SAUDEE GROUP BERHAD (Company No P) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE

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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. Bursa Malaysia Securities Berhad ( Bursa Securities ) has not perused 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. SAUDEE GROUP BERHAD (Company No P) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE AND NOTICE OF EXTRAORDINARY GENERAL MEETING The Notice of the Extraordinary General Meeting ( EGM ) of our Company to be held at Mahkota 4 Hall, Sungai Petani Inn, 427 Jalan Kolam Air, Sungai Petani, Kedah on Thursday, 28 December 2017 at a.m., or immediately after the conclusion or adjournment (as the case may be) of the Ninth (9 th ) Annual General Meeting of the Company to be held at the same venue and on the same day at 9.00 a.m., whichever is the later or at any adjournment thereof, together with the Proxy Form, are enclosed herewith in this Circular. If you decide to appoint a proxy or proxies for the EGM, you must complete and lodge the Proxy Form for the EGM at the Company s registered office at 39 Salween Road, Georgetown, Penang, not less than forty-eight (48) hours before the time appointed for holding the EGM or at any adjournment thereof. The lodging of the Proxy Form for the EGM will not preclude you from attending and voting in person at the meeting should you subsequently decide to do so. Last date and time for lodging the Proxy Form: Tuesday, 26 December 2017 at a.m. Date and time of the EGM : Thursday, 28 December 2017 at a.m. This Circular is dated 12 December 2017

2 DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout this Circular:- Act Companies Act, 2016 Board The Board of Directors of Saudee Bursa Securities Bursa Malaysia Securities Berhad ( W) Director A natural person who holds a directorship in the Company, whether in an executive or non-executive capacity, and shall have the meaning of Section 2(1) of the Capital Markets and Services Act 2007 EGM Extraordinary General Meeting HSMSB Hokubee Saudee (M) Sdn Bhd ( D) Kin Ryu Kin Ryu Enterprise Co.,Ltd ( ) Latest Practicable Date/LPD 24 November 2017, being the latest practicable date prior to printing of this Circular Main Market Main Market of Bursa Securities Main LR Main Market Listing Requirements of Bursa Securities and all amendments thereto Major Shareholder A person who has an interest or interests in one or more voting shares in the Company and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is Nutriveg Nutriveg Sdn Bhd ( D) (a) 10% or more of the aggregate of the nominal amounts of all the voting shares in the Company; or (b) 5% or more of the aggregate of the nominal amounts of all the voting shares in the Company where such person is the largest shareholder of the Company. For the purpose of this definition, interest in shares has the meaning given in Section 8 of the Act. This includes any person who is or was within the preceding six (6) months of the date on which the terms of the transaction were agreed upon, a major shareholder of the Company as defined above or any other corporation which is its subsidiary or holding company Person(s) Connected In relation to a director or a major shareholder, means such person who falls under any one of the following categories:- (a) a family* member of the director or major shareholder; i

3 DEFINITIONS (Cont d) (b) (c) (d) (e) a trustee of a trust (other than a trustee for a share scheme for employees or pension scheme) under which the director, major shareholder or a family member of the director or major shareholder is the sole beneficiary; a partner # of the director, major shareholder or a partner of a person connected with that director or major shareholder; a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the director or major shareholder; a person in accordance with whose directions, instructions or wishes the director or major shareholder is accustomed or is under an obligation, whether formal or informal, to act; (f) 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) (h) (i) a body corporate or its directors whose directions, instructions or wishes the director or major shareholder is accustomed or under an obligation, whether formal or informal, to act; a body corporate in which the director, major shareholder or persons connected with him are entitled to exercise, or control the exercise of, not less than 15% of the votes attached to voting shares in the body corporate; or a body corporate which is a related corporation. Notes:- * Family in relation to a person means such person who falls within any one of the following categories:- (i) (ii) (iii) (iv) (v) spouse; parent; child including an adopted child and step-child; brother or sister; and spouse of the persons referred to in subparagraphs (iii) and (iv) above. # Partner in relation to a director, major shareholder or a person connected with the director or major shareholder, means such person who falls within any one of the following categories:- (i) (ii) a person with whom the director, major shareholder or person connected with the director or major shareholder, is in or proposes to enter into partnership with. Partnership for this purpose has the meaning given in Section 3 of the Partnership Act 1961; and a person with whom the director, major shareholder or person connected with a director or major shareholder has entered or proposes to enter into a joint venture, whether incorporated or not. ii

4 DEFINITIONS (Cont d) Master Master Frozen Product Sdn Bhd ( D) Proposed Shareholders Mandate Proposed new Shareholders Mandate for the Saudee Group to enter into RRPT with a Related Party which are necessary for the day-to-day operations and are in the ordinary course of business of the Saudee Group PSSB Perusahaan Saudee Sdn Bhd ( U) RRPT Recurrent related party transaction(s) of a revenue or trading nature with a Related Party and which are necessary for the dayto-day operations and are in the ordinary course of business of the Saudee Group and are on terms not more favourable to the Related Party than those generally available to the public Related Party (ies) Any Director, Major Shareholder or Person Connected with such Director or Major Shareholder RM and sen Ringgit Malaysia and sen respectively Saudee or the Company Saudee Group Berhad ( P) Saudee Group or the Group Saudee and its subsidiaries SCSSB Sima Saudi Cold Storage Sdn Bhd ( U) Sima Frozen Products Sdn Bhd ( M) Share(s) Ordinary share(s) in Saudee Sunwish Sunwish Venture Sdn Bhd ( D) WSSB Wide Symbol Sdn Bhd ( X) THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK iii

5 TABLE OF CONTENTS Page LETTER FROM THE BOARD TO SHAREHOLDERS CONTAINING:- 1. INTRODUCTION THE PROPOSED SHAREHOLDERS MANDATE Provisions under the Main LR Principal Activities of Saudee Group Principal Activity of the other Related Transacting Party Information on the Related Party and Nature of the RRPT Outstanding RRPT Receivables Review Procedures or Methods for RRPT Statement by the Audit Committee RATIONALE AND BENEFITS FOR THE PROPOSED SHAREHOLDERS MANDATE EFFECTS OF THE PROPOSED SHAREHOLDERS MANDATE DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS CONDITIONS TO THE PROPOSED SHAREHOLDERS MANDATE DIRECTORS' RECOMMENDATION EGM FURTHER INFORMATION... 6 APPENDIX APPENDIX I FURTHER INFORMATION... 7 NOTICE OF EGM...Enclosed PROXY FORM...Enclosed iv

6 SAUDEE GROUP BERHAD (Company No P) (Incorporated in Malaysia) Registered Office: 39, Salween Road, Georgetown, Penang Board of Directors: 12 December 2017 Khoo Lay Tatt (Executive Chairman) Tan Khang Khim (Managing Director) Low Ai Choo (Executive Director) Sim Yee Fuan (Senior Independent Non-Executive Director) Ustaz Abdul Hamid Bin Sulaiman (Independent Non-Executive Director) Koay San San (Independent Non-Executive Director) To: The Shareholders of Saudee Dear Sir/ Madam, PROPOSED NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE 1. INTRODUCTION On 21 November 2017, the Board had announced to Bursa Securities that the Company proposed to seek shareholders mandate for the Recurrent Related Party Transactions. The purpose of this Circular is to provide the shareholders with the relevant information on the Proposed Shareholders Mandate and to seek your approval for the ordinary resolution pertaining to the Proposed Shareholders Mandate to be tabled at the forthcoming EGM. The Notice and the Proxy Form are enclosed in this Circular. YOU ARE ADVISED TO READ AND CAREFULLY CONSIDER THE CONTENTS OF THIS CIRCULAR TOGETHER WITH THE APPENDIX CONTAINED HEREIN BEFORE VOTING ON THE ORDINARY RESOLUTION IN RELATION TO THE PROPOSED SHAREHOLDERS MANDATE TO BE TABLED AT THE FORTHCOMING EGM. 2. THE PROPOSED SHAREHOLDERS MANDATE 2.1 Paragraph of Chapter 10 of the Main LR and Paragraph of Practice Note 12 in relation to the RRPT Pursuant to Paragraph of the Main LR, a listed corporation may seek a mandate from its shareholders for RRPT subject to the following:- (i) 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; 1

7 (ii) (iii) (iv) (v) the shareholders mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders mandate during the financial year where the aggregate value is equal to or more than the threshold under Paragraph 10.09(1) of the Main LR; the listed corporation s circular to shareholders for the shareholders mandate includes the information as may be prescribed by the Bursa Securities; in a meeting to obtain a shareholders 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 transactions. An interested Director or interested Major Shareholder must ensure that Persons Connected with him abstain from voting on the resolution approving the transactions; and the listed corporation immediately announces to the Bursa Securities when the actual value of a RRPT entered into by the listed corporation, exceeds the estimated value of the RRPT disclosed in the circular by 10% or more and the announcement must include the information as may be prescribed by the Bursa Securities. Transactions entered into between the listed issuer (or any of its wholly-owned subsidiaries) and its wholly-owned subsidiaries are excluded from the requirements of Chapter 10 of the Main LR. Paragraph of Practice Note 12 states that the shareholders mandate is subject to annual renewal and any authority conferred by a shareholder mandate will only continue to be in force until - (i) (ii) (iii) the conclusion of the first annual general meeting of the listed issuer following the general meeting at which such mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; the expiration of the period within which the next annual general meeting after the date it is required to be held pursuant to Section 340(2) of the Act (but must not extend to such extension as may be allowed pursuant to Section 340(2) of the Act); or revoked or varied by resolution passed by the shareholders in general meeting; whichever is the earlier. Paragraph of Practice Note 12 further states that in making the disclosure of the aggregate value of RRPT conducted pursuant to the shareholders mandate in a listed issuer s annual report, a listed issuer must provide breakdown of the aggregate value of the RRPT made during the financial year, amongst others, based on the following information: (a) (b) the type of the RRPT made; and the names of the related parties involved in each type of the RRPT made and their relationship with the listed issuer. Accordingly, the Company proposes to seek the approval from the shareholders for the Proposed Shareholders Mandate as set out in Section 2.4 for the Saudee Group to enter into transactions with Related Parties which are of a revenue or trading nature and necessary for its day-to-day operations, on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the Company s minority shareholders. 2

8 2.2 Principal Activities of Saudee Group Saudee is principally an investment holding company while the principal activities of its subsidiaries are as follows:- Subsidiaries/ Associate Subsidiaries % Equity Interest Principal Activities SCSSB 100 Wholesaler and dealer of fresh and frozen foods PSSB 100 Manufacturer and dealer of processed poultry, beef products, frozen foods and bakery products Nutriveg 100 Inactive Sunwish 100 Property Development Associate of PSSB HSMSB 39 Distributor of beef product and frozen food 2.3 The Principal Activities of the other related transacting parties The principal activities of the other related transacting parties which are not part of Saudee Group that are involved in the RRPT with the Saudee Group are set out below:- Other transacting parties Place of incorporation Principal activities Sima Malaysia Trading of frozen food products, packaging and freezing of raw and frozen foods Kin Ryu Cambodia Wholesale of food, beverage and daily products Master Malaysia Distribution and wholesale of all kinds of ice-cream and frozen food stuff 2.4 Information on the Related Party and Nature of the RRPT The details of the RRPT and their estimated values for which approval is sought at the forthcoming EGM of the Company pursuant to the Proposed Shareholders Mandate set out below: Saudee Group Transacting Parties Related Party Interested Related Parties Nature of the RRPT Estimated Value from the forthcoming EGM to the next AGM (2) (RM 000) SCSSB Master Tan Khang Chang (1) SCSSB Sima Tan Khang Sale of goods to Sima Chang (1) Sale of goods to Master 1,000 3,000 PSSB Sima Tan Khang Chang (1) Purchase of raw materials from Sima 1,000 PSSB Kin Ryu Tan Khang Khim (2) Sale of goods to Kin Ryu 3,000 8,000 3

9 Notes: (1) Tan Khang Chang, a Director and substantial shareholder of Master and Sima, is the brother of Tan Khang Khim, the Managing Director and substantial shareholder of Saudee (2) Tan Khang Khim, the Managing Director and substantial shareholder of Saudee is also the substantial shareholder of Kin Ryu (3) The estimated values of the transactions are based on information available at the point of estimation and taking into account the management s forecasts on transaction values which have been undertaken and anticipated. Due to the nature of the transactions, the actual value of transactions may vary from the estimated values disclosed above. Disclosure will be made in the next annual report of the Company on the actual value of transactions conducted. The above transactions are necessary for the Saudee Group s day-to-day operations and 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 and are not to the detrimental of the minority shareholders of the Saudee Group. 2.5 Outstanding RRPT Receivables As at 31 October 2017, there is no outstanding amount due and owing to Saudee Group arising from RRPT which has exceeded the credit term. 2.6 Review Procedures or Methods for RRPT The Saudee Group has established the following procedures or methods for the RRPT to ensure that the RRPT are undertaken on transaction prices on an arm s length basis and on normal commercial terms that are consistent with the Group s usual business practices and policies, which are not on terms that are more favourable to the Related Parties than those extended to the public and are not to the detriment of the Company s minority shareholders:- (i) (ii) (iii) (iv) (v) The Group will ensure that the transactions with the Related Parties will only be entered into after taking into account the pricing, quality of product and other related factors such as availability of stock. At least two other contemporaneous transactions with unrelated 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. In the event that quotation or comparative pricing from unrelated third parties cannot be obtained, the transaction price will be based on the usual business practices of the Group on terms not more favourable to the Related Parties than those generally available to the public to ensure that the RRPT is not detrimental to the interest of minority shareholders; There is no specific threshold for approval of the RRPT within the Group. However, all RRPT will be reviewed and authorised by the Chief Finance Officer and any one (1) of the Executive Directors of the Company, provided always that such personnel has no interest (direct or indirect) in the RRPT and the RRPT have been approved pursuant to the shareholders approval of the RRPT in the general meetings; A list of related parties shall be circulated within the Group from time to time for reference and at the same time, the related party will be notified to ensure that all RRPT are undertaken in accordance with the policies; A register will be maintained by the Company to record all the RRPT which are entered into pursuant to the Proposed Shareholders Mandate; The Board and Audit Committee shall review the RRPT reports to ascertain that the guidelines and procedures established for monitoring the RRPT have been complied with; 4

10 (vi) (vii) (viii) (ix) The Audit Committee has and shall continuously review the adequacy and appropriateness of the procedures, as and when required, with the authority to subdelegate to individuals or committee within the Company as they deem appropriate; In the review of the RRPT, the Audit Committee may, as they deem fit, request for additional information pertaining to the transactions from independent sources and advisers; If a member of the Board or Audit Committee has an interest whether direct or indirect in the RRPT, he/she will abstain from any decision-making by the Board or Audit Committee in respect of such transactions and continue to abstain from voting on the resolution approving the transactions; and Disclosure will be made in the annual report of the Company of the breakdown of the aggregate value of the RRPT conducted pursuant to the Proposed Shareholders Mandate during the financial year, amongst others, based on the type of the RRPT made, the name of the Related Parties involved and their relationship with the Company, for so long as the Proposed Shareholders Mandate remains in force in accordance with Paragraph of Guidance Note 8 of the Main LR. 2.7 Statement by the Audit Committee The Audit Committee of the Company has seen and reviewed the procedures mentioned in Section 2.6 above and is of the view that the said review procedures are sufficient to ensure that the RRPT are not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the Company s minority shareholders. The Audit Committee is also of the view that the Saudee Group has in place adequate procedures and processes to monitor, track and identify RRPT in a timely and orderly manner. The Audit Committee reviews these procedures and processes as and when required. 3. RATIONALE AND BENEFITS FOR THE PROPOSED SHAREHOLDERS MANDATE The RRPT are in the ordinary course of business of the Group and are undertaken at arm s length on normal commercial terms and on terms not more favourable to the Related Parties than those generally available to the public. They are likely to occur to some degree of frequency and arise at any time and from time to time. The RRPT, subject to annual review, will enhance the ability of the Group to pursue business opportunities which are time-sensitive in nature and will eliminate the need for Saudee to announce and convene separate general meetings on each occasion to seek prior approval of the shareholders of the Company for the RRPT. This will substantially reduce the expenses associated with convening general meetings on an ad hoc basis, improve administrative efficiency considerably and allow resources and time to be channelled towards attaining corporate objectives. The Group should have access to all available markets, including the Related Parties. The RRPT are intended to meet the business needs of the Group at the best possible terms. By transacting with the Related Parties, the Group would have an advantage of familiarity with the background, financial well being and management of the Related Parties, thus enabling more informed commercial decisions to be made. In most dealings with the Related Parties, the Group and the Related Parties have a good understanding of each other s business needs and expectations thus providing a platform where all parties can benefit from conducting the RRPT. 4. EFFECTS OF THE PROPOSED SHAREHOLDERS MANDATE The Proposed Shareholders Mandate is not expected to have any effect on the issued share capital and the substantial shareholders shareholdings of the Company, and is not expected to have any material effect on the earnings per Share, net assets per Share and gearing of the Saudee Group, and the dividends to be declared by the Company, if any, for the financial year ending 31 July DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS Save as disclosed below, none of the Directors and/or Major Shareholders and/or Persons Connected to the Directors and/or Major Shareholders of Saudee has any interest, either direct or indirect, in the Proposed Shareholders Mandate. 5

11 Direct Indirect No. of Shares % No. of Shares % Interested Major Shareholder and Director Tan Khang Khim 31,380, (1) 32,297, Persons connected with Interested Director and Interested Major Shareholder Low Ai Choo (2) 522, (3) 753, Tan Leong Chin (4) 753, Notes: (1) Deemed interested by virtue of his substantial shareholdings in WSSB pursuant to Section 8 of the Act and through the shareholding of his son pursuant to Section 59(11)(c) of the Act. (2) Low Ai Choo is the spouse of Tan Khang Khim (3) Deemed interested through the shareholding of her son pursuant to Section 59(11)(c) of the Act. (4) Tan Leong Chin is the son of Tan Khang Khim and Low Ai Choo. The interested Director has abstained and will continue to abstain from Board deliberation and voting in respect of his direct and/or indirect interest in Saudee on the ordinary resolution pertaining to the Proposed Shareholders Mandate in which he is interested at the Board level and at the forthcoming EGM. Tan Khang Khim has undertaken to ensure that all the Persons Connected with him will abstain from voting in respect of their direct and/or indirect interest on the resolution deliberating or approving the Proposed Shareholders Mandate to be tabled at the forthcoming EGM. 6. CONDITIONS TO THE PROPOSED SHAREHOLDERS MANDATE The Proposed Shareholders Mandate is subject to the approval of the shareholders of the Company at the EGM. 7. DIRECTORS RECOMMENDATION 8. EGM The Board (with the exception of Tan Khang Khim and Low Ai Choo who have abstained from expressing any opinion in relation to the Proposed Shareholders Mandate), having taken into consideration the rationale for the Proposed Shareholders Mandate, is of the opinion that the Proposed Shareholders Mandate is in the best interest of the Company and its shareholders. Accordingly, the Board (with the exception of Tan Khang Khim and Low Ai Choo) recommends that you vote in favour of the resolution pertaining to the Proposed Shareholders Mandate to be tabled at the forthcoming EGM to be convened. An EGM, the Notice of which is enclosed with this Circular, will be held at Mahkota 4 Hall, Sungai Petani Inn, 427 Jalan Kolam Air, Sungai Petani, Kedah on Thursday, 28 December 2017 at a.m., or immediately after the conclusion or adjournment (as the case may be) of the Ninth (9 th ) Annual General Meeting of the Company to be held at the same venue and on the same day at 9.00 a.m., whichever is the later or at any adjournment thereof, for the purpose of considering and, if thought fit, passing the ordinary resolution to give effect to the Proposed Shareholders Mandate. If you are unable to attend and vote in person at the EGM, please complete, sign and return the enclosed Proxy Form in accordance with the instructions contained thereon as soon as possible and in any event so as to arrive at the registered office of the Company at 39 Salween Road, Georgetown, Penang, not less than forty-eight (48) hours before the time appointed for holding the EGM, or at any adjournment thereof. The lodging of the Proxy Form will not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. 9. FURTHER INFORMATION Shareholders are requested to refer to the attached Appendix I for further information. Yours faithfully, For and on behalf of the Board of SAUDEE GROUP BERHAD KHOO LAY TATT Executive Chairman 6

12 APPENDIX I FURTHER INFORMATION 1. DIRECTORS RESPONSIBILITY STATEMENT The Board has seen and approved the contents of this Circular, and they collectively and individually, accept full responsibility for the accuracy of the information given in this Circular. They confirm that after making all reasonable enquires 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 As at the LPD, the Group is not engaged in any material litigation, claims or arbitration, either as plaintiff or defendant, and the Board is not aware and does not have any proceedings pending or threatened against the Group, or of any facts likely to give rise to any proceedings, which might materially or adversely affect the financial position or business of the Group. 3. MATERIAL COMMITMENTS As at the LPD, the Board is not aware of any material commitments incurred or known to be incurred by the Saudee Group, which upon becoming enforceable may have a material effect on the business or financial position of the Saudee Group. 4. CONTINGENT LIABILITIES Save as disclosed below, as at the LPD, the Board is not aware of any contingent liabilities incurred or known to be incurred by the Saudee Group, which upon becoming enforceable may have a material effect on the business or financial position of the Group. (a) Perusahaan Saudee Sdn. Bhd ( PSSB ), being a wholly-owned subsidiary company of Saudee, received two letters of claims from the Royal Malaysian Customs Department ( RMCD ) ( Letter of Claim ) under Section 30(1) of Sales Tax Act 1972 for non-payment of sales tax and late penalties as follows:- (j) (ii) Letter of Claim dated 19 January 2015 for sales tax amounting to RM1,333, covering period from 1 November 2011 to 31 October 2014 relating to sales of beef burgers and rabbit burgers said to be packed in air-tight containers and penalty amounting to RM323, up to 31 January 2015 ( Claim 1 ); and Letter of Claim dated 25 February 2015 for sales tax amounting to RM6,154, covering period from 1 January 2012 to 31 October 2014 relating to sales of frozen chicken burgers, sausages, nuggets, balls and fried chicken said to be packed in airtight containers and penalty amounting to RM1,499, up to 24 February 2015 ( Claim 2 ). PSSB has engaged a legal counsel for legal advice in relation to the claims. PSSB has also engaged a tax consultant to liaise with the RMCD on the appeal for the sales tax underpaid via Claims 1 and 2. The tax consultant is in the process of discussing with the Director General of RMCD to seek cancellation of both claims for the sales tax and penalty involved. The tax consultant is of the view that an appeal may be submitted to the Director General of RMCD for withdrawing the claims for the sales tax and penalty. The appeal is based on the lab test concluded by PSSB which supports that the requirement to be classified as air-tight container under the Custom Duties Order 2017 is not met. The outcome of the above appeal is subject to the RMCD s approval. Based on the positive view of the legal counsel, the directors are of the opinion that it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Accordingly, no provision has been recognised in the financial statements for financial period ended 31 July 2017 in respect of the claims. (b) Saudee has entered into financial guarantee contracts to provide financial guarantees to financial institutions for credit facilities granted to certain subsidiaries up to a total limit of approximately RM43,918,000 ( : RM61,338,000). The total utilisation of these credit facilities as at 31 July 2017 amounted to approximately RM38,628,000 ( : RM49,479,000). 7

13 APPENDIX I FURTHER INFORMATION (cont d) The aforementioned financial guarantee contracts should have been recognised in the statement of financial position as at 31 July 2017 in accordance with the recognition and measurement policies of the Group. After considering that the probability of the subsidiaries defaulting on the credit lines is remote, the financial guarantee contracts have not been recognised as the fair values on initial recognition are not expected to be material. 5. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents will be available for inspection during normal office hours (except for Saturday, Sunday and public holidays) from the date of this Circular up to and including the date of the forthcoming EGM, at the registered office of the Company at 39 Salween Road, Georgetown, Penang: (i) (ii) Memorandum and Aricles of Association of Saudee (Company s Constitution); and the audited consolidated financial statements of Saudee for the past two (2) financial year ended 31 May 2016 and financial period ended 31 July THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 8

14 SAUDEE GROUP BERHAD (Company No P) (Incorporated in Malaysia) NOTICE OF EXTRAORDINARY GENERAL MEETING NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting ( EGM ) of Saudee Group Berhad ( Saudee or Company ) will be held at Mahkota 4 Hall, Sungai Petani Inn, 427 Jalan Kolam Air, Sungai Petani, Kedah on Thursday, 28 December 2017 at a.m., or immediately after the conclusion or adjournment (as the case may be) of the Ninth (9 th ) Annual General Meeting of the Company to be held at the same venue and on the same day at 9.00 a.m., whichever is the later or at any adjournment thereof for the purpose of considering and, if thought fit, passing the following ordinary resolution, with or without modification: ORDINARY RESOLUTION PROPOSED NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE ( PROPOSED SHAREHOLDERS MANDATE ) That, subject to the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and/or its subsidiaries to enter into and to give effect to the recurrent related party transactions of a revenue or trading nature with the related parties as stated in Section 2.4 of the Circular to Shareholders dated 12 December 2017 ( Circular ) provided that such transactions are undertaken in the ordinary course of business, on arm s length basis, on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the Company s minority shareholders. That such approval shall continue to be in force until:- (i) (ii) (iii) the conclusion of the next annual general meeting of the Company at which time it will lapse, unless the authority is renewed by a resolution passed at the next annual general meeting; or the expiration of the period within which the next annual general meeting of the Company after the date it is required to be held pursuant to Section 340(2) of the Companies Act, 2016 (but will not extend to such extension as may be allowed pursuant to Section 340(2) of the Act); or revoked or varied by resolution passed by the shareholders in general meeting; whichever is the earlier. And that, the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Shareholders Mandate. By Order of the Board Ooi Yoong Yoong (MAICSA ) Company Secretary Penang 12 December 2017

15 Notes: 1. A proxy may but need not be a member of the Company. There is no restriction as to the qualification of the proxy. 2. A member shall be entitled to appoint two (2) or more proxies to attend and vote at the same meeting. 3. Where a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. 4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under the corporation s seal or under the hand of an officer or attorney duly authorized. 5. Where a Member of the Company is an authorised nominee as defined under the Central Depositories Act, it may appoint at least 1 proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 6. Where a Member of the Company is an exempt authorized nominee as defined under the Central Depositories Act, which holds ordinary shares in the Company for multiple beneficial owners in one Securities Account ( omnibus account ), there is no limit to the number of proxies which the Exempt Authorized Nominee may appoint in respect of each omnibus account it holds. 7. To be valid, the proxy form duly completed must be deposited at the Registered Office, 39 Salween Road Georgetown, Penang not less than forty-eight hours before the time for holding the meeting or adjourned meeting. General Meeting Record of Depositors 8. Only a depositor whose name appears on the Record of Depositors of the Company as at 21 December 2017 shall be entitled to attend this Extraordinary General Meeting or appoint proxies to attend, speak and/or vote on his/her behalf. Personal data privacy: By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the EGM and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the EGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the EGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the Purposes ), (ii) warrants that where the member discloses the personal data of the member s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member s breach of warranty.

16 SAUDEE GROUP BERHAD (Company No P) (Incorporated in Malaysia) PROXY FORM CDS account no. : *I/We... (*I/C No./Passport No./Company No ) of being *a member/members of the abovenamed Company, hereby appoint..... (*I/C No./Passport No....) of or failing him/her. (*IC No./Passport No. ) of... or failing whom, the Chairman as *my/our proxy to vote for *me/us on *my/our behalf at the Extraordinary General Meeting of the Company, to be held at Mahkota 4 Hall, Sungai Petani Inn, 427 Jalan Kolam Air, Sungai Petani, Kedah on Thursday, 28 December 2017 at a.m., or immediately after the conclusion or adjournment (as the case may be) of the Ninth (9 th ) Annual General Meeting of the Company to be held at the same venue and on the same day at 9.00 a.m., whichever is the later or at any adjournment thereof, on the following resolution as indicated below:- ORDINARY RESOLUTION FOR AGAINST TO APPROVE THE PROPOSED SHAREHOLDERS MANDATE Please indicate with an X in the appropriate space provided above on how you wish your vote to be cast. If you do not indicate how you wish your proxy to vote on any resolution, the proxy will vote as he thinks fit. The proportions of shareholdings to be represented by my proxies:- Proxy 1 - % Proxy 2 - % Total 100% Signed this day of Number of shares held Strike out whichever is inapplicable Signature(s) of Member(s) Notes: 1. A proxy may but need not be a member of the Company. There is no restriction as to the qualification of the proxy. 2. A member shall be entitled to appoint two (2) or more proxies to attend and vote at the same meeting. 3. Where a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. 4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under the corporation s seal or under the hand of an officer or attorney duly authorized. 5. Where a Member of the Company is an authorised nominee as defined under the Central Depositories Act, it may appoint at least 1 proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 6. Where a Member of the Company is an exempt authorized nominee as defined under the Central Depositories Act, which holds ordinary shares in the Company for multiple beneficial owners in one Securities Account ( omnibus account ), there is no limit to the number of proxies which the Exempt Authorized Nominee may appoint in respect of each omnibus account it holds. 7. To be valid, the proxy form duly completed must be deposited at the Registered Office, 39 Salween Road Georgetown, Penang not less than forty-eight hours before the time for holding the meeting or adjourned meeting.

17 Fold this flap for sealing Then fold here AFFIX STAMP THE COMPANY SECRETARY SAUDEE GROUP BERHAD 39 Salween Road Georgetown, Penang 1st fold here