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MATERIAL LITIGATION Johor Bahru High Court Writ Summons
No: 23NCVC-74-05/2012

Plaintiffs: Dr Mohd Adnan bin Sulaiman Azizan Bin Sulaiman
Defendant: Kumpulan Perubatan (Johor) Sdn Bhd

1. When was the lawsuit being filed? Which part of the contract is alleged being breached?

The Johor Bahru High Court Writ Summons No. 23NCVC-74-05/2012and Statement of Claims by the Plaintiffs was served on KPJ on 21 May 2012.

We have yet to receive the written grounds of judgement from the High Court and so cannot furnish you on the same.

2. Assuming if KPJ failed to win an appeal, how will KPJ finance the payment of the damages?

KPJ will pay the damage with internal generated fund.

3. Since KPJ owns 30% of Hospital Penawar, is the net payment 70*0.7= RM49mn?

The judgment sum of RM70.486 million is the full sum awarded.

4. Will KPJ make a provision for the claim?

As at to date, there is no provision on the claim since we have filed for appeal and stay of execution. However, we have consulted our auditor who will be advising from the accounting perspective on the same.

5. What will KPJ do about its 30% stake in Hospital Penawar?

At the moment, the BOD agreed for KPJ to continue holding the 30% shares as this contributed RM 1 million to KPJ bottom line.

6. What is KPJ current role in Hospital Penawar?

KPJ is the minority shareholder in Hospital Penawar having a 30% shareholding or 210,000 ordinary shares of RM1.00 each. KPJ also currently has 2 nominee directors in the Board of Directors of Hospital Penawar Sdn Bhd.

7. What is the capacity (# of beds) of Hospital Penawar?

50 beds.

8. What is Hospital Penawar contribution to KPJ? Net profit of RM?

Around RM 1Million.

9. Will operations at Pasir Gudang be impacted?

Every private hospital in Malaysia requires operating license and this license can only be issued by MOH. KPJ Pasir Gudang has obtained its license and it is valid for the next 2 years. Based on experience as long as the building complies with PHFSA there should be no issue for renewal of the license.

10. Does KPJ still have any impending lawsuit?

No, this is the first lawsuit against KPJ. Nonetheless, being in the healthcare industry, our hospital do have medico legal claims of which are covered by insurance.

11. How long the appeal will take?

We cannot estimate the time to be taken by the Court of Appeal to dispose off the claims.

12. Why KPJ didn't announce anything about this lawsuit before this?

Our lawyers had advised, to which we had concurred, that there is no merit to the claim and hence we opined that it is not necessary to announce the claim.

13. Why KPJ didn't include anything in AR or quarterly report?

The cut-off date of our Annual Report has been passed when we received this claim. For 1st quarter result, we did our announcement on 22nd May 2013. Due to the last minute information we have overlooked and did not include this lawsuit in our material litigation note.

We did address this at our AGM where MSWG has put up the question and our BOD has explained and the due announcement was planned in Q2.

ADDITIONAL QUERIES RECEIVED DURING INVESTOR & ANALYST MEETING ON 31/07/2013

1. People see this case as a war between two entities –Hospital Penawar Sdn Bhd vs KPJSB? Please elaborate.

No, this lawsuit was filed by individual shareholders of Hospital Penawar Sdn Bhd namely Dr Mohd Adnan Sulaiman and Azizan Sulaiman against KPJSB.

2. Will the lawsuit impact earnings beyond F2013?

No. The lawsuit will not have any impact on the earnings beyond FY2013.

3. How confident is management on winning the appeal?

We believe that the appeal as to be lined out by our solicitors shall work in our favour.

4. When KPJ made the decision to construct a greenfield hospital in Pasir Gudang in 2009, was there any attempt at discussion with Hospital Penawar as to whether they would like to participate in the new hospital, especially given the proximity of the 2 hospitals to each other?

No.

5. Was the timing of the capital raising related to the litigation issue?

It's not related to the litigation issues. The capital raising has been well planned in advance and it is just coincidence that judgement of the case was delivered a day prior to the capital raising.

6. Does KPJ envisage raising equity again in the next 1-3 years, or will the rights & warrants issues be sufficient for the company's growth plans?

There is no immediate need for KPJ to issue new equity. We are already covered for future growth through the right issue and our plan to issue the new sukuk.

7. When was the legal case instituted against KPJSB?

The summons was issued in May 2012.

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