ISS CONSULTING SOLUTIONS BERHAD ( P) (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 to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. This Circular has been reviewed and approved by the Sponsor of ISS Consulting Solutions Berhad. Bursa Malaysia Securities Berhad has not perused through the contents of this Circular prior to its issuance 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 any part of the contents of this Circular. ISS CONSULTING SOLUTIONS BERHAD ( P) (Incorporated in Malaysia under the Companies Act, 1965) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AND NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE The ordinary resolution in respect of the above proposal will be tabled at the Sixth Annual General Meeting of the Company. The Notice of the Sixth Annual General Meeting of the Company to be held at Banquet Hall, The Royal Selangor Golf Club, Jalan Kelab Golf, Off Jalan Tun Razak, Kuala Lumpur on Saturday, 10 September 2011 at a.m. together with the Form of Proxy are set out in the Annual Report 2011 of the Company which is despatched together with this Circular. The Form of Proxy must be lodged at the Registered Office of the Company at 16th Floor, Menara PanGlobal, 8 Lorong P. Ramlee, Kuala Lumpur not less than 48 hours before the time set for the Sixth Annual General Meeting or any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the Sixth Annual General Meeting should you subsequently wish to do so. This Circular is dated 29 July 2011

2 DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout and for the purposes of this Circular only: ABS Act AGM Board Bursa Securities CLS CNA DGB Dato Mah : Applied Business Systems Sdn Bhd (Company No D), a wholly-owned subsidiary of FRB : The Companies Act, 1965 and any statutory modification, amendment or re-enactment thereof for the time being in force : Annual General Meeting : Board of Directors of ISS : Bursa Malaysia Securities Berhad (Company No W) : Com-Line Systems Sdn Bhd (Company No A), a 70% owned subsidiary of FHB, which in turn is a wholly-owned subsidiary of FRB : Continuous Network Advisers Sdn Bhd (Company No K), a wholly-owned subsidiary of FRB : Diversified Gateway Berhad (Company No T), a wholly-owned subsidiary of ISS, which in turn is a 59.61% owned subsidiary of FHB and which in turn is a wholly-owned subsidiary of FRB : Dato Mah Siew Kwok Director(s) : Shall have the meaning given in Section 2(1) of the Capital Markets and Services Act 2007, includes any person who is or was within the preceding 6 months of the date on which the terms of the transaction were agreed upon, a director of the Company, its subsidiary or holding company or a chief executive officer of ISS, its subsidiary or holding company. FAS FBS FCS FES FHB FMT FNS : Formis Advanced Systems Sdn Bhd (Company No K), a 60% owned subsidiary of Man Yau Holdings Berhad (Company No T), which in turn is a wholly-owned subsidiary of FRB : FORMIS BASS Software Sdn Bhd (Company No P), a wholly-owned subsidiary of FRB : Formis Computer Services Sdn Bhd (Company No P), a wholly-owned subsidiary of FHB, which in turn is a wholly-owned subsidiary of FRB : Formis e Solutions Sdn Bhd (Company No D), a wholly-owned subsidiary of Man Yau Holdings Berhad (Company No T), which in turn is a wholly-owned subsidiary of FRB : Formis Holdings Berhad (Company No K), a wholly-owned subsidiary of FRB : Formis Media Teknologi Sdn Bhd (Company No U), a 65% owned subsidiary of FHB, which in turn is a wholly-owned subsidiary of FRB : Formis Network Services Sdn Bhd (Company No U), a wholly-owned subsidiary of FCS, which in turn is a wholly-owned subsidiary of FHB and which in turn is a wholly-owned subsidiary of FRB i

3 DEFINITIONS (continued) FRB FSSB FST FSTech ICT ISS or the Company ISS Group or the Group ISS (Malaysia) Latest Practicable Date Listing Requirements Major Shareholder : Formis Resources Berhad (Company No T), a major shareholder of ISS through its wholly-owned subsidiary, FHB, which owns 59.61% equity interest in ISS : First Solution Sdn Bhd (Company No P), a wholly-owned subsidiary of FHB, which in turn is a wholly-owned subsidiary of FRB : Formis Systems & Technology Sdn Bhd (Company No W), a wholly-owned subsidiary of FRB : Formis Software & Technologies Sdn Bhd (Company No U), a wholly-owned subsidiary of Man Yau Holdings Berhad (Company No T), which in turn is a wholly-owned subsidiary of FRB : Information and communication technologies : ISS Consulting Solutions Berhad (Company No P) : ISS and its subsidiary companies : ISS Consulting (Malaysia) Sdn Bhd (Company No P), a wholly-owned subsidiary of ISS : 30 June 2011, being the latest practicable date prior to printing of circular : ACE Market Listing Requirements of Bursa Securities and includes any amendments thereto : A person who has an interest or interests in one or more voting shares in the corporation and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is :- (a) 10% or more of the aggregate of the nominal amounts of all the voting shares in the corporation; or (b) 5% or more of the aggregate of the nominal amounts of all the voting shares in the corporation where such person is the largest shareholder of the corporation. For the purposes of the Proposed Mandate, interest in shares shall have the same meaning in Section 6A of the Act. It also includes any person who is or was within the preceding 6 months of the date on which the terms of the transaction were agreed upon, a Major Shareholder of the corporation or any other corporation which is its subsidiary and holding company. NA Person Connected : Net Assets : Such person, in relation to the Director or Major Shareholder, who falls under any one of the following categories : (a) a family member of the Director or Major Shareholder; (b) a trustee of a trust (other than a trustee for an employee share scheme or pension scheme) under which the Director, Major Shareholder or family member of the Director or Major Shareholder is the sole beneficiary; (c) a partner of the Director, Major Shareholder or a partner of a Person Connected with that Director or Major Shareholder; ii

4 DEFINITIONS (continued) (d) a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the Director or Major Shareholder; (e) (f) a person in accordance with whose directions, instructions or wishes the Director or Major Shareholder is accustomed or is under an obligation, whether formal or informal, to act; a body corporate or its directors which/who is/are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the Director or Major Shareholder; (g) a body corporate or its Directors whose directions, instructions or wishes the Director or Major Shareholder is accustomed or under an obligation, whether formal or informal, to act; (h) a body corporate in which the Director, Major Shareholder and/or Persons Connected with him are entitled to exercise, or control the exercise of, not less than 15% of the votes attached to voting shares in the body corporate; or (i) a body corporate which is a related corporation. Proposed Mandate Proposed New Shareholders Mandate : Proposed Renewal of Shareholders Mandate and Proposed New Shareholders Mandate : Proposed new shareholders mandate for new Recurrent Related Party Transactions Proposed Renewal of : Proposed renewal of shareholders mandate for Recurrent Related Party Transactions approved Shareholders Mandate at the Fifth AGM held on 23 June 2010 Recurrent Related Party Transactions Related Party(ies) : Related Party Transactions which are recurrent, of a revenue or trading nature and which are necessary for the day-to-day operations of the ISS Group : Director(s), Major Shareholder(s) or Person(s) Connected with such Director(s) or Major Shareholder(s) Related Party Transaction : A transaction entered into by the Company or its subsidiaries which involves the interest, direct or indirect, of a Related Party RM and sen Shares Tan Sri Megat : Ringgit Malaysia and sen respectively : Ordinary shares of the Company of RM0.10 each : Tan Sri Dato Seri Megat Najmuddin Bin Datuk Seri Dr. Hj. Megat Khas iii

5 contents LETTER TO THE SHAREHOLDERS ON THE PROPOSED MANDATE: PAGE 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED MANDATE 2.1 The Proposed Mandate Principal Activities of ISS Group Class, Nature and Estimated Aggregate Value of the Recurrent Related Party Transactions 3 3. RATIONALE AND BENEFITS FOR THE PROPOSED MANDATE REVIEW PROCEDURES STATEMENT BY AUDIT COMMITTEE CONDITION FOR THE PROPOSED MANDATE FINANCIAL EFFECTS INTERESTS OF THE DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM BOARD S RECOMMENDATION ANNUAL GENERAL MEETING FURTHER INFORMATION 13 APPENDIX I : FURTHER INFORMATION 14 EXTRACT RESOLUTION TO BE TABLED AS SPECIAL BUSINESS AT THE FORTHCOMING SIXTH ANNUAL GENERAL MEETING ENCLOSED

6 ISS CONSULTING SOLUTIONS BERHAD ( P) (Incorporated in Malaysia under the Companies Act, 1965) Registered Office: 16th Floor, Menara PanGlobal 8 Lorong P. Ramlee Kuala Lumpur 29 July 2011 Board of Directors Dato Hairuddin Bin Mohamed (Independent Non-Executive Chairman) Robin Lim Jin Hee (Executive Director and Chief Operating Officer) Neo Poh Lian (Executive Director) Wong Kit Leong (Independent Non-Executive Director) Au Yong Kam Weng (Independent Non-Executive Director) To: The Shareholders of ISS Consulting Solutions Berhad Dear Sir / Madam PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AND NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE 1. INTRODUCTION 1.1 At the Fifth AGM held on 23 June 2010, the shareholders of the Company approved, inter alia, the shareholders mandate for the Company and/or its subsidiaries to enter into Recurrent Related Party Transactions. The said mandates shall, in accordance with the Listing Requirements, expire at the conclusion of the forthcoming Sixth AGM of the Company, unless renewal is obtained. 1.2 In connection thereto, the Board of ISS had on 27 June 2011 announced its intention to seek shareholders approval for the Proposed Mandate. 1.3 The purpose of this Circular is to provide you with the relevant information on the Proposed Mandate and to seek your approval for the ordinary resolution to be tabled at the forthcoming Sixth AGM of the Company. The Notice of Sixth AGM is set out in the Annual Report The extract of ordinary resolution on the Proposed Mandate to be tabled at the ISS s Sixth AGM is enclosed together with this Circular. YOU ARE ADVISED TO READ THE CONTENTS OF THIS CIRCULAR, TOGETHER WITH THE APPENDIX CONTAINED HEREIN CAREFULLY BEFORE VOTING ON THE RESOLUTION TO GIVE EFFECT TO THE PROPOSED MANDATE. 2. DETAILS OF THE PROPOSED MANDATE 2.1 The Proposed Mandate Rule of the Listing Requirements stipulates the obligations of a listed corporation to comply with in relation to Related Party Transactions. However, pursuant to Rule 10.09(2) of the Listing Requirements, a listed corporation may seek a mandate from shareholders in respect of Recurrent Related Party Transactions, subject to the following :- 1

7 (a) the transactions are in the ordinary course of business and are on terms not more favourable to the Related Party than those generally available to the public; (b) (c) (d) (e) the shareholder mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholder mandate during the financial year where the aggregate value is equal to or more than the threshold prescribed under Rule 10.09(1) of the Listing Requirements. a circular to shareholders which includes information as may be prescribed by Bursa Securities is issued by the listed corporation for the shareholder mandate; in a meeting to obtain shareholder mandate, the interested Director, interested Major Shareholder or interested Person Connected with a Director or Major Shareholder; and where it involves the interest of an interested Person Connected with a Director or Major Shareholder, such Director or Major Shareholder, must not vote on the resolution to approve the transaction. An interested Director or interested Major Shareholder must ensure that Persons Connected with him abstain from voting on the resolution approving the transactions; and an immediate announcement is made to Bursa Securities when the actual value of a Recurrent Related Party Transaction entered into by the listed corporation, exceeds the estimated value of the Recurrent Related Party Transaction disclosed in the circular by 10% or more and the announcement must include the information as may be prescribed by Bursa Securities. Where a listed corporation has procured a shareholder mandate in respect of Recurrent Related Party Transactions, the provisions under Rule of the Listing Requirements will not apply to the Recurrent Related Party Transactions which are comprised in the said mandate. The Proposed Mandate, if approved by the shareholders of the Company at the forthcoming Sixth AGM, is subject to annual renewal and will continue to be in force until :- (a) (b) (c) the conclusion of the next AGM of the Company following the forthcoming Sixth AGM at which the Proposed Mandate is passed, at which time such mandate will lapse, unless by a resolution passed at the meeting, the authority for the Proposed Mandate is renewed; the expiration of the period, within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Act (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoke or varied by resolution passed by the shareholders in general meeting, whichever is the earlier. 2.2 Principal Activities of ISS Group ISS is principally involved in the business of investment holding whilst its subsidiaries are involved in the provision of integrated business solutions based on SAP software and in the business of providing networking solutions and managed services to both telecommunication and enterprise organisations. The principal activities of those subsidiary companies within the ISS Group which are transacting with the Related Parties are as follows :- Name of Company Effective equity interest % Principal Activities DGB Provision of computer networking solutions and system integration ISS (Malaysia) Provision of consultancy services for computer software solutions 2

8 2.3 Class, Nature and Estimated Aggregate Value of the Recurrent Related Party Transactions (a) The Recurrent Related Party Transactions which will be covered in the Proposed Renewal of Shareholders Mandate are identified in the table below :- Companies within the ISS Group transacting with the Related Parties DGB ISS (Malaysia) Nature of transactions Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (Malaysia) to FNS Related Party Interested Major Shareholders / Persons Connected FNS (1) Interested Major Shareholders FHB (14) FRB (15) Tan Sri Megat (16) Dato Mah (17) Estimated aggregate value during the validity period of the Proposed Renewal of Shareholders Mandate* Estimated aggregated value as disclosed in the preceding year s circular to shareholders dated 31 May 2010 ( Estimated Value ) Actual value transacted from 23 June 2010 (date of Fifth AGM) to Latest Practicable Date ( Actual Value ) 50,000,000 10,000,000 2,417,161 DGB ISS (Malaysia) Supply of computer hardware and services by FNS to DGB and ISS (Malaysia) Supply of computer hardware and services by FCS to DGB and ISS (Malaysia) Interested Persons 50,000,000 10,000, ,326 Connected with Major Shareholders - FRB (15) - Wong Pooi Lam (18) - Mah Siew Sian (19) FCS (2) - Lim Nicholas Ping (20) 7,500,000 5,000,000 Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (Malaysia) to FCS 7,500,000 10,000,000 3

9 Companies within the ISS Group transacting with the Related Parties DGB ISS (Malaysia) DGB ISS (Malaysia) Nature of transactions Supply of computer hardware and services by FSSB to DGB and ISS (Malaysia) Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (Malaysia) to FSSB Supply of computer hardware and services by ABS to DGB and ISS (Malaysia) Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (Malaysia) to ABS Related Party Interested Major Shareholders / Persons Connected FSSB (3) Interested Major Shareholders FHB (14) Estimated aggregate value during the validity period of the Proposed Renewal of Shareholders Mandate* Estimated aggregated value as disclosed in the preceding year s circular to shareholders dated 31 May 2010 ( Estimated Value ) Actual value transacted from 23 June 2010 (date of Fifth AGM) to Latest Practicable Date ( Actual Value ) 15,000,000 2,500,000 30,574 FRB (15) Tan Sri Megat (16) Dato Mah (17) Interested Persons Connected with Major Shareholders - FRB (15) - Wong Pooi Lam (18) - Mah Siew Sian (19) - Lim Nicholas Ping (20) 15,000,000 5,000,000 ABS (4) 10,000,000 2,500, ,999 10,000,000 5,000,000 4

10 Companies within the ISS Group transacting with the Related Parties DGB ISS (Malaysia) DGB ISS (Malaysia) Nature of transactions Supply of computer hardware and services by FST to DGB and ISS (Malaysia) Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (Malaysia) to FST Supply of computer hardware and services by CLS to DGB Supply of network and software solutions inclusive of technical / maintenance services by DGB to CLS Related Party Interested Major Shareholders / Persons Connected FST (5) Interested Major Shareholders FHB (14) Estimated aggregate value during the validity period of the Proposed Renewal of Shareholders Mandate* Estimated aggregated value as disclosed in the preceding year s circular to shareholders dated 31 May 2010 ( Estimated Value ) Actual value transacted from 23 June 2010 (date of Fifth AGM) to Latest Practicable Date ( Actual Value ) 5,000,000 2,500,000 27,709 FRB (15) Tan Sri Megat (16) Dato Mah (17) 5,000,000 2,500,000 Interested Persons Connected with Major Shareholders - FRB (15) - Wong Pooi Lam (18) - Mah Siew Sian (19) CLS (6) - Lim Nicholas Ping (20) 2,500,000 1,000,000 2,500,000 5

11 Companies within the ISS Group transacting with the Related Parties Nature of transactions DGB Supply of computer hardware and services by FMT to DGB Related Party Interested Major Shareholders / Persons Connected FMT (7) Interested Major Shareholders FHB (14) FRB (15) Estimated aggregate value during the validity period of the Proposed Renewal of Shareholders Mandate* Estimated aggregated value as disclosed in the preceding year s circular to shareholders dated 31 May 2010 ( Estimated Value ) Actual value transacted from 23 June 2010 (date of Fifth AGM) to Latest Practicable Date ( Actual Value ) 5,000,000 1,000,000 Supply of network and software solutions inclusive of technical / maintenance services by DGB to FMT ISS (Malaysia) Supply of computer hardware and services by FBS to ISS (Malaysia) Tan Sri Megat (16) Dato Mah (17) 5,000,000 14,500 Interested Persons Connected with Major Shareholders - FRB (15) FBS (8) - Wong Pooi Lam (18) 2,500,000 1,500,000 1,603,152 - Mah Siew Sian (19) - Lim Nicholas Ping (20) Supply of network and software solutions inclusive of technical / maintenance services by ISS (Malaysia) to FBS 2,500,000 Note : None of the Actual Value of the Recurrent Related Party Transactions has exceeded the Estimated Value by 10% or more. 6

12 (b) The Recurrent Related Party Transactions which will be covered in the Proposed New Shareholders Mandate are identified in the table below :- Companies within the ISS Group transacting with the Related Parties DGB ISS (Malaysia) Nature of transactions Related Party Interested Major Shareholders / Persons Connected Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (Malaysia) to FSTech FSTech (9) Interested Major Shareholders FHB (14) FRB (15) Tan Sri Megat (16) Estimated aggregate value during the validity period of the Proposed New Shareholders Mandate* 10,000,000 Supply of computer hardware and services by FSTech to DGB and ISS (Malaysia) Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (Malaysia) to FES Supply of computer hardware and services by FES to DGB and ISS (Malaysia) Dato Mah (17) 2,500,000 Interested Persons Connected with FES (10) Major Shareholders - FRB (15) 10,000,000 - Wong Pooi Lam (18) - Mah Siew Sian (19) - Lim Nicholas Ping (20) 2,500,000 Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (Malaysia) to CNA CNA (11) 50,000 Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (Malaysia) to FAS FAS (12) 5,000,000 Supply of computer hardware and services by FAS to DGB and ISS (Malaysia) 5,000,000 7

13 Companies within the ISS Group transacting with the Related Parties ISS (Malaysia) Supply of network and software solutions inclusive of technical / maintenance services by ISS (Malaysia) to CLS Nature of transactions Related Party Interested Major Shareholders / Persons Connected CLS (6) Interested Major Shareholders FHB (14) FRB (15) Tan Sri Megat (16) Estimated aggregate value during the validity period of the Proposed New Shareholders Mandate* 2,500,000 Supply of computer hardware and services by CLS to ISS (Malaysia) Supply of network and software solutions inclusive of technical / maintenance services by ISS (Malaysia) to FMT Supply of computer hardware and services by FMT to ISS (Malaysia) Dato Mah (17) 2,500,000 Interested Persons Connected with FMT (7) Major Shareholders - FRB (15) 2,500,000 - Wong Pooi Lam (18) - Mah Siew Sian (19) - Lim Nicholas Ping (20) 2,500,000 DGB Supply of computer hardware and services by FBS to DGB FBS (8) 2,500,000 Suply of network and software solutions inclusive of technical / maintenance services by DGB to FBS 2,500,000 DGB ISS (Malaysia) Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (Malaysia) to Bukit Jalil Development Sdn Bhd ( BJD ) BJD (13) 50,000,000 * This comprises estimated value of transactions from the date of the forthcoming Sixth AGM to the date of the next AGM expected to be held in the month of September The estimated value is based on information available at the point of estimation. Due to the nature of the transactions, the actual value of the transactions may vary from the estimated aggregate value disclosed above. 8

14 Notes :- (1) DGB and ISS (Malaysia) are related parties to FNS through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. FNS is principally involved in the provision of information technology services in terms of hardware, software, consultancy and maintenance to telecommunications, oil and gas and government sectors. (2) DGB and ISS (Malaysia) are related parties to FCS through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. FCS is principally involved in the provision of computer technology and maintenance of computer hardware and software. (3) DGB and ISS (Malaysia) are related parties to FSSB through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. FSSB is principally engaged in the distribution and maintenance of computer hardware and software. (4) DGB and ISS (Malaysia) are related parties to ABS through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. ABS is principally engaged in the distribution and maintenance of computer equipment and software. (5) DGB and ISS (Malaysia) are related parties to FST through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. FST is principally engaged in the distribution and maintenance of computer hardware and software. (6) DGB and ISS (Malaysia) are related parties to CLS through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. CLS is principally engaged in the development of standard application packages and the provision of turnkey solution development services. (7) DGB and ISS (Malaysia) are related parties to FMT through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. FMT is principally involved in the provision of solutions and services to multimedia industry focusing on the broadcasting and production industry. (8) DGB and ISS (Malaysia) are related parties to FBS through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. FBS is principally engaged in the development of application software, system integration services and the provision of hardware and software maintenance services. (9) DGB and ISS (Malaysia) are related parties to FSTech through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. FSTech is principally involved in the development of application software, system integration services and the provision of hardware and software maintenance services. (10) DGB and ISS (Malaysia) are related parties to FES through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. FES is principally involved in the development of application software, system integration services and the provision of hardware and software maintenance services. (11) DGB and ISS (Malaysia) are related parties to CNA through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. CNA is principally involved in the provision of data communication, networking, integration of computer systems and maintenance support for related activities. (12) DGB and ISS (Malaysia) are related parties to FAS through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. FAS is principally involved in the provision of computer technology and maintenance of computer hardware and software. 9

15 (13) DGB and ISS (Malaysia) are related parties to BJD through a common ultimate Major Shareholder, FRB. Tan Sri Megat and Dato Mah are deemed interested by virtue of their major shareholdings in FRB. BJD is a 70% owned subsidiary of Ho Hup Construction Company Berhad which in turn is a 20.59% associated company FHB and which in turn is a wholly-owned subsidiary of FRB. The principal activity of BJD is property development. (14) FHB is the holding company of FNS, FCS, FSSB, CLS and FMT and the penultimate holding company of DGB and ISS (Malaysia). DGB and ISS (Malaysia) are related parties to FNS, FCS, FSSB, CLS and FMT through a common Major Shareholder, FHB. (15) FRB is the ultimate major shareholder of DGB and ISS (Malaysia) and the Related Parties. FRB is also a Person Connected with Tan Sri Megat and Dato Mah. DGB and ISS (Malaysia) are related parties to FNS, FCS, FSSB, ABS, FST, CLS, FMT, FBS, FSTech, FES, CNA, FAS and BJD through a common ultimate Major Shareholder, FRB. (16) Tan Sri Megat is the Non-Executive Chairman of FRB. He is also a Major Shareholder of FRB by virtue of his direct interest in FRB. By virtue of his interests in FRB, Tan Sri Megat is deemed interested in the shares of FRB s subsidiary companies to the extent these companies have an interest. Tan Sri Megat s direct and indirect interests in FRB and ISS as at 30 June 2011 are set out below:- FRB ISS Direct % of Interest Indirect (a) (a) Deemed interested by virtue of his interest in FRB pursuant to Section 6A of the Act. (17) Dato Mah is the Executive Vice Chairman and Chief Executive Officer of FRB. He is also a Major Shareholder of FRB. Dato Mah s direct and indirect interests in FRB and ISS as at 30 June 2011 are set out below:- FRB ISS Direct % of Interest Indirect (18) Wong Pooi Lam is the spouse of Dato Mah s brother, Mah Siew Sian. She is also a non-executive director of FRB. (19) Mah Siew Sian is a brother of Dato Mah. (20) Lim Nicholas Ping is a brother-in-law of Dato Mah. The terms of transactions were based on an arm s length basis and on normal commercial terms and on terms not more favourable to the Related Parties than those generally available to the public and not detrimental to the minority shareholders of the Company. Due consideration based on prevailing market rates under usual commercial terms, business practices and policies or otherwise in accordance with other applicable industry norms was given to price, payment, quality, delivery and service in order to maximise benefits for the transactions. 3. RATIONALE AND BENEFITS FOR THE PROPOSED MANDATE The Recurrent Related Party Transactions entered into or to be entered into by the Group are in the ordinary course of business and intended to meet the business needs of the Group at the best possible terms so as to achieve synergistic benefits within the Group. These transactions are likely to occur with some degree of frequency and may be constrained by the time-sensitive nature and confidentiality of such transactions, thus rendering it impractical to seek shareholders approval on a case by case basis before entering into such transactions. 10

16 By obtaining the Proposed Mandate on an annual basis, the necessity to convene separate general meetings from time to time to seek shareholders approval as and when such Recurrent Related Party Transactions occur would not arise. This would substantially reduce the time, administrative requirements, and expenses associated with the convening of such meetings, without compromising the corporate objectives of the Group or adversely affecting the business opportunities available to the Group. The Related Parties which are involved in the Recurrent Related Party Transactions have proven their reliability and expertise in their respective fields. In certain instances, the Related Parties provide the Group the support for its operational needs, thereby enabling greater efficiency and effectiveness in the utilisation of the Group s resources. 4. REVIEW PROCEDURES To ensure that the Recurrent Related Party Transactions are undertaken on transaction prices and terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders and that they are conducted at arm s length and on normal commercial terms consistent with the Group s usual business practices and policies and will not be prejudicial to the shareholders, the Board will ensure that all transactions with Related Parties will only be entered into after taking into consideration the pricing, level and quality of products and support services. The Board has established the following review procedures which are to be carried out for each Recurrent Related Party Transactions : (a) Records will be maintained by the Company to capture all Recurrent Related Party Transactions entered into pursuant to the Proposed Mandate to ensure that relevant approvals have been obtained and review procedures in respect of such transactions are adhered to. (b) On periodic basis, the procedures and guidelines pertaining to Recurrent Related Party Transactions will be reviewed by the Senior Management of ISS and the Audit Committee to ensure that the terms of the transactions are not more favourable to the Related Parties than those generally available to the public, and are not to the detriment of the minority shareholders. (c) The annual internal audit plan shall incorporate a review of all Recurrent Related Party Transactions to ensure that the relevant approvals have been obtained and the review procedures in respect of such transactions are adhered to. Should any discrepancies arise relating to the procedures and guidelines, proper steps would be taken to rectify them accordingly. The external auditors shall also review all Recurrent Related Party Transactions as part of their work scope. (d) The Board and the Audit Committee shall review the internal audit reports to ascertain that the guidelines and procedures established to monitor Recurrent Related Party Transactions have been complied with. The review shall be done annually. (e) Where any person(s) has an interest in the Recurrent Related Party Transactions to be reviewed, such person(s) shall abstain from deliberation and voting in respect of such transactions. (f) Disclosure shall be made in the annual report of a breakdown of the aggregate value of all transactions conducted pursuant to the Proposed Mandate during the financial year and in the annual reports for the subsequent financial years during which the shareholders mandate remains in force. In making such disclosure, a breakdown will be provided of the aggregate value of the Recurrent Related Party Transactions conducted pursuant to the Proposed Mandate during the current financial year, amongst others, based on the following:- (i) the type of the Recurrent Related Party Transactions made; and (ii) the names of the Related Parties involved in each type of Recurrent Related Party Transactions and their relationship with the ISS Group. 11

17 There are no thresholds for approval of Recurrent Related Party Transactions within the ISS Group. However, all Recurrent Related Party Transactions are subject to the approval of any one of the directors of the respective companies. At least 2 other contemporaneous transactions with unrelated third 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 third parties for the same or substantially similar type of products/services and/or quantities. Where quotation or comparative pricing from unrelated third parties cannot be obtained, the transaction price will be determined by the ISS Group based on the prevailing market rates / prices that are agreed upon under similar commercial terms for transactions with third parties, business practices and on terms which are generally in line with industry norms to ensure that the Recurrent Related Party Transaction is not detrimental to the ISS Group. 5. STATEMENT BY AUDIT COMMITTEE The Audit Committee of the Company has reviewed the procedures mentioned in section 4 above and is of the view that the said procedures are sufficient to ensure that the Recurrent Related Party Transactions are not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders. The ISS Group has in place adequate procedures and processes to monitor, track and identify Recurrent Related Party Transactions in a timely and orderly manner. These procedures and processes will be reviewed annually or as and when necessary. 6. CONDITION FOR THE PROPOSED MANDATE The Proposed Mandate is conditional upon approval being obtained from the shareholders of ISS at the forthcoming Sixth AGM. 7. FINANCIAL EFFECTS The Proposed Mandate does not have any effect on the issued and paid-up share capital and Major Shareholders shareholdings of ISS and is not expected to have any material effect on the consolidated earnings and NA of ISS. 8. INTERESTS OF THE DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM The direct and indirect shareholdings of the interested Major Shareholders, namely Tan Sri Megat, Dato Mah, FRB and FHB ( Interested Major Shareholders ) and interested Persons Connected with the Major Shareholders, namely Wong Pooi Lam, Mah Siew Sian and Lim Nicholas Ping ( Interested Persons Connected ) in the Company as at Latest Practicable Date are set out below:- Interested Major Shareholders Tan Sri Megat Dato Mah FRB FHB Direct Indirect No. of Shares % No. of Shares % 24,895,639 20,776, ,282, ,282,401 (1) 808,282,401 (2)

18 Interested Persons Connected Wong Pooi Lam Mah Siew Sian Lim Nicholas Ping Direct Indirect No. of Shares % No. of Shares % 1 500, ,911 * Notes : (1) Deemed interest by virtue of his substantial shareholding in FRB, the holding company of FHB pursuant to Section 6A of the Act. (2) Deemed interest by virtue of FHB being a wholly-owned subsidiary of FRB pursuant to Section 6A of the Act. * Negligible. The interested Major Shareholders and Interested Persons Connected will abstain from voting in respect of their direct and indirect interest on the Proposed Mandate at the forthcoming Sixth AGM. In addition, the Interested Major Shareholders have undertaken that they will ensure that Persons Connected with them will abstain and continue to abstain from voting on the resolution, deliberating or approving the Proposed Mandate at the forthcoming Sixth AGM. Save as aforesaid, none of the other Directors or Major Shareholder or Persons Connected with them has any interest direct or indirect in the Proposed Mandate. 9. BOARD S RECOMMENDATION The Board having considered all aspects of the Proposed Mandate, is of the opinion that the Proposed Mandate is in the best interest of the Company and its shareholders and accordingly, recommends that you vote in favour of the ordinary resolution pertaining to the Proposed Mandate to be tabled at the forthcoming Sixth AGM. 10. ANNUAL GENERAL MEETING The Notice of Sixth AGM to consider and if thought fit, pass the ordinary resolution pertaining to the Proposed Mandate as set out herein is also enclosed in the Annual Report The Sixth AGM will be held on Saturday, 10 September 2011 at a.m. at Banquet Hall, The Royal Selangor Golf Club, Jalan Kelab Golf, Off Jalan Tun Razak, Kuala Lumpur. If you are unable to attend and vote in person at the Sixth AGM and wish to appoint a proxy to attend and vote in your stead, you are requested to complete, sign and return the Form of Proxy in accordance with the instructions contained therein as soon as possible and in any event so as to arrive at the Company s Registered Office at 16th Floor, Menara PanGlobal, 8 Lorong P. Ramlee, Kuala Lumpur not less than 48 hours before the time for the Sixth AGM. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the Sixth AGM should you subsequently wish to do so. 11. FURTHER INFORMATION Shareholders of ISS are advised to refer to the attached Appendix I for further information. Yours faithfully, For and on behalf of the Board of ISS CONSULTING SOLUTIONS BERHAD Dato Hairuddin bin Mohamed Independent Non-Executive Chairman 13

19 Further Information APPENDIX I 1. RESPONSIBILITY STATEMENT This Circular has been seen and approved by the Board of ISS who collectively and individually accept full responsibility for the accuracy and correctness of the information contained herein and confirm that, after making all reasonable enquiries and to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement in this Circular false or misleading. 2. MATERIAL LITIGATION Save as disclosed below, the ISS Group is not involved in any material litigation, claims or arbitration, either as plaintiff or defendant, and the Board is not aware of any proceedings pending or threatened against the Group or of any facts likely to give rise to any proceedings which may materially and adversely affect the business or the financial position of the Group: (a) Subordinate Court of the Republic of Singapore (MC Suit No. 530 of 2011/D) : Wills Consulting Pte Ltd (Plaintiff) v. Ledge Consulting Pte Ltd (Defendant) And Ledge Consulting Pte Ltd (Plaintiff in Counterclaim) v. 1) Wills Consulting Pte Ltd and 2) William Toh Geok Kim (Defendants in Counterclaim) On 20 May 2009, Wills Consulting Pte Ltd ( Wills ) had entered into an agreement with Ledge Consulting Pte Ltd ( Ledge ), a wholly-owned subsidiary of ISS, which is in turn an indirectly held subsidiary, via a letter of offer wherein Wills was engaged to provide consulting services ( Services ) to Ledge s customers. On 7 January 2011, Wills filed a claim claiming for the sum of SGD64,000, being the outstanding payment for its Services which had yet to be paid by Ledge. This claim was disputed by Ledge and on 22 February 2011, Ledge filed a Defence and Counterclaim in defence of Wills claim and counter-claiming that Wills, being the alter ego of William Toh Geok Kim ( Toh ), had breached the agreement by failing to deliver the Services in a satisfactory manner within the agreed timeframe. As a result of Wills and/or Toh s failure, Ledge sustained loss and damage. Ledge s counterclaim for loss and damage due to Wills and/or Toh s breach is as follows:- a) the sum of SGD1,472, together with interest at the rate of 5.33% per annum from the date of issue of the counterclaim to the date of judgment or payment; or b) alternatively, the sum of SGD698, with interest at the rate of 5.33% per annum from date of issue of the counterclaim to the date of judgment or payment; and c) costs. As the amount of the claim has exceeded the jurisdiction of the Magistrates Court, Ledge has successfully applied to transfer the case to the High Court of the Republic of Singapore. The legal counsels engaged for the matter are of the opinion that Ledge has a basis for defending the claim and making the counterclaim. (b) Arbitration Proceedings by ISS Consulting (M) Sdn Bhd against TSH Resources Berhad ISS (M) has served a Notice of Arbitration dated 2 June 2011 on TSH Resources Berhad ( the Respondent ) under the Arbitration Act 2005 in the Regional Centre for Arbitration at Kuala Lumpur ( Arbitration ). The amount claimed is as follows : a) the following special damages: i) outstanding sums of RM1,770, pursuant to invoices issued; ii) outstanding costs on a time and material basis amounting to RM2,193,148.56; iii) air travel, visa applications and accommodation amounting to RM87,403.00; b) further or alternatively general damages for ISS (M) s losses and damages; c) interest on the damages and/or sums awarded at such rate and for such period as deemed fit and just by the Arbitrators; and d) legal costs and costs of the arbitration proceedings to be borne by the Respondent. 14

20 The Arbitration is based on the outstanding claims due and owing to ISS (M) by the Respondent, including but not limited to monies due and owing in respect of outstanding invoices for works and/or services done and/or rendered, and expenses incurred by ISS (M) pursuant to the Master Consultancy Services Agreement dated 15 February 2008 and the Supplemental Agreement dated 2 October 2009 entered into between ISS (M) and the Respondent which have been terminated by the mutual consent of both parties. The legal counsels for the matter are of the opinion that ISS (M) has a fair chance of success based on the instructions obtained. 3 MATERIAL CONTRACTS Save as disclosed below, the ISS Group has not entered into any material contracts (not being contracts entered into in the ordinary course of business) within the past two (2) years immediately preceding the date of this Circular:- (a) On 12 October 2009, FHB together with Mr Lau Chi Chiang ( LCC ) and Mr Robin Lim Jin Hee ( RLJH ) as vendors (collectively, the Vendors ) entered into a conditional Share Sale Agreement ( SSA ) with ISS for the disposal of the entire equity interest held by the Vendors in Diversified Gateway Berhad ( DGB ) comprising 630,000 ordinary shares of RM1.00 each in DGB ( Sale Shares ) for a total sale consideration of RM110,000,000 ( Sale Consideration ), which was satisfied by the issuance of 1,100,000,000 new ordinary shares of RM0.10 each in ISS ( ISS Shares ) at an issue price of RM0.10 per ISS Share ( Consideration Shares ), as follows: No. of % of equity No. of DGB % of equity Consideration interest in ISS shares interest in Sale Shares after the Vendor disposed DGB Consideration received disposal RM FHB 567, ,000, ,000, LCC 37, ,600,000 66,000, RLJH 25, ,400,000 44,000, , ,000,000 1,100,000, (b) Pursuant to a letter dated 26 November 2009, DGB agreed to make an inter-company short term advance of RM3,000,000 to FRB ( Advance ), the holding company of FHB, for the settlement by FRB of the first principal repayment of the existing RM80,000,000 Murabahah Underwritten Notes Issuance Facility of FRB or for such other corporate purposes of FRB. Interest at the rate of 2% per annum above the prevailing base lending rate of Malayan Banking Berhad is payable by FRB on the Advance. The Advance together with all interest accrued thereon had been paid to DGB on 26 March DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents may be inspected at our registered office at 16th Floor, Menara PanGlobal, 8 Lorong P. Ramlee, Kuala Lumpur, during office hours from Mondays to Fridays (except public holidays) from the date of this Circular until the date of the Sixth AGM:- (a) Memorandum and Articles of Association of ISS; (b) The audited consolidated financial statements of ISS for the past two (2) financial year/period ended 31 December 2009 and 31 March 2011; and (c) The relevant cause papers in respect of the material litigation referred to in Section 2 above; and (d) The material contracts referred to in Section 3 above. 15

21 ISS CONSULTING SOLUTIONS BERHAD ( P) (Incorporated in Malaysia under the Companies Act, 1965) EXTRACT RESOLUTION TO BE TABLED AS SPECIAL BUSINESS AT THE FORTHCOMING SIXTH ANNUAL GENERAL MEETING ORDINARY RESOLUTION PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AND NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE THAT the Company and/or its subsidiaries be and is/are hereby authorised to enter into recurrent related party transactions from time to time with Related Parties who may be a Director, a Major Shareholder of the Company and/or its subsidiaries or a person connected with such a Director or Major shareholder, as specified in section 2.3 of the Circular to Shareholders dated 29 July 2011 subject to the following:- i) the transactions are of a revenue or trading in nature which are necessary for the day-to-day operations of the Company and/or its subsidiaries and are transacted on terms consistent or comparable with market or normal trade practices and/ or based on normal commercial terms and on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders; and ii) disclosure is made in the annual report of the aggregate value of transactions conducted during the financial year pursuant to the shareholders mandate in accordance with the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad. THAT the mandate given by the shareholders of the Company shall only continue to be in force until the conclusion of the next Annual General Meeting of the Company or the expiry of the period within which the next Annual General Meeting is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act ) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); unless revoked or varied by Ordinary Resolution of the shareholders of the Company in general meeting, whichever is the earlier; AND THAT the Directors for the Company be authorised to complete and do such acts and things as they may consider expedient or necessary to give effect to the shareholders mandate.

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