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KWANTAS CORPORATION BERHAD

 Company No. 356602-W

(Incorporated in Malaysia)

 

 

MINUTES OF THE TWENTY-THIRD ANNUAL GENERAL MEETING HELD AT K-63A-3RD FLOOR, SIGNATURE OFFICE, KK TIMES SQUARE, OFF COASTAL HIGHWAY, 88100 KOTA KINABALU, SABAH, MALAYSIA ON FRIDAY, 30TH NOVEMBER 2018 AT 10:00 A.M

 

 

PRESENT :               DIRECTORS

                                   

                                    Datuk Ismail Abdullah

                                    Mr Kwan Ngen Wah                                                                                 

                                    Dato’ Chong Kan Hiung

                                    Mdm Kwan Jin Nget

                                    Mdm Kwan Min Nyet

                                    Mr Petrus Gimbad

                                    Mr Ooi Jit Huat                                                                                         

 

                                    MEMBERS

 

                                    5 members present in person (including Directors)

                                   

                                    PROXY

                                   

                                    7 members appointed the Chairman of the meeting as proxy

                                    9 proxies present in person

 

                                    BY INVITATION

 

                                    Mr Chau Man Kit                   -       PKF Partner

                                    Ms Terrie Wong                     -       PKF Senior Audit In-Charge

                                    Ms Wong Lee Fun                  -       Independent Scrutineer 

                                   

                                    IN ATTENDANCE

 

                                    Mdm Kwan Fei Fen               -        Company Secretary

                                   

Before the commencement of the 23rd Annual General Meeting of the Company, Chairman of the meeting Datuk Ismail Abdullah introduced the new Chief Executive Officer Mr Kwan Ngen Wah, who took over from the late Group Chief Executive Officer Mr Kwan Ngen Chung since his departure on 23 July 2018. Mr Kwan Ngen Wah has been an Executive Director with the Group since its inception.

 

1.            QUORUM

              

Upon confirmation by the Company Secretary that a quorum was present, the Chairman called the meeting to order at 10:00 a.m.

 

2.            NOTICE

 

               The notice convening the meeting was taken as read.

 

3.            TO LAY BEFORE THE MEETING THE AUDITED STATEMENTS OF ACCOUNTS TOGETHER WITH THE DIRECTORS’ AND AUDITORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018 FOR DISCUSSION PURPOSE

 

               The audited accounts for the year ended 30 June 2018 together with the Report of

               Directors and Auditors were tabled for discussion.

 

Chairman Datuk Ismail Abdullah informed that the Board had received a letter dated 23rd November 2018 from Minority Shareholder Watchdog Group (“MSWG”) on matters to be addressed during the Annual General Meeting for the attention of all members of the Company. He acknowledged the presence of the authorised representative of MSWG, Mr Lee Chee Meng, and suggested that the issues be responded to first by the Board. The issues raised in the letter and the Board responses were as follows :-

 

Strategic & Financial Matters

 

Q1.        As reported in the Management Discussion and Analysis (MD&A) on page 22 of the Annual Report, FFB yield per mature hectare (“YPMH”) was 21.2 MT/YPMH, a slight decrease from 22.1 MT/YPMH in the preceding year. The slight decrease in FFB’s YPMH for the current year was mainly due to the over-aged palms of the Group.

 

(a)    What is the current average age of the palms of the Group? What is the percentage of the palms under the “over-aged” category?

 

Reply :

 

According to Executive Director Mdm Kwan Jin Nget, currently the Group’s average palm-tree age stands at approximately 18 years, with majority of the palm-tree age between 16-25 years. Approximately 11% of the palm-trees are under the “over-aged” category.

 

 

(b)What is the optimum average age of the palms that the Group is targeting to achieve?  What is the targeted timeframe to achieve this optimal average age of the palms?

 

      Reply :

 

Executive Director Mdm Kwan Jin Nget briefed that the Group is targeting to maintain an average palm age ranging from 8 to 20 years. 

 

 

(c)                How does the current replanting and new planting plans help to improve the age profile

of the palms to achieve the optimal average palm age within the targeted timeframe?

 

Reply :

 

Executive Director Mdm Kwan Jin Nget briefed that the Group is targeting another 550 hectares for replanting for the financial year ended 30 June 2019. By doing current replanting and new planting, it will lower the average palm age within the Group. The Group expects to achieve the optimal average palm age within 5 years.

 

(d)               Besides the new planting and replanting plans, is the Board considering brownfield

acquisition to improve the age profile of the palms?

 

Reply :

 

Executive Director Dato’ Chong Kan Hiung explained that for the time being, the Group still have land available for development. However, the Board may consider brownfield acquisition if the location of land is suitable.

 

Further question was raised by Mr Lee Chee Meng of MSWG as to whether the Group has plan or solution for the Group in light that most of the palms are ageing and yet the replanting progress is slow.

 

Executive Director Mdm Kwan Jin Nget explained that eventhough some of the palms are ageing, they are still bearing well and capable of producing yield of 22 to 24 MT/YPMH.

 

 

Q2.      As reported in the MD&A on page 20 of the Annual Report, an impairment allowance of RM20.9 million has been provided during the year in relation to an agriculture land in Indonesia due to the uncertainty in renewability of certain licences from the relevant Indonesian authority.

 

(a)    What are the licences involved?

 

Reply :

 

Chief Executive Officer Mr Kwan Ngen Wah reported that the main licence involved is “IJIN LOKASI - UNTUK KEPERLUAN INTI DAN PLASMA PERKEBUNAN KELAPA SAWIT”.

 

(b)   What are the reasons for the uncertainty in the renewability of these licences?

 

Reply :

 

According to the Chief Executive Officer Mr Kwan Ngen Wah, the unfulfilled timeframe and conditions as stipulated in the renewal of the licences have contributed to the uncertainty in the renewability of this licence. The Group’s Indonesia counterpart has submitted extension application to the relevant Indonesian authority and has not received any positive responses until today. The Group will minimize its cost and continue to maintain the condition of the filed while pending for the licence to be renewed.

 

(c)    What is the carrying amount of the land involved after the impairment provision of RM20.90 million?

 

Reply :

 

Executive Director Dato’ Chong Kan Hiung explained that the land has been fully impaired in FYE2018. The carrying amount of the Biological Asset is approximately RM2 million.

 

 

(d)   In the event the licences are not renewed, what will be the financial and operational impact to the Group?

 

Reply :

 

Executive Director Dato’ Chong Kan Hiung replied that since the area of development in Indonesia is still considered insignificant, ie approximately 750 hectares, the impact on the Group’s financial is considered to be insignificant. The remaining carrying amount of the Biological Asset is approximately RM2 million.

 

Further question was raised by Mr Lee Chee Meng of MSWG for the reason of delay in obtaining the renewed licence.

 

Chairman Datuk Ismail Abdullah replied that other plantation companies are also facing similar problem in relation to investment in Indonesia.

 

Executive Director Dato’ Chong Kan Hiung commented that the Board is mindful of the difficult and challenging situation in Indonesia and will be more cautious in its investment. The Group would prefer to concentrate its investment in Malaysia.

 

 

Q3.     As shown in Note 15 to the Financial Statements on page 110 of the Annual Report, the carrying amount (at valuation) of the Group’s investment properties as at 30 June 2018 stood at RM45.7 million. The net rental income in respect of the investment properties for FY2018 is RM17,000, representing a yield of 0.037%.

 

(a) What is the initial cost of these investment properties?

 

     Reply :

 

Chief Executive Officer Mr Kwan Ngen Wah informed that the initial cost of these investment properties was RM9.8 million.

 

(b)What are the types of properties under the investment properties of the Group?

 

     Reply :

 

According to Chief Executive Officer Mr Kwan Ngen Wah, the Group’s investment properties mainly vacant lands in various district. Some of these properties will be considered for disposal and the Group is actively sourcing for potential buyers to dispose the lands.

    

(c) What is the lettable and rented area as at 30 June 2018? What is the average rental rate   

      for the existing rented area?

 

     Reply :

 

Executive Director Dato’ Chong Kan Hiung briefed that as at 30 June 2018, total land area is approximately 31.08 acres and total rented area is 1.12 acres. The average monthly rental rate of the rented area is approximately RM1,340/acre.

 

(d)What is the reason for the low rental yield from these investment properties?

    

     Reply :

 

Executive Director Dato’ Chong Kan Hiung explained that as these lands are yet to be developed, the rental yield is lower.

 

 

Q4      As shown in Note 9 to the Financial Statements on page 121 of the Annual Report, the only assets held for sale that had been disposed during the FY2018 is part of the assets of a subsidiary company, namely Kwantas Plantations Sdn Bhd.

 

(a) Given that plantation land in Malaysia is limited, what is the reason for disposing the plantation land at a loss?

 

Reply :

 

Executive Director Dato’ Chong Kan Hiung explained that the disposal of the asset is part of the Board’s financial streamlining exercise to improve the overall financial position of the Group. Few interested buyers approached the Group during negotiation time but the price offered was far too low and the Group ultimately managed to secure the best offer given at that point of time.

 

(b)Will the disposal of the plantation land affect the financial results of the Group, moving forward?

 

Reply :

 

The Board is of view that the disposal of the land will not have major negative effect on the Group’s financial results, as the yearly contribution from the said piece of plantation land was approximately RM6 million to the Group. The Group has a contract to buy back the FFB produced from the buyer for the Group’s oil mill.

 

 

Q5       As highlighted in the Independent Auditors’ Report on page 64 of the Annual Report, all three subsidiaries of the Group in People’s Republic of China are loss making. The non-current assets of these subsidiaries may be impaired.

 

            As reported in Note 25 to the Financial Statements on page 121 of the Annual Report, two subsidiaries in People’s Republic of China have been classified as held for sale assets in 2017. However, in FY2018, the commitment to the plan to sell one of these subsidiaries has been terminated.

 

            What is the outlook of the subsidiaries in People’s Republic of China and what are the plans for these subsidiaries?

 

       Reply :

 

Executive Director Dato’ Chong Kan Hiung commented that China subsidiaries segment remains challenging due to the trade war between US and China, fluctuations in RMB/USD currency and palm prices. These challenges ultimately may result in sluggish trade and market demand and slowdown in export of downstream products. The Board is considering various options including the option to dispose the subsidiaries in the near future.

 

 

Corporate Governance

 

Q1.         As shown in the Audit and Risk Management Committee (ARMC) Report on page 53 of the Annual Report, Mr Ooi Jit Huat, Chairman of the ARMC, has attended only 3 out of 5 of the ARMC (60%) meetings during FY2018.

 

               What is the reason for him not being able to attend all the ARMC meetings held during the year?

 

Reply :

 

Company Secretary Mdm Kwan Fei Fen explained that the attendance of the ARMC meeting as shown in page 53 of the Annual Report was wrongly stated as a mistake that was inadvertently made in extracting the data carried forward from the Annual Report 2017. There were altogether six(6) ARMC meetings held during the financial year ended 30 June 2018 and all of the ARMC members had attended all the meetings.

 

 

Q2.         The Company in its Corporate Governance Report has stated that it has applied Practice 12.3 of MCCG. Practice 12.3 refers to facilitating or providing platform for shareholders to vote and participate at the general meeting without being physically present at the Company’s AGM. Based on the Company’s explanation on the application of Practice 12.3 that “Participation of shareholders at the general meeting is either by way of attending in person or by proxy. The venue of the general meeting is the Company’s registered office address which is easily accessible”. We wish to highlight that the Company has not applied the Practice.

 

Reply :

 

Company Secretary Mdm Kwan Fei Fen replied that the Board takes note of MSWG’s comment. However, based on the current total number of shareholders of the Company, it may not be justifiable for the investment in technology to enable shareholders voting in absentia and remote participation at general meetings. The application of Practice 12.3 in its entirety entails that listed companies with a large number of shareholders should leverage technology to facilitate voting in absentia and remote shareholders’ participation at General Meetings.

 

 

Additional Request

 

Mr Lee Chee Meng from MSWG requested the Q & A session to be presented onto a projector screen for better clarity. The request is noted by the Board.

 

There being no further questions, Chairman Datuk Ismail Abdullah then proceeded with the rest of the agenda items. At this juncture, he announced that, pursuant to the amendments to the Main Market Listing Requirements of Bursa Securities announced on 24th March 2016, all resolutions to be considered at the general meeting will be put to vote by poll and notified the members and proxies that a copy of the ballot paper will be distributed to each of them for the said purpose. He reminded that interested parties must abstain from voting on resolution approving the shareholders’ mandate on recurrent related party transactions. He then highlighted the adoption of two-tier voting system on resolution to approve the retention of Mr Ooi Jit Huat who has been appointed as an Independent Non-Executive Director for a cumulative term of more than 12 years. He explained that under the two-tier voting process, members’ votes will be cast in the following manner during the meeting :-

 

Tier 1 : Only Large Shareholders of the Company vote; and

 

Tier 2 : Shareholders other than Large Shareholders vote.

 

The decision is determined based on the vote of Tier 1 and a simple majority of Tier 2. The resolution is deemed successful if both Tier 1 and Tier 2 vote in favour of the resolution.

 

Chairman Datuk Ismail Abdullah further added on that poll voting on the resolutions will be scrutinized by Ms Wong Lee Fun of Duomatic Corporate Services Sdn Bhd, the Independent Scrutineer appointed by the Company.

 

 

4.            DIRECTORS’ FEES TO NON-EXECUTIVE DIRECTORS FROM 23RD ANNUAL GENERAL MEETING TO THE NEXT ANNUAL GENERAL MEETING

 

Chairman proceeded to item 2(a) of the Agenda : Resolution 1 : To approve the payment of Directors’ fees totaling RM200,000 to Non-Executive Directors from the 23rd Annual General Meeting to the next Annual General Meeting of the Company.

 

The matter was put to the floor for voting and it was unanimously RESOLVED :-

 

THAT the payment of Directors’ fees totalling RM200,000 to Non-Executive Directors from the 23rd Annual General Meeting to the next Annual General Meeting of the Company is hereby approved.

 

               The poll result was noted as follows :-

 

 

No. of Shares

%

Voted FOR

161,837,232

100

Voted AGAINST

0

0

TOTAL

161,837,232

100

 

 

5.         MEETING ALLOWANCE OF RM500 PER MEETING DAY TO NON-EXECUTIVE DIRECTORS FROM 23RD ANNUAL GENERAL MEETING TO THE NEXT ANNUAL GENERAL MEETING

              

Item 2(b) of the Agenda : Resolution 2 : To approve the payment of Directors’ meeting allowance of RM500 per meeting day to the Non-Executive Directors from the 23rd Annual General Meeting to the next Annual General Meeting of the Company.

 

The matter was put to the floor for voting and it was unanimously RESOLVED :-

THAT the payment of Directors’ meeting allowance of RM500 per meeting day to the Non-Executive Directors from the 23rd Annual General Meeting to the next Annual General Meeting of the Company is hereby approved.

 

               The poll result was noted as follows :-

 

 

No. of Shares

%

Voted FOR

161,837,232

100

Voted AGAINST

0

0

TOTAL

161,837,232

100

 

 

 

6.            DIRECTORATE

 

Item 3(a) of the Agenda : Resolution 3 : To re-elect Mdm Kwan Jin Nget, who retires by rotation pursuant to Article 73 of the Company’s Constitution (Articles of Association) and being eligible, offered herself for re-election.

 

(a)      In accordance with Article 73 of the Company’s Constitution (Articles of Association), Mdm Kwan Jin Nget who retires by rotation and being eligible, offered herself for re-election.

 

The matter was put the floor for voting.

 

Majority of the members voted for the resolution with 0.04% voted against it.

 

The Chairman declared the resolution as carried with majority voted for it and it was RESOLVED :-

 

THAT Mdm Kwan Jin Nget be and is hereby re-elected as a Director of the Company.  

 

                      The poll result was noted as follows :-

 

 

No. of Shares

%

Voted FOR

161,766,432

99.96

Voted AGAINST

70,800

0.04

TOTAL

161,837,232

100

 

              

          Item 3(b) of the Agenda : Resolution 4 : To re-elect Mr Petrus Gimbad, who retires

          by rotation pursuant to Article 73 of the Company’s Constitution (Articles

          of Association) and being eligible, offered himself for re-election.

 

(b)     In accordance with Article 73 of the Company’s Constitution (Articles of Association), Mr Petrus Gimbad who retires by rotation and being eligible, offered himself for re-election.

 

The  matter  was  put  to  the  floor  for  voting  and  it  was unanimously RESOLVED :-

 

      THAT Mr Petrus Gimbad be and is hereby re-elected as a Director of the

      Company.

 

                     The poll result was noted as follows :-

 

 

No. of Shares

%

Voted FOR

161,837,232

100

Voted AGAINST

0

0

TOTAL

161,837,232

100

 

 

 

7.            AUDITORS

 

   Item 4 of the Agenda : Resolution 5 : To re-appoint Messrs PKF as Auditors of the

   Company and authorize the Directors to fix their remuneration.

 

               The matter was put to the floor for voting and it was unanimously RESOLVED :-      

 

THAT Messrs PKF be and is hereby re-appointed as Auditors of the Company and authorize the Directors to fix their remuneration.

 

               The poll result was noted as follows :-

 

 

No. of Shares

%

Voted FOR

161,837,232

100

Voted AGAINST

0

0

TOTAL

161,837,232

100

 

 

8.            SPECIAL BUSINESS

               Item 5 of the Agenda : Ordinary Resolution 1 : Authority to allot and issue shares

               pursuant to Sections 75 and 76 of the Companies Act 2016.

 

 

            I.  ORDINARY RESOLUTION NO.1

·      Authority to Allot and Issue Shares Pursuant to Sections 75 and 76 of the Companies Act 2016

 

The meeting was requested to consider the Ordinary Resolution as set out in the Notice of meeting on the authority to allot and issue shares pursuant to Sections 75 and 76 of the Companies Act 2016.

 

The matter was put to the  floor  for voting and it was unanimously RESOLVED :-

 

THAT pursuant to Sections 75 and 76 of the Companies Act 2016 and subject always to the approval of the relevant authorities, the Directors be and are hereby empowered to issue shares in the capital of the Company from time to time upon such terms and conditions and for such purposes as the Directors may in their discretion deem fit provided that the total number of shares issued pursuant to this resolution does not exceed ten percent (10%) of the issued shares of the Company for the time being and that the Directors be and are also empowered to obtain the approval for listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.

 

 

            The poll result was noted as follows :-

 

 

No. of Shares

%

Voted FOR

161,837,232

100

Voted AGAINST

0

0

TOTAL

161,837,232

100

 

 

 

Item 5 of the Agenda : Ordinary Resolution 2 : Proposed renewal of the existing shareholders’ mandate for recurrent related party transactions of a revenue or trading nature.

 

II.                ORDINARY RESOLUTION NO.2

·               Proposed Renewal of the Existing Shareholders’ Mandate for Recurrent Related Party Transactions of A Revenue or Trading Nature

 

The meeting was requested to consider the Ordinary Resolution as set out in the Notice of meeting on the proposed renewal of the existing shareholders’ mandate for recurrent related party transactions of a revenue or trading nature involving Section 2.1.2 and 2.1.3 of the Circular to Shareholders dated 31st October 2018.

 

The matter was put to the floor for voting and it was unanimously RESOLVED :-

 

THAT subject always to the compliance with the Companies Act 2016, the Company’s Constitution (Memorandum and Articles of Association), the Listing Requirements of

Bursa Malaysia Securities Berhad and all other applicable laws, regulation and guidelines, approval be and is hereby given to the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature which are necessary for

the day-to-day operations of the Company and its subsidiary from time to time, the nature and the contracting party of which referred to under Section 2.1.2 and 2.1.3 of the Circular to Shareholders dated 31st October 2018 PROVIDED THAT

 

(i)                 the transactions are in the ordinary course of business on an arm’s length basis, on normal commercial terms and on terms not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company; and

 

(ii)               disclosure is made in the annual report of the breakdown of the aggregate value of the transactions conducted pursuant to this shareholders’ mandate during the financial year of the Company.

 

AND THAT such authority shall commence upon the passing of this resolution and shall continue to be in force until

 

(a)                the conclusion of the next Annual General Meeting of the Company 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; or

 

(b)               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 Companies Act 2016 but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Companies Act 2016; or

 

(c)                revoked or varied by resolution passed by the shareholders in general meeting,

 

whichever is earlier.

 

AND FURTHER THAT authority be and is hereby given to the Directors of the Company to complete and do all such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution.

 

            The poll result was noted as follows :-

 

 

No. of Shares

%

Voted FOR

67,721,100

100

Voted AGAINST

0

0

TOTAL

67,721,100

100

 

 

 

Item 5 of the Agenda : Ordinary Resolution 3 : Proposed renewal of authority for the Company to purchase up to ten percent (10%) of the issued shares of the Company.

 

III.             ORDINARY RESOLUTION NO. 3

The meeting was requested to consider the Ordinary Resolution as set out in the Notice of meeting on the proposed renewal of authority for the Company to purchase up to ten percent (10%) of the issued shares of the Company.

 

The matter was put to the floor for voting and it was unanimously RESOLVED :-

            The poll result was noted as follows :-

 

 

No. of Shares

%

Voted FOR

161,837,232

100

Voted AGAINST

0

0

TOTAL

161,837,232

100

·                  Continuing In Office As Independent Non-Executive Director

 

 

The meeting was requested to consider the Ordinary Resolution as set out in the Notice of meeting on the proposed continuing in office for Mr Ooi Jit Huat as Independent Non-Executive Director.

 

The matter was put to the floor for voting.

 

             Both Tier 1 and simple majority of Tier 2 voted in favour of the resolution.

 

The Chairman declared  the  resolution  as  carried  and it was RESOLVED :

            The poll result was noted as follows :-

 

               Tier 1

 

No. of Shares

%

Voted FOR

94,116,132

100

Voted AGAINST

0

0

TOTAL

94,116,132

100

 

               Tier 2

 

No. of Shares

%

Voted FOR

67,650,200

99.90

Voted AGAINST

70,900

0.10

TOTAL

67,721,100

100

 

9.            OTHER ORDINARY BUSINESS

 

Item 6 of the Agenda : To transact any other business of the Company for which due notice shall have been given in accordance with the Companies Act 2016 and the Company’s Constitution (Articles of Association) of the Company.

 

               The Secretary confirmed that there was no other ordinary business for which due notice

                had been given.

10.           TERMINATION

 

There being no further business, the meeting was terminated at 11.30a.m with a vote of thanks to the Chair. Chairman Datuk Ismail Abdullah recorded his sincere gratitude to the Board of Directors for the advice, counsel and support given to him as the Chairman of the Company. Chairman further extended his gratitude to the Management for their loyalty, commitment, guidance and support to the Company.

 

 

 

CONFIRMED AS A CORRECT RECORD

 

 

DATUK ISMAIL ABDULLAH

CHAIRMAN OF THE

23RD ANNUAL GENERAL MEETING

 

     
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