A SUMMARY OF THE MINUTES OF THE NINETEENTH ANNUAL GENERAL
MEETING OF WCE HOLDINGS BERHAD (“THE COMPANY”) AT
VICTORIAN BALLROOM, LEVEL 1, HOLIDAY VILLA & CONFERENCE CENTRE
SUBANG, 9 JALAN SS12/1, 47500 SUBANG JAYA
THURSDAY, 27 AUGUST 2020 AT 10.00 A.M.
ATTENDEES:
i) All members of the Board of Directors
ii) Company Secretaries
iii) Management Team of the Company
iv) Representatives of Messrs Baker Tilly Monteiro Heng PLT
v) Representatives of Tricor Corporate Services Sdn Bhd
vi) Shareholders / Proxies / Authorised Representatives / Invitees
CHAIRMAN
Datuk Ir. Hamzah bin Hasan
NOTICE OF MEETING
The notice convening the Meeting, having been circulated to all shareholders of the Company within the statutory period was taken as read.
QUORUM
The Company Secretary confirmed the presence of a quorum and called the meeting to order.
POLLING AND ADMINISTRATIVE MATTERS
The Chairman informed meeting that the resolutions set out in the Notice of meeting would be voted by poll in accordance with Paragraph 8.29A of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
The Chairman further informed the meeting that the poll would be administered by Metra Management Sdn Bhd and the appointed scrutineer was Symphony Merchant Sdn Bhd.
The meeting was also informed that Ordinary Resolutions 1 to 8 required a simple majority of more than 50% votes from members present in person or by proxies who were present and voting at the meeting.
For Ordinary Resolution 6, in view that Datuk Oh Chong Peng has served as an Independent Non-Executive Director of the Company for a cumulative term of more than twelve years, the Company would seek shareholders’ approval for the proposed Ordinary Resolution 6 through a two-tier voting process. Under the two-tier voting process, shareholders’ votes would be cast in two tiers, Tier 1 by the Large Shareholder of the Company and Tier 2 by the shareholders other than Large Shareholder. The decision will be determined based on vote of Tier 1 and simple majority of Tier 2.
PRESENTATION BY MANAGEMENT
The Chairman invited Mr Ir. Gnanasekaran a/l Mariasoosay, (“Ir Ghana”), the General Manager of West Coast Expressway Sdn Bhd to present an update on the West Coast Expressway Project for the financial year ended 31 March 2020.
Subsequently, Mr Chai Kian Soon, the Senior General Manager of Bandar Rimbayu Sdn Bhd was invited to present an update on the development of Bandar Rimbayu for the financial year ended 31 March 2020.
The Chairman the informed that the Company had received a letter dated 11 August 2020 from the Minority Shareholders’ Watchdog Group, raising certain issues and enquiries which were responded accordingly by the Company. He requested Mr Lyndon Alfred Felix, the Chief Financial Officer of the Company, to read the responses to the queries raised (please refer to Appendix A).
The Chairman then invited questions from the floor.
After the questions from the shareholders had been satisfactorily answered, the meeting proceeded with the business of the meeting.
AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2020 TOGETHER WITH THE REPORTS OF THE DIRECTORS AND AUDITORS THEREON
This Audited Financial Statements for the financial year ended 31 March 2020, together with the Reports of the Directors and Auditors thereon have been circulated to all shareholders of the Company within the statutory period, were tabled before the meeting for discussion.
It was noted that pursuant to Section 340(1) of the Companies Act 2016, the agenda item did not require approval from the shareholders of the Company.
The Chairman invited questions from the floor. Following are the key matters raised by shareholders and responses by the Management:
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Key matters raised by Shareholders and Responses from Management |
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Proxy
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Q1
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Reference is made to the non-current asset disclosed in the audited financial statement. May I know if the machinery used to construct the West Coast Expressway (“WCE”) is owned by the Company?
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Q2
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Referring to the loans and borrowings of RM150 million as disclosed in the statement of financial position, will the Company capitalise the interest expenses incurred for the said loans and borrowings until completion of the construction of the WCE?
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Q3 |
When will the Company break even, based on the current forecast?
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Q4 |
The construction of the WCE was delayed due to the COVID-19 pandemic and the Company will have to compensate the government for the delay. Thus, can the Company request for an extension from the government?
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Q5 |
As there will be rest and services areas (“RSA”) built along the WCE, is the land occupied by the RSA owned by the Company and will the Company generate rental income from the RSA?
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Chief Financial Officer (Lyndon Alfred Felix)
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A1
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The non-current asset disclosed in the audited financial statement does not include machineries used in for the construction of the West Coast Expressway (WCE). The construction packages of the WCE Project was awarded to contractors and/or sub-contractors. Thus, construction equipment and machinery are owned by them.
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A2
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Yes, your understanding on the treatment of the interest expenses is correct.
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A3
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Currently, we have four sections of the WCE that are in operations and have commenced toll collection. However, we are unable to assess the breakeven point at this moment until the completion of the entire WCE Project. Nevertheless, based on the current traffic volume, we are optimistic about the future financial performance.
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Chief Executive Officer (Dato’ Neoh Soon Hiong)
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A4
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The COVID-19 pandemic has caused the overall construction of WCE to be approximately 6% behind the schedule. The main affected sections areSection 11 in Perak and Section 7B in Selangor, which have yet to be constructed because the awaited decision from the government on the alignment is delayed. If we set aside these two sections, we are within expected completion target.
We are trying to complete the construction within the stipulated timeline even though we have been granted an extension of time (“EOT”) by the government until 2022.
We are also trying to speed up the award of Section 7B and complete its construction within 24 months.
With regard to Section 11, we are in the midst of negotiating with the government to speed up construction progress.
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A5
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Currently, the land to be occupied for RSA is not owned by the Company. We are in the process of obtaining the ownership of the land, especially in Perak. Another wholly-owned subsidiary will carry out the petrol station business on the RSA.
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Shareholder
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Q6
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How much are the additional costs arising from the delay in the completion of the WCE Project? Is the original financing plan sufficient to complete the WCE Project?
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Chief Financial Officer (Lyndon Alfred Felix)
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A6
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The delay in the completion of the WCE Project is largely caused by external factors, which are beyond the Company’s control, and the government has acknowledged them. Therefore, we have been granted the extension of time (EOT) from the government.
We have raised funds via Rights Issue of Redeemable Convertible Preference Shares with Warrants in 2019. Syndicated Term Loan and Sukuk have been drawn down. Thus, we are able to meet the financial obligation for the construction of the WCE.
We are actively engaging with the government on the land cost overrun and they have acknowledged that the situation is out of the ordinary and have assured us that they will provide necessary support to ensure that the highway is completed.
In addition, we do not foresee any further delay in the construction as the land acquisition process is almost completed. We continue to challenge and appeal against land cost awards we deem excessive and to date, the court’s decisions seem to be favourable to the Company.
At this moment, we do not foresee a need to further raise funds from the shareholders.
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Shareholder
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Q7
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Has the Company started the repayment of the loans? Due to the decrease in interest rate as announced by the Central Bank of Malaysia (“BNM”), the interest rates charged by banks should have also been adjusted accordingly. Thus, the Company may refinance or negotiate with the banks for lower interest rates on those loans.
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Chief Financial Officer (Lyndon Alfred Felix)
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A7
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The Company has started the repayment of the interest on loans. In respect of term loans, the banks have reduced the interest rates to be in line with the BNM’s announcement. There is no change on the interest rate of the Government Support Loan as the existing interest rate is already low, at 4% per annum, and it is a long-term loan.
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Shareholder
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Q8
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Without considering the impact of the COVID-19 pandemic, is the actual traffic volume in line with the forecast?
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Chief Financial Officer (Lyndon Alfred Felix)
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A8
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As clarified earlier, the accurate and complete data will only be available upon the completion of the entire WCE Project. The sections which have opened are only capable to support the local and/or short-distance travel instead of the long-distance travel. However, based on the current data, the actual traffic volume is in line with forecast.
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Shareholder
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Q9
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How much is additional capital expenditure required to complete the WCE Project?
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Chief Financial Officer (Lyndon Alfred Felix)
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A9
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The total project cost of the WCE Project is RM5.94 billion. In addition, the land cost overrun is approximately RM1.1 billion, of which RM400 million is covered under the total project cost savings. Besides, 50% of the remaining RM700 million has been paid.
As approximately 65% of the WCE Project is completed, approximately RM4 billion out of the total project costs has already been incurred.
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Shareholder
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Q10
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What is impact on the Company as the toll rate of PLUS highway has been reduced by 18%?
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Chief Financial Officer (Lyndon Alfred Felix)
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A10
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Yes, there will be some impact on the Company because road users may prefer using the PLUS highway due to its lower toll rate.
However, at this moment, there is no impact on the Company as sections that are open for traffic cater for local traffic users who do not consider PLUS highway as an alternative.
Moreover, the new Minister of Works has said that the Government will review the 18% reduction of toll rate of PLUS highway due to the impact this has on the other highways. The government should ensure that there should not be any large discrepancy in toll rates between different services providers. We are fairly optimistic that the government will be able to resolve this matter before the overall completion of the highway.
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Proxy
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Q11
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Will the operation and maintenance of the WCE be outsourced to third parties?
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Q12
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The infrastructure development expenditure of RM4.5 billion will be amoritsed over 60 years. Am I correct?
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Chief Financial Officer (Lyndon Alfred Felix)
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A11
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No, the operation and maintenance of the WCE will be provided in-house as we have the expertise and experience.
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A12
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It will amortise over the concession period based on the traffic volume and not on a straight-line basis.
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After the questions from the shareholders and shareholders’ proxies had been satisfactorily answered by Management, Chairman declared the Audited Financial Statements properly laid and received.
The Chairman then invited a representative of Metra Management Sdn Bhd to explain the procedures for voting by electronic poll.
ORDINARY RESOLUTION 1
DIRECTORS’ FEES IN RESPECT OF THE FINANCIAL YEAR ENDED 31 MARCH 2020
The Chairman informed the meeting that the Board of Directors had proposed the payment a sum of RM981,300.00 as Directors’ fees for the financial year ended 31 March 2020 to the Directors of the Company.
There being no question was raised, the Chairman put the motion to a vote by way of poll.
Results on voting by poll, as verified by the scrutineer:
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VOTE FOR
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VOTE AGAINST
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No. of shares
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%
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No. of shares
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%
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695,620,574
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99.9526
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330,100
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0.0474
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Based on the poll result, the Chairman declared the motion as carried.
ORDINARY RESOLUTION 2
PAYMENT OF DIRECTORS’ BENEFITS
The meeting continued to consider the payment of Directors’ Benefits for the period from 19th AGM until the 20th AGM.
There being no question was raised, the Chairman put the motion to a vote by way of poll.
Results on voting by poll, as verified by the scrutineer:
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VOTE FOR
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VOTE AGAINST
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No. of shares
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%
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No. of shares
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%
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437,184,377
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99.6898
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1,360,300
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0.3102
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Based on the poll result, the Chairman declared the motion as carried.
ORDINARY RESOLUTION 3
RE-ELECTION OF VUITTON PANG HEE CHEAH AS DIRECTOR
The meeting continued to consider the re-election of Vuitton Pang Hee Cheah as Director of the Company pursuant to Clause 76(3) of the Constitution of the Company.
There being no question was raised, the Chairman put the motion to a vote by way of poll.
Results on voting by poll, as verified by the scrutineer:
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VOTE FOR
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VOTE AGAINST
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No. of shares
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%
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No. of shares
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%
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352,531,005
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99.9999
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100
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0.0001
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Based on the poll result, the Chairman declared the motion as carried.
ORDINARY RESOLUTION 4
RE-ELECTION OF DATUK WIRA HJ.HAMZA BIN TAIB AS DIRECTOR
The meeting continued to consider the re-election of Datuk Wira Hj. Hamza Bin Taib as Director of the Company pursuant to Clause 76(3) of the Constitution of the Company.
There being no question was raised, the Chairman put the motion to a vote by way of poll.
Results on voting by poll, as verified by the scrutineer:
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VOTE FOR
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VOTE AGAINST
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No. of shares
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%
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No. of shares
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%
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695,229,979
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99.9362
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444,100
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0.0638
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Based on the poll result, the Chairman declared the motion as carried.
ORDINARY RESOLUTION 5
RE-APPOINTMENT OF MESSRS BAKER TILLY MONTEIRO HENG PLT AS AUDITORS OF THE COMPANY
The meeting continued to consider the re-appointment of Messrs Baker Tilly Monteiro Heng PLT as Auditors of the Company for the next financial year.
It was noted that Messrs Baker Tilly Monteiro Heng PLT had indicated their willingness to continue in office.
There being no question was raised, the Chairman put the motion to a vote by way of poll.
Results on voting by poll, as verified by the scrutineer:
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VOTE FOR
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VOTE AGAINST
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No. of shares
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%
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No. of shares
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%
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438,598,679
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99.8907
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480,000
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0.1093
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Based on the poll result, the Chairman declared the motion as carried.
ORDINARY RESOLUTION 6 (SPECIAL BUSINESS)
PROPOSED CONTINUATION OF DATUK OH CHONG PENG IN OFFICE AS AN INDEPENDENT NON-EXECUTIVE DIRECTOR
The meeting was requested to consider the continuation of Datuk Oh Chong Peng in office as an Independent Non-Executive Director.
There being no question was raised, the Chairman put the motion to a vote by way of two-tier poll.
After the conduct of the two-tier poll, the Chairman presented the poll results, as verified by the scrutineer:
TIER 1
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VOTE FOR
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VOTE AGAINST
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No. of shares
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%
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No. of shares
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%
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343,145,574
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100.0000
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0
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0
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TIER 2
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VOTE FOR
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VOTE AGAINST
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No. of shares
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%
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No. of shares
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%
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1,306,805
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79.8290
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330,200
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20.1710
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Based on the poll results, the Chairman declared the motion as carried.
ORDINARY RESOLUTION 7 (SPECIAL BUSINESS)
AUTHORITY TO ISSUE SHARES
The meeting continued to consider the Authority to issue Shares pursuant to Section 75 and 76 of the Companies Act 2016 (“the ACT”).
The Chairman informed the meeting that the full text of the proposed Ordinary Resolution 7 was set out in the Notice of meeting and the same was taken as read.
The Chairman further informed the meeting that the passing of the proposed resolution would empower the Directors of the Company to issue new shares in the Company up to an amount not exceeding 10% of the issued share capital of the Company for the time being.
There being no question was raised, the Chairman put the motion to a vote by way of poll.
Results on voting by poll, as verified by the scrutineer:
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VOTE FOR
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VOTE AGAINST
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No. of shares
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%
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No. of shares
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%
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602,006,379
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99.9999
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500
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0.0001
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Based on the poll result, the Chairman declared the motion as carried.
ORDINARY RESOLUTION 8 (SPECIAL BUSINESS)
PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED SHAREHOLDERS’ MANDATE FOR RRPT”)
The meeting continued to consider the motion on the proposed Shareholders’ Mandate for RRPT.
The Chairman informed the meeting that the details of the proposed resolution were set out in the Circular to Shareholders dated 29 July 2020.
There being no objection, the Proposed Ordinary Resolution 8 as contained in the Notice of meeting was taken as read.
The Chairman further informed the meeting that the passing of the proposed Ordinary Resolution 8 would enable the Group to enter into Recurrent Related Party Transactions of a Revenue or Trading Nature (“RRPT”) pursuant to Paragraph 10.09 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
The Meeting was informed that IJM Corporation Berhad (“IJM”), being the interested Major Shareholder, had therefore abstained from voting in respect of the direct shareholdings in the Company on the Proposed Shareholders’ Mandate for RRPT.
Mr Lee Chun Fai, who was IJM’s nominee director, had abstained and continue to abstain from deliberating and voting in respect of the Proposed Shareholders’ Mandate for RRPT at the relevant Board meetings. Interested Director and/or Interested Major Shareholder had ensured that persons connected to them would abstain from voting in respect of their direct and indirect shareholdings in the company on Proposed Shareholders’ Mandate for RRPT.
There being no question raised, the Chairman put the motion to a vote by way of poll.
Results on voting by poll, as verified by the scrutineer:
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VOTE FOR
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VOTE AGAINST
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No. of shares
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%
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No. of shares
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%
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259,011,202
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99.99996
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100
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0.00004
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Based on the poll result, the Chairman declared the motion as carried.
CLOSURE
There being no further business, the meeting closed at 11.45 a.m. with a vote of thanks to the Chair.
APPENDIX A
QUERIES RAISED BY MINORITY SHAREHOLDERS’ WATCH GROUP (MSWG)
Strategy & Financial Matters
Q1. Covid-19 Pandemic
To what extent has the pandemic impacted WCE’s business prospects?
A1. The implementation of the Movement Control Order (MCO) by the Government on 18 March 2020 had a severe impact on the West Coast Expressway project (WCE project) whereby construction activities were temporarily halted and there was a significant drop in traffic volume for the completed sections.
However, since the implementation of the Conditional Movement Control Order (CMCO) on 4 May 2020, construction activities on the uncompleted sections have resumed to normal and traffic volumes on the completed sections have returned to pre-MCO levels.
Going forward, barring any unforeseen circumstances, the Group does not anticipate any long term impact on the WCE project as a result of the Covid-19 pandemic.
Q2. The Group has recorded a loss before tax of RM55.8 million during the financial year as compared to profit before tax of RM23.0 million in the previous financial year. The toll concession segment has reported a loss before tax in the current year mainly due to the interest expense in relation to the project financing for completed sections of the West Coast Expressway Project.
During the financial year, the Group recognised interest expenses of RM93.9 million mainly in respect of the interest charges for completed sections.
Going forward, the Group is expected to incur losses in the early years of toll operations due to the cessation of capitalisation of interest expenses for completed sections and the non-cash expenditure in respect of the amortisation of infrastructure development expenditure (Page 14 of the Annual Report 2020).
a. What are the main reasons for the variance between last years profit and this year’s loss? (Please provide RM figures)
b. Does the Group expect to record loss in FY2021? When does the Group expect to break-even.
A2(a). The main reason for the variance is because the Group has ceased to capitalise borrowing costs for the completed sections of the WCE project. This is in line with MFRS 123 which states that an entity shall charge borrowing costs to the Profit and Loss (P&L) account once the qualifying asset is substantially completed and is ready for its intended use. In this regard, the Group recognised borrowing costs of RM93.9m in the P&L during the financial year.
A2(b). As mentioned in Page 14 of the Annual Report, the Group is expected to incur losses in the early years of toll operations as a result of the cessation of the capitalisation of borrowing costs and the amortisation of infrastructure development expenditure.
Right now the main focus of the Group is to complete the remaining sections of the WCE project and upon full completion of the expressway, we will be in a clearer position to assess the profitability of the Group. Notwithstanding this, income from toll operations will continue to improve the future financial performance of the Group in terms of cash flows and will provide the Group with stable recurrent income over the concession period.
Q3. For Property Development (Bandar Rimbayu), new launches in the pipeline include affordable terrace houses, targeting first time home buyers and young working adults. Radiant Pillar Sdn. Bhd. and its subsidiary (RPSB Group) is expected to maintain its performance for the coming financial year on the back of the unbilled sales and satisfactory response from new launches (Page 16 of the Annual Report 2020).
a. What is the targeted timeframe for RPSB Group’s new property launches in Bandar Rimbayu?
b. What are the current unbilled sales? Are the unbilled sales improving?
A3(a). In June this year, Bandar Rimbayu launched Phase 1 of Starling (Double Storey Link Houses) which was fully sold. This was followed by the launch of Phase 2 in August which was also fully sold. These 2 phases are part of the 4-phase 56.68 acres of residential development consisting 680 units. The remaining 2 phases of Starling have been lined up to be launched in September and November 2020 respectively. Looking slightly further ahead, some shop offices are also being planned to be launched in the first quarter of next year.
A3(b). The current unbilled sales is RM294million and is expected to improve over the next few planned launches.
Corporate Governance & Sustainability Matters
Q1. The Company in its Corporate Governance Report for FY2020 (Page 43) states that it has applied Practice 12.3 of Malaysian Code on Corporate Governance (MCCG). Practice 12.3 of MCCG refers to facilitating or providing platform for shareholders to vote remotely without being physically present at the Company’s AGM.
Based on the Company’s explanation given on the application of Practice 12.3 of MCCG, we wish to highlight that the Company has not applied the Practice 12.3 of MCCG.
Please take note.
A1. We take note of your comment.
The Company does not have a large number of shareholders and its General Meetings are not held in remote locations. Furthermore, the Board believes that even if the Company makes available technology to facilitate voting in absentia and remote shareholders’ participation at General Meetings, the rate of participation might be low and the cost would not be justifiable.
Hence, the Board believes that the Company has complied with Practice 12.3 of the MCCG when it holds General Meetings at a venue located in the city which is easily accessible and not in a remote location.
Q2. On sustainability matters, what are the critical areas that WCE has identified for immediate improvement?
A2. One of the key pillars in WCE’s sustainability framework is environmental best practises as prescribed under the CARE principles on Page 29 of the annual report. As part of the Group’s ongoing efforts to reduce our carbon footprint, for the coming year, the Group is exploring the use of Green Energy and in particular solar, to power our operations at toll plazas and regional offices.