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PRIVATE & CONFIDENTIAL

SUMMARY OF THE KEY MATTERS DISCUSSED AT THE SIXTH ANNUAL GENERAL MEETING OF MSM MALAYSIA HOLDINGS BERHAD HELD AT BANQUET HALL 1, LEVEL B2, MENARA FELDA, PLATINUM PARK, NO. 11, PERSIARAN KLCC, 50088 KUALA LUMPUR ON MONDAY, 15 MAY 2017 AT 11.00 A.M.

PRESENT

Board of Directors:

YB Tan Sri Hj. Mohd Isa Dato’ Hj Abdul Samad Chairman Non-Independent Non-Executive Director

YBhg. Dato’ Zainal Haji Ismail Independent Non-Executive Director

YBhg. Dato’ Rosini Abd Samad Independent Non-Executive Director

YBhg. Datuk Lim Thean Shiang Independent Non-Executive Director

YBhg. Dato’ Hajjah Rosni Haji Zahari Independent Non-Executive Director

YBhg. Dato’ Mohammad Fakhruddin Haji Mohd Ariff Independent Non-Executive Director

YB Datuk Noor Ehsanuddin Mohd Harun Narrashid Non-Independent Non-Executive Director

YBhg. Dato’ Zakaria Arshad Non-Independent Non-Executive Director ABSENT WITH APOLOGY

YBhg. Datuk Hanapi Suhada Non-Independent Non-Executive Director IN ATTENDANCE

Ms. Koo Shuang Yen Company Secretary

Encik Abd Rashid Atan Company Secretary BY INVITATION : SENIOR MANAGEMENT TEAM

Encik Mohamad Amri Sahari @ Khuzari President/Group Chief Executive Officer

Puan Aznur Kama Azmir Chief Financial Officer SHAREHOLDERS AND PROXIES

A total of 1,074 members comprising of shareholders and proxies, representing 620,882,973 ordinary shares or 88.32% of the total issued and paid-up capital of MSM, registered for MSM’s 6th AGM as per the Attendance Summary issued and verified by MSM’s Share Registrar, Messrs Symphony Share Registrars Sdn Bhd. EXTERNAL AUDITORS : MESSRS PRICEWATERHOUSECOOPERS (“PwC”)

Encik Azizan Zakaria

Mr. Teoh Chee Kean

Ms. Law Pei Yee

Ms. Aqilah Ratna Juwita

MSM MALAYSIA HOLDINGS BERHAD (Incorporated in Malaysia Company No. : 935722–K)

MSM MALAYSIA HOLDINGS BERHAD (935722-K) 6th Annual General Meeting held on 15 May 2017

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POLL ADMINISTRATOR

Messrs Symphony Share Registrars Sdn Bhd INDEPENDENT SCRUTINEERS

Messrs Deloitte Enterprise Risk Services Sdn Bhd led by Encik Megat Mohamad Faisal Khir Johari (Lead Independent Scrutineer) The Meeting commenced with a recitation of the Doa by Tuan Mohd Fadhil Md Hussin.

The Master of Ceremony introduced the Board of Directors, Senior Management and the Company

Secretaries of MSM Malaysia Holdings Berhad (“MSM”) that were present to the Meeting, to the

members of the floor.

1.0 CHAIRMAN’S WELCOMING ADDRESS

YB Tan Sri Hj. Mohd Isa Dato’ Hj Abdul Samad as the Chairman (“Tan Sri Chairman”) then

welcomed all present at the Sixth Annual General Meeting (“6th AGM”/“Meeting”) of MSM.

Tan Sri Chairman also informed all members present that YBhg. Datuk Hanapi Suhada

apologized for not being able to attend today's meeting due to his unsatisfactory health

condition.

2.0 CHAIRMAN AS APPOINTED PROXY

Tan Sri Chairman informed the members of the floor that as at 11.00 a.m :-

a. a total of 12 shareholders holding a total of 359,717,348 shares in MSM has

appointed him, the Chairman of the 6th AGM to represent them as their proxies in

this Meeting; and

b. he, as Chairman of the 6th AGM has also been appointed as the corporate

representative of two (2) major shareholders of MSM, namely Felda Global

Ventures Holdings Berhad and Felda Global Ventures Sugar Sdn Bhd which hold

51% of the total paid up share capital of the Company.

In this connection, Tan Sri Chairman represented 51.17% of the shareholdings of MSM for

the purpose of this 6th AGM.

3.0 QUORUM OF MEETING

Tan Sri Chairman informed that the requisite quorum was present for the 6th AGM of MSM

pursuant to Article 64 of the Articles of Association of the Company and called the

Meeting to order at 11.00 a.m.

4.0 NOTICE OF MEETING

With the permission of the Meeting, Tan Sri Chairman proceeded with the agendas of the

Meeting.


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Tan Sri Chairman informed that the Notice convening the 6th AGM of MSM had been

circulated to the shareholders together with the 2016 Annual Report on 20 April 2017.

He put forward the Notice convening the 6th AGM to be taken as read.

5.0 MEETING OUTLINE

Tan Sri Chairman then provided an outline on the conduct of the 6th AGM:-

a. firstly, the President/Group Chief Executive Officer (Group CEO) of MSM, Encik

Mohamad Amri Sahari shall present the Company’s Performance Report for the

financial year ended 31 December 2016;

b. secondly, the questions received from the Minority Shareholders Watchdog Group

(“MSWG”) will be read together with the response;

c. the Meeting shall continue with questions from the Shareholders, Proxies or

Corporate Representatives before proceeding to a poll on all the resolutions; and

d. the Meeting shall be concluded, once the Chairman announced the results of the

poll.

6.0 VOTING PROCEDURES

Tan Sri Chairman highlighted, in conjunction with the amendments to the Main Market

Listing Requirements by Bursa Malaysia Securities Berhad on 24 March 2016, as one of the

measure to strengthen the corporate governance practices of listed issuers was to mandate

poll voting for all resolutions intended to be moved at any general meeting held on or after 1

July 2016.

Hence, in accordance to Paragraph 8.29A of the Main Market Listing Requirements of Bursa

Malaysia Securities Berhad, all resolutions set out in the Notice of this AGM shall be put to

vote by poll.

Each proposed resolution will require a proposer and a seconder from the members of the

floor. Those resolutions shall be opened to the members for discussion, if any, after which

it will then be put to vote by way of poll after all resolutions have been read.

Tan Sri Chairman reminded the poll proceedings shall be conducted after dealing with all

the business of the meeting. He then continued to announce that in line with the

recommended best practices in corporate governance, the poll voting will be conducted on a

poll through electronic voting (“e-Polling”), as MSM believes that this would result in a fair

and more accurate reflection of the views of shareholders through an efficient and

transparent process. In addition, this practice would enforce greater shareholders’ rights,

and it is consistent with the principle of “one share one vote”.

Tan Sri Chairman added that that the e-Polling is a more simplified process but in no way

affects shareholders’ voting rights or ability to ask questions.


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Tan Sri Chairman also informed that MSM has appointed Symphony Share Registrars Sdn

Bhd as Poll Administrator to conduct the polling process and Deloitte Enterprise Risk

Services Sdn Bhd as Independent Scrutineers to verify the poll results. The e-Polling process

will commence after dealing with all the resolutions of the meeting.

Hence, Tan Sri Chairman exercised the powers conferred under Article 68 of the Articles

of Association of the Company for the Chairman to demand a poll for all resolutions.

7.0 PRESENTATION OF FINANCIAL PERFORMANCE FOR THE FINANCIAL YEAR ENDED

31 DECEMBER 2016 (“FINANCIAL PERFORMANCE”)

Tan Sri Chairman then invited Encik Mohamad Amri Sahari @ Khuzari (“Encik Amri

Sahari”), the Group CEO of MSM to present the financial performance of the Company and

accordingly, provide the questions received from MSWG together with the answers.

7.1) Financial Highlights

a) Revenue in 2016 stood at RM2.658 billion with a 15% increase on year-to-

year basis.

b) The Company recorded its Profit after Tax (“PAT”) of RM121.0 million, a

drop of 56% compared to 2015. The drop contributed in the decrease in

earnings per share of 17 cents as compared to 39 cents for the previous

year.

c) The significant drop in profitability was mainly contributed by the drastic

increased in raw sugar price and weakening of the Malaysian Ringgit

(“MYR”) against US Dollar (“USD”).

d) As at the end of 2016, the Company’s total assets were valued at RM3.23

billion, while its total liabilities were at RM1.24 billion. Net assets per share

recorded at RM2.83 per share.

e) The Company’s gearing ratio increased from 17% in 2015 to 26% in 2016.

f) The Company’s cash and cash equivalents increased from RM124.0 million

in 2015 to RM338.0 million at closing of 2016.

7.2) Operational Highlights

a) The Company’s sales were divided into two (2) main segments; Domestic

and Export.

b) In 2016, 87% of the sugar was sold in domestic market, while the remaining

13% was exported to various countries such as Singapore, Hong Kong,

Bangladesh, New Zealand and Australia.

c) Sales in domestic market, which comprised of wholesale and industry

increased by 29,276 MT or 3% in 2016.

d) Export segment, on the other hand decreased by 21% or equivalent to

35,097 MT.


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e) Export allocation in 2016 was reduced in order to fulfil the increase in

domestic demand – this was given higher priority as it offered better

margin.

f) Overall, the total sales volume in 2016 stood at 1.028 million MT, almost flat

year on year basis.

g) In term of production, the Company produced 1.117 million MT of sugar in

2016, which was the highest ever recorded since its inception.

h) Production volume increased by 8% in 2016 as compared to 2015.

i) Despite the increased gas price and labour cost in 2016, the Company still

managed to contain the refining cost at a level almost equivalent to the 2015

figures. As such, it was achieved as a result of continuous improvement

efforts as well as aggressive cost cutting measures that were put in place

throughout the year.

j) It took collective team effort to achieve the improvement and Encik Amri

Sahari took the opportunity to give due credit to the Management team and

its staff that had worked hard for the Company.

7.3) Company’s Major Cost

a) Based on the presentation slides, the Company’s raw material i.e. raw sugar

was at 80% of the total cost.

b) The balance 20% of the total cost had been derived from the production

cost, general administration and distribution cost.

c) As the Company imports 100% of its raw material, the Company is

subjected to market fluctuations of global raw sugar commodity price.

d) Currently, the Company’s raw sugar mainly imported from Brazil, Australia

and Thailand.

e) In addition, the Company had also been exposed to the volatility of foreign

exchange as the purchase of raw material was in USD, in the quantum of

between USD400 to USD480 million annually.

7.4) Sensitivity Analysis

The sensitivity analysis of three (3) major factors affecting the Company’s

business operation were as follows:-

a) Domestic Selling Price

For every RM100 per metric ton charged on domestic selling price will

impact RM71.0 million of the Company’s PAT.

b) Raw Material Price (Raw Sugar Price)

For every USD0.01 per pound charged on raw sugar price will impact the

Company’s bottom line by RM54.0 million.

c) Foreign exchange of MYR against USD

For every MYR0.10 could vary the Company’s profitability by RM30 million.


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7.5) Raw Material Cost Comparison between year 2016 and 2015

a) In 2016, as MYR weakened, the Company hedged its USD requirement at

average exchange rate of 4.10, which showed an increase of 7% year on

year.

b) Further to that, raw sugar cost had increased drastically by 26%, from

15.04c/lb in 2015 to 18.90c/lb in 2016.

c) Thus, in MYR significance, a hike from RM1,291.00 per metric ton to

RM1,735.00 per metric ton, or equivalent to 34% increase in raw material

cost, after factoring the impact of weakening MYR against USD.

d) Additional cost of RM444.00 to purchase every one metric ton of raw sugar

in 2016 as compared to the previous year, which had significantly reduced

its margins as well as the drop in its profitability for financial year 2016

against 2015.

7.6) Outlook for 2017

a) It was highlighted that 2017 will be yet another challenging year for the

MSM Group, as the Company and Group would be facing continuous

fluctuations of global raw sugar price, as well as the pressure on the foreign

exchange rate.

b) Despite this, the Management remains committed to maintain the

Company’s position as market leader in domestic market while growing its

export presence.

c) The Company will also be pushing through various cost-cutting measures to

bring down the cost and to optimise its assets utilisation, further supported

by the prudent management of Capital Expenditure throughout 2016

d) In the near proximity, the Management shall be adopting asset-light

investment approach as the Company wishes to focus on the growing of its

export market from the huge investment made in the Company’s new

refinery in Johor Bahru.

7.7) Update on Johor Refinery

a) The new refinery located at Tanjung Langsat, Johor Bahru was on track for

completion in the first half of 2018.

b) As at 30 April 2017, the project was 45% completed.

c) The Management continues to be committed to complete the project within

the approved budget of USD259.0 million.

d) The additional 1.0 million tonne capacity from the refinery will be a catalyst

to strengthen MSM’s export market and gradually, become a global sugar

player by 2020.

Upon completion of the presentation, Tan Sri Chairman invited the members of the floor

to raise any questions in relation to the performance of the Company.

Since there was no question from the floor, Tan Sri Chairman proceeded with the Meeting

agenda.


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8.0 QUESTIONS RECEIVED FROM MSWG TOGETHER WITH THE RESPONSES FROM

MANAGEMENT

Members were informed that MSWG had submitted a series of questions to MSM prior to

the 6th AGM and the questions and responses from Management of MSM were presented

and read to the members of the floor for their notation – details attached as "Annexure

A" to the Minutes.

9.0 QUESTIONS AND ANSWERS FROM SHAREHOLDERS DURING MEETING

PROCEEDINGS

9.1 Prior to moving on to the agenda of the Meeting, Tan Sri Chairman invited the

attendees to come forth with any further questions pertaining to the Presentation

of Financial Performance of the Company for the year ended 31 December 2016

or other questions regarding the business of MSM Group of Companies.

9.2 Tan Sri Chairman further notified that only the Shareholders, Proxy or Corporate

Representatives are entitled to speak and raise questions. Tan Sri Chairman

further clarified that should any of the Shareholders, Proxy or Corporate

Representatives have questions, they are to approach the microphone provided

and announce their full name clearly and clarify whether they are a Shareholder,

Proxy or Corporate Representative before asking the question.

9.3 Puan Lya Rahman then proceeded to seek further clarifications on few issues. The

issues together with Board responses are as per the attached "Annexure B".

9.4 Other than Puan Lya Rahman, there were two (2) other shareholders raised their

questions. The questions and the responses from the Board and Management are

as per attached "Annexure B".

9.5 On the conclusion of the Questions and Answers session, Tan Sri Chairman

thanked the shareholders of the Company for their questions and comments.

9.6 Tan Sri Chairman then continued with the Meeting notifying all members that

each resolution tabled requires a Proposer and a Seconder before voting by way e-

polling is conducted once all agendas have been tabled.

9.7 Tan Sri Chairman requested that Proposer and Seconder for each resolution to

state their name in full clearly using the microphones provided and to additionally

state their status on whether they were a Shareholder, Proxy or Corporate

Representative.

10.0 MEETING PROCEEDINGS

Tan Sri Chairman then proceeded with the businesses on the Agenda of the 6th AGM.


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11.0 POLL ANNOUNCEMENT RESULTS

Tan Sri Chairman informed the shareholders that the polling results for Resolutions 1 to 11 have been duly verified by Deloitte Enterprise Risk Services Sdn Bhd, the appointed Scrutineers and announced the results which are as below :-

Resolution

*Approved/

Not

Approved

For Against

No. of

Shares %

No. of

Shares %

Ordinary Resolution No. 1 Approved 537,073,734 99.9997 1,500 0.0003


Ordinary Resolution No. 3 Approved 491,503,134 91.5162 45,563,500 8.4838









12.0 CONCLUSION

12.1 Tan Sri Chairman thanked to all shareholders for their presence and participation at the 6th AGM of MSM.

12.2 Tan Sri Chairman then declared the 6th Annual General Meeting of MSM Malaysia

Holdings Berhad concluded at 1.20 p.m.

ANNEXURE A

QUESTIONS FROM MINORITY SHAREHOLDER WATCHDOG GROUP (MSWG) TOGETHER WITH RESPONSES FROM THE COMPANY

Page 1 of 7

STRATEGIC/FINANCIAL

Question 1 :

The Sales Analysis on Page 47 showed that the sales volume for export and industries for

FY2016 were lower compared with FY2015 while sales volume for domestic market had

increased.

a) Given that one of the functions of MSM Dubai that was opened in February 2016 is to

undertake sugar trading activities for Middle East & North Africa region and

neighbouring Asia Pacific region, what was the reason for the drop in export sales?

b) Would the Board foresee significant impact on the export sales of the Company from

the abolishment of EU sugar quota system by end of 2017?

c) Despite that the sales volume for domestic market had increased in FY2016, we noted

that the domestic market share for the Company had declined from 65% in FY2015 to

60% in FY2016. What was the reason for the decline in market share?

d) In April 2016, the Government had halted the issuance of import permit (AP) for sugar.

Would the Board see the increase in domestic and local industries sales, moving

forward?

e) The price of refined sugar was reviewed and increased from RM2.84 to RM2.95 per kg

from 1 March 2016. How was this impact the domestic and industries sugar

consumption?

Answer 1 :

a) Other than handling export sales, the main purpose of MSM Dubai is to better position the

Group by procuring raw sugar in bulk hence enable the refineries to lower down their costs

and at the same time improve the sugar trade flows and sugar purchase arrangement

previously done individually by the respective refineries.

As the government halted the issuance of sugar approved import permit (AP) in April 2016,

we reduced our export sales allocation in order to fulfil local requirement, which is our

main priority.

Strategies are in motion to improve the demand from export customers in 2017 and also in

preparation of the upcoming additional volume availability from our near refinery in 2018.

b) EU liberalisation shall allow its sugar prices to reflect the international sugar prices.

Nonetheless, the narrowing gap between the European and the world prices neither

guarantee a lower sugar price nor will it confirm the benefit it may bring to the EU food and

beverage industry. Taking cognisant of this interesting development, MSM will expedite its

export programme enhancement for the current year and implement marketing strategy to

the specific key markets in conjunction with the additional tonnage coming out from the

Johor Refinery.

ANNEXURE A


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c) MSM market share is usually within the range of 60% - 65% annually which includes both

domestic and industries segment for approximately 1 million MT per annum of refined

sugar sold locally. Two key factors underpinning the stability of MSM’s market share in

FY2016 are; the movement of the international raw sugar price and the market volatility

facing the sugar business globally and changes to industries segment pricing which reflects

NY#11 raw sugar price. This offers a level playing field for both local sugar producers

based on total sugar consumption of 1.5 million MT per annum in Malaysia.

d) Having invested a huge amount of CAPEX for its refineries, the government’s move to cease

the issuance of import permit (AP) is welcomed. This is expected to provide cushion and in

part increase our sales in the months ahead by protecting the domestic market from being

diluted by the influx of foreign sugar and at the same time allow the local refiners to focus

on their business of ensuring a steady sugar supply for the nation.

e) Effective 1 March 2017, the Ministry of Domestic Trade, Cooperatives and Consumerism

(KPDNKK) issued a federal gazette setting the ceiling price of refined sugar increased by

11sen/kg. While we welcomed the Government’s move for the price increase, it is still

insufficient for us to offset the volatility in raw sugar price and foreign exchange. We

anticipate domestic consumption to remain flat in FY2017.

Question 2 :

We noted that the Company imports 100 percent of its raw sugar and cost accounts for 80

percent of the Company’s total operating cost.

In view that the price of raw sugar is subject to factors that are mostly not within the control

of the Company, would the Company consider re-venture into sugar cane plantation, if not in

Malaysia, in foreign countries which have more conducive environment for sugar cane, in

order to have a better control over the price and quality of the raw material?

Answer 2 :

In short term and mid-term strategy, we wish to remain focus in our core business, i.e. in sugar

refining activities. Going upstream or cane plantation will require heavy investment, therefore

MSM will be selective on any new investment opportunities to be undertaken.

Question 3 :

As reported in the Business Operation Analysis and Strategic Review for Supply Chain

Management and Distribution, due to limitation of skillset and inefficiencies caused by ageing

infrastructure and technologies, non-core backroom process would continue to be outsourced.

Heavy expenses would be required to upgrade the ageing infrastructure and technologies.

a) What would be the amount expected to be incurred on the upgrading works and what is

the timeline set for the work?

ANNEXURE A


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b) How would the outsourcing strategies affect the cost structure and total operating cost

of the Division?

Answer 3 :

a) We expect minimal upgrading costs as we are looking into outsourcing strategy for our

logistics division.

b) S&D cost is one of the many operating costs that are being tracked in our continuous effort to

improve the Group’s overall profitability. With regard to S&D, the cost elements which are

being considered for outsourcing are the whole fleets and logistical arrangement with

regards to movement of refined sugar. With the distribution plan managed by the

outsourced company, MSM will focus on its core competency of processing and refining of

quality refined sugar and this will enable MSM to serve its customers better and achieved

their value proposition.

Question 4 :

We noted that the Lost Time Injury (LTI) in FY2016 for Raw Sugar Refining Division was 73

days and the KPI set was 96 days.

a) What was the average cost per LTI day?

b) What was the major cause of the accidents that leads to LTI?

c) How was the LTI of the Company compared with other companies in the industries?

d) Could the Board share the health and safety management system of the Company?

e) What is the budget allocated for effective implementation of the workplace health and

safety management?

Answer 4 :

a) The average cost per LTI days for the two refineries is RM178.91 derived by the total cost of

RM 26,300 divided by 147 LTI days. The total cost is derived from the number of Medical

Leave taken multiplied by the salary per individual involved. 73 days stated in the annual

report is the average LTI days for the group.

b) The two major types of incidents were workers slipped, tripped or fell; and workers being

hit or struck by object.

The root cause for majority of cases was due to unsafe acts by workers. We are tackling this

issue by continuous improvement of our worksite and improved our staff safety awareness

through scheduled training, compulsory Personal Protective Equipment and implement

safety walkabouts. In order to be continuously certified, we engage in periodical OHSAS

9001 (Occupational Health Safety Management System) audits. It is mandatory for everyone

entering our sites to go through a safety briefing.

ANNEXURE A


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c) For manufacturing industry with heavy machineries, LTI is normally more than 100 days.

d) The Health and Safety Management System is satisfactory and is in place and functioning

within the company. The available In House System and Policies are in compliance with the

OSHA Act 1994 and in summary the followings has been implemented.

a. Safety Policies implemented and committed by the top management.

b. Safety Committee has been formed with meetings held every quarter

c. Employing DOSH green book certified Safety and Health Officer (SHO)

d. Adhere to industry standard for safety by providing training and audits. Namely OHSAS

9001 Training

e. Monthly reports for management review

f. Walkabout and safety audit

g. Engagement with FGV Group Safety

e) Sufficient budget is allocated for the health and safety awareness programme, scheduled

training, tools and personal protective equipment (PPE) of about RM 500,000.00 a year.

CORPORATE GOVERNANCE

Question 1 :

We noted that the cost for internal audit for FY2016 was approximately 30% lower compared

with FY2015.

What was the reason for lower cost incurred for Internal Audit Department?

Answer 1 :

The internal audit cost is being charged to MSM Group through management fees mechanism. In

the year of service i.e. FY2016, the charging is based on budgeted audit man-days. Further to the

finalisation of the audited account and tax return, the final amount to be charged will be reflected

accordingly.

In terms of the audit services being delivered for FY2016, the number of Budgeted Man-days of

404 is lower than the 2015 Actual Man-days of 523.

In this regard, the actual fee for FY2015 was RM1,430,139 as compared to FY2016 Budget of

RM1,387,258 which is consistent with the lower audit fees disclosed.

Question 2 :

Under Resolution 3, Company seeks shareholders’ approval for the payment of a portion of

Directors’ fees payable to the Non-Executive Directors up to an amount of RM1,350,000 from 1

January 2017 until the next Annual General Meeting of the Company.

a) Could the Board provide the computation in arriving at the amount RM1,350,000 based

on the note to the Resolution and the number of existing Directors?

ANNEXURE A


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b) What was the reason for the Company to seek shareholders’ approval for a portion of

Directors’ fees payable to Non-Executive Directors instead of full amount of the fees and

what would be the total fees payable proposed for the period?

Answer 2 :

a) The computation in arriving at the amount of RM1,350,000 for the proposed payment of a portion of Directors’ fees payable to the Non-Executive Directors from 1 January 2017 to the next AGM of the Company (18 months) is as follows :

BOARD

MONTHLY (RM)

2017 (1.1.2017 – 31.12.2017)

(RM)

2018 (1.1.2018 – 30.6.2018)

(RM)

TOTAL (RM)

1 Chairman 20,000 240,000 120,000 360,000

11 Board Members 5,000 660,000 330,000 990,000

TOTAL 1,350,000

The above portion of Directors’ fees payable was calculated for the maximum numbers of Directors allowed that is 12 Board members as per Article 84 of the Company’s Articles of Association and for the period of 18 months from 1 January 2017 till the next AGM which to be held no later than 30 June 2018. To-date, MSM has a total of 9 Directors of which all are Non-Executive Directors.

b) The total annual fees payable proposed for the 18-month period from 1 January 2017 to 30

June 2018 will be as below:

Summary of directors fees payable in RM

Monthly fee Annual Fee Grand total Chairman 360,000 112,500 472,500 Directors 990,000 990,000 1,980,000 1,350,000 1,102,500 2,452,500

Breakdown of directors fee payable FY2017 - mid FY2018

Fees No. of pax

2017 2018 Total

12 months 6 months Chairman Monthly fee 20,000 1 240,000 120,000 360,000

Annual fee 75,000 1 75,000 37,500 112,500 Subtotal (A) 472,500

Directors Monthly fee 5,000 11 660,000 330,000 990,000 Annual fee 60,000 11 660,000 330,000 990,000

Subtotal (B) 1,980,000 TOTAL (A+B) 2,452,500

ANNEXURE A


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Resolution 3 seeks shareholders’ approval to pay a portion of the Directors’ fees on monthly basis as below : i) Non-Executive Chairman : RM20,000/month ii) Non-Executive Director : RM5,000/month

The Board is of the view that it is just and equitable for the Directors to receive fees on a monthly basis after they have discharged their responsibilities and rendered their services to the Group throughout the Relevant Period.

Question 3 :

Under Resolution 4, the Company seeks shareholders’ approval for payment of benefits payable to the Non-Executive Directors up to an amount of RM1,780,000 from 1 January 2017 until the next Annual General Meeting of the Company.

Please provide the amount allocated to each director for the period compared with the amount paid in 2016 showed on Page 87 of the Annual Report.

Answer 3 :

The benefits payable to the Non-Executive Directors up to an amount of RM1,780,000 for the period from 1 January 2017 until the next Annual General Meeting of the Company was calculated for the maximum numbers of Directors allowed that is 12 Board members as per Article 84 of the Company’s Articles of Association. To-date, MSM has a total of 9 Directors of which all are Non-Executive Directors.

Based on the estimated amount payable mentioned under Resolution 4, the amount allocated to each director for the period of 18 months from 1 January 2017 until the next annual general meeting of the company compared to the amount paid in FY2016 is as stated in the next slide :

Director

Benefits FY 2016 (12 months)

Benefits FY2017/2018 (18 months)

Meeting allowance

(RM)

Benefit-in-kind & Other benefits

(RM)

Meeting allowance

(RM)

Benefit-in-kind & Other benefits

(RM)

Tan Sri Hj Mohd Isa Dato Hj Abdul Samad

16,000 - 36,000 282,775 (including RM265,080 the Company car allowance)

Dato’ Zainal Hj Ismail 48,016 30,000 72,000 62,695

Dato’ Hajjah Rosni Haji Zahari

50,016 33,765 72,000 62,695

Datuk Noor Ehsanuddin Mohd Harun Narrashid

20,000 30,000 54,000 62,695

Datuk Lim Thean Shiang 24,000 30,000 66,000 62,695

Dato’ Rosini Abd Samad 50,016 33,765 66,000 62,695

Datuk Hanapi Suhada 12,000 - 48,000 62,695

ANNEXURE A


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Datuk Zakaria Arshad (appointed on 1 April 2016)

14,000 - 84,000 (including RM12,000

subsidiary Board meeting)

17,695

Dato’ Mohammad Fakhruddin Haji Mohd Ariff (appointed on 21 November 2016)

2,000 - 66,000 62,695

Dato’ Mohd Emir Mavani Abdullah (resigned on 1 April 2016)

6,000 - - -

Dato’ Sheikh Awab Sheikh Abod (deceased on 14 April 2016)

- 141,968 - -

SUB TOTAL 242,048 299,498 564,000 739,335

Add: Estimation for 3 additional directors

- - 144,000 188,085

Add: Board Tender Committee of 4 members

- - 144,000 -

TOTAL 541,546 1,779,420 *

* rounded up as RM1,780,000

Question 4 :

We noted that Datuk Hanapi Suhada has attended only 5 out of 8 Board Meetings (63%).

What was the reason for him not being able to attend the meeting held during the year given that the Board Meetings for the financial year ended 31 December 2016 were scheduled in advance in November 2015 as stated in the Corporate Governance Statement? Answer 4 :

Datuk Hanapi Suhada has given great commitment by actively participated in all meetings that he attended since his appointment to the Board on 7 October 2015. However in FY2016, he attended 5 out of 8 meetings (63%) due to his health conditions.

ANNEXURE B

QUESTIONS AND ANSWERS FROM SHAREHOLDERS DURING MEETING PROCEEDINGS

Page 1 of 5

A. Puan Lya Rahman, the Representative from MSWG further enquired the Directors on the

following matters:-

Question 1 :

Agenda 4, Resolution 3 of the Notice in relation to the portion of Directors’ Fees

payable to the Non-Executive Directors amounting to RM1,350,000. Puan Lya Rahman

highlighted that the Directors’ Fees was derived based on the composition of twelve

(12) Directors which is the maximum number of Directors allowed under the Article 84

of the Company’s Articles of Association.

Her enquiries were :

a) whether the Board has any plan to appoint three (3) additional Directors for the

period and what would be the justification for having additional Directors

taking into consideration that the current Board size which is considered not

small; and

b) the purpose of splitting the monthly fees and annual fees which in turn would

then require a separate approval from the Shareholders.

Answer 1 :

a) In answering Puan Lya Rahman, Tan Sri Chairman informed that the Board is

expecting to appoint one (1) additional female Director in the near future in line with

the regulator’s recommendation that the Board must have at least 30% female

directors, whereas the other two (2) additional Directors will be considered by the

Board later.

Based on Tan Sri Chairman’s response above, Puan Lya Rahman further

commented that the fees payable for Directors’ should not be based on 12

Directors.

b) Puan Aznur Kama Azmir, the Chief Financial Officer (“CFO”) clarified that MSM has

started to implement the splitting of monthly fee and annual fee since its listing to

Main Board of Bursa Malaysia in 2011.

Question 2 :

Based on Puan Aznur’s response above, Puan Lya Rahman sought further clarification

on the necessity to split up the Directors’ monthly fees and annual fees since the

Directors’ fees even without the new Companies Act still subject to the shareholders’

approval.

Answer 2 :

Encik Abd Rashid Atan, the Company Secretary responded to Puan Lya Rahman’s question

that with the implementation of the Companies Act, 2016 effective from 31 January 2017,

there are grey areas and MSM was following Bursa Malaysia’s practice. He further

explained that the reason the Directors’ fees is split into monthly and annual fees is

because the Company does not categorise it as monthly allowance but instead treat it as

fees. As for transparency, Encik Abd Rashid Atan said that a comparison between the

approved fees and the actual monthly fees paid will be tabled to the shareholders and be

disclosed in the Annual Report accordingly.

ANNEXURE B


Page 2 of 5

Question 3 :

Puan Lya Rahman sought further clarification on Resolution 2 Agenda 3 in regards to

the payment of Directors’ fees of RM1.322 million for the financial year ended 31

December 2016 whether this was also paid monthly? If yes, then to her it is more a

ratification rather than an approval.

Answer 3 :

Encik Abd Rashid Atan responded that part of the total Directors’ fees referred to in

Resolution 2 was already paid on a monthly basis since January 2016.

Question 4 :

Puan Lya Rahman continued to enquire in relation to Agenda 5, Resolution 4 to the

Chairman of the Remuneration Committee. She questioned that the Directors’ Benefits

have been increased substantially in some Directors’ benefit payable increased more

than 100% for each Director, i.e. Tan Sri Chairman has been given car allowance of

approximately RM20,000 per month.

Pn. Lya Rahman enquired YBhg. Dato’ Zainal Haji Ismail, the Chairman of the

Remuneration Committee to provide the justification for the recommendation by the

Remuneration Committee seeing as the performance of MSM has not met expectations.

Answer 4 :

YBhg. Dato’ Zainal Haji Ismail, the Chairman of Remuneration Committee clarified that

based on the responsibilities borne by the Directors, the Remuneration Committee finds

the increase in Directors’ Benefits was justifiable.

En. Abd Rashid Atan, the Company Secretary further added that the Directors’ Benefits

budget allocation also included the budget for the Board Tender Committee, even though

the Board Tender Committee has yet to be set up. He also stated that the medical expenses,

insurance coverage for medical and Directors’ and Officers’ Liability Insurance have also

been included in the Directors’ Benefits.

Question 5 :

Puan Lya Rahman enquired explanation for the lesser number of the budgeted man

days on Internal Audit services as opposed to the actual man days in 2015 and

requested affirmation from the Board on whether this was due to expected less

Internal Audit work or whether it was a result of cost cutting measures?

Answer 5 :

Puan Aznur Kama Azmir, the Chief Financial Officer (“CFO”) explained that with regards to

the number of man days spent by Internal Audit on the audit of the Company, 2016

reflected a higher number of man days as compared to 2015 but recorded a lower total fee

due to cost cutting measures. Additionally, she added that the total fee was higher than the

budgeted.

ANNEXURE B


Page 3 of 5

On behalf of the Company, Encik Abd Rashid Atan, the Company Secretary informed

that the Company shall take note of the comments by Puan Lya Rahman to provide a

more transparent disclosure for the benefit of the shareholders.

B. Mr P.Y. Lim, a shareholder of the Company raised the following concerns:-

Question 1 :

The issue regarding the Directors fees was brought up in the previous year Annual

General Meeting. The Chairman of the Remuneration Committee was requested to

provide the benchmark used in determining the Directors’ fees/allowances.

Answer 1 :

Encik Abd Rashid Atan, the Company Secretary clarified that comparing to the current

market, MSM’s directors’ fees is within the range but on the higher side. However,

compared to the previous year, the proposed fees payable is RM900,000 lower which

reduced by approximately RM200,000 for Chairman and RM100,000 for each of the

directors. Tan Sri Hj. Mohd Isa Dato’ Hj Abdul Samad, the Chairman advised that the

Directors had contributed in accordance to their respective specialties.

Question 2 :

Mr P.Y. Lim requested for further explanation on the reasons behind the requirement

to have such a large number of Directors sitting on the Board in view of the Company

having only one (1) core business.

Answer 2 :

Encik Abd Rashid Atan explained that the Directors’ fee was budgeted for 12 Board

members is because MSM might need to increase its number of Directors in the near future.

But definitely as mentioned Chairman, MSM need at least one (1) more lady director as to

adhere to the requirement imposed by the regulator. The approved budgeted figures

however, will be tabled in next coming AGM to show the comparison between the

approved budgeted figures as opposed to the actual payment made up to June 2018.

Question 3 :

Earnings Per Share has dropped by 50%, in light thereof, it was enquired on the

remedial actions that the Board has taken to recover from the loss.

Answer 3 :

Encik Mohamad Amri Sahari, the Group Chief Executive Officer advised that Earnings Per

Share has dropped due to higher raw sugar prices as well as the strengthening of USD

against Ringgit Malaysia whereas the ceiling price has already been set by the government

which in turn does not allow the Company to price the product based on the targeted

margin.

ANNEXURE B


Page 4 of 5

Question 4 :

Sugar purchase being 80% of the total cost of the Company, whether the Company has

a policy to hedge against the fluctuation of the raw sugar price and foreign exchange.

He further enquired on whether the Sugar Contract is a physical or non-physical

contract.

Answer 4 :

Encik Mohamad Amri Sahari informed that in terms of the raw sugar purchase, MSM is on

100% physical.

Pn. Aznur Kama Azmir, the Chief Financial Officer of the Company added that the Company

hedge back to back upon the arrival of the raw sugar shipments.

Question 5 :

With sugar plantation having ceased since year 2011 to be replaced by palm oil trees

and rubber trees and in light of 6 years having passed which is the time required for

the trees to mature and bear fruit, it was enquired on why the revenue derived from

the palm oil and rubber trees was not reflected in the Annual Report. Additionally, the

Key Indicator Index (KPI) set for rubber tree replanting has only been recorded at 26%

as compared to the targeted KPI set of 100%. Mr P.Y. Lim enquired on why the

replanting of rubber trees was so slow. He also enquired for information on the age

profile of MSM’s rubber and oil palm plantation.

Answer 5 :

Encik Mohamad Amri Sahari, the Group Chief Executive Officer commented that the

Company’s former sugar plantation now consisted of 101 hectares of Palm Oil Trees and

another approximately 3,000 hectares of Rubber Trees. The harvesting of the palm oil

trees started last year and for the rubber trees is targeted to start mid this year, by July.

Pn. Aznur Kama Azmir added that the revenue contribution derived from rubber trees and

oil palms was too little and did not warrant a separate disclosure since it is not required in

accordance with the respective accounting standards. She further confirmed the revenue

derived from the harvest of palm trees is nearly RM500,000.00 and that the rubber trees

would subsequently be harvested in July.

Question 6 :

Referring to Page 140 of the Annual Report, a further explanation on the Inventory

Write Down of RM13.20 million and the Provision of Onerous Contracts of RM16.6

million was requested.

Answer 6 :

Puan Aznur Kama Azmir commented that the Inventory Written Down was based on the

following conditions:-

i) Market fluctuation on raw sugar price;

ii) Net realisable value of inventory;

iii) Provision of contract; and

iv) Comparison of the client’s price against the market price.

ANNEXURE B


Page 5 of 5

Provision for the onerous contracts is when the company compare again the contract price

that the company has locked with customers against the current raw sugar price. Basically

the provision is because of the movement of the commodity prices.

msm malaysia holdings berhadmsmsugar.listedcompany.com/misc/msm_agm_minutes_2017.pdfmsm malaysia...

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