KULIM (MALAYSIA) BERHAD (Company No V) (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 relevant sections of this Circular pertaining to the Proposed Renewal of Share Buy-Back Authority (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. KULIM (MALAYSIA) BERHAD (Company No V) (Incorporated in Malaysia under the Companies Act, 1965) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE (I) PROPOSED RENEWAL OF SHAREHOLDERS MANDATE TO ENABLE KULIM (MALAYSIA) BERHAD TO PURCHASE UP TO TEN PERCENT (10%) OF ITS ISSUED AND PAID-UP SHARE CAPITAL; AND (II) PROPOSED RENEWAL OF EXISTING SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS The Annual General Meeting ( AGM ) of the Company has been scheduled to be held at Permata Ballroom, Level B2, The Puteri Pacific Hotel Johor Bahru, Jalan Abdullah Ibrahim, Johor Bahru, Johor, Malaysia on Tuesday, 3 May 2016 at a.m. The resolutions pertaining to the above proposals are set out in the Notice of the Company s Forty-first (41 st ) AGM, which is attached in the Annual Report of the Company for the financial year ended 31 December 2015, together with the Form of Proxy. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and to vote on his/her behalf. In such event, the Form of Proxy should be lodged at the registered office of the Company at Level 11, Menara KOMTAR, Johor Bahru City Centre, Johor Bahru, Johor, Malaysia on or before the date and time indicated below. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the AGM should you subsequently wish to do so. Last date and time for lodging the Form of Proxy... : Sunday, 1 May 2016 at a.m. Date and time of the AGM.. : Tuesday, 3 May 2016 at a.m. This Circular is dated 11 April 2016

2 DEFINITIONS For ease of reference, all definitions or abbreviations in this Circular shall be define herein:- Act : Companies Act, 1965 AGM : Annual General Meeting Board : Board of Directors of Kulim Bursa Securities : Bursa Malaysia Securities Berhad (Company No W) Circular : This circular to shareholders of Kulim dated 11 April 2016 Code : Malaysian Code on Take-Overs & Mergers, 2010, and any amendments from time to time Director(s) : Any person occupying the position of a director of a corporation and as defined in section 2(1) of the CMSA EPS : Earnings per Share ESOS : Employees share option scheme established by Kulim on 31 December 2013 ESOS Option(s) : Being options which were issued by Kulim on 31 December 2013 under the ESOS FFB : Fresh fruit bunches FYE : Financial year ended/ending, as the case may be JCorp : Johor Corporation Kulim or the Company : Kulim (Malaysia) Berhad (Company No V) Kulim Group or the Group Kulim Share(s) or Share(s) : Kulim and its subsidiary companies, collectively : Ordinary share(s) of RM0.25 each in Kulim Listing Requirements : Main Market Listing Requirements of Bursa Securities and any amendments from time to time LPD : 17 March 2016, being the latest practicable date prior to the printing of this Circular Major Shareholder(s) : A person, who includes 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, has an interest or interests in one (1) or more voting shares in the Company or any company which is its subsidiary or holding company ( group of companies ) and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is:- (a) ten percent (10%) or more of the aggregate of the nominal amounts of all the voting shares in the group of companies; or (b) five percent (5%) or more of the aggregate of the nominal amounts of all the voting shares in the group of companies where such person is the largest shareholder in the group of companies. For the purpose of this definition, interest in shares shall have the meaning given in Section 6A of the Act i

3 DEFINITIONS (Cont d) Market Day(s) : Any day(s) between Monday to Friday (inclusive), excluding public holidays, and a day on which Bursa Securities is open for trading of securities NA : Net assets Outstanding ESOS Option(s) : Being 36,741,560 outstanding ESOS option(s) as at the LPD which were issued by Kulim on 31 December 2013, whereby each ESOS option is convertible into one (1) Kulim Share at an exercise price of RM2.69 Proposals : Collectively, the Proposed Renewal of Share Buy-Back Authority and Proposed Shareholders Mandate for RRPT Proposed Renewal of Share Buy-Back Authority Proposed Shareholders Mandate for RRPT : Proposed renewal of shareholders mandate to enable Kulim to purchase up to ten percent (10%) of its issued and paid-up share capital at any point in time : Proposed renewal of existing shareholders mandate for RRPT and new shareholders mandate for additional RRPT of a revenue and/or trading nature Purchased Share(s) : Kulim Share(s) purchased pursuant to the Proposed Renewal of Share Buy-Back Authority Record of Depositors : A record of securities holders established by Bursa Malaysia Depository Sdn Bhd under the Rules of Bursa Depository Recurrent Transaction(s) or RRPT : Recurrent related party transaction(s) of a revenue and/or trading nature, which are necessary for the day-to-day operations of Kulim and/or its subsidiaries within the ordinary course of business of Kulim and/or its subsidiaries Related Company(ies) : A company which transacts with the Kulim Group, which involves the interest, whether direct or indirect, of a Related Party Related Party(ies) : A Director, Major Shareholder and/or person connected with such Director or Major Shareholder as defined under the Listing Requirements RHB Investment Bank or the Adviser : RHB Investment Bank Berhad (Company No P) RM and sen : Ringgit Malaysia and sen, respectively VWAP : Volume Weighted Average Market Price Words denoting the singular shall, where applicable, include the plural and vice versa. Words denoting the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Any reference to persons shall include corporations, 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 a day in this Circular shall be a reference to Malaysian time, unless otherwise specified. Any discrepancies in the tables included in this Circular between the amounts listed, actual figures and the totals thereof are due to rounding. ii

4 TABLE OF CONTENTS PAGE LETTER TO THE SHAREHOLDERS OF KULIM CONTAINING:- 1. INTRODUCTION 1 2. PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY 2.1 Quantum Funding Duration Purchase price Treatment of Purchased Shares Public shareholding spread Potential advantages and disadvantages of the Proposed Renewal of Share Buy-Back Authority 2.8 Rationale for and benefits of the Proposed Renewal of Share Buy-Back Authority Effects of the Proposed Renewal of Share Buy-Back Authority Implication of the Code Historical share prices Previous purchases, resale and cancellation of treasury shares PROPOSED SHAREHOLDERS MANDATE FOR RRPT 3.1 Details of the Proposed Shareholders Mandate for RRPT Principal activities of the Group Details of Related Parties Nature of the RRPTs contemplated Basis of estimates Validity period of the Proposed Shareholders Mandate for RRPT Review procedures for the Recurrent Transactions Thresholds for approval of RRPT Statement by the audit committee Disclosure in annual report Rationale for and benefits of the Proposed Shareholders Mandate for RRPT Effects of the Proposed Shareholders Mandate for RRPT APPROVALS REQUIRED INTERESTS OF DIRECTORS, MAJOR SHAREHOLDER AND PERSONS CONNECTED TO THEM DIRECTORS RECOMMENDATION 29 iii

5 TABLE OF CONTENTS (Cont d) PAGE 7. AGM FURTHER INFORMATION 30 APPENDIX I FURTHER INFORMATION 31 EXTRACT OF RESOLUTIONS ENCLOSED THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK iv

6 KULIM (MALAYSIA) BERHAD (Company No V) (Incorporated in Malaysia under the Companies Act, 1965) Registered Office: Level 11 Menara KOMTAR, Johor Bahru City Centre, Johor Bahru, Johor, Malaysia 11 April 2016 Board of Directors:- Dato Kamaruzzaman Abu Kassim Ahamad Mohamad Jamaludin Md Ali Abdul Rahman Sulaiman Zulkifli Ibrahim Rozaini Mohd Sani Tan Sri Dato Seri Utama Arshad Ayub Tan Sri Datin Paduka Siti Sa diah Sh Bakir Datuk Haron Siraj Dr. Radzuan A. Rahman Leung Kok Keong (Non-Independent Non-Executive Chairman) (Managing Director) (Executive Director) (Executive Director) (Non-Independent Non-Executive Director) (Non-Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) To: The shareholders of Kulim Dear Sir/Madam, (I) (II) PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY; AND PROPOSED SHAREHOLDERS MANDATE FOR RRPT (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) 1. INTRODUCTION On 2 June 2015, the Company announced that the shareholders had at the Fortieth (40 th ) AGM held on the same date approved the resolutions pertaining to the following:- (a) the renewal of shareholders mandate to enable Kulim to purchase up to ten percent (10%) of its issued and paid-up share capital; and 1

7 (b) the renewal of the existing shareholders mandate for the Company and/or its subsidiaries to enter into RRPT with Related Parties that are necessary for day-today operations, in the ordinary course of business, carried out on normal commercial terms, and on terms not more favourable to the Related Parties than those generally available to the public. The said authorities shall, in accordance with the Listing Requirements, expire at the conclusion of the forthcoming Forty-first (41 st ) AGM of the Company. In this regard, on 24 March 2016, the Board announced the Company s intention to seek the approval of its shareholders for the following matters at the forthcoming AGM of Kulim, which will be held on 3 May 2016:- (a) (b) proposed renewal of shareholders mandate for the purchase of the Company s own Shares in accordance with Section 67A of the Act, the Articles of Association of the Company and the Listing Requirements; and proposed renewal of existing shareholders mandate for RRPT pursuant to Paragraph of the Listing Requirements. The purpose of this Circular is to provide you with details and information pertaining to the Proposals, together with the Board s recommendation, and to seek your approval for the resolutions to be tabled at the forthcoming AGM of the Company, to be convened at Permata Ballroom, Level B2, The Puteri Pacific Hotel Johor Bahru, Jalan Abdullah Ibrahim, Johor Bahru, Johor, Malaysia on Tuesday, 3 May 2016 at a.m. SHAREHOLDERS OF KULIM ARE ADVISED TO READ AND CAREFULLY CONSIDER THE CONTENTS OF THIS CIRCULAR TOGETHER WITH THE APPENDIX CONTAINED HEREIN BEFORE VOTING ON THE RESOLUTIONS TO GIVE EFFECT TO THE PROPOSALS AT THE FORTHCOMING AGM. 2. PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY The Board proposes to seek shareholders approval for the renewal of authority for the Company to purchase up to ten percent (10%) of the Company s issued and paid-up share capital at any point in time, subject to Section 67A of the Act, Chapter 12 of the Listing Requirements and any prevailing laws, rules, regulations, orders, guidelines, and requirements issued by the relevant authorities ( Prevailing Laws ) at the time of purchase. 2.1 Quantum The maximum aggregate number of Kulim Shares, which may be purchased by the Company, shall not exceed ten percent (10%) of the total issued and paid-up share capital of the Company at any point in time. For illustrative purposes, the maximum aggregate number of Kulim Shares that may be purchased under the Proposed Renewal of Share Buy-Back Authority based on the existing issued and paid-up share capital and the number of treasury shares held as at the LPD, are set out below:- 2

8 Scenario 1 Scenario 2 Assuming none of the Outstanding ESOS Options are exercised No. of Kulim Shares RM Assuming all the Outstanding ESOS Options are exercised No. of Kulim Shares RM Issued and paid-up share capital as at the LPD To be issued assuming full exercise of the Outstanding ESOS Options Enlarged issued and paid-up share capital Ten percent (10%) of the issued and paid-up share capital Less: Treasury shares held by the Company as at the LPD Remaining number of Kulim Shares that may be purchased by Kulim 1,393,815, ,453,958 1,393,815, ,453, ,741,560 9,185,390 1,393,815, ,453,958 1,430,557, ,639, ,381,583 34,845, ,055,739 35,763,935 (122,958,300) (30,739,575) (122,958,300) (30,739,575) 16,423,283 4,105,821 20,097,439 5,024,360 The actual number of Kulim Shares to be purchased will depend on, amongst others, market conditions, the availability of retained profits, share premium and financial resources of the Company at the time of the purchase(s). 2.2 Funding The Proposed Renewal of Share Buy-Back Authority may be funded through internally-generated funds and/or bank borrowings as long as the purchase is backed by an equivalent amount of retained profits and/or share premium of the Company, subject to compliance with the Prevailing Laws. As at the LPD, Kulim has not determined the source of funding for the Proposed Renewal of Share Buy-Back Authority. The actual amount of funds to be utilised for the Proposed Renewal of Share Buy- Back Authority will only be determined later depending on the actual number of Kulim Shares to be purchased, the availability of funds at the time of purchase(s) and other relevant cost factors. The Proposed Renewal of Share Buy-Back Authority, if funded through internallygenerated funds, is not expected to have a material impact on the cashflow position of the Company. In the event the Proposed Renewal of Share Buy-Back Authority is to be financed by bank borrowings, the Company will ensure its capabilities of repaying such borrowings and that such repayment will not have a material effect on its cashflow. Based on Kulim s latest audited financial statements as at 31 December 2015, the retained profits and share premium of Kulim are RM2.64 billion and RM million respectively. 3

9 2.3 Duration The authority from the shareholders of Kulim to undertake the Proposed Renewal of Share Buy-Back Authority, if granted, shall be effective upon the passing of the relevant ordinary resolution for the Proposed Renewal of Share Buy-Back Authority (as set out in the enclosed extract of the relevant resolutions as set out in the Notice of AGM) at the forthcoming AGM until:- (a) (b) (c) the conclusion of the next AGM of Kulim following the general meeting at which the ordinary resolution for the Proposed Renewal of Share Buy-Back Authority is passed, at which time it shall lapse, unless the authority is renewed by a resolution passed at the next AGM; or the expiration of the period within which the next AGM is required by law to be held; or revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting, whichever occurs first. The shareholders approval for the Proposed Renewal of Share Buy-Back Authority does not impose an obligation on the Company to purchase its own Shares. However, it will further allow the Board to exercise the power of the Company to purchase its own Shares at any time within the abovementioned time period. 2.4 Purchase price Pursuant to Paragraph of the Listing Requirements, the Company may only purchase its own Shares on Bursa Securities at a price which is not more than fifteen percent (15%) above the VWAP of the Kulim Shares for the five (5) Market Days immediately before the date of the purchase(s). 2.5 Treatment of Purchased Shares In accordance with Section 67A of the Act, the Directors of the Company may deal with the Purchased Shares in either of the following manner:- (a) (b) (c) cancel the Purchased Shares; or retain the Purchased Shares as treasury shares for distribution as share dividends to the shareholders of the Company and/or be resold through Bursa Securities in accordance with the relevant rules of Bursa Securities and/or be cancelled subsequently; or retain part of the Purchased Shares as treasury shares and cancel the remainder. The Board may decide to retain the Purchased Shares as treasury shares and subsequently resell them on Bursa Securities if the opportunity arises for the Company to realise gains from the resale on Bursa Securities. On the other hand, the Board may distribute the Purchased Shares as share dividends, which will depend on the availability of, amongst others, retained profits, share premium and tax credits of the Company, or cancel the Purchased Shares if the Board decides to change the capital structure of the Company. 4

10 In the event the Purchased Shares are held as treasury shares, the rights attaching to them in relation to voting, dividends and participation in any other distribution or otherwise, would be suspended and the treasury shares would not be taken into account in calculating the number of percentage of shares, or of 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. According to Paragraph of the Listing Requirements, in the case of a resale of treasury shares, if any, the Company may only resell any treasury shares on Bursa Securities at:- (a) a price which is not less than the VWAP for the Kulim Shares for the five (5) Market Days immediately before the resale; or (b) a discounted price of not more than five percent (5%) to the VWAP for the Kulim Shares for the five (5) Market Days immediately before the resale provided that:- (i) (ii) the resale takes place no earlier than thirty (30) days from the date of purchase; and the resale price is not less than the cost of purchase of the Kulim Shares being resold. An immediate announcement will be made to Bursa Securities in respect of the intention of the Directors to either retain the Purchased Shares as treasury shares or cancel them or a combination of both following any transaction executed pursuant to the authority granted under the Proposed Renewal of Share Buy-Back Authority. 2.6 Public shareholding spread The Proposed Renewal of Share Buy-Back Authority will be carried out in accordance with the Prevailing Laws at the time of the purchase including compliance with the twenty-five percent (25%) shareholding spread requirements as set out under Paragraph 8.02(1) of the Listing Requirements. As at the LPD, the public shareholding spread of Kulim stood at 432,592,540 Kulim Shares representing approximately 34.04% in the hands of 8,819 public shareholders holding not less than 100 Kulim Shares each. Assuming the Proposed Renewal of Share Buy-Back Authority is implemented in full and all the Kulim Shares so purchased (assuming all Kulim Shares so purchased are from public shareholders in the market) and thereafter cancelled, the public shareholding spread is expected to be reduced to 416,169,257 Kulim Shares representing approximately 33.18% (on the basis that none of the Outstanding ESOS Options are exercised). The Company will endeavour to ensure that the Proposed Renewal of Share Buy- Back Authority will not breach Paragraph of the Listing Requirements, which states that a listed company must not purchase its own shares on Bursa Securities if that purchase(s) will result in the listed company being in breach of the public shareholding spread requirements as set out under Paragraph 8.02(1) of the Listing Requirements. 5

11 2.7 Potential advantages and disadvantages of the Proposed Renewal of Share Buy-Back Authority The potential advantages of the Proposed Renewal of Share Buy-Back Authority to the Company and its shareholders are as follows:- (a) (b) (c) (d) allows the Company to take preventive measures against speculation particularly when its shares are undervalued, which would in turn, stabilise the market price of Kulim Shares and hence, enhance investors confidence; allows the Company flexibility in achieving the desired capital structure, in terms of debt and equity composition and size of equity; if the Purchased Shares which are retained as treasury shares are resold at a higher price, it will provide the Company with opportunities for potential gains; and if the treasury shares are distributed as share dividends by the Company, it may then serve to reward the shareholders of the Company. The potential disadvantages of the Proposed Renewal of Share Buy-Back Authority to the Company and its shareholders are as follows:- (a) (b) the Proposed Renewal of Share Buy-Back Authority will reduce the financial resources of the Group and may result in the Group foregoing other investment opportunities that may emerge in the future; and as the Proposed Renewal of Share Buy-Back Authority can only be made out of retained profits and/or share premium of the Company, it may result in the reduction of financial resources available for distribution to shareholders in the immediate future. 2.8 Rationale for and benefits of the Proposed Renewal of Share Buy-Back Authority The Proposed Renewal of Share Buy-Back Authority, if implemented, will enable Kulim to utilise its surplus financial resources, which is not immediately required for other uses, to purchase its own Shares from the market. The Proposed Renewal of Share Buy-Back Authority is expected to stabilise the supply and demand, as well as the price of Kulim Shares. If the Kulim Shares purchased are subsequently cancelled, the Proposed Renewal of Share Buy-Back Authority may strengthen the EPS of Kulim. Consequently, long-term investors are expected to enjoy a corresponding increase in the value of their investments in the Company. The Purchased Shares can also be held as treasury shares and resold on Bursa Securities at a higher price therefore 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. The Proposed Renewal of Share Buy-Back Authority is not expected to have any potential material disadvantage to the Company and its shareholders, and it will be implemented only after due consideration of the financial resources of the Kulim Group, and of the resultant impact on the shareholders of the Company. The Board will be mindful of the interests of Kulim and its shareholders in undertaking the Proposed Renewal of Share Buy-Back Authority. 6

12 2.9 Effects of the Proposed Renewal of Share Buy-Back Authority The effects of the Proposed Renewal of Share Buy-Back Authority on the Company s issued and paid-up share capital, NA and working capital, earnings, dividend and substantial shareholders and Directors shareholdings are set out below: Issued and paid-up share capital The effect of the Proposed Renewal of Share Buy-Back Authority on the issued and paid-up share capital of Kulim will depend on whether the Purchased Shares are cancelled or retained as treasury shares. Based on the issued and paid-up share capital of the Company as at the LPD, and assuming that the maximum number of Kulim Shares (of up to ten percent (10%) of the issued and paid-up share capital) authorised under the Proposed Renewal of Share Buy-Back Authority are purchased and cancelled, the effects of the Proposed Renewal of Share Buy Back Authority are set out below:- Scenario 1 Scenario 2 Assuming none of the Outstanding ESOS Options are exercised No. of Kulim Shares RM Assuming all the Outstanding ESOS Options are exercised No. of Kulim Shares RM Issued and paid-up share capital as at the LPD To be issued assuming full exercise of the Outstanding ESOS Options Enlarged issued and paid-up share capital Less: Assuming all treasury shares held by the Company as at the LPD are cancelled Less: Assuming Kulim Shares purchased under the Proposed Renewal of Share Buy-Back Authority are cancelled (1) Resultant issued and paid-up share capital 1,393,815, ,453,958 1,393,815, ,453, ,741,560 9,185,390 1,393,815, ,453,958 1,430,557, ,639,348 (122,958,300) (30,739,575) (122,958,300) (30,739,575) (16,423,283) (4,105,821) (20,097,439) (5,024,360) 1,254,434, ,608,562 1,287,501, ,875,413 Note:- (1) Assuming the Kulim Shares purchased pursuant to the Proposed Renewal of Share Buy-Back Authority is based on the maximum number of Kulim Shares that may be purchased under the respective scenarios. On the other hand, if the Kulim Shares purchased are retained as treasury shares, resold or distributed to its shareholders, the Proposed Renewal of Share Buy-Back Authority will have no effect on the issued and fully paid-up share capital of Kulim. 7

13 2.9.2 NA and working capital The effect of the Proposed Renewal of Share Buy-Back Authority on the NA of the Kulim Group will depend on the actual number of Kulim Shares purchased, the prices paid for such Kulim Shares, the effective funding cost to the Kulim Group to finance the purchase of such Kulim Shares, if any, or any loss in interest income to Kulim, and whether the Purchased Shares are cancelled or retained as treasury shares. If all Purchased Shares are cancelled, the NA of the Group would decrease if the purchase price per Purchased Share exceeds the NA per Kulim Share at the relevant point in time, and vice versa. The NA of the Group would decrease if the Purchased Shares are retained as treasury shares, as the treasury shares will be carried at cost and be offset against equity. If the treasury shares are resold on Bursa Securities, the NA of the Kulim Group would increase if the Company realises a gain from the resale, and vice versa. If the treasury shares are distributed as share dividends, the NA of the Kulim Group would decrease by the cost of the treasury shares. The Proposed Renewal of Share Buy-Back Authority will reduce funds available for working capital of the Company and the Kulim Group, the quantum of which will depend on, amongst others, the number of Kulim Shares purchased, the purchase price(s) of Kulim Shares and any costs incurred in making the purchase Earnings Depending on the number of Kulim Shares purchased, the prices paid for such Kulim Shares, the effective funding cost to Kulim to finance the purchase of such Kulim Shares, or any loss in interest income to Kulim or opportunity cost in relation to other investment opportunities, the Proposed Renewal of Share Buy-Back Authority may increase or reduce the EPS of the Kulim Group. Assuming that the Kulim Shares so purchased are retained as treasury shares and subsequently resold, the extent of the effects on the earnings of the Group will depend on the actual selling price, the number of treasury shares resold and the effective gain or the interest savings arising from the exercise. If the Kulim Shares so purchased are cancelled, the Proposed Renewal of Share Buy-Back Authority will increase the EPS of the Kulim Group provided the income forgone and interest expense incurred on the Kulim Shares purchased are less than the EPS before the share purchase Dividends The Proposed Renewal of Share Buy-Back Authority is not expected to have any impact on the policy of the Board in recommending dividends, if any, to shareholders of Kulim. However, as stated in Section 2.5 above, the Board may distribute future dividends in the form of the treasury shares purchased pursuant to the Proposed Renewal of Share Buy-Back Authority. 8

14 2.9.5 Substantial shareholders and Directors shareholdings For illustration purposes only, based on the Records of Depositors as at the LPD and assuming that the maximum number of Kulim Shares (of up to ten percent (10%) of the issued and paid-up share capital) authorised under the Proposed Renewal of Share Buy- Back Authority are purchased from shareholders other than the existing substantial shareholders and Directors of Kulim, and all such shares purchased are cancelled, the effect of the Proposed Renewal of Share Buy-Back Authority on the shareholdings of the existing substantial shareholders and Directors of Kulim by virtue of Section 67A (3C) of the Act are set out below:- Scenario 1 Assuming none of the Outstanding ESOS Options are exercised No. of Kulim Shares As at the LPD After all treasury shares so purchased are cancelled Direct Indirect Direct Indirect No. of # % Kulim Shares No. of # % Kulim Shares % No. of Kulim Shares % Substantial shareholders (1) (1) JCorp 657,375, ,832, ,375, ,832, Waqaf An-Nur Corporation Berhad 72,981, ,981, Directors* Dato' Kamaruzzaman Abu Kassim 200, , Tan Sri Dato Seri Utama Arshad Ayub 2,926, (2) 5,038, ,926, (2) 5,038, Ahamad Mohamad 963, , Tan Sri Datin Paduka Siti Sa diah Sh Bakir 412, , Jamaludin Md Ali 100, , Datuk Haron Siraj 60,000 ^ ,000 ^ - - Dr. Radzuan A. Rahman 150, , Zulkifli Ibrahim 150, , Abdul Rahman Sulaiman 50,000 ^ ,000 ^ - - Notes:- * Directors who holds shares in Kulim only. # Excluding 122,958,300 treasury shares held by the Company. ^ Negligible. (1) Deemed interested through its interest in Waqaf An-Nur Corporation Berhad, Jedcon Engineering Survey Sdn Bhd, JCorp Capital Solutions Sdn Bhd, Intrapreneur Development Sdn Bhd, Johor Ventures Sdn Bhd, and Tenaga Utama (Johor) Berhad pursuant to Section 6A of the Act. (2) Deemed interested through his interest in Zalaraz Sdn Bhd pursuant to Section 6A of the Act. 9

15 Scenario 2 Assuming all the Outstanding ESOS Options are exercised No. of Kulim Shares As at the LPD Assuming full exercise of the Outstanding ESOS Options After all treasury shares so purchased are cancelled Direct Indirect Direct Indirect Direct Indirect No. of Kulim # % Shares No. of Kulim # % Shares No. of Kulim # % Shares No. of Kulim # % Shares % No. of Kulim Shares % Substantial shareholders JCorp 657,375, Waqaf An-Nur Corporation Berhad Directors* (1) 170,832, ,375, (1) 170,832, ,375, (1) 170,832, ,981, ,981, ,981, Dato' Kamaruzzaman Abu Kassim Tan Sri Dato Seri Utama Arshad Ayub 200, ,000, ,000, ,926, (2) 5,038, ,926, (2) 5,038, ,926, (2) 5,038, Ahamad Mohamad 963, ,463, ,463, Tan Sri Datin Paduka Siti Sa diah Sh Bakir 412, , , Jamaludin Md Ali 100, , , Datuk Haron Siraj 60,000 ^ , , Dr. Radzuan A.Rahman 150, , , Zulkifli Ibrahim 150, , , Abdul Rahman Sulaiman 50,000 ^ , ,

16 Notes:- * Directors who holds shares in Kulim only. # Excluding 122,958,300 treasury shares held by the Company. ^ Negligible. (1) Deemed interested through its interest in Waqaf An-Nur Corporation Berhad, Jedcon Engineering Survey Sdn Bhd, JCorp Capital Solutions Sdn Bhd, Intrapreneur Development Sdn Bhd, Johor Ventures Sdn Bhd, and Tenaga Utama (Johor) Berhad pursuant to Section 6A of the Act. (2) Deemed interested through his interest in Zalaraz Sdn Bhd pursuant to Section 6A of the Act Implication of the Code A person and any person acting in concert with him will be obliged to make a mandatory general offer under Part III and subparagraph 10.1 of Practice Note 9 of the Code for the remaining Kulim Shares not already owned by him/them if as a result of the Proposed Renewal of Share Buy-Back Authority:- (a) (b) (c) the person obtains control in the Company; the person (holding more than 33% but not more than 50% of the voting shares or voting rights of the Company) increases his holding of the voting shares or voting rights of the Company by more than 2% in any six-month period; or the person (holding more than 33% but not more than 50% of the voting shares or voting rights of the Company) acquires more than 2% of the voting shares or voting rights of the Company when he knows or reasonably ought to know that the Company would carry out a share buy-back scheme. In the event the Proposed Renewal of Share Buy-Back Authority is implemented in full and all the Kulim Shares acquired are cancelled, the proforma effects of the Proposed Renewal of Share Buy-Back Authority on the shareholdings of the substantial shareholders and Directors of Kulim as at the LPD are illustrated in Section of this Circular. As it is not intended for the Proposed Renewal of Share Buy-Back Authority to trigger the obligation to undertake a mandatory general offer ( MGO ) under the Code by any of the Company s substantial shareholders and/or parties acting in concert with them, the Board will ensure that such number of Shares so purchased, retained as treasury shares, cancelled or distributed, would not result in triggering any MGO obligation on the part of its substantial shareholders and/or parties acting in concert with them. In relation thereto, the Board will be mindful of the obligations under the Code when making any purchase(s) of its own Shares pursuant to the Proposed Renewal of Share Buy-Back Authority Historical share prices The monthly highest and lowest prices of Kulim Shares as traded on Bursa Securities for the last twelve (12) months from April 2015 to March 2016 are as follows:- High Low (RM) (RM) 2015 April May June July August September October November

17 High Low (RM) (RM) December January February March The last transacted price of Kulim Shares on 23 March 2016, being the last day on which Kulim Shares were traded, prior to the date of announcement of the Proposals, was RM3.90. The last transacted price of Kulim Shares on 4 April 2016, being the latest practicable date prior to the printing of this Circular, was RM3.89. (Source: Bloomberg) 2.12 Previous purchases, resale and cancellation of treasury shares Based on the Record of Depositors as at the LPD, 122,958,300 Kulim Shares are held as treasury shares by the Company. Details of the purchases of Kulim Shares over the previous twelve (12) months preceding the LPD are as follows:- Date No. of Kulim Shares Highest price paid per Kulim Share (RM) Lowest price paid per Kulim Share (RM) Average price paid per Kulim Share (RM) Total consideration (RM) , , , ,562, , ,884, , , , , , ,670, , ,619, , , , , , ,350, , , , , , ,457, , , , ,761, , ,084, , , , , , , , , , , , ,040, , , , ,

18 Date No. of Kulim Shares Highest price paid per Kulim Share (RM) Lowest price paid per Kulim Share (RM) Average price paid per Kulim Share (RM) Total consideration (RM) , , , ,089, , , , , , ,039, , ,009, , , , , , , , ,083, , , , , , , , , , , , , , , , , , , , , , ,317, , ,532, , ,250, , , , , , , , , , , , , , , , , , , , , , , , , , ,403, , ,021, , ,229, , , , , , , , , , , , ,

19 Date No. of Kulim Shares Highest price paid per Kulim Share (RM) Lowest price paid per Kulim Share (RM) Average price paid per Kulim Share (RM) Total consideration (RM) , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,200, ,940, , ,425, , ,385, , , , ,890, , ,699, ,618, ,771, ,794, ,091, ,982, ,926, ,180, ,143, ,245, ,068, ,012, ,736, ,743, ,761, ,080, ,690, , , ,755, ,760, , ,016, , , , , ,108, ,102, , ,985, , , , ,313, , , , , ,268, ,602, , , , ,

20 Date No. of Kulim Shares Highest price paid per Kulim Share (RM) Lowest price paid per Kulim Share (RM) Average price paid per Kulim Share (RM) Total consideration (RM) , ,721, , , , ,037, , ,125, , ,040, , , ,721, ,156, ,395, ,147, ,091, ,163, ,001, ,955, ,000, ,977, , , , ,352, , , , , The Company has not resold and/or cancelled any treasury shares held by the Company in the past twelve (12) months preceding the LPD. 3. PROPOSED SHAREHOLDERS MANDATE FOR RRPT 3.1 Details of the Proposed Shareholders Mandate for RRPT In the ordinary course of its business, the Group has entered into certain RRPT and it is anticipated that the companies within the Group would, in the ordinary course of business, continue to enter into such transactions with the Related Parties, details of which are set out in Section 3.4 of this Circular. It is likely that such transactions will occur with some degree of frequency and could arise at any time. Pursuant to Paragraph 10.09(1) of the Listing Requirements, Kulim is required to make an immediate announcement of such RRPTs where:- (i) (ii) the consideration, value of assets, capital outlay or costs of the RRPT is RM1 million or more; or the percentage ratios of such RRPT is 1% or more, whichever is the higher. In addition, Paragraph of the Listing Requirements states that:- (i) (ii) where any one of the percentage ratios of a related party transaction is 5% or more, a listed issuer must issue a circular to its shareholders, obtain specific shareholders approval for the transaction in general meeting and appoint an independent adviser; and where any one of the percentage ratios is 25% or more, in addition to the foregoing, a listed issuer must also appoint a main adviser. 15

21 However, pursuant to Paragraph 10.09(2) of the Listing Requirements, Kulim is allowed to seek a mandate from its shareholders to enter into RRPTs on terms not more favourable to the Related Parties than those generally available to the public. In this regard, the Board proposes to seek a renewal of and new general mandate from the shareholders for the Company and/or its subsidiaries to enter into arrangements or transactions with the Related Parties, which are necessary for the day-to-day operations of the Kulim Group and are based on normal commercial terms that are not more favourable to the Related Parties than those generally available to the public. 3.2 Principal activities of the Group The Company is principally an investment holding company and is involved in the operation of oil palm plantations and property investment. As at the LPD, the principal activities of the Group are as follows:- Effective equity interest held by Kulim as at the LPD (%) Company Principal activities Country of incorporation Held by Kulim: Asia Economic Development Investment holding Hong Kong Fund Limited ( AEDFL ) Cita Tani Sdn Bhd Dormant Malaysia Malaysia Classruum Technologies Sdn Bhd Information, communication and technology business, namely for Classruum.com Programme Danamin (M) Sdn Bhd Provider of non-destructive Malaysia testing and engineering support services EPA Management Sdn Bhd Investment holding and Malaysia provision of plantation management services and consultancy JTP Trading Sdn Bhd Trading/distribution of tropical Malaysia fruits Kulim Energy Nusantara Sdn Investment holding Malaysia Bhd ( KENSB ) Kulim Energy Sdn Bhd Investment holding Malaysia Kulim Nursery Sdn Bhd Oil palm nursery and other Malaysia related services Kulim Plantations (Malaysia) Sdn Bhd Oil palm plantation Malaysia Kulim Smart Technologies Sdn Bhd (formerly known as Rentak Alam Sdn Bhd) IT system & device development, advisor and consultant Malaysia Kulim Topplant Sdn Bhd Production of oil palm clones Malaysia Kumpulan Bertam Oil palm plantation Malaysia Plantations Berhad Mahamurni Plantations Sdn Oil palm plantation Malaysia Bhd Pristine Bay Sdn Bhd Investment holding Malaysia PT Wisesa Inspirasi Investment holding Indonesia Nusantara ( PT WIN ) Renown Value Sdn Bhd Cultivation of pineapples and other agricultural produce Malaysia

22 Company Principal activities Country of incorporation Effective equity interest held by Kulim as at the LPD (%) Selai Sdn Bhd Oil palm plantation Malaysia SG Lifestyles Sdn Bhd (formerly known as The Secret of Secret Garden Sdn Bhd) Sindora Berhad Skellerup Industries (Malaysia) Sdn Bhd Ulu Tiram Manufacturing Company (Malaysia) Sdn Bhd Trading and marketing of personal care products Malaysia Intrapreneur venture business, oil palm and rubber plantation and investment holding Malaysia Dormant Malaysia Oil palm plantation Malaysia Subsidiary of AEDFL Asia Logistics Council Sdn Bhd ( ALC ) Global Horizontal E-Logistics System ( GHELS ) and Global Coalition for Efficient Logistics ( GCEL ) systems for Asia Pacific region Malaysia Subsidiaries of Danamin (M) Sdn Bhd DQ-IN Sdn Bhd Dormant Malaysia Xcot Tech Sdn Bhd Dormant Malaysia Subsidiaries of EPA Management Sdn Bhd Akli Resources Sdn Bhd Provider of in-house and Malaysia external training programme Edaran Badang Sdn Bhd Dealer in agricultural Malaysia machinery and parts Extreme Edge Sdn Bhd IT solutions Malaysia Kulim Civilworks Sdn Bhd Facilities maintenance, Malaysia ( KCSB ) projects and construction works Kulim Livestock Sdn Bhd Breeding and sale of cattle Malaysia Kulim Safety Training and Services Sdn Bhd Provision of training services and any other services related to occupational safety, health, environmental and security systems Malaysia Optimum Status Sdn Bhd Mill maintenance Malaysia Panquest Ventures Limited Dormant British Virgin Island Perfect Synergy Trading Sdn Bhd Fertilizer supplier Malaysia Pinnacle Platform Sdn Bhd Software maintenance and Malaysia supplier PT Kulim Agro Persada Dormant Indonesia Special Appearance Sdn Bhd Plantation, production house and event management Malaysia

23 Company Subsidiary of JTP Trading Sdn Bhd Principal activities Country of incorporation Effective equity interest held by Kulim as at the LPD (%) JTP Montel Sdn Bhd Dormant Malaysia Subsidiary of Mahamurni Plantations Sdn Bhd Pembangunan Sdn Bhd Mahamurni Subsidiaries of PT Wisesa Inspirasi Nusantara Investment holding Malaysia PT Harapan Barito Sejahtera Oil palm plantation Indonesia PT Sawit Sumber Rejo Oil palm plantation Indonesia PT Wahana Semesta Kharisma Subsidiaries of Skellerup Industries (Malaysia) Sdn Bhd SIM Manufacturing Sdn Bhd Skellerup Foam Products (Malaysia) Sdn Bhd Skellerup Latex Products (Malaysia) Sdn Bhd Subsidiaries of Sindora Berhad E.A. Technique (M) Berhad ( E.A. Technique ) EPASA Shipping Agency Sdn Bhd Granulab (M) Sdn Bhd Microwell Bio Solutions Sdn Bhd MIT Insurance Brokers Sdn Bhd Sindora Developments Sdn Bhd Sindora Timber Products Sdn Bhd Oil palm plantation Indonesia Manufacturers and dealers in rubber and rubber products of all kinds Malaysia Dormant Malaysia Dormant Malaysia Provision of sea transportation Malaysia and related services Shipping and forwarding agent Malaysia Trading of granular synthetic bone graft Malaysia Trading of agricultural Malaysia fertilizers, water treatment, biotechnology research and development Insurance broking and Malaysia consultancy Dormant Malaysia Dormant Malaysia Sindora Timber Sdn Bhd Timber logging, processing Malaysia and sale of sawn timber, timber doors, laminated timber scantling and trading of wood products Sindora Trading Sdn Bhd Dormant Malaysia Sindora Wood Products Sdn Bhd Property letting Malaysia