Hap Seng Consolidated : AGM Reporting Document

HAP SENG CONSOLIDATED BERHAD

197601000914 (26877-W) Incorporated in Malaysia

MINUTES OF THE FORTY-EIGHTH ANNUAL GENERAL MEETING OF THE COMPANY CONDUCTED VIRTUALLY THROUGH REMOTE PARTICIPATION AND ELECTRONIC VOTING FACILITIES AT THE BROADCAST VENUE, THE KINABALU ROOM, GROUND FLOOR, MENARA HAP SENG, JALAN P. RAMLEE, 50250 KUALA LUMPUR ON WEDNESDAY, 29 MAY 2024 AT 10AM

Present	: DIRECTORS
	Mr Thomas Karl Rapp
	(Independent Non-Executive Chairman)
	Datuk Edward Lee Ming Foo
	(Managing Director)
	Mr Lee Wee Yong
	(Executive Director)
	Ms Cheah Yee Leng
	(Executive Director)
Present via live streaming	: Datuk Simon Shim Kong Yip
	(Non-IndependentNon-Executive Director)
	Mr Jimmy Leow Ming Fong
	(Independent Non-Executive Director)
	Dato' Wan Mohd Fadzmi
	(Independent Non-Executive Director)
	Mr Patrick Tan Boon Peng
	(Independent Non-Executive Director)
	Mr Wong Yoke Nyen
	(Independent Non-Executive Director)
In Attendance	: Ms Lim Guan Nee
	(Company Secretary)
Present via live streaming	: 294 members as per attendance sheet
	: 23 proxies as per attendance sheet
	: 1 corporate representative as per attendance sheet
By invitation	: Mr Ng Kim Ling
	(Auditor, Messrs Ernst & Young)
	Mr Kisharn Thoolasy Das
	(Auditor, Messrs Ernst & Young)

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HAP SENG CONSOLIDATED BERHAD

197601000914 (26877-W)

Minutes of the Forty-Eighth Annual General Meeting held on 29 May 2024

QUORUM

The chairman welcomed all the shareholders, proxies and corporate representative who participated in the meeting through live streaming and online remote voting via remote participation and electronic

voting facilities.

The chairman informed the meeting that the non-executive directors participated in this meeting via live streaming. He added that the board and management would do their level best to make this virtual experience as seamless as possible. He also apologized for any inadequacies along the way.

The chairman reminded the shareholders and proxies that this AGM was a private event, strictly for the Company's shareholders and their proxies, board members and key management of the Company as well as auditors, scrutineer and other professionals whose presence are required to facilitate this AGM. Accordingly, any recording of this AGM in any form was strictly prohibited.

At the start of the meeting, 97 shareholders, proxies and corporate representative logged in for the meeting using the remote platform. The chairman declared the meeting duly convened.

NOTICE OF MEETING

The chairman informed the meeting that the notice convening this meeting, which was set out in the annual report 2023, had been sent out to all members of the Company, Bursa Malaysia Securities Berhad, auditors of the Company as well as being published in the New Straits Times and Borneo Post and posted on the Company's website on 30 April 2024. The annual report 2023 was also posted on the Company's website on the same day.

The notice convening the meeting was taken as read.

PROXY

As part of good corporate governance practice, the chairman reported that the Company had received a total of 42 proxy forms and a corporate representative authorization from the shareholders representing 69.04% of the issued share capital of the Company. Out of those, there were 19 shareholders who had appointed the Chairman of the meeting as their proxy to vote on their behalf and the shares representing 65.01% of the issued share capital of the Company.

VOTING BY POLL

The chairman informed the meeting that in accordance with Paragraph 8.29A of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ("Listing Requirements"), all the proposed resolutions would be voted on electronically by poll. Boardroom Share Registrars Sdn Bhd ("Boardroom") and GovernAce Advisory & Solutions Sdn Bhd ("GovernAce") had been appointed as poll administrator and independent scrutineer respectively.

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HAP SENG CONSOLIDATED BERHAD

197601000914 (26877-W)

Minutes of the Forty-Eighth Annual General Meeting held on 29 May 2024

The chairman explained that in the interest of time and efficacy, all the questions would be answered after he had tabled all the proposed resolutions to be carried in this meeting. He also encouraged the shareholders and proxies to submit their questions via this meeting portal.

The chairman informed the meeting that the poll had been opened since the beginning of the meeting and invited Boardroom to play the video explaining the remote electronic poll voting and the housekeeping rules for the electronic voting process before the shareholders and proxies proceeded to cast their votes.

ORDINARY BUSINESS:-

TO TABLE THE AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 TOGETHER WITH THE REPORTS OF DIRECTORS AND AUDITORS

The chairman informed the meeting that the first item on the agenda was to table the audited financial statements together with the reports of directors and auditors. There would be no voting on this item.

The chairman proceeded to table the following proposed resolutions:-

ORDINARY RESOLUTION 1

TO RE-ELECT DATUK EDWARD LEE MING FOO, JP, WHO RETIRES AS DIRECTOR BY ROTATION IN ACCORDANCE WITH CLAUSE 116 OF THE COMPANY'S CONSTITUTION

The chairman tabled the following proposed ordinary resolution 1:-

"THAT Datuk Edward Lee Ming Foo, who is retiring as director in accordance with clause 116 of the Company's constitution be hereby re-elected to serve on the board of directors of the Company."

ORDINARY RESOLUTION 2

TO RE-ELECT DATO' WAN MOHD FADZMI BIN CHE WAN OTHMAN FADZILAH, WHO RETIRES AS DIRECTOR BY ROTATION IN ACCORDANCE WITH CLAUSE 116 OF THE COMPANY'S CONSTITUTION

The chairman tabled the following proposed ordinary resolution 2:-

"THAT Dato' Wan Mohd Fadzmi Bin Che Wan Othman Fadzilah, who is retiring as director in accordance with clause 116 of the Company's constitution be hereby re-elected to serve on the board of directors of the Company."

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HAP SENG CONSOLIDATED BERHAD

197601000914 (26877-W)

Minutes of the Forty-Eighth Annual General Meeting held on 29 May 2024

ORDINARY RESOLUTION 3

TO RE-ELECT MR. LEOW MING FONG @ LEOW MIN FONG, WHO RETIRES AS DIRECTOR BY ROTATION IN ACCORDANCE WITH CLAUSE 116 OF THE COMPANY'S CONSTITUTION

The chairman tabled the following proposed ordinary resolution 3:-

"THAT Mr. Leow Ming Fong @ Leow Min Fong, who is retiring as director in accordance with clause 116 of the Company's constitution be hereby re-elected to serve on the board of directors of the Company."

ORDINARY RESOLUTION 4

TO RE-ELECT MR. WONG YOKE NYEN, WHO RETIRES AS DIRECTOR BY ROTATION IN ACCORDANCE WITH CLAUSE 116 OF THE COMPANY'S CONSTITUTION

The chairman tabled the following proposed ordinary resolution 4:-

"THAT Mr. Wong Yoke Nyen, who is retiring as director in accordance with clause 116 of the Company's constitution be hereby re-elected to serve on the board of directors of the Company."

ORDINARY RESOLUTION 5

TO APPROVE THE PAYMENT OF DIRECTORS' FEES OF THE COMPANY AND ITS SUBSIDIARIES AMOUNTING TO RM965,000.00 FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

The chairman tabled the following proposed ordinary resolution 5:-

"THAT the payment of directors' fees of the Company and its subsidiaries amounting to RM965,000.00 for the financial year ended 31 December 2023, be and is hereby approved."

The chairman informed the shareholders and proxies that the interested directors had undertaken to abstain from voting in respect of ordinary resolution 5.

ORDINARY RESOLUTION 6

TO REAPPOINT MESSRS ERNST & YOUNG PLT AS AUDITORS OF THE COMPANY TO HOLD OFFICE UNTIL THE CONCLUSION OF THE NEXT ANNUAL GENERAL MEETING AT A REMUNERATION TO BE DETERMINED BY THE DIRECTORS OF THE COMPANY

The chairman tabled the following proposed ordinary resolution 6:-

"THAT Messrs Ernst & Young PLT be reappointed as auditors of the Company to hold office until the conclusion of the next annual general meeting and that the directors be authorised to fix their remuneration."

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HAP SENG CONSOLIDATED BERHAD

197601000914 (26877-W)

Minutes of the Forty-Eighth Annual General Meeting held on 29 May 2024

SPECIAL BUSINESS:-

ORDINARY RESOLUTION 7

AUTHORITY TO ALLOT SHARES PURSUANT TO SECTION 75 OF THE COMPANIES ACT 2016

The chairman explained that the special business for this meeting was to consider and if thought fit, to approve the authority to the directors to issue shares in the Company up to an amount not exceeding 10% of the total number of issued shares of the Company. As at the date of this meeting, no new shares had been issued pursuant to the mandate obtained at the last annual general meeting.

The chairman tabled the following proposed ordinary resolution 7:-

"THAT the directors of the Company be and are hereby empowered pursuant to section 75 of the Companies Act 2016 to allot shares in the Company up to an amount not exceeding 10% of the total number of issued shares of the Company, and that such authority shall continue to be in force until the conclusion of the next annual general meeting of the Company.

ORDINARY RESOLUTION 8

PROPOSED RENEWAL OF AND NEW SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

The chairman explained that item 6 on the agenda was to consider and if thought fit, to pass the ordinary resolution on the proposed renewal of and new shareholders' mandate for recurrent related party transactions with the respective related parties. The related parties are:

1. Gek Poh (Holdings) Sdn Bhd Group;
2. Lei Shing Hong Limited Group;
3. Samling Strategic Corporation Sdn Bhd Group;
4. Corporated International Consultants Sdn Bhd;
5. Incorporated Consortium Sdn Bhd; and
6. Messrs Shim Pang & Co.

The chairman mentioned that the proposed ordinary resolution 8, if passed, would allow Hap Seng Consolidated Berhad Group to enter into recurrent related party transactions pursuant to paragraph

10.09 of the Listing Requirements. Further information on the proposed shareholders' mandate for recurrent related party transactions with the respective related parties was set out in section 2.3 of Part A of the Circular/Statement to shareholders dated 30 April 2024.

For purpose of good order, the chairman highlighted to the meeting that the interested major shareholders, interested directors and/or persons connected to them had undertaken to abstain from voting in respect of their direct/indirect shareholdings on the ordinary resolution where they have an interest or deemed to have an interest.

The chairman tabled the following proposed ordinary resolution 8:-

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HAP SENG CONSOLIDATED BERHAD

197601000914 (26877-W)

Minutes of the Forty-Eighth Annual General Meeting held on 29 May 2024

"THAT proposed renewal of and new shareholders' mandate for the recurrent related party transactions with the related parties as set out in section 2.3 of Part A of the Circular/Statement to shareholders dated 30 April 2024 be and is hereby approved."

ORDINARY RESOLUTION 9

PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

The chairman explained that item 7 on the agenda was to consider and if thought fit, to pass the ordinary resolution to renew shareholders authorisation for the Company to purchase its own shares through Bursa Malaysia Securities Berhad up to a maximum of 10% of the total number of issued shares of the Company. Further information on the proposed renewal of the share buy-back authority was set out in the share buy-back statement, which has earlier been sent to all shareholders.

The chairman tabled the following proposed ordinary resolution 9:-

"THAT the proposed renewal of the share buy-back authority as set out in the Notice of meeting be and is hereby approved."

Q&A SESSION

The chairman informed the meeting that prior to the annual general meeting, the Minority Shareholders Watch Group ("MSWG") and shareholders had submitted their questions to the Company. The questions and responses thereto are enclosed herewith as Appendix A and Appendix B respectively.

The chairman invited questions from shareholders and proxies via live web and all questions were dealt with accordingly. In summary, the questions and responses thereto are enclosed herewith as Appendix C.

POLL VOTING

The chairman informed the meeting that the voting session would be closed in 5 minutes and the counting of votes as well as the validation by independent scrutineer would take approximately 10 minutes. He also added that the meeting should resume approximately at 15 minutes later for declaration

of the poll results.

POLL RESULTS

The chairman announced that the meeting had resumed for announcement of poll results. Based on the enclosed poll results as set out in Appendix D which had been validated by GovernAce, the independent scrutineer, the chairman declared that all the resolutions are carried.

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HAP SENG CONSOLIDATED BERHAD

197601000914 (26877-W)

Minutes of the Forty-Eighth Annual General Meeting held on 29 May 2024

CONCLUSION

There being no other business, the meeting concluded at 11.15 am with a vote of thanks to the chair.

__________________

CHAIRMAN

Kuala Lumpur

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HAP SENG CONSOLIDATED BERHAD

197601000914 (26877-W)

Minutes of the Forty-Eighth Annual General Meeting held on 29 May 2024

Queries from the Minority Shareholder Watch Group (MSWG)

Letter dated 23 May 2024

APPENDIX A

Operational & Financial Matters

1. The Group possesses two pieces of freehold development land (Lot PT 50086 and Lot PT50386) with a total carrying amount of RM2 billion, representing approximately 11% of the total assets as of 31 December 2023. These lands are designated for the upcoming KL Midtown Mixed Development at KL Metropolis, encompassing five key components: luxury service residences, a retail mall, signature offices, corporate offices, and the prestigious 5-star Hyatt Regency Kuala Lumpur hotel. (Pages 19 and 280 of AR 2023)
2. 1. Q: While the retail mall and the hotel are slated for opening in 2025, what is the status of the luxury service residences, signature offices, and corporate offices?
   2. 1. KL Midtown is an integrated mixed development. Construction of the signature offices is expected to complete in 2025 to be followed by the corporate offices and luxury service residences. We are currently working closely with AEON Malaysia to facilitate the launching of their inaugural lifestyle mall in Malaysia at KL Midtown, which is expected before end of 2025.
   3. Q: The development at KL Metropolis was first disclosed in the 2016 Annual Report and remains one of the upcoming projects of the Property division. What factors have contributed to the delay in launching this development project?
   4. 1. As mentioned earlier, KL Midtown is an integrated development with diverse yet complementary components. In our aspiration to strive for perfect harmony and seamless connectivity among the various components, we have expended much effort, time and resources to bring in the world-class expertise into this project including Skidmore, Owings & Merrill (SOM) headquartered in Chicago as well as Kengo Kuma & Associates from Tokyo. We are confident that our aspiration will come to fruition in time to come.
3. Q: The Property division recorded an operating loss of RM60.4 million (2022: operating profit of RM158.3 million). (Page 18 of AR2023)

Which subdivision (i.e., investment properties or property development) primarily attributed to the operating loss of the Property division, and what are the contributing factors?

1. The operating loss of Property division was mainly attributable to:
2. • inventory write down of RM57.9 million for aged out project stocks under property development segment; and
   • net loss from fair value adjustment of RM96.8 million on certain commercial properties under investment property segment.

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HAP SENG CONSOLIDATED BERHAD

197601000914 (26877-W)

Minutes of the Forty-Eighth Annual General Meeting held on 29 May 2024

Queries from the Minority Shareholder Watch Group (MSWG)

Letter dated 23 May 2024

3. Q: The average age of the oil palm is 16.9 years (2022: 16.6 year), with approximately

47% of the total planted area comprising oil palms aged more than 17 years (2022: 46%). (Page 11 of AR 2023 and Page 11 of AR 2022)

Given that oil palms typically reach their peak production between the 7th and 18th years after planting before experiencing a decline in fruit volume, does the Group intend to expedite the replanting of oil palms to optimise production? If not, why?

1. Our target replanting rate is 4%. However, the Group's replanting programme takes into consideration other factors such as the Group's profitability and replanting costs for future years and seek to balance these factors each year depending on the market conditions.

4. Hap Seng Star recorded a turnover of RM1.08 billion (2022: RM1.43 billion) with an

operating profit of RM42.2 million (2022: RM40.8 million). The decrease in revenue was due to lower sales volume, partly due to the expiration of the sales tax exemption in March 2023. Mercedes-Benz Malaysia's adoption of the agency model on 1 September 2023, which changed the revenue recognition basis, also made 2023 revenue not directly comparable to 2022.

Meanwhile, the non-national makes registered a higher sales volume of 237,860 units or 6.1% growth compared to 2022 with 224,112 units. (Pages 30 & 31 of AR 2023)

1. Q: What was the sales volume of Hap Seng Star in FY2023 compared to the previous year?
2. 1. Hap Seng Star recorded a 15% decrease in sales unit over the previous year.
3. Q: What factors contributed to the lower sales volume in FY2023 despite a 6.1% growth in non-national makes sales?
4. 1. In 2023 Mercedes-Benz did not participate in the growth of the non-national makes sales, mainly due to supply shortages during the first half of the year. The overall increase of 6.1% in the non-national makes was attributable to many factors, which included the entrance of new players like BYD and Cherry which collectively contributed around 3% to the overall non-national makes sales in FY2023.

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HAP SENG CONSOLIDATED BERHAD

197601000914 (26877-W)

Minutes of the Forty-Eighth Annual General Meeting held on 29 May 2024

Queries from the Minority Shareholder Watch Group (MSWG)

Letter dated 23 May 2024

1. Q: Please provide insights on Mercedes-Benz's change in agency model. Other than the change in revenue recognition basis, does the adoption of the new agency model impact the profit per car sold?
2. 1. We are seeing different impacts to the financials with the adoption of the agency model. There were changes made to the margin structure under the agency agreement as compared to the dealership model. This is due to the shift in risks and responsibilities on inventory, pricing and discounts from the todays agents back to the principal Mercedes-Benz Malaysia.

5. Q: Fertiliser trading operation in Malaysia, a primary revenue stream of the Group, experienced a decline in revenue by 33.5% to RM1.57 billion (2022: RM2.36 billion) due primarily to lower fertiliser prices. Sales volume also reduced by 7.0% to 1,000,000 tonnes (2022: 1,076,000 tonnes) on account of reduced demand. (Page 38 of AR2023)

What is the outlook for fertiliser demand in FY2024? Does the Group anticipate the downward demand trend in Malaysia to persist?

A: The Fertilizers Division services primarily the oil palm plantation industry in Malaysia and Indonesia. Fertilizers demand by the oil palm plantation industry is driven by a number of factors, such as planted hectarage, CPO price, fertilisers price, inclement weather and labour supply. With CPO prices sustaining at around RM4,000 levels, coupled with more affordable fertilizer prices, demand for fertilisers in 2024 is expected

	to be stable.
6.	Inventories written down and impairment loss on trade receivables
		Group
		2023		2022
		RM'000		RM'000
	Net inventories written down	53,931		11,016
	Impairment loss on trade receivables	64,865		10,470
	(Page 239 of AR2023)

1. Q: Please provide a breakdown for inventories written down and impairment loss on trade receivables by operating segments.
2. 1. The breakdown of inventories written down / (reversal) of RM53.9 million [2022: RM11.0 million] are as follows:
   2. • Property - RM57.9 million [2022: Nil]
      • Automotive - RM12.3 million [2022: RM4.2 million]
      • Trading - (RM14.0 million) [2022: RM6.5 million]
      • Building Materials - (RM2.3 million) [2022:RM0.3 million]

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