SUNWAY BERHAD (“SUNWAY”) ACQUISITION OF LAND AND BUILDINGS BY DAKSINA HARTA SDN BHD (A SUBSIDIARY OF SUNWAY) FROM CONCEPT HOUSING DEVELOPMENT (M) SDN BHD, A RELATED PARTY 1. INTRODUCTION The Board of Directors of Sunway wishes to announce that Daksina Harta Sdn Bhd (“Purchaser”), a subsidiary of Sunway, has on 1 August 2017, entered into a Sale and Purchase Agreement (“SPA”) with Concept Housing Development (M) Sdn Bhd (“Vendor”) for the acquisition of a freehold land held under Geran No. 47813, Lot No. 1, Mukim Kajang, Daerah Ulu Langat, Negeri Selangor measuring approximately 24,281.1 square metres (before taking into account/deducting the portion of the land that was compulsorily acquired by the relevant authority measuring 2,928 square metres) (“the Land”) together with a partially completed commercial complex comprising a 3-storey podium (3 units of office space) including 1 unit of Tenaga Nasional Berhad substation, a 20-storey office Block A (17 units of office space), a 12- storey office Block B (9 units of office space) and a 10-storey car park (“the Buildings”) free from encumbrances and with vacant possession for a total purchase consideration of RM63,000,000/- (excluding Goods and Services Tax) (“Proposed Property Acquisition”). The Land and the Buildings shall collectively be referred to as “the Property”. 2. INFORMATION ON THE PURCHASER AND VENDOR 2.1 The Purchaser The Purchaser is a company incorporated in Malaysia and having its registered office at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 47500 Subang Jaya, Selangor Darul Ehsan. The issued and paid-up share capital of the Purchaser is RM2/- comprising 2 ordinary shares. The principal activity of the Purchaser is property investment. 2.2 The Vendor The Vendor is a company incorporated in Malaysia and having its registered office at 568-8-25 (Level 8) Kompleks Mutiara 3 ½ Mile, Jalan Ipoh, 51200 Kuala Lumpur. The issued and paid-up capital of the Vendor is RM500,000/- comprising 500,000 ordinary shares. The principal activities of the Vendor are property holding and property investment. 3. SALIENT TERMS OF THE SPA Pursuant to the SPA, the Purchaser will acquire the Property from the Vendor free from encumbrances and with vacant possession for a total purchase consideration of RM63,000,000/- (excluding Goods and Services Tax) (“Purchase Price”). The Purchase Price shall be satisfied by the Purchaser in the following manner: (a) A deposit of RM6,300,000/- paid to the Vendor’s solicitors as stakeholder upon execution of the SPA which shall be refunded to the Purchaser interest free in the event the condition precedents are not met; and (b) The balance Purchase Price of RM56,700,000/- shall be paid to the Vendor’s solicitors as stakeholder within 3 months from the date of fulfillment of the conditions precedent (“Completion Date”). If the Purchaser fails to pay the balance Purchase Price or any remaining part thereof on or before the Completion Date, an extension period of 1 month shall be granted subject to the Purchaser paying interest of 5% per annum on the outstanding amount. 4. BASIS OF ARRIVING AT THE PURCHASE CONSIDERATION FOR THE PROPOSED PROPERTY ACQUISITION The Purchase Price has been agreed on a willing buyer willing seller basis and is calculated based on a rate of approximately RM274/- per square foot for the total land area of 5.276 acres. The Purchase Price was arrived at after taking into account the development potential of the Land and Sunway’s required internal rate of return as well as its familiarity with the market value of the properties within the vicinity of the Property. 5. LIABILITIES TO BE ASSUMED There are no liabilities (including contingent liabilities and guarantees) to be assumed by Sunway arising from the Proposed Property Acquisition. 6. INFORMATION ON THE LAND AND THE PROPOSED DEVELOPMENT A commercial development comprising a 3-storey retail podium, 10-storey car park podium, a 20-storey commercial tower and a 12-storey commercial tower had previously been approved for development on the Land. Construction had also commenced but was discontinued by the previous developer when the structure of the car park podium and both commercial blocks reached the roof top. Sunway intends to continue building on the semi-completed structure but will replace the original development with a proposed mixed-development comprising a retail podium/commercial lots, and serviced apartments/SOHO (“Proposed Development”). The estimated gross development value of the Proposed Development is RM460,000,000/-. The maximum development period for the Proposed Development is expected to be within 5 years. 7. RATIONALE The Proposed Property Acquisition will add 5.276 acres of freehold land in Kajang to Sunway’s land bank, to diversify its presence and providing further visibility to the future earnings of the Group. The Land is located less than 2 kilometers from Kajang town and next to the Sg Jernih MRT Station. Due to its immediate proximity to the existing MRT Station, the Proposed Development will be another transit oriented development (“TOD”) status for Sunway Group. The reinforced concrete structure frame work that has been completed, potentially will be salvaged with minor adjustment to accommodate the new Proposed Development. This represents substantial savings on the construction costs and timing for the Proposed Development. 8. PROSPECTS Located directly beside the Sungai Jernih MRT station, the TOD project comprises retail podium/commercial lots and serviced apartment blocks. It will be one of the first of its kind in the Kajang vicinity and targeted to be a new landmark for Kajang. In terms of accessibility, Sunway proposes a seamless integration between the MRT station and the Proposed Development to ensure higher traffic flow into the commercial aspects of the Proposed Development and greater convenience for residents of the serviced apartments. The Proposed Development has a good connectivity to Kuala Lumpur city center and Putrajaya via the Lebuhraya Cheras-Kajang with the interchange to the highway less than 500 meters away. 9. FEASIBILITY STUDY A feasibility study was conducted by Sunway prior to the entering of the SPA. The preliminary feasibility was based on a mixed-development comprising retail podium/commercial lots, and serviced apartments/SOHO with an estimated gross development value of approximately RM460,000,000/-. Based on the results of the study, the management of Sunway is of the view that the project financials meet the internal investment hurdle rate for Sunway to proceed with the Proposed Property Acquisition. 10. RISK FACTORS Due to the discontinued nature, there could potentially be complications for a new development on the site, including possible objections from previous stakeholders, the need to obtain new development approvals from the authorities and the inability to utilize the existing structure leading to demolition costs. Sunway has sought to obtain reasonable warranties from the Vendor with regards to these matters and performed inspection and consultation on the new Proposed Development. However, there is no assurance that there would not be any delay or additional costs arising from the above. Other than the above, the Proposed Property Acquisition and Proposed Development are subject to the usual risks inherent in the property development and construction industries, which include but are not limited to competition risks, unstable global and domestic economic conditions, currency fluctuations, unfavourable interest rate movements, inflation hike, shortages of raw materials and labour, increase in the cost of capital, political instability, changes in government initiatives, changes in statutory regulations and legal disputes. Sunway, with many years of experience in the business of property development and construction, will take the necessary steps to mitigate the various risks identified. However, no assurance can be given that significant changes in any of these factors will not materially affect Sunway’s operations and financial performance. 11. SOURCE OF FUNDS The Proposed Property Acquisition will be funded through bank borrowings and internally generated funds. 12. EFFECTS OF THE PROPOSED PROPERTY ACQUISITION 12.1 On Share Capital and Substantial Shareholders’ Shareholding The Proposed Property Acquisition will not have any effect on the share capital and substantial shareholders' shareholding of Sunway as they do not involve any allotment or issuance of new shares by Sunway. 12.2 On Earnings Per Share, Net Assets Per Share and Gearing The Proposed Property Acquisition is not expected to have any immediate material effect on the earnings per share, net assets per share and gearing of Sunway for the financial year ending 31 December 2017. However, the Proposed Property Acquisition is expected to contribute positively to the future earnings of Sunway Group. 13. APPROVAL REQUIRED The Proposed Property Acquisition does not require approval from the shareholders of Sunway or any relevant authorities. 14. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS Ms Cheah He Mooi and Mr Yap Chin Gum are the directors and major shareholders of the Vendor and are married to one another. Ms Cheah He Mooi and Mr Yap Chin Gum are the sister and brother-in-law of Tan Sri Dato’ Seri Dr Jeffrey Cheah Fook Ling (“TSJC”) respectively. Ms Sarena Cheah Yean Tih (“SCYT”) is the daughter of TSJC. TSJC and SCYT are Directors and major shareholders of Sunway. Accordingly, TSJC and SCYT (“Interested Directors”)