DIVINE RETURNS SDN. BHD.

PROPOSE TIMBER EXTRACTION, PROCESSING, EXPORT AND LAND DEVELOPMENT IN LIMBANG AREA, SARAWAK

LIST OF CONTENT
1. EXECUTIVE SUMMARY 2. BACKGROUND 3. PROPOSE TIMBER EXTRACTION 4. PROPOSE LAND DEVELOPMENT 5. CONCLUSION 6. ATTACHMENTS: I. COMPANY REGISTRATION & FORMS II. DESIGNATED AREA MAP III. LETTER OF UNDERTAKING

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EXECUTIVE SUMMARY
Devine Returns Sdn. Bhd. has been incorporated on 19 September 2010 with the main objective to explore and maximize the returns from the available resources. The company is a collaboration of the land owners and the prospect investors to explore and generate as much possible revenue from the nature resources awarded to the native land owners. Racha anak Urud that hold 30% of the share in the company is the legal representative of the various native land owners has agreed to assign available resources they have to the company and in return they has agreed to a reasonable rate and mode of payment for the entire project implementation period. The land owner also has agreed that they will not participate in any manner during the timber extraction, process or exporting exercise. The said land area is 250,000 acres thus the timber extraction and the palm oil plantation project will be carried out in 5 phases which cover at least 50,000 acres per phase for estimated period of 8 years on each phase. The timber from the Limbang, Sarawak is expected to be extracted within reasonable period of 20 to 30 years while the palm oil plantation will be carried out in phases according to the land clearing exercise. The expected income from the timber extraction is at RM15 Billion and the Palm Oil plantation is expected to generate at least RM750 Million a year after the fifth year of the plantation. The leasing period for the palm oil plantation has been agreed to be 60 years or two planting cycles. Investors are hereby invited to participate in this project on joint-operation basis and the brief working mechanisms are as below: a) The initial investment expected from the investor for the Phase One is at RM27.5 Million to cater for the payment to the respective authorities, parameter survey, construction of facilities such as access roads, sawmill, jetty and partial payment to Devine Returns shareholders. The investment expected from the investor for the following phases is at RM25 Million for every phase giving a total of investment from the investor as at RM127.5 Million or 51% from the total value of the land of RM250 Million based on the average land value of RM1,000 per acre. The joint-operation will be based on the share proportion of 51% and 49% for the investor and Devine Return respectively for the entire timber extraction project. The share proportion for the investor for the palm oil plantation will be maintained while 10% the Devine Returns proportion need to be given to the STIDC based on the present regulation. Therefore the share proportion during the Palm Oil plantation will be 51% to investor, 39% to Devine Return and 10% to STIDC.

b)

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BACKGROUND
Devine Returns Sdn. Bhd has been incorporated on 19 September 2010 with main objective to maximize the resources returns and utilizations to benefit the shareholders especially the land owners. The company is a collaboration of the land owners and the prospect investors which share mutual aspiration and efforts to explore and generate as much as possible revenue from the nature resources awarded to the native land owners. After series of discussions between the parties involved in this project, the land owner has agreed to participate in the project to develop the designated land belongs to them with the main intention to extract, process and export the timber available within the area and to carry out palm oil plantation project for a certain agreed period. The company shares holding for the timber extraction, process and export project has been agreed as Nor Azmi bin Wahab, Racha Anak Urud and Ghazali Md. Amin will hold 60%, 30%, and 10% respectively. Nor Azmi as the main coordinator is expected to source for the necessary resources for the timber extraction, process and. Ghazali is indentified as the representative of the other relevant parties for the execution and completion of the exercise. The land owner has agreed to assign the designated land belongs to them under the native land area scheme which is within the area of Limbang in the 5 th Area of Sarawak to the company and in return they has agreed to receive a reasonable rate and mode of payment from the project. They will remain holding the 30% share throughout the entire project period but will not in any manner interfere or involve in the management of the company during the implementation of the project. The agreed period for the timber extraction, process and exporting is between 20 to 30 years or any other proposed period while the expected period for the palm oil plantation is 60 years. The timber extraction will be done in 5 phases with 50,000 acres in every phase while the palm oil plantation will immediately be carry out once the land has been cleared. The expected shareholding of the company for the palm oil plantation is expected to be 51% holds by the investor, 39% by Devine Return and 10% by STIDC. The investor is also requested to propose for the rate and mode of payment to the land owner during the palm oil plantation project. The objective of this paper is to invite the interested investor/s to participate in the said project which expected to generate revenue of RM15 Billion from the Timber Extraction and RM45 Billion from the palm oil plantation.

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PROPOSE TIMBER EXTRACTION

The timber area is within the Limbang Area in fifth division of Sarawak. The land has been awarded to the native owners by the state government under several names representing the group of native races. The leaders from the races has mutually agreed to appoint Racha Anak Urud @ Peter Racha as their representative to undertake the necessary actions to generate revenue from available resources. The area is known as virgin forest area with numerous types of timbers from Berlian, Cengal, Meranti and others. The estimated area is more than 250,000 acres but for the purpose of calculation the said figure is taken into account even though the actual area will only can be determine after parameter survey has been carried out. The map and photo of the said area is as Attachement II. The expected timber output from each acre is estimated ranging from 30 tons to 50 tons with most of the areas has not been explored. The average output for the purpose of estimation is taken as 40 tons per acre. The price of timber from the different type of timber is between RM800 per tons to RM2800 per tons, but the average of RM1500 per tons is taken as the average for the calculation purpose. Based on the land area of 250,000 acres, average output of 40 tons per acre and price per ton of RM1500, the expected revenue from the timber extraction is estimated at RM15 Billion. Considering the cost of timber extraction, process and exporting around 30% of the total revenue, this will generate a total net profit to the joint operator of not less than RM10 Billion. The timber extraction will be carried out in five phases with 50,000 acres allocated for each phase. The completion period of each phase is expected in 6 to 8 years for the first phase but should be able to be reduced to 4 to 5 years per phase on the consecutive phases. Therefore the expected period to complete the timber extraction for the whole area is expected to be within 20 to 30 years. Considering the land value is at RM1,000 per acre in Sarawak, the total value of land is expected to be RM250 Million. Thus the investor is required to invest at least RM27.5 Million for the first phase and RM25 Million each for the following phases giving a total investment of RM127.5 Million for the whole 5 phases.

Based on the investment made, the share proportion and the expected revenue to investor from the timber extraction can be tabulated as below:

PHASE PHASE PHASE PHASE PHASE PHASE 1 2 3 4 5 TOTAL

INVESTMENT BY INVESTOR (RM MILLION) 27.5 25.0 25.0 25.0 25.0 127.5

INVESTOR SHARE (%) 51% 51% 51% 51% 51% 51%

EXPECTED REVENUE TO INVESTOR (RM BILLION) 1.53 1.53 1.53 1.53 1.53 7.65

On actual fact, the investor will only need to invest RM27.5 for the entire project as the investment for the 2nd phase onward can be withdrawn from the revenue generated during the first phase. Considering the total operational cost for the timber extraction is 30% from the total revenue, the net profit from the investment to the investor is expected to be RM5.36 Billion.

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PROPOSE LAND DEVELOPMENT

The propose land development is for the palm oil plantation or any other plantation which considered more valuable to investor. It is propose that the palm oil plantation to be carried out since it is proven as the high production and could produce high income after four years old until 25 years old. The plantation is proposed to be carried out in phases probably after 10,000 acres of clearing to maximize the return to investor. However for the purpose of calculation the total land area of 250,000 acres is taken into account while the total development period is agreed as 60 years. The cost for the plantation and maintenance of palm oil inclusive of planting, pruning and other activities for the first four years are estimated at RM9000 per acre per year. The total output after four (4) years is estimated to be 500kg or 0.5 ton per acre per month and if the average price per ton is estimated to be RM500 total income from the palm oil plantation is at RM250 per acre per month. Considering the total land area of 250,000 acre, total development period of 60 years (2 cycles), output of RM250per acre per month, therefore total revenue before cost is estimated as at RM45 Billion. The total cost for the 2 cycles is estimated to be at RM9000 x 250,000 x 4 years x 2 cycles or RM18 Billion. Considering the management cost for the production of the palm oil after the fourth years as at 30% of the total revenue of RM45 Billion, thus the total cost for the whole development project is estimated to be RM18 Billion plus RM15 Billion or RM33 Billion which gives the net profit not less than RM12 Billion for the two cycles or at least RM200 Million a year. The land owner is expected to receive 30% or RM60 Million a year from the net profit thus gives the expected return to the investor to be RM140 Million a year or RM8.4 Billion for the 60 years.

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CONCLUSION
INVESTOR/S ARE INVITED TO PARTICIPATE IN THE TIMBER EXTRACTION, PROCESSING, EXPORT AND PALM OIL PLANTATION PROJECT IN LIMBANG, SARAWAK AREA WHICH EXPECTED TO GENERATE NET PROFIT TO THE INVESTOR OF NOT LESS THAN RM7.65 BILLION FOR THE TIMBER EXTRACTION EXERCISE AND RM6.12 BILLION DURING FOR THE PALM OIL PLANTATION.