(both the Proposed Acquisition and the Proposed Profit Share are collectively referred to as the Proposal )

Transcription

1 S P SETIA BERHAD ( S P SETIA OR COMPANY ) PROPOSED ACQUISITION OF A PIECE OF FREEHOLD LAND MEASURING APPROXIMATELY ACRES (OR 14,919,300 SQUARE FEET) LOCATED IN BANGI, SELANGOR DARUL EHSAN ( LAND ) BY KL EAST SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF S P SETIA FROM SERIEMAS DEVELOPMENT SDN BERHAD FOR A CASH CONSIDERATION OF RM447,579, AND THE PROPOSED PROFIT SHARE FROM THE DEVELOPMENT ON THE LAND 1. INTRODUCTION The Board of Directors of S P Setia ( Board ) wishes to announce that KL East Sdn Bhd ( KL East ), a wholly-owned subsidiary of S P Setia, had on 14 April 2017 entered into the following agreements with Seriemas Development Sdn Berhad ( Seriemas ): (i) (ii) a conditional sale and purchase agreement ( SPA ) to acquire the Land for a cash consideration of RM447,579, or RM30.00 per square foot ( psf ) of the Land ( Purchase Consideration ) ( Proposed Acquisition ); and a conditional profit sharing agreement ( PSA ) in relation to the profit sharing of 20% of the audited profit before taxation ( PBT") from the development on the Land consisting of sale of units and/or land parcels, subject to a maximum RM44,757, calculated at the rate of RM3.00 psf of the Land ( Profit Share Amount ), with Seriemas ( Proposed Profit Share ). (both the Proposed Acquisition and the Proposed Profit Share are collectively referred to as the Proposal ) 2. DETAILS OF THE PROPOSAL 2.1 Information on the Proposed Acquisition The Land is located near Bandar Baru Bangi, Kajang and Semenyih. It is accessible via several major highways, namely Kajang-Seremban Highway ( LEKAS ), North-South Expressway ( PLUS ) and South Klang Valley Expressway ( SKVE ). The Land is approximately 30 kilometres ( km ) south-east of the city centre of Kuala Lumpur and approximately 25 km from Kuala Lumpur International Airport ( KLIA ). The Land is also located within a 5-km radius from the Setia EcoHill and Setia EcoHill 2 townships developed by S P Setia and its subsidiaries ( Group ). There are also schools, University Kebangsaan Malaysia, banks and shop houses in the vicinity of the Land. The details on the Land are as follows: Registered owner : Golden Hope Development Sdn Bhd (now known as Seriemas) Title particulars : GRN 49395, Lot 1913, Mukim Semenyih, District of Ulu Langat, Selangor Darul Ehsan Existing use and description Category of land use : Nil : Palm oil estate Proposed used : Residential and commercial township development Type of estate or plantation : Palm oil - 1 -

2 Restriction in interest : Nil Express condition : Nil Caveat : Nil Audited net book value as at 31 December 2016 Encumbrances : Nil RM36,036,203 Tenure : Freehold Total land area : Approximately acres (equivalent to 14,919,300 square feet) Original cost of investment : RM25,687,500 Date of investment : 26 August 1996 The location of the Land is set out in the map attached as Appendix 1 to this announcement. 2.2 Basis and justification of determining the Purchase Consideration The Purchase Consideration was arrived at between the parties on a willing-buyer willing-seller basis after taking into consideration the indicative market value of the Land of RM447,700, or RM30.00 psf. The indicative market value was opined by Messrs Khong & Jaafar Sdn Bhd, an independent registered valuer ( Valuer ), using the Income Approach to Value (Discounted Cash Flow Methodology) method of valuation as set out in their valuation letter dated 30 March 2017 ( Valuation Letter ). The market value of the Land which was arrived at using the Income Approach to Value was counter-checked by the Valuer using the Comparison Approach to Value. 2.3 Proposed development The Land is planned for a mixed development township comprising residential (e.g. apartments, linked houses and cluster houses) and commercial (e.g. shops and shop offices) components ( Proposed Development ). The Proposed Development is expected to have a gross development value ( GDV ) of approximately RM2.74 billion. The expected development cost and profit of the Proposed Development are subject to various factors including amongst others, timing of launches, economic conditions, market demand, the actual number of units and type of property to be developed and pricing of units. These factors cannot be determined at this point. Further, the development costs of the Land are expected to be funded through a combination of bank borrowings and/or internally generated funds, the quantum of which cannot be determined at this point. Barring any unforeseen circumstances, the Group targets to launch the township development on the Land in 2019 which is expected to take at least 8 years to complete

3 2.4 Source of funding The Purchase Consideration is expected to be funded via the cash proceeds from the issuance of Islamic Redeemable Convertible Preference Shares ( RCPS-i ) by S P Setia, which was completed on 6 December 2016, and/or bank borrowings, the breakdown of which has not been determined at this point. 2.5 Liabilities to be assumed Save for the additional borrowings to be secured to fund the Proposed Acquisition, there is no liability including contingent liability and guarantee to be assumed by the Group arising from the Proposed Acquisition. 2.6 Information on Seriemas Seriemas was incorporated in Malaysia under the Companies Act, 1965 as a private limited liability company on 4 July The principal activity of Seriemas is property development. As at 31 March 2017, being the latest practicable date prior to this announcement ( LPD ), Seriemas has a share capital of RM2,500,000 comprising 2,500,000 ordinary shares. As at the LPD, the shareholders of Seriemas and their shareholdings are as follows: Name PNB Development Sdn Berhad ( PNBD ) Sime Darby Property Berhad ( Sime Darby Property ) Permodalan Nasional Berhad ( PNB ) Yayasan Pelaburan Bumiputra ( Yayasan ) Sime Darby Berhad ( Sime Darby ) AmanahRaya Trustees Berhad Amanah Saham Bumiputera ( AmanahRaya Trustees ) Place of incorporation Direct Indirect No. of shares % No. of shares % Malaysia 1,500, Malaysia 1,000, Malaysia - - 1,500, (1) Malaysia - - 1,500, (2) Malaysia - - 1,000, (3) Malaysia - - 1,000, (4) Notes: (1) Deemed interested by virtue of its interest in PNBD. (2) Deemed interested by virtue of its interest in PNB. (3) Deemed interested by virtue of its interest in Sime Darby Property. (4) Deemed interested by virtue of its interest in Sime Darby

4 As at the LPD, the directors of Seriemas are as follows: Name Suhairi Bin Ramly Cheng Kee Check Ho Ee Lay Tan Sri Dato Sri Hamad Kama Piah Bin Che Othman Mohd Salem Bin Kailany Dato Wan Hashimi Albakri Bin W.A.A Jaffri Nationality Malaysian Malaysian Malaysian Malaysian Malaysian Malaysian As at the LPD, the directors of Seriemas do not hold any shares in Seriemas. 2.7 Information on the Proposed Profit Share Upon completion of the Proposed Acquisition, Seriemas will be entitled to a share of 20% of the audited PBT from the development on the Land consisting of sale of units and/or land parcels, subject to a maximum of RM44,757, calculated at the rate of RM3.00 psf of the Land subject to the terms and conditions as set out in the PSA. 3. KEY TERMS OF THE SPA AND PSA 3.1 SPA The key terms of the SPA are as follows: Settlement of the Purchase Consideration The Purchase Consideration of RM447,579, will be settled in cash in the following manner: Timeline 1 st payment of 10% (RM44,757,900.00) ( Deposit ) Payment terms Paid to Seriemas upon execution of the SPA and in simultaneous exchange for the letter of undertaking ( LoU ) from PNBD, the holding company of Seriemas, in favour of KL East to, among others, pay KL East a sum equivalent to the Deposit together with interest (if any) in the event Seriemas fails to return to KL East the Deposit together with interest (if any) in accordance with the SPA

5 Timeline 2 nd payment of 90% ( Balance Purchase Consideration ) comprising: the loan to be obtained by KL East to assist in the purchase of the Land ( Purchaser s Loan ); and the differential sum being the difference between the Balance Purchase Consideration and the Purchaser s Loan ( Differential Sum ) Payment terms The Differential Sum is payable to Seriemas solicitors as stakeholder on or before the expiry of 3 months from the Effective Date ( Completion Period ). Effective Date is the business day following the fulfilment of the last of the Conditions Precedent as set out in Section 3.1 of this announcement. The Purchaser s Loan is payable to Seriemas on or before the expiry of the Completion Period. If the Balance Purchase Consideration is not paid by the Completion Period, the payment can be made within 1 month after the Completion Period ( Extended Completion Period ) together with late payment interest. Conditions precedent The SPA is conditional upon the following conditions precedent ( Conditions Precedent ): (i) (ii) (iii) (iv) (v) (vi) (vii) the approval of the Board (save for the Interested Directors as set out in Section 9.2 of this announcement) and shareholders (save for the Interested Major Shareholders as set out in Section 9.1 of this announcement) of S P Setia for the Proposed Acquisition; the approval of the directors and shareholders of Seriemas for the sale of the Land; the conduct of due diligence studies on the Land by KL East at its own cost and expense and the results or findings of which are acceptable to KL East; Seriemas having submitted and obtained the development order and layout approval for the Land for the Land, the cost and expense of which shall be borne and paid by Seriemas; KL East having obtained the approval from the Economic Planning Unit of the Prime Minister s Department ( EPU ) for the Proposed Acquisition at its own cost and expense; Seriemas having obtained the approval from the Estate Land Board of Selangor for the Proposed Acquisition at its own cost and expense; and any other approvals from the relevant authorities, if required

6 If any of the Conditions Precedent is not fulfilled, or waived in the case of Section 3.1 (iii) above, within 6 months from the date of the SPA (as may be extended by another 3 months or such longer period by mutual agreement in writing of the parties), any party may rescind the SPA by written notice to the other party. To facilitate the fulfilment of the Conditions Precedent, a power of attorney ( PA ) is to be granted by Seriemas in favour of KL East to, among others, enable KL East to execute all applications for the development order and layout approval in respect of the Land to be submitted to the relevant authorities. The PA shall subsist until the completion of the transfer of legal ownership of the Land from Seriemas to KL East or the termination of the SPA. Execution of Memorandum of Transfer ( MOT ) Within 14 business days after the Effective Date, KL East shall deliver to Seriemas or its solicitors an MOT duly executed by KL East. Within 14 business days upon receipt of such MOT, Seriemas shall execute the MOT and deposit it together with all necessary documents (other than the original title for the Land) with KL East s solicitors. KL East s solicitors are authorised, within 3 business days upon receipt of the MOT, to submit the MOT for adjudication of stamp duty payable and thereafter, for payment of the stamp duty. KL East s solicitors are also authorised to deliver the duly stamped MOT to KL East s financier or its solicitors to facilitate the processing of the Purchaser s Loan. (d) Delivery of land titles If KL East is taking the Purchaser s Loan to finance the Proposed Acquisition, Seriemas shall forward the title, the current quit rent and assessment receipts in respect of the Land and any other necessary documents to effect registration with the Pejabat Tanah dan Galian Selangor and/or such other relevant land registry/office having jurisdiction over the relevant matters ( Land Registry ) within 7 days from the date of fulfilment of (i) the payment of the Differential Sum to the Seriemas solicitors, (ii) the delivery of KL East s financier s undertaking to pay Seriemas or its stakeholder the Purchaser s Loan, and (iii) the receipt by Seriemas solicitors of the confirmation that the MOT has been adjudicated and stamped. (e) Non-registration of MOT If for any reason whatsoever which is not due to the fault of any of the parties, the MOT is rejected for registration by the Land Registry and where all necessary remedial actions have been exhausted, either party may terminate the SPA by written notice to the other party. (f) Effect of rescission If the SPA is rescinded when any of the Conditions Precedent is not fulfilled, or waived as described in Section 3.1 of this announcement, Seriemas will refund the Deposit together with interest accrued thereon at the interest rate agreed by both parties (save where the failure to fulfil any Condition Precedent is caused by the default of KL East, where Seriemas will refund the Deposit without interest). Each party shall return and shall procure its solicitors to return to each other all documents forwarded to the other relating to the Proposed Acquisition. In the event a private caveat has been lodged against the Land, KL East or its solicitors shall also deliver the form for the withdrawal of the private caveat, together with possession of the Land (if Seriemas has already delivered possession of the Land to KL East)

7 (g) Breach by KL East Within 7 business days from the occurrence of any events in Sections 3.1 (g) (i) to (vi) below prior to the date Seriemas or Seriemas solicitors (as stakeholder) receives the Balance Purchase Consideration and the late payment interest (if any) in full from KL East and/or KL East s financier (as the case may be) ( Completion Date ), Seriemas may give notice in writing to KL East specifying the default or breach. In the event: (i) (ii) (iii) (iv) (v) (vi) KL East breaches any fundamental term or condition of the SPA or if KL East fails to perform or observe any material and fundamental undertaking, obligation or agreement of the SPA; a receiver, receiver and manager, liquidator, special administrator, trustee or similar official is appointed over any of the assets or undertaking of KL East whereby they can and/or have legally and lawfully rescinded the SPA; KL East enters into or resolves to enter into any arrangement, composition or compromise with, or assignment for the benefit of, its creditors or any class of them; a resolution is passed or an application or order is made for the winding up or dissolution of KL East otherwise than for the purpose of an amalgamation or reconstruction; KL East commits any act or omits to do any act which results in the breach or non-fulfilment of any term or condition of any banking, finance or credit facility which has the effect of causing the events specified in Sections 3.1 (g) (ii), (iii) or (iv) above to occur; or if KL East fails to pay the Balance Purchase Consideration on the last day of the Extended Completion Period, and if KL East fails to remedy such default or event in Sections 3.1 (g) (i) to (v) above within 14 business days, Seriemas may terminate the SPA by written notice, and Seriemas shall: (i) (ii) (iii) forfeit the Deposit and all interest thereon as agreed liquidated damages; within 14 business days from the date of the termination notice refund to KL East other money received by Seriemas or its solicitors from KL East or its financier towards payment of the Balance Purchase Consideration failing which Seriemas shall pay late payment interest for the delay (unless the delay for the refund is due to KL East s failure to return the original title to the Land and other documents delivered to KL East or its solicitors including the form for the withdrawal of private caveat, if applicable); and return all documents delivered to Seriemas or its solicitors. Alternatively, Seriemas may also claim specific performance and all reliefs thereof

8 (h) Breach by Seriemas Within 7 business days from the occurrence of any events in Sections 3.1 (h) (i) to (v) below prior to the Completion Date, KL East may give notice in writing to Seriemas specifying the default or breach. In the event: (i) (ii) (iii) (iv) (v) Seriemas breaches any fundamental term or condition of the SPA or if Seriemas fails to perform or observe any material and fundamental undertaking, obligation or agreement of the SPA; a receiver, receiver and manager, liquidator, special administrator, trustee or similar official is appointed over any of the assets or undertaking of Seriemas whereby they can and/or have legally and lawfully rescind the SPA; Seriemas enters into or resolves to enter into any arrangement, composition or compromise with, or assignment for the benefit of, its creditors or any class of them; a resolution is passed or an application or order is made for the winding up or dissolution of Seriemas otherwise than for the purpose of an amalgamation or reconstruction; or Seriemas commits any act or omits to do any act which results in the breach or non-fulfilment of any term or condition of any banking, finance or credit facility which has the effect of causing the events specified in Sections 3.1 (h) (ii), (iii) or (iv) above to occur, and if Seriemas fails to remedy such default or event in Sections 3.1 (h) (i) to (v) above within 14 business days, KL East may terminate the SPA by written notice, and Seriemas shall, within 14 business days from the receipt of the termination notice: (i) (ii) (iii) refund the Deposit and other moneys received by Seriemas or its solicitors together with any interest failing which Seriemas shall pay late payment interest for the delay (unless the delay for the refund is due to KL East s failure to return the original title to the Land and other documents delivered to KL East or its solicitors including the form for the withdrawal of private caveat, if applicable); pay KL East a sum equivalent to the Deposit as agreed liquidated damages failing which Seriemas shall pay late payment interest for the delay; and return all documents delivered to Seriemas or its solicitors. Alternatively, KL East may also claim specific performance and all reliefs thereof

9 3.2 PSA The key terms of the PSA are as follows: Profit Share Amount (i) (ii) (iii) In consideration of RM10.00 only and mutual exchange of covenants, Seriemas shall be entitled to 20% share of the PBT from the development of the Land consisting of sale of units and/or land parcels. The cumulative payment shall not exceed the Profit Share Amount. Once the cumulative payment received by Seriemas reaches the Profit Share Amount, Seriemas is not entitled to any further payment. If KL East continues to pay Seriemas after the cumulative amount has exceeded the Profit Share Amount, Seriemas is to refund such overpayment to KL East within 14 days from receipt of a written notice from KL East of such overpayment failing which Seriemas shall pay late payment interest. In the event KL East fails or delays in paying Seriemas the Profit Share Amount for whatever reason, Seriemas is entitled to the remedies as specifically provided for in the PSA. The parties agree that the liabilities of KL East under the PSA for such failure or delay will be limited to the Profit Share Amount and interest accrued under Section 3.2 (i) together with interests as may be ordered by the court or arbitral tribunal and in no event is KL East liable to Seriemas under contract, tort or otherwise for any remedies other than for pecuniary damages up to the Profit Share Amount together with interests as may be ordered by the court or arbitral tribunal. (iv) Any failure or delay in paying the Profit Share Amount shall not be deemed to be a breach of the SPA and Seriemas shall not be entitled to terminate the SPA, seek to recover or procure a re-transfer of the Land or seek recourse thereunder. Determination of Profit Share Amount (i) (ii) In relation to the sale of units or properties (residential or commercial) to be developed in phases from the development of the Land, the payment to Seriemas for the Proposed Profit Share shall be determined based on the audited accounts of each completed phase of the development. The audit of the accounts is to commence within 60 days from each phase completion ( First Audit ). Phase completion occurs when the vacant possession of the first of the units of any phase (that has been sold, completed and fully paid) is delivered. In relation to the sale of land parcel that is held for the development (other than units or properties set out in Section 3.2 (i) above, parcels that is surrendered to authorities or compulsorily acquired), the payment to Seriemas for the Proposed Profit Share shall be determined based on the audited accounts in respect of the sale of such land parcel. The audit of the completed sale of the land parcel that is completed prior to the commencement of the First Audit is to be included in the First Audit

10 (iii) If any unsold saleable units in respect of any completed phase are subsequently sold after the First Audit, and if any sale of land parcel is completed after the commencement of the First Audit, KL East shall do subsequent audit of the accounts (including the accounts in respect of the disposal of such land parcel) at each financial year end in which the sale of the units/land parcel occurs ( Subsequent Audit ). Payment of the Profit Share Amount (i) (ii) KL East is to pay Seriemas the amount of the Proposed Profit Share that has been determined in accordance with Section 3.2 above within 60 days from the completion of the First Audit or the Subsequent Audit, as the case may be, failing which, KL East shall pay late payment interest. If the cumulative payment to Seriemas for the Proposed Profit Share that has been paid by KL East to Seriemas within a 7 year period from the first launch date of the first phase of the development on the Land has not reached the Profit Share Amount, KL East shall pay the difference between the cumulative payment that has been paid and the Profit Share Amount within 90 days from the expiry of such period in one bullet payment or within such extended period as the parties may mutually agree. (d) Validity of the PSA The PSA shall be in force until the earlier of the sale of the last unit of the last completed phase of the development or disposal of all land parcels within the Land, or payment of the Proposed Profit Share by KL East to Seriemas has reached the Profit Share Amount. (e) Condition precedent The PSA is conditional upon the SPA being completed and the successful registration of the transfer of the Land in favour of KL East. If this condition precedent is not satisfied because the SPA is rescinded or terminated, the PSA shall terminate simultaneously with the termination of the SPA. 4. RATIONALE FOR THE PROPOSAL The Proposed Acquisition represents an opportunity for the Group to increase and replenish its current land bank. The size of the land of approximately acres is sizeable and suitable for a township development. The Proposed Development is expected to generate an estimated GDV of RM2.74 billion which is expected to enhance the Group s future revenue and earnings. The Land is located near Bandar Baru Bangi, Kajang and Semenyih. The Proposed Acquisition is in line with the Group s strategy to strengthen its presence in Klang Valley given that the Land is in the growing corridor south of Kuala Lumpur. The Land is located approximately 30 km southeast of the city centre of Kuala Lumpur and approximately 25 km from KLIA. In addition, the Land is within a 5-km radius of the Group s Setia EcoHill and Setia EcoHill 2 township developments in Semenyih. Since the Group s foray into the southern part of Klang Valley, it has further established the S P Setia brand with the Setia EcoHill and Setia EcoHill 2 township developments. The Group will leverage on its track records and established brand to provide more mid-priced products to cater to the local demand and current needs

11 Given the potential value enhancement from the Proposed Acquisition and the Proposed Development of the Land to the Group, the Proposed Profit Share is an additional term agreed upon with Seriemas. 5. PROSPECTS OF THE LAND The Land is planned for a township development comprising residential (e.g. link houses and cluster houses) and commercial (e.g. shops and shop offices) components with an estimated GDV of RM2.74 billion. The Group targets to launch the township development on the Land in 2019 and is expected to take at least 8 years to complete. Therefore, the Proposed Development is expected to contribute positively to the Group s future earnings in the medium to longer term. The Group will benefit from the developments surrounding the Land with amenities, facilities and infrastructures that are readily available in the vicinity such as: (d) (e) upgraded road ways surrounding the Land and linkages to highways such as LEKAS, PLUS and SKVE; schools, universities and established housing estates; water, electricity supply and telephone facility; public services such as road and drainage, street lightings and garbage disposal; and public transport services such as bus and commuter train. The Company is of the view that the location of the Land with readily available amenities, facilities and infrastructure around the Land will add value to the properties on the Land, and the Proposed Acquisition is expected to support and strengthen the strategic development objectives and value enhancement of the Group. 6. RISK FACTORS The risks in relation to the Proposal include: 6.1 Performance of the property market The Proposed Development on the Land will span over at least 8 years and is subject to certain risks inherent to property development, such as deterioration in prevailing market conditions, oversupply of properties, changes in demand for types of residential and commercial properties, labour and material supply shortages, and fluctuations in prices of building materials and costs of labour. Nevertheless, the Group continues to keep abreast of the latest developments in the market and will leverage on its track record as well as expertise and experience to manage these risks accordingly. The timely launch of properties on the Land will depend on factors which may be beyond the control of the Group, such as obtaining timely approvals from relevant regulatory authorities, supply of labour and materials as well as timely and satisfactory performance of contractors. However, the Board and management of the Group will seek to limit these risks through careful planning and proactive monitoring of progress of the Proposed Development on the Land and provide necessary solutions to resolve matters at hand

12 6.2 Political, regulatory and economic risks The property market can be characterised as cyclical in nature and is potentially correlated to the general economic conditions of Malaysia. Adverse developments in political, regulatory and economic conditions in Malaysia could materially affect the property industry in the country. Political, regulatory and economic uncertainties include changes in labour laws, interest rates, fiscal and monetary policies, risks of expropriation of land by authorities and methods of taxation. The Group reviews its business development strategies and implements prudent business, financial and risk management strategies in response to changes in political, regulatory and economic conditions. Nonetheless, no assurance can be given that any change to these factors would not have any material adverse impact on the Group s financial performance in the future. 6.3 Financing risk The Purchase Consideration will be satisfied in cash using the proceeds from the issuance of the RCPS-i and/or bank borrowings. Therefore, the Group may be exposed to fluctuations in interest rate of borrowings and repayment commitments. The interest rates of the borrowings are dependent on various factors, which include general economic and capital market conditions, credit availability from banks or other lenders, lenders confidence in the Group and political and social conditions in Malaysia. There can be no assurance that the necessary borrowings will be available in amounts or on terms acceptable to the Group. Nonetheless, should the Group decide to finance the Proposed Acquisition internally, the Company shall use the proceeds from the issuance of the RCPS-i which is sufficient to pay the Purchase Consideration. 6.4 Non-completion of the Proposed Acquisition In the event that any of the Conditions Precedent stated in Section 3.1 of this announcement is not fulfilled by either KL East or Seriemas, the Proposed Acquisition would not be completed and all the potential benefits arising from the Proposed Acquisition would not materialise. The management of S P Setia will use its best endeavours by engaging with the relevant authorities/parties to obtain all the necessary approvals to ensure the Conditions Precedent are fulfilled in a timely manner to complete the Proposed Acquisition. Although the Group will take necessary efforts to mitigate the various risks identified above, no assurance can be given that any change in these factors will not materially affect the Group s business operations and financial performance. 7. EFFECTS OF THE PROPOSAL 7.1 Share capital and shareholding of substantial shareholders The Proposal will not affect the share capital and the substantial shareholders shareholdings in the Company as the Purchase Consideration and the Profit Share Amount will be fully satisfied in cash

13 7.2 Earnings and earnings per share ( EPS ) The Proposed Acquisition will not have any material effect on the consolidated earnings and EPS of S P Setia for the financial year ending 31 December 2017 ( FY2017 ) as the Proposed Acquisition is expected to be completed by the 4 th quarter of Nonetheless, the Proposed Acquisition is expected to contribute positively to the Group s future earnings and EPS in the ensuing years upon the development of the Land which is slated for launches tentatively scheduled for 2019 onwards over a period of at least 8 years. The Proposed Profit Share will not have any immediate effect on the consolidated earnings and EPS of S P Setia and will only impact the Group s future earnings and EPS in the ensuing years upon the development of the Land. 7.3 Net assets ( NA ) and gearing The Proposed Acquisition is expected to be completed by the 4 th quarter of 2017 and hence, it will not have any effect on the consolidated NA of S P Setia for FY2017. However, the Proposed Acquisition is expected to enhance the consolidated NA of the Group and NA per share of S P Setia in the future in view of the potential future profit contribution arising from the development of the Land. The Purchase Consideration is to be funded via cash proceeds from the issuance of RCPS-i by S P Setia and/or bank borrowings, the breakdown of which has not be finalised. In the event the Purchase Consideration is partially funded via bank borrowings, the gearing of the Group will potentially increase. The Proposed Profit Share will not have any immediate effect on the consolidated NA and gearing of S P Setia. 7.4 Convertible securities Save for the RCPS-i, as at the LPD, the Company does not have any convertible securities. 8. APPROVALS REQUIRED The Proposed Acquisition is conditional upon the following approvals being obtained from: (d) EPU for the acquisition of the Land by KL East; Estate Land Board of Selangor for the sale of the Land by Seriemas; the shareholders of the Company at an extraordinary general meeting ( EGM ) to be convened by S P Setia; and any other relevant authority and/or party, if required. The Proposed Profit Share is conditional upon the Proposed Acquisition

14 9. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM 9.1 Interested Major Shareholders PNB, Yayasan and AmanahRaya Trustees are deemed interested in the Proposal in view of their interests as set out below: (d) Seriemas is 40%-owned by Sime Darby Property and 60%-owned by PNBD. PNBD is a wholly-owned subsidiary of PNB; PNB is a direct major shareholder of S P Setia with 27.98% equity interest. It is also an indirect major shareholder of Seriemas by virtue of its equity interest in PNBD; Yayasan is an indirect major shareholder of S P Setia and Seriemas via its equity interest in PNB; and AmanahRaya Trustees is a direct major shareholder of S P Setia with 27.42% equity interest and also an indirect major shareholder of Seriemas via its equity interest in Sime Darby Berhad, which is the holding company of Sime Darby Property. In view of the following: PNB s direct interest in the Company and its indirect interest in Seriemas through its equity interest in PNBD; AmanahRaya Trustees direct interest in the Company and its indirect interest in Seriemas through its equity interest in Sime Darby Berhad, which is the holding company of Sime Darby Property; and Yayasan s indirect interest in the Company and Seriemas through its equity interest in PNB; the Proposal is a related party transaction. Accordingly, PNB, Yayasan and AmanahRaya Trustees (collectively referred to as Interested Major Shareholders ) will abstain from voting in respect of their direct and/or indirect shareholdings in S P Setia on the resolution in relation to the Proposal to be tabled at the forthcoming EGM to be convened. The Interested Major Shareholders have also undertaken that they will ensure that persons connected with them who have interest in S P Setia will also abstain from voting in respect of their direct and/or indirect shareholdings in S P Setia on the resolution in relation to the Proposal to be tabled at the forthcoming EGM to be convened

15 The shareholdings of the Interested Major Shareholders in S P Setia and Seriemas as at LPD are as follows: Shareholdings in S P Setia Shareholdings in Seriemas Interested Major Shareholders Direct % Indirect % Direct % Indirect % PNB 798,387, ,500, (1) Yayasan ,387, (2) - - 1,500, (2) AmanahRaya Trustees 782,558, ,000, (3) Notes: (1) Deemed interested by virtue of its interest in PNBD, where PNBD is a wholly-owned subsidiary of PNB and PNBD owns 60% equity interest in Seriemas. (2) Deemed interested by virtue of its interest in PNB. (3) Deemed interested by virtue of its interest in Sime Darby, which is the holding company of Sime Darby Property in which Sime Darby Property owns 40% equity interest in Seriemas. 9.2 Interested Directors The following directors are deemed interested in the Proposal by virtue of them being the nominee directors of PNB in S P Setia. (d) Tan Sri Dato Seri Dr. Wan Mohd Zahid Bin Mohd Noordin is the Non-Independent Non- Executive Chairman of S P Setia; Dato Halipah Binti Esa is a Non-Independent Non-Executive Director of S P Setia; Dato Zuraidah Binti Atan is a Non-Independent Non-Executive Director of S P Setia; and Dato Azmi Bin Mohd Ali is a Non-Independent Non-Executive Director of S P Setia, In addition, Tengku Dato Ab. Aziz Bin Tengku Mahmud who is a Non-Independent Non- Executive Director of S P Setia is also deemed interested in the Proposal by virtue of him being the Chief Executive Officer of PNB Merdeka Ventures Sdn Bhd, a wholly-owned subsidiary of PNB. (The above mentioned directors are collectively referred to as Interested Directors ) The Interested Directors have abstained from all deliberations and voting at the relevant Board meetings and on the resolution pertaining to the Proposal. They will also abstain from voting in respect of their direct and/or indirect shareholdings in S P Setia, if any, on the resolution in relation to the Proposal to be tabled at the forthcoming EGM to be convened for the Proposal. The Interested Directors have also undertaken that they will ensure that persons connected with them who have interests in S P Setia will also abstain from voting in respect of their direct and/or indirect shareholdings in S P Setia on the resolution in relation to the Proposal to be tabled at the forthcoming EGM to be convened

16 Save as disclosed above, none of the other directors and major shareholders of S P Setia and/or persons connected with them have any interest, direct or indirect, in the Proposal. 10. HIGHEST PERCENTAGE RATIO APPLICABLE TO THE PROPOSAL Based on the Purchase Consideration and Profit Share Amount, and the Company s audited consolidated financial statement for the financial year ended 31 December 2016, the highest percentage ratio applicable to the Proposal pursuant to Paragraph (g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( MMLR ) is 5.35%. 11. TRANSACTIONS WITH THE SAME RELATED PARTY FOR THE PRECEDING 12 MONTHS Save for the Proposal, the Company has not entered into any transaction with the Interested Major Shareholders, Interested Directors and Seriemas for the 12 months preceding the date of this announcement. 12. INDEPENDENT ADVISER In view of the interests of the Interested Major Shareholders and Interested Directors as set out in Section 9 of this announcement, the Proposal is a related party transaction pursuant to Paragraph of the MMLR. Accordingly, the Board has appointed Affin Hwang Investment Bank Berhad to act as the independent adviser for the Proposal ( Independent Adviser ) to advise the non-interested shareholders of S P Setia and non-interested directors on whether: the Proposal is fair and reasonable so far as the non-interested shareholders of S P Setia are concerned; the Proposal is detrimental to the non-interested shareholders of S P Setia; and they should vote in favour of the resolution pertaining to the Proposal at the EGM to be convened. 13. STATEMENT BY THE BOARD The Board (save for the Interested Directors), after having considered, the terms of the SPA and PSA, the rationale for the Proposal and prospects of the Land, and effects of the Proposal on the Group, is of the opinion that the Proposal is: in the best interest of the Company; fair, reasonable and on normal commercial terms; and not detrimental to the interest of the non-interested shareholders of S P Setia

17 14. STATEMENT BY THE AUDIT COMMITTEE The Audit Committee of the Company (save for Dato Azmi Bin Mohd Ali), after having considered the terms of the SPA and PSA, the rationale for the Proposal and prospects of the Land, and effects of the Proposal on the Group, is of the opinion that the Proposal is: in the best interest of the Company; fair, reasonable and on normal commercial terms; and not detrimental to the interest of the non-interested shareholders of S P Setia. The Audit Committee of the Company (save for Dato Azmi Bin Mohd Ali) had sought the view from the Independent Adviser in forming its view on the Proposal. 15. APPLICATION TO THE RELEVANT AUTHORITIES The application to the relevant authorities will be made within two months from the date of this announcement. 16. ESTIMATED TIMEFRAME FOR COMPLETION Subject to the fulfilment of the Conditions Precedent, the Proposed Acquisition is expected to be completed by the 4 th quarter of DOCUMENTS FOR INSPECTION The SPA, the PSA, the PA and the LoU (all dated 14 April 2017 and the Valuation Letter dated 30 March 2017 are available for inspection at the registered office of S P Setia at Plaza 138, Suite 18.03, 18 th Floor, 138 Jalan Ampang, Kuala Lumpur during business hours (from 9.00 a.m. to 5.00 p.m.) from Monday to Friday (except public holidays) for a period of 3 months from the date of this announcement. This announcement is dated 14 April

18 APPENDIX 1: Location of Land - 1 -