PONTIAN UNITED PLANTATIONS BERHAD (Company No P)

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1 THIS INDEPENDENT ADVICE CIRCULAR ( IAC ) IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. YOU SHOULD READ THIS IAC IN CONJUNCTION WITH THE OFFER DOCUMENT DATED 2 AUGUST 2013 ISSUED BY AMINVESTMENT BANK BERHAD ON BEHALF OF FELDA GLOBAL VENTURES HOLDINGS BERHAD ( OFFEROR ) WHICH HAS BEEN SENT TO YOU. If you are in any doubt as to the course of action you should take, you should consult your stockbroker, solicitor, bank manager, accountant, banker or other professional adviser immediately. If you have sold or transferred all of your voting shares in Pontian United Plantations Berhad, you should at once hand over this IAC to the purchaser or to the transferee or to the agent through whom you effected the sale or transfer for onward transmission to the purchaser or transferee. Pursuant to Section 15(7) of the Malaysian Code on Take-Overs and Mergers, 2010 ( Code ), the Securities Commission Malaysia ( SC ) has granted its consent for the issue of this IAC. However, such consent shall not be taken to imply that the SC agrees with the views and recommendation contained in this IAC. It merely means that this IAC has complied with the disclosure requirements under t he Code. The SC takes no responsibility for the contents of this IAC, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this IAC. PONTIAN UNITED PLANTATIONS BERHAD (Company No P) (Incorporated in Malaysia under the Companies Act, 1965) INDEPENDENT ADVICE CIRCULAR TO THE SHAREHOLDERS OF PONTIAN UNITED PLANTATIONS BERHAD IN RELATION TO THE VOLUNTARY CONDITIONAL TAKE-OVER OFFER BY FELDA GLOBAL VENTURES HOLDINGS BERHAD (Company No P) (Incorporated in Malaysia under the Companies Act, 1965) THROUGH AMINVESTMENT BANK BERHAD (23742-V) (A Participating Organisation of Bursa Malaysia Securities Berhad) TO ACQUIRE ALL THE REMAINING VOTING SHARES OF RM1.00 EACH IN PONTIAN UNITED PLANTATIONS BERHAD WHICH ARE NOT ALREADY HELD BY THE OFFEROR ( OFFER SHARES ) FOR A CASH CONSIDERATION OF RM PER OFFER SHARE Independent Adviser UHY ADVISORY (KL) SDN BHD ( T) This Independent Advice Circular is dated 28 August 2013

2 DEFINITIONS Acceptance Condition Accepting Holder AmInvestment Bank Board Bursa Depository Bursa Securities Closing Date CMSA Code Compulsory Acquisition Comparable Companies Directors Dissenting Shareholder EPS EBITDA EV First Closing Date Form FYE : Offeror having received valid acceptances by 5.00 p.m. (Malaysian time) on the Closing Date which would result in the Offeror holding in aggregate, together with Pontian Shares that are already acquired, held or entitled to be acquired or held by the Offeror, more than 50% of the voting shares of Pontian : Holders who accepts the Offer : AmInvestment Bank Berhad (23742-V) : Board of Directors of Pontian : Bursa Malaysia Depository Sdn Bhd ( W) : Bursa Malaysia Securities Berhad ( W) : First Closing Date or extended closing date in the event the Offer is revised or extended in accordance with the Code or as the Offeror may decide and announced by Amlnvestment Bank, on behalf of the Offeror, at least two (2) days before the Closing Date : Capital Markets and Services Act, 2007 of Malaysia and includes any amendment made to it from time to time : Malaysian Code on Take-Overs and Mergers, 2010 and includes any amendment made to it from time to time : In accordance to Section 222(1) of the CMSA, the right of the Offeror to acquire all the remaining Offer Shares from the Dissenting Shareholders on the condition that the Offer receives valid acceptances from the Holders of not less than nine-tenths (9/10) in nominal value of the Offer Shares (excluding Shares already held by the Offeror (if any) as at the date of the Offer : The Companies that have been identified as comparable companies to Pontian as set out in Section 5.1.2, Part B of this of IAC : The directors of Pontian : Any shareholder of Pontian who does not accept the Offer and/or any shareholder who has failed or refused to transfer the Offer Shares to the Offeror in accordance with the Offer Document : Earnings per share : Earnings before interest, tax, depreciation and amortisation : Enterprise Value : 5.00 p.m. on 9 September 2013, being 38 days from the Posting Date : Form of acceptance and transfer for the Offer, enclosed with the Offer Document : Financial years ended 31 December, as the case may be i

3 DEFINITIONS (Cont d) FPE FGV Group Holder : Financial period ended : FGV and its subsidiary companies : Holders of the Offer Shares IAC : This independent advice circular dated 28 August 2013 IAL Offeror or FGV LAT LBT LPD LPS Market Day MI NA Non-resident Holders Notice Offer Offer Document Offer Period Offer Price Offer Share : Independent advice letter from UHY dated 28 August 2013 to the Holders in relation to the Offer as enclosed in Part B of this IAC : Felda Global Ventures Holdings Berhad ( P) : Loss after taxation : Loss before taxation : 22 August 2013, being the latest practicable date prior to the issuance of this IAC. The LPD is for disclosure of information in this IAC : Loss per Share : Any day on which Bursa Securities is open for trading of securities : Minority interest : Net assets : Any Holder (including without limitation, any nominee, trustee and custodian) who is a citizen or national of, or resident in, or has a registered address in, any jurisdiction outside Malaysia, or is incorporated or registered with or approved by any authority outside Malaysia : The notice of the Offer dated 18 July 2013 issued by AmInvestment Bank on behalf of the Offeror : The voluntary conditional take-over offer by AmInvestment Bank on behalf of the Offeror to acquire all the Offer Shares for an Offer Price of RM per Offer Share, subject to and upon the terms and conditions set out in the Offer Document, including any revision or extension thereof : The offer document dated 2 August 2013, which sets out the details of the Offer, together with the forms of acceptance and transfer enclosed therein : The period commencing from 18 July 2013, being the date of the Notice and ending on:- (a) the Closing Date; or (b) the date when the Offer lapses, expires or is withdrawn with the consent of the SC, whichever is earlier : RM per Offer Share : Pontian Share not already held by the Offeror ii

4 DEFINITIONS (Cont d) Official List PAT PBT : The list specifying all securities which have been admitted for listing on Bursa Securities and not removed : Profit after taxation : Profit before taxation PBR : Price-to-book ratio, which is the price per share over NA per share PER Posting Date Pontian or Offeree Pontian Group Pontian Shares Share(s) Reduced offer price Relevant Day RM and sen RNAV SC UHY or Independent Adviser VWAP : Price-to-earnings ratio, which is the price per share over EPS : 2 August 2013, being the date of posting of the Offer Document : Pontian United Plantations Berhad (2121-P) : Collectively, Pontian and its subsidiaries : Ordinary share of RM1.00 each in Pontian : RM per Offer Share : The Market Day immediately after: (i) the Closing Date; (ii) the day on which the Offer becomes or is declared unconditional as to acceptances; (iii) the day on which the Offer is revised; or (iv) the day on which the Offer is extended : Ringgit Malaysia and sen, respectively : Realisable Net Asset Value : Securities Commission Malaysia : UHY Advisory (KL) Sdn Bhd ( T), the Independent Adviser appointed by the Board, in relation to the Offer : Volume weighted average market price Words importing the singular shall, where applicable, include the plural and vice versa. Words denoting the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall include corporations. Unless otherwise indicated, all references to dates and times in this IAC refer to Malaysian dates and times. All references to you, your or Holder in this IAC are to the holder of the Offer Shares, being the person to whom the Offer is being made. All references to we, us or our in this IAC, save for the Letter from the Board, are to UHY, the Independent Adviser for the Offer. Any reference in this IAC to any enactment is a reference to that enactment for the time being amended or re-enacted. Any discrepancies in the tables included in this IAC between the amounts listed, actual figures and the totals thereof are due to rounding. iii

5 TABLE OF CONTENTS PAGE EXECUTIVE SUMMARY PART A: LETTER FROM THE BOARD 1. Introduction 9 2. Terms and conditions of the Offer Directors comments Details of acceptances/non acceptances Disclosure of interests Independent Adviser s Letter Directors intentions in relation to the offer Directors recommendation Directors responsibility statement 14 PART B: INDEPENDENT ADVICE LETTER FROM UHY 1. Introduction Salient terms of the Offer Details of acceptances/non acceptances Limitations to our evaluation of the Offer UHY s evaluation of the Offer Further information Conclusion and recommendation 40 APPENDICES I. Information on Pontian Group II. Information on FGV (as extracted from the Offer Document) III. Disclosure of Interest IV. Further information The remainder of this page is intentionally left blank iv

6 EXECUTIVE SUMMARY

7 THIS EXECUTIVE SUMMARY HIGHLIGHTS THE SALIENT INFORMATION OF THE OFFER. WE ADVISE HOLDERS TO READ THE LETTER FROM THE BOARD (PART A OF THIS IAC) AND THIS IAL FROM UHY (PART B OF THIS IAC), THE INDEPENDENT ADVISER IN RELATION TO THE OFFER FOR FURTHER INFORMATION AND FOR THE RECOMMENDATION IN RELATION TO THE OFFER. THIS IAC SHOULD ALSO BE READ IN CONJUNCTION WITH THE OFFER DOCUMENT ISSUED BY AMINVESTMENT BANK ON BEHALF OF THE OFFEROR. 1. INTRODUCTION On 18 July 2013, AmInvestment Bank had, on behalf of the Offeror, served the Notice on the Board of Pontian informing Pontian that the Offeror intend to undertake a voluntary conditional take-over offer to acquire all the Offer Shares for a cash consideration of RM per Offer Share. All Offer Shares validly accepted shall accrue to FGV or its nominated companies. 2. PRINCIPAL TERMS AND CONDITIONS OF THE OFFER (a) Consideration of the Offer The consideration of the Offer is RM per Offer Share and shall be satisfied fully in cash. Nevertheless, if Pontian declares, makes and/or pays a dividend or other distribution of any nature whatsoever (collectively, Distribution ) on or after the date of the Notice but prior to the Closing Date and the Holder is entitled to retain such Distribution, the consideration for each Offer Share shall be reduced by the quantum of the net Distribution made per Pontian Share which such Holder is entitled to retain. Pontian had on 6 August 2013 declared an interim single tier dividend of 80 sen per Pontian Share ( Dividend ). The Dividend is to be paid on 2 September 2013 to all Pontian s shareholders whose names are registered in the Register of Members of Pontian on 23 August Accordingly, the Offer Price is reduced by 80 sen from RM to RM per Offer Share (i.e. the Reduced Offer Price). (b) Condition of the Offer The Offer is conditional upon the Offeror having received valid acceptances by the Closing Date which would result in the Offeror holding in aggregate, together with such Pontian Shares that are already acquired, held or entitled to be acquired or held by the Offeror, more than 50% of the voting shares of Pontian (Acceptance Condition ). The Acceptance Condition shall be fulfilled by 5.00 p.m. (Malaysian time) on or before the close of the Offer which should be no later than the sixtieth (60 th ) day from the Posting Date, failing which the Offer shall lapse and all acceptances shall be returned to the Holders who have accepted the Offer and the Offeror will thereafter cease to be bound by such prior acceptances of the Offer. (c) Duration of the Offer The Offer will be opened for acceptances until 5.00 p.m. (Malaysian time) on 9 September 2013 (being the First Closing Date) unless extended or revised in accordance with the Code or as the Offeror may decide and announced by AmInvestment Bank, on behalf of the Offeror, at least two (2) days before the Closing Date. Notices of such extension or revision will be posted to the Holders accordingly. 1

8 For information, pursuant to Section 2(1) Part I of the Code, the minimum number of days a take-over offer can be closed for acceptance is 21 days from the date of despatch of the offer document. In this Offer, the First Closing Date is fixed on 9 September 2013, being 38 days from the Posting Date to allow Pontian s shareholders additional time to deliberate on the Offer before making a decision. For further details relating to the Offer, kindly refer to Section 2 of the IAC or the Offer Document. (d) Method of settlement If the Offeror deems your acceptance to be complete and valid in all respects in accordance with the terms and subject to the conditions set out in the Offer Document, the Offeror shall pay you for your Offer Shares by cheque, banker s draft and/or cashier s order, which will be despatched by ordinary mail to you or your designated agent, as you may direct, at your own risk within seven (7) days from the date on which the Pontian Shares acquired by FGV pursuant to the Offer are registered in the name of FGV or its nominated companies. FGV undertakes to submit to Pontian the Offer Shares tendered for acceptance for registration promptly upon the Offer becoming unconditional. THE ABOVE IS A SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE OFFER. HOLDERS ARE ADVISED TO READ THIS IAC AND, IN PARTICULAR, SECTION 2 THEREIN FOR DETAILS ON THE PRINCIPAL TERMS AND CONDITIONS OF THE OFFER. IN ADDITION, PLEASE REFER TO APPENDIX II OF THE OFFER DOCUMENT FOR THE OTHER TERMS AND CONDITIONS OF THE OFFER AND APPENDIX III OF THE OFFER DOCUMENT FOR THE PROCEDURES FOR ACCEPTANCE OF THE OFFER. 3. DETAILS OF ACCEPTANCES/NON-ACCEPTANCES As at the date of the Notice and up to LPD, the Offeror has obtained irrevocable undertakings from each of the following persons to accept the Offer in respect of their respective Offer Shares held as follows: Name No. of Pontian Shares held ^% Bisa Jaya Sdn Bhd 1,398, Chin Leong Thye Sdn Bhd 57, Lee Chin Hwa 472, Lee Min Huat 112, Lee Sep Pian 4, Lee Ming Keong 15, Total 2,059, Note: ^ Based on the total issued and paid-up share capital of 8,648,280 Pontian Shares. Save as disclosed above, AmInvestment Bank has disclosed in the Offer Document that the Offeror have not received any irrevocable undertaking from any Holders to accept the Offer in respect of such Holders Offer Shares. 2

9 4. DIRECTORS INTENTION IN RELATION TO THE OFFER As at the LPD, the Directors (save for Dr Chen Man Hin, Khoo Siong Kee, Tan Kim Hai, Khoo Lian Khoo Bing Sing, Dr Christopher Chen Li Hsian and Dr John Chen Li Tat) have confirmed that they will REJECT the Offer Shares in respect of their shareholdings in Pontian due to reason as set out under Section 3.3 of Part A of this IAC. Dr Chen Man Hin, Khoo Siong Kee, Tan Kim Hai, Khoo Lian Khoo Bing Sing, Dr Christopher Chen Li Hsian and Dr John Chen Li Tat have indicated their intention to dispose in full or partial of their Offer Shares in respect of their direct shareholdings of 582,017 Pontian Shares (representing 6.73% of Pontian s total issued and paid up capital) after taking into consideration the evaluations and recommendations by UHY as contained in Part B of this IAC. 5. FGV S FUTURE PLANS FOR THE PONTIAN GROUP AND ITS EMPLOYEES FGV s future plans for the Pontian Group and its employees for a period of twelve (12) months after the Closing Date is as set out as follows:- (i) Continuation of the Pontian Group s businesses The Offeror intends to continue with Pontian Group s existing businesses and operations. The Offeror intends to review and may rationalise and/or restructure the businesses and operations of the Pontian Group if the need arises. Nevertheless, there are neither specific nor concrete plans as at 29 July 2013 (being the last practicable date prior to printing of the Offer Document ), and such intentions may only crystallise upon completion of the Offer and after the Offeror has conducted a review of the financial position and operations of the Pontian Group. (ii) Major changes to the Pontian Group s businesses During the course of review of Pontian Group s business, the Offeror may rationalise and/or restructure Pontian Group if the need arises. In doing so, the Offeror may, amongst others, effect necessary changes to the corporate structure which may include, but not be limited to, the redeployment of the assets of Pontian Group within the enlarged FGV Group and/or the disposal of non-core/immaterial assets of Pontian Group. The Offeror has no intention of liquidating Pontian. Nevertheless, these are neither specific nor concrete plans as at LPD, and major changes to Pontian Group s business may only carry out if the need arises and after the Offeror has conducted review of the financial position and operations of Pontian Group. (iii) Employees of the Pontian Group The Offeror has no plans to dismiss or make redundant the employees of Pontian Group as a direct consequence of the Offer. However, it may rationalise the position of employees at Pontian Group which could result in reallocation and/or cessation of personnel within the enlarged FGV Group as part of the overall rationalisation and reallocation of Pontian Group if the need arises. This will be implemented as continuing process and measures to further improve the efficiency and optimisation of staff productivity in Pontian Group. In any event, any such action taken will be deal with in accordance with the relevant legislation and the terms of employment of the affected staff. As at 29 July 2013 (being the latest practicable date prior to posting of the Offer Document), the Offeror has no knowledge of and has not entered into any negotiations, arrangements or understanding whatsoever with any third party with regards to any material change in Pontian s businesses, assets or equity structure that are to be implemented within the next twelve (12) months after the close of the Offer. 3

10 6. COMPULSORY ACQUISITION AND SHAREHOLDERS RIGHTS UNDER SECTIONS 222 AND 223 OF THE CMSA The Offeror intends to invoke the provisions of Section 222(1) of the CMSA to compulsorily acquire any remaining Offer Shares not accepted under the Offer if the Offeror receive acceptances of not less than nine-tenths (9/10) in the nominal value of the Offer Shares subject to Section 224 of the CMSA. A Dissenting Shareholder may exercise his or its rights, under Section 223 of the CMSA, by serving a notice on the Offeror to require the Offeror to acquire his or its Pontian Shares on the same terms as set out in this Offer Document or such other terms as may be agreed between the Offeror and such Dissenting Shareholder. Please refer to Section 5.2.7(c) of the IAC for further details on the compulsory acquisition relating to the Offer. 7. SALIENT CONSIDERATIONS BY UHY 7.1 Assessment of the Fairness of the Offer In accordance with Practice Note 15, Paragraph 3.2 of the Code, in arriving at the fairness evaluation of the Offer, we have conducted the RNAV valuation method and comparable company analysis. In making the above assessment, our evaluation of the fairness of the Offer is based on the following valuation methodology: (i) Implied RNAV of the Pontian Group RNAV is the most appropriate method to arrive at the intrinsic value of Pontian s shares. The Offer Price of RM per Offer Share represents a premium of between 12.59% and 39.97% to the implied RNAV per Offer Share of between approximately RM to RM The above was arrived despite using the highest transacted price as reference for the market value of Pontian s plantation asset. (ii) PER, PBR and EV/EBITDA of Comparable Companies Based on the evaluation as set out above, the Offer Price represents an EV/EBITDA of times is above the average EV/EBITDA of the Comparable Companies. The Offer Price also represent PER of times which is within the range of PER of Comparable Companies of between times and times and is above the average PER of Comparable Companies of times. In addition, the Offer Price s PBR of 2.92 times which is higher than the range of PBR of Comparable Companies of between 1.24 times and 2.24 times and is above the average PBR of Comparable Companies of 1.53 times. Therefore, in accepting the Offer, Accepting Holders are effectively realising their investment in Pontian at a premium to the value that can be realised by the Comparable Companies. In addition, the Pontian Shares are not listed on any stock exchange and is not accorded any listing premium. This therefore signifies an attractive and reasonable Offer to the Holders. 4

11 7.2 Assessment of the Reasonableness of the Offer In accordance with Practice Note 15, Paragraph 3.5 of the Code, in arriving at the reasonableness evaluation of the Offer, we have examined other significant factors to which the Holders may consider prior to accepting or rejecting the Offer. This includes comparing the merits and demerits of the Offer, as well as but not limited to, the position of the Holders in the eventuality the Offer does not proceed. (i) Recent precedent transaction involving take-over of listed oil palm cultivation companies The Offer Price represents an improvement of RM50.00 per Offer Share or premium of 55.56% over the previous offer price of RM90.00 per Offer Share under the previous Pontian TSH Take-Over. Based on the analysis of recent precedent transaction involving listed oil palm cultivation companies, the Offer PER, Offer PBR, EV/EBITDA and RNAV ratio of Pontian (based on the Offer Price) is higher as compared to the PER, PBR, EV/EBITDA and RNAV ratio of the above take-over offers made on the recent precedent transaction involving listed oil palm cultivation companies. Thus, Accepting Holders are able to realise their investment in Pontian Shares at a premium offered at the Offer Price as compared to the above comparable previous take-over of plantation companies. (ii) Consideration on dividends We note that Pontian has consistently declared and paid dividends to its shareholders in respect of the financial years under review. However, the Offer Price represents an avenue to realise the Holder s investment in Pontian which is not publicly traded and provide Accepting Holders an opportunity to invest their cash proceeds in other forms of investments which should generate higher income yield as compared to dividend received from Pontian. (iii) Historical financial performance of the Pontian Group We note that the revenue generated by the Pontian Group over the past audited five (5) FYE is consistent (save for FYE 2009 and FYE 2012) wherein the Group has recorded turnover between RM175 million and RM262 million. It is also noted that the Pontian Group s business was profitable although PAT has fluctuated between RM46.4 million to RM84.4 million in the said financial years. Based on discussion with the management of the Pontian Group, the profitability of the Pontian Group was achieved with fluctuation of average selling prices for CPO sold between RM2,100 per tonne to RM3,000 per tonne during the financial years under review. Current CPO prices are hovering in between RM2,300 and RM2,800 per tonne. As CPO and palm kernel are commodities which are one of the main drivers of Malaysia s agriculture sector, we are of the view that the sustainability and future performance of the Pontian Group will remain stable. Nonetheless, Holders should note that past historical performance do not guarantee future profitability. In addition, as more than 95% of Pontian s plantations are matured, the Company would eventually need to embark on a replanting programme which may have impact on its revenue and margins. The remainder of this page is intentionally left blank 5

12 (iv) Rationale of the Offer We note that the Offer represents FGV s intentions to enlarge its existing landbanks to further improve and increase its palm oil plantation activities. We are of the view that the Offer represents a reasonable opportunity for the Holders to realise their investments in Pontian on a wholesale basis through capital gains the Offer Price provides. The Offer provides the Holders an opportunity to dispose their Pontian Shares for a cash consideration of RM per Offer Share bearing in mind that Pontian s shares is not a publicly traded. Accordingly, Holders who accept the Offer shall no longer be exposed to the inherent risk and downside faced in the plantation sector. In this regard, the Offer does represent an avenue to Pontian Shareholders who wish to realise their investments in the Company without having to incur any transactional costs. (v) Prospects of the Pontian Group The Board is of the opinion that the prospects of the Pontian Group would remain favourable in the short-term (i.e. 12 month period) as it is debt free and have sufficient cash which stood at RM286.0 million as at 30 June 2013 for any future expansion needs. Nonetheless, we are of the view that the long-term prospects (i.e within next 5 years) of the Pontian Group will ultimately depend on the success of Pontian in successfully developing its land bank for oil palm plantation currently owned by the Pontian Group, as discussed in Section of this IAC. (vi) No competing offer and non-tradability of Pontian Shares As at the Offer Date, save from the Offer from the Offeror, we note that the Pontian Board has not received any competing offer for Pontian Shares nor any other offers to acquire the assets and liabilities of Pontian. The Pontian Board does not intend to seek an alternative person to make a take-over offer for the Offer Shares. Pontian Shares are not listed. The Shares are not publicly traded on any stock exchange and there may not be an active ready market for the unlisted shares. (vii) FGV S Future Plans for the Pontian Group and its Employees We note that the Offeror intend to review and may rationalise and restructure the businesses and operations of the Pontian Group if the need arises. Although, the Offeror may rationalise and restructure the Pontian Group if the need arises, the Offeror have no intention of liquidating Pontian. Nevertheless, Holders should note that the Offeror plans for the Pontian Group are neither specific nor concrete plans, and such intentions will only crystalise upon completion of the Offer and after the Offeror have conducted a review of the financial position and operations of the Pontian Group. We further note that the existing business and operations of the Pontian Group should not be materially affected as the Offeror intend to continue with the Pontian Group s existing businesses and operations. Please refer to Section 5.2.7(e) of the IAC on further information relating to the Offeror future plans for the Pontian Group and its employees. Please refer to Sections 5.2.4, 5.2.5, and of the IAL for further details on the above. 6

13 8. RECOMMENDATIONS 8.1 Recommendation by UHY Premised on the factors set out in Section 7 and our evaluation thereon, we consider the Offer as FAIR as the Offer Price of RM per Offer Share represents a premium of between 12.59% and 39.97% to the implied RNAV per Offer Share of between approximately RM to RM The Offer is REASONABLE premised on based on the following considerations: (i) The recent financial performance of Pontian Group for the FYE 31 December 2012; and the prospects of the key industries in which Pontian Group is operating in particular the cautious outlook of those industries; (ii) (iii) (iv) The Offeror s plans for Pontian Group vis-à-vis their intention to invoke compulsory acquisition where possible; The absence of a competing take-over offer nor any intention to seek an alternative take-over offer of the unlisted and illiquid Pontian Shares; and The Offer provides an opportunity for the Holders to exit at a price which would be able to yield better return than the dividend payout from the Company. The advice of UHY as contained in this letter is addressed to the Holders at large and not to any particular Holder. Accordingly, in providing this advice, we have not taken into consideration any specific investment objectives of any individual Holder or any specific group of Holders. We recommend that any individual Holder or any specific group of Holders who may require advice in the context of their objectives, financial situation and particular needs should consult their respective professional advisers immediately. Based on the pertinent factors discussed above and the considerations set out in this IAC, we are of the opinion that the Offer is FAIR and REASONABLE and accordingly we advise and recommend the Holders of the Offer Shares to ACCEPT the Offer. 8.2 Recommendation by the Board Although your Board had made careful examination of the details of the Offer as contained in the Offer Document and taking into consideration the evaluations and recommendations by UHY as contained in Part B of this IAC, as well as the above factors, the Board (save for Dr Chen Man Hin, Khoo Siong Kee, Tan Kim Hai, Khoo Lian Khoo Bing Sing, Dr Christopher Chen Li Hsian and Dr John Chen Li Tat) take note on the recommendation of UHY however, due to the reason as set out under Section 3.3, Part A of the IAC, the Board recommends you to REJECT the Offer. Dr Chen Man Hin, Khoo Siong Kee, Tan Kim Hai, Khoo Lian Khoo Bing Sing, Dr Christopher Chen Li Hsian and Dr John Chen Li Tat have divergent views from the Board s recommendation and CONCURS with the recommendations of UHY (who is of the opinion that the Offer is FAIR and REASONABLE) to ACCEPT the Offer with regards to the Offer and recommend that the Holders ACCEPT the Offer. 7

14 9. TENTATIVE TIMETABLE Notice of the Offer 18 July 2013 Date of despatch of the Offer Document 2 August 2013 Issuance of this IAC 28 August 2013 First Closing Date* 9 September 2013 Note: * The Offer will remain open until 5.00 p.m. (Malaysian time) on 9 September 2013, (being the Closing Date) as extended by the Offeror in accordance with the Code. THE HOLDERS ARE ADVISED TO READ THIS IAC THOROUGHLY FOR MORE INFORMATION AND NOT RELY SOLELY ON THIS EXECUTIVE SUMMARY BEFORE FORMING AN OPINION ON THE OFFER. THE HOLDERS ARE FURTHER ADVISED TO CONSIDER CAREFULLY THE INFORMATION CONTAINED IN THE OFFER DOCUMENT AND THIS IAC BEFORE MAKING A DECISION ON THE COURSE OF ACTION TO BE TAKEN. The remainder of this page is intentionally left blank 8

15 PART A LETTER FROM THE BOARD

16 PART A LETTER FROM THE BOARD (cont d) (Company No P) PONTIAN UNITED PLANTATIONS BERHAD (Incorporated in Malaysia under the Act) Registered Office: 7, Jalan Tunku Hassan Seremban Negeri Sembilan Darul Khusus 27 August 2013 Board of Directors: Dr. Chen Man Hin Soo Lim Pang Khoo Siong Kee Dr Wong Shiak Sun Wong Loi (alternate to Dr. Wong Shiak Sun) Tan Kim Hai Khoo Lian Khoo Bing Sing Soh Lim Chang Chew Ah Siong Dr Christopher Chen Li Hsian Dr John Chen Li Tat (alternate to the Dr. Christopher Chen Li Hsian) Soo Chong Veoy To: The Holders of the Offer Shares Dear Sir/Madam, VOLUNTARY CONDITIONAL TAKE-OVER OFFER BY THE OFFERORS THROUGH AMINVESTMENT BANK TO ACQUIRE ALL THE PONTIAN SHARES WHICH ARE NOT ALREADY OWNED BY THE OFFEROR FOR AN OFFER PRICE OF RM PER OFFER SHARE 1. INTRODUCTION On 18 July 2013, AmInvestment Bank had, on behalf of the Offeror, served the Notice on the Board of Pontian informing Pontian that the Offeror intend to undertake a voluntary conditional take-over offer to acquire all the Offer Shares for a cash consideration of RM per Offer Share. All Offer Shares validly accepted shall accrue to FGV or its nominated companies. The consideration of the Offer is RM per Offer Share and shall be fully satisfied in cash. As at the date of the Notice and up to LPD, the Offeror does not own any Pontian Shares. 9

17 PART A LETTER FROM THE BOARD (cont d) A copy of the Notice was sent to you earlier in the notification to shareholders dated 18 July In addition, you should have received the Offer Document issued by AmInvestment Bank on behalf of the Offeror, which sets out the details of the Offer as well as procedures for acceptance of the Offer and method of settlement of the Offer. A copy of the Notice is also set out in Appendix I of the Offer Document. In accordance with Subsection 15(1) of the Code, your Board had, on 5 August 2013, appointed UHY as the Independent Adviser to advise the Directors and the Holders on the fairness and reasonableness of the Offer. In accordance with Subsection 15(11) of the Code, UHY had on 6 August 2013 declared to the SC its independence and eligibility to act as the Independent Adviser in relation to the Offer. The SC had approved the appointment of UHY under paragraph 1.2 of Practice Note 7 of the Code to act as the Independent Adviser on 7 August THE PURPOSE OF THIS IAC IS TO HIGHLIGHT THE RELEVANT INFORMATION RELATING TO THE OFFER AND TO PROVIDE YOU WITH THE DIRECTORS VIEWS AND RECOMMENDATIONS ON THE OFFER TOGETHER WITH THE RECOMMENDATIONS OF UHY. 2. TERMS AND CONDITIONS OF THE OFFER The salient terms and conditions of the Offer are set out in Section 2 of Part B of this IAC. Please refer to Appendix II and III of the Offer Document for the full terms and conditions of the Offer, and the procedures for acceptance and method of settlement of the Offer. 3. DIRECTORS COMMENTS 3.1 Rationale of the Offer The Directors have considered the Offeror's rationale as set out in Section 3 of the Offer Document together with the Independent Adviser's comments as set out in Section of the IAC. In this respect, the Directors take cognisance of the following: (a) (b) The Offer gives the Holders an opportunity to realise their investment at RM per Offer Share. The Offer provides the Holders an opportunity to exit from Pontian in an efficient and expeditious manner. The Board is of the opinion that the Offer is an attempt by the Offeror to take over your profitable company to expand their plantation operations. Your Board expects the prospects and performance of Pontian Group to remain profitable in the immediate future. The remainder of this page is intentionally left blank 10

18 PART A LETTER FROM THE BOARD (cont d) 3.2 Future plans of the Offeror for the Pontian Group As stated in Section 6 of the Offer Document, the Directors have taken note of the Offeror's intentions with respect to the future plans for the Pontian Group for the period of the next twelve (12) months after the Closing Date:- (a) (b) The Offeror intend to continue with the Pontian Group s existing businesses and operations. The Offeror may carry out a review, rationalisation and/or restructuring of the businesses and operations of the Pontian Group if the need arises. The Offeror may, amongst others, effect necessary changes to the corporate structure which may include, but not be limited to, the redeployment of the assets of Pontian Group within the enlarged FGV Group and/or the disposal of immaterial assets of Pontian Group. The Offeror have no intention of liquidating Pontian. Nevertheless, there are neither specific nor concrete plans as at 29 July 2013, and such intentions may only crystallise upon completion of the Offer and after the Offeror have conducted a review of the financial position and operations of Pontian Group. The Offeror have no immediate plans to dismiss or make redundant the employees of Pontian Group as a direct consequence of the Offer. However, the Offeror may rationalise the position of employees at Pontian Group which could result in reallocation and/or cessation of personnel within the enlarged FGV Group as part of the overall rationalisation and reallocation of Pontian Group if the need arises. This will be implemented as a continuing process and measures to further improve the efficiency and optimisation of staff productivity in Pontian Group. In any event, any such action taken will be dealt with in accordance with the relevant legislation and the terms of employment of the affected staff. 3.3 Other Matters Our Board wish to emphasise that Pontian became a public company since the date when it was converted from a private limited company to a public limited company because of the transfers of shares generally from family members to other family members or close friends which resulted in the number of shareholders to exceed the statutory limit of a private company of 50. The bulk of our shares are owned mainly by five (5) families and their relations or close friends. We have never extended to the public for subscription of our shares. Accordingly, the families and their friends investment in Pontian is supposed to be held for the benefit of the future generation. In our opinion, Pontian has always been well managed by the current management who has demonstrated honesty, dedication and integrity in the interest of our Company. Pontian has built up a substantial cash reserve as well as acquire good land banks as its plantation estates over the years since its inception. In addition, the Holders have always enjoyed dividends payout and the Company has progressed without ever needing additional cash call from any of its shareholders. Holders should note that a Company such as Pontian may not be available to our shareholders if Holders accept the Offer and realised their investment in Pontian. Based on the above and as at the LPD, the Directors (save for Dr Chen Man Hin, Khoo Siong Kee, Tan Kim Hai, Khoo Lian Khoo Bing Sing, Dr Christopher Chen Li Hsian and Dr John Chen Li Tat) have confirmed that they will REJECT the Offer Shares in respect of their shareholdings in Pontian. 11

19 PART A LETTER FROM THE BOARD (cont d) 4. DETAILS OF ACCEPTANCES/NON-ACCEPTANCES As at the date of the Notice and up to LPD, the Offeror has obtained irrevocable undertakings from each of the following persons to accept the Offer in respect of their respective Offer Shares held as follows: Name No. of Pontian Shares held ^% Bisa Jaya Sdn Bhd 1,398, Chin Leong Thye Sdn Bhd 57, Lee Chin Hwa 472, Lee Min Huat 112, Lee Sep Pian 4, Lee Ming Keong 15, Total 2,059, Note: ^ Based on the total issued and paid-up share capital of 8,648,280 Pontian Shares. Save as disclosed above, AmInvestment Bank has disclosed in the Offer Document that the Offeror have not received any other irrevocable undertaking from any other Holders to accept the Offer in respect of such Holders Offer Shares. In addition, Dr Chen Man Hin, Khoo Siong Kee, Tan Kim Hai, Khoo Lian Khoo Bing Sing, Dr Christopher Chen Li Hsian and Dr John Chen Li Tat have indicated their intention to dispose in full or partial of their Offer Shares in respect of their direct shareholdings of 582,017 Pontian Shares (representing 6.73% of Pontian s total issued and paid up capital) after taking into consideration the evaluations and recommendations by UHY as contained in Part B of this IAC. 5. DISCLOSURE OF INTERESTS The respective shareholdings of the Directors in Pontian as at the LPD are as follows:- <---Direct---> <---Indirect*---> Name Nationality No. of No. of Shares % Shares % Dr. Chen Man Hin Malaysian 20, ^981, Soo Lim Pang Malaysian 20, ,097, Khoo Siong Kee Dr Wong Shiak Sun Malaysian Malaysian 103,026 24, , , Wong Loi (alternate to Dr Wong Malaysian 135, , Shiak Sun) Tan Kim Hai Malaysian 102, , Khoo Lian Khoo Bing Sing Malaysian 316, , Soh Lim Chang Malaysian 143, , Chew Ah Siong Malaysian 28, , Dr Christopher Chen Li Hsian Malaysian 20, ^982, Dr John Chen Li Tat (alternate to Malaysian 20, ^982, Dr Christopher Chen Li Hsian) Soo Chong Veoy Malaysian 78, , Note: * Shares with voting rights only and deemed interested by virtue of their family members shareholdings in Pontian ^ Held via their shareholding in Denbee Sdn Bhd 12

20 PART A LETTER FROM THE BOARD (cont d) The disclosure of the interest of the Directors of Pontian in accordance with the disclosure requirements of the Code is set out in Section 4 of Appendix I of this IAC. 6. INDEPENDENT ADVISER S LETTER You are advised to read and consider the views and recommendation by UHY, the Independent Adviser appointed to advise you and the Directors. The IAL is included in Part B of this IAC. However, your Board is of the opinion that the views and recommendation of UHY is tailored towards general investing public or minority shareholders and does not take into account arrangements as set out in Section 3.3 above. 7. DIRECTORS INTENTIONS IN RELATION TO THE OFFER As at the LPD, the Directors (save for Dr. Chen Man Hin, Khoo Siong Kee, Tan Kim Hai, Khoo Lian Khoo Bing Sing, Dr Christopher Chen Li Hsian and Dr John Chen Li Tat) have confirmed that they will REJECT the Offer Shares in respect of their shareholdings in Pontian due to reason as set out under Section 3.3 above. Dr. Chen Man Hin, Khoo Siong Kee, Tan Kim Hai, Khoo Lian Khoo Bing Sing, Dr Christopher Chen Li Hsian and Dr John Chen Li Tat have indicated their intention to dispose in full or partially of the Offer Shares in respect of their direct shareholdings of 582,017 Pontian Shares (representing 6.73% of Pontian s total issued and paid up capital) after taking into consideration the evaluations and recommendations by UHY as contained in Part B of this IAC. 8. DIRECTORS RECOMMENDATION You should carefully consider the Offer based on pertinent factors such as the rationale of the Offer, the future plans of the Offeror for the Pontian Group, the future prospects of the Pontian Group, the financial evaluation of the Offer and any other relevant considerations including those set out in this IAC and the Offer Document. Although your Board had made careful examination of the details of the Offer as contained in the Offer Document and taking into consideration the evaluations and recommendations by UHY as contained in Part B of this IAC, as well as the above factors, the Board (save for Dr. Chen Man Hin, Khoo Siong Kee, Tan Kim Hai, Khoo Lian Khoo Bing Sing, Dr Christopher Chen Li Hsian and Dr John Chen Li Tat) take note on the recommendations of UHY however, due to the reason as set out under Section 3.3, Part A of the IAC, the Board recommends you to REJECT the Offer. Dr. Chen Man Hin, Khoo Siong Kee, Tan Kim Hai, Khoo Lian Khoo Bing Sing, Dr Christopher Chen Li Hsian and Dr John Chen Li Tat have divergent views from the Board s recommendation and CONCURS with the recommendations of UHY (who is of the opinion that the Offer is FAIR and REASONABLE) to ACCEPT the Offer with regards to the Offer and recommend that the Holders ACCEPT the Offer. HOLDERS ARE ADVISED TO CAREFULLY CONSIDER THE INFORMATION CONTAINED IN THIS IAC TOGETHER WITH THE OFFER DOCUMENT BEFORE MAKING A DECISION AS TO THE COURSE OF ACTION TO BE TAKEN. 13

21 PART A LETTER FROM THE BOARD (cont d) PLEASE NOTE THAT THE BOARD HAS NOT TAKEN INTO CONSIDERATION ANY SPECIFIC INVESTMENT OBJECTIVE, FINANCIAL AND TAX SITUATION AND PARTICULAR NEED OF ANY INDIVIDUAL HOLDER OR ANY SPECIFIC GROUP OF HOLDERS. ACCORDINGLY, THE BOARD RECOMMENDS THAT ANY INDIVIDUAL HOLDER OR ANY SPECIFIC GROUP OF HOLDERS WHO REQUIRE ADVICE IN RELATION TO THE OFFER IN THE CONTEXT OF THEIR INDIVIDUAL INVESTMENT OBJECTIVES, RISK PROFILES, FINANCIAL AND TAX SITUATION OR PARTICULAR NEEDS, SHOULD CONSULT THEIR RESPECTIVE STOCKBROKER, BANK MANAGER, ACCOUNTANT, SOLICITOR OR OTHER PROFESSIONAL ADVISERS IMMEDIATELY. 9. DIRECTORS RESPONSIBILITY STATEMENT The Board has seen and approved this IAC and they individually and collectively accept full responsibility for the accuracy of the information contained herein in relation to the Pontian Group and the information contained in this IAC and/or documents provided to UHY, which are essential for UHY s evaluation, and the Board has also confirmed that, after making all reasonable enquiries and to the best of their knowledge and belief, there are no omission of any material fact, which would render any information contained in this IAC incomplete, false and/or misleading. Information in this IAC relating to the Offeror and the Offer was extracted from the Offer Document. The responsibility of the Board for the information on the Offeror and the Offer is therefore restricted to ensuring that the information on the Offeror and the Offer are accurately reproduced in this IAC. Yours faithfully For and on behalf of the Board of PONTIAN UNITED PLANTATIONS BERHAD TAN KIM HAI Non-Executive Director 14

22 PART B INDEPENDENT ADVICE LETTER FROM UHY

23 PART B INDEPENDENT ADVICE LETTER FROM UHY UHY Advisory (KL) Sdn Bhd ( T) Suite 11.05, Level 11 The Gardens South Tower Mid Valley City Lingkaran Syed Putra Kuala Lumpur 27 August 2013 To: The Holders Dear Sir/Madam, VOLUNTARY CONDITIONAL TAKE-OVER OFFER BY THE OFFEROR THROUGH AMINVESTMENT BANK TO ACQUIRE ALL THE PONTIAN SHARES WHICH ARE NOT ALREADY HELD BY THE JOINT OFFERORS FOR AN OFFER PRICE OF RM PER OFFER SHARE 1. INTRODUCTION On 18 July 2013, AmInvestment Bank had, on behalf of the Offeror, served the Notice on the Board of Pontian informing Pontian that the Offeror intend to undertake a voluntary conditional take-over offer to acquire all the Offer Shares for a cash consideration of RM per Offer Share. All Offer Shares validly accepted shall accrue to FGV or its nominated companies. As at the date of the Notice and up to LPD, the Offeror does not own any Pontian Shares. As at the date of the Notice and up to the LPD, the Offeror has obtained irrevocable undertakings from each of the following persons to accept the Offer in respect of their respective Offer Shares held as follows: Name No. of Pontian Shares held ^% Bisa Jaya Sdn Bhd 1,398, Chin Leong Thye Sdn Bhd 57, Lee Chin Hwa 472, Lee Min Huat 112, Lee Sep Pian 4, Lee Ming Keong 15, Total 2,059, Note: ^ Based on the total issued and paid-up share capital of 8,648,280 Pontian Shares. Save as disclosed above, AmInvestment Bank has disclosed in the Offer Document that the Offeror have not received any other irrevocable undertaking from any other Holders to accept the Offer in respect of such Holders Offer Shares. We note that a copy of the Notice was sent to you earlier in the notification to Holders dated 18 July 2013 and is also set out as Appendix I of the Offer Document. In addition, you should have by now received the Offer Document which was despatched to you on 2 August 2013, which sets out the terms and conditions of the Offer as well as the procedures for the acceptance of the Offer. 15

24 PART B INDEPENDENT ADVICE LETTER FROM UHY Pursuant to Subsection 15(1) of the Code, the Directors have, on 5 August 2013, appointed UHY as the Independent Adviser to advise the Holders on the fairness and reasonableness of the Offer. In accordance with Subsection 15(11) of the Code, UHY had on 6 August 2013 declared to the SC its independence and eligibility to act as the Independent Adviser in relation to the Offer. The SC had approved the appointment of UHY under paragraph 1.2 of Practice Note 7 of the Code to act as the Independent Adviser vide its letter dated 7 August The SC had, vide its letter dated 27 August 2013, granted its consent for the despatch of this IAC. The consent granted by the SC does not indicate that the SC concurs with the views and recommendations contained herein in the IAC. It merely means that this IAC has complied with the disclosure requirements under the Code. The purpose of this IAC is to provide our independent evaluation on the fairness and reasonableness of the terms and conditions of the Offer together with our recommendations thereon, subject to the scope of our role and evaluation, and limitations specified herein. WE ADVISE THE HOLDERS TO READ THE IAC INCLUDING THIS IAL CAREFULLY TOGETHER WITH THE OFFER DOCUMENT AND CONSIDER CAREFULLY THE RECOMMENDATIONS CONTAINED THEREIN BEFORE TAKING ANY ACTION. THE IAC INCLUDING THIS IAL DOES NOT CONSTITUTE THE OFFER OR ANY PART THEREOF. IF YOU ARE IN ANY DOUBT AS TO THE COURSE OF ACTION YOU SHOULD TAKE IN RELATION TO THE OFFER, YOU SHOULD CONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANTS OR OTHER PROFESSIONAL ADVISERS IMMEDIATELY. THIS IAC IS SOLELY FOR THE USE OF THE DIRECTORS AND THE HOLDERS FOR THE PURPOSE OF CONSIDERING THE OFFER AND SHOULD NOT BE USED OR RELIED UPON BY ANY OTHER PARTY OR FOR ANY OTHER PURPOSE. 2. SALIENT TERMS OF THE OFFER The principal terms and conditions of the Offer, unless otherwise directed or permitted to be varied by the SC, are as follows:- (a) Consideration of the Offer The consideration for the Offer is RM per Offer Share and shall be satisfied fully in cash. It is intended that all Offer Shares validly accepted shall accrue to FGV. In the event that Pontian declares, makes and/or pays any dividend and/or other distributions of any nature on or after the date of the Notice but prior to the Closing Date and the Holder is entitled to retain such dividend and/or other distributions, FGV will reduce the consideration for each Offer Share by the quantum of the net dividend and/or other distributions per Pontian Share which such Holder is entitled to retain. Pontian had on 6 August 2013 declared an interim single tier dividend of 80 sen per Pontian Share ( Dividend ). The Dividend is to be paid on 2 September 2013 to all Pontian s shareholders whose names are registered in the Register of Members of Pontian on 23 August Accordingly, the Offer Price is reduced by 80 sen from RM to RM per Offer Share (i.e. the Reduced Offer Price). In respect of Holders who have submitted their Form of acceptance for the Offer and Form of transfer of securities ( Accepting Holder ), the Accepting Holder will be entitled to receive the Dividend as FGV has yet to be registered as the registered and beneficial owner of the Pontian Shares. 16