KPJ Healthcare

Proposed Distribution of the investment in units of al-'aqar kpj Real Estate Investment Trust ("al-'aqar kpj Reit") held by kpj Healthcare Berhad ("kpj") To the Shareholders of kpj On The Basis of Seven (7) Units in Al-'aqar kpj Reit For Every Hundred (100) Ordinary Shares of Rm1.00 Each Held In Kpj By Way Of A Dividend-in-specie ("proposed Distribution")

BackJun 25, 2007

General Announcement

Reference No MM-070625-40202

Submitting Merchant Bank	:	AMINVESTMENT BANK BERHAD
Company Name	:	KPJ HEALTHCARE BERHAD
Stock Name	:	KPJ
Date Announced	:	25/06/2007


Type	:	Announcement
Subject	:	PROPOSED DISTRIBUTION OF THE INVESTMENT IN UNITS OF AL-‘AQAR KPJ REAL ESTATE INVESTMENT TRUST ("AL-‘AQAR KPJ REIT") HELD BY KPJ HEALTHCARE BERHAD ("KPJ") TO THE SHAREHOLDERS OF KPJ ON THE BASIS OF SEVEN (7) UNITS IN AL-‘AQAR KPJ REIT FOR EVERY HUNDRED (100) ORDINARY SHARES OF RM1.00 EACH HELD IN KPJ BY WAY OF A DIVIDEND-IN-SPECIE ("PROPOSED DISTRIBUTION")

Contents :

1. INTRODUCTION

We refer to our announcement dated 17 May 2007 in relation to the proposed disposals by KPJ.

On behalf of the Board of Directors of KPJ (Board), AmInvestment Bank Berhad (formerly known as AmMerchant Bank Berhad), a member of AmInvestment Bank Group ("AmInvestment Bank") wishes to announce that the Company also proposes to implement the proposed distribution of the investment in units of Al-‘Aqar KPJ REIT held by KPJ to the shareholders of KPJ on the basis of seven (7) units in Al-‘Aqar KPJ REIT for every hundred (100) ordinary shares of RM1.00 each held in KPJ by way of a dividend-in-specie via a reduction in the retained earnings.

The Proposed Disposals and Proposed Distribution are not inter-conditional.

2. DETAILS OF THE PROPOSED DISTRIBUTION

KPJ proposes to distribute at least 14.411 million units credited as fully paid-up in Al-‘Aqar KPJ REIT ("Units") (based on KPJ's issued and paid-up share capital of 205,868,615 ordinary shares of RM1.00 each as at 31 May 2007, being the latest practicable date), representing about 4% of the total unitholdings of Al-‘Aqar KPJ REIT, to the shareholders of KPJ by way of a dividend-in-specie via a reduction in the retained earnings of KPJ. The Proposed Distribution will result in the units of Al-‘Aqar KPJ REIT being held directly by the shareholders of KPJ on the basis of seven (7) units in Al-‘Aqar KPJ REIT for every hundred (100) ordinary shares of RM1.00 each held in KPJ.

Pursuant to the Proposed Distribution, KPJ shall distribute the Units to its shareholders based on their respective shareholdings in KPJ as at an entitlement date to be determined and announced later. The number of units to be distributed for every hundred (100) ordinary share of RM1.00 each in KPJ ("KPJ Share") held by the shareholders would depend on the issued and paid-up share capital of KPJ as at the entitlement date.

Fractional entitlements of the Units arising from the Proposed Distribution shall be dealt with by the Board in such manner as they deem fit. Accordingly, fractional entitlements, if any, arising from the Proposed Distribution shall be disregarded and are to be dealt with on such terms as the Board may at their discretion deem fit and expedient in the interest of the Company.

The Proposed Distribution will be effected by cancelling the carrying value of the investment in Al-‘Aqar KPJ REIT in the books of KPJ as at 31 December 2006 of RM162.87 million against the retained earnings by the amounts of approximately RM14.41 million. The proforma financial effects of the Proposed Distribution on the net assets ("NA") of KPJ and its subsidiary and associated companies ("Group") are set out in Section 5 herein.

The audited retained earnings of KPJ as at 31 December 2006 and the unaudited retained earnings of KPJ as at 31 March 2007 stood at RM171.24 million and RM182.66 million respectively.

3. INFORMATION ON KPJ AND AL'-AQAR KPJ REIT

3.1 Information on KPJ

KPJ was incorporated in Malaysia under the Companies Act 1965 ("Act") on 18 August 1992 as a private limited company under the name of KPJ Management Sdn Bhd and subsequently changed its name to KPJ Healthcare Sdn Bhd on 14 September 1993. On 4 November 1993, it was converted to a public company and since then assumed its present name.

KPJ was listed on the Main Board of Bursa Securities on 29 November 1994.

The principal activities of the Company are those of an investment holding and provision of management services to its subsidiaries. The Group is principally involved in the operating of specialist hospitals, trading of pharmaceutical and consumer healthcare products, provision of pathology and laboratory services and the running of a private nursing college.

KPJ was originally allocated new Al-‘Aqar KPJ REIT Units of 159,999,000 at RM159,999,000 as part of the sales consideration for the disposal of properties as completed on 17 August 2006 and announced on 18 August 2006.

As at 31 May 2007, its authorised share capital is 500,000,000 ordinary shares of RM1.00 each, of which 205,868,615 ordinary shares of RM1.00 each are fully issued and paid-up.

Based on the latest audited consolidated financial statements for the financial year ended ("FYE") 31 December 2006, KPJ registered a consolidated profit after taxation and minority interest of RM40.96 million and the NA of the KPJ Group was RM487.28 million or RM2.39 per ordinary share.

3.2 Information on Al-‘Aqar KPJ REIT

Al-‘Aqar KPJ REIT is a real estate investment trust with an existing fund size of 340 million units. The investment objective of Al-‘Aqar KPJ REIT is to own and invest in real estate and real estate-related assets whether directly or indirectly through the ownership of single-purposes companies whose principal assets comprise real estate.

ARB is the Trustee of Al-‘Aqar KPJ REIT. The Trustee was established in 1995 when the Department of Public Trustee and Official Administrator Malaysia, which existed since 1921 was corporatised. ARB was incorporated on 29 May 1995 under the Act and established under the Public Trust Corporation Act 1995. ARB is wholly-owned by the Government of Malaysia and its shares are held by the Ministry of Finance (Incorporated) and the Federal Land Commissioner.

The Trustee's functions, duties and responsibilities are set out in the trust deed entered into between ARB and Damansara REIT Managers Sdn Berhad ("Manager") dated 27 June 2006 ("Trust Deed"). The general function, duties and responsibility of Trustee include, but not limited to, the followings:

(a) acting as the trustee for Al-‘Aqar KPJ REIT and safeguarding the rights and interests of the unitholders;

(b) holding the assets of Al-‘Aqar KPJ REIT on the Trust Deed for the benefit of the unitholders; and

(c) exercising all the powers of a trustee and the powers that are incidental to the ownership of the assets of Al-‘Aqar KPJ REIT.

The management company of Al-‘Aqar KPJ REIT is the Manager. The Manager was incorporated in Malaysia under the Act under the name of Ultimate Benchmark Sdn Bhd on 8 December 2005 and assumed its present name on 15 March 2006. The issued and fully paid up share capital of the Manager as at 31 May 2007 is RM1,000,000.

The main responsibility of the Manager is to manage Al-‘Aqar KPJ REIT's assets and liabilities for the benefit of unitholders. In particular, the Manager is responsible for the day-to-day management of the assets held by Al-‘Aqar KPJ REIT and shall at its discretion, make recommendations to the Trustee on the management and operation of the assets and the annual budget.

A Shariah committee ("Syariah Committee") advises the Trustee and the Manager on all Syariah related matters. The Syariah Committee is responsible for ensuring that Al-`Aqar KPJ REIT complies with the Securities Commission's ("SC") Guidelines on Real Estate Investment Trust, Guidelines on Islamic Real Estate Investment Trust, investment guidelines, providing references and consultation to the Manager on permitted investments. The Syariah Committee also monitors and ensures that Al-`Aqar KPJ REIT is managed and administered in accordance with Syariah principles, the applicable guidelines, ruling or decisions issued by the SC pertaining to Syariah matters.

The Shariah Committee Members are as follows:-

(a) Dato' Haji Nooh Bin Gadot
(b) Datuk Hj Md Hashim Bin Hj Yahaya
(c) Prof. Madya Dr Ab. Halim Bin Muhammad

The maintenance manager of Al-`Aqar KPJ REIT is Healthcare Technical Services Sdn Bhd ("Maintenance Manager"). The Maintenance Manager was incorporated in Malaysia under the Act on 29 April 1995 as a private limited company under the name of Mobimatic Industries Sdn Bhd and subsequently changed its name to TPM Healthcare Services Sdn Bhd on 16 October 1995 and assumed its present name on 14 August 1997.

The Maintenance Manager is involved principaly in the business of project management, maintenance and other related services.

The general function, duties and responsibility of the Maintenance Manager include, but not limited to, the following:

(a) managing and monitoring the upgrading, refurbishment, retrofitting and
renovation works of the properties owned by the Al-`Aqar KPJ REIT;

(b) managing and monitoring the planned preventive maintenance and corrective maintenance activities and works in relation to the properties owned by the Al-`Aqar KPJ REIT incuding appointing contractors related to the preventive maintenance and corrective maintenance works;

(c) performing , supervising , directing and/or controlling all acts reasonably necessary in connection with the performance of its services in an efficient and proper manner;

(d) assisting the Manager in the implementation of the Al-`Aqar KPJ REIT organic growth strategies; and

(e) prepare and plan the annual maintenance budget and undertake physical inspection of the properties owned by the Al-`Aqar KPJ REIT.

4. RATIONALE FOR THE PROPOSED DISTRIBUTION

In recent years, KPJ Group's business performance has further improved whereby the Group has achieved a healthy balance sheet. In light thereof, the Board is of the view that this is the right time to return surplus assets to the shareholders of the Company.

The Proposed Distribution represents the Company's initiatives to reward its shareholders for their continuous support of the Company. The quantum of the Proposed Distribution has taken into account the long-term dividend policy of KPJ.

5. EFFECTS OF THE PROPOSED DISTRIBUTION

5.1 Share Capital and Major Shareholder's Shareholding

The Proposed Distribution will not have any effect on the issued and paid up share capital as well as the major shareholder's shareholding structure of KPJ.

5.2 NA

The proforma effects of the Proposed Distribution on the NA of KPJ based on the latest audited consolidated financial statements of KPJ as at 31 December 2006 are set out in the Table 1 and Table 2.

5.3 Earnings

The Proposed Distribution is expected to be completed by the third quarter of 2007. However, the Proposed Distribution will not have any material impact on the earnings of the KPJ Group for the financial year ending 31 December 2007.

5.4 Dividends

The Proposed Distribution is not expected to have any material effect on the long-term dividend policy of the Company.

6. APPROVALS REQUIRED FOR THE PROPOSED DISTRIBUTION

The Proposed Distribution is conditional upon approvals being obtained from the following: (i) the approval of the shareholders of KPJ at an Extraordinary General Meetings ("EGMs") to be convened;

(ii) the approval of the Securities Commission ("SC") for the Proposed Distribution; and any other relevant authorities, if required.

7. DEPARTURE FROM THE POLICIES AND GUIDELINES ON ISSUE/OFFER OF SECURITIES ISSUED BY THE SC

To the best knowledge of the Company, the Proposed Distribution do not depart from the Policies and Guidelines on Issue/Offer of Securities issued by the SC.

8. DIRECTORS AND MAJOR SHAREHOLDER'S INTERESTS

None of the Directors and major shareholders of KPJ and/or persons connected with the Directors and/or major shareholders has any interest, direct and/or indirect, in the Proposed Distribution apart from their respective entitlements as shareholders to the Proposed Distribution which rights are also applicable on a pro-rata basis to all shareholders of the Company.

9. DIRECTORS' RECOMMENDATION

The Board of Directors of KPJ having considered the rationale for the Proposed Distribution, and after careful deliberation, is of the opinion that the Proposed Distribution is in the best and long term interests of KPJ. Accordingly, they recommend that you vote in favour of the ordinary resolution to be tabled at the forthcoming EGM.

10. ESTIMATED TIMEFRAME FOR SUBMISSION OF THE APPLICATION TO THE SC

Barring any unforeseen circumstances, the Proposed Distribution is expected to be submitted to the SC within one (1) month after the date of this announcement.

11. ESTIMATED TIMEFRAME FOR COMPLETION

Barring any unforeseen circumstances, the Proposed Distribution is expected to be completed by the third quarter of 2007.

Summary information of the Al-‘Aqar KPJ REIT Fund is set out in Table 3

This announcement is dated 25 June 2007.

Tables.doc

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