and a new contract to be entered into between the Client and HSSI for the new alignment of ECRL.

Information on the First Contract and New Contract

The Company wishes to announce that HSSI has on 14 May 2020:-

• agreed with the Client that the total contract value for the First Contract is RM9,870,000 and with that the First Contract is finalised; and

• HSSI has accepted Letter of Appointment dated 13 May 2020 from the Client appointing HSSI as the Consultant to provide Consultancy Services for the Detail and Construction Drawings Design for Section A of the ECRL (Kota Bharu to Dungun) with a contract value of RM13,030,000 (“New Contract”).

The New Contract commenced during the second quarter of 2020 and is expected to complete within the fourth quarter of 2028 (including Defect Liability Period). Pursuant to the exclusive teaming arrangement between HSSI and the Company’s wholly-owned subsidiary, HSS Engineering Sdn Bhd ("HSSE"), HSSI and HSSE will be collaborating exclusively to execute and complete the Contract. 

Financial Effects

The New Contract is expected to contribute positively to the revenue, earnings and net assets of HEB Group for financial years ending 31 December 2020 to 31 December 2028.  

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

Risk Factors

The risk factors affecting the New Contract include, but not limited to, execution risks such as dependency on the progress of the ECRL given that the role pursuant to the New Contract is for the preparation and completion of the Detail and Construction Drawings Design in respect of the works for the ECRL. HEB Group has, throughout the years, established its track record and expertise to undertake such projects. As such, the Board of Directors believes that HEB Group is able to mitigate the aforesaid risk factors.

Directors’ and/or major shareholders’ interests

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

This announcement is dated 14 May 2020.