Proposed Renewal of Share Buy-back Authority Statement

THIS STATEMENT TO SHAREHOLDERS OF HIBISCUS PETROLEUM BERHAD 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 advisers 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.

HIBISCUS PETROLEUM BERHAD

Registration Number: 200701040290 (798322-P)

(Incorporated in Malaysia)

STATEMENT TO SHAREHOLDERS

IN RELATION TO THE

PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES OF UP TO 10% OF THE TOTAL NUMBER OF ISSUED SHARES OF THE COMPANY ("PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY")

The Proposed Renewal of Share Buy-Back Authority as contained in this Statement will be tabled as a Special Business at the 14th Annual General Meeting ("AGM") of the Company which will be held on a virtual basis, the details of which are as follows:

The Notice of the 14th AGM together with the Form of Proxy are set out in the Annual Report 2023/2024 of the Company and are available to be downloaded from the Company's website at

https://www.hibiscuspetroleum.com/agm/or Bursa Securities' website at https://www.bursamalaysia.com/. For further information, please refer to the Notice of the 14th AGM and the Administrative Guide for the 14th AGM.

This Statement is dated 29 October 2024

DEFINITIONS

Except where the context otherwise requires, the following definitions shall apply throughout this Statement:

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TABLE OF CONTENTS

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HIBISCUS PETROLEUM BERHAD

Registration Number: 200701040290 (798322-P)

(Incorporated in Malaysia)

Registered Office:

Unit 521, 5th Floor, Lobby 6

Block A, Damansara Intan

No. 1, Jalan SS 20/27

47400 Petaling Jaya

Selangor Darul Ehsan

29 October 2024

Board of Directors:

Zainul Rahim bin Mohd Zain (Non-IndependentNon-Executive Chairman)

Dr Kenneth Gerard Pereira (Managing Director)

Dato' Sri Roushan Arumugam (Non-IndependentNon-Executive Director)

Thomas Michael Taylor (Senior Independent Non-Executive Director)

Dato' Dr Zaha Rina Zahari (Independent Non-Executive Director)

Emeliana Dallan Rice-Oxley (Independent Non-Executive Director)

Zaidah binti Ibrahim (Independent Non-Executive Director)

To: Our Shareholders

Dear Sir/Madam,

PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

1. INTRODUCTION

Our Company had at the 13th AGM held on 5 December 2023, obtained approval from the shareholders for the renewal of share buy-back authority to purchase up to ten percent (10%) of the total number of issued Shares. This authority, which took effect upon passing the ordinary resolution, will lapse at the conclusion of the forthcoming 14th AGM, unless a renewal of mandate for the share buy-back authority is obtained from our shareholders at the forthcoming 14th AGM.

On 1 October 2024, our Company announced its intention to seek the approval of our shareholders for the Proposed Renewal of Share Buy-Back Authority at the forthcoming 14th AGM of our Company.

THE PURPOSE OF THIS STATEMENT IS TO PROVIDE OUR SHAREHOLDERS WITH THE RELEVANT INFORMATION ON THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY AS WELL AS TO SET OUT THE RECOMMENDATION OF OUR BOARD AND TO SEEK OUR SHAREHOLDERS' APPROVAL FOR THE ORDINARY RESOLUTION PERTAINING TO THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY TO BE TABLED AT THE 14TH AGM OF OUR COMPANY TO BE HELD ON 27 NOVEMBER 2024.

YOU ARE ADVISED TO READ AND CONSIDER THE CONTENTS OF THIS STATEMENT CAREFULLY BEFORE VOTING ON THE ORDINARY RESOLUTION TO GIVE EFFECT TO THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY AT OUR FORTHCOMING 14TH AGM.

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2. DETAILS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

2.1 General

Our Shareholders had at our 13th AGM held on 5 December 2023, granted approval for our Company to purchase its own shares of up to 10% of the total number of issued Shares of our Company. The mandate shall in accordance with the Listing Requirements, lapse at the conclusion of our forthcoming 14th AGM unless a fresh mandate is obtained from our shareholders.

Our Board proposes to seek approval from our shareholders for the Proposed Renewal of Share Buy-Back Authority. The Proposed Renewal of Share Buy-Back Authority is subject to compliance with Sections 112, 113 and 127 of the Act, the Listing Requirements and any applicable Prevailing Laws issued by the relevant authorities at the time of purchase.

Under Paragraph 12.07(3) of the Listing Requirements, the approval from our shareholders for the Proposed Renewal of Share Buy-Back Authority would be effective immediately upon the passing of the ordinary resolution at the forthcoming 14th AGM and shall continue to be in force until:

1. the conclusion of the next AGM of our Company, being the 15th AGM following the 14th AGM at which such resolution was passed at which time it will lapse unless by an ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions;
2. the expiration of the period within which the 15th AGM of our Company is required by law to be held; or
3. the authority is revoked or varied by ordinary resolution passed by our shareholders in a general meeting;

whichever occurs first.

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

2.2 Maximum Number or Percentage of Hibiscus Petroleum Shares to be acquired

Under Paragraph 12.09 of the Listing Requirements, the maximum aggregate number of Shares which may be purchased by our Company or held as treasury shares shall not exceed 10% of the total number of issued Shares of our Company at any point in time.

As at the LPD, the total issued share capital of our Company is RM166,013,524.78 comprising 804,967,428 Shares. As such, the maximum number of Shares that may be purchased or held as treasury shares by our Company is 80,496,742 Shares, inclusive of 27,490,600 treasury shares, representing 10% of our total number of issued Shares, for illustrative purposes.

Purchases under the Proposed Renewal of Share Buy-Back Authority shall only be effected on the open market of Bursa Securities via its automated trading system and shall exclude any direct business transactions as defined in accordance with the rules of Bursa Securities. The Proposed Renewal of Share Buy-Back Authority shall be transacted through our Company's appointed stockbroker.

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2.3 Maximum amount of funds to be allocated and the source of funds

The maximum amount of funds to be allocated for the Proposed Renewal of Share Buy-Back Authority shall not exceed the aggregate of the retained earnings of our Company at the time of purchase.

For illustrative purposes only, based on the latest audited financial statements of Hibiscus Petroleum for the FYE 30 June 2024, the retained earnings of our Company is RM48.2 million.

The Proposed Renewal of Share Buy-Back Authority may be funded through internally generated funds and/or external borrowings, the exact proportion of which has yet to be determined at this juncture. The source of funding for the Proposed Renewal of Share Buy- Back Authority will be determined at a later stage depending on, amongst others, the availability of internally generated funds, retained earnings and financial resources of our Company at the time of the purchase, the actual number of Shares to be purchased and other relevant factors.

The actual number of Shares to be purchased and the timing of such purchases will depend on, amongst others, the market conditions and sentiments of the stock market as well as the retained earnings and the financial resources available to our Company and our Group.

Our Board will ensure that our Company has sufficient retained earnings and funds available at our Company level prior to undertaking any share buy-back. As required under Section 112(2) of the Act, our Company will have to perform a solvency test to satisfy the following conditions:

1. that the Proposed Renewal of Share Buy-Back Authority would not result in our Company being insolvent and its capital being impaired at the date of the solvency statement; and
2. that our Company will remain solvent after each share buy-back during the period of six months after the date of the declaration made by a majority of the Directors of our Company in accordance with Section 113(2) of the Act.

If funded through internally generated funds, the Proposed Renewal of Share Buy-Back Authority is not expected to materially impact our Company/Group's cash flow. If financed through external borrowings, our Board will ensure that our Company will have sufficient funds to repay such borrowings and that such repayment will not have a material effect on the cash flow of our Company/Group.

2.4 Treatment of Purchased Shares

In accordance with Section 127(4) of the Act, our Board may deal with the Purchased Shares at its discretion, in the following manner:

1. cancel the Purchased Shares;
2. retain the Purchased Shares as treasury shares; or
3. retain part of the Purchased Shares as treasury shares and cancel the remainder of the Purchased Shares.

Pursuant to Section 127(7) of the Act, where such Purchased Shares are held as treasury shares, our Board may at its discretion:

1. resell the Purchased Shares or any of the Purchased Shares in accordance with the relevant rules of Bursa Securities;
2. distribute the Purchased Shares as dividends to our shareholders, such dividends to be known as "share dividends";

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1. transfer the Purchased Shares or any of the Purchased Shares for the purposes of or under an employees' share scheme;
2. transfer the Purchased Shares or any of the Purchased Shares as purchase consideration;
3. cancel the Purchased Shares or any of the Purchased Shares;
4. sell, transfer or otherwise use the Purchased Shares for such other purposes as the minister charged with the responsibility for companies may by order prescribe; and/or
5. in any other manner permitted by the Act, rules, regulations and orders made pursuant to the Act and the requirements of Bursa Securities and any other relevant authority for the time being in force.

Under Section 127(8) of the Act, if the Purchased Shares are held as treasury shares, the rights attached to them in relation to voting, dividends and participation in any other distribution in cash or otherwise is suspended. In accordance with Section 127(9) of the Act, the treasury shares shall not be taken into account in calculating the number or percentage of Shares or of a class of shares in our Company for any purposes including substantial shareholding, takeovers, notices, the requisitioning of meetings, quorum for a meeting and result of a vote on resolution(s) at meetings.

The decision whether to retain the Purchased Shares as treasury shares, or to cancel the Purchased Shares or a combination of both, will be made by our Board at the appropriate time.

Our Company will make an immediate announcement to Bursa Securities of any purchase or resale of Shares and whether the Purchased Shares will be cancelled or retained as treasury shares or a combination of both.

1. RATIONALE FOR THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
   The Proposed Renewal of Share Buy-Back Authority, if approved by our shareholders, will enable our Company to utilise any of its surplus financial resources, which are not immediately required for other uses, to purchase the Shares when appropriate and at prices which our Board views as favourable.
   In addition to the potential advantages as set out in Section 4 of this Statement, the Proposed Renewal of Share Buy-Back Authority may effectively reduce the number of our Shares in issue carrying voting and participation rights. As such, in arriving at the EPS of our Group, the earnings of our Group would be divided by a reduced number of Shares. Depending on, amongst other factors, the current market price of our Shares, our shareholders may enjoy an increase in the value of their investment in our Company arising from the consequent increase in EPS.
2. POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
   The potential advantages of the Proposed Renewal of Share Buy-Back Authority to our Company are as follows:
3. 1. enables our Company to purchase our Shares particularly when our Shares are undervalued, which would in turn, enhance investors' confidence;
   2. our Company may realise potential gains from the resale of the treasury shares, if the Purchased Shares which are retained as treasury shares are resold at higher prices;
   3. our Company may distribute any Shares held as treasury shares as share dividends to reward our shareholders, if of a reasonable size and/or to be utilised pursuant to any employees' share scheme;

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1. enables our Company to use its financial resources to enhance the value of shareholders' investment in our Company if there is no immediate use, by purchasing our Shares; and
2. enables our Company to use the treasury shares as purchase consideration in corporate transactions thereby reducing the financial outflow and/or preserving our working capital.

The potential disadvantages of the Proposed Renewal of Share Buy-Back Authority to our Company are as follows:

1. as the Proposed Renewal of Share Buy-Back Authority can only be made out of retained earnings of our Company, it may result in the reduction of retained earnings available for distribution to our shareholders in the immediate future; and
2. the Proposed Renewal of Share Buy-Back Authority may reduce the immediate financial resources of our Company and may result in our Group foregoing other investment opportunities that may be available in the future.

Nevertheless, these potential disadvantages are mitigated by the prospects that the financial capacity of our Group may increase, if the Purchased Shares held as treasury shares are resold at a higher price than their purchase price.

In addition, our Board does not expect the Proposed Renewal of Share Buy-Back Authority to give rise to any material disadvantage to our Company and our shareholders, as it will be implemented only after due consideration that there is adequate cash flow to fund our Group's working capital and other requirements prior to allocating the available resources for the Proposed Renewal of Share Buy-Back Authority. Our Board, in exercising any decision to purchase the Shares pursuant to the Proposed Renewal of Share Buy-Back Authority and any subsequent resale of treasury shares on Bursa Securities, will be mindful of the interest of our Company and our shareholders.

5. EFFECTS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

The effects of the Proposed Renewal of Share Buy-Back Authority and the implications relating to the Code are as follows:

5.1 Issued share capital

Assuming that the maximum number of Hibiscus Petroleum Shares authorised under the Proposed Renewal of Share Buy-Back Authority are purchased and cancelled, the effects on the issued share capital of our Company as at the LPD are set out below:

Notes:

1. Assuming sufficiency of retained earnings and that all Shares purchased are cancelled.
2. Inclusive of 27,490,600 treasury shares as at the LPD.

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1. Consolidated NA, consolidated NA per Share and consolidated gearing
   The effects of the Proposed Renewal of Share Buy-Back Authority on the consolidated NA per Share of Hibiscus Petroleum will depend on the number of Purchased Shares, the purchase prices of the Purchased Shares, the cost of funding to our Group to finance such purchases, if any, and/or any loss in interest income to our Group if internally generated funds are used. The effects will also be subject to whether the Purchased Shares are resold on Bursa Securities, cancelled, retained as treasury shares or distributed as share dividends to our shareholders.
   For Purchased Shares which are retained as treasury shares, cancelled and/or distributed as share dividends, the consolidated NA per Share would increase if the purchase prices are less than the consolidated NA per Share at the point of purchase, and vice versa.
   If the treasury shares are resold on Bursa Securities, the consolidated NA per Share upon the resale would increase if our Company realises a gain from the resale and vice versa.
   The effects of the Proposed Renewal of Share Buy-Back Authority on the consolidated gearing of Hibiscus Petroleum will depend on the proportion of borrowings used to fund any purchase of the Purchased Shares. At this juncture, our Company has not determined whether to use any form of borrowings for purposes of the Proposed Renewal of Share Buy- Back Authority.
2. Consolidated earnings and consolidated EPS
   The effects of the Proposed Renewal of Share Buy-Back Authority on the consolidated earnings and consolidated EPS of our Company will depend on, inter alia, the number of Purchased Shares, the purchase price of such Shares, the effective funding cost to our Company to finance the Purchased Shares or any loss in interest income of our Company and the proposed treatment of the Purchased Shares.
3. Working capital
   The Proposed Renewal of Share Buy-Back Authority will result in cash outflow, thereby reducing the working capital of our Group, the quantum of which is dependent on the purchase prices of our Shares and the actual number of Purchased Shares and the cost of funding, if any. Our Board will take into consideration the interests of our Company and our shareholders as well as assess the working capital requirements of our Group prior to undertaking any share buy-back.

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