Sime Darby : Minutes of 17th Annual General Meeting

SIME DARBY BERHAD

(Registration No. 200601032645 (752404-U))

(Incorporated in Malaysia)

MINUTES OF THE SEVENTEENTH ANNUAL GENERAL MEETING OF SIME DARBY BERHAD HELD VIRTUALLY THROUGH LIVE STREAMING FROM THE BRADCAST VENUE AT FUNCTION ROOM, GROUND FLOOR, MENARA SIME DARBY, OASIS CORPORATE PARK, JALAN PJU 1A/2, ARA, DAMANSARA, 47301 PETALING JAYA, SELANGOR DARUL EHSAN, MALAYSIA ON THURSDAY, 16 NOVEMBER 2023 AT 10.00 A.M.

1. OPENING REMARKS BY THE CHAIRMAN
2. Tan Sri Samsudin Osman, the Chairman of Sime Darby Berhad ("Sime Darby" or "Company"), presided as Chairman of the Meeting and welcomed all persons present at the Seventeenth Annual General Meeting ("17th AGM" or the "Meeting") of Sime Darby.
3. The Chairman informed the Meeting that the 17th AGM of the Company was conducted virtually and live-streamed from the broadcast venue at Sime Darby's office at Menara Sime Darby, Oasis Corporate Park, Jalan PJU 1A/2, Ara Damansara, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia.
4. The Chairman added that the Company would do its best to ensure a smooth live streaming. However, the quality of the broadcast was dependent on the participant's bandwidth and stability of the internet connection.

1. QUORUM
2. The requisite quorum being present, the Chairman called the Meeting to order at 10.00 a.m.
3. The Chairman proceeded to introduce members of the Board of Directors ("Board") and the management team. The Chairman also introduced the representative from
   PricewaterhouseCoopers PLT ("PwC"), the auditors of the Company, Tricor Investor & Issuing House Services Sdn Bhd ("Tricor"), the Company's Share Registrar, and Coopers Professional Scrutineers Sdn Bhd ("CPS"), the Scrutineers, who were also present at the broadcast venue.

1. PRELIMINARY
2. The Chairman informed the Meeting:
3. 1. That the Notice of Annual General Meeting was issued to all Shareholders on 18 October 2023 and made available on the same day on the
      Company's website in accordance with the Company's Constitution.
   2. That the Company's Annual Report 2023 was uploaded on the Company's website for all the Shareholders and released to Bursa Malaysia Securities
      Berhad ("Bursa Securities") on 18 October 2023.
   3. That information on the Company, its activities, results, and financial position for the financial year ended 30 June 2023 were set out in the Annual Report 2023.

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1. NOTICE OF MEETING
2. With the consent of the Shareholders and proxy holders present, the Notice of AGM was taken as read.

1. GENERAL INSTRUCTIONS ON MEETING PROCEDURES
2. The Chairman briefed the Meeting as follows:
3. 1. Shareholders and proxy holders who attended the 17th AGM remotely would have submitted questions for the Board in advance through Tricor's
      TIIH Online before the closing date on 15 November 2023 at 10.00 a.m. Shareholders and proxy holders could pose questions to the Board through a real time submission of typed texts during the proceeding of the 17th AGM by posting the questions in the query box.
   2. Shareholders and proxy holders were encouraged to take the opportunity to participate in the affairs of the Company by deliberating and voting on the resolutions which would be put to vote via electronic poll via remote participation and voting facilities ("RPV") provided by Tricor.
   3. The online remote voting via RPV was accessible to Shareholders and proxy holders from 10.00 a.m. onwards until the closing of the voting session.
   4. The polling and verification process would take approximately 30 minutes and after the end of the polling and verification process, CPS, being the Scrutineers would declare the poll results of the AGM.
   5. In accordance with the Notice of AGM, the cut-off date to determine those who were qualified to attend, speak and vote at the Meeting was on 7 November 2023.
   6. A total of 691 valid proxy forms were lodged within the stipulated timeframe, representing 5,662,441,558 ordinary shares or 83.08% of the total ordinary shares of Sime Darby of 6,815,597,577.
   7. In his capacity as the Chairman of the Meeting, he had received proxies from members whom he would vote for as indicated in the proxy forms. Where a proxy vote had been given to the Chairman without any voting instructions, the Chairman expressed his intention to vote in favour of the resolutions set out in the Notice of AGM.
4. The Chairman further informed the Meeting of the procedures on poll voting:
5. 1. In accordance with the Main Market Listing Requirements of Bursa
      Securities ("Listing Requirements"), all resolutions set out in the Notice of
      AGM would be voted by way of electronic poll.

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1. 1. Each share would represent one (1) vote in the polling which would be carried out by way of electronic voting via RPV.
   2. The poll voting for all resolutions set out in the Notice of AGM would commence after the adjournment of the Meeting. All questions posed on the resolutions would be dealt with prior to the commencement of the polling process.
   3. A total of 10 resolutions were to be voted for at the Meeting, all of which were proposed as ordinary resolutions which required a simple majority in order for the resolutions to be passed.
   4. Tricor had been appointed as the Poll Administrator to conduct the polling process and CPS as the Scrutineers to verify the poll results.
2. A short video outlining the RPV process was played.
3. The Chairman also briefed the Meeting on the programme outline of the 17th AGM.

1. PRESENTATION BY THE GROUP CHIEF EXECUTIVE OFFICER
2. The Chairman invited Dato' Jeffri Salim Davidson, the GCEO, to present the Company's performance and key events during the financial period under review.
3. The following was the summary from the GCEO's presentation:
4. 1. Sime Darby is an Asian Pacific multinational corporation, operating in 17 countries. The core focus of the Group is on the distribution of motor cars and industrial equipment. Its comprehensive portfolio encompasses car and heavy equipment sales, complemented by robust after-sales support and rental fleets. With a strong presence in Malaysia, Australia and China, Sime Darby is a partner of choice for renowned brands like Caterpillar, BMW, Porsche, and most recently, BYD, a prominent Chinese Electric Vehicle ("EV") Original Equipment Manufacturer ("OEM").
   2. Revenue is largely generated in the key markets in Australia (37%), China (35%) and Malaysia.
   3. The overarching purpose of the Group is to provide the best products and solutions, to enable the development of the Asia Pacific region.
   4. Financial year ("FY") 2023 was a challenging year for the Group. Global market conditions, marked by inflation and rising interest rates, impacted several markets, particularly China where a price war in the auto sector has significantly affected margins and overall results. However, the Malaysian auto market performed well, driven by the Malaysian Government's support for EVs, while Australia thrived on the back of high commodity prices.

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1. Despite the challenging market conditions, revenue grew from RM42 billion to RM48 billion. Net profit reached a RM1.4 billion and the return on invested capital improved from 8.8% to 9.6%. The Group maintains a dividend payout policy of at least 50%. The Group exceeded its promised dividend percentage, providing a dividend payout of 61% in FY2023.
2. The Group's strategic focus centres on a five-year plan initiated post-2017, namely "Operational Excellence", "Growth & Business Expansion", "Non- Core Asset Rationalisation" and "Unlock Value in Healthcare".
3. The first pillar, Operational Excellence, emphasises efficient management, capital utilisation, and cost control. The Group saw a 30% increase in revenue, improved returns and increased sales volume.
4. The second pillar focusses on growth. Collaborative efforts with BMW has led to the doubling of the Group's footprint in China over the past four years. The securing of the Porsche assembly operations in Malaysia was a significant accomplishment, given Porsche's limited assembly locations outside Europe. Additionally, the acquisition of the BYD dealership for Malaysia and the expansion in the industrial space through the acquisitions of the Caterpillar Gough dealership in New Zealand, Salmon Engineering (a rental business) and Onsite Rental demonstrated the Group's proactive stance in growth.
5. The third pillar involves Rationalising Non-Core Assets. The Group divested its stakes in Tesco Malaysia and Eastern & Oriental, exited non- essential land holdings in Hong Kong and Malaysia, and successfully withdrew from the ports business in China.
6. The fourth pillar addresses the future of Ramsay Sime Darby Health Care, leading to the recent announcement on the divestment of its 50% stake of its hospital business.
7. The changing landscape of the automotive industry will offer opportunities for the Group in the future like the selling of EVs and collaborating with EV OEMs. There will also be opportunities associated with mining, infrastructure development such as EV charging stations, and the potential for bringing battery manufacturers to Malaysia.
8. The Group entered into a sale and purchase agreement with TPG/Hong Leong, for the divestment of Ramsay Sime Darby Health Care, which will result in a gain of around RM2 billion. The proceeds from the transaction are earmarked to fund the UMW acquisition.
9. The recent acquisition of Cavpower, a reputable Caterpillar dealer based in South Australia, holds significant strategic importance, due to the region's rich abundance of copper deposits. This strategic positioning is well-aligned with the anticipation of a surge in copper demand, driven by the increasing adoption of EVs. The acquisition of Cavpower is viewed as a pivotal step in positioning the Group to capitalise on the expanding market for minerals.

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1. 1. Onsite Rental, which is Australia's second-largest rental services company and which provides rental services to the mining, oil & gas and construction industries, is another important acquisition for the Group. South Australia is, strategically, an important territory due to the abundance of copper deposits.
   2. Sime Darby's share price has persistently hovered around RM2.00 to RM2.20 for the past year. The Group has demonstrated robust performance, consistently delivering an above-average total shareholder return over the past four years. Recently, there has been an uptick in the share price, reaching a high of RM2.42. This positive momentum is believed to be influenced by favourable news and recent developments within the Group.
2. The GCEO expressed his gratitude towards the executive team for their contribution to the Group's successes throughout the past financial year.
3. The Chairman informed the Meeting that the Company had received a letter from MSWG. With permission from the Shareholders and proxy holders, the GCEO summarised the Company's responses to MSWG's queries as follows:
4. 1. 17.8% of the total new vehicles sold by the Group in FY2023 were EVs, an increase from the previous year's 5%. Out of the EVs sold, approximately half were in China, a quarter were in Malaysia and the remaining in other markets like Singapore, Australia, and New Zealand.
   2. The Group primarily operates in the luxury segments distinguishing itself from the smaller mass-market Chinese OEMs like Neta V and Cherry. The introduction of electric models by established brands like BMW, Volvo, and Hyundai in Malaysia has contributed to the Group's success in EV car sales and positioning Sime Darby as a leading layer in this segment.
   3. The strong Malaysian Government support has made EVs more affordable contributing to the rise in EV sales from 5% to 18%. However, the challenges in the charging infrastructure in Malaysia underscores the pressing need for additional investments in charging facilities to align with the growing market for EVs.
   4. The Group's business expansion into Indonesia is in the early stages. The Group is optimistic on the Indonesian market.
5. The letter from MSWG and the Company's response dated 8 November 2023 and 14 November 2023, respectively, have been posted on the Company's website.
6. A copy of the letter from MSWG and the Company's response are enclosed as Appendix I and Appendix II, respectively.
7. The GCEO concluded his presentation and thanked all the Shareholders and proxy holders for their attention.

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6.8 The Chairman thanked the GCEO for his presentation and proceeded with the items in the Agenda of the AGM.

1. AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 TOGETHER WITH THE REPORTS OF THE DIRECTORS AND THE AUDITORS THEREON
2. The Chairman informed the Meeting that the Annual Report 2023 incorporated the Audited Financial Statements of the Company for the financial year ended 30 June 2023 together with the Reports of the Directors' and Auditors thereon had been sent to all the Shareholders in accordance with the Constitution of the Company.
3. The Chairman further informed that pursuant to Section 340(1)(a) of the Companies Act 2016 and Rule 162(d) of the Constitution of the Company, the Audited Financial Statements were not required to be formally approved by the Shareholders. Therefore, the Audited Financial Statements were not tabled for voting but were tabled for discussion only.

1. RESOLUTIONS
2. The Chairman proceeded to put forward the resolutions as set out in the Notice of AGM for Shareholders and proxy holders to consider and vote as follows:
3. 1. Payment of fees to the Non-Executive Directors of up to an amount of RM4,600,000 from the 17th AGM until the next AGM of the Company as explained under Explanatory Note 2 of the Notice of the AGM in the Annual Report.
   2. Payment of benefits to the Non-Executive Directors of up to an amount of RM1,500,000 from the 17th AGM until the next AGM of the Company as explained under Explanatory Note 2 of the Notice of the AGM in the Annual Report.
   3. Election of Mr Scott William Cameron and Tengku Dato' Sri Azmil Zahruddin Raja Abdul Aziz pursuant to Rule 82.2 of the Company's Constitution.
   4. Re-electionof Dato' Jeffri Salim Davidson, Dato' Dr Nirmala Menon and Tan Sri Ahmad Badri Mohd Zahir pursuant to Rule 103 of the Company's Constitution.
   5. Re-appointmentof PricewaterhouseCoopers PLT as the Auditors of the Company for the financial year ending 2024 and the authorisation to the Directors to fix their remuneration pursuant to Section 271 of the Companies Act 2016.

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1. 1. Proposed renewal of existing 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 involving interest of Amanahraya Trustee Berhad - Amanah Saham Bumiputera and Bermaz Auto Berhad, details as per Section 2.3 of the Circular to Shareholders dated 18 October 2023.
2. RESPONSE TO ADVANCE AND REAL-TIME QUESTIONS SUBMITTED BY SHAREHOLDERS
3. The Chairman invited questions and views from the Shareholders and proxy holders for the Board and Management to address or note accordingly. A summary of the questions and comments raised and the Company's responses thereto was as follows:

9.1.1 Question raised by Ronald Danker, Daberah Ann Danker and several others

1. Any door gifts for shareholders?

Response

1. The Company has consistently adhered to maximise shareholder value. It believes that shareholders are best served through its efforts to enhance the Group's overall performance and to deliver robust financial results as opposed to allocating resources to door gifts or other non- essential expenditure. Management strives to create value through holistic shareholder returns and strong dividend yields. The Group's proven track record substantiates this commitment, as evidenced by noteworthy dividends of 13 sen in FY2023 and 12 sen in FY2022.

9.1.2 Comments and question raised by Teo Cher Ming

1. EV is the future of motor industry, and it is also featured heavily in the Annual Report. What are the opportunities and threats to Sime Darby? Considering that charging points are still quite lacking and Sime Darby's portfolio of brands are predominantly in ICE offerings.

Response

1. It appears that the growth in demand for EVs has remained strong. Sime Darby, as the dealer for globally recognised OEMs like BMW, Volvo and Hyundai, is in a unique position to capitalise on the opportunities afforded by the introduction of new EV and ICE models into the market. The Group is also in a position to explore assembly opportunities with leading Chinese EV OEMs like BYD and Nio to potentially produce right-hand drive EVs for the Malaysian and ASEAN markets.
2. Through its subsidiary, Kineta Sdn Bhd, Sime Darby is also involved in the supply, installation and maintenance of EV charging infrastructure.

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1. In assessing potential threats, the transition to EVs will likely reduce after- sales service requirements due to the inherent simplicity of EVs. However, in mitigation, demand for ICE will continue to remain strong for the foreseeable future.
2. Recognising the existing shortage of charging stations, there is a need for increased investments in charging infrastructure.

9.1.3 Comment and question raised by Teo Cher Ming

1. Sime Darby has quite a big presence in China. However, the recent property market crisis and issues at some large property companies showed that the economy is slowing down. Does Sime Darby see any impact in terms of car sales or issues for car buyers to obtain financing for their vehicle purchase?

Response

1. Despite macroeconomic concerns, demand for luxury products, particularly among the expanding middle class, remains robust. The Group's car sales in China have shown an increase from 58,000 the previous year to 66,000 units last year. The current challenge in the Chinese automotive market stems largely from supply issues where OEMs have over-produced in anticipation of a surge in demand, post the Covid lockdowns. This has led to widespread discounting, significantly impacting profit margins.
2. Looking ahead, Sime Darby is confident in the resilience of the Chinese consumer market. The overall outlook for the Chinese automotive market remains optimistic. The anticipation is for a gradual achievement of a more balanced supply-demand equilibrium in the coming years to improve profit margins.

9.1.4 Questions raised by Teo Cher Ming

1. What kind of challenges that the company is expected to face with the shift to agency model? As of now which market has adopted this model?

Response

1. Many OEMs, including BMW, are experimenting with the agency model. For example, the agency model was successfully introduced in South Africa where the local BMW dealers have experienced increased profitability. In Europe, the agency model is being introduced, largely to address the issue of over-dealerisation which has led to stiff competition and reduced dealer margins. The agency model is also being tested in China with the MINI brand.

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1. From a financial perspective, the shift to the agency model does not necessarily impact dealer profitability. The agency fees or commissions received is largely comparable to the margins under the traditional dealership model. One notable advantage is the elimination of inventory, potentially leading to a substantial reduction in the Company's working capital requirements. Overall, whilst there will be a need for operational adjustments, the Group is optimistic that the shift to the agency model will unlikely pose a major profitability challenge for Sime Darby.

9.1.5 Comment and question raised by Teo Cher Ming

1. The company has gone on a shopping spree in Australasia acquiring companies in FY2023. However, one main risk could be "the end of resources boom in Australia" from a government survey released in July 2023. Is the company worried about this and hence the dreaded "impairment" word might pop up?

Response

1. The energy transition and the resultant increase in demand for minerals like copper and "battery metals" is likely to offer significant opportunity in the mining space for many years in the future.
2. A major concern is around the future of thermal coal mining where demand is likely to fall with the global shift towards cleaner energy sources. However, the Group is more exposed to metallurgical coal, where the outlook remains relatively positive. Metallurgical coal is a key ingredient in steel production. And demand is expected to persist as demand for steel continue to increase.
3. In any acquisition, there is an element of goodwill that will reside on the balance sheet. This is unavoidable. And, of course, goodwill is subject to an annual impairment test. In challenging market conditions, there will always be a risk that an impairment may be required. However, despite the potential for impairments, Sime Darby maintains an optimistic outlook on the mining sector in Australia for the foreseeable future.

9.1.6 Question raised by Chong Swee Moi

1. When will the company start having physical AGM?

Response

1. There is a prevailing global trend among major corporations towards virtual AGMs. It is regarded as a more effective means of reaching a broader shareholder audience.

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