GSB GROUP BERHAD (Company No X) (Incorporated in Malaysia) INDEPENDENT ADVICE CIRCULAR TO THE HOLDERS IN RELATION TO THE

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1 THIS INDEPENDENT ADVICE CIRCULAR ( IAC ) IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. YOU SHOULD READ THIS IAC IN CONJUNCTION WITH THE OFFER DOCUMENT DATED 8 JUNE 2018 ISSUED BY AMINVESTMENT BANK BERHAD ON BEHALF OF THE OFFEROR (AS DEFINED HEREIN) WHICH HAS BEEN SENT TO YOU. If you are in any doubt as to what course of action you should take, please consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. If you have sold or transferred all your shares in GSB Group Berhad ( GSB ) (Company No X), you should at once hand this IAC to the stockbroker or the agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee of such securities. The Securities Commission Malaysia ( SC ) is not responsible for the contents of this IAC, does not represent that the IAC is accurate or complete and disclaims any liability for any loss arising from, or due to, your reliance on this IAC. Pursuant to Rule 11 of the Rules on Takeovers, Mergers and Compulsory Acquisitions ( Rules ), the SC has notified that it has no further comments to the contents of the IAC and such notification shall not be taken to suggest that SC agrees with the recommendations of the non-interested directors of GSB and the independent adviser or assumes responsibility for the correctness of any statements made or opinions or reports expressed in the IAC. GSB GROUP BERHAD (Company No X) (Incorporated in Malaysia) INDEPENDENT ADVICE CIRCULAR TO THE HOLDERS IN RELATION TO THE CONDITIONAL MANDATORY TAKE-OVER OFFER BY JAVAWANA SDN BHD (Company No A) (Incorporated in Malaysia) ( OFFEROR ) THROUGH AMINVESTMENT BANK BERHAD (Company No V) (A Participating Organisation of Bursa Malaysia Securities Berhad) TO ACQUIRE: (I) (II) ALL THE REMAINING ORDINARY SHARES IN GSB GROUP BERHAD ( GSB ) ( GSB SHARE(S) ) NOT ALREADY OWNED BY THE OFFEROR; AND ANY NEW GSB SHARES THAT MAY BE ALLOTTED AND ISSUED PRIOR TO THE CLOSING DATE OF THE OFFER (AS DEFINED HEREIN) ARISING FROM THE EXERCISE OF THE OUSTANDING EMPLOYEES SHARE OPTIONS IN GSB (COLLECTIVELY REFERRED TO AS THE OFFER SHARES ) FOR A CASH CONSIDERATION OF RM0.13 PER OFFER SHARE ( OFFER ) Independent Adviser This Independent Advice Circular is dated 18 June 2018

2 DEFINITIONS Except where the context otherwise requires or where otherwise defined herein, words and expressions defined in the Rules (as defined hereunder) shall have the same meaning when used herein and the following definitions shall apply throughout this Independent Advice Circular: Acceptance Condition : The condition that the Offeror having received Valid Acceptances by the Closing Date, which would result in the Offeror and Joint Ultimate Offerors holding in aggregate together with such GSB Shares that are already acquired, held or entitled to be acquired or held by the Offeror and Joint Ultimate Offerors more than 50% of the voting shares of GSB Accepting Holder(s) : Holder(s) who accepts the Offer in accordance with the terms and conditions set out in the Offer Document Act : Companies Act, 2016 AmInvestment Bank : AmInvestment Bank Berhad (Company No V) Banda Industries : Banda Industries Sdn. Bhd. (Company No P), a wholly-owned subsidiary of GSB Board : Board of Directors of GSB Bursa Depository : Bursa Malaysia Depository Sdn. Bhd. (Company No W) Bursa Securities : Bursa Malaysia Securities Berhad (Company No W) CH Williams : CH Williams Talhar & Wong Sdn. Bhd. (Company No U) Closing Date : First Closing Date; or (ii) If the Offer is extended or revised in accordance with the Rules, such other extended or revised closing dates as the Offeror may decide and AmInvestment Bank may announce on behalf of the Offeror at least two (2) days before the Closing Date CMSA : Capital Markets and Services Act, 2007 Constitution : The constitution means a document as referred to in Section 34 of the Act Datin Toh : Datin Toh Siew Chuon Datuk Tee : Datuk Tee Eng Ho Director(s) : Director(s) of GSB Dissenting Holder(s) : Any Holder(s) who does not accept the Offer and/or any Holder(s) who has failed or refused to transfer the Offer Shares to the Offeror in accordance with the terms and conditions set out in the Offer Document Distribution(s) : Dividend(s) or distribution(s) of any nature declared, made and/or paid by GSB to the Holders EPS : Earnings per share First Closing Date : 5.00 p.m. (Malaysian time) on 29 June 2018, being 21 days from the Posting Date FPE : Financial period ending/ended, as the case may be i

3 DEFINITIONS (Cont d) FYE : Financial year ending/ended, as the case may be GDC : Gross development cost GDV : Gross development value GSB or Offeree : GSB Group Berhad (Company No X) GSB ESOS Options : 23,070,000 outstanding employee share options issued by GSB as at the LPD (each exercisable into one (1) new GSB Share) GSB Group : GSB and its subsidiaries, collectively GSB Properties : GSB Properties Sdn. Bhd. (Company No T), a wholly-owned subsidiary of GSB GSB Hotel : GSB Hotel Sdn. Bhd. (Company No D), a wholly-owned subsidiary of GSB GSB Share(s) : Ordinary share(s) in GSB Henry Butcher : Henry Butcher Malaysia (Kuantan) Sdn. Bhd. (Company No M) Holder(s) : Holder(s) of the Offer Shares Independent Circular or IAC Independent Letter or IAL Advice Advice : The independent advice circular comprising the letter from the Board as contained in Part A and the IAL to the Holders as contained in Part B : Independent advice letter dated 18 June 2018 issued by IPS as contained in Part B of this IAC Interested Directors : Gan Pik Mui and Gan Boon Kat, collectively IPS or Independent Adviser or IA : Inter-Pacific Securities Sdn. Bhd. (Company No U), who has been appointed by the Board (save for the Interested Directors) to provide comments, opinions, information and recommendation on the Offer to the Board and Holders in respect of the Offer Javawana or Offeror : Javawana Sdn. Bhd. (Company No A) Joint Ultimate Offerors : Datuk Tee, Datin Toh and TES, collectively LAT : Loss after taxation LBT : Loss before taxation Listing Requirements : Main Market Listing Requirements of Bursa Securities, as amended from time to time LPD : 11 June 2018, being the latest practicable date prior to the despatch of this IAC LPS : Loss per share LTD : 17 May 2018, being the last trading day prior to the announcement of the Share Acquisitions and the date of the Notice Main Market : Main Market of Bursa Securities ii

4 DEFINITIONS (Cont d) Market Day(s) : Any day(s) between Monday and Friday (inclusive) which is not a public holiday and on which Bursa Securities is open for trading of securities NA : Net assets attributable to owners NBV : Net book value Non-Interested Directors : Loy Kwee Keow and Ir. Liaw Boo Leow Bong Lai (D.S.M.), collectively Notice : Notice of the Offer dated 18 May 2018, served to the Board by AmInvestment Bank on behalf of the Offeror Offer : The conditional mandatory take-over offer by the Offeror, through AmInvestment Bank, to acquire the Offer Shares, subject to and upon the terms and conditions set out in the Offer Document, including any revision thereof Offer Document : The document dated 8 June 2018, which sets out the details of the Offer together with the form of acceptance and transfer Offer Document LPD : 1 June 2018, being the latest practicable date prior to the Posting Date Offer Period : The period commencing from 18 May 2018 being the date of the Notice, until the earlier of either: the Closing Date; or (ii) the date on which the Offer lapses or is withdrawn with the written consent of the SC Offer Price : Cash offer price of RM0.13 for each Offer Share Offer Share(s) : All the remaining 314,800,000 GSB Share(s) representing 59.42% equity interest in GSB not already owned by the Offeror as well as such number of new GSB Share(s) that may be allotted and issued prior to the exercise of GSB ESOS Options prior to the Closing Date Official List : A list specifying all securities which have been admitted for listing on Bursa Securities and not removed PAT : Profit after taxation PBT : Profit before taxation PAC : Persons acting in concert in accordance with Section 216 of the CMSA Posting Date : 8 June 2018, being the date of despatch of the Offer Document Project Avenue Bentong : A property development project by GSB Hotel located at Bentong, Pahang Darul Makmur Project G Residence : A property development project by GSB Properties located at Plentong, Johor Darul Takzim Project Taman Makmur Height : A property development project by Banda Industries located at Bentong, Pahang Darul Makmur iii

5 DEFINITIONS (Cont d) Public Requirement Spread : The requirement under Paragraph 8.02(1) of the Listing Requirements which states that a listed issuer must ensure that at least 25% of its total listed shares (excluding treasury shares) are in the hands of public shareholders RM and sen : Ringgit Malaysia and sen respectively, the lawful currency of Malaysia RNAV : Revalued net assets value Rules : Rules on Take-overs, Mergers and Compulsory Acquisitions issued by the SC SC : Securities Commission Malaysia Share Acquisitions : Acquisitions by the Offeror of 127,000,000 GSB Shares or approximately 24.05% equity interest in GSB for a total consideration of RM16,510,000 or RM0.13 per GSB Share, which were effected via direct business transactions on 18 May 2018 sq metres : Square metres TES : Tee Eng Seng Valid Acceptance(s) : The acceptance(s) of the Offer by a Holder(s) in accordance with the terms and conditions of the Offer Document, which is deemed by the Offeror to be valid and complete in all respects Valuers : CH Williams and Henry Butcher, collectively VWAP : Volume weighted average price In this IAC, the words denoting the singular shall, where applicable, include the plural and vice versa. Words denoting the masculine shall, where applicable, include the feminine and neuter genders and vice versa. Reference to persons shall include corporations, unless otherwise specified. Where a period specified in the Rules, as appearing in this IAC, ends on a day which is not a Market Day, the period is extended until the next Market Day. All references to you or Holder in this IAC are to each Holder, being the person to whom the Offer is being made. All references to we, us and our in this IAC are to IPS, being the Independent Adviser for the Offer. All references to dates and times in this IAC shall be references to Malaysian dates and times, unless otherwise indicated. Any reference to any enactment or guideline in this IAC is reference to that enactment or guideline as amended or re-enacted from time to time. [The rest of this page has been intentionally left blank] iv

6 TABLE OF CONTENTS EXECUTIVE SUMMARY PAGE vi PART A LETTER FROM THE BOARD 1. INTRODUCTION 2 2. TERMS AND CONDITIONS OF THE OFFER 3 3. NON-INTERESTED DIRECTORS COMMENTS 4 4. ACCEPTANCES OF THE OFFER 5 5. INDEPENDENT ADVISER S LETTER 6 6. DIRECTORS DISCLOSURE OF INTERESTS AND INTENTION RELATING TO THE 6 OFFER 7. DIRECTORS RESPONSIBILITY STATEMENT 6 8. NON-INTERESTED DIRECTORS RECOMMENDATION 7 PART B INDEPENDENT ADVICE LETTER FROM IPS 1. INTRODUCTION 9 2. TERMS AND CONDITIONS OF THE OFFER ACCEPTANCES OF THE OFFER SCOPE AND LIMITATIONS OF THE EVALUATION AND OPINION EVALUATION OF THE OFFER FAIRNESS OF THE OFFER REASONABLENESS OF THE OFFER FUTURE PLANS FOR GSB GROUP AND ITS EMPLOYEES OTHER INFORMATION RATIONALE FOR THE OFFER FURTHER INFORMATION CONCLUSION AND RECOMMENDATION 40 APPENDICES I INFORMATION ON GSB 43 II FURTHER INFORMATION 53 v

7 EXECUTIVE SUMMARY vi

8 EXECUTIVE SUMMARY THIS EXECUTIVE SUMMARY IS INTENDED TO PROVIDE A SUMMARY OF THE PERTINENT INFORMATION OF THE OFFER. HOLDERS ARE ADVISED TO READ AND FULLY UNDERSTAND THE LETTER FROM THE BOARD AND THE IAL FROM IPS, THE INDEPENDENT ADVISER, FOR FURTHER INFORMATION AND FOR THEIR RECOMMENDATIONS IN RELATION TO THE OFFER. THIS IAC SHOULD BE READ IN CONJUNCTION WITH THE OFFER DOCUMENT ISSUED BY THE OFFEROR THROUGH AMINVESTMENT BANK DATED 8 JUNE INTRODUCTION On 18 May 2018, the Offeror acquired an aggregate of 127,000,000 GSB Shares or approximately 24.05% equity interest in GSB, from Sun Acres Development Sdn. Bhd. (19,800,000 GSB Shares/ 3.75%), ID D Art Sdn. Bhd. (18,600,510 GSB Shares/ 3.52%), Gan Boon Kat (9,119,490 GSB Shares/ 1.73%), Gan Pik Mui (54,750,100 GSB Shares/ 10.37%) and Dato Gan Seng Biang (24,729,900 GSB Shares/ 4.68%) for a total cash consideration of RM16,510,000 or RM0.13 per Offer Share. The Share Acquisitions were effected via direct business transactions. Immediately prior to the Share Acquisitions, the Offeror held 88,000,000 GSB Shares representing approximately 16.66% equity interest in GSB. Accordingly, upon completion of the Share Acquisitions, the shareholdings of the Offeror in GSB increased from approximately 16.66% to 40.71%. Pursuant to Section 218(2) of the CMSA and Paragraph 4.01(a) of the Rules, as the shareholdings of the Offeror exceeded 33% of the voting shares in GSB after the Share Acquisitions, AmInvestment Bank had, on behalf of the Offeror, served the Notice on 18 May 2018, in accordance with Paragraph 9.10(1)(b) of the Rules. The Board had, on 18 May 2018, announced the receipt of the Notice. In accordance with Paragraph 3.06 of the Rules, the Board had, on 21 May 2018, appointed IPS as the Independent Adviser to provide its comments, opinions, information and recommendation on the Offer in an IAC to the Holders. IPS had, on 22 May 2018, declared to the SC its independence from any conflict of interest or potential conflict of interest to act as the Independent Adviser in relation to the Offer. A copy of the Notice was despatched to the Holders on 25 May Further information on the Offer is set out in Sections 1 and 2 of Part B of this IAC. THE PURPOSE OF THIS IAC IS TO PROVIDE YOU WITH THE RELEVANT INFORMATION ON THE OFFER AND THE NON-INTERESTED DIRECTORS VIEW AND RECOMMENDATION ON THE OFFER TOGETHER WITH THE RECOMMENDATION OF IPS. YOU ARE ADVISED TO READ BOTH THIS IAC AND THE OFFER DOCUMENT AND CAREFULLY CONSIDER THE RECOMMENDATIONS CONTAINED HEREIN BEFORE TAKING ANY ACTION. [The rest of this page has been intentionally left blank] vii

9 EXECUTIVE SUMMARY (Cont d) 2. TERMS AND CONDITIONS OF THE OFFER The terms and conditions of the Offer are as follows: Consideration for the Offer The consideration for the Offer is RM0.13 per Offer Share and shall be satisfied wholly in cash. Notwithstanding this, if GSB declares, makes and/or pays any Distribution on or after the date of the Notice but prior to the Closing Date of the Offer and the Holders are entitled to retain such Distribution, the Offer Price shall be reduced by an amount equivalent to the net Distribution per GSB Share which such Holders are entitled to. As at the LPD, GSB has not declared, made or paid any Distribution on or after the date of the Notice. Holders may accept the Offer in respect of all or part of their Offer Shares. They may not accept the Offer in excess of their respective holdings of the Offer Shares and entitlements to cash payment will be rounded down to the nearest whole sen. The Offeror will not pay fractions of a sen to Accepting Holders. Condition of the Offer The Offer is conditional upon the fulfilment of the Acceptance Condition, that is, the Offer is conditional upon the Offeror having received Valid Acceptances (provided that such Valid Acceptances are not, where permitted, subsequently withdrawn) by the Closing Date which would result in the Offeror and Joint Ultimate Offerors holding in aggregate, together with such GSB Shares that are already acquired, held or entitled to be acquired or held by the Offeror and Joint Ultimate Offerors more than 50% of the voting shares of GSB. The Acceptance Condition will need to be fulfilled no later than 5.00 p.m. (Malaysian time) on or before the Closing Date, which in any event shall not be later than the 60 th day from the Posting Date, failing which the Offer will lapse and all acceptances will be returned to you and the Offeror will cease to be bound by any such prior acceptances of the Offer. Duration of the Offer The Offer will remain open for acceptance until 5:00 p.m. (Malaysian time) on 29 June 2018, being the First Closing Date, unless extended or revised in accordance with the Rules. Any such extension or revision will be announced by AmInvestment Bank, on behalf of the Offeror, at least two (2) days before the Closing Date. Notice of such extension or revision will be posted to the Holders accordingly. Please refer to Section 2 of Appendix I of the Offer Document for further details on the duration of the Offer. Method of settlement Save for the Offeror s right to reduce the Offer Price as set out in Section 2.1 of the Offer Document and except with the consent of the SC, the Offeror will settle the consideration to which the Holder is entitled under the Offer in full in accordance with the terms of the Offer without regard to any lien, right of set-off, counter-claim or other analogous rights to which the Offeror may be or claim to be entitled against the Holder. However, this is without prejudice to the Offeror s rights to make any claim against the Holder after such settlement in respect of a breach of the Holder s warranties as set out in Section 1 of Appendix I of the Offer Document. Please refer to Appendix I of the Offer Document for further information on the other terms and conditions of the Offer and Appendix II of the Offer Document for details on the procedures for acceptance and method of settlement of the Offer. viii

10 EXECUTIVE SUMMARY (Cont d) 3. ACCEPTANCES OF THE OFFER As at the Offer Document LPD, the Offeror and the Joint Ultimate Offerors have not received any irrevocable undertaking from any Holder to accept or reject the Offer. As at the LPD, to the best knowledge of the Board, no person (whose interest in the Offer Shares, whether direct or indirect, is required to be disclosed under the Rules) has accepted or given an irrevocable undertaking to accept or reject the Offer. As at the LPD, there is no other announcement made by AmInvestment Bank on behalf of the Offeror of any acceptance of the Offer Shares. 4. EVALUATION ON THE OFFER In arriving at our conclusion and recommendation, we have assessed the fairness and reasonableness of the Offer in accordance with Paragraphs 1 to 6 of Schedule 2: Part III of the Rules, where the term fair and reasonable should generally be analysed as two distinct criteria i.e. whether the offer is fair ; and whether the offer is reasonable, rather than as a composite term. 4.1 Fairness of the Offer In evaluating and arriving at the valuation of GSB Shares, we have adopted the assetbased valuation method using the RNAV valuation methodology. We are of the opinion that this is the most appropriate method to estimate the value of GSB Shares for the reasons set out in Section 6.1 in Part B of this IAC. We are of the view that the Offer is fair after having considered the following: The Offer Price of RM0.13 represents a premium of RM0.01 or approximately 8.33% to the RNAV of RM0.12 per GSB Share. [The rest of this page has been intentionally left blank] ix

11 EXECUTIVE SUMMARY (Cont d) 4.2 Reasonableness of the Offer We are of the view that the Offer is reasonable after having considered the following: Historical price performance of GSB Shares Save for brief periods during: 8 April 2017 to 21 April 2017; and (ii) 25 October 2017 to 15 November 2017, the closing market prices of GSB Shares were below the Offer Price of RM0.13 for the past two (2) years up to and including the LTD. The Offer Price represents a premium ranging from RM to RM or approximately 10.73% to 23.22% over the last traded market price as at the LTD and the five (5)-day, one (1)-month, three (3)-month, six (6)-month and twelve (12)-month VWAPs of GSB Shares up to and including the LTD. The Offer Price represents a discount of RM or approximately 36.59% over the last traded market price of GSB Shares as at the LPD and a discount of RM or approximately 30.81% over the five (5)-day VWAP of GSB Shares up to LPD. No competing take-over offer In the absence of a competing offer, the Offer provides an exit opportunity to the Holders to realise their investments in GSB at the Offer Price. 5. FUTURE PLANS FOR GSB GROUP AND ITS EMPLOYEES We note the intention of the Offeror in relation to the future plans for GSB Group and its employees as stated in Section 5 of the Offer Document as follows: Continuation of GSB Group s business We noted that the Offeror and Joint Ultimate Offerors intend to continue with GSB Group s focus in the property development business and that they do not have any intention or plans to liquidate GSB. We noted that the Offeror and Joint Ultimate Offerors will carry out a detailed review of the operations and assets of GSB Group immediately after the completion of the Offer with the objective of gaining a better understanding and assessment of the current position of GSB. (ii) Major changes to GSB Group s business We noted that subsequent to the completion of the Offer and the above review, the Offeror and Joint Ultimate Offerors will then work out, together with the Board and management of GSB, a strategic growth plan to further drive and expand the business of GSB Group, which may include but not limited to amongst others, the following: (a) acquisition and/or entering into agreements or joint ventures for additional viable and strategic landbanks and/or property developments from third part(ies) and/or the Offeror and Joint Ultimate Offerors or persons connected to them, which will be implemented in compliance with the Listing Requirements and applicable laws and regulations, if any. For the avoidance of doubt, no specific assets have been identified as at the Offer Document LPD; x

12 EXECUTIVE SUMMARY (Cont d) (b) (c) redeployment or disposal of the existing fixed assets of GSB which are identified as non-viable or non-core to the long-term growth direction of GSB moving forward, to optimise the utilisation of resources of the company; and implementation of necessary changes to the corporate structure of GSB Group from time to time, including those pursuant to any expansionary, redeployment and/or disposal activities, to be in line with the strategic plans of the company. Lastly, we take cognisance that as at the Offer Document LPD, the Offeror and Joint Ultimate Offerors have no knowledge of and have not entered into any negotiation, arrangement or understanding with any third party in relation to any significant change in GSB Group s business and assets or the shareholding structure of GSB. (iii) Employees of GSB Group We note that the Offeror and Joint Ultimate Offerors do not have any plans to dismiss or make redundant any of GSB Group s existing employees as a direct consequence of the Offer. Nevertheless, there will be continuous constructive measures to improve the efficiency of operations and to optimise staff productivity of GSB Group. Such actions, if required, will be carried out by the Board in the best interest of GSB and in accordance with relevant regulations. 6. CONCLUSION AND RECOMMENDATION 6.1 IPS conclusion and recommendation In arriving at our recommendation, we have reviewed and evaluated the factors which we deemed to have significant relevance to our assessment of the Offer. Premised on the above, we are of the opinion that the Offer is fair and reasonable. Accordingly, we recommend that the Holders accept the Offer. It should be noted that the closing market prices of the GSB Shares had traded above the Offer Price subsequent to the Notice and including the LPD. However, this may not be an indication of future performance of the market prices of GSB Shares. There is also no assurance that the market price of the GSB Shares will continue to trade at the current level or will remain at current levels after the Closing Date. Holders who intend to exit their investments in the Offer Shares may also consider selling their GSB Shares in the open market if they are able to obtain a price higher than the Offer Price, net of related expenses. [The rest of this page has been intentionally left blank] xi

13 EXECUTIVE SUMMARY (Cont d) 6.2 Non-Interested Directors conclusion and recommendation After careful examination of the terms and conditions of the Offer as contained in the Offer Document and taking into consideration the evaluation and recommendation of IPS, the Non-Interested Directors concur with the evaluation and recommendation of IPS that the Offer is fair and reasonable. Accordingly, the Non-Interested Directors recommend that the Holders accept the Offer. The Non-Interested Directors and IPS have not taken into consideration any specific investment objectives of any individual Holder or any specific group of Holders. The Non-Interested Directors and IPS recommend that any individual Holder or any specific group of Holders who may require advice in the context of their investment objectives, financial and tax situations and particular needs should consult their respective professional advisers immediately. The decision to be made would rest on the individual risk appetite and specific requirements of the Holders. Holders should be mindful that there may be continuous fluctuations in the market prices of GSB Shares prior to the Closing Date. As such, Holders are advised to closely monitor the prices and volume of GSB Shares before deciding on the Offer. 7. INDICATIVE TIMETABLE Event Date Notice served on the Board 18 May 2018 Posting Date 8 June 2018 Issuance of IAC 18 June 2018 First Closing Date (1) 29 June 2018 Note: The Offer will remain open for acceptances until 5.00 p.m. (Malaysian time) on 29 June 2018, being the First Closing Date unless revised or extended in accordance with the Rules. Any such revision or extension will be announced by AmInvestment Bank on behalf of the Offeror at least two (2) days before the Closing Date. Notice of such extension or revision will be posted to you accordingly. YOU ARE ADVISED TO READ AND CONSIDER CAREFULLY THE INFORMATION CONTAINED IN THE OFFER DOCUMENT AND THIS IAC AND NOT TO RELY ON THIS EXECUTIVE SUMMARY BEFORE FORMING AN OPINION ON THE OFFER AND MAKING A DECISION ON THE COURSE OF ACTION TO BE TAKEN. [The rest of this page has been intentionally left blank] xii

14 PART A LETTER FROM THE BOARD 1

15 GSB GROUP BERHAD (Company No X) (Incorporated in Malaysia) Registered Office Level 8, Symphony House Block D13, Pusat Dagangan Dana 1 Jalan PJU 1A/ Petaling Jaya Selangor Darul Ehsan Malaysia 18 June 2018 Board of Directors Loy Kwee Keow (Senior Independent Non-Executive Chairman) Gan Pik Mui (Managing Director) Ir. Liaw Boo Leow Bong Lai (D.S.M.) (Independent Non-Executive Director) Gan Boon Kat (Non-Independent Non-Executive Director) To: The Holders Dear Sir/Madam, CONDITIONAL MANDATORY TAKE-OVER OFFER BY THE OFFEROR THROUGH AMINVESTMENT BANK TO ACQUIRE ALL THE OFFER SHARES FOR A CASH CONSIDERATION OF RM0.13 PER OFFER SHARE 1. INTRODUCTION On 18 May 2018, the Offeror acquired an aggregate of 127,000,000 GSB Shares or approximately 24.05% equity interest in GSB, from Sun Acres Development Sdn. Bhd. (19,800,000 GSB Shares/ 3.75%), ID D Art Sdn. Bhd. (18,600,510 GSB Shares/ 3.52%), Gan Boon Kat (9,119,490 GSB Shares/ 1.73%), Gan Pik Mui (54,750,100 GSB Shares/ 10.37%) and Dato Gan Seng Biang (24,729,900 GSB Shares/ 4.68%) for a total cash consideration of RM16,510,000 or RM0.13 per Offer Share. The Share Acquisitions were effected via direct business transactions. Immediately prior to the Share Acquisitions, the Offeror held 88,000,000 GSB Shares representing approximately 16.66% equity interest in GSB. Accordingly, upon completion of the Share Acquisitions, the shareholdings of the Offeror in GSB increased from approximately 16.66% to 40.71%. Pursuant to Section 218(2) of the CMSA and Paragraph 4.01(a) of the Rules issued by the SC, the Offeror is obliged to extend an Offer to acquire the Offer Shares. 2

16 For information purposes, Javawana was a company controlled by Datin Toh, Tee Eng Han and Tee Eng Tiong. Prior to the Share Acquisitions, Tee Eng Han and Tee Eng Tiong had transferred their entire shareholdings, being 25% equity interest each in Javawana to TES and Datuk Tee respectively, while Datin Toh had transferred 25% equity interest in Javawana to TES ( Share Transfers ). Following the Share Transfers, Datin Toh, Datuk Tee and TES hold 25%, 25% and 50% equity interest in Javawana respectively. Accordingly, Datin Toh, Datuk Tee and TES being the shareholders of the Offeror, are also the Joint Ultimate Offerors for the Offer. As at the LPD, the Offeror and Joint Ultimate Offerors do not regard any person to be acting in concert with them (in accordance with Section 216 of the CMSA) in relation to the Offer. The Board had on 21 May 2018 appointed IPS as the Independent Adviser for the Offer to advise the Non-Interested Directors and the Holders in respect of the Offer. A copy of the Notice was dispatched to the Holders on 25 May As at the LPD, the shareholdings of the Offeror and Joint Ultimate Offerors in GSB are as follows: Name < Direct > < Indirect > No. of GSB Shares % No. of GSB Shares % Offeror Javawana 215,000, Joint Ultimate Offerors Datin Toh ,000, Datuk Tee ,000, TES ,000, Note: (1) Deemed interested pursuant to Section 8 of the Act by virtue of their shareholdings in Javawana. A copy of the Offer Document, which sets out the details, terms and conditions of the Offer as well as the procedures for acceptance of the Offer, had been posted to the Holders on 8 June THE PURPOSE OF THIS IAC IS TO PROVIDE YOU WITH THE RELEVANT INFORMATION ON THE OFFER AND THE NON-INTERESTED DIRECTORS VIEW AND RECOMMENDATION ON THE OFFER TOGETHER WITH THE RECOMMENDATION OF IPS. YOU ARE ADVISED TO READ BOTH THIS IAC AND THE OFFER DOCUMENT AND CAREFULLY CONSIDER THE RECOMMENDATIONS CONTAINED HEREIN BEFORE TAKING ANY ACTION. 2. TERMS AND CONDITIONS OF THE OFFER The terms and conditions of the Offer are set out in Section 2 of Part B of this IAC. Please refer to Appendix I of the Offer Document for the other terms and conditions of the Offer and Appendix II of the Offer Document for the procedures for acceptance and method of settlement of the Offer. 3

17 3. NON-INTERESTED DIRECTORS COMMENTS 3.1 Rationale for the Offer The Non-Interested Directors take cognisance of the rationale for the Offer as set out in Section 3 of the Offer Document. The Offer was made by the Offeror pursuant to Section 218(2) of the CMSA and Paragraph 4.01(a) of the Rules as a result of the Offeror s shareholdings in GSB increasing from approximately 16.66% to 40.71% following the Share Acquisitions. The Non-Interested Directors note that the Share Acquisitions and Offer were undertaken to increase the Offeror s equity interest in GSB to enable the Joint Ultimate Offerors to have better strategic and operational control to drive the future business direction and expansion of GSB Group, after taking into consideration, amongst others, their expertise in the property development industry as well as the prospects of the Group s assets. It is the intention of the Joint Ultimate Offerors to further grow the property development business of GSB Group. The Joint Ultimate Offerors are currently involved in property development via privately held companies which have completed various projects such as, inter alia, The Melaka, 100 Residency, 222 Residency and 288 Residency in Setapak, Kuala Lumpur as well as Viridian Cheras Idaman in Cheras, Kuala Lumpur. Accordingly, they are of the view that they are in a position to contribute positively to the earnings of GSB Group and correspondingly enhance the value of the Offeror s investment in GSB. The Non-Interested Directors further note that the Holders will also be provided with an opportunity to realise their investments in GSB Shares for cash at the Offer Price. Please refer to Section 10 of Part B of this IAC for further details. 3.2 Listing status of GSB The Non-Interested Directors take note that the Offeror intends to maintain the listing status of GSB on the Main Market of Bursa Securities. Accordingly, in the event that GSB fails to comply with the Public Spread Requirement, by having a public shareholding spread position of less than 25% of the total number of listed GSB Shares following the completion of the Offer, the Offeror will explore together with GSB various options or proposals within three (3) months from the Closing Date or such extended timeframe as allowed by the relevant authorities to enable GSB to comply with the Public Spread Requirement. As at the Offer Document LPD, no arrangements on the above have been made. Please refer to Section 9.1 of Part B of this IAC for further details. 3.3 Compulsory acquisition and rights of Dissenting Holders The Non-Interested Directors take note that the Offeror does not intend to invoke the provisions of Section 222(1) of the CMSA to compulsorily acquire any outstanding Offer Shares for which the Valid Acceptances have not been received prior to the Closing Date even if the conditions stipulated in Section 222(1) of the CMSA are fulfilled. Notwithstanding the above, subject to Section 224 of the CMSA, Section 223 of the CMSA provides that if the Offeror receives Valid Acceptances from the Holders resulting in the Offeror, Joint Ultimate Offerors and PACs holding not less than nine-tenths (9/10) in the value of all the shares in the Offeree or of that class in the Offeree on or before the Closing Date, a Dissenting Holder may exercise his or its rights under Section 223(1) of the CMSA within a period to be specified by the Offeror which shall be no less than three (3) months after the Closing Date, by serving a notice on the Offeror to require the Offeror to acquire his Offer Shares (as the case may be) on the same terms as set out in this Offer Document or such other terms as may be agreed between the Offeror and such Dissenting Holder. Please refer to Section 9.2 of Part B of this IAC for further details. 4

18 3.4 Future plans for GSB Group and its employees The Non-Interested Directors take note of Section 5 of the Offer Document on the intention of the Offeror with respect to the future plans for GSB Group and its employees as follows: Continuation of GSB Group s business The Offeror and Joint Ultimate Offerors intend to continue GSB s focus in the property development business and they do not have any intention or plans to liquidate GSB. The Offeror and Joint Ultimate Offerors will carry out a detailed review of the operations and assets of GSB Group immediately after completion of the Offer with the objective of gaining a better understanding and assessment of the current position of GSB Major changes to GSB Group s business Subsequent to completion of the Offer and the above review, the Offeror and Joint Ultimate Offerors will then work out, together with the Board and management of GSB, a strategic growth plan to further drive and expand the business of GSB Group, which may include but not limited to, amongst others, the following: (ii) (iii) acquisition and/or entering into agreements or joint ventures for additional viable and strategic landbanks and/or property developments from third part(ies) and/or the Offeror and Joint Ultimate Offerors or persons connected to them, which will be implemented in compliance with the Listing Requirements and applicable laws and regulations, if any. For the avoidance of doubt, no specific assets have been identified as at the Offer Document LPD; redeployment or disposal of the existing fixed assets of GSB which are identified as nonviable or non-core to the long-term growth direction of GSB moving forward, to optimise the utilisation of resources of the Company; and implementation of necessary changes to the corporate structure of GSB Group from time to time, including those pursuant to any expansionary, redeployment and/or disposal activities, to be in line with the strategic plans of the Company. As at the Offer Document LPD, the Offeror and Joint Ultimate Offerors have no knowledge of and have not entered into any negotiation or arrangement or understanding with any third party in relation to any significant change in GSB Group s business and assets or the shareholding structure of the Company Employees of GSB Group The Offeror and Joint Ultimate Offerors do not have any plans to dismiss or make redundant any of the existing employees of GSB Group as a direct consequence of the Offer. Nevertheless, there will be continuous constructive measures to improve the efficiency of operations and to optimise staff productivity of GSB Group. Such actions, if required, will be carried out by the Board in the best interest of GSB and in accordance with relevant regulations. Please refer to Section 8 of Part B of this IAC for further details. 4. ACCEPTANCES OF THE OFFER As stated in Section 1 of the Offer Document, as at the Offer Document LPD, the Offeror and Joint Ultimate Offerors have not received any irrevocable undertaking from any Holder to accept or reject the Offer. As at the LPD, there is no announcement made by AmInvestment Bank, on behalf of the Offeror, of any acceptances of the Offer Shares. 5

19 As at the LPD, to the best knowledge of the Board, no person who has an interest in the voting shares in GSB (whether direct or indirect), which are required to be disclosed under the Rules had accepted or had given an irrevocable undertaking to accept or reject the Offer. 5. INDEPENDENT ADVISER S LETTER The Holders are advised to read and consider the views and recommendation of IPS, the Independent Adviser appointed to advise you and the Non-Interested Directors. The IAL is included in Part B of this IAC. 6. DIRECTORS DISCLOSURE OF INTERESTS AND INTENTION RELATING TO THE OFFER As at the LPD, the Directors and their respective interests (direct and indirect) in the GSB Shares are as follows: Name < Direct > < Indirect > No. of GSB No. of GSB Shares % Shares % Loy Kwee Keow Gan Pik Mui 315, Ir. Liaw Boo Leow Bong Lai (D.S.M.) Gan Boon Kat Save for the disposal of 54,750,100 GSB Shares and 9,119,490 GSB Shares by Gan Pik Mui and Gan Boon Kat respectively, at RM0.13 per GSB Share pursuant to the Share Acquisitions, the Directors have not dealt, directly or indirectly, in the GSB Shares during the period commencing six (6) months before the date of the Notice and ending on the LPD. Loy Kwee Keow, Ir. Liaw Boo Leow Bong Lai (D.S.M.) and Gan Boon Kat have no interest in GSB. Gan Pik Mui has confirmed her intention to reject the Offer in respect of her holding in the Offer Shares. 7. DIRECTORS RESPONSIBILITY STATEMENT The Board has seen and approved the contents of this IAC. The Directors collectively and individually accept full responsibility for the accuracy and completeness of the information contained in this IAC and confirm that, after making all enquiries as were reasonable in the circumstances and to the best of their knowledge and belief: (ii) (iii) (iv) no statement and/or information relating to the GSB Group in this IAC is incomplete, false and/or misleading; there are no other facts and/or information, the omission of which would render any statement and/or information relating to the GSB Group in this IAC incomplete, false and/or misleading; all material facts and/or information in relation to the Offer (including those required under the Rules) have been accurately and completely disclosed in this IAC; and opinions expressed in this IAC have been arrived at after due and careful consideration. The responsibility of the Board in respect of: the information relating to the Offeror, the Joint Ultimate Offerors and the Offer (as extracted from the Offer Document) is to ensure that such information is accurately reproduced in this IAC; and 6

20 (ii) the independent advice and expression of opinion by IPS in relation to the Offer as set out in Part B of this IAC, is to ensure that accurate information in relation to the GSB Group was provided to IPS for its evaluation of the Offer and to ensure that all information in relation to the GSB Group that is relevant to IPS' evaluation of the Offer have been completely disclosed to IPS and that there is no omission of material facts which would make any information provided to IPS false or misleading. 8. NON-INTERESTED DIRECTORS RECOMMENDATION Gan Pik Mui (by virtue of her shareholding in GSB as well as her disposal of 54,750,100 GSB Shares pursuant to the Share Acquisitions) and Gan Boon Kat (by virtue of his disposal of 9,119,490 GSB Shares pursuant to the Share Acquisitions) are deemed interested in the Offer and have duly abstained from deliberations and making any recommendation in respect of the Offer. After careful examination of the terms and conditions of the Offer as contained in the Offer Document and taking into consideration the evaluation and recommendation of IPS, the Non- Interested Directors concur with the evaluation and recommendation of IPS that the Offer is fair and reasonable. Accordingly, the Non-Interested Directors recommend that the Holders accept the Offer. Holders who intend to exit their investments in the Offer Shares should consider selling their GSB Shares in the open market if they are able to obtain a price higher than the Offer Price, net of related expenses. However, the decision to be made would rest entirely on the individual risk appetite and specific requirements of the Holders. The Holders should also be mindful that there may be continuous fluctuations in the market prices of the GSB Shares prior to the Closing Date. As such, the Holders are advised to closely monitor the market prices and information/announcements in relation to the Offer before deciding on the course of action to be taken in respect of the Offer Shares. THE HOLDERS ARE ADVISED TO CAREFULLY CONSIDER THE INFORMATION CONTAINED IN THE OFFER DOCUMENT AND THIS IAC BEFORE DECIDING ON THE COURSE OF ACTION TO BE TAKEN. THE NON-INTERESTED DIRECTORS HAVE NOT TAKEN INTO CONSIDERATION ANY SPECIFIC INVESTMENT OBJECTIVES, FINANCIAL SITUATION, RISK PROFILE AND PARTICULAR NEEDS OF ANY INDIVIDUAL HOLDER OR ANY SPECIFIC GROUP OF HOLDERS. THE NON-INTERESTED DIRECTORS RECOMMEND THAT HOLDERS WHO REQUIRE ADVICE IN RELATION TO THE OFFER IN THE CONTEXT OF THEIR INVESTMENT OBJECTIVES, FINANCIAL SITUATION, RISK PROFILE OR PARTICULAR NEEDS, SHOULD CONSULT THEIR RESPECTIVE STOCKBROKER, SOLICITOR, ACCOUNTANT, BANK MANAGER OR OTHER PROFESSIONAL ADVISERS IMMEDIATELY. Yours faithfully, For and on behalf of the Board of GSB GROUP BERHAD Loy Kwee Keow Senior Independent Non-Executive Chairman 7

21 PART B INDEPENDENT ADVICE LETTER FROM IPS 8

22 Registered Office West Wing, Level 13 Berjaya Times Square No. 1, Jalan Imbi Kuala Lumpur 18 June 2018 To: The Holders Dear Sir/Madam, CONDITIONAL MANDATORY TAKE-OVER OFFER BY THE OFFEROR THROUGH AMINVESTMENT BANK TO ACQUIRE ALL THE OFFER SHARES FOR A CASH CONSIDERATION OF RM0.13 PER OFFER SHARE 1. INTRODUCTION On 18 May 2018, the Offeror acquired an aggregate of 127,000,000 GSB Shares or approximately 24.05% equity interest in GSB, from Sun Acres Development Sdn. Bhd. (19,800,000 GSB Shares/ 3.75%), ID D Art Sdn. Bhd. (18,600,510 GSB Shares/ 3.52%), Gan Boon Kat (9,119,490 GSB Shares/ 1.73%), Gan Pik Mui (54,750,100 GSB Shares/ 10.37%) and Dato Gan Seng Biang (24,729,900 GSB Shares/ 4.68%) for a total cash consideration of RM16,510,000 or RM0.13 per Offer Share. The Share Acquisitions were effected via direct business transactions. Immediately prior to the Share Acquisitions, the Offeror held 88,000,000 GSB Shares representing approximately 16.66% equity interest in GSB. Accordingly, upon completion of the Share Acquisitions, the shareholdings of the Offeror in GSB increased from approximately 16.66% to 40.71%. Pursuant to Section 218(2) of the CMSA and Paragraph 4.01(a) of the Rules, as the shareholdings of the Offeror exceeded 33% of the voting shares in GSB after the Share Acquisitions, AmInvestment Bank had, on behalf of the Offeror, served the Notice on 18 May 2018, in accordance with Paragraph 9.10(1)(b) of the Rules. The Board had, on 18 May 2018, announced the receipt of the Notice. In accordance with Paragraph 3.06 of the Rules, the Board had, on 21 May 2018, appointed IPS as the Independent Adviser to provide its comments, opinions, information and recommendation on the Offer in an IAC to the Holders. IPS had, on 22 May 2018, declared to the SC its independence from any conflict of interest or potential conflict of interest to act as the Independent Adviser in relation to the Offer. 9

23 As at the LPD, the Offeror and Joint Ultimate Offerors have the following direct and indirect interests in GSB Shares: Name < Direct > < Indirect > No. of GSB Shares % No. of GSB Shares % Offeror Javawana 215,000, Joint Ultimate Offerors Datin Toh - - (1) 215,000, Datuk Tee - - (1) 215,000, TES - - (1) 215,000, Note: (1) Deemed interested pursuant to Section 8 of the Act by virtue of their shareholdings in Javawana. A copy of the Notice was despatched to the Holders on 25 May You should have by now received a copy of the Offer Document dated 8 June 2018 which sets out the terms and conditions of the Offer as well as the procedures for acceptance and method of settlement of the Offer. Pursuant to Rule 11 of the Rules, the SC had on 12 June 2018, given its notification that it has no further comments to the contents of the IAC and such notification shall not be taken to suggest that the SC agrees with the recommendations of the Non-Interested Directors and the Independent Adviser or assumes responsibility for the correctness of any statements made or opinions or reports expressed in the IAC. The purpose of this IAL is to highlight the relevant information relating to the Offer, our independent evaluation of the terms of the Offer together with our recommendation, subject to the scope and limitation of our role and evaluation specified in this IAC. HOLDERS ARE ADVISED TO CAREFULLY CONSIDER THE INFORMATION AND RECOMMENDATION CONTAINED IN THIS IAL, TOGETHER WITH THE OFFER DOCUMENT BEFORE DECIDING AS TO THE COURSE OF ACTION TO BE TAKEN. IF YOU ARE IN ANY DOUBT AS TO THE COURSE OF ACTION YOU SHOULD TAKE IN RELATION TO THE OFFER, YOU SHOULD CONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER PROFESSIONAL ADVISER IMMEDIATELY. THIS IAL IS SOLELY FOR THE USE OF THE HOLDERS FOR THE PURPOSE OF CONSIDERING THE OFFER AND SHOULD NOT BE USED OR RELIED UPON BY ANY OTHER PARTY OR FOR ANY OTHER PURPOSE. 2. TERMS AND CONDITIONS OF THE OFFER The terms and conditions of the Offer are as follows: Consideration for the Offer The consideration for the Offer is RM0.13 per Offer Share and shall be satisfied wholly in cash. Notwithstanding this, if GSB declares, makes and/or pays any Distribution on or after the date of the Notice but prior to the Closing Date of the Offer and the Holders are entitled to retain such Distribution, the Offer Price shall be reduced by an amount equivalent to the net Distribution per GSB Share which such Holders are entitled to. As at the LPD, GSB has not declared, made or paid any Distribution on or after the date of the Notice. 10

24 Holders may accept the Offer in respect of all or part of their Offer Shares. They may not accept the Offer in excess of their respective holdings of the Offer Shares and entitlements to cash payment will be rounded down to the nearest whole sen. The Offeror will not pay fractions of a sen to Accepting Holders. (ii) Condition of the Offer The Offer is conditional upon the fulfilment of the Acceptance Condition, that is, the Offer is conditional upon the Offeror having received Valid Acceptances (provided that such Valid Acceptances are not, where permitted, subsequently withdrawn) by the Closing Date which would result in the Offeror and Joint Ultimate Offerors holding in aggregate, together with such GSB Shares that are already acquired, held or entitled to be acquired or held by the Offeror and Joint Ultimate Offerors, more than 50% of the voting shares of GSB. The Acceptance Condition will need to be fulfilled no later than 5.00 p.m. (Malaysian time) on or before the Closing Date, which in any event shall not be later than the 60 th day from the Posting Date, failing which the Offer will lapse and all acceptances will be returned to you and the Offeror will cease to be bound by any such prior acceptances of the Offer. For the avoidance of doubt, assuming 23,070,000 new GSB Shares are allotted and issued prior to the Closing Date arising from the full exercise of GSB ESOS Options, the Offeror is required to receive Valid Acceptances or acquire or be entitled to acquire, a total of 61,435,001 Offer Shares, during the Offer Period to fulfil the Acceptance Condition. (iii) Duration of the Offer The Offer will remain open for acceptance until 5:00 p.m. (Malaysian time) on 29 June 2018, being the First Closing Date, unless extended or revised in accordance with the Rules. Any such extension or revision will be announced by AmInvestment Bank, on behalf of the Offeror, at least two (2) days before the Closing Date. Notice of such extension or revision will be posted to the Holders accordingly. Please refer to Section 2 of Appendix I of the Offer Document for further details on the duration of the Offer. (iv) Method of settlement Save for the Offeror s right to reduce the Offer Price as set out in Section 2.1 of the Offer Document and except with the consent of the SC, the Offeror will settle the consideration to which the Holder is entitled under the Offer in full in accordance with the terms of the Offer without regard to any lien, right of set-off, counter-claim or other analogous rights to which the Offeror may be or claim to be entitled against the Holder. However, this is without prejudice to the Offeror s rights to make any claim against the Holder after such settlement in respect of a breach of the Holder s warranties as set out in Section 1 of Appendix I of the Offer Document. Where there are Valid Acceptances, the settlement for the Offer Shares to which such Valid Acceptances relate will be effected through remittance in the form of cheques, bankers drafts or cashier s orders which will be posted by ordinary mail to the Holders (or the Holders designated accounts as they may direct) at their registered Malaysian address last maintained with Bursa Depository at their own risk without ten (10) days from: (ii) the date the Offer becomes or is declared wholly unconditional, if the Valid Acceptances are received during the period when the Offer is still conditional; or the date of the Valid Acceptances, if the Valid Acceptances are received during the period after the Offer is or has become or has been declared wholly unconditional. 11

25 (v) Other terms and conditions and procedures for acceptance Please refer to Appendix I of the Offer Document for the other terms and conditions of the Offer and Appendix II of the Offer Document for details on the procedures for acceptance and method of settlement of the Offer. 3. ACCEPTANCES OF THE OFFER As at the Offer Document LPD, the Offeror and the Joint Ultimate Offerors have not received any irrevocable undertaking from any Holder to accept or reject the Offer. As at the LPD, to the best knowledge of the Board, no person (whose interest in the Offer Shares, whether direct or indirect, is required to be disclosed under the Rules) has accepted or given an irrevocable undertaking to accept or reject the Offer. As at the LPD, there is no other announcement made by AmInvestment Bank on behalf of the Offeror of any acceptance of the Offer Shares. 4. SCOPE AND LIMITATIONS OF THE EVALUATION AND OPINION IPS was not involved in the formulation of, deliberations, negotiations or discussions of the terms of the Offer. Our scope as the independent adviser is limited to expressing an independent opinion on the terms of the Offer and to the fairness and reasonableness of the Offer as far as the Holders are concerned based on the following sources of information and documents which are available to us, including the following: (ii) (iii) (iv) information contained in the Notice and the Offer Document; other relevant information, documents, confirmations and/or representations provided to us by the Board and the management of GSB; discussions and consultation with the Board and management of GSB; and other publicly available information which we consider relevant for our evaluation. We have relied on the Board and management of GSB to exercise due care to ensure that all information, data, documents and representations that they had provided to us to facilitate our evaluation are accurate, valid and complete in all material respects. We have made due enquiries that were reasonable in the circumstances and as the date hereof, we are satisfied that the information provided to us is sufficient and have no reason to believe that the aforementioned information is unreliable, inaccurate, incomplete and/or misleading. In evaluating the Offer and preparing this IAL, we have taken into consideration pertinent matters which we believe are of general importance to an assessment of the fairness and reasonableness of the Offer and therefore of concern to the Holders as a whole. We are not in possession of information relating to, and have not taken into consideration separate specific investment objectives, financial and tax situations or any particular needs of any individual Holder or any specific group of Holders. We therefore recommend that any individual Holder or any specific group of Holders who may require specific advice in relation to the Offer within the context of their investment objectives, financial and tax situations and particular needs to consult their stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Our views expressed in this IAL are, amongst others, based on economic, market and other conditions prevailing, and the information and/or documents made available to us as at the LPD or such other period as specified herein. Such conditions may change significantly over a short period of time. 12

26 We shall immediately notify the Holders by way of announcement(s) if, after despatching of this IAC, as guided by Paragraph 11.07(1) of the Rules, we become aware that the information or document previously circulated or provided: (a) (b) (c) contains a material statement which is false or misleading; contains a statement from which there is a material omission; or does not contain a statement relating to a material development. If circumstances require, we shall send a supplementary IAC to the Holders as guided by Paragraph 11.07(2) of the Rules. 5. EVALUATION OF THE OFFER In arriving at our conclusion and recommendation, we have assessed the fairness and reasonableness of the Offer in accordance with Paragraphs 1 to 6 of Schedule 2: Part III of the Rules, where the term fair and reasonable should generally be analysed as two distinct criteria i.e. whether the offer is fair ; and whether the offer is reasonable, rather than as a composite term. Paragraph 2 of Schedule 2: Part III of the Rules states that in considering whether a take-over offer can be considered fair, the Independent Adviser should assess if the offer price or value of consideration is equal to or greater than the value of the securities that are the subject of the take-over offer. If the offer price is equal to or higher than the market price and is also equal to or higher than the value of the securities of the offeree, the take-over offer is considered as fair. If the offer price is equal to or higher than the market price, but is lower than the value of the securities of the offeree, the take-over offer is considered as not fair. Paragraph 4 of Schedule 2: Part III of the Rules states that in considering whether a take-over offer is reasonable, the Independent Adviser should take into consideration matters other than the valuation of the securities that are the subject of the take-over offer. Generally, a take-over offer would be considered reasonable if it is fair. Nevertheless, an independent adviser may also recommend for shareholders to accept the take-over offer despite it being not fair, if the independent adviser is of the view that there are sufficiently strong reasons to accept the offer in the absence of a higher bid and such reasons should be clearly explained. In our evaluation of the Offer, we have taken into consideration the following factors in forming our opinion: Fairness of the Offer Section Valuation of GSB Shares 6.1 Reasonableness of the Offer Section Historical price performance of GSB Shares 7.1 No competing take-over offer 7.2 [The rest of this page has been intentionally left blank] 13

27 6. FAIRNESS OF THE OFFER 6.1 Valuation of GSB Shares GSB is an investment holding company. The Company, through its subsidiaries, is involved in property development and manufacturing and replication of optical discs. GSB Group s revenue is mainly derived from its property development business which is the core business of GSB. Based on the audited consolidated financial statements of GSB for the FYE 31 March 2017, the property development segment contributed RM27.22 million or approximately 81.69% to GSB s total revenue of RM33.32 million. Based on the unaudited consolidated financial statements of GSB for the FYE 31 March 2018, the property development segment contributed RM31.85 million or approximately 86.41% to GSB s total revenue of RM36.86 million. GSB Group s manufacturing and replication of optical discs business contributed RM6.10 million or approximately 18.31% to GSB s total revenue of RM33.32 million for the FYE 31 March Based on the unaudited consolidated financial statements of GSB for the FYE 31 March 2018, the manufacturing and replication of optical discs business segment contributed RM5.01 million or approximately 13.59% to GSB s total revenue of RM36.86 million. In our evaluation, we have also taken note of the composition of GSB s unaudited consolidated total assets as at 31 March 2018 which is set out below: Notes Unaudited as at 31 March 2018 NBV RM 000 % over total assets Property, plant and equipment ( PPE ) (a) 15, Land held for property development (b) 72, ( LHPD ) Total non-current assets 88, Inventories (c) 1, Current tax assets (d) 1, Trade and other receivables (e) 44, Prepayments (f) Property development costs ( PDC ) (g) 70, Cash and bank balances (h) 5, , Asset held for sale Total current assets 124, Total assets 212, (Source: Quarterly results of GSB for the FYE 31 March 2018) 14

28 Notes: (a) We have noted that the PPE of GSB comprises land, buildings, plant, machinery and audio equipment, office equipment, motor vehicles, furniture, fixtures and fittings and renovation. The properties (comprising land and buildings) which have not been revalued are set out below. Please refer to note (a) of our RNAV evaluation in Section 6.1 of the IAL for the properties under PPE which were revalued by the Valuers ( Revalued PPE ). No. Subject properties Total floor area 1 Parcel No. 1307, Storey No. 3, Building,1, Taman Shamelin Perkasa, PT1604, Mukim of Kuala Lumpur, District of Kuala Lumpur. (sq metres) Tenure / year of expiry Description Date of acquisition Leasehold 99 years expiring on 11 September 2082 (age is approximately 21 years) Three (3) bedroom apartment for Unaudited NBV as at 31 March 2018 (RM 000) 4 July management 2 Parcel No. D-113, 1st Floor, Block D, Pandan Freehold (age is approximately Three (3) 3 June Height, PT Mukim of Ampang, District of 17 years) bedroom Ulu Langat, State of Selangor. apartment for management 3 Parcel No. 1313, Storey No.3, Building 1, Taman Leasehold 99 years expiring Three (3) 4 July Shamelin Perkasa, PT1604, Mukim of Kuala on 11 September 2082 (age is bedroom Lumpur, District of Kuala Lumpur. approximately 21 years) apartment for management Total No recent valuations were conducted for the above properties as the NBV of these properties represents only: approximately 0.59% of the unaudited NA of GSB Group as at 31 March 2018; (ii) approximately 1.97% of the unaudited PPE of GSB Group as at 31 March 2018; and (iii) approximately 0.14% of the unaudited total assets of GSB Group as at 31 March However, we have noted that valuations were conducted for the above three (3) properties in year We are of the opinion that there will be no significant impact to the fair value of GSB Shares with respect to these properties. (b) We have noted that the LHPD of GSB Group consists of land or such portions thereof on which no development activities have been carried out or where development activities are not expected to be completed within the Group s normal operating cycle of two (2) to four (4) years. Such land is classified as non-current asset and is measured at cost less any accumulated impairment losses. All lands categorised under LHPD have been revalued. Please refer to note (b) of our RNAV evaluation in Section 6.1 of the IAL for the revalued LHPD and inventories ( Revalued LHPD and Inventories ). LHPD is reclassified as property development costs at the point when active development activities have commenced and where it can be demonstrated that the development activities can be completed within the Group s operating cycle of two (2) to four (4) years. 15

29 (c) The inventories are deemed not material to the total assets of GSB Group. The inventories comprise raw materials, consumables, work-in-progress, finished goods and completed properties. Based on GSB Group s accounting policy, inventories are measured at the lower of cost and net realisable value. The cost of inventories is measured based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of work-in-progress and finished goods, cost includes an appropriate share of production overheads based on normal operating capacity. The cost of completed properties includes expenditures incurred in the acquisition of land, direct cost and appropriate proportions of common cost attributable to developing the properties to completion. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. All completed properties categorised under inventories have been revalued. Please refer to note (b) of our RNAV evaluation in Section 6.1 of the IAL for the Revalued LHPD and Inventories. (d) The current tax assets are deemed not material to the total assets of GSB Group as it represents only: 0.76% of the unaudited total assets of GSB Group as at 31 March 2018; and (ii) 3.02% of the unaudited NA of GSB Group as at 31 March The current tax assets comprise monthly tax instalments paid by GSB Group. (e) (f) Trade and other receivables comprises trade receivables, accrued billings, other receivables and deposits. The carrying amount of trade and other receivables approximate their fair value due to the relatively short-term nature of these financial instruments and is expected to be received within twelve (12) months. The prepayments are deemed not material to the total assets of GSB Group as it represents only: 0.05% of the unaudited total assets of GSB Group as at 31 March 2018; and (ii) 0.19% of the unaudited NA of GSB Group as at 31 March The prepayments comprise prepaid expenses and costs incurred which do not fall under the FYE 31 March (g) (h) We have noted that the PDC of GSB Group comprise costs associated with the acquisition of land and all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. PDC not recognised as an expense is recognised as an asset, which is measured at the lower of cost and net realisable value. Please refer to notes (c), (d) and (e) of our RNAV evaluation in Section 6.1 of the IAL for GSB Group s on-going property development projects namely Project Taman Makmur Height, Project Bentong Avenue and Project G Residence. Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value. Cash and cash equivalents approximate their fair value due to the relatively short-term nature of these financial instruments. The asset held for sale is deemed not material to the total assets of GSB Group. The asset held for sale comprises a freehold land at H.S.(D) 69156, No PT632, Selambau Industrial Estate, Pekan Bukit Selambau, Daerah Kuala Muda, Negeri Kedah Darul Aman. The said land had been disposed for a consideration sum of RM1,100,000 in year 2018, whereby a net gain on disposal of approximately RM229,000 will be recognised in the FYE 31 March 2019 as the sale was completed after the FYE 31 March

30 Based on the audited consolidated financial statements of GSB for the FYE 31 March 2017 and the unaudited consolidated financial statements of GSB for the FYE 31 March 2018, GSB Group had recorded a LAT of approximately RM1.92 million and RM2.43 million respectively. GSB Group is not expected to have any consistent earnings stream as a basis to determine the fair value of GSB Shares using the earnings-based valuation method. The dividend discount model valuation is also not adopted to determine the fair value of GSB Shares as no dividend has been declared by GSB for the past four (4) financial years. Please refer to Section 6 of Appendix I for further information on the summary of financial results of GSB Group for the past four (4) financial years. Since GSB Group is involved in the property development business, GSB Group has substantial property assets. The RNAV per GSB Share which has been calculated based on the revalued property assets would provide the basis for the fair value of GSB Shares. As such, for the purpose of assessing the valuation of the Offer Shares, we have adopted the assetbased valuation method using the RNAV per GSB Share as we are of the opinion that it is the most suitable valuation methodology to be used for the valuation of GSB. RNAV is a commonly adopted valuation methodology in approaching valuations of asset-based companies as all or certain substantial property-related assets may be carried at their historical cost or book values. Thus, the RNAV analysis assumes, inter alia, the existence of ready and committed buyer(s) for each asset at the fully revalued basis, and that the sale can be conducted efficiently without any timing constraint and without regard to other relevant market factors that may affect the sale process. The market values would typically be appraised by expert valuers. In order to ascertain the RNAV, we have considered the deferred tax liability. Pursuant to paragraph 51 of Malaysian Financial Reporting Standards (MFRS) 112, the measurement of the deferred tax liability would follow the manner in which the entity expects to recover the carrying amount of its assets. If GSB intends to develop the land in the foreseeable future, it will be subject to corporate tax in the future and thus the deferred tax liability is computed at 24%, being the current tax rate. However, for PPE and investment properties, the deferred tax liability is based on the Real Property Gains Tax ( RPGT ) which is computed in accordance with the Real Property Gains Tax Act 1976, where the following RPGT will be imposed when a company disposes its property assets depending on its date of acquisition. Date of disposal RPGT rates (%) Disposal within 2 years after date of acquisition 30 Disposal within 3rd year after date of acquisition 30 Disposal within 4th year after date of acquisition 20 Disposal within 5th year after date of acquisition 15 Disposal within 6th year after date of acquisition or thereafter 5 We note that GSB Group presently has three (3) property development projects, namely Project Taman Makmur Height, Project Bentong Avenue and Project G Residence. Project Taman Makmur Height is a property development project by Banda Industries located at Bentong, Pahang. Project Bentong Avenue is a property development project by GSB Hotel located at Bentong, Pahang. Project G Residence is a property development project by GSB Properties located at Plentong, Johor Bahru. Project Taman Makmur Height and Project G Residence were both appraised by Henry Butcher and CH Williams respectively. Project Bentong Avenue comprises a land for the proposed development of a hotel as well as thirty (30) units of double storey mid and corner terrace shop offices, of which four (4) are unsold. GSB had only engaged Henry Butcher to appraise the land held for the development of a hotel. 17

31 Hence, we have adopted the residual income method basis of valuation to arrive at the potential earnings to be derived from the Project Bentong Avenue for the thirty (30) units of double story mid and corner terrace shop offices, rather than the land value, which is then aggregated to the RNAV valuation. The residual method involves the present value of the remaining expected PAT from the project which is discounted at the cost of equity. The earnings generated by GSB s subsidiary from Project Bentong Avenue have a direct correlation with the NA of GSB whereby positive earnings will result in an increase in the NA of GSB and vice versa. Pursuant thereto, as we have adopted the RNAV methodology, which is an asset based approach, we are of the view that aggregating the potential earnings to be derived from GSB Group s property development project to the RNAV valuation is reasonable. The bases and assumptions used in deriving the potential earnings for Project Bentong Avenue for RNAV purposes were based on, amongst others, the following: (ii) (iii) (iv) the remaining estimated GDV and GDC for all the sold twenty-six (26) units of shop offices; the remaining estimated GDV and GDC for the unsold four (4) units of shop offices which are expected to be sold during the FYE 31 March 2019; selling prices of the shop offices; and estimated PBT margin of the shop offices. As at 31 March 2018, the percentage of completion of Project Bentong Avenue is approximately 85%. In addition, the management of GSB has also relied on, inter alia, the following key assumptions: (ii) (iii) (iv) Project Bentong Avenue will achieve the projected income; Project Bentong Avenue will continue as a going concern; there will be no significant change to the terms and conditions of various agreements entered into by GSB Group governing Project Bentong Avenue; and GSB Group will complete Project Bentong Avenue as planned. As the indicative valuation of the expected profits to be derived from Project Bentong Avenue is an estimation based on certain assumptions, the indicative RNAV is subject to change and may be significantly affected by factors which include the following: (ii) any increase in actual profit margins from the estimates made by the management of GSB will have a positive impact on the indicative RNAV, while any decrease in actual profit margins from the estimates will have a negative impact on the indicative RNAV. Factors such as increase in prices of building materials, higher than anticipated operating costs and lower sales prices can have a negative impact on the profit margins; and any delays in the progress of construction which may arise due to various reasons such as authority approval, project complexities or material availability may negatively affect the indicative RNAV. We are of the view that the bases and assumptions provided by GSB for Project Bentong Avenue are reasonable. As such we are satisfied with the bases and assumptions used by the management of GSB to derive the potential earnings for Project Bentong Avenue as above. We have reviewed the bases and assumptions used by the management of GSB in arriving at the aforementioned estimates and they appear to be reasonable. 18

32 The indicative value per GSB Share by adopting the RNAV valuation methodology is as follows: Notes Amount (RM 000) Unaudited consolidated NA of GSB Group as at 31 March , Add: Total net revaluation surplus from properties of GSB Group that are revalued ( Revalued Properties ) which consists of the following: - Revalued PPE (a) Revalued LHPD and Inventories (b) (488.39) - Project Taman Makmur Height (c) Project Bentong Avenue (d) 1, Project G Residence (e) 6, Net gain on disposal from asset held for sale (f) Issuance of 1,700,000 GSB Shares pursuant to 1,700,000 GSB ESOS Options exercised subsequent to 31 March RNAV 62, No. of issued GSB Shares ( 000) 529,800 RNAV per GSB Share (RM) 0.12 Diluted RNAV For illustration purposes, the RNAV per GSB Share assuming full exercise of the outstanding GSB ESOS Options (1) RNAV (as per above) 62, Increase in share capital assuming full exercise of the outstanding 2, GSB ESOS Options (1) Adjusted RNAV 64, No. of proforma enlarged GSB Shares ( 000) 552,870 Diluted RNAV per GSB Share (RM) 0.12 Note: (1) As at the LPD, GSB has 23,070,000 outstanding GSB ESOS Options with an exercise price of RM0.10 each. Based on the above, the Offer Price represents: (ii) a premium of RM0.01 or approximately 8.33% to the RNAV of RM0.12 per GSB Share; and a premium of RM0.01 or approximately 8.33% to the diluted RNAV of RM0.12 per GSB Share (assuming all outstanding 23,070,000 GSB ESOS Options are exercised into GSB Shares). 19

33 Total net revaluation surplus from GSB Group s Revalued Properties: The Group had engaged the Valuers to determine the market value of the Revalued Properties for internal management use. In arriving at the valuation of GSB s properties, the Valuers had adopted the following methods of valuation. The methods are described as follows: Method of valuation Comparison approach Residual method Income approach/ Investment method Description The comparison approach entails analysing recent transactions and asking prices of similar properties in and around the locality for comparison purposes with adjustments made for differences in location-general, location-accessibility/ visibility, size, tenure, shape/terrain and other relevant characteristics to arrive at the market value. The residual method of valuation involves a computation of the net development value of the project, from which all expenses and costs to complete the project including a margin for developer s profit. The remainder or residual sum, appropriately discounted for passage of time reflects the development value of the property with the approvals obtained. This method entails determining the net current annual income by deducting the annual outgoings from the gross annual income and capitalising the net income by a suitable rate of return consistent with the type and quality of investment to arrive at the market value. We are of the view that the methodologies applied by the Valuers are reasonable and are consistent with generally applied valuation methodologies. We are satisfied with the bases and assumptions used by the Valuers in deriving the valuation for the Revalued Properties. As such, we are satisfied with and have relied upon the valuation of the properties conducted by the Valuers. The details of the subject properties where valuation has been carried out are set out in the ensuing sections. [The remainder of this page has been intentionally left blank] 20

34 Note (a) Revalued PPE The revalued PPE consists of two (2) properties at Taman Shamelin Perkasa, Kuala Lumpur and one (1) shop office at Taman Bentong Makmur, Pahang Darul Makmur as follows: Subject properties (Address where applicable) PN 31020, Lot No 11, Jalan 3/91A, Taman Shamelin Perkasa, 5600 Kuala Lumpur. Total land area/ built-up area (sq metres) 1,037/ 1, Tenure / year of expiry Leasehold 81 years expiring on 11 September 2082 (unexpired term of approximately 64 years) Description Date of acquisition One (1) adjoining units of two and a half (2 ½) storey semidetached factory 27 July 1993 Valuer Valuation method(s) CH Williams Comparison method / investment method Material date of valuation 22 May 2018 Unaudited NBV as at 31 March 2018 (RM 000) Open market value Revaluation surplus/ (deficit) Deferred tax rate applicable Net revaluation surplus/ (deficit) (RM 000) (RM 000) (RM 000) (%) 8, , (783.86) 5 (783.86) PN 31021, Lot No.9, Jalan 3/91A, Taman Shamelin Perkasa, 5600 Kuala Lumpur. 1,041/ 1, Leasehold 81 years expiring on 11 September 2082 (unexpired term of approximately 64 years) One (1) adjoining units of two and a half (2 ½) storey semidetached factory 27 July 1993 CH Williams Comparison method / Investment method 22 May , , HSD 12321/ PT P206, Lorong Bentong Makmur 10, Taman Bentong Makmur, Mukim and Daerah Bentong, Pahang Darul Makmur 208/ Freehold A double storey corner terraced shop office - (ii) Henry Butcher Comparison method / investment method 25 May (ii) Total (Source: The management of GSB and the valuation reports prepared by the Valuers) 21

35 Notes: The net revaluation deficit of said property remains unchanged as no RPGT will be paid in the event of loss. (ii) There is no date of acquisition as the said property was transferred from GSB Group s inventories to its PPE on 31 March A deferred tax rate of 24% is used considering that this property was developed by Banda Industries and subsequently re-classified to PPE and is currently used as a shop office by Banda Industries. [The remainder of this page has been intentionally left blank] 22

36 Subject properties (Address where applicable) G.M. 5148, Lot 791 Jalan Batu Unjur, Telok Gadong Besar, 4200 Klang PN 97185, Lot 325 Along Jalan Tukul Q15/Q,Section 15, Shah Alam, Selangor PN 97186, Lot 326 Along Jalan Tukul Q15/Q,Section 15, Shah Alam, Selangor GRN 9894, Lot 1248, Mukim and Daerah Bentong, Negeri Pahang Darul Makmur GM 1441, Lot 3728 Mukim and Daerah Bentong, Negeri Pahang Darul Makmur. Note (b) - Revalued LHPD and Inventories The revalued LHPD and Inventories which comprise lands located in Klang and Shah Alam in Selangor Darul Ehsan and Bentong in Pahang Darul Makmur are set out below: Total land area Tenure / year of expiry Description Date of acquisition Valuers Valuation method Material date of valuation Unaudited NBV as at 31 March 2018 Open market value Revaluation surplus/ (deficit) Deferred tax rate applicable Net revaluation surplus/ (deficit) (sq metres) 24,534 Freehold Vacant Land 28 July 2011 CH Williams Comparison method 22 May 2018 (RM 000) (RM 000) (RM 000) (%) (RM 000) 11, , , , ,655 12, Leasehold 99 years expiring on 29 March 2106 (unexpired term of approximately 88 years) Vacant Land 15 October 2014 CH Williams Comparison method / residual method 22 May ,338 11, , (2,243.24) 24 (1,704.86) 210,800 Freehold A parcel of development land 17 February 2015 Henry Butcher Comparison method 25 May , , (25.59) 24 (19.45) 38,445 Freehold A parcel of agricultural land 6 July 2007 Henry Butcher Comparison method 25 May

37 Subject properties (Address where applicable) Total land area Tenure / year of expiry Description Date of acquisition Valuers Valuation method Material date of valuation Unaudited NBV as at 31 March 2018 Open market value Revaluation surplus/ (deficit) Deferred tax rate applicable Net revaluation surplus/ (deficit) HSM 7456, PT Mukim and Daerah Bentong, Negeri Pahang Darul Makmur (sq metres) 18,644 Freehold A parcel of agricultural land 18 July 2000 Henry Butcher Comparison method 25 May 2018 (RM 000) (RM 000) (RM 000) (%) (RM 000) -* Please refer to note below for the titles and lot numbers of the twenty-nine (29) parcels of vacant residential plot which held under fifty three (53) subdivided complete and partial lots all located within Mukim and Daerah Bentong, Negeri Pahang Darul Makmur 22,711 Freehold Twenty-nine (29) parcels of vacant residential land plots which are held under fifty-three (53) subdivided complete and partial lots Please refer to note below for the dates of acquisition Henry Butcher Comparison method 25 May , , (223.99) 24 (170.23) Total (488.39) (Source: The management of GSB and the valuation reports prepared by the Valuers) Notes: * Negligible The title and lot numbers of the twenty-nine (29) parcels of vacant residential land are set out as follows: Lot No. Title No. Title land area (sq metres) Express condition Date of acquisition 1 Lot GRN Detached plot 23 November Lot GRN ,597 Detached plot 23 November Lot PT GRN HSD Detached plot 23 November November Lot GRN Detached plot 23 November Lot GRN Detached plot 23 November Lot GRN Detached plot 23 November Lot GRN Detached plot 23 November Lot GRN ,167 Detached plot 23 November

38 Lot No. Title No. Title land area (sq metres) 9 Lot PT GRN HSD , Express condition Date of acquisition Detached plot 23 November November Lot GRN Detached plot 23 November Lot GRN Detached plot 23 November 2004 PT HSD November Lot GRN Detached plot 23 November 2004 PT HSD November Lot GRN Detached plot 23 November 2004 Lot GRN November 2004 PT HSD November Lot GRN Detached plot 23 November 2004 Lot GRN November 2004 PT HSD November Lot GRN Detached plot 23 November 2004 Lot GRN November 2004 PT HSD November Lot GRN Detached plot 23 November 2004 Lot GRN November 2004 PT HSD November Lot GRN Detached plot 23 November 2004 Lot GRN November 2004 PT HSD November Lot GRN Detached plot 23 November 2004 Lot GRN November 2004 PT HSD November Lot GRN Detached plot 23 November 2004 Lot GRN November 2004 PT HSD November Lot GRN Detached plot 23 November 2004 Lot GRN November 2004 PT HSD November Lot GRN Detached plot 23 November 2004 Lot GRN November 2004 PT GRN November Lot GRN Detached plot 23 November 2004 PT HSD November 2004 PT HSD November Lot GRN Detached plot 23 November Lot GRN Detached plot 23 November Lot GRN Detached plot 23 November Lot GRN Detached plot 23 November Lot GRN Terraced plot 10 September Lot GRN Terraced plot 10 September Lot GRN Terraced plot 10 September 2003 Total 22,711 (Source: The valuation report prepared by Henry Butcher) 25

39 Note (c) - Project Taman Makmur Height The details of Project Taman Makmur Height are presented in the table below: Items Description 1 Property type Two hundred and ten (210) parcels of residential plots all located within Mukim and Daerah Bentong, Negeri Pahang Darul Makmur 2 Tenure Freehold 3 Master title HSM 7630 to HSM Lot Nos. PT to PT PT to PT Combined land area 42,772 sq metres 6 Category of land use Bangunan 7 Registered owner Banda Industries 8 Name of developer Banda Industries 9 Location The subject properties are located within Taman Bentong Makmur and is approximately 1 km due southeast of the Bentong town centre and is accessible from the Bentong town via Jalan Ketari, Jalan Utama Bentong Makmur, Lorong Bentong Makmur 5 and thence onto an unnamed metalled road. 10 Site Description The subject sites are generally flat in terrain and lies about the same level as the surrounding areas. The sites boundaries are partly demarcated by metal hoardings. At the date of inspection, Henry Butcher noted that subject sites have generally been cleared and levelled which rendering for immediate development with the seventy-one (71) parcels of terraced house plots were presently on-going with double storey terraced house development up to 10% completion whilst the remaining one hundred and thirty nine (139) parcels residential plots where no construction work has commenced yet. 11 Valuation method (a) Residual method for the seventy-one (71) parcels of terraced house plots ; and (b) Comparison method for the remaining one hundred and thirty-nine (139) parcels of residential plots where no construction work has commenced yet (ii). 12 Date of valuation 25 May Open market value RM6,200,000 (Source: Valuation report prepared by Henry Butcher and the management of GSB) Notes: The summary of parameters of the residual method in respect of the seventy-one (71) plots of terraced house plots which have been sold are as follows: Items Total GDV : RM29,451,129 Total GDV billed : RM3,080,306 Total GDC : RM28,957,257* Total GDC balance to be claimed : RM24,908,257 Developer s profit and risk : 10% of GDV Total development period : 2 ½ years Present value factor : 8% Valuation under residual method : RM1,204,105 * Inclusive of developer s profit and risk 26

40 (ii) Henry Butcher had adopted only one (1) method of valuation (i.e. comparison approach) for the one hundred and thirty-nine (139) parcels of residential plots whereby construction work has not commenced yet. For subdivided residential plots, the comparison approach is the most suitable method to be used. As there are sufficient sale comparables to justify an opinion of value, Henry Butcher had adopted the comparison approach in this valuation. The net revaluation surplus of Project Taman Makmur Height is calculated as follows: Amount (RM 000) Market value of Project Taman Makmur Height 6, Less: unaudited NBV of the LHPD of Project Taman Makmur Height as at 31 (5,217.08) March 2018 Revaluation surplus less: Deferred tax rate applicable of 24% (235.90) Net revaluation surplus Note (d) - Project Bentong Avenue Project Bentong Avenue comprises a parcel of commercial land which forms part and partial of master lot/ title nos. Lot 432 GM309 and PT421 HSD 18039, Bandar Bentong, both within Daerah Bentong, Negeri Pahang Darul Makmur for the proposed development of a hotel as well as thirty (30) units of double storey mid and corner terrace shop offices. The details are as shown below: Item Revalued portion Non-revalued portion Comprising A parcel of commercial land which forms part and partial of master lot/ title nos. Lot 432 GM 309, Mukim Bentong and PT 421 HSD 18039, Bandar Bentong, both within Daerah Bentong, Negeri Pahang Darul Makmur. Thirty (30) double storey mid and corner terrace shop offices. The details of the land for the proposed development of a hotel and the thirty (30) double storey mid and corner terrace shop offices are as follows: Land for the proposed development of a hotel Items Description 1 Property type A parcel of commercial land 2 Tenure Freehold 3 Master title GM 309 and HSD Lot Nos. Lot 432 and PT Combined land area 2,156 sq metres 6 Category of land use Lot 432- Pertanian PT 421- Bangunan 7 Registered owner GSB Hotel 8 Name of developer GSB Hotel 9 Location The subject property is located within a proposed commercial scheme known as Bentong Avenue which is located along Jalan Ketari and adjoins to the housing scheme of Taman Bentong Makmur along its northeastern boundaries. It is located approximately one (1) km due south-east of Bentong town centre and is accessible from Bentong town centre via Jalan Ketari. 27

41 10 Description The subject property comprises a parcel of commercial land which forms part and partial of master lot nos. Lot 432 GM 309, Mukim of Bentong and PT 421 HSD (formerly known as PT HSD 12718), Bandar Bentong, Daerah Bentong, Negeri Pahang Darul Makmur. The subject site comprises a regular shape of land encompassing a provisional land area of 2,156 square metres (about 23,207 square feet) as per the approved pre-computation plan. At the date of inspection, Henry Butcher noted that the site was generally flat in terrain and has generally been cleared and over grown with light undergrowth. 11 Valuation method Comparison method 12 Date of valuation 25 May Open market value RM700,000 (Source: Valuation report prepared by Henry Butcher and the management of GSB) (ii) Thirty (30) double storey mid and corner terrace shop offices As at 31 March 2018, the percentage of completion for the 30 shop offices and the number of shop offices that have been sold and yet to be sold are as follows: Units sold Units unsold Percentage of completion Units % Units % % Shop offices The details of the property development project of the 30 shop offices are summarised in the table below: GDV Approximately RM33.63 million Total development cost Approximately RM24.52 million Master title GM 309 and HSD Lot Nos. Lot 432 and PT 421 Tenure Freehold Land area 9,434 sq metres Date of launch 7 February 2015 Expected date of completion November 2018 Range of selling prices RM621,000 to RM2,560,000 For the purposes of valuing the remaining expected PAT to be derived from the shop offices in Project Bentong Avenue upon completion in the FYE 31 March 2019, we have relied on and are satisfied with the estimates made by the management of GSB to calculate the net present value of the estimated PAT of the shop offices. The remaining expected GDV and profits to be derived from the shop offices in Project Bentong Avenue are set out as follows: FYE 31 March 2019 (RM 000) Estimated remaining GDV (1) 9, Less: estimated remaining costs (7,800.00) Estimated PBT 1, Less: applicable tax rate of 24% (353.00) Estimated PAT (2) 1, Present value of estimated PAT (3) 1, Notes: (1) Revenue from property development activities are recognised based on the stage of completion measured by reference to the proportion that property development costs incurred for works performed to date bear the estimated total property development costs. 28

42 Where the financial outcome of a property development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development cost incurred that is probable will be recoverable, and property development cost on the development units sold are recognised as an expense in the period in which they are incurred. Revenue from the sale of completed properties is measured at fair value of the consideration received or receivable and is recognised in the profit or loss when significant risks and rewards of ownership have been transferred to the customer. (2) Based on the expected PBT margin of approximately 16% after taking into consideration the costs recognised which comprise predominantly the development cost, infrastructure cost, management and office overhead cost, land cost, sales and marketing expenses, professional/legal fee, and interest expenses and the corporate income tax rate of 24% for the uncompleted properties. (3) The present value of the estimated PAT was derived based on the following: Key bases and assumptions Discounted RM1.04 PAT million Description The formula used to derive the value of the discounted PAT is as follows: Cost equity ( Ke ) of PPPPPPPPPPPPPPPPPP PPPPPP ffffff tthee FFFFFF 2019 (1 + kk ee ) % The cost of equity represents the rate of return on the Company required by an investor on the earnings generated by the Group, given, amongst others, the risk associated with the earnings. We have derived an estimated cost of equity of 6.74% for the Company using the capital asset pricing model with the following inputs: KK ee = RR ff + ββ(rr mm RR ff ) We are of the view that the cost of equity of 6.74% is reasonable. Risk-free rate of return ( Rf ) 4.20% Risk-free rate of return represents the expected rate of return from a risk-free investment. The best available approximation of the risk-free rate of return is the yield of ten (10)-year Malaysian Government Securities.The yield for ten (10)-year Malaysian Government Securities is 4.20% as at the LTD as extracted from Bank Negara Malaysia s fully automated system for issuing/tendering website. Beta ( β ) 0.83 Beta is the sensitivity of an asset s return to the changes in the market returns. It measures the correlation of systemic risk between the said asset and the market. A beta of more than one (1) signifies that the asset is riskier than the market and vice versa. Considering that the revenue attributable to GSB s property development sector represent approximately 64.45% and 81.69% of the total revenue of GSB Group for the FYE 31 March 2016 and FYE 31 March 2017 respectively and the expected completion date of Project Bentong Avenue is estimated to be in November 2018, we are of the view that the beta for one (1) year period is justifiable. (a) (b) (c) firstly, the selected comparable companies do not have property development business outside Malaysia; secondly, the selected comparable companies are involved in property development projects in Pahang (including land banks in Pahang); and lastly, more than 80% of the total revenue of the comparable companies are contributed from their property development business, taking into consideration that GSB Group s revenue from the property development accounts for more than 80% of the revenue of GSB Group. 29

43 Key bases and assumptions Description As the historical beta extracted from Bloomberg is based on the capital structure of the respective comparable companies, we have un-levered the average historical beta and re-levered it based on the capital structure of GSB Group as at the FYE 31 March Based on our computation, the re-levered beta of GSB Group is Note: (1) There is no company listed on Bursa Securities that may be considered identical to GSB Group in terms of, amongst others, composition of business activities, scale and size of operations, risk profile, track record and prospects. Considering that GSB Group s property development projects are in Pahang, we are of the view that these selected companies are reasonable to be adopted as proxies for deriving the estimated beta of a property development company that is involved in property development projects in Pahang. The selected comparable companies identified are as follows: (a) (b) (c) (d) (e) (f) (g) (h) Tropicana Corporation Berhad; YNH Property Berhad; Magna Prima Berhad; Sentoria Group Berhad; Y&G Corporation Berhad; SBC Corporation Berhad; LBI Capital Berhad; and Tanco Holdings Berhad. However, it is pertinent to note that the actual beta of GSB may be higher than the selected comparable companies beta if the perceived risks associated with GSB s property development business are higher than the said comparable companies, given that the property development business of GSB only consists of three (3) property development projects currently. Expected market rate of return ( Rm ) 7.26% Expected market rate of return is the expected rate of return for investing in a portfolio consisting of a weighted sum of assets representing the entire equity market. In our opinion, the historical rate of return for the KLCI Index is a good indicator of the equity market return in Malaysia. Given the volatility of the stock market and market cycles, we are of the view that a 10-year historical rate of return of the KLCI Index is an appropriate estimate of the expected market rate of return as it normalises the year-on-year fluctuations of the stock market and mitigates market bias. We have extracted from Bloomberg, the annualised rate of return for the KLCI Index for the past ten (10) years up to the LTD of 7.26% as the expected market rate of return. Hence, the net valuation surplus of the revalued land and the present value of the estimated PAT of the thirty (30) shop offices of Project Bentong Avenue are calculated as follows: Project Bentong Avenue Amount (RM 000) Open market value of: - Land held for the proposed development of a hotel Less: Unaudited NBV of the land held for the proposed development of a hotel as at 31 March 2018 (556.70) Revaluation surplus of the land Less: Deferred tax rate applicable of 24% (34.39) Net revaluation surplus/ deficit of the land Add: Present value of the estimated PAT of the thirty (30) shop offices 1, Total 1,

44 Note (e) - Project G Residence On 12 July 2013, GSB Properties (as developer) and Beethoven Trading Sdn Bhd ( BTSB ) (as landowner) entered into a joint venture agreement for the development of the land known as Lot , Mukim of Plentong, District of Johor Bahru, Johor ( Lot ) into Project G Residence ( G Residence Joint Venture Agreement ). The salient terms and conditions of the G Residence Joint Venture Agreement include the following: The parties expressly agreed that BTSB shall be entitled to 18% of the net GDV ( BTSB s Entitlement ), payable by GSB Properties to BTSB in the following manner: (a) (b) (c) (d) upon execution of the G Residence Joint Venture Agreement, GSB Properties shall pay to BTSB a sum of RM900,000 only in cash which together with an earlier payment by GSB Properties of RM100,000 cash to BTSB on 7 June 2013 ( Initial Payment ). Within six (6) months from the date of the G Residence Joint Venture Agreement, GSB Properties shall pay to BTSB a further sum of RM4,000,000 only in cash ( Second Payment ); pending full repayment of the credit facilities granted by Public Bank Berhad ( PBB ) to BTSB as set out in the offer letters dated 21 October 2009 and 1 March 2010 ( BTSB Facilities ) or the refinanced BTSB Facilities by BTSB, all the BTSB s Entitlement shall be applied by GSB Properties towards the monthly repayment of the BTSB Facilities in accordance with the repayment schedule set by PBB or the refinancier(s) (as the case may be). In the event the BTSB s Entitlement is insufficient to fulfil the monthly repayment obligation of BTSB, GSB Properties shall advance such amount equivalent to the shortfall ( GSB Properties Advance ) to ensure repayment of the BTSB Facilities in accordance with the repayment schedule set by PBB or the refinancier(s) (as the case may be). In the event the GSB Properties Advance is made by GSB Properties, BTSB shall pay to GSB Properties such sum equivalent to the GSB Properties Advance within fourteen (14) days from the date of notice by GSB Properties to BTSB informing BTSB of such GSB Properties Advance made, failing which BTSB shall be liable to pay GSB Properties late payment penalty at the rate of 8% per annum accruing on a daily basis on the GSB Properties Advance or such outstanding sum under the GSB Properties Advance ( GSB Properties Advance Interest ) until all sums owing under the GSB Properties Advance together with the GSB Properties Advance Interest (if any) have been fully repaid to GSB Properties; upon full repayment of the BTSB Facilities by BTSB, the BTSB s Entitlement shall be utilised towards the repayment of GSB Properties Advance and GSB Properties Advance Interest (if applicable); and upon full repayment of the BTSB Facilities, GSB Properties Advance and GSB Properties Advance Interest (if any) by BTSB and after deducting the Initial Payment and Second Payment, all the BTSB s Entitlement shall be distributed to BTSB on a quarterly basis subject to BTSB fulfilling all its obligations under the G Residence Joint Venture Agreement. In the event if any of the units remain unsold upon expiry of a period of six (6) months from the date of the Certificate of Completion and Compliance for the whole Project G Residence, the parties thereto agreed that, any residual amount of the BTSB s Entitlement which has not been paid to BTSB in cash shall be settled by distributing to BTSB such number of unsold units with value (based on the prevailing market prices of the units) equivalent to the said residual amount. 31

45 GSB Properties shall be entitled to deduct the following from the BTSB s Entitlement (if relevant): (ii) all costs and expense in delivering Lot including doing all acts and things to deliver vacant possession of the Lot to GSB Properties, and all outgoings in relation to the Lot to be paid by BTSB under the G Residence Joint Venture Agreement. The details of Project G Residence are presented in the table below: Items 1 Property type GSB Properties rights of an ongoing mixed development known as G Residence, Masai, Johor based on the actual terms and obligations as contained in the G Residence Joint Venture Agreement 2 Tenure Freehold 3 Master title GRN Lot Nos. Lot Combined land area 11,007 sq metres 6 Category of land use Building 7 Registered landowner BTSB 8 Name of developer GSB Properties 9 Location Mukim Plentong, Johor Bahru 10 Description The subject property is an ongoing mixed development known as G Residence, comprising: (a) (b) service space on the ground floor; 1 block of 7-storey podium made up of: 25 commercial units, 1 office unit, 1 guardhouse on the ground level and first level; (ii) car park at Levels 1 to 6; (iii) 48 units of serviced apartment at Levels 2 to 7; and (iv) facilities services at Level 7; (c) 1 block of serviced apartment of 18-storey - Tower A (216 units); (d) 1 block of serviced apartment of 18-storey - Tower B (216 units); (e) (f) 1 refuse chamber; and 1 block of Tenaga Nasional Berhad substation. The subject site is near rectangular in shape with a surveyed land area of about 11,007 square metres (118,478 square feet or 2.72 acres). Its northern and southern boundaries measuring about metres and metres front onto Jalan Mutiara 7 and Jalan Mutiara 8 respectively. Jalan Masai Lama runs parallel to the western boundary of the subject site. 11 Valuation method Residual method 12 Date of valuation 31 May Total remaining GDV Approximately RM million 14 Total remaining GDC Approximately RM million 15 Range of selling price Service apartment: RM370,300 to RM945,300 Commercial units: RM564,900 to RM3,038,624 (Source: Valuation report prepared by CH Williams and the management of GSB) 32

46 Notes: (ii) CH Williams had adopted the residual method as the sole method. The valuation takes into consideration the planning permission and building plan approval granted by the Majlis Perbandaran Johor Bahru Tengah on 21 July 2013 and 5 March The summary of parameters of the residual method in respect of Project G Residence which have been adopted by CH Williams are as follows: Items RM Estimated cash inflow- GDV : 193,493,671 Estimated cash outflow- GDC : (142,560,827) Net cash flow : 50,932,844 Residual value : 23,028,512 Present value factor : 8% Net present value : 12,824,199 Balance BTSB s Entitlement : (3,315,531) Market value of GSB Properties joint venture interest : 9,508,668 Estimated market value of GSB Properties joint venture interest : 9,000,000 As at 31 March 2018, the percentage of completion for the Project G Residence and the number of serviced apartments and commercial units that have been sold and yet to be sold are as follows: Units sold Units unsold Percentage of completion Tower Units % Units % % A Service apartments B Service apartments Commercial units Hence, the net valuation surplus of the rights of Project G Residence is calculated as follows: Project G Residence Amount (RM 000) Open market value of Project G Residence 9, Less: Deferred tax rate applicable of 24% (2,160.00) Net revaluation surplus of Project G Residence 6, Note (f) Gain on disposal from asset held for sale The asset held for sale comprises a freehold land at H.S.(D) 69156, No PT632, Selambau Industrial Estate, Pekan Bukit Selambau, Daerah Kuala Muda, Negeri Kedah Darul Aman. The details of the land are as follows: Subject property HS(D) 69156, No PT632, Selambau Industrial Estate, Pekan Bukit Selambau Total land area / built-up area (sq metres) Tenure/ year of expiry Description Date of acquisition 23, Freehold Vacant industrial land held 4 April 2008 (Source: The management of GSB) 33

47 In year 2018, the said land had been disposed for a consideration sum of RM1,100,000 whereby a net gain on disposal of approximately RM229,000 will be recognised in the FYE 31 March 2019 financial statements of GSB as the sale was completed after the FYE 31 March The computation of the net gain on disposal are as follows: Amount (RM 000) Selling price of said land 1, Less: Legal fees on the sales and purchase agreement (11.00) Less: NBV of the said land (848.00) Gain on disposal Less: RPGT of 5% (12.00) Net gain on disposal IPS Comments Based on the computation above, the Offer Price of RM0.13 represents: (ii) a premium of RM0.01 or approximately 8.33% to the RNAV of RM0.12 per GSB Share; and a premium of RM0.01 or approximately 8.33% to the diluted RNAV of RM0.12 per GSB Share. (assuming all outstanding 23,070,000 GSB ESOS Options are exercised into GSB Shares). Notwithstanding the above, Holders are reminded that the market prices of property assets held by GSB Group are affected by various factors, including but not limited to, the liquidity risk (i.e. the process of selling and buying property takes a lot longer than trading equities or government bonds) and valuation risk (i.e. the eventual transacted price may not necessarily reflect the market value of the properties ascribed by the valuers). Holders should note that the RNAV approach implicitly includes the assumption that the property assets may be disposed of by GSB at a price determined by the Valuers, on a willing buyer and a willing seller basis in an arms-length transaction with a third party. The Valuers valuations do not account for the effort, time, marketability, buyer demand, uncertainty relating to a property sale and potential transaction costs that would be required to dispose of the assets and realise the intrinsic value of the properties. Premised on the above analysis in Section 6.1, we are of the opinion that the Offer Price is fair. [The rest of this page has been intentionally left blank] 34

48 7. REASONABLENESS OF THE OFFER 7.1 Historical Price Performance of GSB Shares In assessing the Offer Price, we have also taken into consideration the movement of the daily closing market prices of GSB Shares on the Bursa Securities for the past two (2) years up to the LTD and including the LPD, which is depicted in the share price chart below: Offer Price = RM0.13 (e) (f) (g) (a) (b) (c) (d) (Source: Bloomberg) During the past two (2) years up to the LTD and including the LPD, the key announcements by GSB were as follows: Date Announcements (a) 15 July 2016 Announcement on the proposed acquisition of Lot 1248, Mukim and Daerah Bentong, Negeri Pahang Darul Makmur held under Geran No 9894, measuring approximately acres for a purchase consideration of RM29,492,570 ( Lot 1248 Land ) (b) 31 January 2017 Announcement on the granting of an extension period of up to six (6) calendar months from 31 January 2017 to settle a cash payment due on 31 January 2017, subject to the terms and conditions of the supplementary agreement dated 15 July 2016 for the Lot 1248 Land. (c) 15 February 2017 Announcement on the further supplementary sale and purchase agreement between Banda Industries and Restu Angkasa Sdn Bhd to amend and vary the cash settlement for 31 January (d) 31 July 2017 Announcement on the granting of an extension period of six (6) calendar months from 31 July 2017 to settle a cash consideration of RM9,500,000, in relation to the acquisition of the Lot 1248 Land. (e) 24 October 2017 Announcement on the completion of the acquisition of the Lot 1248 Land. (f) 18 May 2018 Announcement on the Notice. (g) 31 May 2018 Announcement on quarterly results of GSB for the FPE 31 March