SIME DARBY BERHAD (Company No U) (Incorporated in Malaysia under the Companies Act, 1965)

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Bursa Malaysia Securities Berhad 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. SIME DARBY BERHAD (Company No U) (Incorporated in Malaysia under the Companies Act, 1965) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR EXISTING RECURRENT RELATED PARTY TRANSACTIONS AND PROPOSED NEW SHAREHOLDERS MANDATE FOR ADDITIONAL RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE The resolution in respect of the above proposal will be tabled as Special Business at the Ninth Annual General Meeting of the Company. The notice of the Ninth Annual General Meeting of the Company together with the Form of Proxy are set out in the 2015 Annual Report of the Company despatched together with this Circular. In the event you wish to appoint a proxy, please complete and return the Form of Proxy in accordance with the instructions printed thereon. The completed Form of Proxy must be deposited at the office of the Share Registrar of the Company, Tricor Investor Services Sdn Bhd, at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time stipulated for the holding of the Annual General Meeting. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the meeting should you subsequently decide to do so. Last date and time for lodging of Form of Proxy : Saturday, 21 November 2015 at a.m. Date and time of Annual General Meeting : Monday, 23 November 2015 at a.m. Venue of Annual General Meeting : Grand Ballroom, First Floor Sime Darby Convention Centre 1A, Jalan Bukit Kiara Kuala Lumpur, Malaysia This Circular is dated 30 October 2015

2 DEFINITIONS Except where the context otherwise requires, the following definitions (in alphabetical order) shall apply throughout this Circular (definition denoting singular number shall also include the plural and vice-versa, where applicable): 2015 Annual Report : Annual Report of the Company for the financial year ended 30 June 2015 Act : Malaysian Companies Act, 1965, as amended from time to time AGM : Annual General Meeting of the Company Board : Board of Directors of Sime Darby Bursa Securities : Bursa Malaysia Securities Berhad (Company No W) Circular : This Circular dated 30 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 Shareholders Mandate 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 or the Chief Executive Officer of Sime Darby and its subsidiaries EPF : Employees Provident Fund Board (EPF Act 1991) LPD : 30 September 2015, being the latest practicable date prior to the date of this Circular Major Shareholder(s) : A person who has an interest or interests in one (1) or more voting shares in a company and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is: (i) (ii) 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; and for the purposes of the Proposed Shareholders Mandate, Major Shareholder shall include any person who is or was within the preceding six (6) months of the date on which the terms of the transaction were agreed upon a Major Shareholder of Sime Darby or any other company which is its subsidiary or holding company For the purposes of this definition, interest in shares shall have the meaning given in Section 6A of the Act MMLR : The Main Market Listing Requirements of Bursa Securities and any amendment made thereto from time to time and any Practice Notes issued in relation thereto i

3 DEFINITIONS (Continued) Person(s) Connected : In relation to a Director or Major Shareholder 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. Family in relation to a person means such person who falls within any one of the following categories: (a) spouse; (b) parent; (c) child including an adopted child and step-child; (d) brother or sister; and (e) spouse of the person referred to in subparagraphs (c) and (d) above. a trustee of a trust (other than a trustee for a share scheme for employees or pension scheme) under which the Director or Major Shareholder, or a family member of the Director or Major Shareholder, is the sole beneficiary; a partner of the Director or 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 or 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 of the Director or Major Shareholder PNB : Permodalan Nasional Berhad (Company No X) Proposed Shareholders Mandate : Proposed renewal of shareholders mandate for existing recurrent related party transactions and Proposed new shareholders mandate for the Sime Darby Group to enter into additional Recurrent Related Party Transactions of a revenue or trading nature, collectively which are necessary for the Sime Darby Group s day-to-day operations and are in the ordinary course of business of the Sime Darby Group ii

4 DEFINITIONS (Continued) Recurrent Related Party Transaction(s) : Related Party Transaction(s) which is recurrent, of a revenue or trading nature, and which is necessary for the day-to-day operations of the Sime Darby Group Related Party(ies) : Director(s), Chief Executive Officer, Major Shareholder(s) or Person(s) Connected with such Director(s), Chief Executive Officer or Major Shareholder(s). For the purpose of the Proposed Shareholders Mandate, the Related Parties are set out in section 2.4 of this Circular Related Party Transaction : A transaction entered into by the Sime Darby Group which involves the interests, direct or indirect, of a Related Party RM and sen : Ringgit Malaysia and sen, respectively Sime Darby Group or the Group Sime Darby or the Company : Sime Darby and its subsidiary companies, collectively : Sime Darby Berhad (Company No U) YPB : Yayasan Pelaburan Bumiputra (Registration No P) All references to our Company or Sime Darby in this Circular are to Sime Darby Berhad and references to our Group are to our Company and our subsidiaries. References to we, us, our and ourselves are to our Company and, where the context otherwise requires, our subsidiaries. All references to you in this Circular are to the shareholders of our Company. Words denoting the singular shall, where applicable, include the plural and vice versa, and words denoting the masculine gender shall, where applicable, include the feminine and/or neuter genders, and vice versa. References to persons shall include corporations. Any discrepancies in the tables included in this Circular between the amounts listed, actual figures and the totals thereof are due to rounding. Any reference to a time of day and date in this Circular is a reference to Malaysian time and date, respectively. The rest of this page has been intentionally left blank iii

5 CONTENTS Page PROPOSED SHAREHOLDERS MANDATE 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED SHAREHOLDERS MANDATE Provisions of the MMLR Principal activities of the Sime Darby Group Classes of Related Parties Details of Recurrent Related Party Transactions Review of procedures on Recurrent Related Party Transactions Statement by the Governance & Audit Committee RATIONALE AND BENEFITS OF THE PROPOSED SHAREHOLDERS MANDATE EFFECTS OF THE PROPOSED SHAREHOLDERS MANDATE INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM APPROVAL REQUIRED DIRECTORS RECOMMENDATION AGM FURTHER INFORMATION 14 APPENDICES APPENDIX I FURTHER INFORMATION 15 APPENDIX II EXTRACT OF THE NOTICE OF THE NINTH ANNUAL GENERAL MEETING 26 iv

6 SIME DARBY BERHAD (Company No U) (Incorporated in Malaysia under the Act) Registered Office 19 th Floor, Wisma Sime Darby Jalan Raja Laut Kuala Lumpur Malaysia 30 October 2015 Directors Tan Sri Dato Abdul Ghani Othman (Independent Non-Executive Chairman) Tan Sri Dato Sri Dr Wan Abdul Aziz Wan Abdullah (Non-Independent Non-Executive Deputy Chairman) Tan Sri Samsudin Osman (Non-Independent Non-Executive Director) Tan Sri Dato Dr Wan Mohd Zahid Mohd Noordin (Non-Independent Non-Executive Director) Tan Sri Datuk Amar (Dr) Tommy Hamid Bugo (Independent Non-Executive Director) Tan Sri Datuk Dr Yusof Basiran (Non-Independent Non-Executive Director) Datuk Zaiton Mohd Hassan (Non-Independent Non-Executive Director) Dato Sri Lim Haw Kuang (Independent Non-Executive Director) Dato Henry Sackville Barlow (Senior Independent Non-Executive Director) Dato Azmi Mohd Ali (Non-Independent Non-Executive Director) Dato Rohana Tan Sri Mahmood (Independent Non-Executive Director) Ir Dr Muhamad Fuad Abdullah (Independent Non-Executive Director) Tan Sri Dato Seri Mohd Bakke Salleh (President & Group Chief Executive) To: The Shareholders of Sime Darby Dear Sir/Madam PROPOSED SHAREHOLDERS MANDATE 1. INTRODUCTION At the Eighth AGM held on 13 November 2014, the Company had obtained a mandate from its shareholders to allow the Company and/or its subsidiaries to enter into Recurrent Related Party Transactions of a revenue or trading nature which are necessary for the Group s day-to-day operations and are carried out in the ordinary course of business on normal commercial terms and on terms which are not more favourable to the Related Parties than those generally available to the public (2014 Shareholders Mandate). The 2014 Shareholders Mandate shall, in accordance with the MMLR, expire at the conclusion of the forthcoming Ninth AGM which will be held on 23 November 2015 unless renewal of the 2014 Shareholders Mandate is obtained from the shareholders at the said AGM. In addition to the renewal of the 2014 Shareholders Mandate, the Company will also be seeking a new shareholders mandate for the Sime Darby Group to enter into additional Recurrent Related Party Transactions of a revenue or trading nature with its Related Parties. 1

7 In respect of the above, the Company had on 18 September 2015, announced through Bursa Securities that the Board had resolved to seek shareholders approval for the Proposed Shareholders Mandate in accordance with Paragraph of the MMLR at the forthcoming Ninth AGM. The purpose of this Circular is to provide you with details of the Proposed Shareholders Mandate and to seek your approval of the ordinary resolution pertaining to the Proposed Shareholders Mandate to be tabled at the forthcoming Ninth AGM. An extract of the Notice of the Ninth AGM is enclosed in this Circular for your ease of reference. YOU ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS CIRCULAR BEFORE VOTING ON THE ORDINARY RESOLUTION PERTAINING TO THE PROPOSED SHAREHOLDERS MANDATE AT THE FORTHCOMING NINTH AGM. 2. DETAILS OF THE PROPOSED SHAREHOLDERS MANDATE 2.1 Provisions of the MMLR (i) Pursuant to Paragraph of the MMLR, the Company may seek from its shareholders the Proposed Shareholders Mandate in respect of Recurrent Related Party Transactions, subject to the following: (a) (b) the transactions are in the ordinary course of business and are on terms which are 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: (i) (ii) the consideration, value of the assets, capital outlay or costs of the Recurrent Related Party Transactions is RM1 million or more; or the percentage ratio of such Recurrent Related Party Transaction is 1% or more, whichever is the higher. (c) (d) (e) the circular to shareholders for the shareholders mandate includes the information as may be prescribed by Bursa Securities; in a meeting to obtain the shareholders mandate, the interested Director(s), interested Major Shareholder(s) or interested person(s) 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 person(s) connected with him abstain from voting on the resolution approving the transactions; and the Company immediately announces to Bursa Securities when the actual value of a Recurrent Related Party Transaction entered into by Sime Darby Group exceeds the estimated value of the Recurrent Related Party Transaction disclosed in this circular by 10% or more and must include the information as may be prescribed by Bursa Securities in its announcement. 2

8 (ii) The Proposed Shareholders Mandate, if approved, will take effect from the date of the forthcoming Ninth AGM and shall continue to be in force until: (a) (b) (c) the conclusion of the next AGM of the Company following the forthcoming Ninth AGM at which such mandate was passed, at which time the said authority shall lapse, unless by an Ordinary Resolution passed at that meeting, the authority is renewed; or the expiration of the period within which the next AGM is to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or the authority is revoked or varied by Ordinary Resolution passed by the shareholders of the Company in a general meeting, whichever is the earliest. Thereafter, approval from shareholders will be sought, if necessary, for the renewal of the Proposed Shareholders Mandate for the Recurrent Related Party Transactions at each subsequent AGM. (iii) Disclosure will be made in the Company s Annual Report in accordance with Section of Practice Note 12 of the MMLR, which requires a breakdown of the aggregate value of the Recurrent Related Party Transactions made pursuant to the Proposed Shareholders Mandate for the financial year under review, 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 Company. Notwithstanding the above, the Proposed Shareholders Mandate sought does not cover any recurrent transaction of a revenue or trading nature involving companies in which EPF is interested, as the conditions set out in Paragraph (11)(m) of the MMLR are expected to be fulfilled, and therefore, transactions involving companies in which EPF is interested would not be regarded as related party transactions. The Sime Darby Group in the ordinary course of business, enters into Recurrent Related Party Transactions with certain Related Parties of the Company. Such Recurrent Related Party Transactions will be carried out on arm s length basis and 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. Details of the Recurrent Related Party Transactions under the Proposed Shareholders Mandate are set out in Section 2.4 of this Circular. 2.2 Principal activities of the Sime Darby Group The Company is a limited liability company, incorporated and domiciled in Malaysia. The Company is principally an investment holding company. The principal activities of the Group are divided into five businesses namely, Plantation, Property, Industrial, Motors and Energy & Utilities. 3

9 The companies in the Sime Darby Group to which the Proposed Shareholders Mandate applies are as follows: Subsidiaries of Sime Darby Property Division Sime Darby s Effective Equity Interest Principal Activities Sime Darby Brunsfield Holding Sdn Bhd (SDBH) 60% Property development and investment holding Subsidiaries of SDBH Sime Darby Brunsfield Damansara Sdn Bhd (SDBD) Sime Darby Brunsfield Resort Sdn Bhd (SDBR) 60% 60% Property development and property investment Property investment and property development The companies in the Sime Darby Group to which renewal of the Shareholders Mandate will not be sought are as follows: Subsidiaries of Sime Darby Plantation Division Sime Darby s Effective Equity Interest Principal Activities Sime Darby Plantation Sdn Bhd (Sime Darby Plantation) 100% Production, processing, refining and sale of palm oil, palm kernel, rubber and other palm oil and rubber related products and investment holding Subsidiaries of Sime Darby Plantation PT Minamas Gemilang PT Sime Agri Bio 100% 100% Investment holding Trading of agricultural related products Motors Division Inokom Corporation Sdn Bhd (Inokom) 53.55% Manufacture and assembly of light commercial and passenger vehicles, and contract assembly of motor vehicles 2.3 Classes of Related Parties The Proposed Shareholders Mandate will apply to the following classes of Related Parties: (i) (ii) Directors; and Major Shareholders. 4

10 2.4 Details of Recurrent Related Party Transactions The class and nature of the Recurrent Related Party Transactions which have been entered into and are to be entered into by the Sime Darby Group are detailed as follows: (i) Existing Shareholders Mandate Company Transacting Party Nature of Transaction Related Party Estimated Aggregate Value from 13 November 2014 to 23 November Actual Value Transacted from 13 November 2014 (i.e. date of the last AGM) to LPD 2 Estimated Aggregate Value from the forthcoming AGM on 23 November 2015 to the next AGM 3 Sime Darby Plantation and its subsidiaries (Sime Darby Plantation and Group) Chemical Company of Malaysia Berhad and its following subsidiaries: CCM Agri- Max Sdn Bhd CCM Fertilizers Sdn Bhd CCM Chemicals Sdn Bhd PT CCM Agripharma (CCM and Group) Purchase of chemicals and fertilisers by Sime Darby Plantation and Group from CCM and Group Interested Director Dato Azmi Mohd Ali 5 Person Connected with Major Shareholder PNB 6 RM million RM million RM million Not Applicable 4 Subsidiaries of SDBH, namely SDBD and SDBR Brunsfield Engineering Sdn Bhd (BESB) Building Contract for the design and build as well as certain service provider components of SDBH s property development projects (Oasis Corporate Park, Oasis Autocity, Oasis Rio (Homeplex), Kuala Lumpur Golf & Country Club (KLGCC) Parcel G2 (Kiara Haven), Oasis Central, KLGCC Parcel A & B and Oasis Mall) Interested Directors and Major Shareholders Tan Sri Dato Dr Ir Gan Thian Leong 7 Encik Mohamad Hassan Zakaria 8 2, ,066 5

11 Company Transacting Party Nature of Transaction Related Party Estimated Aggregate Value from 13 November 2014 to 23 November Actual Value Transacted from 13 November 2014 (i.e. date of the last AGM) to LPD 2 Estimated Aggregate Value from the forthcoming AGM on 23 November 2015 to the next AGM 3 Inokom Hyundai Motor Company (HMC) Purchase of completely knocked-down (CKD) packs by Inokom from HMC for the assembly of passenger and commercial vehicles Interested Major Shareholder HMC 9 RM million RM million RM million Not Applicable 4 Payment of engineering fees by Inokom to HMC for the CKD models biannually Interested Major Shareholder HMC Not Applicable 4 TOTAL 3, ,066 (ii) New Shareholders Mandate Company Transacting Party Nature of Transaction Related Party Subsidiary of SDBH, namely SDBD BESB Building Contract for the design and build elements, building contract and service provider (Development of Oasis Ky la, Oasis Atelier, Oasis Place and Oasis Tower) Interested Directors and Major Shareholders Tan Sri Dato Dr Ir Gan Thian Leong 7 Encik Mohamad Hassan Zakaria 8 Estimated Aggregate Value from the Forthcoming AGM on 23 November 2015 to the next AGM 3 RM million 411 6

12 Notes: 1 The Estimated Aggregate Value as disclosed in the preceding year s circular to shareholders dated 21 October The Actual Value transacted has not exceeded the Estimated Aggregate Value of the Existing Shareholders Mandate by 10% or more. 3 Due to the nature of the transactions, the actual value of the transactions may vary and are subject to change from the Estimated Aggregate Values disclosed above. 4 Renewal of shareholders mandate will not be sought for this transaction. 5 Dato Azmi Mohd Ali is a Director of Chemical Company of Malaysia Berhad (CCM) and Sime Darby. 6 PNB is a person connected with AmanahRaya Trustees Berhad Skim Amanah Saham Bumiputera, a major shareholder of Sime Darby. PNB is also a Major Shareholder of CCM by holding 71.35% direct interest in CCM as at LPD. PNB has, on 19 March 2015, ceased to be a Major Shareholder of Sime Darby following the expiration of six (6) months from the date on which PNB disposed part of its direct shareholdings in Sime Darby. PNB is holding 8.45% direct interest in Sime Darby as at LPD. 7 Tan Sri Dato Dr Ir Gan Thian Leong is a Director and an indirect Major Shareholder of SDBH, holding an effective interest of 19.2% in SDBH by virtue of his effective interest of 48% shareholding in Brunsfield Metropolitan Sdn Bhd (BMSB), a Major Shareholder of SDBH pursuant to Section 6A of the Act. He also holds an effective interest of 43.2% in BESB. 8 Encik Mohamad Hassan Zakaria is a Director and an indirect Major Shareholder of SDBH, holding an effective interest of 20.8% in SDBH by virtue of his effective interest of 52% shareholding in BMSB, a Major Shareholder of SDBH pursuant to Section 6A of the Act. He also holds an effective interest of 41.6% in BESB. 9 HMC is a Major Shareholder of Inokom by holding 15% shareholding in Inokom as at LPD For the financial year ended 30 June 2015, there were no amounts due and owing to the Sime Darby Group by its Related Parties pursuant to the Recurrent Related Party Transactions which has exceeded the credit terms. Hence, there were no late payment charges imposed on the Related Parties. 2.5 Review of procedures on Recurrent Related Party Transactions The Sime Darby Group has established guidelines and procedures to ensure that Recurrent Related Party Transactions are undertaken at arm s length, on normal commercial terms consistent with the Group s normal business practices and policies 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, as follows: (i) (ii) A list of Related Parties shall be circulated to the operating divisions and subsidiaries, updated on a quarterly basis, for their reference in ensuring that all transactions with such Related Parties are undertaken on arm s length basis and on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public. These include transacting at the prevailing market rates/prices of the service or product provider s usual commercial terms (including, where appropriate, preferential rates and discounts accorded for bulk purchases which are the same as those accorded for thirdparty bulk purchases), or otherwise in accordance with applicable industry norms. Other criteria to be taken into consideration include quality of the products and services, track record, experience, financial position of the supplier or vendor, speed of delivery and certification. The corporate assurance plan incorporates a review of the Recurrent Related Party Transactions entered into as well as Management s systems and procedures to capture and compile information on such transactions on annual basis. 7

13 (iii) (iv) (v) Any member of the Governance & Audit Committee of the Board of Sime Darby (GAC) may, as he deems fit, request for additional information pertaining to Recurrent Related Party Transactions from independent sources or advisers. Details of the Recurrent Related Party Transactions made during the financial year shall be submitted to the Group Finance Department annually for disclosure in the Company s Annual Report. Where necessary, monthly reports shall be generated. All divisions and subsidiaries are required to comply with the Sime Darby Group Policies and Authorities (GPA). The GPAs establish the minimum standards of corporate governance practices expected of the companies within the Sime Darby Group in pursuit of Sime Darby s corporate objectives. The GPAs covering the following areas have relevance in respect of Related Party Transactions which are also applicable to Recurrent Related Party Transactions: (a) (b) (c) (d) (e) defined authority limits for approval of proposed capital expenditure which include the leasing or renting of premises/assets for a period exceeding one (1) year. Details of the transacting parties, particularly if it is a Related Party, and the terms of the transaction must be furnished in the proposal. policies on conflicts of interest which require Directors and employees to act in good faith at all times in the best interest of the companies within the Group. the requirement for the corporate assurance team to review the internal control systems of the Group so as to reasonably provide assurance to the Board, the GAC and Management of the proper conduct and adherence to controls and procedures. policies on Directors and persons connected with Directors purchases of the Group s products which should not be on terms that are more favourable than those offered to employees and the public. Directors are required to notify the relevant Company Secretary of any direct sales to them and/or persons connected with them. tendering procedures to ensure that competitive bidding principles are observed in the procurement of goods and services. These include the setting up of tender committees, and having a sufficient number of vendors (normally not less than three (3)) to bid where all priced bids received are on a sealed basis and are appropriately documented as well as witnessed upon opening. (vi) (vii) Where a Director has an interest (direct or indirect) in any Recurrent Related Party Transaction, such Director shall abstain from deliberation and voting on any decision to be taken by the Board in respect of such Recurrent Related Party Transaction, if any, and ensure that persons connected with him also abstain from voting in respect of the resolution on Recurrent Related Party Transaction at the general meeting. Where any member of the GAC has interest in any Recurrent Related Party Transaction, that member shall abstain from deliberation and voting on any decision to be taken by the GAC with respect of such transaction. At least two (2) other contemporaneous transactions with unrelated third parties for similar products/services and/or quantities will be used as comparison, where possible, to determine whether the price and terms offered to/by the Related Party are fair and reasonable and comparable to those offered to/by the public for the same or substantially similar type of products/services and/or quantities. In the event that quotation or comparative price from unrelated third parties cannot be obtained (e.g., if there are no unrelated third party vendors/customers of similar products or services, or if the products or services is a proprietary item), the transaction price will be determined by price negotiation with the Related Party based on those offered by other unrelated parties for substantially similar type of transactions where available to ensure that the Recurrent Related Party Transaction is not detrimental to the listed issuer or its group of companies. 8

14 (viii) (ix) (x) (xi) The operating divisions and subsidiaries shall inform the Divisional Chief Financial Officer and Company Secretary, by completing the Related Party Transaction Disclosure Form, as and when Recurrent Related Party Transactions exceed the Group s threshold of RM305 million (i.e. 1% of the Net Assets of Sime Darby as at 30 June 2015) and where a shareholders mandate has not been obtained or has exceeded the shareholders mandate by 10% or more, an announcement shall be made to Bursa Securities upon occurrence of these events. A register shall be maintained to capture all Recurrent Related Party Transactions entered into pursuant to the Proposed Shareholders Mandate. Details of Recurrent Related Party Transactions made during each quarter and the cumulative amount shall be tabled to the GAC every quarter for its consideration and information. There are no specific thresholds for approval of Recurrent Related Party Transactions within the Group. However, all Recurrent Related Party Transactions are subject to the approval of the appropriate levels of authority set by the operating divisions. Plantation Division The following guidelines set by the Plantation Division will apply for the purchase of goods and services in the Plantation Division, including the purchase of chemicals and fertilisers by Sime Darby Plantation and its subsidiaries: (a) For purchases of goods or services for value up to RM50,000, a quotation process is adopted. Such purchases shall be approved by the General Manager of the Operating Unit/Head of Operating Unit or managers that are assigned with such authority to approve. A tendering process shall be adopted for purchases of goods or services above RM50,000 in value. For closed tenders, invitations to bid shall be extended to selected approved vendors, which list could include companies related to the Group. All transactions are conducted on arm s length basis and based on best pricing. Tenders valued >RM50,000 to <RM500,000 are deliberated and approved by the Tender Committee from the respective operating units/estates/mills/business units. Tenders valued from RM500,000 to <RM50 million will be recommended by the Divisional Head Office Tender Evaluation Committee (HOTEC) and the approvals will be as follows: (i) (ii) Tenders valued from RM500,000 to <RM5 million shall be approved by the Plantation Division Tender Committee 1 (PDTC 1), approval by circulation. Tenders valued from RM5 million to <RM50 million shall be deliberated and approved by the PDTC 1. Tenders valued from RM50 million to <RM100 million shall be recommended by the Plantation Division Tender Review Committee (PDTRC), whose members shall include Group Procurement and Group Finance, and approved by the Plantation Division Tender Committee 2 (PDTC 2). Tenders valued from RM100 million to <RM500 million shall be recommended by the Managing Director and supported by the PDTRC and Group Tender Committee (GTC) and approved by the Sime Darby Plantation Board Tender Committee. Tenders valued at or above RM500 million shall be recommended by the Managing Director and supported by the PDTRC and GTC, and approved by the Sime Darby Board. 9

15 (b) The Limits of Authority which shall be observed are as follows: Tenders valued >RM50,000 to <RM500,000 shall be approved by the Tender Committee of the respective operating units/estates/mills/business units. Tenders valued from RM500,000 to <RM5 million shall be approved by the PDTC 1, which approval shall be by circulation. The members of PDTC 1 shall include Group Procurement. Tenders valued from RM5 million to <RM50 million shall be deliberated and approved by the PDTC 1. Tenders valued from RM50 million to <RM100 million shall be deliberated and approved by the PDTC 2. The members of the PDTC 2 shall include Group Procurement and Group Finance. Tenders valued from RM100 million to <RM 500 million shall be deliberated and approved by the Sime Darby Plantation Board Tender Committee. Tenders valued at RM500 million and above shall be deliberated and approved by the Sime Darby Board. Property Division All construction and service provider contracts to be awarded by SDBH shall be based on the method which is most beneficial to SDBH and its subsidiaries and in compliance with Sime Darby Property Berhad s (Sime Darby Property) tender policies and procedures. For all contracts, tenders submitted are assessed and evaluated by an independent check consultant. The tendered rates are evaluated against current market rates to ensure that the rates are reasonable and comparable. SDBH will continue to assess and evaluate the tender rates to determine whether the prices and terms offered by the related parties are fair and reasonable and comparable to the market rates for the same or substantially similar types of products and/or quantities and to ensure that the recurrent Related Party Transaction is not detrimental to the Sime Darby Group. The following guidelines set by the Property Division will apply for the tender policies and procedures in the Property Division: (a) Scope of Procurement All tenders for construction and project related works in Sime Darby Property shall be executed by the Procurement Department except for tenders for the following departments: (i) (ii) Property China Operations Sime Darby Brunsfield Holding Sdn Bhd. The above will be executed by the Procurement departments of the respective company. 10

16 (b) Tendering Strategy All tenders shall be through: (i) (ii) (iii) (iv) Selective tendering Standard model for all contracts in the annual budget with the normal process of design development, plan approval and tender. Direct negotiated tenders (single sourcing) For selected products or work that meet or exceed the desired quality and cost e.g. supplier management products. Design & build tenders For specialised projects. Capable Contractors take the lead in design management and construction. Cost is capped within the approved budget. Contractors are to reduce cost and add value. Selection of Contractors will be approved by the Property Divisional Tender Committee (PDTC). Open tenders Work that requires Contractors beyond the current Master list of Contractors. (c) List of Tenderers The tenderers shall be selected based on their category, listing status, specialisation and grading i.e. limit of work in hand as indicated below: Super A2 Super A1 A B C Grade Limit of Work in Hand More than RM150 million Up to RM150 million Up to RM100 million Up to RM20 million Up to RM5 million Should a proposed tenderer be selected despite exceeding the above limit, justification shall be made to the respective approval authority for such a selection. (d) Authority Limits for Award of Contract Approving Authority Value of Contract (RM) Sime Darby Board > 500 million Sime Darby Property Board Tender Committee > 100 million 500 million Division Tender Committee 2 > 50 million 100 million Division Tender Committee 1 > 5 million 50 million Managing Director of Sime Darby Property Up to 5 million Head of Property Development Up to 1 million Head of Development Regions Up to 500,000 Heads of Department & Head of Township Up to 100,000 Heads of Unit Up to 10,000 Maintenance Manager (for urgent cases) Up to 10,000 A newly prequalified contractor (first timer) shall not be awarded a second contract until 30% satisfactory completion of the first contract or when the Tender Committee is satisfied that the company recommended for the second contract has met all the criteria and assurances for quality delivery, financial capability and having the resources to undertake the second contract while at the same time maintaining the momentum of the first contract. 11

17 Motors Division As disclosed above, the principal activities of Inokom are manufacturing and assembly of light commercial and passenger vehicles, and contract assembly of motor vehicles. As part of its manufacturing and assembly activities, Inokom is required to procure these CKD packs from HMC for Hyundai brand of vehicles. Due to the nature of the Motors business, Inokom has entered into a Technical Licence Agreement with HMC for each Hyundai brand CKD model assembled by it for sale to distributors in Malaysia and Thailand. HMC is our sole supplier for the CKD packs for the assembly of Hyundai brand of passenger and commercial vehicles, which is proprietary in nature. As such, there are no contemporaneous transactions with third parties for us to draw any comparison with. The prices of the products are in accordance with the Technical Licence Agreement or mutually agreed by both parties. The following guidelines set by the Motors Division shall apply for any purchase of CKD parts for assembly of vehicles and parts for all brands of vehicles by Sime Darby Motors Sdn Bhd (Sime Darby Motors) and its subsidiaries: (a) (b) (c) for purchases within the budget set for each financial year and approved by the Boards of Directors of the respective operating units/subsidiaries of Sime Darby Motors (Budget), these shall be approved by the Managing Director/General Manager of the operating unit/subsidiary; for purchases exceeding the Budget by up to 20%, these shall be approved by the Chief Financial Officer of Sime Darby Motors; and for purchases exceeding the Budget by more than 20%, these shall be approved by the Managing Director of Sime Darby Motors. These purchases are direct purchases from the manufacturers of CKD packs and parts for all brands of vehicles or their nominated suppliers as stipulated under the agreements entered into between these manufacturers with the relevant operating units in Sime Darby Motors. For any ordering of completely built-up vehicles by all operating units in Motors Division, the approval of the Managing Director, Singapore, Indochina and Strategic Operations must be obtained prior to the order being confirmed. The operating units shall only proceed with the orders according to the final approval obtained. 2.6 Statement by the Governance & Audit Committee The GAC has seen and reviewed the guidelines and procedures in Section 2.5 above and is satisfied that the guidelines and procedures established for Recurrent Related Party Transactions are sufficient to ensure that such transactions will be carried out on normal commercial terms which are not prejudicial to the interests of shareholders, and the terms of the Recurrent Related Party Transactions 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 of Sime Darby. The GAC is of the view that the Group has put in place adequate procedures and processes to identify, monitor and track Recurrent Related Party Transactions in a timely and orderly manner, and will, at its discretion, amend the guidelines and procedures which are no longer appropriate or adequate, to ensure that the Recurrent Related Party Transactions are, at all times, carried out on terms consistent with the Group s practices and are not to the detriment of the minority shareholders. These procedures and processes are reviewed on an annual basis. 12

18 As at LPD, the GAC comprised the following members: Dato Henry Sackville Barlow (Chairman/Senior Independent Non-Executive Director) Tan Sri Datuk Amar (Dr) Tommy Hamid Bugo (Independent Non-Executive Director) Datuk Zaiton Mohd Hassan (Non-Independent Non-Executive Director) Ir Dr Muhamad Fuad Abdullah (Independent Non-Executive Director). 3. RATIONALE AND BENEFITS OF THE PROPOSED SHAREHOLDERS MANDATE The rationale and benefits of the Proposed Shareholders Mandate are as follows: (i) (ii) (iii) To facilitate transactions with Related Parties which are in the ordinary course of business of the Group, undertaken on arms length basis, on normal commercial terms and on terms which are 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. To meet the business needs of the Group on the best possible terms as well as to explore beneficial business opportunities within the Group and with its joint-venture partners. The Group has had long-standing business relationships with the Related Parties and the close co-operation has reaped mutual benefits which are expected to continue to be beneficial to the business of the Group. The necessity to make frequent announcements to Bursa Securities and to convene separate general meetings from time to time to seek shareholders approval as and when such Recurrent Related Party Transactions occur as required under the MMLR would not arise. This will substantially reduce administrative time and expenses associated with the making of announcements or the convening of such meetings on an ad-hoc basis, without compromising the corporate objectives of the Group or adversely affecting the business opportunities available to the Group. 4. EFFECTS OF THE PROPOSED SHAREHOLDERS MANDATE The Proposed Shareholders Mandate will not have any effect on the share capital, substantial shareholders shareholdings, net assets per share, gearing, or earnings per share of Sime Darby for the financial year ending 30 June INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM Save as disclosed in Section 2.4, none of the other Directors or Major Shareholders and/or Persons Connected with them have any interest, direct or indirect, in the Proposed Shareholders Mandate. The interested Directors and Major Shareholders (Tan Sri Dato Dr Ir Gan Thian Leong and Encik Mohamad Hassan Zakaria) as disclosed in Section 2.4 have undertaken that they will abstain from voting at the forthcoming Ninth AGM of Sime Darby on the Ordinary Resolution pertaining to the Proposed Shareholders Mandate in respect of their interest, through either direct or indirect shareholdings in Sime Darby, if any. They have also undertaken to ensure that Persons Connected with them will abstain from voting at the forthcoming Ninth AGM of Sime Darby on the Ordinary Resolution pertaining to the Proposed Shareholders Mandate in respect of their interest, through any direct and indirect shareholdings in Sime Darby. 13

19 6. APPROVAL REQUIRED The Proposed Shareholders Mandate is subject to the approval of the shareholders of Sime Darby at the forthcoming Ninth AGM. 7. DIRECTORS RECOMMENDATION Having considered all aspects of the Proposed Shareholders Mandate, the Directors of Sime Darby are of the opinion that the Proposed Shareholders Mandate is in the best interest of the Company. Accordingly, they recommend that you vote in favour of the Ordinary Resolution pertaining to the Proposed Shareholders Mandate to be tabled at the forthcoming Ninth AGM. 8. AGM The Ninth AGM of the Company, the Notice of which is enclosed in the 2015 Annual Report of the Company, will be held at Grand Ballroom, First Floor, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, Kuala Lumpur, Malaysia, on Monday, 23 November 2015 at a.m., for the purpose of considering and, if thought fit, approving, inter alia, the Ordinary Resolution on the Proposed Shareholders Mandate, as Special Business. If you are unable to attend and vote in person at the AGM, you are requested to complete, sign and return the Form of Proxy (available in the 2015 Annual Report of the Company) in accordance with the instructions printed thereon as soon as possible, in any event, so as to arrive at the office of the Share Registrar of the Company, Tricor Investor Services Sdn Bhd, at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time fixed for holding the AGM or any adjournment thereof. The completion and lodgement of the Form of Proxy will not preclude you from attending and voting in person at the AGM should you subsequently decide to do so. 9. FURTHER INFORMATION Shareholders are advised to refer to the attached Appendices for further information. Yours faithfully for and on behalf of the Board of Directors of SIME DARBY BERHAD TAN SRI DATO ABDUL GHANI OTHMAN Chairman 14

20 FURTHER INFORMATION APPENDIX I 1. RESPONSIBILITY STATEMENT The Directors of Sime Darby have seen and approved this Circular. The Directors, collectively and individually, accept full responsibility for the accuracy of the information contained in this Circular and confirm that to the best of their knowledge and belief, after making all reasonable enquiries, there are no other facts the omission of which would make any statement herein false or misleading. 2. MATERIAL CONTRACTS Save as disclosed below, there is no material contract which has been entered into by the Sime Darby Group during the two (2) years immediately preceding this Circular, other than contracts entered into in the ordinary course of business: (i) On 29 November 2013, Sime Darby Motors Wholesale Australia Pty Ltd (SDMW), an indirect wholly-owned subsidiary of Sime Darby, entered into a conditional Share and Unit Sale Deed (Deed) with the following parties (collectively, the Sellers) to acquire 70% equity stake in LMM Holdings Pty Ltd (LMMH) and 70% of the units in the Brisbane BMW Unit Trust (BBUT) for a total cash consideration of A$22,699,549 (equivalent to RM66,480,169), subject to the terms and conditions of the Deed: LMMH BBUT Sellers Total No. of No. of Shares Total No. of No. of Units Shares Units Linfox Group Pty Ltd , ,000 Third Pleshette Pty Ltd ,000 50,000 Burke Management Pty Ltd ,500 37,500 Roller Management Pty Ltd ,500 37,500 Total , ,000 Percentage (%) 100% 70% 100% 70% As trustee of BBUT, LMMH effectively operates BBUT s BMW, MINI and Lamborghini motor dealership businesses in Brisbane, Australia. LMMH also has a wholly-owned subsidiary, Brisbane Bodyshop Pty Ltd, which operates the business of BMW parts, panels and accessories. BBUT is a Trust which owns the BMW, MINI and Lamborghini motor dealership businesses in Brisbane, Australia. On the same day, SDMW also entered into Property Sale and Purchase Agreements (Agreements) with the Sellers to acquire the following properties, which are necessary for the operations of the businesses, for a total cash consideration of A$58,000,000 (equivalent to RM169,864,600), subject to the terms and conditions of the Agreements: (a) (b) (c) 800 Ann Street, Fortitude Valley; 275 Monier Road, Darra; and 269 Monier Road, Darra. The transaction was completed on 4 April

21 FURTHER INFORMATION (Continued) APPENDIX I (ii) On 7 April 2014, Sime Darby Energy Sdn Bhd (SD Energy), a wholly-owned subsidiary of Sime Darby, entered into share purchase agreements for the following: (a) (b) the disposal of its entire 75% equity interest in Port Dickson Power Berhad (PDP) comprising 112,500 ordinary shares of RM1.00 each and 112,500 redeemable preference shares of RM1.00 each, to Hypergantic Sdn Bhd; and the disposal of its entire equity interest in Sime Darby Biofuels Sdn Bhd (SD Biofuels) comprising 2 ordinary shares of RM1.00 each to Malakoff Power Berhad for a total cash consideration of RM300 million (Proposed Disposal). PDP was a licensed independent power producer under the Electricity Supply Act, 1990, and operates the 440 megawatt gas-fired open cycle power plant (Plant) located at Tanjung Gemok, Port Dickson, Negeri Sembilan, under a build, own and operate basis. The Plant commenced commercial operations in 1995 and was Sime Darby s sole power generation asset in Malaysia. The Plant supplies electricity to Tenaga Nasional Berhad under a 21-year Power Purchase Agreement expiring in January SD Biofuels was a dormant company. As part of the Proposed Disposal, the Plant s operation and maintenance business which was conducted by a department within SD Energy was transferred to SD Biofuels. The Proposed Disposal was completed on 30 April (iii) On 28 May 2014, Sime Darby Nominees Sendirian Berhad (SD Nominees), an indirect wholly-owned subsidiary of Sime Darby, entered into a share sale agreement to dispose of 110,000,000 ordinary stock units of RM1.00 each in Eastern & Oriental Berhad (E&O), representing approximately 9.9% equity interest in E&O (excluding treasury stocks) to Morning Crest Sdn Bhd for a total cash consideration of RM319 million or approximately RM2.90 per E&O stock. The disposal was completed on 23 July (iv) On 16 June 2014, Sime Darby Energy Pte Limited (SDEPL) and Sime Darby Far East (1991) Limited (SDFE), both indirect wholly-owned subsidiaries of Sime Darby, entered into a Sale and Purchase Agreement (SPA) with B.Grimm Power Limited (B.Grimm) for the disposal of the following for a total cash consideration of USD162.9 million (approximately RM522.9 million): (a) SDEPL disposing: (i) (ii) (iii) all the issued shares in Sime Darby Power Co., Limited (SDPC) comprising 67,000,000 ordinary shares of THB10 each in SDPC; all the issued shares in Sime Darby LCP Power Co., Limited (SDLP) comprising 5,350,000 ordinary shares of THB100 each in SDLP; and all the issued shares in Sime Darby O&M (Thailand) Co., Limited (SOMT) comprising 190,000 ordinary shares of THB100 each in SOMT to B.Grimm, for a cash consideration of USD126.7 million (approximately RM406.7 million); and 16