OLD CHANG KEE LTD. (Incorporated in the Republic of Singapore on 16 December 2004) (Company Registration No W)

Transcription

1 CIRCULAR DATED 14 APRIL 2009 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in doubt about its contents or the action you should take, you should consult your bank manager, stockbroker, solicitor, accountant or other professional adviser immediately. If you have sold all your ordinary shares in the capital of Old Chang Kee Ltd. (the Company ), you should immediately hand this Circular and the enclosed Proxy Form to the purchaser or to the bank, stockbroker or agent through whom you effected the sale for onward transmission to the purchaser. Your attention is drawn to page 25 of this Circular in respect of actions to be taken if you wish to attend and vote at the Extraordinary General Meeting. The Singapore Exchange Securities Trading Limited ( SGX-ST ) assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular. The approval-in-principle from the SGX-ST is not an indication of the merits of the Share Buyback Mandate (as defined in the Circular), the Old Chang Kee Performance Share Scheme, the Company, its subsidiaries, its associated companies or the Shares (as defined in the Circular). OLD CHANG KEE LTD. (Incorporated in the Republic of Singapore on 16 December 2004) (Company Registration No W) CIRCULAR TO SHAREHOLDERS in relation to (1) THE PROPOSED SHARE BUYBACK MANDATE; AND (2) THE PROPOSED OLD CHANG KEE PERFORMANCE SHARE SCHEME IMPORTANT DATES AND TIMES Last date and time for lodgement of Proxy Form : 27 April 2009 at 2.30 p.m. Date and time of Extraordinary General Meeting : 29 April 2009 at 2.30 p.m. (or immediately following the conclusion or adjournment of the Annual General Meeting of the Company to be held at 2.00 p.m. on the same day and at the same place) Place of Extraordinary General Meeting : Republic Polytechnic 9 Woodlands Avenue 9 Singapore Lecture Theatre LRE5 (Building E5, Level 3)

2 CONTENTS DEFINITIONS... 3 LETTER TO SHAREHOLDERS INTRODUCTION THE PROPOSED SHARE BUYBACK MANDATE DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTEREST THE PROPOSED OLD CHANG KEE PERFORMANCE SHARE SCHEME EXTRAORDINARY GENERAL MEETING ACTION TO BE TAKEN BY SHAREHOLDERS DIRECTORS RECOMMENDATIONS DIRECTORS RESPONSIBILITY STATEMENT DOCUMENTS FOR INSPECTION APPENDIX A NOTICE OF EXTRAORDINARY GENERAL MEETING PROXY FORM 2

3 DEFINITIONS For the purpose of this Circular, the following definitions have, where appropriate, been used: AGM : The annual general meeting of the Company Approval Date : Has the meaning ascribed to it in Section of this Circular Articles : The Articles of Association of the Company Associates : Shall bear the meaning assigned to it by the Listing Manual Award : A contingent award of Shares granted under the Scheme Board : The board of the directors of the Company CDP : The Central Depository (Pte) Limited cents : Singapore cents Committee : A committee comprising Directors duly authorised and appointed by the Board to administer the Scheme Company or Old Chang Kee : Old Chang Kee Ltd. Companies Act : The Companies Act (Chapter 50) of Singapore, as amended or modified from time to time Controlling Shareholder : A person who: holds directly or indirectly 15% or more of the nominal amount of all voting shares in the company; or in fact exercises control over a company Council : The Securities Industry Council Directors : Directors of the Company as at the date of this Circular EGM : Extraordinary General Meeting, notice of which is given on page 36 of this Circular EPS : Earnings per Share Executive Director : Executive director of the Company Group : The Company and its Subsidiaries Group Employee : Any employee of the Group (including any Group Executive Directors who meet the relevant age and rank criteria and whose services had been seconded to a company within the Group) selected by the Committee to participate in the Scheme, in accordance with the provisions thereof Group Executive Director : A director of the Company and/or any of its subsidiaries, as the case may be, who performs an executive function 3

4 Independent Director : The independent directors of the Company Latest Practicable Date : 6 April 2009, being the latest practicable date prior to the submission of this Circular Listing Manual : The Listing Manual of the SGX-ST, as amended, varied or supplemented from time to time Market Day : A day on which the SGX-ST is open for trading in securities Market Purchase : Has the meaning ascribed to it in Section of this Circular Maximum Price : Has the meaning ascribed to it in Section of this Circular Non-Executive Director : A person who is: an Independent Director; or a director of the Company and/or any of its subsidiaries, as the case may be, other than a Group Executive Director NTA : Net tangible assets Off-Market Purchase : Has the meaning ascribed to it in Section of this Circular Participant : A person who has been granted an Award Performance Target(s) : The performance target(s) prescribed by the Committee to be fulfilled by a Participant for any particular period under the Scheme Relevant Period : The period commencing from the date the last AGM was held or was required by law to be held before the resolution relating to the Share Buyback Mandate is passed, and expiring on the date the next AGM is or required by law to be held, whichever is the earlier, after the said resolution is passed Scheme : The proposed Old Chang Kee Performance Share Scheme, as amended, modified or supplemented from time to time SGX-ST : Singapore Exchange Securities Trading Limited Share Buyback(s) : The buyback(s) of Shares by the Company pursuant to the terms of the Share Buyback Mandate Share Buyback Mandate : The proposed mandate to enable the Company to purchase or otherwise acquire its Shares, the terms of which are set out in Section 2.3 of this Circular Shareholders : Persons who are registered as holders of the Shares except where the registered holder is CDP, in which case the term Shareholders shall in relation to such Shares mean the Depositors whose securities accounts with CDP are credited with the Shares Shares : Ordinary shares in the capital of the Company 4

5 Subsidiaries : The subsidiaries of a company (as defined in Section 5 of the Companies Act) and Subsidiary shall be construed accordingly Take-over Code : The Singapore Code on Take-overs and Mergers Currencies and others S$ : Singapore dollars % or per cent. : Per centum or percentage The terms Depositor and Depository Register shall have the meanings ascribed to them respectively by Section 130A of the Companies Act. The term treasury shares shall have the meaning ascribed to it in Section 4 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 and neuter genders. Any reference to a time of a day in this Circular is a reference to Singapore time. 5

6 LETTER TO SHAREHOLDERS OLD CHANG KEE LTD. (Incorporated in the Republic of Singapore on 16 December 2004) (Company Registration No W) Directors: Registered Office: Han Keen Juan (Executive Chairman) 2 Woodlands Terrace Lim Tao-E William (Chief Executive Officer) Singapore Choong Buat Ken (Non-Executive Director) Lim Yen Heng (Non-Executive Director) Ong Chin Lin (Lead Independent Director) Wong Chak Weng (Independent Director) 14 April 2009 To: The Shareholders of Old Chang Kee Ltd. (1) THE PROPOSED SHARE BUYBACK MANDATE; AND (2) THE PROPOSED OLD CHANG KEE PERFORMANCE SHARE SCHEME Dear Shareholder, 1. INTRODUCTION The purpose of this Circular is to provide Shareholders with the relevant information pertaining to, and to seek Shareholders approval at the EGM to be held on 29 April 2009 for the following matters: the proposed Share Buyback Mandate; and the proposed Old Chang Kee Performance Share Scheme. The notice of the EGM is set out on page 36 of this Circular. The SGX-ST takes no responsibility for the accuracy of any statements or opinions made in this Circular. 2. THE PROPOSED SHARE BUYBACK MANDATE 2.1 Introduction Shareholders approval is being sought at the EGM to be held for the adoption of the Share Buyback Mandate for the purchase or acquisition by the Company of its issued Shares. If approved, the Share Buyback Mandate will take effect from the date of the EGM and continue in force until the date of the next AGM or such date as the next AGM is required by law to be held, unless prior thereto, Share Buybacks are carried out to the full extent mandated or the Share Buyback Mandate is revoked or varied by the Company in a general meeting. The Share Buyback Mandate will be put to Shareholders for renewal at each subsequent Annual General Meeting of the Company. 2.2 Rationale The Directors constantly seek to increase Shareholders value and to improve, inter alia, the return on equity of the Group. A share buyback at the appropriate price level is one of the ways through which the return on equity of the Group may be enhanced. 6

7 Share buybacks provide the Company with a mechanism to facilitate the return of surplus cash over and above its ordinary capital requirements in an expedient, effective and cost-efficient manner. It will also provide the Directors with greater flexibility over the Company s share capital structure with a view to enhancing the earnings and/or net tangible asset value per Share. The Directors further believe that share buybacks by the Company will help mitigate short-term market volatility, offset the effects of short-term speculation and bolster shareholder confidence. If and when circumstances permit, the Directors will decide whether to effect the Share Buybacks via market purchases or off-market purchases, after taking into account the amount of surplus cash available, the prevailing market conditions and the most cost-effective and efficient approach. The Directors do not propose to carry out buybacks to an extent that would, or in circumstances that might, result in a material adverse effect on the liquidity and/or the orderly trading of the Shares and/or the financial position of the Group, taking into account the working capital requirements of the Company or the gearing levels, which in the opinion of the Directors, are from time to time appropriate for the Company. 2.3 Terms of the Share Buyback Mandate The authority and limitations placed on purchases of Shares by the Company under the Share Buyback Mandate are summarised below: Maximum number of shares Only Shares which are issued and fully paid-up may be purchased or acquired by the Company. The total number of Shares that may be purchased or acquired by the Company is limited to that number of Shares representing not more than ten per cent. (10%) of the issued ordinary share capital of the Company as at the date of the EGM at which the Share Buyback Mandate is approved (the Approval Date ) (unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Companies Act, at any time during the Relevant Period, in which event the issued ordinary share capital of the Company shall be taken to be the amount of the issued ordinary share capital of the Company as altered (excluding any treasury shares that may be held by the Company from time to time). For illustrative purposes only, based on the existing issued and paid-up capital of the Company as the Latest Practicable Date of S$10,012,605 comprising 93,400,000 Shares, and assuming that no further Shares are issued on or prior to the EGM, not more than 9,340,000 Shares (representing approximately ten per cent. (10%) of the issued ordinary share capital of the Company as at that date) may be purchased or acquired by the Company pursuant to the Share Buyback Mandate Duration of authority Purchases or acquisitions of Shares may be made, at any time and from time to time, on and from the Approval Date, up to the earlier of: (c) the date on which the next annual general meeting is held or required by law to be held; the date on which the Share Buybacks are carried out to the full extent mandated; or the date on which the authority contained in the Share Buyback Mandate is varied or revoked. 7

8 2.3.3 Manner of purchase of Shares Purchases of Shares may be made by way of, inter alia: on-market purchases ( Market Purchase ), transacted on the SGX-ST through the SGX-ST s Central Limit Order Book (CLOB) trading system or, as the case may be, any other securities exchange on which the Shares may for the time being be listed and quoted, through one or more duly licensed stockbrokers appointed by the Company for the purpose; and/or off-market purchases ( Off-Market Purchase ) (if effected otherwise than on the SGX-ST) in accordance with an equal access scheme(s) as may be determined or formulated by the Directors as they may consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act and the Listing Rules. Under the Companies Act, an equal access scheme must satisfy all of the following conditions: (c) offers for the purchase or acquisition of issued shares shall be made to every person who holds issued shares to purchase or acquire the same percentage of their issued Shares; all of those persons shall be given a reasonable opportunity to accept the offers made; and the terms of all the offers are the same, except that there shall be disregarded: (i) (ii) (iii) differences in consideration attributable to the fact that offers may relate to shares with different accrued dividend entitlements; (if applicable) differences in consideration attributable to the fact that offers relate to shares with different amounts remaining unpaid; and differences in the offers introduced solely to ensure that each person is left with a whole number of shares. In addition, the Listing Rules provides that, in making an Off-Market Purchase, the Company must issue an offer document to all Shareholders which must contain at least the following information: (c) (d) (e) (f) the terms and conditions of the offer; the period and procedures for acceptances; the reasons for the proposed Share Buyback; the consequences, if any, of share buybacks by the Company that will arise under the Take-over Code or other applicable take-over rules; whether the Share Buyback, if made, would have any effect on the listing of the Shares on the SGX-ST; and details of any Share Buyback made by the Company in the previous 12 months (whether Market Purchase or Off-Market Purchase), giving the total number of Shares purchased, the purchase price per Share or the highest and lowest prices paid for the purchases, where relevant, and the total consideration paid for the purchases. 8

9 2.3.4 Maximum Purchase Price The purchase price (excluding brokerage, stamp duties, applicable goods and services tax and other related expenses) to be paid for the Shares will be determined by the Directors. However, the purchase price to be paid for a Share as determined by the Directors must not exceed: in the case of a Market Purchase, 105% of the Average Closing Price (as defined hereinafter); and in the case of an Off-Market Purchase pursuant to an equal access scheme, 125% of the Average Closing Price (as defined hereinafter), (the Maximum Price ) in either case, excluding related expenses of the purchase. For the above purposes Average Closing Price means the average of the closing market prices of a Share over the last five Market Days, on which transactions in the Shares were recorded, preceding the day of the Market Purchase, and deemed to be adjusted for any corporate action that occurs after the relevant 5-day period. 2.4 Status of purchased shares under the Share Buyback Mandate A Share purchased or acquired by the Company is deemed cancelled immediately on purchase or acquisition (and all rights and privileges attached to the Share will expire on such cancellation) unless such Share is held by the Company as a treasury share. Accordingly, the total number of issued Shares will be diminished by the number of Shares purchased or acquired by the Company and which are not held as treasury shares. 2.5 Treasury shares Under the Companies Act, Shares purchased or acquired by the Company may be held or dealt with as treasury shares. Some of the provisions on treasury shares under the Companies Act, are summarised below: Maximum holdings The number of Shares held as treasury shares cannot at any time exceed 10% of the total number of issued Shares Voting and other rights The Company cannot exercise any right in respect of treasury shares. In particular, the Company cannot exercise any right to attend or vote at meetings and for the purposes of the Companies Act, the Company shall be treated as having no right to vote and the treasury shares shall be treated as having no voting rights. In addition, no dividend may be paid, and no other distribution of the Company s assets may be made to the Company in respect of treasury shares. However, the allotment of shares as fully paid bonus shares in respect of treasury shares is allowed. Also, a subdivision or consolidation of any treasury share into treasury shares of a smaller amount is allowed so long as the total value of the treasury shares after the subdivision or consolidation is the same as before Disposal and cancellation Where Shares are held as treasury shares, the Company may at any time: sell the treasury shares for cash; transfer the treasury shares for the purposes of any other employee s share scheme; 9

10 (c) (d) (e) transfer the treasury shares as consideration for the acquisition of shares in or assets of another company or assets of a person; cancel the treasury shares; or sell, transfer or otherwise use the treasury shares for such other purposes as may be prescribed by the Minister for Finance. Pursuant to Rule 704(26) of the Listing Manual, the Company will immediately announce any sale, transfer, cancellation and/or use of treasury shares, stating the following: (i) (ii) (iii) (iv) (v) (vi) date of the sale, transfer, cancellation and/or use; purpose of such sale, transfer, cancellation and/or use; number of treasury shares sold, transferred, cancelled and/or used; number of treasury shares before and after such sale, transfer, cancellation and/or use; percentage of the number of treasury shares against the total number of shares outstanding in a class that is listed before and after such sale, transfer, cancellation and/or use; and value of the treasury shares if they are used for a sale or transfer or cancelled. 2.6 Sources of funds for Share Buyback Any purchase of Shares could only be made out of the Company s distributable profits that are available for payment as dividends, as well as from its capital, provided that: the Company is able to pay its debts in full at the time it purchases the Shares and will be able to pay its debts as they fall due in the normal course of business in the 12 months immediately following the purchase; and the value of the Company s assets is not less than the value of its liabilities (including contingent liabilities) and will not after the purchase of Shares become less than the value of its liabilities). Further, for the purposes of determining the value of a contingent liability, the Directors or managers of the Company may take into account the following: the likelihood of the contingency occurring; and any claim the Company is entitled to make and can reasonably expect to be met to reduce or extinguish the contingent liability. The Company will use internal resources and/or external borrowings and/or a combination of both to finance purchases of Shares pursuant to the Share Buyback Mandate. 2.7 Financial effects of the Share Buyback Mandate The financial effects on the Company and the Group arising from purchases or acquisition of Shares which may be made pursuant to the Share Buyback Mandate will depend on, inter alia, how the Shares are purchased or acquired, the price paid for such Shares and whether the Shares purchased or acquired are held as treasury shares or cancelled. The financial effects on the Company and the Group, based on the audited financial statements of the Company and the Group for the financial year ended 31 December 2008, are based on the following principal assumptions: the acquisition of Shares pursuant to the Share Buyback Mandate had taken place on 1 January 2008 for the purpose of computing the financial effects on the EPS of the Group and the Company; 10

11 the acquisition of Shares pursuant to the Share Buyback Mandate had taken place on 1 January 2008 for the purpose of computing the financial effects on the shareholders equity, NTA per share and gearing of the Group and the Company; and (c) transaction costs incurred for the acquisition of Shares pursuant to the Share Buyback Mandate are assumed to be insignificant and have been ignored for the purpose of computing the financial effects Purchase or acquisition out of capital or profits Under the Companies Act, purchases or acquisitions of Shares by the Company may be made out of the Company s capital or profits so long as the Company is solvent. Where the consideration (excluding related brokerage, goods and services tax, stamp duties and clearance fees) paid by the Company for the purchase or acquisition of Shares is made out of capital, the amount available for the distribution of cash dividends by the Company will not be reduced but the issued share capital of the Company will be reduced by the value of the Shares purchased. Where the consideration (excluding related brokerage, goods and services tax, stamp duties and clearance fees) paid by the Company for the purchase or acquisition of the Shares is made out of profits, such consideration will correspondingly reduce the amount available for the distribution of cash dividends by the Company Information as at the Latest Practicable Date As at the Latest Practicable Date, the issued and paid-up capital of the Company is S$10,012,605 comprising 93,400,000 Shares. No Shares are reserved for issue by the Company as at the Latest Practicable Date Financial effects For illustration purposes only, and on the basis of the assumptions set out below, the financial effects of the: acquisition of Shares by the Company pursuant to the Share Buyback Mandate by way of purchases made out of capital and held as treasury shares; and acquisition of Shares by the Company pursuant to the Share Buyback Mandate by way of purchases made out of capital and cancelled; based on the audited financial statements of the Group and the Company for the financial year ended 31 December 2008 are set out in the sections below. The financial effects of the acquisition of Shares by the Company pursuant to the Share Buyback Mandate by way of purchases made out of profits are similar to that of purchases made out of capital. Therefore, only the financial effects of the acquisition of the Shares pursuant to the Share Buyback Mandate by way of purchases made out of capital are set out in this Circular. 11

12 Purchases made entirely out of capital and held as treasury shares Market Purchase For illustrative purposes only, in a market purchase, assuming that the Maximum Price is S$0.21, which is 105% of the Average Closing Price of the Shares over the five (5) trading days preceding the Latest Practicable Date on which transactions in the Shares were recorded, the maximum amount of funds required for the purchase of up to 9,340,000 Shares is S$1,961,400. On this assumption, the impact of the Shares Buyback by the Company undertaken in accordance with the proposed Shares Buyback Mandate on the Company s and the Group s audited financial statements for the financial year ended 31 December 2008 is as follows: Company Group As at 31 December 2008 Before the After the Before the After the Share Share Share Share Buyback Buyback Buyback Buyback Shareholders Equity 11,584 9,623 16,010 14,049 (S$ 000) NTA (S$ 000) 11,584 9,623 15,785 13,824 Current Assets (S$ 000) 5,441 3,480 12,031 10,070 Current Liabilities (S$ 000) ,712 6,712 Working Capital (S$ 000) 5,284 3,323 5,319 3,358 Total Borrowings (S$ 000) 2,170 2,170 Cash & Cash Equivalents 3,380 1,419 9,569 7,608 (S$ 000) Net Profit (S$ 000) 2,292 2,292 2,234 2,234 Number of Shares ( 000) 92,358 83,018 92,358 83,018 Financial Ratios NTA per Share (cents) Basic EPS (cents) Debt Equity Ratio (%) 0.0% 0.0% 13.6% 15.4% Current Ratio (times)

13 Off-Market Purchase For illustrative purposes only, in an off-market purchase, assuming that the Maximum Price is S$0.25, which is 125% of the Average Closing Price of the Shares over the five (5) trading days preceding the Latest Practicable Date on which transactions in the Shares were recorded, the maximum amount of funds required for the purchase of up to 9,340,000 Shares is S$2,335,000. On this assumption, the impact of the Shares Buyback by the Company undertaken in accordance with the proposed Shares Buyback Mandate on the Company s and the Group s audited financial statements for the financial year ended 31 December 2008 is as follows: Company Group As at 31 December 2008 Before the After the Before the After the Share Share Share Share Buyback Buyback Buyback Buyback Shareholders Equity 11,584 9,249 16,010 13,675 (S$ 000) NTA (S$ 000) 11,584 9,249 15,785 13,450 Current Assets (S$ 000) 5,441 3,106 12,031 9,696 Current Liabilities (S$ 000) ,712 6,712 Working Capital (S$ 000) 5,284 2,949 5,319 2,984 Total Borrowings (S$ 000) 2,170 2,170 Cash & Cash Equivalents 3,380 1,045 9,569 7,234 (S$ 000) Net Profit (S$ 000) 2,292 2,292 2,234 2,234 Number of Shares ( 000) 92,358 83,018 92,358 83,018 Financial Ratios NTA per Share (cents) Basic EPS (cents) Debt Equity Ratio (%) 0.0% 0.0% 13.6% 15.9% Current Ratio (times)

14 Purchases made entirely of capital and cancelled Market Purchase For illustrative purposes only, in a market purchase, assuming that the Maximum Price is S$0.21, which is 105% of the Average Closing Price of the Shares over the five (5) trading days preceding the Latest Practicable Date on which transactions in the Shares were recorded, the maximum amount of funds required for the purchase of up to 9,340,000 Shares is S$1,961,400. On this assumption, the impact of the Shares Buyback by the Company undertaken in accordance with the proposed Shares Buyback Mandate on the Company s and the Group s audited financial statements for the financial year ended 31 December 2008 is as follows: Company Group As at 31 December 2008 Before the After the Before the After the Share Share Share Share Buyback Buyback Buyback Buyback Shareholders Equity 11,584 9,623 16,010 14,049 (S$ 000) NTA (S$ 000) 11,584 9,623 15,785 13,824 Current Assets (S$ 000) 5,441 3,480 12,031 10,070 Current Liabilities (S$ 000) ,712 6,712 Working Capital (S$ 000) 5,284 3,323 5,319 3,358 Total Borrowings (S$ 000) 2,170 2,170 Cash & Cash Equivalents 3,380 1,419 9,569 7,608 (S$ 000) Net Profit (S$ 000) 2,292 2,292 2,234 2,234 Number of Shares ( 000) 92,358 83,018 92,358 83,018 Financial Ratios NTA per Share (cents) Basic EPS (cents) Debt Equity Ratio (%) 0.0% 0.0% 13.6% 15.4% Current Ratio (times)

15 Off-Market Purchase For illustrative purposes only, in an off-market purchase, assuming that the Maximum Price is S$0.25, which is 125% of the Average Closing Price of the Shares over the five (5) trading days preceding the Latest Practicable Date on which transactions in the Shares were recorded, the maximum amount of funds required for the purchase of up to 9,340,000 Shares is S$2,335,000. On this assumption, the impact of the Shares Buyback by the Company undertaken in accordance with the proposed Shares Buyback Mandate on the Company s and the Group s audited financial statements for the financial year ended 31 December 2008 is as follows: Company Group As at 31 December 2008 Before the After the Before the After the Share Share Share Share Buyback Buyback Buyback Buyback Shareholders Equity 11,584 9,249 16,010 13,675 (S$ 000) NTA (S$ 000) 11,584 9,249 15,785 13,450 Current Assets (S$ 000) 5,441 3,106 12,031 9,696 Current Liabilities (S$ 000) ,712 6,712 Working Capital (S$ 000) 5,284 2,949 5,319 2,984 Total Borrowings (S$ 000) 2,170 2,170 Cash & Cash Equivalents (S$ 000) 3,380 1,045 9,569 7,234 Net Profit (S$ 000) 2,292 2,292 2,234 2,234 Number of Shares ( 000) 92,358 83,018 92,358 83,018 Financial Ratios NTA per Share (cents) Basic EPS (cents) Debt Equity Ratio (%) 0.0% 0.0% 13.6% 15.9% Current Ratio (times) Shareholders should note that the financial effects set out above are for illustrative purposes only. In particular, it is important to note that the above analysis is based on historical audited financial statements for the financial year ended 31 December 2008 and is not necessarily representative of future financial performance. Although the Share Buyback Mandate would authorise the Company to purchase or acquire up to ten per cent. (10%) of the issued Shares, the Company may not necessarily purchase or acquire or be able to purchase or acquire the entire ten per cent. (10%) of the issued Shares. In addition, the Company may cancel all or part of the Shares repurchased or hold all or part of the Shares repurchased as treasury shares. 15

16 2.8 Listing Rules The Listing Manual specifies that a listed company shall report all purchases or acquisitions of its shares to the SGX-ST not later than 9.00 a.m., in the case of a Market Purchase, on the Market Day following the day of purchase or acquisition of any of its shares and in the case of an Off- Market Purchase under an equal access scheme, on the second Market Day after the close of acceptances of the offer. Such announcement currently requires the inclusion of details of the total number of shares purchased, the purchase price per share or the highest and lowest prices paid for such shares, as applicable. While the Listing Manual does not expressly prohibit any purchase of shares by a listed company during any particular time or times, because the listed company would be regarded as an insider in relation to any proposed purchase or acquisition of its issued shares, the Company will not undertake any purchase or acquisition of Shares pursuant to the proposed Share Buyback Mandate at any time after a price sensitive development has occurred or has been the subject of a decision until the price sensitive information has been publicly announced. In particular, in line with the best practices guide on securities dealings issued by the SGX-ST, the Company would not purchase or acquire any Shares through Market Purchases during the period of two weeks and one month immediately preceding the announcement of the Company s interim results and the annual (full-year) results respectively. The Listing Manual requires a listed company to ensure that at least 10% of any class of its listed securities must be held by public shareholders. As at the Latest Practicable Date, approximately 15.47% of the issued Shares are held by public Shareholders. As at the Latest Practicable Date and assuming the Company undertakes purchases or acquisitions of its Shares up to the full 10% limit pursuant to the Share Buyback Mandate, approximately 5.47% of the issued Shares will be held by public Shareholders. In view of this, in undertaking purchases or acquisitions of its Shares pursuant to the Share Buyback Mandate, the Company will ensure that such purchases or acquisitions will not affect the listing status of the Shares on the SGX-ST, and that the number of Shares remaining in the hands of the public will not fall to below 10% of the Company s total issued shares or such a level as to cause market illiquidity or to affect orderly trading. 2.9 Take-over Obligations Appendix 2 of the Take-over Code contains the Share Buyback Guidance Note applicable as at the Latest Practicable Date. The take-over implications arising from any purchase or acquisition by the Company of its Shares are set out below: Obligation to make a take-over offer If, as a result of any purchase or acquisition by the Company of its Shares, a Shareholder s proportionate interest in the voting capital of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 14 of the Take-over Code. If such increase results in a change of effective control, or, as a result of such increase, a Shareholder or group of Shareholders acting in concert obtains or consolidates effective control of the Company, such Shareholder or group of Shareholders acting in concert could become obliged to make a mandatory take-over offer for the Company under Rule 14 of the Take-over Code Persons acting in concert Under the Take-over Code, persons acting in concert comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal), cooperate, through the acquisition by any of them of shares in a company, to obtain or consolidate effective control of that company. 16

17 Unless the contrary is established, the following persons will, inter alia, be presumed to be acting in concert: (c) (d) (e) (f) (g) (h) A company with any of its directors (together with their close relatives, related trusts as well as companies controlled by any of the directors, their close relatives and related trusts); A company with its parent company, subsidiaries, its fellow subsidiaries, any associated companies of the above companies, and any company whose associated companies include any of the above companies. For this purpose, a company is an associated company of another company if the second company owns or controls at least 20% but not more than 50% of the voting rights of the first-mentioned company; A company with any of its pension funds and employee share schemes; A person with any investment company, unit trust or other fund in respect of the investment account which such person manages on a discretionary basis; A financial or other professional adviser, with its clients in respect of the shareholdings of the adviser and the persons controlling, controlled by or under the same control as the adviser and all the funds which the adviser manages on a discretionary basis, where the shareholding of the adviser and any of those funds in the client total 10% or more of the client s equity share capital; Directors of a company, together with their close relatives, related trusts and companies controlled by any of them, which is subject to an offer where they have reason to believe a bona fide offer for their company may be imminent; Partners; and An individual, his close relatives, his related trusts, and any person who is accustomed to act according to the instructions and companies controlled by any of the above. The circumstances under which Shareholders of the Company (including Directors of the Company) and persons acting in concert with them respectively will incur an obligation to make a take-over offer under Rule 14 after a purchase or acquisition of Shares by the Company are set out in Appendix 2 of the Take-over Code Effect of Rule 14 and Appendix 2 of the Take-over Code In general terms, the effect of Rule 14 and Appendix 2 of the Take-over Code is that, unless exempted, Directors of the Company and persons acting in concert with them will incur an obligation to make a takeover offer for the Company under Rule 14 if, as a result of the Company purchasing or acquiring its Shares, the voting rights of such Directors and their concert parties would increase to 30% or more, or if the voting rights of such Directors and their concert parties fall between 30% and 50% of the Company s voting rights, the voting rights of such Directors and their concert parties would increase by more than 1% in any period of six months. Under Appendix 2 of the Take-over Code, a Shareholder not acting in concert with the Directors of the Company will not be required to make a take-over offer under Rule 14 of the Take-over Code if, as a result of the Company purchasing or acquiring its Shares, the voting rights of such Shareholder in the Company would increase to 30% or more, or, if such Shareholder holds between 30% and 50% of the Company s voting rights, the voting rights of such Shareholder would increase by more than 1% in any period of six months. Such Shareholder need not abstain from voting in respect of the resolution authorising the Share Buyback Mandate. 17

18 Shareholders are advised to consult their professional advisers and/or the Securities Industry Council and/or the relevant authorities at the earliest opportunity as to whether an obligation to make a take-over offer would arise by reason of any share purchases or acquisitions by the Company pursuant to the Share Buyback Mandate. In the event that the Company undertakes Share Buybacks of up to ten per cent. (10%) of the issued share capital of the Company as permitted by the Share Buyback Mandate, none of the Directors are required to make a mandatory take-over offer for the Company under Rule 14 of the Take-over Code Shares purchased by the Company The Company has not made any Share Buybacks in the 12 months preceding the Latest Practicable Date Limits on shareholdings The Company does not have any limits on the shareholding of any shareholder. 3. DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTEREST As at the Latest Practicable Date, the interests of the Directors in the Shares, as extracted from the Register of Directors shareholdings, and the interests of the substantial Shareholders in the Shares (being a Shareholder whose interests in the Company s issued share capital is equal to or more than 5 per cent.), as extracted from the Register of Substantial Shareholders, are as follows: Number of Shares Name Direct Interest % Deemed Interest % Directors Han Keen Juan 54,720, ,840, Lim Tao-E William 6,840, Choong Buat Ken 100, Lim Yen Heng 100, Ong Chin Lin 50, Substantial Shareholders Ng Choi Hong 6,840, ,720, Novena Holdings Limited 4,670, ,630,000 (1) 6.03 (1) Held in the name of Mayban Nominees (S) Pte Ltd In the event that the Company undertakes Share Buybacks of up to ten per cent. (10%) of the issued share capital of the Company as permitted by the Shares Buyback Mandate, none of the Directors are required to make a mandatory take-over offer for the Company under Rule 14 of the Take-over Code. 4. THE PROPOSED OLD CHANG KEE PERFORMANCE SHARE SCHEME 4.1 The rationale for the Scheme The Directors are proposing to implement the Scheme to increase the Company s flexibility and effectiveness in its continuing efforts to reward, retain and motivate employees to achieve superior performance. The Scheme will further strengthen the Company s competitiveness in attracting and retaining local and foreign talent. The Scheme will incentivise Participants to excel in their performance and encourage greater dedication and loyalty to the Company. Through the Scheme, the Company will be able to recognise and reward past contributions and services and motivate Participants to continue to strive for the Group s long-term prosperity. In addition, the Scheme aims to foster an ownership culture within the Group which aligns the interests of Group Employees and Non-Executive Directors with the interests of Shareholders. 18

19 The Scheme uses methods fairly common among successful companies to incentivise and motivate employees to achieve pre-determined targets and/or to put in their best efforts which create and enhance economic value for Shareholders. By giving the Participants the opportunity to participate in the equity of the Company as opposed to providing cash rewards for their performance, the Scheme aims to cultivate a greater sense of involvement in the Company amongst the Participants. The Company hence believes that the Scheme will be more effective than cash bonuses in motivating employees to work towards pre-determined targets and/or to put in their best efforts whilst at the same time allowing the Company to offer incentives and remuneration packages compatible with other multinational companies. The Scheme contemplates the award of fully paid Shares when or after pre-determined performance or service conditions are accomplished and/or when due recognition should be given to any good work performance and/or any significant contribution to the Company. In addition, the Scheme is intended to be broad-based and will serve to enhance the Group s overall compensation packages in order to attract talent. Potential executive hires who decide on a career switch often have to forego substantial share options/share incentives when they join the Group. Through the Scheme, the Company will be able to compensate such new hires for any share options or incentives that they may have to forego when they join the Group. The Scheme will serve as an additional and flexible incentive tool. With the Scheme, the Company would be able to tailor share-based incentives according to the objectives to be achieved. The Scheme is subject to the approval of the Shareholders which is being sought at the EGM. 4.2 Summary of the Scheme The following is a summary of the principal rules of the Scheme. The detailed rules of the Scheme are attached hereto as Appendix A. 4.3 Eligibility The Scheme allows for participation by Group Employees (including Group Executive Directors) and Non-Executive Directors who have attained the age of 21 years and above on or before the relevant date of Award provided that none shall be an undischarged bankrupt, and who, in the absolute discretion of the Committee, will be eligible to participate in the Scheme. Persons who are Controlling Shareholders or Associates of a Controlling Shareholder would not be eligible to participate in the Scheme. Subject to the Companies Act and any requirement of the SGX-ST, the terms of eligibility for participation in the Scheme may be amended from time to time at the absolute discretion of the Committee. 4.4 Awards Awards represent the right of a Participant to receive fully paid Shares free of charge, upon the Participant achieving prescribed Performance Targets. Performance Targets set under the Scheme may be based on medium-term corporate objectives covering market competitiveness, quality of returns, business growth and productivity growth. The Performance Targets are targets aimed at sustaining long-term growth. Examples of Performance Targets to be set include targets based on criteria such as sales growth, growth in earnings and return on investment. Awards may only be vested and consequently any Shares comprised in such Awards shall only be delivered upon the Committee s satisfaction that the prescribed Performance Targets have been achieved. 19

20 Awards may be granted at any time in the course of a financial year, provided that in the event that an announcement on any matter of any exceptional nature involving unpublished price sensitive information is imminent, Awards may only be vested and hence any Shares comprised in such Awards may only be delivered on or after the second Market Day from the date on which the aforesaid announcement is made. An Award letter confirming the Award and specifying, inter alia, in relation to the Award, the prescribed Performance Target(s), the performance period during which the prescribed Performance Target(s) are to be satisfied and the date by which the Award shall be vested, will be sent to each Participant as soon as reasonably practicable after the Award is finalised. Notwithstanding that a Participant may have met his Performance Targets, no Award shall vest in a Participant in the following circumstances: (c) (d) upon the bankruptcy of a Participant or the happening of any other event which results in his being deprived of the legal or beneficial ownership of such Award; in the event of any misconduct of a Participant as determined by the Committee in its discretion; in the event that the Committee shall, in its discretion, deems it appropriate that such Award shall so lapse on the grounds that any of the objectives of the Scheme have not been met; or in the event that the Participant ceases to be employed by the Company before vesting of the Award to him. The intention is to award Shares based on pre-determined dollar amounts such that the quantum of Shares comprised in Awards is dependent on the closing price of Shares transacted on the Market Day the Award is vested. The Committee will also monitor the grant of Awards carefully to ensure that the size of the Scheme will comply with the relevant rules of the SGX-ST (as described below). 4.5 Size and duration of the Scheme Currently, the Company does not have any existing stock option scheme. The number of new Shares to be issued under the Scheme and any future stock option schemes or share schemes adopted by the Company collectively will remain subject to the existing maximum limit of fifteen per cent. (15%) of the Company s total issued share capital from time to time. The Company will be delivering Shares pursuant to the Awards granted under the Scheme in the form of existing Shares held as treasury shares and/or an issue of new Shares. On 6 March 2009, the SGX-ST granted approval-in-principle for the listing and quotation of the new Shares issued pursuant to the Scheme. The SGX-ST assumes no responsibility for the correctness of statements made or reports contained, or opinions expressed in this Circular. The approval-in-principle from the SGX-ST is not an indication of the merits of the Scheme, the new Shares issued pursuant to the Scheme, the Company, its subsidiaries, its associated companies or the Shares. In determining whether to issue new Shares or to purchase existing Shares for delivery to Participants upon vesting of their Awards, the Committee will take into account factors such as (but not limited to) the number of Shares to be delivered, the prevailing market price of the Shares and the financial effect on the Company of either issuing new Shares or purchasing existing Shares. Insofar as in relation to the number of treasury shares that may be held pursuant to the Companies Act, such a method is not subject to any further limit under prevailing legislation and SGX-ST guidelines as it does not involve the issuance of any new Shares. 20

21 The Scheme shall continue in force at the discretion of the Committee, subject to a maximum period of ten (10) years commencing on the date the Scheme is adopted by the Company in general meeting, provided always that the Scheme may continue beyond the above stipulated period with the approval of Shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be required. The Scheme may be terminated at any time by the Committee or by resolution of the Company in general meeting subject to all relevant approvals, which may be required, and if the Scheme is terminated, no further awards shall be vested by the Company. 4.6 Operation of the Scheme Subject to prevailing legislation and SGX-ST guidelines, the Company will be delivering Shares to Participants upon vesting of their Awards by way of delivery of existing Shares held as treasury shares and/or issue of new Shares. The financial effects of the delivery of Shares to Participants upon vesting of the Awards are set out in Section 4.11 of this Circular. New Shares allotted and issued and existing Shares held as treasury shares for delivery, on the release of an Award shall rank in full for all entitlements, including dividends or other distributions declared or recommended in respect of the then existing Shares, the record date for which is on or after the relevant vesting date, and shall in all other respects rank pari passu with other existing Shares then in issue. For purposes of the determination of Awards, the Committee has the right to make computational adjustments to figures extracted from the unaudited results of the Company or the Group, as the case may be, to take into account such factors as the Committee may determine to be relevant, including changes in accounting methods, taxes and extraordinary events, and the right to amend the Performance Target(s) if the Committee decides that a changed Performance Target would be a fairer measure of performance. 4.7 Adjustments and Alterations under the Scheme Variation of Capital If a variation in the issued ordinary share capital of the Company (whether by way of a capitalisation of profits or reserves or rights issue, or distribution) shall take place, then: the class and/or number of Shares which are the subject of an Award to the extent not yet vested; and/or the class and/or number of Shares over which future Awards may be granted under the Scheme, shall be adjusted in such manner as the Committee may determine to be appropriate, which will not result in a Participant receiving a benefit that a Shareholder does not receive. The issue of securities as consideration for an acquisition or a private placement of securities or the cancellation of issued Shares purchased or acquired by the Company by way of a market purchase of such Shares undertaken by the Company on the SGX-ST during the period when a share purchase mandate granted by Shareholders (including any renewal of such mandate) is in force shall not normally be regarded as a circumstance requiring adjustment. Any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by the Auditors to be in their opinion, fair and reasonable. 21