GIKEN SAKATA (S) LIMITED - GSS Energy Limited€œOil Fields”: Means the Dandangilo-Wonocolo and...

CIRCULAR DATED 7 AUGUST 2014

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

This Circular is issued by Giken Sakata (S) Limited (the “Company”). If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately.

If you have sold or transferred all your shares represented by physical share certifi cate(s), you should at once hand this Circular to the purchaser or transferee or to the bank, stockbroker or agent through whom you effected the sale or transfer, for onward transmission to the purchaser or transferee.

This Circular has been prepared by the Company and its contents have been reviewed by the Company’s continuing sponsor, Stamford Corporate Services Pte. Ltd. (the “Sponsor”), for compliance with the relevant rules of the SGX-ST. The Sponsor has not independently verifi ed the contents of this Circular. The contact person for the Sponsor is Mr. Bernard Lui, at telephone no. (65) 6389 3000; email address [email protected].

This Circular has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this document, including the correctness of any of the statements or opinions made or reports contained in this Circular.

GIKEN SAKATA (S) LIMITED(Incorporated in the Republic of Singapore) (Company Registration No. 197903879W)

CIRCULAR TO SHAREHOLDERS

in relation to

(1) THE PROPOSED ACQUISITION OF 624,079 SHARES IN THE CAPITAL OF CEPU SAKTI ENERGY PTE. LTD. AS A MAJOR TRANSACTION;

(2) THE PROPOSED ISSUE AND ALLOTMENT OF 1,600,000 INTRODUCER SHARES TO TAM SIEW FOONG;

(3) THE PROPOSED ISSUE AND ALLOTMENT OF UP TO 80,000,000 PLACEMENT SHARES;

(4) THE PROPOSED DIVERSIFICATION; AND

(5) THE PROPOSED NEW SHARE ISSUE MANDATE.

Important Dates and Times

Last date and time for lodgement of Proxy Form : 20 August 2014 at 10.00 a.m. Date and time of Extraordinary General Meeting : 22 August 2014 at 10.00 a.m. Place of Extraordinary General Meeting : The Grassroots’ Club 190 Ang Mo Kio Avenue 8, Singapore 568046

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TABLE OF CONTENTS

PAGE

DEFINITIONS ..................................................................................................................................... 3

LETTER TO SHAREHOLDERS ......................................................................................................... 9

1. INTRODUCTION ....................................................................................................................... 9

2. THE ACQUISITION ................................................................................................................... 11

3. TRANSFER OF CONTROLLING INTEREST IN THE COMPANY PURSUANT TO THE ISSUANCE OF THE CONSIDERATION SHARES TO JPEL ................................................... 25

4. THE PROPOSED DIVERSIFICATION INTO THE NEW BUSINESS ....................................... 25

5. THE PLACEMENT OF SHARES .............................................................................................. 42

6. RATIONALE AND USE OF PROCEEDS ................................................................................. 45

7. FINANCIAL EFFECTS OF THE TRANSACTIONS .................................................................. 46

8. NEW SHARE ISSUE MANDATE .............................................................................................. 47

9. DIRECTORS’ OPINION ON WORKING CAPITAL ................................................................... 49

10. UNDERTAKING ........................................................................................................................ 49

11. RECOMMENDATION BY DIRECTORS ................................................................................... 49

12. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS ................................ 49

13. SHAREHOLDING STRUCTURE OF THE COMPANY ............................................................. 50

14. EXTRAORDINARY GENERAL MEETING ............................................................................... 51

15. INTER-CONDITIONALITY OF THE ORDINARY RESOLUTIONS TO BE PASSED ............... 51

16. ACTIONS TO BE TAKEN BY SHAREHOLDERS .................................................................... 51

17. DIRECTORS’ RESPONSIBILITY STATEMENT ....................................................................... 51

18. DOCUMENTS AVAILABLE FOR INSPECTION ...................................................................... 52

NOTICE OF EXTRAORDINARY GENERAL MEETING ..................................................................... N-1

PROXY FORM

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DEFINITIONS

In this Circular, the following defi nitions apply throughout except where the context otherwise requires:

“2013 AGM” : Has the meaning ascribed thereto in Section 8.1 of this Circular

“2013 General Mandate” : Has the meaning ascribed thereto in Section 8.1 of this Circular

“2014 Subscription” : Has the meaning ascribed thereto in Section 8.1 of this Circular

“3M2014” : Has the meaning ascribed thereto in Section 2.1.3 of this Circular

“Acquisition” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Adjustment Event” : Has the meaning ascribed to it in Section 2.4.6 of this Circular

“a nnual general meeting” : An annual general meeting of the Company

“Associate” : (a) in relation to any Director, chief executive officer, Substantial Shareholder or Controlling Shareholder (being an individual) means:

(i) his immediate family;

(ii) the trustees of any trust of which he or his immediate family is a benefi ciary or, in the case of a discretionary trust, is a discretionary object; and

(iii) any company in which he and his immediate family together (directly or indirectly) have an interest of 30% or more; and

(b) in relation to a Substantial Shareholder or a Controlling Shareholder (being a Company) means any other company which is its subsidiary or holding company or is a subsidiary or holding company or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30% or more

“Benchmark” : Has the meaning ascribed to it in Section 2.4.6 of this Circular

“Blue Water” : Blue Water Engineering Pte Ltd (Company Registration No. 199101832Z), a company incorporated in Singapore and having its registered address at 45 Cantonment Road, Singapore 089748

“Blue Water Shareholders” : Has the meaning ascribed thereto in Section 2.2 of this Circular

“Blue Water Shares Moratorium”

: Has the meaning ascribed thereto in Section 2.4.5 of this Circular

“Board” : The board of Directors of the Company as at the Latest Practicable Date

“Business Day” : A day (other than a Saturday, Sunday or public holiday in Singapore or Indonesia) on which commercial banks are generally open for business in Singapore and Indonesia

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DEFINITIONS

“Cash Consideration” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Catalist” : The Catalist Board of the SGX-ST

“CDP” : The Central Depository (Pte) Limited

“Circular” : This circular to Shareholders dated 7 August 2014

“Code” : The Singapore Code on Take-overs and Mergers

“Companies Act” : The Companies Act (Chapter 50) of Singapore as amended, modifi ed or supplemented from time to time

“Company” : Giken Sakata (S) Limited

“Completion” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Completion Date” : Has the meaning ascribed thereto in Section 2.4.3(e) of this Circular

“Concessions” : The rights granted by the Minister of Energy and Mineral Resources of Indonesia to PEP to operate and produce oil from the Oil Fields

“Consideration” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Consideration Shares” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Controlling Interest” : The interest of the Controlling Shareholder(s)

“Controlling Shareholder” : A person who (a) holds directly or indirectly 15% or more of the total number of issued shares excluding treasury shares in the Company or (b) in fact exercises control over the Company

“Cooperation Agreements” : Means (a) the Tungkul Agreement; (b) the Dandangilo Agreement; and (c) the Kawengan Agreement

“Dandangilo Agreement” : The cooperation agreement on the Management of Old Wells at Dandangilo – Wonocolo and Ngrayong Fields in Kedewan – Bojonegoro, East Java between KUD SP and PT Cepu dated 25 March 2013

“Dandangilo-Wonocolo and Tungkul Oil Fields”

: Has the meaning ascribed thereto in Section 2.1.1 of this Circular

“Director” : A director of the Company as at the Latest Practicable Date

“Diversifi cation” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“EGM” : The extraordinary general meeting of the Company to be convened and held on 22 August 2014 at 10.00 a.m. at The Grassroots’ Club, 190 Ang Mo Kio Avenue 8, Singapore 568046, the notice of which is set out on page N-1 of this Circular

“EPS” : Earnings per Share

“Evidence of Renewal” : Has the meaning ascribed thereto in Section 2.4.1.2 of this Circular

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DEFINITIONS

“First Tranche” : Has the meaning ascribed thereto in Section 2.4.1.2 of this Circular

“FY2011” : Has the meaning ascribed thereto in Section 2.1.3 of this Circular



“Group” : The Company and its subsidiaries

“GSIHL” : Giken Sakata Investment Holdings Limited (BVI Company No. 1822606), a company incorporated in the British Virgin Islands, and having its registered address at P.O. Box 957, Offshore Incorporations Centre Road Town, Tortola, British Virgin Islands

“Introducer” : Tam Siew Foong

“Introducer Consideration” : Has the meaning ascribed to it in Section 2.4.2 of this Circular

“Introducer Moratorium” : Has the meaning ascribed thereto in Section 2.4.5 of this Circular

“Introducer Shares” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“JPEL” : Java Petral Energy Pte. Ltd. (Company Registration No. 201302594W), a company incorporated in Singapore and having its registered address at 45 Cantonment Road, Singapore 089748

“JPEL Shareholders” : Has the meaning ascribed thereto in Section 2.2 of this Circular

“JPEL Shares Moratorium” : Has the meaning ascribed thereto in Section 2.4.5 of this Circular

“Kawengan Agreement” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Kawengan Oil Field” : Has the meaning ascribed thereto in Section 2.1.1 of this Circular

“Key Management Team” : Has the meaning ascribed thereto in Section 2.1.2 of this Circular

“KUD SP” : Village Cooperative (Koperasi Unit Desa) Sumber Pangan, a village cooperative and a company incorporated in Indonesia

“Latest Practicable Date” : 31 July 2014, being the latest practicable date prior to the printing of this Circular

“Listing Manual” : Listing Manual Section B: Rules of Catalist of the SGX-ST, as may be amended, varied or supplemented from time to time

“MMstb” : Millions of stock tank barrels

“Moratorium Period” : Has the meaning ascribed thereto in Section 2.4.5 of this Circular

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DEFINITIONS

“Mother Agreements” : Has the meaning ascribed thereto in Section 2.4.4.1 of this Circular

“Net Proceeds” : Has the meaning ascribed thereto in Section 6 of this Circular

“New Business” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“New Share Issue Mandate” : Has the meaning ascribed thereto in Section 8.1 of this Circular

“Notice of EGM” : The notice of the EGM which is set out on page N-1 of this Circular

“NPV10” : Has the meaning ascribed thereto in Section 2.4.4.3 of this Circular

“NTA” : Net tangible assets

“Offer Information Statement” : Has the meaning ascribed thereto in Section 5 of this Circular

“Oil Fields” : Means the Dandangilo-Wonocolo and Tungkul Oil Fields and the Kawengan Oil Field

“Ordinary Resolutions” : The ordinary resolutions 1 to 5 set out in this Circular and in the Notice of EGM

“Parties” : The parties to each of the SPA and the Supplemental Agreement, being the Company, GSIHL and JPEL

“PEP” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Permitted Transferee” : Has the meaning ascribed to it in Section 2.4.5 of this Circular

“Placees” : The placees procured and/or to be procured, on a commercially reasonable efforts basis, by the Placement Agent to subscribe for the Placement Shares

“Placement” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Placement Agent” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Placement Agreement” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Placement Price” : The price per Placement Share

“Placement Shares” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Pledged Shares” : Has the meaning ascribed to it in Section 2.4.6 of this Circular

“Possible Reserves” : Those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recoverable than Probable Reserves

“Probable Reserves” : Those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Resources but more certain to be recovered than Possible Reserves

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DEFINITIONS

“Proved Reserves” : Those quantities of petroleum, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defi ned economic conditions, operating methods, and government regulations

“PT Cepu” : PT Cepu Sakti Energy, a company incorporated in Indonesia

“PT SPJ” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“PT SPJ Mother Agreement” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“PT SPJ and 1st KUD SP Mother Agreements”

: Means (a) the Production of Oil from Old Wells Agreement between PEP and PT SPJ dated 3 November 2010 ; and (b) the Production of Oil from Old Wells Agreement between PEP and KUD SP dated 31 October 2012

“QPR” : Has the meaning ascribed to it in Section 2.4.4 of this Circular

“Reg. ESDM No. 1/2008” : Regulation of the Minister of Energy and Mineral Resources No. 1 of 2008 regarding the Guidelines for the Exploitation of Oil Mining in the Old Wells

“Reserves” : Those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions

“Sale Shares” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Second Tranche” : Has the meaning ascribed to it in Section 2.4.1.2 of this Circular

“SFA” : Securities and Futures Act (Cap. 289) of Singapore, as amended, modifi ed or supplemented from time to time

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Share” : An ordinary share in the capital of the Company

“Shareholders” : Registered holders of Shares, except where the registered holder is CDP, in which case the term “Shareholders” shall in relation to such Shares mean the Depositors whose securities accounts maintained with CDP are credited with Shares

“Shareholder’s Loan” : Has the meaning ascribed to it in Section 2.4.10 of this Circular

“SPA” : The sale and purchase agreement between the Company, GSIHL and JPEL dated 31 May 2014, as amended by the Supplemental Agreement

“Sponsor” : The continuing sponsor of the Company, Stamford Corporate Services Pte. Ltd.

“Substantial Shareholder” : Shareholders who are benefi cial owners of 5% or more of the Shares

“Supplemental Agreement” : Has the meaning ascribed thereto in Section 1.1 of this Circular

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DEFINITIONS

“Target” : Cepu Sakti Energy Pte. Ltd. (Company Registration No. 200207320H), a company incorporated in Singapore and having its registered address at 45 Cantonment Road, Singapore 089748

“Target Group” : The Target and its subsidiaries

“Transactions” : Has the meaning ascribed thereto in Section 1.1 of this Circular

“Tungkul Agreement” : The cooperation agreement on the Management of Old Wells at Tungkul and Trembul Fields in Blora – Central Java between PT SPJ and PT Cepu dated 28 February 2013

“VWAP” : Volume weighted average price of the Shares

“%” : Per centum or percentage

“S$” and “cents” : Singapore dollars and cents, respectively

“US$” and “cents” : United States dollars and cents, respectively

The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the respective meanings ascribed to them in Section 130A of the Companies Act.

Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations.

Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defi ned under the Companies Act, the Listing Manual or any modifi cation thereof and used in this Circular shall have the meaning assigned to it under the Companies Act, the Listing Manual or any modifi cation thereof, as the case may be.

Any reference to a time of day in this Circular shall be a reference to Singapore time unless stated otherwise.

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LETTER TO SHAREHOLDERS


Directors: Registered Offi ce:

Mr. Chin Siew Gim (Non-Executive Chairman, Independent Director) 50 Raffl es PlaceMr. Yeung Kin Bond, Sydney (Non-Executive Non-Independent Director) #32-01 Singapore Land Tower,Mr. Tan Kay Guan (Chief Executive Offi cer, Executive Director) Singapore 048623Mr. Ng Say Tiong (Executive Director)Mr. Lee Kok Wah (Non-Executive Non-Independent Director) Mr. Chee Sanford (Independent Director)Mr. Valentin Schillo (Independent Director)

7 August 2014

To: The Shareholders of the Company

Dear Sir / Madam

(1) THE PROPOSED ACQUISITION OF 624,079 SHARES IN THE CAPITAL OF CEPU SAKTI ENERGY PTE. LTD. AS A MAJOR TRANSACTION;

(2) THE PROPOSED ISSUE AND ALLOTMENT OF 1,600,000 INTRODUCER SHARES TO TAM SIEW FOONG;

(3) THE PROPOSED ISSUE AND ALLOTMENT OF UP TO 80,000,000 PLACEMENT SHARES;

(4) THE PROPOSED DIVERSIFICATION; AND

(5) THE PROPOSED NEW SHARE ISSUE MANDATE

1. INTRODUCTION

1.1 Overview

The Acquisition

On 1 June 2014, the Company announced that it entered into a sale and purchase agreement with GSIHL and JPEL dated 31 May 2014, pursuant to which GSIHL shall acquire 624,079 ordinary shares in the capital of the Target representing approximately 53.6842% of the issued share capital of the Target (the “Sale Shares”) from JPEL for an aggregate consideration of up to S$48.0 million (the “Acquisition”). The Company further announced on 30 June 2014 that the Target Group has informed the Company that the Production of Oil from Old Wells Agreement between PT Pertamina EP1 (“PEP”) and PT Sarana Patra Jateng2 (“PT SPJ”) dated 3 November 2010 (the “PT SPJ Mother Agreement”) has been extended until 3 November 2020, and on 2 July 2014 that it entered into a supplemental agreement with GSIHL and JPEL dated 2 July 2014 (the “Supplemental Agreement”) to amend the terms of the sale and purchase agreement dated 31 May 2014. The Company also announced on 16 July 2014 that the Target Group has informed the Company that it has entered into a cooperation agreement on the

1 JPEL has informed the Company that PEP is an Indonesian national oil major who holds the rights to operate and produce oil in the relevant Oil Fields.

2 JPEL has informed the Company that PT SPJ has been granted a right from PEP to operate the old wells at the Tungkul and Trumbul fi elds in Blora, Central Java.

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Management of Old Wells located in the Village Kawengan, District Kedewan, Bojonegoro with KUD SP dated 20 June 2014 (the “Kawengan Agreement”). The Company further announced on 23 July 2014 that the Target Group had notifi ed the Company on the extension of the PT SPJ Mother Agreement based on a letter issued by PEP to PT SPJ, committing that PEP will extend the PT SPJ Mother Agreement until 3 November 2020 and that, pursuant to further discussions with the Company’s Indonesian legal counsel and the Target Group, the Company has been advised that further formalities may need to be fulfi lled before the extension of the PT SPJ Mother Agreement is legally completed.

GSIHL is a wholly-owned subsidiary of the Company, which was incorporated as part of the Company’s ongoing business development. For further details, please refer to the Company’s announcement dated 7 May 2014.

The aggregate consideration for the Acquisition (the “Consideration”) shall be the sum of up to S$48.0 million to be satisfi ed by GSIHL and the Company in the following manner upon completion of the Acquisition (the “Completion”):

(a) S$25,200,000 of the Consideration shall be satisfi ed in cash (the “Cash Consideration”) in two (2) tranches; and

(b) S$22,800,000 shall be satisfi ed by the issue and allotment of 76,000,000 new ordinary shares in the capital of the Company (the “Consideration Shares”) to JPEL at the issue price of S$0.30 per Consideration Share, all of which shall rank pari passu with the existing issued ordinary shares of the Company.

Subject to and upon Completion, the Company shall issue and allot 1,600,000 new Shares (the “Introducer Shares”) at the issue price of S$0.30 per Introducer Share to Tam Siew Foong, as consideration for her services for introducing the Company and GSIHL to the Target in respect of the Acquisition.

The Placement

On 11 July 2014, the Company further announced that it has entered into a placement agreement with Religare Capital Markets (Singapore) Pte. Limited (the “Placement Agent”) dated 11 July 2014 (the “Placement Agreement”) pursuant to which the Company proposes to issue up to 80,000,000 new ordinary shares in the capital of the Company (the “Placement Shares”), amounting to an aggregate amount of S$24,000,000 (assuming 80,000,000 Placement Shares are issued at the minimum Placement Price of S$0.30 per Placement Share) (the “Placement”). The Placement Agent and the Company may agree on a Placement Price which is higher than the minimum Placement Price of S$0.30 per Placement Share.

In connection with the Acquisition, the Group also intends to diversify its business scope (the “Diversifi cation”) to include the business of exploration, exploitation and production of oil and gas as well as the provision of services to the upstream oil and gas sector (the “New Business”). This includes the business of the Target Group, which involves the provision of services in relation to the operation and production of oil in the Oil Fields, including the procurement of equipment, transportation of the oil, manpower and injecting working capital. Please refer to Section 2.1 and Section 4.1 of this Circular for more information about the Target Group and the scope of the New Business respectively.

The Acquisition, the issue and allotment of the Introducer Shares to the Introducer, the Placement and the Diversifi cation are collectively referred to as, the “Transactions”.

In addition, as the issuance of the 2014 Subscription had substantially exhausted the 2013 General Mandate, the Company intends to seek Shareholders’ approval for the proposed New Share Issue Mandate.

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1.2 Extraordinary General Meeting

The Board is proposing to convene the EGM to seek Shareholders’ approval in respect of the Ordinary Resolutions 1, 2, 3 and 4 to approve the Transactions, and in respect of Ordinary Resolution 5 to approve the proposed New Share Issue Mandate.

1.3 Purpose of this Circular

The purpose of this Circular is to provide Shareholders with information relating to, and the rationale for, the Ordinary Resolutions and to seek Shareholders’ approval for the same at the EGM to be held on 22 August 2014 at 10.00 a.m. at The Grassroots’ Club, 190 Ang Mo Kio Avenue 8, Singapore 568046. The Notice of EGM is set out on page N-1 of this Circular.

This Circular has been prepared solely for the purposes set out herein and may not be relied upon by any persons (other than the Shareholders to whom this Circular is dispatched to) or for any other purpose.

SHAREHOLDERS SHOULD NOTE THAT THE ORDINARY RESOLUTIONS 1, 2, 3 AND 4 ARE INTER-CONDITIONAL. ACCORDINGLY, THE APPROVAL OF A TRANSACTION OF AN ORDINARY RESOLUTION IS INTER-CONDITIONAL WITH THE APPROVAL OF EACH OF THE OTHER TRANSACTIONS TO BE APPROVED IN THE OTHER ORDINARY RESOLUTIONS. ORDINARY RESOLUTION 5 IS NOT INTER-CONDITIONAL WITH ANY OF THE OTHER RESOLUTIONS.

2. THE ACQUISITION

Subject to the terms and conditions of the SPA, GSIHL has agreed to purchase, and JPEL has agreed to sell, the Sale Shares, free from any charge, pledge, lien or other encumbrances, and together with all rights, benefi ts and entitlements attaching thereto, for an aggregate consideration of up to S$48.0 million.

GSIHL shall not be obliged to complete the purchase of any of the Sale Shares unless the purchase of all the Sale Shares is completed simultaneously.

2.1 Information on the Target Group

The information presented herein and in other sections of this Circular relating to information on the Target Group is based on information provided by JPEL and the Target Group.

2.1.1 Information on the Target and PT Cepu

The Target is the corporate headquarter of the Target Group (comprising the Target and PT Cepu), and was incorporated in Singapore in 2002. The Target owns 95% of the issued and paid-up share capital of PT Cepu, while the remaining 5% of the issued and paid-up share capital of PT Cepu is owned by Muhammad Saleh and Ario Djoko Damar in equal parts, who are also shareholders of JPEL.

As at the date of this Circular, PT Cepu has signed Cooperation Agreements with PT SPJ and KUD SP. Pursuant to the Tungkul Agreement and the Dandangilo Agreement, PT Cepu has been granted exclusive rights to cooperate in conducting operations for extracting oil from two (2) oilfi elds in (a) the Tungkul and Trumbul fi elds in Blora, Central Java, and (b) the Dandangilo-Wonocolo fi elds in Bojonegoro, East Java, Indonesia, with a total of 148 oil wells (the “Dandangilo-Wonocolo and Tungkul Oil Fields”). Under the Tungkul Agreement and the Dandangilo Agreement, PT Cepu is responsible for the operations of the old wells, including the procurement of equipment, transportation of the oil, manpower and injecting working capital. In return for its operational services, it has the right to acquire a substantial proportion of the revenues arising from the oil that is produced. Pursuant to the Kawengan Agreement, PT Cepu

12


has been granted the right to manage at least 91 old oil wells located in the Village Kawengan, District Kedewan, Bojonegoro (the “Kawengan Oil Field”). Under the Kawengan Agreement, PT Cepu is responsible for funding the drilling and the operational costs of the old oil wells and bearing the costs incurred for deepening wells in return for the rights to 80% of the revenues arising from the oil that is produced.

As at the Latest Practicable Date, the Dandangilo-Wonocolo and Tungkul Oil Fields are producing a minimum of 300 barrels of crude oil per day. Please refer to Section 2.4.4 of this Circular for more information about the Oil Fields.

Based on the unaudited consolidated fi nancial statements of the Target Group for the 3 month period ended 31 March 2014, the consolidated net asset value of the Target Group as at 31 March 2014 was S$3.96 million.

The corporate structure of the Target Group after the Acquisition has been completed will be as follows:

JAVA PETRAL ENERGY PTE LTD

CEPU SAKTI ENERGY PTE LTD

PT CEPU SAKTI ENERGY

Muhammad Saleh & ArioDjoko Damar

TUNGKUL KAWENGAN

5.0%95.0%

DANDANGILO -WONOCOLO

GIKEN SAKATA (S) LIMITED

53.7% 46.3%

Oil in place: 19.3 MMstb1

30 wellsOil in place: 47.5 MMstb1

109 wellsat least 91 wells

Note:

(1) Source: Senergy Oil & Gas (Singapore) Pte Ltd – Reserves and Resource Estimation of Dandangilo-Wonocolo and Tungkul Fields (a Qualifi ed Person’ Report), Table 4 Stock Tank Oil Initially In-Place dated May 2014

2.1.2 K ey Management of the Target Group

The key management team of the Target Group as at Completion comprises Lee Kok Wah, Charles Madhavan, Muhammad Saleh and Ario Djoko Damar (the “Key Management Team”). The working and business experience of the Key Management Team are as follows:

Lee Kok Wah is the Executive Chairman of the Target and has more than 30 years of experience in the corporate, fi nance and capital markets, with emphasis on the marine and shipping sectors. He was previously with Otto Marine Ltd, a listed company on the SGX-ST, from 2003 to 2011 and held various capacities at different stages, including being appointed as its Managing Director and Group Chief Executive Offi cer. Lee Kok Wah was also appointed as a Director pursuant to the Acquisition on 4 July 2014.

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Charles Madhavan is the Managing Director of the Target and has overall responsibility for the operations of the Target Group. He has more than 30 years of experience in oil and gas construction and drilling, with expertise in managing and operating land drilling rigs and sludge processing plants. Prior to heading up Blue Water Consultants International Ltd, he was the Managing Director of Rotary Environmental Pte Ltd from 1996 to 2000. He also has former experience working in a number of large oil and gas players, such as Chevron and Unocal.

Muhammad Saleh is the President Director of PT Cepu, and has more than 30 years of commercial experience in the Indonesian oil and gas industry, and has worked with PT Ekamaro Sakti and Mobil Oil Indonesia.

Ario Djoko Damar is responsible for the administration and general affairs (including health, safety and environmental matters) of PT Cepu, has more than 30 years of experience in the oil and gas, petrochemical, energy and heavy industrials and engineering sectors, with stints at PT Satoro Energy, KBR, Inc. (formerly known as Kellogg Brown & Root) and PT Inti Karya Persada Tehnik.

Save as disclosed in Sections 2.2 and 2.4.8 and the appointment of Lee Kok Wah as a Director, none of the Key Management Team is related, directly or indirectly, to the Company, its Directors and/or their Associates and none of the Key Management Team is a Substantial Shareholder or an Associate of any Substantial Shareholder.

2.1.3 S ummary of Financial Information of the Target Group

The consolidated income statement of the Target Group for the last three (3) calendar years ended 31 December 2011 (“FY2011”), 31 December 2012 (“FY2012”), 31 December 2013 (“FY2013”) and the three (3) months ended 31 March 2014 (“3M2014”) and the consolidated balance sheet of the Target Group as at 31 December 2013 and 31 March 2014 are set out below. The fi nancial fi gures presented below are based on the audited fi nancial statements of the Target Group for FY2012 and the unaudited fi nancial statements of the Target Group for FY2011, FY2013 and 3M2014, and have been prepared in accordance with the Singapore Financial Reporting Standards.

(a) Summary of Consolidated Income Statement

(S$’000) FY2011 FY2012 FY2013 3M2014

Revenue – – 1,634 1,075

Cost of Sales – – (619) (362)

Gross Profi t – – 1,015 713

Earnings before interest, taxes, depreciation, and amortization

(0.4) (211) (445) 353

Profi t before tax (0.4) (211) (617) 290

Profi t after tax (0.4) (211) (617) 168

(b) Summary of Consolidated Balance Sheet

(S$’000) As at 31 December 2013 As at 31 March 2014

Non-current Assets 2,347 4,962

Current Assets 2,471 2,680

Non-current Liabilities – –

Current Liabilities 1,141 3,684

Net Assets 3,677 3,958

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2.2 Information on JPEL

The information presented herein and in other sections of this Circular relating to information on JPEL is based on information provided by JPEL.

JPEL is an investment holding company incorporated in Singapore in 2013. The shareholders of JPEL and their respective shareholdings in JPEL (the “JPEL Shareholders”) are as follows:

JPEL Shareholder Number of shares held in JPEL

Approximate percentage shareholding in JPEL

Blue Water (1) 280,000 30.4%

Howard James Smith 46,000 5.0%

Lee Kok Wah 161,000 17.5%

Ong Chin Yew 49,000 5.3%

Yaw Chee Siew 175,000 19.0%

Muhammad Saleh 105,000 11.4%

Ario Djoko Damar 105,000 11.4%

Total 921,000 100%

Note:

(1) Blue Water is an investment holding company which is equally owned by Charles Madhavan and Anthony Clive Reudavey (collectively, the “Blue Water Shareholders”).

2.3 Rationale and Benefi ts of the Acquisition

The Group is currently engaged in the (i) manufacturing of microshafts and plastic injection moulding parts; (ii) assembly of mechanisms and printed circuit board assembly used in a range of electronic products; and (iii) sourcing and marketing of component parts for the electronics industry.

The Target is an operating company with a proven track record of two (2) years in the Indonesian oil and gas resources sector. Its business model of reworking old wells enables its customers to minimise the risk of encountering dry wells. Its business model and the established track record of its Key Management Team underpin its positive growth prospects in the foreseeable future. In addition, the Target is the majority shareholder of PT Cepu which holds the exclusive rights to cooperate in conducting operations for extracting oil from the Dandangilo-Wonocolo and Tungkul Oil Fields pursuant to the Tungkul Agreement and the Dandangilo Agreement, thus accounting for an initial 148 oil wells. PT Cepu also recently entered into the Kawengan Agreement pursuant to which PT Cepu has been granted the right to manage at least an additional 91 old oil wells.

The Target Group recorded no revenue in the fi nancial years ended 31 December 2011 and 31 December 2012. The consolidated revenue of the Target Group for the last fi nancial year ended 31 December 2013 was approximately S$1.6 million. The consolidated loss after tax of the Target Group for the last three (3) fi nancial years ended 31 December 2011, 31 December 2012 and 31 December 2013 were approximately S$436, S$0.2 million and S$0.6 million respectively. Based on the unaudited consolidated income statements of the Target Group for the three (3) months ended 31 March 2014, the Target Group recorded revenue of approximately S$1.1 million and turned a profi t after tax of approximately S$0.17 million. Given the foregoing, the Board believes that the completion of the Acquisition will contribute positively to the future earnings of the Group and enhance shareholder value in the long term.

15


2.4 Principal Terms Of The Acquisition

2.4.1 Consideration

2.4.1.1 Subject to Section 2.4.1.2 below, the aggregate Consideration for the Acquisition shall be the sum of up to S$48,000,000 to be satisfi ed by GSIHL and the Company in the following manner upon Completion:

(a) S$25,200,000 of the Consideration shall be satisfi ed in cash in two (2) tranches; and

(b) S$22,800,000 shall be satisfi ed by the issue and allotment of 76,000,000 Consideration Shares to JPEL at the issue price of S$0.30 per Consideration Share, all of which shall rank pari passu with the existing issued ordinary shares of the Company.

As the issue price of S$0.30 per Consideration Share represents a discount of approximately 20.9% to the VWAP of S$0.3793 of the Shares for trades done on the SGX-ST on 30 May 2014 (being the last full market day on which the Shares were traded prior to the date the SPA was signed), and a discount of approximately 14.3% to the VWAP of S$0.350 of the Shares for trades done on the SGX-ST as at the Latest Practicable Date, the Company is required under Rule 811(3) of the Listing Manual to seek the specifi c approval of Shareholders for the issuance of the Consideration Shares.

The Company intends to seek the specifi c approval of Shareholders for the allotment and issue of the Consideration Shares at the EGM in accordance with Rules 805(1) and 811(3) of the Listing Manual and Section 161 of the Companies Act.

2.4.1.2 The Cash Consideration shall be payable to JPEL in the following manner:

(a) S$15,000,000 on the Completion Date (the “First Tranche”); and

(b) S$10,200,000 (the “Second Tranche”) upon evidence being provided to GSIHL’s satisfaction of the renewal of the PT SPJ Mother Agreement for an additional 5-year term from the expiry date (the “Evidence of Renewal”), to be paid in the following manner:

(i) if the approval of Shareholders is not required for the raising of capital, within:

(a) 30 days of the Evidence of Renewal being provided to GSIHL’s satisfaction; or

(b) nine (9) calendar months from the Completion Date,

whichever is later; and

(ii) if the approval of Shareholders is required for the raising of capital, within:

(a) 90 days of the Evidence of Renewal being provided to GSIHL’s satisfaction; or

(b) nine (9) calendar months from the Completion Date,

whichever is later.

The Second Tranche shall not be payable by GSIHL if the PT SPJ Mother Agreement is not renewed for an additional 5-year term from the expiry date. The Target Group has informed the Company that it will continue to explore and evaluate other oil fi eld projects to cooperate in conducting operations for extracting oil, irrespective of whether the PT SPJ and 1st KUD SP Mother Agreements are renewed.

16


The Consideration was determined at arm’s length on a willing-buyer willing-seller basis, and after taking into consideration the anticipated rate of production and the anticipated recoverable reserves of the Dandangilo-Wonocolo and Tungkul Oil Fields, as well as the QPR prepared by Senergy Oil & Gas (Singapore) Pte. Ltd. and dated 26 May 2014 jointly commissioned by the Company and JPEL. Please refer to Section 2.4.4 for more information about the Dandangilo-Wonocolo and Tungkul Oil Fields.

In connection with the Acquisition, the Company intends to undertake a placement of up to 80,000,000 new Shares to, amongst others, partially fund the Cash Consideration. Please refer to Section 5 of this Circular for more information on the Placement.

Upon completion of the Acquisition, the interests of JPEL, Blue Water, Charles Madhavan and Anthony Clive Reudavey in the enlarged share capital of the Company will be as follows:

Direct Interest Deemed Interest

Number of Shares %(3) Number of Shares %(3)

JPEL 76,000,000 16.1 – –

Blue Water – – 76,000,000(1) 16.1

Charles Madhavan – – 76,000,000(2) 16.1

Anthony Clive Reudavey – – 76,000,000(2) 16.1

Notes:

(1) Blue Water holds 30.4% of the shares in the capital of JPEL and is deemed interested in the 76,000,000 Shares to be held by JPEL by virtue of Section 7 of the Companies Act.

(2) Each of Charles Madhavan and Anthony Clive Reudavey holds 50% of the shares in the capital of Blue Water. Each of Charles Madhavan and Anthony Clive Reudavey is deemed interested in the 76,000,000 Shares to be held by JPEL by virtue of Section 7 of the Companies Act.

(3) Based on an enlarged issued share capital of the Company of 472,618,657 Shares, comprising the existing issued share capital of 315,018,657 Shares, the 76,000,000 Consideration Shares and the 1,600,000 Introducer Shares assuming (i) 80,000,000 Placement Shares have been issued pursuant to the Placement, and (ii) none of JPEL, Blue Water, Charles Madhavan and Anthony Clive Reudavey subscribe for new Shares pursuant to the Placement.

The Company will be making an application to the SGX-ST through the Sponsor for the listing of and quotation for the Consideration Shares on the Catalist, and will make the necessary announcement upon receipt of the listing and quotation notice from the SGX-ST.

2.4.2 Introducer Shares

Subject to and upon completion of the Acquisition, the Company shall issue 1,600,000 Introducer Shares at the issue price of S$0.30 per Introducer Share to Tam Siew Foong, as consideration for her services for introducing the Company to the Target in respect of the Acquisition (the “Introducer Consideration”). The Introducer Consideration was arrived at after negotiations between the Introducer and the Company at arms’ length and took into consideration the services provided by the Introducer, which includes acting as a liaison between the Company and JPEL to provide the necessary information for the purposes of the Acquisition, and assisting the Company in the discussions relating to the terms and conditions of the Acquisition.

Tam Siew Foong is a private equity investor and currently runs an investment company which she set up in 2004. Prior to 2004, Tam Siew Foong joined a local bank as a banking offi cer, and was a dealer at BZQ Securities and UOB Securities. She graduated from City University, London, with a Bachelor of Science in Banking and Finance in 1984. Tam Siew Foong has been acquainted with Lee Kok Wah of the Key Management Team of the Target for more than 20 years. She started off as Lee Kok Wah’s broker, but remained in touch with him on a social basis over the last 20 years. Tam Siew Foong has also been acquainted with Sydney Yeung from Roots Capital Asia Limited on a social basis for approximately three (3) years. Save as disclosed above, there is no other existing relationship between (i) the Introducer and the Company; and (ii) the Introducer and the Target.

17


The Introducer Shares when issued and allotted shall be free from all charges, liens and other encumbrances and shall rank in all respects pari passu with the Shares existing at the date of issue of the Introducer Shares, save that they shall not rank for any dividend, right, allotment or other distributions, the record date for which falls on or before the date of issue of the Introducer Shares.

The issue price of S$0.30 per Introducer Share represents a discount of approximately 20.9% to the VWAP of S$0.3793 of the Shares for trades done on the SGX-ST on 30 May 2014 (being the last full market day on which the Shares were traded prior to the date the SPA was signed), and a discount of approximately 14.3% to the VWAP of S$0.350 of the Shares for trades done on the SGX-ST as at the Latest Practicable Date, the Company is required under Rule 811(3) of the Listing Manual to seek the specifi c approval of Shareholders for the issuance of the Introducer Shares.

The Company intends to seek the specifi c approval of Shareholders for the allotment and issue of the Introducer Shares at the EGM in accordance with Rules 805(1) and 811(3) of the Listing Manual and Section 161 of the Companies Act.

The Company will be making an application to the SGX-ST through the Sponsor for the listing of and quotation for the Introducer Shares on the Catalist, and will make the necessary announcement upon receipt of the listing and quotation notice from the SGX-ST.

2.4.3 Conditions Precedent

Completion of the Acquisition is conditional upon the following conditions being fulfi lled (unless expressly waived by the Parties):

(a) the completion by GSIHL of the legal, fi nancial, operational, tax and other due diligence on the affairs of the Target Group and the results of such due diligence being satisfactory in the opinion of GSIHL;

(b) in relation to the Sale Shares:

(i) the receipt by GSIHL of such waivers or consents as may be necessary to enable GSIHL to be registered as holder of any and all of the Sale Shares; and

(ii) all other consents and approvals required under any and all applicable laws for the sale of the Sale Shares and/or to give effect to the transactions contemplated thereunder (including without limitation, such waivers as may be necessary of terms which would otherwise constitute a default under any instrument, contract, document or agreement to which JPEL or the Target is a party or by which JPEL or the Target or its or their respective assets are bound) being obtained and where any consent or approval is subject to conditions, such conditions being satisfactory to GSIHL;

(c) the completion of the Placement;

(d) the completion of a qualifi ed person’s report (made in accordance with Rule 1014(2) of the SGX-ST Listing Manual of the crude oil reserves and resources of the Dandangilo-Wonocolo and Tungkul Oil Fields which shall be addressed to the Company and GSIHL and in a form reasonably acceptable to the Company and GSIHL, and such report stating that the Dandangilo-Wonocolo and Tungkul Oil Fields have a gross and net entitlement of oil reserves of not less than approximately 10,000,000 barrels of recoverable reserves and a net present value of not less than US$100,000,000;

18


(e) there being no change to the prospects, operations, fi nancial and/or business conditions of JPEL, the Target Group and/or the Dandangilo-Wonocolo and Tungkul Oil Fields from the date of the SPA and up to and including the date of the Completion (the “Completion Date”) that could constitute a material adverse effect on or material adverse change in the condition (fi nancial or otherwise), results of operations, assets, prospects, liabilities or business of the Target and/or the Target Group as a whole;

(f) JPEL having performed all of the covenants and undertakings required to be performed by it under the SPA on or before the Completion Date;

(g) receipt of the listing and quotation notice from the SGX-ST for the listing and quotation of the Consideration Shares and the Introducer Shares on the Catalist, and such listing and quotation notice not being revoked, rescinded or cancelled prior to Completion;

(h) there being no delisting or suspension of the existing Shares on the Catalist on or before the Completion Date;

(i) the approval of the Shareholders being obtained at an extraordinary general meeting to be held (or any adjournment thereof) in respect of:

(i) the Acquisition;

(ii) the Placement; and

(iii) the diversifi cation of business in relation to the Acquisition;

(j) the Target, Muhammad Saleh and Ario Djoko Damar being collectively the legal and benefi cial owners of the entire issued and paid-up share capital of PT Cepu, holding 95%, 2.5% and 2.5% respectively of the issued and paid-up share capital of PT Cepu;

(k) PT Cepu holding the exclusive rights:

(i) to cooperate in conducting operations for extracting oil from the Dandangilo-Wonocolo and Tungkul Oil Fields; and

(ii) to have access to, make use of, and perform all other activities in, the Dandangilo-Wonocolo and Tungkul Oil Fields that may be necessary or convenient in connection with (i) above;

(l) JPEL, GSIHL and the Company having obtained all third party consents and approvals (including, if applicable, the approval of the SGX-ST and the Sponsor) as may be necessary in connection with the transactions contemplated by the SPA, and where any such third party consents and approvals are subject to conditions, such conditions being satisfactory to the Parties in their reasonable discretion and being in full force and effect and not having been withdrawn, suspended, amended or revoked, on or before Completion; and

(m) each of Charles Madhavan, Muhammad Saleh and Ario Djoko Damar having entered into a service agreement with the Company, the Target or PT Cepu (as the case may be), on terms satisfactory to GSIHL.

2.4.4 The Oil Fields

The information presented herein and in other sections of this Circular relating to information on the oil fi elds managed and/or operated by the Target Group is based on information obtained from the QPR (as defi ned below) or provided by JPEL or the Target Group.

19


In accordance with the condition precedent to Completion set out in Section 2.4.3(d) of this Circular, Senergy Oil & Gas (Singapore) Pte. Ltd. has been jointly commissioned by the Company and JPEL to produce a qualifi ed person’s report (made in accordance with Rule 1014(2) of the Listing Manual) of the crude oil reserves and resources of the Dandangilo-Wonocolo and Tungkul Oil Fields prepared in accordance with the 2007 Petroleum Resources Management System which is addressed to the Company and GSIHL and presented in a form reasonably acceptable to the Company and the Target (the “QPR”).

Based on information extracted from the QPR and information provided by the Target Group and JPEL, PT Cepu holds the exclusive rights to cooperate in conducting operations for extracting oil from the Dandangilo-Wonocolo and Tungkul Oil Fields pursuant to the Tungkul Agreement and the Dandangilo Agreement. PT Cepu also holds the rights to manage at least an additional 91 old oil wells pursuant to the Kawengan Agreement.

Some of the key fi ndings of such QPR dated 26 May 2014 are set out herein. Where information in this Circular has been extracted from the QPR or obtained from the Target Group or JPEL, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Circular in its proper form and context. A copy of the QPR is available for inspection at the registered offi ce of the Company during normal business hours from the date of this Circular up to and including the date of the EGM. Please refer to Section 18 of this Circular for more information.

2.4.4.1 Description of the Oil Fields

The Dandangilo-Wonocolo and Tungkul Oil Fields and the Kawengan Oil Field are located onshore in North-East and Central Java, Indonesia.

Asset Name Issuer’s Interest (%) Development StatusType of Mineral,

Oil or Gas Deposit

Dandangilo-Wonocolo 80 Producing Oil

Tungkul 80 Producing Oil

Kawengan 80 Yet to commence production

Oil

Pursuant to Reg. ESDM No. 1/2008, PEP signed three (3) agreements to extract and produce oil from the Oil Fields, namely, (a) the Production of Oil from Old Wells Agreement between PEP and PT SPJ dated 3 November 2010; (b) the Production of Oil from Old Wells Agreement between PEP and KUD SP dated 31 October 2012; and (c) the Production of Oil from Old Wells Agreement between PEP and KUD SP dated 12 May 2014 (collectively, the “Mother Agreements”). The Mother Agreements are for a fi ve (5)-year period and may be renewed for a period of fi ve (5) years upon prior written application by PT SPJ or KUD SP (as the case may be) to PEP, expiring on October 2022 for the assets located in Dandangilo-Wonocolo, in November 2020 for the assets located in Tungkul, and in May 2024 for the assets located in Kawengan, on the assumption that the agreements are extended.

Each of PT SPJ and KUD SP has signed Cooperation Agreements with PT Cepu. Pursuant to the Dandangilo Agreement and the Tungkul Agreement, PT Cepu has been granted exclusive rights to cooperate to conduct the operation for extracting oil from old wells in the Dandangilo-Wonocolo and Tungkul Oil Fields under the names of these entities in return for the rights to 80% of the revenues arising from the oil production. Pursuant to the Kawengan Agreement, PT Cepu has been granted the right to manage at least 91 old oil wells located in the Village Kawengan, District Kedewan, Bojonegoro in return for the rights to 80% of the revenues arising from the oil production. Each of the Cooperation Agreements are valid for a period of 10 years, and will be automatically extended for another fi ve (5) years upon the expiry of the Cooperation Agreements.

20


PT Cepu has been operating several wells in the Dandangilo-Wonocolo and Tungkul Oil Fields since April 2013. According to the QPR, PEP is aware of the operations conducted by PT Cepu on the oil wells.

Figure 1: Extracted from “The Geology of the Oilfi eld in NE Java, presented at IPA73”

2.4.4.2 History of the Oil Fields

The Oil Fields are located onshore in North-East Java and Central Java, approximately 75 km west of the city of Surabaya.

Figure 2: Location of the Fields in the Cepu Area, N.E. and Central Java & Structure Map of the Dandangilo-Wonocolo Field

21


Production occurred from 1900 to 1920. PT Cepu commenced its operations in these areas in 2013. Historically, a total of 160 wells had been drilled in Dandangilo, 50 wells in Wonocolo and 41 wells in the Tungkul fi eld.

2.4.4.3 Ke y Findings of the QPR

Based on the QPR, a summary of the estimated oil reserves for the PT Cepu-operated areas in the Dandangilo-Wonocolo and Tungkul fi elds is as follows:

Summary of Oil ReservesDandangilo-Wonocolo and Tungkul Fields (Operated Wells only), Java

As of 30 April 2014

Oil (MMstb)(1) Gross attributable to License Net (80%) Attributable to Issuer

1P(2) 5.6 4.4

2P(2) 9.6 7.6

3P(2) 13.2 10.4 Notes:

(1) MMstb means millions of stock tank barrels.

(2) 1P: Proved Reserve; 2P: Proved Reserve + Probable Reserve; 3P: Proved Reserve + Probable Reserve + Possible Reserve.

Based on the QPR, the project net present value using a discount rate of 10% (“NPV10”) for the low, best and high cases is as follows:

NPV10 (Million US$) through to PT SPJ and 1st KUD SP Mother

Agreements expiry(1) in 2020/2022

NPV10 (Million US$) through to Tungkul Agreement and Dandangilo Agreement expiry(1) in March 2028

Low 96 101

Best 195 222

High 281 335

Note:

(1) On assumption that the PT SPJ and 1st KUD SP Mother Agreements are extended. Please refer to Section 2.4.4.1 for more information relating to the renewal of the PT SPJ and 1st KUD SP Mother Agreements.

2.4.5 Moratorium Undertakings

JPEL has undertaken not to (directly or indirectly), inter alia, offer, pledge, sell, contract to sell, grant any option, right or warrant to purchase, lend, hypothecate or encumber or otherwise transfer or dispose of, any of its Consideration Shares for the period commencing from the Completion Date and up to the later of (i) one (1) year from the Completion Date; or (ii) 30 November 2015 (the “Moratorium Period”).

Each of the JPEL Shareholders will on Completion be giving a moratorium undertaking not to (directly or indirectly), inter alia, offer, pledge, sell, contract to sell, grant any option, right or warrant to purchase, lend, hypothecate or encumber or otherwise transfer or dispose of, any of its shares in JPEL during the Moratorium Period (the “JPEL Shares Moratorium”).

Each of the Blue Water Shareholders will on Completion be giving a moratorium undertaking not to (directly or indirectly), inter alia, offer, pledge, sell, contract to sell, grant any option, right or warrant to purchase, lend, hypothecate or encumber or otherwise transfer or dispose of, any of its shares in Blue Water during the Moratorium Period (the “Blue Water Shares Moratorium”).

22


The Introducer will on Completion be giving a moratorium undertaking not to (directly or indirectly), inter alia, offer, pledge, sell, contract to sell, grant any option, right or warrant to purchase, lend, hypothecate or encumber or otherwise transfer or dispose of, any of her Introducer Shares during the Moratorium Period (the “Introducer Moratorium”).

The JPEL Shares Moratorium, the Blue Water Shares Moratorium and the Introducer Moratorium shall not apply to any transfer made during the Moratorium Period by the relevant entity to its immediate family member or to a wholly-owned company (the “Permitted Transferee”) provided that such Permitted Transferee executes a deed of undertaking in favour of the Company and GSIHL to abide by the relevant moratorium prior to the completion of such transfer.

2.4.6 Adjustment Mechanism

The relative shareholding of JPEL and GSIHL in the Target shall be adjusted in the event that any one of the PT SPJ and 1st KUD SP Mother Agreements, is (a) not renewed beyond its current term for another fi ve (5) years; or (b) terminated prior to the expiry of the current term (each, an “Adjustment Event”).

Upon the occurrence of an Adjustment Event, the shareholding proportion of JPEL and GSIHL in the Target shall be adjusted such that the value of the GSIHL’s shareholding in the Target after such adjustment, as measured by its proportion of the Target Group’s consolidated net tangible assets on the relevant date of such Adjustment Event is equivalent to an aggregate of not less than: the Cash Consideration already paid by GSIHL to JPEL plus S$22,800,000 plus 10% internal rate of return on such amount of the Cash Consideration already paid (the “Benchmark”). In the event the value of GSIHL’s shareholding in the Target is less than the Benchmark, JPEL undertakes and agrees to transfer such number of shares in the Target to GSIHL such that the Benchmark is satisfi ed, or to GSIHL seeking additional recourse from JPEL to cover the shortfall. For the avoidance of doubt, no adjustments to the shareholding proportion of JPEL and GSIHL in the Target is required if the Benchmark is satisfi ed.

As security for the obligations of JPEL in respect of the Adjustment Event, JPEL agrees to grant a fi rst priority interest over all of the shares owned by it in the Target, which total an aggregate of 538,421 shares (the “Pledged Shares”) in favour of GSIHL, and to enter into a share pledge (in a form acceptable to GSIHL) to effect this on the Completion Date. In the event that (a) the Pledged Shares are insuffi cient to discharge JPEL’s obligations; and (b) the Target issues new shares which are subscribed for by JPEL, such shares in the Target will similarly be subject to a share pledge in favour of GSIHL, as security for the obligations of JPEL in respect of the Adjustment Event.

2.4.7 Right to Appoint Directors

On or after Completion:

(a) the Company shall have the right to appoint directors (and if applicable, commissioners) in all the Target Group companies, and shall have control of the Target Group in a manner that allows the Company to consolidate the Target Group’s fi nancials in accordance with Singapore Financial Reporting Standards; and

(b) for so long as JPEL holds not less than 15% of the issued share capital of the Company, JPEL shall have the right to nominate two (2) directors to the board of directors of the Company for the nominating committee’s consideration (such consideration shall be in good faith), and in the event that the nominating committee does not recommend the appointment of any of the nominees of JPEL to the board of directors of the Company, JPEL shall have the right to continue nominating alternative individuals for the nominating committee’s consideration. Lee Kok Wah has been nominated by JPEL as its nominee, and has been appointed as a Director; and

(c) the remuneration of the directors and commissioners of the companies within the Target Group shall be subject to the prior approval of GSIHL.

23


2.4.8 Service Agreements

As disclosed in Section 2.4.3(m) of this Circular, a condition precedent to completion of the Acquisition is the entry by each of Charles Madhavan, Muhammad Saleh and Ario Djoko Damar into a service agreement with the Company, the Target or PT Cepu, on terms satisfactory to GSIHL. JPEL intends to appoint two (2) directors to the board of directors of the Company. The Company will provide details of any service agreement(s) entered into with a director nominated by JPEL and appointed to the Board in compliance with the requirements of the Listing Manual in due course.

2.4.9 Transfer of Target’s Shares

For so long as any of the PT SPJ and 1st KUD SP Mother Agreements have not been renewed for an additional 5-year term from each of their respective expiry dates, JPEL shall not (directly or indirectly) offer, sell, transfer or otherwise dispose of any or all of its remaining shares in the Target.

On or after the date of renewal of both the PT SPJ and 1st KUD SP Mother Agreements for an additional 5-year term from each of their respective expiry dates, if JPEL intends to (directly or indirectly) offer, sell, transfer or otherwise dispose of any or all of its remaining shares in the Target, JPEL shall fi rst offer such shares to GSIHL by notifying GSIHL according to the terms set out in the SPA.

2.4.10 Shareholder’s Loan

On the Completion Date, GSIHL shall extend to the Target a shareholder’s loan of S$6,250,000 for a period of three (3) years at an interest rate of 5% per annum (subject to withholding tax gross-up if applicable) (the “Shareholder’s Loan”) in order that the Target may extend to PT Cepu the equivalent amount as the shareholder’s loan to be applied by PT Cepu as working capital.

The Shareholder’s Loan is immediately repayable to GSIHL upon demand if either of the PT SPJ and 1st KUD SP Mother Agreements is not renewed beyond its current term for another fi ve (5) years. Please refer to Section 6 of this Circular for more information relating to the funding of the Shareholder’s Loan.

The Shareholder’s Loan will be used by the Target in the following estimated proportions:

Use of Proceeds Percentage Allocation (%)

Repayment of temporary loan extended from JPEL to Target Approximately 15% to 40%

General working capital of the Target Group (e.g. salaries, operational expenses and general administrative expenses)

Approximately 60% to 85%

2.4.11 Source of Funds

On 11 July 2014, the Company entered into a Placement Agreement with the Placement Agent to place up to 80,000,000 Placement Shares at a Placement Price of not less than S$0.30 per Placement Share amounting to an aggregate amount of up to S$24,000,000 (assuming 80,000,000 Placement Shares are placed at the minimum Placement Price of S$0.30 per Placement Share. The Company intends to use the proceeds from the Placement primarily to fund the First Tranche of the Cash Consideration and the Shareholder’s Loan (to be extended by the Purchaser to the Target). Please refer to Section 5 of this Circular for more information relating to the Placement.

24


2.4.12 Relative Figures Under Rule 1006 of the Listing Manual

Based on the latest announced consolidated fi nancial results of the Group for the period ending 28 February 2014, the relative fi gures in respect of the Acquisition, as computed on the bases set out in Rule 1006 of the Listing Manual, are as follows:

Bases in Rule 1006

(a) Net asset value of the assets to be disposed Not applicable(1)

Net asset value of the Group –

Size of relative fi gure –

(b) Net loss(2) attributable to the 624,079 shares in the Target to be acquired (S$’000)

(331)(3)

Net profi ts of the Group (S$’000) 740(4)

Size of relative fi gure (44.73)%

(c) Aggregate value of the consideration (S$’000) (comprising of the Consideration and the Shareholder’s Loan)

54,250

Market capitalisation(5) of the Company (S$’000) 119,487

Size of relative fi gure 45.40%

(d) Number of equity securities issued for the Acquisition (comprising of the Consideration Shares and the Introducer Shares)

77,600,000

Number of shares of the Company in issue 315,018,657

Size of relative fi gure 24.63%

(e) Aggregate volume or amount of proved and probable reserves to be disposed of

Not applicable(6)

Aggregate of the group’s proved and probable reserves –

Size of relative fi gure – Notes:

(1) This is not applicable to an acquisition of assets.

(2) “Net profi ts” means profi t or loss before income tax, minority interests and extraordinary items.

(3) Based on the unaudited consolidated fi nancial statements of the Target for the fi nancial year ended 31 December 2013.

(4) Based on the half-year consolidated fi nancial statements of the Group for the period ended 28 February 2014.

(5) “Market capitalisation” is determined by multiplying the number of shares of the Company in issue by the VWAP of such shares transacted on 30 May 2014 (being the market day preceding the date of the Agreement).

(6) This is not applicable as it is not an acquisition of mineral, oil or gas assets.

Paragraph 3 of Practice Note 10A of the Listing Manual states that a major transaction is one that will result in a fundamental change in the issuer’s business, or where any of the relative fi gures as computed on the bases set out in Rule 1006 exceeds 75%, but is less than 100%. Rule 1014 requires that a major transaction be made conditional upon the approval of shareholders in general meeting.

Although none of the fi gures as computed on the bases set out in Rule 1006 exceeds 75%, as the Acquisition will bring about a fundamental change in the Company’s business model, the Company proposes to seek the approval of the Shareholders for the Acquisition at the EGM.

25


3. TRANSFER OF CONTROLLING INTEREST IN THE COMPANY PURSUANT TO THE ISSUANCE OF THE CONSIDERATION SHARES TO JPEL

Rule 803 of the Listing Manual provides that an issuer must not issue securities to transfer a Controlling Interest without prior approval of shareholders in general meeting. Under the Listing Manual, a Controlling Shareholder is a person who directly or indirectly holds 15% or more of the nominal amount of all voting shares in the Company, or a person who in fact exercises control over the Company.

As at the Latest Practicable Date, JPEL does not hold any Shares. Assuming that all the Transactions have been completed, and that the maximum number of 80,000,000 Placement Shares is placed out by the Placement Agent, JPEL will hold approximately 16.1% of the enlarged and issued share capital of the Company (excluding treasury shares) immediately after completion of the Transactions.

In addition, as disclosed in Section 2.4.7(b) of this Circular, for as long as JPEL holds not less than 15% of the Shares, JPEL shall have the right to nominate two (2) directors to the board of directors of the Company for the nominating committee’s consideration (such consideration shall be in good faith), and in the event that the nominating committee does not recommend the appointment of any of the nominees of JPEL to the board of directors of the Company, JPEL shall have the right to continue nominating alternative individuals for the nominating committee’s consideration.

Accordingly, the Transactions would constitute a transfer of a Controlling Interest in the Company and is subject to the approval of the Shareholders for the purposes of Rule 803 of the Listing Manual. Further, as the issue price of S$0.30 per Consideration Share represents a discount of approximately 20.9% to the VWAP of S$0.3793 of the Shares for trades done on the SGX-ST on 30 May 2014 (being the last full market day on which the Shares were traded prior to the date the SPA was signed), the Company will also be obtaining the Shareholders approval in accordance with Rule 811 of the Listing Manual.

4. THE PROPOSED DIVERSIFICATION INTO THE NEW BUSINESS

4.1 The New Business

In conjunction with the Acquisition, the Group will diversify its business to include the exploration, exploitation and production of oil and gas as well as the provision of services to the upstream oil and gas sector. This includes the business of the Target Group, which involves the operation and production of oil in the Dandangilo-Wonocolo and Tungkul Oil Fields and the management of the Kawengan Oil Field. Pursuant to the Tungkul Agreement and the Dandangilo Agreement, PT Cepu is responsible for the operations of the old wells, including the procurement of equipment, transportation of the oil, manpower and injecting working capital, and for funding the drilling and the operational costs of the old oil wells and bearing the costs incurred for deepening wells. In return for its operational services, it has the right to acquire a substantial proportion of the revenues arising from the oil that is produced. Please refer to Sections 2.1.1 and 2.4.4 of this Circular for more information on the business of the Target Group.

Business Scope

The New Business of exploration, exploitation and production of oil and gas may be broadly classifi ed into two (2) phases, being (a) the exploration phase; and (b) the exploitation and production phase.

(a) Exploration phase

The exploration phase includes, but is not limited to, some or all of the following activities to locate and determine the commercial viability of oil and gas reserves:

obtaining the relevant licences and concessions to undertake exploratory activities;

26


gathering and interpreting, inter alia, seismic, geological and metallurgical information; and

undertaking exploration and appraisal drilling to verify the existence of the oil and gas reserves and to determine the extent and commercial viability of the oil and gas reserves.

(b) Exploitation and Production Phase

The exploitation and production phase includes, but is not limited to, some or all of the following activities:

obtaining the relevant licences and concessions to undertake extraction and production activities;

preparing the relevant production and development plans;

site preparation, and the installing and/or operating the required equipment to drill, extract, separate, store and/or transport the oil and gas;

entry into off-take agreements with third parties for the supply of oil and gas produced;

refi ning of extracted oil and gas into various products such as gasoline or diesel for further sale and distribution; and

maintenance of related plant and equipment.

The Group does not intend for the New Business to be restricted to any geographical area or to any particular phase or activity of the New Business.

The Diversifi cation into the New Business may be effected through investments or acquisitions of other entities or other investment structures in the New Business, joint ventures and/or directly undertaking the New Business, as and when the opportunity arises.

The Company will assess and consider factors such as whether it has the necessary fi nancing and technical expertise for the investment, acquisition and/or direct undertaking, the then existing market conditions and timing of the investment, acquisition and/or direct undertaking, the revenue which the opportunity may generate, and the standing and contribution of its business or joint venture partner, if any, before proceeding with such investment, acquisition and/or direct undertaking.

Rationale and Benefi ts

The rationale and benefi ts of the Acquisition and the Diversifi cation are set out in Sections 2.3 and 6 of this Circular.

4.2 Risk Factors

The Board believes that the Diversifi cation constitutes a fundamental change of the Company’s business and will materially change the risk profi le of the Company.

Any of the risks described below could materially and adversely affect the Company’s ability to comply with its obligations, including those under the Listing Manual, and could have a material adverse effect on the Company’s or the Group’s business, fi nancial condition, operations and prospects. In that event, the market price of the Shares could decline, and Shareholders may lose all or part of their investments in the Shares. The risks and uncertainties described below are not intended to be exhaustive and are not the only risks and uncertainties that the Group may face. The Group could be affected by a number of risks which relate to the industries and

27


countries in which the Group intends to operate as well as those which may generally arise from, inter alia, economic, business, market and political factors, including the risks set out herein. Additional risks and uncertainties not presently known to the Company or the Group or that the Company or the Group currently deem immaterial may also impair the Company’s or the Group’s business, fi nancial condition, operations and prospects. The risks discussed below also include forward-looking statements and the Company’s and the Group’s actual results may differ substantially from those discussed in these forward-looking statements.

Subheadings are for convenience only and risk factors that appear under a particular sub-heading may also apply to one or more other sub-headings.

4.2.1 Risks Relating to the Group

(a) The New Business is dependent on the oil and gas industry

The New Business will be largely dependent on the oil and gas industry, in particular the level of activities in the exploration, development and production of oil and gas. Such activities are affected by factors such as fl uctuations in oil and gas prices and by other general economic factors, as well as by the industry’s view of future economic growth and the resulting impact on demand for oil and gas and the expectations of potential customers in respect of changes in oil and gas prices and the related changes in their capital spending.

The prices of oil and gas are volatile and affected by supply and demand. They in turn will affect the level of capital spending by companies in the oil and gas industry. Low oil and gas prices tend to reduce the amount of oil and gas that producers can produce economically. When this occurs, major oil and gas companies generally reduce their spending budgets for drilling, exploration and development. Any decline in the level of activities in the oil and gas industry may result in a decrease in demand for the New Business.

The above are factors beyond the control of the Group. As a result, the timing, nature and degree of changes in industry conditions are unpredictable. In addition, there can be no assurance that the Group will be able to obtain the fi nancing necessary in time to develop relevant opportunities for the New Business that may arise. There can be no assurance that the activity levels of exploration, development and production activities of the Oil Fields will remain at their current levels or continue to increase. Any prolonged period of low exploration, development and production activity or decrease in demand for oil and gas would be likely to have an adverse effect on the Group’s business, fi nancial performance, fi nancial condition and operating cash fl ow.

(b) The Mother Agreements may not be renewed

The Target Group has entered into the Tungkul Agreement and the Dandangilo Agreement under which PT Cepu holds the exclusive rights to cooperate in conducting operations for extracting oil from the Dandangilo-Wonocolo and Tungkul Oil Fields. The Tungkul Agreement took effect from 28 February 2013 and is expected to expire in February 2023. The Dandangilo Agreement took effect from 25 March 2013 and is expected to expire in March 2023. The Target Group has also entered into the Kawengan Agreement pursuant to which PT Cepu has been granted the right to manage at least 91 old oil wells located in the Village Kawengan, District Kedewan, Bojonegoro. The Kawengan Agreement was entered into on 20 June 2014 and is expected to expire in June 2024.

However, the Mother Agreements, which underlie the Tungkul Agreement, the Dandangilo Agreement and the Kawengan Agreement are valid for a fi ve (5) year period and may be renewed for a period of fi ve (5) years upon prior written application by PT SPJ or KUD SP (as the case may be) to PEP. The agreement between PEP and PT SPJ is due to expire in November 2015 while the agreement between PEP and KUD SP is due to expire in October 2017. The renewal of the Mother Agreements is subject to the discretion of

28


the PEP to further request approval from the Ministry of Energy and Mineral Resources to renew the Concessions granted in respect of the Oil Fields. Therefore, the validity of the Tungkul Agreement, the Dandangilo Agreement and the Kawengan Agreement is also subject to such approvals. Please refer to Section 2.4.4 of this Circular for more information.

The non-renewal of the relevant Mother Agreements would impact the Group’s operation of the Oil Fields, and the Group’s results of operations and fi nancial conditions could be materially and adversely affected.

(c) The Mother Agreements may not be renewed on similar terms

Assuming the Mother Agreements are renewed, there is no guarantee that the Mother Agreements will be renewed on the terms as favourable as those in the expired agreements. If the Mother Agreements are renewed on less favourable terms, the Group’s results of operations and fi nancial conditions could be materially and adversely affected.

(d) The Group will have no control over oil prices which is fi xed by PEP

The New Business is currently dependent upon PEP as the Target’s only customer. PEP has the right to fi x the price and the exchange rate at which the oil extracted is sold, and has on occasion, sold oil below market prices. The Group will therefore have no control over the pricing of the oil extracted and sold. Unfavourable terms in pricing may have an adverse effect on the Group’s operating results.

(e) The rights and obligations under the Mother Agreements cannot be assigned to

third parties

It is a term of the Mother Agreements that each of PT SPJ and KUD SP is prohibited from assigning part or all of its rights and obligations under the respective agreements. Pursuant to the Mother Agreements, each of PT SPJ and KUD SP is responsible for the operation of the oil wells and the delivery of oil from the oil wells within the Dandangilo-Wonocolo and Tungkul Oil Fields. There is a risk that the Cooperation Agreements signed between each of PT SPJ and KUD SP with the Target may be viewed as an assignment of PT SPJ and KUD SP’s obligations and may be taken to be a breach of the Mother Agreements, as the Tungkul Agreement and the Dandangilo Agreement each provide that the Target is obliged to operate the oil wells and to deliver the oil on behalf of each of PT SPJ and KUD SP while the Kawengan Agreement provides that the Target is responsible for the funding the drilling and the operational costs of the old oil wells.

(f) The Group may be subject to risks arising from foreign exchange fl uctuations

The business of the Group is denominated in Singapore Dollars while the business of the Target Group, its cost of sales and operating expenses are denominated in Indonesian Rupiah. Any signifi cant unfavourable fl uctuations in foreign currency exchange rates against the Company’s functional currency may have an adverse effect on its operating results.

(g) The Group has no prior track record in the New Business and the New Business may not be viable or successful

As the Group does not have a proven track record in the exploration, exploitation and production of oil and gas or in the business of cooperating to conduct operations for extracting oil, the New Business may not be commercially viable or successful. Unsuccessful attempts to undertake the New Business may have an adverse effect on the Group’s business, fi nancial condition and results of operations.

29


The exploration, exploitation and production of oil and gas may require substantial capital expenditure and investment costs before they reach a revenue producing stage. Hence, in the event that the Group engages in such activities pursuant to the New Business, the Group may not be able to generate positive cash fl ows from such activities immediately. A cash fl ow defi cit may have a negative impact on the working capital and the fi nancial position of the Group. Furthermore, as such business activities may need time to generate profi ts, to the extent that the Group is unable to generate suffi cient profi ts from its existing business and the New Business to cover its operating costs, the Group will suffer an adverse effect on its business, fi nancial performance, fi nancial condition and operating cash fl ow.

(h) Current management may not have the expertise to ensure success

As the New Business is a new area of business to the Group, the Group will face the usual risks, uncertainties and problems associated with the entry into any new business which it has no prior track record in. These risks, uncertainties and problems include, among other things, the inability to fi nd the right joint venture, strategic or other business partnerships, the inability to manage expanding operations and costs, failure to attract and retain customers, diffi culty in establishing a database of suppliers, failure to provide the results, level of revenue and margins the Group is expecting and failure to identify, attract, retain and motivate qualifi ed personnel.

In addition, the Group’s current management may not have the relevant expertise to ensure success in these areas. The Group may also face diffi culties in recruiting skilled and qualifi ed personnel in the New Business due to its specialised nature. If the Group is unable to attract and retain a suffi cient number of suitably skilled and qualifi ed personnel, the Group’s business, results of operations and fi nancial conditions being materially adversely affected.

(i) The success of the New Business is dependent on the Key Management Team

The success of the New Business is dependent, to a large extent, on the continued efforts, skills and services of the Key Management Team of the Target, who are responsible for formulating and implementing the Target Group’s business plans and driving its growth and corporate development. In particular, Charles Madhavan, the Managing Director of the Target has overall responsibility for the operations of the Target Group. He is supported by Muhammad Saleh, the President Director of the Target, and other members of the Key Management Team. There is no assurance that the Group will be able to retain their services. Please refer to Section 2.1.2 of the Circular for details of their qualifi cations and working experience. The loss of services of one or more of these individuals without suitable and/or timely replacements and an inability to attract or retain new qualifi ed personnel will have a material adverse impact on the Group’s operations and fi nancial performance.

(j) Inability to complete the Placement

There is no assurance that the Placement will be completed. As disclosed in Section 2.4.3(c) of the Circular, the completion of the Acquisition is conditional upon the completion of the Placement. The Company intends to use the proceeds from the Placement to fund the First Tranche of the Cash Consideration and the Shareholders’ Loan. If the Company is unable to complete the Placement, the Company will not be able to complete the Acquisition. The Group could suffer a material adverse effect on its business, fi nancial performance, fi nancial condition, results of operations and prospects due to the amount of resources spent on the Acquisition, the loss of the business opportunities which would have been available to the Group as a result of the acquisition of the Target Group, and the negative impact on the Company’s brand image.

30


(k) The Target Group has a limited operating history as a company and has incurred losses in certain years since incorporation

The Target Group has a limited operating history upon which the Company based its evaluation of the Target Group’s business and prospects. As a company in the early stages of development, there are substantial risks, uncertainties, expenses and diffi culties to which the business of the Target Group is subject. To address these risks and uncertainties, the Target Group must successfully develop and execute its business strategy and respond to competitive developments. There can be no assurance that it will be able to manage effectively the expansion of its operations through organic growth or acquisitions.

The Target Group has incurred losses in each of FY2011, FY2012 and FY2013. Please refer to Section 2.1.3 of this Circular for more information on the Target Group’s fi nancial information. There can be no assurance that it will earn signifi cant profi ts or any profi ts from operations at all, which could impact its ability to sustain operations, bring operations to a point where it is able to make full use of its rights to cost recovery petroleum, or obtain any additional funds it may require in the future to satisfy requirements beyond its current committed capital expenditure. The Group cannot be certain that the Target Group will successfully develop and implement its business strategy or that it will successfully address the risks that face its business. In the event that the Target Group does not successfully address these risks, the Group’s business, fi nancial condition, prospects, results of operations, could be materially and adversely affected.

(l) Certain fi nancial information of the Target Group is unaudited

The fi nancial information of the Target Group for each of FY2011, FY2013 and 3M2014 included in this Circular has not been audited. Please refer to Sections 2.1.3 and 7 of this Circular for the fi nancial information of the Target Group. In particular, the fi nancial effects of the Acquisition set out in Section 7 have been calculated based on the unaudited consolidated statements of the Target for FY2013. There can be no assurance that, had an audit been conducted in respect of such fi nancial information, the information presented therein would not have been materially different, and Shareholders should not place undue reliance on them.

(m) Future acquisitions, joint ventures or other arrangements may expose the Group to increased business and operating risks

The Group may, as a matter of business strategy, invest in or acquire other entities engaged in the New Business, or enter into joint ventures or other investment structures in connection with the New Business. Acquisitions that the Group may make, along with potential joint ventures and other investments, may expose the Group to additional business and operating risks and uncertainties, including:

direct and indirect costs in connection with the transaction;

the inability to effectively integrate and manage acquired business;

the inability or unwillingness of joint venture partners to fulfi l their obligations under the relevant joint venture agreements;

the inability of the Group to exert control over strategic decisions made by these companies;

time and resources expended to coordinate internal systems, controls, procedures and policies;

disruption in ongoing business and the diversion of management’s time and attention from other business concerns;

31


the risk of entering markets in which the Group may have no or limited prior experience;

the potential loss of key employees and customers of the acquired businesses;

the risk that an investment or acquisition may reduce the Group’s future earnings; and

exposure to unknown liabilities.

If the Group is unable to successfully implement the Group’s acquisition or expansion strategy or address the risks associated with acquisitions or expansions, or if the Group encounters unforeseen expenses, diffi culties, complications or delays frequently encountered in connection with the integration of acquired entities and the expansion of operations, the Group’s growth and ability to compete may be impaired, the Group may fail to achieve acquisition synergies and the Group may be required to focus resources on integration of operations rather than on the Group’s primary business.

Should these occur, the Group’s business, fi nancial performance, fi nancial condition and operating cash fl ow may be adversely affected.

(n) Dilutive effect on the Company’s Shares

The Group may make future acquisitions or enter into fi nancings or other transactions involving the issuance of securities of the Company which may have a dilutive effect on the Company’s Shares. For example, the Company may issue further Shares in the future to fi nance the Second Tranche of the Cash Consideration.

4.2.2 Risks Relating to the New Business and the Oil and Gas Industry

(a) Reserve and resource estimates depend on several assumptions that may turn out to be inaccurate

This Circular includes estimates of the reserves and contingent and prospective resources for the Target-operated areas in the Dandangilo-Wonocolo and Tungkul fi elds. The process of estimating hydrocarbon quantities is complex, requiring interpretations of available technical data and many assumptions made in a particular price environment. Any signifi cant deviations from these interpretations, prices or assumptions could materially affect the estimated quantities of hydrocarbons reported. The uncertainties inherent in estimating quantities of hydrocarbons include, inter alia, the following:

variable factors and assumptions such as historical production from the Oil Fields;

the quality and quantity of technical and economic data;

the prevailing oil and natural gas prices applicable to production;

drilling and operating expenses, capital expenditures, taxes and the availability of funds ;

debt and equity;

the assumed effects of regulations by governmental agencies and future operating costs;

the production performance of the reserves; and

extensive engineering, geological and geophysical judgments.

32


Understanding of the subsurface conditions is based on the Group’s interpretation of the best data available but due to the inherent uncertainty of such interpretation, it may reach incorrect conclusions. The reserves and contingent and prospective resources data set out in this Circular represents estimates only and represents quantities estimated at a given point in time. Many of the factors, assumptions and variables involved in estimating hydrocarbon volumes are beyond the Group’s control and may prove incorrect over time. Estimates of the commercially recoverable hydrocarbon volumes attributable to any particular contract area, classifi cation of such hydrocarbons volumes based on risk of recovery and estimates of future net revenues expected, prepared by different persons at different times, may vary substantially. In the event that actual production with respect to these hydrocarbons volumes is lower than these estimates and/or actual future prices are materially lower, the Group’s revenue and therefore its results of operations and fi nancial condition will be adversely affected.

The uncertainties inherent in estimating oil and gas resources and reserves are generally greater for areas where there has been limited historic hydrocarbon exploration, such as in the case of contingent, and in particular, prospective resource estimates, which are derived from the interpretation of seismic and other geoscientifi c data and where appropriate, drilling results. Such interpretation and estimates of the amounts of oil and gas resources are subjective and the production results subsequent to the date of any particular estimate may result in substantial revisions to the original interpretation and estimates, including the recoverability and commerciality of the reserves and resources.

(b) Fluctuations in the Group’s turnover due to unfavourable environmental conditions

A key factor that may lead to the fl uctuations in turnover for the New Business is the environmental changes in the areas in which the Group proposes to conduct its exploration, exploitation and production of oil and gas. In the event where there are drastic changes in the climate and extreme weather conditions, it may be more diffi cult or not feasible to conduct the New Business, and actual revenue may be signifi cantly lower than expected. The Group will be unable to mitigate the impact of environmental conditions on its results of operations. Negative environmental conditions may impact the production of oil and gas, as it may entail work stoppages and the suspension of operations, thus the Group’s results of operations and fi nancial conditions could be materially and adversely affected.

(c) Uncertainties on securing additional funding for business development

The Group’s growth strategy to undertake the New Business is capital intensive and requires substantial funding. The ability of the Group to arrange fi nancing and the cost of such fi nancing are dependent on global economic conditions, capital and debt market conditions, lending policies of the government and banks, and other factors. The Group’s business may not be able to generate suffi cient cash fl ows to fund investment and/or expansion opportunities. Unless the Group can do so through internal sources, it will be required to fi nance the cash needs through public or private equity offerings, bank loans and/or other debt fi nancing. There can be no assurance that international or domestic fi nancing for the New Business and necessary equipment that the Group may acquire or develop will be available on terms favourable to the Group or at all. The Group may have to delay, adjust, reduce or abandon its planned growth strategies. In the event that the Company does obtain bank loans or debt fi nancing but is unable to meet the fi nancing expenses of such, its business performance may be adversely affected.

33


(d) Disruptions to business caused by factors, such as natural disasters and human fault

The oil and gas fi elds that the Group conducts its operations for extracting oil or that the Group may acquire and develop may be damaged by fl ooding, drought, debris fl ow, landslide, earthquake, other natural disasters, human error, fault or negligence or the operations may have to be suspended during repair of the damaged plants and/or equipment or when there is a drought. The pipelines used to carry the oil and gas are vulnerable to natural disasters such as earthquakes, debris fl ow, landslide, storms and fl oods, as well as disasters caused by human actions such as terrorist attacks, military conflicts and other deliberate or inadvertent actions which may affect the smooth transportation of the oil and gas mined. The operations of the New Business may be seriously disrupted by such disasters which may materially and adversely affect the Group’s results of operations.

(e) Inadequate insurance coverage to cover all liabilities

The Group’s involvement in the New Business may result in the Group becoming subject to liability for pollution, blowouts, property damage, personal injury or other hazards. Although the Group intends to obtain insurance in accordance with industry standards to address such risks, such insurance has limitations on liability that may not be suffi cient to cover the full extent of such liabilities. In addition, such risks may not in all circumstances be insurable or, in certain circumstances, the Group may elect not to obtain insurance to deal with specifi c risks due to the high premiums associated with such insurance or other reasons. The payment of such uninsured liabilities would reduce the funds available to the Group. The occurrence of a signifi cant event that the Group is not fully insured against, or the insolvency of the insurer of such event, could have a material adverse effect on the Group’s fi nancial position, results of operations or prospects.

(f) Health, safety, operational and environmental hazards

The ownership and/or the operation of the oil and gas fi elds carry an inherent risk of liability related to worker health and safety and the environment, including the risk of government imposed orders to remedy unsafe conditions and/or to remediate or otherwise address environmental contamination, potential penalties for contravention of health, safety and environmental laws, licenses, permits and other approvals, and potential civil liability. Environmental legislation may also provide for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with oil and gas operations. Legislation may also require that wells and facility sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Furthermore, environmental legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fi nes and liability and potentially increased capital expenditures and operating costs. The discharge of oil, natural gas or other pollutants into the air, soil or water may give rise to liabilities to governments and third parties and may require the Group to incur costs to remedy such discharge.

Compliance with health, safety and environmental laws (and any future changes) and the requirements of licenses, permits and other approvals will remain material to the New Business. The Group will incur signifi cant capital and operating expenditures to comply with health, safety and environmental laws and to obtain and comply with licenses, permits and other approvals and to assess and manage its potential liability exposure. Nevertheless, the Group may become subject to government orders, investigations, inquiries or other proceedings (including civil claims) relating to health, safety and environmental matters.

34


The occurrence of any of these events or any changes, additions to or more rigorous enforcement of, health, safety and environmental laws, licenses, permits or other approvals could have a signifi cant impact on operations and/or result in additional material expenditures. As a consequence, no assurances can be given that additional environmental and workers’ health and safety issues relating to presently known or unknown matters will not require unanticipated expenditures, or result in fi nes, penalties or other consequences (including changes to operations) material to the Group’s business and operations.

(g) Changes in tax regulations

The Group’s operations in the oil and gas exploration, exploitation and production business are subject to taxation in the countries which the Group may operate in, including Indonesia, and it could be faced with increasingly complex tax laws. The amount of tax the Group pays could increase substantially as a result of changes in or new interpretations of these laws, which could have a material adverse effect on the Group’s liquidity and results of operations.

During periods of high profi tability, there may be calls for increased or windfall taxes on the revenue of energy resources. Taxes may increase or be imposed consequently. In addition, taxing authorities could review and question the Group’s tax returns leading to additional taxes and penalties which could have a material adverse effect on the fi nancial position of the Group.

(h) Fluctuations in interest rates and refi nancing risks

Interest rate fl uctuations are of particular concern to a capital-intensive industry such as that of exploration, exploitation and production of oil and gas. The Group faces interest rate and debt refi nancing risk in respect of fl oating-rate bank credit facilities and long-term fi nancings. The Group’s ability to refi nance debt on favourable terms is dependent on debt capital market conditions, which are inherently variable and diffi cult to predict.

(i) Failure of major counterparties to perform contractual obligations

The Group may enter into contracts with third-party counterparties, such as suppliers and contractors, to supply equipment or services for the New Business. Should one or more of these counterparties, such as the Group’s suppliers and/or contractors, be unable to meet their obligations under the contracts, this would result in possible loss of revenue, delay in production and increase in costs for the Group. Failure of any supplier and/or contractors to meet its obligations to the Group may result in the Group not being able to meet its commitments and thus lead to potential defaults of contracts with its customers.

(j) Reliance on access to necessary equipment from independent third-party providers

Part of PT Cepu’s obligations pursuant to the Tungkul Agreement and the Dandangilo Agreement is to procure equipment for the operation and management of the Dandangilo-Wonocolo and Tungkul Oil Fields, as well as to deliver the crude oil produced to PEP.

The fulfi lment of these obligations is dependent upon the availability of drilling and related

equipment in the particular areas where the production and extraction of crude oil is conducted. Demand for limited equipment such as drilling rigs, or access restrictions on such equipment, may affect the availability of, and the Target Group’s access to, such equipment. In the areas in which it operates there is signifi cant demand for drilling rigs and other related equipment and even if it is successful in obtaining access to drilling rigs and other equipment, it may only be after signifi cant delay. Failure by the Target Group or its contractors to secure necessary equipment could have a material and adverse effect on its business, results of operations, fi nancial condition and prospects.

35


PT Cepu contracts or leases services and capital equipment from third-party providers and will continue to do so. Such equipment and services may be scarce and not readily available. In addition, costs of third-party services and equipment have increased signifi cantly over recent years and may continue to rise. Scarcity of equipment and services and increased prices may in particular result from any signifi cant increase in exploration and development activities on a region by region basis. In the regions in which the Target Group operates, there is signifi cant demand for capital equipment and services. The unavailability and high costs of such equipment and services could result in a delay or non-completion of its projects and adversely affect the feasibility and profi tability of such projects, and therefore have a material and adverse effect on the Group’s business, results of operations, fi nancial condition and prospects.

PT Cepu and its offtaker, PEP, rely upon transportation systems, including systems owned and operated by third parties for the transport of oil and gas. It may be unable to access the transportation systems used currently or face diffi culty sourcing for alternative transportation systems. Further, PEP could become subject to increased tariffs imposed by government regulators or the third-party operators or owners of the transportation systems which could result in an increase in costs and a decrease in the profi t margins.

Additionally, importation of certain equipment and chemicals for drilling, exploration and production requires licenses of the relevant governmental agencies and the process of obtaining such licences may cause unexpected delay and substantial costs.

(k) Reliance on the discovery and development of additional reserves to replace produced reserves

The success of the New Business is dependent upon the continual acquisition, exploration or development of new oil and gas reserves to replace those produced and sold. If the Group is unsuccessful in locating and developing or acquiring new reserves, its ability to exploit and produce will decline over time due to depletion by production. The Group’s ability to achieve this objective of continual replacement of oil and gas reserves depends, in part, on its level of success in acquiring additional oil and gas reserves, and further exploration and development of the existing reserves base. Such exploration and development activities would expose the Group to a number of risks, including competition from other interested purchasers who may have larger fi nancial resources than it does; unidentifi ed historical or future liabilities of the operations that it may acquire; the inability to receive accurate and timely information about these operations in order to make informed investment decisions; problems in integrating acquired operations; problems in hiring and retaining qualifi ed personnel; as well as the geological risk that commercially recoverable reserves will not be discovered.

Exploration, development and the acquisition of reserves are capital intensive. If the Group is not successful in exploring for or developing new reserves, or acquiring contract areas containing proved plus probable reserves, its total proved plus probable reserves will decline, which will adversely affect its business, results of operations, fi nancial condition and prospects.

(l) Unanticipated increased or incremental risks

The oil and gas industry is capital intensive. To implement the business strategy for the New Business, the Group will invest in drilling and exploration activities and infrastructure. The Group’s current and planned expenditures on such projects may be subject to unexpected problems, costs and delays, and the economic results and the actual costs of these projects may differ signifi cantly from its current estimates.

36


The Group relies on suppliers and contractors to provide materials and services in conducting its exploration and production activities. Any competitive pressures on its suppliers and contractors, or substantial increases in the worldwide prices of commodities, such as steel, could result in a material increase of costs for the materials and services required to conduct its business. The cost increases may be the result of infl ationary pressures. For example, due to high global demand and a limited number of suppliers, the cost of oil and gas services and goods has increased signifi cantly in recent years and could continue to increase. Future increases could have a material adverse effect on the Group’s operating income, cash fl ows and borrowing capacity and may require a reduction in the carrying value of its contract areas and its planned level of spending for exploration and development, which depends upon its ability to commercially exploit any underlying petroleum quantities. Prices for the materials and services it depends on to conduct its business may not be sustained at levels that enable the Group to operate profi tably. The Group may also need to incur various unanticipated costs, such as those associated with personnel, transportation, government taxes and compliance with environmental and safety requirements. Personnel costs, including salaries, are increasing as the standard of living rises in the countries in which the Group operates, and as demand for suitably qualifi ed personnel in the oil and gas industry increases. An increase in any of these costs could have a material and adverse effect on the Group’s business, results of operations, fi nancial condition and prospects.

(m) Exposure to foreign exchange risks

The revenue from the New Business will be generated from sales to markets, which may include overseas markets. To the extent that the Group’s revenue, purchases and operating costs are not matched in the same currency, such as the Indonesian Rupiah, and to the extent there are timing differences between invoicing and collection of payment, as the case may be, the Group will be exposed to any adverse fl uctuations of the currency of the jurisdiction in which the Group will be engaging in to conduct its business, and the Group’s operating results may be materially or adversely affected.

(n) The New Business is subject to general risks associated with operating businesses outside Singapore

There are risks inherent in operating businesses overseas, which include unexpected changes in regulatory requirements, difficulties in staffing and managing foreign operations, social and political instability, fluctuations in currency exchange rates, potentially adverse tax consequences, legal uncertainties regarding the Group’s liability and enforcement, changes in local laws and controls on the repatriation of capital or profi ts. Any of these risks could adversely affect the Group’s overseas operations and consequently, its business, fi nancial performance, fi nancial condition and operating cash fl ow.

In addition, if the governments of countries in which the Group operates, such as Indonesia, tightens or otherwise adversely changes their laws and regulations relating to the repatriation of their local currencies, it may affect the ability of the Group’s overseas operations to repatriate profi ts to the Group and, accordingly, the cash fl ow of the Group will be adversely affected.

(o) The Group’s ability to borrow in the bank or capital markets may be adversely affected by a fi nancial crisis

The Group’s ability to borrow from banks or the capital markets to meet its fi nancial requirements is dependent on favourable market conditions. Financial crises in particular geographic regions, industries or economic sectors for example, the United States sub-prime mortgage crisis and the sovereign debt crisis in Europe and the United States, have, in the recent past, led and could in the future lead to sharp declines in the currencies, stock markets and other asset prices in those geographic regions, industries or economic sectors, in turn threatening affected companies, fi nancial systems and economies.

37


(p) Inability to locate, acquire, develop or produce oil and gas reserves

The Group’s long-term commercial success will depend on its ability to locate, acquire, develop and commercially produce oil and gas reserves. Without the continual addition of new reserves, any existing reserves that the Group may have at any particular time and the production therefrom will decline over time as existing reserves are exploited. A future increase in the Group’s reserves will depend not only on its ability to explore and develop any existing assets it may have from time to time, but also on its ability to select and acquire suitable production fi elds or prospects. No assurance can be given that the Group will be able to continue to locate satisfactory production fi elds for its acquisition or participation. Moreover, even if such acquisitions or participations are identifi ed, the Group may determine that the current market, terms of acquisition and participation or pricing conditions make such acquisitions or participations uneconomic. There is no assurance that further commercial quantities of oil and gas will be discovered or acquired by the Group.

(q) Inability to predict future oil and gas revenues

Future oil and gas exploration may prove to be unprofi table, as wells may be dry or may be productive but produce insuffi cient net revenues to return a profi t after drilling, operating and other costs. Completion of a well does not assure a profi t on the investment or recovery of drilling, completion and operating costs. Furthermore, drilling hazards or environmental damage could greatly increase the cost of operations, and various fi eld operating conditions may adversely affect the production from successful wells. These conditions include delays in obtaining governmental approvals or consents, shut-ins of connected wells resulting from extreme weather conditions, insufficient storage or transportation capacity or other geological and mechanical conditions. While diligent supervision of the wells and effective maintenance operations can contribute to maximising production rates over time, production delays and declines from normal fi eld operating conditions cannot be eliminated and can be expected to adversely affect revenue and cash fl ow levels on the Group’s fi nancials to varying degrees.

(r) Volatility of markets, prices and marketing

The marketability and price of oil and gas that may be produced, acquired or discovered by the Group will be affected by numerous factors beyond its control. Although not currently applicable in relation to the proposed Acquisition, in the future, depending on the future activities of the Group, the Group’s ability to market its oil and gas may depend upon its ability to acquire space on pipelines that deliver oil and gas to commercial markets. Depending on the future activities of the Group, the Group may also be affected by deliverability uncertainties related to the proximity of its reserves to pipelines and processing facilities and related to operational problems with such pipelines and facilities and extensive government regulation relating to price, taxes, royalties, land tenure, allowable production, the export of oil and gas and many other aspects of the oil and gas business.

Both oil and gas prices are unstable and are subject to fl uctuation. Any material decline in prices could result in a reduction of the Group’s net production revenue. The economics of producing from some wells may change as a result of lower prices, which could result in a reduction in the volumes of the Group’s reserves. The Group might also elect not to produce from certain wells at lower prices. All of these factors could result in a material decrease in the Group’s net production revenue causing a reduction in its oil and gas acquisition, development and exploration activities.

38


(s) Decreased productivity resulting from operational hazards

Oil and gas exploration, development and production operations are subject to all the risks and hazards typically associated with these operations. Such hazards would include fi re, explosion, blowouts, cratering, sour gas releases and spills, each of which may result in substantial damage to oil and gas wells, production facilities, other property and the environment or in personal injury to employees.

Oil and gas production operations are also subject to all the risks typically associated with such operations, including encountering unexpected formations or pressures, premature decline of reservoirs and the invasion of water into producing formations. Losses resulting from the occurrence of any of these risks could have a materially adverse effect on future results of operations, liquidity and fi nancial condition.

(t) Competition from major oil and gas players

All phases of the petroleum industry are competitive. Key areas in respect of which the Group faces competition include:

acquisition of exploration and production licenses through bidding processes run by governmental authorities;

alternative energy sources that may compete with or reduce demand for oil and gas;

acquisition of other companies that may already own licenses or existing hydrocarbon assets;

engagement of third-party service providers whose capacity to provide key services may be limited;

entering into commercial arrangements with customers;

purchase of capital equipment that may be scarce; and

employment of highly skilled personnel and professional staff.

The Group will inevitably compete with numerous other participants in the search for the acquisition of oil and gas production sites and, depending on future activities, in the marketing of oil and gas. Its competitors include established oil and gas companies with superior operating track records and who have substantially greater fi nancial resources, staff and facilities than those of the Group, as the case may be. Many of these competitors not only explore for and produce oil and gas, but also carry on refi ning operations and market hydrocarbon and other products on an international basis. These competitors may be able to pay more for producing oil and gas contract areas and exploratory prospects and to evaluate, bid for and purchase a greater number of contract areas and prospects than the Group’s fi nancial or personnel resources permit. This may result in higher than anticipated prices for the acquisition of licenses or assets, the hiring by competitors of key management or operatives, restrictions on the availability of equipment or services.

If the Group is unsuccessful in identifying suitable contract areas or continuing satisfactory relationships with existing partners and competing against other companies, its business, results of operations, fi nancial condition and prospects could be materially adversely affected.

39


(u) Title to assets may be defective

Although title reviews will generally be conducted prior to the purchase of most oil and gas producing properties or the commencement of drilling wells, such reviews do not guarantee or certify that an unforeseen defect in the chain of titles will not arise to defeat the Group’s claim which could result in a reduction or elimination of the revenue received by the Group.

(v) Assessments of the value of acquisitions

Acquisitions of oil and gas issuers and oil and gas assets are typically based on engineering and economic assessments made by independent engineers and the Group’s internal assessments. These assessments both will include a series of assumptions regarding such factors and recoverability and marketability of oil and gas, future prices of oil and gas and operating costs, future capital expenditures and royalties and other government levies which will be imposed over the producing life of the reserves. Many of these factors are subject to change and are beyond the Group’s control. In particular, the prices of and markets for oil and gas products may change from those anticipated at the time of making such assessment. In addition, all such assessments involve a measure of geologic and engineering uncertainty which could result in lower production and reserves than anticipated. Initial assessments of acquisitions may be based on reports by a fi rm of independent engineers that are not the same as the fi rm the Group uses for its year end reserve evaluations. Because each of these fi rms may have different evaluation methods and approaches, these initial assessments may differ signifi cantly from the assessments of the fi rm used by the Group. Any such instance may offset the return on and value of the Company’s shares.

(w) Delays in business operations

In addition to the usual delays in payments by purchasers of oil and gas to the Group or to the operator, and the delays by operators in remitting payment to the Group, payments between these parties may be delayed due to restrictions imposed by lenders, accounting delays, delays in the sale or delivery of products, delays in the connections of wells to a gathering system, adjustment for prior periods, or recovery by the operator of expenses incurred in the New Business. Any of these delays could reduce the amount of cash fl ow available for the business of the Group in a given period and expose the Group to additional third party credit risks.

(x) Alternatives to and changing demands for petroleum products

Full conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and gas, and technological advances in fuel economy and energy generation devices could reduce the demand for crude oil and other liquid hydrocarbons. The Group cannot predict the impact of changing demand for oil and gas products, and any major changes may have a material adverse effect on its business, fi nancial condition, results of operations and cash fl ows.

4.2.3 Risks Relating to Conducting Operations in Indonesia

(a) The business and operations of the Group may be affected by the political, economic and social environment in Indonesia

The New Business is mainly located in Indonesia and the Group’s main markets pursuant to the New Business will be in Indonesia. Accordingly, the Group’s business and future growth is highly dependent on the political, economic and social environment in Indonesia.

Adverse changes in the political, economic and social conditions in Indonesia such as changes in labour conditions, import and export regulations, tariffs, non-trade tariffs, barriers, custom restrictions, fl uctuations in exchange rates, economic recession and infl ation may adversely affect the Group’s business, operations and fi nancial performance.

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The laws and regulations in Indonesia or the interpretation and implementation of the same may be subject to change. Unfavourable changes in Indonesia laws, the Indonesia legal system or any changes in the policies implemented by the government of the Indonesia or the implementation of existing laws and policies which may result in currency and interest rate fl uctuations, capital restrictions, changes in treatment of land use rights and other property rights and changes in duties and taxes detrimental to the New Business may materially affect the Group’s operations, fi nancial performance and future growth.

From time to time, changes in law and regulations in Indonesia or the implementation thereof may also require the Group to obtain additional approvals and licences from the Indonesia authorities for the conduct of the New Business in Indonesia. In such event, the Group may need to incur additional expenses in order to comply with such requirements. This will in turn affect its fi nancial performance as its business costs will increase. Furthermore, there can be no assurance that such approvals or licences will be granted to the Group promptly or at all. If the Group experiences delay in obtaining or is unable to obtain such required approvals of licences, its operations and business in Indonesia and its overall fi nancial performance will be adversely affected.

(b) Government regulations relating to the New Business and the procurement of government licences and approvals in Indonesia

The Group’s operations in the oil and gas exploration, exploitation and production business will be subject to licenses, regulations and approvals for, inter alia, the exploration, development, construction, operation, production, marketing, pricing, transportation and storage of such resources. Similar licenses, regulations and approvals are also applicable to the Group in its capacity as an operator cooperating in production or to the service providers it engages. The governments of the countries in which the Group and/or the service providers may operate may exercise signifi cant infl uence over the oil and gas sector.

Any government action which affects the Group (such as a change in pricing policy or taxation rules or practice, or renegotiation or nullifi cation of existing concession contracts or exploration policy, laws or practice) could have a material adverse effect on the Group. In addition, the Indonesian government could also require the Company to grant to them revenues or shares of the relevant portions of the New Business, as equity participation by such governments might be a pre-condition for the grant of the necessary licences, or postpone or review projects, nationalise assets, or make changes to laws, rules, regulations or policies, which in each case, could adversely affect the Group’s business, prospects, fi nancial condition and results of operations. Possible future changes in the government, major policy shifts or increased security arrangements in Indonesia could have to varying degrees an adverse effect on the value of the Group. These factors could have a material adverse effect on the Group’s business, results of operations, fi nancial condition and prospects.

(c) Risk of non-compliance with governmental and regulatory requirements

Notwithstanding the adoption of any measures that are put in place by the Group, there is no assurance that the Group will be able to meet all the regulatory requirements and guidelines, or comply with all the applicable regulations at all times, or that it will not be subject to sanctions, fi nes or other penalties in the future as a result of non-compliance. If sanctions, fi nes and other penalties are imposed on the Group for failing to comply with applicable requirements, guidelines or regulations, its business, reputation, fi nancial condition and results of operations may be materially and adversely affected.

41


(d) Terrorism and militant activity

Indonesia, where the Group primarily operates and conducts the New Business has experienced terrorist and militant activity. There can be no assurance that further terrorist acts will not occur in the future. The fear of terrorist actions, either against the Group’s properties or generally, could have an adverse effect on the Group’s ability to adequately staff and/or manage the Group’s operations or could substantially increase the costs of doing so.

Any future terrorist acts in Indonesia, or countries neighbouring thereto, could destabilise the economy and increase internal divisions within the Indonesian government, and might result in concerns about stability in the region and negatively affect investors’ confi dence. Violent acts arising from and leading to instability and unrest have in the past had, and could continue to have, a material adverse effect on investment and confi dence in, and the performance of, the economies of Indonesia, and in turn, on the Group’s business. Any terrorist attack, including those targeting the Group’s properties, could interrupt parts of the Group’s business and materially and adversely affect the Group’s business, results of operations, fi nancial condition and prospects.

(e) Lack of infrastructure / poorly maintained infrastructure

Physical infrastructure in some areas in which the Group operates or intends to operate in the New Business, is obsolete or non-existent and in certain respects have not been adequately funded and maintained. Breakdowns or failures of any part of the physical infrastructure in such areas may disrupt the Group’s normal business activity, cause the Group to suspend operations or result in environmental damage to the surrounding areas. Further deterioration of the physical infrastructure in such areas may disrupt the transportation of goods and supplies, increase operational costs of doing business in these areas and generally interrupt business operations, any or all of which could have a material adverse effect on the Group’s business, results of operations, fi nancial condition and prospects.

(f) Uncertainty in the interpretation and application of laws and regulations

The courts in the jurisdiction in which the Group operates in the New Business, such as Indonesia, may offer less certainty as to the judicial outcome or a more protracted judicial process than is the case in more established economies. Businesses can become involved in lengthy court cases over simple issues when rulings are not clearly defi ned, and the poor drafting of laws and excessive delays in the legal process for resolving issues or disputes compound such problems.

Accordingly, the Group could face risks such as: (i) effective legal redress in the courts of such jurisdictions being more diffi cult to obtain, whether in respect of a breach of law or regulation, or in an ownership dispute; (ii) a higher degree of discretion on the part of governmental authorities and therefore less certainty; (iii) the lack of judicial or administrative guidance on interpreting applicable rules and regulations; (iv) inconsistencies or confl icts between and within various laws, regulations, decrees, orders and resolutions; or (v) relative inexperience or unpredictability of the judiciary and courts in such matters.

Enforcement of laws in Indonesia may depend on and be subject to the interpretation placed upon such laws by the relevant local authority, and such authority may adopt an interpretation of an aspect of local law which differs from the advice that has been given to the Group by local lawyers or even by the relevant local authority itself previously. Furthermore, there is limited or no relevant case law providing guidance on how courts would interpret such laws and the application of such laws to the Group’s contracts, joint operations, licenses, license applications or other arrangements.

42


There can be no assurance that an unfavorable interpretation or application of the laws in Indonesia will not adversely affect the Group’s contracts, joint operations, licenses, license applications or other legal arrangements. In certain jurisdictions, the commitment of local businesses, government offi cials and agencies and the judicial system to abide by legal requirements and negotiated agreements may be less certain and more susceptible to revision or cancellation, and legal redress may be uncertain or delayed. If the existing body of laws and regulations in the countries in which the Group operates are interpreted or applied, or relevant discretions exercised, in an inconsistent manner by the courts or applicable regulatory bodies, this could result in ambiguities, inconsistencies and anomalies in the enforcement of such laws and regulations, which in turn could hinder the Group’s long-term planning efforts and may create uncertainties in the Group’s operating environment.

5. THE PLACEMENT OF SHARES

5.1 Introduction to the Placement

Subject to the terms and conditions of the Placement Agreement, the Company has agreed to issue, and the Placement Agent has agreed, subject to the lodgement by the Company of an Offer Information Statement for the Placement, to procure subscriptions on a commercially reasonable efforts basis for up to 80,000,000 Placement Shares at not less than S$0.30 for each Placement Share.

Section 161 of the Companies Act requires a company to obtain the approval of its shareholders in a general meeting for the issue of shares by the company, except where such issue is undertaken pursuant a general mandate granted by shareholders in a general meeting.

Rule 805(1) of the Listing Manual requires an issuer to obtain the prior specifi c approval of shareholders in a general meeting for the issue of shares, save where such issue is undertaken pursuant to a general mandate granted by shareholders in a general meeting.

In addition, as the Placement Price represents a discount of approximately 13.32% to the VWAP of S$0.3461 for trades done on the Catalist on 10 July 2014 (being the full market day on which the Shares were traded prior to the signing of the Placement Agreement), the Company is required under Rule 811(3) of the Listing Manual to seek the specifi c approval of Shareholders for the issuance of the Placement Shares.

The Company intends to seek the specifi c approval of Shareholders for the allotment and issue of the Placement Shares at the EGM in accordance with Rules 805(1) and 811(3) of the Listing Manual and Section 161 of the Companies Act.

The Placement is not underwritten and will be undertaken pursuant to Section 277 of the SFA.

5.2 Placement Price

The minimum Placement Price of S$0.30 for each of the Placement Shares represents a discount of approximately 13.32% to the VWAP of S$0.3461 for trades done on the Shares on the Catalist on 10 July 2014 (being the full market day on which Shares were traded prior to the signing of the Placement Agreement).

The Placement Price was commercially agreed between the Company and the Placement Agent, after taking into consideration, inter alia, the historical trading prices and volume of the Shares on the Catalist. The Company and the Placement Agent will determine the Placement Price based on a bookbuilding process. If there is a strong investor demand for the Placement Price to be higher than S$0.30, the Company and the Placement Agent may agree on a higher price, taking into account factors including quality of demand and possible aftermarket performance.

43


As the Placement Price represents a discount of more than 10% to the VWAP, the Company is required under Rule 811(3) of the Listing Manual to seek the specifi c approval of Shareholders for the issuance of the Placement Shares.

5.3 Terms of the Placement

The Placement Shares represent approximately 25.4% of the issued share capital of the Company comprising 315,018,657 Shares as at the Latest Practicable Date and will represent approximately 16.9% of the enlarged issued share capital of the Company comprising 472,618,657 Shares on Completion (assuming 80,000,000 Placement Shares, 76,000,000 Consideration Shares and 1,600,000 Introducer Shares are issued).

The Placement Shares shall be sold free from any and all mortgages, charges, claims, securities, pledges, liens, equities, encumbrances or any other interests whatsoever and shall rank in all respects pari passu with the Shares existing at the date of issue of the Placement Shares, save that they shall not rank for any entitlements, distributions, dividends or rights (if any), the record date in respect of which falls prior to the date of issue of the Placement Shares.

The Placement Shares will not be offered for sale to, nor will subscriptions be procured from, nor will any invitation be made for subscription for or sale of the Placement Shares to, any person who is a director or substantial shareholder of the Company or other persons specifi ed in Rule 812(1) of the Listing Manual save for such persons falling within the exceptions specifi ed in Rule 812(3).

The Company shall pay to the Placement Agent a commission of 4.0% of the aggregate Placement Price for the Placement Shares for which the Placement Agent has procured subscribers (as determined in the pricing supplement to the Placement Agreement which sets out the number of Placement Shares placed and the Placement Price).

The Company will be making an application to the SGX-ST through the Sponsor for the listing of and quotation for the Placement Shares on the Catalist, and will make the necessary announcement upon receipt of the listing and quotation notice from the SGX-ST.

5.4 Conditions Precedent

Completion of the Placement is conditional upon the fulfi llment of, inter alia, the following conditions:

(a) the SPA not having been terminated and no fact, circumstance, event or situation having arisen that would cause the Company to reasonably believe that the Acquisition could not be completed;

(b) the listing and quotation notice being obtained from the SGX-ST for the dealing in, listing of and quotation for the Placement Shares on the Catalist in accordance with the terms of the Placement Agreement, and not having been revoked or amended and where such approval is subject to conditions, such conditions being reasonably acceptable to the Placement Agent and to the extent that any conditions to such approval are required to be fulfi lled on or before the completion date, they are so fulfi lled;

(c) the allotment and issuance of the Placement Shares not being prohibited by law or regulation or interpretation thereof (including without limitation, any statute, order, rule, regulation, request, judgement or directive promulgated or issued by any legislative, executive, judicial or regulatory body or authority (including without limitation, the Monetary Authority of Singapore and the SGX-ST)) in Singapore or other jurisdictions which are applicable to the Company or the Placement Agent;

44


(d) the determination of the number of Placement Shares for which the Placement Agent has procured subscription and the Placement Price, and the entry into of the pricing supplement on or before the cut-off date of 31 August 2014 (or such other date as the Company and the Placement Agent may agree);

(e) as of the completion date, the trading of the issued Shares on the SGX-ST not being suspended by the SGX-ST (other than a suspension or trading halt on a temporary basis requested by the Company) and the issued Shares not having been delisted from the SGX-ST;

(f) Shareholders’ approval for the following being obtained at an extraordinary general meeting of the Company to be convened:

(i) the Placement;

(ii) the proposed Acquisition;

(iii) the proposed issue and allotment of 1,600,000 new Shares to Tam Siew Foong; and

(iv) the proposed diversifi cation by the Company into the business of operating and producing oil in the oil fi elds;

(g) the representations, warranties and undertakings by the Company in the Placement Agreement remaining true and accurate in all material respects (or where already qualifi ed by materiality, in all respects) from the date of the Placement Agreement up to the completion date;

(h) the Company having performed in all material respects (or where already qualifi ed by materiality, in all respects) all of its relevant obligations to be performed under the Placement Agreement on or before the completion date;

(i) there having been, from the date of the Placement Agreement up to the completion date, no occurrence of any event nor the discovery of any fact rendering untrue or incorrect in any material respect (or where already qualifi ed by materiality, in any respect) any of the representations, warranties and undertakings contained in the Placement Agreement;

(j) the delivery to the Placement Agent on the completion date of a certifi cate in the form set out in the Placement Agreement; and

(k) an offer information statement in relation to the Placement in a form and substance reasonably satisfactory to the Placement Agent and which complies as to form and content with the Sixteenth Schedule of the Securities and Futures (Offers of Investment) (Shares and Debentures) Regulations 2005, having been lodged with and accepted by the SGX-ST, acting as agent on behalf of the Monetary Authority of Singapore.

If any of the conditions set forth above is not satisfi ed on or before 31 August 2014 or such other date as the Company and the Placement Agent may agree, the obligations of the Placement Agent and the Company under the Placement Agreement shall ipso facto cease and determine thereafter and in that event the Company and the Placement Agent shall be released and discharged from their respective obligations under the Placement Agreement (except for any liability accruing before or in relation to such termination) and the parties to the Placement Agreement shall (except for Clauses 9, 17, 18 and 20 of the Placement Agreement relating to indemnities, notices, governing law and jurisdiction and the Contracts (Rights of Third Parties) Act respectively) be under no further liability or obligation arising out of the Placement Agreement (except for any liability accruing before or in relation to such termination).

45


6. RATIONALE AND USE OF PROCEEDS

The rationale for the Transactions is as follows:

(a) The Target Group is in the growing business of enhancing the production of existing oil wells. The Acquisition presents a unique opportunity for the Company to prudently diversify into the upstream oil and gas sector.

(b) The strategic shareholding by JPEL as a Controlling Shareholder of the Company and its continued indirect equity participation in the Target Group pursuant to the Acquisition will be instrumental in ensuring the alignment of J PEL’s interest with that of the Company and the Target Group as a whole in the long term, and will incentivise JPEL to assist the Company in the development of the New Business.

(c) PT Cepu holds the exclusive rights to cooperate in conducting operations for extracting oil from the Dandangilo-Wonocolo and Tungkul Oil Fields.

(d) The cash proceeds raised from the Placement will be primarily used to fund the First Tranche of the Cash Consideration and the Shareholder’s Loan (to be extended by the Purchaser to the Target).

Please refer to Sections 2.4.1 and 2.3 of this Circular for more information on the Consideration payable to JPEL in respect of the Acquisition and the rationale and benefi ts of the Acquisition respectively.

The net cash proceeds from the Placement (after deducting expenses relating to the Placement) will be approximately S$22,700,000 (the “Net Proceeds”). The Net Proceeds will be used by the Company in the following estimated proportions:

Use of Proceeds Percentage Allocation (%)

First Tranche of the Cash Consideration in respect of the Acquisition

Approximately 60% to 66%

Shareholder’s Loan Approximately 20% to 28%

General working capital of the Group Approximately 6% to 20%

The Company will make periodic announcements on the use of the Net Proceeds as and when they are materially disbursed, and provide a status report on the use of the Net Proceeds in the Company’s annual report. The Company will disclose a breakdown with specifi c details on the use of the Net Proceeds for working capital in such announcements and annual reports. Where there is any material deviation from the stated use of Net Proceeds, the Company will announce the reasons for such deviation.

Pending the deployment of the Net Proceeds, such proceeds may be deposited with banks or fi nancial institutions, invested in short-term money market instruments or marketable securities, and/or used for any other purpose on a short-term basis, as the Directors may, in their absolute discretion, deem fi t from time to time.

The Net Proceeds from the Placement will be used (i) to fund the First Tranche of the Cash Consideration in respect of the Acquisition, (ii) to fund the Shareholder’s Loan and (iii) as general working capital of the Group. The Directors are of the opinion that after taking into consideration (a) the present bank facilities, the working capital available to the Group is suffi cient to meet its present requirements; and (b) the present bank facilities and Net Proceeds, the working capital available to the Group is suffi cient to meet its present requirements.

46


7. FINANCIAL EFFECTS OF THE TRANSACTIONS

The pro forma fi nancial effects of the Transactions set out below are based on the audited consolidated fi nancial statements of the Company and the Group for the fi nancial year ended 31 August 2013 and the unaudited consolidated statements of the Target for the fi nancial year ended 31 December 2013, and are subject to the following assumptions:

(a) that the Transactions were completed on 1 September 2012 for the purpose of calculating the pro forma EPS;

(b) that the Transactions were completed on 31 August 2013 for the purpose of calculating the pro forma NTA per Share;

(c) the maximum number of 80,000,000 Placement Shares is placed out by the Placement Agent at the Placement Price of S$0.30 per Placement Share; and

(d) the Second Tranche is not funded by an issuance of new Shares.

The fi nancial effects are only presented for illustration purposes, and are not intended to refl ect the actual future fi nancial situation of the Company or the Group after Completion.

7.1 Net Tangible Assets

Assuming that the Transactions were completed on 31 August 2013, the effect on the NTA per Share of the Group will be as follows:

Before the Transactions After the Transactions

Consolidated NTA attributable to Shareholders (S$’000)

8,268 57,522

Number of Shares 131,509,657 289,109,657

Consolidated NTA per Share attributable to Shareholders (cents)

6.29 19.90

7.2 Earnings per Share

Assuming that the Transactions were completed on 1 September 2012, the effect on the earnings per Share of the Group will be as follows:


Consolidated earnings after tax and minority interests (S$’000)

450 119

Weighted average number of Shares 131,509,657 289,109,657

Consolidated earnings per Share (cents) 0.34 0.04

47


7.3 Gearing

Assuming that the Transactions were completed on 31 August 2013, the effect on the gearing of the Group as at 31 August 2013 will be as follows:


Net debt(1) / (cash) (S$’000) (1,644) (4,007)

Total capital (S$’000) 21,332 68,612

Gearing (times)(2) (0.08) (0.06)

Notes:

(1) Net debt is calculated as borrowings (excluding trade and other payables, due to holding company, due to related companies and provisions) less cash and cash equivalents. Total capital is calculated as total equity plus net debt.

(2) Gearing is determined based on net debt divided by total capital.

8. NEW SHARE ISSUE MANDATE

8.1 New Share Issue Mandate

At the last general meeting of the Company held on 26 December 2013 (the “2013 AGM”), the Shareholders passed a resolution to authorise the Directors to allot and issue new shares and convertible securities in the capital of the Company (whether by rights issue or otherwise), provided that the aggregate number of Shares to be issued pursuant to such authority does not exceed fi fty per centum (50%) of the Company’s total issued share capital at the time of passing of the resolution (the “2013 General Mandate”).

The number of issued Shares as at the date of the 2013 AGM was 263,018,657 Shares, and the maximum number of new Shares that may be issued pursuant to the 2013 General Mandate is 52,603,731 Shares.

On 18 February 2014, the Company entered into a subscription agreement, pursuant to which the subscribers agreed to subscribe for 52,000,000 Shares (“2014 Subscription”).

As the 2013 General Mandate has been substantially exhausted by the 2014 Subscription, the Company is seeking Shareholders’ approval at the EGM for a mandate (the “New Share Issue Mandate”) to be given to the Directors to issue shares and convertible securities in the capital of the Company (whether by way of rights, bonus or otherwise) at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fi t.

The aggregate number of shares to be issued pursuant to the New Share Issue Mandate, including shares to be issued in pursuance of any convertible securities made or granted pursuant to this authority, shall not exceed hundred per centum (100%) of the total number of issued shares in the capital of the Company (excluding treasury shares) at the time of the passing of the New Share Issue Mandate, of which the aggregate number of shares and convertible securities to be issued other than on a pro-rata basis to existing Shareholders shall not exceed fi fty per centum (50%) of the total number of issued shares in the capital of the Company (excluding treasury shares).

48


Subject to such manner of calculation as may be prescribed by the SGX-ST, for the purpose of determining the aggregate number of shares that may be issued under the paragraph above, the percentage of the total number of issued shares (excluding treasury shares) shall be based on the Company’s total number of issued shares (excluding treasury shares) at the time such authority is given, after adjusting for:

(i) new shares arising from the conversion or exercise of any convertible securities;

(ii) new shares arising from exercising share options or vesting of share awards which are outstanding or subsisting at the time such authority is given, provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual; and

(iii) any subsequent bonus issue, consolidation or sub-division of shares.

If approved, the New Share Issue Mandate will take effect from the date of the EGM and continue in force (i) until the Company’s next annual general meeting or the date by which the next annual general meeting of the Company is required by the law to be held, whichever is earlier, or (ii) in the case of shares to be issued in accordance with the terms of convertible securities issued, made or granted pursuant to the New Share Issue Mandate, until the issuance of such shares in accordance with the terms of such convertible securities unless prior thereto, issues of shares are made to the full extent permitted by the New Share Issue Mandate or the New Share Issue Mandate is revoked or varied by the Company in general meeting.

8.2 Compliance with Listing Manual

In exercising the authority conferred under the New Share Issue Mandate, the Company will comply with the provisions of the Listing Manual for the time being in force, unless such compliance has been waived by the SGX-ST and the Articles of Association for the time being of the Company.

8.3 Rationale

The Directors believe that the proposed New Share Issue Mandate is in the best interests of the Company and its Shareholders. It will enable the Company to act quickly and take advantage of market conditions, in issuing shares or convertible securities, within the limits specifi ed, and avoid the delay and the expense of otherwise having to convene general meetings of the Company to approve each share issue or the making or granting of each specifi c convertible security.

8.4 Risks of the New Share Issue Mandate

(a) Dilution of shareholding

The proposed New Share Issue Mandate, once approved will empower the Directors to issue new Shares or convertible securities in the capital of the Company (whether by way of bonus issue, rights issue or otherwise), subject to the limitations set out in Section 8.1 above. This will allow the Company to undertake additional capital raisings and/or acquisitions by way of issuance of new Shares under the proposed New Share Issue Mandate provided the terms of the share issuances and/or acquisitions do not require Shareholders’ approval. In such instances, Shareholders’ shareholding in the Company will be diluted.

However, despite the proposed New Share Issue Mandate, the Company will still be subject to the Listing Manual, including but not limited to the relevant rules under Chapters 8 and 10 of the Listing Manual. Shareholders’ approval would still have to be sought if the terms of the share issuances pursuant to the additional capital raising and/or acquisition exceed certain thresholds. In such an instance, the Company will seek the approval of Shareholders for the issuance of Shares and details relating to the additional capital raising and/or acquisition will be detailed in a circular to be despatched to Shareholders allowing them to make an informed decision.

49


(b) Shareholders may not have the opportunity to consider terms of corporate actions

If the proposed New Share Issue Mandate is approved by Shareholders at the EGM, the Company will not need to seek specifi c Shareholder’s approval for certain corporate actions that the Company may undertake, including additional capital raising and/or acquisitions if the terms of such corporate actions do not exceed the thresholds as stated in the Listing Manual. In such cases, Shareholders will not have the opportunity to consider the terms of the corporate actions.

9. DIRECTORS’ OPINION ON WORKING CAPITAL

The Directors are of the opinion that after taking into consideration:

(a) the Group’s present bank facilities, the working capital available to the Group is suffi cient to meet its present requirements; and

(b) the Group’s present internal resources and bank facilities and the net proceeds of the Placement, the working capital available to the Group is suffi cient to meet its present requirements,

excluding its obligations in connection with the Transactions.

The Company has decided to undertake the Placement to fund the First Tranche of the Cash Consideration, the Shareholder’s Loan (to be extended by the Purchaser to the Target) and the fees and expenses in connection with the Acquisition and the Placement.

10. UNDERTAKING

Roots Capital Asia Limited has given an undertaking to the Company that it will vote in favour of the Ordinary Resolutions to be proposed at the EGM.

11. RECOMMENDATION BY DIRECTORS

Having reviewed the terms, inter alia, the rationale and fi nancial effects of the Transactions, the Directors (save for Lee Kok Wah, who has abstained from making any recommendations due to his position as director of the Target, and a shareholder of JPEL) are unanimously of the view that the Transactions are in the best interests of the Company, and they recommend that the Shareholders vote in favour of the Transactions at the EGM.

The Directors are of the opinion that the New Share Issue Mandate is in the best interest of the Company. Accordingly, the Directors recommend that Shareholders vote in favour of the ordinary resolution relating to the New Share Issue Mandate, at the EGM.

12. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

Save as disclosed in Sections 2.1.2 and 2.2 above, none of the Directors or the Substantial Shareholders of the Company has any interest, direct or indirect, in the Acquisition and the Placement, save for their respective shareholdings in the Company.

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13. SHAREHOLDING STRUCTURE OF THE COMPANY

The shareholding structure of the Company (including the interest of each of the Directors and Substantial Shareholders in the Shares) as at the Latest Practicable Date before the Transactions and immediately after the Transactions is set out below:

As at the Latest Practicable Date and before the Transactions Immediately after the Transactions

Direct Interest Deemed Interest Direct Interest Deemed Interest

Number of Shares %

Number of Shares %

Number of Shares %

Number of Shares %

Directors

Chin Siew Gim – – – – – – – –

Tan Kay Guan 652,000 0.21 – – 652,000 0.14 – –

Ng Say Tiong – – – – – – – –

Yeung Kin Bond, Sydney(1)

– – 76,275,000 24.21 – – 76,275,000 16.14

Chee Sanford – – – – – – – –

Valentin Schillo – – – – – – – –

Lee Kok Wah – – – – – – – –

Substantial Shareholders (excluding Directors)

Roots Capital Asia Limited

76,275,000 24.21 – – 76,275,000 16.14 – –

JPEL – – – – 76,000,000 16.08 – –

Blue Water – – – – – – 76,000,000(3) 16.08

Anthony Clive Reudavey

– – – – – – 76,000,000(4) 16.08

Charles Madhavan – – – – – – 76,000,000(4) 16.08

Placees(2) – – – – 80,000,000 16.92 – –

Tam Siew Foong – – – – 1,600,000 0.34 – –

Other Shareholders 238,091,657 75.58 238,091,657 50.38

Total 315,018,657 100.00 472,618,657 100.00

Notes:

(1) Yeung Kin Bond, Sydney holds 100.00% of the shares in the capital of Roots Capital Asia Limited and is deemed interested in the 76,275,000 Shares held by Roots Capital Asia Limited by virtue of Section 7 of the Companies Act.

(2) Presented for illustrative purposes only and on the assumptions that (a) none of the Placees has any interest in Shares as at the Latest Practicable Date and prior to the Placement and the Acquisition; and (b) the maximum number of 80,000,000 Placement Shares is placed out by the Placement Agent.

(3) Blue Water holds 30.4% of the shares in the capital of JPEL and is deemed interested in the 76,000,000 Shares to be held by JPEL by virtue of Section 7 of the Companies Act.

(4) Each of Charles Madhavan and Anthony Clive Reudavey holds 50% of the shares in the capital of Blue Water. Each of Charles Madhavan and Anthony Clive Reudavey is deemed interested in the 76,000,000 Shares to be held by JPEL by virtue of Section 7 of the Companies Act.

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14. EXTRAORDINARY GENERAL MEETING

The EGM will be held on 22 August 2014 at 10.00 a.m. at The Grassroots’ Club, 190 Ang Mo Kio Avenue 8, Singapore 568046 for the purpose of considering and, if thought fi t, passing with or without any modifi cations, the resolutions set out in the Notice of EGM on page N-1 of this Circular.

15. INTER-CONDITIONALITY OF THE ORDINARY RESOLUTIONS TO BE PASSED

In voting for the ordinary resolutions set out in the Notice of EGM, Shareholders should note that the ordinary resolution to approve the Acquisition (“Ordinary Resolution 1”), the ordinary resolution to approve the Introducer Consideration (“Ordinary Resolution 2”), the ordinary resolution to approve the Diversifi cation (“Ordinary Resolution 3”), and the ordinary resolution to approve the Placement (“Ordinary Resolution 4”) are inter-conditional upon each other and in the event that Ordinary Resolution 1, Ordinary Resolution 2, Ordinary Resolution 3 or Ordinary Resolution 4 is not approved by Shareholders, the proposed Acquisition, the issuance and allotment of the Introducer Shares and the proposed Diversifi cation will not be proceeded with.

For the avoidance of doubt, the ordinary resolution to approve the New Share Issue Mandate (“Ordinary Resolution 5”) is not inter-conditional upon the other Ordinary Resolutions.

16. ACTIONS TO BE TAKEN BY SHAREHOLDERS

Shareholders who are unable to attend the EGM and wish to appoint a proxy to attend and vote at the EGM on their behalf, may complete, sign and return the proxy form attached to the Notice of EGM in accordance with the instructions printed thereon as soon as possible and in any event so as to reach the registered offi ce of the Company at 50 Raffl es Place, #32-01, Singapore Land Tower, Singapore 048623 not later than 48 hours before the time fi xed for holding the EGM. The completion and return of the proxy form by a Shareholder will not prevent him from attending and voting at the EGM, if he wishes to do so, in place of his proxy.

A Depositor shall not be entitled to attend and vote at the EGM unless he is shown to have Shares entered against his name in the Depository Register as at 48 hours before the time fi xed for holding the EGM, as certifi ed by CDP to the Company.

17. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept full responsibility for the accuracy of the information given in this Circular and confi rm after making all reasonable enquiries, that to the best of their knowledge and belief, this Circular constitutes full and true disclosure of all material facts about the Transactions and the New Share Issue Mandate, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this Circular misleading.

Where information in this Circular has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Circular in its proper form and context.

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18. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents may be inspected at the registered offi ce of the Company at 50 Raffl es Place, #32-01, Singapore Land Tower, Singapore 048623 during normal business hours from the date of this Circular up to and including the date of the EGM:

(a) the Memorandum and Articles of Association of the Company;

(b) the SPA;

(c) the Supplemental Agreement;

(d) the QPR;

(e) the annual report of the Company for FY2013; and

(f) the Placement Agreement.

Yours faithfully For and on behalf of the Board of Directors ofGIKEN SAKATA (S) LIMITED

Tan Kay GuanChief Executive Offi cer

N-1

NOTICE OF EXTRAORDINARY GENERAL MEETING



Unless otherwise defi ned or the context otherwise requires, all capitalised terms herein shall bear the same meanings as used in the circular dated 7 August 2014 issued by the Company (the “Circular”).

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Giken Sakata (S) Limited (the “Company”) will be held on 22 August 2014 at 10.00 a.m. at The Grassroots’ Club, 190 Ang Mo Kio Avenue 8, Singapore 568046 for the purpose of considering and, if thought fi t, passing with or without any modifi cations the following Resolutions:

SHAREHOLDERS SHOULD NOTE THAT THE ORDINARY RESOLUTIONS 1, 2, 3 AND 4 ARE INTER-CONDITIONAL. ACCORDINGLY, THE APPROVAL OF A TRANSACTION OF AN ORDINARY RESOLUTION IS INTER-CONDITIONAL WITH THE APPROVAL OF EACH OF THE OTHER TRANSACTIONS TO BE APPROVED IN THE OTHER ORDINARY RESOLUTIONS. ORDINARY RESOLUTION 5 IS NOT INTER-CONDITIONAL WITH THE OTHER RESOLUTIONS.

ORDINARY RESOLUTION 1: THE PROPOSED ACQUISITION

That:

(a) approval be and is hereby given for the proposed acquisition of 624,079 shares in the capital of Cepu Sakti Energy Pte. Ltd. (the “Target“) from Java Petral Energy Pte. Ltd. (“JPEL”) for the consideration of up to S$48.0 million as a major transaction (the “Acquisition”), subject to the terms and conditions of the sale and purchase agreement entered into between the Company and JPEL dated 31 May 2014 as amended by the supplemental agreement with GSIHL and JPEL dated 2 July 2014 (the “SPA”);

(b) approval be and is hereby given for the proposed issue and allotment of 76,000,000 new ordinary shares in the capital of the Company (“Shares”) at the issue price of S$0.30, subject to the terms and conditions of the SPA (the “Consideration Shares”);

(c) approval be and is hereby given for the transfer of a controlling interest in the Company to JPEL arising from the allotment and issuance of the Consideration Shares pursuant to Rule 803 of the Listing Manual; and

(d) any of the directors of the Company (“Directors”) be and is hereby authorised to complete and to do all acts and things as he may consider necessary or expedient for the purposes of or in connection with the Acquisition and to give effect to this Ordinary Resolution 1 (including any amendment to the SPA, execution of any other agreements or documents and procurement of third party consents) as he shall think fi t and in the interests of the Company.

ORDINARY RESOLUTION 2: THE PROPOSED ISSUE AND ALLOTMENT OF 1,600,000 INTRODUCER SHARES TO TAM SIEW FOONG

That:

(a) and subject to and on completion of the Acquisition, approval be and is hereby given for the Company to issue 1,600,000 new ordinary Shares (the “Introducer Shares”) at the issue price of $0.30 per Introducer Share to Tam Siew Foong, as consideration for her services for introducing the Company to the Target in respect of the Acquisition; and

N-2


(b) any of the Directors be and is hereby authorised to complete and to do all acts and things as he may consider desirable, necessary or expedient to give effect to the matters referred to in paragraph (a) above as he shall think fi t and in the interests of the Company.

ORDINARY RESOLUTION 3: THE PROPOSED ALLOTMENT AND ISSUE OF UP TO 80,000,000 PLACEMENT SHARES

That:

(a) approval be and is hereby given for the allotment and issuance by the Company of up to 80,000,000 new ordinary Shares (the “Placement Shares”), at the issue price of not less than S$0.30 per Placement Share, on the terms and subject to the conditions of the Placement Agreement, pursuant to Rule 805(1) of the Listing Manual; and

(b) any of the Directors be and is hereby authorised to complete and to do all acts and things as he may consider desirable, necessary or expedient to give effect to the matters referred to in paragraph (a) above (including any amendment to the Placement Agreement, execution of any other agreements or documents or procurement of third party consents) as he shall think fi t and in the interests of the Company.

ORDINARY RESOLUTION 4: THE PROPOSED DIVERSIFICATION

That:

(a) approval be and is hereby given for the Company to undertake the diversifi cation of the Company and its subsidiaries’ business scope to include the business of exploration, exploitation and production of oil and gas as well as the provision of services to the upstream oil and gas sector (the “Diversifi cation”), and the entry by the Company into such contracts, agreements, and undertakings as the Directors may deem desirable, necessary or expedient to undertake the Diversifi cation;

(b) the Company be and is hereby authorised to invest in, purchase or otherwise acquire or dispose of, from time to time any such assets, investments and shares/interests in any entity pursuant to the Diversifi cation on such terms and conditions as the Directors deem fi t, and such Directors be and are hereby authorised to take such steps and exercise such discretion and do all such acts and things as they or he deem desirable, necessary or expedient or give effect to any such investment, purchase, or acquisition, disposition; and

(c) the Directors and each of them be and are hereby authorised to do all acts and things as they or each of them deem desirable, necessary, or expedient to give effect to the matters referred to in the above paragraphs of this Ordinary Resolution 4 as they or each of them may in their or each of their absolute discretion deem fi t in the interests of the Group.

ORDINARY RESOLUTION 5: THE PROPOSED NEW SHARE ISSUE MANDATE

That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of Section B of the Singapore Exchange Securities Trading Limited Listing Manual: Rules of Catalist (the “SGX-ST”), the Directors be authorised and empowered to allot and issue shares and convertible securities in the capital of the Company (whether by way of rights, bonus or otherwise) at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fi t provided that the aggregate number of the shares to be allotted and issued pursuant to this Ordinary Resolution 5 shall not exceed hundred per centum (100%) of the total number of issued shares in the capital of the Company (excluding treasury shares) at the time of the passing of this Ordinary Resolution 5, of which the aggregate number of shares and convertible securities to be issued other than on a pro-rata basis to all shareholders of the Company shall not exceed fi fty per centum (50%) of the total number of issued shares in the capital of the Company (excluding treasury shares) and that such authority shall,

N-3


unless revoked or varied by the Company in general meeting, continue in force (i) until the conclusion of the Company’s next annual general meeting or the date by which the next annual general meeting of the Company is required by the law to be held, whichever is earlier or (ii) in the case of shares to be issued in accordance with the terms of convertible securities issued, made or granted pursuant to this Ordinary Resolution 5, until the issuance of such shares in accordance with the terms of such convertible securities.

See Explanatory Note (i)

By Order of the BoardGiken Sakata (S) Limited

Ng Say Tiong Company Secretary

7 August 2014

EXPLANATORY NOTE:

(i) Ordinary Resolution 5 above, if passed, will empower the Directors from the date of this EGM until the date of the next annual general meeting or the date by which the next annual general meeting is required by law to be held or when varied or revoked by the Company in general meeting, whichever is the earlier, to allot and issue shares and convertible securities in the Company. The number of shares and convertible securities that the Directors may allot and issue under Ordinary Resolution 5 would not exceed hundred per centum (100%) of the total number of issued shares of the Company at the time of passing Ordinary Resolution 5. For issue of shares and convertible securities other than on a pro-rata basis to all shareholders, the aggregate number of shares and convertible securities to be issued shall not exceed fi fty per centum (50%) of the total number of issued shares of the Company.

For the purpose of Ordinary Resolution 5, the percentage of issued shares is based on the total number of issued shares at the time Ordinary Resolution 5 is passed after adjusting for (a) new shares arising from the conversion or exercise of convertible securities, (b) new shares arising from the exercise of share options or the vesting of share awards outstanding or subsisting at the time when Ordinary Resolution 5 is passed, provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual and (c) any subsequent bonus issue, consolidation or subdivision of shares.

Notes:

1. A member entitled to attend and vote at this meeting is entitled to appoint a proxy or proxies to attend and vote instead of him. A proxy need not be a member of the Company.

2. The form of proxy in the case of an individual shall be signed by the appointor or his attorney, and in the case of a corporation, either under its common seal or under the hand of an offi cer or attorney duly authorised.

3. If the form of proxy is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he thinks fi t.

4. If no name is inserted in the space for the name of your proxy on the form of proxy, the Chairman of the Meeting will act as your proxy.

5. The form of proxy or other instruments of appointment shall not be treated as valid unless deposited at the Company’s business offi ce at 50 Raffl es Place, #32-01, Singapore Land Tower, Singapore 048623 not less than 48 hours before the time appointed for holding the meeting and at any adjournment thereof.

6. For depositors holding their shares through The Central Depository (Pte) Limited in Singapore, the Directors have determined that it is more practicable for the depositor proxy form to be delivered to, collected, collated, reviewed and checked at the Company’s business offi ce at 50 Raffl es Place, #32-01, Singapore Land Tower, Singapore 048623 and as such will be counted as valid in regards to this meeting pursuant to the Company’s Articles of Association. The depositor proxy form, duly completed, must be deposited by the depositor(s) at the abovementioned offi ce of the Company’s Share Registrar in Singapore not less than 48 hours before the commencement of the EGM.

This page has been intentionally left blank.

PROXY FORM

GIKEN SAKATA (S) LIMITED (Incorporated in the Republic of Singapore)(Company Registration Number: 197903879W)

PROXY FORM

*I/We (Name)

of (Address)

being *a member/members of GIKEN SAKATA (S) LIMITED (the “Company”), hereby appoint:

Name Address *NRIC / PassportNumber

Proportion of shareholdings to be represented by proxy

Number of Shares

%

*and/or

or failing *him/them the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Extraordinary General Meeting of the Company to be held on 22 August 2014 at 10.00 a.m. at The Grassroots’ Club, 190 Ang Mo Kio Avenue 8, Singapore 568046 and at any adjournment thereof.

*I/We direct *my/our *proxy/proxies to vote for or against the Ordinary Resolutions to be proposed at the Extraordinary General Meeting as indicated with an “X” in the spaces provided hereunder. If no specifi ed directions as to voting are given, the *proxy/proxies will vote or abstain from voting at *his/their discretion.

To be used on a show of hands

To be used in the event of a poll

No. Ordinary ResolutionFor(1) Against(1) Number of

votes for(2)Number of votes against(2)

1. To approve the Acquisition

2. To approve the proposed issue and allotment of 1,600,000 Introducer Shares to the Introducer

3. To approve the Placement

4. To approve the Diversifi cation

5. Proposed New Share Issue Mandate

(1) Please indicate your vote “For” or “Against” the Resolution.(2) If you wish to use all your votes “For” or “Against”, please indicate with an “X” within the box provided. Otherwise, please

indicate the number of votes.

Dated this day of 2014

Signature(s) of Member(s) or Common Seal of Corporate Shareholder

*Please delete accordingly Important: Please read notes overleaf.

IMPORTANT:

1. For investors who have used their CPF money to buy Shares in Giken Sakata (S) Limited, this Circular is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

Total Number of Shares in:

(a) CDP Register

(b) Register of Members

PROXY FORM

Notes:

1. A member of the Company entitled to attend and vote at the EGM is entitled to appoint one or two proxies to attend and vote in his stead.

2. Where a member appoints more than one proxy, he/she should specify the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy and if no percentage is specifi ed, the fi rst named proxy shall be treated as representing 100 per cent of the shareholding and the second named proxy shall be deemed to be an alternate to the fi rst named.

3. A proxy need not be a member of the Company.

4. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defi ned in Section 130A of the Companies Act, Cap. 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members of the Company, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and registered in your name in the Register of Members, you should insert the aggregate number of Shares. If no number is inserted, this form of proxy will be deemed to relate to all the Shares held by you.

5. The instrument appointing a proxy or proxies must be deposited at the Company’s business offi ce at 50 Raffl es Place #32-01 Singapore Land Tower, Singapore 048623 not less than 48 hours before the time set for the EGM.

6. The instrument appointing a proxy or proxies must be under the hand of the appointor or by his/her attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised offi cer.

7. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certifi ed copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

8. A corporation which is a shareholder of the Company may, in accordance with Section 179 of the Companies Act, Cap. 50 of Singapore, authorise by resolution of its directors or other governing body such person as it thinks fi t to act as its representative at the EGM.

9. The Company shall be entitled to reject the instrument appointing a proxy or proxies, if it is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifi ed on the instrument appointing a proxy or proxies. In addition, in the case of shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies if a shareholder of the Company, being the appointor, is not shown to have shares entered against his/her name in the Depository Register as at 48 hours (being two (2) Business Days) before the time appointed for holding the EGM, as certifi ed by The Central Depository (Pte) Limited to the Company.

GIKEN SAKATA (S) LIMITED - GSS Energy Limited€œOil Fields”: Means the Dandangilo-Wonocolo and...

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