Gunung Capital Bhd : OTHERS GUNUNG CAPITAL BERHAD AWARD OF RM43.90 MILLION SERVICE CONTRACT

INTRODUCTION

The Board of Directors of Gunung Capital Berhad ('Gunung' or 'Company') ('Board') is pleased to announce that GPB Corporation Sdn Bhd, a wholly owned subsidiary of Gunung, had on 30th December 2016, received and accepted a 'Letter of Award' from the Ministry of Defence for a Service-Contract with the value of up to RM43,904,850.

Details of the contract is summarised below :

PROVISION OF A SCHOOL TRANSPORTATION (BUS) SERVICE FOR THE CHILDREN OF THE ARMED FORCES PERSONNEL THROUGHOUT MALAYSIA

1. Tenure of Contract

The tenure of the Service-Contract awarded is from 01 January 2016 to 30 November 2019 (3 years), comprising of 33 months of school sessions.

2. Scope of Services

The scope of services to be provided under the above-mentioned Service-Contract, is to provide transportation to, and from the nominated schools, for the children of the armed forces personnel nationwide ('pick-up and drop-off services').

The scope of services is for school children residing within the armed forces quarters.

The scope includes the provision of services for 76 armed forces camps over 10 zones. Gunung estimates that a total of 233 units of 44-seater buses, and 85 units of 25-seater buses will be required to fulfill its obligations under this Service-Contract.

3. Value of the Service-Contract

The value of the Service-Contract over 3 years is up to RM43,904,850 (ceiling limit).

FINANCIAL EFFECTS

The contract announced herein is expected to contribute positively towards the earnings of Gunung Group principally for the financial years ending 31 December 2017-2019.

RISK FACTORS

Risk factors affecting the contracts include execution risks such as availability of manpower, fleet capacity (coaches), breakdown of coaches, and/or political, economic and regulatory conditions. The Government has the right to terminate the Services-Contract in the event that there is a failure by the contractor to execute any of the obligations under the contract, breach of the terms and conditions of the contract andor if the contractor goes under receivership. Notwithstanding, the Company has established a successful track record undertaking similar contracts. Note also that Gunung Group has an existing fleet of buses, available resources, and drivers to be allocated for this contract.

DIRECTORS' AND MAJOR SHAREHOLDERS' INTEREST

None of the Directors and/or major shareholders of the Company and/or persons connected with them have any direct or indirect interest in the award of the contracts herein.

DIRECTORS' STATEMENT

The Board is of the opinion that the acceptance of the contract herein is in the best interest of the Company.

This announcement is dated 3 January, 2017.