Reference is made to the announcement dated 22 December 2017, the Circular to Shareholders dated 12 February 2018 and the announcement dated 19 June 2018 in relation to the subscription of additional 1,035,969 new ordinary shares in Proventus Bina Sdn Bhd (“PBSB”) which was completed on 19 June 2018 and resulted in CIC Construction Sdn Bhd (a wholly-owned subsidiary of CGB) (“CICC”) increasing its equity stake in PBSB to 51% (“Subscription”).

Pursuant to the subscription agreement dated 22 December 2017 entered into between CICC, PBSB and the then existing shareholders of PBSB (“Promoters”), the Promoters had provided a cumulative profit after tax (“PAT”) guarantee of not less than RM3,672,000 attributable to CICC (based on shareholdings of 51%) (“Profit Guarantee”) over the 3 financial year(s) ended (“FYE”) 31 December 2017, 2018 and 2019 (“Profit Guarantee Period”).

In this regard, PBSB has achieved a cumulative PAT of approximately RM2,590,304 attributable to CICC which was computed as follows:-

*      The PAT for FYE 2018 has been adjusted to incorporate the net insurance income of approximately RM1.33 million (after deduction of tax of 24%) that was recognised by PBSB in 2nd quarter of 2020 pursuant to PBSB’s insurance claim submitted in June 2018 which was approved and paid by insurance company in May and July 2020, respectively. The insurance claim related to a compensation pertaining to a fire accident which occurred in the Tri-Pinnacle project during the Profit Guarantee Period, as such, the Board of Directors of CGB has taken into consideration the insurance claim in computing the profit guarantee.

The above achieved cumulative PAT attributable to CICC was short by RM1,081,696 (“Shortfall”) compared to the Profit Guarantee due mainly to the delays in the progress work at the construction site and the general slowdown in construction industry. Notwithstanding the Shortfall, PBSB has registered a total revenue and profit before tax (“PBT”) of RM59.91 million and RM3.18 million respectively in FYE 31 December 2019 which has contributed significantly to the CGB group’s total revenue of RM114.06 million and PBT of RM1.27 million in FYE 31 December 2019.

In accordance to the terms of the Subscription Agreement, CICC has on 30 July 2020 notified the Promoters in writing of the Shortfall (“Notice”) and the Promoters are liable to pay CICC the Shortfall within the stipulated period (i.e. by 21 August 2020; which is within 14 business days from the date of the Notice).

This announcement is dated 30 July 2020.