1.   INTRODUCTION

The Board of Directors of LKL International (“Board”) wishes to announce that its wholly-owned subsidiary, LKLAM, had on 4 December 2018 entered into a Memorandum of Understanding (“MOU”) with AGROW.

2.   BACKGROUND OF THE MOU

LKLAM is in the business of provision of medical/healthcare beds, peripherals and accessories, and is one of the largest local healthcare product manufacturers in Malaysia. LKLAM provides diverse product range to hospitals, medical centres, as well as other healthcare-related facilities such as clinics and specialist institutions.

AGROW is a wholly-owned subsidiary of Agrow Malaysia Sdn. Bhd., which in turn is a wholly-owned subsidiary of OCB Berhad, a listed company on the Main Market of Bursa Malaysia Securities Berhad. AGROW is a specialist in building materials, supplying a wide range of international and local branded sanitary wares, bathroom wares, bathroom fittings, bathroom accessories, ironmongery, doors and other quality building products and providing services to all stakeholders in the building and construction industry. Institutional buildings, hospital/laboratory projects and custom designed items are also other area of AGROW’s specialty.

Both LKLAM and AGROW envisage a mutually beneficial arrangement to cooperate in the market development of BREATHAIR merchandise, an advanced washable cushion material with high level of air and water permeability, cushioning characteristics, durability, safe and anti-bacterial properties. BREATHAIR merchandise is widely used in hospitals and healthcare facilities.

3.   SALIENT TERMS OF THE MOU

The MOU does not constitute a binding or enforceable agreement between LKLAM and AGROW, but is aimed to provide a basic framework of collaboration between the parties to cooperate for the promoting and marketing of BREATHAIR merchandise in the global market. LKLAM shall be responsible for applying the certificate necessarily for the sale of BREATHAIR merchandise in the global market on behalf of the manufacturer. The term of the MOU will be for a period of two years.

4.   FINANCIAL EFFECTS

The execution of the MOU is not expected to have any material effect on the net assets and gearing of the Company for the financial year ending 30 April 2019. Should the collaboration materialise, it is expected to contribute positively to the earnings of the Company.

5.   RISK FACTORS

The Board is of the view that the risk factors involved in this MOU at this juncture is minimal and in the event the Company enters into a normal business arrangement, it will exercise due care in considering the associated risks and benefits, and will take appropriate measures in planning the successful implementation of the MOU vis-à-vis its current business operations.

6.   APPROVAL REQUIRED

The MOU is not subject to the approval of the Company’s shareholders and/or any regulatory authorities.

7.   INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED TO THEM

None of the directors, major shareholders and/or persons connected to them has any interest, whether direct or indirect, in the MOU.

8.   STATEMENT OF DIRECTORS

The Board, having taken into consideration all aspects of the MOU, is of the opinion that the MOU is in the best interests of the Company.

9.   DOCUMENT FOR INSPECTION

The MOU will be made available for inspection at the registered office of the Company at Third Floor, No. 79 (Room A), Jalan SS21/60, Damansara Utama, 47400 Petaling Jaya, Selangor Darul Ehsan, during normal business hours (except public holidays) for a period of three (3) months from the date of this announcement.

This announcement is dated 4 December 2018.