CITYNEON HOLDINGS LIMITED (Company Registration No.: E) (Incorporated in the Republic of Singapore)

Transcription

1 CIRCULAR DATED 9 APRIL 2009 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax or other professional adviser immediately. If you have sold or transferred all your shares in the capital of Cityneon Holdings Limited (the Company ), you should immediately forward this Circular, the enclosed Notice of Extraordinary General Meeting and the Proxy Form to the purchaser or to the bank, stockbroker or other agent through whom you effected the sale for onward transmission to the purchaser. The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this Circular. CITYNEON HOLDINGS LIMITED (Company Registration No.: E) (Incorporated in the Republic of Singapore) CIRCULAR TO SHAREHOLDERS in relation to (1) THE APPROVAL AND RATIFICATION OF THE PROPOSED GRANT OF OPTIONS TO KO CHEE WAH, LIM POH HOCK, CHUA SOO CHUA KAW KIA AND TAN HUP TAN HUP HOI PURSUANT TO THE CITYNEON EMPLOYEE SHARE OPTION SCHEME; AND (2) THE PROPOSED EXTENSION OF THE EXPIRY DATE OF THE AFFECTED OPTIONS (AS DEFINED HEREIN). IMPORTANT DATES AND TIMES Last date and time for lodgement of Proxy Form : 25 April 2009 at 3.30 p.m. Date and time of Extraordinary General Meeting : 27 April 2009 at 3.30 p.m. (or as soon thereafter following the conclusion or adjournment of the Annual General Meeting of the Company to be held at 2.30 p.m. on the same day and at the same place) Place of Extraordinary General Meeting : 84 Genting Lane, Cityneon Design Centre, Singapore

2 CONTENTS DEFINITIONS INTRODUCTION CITYNEON EMPLOYEE SHARE OPTION SCHEME THE APPROVAL AND RATIFICATION OF THE PROPOSED GRANT OF OPTIONS TO MR KO CHEE WAH, MR LIM POH HOCK, MR CHUA SOO CHIEW AND MR TAN HUP FOI COST OF GRANT OF OPTIONS DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS DIRECTORS RECOMMENDATIONS DIRECTORS RESPONSIBILITY STATEMENT EXTRAORDINARY GENERAL MEETING ACTION TO BE TAKEN BY SHAREHOLDERS DOCUMENTS AVAILABLE FOR INSPECTION SCHEDULE 1 DETAILS OF AFFECTED OPTIONS NOTICE OF EXTRAORDINARY GENERAL MEETING PROXY FORM 2

3 DEFINITIONS In this Circular, the following definitions apply throughout unless the context otherwise requires or it is otherwise stated:- Articles : The Articles of Association of the Company Associate : (a) In relation to any Director, chief executive officer, Substantial Shareholder or Controlling Shareholder (being an individual) means:- (i) (ii) (iii) his immediate family; the trustees of any trust of which he or his immediate family is a beneficiary or, in the case of a discretionary trust, is a discretionary object; and any company in which he and his immediate family together (directly or indirectly) have an interest of 30% or more (b) In relation to a Substantial Shareholder or a Controlling Shareholder (being a company) means any other company which is its subsidiary or holding company or is a subsidiary of such holding company or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30% or more Board : The board of Directors of the Company CDP : The Central Depository (Pte) Limited Chua Soo Chiew : Mr Chua Soo Chua Kaw Kia, a Director as at the date of this Circular Circular : This circular to Shareholders dated 9 April 2009 Committee : A committee comprising Directors duly authorised and appointed by the Board to administer the Scheme. The Remuneration Committee of the Company currently performs this role Company : Cityneon Holdings Limited Companies Act : The Companies Act, Chapter 50 of Singapore, as amended or modified from time to time Controlling Shareholder : A person who (a) holds directly or indirectly 15% or more of the total number of issued Shares (excluding treasury shares) in the Company (unless otherwise determined by the SGX ST) or (b) in fact exercises control over the Company, or such other definition as the SGX ST Listing Rules may provide from time to time Directors : The directors of the Company as at the date of this Circular 3

4 EGM : The Extraordinary General Meeting of the Company to be convened on 27 April 2009, notice of which is given on pages of this Circular EPS : Earnings per Share Exercise Period : The period for the exercise of an Option granted under the Scheme Exercise Price : The price at which a Participant shall subscribe for each Share upon the exercise of an Option FY : Financial year ended or ending, as the case may be, 31 December for the relevant year Group : The Company together with its Subsidiaries and its Associates Group Employee : An employee of the Group (including any Group Executive Director) who is not under probation, whose employment has been confirmed and who meets the relevant age and rank criteria, selected by the Committee to participate in the Scheme. Group Executive Director : A director of the Company and/or its Subsidiaries, as the case may be, who performs an executive function Group Non-executive Director : A director (including an independent director) of the Company and/or its Subsidiary, as the case may be, who is not a Group Executive Director Latest Practicable Date : 31 March 2009, being the latest practicable date prior to the printing of this Circular Market Price : A price equal to the average of the last dealt prices for the Shares on the SGX ST over the five consecutive Trading Days immediately preceding the date of grant of that Option, as determined by the Committee by reference to the daily official list or any other publication published by the SGX ST, rounded to the nearest whole cent in the event of fractional prices NTA : Net tangible assets Option : The right to subscribe for Shares granted or to be granted pursuant to the Scheme Participant : The holder of an Option Scheme : The Cityneon Employee Share Option Scheme which was approved and adopted on 15 September 2005 Securities Account : Securities account maintained by a Depositor with CDP, but does not include a securities sub-account SESDAQ : Stock Exchange of Singapore Dealing and Automated Quotation Systems SGX-ST : The Singapore Exchange Securities Trading Limited 4

5 SGX ST Listing Rules : The listing rules of the SGX ST as set out in the Listing Manual of the SGX ST, as amended or modified from time to time Shares : Ordinary shares in the capital of the Company Shareholders : Persons who are for the time being registered as holders of the Shares in the Register of Members maintained by the Company, except that where the registered holder is CDP, the term Shareholders shall, where the context admits, mean the Depositors whose Securities Accounts are credited with Shares Subsidiary : A company which is for the time being a subsidiary of the Company, as defined by Section 5 of the Companies Act, save for a company which is listed on a stock exchange and the subsidiaries or associated companies of such a company Substantial Shareholder : A substantial Shareholder as defined under Section 81 of the Companies Act Tan Hup Foi : Mr Tan Hup Tan Hup Hoi, a Director as at the date of this Circular Trading Day : A day on which the Shares are traded on the SGX ST % : Per centum or percentage S$ or $ : Singapore dollar The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine gender and vice versa. References to persons shall include corporations. Any reference to a time of day in this Circular shall be a reference to Singapore time unless otherwise stated. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any term defined under the Companies Act or the SGX ST Listing Rules or any modification thereof and used in this Circular shall, where applicable, have the meaning ascribed to it under the Companies Act or the SGX ST Listing Rules or such modification thereof, as the case may be, unless otherwise provided. 5

6 CITYNEON HOLDINGS LIMITED (Company Registration No.: E) (Incorporated in the Republic of Singapore) LETTER TO SHAREHOLDERS Board of Directors: Registered Office: Datin Ngiam Pick Ngoh (Non-executive Chairman) 84 Genting Lane #05-01 Ko Chee Wah (Group Managing Director) Cityneon Design Centre Lim Poh Hock (Executive Director) Singapore Chua Soo Chua Kaw Kia (Independent Director) Tan Hup Tan Hup Hoi (Independent Director) Ng Beng Lye (Non-executive Director) Ong Kuee Hwa (Non-executive Director) Lim Seng Chai (Independent Director) 9 April 2009 To: The Shareholders of Cityneon Holdings Limited. Dear Sir/Madam 1. INTRODUCTION 1.1 EGM The Directors are convening an EGM to be held on 27 April 2009 at 3.30 p.m. at 84 Genting Lane, Cityneon Design Centre, Singapore (or soon thereafter following the conclusion or adjournment of the Annual General Meeting of the Company to be held at 2.30 p.m. at the same day at the same place) to seek the approval and/or ratification of the Shareholders for the proposed grants of Options to Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi in FY2007 and/or FY2008. Mr Ko Chee Wah and Mr Lim Poh Hock are at all material times, Group Executive Directors and Controlling Shareholders. Mr Chua Soo Chiew and Mr Tan Hup Foi are independent Directors. The purpose of the Circular is to provide Shareholders with information relating to the proposed approval and/or ratification of the proposed grants of Options to Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi pursuant to the Scheme. The notice of EGM is set out on pages of this Circular. 2. CITYNEON EMPLOYEE SHARE OPTION SCHEME 2.1 Introduction The Scheme was approved and adopted at an extraordinary general meeting of the Shareholders on 15 September Executive and non-executive directors of the Group (including Controlling Shareholders and their Associates) are eligible to participate in the Scheme. The participation of Controlling Shareholders and their Associates in the Scheme was approved on 15 September The grant of Options at a discount was also approved by the Shareholders on 15 September The Company was listed on the SESDAQ of SGX ST on 7 December 2005 and upgraded to the Mainboard of SGX ST on 22 January For FY2006, no Options were granted under the Scheme. 6

7 For FY2007, 2,428,000 Options were granted to eligible Participants on 20 August 2007 at the Exercise Price of S$0.46, a discount of 20% off the Market Price at the date of grant, of which 1,100,000 Options were granted to Mr Ko Chee Wah, Mr Lim Poh Hock and Mr Chua Soo Chiew. Mr Ko Chee Wah and Mr Lim Poh Hock were each granted 500,000 Options. As Mr Ko Chee Wah and Mr Lim Poh Hock were Controlling Shareholders of the Company, the proposed grant of the 500,000 Options to each of them dated 20 August 2007 was subject to separate approval by independent Shareholders. An award of 100,000 Options was also granted to Mr Chua Soo Chiew. The proposed grant of Options to Mr Chua Soo Chiew is an award to him for his efforts and contributions to the Group. The proposed grant of Options to Mr Chua Soo Chiew is subject to approval pursuant to section 169 of Companies Act. The details of such grant of Options to Messrs Ko Chee Wah, Lim Poh Hock and Chua Soo Chiew on 20 August 2007 were disclosed in the Company s annual return for the financial year ended 31 December However, separate approval by independent Shareholders for the grants of Options to Mr Ko Chee Wah and Mr Lim Poh Hock on 20 August 2007 were not obtained by the Company previously. Likewise, the Company did not ask for separate approval of the Shareholders for the grant of Options to Mr Chua Soo Chiew made on 20 August 2007, which was subject to section 169 of the Companies Act. This oversight on the part of the Company to obtain Shareholders approval was only realized by the Company in late For FY2008, 2,549,400 Options were granted to Participants on 3 November 2008, of which 1,145,400 were granted to Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi at the Exercise Price of S$0.48, a discount of 20% off the Market Price at the date of grant. On 3 November 2008, 472,700 Options were granted to Mr Ko Chee Wah and Mr Lim Poh Hock each. On the same day, 100,000 Options were granted to Mr Chua Soo Chiew and Mr Tan Hup Foi each. As Mr Ko Chee Wah and Mr Lim Poh Hock were Controlling Shareholders, the proposed grants of Options to them are subject to approval by independent Shareholders by separate resolutions. The proposed grants of Options dated 3 November 2008 to Mr Chua Soo Chiew and Mr Tan Hup Foi, both being independent Directors, are awards to each of them for their contributions to the Company. The proposed grants of Options to Mr Chua Soo Chiew and Mr Tan Hup Foi are subject to approval pursuant to section 169 of the Companies Act. 2.2 Specific approval requirements under the SGX ST Listing Rules and Companies Act Under the listing rules of SGX ST, specific approval of independent Shareholders is required for the grant of Options to Controlling Shareholders and their Associates and a separate resolution must be passed to approve the actual number and terms of such Options to be granted to each Controlling Shareholder and his Associate. Pursuant to section 169 of the Companies Act, approval under a separate resolution is required for the provision of, or improvement in, the emoluments to a director of a company in respect of his office. As the proposed grants of Options to Mr Chua Soo Chiew and Mr Tan Hup Foi, both being independent Directors, are regarded as awards to each of them for their contributions to the Company and hence an improvement in the emoluments already provided to them in respect of their office as Directors of the Company, the proposed grants of Options to Mr Chua Soo Chiew and Mr Tan Hup Foi are to be ratified and approved by Shareholders at a general meeting in a separate resolution. 2.3 Extension of expiry date of Options granted to certain employees As previously announced, a take-over offer of the shares of the Company (LPL Offer) was made by ANZ Singapore Limited and AmFraser Securities Pte Ltd for and on behalf of Laviani Pte Ltd (LPL) in FY2008. The LPL Offer became unconditional on 29 October 2008 and closed on 20 November

8 Pursuant to Rule 9.1 of the Rules of the Scheme, in the event of a take-over being made for the Shares, a Participant shall be entitled to exercise any Option held by him and as yet unexercised, in respect of such number of Shares comprised in that Option in the period commencing on the date on which such take-over offer becomes or is declared unconditional and ending on the earlier of: (i) (ii) the expiry of six (6) months thereafter, unless prior to the expiry of such six-month period, at the recommendation of the offeror and with the approval of the Committee and SGX ST, such expiry date is extended to a later date (in either case, being a date falling not later than the expiry of the Exercise Period relating thereto); or the date of expiry of the Exercise Period relating thereto, whereupon the Option then remaining shall lapse. As at the close of the LPL Offer, 407,000 Options granted on 20 August 2007 and 564,000 Options granted on 3 November 2008, all held by certain Group Employees (who are not Directors) remain unexercised. Of these Options held by such Group Employees as at the close of the LPL Offer, 404,000 Options granted on 20 August 2007 and 560,000 Options granted on 3 November 2008 remain unexercised as at the Latest Practicable Date. Further details of these Options which were not exercised as at the close of the LPL Offer and remained unexercised as at the Latest Practicable Date are provided in Schedule 1 to this Circular (Affected Options). The Affected Options do not include any Options granted to the Directors on 20 August 2007 and 3 November Pursuant to Rule 9.1 of the Rules of the Scheme, the Affected Options will lapse on 28 April 2009 (being 6 months from the date the LPL Offer became unconditional) if they are not exercised by then unless the expiry date for exercise of these Options are extended with the recommendation of LPL, and with the approval of the Committee and the SGX ST. Some of the holders of the Affected Options (the Affected Employees, and the Affected Employees do not include the Directors) have requested for more time to exercise their Affected Options in view of the current economic conditions. The Directors are of the view that the Affected Employees, of which a large majority are on overseas assignments during the course of their employment with the Group, should be given more time to exercise the Affected Options. LPL and the Committee are agreeable to extend the expiry date for the exercise of each of the Affected Options to the original expiry date of the original Exercise Period for that Affected Option as stated in respective letter of grant of Options as if the original expiry date for the exercise of the Affected Option has not been brought forward to 28 April 2009 pursuant to Rule 9.1 of the Rules of the Scheme. The SGX ST has confirmed that it will not object to the proposed extension of the expiry date for the exercise of each of the Affected Options, subject to the approval of the Shareholders. Therefore, the Company wishes to seek the approval of the Shareholders to extend the expiry date for the exercise of each of the Affected Options to the original expiry date of the original Exercise Period for that Affected Option as stated in the respective letter of grant of Options as if such original expiry date has not been brought forward to 28 April 2009 pursuant to Rule 9.1 of the Rules of the Scheme. 2.4 Summary of the Rules of the Scheme (i) Eligibility To be eligible to participate in the Scheme, Participants must be:- (i) (ii) confirmed Group Employees (including Group Executive Directors); or Group Non-executive Directors. The Participants must have reached the age of 21 years before the date of grant of Options to them, and must not be undischarged bankrupts and must not have entered into compositions with their creditors. 8

9 Controlling Shareholders and their Associates are also eligible to participate, provided that each of them: (i) (ii) (iii) is confirmed in his employment with the Group; has attained the age of twenty-one (21) years on or before the date of grant of Options; and is not an undischarged bankrupt and must not have entered into a composition with his creditors. (ii) Administration of Scheme The Remuneration Committee of the Company has been designated as the Committee responsible for the administration of the Scheme. The Committee comprises of Directors (including Directors who may be participants of the Scheme), with powers to determine, inter alia, the following: (i) (ii) (iii) persons to be granted Options; number of Options to be offered; and recommendations for modifications to the Scheme. In compliance with the requirements of the SGX ST Listing Rules, a Participant of the Scheme who is a member of the Committee shall not be involved in its deliberations in respect of Options to be granted to or held by him or his Associates. In addition, where Options are proposed to be granted to or held by Group Executive Directors, Controlling Shareholders or Associates of Controlling Shareholders, as a safeguard against abuse, all members of the Board (and not just members of the Committee) who are not Group Executive Directors, Controlling Shareholders or Associates of Controlling Shareholders, will be involved in deliberations on the same. (iii) Size and Duration The total number of new Shares over which Options may be granted on any date, when added to the number of new Shares issued and issuable in respect of (a) all Options granted thereunder; and (b) all awards granted under any other share option, share incentive, performance share or restricted share plan implemented by the Company and for the time being in force, shall not exceed 15% of the total number of issued Shares of the Company (excluding treasury shares) on the day preceding the relevant date of grant during the duration of the Scheme. As at the Latest Practicable Date, 15% of the total number of issued Shares of the Company (excluding treasury shares) consist of approximately 13,278,810 Shares. In addition, pursuant to the SGX ST Listing Rules, the total amount of new Shares over which the Committee may grant Options on any date pursuant to the Scheme, when added to the amount of new Shares issued and issuable in respect of all Options granted thereunder available to:- (i) (ii) all Controlling Shareholders and their Associates, must not exceed 25% of the Shares available under the Scheme; and each Controlling Shareholder or an Associate of a Controlling Shareholder, must not exceed 10% of the Shares available under the Scheme. 9

10 Based on the total of 1,945,400 Options granted to Mr Ko Chee Wah and Mr Lim Poh Hock (comprising of 1,000,000 Options granted in FY2007 and 945,400 Options granted in FY2008 and subject to Shareholders approval) as at the Latest Practicable Date, this constitutes about 14.65% of the total number of Shares available under the Scheme. Based on the total of 972,700 Options granted to Mr Ko Chee Wah (comprising of 500,000 Options granted in FY2007 and 472,700 Options granted in FY2008 and subject to Shareholders approval) as at the Latest Practicable Date, this constitutes about 7.33% of the total number of Shares available under the Scheme. Based on the total of 972,700 Options granted to Mr Lim Poh Hock (comprising of 500,000 Options granted in FY2007 and 472,700 Options granted in FY2008 and subject to Shareholders approval) as at the Latest Practicable Date, this constitutes about 7.33% of the total number of Shares available under the Scheme. (iv) (v) Entitlement to Options The number of Shares comprised in any Options to be offered to a Participant shall be determined at the absolute discretion of the Committee, who shall take into account criteria such as rank, past performance, years of service/appointment and potential for future development of that Participant. Grant of Options Under the rules of the Scheme, there are no fixed periods for the grant of Options. As such, offers of the grant of Options may be made at any time and from time to time at the discretion of the Committee. No Option shall however be granted during the period of 30 days immediately preceding the date of announcement of the Company s interim and/or final results (as the case may be). In addition, in the event that an announcement on any matter of an exceptional nature involving unpublished price sensitive information is made, offers to grant Options may only be made on or after the second Market Day on which such announcement is released. (vi) Options, Exercise Price and Exercise Period The Options that are granted under the Scheme may have exercise prices that are, at the Committee s discretion, set at a discount to the Market Price, subject to a maximum discount of 20%, in which event, such Options may be exercised after the second anniversary from the date of grant of the Option (Incentive Option), or fixed at the Market Price (Market Price Option). Market Price Options may be exercised after the first anniversary of the date of grant of that Option. Options granted under the Scheme shall have a life span of up to 10 years. (vii) Termination of Options Special provisions in the rules of the Scheme deal with the lapse or earlier exercise of Options in circumstances which include the termination of the Participant s employment with the Group, the bankruptcy of that Participant, the death of the Participant, a take-over of the Company, and the winding-up of the Company. (viii) Acceptance of Options The grant of Options shall be accepted within 30 days from the date of the offer. Offers of Options made to grantees, if not accepted before the closing date, will lapse. Upon acceptance of the offer, the grantee shall pay the Company a consideration of S$1.00. (ix) Rights of Shares arising Shares arising from the exercise of Options are subject to the provisions of the Memorandum and Articles of Association of the Company. The Shares so allotted will upon issue rank pari passu in all respects with the then existing issued Shares, save for any dividend, rights, 10

11 allotments or distributions, the record date (Record Date) for which falls on or before the relevant exercise date of the Option. Record Date means the date as at the close of business on which the Shareholders must be registered in order to participate in any dividends, rights, allotments or other distributions. (x) (xi) Duration of the Scheme The Scheme shall continue in operation for a maximum duration of 10 years and may be continued for any further period thereafter with the approval of the Shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be required. Abstention from voting Participants who are Shareholders are to abstain from voting on any shareholders resolution relating to the Scheme, including any resolutions relating to (i) the implementation of the Scheme and (ii) the quantum of discount in respect of any Incentive Options. 2.5 Rationale for Participation in Scheme by Controlling Shareholders and their Associates and the grant of Options to such persons thereunder It is the Company s intention that all directors and employees, including Controlling Shareholders and their Associates, should be treated equally for the purposes of the Scheme. The Company believes that the application of the Scheme should not unduly favour the Controlling Shareholders and their Associates over other employees of the Group. However, the Company also believes that Controlling Shareholders and their Associates should not be excluded from the Scheme solely on the basis that they are Controlling Shareholders or their Associates. Accordingly, the Scheme does not differentiate between Directors and employees who are Controlling Shareholders and their Associates in determining their eligibility to participate in the Scheme and Controlling Shareholders and their Associates are subject to the same criteria as are applied to other Directors and employees of the Group. The Company s Controlling Shareholders and their Associates who meet the eligibility criteria set out in paragraph 2.4 above will also be eligible to participate in the Scheme. As at the date of this Circular, the Controlling Shareholders and their Associates who are eligible to participate in the Scheme are the Group Executive Directors, Mr Ko Chee Wah and Mr Lim Poh Hock. The Company recognises that both the Group Executive Directors have to a large part been responsible for the growth and success of the Group. The extension of the Scheme to them will serve not only as recognition of their valuable contributions to the Group but also to give them a personal stake in the future performance of the Group. The Company is of the view that Mr Ko Chee Wah s and Mr Lim Poh Hock s experience and contribution towards the growth of the Group are invaluable and their continuing contribution is required for the success of the Group. Participation in the Scheme will provide sufficient incentive which will instill in them a deeper sense of commitment to the Group. As the Scheme serves to recognise past contributions as well as to encourage future contributions, the Scheme allows such contributions to be duly recognised and rewarded. In addition, by allowing them to participate in the Scheme, both Mr Ko Chee Wah and Mr Lim Poh Hock will have an additional variable component in their remuneration package and this will motivate them further to contribute to the Group. Where Options are proposed to be granted to or held by Group Executive Directors, Controlling Shareholders or Associates of Controlling Shareholders, as a safeguard against abuse, all members of the Board (and not just members of the Committee) who are not Group Executive Directors, Controlling Shareholders or Associates of Controlling Shareholders, will be involved in deliberations on the same. 11

12 2.6 Rationale for grant of Options with a discounted exercise price The ability to offer Options to Participants of the Scheme with exercise prices set at a discount to the prevailing market prices of the Shares will operate as a means to recognise the performance of Participants as well as to motivate them to continue to excel while encouraging them to focus more on improving the profitability and return of the Group above a certain level which will benefit all Shareholders when these are eventually reflected through share price appreciation. Discounted Options would be perceived in a more positive light by the Participants, inspiring them to work hard and produce results in order to be offered Options at a discount as only employees who have made outstanding contributions to the success and development of the Group would be granted Options at a discount. The flexibility to grant Options with discounted prices is also intended to cater to situations where the stock market performance has overrun the general market conditions. In such events, the Committee will have absolute discretion to: (i) (ii) grant Options set at a discount to Market Price of a Share (subject to a maximum limit of twenty per cent. (20%)); and determine the Participants to whom, and the Options to which, such reduction in Exercise Prices will apply. In determining whether to give a discount and the quantum of the discount, the Committee has taken into consideration factors including the performance of the Company, the Group, the performance of the Participant concerned, the contribution of the Participant to the success and development of the Group and the prevailing market conditions. The Company believes that the maximum twenty per cent. (20%) discount to the Market Price of the Shares is sufficient to allow for flexibility in the Scheme, while minimising the potential dilutive effect to the Shareholders arising from the Scheme. In respect of the grant of Options in FY2007 and FY2008, the Committee had approved the discount to be set at the maximum of twenty per cent. (20%) having taken into consideration the Group s performance. As it has been the Company s intention that all Directors and employees, including Controlling Shareholders and their Associates, should be treated equally for the purposes of the Scheme, the Committee believes that it should not differentiate between Directors and employees who are Controlling Shareholders and their Associates in determining the terms of the grants to them and that the Controlling Shareholders and their Associates who were subjected to the same criteria as were applied to other Directors and employees of the Group should also enjoy the same terms of the grant of Options. Accordingly, Mr Ko Chee Wah and Mr Lim Poh Hock should enjoy the same of discount of twenty per cent. (20%) that was given to the employees granted the Options in FY2007 and FY THE APPROVAL AND RATIFICATION OF THE PROPOSED GRANT OF OPTIONS TO MR KO CHEE WAH, MR LIM POH HOCK, MR CHUA SOO CHIEW AND MR TAN HUP FOI Mr Ko Chee Wah and Mr Lim Poh Hock are the key management of the Group. They are responsible for the management and for driving the growth of the Group, and the Company believes they have made and will continue to make invaluable contributions to the Group. The Company is proposing that the proposed grant of Options to them dated 20 August 2007 for FY2007 and dated 3 November 2008 for FY2008 as set out in paragraphs 3.1 to 3.2 of this Circular be approved and ratified so as to motivate them on to further optimise their performance standards and efficiency and to reward them for their significant contributions to the Group. In terms of the basis for determining the quantum of grant to Mr Ko Chee Wah and Mr Lim Poh Hock respectively, factors which have been taken into account include the designation, capability, experience, scope of responsibility and years of service of each Director as well as his overall past and potential contributions to the growth and development of the Group. The remuneration of Mr Ko Chee Wah and Mr Lim Poh Hock, are in line with non-related employees/executives of the same rank. 12

13 The Company is proposing that the proposed grants of Options to Mr Ko Chee Wah, Mr Lim Poh Hock and Mr Chua Soo Chiew dated 20 August 2007 and 3 November 2008, and the proposed grant of Options to Mr Tan Hup Foi dated 3 November 2008, such proposed grants on terms consistent with and similar to the terms of Options granted to other Participants on 20 August 2007 and 3 November 2008, be approved and ratified by the independent Shareholders. As at the Latest Practicable Date, the shareholdings of Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi in the Company are as follows: Direct Interest Deemed Interest Total Interest Number of Number of Number of Shares % (1) Shares % (1) Shares % (1) Mr Ko Chee Wah 14,912, ,912, Mr Lim Poh Hock (2) 12,311, ,000, ,311, Mr Chua Soo Chiew Mr Tan Hup Foi Notes:- (1) The percentage shareholding interest is based on 88,525,400 Shares being the total number of issued Shares of the Company as at the Latest Practicable Date. The Company has no treasury shares. (2) Mr Lim Poh Hock has a deemed interest in the 3,000,000 Shares registered in the name of Mayban Nominees (Singapore) Private Limited. 3.1 Approval and Ratification of the Proposed Grant of Options to Mr Ko Chee Wah Mr Ko Chee Wah is the Group Managing Director of the Company. He is responsible for the overall day-to-day management and the strategic and business development of the Group. The Company is of the view that given Mr Ko Chee Wah s in-depth knowledge of and years of experience in the MICE industry, he will continue to play an integral role in driving the strategic development and success of the Group. The Company therefore wishes to seek the approval and ratification of independent Shareholders for the proposed grant of Options to Mr Ko Chee Wah pursuant to the Scheme. For the reasons set out above, it is proposed that the grant of Options to Mr Ko Chee Wah on the following terms be approved and ratified:- Grant of Options dated 20 August 2007 (a) Date of grant of Options, subject to Shareholders approval being obtained : 27 April 2009 (b) Number of Options : 500,000 (c) Number of Shares comprised in the Option : 500,000 (d) Exercise Price per Share : $0.46 (e) Exercise Period : Exercisable at any time after two years from the date of grant but before 7 years from the date of grant 13

14 Grant of Options dated 3 November 2008 (a) Date of grant Options, subject to Shareholders approval being obtained : 27 April 2009 (b) Number of Options : 472,700 (c) Number of Shares comprised in the Options : 472,700 (d) Exercise Price per Share : $0.48 (e) Exercise Period : Exercisable at any time after two years from the date of grant but before 7 years from the date of grant 3.2 Approval and Ratification of Proposed Grant of Options to Mr Lim Poh Hock Mr Lim Poh Hock is a Group Executive Director in charge of the administrative matters of the Group and supervises the management of subsidiaries within the Group. Mr Lim Poh Hock joined the Company since the incorporation of the Company. The Company considers Mr Lim Poh Hock s contribution towards the Group s continued growth and development to be invaluable and therefore wishes to seek the approval and ratification of independent Shareholders for the proposed grant of Options to Mr Lim Poh Hock pursuant to the Scheme. For the reasons set out above, it is proposed that the grant of Options to Mr Lim Poh Hock on the following terms be approved and ratified:- Grant of Options dated 20 August 2007 (a) Date of grant Options, subject to Shareholders approval being obtained : 27 April 2009 (b) Number of Options granted : 500,000 (c) Number of Shares comprised in the Options : 500,000 (d) Exercise Price per Share : $0.46 (e) Exercise Period : Exercisable at any time after 2 years from the date of grant but before 7 years from the date of grant Grant of Options dated 3 November 2008 (a) Date of grant of Options, subject to Shareholders approval being obtained : 27 April 2009 (b) Number of Options : 472,700 (c) Number of Shares comprised in the Options : 472,700 (d) Exercise Price per Share : $0.48 (e) Exercise Period : Exercisable at any time after 2 years from the date of grant but before 7 years from the date of grant 14

15 3.3 Approval and ratification of the proposed grant of Options to Mr Chua Soo Chiew Mr Chua Soo Chiew is an independent Director of the Company. The proposed grants of Options to Mr Chua Soo Chiew is an award to him for his contributions to the Group. The proposed grants of Options to Mr Chua Soo Chiew is part of the emoluments to him in his capacity as a Director of the Company. Mr Chua Soo Chiew serves as the chairman of the Audit Committee and the Nominating Committee of the Company and is a member of the Remuneration Committee of the Company. As an independent Director of the Company, Mr Chua Soo Chiew has given the Company strategic advice based on his experience and expertise in the accounting industry. The Company considers Mr Chua Soo Chiew s efforts and contributions vital to the expansion and growth of the Group s business and therefore wishes to seek the ratification and approval of Shareholders for the proposed grants of Options dated 20 August 2007 and 3 November 2008 to Mr Chua Soo Chiew. For the reasons set out above, it is proposed that the grant of Options to Mr Chua Soo Chiew on the following terms be approved and ratified:- Grant of Options dated 20 August 2007 (a) Date of grant of Options, subject to Shareholders approval being obtained : 27 April 2009 (b) Number of Options : 100,000 (c) Number of Shares comprised in the Options : 100,000 (d) Exercise Price per Share : $0.46 (e) Exercise Period : Exercisable at any time after 2 years from the date of grant but before 5 years from the date of grant Grant of Options dated 3 November 2008 (a) Date of grant of Options, subject to Shareholders approval being obtained : 27 April 2009 (b) Number of Options : 100,000 (c) Number of Shares comprised in the Options : 100,000 (d) Exercise Price per Share : $0.48 (e) Exercise Period : Exercisable at any time after 2 years from the date of grant but before 5 years from the date of grant 3.4 Approval and ratification of the proposed grant of Options to Mr Tan Hup Foi Mr Tan Hup Foi is an independent Director of the Company. The proposed grant of Options to Mr Tan Hup Foi is an award to him for his contributions to the Group. The proposed grant of Options to Mr Tan Hup Foi is part of the emoluments to him in his capacity as a Director of the Company. Mr Tan Hup Foi has previously sat on various boards of statutory boards and public institutions in Singapore and is currently chairman of the Ngee Ann Polytechnic Council. He serves as chairman of the Remuneration Committee and is a member of both the Audit and Nominating Committee of the Company. As an independent Director, he has given invaluable advice and guidance to the Group. The Company considers Mr Tan Hup Foi s contribution in terms of general management and strategic advice vital to the growth and expansion of the Group and therefore wishes to seek the approval and ratification of Shareholders for the proposed grant of Options dated 3 November 2008 to Mr Tan Hup Foi. 15

16 For the reasons set out above, it is proposed that the grant of Options to Mr Tan Hup Foi on the following terms be approved and ratified:- Grant of Options dated 3 November 2008 (a) Date of grant of Options, subject to Shareholders approval being obtained : 27 April 2009 (b) Number of Options : 100,000 (c) Number of Shares comprised in the Options : 100,000 (d) Exercise Price per Share : $0.48 (e) Exercise Period : Exercisable at any time after 2 years from the date of grant but before 5 years from the date of grant 4. COST OF GRANT OF OPTIONS Details of the costs to the Company of granting Options under the Scheme would be as follows:- 4.1 Potential Cost of Options Any Options granted under the Scheme would have a fair value. In the event that such Options are granted at prices below the fair value of the Options, there will be a cost to the Company. The amounts of such costs may be more significant in the case of Incentive Options, where such Options are granted with exercise prices set at a discount to the prevailing market price of the Shares. The cost to the Company of granting Options under the Scheme would be as follows: (i) (ii) (iii) the exercise of an Option at the exercise price would translate into a reduction of the proceeds from the exercise of such Option, as compared to the proceeds that the Company would have received from such exercise had the exercise been made at the prevailing market price of the Shares. Such reduction of the exercise proceeds would represent the monetary cost to the Company; as the monetary cost of granting Options with a discounted exercise price is borne by the Company, the earnings of the Company would effectively be reduced by an amount corresponding to the reduced interest earnings that the Company would have received from the difference in proceeds from exercise price with no discount versus the discounted exercise price. Such reduction would, accordingly, result in the dilution of the Company s EPS; and the effect of the issue of new Shares upon the exercise of Options, is that the Company s NTA per Share will increase if the exercise price is above the NTA per Share and decrease, if the exercise price is below the NTA per Share. The costs as discussed above would only materialise upon the exercise of the relevant options. Effective from 1 January 2005, the Singapore Financial Reporting Standards (FRS) requires companies to account for share-based awards granted to their employees. Accordingly, companies are required to recognise any compensation expenses relating to share options granted to their employees in their financial statements. Share options have value because the option to buy a company s share for a fixed price during an extended future time period is a valuable right, even if there are restrictions attached to such an option. As the FRS requires the Company to account for share-based awards granted to our employees, the cost of granting Options will affect our financial results as this cost to the Company would be required to be charged to the Company s profit and loss account at the time Options are granted. Even if the Options are not granted at a discount, there would be a cost to the Company and the cost is required to be charged to the Company s profit and loss account under the FRS. Subject as aforesaid, as and when Options are exercised, the cash inflow will add to the net tangible assets of the Company and its share capital base will grow. Where Options are granted with subscription 16

17 prices that are set at a discount to the market prices for the Shares prevailing at the time of the grant of such Options, the amount of the cash inflow to the Company on the exercise of such Options would be diminished by the quantum of the discount given, as compared with the cash inflow that would have been receivable by the Company had the Options been granted at the market price of the Shares prevailing at the time of the grant. 4.2 Share capital The Scheme will result in an increase in the Company s issued share capital when the Options are exercised into new Shares. This will in turn depend on, inter alia, the number of Shares comprised in the Options to be granted and the vesting schedules under the Options and the prevailing market price of the Shares on the SGX ST. If, instead of issuing new Shares to Participants, existing Shares are purchased for delivery to Participants, the Scheme will have no impact on the Company s issued Shares. 4.3 EPS The Scheme will have a dilutive impact on the Company s consolidated EPS following the increase in the Company s number of issued Shares to the extent that new Shares are allotted and issued pursuant thereto. 4.4 NTA The issue of new Shares upon the exercise of the Options will increase the Company s consolidated NTA by the aggregate Exercise Price of the new Shares issued. On a per Share basis, the effect on the NTA of the Company is accretive if the Exercise Price is above the NTA per Share but dilutive otherwise. Directors Direct Interest Deemed Interest Total Interest Number of Number of Number of Shares % (1) Shares % (1) Shares % (1) Ko Chee Wah 14,912, ,912, Lim Poh Hock (2) 12,311, ,000, ,311, Substantial Shareholders Laviani Pte Ltd 56,418, ,418, Star Publications (Malaysia) Berhad (3) ,418, ,418, Huaren Holdings Sdn Bhd (4) ,418, ,418, Ko Chee Wah 14,912, ,912, Lim Poh Hock 12,311, ,000, ,311, DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS The interests of the Directors and Substantial Shareholders in the Shares as at the Latest Practicable Date, as recorded in the Register of Directors Shareholdings and the Register of Substantial Shareholdings, are set out below:- Notes:- (1) The percentage shareholding interest is based on 88,525,400 Shares being the total number of issued Shares of the Company as at the Latest Practicable Date. (2) Mr Lim Poh Hock has a deemed interest in the 3,000,000 Shares registered in the name of Mayban Nominees (Singapore) Private Limited. 17

18 (3) Star Publications (Malaysia) Berhad is deemed to be interested in the Shares by virtue of its 100% shareholding in Laviani Pte Ltd. (4) Huaren Holdings Sdn Bhd is deemed to be interested in the Shares by virtue of its 40.4% interest (direct and deemed) in Star Publications (Malaysia) Berhad. 6. DIRECTORS RECOMMENDATIONS 6.1 The approval and ratification of the proposed grants of Options to Mr Ko Chee Wah and Mr Lim Poh Hock The Directors (save for the Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi who have abstained from making any recommendation) are of the opinion that the proposed grants of Options to Mr Ko Chee Wah and Mr Lim Poh Hock under the Scheme is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of Ordinary Resolutions 1 to 4 to be proposed at the EGM, being the resolutions relating to the approval and ratification of the proposed grant of Options to Mr Ko Chee Wah and Mr Lim Poh Hock. Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi have abstained from making any recommendation on Ordinary Resolutions 1 to 4 to be proposed at the EGM. Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi shall abstain from voting in respect of Ordinary Resolutions 1 to 4. Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew, Mr Tan Hup Foi and their Associates shall also decline to accept appointment as proxies for any Shareholder to vote in respect of each of the said Resolutions unless the Shareholder concerned shall have given instructions in his proxy form as to the manner in which his votes are to be cast in respect of such Resolutions. 6.2 The approval and ratification of the proposed grants of Options to Mr Chua Soo Chiew The Directors (save for Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi who have abstained from making any recommendation) are of the opinion that the proposed grants of Options to Mr Chua Soo Chiew under the Scheme is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of Ordinary Resolutions 5 and 6 to be proposed at the EGM, being the resolutions relating to the approval and ratification of the proposed grants of Options to Mr Chua Soo Chiew. Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi have abstained from making any recommendation on Ordinary Resolutions 5 and 6 to be proposed at the EGM. Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi shall abstain from voting in respect of Ordinary Resolutions 5 and 6. Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew, Mr Tan Hup Foi and their Associates shall also decline to accept appointment as proxies for any Shareholder to vote in respect of Ordinary Resolutions 5 and 6 unless the Shareholder concerned shall have given instructions in his proxy form as to the manner in which his votes are to be cast in respect of such Resolutions. 6.3 The approval and ratification of the proposed grant of Options to Mr Tan Hup Foi The Directors (save for Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi who have abstained from making any recommendation) are of the opinion that the proposed grant of Options to Mr Tan Hup Foi under the Scheme is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of Ordinary Resolution 7 to be proposed at the EGM, being the resolution relating to the approval and ratification of the proposed grant of Options to Mr Tan Hup Foi. Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi have abstained from making any recommendation on Ordinary Resolution 7 to be proposed at the EGM. Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew and Mr Tan Hup Foi shall abstain from voting in respect of Ordinary Resolution 7. Mr Ko Chee Wah, Mr Lim Poh Hock, Mr Chua Soo Chiew, Mr Tan Hup Foi and their Associates shall also decline to accept appointment as proxies for any Shareholder to vote in respect of Ordinary Resolution 7 unless the Shareholder concerned shall have given instructions in his proxy form as to the manner in which his votes are to be cast in respect of Ordinary Resolution 7. 18