THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III PROPERTY VALUATION REPORT
The following is the summary of values within the valuation reports received from Savills (Malaysia) Sdn Bhd (“Savills Malaysia”), as independent Property Valuer in connection with their opinion of values of the Property interests of the Group as at 3 April 2019, prepared for the purpose of incorporation in this document.
Savills (Malaysia) Sdn Bhd Level 9, Menara Milenium Jalan Damanlela Bukit Damansara 50490 Kuala Lumpur Malaysia
T : +603 2092 5955 F : +603 2092 5966 www.savills.com.my
The Board of Directors Infinity Logistics & Transport Ventures Limited No. 2, Jalan Kasuarina 8 Bandar Botanic 41200 Klang Selangor Darul Ehsan Malaysia
[Date]
Dear Sirs,
INSTRUCTIONS
In accordance with the instructions of Infinity Logistics & Transport Ventures Limited (referred to as the “Company”) and its subsidiaries (together referred to as the “Group”) for Savills Malaysia to value the properties situated in Malaysia (as more particularly described in the attached valuation reports), we confirm that we have inspected the properties, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of values of the properties as at 3 April 2019 (the “valuation date”).
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DEFINITION OF MARKET VALUE
The valuation of each of the properties represent its Market Value. The definition of Market Value adopted in the Malaysian Valuation Standards (Sixth Edition 2019) issued by the Board of Valuers, Appraisers, Estate Agents and Property Managers Malaysia follow the International Valuation Standards published by the International Valuation Standard Council (“IVSC”).
Market Value is defined by the Malaysian Valuation Standards (Sixth Edition 2019) as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.
VALUATION BASIS AND ASSUMPTIONS
In valuing the properties, we have complied with the requirements set out in Chapter 5 of the Main Board Listing Rules of The Stock Exchange of Hong Kong Limited published by The Stock Exchange of Hong Kong Limited, Malaysian Valuation Standards (Sixth Edition 2019) issued by Board of Valuers, Appraisers, Estate Agents and Property Managers Malaysia and International Valuation Standards 2017 by IVSC.
Our valuations have been made on the assumption that the properties are sold in the open market without the benefit of a deferred term contract or any similar arrangement which could serve to affect the values of the properties.
In valuing the properties, we have assumed that the Group has an enforceable title to each of the properties and has free and uninterrupted rights to use, occupy or assign the properties for the whole of the respective unexpired land use term as granted.
No allowance has been made in our valuation for any charges, mortgages or amounts owning on any property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.
Dimensions, measurements and areas included in the valuation reports are based on information provided to us and are therefore only approximations. Unless otherwise stated, dimensions and areas would be measured on-site or scaled off from the plans and calculated in accordance with, where appropriate, each local measurement guidelines and are quoted to a reasonable approximation, with reference to their source.
We confirm that we do not have a pecuniary interest that would conflict with a proper valuation of the properties and the valuers undertaking the valuation are authorised to practise as valuers and have the necessary expertise and experience in valuation of such type of properties.
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The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions and is our personal, unbiased professional analyses, opinions and conclusions.
VALUATION METHODOLOGY
In valuing Property No. 1, we have concluded that this Property has “no commercial value” mainly due to the fact that there are restrictions against any assignment and sub-letting of the property.
For the Company’s internal management reference purpose, we reported a reference value of this Property to the Company. In arriving of the “reference value” for Property No. 1, we have adopted the Cost Approach. The values of the land and building (under construction) are separately determined and a summation of these values is taken to be the Market Value of the Property as an integral whole. The value of the land is arrived at by the “profit rent” principle whilst the value of the building is arrived by making reference to the costs spent as at valuation date based on Certificate of Payment No. 5 (ref: MAD/PKFZ-COP 5 dated 26 March 2019) amounting to approximately RM16,500,000.
In valuing Property No. 2, we have adopted the Comparison Approach which entails comparing the Property with comparable properties which were sold or are being offered for sale and making adjustments for factors which affect value such as location, market conditions, size, tenure, siting, efficiency and restriction (if any), availability of infrastructure, vacant possession and other relevant characteristics.
In valuing Property No. 3, which is tenanted by the Group in Malaysia, we consider that the Property has “no commercial value” mainly due to either no provision for/the prohibition against assignment and sub-letting or otherwise lack of substantial profit rents.
TITLE INVESTIGATION
We have relied upon on the property data and information supplied by the Client and the Group legal adviser, David Lai & Tan (DLT) which we assumed to be true and accurate. Savills Malaysia takes no responsibility for inaccurate data and information supplied by the owner & its legal advisor and subsequent conclusions related to such data.
SOURCE OF INFORMATION
We have relied to a very considerable extent on the information given to by the Group and its legal adviser in Malaysia, DLT, regarding to the title of each of the properties and the interests of the Group in the properties. We has accepted advice given by the Group on such matters as planning approvals or statutory notices, easements, tenure, identification of land and buildings, completion date of buildings, particulars of occupancy, site & floor areas and all other relevant matters. However, Savills Malaysia has not inspected the original documents to ascertain the existence of any amendments which may not appear on the copies provided to us.
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We have assumed that, unless otherwise stated, the transferable land use rights of the properties for their respective terms at nominal annual land use fees have been granted and that any premiums payable have already been fully paid.
SITE INSPECTION
Our valuers Datuk Sr. Paul Khong, Mr. Lee Yen Ten and Mr. Tan Yi Huan have inspected the properties on 3 April 2019. However, they have not carried out site investigations to determine the suitability of the soil conditions and the services etc. The valuations are prepared on the assumption that these aspects are satisfactory and that no extraordinary costs or delay will be incurred during the construction period. No structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report that the properties are free of rot, infestation or any other structural defects. No tests were carried out to any of the services. Unless otherwise stated, we have not been able to carry out on-site measurements to verify the site and floor areas of the properties and we have assumed that the areas shown on the documents handed to us are accurate and correct.
CURRENCY AND EXCHANGE RATE
Unless otherwise stated, all monetary sums as shown in our valuation reports are expressed in Ringgit Malaysia (“RM”) which is the official currency of Malaysia.
We enclosed herewith our summary of values and valuation reports.
Yours faithfully, For and on behalf of SAVILLS (MALAYSIA) SDN BHD
DATUK SR. PAUL KHONG MRICS FRISM APEPS Chartered Surveyor Registered Valuer (V-528) Managing Director
Note: Datuk Sr. Paul Khong is the Managing Director of Savills (Malaysia) Sdn Bhd and a Registered Valuer who has over 25 years of experience in the valuation of properties in Malaysia.
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SUMMARY OF VALUES
Market Value in existing state as at No. Property 3 April 2019
GroupI–Property held by the Group under construction in Malaysia
1. A Registered Lease interest of KNS Infinity Sdn Bhd No commercial value* built-upon with two detached warehouses (under construction), (* for the reference Precinct 8, value, please refer Part of P806, P808, to Note 6 of the P832 & P833, report) Port Klang Free Zone/KS12, 42920 Pulau Indah, Selangor Darul Ehsan, Malaysia.
Group II – Property held by the Group for future development in Malaysia
2. A parcel of industrial land RM38,000,000 Lot No. 26, Phase 3A on Part of P.N. 7935 Lot No. 74078, Mukim & District of Klang, Selangor Darul Ehsan, Malaysia.
Group III – Property tenanted by the Group in Malaysia
3. Two adjoining 3- & 4-storey shopoffices No commercial value Nos.2&4,Jalan Kasuarina 8, Bandar Botanic 41200 Klang, Selangor Darul Ehsan, Malaysia.
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VALUATION REPORT
GroupI–Property held by the Group under construction in Malaysia
Market Value in Particulars of existing state as at No. Property Description and tenure occupancy 3 April 2019
1. A Registered Lease interest of Land As at the valuation No commercial value KNS Infinity Sdn Bhd The land (7.74 acres) is held under a Registered date, the two built-upon with two detached Lease interest of KNS Infinity Sdn Bhd warehouses on site are (please refer to Note 6) warehouses (under (a wholly-owned subsidiary of the Group) for a still under construction), Precinct 8, Part period of 30-year with an option to renew for a construction. of P806, P808, P832 & P833, further 30-year commencing on 27 September 2017 Port Klang Free Zone/KS12, at a monthly rental of RM61,648.70 (inclusive 6% 42920 Pulau Indah, Selangor GST) and a monthly maintenance charge of Darul Ehsan, Malaysia. RM2,150.
It is held under part This land was subsequently sub-tenanted to Infinity of/registered on Master Title Logistics & Transport Sdn Bhd (a wholly-owned PN 7324/ Lot 67894, Mukim subsidiary of the Group) for a period of 3-year with and District of Klang, Selangor an option to renew for a further 1-year, commencing Darul Ehsan, Malaysia. on 27 October 2018 at a monthly rental of RM61,648.70 and a monthly maintenance charge of The land is held by KNS RM2,150. Infinity Sdn Bhd vide a Registered Lease interest Warehouses registered on Master Title Lot There are two units of single storey detached 67894. warehouses currently built on site and they are in advance stages of construction. The buildings (under construction) are built by The warehouses are currently built by Infinity Infinity Logistics & Transport Logistics & Transport Sdn Bhd at their own costs. Sdn Bhd at their own costs. Upon completion, the two warehouses will have a Both Land & Building interests total gross floor area of approximately 19,700 square are valued together as per our metres (approx. 212,000 square feet). Its completion Client’s instructions and both is expected to be on 9 June 2019. KNS Infinity Sdn Bhd (Lessee) & Infinity Logistics & The Property is located within Port Klang Free Zone Transport Sdn Bhd (Tenant) (PKFZ) which lies approximately 70 kilometres & 30 are wholly-owned subsidiary of kilometres south-west of City Centre of Kuala the Group. Lumpur and Town Centre of Klang respectively.
Notable industrial concerns found within the general vicinity include Aker Solutions Malaysia Sdn Bhd, Syarikat Logistik Petikemas Sdn Bhd, Asia Propel Sdn Bhd, OAG Group of Company, DRB Hicom Auto Solution Sdn Bhd, Gulf Lubes Malaysia Sdn Bhd, Cargill Palm Products Sdn Bhd and Visko Industries Sdn Bhd to name a few.
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Notes:
(1) According to the title search on the registered Document of Title (Master Title Lot 67894) issued by Registry of Land Titles, Selangor Darul Ehsan, the Registered Owner of the land is Port Kelang Authority.
i. Part of the land measuring approximately 7.74 acres has been leased to KNS Infinity Sdn Bhd for 30 years commencing on 27 September 2017 vide Presentation no. 47461/2018 dated 30 May 2018;
ii. The entire land is designated for industrial usage; and
iii. The apportioned annual Quit Rent (Cukai Tanah) in respect of the Property amounts to RM33,039.
(2) According to the Local Planning Guidelines of Klang Municipal Council, the Property is presently zoned for industrial usage.
(3) Based on the Land Lease Agreement between Port Kelang Authority & Port Klang Free Zone Sdn Bhd (the “Lessor”) and KNS Infinity Sdn Bhd (the “Lessee”) dated 15 January 2018, the pertinent lease details are as follows:
• Demised area : Jalan FZ1 – P8, Part of P806, Part of P808, Part of P832 & Part of P833, Port Klang Free Zone/KS12, 42920 Pulau Indah, Selangor Darul Ehsan.
• Land area : approximately 7.74 acres (about 31,322.6687 square metres or 337,154.4 square feet).
• Lease term : 30-year Lease with an option to renew for a further 30-year.
• Commencement date : 27 September 2017
• Monthly rental rate : RM61,648.70 (inclusive of GST)
• Rent review : Every five (5) years at Market Rental with a rental cap not exceeding 15% of the preceding monthly lease rental.
• Monthly maintenance : RM2,150 charge
• Permitted use/Purpose : warehouse and logistics services for commodities such as polymers, LME metal products, iron and steel products and other value added services.
• Construction of the : 10.(a)(v) Commence construction of the building within Twelve (12) building (clauses months from the commencement date; & 10.(a)(vi) Complete 10.(a)(v) & 10.(a)(vi)) construction of the building with the issuance of the Certificate of Completion and Compliance thereof by the Lessee’s Architect or Engineer within Two (2) years from the commencement date.
(4) The Building Plans have been approved vide Plans bearing reference no. 600-4/1/0087(2018) dated 27 September 2018.
(5) The Letter of Awards for building construction has been issued to EMQ Link Sdn Bhd vide reference no. ILNT/0001/18 on15 August 2018 and the salient details are as follows:
• Total contract sum: RM29,000,000;
• Based on Progress Claim No. 5 (ref: EMQ/KNSI/PKFZ/Claim/05) dated 4 March 2019 and certificate of payment No. 5 (ref: MAD/PKFZ-COP 5) dated 26 March 2019, the total cost spent is estimated at approximately RM16,500,000.
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• Construction commencement date: 10 October 2018; &
• Expected completion date: 9 June 2019.
(6) For the present exercise, we have attributed “no commercial value” to the Property since the Property is not transferable in the market unless with full prior written consent obtained from the Lessor. For reference purpose, we are of the opinion that the market value of the Property as at the valuation date would be RM18,000,000, on the assumptions/bases that:-
• KNS Infinity Sdn Bhd (the Lessee) shall fully exercise all options to renew the lease made with Port Kelang Free Zone (the Lessor);
• The said lease will be expired on 26 September 2077 as follows:-
• Current lease term – expires on 26 September 2047
• 30-year option to renew – expires on 26 September 2077
• The rental rate will be renewed once every five years and the revised rental shall subject to a cap of 15%;
• KNS Infinity Sdn Bhd shall continue to pay all rental promptly without default till the expiry of the lease in 2077;
• There shall be no any obstacle for the Group to transfer both Land & Building to a third party as both interests of Land & Building are valued together as per instructions of our Client. KNS Infinity Sdn Bhd (Lessee) and Infinity Logistics & Transport Sdn Bhd (Tenant) are now deemed as same/related parties under the Group (wholly-owned subsidiary of the Group);
• The Property shall be easily transferable without any extra time and costs to be incurred; and
• The total contract sum for the building construction is about RM29,000,000:
• As at the valuation date, we have made reference to Certificate of Payment No. 5 (ref: MAD/PKFZ-COP 5 dated 26 March 2019) amounting to approximately RM16,500,000.
(7) The Lease arrangement (where Land Rentals are payable on a monthly basis till expiry of the Registered Lease in 26 September 2077) is a common Lease arrangement solely in the PKFZ development in Port Klang only.
(8) We have been provided with a legal opinion on the Property by Group’s legal adviser, which contains, inter alia, the following information:
i. the 30-year lease is registered under the (master title) Lot 67894 vide Presentation no. 47461/2018 dated 30 May 2018;
ii. the Lease Agreement dated 15 January 2018 is legally binding;
iii. the Tenancy Agreement dated 14 January 2019 is legally binding; and
iv. the Group has the right to hold and enjoy the Property during the term of the Lease.
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VALUATION REPORT
Group II – Property held by the Group for future development in Malaysia
Market Value in Particulars of existing state as No. Property Description and tenure occupancy at 3 April 2019
2. A parcel of industrial The Property is a prominent corner parcel As at the valuation RM38,000,000 land, Lot No. 26, Phase of industrial land with triple frontages onto date, the Property 3A on Part of P.N. 7935 Persiaran Pelabuhan Barat, Jalan Sungai is a vacant land Lot No. 74078, Mukim Pinang 4/1 & Jalan Sungai Chandong held for future & District of Klang, 26/KS11. development by Selangor Darul Ehsan, the Group. Malaysia. It is located within Pulau Indah Industrial Park which lies approximately 62 However, based on the kilometres & 22 kilometres south-west of assessment bill provided City Centre of Kuala Lumpur and Town by the Client, the Centre of Klang. property address is PT 152263, Jalan Sungai Notable industrial concerns found within Chandong 26/KS11, the general vicinity include the industrial Pulau Indah Industrial premises of F&N Dairies Manufacturing Park, 42920 Selangor Sdn Bhd, Solmax International Asia Darul Ehsan, Malaysia. Pacific Sdn Bhd, Ecolex Sdn Bhd, Scientex Great Wall Sdn Bhd, Oleon Sdn It is held under HSD Bhd, Ramly Food Industries Sdn Bhd, 158967/Lot PT 152263, Secret Recipe Manufacturing Sdn Bhd, Mukim and District of Hartasuma Sdn Bhd, Huat Swee Kim Sdn Klang, Selangor Darul Bhd, Yara International (M) Sdn Bhd and Ehsan, Malaysia. Dexion Asia Sdn Bhd to name a few.
The Property has a provisional title land area of 84,321.495 square metres (i.e. about 20.84 acres).
The Property has a 99-year leasehold interest, expiring on 30 October 2116 (unexpired term of approximately 98 years).
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Notes:
(1) The title search on the registered Document of Title (i.e. Lot PT 152263) issued by Registry of Land Titles, Selangor Darul Ehsan reveals that the Registered Owner of the Property is Infinity Logistics & Transport Sdn Bhd.
i. The provisional title land area is approximately 84,321.495 square metres (i.e. about 20.84 acres) and is designated for light industrial usage.
ii. The annual Quit Rent (Cukai Tanah) amounts to RM55,231.
(2) According to the Local Planning Guidelines of Klang Municipal Council, the Property is presently zoned for industrial usage.
(3) The salient terms of the Sale & Purchase Agreement (SPA) dated 15 January 2016 made between Central Spectrum (M) Sdn Bhd (the “Vendor”) and Infinity Logistics & Transport Sdn Bhd (the “Purchaser”) are summarised as follows:
• Particulars of the Lot : Lot No. 26, Phase 3A, Pulau Indah Industrial Park
• Land area : 20.84 acres (907,790.40 square feet)
• Category of use : Perusahaan (“Industrial”)
• Purchase price : RM34,496,035.20
• Maintenance charge : RM3,000.00 per acre/year (RM250.00 per acre/month) -services include domestic refuse collection, cleaning of public drains and grass cutting on the road reserves in relation to the Lot until such services are taken over by the Appropriate Authority(s).
• RM62,520 (for Year 2018)
• Basic infrastructure to : a. site clearance and earthworks; be provided for the Lot b. road and roadside drains excluding entrance/slab/bridge for drain (Fourth Schedule of the crossing; SPA) c. water reticulation mains to the vicinity of the Lot; d. electrical substations within the vicinity of Lot; and e. telephone ductworks and manholes to the vicinity of the Lot.
• Delivery of the vacant The Vendor shall deliver vacant possession of the Lot to the Purchaser possession (under clause upon completion of the Basic Infrastructure provided in the Fourth 13.1 of the SPA) Schedule herein. The vacant possession of the Lot shall be delivered to the Purchaser within thirty six (36) months from the date of the agreement.
• Based on the legal opinion provided by DLT, the Vendor has issued a notice of delivery of vacant possession on 28 August 2017.
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• Construction of premises : 17.2 The Purchaser shall within twelve (12) months from the date of (under clauses 17.2 & the delivery of the vacant possession apply to and submit the 17.3 of the SPA) * development order and building plans for the approval to the Appropriate Authority for the construction of factory and building as approved for the industrial purposes in accordance with the guidelines and requirement as set out by the Appropriate Authority.
17.3 The Purchaser shall within thirty six (36) months from the date of delivery of vacant possession commence the construction of the building at the Lot as approved for industrial purposes in accordance with the guidelines and requirements as set out by the Appropriate Authority.
*Note:
Vacant Possession of the site was issued by the Vendor on 28 August 2017. The Purchaser has an unfulfilled obligation to apply to construct building(s) within 12 months (i.e. on 27 August 2018) and commence the construction within 36 months (i.e. on 27 August 2020). We note that no plan has been submitted to date. This non-fulfilment may trigger the rights of the Vendor under the SPA to annul the sale and re-transfer the Property with full refund of the payment paid, excluding any compensation paid to the Purchaser.
(4) Based on the Legal Opinion Letter provided by the lawyer’s (DLT), they are of the view that the Vendor (Central Spectrum (M) Sdn Bhd) is unlikely to commence any action against the Purchaser (Infinity Logistics & Transport Sdn Bhd) over the said land and even if an action is taken, any damages is nominal as they do not foresee any damages that would be suffer by the Vendor.
(5) The annual Assessment Rate (Cukai Pintu) for 2019 amounts to RM49,014.
(6) We have been provided with a legal opinion on the Property by Group’s legal adviser, which contains, inter alia, the following information:
i. Infinity Logistics & Transport Sdn Bhd is presently the Registered Owner of the Property; and
ii. a charge is registered against the Property in favour of Hong Leong Bank Berhad.
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VALUATION REPORT
Group III – Property tenanted by the Group in Malaysia
Market Value in Particulars of existing state as at No. Property Description and tenancy details occupancy 3 April 2019
3. Two adjoining 3- & 4-storey The Properties comprises two adjoining shopoffices As at the valuation No commercial value shopoffices, as follows: date, the Properties were occupied Nos.2&4,Jalan Kasuarina 8, • No. 2 (4-storey corner shopoffice); & (tenanted) by Infinity Bandar Botanic 41200 Klang, • No. 4 (3-storey intermediate shopoffice). Logistics & Transport Selangor Darul Ehsan, Sdn Bhd. Malaysia. It is located within Bandar Botanik which lies approximately 48 kilometres south-west & 9 It is held under HSD kilometres south of City Centre of Kuala Lumpur 126573/Lot PT 118018 & HSD and Town Centre of Klang respectively. 126574/Lot PT 118019, both within Mukim and District of Developments within Bandar Botanik comprise Klang, Selangor Darul Ehsan, mainly of terraced houses, semi-detached houses, Malaysia. detached houses, serviced apartments/ condominiums, shopoffices, a shopping mall and vacant lands earmarked for future development.
Provisional Title Land Area • No. 2: Approximately 4,300 square feet; & • No. 4: Approximately 1,870 square feet
Based on the latest tenancy agreement dated 1 March 2019, the Properties has a total lettable area of approximately 17,154 square feet.
The Properties were completed in 2008.
The Properties are tenanted by Infinity Logistics & Transport Sdn Bhd from Infinity Shipping Sdn Bhd (do not form part of the Group) for a 3-year term commencing on 1 January 2019 at a monthly rental of RM15,000 with an option to renew for a further 1-year term.
Notes:
(1) According to HSD 126573/Lot PT 118018 & HSD 126574/Lot PT 118019 issued by Registry of Land Titles, Selangor Darul Ehsan, the Registered Owner of the Properties is Infinity Shipping Sdn Bhd. The provisional title land areas are as follows:
• No. 2, Jalan Kasuarina 8/KS7 - Approximately 4,300 square feet; &
• No. 4, Jalan Kasuarina 8/KS7 - Approximately 1,870 square feet
and both are designated for commercial.
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(2) No copies of the original Approved Building Plan have been provided. The Properties were physically measured on-site and the said floor plan were re-drawn accordingly. The gross floor areas of the properties are estimated at:
• No. 2, Jalan Kasuarina 8/KS7 - approx. 12,000 square feet; &
• No. 4, Jalan Kasuarina 8/KS7 –approx. 5,000 square feet.
Based on the Tenancy Agreement dated 1 March 2019, the lettable area reported is at approximately 17,154 square feet.
(3) The Properties are tenanted by Infinity Logistics & Transport Sdn Bhd from the landlord for a 3-year term commencing on 1 January 2019 at a monthly rental of RM15,000 with an option to renew for a further 1-year term.
(4) We have been provided with a legal opinion on the Properties prepared by Group’s legal adviser, which contains, inter alia, the following information:
i. the Tenancy Agreement dated 1 March 2019 is legally binding; and
ii. the Group has the right to hold and enjoy the Properties during the term of the tenancy.
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