PROPOSED INCREASE IN THE AUTHORISED SHARE CAPITAL; AND

Transcription

1 LAY HONG BERHAD ( LHB OR THE COMPANY ) PROPOSED BONUS ISSUE OF SHARES; PROPOSED SHARE SPLIT; PROPOSED FREE WARRANTS ISSUE; PROPOSED INCREASE IN THE AUTHORISED SHARE CAPITAL; AND PROPOSED AMENDMENT (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) 1. INTRODUCTION On behalf of the Board of Directors of LHB ( Board ), TA Securities Holdings Berhad ( TA Securities ) wishes to announce that the Company proposes to undertake the following: (i) (ii) (iii) (iv) (v) proposed bonus issue of up to 66,412,500 new ordinary shares of RM1.00 each in LHB ( LHB or ) ( Bonus ) on the basis of one (1) Bonus Share for every one (1) existing LHB Share held at an entitlement date to be determined later ( Entitlement Date ) ( Proposed Bonus Issue of ); proposed share split involving subdivision of every one (1) LHB Share held into five (5) new ordinary shares of RM0.20 each in LHB ( Subdivided ) on the Entitlement Date ( Proposed Share Split ); proposed issue of up to 332,062,500 free warrants ( Warrants ) on the basis of one (1) Warrant for every two (2) LHB held on the Entitlement Date ( Proposed Free Warrants Issue ); proposed increase in the authorised share capital of LHB from RM100,000,000 comprising 100,000,000 LHB to RM400,000,000 comprising 2,000,000,000 LHB ( Proposed Increase in the Authorised Share Capital ); and proposed amendment to the Company s Memorandum of Association to facilitate the Proposed Share Split and Proposed Increased in the Authorised Share Capital ( Proposed Amendment ). 2. DETAILS OF THE PROPOSALS 2.1 Proposed Bonus Issue of Basis and number of Bonus to be issued The Proposed Bonus Issue of will entail an issuance of up to 66,412,500 Bonus to be credited as fully paid-up on the basis of one (1) Bonus Share for every one (1) existing LHB Share held by the shareholders of LHB whose names appear in the Record of Depositors of the Company as at the close of business on the Entitlement Date ( Entitled Shareholders ). 1

2 For illustration purposes only, the maximum number of 66,412,500 Bonus was arrived at after taking into account the following: (i) (ii) LHB s existing issued and paid-up share capital of RM57,750,000 comprising 57,750,000 LHB as at 29 January 2016 (being the latest practicable date prior to the announcement ( LPD )); and assuming full exercise of 5,250,000 options ( SIS Options ) granted on 12 January 2016 and 3,412,500 SIS Options to be granted pursuant to the share issuance scheme ( SIS ). The actual number of Bonus to be provisionally allotted to the Entitled Shareholders would depend on the total issued and paid-up share capital of the Company on the Entitlement Date. The Entitlement Date will be determined and announced at a later date upon receipt of all the relevant approval for the Proposed Bonus Issue of. The Proposed Bonus Issue of is not intended to be implemented in stages over a period of time. It is the intention of the Board to fix the Entitlement Date for the Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue to be on the same date. The Proposed Bonus Issue of is intended to be implemented immediately before the Proposed Share Split and Proposed Free Warrants Issue. Thus, the Bonus allotted will be subject to the Proposed Share Split and Proposed Free Warrants Issue Capitalisation of reserves The Proposed Bonus Issue of shall be wholly capitalised from the share premium account and retained earnings account of the Company. An illustration of the proposed capitalisation of reserves for the Proposed Bonus Issue of based on the Company s latest audited financial statements as at 31 March 2015 and unaudited financial results as at 30 September 2015 and subsequent events up to the LPD is set out below: Minimum Scenario Maximum Scenario : Taking into consideration of the impacts of: (i) the allotment of 1,670,000 LHB pursuant to LHB s executive s share options ( ESOS Options ) on 7 April 2015, 1 October 2015 and 3 November 2015; (ii) an interim dividend of RM33,000,000 declared and paid to LHB by its subsidiaries, namely Lay Hong Liquid Egg Sdn Bhd, Sri Tawau Farming Sdn Bhd, Eminent Farm Sdn Bhd, Hing Hong Sdn Bhd and Lay Hong Food Corporation Sdn Bhd (collectively referred as the Subsidiaries ); (iii) the issuance of 5,250,000 LHB pursuant to the private placement which was completed on 21 January 2016 ( Private Placement ); and (iv) assuming none of the SIS Options are exercised prior to the Entitlement Date : Taking into consideration of the impacts of: (i) the allotment of 1,670,000 LHB pursuant to the ESOS Options on 7 April 2015, 1 October 2015 and 3 November 2015; (ii) an interim dividend of RM33,000,000 declared and paid to LHB by its Subsidiaries; (iii) the issuance of 5,250,000 LHB pursuant to the Private Placement; and (iv) assuming full exercise of 5,250,000 SIS Options granted on 12 January 2016 and 3,412,500 SIS Options to be granted prior to the Entitlement Date 2

3 LHB (Company level) Minimum Scenario Maximum Scenario Share Retained Share Retained premium earnings premium earnings RM 000 RM 000 RM 000 RM 000 Audited as at 31 March ,368-21,368 Add: Share premium arising from the exercise of ESOS Options Add: Interim net dividend declared to LHB by its Subsidiaries Add: Share premium arising from the Private Placement Add: Share premium arising from the exercise of SIS Options 3,777 (1) - 3,777 (1) ,000-33,000 25,253 (2) - 25,253 (2) ,615 (3) - Add: Less: Less: Retained earnings credited pursuant to the exercise of SIS Options Expenses in relation to the private placement and SIS as disclosed in circular dated 23 April 2015 ( Circular ) Expenses in relation to the Private Placement ,272 (4) - (218) - (218) (200) - (200) - Less: Share-based payment arising from issuance of SIS Options Less: Estimated expenses in relation to the Proposals - (15,093) - (27,272) (320) - (320) - Less: Amount to be capitalised pursuant to the Proposed Bonus Issue of (28,510) (29,240) (66,413) - After the Proposed Bonus Issue of - 9,817 8,712 54,150 Notes: (1) The 600,000, 920,000 and 150,000 ESOS Options were allotted on 7 April 2015, 1 October 2015 and 3 November 2015 at RM3.10, RM3.10 and RM4.90, respectively. (2) Taking into consideration of the issuance of 5,250,000 new LHB pursuant to the Private Placement ( Placement ) at an issue price of RM5.81 each. 3

4 (3) Assuming full exercise of 5,250,000 SIS Options granted on 12 January 2016 at an exercise price of RM5.81 each and 3,412,500 SIS Options to be granted at an indicative exercise price of RM7.26 each, representing a discount of approximately RM or 9.90% to the five (5)-day volume weighted average market price ( 5D-VWAP ) of LHB up to the LPD of RM (4) Retained earnings transferred from SIS reserve as a result of exercise of SIS Options. LHB (Company level) Unaudited as at 30 September 2015 Minimum Scenario Maximum Scenario Share Retained Share Retained premium earnings premium earnings RM 000 RM 000 RM 000 RM 000 1,260 (1) 25,721 1,260 (1) 25,721 Add: Share premium arising from the exercise of ESOS Options 2,517 (2) - 2,517 (2) - Add: Interim net dividend declared to LHB by its Subsidiaries - 33,000-33,000 Add: Add: Share premium arising from the Private Placement Share premium arising from the exercise of SIS Options 25,253 (3) - 25,253 (3) ,615 (4) - Add: Retained earnings credited pursuant to the exercise of SIS Options ,272 (5) Less: Expenses in relation to the Private Placement (200) - (200) - Less: Share-based payment arising from issuance of SIS Options Less: Estimated expenses in relation to the Proposals - (15,093) - (27,272) (320) - (320) - Less: Amount to be capitalised pursuant to the Proposed Bonus Issue of (28,510) (29,240) (66,413) - After the Proposed Bonus Issue of - 14,388 8,712 58,721 4

5 Notes: (1) The 600,000 ESOS Options were allotted on 7 April 2015 at exercise price of RM3.10. (2) The 920,000 and 150,000 ESOS Options were allotted on 1 October 2015 and 3 November 2015 at exercise price of RM3.10 and RM4.90, respectively. (3) Taking into consideration of the issuance of 5,250,000 Placement at an issue price of RM5.81 each. (4) Assuming full exercise of 5,250,000 SIS Options granted on 12 January 2016 at an exercise price of RM5.81 each and 3,412,500 SIS Options to be granted at an indicative exercise price of RM7.26 each, representing a discount of approximately RM or 9.90% to the 5D-VWAP of LHB up to the LPD of RM (5) Retained earnings transferred from SIS reserve as a result of exercise of SIS Options. According to Paragraph 6.30(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) ( Listing Requirements ), a listed issuer intending to make a bonus issue of securities must ensure the necessary reserves required for capitalisation of the bonus issue is unimpaired by losses on a consolidated basis, where applicable, based on the listed issuer s latest audited financial statements as well as its latest quarterly report. The reserves available to be capitalised for the Proposed Bonus Issue of are unimpaired by losses on a consolidated basis, based on LHB s audited consolidated financial statements as at 31 March 2015 and its latest unaudited consolidated financial results as at 30 September 2015 (including subsequent events up to the LPD). Hence, LHB has complied with Paragraph 6.30(1) of the Listing Requirements. Further, the Board will obtain a confirmation letter from its external auditors pursuant to Paragraph 6.30(3) of the Listing Requirements, on the adequacy of reserves to cover the capitalisation of the Proposed Bonus Issue of, details of which will be disclosed in the circular to shareholders to be issued Ranking of the Bonus The Bonus shall, upon allotment and issuance, rank pari passu in all respects with the then existing LHB, save and except that the Bonus shall not be entitled to any dividends, rights, allotments and/or other distributions that may be declared, made or paid, the entitlement date of which is prior to the date of allotment and issuance of the Bonus. For the purpose of clarity, the Bonus will be subject to Proposed Share Split and Proposed Free Warrants Issue Listing of and quotation for the Bonus An application will be made for the listing of and quotation for the Bonus on the Main Market of Bursa Securities. The Bonus shall be listed and quoted on the Main Market of Bursa Securities concurrently with the Subdivided pursuant to the Proposed Share Split. 5

6 2.2 Proposed Share Split Details of the Proposed Share Split The Proposed Share Split entails subdivision of every one (1) LHB Share held by the Entitled Shareholders into five (5) Subdivided on the Entitlement Date. Upon the completion of the Proposed Bonus Issue of, the issued and paid-up ordinary share capital of LHB will be up to RM132,825, comprising 132,825,000 LHB. Accordingly, upon the completion of the Proposed Bonus Issue of and the Proposed Share Split, the issued and paid-up ordinary share capital of the Company will be RM132,825, comprising 664,125,000 Subdivided. No suspension will be imposed on the trading of LHB on Bursa Securities for the purpose of implementing the Proposed Share Split. The Proposed Share Split would be implemented immediately after the Proposed Bonus Issue of but before the Proposed Free Warrants Issue. The Proposed Share Split will result in an adjustment to the market price of LHB listed and quoted on the Main Market of Bursa Securities. For illustration purposes, the theoretical adjusted market price of LHB upon completion of the Proposed Bonus Issue of and the Proposed Share Split is as follows: Total Assumed Market market number of price per value of LHB Par LHB LHB held value Share (RM) (RM) (RM) As at the LPD After the Proposed Bonus Issue of After the Proposed Share Split Based on the above illustration, the Proposed Share Split will adjust the market price for each LHB Share but it will not have any impact on the total market value of the LHB held by the shareholders of LHB Ranking of Subdivided The Subdivided will, upon allotment and issuance, rank pari passu in all respects with the then existing LHB, save and except that the Subdivided shall not be entitled to any dividends, rights, allotments and/or other distributions that may be declared, made or paid, the entitlement date of which is prior to the date of allotment and issuance of the Subdivided. 6

7 2.2.3 Listing of and quotation for the Subdivided An application will be made to Bursa Securities for the Proposed Share Split. The Subdivided shall be listed and quoted on the Main Market of Bursa Securities concurrently with the Bonus pursuant to the Proposed Bonus Issue of. 2.3 Proposed Free Warrants Issue Basis and number of Warrants to be issued The Proposed Free Warrants Issue involves the issuance of up to 332,062,500 Warrants on the basis of one (1) Warrant for every two (2) LHB held by the Entitled Shareholders on the Entitlement Date. Based on the issued and paid-up share capital of LHB of up to RM132,825, comprising up to 664,125,000 LHB after taking into consideration the existing issued and paid-up share capital of LHB as at the LPD, the Proposed Bonus Issue of and the Proposed Share Split, a total of up to 332,062,500 Warrants will be issued pursuant to the Proposed Free Warrants Issue. Assuming all the Warrants are exercised, a total of up to 332,062,500 new LHB will be issued. Fractional entitlement arising from the Proposed Free Warrants Issue, if any, shall be dealt with by the Board in such manner at it absolute discretion as it may deem fit and/or expedient and/or in the best interest of the Company. The Proposed Free Warrants Issue will not be implemented in stages over a period of time. The Proposed Free Warrants Issue will be implemented after the Proposed Bonus Issue of and Proposed Share Split Basis of determining the issue price and exercise price of the Warrants The Warrants will be issued at no cost to the shareholders of LHB. The Board has fixed the exercise price of the Warrants at RM0.40 each after taking into consideration, amongst others, the following: (i) (ii) the par value of LHB after the Proposed Share Split of RM0.20 each; and the theoretical ex-price of LHB after the Proposed Bonus Issue of and the Proposed Share Split of RM based on the 5D-VWAP of LHB up to the LPD of RM The exercise price of RM0.40 per Warrant represents a discount of RM or 50.36% to the theoretical ex-price after the Proposed Bonus Issue of and Proposed Share Split, based on the 5D-VWAP of LHB up to and including the LPD of RM The exercise price of the Warrant of RM0.40 is fixed at a discount to the above-mentioned ex-price to provide an incentive to the Entitled Shareholders who will be receiving the Warrants to exercise the Warrants, thereby further increasing their equity participation in LHB. 7

8 2.3.3 Ranking of the new LHB arising from the exercise of the Warrants The holders of the Warrants will not be entitled to any voting right or participation in any form of distribution and/or offer of further securities in LHB until and unless such holders of the Warrants exercise their Warrants into new LHB. The new LHB to be issued arising from the exercise of the Warrants shall, upon allotment and issuance, rank pari passu in all respects with the then existing LHB, save and except that the new LHB shall not be entitled to any dividends, rights, allotments and/or other distributions that may be declared, made or paid, the entitlement date of which is prior to the date of allotment and issuance of the new LHB arising from the exercise of the Warrants Listing of and quotation for the Warrants and new LHB arising from the exercise of the Warrants An application will be made to Bursa Securities for the admission of the Warrants to the Official List of Bursa Securities as well as for the listing of and quotation for the Warrants and new LHB to be issued pursuant to the exercise of the Warrants on the Main Market of Bursa Securities Indicative salient terms of the Warrants The indicative salient terms of the Warrants are set out as follows: Terms Details Issue size : Up to 332,062,500 Warrants. Form and denomination : The Warrants which are free will be issued in registered form and will be constituted by a deed poll to be executed by the Company ( Deed Poll ). Exercise price : The exercise price of the Warrants is RM0.40 each. Exercise rights : Each Warrant entitles the registered holder to subscribe for one (1) new LHB Share at any time during the exercise period at the exercise price (subject to adjustments in accordance with the provisions of the Deed Poll). Exercise period : The Warrants may be exercised at any time within five (5) years commencing on and including the date of issuance of the Warrants until 5.00 p.m. on the Expiring Date. Warrants not exercised during the exercise period will thereafter lapse and cease to be valid. Expiry date : The day immediately preceeding the fifth (5 th ) anniversary date of the issuance of the Warrants, provided that if such day falls on a day which is not a market day, then on the preceding market day. 8

9 Mode of exercise : The registered holder of the Warrants is required to lodge an exercise form, as set out in the Deed Poll, with the Company s registrar, duly completed, signed and stamped together with payment of the exercise price for the new LHB subscribed for by banker s draft or cashier s order or money order or postal order in Ringgit Malaysia drawn on a bank or post office operating in Malaysia. Board lot : For the purpose of trading on Bursa Securities, one (1) board lot of Warrant shall comprise one hundred (100) Warrants carrying the right to subscribe for one hundred (100) new LHB at any time during the exercised period, or such other denomination as determined by Bursa Securities from time to time. Adjustments in the exercise price and/or number of the Warrants Rights of the Warrants Modification to the terms of the Warrants : The exercise price and/or number of unexercised Warrants shall be adjusted in accordance with the provisions of the Deed Poll. : The Warrant holders are not entitled to any dividends, rights, allotments and/or other distributions that may be declared, made or paid where the entitlement date precedes the date of allotment and issuance of the new LHB upon the exercise of the Warrants. The Warrant holders are not entitled to any voting rights or participation in any form of distribution and/or offer of securities in the Company until and unless such Warrant holders exercise their Warrants into new LHB. : Subject to the terms on modification of rights, save for manifest error, any modification, amendment, deletion or addition to the Deed Poll, shall require the approval of the Warrant holders sanctioned by special resolution and may be effected only by deed poll, executed by the Company and expressed to be supplemental thereto and subject to the approval of the relevant authorities, if necessary. A memorandum of every such supplemental deed shall be endorsed on the Deed Poll. 9

10 Rights in the event of winding-up, liquidation, compromise and/or arrangement : If a resolution is passed for a members voluntary winding up of the Company or there is a compromise or arrangement, whether or not for the purpose of or in connection with a scheme for the reconstruction of the Company or the amalgamation of the Company with one or more companies, then:- (i) for the purposes of such winding-up, compromise or arrangement (other than a consolidation, amalgamation or merger in which the Company is the continuing corporation) to which the Warrant holder (or some person designated by them for such purpose by special resolution) shall be a party, the terms of such winding up, compromise and arrangement shall be binding on all the Warrant holders; and (ii) in any other case, every Warrant holder shall be entitled upon and subject to the conditions at any time within six (6) weeks after the passing of such resolution for a members voluntary winding-up of the Company or the granting of the court order approving the compromise or arrangement (as the case may be), to exercise their Warrants by submitting the exercise form duly completed authorising the debiting of his Warrants together with payment of the relevant exercise price to elect to be treated as if he had immediately prior to the commencement of such winding-up exercised the exercise rights to the extent specified in the exercise form(s) and had on such date been the holder of the new to which he would have become entitled pursuant to such exercise and the liquidator of the Company shall give effect to such election accordingly. Listing status : The Warrants will be listed and traded on the Main Market of Bursa Securities. An application will be made for the admission of the Warrants to the Official List of the Main Market of Bursa Securities as well as for the listing of and quotation for the Warrants and the new LHB to be issued pursuant to the exercise of the Warrants on the Main Market of Bursa Securities. Governing law : The laws of Malaysia. 10

11 2.3.6 Utilisation of proceeds The Proposed Free Warrants Issue is not expected to raise any funds as the Warrants will be issued at no cost to the shareholders of LHB. However, as and when the Warrants are exercised, the exact quantum of proceeds that may be raised by LHB will depend upon the actual number of Warrants exercised during the tenure of the Warrants. As such, the exact timeframe and the breakdown for the utilisation of the proceeds is not determinable at this juncture. For illustration purposes only, assuming the full exercise of up to 332,062,500 Warrants at the exercise price of RM0.40, the proceeds to be raised by the Company is up to approximately RM million. Such proceeds are intended to be utilised for the working capital of LHB and its subsidiaries ( LHB Group or Group ) as and when the need arises. The proceeds to be utilised for each component of working capital are subject to the operating requirements at the time of utilisation and therefore cannot be determined at this juncture. 2.4 Details of the Proposed Increase in the Authorised Share Capital As at the LPD, the authorised share capital of LHB is RM100,000,000 comprising 100,000,000 LHB of which RM57,750,000 comprising 57,750,000 LHB have been issued and fully paid-up. In order to accommodate the issuance of the Bonus and any future issuance of new LHB arising from the exercise of Warrants, LHB proposed to increase its authorised share capital to RM400,000,000 comprising 2,000,000,000 LHB. 2.5 Details of the Proposed Amendment In order to facilitate and to reflect the Proposed Share Split and the Proposed Increase in the Authorised Share Capital, the Memorandum of Association of LHB shall be amended by deleting the existing Clause 5 in its entirety and replace with the following new Clause 5: Existing Clause 5 of Memorandum of Association The capital of the Company is RM100,000,000/- Malaysian Currency divided into 100,000,000 shares of RM1.00 each. The shares in the original or any increased capital may be divided into several classes and there may be attached thereto respectively any preferential, deferred or other special rights, privileges, conditions or restrictions as to dividends, capital, voting or otherwise. Amended Clause 5 of Memorandum of Association The capital of the Company is RM400,000,000/- Malaysian Currency divided into 2,000,000,000 shares of RM0.20 each. The shares in the original or any increased capital may be divided into several classes and there may be attached thereto respectively any preferential, deferred or other special rights, privileges, conditions or restrictions as to dividends, capital, voting or otherwise. 11

12 3. RATIONALE FOR THE PROPOSALS 3.1 Proposed Bonus Issue of The Proposed Bonus Issue of shall: (i) (ii) increase the number of LHB held by the Company s shareholders, whilst maintaining their percentage of equity interest; and encourage the trading liquidity of LHB on Bursa Securities via a greater participation by investors with the increase in the number of LHB. 3.2 Proposed Share Split The Proposed Share Split shall further enhance the trading liquidity of LHB on Bursa Securities as a result of the increase in the number of shares in issue. The Proposed Share Split will result in an adjustment to the market price of LHB, to a more affordable entry price which is expected to appeal to a wider group of public shareholders and/or investors to participate in the growth of the Company. The Proposed Share Split will also enable the existing shareholders of the Company to have a larger number of LHB while maintaining their percentage of equity interest. 3.3 Proposed Free Warrants Issue The Proposed Free Warrants Issue shall: (i) (ii) (iii) (iv) allow the shareholders of the Company to participate in convertible securities of the Company which are tradable on Bursa Securities without incurring any cost; help to strengthen the Group s capital base and shareholders funds as well as potentially provide funds for the Group to finance its working capital requirements, as and when the Warrants are exercised without incurring interest cost, as compared to bank borrowings and to improve the gearing of the Group; provide the shareholders of the Company with an opportunity to increase their equity in the Company at a predetermined price during the tenure of the Warrants; and allow the shareholders of the Company to further participate in the future prospects and growth of the Group and/or any potential capital appreciation in the Warrants and LHB, as and when the Warrants are exercised. 3.4 Proposed Increase in the Authorised Share Capital The Proposed Increase in the Authorised Share Capital is to accommodate the issuance of the Bonus, Subdivided and any future issuance of new LHB arising from the exercise of the Warrants. 3.5 Proposed Amendment The Proposed Amendment is to facilitate and to reflect the consequence of the Proposed Share Split and Proposed Increase in the Authorised Share Capital. 12

13 4. EFFECTS OF THE PROPOSALS The Proposed Increase in the Authorised Share Capital and the Proposed Amendment will not have any effect on the share capital, net assets ( NA ), gearing, earnings, earnings per Share ( EPS ) and substantial shareholders shareholdings of LHB. For illustration purpose, the pro-forma effects of the Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue on the share capital, NA, gearing, earnings, EPS and substantial shareholders shareholdings of LHB are set out below: 4.1 Issued and paid-up share capital The pro-forma effects of the Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue on the issued and paid-up share capital of LHB are as follows: Minimum Scenario Maximum Scenario Par Value (RM) RM RM Issued and paid-up share capital as at the LPD ,750,000 57,750,000 57,750,000 57,750,000 To be issued pursuant to exercise of SIS Options ,662,500 8,662, ,750,000 57,750,000 66,412,500 66,412,500 To be issued pursuant to the Proposed Bonus Issue of ,750,000 57,750,000 66,412,500 66,412,500 Upon the completion of the Proposed Bonus Issue of ,500, ,500, ,825, ,825,000 After the Proposed Share Split ,500, ,500, ,125, ,825,000 To be issued assuming full exercise of the Warrants ,750,000 57,750, ,062,500 66,412,500 Enlarged issued and paid-up share capital ,250, ,250, ,187, ,237,500 13

14 4.2 NA and gearing Based on the audited consolidated financial statements of LHB as at 31 March 2015, and on the assumption that the Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue had been effected as at the date, the pro-forma effects of the Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue on the consolidated NA and gearing of LHB are as follows: Minimum Scenario (Audited) (I) (II) (III) (IV) After (III) and assuming full After (I) and After (II) and exercise of the Warrants Subsequent events Proposed Bonus the Proposed pursuant to the Proposed Free up to the LPD (1) Issue of Share Split Warrants Issue (RM 000) (RM 000) (RM 000) (RM 000) As at 31 March 2015 (RM 000) Share capital 50,830 57, , , ,250 Share premium - 28,830 - (2) - 57,750 Revaluation reserve 17,823 17,823 17,823 17,823 17,823 Foreign currency translation Fair value reserve SIS reserve - 15,093 15,093 15,093 15,093 Retained earnings 67,714 52,404 23,163 23,163 23,163 Shareholders funds / NA 136, , , , ,510 in issue 50,830 57, , , ,250 ( 000) NA per LHB Share (RM) Total borrowings 145, , , , ,808 Gearing (times) Notes: (1) After taking into consideration: (a) deduction of expenses in relation to the Circular of approximately RM0.22 million; 14

15 (b) (c) (d) exercise of 600,000, 920,000 and 150,000 ESOS Options were allotted on 7 April 2015, 1 October 2015 and 3 November 2015 at exercise price of RM3.10, RM3.10 and RM4.90, respectively; issuance of 5,250,000 Placement at RM5.81 each; and granting of 5,250,000 SIS Options at exercise price of RM5.81 each. (2) After taking into account the total estimated expenses for the Proposals of RM0.32 million. Maximum Scenario (Audited) (I) (II) (III) (IV) (IV) After (I) and After (IV) and assuming assuming full After (II) and After (III) full exercise of the Subsequent granting and Proposed and the Warrants pursuant to events up to exercise of SIS Bonus Issue of Proposed the Proposed Free the LPD (1) Options Share Split Warrants Issue (RM 000) (RM 000) (RM 000) (RM 000) (RM 000) As at 31 March 2015 (RM 000) Share capital 50,830 57,750 66, , , ,238 Share premium - 28,830 75,444 (2) 8,712 (3) 8,712 75,124 Revaluation reserve 17,823 17,823 17,823 17,823 17,823 17,823 Foreign currency translation Fair value reserve SIS reserve - 15, Retained earnings 67,714 52,404 67,497 67,497 67,497 67,497 Shareholders funds / NA 136, , , , , ,113 in 50,830 57,750 66, , , ,188 issue ( 000) NA per LHB Share (RM) Total borrowings 145, , , , , ,808 Gearing (times)

16 Notes: (1) After taking into consideration: (a) (b) (c) (d) deduction of expenses in relation to the Circular of approximately RM0.22 million; exercise of 600,000, 920,000 and 150,000 ESOS Options were allotted on 7 April 2015, 1 October 2015 and.3 November 2015 at exercise price of RM3.10, RM3.10 and RM4.90, respectively; issuance of 5,250,000 Placement at RM5.81 each; and granting of 5,250,000 SIS Options at exercise price of RM5.81 each. (2) Assuming full exercise of 5,250,000 SIS Options granted on 12 January 2016 at an exercise price of RM5.81 each and 3,412,500 SIS Options to be granted at an indicative exercise price of RM7.26 each, representing a discount of approximately RM or 9.90% to the 5D-VWAP of LHB up to the LPD of RM (3) After taking into account the total estimated expenses for the Proposals of RM0.32 million. 4.3 Earnings and EPS The Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue are not expected to have any material effect on the earnings of the LHB Group for the financial year ending 31 March However, there will be a corresponding dilution in LHB s consolidated EPS as a result of the increase in the number of shares arising from the Proposed Bonus Issue of and Proposed Share Split. The Proposed Free Warrants Issue is not expected to have an immediate material effect on the consolidated earnings and EPS until such time when the Warrants are exercised. The potential effect of the exercise of the Warrants on the future consolidated earnings and EPS of LHB will depend upon, amongst others, the number of Warrants exercised at any point in time and the returns generated from the utilisation of proceeds arising from the exercise of the Warrants. 16

17 For illustrative purposes only, based on the consolidated financial statements of LHB for the financial year ended 31 March 2015, the pro-forma effects of the Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue on the EPS of LHB are as follows: Minimum Scenario Number of LHB in issue ( 000) Profit attributable to owners of the Company (RM 000) (Audited) (I) (II) (III) (IV) As at 31 March 2015 Subsequent event up to the LPD After (I) and the Proposed Bonus Issue of After (II) and the Proposed Share Split After (III) and assuming full exercise of the Warrants pursuant to the Proposed Free Warrants Issue 50,830 57, , , ,250 18,605 18,605 18,605 18,605 18,605 Basic of EPS (sen) [The rest of the page has been intentionally left blank] 17

18 Maximum Scenario Number of LHB in issue ( 000) Profit attributable to owners of the Company (RM 000) (Audited) (I) (II) (III) (IV) (V) As at 31 March 2015 Subsequent event up to the LPD After (I) and assuming full granting and exercise of SIS Options After (II) and the Proposed Bonus Issue of After (III) and the Proposed Share Split After (IV) and assuming full exercise of the Warrants pursuant to the Proposed Free Warrants Issue 50,830 57,750 66, , , ,188 18,605 18,605 18,605 18,605 18,605 18,605 Basic of EPS (sen) [The rest of this page has been intentionally left blank] 18

19 4.4 Substantial shareholders shareholdings The pro-forma effects of the Proposed Bonus Issue of, the Proposed Share Split and the Proposed Free Warrants Issue on the direct and indirect shareholdings of the substantial shareholders of LHB as at the LPD are as follows: Minimum Scenario (I) As at the LPD After the Proposed Bonus Issue of Direct Indirect Direct Indirect ( 000) % Name ( 000) % ( 000) % ( 000) % Yap Hoong Chai ,692 (1) , ,384 (1) Innofarm Sdn Bhd 18, , Kenanga Investment Bank 8, , NH Foods Ltd 13, , (III) After (II) and assuming full exercise of the (II) After (I) and the Proposed Share Split Warrants pursuant to the Proposed Free Warrants Issue Direct Indirect Direct Indirect ( 000) % Name ( 000) % ( 000) % ( 000) % Yap Hoong Chai 6, ,919 (1) , ,379 (1) Innofarm Sdn Bhd 189, , Kenanga Investment Bank 80, , NH Foods Ltd 132, , Note: (1) Deemed interested by virtue of his equity interest in Innofarm Sdn Bhd, his spouse s and children s equity interests in LHB. 19

20 Maximum Scenario (I) Assuming full granting and exercise of SIS As at the LPD Options Direct Indirect Direct Indirect ( 000) % Name ( 000) % ( 000) % ( 000) % Yap Hoong Chai ,692 (1) ,692 (1) Innofarm Sdn Bhd 18, , Kenanga Investment Bank 8, , NH Foods Ltd 13,250] , (II) After (I) and the Proposed Bonus Issue of (III) After (II) and the Proposed Share Split Direct Indirect Direct Indirect ( 000) % Name ( 000) % ( 000) % ( 000) % Yap Hoong Chai 1, ,384 (1) , ,919 (1) Innofarm Sdn Bhd 37, , Kenanga Investment Bank 16, , NH Foods Ltd 26, ,

21 (IV) After (III) and assuming full exercise of the Warrants pursuant to the Proposed Free Warrants Issue Direct Indirect ( 000) % Name ( 000) % Yap Hoong Chai 9, ,379 (1) Innofarm Sdn Bhd 283, Kenanga Investment Bank 120, NH Foods Ltd 198, Note: (1) Deemed interested by virtue of his equity interest in Innofarm Sdn Bhd, his spouse s and children s equity interests in LHB. [The rest of this page has been intentionally left blank] 21

22 4.5 Convertible securities As at the LPD, the Company does not have any convertible securities. 5. APPROVALS REQUIRED The Proposals are subject to and conditional upon the following approvals being obtained: (i) Bursa Securities for the following: (a) (b) (c) admission, listing of and quotation for the Warrants to the Official List of Bursa Securities; listing of and quotation for the Bonus and new LHB to be issued pursuant to the exercise of Warrants on the Main Market of Bursa Securities; the Proposed Share Split; and (ii) the shareholders of LHB for the Proposals at an extraordinary general meeting to be convened. 6. INTER-CONDITIONALITY OF THE PROPOSALS It is the intention of the Board to propose the same Entitlement Date for the Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue. The Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue are inter-conditional upon each other. The Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue are conditional upon the Proposed Increase in the Authorised Share Capital and the Proposed Amendment but not vice versa. The Proposals are not conditional upon any other corporate proposals undertaken or to be undertaken by LHB. 7. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM None of the Directors and/or major shareholders of LHB and/or persons connected with them have any interest, either direct or indirect, in the Proposals save for their respective entitlements as shareholders of LHB under the Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue, the rights of which are also available to all other existing shareholders of the Company on the Entitlement Date. 8. DIRECTORS STATEMENT The Board, after having considered all aspects of the Proposals including its rationale and effects, is of the opinion that the Proposals are in the best interest of the Company. 22

23 9. ADVISER TA Securities has been appointed as the Adviser in relation to the Proposed Bonus Issue of, Proposed Share Split and Proposed Free Warrants Issue. 10. ESTIMATED TIME FRAME FOR COMPLETION Barring any unforeseen circumstances and subject to the approvals of the relevant authorities being obtained, the Board expects the Proposals to be completed in the second (2 nd ) quarter of APPLICATIONS TO THE RELEVANT AUTHORITIES Applications to the relevant authorities in respect of the Proposals are expected to be submitted within one (1) month from the date of this announcement. This announcement is dated 2 February