CSE Global : Annual General Meeting To Be Held On 20 April 2023 - Responses To Substantial And Relevant Questions

CSE GLOBAL LIMITED

(Company Registration No. 198703851D)

(Incorporated in Singapore)

ANNUAL GENERAL MEETING TO BE HELD ON 20 APRIL 2023

RESPONSES TO SUBSTANTIAL AND RELEVANT QUESTIONS

CSE Global Limited (the "Company" or "CSE") would like to thank Securities Investors Association (Singapore) and a Shareholder who submitted their questions in advance of our Annual General Meeting (AGM) which will be convened and held, in a wholly physically format, at Raffles City Convention Centre, Level 4, Atrium Ballroom, 80 Bras Basah Rd, Singapore 189560 on Thursday, 20 April 2023 at 2.30 p.m.

The Board's responses to these questions are set out in Appendix 1 and also published on the

Company's website athttps://cseglobal.listedcompany.com/agm_egm.html.

Appendix 1

RESPONSES TO SUBSTANTIAL AND RELEVANT QUESTIONS

RECEIVED FROM SECURITIES INVESTORS ASSOCIATION (SINGAPORE)

AND A SHAREHOLDER

No

Questions

CSE's Response

1. Would the board/management provide shareholders greater clarity on the following operational, financial and governance matters? Specifically:

1. Renewable energy: Can the company provide information about the group's key capabilities in the renewable energy sector? What percentage of the group's total revenue is generated from renewable energy, and what percentage comes from fossil fuels?

1. Cost overrun: Can the company provide a breakdown of the $5.9 million recognised for the project cost overruns in the United States?

Similar to other sectors in which the Group operates, the renewable energy sector utilises the same key capabilities such as engineering skill sets in process automation controls and communications and security.

The share of the group's total revenue generated from renewable energy sector remains negligible at this moment. The percentage of the fossil fuel revenue is slightly less than 50% of the group's total revenue.

The project cost overruns comprised of material, labour and subcontractor costs.

1. Cash flow from operations: The cash flow from operations of the company decreased significantly by 75% to $9.1 million. This was primarily attributed to a $20 million increase in trading goods that are included in inventories. The value of inventories has surged from $29.3 million to $52.0 million. Could management provide details on how it intends to better manage its working capital to ensure optimal cash flow from operations?
2. Acquisitions: Since the beginning of 2022, the group acquired DTS Solutions, General Communications (Gencom), Logic Wireless and Radio One Group. Can management provide a comprehensive update on the post-acquisition performance of these companies to help shareholders understand the benefits and synergies that have been realised?

In 2022, there is an increase in working capital requirements due to higher orders and business volume, as well as an increase in stocking levels to mitigate the impact of supply chain disruption.

Despite this, the Group improved its working capital efficiency by delivering 75.8 working capital days in 2022 as compared to 77.2 working capital days in 2021.

The acquisitions of DTS Solutions and Gencom had contributed positive earnings to the Group in 2022.

The acquisition of Logic Wireless was concluded in December 2022, while the acquisition of Radio One group was completed in January 2023. Hence, it is too premature to provide the post-acquisition performance of these acquisitions at this moment.

NoQuestions

1. Long-termvalue creation: In the corporate profile, it was noted that the group has a "consistent profit track" and a "management that is focused on operational excellence to achieve sustainable profit growth and enhance shareholder returns." Can management provide the total shareholder return over the past 5, 10, 15, and 20 years to help shareholders evaluate the company's ability to deliver returns? In addition, how has the board evaluated the company's performance in delivering shareholder returns, and what measures are in place to ensure continued long-term value creation?

CSE's Response

The total shareholder return over the last 5, 10, 15 and 20 years are 30.8%, 18.9%, -7.3%, and 261.9% respectively.

The Board focused on total shareholder return on a long term basis.

1. Long tenured independent directors: Mr Lim Ming Seong has served as the independent board chairman since 1997 while Mr Sin Boon Ann has been on the board since May 2002. In light of the recent changes to the Listing Rules which impose a hard limit of 9 years for directors' tenure, the board has taken this into consideration as part of the ongoing board renewal process. Can the nominating committee (NC) provide more information on its plans to renew the board in the near term?

In relation to tenure, the ongoing Board renewal and refreshment process is phased to ensure that the Company has a group of Independent Directors whose tenures are staggered across their terms of office. This provides continuity and stability for the conduct of Board matters while also ensuring that the Board is able to benefit from different perspectives and insights from the directors. The Group has been proactive in its board renewal process, and has tabled the actions made over the last 6 years.

Number of directors	2022	2021	2020	2019	2018	2017
Appointment	-	-	4	1	2	-
Retirement/ Resignation	2	-	3	1	-	1

The NC and Board are already in the process of identifying suitable candidates to be appointed by this financial year and will make the appropriate announcement as and when the candidate(s) is/are identified to comply with the CG requirement.

NoQuestions

2. On 10 October 2022, the company proposed a renounceable non-underwritten rights issue of up to 102,480,337 new ordinary shares on the basis of one rights share for every five ordinary shares in the capital of the company held by the shareholders of the company at an issue price of $0.33 per rights share.

The rights issue closed with valid acceptances of 79.4% or 81,320,029 rights shares. Excess applications amounted to 63,857,487 or 62.3%.

(Source: company announcement dated 19 December 2022)

1. Could the board provide shareholders with more information about whether it evaluated the relatively low valid acceptance rate for the rights shares ex post, and if so, what were its findings?
   On 15 February 2023, the company issued a profit warning, stating that it expects to report a significantly lower net profit for 2H2022, as a result of a $1.3 million restructuring cost linked to a business division in the United States of America and $5.9 million in project overrun costs due to management's underestimation.

1. Could the board, particularly the independent directors, provide clarification as to whether the knowledge and the details of the restructuring and project overruns were available to them before the conclusion of the rights issue, and if so, whether the company could have provided the information to shareholders?

CSE's Response

The Board is pleased that the Company has met its objective for its rights issue by closing with a 141.7% oversubscription rate in spite of the weak equity and bond market conditions in 2022.

The Company wishes to clarify that the profit warning arose from the project cost overruns of S$5.9 million. The board and independent Directors of the Company confirms that they were not aware of the project cost overruns before the conclusion of the rights issue. The board became aware of the project cost overruns in early February 2023 and made the profit warning announcement in early February 2023.

No

Questions

CSE's Response

3. The attendance of directors at board and board committee meetings is shown on page

36 of the annual report and reproduced below.

(Source: company annual report)

It is observed that several independent directors missed board meetings held during the year.

1. Could the board provide reasons or clarification for the absence of independent directors from board meetings during the year? Were there any extenuating circumstances that contributed to their absence?
   The company constitution allows for telephonic and videoconference meetings.

Generally, the Directors have an excellent record of Board attendance. In respect of the financial year under review, one director could not attend one of the board meetings as he was on the plane at that point in time, while the other two directors could not attend to an adhoc board meeting (not a regular scheduled meeting) which was called.

1. Can the company confirm that the absent directors did not participate remotely through voice calls or video conferencing? Was there a situation where only 5 of the 8 directors were present for a board meeting?
   It is further observed that the absent directors have 7, 11 and 14 "present directorships" as declared in their biographies in the annual report (pages 10 to 16).

The absent directors did not participate remotely through voice calls or video conferencing. There was no situation where only 5 out of 8 directors were present for a board meeting. The absent directors were not present at board meetings held on different dates. Nonetheless, these absent directors registered full attendance at the respective regular board committee meetings that they sit on.