British American Tobacco Malaysia : 62nd Annual General Meeting Minutes (434 kb)

BRITISH AMERICAN TOBACCO (MALAYSIA) BERHAD

[Registration No. 196101000326 (4372-M)]

(Incorporated in Malaysia)

Minutes of the Sixty-Second ("62nd") Annual General Meeting of British American Tobacco (Malaysia) Berhad ("the Company" or "BAT Malaysia") held at the broadcast venue at Infinity Room, Level 16, Guoco Tower, Damansara City, No. 6, Jalan Damanlela, Bukit Damansara, 50490 Kuala Lumpur on Wednesday, 3 May 2023 at 9.30 a.m.

PRESENT
Tan Sri Dato' Seri Dr. Aseh bin Haji Che Mat	:	Chairman
(TSA)		Independent Non-Executive Director
Dato' Chan Choon Ngai (DCCN)	:	Senior Independent Non-Executive
		Director
Mr. Eric Ooi Lip Aun (EO)	:	Independent Non-Executive Director
Cik Norliza binti Kamaruddin (LK)	:	Independent Non-Executive Director
Datuk Christine Lee Oi Kuan (DCL)	:	Non-IndependentNon-Executive Director
Mr. Nedal Louay Salem (NS)	:	Managing Director
Mr. Anthony Yong Mun Seng (AY)	:	Finance Director
IN ATTENDANCE
Ms. Sharifah Thaherah (STA)	:	Company Secretary
Mr. Adiel Emir Ikram Aziz Al Rahim (AEI)	:	Company Secretary
BY INVITATION
Mr. Adrian Lee	:	Messrs. KPMG PLT (External Auditors)
Ms. Soo Tho Pei Yin	:	Messrs. KPMG PLT (External Auditors)
Mr. Poon How Kun	:	Messrs. Jeff Leong, Poon & Wong
ATTENDEES

(846 Members, 119 Proxies and 1 Corporate Representative participated in the virtual meeting of the 62nd Annual General Meeting as per the summary of attendance)

1. CHAIRMAN OF THE MEETING
   TSA chaired the 62nd Annual General Meeting ("AGM" or "Meeting") of BAT Malaysia.
2. WELCOME ADDRESS AND HOUSE RULE
   STA shared that the AGM was a fully virtual meeting, and the Meeting was restricted to shareholders and authorised representatives of corporate shareholders. BAT Malaysia had taken all efforts to ensure a smooth live streaming, however the quality of the broadcast for the recipients might be affected by the participants' own internet bandwidth connection and stability. Shareholders were also encouraged to submit their questions early in the query box.

BRITISH AMERICAN TOBACCO (MALAYSIA) BERHAD

Minutes of the 62nd Annual General Meeting held on 3 May 2023

1. CHAIRMAN'S OPENING SPEECH
   On behalf of the Board of Directors ("Board") and the Leadership Team of BAT Malaysia, the Chairman extended a warm welcome to the shareholders and authorised representative of corporate representatives, proxies and invitees to the AGM. The Chairman went on to express his special gratitude to all employees of BAT Malaysia for their grit, dedication and resilience in 2022. The Chairman also thanked the shareholders for their continued support and loyalty.
   The Chairman briefed the Meeting on the following:
2. 1. BAT Malaysia delivered a commendable performance given the challenging operating environment in 2022;
   2. In line with BAT Malaysia's commitment to delivering value to its stakeholders, the Board of Directors maintained a dividend payout ratio of above 90% in 2022, where the Board of Directors has declared dividends amounting to 88 sen per share for the financial year ended 31 December 2022;
   3. The Board of Directors remained committed to delivering strong shareholder value.
3. QUORUM
   The requisite quorum being present pursuant to Clause 80 of BAT Malaysia's Constitution, the Chairman declared the Meeting duly convened.
4. NOTICE OF MEETING
   The Notice of the 62nd AGM dated 4 April 2023 ("Notice") was announced to Bursa Malaysia Securities Berhad, published on BAT Malaysia's website, advertised in the newspapers and circulated to all members on 4 April 2023.
5. VOTING PROCEDURES
   Before proceeding with the agenda of the Meeting, the shareholders and proxies were briefed by the Chairman that pursuant to Paragraph 8.29A of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the resolutions set out in the Notice would be voted on by way of poll.
   The shareholders were informed that BAT Malaysia had appointed Tricor Investor & Issuing House Services Sdn. Bhd. as the poll administrator to conduct the e-voting process and Coopers Professional Scrutineers Sdn. Bhd. as the scrutineer to validate the votes cast.
   The shareholders were informed that the voting on the resolutions could be done at any time during the Meeting until the closure of the voting session. The polling process via remote participation and voting facility for the resolutions and hotline number for support were shared.
   The Chairman informed the shareholders that the Board would make every effort to answer questions received prior to and during the Meeting. For questions that were not addressed at the Meeting, the Company would provide responses by email within five (5) working days from the date of the Meeting.

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BRITISH AMERICAN TOBACCO (MALAYSIA) BERHAD

Minutes of the 62nd Annual General Meeting held on 3 May 2023

1. BUSINESS AND FINANCIAL PERFORMANCE
   The Chairman then invited the Managing Director, NS, to share BAT Malaysia and its subsidiaries ("the Group") 2022 strategy and operating environment. NS shared the key strategy and operating environment highlights as follows:
2. 1. The Group's purpose strategy remained the same which is to build A Better Tomorrow™ by reducing the health impact of its business through offering a greater choice of enjoyable and less risky products to adult consumers.
   2. It was the Group's third consecutive year of marginal declined in illicit incidence, where in 2022, the reduction recorded at 1 percentage point ("ppt") compared to the previous year. This was delivered through the Company's continuous efforts working with enforcement agencies like the Royal Malaysian Customs.
   3. With the decline in the black market, the Group was able to see a direct correlation where the legal tobacco industry grew by just under 5%. The biggest beneficiary of legal market growth was the Value-for-Money ("VFM") segment, where the black-market smokers up trade to legal VFM offers.
   4. The lifting of the Movement Control Order ("MCO") helped drive Gross Domestic Product ("GDP") growth to +8.7% compared to same period last year which was the highest annual growth recorded in 22 years. This was largely driven by private consumption supported by better labour market prospects.
3. 2022 FINANCIAL PERFORMANCE
   The Finance Director, AY, shared with the shareholders the Group's 2022 financial performance as follows:
4. 1. After two consecutive years of market share growth (2019: 50.6%, 2020: 51.7%; 2021: 52.4%), the Group experienced a decline in total market share this year, mainly driven by the Group's planned delisting of Pall Mall and Kent. Both brands contributed 2.8% share of market in the prior year.
   2. Nevertheless, the Group would remain in a better position to strengthen its portfolio going forward as well as to move into multi-category.
   3. The Group's cash from operations improved significantly by 242% which contributed to the loan repayment of RM80 million in 2022. As a result, the Group's borrowing levels have reduced by 10% from RM775 million in 2021 to RM695 million in 2022.
   4. Despite the challenging operating environment during the year, the Group landed profit from operations at 1% lower than 2021 with improved gross profit margins.
   5. The Group continued to be committed to a dividend payout ratio of above 90% and had declared dividends of 88 sens per share during the full year 2022.

9. 2023 OUTLOOK

The 2023 outlook was highlighted as follows:

1. Despite the unemployment rate dropping to a 3-year low at 3.5% in February 2023 and GDP growth forecasted at +4.1% compared to same period last year, in the short-term, the Group would expect a volatile economic environment driven by inflationary pressures and disruptions on the global supply chain.

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BRITISH AMERICAN TOBACCO (MALAYSIA) BERHAD

Minutes of the 62nd Annual General Meeting held on 3 May 2023

1. 1. The Group would expect this challenging operating landscape to stretch disposable income, leading to downtrading from legal products to tobacco black market options.
   2. In the medium term, the Group was confident the economic conditions would improve, the Government would introduce balanced regulations on vapour and accelerate their interventions to further reduce the tobacco black market.
   3. The Group aimed to continue growing its tobacco heating product, glo™, which represented its efforts to offer a choice of reduced-risk alternatives to adult smokers. The Group would also focus on investing in VFM brands and maintaining leadership in the Premium segment.
   4. The Group welcomed the Government's move to regulate vapour. This would ensure vapers in Malaysia have access to legal products that adhere to safety and quality standards.
   5. The Group believed regulations on vapour products should be based on scientific evidence. There was a growing consensus among many members of the public health community and academics about the role of vapour products as a reduced-risk alternative to smoking.
2. AUDITED FINANCIAL STATEMENTS OF THE COMPANY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 AND THE REPORTS OF THE DIRECTORS AND AUDITORS THEREON
   STA was invited by the Chairman to read the resolutions and agenda of the Meeting. STA informed the shareholders that the first item on the Agenda was to receive the Audited Financial Statements of the Company for the financial year ended 31 December 2022 together with the Reports of the Directors and Auditors thereon ("2022 AFS"). The first item on the Agenda was for discussion only and did not require voting.
3. ORDINARY RESOLUTION 1
   RE-ELECTION OF TSA IN ACCORDANCE WITH CLAUSE 109.1 OF THE COMPANY'S CONSTITUTION
   Ordinary Resolution 1 was in relation to the re-election of TSA as a Director of the Company in accordance with Clause 109.1 of the Constitution of the Company.
4. ORDINARY RESOLUTION 2
   RE-ELECTION OF DCCN IN ACCORDANCE WITH CLAUSE 109.1 OF THE COMPANY'S CONSTITUTION
   Ordinary Resolution 2 was in relation to the re-election of DCCN as a Director of the Company in accordance with Clause 109.1 of the Constitution of the Company.
5. ORDINARY RESOLUTION 3
   RE-ELECTION OF EO IN ACCORDANCE WITH CLAUSE 109.1 OF THE COMPANY'S CONSTITUTION
   Ordinary Resolution 3 was in relation to the re-election of EO as a Director of the Company in accordance with Clause 109.1 of the Constitution of the Company.

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BRITISH AMERICAN TOBACCO (MALAYSIA) BERHAD

Minutes of the 62nd Annual General Meeting held on 3 May 2023

1. ORDINARY RESOLUTION 4
   PAYMENT OF DIRECTORS' FEES AND BOARD COMMITTEES' FEES TO THE NON- EXECUTIVE DIRECTORS FOR THE PERIOD COMMENCING 4 MAY 2023 UNTIL THE NEXT ANNUAL GENERAL MEETING OF THE COMPANY
   Ordinary Resolution 4 was in relation to the approval of the payment of Directors' fees and Board Committees' fees to the Non-Executive Directors for the period commencing 4 May 2023 until the next Annual General Meeting of the Company.
2. ORDINARY RESOLUTION 5
   PAYMENT OF DIRECTORS' BENEFITS TO THE NON-EXECUTIVE DIRECTORS OF UP TO RM250,000 FOR THE PERIOD COMMENCING 4 MAY 2023 UNTIL THE NEXT ANNUAL GENERAL MEETING OF THE COMPANY
   Ordinary Resolution 5 was in relation to the approval of the payment of Directors' benefits to the Non-Executive Directors of up to RM250,000 for the period commencing 4 May 2023 until the next Annual General Meeting of the Company.
3. ORDINARY RESOLUTION 6
   RE-APPOINTMENT OF KPMG PLT AS AUDITORS OF THE COMPANY
   Ordinary Resolution 6 was in relation to re-appointment of KPMG PLT as the auditors of the Company for the financial year ending 31 December 2023 and to authorise the Directors to fix their remuneration. The retiring auditors, KPMG PLT have indicated their willingness to continue in office.
4. ORDINARY RESOLUTION 7
   PROPOSED RENEWAL OF SHAREHOLDERS' MANDATE FOR THE COMPANY AND ITS SUBSIDIARIES TO ENTER INTO RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE WITH RELATED PARTIES ("PROPOSED RENEWAL OF THE RECURRENT RELATED PARTY TRANSACTIONS MANDATE")
   Ordinary Resolution 7 was in relation to the Proposed Renewal of the Recurrent Related Party Transactions Mandate. The details of which were set out in the Circular to Shareholders dated 4 April 2023.
   STA informed the Meeting that DCL, NS and AY and persons connected with them, were deemed to be interested in the proposed resolution and as such, would abstain from voting on the resolution pertaining to the proposed renewal of shareholders' mandate for recurrent related party transactions in respect of their direct and indirect shareholdings in the Company.
5. QUESTIONS AND ANSWERS
   The Chairman informed the Meeting that the Company had received questions from the Minority Shareholders Watch Group ("MSWG"). The questions posted by MSWG and the responses from the Company were read out by STA, NS and AY respectively and were shared to the shareholders on the screen.
   The Company had also received questions prior to and during the Meeting. The shareholders were notified that questions would be summarised to avoid repetition. The Chairman, NS and AY took turns to answer the questions. The shareholders were informed that the Company would provide email responses to questions that were not addressed at the Meeting within five
   (5) working days from the date of the Meeting.

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