MUDAJAYA GROUP BERHAD (Company No H) (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 has not perused the contents of this Circular in relation to the Proposed Renewal of Share Buy- Back Authority (as defined herein) prior to the issuance of this Circular as it is an exempt document pursuant to Practice Note 18 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. 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. MUDAJAYA GROUP BERHAD (Company No H) (Incorporated in Malaysia under the Companies Act 1965) CIRCULAR/STATEMENT TO SHAREHOLDERS IN RELATION TO THE:- PART A PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE WHICH ARE NECESSARY FOR DAY-TO-DAY OPERATIONS PART B PROPOSED RENEWAL OF THE AUTHORITY FOR THE COMPANY TO PURCHASE AND/OR HOLD ITS OWN SHARES OF AN AGGREGATE AMOUNT OF UP TO 10% OF ITS ISSUED AND PAID-UP SHARE CAPITAL The above proposals will be tabled as Special Business at the Company s 12 th Annual General Meeting ( AGM ) to be held at Level 11, Menara Mudajaya, No. 12A, Jalan PJU 7/3, Mutiara Damansara, Petaling Jaya, Selangor Darul Ehsan, Malaysia on Wednesday, 17 June 2015 at a.m. or any adjournment thereof. Notice of the AGM together with the Form of Proxy are set out in the Company s Annual Report 2014, which is despatched together with this Circular. If you are unable to attend and vote in person at the AGM, you are requested to complete and return the Form of Proxy enclosed in the Company s Annual Report 2014 in accordance with the instructions therein. The Form of Proxy should be lodged at the registered office of Mudajaya Group Berhad at Level 12, Menara Mudajaya, No. 12A, Jalan PJU 7/3, Mutiara Damansara, Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than forty-eight (48) hours before the time for holding the AGM. The lodging 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. This Circular/Statement is dated 26 May 2015

2 DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout this Circular:- Act : The Companies Act 1965 AGM : Annual general meeting of the Company Audit Committee : Audit committee of the Company Board : Board of Directors of MGB Bursa Securities : Bursa Malaysia Securities Berhad Circular : This circular dated 26 May 2015 to the shareholders of the Company in relation to the Proposed Renewal of Shareholders Mandate CMSA : The prevailing Capital Markets and Services Act 2007 Code : Malaysian Code on Take-Overs and Mergers 2010, and includes any amendments from time to time Director(s) : A director of MGB or any other company which is a subsidiary or holding company of the Company, which, in accordance with Paragraph 10.02(c) of the Listing Requirements, has the meaning given in Section 2(1) of the CMSA and includes any person who is or was within the preceding 6 months of the date on which the terms of the respective RRPTs were agreed upon, a director of the Company or any other company which is a subsidiary or holding company of the Company, or a chief executive officer of the Company or its subsidiary or holding company EPS : Earnings per share Listing Requirements : Main Market Listing Requirements of Bursa Securities LPD : 27 April 2015, being the latest practicable date prior to the printing of this Circular Major Shareholder(s) : A major shareholder of MGB, which, in accordance with Paragraph 10.02(f) of the Listing Requirements, includes any person who is or was within the preceding 6 months of the date on which the terms of the respective RRPTs were agreed upon, a major shareholder of the Company or its subsidiary or holding company whereby a major shareholder is defined under Paragraph 1.01 of the Listing Requirements as a person who has an interest or interests in one or more voting shares in MGB 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 MGB or 5% or more of the aggregate of the nominal amounts of all the voting shares in MGB where such person is the largest shareholder of the Company Market Day(s) : A day (other than Saturday, Sunday or a public holiday) on which Bursa Securities is open for trading of securities MGB Group or the Group : MGB and its subsidiaries, collectively MGB or the Company : Mudajaya Group Berhad MIB : Mulpha International Bhd i

3 DEFINITIONS MIB Group : MIB and its subsidiaries, collectively MLB : Mulpha Land Berhad MLB Group : MLB and its subsidiaries, collectively NA : Net assets Proposed Renewal of Shareholders Mandate Proposed Renewal of Share Buy-Back Authority : Proposed renewal of the Shareholders Mandate for the MGB Group to enter into the RRPT(s) as set out in Section 4.0, Part A of this Circular, for which approval from non-interested shareholders is being sought at the forthcoming AGM : Proposed renewal of the authority for the Company to purchase and/or hold Mudajaya Shares of an aggregate amount of up to 10% of its prevailing issued and paid-up share capital at any time Related Party(ies) : A Director or Major Shareholder or person connected with such Director or Major Shareholder, as defined in Paragraphs 1.01 and of the Listing Requirements RM : Ringgit Malaysia RRPT(s) : Recurrent related party transactions of a revenue or trading nature which are necessary for the day-to-day operations of the MGB Group and entered into in the ordinary course of business by the MGB Group with the Related Party(ies) Mudajaya Share(s) or Share(s) : Ordinary shares of RM0.20 each in MGB Shareholders Mandate : A mandate from shareholders of the Company for the RRPTs, pursuant to Paragraph of the Listing Requirements VWAP : Volume weighted average market price Words denoting the singular number only shall include the plural and vice-versa and words denoting the masculine gender shall, where applicable, include the feminine gender, neuter gender and vice versa. Reference to persons shall include a body of persons, corporate or unincorporated (including a trust). Any reference to a time of day shall be a reference to Malaysian time, unless otherwise stated. Any reference to any statute is a reference to that statute as for the time being amended or re-enacted. [The rest of this page is intentionally left blank] ii

4 CONTENTS PAGE PART A CIRCULAR TO SHAREHOLDERS OF MGB IN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE 1.0 INTRODUCTION PROVISIONS UNDER THE LISTING REQUIREMENTS DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE DETAILS OF THE RRPTS STATEMENT BY AUDIT COMMITTEE DISCLOSURE AND VALIDITY PERIOD OF THE SHAREHOLDERS MANDATE RATIONALE FOR THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE APPROVAL REQUIRED DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS DIRECTORS STATEMENT AND RECOMMENDATION AGM FURTHER INFORMATION 9 PART B - STATEMENT TO SHAREHOLDERS OF MGB IN RELATION TO THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY 1.0 INTRODUCTION DETAILS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY RATIONALE FOR THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY EFFECTS OF THE PROPOSED RENEWAL OF SHARE BUY BACK AUTHORITY IMPLICATIONS OF THE CODE INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED DIRECTORSʼ RECOMMENDATION 18 APPENDIX I FURTHER INFORMATION 19 iii

5 PART A CIRCULAR TO SHAREHOLDERS OF MGB IN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE

6 MUDAJAYA GROUP BERHAD (Company No H) (Incorporated in Malaysia under the Companies Act 1965) REGISTERED OFFICE Level 12, Menara Mudajaya No. 12A, Jalan PJU 7/3 Mutiara Damansara Petaling Jaya Selangor Darul Ehsan Malaysia 26 May 2015 BOARD OF DIRECTORS Dato Yusli Bin Mohamed Yusoff (Independent Non-Executive Chairman) James Wong Tet Foh (Group Managing Director & Chief Executive Officer) Wee Teck Nam (Non-Independent Non-Executive Director) Lee Seng Huang (Non-Independent Non-Executive Director) Chew Hoy Ping (Independent Non-Executive Director) Lee Eng Leong (Alternate Non-Independent Non-Executive Director to Lee Seng Huang & Deputy Chief Executive Officer) To: The Shareholders of MGB Dear Sir/Madam, PROPOSED RENEWAL OF SHAREHOLDERS MANDATE 1.0 INTRODUCTION On 18 June 2014, the Company obtained a general mandate from its shareholders for the MGB Group to enter into the RRPTs in the ordinary course of business of the MGB Group based on commercial terms which are not more favourable to the Related Parties involved than those generally available to the public. The said general mandate obtained for the RRPTs shall, in accordance with Paragraph of the Listing Requirements, lapse at the conclusion of the forthcoming AGM which has been scheduled to be held on 17 June 2015, unless approval for renewal is obtained from the shareholders of the Company. Accordingly, the Company had on 5 May 2015 announced to Bursa Securities that the Company is proposing to seek the approval of its shareholders for the Proposed Renewal of Shareholders Mandate. THE PURPOSE OF PART A OF THIS CIRCULAR IS TO PROVIDE YOU WITH THE DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE, TO SET OUT YOUR BOARD S RECOMMENDATION THEREON, AND TO SEEK YOUR APPROVAL ON THE RESOLUTION TO BE TABLED AT THE FORTHCOMING AGM. THE NOTICE OF AGM TOGETHER WITH THE FORM OF PROXY ARE ENCLOSED IN THE COMPANY S ANNUAL REPORT

7 SHAREHOLDERS OF MGB ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF PART A OF THIS CIRCULAR TOGETHER WITH THE APPENDIX CONTAINED HEREIN BEFORE VOTING ON THE RESOLUTION PERTAINING TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AT THE FORTHCOMING AGM. 2.0 PROVISIONS UNDER THE LISTING REQUIREMENTS In line with Paragraph 10.09(2) of the Listing Requirements, the Company may seek the Shareholders Mandate subject to, inter-alia, the following:- (i) (ii) (iii) (iv) (v) the RRPTs are in the ordinary course of business and are on terms not more favourable to the Related Parties involved than those generally available to the public; the Shareholders Mandate is subject to annual renewal and disclosure is made in the annual report of MGB of the aggregate value of RRPTs conducted pursuant to the Shareholders Mandate during the financial year where the aggregate value is equal to or more than the threshold prescribed under subparagraph 10.09(1) of the Listing Requirements, i.e. where the consideration, value of the assets, capital outlay or costs of the RRPTs is RM1 million or more; or the percentage ratios of such RRPTs (as prescribed in Paragraph of the Listing Requirements) is 1% or more, whichever is the higher; the Company s circular to shareholders for the Shareholders Mandate includes the information as may be prescribed by Bursa Securities; the interested Directors and Major Shareholders, and interested persons 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 approving the RRPTs. An interested Director or Major Shareholder must also ensure that persons connected with them abstain from voting on the resolution approving the RRPTs; and the Company immediately announces to Bursa Securities when the actual value of a RRPT entered into by the Company exceeds the estimated value of the RRPTs disclosed in the Circular by 10% or more and must include the information as may be prescribed by Bursa Securities in its announcement. 3.0 DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE 3.1 The principal activity of the Company is investment holding whilst its main subsidiaries are primarily engaged in civil engineering, building construction and property development activities. 3.2 In the course of the Group s day-to-day business, it is envisaged that transactions of a revenue or trading nature between companies in the MGB Group and the MLB Group are likely to occur on a recurrent basis. Further details of the RRPTs are provided in Section 4.0 below. 3.3 The Board is seeking the approval of the shareholders of MGB for the Group to enter into the RRPTs on the conditions that such RRPTs are entered into at arm s length and on normal commercial terms which are not more favourable to the MLB Group than those generally available to the public, and which will not be detrimental to the minority shareholders of MGB. [The rest of this page is intentionally left blank] 2

8 4.0 DETAILS OF THE RRPTS 4.1 Type of RRPTs and Related Parties to which the Proposed Renewal of Shareholders Mandate is applicable The specific type of RRPTs which is covered under the Proposed Renewal of Shareholders Mandate is in relation to construction contracts and project management services. In the course of the MGB Group s businesses, it is anticipated that transactions with the MLB Group will include the provision by companies in the MGB Group to, or receipt from the MLB Group of, construction contracts and project management services. In this regard, the Proposed Renewal of Shareholders Mandate will facilitate such transactions between the MGB Group and the MLB Group that arise in the normal course of operations of the MGB Group in a more expeditious manner. The Related Parties to which the Proposed Renewal of Shareholders Mandate is applicable are as follows:- Related Parties Relationship Principal Activities MIB Group, MLB Group, Dato Yusli Bin Mohamed Yusoff, Lee Seng Huang, Lee Eng Leong and Chew Hoy Ping MIB is an indirect major shareholder of MGB via Mulpha Infrastructure Holdings Sdn Bhd, a wholly-owned subsidiary of MIB, where Mulpha Infrastructure Holdings Sdn Bhd holds 22.34% shareholding in MGB as at the LPD. MIB Group is principally an investment holding company whilst its main subsidiaries are primarily engaged in property ownership, development and investment. As at the LPD, MLB is a 26.89%- owned associated company of MIB, hence a person connected with MIB. Dato Yusli Bin Mohamed Yusoff, an Independent Non- Executive Chairman of MGB, is also an Independent Non- Executive Director of MIB. Lee Seng Huang, a Non- Independent Non-Executive Director of MGB, is an indirect major shareholder of MIB and a Non-Independent Non-Executive Director of MLB. Lee Eng Leong, an Alternate Non-Independent Non-Executive Director to Lee Seng Huang and the Deputy Chief Executive Officer of MGB, is also an Alternate Non-Independent Non- Executive Director to Lee Seng Huang in MLB. Chew Hoy Ping, an Independent Non-Executive Director of MGB, is also an Independent Non- Executive Director of MIB. MLB Group is principally involved in investment holding, property development and property investment. Not applicable. Not applicable. Not applicable. Not applicable. 3

9 4.2 Information on the RRPTs The estimated aggregate value of the RRPTs under the Proposed Renewal of Shareholders Mandate is as follows:- Nature of transactions Related Party Relationship Interested Director/ Major Shareholder/ persons connected Estimated value as per last Shareholders Mandate as disclosed in the circular to shareholders dated 27 May 2014 Actual value transacted from 18 June 2014 to the LPD Estimated aggregate value from 17 June 2015 to the date of the next AGM RM 000 RM 000 RM 000 Construction contracts and project management services MLB Group (being the awarder of construction contracts and/or recipient of project management services) As set out in Section 4.1 above MIB Group, MLB Group, Dato Yusli Bin Mohamed Yusoff, Lee Seng Huang, Lee Eng Leong and Chew Hoy Ping *500,000 - *500,000 Note: * Based on best estimates by the management of MGB after taking into consideration of projected business transaction value. The actual transacted value may vary from, exceed or be lower than the estimated aggregate value shown above. [The rest of this page is intentionally left blank] 4

10 4.3 Amounts due and owing by Related Parties As at the end of the financial year ended 31 December 2014, there is no sum due and owing to the MGB Group by its Related Parties pursuant to RRPTs which exceeded the credit term. 4.4 The guidelines and procedures for transacting with Related Parties The MGB Group has established various guidelines and procedures to ensure that the RRPTs are undertaken on an arm s length basis, on transaction prices and terms not more favourable to the Related Parties involved than those generally available to the public and not detrimental to the minority shareholders of the Company. The management of MGB shall review the RRPTs based on the following parameters/procedures:- (i) Any tender, quotation or contract proposed to be entered into with a Related Party will not be approved unless:- The MGB Group s pricing for the contracts to be awarded by and/or services to be provided to the Related Parties is determined in accordance with the Group s usual business practices and policies, consistent with the usual margin of the Group for the same or substantially similar type of transactions made by the Group with unrelated third parties; The terms are no more favourable to the Related Parties than those extended to unrelated third parties and available to the public and the RRPTs are not detrimental to minority shareholders of MGB; and The terms offered to the MGB Group are comparable with those offered by other unrelated parties for the same or substantially similar type of services; (ii) (iii) (iv) (v) (vi) Where practical and feasible, terms and pricing for at least 2 other contemporaneous transactions with unrelated 3 rd parties for similar products/services and/or quantities will be used as comparison, wherever possible, to determine whether the price and terms offered to/by the Related Parties are fair and reasonable and comparable to those offered to/by other unrelated 3 rd parties for the same or substantially similar type of products/services and/or quantities; In the event that quotation or comparative pricing to/from unrelated 3 rd parties could not be obtained, the transaction price will be determined by the Group based on the usual commercial terms, business practices and policies or otherwise in accordance with applicable industry norms to ensure that the RRPTs are not detrimental to the Group; Internal auditors will conduct reviews on RRPTs to ensure that the review procedures pertaining to the transactions are adhered to. Records will be maintained by the Company to capture all RRPTs which are entered into pursuant to the Shareholders Mandate and report to the Audit Committee on quarterly basis for review. Any divergence will be reported by the Audit Committee to the Board accordingly. However, in the event where the actual value of an RRPT exceeds the estimated value by 10% or more, such RRPT with the reasons for such deviation will be immediately announced to Bursa Securities; Any member of the Audit Committee may, as he deems fit, request for additional information pertaining to the transaction from independent sources or advisers; and In addition to the guidelines set out above, the Audit Committee will also undertake the following reviews:- The Audit Committee will review, from time to time, status reports on contracted works being performed by the MGB Group which are RRPTs to ascertain the progress of the works; 5

11 The Audit Committee will carry out a quarterly review to ascertain that the established guidelines and procedures for RRPTs have been complied with; and The Audit Committee will consider, from time to time, whether the established guidelines and procedures for RRPTs have become inappropriate, and/or are unable to ensure that the transactions will be on normal commercial terms, and/or will prejudice the interests of shareholders generally. RRPTs shall be reviewed and authorised by the following parties within the Group:- Nature of transaction Value of transaction (for each project or single transaction) Authority Levels Construction contracts and project management services Up to RM100 million (i) Any 2 Executive Directors; or (ii) Any 1 Executive Director and Group Managing Director/ Managing Director Above RM100 million Any 1 Executive Director and Group Managing Director/Managing Director Where any Director has an interest (direct or indirect) in any of the RRPTs, such Director shall abstain from deliberating and voting on all matters pertaining to the RRPTs at the relevant meetings of the Audit Committee and/or the Board, as the case may be. Pursuant to Paragraph of the Listing Requirements, in a meeting to obtain the shareholders approval for the Proposed Renewal of Shareholders Mandate, the interested Director, interested Major Shareholder or interested persons 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 approving the Proposed Renewal of Shareholders Mandate. In addition, such interested Director or Major Shareholder must also ensure that persons connected with him/her (as the case may be) abstain from voting on the resolution approving the Proposed Renewal of Shareholders Mandate. Interested Directors shall also abstain from deliberating at the Board s meetings in respect of the Proposed Renewal of Shareholders Mandate and/or RRPTs in which they are interested. 5.0 STATEMENT BY AUDIT COMMITTEE The Audit Committee, comprising Chew Hoy Ping, Dato Yusli Bin Mohamed Yusoff and Wee Teck Nam, has seen and reviewed the guidelines and procedures set out in Section 4.4 above and is of the view that they are sufficient to ensure that the RRPTs will be carried out on normal commercial terms which are not more favourable to the Related Parties involved than those generally available to the public and not detrimental to the interest of the Company and its minority shareholders. The Audit Committee is of the view that the Group has in place adequate procedures and processes to monitor, track and identify RRPTs in a timely and orderly manner. The Audit Committee shall review these procedures and processes on a quarterly basis. This is to ensure that the RRPTs are not detrimental or prejudicial to the minority shareholders of the Company. 6

12 6.0 DISCLOSURE AND VALIDITY PERIOD OF THE SHAREHOLDERS MANDATE Disclosure will be made in the next Annual Report of the Company of the breakdown of the aggregate value of the RRPTs, type of transactions, and names of the Related Parties involved and their relationship with the Company for RRPTs entered into during the current financial year, and in the Annual Report of the subsequent financial years of the Company during which the Shareholders Mandate remains in force. The Shareholders Mandate is subject to annual renewal and shall continue to be in full effect and force until:- (i) (ii) (iii) the conclusion of the next AGM of the Company following the forthcoming AGM if the Shareholders Mandate is successfully passed, at which time it will lapse, unless by a resolution passed at the said AGM, the authority for the Shareholders Mandate is renewed; the expiration of the period within which the next AGM after that date is required 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 revoked or varied by resolution passed by the shareholders in a general meeting, whichever is earlier. 7.0 RATIONALE FOR THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE The rationale for the Proposed Renewal of Shareholders Mandate is as follows:- (a) (b) (c) The Proposed Renewal of Shareholders Mandate will facilitate transactions with the Related Parties which are in the Group s ordinary course of business, undertaken on commercial terms and on terms not more favourable to the Related Parties than those generally available to and/or from the public, where applicable, and not, in the Company s opinion, detrimental to the minority shareholders of the Company; The Proposed Renewal of Shareholders Mandate will enhance the MGB Group s ability to pursue business opportunity which are time-sensitive in nature and will eliminate the need for the Company to convene separate general meetings to seek shareholders approval for each RRPT; and The Proposed Renewal of Shareholders Mandate will substantially reduce the expenses associated with the convening of general meetings on an ad hoc basis, improve administrative efficiency considerably and allow resources to be channeled towards attaining other corporate objectives. 8.0 APPROVAL REQUIRED The Proposed Renewal of Shareholders Mandate is subject to the approval of the shareholders of the Company being obtained at the forthcoming AGM to be convened. [The rest of this page is intentionally left blank] 7

13 9.0 DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS 9.1 As at the LPD, the direct and indirect shareholdings of the interested Major Shareholders and interested Directors in MGB are as follows:- Shareholdings as at the LPD Interested Major Shareholders and Direct Indirect Interested Directors No. of Shares % No. of Shares % Mulpha Infrastructure Holdings Sdn Bhd 120,287, MIB - - (1) 120,287, Nautical Investments Limited - - (2) 120,287, Lee Seng Huang - - (3) 120,287, Dato Yusli Bin Mohamed Yusoff Lee Eng Leong Chew Hoy Ping Notes:- (1) Deemed interest pursuant to Section 6A of the Act by virtue of its shareholdings in Mulpha Infrastructure Holdings Sdn Bhd. (2) Deemed interest pursuant to Section 6A of the Act by virtue of its shareholdings in MIB. (3) Deemed interest pursuant to Section 6A of the Act by virtue of his indirect shareholdings in Nautical Investments Ltd. 9.2 Accordingly, Lee Seng Huang, Dato Yusli Bin Mohamed Yusoff, Lee Eng Leong and Chew Hoy Ping have abstained and shall continue to abstain from any deliberation and voting in relation to the Proposed Renewal of Shareholders Mandate at the meetings of the Board. In addition, they shall abstain from voting at the forthcoming AGM in respect of his direct and/or indirect shareholdings in MGB on the resolution in relation to the Proposed Renewal of Shareholders Mandate at the forthcoming AGM. 9.3 Mulpha Infrastructure Holdings Sdn Bhd shall abstain from voting at the AGM to be convened in respect of its direct and/or indirect shareholding in MGB on the resolution in relation to the Proposed Renewal of Shareholders Mandate. 9.4 The interested Major Shareholders and interested Directors have also given the undertaking that they will ensure that persons connected with them shall abstain from voting in respect of their direct and/or indirect shareholdings in MGB on the resolution in relation to the Proposed Renewal of Shareholders Mandate at the forthcoming AGM DIRECTORS STATEMENT AND RECOMMENDATION The Board, save for Lee Seng Huang, Dato Yusli Bin Mohamed Yusoff, Lee Eng Leong and Chew Hoy Ping who are the interested Directors in relation to the Proposed Renewal of Shareholders Mandate, is of the opinion that the Proposed Renewal of Shareholders Mandate is in the best interest of the Company. Accordingly, the Board, save for the aforesaid interested Directors, recommends that you vote in favour of the resolution in relation to the Proposed Renewal of Shareholders Mandate to be tabled at the forthcoming AGM. [The rest of this page is intentionally left blank] 8

14 11.0 AGM The AGM, notice of which is enclosed in the Company s Annual Report 2014, will be held at Level 11, Menara Mudajaya, No. 12A, Jalan PJU 7/3, Mutiara Damansara, Petaling Jaya, Selangor Darul Ehsan, Malaysia on Wednesday, 17 June 2015 at a.m. or any adjournment thereof. 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 enclosed in the Company s Annual Report 2014 in accordance with the instructions therein as soon as possible so as to arrive at the Registered Office of the Company at Level 12, Menara Mudajaya, No. 12A, Jalan PJU 7/3, Mutiara Damansara, Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than forty-eight (48) hours before the appointed time for holding the AGM or any adjournment thereof. The lodging 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 FURTHER INFORMATION Shareholders are requested to refer to the attached Appendix I of this Circular for further information. Yours faithfully, For and on behalf of the Board of Directors of MUDAJAYA GROUP BERHAD JAMES WONG TET FOH Group Managing Director & Chief Executive Officer 9

15 PART B STATEMENT TO SHAREHOLDERS OF MGB IN RELATION TO THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

16 MUDAJAYA GROUP BERHAD (Company No H) (Incorporated in Malaysia under the Companies Act 1965) SHARE BUY-BACK STATEMENT PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY 1.0 INTRODUCTION At our Eleventh AGM held on 18 June 2014, our Board had obtained your approval for the renewal of the authorisation for us to purchase up to 10% of our issued and paid-up share capital. Such authorisation will expire at the conclusion of our forthcoming AGM unless it is renewed. Accordingly, on 5 May 2015, we announced our intention to seek your approval for the Proposed Renewal of Share Buy-Back Authority at our forthcoming AGM. Part B of this Circular provides you with the details of the Proposed Renewal of Share Buy-Back Authority. We will be seeking your approval for the ordinary resolution pertaining to the Proposed Renewal of Share Buy-Back Authority at our forthcoming AGM. The Notice of AGM together with the Form of Proxy are set out in our Annual Report for the financial year ended 31 December YOU ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS STATEMENT BEFORE VOTING ON THE ORDINARY RESOLUTION PERTAINING TO THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY TO BE TABLED AT OUR FORTHCOMING AGM. 2.0 DETAILS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY 2.1 Our Board proposes to seek your approval for the renewal of authority for our Company to purchase and/or hold our own shares of an aggregate amount of up to 10% of our prevailing issued and paid-up share capital at any time within the time period stated in Section 2.2 below. Such purchase is subject to compliance with Section 67A of the Act and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by the relevant authorities at the time of the purchase. 2.2 The authority from you if renewed, shall be effective upon the passing of the ordinary resolution for the Proposed Renewal of Share Buy-Back Authority and shall continue in force until:- (i) (ii) (iii) the conclusion of our next AGM unless the authority is renewed either unconditionally or subject to conditions; or the expiration of the period within which our next AGM is required by law to be held; or revoked or varied by ordinary resolution of our shareholders in general meeting, whichever is earlier. 10

17 2.3 For illustrative purposes, based on our issued and paid-up share capital and the number of treasury shares held as at the LPD of 552,418,466 Mudajaya Shares and 14,018,300 Mudajaya Shares respectively, as at the LPD, the maximum number of Mudajaya Shares that can be purchased pursuant to the Proposed Renewal of Share Buy-Back Authority is 41,223,546 Mudajaya Shares. 2.4 As at the LPD, our public shareholding spread was approximately 34.29%. For illustrative purposes, assuming that the purchase by our Company of our own shares is carried out in full based on our issued and paid-up share capital as at the LPD, and the Mudajaya Shares are purchased from public shareholders, our proforma public shareholding spread will be approximately 28.84%. In this regard, our Board will ensure that the purchase by our Company of our own shares pursuant to Proposed Renewal of Share Buy-Back Authority will be carried out only after taking into consideration, amongst others, the 25% public shareholding spread as required under the Listing Requirements, to ensure continuous compliance. 2.5 For the financial year ended 31 December 2014, our Company purchased a total of 4,801,400 of its own shares from the open market. The number of Mudajaya Shares purchased and retained as treasury shares as at 31 December 2014 was 14,018,300. There were neither any resale nor any cancellation of treasury shares by our Company in the financial year ended 31 December Further information on the purchase of Mudajaya Shares by our Company is set out in the Schedule of Share Buy-Back on page 28 of our Annual Report for the financial year ended 31 December The Proposed Renewal of Share Buy-Back Authority will allow our Board to exercise its power to purchase our own shares at any time during the validity period stated in Section 2.2 above, using internally generated funds and/or external borrowings. The actual number of Mudajaya Shares that may be purchased will depend on the availability of funds, other relevant cost factors, and market conditions and sentiments. The purchase by our Company of our own shares pursuant to the Proposed Renewal of Share Buy-Back Authority, whether it is financed by internally generated funds and/or external borrowings, would effectively reduce the net cash position of our Group. Should we utilise our internally generated funds, our Board will ensure that there is sufficient surplus funds to meet our working capital requirements in the foreseeable future. Alternatively, if external borrowings are used by our Company to finance such purchases, our Board will ensure that there are sufficient funds to repay such borrowings and that such borrowings are not expected to have any material effect on our cashflow. Notwithstanding the above, the maximum amount of funds to be allocated for the purchase by our Company of our own shares under the Proposed Renewal of Share Buy-Back Authority will be subject to the amount of our retained profits and/or share premium account. Based on our latest audited financial statements for the financial year ended 31 December 2014, our retained profits and share premium accounts were RM9.079 million and RM million respectively. 2.7 Under the Listing Requirements:- (i) (ii) we may only purchase our own shares on Bursa Securities at a price which is not more than 15% above the VWAP of Mudajaya Shares for the 5 Market Days immediately prior to the date of the purchase; and we may only resell the treasury shares on Bursa Securities at a price which is:- (a) (b) not less than the VWAP of Mudajaya Shares for the 5 Market Days immediately prior to the date of the resale; or at a discounted price of not more than 5% to the VWAP of Mudajaya Shares for the 5 Market Days immediately prior to the resale provided that:- 11

18 the resale takes place no earlier than 30 days from the date of purchase; and the resale price is not less than the cost of purchase of the Mudajaya Shares being resold. 2.8 In accordance with Section 67A of the Act, our Board may, at its discretion, deal with the purchased Mudajaya Shares in the following manner:- (i) (ii) (iii) cancel the Mudajaya Shares so purchased; or retain the Mudajaya Shares so purchased as treasury shares which may be distributed as share dividends to our shareholders and/or be resold on Bursa Securities in accordance with the relevant rules of Bursa Securities and/or be cancelled subsequently; or combination of items (i) and (ii) above. In the event we cease to hold all or part of the purchased Mudajaya Shares as a result of the above, we may further purchase and/or hold such additional number of Mudajaya Shares provided that the total purchased Mudajaya Shares (including Mudajaya Shares held as treasury shares then) does not exceed 10% of our total issued and paid-up share capital at the time of such purchase. While the purchased Mudajaya Shares are held as treasury shares, the rights attached to them as to voting, dividends and participation in other distributions or otherwise are suspended and the treasury shares shall not be taken into account in calculating the number or percentage of shares or of a class of shares in Mudajaya for any purpose including substantial shareholdings, take-overs, notices, the requisitioning of meetings, the quorum for a meeting and the result of a vote on a resolution at a meeting. 3.0 RATIONALE FOR THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY The Proposed Renewal of Share Buy-Back Authority, if implemented, is expected to stabilise the supply and demand of Mudajaya Shares traded on Bursa Securities and thereby support its fundamental value. The Mudajaya Shares purchased can be held as treasury shares, and if subsequently sold at higher prices than the purchase prices, a potential capital gain may be realised without affecting our total issued and paid-up share capital. Treasury shares may also be distributed as share dividends or be cancelled subsequently. If the Mudajaya Shares purchased are retained as treasury shares and/or are cancelled, our Group s EPS is expected to be enhanced as a result of a reduction in the number of voting shares in our Company. 4.0 POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY 4.1 The Proposed Renewal of Share Buy-Back Authority, if implemented, will reduce the amount of financial resources of our Group. This may result in our Group having to forego future investment opportunities, or deprive our Group of interest income that can be derived from the funds utilised for any purchase of Mudajaya Shares. Our Group s working capital will also be affected, as any purchase of Mudajaya Shares will reduce our Group s cashflow depending on the actual number of Mudajaya Shares purchased and their purchase prices. However, such decrease in our financial resources may be temporary since the Mudajaya Shares purchased which are retained as treasury shares may be subsequently resold. 12

19 4.2 The Proposed Renewal of Share Buy-Back Authority, if implemented, is expected to stabilise the supply and demand of Mudajaya Shares traded on Bursa Securities and thereby support its fundamental value. Our Board may also choose to retain the Mudajaya Shares purchased as treasury shares and distribute it as share dividends to our shareholders. In addition, we may have the opportunity to realise potential capital gains if the shares so purchased are resold at prices higher than the purchase prices without affecting our total issued and paid-up shares and such proceeds may be subsequently used for investment opportunities arising in the future or as working capital and/or distributed as dividends to shareholders of our Company. 4.3 The Proposed Renewal of Share Buy-Back Authority is not expected to have any material disadvantage to our Company and our shareholders as it will be implemented only after due consideration of the financial resources of our Group and of the resultant impact on our Company and our shareholders. Our Board will be mindful of the interest of our Company and our shareholders in exercising any decision to purchase any Mudajaya Share. 5.0 EFFECTS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY 5.1 Share capital The effects of the Proposed Renewal of Share Buy-Back Authority on our issued and paid-up share capital will depend on whether the Mudajaya Shares purchased are cancelled or retained as treasury shares. The Proposed Renewal of Share Buy-Back Authority will result in a reduction of our issued and paid-up share capital if the Mudajaya Shares purchased are cancelled. For illustrative purposes, assuming the purchase by our Company of our own shares pursuant to the Proposed Renewal of Share Buy-Back Authority is carried out in full and all the Mudajaya Shares purchased are cancelled, the effects of such cancellation are as follows: No. of Mudajaya Shares Issued and paid-up share capital as at the LPD 552,418,466 Treasury shares as at the LPD 14,018,300 Maximum number of Mudajaya Shares that may be purchased pursuant to the Proposed Renewal of Share Buy-Back Authority 41,223,546 Resultant issued and paid-up share capital 497,176,620 However, the purchase by our Company of our own shares pursuant to the Proposed Renewal of Share Buy-Back Authority will not have any effect on our issued and paid-up share capital if all the Mudajaya Shares purchased are retained as treasury shares. [The rest of this page is intentionally left blank] 13

20 5.2 Substantial shareholders and Directors shareholdings Substantial shareholders Assuming the purchase by our Company of our own shares pursuant to the Proposed Renewal of Share Buy-Back Authority is carried out in full, the effects of such purchase on the shareholdings of our substantial shareholders (based on our Register of Substantial Shareholders as at the LPD) are as follows:- Substantial shareholders As at the LPD After share buy-back Direct Indirect Direct Indirect No. of Mudajaya No. of Mudajaya Shares held % (1) Shares held % (1) No. of Mudajaya Shares held % No. of Mudajaya Shares held % Dataran Sentral (M) Sdn Bhd 133,413, ,413, Mulpha Infrastructure Holdings Sdn Bhd 120,287, ,287, Lembaga Tabung Haji 53,865, ,865, Winners Spectrum Investment Holdings Sdn Bhd 273, First Positive Sdn Bhd - - MIB - - Nautical Investments Ltd - - (2) 133,413, , (2) 133,413, (2) 133,413, (2) 133,413, (3) 120,287, (3) 120,287, (4) 120,287, (4) 120,287, Lee Seng Huang - - (5) 120,287, (5) 120,287, Ng Ying Loong 3, (2)(6) 133,686, , (2)(6) 133,686, (2)(6) Anto A/L SF Joseph 2,266, ,686, ,266, (2)(6) 133,686, (2) Wee Teck Nam 1,300, ,413, ,300, (2) 133,413, (7) Fairfax Asia Limited ,497, (7) 39,497, (8) Odyssey Reinsurance Company ,497, (8) 39,497,

21 Substantial shareholders As at the LPD After share buy-back Direct Indirect Direct Indirect No. of Mudajaya No. of Mudajaya Shares held % (1) Shares held % (1) No. of Mudajaya Shares held % No. of Mudajaya Shares held % Fairfax (Barbados) International Corp. - - (9) 42,309, (9) 42,309, FFHL Group Ltd - - (10) 42,309, (10) 42,309, Fairfax Financial Holdings Ltd - - (11 42,309, (11) 42,309, Voting shares 538,400, ,176,620 Notes:- (1) Excluding the 14,018,300 treasury shares held by the Company. (2) Deemed interest pursuant to Section 6A of the Act by virtue of its shareholdings in Dataran Sentral (M) Sdn Bhd (3) Deemed interest pursuant to Section 6A of the Act by virtue of its shareholdings in Mulpha Infrastructure Holdings Sdn Bhd. (4) Deemed interest pursuant to Section 6A of the Act by virtue of its shareholdings in MIB. (5) Deemed interest pursuant to Section 6A of the Act by virtue of his indirect shareholdings in Nautical Investments Ltd. (6) Deemed interest pursuant to Section 6A of the Act by virtue of his shareholdings in Winners Spectrum Investment Holdings Sdn Bhd. (7) Deemed interest pursuant to Section 6A of the Act by virtue of its collective shareholdings in First Capital Insurance Limited, Falcon Insurance Company (Hong Kong) Ltd and The Pacific Insurance Berhad. (8) Deemed interest pursuant to Section 6A of the Act by virtue of its shareholdings in Fairfax Asia Limited. (9) Deemed interest pursuant to Section 6A of the Act by virtue of its shareholdings in Wentworth Insurance Company Ltd. (10) Deemed interest pursuant to Section 6A of the Act by virtue of its shareholdings in Fairfax (Barbados) International Corp. (11) Deemed interest pursuant to Section 6A of the Act by virtue of its shareholdings in FFHL Group Ltd. 15

22 5.2.2 Directors Assuming the purchase by our Company of our own shares pursuant to the Proposed Renewal of Share Buy-Back Authority is carried out in full, the effects of such purchase on the shareholdings of our Directors (based on our Register of Directors Shareholdings as at the LPD) are as follows: Directors As at the LPD After share buy-back Direct Indirect Direct Indirect No. of Mudajaya No. of Mudajaya Shares held % (1) Shares held % (1) No. of Mudajaya Shares held % No. of Mudajaya Shares held % Dato Yusli bin Mohamed Yusoff James Wong Tet Foh - - Wee Teck Nam 1,300, Lee Seng Huang (2) 133,413, ,300, (2) 133,413, (3) 120,287, (3) 120,287, Chew Hoy Ping Lee Eng Leong (Alternate Director to Lee Seng Huang) Voting shares 538,400, ,176,620 Notes: (1) Excluding the 14,018,300 treasury shares held by the Company. (2) Deemed interest pursuant to Section 6A of the Act by virtue of his shareholdings in Dataran Sentral (M) Sdn Bhd. (3) Deemed interest pursuant to Section 6A of the Act by virtue of his indirect shareholdings in Nautical Investments Ltd. 16

23 5.3 EPS The effects of the purchase by our Company of our own shares pursuant to the Proposed Renewal of Share Buy-Back Authority on our consolidated earnings will depend on the purchase prices paid for the Mudajaya Shares, the number of shares purchased, the effective funding cost to our Group to finance such purchases and/or any loss in interest income to our Group. The reduced number of shares applicable in computing the consolidated EPS subsequent to the Proposed Renewal of Share Buy-Back Authority will enhance our consolidated EPS, given all else being equal. 5.4 NA per share If the Mudajaya Shares purchased are retained as treasury shares, our consolidated NA would decrease by the purchase cost of the treasury shares because the treasury shares are required to be carried at cost and be offset against equity. If the treasury shares are subsequently cancelled or distributed as share dividends, there will be no additional effects on our consolidated NA. The purchase of Mudajaya Shares will reduce our consolidated NA per share if the purchase price of such shares exceeds our consolidated NA per share, and vice versa. If the treasury shares are resold on Bursa Securities, it will increase our consolidated NA per share if we realise a gain from such resale, and vice versa. 5.5 Working capital The purchase by our Company of our own shares pursuant to the Proposed Renewal of Share Buy-Back Authority will reduce the working capital of our Group, the quantum of which would depend on, amongst others, the purchase prices of the Mudajaya Shares and the number of Mudajaya Shares purchased. However, the Mudajaya Shares purchased which are retained as treasury shares and subsequently resold on Bursa Securities will increase our Group s working capital. The quantum of the increase in our Group s working capital will depend on the actual selling price of the treasury shares and the number of treasury shares resold on Bursa Securities. 5.6 Dividends The Proposed Renewal of Share Buy-Back Authority is not expected to have any material impact on the policy of our Board in recommending future dividends. However, our Board may choose to distribute the treasury shares as share dividends to our shareholders. 6.0 IMPLICATIONS OF THE CODE As at the LPD, none of our substantial shareholders will be obliged to undertake a mandatory take-over offer under the Code as a result of the purchase by our Company of our own shares pursuant to the Proposed Renewal of Share Buy-Back Authority. 7.0 INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED Save for the proportionate increase in the percentage of shareholdings and/or voting rights of our shareholders as a consequence of the implementation of the Proposed Renewal of Share Buy-Back Authority, none of our Directors and major shareholders and/or persons connected to them have any interest, direct or indirect, in the Proposed Renewal of Share Buy-Back Authority or resale of treasury shares, if any in the future. 17

24 8.0 DIRECTORS RECOMMENDATION Our Board, after considering all aspects of the Proposed Renewal of Share Buy-Back Authority, is of the opinion that the Proposed Renewal of Share Buy-Back Authority is in the best interest of our Company, and accordingly, recommends that you vote in favour of the ordinary resolution pertaining to the Proposed Renewal of Share Buy-Back Authority to be tabled at our forthcoming AGM. [The rest of this page is intentionally left blank] 18