LONDON BISCUITS BERHAD (Company No H) (Incorporated in Malaysia under the Companies Act, 1965)

Transcription

1 THIS STATEMENT/CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. If you have sold all your shares in the Company, you should at once hand this Statement and Circular to the agent through whom the sale was contracted for onward transmission to the purchaser. Bursa Malaysia Securities Berhad ( Bursa Securities ) takes no responsibility for the contents in this Statement/Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Statement/Circular. Bursa Securities has not perused the contents of Part A of this Statement/Circular prior to the issuance as it is an exempt Circular pursuant to Practice Note 18 of the Main Market Listing Requirements of Bursa Securities. LONDON BISCUITS BERHAD (Company No H) (Incorporated in Malaysia under the Companies Act, 1965) PART A - PART B - STATEMENT TO SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR SHARE BUY-BACK AUTHORITY CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE The above proposals will be tabled as Special Business at the 34 th Annual General Meeting ( AGM ). The Notice of the 34 th AGM together with the Proxy Form are enclosed in the Annual Report 2015 of London Biscuits Berhad ( LBB or the Company ), which will be despatched together with this Statement/Circular. The Proxy Form must be completed in accordance with the instructions thereon and lodged at the Company s Registered Office at No. 1, Jalan Istimewa 2, Taman Perindustrian Desa Cemerlang, Ulu Tiram, Johor Darul Takzim, Malaysia, not less than forty-eight (48) hours before the time set for holding the 34 th AGM, should you be unable to attend the 34 th AGM or at any adjournment thereof. The lodgement of the Proxy Form will not preclude you from attending and voting in person at the Meeting, should you subsequently wish to do so. IMPORTANT NOTES: Last date and time for lodging the Proxy Form Date and time of 34 th AGM Venue of 34 th AGM : : : Wednesday, 29 December 2015 at 8.30 a.m. Friday, 31 December 2015 at 8.30 a.m. London Room, No 1, Jalan Istimewa 2, Taman Perindustrian Desa Cemerlang, Ulu Tiram, Johor Darul Takzim, Malaysia THIS STATEMENT/CIRCULAR IS DATED 30 NOVEMBER 2015

2 ABBREVIATIONS The words and phrases below, shall apply throughout this Statement/Circular unless the context requires otherwise: Abbreviations Meanings Act : The Malaysian Companies Act, 1965, as amended from time to time and any re-enactment thereof AGM : Annual General Meeting Annual Report 2015 : Annual Report of LBB issued for the financial year ended 30 June 2015 Audit Committee : Audit Committee of LBB Board : The Board of Directors of LBB Bursa Securities or Exchange : Bursa Malaysia Securities Berhad ( W) Code : Take-Overs and Mergers Code CMSA : Capital Markets and Services Act, 2007 Director(s) : Shall have the same meaning given under Section 4 of the Act and includes any person who is or was within the preceding six (6) months of the date on which the terms of transactions were agreed upon, a Director of LBB, or any other company which is its subsidiary or holding company or a Chief Executive Officer of LBB, its subsidiary or holding Company; AND including the meaning given under Section 2 of the CMSA EPS : Earnings per Share Khee San : Khee San Berhad ( A) Khee San Food Industries : Khee San Food Industries Sdn Bhd (27605-H) Khee San Marketing : Khee San Marketing Sdn Bhd (27610-X) Kim Choaw : Kim Choaw Sdn Bhd (84229-K) Kinos Food Industries : Kinos Food Industries (M) Sdn Bhd (91874-W) Kinos Food Trading : Kinos Food Trading Sdn Bhd ( W) LBB or the Company : LBB Group or the Group : LBB and its subsidiaries as defined in Section 5 of the Act LBB Share(s) or Share(s) : Ordinary Shares of RM1.00 each held in LBB Listing Requirements : The Main Market Listing Requirements of Bursa Securities, including any amendments, modifications and additions thereof that may be made from time to time LPD : 2 November 2015, being the latest practicable date prior to the printing of this Statement/Circular -i-

3 Abbreviations Meanings Major Shareholder(s) : A person who has an interest or interests in one (1) or more voting shares in LBB and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is:- (a) 10% or more of the aggregate of the nominal amounts of all the voting shares in LBB; or (b) 5% or more of the aggregate of the nominal amounts of all the voting shares in LBB where such person is the largest shareholder of LBB. For the purpose of this definition, interest in shares shall have the meaning given in Section 6A of the Act. Major shareholder(s) shall include any person who is or was within the preceding six (6) months of the date on which the terms of the transaction were agreed upon, a major shareholder of LBB or any other company which is a subsidiary of LBB or a holding company of KSB. Market Day : Any day when Bursa Securities is open for trading of securities MGO : Mandatory General Offer MSB : Meileelanusa Sdn Bhd ( K), a major shareholder of LBB with equity interest of 21.46% in LBB as at the LPD. NA : Net Assets Person(s) Connected : Such person, in relation to the director or major shareholder, who falls under any one of the following categories: (a) A member of the director s or major shareholder s family, which family shall have the meaning given in paragraph 1.01 of the Listing Requirements; (b) A trustee of a trust (other than a trustee for a share scheme for employees or pension scheme) under which the director, major shareholder or a member of the director s or major shareholder s family is the sole beneficiary; (c) A partner of the director, major shareholder or a partner of a person connected with that director or major shareholder; (d) A person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the director or major shareholder; (e) A person in accordance with whose directions, instructions or wishes the director or major shareholder is accustomed or is under an obligation, whether formal or informal, to act; (f) A body corporate or its directors which/who is/are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the director or major shareholder; (g) A body corporate or its directors whose directions, instructions or wishes the director or major shareholder is accustomed or is under an obligation, whether formal or informal, to act; (h) A body corporate in which the director or major shareholder and/or persons connected with him are entitled to exercise, or control the exercise of, not less than 15% of the votes attached to voting shares in the body corporate; or (i) A body corporate which is a related corporation. Proposals : Proposed Share Buy-Back and Proposed RRPTs Renewal -ii-

4 Abbreviations Meanings Proposed RRPTs Renewal : Proposed Renewal of Shareholders Mandate in respect of the RRPTs as set out in Part B Proposed Share Buy-Back : Proposed Renewal of Shareholders Mandate to enable LBB to purchase its own shares up to 10% of the Company s issued and paidup share capital as set out in Part A Purchased Shares : Shares purchased pursuant to the Proposed Renewal of Share Buy- Back Recurrent Related Party Transactions or RRPTs : Related party transactions involving recurrent transactions of a revenue or trading nature which are necessary for the Group s day-today operations and are in the ordinary course of business of the Group Related Party(ies) : Director(s), major shareholder(s) or person(s) connected with such director(s) or major shareholder(s) as defined in Paragraph 1.01 of the Listing Requirements RM and sen : Ringgit Malaysia and sen, respectively Substantial Shareholder(s) : A person who has an interest or interests in one or more voting Shares in the Company and the nominal amount of that Share, or the aggregate of the nominal amount of those Shares is not less than 5% of the aggregate of the nominal amount of all the voting Shares in the Company Treasury Shares : The Purchased Shares which are retained by the Company and shall have the meaning given under Section 67A of the Act Words incorporating the singular shall, where applicable, include the plural and vice versa and words incorporating the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Reference to persons shall include a corporation, unless otherwise specified. Any reference in this Statement/Circular to any enactment is a reference to that enactment for the time being amended or re-enacted. (The rest of this page is intentionally left blank) -iii-

5 TABLE OF CONTENTS STATEMENT AND CIRCULAR TO THE SHAREHOLDERS OF THE COMPANY CONTAINING:- Pages 1. INTRODUCTION 1 2. PART A: STATEMENT IN RELATION TO THE PROPOSED SHARE BUY-BACK 2.1 Background Maximum Amount of Funds to be allocated and the source of funds Treatment of Shares purchased Share Prices Pricing The public shareholding spread Rationale Potential Advantages and Disadvantages Purchase and Resale made in the previous twelve (12) months Financial Effects Interested Directors, Substantial Shareholders and Persons Connected to 6 them 2.12 Directors and Substantial Shareholders Interests Implications of the Code 8 3. PART B CIRCULAR IN RELATION TO THE PROPOSED RRPTS RENEWAL 3.1 Background Principal Activities of LBB Group Class and Nature of RRPTS Amount due and owing by Related Parties Review of procedures for the RRPTS Excluded Transactions Audit Committee s Statement Disclosure in the Annual Report Rationale and Benefits Directors and Major Shareholders Interests Condition to the Proposed RRPTs Renewal Financial Effects APPROVAL REQUIRED DIRECTORS RECOMMENDATION AGM ADDITIONAL INFORMATION 16 APPENDICES Appendix I - Additional Information 17 Appendix II Extract of Resolutions Ordinary Resolutions - To approve the Proposed Share Buy-Back - To approve the Proposed RRPTs Renewal 18

6 LONDON BISCUITS BERHAD (Company No H) (Incorporated in Malaysia Under Companies Act, 1965) Registered Office: No. 1, Jalan Istimewa 2 Taman Perindustrian Desa Cemerlang Ulu Tiram Johor Darul Takzim, Malaysia Board of Directors: Dato Sri Liew Kuek Hin (Non-Independent Non-Executive Chairman) Datin Sri Lim Yook Lan (Non-Independent Non-Executive Director) Dato Sri Liew Yew Chung (Group Managing Director / Group Chief Executive Officer) Dato Liew Yew Cheng (Non-Independent Non-Executive Director) Ms. Liew Yet Mei (Non-Independent Non-Executive Director) Dato Liew Yet Lee (Non-Independent Non-Executive Director) Dato Paduka Cheong Siew Kai (Independent Non-Executive Director) Mr. Huang Yan Teo (Independent Non-Executive Director) Mr. Leslie Looi Meng (Independent Non-Executive Director) 30 November 2015 To: The Shareholders of London Biscuits Berhad, Dear Sir/Madam, PART A - PART B - STATEMENT IN RELATION TO THE PROPOSED SHARE BUY-BACK CIRCULAR IN RELATION TO THE PROPOSED RRPTS RENEWAL 1. INTRODUCTION LBB had, on 30 October 2015 announced to Bursa Securities that it proposes to seek the Shareholders approvals for the Proposed Share Buy-Back and Proposed RRPTs Renewal at the forthcoming 34 th AGM of the Company. The purpose of this Statement/Circular is to provide you with the details of the Proposals together with the recommendation of the Board as well as to seek your approval for the resolutions thereto which will be tabled at the 34 th AGM of the Company, to be held on 31 December The Notice of 34 th AGM detailing the relevant resolutions for the Proposals is contained in the Annual Report 2015 of the Company. SHAREHOLDERS OF LBB ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS STATEMENT/CIRCULAR BEFORE VOTING ON THE RESOLUTIONS PERTAINING TO THE ABOVE PROPOSALS 1

7 PART A - ROPOSED SHARE BUY-BACK 2. STATEMENT IN RELATION TO THE PROPOSED SHARE BUY-BACK 2.1 BACKGROUND The Company is proposing to seek the approval from the Shareholders, the renewal of the authority for the Company to purchase and/or hold in aggregate of up to 10% of its issued and paid-up share capital at any point in time through Bursa Securities. The Proposed Share Buy- Back is subject to compliance with Section 67A of the Act and any prevailing laws, rules and regulations issued by the relevant authorities. On 31 December 2014, the Company obtained its Shareholders approval at its 33 rd AGM for the renewal of authority for share buy back of up to 10% of the issued and paid up capital of the Company. The said authority shall expire at the conclusion of the forthcoming 34 th AGM of the Company. No Shares were purchased todate since the approval was obtained at the 33 rd AGM. As at LPD, the total issued and paid-up capital of LBB is RM186,533,789 comprising 186,533,789 Shares. Specifically, the Company can purchase up to 18,653,378 Shares representing 10% of the issued and paid-up share capital of LBB and the maximum amount of funds to be allocated for the Proposed Share Buy-Back will be limited to the amount of the audited retained profits and share premium of the Company as at 30 June The Proposed Share Buy-Back, once approved by the Shareholders, shall be effective upon passing of the Ordinary Resolution relating thereto at the 34 th AGM and will continue to be in force until:- (a) the conclusion of the next AGM of the Company following the forthcoming AGM, at which time the said authority will lapse, unless by an Ordinary Resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or (b) the expiration of the period within which the next AGM is required by law to be held; or (c) revoked or varied by an Ordinary Resolution passed by the Shareholders in a general meeting. whichever occurs first ( Proposed Authorised Period ). The Proposed Share Buy-Back will be effected through LBB s appointed stockbrokers. The Shareholders approval for the Proposed Share Buy-Back does not impose an obligation on the Company to purchase its own shares on Bursa Securities. 2.2 MAXIMUM AMOUNT OF FUNDS TO BE ALLOCATED AND THE SOURCE OF FUNDS In accordance with the Listing Requirements, the Proposed Share Buy-Back must be made wholly out of retained profits and/or share premium accounts of the Company. Therefore, the Board proposes that the maximum amount of funds to be utilised for the Proposed Share Buy-Back shall not exceed the retained profits and share premium account of the Company. Based on the latest audited Financial Statements of the Company as at 30 June 2015, the retained profits and share premium account are as follows:- As at 30 June 2015 Retained Profits Share Premium Account RM120,044,269 RM13,774,466 Accordingly, the Proposed Share Buy-Back will allow the Board to exercise the power of the Company to purchase and hold its own shares at any time within the abovementioned time period using internally generated funds and/or borrowings. The amount of funds to be utilised will depend on the actual number of Shares to be purchased the price of the Shares and the availability of funds involved for each purchase(s) will depend on the market conditions and sentiments of the stock market as well as the retained profits and financial resources available to the Group. 2

8 In the event that the Company purchases and holds its own Shares using external borrowings, the Board will ensure that the Company has sufficient funds to repay the external borrowings and that the repayment is not expected to have a material effect on the cash flow of the Company. 2.3 TREATMENT OF SHARES PURCHASED In accordance with Section 67A of the Act, the Company would be able to deal with any LBB Shares so purchased by the Company in the following manner: (a) to cancel the Purchased Shares; and/or (b) to retain the Purchased Shares as Treasury Shares for distribution as share dividends to the Shareholders of the Company, which then may be applied as a reduction of the retained profits of the Company, and/or resell on the market of Bursa Securities in accordance with the relevant rules of Bursa Securities and/or cancel subsequently; and/or (c) to retain part of the Purchased Shares as Treasury Shares and cancel the remainder; and/or (d) any other manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the Listing Requirements as well as any other relevant authority for the time being in force. As at the date of this Statement, the Board has yet to decide on the treatment of the Shares so purchased and will take into consideration the effects of such treatment on the Group in arriving at its decision. An immediate announcement will be made to Bursa Securities upon each purchase, cancellation and/or resale of Shares pursuant to the Proposed Share Buy-Back. If such Purchased Shares were held as Treasury Shares, the rights attaching to them in relation to voting, dividends and participation in any other distribution or otherwise will be suspended. The Treasury Shares would not be taken into account in calculating the number or percentage of Shares or a class of Shares in the Company for any purposes including the determination of substantial shareholdings, take-overs, notices, the requisitioning of meetings, the quorum for meetings and the result of a vote on resolution(s) at meetings. 2.4 SHARE PRICES The following table set out the monthly highest and lowest transacted prices of the Company s Shares on the Bursa Securities for the past twelve (12) months from November 2014 to October 2015 (Source: klse.i3investor.com): Period High (RM) Low (RM) 2014 November December January February March April May June July August September October Last transacted market price of LBB Shares on 29 October 2015, being the last trading day prior to the announcement of the Proposed Share Buy-Back Last transaction market price of LBB Shares on 2 November 2015, being the LPD prior to the printing of this Circular

9 2.5 PRICING Pursuant to Chapter 12 of the Listing Requirements, LBB shall purchase its own Shares or resell its treasury shares (if applicable) only on the market of the Bursa Securities at a price not be more than 15% above the weighted average market price of LBB Shares for the five (5) market days immediately preceding the date of purchase. The price for the resale of treasury shares shall:- (a) not be less than the weighted average market price for LBB Shares for five (5) market days immediately prior to the resale; or (b) a discounted price of not more than 5% to the weighted average market price for LBB Shares for five (5) market days immediately prior to the resale provided that: (i) the resale takes place not earlier than thirty (30) days from the date of the purchase; and (ii) the resale price is not less than the cost of purchase of the Shares being resold. 2.6 PUBLIC SHAREHOLDING SPREAD Pursuant to Paragraph 8.02(1) of the Listing Requirements, the Proposed Share Buy-Back will be carried out in accordance with the prevailing laws at the time of the purchase including compliance with 25% public shareholdings spread. As at the LPD, the public shareholding spread of the Company is as follow:- As at LPD (1) After Proposed Share Buy-Back (2) No of Shares % No of Shares % Public Shareholding 141,932, ,279, Notes: (1) Based on the issued and paid-up share capital of 186,533,789 ordinary shares of RM1.00 each as at LPD. (2) Based on the assumption that:- (a) the Proposed Share Buy-Back involves the aggregate purchase of 18,653,378 LBB Shares, representing 10% of the issued and paid-up share capital of the Company as at LPD; (b) the number of LBB Shares held by the Directors of the Group, the substantial shareholders of LBB and Persons Connected to them remain unchanged; and (c) the Purchased Shares are from the Shareholders other than the Directors, substantial shareholders of LBB and Persons Connected to them. The Board will endeavour to ensure that the Company complies with the public shareholding spread requirements and shall not buy back the Company s own shares if the purchase would result in the public shareholding spread requirements not being met. 2.7 RATIONALE The Proposed Share Buy-Back if implemented will enable LBB to utilise its surplus financial resources more effectively. The Proposed Share Buy-Back is expected to stabilise the supply and demand of LBB Shares as well as the price of LBB Shares. In addition, the Purchased Shares may be held as Treasury Shares and resold on Bursa Securities with the intention of realising a potential gain without affecting the total issued and paid-up share capital of the Company. Should any Treasury Shares be distributed as share dividends, this would serve to reward the Shareholders of the Company. Nevertheless, the Board will be mindful of the interest of LBB and its shareholders in undertaking the Proposed Share Buy-Back and in the subsequent cancellation to the Purchased Shares. 2.8 POTENTIAL ADVANTAGES AND DISADVANTAGES (a) Advantages The potential advantages of the Proposed Share Buy-Back to the Company and its shareholders are as follows:- (i) the Proposed Share Buy-Back may enhance the earnings per share of LBB Shares in Bursa Securities, which generally will have a positive impact on the market price of the Shares, which would be a benefit to the Shareholders of the Company; 4

10 (ii) the Proposed Share Buy-Back may also help to stabilise the supply and demand and price of LBB Shares traded on Bursa Securities. The stability of LBB Share prices is important to maintain investors confidence to facilitate future fund raising exercises of the Company via the equity market; (iii) the Proposed Share Buy-Back by LBB may allowed the flexibility in achieving the desired capital structure, in terms of its debt and equity composition and the size of its equity; (iv) the Purchased Shares may be held as Treasury Shares and resold on Bursa Securities with the intention of realising a potential gain without affecting the total issued and paid-up share capital of the Company; and (v) In the event the treasury shares are distributed as share dividends, it will serve to reward the shareholders of LBB. (b) Disadvantages The potential disadvantages of the Proposed Share Buy-Back to the Company and its shareholders are as follows:- (i) The Proposed Share Buy-Back may result in the Group forgoing other investment opportunities that may emerge in the future and may also result in the reduction of financial resources available for distribution to the Shareholders of the Company in the immediate future; (ii) The cashflow of the Company may be affected if the Company decides to utilise the bank borrowings; (iii) The issued and paid-up share capital of the Company will be reduced if the Directors resolve to cancel the Shares so purchased and, everything being equal, will generally have a positive impact on the market price of the Shares; and (iv) As the funds to be allocates for the Proposed Share Buy-Back must be made wholly out of the Company s retained profits, the amount available from this account for distribution of dividends to shareholders of the Company may decrease accordingly. The Proposed Share Buy-Back, however, is not expected to have any potential material disadvantages to the Company and its Shareholders, as it will be exercised only after careful consideration of the financial resources of the LBB Group, and of the resultant impact on the Company and its Shareholders. 2.9 PURCHASE OF SHARES AND RESALE AND/OR CANCELLATION OF TREASURY SHARES IN THE PREVIOUS TWELVE (12) MONTHS The Company has not made any purchase, resale and/or cancellation of any of its own ordinary shares in the previous twelve (12) months preceding this Statement. As at LPD, the Company does not have any Treasury Shares and has not resold any Treasury Shares FINANCIAL EFFECTS Assuming that the Company purchases Shares representing 10% of its issued and paid-up share capital as at LPD, the effects of the Proposed Share Buy-Back on the share capital, NA, working capital, earnings and dividends are set out as follows:- (a) Share Capital The Proposed Share Buy-Back will result in the reduction of the issued and paid-up share capital of the Company if the Purchased Shares are cancelled. The proforma effects of the Proposed Share Buy-Back on the issued and paid-up share capital of LBB as at LPD assuming the Purchase Shares are cancelled, is illustrated below:- Less: No of Shares RM Issued and Paid-Up Share Capital as at LPD 186,533, ,533, Maximum number of LBB Shares that may be purchased and cancelled pursuant to the Proposed Share Buy-Back Total issued and paid-up share capital after the Proposed Share Buy-Back (18,653,378) (18,653,378.00) 167,880, ,880, However, the Proposed Share Buy-Back will not have effect on the issued and paid-up capital of LBB, assuming the purchased shares are to be retained as treasury shares, resold on Bursa Securities or distributed as share dividends to Shareholders. 5

11 (b) NA The effect of the Proposed Share Buy-Back on the NA of the Group will depend on the purchase prices of the Shares, the number of Shares purchased and the effective funding cost to the Group to finance the purchase of Shares or any loss in interest income to the Group. Depending on the purchase price and number of Shares purchased, the Proposed Share Buy-Back will reduce the consolidated NA per Share at the time of purchase if the purchase price exceeds the consolidated NA per Share and conversely will increase the consolidated NA per Share at the time of purchase if the purchase price is less than the consolidated NA per Share. Should the Purchased Shares be resold, the consolidated NA per Share will increase if the Company realises a gain from the resale, and vice versa. If the Purchased Shares which were held as Treasury Shares, are distributed as share dividends, the consolidated NA per share will decrease by the cost of the Treasury Shares. (c) Gearing The effect of the Proposed Share Buy-Back on the gearing of the LBB Group will depend on the proportion of borrowings utilised to fund any purchase of Shares. The utilisation of any borrowings utilised to fund any purchase of Shares. The utilisation of any borrowings to fund the purchase of any Shares will serve to increase the gearing of LBB Group. (d) Working Capital The implementation of the Proposed Share Buy-Back is likely to reduce the working capital and cash flow of the Group, the quantum of which depend on the number of LBB Shares being purchased, the purchase price(s) and the amount of financial resources to be utilised for the purchase of LBB Shares. For the Purchased Shares retained as Treasury Shares, upon its resale, the working capital and cash flow of the Company will increase. Again, the quantum of the increase in the working capital and cash flow, will depend on the actual selling price(s) of the Treasury Shares resold, the effective gain or interest saving arising and the gain or loss from the disposal. (e) Earnings The effects of the Proposed Share Buy-Back on the consolidated earnings of LBB would depend on the purchase price and number of Shares purchased as well as the effective funding cost to the Company in implementing the Proposed Share Buy-Back. The reduction in the number of Shares applied in the computation of the consolidated EPS pursuant to the Proposed Share Buy-Back may generally, all else being equal, have a positive impact on the consolidated EPS for the financial year when the Proposed Share Buy-Back is implemented. Should the Purchased Shares be resold, the extent of the impact to the earnings of LBB Group will depend on the actual selling price, the number of treasury shares resold, the effective funding cost and the gain or loss on the disposal, if any. (f) Dividends Assuming the Proposed Share Buy-Back is implemented in full and the dividend quantum is maintained at historical levels, the Proposed Share Buy-Back will have the effect of increasing the dividend rate of LBB as a result of the reduction in the issued and paid-up share capital of LBB as described under Section 2.10(a) above. Nevertheless, the decision to declare and pay dividends in the future would depend on the performance, cash flow position and financing requirements of the LBB Group. As stated in Section 2.3 above, the Board may have the option to distribute future dividends in the form of the Treasury Shares purchased pursuant to the Proposed Share Buy-Back INTERESTED DIRECTORS, SUBSTANTIAL SHAREHOLDERS AND PERSONS CONNECTED TO THEM The Purchased Shares by the Company pursuant to the Proposed Share Buy-Back that are retained as Treasury Shares and/or cancelled will result in a proportionate increase in the percentage of shareholdings of the Directors, Substantial Shareholders and Persons connected to them of the Company. 6

12 In the event that all the Purchased Shares are cancelled and on the assumption that the Proposed Share Buy-Back is exercised in full and that the Company will purchase the Shares from Shareholders other than the Directors, Substantial Shareholders and Persons connected to them, the proforma effects of the Proposed Share Buy-Back on the shareholdings of the Directors, Substantial Shareholders of LBB and persons connected as at LPD, are set out below. For illustrative purposes, assuming LBB purchases the maximum 10% of the issued and paid-up share capital, the effect of the Proposed Share Buy-Back on the shareholdings of the Directors and Substantial Shareholders of LBB share set out below:- Name Number of LBB Shares as at LPD Number of LBB Shares after Proposed Share Buy-Back * Direct % Indirect % Direct % Indirect % Directors Dato Sri Liew Kuek Hin ,600,544 (1)(2) ,600,544 (1)(2) Datin Sri Lim Yook Lan 224, ,376,307 (1)(3) , ,376,307 (1)(3) Dato Sri Liew Yew Chung 2,133, ,466,809 (4) ,133, ,466,809 (4) Dato Liew Yew Cheng 31 44,600,763 (5) ,600,763 (5) Liew Yet Mei 39, ,561,123 (6) , ,561,123 (6) Dato Liew Yet Lee 2,172, ,428,123 (7) ,172, ,428,123 (7) Dato Paduka Cheong Siew Kai Huang Yan Teo Leslie Looi Meng Substantial Shareholders MSB 40,029, ,029, Dato Liew Yet Lee 2,172, ,428,123 (7) ,172, ,428,123 (7) Dato Sri Liew Yew Chung 2,133, ,466,809 (4) ,133, ,466,809 (4) Datin Sri Lim Yook Lan 224, ,376,307 (1)(3) , ,376,307 (1)(3) Liew Yet Mei 39, ,561,123 (6) , ,561,123 (6) Dato Sri Liew Kuek Hin ,600,544 (1)(2) ,600,544 (1)(2) Dato Liew Yew Cheng 31 44,600,763 (5) ,600,763 (5) Notes: * Based on issued and paid-up share capital of 167,880,411 LBB Shares. Negligible (1) Deemed interested by virtue of their interest in MSB. (2) Deemed interested by virtue of the shares held by his spouse, Datin Sri Lim Yook Lan, and his children, Dato Sri Liew Yew Chung, Dato Liew Yew Cheng, Ms. Liew Yet Mei and Dato Liew Yet Lee. (3) Deemed interested by virtue of the shares held by her spouse, Dato Sri Liew Kuek Hin, and her children, Dato Sri Liew Yew Chung, Dato Liew Yew Cheng, Ms. Liew Yet Mei and Dato Liew Yet Lee. (4) Deemed interested by virtue of the shares held by his parents, Dato Sri Liew Kuek Hin and Datin Sri Lim Yook Lan, and his siblings, Dato Liew Yew Cheng, Ms. Liew Yet Mei and Dato Liew Yet Lee. (5) Deemed interested by virtue of the shares held by his parents, Dato Sri Liew Kuek Hin and Datin Sri Lim Yook Lan, and his siblings, Dato Sri Liew Yew Chung, Ms. Liew Yet Mei and Dato Liew Yet Lee. (6) Deemed interested by virtue of the shares held by her parents, Dato Sri Liew Kuek Hin and Datin Sri Lim Yook Lan, and her siblings, Dato Sri Liew Yew Chung, Dato Liew Yew Cheng and Dato Liew Yet Lee. (7) Deemed interested by virtue of the shares held by her parents, Dato Sri Liew Kuek Hin and Datin Sri Lim Yook Lan, and her siblings, Dato Sri Liew Yew Chung, Dato Liew Yew Cheng and Ms. Liew Yet Mei. 7

13 Dato Sri Liew Kuek Hin, Datin Sri Lim Yook Lan, Dato Sri Liew Yew Chung, Dato Liew Yew Cheng, Ms. Liew Yet Mei and Dato Liew Yet Lee, by virtue of their direct and indirect shareholdings of the Company, are deemed interested in the Proposed Share Buy-Back. Accordingly, Dato Sri Liew Kuek Hin, Datin Sri Lim Yook Lan, Dato Sri Liew Yew Chung, Dato Liew Yew Cheng, Ms. Liew Yet Mei and Dato Liew Yet Lee ( Interested Directors ) have abstained and will continue to abstain from deliberations and voting in respect of the Proposed Share Buy-Back at the relevant Board Meetings. In addition, the Interested Directors herein shall also abstain from voting in respect of the resolution in relation to the Proposed Share Buy-Back at the forthcoming AGM. The Interested Directors, will undertake to ensure that the Persons Connected with them, will abstain from voting on the resolution approving the Proposed Share Buy-Back at the forthcoming AGM in respect of their direct and/or indirect shareholdings. MSB is a Major Shareholder of LBB, holding 40,029,699 LBB Shares representing 21.46% of the issued and paid-up capital of LBB as at LPD. MSB is deemed interested in the Proposed Share Buy-Back by virtue of its shareholders, namely Dato Sri Liew Kuek Hin and Datin Sri Lim Yook Lan. Accordingly, MSB will abstain from voting in respect of its direct shareholdings on the resolution pertaining to the Proposed Share Buy-Back at the forthcoming AGM. In addition, MSB will ensure that persons connected to them (as defined under Paragraph 1.01 of the Listing Requirements) will abstain from voting in respect of their shareholdings, direct or indirect in LBB on the resolution pertaining to the Proposed Share Buy-Back at the forthcoming AGM. Dato Sri Liew Kuek Hin, Datin Sri Lim Yook Lan, Dato Sri Liew Yew Chung, Dato Liew Yew Cheng, Ms. Liew Yet Mei and Dato Liew Yet Lee being the Major Shareholders of LBB, will abstain from deliberation and voting, in respect of their direct and indirect shareholdings in LBB, pertaining to the resolution for the Proposed Share Buy-Back at the forthcoming AGM DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS Save for the proportionate increase in the percentage (%) of shareholdings and/or voting rights in their capacity as shareholders as a consequence of the Proposed Share Buy-Back, none of the Directors, Major Shareholders, Substantial Shareholders of the Company and persons connected with the Directors and substantial shareholders of the Company have any interest, direct or indirect, in the Proposed Share Buy-Back, or in the resale of the Treasury Shares, if any IMPLICATIONS OF THE CODE Under Practice Note 9, Part II, 10.1 of the Code, a Director and any person acting in concert with him or a relevant shareholders will required to make a MGO for the remaining ordinary shares of the Company not already owned by him/her if:- (i) less than 33% has inadvertently increased his/their combined shareholdings to more than 33%; or (ii) more than 33% but less than 50% has inadvertently increased his/their combined shareholdings by more than 2% or more within a six (6) month period, the said person or group of persons acting in concert will be obliged to make a mandatory general offer for the remaining LBB Shares not held by him/them. Notwithstanding the above, the said person or group of persons acting in concert is/are allowed to make an application to the Securities Commission for a waiver from implementing a MGO under Practice Note 9, Part II, 24.1 of the Code. Based on the Register of Substantial Shareholders as at LPD, the Substantial Shareholders of LBB, namely, MSB, Dato Sri Liew Kuek Hin, Datin Sri Lim Yook Lan, Dato Sri Liew Yew Chung, Dato Liew Yew Cheng, Ms. Liew Yet Mei and Dato Liew Yet Lee, collectively, have combined LBB shareholdings of 44,600,794 shares, through their direct and indirect shareholdings, representing approximately 23.90% equity interest in LBB. The Board does not anticipate any implication relating to the Code, should the allowed maximum amount of shares be purchased pursuant to the Proposed Share Buy-Back. 8

14 PART B - PROPOSED RRPTS RENEWAL 3. PROPOSED RRPTS RENEWAL 3.1 BACKGROUND On 30 October 2015, the Board announced that the Company s intention to seek approval for the Proposed RRPTs Renewal on the RRPTs pursuant to Paragraph of Chapter 10 of the Listing Requirements, of which is subject to annual renewal at the forthcoming AGM. At the Company s 33 rd AGM held on 31 December 2014, the Shareholders of the Company had approved the mandate to allow LBB Group to enter into RRPTs with the classes of Related Party(ies) which are necessary for LBB Group's day to day operations, in the ordinary course of business and on terms not more favourable to the Related Party than those generally available to the public. The approval for the mandate shall lapse at the conclusion of the forthcoming AGM, which has been scheduled to be held on 31 December 2015 unless the approval is renewed. Under Paragraph of the Listing Requirements, a listed issuer may seek a mandate from its shareholders for RRPTs, subject to the following:- (a) the transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public; (b) the shareholders mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders mandate during the financial year where the aggregate value is equal to or more than the threshold prescribed under subparagraph (vi) of Section 3.5 below; (c) the listed issuer s circular to Shareholders for the Shareholders mandate includes the information as may be prescribed by the Exchange; (d) in a meeting to obtain Shareholders mandate, the interested Director, interested Major Shareholder or interested person connected with a Director or Major Shareholder; and where it involves the interest of an interested person connected with a Director or Major Shareholder, such Director or Major Shareholder, must not vote on the resolution to approve the transactions. An interested Director or interested Major Shareholder must ensure that persons connected with him abstain from voting on the resolution approving the transactions; and (e) the listed issuer immediately announces to the Exchange when the actual value of a RRPTs entered into by the listed issuer, exceeds the estimated value of the RRPTs disclosed in the circular by 10% or more and must include the information as may be prescribed by the Exchange in its announcement. Transactions entered into between a listed issuer (or any of its wholly-owned subsidiary) and its wholly-owned subsidiaries are excluded from the requirements under Chapter 10 of the Listing Requirements. Accordingly, the Company proposes to seek its Shareholders approval for the Proposed RRPTs Renewal to allow the Company to enter into RRPTs as set out on section 3.3 below. The RRPTs are entered into at arms length and on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public and which will not be to detriment of the minority Shareholders. The Proposed RRPTs Renewal, if approved by Shareholders at the forthcoming AGM, will be subject to annual renewal. In this respect, any authority conferred by the Proposed RRPTs Renewal shall only continue to be in force until:- (a) the conclusion of the next AGM of the Company, at which time such mandate it will lapse, unless by a resolution passed at the next AGM, the authority is renewed; or (b) the expiration of the period within which the next AGM of LBB is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (c) revoked or varied by resolution passed by the Shareholders in General Meeting; whichever is earlier. 9

15 3.2 PRINCIPAL ACTIVITIES OF LBB GROUP The principal activities of the Company is manufacturing and trading of confectionery and other related foodstuff. The details principal activities of the subsidiary companies are as follows:- Name of Subsidiary Companies Country of Incorporation Effective Interest (%) Principal Activities Subsidiaries of LBB Khee San* Malaysia Investment holding Kinos Food Industries Malaysia 100 Investment holding, manufacturing and trading of confectioneries and snack food Wholly-owned Subsidiary of Khee San Khee San Food Industries Malaysia Manufacturing of candy confectionery and wafer products Khee San Marketing Malaysia Temporarily ceased operation Wholly-owned Subsidiaries of Kinos Food Industries Kinos Food Trading Malaysia 100 Temporarily ceased operation Kim Choaw Malaysia 100 Letting of property and trading of confectioneries and general food stuffs Notes: * Khee San is deemed subsidiary of LBB pursuant to Section 5(1) of the Companies Act, CLASS AND NATURE OF RRPTS LBB Group has entered / will enter into RRPTs on terms not more favourable to the Related Party than those generally available to the public and which are not detrimental to the interests of the minority shareholders. Some of the transactions are bound by agreements and others could occur in accordance to periodic requirements and are not bound by any preceding agreements negotiated in advance. The Proposed RRPTs Renewal will apply to transactions with Transacting Parties comprising Directors, Major Shareholders or persons connected with such Directors or Major Shareholders of LBB Group. The details of the class and nature of the RRPTs are as follows:- Related Parties Principal Activities Nature of Relationship Khee San Food Industries Manufacturing of candy confectionery and wafer products LBB has an effective interest of 22.09% in Khee San Food Industries via LBB s shareholdings in Khee San. The RRPTs as set out below, are general transactions to be entered into by LBB Group relating to the provision or the obtaining of products and services to or from the Transacting Parties in the ordinary course of business under the Proposed RRPTs Renewal:- 10

16 Renewal of RRPTs by LBB:- Companies Nature of Transactions Related Party Last Year Mandate (M1) RM Actual Value Transacted (M2) RM Proposed Mandate (M3) RM Relationship LBB T1 Khee San Food Industries 69,300,000 15,103,839 70,000,000 R1 LBB T2 Khee San Food Industries 52,500,000 Nil 53,000,000 R1 Notes: * The actual transaction value for the financial year ended 30 June 2015 was used as the yardstick for the Management to forecast the sales volume from 31 December 2015 (i.e. forthcoming AGM) to the next AGM and it will not vary significantly from the financial year ending 30 June M1 Estimate value of transactions from 31 December 2014 to 31 December M2 Actual value of transactions from 31 December 2014 to LPD, being the latest practicable date before the printing of this Circular. The actual value of the transactions from 31 December 2014 to LPD did not exceed 10% or more of the Estimated Value obtained under the Shareholders Mandate during the 2014 AGM. M3 Estimated value of transactions from the date of the 34 th AGM on 31 December 2015 to the date of the next AGM in The estimated values are subject to changes. T1 T2 R1 Purchase of sweets and confectionery products including contract manufacturing of deposited candies, hard and chewy candies/sweets, wafers and chewing gums on a perpetual basis from Khee San Food Industries by LBB. Sale of assorted raw materials such as packaging materials, sugar and flavourings on a perpetual basis by LBB to Khee San Food Industries. As at LPD, LBB is one of the Major Shareholders in Khee San with 22.09% shareholdings. Dato Sri Liew Kuek Hin is a deemed Substantial Shareholder of Khee San through his direct interest of 0.03% in Khee San and indirect interest of 22.09% in Khee San by virtue of his direct and indirect shareholdings in LBB. Datin Sri Lim Yook Lan is the Non-Independent Non-Executive Director in LBB. She is also a deemed Substantial Shareholder of Khee San through her direct and indirect shareholdings in LBB and by virtue of the shareholdings of her spouse, Dato Sri Liew Kuek Hin in Khee San. Dato Sri Liew Yew Chung is the Group Managing Director / Group CEO in LBB. He is also the Group Managing Director / Group CEO in Khee San and a Director in Khee San Food Industries. Dato Sri Liew Yew Chung is deemed Substantial Shareholder of Khee San through his direct and indirect shareholdings in LBB and by virtue of the shareholdings of his parent, Dato Sri Liew Kuek Hin in Khee San. Dato Liew Yew Cheng is the Non-Independent Non-Executive Director in LBB. He is also a deemed Substantial Shareholder of Khee San through his direct and indirect shareholdings in LBB and by virtue of the shareholdings of his parent, Dato Sri Liew Kuek Hin in Khee San. Ms. Liew Yet Mei is the Non-Independent Non-Executive Director in LBB. She is also a Non-Independent Non-Executive Director in Khee San. She is a deemed Substantial Shareholder of Khee San through her direct and indirect shareholdings in LBB and by virtue of the shareholdings of her parent, Dato Sri Liew Kuek Hin in Khee San. Dato Liew Yet Lee is the Non-Independent Non-Executive Director in LBB. She is also a deemed Substantial Shareholder of Khee San through her direct and indirect shareholdings in LBB and by virtue of the shareholdings of her parent, Dato Sri Liew Kuek Hin in Khee San. 3.4 AMOUNT DUE AND OWING BY RELATED PARTIES As at the financial year ended 30 June 2015, there is no amount due or owing to the Company by its Related Parties arising from the RRPTs which exceeded the credit term of more than one (1) year. 11

17 3.5 REVIEW AND DISCLOSURE PROCEDURES FOR THE RRPTS The Company has set out the procedures to ensure the RRPTs are undertaken on an arm s length basis and on the Group s normal commercial terms, which are consistent with the Group s usual business practices and policies, and on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority Shareholders. To monitor the RRPTs, the following review and procedures have been implemented:- (i) All companies within the Group are informed of the procedures applicable to RRPTs; (ii) A list of Related Parties will be circulated to the Directors and management of the Company and its subsidiaries to notify that all RRPTs are required to be undertaken on an arm s length basis, are on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public and are not detrimental to the minority Shareholders; (iii) All RRPTs will be reviewed by the Accountant, Group Chief Operation Officer and the Members of the Audit Committee of the Company, who have no interest in the transactions; (iv) A register will be maintained by the Company to record all RRPTs which are entered into pursuant to the Proposed RRPTs Renewal; (v) The Board and the Audit Committee are to review the reports of all RRPTs entered into pursuant to the Proposed RRPTs Renewal and also to monitor that the procedures in respect of such transactions are adhered to; (vi) The threshold for approval of recurrent related party transactions is consistent with those transactions entered into with unrelated parties. All RRPTs are to be reviewed by the Group Accountant and Group Managing Director before approved by Audit Committee; (vii) At least two (2) other contemporaneous transactions with unrelated third parties for similar products/services and/or quantities will be used as comparison, wherever possible, to determine whether the price and terms offered to/by the related parties are fair and reasonable and comparable to those offered to/by other unrelated third parties for the same or substantially similar type of products/services and/or quantities. Where quotation or comparative pricing from unrelated third parties cannot be obtained, the transaction price will be determined by the Group based on those offered by/to other unrelated parties for the same or substantially similar type of transaction to ensure that the recurrent related party transaction is not detrimental to the Group; (viii) If a Member of the Board of LBB or the Audit Committee has an interest in the transaction to be reviewed by the Board of LBB or the Audit Committee as the case may be, he will abstain from any decision making by the Board or the Audit Committee in respect of that transaction; (ix) The transactions with the Related Parties will only be entered into after taking into account the pricing, level of service, quality of product and other related factors such as availability of stock and personnel. The pricing shall be at the prevailing market rates including where appropriate preferential rates and discounts accorded for bulk purchase which are the same as accorded to third party bulk purchase; and (x) The Board and the Audit Committee of LBB shall review and ascertain that the guidelines and procedures established to monitor the RRPTs have been complied with including the overall responsibility for the determination of the review procedures with authority to subdelegate to individuals or committees with the LBB Group as they may deem appropriate. Such review methods and procedures may be modified, supplemented or replace from time to time by the Audit Committee and furnished to the Board for approval. 3.6 EXCLUDED TRANSACTIONS Transactions with any related parties, which do not fall within the ambit of the Proposed RRPTs Renewal, will be subject to other applicable provisions of the Listing Requirements, the Act and/or any applicable law, whereby immediate announcement will be required to be made on the RRPTs in accordance with Paragraph 10.09(1)(a) as follow:- (a) in relation to a listed issuer with an issued and paid-up capital of RM60 million and above:- (i) the consideration, value of the assets, capital outlay or costs of the RRPTs is RM1 million or more; or (ii) the percentage ratio of such RRPTs is 1% or more; whichever is the higher. 12