The Board of Directors of Zelan (“Board”) wishes to announce that pursuant to an Application for Tax Audit and Revision by a Branch of its wholly owned subsidiary in Indonesia, Zelan Holdings (M) Sdn Bhd (“Branch”), by an Application no. 001/TAX/ZH/8/10 dated 8 September 2010 against the decision of the Director General of Taxation on 15 June 2010, the Tax Court has delivered its verbal decision on 29 June 2012 whereby it has ruled not in favour of the Branch. The ruling resulted in a potential tax payable and related tax penalties of approximately RM25.1 million to be incurred by the Branch.

The written decision from the Tax Court will be delivered to the Branch within one month from 29 June 2012.

The Branch’s tax agent in Indonesia (Messrs Ernst & Young) has advised that based on the facts of the case, the Branch stands a fair chance to succeed in its appeal against this decision through a judicial review to be filed at the Supreme Court of Indonesia. Based on this advice, the Company’s intention is to file a judicial review against this decision.

1. Brief particulars of the case

In 2009, the Branch was subjected to a tax audit for its financial year 2007 and the Indonesian Income Tax raised an assessment on 26 June 2009 subjecting the Branch to a tax liability of IDR60.9 billion (approximately RM20.5 million) and tax penalty of IDR19.9 billion (approximately RM6.7 million). Subsequently, the Branch filed for a review of the assessment to the Tax Court. The Tax Court hearing was completed in November 2011 and the result was verbally delivered to the Branch’s representatives on 29 June 2012.

2. The subsidiary is a major subsidiary of the Company.

3. The net cost of investment in the subsidiary as at 2 July 2012 is RM285,004.00

4. The financial implication of the decision.

Based on the opinion of the Branch’s tax agent that there are good grounds for the Branch to appeal against the Tax Court decision through a judicial review to be filed within 3 months from the receipt of the written judgment, the potential exposure of approximately RM25.1 million continues to be reflected as a contingent liability in the Company’s financial statement.

5. The steps taken and proposed to be taken by the Company in respect of this case.

The Board will review the grounds of the decision made by the Tax Court once the written judgment is delivered to the Branch and will engage professional assistance from the solicitors and tax lawyers in Indonesia to file for a judicial review of the Tax Court decision in order to protect the Company’s interest in this matter.

This announcement is dated 2 July 2012.