Industry Overview

7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Prepared fDr inclusiDn in this Prospectus) SMITH ZANDER INTERNATIONAL SDN BHD (1058128·V) Suite 23-3, Level 23, Office Suite, Menara 1MK, SMITH ZAt\TDER 1 Jalan Kiara, Mont’ Kiara, 50480 Kuala Lumpur, Malaysia. T +60362112121 ·9 JUN 2015 The Board of Directors SUNWAY CONSTRUCTION GROUP BERHAD Level 16, Menara Sunway Jalan Lagoon Timur, Bandar Sun way 47500 Selangor Darul Ehsan Malaysia Dear Sirs, Executive Summary of the Independent Market Research Report on the Construction and Precast Concrete Industries in Malaysia and Singapore in relation to the Proposed Offering of SCG Shares (“Offering”) and its Listing of and Quotation for the Entire Issued and Paid-up Ordinary Share Capital of SCG on the Main Market of Bursa Malaysia Securities Berhad This Executive Summary of the Independent Market Research RepDrt Dn the CDnstructiDn and Precast Concrete industries in Malaysia and SingapDre is prepared by SMITH ZANDER INTERNATIONAL SDN BHD (“SMITH ZANDER”) for inciusiDn in the Prospectus Df SUNWAY CONSTRUCTION GROUP BERHAD. For and Dn behalf of SMITH ZANDER:

_Df-_, DENNIS TAt MANAGING PARTNER 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
1 DEFINITION AND SEGMENTATION The construction industry can broadly be divided into two (2) key major segments. namely the construction of buildings and infrastructure, where the construction of buildings is then further categorised into three (3) categories, namely commercial, residential and industrial: • Commercial buildings are used for business purposes and this includes office buildings, warehouses, hotels, retail outlets and other institutional or purpose-buill bUildings such as convention centres, resorts (including theme parks), and educational and medical institutions;
• Industrial properties are buildings or structures where industrial or manufacturing activities are carried out, and includes factories and production plants; and
• Residential buildings are intended for dwelling purposes.

The construction of infrastructure refers to any form of development of public assets used for purposes such as transportation, utilities management and communication, recreation and community use. This includes road and highway networks, jellies, transportation transit systems (I.e. commuter rail systems, mass rapid transit, light raii transit, subways and bus transportation) and drainage systems. Construction industry -industry segmentation a Construction Industry
~I Industrial I-~·~· { R_ail_wa_y_sL-____ _ 1
ReSideOtial-~ Bridges

 

C Jj o The examples above are not exhaustive Source: Extracted from the independent market research report prepared by SMITH ZANDER Typically, the construction industry constitutes civil works, structural works, and mechanical, eiectrical and plumbing (“MEP”) works. Civil and structural works comprises all design and build activities, including foundation and geotechnical works. Design and build activities include, but are not restricted to, design deveiopment, foundation and geotechnical works, construction and installation works, quality control, safety, health and environmental monitoring, finishing works including MEP and commissioning and 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
handover. The main building materials utilised in civil and structural works include cement and concrete, and steel due to its durability and resistance as well as cost-effectiveness. Foundation and geotechnical works pertain to the groundwork and foundation bUilding based on a study of the geological structure and earth materials on the construction site and its influence on foundation and geotechnical works, and the study of groundwater regime and its influence on wall stability and integrity of the foundation and geotechnical works. Foundations are designed and constructed for structures of various sizes, including high-rise buildings, bridges. and medium to large commercial buildings. Shallow and deep foundations are built for above-ground structures depending on load bearing capacity, soil settlement and ground movement beneath the foundations. Retaining structures include earth-filled dams and retaining walls. MEP works is a significant component in construction, and industry players that provide this service are trade specialists. MEP specialists are involved in the design andlor installation of heating, ventilation and air conditioning (“HVAC”), fire protection systems. power distribution, telecommunication systems and central utility facilities. Central utility facilities are erected for utility generation, transmission and distribution, and utilities produced and distributed here can include compressed air, chilled water, steam, hot water and electricity. Central utility facilities may also be erected to manage the collection and disposal of solid waste. Construction industry -key components and building blocks a Construction Industry J Building and infrastructure Heating, ventilation and ~ works conditioning (UHVAC”)_J ..” Foundation and geotechnics l ·1 Fire protection systems ·1 Power distribution _.’J’
Telecommunication systems I Central utility faCil;t~
a The examples above are not exhaustive Source: Extracted from the independent market research report prepared by SMrrH ZANDER 2 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
The construction industry is supported by a strong and robust building materials industry. The production of building materials is typically an established and stable growth industry owing to the factthat demand for building and infrastructure development is driven by public and private expenditure. Building materials encompass natural substances such as clay, rock, wood and sand, and manufactured materials such as cement, concrete, glass, metals and plastics. Building materials from both natural substances and manufactured materials are used for the purposes of building, infrastructure and social amenities development. Concrete is typically made from Portland cement that is combined with aggregates. While concrete has high compressive strength, it also exhibits low tensile strength. Thus in the application for construction, concrete is generally reinforced with steel bars or rods which provides it with strong tensile properties. The resultant concrete is known as reinforced concrete. Concrete is typically produced in the five (5) basic forms of ready-mix concrete, precast concrete, masonry, tilt-up and cement-based materials. Precast concrete industry -definition and segmentation READY-MIX · Concrele U18t is balched for delivery (10m a cenlral plant Ins[ead of bemg mixed on the job sile. 0 · Each batch of ready-mixed concrete IS tailor-made according to the specifics or the contractor and is delivered to the contractor in cement mixers. · The most common form of concrete. · Cast in a reusable mould in a fadory settmg under high quality control before transported to thePRECI\STCONCRETE 0 · conslruction site for installation. There are two (2) types of precast products. standard producls and speCialty products · Standard products such as beams. decks, and railroad lies are can be produced in large · volumes and slacked as illvenlory while awa.IUng sale. Specialty producls are designed specifically and customised 10 order.
· Standard rectangular concrete blocks measuring 8 inches A B Irlches x 16 Inches (200MI\SONRY 0 · millimeters (Omm”) x 200 mm x 400 mm). Widely used to construct small and large structures that are economical. energy efficient, fire­reslslanl, and Il1\folVe minimal maintenance.
f AJso known as tlrr:~s1ab or Wt-wall. 0 Concrete walls, columns or structural supports are rurmed horizontally on a concrete slall, and once cured, are Med 10 a verlica.l position by a crane and braced into pasHioll while other structural components such as roofs, intermediate floors and walls are secured. TILT-UP CEMENT-BI\SED · · Represent producls ihal defy the I<‘,bel or concrele but share many of ifs qua.lilies Includes marlar, grout. terrazzo, SOil-cement, roller-compacted concrete, flowable fill and cement-lreated base. • MATERIALS Source. Extracted from the mdependent market research report prepared by SMITH ZANDER Ready-mix concrete is the most common of concrete types, generally because it was the earliest to be introduced to the construction industry. Ready-mix concrete does not only act as a binder, it also allows for on-site casting of concrete products such as concrete slabs and tilt-ups. Prior to the introduction of ready­mix concrete, end-users used to purchase their own cement and other raw materials for the production of concrete on-site. With the constant evolution of the construction industry, precast concrete was later introduced to end-users. While ready-mix concrete still requires end-users to cast concrete products on-site, precast concrete 3 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
provides end-users with concrete products which have been casted off-site in a factory setting either according to their specifications or to standard specifications. There are many advantages in which precast concrete holds over other types of concrete, such as faster construction times, easier management of construction sites without having to monitor on-site production as well as [ower transportation costs. Precast concrete industry -advantages of precast concrete FasterconstrucUon time > Quicker erection or structural alld ornamental parts as these parts can be produced in advance according La the specificaticm required for each construction sile > Construction schedule is less dependent on l’Ieatfler condilions 8S cu[i~ of concreje is not rleeded in this case EaSier management of construction site > The volume of construction waste is reduced as the need fer on-site precast concrete produdon operafioll5 have been eliminated Eliminalion of1he need (or scaffoldings and temporary support structures alld tflus, reducing c05ls as well as heaKh alld safely hazards > More fm:us can be placed on other ccmsl/uction activities and thus. Improving quality and labour costs East of logistics and transportation > Concrete, In its ready-m\xed form, musl be delIVered WIthin 90 minutes from lIs 1T’lI)(lng, which hmrts the area a ready-mlxed concrete plant can selVlce
> Goncrele, in its ready-mixed form, must also be transported in a IrarlSit-mill. truck, which is heavier than a 10fry lransporting precast concrete products and thus, transportaTIon IS kepI 10 bare minimum to avoid hauUng heavy loads on the road over longer distances Source: Extracted from the independent market research report prepared by SMITH ZANDER [The rest of this page is intentionally left blank] 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)

2 ANALYSIS OF THE CONSTRUCTION INDUSTRY IN MALAYSIA Industry Performance, Outlook and Prospects Economic Contribution The construction industry in Malaysia is largely influenced by the nation’s economic development as the construction of buildings and infrastructure are essential for national development and progress. With economic development comes an increase in demand for residential, commercial and industrial properties due to the increase in the average income of the population as well as the increase in business activities. As these construction sub-segments (Le. residential, commercial and industrial) develop, the infrastructure and social amenities supporting these developments must be likewise built or improVed. The mark of a country’s economic development is reflected by its gross domestic production (“GOP”) and employment rate achievements. From 2009 to 2013, the GOP for the construction industry in Malaysia increased from about RM19.3 billion to about RM29.6 billion, recording a compound annual growth rate (“CAGR”) of 11.3%. Between 2009 and 2014, the construction industry contributed to between 3.0% and 4.0% of Malaysia’s total GOP, increasing from 3.1 % in 2009 to 3.9% in 2014, sign~ying its importance to overall econom ic developmen l. Construction industry in Malaysia -key economic statistics
The construction industry is a vital building block for the development of other economic activities in the country, including manufacturing, finance and business services as well as wholesale and retail trade, hotels and restaurants. In 2013, the manufacturing sector contributed apprOldmately 24.5% to Malaysia’s total GOP, while wholesale trade, retail trade, accommodation and restaurants collectively contributed approximately 16.9%, and finance, insurance, real estate and business services collectively contributed approximately 14.8%. In 2014, the manufacturing sector contributed approximately 24.6% to Malaysia’s total GOP, while wholesale trade, retail trade, accommodation and restaurants collectively contributed approXimately 15.4%, and finance, insurance, real estate and business services collectively contributed approximately 14.5%. In order for these economic activities to operate and thrive, buildings and structures such as industrial parks, office buildings, retail malls, hotels and restaurants must be erected. 5 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Globally, crude oil prices began witnessing a Construction industry in Malaysia -global drop below the USD100 per barrel mark in Brent crude oil prices September 2014 after nearly five (5) years of stability, raising concerns on the impact of lower oil prices on the construction industry in Malaysia. The combination of robust world crude oil supply growth and weak global demand has contributed to rising global inventories and falling crude oil prices.
Month, year February 2014 March 2014 April 2014 May 2014 June 2014 July 2014 AU9ust2014 September 2014 October 2014 November 2014 December 2014 107.42 108.81 107.40 -107.79 109.68 111.87 106.98 101.92 97.34 87.27 78.44 62.33 Source. Extracted from the mdependent market research report prepared by SMITH ZANDER In assessing the impact of falling crude oil prices on Malaysia’s construction industry, a ionger tenn view of the country’s construction industry perfonnance benchmarked against crude oil prices is necessary. Over the period of 1987 to 2014, Malaysia’s construction GDP increased from RM2.8 billion to RM46.8 billion. Malaysia’s construction industry has witnessed a steady upward growth trend between 1987 and 2014, save for the year 1998 when the construction industry was affected by the impact of the Asian financiai crisis. While growth in the construction industry moderated between 1998 and 2006, the industry’s perfonnance picked up and registered stronger growth commencing the year 2006, reaching RM46.8 billion in 2014. Over the same period between 1987 and 2014, Brent crude oil prices increased from USD18.34 in 1987 to USD98.94 in 2014. During this period, Brent crude oil prices have fluctuated more drastically than the perfonnance of the construction industry in Malaysia, as a result of global demand and supply factors, with dips in 1988, 1991, 1998, 2001 and 2009 arising from major regional and/or global economic slowdowns. The oniy corresponding dip in the performance of the construction industry in Malaysia was in 1998 during the Asian financial crisis, when both construction GOP in Malaysia and Brent crude oil prices dropped in tandem. In 2009, when Brent crude oil prices decreased drastically to USD61.86 from USD97.64 in the year before due to the United States sub-prime crisis, construction GOP in Malaysia continued to rise. Based on this historical trend, save for the period during the Asian financial crisis in 1998, the construction industry in Malaysia has been predom inantly resilient to fiuctuations in global crude oii prices. 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Construction industry in Malaysia -impact of global Brent crude oil prices on the construction industry in Malaysia· 50,000 120 45,000 100 C” 40,000 .”
~ ro” -“I \,0-35,000 II iii80 0­,g ,” \, aE 30,000 )” If),, “,, 2­,¥!!’-:;; 25,000 /’ II 80 •0 0. ,/ ‘§.a ,’0′” 20,000 ,0 0 ! 40 ~• ~ 215,000 02 ~ ~ 0 10,000() ……………. ~ ­20…….~ …

“‘ ~ 5,000 0
o ~~~~~~w~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ __Construction GOP (RM million) ~o$”_ Brent crude oil price (USD per barrel) a Malaysia’s construction GOP is based on current prices Source: Extracted from the independent market research report prepared by SMITH ZANDER [The rest ofthis page is intentionally left blank] 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Employment The construction industry has also contributed to the socio-€conomic development of Malaysia in terms of employment. Employees in the construction industry increased from about 10.9 million persons in 2009 to an estimated 13.6 million persons in 2014, indicating a growing construction industry that is in line with a deveioping country’s manpower requirements. The percentage of employment in the construction industry hovered between 9.0% and 9.5% of tota’ employment in Malaysia over the period of 2009 to 2014. Construction industry in Malaysia -employment statistics
Percentage employment of the construction industry (%) I I I I = I p -prellmmary Source: Extracted from the independent market research report prepared by SMITH ZANDER 9.1  9.2  .~-_ ..__ ._~­ 9.1  9.4  9.0  Not applicable-
Value of Projects Awarded The vibrancy of the construction industry reflects the growth of a country’s economy. The growth of the construction industry is typically cyclical as it follows relatively closely to the GOP growth of a country. A common measure of the construction industry is based on value of projects awarded during a certain period. From 2009 to 2013, the construction industry in Malaysia, as measured by vaiue of projects awarded, grew from RM74.9 billion to RM130.7 billion and recorded a CAGR of 14.9%. The industry experienced a siowdown in 2009 as public and private expenditure on construction activities were tightened due to the global financial crisis. However, the industry began rebounding in 2010 in a show of resilience as the Government of Maiaysia and the private sector resumed spending on construction activities. Residential construction activities registered the highestCAGR of 27.6%, increasing from RM14.3 biliion in 2009 to RM37.9 billion in 2013 in terms of awarded project value. Commerciai and industrial construction witnessed an impressive growth rate of 12.8% between 2009 and 2013 on the back of an increase in the supp Iy of commercial office space. II Company Number: 1108506-W II 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Construction industry in Malaysia -value of projects awarded a 140 120
C 0 99. 100==:a ::; 87.9 !!:­
,~;:,’-,,’ 46.0,-.<,.!!l 80 74.9 (,’;~{» •u
66.7’e
62.9 ~ ~• 60 ~ •~40’0 •:’l”” 20 0 2009 2010 2011 2012 2013 January -January-June 2013 June 2014

_ Commercial and industrial m!&l Residential Infrastructure -Total “Latest available data as at 31 May 2015 Source: Extracted from the independent market research report prepared by SMITH ZANDER The infrastructure development sector of the construction industry is typically reliant on public funding from the Govemment of Malaysia. In terms of awarded project value, this sector increased at a rate of 8.4% from RM22.7 billion in 2009 to RM31.3 billion in 2013. Infrastructure and social amenities development was adversely affected by the global financial crisis in 2008 which prevailed over the next two (2) years. Nevertheless, with the implementation of the 10’h Malaysian Plan (“10MP”) and the Economic Transformation Programme (“ETP”), infrastructure and sociai amenities construction recovered in 2011 and 2012. In 2013, the Govemment was largely focused on seeing through several of the transportation­related infrastructure projects awarded in 2011 and 2012, hence resulting in lower construction values in terms of awarded projects during the period of 2013. Moving forward, infrastructure and social amenities construction is also expected to continue to be strongly driven by public expenditure. The 10MP identifies 52 high impact projects worth RM63.0 billion which include the Pahang-Selangor Raw Water Transfer Project with an estimated project value of RM9.0 billion, the Light Rail Transit (“LRT”) extension from Kelana Jaya station to Putra Heights, Subang Jaya with a maximum contract value of RM7.0 billion and the construction of the new Low Cost Carrier Tenminal (“LCCT”) with a gross development value (“GDV”) of RM2.0 billion. With the aim of further developing the country, the Government of Malaysia also announced future development plans under the ETP in January 2011. These plans Include the construction of the Klang Valley MRT system, which is estimated to cost about RM55.0 billion and KL Intemational Financial District Development which has a GDV of RM26.0 billion. Other plans under the ETP include the development of the Pengerang Independent Deepwater Petroleum Terminal (“PIDPT”) and the Refinery and Petrochemical Integrated Development (“RAPID”) in Johor, with an estimated cost of over RM60.0 billion, as well as 9 “”$”‘” •
7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
several power utilities plant development in Pahang, Perak and Terengganu which have an estimated combined total project value of RM500.0 million. The Govemment has further approved six (6) toll highways for Selangor, namely Kinrara -Damansara Expressway (“KIDEX”), East Klang Valley Expressway (“EKVE”), Sungai Besi -Ulu Klang Expressway (“SUKE”), Damansara -Shah Alam Highway, Serdang Kinrara Putrajaya Expressway (“SKIP”) and West Coast Highway (“LPB”), which collectively will require an investment of RM20.5 billion. Construction industry in Malaysia -selected on-going and upcoming major infrastructure development projects LocationPahang andSelangor Negeri Sembilan Selangor
I i Type of infrastructure I Estimated projectProject I I development value (RM billion) Pahang -Selangor Raw Water Transfer g.O Project Low Cost Carrier Terminal Utilities Tran sportation 2.0 _.–_. LRT Extension Project Transportation 7.0 Klang Valley MRT System Transportation 55.0 -CommerciaI’KL International Financial District 26.0 Development (“KLlFD”) _..­KL bullet train to Singapore Transportation 12.0 Klang River Revitalisation Commercial 18.0 -_.._—-_…._-Kinrara -Damansara Expressway (“KIDEX”)
Transportation -fEast Klang Valley Expressway (“EKVE’j-Transportation 1.6 ——-_.._. ———_-..­…-=iI Sungai Besi -Ulu Klang Expressway’ Transportation 4.2 J:SUK,E”) –…._… Damansara -Shah Alam Highway ‘—­Transportation 4.3 _____……n ••••••••• -. ._-~~ Transportation 2.0 (“SKIP”) I Serclang Kinrara Putrajaya Expressway ….__.__._.-,.-……..
-·cc-=-­Transportation 6.0 –_.. -1———-~ i West Coast Highway (“LPB”) I Johor Pengerang Independent Deepwater Commercial

 

60.0 I Petroleum Terminal (“PIDPT”) ,II Refinery and Pelrochemicallnlegrated’–‘ II I Development (“RAPID”). .f-~-.­UtilitiesUlu Jelai Hydropow~r!,roject .. O~Pahan.~
._._—­Perak UtilitiesManjung Extension Develo~.~..:_~..~ f-=—..

Terengganu UtilitiesHuiu Terengganu Hydroe~ectric Project

__=:””-===L I Source. Extracted from the mdependent market research report prepared by SMITH ZANDER Apart from the initiatives driven by the Govemment to further develop infrastructure based on the nation’s socio-economic needs, the Government through the Construction Industry Development Board (“CIDB”) intends to further deveiop the construction industry in Malaysia to maintain its status as a healthy and self­sufficient industry. The CIDB implemented the Construction Industry Master Plan (2006-2015) in 2006, which includes seven (7) thrusts that aim to increase the industry’s market size by expanding into new and unexplored foreign markets, and improve productivity, efficiency and cost-effectiveness of the domestic construction industry in order to provide comparative advantage to the economy. 10 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
With these opportunities created by the Government of Malaysia to drive industry growth and socio­economic development, the construction industry is expected to grow strongly, particularly in line with the rolling out of large infrastructure and social amenities development projects. SMITH ZANDER projects the construction industry to grow from RM130.7 billion in 2013 to RM191.1 billion in 2017, based on awarded project value, at a CAGR of 10.0%. SMITH ZANDER estimates that the percentage contribution of infrastructure, commercial and residential development projects will not significantly change over the forecast period. Competitive Landscape The construction industry in Malaysia is competitive owing to the large pool of diversified and pure play industry players that compete for public and private residential, commercial and industrial, and infrastructure construction projects in the country. Based on its revenue of approximately RM1.9 billion in the FYE 31 December 2014, Sunway Construction Group Berhad ranks among the top five (5) construction companies in Malaysia, and upon its Listing, will be the largest pure play public listed construction company in Malaysia. For the purposes of this research report, SMITH ZANDER has adopted the premise that a pure play construction player is a construction group and/or company that derives 90.0% or more of its revenue from construction and construction-related activities, while diversified groups and/or companies derive less than 90.0% of their revenue from construction and construction-related activities, and are involved in other core businesses, which include, among others, property development, oil palm, tolls and other concessions. manufacturing and trading. The ranking of Sunway Construction Group Berhad is based on a comparison of its revenue in the FYE 31 December 2014 against the latest available revenues of the companies listed on the Construction Sector of the Main Market of Bursa Malaysia Securities Berhad, with the latest available revenues of these companies ranging from the FYE 31 December 2013 to the FYE 31 December 2014. The following sets out the latest available revenues of the major construction groups and/or companies in Malaysia, with classifications indicating if they are pure play construction groups and/or companies, or diversified groups and/or companies. [The rest ofthis page is intentionally left blank] I 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Construction industry in Malaysia -financial performance of public listed construction industry players as at 31 May 2015
IJM Corporation  Construction,  Diversified  31 March  6,006,481,000  2,080,082,000  Bernad b  property  2014  development,  manufacturing and  quanying,  plantation,  infrastructure and  investment  holding

—.———–+~~_::=-+~==_+=r,::c:::==+=MMC Ports and Diversified 31 December 8,765,501,000 Corporation logistics, energy 2014 others  I  Kimlun Construction, Corporation manufacturing of Bernad b concrete products I and tradin9 of building materials, l . .L..~_:_=:_=~:c;_=y::cn_~::ct_._-‘  Diversified  31 December 1,206,398,768 967,195,1:J.fl 2014 I ‘ IJ I ‘­–‘_________ __~_____j
7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (eONT’D)

Eversendai Corporation Bemad b Mudajaya Group Berhad b Bina Puri Holdings Bemad b __. __ .__. __._._ Muhibbah Engineering (M) Berhad b 965,050,000Construction Pure play 31 December 965,050,000 2013contracts Diversified 31 December 1,050,805,000 849,756,000 contracts, property Construction 2014 I development, trading and plant hiring,
manufacturing, others Diversified 31 December 1,053,478,000 833,226,000 property Construction, 2014 development, quarry and
readymix concrete, polyol manufacturing, .l’.”””er sLJ””I~_ Inlrastructure
—OiverS[fled-­’31’oecember 1,733,620,000 717,089,000 construction, 2014 cranes, marine ship building and ship repairI concessions 706,833,597′-~-:m-C-~”rgy -.-~~~~~:~~~terty-DiverSified-~~~ecemb~J-814’955’8871l Ahm-ad-=Zc-ak'”‘ic—-j-C”‘o’–n-‘s”‘tru-‘—ct;cio-n-,—+–“”pc-u-re-p~l-ay–+–;3;-:;1~D””ec-ember 1-662 ,358,562 1—~6′”‘0;-:;1, 120,555 Resources trading in oil and 2014 Bemad b gas and other related products, i cultivation, other —–c—-jl’….operati~:ms .. I Hock SengLee Construction, Pure play 31 December 604,721,309
572,767,959 Bemad b property 2014 , development, II ‘””Gc-a~d-a’n-g—-+””C:-oc-ns~t-ru-c-:;-tio-n-, –. Diversified 31 May 2014 544,945,855-442,192,822others
I””~ Holdings I property, utility, Bemad b investment holding and __—-j_.o”‘th=er.:s’-‘,p::cl.:::an:.t:.a.:::tio.:::n’—-I–~_——-1-=c–;-=-,–;-,—ed—~=-I i~~::;~ ri~~~~~:, and 418,687,7L1::~1:600JPure play 30 June 2014 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
31 December 2014 Diversified Berhad b  development,  manufacturing and  trading, heaithcare  industries, others  Gabungan  Property  AQRS Berhad b  development,  construction,  others  Sycai Ventures  Construction,  Berhad b  property  development,  manufactu ring and  ‘_’  ,t~adirlL  ,  Pesona Metro  Construction  Holdings  works,  Berhad b  manufactu ring and  trading of polyurethane,  ~effi
Diversified Diversified Pure play 31 December 2014 31 December 2014 31 December 2013 I
534,163,223 406,183,000 296,887,419 . 325,222,557 291 ,859,000 283,120,770 Fajarbaru -~~-v~-I~~-,~-nro-t:-t~-rty’Dive;sified “30June 20141′ 313,581;i;95I’—244~034’030 Builder Group Berhad b
construction, trading 1Engic-ne”-e-n,.-‘n-g-a-n””‘d-+—-.p’u’r’e-p’la-y-+32′””’01C”01M4·arch -“—,250,20·7,000’ –242,999,000Zel,m Berhad b construction, I property and development, investment, others I-=–=–:-‘-f-::-~, , ‘~=-===-il—,-=,.–;:c==;-j Ireka II constructiOr,;-‘-! Diversified 31 March 289,676,087 I 231,972,773 Corporation property; 2014 Berhad b development,;1 I I trading and services,
hospitality and leisure, investment I holding i I ~ I-‘M”‘T”D’A’C=P’I’–f-;;CC:-o::C:nstru-ct-io-n-,—–‘–jO-ive-r-si-fie-d-‘-’31 March l—-m,185,OOO 222,546,000II -, Engineering manufacturing and 2014 Berhad b ~ related services. I I I o~effi I ~:~:.~:~_. Diversified _.L~_’~_p_4_ec_e_m_b_-e_r-L_3_0_2_,158,621_.[-“19-8,-54..1.,.'””

-~~~~~yction’—L[-‘-IBerhad b development, trading and others , ._–_… 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)

Melati Ehsan  DiveConstruction.  rsified 31 August  323.143,107  168,388,471  Holdings  trading. property  2014  Berhad b  development,  others
p”in”taCCra’-s’-J”a’-yCCa–t ~P;’:ili=ng:’:.’-:ccciv70il—+-“””‘D”ivC:e:-rs'”ifi”leC:dc–/-;3″0″JU'””n”-e”‘2o”‘1;c4,-t-“‘2o”‘1:9-o-6-,7-7;;-9+—-;;1″‘6’7·,4.,.19″‘.”‘2~57orl Berhad ‘ . …._….__~_ Protasco Berhad b engineering and construction works, manufacturin~.. Construction contracts, engineering services, training and education, trading. property development, others I-=Z’–eco-n:-B~e-r:-h-ad-cbc-f–OC”-o=ns:”:t’-ruction. –+–~D::-iv-e-rs-,ifi~le-d,-+3:c0;-cJune propertydevelopment. toll concession, others i-:cEc-k-ov-e-s7tB”‘e-rh’;-a’d-!-“‘C’-o-nst-:-ru–c”‘tlo-n:–­b …..,—-‘Jaks Resources Bemad b r.-:–;–;–,–,__Ho Hup Construction Company Berhad b
L operations, property development, investment holding, toll operations Manufaclun”‘n-g-, trading. construction,
~~~~~yent,
~.:.:ve::.:lo,,,,pm.:.:e:::.:n.:.t_ Construction, ..__.~_ 31 DecemberDiversified 1.061.573,000 141.971,000 2014 ~ 2014 208 ,595 .336=-+1—–,1-c41c-,’O’32~4c-.-=-50:c504 [1’1 .. IL Diversified –30-J-Une-2-0-141-229,126.000 ,’i,,1 Diversified -3-1-tfec-embe’r’-­490,932,434 I i 2014 I
j ~I J i Diversified 31 December property’ I 2014 development, [ manufacturing. others _ ‘ 341,024,000 —-1-37~471 ,000 134.554.306 115.897,000 114,033.677

7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)

quarry and road paving, construction, operation of go~ I resort and hotel,
I _ trading r.:D:7:K:CL”‘S”‘ln-d”‘u-s”‘tr7’ie-s Investment Diversified Berhad b holding, construction. manufacturing, property development. I

 

L__­~~;:~ruction, —1’–=D::’iv-e-rS”‘7itl,€«(-,II”23011″‘A-u9St –I–1’9{72’9,605 I~’-‘—66,001,000-u-‘CPLB Engineering property 4 Berhad b
development, I trading, property I letting, waste !
1 I management, II investment , holding, others Kumpu”‘la-n—-‘I’construction and Diversified –131 December +—“‘150’;9′”‘,0′”‘5′”7-=,9::;181 45,984,444 I Jetson Berhad b property 2014
I development, :1I’ hostel I management, manufacturing Fututech
Manufacturing, Diversified’ -.-23011D3’oc–,eii’iber 41,99~,486 —-36]70:5291 Berhad b construction, 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
properties, investment and others -Be;;e-Ia-c~~·  “land’reclamation  -,  Diversified  Holdings Berhad b  services, vessel chartering and  marine transportation, shipbuilding,  others  Brem Holding Berhad b  Civil engineering and construction,  Diversified  property development,  property investments and investment holding, water  supply and services f–;Ac;rkc-R”‘ec-so=uC:-rcc-e-=s-r-“‘C”‘on:”s”t:Cru’-=c”tion=-,-­ Pure play  Berhad’  property  development,
I ~~~1~~n _u~~~~~~~g,.__ -Diversified­30 June 2014 211,017,214 17,617,674 31 March 144,101,370 14,744,025 2014 I I ~ 31 December· ~~7 ,400,041 I -~~-=6-=,8=’73, 737 2014 I
;~1~a~h–_13:9io,~~~t{694~OO:
I’Due to differing segmental revenue definitions of industry players, this may include some revenue derived from businesses other than construction and revenue derived from outside Malaysia b Segmental revenue for construction and construction-related activities excludes inter-company or inter-segment revenue C Segmental revenue for construction and construction-retated activities may include inter-company or inter·segment revenue Source: Extracted from Ihe independent markel research report. prepared by SMITH ZANDER In 2013, Malaysia’s construction industry, measured by the total value of projects awarded, was registered at RM130.7 billion. During this same period, Sunway Construction Group Berhad was awarded projects amounting to RM2,9 billion and thereby garnered a market share of 2.2% in Malaysia based on the total value of projects awarded. For the first half of 2014, Malaysia’s construction industry, measured by the total value of projects awarded, was registered at RM62.9 billion, Sunway Construction Group Berhad was further awarded with projects amounting to RM758.3 miiiion in 2014, of which RM332.7 miiiion was secured in the first half of 2014 thereby resulting in a market share of 0.5%, 17 –
7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Demand Conditions -Key Demand Drivers Government expenditure to drive infrastructure development generates demand for construction services In addition to the 1OMP and ETP, the Government of Malaysia in the recent Budget 2015 announced the launch of the Eleventh Malaysia Plan (“11 MP”) commencing May 2015, and the formulation of the Malaysian National Development Strategy (“MyNDS”). MyNDS will be the vehicle for planning and preparation of programmes and projects under 11 MP, with an emphasis on using limited resources optimally, with focus on high impact projects and programmes at low cost as well as efficient and rapid implementation. Budget 2016 which will be announced in the second half of 2015 will be the start to the final five (5) years of Malaysia’s progress to achieving high-income advanced economy status by 2020. Under Budget 2015, the Government announced several infrastructure projects that will result in greater demand for construction services. A total of approximately RM75.0 billion worth of highway Infrastructure projects have been earmarked to commence in 2015. Construction industry in Malaysia -infrastructure projects announced under Budget 2015 Accelerating public and private investment I

l-;:-:-=-:c:cc==~.
I Increasing capacity of high-speed broadband Rura(facili’t”le-s-a-nd-;-­infrastructure ……..
Constr~ction of the 59 km Sungai Besi -Ulu Klang Expressway Construction of the 276 km West Coast Expressway from Taiping to Bantln”g_~o-~-:—= =~~_”,””
Construction of the 47 km Damansara -Shah Alam HighWay’–±’–~’ Construction ofthe36 km Eastern Klang Valley Expressway Upgrading the E’ast Coast raiiway line along Gemas -Mentakab, ~erantut -Sungai Yu and Gua Musang -Tumpat_~_. Construction of the 56 krn Second MRT Line from Selaya-n-g7Putrs”a a .:—–:—-:::-. LRT 3 Project, which will link Bandar Utama to Shah Alam and Klan ro;C:-=o”-‘ns~tC”ru”””:c”tioC”n=of”th;::-:-e {663 krn Pan:s'”0:C:::m”””:e-‘:-0″”‘H”i9:::;hC”wccaCCy”c”0-‘:-m=p-‘:-riccSiccnC”9″9″3″”6+——-.-27.0 km in Sarawak and 727 km in_§.”.bah __.__ Pengerang Integrated Petroleum Complex (“PIPC”) project BUild 1,000 new telecommunication lowers and laying OlunderS.ef··—-.N70::t-:aC”va:cI,cla’.:bo’le-1 cables “Constructlon of 635 km of rural roads including formerlogging–‘” roads in Sabah and Sarawak Implement electric~y connection for 15,000 hall’ses in Sabah and 1 Sarnwak —4­~__’Im___”p_’Ie_m_’e”n-‘-t rur’:’.clean water supplY/ill7,56~houses ~_.==Source: Extracted from the independent market research report prepared by SMITH ZANDER 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
In January 2015, the Government of Malaysia announced a revision to Budget 2015 following the global decline in crude oil prices. Despite a revenue shortfall resul~ng from lower crude oil prices, the Govemment will take measures to ensure that economic growth remains on a strong trajectory. Specific to the construction industry, the Government is committed to ensuring that the developmental expenditure allocated under Budget 2015 will be maintained and spent on projects such as public housing, flood mitigation, water supply, electricity and public transport infrastructure. Under the Budget 2015 revisions, the Govemment intends to continue to undertake major infrastructure projects such as the Second MRT Line, LRT 3, Kuala Lumpur-Singapore High-Speed Rail and the Pan-Borneo Highway. Construction industry in Malaysia -revisions to Budget 2015, specific to the construction industry Strategy Description Ensuring baianced Frontload implementation of logistics and trade facUilation: inclusive and • Improve last-mile connectivity to Port Klang including access road, railway networ1< sustainable economic and traffic management system; growth • Upgrade Padang Besar railway terminal; • Improve operational efficiency of import and export processes; and
• Establish a hub and spoke system for air transport
• To enhance private consumption, the Government will give priority to local class G1 (Class F), G2 (Class E) and G3 (Class D) contractors registered with CIDB to undertake reconstruction works in their respective flood affected areas.

Assisting the rakyat and I The recent floods affected around 400,000 people nationwide. The latest estimate of business commun~y as i damage to infrastructure is about RM2.9 billion. Among the measures that have been well as rebuilding I taken and will be implemented to assist flood victims include: infrastructure damaged I. The Govemment has proVided an initial allocation of RM500.0 million for rehabilitation by the floods i worKs and welfare programmes for flood victims. This is in addition to the existing I allocation to the National Security Council, bringing the total to RM787.0 million; i • Provide an initial allocation of RM800.0 million for repair and reconstruction of basic I infrastructure such as schools, hospitals, roads and bridges; • Provide RM893.0 miliion under Budget 2015 for flood mitigation projects;
• Build eight (8) feet stilt houses for those who have land and whose homes were

damaged by the floods; and I L-._. . Handover 1,000 units of completed low cost h~u~es in Gua Musang. _~ Source: Extracted from the independent market research report prepared by SMITH ZANDER In May 2015, the Government tabied the 11 MP (2016-2020) which outlined the nation’s development e”Penditure until 2020. The development of the 11 MP was guided by MyNDS which focuses on rapidly delivering high impact on both the capital and people economies at low cost to the Govemment. The capital economy focuses on GOP grow1ll, big businesses, large investment projects, and financial markets, while the people economy focuses on with what matters most to the people, which includes jobs, small businesses, the cost of living, family wellbeing, and social inclusion. The construction industry is expected to benefit from the 11 MP due to higher demand for modern and efficient infrastructure. Under the 11 MP, the construction sector is estimated to e”Pand by 10.3% per annum during the 11 MP period. This is attributed to continued civil engineering works and a growing residential subsector to fulfil the demand for housing, particularly from the middle-income group. Demand for affordable housing by the low-income group will also remain favourable, which will be supported by several Govemment initiatives, such as Program Perumahan Rakyat 1Malaysia (“PR1 MA”), Rumah Idaman Rakyat and Rumah Mesra Rakyat. Other subsectors such as civil engineering and non-residen~al wili remain robust in line with the 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
development of major projects such as the Tun Razak Exchange, KL118 Tower, RAPID and the Pan­Borneo Highway. Construction industry in Malaysia -initiatives announced under 11 MP, specific to the construction industry Focus area -I Description ~ ­Uplifting Bottom 40% (“B40”) households towards a middle-class society Empowering communities for a productive and prosperous society , • The Rural Electricity Supply programme will continue to focus on off-grid generation for remote and isolated areas. The alternative system of solar hybrid and mini hydro will be supported by micro and pico-grid to increase coverage. Under the 11 MP, 99.0% coverage of access of electricrty will be provided to rural houses reaching 36,800 additional houses. ‘——–t–o–;O:””‘7’~—-O–;—“‘-~­Transforming rural Revisiting regional economic corridor priorities and industry-focusI: • areas to uplift wellbeing • The Border Economic Transformation Programme will enhance outcomes from of rural communities I regional economic development by bringing inclusive development and prosperity I to the border regions of Malaysia. A range of large-scale economic growth projects and local income-generating opportunities will be developed, including the development of Lembah Chuping and Perlis Inland Port in Perlis, rubber-based ‘ downstream processing in Rubber City in Kedah, the construction of Plaza IMT-GT which is a retail plaza in Bukit Bunga, as well as the redevelopment of Kampung Laut in Tumpat, Kelantan. Improving connectivity and mobility • Transportation networks will be improved to enhance connectivity and mobility in regional economic corridors. This includes the construction and upgrading of roads and highways such as the Pan Borneo Highway to link Sarawak Corridor of Renewable Energy (“SCORE”) and Sabah Deveiopment Conidor (“SDC”); Central Spine Road and Kat,,: Bham-Kuaia Kral Highway to increase connectivity In~e East Increasing the provision of affordable housing
• The Government will continue to ensure that affordable homes are available to 840 households, Existing low cost flats and houses will be refurbished as part of a holistic campaign to improve the living conditions of the community. For poor households in rural areas, especially Orang Asli in Peninsular Malaysia and those living in Sabah and Sarawak, the Government will continue to provide hougjng wrth basic amenities through the construction of integrated settlements under Program Banluan Rumah (“PBR”). The Program Perumahan Rakyat (“PPR”) will be continued for poor households in urban areas. Increasing access to healthcare services • In rural areas, more community clinics will be built to increase access to basic healthcare services. increasing tli,,’provlsion of road, water and'”I”ciric~ysupply—~~­• New roads will be constructed and existing roads inclUding ex-logging roads will be upgraded to Improve connectivity, particularly in Sabah and Sarawak as well as Orang Asli settlements in Peninsular Malaysia. Priority will be given to the construction of roads connecting villages as well as linking villages with the nearest towns. During the 11MP, 3,000 km of paved roads will be constructed.
• The Rural Water Supply programme, to suppiy ciean and treated water directly to each household, will be expanded and this will involve connecting households to the meter stands of the reticulation systems. In addition, alternative systems such as gravity feed, tube wells and rain water harvesting will be used in remote and isolated areas. Under the 11MP, 99.0% coverage of access of clean and treated water will be provided to rural houses reaching 90,000 additional houses.

7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Focus area Accelerating regional growth for better geographic balance Building an integrated need-based transport system ‘ .__…L
I Description Coast Economic Region (“ECER”). The completion of Mukah Airport is expected to accelerate development in Mukah and the surrounding areas within SCORE, with Mukah to be developed as a smart city as well as one of the growth nodes in SCORE. • Strengthening institutional-based programmes for assets ownership
• Institutional-based programmes including Bumiputera real estate investment trust

(“REIT”) will continue to be strengthened to enhance Bumiputera ownership of large commercial and residential properties in strategic locations. Yayasan Wakaf Malaysia, state Islamic religious councils, and other Bumiputera-based institutions will collaborate to develop Malay reserve and waqf land to unlock value while retaining Bumiputera ownership. Prioritising regional connectivity for new highways • To achieve a balanced economic development, highway development will be focused outside the Klang Valley and other urban areas. The 11 MP will therefore focus on rural and rural-urban connectivity. The Pan Bomeo Highway will promote better connectivity in Sabah and Sarawak. Further development of the Central Spine Road, Kota Kola Bhalt/-Kuala Krai Highway, and the Lebuh Raya Pantai Timur will improve connectivity in Peninsular Malaysia and catalyse growth in the east coast region. The compietion of the West Coast Expressway in 2019 will also provide better access to the west coast of Perak and Selangor. Increasing public transport modal share in c~ies • Improving urban public transport remains critical for Malaysia as 75.0% of its population wiil be living in ctties by 2020. The Klang Valley MRT system will become operational during the 11 MP. The Klang Valiey MRT Line 1 will traverse 51 km between Sungai Buioh and Kajang, through 31 slations serving about 1.2 million people with a daily expected ridership of 400,000. Construction on Klang Valley MRT Line 2 will also start in 2016 and is estimated to become operational by 2022. Addllionaliy, construction on a LRT Line 3 connecling Bandar Ulama to Klang, running over 36 km and serving 25 stations will start in 2016 wtth expected compietion in 2020. Deploying roads and public transport to increase rural and rural-urban connectivity • Rural roads linking the main road networks will continue to be given focus. These roads provide access to basic social amenities such as health, education, and other public services. Rural roads will also create economjcopportun~jes for the residents and further alleviate poverty among the rural households. I • The Govemment will continue to enhance connectivity and safety of rural air I services by improving short take-off and landing airstrips (“STOLports”). The construction of a new airport in Mukah will be completed in 2018 and the relocation II of Lawas STOLport in Sarawak to a suitable site will be carried out. Upgrading air navigation system and airport infrastructure I • A new Kuala Lumpur Air Traffic Control Centre will be built at Kuala Lumpur I Intemational Airport to replace the National Controi Centre at Subang, Selangor to improve aircraft movement capacity. In add~ion, the Communication, Navigation and Surveillance as weli as the Air Traffic Management systems will be upgraded to improve efficiency of air navigation services. The Langkawi International Airport, Kedah and the Sultan Ismail Petra Airport, Kelantan will be upgraded to cater for the expected increase in passengers. I Improving port accessibility and capacity ~. • Access.ib.i1ity to maio.r ports will be improved to cater for bigger vessels through channel deepening works. In addition, port operators will undertake capacity …J. expansion, which i,’.c1udes building addttional…berths and wharfs. These 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Focus area Encouraging sustainable energy use to support growth
Description improvements will attract more international liners and mega vessels with capacity of 18,000 twenty-footer equivalent units (“TEUs”) to call at these ports. -Ensu’rlng ssell”ray of supp’ly forgas-~—-“–“–“‘-“‘”-…——~———.,–….—-­o Gas supply security would be ensured through the construction of pipelines from the Malaysia-ThailandJointDevelopmentArea to Kerteh,Terengganu;construction of the RGT-2 in Pengerang, Johor; and the commissioning of two (2) floating LNG units offshore Sabah and Sarawak with a capacity of 2.7 metric tonnes per annum.
o Reliability of gas supply in Sabah will be improved with additional pipeline

connections from offshore fields to demand centres in Federal Territory Labuan, as well as Kota Kinabalu and Kimanis in Sabah. Platforms will be connected through multiple links to provide alternative bypass options and provide capacity to users in the event of piatform shutdowns. Improved connectivity for Federal Territory Labuan will be realised through the establishment of a pipeline connection between the Sabah-Sarawak Gas Pipeline and Federal Territory Labuan. • Supporting the development of PIPC o RAPID within PIPC is a major development that will add 300,000 barrels per day of oil refining capacity in Malaysia during the 11 MP. The facility will be able to produce EURO 4M and EURO 5 grade petrol, in addition to 7.7 metric tonnes per annum of various grades of specialised products such as synthetic rubber and high grade polymer by 2020. In addition, the complex will have a 1,220 megawatt (“MW”) co­generation power plant of which 620 MW will be utilised by RAPID and the remaining 600 MW exported to the grid. The Government will provide support to construct essential infrastructure such as roads, drainage, and utilities for this I development. Another investment in PIPC will be secured by the Johor Petroleum I Development Corporation during the 11 MP to complement existing investments by DIALOG-Vopak and PETRONAS. Improving efficiency and reliability of eiectricity supply o Construction of new power plants to produce 7,626 MW will be initiated to replace retiring plants and meet the growing peak demand. A numberof500 kilovolts (“kV”) and 275 kV transmission projects to reinforce the grid systems will be completed to enhance the security of suppiy to major load demand centres. The additional I generation capacity coupled with expanded transmission and distribution networKs will improve the system average interruption duration index (“SAlOl”) for Peninsular I Malaysia, Sabah, and Sarawak. I Tran-=s””fo-=rm=inCCg’ —-f–=-“Ec:n-;::h-=ac:cnc:;cic:cn-=g~kc:cn-::ow·ledge content!, construction • The strategies to enhance knowledge content in the construction industry include I increasing the quality of human capital, accelerating capacity and capability building of small and medium enterprises and Bumipulera contractors, and reducing the; mismatch between labour demand and supply. Key initiatives include fostering greater collaboration between Construction Industry Development Board (“CIDB”), the respective professional boards, and training inst~utions to develop industry­relevant training modules. A structured skilled trade apprenticeship programme for specific courses such as safety supervisors, crane operators, and rotary drill operators will also be introduced to produce a highly skilled workforce. Small and medium enterprise capabilities will be enhanced, particularly Bumiputera contraclors, with the support of key partners and the establishment of productivity CoE for sharing of best practices. Regular manpower planning will be undertaken to reduce the mismatch between labour demand and supply. The proportion of skilled foreign labour will be increased by streamlining entry requirements and introducing a new levy system. .. _[)rivi~~produ_c!i~itL .. 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Focus area I Investing in competitive I cities and regional I economic corridors I I

Description • The strategies to increase productivity in the construction sector will focus on increasing technology adoption and modernisation of construction methods as well as reducing dependency on low-skilled labour. The iabour producliv~y of the sector is targeted to increase by about 1.6 times, from RM39,116 per worker in 2015 to RM61,939 per worker by 2020. A number of initiatives will be introduced to drive productivity, inciuding expediting the adoption of the Industrial Building System I (“IBS”) by the industry through the revision of the public procurement policy and Uniform Building By-Laws and improving existing regulations to ease construction· reiated business processes. This effort, which started with Kuala Lumpur City Hall, will be expanded to other local authorities. The use of information and communication technoiogy (“ICT”) wiil be enhanced by providing a common platform to use building information modelling (“BIM”) on a pay-per-use basis. Fostering sustainable practices • in line w~h the growing need for green construction practices, strategies wiil be geared towards increasing the sustainability of built infrastructure. This wiil include inculcating green practices in the construction value chain and developing legislation that supports sustainable construction activities. Three (3) initiatives to foster environmental sustainability in the sector are: mandating compliance to sustainable waste management practices through EMS ISO 14001 certification; enhancing the current rating systems for bUildings and developing new standards for infrastructure to promote sustainability; and enhancing the awareness and accountabil~y of health, safety and environment, where health, safety and environment good practices will be made obligatory. The minimum level of construction workers’ amenities will be raised in the code of practice and further mandated within standard contracts. • Increasing the intemationalisation of construction firms
• The strategies to increase the intemationalisation of firms will focus on building

capability and scale of firms by encouraging highperforming small and medium enterprises to forge partnerships with larger corporations or form multidisciplinary consortia when bidding for international projects. The public procurement policy will be reviewed to facilitate the formation of such consortia. In addition, firms will be encouraged to leverage free trade agreements and mutual recogn~ion agreements, and provide feedback to the Government on challenges faced when venturing abroad to enable issues to be addressed at govemment-toijovemmentlevel. The Services Export Fund (“SEF”), which covers aclivities such as tendering, negotiating, and conducting feasibility studies for international projects as well as export promotion activities. will assist construction firms to secure opportunities abroad. Expanding transit-oriented development (“TOD”) • TOO refers to urban development concepts involving the mixed use of residential and commercial development to be pedestrian-friendly, designed with maximum access to public transport. City author~ies will adopt TOD as part of the c~y’s competitiveness master plan to provide mobility options to residents, add vibrancy to city spaces. reduce pollution and energy consumption by reducing commute times and increasing the use of public transport or walking, and also revitalise brownfield areas within the city. Efficient land use through TOD will be given priority along established public transport routes. • Strengthening knowledge-based clusters
• Knowledge-based clusters will be developed lo attract investment and talent.

KnOWledge-based clusters are physical hubs within the city thal agglOmera~e industry-specific firms and talent, particularly for industries such as creative content, leT. and professional services. Knowledge-intensive investments will be given-….._… -. 23 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Focus area Description priority in the selected cities. Institutions of higher leaming and research institutes located in the cities will be the catalysts to create knowledge-based clusters. Enhancing liveability • Cities need to be liveable and should create a conducive environment that attracts talent to live, study, work, and play in. Better city planning mechanisms will be developed, including land use zoning that promotes residential, commercial, and basic sociai amenities in close proximity to increase walkability. Sports, arts, and cultural facilities will be promoted through greater collaboration between related associations, corporate bodies, and non-governmental organisations. Emphasis will also be given to the quality, capacity, and reliability of public transport, social amenities, and telecommunications networks. Healthcare facilities and high-quaiity schools will be planned for and developed accordingly to meet local demand. Vibrant cultural attractions, food and beverage and retail spaces will be developed to create cities that are attractive to global talent. • Adopting green-based development and practices
• All these cities will place high importance on continuous sustainable growth by

enhancing green-based development and optimising low carbon resources, Environment-friendly practices, such as green buildings, green lifestyles, and sustainable consumption and production, will be embedded within the development, L plans of these cities. I ….~–_ .._–_._.-···—‘””Source:Extracie-(i”iiom”lhe independent markei’researCh-ieport preparedby’SMiiiizANO-ER Greater demand for residential, commercial and industrial properties results in demand for construction services The key indicator that influences the property market is the stability of the nation’s economy. A robust economy has a positive impact on the property market while a sluggish economy will iikewise have a sluggish impact on property demand. Economic growth has the potential to contribute to increased disposable incomes among the population arising from higher employment and increased earnings for businesses and companies due to greater operating scale and wider market reach, consequently leading to increased demand for residential, commercial and industrial properties. Economic growth is a catalyst for development and growth in the property market. Between 2009 and 2013, Malaysia’s wealth, as depicted by its real GDP, increased from RM629.9 billion to RM787.6 billion. Totai property transaction value increased from RM65.1 billion to RM120.0 billion between 2009 and 2013, where the highest growth rate of 21.4% was registered in the commercial property segment which expanded from RM16.4 billion to RM35.6 biliion. The largest contributing property segment was the residential property segment that formed 60.1 % of total property transaction value in 2013, followed by commercial property segment (29.6% of total property transaction value in 2013) and industrial property segment (10.3% of total property transaction value in 2013). Over the course of 2009 and 2013, the property market in Malaysia has moved in tandem with economic development. II Company Number: 11 08506-W ~ 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Construction industry in Malaysia” economic impact on property transactions __——-120.0 :;; 600 .—-_..—–“‘1″0·8.3……,,–100 ‘”j_—–101.00­~ 500 :0 -_…. —–” 80 “~ 84.3 ~ 400 ~ 72.1 ~ 0­67.8 60 ” £:l 61.8t’l 300 ~ ;;;~ r 35.650.7 0::: 200 41.8 27.8 . • 40 ‘0 27.6 •23.8 ………………” . .2
………,.
.. .0 …… ~ 20 Ai100
‘_’M’-‘-‘-‘-‘-‘~’-‘-,§;~. -11.5 12.8 12.39.8o 6.8 o 2009 2010 2011 2012 2013 –Real GOP -+-Total value of property transactions -+-Tata! value of residential property transactions “0” Total value of commercial property transactions -;’l -Total value of industrial property transactions

Source. Extracted from the independent market research report prepared by SMITH ZANDER Commercial property supply is expected to remain robust over the period of 2014 and 2015. Ongoing decentralisation of office developments. scarcity of land and plans to improve the public transportation system in Malaysia via the construction of the Klang Valley MRT System will be among the key factors that are expected to lead to a reduction in the share of office space in major city centres as new townships and business centres emerge outside these areas. Commercial retail space is expected to witness growth in the next three (3) to five (5) years as several mixed development projects that are expected to come onstream by 2017 have incorporated retail centres as key components. From a geographical perspective, the property market in the Central region, and specifically Kuala Lumpur, is expected to be rejuvenated following the Government’s move to construct the Klang Valley MRT System which will have structural impact on Kuala Lumpur’s property market. The high mu/liplier impact from the RM43.0 billion investment to improve the city rail network for better connectivity and integration, as well as continued demand will drive opportunities in high density mixed developments and new suburban townships. Among the major upcoming commercial and mixed development projects that have been announced include the Tun Razak Exchange, MATRADE, redevelopment of Rubber Research Institute Malaysia (“RRIM”) Sungai Buloh, Bandar Malaysia Sungai Besi and Kampung Baru. II Company Number: 1108506-W ~ 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Construction industry in Malaysia -selected upcoming major property developments in the Central region I Project I Type of development I
Tun Razak Exchange

 

Commercial -~ Mixed development (Including a 167, lot 176 and lot 185 KLCC development -lot 64-storey office tower) MATRADE, Hartamas
Mixed development surrounding a convention centre Cochrane
Mixed development (mainly residential and retail) Warisan Merdeka
CommerciaI(1DO-storey office tower) I3Ukit Bintan9 Mixed development Commercial Centre Redevelopment of
Mixed development (mainly Rubber Research
residential) Institute Malaysia (“RRIM”) Sun9ai B”.lo,h Bandar Malaysia
Mixed development (mainly residential) _….__. .,
~~;~~ge~iaru Mixed development (Malay 375.0 20.0
Not available reserve land) -_.__ .. Source. Extracted from the Independent market research report prepared by SMITH ZANDER Specific to the state of Johor, the Comprehensive Development Plan (“CDP”) (2006 -2025) was launched for Iskandar Malaysia, encompassing the districts of Johor Bahru, Kulaijaya, Pontian and Kota Tinggi. Over the period of 2011 and 2015, Iskandar Malaysia intends to achieve the creation of 55,730 employment opportunities. This target is in line with the commencement of several jet catalyst projects under various flagship development zones. Nine (9) major economic clusters have been identified to spearhead the growth of Iskandar Malaysia and these clusters are electrical and electronics, petrochemicals and oleochemicals, food and agro-processing, logistics and related services, tourism, health services, educational services, financial services and creative industries. The implementation of these economic plans and targeted strategies under the respective plans, including infrastructure and transportation improvement, have great impact on socio-economic developments in Johor, and the anticipated business opportunities arising from these economic plans will have positive impact on commercial property supply and demand in Johor. Estimated I Estimated gross I ExpectedI iland area development I completion (acres) I value (RM billion) i date 80.0 26.0 2028 (Phase 1 by2017) 4.0 5.0 2017 62.0 15.0 2020 50.0 10.0 Not avaiiablEl 19.0 5.0 2020 22.0 5.0 2020 2,330.0 202510.0 460.0 15.0 Not available 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Growth prospects of end-user markets/industries drive demand for commercial and industrial properties and supporting infrastructure Malaysia’s economy registered a 6.0% growth in 2014 supported by resilient domestic demand and augmented by a recovery in exports. This positive performance Was underpinned by strong macroeconomic fundamentals and a diversified economic structure as well as a sound financial system. Private sector expenditure expanded 7.1 % and contributed 52.5% to the economy. Private investment. in particular. surged 13.0% to RM78.7 billion during the first half of 2014 with its share to total investment increasing to 68.9%. In tandem with Government transformation initiatives’, investment growth is expected to remain strong in 2015. The services sector remains the driver of growth, contributing 55.3% to GOP in 2014. Given its imparlance, the Govemment has formulated the Services Sector Blueprint 2014 to further develop the sector and strengthen its competitiveness. In this respect, the Services Sector Blueprint focuses on four (4) areas. namely internationalisation which includes liberalisation and services exports; providing efficient tax and non-tax incentives; developing human capital; and implementing regulatory reform in the services sector. With the implementation of the Services Sector Blueprint, the services sector is targeted to achieve approximately 60.0% share of GOP by 2020, on par with deveioped economies. A positive growth is also expected for the outlook for the manufacturing sector led by the export-oriented industries which are expected to record higher growth in line with the improvement in external demand. The continued implementation of various construction projects in Malaysia will support growth in the construction-related cluster. The construction sector is expected to continue recording high growth, albeit at a more moderate pace in 2015, as the completion of several large civil engineering projects will more than offset the progress in existing projects in the transport. utility, and oil and gas sectors. The positive growth recorded in Malaysia’s economy and the manufacturing sector would lead to an increase in the demand for commercial and industrial properties, and subsequently, the demand for infrastructure. The ETP (2011-2020) was launched in 2010 with a goal to promote Malaysia into an inclusive and sustainable high-income country by the year 2020. To achieve this, rapid urbanisation is required, and subsequently, the demand for supporting infrastructure is expected to increase in tandem to support economic growth targets. Construction industry in Malaysia -anticipated economic growth of end-user markets/industries
Source: Extracted from the independent market research report prepared by SMITH ZANDER 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Economic growth corridors drive demand for comprehensive infrastructure development The scale and pattern of infrastructure development strategies formulated by the Govemment is driven by the recognition that infrastructure is vital for the nation’s economic development. To this end, the Government’s objective is to meet the nation’s infrastructure needs arising from the growth and transfonmation of its economy. The Government views seriously its role of minimising infrastructure shortages in the country. Further to meeting the needs of modernised sectors of the economy, including the external sector, the Government is also driven to develop infrastructure to serve socio-economic ends. In this regard, the Govemment strives to provide infrastructure to promote the development of Jess developed regions in the country. Improving the accessibility of these regions is intended to result in a more balanced development of the country and reduce economic disparity. In the Ninth Malaysia Plan (“9MP”), five (5) economic corridors were launched in an effort to promote balanced economic development throughout the country. These corridors, located in both Peninsular Malaysia and East Malaysia, have attracted significant investments of approximately RM53.4 billion in the first nine (9) months of2013 of which only an estimated 50.0% of the investments have been realised during the period. Approximately RM27.8 billion of these committed investments remain unrealised and could potentially be implemented over the next few years. Construction industry in Malaysia -cumulative investments in five IS) economic growth corridors , C ‘d Committed Realised Major projects recently completed and in om or (RM billion) (RM billion) progress East Coast Economic 22.8
3.7 Kuantan Port expansion ” Region (“ECER”) Kuantan Port City development” Malaysia -China Kuantan Industrial Park” Kuala Terengganu City Centre” Kertih BioPolymer Park” -=-=-_+”,—,-A-“u””tomotiye Industrial Hub, Pekan .. j I Iskandar Malaysia 10.0 “Pinewood iskandar Malaysia Studios i Gleneagles Medini Hospital I” Double Tree Hilton” Pegasus International School –_ … I” 7.2Northern Corridor 7.2 Biotechnology Incubation Centre” Economic Region • Aquaculture Development Complex, Selin sing (“NCER”) .-,.-_-f—–co-=-_+ .J ” Expansion Programme Edu Citi Tel__ I 8.6, Sabah Development 30’ Sabah Oil and Gas Terminal (“SOGT”) andI Corridor (“SOC”) . I: Sabah -Sarawak Gas Pipeline (SSGP”) 10 I Sipitang Oil and Gas Industrial Park (“SOGIP­Phase 1 SAMUR”) Kimanis Power Plant I: International Technology and Commercial Centre (“ITCC”) Aeropod” Sabah International Convention Centre (“SICC”)” Sabah Agro Industrial Precinct (“SAIP”)” Palm Oil Industrial Clusters (“POIC”) at Lahad Datu and Sandakan Ferro alloy manufacturing plant Renewable Energy (“SCORE”) . __._.Total 53.4 …. 25.6 —Source: Extracted from the independent market research report prepared by SMITH ZANDER ,,-“O>,~”‘”‘ I ,,; _-+__:c1:c’7~~~.J:” Polycrystalline silicon manufacturing plant I Company Number: 11 08506-W II
7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
The development of these economic corridors as a result of the committed and realised investments is expected to be a significant impetus for the development of infrastructure in regions beyond the Klang Valiey. Increase in investments drive overall economic growth, and subsequently, demand for construction services Malaysia continues to witness two-way capital flows, with foreign inflows remaining strong as a result of resilient growth prospects. In 2013, Malaysia attracted RM216.5 billion in approved direct investments in 5,669 projects that are expected to create 191,766 new jobs. Total investments in 2013 witnessed a year­on-year growth of 29.0%, with 14 mega-projects worth RM1.0 biliion or more and 82 large projects worth RM100.0 million or more, where a majority of these mega-projects and large projects were in high-value, high-growth industries. FDI inflows continue to remain broad-based with significant inflows registered in high growth areas such as the oil and gas and communication services sectors. A portion of FDI is also channeled into projects under the ETP. Between 2009 and 2013, FDI infiows into Malaysia increased from RM5.1 billion to RM38.3 biilion at a CAGR of 65.5%. The ETP has a defined structure for the manufacturing and services sectors to contribute to Malaysia’s continued growth through high impact projects and business opportunities across the economy. Malaysia’s investment performance in 2013 supports the nation’s goal in fulfilling the objectives of the ETP where it attracted a total of RM216.5 billion worth of investments, with RM89.9 billion under ETP projects (41.5% of total investments in 2013) and the remaining RM126.6 billion under non-ETP related projects. The services sector received investments of RM144. 7 billion or 66.8% of total investments in 2013 from 4,796 projects that target to create 97,017 job opportunities, of which domestic investment accounted for RM125.7 billion (86.9%) and foreign investments accounted for RM19.0 billion (13.1%). The real estate segment was the main contributor of approved investments worth RM83.3 biilion, followed by the power and utilities segment (RM9.1 biliion), global operations hub segment (RM7.9 biilion), transport (RM7.9 billion) and hotels and tourism (RM7.0 biilion). The manufacturing sector attracted RM52.1 billion of investments in the same period from 787 projects, of which RM30.5 biilion was foreign investments compared to RM21.6 billion worth of domestic investments. In 2013, the primary sector received RM19.7 billion of investments where foreign investments comprised RM10.0 billion and domestic investments comprised the remaining RM9.7 billion. The mining segment, agriculture segment and plantation and commodities segment received RM18.8 billion, RM558.8 miliion and RM330.6 miliion respectively in 2013. In 2014, Malaysia targets to register approved investments of RM53.0 biilion in manufacturing and RM64.0 billion in the services sector excluding real estate. As the nation strives to position itself as an ideal destination for investments into high value-added, high technoiogy, knowledge-intensive and innovation­based industries, businesses and companies will need to grow in terms of current business practices and infrastructure and in order to expand in scale and reach. This signifies positively for the commercial and industrial property segments, and the infrastructure and social amenities development segments in Malaysia, where increased investments in business facilities are expected to witness growth resulting from increased total investments. 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Construction industry in Malaysia· total investments and FDI inflows 250
_Total investments II FDI Source: Extracted from the independent market research report prepared by SMITH ZANDER Increasing disposable income and affluence of the population signifies growth opportunities for residential properties Malaysia is an upper-middle income developing economy with aspirations to achieve deveioped status by the year 2020. Malaysia’s GOP per capita increased by 29.8% from approximately RM25,385 in 2009 to RM33,132 in 2013 while purchasing power parity (“PPP”) per capita income increased by 25.1% from approximately USD18,507 to USD22,104 during the same period. In 2014, Malaysia’s GOP per capita further increased to RM35,399 while PPP per capita income increased to USD23,160. This increase in disposabie income has ied to a rise in a more affluent population that has greater spending power, creating demand for basic necessities and non-essential products. The increasing disposable income of Malaysia’s population has a positive correlation on the demand for residentiai properties. During the same period of 2009 and 2013, the total value of residential property transactions increased from RM41.8 billion to RM72.1 billion. In 2014, the total value of residential property transactions was registered at RM82.1 billion. Furthermore, in an effort to reduce the burden of the population and increase disposable income of the lower-income population, the Government has improved the Bantuan Rakyat 1Malaysia (“BR1M”) to households and single individuals in line with a targeted subsidy programme whereby: • BR1 M to households with a monthly income of below RM3,OOO will be increased from RM650 to RM950
• BR1 M to households with a monthly income of between RM3,OOO and RM4,OOO will be increased from RM450 to RM750
• For single individuals aged 21 and above and with a monthly income not exceeding RM2,OOO, BR1M will be increased from RM200 to RM350

Malaysia launched the ETP (2011-2020) in 2010 with a goal to promote Malaysia into an inclusive and sustainable high-income country by the year 2020. The ETP is a comprehensive initiative comprising 131 high impact projects under 12 economic focus areas that have the potential to stimulate economic growth. 30 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
The implementation of the ETP will allow Malaysia to be closer to achieving its goal of raising the disposable income of the population to approximately RM48,000 by 2020. In 2014, Maiaysia achieved a GDP growth of6.0%. The potential growth opportunities for the residential property segment in Malaysia is underscored by the nation’s economic potential as well as Government initiatives via economic plans, policies, programmes and stimulus, making Malaysia an attractive market for residential properties. Key Supply Conditions Rising cost of building materials and development costs impact construction costs The construction industry is expected to witness increased competition for raw materials and labour with the rollout of large infrastructure projects such as the MRT lines 2 and 3, high speed rail and six (6) toll highways for Selangor, which coincide with rising incoming supplies of properties in 2014/15 following strong launches in the iast three (3) years. While some building material producers are expanding production capacity, major capacity enhancement projects take at least one (1) to two (2) years for completion. Recent hikes in fuel prices following subsidy withdrawals also will feed inflation as transportation costs increase. Ali of these factors could contribute to a rise in the cost of building materials. Availability of land bank for future development Large property developers acquire greenfield sites or large parcels of land to amass land bank in ensuring they have sufficient stock of land for future property developments. While holding a stockpile or bank of land can generate profits in a rising market, it can aiso lead to a downfall when real estate values contract, or when rising interest rates exceed holding costs. The construction of infrastructure may require the government to acquire various private properties. Under the Land Acquisition Act 1960, a State authority may compulsorily acquire public property for any public purpose, for a purpose which the State authority considers beneficial to the economic development of Malaysia, and for mining, residential, agricultural, commercial, industrial, or recreational purposes, or a combination of such purposes. While the State authority is legally required to pay adequate compensation to the owner(s) of the private properties, the owner(s) may still be adverse to the compulsory land acquisition. Subsequently, this would result in a delay in the acquisition of the properties; a delay which may span over years. This delay would then delay the construction of the infrastructure in Malaysia. Product/Service Substitution There is no comparable substitute for construction services. However, industry players differentiate themselves through pricing, service specialisation and regional presence. Some construction industry players are able to offer bundled services, through the offering of integrated design, buiid, commissioning and completion expertise, or bundling of construction services together with building materials produced by their subsidiary and/or associate companies. 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Reliance and VUlnerability to Imports The construction industry in Malaysia has a certain degree of dependency on the imports of construction materials and metal and mineral products (such as steel, aluminium and copper) that are used to build residential, commercial and industrial properties. Malaysia’s imports of construction materials and mineral products increased from RM3.4 billion to RM5.0 billion between 2009 and 2013 at a CAGR of 10.0% due to increased construction activities as a result of greater demand for properties. Between 2009 and 2013, the total value of awarded construction projects increased from RM74.9 billion to RM130.7 billion at a CAGR of 14.9%. While building materials are subject to certain levels of imports, construction services are provided primarily by local construction companies, with the exception of selected large projects where foreign companies may be involved. Relevant Laws and Regulations Imports of construction materials and mineral products a Import value Year ‘(RM million) 2009 3,403.3 _.._-_….,….,—_._———­_-_.~—­2010 4,339.7——_. —-….__…-._-_.__.._—­2011 4,942.0 2012 4,909.0
2013~==-4,97~.6 –==1 CAGR __ _._~,o-“t,,–..J B Latest available data as at 31 May 2015 Source: Extracted from the independent market research report prepared by SMITH ZANDER The relevant iaws and regulations pertaining to the construction of infrastructure, residential, commercial and industrial properties in Malaysia include, but are not limited to, the following: Construction Industry Development Board Act 1994 (also known as Act 520) The CIDB was established under the Construction Industry Development Board Act 1994 to promote, stimulate, regulate and standardise the construction industry, where specifically CIDB is granted power to accredit and register contractors and to cancel, suspend or reinstate the registration of any registered contractor. Under the Construction Industry Development Board Act 1994, no person is allowed to carry out and complete any construction works unless he is registered with the CIDB and holds a valid certification license issued by the CIDB. A penalty not exceeding RM50,000 shall be imposed on persons carrying out construction worKs without being registered by the CIDB. Persons that are carrying out construction worKs for the purpose of building a residence for his own use or who employs less than three (3) worKers is exempt from registration with the CIDB. Persons/individuals, sale proprietors, partnerships, private limited companies, public limited companies and/or cooperatives must comply to and fulfil criteria prior to registration with CIDB. The Certification of Registration issued by the CIDB is valid for a minimum period of one (1) year and a maximum term not exceeding three (3) years, unless cancelled, suspended or revoked earlier by the CIDB. There are three (3) categories of registrations, namely building construction, civil engineering construction and mechanical and electrical. The scope of registration can be further classified into seven (7) grades with each grade having different tendering capacity. II Company Number: 11 08506-W II 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)

Construction industry in Malaysia -CIDB construction registration criteria Gd ra e G2 G3 G4 G5 … .. Tendering Paid-up capitall net …. .. capacity capital worth (RM) .. 20 50Cou rse certificate in RM200,000  construction-related  fields/experience  Not exceeding RM500,000  25,000  • Course certificate in construction-related  80  Not exceeding  fields/experience —50,000–T:-cou~;~~~rtJficatei~­ –. ­ . ·—–150
RM 1,000,000 7:===-::–1—–…—..Not exceeding 150,000 RM3,000,000 -;;;c;;-;;;;c;;-­Not exceeding 250,000 RM5,000,OOO I

I -J.. _..1_ -­500,000I G6 Not exceeding I RM10,000,000
I construction-related fields/experience
3501 diploma holder in construction·related fields/degree hoider with experience in construction works
.._-.._ –. I r 7001 degree holder in construction related fields or 1 diploma holder in
construction-related fields/degree holder with minimum 5 years of ::::ence i~c:nstructi~n j 1,0001 degree holder in construction related fields and 1 diploma holder in con struction-related fields/degree holder, where 1 must possess minimum 3 years of experience in 1 construction works
LII ….I· —-·..···–1–I’ 750,000 : 1 degree holder in I 1,400 i i construction related fields I i , and 1 diploma holder in construction-relatedI fields/degree holder where both must possess minimum 5 years of experience in construction works; or 2 degree holders in construction related fields, I where 1 must possess minimum 5 years of

I IL… _ ..L;I::i:~:~.c:n_st_ru_c_tion_L_J1_.__ ..L_. Source: Extracted from the independent market research report prepared by SMITH ZANDER 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
The Government had implemented the Sistem Satu Pendaftaran Kontraktor(“SSPK”) with immediate effect from 15 October 2012. SSPK is a method that combines the registration procedures of CIDB and Construction Services Centre (“PKK”). Under the new system, all contractor licences issued by PKK in relation to participation in tenders called by the Malaysian Govemment authorities, statutory bodies, regulatory authorities or an entity that is otherwise regarded to be in the public sector are cancelled and replaced with Sijil Perolehan Kerja Kerajaan (“SPKK”) issued by the CIDB. Nevertheiess, the issuance of Sijil Taraf Bumiputera for the identification of Bumiputera status has remained under the control and supervision of PKK. The scope of registration for SPKK can be further classified into two (2) categories, namely civil engineering, building or mechanical and eiectrical with six (6) grades for each category. Each grade has different tendering capacity. The Construction Industry Payment and Adjudication Act 2012 The Construction Industry Payment and Adjudication Act 2012 was enacted to facilitate regular and timely payment, provide a mechanism for speedy dispute resolution through adjudication, provide remedies for the recovery of payment in the construction industry, and provide for connected and incidental matters. The Construction Industry Payment and Adjudication Act 2012 is applicable to all written construction contracts relating to construction worKs carried out wholly or partly in Malaysia, including construction contracts entered into by the Government. The Construction Industry Payment and Adjudication Act 2012 does not apply to construction contracts entered into by persons for construction worKs in respect of buildings less than four (4) storeys high and which is wholly intended for his occupation. Mandatory Standards in Construction The Department of Standards Malaysia (“STANDARDS MALAYSIA”) develops, promulgates and promotes the adoption of Maiaysian Standards (“MS”). STANDARDS MALAYSIA is responsible for policy and strategy and has appointed SIRIM Berhad to undertake implementation at the technical level. STANDAR’DS MALAYSIA has issued 48 mandatory standards for the building, construction and civil engineering category under ISC 0, and eight (8) mandatory standards for mechanicai engineering under ISC F. The ISC 0 primarily covers codes of practices and specifications for raw materials used in construction and ISC F includes safety rules for construction and installation. Additionally, the CIDB in collaboration with other organisations including the Public Works Department, National Housing Department, Real Estate and Housing Developers’ Association Malaysia (“REHDA”), Malaysian Institute of Architects, Master Builders Association Malaysia (“MBAM”) and National House Buyers Association (“HBA”) had issued its own construction industry standard known as CIS 7:2006 on Quality Assessment System for Building Construction WorK. This standard specilies requirements on the quality of workmanship and assessment procedures for building construction work as part of the Quality Assessment System in Construction (“QLASSIC”). Factories and Machinery Act 1967 The Factories and Machinery Act 1967 provides for the control of factories with respect to matters relating to the safety, health and welfare of persons therein, the registration and inspection of machinery and for matters connected to it. The Factories and Machinery Act 1967 is applicable to the manufacturing, mining and quarrying, as well as construction industries. 34 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
The Factories and Machinery Act 1967 mandates the appointment of Chief Inspector of Factories and Machinery and Deputy Chief Inspector of Factories and Machinery with the power to enter, inspect and examine any factory, and the machinery, plant and appliances contained therein. Failure to comply with any order lawfully provided by the inspecting Chief Inspector of Factories and Machinery or Deputy Chief Inspector of Factories and Machinery, or willful delay or willful withholding of information can result in a fine not exceeding RM5,OOO or imprisonment of a tenm not exceeding two (2) years or both. The Factories and Machinery Act 1967 also makes specific provisions relating to the safety, health and welfare of employees in the manufacturing. mining and quarrying, as well as construction industries. Factories and Machinery (Building Operations and Works of Engineering Construction) (Safety) Regulations 1986 The Factories and Machinery (Building Operations and Works of Engineering Construction) (Safety) Regulations 1986 applies to bUilding operations and works relating to engineering construction undertaken as a trade or business. The Factories and Machinery (Building Operations and WorKs of Engineering Construction) (Safety) Regulations 1986 makes specific provisions to ensure the safety of worKers in construction. Failure to comply with the Factories and Machinery (Building Operations and WorKs of Engineering Construction) (Safety) Regulations 1986 shall result in a fine not exceeding RM2,000. Employment Act 1955 The Employment Act 1955 stipulates the rights and welfare benefits that employees are entitled to, and which all employers are required to comply. The Employment Act also states that an employer is required to obtain a license to import legal foreign workers under the contract of services, and ensure their welfare and rights are fulfilled in terms of their wages, hours of work, rest days, and sick and annual leaves. The Ministry of Human Resource is responsible in monitoring and ensuring that companies are in compliance with the Employment Act 1965 and protects the welfare of employees. Occupational Safety and Health Act 1994 All employers possess a general dutyof care to the employees. In accordance with the Occupational Safety and Health Act 1994, empioyers need to ensure that the worK site facilities and systems are practicable, safe and without risks or hazard to the employees’ health and safety. It is also the obligation of the employer to provide employees with the training, knowiedge, infonmation and supervision, in providing a safe worKing environment without risks to their health, safety and welfare. The Department of Occupational Safety and Health (“DOSH”) is authorised to ensure that companies have taken proper steps 10 ensure a safe worKing environment for their employees. Environmental Quality Act 1974 The Department of Environment (“DOE”) Malaysia is responsible for the implementation and monitoring of Malaysia’s environmental regulations and policies. The Environmental Quality Act 1974 prohibits industrial activities which cause air, sound, soil, and water pollution without obtaining a valid license. Therefore, the burning of waste or rubbish or any open burning is prohibited without obtaining the necessary licenses or penmits. Under this regulation. effiuent is not penmilled to be diluted, whether raw or treated, at any time or point after it is treated, without first obtaining a wrillen authorisation which approves the effiuenllo be treated according to the terms and conditions of the authorisation. 35 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 1987 An environmental impact assessment study is mandatory for prescribed activities under the Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 1987. All prescribed activities need to obtain Environmental Impact Assessment (“EIA”) approval from the Director General of Environment prior to the giving of approval by the relevant Federal or State Government authority for the implementation of the project. The approving authority is the Govemment Authority that has the task of deciding, whether or not a project should proceed. ~ a proposed venture is categorised as a prescribed activity under the Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 1987 (Appendix B), an EIA study needs to be conducted and the environmental impact assessment report has to be submitted to the Director General of Environmental Quality for approval. The project is not allowed to proceed unless approval of the environmental impact assessment report has been granted. The construction of airports, drainage and irrigation (including dams and manmade lakes), land reclamation, fishing harbours, housing development, infrastructure (including hospitals, industrial development for medium and heavy industries, expressways, highways and new townships), ports, oil and gas facilities (including refineries and depots), power plants, railways, mass rapid transport projects, resort and recreational development and water supply (including dams and impounding reservoirs) are classified as prescribed activities. [The rest of this page Is intentionally left blank] 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’DJ
3 ANALYSIS OF THE PRECAST CONCRETE INDUSTRY IN MALAYSIA Industry Performance, Outlook and Prospects The precast concrete industry in Malaysia is an important component of the construction industry as it acts as a key building material in both building and infrastructure development. As such, over the years, demand for precast concrete is seen to be subject to factors driving the construction industry including Government support as well as private expenditure fuelling the constructiDn sectDr. As the growth of the cDnstructiDn industry is driven by the eCDnDmic perfDnnance of the cDuntry, significant increases and decreases in the GDP Df the cDuntry influences demand fDr precast CDncrete products. In the context of building CDnstructiDn, precast cDncrete is a form Df Industrial Building System (“IBS”), where IBS is a constructiDn process that utilises techniques, products, cDmpDnents, Dr building systems which invDlve prefabricated cDmponents and Dnsite installation. In Malaysia, the main IBS products used fDr building and infrastructure develDpment are precast CDncrete framing, panel and bDx systems; steel fDnnwDrk systems; steel framing systems; prefabricated timber framing systems; and blDck WDrk systems. Precast concrete industry in Malaysia -main IBS products used in Malaysia IBS product category Product range Precast concrete framing, panel and bDX systems Steel fDrmwDrk systems Steel framing systems Prefabricated timber framing systems Precast columns, beams, slabs, three (3) dimensional cDmpDnents (balcDnies, slaircases, toilets, lift chambers) and permanent concrete fDrmwork Tunnel forms, beams and columns moulding forms and permanent steel I formworks1SIeelb,,-:a”::m:-s-:accnd”cccD7Iumns;portal frames and roof trusses ——–1 Timber frames and roof trusses —-“-;—cc;–:-:cc:c-;-c-;:o::-;-:-:—–IInterlDcking concrete masonry units and lightweight concrete blocksBIDCk WDrk systems Source: Extracted from the indepencie-nt market research report prepared by SMITH ZANDER Interest in the adDptiDn Df precast CDncrete in Malaysia dates as far back as the 1960s fDllDwing the initiatiDn Df an IBS Dr prefabricatiDn piiDt project in 1964 aimed at speeding up the delivery times Df IDW cost or affDrdable hDusing prDjects. In the early days, precast CDncrete solutiDns were used in the cDnstructiDn Df several residential prDperties, including the 17-stDrey flats alDng Jalan Pekeliling, Kuala Lumpur, using precast cDncrete walls and plank slabs; six (6) blDcks Df 17 stDrey-flats, and three (3) blDcks Df 18 stDrey­flats at Jalan Rifle Range, Penang, using IBS precast cDncrete cDmpDnents and building systems; and Perbadanan Kemajuan Negeri SelangDr’s IDW cost hDusing and high CDSt bungalDw prDjects cDmprising 3,000 residential units acrDSS the state of SelangDr, using precast cDncrete technDIDgy. Since the 1990s, precast cDncrete components were used for the construction of several large building and infrastructure development such as the Kuala Lumpur Convention Centre using steel framing and trusses with precast concrete slabs, LRT using steel structures and precast concrete hollow cores, Kuala Lumpur Sentral using steel structures and precast hollow cores, Kuala Lumpur Tower using climbing formwork and steel beams, Kuala Lumpur International Airport using steel roof structures and fonnwork system fDr slabs, Petronas Twin Towers using climbing fonnwork, steel beams and steel decking for slabs, several administration buildings in Putrajaya and Cyberjaya using precast concrete components, and the 37 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
electrification of double track project from Ipoh, Perak, to Padang Besar, Perils, using precast concrete sleepers. The industry size for concrete, including precast concrete products, based on estimated production volume, Increased from an estimated 30.7 million metric tonnes (“MT”) in 2009 to 33.8 million MT in 2013 ata CAGR of 2.4%. Concrete production volume, includin9 precast concrete products, increased from an estimated 30.7 million MT in 2009 to 35.4 million MT in 2014 at a CAGR of 2.9%. This production volume is estimated based on cement output and includes total concrete products, including ready-mix concrete, precast concrete and other concrete products. Between 2010 and 2012, precast concrete products accounted for an annual average of 23.7% of total concrete products. The demand for concrete was largely generated by the launch of several construction projects under the 10MP and the ETP. The positive wave from the launch and commencement of construction of projects under the 10MP and the ETP, and impact of these launches continued to be witnessed in 2011 and 2012. In 2013, the industry registered a Sli9ht decrease in demand for concrete as construction activities, particularly in infrastructure development, went through a period of consolidation as several major projects such as the Klang Valley MRT project and LRT 2 projects commenced that year. Precast concrete industry in Malaysia -estimated concrete production volume, including precast concrete products 40
L———–SOOo-,-uccrcecc.:c.E~x:;::tr.-,-ccc/e:cd:;::fr:-om~/hcce-;:inc:;dc-epcceccnd:;:e–::n:-// r-‘-es-e–::.c-rc”‘-hccre–::po-r:-tpccre-‘-p-‘-.r-e–::d7″by-‘-S”‘M””,”‘TH=ZA:-N”‘O”‘E”‘RIm::-a-rk;-eccSMITH ZANDER forecasts the concrete industry, including precast concrete products, to grow from 35.4 million MT in 2014 to 39.1 million MT in 2017 representing a CAGR of3.4%. SMITH ZANDER also expects the percentage contribution of precast concrete products to total concrete products to grow further as end­users become more aware of the advantages it holds over ready-mix concrete. Furthenmore, the precast concrete products segment is also expected to benefit from the goals of the IBS Roadmap (2011 -2015) 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)

SMITH ZANDER
that mandates sustaining 70.0% ISS content for all public sector building projects through to 2015 and increasing the ISS content to 50.0% for private sector building projects by 2015. [The rest of this page is intentionally left blank] 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
4 ANALYSIS OF THE CONSTRUCTION INDUSTRY IN SINGAPORE Industry Performance, Outlook and Prospects Economic Contribution As the regional hub for the Association for Southeast Asian Nations (“ASEAN”) region, Singapore’s economy has illustrated stable and promising trends in the past. Between 2009 and 2013, the country’s GDP grew at a healthy CAGR of 7.4%, from SGD279.9 billion in 2009 to SGD372.8 billion in 2013. The economic growth in Singapore has consequently spurred the growth of its construction industry. As the constnuction industry is essential to sustaining the development of the country and supporting the growth of the other sectors such as manufacturing, trade, transportation, finance and business services, the construction industry in Singapore illustrated a healthy upward trend in light of the growth of these other major sectors in Singapore. The GDP for the construction industry in Singapore grew from SGD15.0 billion in 2009 to SGD17.2 billion in 2013ata CAGRof3.5%. Construction industry in Singapore -key economic statistics a
a Latest available data as at 31 May 2015 Source: Extracted from the independent market research report prepared by SMITH ZANDER Employment The construction industry also creates job opportunities in Singapore, thus contributing to the socio· economic development of the nation. The percentage of employees in the construction industry in Singapore grew from 12.6% to 13.7% over a span of five (5) years between 2009 and 2013. Total employees in the construction industry increased ata rate of6.0% between 2009 and 2013. Construction industry in Singapore -employment statistics a Employment in the Percentage employment in Year I Total employment (‘000) : construction industry the construction industry , i (‘000) (%)
7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
i ! Employment in the I Percentage employment in Year i Total employment (‘000) I construction industry the construction industry II (‘000) (%) 3,357.6 441.8 13.2————1 2013 3,493.8 477.1 13.7 —-_..­i-Notap-p–,ic-a-b-,e—–jCAGR 4.0% .__1­6_.0_%_ __L…. —” o Latest available data as at 31 May 2015 Source: Extracted from the independent market research report prepared by SMITH ZANDER Value of Contracts Awarded The cDnstructiDn industry in SingapDre, measured in terms Df value Df cDntracts awarded, grew frDm SGD22.5 billiDn in 2009 tD SGD35.8 billiDn in 2013 at a heallhy CAGR Df 12.3%. SingapDre’s awarded cDnstructiDn cDntract value witnessed a surge in 2010 cDmpared tD 2009 as the natiDn recDvered from the glDbal financial crisis, and cDnstructiDn activities resumed in the cDmmercial and industrial, and residential prDperty sectDrs. CDnstructiDn demand in the subsequent years remained strDng, underpinned by a grDwing eCDnDmy. During this periDd, new hDmes were cDnstructed acrDSS the island tD meet demand, new Dffices were built as the natiDn strived tD improve its position as a regiDnal centre for trade and commerce, and new facilities were rolled-Dut tD enhance the quality Df life in the cDuntry. Construction industry in Singapore -value Df contracts awarded’ 50 35.835.5 30.8

 

~.7• 4.~ o 2009 2010 2011 2012 2013 _Commercial and industrial ~Residential Infrastru ctu re -Total
I”’L::a;:te::st;-;a;;:v:Cai;;:fa”’bf~e-;<d:;;atC:a::a-;:s-;:at”3″I.M-,;a;;:y:02:;;O..15,—–~——————–­Source: Extracted from the independent market research report prepared by SMITH ZANDER 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (eONT’D)
The construction industry in Singapore is largely spurred by residential development. Home ownership has been a key pillar for nation building since Singapore’s independence in 1965. Between 2009 and 2013, residen~al construction ac~vities increased from SGD6.7 billion to SGD16.1 billion at a CAGR of 24.5%. In 2013, residential development formed the largest proportion of construction activities in Singapore at 45.0%. This is owing to the growing demand for residential development which has not been adequately met due to limited land space available in the country. Public residential development in Singapore is spearheaded by the Housing & Development Board (“HDB”) that plans and develops public housing townships to provide the population with quality homes and living environments. The HDB is a statutory body under Singapore’s Ministry of National Development. Approximately 80.0% of the nation’s housing stock is public sector, comprising HDB direct sales that is subsidised new public housing only available to Singaporean citizens, and the HDB secondary marKet that represents the resale of public housing after a number of years at current market prices. The latter is available to both citizens and permanent residents. The remaining stock is private housing market that is not subsidised or directly regulated by the Govemment of Singapore. HDB also develops and maintains commercial and industrial proper~es, and car parks. To help build sustainable communities, HDB plans towns with a comprehensive range of facilities to meet residents’ needs. These include recreational and community facilities such as neighbourhood parKs and children’s playgrounds in its housing estates. Singapore’s public housing system is a unique model where home ownership provides every person with a tangible stake in the nation. The Government provides mortgage financing for poten~al buyers in an effort to ensure that public housing remains affordable. Low-income families also receive additional assistance through the Additional Housing Grant to buy their first fiat. Selected low-income families that are unable to afford homes are offered rental flats at heavily subsidised rates. Residents who have owned their properties for more than five (5) years are free to sell it in the open marKet. Throughout HDB townships, potential buyers have six (6) different fiat types to choose from, and buyers have the op~on of customising the interior by choosing different features or materials. Between 2009 and 2013, the total number of completed public housing units increased from 1,769 units to 12,744 units at a CAGR of 63.8%. Public housing was ramped up over the period of 2009 and 2013 as HDB sought to satisfy demand for new fiats. Residential development projects were brought forward as affordable housing was an issue raised by the electorate in the May 2011 general elections. HDB raised the number of build-to-order (“BTO”) units from the initial 22,000 units to 25,000 units commencing 2011 as an effort to stabilise housing demand following the Government’s move of raising the income ceiling for those eligibie for HDB and executive condominium fiats. Under BTO, tenders for construction on identified sites will only be called after demand exceeds 70.0% of the total offered housing units. Post the global financial crisis, HDB built more public housing units in newer towns such as Punggol, and additional flats in mature estates such as KallangMihampoa and Tampines to provide more choice and meet demand. In 2010, HDB launched 12 BTO exercises comprising 24 projects with a total of 17,284 units. HDB launched approximately 50,000 units over 2011 and 2012 across Singapore to meet the increasing demand for affordable housing. In 2011, HDB also launched My Waterway@Punggol, a sustainable green living township comprising 42,000 housing units and the rejuvena~on and upgrading works under the Remaking our Heartland (“ROH”) programme in East Coast, Jurong and Hougang. In 2013, HDB launched broad development plans for three (3) new housing areas, namely Bidadari, Tampines and Punggol Matilda. In 2010, prospective buyers also had the option of purchasing properties from the private sector where households earning between SGD8,000 and SGD10,000 were allowed to buy new fiats under the Design, Build & Sell Scheme (“DBSS”) with a housing grant from Central Provident Fund (“CPF”). Six (6) new DBSS sites with 3,800 units were launched for sale to developers in Tampines, Bedok, Upper Serangoon, Yuan 42 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Ching, Clementi and Pasir Ris. As at end 2013, there were a total of 289,370 units of private housing in Singapore of which 18,003 units were vacant. In January 2014, Singapore’s Minister for National Development announced the planned construction of an additional 80,000 units of public housing over the next three (3) years. Under Budget 2014, Singapore’s Ministry of National Development allocated SGD484.0 million for the upgrading of HOB public housing precincts, where investments will be made to improve access and upgrade lifts in older HOB developments which will benefit an estimated 50,500 units, and completion of 17,900 units and 20,900 units under HOB’s Home Improvement Programme (“HIP”) and Neighbourhood Renewai Programme (“NRP”) respectively. Construction industry in Singapore -key statistics of public housing development”
2009 888,143 31,058 1,769 4,419 82.0 2010 898,532 35,635 7,050 6,299 82.0 .~_. __._.__.__..__._._~–._–_ .. ,–_…-…._._…_~_ ..-.-_…——” —~_._.__..—-_…. __…._-,-,’. 2011 914,102 47,282 12,962 12,560 82.0 .. —–_…_…_—-_._”­2012 922,493 64,633 19,005 14,057 83.0 f—-;;c~ .._–·–··—+—–::;c~:__+______::;.;’:;_:~-r-~~__12013 –.L 933,278 77,436 12,744 12,197 82.0 1–CC::-A”‘”G=,f 1_1.2’/;=:-..–+–::2ccS.-=7:c%,–1—:6cc3-:.8cc’j,c-. 28.9% I No”t-a-pp””‘l:–ic-ab””‘le–1 • Latest available data as at 31 May 2015 _-L _ Source: Extracted from the independent market research report prepared by SMITH ZANDER Meanwhile, commercial and industrial construction grew at a rate of 16.9% between 2009 and 2013 where construction project value increased from SGD6.8 billion to SGD12.7 billion during the said years. Post 2009, new office blocks with enhanced features were erected across Singapore’s central business district as developers capitalised on the healthy business environment and attractive rental yields. The Marina Bay Financial Centre which was completed in 2012 was the country’s largest office development with three (3) office towers offering nearly 3.0 million square feet (“W’) of office space, two (2) residential towers and shops. During this period, construction works also commenced on One Raffles Place (Tower 2) on the site of the previous OUB Centre, and the Asia Square twin towers mixed-development in Marina Bay, Collectively, these projects target to being on-stream approximately 7.0 million ft’ of office space between 2011 and 2015. Several healthcare projects were also awarded during this period such as the Ng Teng Fong Hospital and an Integrated Building for Changi General Hospital and Saint Andrew Community Hospital. Educational projects awarded during this period include the Yong Loo School of Medicine, Singapore University of Technoiogy and Design Phase 1 and Yale-NUS College. Contracts awarded for infrastructure and sociai amenities construction in Singapore declined from SGD9.0 billion to SGD7.0 billion between 2009 and 2013 as major infrastructure projects were awarded in the earlier period, resulting In a higher base for the year 2009. In an ongoing effort to promote public transportation, Singapore stepped up the expansion of its MRT system. The Government targets to spend approximately SGD60.0 billion to double the train network to 280 km by 2020, improving public accessibility to the MRT system. During the period of 2009 and 2013, the Govemmentfocused on the Downtown line (“DTL”) which connected the city centre to north-west, linking the Marina area through Bugis and Newton along Bukit Timah and all the way to Bukit Panjang. The DTL1 that connects Bugis to Chinatown commenced 43 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
operations in December 2013, while DTL 2 that extends the MRT line to north-west is scheduled to commence operations in 2016 and DTL 3 that connects Singapore Expo to River Valley is slated to commence operations in 2017. Construction work was also carried out on extending existing lines, including the North-South Line to reach the Marina Bay area, and the East-West Line into Tuas. SMITH ZANDER forecasts the construction industry in Singapore to increase in terms of awarded contract value, from SGD35.8 billion in 2013 to SGD53.0 billion in 2017 at a CAGR of 10.3%. All construction segments are expected to witness growth over the forecast period, as demand for these properties will be driven by economic growth, population increase and supporting Govemment plans and policies. Moving forward, the infrastructure and social amenities sector is expected to continue to be strongly driven by public expenditure. The Urban Redevelopment Authority of Singapore has introduced the Concept Plan 2011 and the Master Plan 2014 with aims to promote the social well-being and increase the standard of living in Singapore. Some of the identified projects under these plans include the Garden in a City project and the upgrading and construction of bus stops. In addition, the Healthcare 2020 Masterplan will continue to make healthcare more accessibie to the citizens. More hospitals are in the midst of construction and are expected to commence operations within the next five (5) years, including Ng Teng Fong General Hospital, Jurong Community Hospital and Sengkang General and Community Hospitals. The Government of Singapore also has plans to continue to invest heavily on land transportation 10 upgrade and enhance the transportation infrastructure. The Land Transport Authority intends to increase the country’s MRT network to 360 km by 2030, consisting of projects such as the Jurong Region line and Cross Island line as well as the Thomson line and Cross Island Line. Apart from that, there are also initiatives driven by the Government of Singapore to further develop the tourism industry in Singapore. The Government through the Singapore Tourism Board (“STB”) aims to place emphasis in growing the tourism industry in Singapore. As such, it is expected that there will be greater focus on the development of new tourist destinations over the forecast period starting with the new Changi Terminal 4 airport. Growth in Singapore’s construction industry will continue to create demand for building materials and specifically precast concrete products which are primary raw malerials for building development. Thus, the demand for precast concrete products is expected to experience growth, benefiting industry players involved in the rest of the value chain including concrete manufacturers and suppliers. Construction industry in Singapore -selected upcoming major property developments Estimated project value … … …. -..~ (SGD million) 1-‘~C,-,ha=n:”gc.i;—If-,Pc;-ro2″j~t.:J-“~–.—.–Mixed-used …. ~~700 Punggol Woodlands  Watertown HOB building worns  Residential 1,600.0 —-+-=–~~_o_—1—–·–·­Residential_____ . .__2_04_.5  Sembawang  HOB building warns  Residential  188.0  I~~~~~ol We~t._ ~~: ~~::~:~~ :~::  ::::~:~~::  ..­ –11’===~=·==~–1:r
Pasir Panjang :asir Panjang Terminal Phase~3 .._n~~~ustrial : 3,500.0 I Loyang -_… Loyang bus depot Industrial ..-+—-….–~6-;-1-;;.2-1 fJu-ro-n-g’Island Energy Market Authority’s storage-‘ Industrial 638.00 tank for a liquefied natural gas ; terminal I Kallang __. Singapore Sports Hub -rsocial amenities 1,330.0 Isiandwide Upgrading and construction of bus [-TranSPO.ria;ctio-n—-t——23.4 ‘–stops —-” ..L.-_.L…… 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Estimated project value Location I Project I Type of development (SGD million)I
Sengkang Sengkang General Hospital and Social amenities 1,911.5 Sengkang Community Hospital Jurong Ng Teng Fong General Hospital and Social amenities 700.0 Jurong Community Hospital I Islandwide IGas transmission pipelines from Jalan Utilities 13.7I
Bahar to Old Choa Chu Kang Road Islandwide
Cycling Masterplan Transportation 43.2 Islandwide Downtown MRT Line Transportation 1,400.0-_.__.,–_….._..__._-_.._–.” ..-……….__. ._..•.-.._ …..­~._-_._,,-_._–…….. . -._._­.. ….._–_.._——-~—_ Islandwide Thomson MRT Line Transportation 18,000.0 …….
Marina Coastal Expressway Transportation 4,300.0 Banyan Basin, ~iandwide Jurong Rock Caverns Infrastructure 200.0 Jurong Island Changi Changi Airport Tenminai 4 Transportation 985.0 Source. Extracted from the mdependent market research report pr&pared by SMfTH ZANDER [The rest of this page is intentionally left blank] 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’DJ

5 ANALYSIS OF THE PRECAST CONCRETE INDUSTRY IN SINGAPORE Industry Performance, Outlook and Prospects In the 1970s, the use of precast concrete products was largely limited to civil engineering works such as pipes, piles, blocks and precast beams for bridges. Precast concrete components for buildings gained popularity in the early 1980s when HOB introduced large-scale industrialisation in its public housing programme. The industrialisation programme in public housing led to the award of several contracts to foreign contractors between 1981 and 1983. Most of these projects extensively used precast concrete including precast beams, frames, walls, slabs, refuse chutes and staircases. Oue to high standardisation and repetition, higher productivity became possible compared to conventional designs as a result of shorter construction time and economies of scale. Upon completion of the initially awarded contracts under the industrialisation programme, HOB shifted its emphasis onto low volume flexible prefabrication. Precast components such as refuse chutes, staircases, parapet walls were increasingly used in HOB constructions. While precast products also began to find its way into the non-HOB construction sector during this period, public housing was a dominant market for precast concrete products. Singapore implemented mechanised construction nationwide in 1984 to improve productivity in construction through the use of precast concrete components and prefabricated reinforcements. In 1992, the HOB established the Prefabrication Technology Centre (“PTC”) to champion and implement then innovative improvements in precast construction technology and components such as long-bed production of precast prestressed planks, battery moulded multicell production systems and ferrocement cladding systems. Construction of the first 40-storey apartment blocks in Singapore was completed in 2005 adopting construction technology to improve quality, safety and productivity. The first fully precast 40-storey public housing development in Singapore using HOB’s modular Precast Column Beam System (“PCBS”) comprised four (4) blocks in Toa Payoh Lorong 2. The PCBS’s precast components of columns, beams, slabs, household shelters, facades, internal walls and volumetric toilet, came complete with tiling, sanitary wares, light fittings and fixtures. Components were also designed to be light for ease of site installations for buildings of that height. The extensive use of precast and prefabrication technology together with a mechanised construction system eliminated labour-intensive work such as plastering, carpentry and bar tying. These improvements, together with less physically demanding work for the workers contributed to a conducive and safe working environment. Singapore’s National Productivity and Continual Education Council (“NPCEC”) endorsed the Construction Productivity Roadmap in November 2010 to promote productivity in the construction sector. The Construction Productivity Roadmap’s vision is to build a highly integrated and technologically advanced construction sector led by progressive firms and supported by a skilled and competent workforce by 2020. The Construction Productivity Roadmap seeks to address the challenges of easy availability of low cost and transient foreign workers and steer the construction industry towards greater adoption of higher buildable design and labour-€fficient technology. Regulatory requirements such as lower quota for foreign workers, increase in foreign worker levy and Buildability Framework puts responsibility on developers, architects, engineers and builders to consider a wider range of construction systems, methods, technologies, materials and products to meet the requirement for minimum Buildable Oesign Score and Constructability Score before construction can commence and Temporary Occupation Permit is given. In view of this, modular and repetitive designs and off-site fabrications such as precast concrete, steel structures and unitised curtain walls are now receiving a wider adoption in Singapore. Today, approximately 70.0% of building components in public housing are precast concrete components. 46 _-.:” II Company Number: 11 08506-W II 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
The demand for precast concrete products is primarily generated from residential construction projects which fomned the largest component of construction activities in Singapore in 2013. Specifically, demand for precast concrete components are driven by public housing development projects. Thus the industry size for precast concrete is measured on the basis of public housing units completed and under construction in Singapore on an annual basis. Public housing units under construction increased from 31,058 units to 77,436 units between 2009 and 2013 at a CAGR of 25.7%, while completed units increased from 1,769 unils to 12,744 units over the same period at a CAGR of 63.8%. Post 2009, HOB housing was developed in newer towns such as Punggol and in mature estates such as KallangJWhampoa and Tampines to provide more choice and meet demand stemming from the population. HOB launched 12 BTO exercises comprising 24 projects with a totai of 17,284 units in 2010, and in subsequent years 2011 and 2012, launched approximately 50,000 units across Singapore. Additionally in 2011, My Waterway@Punggol, a sustainable green living township comprising 42,000 housing units was launched by HOB. My Waterway@Punggolwill see the projected 42,000 housing units completed in phases till 2015, making it one (1) of Singapore’s largest towns. Several rejuvenation and upgrading works were launched under the ROH programme in East Coast, Jurong and Hougang. HOB also announced broad development plans for three (3) new housing areas, namely Bidadari, Tampines and Punggol Matilda in 2013. HOB intends to construct an additional 80,000 units of public housing over the next three (3) years. Precast concrete industry in Singapore -HOB under construction and completed units’ i Public housing Year ~–.———–….———————–­I Under construction (units) I Completed (units) 2010 35,635 7,050 I r~——-~–c.~””~-c.~-;~–:-=———::::~:-~.-========–_-+–.========_=__=_~-~=__:~=_~:_:~ —–ll
~~3 __7_7_,4_36 -[ . .__12_,7__44 -1. ~R 25.7% 63.8% J “Latest available data as at 31 May ‘2(i1″s Source: Extracted from the independent market research report prepared by SMITH ZANDER The Government recentiy announced several new measures such as mandating the adoption of modular construction techniques on government land, investments of SG055.0 million into a dedicated Construction Productivity and Capability Fund to help firms adopt new technologies and develop their workforce, and skills enhancement courses to alleviate the developers, consultants and contractors in the latest approaches to virtual design and construction technologies and techniques. Modular construction, also known as design for manufacture and assembly (“DfMA”) or prefabricated prefinished volumetric construction (“PPVC”), involves assembling building components, including whole rooms, in offsite factories and iifting them into position onsite. The approach is widely believed to be faster, safer, and to provide more predictable quality. Modular construction is being adopted on a limited scale in four (4) projects in Singapore, the Green Gallery at Singapore Botanic Gardens, a student hoslel at Nanyang Technological University, an extension to the Crowne Plaza Changi Airport Hotel, and the Canberra Drive scheme. The Canberra Drive scheme comprises 12-storey towers with a total of 636 units of executive condominiums, and this scheme will be built using 3,300 building modules. The Building and 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Construction Authority believes the Canberra Drive scheme to be the largest application of volumetric modular building in the world. The Building and Construction Authority plans to launch two (2) more integrated construction and precast hubs (“ICPH”) In 2014. The ICPH is a highly-automated, multi-storey factory for producing precast concrete building elements such as staircases, plus volumetric modules such as bathrooms. The first ICPH contract was awarded in 2013 in for a compact, five (5) storey, 32,600 m2 factory in Kaki Bukit, Singapore. These ICPH projects are intended to buiid native off-site manufacturing capacity and promote the adoption of large-scale bUilding modulariy in the country. Competitive Landscape Singapore’s construction industry is characterised by sUb-<:ontracting. Tenders for public housing construction are awarded by HDB to qualifying property developers, who then carry out construction activities together with their team of sub-<:ontractors. These sub-contractors may be engaged for either the manufacture, supply and/or installation of semi-finished or finished building components. There are presently 43 industry players that are involved in the manufacture and supply of precast concrete components for construction projects in Singapore, with several industry players largely focused on the manufacture and supply of precast components for public housing projects. Sunway Concrete Products (S) Pte Ltd, a wholly-owned subsidiary of Sunway Construction Group Bertlad, primariiymanufactures and supplies precast concrete components for public housing in Singapore. In 2013, Sunway Concrete Products (S) Pte Ltd manufactured and supplied precast concrete components for a total of 2,498 HDB units, out of 77,436 HDB units under construction in Singapore in that year, resulting in a market share of 3.2%. Precast concrete industry in Singapore -industry players categorised by license grades as at 31 May 2015
BBR Construction Systems Pte Ltd China Civil (Singapore) Pte Limited E-Force Engineering Private Ltd Group Industries Pte Ltd ICPH Internationai Pte Ltd’ Joe Green Pte Ltd Jurong Primewide Pte Ltd Nam Kee Cement Products Pte Ltd
• SEF Engineering Soiutions Pte Ltd SPC Industries Sdn Bhd, Singapore branch Teambuild Engin’eering & Construction Pte Ltd .~tracon Structural Systems P_Ie_L_t<J…. _ Intac Systems Solution Pte Ltd Projalma Sdn Bhd, Singapore branch
• Bilcon Industries PteTid———· • Boisen Cement Products Pte Ltd Concrete Innovators Co Pte Ltd Eng Seng Cement Products (Pte) Ltd Eng Seng Tech Pte Ltd Jin Cheng Pte Ltd
… …£.F’.I.Engin.ee!in!!”,te ‘:.td…~ 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)

Prefab Technology Pte Ltd …_ ,—-.._.._,,-.–_.__.._-_._–__._..__.._.__.~-,._.,,_ -.-._-~_._.• CM Technologies Pte Ltd Ed Zublin AG, Singapore branch Eng Lee Engineering Pte Ltd Jeks Engineering Pte Ltd Pay Ah Heng Contractor Pte Ltd Robin Village Development Pte Ltd Singapore Pre-cast Pte Ltd
Ces-Precast Pte Ltd Chip Eng Seng Contractors (1988) Pte Ltd Contech Precast Pte Ltd Eastern Pretech Pie Ltd Econ Precast Pte Ltd

• Excel Precast Pte Ltd Fonda Global Engineering Pte Ltd G & W Precast Pte Ltd
• HL Building Materials Pte Ltd Hor Kew Private Lim~ed Poh Cheong Concrete Product Pte Ltd Qingjian Precast Pte Ltd

5unway Concrete Products (5) Pte Ltd • Syscon Pte Ltd Source: Extracted from the independent market research report prepared by SMITH ZANDER Demand Conditions -Key Demand Drivers Ongoing plans and policies by the Government to develop and offer affordable housing to the population creates demand for residential construction The HOB was established as the public housing authority of Singapore and tasked with the mission to provide affordable homes of quality and value, create vibrant and sustainable towns, and promote the building of active and cohesive communities. HOB also develops and maintains other facilities, namely commercial and industrial properties, and car parks. To help build sustainable communities, HOB plans towns with a comprehensive range of facilities to meet residents’ needs. These include recreational and community facilities such as neighboumood parks and playgrounds in its housing estates. The Home Ownership for the People Scheme was introduced in 1964 to enable citizens to acquire long­term assets through the purchase of HOB flats. In 2013, 12,197 flats were sold under this scheme. Currently, some 82.0% of the resident population live in Home Ownership flats. In October 1994, HOB implemented Ihe Central Provident Fund (“CPF”) Housing Grant Scheme to strengthen family ties by giving a housing grant to first-time citizen families to buy a resale flat that is in the same town or estate or within two (2) km of their parents’ flat. A two-tier grant system was subsequently implemented in August 1995. The higher-tier grant is applicable to first-timer families who buy resale flats to live togelher with or near their parents, while the lower-tier grant is applicable to first-timer families who buy any resale flat. The scheme was extended to the purchase of executive condominiums in August 1995 and to single citizens in June 1998 to heip them buy resale flats. In April 2008, the higher-tier Singles Grant was introduced for single citizens to buy resale flats to live with their parents for mutual care and support. HOB offers a number of schemes to help low-income families own HOB flats. These include the sale of flats to rental tenants, and the rental and purchase of three (3) room flats. HOB aiso started offering smaller flat types, which are the new two (2) and three (3) room flats, under the BTO system in July 2006 and August 49 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
2004 respectively. Additional assistance is provided to lower-income households buying their first flats via the Additional CPF Housing Grant (“AHG”) Scheme implemented in March 2006. The scheme was enhanced in August2007 and February 2009 to provide greater assistance to lower-middle income families. In March 2011, a new Special CPF Housing Grant (“SHG”) was also Introduced for eligible first-time households earning no more than SGD2,250 a month to help them buy their flrstflat. This SHG is over and above the regular housing subsidy and the AHG. To ensure continual rejuvenation and vibrancy of the HDB townships, the ROH initiative was developed as a new comprehensive blueprint to renew and further develop these towns and estates. Punggol, Yishun and Dawson were selected as the pilot batch in 2007. The plans and proposals for these pilot towns and estates are at various stages of implementation. In 2011, Hougang, East Coast, and Jurong Lake areas were selected for ROH as they have good potential for a comprehensive makeover. The ROH plans for these towns and areas share four (4) common Ihemes, namely rejuvenation of the town centre’ outdoor recreational choices; Improved connectivity; and heartland heritage. The plans and proposals for these towns and areas are at various stages of implementation. Launched in 1995, Selective En bloc Redevelopment Scheme (“SERS”) is part of the Government’s Estate Renewal Strategy to enhance the living environment of older HDB estates. Under the scheme, selected old blocks of sold fiats are redeveloped en bloc to optimise land use. Residents involved are given an opportunity to move to new fiats with fresh 99-year leases and a beller living environment served by modern facilities. With the rehousing of the residents en bloc, SERS enables residents to preserve the family and community ties built over the years. The injection of new developments helps to rejuvenate the old estates as well as revitalize the demographic and economic profiles of the residents as younger residents move into these estates. As at the end of 2013, more than 35,800 sold flats in 78 sites had been selected for SERS. In 2013, HDB launched the broad development plans for three (3) new housing areas, namely Bidadari, Tampines North and Punggol Matilda. Five (5) key ideas will guide the development plans of the three (3) areas, namely distinctive housing districts with unique identities; green housing districts with community gardens and abundant greenery; vibrant community spaces to encourage community activities; rekindling memories to form new ties and communities; and promoting a healthy lifestyle with welkonnected cycling and pedestrian networKs. The implementation of these new urban design concepts will add to the vibrancy of the Singapore housing landscape, and characterise the next generation of public housing. Growth in construction activities drives the demand for precast concrete components The construction industry in Singapore, measured in tenms of total industry project value awarded, grew from SGD22.5 billion in 2009 to SGD35.8 billion in 2013 at a CAGR of 12.3% and is further forecast to grow to SGD53.0 billion, registering a CAGR of 10.3% between 2013 and 2017. The construction industry in Singapore is largely spurred by residential development. Home ownership has been instrumental in building the nation since its independence. The total number of completed public housing units increased from 1,769 units to in 2009 to 12,744 units in 2013 at a CAGR of 63.8%, and comprised the largest proportion of construction activities in Singapore in 2013 at 45.0%. This is due to the growing demand for residentiai development which has not been adequately met due to limited land space available in the country. In 2013, HOB launched development plans for the Bidadari, Tampines North and Punggol Matilda housing areas. The Minister for National Development further announced the planned construction of an additional 80,000 units of public housing over the next Ihree (3) years, thereby indicating positive demand for precast concrete components for public housing over this period. 50 ” 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
In an effort to improve accessibility to heaithcare, the Government is constructing more hospitals under Healthcare 2020 Masterplan, several of which are expected to commence operations within the next five (5) years, including Ng Teng Fong General Hospital, Jurong Community Hospital and Sengkang General and Community Hospitals. The Government also intends to upgrade and enhance the transportation infrastructure in Singapore by increasing the country’s MRT network to 360 km by 2030, through the construction of new and expanded transportation lines including the Jurong Region line and Cross Island line as well as the Thomson line and Cross Island Line. In developing tourism, a greater focus will be placed on the development of new tourist destinations in the near future starting with the new Changi Terminal 4 airport. These developments in Singapore’s construction industry is expected to drive demand for concrete products as these products are among the key raw materials utilised In the construction industry. Rising income levels creating demand for property and real estate The demand for concrete products is dependent on the growth of the construction industry, which in turn is largely infiuenced by economic conditions. As Singapore continues to achieve economic growth, its population enjoys higher disposable income, leading to greater demand for capital goods such as property and real estate. The number of construction projects will continue to increase in line with consumer demand, creating increased demand for building materials. Singapore’s GNI increased from SGD266.9 billion in 2009 to SGD363.8 billion in 2013 at an impressive CAGR of 8.1 %. This has consequently led to an increased demand for property, resulting in construction projects increasing in tandem to meet this demand. This is witnessed in the growth of residentlal development from SGD6.7 billion in 2009 to SGD16.1 billion in 2013 at a CAGR of 24.5%. Plans, policies and stimulus that drive the adoption of precast concrete in the construction sector Property developers play an integral role in infiuenclng productivity improvement in the building materials industry, including the precast concrete industry, when building designs incorporate high-impact productive technologies. In Budget2014, the Government of Singapore announced the mandatory use of prefabricated prefinished construction and prefabricated bathrooms by property developers in tender conditions for selected Government Land Sales (“GLS”) and Industrial Government Land Sales (“iGLS”) sites. Property developers will be further incentivised to adopt productive technologies for non-GLS site developments. Additionally, HDB will further optimise the use of precast and prefabricated components in upcoming development projects. The construction of conventional bathroom units are labour intensive and involve multiple on-site trade expertise, including water proofing, tiling, plumbing, electrical works and sanitary ware installation. Prefabricated bathroom units are manufactured and pre-assembled in a factory selling prior to delivery and installation on the construction site. The three (3) common types of prefabricated bathroom units are full precast concrete; steel panel wall and concrete fioor tray; and cement board wall and either concrete or fibre glass fioor tray. Prefabricated bathroom units may be delivered to the construction site in the fomn where wall panels and fioor trays are pre-assembled in an offsite factory as a complete unit and delivered for installation on the ccnstruction site; or wall panels and fioor trays are fabricated separately in an offsite factory setting and assembled together on the construction site prior to installation. The adoption of prefabricated bathrooms allows the construction of entire bathroom units to be streamlined and completed efficiently in a controlled factory environment, where productivity and quality can be maximised, and manpower and time savings can be realised. 51 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
The drive to adopt productive technologies such as prefabricated prefinished construction and prefabricated bathrooms is part of the Govemment’s effort to boost productivity in the construction sector, where industry players can focus on innovative, productive and advanced buiiding solutions that reduce their dependency on foreign labour and buiid faster with higher quality. Key Supply Conditions Availability of funding schemes to spur productivity in the construction industry The Government, via Buiiding and Construction Authority, actively seeks new, innovative and productive methods of construction to transform construction activities in Singapore. Buiiding and Construction Authority has studied technologies such as PPVC and cross-laminated timber which are widely adopted overseas, which lead to higher productivity, better quality and lesser harm to communities and the environment. The Building and Construction Authority has introduced two (2) funding schemes to support industry bottom-up innovation, particularly in applied developmental work. These schemes are: • Productivity improvement project (“PIP”) supports developmental projects to buiid up capability and improve site processes to achieve higher productivity
• Innovation Grant (“iGranl”) aims to help the entire construction value chain in research and development (“R&D”) projects with near term commercialisation potential

Both schemes are open to developers, consultants, builders and subcontractors registered in Singapore. The schemes co-fund up to 70.0% of the qualifying costs with different cap amounts depending on the scheme and level offunding. A minimum 20.0% productivity improvement is required for these development projects. Proximity to target markets Precast concrete components are bulky and thus logistics management ;s an important facet of its distribution channel. Concrete producers, whether for ready-mix concrete or precast concrete, usually have multiple batching plants strategically located close to their key markets in order to lower transportation costs and reduce delivery time. Due to scarcity and consequently high cost of land in Singapore, several industry players have ventured to establish precast concrete plants in Malaysia, in the southern state of Johor, in close proximity to Singapore’s border. While this reduces the cost of land acquisition and labour cost, transportation charges incurred for the delivery of finished or semi-finished precast concrete components to construction sites in Singapore can be subject to duties and taxes. Dependency on foreign workers for the production of precast concrete components Singapore is largely dependent on foreign workers in all sectors of its economy. In 2013, the total population of Singapore was 5.4 million, of which 3.3 million were citizens, 0.5 million were permanent residents and the remaining 1.6 million were foreigners. This was an increase from the 5.0 million population count in 2009 where 3.2 million were citizens, 0.5 million were permanent residents and the remaining 1.3 million were foreigners. Singapore has moved to tighten foreign worker poiicies progressively since 2010 and as a result, foreign workforce growth has slowed in the last two (2) years. While the Government expects further slowdowns in 52 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
the coming two (2) years especially in the services sector, the construction sector is spared Government intervention with regards to tighter foreign worker inflows. In Budget 2014, the Govemment announced several measures to encourage the construction sector to retain skilled workers and implement manpower­saving technologies. Rising cost of building materials and development costs impact construction costs The construction industry is expected to witness increased competition for raw materials and labour with the rollout of large residential and infrastructure projects in Singapore, which will thus have an impact on the production costs of building materials including precast concrete components. Product/Service Substitution At present, precast concrete competes with other local and mostly cheaper building materials, such as ready-mix casting, clay bricks, autoclaved aerated concrete (“AAC”) and concrete. Compared to these building materials, precast concrete components offers certain advantages, including the uniform standardised consistent quality, just-in-time delivery and quick assembly, tidy construction sites with lower risk of accidents, high-quality finish and fewer project-owner quality claims, making it the building material of choice especially for public housing development projects in Singapore. Reliance and Vulnerability to Imports The construction industry in Singapore is significantly dependent on the imports of cement, concrete and artificial stone, including precast concrete components, that are used to build residential, commercial and industrial properties. Singapore’s imports of cement, concrete and artificial stone increased from USD109.9 million in 2009 to USD327.9 million in 2013 at a CAGR Of 31.4%. Between 2009 and 2013, residential, commercial and industrial construction, measured by total industry project value increased from SGD22.5 billion to SGD35.8 billion at a CAGR of 12.3%. SMITH ZANDER notes that the growth rate of Singapore’s imports of cement, concrete and artificial stone (CAGR 31.4%) are significantiy higher than the demand for construction services (CAGR 12.3%), thus indicating that demand for building materials, construction materials and mineral products for property construction is largely dependent on imports. Precast concrete industry in Singapore -imports of articles of cement, concrete or artificial stone’ Import value Year (USD million)

 

i~~1~·-~-“-~=~J32~;93.50~~.·~69~~~)
12()ii f-“I !2()i3-“‘” “.”~~ ‘I'” ‘327.9 .~-! I CAGR’ i” “”3{4oj~-‘1 B LatesF’avaijiibie-cFata’asaT3’1’·’Miiy-i01S–..—-· –, Source: Extracted from the independenl market research report prepared by SMITH ZANDER 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
Relevant Laws and Regulations The relevant laws and regulations pertaining to the concrete industry in Singapore include, but are not limited to, the following: Workplace Safety and Health (Registration of Factories) Regulations 2008 Any person who wishes to occupy or use any premises where any building operation or works of engineering construction is or are being carried out by way of trade or for the purposes of gain is required to register the premises (or worksite) as a factory with the Commissioner for Workplace Safety and Health pursuant to the Workplace Safety and Health (Registration of Factories) Regulations 2008 one (1) month prior to the commencement of activities. Construction sites also fall within the one (1) time registration regime and such factories need to declare that they have implemented risk management prior to commencement of their operations; and complete the safety and health management system audit I internal review within two (2) months from the commencement of work. An audit will be carried out by work health safety auditors for any worksite with a contract sum of SGD30.0 million or more at least once every six (6) months. An internal review of at least once every six (6) months would suffice for any worksite with a contract sum of less than SGD30.0 million. Workplace Safety and Health Act, Chapter 354A Under the Workplace Safety and Health Act, Chapter 354A, every employer has the duty to take, so far as is reasonably practicable, such measures as are necessary to ensure the safety and health of his employees atwork. With effect from 1 September 2011, all workplaces in Singapore are covered under the Workplace Safety and Health Act, Chapter 354A. These measures include providing and maintaining a safe work environment without risk to health; ensuring that adequate safety measures are taken in respect of any machinery, equipment, plant, article or process used by employees; ensuring that the employees are not exposed to hazards arising from the arrangement, disposal, manipulation, organisation, processing, storage, transport, working or use of things in their workpiace or near their workplace and under the control of the employer; developing and implementing procedures for dealing with emergencies that may arise while those persons are at work; and ensuring that employees have adequate instruction, information, training and supervision to perform at work. Environmental Public Health Act, Chapter 95 The Environmental Pubiic Health Act, Chapter 95 requires, inter alia, a person, during the erection, alteration, construction or demolition of any building Or at any time, to take reasonable precautions to prevent danger to the life, health or well-being of persons using any public places from flying dust or falling fragments or from any other material, thing or substance. The Environmental Public Health Act, Chapter 95 also regulates, inter alia, the disposai and treatment of industrial waste and public nuisances. Under the Environmentai Public Health Act, Chapter 95, the Ministry of Environment and Water Resources has empowered the Director-General of Public Health to serve a nuisance order on the owner or occupier of the premises on which the nuisance arises. Some of the nuisances which are liable to be deait with summarily under the Environmental Public Health Act, Chapter 95 include any premises or part thereof of such a construction or in such a state as to be a nuisance or there exists or is likely to exist any condition 54 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
giving rise, or capable of giving rise to the breeding of flies or mosquitoes and any place where there occurs, or from which there emanates noise or vibration as to amount to a nuisance. Building and Construction Industry Security of Payment Act (Chapter 30B) The Building and Construction Industry Security of Payment Act (Chapter 30B) confers a statutory entitlement to progress payments on any person who has carried out any construction work or supplied any goods or services under a contract. The Building and Construction Industry Security of Payment Act (Chapter 30B) also contains provisions relating to, inter alia, the amount of progress payment to which a person who has carried out any construction work is entitled under a contract, the valuation of the construction work carried out and the date on which a progress payment becomes due and payable (even where a construction contract does not provide for such date). Building Control Act, Chapter 29 The Building Controi Act, Chapter 29 sets out the requirements for licensing of builders. All builders carrying out building works where pians are required 10 be approved by the Commissioner of Building Control and builders who work in specialist areas which have a high impact on public safety will require a Builder’s License from 16 June 2009. Pursuant to the Building Control (Amendment) Act 2007, builders who undertake all building works where plans are required to be approved by the Building and Construction Authority and those who undertake works in specialist areas which have a high impact on public safety and require specific expertise, skill or resources for their proper execution have to be iicensed. Builders are licensed under two (2) registers, namely the General Builder Register (Class 1 and Class 2) and the Specialist Builder Register and such licenses are to be renewed on a three (3) year basis. Holders of the General Builder Class 1 license are allowed to perform general building works of unlimited value while holders of the General Builder Class 2 license are allowed to perform general building works of contract vaiues of SGD6.0 million or iess. A builder is required to obtain a Specialist Builder License if he undertakes any of the following specialist building works, namely piling works, ground support and stabilisation works, site investigation work, structural steelwork, precast concrete work or in-situ post-tensioning work. Concrete industry in Singapore -classes of specialist builder license
Specialist Builder Piling works comprising installation and testing of precast reinforced concrete or I I (Piling Works) prestressed concrete piles, steel piles, bored cast-in-place reinforced concrete piles, 1 I I caissons and special pile types like microiJiles, barrettes piles and composite piles, I 1 ! embedded retaining wall piles iike diaphragm walls, contiguous bored piles or secant piles I f·-__,,,_. ._… ~_~~___;–“””_.. ~ “…._”, ..,’,._._.. …__~ ……….•. .. ~__..__. “”..•……_. .. ..__,,_… …__._. .,_.
._…~._J i Specialist Builder ! Ground support and stabilisation works including installation and testing of ground I I (Ground Support and I anchors, soil nails, rock bolts, ground treatment like chemical grouting and jet-grouting, I ! Stabilisation Works) reinforced-€arth, shotcreting and tunnel supportsr. r-sp~~j’~~~t Builder r-St~~~t~~~;~l;~~~~~p·ri~i~g————-··——…. . –.–..——-…..—–·..-···· -I I (Structural Steelwork) i· fabrication of structural elements; i ‘I i• erection work like site cutting, site welding and site bolting; and !• installalion of steel supports for underground building ‘NOrks ;
L . .•_ …_. __ ~ _…_._…. _L~ .•__.__.•. … .,, __•..__~.. .. …..__._._._.__ ~ ……_…..~. __~ ._…… .__….._._. ., __… ._._…. __.•_•..__. . __ 0 ~_ ~..–J Extracted from the independent market research report prepared by SMITH ZANDER 55 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
In addition to obtaining the requisite licenses, registration in the contractors’ registry maintained by the Building and Construction Authority is a prerequisite to tendering for projects in the public sector and the contractors’ registry is subject to review every three (3) years. Presently, there are six (6) major categories of registration, some of which are further sub-classified into six (6) or seven (7) grades, depending on the category of registration. Registration of a contractor with the Building and Construction Authority is dependent on the contractor fulfilling certain requirements relating to, inter alia, the value of previously completed projects, personnel resources, net worth and paid-up capital of the contractor. Employment of Foreign Manpower Act, Chapter 91A Under Section 5(1) of the Employment of Foreign Manpower Act, Chapter 91A, no person shall employ a foreignworkerunlesshehasobtained in respectoftheforeign workeravalidworkpennit,which allows the foreign worker to work for him. From 1 July 2012, basic skilled construction work permit workers would be allowed to work up to a maximum of ten (10) years, while higher skilled workers would be allowed to work up to 18 years. As a transitional measure, the Ministry of Manpower will grant an extension to the period of employment of all affected workers. Employers will have at least two (2) years to upgrade their workers from basic skilled to higher skilled. The availability of foreign workers to the construction industry is regulated by the Ministry of Manpower through the following policy instruments, namely approved source countries; issuance of work penn its; the imposition of security bonds and levies; dependency ceilings based on the ratio of local to foreign workers; skill trade test requirement whereby the foreign worker will need to meet a basic skill requirement before he can work in Singapore; and quotas based on man-year entitlements in respect of workers from non­traditional sources and the People’s Republic of China. The approved source countries for construction workers include Malaysia, the People’s Republic of China, non-traditional source countries and North Asian sources. Non-traditional source countries include India, Sri Lanka. Thailand, Bangladesh, Myanmar, Philippines and Pakistan. North Asian source countries include Hong Kong, Macau, South Korea and Taiwan. [The rest of this page is intentionally left blank] II Company Number: 11 08506-W II 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
6 INDUSTRY PROSPECTS AND OUTLOOK FOR SUNWAY CONSTRUCTION GROUP BERHAD Malaysia’s economy is expected to sustain its growth momentum driven by resiiient domestic demand and an improving external sector. Given the improving outlook of global economy and underpinned bymeasures announced under Budget 2015 to support growth and transfonmation programmes, Malaysia’s GDP is expected to expand between 4.5% and 5.5% in 2015. Despite considerable achievements in providing basic infrastructure and public amenities for the population, there are still development gaps between regions in Malaysia, as well as between urban and rural areas. Public transport and infrastructure such as roads, railways, ports and utilities are key targeted development areas as the country strives towards developed nation status by 2020. Additionally, key urban areas have been identified for large scale development and upgrade of efficient public transportation systems, indicating further growth potential for infrastructure deveiopment and construction. Historically, Malaysia’s construction sector, based on the total value of construction projects awarded, has grown from RM74.9 billion in 2009 to RM130.7 billion in 2013 at a CAGR of 14.9%, where infrastructure construction increased from RM22.7 biliion to RM31.3 billion in the same period. Residential construction activities registered the highest growth rate of 27.6% as the value of awarded projects increased from RM14.3 billion in 2009 to RM37.9 biilion in 2013. On the back of an increase in the supply of commercial office space, the value of awarded commercial and industrial construction projects witnessed a growth rate of 12.8% over the period of 2009 and 2013. The demand for construction services is expected to remain robust moving forward as the decentralisation of office developments, scarcity of land and plans to improve the public transportation system in Malaysia will be key factors that contribute the development of new townships and business centres emerging outside major city centres. Several mixed development projects are expected to come onstream by 2017, thereby indicating growth potentiai for commercial retail space in Malaysia. The implementation of the second phase of the Iskandar Malaysia masterplan will have significant impact on construction activities in Johor as development plans under the CPD will be focused within the city centre, Danga Bay and the Nusajaya localities. In 2013, the total value of construction projects awarded in Maiaysia was registered at RM130.7 billion. During this same period, Sunway Construction Group Berhad was awarded projects amounting to RM2.9 billion and thereby gamered a market share of 2.2% in Maiaysia. SMITH ZANDER projects the construction industry to grow from RM130.7 billion in 2013 to RM191.1 billion in 2017 underpinned by the high impact projects announced under 10MP, 11 MP, ETP and Budget 2015 which are expected to catalyse the construction industry. Allocations have been provided for under Budget 2015 to improve public infrastructure facilities, including improving road networks and bridges, train services, ports, airports and utilities. Budget 2015 will aiso focus on strengthening health services through the construction of new hospitals and clinics as well as upgrading of existing healthcare facilities. Specifically in Budget 2015, the Government announced several infrastructure projects that will result in greater demand for construction services. A total of approximately RM75.0 billion worth of highway infrastructure projects have been eanmarked to commence in 2015. The construction industry in Singapore grew from SGD22.5 billion in 2009 to SGD35.8 billion in 2013 at a CAGR of 12.3%. The nation’s construction industry is largely spurred by residential development where residential construction activities increased from SGD6.7 billion to SGD16.1 billion at a CAGR of 24.5% over the period of 2009 and 2013. The total number of completed public housing units in Singapore has increased from 1,769 units to in 2009 to 12,744 units in 2013 at a CAGR of 63.8%, and comprised the largest proportion of construction activities in Singapore in 2013 at 45.0%. SMITH ZANDER expects the 57 Company Number: 11 08506-W 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (CONT’D)
construction industry in Singapore to grow from SGD35.8 billion in 2013to SGD53.0 billion in 2017 at a CAGR of 10.3%. Singapore further announced plans to construct an additionai 80,000 units of public housing over the coming three (3) years. Under Budget2015, the Governmentallocated SGD484.0 million for the upgrading of HDB public housing precincts, where investments will be made to improve access and upgrade lifts in older HDB developments which will benefit an estimated 50,500 units, and the completion of 17,900 units and 20,900 units under HDB’s HIP and NRP respectively. These developments bode well for the precast concrete industry in Singapore as demand for precast concrete products is primarily generated from residential construction projects. Sunway Concrete Products (S) Pte Ltd, a wholly-owned subsidiary of Sunway Construction Group Berhad has manufactured and supplied precast concrete components for a total of 2,498 units of the 77,436 HDB units under construction in Singapore in the same year, resulting in a market share of 3.2%. SMITH ZANDER believes that the prospects for Sunway Construction Group Berhad will be supported by overall growth in the construction industries in Malaysia and Singapore, to be driven by strong anticipated pUblic spending on infrastructure development and public housing respectively. As one of the largest construction companies in Malaysia with an established track record of over 30 years delivering building and civil infrastructure construction projects, Sunway Construction Group Berhad will continue to be a key industry player, leveraging on its proven success to achieve furthergrowlh. [The rest of this page is intentionally left blank]

 

 

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