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BIO OSMO BERHAD (“BIO OSMO” OR THE “COMPANY”)

 PROPOSED ACQUISITIONS;

 PROPOSED PRIVATE PLACEMENT;

 PROPOSED OFFER FOR SALE;

 PROPOSED AMENDMENTS; AND

 PROPOSED CHANGE OF NAME

(COLLECTIVELY, THE “PROPOSALS”)

1. INTRODUCTION

M&A Securities Sdn Bhd (“M&A Securities”) on behalf of the Board of Directors of Bio Osmo
(“Board”) wishes to announce the following:

(i) Bio Osmo had on 12 April 2018 entered into the following conditional share sale
agreements:

(a) Share sale agreement with Dato’ Seri Ismail @ Farouk Bin Abdullah (“DS
Farouk”) and Datin Afrizah Binti Abdul Bakar (“Datin Afrizah”) for the
acquisition of 100.0% equity interest in Impiana Hotels & Resorts
Management Sdn Bhd (“Impiana Management”) for a purchase consideration
of RM70,840,458 to be satisfied via the issuance of 850,085,500 new
ordinary shares in Bio Osmo (“Bio Osmo Shares” or “Shares”) at an issue
price of RM0.05 per Share and 566,723,660 new irredeemable convertible
preference shares in Bio Osmo (“ICPS”) at an issue price of RM0.05 per ICPS
(“Impiana Management SSA”);

(b) Share sale agreement with DS Farouk and Datin Afrizah for the acquisition of
100.0% equity interest in Impiana Pangkor Sdn Bhd (“Impiana Pangkor”) for
a purchase consideration of RM79,000,664 to be satisfied via the issuance of
948,007,980 new Bio Osmo Shares at an issue price of RM0.05 per Share
and 632,005,300 new ICPS at an issue price of RM0.05 per ICPS (“Impiana
Pangkor SSA”);

(c) Share sale agreement with Impiana Sdn Bhd (“Impiana SB”) for the
acquisition of 100.0% equity interest in Astaka Mekar Sdn Bhd (“Astaka
Mekar”) for a purchase consideration of RM15,830,878 to be satisfied via the
issuance of 189,970,540 new Bio Osmo Shares at an issue price of RM0.05
per Share and 126,647,020 new ICPS at an issue price of RM0.05 per ICPS
(“Astaka Mekar SSA”);

(d) Share sale agreement with Impiana SB for the acquisition of 25.0% equity
interest in Intra Magnum Sdn Bhd (“Intra Magnum”), the 75%-owned
subsidiary of Bio Osmo for a purchase consideration of RM12,674,767 to be
satisfied via the issuance of 152,097,200 new Bio Osmo Shares at an issue
price of RM0.05 per Share and 101,398,140 new ICPS at an issue price of
RM0.05 per ICPS (“Intra Magnum SSA”); and

(e) Share sale agreement with Impiana SB and Dato’ Yahya Bin Abdul Jalil
(“Dato’ Yahya”) for the acquisition of 100.0% equity interest in Impiana
Cherating Sdn Bhd (“Impiana Cherating”) for a purchase consideration of
RM207,144,359 to be satisfied via the issuance of 2,485,732,300 new Bio

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Osmo Shares at an issue price of RM0.05 per Share and 1,657,154,880 new
ICPS at an issue price of RM0.05 per ICPS (“Impiana Cherating SSA”);

(ii) Intra Magnum, the 75%-owned subsidiary of Bio Osmo had on 12 April 2018 entered
into the conditional sale and purchase agreement with Impiana Hotel Ipoh Sdn Bhd
(“Impiana Ipoh”) (as vendor) for the acquisition of the assets which include the
ownership of a hotel under the name of “Impiana Hotel Ipoh” located in Ipoh
together with the business and assuming the liabilities of Impiana Ipoh for a
purchase consideration of RM40,408,874 to be satisfied via the issuance of
174,106,480 new Bio Osmo Shares at an issue price of RM0.05 per Share and
116,071,000 new ICPS at an issue price of RM0.05 per ICPS as well as cash
amounting to RM25,900,000 (“Impiana Ipoh SPA”).

(collectively be referred to as the “Proposed Acquisitions”)

The Impiana Management SSA, Impiana Pangkor SSA, Astaka Mekar SSA, Intra
Magnum SSA, Impiana Ipoh SPA, Impiana Cherating SSA and Impiana Ipoh SPA shall
collectively be referred to as “Agreements”.

DS Farouk, Impiana SB, Dato’ Yahya, Datin Afrizah and Impiana Ipoh shall
collectively be referred to as the “Vendors”.

Impiana Management, Impiana Pangkor, Astaka Mekar, 25% equity interest in Intra
Magnum, Impiana Cherating and the assets and liabilities of Impiana Ipoh shall
collectively be referred to as the “Acquisition Targets”.

Pursuant to the Proposed Acquisitions, Bio Osmo and Intra Magnum shall acquire the
Acquisition Targets from the Vendors for a total purchase consideration of
RM425,900,000 (“Total Purchase Consideration”) to be satisfied in the following
manner:

(aa) RM400,000,000 shall be satisfied via the allotment and issuance of


4,800,000,000 new Bio Osmo Shares (“Consideration Shares”) and
3,200,000,000 new ICPS (“Consideration ICPS”) at an issue price of RM0.05
per Share/ICPS; and

(bb) the cash portion amounting to RM25,900,000;

Consideration Shares and Consideration ICPS shall collectively be referred to as the


“Consideration Securities”.

(iii) Proposed private placement of up to 2,000,000,000 new Bio Osmo Shares to


independent third party investors to be identified (“Proposed Private Placement”);

(iv) Proposed offer for sale of up to 1,000,000,000 Bio Osmo Shares to be held by DS
Farouk upon completion of the Proposed Acquisitions to investors to be identified
(“Proposed Offer for Sale”);

(v) Proposed amendments to the Constitution of the Company to facilitate the issuance
of the ICPS (“Proposed Amendments”); and

(vi) Proposed change of name from “Bio Osmo Berhad” to “Impiana Hotels (Malaysia)
Berhad” (“Proposed Change of Name”).

(Collectively, the “Proposals”)

Further details of the Proposals are set out in Section 2 below.

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2. DETAILS OF THE PROPOSALS

2.1 Proposed Acquisitions

Bio Osmo/Intra Magnum and the Vendors had on 12 April 2018 entered into the Agreements
wherein Bio Osmo/Intra Magnum shall acquire the Acquisition Targets from the Vendors for
the Total Purchase Consideration to be satisfied in the following manner:

(i) RM400,000,000 shall be satisfied via the allotment and issuance of 4,800,000,000
Consideration Shares and 3,200,000,000 Consideration ICPS at an issue price of
RM0.05 per Consideration Share/Consideration ICPS to be allocated in the following
proportions; and

No. of Bio
Vendors Reference Osmo Shares % No. of ICPS %

DS Farouk Impiana 850,082,100 17.71 566,721,400 17.71


Management
SSA
Impiana 948,006,080 19.75 632,004,040 19.75
Pangkor SSA

Impiana SB Impiana Ipoh 174,106,480 3.63 116,071,000 3.63


SPA ^
Astaka Mekar 189,970,540 3.96 126,647,020 3.96
SSA
Impiana 2,461,732,300 51.28 1,641,154,880 51.28
Cherating SSA
Intra Magnum 152,097,200 3.17 101,398,140 3.17
SSA

Dato’ Impiana 24,000,000 0.50 16,000,000 0.50


Yahya Cherating SSA

Datin Impiana 3,400 * 2,260 *


Afrizah Management
SSA
Impiana 1,900 * 1,260 *
Pangkor SSA

4,800,000,000 100.00 3,200,000,000 100.00

Notes:
*
Negligible.
^
Pursuant to the Impiana Ipoh SPA, the Consideration Securities shall be issued
to Impiana SB, the shareholder of Impiana Ipoh.

(ii) the cash portion amounting to RM25,900,000.

Information on the Acquisition Targets are set out in Section 2.1.10 below.

Upon receipt of the Consideration Shares, the shareholdings of DS Farouk in Bio Osmo will
increase to more than 33% equity interest in the Company. Under paragraph 4.01(a) of the
Rules on Take-Overs, Mergers and Compulsory Acquisitions (“Rules”), DS Farouk and persons
acting in concert with him (“PACs”) will be obligated to extend a mandatory general offer

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(“MGO”) to acquire the remaining Bio Osmo Shares not already held by him and the PACs
immediately upon the Agreements becoming unconditional. Details of the MGO are set out in
Section 2.1.12 below.

2.1.2 Proposed group structure

The group structure before and after the Proposed Acquisitions is as follows:

Before the Proposed Acquisitions

Bio Osmo

75.0% 100.0%

Intra Others*
Magnum

After the Proposed Acquisitions

Bio Osmo

100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Impiana Impiana Astaka Intra Impiana Others*


Management Pangkor Mekar Magnum Cherating

20.0% 100.0%

Heritage Assets and


Lane liabilities of
Impiana
Ipoh

Note:

* Including other subsidiaries which are involved in the business of processing,


manufacturing and distribution of drinking water and other beverages.

2.1.3 Indicative terms of the ICPS

Indicative terms of the ICPS are as follows:

Issuer : Bio Osmo

Type of securities : Irredeemable convertible preference share

Issue price : RM0.05 per ICPS

Issue size : 3,200,000,000 ICPS

Total value : RM160,000,000

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Transferability : Transferable at the discretion of the holder

Tenure : 5 years commencing and including the date of issuance. In the


event the last date of the Tenure is not a market day, the market
day immediately following such date

Dividend rate : Bio Osmo, shall at its discretion and subject to availability of
distributable profits, pay out such dividends as the Board of Bio
Osmo may so decide

Redemption : Not redeemable for cash

Conversion Rights : (i) Each ICPS is entitled to be converted into 1 new Bio Osmo
Share through the surrender of the ICPS, at the discretion
of the holder at the Conversion Ratio;

(ii) The ICPS may be converted into Bio Osmo Shares at the
Conversion Ratio at any time during the tenure of the
ICPS;

(iii) Any outstanding unconverted ICPS at the end of the


tenure will be automatically converted into new Bio Osmo
Shares at the Conversion Ratio; and

(iv) Any fractions arising from the conversion of the ICPS will
be disregarded

Ranking of ICPS : The ICPS will rank equally in all respects with each other and will
rank in priority to all other class of securities of Bio Osmo in
respect of capital repayments and dividends

Ranking of new : The new shares to be issued pursuant to the conversion of the
Shares from the ICPS shall, upon allotment and issuance, rank equally in all
conversion of ICPS respects with the Bio Osmo Shares

Voting Rights : The ICPS holders will have the same rights as ordinary
shareholders on receiving notices, reports and audited accounts
and attending general meetings of Bio Osmo but will not have
the right to vote or approve any shareholders’ resolution at any
general meeting of Bio Osmo except on:

(i) reduction of the Company’s share capital;


(ii) disposal of the Company’s entire business;
(iii)proposals varying or affecting the rights, privileges or
conditions attached to the ICPS, or the exercise of any of
those rights, privileges or conditions; or
(iv) winding up of the Company.

The ICPS holders shall have one (1) vote for each ICPS held

Rights to Participate : The holders of the ICPS shall not have any right to participate in
in any Distribution any distribution and/or offers of further securities by Bio Osmo
and/or Offers of unless otherwise resolved by ordinary shareholders of Bio Osmo
Further Securities by at a general meeting
Bio Osmo

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Conversion Ratio : The ICPS will be convertible, at the option of the ICPS holders at
the ratio of 1 ICPS for 1 new Bio Osmo Share without payment of
any consideration.

The Conversion Ratio will be subject to adjustments from time to


time, at the determination of the Board, in the event of any
alteration to the Company’s share capital, whether by way of
rights issue, capitalisation issue, consolidation of shares,
subdivision of shares or reduction of capital

Rights of Holders on : The right on a winding-up or return of capital shall rank prior to
Liquidation of Bio the holders of any other ordinary shares then in issue in the
Osmo capital

Governing Law : The laws of Malaysia

Listing Status : The ICPS will not be listed on any stock exchange

2.1.4 Basis in arriving at the Total Purchase Consideration

The Total Purchase Consideration was arrived at on a willing buyer-willing seller basis after
taking into consideration the following:

(i) the market value of the properties. The Board appointed LaurelCap Sdn Bhd
(“LaurelCap”) and Appraisal (Malaysia) Sdn Bhd (“Appraisal”), as Independent
Property Valuers to conduct valuations on the properties held by Acquisition Targets.
Based on the valuations carried out by LaurelCap and Appraisal, the total market
value of the properties are RM220.58 million.

Acquisition Market Value Valuer/


No. Targets Details of properties (RM) Valuation date

1. Impiana 2 parcels of commercial land 35,300,000 LaurelCap/


Pangkor located in Mukim Of Lumut, District 16 March 2018
Of Manjung, Perak
(1)
2. Astaka Mekar 25 storey, 4-star hotel with 519 93,600,000 LaurelCap/
rooms known as “Impiana KLCC 16 March 2018
Hotel & Spa” located in Kuala
Lumpur

3. Impiana 7 parcels of land located in Mukim 41,680,000 Appraisal/


Cherating / of Sungai Karang, District of 16 March 2018
Intra Magnum Kuantan, Pahang (2)

4. Impiana Ipoh 10 storey, 4-star hotel with 200 50,000,000 LaurelCap/


rooms known as “Impiana Hotel 16 March 2018
Ipoh, Perak” located in District of
Kinta, Perak

220,580,000 (3)

Notes:

(1) Market value is based on 20% effective interest in Impiana KLCC Hotel & Spa
which is valued at RM468,000,000.

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(2) The property comprises 7 contiguous parcels of land of which 5 parcels are
owned by Impiana Cherating and 2 parcels are owned by Intra Magnum.

(3) The market value of the properties was adopted by SCA (defined herein) in
the valuation of the Acquisition Targets.

Kindly refer to Appendix II for the details of the respective properties.

(ii) the historical performance and operating history of the Acquisition Targets.

(iii) the future earnings potential of the Acquisition Targets after taking into consideration
the economic outlook and future prospects of the Acquisition Targets.

The Board has appointed Strategic Capital Advisory Sdn Bhd (“SCA”), an Independent Adviser
to advise the non-interested Directors and non-interested shareholders on the fairness and
reasonableness of the terms of the Proposed Acquisitions. Accordingly, SCA conducted a
valuation on the Acquisition Targets.

SCA has relied on the Sum of Parts Valuation methodology (i.e., a combination of Discounted
Cash Flow (“DFC”) and Revalued Net Asset Values methodologies (“RNAV”)) in arriving at the
opinion on the indicative fair value of the equity interest of the Acquisition Targets of
between RM397.80 million to RM439.98 million.

A summary of the valuation is as follows:

Purchase
Range consideration
No. Acquisition Targets (RM‟ million) (RM‟ million) Methodology applied

1. Impiana Management 64.03 – 73.18 70.84 DCF

2. Impiana Pangkor 75.31 – 81.61 79.00 Combination of DCF and


RNAV

3. Astaka Mekar 16.35 15.83 RNAV


(1)
4. Intra Magnum 12.06 – 13.10 12.68 Combination of DCF and
RNAV

5. Impiana Cherating 188.30 – 213.99 207.14 Combination of DCF and


RNAV

6. Assets and liabilities of 41.75 40.41 Assets and liabilities


Impiana Ipoh

397.80-439.98 425.90

Note:
(1)
Based on 25% equity interest in Intra Magnum.

The Total Purchase Consideration of RM425.90 million falls within the range of fair market
value of the equity interest in Acquisition Targets of between RM397.80 million and RM439.98
million ascribed by SCA.

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2.1.5 Mode of settlement

The Total Purchase Consideration of RM425,900,000 shall be satisfied in the following


manner:

(i) RM400,000,000 shall be satisfied via the allotment and issuance of 4,800,000,000
new Bio Osmo Shares (“Consideration Shares”) and 3,200,000,000 ICPS
(“Consideration ICPS”) at an issue price of RM0.05 per Consideration
Share/Consideration ICPS; and

(ii) RM25,900,000 to be satisfied by cash to be funded through bank borrowings. The


Impiana Hotel Ipoh, Perak is presently charged to a bank and Impiana Ipoh will,
upon receipt of the cash pursuant to the Proposed Acquisitions, repay the existing
bank borrowings to release the said encumbrance on the Impiana Hotel Ipoh.

2.1.6 Basis in arriving at the issue price of the Consideration Securities

The issue price of RM0.05 per Consideration Share and RM0.05 per Consideration ICPS was
arrived at after taking into consideration the 5-day volume weighted average market price
(“5D-VWAP”) of the Bio Osmo Shares up to and including 11 April 2018 (being the market
day immediately preceding the date of this announcement) of RM0.0454. The issue price of
RM0.05 represents a premium of 10.13% from the 5D-VWAP up to and including 11 April
2018.

2.1.7 Ranking and listing of the Consideration Securities

(i) Consideration Shares

The Consideration Shares shall, upon allotment and issuance, rank equally in all
respects with the existing Bio Osmo Shares.

(ii) Consideration ICPS

The Consideration ICPS shall rank in priority with all dividends payable by Bio Osmo.
In the event of liquidation, dissolution or winding up, the ICPS shall rank in priority to
any other Bio Osmo Shares.

The new Shares to be issued pursuant to the conversion of the Consideration ICPS
shall, upon allotment and issuance, rank equally in all respects with the existing Bio
Osmo Shares.

Bio Osmo will make an application to Bursa Securities for the listing of and quotation for the
Consideration Shares and Bio Osmo Shares to be issued from the conversion of the
Consideration ICPS to be issued pursuant to the Proposed Acquisitions on the Main Market of
Bursa Securities.

2.1.8 Liabilities to be assumed

Save for the corporate guarantees that Bio Osmo may be required to give as the holding
company of the Acquisition Targets in relation to their loans and liabilities of Impiana Ipoh
under the Impiana Ipoh SPA, there are no other liabilities to be assumed by the Bio Osmo
and its subsidiaries (“Bio Osmo Group” or “Group”) pursuant to the Proposed Acquisitions.

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2.1.9 Estimated financial commitments

Save for Impiana Cherating and Impiana Pangkor, the Acquisition Targets are already an
operating business. However, the Bio Osmo Group will require the following amounts to
develop certain hospitality assets:

(i) Estimated gross development cost for the redevelopment of Impiana Resort &
Residences Cherating under the “Impiana” brand hotel in Cherating, Pahang and will
comprise of 486 units of service suites, 18 units of semi-detached villas and 42 units
of private villas upon completion. Details of the gross development cost are as
follows:

Phase RM‟000 Remarks


Phase 1 125,074 Based on the approved building plans
Phase 2 119,284 Based on management’s estimation
Phase 3 52,760 Based on management’s estimation
297,118

The above costs include payments for preliminary works, piling works, mechanical
and electrical works, infrastructure works, professional fees as well as supervision
and project management; and

(ii) Estimated gross development cost amounting to RM61.34 million (based on


management’s estimation) for 100 units of villa for Impiana Pangkor which includes
payments for construction of villas, infrastructure works, professional fees as well as
supervision and project management.

2.1.10 Brief information on the Acquisition Targets

2.1.10.1 Information on Impiana Management

Impiana Management was incorporated in Malaysia on 21 August 1991 under the Companies
Act, 1965. Presently, its share capital is RM250,000 comprising 250,000 ordinary shares in
Impiana Management. It presently undertakes hotel management for Impiana KLCC Hotel &
Spa and Impiana Senai in Malaysia, Impiana Resort Patong & Impiana Private Villas, Kata Noi
in Phuket as well as Impiana Chaweng Noi in Koh Samui, Thailand and Impiana Private Villas
Cemagi and Impiana Private Villas Seminyak, both in Bali, Indonesia. Upon completion, the
Impiana Private Villas Ubud in Bali, Indonesia, will also be managed by Impiana Management.

The directors and shareholders of Impiana Management are DS Farouk and Datin Afrizah and
details of their shareholdings are set out below:

No. of shares
Shareholder held ,%

DS Farouk 249,999 100.0


Datin Afrizah 1 *

250,000 100.0

Note:

* Negligible.

Further details of Impiana Management is set out in Appendix II(A).

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2.1.10.2 Information on Impiana Pangkor

Impiana Pangkor was incorporated in Malaysia on 2 November 1991 under the Companies
Act, 1965. Presently, its share capital is RM500,000 comprising 500,000 ordinary shares in
Impiana Pangkor. Impiana Pangkor holds 2 parcels of vacant land for resort development.

The directors of Impiana Pangkor are Raja Dato’ Seri Eleena Binti Sultan Azlan Shah (“Raja
Eleena”), Datin Afrizah and Mohd Shukri Bin Mohd Jai. The shareholders of Impiana Pangkor
are set out below:

No. of shares
Shareholder held %

DS Farouk 499,999 100.0


Datin Afrizah 1 *

500,000 100.0

Note:

* Negligible.

Further details of Impiana Pangkor is set out in Appendix II(B).

2.1.10.3 Information on Astaka Mekar

Astaka Mekar was incorporated in Malaysia on 24 April 2009 under the Companies Act, 1965.
Presently, its share capital is RM2 comprising 2 ordinary shares in Astaka Mekar. Astaka
Mekar holds 20% equity interest in Heritage Lane Sdn Bhd (“Heritage Lane”) which in turn
owns the Impiana KLCC Hotel & Spa.

The directors of Astaka Mekar are DS Farouk and Azrin Mirzhan Bin Kamaluddin (“Azrin”) and
it is a wholly-owned subsidiary of Impiana SB. Information on Impiana SB is set out in
Section 2.1.11.2 of this announcement.

Further details of Astaka Mekar is set out in Appendix II(C).

2.1.10.4 Information on Intra Magnum

Intra Magnum was incorporated in Malaysia on 27 January 2014 under the Companies Act,
1965. Presently, its share capital is RM25,000,000 comprising 25,000,000 ordinary shares in
Intra Magnum. Intra Magnum undertakes the hotel management for the Impiana Hotel Ipoh
and also holds the hotel management rights for future “Impiana” brand hotels in Cherating
and Tioman; development manager of “Impiana” brand hotels in Cherating, Pangkor, Tioman
and Ubud, Indonesia; and land owner for 2 parcels of the land to be redeveloped into the
Impiana Resort & Residences Cherating.

The directors of Intra Magnum are Datin Afrizah, Shazilan Bin Dahalan, Prof Dr Mohd Amy
Azhar Bin Mohd Harif, Chang How Weng and Wong Kok Seong. Bio Osmo holds 18,750,000
ordinary shares in Intra Magnum, representing 75.0% equity interest in Intra Magnum while
the balance of 6,250,000 shares, representing 25.0% equity interest is held by Impiana SB.
Information on Impiana SB is set out in Section 2.1.11.2 of this announcement.

Further details of Intra Magnum is set out in Appendix II(D).

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2.1.10.5 Information on Impiana Cherating

Impiana Cherating was incorporated in Malaysia on 7 October 1985 under the Companies Act,
1965. Presently, its share capital is RM8,600,000 comprising 8,600,000 ordinary shares in
Impiana Cherating. Impiana Cherating ceased its hotel operations during the FYE 31
December 2017 for redevelopment. It owns 5 parcels of land (out of 7 parcels, of which 2
parcels are owned by Intra Magnum) which will be redeveloped into the Impiana Resort &
Residences Cherating in Cherating, Pahang and will comprise of 486 units of service suites,
18 units of semi-detached villas and 42 units of private villas upon completion.

The directors of Impiana Cherating are Datin Afrizah and Azrin. The shareholders of Impiana
Cherating are set out below:

No. of shares
Shareholder held %

Impiana SB 8,100,000 94.19


Dato’ Yahya 500,000 5.81

8,600,000 100.00

Further details of Intra Magnum is set out in Appendix II(E).

2.1.10.6 Information on assets and liabilities of Impiana Ipoh to be acquired

Intra Magnum proposes to acquire the assets of Impiana Ipoh (including the business of the
Impiana Hotel Ipoh, Perak, a 4-star hotel located in the Ipoh city centre) and assume its
liabilities.

The assets and liabilities shall include the following:

(i) List of assets

No. Assets

1. A building known as the Impiana Hotel Ipoh on a piece of leasehold land held under
PN 400702, Lot 398115, Bandar Ipoh (S), District of Kinta, State of Perak Darul
Ridzuan
2. Plant and machinery
3. Equipment for the purpose of the operation and management of the hotel
4. Furniture and fittings
5. Office equipment
6. Motor vehicles
7. Project refurbishment
8. Stocks
9. Debts owed by Impiana Management to the Vendor

(ii) List of liabilities

No. Liabilities

1. Debts owed to the holding company of the Vendor, Impiana SB


2. Trade creditors
3. Other creditors

Details of Impiana Ipoh are set out in Section 2.1.11.5 and Appendix II(F).

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2.1.10.7 Historical Financial Performance

The consolidated pro forma audited financial information of the Acquisition Targets for the
past 3 FYEs 31 December 2015 to 2017 (assuming the Acquisition Targets were in place
throughout the period under review) is set out in Appendix III.

2.1.11 Information on the Vendors

2.1.11.1 DS Farouk

DS Farouk, Malaysian, aged 72, is the Executive Chairman of the Impiana SB. Impiana SB
was established by DS Farouk in 1990.

DS Farouk holds a degree in Hotel Management from L’Ecole Hoteliere, Lausanne,


Switzerland. Since 1979, DS Farouk has been actively involved in the development and
management of hotels and resorts, travel and leisure, property development, manufacturing
as well as education. His experience in the hospitality industry spans over 39 years both in
Europe and Asia.

Since 1979, he has been an Independent Non-Executive Director of Shangri-La Hotels


(Malaysia) Berhad. He was appointed as the Independent Non-Executive Director of Jerneh
Asia Bhd from 1996 to 2005.

2.1.11.2 Impiana SB

Impiana SB was incorporated in Malaysia on 15 June 1990 under the Companies Act, 1965.
Presently, its share capital is RM51,319,300 comprising 51,319,300 ordinary shares. The
principal activity of Impiana SB is in investment holdings, whilst its subsidiaries are involved in
hotel operations.

The Directors of Impiana SB are DS Farouk and Raja Eleena and its shareholders are set out
below:

No. of shares
Shareholder held %

DS Farouk 37,812,489 73.68


Aneka Mutiara (M) Sdn Bhd 6,503,916 12.67
Anjung Hikmat Sdn Bhd 3,859,649 7.52
Teliti Mahir (M) Sdn Bhd 2,455,526 4.78
Universal Trustee (M) Bhd 687,719 1.34
Datin Afrizah 1 *

51,319,300 100.00

Note:

* Negligible.

2.1.11.3 Dato‟ Yahya

Dato’ Yahya, Malaysian, aged 62, is a Non-Independent Non-Executive Director of Bio Osmo
and shareholder of Impiana Cherating.

He graduated from MARA Institute of Technology, Malaysia with a Diploma in Town &
Country Planning in 1978. He has been involved in various business activities which include
construction and facilities management in Malaysia since 1977.

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He founded IC&E Group Sdn Bhd in 1991 and has completed numerous mega infrastructure
and property projects such as the Aquatic Centre at the National Sports Complex, Bukit Jalil,
the Administration Building for Phase 1 of Projek Usahasama Transit Ringan Automatik
(PUTRA) LRT, and toll plazas along the New Klang Valley Expressway (NKVE) and Projek
Lebuh Raya Utara-Selatan (PLUS).

He is also the founder of several companies under the IBEX Group which amongst others,
include Gerbang Perdana Sdn Bhd which was the design and build contractor for the
Integrated Customs, Immigration & Quarantine (CIQ) Complex in Johor Bahru. His other
notable business ventures were Harley-Davidson of Malaysia and H2O Sports, the organiser
of the Formula 1 Powerboat Championship from 2001 to 2004.

2.1.11.4 Datin Afrizah

Datin Afrizah, Malaysian, aged 72, is a Director of Impiana Management, Impiana Ipoh, Intra
Magnum, Impiana Cherating and Impiana Pangkor as well as the shareholder of Impiana SB,
Impiana Pangkor and Impiana Management.

She started her career in a Class “A” contracting company specialising in mechanical and
electrical engineering for high-rise buildings where she worked for over 17 years.

Datin Afrizah joined the KAB Corporation Sdn Bhd in 1987 following which she served a 3
year term as its chief executive officer and she currently sits on its Audit Committee and
Tender Committee. Subsequently, she was appointed as a Director of Impiana Pangkor and
Impiana Cherating, both in 1992, a director of Impiana Management in 1997, a director of
Impiana Ipoh in 2009 and a Director of Intra Magnum in 2014.

2.1.11.5 Impiana Ipoh

Impiana Ipoh was incorporated in Malaysia on 23 September 2008 under the Companies Act,
1965. Presently, its share capital is RM10,000,000 comprising 10,000,000 ordinary shares in
Impiana Ipoh. It owns the Impiana Hotel Ipoh, Perak, a 4-star hotel located in the Ipoh city
centre.

The directors of Impiana Ipoh are DS Farouk and Datin Afrizah and it is a wholly-owned
subsidiary of Impiana SB. Information on Impiana SB is set out in Section 2.1.7.1 of this
announcement.

2.1.12 MGO implications

Upon issuance of the Consideration Shares, DS Farouk and the Vendor’s collective
shareholdings in the Company will increase from 19.61% to more than 33%.

As a consequence, DS Farouk and the PACs will be obligated under Paragraph 4.01(a) of the
Rules to extend a MGO to acquire the remaining Bio Osmo Shares not already held by him
and the PACs (“Offer Shares”) for a minimum cash consideration of RM0.05 per Offer Share,
which is equivalent to the issue price for the Consideration Shares.

A notice of the MGO will be served on the Board immediately upon the Agreements becoming
unconditional.

2.1.13 Original date and cost of investment

The original dates and cost of investments in the respective Acquisition Targets by the
Vendors are as follows:

13
2.1.13.1 Impiana Management

Original cost
Original date of of investment No of shares
Name of shareholder investment RM subscribed

DS Farouk 6 September 1991 1.00 1


DS Farouk 21 August 1998 49,998.00 49,998
Datin Afrizah 17 November 2006 1.00 1
DS Farouk 16 April 2013 100,000.00 100,000
DS Farouk 1 December 2013 100,000.00 100,000

2.1.13.2 Impiana Pangkor

Original cost
Original date of of investment No of shares
Name of shareholder investment RM subscribed

DS Farouk 16 March 1992 1.00 1


Datin Afrizah 16 March 1992 1.00 1
DS Farouk 23 April 2003 499,998.00 499,998

2.1.13.3 Astaka Mekar

Original cost
Original date of of investment No of shares
Name of shareholder investment RM subscribed

Impiana SB 3 June 2009 2.00 2

2.1.13.4 Intra Magnum

Original cost
Original date of of investment No of shares
Name of shareholder investment RM subscribed

Impiana SB 10 February 2014 2.00 2


Impiana SB 14 September 2015 6,249,998.00 6,249,998

2.1.13.5 Impiana Cherating

Original cost
Original date of of investment No of shares
Name of shareholder investment RM subscribed

Dato’ Yahya 1 October 1992 500,000.00 500,000


Impiana SB 28 December 1995 4,500,000.00 4,500,000
Impiana SB 28 December 1995 3,600,000.00 3,600,000

2.1.13.6 Impiana Ipoh


Original cost
Original date of of investment No of shares
Name of shareholder investment RM subscribed

Impiana SB 24 February 2009 2.00 2


Impiana SB 8 September 2009 1,999,998.00 1,999,998
Impiana SB 14 April 2014 8,000,000.00 8,000,000

14
2.2 Proposed Private Placement

Bio Osmo proposes to undertake an issuance of up to 2,000,000,000 new Bio Osmo Shares to
independent third party investors to be identified (“Placement Shares”). The final issue size
and basis of allocation will be determined by the Board prior to the implementation of the
Proposals after taking into account, amongst others, the demand for the Placement Shares
and prevailing market conditions.

The Proposed Private Placement may be implemented in tranches within 6 months after the
receipt of all relevant approvals for the Proposed Private Placement and shall depend on
investors’ interest at the point of implementation. As such, there could potentially be several
price fixing dates depending on the number of tranches and timing of implementation.

The issue price of the Placement Shares shall be determined based on the following pricing
mechanism:

(i) The initial issue price of the Placement Shares has been fixed at RM0.05 per
Placement Share (“Initial Placement Price”). In accordance with Paragraph 6.13 of
the Main Market Listing Requirements of Bursa Securities (“Main LR”), payments for
this tranche of Placement Shares at the Initial Placement Price must be received
within 5 market days from the date of the Company’s shareholders’ approval for the
Proposed Private Placement.

(ii) For any other tranches of Placement Shares, the issue price of the Placement Shares
shall be fixed by the Board at a later date after obtaining the relevant approvals and
with a discount of not more than 10% to the 5D-VWAP of the Bio Osmo Shares
immediately preceding the price fixing date(s).

The above mechanism to determine the issue price of the Placement Shares is in accordance
with market based principles.

The Initial Placement Price was determined after taking into account the 5D-VWAP traded on
Bursa Securities up to and including 11 April 2018, being the market day preceding the date
of this announcement of RM0.0454. The Initial Placement Price represents a premium of
approximately 10.13% to the 5D-VWAP of Bio Osmo Shares up to and including 11 April
2018.

The Proposed Private Placement will not require any prospectus to be issued should the
issuance of Bio Osmo Shares falls under the relevant categories prescribed under Schedule 7
of the Capital Markets and Services Act, 2007 (“CMSA”) which includes inter-alia, the issuance
where the purchase consideration is not less than RM250,000 and the issuance is made to
high net worth individuals whose personal net worth exceed RM3,000,000 or corporations
with net assets exceeding RM10,000,000. The Placement Shares will not be placed to the
directors, major shareholders, chief executive or persons connected to them.

In addition, the Board of Bio Osmo is of the opinion that the Proposed Private Placement
represents the most effective means of fund raising without incurring interest costs as
compared to bank borrowings. Further, the Proposed Private Placement will strengthen the
capital base of Bio Osmo and put the enlarged Bio Osmo Group onto a stronger financial
footing to expand its business.

The Proposed Private Placement will not be underwritten. Notwithstanding that there will be
no underwriting arrangement and the issue size has not been finalised at this point in time,
the Company/Bio Osmo has appointed M&A Securities as the placement agent to place out
sufficient number of Placement Shares under the Proposed Private Placement (together with
Offer Shares under the Proposed Offer for Sale) in order to allow Bio Osmo to meet the public
spread requirements upon listing on the Main Market of Bursa Securities.

15
The Placement Shares shall, upon allotment and issue, rank equally in all respects with the
then existing Bio Osmo Shares.

An application will be made to Bursa Securities for the listing of and quotation for the
Placement Shares on the Main Market of Bursa Securities.

Based on the Initial Placement Price of RM0.05 per share and an issue size of up to
2,000,000,000 Placement Shares, the Proposed Private Placement will raise gross proceeds of
RM100,000,000 which will be utilised for the following:

Expected time frame for


RM‟000 Note utilisation of proceeds

Repayment of bank borrowings 39,700 (i) Within 6 months from the


listing of the Placement Shares

Repayment of advances from 33,723 (ii) Within 1 month from the listing
shareholders of the Placement Shares

Future expansion of hospitality 18,577 (iii) Within 12 months from the


assets / working capital listing of the Placement Shares

Estimated expenses for the 8,000 (iv) Within 1 month from the listing
Proposals of the Placement Shares

Total estimated proceeds 100,000

Notes:

(i) Repayment of bank borrowings

As at 31 December 2017, the total borrowings of Astaka Mekar amounts to RM39.70


million. Upon completion of the Proposed Acquisitions and the Proposed Private
Placement, Bio Osmo proposes to utilise RM39.70 million from the proceeds of
Proposed Private Placement for the repayment of outstanding bank borrowings
withdrawn by Astaka Mekar.

Details of the bank borrowings to be repaid are as follows:

Total borrowings as
Interest at 31 December Repayment
rate 2017 amount
Bank borrowing (%) (RM‟000) (RM‟000)

Term loan 6.97 37,700 37,700


Overdraft facility 6.97 2,000 2,000

39,700 39,700

Based on the effective interest rate of approximately 6.97% per annum, Astaka Mekar
is expected to generate an annual interest savings of approximately RM2.77 million per
annum.

Resulting from the above, the future interest expenses of the Group are expected to
reduce and hence improve its cash flow position.

16
(ii) Repayment of advances from shareholders

As at 31 December 2017, the Acquisition Targets have amounts owing to Impiana SB


totalling RM33.72 million as follows:

Amount owing
Acquisition Targets (RM‟000)
(a) Impiana Cherating Sdn Bhd 22,514
(b) Astaka Mekar 15,024
(c) Impiana Ipoh Hotel 5,859
(d) Impiana Pangkor 3,464
(e) Impiana Management (13,139)*
33,723

Note:

* Amount owing by Impiana SB to Impiana Management to be offset against


amount owing to Impiana SB.

Upon completion of the Proposed Acquisitions and the Proposed Private Placement, Bio
Osmo proposes to utilise RM33.72 million from the proceeds of the Proposed Private
Placement for the settlement of the abovementioned shareholder’s advances.

Impiana SB intends to utilise the proceeds from the repayment to pay down its bank
borrowings amounting to RM32.50 million for which Impiana Pangkor’s properties have
been charged as collateral. Impiana SB has undertaken to fully redeem the properties
owned by Impiana Pangkor and ensure that the properties are free from
encumbrances.

(iii) Future expansion of hospitality assets / working capital

The Company intends to utilise up to RM18.58 million of the proceeds from the
Proposed Private Placement to fund future acquisition of hospitality assets, the upgrade
of existing hospitality assets and/or working capital.

To-date, the Company has yet to identify any assets to be acquired. The relevant
announcements, if deemed necessary, shall be released as and when the Company
identifies suitable assets.

This will also provide the Company with ready funds should the need for refurbishment
or upgrade of existing hospitality assets arise. In addition, the Company can also tap
into these proceeds for general working capital for both its hotel management and
development operations, which includes payments to suppliers and/or sub-contractors,
sales and marketing expenses, payment of salaries, utilities and other general expenses
related to the day-to-day operations of the enlarged Group.

(iv) Estimated expenses for the Proposals

The estimated expenses of RM8.00 million comprise of the following:

Details RM‟000
(a) Professional fees 1,500
(b) Placement fees 3,500
(c) Taxes payable 2,590
(d) Miscellaneous* 410
8,000

17
Note:

* Including the fees payable to authorities, printing and advertising fees, EGM
related fees.

If the actual expenses incurred pursuant to the Proposals are higher than the amount
budgeted, the deficit will be funded out of the portion allocated for working capital.
Conversely, if the actual expenses are lower than the amount budgeted, the excess will
be utilised for working capital.

Pending utilisation, the proceeds will be placed in deposits with financial institutions or short-
term money market instruments. The Company shall provide periodic updates of the
utilisation of proceeds as part of the Group's quarterly result releases.

2.3 Proposed Offer for Sale

DS Farouk (“Selling Shareholder”) will undertake an offer for sale of up to 1,000,000,000 Bio
Osmo Shares (“Offer Shares”) to be held by him upon completion of the Proposed
Acquisitions, to independent third party investors to be identified at an offer price of RM0.05
per Offer Share (“Proposed Offer for Sale”).

The Proposed Offer for Sale will not require any prospectus to be issued should the offer of
Offer Shares falls under the relevant categories prescribed under Schedule 6 of the CMSA
which includes inter-alia offers where the purchase consideration is not less than RM250,000
and issuance is made to high net worth individuals whose personal net worth exceed
RM3,000,000 or corporations with net assets exceeding RM10,000,000.

The Offer Shares will not be placed to the directors, major shareholders, chief executive of
the Company or persons connected to them.

The offer price of RM0.05 per Offer Share was arrived at after taking into account, amongst
others the following:

(i) the issue price of the Consideration Shares/ICPS of RM0.05;

(ii) the future earnings potential of the Acquisition Targets; and

(iii) the 5D-VWAP of the Bio Osmo Shares up to and including 11 April 2018 (being the
market day immediately preceding the date of this announcement) of RM0.0454.

All expenses incurred in connection with the Proposed Offer for Sale will be borne by the
Selling Shareholder. As part of the implementation process for the Proposed Offer for Sale,
the Company shall have the right to credit the Selling Shareholder’s entitlement to the new
Consideration Shares under the Proposed Acquisitions directly into the Central Depository
System account of the independent third party investors to be identified.

2.4 Proposed Amendments

The Proposed Amendments entail changes to certain clauses of the Constitution of Bio Osmo in
order to facilitate the issuance of the ICPS.

2.5 Proposed Change of Name

The Board proposes to change the Company’s name from “Bio Osmo Berhad” to “Impiana
Hotels (Malaysia) Berhad”. The Proposed Change of Name, if approved by the Shareholders,
will take effect from the date of the Certificate of Incorporation on Change of Name to be
issued by the Companies Commission of Malaysia to the Company.

18
3. SALIENT TERMS OF THE AGREEMENTS

The salient terms of the Agreements are set out in Appendix I.

4. RATIONALE FOR THE PROPOSALS

4.1 Proposed Acquisitions

Bio Osmo had on 26 October 2016 completed the placement of 224,397,000 new shares
which raised total proceeds of RM11.22 million. From the said proceeds, RM9.02 million was
utilised to subscribe for 75% equity interest in Intra Magnum, which is involved in the
hospitality business.

The diversification into the hospitality businesses which took place in 2016 has been
contributing profits whilst the bottled drinking water division is incurring losses. Based on the
audited consolidated financial statement of Bio Osmo for the financial year ended (“FYE”) 30
June 2017 and unaudited consolidated financial statements of Bio Osmo for the 6 months
financial period ended (“FPE”) 31 December 2017, the revenue and profit segmentations of
Bio Osmo are as follows:

Audited Unaudited FPE


FYE 30 June 31 December
2017 2017
Segment revenue and results (RM„000) (RM„000)

Revenue:
- Bottled water 4,151 1,041
- Hospitality business 4,699 1,577
- Others 256 -
9,106 2,618

Net profits/(loss) after tax


- Bottled water (11,126) (1,334)
- Hospitality business 2,075 324
- Other unallocated expenses (2,021) (1,217)
(11,072) (2,227)

The Group’s hospitality business contributed 51.6% and 60.2% of the Group’s revenue for
the FYE 2017 and the FPE 31 December 2017 respectively. The hospitality business has also
been contributing positively to the Group’s financial position while the bottled drinking water
division recorded losses in both the FYE 2017 and FPE 31 December 2017. As such, the
hospitality business is the main contributor to the revenue and profits of the Group.

The Proposed Acquisitions will allow the Company to further expand its existing hospitality
business, improve the financial performance of the Group and enhance shareholder value.

In addition, the Proposed Acquisitions will allow the Group to leverage on the expertise of
existing members of the Board, namely Azrin, the Chief Operating Officer of the Impiana SB
and Executive Director of Bio Osmo, who oversees the hospitality division of the Group.

19
4.2 Proposed Private Placement

The Proposed Private Placement is undertaken primarily to provide Bio Osmo with additional
capital to fund the repayment of bank borrowings, repayment of advances, defray the
expenses for the Proposals, facilitate future business investments/expansion and provide the
Company with additional working capital and funding requirements for the Acquisition
Targets, which is expected to contribute positively to the earnings potential of the enlarged
Bio Osmo Group in the future.

After due consideration of the various options available, the Board of Bio Osmo is of the view
that the Proposed Private Placement is the most appropriate avenue to raise funds without
incurring interest costs and to minimise any potential cash outflow in respect of interest
servicing costs.

4.3 Proposed Offer for Sale

The Proposed Offer for Sale is undertaken to allow Bio Osmo to meet the public spread
requirements upon listing on the Main Market of Bursa Securities.

4.4 Proposed Amendments

The Proposed Amendments is to facilitate the issuance of the ICPS pursuant to the Proposed
Acquisitions.

4.5 Proposed Change of Name

The Company proposes to change its name to “Impiana Hotels (Malaysia) Berhad to better
reflect its principal business activity and the corporate identity of the Company upon the
completion of the Proposed Acquisitions.

5. INDUSTRY OUTLOOK AND PROSPECTS

5.1 Overview and outlook of the Malaysian Economy

The Malaysian economy recorded a sterling growth of 5.7% during the first six months of
2017 underpinned by strong domestic demand and reinforced by improved external sector.
Given the robust economic growth during the first half, real GDP for the year is expected to
strengthen further between 5.2% and 5.7% (2016: 4.2%), surpassing the earlier estimates.
Accordingly, gross national income (GNI) at current prices is estimated to expand 9.1% to
RM1.3 trillion (2016: 6.2%; RM1.2 trillion), with income per capita increasing 7.7% to
RM40,713 (2016: 4.7%; RM37,791).

Aggregate domestic demand is expected to remain resilient, primarily driven by private sector
expenditure, while the public sector gradually consolidates. Of significance, private
consumption will continue to support economic growth. The propensity to consume will be
enhanced by stable labour market, higher export earnings and manageable inflation amid low
interest rate environment. Meanwhile, private investment is projected to expand at a stronger
pace supported by higher capital outlays, particularly in the services and manufacturing
sectors. Investments will also be supported by steady inflows of foreign direct investment.

On the supply side, growth will be supported by stronger performance across all sectors with
services and manufacturing remaining as the main drivers of growth. The services sector is
projected to expand at a faster rate, reflecting stronger expansion across most subsectors,
particularly wholesale and retail trade; information and communication; as well as food and
beverages and accommodation. Within the manufacturing sector, the export-oriented
industries are projected to expand significantly following higher global demand for

20
semiconductors. Similarly, growth in the domestic-oriented industries will strengthen
following improved demand for consumer products and construction-related materials. In the
agriculture sector, growth is expected to be supported by the recovery in output of crude
palm oil and rubber. The construction sector will be led by higher civil engineering activities
while the mining sector continues to expand, though at a slower pace supported by higher
production of natural gas.

Malaysia’s external position is estimated to remain resilient in line with the increase in global
trade activities. The current account is forecast to improve mainly backed by sizeable surplus
in the goods account. Impetus to export growth is expected to stem from strong demand for
electrical and electronics and commodities. Meanwhile, imports will continue to increase in
line with strong domestic investment activities.

(Source: Economic Report 2017/18, Ministry of Finance Malaysia)

5.2 Overview and prospects of the Malaysia Tourism Industry

In 2018, the tourism industry accounted for 14.8% of the Country’s gross domestic product
and generated 3.2 million employment. However in 2016, Malaysia recorded 26.8 million
tourist arrivals with receipts amounting to RM81.2 billion, lower than the Economic
Transformation Plan’s 2016 target of 30.5 billion tourists and RM103 billion generated from
tourist spending. In particular, lower tourist arrivals, spending and shorter length of stays
contributed to the significant difference between the actual and targeted tourist receipts.
Thus it is essential to attract high net worth individuals to boost tourism revenue.

The Government continues to implement various ecotourism projects to accelerate the


growth of the tourism industry. The projects include the upgrading of infrastructure in
Burlington Taman Kinabalu and Tabin’s Wildlife Reserve in Sabah and Sungai Cherating in
Pahang. Furthermore, efforts were intensified to promote Malaysia as the preferred tourist
destination through Visit ASEAN@50 campaign, and the hosting of the 29th South East Asian
Games and the 9th ASEAN Para Games in 2017. To attract tourist arrivals in 2018, the e-Visa
was expanded to include more countries such as Bhutan, Sri Lanka, Serbia and Montenegro.

To sustain the role of the services sector as the key driver of growth, the Government will
accelerate the implementation of the Services Sector Blueprint and the Logistics and Trade
Facilitation Masterplan. Within the sector, the Governments’ emphasis is on the development
of tourism, including medical tourism, logistics and venture capital industries. With regards to
tourism, Malaysia comparative advantage in scenery, hospitality customs and culture, quality
of food and friendliness of local people will be leveraged to attract a significant share of
tourist flows to the region. To facilitate the strategic development of Malaysia’s healthcare
travel industry and to raise the country’s profile as a globally preferred destination for world-
class healthcare services, more new hospitals will be developed and exiting ones upgraded.
At the same time, promotions will be enhanced to showcase the country’s dual heritage of
warm hospitality and world-class healthcare services in new markets and facilitate the entry
of medical tourists.

(Source: Economic Report 2017/18, Ministry of Finance Malaysia)

5.3 Prospects of the enlarged Bio Osmo Group

The Bio Osmo Group is principally involved in the hospitality business as well as processing,
manufacturing and distribution of drinking water and other beverages.

Over the past years, the Bio Osmo Group has faced continuous challenges in the bottled
drinking water business due to increasing competition and rising production costs. In 2016,
the Group diversified into the hospitality business which has contributed positively to the
Company.

21
The Group’s hospitality business contributed 51.6% and 60.2% to the Group’s revenue for
the FYE 2017 and the FPE 31 December 2017 respectively. The hospitality business has also
been contributing positively to the Group’s financial position while the bottled drinking water
division incurred losses in both the FYE 2017 and FPE 31 December 2017. As such the Group
anticipates that the hospitality business will continue to be the main revenue contributor to
the Group. The Group expects that the expansion of its hospitality business after the
Proposed Acquisitions will allow the Group to benefit further from the profitability of Impiana
Group.

In addition to its existing operations, the 7 parcels of land held under Impiana Cherating and
Intra Magnum will be redeveloped into a new resort known as “Impiana Resort & Residences
Cherating” in Cherating, Pahang and will comprise of 486 units of service suites, 18 units of
semi-detached villas and 42 units of private villas upon completion. The Impiana Group shall
adopt a sale and leaseback model for all the service suites, which will allow the Group to
derive revenue from both the sale of the units as well as the management and operations of
the units upon completion.

Impiana Resort & Residences Cherating redevelopment is expected to have an estimated


gross development value of RM413.08 million. After taking into the gross development costs
of RM297.12 million, the Impiana Cherating expects to generate a total pre-tax profit of
RM115.96 million from the said project.

Upon completion of the redevelopment, Impiana Cherating shall be involved in the provision
of hospitality services to travellers to the locality of Impiana Resort & Residences Cherating
as well as banquet and/or function facilities for events.

Further thereto, it is also envisaged that the hospitality business of the Group will continute
to expand via the development of a resort comprising of 100 units of villas by Impiana
Pangkor on its property located on Pangkor Island, Perak, which is presently vacant, with
gross development costs of RM61.34 million.

(Source: Management of the Bio Osmo Group and Acquisition Targets)

6. RISK FACTORS

6.1 Completion risks

(i) Delay / non-completion of the Proposed Acquisitions

The completion of the Proposed Acquisitions is conditional upon the conditions


precedent in the Agreements as set out in Appendix I. If the conditions precedent
are not met within the stipulated period or such extension of time agreed between
the Company and the Vendors, the Proposed Acquisition will not be completed.

The Board will take reasonable steps to ensure that the conditions precedent in the
Agreements are met in order to complete the Proposed Acquisitions. Notwithstanding
the above, there is no assurance that such steps taken by the Board will yield the
desired outcomes.

(ii) Failure / delay in the listing of the Consideration Shares, Settlement


Shares and Placement Shares

Any delay to listing of the Consideration Shares and Placement Shares on Bursa
Securities as well as the issuance of the Consideration ICPS could result in the
Agreements being terminated.

22
These delays may arise from amongst others, the delay in meeting the conditions
precedent for the SSA, inability of the Company to obtain approval from Bursa
Securities for the listing and quotation of the Consideration Shares and Placement
Shares on Bursa Securities, or the inability of the Company to obtain its shareholders’
approval.

The Board will take reasonable steps to ensure that the Proposals will be
implemented in in a timely manner. Notwithstanding the above, there is no assurance
that such steps taken by the Board will yield the desired outcomes.

6.2 Industry risks

(i) The travel and tourism industries are dependent on changes in the
economic environment

Spending on travel and tourism is discretionary and price sensitive, being affected by
factors such as the supply of and demand for modes of transportation and
accommodation, the rate of economic growth, interest rates, inflation and economic
developments affect travel and tourism activities. Changes in the global financial
markets and economic conditions may boost or dampen business and leisure travel
activities, and consequently, the demand for tourism products.

The Acquisition Targets’ business is largely dependent on the travel decisions and
preferences of travellers, which in tum are affected by changes in global economic
conditions. Any changes in global economic conditions in the future may affect travel
decisions and preferences of travellers, which in turn may affect the business,
operational results and future prospects of the enlarged Bio Osmo Group.

Notwithstanding the above, the “Impiana” brand has a history of more than 25 years
of operations in the hospitality industry, and has weathered through various periods
of economic and geopolitical challenges during this period. The Acquisition Targets
have demonstrated resilience and growth under the guidance of a strong
management team, and has demonstrated the ability to adapt to changes in the
economic environment in a timely manner through being in touch with current
traveler trends and preferences, adapting to changes in those trends and
preferences, expansion into new markets and retention of existing customers as well
as procurement of new customers through constant service and product
enhancement, that collectively have allowed the Acquisition Targets to remain
competitive over the years.

The Group believes that it will be able to leverage on the competitive strengths of the
Acquisition Targets and industry growth prospects, set out in Section 5.2, to adapt to
changes in the economic environment and remain competitive, thus minimising
impact to its future operations and profitability.

(ii) Travel and tourism activities are seasonal in nature where fluctuations in
travel patterns impact the demand for tourism products and services

The tourism industry is inherently seasonal, whereby the sales of travel and tourism
products and services typically increase during holiday periods and decrease during
off-peak periods. The prices of tourism products and services are subject to
fluctuation between peak seasons and low seasons.

From a segmental perspective, corporate travel generally declines during the festive
holiday periods which are times when many corporate travellers are on holiday and
conversely, leisure travel generally increases during the school holidays and festive
holiday periods. This seasonal fluctuation in corporate and leisure travel impacts the

23
demand for tourism products and services, and ultimately affects the operating
results of tourism industry stakeholders. On the other hand, “Impiana” brand, being a
regionally recognised brand, with locations that are both corporate and leisure
destinations, is able to mitigate the effects of seasonal fluctuations in corporate and
leisure travel demand.

Over the years of its operations, the Acquisition Targets has weathered seasonal
variations in the demand for its travel products and services annually depending on
the contribution of its leisure travel and corporate business segments, but the recent
surge in China outbound travel has offset the effects of the traditionally seasonal
Western outbound travel.

The Acquisition Targets will continue to adopt effective measures such as on-going
market research on evolving consumer preferences, offer a comprehensive and
diversified range of travel products and services, careful cash flow management and
have efficient operating procedures to mitigate these factors. However, there is no
assurance that the efforts of the Group will be sufficient to address the risks arising
from the seasonal fluctuations of the travel and tourism industry.

(iii) The tourism industry is adversely affected by natural disasters, outbreak of


diseases, terrorist attacks and other catastrophic events

Travel and tourism industry stakeholders are exposed to the risk of reduced business
as a result of political instability, accidents, terrorist attacks, acts of sabotage and
natural catastrophes, climate change, outbreaks of diseases, epidemics, social unrest,
civil war, international conflicts and failing governments, which could adversely
impact consumer spending on leisure and business travel. Natural disasters, force
majeure, terrorist attacks or other casualty events in popular travel destinations may
also affect sentiment to tourism products relating to the affected destination or
country.

While the above-mentioned events are beyond the Group’s control, there can be no
assurance that such events will not materially affect the business and/or results of
operations of the Group.

Notwithstanding the above, natural disasters and other catastrophic events are
typically country specific and region-specific in nature. The Acquisition Targets will
eventually have diverse leisure and corporate travel products and services across an
array of destinations in in Malaysia including Kuala Lumpur, Tioman, Pangkor, Ipoh
and Cherating. Thus, the Group believes that while natural disasters and other
catastrophic events may impact travel and tourism activities in certain regions in
Malaysia and cause a drop in revenue from this region, the Acquisition Targets will be
able to actively promote its travel products and services to other destinations in
regions that are not affected, thereby minimising the impact on business and results
of operations.

The Acquisition Targets’ long operating history and past track record of financial
performance is testament to the Acquisition Targets’ resilience to face and rebound
from these events that have impacted the travel and tourism activities.

24
(iv) Changing consumer behaviour and preferences influence spending on
travel and tourism activities

Travellers are increasingly booking holidays closer to the time of travel than has
traditionally been the case, and this type of booking behaviour makes it considerably
more difficult for industry stakeholders to engage in seasonal planning, making them
vulnerable to short-term changes in customer demand. The ability to anticipate
changes in consumer preferences for leisure travel products across a number of
source markets and destinations can be instrumental for success.

Nonetheless, the Acquisition Targets’ management takes cognisance of the changes


in consumer behavior and preferences as well as the growing prominence of the
internet and mobile devices in current lifestyles. To cater to the changes to behavior
and preferences in the tourism industry, the Acquisition Targets has been closely
monitoring the industry practices in order to keep abreast with the expectations and
preference of its clientele.

In addition, the Acquisition Targets carries out advertising and promotional activities
in traditional and digital media to market its travel locations and to remain relevant in
the current environment as well as target new customer segments and expand
customer base.

6.3 Business and operational risks

Upon completion of the Proposed Acquisitions, the Bio Osmo Group would be exposed to risks
inherent to the travel management and services industry. Details of these risks, which are not
exhaustive, are set out below:

(i) Encroachment of land

There are squatters currently occupying the land of Impiana Pangkor situated in
Pulau Pangkor, Perak unlawfully without any permission and the Vendors expressly
agree with Bio Osmo that the Vendors shall bear all costs and expenses with respect
to the eviction of the squatters and will indemnify and keep Bio Osmo indemnified
from all damages as may be suffered by Bio Osmo and/or Impiana Pangkor pursuant
to the unlawful occupation of the land by squatters.

(ii) Risks from redevelopment, repair and maintenance of assets owned by the
Acquisition Targets

The hospitality industry is highly competitive and the completion of new hotels or
renovations of competing hotel properties may reduce the competitiveness of older or
existing properties. The success of a hotel, including those under the “Impiana”
brand largely depends on its ability to brand and compete in areas such as quality of
accommodation, services and the quality of lobby areas, facilities and other
amenities.

The hospitality assets owned by the Acquisition Targets may need to undergo
renovation works from time to time to retain their attractiveness to guests, and may
also require ad hoc maintenance or repairs in respect of faults or problems that may
develop such that there may be periodic capital expenditure beyond the Acquisition
Targets’ current estimates for refurbishment, renovation and improvements.

The cost of maintaining the hospitality assets owned by the Acquisition Targets and
the risk of unforeseen maintenance or repair requirements will tend to increase over
time as these hospitality assets age.

25
The business and operations of hotel may be disrupted as a result of renovation
works and it may affect rates charged. Nevertheless, the Acquisition Targets have
through its years of experience devised methods of undertaking refurbishment in the
least obtrusive manner to minimise the inconvenience to guests.

In addition to the repair and maintenance of its hospitality assets, the Acquisition
Targets may be required to undertake the complete redevelopment of its assets or
undertake the development of new hospitality assets in different locations in order to
remain competitive. Such development or redevelopment of the assets owned may
disrupt the operations of the enlarged Group.

Impiana Cherating ceased operations of Impiana Resort Cherating in FYE 31


December 2017 in order to undertake the complete redevelopment of the resort.

In addition, the Group will be exposed to risks relating to variation to the initial
development plans, or material fluctuations in raw material costs may result in an
increase in the gross development cost for the Group’s developments or
redevelopment. Cash flows and profitability will be reduced if the actual costs to
complete a contract exceed original estimated development costs.

The cash flows and profitability are therefore dependent upon the ability to
accurately estimate the costs associated with our developments. These costs may be
affected by a variety of factors, such as lower than anticipated productivity,
conditions at the work sites differing materially from what was anticipated at the time
we bid for the contract, higher costs of materials and labour, delay in the availability
of financing and political or social disruptions, amongst others.

(iii) Risks arising from the sale and leaseback of units under the redevelopment
of Impiana Resort & Residences Cherating

As part of the redevelopment of Impiana Resort & Residences Cherating, a sale and
leaseback model shall be adopted for the service suites, which will allow the Group to
derive revenue from both the sale of the redeveloped units as well as the operations
of the units upon completion of the redevelopment.

As such, the Group may be subjected to the challenges and risks arising from this
business which include adverse changes in real estate market prices, changes in
demand for residential properties, competition from other developments, changes in
economic, social and political conditions, delay in completion of property
development projects against the scheduled completion.

The demand for properties is dependent on the general economic, business and
credit conditions as well as the extent of supply in the market. Although the Impiana
Resort & Residences Cherating is strategically located in Cherating, Pahang and is
one of the primary tourist attractions in the East Coast of Malaysia and is also
earmarked as a special tourism promotion zone in the East Coast Economic Corridor
masterplan, there can be no assurance that any adverse downturn of the property
market will not affect the value of service suites which have yet to be sold under the
sale and leaseback model.

In addition, the Group shall be subject to compliance with the terms and conditions
of the sale and leaseback arrangement entered into with purchasers of the service
suites. There is no assurance that the efforts undertaken by the Group to comply
with the terms and conditions of such agreements will be sufficient or that the Group
will not be adversely affected by such repercussions arising from the breach of any
terms of the contract entered between the purchasers of the service suites.

26
(iv) Competition risk

The hospitality industry in Malaysia is fragmented and competitive due to the


increased investment in hospitality assets over the past 10 years leading to increased
supply. Location, quality, attractive pricing and niche marketing are crucial factors for
remaining relevant and maintaining a competitive edge in the industry.

The Acquisition Targets have a multi-pronged distribution strategy that comprises of


traditional and digital media to leverage direct bookings, while expanding its third
party marketing partners such as wholesalers, travel agents, online travel agents and
other collaborative partners such as group event and meeting planners that enable
effective marketing of the Acquisition Targets products and services. The
management of the Acquisition Targets believes that its travel management and
services offices and external travel agents provide it with a public presence
throughout Malaysia and globally that will allow the Acquisition Targets to effectively
remain competitive.

The Acquisition Targets will also continue to introduce innovative travel packages
such as wedding and honeymoon packages, school holiday getaway packages in
addition to the corporate and government meetings and retreat packages as a means
of balancing demand. The Acquisition Targets will continue to develop its marketing
strategy and products and services based on consumer demand and preferences,
while leveraging on its ever-growing distribution network.

(v) Dependency on key personnel

As in any other business, the Acquisition Targets believes that its continual success
will depend to a significant extent upon the abilities, skills, experience, competency
and continuous efforts of its existing directors and management team. The
Acquisition Targets are currently headed by DS Farouk and Azrin, who have been in
the industry for more than 39 years and approximately 13 years, respectively. They
are supported by a dedicated management team. The Acquisition Targets will strive
to continue attracting and retaining qualified and experienced personnel which are
essential towards maintaining its continuous growth.

Efforts are being made by the Acquisition Targets to develop younger members of
the management team to gradually assume greater responsibilities of the business
and operations in preparation for long-term expansion. As such, the Acquisition
Targets has implemented a variety of training programmes to upgrade their
knowledge and capabilities as well as to keep abreast with the Acquisition Targets’
expansion plans and travel industry trends.

Nevertheless, there is no assurance that the loss of any key directors and
management personnel may not adversely affect the Acquisition Targets’ ability to
compete in the industry in the short term.

(vi) Foreign exchange risk

Impiana Management has business transactions in foreign currencies in the normal


course of its business under its hotel management agreements which are
predominantly denominated in United State Dollars and other currencies in which
countries they have dealings with. Any significant increase or decrease in foreign
exchange may have an adverse effect on the results of its operations.

Nevertheless, the management of Impiana Management constantly monitors


movements of the foreign currencies applicable to the Acquisition Targets’ business in
managing its foreign currency exposure.

27
Nevertheless, there is no assurance that the efforts of Impiana Management will be
sufficient to address the foreign exchange risks of the Group moving forward.

(vii) Renewal of licences

The Acquisition Targets are required to obtain certain licences such as, operating,
health and safety and equipment licences.

The licenses are subjected to periodic renewal/assessment by the relevant authorities


and the terms and conditions for renewal may change from time to time. As such,
there is no assurance that the Acquisition Targets will be able to renew or maintain
its licenses.

While these factors are beyond the management of the Acquisition Targets’ control,
the Acquisition Targets will mitigate such risk by ensuring compliance with the
relevant laws and regulations and conditions that are enforced and that the relevant
licenses are obtained and renewed on a timely basis.

6.4 Financial and investment risks

(i) Control by the Vendors

Upon completion of the Proposed Acquisitions, Impiana SB, DS Farouk, Dato’ Yahya
and Datin Afrizah will own 4,800,000,000 Bio Osmo Shares and 3,200,000,000 ICPS.
The equity shareholding of Bio Osmo held by the Vendors shall represent 52.09% of
the enlarged share capital of the Company (assuming none of the shareholders
accept the MGO and no exercise of ICPS) after completion of the Proposals. As a
result, the Vendors will be able to exercise significant influence over all matters
requiring shareholders’ approval, including the appointment of Directors and the
approval of significant corporate transactions. Such concentration of ownership may
also have the effect of delaying, preventing or deterring a change in control of the
Group which may not be in line with the interest of the other shareholders of Bio
Osmo.

Notwithstanding that, the Group’s non-executive and independent members of the


Board shall ensure continued compliance with the Main LR and adopt, where
appropriate, best practices in corporate governance in the interest of all the
shareholders of the Company.

(ii) Acquisition risk

The Proposed Acquisitions are expected to contribute positively to our Group based
on the rationale stated in Section 4.1. However there can be no assurance that the
anticipated benefits of the Proposed Acquisitions will be realised and there is also no
assurance that the Acquisition Targets will be able to maintain or improve the
financial performance of Bio Osmo after the Proposed Acquisitions.

Nevertheless, the Group intends to leverage on the competencies and expertise of


Acquisition Targets management headed by DS Farouk and Azrin to drive the new
business of Bio Osmo moving forward.

28
7. EFFECTS OF THE PROPOSALS

7.1 Share capital

The pro forma effects of the Proposals on the share capital of Bio Osmo are set out below:

No. of shares Share capital


RM

As at the date of this announcement 795,362,700 42,298,834.50


To be issued pursuant to the Proposed 4,800,000,000 240,000,000.00
Acquisitions

After the Proposed Acquisitions 5,595,362,700 282,298,834.50


To be issued pursuant to the Proposed 2,000,000,000 100,000,000.00
Private Placement
After the Proposed Private Placement 7,595,362,700 382,298,834.50
Upon full conversion of ICPS 3,200,000,000 160,000,000.00
Total enlarged share capital 10,795,362,700 542,298,834.50

The Proposed Offer for Sale will not have any effect on the share capital of the Company.

7.2 Net Assets (“NA”) and Gearing

Based on the audited financial statements of the Bio Osmo Group as at 30 June 2017, the pro
forma effects of the Proposals on the consolidated NA and gearing of Bio Osmo are shown
below:

(I) (II) (III) (IV)


Subsequent After (II)
events up to After the and the After (III) and
Audited as at 31 Proposed Proposed assuming full
30 June December Acquisitions Private conversion of
(ii)
2017 2017 Placement(iii) ICPS
RM RM RM RM RM

Share capital 42,298,835 42,298,835 282,298,835 382,298,835 542,298,835


ICPS - - 160,000,000 160,000,000 -
Accumulated (12,681,898) (14,928,287) 6,667,024 (1,332,976) (1,332,976)
profits/ (losses)
Net assets 29,616,937 27,370,548 288,965,859 380,965,859 540,965,859
Minority interest 5,414,624 5,434,701 - - -
Total equity 35,031,561 32,805,249 288,965,859 380,965,859 540,965,859

No. of shares 795,362,700 795,362,700 5,595,362,700 7,595,362,700 10,795,362,700


NA per share (RM) 0.037 0.034 0.080 0.071 0.050
Bank borrowings - - 72,931,062 33,806,885 33,806,885
(RM)
Gearing (times) - - 0.162 0.062 0.062

Notes:
(i)
After taking into consideration the unaudited financial results of Bio Osmo for the 6
months FPE 31 December 2017.

29
(ii)
After taking into consideration the issuance of 4,800,000,000 new Consideration
Shares and 3,200,000,000 new Consideration ICPS at an issue price of RM0.05 per
Consideration Share/ICPS.
(iii)
After taking into consideration the issuance of 2,000,000,000 Placement shares at
the Initial Placement Price of RM0.05 per share and deducting estimated expenses
for the Proposals of RM8.0 million.

The Proposed Offer for Sale is not expected to have any effect on the NA and gearing of Bio
Osmo Group.

7.3 Earnings and earnings per share (“EPS”)

The Proposals is expected to be earnings accretive and will contribute positively to the long-
term future earnings and EPS of the enlarged Bio Osmo Group.

30
7.4 Shareholdings of Substantial Shareholders

The pro forma effects of the Proposals on the substantial shareholders’ shareholdings of Bio Osmo and the Vendors are as follows:

(I) (II)
After (I) and the Proposed Private
As at 22 March 2018 After the Proposed Acquisitions^ Placement
<-----Direct -----> <---Indirect---> <----Direct ----> <---Indirect---> <---Direct ----> <----Indirect-->
No. of No. of No. of No. of No. of No. of
Bio Osmo Bio Osmo Bio Osmo Bio Osmo Bio Osmo Bio Osmo
Shares Shares Shares Shares Shares Shares
(„000) % („000) % („000) % („000) % („000) % („000) %

Al Maurid Resources 100,000 12.57 - - 100,000 1.79 - - 100,000 1.32 - -


Sdn Bhd
Zulkifli Bin Musa (ii) - - 100,000 12.57 - - 100,000 1.79 - - 100,000 1.32
Shahrizal Hisham Bin - - 100,000 12.57 - - 100,000 1.79 - - 100,000 1.32
Abdul Halim (ii)
Vendors
DS Farouk (i) 155,985 19.61 - - 1,954,073 34.92 2,977,907 53.22 1,954,073 25.73 2,977,907 39.21
Impiana SB - - - - 2,977,907 53.22 - - 2,977,907 39.21 - -
Dato’ Yahya - - - - 24,000 0.43 - - 24,000 0.32 - -
Datin Afrizah - - - - 5 * - - 5 * - -

Identified Investors - - - - - - - - 2,000,000 26.33 - -


(collectively)

31
(III) (IV)
After (II) and the Proposed Offer for
Sale After (III) and the full conversion of ICPS
<-----Direct ----> <----Indirect---> <----Direct -----> <----Indirect---->
No. of Bio No. of Bio No. of Bio No. of Bio
Osmo Osmo Osmo Osmo
Shares Shares Shares Shares
(„000) % („000) % („000) % („000) %

Al Maurid Resources Sdn 100,000 1.32 - - 100,000 0.93 - -


Bhd
Zulkifli Bin Musa (ii) - - 100,000 1.32 - - 100,000 0.93
Shahrizal Hisham Bin - - 100,000 1.32 - - 100,000 0.93
Abdul Halim (ii)
Vendors
DS Farouk (i) 954,073 12.56 2,977,907 39.21 2,152,799 19.94 4,963,178 45.98
Impiana SB 2,977,907 39.21 - - 4,963,178 45.98 - -
Dato’ Yahya 24,000 0.32 - - 40,000 0.37 - -
Datin Afrizah 5 * - - 9 * - -

Identified Investors 3,000,000 39.50 - - 3,000,000 27.79 - -


(collectively)

Notes:
*
Negligible
^
Assuming none of the shareholders accepted the MGO.
(i)
Deemed interest by virtue of his interest in Impiana SB.
(ii)
Deemed interest by virtue of his interest in Al Maurid Resources Sdn Bhd.

32
7.5 Dividend

The Proposals are not expected to affect the dividend policy of the Company (if any) as future
dividend payable by the Company would be dependent on inter-alia, the future profitability and
cashflow position of the enlarged Bio Osmo Group.

7.6 Convertible Securities

As at the date of this announcement, the Company has no convertible securities.

8. APPROVALS REQUIRED

The Proposals are subject to the approvals being obtained from the following:

(i) the approval of Bursa Securities for:

(a) the listing of and quotation for the Consideration Shares;

(b) the listing of and quotation for the new Bio Osmo Shares to be issued from the
conversion of Consideration ICPS; and

(c) the listing of and quotation for the Placement Shares;

(ii) the shareholders of the Company at the extraordinary general meeting (“EGM”) to be
convened; and

(iii) other relevant authorities, if required.

In compliance with Paragraph 11.02(3) of the Rules, the Securities Commission Malaysia’s
notification that it has no further comments on the offer document in relation to the MGO is
also required, and will be sought within the timeframes stipulated by the Rules once the MGO
is undertaken (that is, immediately upon the Agreements becoming unconditional).

Each component of the Proposed Acquisitions and the Proposed Amendments are inter-
conditional. The Proposed Private Placement, Proposed Offer for Sale and Proposed Change of
Name are conditional upon the Proposed Acquisitions. The Proposals are not conditional upon
any other proposals, if any.

9. APPLICATION TO THE AUTHORITIES

Barring any unforeseen circumstances, all the relevant applications to the authorities in relation
to the Proposals will be made within 2 months from the date of this announcement.

10. DIRECTORS‟ AND MAJOR SHAREHOLDERS‟ INTERESTS

Save as disclosed below, none of the Directors or major shareholders of Bio Osmo and any
persons connected with them have any interest, direct or indirect in the Proposals:

(i) DS Farouk, the major shareholder of Bio Osmo, is the shareholder of Impiana
Management, Impiana Pangkor and Impiana SB and a Director of Impiana Management,
Astaka Mekar and Impiana SB (“Interested Major Shareholder”);

33
(ii) Dato’ Yahya, the Non-Independent Non-Executive Director of Bio Osmo, is a shareholder
of Impiana Cherating and is a person connected to DS Farouk as he was appointed to
the Board at the request of DS Farouk;

(iii) Azrin, the Executive Director of Bio Osmo, is a Director of Astaka Mekar and Impiana
Cherating and is a person connected to DS Farouk as he was appointed to the Board at
the request of DS Farouk;

(iv) Dato’ Latt Shariman Bin Abdullah, the Non-Independent Non-Executive Director of Bio
Osmo is a person connected to DS Farouk as he was appointed to the Board at the
request of DS Farouk; and

(v) Datuk Mohammad Kamal Bin Yan Yahaya, the Non-Independent Non-Executive Director
of Bio Osmo is a person connected to DS Farouk as he was appointed to the Board at the
request of DS Farouk.

(Dato’ Yahya, Azrin, Dato’ Latt Shariman Bin Abdullah and Datuk Mohammad Kamal Bin
Yan Yahaya are deemed as the “Interested Directors”)

In view of the conditionality of the Proposals set out in Section 8, the abovementioned
Interested Major Shareholder and Interested Directors are accordingly deemed interested in
the Proposals.

The Interested Directors have and will abstain from deliberation in the Board’s meeting in
relation to the Proposals. The Interested Major Shareholder and Interested Directors will
abstain from voting in respect of their direct and/or indirect shareholdings in the Company on
the relevant resolutions pertaining to the Proposals to be tabled at an EGM to be convened.

The abovementioned Interested Major Shareholder and Interested Directors have also
undertaken to ensure that persons connected to them shall abstain from voting in respect of
their direct and/or indirect shareholdings in the Company, if any, on the relevant resolutions
pertaining to the Proposals at an EGM to be convened.

11. DIRECTORS‟ RECOMMENDATION

11.1 Audit Committee‟s Statement

The audit committee of Bio Osmo (save for Dato’ Latt Shariman Bin Abdullah) is of the opinion
that the Proposed Acquisitions are in the best interest of Bio Osmo and that the terms of the
Proposed Acquisitions are fair, reasonable and on normal commercial terms and hence are not
detrimental to the interest of the non-interested shareholders.

The views of the audit committee was arrived at after having considered, inter-alia, the opinion
from SCA, the Independent Adviser, terms and conditions of the Agreements, the rationale for
the Proposals, the prospects of the Acquisition Targets, the effects of the Proposals on the
Group and the opinion of the Independent Adviser.

11.2 Directors‟ Statement

Having considered all aspects of the Proposals (including the opinion from SCA, the
Independent Adviser that the Proposed Acquisitions are fair, reasonable and is not detrimental
to the non-interested shareholders of Bio Osmo), the Directors of Bio Osmo (save for the
Interested Directors) is of the opinion that the Proposals are in the best interest of Bio Osmo.

34
12. ADVISERS

M&A Securities has been appointed as the Principal Adviser for the Proposals and Placement
Agent for the Proposed Private Placement and Proposed Offer for Sale.

In view of the interests of the Interested Major Shareholder as set out in Section 10 above, the
Proposed Acquisitions is a related party transaction pursuant to Paragraph 10.08 of the Main
LR. Accordingly, in compliance with Paragraph 10.08 of the Main LR, SCA has been appointed
to act as the Independent Adviser to undertake the following:

(i) comment whether the Proposed Acquisitions are fair and reasonable insofar as the
non-interested shareholders of Bio Osmo are concerned;

(ii) comment whether the Proposed Acquisitions are detrimental to the non-interested
shareholders of Bio Osmo; and

(iii) advise the non-interested shareholders of Bio Osmo whether they should vote in favour
of the resolution pertaining to the Proposed Acquisitions at the EGM to be convened.

13. ESTIMATED TIME FRAME FOR COMPLETION

Barring unforeseen circumstances, the completion of the Proposals is expected to take place
during the second-half of 2018.

14. HIGHEST PERCENTAGE RATIO PURSUANT TO PARAGRAPH 10.02(G) OF THE MAIN


LR

The highest percentage ratio as set out in Paragraph 10.02(g)(v) of the Main LR is above
100.0%, being the aggregate value of the consideration given and received in relation to the
Proposed Acquisitions compared with the net assets of Bio Osmo.

15. TRANSACTIONS WITH THE SAME RELATED PARTY FOR THE PRECEDING 12
MONTHS

Save for the recurrent related party transactions of a revenue or trading nature pursuant to the
shareholders’ mandate obtained by the Company at its tenth annual general meeting held on
22 November 2017, the Company has not entered into any transaction (not being a transaction
within the ordinary course of business) with the Interested Major Shareholder and Interested
Directors for the 12 months preceding the date of this announcement.

16. DOCUMENTS FOR INSPECTION

A copy of the Agreements, valuation reports prepared by LaurelCap and Appraisal and
valuation letter from SCA will be made available for inspection at the registered office of Bio
Osmo at 5-9A The Boulevard Offices, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala
Lumpur, Malaysia, during normal office hours on Mondays to Fridays (except public holidays)
for a period of three (3) months from the date of this announcement.

This announcement is dated 12 April 2018.

35
APPENDIX I

SALIENT TERMS OF THE AGREEMENTS

Note:

Impiana Management SSA shall be referred to as “SSA of Non-Real Property Company”.

Impiana Pangkor SSA, Astaka Mekar SSA, Intra Magnum SSA and Impiana Cherating SSA shall
collectively be referred to as “Agreements of Real Property Companies”.

(1) SSA of the Non-Real Property Company

(a) Conditions Precedent

The acquisition of Impiana Management is conditional upon the following conditions


precedent being fulfilled within 6 months from the date of the Agreements of the Non-Real
Property Company or such other date as may be mutually agreed by the vendors and
Company (“Conditional Period under SSA of the Non-Real Property Company”):

(i) There are no material adverse findings on the Acquisition Targets based on the
results of the financial and/or legal due diligence inquiry conducted on the Acquisition
Targets by the representatives of the Company.

(ii) The conditions precedent to the Agreements of the Real Property Companies have
been fulfilled or waived to the satisfaction of the Company.

(iii) The conditions precedent to the Impiana Ipoh SPA have been fulfilled or waived to
the satisfaction of Intra Magnum.

(iv) The approval of financiers of Impiana Management for the transfer of the sale
shares, if required.

(v) The approval of the directors of the Company for the Company to carry out the
acquisition of Impiana Management.

(vi) The approval of the shareholders of the Company at an EGM to be convened for the
Company to carry out the Proposed Acquisitions.

(vii) The approval of Bursa Securities on the listing of and quotation for the Consideration
Shares and Bio Osmo Shares to be issued pursuant to the conversion of the
Consideration ICPS.

(viii) The approval of the shareholders of the Company at an EGM to be convened on


amendments to the articles of association/constitution of the Company to include the
terms of the ICPS.

(ix) There are no material adverse findings on the Company based on the results of the
financial and/or legal due diligence inquiry to be conducted on the Company by the
representatives of the vendors.

(x) Such other consents or approvals as may be necessary from any governmental or
regulatory body or competent authority, or third party having jurisdiction over the
sale, which are mutually agreed on by the parties, having been granted, waived or
obtained.

36
APPENDIX I

(b) Termination

(i) If a party (“Defaulting Party”):

(aa) fails to proceed to Completion under SSA of the Non-Real Property Company
despite the fulfilment of all the conditions precedent;
(bb) fails to carry out any obligation on its part under this SSA of Non-Real
Property Company required for Completion under SSA of the Non-Real
Property Company;
(cc) is in breach of any term of this SSA of Non-Real Property Company;
(dd) in the case of the vendors, any of the warranties contained in this SSA of
Non-Real Property Company are false, incorrect or incomplete such as to
render the warranties contained in the SSA of the Non-Real Property
Company misleading;

and the Defaulting Party fails to remedy such breach within 30 days after the other
party (“Non-Defaulting Party”) has given that Defaulting Party written notice of such
breach, the Non-Defaulting Party may give written notice to the Defaulting Party:

(ee) terminating the SSA of the Non-Real Property Company and claims damages;
(ff) enforcing specific performance of this Agreement against the Defaulting
Party;
(gg) defer Completion under SSA of the Non-Real Property Company to a date not
more than thirty (30) days after Completion Date under SSA of the Non-Real
Property Company or such other date as may be agreed by the parties in
writing; or
(hh) proceed to Completion under SSA of the Non-Real Property Company so far
as practicable (without prejudice to their rights under the SSA of the Non-
Real Property Company).

(ii) Nothing in the clause of termination under SSA of Non-Real Property Company
affects any other provision of this SSA of Non-Real Property Company which gives
rise to a right to terminate this SSA of Non-Real Property Company.

(iii) In the event that the Completion under SSA of the Non-Real Property Company does
not take place due to any failure to satisfy any or all the conditions precedent under
SSA of the Non-Real Property Company or the occurrence of any event which is
beyond the control of the parties, each party must return all documents, if any,
delivered to it by the other party or on behalf of the other party, to the other party
and the escrow agent as stipulated in SSA of Non Real Property Company is
authorised to return the stake documents as stipulated in SSA of Non-Real Property
Company to the vendors with the vendors’ interest therein remains intact. Thereafter,
this SSA of Non-Real Property Company shall cease and terminate and no party shall
have any claims against the other save for:

(i) antecedent breach of any representations, undertakings; and/or


(i) as provided for in this SSA of Non-Real Property Company.

For the avoidance of doubt, each party shall bear its own costs and expenses with respect to
the SSA of Non-Real Property Company in the event the SSA of Non-Real Property Company
is terminated due to any failure to satisfy any or all the conditions precedent or the
occurrence of any event which is beyond the control of the parties.

37
APPENDIX I

(2) Agreements of the Real Property Companies

(A) Astaka Mekar SSA and Intra Magnum SSA

(a) Conditions Precedent

The acquisition of Astaka Mekar and 25% equity interest in Intra Magnum are conditional
upon the following conditions precedent being fulfilled within 6 months from the date of the
Agreements of the Real Property Companies or such other date as may be mutually agreed
by the vendors and the Company (“Conditional Period”):

(i) There are no material adverse findings on the Acquisition Targets based on the
results of the financial and/or legal due diligence inquiry conducted on the Acquisition
Targets by the representatives of the Company.

(ii) The conditions precedent to the Agreements of the Real Property Companies and
Impiana Management SSA have been fulfilled or waived to the satisfaction of the
Company.

(iii) The conditions precedent to the Impiana Ipoh SPA have been fulfilled or waived to
the satisfaction of Intra Magnum.

(iv) The approval of financiers of the Astaka Mekar/Intra Magnum for the transfer of the
sale shares, if required.

(v) The approval of the directors of the Company for the Company to carry out the
acquisition of Astaka Mekar and 25% equity interest in Intra Magnum.

(vi) The approval of the shareholders of the Company at an EGM to be convened for the
Company to carry out the Proposed Acquisitions.

(vii) The approval of Bursa Securities on the listing of and quotation for the Consideration
Shares and Bio Osmo Shares to be issued pursuant to the conversion of the
Consideration ICPS.

(viii) The approval of the shareholders of the Company at an EGM to be convened on


amendments to the articles of association/constitution of the Company to include the
terms of the ICPS.

(ix) There are no material adverse findings on the Company based on the results of the
financial and/or legal due diligence inquiry to be conducted on the Company by the
representatives of the vendors.

(x) Such other consents or approvals as may be necessary from any governmental or
regulatory body or competent authority, or third party having jurisdiction over the
sale, which are mutually agreed on by the parties, having been granted, waived or
obtained.

(b) Termination

(i) If a party (“Defaulting Party”):

(aa) fails to proceed to Completion under the Agreements of the Real Property
Companies despite the fulfilment of all the conditions precedent;

(bb) fails to carry out any obligation on its part under the Agreements of the Real
Property Companies required for Completion under the Agreements of the
Real Property Companies;

38
APPENDIX I

(cc) is in breach of any term of the Agreements of the Real Property Companies;

(dd) in the case of the vendors, any of the warranties contained in the
Agreements of the Real Property Companies are false, incorrect or
incomplete such as to render the warranties contained in the Agreements of
the Real Property Companies misleading;

and the Defaulting Party fails to remedy such breach within thirty (30) days after the
other party (“Non-Defaulting Party”) has given that Defaulting Party written notice of
such breach, the Non-Defaulting Party may give written notice to the Defaulting
Party:

(ee) terminating the Agreements of the Real Property Companies and claims
damages;

(ff) enforcing specific performance of the Agreements of the Real Property


Companies against the Defaulting Party;

(gg) defer Completion under the Agreements of the Real Property Companies to a
date not more than thirty (30) days after Completion Date under the
Agreements of the Real Property Companies or such other date as may be
agreed by the parties in writing; or

(hh) proceed to Completion under the Agreements of the Real Property


Companies so far as practicable (without prejudice to their rights under the
Agreements of the Real Property Companies).

(ii) Nothing in the clause of termination under the Agreements of the Real Property
Companies affects any other provision of the Agreements of the Real Property
Companies which gives rise to a right to terminate the Agreements of the Real
Property Companies.

(iii) In the event that the Completion under the Agreements of the Real Property
Companies does not take place due to any failure to satisfy any or all the conditions
precedent under Agreements of the Real Property Companies or the occurrence of
any event which is beyond the control of the parties, each party must return all
documents, if any, delivered to it by the other party or on behalf of the other party,
to the other party. The escrow agent as stipulated in the Agreements of the Real
Property Companies is authorised to return the stake documents as stipulated in the
Agreements of the Real Property Companies to the vendors with the vendors’ interest
therein remains intact and the Company’s solicitors as stipulated in the Agreements
of the Real Property Companies is authorised to refund the retention sum equivalent
to 3% of the purchase consideration, if applicable, as stipulated in the Agreements of
the Real Property Companies to the vendor(s) (if the aforesaid retention sum is still
held by the Company’s solicitors as stipulated in the Agreements of the Real Property
Companies). Thereafter, the Agreements of the Real Property Companies shall cease
and terminate and no party shall have any claims against the other save for:

(aa) antecedent breach of any representations, undertakings; and/or

(bb) as provided for in the Agreements of the Real Property Companies.

39
APPENDIX I

For the avoidance of doubt:

(aaa) each party shall bear its own costs and expenses with respect to the Agreements
of the Real Property Companies in the event the Agreements of the Real Property
Companies are terminated due to any failure to satisfy any or all the conditions
precedent or the occurrence of any event which is beyond the control of the
parties; and

(bbb) if upon such termination, the retention sum equivalent to 3% of the purchase
consideration as stipulated in the Agreements of the Real Property Companies has
been remitted by the Company’s solicitors as stipulated in the Agreements of the
Real Property Companies to the director-general of Inland Revenue, the Vendor(s)
shall then claim for the refund of the aforesaid retention sum from the director-
general of Inland Revenue directly.

(B) Impiana Pangkor SSA

(a) Conditions Precedent

The acquisition of Impiana Pangkor is conditional upon the following conditions precedent
being fulfilled within 6 months from the date of the Agreements of the Real Property
Companies or such other date as may be mutually agreed by the vendors and the Company
(“Conditional Period”):

(i) There are no material adverse findings on the Acquisition Targets based on the
results of the financial and/or legal due diligence inquiry conducted on the Acquisition
Targets by the representatives of the Company.

(ii) The conditions precedent to the Agreements of the Real Property Companies and
Impiana Management SSA have been fulfilled or waived to the satisfaction of the
Company.

(iii) The conditions precedent to the Impiana Ipoh SPA have been fulfilled or waived to
the satisfaction of Intra Magnum.

(iv) The approval of financiers of the Impiana Pangkor for the transfer of the sale shares,
if required.

(v) The approval of the directors of the Company for the Company to carry out the
acquisition of Impiana Pangkor.

(vi) The approval of the shareholders of the Company at an EGM to be convened for the
Company to carry out the Proposed Acquisitions.

(vii) The approval of Bursa Securities on the listing of and quotation for the Consideration
Shares and Bio Osmo Shares to be issued pursuant to the conversion of the
Consideration ICPS.

(viii) There are no material adverse findings on the Company based on the results of the
financial and/or legal due diligence inquiry to be conducted on the Company by the
representatives of the vendors.

(ix) The approval of the shareholders of the Company at an EGM to be convened on


amendments to the articles of association/constitution of the Company to include the
terms of the ICPS.

40
APPENDIX I

(x) The receipt of a letter of undertaking from Impiana SB to the Company undertaking
to remove the encumbrances over the lands of Impiana Pangkor bearing land titles
HSD 36809 Lot PT 16039 and HSD 36810 Lot 16040 respectively (“Pangkor Lands”)
as security for loan granted by RHB Bank Berhad in favour of Impiana SB by
discharging the charges created over the Pangkor Lands in favour of RHB Bank
Berhad.

(xi) Such other consents or approvals as may be necessary from any governmental or
regulatory body or competent authority, or third party having jurisdiction over the
sale, which are mutually agreed on by the parties, having been granted, waived or
obtained.

(b) Termination

(i) If a party (“Defaulting Party”):

(aa) fails to proceed to Completion under the Agreements of the Real Property
Companies despite the fulfilment of all the conditions precedent;

(bb) fails to carry out any obligation on its part under the Agreements of the Real
Property Companies required for Completion under the Agreements of the
Real Property Companies;

(cc) is in breach of any term of the Agreements of the Real Property Companies;

(dd) in the case of the vendors, any of the warranties contained in the
Agreements of the Real Property Companies are false, incorrect or
incomplete such as to render the warranties contained in the Agreements of
the Real Property Companies misleading;

and the Defaulting Party fails to remedy such breach within thirty (30) days after the
other party (“Non-Defaulting Party”) has given that Defaulting Party written notice of
such breach, the Non-Defaulting Party may give written notice to the Defaulting
Party:

(ee) terminating the Agreements of the Real Property Companies and claims
damages;

(ff) enforcing specific performance of the Agreements of the Real Property


Companies against the Defaulting Party;

(gg) defer Completion under the Agreements of the Real Property Companies to a
date not more than thirty (30) days after Completion Date under the
Agreements of the Real Property Companies or such other date as may be
agreed by the parties in writing; or

(hh) proceed to Completion under the Agreements of the Real Property


Companies so far as practicable (without prejudice to their rights under the
Agreements of the Real Property Companies).

(ii) Nothing in the clause of termination under the Agreements of the Real Property
Companies affects any other provision of the Agreements of the Real Property
Companies which gives rise to a right to terminate the Agreements of the Real
Property Companies.

41
APPENDIX I

(iii) In the event that the Completion under the Agreements of the Real Property
Companies does not take place due to any failure to satisfy any or all the conditions
precedent under Agreements of the Real Property Companies or the occurrence of
any event which is beyond the control of the parties, each party must return all
documents, if any, delivered to it by the other party or on behalf of the other party,
to the other party. The escrow agent as stipulated in the Agreements of the Real
Property Companies is authorised to return the stake documents as stipulated in the
Agreements of the Real Property Companies to the vendors with the vendors’ interest
therein remains intact. Thereafter, the Agreements of the Real Property Companies
shall cease and terminate and no party shall have any claims against the other save
for:

(aa) antecedent breach of any representations, undertakings; and/or

(bb) as provided for in the Agreements of the Real Property Companies.

For the avoidance of doubt, each party shall bear its own costs and expenses with respect to
the Agreements of the Real Property Companies in the event the Agreements of the Real
Property Companies are terminated due to any failure to satisfy any or all the conditions
precedent or the occurrence of any event which is beyond the control of the parties.

(c) Other terms and conditions

(i) Indemnity on Encroachment of Land

The vendors have disclosed to the Company that there are squatters whom are
occupying the Pangkor Lands unlawfully and illegally, and the vendors expressly
agree and undertake with the Company that the vendors shall cause the Company to
take appropriate legal proceedings to evict the squatters from the Pangkor Lands at
their own cost. The vendors further undertake to indemnify the Company and keep
the Company indemnified from all damages as may be suffered by the Company
and/or the Company arising from the unlawful occupation of the Pangkor Lands by
the squatters.

(ii) Undertakings After Completion

The vendors acknowledge that there are existing encumbrances created over the
Pangkor Lands as security for loan granted by RHB Bank Berhad in favour of Impiana
SB. The vendors hereby agree and undertake to the Company that they will and/or
procure Impiana SB to remove the encumbrances over the Pangkor Lands by
payment of the redemption sum to RHB Bank Berhad via the proceeds received
pursuant to the Proposed Private Placement and discharging the charges created
over the Pangkor Lands and deliver the original title to the Pangkor Lands free of
encumbrances to Bio Osmo within 6 months from the Completion Date or such other
date as may be acceptable by Bio Osmo.

(C) Impiana Cherating SSA

(a) Conditions Precedent

The Proposed Acquisitions are conditional upon the following conditions precedent being
fulfilled within 6 months from the date of the Agreements of the Real Property Companies or
such other date as may be mutually agreed by the vendors and the Company (“Conditional
Period”):

42
APPENDIX I

(i) There are no material adverse findings on the Acquisition Targets based on the
results of the financial and/or legal due diligence inquiry conducted on the Acquisition
Targets by the representatives of the Company.

(ii) The conditions precedent to the Agreements of the Real Property Companies and
Impiana Management SSA have been fulfilled or waived to the satisfaction of the
Company.

(iii) The conditions precedent to the Impiana Ipoh SPA have been fulfilled or waived to
the satisfaction of Intra Magnum.

(iv) The approval of financiers of the Acquisition Targets for the transfer of the
Acquisition Targets, if required.

(v) The approval of the directors of the Company for the Company to carry out the
Proposed Acquisitions.

(vi) The approval of the shareholders of the Company at an EGM to be convened for the
Company to carry out the Proposed Acquisitions.

(vii) The approval of Bursa Securities on the listing of and quotation for the Consideration
Shares and Bio Osmo Shares to be issued pursuant to the conversion of the
Consideration ICPS.

(viii) The deletion of the existing Article 3(e) contained in the Impiana Cherating’s articles
of association.

(ix) The completion of the sale and purchase agreement entered into between Impiana
Cherating and DS Farouk in relation to the transfer of property bearing the title
number of PM 563 Lot 4632, Mukim Sungai Karang, Daerah Kuantan, Negeri Pahang
(“Lot 4632”) from Impiana Cherating to DS Farouk.

(x) There are no material adverse findings on the Company based on the results of the
financial and/or legal due diligence inquiry to be conducted on the Company by the
representatives of the vendors.

(xi) Such other consents or approvals as may be necessary from any governmental or
regulatory body or competent authority, or third party having jurisdiction over the
sale, which are mutually agreed on by the parties, having been granted, waived or
obtained.

(b) Termination

(i) If a party (“Defaulting Party”):

(aa) fails to proceed to Completion under the Agreements of the Real Property
Companies despite the fulfilment of all the conditions precedent;

(bb) fails to carry out any obligation on its part under the Agreements of the Real
Property Companies required for Completion under the Agreements of the
Real Property Companies;

(cc) is in breach of any term of the Agreements of the Real Property Companies;

(dd) in the case of the vendors, any of the warranties contained in the
Agreements of the Real Property Companies are false, incorrect or
incomplete such as to render the warranties contained in the Agreements of
the Real Property Companies misleading;

43
APPENDIX I

and the Defaulting Party fails to remedy such breach within thirty (30) days after the
other party (“Non-Defaulting Party”) has given that Defaulting Party written notice of
such breach, the Non-Defaulting Party may give written notice to the Defaulting
Party:

(ee) terminating the Agreements of the Real Property Companies and claims
damages;

(ff) enforcing specific performance of the Agreements of the Real Property


Companies against the Defaulting Party;

(gg) defer Completion under the Agreements of the Real Property Companies to a
date not more than thirty (30) days after Completion Date under the
Agreements of the Real Property Companies or such other date as may be
agreed by the parties in writing; or

(hh) proceed to Completion under the Agreements of the Real Property


Companies so far as practicable (without prejudice to their rights under the
Agreements of the Real Property Companies).

(ii) Nothing in the clause of termination under the Agreements of the Real Property
Companies affects any other provision of the Agreements of the Real Property
Companies which gives rise to a right to terminate the Agreements of the Real
Property Companies.

(iii) In the event that the Completion under the Agreements of the Real Property
Companies does not take place due to any failure to satisfy any or all the conditions
precedent under Agreements of the Real Property Companies or the occurrence of
any event which is beyond the control of the parties, each party must return all
documents, if any, delivered to it by the other party or on behalf of the other party,
to the other party. The escrow agent as stipulated in the Agreements of the Real
Property Companies is authorised to return the stake documents as stipulated in the
Agreements of the Real Property Companies to the vendors with the vendors’ interest
therein remains intact and the Company’s solicitors as stipulated in the Agreements
of the Real Property Companies is authorised to refund the retention sum equivalent
to 3% of the purchase consideration, if applicable, as stipulated in the Agreements of
the Real Property Companies to the Company (if the aforesaid retention sum is still
held by the Company’s solicitors as stipulated in the Agreements of the Real Property
Companies). Thereafter, the Agreements of the Real Property Companies shall cease
and terminate and no party shall have any claims against the other save for:

(aa) antecedent breach of any representations, undertakings; and/or

(bb) as provided for in the Agreements of the Real Property Companies.

44
APPENDIX I

For the avoidance of doubt:

(aaa) each party shall bear its own costs and expenses with respect to the Agreements
of the Real Property Companies in the event the Agreements of the Real Property
Companies are terminated due to any failure to satisfy any or all the conditions
precedent or the occurrence of any event which is beyond the control of the
parties; and

(bbb) if upon such termination, the aforesaid retention sum has been remitted by the
Company’s solicitors as stipulated in the Agreements of the Real Property
Companies to the director-general of Inland Revenue, the Vendor(s) shall then
claim the refund of the aforesaid retention sum from the director-general of Inland
Revenue directly.

(3) Impiana Ipoh SPA

(a) Conditions Precedent

The acquisition of Impiana Ipoh is conditional upon the following conditions precedent being
fulfilled within six (6) months from the date of the Impiana Ipoh SPA or such other date as
may be mutually agreed by Impiana Ipoh, Intra Magnum and the Company (“Conditional
Period”):

(i) There are no material adverse findings on the Acquisition Targets based on the
results of the financial and/or legal due diligence inquiry conducted on the Acquisition
Targets by the representatives of Intra Magnum.

(ii) The conditions precedent to the Agreements of the Real Property Companies and
Impiana Management SSA have been fulfilled or waived to the satisfaction of the
Company.

(iii) The receipt by Intra Magnum of the certified true copy of the approval from the state
authority of Perak for the transfer of a piece of the leasehold land held under PN
400702 Lot 398115 Bandar Ipoh, Daerah Kinta, Perak and measuring approximately
9738 square meters (“Land”) from Impiana Ipoh in favour of Intra Magnum by virtue
of restriction-in-interest endorsed on the issue of document of title to the Land.

(iv) The approval of the directors of Intra Magnum for Intra Magnum to carry out the
acquisition of Impiana Ipoh.

(v) The approval of the shareholders of Intra Magnum for Intra Magnum to carry out the
Proposed Acquisitions.

(vi) The approval of the directors of the Company for the issuance and allotment of the
Consideration Securities.

(vii) The approval of the shareholders of the Company at an EGM to be convened for the
Proposed Acquisitions and the allotment and issuance of the Consideration Securities
as satisfaction of part of the purchase consideration as stipulated in the Impiana Ipoh
SPA.

(viii) The approval of Bursa Securities for the listing of and quotation for the Consideration
Shares and Bio Osmo Shares to be issued pursuant to the conversion of the
Consideration ICPS.

45
APPENDIX I

(ix) The approval of the shareholders of the Company at an EGM to be convened on


amendments to the articles of association/constitution of the Company to include the
terms of the ICPS.

(x) Intra Magnum obtaining the loan from its financier evidenced by a letter of offer by
the aforesaid financier duly accepted by Intra Magnum to finance the balance
purchase consideration as stipulated in Impiana Ipoh SPA.

(xi) Such other consents or approvals as may be necessary from any governmental or
regulatory body or competent authority, or third party having jurisdiction over the
sale, which are mutually agreed on by the parties, having been granted, waived or
obtained.

(b) Termination

(i) If a party (“Defaulting Party”):

(aa) fails to proceed to Completion under the Impiana Ipoh SPA despite the
fulfilment of all the conditions precedent;
(bb) fails to carry out any obligation on its part under the Impiana Ipoh SPA
required for Completion;
(cc) is in breach of any term of the Impiana Ipoh SPA;
(dd) any of the warranties contained in the Impiana Ipoh SPA are false, incorrect
or incomplete such as to render the warranties contained in the Impiana
Ipoh SPA misleading;

and the Defaulting Party fails to remedy such breach within thirty (30) days after the
other party (“Non-Defaulting Party”) has given that Defaulting Party written notice of
such breach, the Non-Defaulting Party may give written notice to the Defaulting
Party:
(ee) terminating the Impiana Ipoh SPA and claims damages;
(ff) enforcing specific performance of the Impiana Ipoh SPA against the
Defaulting Party;
(gg) defer Completion under the Impiana Ipoh SPA to a date not more than thirty
(30) days after Completion Date under the Impiana Ipoh SPA or such other
date as may be agreed by the parties in writing; or
(hh) proceed to Completion under the Impiana Ipoh SPA so far as practicable
(without prejudice to their rights under the Impiana Ipoh SPA).

(ii) Nothing in the clause of termination under the Impiana Ipoh SPA affects any other
provision of the Impiana Ipoh SPA which gives rise to a right to terminate the
Impiana Ipoh SPA.

(iii) In the event that the Completion under the Impiana Ipoh SPA does not take place
due to any failure to satisfy any or all the conditions precedent under Impiana Ipoh
SPA or the occurrence of any event which is beyond the control of the parties, either
party is entitled to terminate the Impiana Ipoh SPA by written notice to the other
party. In such an event, each party must within fourteen (14) days from the date of
termination of the Impiana Ipoh SPA, return all documents, if any, delivered to it by
the other party or on behalf of the other party, to the other party. The escrow agent
as stipulated in the Impiana Ipoh SPA is authorised to return the stake documents as
stipulated in the Impiana Ipoh SPA to Impiana Ipoh with the Impiana Ipoh’s interest
therein remains intact, Intra Magnum’s solicitors as stipulated in the Impiana Ipoh

46
APPENDIX I

SPA is authorised to refund the retention sum equivalent to 3% of the purchase


consideration of the assets, if applicable, as stipulated in the Impiana Ipoh SPA to
Impiana Ipoh (if the aforesaid retention sum is still held by Intra Magnum’s solicitors
as stipulated in the Impiana Ipoh SPA) and the Impiana Ipoh’s solicitors as stipulated
in the Impiana Ipoh SPA shall refund the balance purchase consideration as
stipulated in the Impiana Ipoh SPA held by them as stakeholder (if any) to Intra
Magnum. Thereafter, the Impiana Ipoh SPA shall cease and terminate and no party
shall have any claims against the other save for:

(i) antecedent breach of any representations, undertakings; and/or


(ii) as provided for in the Impiana Ipoh SPA.

47
APPENDIX II

IMFORMATION OF ACQUISITION TARGETS

The Acquisition Targets are a homegrown hotel and resorts group under the Impiana group of
companies (“Impiana Group”) dating back to 1990. The Impiana Group is involved in the provision of
consultation and management services for hotels and resorts, hotel and resort management, hotel
operations and resort development.

(A) IMPIANA MANAGEMENT

Impiana Management was incorporated in Malaysia on 21 August 1991 under the Companies
Act, 1965. Presently, its share capital is RM250,000 comprising 250,000 ordinary shares in
Impiana Management.

Impiana Management is principally involved in the provision of professional management


services to hotels, resorts and recreation clubs and provision of technical services to land
owners on development of hotels. It presently undertakes hotel management for Impiana
KLCC and Impiana Senai in Malaysia, Impiana Resort Patong & Impiana Private Villas, Kata
Noi in Phuket as well as Impiana Chaweng Noi in Koh Samui, Thailand and Impiana Private
Villas Cemagi and Impiana Private Villas Seminyak, both in Bali, Indonesia. Upon completion,
the Impiana Private Villas Ubud in Bali, Indonesia, will also be managed by Impiana
Management.

(B) IMPIANA PANGKOR

Impiana Pangkor was incorporated in Malaysia on 2 November 1991 under the Companies
Act, 1965. Presently, its share capital is RM500,000 comprising 500,000 ordinary shares in
Impiana Pangkor.

Impiana Pangkor is presently dormant. Impiana Pangkor holds 2 parcels of vacant land for
resort development.

Details of the 2 parcels of land are as follows:

Title details : (i) HSD 36809, Lot No. PT 16039


(ii) HSD 36810, Lot No. PT 16040

All of which located within Mukim of Lumut, District of Manjung, State of


Perak Darul Ridzuan

Registered owner : Impiana Pangkor Sdn Bhd

Category of land : Bangunan


use

Existing use : Lot PT 16039 is vacant while Lot No. PT 16040 is being resided with two
camp sites, namely Pangkor Rimba Kem and Belantara Kem, occupying
almost 70% of the Lot PT 16040 land area. The camp sites are fully
developed with lodging facilities, rooms, operation office and function
rooms. The camps have been operating on the parcel illegally

Restriction-in- : "Tanah ini hanya boleh dipindahmilik atau dipajak dengan kebenaran
interest bertulis oleh Pihak Berkuasa Negeri. Sekatan ini dikecualikan kepada
kaum Bumiputra bagi pindahmilik kedua dan seterusnya"

Tenure : Leasehold 99 years expiring on 24 March 2112 with a remaining


leasehold period of approximately 94 years

48
APPENDIX II

Approximate age : Not applicable


of buildings

Land area : Land Area (square


Lot No metre)
PT 16039 104,664
PT 16040 12,622
Total 117,286
234,572

Build-up area : Not applicable

Encumbrances : Not applicable

Express conditions : "Perniagaan - Pelancongan"

Net book value : RM32,000,000 as at 31 December 2017

Date of valuation : 16 March 2018

Method of : Comparison Approach


valuation

Market value : RM35,300,000.00 (as appraised by LaurelCap vide its valuation report
dated 16 March 2018)

Encroachment of : There are squatters currently occupying the land of Impiana Pangkor
land situated in Pulau Pangkor, Perak unlawfully without any permission and
the vendors expressly agree with Bio Osmo that they shall bear all costs
and expenses with respect to the eviction of the squatters and will
indemnity and keep Bio Osmo indemnified from all damages as may be
suffered by Bio Osmo and/or the Impiana Pangkor pursuant to the
unlawful occupation of the land by squatters.

(C) ASTAKA MEKAR

Astaka Mekar was incorporated in Malaysia on 24 April 2009 under the Companies Act, 1965.
Presently, its share capital is RM2 comprising 2 ordinary shares in Astaka Mekar.

Astaka Mekar holds 20% equity interest in Heritage Lane which in turn owns the Impiana
KLCC Hotel & Spa. Astaka Mekar is principally involved in the investment holding of shares in
Heritage Lane.

Impiana KLCC Hotel & Spa is a 4-star hotel with 519 rooms located at Bandar Kuala Lumpur,
District of Kuala Lumpur, Wilayah Persekutuan.

The details of Impiana KLCC Hotel & Spa are as follows:

Title details : (i) Geran 26898, Lot 696


(ii) Geran 26899, Lot 697
(iii) Geran 26900, Lot 698

All of which located within Seksyen 57, Bandar Kuala Lumpur, District
Kuala Lumpur, Wilayah Persekutuan

49
APPENDIX II

Registered owner : Heritage Lane

Category of land : Not stated


use

Existing use : 4-Star Hotel (519 Rooms)

Restriction-in- : Not stated


interest

Tenure : Freehold

Approximate age : 15 years


of buildings

Land area : Land Area


Lot No (square metre)
696 2,084.063
697 2,084.063
698 2,084.063
6,252.19

Build-up area : 49,190.62 square metre (“sqm”) (529,487.83 square feet (“sq ft”))

Amount of lettable : 19,723.00 sqm (212,298.37 sq ft)


space

Amount of lettable : 19,723.00 sqm (212,298.37 sq ft)


space available
for letting and the
occupancy

Percentage : Year Occupancy Rate


occupancy
2006 57.81%
2007 78.02%
2008 82.76%
2009 82.41%
2010 80.13%
2011 79.48%
2012 62.06%
2013 70.29%
2014 66.49%
2015 61.87%
2016 60.24%
2017 64.80%

Encumbrances : One charge to Malayan Banking Berhad on 6 October 2006

Lease : Lot 696


“Pajakan sebahagian tanah kepada Lembaga Letrik Tanah Melayu bagi
tempoh selama 30 tahun mulai dari April 1,1973 dan berakhir pada 31
Mac 2003” vide Presentation No 7229/1977; Jilid 4; Folio 130; dated 6
July 6 1977.

50
APPENDIX II

Express conditions : “Subject to the conditions and agreements expressed or implied in Lease
for Agricultural Land No 1431 and to such restriction in interest
expressed therein and shown by memorial hereon and to such registered
interest as are shown by memorial hereon”.

Net book value : RM230,905,425 as at 31 December 2017

Date of valuation : 16 March 2018

Method of : (i) Comparison Approach


valuation (ii) Income Approach By Discounted Cash Flow (DCF)

Market value : RM468,000,000 (as appraised by LaurelCap vide its valuation report
dated 16 March 2018)

(D) INTRA MAGNUM

Intra Magnum was incorporated in Malaysia on 27 January 2014 under the Companies Act,
1965. Presently, its share capital is RM25,000,000 comprising 25,000,000 ordinary shares in
Intra Magnum.

Intra Magnum is principally involved in investment holding, management and operation of


hotels and resorts, property investment and hotel development.

Currently, Intra Magnum undertakes the hotel management for the Impiana Hotel Ipoh and
also holds the hotel management rights for future “Impiana” brand hotels in Cherating and
Tioman; development manager of “Impiana” brand hotels in Cherating, Pangkor, Tioman and
Ubud, Indonesia; and land owner for the 2 parcels of land (out of 7 parcels, of which 5
parcels are owned by Impiana Cherating) which will be redeveloped into the Impiana Resort
& Residences Cherating, Pahang and will comprise of 486 units of service suites, 18 units of
semi-detached villas and 42 units of private villas upon completion.

Kindly refer to Appendix II(E) for the details of the lands.

(E) IMPIANA CHERATING

Impiana Cherating was incorporated in Malaysia on 7 October 1985 under the Companies Act,
1965. Presently, its share capital is RM8,600,000 comprising 8,600,000 ordinary shares in
Impiana Cherating.

Impiana Cherating ceased its hotel operations during the FYE 31 December 2017 for
redevelopment. It owns 5 parcels of land (out of 7 parcels, of which 2 parcels are owned by
Intra Magnum) which will be redeveloped into the Impiana Resort & Residences Cherating
under the “Impiana” brand hotel in Cherating, Pahang and will comprise of 486 units of
service suites, 18 units of semi-detached villas and 42 units of private villas upon completion.
Upon completion of the redevelopment, Impiana Cherating shall be involved in the provision
of hospitality services to travellers to the locality of Impiana Resort & Residences Cherating as
well as banquet and/or function facilities for events.

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APPENDIX II

The details of the 7 parcels of lands owned by Impiana Cherating and Intra Magnum are as
follows:

Title details : (i) Lot 109343, Locality of Chendor held under GM 9091
(ii) Lot 2660, Locality of Cherating held under GM 705
(iii) Lot 2661, Locality of Cendor held under GM 710
(iv) Lot 2662, Locality of Cendor held under GM 709
(v) Lot 4630, Locality of Kg. Chendor held under PM 565
(vi) Lot 4631, Locality of Chendor held under PM 564
(vii) Lot 5432, Locality of Cendor held under PM 629

All of which located within Mukim of Sungai Karang, District of Kuantan,


State of Pahang Darul Makmur

Registered owner : (i) Lots 109343 and 5432 are owned by Intra Magnum
(ii) Lots 2660, 2661, 2662, 4630 and 4631 are owned by Impiana
Cherating

Category of land : Bangunan


use

Existing use : Presently ceased operation for Impiana Resort Cherating

Restriction-in- : “Tanah ini tidak boleh dipindahmilik, dipajak, digadai melainkan dengan
interest kebenaran bertulis daripada Pengarah Tanah dan Galian Pahang”

Tenure : (i) Lots 109343, 2660, 2661 and 2662 are freehold
(ii) Lots 4630 and 4631 are leasehold for 60 years expiring on 9
January 2049 with a remaining leasehold period of approximately
31 years
(iii) Lot 5432 is leasehold for 99 years expiring on 27 November 2090
with a remaining leasehold period of approximately 72 years

Approximate age : Not applicable


of buildings

Land area : Land Area


Lot No (square metre)
109343 23,220
2660 10,220
2661 10,940
2662 11,270
4630 7,965
4631 23,280
5432 12,518
99,413
Build-up area : Not applicable

Amount of lettable : Not applicable


space

Amount of lettable : Not applicable


space available
for letting and the
occupancy

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APPENDIX II

Percentage : Vacant
occupancy

Encumbrances : Lots 2660, 2661, 2662, 4630 and 4631 are charged to RHB Bank Berhad
on 18 April 2016

Lease : Not applicable

Express conditions : “Tanah ini hendaklah digunakan untuk bangunan perniagaan sahaja”

Net book value : RM29,404,992 as at 31 December 2017

Date of valuation : 16 March 2018

Method of : (i) Comparison Method and Residual Method for Lots 109343 and
valuation 5432
(ii) Comparison Method only for Lots 2660, 2661, 2662, 4630 and
4631

Market value : RM41,680,000 (as appraised by Appraisal vide its valuation report dated
16 March 2018)

Details of : The lands shall be developed into the Impiana Resort & Residences
development Cherating under the “Impiana” brand hotel in Cherating, Pahang and will
potential comprise of 486 units of service suites, 18 units of semi-detached villas
and 42 units of private villas upon completion

Total development : The estimated gross development cost is as follows:


cost
Details RM‟000 Remarks
Phase 1 125,074 Based on the approved building plans by
Majlis Perbandaran Kuantan dated 9
January 2018
Phase 2 119,284 Based on management’s estimation
Phase 3 52,760 Based on management’s estimation
297,118

In addition, the development comprises not-for-sale units, all-day dining


restaurant, specialty restaurant, ballroom and other hotel facilities with
an estimated development cost of RM56 million.

Expected : The redevelopment has not commenced as at the date of this


commencement announcement. It shall commence in second quarter of 2018 and
and completion complete in 2021
date of
development

Expected profits to : Pre-tax profit of RM115.96 million based on gross development value of
be derived RM413.08 million

Stages/percentage : Not applicable


of completion
Sources of funds : The redevelopment shall be financed via a combination of internally
to finance the generated funds and bank loans to be drawn down
development

53
APPENDIX II

Relevant approvals : Phase 1 has been approved by the Majlis Perbandaran Kuantan under
obtained for the two (2) development orders (“DO”) bearing reference numbers, (34) dlm
development MPK/R:PT/1-3981/2015/SK JLD. 2 dated 7 June 2017 and (33) dlm
MPK/R:PT/1-4270/2016/SK dated 22 June 2017.

The building plans for Phase 1A have been approved by the Majlis
Perbandaran Kuantan vide approval letter bearing reference, Bil. (22)
dlm. MPK/R/B:PB/57/2017-H, dated 9 January 2018

(F) IMPIANA IPOH

Impiana Ipoh was incorporated in Malaysia on 23 September 2008 under the Companies Act,
1965. Presently, its share capital is RM10,000,000 comprising 10,000,000 ordinary shares in
Impiana Ipoh.

It owns the Impiana Hotel Ipoh, Perak, a 4-star hotel located in the Ipoh city centre with a
total of 200 rooms, which is currently managed by Intra Magnum. Impiana Ipoh is principally
involved in the provision of hospitality services as well as banquet and/or function facilities for
events.

The details of Impiana Hotel Ipoh, Perak are as follows:

Title details : PN 400702, Lot 398115, Bandar Ipoh (S), District of Kinta, State of Perak
Darul Ridzuan

Registered owner : Impiana Hotel Ipoh Sdn Bhd

Category of land : “Bangunan”


use

Existing use : 4-star hotel (200 Rooms)

Restriction-in- : “Tanah ini hanya boleh dipindahmilik atau dipajak dengan kebenaran
interest bertulis oleh Pihak Berkuasa Negeri”

Tenure : Leasehold for 99 years. Term expiring on 13 March 2106 with an


unexpired term of approximately 88 years as the date of valuation

Approximate age : 33 years


of buildings

Land area : 9,739.50 sqm / 104,835.97 sq ft /2.40 acres/0.97 hectares

Build-up area : 23,444.080 sqm (252,352.077 sq ft)

Amount of lettable : 6,012.00 sqm (64,731.15 sq ft)


space

Amount of lettable : 6,012.00 sqm (64,731.15 sq ft)


space available
for letting and the
occupancy

Percentage : Year Occupancy


occupancy Rate
2010 65.00%

54
APPENDIX II

2011 63.00%
2012 63.00%
2013 64.00%
2014 55.00%
2015 70.00%
2016 63.00%
2017 70.00%

Encumbrances : The title was charged 3 times to CIMB Bank Berhad vide:
(i) Presentation No 24222/2014; dated 3 June 2014;
(ii) Presentation No 28751/2015; dated 29 June 2015; and
(iii) Presentation No 36147/2016; dated 23 September 2016

Express conditions : “Perniagaan – Tapak Perniagaan”

Net book value : RM34,012,830 as at 31 December 2017

Date of valuation : 16 March 2018

Method of : (i) Comparison Approach


valuation (ii) Income Approach By Discounted Cash Flow (DCF)

Market value : RM50,000,000 (as appraised by LaurelCap vide its valuation report dated
16 March 2018)

55
APPENDIX III

CONSOLIDATED PRO FORMA AUDITED FINANCIAL INFORMATION OF THE ACQUISITION


TARGETS FOR THE PAST 3 FYES 31 DECEMBER 2015 TO 2017

FYE 31 December 2015 (“FYE 2015”)

Impiana Impiana Astaka Intra Impiana Impiana Acquisition


Management Pangkor Mekar Magnum Cherating Ipoh^ Targets*
RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

Revenue 3,853 - - 88 6,996 12,393 22,952

Profit/(loss) 2,481 (1) 2,148 (81) 635 677 5,859


before taxation
(“PBT/(LBT”)

Profit/(loss) after 1,871 (1) 2,144 (81) 595 538 5,066


taxation
(“PAT/(LAT”)

Shareholders’ 7,152 29,344 (647) 6,167 39,525 1,641 83,182


funds

Borrowings 240 - 34,846 - - 27,120 62,206

FYE 31 December 2016 (“FYE 2016”)

Impiana Impiana Astaka Intra Impiana Impiana Acquisition


Management Pangkor Mekar Magnum Cherating Ipoh^ Targets*
RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

Revenue 4,522 - - 872 1,813 12,559 14,166

PBT/(LBT) 2,308 46 (2,025) 754 2,242 597 (1,559)

PAT/(LAT) 1,723 37 (2,029) 573 2,108 715 (2,354)

Shareholders’ 8,875 29,381 (2,676) 573 25,662 2,356 83,606


funds

Borrowings 502 - 34,038 - 6,313 27,751 68,604

FYE 31 December 2017 (“FYE 2017”)

Impiana Impiana Astaka Intra Impiana Impiana Acquisition


Management Pangkor Mekar Magnum Cherating Ipoh^ Targets*
RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

Revenue 7,321 - - 5,883 1,632 12,757 21,116

PBT/(LBT) 4,441 (246) (1,680) 4,396 (13,336) 1,329 (10,526)

PAT/(LAT) 3,377 (246) (1,688) 3,346 (13,602) 1,329 (12,914)

Shareholders’ 12,252 29,135 (4,364) 28,837 25,241 3,686 89,357


funds

Borrowings 213 - 39,124 - 7,694 24,840 71,871

56
APPENDIX III

Notes:

^ Although the Group is acquiring the business, the historical financial performance of
Impiana Ipoh are included for illustrative purposes.
* After taking into consideration inter-company transactions eliminations.

Commentary:

Comparison between FYE 2016 and FYE 2015

Impiana Management

The revenue achieved by Impiana Management for the FYE 31 December 2016 had
increased to RM4.52 million for the financial year under review as compared to RM3.85
million for the FYE 31 December 2015, representing an increase of RM0.67 million or
17.40%. This improvement was mainly attributable to the technical fees charged to Impiana
Resort Cherating for its proposed redevelopment. However, the PBT achieved for the FYE 31
December 2016 had decreased by RM0.17 million or 6.85%. This was due to the increase in
administrative expenses which had escalated from RM1.39 million for the previous financial
year to RM2.19 million for the financial year under review, representing an increase of
RM0.80 million or 57.55% as a result of increased staff cost.

Impiana Pangkor

The PBT recognised for the FYE 31 December 2016 was mainly attributable to other income
of RM0.05 million arising from the write back of other payables during the financial year
under review.

Astaka Mekar

The PBT achieved by Astaka Mekar for the FYE 31 December 2016 had decreased from a
PBT of RM2.15 million to a LBT of RM2.03 million. This was due to the decrease in the share
of profit of associate from RM5.08 million to RM0.85 million for the financial year under
review attributable by the decrease in revenue recognised by Heritage Lane for the FYE 31
December 2016.

Intra Magnum

The revenue of Intra Magnum for the FYE 31 December 2016 increased from RM0.09 million
to RM0.87 million, representing an increase of RM0.78 million, mainly due to consultancy
fees arising from the redevelopment of Impiana Resort Cherating. Correspondingly, the PBT
of Intra Magnum for the FYE 31 December 2016 also increased.

The shareholders’ funds of Intra Magnum had further increased in the FYE 31 December
2016 to RM25.49 million. This was attributable to the subscription of 18,750,000 new
ordinary shares in Intra Magnum by the Company at an issue price of RM1.00 each.

Impiana Cherating

The revenue recorded by Impiana Cherating for the FYE 31 December 2016 had decreased
from RM7.0 million for the previous financial year to RM1.81 million for the financial year
under review, representing a decrease of RM5.19 million or 74.14%. This was because
Impiana Cherating had ceased the operations of Impiana Resort Cherating effective January
2016 in light of its proposed full redevelopment and is expected to recommence operations
in phases beginning in year 2020 as Impiana Private Villas & Resort Cherating Beach. The
PBT achieved by Impiana Cherating had increased by RM1.6 million or 250.0%, from RM0.64

57
APPENDIX III

million for the FYE 31 December 2015 to RM2.24 million for the financial year under review.
This was due to the increase in other income arising from the gain recognised from the
disposal of fixed assets of RM3.23 million for the FYE 31 December 2016 which had
increased from RM0.03 million to RM3.29 million, representing an increase of RM3.26 million.

The shareholders’ funds for the FYE 31 December 2016 had decreased from RM39.53 million
to RM25.66 million, representing a decrease of RM13.87 million or 35.09%. This was
attributable to the repayment of advances by shareholders of RM15.97 million during the
financial year under review.

Impiana Ipoh

While a marginal increase in the revenue and decrease in PBT recognised for the FYE 31
December 2016 was observed, it is noted that the PAT achieved by Impiana Ipoh for the
financial year under review had increased from RM0.54 million to RM0.72 million,
representing an increase of RM0.18 million or 33.33%. This was mainly due to the reversal
of deferred tax asset of RM0.12 million in the statement of comprehensive income for the
FYE 31 December 2016.

Comparison between FYE 2017 and FYE 2016

Impiana Management

The revenue for Impiana Management had increased from RM4.52 million for the FYE 2016
to RM7.32 million for the financial year under review, representing an increase of RM2.80
million or 61.9%. The increase in revenue was mainly due to the increase in management
fees charged for the management of the hotel assets located in Cemagi and Seminyak in
Indonesia, Kata Noi in Thailand and Senai in Malaysia and technical fees charged for the
setting up of the third-party owned hotel located in Senai, Malaysia and the development of
the hotel assets to be developed in Cherating, Malaysia and Ubud, Indonesia. The increase
in the profitability of Impiana Management during the FYE 2017 was in line with its increase
in revenue achieved for the financial year under review.

Impiana Pangkor

Impiana Pangkor remained dormant during the financial year under review and recognised a
LBT of RM0.25 million for the FYE 2017 arising from administrative and operating expenses
incurred.

Astaka Mekar

The LBT of Astaka Mekar had reduced from RM2.03 million for the FYE 2016 to RM1.68
million for the FYE 2017, representing an improvement of RM0.35 million or 17.24%. The
decrease in LBT was mainly attributable to the increase in share of profit of associate from
RM0.85 million to RM1.07 million, representing an increase of RM0.22 million or 25.88%,
arising from the increase in revenue of Heritage Lane during the financial year under review.

Intra Magnum

The revenue of Intra Magnum increased substantially from RM0.87 million during the FYE
2016 to RM5.88 million for the FYE 2017, representing an increase of RM5.01 million or
575.86%. The increase in revenues recognised by Intra Magnum was mainly due to the
technical consultancy fees derived for the pre-development project of Impiana Cherating
Hotel & Resort in Cherating, Malaysia and Impiana Ubud Resort in Bali, Indonesia as well as
the hotel management from Impiana Hotel Ipoh. Accordingly, the PBT and shareholders’
funds of Intra Magnum also increased.

58
APPENDIX III

Impiana Cherating

The revenue of Impiana Cherating had decreased from RM1.81 million during the FYE 2016
to RM1.63 million during the financial year under review, representing a decrease of RM0.18
million or 9.94%. Whilst Impiana Cherating had already ceased operations in the prior
financial year, the revenue recognised during the FYE 2017 was from a short term lease of
the hospitality assets. Impiana Cherating recorded LBT of RM13.34 million as compared to
PBT of RM2.24 million for FYE 2016. This was due to the one-off write-off of RM13.14 million
for the hotel building and RM0.50 million for staff quarters which are subject to the
redevelopment of Impiana Resort Cherating which was expensed out at the financial year
end.

Notwithstanding the LBT incurred, the shareholder’ funds had decreased by RM0.42 million
or 1.64% from RM25.66 million as at 31 December 2016 to RM25.24 million as at 31
December 2017. The impact of the above-mentioned write-off was partly mitigated by the
increase in shareholders’ advances which was recorded as equity during the financial year
under review from RM9.33 million to RM22.03 million.

Impiana Ipoh

The revenue of Impiana Ipoh had increased marginally during the FYE 2017 by RM0.2
million or 1.59% from RM12.56 million for the FYE 2016 to RM12.76 million. However, its
PBT had increased from RM0.60 million to RM1.33 million for the financial year under review,
representing an increase of RM0.73 million or 121.67%. The increase in PBT was mainly
attributable to the decrease in administration and operating expenses by RM0.35 million or
5.73% from RM6.11 million for the FYE 2016 to RM5.76 million for the FYE 2017 as well as
the decrease in finance cost from RM1.63 million to RM1.51 for the financial year under
review, representing a decrease of RM0.12 million or 7.36%.

59