CIRCULAR TO SHAREHOLDERS. in relation to the PART A

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other independent adviser immediately. Bursa Malaysia Securities Berhad ( Exchange ) has not perused Part B and Part C prior to its issuance as it is prescribed as an Exempt Circular. The Exchange 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. (Company No U) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS in relation to the PART A PROPOSED RENEWAL OF AND NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE PART B PROPOSED AUTHORITY TO PURCHASE ITS OWN SHARES BY THE COMPANY PART C PROPOSED AMENDMENTS TO THE COMPANY S ARTICLES OF ASSOCIATION Notice of the Fourth Annual General Meeting which will be held at Dewan Berjaya, Bukit Kiara Equestrian & Country Resort, Jalan Bukit Kiara, Off Jalan Damansara, Kuala Lumpur on Thursday, 10 October 2013 at a.m. together with the Form of Proxy are enclosed in the Annual Report The Form of Proxy must be lodged at the Registered Office of the Company not less than 48 hours before the time fixed for the Meeting. The lodging of the Form of Proxy will not preclude you from attending and voting at the Meeting if you are subsequently able to do so. This Circular is dated 18 September 2013.

2 DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout this Circular: Act : The Malaysian Companies Act, 1965, including any amendment that may be made thereto from time to time AGM : Annual General Meeting Annual Report 2013 : The annual report of BFood for the financial year ended 30 April 2013 B&B : B & B Enterprise Sdn Bhd BAssets : Berjaya Assets Berhad BCorporation : Berjaya Corporation Berhad BFI : Berjaya Food (International) Sdn Bhd BFood or the Company : Berjaya Food Berhad BFood ESOS : Employees Share Option Scheme of BFood for the grant of options to eligible Directors and employees of the Group to subscribe for new BFood Shares BFood Group or the Group : BFood and its subsidiaries BFood Shares : Ordinary shares of RM0.50 each in BFood BGroup : Berjaya Group Berhad BHills : Berjaya Hills Berhad BJM : Berjaya Jollibean (M) Sdn Bhd B-Land : Berjaya Land Berhad BMedia : Berjaya Media Berhad Board : Board of Directors of BFood BRadioShack : Berjaya RadioShack Sdn Bhd BRoasters : Berjaya Roasters (M) Sdn Bhd BSompo : Berjaya Sompo Insurance Berhad BTSSB : Berjaya Times Square Sdn Bhd Code : Malaysian Code on Take-Overs and Mergers, 2010 Desiran Unggul : Desiran Unggul Sdn Bhd i

3 DEFINITIONS (cont d) Director : Has the meaning given in Section 2(1) of the Capital Markets and Services Act 2007 and 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, a Director of BFood, its subsidiaries or holding company or a chief executive officer of BFood, its subsidiaries or holding company DRTYC : Dato Robin Tan Yeong Ching EGM : Extraordinary General Meeting EPS : Earnings per share Exchange : Bursa Malaysia Securities Berhad Gemtech : Gemtech (M) Sdn Bhd HRESB : Hotel Resort Enterprise Sdn Bhd HQZ : HQZ Credit Sdn Bhd Intan : Intan Utilities Berhad JFPL : Jollibean Foods Pte Ltd KRR : Kenny Rogers Roasters LBSB : Lengkap Bahagia Sdn Bhd Listing Requirements : Exchange s Main Market Listing Requirements, including any amendment that may be made from time to time Major Shareholder(s) : A person who has an interest or interests in one or more voting shares in BFood and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is (a) (b) MOL.com : MOL.com Sdn Bhd 10% or more of the aggregate of the nominal amounts of all the voting shares in BFood; or 5% or more of the aggregate of the nominal amounts of all the voting shares in BFood where such person is the largest shareholder of BFood. For the purpose of this definition, interest in shares shall have the meaning given in Section 6A of the Act. A major shareholder includes any person who is or was within the preceding 6 months of the date on which the terms of the transaction were agreed upon, a major shareholder of BFood or any other company which is its subsidiary or holding company. NA : Net assets attributable to ordinary equity holders of the BFood Group Nautilus : Nautilus Corporation Sdn Bhd ii

4 DEFINITIONS (cont d) NKSB : Nostalgia Kiara Sdn Bhd PCL : Prime Credit Leasing Sdn Bhd Person(s) Connected In relation to a Director or a Major Shareholder, means such person who falls under any one of the following categories: - (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) a family member of the Director or Major Shareholder; 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 family member of the Director or Major Shareholder, is the sole beneficiary; a partner of the Director, Major Shareholder or a partner of a Person Connected with that Director or Major Shareholder; 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; 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; 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; a body corporate or its directors whose directions, instructions or wishes the Director or Major Shareholder is accustomed or under an obligation, whether formal or informal, to act; a body corporate in which the Director, Major Shareholder 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 a body corporate which is a related corporation Premier Merchandise : Premier Merchandise Sdn Bhd Prevailing Laws : Any prevailing laws, rules, regulations, orders, guidelines and requirements issued by the relevant authorities Proposed Amendments : The proposed amendments to the Articles of Association of BFood to be in line with the recent amendments to the Listing Requirements Proposed Mandate : Proposed renewal of and new shareholders mandate for the BFood Group to enter into Recurrent Related Party Transactions in the ordinary course of business Proposed Share Buy- Back : The proposed authority to purchase and/or hold BFood Shares of up to 10% of the issued and paid-up ordinary share capital of the Company PT Boga : PT Boga Lestari Sentosa Qinetics : Qinetics Solutions Sdn Bhd iii

5 DEFINITIONS (cont d) Qinetics Services : Qinetics Services Sdn Bhd Recurrent Related Party Transactions : Transactions which are recurrent, of a revenue or trading nature and which are necessary for the day-to-day operations of the BFood Group and involve the interest, direct or indirect, of a Related Party Related Party (ies) : A Director, Major Shareholder or a Person Connected with such a Director or Major Shareholder RM and sen : Ringgit Malaysia and sen respectively Sublime Cartel : Sublime Cartel Sdn Bhd Superior Structure : Superior Structure Sdn Bhd Treasury Shares : BFood Shares that may be purchased by BFood which will be retained in treasury TSVT : Tan Sri Dato Seri Vincent Tan Chee Yioun Warrants 2012/2017 : BFood s warrants 2012/2017 constituted by the deed poll dated 2 July 2012 iv

6 TABLE OF CONTENTS LETTER TO THE SHAREHOLDERS OF BFOOD PART A: PROPOSED RENEWAL OF AND NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE PAGE 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED MANDATE 1 3. RATIONALE FOR, AND THE BENEFIT TO THE BFOOD GROUP FROM TRANSACTING WITH RELATED PARTIES CONDITIONS FOR THE PROPOSED MANDATE FINANCIAL EFFECTS OF THE PROPOSED MANDATE DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS DIRECTORS RECOMMENDATION AGM FURTHER INFORMATION 14 PART B: PROPOSED AUTHORITY TO PURCHASE ITS OWN SHARES BY THE COMPANY 1. INTRODUCTION DETAILS OF THE PROPOSED SHARE BUY-BACK RATIONALE FOR THE PROPOSED SHARE BUY-BACK POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED SHARE BUY-BACK EFFECTS OF THE PROPOSED SHARE BUY-BACK IMPLICATION RELATING TO THE CODE HISTORICAL SHARE PRICES PURCHASES, RESALES OR CANCELLATIONS MADE IN THE PREVIOUS 12 MONTHS CONDITIONS OF THE PROPOSED SHARE BUY-BACK DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS DIRECTORS RECOMMENDATION AGM FURTHER INFORMATION 22 v

7 TABLE OF CONTENTS (cont d) PART C: PROPOSED AMENDMENTS TO THE COMPANY S ARTICLES OF ASSOCIATION PAGE 1. INTRODUCTION DETAILS OF THE PROPOSED AMENDMENTS RATIONALE FOR THE PROPOSED AMENDMENTS DIRECTORS RECOMMENDATIONS AGM FURTHER INFORMATION 24 APPENDIX I FURTHER INFORMATION 25 APPENDIX II DETAILS OF THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY 26 EXTRACT OF RESOLUTIONS TO BE TABLED AT THE BFOOD FOURTH AGM ENCLOSED vi

8 PART A CIRCULAR TO SHAREHOLDERS in relation to the PROPOSED RENEWAL OF AND NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

9 BERJAYA FOOD BERHAD (Company No U) (Incorporated in Malaysia) Registered Office: Lot 13-01A, Level 13 (East Wing) Berjaya Times Square No. 1 Jalan Imbi Kuala Lumpur 18 September 2013 Directors: Dato Robin Tan Yeong Ching (Executive Chairman) Dato Lee Kok Chuan (Chief Executive Officer) Tan Thiam Chai (Non-Independent Non-Executive Director) Datuk Zainun Aishah Binti Ahmad (Independent Non-Executive Director) Dato Mustapha Bin Abd Hamid (Independent Non-Executive Director) To: The Shareholders of BFood Dear Sir/Madam, PROPOSED RENEWAL OF AND NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE 1.0 INTRODUCTION 1.1 The Board of BFood had on 26 August 2013 announced its intention to seek shareholders approval for the proposed renewal of and new shareholders mandate for Recurrent Related Party Transactions. 1.2 The purpose of this Circular is to provide you with the relevant information on the Proposed Mandate and to seek your approval for the ordinary resolution to be tabled at the forthcoming AGM of the Company. The Notice of AGM is set out in the Annual Report The extract of the ordinary resolution on the Proposed Mandate to be tabled at the forthcoming AGM is enclosed together with this Circular. 2.0 DETAILS OF THE PROPOSED MANDATE 2.1 The Proposed Mandate The Company had on 9 October 2012 obtained its shareholders mandate for the BFood Group to enter into Recurrent Related Party Transactions on terms that are not more favourable to the Related Parties than those generally available to the public. The approval shall in accordance with the Listing Requirements lapse at the conclusion of the forthcoming AGM of the Company scheduled on 10 October 2013 unless approval for its renewal is obtained from the shareholders of the Company at the forthcoming AGM. 1

10 2.1.2 Pursuant to Paragraph 10.09(2) of the Listing Requirements, BFood may seek a shareholders mandate in respect of Recurrent Related Party Transactions subject to the following:- (a) (b) (c) (d) (e) 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; 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 Paragraph 10.09(1) of the Listing Requirements; the circular to shareholders for the shareholders mandate includes the information as may be prescribed by the Exchange. The draft circular must be submitted to the Exchange together with a checklist showing compliance with such information; 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 BFood immediately announces to the Exchange when the actual value of a Recurrent Related Party Transaction entered into by the BFood Group exceeds the estimated value of the Recurrent Related Party Transaction 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 BFood (or any of its wholly-owned subsidiaries) and its whollyowned subsidiaries are excluded from the requirements of Part E of Chapter 10 of the Listing Requirements The Proposed Mandate, if approved by the BFood shareholders at the forthcoming AGM, will take effect from the date of passing of the ordinary resolution at the forthcoming AGM and shall continue to be in force until:- (a) (b) (c) the conclusion of the next AGM of BFood following the forthcoming AGM at which such ordinary resolution for the Proposed Mandate will be passed, at which time it will lapse, unless by a resolution passed at a general meeting, the authority is renewed; the expiration of the period within which the next AGM after the date it is required to be held pursuant to Section 143 (1) of the Act (but must not extend to such extension as may be allowed pursuant to Section 143 (2) of the Act); or revoked or varied by resolution passed by the shareholders at a general meeting; whichever is the earlier. 2

11 2.2 Information on the BFood Group The principal activity of BFood is investment holding while the principal activities of its unlisted subsidiaries are set out below: - Name of Company Effective Equity Interest Held Principle Activities (%) BRoasters 100 Development and operation of KRR chain of restaurants in Malaysia BFI 100 Investment holding BJM 100 The intended principle activities are operation of retail outlets, food caterer and licensing. As at 22 August 2013, the company is dormant Berjaya Food Management Services Sdn Bhd 100 The intended principle activity is to provide management services related to certain food operations of the BFood Group. As at 22 August 2013, the company is dormant Subsidiaries of BFI JFPL 100 Operation of retail outlets and food caterers PT Boga 51 Principally engaged in developing and operating KRR restaurants in Java island, Bali and Medan, Indonesia Details of the Recurrent Related Party Transactions of the BFood Group which are in accordance with Paragraph (2) of the Listing Requirements are set out in Section 2.3 below. 2.3 Class and Nature of the Recurrent Related Party Transactions The class and nature of the Recurrent Related Party Transactions of the BFood Group are tabulated as follows:- BFood Group with the following Related Parties Nature of transactions undertaken by BFood and/or its unlisted subsidiaries Interested Directors/Major Shareholders and/or Persons Connected to them Estimated value from 10/10/2013 to the date of the next AGM (RM 000) BCorporation and its unlisted subsidiaries BCorporation Management fees payable by BFood for services rendered that include, inter-alia, the provision of finance, secretarial and general administrative services TSVT, DRTYC and Persons Connected with them as mentioned in the notes of Sections 2.3 and

12 BFood Group with the following Related Parties Nature of transactions undertaken by BFood and/or its unlisted subsidiaries Interested Directors/Major Shareholders and/or Persons Connected to them Estimated value from 10/10/2013 to the date of the next AGM (RM 000) Berjaya Channel Sdn Bhd Procurement of advertising services by the BFood Group* TSVT, DRTYC and Persons Connected with them as mentioned in the notes of Sections 2.3 and Berjaya Registration Services Sdn Bhd Receipt of share registration services and other related expenses by BFood TSVT, DRTYC and Persons Connected with them as mentioned in the notes of Sections 2.3 and Kimia Suchi Marketing Sdn Bhd Purchase of cleaning chemical products by BRoasters and BJM TSVT, DRTYC and Persons Connected with them as mentioned in the notes of Sections 2.3 and PCL Receipt of leasing and hire purchase facilities by BRoasters TSVT, DRTYC and Persons Connected with them as mentioned in the notes of Sections 2.3 and ,000 Roasters Asia Pacific (M) Sdn Bhd Royalty fee payable by BRoasters in respect of ongoing training and support services provided Income receivable by BRoasters pursuant to the rights awarded for granting of franchises to the independent franchisees TSVT, DRTYC and Persons Connected with them as mentioned in the notes of Sections 2.3 and Roasters Asia Pacific (Cayman) Limited Royalty fee payable by PT Boga in respect of ongoing training and support services provided Franchise fee payable by PT Boga in respect of support services for the opening of new outlets TSVT, DRTYC and Persons Connected with them as mentioned in the notes of Sections 2.3 and

13 BFood Group with the following Related Parties Nature of transactions undertaken by BFood and/or its unlisted subsidiaries Interested Directors/Major Shareholders and/or Persons Connected to them Estimated value from 10/10/2013 to the date of the next AGM (RM 000) Securexpress Services Sdn Bhd Receipt of transportation services by BRoasters TSVT, DRTYC and Persons Connected with them as mentioned in the notes of Sections 2.3 and Total 13,208 BAssets and/or its unlisted subsidiaries BTSSB Rental payable by BRoasters at RM30,195 per month for renting of shoplot at Lot 03-85, 3 rd Floor, Berjaya Times Square, Jalan Imbi, Kuala Lumpur. Tenure of the rental agreement is for a period of 3 years and renewable thereafter TSVT, DRTYC, BCorporation and Persons Connected with them as mentioned in the notes of Sections 2.3 and Rental payable by BRoasters at RM18,858 per month for renting of office at Lots to 09-13, 9 th Floor, Berjaya Times Square, Jalan Imbi, Kuala Lumpur. Tenure of the rental agreement is for a period of 3 years and renewable thereafter 226 BTSSB Rental payable by BJM at RM8,750 per month (pending finalisation of tenancy agreement) for renting of kiosk at Lot LG- 18A-2, Lower Ground Floor, Berjaya Times Square, Jalan Imbi, Kuala Lumpur. Tenure of the rental agreement is for a period of 3 years and renewable thereafter TSVT, DRTYC, BCorporation and Persons Connected with them as mentioned in the notes of Sections 2.3 and BTS Car Park Sdn Bhd Parking charges payable by BFood Group* TSVT, DRTYC, BCorporation and Persons Connected with them as mentioned in the notes of Sections 2.3 and Total 793 5

14 BFood Group with the following Related Parties Nature of transactions undertaken by BFood and/or its unlisted subsidiaries Interested Directors/Major Shareholders and/or Persons Connected to them Estimated value from 10/10/2013 to the date of the next AGM (RM 000) B-Land and/or its unlisted subsidiaries Cempaka Rental payable by BRoasters Properties Sdn Bhd at RM8,488 per month for renting of shoplot at Lot G-83 (Ground Floor) and concourse area at Lot CCS- B-Bay 5A, Berjaya Megamall, Jalan Tun Ismail, Kuantan. Tenure of the rental agreement is for a period of 3 years and renewable thereafter BMedia and/or its unlisted subsidiaries Sun Media Procurement of advertising Corporation Sdn and publishing services by Bhd the BFood Group Other related parties BRadioShack Purchase of hardware and electronic equipments by BRoasters* TSVT, BCorporation and Persons Connected with them as mentioned in the notes of Sections 2.3 and 6.1 TSVT, DRTYC, BCorporation and Persons Connected with them as mentioned in the notes of Sections 2.3 and 6.1 TSVT, BCorporation and Persons Connected with them as mentioned in the notes of Sections 2.3 and , Qinetics Services Purchase of hardware, software, networking equipments, maintenance and management services by BFood Group* TSVT, DRTYC, BCorporation and Persons Connected with them as mentioned in the notes of Sections 2.3 and Total 540 Grand Total 16,201 Notes: * New Recurrent Related Party Transactions which were not covered in the previous general mandate. 6

15 (1) The estimated values from 10 October 2013 to the date of the next AGM in 2014 are based on historical records and budgets of the respective Recurrent Related Party Transactions. The actual values of these transactions may differ from the said estimated values. (2) BCorporation is a Major Shareholder of B-Land, BAssets and BMedia. Its direct and indirect interests in these companies as at 22 August 2013 are set out as follows:- % of Interest Direct Indirect B-Land (a) BAssets (a) BMedia (b) Notes: (a) (b) Deemed interested by virtue of its 100% interest in BGroup. Deemed interested by virtue of its 100% interests in BGroup and BHills. (3) TSVT is a Major Shareholder of BCorporation by virtue of his direct and deemed interests in BCorporation. TSVT is also the father of DRTYC. By virtue of his interest in BCorporation, TSVT is deemed to be interested in the shares of BCorporation s subsidiaries to the extent BCorporation has an interest. TSVT s direct and indirect interests in BCorporation, B-Land, BAssets and BMedia as at 22 August 2013 are set out below:- % of Interest Direct Indirect BCorporation (a) B-Land (b) BAssets (c) BMedia (d) Notes: (a) (b) (c) (d) Deemed interested by virtue of his interests in HRESB, NKSB, Superior Structure, BAssets (the holding company of BTSSB and Sublime Cartel), BMedia (the holding company of Gemtech), B&B (the holding company of LBSB and Nautilus) and HQZ (the ultimate holding company of Desiran Unggul and Premier Merchandise. Deemed interested by virtue of his interests in BCorporation, HRESB, B&B, BAssets (the holding company of BTSSB and Sublime Cartel) and HQZ (the ultimate holding company of Desiran Unggul and Premier Merchandise). Deemed interested by virtue of his interests in BCorporation, Vecc-Men Holdings Sdn Bhd, HRESB, B&B, Berjaya VTCY Sdn Bhd and his deemed interest in Lim Kim Hai Sales & Services Sdn Bhd. Deemed interested by virtue of his interests in BCorporation, HRESB, NKSB, Superior Structure, BAssets (the holding company of BTSSB and Sublime Cartel), B&B (the holding company of LBSB and Nautilus) and HQZ (the ultimate holding company of Desiran Unggul and Premier Merchandise). (4) DRTYC is the Executive Chairman of BFood and the Chairman of BMedia. DRTYC is also the Chairman and Chief Executive Officer of BCorporation. DRTYC is a son of TSVT and hence, he is deemed a Person Connected to TSVT. 7

16 DRTYC s direct and indirect interests in BCorporation, B-Land, BAssets and BMedia as at 22 August 2013 are set out below:- % of Interest Direct Indirect BCorporation (a) B-Land (a) BAssets (a) BMedia (a) Note: (a) Deemed interested by virtue of his interest in HRESB. (5) BRadioShack is an indirect wholly-owned subsidiary of Premier Merchandise which in turn is a wholly-owned subsidiary of Intan. TSVT is a deemed Major Shareholder of Intan by virtue of his 99.99% interest in HQZ Credit Sdn Bhd, the ultimate holding company of Intan. (6) Qinetics Services is a wholly-owned subsidiary of Qinetics which in turn is an 88%-owned subsidiary of MOL.com. TSVT and BCorporation are deemed Major Shareholders of Qinetics Services by virtue of their interests in MOL.com. Their direct and indirect interests in MOL.com as at 22 August 2013 are set out as follows:- % of Interest Direct Indirect TSVT (a) BCorporation (b) Notes: (a) (b) Deemed interested by virtue of his interest in BCorporation. Deemed interested by virtue of its 100% interest in BHills and its deemed interests in BSompo and PCL. DRTYC is the Chairman and a shareholder of MOL.com. 2.4 Method or Procedures on which Transactions Prices are Determined/Review Procedures for Recurrent Related Party Transactions The BFood Group has established various methods and procedures to ensure that Recurrent Related Party Transactions are entered into on an arm s length basis and on normal commercial terms which are consistent with the Group s normal business practices and policies and are on terms not more favourable to the Related Parties than those extended to third parties and are not detrimental to the minority shareholders. They include inter-alia, the following:- (i) (ii) (iii) The transaction prices are based on prevailing market rates/prices that are agreed upon under similar commercial terms for transactions with third parties, business practices and policies and on terms which are generally in line with industry norms; The Related Parties and interested Directors will be notified of the method and/or procedures of the BFood Group; Records of Recurrent Related Party Transactions will be retained and compiled by the Group accountant for submission to the auditors and the Audit and Risk Management Committee for review; 8

17 (iv) (v) (vi) (vii) Auditors shall review Recurrent Related Party Transactions as part of their audit programme and report findings to the Audit and Risk Management Committee; The Audit and Risk Management Committee is to provide a statement that it has reviewed the terms of the Recurrent Related Party Transactions to ensure that such transactions are undertaken based on terms not more favourable to the Related Parties than those generally available to the public, are not detrimental to the minority shareholders and are in the best interest of the BFood Group; Directors who have any interest in any Recurrent Related Party Transactions shall abstain from Board deliberations and voting and will ensure that they and any Persons Connected with them will also abstain from voting on the resolution at the EGM or AGM to be convened for the purpose; and Disclosures will be made in the annual report on the breakdown of the aggregate value of the Recurrent Related Party Transactions during the financial year, amongst others, based on the following information:- (a) (b) the type of the Recurrent Related Party Transactions made; and the names of the Related Parties involved in each type of the Recurrent Related Party Transactions made and their relationship with the BFood Group. At least 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 BFood 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 Transactions are not detrimental to the BFood Group. Pursuant to Paragraph 10.09(1)(a) of the Listing Requirements, BFood must immediately announce a Recurrent Related Party Transaction where :- (i) (ii) the consideration, value of the assets, capital outlay or costs of the Recurrent Related Party Transaction is RM1 million or more; or the percentage ratio of such Recurrent Related Party Transaction is 1% or more, whichever is the higher. In addition, Paragraph 10.08(2) of the Listing Requirements states that where any one of the percentage ratios of a related party transaction is 5% or more, BFood must issue a circular to its shareholders, obtain specific shareholders approval of the transaction and appoint an independent adviser. Further, Paragraph 10.08(4) of the Listing Requirements states that where any one of the percentage ratios of a related party transaction is 25% or more, in addition to the foregoing, BFood must appoint a main adviser. The guidelines for the relevant approving authority practised by the BFood Group in relation to Recurrent Related Party Transactions are as follows:- (i) Transactions below RM500,000 each in value, will be reviewed and approved by the Chief Executive Officer or such other senior executive(s) (not being a person connected to the Related Party) designated by the Audit and Risk Management Committee from time to time for such purpose, and tabled for review by the Audit and Risk Management Committee on a half yearly basis. 9

18 (ii) (iii) Transactions equal to or exceeding RM500,000 each in value will be reviewed and approved by the Audit and Risk Management Committee. The Chief Executive Officer or other senior executives(s) designated by the Audit and Risk Management Committee from time to time for such purpose, and the Audit and Risk Management Committee, may, as he/it deems fit, request for additional information pertaining to the transaction under review from independent sources or advisers, including the obtaining of valuations from independent professional valuers. 2.5 Statement by the Audit and Risk Management Committee The Audit and Risk Management Committee of BFood has seen and reviewed the procedures mentioned in Section 2.4 above and is of the opinion that the abovementioned procedures are sufficient to ensure that the Recurrent Related Party Transactions are carried out on terms not more favourable to the Related Parties than those generally available to the public and are not detrimental to the interests of the minority shareholders. The BFood Group has in place adequate procedures and processes to monitor, track and identify Recurrent Related Party Transactions in a timely and orderly manner. The Audit and Risk Management Committee conducts the review of these procedures and processes on a half yearly basis. 2.6 Existing Mandate On Recurrent Related Party Transactions Set out below is the actual value transacted of each Recurrent Related Party Transactions, from the date on which the existing mandate was obtained on 9 October 2012 up to 22 August 2013, being the latest practicable date before the printing of this Circular, together with its estimated value as disclosed in the Circular to Shareholders dated 14 September 2012:- BFood Group with the following Related Parties Nature of transactions undertaken by BFood and/or its unlisted subsidiaries Actual value transacted from 9/10/12 to 22/8/13 (RM 000) Estimated value as disclosed in the Circular to Shareholders dated 14/9/12 (RM 000) BCorporation and its unlisted subsidiaries BCorporation Management fees paid/payable by BFood for services rendered that include, inter-alia, the provision of finance, secretarial and general administrative services Roasters Asia Pacific (M) Sdn Bhd Royalty fee paid/payable by BRoasters in respect of ongoing training and support services provided Income received/receivable by BRoasters pursuant to the rights awarded for granting of franchises to the independent franchisees

19 BFood Group with the following Related Parties Nature of transactions undertaken by BFood and/or its unlisted subsidiaries Actual value transacted from 9/10/12 to 22/8/13 (RM 000) Estimated value as disclosed in the Circular to Shareholders dated 14/9/12 (RM 000) Roasters Asia Pacific (Cayman) Limited Royalty fee paid/payable by PT Boga in respect of ongoing training and support services provided Franchise fee paid/payable by PT Boga in respect of support services for the opening of new outlets Advertisement and promotion fund paid/payable by PT Boga Berjaya Registration Services Sdn Bhd PCL Securexpress Services Sdn Bhd Kimia Suchi Marketing Sdn Bhd Receipt of share registration services and other related expenses by BFood Receipt of leasing and hire purchase facilities by BRoasters Receipt of transportation services by BRoasters Purchase of cleaning chemical products by BRoasters , Total 1,838 13,495 B-Land and/or its unlisted subsidiaries Cempaka Properties Sdn Bhd Rental paid/payable by BRoasters for renting of shoplot at Lot G-83 (Ground Floor) and concourse area at Lot CCS- B-Bay 5A, Berjaya Megamall, Jalan Tun Ismail, Kuantan BAssets and/or its unlisted subsidiaries BTSSB Rental paid/payable by BRoasters for renting of shoplot at Lot 03-85, 3 rd Floor, Berjaya Times Square, Jalan Imbi, Kuala Lumpur

20 BFood Group with the following Related Parties Nature of transactions undertaken by BFood and/or its unlisted subsidiaries Actual value transacted from 9/10/12 to 22/8/13 (RM 000) Estimated value as disclosed in the Circular to Shareholders dated 14/9/12 (RM 000) BTSSB Rental paid/payable by BRoasters for renting of office at Lots to 09-13, 9 th Floor, Berjaya Times Square, Jalan Imbi, Kuala Lumpur Parking charges paid/payable by BRoasters Total BMedia and/or its unlisted subsidiaries Sun Media Corporation Sdn Bhd Procurement of advertising and publishing services by the BFood Group 496 1,550 Other related parties Qinetics Purchase of hardware, software and networking equipments by BRoasters Grand Total 3,048 16, Amount Due And Owing By Related Parties Pursuant To Recurrent Related Party Transactions As at financial year ended 30 April 2013, there was no amount due and owing to the BFood Group by its Related Parties pursuant to the Recurrent Related Party Transactions. 3.0 RATIONALE FOR, AND THE BENEFIT TO THE BFOOD GROUP FROM TRANSACTING WITH RELATED PARTIES 3.1 The Recurrent Related Party Transactions entered into/to be entered into by the BFood Group are all in the ordinary course of business and intended to meet the business needs of the Group at the best possible terms so as to achieve the synergistic benefits within the BFood Group. As such, it is anticipated that the Recurrent Related Party Transactions would occur on a frequent and recurrent basis. 3.2 The Proposed Mandate will eliminate the need to make announcements to the Exchange and/or to convene separate EGMs from time to time to seek shareholders prior approvals for the BFood Group to enter into such Recurrent Related Party Transactions. This will reduce substantial administrative time and expenses in convening such EGMs without compromising the corporate objectives of the Group or affecting the business opportunities available to the Group. 3.3 The Recurrent Related Party Transactions provide the BFood Group the support for its operational and business needs and further enhance its ability to explore beneficial business opportunities within the BFood Group and the Related Parties. 12

21 4.0 CONDITIONS FOR THE PROPOSED MANDATE 4.1 The Proposed Mandate is conditional upon the approval of the shareholders of the Company being obtained at the forthcoming AGM. The Proposed Mandate being procured from shareholders of BFood at the forthcoming AGM is subject to annual renewal. 5.0 FINANCIAL EFFECTS OF THE PROPOSED MANDATE 5.1 The Proposed Mandate does not have any effect on the issued and paid-up share capital of BFood and is not expected to have any material effect on the consolidated earnings and NA of BFood DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS 6.1 The direct and indirect shareholdings of the interested Major Shareholders and interested Director and/or Person Connected with them in BFood as at 22 August 2013 are as follow:- Direct Indirect No. of Shares % No. of Shares % Interested Major Shareholders TSVT 1,000, ,919,860 (i) BCorporation ,919,860 (ii) Interested Director DRTYC 965, Person Connected with Major Shareholders DRTYC 965, Notes: (i) (ii) Deemed interested by virtue of his interest in BCorporation. Deemed interested by virtue of its 100% interest in BGroup and its deemed interest in Berjaya Philippines Inc. 6.2 Based on details in Section 2.3, DRTYC, being an interested Director, has abstained and will continue to abstain from all the Company s Board deliberations and voting in relation to the Proposed Mandate. DRTYC will also abstain from voting in respect of his direct shareholdings in BFood on the ordinary resolution approving the Proposed Mandate at the forthcoming AGM. DRTYC has undertaken to ensure that Persons Connected with him will also abstain from voting on the ordinary resolution, deliberating or approving the Proposed Mandate at the Company s forthcoming AGM. 6.3 TSVT and BCorporation, being the interested Major Shareholders, will abstain from voting in respect of their direct and/or indirect shareholdings on the ordinary resolution approving the Proposed Mandate at the Company s forthcoming AGM. They have respectively undertaken to ensure that Persons Connected with them will also abstain from voting on the ordinary resolution, deliberating or approving the Proposed Mandate at the Company s forthcoming AGM. 6.4 Save as disclosed above, none of the other Directors and Major Shareholders of BFood and/or Persons Connected with them, has any interest, direct or indirect in the Proposed Mandate. 13

22 7.0 DIRECTORS RECOMMENDATION 7.1 The Board (except for DRTYC), having considered all aspects of the Proposed Mandate, is of the opinion that it is in the best interest of the BFood Group and accordingly, the Board, with the exception of DRTYC who has abstained from making any recommendation on the Proposed Mandate, recommends that you vote in favour of the Proposed Mandate to be tabled at the Company s forthcoming AGM. 8.0 AGM 8.1 The AGM, Notice of which is enclosed in the Annual Report 2013, and an extract of the ordinary resolution on the Proposed Mandate is enclosed in this Circular, will be held at Dewan Berjaya, Bukit Kiara Equestrian & Country Resort, Jalan Bukit Kiara, Off Jalan Damansara, Kuala Lumpur on Thursday, 10 October 2013 at a.m. for the purpose of considering and, if thought fit, passing the ordinary resolution to give effect to the Proposed Mandate. 8.2 If you are unable to attend and vote in person at the forthcoming AGM, you are requested to complete and return the enclosed Form of Proxy in the Annual Report 2013 in accordance with the instructions therein as soon as possible so as to arrive at the Registered Office of the Company at Level 13-01A, Level 13 (East Wing), Berjaya Times Square, No. 1 Jalan Imbi, Kuala Lumpur not less than forty eight (48) hours before the time set for the AGM. The completion and the return of the Form of Proxy will not preclude you from attending and voting in person at the forthcoming AGM should you subsequently wish to do so. 9.0 FURTHER INFORMATION 9.1 Shareholders are requested to refer to the attached Appendix I for further information. Yours faithfully For and on behalf of the Board of Directors of BERJAYA FOOD BERHAD Datuk Zainun Aishah Binti Ahmad Independent Non-Executive Director 14

23 PART B CIRCULAR TO SHAREHOLDERS in relation to the PROPOSED AUTHORITY TO PURCHASE ITS OWN SHARES BY THE COMPANY

24 BERJAYA FOOD BERHAD (Company No U) (Incorporated in Malaysia) Registered Office: Lot 13-01A, Level 13 (East Wing) Berjaya Times Square No. 1 Jalan Imbi Kuala Lumpur 18 September 2013 Directors: Dato Robin Tan Yeong Ching (Executive Chairman) Dato Lee Kok Chuan (Chief Executive Officer) Tan Thiam Chai (Non-Independent Non-Executive Director) Datuk Zainun Aishah Binti Ahmad (Independent Non-Executive Director) Dato Mustapha Bin Abd Hamid (Independent Non-Executive Director) To: The Shareholders of BFood Dear Sir/Madam, PROPOSED AUTHORITY TO PURCHASE ITS OWN SHARES BY THE COMPANY 1.0 INTRODUCTION 1.1 On 26 August 2013, the Board of Directors of BFood announced that the Company proposed to seek a shareholders mandate for the authority to purchase its own shares on the Exchange of up to a maximum of 10% of the issued and paid-up share capital of BFood. 1.2 The purpose of this Circular is to provide you with the relevant details of the Proposed Share Buy- Back to be tabled at the forthcoming AGM, which will be held at Dewan Berjaya, Bukit Kiara Equestrian & Country Resort, Jalan Bukit Kiara, Off Jalan Damansara, Kuala Lumpur on 10 October 2013 at a.m. SHAREHOLDERS OF BFOOD ARE ADVISED TO READ THE CONTENTS OF THIS CIRCULAR CAREFULLY BEFORE VOTING ON THE ORDINARY RESOLUTION PERTAINING TO THE PROPOSED SHARE BUY-BACK. 2.0 DETAILS OF THE PROPOSED SHARE BUY-BACK 2.1 Pursuant to Paragraph of the Listing Requirements, a mandate is required from the shareholders of the Company for the authority to purchase up to 10% of its issued and paid-up share capital on the Exchange subject to the compliance with Section 67A of the Act, and the Prevailing Laws at the time of the purchase. This mandate from the shareholders will be effective immediately upon the passing of the ordinary resolution for the Proposed Share Buy-Back at the forthcoming AGM and may only continue to be in force until:- 15

25 (a) (b) (c) the conclusion of the next AGM of BFood following the general meeting at which such resolution was passed at which time it will lapse unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or the expiration of the period within which the next AGM after that date it is required by law to be held; or revoked or varied by an ordinary resolution passed by the shareholders of BFood in a general meeting, whichever occurs first. 2.2 Based on the issued and paid-up share capital of the Company on 22 August 2013 of 263,282,800 BFood Shares, being the latest practicable date prior to the printing of this Circular, the number of shares that can be purchased is up to 26,328,280 BFood Shares representing 10% of the issued and paid-up share capital of the Company. As at 22 August 2013, BFood has a total outstanding BFood ESOS of 9,015,400 and a total outstanding Warrants 2012/2017 of 111,173,120. Should the issued and paid-up share capital of the Company increase due to exercise of the BFood ESOS and Warrants 2012/2017, the maximum number of BFood Shares that can be purchased is up to 10% of the enlarged issued and paid-up share capital of the Company at the time of purchase. 2.3 The amount of funds allocated for the purchase of BFood Shares pursuant to the Proposed Share Buy-Back will be financed through internally generated funds and/or borrowings, the proportion of which will depend on the quantum of the purchase consideration as well as the availability of internally generated funds and/or borrowings at the time of the purchase(s). In the event the Proposed Share Buy-Back is to be partly financed by borrowings, the Company expects that it will be capable of repaying the borrowings and that the borrowings will not have any material impact on the consolidated cash flow of BFood. 2.4 The actual number of BFood Shares to be purchased, the total amount of funds to be utilised for each purchase and the timing of any purchase will depend on inter-alia, the market conditions and sentiments of the stock market, the availability of financial resources and the retained profits or the share premium reserve of the Company or both. The total consideration for the Proposed Share Buy-Back shall not exceed the aggregate of the retained profits and the share premium reserve of the Company. Based on the audited financial results of the Company as at 30 April 2013, the maximum funds available are set out below:- Audited as at 30 April 2013 RM 000 Retained profits 8,115 Share premium reserve 1,633 Total reserves 9,748 Limit of maximum funds available 9,748 The treatment of the purchased shares being held as Treasury Shares, either to be distributed as share dividends or to be resold by the Company on the Exchange or cancelled, or both, will also depend, inter-alia on the availability of retained profits or share premium reserve of the Company or both. 16

26 2.5 The Directors may resolve to cancel all the BFood Shares so purchased, retain all the BFood Shares as Treasury Shares for future sale, or retain part thereof as Treasury Shares and subsequently cancelling the balance. The Company would expect to enhance the EPS of the Group (in the case where the Directors resolve to cancel the BFood Shares so purchased), and thereby long term and genuine investors are expected to enjoy a corresponding increase in the value of their investments in the Company. If the BFood Shares bought back are to be kept as Treasury Shares, it may be realised with potential gain without affecting the total issued and paid-up share capital of the Company. The Company may also utilise the Treasury Shares as future share dividends to the shareholders of the Company and/or resell the Treasury Shares in the open market to profit from any future price appreciation of the BFood Shares. 2.6 BFood may only purchase its own shares on the Exchange at prices which are not more than 15% above the weighted average market price for BFood Shares for the five (5) market days immediately before the purchase(s). The Company may only resell the Treasury Shares on the Exchange at: (a) (b) prices which are not less than the weighted average market price of BFood Shares for the five (5) market days immediately before the resale; or at a discounted price of not more than 5% to the weighted average market price of BFood Shares for the five (5) market days immediately before the resale provided that: (i) (ii) the resale takes place no earlier than 30 days from the date of purchase; and the resale price is not less than the cost of purchase of the shares being resold. 2.7 The Proposed Share Buy-Back will be in accordance with the Prevailing Laws at the time of the purchase including compliance with the 25% shareholding spread as required by the Listing Requirements. Based on the issued and paid-up share capital as at 22 August 2013 of 263,282,800 BFood Shares, the public shareholding spread of the Company was approximately 33.14%. Assuming that the Proposed Share Buy-Back was carried out in full, and being retained as Treasury Shares, the proforma shareholding spread of the Company will be approximately 25.71%. The Board is mindful of the requirement that the Proposed Share Buy-Back must not result in the number of BFood Shares which are in the hands of the public falling below 25% of the issued and paid-up share capital of BFood. As such, the Company will make every effort available to ensure the public shareholding spread requirement is met should the Company purchase its own shares pursuant to the Proposed Share Buy-Back. 3.0 RATIONALE FOR THE PROPOSED SHARE BUY-BACK 3.1 The Proposed Share Buy-Back will enable BFood to utilise any of its surplus financial resources to purchase its own shares which may have positive impact on the market price of BFood Shares. The Proposed Share Buy-Back, if implemented, may help to stabilise the supply and demand of the BFood Shares traded on the Exchange and thereby supporting its fundamental value. 3.2 The Proposed Share Buy-Back may also improve the future EPS of the Group and the return on equity as a result of a reduced share capital base if the BFood Shares purchased are subsequently cancelled. 17

27 3.3 If the BFood Shares purchased are to be retained as Treasury Shares, it will provide an option for the Company to resell the Treasury Shares at a higher price and generate capital gain for the Company. Alternatively, the BFood Shares purchased being retained as Treasury Shares can be distributed as share dividends to reward the shareholders in the future. 4.0 POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED SHARE BUY-BACK 4.1 The potential advantages of the Proposed Share Buy-Back are as follows:- (a) (b) allows the Company to take preventive measures against speculation particularly when its shares are undervalued; and allows the Company flexibility in attaining its desired capital structure. 4.2 The potential disadvantages of the Proposed Share Buy-Back are as follows:- (a) (b) the Proposed Share Buy-Back will reduce the surplus financial resources of the Group and may result in the Group foregoing better investment opportunities that may emerge in future; and as the Proposed Share Buy-Back can only be made out of retained profits and/or share premium reserve of the Company, it will result in the reduction of financial resources available for distribution to shareholders in the immediate future. 4.3 The Board will be mindful of the interest of BFood and its shareholders in undertaking the Proposed Share Buy-Back and in subsequent resale. 5.0 EFFECTS OF THE PROPOSED SHARE BUY-BACK 5.1 Share Capital If the purchased BFood Shares are being retained in full as Treasury Shares, the Proposed Share Buy-Back will not have any effect on the issued and paid-up share capital of BFood. However, the rights attaching to them as to voting, dividends and participation in other distributions and otherwise are suspended and the Treasury Shares shall not be taken into account in calculating the number of percentage of shares or of a class of shares for any purposes including substantial shareholding, takeovers, notices, the requisitioning of meetings, the quorum for a meeting and the result of a vote on a resolution at a meeting. The issued and paid-up share capital of BFood will decrease if the BFood Shares purchased are to be cancelled. The proforma effect of the Proposed Share Buy-Back on the issued and paid-up share capital of the Company assuming BFood buys and subsequently cancels up to 10% of the issued and paid-up share capital as at 22 August 2013 is as follows:- No. of BFood Shares As at 22 August ,282,800 Less : Treasury Shares to be cancelled (26,328,280) Resultant share capital 236,954,520 18