FELDA GLOBAL VENTURES HOLDINGS BERHAD (Company No P)

Transcription

1 FELDA GLOBAL VENTURES HOLDINGS BERHAD (Company No P) PROPOSED ACQUISITION BY PONTIAN UNITED PLANTATIONS BERHAD ( COMPANY OR PUP OR PURCHASER ) OF ONE PIECE OF LAND OWNED BY GOLDEN LAND BERHAD ( GLB OR VENDOR ) AND ITS FOUR WHOLLY-OWNED SUBSIDIARY COMPANIES NAMELY YAPIDMAS PLANTATION SDN BHD ( YPSB ), SRI KEHUMA SDN BHD ( SKSB ), TANAH EMAS OIL PALM PROCESSING SDN BHD ( TEOPP ) AND LADANG KLUANG SDN BHD ( LKSB ) FOR A TOTAL PURCHASE PRICE OF RINGGIT MALAYSIA SIX HUNDRED AND FIFTY FIVE MILLION (RM655,000,000.00) 1. INTRODUCTION The Board of Directors of FGV is pleased to announce that PUP, a wholly-owned subsidiary of FGV has, on even date, entered into a sale and purchase agreement ( SPA ) with GLB for PUP and/or its nominee to acquire a piece of land owned by GLB and its four subsidiary companies namely YPSB, SKSB, LKSB and TEOPP for a total purchase price of Ringgit Malaysia Six Hundred and Fifty Five Million (RM655,000,000.00)( Proposed Acquisition ). 2. INFORMATION ON THE ACQUIRED LAND & SUBSIDIARY COMPANIES 2.1 GLB Land The Vendor is the registered owner of the land held under Lot No. CL , in the District of Beluran and Locality of Mile 74, Labuk Road, Sabah, measuring approximately hectares (hereinafter referred to as the GLB Land ). The GLB Land is currently charged to Hong Leong Bank Berhad ( HLBB ) vide Register Memo No , , and Subsidiary Companies The Vendor is the registered and beneficial owner of the entire issued and paid-up ordinary shares of RM1.00 each in the following companies:- (a) (b) (c) (d) Yapidmas Plantation Sdn Bhd (hereinafter referred to as YPSB ); Sri Kehuma Sdn Bhd (hereinafter referred to as SKSB ); Ladang Kluang Sdn Bhd (hereinafter referred to as LKSB ); and Tanah Emas Oil Palm Processing Sdn Bhd ( TEOPP ), (YPSB, SKSB, LKSB and TEOPP are collectively referred to as the Subsidiary Companies and the shares of the Subsidiary Companies are collectively referred to as the Sale Shares ). Details of each of the Subsidiary Companies are as follows: 1

2 (a) Yapidmas Plantation Sdn Bhd (YPSB) Corporate Information YPSB was incorporated in Malaysia under the Act on 8 May 1992 as a private company limited by shares. The principal activity of YPSB is the cultivation of oil palm and provision of management service. The authorised share capital of YPSB is RM5,000, comprising 5,000,000 YPSB Shares, which are fully issued and paid-up. YPSB is a wholly-owned subsidiary of GLB. YPSB does not have any subsidiary or associate company. The Directors of YPSB are Mr Yap Phing Cern and Ms Yap Fei Chien. General Nature of Business The principal activity of YPSB is the cultivation of oil palm and provision of management service. The principal market for the oil palm is Malaysia. (iii) Financial Information The audited financial information of YPSB for the past three (3) FYE 30 June 2012 to FYE 30 June 2014 are as follows:- Restated FYE 30 June (RM 000) (RM 000) (RM 000) Revenue 46,904 35,722 42,782 PBT 19,266 5,203 10,982 PAT 14,460 3,594 8,092 Net assets 285, , ,932 Notes:- The restatement for the FYE 30 June 2013 is due to the change in accounting policy for property, plant and equipment and biological assets of the company. The company changed its accounting policy to measure its plantation infrastructure at cost less accumulated depreciation and accumulated impairment losses. Plantation infrastructure was previously measured at fair value less accumulated depreciation and accumulated impairment losses. In addition, the leasehold land and biological assets of the company has been restated to adjust for the increases in fair value since FYE 30 June

3 Restated net assets as at 1 July 2012 pursuant to restatement disclosed in above. The adjusted financial information of YPSB (after adjusting for the exclusion of Estate Kuamut 2 and 3) based on audited financial information of YPSB for the past three (3) FYE 30 June 2012 to FYE 30 June 2014 are as follows:- FYE 30 June (RM 000) (RM 000) (RM 000) Revenue 49,904 35,722 42,782 Profit before taxation ( PBT ) 19,128 4,980 10,759 PAT 14,322 3,371 7,869 NA 278, , ,890 (b) Sri Kehuma Sdn Bhd (SKSB) Corporate Information SKSB was incorporated in Malaysia under the Act on 21 November 1988 as a private company limited by shares. The principal activity of SKSB is the cultivation of oil palm. The authorised share capital of SKSB is RM500, comprising 500,000 SKSB Shares, of which RM300, comprising 300,000 SKSB Shares are fully issued and paid-up. SKSB is a wholly-owned subsidiary of GLB. SKSB does not have any subsidiary or associate company. The Directors of SKSB are Mr Yap Phing Cern and Ms Yap Fei Chien. General Nature of Business The principal activity of SKSB is the cultivation of oil palm. The principal market for the oil palm is Malaysia. (iii) Financial information The audited financial information of SKSB for the past three (3) FYE 30 June 2012 to FYE 30 June 2014 are as follows:- Restated FYE 30 June (RM 000) (RM 000) (RM 000) Revenue 13,116 8,248 9,061 3

4 PBT 4,152 (948) 1,477 PAT 3,062 (763) 1,082 NA 80,691 82,559 86,579 Notes:- The restatement for the FYE 30 June 2013 is due to the change in accounting policy for property, plant and equipment and biological assets of the company. The company changed its accounting policy to measure its plantation infrastructure at cost less accumulated depreciation and accumulated impairment losses. Plantation infrastructure was previously measured at fair value less accumulated depreciation and accumulated impairment losses. In addition, the leasehold land and biological assets of the company has been restated to adjust for the increases in fair value since FYE 30 June (c) Restated net assets as at 1 July 2012 pursuant to restatement disclosed in above. Ladang Kluang Sdn Bhd (LKSB) Corporate Information LKSB was incorporated in Malaysia under the Act on 19 June 1992 as a private company limited by shares under the name of Siangyi Plantation Sdn Bhd. Subsequently, on 22 December 2006, the company changed its name to Ladang Kluang Sdn Bhd. The principal activity of LKSB is the cultivation of oil palm. The authorised share capital of LKSB is RM25, comprising 25,000 LKSB Shares, of which RM comprising 100 LKSB Shares are fully issued and paid-up. LKSB is a wholly-owned subsidiary of GLB. LKSB does not have any subsidiary or associate company. The Directors of LKSB are Mr Yap Phing Cern and Ms Yap Fei Chien. General Nature of Business The principal activity of LKSB is the cultivation of oil palm. The principal market for the oil palm is Malaysia. (iii) Financial information The audited financial information of LKSB for the past three (3) FYE 30 June 2012 to FYE 30 June 2014 are as follows:- FYE 30 June 2012 Restated

5 (RM 000) (RM 000) (RM 000) Revenue 10,316 7,196 7,352 PBT 6,036 2,892 3,074 PAT 4,492 2,135 2,283 NA 44,554 47,170 50,229 Notes:- (d) The restatement for the FYE 30 June 2013 is due to the change in accounting policy for property, plant and equipment and biological assets of the company. The company changed its accounting policy to measure its plantation infrastructure at cost less accumulated depreciation and accumulated impairment losses. Plantation infrastructure was previously measured at fair value less accumulated depreciation and accumulated impairment losses. In addition, the leasehold land and biological assets of the company has been restated to adjust for the increases in fair value since FYE 30 June Restated net assets as at 1 July 2012 pursuant to restatement disclosed in above. Tanah Emas Oil Palm Processing Sdn Bhd (TEOPP) Corporate Information TEOPP was incorporated in Malaysia under the Act on 20 November 1995 as a private company limited by shares. The principal activity of TEOPP is the milling and sale of oil palm products. The authorised share capital of TEOPP is RM10,000, comprising 10,000,000 TEOPP Shares, of which RM5,500, comprising 5,500,000 TEOPP Shares are fully issued and paid-up. TEOPP is a wholly-owned subsidiary of GLB. TEOPP does not have any subsidiary or associate company. The Directors of TEOPP are Mr Yap Phing Cern, Ms Yap Fei Chien and Mr Kong Chung Peter Kong. General Nature of Business The principal activity of TEOPP is the milling and sale of oil palm products. The principal market for the oil palm is Malaysia. 5

6 (iii) Financial information The audited financial information of TEOPP for the past three (3) FYE 30 June 2012 to FYE 30 June 2014 are as follows:- FYE 30 June 2012 Restated (RM 000) (RM 000) (RM 000) Revenue 271, , ,766 PBT 3,191 5,884 9,181 PAT 2,281 4,430 6,915 NA 23,065 22,494 21,910 Notes:- The restatement for the FYE 30 June 2013 is due to the change in accounting policy for property, plant and equipment and biological assets of the company. The company changed its accounting policy to measure its plantation infrastructure at cost less accumulated depreciation and accumulated impairment losses. Plantation infrastructure was previously measured at fair value less accumulated depreciation and accumulated impairment losses. Restated net assets as at 1 July 2012 pursuant to restatement disclosed in above. 2.3 The age profile of the oil palm trees of the acquisition is as per the table below: Age Group Area (ha) % Immature (0-3) 1,181 14% Young (4-9) 1,175 14% Prime (10-20) 5,404 64% Old (>20) 719 8% Total 8, % 2.4 Upon completion of the Proposed Acquisition, PUP and/or its nominee will acquire: (a) (b) the GLB Land; and the Sale Shares. 2.5 PUP shall not be obliged to complete the purchase of any of the Sale Shares unless the purchase of all the Sale Shares and the GLB Land is completed simultaneously. 6

7 3. DETAILS OF THE PROPOSED ACQUISITION 3.1 The Proposed Acquisition The Proposed Acquisition involves the acquisition of: the GLB Land on as is where is basis free from any mortgage, charge, pledge, lien, assignment, hypothecation, security interest, title retention, preferential right or trust arrangement or other security arrangement or agreement conferring a right to a priority of payment, prohibitory orders, injunctions and other similar orders and proceedings and upon the terms and conditions contained in the SPA, with vacant possession, and subject to the conditions of title and restrictions-in-interest, express or implied, now or hereafter or from time to time imposed on, relating to or affecting the said GLB Land or to which the said GLB Land are subject; AND the Sale Shares free from any mortgage, charge, pledge, lien, assignment, hypothecation, security interest, title retention, preferential right or trust arrangement or other security arrangement or agreement conferring a right to a priority of payment and together with all rights and benefits attaching thereto, by PUP and/or its nominee for a total purchase consideration of Ringgit Malaysia Six Hundred Fifty Five Million (RM655,000,000.00) ( Purchase Price ) comprising of the following: (a) GLB Land Purchase Price : RM 71,720, (b) YPSB Purchase Price : RM376,210, (c) SKSB Purchase Price : RM116,640, (d) LKSB Purchase Price : RM 51,930, (e) TEOPP Purchase Price : RM 38,500, Basis of determining the Purchase Price and payment of the Purchase Price (iii) The Purchase Price for the purchase of the GLB Land and the Sale Shares is arrived at on a willing seller and willing buyer basis. The Purchase Price was determined based on the market value net of discount of the GLB Land and the Subsidiary Companies Lands including the palm oil mill in TEOPP derived from a valuation undertaken by an independent valuer. The Purchase Price will be satisfied in full by cash in the manner set out in Paragraph 3.2(iii) below, consequent to the fulfillment of all the conditions precedent stipulated in the SPA. The Proposed Acquisition will be partly financed through cash and borrowings. 7

8 (iv) The manner of payment of the Purchase Price shall be as follows: (a) Deposit The deposit amounting to Ringgit Malaysia Sixty Five Million And Five Hundred Thousand (RM65,500,000.00) which is equivalent to ten per centum (10%) of the Purchase Price ( Deposit ) and comprising of the following:- GLB Land Deposit: RM 7,172, YPSB Deposit: RM37,621, (iii) SKSB Deposit: RM11,664, (iv) LKSB Deposit: RM 5,193, (v) TEOPP Deposit: RM 3,850, Total Deposit: RM65,500, shall be deposited by PUP with the stakeholder, Messrs. Mohamed Ridza & Co ( Stakeholder or Purchaser s Solicitors ) on execution of the SPA and the Stakeholder shall retain the same in an income-generating account. The Stakeholder shall be irrevocably authorized to utilize part of the Deposit to pay the RPGT Retention Sum to the Director General of Inland Revenue pursuant to Clause 9 of the SPA and release the balance thereof together with all profits to GLB on the date on which the last of the conditions precedent has been duly fulfilled ( Unconditional Date ). In the event the SPA is rescinded, the Stakeholder shall within three (3) Business Days from the date of the rescission of the SPA return the Deposit together with all profits to PUP. (b) Balance Purchase Price The balance purchase price amounting to Ringgit Malaysia Four Hundred Ninety One Million Two Hundred And Fifty Thousand (RM491,250.00) ( Balance Purchase Price ) which is equivalent to seventy five per centum (75%) of the Purchase Price and comprising of the following:- GLB Land Balance Purchase Price: RM 53,790, YPSB Balance Purchase Price: RM 282,157, (iii) SKSB Balance Purchase Price: RM 87,480, (iv) LKSB Balance Purchase Price: RM 38,947, (v) TEOPP Balance Purchase Price: RM 28,875, Total Balance Purchase Price: RM491,250,

9 shall be deposited by PUP with the Stakeholders within seven (7) Business Days from the Unconditional Date and subject to PUP s receipt of the Redemption Statement on or before the Unconditional Date, the Stakeholder shall be irrevocably be authorized to utilize the Balance Purchase Price within seven (7) Business Days of receipt of the same in the following order of priority:- (1) Redemption / partial redemption of GLB s financing with HLBB to facilitate discharge of the GLB Land. A portion of the Balance Purchase Price equivalent to the Redemption Sum payable to Hong Leong Bank Berhad ( HLBB ) shall be utilized by the Stakeholders to pay to HLBB for the purposes of redeeming and/or partially redeeming GLB s borrowing with HLBB so as to facilitate the release and discharge of the GLB Land. (2) Redemption of the Subsidiary Companies outstanding loans / financing. A portion of the Balance Purchase Price shall be utilized by the Stakeholders to pay the Redemption Sum to the respective Financiers for the purposes of redeeming in full all outstanding borrowings of the Subsidiary Companies so as to facilitate the release and discharge of all securities provided by such Subsidiary Companies to the respective Financiers. (3) Redemption / Partial Redemption of all related borrowings of GLB or any of its subsidiaries pursuant to which securities have been provided by the Subsidiary Companies. A portion of the Balance Purchase Price shall be utilized by the Stakeholders to pay the Redemption Sum to the relevant Financiers for the purposes of redeeming and/or partially redeeming GLB s or any of its subsidiaries borrowing to which securities have been provided by the Subsidiary Companies so as to facilitate the release and discharge of all securities provided by such Subsidiary Companies to the respective Financiers in respect of such borrowings. (4) Balance thereof shall be paid by PUP to GLB. Any balance after settlement of payments of the Redemption Sum referred to in paragraphs (1), (2) and (3) above shall be released by the Stakeholders to GLB within fourteen (14) Business Days of presentation of the Land Transfer to the relevant land office. (c) Final Retention Sum The Final Retention Sum amounting to Ringgit Malaysia Ninety Eight Million And Two Hundred And Fifty Thousand 9

10 (RM98,250,000.00) which is equivalent to fifteen per centum (15%) of the Purchase Price shall be paid to the Stakeholder on Completion Date to be held by the Stakeholder in an income-generating account. The Final Retention Sum shall be subject to:- (a) (b) if applicable, deduction of such amount as provided under Clause 15.5 or Clause 15.6 (Agreed Upon Procedure) as detailed out in the SPA ( First Deducted Amount ); and if applicable, deduction of such amount equivalent to Ringgit Malaysia Fifteen Million (RM15,000,000.00) in respect of the caveats pertaining to certain lands identified in the SPA ( Affected Lands ) which has not been removed from the Affected Lands ( Affected Lands Caveats ) ( Second Deducted Amount ). (iii) (iv) (v) The Final Retention Sum, subject to deduction of the First Deducted Amount and/or the Second Deducted Amount (if applicable), together with all profits shall only be paid to GLB (to be credited directly into GLB s bank account) within fourteen (14) Business Days of presentation of all discharge documents at the relevant land offices in respect of the Subsidiary Companies Lands which have been charged as security for the Existing Facilities (save for the discharge of charge over the Affected Lands where such discharge is to be carried out only after removal of the Affected Lands Caveats). The First Deducted Amount, if any, shall be released to PUP immediately upon receipt of confirmation from the independent auditors as set out in Clause 15.5 or Clause 15.6 of the SPA. The Second Deducted Amount, if any, shall continue to be retained by the Stakeholder in an income generating account and shall only be paid to GLB (to be credited directly into GLB s bank account) within three (3) Business Days of receipt by PUP and the Stakeholder of a current land search result conducted at the land office confirming that the Affected Lands Caveats are no longer registered against the Affected Lands. 3.3 Salient terms of the SPA The sale and purchase of the GLB Land and the Sale Shares is conditional upon the fulfillment of all the conditions precedent as set out below within the period of six (6) months from the date of the SPA or such other period as 10

11 may be mutually agreed in writing between the parties (hereinafter referred to as the CP Period ). (a) GLB shall deliver to PUP and/or the Purchaser s Solicitors the following documents:- two (2) certified true copies of: (1) GLB's Certificate of Incorporation; (2) GLB's Memorandum and Articles of Association; (3) GLB's latest Forms 24, 44 and 49 filed with the Companies Commission of Malaysia; extracts of GLB's Board of Directors' resolution and shareholders' resolution authorising the sale of the GLB Land and the Sale Shares in accordance with the terms and subject to the conditions of the SPA and further authorising the execution of the SPA, the memorandum of transfer in respect of the GLB Land (Land Transfer) and the Sale Shares (Share Transfer) and all other relevant related documents; (iii) (iv) (v) the quit rent receipt and assessment receipts for the current year in respect of the GLB Land and the lands legally and/or beneficially owned by YPSB (excluding Estate Kuamut 2 and Estate Kuamut 3 lands measuring approximately 3.39 hectares ( Excluded Lands )), SKSB and LKSB ( Subsidiary Companies Lands ) evidencing no outstanding payments. In the event that the Land Transfer can only be presented for registration with the relevant land authorities in a new calendar year, GLB shall within one (1) month from the commencement of the new year or within three (3) business days of the Unconditional Date, whichever is the earlier, deliver to the Purchaser's Solicitors certified true copies of receipts for assessment, quit rent and all other rates or dues then payable in respect of the GLB Land and the Subsidiary Companies Lands for the new calendar year; list of all licences, approvals, permits, certificates and insurance policies taken in respect of the GLB Land and the Subsidiary Companies and the businesses operated therein with a validity period of less than six (6) months prior to the Completion Date; certified extracts of bank statements evidencing payment of instalments for all bank borrowings of the Subsidiary Companies for the past twelve (12) months from the Agreement Date. 11

12 (b) (c) (d) (e) (f) (g) GLB shall procure the redemption statement cum undertaking from the relevant financiers in respect of the Subsidiary Companies borrowings and for the purposes of releasing all securities offered by the Subsidiary Companies as third party securities for any borrowings of GLB and/or its group of companies. GLB shall procure a redemption statement cum undertaking from HLBB for the partial release of security in respect of the loan granted by HLBB to GLB so as to facilitate the discharge of charge on the GLB Land. GLB shall cause all Excluded Lands which sub-leases over such lands are, as at the date of the SPA, registered in favour of the relevant Subsidiary Companies to be transferred to GLB (or any other persons or companies as GLB would deem fit) and the cost of such transfer shall be borne entirely by GLB. GLB shall obtain the approval of its financiers (if required) for the transactions contemplated in the SPA. If no approval of financiers is required, GLB shall issue a letter to PUP to confirm the same. GLB shall obtain extracts of the mapping index from the appropriate public authority for the purposes of identifying the Excluded Lands. PUP shall deliver to GLB and/or the Vendor s solicitors, Messrs. Cheang & Ariff, the following documents:- two (2) certified true copies of: (1) PUP's Certificate of Incorporation; (2) PUP's Memorandum and Articles of Association; (3) PUP's latest Forms 24, 44 and 49 filed with the Companies Commission of Malaysia; and extracts of PUP's Board of Directors' resolution and shareholders resolution authorising the purchase of the GLB Land and the Sale Shares in accordance with the terms and subject to the conditions of the SPA and further authorising the execution of the SPA, the Share Transfer and all other relevant related documents. If any of the conditions under Paragraph 3.3 above is not fulfilled on or before the expiry of the CP Period, the Parties may by mutual agreement in writing extend the period for fulfillment of the Conditions Precedent by a further two (2) months (or such longer period as the Parties may agree) from the expiry of the CP Period (hereinafter referred to as the Extended CP Period ). If any of the Conditions Precedent remains unfulfilled on expiry of the Extended CP Period, either party may rescind the SPA forthwith by 12

13 written notice to the other party and the provisions of Paragraph 3.3 (iii) below shall apply. (iii) Upon the rescission of the SPA, the Stakeholder shall within three (3) business days from the date of rescission of the SPA return the Deposit together with all profits to PUP and SPA shall thereafter cease to have any effect and shall become null and void and neither of the parties shall have any further claims against the other save and except for any antecedent breach. 3.4 Assumption of liabilities There are no liabilities, including contingent liabilities and guarantees to be assumed by FGV and PUP pursuant to the Proposed Acquisition. 3.5 Percentage ratios under Paragraph 10.02(g) of the Bursa Malaysia Main Market Listing Requirements Based on FGV s Group Audited Accounts for FYE 30 June 2014, the highest percentage ratio under Paragraph 10.02(g) of Chapter 10 of Bursa Malaysia Main Market Listing Requirements is 10.27%. 4. INFORMATION ON THE VENDOR The Vendor owns GLB Land and the entire equity interest in YPSB, SKSB, LKSB and TEOPP. The Vendor was incorporated in Malaysia on 3 May 1994 and was converted into a public listed company on 26 April The Vendor is principally involved in investment holding, cultivation of oil palm and provision of management services to its subsidiary companies. The authorised share capital of the Vendor is RM500,000, comprising 500,000,000 ordinary shares of RM1.00 each in the Vendor ( Vendor s Shares ), of which 222,912,569 of the Vendor s Shares have been issued and fully paid-up. The Directors of the Vendor and its respective direct and indirect shareholdings are as follows: Name of Director Direct Shareholding Indirect Shareholding Yap Phing Cern 57,681,711 (26.67%) 3,995,072 (1.85%) Yap Fei Chien 346,000 (0.16%) Nil Beh Sui Loon Nil Nil Oh Kim Sun Nil 54,460,700 (25.18%) Chan Gak Keong Nil Nil 13

14 5. RATIONALE FOR THE PROPOSED ACQUISITION (iii) The Proposed Acquisition is consistent with FGV s long-term business plans to expand the Company s land bank in Malaysia and Indonesia. The Proposed Acquisition represents strategic investment by the Group and is expected to enhance the future earnings and shareholders value of FGV. The Proposed Acquisition would improve FGV s brownfield land whereby the prime-mature profile will complement FGV s own replanting programme and improve FGV s age profile of oil palms. 6. EFFECTS OF THE PROPOSED ACQUISITION 6.1 Share capital and substantial shareholders shareholdings The Proposed Acquisition will not have any effect on the share capital and substantial shareholders shareholdings as the Proposed Acquisition will be satisfied entirely in cash and does not involve any issuance of new ordinary shares in FGV. 6.2 Earnings The Proposed Acquisition is not expected to have significant effect on the earnings per share, net assets per share, gearing, share capital and substantial shareholders shareholdings in FGV for the current year ending 31 December Net Assets ( NA ) and gearing The Proposed Acquisition is not expected to have any material impact on the NA and gearing level of FGV based on the audited financial statements for the financial year ending Dividends The Proposed Acquisition is not expected to have any material effect on the dividend payable for the current financial year ending INDUSTRY PROSPECT The oil palm production in Malaysia for the first (1 st ) quarter of 2015 is expected to decrease significantly to 4.0 million tonnes ( MT ) from 5.0 MT in the fourth (4 th ) quarter of 2014 mainly due to the serious floods in Peninsular Malaysia and Sarawak at the end of 2014 and January 2015 respectively It is estimated that for the first (1 st ) quarter of 2015, the stock would marginally decrease from 2.2 MT in the fourth (4 th ) quarter of 2014 to 2.0 MT due to an increase in import demand from Indonesia because of the zero duty for Indonesian CPO export. It is expected that for the first (1 st ) quarter of 2015, the CPO price will increase slightly to RM2,243 per tonne mainly due to shortage in supply. 14

15 (Source: Quarterly Report on Oils and Fats (Fourth Quarter of 2014), Malaysian Palm Oil Board) FGV has been aggressively expanding its land bank size since FGV IPO, working towards a more favourable crop-age profile. A two-pronged strategy was adopted: on the one hand driving forward an aggressive replanting programme of 15,000 hectares per year and on the other hand expanding through brown field acquisitions of plantation land in Malaysia as well as overseas. FGV will continue its efforts in land bank expansion and operational improvement, in order to drive towards its overall strategic priorities. FGV will continue to improve yield through collaboration with the other Clusters and roll-out best management practices in the field. FGV will boost its crop-age profile by continuing with replanting efforts and expanding our brownfield acquisitions, while maintaining focus in compliance with RSPO accreditations. Premised on the above and that the Proposed Acquisition augurs well with the expansion plan of the FGV Group, the Proposed Acquisition is expected to contribute positively to the future earnings of the FGV Group. 8. RISK FACTORS 8.1 Business Risk FGV Group is involved in, amongst others, the cultivation of oil palm, extraction of crude palm oil and palm kernel for sale and as such, is already exposed to the risks inherent to the oil palm plantation industry. Pursuant to the Proposed Acquisition, the FGV Group will continue to be exposed to similar business and operational risks inherent to the oil palm plantation industry such as fluctuation in global crude palm oil prices, changes in the world demand for edible oils and fats, threat of substitutes for palm oil products, weather conditions and constraints of labour supply. 8.2 Non-completion of the Proposed Acquisition The completion of the Proposed Acquisition could be subject to conditions that are beyond FGV s control. Accordingly, there can be no assurance that the Proposed Acquisition will be completed as contemplated. 9. INTERESTS OF MAJOR SHAREHOLDERS AND DIRECTORS 9.1 Directors None of the directors of PUP and FGV or any other persons connected with them has any material interest, direct or indirect, in the Proposed Acquisition. 9.2 Substantial Shareholders 15

16 None of the substantial shareholders of FGV nor any person connected to them has any material interest, whether direct or indirect in the Proposed Acquisition. 10. DIRECTORS RECOMMENDATION The Board of Directors of FGV and PUP, having considered all aspects of the Proposed Acquisition, is of the opinion that the Proposed Acquisition is fair and reasonable and is in the best interest of the Company. 11. ESTIMATED TIMEFRAME FOR COMPLETION Barring unforeseen circumstances, the Proposed Acquisition is expected to be completed by the last quarter of SHAREHOLDERS APPROVAL The Proposed Acquisition is not subject to shareholders approval. 13. DOCUMENTS FOR INSPECTION A copy of the SPA is available for inspection at FGV s registered office during normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this Announcement. This announcement is dated 8 th June