2.0 Information on FMMSB

FMMSB was incorporated as FLE (JB) Sdn Bhd, a private limited company in Malaysia on 4 June 1982 and assumed its present name, Freight Management (M) Sdn Bhd in year 1996. The issued and paid up capital of FMMSB is RM2,000,000.00 comprising 2,000,000 ordinary shares of RM1.00 each.

The principal activity of FMMSB is the provision of freight services.

FMMSB is a wholly-owned subsidiary of FMHB.

3.0 Details of the Acquisition of Property

3.1 Information on the Property

The Property, a leasehold land together with the buildings and/or structure erected thereon is bearing postal address Lot 24, Lebuh Sultan Mohamed 1, Kawasan Perindustrian Bandar Sultan Sulaiman, 42000 Port Klang, Selangor Darul Ehsan. The Vendor, OSK Trustees Berhad, the Trustee for Axis-REIT, on behalf of Axis-REIT, had entered into the agreement in relation to the disposal of the Property.

Description of Property : Axis North Port LC 1

The Property was valued by Colliers, Jordan Lee & Jaafar (S) Sdn Bhd on 12 November 2010 using the Cost Method of valuation.

3.2 Basis and Justification of Purchase Consideration

The acquisition of the said Property by FMMSB for a cash consideration of RM14.5 million (“Purchase Price”) was arrived at on a willing buyer–willing seller basis, after taking into account the total market value of the Property of RM14,550,000.00 as appraised by Colliers, Jordan Lee & Jaafar (S) Sdn Bhd in its valuation report, and free from all encumbrances subject however to all conditions of the title and restriction in interest whether expressed or implied and the existing “as is where is” condition of the Property and with vacant possession at the Purchase Price and upon the terms and conditions and stipulations contained in the SPA.

The Purchase Price, fully funded by internally generated funds, shall be paid by the Purchaser in the following manner:-

i) the sum of RM290,000.00 ("Earnest Deposit”) already paid to the Vendor’s Solicitors as stakeholders prior to the date of the SPA; and

ii) upon the execution of the SPA:-

a) a sum of RM870,000.00 ("Balance Deposit”) to be paid by the Purchaser to the Vendor directly;
b) a sum of RM290,000.00 (“Retention Sum”) to be paid by the Purchaser to the Vendor’s Solicitors to be held by the Vendor’s Solicitor as stakeholders and to be dealt with in the manner set out in the SPA; and

iii) the balance of the Purchase Price amounting to RM13,050,000.00 to be paid to the Vendor’s Solicitors as stakeholders within three (3) months from the date of the SPA or within one (1) month from the Unconditional Date, whichever date is the later to be dealt with in accordance with the provisions of the SPA.

3.3 Financial Information on the Property

The net book value of the Property was not available.

3.4 Liabilities to be Assumed

The Property is purchased free from encumbrances. No liabilities will be assumed by FMMSB.

4.0 Conditions Precedent

4.1 The sale and purchase of the said Property shall be conditional upon the consent for the transfer of the said Property from the Vendor in favour of the Purchaser being obtained from the Pihak Berkuasa Negeri (“Consent to Transfer”) by the Vendor, at its own cost and expense, for the transfer of the said Property in favour of the Purchaser, within six (6) months from the date of the SPA with the option of the Purchaser to extend for a further three (3) months upon expiry thereof (“Approval Period”).

4.2 The Vendor shall forthwith within fourteen (14) days upon the execution of the SPA, submit and apply to the Pihak Berkuasa Negeri for the Consent to Transfer and shall do and execute all acts, things and documents and supply such information as may be necessary for the purpose of such application, at the Vendor’s own costs and expense.

4.3 Simultaneously with the execution of the SPA, the Vendor shall execute a valid and registrable Memorandum of Transfer for the purpose of effecting the transfer of the said Property in favour of the Purchaser free from all Encumbrances subject to all conditions of title and restrictions in interest whether expressed or implied and the existing category of land use affecting the title to the Property and deposit the same with the Purchaser’s Solicitors as stakeholders.

5. The rationale for the Proposed Acquisition

To accommodate the growth in FMHB Group’s warehousing and distribution activities.

6. Directors’ and Major Shareholders’ Interest

None of the Directors, major shareholders of the Company and/or persons connected with them has any interest, direct and/or indirect in the Proposed Acquisition of Property.

7. Effects of the Proposed Acquisition of Property

The Proposed Acquisition will not have any material effect on the net assets per share, earnings per share and gearing of FMHB Group and will have no effect on the share capital and substantial shareholders’ shareholding of the Company for the financial year ending 30 June 2011.

8. Risk Factor

The Board is unaware of any risks arising from the Proposed Acquisition of Property which could materially or adversely affect the financial and operating conditions of the FMHB Group.

9. Estimated Timeframe for Completion

Barring unforeseen circumstances, the Proposed Acquisition is expected to be completed in the fourth quarter of financial year ending 30 June 2011.

10. Statement by Directors

The Board of Directors of the Company is of the opinion that the Proposed Acquisition is in the best interest of the Company.

11. Approvals for the Proposed Acquisition of Property

The highest percentage ratio applicable to the proposal disposal of property is 13.91%, therefore the Proposed Acquisition of Property is not subject to the approval of the shareholders of the Company. However, the Proposed Acquisition is subject to the approval being obtained from the relevant State Authority approving the transfer of the Property by the Vendor to the Purchaser.

Save for the approval of the consent from the State Authority, the Proposed Acquisition is not conditional upon any other approval.

12 Document for Inspection

The SPA is available for inspection at the Company’s Registered Office, Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur from 8.30 a.m. to 5.30 p.m., Monday to Friday (except public holidays) for a period of two weeks from the date of this announcement.

For further reference kindly refer to the related announcement made by Axis Real Estate Investment Trust.

This announcement is dated 17 January 2011.