HLT GLOBAL BERHAD (Company No.: H) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE

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1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. accountant or other professional adviser immediately. This Circular has been reviewed and approved by KAF Investment Bank Berhad, an Adviser to HLT Global Berhad ( HLT ) for the This Circular has been reviewed and approved by KAF Investment Bank Berhad, an Adviser to HLT Global Berhad ( HLT ) for the Proposals (as defined herein). Proposals (as defined herein). Bursa Malaysia Securities Berhad has not perused through the contents of this Circular in relation to the Proposed Bonus Issue of Bursa Malaysia Securities Berhad has not perused through the contents of this Circular in relation to the Proposed Bonus Issue of Shares (as defined herein) prior to its issuance as this is an Exempt Circular pursuant to Guidance Note 22 of the ACE Market Shares (as defined herein) prior to its issuance as this is an Exempt Circular pursuant to Guidance Note 22 of the ACE Market Listing Requirements and takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or Listing Requirements and 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 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. any part of the contents of this Circular. HLT GLOBAL BERHAD (Company No.: H) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE (I) (II) PROPOSED BONUS ISSUE OF UP TO 132,960,500 NEW ORDINARY SHARES IN HLT ( HLT SHARES OR SHARES ) ( BONUS SHARES ) ON THE BASIS OF ONE (1) BONUS SHARE FOR EVERY TWO (2) EXISTING HLT SHARES HELD ON AN ENTITLEMENT DATE TO BE DETERMINED LATER ( PROPOSED BONUS ISSUE OF SHARES ) PROPOSED BONUS ISSUE OF UP TO 199,440,750 FREE WARRANTS IN HLT ( WARRANTS ) ON THE BASIS OF THREE (3) WARRANTS FOR EVERY FOUR (4) EXISTING HLT SHARES HELD ON THE SAME ENTITLEMENT DATE AS THE PROPOSED BONUS ISSUE OF SHARES ( PROPOSED BONUS ISSUE OF WARRANTS ) AND NOTICE OF EXTRAORDINARY GENERAL MEETING Adviser The Notice of the Extraordinary General Meeting ( EGM ) of HLT to be held at Tioman Room, First Floor, Bukit Jalil Golf & Country Resort, Jalan Jalil Perkasa 3, Bukit Jalil, Kuala Lumpur on Monday, 20 November 2017 at a.m. or any adjournment thereof, together with the Proxy Form are enclosed herewith. The Proxy Form should be lodged at the Share Registrar Office of HLT situated at 149, Jalan Aminuddin Baki, Taman Tun Dr. Ismail, Kuala Lumpur not less than forty-eight (48) hours before the time appointed for the EGM or any adjournment thereof. The lodgement of the Proxy Form will not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. IMPORTANT DATES Last date and time for lodging the Proxy Form : Saturday, 18 November 2017 at a.m. Date and time for the EGM : Monday, 20 November 2017 at a.m. This Circular is dated 3 November 2017

2 DEFINITIONS In this Circular, unless otherwise indicated, the following words and abbreviations shall have the following meanings:- Act : The Companies Act 2016 as amended from time to time and any reenactment thereof Board : Board of Directors of HLT Bonus Share(s) : Up to 132,960,500 new HLT Shares to be issued pursuant to the Proposed Bonus Issue of Shares Bursa Depository : Bursa Malaysia Depository Sdn Bhd Bursa Securities : Bursa Malaysia Securities Berhad Circular : This circular dated 3 November 2017 to the shareholders of HLT in relation to the Proposals Deed Poll : The deed poll to be executed by the Company constituting the Warrants and governing the rights of the holders of Warrants Dividend Entitlement Date : The date as at the close of business on 1 November 2017 on which shareholders of HLT must be registered as a member in the Record of Depositors of HLT in order to be entitled for the first interim single tier dividend of 1.00 sen per Share which shall be paid out on 30 November 2017 EGM : Extraordinary general meeting of HLT in relation to the Proposals Entitlement Date : The date as at the close of business (to be determined and announced later by the Board after receipt of the approvals from the relevant authorities and shareholders of the Company for the Proposals) on which shareholders of HLT must be registered as a member in the Record of Depositors of HLT in order to participate in the Proposals EPS : Earnings per Share ESOS : HLT s Employees Share Option Scheme ESOS Options : Options granted under the ESOS FPE : Financial period ended FYE : Financial year ended/ending HLT or the Company : HLT Global Berhad HLT Group or the Group HLT Share(s) or Share(s) : HLT and its subsidiary, collectively : Ordinary shares in the Company KAF IB : KAF Investment Bank Berhad Listing Requirements : ACE Market Listing Requirements of Bursa Securities LPD : 20 October 2017, being the latest practicable date prior to the printing of this Circular Maximum Scenario : Assuming all of the outstanding 915,000 ESOS Options are exercised into new HLT Shares on or prior to the Entitlement Date i

3 DEFINITIONS (CONT D) Minimum Scenario : Assuming none of the outstanding 915,000 ESOS Options are exercised on or prior to the Entitlement Date NA : Net assets Proposals : The Proposed Bonus Issue of Shares and the Proposed Bonus Issue of Warrants collectively Proposed Bonus Issue of Shares Proposed Bonus Issue of Warrants : Proposed bonus issue of up to 132,960,500 Bonus Shares on the basis of one (1) Bonus Share for every two (2) existing HLT Shares held on the Entitlement Date : Proposed bonus issue of up to 199,440,750 Warrants on the basis of three (3) Warrants for every four (4) existing HLT Shares held on the Entitlement Date Record of Depositors : A record of depositors established by Bursa Depository under the Rules of Bursa Depository RM and sen : Ringgit Malaysia and sen, respectively Rules of Bursa Depository : The rules of Bursa Depository as issued pursuant to the Securities Industry (Central Depositories) Act, 1991 as amended from time to time, including the Securities Industry (Central Depositories) Amendment Act, 1998 Warrants : The 5-year free Warrants in HLT, the salient terms of which are set out in of this Circular and as constituted by the Deed Poll 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 has been intentionally left blank] ii

4 CONTENTS PAGE LETTER TO THE SHAREHOLDERS OF HLT IN RELATION TO THE PROPOSALS 1.0 INTRODUCTION DETAILS OF THE PROPOSALS UTILISATION OF PROCEEDS RATIONALE FOR THE PROPOSALS INDUSTRY OUTLOOK AND PROSPECTS OF HLT EFFECTS OF THE PROPOSALS APPROVALS REQUIRED CONDITIONALITY HISTORICAL SHARE PRICES DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS DIRECTORS STATEMENT AND RECOMMENDATION OUTSTANDING CORPORATE EXERCISES ESTIMATED TIME FRAME FOR COMPLETION OF THE PROPOSALS EGM FURTHER INFORMATION APPENDICES I LETTER FROM MESSRS CROWE HORWATH DATED 25 OCTOBER 2017 ON THE ADEQUACY OF RESERVES FOR CAPITALISATION IN RELATION TO THE PROPOSED BONUS ISSUE OF SHARES II FURTHER INFORMATION NOTICE OF EGM... ENCLOSED PROXY FORM... ENCLOSED iii

5 HLT GLOBAL BERHAD (Company No.: H) (Incorporated in Malaysia) Registered Office: Third Floor, No. 79 (Room A) Jalan SS21/60 Damansara Utama Petaling Jaya Selangor 3 November 2017 BOARD OF DIRECTORS Wong Wai Tzing (Independent Non-Executive Chairman) Wong Kok Wah (Deputy Chairman / Executive Director) Chan Yoke Chun (Executive Director / Chief Executive Officer) Yau Ming Teck ( Non-Independent Non-Executive Director) Wong Koon Wai (Independent Non-Executive Director) To: The Shareholders of HLT Dear Sir/Madam, (I) PROPOSED BONUS ISSUE OF SHARES; AND (II) PROPOSED BONUS ISSUE OF WARRANTS, (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) 1.0 INTRODUCTION On 25 September 2017, KAF IB had, on behalf of the Board, announced that HLT is proposing to undertake the:- (i) (ii) proposed bonus issue of up to 132,960,500 Bonus Shares on the basis of one (1) Bonus Share for every two (2) existing HLT Shares held on the Entitlement Date; and proposed bonus issue of up to 199,440,750 Warrants on the basis of three (3) Warrants for every four (4) existing HLT Shares held on the Entitlement Date. On 24 October 2017, KAF IB had, on behalf of the Board, announced that Bursa Securities had vide its letter dated 24 October 2017 resolved to approve the followings:- (i) (ii) (iii) listing of and quotation for up to 132,960,500 Bonus Shares on the ACE Market of Bursa Securities; admission to the Official List and the listing of and quotation for up to 199,440,750 Warrants on the ACE Market of Bursa Securities; and listing of and quotation for up to 199,440,750 new HLT Shares to be issued pursuant to the exercise of Warrants on the ACE Market of Bursa Securities. 1

6 THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE THE SHAREHOLDERS OF HLT WITH THE DETAILS OF THE PROPOSALS AND TO SEEK YOUR APPROVAL ON THE RESOLUTIONS PERTAINING TO THE PROPOSALS TO BE TABLED AT THE FORTHCOMING EGM. THE NOTICE OF THE FORTHCOMING EGM TOGETHER WITH THE PROXY FORM ARE ENCLOSED HEREWITH IN THIS CIRCULAR. SHAREHOLDERS OF HLT ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS CIRCULAR TOGETHER WITH THE APPENDICES CONTAINED HEREIN BEFORE VOTING ON THE RESOLUTION PERTAINING TO THE PROPOSALS TO BE TABLED AT THE FORTHCOMING EGM. 2.0 DETAILS OF THE PROPOSALS 2.1 Proposed Bonus Issue of Shares Basis and number of Bonus Shares to be issued The Proposed Bonus Issue of Shares entails the issuance of up to 132,960,500 Bonus Shares to be credited as fully paid-up on the basis of one (1) Bonus Share for every two (2) existing HLT Shares held by the shareholders of HLT whose names appears on the Record of Depositors of the Company on the Entitlement Date. As at the LPD, the issued share capital of HLT is RM27,074,131 comprising 265,006,000 HLT Shares. In addition, there are 915,000 ESOS Options, which remained unexercised as at the LPD. For the purpose of illustration, the pro forma effects of the Proposals shall be based on the following scenarios:- Minimum Scenario - 132,503,000 Bonus Shares will be issued pursuant to the Proposed Bonus Issue of Shares based on the issued share capital of the Company as at the LPD of RM27,074,131 comprising 265,006,000 HLT Shares on the assumption that none of the outstanding 915,000 ESOS Options will be exercised on or prior to the Entitlement Date. Maximum Scenario - Up to 132,960,500 Bonus Shares will be issued pursuant to the Proposed Bonus Issue of Shares based on the enlarged issued share capital of HLT as at the LPD of RM27,649,300 comprising 265,921,000 HLT Shares on the assumption that all of the outstanding 915,000 ESOS Options will be exercised into new HLT Shares on or prior to the Entitlement Date. The actual number of Bonus Shares to be issued will depend on the number of HLT Shares in issue as at the Entitlement Date. Fractional entitlements arising from the Proposed Bonus Issue of Shares, if any, shall be dealt with in such manner as the Board shall in its absolute discretion deem fit and expedient, and in the best interest of the Company. The Proposed Bonus Issue of Shares is not intended to be implemented on a staggered basis Capitalisation of reserves The Proposed Bonus Issue of Shares shall be effected by way of capitalising the share premium and retained profits of the Company. HLT intends to capitalise the entire share premium account of the Company first and utilise the retained earnings account of the Company to make up for any shortfall to facilitate the Proposed Bonus Issue of Shares. 2

7 For the purpose of illustration, the pro forma effects of the Proposed Bonus Issue of Shares on the reserves based on the Company s latest audited financial statements for the FYE 31 December 2016 and latest unaudited financial statements for the six (6)-months FPE 30 June 2017, are as follows:- FYE 31 December 2016 Group Level Company Level (Accumulated Losses)/ Share Retained Share Retained premium earnings Total premium earnings Total Minimum Scenario RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Audited as at ,768 34,768 - (2,108) (2,108) Add : Subsequent event (1) 13,177-13,177 13,177-13,177 Interim dividend - Income (2) ,000 8,000 - Payable (3) - (2,650) (2,650) - (2,650) (2,650) Less : Amount to be capitalised (13,177) (73) (13,250) (13,177) (73) (13,250) After Proposed Bonus Issue - 32,045 32,045-3,169 3,169 ====== ====== ====== ====== ====== ====== Maximum Scenario Audited as at ,768 34,768 - (2,108) (2,108) Add : Subsequent event (1) 13,177-13,177 13,177-13,177 Interim dividend - Income (2) ,000 8,000 - Payable (3) - (2,659) (2,659) - (2,659) (2,659) Less : Amount to be capitalised (13,177) (119) (13,296) (13,177) (119) (13,296) After Proposed Bonus Issue - 31,990 31,990-3,114 3,114 ====== ====== ====== ====== ====== ====== Six (6)-month FPE 30 June 2017 Group Level Company Level (Accumulated Losses)/ Share Retained Share Retained premium earnings Total premium earnings Total Minimum Scenario RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Unaudited as at ,177 35,256 48,433 13,177 (2,464) 10,713 Add : Interim dividend - Income (2) ,000 8,000 - Payable (3) - (2,650) (2,650) - (2,650) (2,650) Less : Amount to be capitalised (13,177) (73) (13,250) (13,177) (73) (13,250) After Proposed Bonus Issue - 32,533 32,533-2,813 2,813 ====== ====== ====== ====== ====== ====== Maximum Scenario Unaudited as at ,177 35,256 48,433 13,177 (2,464) 10,713 Add : Interim dividend - Income (2) ,000 8,000 - Payable (3) - (2,659) (2,659) - (2,659) (2,659) Less : Amount to be capitalised (13,177) (119) (13,296) (13,177) (119) (13,296) After Proposed Bonus Issue - 32,478 32,478-2,758 2,758 ====== ====== ====== ====== ====== ====== Notes:- (1) Being the share premium arising from the public issue of 39,591,000 HLT Shares at RM0.45 per share pursuant to the Company s listing on ACE Market of Bursa Securities on 10 January 2017 ( Public Issue ) after adjusted for the associated share issuance expenses of RM0.68 million. (2) The declaration of interim dividends totalling RM8.0 million in respect of the financial year ending 31 December 2017 on 21 September 2017, which is payable on 23 November 2017, by HL Advance Technologies (M) Sdn Bhd, a wholly-owned subsidiary of HLT. (3) The declaration of first interim dividend of 1.00 sen per Share for the financial year ending 31 December 2017, which shall be paid out on 30 November 2017 to the shareholders on Dividend Entitlement Date. 3

8 The Board confirms that based on HLT s latest audited consolidated financial statements for the FYE 31 December 2016 and its latest unaudited consolidated quarterly financial results for the six (6)-month FPE 30 June 2017, after adjusted for the aforesaid subsequent events, HLT s reserves required for the capitalisation of the Proposed Bonus Issue of Shares are unimpaired by losses on a consolidated basis in accordance with Paragraph 6.31(1) of the Listing Requirements. The external auditors of the Company, namely Messrs Crowe Horwath had, vide their letter dated 25 October 2017, confirmed that based on HLT s latest audited consolidated financial statements for the FYE 31 December 2016 and its latest unaudited consolidated quarterly financial results for the six (6)- month FPE 30 June 2017 at the Company level, after adjusted for the aforesaid subsequent events, HLT has adequate reserves from its share premium and retained earnings accounts to be capitalised for the Proposed Bonus Issue of Shares. The said letter from the Messrs Crowe Horwath on the adequacy of reserves in connection with the Proposed Bonus Issue of Shares is set out in Appendix I of this Circular Ranking of the Bonus Shares The Bonus Shares shall, upon allotment and issuance, shall rank pari passu in all respects with the then existing HLT Shares, save and except that they will not be entitled to any dividends, rights, allotments and/or any other forms of distribution which may be declared, made or paid to the shareholders of HLT, the entitlement date of which is prior to the date of allotment and issuance of the Bonus Shares. For clarity, the Bonus Shares will be allotted and issued after the Dividend Entitlement Date and hence, will not be entitled to the first interim single tier dividend of 1.00 sen per Share declared for the FYE 31 December In addition, the Company wishes to highlight that the existing HLT Shares are not subjected to any moratorium as at the LPD Listing of and quotation for the Bonus Shares Bursa Securities had vide its letter dated 24 October 2017 approved the listing of and quotation for the Bonus Shares on the ACE Market of Bursa Securities. 2.2 Proposed Bonus Issue of Warrants Basis and number of Warrants to be issued The Proposed Bonus Issue of Warrants involves the issuance of up to 199,440,750 Warrants on the basis of three (3) Warrants for every four (4) existing HLT Shares held by the shareholders of HLT on the same Entitlement Date as the Proposed Bonus Issue of Shares. For the avoidance of doubt, the Bonus Shares are not entitled to the Warrants. Under the Minimum Scenario, 198,754,500 Warrants will be issued pursuant to the Proposed Bonus Issue of Warrants, whilst up to 199,440,750 Warrants will be issued under the Maximum Scenario. Any fractional entitlements of the Warrants, if any, shall be disregarded, and dealt with in such manner as the Board shall in its absolute discretion think fit and expedient, and in the best interests of the Company. The Proposed Bonus Issue of Warrants will not be implemented on a staggered basis. The Warrants will be issued in registered form and constituted the Deed Poll. The indicative salient terms of the Warrants are set out in Section of this Circular Ranking of the Warrants and the new HLT Shares to be issued arising from the exercise of the Warrants The holders of the Warrants will not be entitled to any voting rights or participation in any form of distribution other than on winding-up, compromise or arrangement of HLT to be set out in the Deed Poll and/or any offer of further securities in HLT until and unless such holders of the Warrants exercise their Warrants into new HLT Shares. 4

9 The new HLT Shares to be issued pursuant to the exercise of the Warrants shall, upon allotment and issuance, rank pari passu in all respects with the then existing HLT Shares, save and except that they will not be entitled to any dividends, rights, allotments and/or any other forms of distribution which may be declared, made or paid to the shareholders of HLT, the entitlement date of which is prior to the date of allotment and issuance of the new HLT Shares arising from the exercise of the Warrants Listing of and quotation for the Warrants and new HLT Shares to be issued arising from the exercise of the Warrants Bursa Securities had vide its letter dated 24 October 2017 approved the admission of the Warrants to the Official List of the ACE Market of Bursa Securities as well as for the listing of and quotation for the Warrants and the new HLT Shares to be issued arising from the exercise of the Warrants on the ACE Market of Bursa Securities Basis of determining the issue price and exercise price of the Warrants The Warrants will be issued at no cost to the shareholders on a pro rata basis. The exercise price of the Warrants has been fixed at RM0.20 by the Board after taking into consideration, amongst others, the following:- (i) (ii) (iii) (iv) The historical price movement of HLT Shares; the theoretical ex-price of RM per HLT Share after the Proposals, calculated based on the five (5)-day volume weighted average market price of HLT Shares up to and including the LPD of RM0.5655; The prevailing market conditions; and The potential future earnings of HLT Group. For illustration purposes, the exercise price of the Warrants of RM0.20 represents a discount of RM or approximately 37.11% to the aforesaid theoretical ex-price of RM per HLT Share Indicative principal terms of the Warrants Form and denomination : The Warrants will be issued in registered form and constituted by the Deed Poll. Number of Warrants : Up to 199,440,750 Warrants to be issued pursuant to the Proposed Bonus Issue of Warrants. Exercise Price : The exercise price of the Warrants has been fixed at RM0.20 per Warrant, subject to further adjustments (where applicable) in accordance with the provisions of the Deed Poll. Exercise Period : The period commencing on and including the date of issuance of the Warrants and ending on the Expiry Date. Warrants not exercised during the exercise period will thereafter lapse and cease to be valid. Method of exercise : The Warrant holders are required to lodge at the Company s registrar an exercise form, as set out in the Deed Poll, duly completed and signed, together with payment of the exercise price for the total number of new HLT Shares subscribed by banker s draft or cashier s order or money order or postal order issued by a post office in Malaysia. Expiry Date : The close of business at 5.00 p.m. in Kuala Lumpur on the last Market Day immediately preceding the fifth (5 th ) anniversary date of first issue of the Warrants, and if such date is not a Market Day, then on the immediate preceding Market Day. 5

10 Exercise Rights : Each Warrant entitles its holder to subscribe for one (1) new HLT Share at the Exercise Price at any time during the Exercise Period subject to adjustments in accordance with the provisions in the Deed Poll. Board lot : The Warrants are tradable upon listing on ACE Market of Bursa Securities in board lots of 100 Warrants. Status of new HLT Shares to be issued pursuant to the exercise of the Warrants Adjustment in the Exercise Price and/or the number of Warrants held by Warrant holders in the event of alteration to the share capital : All new HLT Shares to be issued upon the exercise of the Warrants (in accordance with the provisions of the Deed Poll) shall, upon allotment and issuance, rank pari passu in all respects with the then existing HLT Shares, save and except that the new HLT Shares shall not be entitled to any dividends, rights, allotments and/or any other distribution which may be declared, made or paid before the date of allotment of such new HLT Shares. : Subject to the provisions of the Deed Poll, the exercise price and/or the number of Warrants held by each Warrant holder shall be adjusted by the Board in consultation with an approved principal advisor or an auditor in Malaysia appointed by the Company for the purposes of the Deed Poll in the event of alteration to the share capital of the Company in accordance with the provisions as set out in the Deed Poll. Rights of Warrants : The Warrants do not entitle the registered holders thereof to any voting rights in any general meeting of the Company or to participate in any distribution and/or offer of further securities in the Company unless the Warrant holder becomes a shareholder by exercising his/her Warrants. Modification of rights of Warrant holders Rights of Warrant holders on winding-up, compromise or arrangement of the Company : Save as otherwise provided in the Deed Poll, an ordinary resolution of the Warrant holders is required to sanction any modification, alteration or abrogation in respect of the rights of the Warrant holders. : Where a resolution has been passed for a members voluntary winding-up of the Company, or where 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 (1) or more companies, then every Warrant holder shall be entitled, upon and subject to the provisions of the Deed Poll, at any time within six (6) weeks after the passing of such resolution for a members voluntary winding-up of the Company, or within six (6) weeks after (whichever is later) the court order approving the compromise or arrangement, to be treated as if he had immediately prior to the commencement of such winding-up, compromise or arrangement (as the case may be) exercised the Exercise Rights represented by the Warrants and had on such date been the holder of the new HLT Shares arising from the exercise of the Warrants. Upon the expiry of the above six (6) weeks, all exercise rights of the Warrants shall lapse and cease to be valid for any purpose. Governing Law : Laws and regulations of Malaysia. 6

11 2.3 Adjustments to the ESOS Options The ESOS by-laws constituting the Company s ESOS provides for, amongst others, adjustment to be made to the option price of the unexercised ESOS Options and the number of ESOS Options in the event of a bonus issue of shares. For the avoidance of doubt, there will be no adjustments to be made pursuant to the issuance and exercise of the Warrants. 3.0 UTILISATION OF PROCEEDS The Proposed Bonus Issue of Shares will not raise any funds. The Proposed Bonus Issue of Warrants will not raise any immediate funds upon its issuance as the Warrants will be issued at no cost to the entitled shareholders of HLT. The exact quantum of the future proceeds that may be raised by HLT would depend upon the actual number of Warrants exercised during the tenure of the Warrants. As such, the exact timeframe for the utilisation of proceeds arising therefrom is not determinable at this juncture. Assuming full exercise of the Warrants at the Exercise Price of RM0.20 per Warrant, a total of up to 199,440,750 new HLT Shares would be issued and the Company could potentially raise a maximum gross proceeds of RM39,888,150. Such proceeds to be raised, as and when the Warrants are exercised, shall be utilised for the future working capital requirements of the HLT Group, which include, amongst others, payment to trade and other payables, staff costs and other operating expenses such as rental and utilities. The proceeds to be utilised for each component of working capital are subject to the HLT Group s operating requirements at the time of utilisation and therefore cannot be determined at this juncture. 4.0 RATIONALE FOR THE PROPOSALS The Proposals are aimed at rewarding shareholders of the Company for their confidence in the HLT Group and continuing support by giving them additional participation in the equity of the Company in terms of number of Shares held, whilst maintaining their equity interest. In addition, the Proposed Bonus Issue of Shares is expected to enhance the marketability and trading liquidity of HLT Shares on Bursa Securities by way of a larger capital base. Further, the Board is of the view that the Proposed Bonus Issue of Warrants is an appropriate avenue for rewarding the existing shareholders of HLT after taking into consideration, amongst others, the following factors:- (a) (b) (c) (d) the Proposed Bonus Issue of Warrants will reward the shareholders for their continuous support by enabling them to participate in a derivative of HLT without incurring any costs; the issuance of Warrants will provide the shareholders with an opportunity to further increase their equity participation in the Company by exercising the Warrants at a pre-determined price over the tenure of the Warrants. The shareholders who are entitled to the Warrants may also benefit from any potential capital appreciation arising from the exercise of the Warrants; to strengthen its financial position with enhanced shareholders funds and enlarged capital base pursuant to the exercise of Warrants into new HLT Shares which is expected to enhance the liquidity of HLT Shares on the ACE Market of Bursa Securities; and the Warrants will enable the Company to raise further proceeds as and when the Warrants are exercised, for working capital requirements of the HLT Group. 7

12 5.0 INDUSTRY OUTLOOK AND PROSPECTS OF HLT 5.1 Overview and outlook of Malaysian economy The Malaysian economy recorded a stronger growth of 5.8% in the second quarter of 2017 (1Q 2017: 5.6%). Private sector spending continued to be the main driver of growth. On the external front, growth was further supported by the robust expansion in real exports of goods and services (9.6%; 1Q 2017: 9.8%) following strong demand for manufactured and commodity products. Real imports moderated slightly to 10.7% (1Q 2017: 12.9%) following more moderate expansion in investment. On a quarteron-quarter seasonally adjusted basis, the economy recorded a growth of 1.3% (1Q 2017: 1.8%). Domestic demand grew by 5.7% in the second quarter of the year (1Q 2017: 7.7%), supported by continued expansion in both private sector expenditure (7.2%; 1Q 2017: 8.2%) and public sector spending (0.2%; 1Q 2017: 5.8%). Private consumption recorded a growth of 7.1% (1Q 2017: 6.6%), supported by the improvement in private sector wages amid continued strength in employment growth. During the quarter, consumer sentiments continued to improve, providing further impetus to household spending. Private investment expanded by 7.4% in the second quarter (1Q 2017: 12.9%), mainly in the services and manufacturing sectors. In line with the recovery in demand, manufacturers undertook capacity expansions, machinery and equipment (M&E) acquisitions and replacements to cater for new orders. This was evident across both the export and domestic-oriented manufacturing sub-sectors. In the services sector, investment was supported mainly by expansions in the utilities, healthcare and food & beverage and accommodation sub-sectors. Given the continued strong performance in the second quarter of 2017, the Malaysian economy recorded a strong growth of 5.7% in first half of At this point, compared to the beginning of the year, there are considerable improvements in the operating environment of the economy. Looking ahead, it is likely for the Malaysian economy to expand by more than 4.8% for the whole year of Private consumption will be underpinned by continued wage and employment growth, with support from various policy measures to raise disposable income. Investments will be driven by the implementation of new and ongoing infrastructure projects, and higher capacity expansion in the manufacturing and services sectors. The stabilisation of commodity prices is also expected to lend support to investments in the mining sector. On the external front, exports are expected to benefit from the improvement in global growth, especially among Malaysia s key trading partners. Overall, the economy is expected to record a stronger growth in (Source: Economic and Financial Developments in the Malaysian Economy in the Second Quarter of 2017, Bank Negara Malaysia) In 2016, the Malaysian economy recorded a growth of 4.2% (2015: 5.0%) despite considerable external and domestic headwinds. The global economic landscape was challenging given the subdued global demand and low commodity prices. International financial markets were also subjected to heightened uncertainty with significant reversal of capital flows from emerging economies. This was driven by the unexpected political developments in the advanced economies, such as the UK and the US, and the macroeconomic policies adopted by these economies. Domestically, the economy continued to face headwinds from the higher cost of living amid soft employment conditions. Concurrently, business and consumer sentiments were affected by a confluence of global and domestic factors, including the heightened volatility in financial markets and the significant underperformance of the ringgit. Global economic activity is projected to improve in 2017, underpinned by an expansion in domestic demand in the advanced and emerging market economies, boosted in part by expansionary fiscal policies in selected major economies. These pro-growth policies would spur global demand and provide impetus to global trade. The outlook would also be supported by a recovery in commodity prices amid the move to reduce oversupply conditions. Nonetheless, the global economy will continue to be subjected to several downside risks. These include a potential retreat from globalisation and free trade in the advanced economies, and uncertainty over the UK and EU negotiations and geopolitical developments. Anticipation of monetary policy divergence between the US and the other major 8

13 economies could also result in over adjustment in the foreign exchange markets amidst destabilising capital flows. With the gradual improvement in global growth, recovery in global commodity prices and the continued growth of domestic demand are expected to collectively support Malaysia s growth performance. The Malaysian economy is projected to register a sustained growth of 4.3% - 4.8% in (Source: Bank Negara Malaysia Annual Report 2016, Bank Negara Malaysia) 5.2 Overview and outlook of the rubber industry in Malaysia In 2016, total world production of rubber reached 26.9 million tonnes, growing at a compound annual growth rate of 2.2% from 23.7 million tonnes in Natural rubber, with production estimated at 12.3 million tonnes, accounted for 46% of world rubber production, while synthetic rubber production accounted for 54%, with production in 2016 estimated at 14.6 million tonnes. Malaysia is the world's fifth largest producer of natural rubber ( NR ) after Thailand, Indonesia, Vietnam and China. NR production in Malaysia decreased by 6.6% from 0.72 million tonnes in 2015 to 0.67 million tonnes in Exports of NR recorded a decline of 10.7% from 1.1 million tonnes in 2015 to 1.0 million tonnes in Nonetheless, Malaysia is still a net exporter of NR. Consumption of NR increased by 4% from million tonnes in 2015 to million tonnes in Consumers can look towards Malaysia as a source of supply for quality raw rubber of SMR (Standard Malaysian Rubber) grades, specialty rubber such as epoxidised natural rubber, deproteinised natural rubber and thermoplastic epoxidised natural rubber and latex concentrates including low protein latex. Meanwhile, synthetic rubber ( SR ) production in Malaysia increased by 23% from 0.10 million tonnes in 2015 to 0.12 million tonnes in Similarly, exports of SR also recorded an increase of 49.7% from 0.08 million tonnes in 2015 to 0.11 million tonnes in However, Malaysia is still a net importer of SR. Exports of rubber products from Malaysia surpassed RM18 billion in 2016, recording a growth of 0.9% year-on-year. The growth in exports was fuelled by the non-latex goods category, where footwear reported strong export performance with a growth of 28% from previous year, along with 5% expansion in the general rubber goods segment. Seals and gaskets, automotive parts and accessories, floor coverings and mats, as well as fenders were among the high growth products in the general rubber goods category. Nonetheless, the latex goods remained the largest contributor to Malaysian exports of rubber products, reaching RM14.6 billion in 2016 and accounted for 80.7% of the total exports of rubber products in the year. Rubber gloves under the latex goods category continued to contribute significantly to total exports of rubber products, reaching RM13.3 billion in export value or 73.2% of the total value of all rubber products exported. Malaysia is globally renowned for its high quality and competitively priced rubber products. Malaysian rubber products manufacturers comprise multinationals and joint ventures from various countries including the USA, Europe and Japan, as well as locally-owned enterprises. Malaysia remain the world's leading supplier for medical gloves (examination and surgical gloves), satisfying more than 50% of global demand. (Source: Malaysia Rubber Export Promotion Council website, Prospects of HLT Given the vibrant and growing rubber glove industry in Malaysia, the prospects of HLT remained positive as evident by the export of rubber glove from Malaysia which has grown from RM8.92 billion in 2010 to RM13.28 billion in 2016, registering a compound annual growth rate of 6.86%. (Source: Malaysia Rubber Export Promotion Council website, In relation to the foregoing, the management of HLT believes that the Group is able to leverage on its past track record and market reputation to tap into the growth in the rubber glove industry and to capture opportunities in the export markets. The prospects for growth in the rubber glove industry are positive as the industry is expected to continue to be driven by growth in the global and domestic healthcare industry, increasing demand arising from other end-user markets such as manufacturing, 9

14 continued growth in the global economy, and availability of raw materials utilised in the manufacturing of rubber gloves. Moving forward, it is the intention of the Group to continue to seek market opportunities and strengthen its market presence. Through its track record and market reputation in the glove-dipping line industry in Malaysia, the management of HLT believes that the Group is well-placed to continue growing its market presence and increase its overall market share. The Group will remain focused in its commitment on product quality and customer service, as well as continuously improve and upgrade its products. To achieve this, HLT will increase its sales and marketing efforts as well as the frequency of visits to existing customers to help secure repeat orders and to potential customer to win new sales. (Source : the management of HLT) 6.0 EFFECTS OF THE PROPOSALS 6.1 Issued share capital The proforma effects of the Proposals on the issued share capital of HLT are as follows:- Minimum Scenario Maximum Scenario No. of No. of Shares RM Shares RM ( 000) ( 000) ( 000) ( 000) Issued share capital as at the LPD 265,006 27, ,006 27,074 To be issued pursuant to the exercise of ESOS Options - - (1) 915 (1) ,006 27, ,921 27,649 To be issued pursuant to the Proposed Bonus Issue of Shares 132,503 (2) 13, ,961 (2) 13, ,509 40, ,882 40,795 To be issued pursuant to the exercise of Warrants (3) 198,755 39,751 (3) 199,441 39,888 Enlarged issued share capital 596,264 79, ,323 80,683 Notes:- (1) Assuming all outstanding 915,000 ESOS Options as at the LPD are exercised by the holders of ESOS Option on or prior to the Entitlement Date and RM0.16 million has been transferred from ESOS reserve to share capital. (2) After netting-off estimated expenses incidental to the Proposals of RM0.15 million that are accounted for as a deduction from equity. (3) Assuming all entitled shareholders of the Company exercise their Warrants. 6.2 Earnings and EPS The Proposals are not expected to have any material effect on the consolidated earnings of HLT for the FYE 31 December 2017, save for the proportionate reduction in the EPS of the Group as a result of the increase in the number of HLT Shares in issue pursuant to the Proposed Bonus Issue of Shares and exercise of the Warrants arising from the Proposed Bonus Issue of Warrants. [The rest of this page has been intentionally left blank] 10

15 6.3 NA and gearing The proforma effects of the Proposals on the consolidated NA per Share and gearing of HLT based on the audited consolidated financial statements of HLT for the FYE 31 December 2016 are as follows:- Minimum Scenario (I) (II) (III) (3) After (II) and Audited as at 31 December 2016 Adjustments for subsequent events (1) After (I) and the Proposals assuming full exercise of Warrants RM 000 RM 000 RM 000 RM 000 Share capital 22,433 27,074 40,174 79,925 Share premium - 13,177 (2)- - Merger deficit (22,033) (22,033) (22,033) (22,033) ESOS reserve Retained earnings 34,768 32,118 (2) 32,045 32,045 Shareholders equity / NA 35,525 50,499 50,349 90,100 No. of Shares ( 000) 224, , , ,264 NA per Share (RM) Borrowings (RM 000) 1,372 1,372 1,372 1,372 Gearing (times) Maximum Scenario:- Audited as at (I) (II) (III) (IV) Adjustments (4) After (I) and (3) After (III) for full exercise of and assuming subsequent outstanding After (II) and full exercise of events (1) ESOS Options the Proposals Warrants RM 000 RM 000 RM 000 RM 000 RM 000 Share capital 22,433 27,074 27,649 40,795 80,683 Share premium - 13,177 13,177 (5)- - Merger deficit (22,033) (22,033) (22,033) (22,033) (22,033) ESOS reserve Retained earnings 34,768 32,109 32,109 (5) 31,990 31,990 Shareholders equity/na 35,525 50,490 50,902 50,752 90,640 No. of Shares ( 000) 224, , , , ,323 NA per Share (RM) Borrowings (RM 000) 1,372 1,372 1,372 1,372 1,372 Gearing (times) Notes:- (1) After adjusted for the following subsequent events:- - new Shares issued under the Public Issue and the share premium arising therefrom after adjusted for the associated share issuance expenses of RM0.68 million; - declaration of first interim single tier dividend of 1.00 sen per Share of RM2.64 million and RM2.66 million under Minimum Scenario and Maximum Scenario respectively; and - new Shares issued pursuant to the exercised of 1,085,000 ESOS Options at an exercise price of RM0.45 per Share and the associated transfer of RM0.19 million from ESOS reserve to share capital. (2) After adjusted for the capitalisation of approximately RM13.18 million from the share premium and RM0.07 million from the retained earnings account pursuant to the issuance of 132,503,000 Bonus Shares under the Proposals. (3) Based on the exercise price of RM0.20 per Warrant. (4) Assuming all 915,000 outstanding ESOS Options as at LPD are fully exercised into new HLT Shares. (5) After adjusted for the capitalisation of approximately RM13.18 million from the share premium and RM0.12 million from the retained earnings account pursuant to the issuance of 132,960,500 Bonus Shares under the Proposals. 11

16 6.4 Substantial shareholders shareholdings The Proposals will not have any effect on the substantial shareholders percentage of shareholding in the Company as the Bonus Shares will be allotted on a pro-rata basis to all the shareholders of the Company. However, the number of HLT Shares held by each substantial shareholder will increase proportionately as a result of the Proposals. The proforma effects of the Proposals on HLT s substantial shareholders shareholdings in the Company are as follows:- (I) (II) After (I) and full As at LPD After the Proposals exercise of Warrants Minimum Scenario Direct Indirect Direct Indirect Direct Indirect No. of No. of No. of No. of No. of No. of Substantial shareholders Shares % Shares % Shares % Shares % Shares % Shares % Wong Kok Wah 93, *91, , *137, , *206, Chan Yoke Chun 91, ^93, , ^139, , ^209, (I) (II) (III) After full exercise After (I) and After (II) and full As at LPD of ESOS Options # the Proposals exercise of Warrants Maximum Scenario Direct Indirect Direct Indirect Direct Indirect Direct Indirect No. of No. of No. of No. of No. of No. of No. of No. of Substantial shareholders Shares % Shares % Shares % Shares % Shares % Shares % Shares % Shares % Wong Kok Wah 93, *91, , *91, , *137, , *206, Chan Yoke Chun 91, ^93, , ^93, , ^139, , ^209, Notes:- * Deemed interested through his spouse s shareholdings in HLT. ^ Deemed interested through her spouse s shareholdings in HLT. # Assuming all 915,000 outstanding ESOS Options as at LPD are fully exercised into new HLT Shares. [The rest of this page has been intentionally left blank] 12

17 6.5 Convertible securities As at the LPD, save for the outstanding ESOS Options, the Company does not have any other convertible securities. 7.0 APPROVALS REQUIRED The Proposals are subject to the following approvals being obtained:- (a) Bursa Securities for the following:- (i) listing of and quotation for up to 132,960,500 Bonus Shares on the ACE Market of Bursa Securities; (ii) admission to the Official List and the listing of and quotation for up to 199,440,750 Warrants on the ACE Market of Bursa Securities; and (iii) listing of and quotation for up to 199,440,750 new HLT Shares to be issued pursuant to the exercise of Warrants on the ACE Market of Bursa Securities. The approval of Bursa Securities was obtained vide its letter dated 24 October 2017 and is subject to the following conditions:- Condition HLT and KAF IB must fully comply with the relevant provisions under the Listing Requirements pertaining to the implementation of the Proposals HLT and KAF IB to inform Bursa Securities upon the completion of the Proposals HLT to furnish Bursa Securities with a written confirmation of its compliance with the terms and conditions of Bursa Securities approval once the Proposals are complete HLT and KAF IB are required to make the relevant announcements for the Proposed Bonus Issue of Shares pursuant to Rules 6.36(2)(a) & (b) and 6.36(4) of the Listing Requirements HLT to furnish Bursa Securities on a quarterly basis a summary of the total number of shares listed pursuant to the exercise of Warrants as at the end of each quarter together with a detailed computation of listing fees payable Status of compliance To be met To be met To be met To be met To be met (b) (c) shareholders of the Company at the EGM to be convened for the Proposals; and any other relevant authorities and/or parties (if applicable). 8.0 CONDITIONALITY The Proposed Bonus Issue of Shares and the Proposed Bonus Issue of Warrants are inter-conditional upon one another. The Proposals are not conditional upon any other corporate exercise undertaken or to be undertaken by the Company. [The rest of this page has been intentionally left blank] 13

18 9.0 HISTORICAL SHARE PRICES The monthly highest and lowest prices of HLT Shares as traded on Bursa Securities since the Company s IPO in January 2017 up to the LPD are as follows:- Lowest (RM) Highest (RM) 2017 January February March April May June July August September Last transacted market price on 21 September 2017 (being the latest market day preceding the announcement of the Proposals) Last transacted market price on the LPD (Source: Bloomberg) 10.0 DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the Directors, major shareholders and/or persons connected with the Directors and major shareholders of HLT have any interest, direct or indirect, in the Proposals save for their respective entitlements as shareholders under the Proposals, which are also available to all other shareholders of the Company DIRECTORS STATEMENT AND RECOMMENDATION The Board, having considered all aspects of the Proposals, including, but not limited to, the rationale and financial effects of the Proposals, is of the opinion that the Proposals are in the best interest of the Company and accordingly, on the basis above, recommends you to vote in favour of the resolution in relation to the Proposals to be tabled at the forthcoming EGM OUTSTANDING CORPORATE EXERCISES Save for the Proposals, there are no other intended corporate exercises/schemes which have been announced but yet to be completed by the Group prior to the printing of this Circular. [The rest of this page has been intentionally left blank] 14

19 13.0 ESTIMATED TIME FRAME FOR COMPLETION OF THE PROPOSALS Subject to the approvals as stated in Section 7.0 above and barring any unforeseen circumstances, the Proposals are expected to be completed by the fourth (4 th ) quarter of The tentative timetable in relation to the Proposals is set out below:- Date Events 20 November 2017 Convening of the EGM to obtain the approval of HLT s shareholders for the Proposals 3 rd week of November 2017 Announcement of the Entitlement Date 1 st week of December 2017 Entitlement Date 3 rd week of December 2017 Admission of the Warrants and the listing of and quotation for the Bonus Shares and Warrants on Bursa Securities/Completion of the Proposals 14.0 EGM The EGM, the notice of which is enclosed in this Circular, will be held at Tioman Room, First Floor, Bukit Jalil Golf & Country Resort, Jalan Jalil Perkasa 3, Bukit Jalil, Kuala Lumpur on Monday, 20 November 2017 at a.m. or any adjournment thereof, for the purpose of considering and, if thought fit, passing the resolutions pertaining to the Proposals. If you are unable to attend and vote in person at the EGM, you should complete, sign and return the Proxy Form enclosed with this Circular in accordance with the instructions printed therein as soon as possible so as to arrive at the Share Registrar Office of HLT situated at 149, Jalan Aminuddin Baki, Taman Tun Dr. Ismail, Kuala Lumpur not later than forty-eight (48) hours before the time appointed for holding the EGM or adjourned meeting at which the person named in the instrument proposes to vote, or in the case of a poll, not less than twenty-four (24) hours before the time appointed for taking of the poll. The lodgement of the Proxy Form will not preclude you from attending and voting in person at the EGM should you subsequently wish to do so 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 HLT GLOBAL BERHAD WONG WAI TZING Independent Non-Executive Chairman 15