1. 1.                INTRODUCTION

The Board of Directors of BHB is pleased to announce that BHB, had on 6 March 2014, entered into a Memorandum of Understanding (“MOU”) with Dhyafat Albalad Alameen Co Ltd (“Dhyafa”) to formalise their intention to collaborate and establish a joint venture company (“Project Company”) to develop food manufacturing, production and services in the city of Makkah, Saudi Arabia.

1. 2.                INFORMATION ON DHYAFA

Dhyafa is a private development company owned by the Municipality of Holy Makkah. Its role is to identify, assess and develop business opportunities with private partners to improve hospitality and tourism services in Makkah especially in the areas of Food & Beverages, Islamic Historic sites, Transportation, Information Technology & Media, Makkah Gifts and Food Safety & Hygiene.

1. 3.                SALIENT TERMS OF THE MOU

The salient terms of the MOU are as follows:

(i)            that both parties will collaborate and cooperate to bring to fruition the project of setting up a food factory in Makkah to produce, sell and distribute food products to interested parties (“Food Factory”);

(ii)           the Project Company shall also be open to other opportunities in trading, food services, restaurant operations, industrial catering including in-flight catering, logistics and warehouse management including cold storage, and consultancies;

(iii)          Dhyafa will facilitate sourcing a suitable land area for lease on a long term basis, located within the Makkah suburb, for the construction of the Project Company. Dhyafa will be responsible for identifying available plots of land, negotiating the lease rate, and finalising the land lease process;

(iv)         Dhyafa shall collect all necessary information regarding local laws and regulations required to be complied with for the intended activities from local authorities. This includes but is not limited to authoritative and/or governmental licenses, approvals, and exemptions, and any other documents necessary for the implementation of the Project Company;

(v)          Dhyafa will utilise its technical expertise, local knowledge of Makkah, and provide its relational network and goodwill in order to develop the Project Company. This may include sourcing potential partner clients in the hospitality and other industries, as well as supporting the sales and distribution of the products produced by the Food Factory;

(vi)         BHB shall contribute its expertise in the setting up of the Food Factory, as well as in the areas of operation management, food production and processing, food packaging and food quality management;

(vii)        BHB shall utilise its reputation to attract clients from Asian pilgrims, especially Malaysian pilgrims during the Hajj and Umrah;

(viii)       both Dhyafa and BHB will mutually collaborate on, including but not limited to:

(a)          strategic planning – developing a detailed business plan, a detailed marketing plan, and financial forecasts;

(b)          project management – land development, technical design, construction supervision;

(c)          human resources – including the recruitment of management and operational staff, both locals and expatriates;

(d)          starting up the factory – including commissioning of the Food Factory; and

(ix)         both Dhyafa and BHB shall immediately designate one or more individuals within their respective organisations as their representative(s) responsible for communicating and performing the duties as listed in this MOU. A team to oversee the execution of the construction and development of the Project Company shall be formed at the earliest possible date.

1. 4.                RATIONALE

The objective of the MOU is to define the main conditions for the creation of the Project Company to develop food manufacturing, production and services in the city of Makkah. The MOU will allow the initiation of the required procedures and collaborative works in order for the project to commence immediately.

1. 5.                EFFECT OF THE MOU

The MOU is not expected to immediately have material effects on the earnings per share, net assets per share, gearing, share capital and substantial shareholders’ shareholding of BHB for the financial year ending 31 December 2014.