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NOTES TO THE

FINANCIAL STATEMENTS

17 FORTERRA UNIT OPTION SCHEME

Prior to the constitution of the Trust, certain directors of CREO and the employees of Treasury

Holdings China Limited (“THCL”) and Treasury Holdings, were granted CREO Share Options in the

implementation of the CREO Share Scheme as approved by the Board of Directors of CREO. In

conjunction with the acquisition of CREO and the listing of the Trust on the mainboard of the SGX-

ST, a Forterra Unit Option Scheme (formerly known as TCT Unit Option Scheme) was introduced

to replace the CREO Share Scheme on 21 June 2010. As such, the Trustee-Manager granted the

Forterra Unit Options to the existing holders of the CREO Share Options, in consideration for any

CREO Share Options which they surrender prior to, and conditional upon, the listing of the Units of

the Trust on the mainboard of the SGX-ST. The terms of the Forterra Unit Option are equivalent to

the terms of the CREO Share Options, so that the rights of the holders of the CREO Share Options

will not be prejudiced.

The fair value amount in respect of the outstanding options that had been charged through the

income statement of CREO and the fair value amount of the relevant employee benefits that was

required to be settled in equity of CREO prior to the acquisition of CREO made by the Trust were

recognised in the Unitholders’ funds of the Trust.

The fair values of the options were calculated using the binomial option pricing model. The original

currency of the options under the CREO Share Scheme was GBP. Following the listing of the Trust

on SGX-ST, options under Forterra Unit Option Scheme are measured in SGD at S$17.6 million, being

the higher of the fair value of the options under the CREO Share Scheme at grant date or modified

fair value under the Forterra Unit Option Scheme on modification date as follows:

Tranches

One

Two

Three

Four

Five

Six

Seven

Exercise price (S$)

0.35

3.10

3.30

2.60

3.10

Number of options

3,825,000 3,810,000

75,000 150,000 2,000,000 400,000 575,000

Expected volatility

20.95%

22.21%

21.87% 53.89% 40.40% 36.90%

Expected life (years)

3.8

4.5

6.0

3.8

4.1

Risk free rate

5.24%

5.50%

4.33%

4.47%

0.87%

0.55%

Earliest exercise date

21/6/2010 21/6/2010 21/6/2010 21/6/2010 10/9/2013 3/3/2012

1/1/2013

Expiry date

24/4/2014 4/6/2014 2/12/2014 23/1/2015 10/9/2015 31/12/2014 31/12/2015