QAF LIMITED

Company Registration No. 195800035D

(Incorporated in the Republic of Singapore)

ANNOUNCEMENT IN CONNECTION WITH THE COMPANY'S EGM TO BE HELD ON 21 DECEMBER 2021 RELATING TO THE DISPOSAL BY THE QAF GROUP OF THE PRIMARY PRODUCTION BUSINESS IN AUSTRALIA ("DISPOSAL") AND THE SPECIAL DIVIDEND

  1. Introduction: QAF Limited ("QAF" or the "Company") refers to:
    1. its Circular to Shareholders and Notice of Extraordinary General Meeting ("EGM") dated 6 December 2021 ("Circular") notifying shareholders that the EGM of the Company will be held on 21 December 2021 at 11.00 a.m. by electronic means, and the Company's announcement dated 14 December 2021 relating to a proposed amendment to Ordinary Resolution 2; and
    2. the announcement issued by the Company on 6 December 2021 setting out the alternative arrangements relating to attendance at the EGM by electronic means and submission of substantial and relevant questions in advance.
  3. Response to questions from shareholders: The Company would like to thank shareholders for submitting their questions in advance of the EGM. Responses to substantial and relevant questions which have been submitted by verified shareholders are set out in Annex A.

By Order of the Board

Serene Yeo

Company Secretary

18 December 2021

1

ANNEX A

Responses to Substantial and Relevant Questions

Based on questions received from shareholders, the Company sets out its responses below, focussing on substantial and relevant questions. As some of the questions submitted overlap, the Company has set out its responses by way of subject matter/ themes. The information released in this announcement should be read in conjunction with the Company's Circular.

Question

Response

Topic 1: Rationale for the Disposal

We have received a

The Board's rationale for the Disposal has been provided in section 5 of the Circular to Shareholders. We would reiterate that the

question relating to the

disposal of the Primary Production Business would enable the Group to focus on and support the growth of the Bakery and Distribution

rationale for the

and Warehousing Businesses through funding any equity contribution requirement of these capital expenditures, and enable the Group

Disposal.

to invest in new business opportunities related to these core businesses. Further, the Primary Production business has historically been

a cyclical and volatile business being significantly dependent on and affected by factors such as commodity pork prices, grain costs and

weather, compared with the Group's core Bakery and Distribution & Warehousing businesses, which have generated relatively higher

and more stable margins and returns. Please see Chart (including Notes) below on the historical EBITDA of the three segments of the

Group's business.

A-1

Question

Response

Note 1: The drop in the EBITDA of the Bakery segment from approximately S$85 million in 2015 to S$54 million in 2016 is attributable to the divestment of 20% of GBKL held by the Group, resulting in a reduction of the Group's shareholding from 70% to 50% and GBKL ceasing to be a subsidiary.

Note 2: The increase in the EBITDA of the Bakery segment from approximately S$50 million in 2019 to S$80 million in 2020 is attributable to higher demand from panic buying during the Covid-19 pandemic, especially at its onset.

Topic 2: Financial Matters

We have received

The Disposal will monetize our Primary Production Business and is expected to bring in approximately S$150 million in cash. Please see

various questions

the table below. The financials in the table are based on the defined financial condition of the Primary Production entities as at 30

relating to financial

November 2021.

aspects of the

Disposal.

The final cash proceeds will be based on the defined financial condition of the Primary Production entities immediately before the Completion Date. The final numbers can only be determined after the financials, as at the relevant time immediately before Completion, are available. On Completion, we will receive an initial payment of the estimated sale price of an amount of approximately A$157 million.

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Question

Response

After Completion, the final adjustment to the sale price, if any, is expected to be in 1H2022 (subject to the terms of the Sale & Purchase

Agreement).

By way of illustration, on a proforma basis, the Disposal would improve the QAF Group's net cash position from approximately S$10

million to S$145 million at the end of FY2020, assuming the sale had been completed in FY2020. The significant net cash position will

enable the QAF Group to focus on and support the expansion of the Bakery operations in Singapore, Malaysia and Philippines as well as

the Distribution and Warehousing division. Please see Chart 1 below for the illustration described above.

CHART 1

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Question

Response

The Disposal however will result in the Primary Production entities ceasing to be a part of the QAF Group. This means that post- completion, the financials of the Primary Production entities will no longer form part the QAF Group's financial results. See please see Chart 2 below:

CHART 2

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QAF Limited published this content on 18 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 December 2021 12:09:07 UTC.