1 of 9 19/05/2012 6:11 PM General Announcement Reference No L&-120518-56383 Company Name : LAND & GENERAL BERHAD Stock Name : L&G Date Announced : 18/05/2012 Type Subject Description : Announcement : TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) RELATED PARTY TRANSACTIONS : PROVISION OF FINANCIAL ASSISTANCE TO HIDDEN VALLEY AUSTRALIA PTY LTD, A 50% JOINTLY CONTROLLED ENTITY OF LAND & GENERAL BERHAD WHICH IS HELD THROUGH ITS WHOLLY-OWNED SUBSIDIARY, LAND & GENERAL AUSTRALIA (HOLDINGS) PTY LTD Announcement Details/Table Section : 1. INTRODUCTION Pursuant to Paragraphs 8.23(1) and 10.08(1) of the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa ) with regards to the provision of financial assistance which involves the interest of related parties, the Board of Directors ( Board ) of Land & General Berhad ( L&G or the Company ) wishes to announce that Land & General Australia (Holdings) Pty Ltd ( LGAH ), a wholly-owned subsidiary of L&G, had provided financial assistance in the form of cash advance of AUD100,000 (equivalent to actual remittance of RM319,430) to Hidden Valley Australia Pty Ltd ( HVA ), a 50% jointly controlled entity of L&G and that L&G or its subsidiaries would be providing further financial assistance to HVA up to an estimated amount of AUD2,400,000 (equivalent to approximately RM7,480,800 at an exchange rate of 3.117 as at 18 May 2012) on a need basis to facilitate the proposed Retirement Estate project being undertaken by HVA ( Provision of Financial Assistance ). The estimated total Provision of Financial Assistance from L&G or its subsidiaries to HVA within the next twelve (12) months will not exceed AUD2,500,000 (equivalent to approximately RM7,800,230. Please refer to table under Section 2 below). LGAH (Company No.: ACN 094 606 461) is a proprietary company incorporated in Australia on 27 September 2000 with its registered office situated at Suite 501, 370 St Kilda Road, Melbourne VIC 3004, Australia. The issued and paid up share capital of LGAH is 40,000,001 ordinary shares and AUD10,670,671, respec vely. The principal ac vity of LGAH is investment holding. The Directors of LGAH are Mr Low Gay Teck, Encik Ferdaus Mahmood and Mr Spiros Dellas. HVA (Company No.: ACN 077 640 469) is a proprietary company incorporated in Australia on 25 February 1997 with its registered office situated at Suite 501, 370 St Kilda Road, Melbourne VIC 3004, Australia. The issued and paid up share capital of HVA is 2 ordinary shares and AUD2, respec vely. The shareholders of and their respec ve shareholdings in HVA are : Shareholders of HVA No. of issued share Paid up share capital Shareholding
2 of 9 19/05/2012 6:11 PM capital AUD % LGAH 1 1.00 50 Craig Williams 1 1.00 50 TOTAL 2 2.00 100 The Directors of HVA are Encik Ferdaus Mahmood and Mr Craig Williams. HVA is the trustee of Mayfields View Unit Trust ( MVUT ) and the unitholders of MVUT together with their respec ve unitholdings are: Unitholders of MVUT No. of issued Units Unitholding PLR Mayfields Pty Ltd (Company No. 6 50 ACN 077 647 691) Bata Mayfields Unit Trust ( BMUT ) 6 50 TOTAL 12 100 PLR Mayfields Pty Ltd is a wholly owned subsidiary of LGAH. BMUT is wholly owned by Bata Interna onal Ltd which was incorporated in the Bri sh Virgin Islands ("BIL"). The principal ac vity of HVA is property development. 2. DETAILS OF THE PROVISION OF FINANCIAL ASSISTANCE The details of the Provision of Financial Assistance are set out below. Particulars By To Amount % Ratio * % a) Cash advanced on 19 October 2011 b) Estimated further advances to be provided within the next twelve (12) months c) Total estimated aggregate advances (a + b) LGAH L&G or its subsidiaries L&G or its subsidiaries HVA HVA HVA AUD100,000 (equivalent to RM319,430^) Up to AUD2,400,000 (equivalent to approximately RM7,480,800 # ) Up to AUD2,500,000 (equivalent to approximately RM7,800,230) 0.1% 2.9% 3.0%
3 of 9 19/05/2012 6:11 PM ^ # actual remittance at exchange rate of 3.117 as at 18 May 2012 * Percentage ratio of financial assistance valued against latest audited consolidated Net Tangible Assets of L&G Group as at 31 March 2011 of approximately RM256.653 million The Provision of Financial Assistance will be in the form of advances for HVA s working capital and preliminary expenses in respect of the proposed Retirement Estate project within the next 12 months, such as advertising & promotion expenses, project consultancy costs, contribution payment to relevant authorities and project overhead costs. The Provision of Financial Assistance provided and to be provided in favour of HVA is without any specific repayment timeframe or interest. The Provision of Financial Assistance will be funded via L&G s internally generated funds and will not exceed AUD2,500,000, at any point in time during the period of the Provision of Financial Assistance. Any additional financial assistance to be provided above AUD2,500,000 will require further announcement, if in aggregate is not exceeding 5%, and to obtain L&G shareholders approval once it exceeds 5% in aggregation. 3. RATIONALE FOR THE PROVISION OF FINANCIAL ASSISTANCE HVA is in the midst of obtaining relevant approvals from the authori es in order to commence the proposed Re rement Estate project in the 2 nd half of 2012. The proposed Re rement Estate project consists of 298 independent living units built as standalone and duplex style accommoda on with average selling price at AUD456,000 per unit, which is expected to generate a project surplus of AUD60.1 million. The expected date of comple on of the proposed Re rement Estate project is March 2023 and the total amount of gross development expenditure is es mated to be approximately AUD116.2 million, which primarily will be funded from bank borrowings and internally generated funds/collec ons from progress billings, with shareholders advances at the preliminary stage. The proposed Re rement Estate project will be built in 10 stages providing for a mix of units with each stage being between 18 and 33 units. Each stage is expected to take 12 months to build with a progressive release of units on comple on within the same period. Due to current market sentiment, banks are only willing to extend its banking facilities if there are similar commitments shown by both the shareholders via its equity participation and/or advances. Therefore, the availability of the financial assistance is crucial during the early stages of the implementation of the proposed Retirement Estate project. The Provision of Financial Assistance will allow HVA to mobilise funds to fast track the commencement of the project. Both joint venture shareholders of HVA will provide advances proportionate to their respective shareholdings.
4 of 9 19/05/2012 6:11 PM Bank borrowings will be utilised to ensure the project is on track based on the scheduled timeline. Repayment to shareholders will be made at the end of each year and the funds to be used to repay the shareholders will be from any surplus cash generated from the project on yearly basis. Besides, the poten al financial assistance to be provided by L&G will enable HVA to raise the necessary financing expediently, for the proposed Re rement Estate project. Upon successful development and sales arising from the proposed project, the earnings from HVA are expected to contribute posi vely to the future profits of L&G Group. 4. RISK FACTORS Apart from normal business risks including but not limited to the following, the Provision of Financial Assistance is not expected to result in any other potential risks, save for the financing risks as mentioned in Section 4.4 below : 4.1 Failure/delay in the approval from the authori es/par es The proposed Re rement Estate project is condi onal upon the approvals from the relevant authori es and/or par es. There is no assurance that the Proposed Re rement Estate project can be completed within the me period as scheduled. In the event that approvals are not obtained or in the event any of the approvals shall contain terms, which are not acceptable to HVA, the proposed project may not be able to take off as scheduled and/or delay the commencement of the proposed project. 4.2 Business risk Being a re rement home development project, HVA is subject to certain general risk inherent in the property development industry. The property development industry could in turn be sensi ve to the economic downturn as it is primarily reliant on consumer demand. The property development industry is cyclical and ability to meet future earnings depends highly on the loca on and type of development, land and development expenditure, holding costs and overheads. The business could be affected by changes in general economic, poli cal and business condi ons, labour, land and building material shortages, increase in the cost of labour, high supply of neighbouring similar development and changes in the legal and environmental framework within which this industry operates. 4.3 Project risk The proposed Re rement Estate project is subject to risks inherent in the property development sector, including, inter alia, financing issues, mely comple on of project, changes in relevant regula ons or governmental priori es or a tudes, sa sfactory sales level for the project, risk of purchaser defaults and unforeseen circumstances and problems. Any of these could result in cost overruns. Delays in the process of obtaining the requisite licences, permits or approvals from the government agencies or authori es can also increase the cost, or delay or prevent the commencement of a project. Construc on delays can result in loss of revenues. The failure or delay in comple ng a development or construc on project according to its specifica ons may result in liabili es, reduced efficiency and less desirable returns. These risks are common to all property development projects and, to the extent possible, the Board is expected to take pro ac ve steps to counter and/or mi gate these risks through, amongst others, its experience in developing its other development projects, effec ve planning, mely implementa on and con nuous review.
5 of 9 19/05/2012 6:11 PM 4.4 Financing risk The extension of shareholder advances to HVA may pose a default risk to L&G should HVA fail to operate successfully. While L&G will con nue to undertake prudent financial management, there can be no assurance that any adverse changes to HVA s business and/or opera ons will not affect their ability to service its repayment obliga ons. 5. FINANCIAL EFFECTS 5.1 Share Capital and Major Shareholders Shareholdings The Provision of Financial Assistance will not have any effect on the share capital or the major shareholders shareholdings in L&G as the Provision of Financial Assistance does not involve the issuance of new shares in L&G. 5.2 Net Assets, Net Assets per share and Gearing The Provision of Financial Assistance will not be expected to have any effect on the consolidated net assets and net assets per share and gearing of L&G for the financial year ending 31 March 2013. 5.3 Earnings per Share The Provision of Financial Assistance will not and is not expected to have any effect on the earnings and earnings per share of L&G for financial year ending 31 March 2013. 6. APPROVALS REQUIRED The Provision of Financial Assistance is not subject to and does not require the approval of shareholders of L&G and/or the relevant regulatory authori es as the value of the Provision of Financial Assistance is less than 5% of the prescribed percentage ra o as s pulated in Chapter 10 of the Lis ng Requirements of Bursa. 7. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED The Provision of Financial is a related party transac on under the Lis ng Requirements of Bursa due to the interests of the major shareholders of L&G. 7.1 Interests of Major Shareholders Mayland Parkview Sdn Bhd ( MPSB ) is a major shareholder of L&G, holding 16.9% equity interest in L&G as at the date of this announcement. MPSB is a wholly owned subsidiary of Malaysia Land Proper es Sdn Bhd ( MLP ), which in turn is a wholly owned subsidiary of Pres ge Aspects Sdn Bhd ( PASB ). Tan Sri Dato David Chiu is a major and controlling shareholder of PASB via his interest in the holding company of PASB. Therefore, Tan Sri Dato David Chiu is deemed as a major shareholder of L&G through his deemed interest of 16.9% in L&G. Tan Sri Dato David Chiu, by virtue of his direct and indirect interests in BIL, controls BIL. BIL has 50% beneficial interest in MVUT. HVA is the trustee of MVUT. Accordingly, MPSB and Tan Sri Dato David Chiu, the major shareholders of L&G, are deemed
6 of 9 19/05/2012 6:11 PM interested in the Provision of Financial Assistance. 7.2 Interests of Directors Mr. Low Gay Teck, the Managing Director of L&G, is a nominee director of MPSB on the Board of L&G. Mr Low Gay Teck is also a director of MPSB and MLP. Dato Muhammad Khairun Aseh and Mr Hoong Cheong Thard, the Non Independent Non Execu ve Directors of L&G are also the nominee directors of MPSB on the Board of L&G. Ms Wing Kwan Winnie Chiu, a Non Independent Non Execu ve Director of L&G is nominated to the Board of L&G by MPSB. Ms Wing Kwan Winnie Chiu is also a director of MPSB and MLP. The direct and indirect shareholdings of the Interested Directors in respect of the Provision of Financial Assistance in L&G as at the date of this announcement are as follows: Director No. of Direct L&G shares % No. of Indirect L&G shares % Low Gay Teck 0.00 0.00 Dato Muhammad Khairun Aseh 0.00 0.00 Wing Kwan Winnie Chiu 0.00 (1) 101,380,000 16.94 Hoong Cheong Thard 0.00 0.00 Note (1): Deemed interested through MPSB pursuant to Sec on 6A of the Companies Act, 1965. As such, Mr Low Gay Teck, Dato Muhammad Khairun Aseh, Ms Wing Kwan Winnie Chiu and Mr Hoong Cheong Thard (collec vely referred hereina er as the Interested Directors ) are deemed interested in the Provision of Financial Assistance. Accordingly, the Interested Directors have abstained and will con nue to abstain from all Board of L&G delibera ons and vo ng pertaining to the Provision of Financial Assistance. Save as disclosed above, none of the other Directors, major shareholders of L&G and/or persons connected to them, as defined in the Main Market Lis ng Requirements of Bursa, have any interest, either direct or indirect, in the Provision of Financial Assistance. 8. OTHER TRANSACTIONS WITH THE RELATED PARTIES i) The acquisi on of ten (10) parcels of land improved with 27 hole golf course with a clubhouse including other suppor ng facili es, five (5) parcels of vacant residen al development land, 44 parcels of vacant bungalow plots, a single storey bungalow house and a parcel of industrial plot designated for Tenaga Nasional Berhad (TNB) substa on located within the Tuanku Jaafar Golf and Country Resort, 71450 Sungai Gadut, Seremban, Negeri Sembilan Darul Khusus by Bright Term Sdn Bhd, a wholly owned subsidiary of L&G, from Seremban Golf Resort Berhad (Receiver and Managers appointed) (In liquida on) for a total
7 of 9 19/05/2012 6:11 PM cash considera on of RM25,000,000 ( the Acquisi on ) which was approved by shareholders of L&G on 13 April 2011 and completed in July 2011; ii) The acquisi on by Synergy Score Sdn Bhd, a wholly owned subsidiary of L&G, of 75 ordinary shares of RM1 each in Elite Forward Sdn Bhd ( EFSB ), represen ng 0.01% equity interest in EFSB from Forward Splendour Sdn Bhd, a related company of MPSB which in turn is a major shareholder of L&G, on 30 September 2011 ( Addi onal Acquisi on ); and iii) The ra fica on for the provision of addi onal financial assistance of RM16.45 million to EFSB by L&G and addi onal provision of financial assistance to EFSB in the form of shareholders loan and/or corporate guarantees in respect of external borrowings to be secured by EFSB of an aggregate amount of up to RM43.56 million ( Provision of Addi onal Financial Assistance to EFSB ) which was approved by shareholders of L&G on 5 April 2012. Save for the Acquisi on, the Addi onal Acquisi on and the Provision of Addi onal Financial Assistance to EFSB stated above, there has been no other transac on entered into between L&G and its Group of companies, with MLP and its group of companies, as well as the Interested Directors during the twelve (12) months preceding the date of this announcement. 9. DIRECTORS STATEMENT The Board of L&G (save for the Interested Directors who have abstained from all delibera ons on the Provision of Financial Assistance), having considered all aspects of the Provision of Financial Assistance, is of the opinion that the Provision of Financial Assistance is in the best interest of the Company. 10. AUDITOR COMMITTEE S STATEMENT The Audit Commi ee of L&G (save for Mr Hoong Cheong Thard who has abstained from all delibera ons on the Provision of Financial Assistance), having considered all aspects of the Provision of Financial Assistance, is of the opinion that the Provision of Financial Assistance is in the best interest of the Company, fair, reasonable and on normal commercial terms, and is not detrimental to the interests of the non interested shareholders of L&G. 11. HIGHEST PERCENTAGE RATIO PURSUANT TO PARAGRAPH 10.02(G) OF THE LISTING REQUIREMENTS The highest percentage ratio pursuant to Paragraph 10.02(g) of the Listing Requirements in relation to the Proposals is approximately 3.0%. This Announcement is dated 18 May 2012
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9 of 9 19/05/2012 6:11 PM 2012, Bursa Malaysia Berhad. All Rights Reserved.