Further to the announcement made by BHS Industries Berhad (“BHS” or “Company”) on 11 March 2016 and 21 October 2016, the Board wishes to clarify as follows:-

1. The Company intends to develop the 375 acres of Land into a Green Technology Park (“GTP”) where the main industries locating in the Park are using the Green Technology to convert the Empty Fruit Bunches into pulp and paper, box liner paper, corrugated paper and tissue paper.Also using the bio-technology to convert frond to agro-feed and other palm waste into organic fertilizer.To further develop the green technology and bio-technology knowhow, BHS will set up an Education Hub for research and development of these two branches of science in collaboration with the local and overseas universities.

The development of the Land will be divided into 5 phases.  Phase 1 has already taken off and BHS through its subsidiary, Nextgreen Pulp and Paper Sdn Bhd is building a Pulp and Paper mill at GTP with an annual production capacity of 10,000 metric ton.  On 19 October 2015, BHS had raised a gross proceeds of RM41.6 million through a rights issue to finance the Pulp and Paper project.  By late 1st half of 2017, we expect the mill to be ready for production. There is also a plan for a tissue paper factory of 5,000 metric ton in the 1st phase which has yet to take off.  BHS is presently talking to potential investors and once it has anything to report, it will make an announcement to Bursa Malaysia Securities Berhad (“Bursa”).

Phase 2 may involve a factory with a capacity to produce 100,000 metric tons of box liner paper and 120,000 metric tons of corrugated paper with Phase 3 another factory with a capacity to produce 65,000 metric tons of tissue paper.  BHS is presently talking to potential investors and once it has succeeded, it will make an announcement to Bursa.

Phase 4 consists of a factory to produce agro-feed and organic fertilizer and Phase 5 the Land has been earmarked for light industries.  To support and service the man-power needs of the GTP, the Company plans to build shop lots and also hostels for workers.  These are still at the preliminary stage of the planning.

In view of the foregoing, BHS has intended to diversify into industrial park development and management including construction and property development and the Company shall seek shareholders’ approval in the near future.

2. Since the Company is developing the Land in phases, it is in a position to manage and control its financial commitment.For Phase 1, the total construction cost expected to be incurred is RM14 million.Thus far, the Company has incurred about RM4.2 million on the infrastructural work as part of the cost of construction.