KEJURUTERAAN SAMUDRA TIMUR BERHAD (Company No X) (Incorporated in Malaysia)

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, bank manager, solicitor, accountant or other professional adviser immediately. Bursa Malaysia Securities Berhad ( Bursa Securities ) has perused this Circular on a limited review basis pursuant to the relevant provisions of the Practice Note 18 of Bursa Securities Main Market Listing Requirements. 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. KEJURUTERAAN SAMUDRA TIMUR BERHAD (Company No X) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS IN RELATION TO PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR EXISTING RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (Resolution 9) AND PROPOSED NEW SHAREHOLDERS MANDATE FOR ADDITIONAL RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (Resolution 10) The Notice of convening the Thirtieth Annual General Meeting ( AGM ) of the Company to be held at the Greens III Room, Sport Wing, Tropicana Golf & Country Resort Berhad, Jalan Kelab Tropicana, Tropicana Club & Country Resort, Petaling Jaya, Selangor Darul Ehsan on Friday, 20 November 2015 at a.m. together with the Form of Proxy are set out in the 2015 Annual Report. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies (but not more than two) to attend and vote on his/her behalf. The Form of Proxy should be completed and must be lodged at the registered office of the Company at Suite A-21-12, Level 21, Menara UOA Bangsar, No. 5, Jalan Bangsar Utama 1, Kuala Lumpur, Wilayah Persekutuan, not later than forty-eight (48) hours before the time fixed for holding the meeting or at any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the meeting should you subsequently wish to do so. Last date and time for lodging the Form of Proxy : Wednesday, 18 November 2015 at a.m. Date and time of AGM : Friday, 20 November 2015 at a.m. This Circular is dated 29 October 2015

2 DEFINITIONS Except where the context otherwise requires, the following terms and abbreviations (in alphabetical order) shall apply throughout the Circular (definition denoting singular also include the plural and vice versa, where applicable) Act AGM : : Companies Act, 1965, and any amendments thereto Annual General Meeting Board : Board of Directors of KSTB Bursa Securities Circular : : Bursa Malaysia Securities Berhad Circular to Shareholders dated 29 October 2015 Director(s) : Shall have the meaning given in Section 2(1) of the Capital Markets and Services Act 2007 and for the purpose of the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate includes any person who is or was within the preceding six (6) months from the date on which the terms of the transactions were agreed upon, a director of KSTB, its subsidiary or holding company or a chief executive of KSTB, its subsidiary or holding company. FYE : Financial years ended / ending KSTB or the Company : Kejuruteraan Samudra Timur Berhad KSTB Group or the Group : KSTB and its subsidiaries, collectively Listing Requirements : Bursa Securities Main Market Listing Requirements including any amendments thereto that may be made from time to time LPD : 2 October 2015, being the latest practicable date prior to the printing of the Circular Major Shareholder : A person who has (which 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 major shareholder of the Company or any other corporations which is its subsidiary or holding company) an interest or interests in one (1) or more voting shares in the Company and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is 10% or more of the aggregate of the nominal amounts of all the voting shares in the Company; or 5% or more of the aggregate of the nominal amounts of all the voting shares in the Company where such person is the largest shareholder of the Company. For the purpose of this definition, interest in shares shall have the meaning given in Section 6A of the Act Person(s) connected : In relation to a Director or Major Shareholder, means such person who falls under any one (1) of the following categories:- i. a family member of the Director or Major Shareholder, which family means such person who falls within any one (1) of the following categories:- spouse; parent; child including an adopted child and step-child; brother or sister; and spouse of the child including an adopted child and step-child and brother or sister; ii. iii. iv. 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 them, 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; i

3 v. 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; vi. vii. viii. ix. 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 them 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 Proposed Renewal of Shareholders Mandate Proposed New Shareholders Mandate Recurrent Related Party Transactions or RRPT : Proposed renewal of Shareholders Mandate as set out in paragraph 2.4 herein : Proposed new Shareholders Mandate as set out in paragraph 2.4 herein : Related party transactions involving recurrent transactions of a revenue or trading nature which are necessary for the Group s day-to-day operations and are entered into by the Group in the ordinary course of business which involves the interest, direct or indirect, of a Related Party Related Party (ies) : A Director, Major Shareholder or person connected with such Director or Major Shareholder RM : Ringgit Malaysia SC : Securities Commission Shareholders Mandate : Shareholders mandate obtained on 31 December 2014 for KSTB Group to enter into Recurrent Related Party Transactions based on the terms set out in the circular to shareholders dated 9 December 2014 THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK ii

4 TABLE OF CONTENTS LETTER TO THE SHAREHOLDERS OF KSTB CONTAINING: PAGE 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE 2.1 Provisions under the Listing Requirements 2.2 Principal activities of KSTB Group 2.3 Classes of Related Parties 2.4 Details of nature of the existing and additional Recurrent Related Party Transactions and nature and extent of interests of the Related Parties in the transactions 2.5 Outstanding Recurrent Related Party Transactions Receivables 3. RATIONALE AND BENEFITS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE PROCEDURES FOR DETERMINATION OF TRANSACTION PRICE DISCLOSURE AND REVIEW PROCEDURES FOR THE RECURRENT RELATED PARTY TRANSACTIONS THRESHOLDS FOR THE APPROVAL OF RRPT WITHIN KSTB GROUP CREDIT TERM AND LATE PAYMENT CHARGES FOR ADDITIONAL RRPT UNDER THE PROPOSED NEW SHAREHOLDERS MANDATE DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS CORPORATE PROPOSALS ANNOUNCED BUT PENDING COMPLETION EFFECT OF THE PROPOSALS AUDIT COMMITTEE STATEMENT DIRECTORS RECOMMENDATION APPROVAL REQUIRED AGM FURTHER INFORMATION 12 APPENDIX I FURTHER INFORMATION 13 THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK iii

5 KEJURUTERAAN SAMUDRA TIMUR BERHAD (Company No X) (Incorporated in Malaysia) Registered Office: Suite A-21-12, Level 21 Menara UOA Bangsar No. 5, Jalan Bangsar Utama Kuala Lumpur Wilayah Persekutuan 29 October 2015 Board of Directors Leong Chee Keong (Independent Non-Executive Director/Chairman) Low Cheng Lai (Independent Non-Executive Director) Adnan bin Ahmad (Independent Non-Executive Director) Tengku Aniza binti Tengku Ab. Hamid (Non-Independent Non-Executive Director) Darmendran Kunaretnam (Non-Independent Executive Director) Chee Cheng Chun (Non-Independent Executive Director) To: The Shareholders of KSTB Dear Sir/Madam, PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE 1. INTRODUCTION At the last AGM of the Company held on 31 December 2014, the Company obtained a renewal and new mandate from its shareholders for the Company and/or KSTB Group to enter into the existing and new Recurrent Related Party Transactions. The Shareholders Mandate is expiring at the forthcoming Thirtieth AGM of the Company, unless the mandate is renewed in the said AGM of the Company. On 23 September 2015, the Company announced to Bursa Securities that the Company proposes to seek shareholders approval for the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate in its forthcoming Thirtieth AGM. THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE YOU WITH DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE TOGETHER WITH THE RECOMMENDATION OF YOUR BOARD AS WELL AS TO SEEK YOUR APPROVAL FOR THE RESOLUTIONS TO BE TABLED AT THE FORTHCOMING AGM. NOTICE OF THE AGM AND THE FORM OF PROXY ARE SET OUT IN THE 2015 ANNUAL REPORT. SHAREHOLDERS OF KSTB ARE ADVISED TO READ THE CONTENTS AND APPENDIX OF THIS CIRCULAR CAREFULLY BEFORE VOTING ON THE RESOLUTIONS PERTAINING TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 1

6 2. DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE 2.1 Provisions under the Listing Requirements Pursuant to Paragraph of the Listing Requirements, a listed issuer may seek a shareholders mandate in respect of related party transactions involving recurrent transactions of a revenue or trading nature which are necessary for its day-to-day operations subject to, inter-alia, the following: a) the transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public; b) the shareholders mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders mandate during the financial year where:- i) the consideration, value of the assets, capital outlay or costs of the recurrent related party transactions is RM1 million or more; or ii) the percentage ratio of such recurrent related party transactions is 1% or more, whichever is the lower; c) the issuance of a circular to shareholders for the shareholders mandate, the contents of which shall include information as may be prescribed by Bursa Securities; d) in a meeting to obtain shareholders mandate, the interested director, interested major shareholder or interested person connected with a director or major shareholder; and where it involves the interest of an interested person connected with a director or major shareholder, such director or major shareholder, must not vote on the resolution to approve the recurrent related party transactions. An interested director or interested major shareholder must ensure that persons connected with him abstain from voting on the resolution approving the recurrent related party transactions; and e) the listed issuer immediately announces to Bursa Securities when the actual value of a recurrent related party transactions entered into by the listed issuer, exceeds the estimated value of the recurrent related party transactions disclosed in the circular by 10% or more and must include the information as may be prescribed by Bursa Securities in its announcement. The Recurrent Related Party Transactions are necessary for day-to-day operations and in the ordinary course of business of KSTB Group as mentioned below and which are detailed in item 2.4 below. It is likely that such transactions will occur with some degree of frequency and could arise at any time. In view of the frequent nature of such Recurrent Related Party Transactions, the Board is seeking shareholders approval for KSTB Group to enter into such transactions in the normal course of business with the classes of Related Parties set out in item 2.3 below and that such transactions are entered into on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders. The Recurrent Related Party Transactions are also subject to the review procedures set out in item 5 below. The Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate are subject to annual renewal. The authority, if approved by the shareholders at the forthcoming AGM, shall continue to be in force until:- a) the conclusion of the next AGM following the general meeting at which such mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; b) the expiration of the period within which the next AGM after that 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 c) revoked or varied by resolution passed by the shareholders in general meeting, whichever is the earlier. A disclosure of the aggregate value of Recurrent Related Party Transactions conducted pursuant to the Shareholders Mandate shall be made in the annual report, including a breakdown of the aggregate value of the Recurrent Related Party Transactions made during the financial year, amongst others, based on the following information: 2

7 the type of the Recurrent Related Party Transactions made; and the names of the Related Parties involved in each type of Recurrent Related Party Transactions made and their relationship with KSTB. 2.2 Principal activities of KSTB Group The Company is principally engaged in investment holding and is categorised as "Cash Company" under Practice Note ("PN") 16 of the Listing Requirements and pursuant to Paragraph 8.03 of the Listing Requirements. The Company is still in the midst of identifying new prospective businesses and/or assets and formulating its regularisation plan. It has up to 26 February 2016 to submit a proposal to acquire a new core business to the SC for its approval. The principal activities of its subsidiaries as at LPD are as follows:- Name of Company Effective equity interest Principal Activities Samudra Timur Sdn. Bhd. ( STSB ) KST Drilling Technologies Sdn. Bhd. ( KSTD ) 100% Provision of tubular inspection and maintenance services to the oil and gas industry within and outside Malaysia 100% Dormant KST International Ltd. 100% Dormant KST Fishing Services Sdn. Bhd. ( KSTFS ) Subsidiary of KSTD PT. KST Drilling Technologies Indonesia 100% Dormant 95% Dormant 2.3 Classes of Related Parties The Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate would apply to recurrent transactions entered into by the KSTB Group which involves the interest, direct or indirect, of Related Parties. Such Related Parties are those described below:- No. Names Principal activities Relationship 1. Dato Chee Peck Chee Peck Jan Not applicable Major Shareholder of KSTB Director and major shareholder of Gem Travel & Tours Sdn. Bhd. ( Gem Travel ) Father of Mr. Chee Cheng Chun, Director and substantial shareholder of KSTB 2. Darmendran Kunaretnam Not applicable Director and substantial shareholder of KSTB Director of Safeguards Corporation Sdn. Bhd. ( Safeguards Corporation ), Safworks Sdn. Bhd. ( Safworks ), Safeguards Oceanic Holdings Sdn. Bhd. ( SOHSB ), Safeguards Oceanic Freightways Sdn. Bhd. ( Oceanic Freightways ) and Safeguard Records Management Sdn. Bhd. ( Safeguard Records ) Director and major shareholder of Eighth Jewels Systems Sdn Bhd. ( Eighth Jewels ), GoldMaal Sdn. Bhd. ( GoldMaal ), MPA Info Solution Sdn Bhd ( MPA ) and Epedas Sdn. Bhd. ( EPedas ) 3

8 No. Names Principal activities Relationship Eighth Jewels is the ultimate holding company of Safeguards Corporation, Safworks, SOHSB, Safeguards Oceanic Sdn Bhd ( Safeguards Oceanic ), Oceanic Freightways, Airoceanic Express Sdn. Bhd. ( Airoceanic ) and Safeguard Records 3. Chee Cheng Chun Not applicable Director and substantial shareholder of KSTB Director and major shareholder of Gem Travel Son of Dato Chee Peck Chee Peck Jan, Major Shareholder of KSTB 4. Gem Travel Travel & tour agency Person connected to Dato Chee Peck Chee Peck Jan and Chee Cheng Chun. A company in which both of them have interest by virtue of them being directors and shareholders. 5. Safeguards Corporation Providers of cash services, securities services, electronic security surveillance and detection system, records management, fleet management services and investment holding 6. Safworks Providing vehicle fleet management services, information technology services and investment holding 7. Safeguards Oceanic Sea cargo forwarding and customs clearance agents 8. Oceanic Freightways International shipping and forwarding agents 9. Airoceanic Airfreight forwarders and transportation agents 10. Safeguards Records Provider of data and records management services 11. GoldMaal Leasing of vehicles and equipment 12. MPA Shared human resource, administration and corporate related services Person connected to Darmendran Kunaretnam. A company in which he has interest by virtue of him being a director and major shareholder in Eighth Jewels, its ultimate holding company. Person connected to Darmendran Kunaretnam. A company in which he has interest by virtue of him being a director and major shareholder in Eighth Jewels, its ultimate holding company. Person connected to Darmendran Kunaretnam. A company in which he has interest by virtue of him being a director and major shareholder in Eighth Jewels, its ultimate holding company. Person connected to Darmendran Kunaretnam. A company in which he has interest by virtue of him being a director and major shareholder in Eighth Jewels, its ultimate holding company. Person connected to Darmendran Kunaretnam. A company in which he has interest by virtue of him being a director and major shareholder in Eighth Jewels, its ultimate holding company. Person connected to Darmendran Kunaretnam. A company in which he has interest by virtue of him being a director and major shareholder in Eighth Jewels, its ultimate holding company. Person connected to Darmendran Kunaretnam. A company in which he has interest by virtue of him being director and shareholder. Person connected to Darmendran Kunaretnam. A company in which he has interest by virtue of him being director and shareholder. 4

9 No. Names Principal activities Relationship 13. EPedas E-commerce and information technology support services 14. Trance Rex Sdn. Bhd. ( Trance Rex ) Person connected to Darmendran Kunaretnam. A company in which he has interest by virtue of him being a director and major shareholder in Eighth Jewels, its ultimate holding company. Investment holding Major shareholder of KSTB Person connected to Darmendran Kunaretnam. A Company in which he has interest by virtue of him being a director and major shareholder in Trance Rex. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 5

10 2.4 Details of nature of the existing and additional Recurrent Related Party Transactions and nature and extent of interests of the Related Parties in the transactions The types of the existing and additional Recurrent Related Party Transactions which are to be covered by the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate relate mainly to transactions for the obtaining/providing of products/services of a revenue or trading nature, which are necessary for the day-to-day operations and are in the normal course of business of the KSTB Group. Existing Recurrent Related Party Transactions No. KSTB and/or its subsidiaries (Buyer/Recipient) Related transacting party (Seller/Provider) Name of interested Related Parties * 1. KSTB Group Gem Travel Dato Chee Peck Chee Peck Jan Chee Cheng Chun Nature of transactions Estimated Value as disclosed in the preceding year s Circular to Shareholders (RM 000) Actual Value transacted from the date of the last AGM held on 31 December 2014 to LPD (RM 000) Estimated aggregate value of transaction from the date of forthcoming AGM to the next AGM in 2016 # (RM 000) Purchase of air tickets 1, , KSTB Group Safeguards Corporation Darmendran Kunaretnam Trance Rex Records management services and handling services KSTB Group Safworks Darmendran Kunaretnam Trance Rex Information technology network and hardware support service Develop and administration of corporate website with Content Management System Develop and administration of Personnel Utilisation Verification System and other system software

11 Existing Recurrent Related Party Transactions (Cont d) No. KSTB and/or its subsidiaries (Buyer/Recipient) Related transacting party (Seller/Provider) Name of interested Related Parties * 4. KSTB Group Safeguards Oceanic Oceanic Freightways Airoceanic Darmendran Kunaretnam Trance Rex 5. KSTB Group Safeguards Records Darmendran Kunaretnam Trance Rex 6. KSTB Group GoldMaal Darmendran Kunaretnam Trance Rex Additional Recurrent Related Party Transactions No. KSTB and/or its subsidiaries (Buyer/Recipient) Related transacting party (Seller/Provider) Name of interested Related Parties * 1. KSTB Group MPA Darmendran Kunaretnam Trance Rex 2. KSTB Group EPedas Darmendran Kunaretnam Trance Rex Nature of transactions Estimated Value as disclosed in the preceding year s Circular to Shareholders (RM 000) Transportation and freight handling services 2,000 1,000 2,000 Actual Value transacted from the date of the last AGM held on 31 December 2014 to LPD (RM 000) Estimated aggregate value of transaction from the date of forthcoming AGM to the next AGM in 2016 # (RM 000) 2,000 1,000 2,000 Storage of documents and files GoldMaal providing leasing service of executive cars to KSTB Group ,000 Nature of transactions Estimated aggregate value of transaction from the date of forthcoming AGM to the next AGM in 2016 # (RM 000) Shared human resource, administration and 500 corporate related services E-commerce and information technology support services 500 7

12 * Please refer details of relationship under item 2.3 above. # The estimated aggregate value of transaction is based on the current normal commercial price as offered by other service providers and past transactions and/or management estimates on the assumption that current level of transactions will continue and all external conditions remain unchanged or may vary and are subject to changes. Due to the nature of the transaction in respect of purchasing of air tickets, the ticket prices or rates are based on non-negotiable fixed price or rate plus some agency fee which is comparable to the agency fees charged by other travel agencies. The prices or rates and its terms and conditions however, may vary and subject to changes depending on market forces. 2.5 Outstanding Recurrent Related Party Transactions Receivables There is no amount due and owing to the KSTB Group by its Related Parties pursuant to the Recurrent Related Party Transactions, as such the disclosure as required under Paragraphs 16A and 16B in the Annexure PN 12-A of the Listing Requirements, are not applicable. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 8

13 3. RATIONALE AND BENEFITS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE Transacting with the Related Parties and close corporation between KSTB Group and the Related Parties are expected to be beneficial to KSTB Group as these would facilitate KSTB Group in its negotiation for competitive prices/rates, terms and conditions and credit terms taking into consideration the level of consistency, reliability, speed and quality of the products/services provided while KSTB Group will be given the priority in services. Further KSTB Group would have an advantage of familiarity with the background, financial well-being and management of the Related Parties. The RRPT to be entered into by KSTB Group with the Related Parties are all conducted in the ordinary course of business and are recurring transactions of a revenue or trading nature which are necessary for its day-to-day operations. These transactions may be constrained by time-sensitive nature and confidentiality of such transactions, and it may be impractical to seek shareholders approval on a case-to-case basis before entering into such related party transactions. These RRPT are likely to occur with some degree of frequency and could arise at any time. As such obtaining of shareholders mandate for the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate on an annual basis would facilitate KSTB Group to continue transacting with the Related Parties and would eliminate the need to make immediate announcement and/or convene separate general meetings from time to time to seek shareholders approval as and when potential RRPT arise. This will substantially reduce the expenses associated with the convening of general meetings on an ad hoc basis, improve administrative efficiency considerably, and allow manpower resources and time to be channelled towards attaining other corporate objectives. The RRPT to be entered into are undertaken at an arm s length basis on normal commercial terms and are on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders are maintained. 4. PROCEDURES FOR DETERMINATION OF TRANSACTION PRICE The pricing of the transaction shall be determined on the basis of the prevailing rates/prices of the products/services according to their usual commercial terms, business practices and policies or otherwise in accordance with other applicable industry norms/considerations. The transaction price, terms and conditions are determined by prevailing market rates, also taking into consideration the extent and scope of service rendered where practical and feasible. At least two (2) other contemporaneous transactions with unrelated third parties for similar products/services and/or quantities will be used as comparison 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 and to ensure the transactions with the Related Parties are undertaken on an arm s length basis and on normal commercial terms and are on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders. In the event that quotations or comparative pricing from unrelated third parties could not be obtained for the proposed transactions, the transactions prices will be based on the following, to ensure that the RRPT are not detrimental to the KSTB Group:- (a) (b) Historical prices on past transactions that have been incurred with other comparable unrelated third parties; and Usual business practices of the Group taking into account the efficiency, quality and type of goods or services to be provided. 5. DISCLOSURE AND REVIEW PROCEDURES FOR THE RECURRENT RELATED PARTY TRANSACTIONS The KSTB Group has established guidelines and procedures to ensure that Recurrent Related Party Transactions are undertaken on an arm s length basis and on normal commercial terms consistent with the usual business practices and policies and on transaction prices and terms, which are not more favourable to the Related Parties than those available to third parties/public and are not to the detriment of the minority shareholders. KSTB Group has implemented the following review and approval procedures: (i) Mandated Recurrent Related Party Transactions would be tabled to the Audit Committee for review on quarterly basis. Any mandated RRPT exceeding the respective mandated aggregate transaction value as given in item 2.4 above require approval of the Audit Committee and the Board. Any deviation of 10% exceeding the mandated value require announcement to Bursa Securities in addition to review and approval by the Audit Committee and the Board. 9

14 Any mandated RRPT below the respective mandated aggregate transaction value will be reviewed and approved by an Executive Director of the Company. (ii) (iii) (iv) (v) RRPT within the KSTB Group which are not within the shareholders mandate shall be reviewed and approved by the Audit Committee and the Board before the transactions are entered into. A register and/or records shall be maintained to record all Recurrent Related Party Transactions which are entered into. Details of all Recurrent Related Party Transactions made during the financial year shall be disclosed in the annual report in accordance with Paragraph 10.09(2)(b) and Paragraph of Practice Note 12 of the Listing Requirements, which includes information on the breakdown of the aggregate value of the Recurrent Related Party Transactions made during the financial year, type of Recurrent Related Party Transactions made and the names of the Related Parties involved in each type of the Recurrent Related Party Transactions made and the relationship with KSTB Group. A yearly review on the RRPT would be carried out prior to seeking renewal of shareholders mandate for the RRPT to ensure the principle of RRPT undertaken on an arm s length basis and on normal commercial terms and are on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders are maintained. The Board and Audit Committee shall have overall responsibility for the determination of the review procedures. If a member of the Board or Audit Committee has an interest in the transaction concerned, he/she will abstain from any deliberation and decision making by the Board or Audit Committee in respect of the said transaction. All Department Heads and/or Head of Operation Units concern in KSTB Group would be notified and advised of the Recurrent Related Party Transactions and the relevant compliances with the Listing Requirements. They are also advised that all transactions undertaken by KSTB Group regardless whether with Related Parties or unrelated third parties should be undertaken on an arm s length basis and on normal commercial terms and on terms not more favourable to any parties than those generally available to the public and are not detrimental to the minority shareholders of KSTB. It is a policy of KSTB Group to obtain at least two (2) or three (3) quotations for any transactions to be undertaken by KSTB Group. 6. THRESHOLDS FOR THE APPROVAL OF RRPT WITHIN KSTB GROUP There is no specific threshold for approval of RRPT. All mandated RRPT would be reviewed by the Audit Committee on quarterly basis. Any mandated RRPT exceeded the respective mandated aggregate transaction value as given in item 2.4 above require approval of the Audit Committee and the Board. Any mandated RRPT below the respective mandated aggregate transaction value will be reviewed and approved by an Executive Director of the Company. Any non-mandated RRPT within KSTB Group require review and approval of the Audit Committee and the Board before the transaction is entered into. 7. CREDIT TERM AND LATE PAYMENT CHARGES FOR ADDITIONAL RRPT UNDER THE PROPOSED NEW SHAREHOLDERS MANDATE The credit term allowed for the additional RRPT under the Proposed New Shareholders Mandate is thirty (30) days. 8. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS The direct and indirect shareholdings of the Directors and Major Shareholder who have interests, direct and indirect, in the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate as at LPD is as follows: No. of shares held Interested Parties Direct % Indirect % Major Shareholder of KSTB Dato Chee Peck Chee Peck Jan 24,692, Director of KSTB Darmendran Kunaretnam 1,850, ,266,000 (1) Major Shareholder of KSTB Trance Rex 66,266, Director of KSTB Chee Cheng Chun 9,767,

15 Note> (1) - Deemed interested via his shareholding in Trance Rex pursuant to Section 6A of the Act. Gem Travel, Safeguards Corporation, Safworks, Safeguards Oceanic, Oceanic Freightways, Airoceanic, Safeguards Records, GoldMaal, MPA and EPedas have no direct or indirect shareholdings in KSTB and/or its subsidiaries. The Directors namely, Darmendran Kunaretnam and Chee Cheng Chun, and/or Major Shareholders of KSTB namely Dato Chee Peck Chee Peck Jan and Trance Rex who are interested in the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate, have abstained and will continue to abstain from all deliberations and voting in respect of the RRPT involving them at the Board meetings (if applicable) and shall also abstain from voting in respect of their direct and/or indirect shareholdings in the Company at the forthcoming AGM of the Company, on the ordinary resolutions in respect of the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate in which they are interested in. Further, the Directors namely, Darmendran Kunaretnam and Chee Cheng Chun and Major Shareholders of KSTB namely Dato Chee Peck Chee Peck Jan and Trance Rex have undertaken that they will ensure that the persons connected to them abstain from voting in respect of their direct and indirect shareholdings in KSTB on the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate at the forthcoming AGM of the Company. Save for the above interested parties, none of the other Directors or Major Shareholders or persons connected to them having any interest direct and indirect in the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate. 9. CORPORATE PROPOSALS ANNOUNCED BUT PENDING COMPLETION There is no corporate exercise / scheme which has been announced by the Company that is pending completion as at the LPD. The Board confirms that there is no outstanding corporate proposal which has been announced to Bursa Securities but not yet completed prior to the printing of this Circular. 10. EFFECT OF THE PROPOSALS The Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate will not have any effect on the issued and paid-up share capital, the shareholdings of the substantial shareholders and the consolidated net assets as at 30 June 2015 of KSTB Group. The Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate are not expected to have material effect on the earnings and earnings per share of the KSTB Group for the FYE 30 June AUDIT COMMITTEE STATEMENT The Audit Committee of the Company has seen and reviewed the procedures mentioned in item 5 above and is of the view that the said procedures are sufficient to ensure that the existing Recurrent Related Party Transactions are undertaken on an arms length basis and on normal commercial terms and on transaction price which are not more favourable to the Related Parties than those generally available to the public and are not detrimental to the minority shareholders of KSTB. The Audit Committee is of the view that KSTB Group has in place adequate procedures and processes to monitor, track and identify RRPT in a timely and orderly manner. The Audit Committee reviews these procedures and processes annually or from time to time as it deems relevant and feasible. 12. DIRECTORS RECOMMENDATION The Board (save and except for the interested Directors, Chee Cheng Chun and Darmendran Kunaretnam), after having considered the rationale and benefits of the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate as set out in Section 3 above, is of the opinion that the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate are in the best interest of the Company. Your Board (save for the interested Directors, Chee Cheng Chun and Darmendran Kunaretnam) therefore recommends that you vote in favour of the resolutions pertaining to the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate to be tabled at the forthcoming AGM. 13. APPROVAL REQUIRED The Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate are subject to the approval of the shareholders of the Company at the forthcoming AGM to be convened. 11

16 14. AGM The ordinary resolutions pertaining to the Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate are set out in the Notice of AGM in the 2015 Annual Report. The AGM will be held at the Greens III Room, Sport Wing, Tropicana Golf & Country Resort Berhad, Jalan Kelab Tropicana, Tropicana Club & Country Resort, Petaling Jaya, Selangor Darul Ehsan on Friday, 20 November 2015 at a.m. If you are unable to attend and vote in person at the AGM, you may appoint a proxy to attend and vote on your behalf by completing, signing and returning the Form of Proxy in accordance with the instructions printed thereon as soon as possible and in any event so as to arrive at the registered office of the Company at Suite A-21-12, Level 21, Menara UOA Bangsar, No. 5, Jalan Bangsar Utama 1, Kuala Lumpur, Wilayah Persekutuan not less than forty-eight (48) hours before the time fixed for the AGM or at any adjournment thereof. The lodgement of the Form of Proxy does not preclude you from attending and voting in person should you subsequently decide to do so. 15. FURTHER INFORMATION Shareholders are requested to refer to the attached Appendix I for further information. Yours faithfully for and on behalf of the Board KEJURUTERAAN SAMUDRA TIMUR BERHAD Darmendran Kunaretnam Executive Director THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 12

17 FURTHER INFORMATION APPENDIX 1 1. RESPONSIBILITY STATEMENT This Circular has been seen and approved by the Board who collectively and individually accept full responsibility for the accuracy of the information given and confirm that, after making all reasonable enquiries and to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement in this Circular false or misleading. 2. MATERIAL CONTRACTS Save as disclosed below, the Board has confirmed that neither the Company nor its subsidiaries has entered into any material contracts (not being contracts entered into in the ordinary course of business), within two (2) years immediately preceding the date of this Circular: i) The management agreement dated 27 March 2014 entered into between KSTB and Destini Berhad ( Destini ) in relation to the management of Samudra Oil Services Sdn Bhd ( Samudra Oil ) pursuant to the conditional shares sale agreement dated 1 November 2013 ( SSA ) entered into between KSTB and Destini in respect of the disposal of the entire issued and paid-up share capital of Samudra Oil to Destini for RM80.00 million to be fully satisfied by 228,571,428 new ordinary shares in Destini ( Destini Shares ) at an issue price of RM0.35 per Destini Share ( Disposal of Samudra Oil ); ii) iii) iv) The Trust Deed constituting the RM12.0 million Irredeemable Convertible Loan Stock issued pursuant to the Debt Settlement Agreement dated 3 June 2014; The Deed of Novation dated 29 May 2014 entered into by KSTB, in relation to the novation of contract with Petronas Carigali Sdn. Bhd. under the Pan Malaysia Contract for the provision of tubular handling equipment and services, to Samudra Oil; and The Deed of Novation dated 26 September 2014 entered into by KSTB, in relation to the novation of contract with ExxonMobil Exploration and Production Malaysia Inc. under the Pan Malaysia Contract for the provision of tubular handling equipment and services, to Samudra Oil. 3. MATERIAL LITIGATION Save as disclosed below, as at the LPD, neither the Company nor its subsidiaries is engaged in any material litigations, claims or arbitrations either as plaintiff or defendant, and the Board has no knowledge of any proceedings pending or threatened against the Company or its subsidiaries or of any facts likely to give rise to any proceedings which might materially and adversely affect the financial position or business of the Company or its subsidiaries: (a) Gagie Corporation S.A. ( Gagie ) and KST Gagie Sdn Bhd ( KSTGSB ) vs Dato Chee Peck Chee Peck Jan Suit No. D On 22 May 2007, the Company announced that the Company, Dato Chee Peck Chee Peck Jan (a shareholder and director of the Company and a director of KSTFS) and KSTFS (collectively referred to as the Defendants ) had on 18 May 2007 been served with a Writ and Statement of Claim filed by Gagie and KSTGSB (collectively referred to as the Plaintiffs ) in the High Court of Malaya at Kuala Lumpur ( Suit No. D or the D8 Suit ) as well as an ex-parte injunction application by the Plaintiffs against the Defendants. The Suit was commenced arising from the termination by the Company of the Shareholders Agreement dated 19 December 2005 entered into between Gagie and the Company to govern the rights of the parties in relation to KSTGSB and KST Gagie Labuan Ltd ( KSTGLL ) on 5 April The injunction application was heard on various dates and on 1 November 2007, the High Court granted various interim injunctions against the Defendants. The grant of the interim injunctions by the High Court on 1 November 2007 had the effect of, inter alia, restraining the Defendants, until the trial of the action or further order from: i) Diverting or attempting to divert to KSTFS or any other companies related to any of the Defendants, all trade receivables due and owing to KSTGSB for services rendered under any existing or prospective business opportunities in relation to oil well fishing operations which belong to the Plaintiffs; ii) Dealing with fishing tools and equipment belonging to KSTGSB and/or KSTGLL procured for the use of the joint venture without the consent of the Plaintiffs or in a manner inconsistent with the rights of the Plaintiffs or amounting to a denial of the Plaintiffs rights; and 13

18 iii) Publishing any words which reflect adversely on the Plaintiffs trade and business. The Plaintiffs were required to deposit a sum of USD1 million into an interest bearing fixed deposit account by way of fortification of the Plaintiffs undertaking as to damages before 1 December The sum was not paid. On 12 June 2007, the Defendants filed an application to strike out the claims made by KSTGSB in the Suit and the order was successfully obtained on 27 February The Senior Assistant Registrar further ordered KSTGSB (failing which, their lawyers) to pay to the Defendants the costs incurred in this application. The Plaintiffs appeal against the order was dismissed with costs on 13 May 2008 but the court agreed to vary the order to the extent that the Plaintiffs lawyers would not be liable for the said costs. On 12 November 2007, on the advice of the lawyers acting for the Company, KSTGLL filed a suit against Gagie, Mr George Gair Nicoll and Mr Thomas White Doig in the High Court of Malaya at Kuala Lumpur (Suit No. D ) (the D7 Suit ) for alleged wrongful and/or tortious acts in and against KSTGLL including to have them account for the tools and equipment that they have taken from KSTGLL. Gagie, Mr George Gair Nicoll and Mr Thomas White Doig (the D7 Defendants ) have through their lawyer, filed their defence and their counterclaim against KSTGLL, the Company and KSTFS in respect of the D7 Suit. In their counterclaim, the D7 Defendants have inter alia sought the delivery of the fishing equipment and tools to them or alternatively, judgement in the sum of their current replacement value of USD270, and general damages to be assessed. The Company has been advised by its lawyers that with respect to the Company s defence to the D8 Suit, the Company has valid defences to the various claims by the Plaintiffs although it is not possible to predict the outcome of the litigation. The lawyers are of the view that even if the Plaintiffs were to succeed in their claims or some of their claims, the damages would not be material. Accordingly, no provision has been made in respect of the claims of damages by Gagie in the financial statements. The Company and Gagie had also agreed to refer the disputes between the Company and Gagie arising out of the two (2) Shareholders Agreements dated 19 December 2005 in relation to KSTGSB and KSTGLL to arbitration whereby the Company claimed substantial damages against Gagie for breaches of the two (2) Shareholders Agreements before Tan Sri Dato Siti Norma Yaakob as the sole arbitrator. The lawyers acting for the Company confirmed that the arbitration proceedings have completed and the parties are awaiting delivery of the decision by the arbitrator. The lawyers acting for the Company opines although the Company has a valid claim against Gagie they are unable to predict the quantum of damages suffered by the Company in the event the arbitral tribunal should be made in favour of the Company and whether Gagie will be in a position to honour any award that may be made against it as Gagie is registered in Panama and has no or no substantial assets within the jurisdiction. The lawyers acting for the Company have also confirmed that the legal proceedings under the D7 Suit and D8 Suit remain status quo pending the decision of the arbitrator. As at the LPD, the arbitrator has yet to deliver her decision. 4. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents are available for inspection at the registered office of the Company at Suite A , Level 21, Menara UOA Bangsar, No. 5, Jalan Bangsar Utama 1, Kuala Lumpur, Wilayah Persekutuan, during normal office hours from Mondays to Fridays (except public holidays) from the date of this Circular up to and including the date of the forthcoming AGM: (i) The Memorandum and Articles of Association of KSTB; (ii) The audited consolidated financial statements of the KSTB Group for the past two (2) FYE 30 June 2014 and 30 June 2015; (iii) The unaudited Quarterly Results for the financial period ended 30 June 2015; (iv) (v) Material contracts referred to in paragraph 2 above; and Relevant cause papers in respect of the material litigation referred to in paragraph 3 above. 14

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