FAVELLE FAVCO BERHAD

Type	Reply to Query
Reply to Bursa Malaysia's Query Letter - Reference ID	IQL-30032018-00001
Subject	PROPOSED ACQUISITION BY FAVELLE FAVCO BERHAD OF 70% EQUITY INTERESTS IN EXACT AUTOMATION SDN BHD ("EXACT AUTOMATION"), SEDIA TEGUH SDN BHD, EXACT ANALYTICAL SDN BHD AND EXACT OIL & GAS SDN BHD ("PROPOSED ACQUISITION")
Description	FAVELLE FAVCO BERHAD ("FAVCO" OR "THE COMPANY")   PROPOSED ACQUISITION BY FAVCO OF 70% EQUITY INTERESTS IN EACH OF THE FOLLOWING COMPANIES:   (I)           EXACT AUTOMATION SDN BHD ("EXACT AUTOMATION"); (II)          SEDIA TEGUH SDN BHD ("SEDIA TEGUH"); (III)         EXACT ANALYTICAL SDN BHD ("EXACT ANALYTICAL"); AND (IV)         EXACT OIL & GAS SDN BHD ("EXACT OIL & GAS")   (HEREINAFTER REFERRED TO AS THE "PROPOSED ACQUISITION")
Query Letter Contents	We refer to your Company’s announcement dated 28 March 2018, in respect of the aforesaid matter. In this connection, kindly furnish Bursa Securities with the following additional information for public release:- 1)      Financial performance of the respective Target Companies for the past 3 years together with the adjusted net assets of the Target Companies for the FYE 2016. 2)      The nature and breakdown of net adjustments arising from due diligence on the Target Companies of approximately RM0.9 million. 3)      Rationale for the Purchase Consideration to be segregated into 3 different portions. 4)      Basis of using the 8 times PER to derive at the Initial Purchase Consideration. 5)      Further clarification as to why further adjustments are required for the Initial Purchase Consideration when the net adjustment of approximately RM0.9 million has been made pursuant to the due diligence on the Target Companies. 6)      Basis of using the 2 or 4 times PER to derive at the Incremental Purchase Consideration which is different from how the Initial Purchase Consideration is arrived at. 7)      Basis to derive at an indicative cumulative profit threshold of RM62.6 million. 8)      The timeframe for Exact Automation to declare the RM10 million dividend and for which financial year. 9)      Whether the Proposed Acquisition will signify the diversification pursuant to Paragraph 10.13 of the Main Market Listing Requirements. 10)    Outlook of the industrial automation industry and oil & gas industry in Malaysia as well as the prospects of the Target Companies. Please furnish Bursa Securities with your reply within one (1) market day from the date hereof.   Yours faithfully, HENG TECK HENG Vice President, Issuers, Listing, Regulation IJ/TEK Cc : Market Surveillance Dept. , Securities Commission (via fax)
We refer to our announcement dated 28 March 2018 in relation to the Proposed Acquisition (“Earlier Announcement"). Unless otherwise stated, defined terms used herein shall have the same meanings as defined in our Earlier Announcement. We wish to inform that we have received a notification from Bursa Malaysia Securities Berhad dated 30 March 2018 in relation to the additional clarification sought in relation to the Proposed Acquisition. Please refer to the attachment for our reply. This announcement is dated 2 April 2018.

Please refer attachment above.