KPJ Healthcare : Statement of Share Buy Back

THIS DOCUMENT 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 ("Bursa Securities") has not perused this Statement prior to its issuance as it is an exempt document pursuant to Practice Note 18 of the Main Market Listing Requirements of Bursa Securities. Bursa Securities takes no responsibility for the contents of this Statement, 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 Statement.

KPJ HEALTHCARE BERHAD

(Registration No. 199201015575 (247079-M))

(Incorporated in Malaysia)

STATEMENT TO SHAREHOLDERS

IN RELATION TO

THE PROPOSED AUTHORITY FOR KPJ HEALTHCARE BERHAD

TO PURCHASE ITS OWN SHARES OF UP TO 10% OF THE TOTAL NUMBER

OF ISSUED SHARES OF THE COMPANY

("PROPOSED SHARE BUY-BACK")

The ordinary resolution in respect of the above proposal will be tabled as Special Business at the Thirty-First Annual General Meeting ("31st AGM") of KPJ Healthcare Berhad ("KPJ" or the "Company") to be held at Ballroom 1 and 2, Level 1, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, Bukit Kiara, 60000 Kuala Lumpur, Malaysia on Wednesday, 26 June 2024 at 11:00 a.m. or any adjournment thereof. The Notice of the 31st AGM together with the Proxy Form are available for download from the Company's website together with this Statement at https://kpj.listedcompany.com/ar.html.

A member who is entitled to attend and vote at the 31st AGM is entitled to appoint a proxy or proxies to attend and vote on his/her behalf. If you wish to appoint a proxy to participate and vote on your behalf, you may deposit your Proxy Form at the office of the poll administrator at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia or its Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia, or alternatively, you may lodge your Proxy Form by electronic means via TIIH Online website at https://tiih.online, at least forty-eight (48) hours before the time appointed for holding the 31st AGM as indicated below or any adjournment thereof.

Last date and time for lodging the Proxy Form	:	Monday, 24 June 2024 at 11:00 a.m.
Date and time of 31st AGM	:	Wednesday, 26 June 2024 at 11:00 a.m.

This Statement is dated 10 May 2024

DEFINITIONS

For the purpose of this document, except where the context otherwise requires, the following definitions shall apply throughout this Statement:-

Act	: The Companies Act, 2016, as amended from time to time and any re-
		enactment thereof
AGM	:	Annual General Meeting
Board or the Director(s)	: The Board of Directors of KPJ
Bursa Securities	: Bursa Malaysia Securities Berhad
CMSA	: Capital Markets and Services Act, 2007, as amended from time to time
		and any re-enactment thereof
Code	: Malaysian Code on Take-Overs and Mergers 2016 read together with the
		Rules on Take-Overs, Mergers and Compulsory Acquisitions, as
		amended from time to time
Constitution	: The Constitution of KPJ, as amended from time to time
Director	: Shall have the same meaning given in Section 2(1) of the CMSA
EPS	:	Earnings per Share
FYE(s)	: Financial year(s) ended / ending, as the case may be
JCorp	: Johor Corporation, a body corporate established under the Johor
		Corporation Enactment No. 4, 1968 (as amended by Enactment No. 5,
		1995)
KPJ or the Company	:	KPJ Healthcare Berhad
KPJ Group or the Group	: KPJ and its subsidiary companies
KPJ Share(s) or Share(s)	:	Ordinary share(s) in KPJ
Listing Requirements	: Main Market Listing Requirements of Bursa Securities
LPD	: 24 April 2024, being the latest practicable date prior to the printing of this
		Statement
Major Shareholder	: A person who has an interest or interests in one (1) or more voting shares
		in the Company and the number, or the aggregate number of those voting
		shares, is:-
		(i) 10% or more of the total number of voting shares in the Company;
		or
		(ii) 5% or more of the total number of voting shares in the Company
		where such person is the largest shareholder of the Company.
		For the purpose of this definition, "interest in shares" shall have the
		meaning given in Section 8 of the Act
Minister	: The Minister charged with the responsibility for companies

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DEFINITIONS (CONT'D)

NA	: Net assets
Proposed Share Buy-Back	: The proposed authority for KPJ to purchase its own shares of up to 10%
	of the total number of issued shares of the Company
RM and sen	: Ringgit Malaysia and sen, respectively
Statement	: This Statement to Shareholders of KPJ dated 10 May 2024
Treasury Shares	: 162,306,700 treasury shares held by KPJ as at LPD

Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine gender shall, where applicable, include the feminine and/or neuter gender, and vice versa. References to persons shall include corporations, unless otherwise specified.

All references to "you" or "your" in this Statement are to the shareholders of the Company.

Throughout this Statement, for ease of reading, certain figures have been rounded.

Any reference in this Statement to any enactment or guidelines is a reference to that enactment or guidelines as for the time being amended or re-enacted. Any reference to a time of day in this Statement shall be a reference to Malaysian time, unless otherwise stated.

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TABLE OF CONTENTS

STATEMENT TO SHAREHOLDERS IN RELATION TO THE PROPOSED SHARE BUY-BACK

		PAGE
1.	INTRODUCTION	1
2.	PROPOSED SHARE BUY-BACK	2
3.	RATIONALE/POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED
	SHARE BUY-BACK	4
4.	EFFECTS OF THE PROPOSED SHARE BUY-BACK	5
5.	HISTORICAL SHARE PRICE	8
6.	IMPLICATIONS RELATING TO THE CODE	8
7.	APPROVAL REQUIRED	..8
8.	DIRECTORS' STATEMENT	..8
9.	DIRECTORS' RECOMMENDATION	..8
10. AGM	..8
11. FURTHER INFORMATION	..9
APPENDIX I - FURTHER INFORMATION	10
APPENDIX II - EXTRACT OF NOTICE OF 31ST AGM	11

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KPJ HEALTHCARE BERHAD

(Registration No. 199201015575 (247079-M))

(Incorporated in Malaysia)

	Registered Office:
	Level 13
	Menara KPJ
	238, Jalan Tun Razak
	50400 Kuala Lumpur
	Malaysia
	10 May 2024
Board of Directors:
Tan Sri Dato' Sri Dr. Ismail bin Bakar	(Non-IndependentNon-Executive Chairman)
Dato' Mohd Redza Shah bin Abdul Wahid	(Senior Independent Non-Executive Director)
Mohamed Ridza bin Mohamed Abdulla	(Independent Non-Executive Director)
Khairuddin bin Jaflus	(Independent Non-Executive Director)
Hisham bin Zainal Mokhtar	(Independent Non-Executive Director)
Lee Lai Fan	(Independent Non-Executive Director)
Shamsul Anuar bin Abdul Majid	(Non-IndependentNon-Executive Director)
Rozaini bin Mohd Sani	(Non-IndependentNon-Executive Director)
Prof. Dato' Dr. Azizi bin Haji Omar	(Non-IndependentNon-Executive Director)
Annie binti Rosle	(Non-IndependentNon-Executive Director)
Chin Keat Chyuan	(President and Managing Director)
To: The Shareholders of KPJ
Dear Sir/Madam,

STATEMENT TO SHAREHOLDERS IN RELATION TO THE PROPOSED SHARE BUY-BACK

1. INTRODUCTION

On 7 May 2024, KPJ announced that the Company intends to seek shareholders' approval for the Proposed Share Buy-Back at the forthcoming 31st AGM.

The purpose of this Statement is to provide you with the details of the Proposed Share Buy-Back, to set out the recommendation of the Board thereon and to seek your approval for the ordinary resolution pertaining to the Proposed Share Buy-Back to be tabled at the forthcoming 31st AGM under the agenda of Special Business.

YOU ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS STATEMENT BEFORE VOTING ON THE ORDINARY RESOLUTION PERTAINING TO THE PROPOSED SHARE BUY-BACK TO BE TABLED AS A SPECIAL BUSINESS AT THE FORTHCOMING 31ST AGM.

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2. PROPOSED SHARE BUY-BACK

2.1 Details of the Proposed Share Buy-Back

The Board proposes to seek shareholders' approval to purchase up to 10% of the total number of issued Shares in the Company at any point in time subject to the compliance with the provisions of the Act and the requirements of Bursa Securities and/or any other relevant authorities.

The purchase of KPJ Shares by the Company from the open market on Bursa Securities will be made through stockbroker(s) to be appointed by the Board.

2.2 Maximum Number of Shares for the Proposed Share Buy-Back and Source of Funds

The maximum aggregate number of Shares which may be purchased by the Company, shall not exceed 10% of the total number of issued Shares of the Company at any point in time.

As at the LPD, the total number of issued KPJ Shares (including Treasury Shares) is 4,526,608,066 Shares. For illustration purposes, the maximum number of KPJ Shares that may be purchased pursuant to the Proposed Share Buy-Back is as follows:

		Number of Shares
10% of the total number of issued KPJ Shares	452,660,807
Less: Treasury Shares held as at the LPD	(162,306,700)
Maximum number of KPJ Shares that may be purchased
pursuant to the Proposed Share Buy-Back		290,354,107

Paragraph 12.10(1) of the Listing Requirements stipulates that a listed corporation must ensure that the proposed purchase(s) of its own shares is made wholly out of its retained profits. For the purpose of calculating the total amount of retained profits available for effecting a share buy-back, the listed corporation must not use the amount of retained profits available on a group basis.

Pursuant to the Listing Requirements, the maximum amount of funds to be allocated for any purchase of its own KPJ Shares should not exceed the retained profits of the Company. The retained profits of the Company based on the latest audited financial statements for the year ended 31 December 2023 was approximately RM253,497,000.

The Proposed Share Buy-Back will be financed through internally generated funds and/or external borrowings, the proportion of which will depend on the quantum of the purchase consideration as well as the availability of the internally generated funds and/or external borrowings at the time of the purchase(s). The actual number of KPJ Shares to be purchased will depend on the market conditions, the share market sentiments, the sufficiency of retained profits as well as the availability of the financial resources available to the Company.

In the event the Company decides to utilise external borrowings to finance the Proposed Share Buy- Back, it will ensure that it has sufficient financial capability to repay the external borrowings and that the external borrowings will not have any material impact on the cash flow of the Company.

2.3 Effective Period

The Proposed Share Buy-Back, if approved by the shareholders at the forthcoming 31st AGM of KPJ, will be effective immediately from the passing of the ordinary resolution for the Proposed Share Buy-Back and shall continue to be in force until: -

1. the conclusion of the next AGM at which time the authority will lapse, unless the authority is renewed by an ordinary resolution passed at that meeting; or
2. the expiration of the period within which the next AGM after that date is required by law to be held; or

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1. the authority is revoked or varied by ordinary resolution passed by the shareholders of the Company in general meeting,

whichever occurs first.

Your approval for the Proposed Share Buy-Back does not impose an obligation on the Company to purchase the Shares. However, it will allow the Board to exercise the power of the Company to purchase the Shares at any time within the abovementioned time period.

2.4 Treatment of Shares purchased by KPJ

In accordance with Section 127 of the Act, Directors of KPJ may, at its absolute discretion, deal with the Shares so purchased in the following manner:

1. cancel the Shares so purchased; or
2. retain the Shares so purchased as treasury shares which may be distributed as share dividends to shareholders of KPJ and/or be resold on Bursa Securities in accordance with the relevant rules of

Bursa Securities and/or be transferred for the purposes of an employees' share scheme and/or be transferred as purchase consideration and/or be cancelled subsequently and/or sold, transferred or otherwise be used for such purposes as the Minister may by order prescribe; or

1. retain part of the Shares so purchased as treasury shares and cancel the remainder; or
2. deal with the Shares so purchased in any other manner as may be permitted by the applicable laws and/or regulations in force from time to time.

In the event the Company wishes to purchase its own KPJ Shares, the Company is required to comply with Sections 112, 113 and 127 of the Act and the Company is required to release an immediate announcement on the day the purchase is made.

An appropriate announcement will also be made to Bursa Securities in respect of the intention of the Board whether to retain the KPJ Shares so purchased as treasury shares or cancel them or a combination of both.

While the purchased KPJ Shares are held as treasury shares, the rights attached to them in relation to voting, dividends and participation in any other distributions whether cash or otherwise are suspended and the treasury shares shall not be taken into account in calculating the number or percentage of KPJ Shares or of a class of shares in the Company for any purposes including substantial shareholdings, take- overs, notices, the requisitioning of meetings, the quorum for a meeting and the result of a vote on a resolution at a meeting.

2.5 Pricing

Pursuant to Paragraph 12.17 of the Listing Requirements, the Company shall purchase its own Shares on Bursa Securities at a price which is not more than 15% above the weighted average market price of the Company's Shares for the 5 market days immediately before the purchase.

In addition, pursuant to Paragraph 12.18 of the Listing Requirements, in the case of a resell or transfer of treasury shares, the Company may only resell the purchased KPJ Shares held as treasury shares on Bursa Securities or transfer the treasury shares at:-

1. a price which is not less than the weighted average market price for the KPJ Shares for the 5 market days immediately before the resale or transfer; or

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1. 1. a discounted price of not more than 5% to the weighted average market price for the KPJ Shares for the 5 market days immediately before the resale or transfer provided that:-
   2. 1. the resale or transfer takes place not earlier than 30 days from the date of purchase; and
      2. the resale or transfer price is not less than the cost of purchase of the KPJ Shares being resold or transferred.
2. Public Shareholding Spread
   As at LPD, the Company's public shareholding spread stood at 54.99% comprising 7,075 public shareholders holding 2,399,833,735 KPJ Shares.
   For illustrative purposes, assuming that the purchase by the Company of the Shares pursuant to the Proposed Share Buy-Back is carried out in full based on the total number of issued Shares of the Company as at the LPD, the proforma public shareholding spread of the Company will be reduced to approximately 51.78%, on the basis that all the Shares are purchased from public shareholders and the Shares so purchased are held as treasury shares.
3. Purchase, Resale, Cancellation and/or Transfer of Shares in the preceding 12 months
   As at the LPD, the Company holds a total of 162,306,700 of its 4,526,608,066 issued Shares as treasury shares. During the past 12 months preceding the LPD, the Company did not purchase any of its own Shares, resell, cancel and/or transfer any Treasury Shares.

3. RATIONALE/POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED SHARE BUY-BACK

3.1 Rationale

The rationale for the Proposed Share Buy-Back is as follows:

1. it enables the Company to purchase its own Shares when the Shares are being traded at values that are grossly below what the Board believes to be their intrinsic value;
2. the Group's EPS is expected to increase as the consolidated earnings of the Company would be divided by a reduced number of Shares, assuming all other things being equal; and

1. it provides the Company with the flexibility to use the purchased Shares which are held as treasury shares. The purchased Shares can be held as treasury shares to be transferred for the purpose of or under the employees' share scheme or any other share scheme to be established by the Company or resold on Bursa Securities at a higher price with the intention of realising potential gain without affecting the total issued share capital. Should any treasury shares be distributed as share dividends, this would serve to reward you.

3.2 Potential advantages

The Proposed Share Buy-Back, if implemented, may potentially benefit the Company as follows:

1. all other things being equal, the Proposed Share Buy-Back will result in a lower number of KPJ Shares being used for the purpose of computing EPS, if the KPJ Shares purchased are subsequently cancelled or are held as treasury shares. Therefore, the Proposed Share Buy-Back will enhance the EPS of the Company, which in turn might have a positive impact on the market price of the KPJ Shares; and
2. if the KPJ Shares so purchased are kept as treasury shares, the Company may have the opportunity to realise capital gains if these are resold on Bursa Securities at price(s) higher than their purchase price(s). Alternatively, the KPJ Shares so purchased may be distributed as share dividends to reward the shareholders of the Company, or transferred for purposes of or under an employees' share scheme, long term incentive plan for eligible employees and/or directors, or as purchase consideration.

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3.3 Potential disadvantages

The Proposed Share Buy-Back, if implemented, would reduce the financial resources of the Group. This may result in the Group having to forgo future investment opportunities and/or any income that may be derived from alternative uses of such funds. However, such decrease in financial resources may be temporary since the purchased Shares held as treasury shares can be subsequently resold at prices higher than the purchase price.

Notwithstanding the above, the Proposed Share Buy-Back is not expected to result in any material disadvantages to the Company and its shareholders as it will only be implemented after due consideration of the Group's available financial resources and the resultant impact on the Company and shareholders. The Board, in exercising any decision to purchase any Share(s), will be mindful of the

Company's and shareholders' interests.

4. EFFECTS OF THE PROPOSED SHARE BUY-BACK

4.1 Share Capital

The effect of the Proposed Share Buy-Back on the share capital of the Company will depend on the treatment of the KPJ Shares purchased, whether such Shares purchased are cancelled, retained as treasury shares, resold on the open market, distributed as share dividends, or transferred for purposes of or under an employees' share scheme, long term incentive plan for eligible employees and/or directors, or as purchase consideration.

On the assumption that the Proposed Share Buy-Back is carried out in full and the Shares so purchased are fully cancelled, the effects of the Proposed Share Buy-Back on the total number of issued shares capital of the Company are as follows:

	Number of Shares
Total number of issued shares as at the LPD (including Treasury	4,526,608,066
Shares)
Less :
Maximum number of Shares that may be purchased and cancelled pursuant
to the Proposed Share Buy-Back	(290,354,107)
Total number of issued shares after cancellation of Shares purchased under
the Proposed Share Buy-Back	4,236,253,959

However, the Proposed Share Buy-Back will have no effect on the total number of issued Shares of KPJ if all the KPJ Shares purchased are retained as treasury shares, resold on the open market, distributed as share dividends or transferred for purposes of or under an employees' share scheme or as purchase consideration.

4.2 NA

The effect of the Proposed Share Buy-Back on the consolidated NA per Share will depend on the number of KPJ Shares purchased, the effective funding costs to finance the purchase of the KPJ Shares and the treatment of the KPJ Shares so purchased by the Company.

The Proposed Share Buy-Back is likely to reduce the consolidated NA per Share at the time of purchase if the purchase price exceeds the consolidated NA per Share and conversely will increase the consolidated NA per Share at the time of purchase if the purchase price is less than the consolidated NA per Share.

Should the KPJ Shares purchased under the Proposed Share Buy-Back be held as treasury shares and later resold, the consolidated NA per Share will increase if the Company realises a gain from the resale, and vice versa.

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1. Working Capital
   The Proposed Share Buy-Back will reduce the cash flow and financial resources available for working capital depending on the purchase price and the number of the KPJ Shares purchased.
   However, the cash flow position and financial resources of the Company will be restored if the purchased KPJ Shares are resold at least at the purchase price.
2. Earnings

The effect of the Proposed Share Buy-Back on the earnings and EPS of the Group is dependent on the purchase price(s) of the KPJ Shares, the number of KPJ Shares purchased, and loss in interest income to the Group, or the opportunity cost in relation to other investment opportunities.

On the assumption that the KPJ Shares so purchased are treated as treasury shares and subsequently resold, the extent of the effect on earnings of the KPJ Group will depend on the actual selling price, the number of treasury shares resold and the effective gain or interest saving arising.

1. Dividends
   The Proposed Share Buy-Back is not expected to have any impact on the policy of the Board in recommending dividends to the shareholders of the Company. However, the Board may, at its discretion, deal with the purchased Shares in the manner as may be permitted by the Act, rules, regulations, guidelines, requirements and/or orders of Bursa Securities and any other relevant authorities for the time being in force, including but not limited to distributing future dividends in the form of treasury shares which are purchased pursuant to the Proposed Share Buy-Back.
2. Gearing
   The Proposed Share Buy-Back may increase the gearing of the Group if borrowing is used to fund any purchase of the purchased Shares. However, at this juncture, we have not determined whether to use any borrowing to purchase any Shares under the Proposed Share Buy-Back.
3. Interests of Directors' and Major Shareholders' and/or person connected to them

Save for the proportionate increase in the percentage of shareholdings and/or voting rights in their capacity as the shareholders of the Company as a consequence of the implementation of the Proposed Share Buy-Back, none of the Directors and/or Major Shareholder of the Company and any person connected with the Directors and/or Major Shareholder of the Company, have any interest, direct or indirect, in the Proposed Share Buy-Back, and in the resale of the treasury shares, if any.

The proforma effects of the Proposed Share Buy-Back on the shareholdings of the Directors and substantial shareholders as at the LPD respectively, assuming the Company implements the Proposed Share Buy-Back in full and retained the shares purchased as treasury shares, are as follows:

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