OLDTOWN BERHAD (Company No: M) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE:-

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1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Bursa Malaysia Securities Berhad has not perused the sections pertaining to the Proposed SBB Renewal prior to the issuance of this Circular, takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular. OLDTOWN BERHAD (Company No: M) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE:- (I) PROPOSED RENEWAL OF EXISTING SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE FOR THE COMPANY AND/OR ITS SUBSIDIARIES TO ENTER INTO RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE WITH RELATED PARTIES; AND (II) PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR THE AUTHORITY TO THE COMPANY TO PURCHASE ITS OWN SHARES OF UP TO TEN PER CENT (10%) OF THE ISSUED AND PAID-UP SHARE CAPITAL Adviser: cfsolutions c f S o lu t i o n s S d n B h d ( W ) licensed corporate finance adviser The resolutions in respect of the above proposals will be tabled as Special Business at the Eighth (8 th ) Annual General Meeting ( AGM ) of the Company to be held at Ballroom 2, 3 & 4, Level 6, Weil Hotel, 292, Jalan Sultan Idris Shah, Ipoh, Perak Darul Ridzuan on Thursday, 8 September 2016 at a.m. The Notice of AGM, together with the Form of Proxy is enclosed in the Annual Report of the Company for the financial year ended 31 March An extract of the relevant resolutions in the Notice of AGM convening the Eighth (8 th ) AGM of the Company is set out in this Circular. The Form of Proxy should be lodged at the Share Registrar of the Company not less than forty-eight (48) hours before the time appointed for holding the meeting. This Circular is dated 29 July 2016

2 DEFINITIONS Unless otherwise indicated, the following definitions apply throughout this Circular:- ACL : Advance City Limited, a wholly-owned subsidiary of Oldtown incorporated in Hong Kong Special Administrative Region, People s Republic of China Act : The Companies Act, 1965 and any amendment thereto AEC : April Eight (China) Limited, a 51% subsidiary of OTL incorporated in Hong Kong Special Administrative Region, People s Republic of China AGM : Annual General Meeting of Oldtown Board : Board of Directors of Oldtown Bursa Securities : Bursa Malaysia Securities Berhad CMSA : The Capital Markets and Services Act, 2007 Code : Malaysian Code on Take-over and Mergers, 2010 as amended from time to time Conneczone : Conneczone Sdn Bhd, a 80% subsidiary of Oldtown Director : A director as defined in Section 2(1) of the CMSA and includes any person who is or was within the preceding six (6) months of the date on which the terms of the Recurrent Transaction were agreed upon, a director of Oldtown or any other company which is its subsidiary or holding company or a chief executive officer of the Company, its subsidiary or holding company Dynasty Kitchen : Dynasty Kitchen Sdn Bhd, a wholly-owned indirect subsidiary of Oldtown EGM : Extraordinary General Meeting Emperor s Kitchen : Emperor s Kitchen Sdn Bhd, a wholly-owned subsidiary of Oldtown EPS : Earnings per share Gongga Food : Gongga Food Sdn Bhd, a wholly-owned subsidiary of Oldtown GSF : Guangzhou Supreme Food Service Limited, a wholly-owned subsidiary of AEC incorporated in Guangzhou, People s Republic of China HKD : Hong Kong Dollar Kopitiam Asia Pacific : Kopitiam Asia Pacific Sdn Bhd, a wholly-owned subsidiary of Oldtown Listing Requirements : Main Market Listing Requirements of Bursa Securities including the relevant Practice Notes and any amendments thereto LPD : The latest practicable date prior to the issuance of this circular, being 30 June 2016 Major Shareholder : A person who is or was within the preceding 6 months of the date on which the terms of the transaction were agreed upon, a person who has an interest or interests in one or more voting shares in Oldtown, its subsidiary company or its holding company and the nominal amount of that share, or the aggregate of the nominal amounts of those shares is:- (a) 10% or more of the aggregate of the nominal amounts of all the voting shares in the company; or (b) 5% or more of the aggregate of the nominal amounts of all the voting shares in the company where such person is the largest shareholder of the company Market Day : Any day from Mondays to Fridays (both inclusive) which Bursa Securities is open for the trading of securities i

3 DEFINITIONS (Cont d.) NA : Net assets Oldtown or the Company : Oldtown Berhad Oldtown Group or the Group : Oldtown Berhad and its subsidiaries Old Town International : Old Town International Sdn Bhd, the holding company of Oldtown Berhad OTK HK : OTK (HK) Investment Limited, a wholly-owned indirect subsidiary of Oldtown incorporated in Hong Kong Special Administrative Region, People s Republic of China OTL : Old Town Logistics Sdn Bhd, a wholly-owned subsidiary of Oldtown OTM : Old Town (M) Sdn Bhd, a wholly-owned subsidiary of Oldtown Proposals : Proposed RRPT Mandates and Proposed SBB Renewal collectively Proposed New RRPT Mandate : Proposed new shareholders mandate for the Oldtown Group to enter into Recurrent Transactions Proposed RRPT Mandates : Proposed RRPT Renewal and Proposed New RRPT Mandate collectively Proposed RRPT Renewal : Proposed renewal of existing shareholders mandate for the Oldtown Group to enter into Recurrent Transactions Proposed SBB Renewal : Proposed renewal of shareholders mandate for the authority to the Company to purchase its own shares of up to ten per cent (10%) of the issued and paid-up share capital Purchased Shares : Shares purchased pursuant to the Proposed SBB Renewal Recurrent Transaction(s) or RRPT : Recurrent transaction(s) of a revenue or trading nature entered into by the Oldtown Group which involves the interest, direct or indirect of a Related Party(ies) and which are necessary for its day-to-day operations Related Parties : Director(s), Major Shareholder(s) or persons connected with such Director(s) or Major Shareholder(s) and sen : Ringgit Malaysia and sen, the legal currency in Malaysia SC : Securities Commission, Malaysia Share(s) : Ordinary share(s) of 1.00 each in Oldtown Shareholders : Shareholders of Oldtown Shenzhen KAP : Shenzhen Kopitiam Asia Pacific Limited, a wholly-owned subsidiary of OTK HK incorporated in the territory of Shenzhen, People s Republic of China Shenzhen Oldtown : Shenzhen OldTown White Coffee Trading Co. Ltd., a wholly-owned subsidiary of ACL incorporated in the territory of Shenzhen, People s Republic of China Substantial Shareholder : A person who has an interest or interests in one or more voting shares in a company and the nominal amount of those shares, is not less than 5% of the aggregate of the nominal amounts of all the voting shares in the company. For the purpose of this definition, interest in shares shall have the meaning given in Section 6A of the Act White Cafe : White Cafe Sdn Bhd, a wholly-owned subsidiary of Oldtown White Cafe Marketing : White Cafe Marketing Sdn Bhd, a wholly-owned subsidiary of Oldtown ii

4 TABLE OF CONTENTS LETTER TO THE SHAREHOLDERS OF OLDTOWN CONTAINING: PAGE 1. INTRODUCTION 1 2. PROPOSED RRPT MANDATES 2 3. PROPOSED SBB RENEWAL 6 4. RATIONALE FOR THE PROPOSALS 9 5. FINANCIAL EFFECTS OF THE PROPOSALS IMPLICATIONS RELATING TO THE CODE CONDITIONS OF THE PROPOSALS INTEREST OF DIRECTORS AND/OR MAJOR SHAREHOLDERS AND PERSON CONNECTED WITH THEM DIRECTORS RECOMMENDATION AGM FURTHER INFOATION 15 APPENDIX I - FURTHER INFOATION 16 APPENDIX II - DETAILS OF THE PROPOSED RRPT RENEWAL 19 APPENDIX III - DETAILS OF THE PROPOSED NEW RRPT MANDATE 33 APPENDIX IV - EXTRACT OF RESOLUTIONS FROM THE NOTICE OF AGM 34 iii

5 OLDTOWN BERHAD (Company No: M) (Incorporated in Malaysia) Registered Office: Unit 30-01, Level 30, Tower A Vertical Business Suite Avenue 3, Bangsar South, No 8, Jalan Kerinchi Kuala Lumpur 29 July 2016 Board of Directors:- Datuk Dr. Ahmed Tasir Bin Lope Pihie (Independent Non-Executive Chairman) Lee Siew Heng (Group Managing Director) Dato Wong Guang Seng (Independent Non-Executive Director) Tan Chon Tan Chong Ling (Independent Non-Executive Director) Chuah Seong Meng (Executive Director) Clarence D Silva A/L Leon D Silva (Executive Director) Goh Ching Mun (Executive Director) Tan Say Yap (Executive Director) TO THE SHAREHOLDERS OF OLDTOWN, Dear Sir/Madam, (I) PROPOSED RENEWAL OF EXISTING SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE FOR THE COMPANY AND/OR ITS SUBSIDIARIES TO ENTER INTO RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE WITH RELATED PARTIES; AND (II) PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR THE AUTHORITY TO THE COMPANY TO PURCHASE ITS OWN SHARES OF UP TO TEN PER CENT (10%) OF THE ISSUED AND PAID-UP SHARE CAPITAL (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) 1. INTRODUCTION On 28 June 2016, the Company had announced that the Company proposes to seek the Shareholders approval for the Proposals. The purpose of this Circular is to set out the relevant details of the Proposals and to seek your approval for the resolutions pertaining to the Proposals to be tabled at the forthcoming AGM. 1

6 2. PROPOSED RRPT MANDATES Pursuant to Paragraph 10.09(2) of the Listing Requirements, a listed company may seek shareholders mandate in respect of related party transactions which involve Recurrent Transactions subject to the following:- (a) the transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public; (b) the shareholders mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders mandate during the financial year where the aggregate value is equal to or more than the threshold prescribed in Paragraph 10.09(1) of the Listing Requirements; (c) the circular to shareholders for the shareholders mandate includes the information as may be prescribed by Bursa Securities. The draft circular must be submitted to Bursa Securities together with a checklist showing compliance with such information; (d) in a meeting to obtain shareholders mandate, the interested Director, interested Major Shareholder or interested person connected with a Director or Major Shareholder; and where it involves the interest of an interested person connected with a Director or Major Shareholder, such Director or Major Shareholder must not vote on the resolution approving the transactions. An interested Director or interested Major Shareholder must ensure that person(s) connected with him abstain from voting on the resolution approving the transactions; and (e) the listed issuer immediately announces to Bursa Securities when the actual value of a Recurrent Transaction entered into by the listed issuer, exceeds the estimated value of the Recurrent Transaction disclosed in this Circular by 10% or more with the information as may be prescribed by Bursa Securities. The Board herein seeks the approval of the Shareholders for the Proposed RRPT Mandates. The Recurrent Transactions are entered into in the ordinary course of business between the Group and companies/parties in which certain Directors, Major Shareholders and/or persons connected to them have an interest in. 2.1 Nature of the Recurrent Transactions Contemplated Under the Mandates and Related Parties The principal activity of Oldtown is investment holding. The particulars of its subsidiaries and their principal activities as at LPD are as follows:- Subsidiaries % effective equity interest Principal activities ACL 100 Marketing of beverages AEC 51 Investment holding Conneczone 80 Operator of cafe outlets Dynasty Confectionery Sdn Bhd 100 Central bakery and confectionery processing centre Dynasty Kitchen 100 Dormant Esquire Chef Sdn Bhd 100 Dormant Emperor s Kitchen 100 Central food processing centre and trading of food products Gongga Food 100 Manufacture of roasted coffee powder and procurement of food items GSF 51 Central food processing business and trading of food products Kopitiam Asia Pacific 100 Franchisor of cafe outlets and provision of management services Old Town Kopitiam Sdn Bhd 100 Operator of cafe outlets Old Town Kopitiam Butterworth Sdn Bhd 100 Operator of cafe outlets Old Town Kopitiam Cheras Sdn Bhd 100 Operator of cafe outlets 2

7 Subsidiaries % effective equity interest Principal activities Old Town Kopitiam Kuala Lumpur Sdn Bhd 100 Dormant Oldtown APP Sdn Bhd 100 Dormant Oldtown Singapore Pte Ltd 100 Franchisor of cafe outlets, provision of management services, procurement of food items and operator of cafe outlets OTK HK 100 Investment holding OTL 100 Investment holding OTM 100 Investment holding Shenzhen KAP 100 Wholesale, import and export, and related business of utensils and electrical appliances to be used for coffee house and other catering service entities Shenzhen Oldtown 100 Engaged in wholesale, export, import and related business of coffee and related products White Cafe 100 Manufacturing and marketing of beverages White Cafe Marketing 100 Inactive It is anticipated that the Oldtown Group would, in the ordinary course of business, enter into transactions with various Related Parties. 2.2 Classes of Related Parties and Nature of Transactions The Proposed RRPT Renewal will apply to the Recurrent Transactions by the Oldtown Group with the Related Parties, details of which are as detailed in Appendix II. For the above Recurrent Transactions, there is no amount due and owing to/from the Related Parties as at 31 March 2016 which exceeds credit period. The Proposed New RRPT Mandate will apply to fresh Recurrent Transactions by the Company with the following class of Related Party, details of which are as detailed in Appendix III. 2.3 Procedures Engaged to Determine Transaction Prices The transaction prices, terms and conditions of the transactions are determined by market forces, under similar commercial terms for transactions with third parties which depend on the demand and supply of the products in the market and with no special treatment accorded to the Related Parties. Transactions entered into will be at prevailing market prices and/or taking into consideration the prevailing market conditions as well as inter-alia, pricing, quality of the products and/or services and the timing to delivery. The Related Parties undergo the same key criteria and selection process for potential franchisees as third parties. The pricing of the services, products and materials to be provided/supplied and/or received/purchased is determined in accordance with the Group s usual business practices and policies and consistent with the usual margins of the Group with third parties. The Oldtown Group has implemented procedures to ensure proper identification and reporting of RRPT, and to ensure that the RRPT is conducted on an arms-length basis, on prices and terms not more favourable to the Related Parties than those generally available to the public and not to the detriment of the minority shareholders of the Group, as follows:- (a) All Directors and Major Shareholders have been informed and briefed on the procedures put in place for the Group by the management of the Group in relation to RRPT entered/to be entered into by the Group; (b) The interested Directors and Major Shareholders are required to declare and disclose to the Board in a timely manner on transactions in which they are deemed interested; 3

8 (c) Records pertaining to the RRPT will be analysed and monitored by the management. The status of these RRPT (including debt settlement / collection, interest charges / late payment charges) will be analysed, scrutinized and monitored by the management; (d) All RRPT entered into pursuant to the shareholders mandate have been / will be recorded in a register to be maintained by the Company; (e) As a periodic check, an updated list of Related Parties will be circulated to the Directors and management of the Company and its subsidiaries quarterly to ensure that all RRPT is scrutinized and identified; (f) Where applicable, the terms of the pricing of the RRPT will be consistent with the Group s usual business practices and policies and will take into consideration the terms and conditions, level of service and expertise required, quality, reliability and consistency of products and services as compared with the prevailing market rate of prices and general practices by other service providers of similar capacity and capability; (g) At least two other contemporaneous transactions with unrelated third parties for similar products/services and/or quantities will be used as comparison, wherever possible, to determine whether the price and terms offered to/by related third parties are fair and reasonable and comparable to those offered to/by other unrelated third parties for the same or substantially similar type of products/services and/or quantities. In the event that quotation or comparative pricing from unrelated third parties cannot be obtained, the transaction prices will be reviewed by the Audit Committee based on usual business practices of the Group to ensure that the RRPT are fair and reasonable to the Group as to the prices and terms, and are not detrimental to the minority shareholders of Oldtown Group. The Audit Committee may, in its review of the RRPT, request for additional information from unrelated third parties or independent advisers as it deems fit; (h) All RRPT will be reviewed by the Audit Committee of the Company on a quarterly basis. Any member of the Audit Committee may as he deems fit, request for additional information pertaining to the RRPT from independent sources or advisers. Where the RRPT is estimated to exceed the percentage ratio of 1% or 1 million in value whichever is higher, the RRPT will be reviewed and approved by the Audit Committee. Where the RRPT is below the above threshold, the RRPT can be reviewed and approved by any two non-interested authorised personnel (comprising any one of the Directors and any one of the General Managers) and thereafter, perused by the Audit Committee quarterly; (i) The Audit Committee will report its findings to the Board for further action if during the quarterly review, the Audit Committee is of the view that the guidelines and procedures are not sufficient to ensure that the RRPT are carried on normal commercial terms and/or the RRPT are deemed detrimental to the minority shareholders of Oldtown; (j) The Audit Committee shall review procedures, and shall continue to review the procedures, on an annual basis or whenever the need arises; (k) The annual internal audit plan shall incorporate a review of all RRPT entered into pursuant to the Proposed RRPT Mandates to ensure that all relevant approvals have been obtained and the review procedures in respect of such transactions are adhered to. Any divergence will be reported to the Audit Committee; and (l) If a member of the Board or the Audit Committee has an interest in the transaction, he will abstain from any deliberation and any decision making by the Board or the Audit Committee in respect of the transaction. 4

9 2.4 Statement by the Audit Committee The Audit Committee of the Company has seen and reviewed the procedures mentioned in Section 2.3 mentioned above and is of the view that:- (a) the terms of the procedures established are sufficient to ensure that the Recurrent Transactions are:- (i) on terms not more favourable to the Related Parties than those generally available to the public, and (ii) are not to the detriment of the minority shareholders, (b) the Group has in place adequate procedures and processes to monitor, track and identify Recurrent Transactions in a timely and orderly manner, and such procedures and processes are reviewed on a quarterly basis or whenever the need arises. 2.5 Validity Tenure of Proposed RRPT Mandates The Proposed RRPT Mandates, if approved by the shareholders of Oldtown at the forthcoming AGM, will take effect from the date of the passing of the Ordinary Resolution proposed at the AGM and is subject to annual renewal. In this respect, the mandate arising therefrom will continue to be in force until:- (a) the conclusion of the next AGM of the Company following the general meeting at which such Mandate was passed, at which time it will lapse, unless by an ordinary resolution passed at the meeting, the authority is renewed, either unconditionally or subject to conditions; (b) the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (c) revoked or varied by ordinary resolution passed by the shareholders of the Company in general meeting, whichever is the earlier. 2.6 Disclosure in Annual Report Disclosure will be made in the Annual Report of the Company of the breakdown of the aggregate value of transactions conducted pursuant to the shareholders mandates during the financial year and in the Annual Report for the subsequent financial year during which the shareholders mandate remain in force containing the following information:- (a) the type of Recurrent Transactions made; and (b) the names of the Related Parties involved in each type of the Recurrent Transactions made and their relationships with Oldtown. 5

10 3. PROPOSED SBB RENEWAL 3.1 Details of the Proposed SBB Renewal The Board is seeking the approval of the Shareholders to purchase up to ten per cent (10%) of the issued and paid-up share capital of Oldtown through stockbroker(s) appointed/to be appointed at a later date, subject to the Act, Listing Requirements and any prevailing laws, rules, regulations and guidelines issued by the relevant authorities at the time of purchase. The approval from the shareholders for the Proposed SBB Renewal would be effective immediately upon the passing of the ordinary resolution for the Proposed SBB Renewal at the forthcoming AGM and shall be valid until:- (a) the conclusion of the next AGM of the Company following the general meeting at which such mandate was passed, at which time it will lapse, unless by an ordinary resolution passed at the meeting, the authority is renewed, either unconditionally or subject to conditions; (b) the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of Act); or (c) revoked or varied by ordinary resolution passed by the shareholders in general meeting, whichever occurs first. 3.2 Quantum Based on the issued and paid-up share capital of Oldtown of 463,239,101 comprising 463,239,101 Oldtown Shares as at LPD, a maximum of 46,323,900 Oldtown Shares representing 10% of the issued and paid-up share capital of Oldtown may be repurchased by the Company pursuant to the Proposed SBB Renewal. Nevertheless, the actual number of Shares in Oldtown to be purchased by the Company pursuant to the Proposed SBB Renewal, the total amount of funds involved for each purchase and the timing of the purchase(s) will depend on inter-alia, the market conditions and sentiments of the stock market as well as the availability of financial resources of the Company and the availability of the retained profits reserve and the share premium reserve of the Company. 3.3 Maximum Amount of Funds to be Allocated and the Source of Funds The shareholders approval for the Proposed SBB Renewal does not impose an obligation on the Company to purchase its own shares on Bursa Securities. Rather, the Proposed SBB Renewal will allow the Board to exercise the power of the Company to purchase its own ordinary shares at any time within the above-mentioned time period using internally generated funds and/or external borrowings. The amount of internally generated funds and/or external borrowings to be utilised will only be determined later depending on the availability of internally generated funds and bank borrowings at the time of the purchase(s), actual number of Oldtown Shares to be purchased, the economic and market conditions and other cost factors. Should the Proposed SBB Renewal be financed through bank borrowings, the Company will ensure that it will have sufficient funds to repay such borrowings as and when they are due. The Proposed SBB Renewal is expected to reduce the cash flow of the Oldtown Group. 6

11 The maximum funds to be utilized for the Proposed SBB Renewal shall not exceed the aggregate of retained profits and/or share premium accounts of the Company. Based on the latest audited financial statements for the financial year ended 31 March 2016, the share premium reserves and retained profit of Oldtown were 9,435,179 and 12,513,649 respectively, giving an aggregate of 21,948,828. As at the date of this Circular, the results for the first quarter ended 30 June 2016 has yet to be released. 3.4 Treatment of Purchased Shares In accordance with Section 67A of the Act, the Directors are able to deal with any Oldtown Shares bought pursuant to the Proposed SBB Renewal in the following manner: (a) to cancel the Oldtown Shares so purchased; or (b) to retain the Oldtown Shares so purchased as treasury shares for distribution as dividends to shareholders and/or resell through Bursa Securities in accordance with the relevant rules of Bursa Securities; or (c) combination of (a) and (b) above. Upon each purchase of the Shares, an immediate announcement will be made to Bursa Securities in respect of the intention of the Board on the treatment of the Purchased Shares. An immediate announcement will also be made to Bursa Securities of any resale or cancellation of Shares. As at the date of the Circular, the Board has yet to make any decision with regards to the treatment of the Shares so purchased in the future. Where the Directors resolve to cancel the Shares so purchased, the Company s issued and paid-up share capital shall be diminished by the cancellation of the Shares so purchased and the amount by which the Company s issued share capital is diminished shall be transferred to a capital redemption reserve. It is pertinent to note that the cancellation of Shares made pursuant to Section 67A of the Act shall not be deemed to be a reduction in share capital as the capital redemption reserve shall be treated as if it were part of shareholders funds. 3.5 Ranking While the Shares so purchased are held as treasury shares, the rights attached to them as to voting, dividends and participation in any other distribution or otherwise are suspended and the treasury shares shall not be taken into account in calculating the number or percentage of Shares for any purpose including substantial shareholding, takeovers, notices, the requisition of meetings, the quorum for a meeting and the result of a vote on a resolution at a meeting. 3.6 Purchase Price In compliance with the Listing Requirements, Oldtown may only purchase its own Shares at a price, which is not more than fifteen per cent (15%) above the weighted average market price for the five (5) market days immediately before the purchase. 3.7 Resale Price In the case of a resale of treasury Shares, the Company may only resell the Shares at a price which is:- (a) not less than the weighted average market price of Oldtown Shares for the five (5) market days immediately before the resale; or 7

12 (b) a discounted price of not more than five per cent (5%) to the weighted average market price of Oldtown Shares for five (5) market days immediately before the resale provided that: (i) the resale takes place not earlier than 30 days from the date of purchase; and (ii) the resale price is not less than the cost of purchase of Oldtown Shares being resold. 3.8 Other Regulatory Requirements Based on the Listing Requirements, the Proposed SBB Renewal is subject to, inter-alia, the following rules: (a) The Proposed SBB Renewal shall only be effected on the market of Bursa Securities via its automated trading system and shall exclude any direct business transactions as defined according to the rules of Bursa Securities; (b) The Company shall appoint not more than two (2) stockbroking companies and ensure that all dealings in relation to the Proposed SBB Renewal are made through the appointed stockbroking companies only; (c) An immediate announcement will be made to Bursa Securities on any purchase of Shares as well as any resale or cancellation of Purchased Shares; and (d) As at LPD, the Record of Depositors of Oldtown showed that 150,486,387 Shares representing approximately 33.33% of the issued and paid-up share capital were held by public shareholders. Assuming that the Proposed SBB Renewal is carried out in full and the substantial shareholdings are not varied, the public shareholding spread of the Company would be potentially reduced to 27.81%. The Board undertakes that the Proposed SBB Renewal will be conducted in accordance with the laws prevailing at the time of the purchase including compliance with the Listing Requirements that a public shareholding spread of 25% in the hands of public shareholders. 3.9 Advantages and Disadvantages of the Proposed SBB Renewal Advantages (a) The Proposed SBB Renewal, if implemented, will enable the Company to stabilise the supply and demand of Oldtown Shares on Bursa Securities and thereby support the Company s fundamental value; (b) The resultant reduction of share capital base (in respect of Shares so purchased which are then cancelled) is expected to improve the EPS, and may improve the NA per Share as well as the probability of permitting the Company to declare a higher quantum of dividend in future; (c) It provides flexibility for the Company in attaining its desired capital structure, in terms of the debt and equity composition and the size of equity; (d) It allows the Company to take preventive measures against excessive speculation, particularly when the Shares are undervalued which would in turn stabilize the market price of Oldtown Shares to enhance investors confidence; (e) The Board would have the opportunity to utilise its financial resources not immediately required for other use to purchase Oldtown Shares. Oldtown may have the opportunity for potential gains if the purchased Oldtown shares which are retained as treasury shares are resold at prices higher than their purchase price and consequently increase the working capital and NA of the Company; and (f) In the event that the treasury shares are distributed as dividends by the Company, it may then serve to reward the Shareholders of Oldtown. 8

13 3.9.2 Disadvantages (a) The purchases may result in a reduction of the quantum of reserves available for distribution as cash dividends and/or bonus issue(s) to the Shareholders if the Shares so purchased are cancelled; (b) The purchase of existing Shares will reduce the financial resources of the Company which may otherwise be retained in the business to generate further profits; (c) The funds allocated for the Proposed SBB Renewal may result in the Oldtown Group foregoing other investment opportunities that may emerge in the future; and (d) The working capital of the Group may also be affected, as any purchase of Oldtown Shares will reduce the Group s working capital depending on the actual number of shares purchased and their purchase price. However, the working capital of the Oldtown Group may recover and increase upon the reselling of the Purchased Shares held as treasury shares. The Board will be mindful of the interests of the Group and the shareholders in implementing the Proposed SBB Renewal. 4. RATIONALE FOR THE PROPOSALS 4.1 Rationale for the Proposed RRPT Mandates The Recurrent Transactions entered or to be entered into by the Oldtown Group under the Proposed RRPT Mandates with the Related Parties are in the ordinary course of business on normal commercial terms for the Group s day-to-day operations. They are recurring transactions of a revenue or trading nature which are likely to occur with some degree of frequency and arise at any time and from time to time. The above Recurrent Transactions are either recurring transactions of a revenue or trading nature which will generate income and profitability to the Group and the Related Parties or the receipt of support services which are necessary to facilitate the requirements and functions of the Group. Hence, they are of benefit to the Oldtown Group. The Recurrent Transactions are intended to meet the business needs of the Group at the best possible terms. Obtaining the shareholders approval for the Proposed RRPT Mandates on an annual basis would allow the Oldtown Group to pursue business opportunities which are timesensitive in nature, and will eliminate the need for the Company to make announcements and/or convene separate general meetings from time to time to seek shareholders approval, as and when potential Recurrent Transactions arise, thereby reducing the administrative time, efforts and expenses associated with the convening of such meetings. This will allow the human resources and time to be channeled towards attaining the corporate objectives of the Oldtown Group. The Proposed RRPT Mandates is sought to obtain shareholders approval for the mandate to be valid from the forthcoming AGM to the next AGM of the Company. Thereafter, approval from shareholders for a renewal of shareholders mandate for the Proposed RRPT Mandates will be sought at each subsequent AGM of Oldtown, if required. 4.2 Rationale for the Proposed SBB Renewal The Proposed SBB Renewal is to permit a stabilising factor on the supply and demand as well as the price of the Shares of Oldtown on Bursa Securities. It is to be carried out when the share price is transacted at levels which do not reflect the potential earnings capabilities and/or underlying asset value of the Group. 9

14 The Proposed SBB Renewal will also enable Oldtown to utilise its surplus financial resources to purchase the Oldtown Shares as and when the Board deems fit in the interest of its shareholders during the tenure the authority granted is in effect. In addition, the Purchased Shares may be held as treasury shares and resold on Bursa Securities with the intention of realising a potential gain without affecting the total issued and paid-up share capital of the Company. Should any treasury shares be distributed as share dividends, this would serve to reward the shareholders of the Company. 5. FINANCIAL EFFECTS OF THE PROPOSALS The Proposed RRPT Mandates will not have any effect on the share capital or the substantial shareholders shareholdings of Oldtown. The Proposed RRPT Mandates will also not have any material effect on the NA, earnings, gearing and dividend policy of the Oldtown Group save for cost efficiencies arising from the general mandate received. The effects of the Proposed SBB Renewal on the share capital, Substantial Shareholders and Directors shareholdings, NA, working capital and cash flow, earnings and dividends are set out below:- 5.1 Share Capital Based on the issued and paid-up share capital of Oldtown of 463,239,101 comprising 463,239,101 Oldtown Shares as at LPD, up to 46,323,900 Oldtown Shares can be repurchased and cancelled. Assuming the Proposed SBB Renewal is carried out in full by the Company, the issued and paid-up share capital of Oldtown would reduce to 416,915,201 comprising 416,915,201 Oldtown shares. If all the Oldtown Shares purchased are retained as treasury shares, the share repurchase would not have any effect on the share capital of Oldtown, although the rights attached to the treasury shares as to voting, dividends and participation in other distribution or otherwise would be suspended. The treasury shares shall not be taken into account in calculating the percentage of shares or of a class of shares in the Company for any purpose including, without limiting the generality of this provision, the provisions of any law or requirements of the Articles or the Listing Requirements on substantial shareholdings, takeovers, notices, the requisitioning of meetings, the quorum for a meeting and the result of vote on resolution at a meeting. 5.2 Substantial Shareholders and Directors Shareholdings Assuming the Proposed SBB Renewal is carried out in full by the Company, the effects of the share purchase on the shareholdings of Substantial Shareholders and Directors based on the Register of Substantial Shareholders and the Register of Directors Shareholdings respectively as at LPD are as follows:- Substantial Shareholder Existing Share Capital No. of Shares held* After the Proposed SBB Renewal No. of Shares held ^ Direct % Indirect % Direct % Indirect % Old Town International 197, , Mawer Investment Management Ltd. 43, ,

15 Substantial Shareholder Existing Share Capital No. of Shares held* After the Proposed SBB Renewal No. of Shares held ^ Direct % Indirect % Direct % Indirect % Franklin Resources, Inc. 51, , Lee Siew Ming ,296 (i) ,296 (i) 47.3 Director and Substantial Shareholder Lee Siew Heng 6, ,259 (ii) , ,259 (ii) 47.3 Goh Ching Mun ,259 (ii) ,259 (ii) 47.3 Director Datuk Dr Ahmed Tasir Bin Lope Pihie 25 ~ ~ - - Dato Wong Guang Seng Tan Chong Tan Chong Ling Chuah Seong Meng Clarence D Silva A/L Leon D Silva Tan Say Yap Notes: * Excluding 11,769,200 treasury shares held ^ On the assumption that the Company purchases the maximum of 46,323,900 Oldtown Shares, representing ten per cent (10%) of its issued and paid-up share capital of 463,239,101 comprising 463,239,101 Oldtown Shares (i) Deemed interested by virtue of his substantial shareholding in Old Town International, Conneczone Puchong Sdn Bhd and Carefree Avenue Sdn Bhd pursuant to Section 6A of the Act (ii) Deemed interested by virtue of their substantial shareholdings in Old Town International pursuant to Section 6A of the Act ~ Negligible 5.3 NA The effect of the Proposed SBB Renewal on the NA of the Oldtown Group is dependent on the number of Oldtown Shares which the Company purchased, the purchase price of the Oldtown Shares, the treatment of the shares so purchased and the funding cost, if any. The Proposed SBB Renewal would reduce the NA per share of the Oldtown Group at the time of purchase if the purchase price exceeds the NA per share. Conversely, the NA per share of the Oldtown Group would increase if the purchase price is less than the NA per share. If the treasury shares are resold on the share market, the NA per share will increase if the Company realises a gain from the resale, and vice versa. If the treasury shares are distributed as share dividends, the NA will decrease by the cost of the treasury shares. 11

16 5.4 Working Capital and Cash Flow The shares purchased will result in an outflow of cash and thereby reduce the working capital of the Oldtown Group. The quantum of the reduction in working capital is dependent on the purchase prices of the Oldtown Shares and the number of Oldtown Shares purchased and the funding cost, if any. However, for the Share so purchased and kept as treasury shares, upon resale, the working capital and cash flow of the Company will increase. Again, the quantum of the increase in the working capital and cash flow will depend on the actual selling price of the treasury shares and the number of treasury shares resold. 5.5 Earnings The effect of the Proposed SBB Renewal on the EPS of the Oldtown Group is dependent on the purchase price of Oldtown Shares, the effective funding cost and/or loss in interest income to the Group thereof. Further, the purchase of the Oldtown Shares will result in a lower number of shares being taken into account for purposes of EPS computation. Assuming that any Oldtown Shares purchased and retained as treasury shares are sold, the effects on the earnings of the Oldtown Group will depend on the actual selling price, the number of treasury shares sold and the effective gain or interest savings arising from the exercise. 5.6 Dividends The Company has on 25 February 2016 declared, and on 13 April 2016 paid an interim dividend of 3 sen per share under the single tier system for the financial year ended 31 March In addition, the Board has proposed, subject to shareholders approval at the forthcoming AGM, a final dividend of 3 sen per share and a special dividend of 3 sen per share for the financial year ended 31 March Barring any unforeseen circumstances, any future dividends which may be declared would depend on, amongst others, the profitability and cashflow position of the Oldtown Group. The Proposed SBB Renewal may impact the Company dividend payouts as it would reduce the cash available which may otherwise be used for dividend payment. Nonetheless, the treasury shares purchased may also be distributed as dividends to shareholders of the Company, if the Company so decides. 6. IMPLICATIONS RELATING TO THE CODE As it is not intended for the Proposed SBB Renewal to trigger the obligation to undertake a mandatory general offer under the Code for any of its substantial shareholders and/or parties acting in concert with them, the Board will ensure that such number of Shares are purchased, retained as Treasury Shares, cancelled or distributed such that the Code will not be triggered. Nonetheless, if the obligation to undertake a mandatory general offer under the Code is expected to be triggered, the substantial shareholders and their respective parties acting in concert will apply for an exemption from the SC. Such exemption may be granted by the SC under Paragraph 24.1 of Practice Note 9 of the Code, subject to there being no disqualifying transaction, approval has been obtained from the independent shareholders of Oldtown at a meeting to waive their rights to receive the mandatory offer from the substantial shareholders and their respective parties acting in concert; and the names of the parties that have abstained from voting at the meeting have been submitted to the SC. 12

17 7. CONDITIONS OF THE PROPOSALS The Proposals are conditional upon approval being obtained from the shareholders of the Company at the forthcoming AGM. The Proposals are not conditional upon any other proposal and are not inter-conditional. 8. INTERESTS OF DIRECTORS AND/OR MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM The direct and indirect interests of the Directors and/or Major Shareholders and persons connected to them who are interested in the Proposed RRPT Mandates in the Company as at LPD are as follows:- Major Shareholder Direct Interest Indirect Interest No. of Shares ( 000) %* No. of shares ( 000) %* Old Town International 197, Lee Siew Ming ,296 (i) 43.7 Director and Major Shareholder Lee Siew Heng 6, ,259 (ii) 43.7 Goh Ching Mun ,259 (ii) 43.7 Director Datuk Dr Ahmed Tasir Bin Lope Pihie 25 ~ - - Clarence D Silva A/L Leon D Silva Tan Say Yap Interested Person Connected to the Directors and Major Shareholders Azmah Binti Abdul Aziz Chin Lai Angeline Chin Lai Yoong 211 ~ - - Koo Yai Peng Lee Teck Wai 1 ~ 61 (iii) ~ Lee Siew Fong 125 ~ - - Lee Siew Kong 7 ~ 61 (iii) ~ Lee Sin Luan 65 ~ - - Lee Cheng Yee Lim Ah Fah

18 Direct Interest Indirect Interest No. of Shares ( 000) %* No. of shares ( 000) %* Interested Person Connected to the Directors and Major Shareholders (Cont d.) Lim Khim Lan Nurul Asyiqin Motimbin bt Abdullah Notes: * Excluding 11,769,200 treasury shares held (i) Deemed interested by virtue of his substantial shareholding in Old Town International, Conneczone Puchong Sdn Bhd and Carefree Avenue Sdn Bhd pursuant to Section 6A of the Act (ii) Deemed interested by virtue of their substantial shareholdings in Old Town International pursuant to Section 6A of the Act (iii) Deemed interested by virtue of their shareholdings in CN Properties pursuant to Section 6A of the Act ~ Negligible Datuk Dr Ahmed Tasir Bin Lope Pihie, Lee Siew Heng, Clarence D Silva A/L Leon D Silva, Goh Ching Mun and Tan Say Yap are deemed interested in the Proposed RRPT Mandates by virtue of their interests in and/or relationships with the Related Parties as disclosed in Appendices II and III. In this respect, they have accordingly abstained and/or will continue to abstain from all Board deliberations and voting in respect of the Proposed RRPT Mandates and will abstain from voting in respect of their direct and indirect shareholdings in the Company on the resolution pertaining to the Proposed RRPT Mandates to be tabled at the forthcoming AGM. Lee Siew Ming and Old Town International are deemed interested in the Proposed RRPT Mandates by virtue of their interests in and/or relationships with the Related Parties as disclosed in Appendices II and III. In this respect, Lee Siew Ming and Old Town International will abstain from voting in respect of its direct and indirect shareholdings in the Company on the resolution pertaining to the Proposed RRPT Mandates to be tabled at the forthcoming AGM. In addition, the interested Directors and/or interested Major Shareholders (namely Datuk Dr Ahmed Tasir Bin Lope Pihie, Lee Siew Heng, Clarence D Silva A/L Leon D Silva, Goh Ching Mun, Tan Say Yap, Lee Siew Ming and Old Town International) have undertaken to ensure that persons connected to them will abstain from voting in respect of their direct and indirect shareholdings on the resolution pertaining to the Proposed RRPT Mandates at the forthcoming AGM. Save as disclosed above, none of the other Directors, Major Shareholders and/or persons connected with them as defined in the Listing Requirements has any interest, direct or indirect, in the Proposed RRPT Mandates. Save for the proportionate increase in the percentage of shareholdings and/or voting rights in their capacities as the shareholders of the Company pursuant to the Proposed SBB Renewal, none of the Directors or Substantial Shareholders and/or persons connected to them have any interest, direct or indirect, in the Proposed SBB Renewal and resale of treasury shares, if any. 14

19 9. DIRECTORS RECOMMENDATION The Board (save for the interested Directors, namely Datuk Dr Ahmed Tasir Bin Lope Pihie, Lee Siew Heng, Clarence D Silva A/L Leon D Silva, Goh Ching Mun and Tan Say Yap, who abstained from giving an opinion and make no recommendation on the Proposed RRPT Mandates), having taken into consideration all aspects (including the rationale and the financial effects) of the Proposed RRPT Mandates, is of the opinion that the Proposed RRPT Mandates are in the best interest of the Oldtown Group and its shareholders. Accordingly, the Board (save for the interested Directors, namely Datuk Dr Ahmed Tasir Bin Lope Pihie, Lee Siew Heng, Clarence D Silva A/L Leon D Silva, Goh Ching Mun and Tan Say Yap) recommends that you vote in favour of the ordinary resolution pertaining to the Proposed RRPT Mandates to be tabled at the forthcoming AGM. The Board, having taken into consideration all aspects of the Proposed SBB Renewal, is of the opinion that the Proposed SBB Renewal is in the best interest of the Oldtown Group and its shareholders. Accordingly, the Board recommends that you vote in favour of the ordinary resolution pertaining to the Proposed SBB Renewal to be tabled at the forthcoming AGM. 10. AGM The Eighth (8 th ) AGM of the Company will be held at Ballroom 2, 3 & 4, Level 6, Weil Hotel, 292, Jalan Sultan Idris Shah, Ipoh, Perak Darul Ridzuan on Thursday, 8 September 2016 at a.m. for the purpose of considering and if thought fit, inter-alia, to pass the resolutions pertaining to the Proposals as Special Business. The Notice of AGM, together with the Form of Proxy, is enclosed in the Annual Report of the Company for the financial year ended 31 March An extract of the relevant resolutions in the Notice of AGM convening the Eighth (8 th ) AGM of the Company is set out in Appendix IV of this Circular. If you are unable to attend and vote at the AGM, you are requested to complete, sign and return the enclosed Form of Proxy in accordance with the instructions contained therein so as to arrive at the Share Registrar of the Company as soon as possible and in any event not later than forty-eight (48) hours before the time fixed for the AGM, or any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the AGM should you subsequently wish to do so. 11. FURTHER INFOATION Shareholders are requested to refer to the Appendices for further information. Yours faithfully, for and on behalf of the Board of Directors OLDTOWN BERHAD CHUAH SEONG MENG Executive Director 15

20 APPENDIX I APPENDIX I - FURTHER INFOATION 1. RESPONSIBILITY STATEMENT The Directors of Oldtown have seen and approved the contents of this Circular and they collectively and individually accept full responsibility for the accuracy of the information given herein and confirm that, after making all reasonable enquiries and to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading. 2. CONSENT AND CONFLICT OF INTEREST The written consent of cfsolutions Sdn Bhd to the inclusion in this Circular of its name and all references thereto, as the case may be, in the form and context in which it appears, has been given prior to the issuance of this Circular and has not subsequently been withdrawn. Furthermore, cfsolutions Sdn Bhd is of the view that there is no existing or potential conflict of interest situation in their role as the Adviser in respect of the Proposals. 3. MATERIAL LITIGATION, CLAIMS OR ARBITRATION Oldtown and its subsidiary companies are not engaged in any material litigation, claims or arbitration either as plaintiff or defendant which have a material effect on the business or financial position of the Oldtown Group and the Board does not know of any proceedings, pending or threatened or of any facts likely to give rise to any proceedings which might materially affect the business or financial position of the Oldtown Group. 4. MATERIAL CONTRACTS Oldtown and its subsidiary companies have not entered into any material contracts (not being contracted entered into in the ordinary course of business) within the two (2) years preceding the date of this Circular, other than the following:- (i) (ii) (iii) A conditional Share Sale Agreement entered into between the Company and Chan Koon Hung, Nelson, Law Cho Hong and Lee Siu Chung on 14 July 2015 to acquire the remaining 30.0% equity interest in Advance City Limited for a total purchase consideration of 15,523,394 ( Purchase Consideration ). The Purchase Consideration has been fully satisfied via the allotment and issuance of 9,641,859 new ordinary shares of 1.00 each in the Company at an issue price of 1.61 per share on 6 August This acquisition was completed on 10 August 2015; A Sale and Purchase Agreement ( SPA ) entered into by OTL with Join Dream Group Limited ( JD Group ) and Mr Lai Sui Hong on 27 January 2015 to acquire 5,100 ordinary shares of HKD1.00 each in AEC representing fifty-one percent (51%) of the issued and paid-up share capital of AEC from JD Group, for a total cash consideration of HKD3 million (equivalent to 1,400,400 based on the exchange rate of 1 : HKD 2.14 as at 26 January 2015). This acquisition was completed on 7 October 2015; and A conditional Shareholders Agreement entered into between OTL, JD Group and AEC on 27 January 2015 to set out the respective rights and obligations of the Shareholders of AEC with respect to the organisation, management and operation of AEC. 16