13-11-2020

To:

Datuk Ng Peng Hong @ Ng Peng Hay

Non-Independent Non-Executive Chairman

iCapital.biz Berhad

Cc: Mr Tan Teng Boo

Designated Person

Dear Sir,

Proposals/questions To Be Tabled at iCapital.biz 16^th Virtal AGM

I have been a share owner of iCapital.biz since its inception in 2005.  I uphold the spirit of Independence, Intelligence and Integrity as enshrined in iCapital’s motto.  They are also my personal philosophy.

I have the following questions to ask and if possible would like them to be included as an agenda to be discussed in the AGM:-

Question 1

On page 40 of iCapital.biz 2020 Annual Report, under “Statement of Profit or Loss and Other Comprehensive Income For the Financial Year Ended 31 May 2020”, there is an operating expenses item disclosed as “Dual-listing project expenses” Note 12 with amount of RM6,679,097.

 (as circled below)

From the name of this item of expenses, i.e. “Dual-listing project expenses” it does not look like it is an ordinary business item of the company.  And the amount of RM6.68 million is also significant and extraordinary compared to the usual operating expenses items.  

The disclosure by the directors on page 37 of the annual report means that this item of “dual-listing project expenses” is an item of “unusual nature and material” and has substantially affected the results of the operations of our Fund.

In view of the adverse effect caused by this unusual and material expenses, the directors have the duty to disclose in detail what has actually happened that has resulted in such a large sum being paid.

If it is a dual-listing project, we would like to know the following:-

(A)

When the dual-listing project was first mooted, has a preliminary feasibility study been done?

In the feasibility study, have the following  analyses been done?

i   What is the minimum requirement for dual-listing in that particular stock exchange?

   a) Does our company qualifies or very near to the minimum requirement?  

   b) If not, what can we do to overcome it and is the cost worth trying?

   c) If after doing a preliminary checking and you found out that the minimum requirement is so high that it is practically       insurmountable, would you still want to proceed further? 

ii  List out all the anticipated and ascertainable cost such as listing fees, office set-up and staffing?  

iii  The projected cost need to be weighed against the expected benefit from a dual-listing.  Bearing in mind the expected benefit is very uncertain (depends on market perception), is it worth the expenses if it is already known   (since listing fees and the like can be quite easily ascertained) to be substantial?

(B)

Having estimated the cost,  have you look into the probability of the projected return that we can get from such a dual-listing project?

i  How likely are we going to see an improvement of the share price when our company actually got dual-listed.  Is it within our own control or is it subject to market perception just like here in Malaysia?

ii  Are there other benefits that we will get from dual-listing?

   What is the probability?

(C)

Since this is an unusual and material event for our company, after the preliminary feasibility study has been done, an AGM or other meeting for all share owners should be called to brief them on why the project should be carried out and get their approval to go ahead.

Has this been done?

(D)

a) Who is/are  the recipient/s  of the “Dual-listing project expenses”?

b) Are they related party to our company either directly  or indirectly?

c) If so, is the transaction announced in Bursa Malaysia?

(E) 

If the cost of the dual-listing project has been known roughly from preliminary feasibility study like in (A) ii above, and knowing that it is in the region of RM6 million,  (this amount is more than 0.25% of iCapital.biz’s historical highest market capitalisation and is about half of the total dividend of RM13 million paid out in the whole history of iCapital.biz.)

was the transaction announced in Bursa Malaysia?  

(F)

After the company has decided to go ahead with the dual-listing project, was this properly announced in Bursa Malaysia in view of its unusual and material nature?

Proposal:

Since so far we do not have any information to the above questions, I would like to propose that Agenda 1 of the 16^th AGM  i.e.

“To receive the Audited Financial Statements for the financial year ended 31 May 2020 together with the Reports of the Directors and Auditors thereon”

be adopted (if not possible to postpone) subject to a clause of “without prejudice to our recourse on the dual-listing project expenses”   

to preserve our right of recourse in due course.

Question 2

The external auditor’s duty only covers the Financial Statements (pages 40 to 49)?

Suggestion

This means that the other information are not audited by the external auditors.  This is not an issue  since this is also what the Companies Act 2016 propose.

However, from an investor’s point of view, the accuracy of the other information will need to be subject to more scrutiny by themselves.  

I would like to propose that more transparency be seen in presenting ” the other information” in the Annual Report.  The other information should be more user-friendly.  For example, when tables and graphs are presented, the sources of data or how they are derived should be given.  And consistency has to be seen.

This could be the most economical method to improve our market price.

Question 3 (question come at the end after the following story)

For the coming 16^th Virtual AGM, I started to register with BoardRoom Smart Investor Portal on 22 October 2020 and was informed on the same day via e-mail that my account has been approved.  I then proceeded to apply to attend the virtual AGM via BoardRoom by giving my CDS account no. for verification.  At the same time I also requested a digital copy of iCapital.biz’s M&A from BoardRoom’s helpdesk.

However, BoardRoom helpdesk replied to me on 26 October 2020 that the request is forwarded to the Person in Charge.

On 02 November 2020,  I sent a gentle reminder to BoardRoom.  And then they replied that they have forwarded this to the Company Secretary and the Company.

I append the email correspondence below for your perusal.

Until today 12 November 2020， I have not received any M&A or any news. (i.e. after two weeks, I am still stretching my neck to wait for just a reply, let alone the M&A).

Chinese saying:  伸长脖子慢慢等！

My question is:  

Is this the work competence I am supposed to see from a company who is known for its efficiency and integrity?

Thank you.

Period.

P/s  

When I have finished my above letter, my vision became blurred.  My wife asked me what happened?  I told her : Smoke gets in my eyes!

The Chinese version of the above letter will be ready shortly.