1. INTRODUCTION
The Board of Directors of Nestcon (“the Board”) wishes to announce that its wholly-owned subsidiary, Nestcon Infra Sdn. Bhd. (“Nestcon Infra”), had on 2 August 2021 accepted the letter of award dated 2 August 2021 (“LOA”) awarded by MMC Engineering Sdn. Bhd. (“MMCE”) in respect of the sub-contract for the main infrastructure works pertaining to the construction of access road connecting to Sungai Pulai Bridge for the proposed Petrochemical & Maritime Industry Centre development at Tanjung Bin, Pontian, Johor (“Project”).
2. INFORMATION ON NESTCON INFRA
Nestcon Infra was incorporated in Malaysia as a private company limited by shares and it is a wholly-owned subsidiary of the Company.
Nestcon Infra is principally involved in construction works.
3. INFORMATION ON MMCE
MMCE was incorporated in Malaysia as a private company limited by shares and is the contractor for the Project.
MMCE is a wholly-owned subsidiary of MMC Engineering Group Berhad, which in turn is a wholly-owned subsidiary of MMC Corporation Berhad, a public company listed on the Main Market of Bursa Malaysia Securities Berhad.
4. DETAILS OF THE LOA
(a) The scope of the sub-contract works to be undertaken by Nestcon Infra pursuant to the Project comprises the supplying of all services, labour, plant and material for the construction, completion, testing and commissioning (if applicable) in accordance with the terms and conditions of the LOA and the relevant contract documents which are mutually agreed between the parties (“Sub-Contract Works”).
(b) The provisional quantities sub-contract sum for the Sub-Contract Works is RM25.08 million, and payment shall be made to Nestcon Infra progressively based on the Interim Certificate issued by the project manager in accordance with the progress of work completed and as certified by MMCE.
(c) The LOA constitutes an official order for Nestcon Infra to commence work at the project site. Nestcon Infra officially takes site possession on 2 August 2021 upon the acceptance of LOA, which shall be the commencement date for the planning activities and temporary works. The Sub-Contract Works is expected to be completed by 31 May 2022.
(d) The defects liability period of the Sub-Contract Works shall be 18 months commencing from the date of issuance of the Certificate of Practical Completion by MMCE to Nestcon Infra.
(e) MMCE may at any time without assigning any reason and at its absolute discretion, by giving 7 days prior notice in writing to Nestcon Infra to terminate the Sub-Contract Works or any part or parts thereof. In the event of such termination, Nestcon Infra shall be entitled to the payment for the part of the Sub-Contract Works performed up to the date of such termination provided that the part of the Sub-Contract Works has been duly accepted by MMCE.
5. FINANCIAL EFFECTS
The acceptance of the LOA to undertake the Sub-Contract Works is expected to contribute positively to the net assets per share, earnings per share and gearing of the Company for the financial year ending 31 December 2021 and throughout the duration of the Sub-Contract Works.
6. RISK FACTORS
The Company does not foresee any exceptional risk other than the normal operational risks associated with the LOA and/or Sub-Contract Works. Nevertheless, the Company will take the necessary steps to mitigate the risks as and when they occur.
7. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
None of the Directors and/or major shareholders of Nestcon or persons connected with them has any interests, direct or indirect, in the LOA and/or Sub-Contract Works.
8. STATEMENT BY THE BOARD OF DIRECTORS
The Board is of the opinion that the LOA and the Sub-Contract Works are within the ordinary course of business of Nestcon and the acceptance of the LOA is in the best interest of the Company.
This announcement is dated 2 August 2021.