STONE MASTER CORPORATION BERHAD

General Announcement (Amended) Company Name : STONE MASTER CORPORATION BERHAD Stock Name : STONE Date Announced : 21 st June 2016 Type Subject : OTHERS : STONE MASTER CORPORATION BERHAD ( SMCB OR THE DEBTOR ) SIGNING OF SUPPLEMENTARY SETTLEMENT AGREEMENT ( SSA ) WITH DATO EII CHING SIEW @ YII CHING SIEW ( THE CREDITOR ) Content : INTRODUCTION The Board of Stone Master Corporation Berhad ( SMCB or the Debtor ) wishes to inform that SMCB has today, the 21 st June 2016 signed a Supplementary Settlement Agreement (hereinafter referred to as the SSA ) with Dato Eii Ching Siew @ Yii Ching Siew (NRIC No. 450826-13- 5197) of Marina Court, Block D 1107, 11 th Floor, 88000 Kota Kinabalu, Sabah ( the Creditor ), the details of which are as follows: 1. BRIEF BACKGROUND INFORMATION As of 10 th February 2016, the Debtor is indebted to the Creditor in the sum of Ringgit Malaysia Two Million Eight Hundred Thousand (MYR2,800,000.00) Only (hereinafter referred to as the Debt ) to which a Settlement Agreement was executed and an Announcement was made to the Bursa Malaysia Securities Berhad ( Bursa Securities) on even date. The Debtor has then proposed for the settlement of the said Debt ( hereinafter referred to as Settlement Proposal ) by way of allotment and issuance of the equivalent units of the Debtor s company shares to the Creditor. Pursuant to a Settlement Agreement between the Creditor and the Debtor dated 10 th February 2016, the Creditor has accepted the Settlement Proposal via allotment and issuance (hereinafter referred to as Special Issuance ) of 7,000,000 units of new ordinary shares of RM0.25 each in the Debtor s Company (hereinafter referred to as Settlement ) to the Creditor at the Issue Price of Forty Sen (RM0.40) per Settlement Share. The condition precedent to the Special Issuance exercise is that approval of shareholders in an Extraordinary General Meeting of the Debtor be first obtained. To date, the shareholder s approval for the Special Issuance exercise is pending. Kindly refer to the SMCB s Announcements of 10 th February 2016, 15 th February 2016, 8 th April 2016 and 10 th June 2016 for a better understanding of the background. 1

The Parties have mutually agreed to a partial settlement of the Debt, in the sum of Ringgit Malaysia Eight Hundred Thousand (RM800,000.00) Only (hereinafter referred to as Partial Repayment ) with immediate effect upon the terms and conditions as thereinafter appearing in the SSA. 2. SALIENT TERMS OF THE SUPPLEMENTARY SETTLEMENT AGREEMENT ( SSA ) The salient terms and conditions of the SSA entered into by SMCB with the Creditor are as follows:- 2.1 Partial Settlement of Indebtedness The Debtor shall upon the execution of the SSA make partial repayment ( Partial Repayment ) of the Debt to the Creditor in the sum of Ringgit Malaysia Eight Hundred Thousand (RM800,000.00) Only, the receipt whereof the Creditor thereby acknowledges. 2.2 Reduction in Debt and Settlement Subject to the Partial Repayment as aforesaid, the Debt shall accordingly be reduced to Ringgit Malaysia Two Million (RM2,000,000.00) Only (hereinafter referred to as Balance Debt ) and the Settlement shall be reduced proportionately to 5,000,000 units of new ordinary shares of RM0.25 sen each in the Debtor s Company at an issue price of RM0.40 per settlement share (hereinafter referred to as Revised Settlement ). 2.3 Ranking of the Revised Settlement The Revised Settlement shall, upon issuance and allotment, rank pari passu in all respects with the then existing Debtor s shares, save and except that the Revised Settlement shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of issuance and allotment of the Revised Settlement. 2.4 Acceptance of the Revised Settlement deemed full and final settlement of the Balance Debt The Creditor thereby agrees and confirms that it will accept the Revised Settlement as full and final payment and settlement of the Balance Debt upon the terms and conditions therein. 2.5 Balance Debt fully satisfied and extinguished upon issuance of Revised Settlement 2

The Parties thereby mutually acknowledge and agree that upon issuance of the Revised Settlement in favour of the Creditor, the Balance Debt will be fully satisfied and extinguished and the parties will have no further obligations to each other in relation to the Balance Debt. 2.6 Condition Precedent The settlement of the Balance Debt shall be subject to the condition precedent that approval of the shareholders in an Extraordinary General Meeting of the Debtor shall have been obtained for the Special Issuance exercise by 10 th August 2016 or within such extension(s) as may be granted by the Creditor (hereinafter referred to as the Condition Precedent ). 3. RATIONALE FOR ENTERING INTO THE SUPPLEMENTARY SETTLEMENT AGREEMENT ( SSA ) It is envisaged that, with the signing of this SSA, SMCB will be able to settle the Balance Debt in full. 4. THE RISKS IN RELATION TO THE SIGNING OF THE SUPPLEMENTARY SETTLEMENT AGREEMENT ( SSA ) The probable risk accessed and calculated risk that is in relation to and associated with the signing of this SSA is that in the event that the shareholders in the General Meeting of SMCB do not approve the Special Issuance as aforementioned for the settlement of the Balance Debt. 5. THE FINANCIAL EFFECTS OF THE SIGNING OF THE SUPPLEMENTARY SETTLEMENT AGREEMENT ( SSA ) Despite a dilutive effect on the existing shareholders shareholdings in SMCB as a result of issuance of the Revised Settlement, the proposed Special Issuance is expected to have the following positive effects: (a) (b) (b) reduce SMCB s debt without any cash outflow; the equity base and net assets of SMCB will be enhanced; and enable SMCB to improve its financial results. 6. DIRECTORS AND MAJOR SHAREHOLDERS INTEREST Except for Dato Dato Eii Ching Siew @ Yii Ching Siew (being the President/ Executive Director of SMCB and a substantial shareholder of SMCB), who is an interested party to the earlier Settlement Agreement executed on 10 th February 2016 and to this now executed SSA, none of the other directors and major shareholders of SMCB as well as persons connected with them have any interest, direct and/or indirect in this SSA. 3

7. WHETHER SHAREHOLDERS APPROVAL IS REQUIRED Approval by the shareholders of SMCB is not required for the signing of this SSA. However, the Special Issuance exercise shall be subject to the approval of the shareholders in the General Meeting of SMCB. 8. DIRECTORS STATEMENT The Board of SMCB is of the opinion that the signing of this SSA will be in the best and the overall long term interest of the Company as a whole. 9. ADVISER & SOLICITORS SMCB is in the midst of appointing a Solicitor to perfect, perform and ensure the completeness of the transaction as herein mentioned. 10. DOCUMENT AVAILABLE FOR INSPECTION The SSA (upon its stamping) may be inspected at the registered office of SMCB at Unit 2-03, Medan Klang Lama 28, No. 419, Jalan Klang Lama, 58100 Kuala Lumpur, Wilayah Persekutuan during the normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date hereof. ADDITIONAL INFORMATION 11. The Circumstances leading to the Debt owed to the Creditor Background The Creditor had prior to 10 th February 2016 made a number of advances ( the Advances ) amounting to Ringgit Malaysia Two Million and Eight Hundred (RM2,800,000.00) only to SMCB, and SMCB was then indebted to the Creditor in this respect ( the Debt ). By way of mutual understanding and agreement between SMCB and the Creditor, SMCB has proposed for the settlement of the Debt ( Settlement Proposal ) by way of allotment and issuance ( Special Issuance ) of the equ ivalent number of units of SMCB s shares ( Settlement ) to the Creditor, and the Creditor has agreed to accept the Settlement Proposal upon the terms and conditions of the Settlement Agreement ( Settlement Agreement ) executed on 10 th February 2016. Subsequent Event The Parties have now, via the execution of this SSA, mutually agree to a Partial Settlement of the Debt in the sum of Ringgit Malaysia Eight Hundred Thousand (RM800,000.00) only ( Partial Repayment ) with immediate effect upon the terms and conditions therein appearing in the SSA (under the Salient Terms of the SSA). 4

12. The Breakdown of the Advances and Interest for each of the Debt, and the Terms of Repayment 12.1. Breakdown of the Advances As of 10 th February 2016, the Creditor had made Advances totaling the sum of RM2,800,000.000. Kindly refer to the SMCB s Announcement of 15 th February 2016 for more details. 12.2 Interest There is no interest payable on the Debt concerned. 12.3 The Term of Repayment of the Advances The Partial Repayment as agreed between SMCB and the Creditor amounting to RM800,000.00 will be made upon execution of this SSA. The Balance Debt in the sum of RM2,000,000 will be repaid by way of the Revised Settlement to the Creditor via the Special Issuance which is condition precedent to the approval of the shareholders of SMCB at a General Meeting of SMCB to be held. The said approval of the shareholders in an Extraordinary General Meeting of SMCB shall have been obtained for the Special Issuance exercise on or before 10 th August 2016 ( Repayment Date ). 13. The date when the Balance Debt was incurred. The Balance Debt was incurred as of 10 th February 2016 upon the execution of the Settlement Agreement dated 10 th February 2016 between the Creditor and SMCB. 14. The due date to settle the Balance Debt. The Balance Debt is to be repaid by SMCB on the Repayment Date. 15. The highest and lowest market transaction price of SMCB s shares from January 2016 to June 2016 The monthly highest and lowest transacted prices of SMCB s shares for the past six (6) months from January 2016 to June 2016 are as follows: Year 2016 Highest (RM) Lowest (RM) January 0.40 0.37 February 0.40 0.37 March 0.40 0.29 April 0.39 0.36 May 0.37 0.34 June 0.36 0.33 The last transacted price of SMCB s shares on the Bursa Securities immediately prior to the Announcement of this SSA, that was on 20 th June 2016 was RM0.345 per share. The last transacted price of SMCB on Bursa Securities as at the LPD of 31 st May 2016 was RM0.34 per SMCB Share. 5

16. An explanation on the basis in arriving at RM0.40 for the Issue Price of the Revised Settlement and Justification for the Pricing. The issue price of the Revised Settlement as per the Settlement Agreement and the SSA has been fixed by SMCB s Board at RM0.40 per Settlement Share, which was determined based on the 5D-VWAP of SMCB up to and including 20 th June 2016, being the last trading date immediately preceding the Announcement. The basis of determining the issue price of the Revised Settlement was in accordance with marketbased principles and the 5D-VWAP represents the current average trading price of SMCB prior to the Announcement. 17. To show the effects of the Settlement Agreement in tabular form based on the latest Audited Accounts on the following: (i) the Issued and Paid-up Share Capital; (ii) the Net Asset Per Share; (iii) the Net Tangible Asset Per Share; (iv) Earnings Per Share; (v) the Substantial Shareholding s Structure; (vi) the Gearing (where applicable); and (vii) any existing convertible securities The cumulative pro-forma effects of the Proposed Capitalisation on SMCB s issued and paidup share capital flowing from and consistent with the Company s Announcement made on 15 th June 2016 are as follows: (i) The Issued and Paid-up Share Capital Issued and paid-up share capital as at the LPD To be issued pursuant to the Proposed Capitalisation To be issued pursuant to the full exercise of the Outstanding Warrants Enlarged issued and paid-up share capital No. of SMCB RM 000 89,905.177 22,476.294 7,648,025,000 1,912,006.250 21,852.588 5,463.147 7,759,782,765 1,939,945.691 (ii) Net Asset (as well as gearing) (Audited) (I) (II) As at 30th September 2015 (RM,000) After the Proposed Capitalisation (RM,000) After (I) and assuming full exercise of the 2005/2020 Warrants (RM,000) Share capital 22,476.294 1,936,482.544 1,941,945.691 Share premium 2,048.00 1,161,889.527 1,162,982.156 Merger deficit - - - 6

Unappropriated (8,548.00) (4,978.00) (4,978.00) profits Shareholders 17,208.00 3,083,148.07 3,089,703.847 funds / NA No. of SMCB 89,905.177 7,745,930.177 7,767,782.765 in issue Earning Per (0.10) 0.00 0.00 SMCB Share (RM) NA per SMCB 0.19 0.40 0.40 Share (RM) NTA per SMCB 0.19 0.40 0.40 Share (RM) 29,352.00 19,396 19,396 Gearing (times) 1.71 0.00 0.00 Notes: 1. The above is subject to verification by the Company s External Auditors. 2. The warrants reserve amount arises after taking into consideration the cost arising from the issuance of 21,852,588 Warrants 2015/2020 based on the opening price of RM0.30 per Warrant 2015/2020 on 21 Jun 2015, being the listing date of the Warrant 2015/2020 on the Main Market of Bursa Securities. (iii) Earnings and EPS The Proposed Capitalisation is not expected to have any material effect on the earnings of SMCB Group for the FYE 30 September 2016. However, the EPS for the FYE 30 September 2016 is expected to be diluted as a result of the increase in the number of SMCB in issue upon issuance of the Revised Settlement. Despite a dilutive effect on SMCB s existing minority shareholders shareholdings as a result of issuance of the Revised Settlement, the Proposed Capitalisation are expected to reduce SMCB Group s debt without any cash outflow and SMCB s equity base and NA will be enhanced. In addition, SMCB s earnings shall be increase due to utilising the initial kick off package to undertake the businesses under the Framework Agreements signed with SMCB s clients. (iv) Substantial Shareholdings Structure The pro-forma effects of the Proposed Capitalisation on SMCB s substantial shareholders shareholdings are as follows: As at the LPD Name Dato' Lee Fong Yin @ Lee Vun Ya Direct Indirect No. of SMCB % No. of SMCB 20,039.6 22.29 % 7

Dato' Eii Ching Siew @ Yii Ching Siew Starfield Capital Sdn Bhd 8,500 9.45 4,856.2 5.4 Name Dato' Lee Fong Yin @ Lee Vun Ya Dato' Eii Ching Siew @ Yii Ching Siew Starfield Capital Sdn Bhd (I) After Proposed Capitalisation Direct Indirect No. of SMCB % No. of SMCB 20,039.6 0.26 13,500.0 0.17 49,856.2 0.64 % Name Dato' Lee Fong Yin @ Lee Vun Ya Dato' Eii Ching Siew @ Yii Ching Siew Starfield Capital Sdn Bhd (II) After (I) and assuming full exercise of the 2005/2020 Warrants Direct No. of SMCB 20,039.6 0.26 13,500.0 0.17 49,856.2 0.64 Indirect % No. of SMCB % 18. An Explanation on how the SSA will enable SMCB to improve its Financial Results. The SSA when implemented to its full effect will reduce SMCB s debt without any cash outflow. This in turn will allow SMCB to preserve its cash for other purposes, such as business development and working capital requirements. The equity base of SMCB will therefore be enhanced and consequently its net asset will be increased. 19. Whether the Creditor will emerge as a new substantial shareholder. The Creditor is presently already a substantial shareholder. 20. The approvals required for the issuance of new shares and the estimated time frame for submission of the application to the relevant authorities. The issuance of new shares is subject to and conditional upon the following approvals being obtained: 8

(A) Bursa Securities for the listing of and quotation for the Revised Settlement on the Main Market of Bursa Securities; The approval of Bursa Securities is subject to the following conditions: (a) (b) (c) Conditions imposed SMCB and Advisor must fully comply with the relevant provisions under the Listing Requirements pertaining to the implementation of the Proposals; SMCB and Advisor to inform Bursa Securities upon the completion of the Proposals; SMCB to furnish Bursa Securities with a written confirmation of SMCB s compliance with the terms and conditions of Bursa Securities approval once the Proposals are completed; and Status of compliance To be complied with in the very near future To be complied with in the very near future To be complied with in the very near future (d) SMCB to furnish Bursa Securities with a certified true copy of the resolutions passed by shareholders at EGM for the Proposals. To be complied with in the very near future (B) (C) SMCB s shareholders for the Proposals at the EGM to be convened; and Any other relevant authorities, if required. 21. The estimated time frame for completion of the issuance of new shares. Barring unforeseen circumstances and subject to receipt of all relevant approvals, the Proposals are expected to be completed by the third (3 rd ) quarter of 2016. The tentative timetable for the implementation of the Proposed Capitalisation are as follows: Events Date EGM for the Proposals 18 th July 2016 Listing of and Quotation for 10 th August 2016 the Revised Settlement 22. The justification for embarking on the issuance of new shares rather than other available options. SMCB was advised and verily believed that, by taking advantage of the current market price of SMCB s shares, and with the proposal for settlement of the said Balance Debt being acceptable to the Creditor, the issuance of new shares will tend to create greater shareholders value. SMCB had further been advised that there is no other plausible and practical option available. This Announcement is dated 21 st June 2016 and amended this 5 th July 2016. Key:- All amendments are shown in red. 9