1. INTRODUCTION

On behalf of the Board of Directors of KFB ("Board"), PM Securities Sdn Bhd is pleased to announce that the Company proposes to undertake a bonus issue of 40,000,000 new KFB Shares ("Bonus Shares") to be credited as fully paid-up on the basis of one (1) Bonus Share for every two (2) existing KFB Shares held on an entitlement date to be determined later ("Entitlement Date").

2. DETAILS OF THE PROPOSED BONUS ISSUE

2.1 Details of the Proposed Bonus Issue

The Proposed Bonus Issue involves the issuance of 40,000,000 Bonus Shares to be credited as fully paid-up on the basis of one (1) Bonus Share for every two (2) existing KFB Shares held by the shareholders of KFB whose names appear in the Record of Depositors of KFB at the close of business on the Entitlement Date.

The number of Bonus Shares that may be issued under the Proposed Bonus Issue is based on the Company’s issued and paid-up share capital as at 15 May 2008 of 80,000,000 KFB Shares. However, the actual number of Bonus Shares to be issued pursuant to the Proposed Bonus Issue will depend on the issued and paid-up share capital of the Company held as at the Entitlement Date.

Any fractional entitlements arising from the Proposed Bonus Issue shall be dealt with by the Board in such manner at their sole discretion as they may deem fit and expedient and in the best interest of the Company.

The Proposed Bonus Issue is not to be implemented in stages over a period of time.

2.2 Ranking of Bonus Shares

The Bonus Shares shall, upon issue and allotment, rank pari passu in all respects with the then existing KFB Shares, save and except that the Bonus Shares will not be entitled to any dividends, rights, allotment and/or other distributions, the entitlement date of which is prior to the date of allotment of the Bonus Shares.

2.3 Capitalisation of reserves

The Proposed Bonus Issue will be effected via the capitalisation of RM20,000,000, firstly from the Company’s share premium account and the remainder from the Company’s retained earnings account.

The illustration of the proposed capitalisation from the reserves of the Company for the Proposed Bonus Issue is set out in Table 1 herein.

The Board confirms that the reserves required for capitalisation are sufficient for the Proposed Bonus Issue and the reserves are unimpaired by losses on a consolidated basis as at 31 December 2007 and 31 March 2008, and complies with Paragraph 6.26A(1) of the Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Securities") and the Securities Commission’s Guidelines on the Offering of Equity and Equity-Linked Securities respectively.

3. RATIONALE FOR THE PROPOSED BONUS ISSUE

The Proposed Bonus Issue will increase the share capital base of KFB to a level which will better reflect the current scale of operations and assets employed by KFB and its subsidiaries ("KFB Group").

The Proposed Bonus Issue aims to reward the shareholders of KFB for their continued support of the Company and would allow the existing shareholders to further participate in the growth of KFB.

In addition, the increase in the number of KFB Shares in issue pursuant to the Proposed Bonus Issue is expected to improve the liquidity and marketability of KFB Shares on Bursa Securities.

4. EFFECTS OF THE PROPOSED BONUS ISSUE

The effects of the Proposed Bonus Issue on the issued and paid-up share capital, net assets and gearing, earnings, dividends and substantial shareholders’ shareholdings are as follows:-

4.1 Issued and paid-up share capital

The proforma effects of the Proposed Bonus Issue on the issued and paid-up share capital of KFB are set out in Table 2 herein.

4.2 Net assets and gearing

The Proposed Bonus Issue will not have any material effect on the net assets of the KFB Group, except for the corresponding dilution in the proforma consolidated net assets per share of KFB as a result of the increased in number of KFB Shares in issue upon completion of the Proposed Bonus Issue.

The Proposed Bonus Issue will not have any effect on the gearing of the KFB Group.

The proforma effects of the Proposed Bonus Issue on the audited consolidated net assets and gearing of the KFB Group as at 31 December 2007 are set out in Table 3 herein.

4.3 Earnings

Save for the expenses relating to the Proposed Bonus Issue, the Proposed Bonus Issue will not have any material effect on the earnings of the KFB Group for the financial year ending 31 December 2008. However, the future earnings per share of the KFB Group will correspondingly be diluted as a result of the increased in number of KFB Shares in issue upon completion of the Proposed Bonus Issue.

4.4 Dividends

The Proposed Bonus Issue will reduce the available reserves of KFB for declaration of dividends. However, the Board does not expect the Proposed Bonus Issue to have any material effect on the future dividends to be declared by the Company, which is dependent on, amongst others, the future profitability and the cash flow position of KFB at that point in time.

4.5 Substantial shareholders’ shareholdings

The Proposed Bonus Issue will not have any effect on the percentage of shareholdings of the substantial shareholders of KFB. However, the number of KFB Shares held by each substantial shareholder will increase proportionately as a result of the Proposed Bonus Issue.

5. APPROVALS REQUIRED

The Proposed Bonus Issue is conditional upon the approvals being obtained from the following:-

• Bursa Securities for the listing of and quotation for the Bonus Shares to be issued pursuant to the Proposed Bonus Issue; and
• the shareholders of KFB for the Proposed Bonus Issue at an extraordinary general meeting ("EGM") to be convened.

The Proposed Bonus Issue is not conditional upon any other corporate exercise or scheme.

6. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS

To the best knowledge of the Directors, none of the Directors and/or major shareholders of KFB and/or persons connected to them have any interest, direct or indirect, in the Proposed Bonus Issue beyond their respective entitlements as shareholders of KFB, for which all the existing shareholders of KFB are also entitled to.

7. DIRECTORS’ STATEMENT

The Board, having considered all aspects of the Proposed Bonus Issue, is of the opinion that the Proposed Bonus Issue is in the best interest of the Company.

8. ADVISER

PM Securities Sdn Bhd has been appointed as the adviser to the Company for the Proposed Bonus Issue

9. APPLICATION TO BURSA SECURITIES

An application to Bursa Securities for the Proposed Bonus Issue is expected to be made within two (2) months from the date of this announcement.

10. EGM

An EGM will be convened for the purpose of seeking shareholders’ approval for the Proposed Bonus Issue. A circular together with the Notice of EGM will be sent to the shareholders of KFB in due course.

11. ESTIMATED TIME FRAME FOR COMPLETION

Barring any unforeseen circumstances, the Proposed Bonus Issue is expected to be completed by the third quarter of 2008.

This announcement is dated 16 May 2008.