DAIBOCHI PLASTIC AND PACKAGING INDUSTRY BHD (Company No.: W) (Incorporated in Malaysia under the Companies Act, 1965)

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, solicitor, accountant, bank manager or other professional adviser immediately. Bursa Malaysia Securities Berhad ("Bursa Securities") has not perused the contents of this Circular pertaining to the Proposed Bonus Issue (as defined herein) and the Proposed Amendments (as defined herein) prior to its issuance. Bursa Securities takes no responsibility for the contents of this 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 Circular. DAIBOCHI PLASTIC AND PACKAGING INDUSTRY BHD (Company No.: W) (Incorporated in Malaysia under the Companies Act, 1965) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE I. PROPOSED SHARE SPLIT INVOLVING THE SUBDIVISION OF EVERY ONE (1) EXISTING ORDINARY SHARE OF RM1.00 EACH IN DAIBOCHI PLASTIC AND PACKAGING INDUSTRY BHD ("DAIBOCHI" OR THE "COMPANY") ("DAIBOCHI SHARE(S)" OR SHARE(S)") INTO TWO (2) ORDINARY SHARES OF RM0.50 EACH IN DAIBOCHI ("SPLIT SHARE(S)") HELD ON AN ENTITLEMENT DATE TO BE DETERMINED LATER ("PROPOSED SHARE SPLIT"); II. III. PROPOSED BONUS ISSUE OF UP TO 45,540,998 NEW SPLIT SHARES ("BONUS SHARE(S)") TO BE CREDITED AS FULLY PAID-UP ON THE BASIS OF ONE (1) BONUS SHARE FOR EVERY FIVE (5) SPLIT SHARES HELD ON THE SAME ENTITLEMENT DATE AS THE PROPOSED SHARE SPLIT ("PROPOSED BONUS ISSUE"); AND PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF DAIBOCHI TO FACILITATE THE IMPLEMENTATION OF THE PROPOSED SHARE SPLIT ("PROPOSED AMENDMENTS") AND NOTICE OF EXTRAORDINARY GENERAL MEETING Adviser (Company No P) (A Participating Organisation of Bursa Malaysia Securities Berhad) The Notice of the Extraordinary General Meeting ("EGM") of Daibochi which is scheduled to be held at Sky Lotus I & II, Level 30, Swiss-Garden Hotel & Residences Malacca, T2-4, The Melaka River, Jalan Persisiran Bunga Raya, Melaka on Saturday, 30 January 2016 at a.m., or at any adjournment thereof, together with the Form of Proxy are enclosed herein. A member entitled to attend, speak and vote at the EGM is entitled to appoint up to two (2) proxies to attend and vote on his/ her behalf. In such event, the completed and signed Form of Proxy must be lodged at the registered office of Daibochi at Kompleks Daibochi Plastic, Lot 3 & 7, Air Keroh Industrial Estate, Phase IV, Melaka, not less than 48 hours before the stipulated time for holding the EGM, as indicated below, or at any adjournment thereof. The lodging of the Form of Proxy shall not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. Last date and time for lodging the Form of Proxy... Date and time of the EGM... : Thursday, 28 January 2016 at a.m. : Saturday, 30 January 2016 at a.m. This Circular is dated 6 January 2016

2 DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout this Circular:- "Act" : The Companies Act, 1965 "Board" : The Board of Directors of Daibochi "Bonus Entitlement Date" "Bonus Share(s)" : A date to be determined and announced later by the Board, on which the names of the shareholders of Daibochi must appear in the Record of Depositors of the Company as at 5.00 p.m. in order to participate in the Proposed Bonus Issue : Up to 45,540,998 new Split Share(s) to be issued pursuant to the Proposed Bonus Issue "Bursa Depository" : Bursa Malaysia Depository Sdn Bhd "Bursa Securities" : Bursa Malaysia Securities Berhad "Circular" : This circular dated 6 January 2016 "Daibochi" or the "Company" "Daibochi Group" or the "Group" "Daibochi Share(s)" or "Share(s)" : Daibochi Plastic And Packaging Industry Bhd : Daibochi and its subsidiary companies, collectively : Ordinary share(s) of RM1.00 each in Daibochi "Director(s)" : A natural person who holds directorship in the Company and shall have the meaning given in Section 2(1) of the Capital Markets and Services Act, 2007 and includes:- i. In the case of an issuer of structured warrants, a director of the issuer of the structured warrants; or ii. In the case of an applicant or listed issuer which is a collective investment scheme, a director of a management company or a director of the trustee-manager, as the case may be "EGM" : Extraordinary General Meeting "EPS" : Earnings per Share "FPE" : Financial period ended "FYE" : Financial year ended/ ending "Listing Requirements" : Main Market Listing Requirements of Bursa Securities "LPD" : 28 December 2015, being the latest practicable date prior to the printing and despatch of this Circular "NA" : Net assets i

3 DEFINITIONS (CONT'D) "Proposals" : The Proposed Share Split, the Proposed Bonus Issue and the Proposed Amendments, collectively "Proposed Amendments" "Proposed Bonus Issue" : The proposed amendments to the Memorandum and Articles of Association of Daibochi to facilitate the implementation of the Proposed Share Split : The proposed bonus issue of up to 45,540,998 Bonus Shares to be credited as fully paid-up on the basis of one (1) Bonus Share for every five (5) Split Shares held on the Bonus Entitlement Date "Proposed Share Split" : The proposed share split involving the subdivision of every one (1) existing ordinary share of RM1.00 each in Daibochi into two (2) ordinary shares of RM0.50 each in Daibochi held on the Split Entitlement Date "Record of Depositors" : A record of depositors established by Bursa Depository under the Rules of Depository "RHBIB" or the "Adviser" : RHB Investment Bank Berhad "RM" and "sen" : Ringgit Malaysia and sen, respectively "Split Entitlement Date" "Split Share(s)" : A date to be determined and announced later by the Board, on which the names of the shareholders of Daibochi must appear in the Record of Depositors of the Company as at 5.00 p.m. in order to participate in the Proposed Share Split : Ordinary share(s) of RM0.50 each in Daibochi, after the Proposed Share Split Words incorporating the singular shall, where applicable, include the plural and vice versa. Words incorporating the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Any reference to persons shall include a corporation, unless otherwise specified. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any reference to a time of day in this Circular shall be a reference to Malaysian time, unless otherwise specified. ii

4 TABLE OF CONTENTS LETTER TO THE SHAREHOLDERS OF DAIBOCHI CONTAINING:- PAGE 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSALS 2 3. RATIONALE FOR THE PROPOSALS 5 4. EFFECTS OF THE PROPOSALS 6 5. HISTORICAL SHARE PRICES 9 6. APPROVALS REQUIRED/ OBTAINED 9 7. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/ OR PERSONS CONNECTED TO THEM 8. ESTIMATED TIMEFRAME FOR COMPLETION AND TENTATIVE TIMETABLE FOR IMPLEMENTATION PROPOSALS ANNOUNCED BUT PENDING COMPLETION DIRECTORS' RECOMMENDATION EGM FURTHER INFORMATION 11 APPENDIX I. FURTHER INFORMATION 12 NOTICE OF EGM FORM OF PROXY ENCLOSED ENCLOSED iii

5 DAIBOCHI PLASTIC AND PACKAGING INDUSTRY BHD (Company No.: W) (Incorporated in Malaysia under the Companies Act, 1965) Registered Office Kompleks Daibochi Plastic Lot 3 & 7, Air Keroh Industrial Estate Phase IV, Melaka Board of Directors 6 January 2016 P. James Edwin A/L Louis Pushparatnam (Chairman and Independent Non-Executive Director) Lim Soo Koon (Managing Director) Datuk Wira Wong Soon Lim (Executive Director) Low Chan Tian (Executive Director) Low Geoff Jin Wei (Executive Director) Heng Fu Joe (Independent Non-Executive Director) Caroline Ang Choo Bee (Independent Non-Executive Director) To: The shareholders of Daibochi Plastic And Packaging Industry Bhd Dear Sir/ Madam, I. PROPOSED SHARE SPLIT; II. III. PROPOSED BONUS ISSUE; AND PROPOSED AMENDMENTS 1. INTRODUCTION On 23 November 2015, RHBIB had, on behalf of the Board, announced that the Company proposes to undertake the following:- i. Proposed share split involving the subdivision of every one (1) existing ordinary share of RM1.00 each in Daibochi into two (2) ordinary shares of RM0.50 each in Daibochi held on an entitlement date to be determined later; ii. iii. Proposed bonus issue of up to 45,540,998 new Split Shares to be credited as fully paid-up on the basis of one (1) Bonus Share for every five (5) Split Shares held on the same entitlement date as the Proposed Share Split; and Proposed amendments to the Memorandum and Articles of Association of Daibochi to facilitate the implementation of the Proposed Share Split. Further details of the Proposals are set out in ensuing sections. 1

6 The Company currently has a share buy-back mandate which is in effect until 16 May As at the LPD, the Company has no treasury shares. However, in the event if the Company purchases any Daibochi Shares under the said share buy-back mandate prior to the completion of the Proposals, the issuance size of the Bonus Shares shall be reduced accordingly. THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE THE SHAREHOLDERS OF DAIBOCHI WITH THE RELEVANT INFORMATION ON THE PROPOSALS AS WELL AS TO SEEK THE APPROVAL FROM THE SHAREHOLDERS OF DAIBOCHI FOR THE RESOLUTIONS PERTAINING TO THE PROPOSALS TO BE TABLED AT THE FORTHCOMING EGM. THE NOTICE OF THE FORTHCOMING EGM AND THE FORM OF PROXY ARE ENCLOSED TOGETHER WITH THIS CIRCULAR. SHAREHOLDERS OF DAIBOCHI ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS CIRCULAR TOGETHER WITH THE APPENDIX CONTAINED HEREIN BEFORE VOTING ON THE RESOLUTIONS PERTAINING TO THE PROPOSALS TO BE TABLED AT THE FORTHCOMING EGM. 2. DETAILS OF THE PROPOSALS 2.1 Proposed Share Split Details of the Proposed Share Split The Proposed Share Split entails the subdivision of every one (1) existing ordinary share of RM1.00 each in Daibochi into two (2) ordinary shares of RM0.50 each in Daibochi held by shareholders of Daibochi whose names appear in the Record of Depositors of the Company as at the Split Entitlement Date. As at the LPD, the issued and paid-up share capital of Daibochi is RM113,852,496 comprising 113,852,496 Daibochi Shares. Upon completion of the Proposed Share Split, the resultant issued and paid-up share capital of Daibochi will be RM113,852,496 comprising 227,704,992 Split Shares. For illustrative purposes, based on the last transacted market price of Daibochi Shares as at the LPD, the market price of Split Shares after the Proposed Share Split shall theoretically be adjusted as follows:- Assumed no. of shares held Market price Total Par value per share value RM RM RM As at the LPD After the Proposed Share Split Accordingly, the Proposed Share Split is not expected to have any impact on the total value of ordinary shares held by shareholders in the Company. It is the intention of the Board to propose the Split Entitlement Date and the Bonus Entitlement Date to be on the same date, which will be determined and announced later by the Board upon receipt of all relevant approvals. 2

7 2.1.2 Ranking of the Split Shares The Split Shares will, upon allotment and issuance, rank pari passu in all respects with each other, except that the Split Shares will not be entitled to any dividends, rights, allotments and/ or any other forms of distributions that may be declared for which the entitlement date for the said distribution precedes the date of allotment and issuance of the Split Shares Listing of and quotation for the Split Shares Approval has been obtained from Bursa Securities vide its letter dated 15 December 2015 for the Proposed Share Split. No suspension will be imposed on the trading of Daibochi Shares on the Main Market of Bursa Securities for the purpose of implementing the Proposed Share Split as the Proposed Share Split is prescribed as a Specified Subdivision pursuant to paragraph 13.04(3) of the Listing Requirements. The Split Shares shall be listed and quoted on the Main Market of Bursa Securities concurrently with the Bonus Shares on the next market day following the Split Entitlement Date. 2.2 Proposed Bonus issue Basis and number of Bonus Shares to be issued The Proposed Bonus Issue will entail an issuance of up to 45,540,998 Bonus Shares to be credited as fully paid-up on the basis of one (1) Bonus Share for every five (5) Split Shares held by shareholders of Daibochi whose names appear in the Record of Depositors of the Company as at the Bonus Entitlement Date, which is intended to be on the same date as the Split Entitlement Date. Based on the paid-up share capital of Daibochi after the Proposed Share Split comprising 227,704,992 Split Shares, the Proposed Bonus Issue will entail an issuance of up to 45,540,998 Bonus Shares. Fractional entitlements arising from the Proposed Bonus Issue, if any, shall be dealt with in such manner as the Board shall in its absolute discretion deem fit and expedient, and to be in the best interest of the Company. The Proposed Bonus Issue will be implemented concurrently with the Proposed Share Split. The Proposed Bonus Issue will not be implemented in stages over a period of time Capitalisation of reserves The Proposed Bonus Issue shall be wholly capitalised from the retained earnings accounts of the Company. For avoidance of doubt, the estimated expenses for the Proposals shall be deducted from the share premium account of the Company. An illustration of the proposed capitalisation for the Proposed Bonus Issue based on Daibochi's audited financial statements for the FYE 31 December 2014 and the latest unaudited financial statements for the nine (9)-month FPE 30 September 2015 at the Company level is set out below:- 3

8 FYE 31 December 2014 Daibochi (Company level) RM'000 Retained earnings 41,672 Less: Dividends paid *1 (16,468) Less: Amount to be capitalised for the Proposed Bonus Issue Up to (22,771) Retained earnings after the Proposed Bonus Issue 2,433 FPE 30 September 2015 Daibochi (Company level) RM'000 Retained earnings 47,386 Less: Dividend paid *2 (3,983) Less: Amount to be capitalised for the Proposed Bonus Issue Up to (22,771) Retained earnings after the Proposed Bonus Issue 20,632 Notes:- *1 After adjusting for the following events:- i. Fourth interim single tier dividend of 3.50 sen per Share in respect of the FYE 31 December 2014 amounting to RM3.98 million which has been paid on 27 March 2015; ii. iii. iv. First interim single tier dividend of 3.50 sen per Share in respect of the FYE 31 December 2015 amounting to RM3.97 million which has been paid on 19 June 2015; Second interim single tier dividend of 4.00 sen per Share in respect of the FYE 31 December 2015 amounting to RM4.54 million which has been paid on 29 September 2015; and Third interim single tier dividend of 3.50 sen per Share in respect of the FYE 31 December 2015 amounting to RM3.98 million which has been paid on 28 December 2015 *2 After adjusting for the third interim single tier dividend of 3.50 sen per Share in respect of the FYE 31 December 2015 amounting to RM3.98 million which has been paid on 28 December 2015 Pursuant to Paragraph 6.30(1) of the Listing Requirements, a listed issuer intending to make a bonus issue of securities must ensure that the necessary reserves required for capitalisation of the bonus issue is unimpaired by losses on a consolidated basis, where applicable, based on the listed issuer's latest audited financial statements as well as its latest quarterly report. Based on Daibochi's audited consolidated financial statements for the FYE 31 December 2014 and the latest unaudited quarterly report for the nine (9)- month FPE 30 September 2015, the reserves available to be capitalised for the Proposed Bonus Issue are unimpaired by losses on a consolidated basis. Hence, the Company has complied with Paragraph 6.30(1) of the Listing Requirements. Purely for illustrative purposes only, based on the closing market price of Daibochi Shares as at the LPD of RM5.25, the theoretical ex-all price of Daibochi Shares after the Proposed Share Split and Proposed Bonus Issue is RM

9 2.2.3 Ranking of the Bonus Shares The Bonus Shares will, upon allotment and issuance, rank pari passu in all respects with each other, except that the Bonus Shares will not be entitled to any dividends, rights, allotments and/ or any other forms of distributions that may be declared for which the entitlement date for the said distribution precedes the date of allotment and issuance of the Bonus Shares Listing of and quotation for the Bonus Shares Approval has been obtained from Bursa Securities vide its letter dated 15 December 2015 for the listing of and quotation for the Bonus Shares to be issued pursuant to the Proposed Bonus Issue on the Main Market of Bursa Securities. The Bonus Shares shall be listed and quoted on the Main Market of Bursa Securities concurrently with the Split Shares on the next market day following the Bonus Entitlement Date. 2.3 Proposed Amendments In conjunction with the Proposed Share Split, Daibochi proposes to amend the Memorandum and Articles of Association as set out below:- i. to facilitate the subdivision of the par value of the existing ordinary shares of RM1.00 each in Daibochi to RM0.50 each in Daibochi; and ii. to amend the authorised share capital of Daibochi, whereby the authorised share capital of RM200,000,000 comprising 200,000,000 ordinary shares of RM1.00 each in Daibochi will be amended to RM200,000,000 comprising 400,000,000 ordinary shares of RM0.50 each in Daibochi. 3. RATIONALE FOR THE PROPOSALS 3.1 Proposed Share Split The adjustment in market price of Daibochi Shares pursuant to the Proposed Share Split is expected to result in the Split Shares being more affordable in order to possibly appeal to a wider group of public shareholders and investors. This in turn may also improve the liquidity of Daibochi Shares on the Main Market of Bursa Securities by increasing the number of shares in issue. 3.2 Proposed Bonus Issue After due consideration, the Board is of the view that the Proposed Bonus Issue is the most appropriate avenue of rewarding the existing shareholders of the Company while at the same time enhance the Company's capital base as the Proposed Bonus Issue will:- i. Reward the existing shareholders of the Company for their continuous support; ii. iii. Increase the Company's issued and paid-up share capital to a level which would be more reflective of its current scale of operations and assets employed; Enlarge the number of ordinary shares in the Company held by the Company's existing shareholders, albeit without increasing the percentage equity interest; and 5

10 iv. Be able to encourage trading liquidity of the ordinary shares of the Company on Bursa Securities and greater participation by investors as well as potentially broadening the shareholder base of the Company. 3.3 Proposed Amendments The Proposed Amendments are intended to facilitate the implementation of the Proposed Share Split. 4. EFFECTS OF THE PROPOSALS The effects of the Proposals (save for the Proposed Amendments which will not give rise to any financial effect herein this section) on the issued and paid-up share capital, NA per share and gearing, earnings and EPS and substantial shareholders' shareholdings of the Company, are based on the following scenarios:- 4.1 Issued and paid-up share capital The proforma effects of the Proposed Share Split and the Proposed Bonus Issue on the issued and paid-up share capital of Daibochi are set out below:- Par value RM No. of Shares RM Issued and paid-up share capital as at the LPD Issued and paid-up share capital after the Proposed Share Split Bonus Shares to be issued pursuant to the Proposed Bonus Issue ,852, ,852, ,704, ,852, ,540,998 22,770,499 Enlarged issued and paid-up share capital 273,245, ,622, NA per Share and gearing Based on the latest audited consolidated statement of financial position of Daibochi Group as at 31 December 2014, the proforma effects of the Proposed Share Split and the Proposed Bonus Issue on the consolidated NA per share and gearing of the Group are set out below:- Audited as at 31 December 2014 Subsequent adjustments up to the LPD *1 I II III After I and the After II and the Proposed Share Proposed Split Bonus Issue RM'000 RM'000 RM'000 RM'000 Share capital 113, , , ,623 Treasury shares (2,196) Share premium 2,941 3,014 2,864 *2 2,864 Translation reserve (341) (341) (341) (341) Retained earnings 54,067 37,600 37,600 14,830 Equity attributable to owners of the Company/ NA 168, , , ,976 No. of shares in issue (excluding treasury shares) ('000) 113, , , ,246 NA per share (RM) Total borrowings (RM'000) 59,521 59,521 59,521 59,521 Gearing ratio (times)

11 Notes:- *1 After adjusting for the following events:- i. Net movements in treasury shares of approximately RM2.20 million; ii. Fourth interim single tier dividend of 3.50 sen per Share in respect of the FYE 31 December 2014 amounting to RM3.98 million which has been paid on 27 March 2015; iii. First interim single tier dividend of 3.50 sen per Share in respect of the FYE 31 December 2015 amounting to RM3.97 million which has been paid on 19 June 2015; iv. Second interim single tier dividend of 4.00 sen per Share in respect of the FYE 31 December 2015 amounting to RM4.54 million which has been paid on 29 September 2015; and v. Third interim single tier dividend of 3.50 sen per Share in respect of the FYE 31 December 2015 amounting to RM3.98 million which has been paid on 28 December 2015 *2 After deducting the estimated expenses of RM150,000 in relation to the Proposals 4.3 Earnings and EPS The Proposed Share Split and the Proposed Bonus Issue, which are expected to be implemented by the first quarter of 2016, are not expected to have any material effect on the earnings of the Group for the FYE 31 December However, there will be a corresponding dilution in the EPS of the Group as a result of the increase in the number of Split Shares and Bonus Shares pursuant to the Proposed Share Split and Proposed Bonus Issue. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 7

12 4.4 Substantial shareholding structure The Proposed Bonus Issue and the Proposed Share Split will not have any effect on the percentage shareholdings of the substantial shareholders of Daibochi. However, the number of Daibochi Shares held by each substantial shareholder will increase proportionately as a result of the Proposed Share Split and the Proposed Bonus Issue. The proforma effects of the Proposed Share Split and the Proposed Bonus Issue on the substantial shareholders' shareholdings in the Company are set out below:- I Shareholdings as at the LPD After the Proposed Share Split < Direct >< Indirect > < Direct > < Indirect > Substantial shareholders No. of shares % No. of shares % No. of shares % No. of shares % Apollo Asia Fund Ltd 10,662, ,325, Low Chan Tian 11,752, ,505, Lim Koy Peng 8,620, ,240, Datuk Wira Wong Soon Lim 5,839, ,450 * ,678, ,578,900 * Hallev Sicav Halley Asian Prosperity 6,273, ,546, II After I and the Proposed Bonus Issue < Direct >< Indirect > Substantial shareholders No. of shares % No. of shares % Apollo Asia Fund Ltd 25,590, Low Chan Tian 28,206, Lim Koy Peng 20,688, Datuk Wira Wong Soon Lim 14,013, ,894,680 * Hallev Sicav Halley Asian Prosperity 15,055, Note:- *1 Deemed interested by virtue of the shareholding held through his spouse and child 8

13 4.5 Convertible securities As at the LPD, the Company does not have any convertible securities. 5. HISTORICAL SHARE PRICES The monthly highest and lowest market prices of Daibochi Shares as traded on Bursa Securities for the past 12 months from January 2015 to December 2015 are set out below:- High RM Low RM 2015 January February March April May June July August September October November December Last transacted market price on 20 November (being the date prior to the announcement on the Proposals) Last transacted market price on the LPD 5.25 (Source: Bloomberg) 6. APPROVALS REQUIRED/ OBTAINED The Proposals are conditional upon approvals being obtained from the following parties:- i. Bursa Securities, for the Proposed Share Split and the listing of and quotation for the Split Shares and Bonus Shares on the Main Market of Bursa Securities. The approval of Bursa Securities was obtained vide its letter dated 15 December 2015 and subject to the following conditions:- (a) (b) (c) Conditions Daibochi and RHBIB must fully comply with the relevant provisions under the Listing Requirements pertaining to the implementation of the Proposals Daibochi and RHBIB to inform Bursa Securities upon the completion of the Proposals Daibochi to furnish Bursa Securities with a written confirmation of its compliance with the terms and conditions of Bursa Securities' approval once the Proposals are completed Status of compliance To be complied To be complied To be complied 9

14 Conditions Status of compliance (d) (e) Daibochi and RHBIB are required to make the relevant announcements pursuant to Paragraphs 6.35(2)(a)&(b) and 6.35(4) of the Listing Requirements in relation to the Proposed Bonus Issue and Paragraph 13.10(2) of the Listing Requirements in relation to the Proposed Share Split Shareholders' approval for the Proposals. In this respect, Daibochi is required to furnish Bursa Securities with a certified true copy of the resolution passed by the shareholders approving the Proposals and proposed amendment to the Memorandum and Articles of Association of Daibochi prior to the listing and quotation of the Split Shares and Bonus Shares To be complied To be complied ii. The shareholders of Daibochi for the Proposals at the forthcoming EGM of the Company. The Proposed Share Split, the Proposed Bonus Issue and the Proposed Amendments are inter-conditional upon each other. The Proposals are not conditional upon any other proposals undertaken or to be undertaken by the Company. 7. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/ OR PERSONS CONNECTED TO THEM None of the Directors and/ or major shareholders of the Company and/ or persons connected to them have any interest, either direct or indirect, in the Proposals, save for their respective entitlements as shareholders of the Company under the Proposed Share Split and the Proposed Bonus Issue which are also available to all other shareholders of the Company. 8. ESTIMATED TIMEFRAME FOR COMPLETION AND TENTATIVE TIMETABLE FOR IMPLEMENTATION Barring any unforeseen circumstances and subject to all required approvals being obtained, the Board expects the Proposals to be completed by the first quarter of The tentative timetable in relation to the Proposals is set out below:- Month Events 30 January 2016 Convening of EGM to obtain approval for the Proposals Early February 2016 End February 2016 Announcement on the Split Entitlement Date Announcement on the Bonus Entitlement Date Split Entitlement Date Bonus Entitlement Date Listing of and quotation for the Split Shares and Bonus Shares on the Main Market of Bursa Securities 9. PROPOSALS ANNOUNCED BUT PENDING COMPLETION Save for the Proposals which are the subject matter in this Circular, the Board is not aware of any other outstanding proposals which have been announced but not yet completed as at the date of this Circular. 10

15 10. DIRECTORS' RECOMMENDATION The Board, having considered all aspects including the rationale and justifications as well as effects of the Proposals, is of the opinion that the Proposals are in the best interest of the Company. Accordingly, the Board recommends that you vote in favour of the resolutions pertaining to the Proposals to be tabled at the forthcoming EGM of the Company. 11. EGM The EGM, the notice of which is enclosed in this Circular, is scheduled to be held at Sky Lotus I & II, Level 30, Swiss-Garden Hotel & Residences Malacca, T2-4, The Melaka River, Jalan Persisiran Bunga Raya, Melaka on Saturday, 30 January 2016 at a.m., or at any adjournment thereof, for the purpose of considering and if thought fit, passing with or without modification, the resolutions to give effect to the Proposals. If you are unable to attend and vote in person at the EGM, you are requested to complete, sign and return the enclosed Form of Proxy in accordance with the instructions contained therein, to be deposited at the registered office of the Company at Kompleks Daibochi Plastic, Lot 3 & 7, Air Keroh Industrial Estate, Phase IV, Melaka, not less than 48 hours before the stipulated time for holding the EGM or at any adjournment thereof. The lodging of the Form of Proxy shall not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. 12. FURTHER INFORMATION Shareholders are advised to refer to the appendix set out in this Circular for further information. Yours faithfully, For and on behalf of the Board DAIBOCHI PLASTIC AND PACKAGING INDUSTRY BHD P. JAMES EDWIN A/L LOUIS PUSHPARATNAM Chairman and Independent Non-Executive Director 11

16 APPENDIX I FURTHER INFORMATION 1. DIRECTORS' RESPONSIBILITY STATEMENT This Circular has been seen and approved by the Board, and the Directors collectively and individually accept full responsibility for the accuracy of the information contained herein and confirm that, after making all reasonable enquiries and to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement herein misleading. 2. CONSENT RHBIB, being the Adviser for the Proposals, has given and has not subsequently withdrawn its written consent to the inclusion in this Circular of its name and all references thereto in the form and context in which they appear in this Circular. 3. DECLARATION OF CONFLICT OF INTERESTS RHBIB has given its written confirmation that as at the date of this Circular, there is no situation of conflict of interests that exists or is likely to exist in relation to its role as the Adviser to Daibochi for the Proposals. 4. MATERIAL COMMITMENTS Save as disclosed below, as at the LPD, the Board is not aware of any material commitments incurred or known to be incurred by the Group that has not been provided for which, upon becoming enforceable, may have a material impact on the financial results/ position of the Group:- RM'000 Property, plant and equipment Authorised and contracted for 5, CONTINGENT LIABILITIES As at the LPD, the Board is not aware of any contingent liabilities incurred or known to be incurred which, upon becoming enforceable, may have a material impact on the financial results/ position of the Group. 6. MATERIAL LITIGATION As at the LPD, the Group is not engaged in any material litigation, claims or arbitration, either as plaintiff or defendant, and the Board is not aware and has no knowledge of any proceedings pending or threatened against the Group, or of any facts likely to give rise to any proceedings, which might materially or adversely affect the financial position or business of the Group. 12

17 7. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents are available for inspection at the registered office of the Company at Kompleks Daibochi Plastic, Lot 3 & 7, Air Keroh Industrial Estate, Phase IV, Melaka, during normal business hours from Mondays to Fridays (except public holidays) from the date of this Circular up to the date of the forthcoming EGM of the Company:- i. Memorandum and Articles of Association of Daibochi; ii. Audited consolidated financial statements of Daibochi Group for the past two (2) financial years up to the FYE 31 December 2014 and the latest unaudited quarterly report of Daibochi for the nine (9)-month FPE 30 September 2015; and iii. The letter of consent and declaration of conflict of interests referred to in Sections 2 and 3 above, respectively. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 13

18 DAIBOCHI PLASTIC AND PACKAGING INDUSTRY BHD (Company No.: W) (Incorporated in Malaysia under the Companies Act, 1965) NOTICE OF EXTRAORDINARY GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Extraordinary General Meeting of Daibochi Plastic And Packaging Industry Bhd ("Daibochi" or the "Company") will be held at Sky Lotus I & II, Level 30, Swiss-Garden Hotel & Residences Malacca, T2-4, The Melaka River, Jalan Persisiran Bunga Raya, Melaka on Saturday, 30 January 2016 at a.m., or at any adjournment thereof, for the purpose of considering and if thought fit, passing with or without modifications the following resolutions:- ORDINARY RESOLUTION 1 PROPOSED SHARE SPLIT INVOLVING THE SUBDIVISION OF EVERY ONE (1) EXISTING ORDINARY SHARE OF RM1.00 EACH IN DAIBOCHI ("DAIBOCHI SHARE(S)" OR SHARE(S)") INTO TWO (2) ORDINARY SHARES OF RM0.50 EACH IN DAIBOCHI ("SPLIT SHARE(S)" OR "SHARE(S)") HELD ON AN ENTITLEMENT DATE TO BE DETERMINED LATER ("PROPOSED SHARE SPLIT") "THAT, subject to the passing of Ordinary Resolution 2 and the Special Resolution, and the approvals of all relevant regulatory authorities being obtained, where required, approval be and is hereby given to the Board of Directors of the Company ("Board") to subdivide each of Daibochi Shares, held by the shareholders of Daibochi whose names appear in the Record of Depositors of the Company as at the close of business on a date to be determined and announced later by the Board ("Split Entitlement Date"), into two (2) Split Shares; THAT, upon subdivision, the Split Shares shall, upon allotment and issuance, rank pari passu in all respects with each other; AND THAT, the Board be and is hereby authorised to take all such necessary steps to give effect to the Proposed Share Split with full powers to assent to any conditions, variations, modifications, termination and/ or amendments in any manner as may be required by the relevant authorities or deemed necessary by the Board, and to take all steps and to do all such acts and matters as the Board may consider necessary or expedient to implement, finalise and give full effect to the Proposed Share Split." ORDINARY RESOLUTION 2 PROPOSED BONUS ISSUE OF UP TO 45,540,998 NEW SPLIT SHARES ("BONUS SHARE(S)") TO BE CREDITED AS FULLY PAID-UP ON THE BASIS OF ONE (1) BONUS SHARE FOR EVERY FIVE (5) SPLIT SHARES HELD ON THE SAME ENTITLEMENT DATE AS THE PROPOSED SHARE SPLIT ("PROPOSED BONUS ISSUE") "THAT, subject to the passing of Ordinary Resolution 1 and the Special Resolution, and the approvals of all relevant authorities being obtained, where required, in respect of the listing of and quotation for up to 45,540,998 Bonus Shares on the Main Market of Bursa Malaysia Securities Berhad, the Board be and is hereby authorised to capitalise a total sum of up to RM22.77 million from the retained earnings account of the Company for the purposes of the Proposed Bonus Issue; THAT the Board be and is hereby authorised to apply such capitalisation sum and to issue at par, up to 45,540,998 Bonus Shares to be credited as fully paid-up and such new Bonus Shares be allotted to the shareholders of the Company whose names appear in the Record of Depositors as at the close of business on an entitlement date to be determined and announced later by the Board ("Bonus Entitlement Date"), which is intended to be on the same date as the Split Entitlement Date, on the basis of one (1) Bonus Share for every five (5) Split Shares held in the Company on the Bonus Entitlement Date;

19 THAT, the Board be and is hereby authorised to deal with any fractional entitlements from the Proposed Bonus Issue in such a manner at its absolute discretion as the Board may deem fit and expedient and in the best interest of the Company; THAT, the Bonus Shares will, upon allotment and issuance, rank pari passu in all respects with each other, except that the Bonus Shares will not be entitled to any dividends, rights, allotments and/ or any other forms of distributions that may be declared for which the entitlement date for the said distribution precedes the date of allotment and issuance of the Bonus Shares; AND THAT, the Board be and is hereby authorised to take all such necessary steps to give effect to the Proposed Bonus Issue with full powers to assent to any conditions, variations, modifications, termination and/ or amendments in any manner as may be required by the relevant authorities or deemed necessary by the Board, and to take all steps and to do all such acts and matters as the Board may consider necessary or expedient to implement, finalise and give full effect to the Proposed Bonus Issue." SPECIAL RESOLUTION PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF DAIBOCHI TO FACILITATE THE IMPLEMENTATION OF THE PROPOSED SHARE SPLIT ("PROPOSED AMENDMENTS") "THAT, subject to the passing of Ordinary Resolution 1 and Ordinary Resolution 2, approval be and is hereby given to the Company to alter, modify, vary and delete the Memorandum and Articles of Association of Daibochi in the following manner:- Clause 5 of Memorandum of Association Article 3 of Articles of Association Existing The capital of the Company is RM200,000, divided into 200,000,000 ordinary shares of RM1.00 each, with power for the Company to increase or reduce such capital and to issue any part of its capital, original, or increased, with or without any preference, priority or special privilege, or subject to any postponement of rights, or to any conditions or restrictions; and so that, unless the conditions of issue shall otherwise expressly declare every issue of shares, whether declared to be preference or otherwise, shall be subject to the power hereinbefore contained. At the date of the adoption of this Article, the authorised capital of the Company is $20,000,000/= divided into 20,000,000 ordinary shares of $1/= each. Proposed amendment The authorised share capital of the Company is RM200,000, divided into 400,000,000 ordinary shares of RM0.50 each with power for the Company from time to time to increase or reduce its share capital, to divide the shares in the share capital into several classes, and to attach to any class or classes of shares any preferential, deferred, qualified or special rights, privileges or conditions. The authorised share capital of the Company is RM200,000, divided into 400,000,000 ordinary shares of RM0.50 each. AND THAT, the Board be and is hereby authorised to take all such necessary steps to give effect to the Proposed Amendments with full powers to assent to any conditions, variations, modifications, termination and/ or amendments in any manner as may be required by the relevant authorities or deemed necessary by the Board, and to take all steps and to do all such acts and matters as the Board may consider necessary or expedient to implement, finalise and give full effect to the Proposed Amendments." By Order of the Board Tan Gaik Hong (MIA 4621) Company Secretary Melaka 6 January 2016

20 Notes:- 1. For the purpose of determining a member who shall be entitled to attend this EGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Article 67(b) of the Company s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act 1991, to issue a General Meeting Record of Depositors as at 22 January Only a depositor whose name appears on the Record of Depositors as at 22 January 2016 shall be entitled to attend the said meeting or appoint proxies to attend and/ or vote on his/ her behalf. 2. A member entitled to attend and vote at the meeting is entitled to appoint up to two (2) proxies to attend and vote in his/ her stead. A proxy need not be a member of the Company. 3. Where a member appoints two (2) proxies, he/ she shall specify the proportion of his/her shareholdings to be represented by each proxy. 4. A member of the Company who is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 5. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account ("omnibus account"), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds. 6. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/ her attorney duly authorised in writing. If the appointor is a corporation, the Form of Proxy must be executed under its Common Seal or under the hand of its officer or duly authorised attorney. 7. The instrument appointing a proxy must be deposited at the registered office of the Company at Kompleks Daibochi Plastic, Lot 3 & 7 Air Keroh Industrial Estate, Phase IV, Melaka not less than forty-eight (48) hours before the time appointed for holding the meeting or at any adjournment thereof.

21 FORM OF PROXY CDS account no. No. of shares held I/We (FULL NAME IN BLOCK LETTERS) IC No./ID No./Company No... (NEW & OLD IC. No.) of.... (FULL ADDRESS) being a member(s) of DAIBOCHI PLASTIC AND PACKAGING INDUSTRY BHD, hereby appoint.. (FULL NAME IN BLOCK LETTERS) IC No./ID No... (NEW & OLD IC No.) of. and/ or (FULL ADDRESS) failing whom. (FULL NAME IN BLOCK LETTERS) IC No./ID No... (NEW & OLD IC No.) of (FULL ADDRESS) or failing him/ her THE CHAIRMAN OF THE MEETING as my/ our proxy to attend and vote for me/ us on my/ our behalf at the Extraordinary General Meeting ("EGM") of the Company, to be held at Sky Lotus I & II, Level 30, Swiss-Garden Hotel & Residences Malacca, T2-4, The Melaka River, Jalan Persisiran Bunga Raya, Melaka on Saturday, 30 January 2016 at a.m. and at any adjournment thereof. My/ our proxy is to vote as indicated below. RESOLUTIONS FOR AGAINST ORDINARY RESOLUTION 1 PROPOSED SHARE SPLIT ORDINARY RESOLUTION 2 PROPOSED BONUS ISSUE SPECIAL RESOLUTION PROPOSED AMENDMENTS (Please indicate with an "X" in the spaces provided how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his/ her discretion) For appointment of two proxies, percentage of shareholdings to be represented by the Signature/ Common Seal proxies: No. of shares Percentage Proxy 1 % Contact No. : Proxy 2 % Total 100% Date: NOTES: - 1. For the purpose of determining a member who shall be entitled to attend this EGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Article 67(b) of the Company s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act 1991, to issue a General Meeting Record of Depositors as at 22 January Only a depositor whose name appears on the Record of Depositors as at 22 January 2016 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf. 2. A member entitled to attend and vote at the meeting is entitled to appoint up to two (2) proxies to attend and vote in his/ her stead. A proxy need not be a member of the Company. 3. Where a member appoints two (2) proxies, he/she shall specify the proportion of his/her shareholdings to be represented by each proxy. 4. A member of the Company who is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 5. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account ("omnibus account"), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds. 6. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing. If the appointor is a corporation, the Form of Proxy must be executed under its Common Seal or under the hand of its officer or attorney duly authorised. 7. The instrument appointing a proxy must be deposited at the Registered Office of the Company at Kompleks Daibochi Plastic, Lot 3 & 7 Air Keroh Industrial Estate, Phase IV, Melaka not less than forty-eight (48) hours before the time appointed for holding the meeting.

22 Fold this flap for sealing Then fold here AFFIX STAMP DAIBOCHI PLASTIC AND PACKAGING INDUSTRY BHD Kompleks Daibochi Plastic Lot 3 & 7 Ayer Keroh Industrial Estate, Phase IV, Melaka. West Malaysia. P.O.Box 263, Melaka, West Malaysia. 1st fold here