THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR … · Venue of the EGM : Aspena Room, Level 1,...

(Company No. 305530-A)(Incorporated in Malaysia)

CIRCULAR TO SHAREHOLDERS

IN RELATION TO

PROPOSED ACQUISITION OF A PIECE OF LAND HELD UNDER COUNTRY LEASE NO. 215465802 MEASURING APPROXIMATELY 1.709 HECTARE SITUATED AT KG KEPAYAN, DISTRICT OF PENAMPANG (“LOT G LAND”) FOR A TOTAL CASH CONSIDERATION OF RM16.3 MILLION

AND

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

Adviser

Sierac Corporate Advisers Sdn Bhd(Company no.: 515853-A)

The Notice of the Extraordinary General Meeting (“EGM”) together with the Form of Proxy are enclosed in this Circular.

Date and time of the EGM : Friday, 16 November 2018 at 11:00 a.m., or at any adjournment thereof

Venue of the EGM : Aspena Room, Level 1, Grandis Hotels and Resorts, Suria Sabah Shopping Mall, 1A, Jalan Tun Fuad Stephens, 88000 Kota Kinabalu, Sabah

Last date and time for lodging the Form of Proxy

: Wednesday, 14 November 2018 at 11:00 a.m.

Shareholders are advised to refer to the Notice of the EGM and the accompanying Form of Proxy which are enclosed. The Form of Proxy must be lodged with the Company’s Share Registrar at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South City, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur on or before the date and time indicated above or at any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the EGM should you subsequently decide to do so.

This Circular is dated 31 October 2018

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional advisers immediately.

Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representation as to itsaccuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular.



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BERTAM ALLIANCE BERHAD(Company No. 305530-A)(Incorporated in Malaysia)


NOTICE IS HEREBY GIVEN THAT an Extraordinary General Meeting (“EGM”) of Bertam Alliance Berhad (“Bertam” or the “Company”) will be held at Aspena Room, Level 1, Grandis Hotels and Resorts, Suria Sabah Shopping Mall, 1A, Jalan Tun Fuad Stephens, 88000 Kota Kinabalu, Sabah on Friday, 16 November 2018 at 11:00 a.m., or at any adjournment thereof, for the purpose of considering and, if thought fit, passing with or without modification the following resolution:

ORDINARY RESOLUTION 3

PROPOSED ACQUISITION OF A PIECE OF LAND HELD UNDER COUNTRY LEASE NO. 215465802 MEASURING APPROXIMATELY 1.709 HECTARE SITUATED AT KG KEPAYAN, DISTRICT OF PENAMPANG (“LOT G LAND”) FOR A TOTAL CASH CONSIDERATION OF RM16.3 MILLION (“PROPOSED ACQUISITION”)

“THAT subject to approval and consent of all the relevant authorities or parties being obtained (if required), approval be and is hereby given to Wow Land Sdn Bhd to acquire the Lot G Land, for a total cash consideration of RM16.3 million and upon the terms and conditions as stated in the sale and purchase agreement dated 15 December 2017 and as amended by the supplemental agreement dated 15 January 2018 entered into between Wow Land Sdn Bhd and Jumat (including any amendment and/or extension thereof as mutually agreed).

AND THAT the Directors of the Company be and are hereby authorised to act for and on behalf of the Company to do all acts, deeds, things and execute all necessary documents as they may consider necessary or expedient or in the best interest of the Company with full power to assent to any conditions, variations, modifications and/or amendments in any manner as may be required or permitted by any relevant authorities and to deal with all matters relating thereto and to take such steps and do all acts and things in any manners they may deem necessary or expedient to implement, finalise and give full effect to the Proposed Acquisition.”

Note: Other resolutions will be tabled by the Company at the forthcoming EGM, further details of which are set out in the circular to shareholders in relation to the Proposed JV Ratifications (as defined therein), which will be despatched separately. Please refer to the respective circular to shareholders for further details to be tabled.

By order of the Board BERTAM ALLIANCE BERHAD

Tan Tong Lang (MAICSA 7045482)Thien Lee Mee (f) (LS 0009760)Joint Secretaries

Kuala Lumpur31 October 2018

Notes:

1. For the purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd. to make available to the Company, a Record of Depositors as at 8 November 2018. Only a member whose name appears on this Record of Depositors shall be entitled to attend this meeting or appoint a proxy to attend, speak or vote on his/her behalf.

2. A member entitled to attend and vote at this meeting is entitled to appoint proxy/proxies to attend, speak and vote in his stead. A proxy may but need not be a member of the Company.



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DEFINITIONS

I

For the purpose of this Circular and the accompanying appendices, except where the context otherwise requires, the following words and abbreviations shall apply throughout this Circular and shall have the following meanings:

Act : Companies Act, 2016

Adviser or SCA : Sierac Corporate Advisers Sdn Bhd (515853-A)

Balance Purchase Price : The balance purchase price of RM13.17 million, which has been paid by WLSB to WLSB’s solicitors on 18 January 2018 as stakeholders and shall be released to Jumat based on the terms and conditions under the Supplemental Agreement

BDSB : Bertam Development Sdn Bhd (45881-X), a wholly-owned subsidiary of Bertam

Bertam or Company : Bertam Alliance Berhad (305530-A)

Bertam Group or Group : Bertam and its subsidiaries, collectively

Board : Board of Directors of the Company

Bursa Securities : Bursa Malaysia Securities Berhad (635998-W)

Cheras Lands Disposal : Disposal of two (2) parcels of freehold land held under Geran Mukim 563, Lot 809 and Geran Mukim 415, Lot 810, both located in Mukim Cheras, Daerah Hulu Langat, Negeri Selangor by MV Properties to Tujuan Optima for a total cash consideration of RM128.0 million

Circular : This circular to shareholders of the Company dated 31 October 2018 in relation to the Proposed Acquisition

Completion Documents : Original issue documents of title in respect of the Lot G Land, the duly executed MOT in respect of the Lot G Land, and the latest current year quit rent and assessment receipts in respect of the Lot G Land

Country Lease : Lands with meaning as set out in the Sabah Land Ordinance, as amended from time to time including any re-enactment thereof

CPO : Crude palm oil

Deposit : The deposit of RM3.13 million which was paid in tranches and had been settled by WLSB by 22 April 2016, pursuant to the arrangement as provided in the Letter of Understanding and SPA

Director(s) : The director(s) of Bertam and shall have the meaning given in Section 2(1) of the Capital Markets and Services Act 2007 and Section 2(1) of the Act

E&E : Electronic and electrical

EGM : Extraordinary general meeting

EPS : Earnings per share

EU : European Union

FPE : Financial period ended/ending

FYE : Financial year ended/ending

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DEFINITIONS (Cont’d)

II

GDC : Gross development cost GDP : Gross domestic product GDV : Gross development value GNI : Gross national income ITCC : International Technology & Commercial Centre JPH : Jurunilai & Perunding Hartanah Sabah Jumat : Jumat Bin Laiyo JV : Joint venture JVA : Joint venture agreement Letter of Confirmation : Letter of understanding and confirmation dated 1 December 2016 between Jumat

and BDSB in which BDSB nominated WLSB to enter into the SPA on BDSB’s behalf with Jumat for the acquisition of Lot G Land

Letter of Understanding : Letter of understanding dated 5 May 2015 between Jumat and BDSB in relation

to the undertaking by BDSB to pay the commitment fees of RM3.13 million for the Proposed Acquisition, in which the sum paid shall form part of Purchase Price

Listing Requirements : Main Market Listing Requirements of Bursa Securities, as amended from time to

time Lot A Lands : Lands held under Native Title No. 213038825 and 16 others, measuring 24.265

acres, located off Jalan Pintas-Donggongon, Kepayan, District of Penampang Lot B1 to Lot B6 Lands : Lands held under Native Title No. 213021526, Native Title No. 213021535,

Native Title No. 213021544, Native Title No. 213021562, Native Title No. 213021553 and Native Title No. 213021580, measuring 6.991 acres, located off Jalan Pintas-Donggongon, Kepayan, District of Penampang

Lot B7 Land : Land held under Native Title No. 213021571, measuring 0.813 acres, located off

Jalan Pintas-Donggongon, Kepayan, District of Penampang Lot B Lands : Lot B1 to Lot B6 Lands and Lot B7 Land collectively Lot C2 Land : Land held under Native Title No. 213206896, measuring 1.260 acres, located off

Jalan Pintas-Donggongon, Kepayan, District of Penampang Lot C5(a) Land : Such parcel of land comprising 200,000/2,531,000 undivided share of land held

under Native Title No. 213021973, measuring 0.200 acres, located off Jalan Pintas-Donggongon, Kepayan, District of Penampang

Lot C5(b) Land : Such parcel of land comprising 746,000/2,531,000 undivided share of land held

under Native Title No. 213021973, measuring 0.746 acres, located off Jalan Pintas-Donggongon, Kepayan, District of Penampang

Lot C5 Land : Lot C5(a) Land and Lot C5(b) Land collectively Lot C Lands : Lot C2 Land and Lot C5 Land collectively

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III

Lot G Land : Country Lease 215465802, measuring 1.709 hectares (approximately 4.223 acres), located at Kampung Kepayan, District of Penampang, State of Sabah

LPD : 26 October 2018, being the latest practicable date prior to the printing of this

Circular L&S Department : Lands and Surveys Department Main Market : Main Market of Bursa Securities MDP : Majlis Daerah Penampang MOT : The Memorandum of Transfer in respect of the Lot G Land MOS : Memorandum of Sublease pursuant to the Sabah Land Ordinance MOS- Lot C2 Land : MOS dated 25 October 2016 entered into between SASB and Rosalia in relation

to Lot C2 Land MOS- Lot C5(a) Land : MOS dated 25 October 2016 entered into between SASB and Rosalia in relation

to Lot C5(a) Land MRT : Mass rapid transit MRT-SSP line : MRT- Sungai Buloh- Serdang- Putrajaya line NA : Net assets Native Title(s) : Lands with meaning as set out in the Sabah Land Ordinance, as amended from

time to time including any re-enactment thereof OECD : Organization for Economic Cooperation and Development O&G : Oil and gas PN17 : Practice Note 17 of the Listing Requirements PPA1M : Perumahan Penjawat Awam 1Malaysia Proposed Acquisition : Proposed acquisition of Lot G Land by WLSB from Jumat for a total cash

consideration of RM16.3 million Proposed JV Ratification – Lot A Lands

: Proposed ratification on the JV between SHSB and Jumat for the proposed development of Lot A Lands into residential development, strictly conditional upon approval of the application for amalgamation, subdivision and conversion of the land titles in Lot A Lands from Native Titles into Country Lease titles and/or Town Lease lands

Proposed JV Ratification – Lot B Lands and Lot C Lands

: Proposed ratification on the JV between SASB and Rosalia for the proposed development of Lot B Lands and Lot C Lands into commercial development, strictly conditional upon approval of the application for amalgamation, subdivision and conversion of the land titles in Lot B Lands and Lot C Lands from Native Titles into Country Lease titles and/or Town Lease lands

Proposed JV Ratifications

: Proposed JV Ratification – Lot A Lands and Proposed JV Ratification – Lot B Lands and Lot C Lands, collectively

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IV

Purchase Price : The consideration of RM16.30 million paid by WLSB to Jumat and/or WLSB’s solicitors pursuant to the SPA and Supplemental Agreement

RCT : R&C Cergas Teguh Sdn Bhd (520886-V), the petitioner in winding up petition no.

WA-28NCC-518-08/2017 in High Court of Malaya and the appellant in appeal civil suit no. W-02(C)(A)-1277-0/2017 in the Appeal Court of Malaysia

RGT2 : Rapid re-gasification terminal 2 RM and sen : Ringgit Malaysia and sen, respectively Rosalia : Rosalia Anthony Sabah Land Ordinance : Sabah Land Ordinance (Cap. 68) SASB : Sunrise Avenue Sdn Bhd (225002-P), a wholly-owned subsidiary of BDSB,

which is in turn wholly-owned by Bertam SDC : Sabah Development Corridor SEDIA : Sabah Economic Development and Investment Authority SHAREDA : Sabah Housing and Real Estate Developers Association SHSB : Sepakat Heights Sdn Bhd (207609-U), a wholly-owned subsidiary of BDSB,

which is in turn wholly-owned by Bertam SICC : Sabah International Convention Centre SITC : Sabah International Technology Centre SPA : Sale and Purchase Agreement dated 15 December 2017 entered into between

WLSB and Jumat for the Proposed Acquisition SPE : Setiawan-Pantai Expressway Supplemental Agreement : Supplemental agreement dated 15 January 2018 entered into between WLSB and

Jumat for the Proposed Acquisition Town Lease : Lands with meaning as set out in the Sabah Land Ordinance, as amended from

time to time including any re-enactment thereof Trigger Date : 4 April 2018, being the date that the Board announced that the Company has

triggered the prescribed criteria pursuant to Paragraph 2.1(c) of PN 17 of the Listing Requirements

Tujuan Optima : Tujuan Optima Sdn Bhd (1126805-P) USD : United States dollars Winding-up Order : A sealed copy of the Winding Up by Court dated 30 November 2017 and Sealed

Allocator dated 19 December 2017 WLSB : Wow Land Sdn Bhd (1001293-W), a wholly-owned subsidiary of BDSB, which

is in turn wholly-owned by Bertam All references to “you” in this Circular are addressing the shareholders of the Company.

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V

Words denoting the singular shall, where applicable, include the plural and vice versa. Words denoting the masculine gender shall, where applicable, include the feminine and/or neuter genders, and vice versa. Any reference to persons shall include a corporation, unless otherwise specified. Any reference in this Circular to any legislation is a reference to that legislation as for the time being amended or re-enacted. Any reference to a time of a day in this Circular shall be a reference to Malaysian time, unless otherwise specified. Any discrepancy in the tables between the amounts listed and the totals in this Circular are due to rounding.

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CONTENTS

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LETTER TO THE SHAREHOLDERS OF BERTAM IN RELATION TO THE PROPOSED ACQUISITION CONTAINING:

1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED ACQUISITION 2 3. RATIONALE FOR THE PROPOSED ACQUISITION 9 4. RISK FACTORS 9 5. ECONOMY AND INDUSTRY OVERVIEW AND PROSPECTS OF THE LOT G

LAND 11

6. EFFECTS OF THE PROPOSED ACQUISITION 15 7. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS

CONNECTED WITH THEM 15

8. BOARD’S STATEMENT AND RECOMMENDATION 15 9. APPROVALS REQUIRED 16 10. OTHER CORPORATE EXERCISES ANNOUNCED BUT PENDING COMPLETION 16 11. ESTIMATED TIMEFRAME FOR COMPLETION 16 12. EGM 16 13. FURTHER INFORMATION 16 APPENDICES I. VALUATION CERTIFICATE OF LOT G LAND 17 II. UPDATED VALUATION CERTIFICATE OF LOT G LAND 27 III. FURTHER INFORMATION 32 NOTICE OF THE EGM ENCLOSED FORM OF PROXY ENCLOSED

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LETTER TO THE SHAREHOLDERS OF BERTAM IN RELATION TO THE PROPOSED ACQUISITION

1


Registered Office:

Suite 10.02, Level 10The Gardens South TowerMid Valley CityLingkaran Syed Putra59200 Kuala Lumpur

31 October 2018

Board of Directors:

Datuk Mohamed Arsad Bin Sehan (Chairman/Senior Independent Non-Executive Director)Lim Nyuk Foh (Managing Director)Chiew Boon Chin (Executive Director)Lim Shaw Keong @ Alfred Lim (Independent Non-Executive Director)Koo Jenn Man (Non-Independent Non-Executive Director)

To: Shareholders of Bertam

Dear Sir/Madam,

PROPOSED ACQUISITION

1 INTRODUCTION

On 5 May 2015, BDSB entered into a Letter of Understanding with Jumat. Pursuant to the Letter of Understanding, BDSB agrees and undertakes to pay Jumat commitment fees of RM3.13 million to facilitate the acquisition of Lot G Land (prior to the conversion of Lot G Land from Native Titles to Country Lease Title). The commitment fees shall be offset against payment terms to be set out in the subsequent SPA which shall be executed between BDSB and Jumat at a later date. In the event that the acquisition negotiation of Lot G Land is terminated prior to the execution of the SPA, the commitment fees shall be refundable in full by Jumat to BDSB. The commitment fees of RM3.13 million was paid in full by BDSB on the 22 April 2016.

On 1 December 2016, BDSB and Jumat have agreed on the nomination of WLSB, a wholly-owned subsidiary of BDSB, to enter into a SPA on behalf of BDSB with Jumat to acquire the Lot G Land via the Letter of Confirmation. The parties have also agreed in the Letter of Confirmation that the commitment fees of RM3.13 million paid by BDSB shall be deemed duly paid by WLSB.

On 15 December 2017, the Board announced that the Group’s wholly owned subsidiary, WLSB, had on even date entered into a SPA with Jumat to acquire Lot G Land for a total cash consideration of RM16.30 million.

WLSB and Jumat had on 15 January 2018 entered into the Supplemental Agreement in which Jumat shall transfer the Lot G Land to WLSB prior to the completion of the SPA to facilitate the application for a Housing Developer License from the Controller of Housing, Sabah and to expedite the proposed development of Lot G Land.

WLSB is a wholly owned subsidiary of BDSB, which in turn is a wholly owned subsidiary of Bertam.

1


Registered Office:

Suite 10.02, Level 10The Gardens South TowerMid Valley CityLingkaran Syed Putra59200 Kuala Lumpur

31 October 2018

Board of Directors:

Datuk Mohamed Arsad Bin Sehan (Chairman/Senior Independent Non-Executive Director)Lim Nyuk Foh (Managing Director)Chiew Boon Chin (Executive Director)Lim Shaw Keong @ Alfred Lim (Independent Non-Executive Director)Koo Jenn Man (Non-Independent Non-Executive Director)

To: Shareholders of Bertam

Dear Sir/Madam,

PROPOSED ACQUISITION

1 INTRODUCTION

On 5 May 2015, BDSB entered into a Letter of Understanding with Jumat. Pursuant to the Letter of Understanding, BDSB agrees and undertakes to pay Jumat commitment fees of RM3.13 million to facilitate the acquisition of Lot G Land (prior to the conversion of Lot G Land from Native Titles to Country Lease Title). The commitment fees shall be offset against payment terms to be set out in the subsequent SPA which shall be executed between BDSB and Jumat at a later date. In the event that the acquisition negotiation of Lot G Land is terminated prior to the execution of the SPA, the commitment fees shall be refundable in full by Jumat to BDSB. The commitment fees of RM3.13 million was paid in full by BDSB on the 22 April 2016.

On 1 December 2016, BDSB and Jumat have agreed on the nomination of WLSB, a wholly-owned subsidiary of BDSB, to enter into a SPA on behalf of BDSB with Jumat to acquire the Lot G Land via the Letter of Confirmation. The parties have also agreed in the Letter of Confirmation that the commitment fees of RM3.13 million paid by BDSB shall be deemed duly paid by WLSB.

On 15 December 2017, the Board announced that the Group’s wholly owned subsidiary, WLSB, had on even date entered into a SPA with Jumat to acquire Lot G Land for a total cash consideration of RM16.30 million.

WLSB and Jumat had on 15 January 2018 entered into the Supplemental Agreement in which Jumat shall transfer the Lot G Land to WLSB prior to the completion of the SPA to facilitate the application for a Housing Developer License from the Controller of Housing, Sabah and to expedite the proposed development of Lot G Land.

WLSB is a wholly owned subsidiary of BDSB, which in turn is a wholly owned subsidiary of Bertam.

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THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE YOU WITH THE RELEVANT INFORMATION ON THE PROPOSED ACQUISITION AND TO SEEK YOUR APPROVAL FOR THE ORDINARY RESOLUTION PERTAINING TO THE PROPOSED ACQUISITION TO BE TABLED AT THE FORTHCOMING EGM. THE NOTICE OF THE EGM TOGETHER WITH THE FORM OF PROXY ARE ENCLOSED IN THIS CIRCULAR.

YOU ARE ADVISED TO READ AND CAREFULLY CONSIDER THE CONTENTS OF THIS CIRCULAR BEFORE VOTING ON THE ORDINARY RESOLUTION TO GIVE EFFECT TO THE PROPOSED ACQUISITION AT THE FORTHCOMING EGM.

2 DETAILS OF THE PROPOSED ACQUISITION

2.1 Details of the Lot G Land

Description of the Lot G Land is set out below:

Brief description : One (1) parcel of vacant development land measuring 1.709 hectares (approximately 4.223 acres) which was alienated for condominium development. The development plan has been approved by the MDP on 14 May 2015 and revalidated on 23 April 2018. The revalidation of the development plan shall be valid up to 22 April 2020, which is the deadline for commencement of construction on Lot G Land(1).The proposed development on Lot G Land is proposed to be known as Idaman Residence. The earth filling works performed on Lot G Land was completed in March 2017 and Lot G Land is ready for development. Further information on the proposed development of Lot G Land can be found in Section 2.2 of this Circular.

Registered owner : WLSB(2)

Title no. : Country Lease 215465802

Locality : Kampung Kepayan, District of Penampang, Kota Kinabalu, Sabah

Land tenure : 99 years commencing from 1 January 2015 and expiring on 31 December 2113 (i.e. unexpired term of about 96 years).

Planning details : The Lot G Land is situated within the area covered by the ProposalsMap of Penampang Local Plan and is zoned for “Medium Density-Residential Areas”

Existing use : Vacant land

Proposed use : Residential development

Land area : 1.709 hectares (approximately 4.223 acres)

Market value as appraised by JPH

: RM18.4 million

Date of valuation / method of valuation

: 11 June 2018 / Comparison method

Net book value : RM16.3 million(3)

Encumbrances : As at LPD, the Lot G Land is free from encumbrances

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Restriction in interest

: The title to Lot G Land is held subject to the provisions and conditions contained in the Sabah Land Ordinance and to the special terms described herein:-

“The said land is demised herein expressly and only for the purpose of erecting thereon for use as such condominium.

Transfer or sublease of the title is prohibited before the fulfilment of the covenants herein or without the written permission from the director of lands and surveys department who shall imposed additional premium, enhanced rent and any other condition thereof while granting such permission.

Subdivision of the title is prohibited without the written permission from the director of lands and surveys department who shall charge additional premium and enhanced rent and any other condition thereof when granting such permission.

The owner covenants:

To complete before January 2021 the construction on the said land of a building in accordance with the terms and conditions containedherein and with the plans and specifications submitted to and approved by the authority under the Local Government Ordinance, (and Town and Country Planning Ordinance) having jurisdiction over the said land.

At all times to maintain and keep in tenantable conditions and good repair the building/s erected or to be erected on the said land to the satisfaction of the authority under the Local Government Ordinance (and Town and Country Planning Ordinance) having jurisdiction over the said land and that in the event of the total or partial destruction of the said building, to repair, reinstate and rebuild in accordance with the last plans and specifications submitted to and approved by the said authority.”

Notes:

(1) Based on industry practice and as advised by MDP, approval/revalidation by MDP on proposed development plans shall have a validity period of two (2) years and shall lapse upon the expiry of the said period, unless construction work on the development project has commenced.

Commencement of construction work may only take place after WLSB has obtained Housing Developer License / Advertisement and Sale Permit from the Controller of Housing, Sabah(“Licenses”). Once the abovementioned Licenses are obtained, the validity period of the approval/revalidation by MDP on the proposed development plans shall be disregarded, and the validity period for the proposed development plan shall automatically renew to a 3-year period, i.e., 2 years to complete construction works + 1 year to deliver completed units to homebuyers and obtain Occupation Certificate approval.

(2) On 5 February 2018, Jumat transferred the Country Lease title for Lot G Land to WLSB to facilitate the application for a Housing Developer License from the Controller of Housing, Sabah as provided under the Supplemental Agreement as well as to expedite the proposed development of Lot G Land.

(3) The net book value is evaluated based on the Purchase Price to be paid by WLSB for Lot G Land under the SPA.

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2.2 Proposed development of Lot G Land

The proposed development of Lot G Land, proposed to be known as Idaman Residence, involves a residential development of 228 condominium units, ground floor car park, open space and facilities deck with a total built-up area of about 280,048 square feet.

The proposed development plan has previously been approved by MDP on 14 May 2015, for a period of two (2) years. Given the expiry of the previous approval on 9 April 2017, an application for revalidation has been submitted on 26 April 2017. MDP granted approval for revalidation of the proposed development plan of Lot G Land vide its letter dated 26 March 2018, and subsequently endorsed the proposed development plan on 23 April 2018. The revalidation of the development plan shall be valid up to 22 April 2020.

The letter of approval from MDP for the proposed building plan of Lot G Land was obtained on 5 May 2017. MDP subsequently endorsed the proposed building plan on 7 June 2018.

On 25 June 2018, WLSB applied for a Housing Developer Licence from the Controller of Housing, Sabah. With the said license, WLSB shall be able to commence construction on Lot G Land. As at the LPD, WLSB has yet to obtain the Housing Developer License from the Controller of Housing, Sabah. Hence, other than the reclamation works to bring the abandoned paddy fields up to platform level of the development, construction of the proposed development on Lot G Land has not commenced.

On 25 June 2018, WLSB applied to the Controller of Housing, Sabah for the Advertisement and Sale Permit for the sale of condominium units in Idaman Residence. Upon obtaining of the same, WLSB shall commence such sale of units to public or interested buyer. As at the LPD, WLSB has yet to obtain the Advertisement and Sale Permit from Controller of Housing, Sabah.

The proposed development of Lot G Land is expected to span over a period of 3 years. Management estimates a GDV of approximately RM155.0 million and an estimated GDC of approximately RM130.0 million. This project will result in a projected gross profit of approximately RM25.0million to Bertam Group over the next 3 years. The actual GDV and GDC will depend on the final architectural design and the progressive development of the various components. This amount covers, inter-alia, construction and development costs, promotion and marketing expenses, professional fees and statutory charges.

Subject to obtaining the approvals from the relevant authorities and shareholders of Bertam, the proposed development of Lot G Land is targeted to commence in late November to early December 2018 and is to be completed in September 2021. It is noted that the Country Lease title for Lot G Land includes a special term that WLSB is required to complete construction on Lot G Land before January 2021. WLSB intends to apply for extension of time in due time to complete its construction works in accordance with the approved development plan and building plan of Idaman Residence.

Bertam intends to finance the development costs or any other costs associated with the proposed development of Lot G Land either through internally generated funds and future debt or equity fund raising exercise(s) or a combination of both debt and equity fund raising exercises.

2.3 Salient terms and conditions of the SPA

The salient terms and conditions of the SPA, with all relevant amendments pursuant to the Supplemental Agreement incorporated, include the following:

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2.3.1 Manner of payment of Purchase Price

(i) SPA

(a) Upon execution of the SPA, WLSB shall pay to Jumat RM3.13 million, being the Deposit, which Jumat acknowledges receipt of such sum shall be the deposit towards the Purchase Price. The Deposit of RM3.13 million was paid by WLSB in tranches and has been fully settled by 22 April 2016 to Jumat, pursuant to the arrangement as provided in the Letter of Understanding and the SPA.

(b) On or before the SPA completion date, WLSB shall pay or cause to be paid to WLSB’s solicitors as stakeholders the Balance Purchase Price which shall be disbursed as follows:-

i. Immediately upon registration of caveat over the Lot G Land, release a sum sufficient for the payment of the additional premium of RM171,000 to the L&S Department for the permission to effect one transfer before fulfilment of the building covenant on behalf of Jumat,which the additional premium will be offset from the Balance Purchase Price;

ii. Submission of the Completion Documents to the collector of stamp duties for adjudication of ad valorem stamp duty payable by WLSBand the presentation of the Completion Documents to the Central Land Registry, Kota Kinabalu for registration; and

iii. Upon acceptance of the Completion Documents for registration evidenced by the memorial numbers assigned thereto, release the remaining balance of the Balance Purchase Price to Jumat’s solicitors for onward transmission to Jumat.

Save for the Deposit of RM3.13 million, WLSB has not made any subsequent payment to Jumat on the Balance Purchase Price prior to entering into the Supplemental Agreement on 15 January 2018.

(ii) Supplemental Agreement

In order to facilitate WLSB to develop the Lot G Land and to facilitate the application for a Housing Developer License from Controller of Housing, Sabah by WLSB, it is necessary that the Lot G Land be registered into the name of the Purchaser. In view of the above, Jumat has agreed to transfer the Lot G Land to WLSB pending the completion of the SPA. In turn, WLSB shall pay the Balance Purchase Price to WLSB’s Solicitors as stakeholder and the same shall only be release to Jumat upon completion of the SPA. As at 18 January 2018, the lump sum of RM13,170,000 has been paid by WLSB to WLSB’s Solicitors.

For avoidance of doubt, the Balance Purchase Price has not been released to Jumat’s solicitors. The amount shall be released to Jumat’s solicitors subject to fulfilment of the conditions precedent as stated in Section 2.3.3 of this Circular.

2.3.2 Delivery of vacant and/or legal possession

WLSB shall be subject to a late payment interest of ten percent (10%) per annum on any part of the Balance Purchase Price which remains outstanding one month past the unconditional date of the SPA, calculated on a daily basis from the date falling immediately after one month from the unconditional date until the date of full payment of the Balance Purchase Price.

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In the event that Jumat fails to deliver vacant possession of the Lot G Land within seven (7) working days from the date of the receipt of the full Balance Purchase Price together with the late payment interest (if any), Jumat shall pay to WLSB, interest at the rate of six percent (6%) per annum on the Balance Purchase Price calculated from the 8th day from the date of the receipt of the full Balance Purchase Price until the date of actual vacant possession.

On 5 February 2018, Jumat transferred the Country Lease title for Lot G Land to WLSB to facilitate the application for a Housing Developer License from the Controller of Housing, Sabah as well as to expedite the proposed development of Lot G Land.

WLSB has placed the Balance Purchase Price with WLSB’s solicitors as stakeholders pending the receipt of its shareholders’ approval on the Proposed Acquisition and the obtainment of the Housing Developer License from the Controller of Housing, Sabah.

2.3.3 Conditions precedent

Pursuant to the SPA and Supplemental Agreement, the Proposed Acquisition is subject to:-

(i) The Lot G Land is subject to a restriction in interest which prohibits the proposed transfer of or dealing with the Lot G Land before fulfillment of the building covenant unless permission to effect one transfer is obtained from the L&S Department;

(ii) WLSB to obtain approval of the shareholders in general meeting to be convened; and

(iii) WLSB to obtain approval of the Housing Developer License from the Controller of Housing, Sabah.

As at LPD, items (ii) and (iii) are pending to be fulfilled by WLSB.

Pursuant to the Supplemental Agreement, it has been provided that:-

(i) if the SPA is terminated due to failure to obtain the shareholders’ approval of WLSB and/or the approval of the Housing Developer License or for any reason whatsoever, WLSB shall and hereby undertakes at its sole cost and expense to deliver legal vacant possession of the Lot G Land to Jumat, in the same condition, state and nature as at the date WLSB obtained possession of the Lot G Land; and

(ii) The parties hereto hereby agree that notwithstanding anything to the contrary contained in the SPA or elsewhere, no moneys whatsoever which may be refundable to WLSB pursuant to the provisions of the SPA upon a termination or rescission of the SPA shall be refundable or refunded by Jumat until legal vacant possession of the Lot G Land has been delivered to Jumat and the Lot G Land has been retransferred to Jumat.

2.3.4 Events of default

In the event that WLSB breaches or fails to perform any of its obligations under the SPA or fails to complete the purchase of the Lot G Land pursuant to the terms of the SPA, or in the event that WLSB fails to pay the entire Purchase Price or any part thereof and/or any other moneys payable by it pursuant to the provisions of the SPA, or in the event that any of WLSB’s representations and/or warranties should be incorrect, untrue or misleading in any manner whatsoever, and WLSB fails to complete the purchase of the Lot G Land, Jumatshall be entitled, in addition to and without prejudice to any and all other rights and remedies available to it at law:

(a) to the relief of specific performance of the SPA and/or damages; or

(b) provided that such breach has not been rectified to the satisfaction of Jumat within seven (7) days from the date of a notice to WLSB, terminate the SPA whereupon the following consequences shall ensue, namely:

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(i) Jumat shall be entitled to a sum equivalent to the Deposit, and shall be entitled to any and all interest which may have accrued on the Deposit, and for such purpose shall be wholly entitled to forfeit the entire Deposit if already paid to and received by Jumat, and if not so already paid to or received by JumatWLSB shall immediately on demand pay a sum equivalent to the Deposit (or any part thereof remaining unpaid) to Jumat;

(ii) Jumat shall be entitled to sell the Lot G Land to any third party without any further reference whatsoever to WLSB;

(iii) WLSB and/or WLSB’s solicitors (as applicable) shall return the Memorandum of Transfer, the Completion Documents and all other documents whatsoever which may have been provided by Jumat to WLSB with all Jumat’s interestsintact, provided that the Memorandum of Transfer is not required by the Stamp Office for cancellation for the purpose of refund of the stamp duty paid thereon (as applicable) and in such event, the Memorandum of Transfer shall be returned immediately after such cancellation;

(iv) WLSB shall cause and procure any and all private caveats and encumbrances lodged by WLSB and/or any person(s) claiming under WLSB over the Lot G Land to be forthwith withdrawn at WLSB’s own costs; and

(v) thereafter the SPA shall be null and void and of no further effect and the parties shall have no further claims of whatsoever nature against each other in respect of anything arising from or in connection with the SPA (save the return of any documents belonging to Jumat).

In the event that Jumat fails to perform his obligations under or complete the sale of the Lot G Land pursuant to the terms of the SPA otherwise than by reason of default by WLSB,WLSB shall be entitled, by giving ten (10) business days’ notice to Jumat and provided that such breach has not been rectified to the satisfaction of WLSB during the aforesaid period, to terminate the SPA whereupon the following consequences shall ensue, namely:

(a) Jumat shall refund to WLSB the Deposit if already paid to and received by Jumat,free of any and all interest whatsoever;

(b) Jumat shall thereafter be entitled to sell the Lot G Land to any third party without any further reference whatsoever to WLSB;

(c) WLSB and/or WLSB’s solicitors (as applicable) shall return the Memorandum of Transfer, the Completion Documents and all other documents whatsoever which may have been provided by Jumat to WLSB with all Jumat’s interests intact, provided that the Memorandum of Transfer is not required by the Stamp Office for cancellation for the purpose of refund of the stamp duty paid thereon (as applicable) and in such event, the Memorandum of Transfer shall be returned immediately after such cancellation;

(d) WLSB shall cause and procure any and all private caveats and encumbrances lodged by WLSB and/or any person(s) claiming under WLSB over the Lot G Land to be forthwith withdrawn at WLSB’s own costs; and

(e) thereafter the SPA shall be null and void and of no further effect and the parties shall have no further claims of whatsoever nature against each other in respect of anything arising from or in connection with the SPA (save the return of any documents belonging to Jumat).

2.4 Basis and justification of the Purchase Price

The Purchase Price was arrived at between the parties on a “willing-buyer willing-seller” basis after taking into consideration the following:

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(i) the Purchase Price of RM16.3 million represents a 11.41% discount from the market value of the Lot G Land of RM18.4 million or RM100 per square feet, as ascribed by JPH using the comparison method and cross-checked with the residual method valuation;

(ii) the rationale for undertaking the Proposed Acquisition;

(iii) the location and prospects of the Lot G Land - it is strategically located in the District of Penampang and within Kampung Kepayan which is approximately 9 kilometres by road to the south of Kota Kinabalu City Centre and about 10 kilometers by road due north-west of Donggongon Township;

(iv) the development potential of the Lot G Land into a residential condominium with potential estimated GDV of up to approximately RM155.0 million;

(v) eventual density per acre(1) obtained from the relevant authorities on the development order in respect of the proposed development of Lot G Land; and

(vi) the management of Bertam’s knowledge of the market value of properties surrounding Lot G Land.

Note:(1) All other things being equal, areas of greater density per acre allow the planning and

construction of more sellable units, which may generate higher potential revenue for WLSB.

2.5 Source of funding

The Proposed Acquisition shall be satisfied by cash, which will be financed through inter-company loans extended by Bertam to WLSB.

Bertam will not assume any liability, including contingent liabilities and guarantees, with regards to the Proposed Acquisition.

2.6 Additional financial commitment

Save for the estimated GDC of approximately RM130.0 million for the proposed development of Lot G Land, there are no other material additional financial commitment expected to be incurred in relation to Lot G Land.

Bertam intends to finance the development costs or any other costs associated with the proposed development of Lot G Land either through internally generated funds and future debt or equity fund raising exercise(s) or a combination of both debt and equity fund raising exercises.

2.7 Encumbrances on Lot G Land

Based on valuation report on Lot G Land dated 12 January 2018, Lot G Land is charged to Sabah Development Bank Berhad. The charge was discharged on 23 February 2018. As at LPD, the Lot G Land is free from encumbrances.

2.8 Information on the purchaser

WLSB is a company incorporated on 11 May 2012 in Malaysia under the Companies Act, 1965 as a private limited company which is deemed to be incorporated under the Act. WLSB is principally involved in property development. As at the LPD, WLSB has an issued and paid up capital of RM250,000.

WLSB became the wholly-owned subsidiary of BDSB on 8 August 2016. BDSB is a wholly-owned subsidiary of Bertam. The present directors of WLSB are Lim Nyuk Foh and Quek Lip Arl.

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2.9 Information on the vendor

Jumat, aged 34, a Malaysian and a native of Sabah was the sole and absolute registered, legal and beneficial owner of the Lot G Land. On 5 February 2018, Jumat transferred the Country Lease title for Lot G Land to WLSB to facilitate the application for a Housing Developer License from the Controller of Housing, Sabah as well as to expedite the proposed development of Lot G Land. The Lot G Land shall be retransferred to Jumat should WLSB fail to obtain shareholder’s approval and/or the approval for the Housing Developer License.

He is a businessman involved in trading business and was the director of WLSB from 1 April 2015 to 1 November 2016. He was previously a shareholder of WLSB with a shareholding of 87% equity interest in WLSB prior to the acquisition of WLSB by BDSB on 8 August 2016. Jumat resigned as a director of WLSB with effect from 1 November 2016.

For avoidance of doubt, Jumat is not related to any of the directors in Bertam, its subsidiaries or to any of its major shareholders.

3 RATIONALE FOR THE PROPOSED ACQUISITION

The Proposed Acquisition is in line with Bertam’s strategy of geographical focus on development in Kota Kinabalu. Bertam Group intends to develop Lot G Land into condominiums with smaller units to cater for the middle-income segment to ensure affordability. Idaman Residence’s condominiums will also be of modern design taking cognisance that the residential property market in Kota Kinabalu is evolving from the conventional housing development into contemporary and luxurious housing concept.

The Board envisages the prospects of the proposed development of Lot G Land to be encouraging with favourable take-up rates and good prospects for capital appreciation. In addition, the Board believes that as long as Kota Kinabalu city centre remains Sabah’s commercial hub, demand for housing within and around the city will be most sought after as the population density in Kota Kinabalu increases. The spillover effects of the booming Kota Kinabalu property market will also enhance Bertam’s property development segment.

4 RISK FACTORS

4.1 Completion risk

The completion of the Proposed Acquisition is conditional upon the fulfillment of the conditions precedent as set out in Section 2.3.3 of this Circular. In the event that such conditions/approvals are not obtained and/or satisfied, the Proposed Acquisition will not be completed. However, Bertam Group will take reasonable steps to ensure the fulfillment of the conditions precedent in the SPA and Supplemental Agreement to facilitate the completion of the Proposed Acquisition.

4.2 Acquisition risk

Although the Proposed Acquisition is expected to contribute positively to the future earnings of Bertam Group, there can be no assurance that the expected benefits of the Proposed Acquisition will materialise or that Bertam Group would be able to generate sufficient returns from the proposed development of Lot G Land. As such, there can be no assurance that the Proposed Acquisition will improve Bertam Group’s financial performance and the duration required for Bertam Group to recoup its investment could be longer than expected. However, the Board believes that such risk can be mitigated by conducting proper assessment of the proposed development of Lot G Land.

4.3 Business risk

The Proposed Acquisition is subject to business risks which may include, amongst others,

i. delay in completion of the proposed development of Lot G Land against the scheduled completion which may be attributable to the delay in obtaining approvals for the development plan and building plan from the relevant authorities;

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ii. delay in obtaining financing for the project and/or shortages in the supply of material and labour;

iii. softening demand for properties and thus, affecting the selling prices of the properties to be developed or change in purchasers’ preference for type and design of properties and thereby affecting the saleability of units in the proposed development of Lot G Land;

iv. fluctuations in the costs of building materials and labour due to currency foreign exchange;

v. competition from other property developers;

vi. changes in economic, social and political conditions in Malaysia; and

vii. increase in real property gains tax and property tax assessments including imposition of higher goods and services tax, increase in stamp duty on property purchase as well as changes in property tax assessments and other statutory charges.

Any adverse change in the above conditions may affect the business operations and financial performance of the Group.

The Group will take measures to mitigate the above risks such as conducting market intelligence surveys, monitoring and adjusting development and marketing strategies in response to changing economic conditions and market demand, conducting continuous reviews of Group operations, closely monitoring the progress of the developments as well as leveraging on the Group’s experienced and capable management team.

4.4 Funding risk

As set out in Section 2.7 of this Circular, Bertam will fund the development of Lot G Land through internally generated funds and future debt or equity fund raising exercise(s) or a combination of both debt and equity fund raising exercises.in a funding mix to be confirmed at a later date. Bertam Group’s ability to raise funds through debt financing and the cost of such fund raising is dependent on numerous factors, including general economic and capital market conditions, interest rates, credit availability from banks or other lenders, investors’ confidence in Bertam Group or any restrictions imposed by the Malaysian government including political, social and economic conditions in Malaysia. There can be no assurance that the necessary fund raising will be available in amounts or on terms acceptable to Bertam. In addition, Bertam Group could potentially be exposed to fluctuations in interest rates on such external fund raising raised, leading to higher borrowing costs or cost of equity which may adversely affect Bertam Group’s future results of operations and financial performance as well as the Group’s ability to service future loan repayment obligations.

Nevertheless, Bertam shall continuously monitor and review its debt portfolio, which includes taking into consideration its group gearing level, interest costs as well as cash flows in achieving and maintaining an optimal capital structure.

4.5 Risk relating to political, economic and regulatory conditions

The successful development of the Lot G Land depends largely on the economic conditions in Sabah. Factors that could affect the successful development of the Lot G Land include, but are not limited to, changes in interest rates, inflation, economic growth, taxation, accounting policies, changes in laws and regulations, government policies and political stability. Any adverse development in political, economic, regulatory and social conditions in Sabah, directly or indirectly, could materially and adversely affect the prospect and potential of the development of the Lot G Land.

These factors are generally beyond the Group’s control and will affect all the players in the property industry. Nevertheless, Bertam will continuously strive to take reasonable and effective measure such as prudent financial risk management and efficient operating procedures to mitigate such risk.

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4.6 Risk relating to Bertam being classified as a PN17 Company

On 4 April 2018 (Trigger Date), the Board of Bertam announced that the Company had triggered Paragraph 2.1(c) of PN17 of Listing Requirements of Bursa Securities, as the Winding-up Order had been made against BDSB, a wholly-owned subsidiary of the Company, which accounts for at least 50% of the total assets employed of Bertam on a consolidated basis. Pursuant thereto, Bertam was classified as an affected issuer pursuant to PN17 of the Listing Requirements.

On 8 May 2018, BDSB had made a payment of RM4,670,165 via bank draft to RCT, being the full and final settlement of the sum due for payments claims on construction work. On 21 May 2018, BDSB received a letter from its solicitors informing that the appeal for the winding-up petition has been withdrawn in the Court of Appeal pursuant to the full settlement of BDSB’s debts with RCT. In light of the above, BDSB’s solicitors shall apply to the court pursuant to Section 493 of the Act to terminate the Winding-up Order granted on 30 November 2017 against BDSB.

Pursuant to PN17 of the Listing Requirements, the Company is required to, amongst others, regularise its condition and submit a regularisation plan to the relevant authorities for their approval within 12 months from Trigger Date. Bertam will endeavour to take necessary actions to regularise its financial condition so as to maintain its listing status on the Main Market of Bursa Securities.

In the event that the Board is unable to submit its regularisation plan within twelve (12) months from the Trigger Date, Bursa Securities shall suspend trading of Bertam Shares and delist the Company from the Main Market of Bursa Securities, subject to the Company’s right to appeal against delisting.

5 ECONOMY AND INDUSTRY OVERVIEW AND PROSPECTS OF THE LOT G LAND

5.1 Overview and outlook of the Malaysian economy

The Malaysian economy expanded at a slower pace of 4.5% in the second quarter of 2018 (1Q 2018: 5.4%). Growth was slower on account of supply disruptions in the mining sector and lower agriculture production. The latter is due to supply constraints and adverse weather conditions. On the demand side, growth was dampened by lower public investment and net export growth. Private sector spending remained resilient, expanding further by 7.5% (1Q 2018: 5.2%). In particular, private consumption increased strongly by 8.0% (1Q 2018: 6.9%). On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 0.3% (1Q 2018: 1.4%).

Domestic demand recorded a stronger growth of 5.6% (1Q 2018: 4.1%), as the higher private sector activity (7.5%; 1Q 2018: 5.2%) more than offset the decline in public sector spending (-1.4%; 1Q 2018: -0.1%).

Private consumption expanded at a stronger pace of 8.0% (1Q 2018: 6.9%), the highest since the first quarter of 2015. This was driven by continued strength in income and employment. Consumer spending was also boosted by the lower inflation during the quarter following the zerorisation of the Goods and Services Tax (GST) rate1 and stronger consumer sentiments.

Private investment growth was higher at 6.1% (1Q 2018: 0.5%), driven mainly by capital spending in the manufacturing and services sectors. The better performance was supported by positive business sentiments, favourable demand conditions and continued high capacity utilisation during the quarter.

Public consumption registered a higher growth of 3.1% (1Q 2018: 0.4%), supported by improvement in supplies and services and sustained growth in emoluments. Public investment continued to contract during the quarter (-9.8%; 1Q 2018: -1.0%). This was in part due to the near completion of ongoing projects and lower Federal Government development expenditure.

Growth in gross fixed capital formation (GFCF) improved to 2.2% (1Q 2018: 0.1%), attributed to higher private sector investment activity. By type of assets, capital spending on machinery andequipment rebounded to 3.6% (1Q 2018: -3.6%). Investment in structures expanded at a slower pace of 2.1% (1Q 2018: 2.8%), due mainly to a slower expansion in investments in non-residential

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property such as office and retail space. Investment in other types of assets contracted by 2.9% (1Q 2018: -0.2%).

On the supply side, growth was affected by commodity-specific shocks. Major economic sectors, notably the services and manufacturing sectors (77.5% of GDP), remained supportive of growth.

Growth in the mining sector contracted, due mainly to declining natural gas output following unplanned supply outages. The agriculture sector’s growth declined as the oil palm sub-sector was affected by production constraints and adverse weather conditions.

Growth in the services sector was sustained during the quarter, driven primarily by the wholesale and retail trade sub-sector arising from increased household spending following the zerorisation of the GST rate. Growth was further supported by the information and communication sub-sector, following continued strong demand for data communication services. Growth in the finance and insurance sub-sector was driven by continued strength in lending activity.

The manufacturing sector grew at a more moderate pace supported by continued strength in the electronics and electrical (E&E), consumer- and construction-related clusters. This can be attributed to the continued demand from fast growing semiconductor segments (e.g. automotive and Internet of Things (IoT)), and the zerorisation of the GST rate. These gains partly offset the slower performance in the primary-related cluster which was affected by the commodity-specific shocks upstream.

Growth in the construction sector continued to moderate in the second quarter. In the civil engineering sub-sector, growth was supported by the ongoing transportation, petrochemical and power plant projects. In the residential and non-residential sub-sectors, growth continued to decline. The development partly reflected the significant number of unsold residential properties and oversupply of office spaces and shopping complexes.

Headline inflation, as measured by the annual percentage change in the Consumer Price Index (CPI), declined to 1.3% in the second quarter of 2018 (1Q 2018: 1.8%).

The lower inflation outcome mainly reflected the zerorisation of the GST rate. As a result, inflation declined to 0.8% in June (May: 1.8%, April: 1.4%). The decline in prices was broad-based where more than 90% of the items that were previously taxed at the standard-rate under the GST were observed to register price declines ranging between 0.06% and 6.75%. As a result, the percentage of items in the CPI basket that registered inflation of more than 2% declined to 18% in the second quarter (1Q 2018: 28%). However, the extent of price decline in June was smaller than anticipated. Prices of standard-rated items in the CPI basket only declined by an average of 2.3%.

The impact from the GST zerorisation, however, was offset by higher transport inflation. While the domestic RON95 petrol price was maintained at RM2.20 per litre since 22 March 2018, the lower prices in the base period of the second quarter of 2017 resulted in higher inflation in the transport category2. Nevertheless, the fixed RON95 petrol price has helped to contain further increases in fuel inflation during the quarter.

Core inflation, excluding the impact of the GST zerorisation, also moderated during the quarter to 1.5% (1Q 2018: 1.9%). This was mainly due to lower inflation in the food away from home sub-category, contributed by the stronger ringgit exchange rate in the first half of 2018 relative to the second half of 2017. Demand-driven inflation remained stable.

(Source: Quarterly Bulletin for Second Quarter of 2018, Bank Negara Malaysia)

5.2 Overview of the Sabah economy

During the Eleventh Malaysia Plan, SEDIA has been according greater emphasis on improving the state's economic competitiveness by enhancing the state's global connectivity to ensure seamless movement of people, goods and services. Efforts would be directed especially towards enhancing the efficiency of the logistics sector by improving the relevant infrastructure and the integration of land, sea, and air services. In the long run, this will help in reducing the cost of living and doing business.

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Realising the potential of small and medium enterprises (SMEs) towards contributing to the state economy, SEDIA had also developed initiatives for, and have been actively involved in, SME development in Sabah commencing during the Second Phase of SDC (2011-2015) and into the current Third and final Phase of SDC (2016-2025). The SME programmes are also in line with one of the three principles of SDC, which is capturing economic value activities. The SDC SME programmes are to help entrepreneurs, start-ups and companies to discover business ideas, validate as well as scale up their ventures.

A crucial component of SDC SME programmes is the SDC SME Incubator programme, whereby the programme is conducted over a two-year period through two types of setups based on their location, namely In-Situ (on-site) and Ex-Situ (off-site) Incubation. In-Situ Incubation is hosted at the Sabah Agro-Industrial Precinct (SAIP), supported by shared basic facilities. This programme was launched in 2016 with an allocation of RM15 million provided by the Federal government via TERAJU. The incubatees will get access to technical and business advisory services from business development and technical officers stationed in SAIP. These services are available to participants of the Incubator programme on a pro-bono basis during the two-year period, and non-participants can access these services at an attractive fee. As at July 2018, there are a total of 259 In-Situ andEx-Situ incubatees, and a total of RM11.86 million in grants approved for these incubatees. SEDIA is planning to assist in marketing the products of these incubatees locally as well as internationally, and is looking forward to support from MITI via MATRADE.

SEDIA noted that, during his recent visit to Sabah for the Malaysia Day celebration, Prime Minister Tun Dr Mahathir Mohamed commented that Sabah has the capability for rapid development, having gone through much progress over the years; he was impressed with Sabah's landscape and believed the state had strong potential to be a developed state.

To develop Sabah further, the Prime Minister suggested identifying assets of Sabah which can be exploited, such as land, mountains, seas, beaches and low temperatures. He was however concerned for the high cost of living that the people in Sabah had to bear. He further suggested Sabah could establish an automotive industry where carmakers could assemble their products in the state. Industries can come here because in the future, Sabah is going to be a petrochemical producer with deep-water production due to begin soon. In this regard, the Third National Car Project could be sited at KKIP. This possibility should be seriously considered in view of the strategic geographical location of Sabah in the East ASEAN region. The proposed upgrading of Sapangar Bay Container Port into a transhipment hub under SDC is timely. SEDIA is also looking into a study to establish a free economic zone in KKIP.

SEDIA also welcomes the announcement by the MITI minister to establish an aerospace industry in Sabah. In order to enhance seamless movement of air passenger and cargo, the Federal government through SEDIA had also commissioned an Air Freights and Aviation Hub Masterplan Study. The location, once finalised, could also provide support for various aviation businesses and services such as logistics support for e-commerce, premium outlets, Fixed-based Operation for private jets and charter, Maintenance, Repair and Overhaul (MRO) services, and aerospace manufacturing industries.

(Source: Press release dated 19 September 2018, SEDIA)

5.3 Overview of the overall property industry in Sabah

The state’s property market softened in the first half of (“H1”) 2018. The review period registered 4,110 transactions with a total value of RM2.71 billion (H1 2017: 4,501 transactions worth RM1.98 billion). In comparison to H1 2017, the market activity showed a marginal decrease of 8.7% in volume though value increased substantially by 37.2%. Residential sub-sector continued to lead the overall market, accounting for 58.9% of the total transactions. This was followed by agricultural (23.6%), commercial (11.1%), development land (4.1%) and industrial (2.3%) sub-sectors. Market activity across all sub-sectors showed mixed movement. Commercial and residential sub-sector recorded growth of 18.5% and 5.4% respectively. On the contrary, agricultural sub-sector led the decline by 37.2%, followed by industrial (-9.4%) and development land (-1.2%) sub-sectors. In terms of transactions value, all sub-sectors recorded upward trend except industrial sub-sector, which declined by 38.3%.

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The performance of residential sub-sector improved in the review period. There were 2,422 transactions worth RM905.24 million, indicating a slight increase of 5.4% and 7.5% in volume and value respectively. Terraced units spearheaded the residential market, dominating 34.1% of the total residential transactions.

The performance of primary market encouraging as the numbers of newly launched slightly increased by 3.0% to 1,762 units in H1 2018 (H1 2017: 1,711 units). All of these new units were affordable houses with priced range between RM150,000 and RM300,000. The market response slightly sluggish as no take-up recorded in the review period.

The residential overhang recorded increasing numbers. There were 925 overhang units worth RM473.77 million recorded, increased by 5.2% and 32.6% in volume and value against H2 2017 (879 overhang units worth RM357.20). On a similar note, the unsold under construction and not constructed showed a significant increase by almost double to 3,382 units (H2 2017: 1,764 units) and 64.0% to 1,627 units (H2 2017: 992 units) respectively

The residential construction activity witnessed a mixed movements. Start and new planned supply increased by 3.3% (H1 2018; 1,411 units; H1 2017: 2,700 units) and more than six fold (H1 2018: 853 units; H1 2017: 111 units) respectively. On the contrary, completions charted a significant decline of almost double to only 120 units as compared to H1 2017 (1,791 units). As at end-June 2018, there were 209,433 existing residential units with another 24,295 units in the incoming supply and 20,639 units in the planned supply.

Prices of residential property were generally on uptrend. Double storey terraced houses strategically located nearby commercial centres, shopping complexes as well as city centres recorded double digit growth. In Kota Kinabalu, prices also firmed up for stratified property with marginal increase of 4.0% to 8.3% recorded for condominium units. As at Q2 2018, the All House Price Index for the state stood at 173.7 points, up by 4.8% from 155.5 points in Q2 2017. The average All House Price as at Q2 2018 stood at RM445,485 increased from RM425,294 in Q2 2017.

The residential rental market was generally stable with positive movements recorded in several areas. New tenancy and strategic locations nearby commercial centres served with efficient connectivity were among the factors contributed to the rental gains.

(Source: Property Market Report, 1st Half 2018, Sabah Report, National Property Information Center (NAPIC))

5.4 Prospects of the Lot G Land

The Lot G Land is located in a prime and strategic location in between Jalan Lintas Highway and Jalan Pintas Donggongon (Penampang Bypass) and is in close proximity to city center in Kota Kinabalu, Kota Kinabalu International Airport and Donggongon, the Greater Kota Kinabalu.

The Lot G Land is also near the newly completed commercial center, ITCC Penampang, a “Private Sector Initiative Project” by the SEDIA under SDC. It is the largest mixed-development project in that area and has over 677 lots of retail outlets available, restaurants, bars, Cineplex, Banquet Hall, Science & Technology Centre and Conference & Exhibitions Centre adjacent to modern architecturally designed Office, Hotel and Hotel Suites in the heart of a bustling District of Penampang. Moreover, it is equipped with a dedicated high speed 100M broadband connectivity.

Presently, there are only small pockets of developments along the Penampang Bypass. One of the latest and newest commercial centre with the most number of shop offices by far is the Kobusak Commercial Centre or also known as Plaza 333, comprising 80 units of 3-storey shop office fully sold with occupancy rate about 80%. Other new and on-going developments within 10 kilometers radius of the subject land include I-Plaza, C-Park, Padimas Point Phase 2, Austin Business Park, Wisma Langat and Donggongon Avenue, just to name a few.

The proposed development of Lot G Land, also known as Idaman Residence, involves a residential development of 228 condominium units, ground floor car park, open space and facilities deck with a total built-up area of about 280,048 square feet.

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With the interconnectivity of major highways for convenient access to the Kota Kinabalu International Airport, city center, Donggongon, ITCC Penampang, schools and commercial areas, this will provide future buyers of the Idaman Residence with a holistic approach to modern living.

Premised on the above, in addition to the prospects of the property industry in Sabah as set out in Section 5.3 above, our Board envisages the prospects of the development of the Lot G Land to be encouraging with favourable take-up rates and good prospects for capital appreciation. In addition, our Board believes that as long as Kota Kinabalu city centre remains Sabah’s commercial hub, demand for commercial housing within and around the city will be most sought after as the population density in Kota Kinabalu increases, and thus, creating demand for commercial properties. The spillover effects of the booming Kota Kinabalu property market will also enhance our property development.

(Source: The management of Bertam)

6 EFFECTS OF THE PROPOSED ACQUISITION

6.1 Issued and paid-up share capital and substantial shareholders’ shareholdings

The Proposed Acquisition will not have any effect on the issued and paid up share capital and the substantial shareholders’ shareholdings of Bertam as it does not involve any issuance of new ordinary shares in Bertam.

6.2 NA and gearing

The Proposed Acquisition is not expected to have a material impact on the NA of Bertam Group for the FYE 31 December 2017. It is expected to enhance the NA of Bertam Group in the future in view of potential future earnings from the proposed development of Lot G Land, which is expected to commence in the fourth quarter of 2018.

The Proposed Acquisition will not have an effect on the gearing of Bertam Group as the Proposed Acquisition will be fully funded via inter-company loans, extended by Bertam to WLSB.

6.3 Earnings and EPS

The Proposed Acquisition is not expected to have a material impact on the earnings of Bertam Group for the FYE 31 December 2017 as the proposed development of Lot G Land is expected to commence in the fourth quarter of 2018. However, the Proposed Acquisition is expected to contribute positively to the future earnings of the Group when the proposed development of Lot G Land is completed.

7 INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED TO THEM

None of the directors and major shareholders of the Company or persons connected to them has any interest, direct or indirect, in the Proposed Acquisition.

8 BOARD’S STATEMENT AND RECOMMENDATION

The Board after having considered all aspects of the Proposed Acquisition, including but not limited to the rationale as set out in Section 3 of this Circular, the terms of the SPA and Supplemental Agreement and the prospects of the Lot G Land, is of the opinion that the Proposed Acquisition is in the best interest of Bertam Group.

Accordingly, the Board recommends you to vote in favour of the resolution pertaining to the Proposed Acquisition to be tabled at the forthcoming EGM of Bertam.

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9 APPROVALS REQUIRED

The Proposed Acquisition is subject to approvals being obtained from the following:

(i) the shareholders of Bertam at the forthcoming EGM to be convened;

(ii) the Controller of Housing, Sabah on the application by WLSB for the Housing Developer License on the proposed development on Lot G Land; and

(iii) any other relevant authorities or parties, if required.

10 OTHER CORPORATE EXERCISES ANNOUNCED BUT PENDING COMPLETION

Save for the Proposed JV Ratifications, which was announced to Bursa Securities on 22 May 2017, 24 May 2017, 20 November 2017 and 14 May 2018, the Company does not have any outstanding corporate proposals that have been announced but pending completion prior to the date of this Circular.

The Proposed Acquisition is not conditional on any other corporate proposals of Bertam. The Proposed JV Ratifications and the Proposed Acquisition are not inter-conditional upon each other.

11 ESTIMATED TIMEFRAME FOR COMPLETION

Barring any unforeseen circumstances, the Proposed Acquisition is expected to be completed by fourth quarter of year 2018.

12 EGM

We will hold an EGM, the notice of which is enclosed with this Circular at Aspena Room, Level 1, Grandis Hotels and Resorts, Suria Sabah Shopping Mall, 1A, Jalan Tun Fuad Stephens, 88000 Kota Kinabalu, Sabah on Friday, 16 November 2018 at 11:00 a.m., or at any adjournment thereof, for the purpose of considering and, if thought fit, passing with or without modification, the resolution to give effect to the Proposed Acquisition.

If you are unable to attend, speak and vote in person at the EGM, you are requested to complete, sign and return the enclosed Form of Proxy in accordance with the instructions contained therein, to be deposited at the Company’s Share Registrar at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South City, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur not less than 48 hours before the time for holding the EGM. The lodging of the Form of Proxy shall not preclude you from attending, speaking and voting in person at the EGM should you subsequently wish to do so.

13 FURTHER INFORMATION

Shareholders are advised to refer to Appendix III of this Circular for further information.

Yours faithfully,for and on behalf of the Board of BERTAM ALLIANCE BERHAD

DATUK MOHAMED ARSAD BIN SEHAN Chairman/Senior Independent Non-Executive Director

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APPENDIX I

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THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR … · Venue of the EGM : Aspena Room, Level 1,...

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