Investor Relations

Summary of 49th AGM

Summary of the key matters discussed at the 49th Annual General Meeting (“AGM”) of PPB Group Berhad (“PPB” or the “Company”) held at Sabah Room, B2 Level, Shangri-La Hotel Kuala Lumpur, 11 Jalan Sultan Ismail, 50250 Kuala Lumpur on Tuesday, 15 May 2018 at 10.00 am.

POLL VOTING

The Chairman informed the meeting that voting on all the resolutions set out in the notice of the 49th AGM would be carried out by poll. Voting on the resolutions tabled at the meeting was subsequently conducted on completion of the discussion of the agenda items. Tricor Investor & Issuing House Sdn Bhd (“Tricor”) was the poll administrator to conduct the electronic voting process, and Asia Securities Sdn Bhd acted as scrutineer to validate the votes cast.
PROPOSED BONUS ISSUE AND PERFORMANCE HIGHLIGHTS
1. Proposed bonus issue
  The Chairman informed the Meeting that PPB had on 8 May 2018 announced a proposed 1 for 5 bonus issue (“Proposed Bonus Issue”), whereby a total of 237 million bonus shares would be issued by capitalizing from retained earnings. The Additional Listing Application to Bursa Securities is being prepared, and members’ approval for the Proposed Bonus Issue will be sought in due course. The Proposed Bonus Issue is expected to be completed in the 3rd quarter of the year.
2. Letter form Minority Shareholder Watchdog Group ("MSWG")
  PPB had received a letter dated 8 May 2018 from the MSWG containing several questions on the Group’s operations, and had replied to MSWG in a letter dated 15 May 2018. The Chief Financial Officer (“CFO”), Ms Yap Choi Foong read out the Company’s replies for the benefit of members present. PPB’s written reply to MSWG’s questions is attached as Annexure A.
3. Presentation on the PPB Group
  The Managing Director, Mr Lim Soon Huat, and the CFO presented a summary of PPB’s history, its main businesses and performance highlights to the members.
DIRECTORS’ REPORT AND AUDITED FINANCIAL STATEMENTS

The audited financial statements for financial year ended ("FYE") 31 December 2017 were tabled at the AGM pursuant to Section 340(1)(a) of the Companies Act 2016, and this agenda item was not required to be put to vote.

The Chairman invited questions from the floor on the Company’s financial statements and group’s businesses. Several questions on the Group’s businesses were raised by the members which were dealt with by the Chairman and management. These comprised the following :
1. What is the take-up rate for the Megah Rise project (in Petaling Jaya)?
  Response
  The soft launch of the Megah Rise project was held in November 2017. The project has received positive response, particularly from residents in the surrounding area, and the take-up rate to-date is about 40%. The official launch is scheduled in July/August 2018.
2. What is the percentage of land not developed yet by Hillcrest Gardens Sdn Bhd (“Hillcrest”), and the projected GDV of future developments by Hillcrest?
  Response
  Hillcrest currently has 148 acres of undeveloped land (84 acres in Taman Puchong Utama, and 64 acres in Taman Sri Gombak). These lands have not been revalued in the past 10 years. PPB is unable to provide the estimated GDV as its acquisition of 16.8% in Hillcrest has yet to be completed.
3. Most of the Group's profits are contributed by the Grains & Agribusiness segment. Will PPB expand its business into agriculture?
  Response
  PPB also has a stake in the agribusiness sector through its investment in Wilmar International Limited; it presently has no intention to expand directly into agriculture on its own. Nonetheless the Board and management is always on the lookout for potential businesses.
The Chairman declared the Company's audited financial statements for FYE 2017 properly laid before the meeting.
FINAL DIVIDEND

The Directors had recommended a final single tier dividend of 22 sen per share for FYE 31 December 2017 for shareholders’ approval. Together with the interim single tier dividend of 8 sen per share already paid, the total dividend declared/proposed for FYE 2017 would be 30 sen per share.
DIRECTORS’ FEES AND BENEFITS
5.1 Directors' fee

Directors’ fees were last revised for FYE 2015. The Board had recommended that the fees payable to non-salaried Directors for FYE 2017 be revised as follows :
1. That the annual base fee for non-salaried Directors, excluding the Chairman, be increased from RM60,000/- to RM70,000/-; and
2. That the fee for the Audit Committee Chairman be increased from RM20,000/- to RM25,000/-, and from RM12,500/- to RM15,000/- for each of the other Audit Committee members.
The proposed revisions above had been reviewed by PPB’s Remuneration Committee.

The total fees payable to non-salaried Directors who served on the Board and various committees in 2017 would amount to RM940,000/- compared to RM880,000/- for FYE 2016.

5.2 Directors’ benefits

An amount of RM242,470/- for Directors’ benefits which comprise allowances and benefits-in-kind was approved at the 48th AGM held on 9 May 2017 for the period from 31 January 2017 to 31 May 2018, of which about RM145,490/- is expected to be incurred up to 31 May 2018.

The estimated value of benefits payable to non-salaried Directors for the period from 1 June 2018 to 30 June 2019 is RM170,000/-.
RE-ELECTION OF DIRECTORS

The following Directors who retired by rotation offered themselves for re-election at the AGM :
1. Datuk Ong Hung Hock; and
2. Mr Soh Chin Teck
RE-APPPOINTMENT OF AUDITORS

Mazars PLT, the retiring auditors had indicated their willingness to be re-appointed and the Audit Committee had recommended their re-appointment.

SPECIAL BUSINESS

EXTENSION OF DATO’ CAPTAIN AHMAD SUFIAN @ QURNAIN BIN ABDUL RASHID’S TENURE AS AN INDEPENDENT DIRECTOR

Dato’ Captain Sufian was appointed as an Independent Non-executive Director on 22 June 2009, and his term as an independent director would exceed nine years after 22 June 2018.

Pursuant to the Malaysian Code on Corporate Governance, the Board through the Nomination Committee had carried out an assessment, and is satisfied that Dato’ Captain Sufian is able to exercise independent judgement, and act in the best interest of the Company.

Shareholders’ approval was sought to extend Dato’ Captain Sufian’s tenure as an independent director until the conclusion of the next AGM.
AUTHORITY TO ALLOT AND ISSUE SHARES PURSUANT TO THE COMPANIES ACT 2016

Shareholders’ approval was sought to authorise the Directors to allot and issue shares not exceeding 10% of the Company’s issued shares to avoid any delay and cost of convening general meetings should the Company need to issue new shares during the year.
SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

Shareholders’ approval was sought for a proposed mandate for the PPB group to enter into recurrent related party transactions of a revenue or trading nature with the following related parties :
1. PGEO Group Sdn Bhd and/or its connected persons; and
2. Kuok Brothers Sdn Berhad and/or its connected persons.
The above related parties and their connected persons would abstain from voting on the respective resolutions.
RENEWAL OF AUTHORITY FOR SHARE BUY-BACK

Shareholders’ approval was sought for the renewal of the authority for the Proposed Share Buy-back to enable the Company to purchase its own ordinary shares, up to a maximum of 10% of the issued shares of the Company
OTHER BUSINESS

The Company did not receive notice of any other business of an annual general meeting.
VOTING ON RESOLUTIONS
1. Registration of shareholders/proxy holders for voting was closed at 11.40 am, and the meeting was adjourned at 11.45 am for the commencement of the voting process.
2. The Chairman called the meeting to order at 11.55 am for the declaration of the voting results provided by the poll administrator and verified by the scrutineers. Based on the results of the voting set out in Annexure B to this summary, the Chairman declared that all the resolutions tabled and put to vote at the 49th AGM of the Company were passed.

Annexure A – PPB’s replies to MSWG’s questions

Summary of key matters discussed at the 49th Annual General Meeting of PPB Group Berhad held on 15 May 2018

PPB’S REPLIES TO MSWG’S QUESTIONS

Strategic and Financial Matters

On page 29 of the Annual Report 2017 (“AR2017”), it is stated that the environment engineering and utilities segment revenue was lower at RM130.1 million. We also note on page 30 of AR2017, there was no capital expenditure (“CAPEX”) allocated for the environment engineering and utilities segment during FYE2017.

Is there any capital expenditure to be incurred for the segment in FY2018 and what are the expectations?
Answer

Our environmental engineering and utilities business is engaged in the construction of sewerage and water treatment plants for clients; as such, no extensive CAPEX is required to undertake these projects. For FYE2018, we plan to incur a total CAPEX of RM17 million, mainly for the purchase of land use rights on which the existing environmental business office building is located.
The segment’s strategies are to venture into Green Energy Projects and well as to expand beyond Malaysia. Please share your views on the Group’s prospects in the new Green Energy Projects in the overseas market?
Answer

We are currently at the exploration stage for strategic partnership opportunities in Green Energy Projects, as well as to bring our water and sewerage solutions to the overseas market.

On page 29 of AR2017, the grain and agribusiness segment profit was lower at RM135.9 million in FYE2017 despite the segment revenue increasing by 5.2% to RM3.01 billion in FYE2017 from RM2.86 billion in FYE2016.
1. What measures have been taken by management to address the decline in profit?
  Answer
  
  The declining profit was due mainly to higher wheat cost while selling prices of flour products have not increased in tandem due to competition.
  
  We will continue to leverage on our strong distribution network and be cost-efficient while ensuring consistency in product quality, prompt deliveries and good technical services and support to our customers so as to remain as market leader.
2. On page 20 of AR2017, it is highlighted that due to near full capacity, there is a need to expand the new expansion of the wheat flour milling capacity in Ba Ria-Vung Tau Province in South Vietnam and in Pasir Gudang, Johor. When would the new expansions be expected to commence operation and what is the estimated cost?
  Answer
  
  The new mill in South Vietnam has commenced operation in July 2017, and the Pasir Gudang mill commenced operation in January 2018. The construction cost of the mills was RM65 million and RM84 million respectively.
The announcement by the Company dated 26 April 2018 refers to the proposed acquisition by PPB of 16.8% equity interest in Hillcrest Gardens Sdn Bhd (“Hillcrest”).
1. Please explain further on how the Company will benefit from the investment in Hillcrest as the Company has paid a hefty cash consideration representing a premium of 76% over the audited consolidated net assets of Hillcrest as at 31 December 2017.
  Answer
  In determining the purchase consideration of RM59.1 million for the proposed acquisition of 16.8% in Hillcrest (“Proposed Acquisition”), the Company has taken into consideration of the strategic locations of the Taman Puchong Utama and Taman Sri Gombak Lands (“Lands”); the prospects and development potential of the Lands; and information relating to the market value of properties surrounding the Lands.
  
  On 30 April 2018, the Company further clarified that an independent valuation was carried out in 2016 by a firm of independent valuers which had ascribed a total value of RM426 million in respect of the Lands. This represents a surplus of about RM192 million over the audited net book value of the Lands. After taking into account deferred taxation, the adjusted consolidated net assets of Hillcrest as at 31 December 2017 would amount to RM346 million, representing a slight premium of about RM1 million or 1.72% over the proportionate 16.8% adjusted consolidated net assets of Hillcrest as at 31 December 2017.
  
  The Proposed Acquisition would enable the Company to expand its investment into property-based activities and diversify its source of earnings over the medium to long term through dividend income, as Hillcrest continues to develop the Taman Puchong Utama and Taman Sri Gombak Lands totalling 148 acres over a period of 10 to 15 years.
2. As reported, the future development of the lands in Taman Seri Gombak and Taman Puchong Utama by Hillcrest are expected to contribute positively to the Group’s future earnings. When would the future earnings contribution from Hillcrest be accounted into the Group’s earnings?
  
  Answer
  
  We expect the Proposed Acquisition to be completed in Q2 2018. Upon completion, the Group will have more information on the timing of the various development projects being undertaken by Hillcrest, including timing of dividend streams to be generated from Hillcrest.
  
  We expect Hillcrest to continue to develop on-going and future property projects under its development plan for the Taman Puchong Utama and Taman Sri Gombak Lands, and these projects are expected to generate development profits and cashflows for distribution as dividends to its shareholders. However, the contributions may straddle over a period of 10 to 15 years given the size of the Lands and the gestation period of typical property development projects.
The European Parliament has passed a resolution to phase out palm oil from the EU biofuel programme by 2020. How would this impact the Group’s profitability given that the Group relies to a large extent on the earnings contribution from its associate, Wilmar International Limited as shown on pages 31 and 86 of AR2017?
Answer

We understand that the impact on Wilmar may not be material as the volume of palm-based products for biofuel that it sells to the EU is relatively small. We are also made to understand that while the European Parliament voted in January 2018 to phase out palm oil from biofuels by 2020, it still needs to be ratified by the European Commission and member governments.

15 May 2018

Annexure B – Results of poll voting

Summary of key matters discussed at the 49th Annual General Meeting of PPB Group Berhad held on 15 May 2018

Resolution No.	Subject	Votes for		Votes against		Total votes
Resolution No.	Subject	No. of shares	%	No. of shares	%	No.of shares	%
1	To approve the payment of a final single tier dividend.	891,017,690	100.000	0	0.000	891,017,690	100.000
2	To approve an increase in Directors' fees.	890,879,864	99.998	15,160	0.002	890,895,024	100.000
3	To approve the payment of benefits to Directors.	890,890,524	99.999	4,500	0.001	890,895,024	100.000
4	To re-elect Datuk Ong Hung Hock as a Director.	882,294,439	99.021	8,723,251	0.979	891,017,690	100.000
5	To re-elect Mr Soh Chin Teck as a Director.	890,243,871	99.913	773,819	0.087	891,017,690	100.000
6	To re-appoint Mazars PLT as Auditors of the Company.	890,726,490	99.967	291,200	0.033	891,017,690	100.000
7	To approve the extension of Dato’ Captain Sufian’s tenure as an Independent Director.	890,910,905	99.988	106,785	0.012	891,017,690	100.000
8	To authorise the Directors to allot and issue shares.	886,502,790	99.493	4,514,900	0.507	891,017,690	100.000
9	To approve a shareholders’ mandate for recurrent related party transactions of a revenue or trading nature (“RRPT”) with PGEO Group Sdn Bhd and/or its connected persons.	890,386,890	99.929	630,800	0.071	891,017,690	100.000
10	To approve a shareholders’ mandate for RRPTs with Kuok Brothers Sdn Berhad and/or its connected persons.	288,587,940	99.782	630,800	0.218	289,218,740	100.000
11	To approve the Proposed Share Buy-back.	890,962,090	100.000	0	0.000	890,962,090	100.000

15 May 2018

Summary of 49th AGM

Annexure A – PPB’s replies to MSWG’s questions

Annexure B – Results of poll voting

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