PINE AGRITECH LIMITED

Transcription

1 31 March 2010 This Appendix is circulated to Shareholders of Pine Agritech Limited (the Company ) together with the Company s Annual Report. Its purpose is to explain to Shareholders the rationale and provide information to Shareholders for the proposed renewal of the Shareholders Mandate For Interested Person Transactions to be tabled at the Annual General Meeting to be held at Traders Hotel, Bencoolen (Level 2), 1A Cuscaden Road, Singapore on Friday, 23 April 2010 at 9.30 a.m. and at any adjournment thereof. The Notice of Annual General Meeting and a Proxy Form are enclosed with the Annual Report. The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained/referred to, or opinions expressed, in this Appendix. If you have sold all your shares in the Company, you should immediately forward this Appendix, the Annual Report and the Proxy Form to the purchaser or the bank, stockbroker or agent through whom the sale was effected for onward transmission to the purchaser. If you have any doubt as to the action you should take, please consult your professional independent advisers immediately. PINE AGRITECH LIMITED (Incorporated in Bermuda) APPENDIX IN RELATION TO THE DETAILS OF THE PROPOSED RENEWAL OF THE SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS

2 DEFINITIONS In this Appendix, the following definitions apply throughout unless otherwise stated: Act : The Companies Act, Chapter 50 of Singapore, as amended or modified from time to time AGM : The annual general meeting of the Company to be held on 23 April 2010 (or any adjournment thereof) Annual Report : Annual Report of the Company Audit Committee : The audit committee of the Company BVI : The British Virgin Islands CDP : The Central Depository (Pte) Limited Company : Pine Agritech Limited Directors or Board : The directors of the Company as at the date of this Appendix Executive Directors : The executive Directors of the Company as at the date of the Annual Report Executive Officers : The executive officers of the Company as at the date of the Annual Report FY : Financial year ended or ending 31 December Group : The Company and its subsidiaries Independent Directors : The independent Directors of the company as at the date of the Annual Report IPT : Interested person transaction Latest Practicable Date : The latest practicable date prior to the printing of this Appendix being 12 March 2010 Listing Manual : The listing manual of the SGX-ST NTA : Net tangible assets PFH : People s Food Holdings Limited, a company incorporated in Bermuda, the shares of which are listed on the SGX-ST PFH Group : PFH and its subsidiaries RMB : Renminbi PRC : People s Republic of China Securities Account : Securities account maintained by a depositor with CDP but does not include a securities sub-account 2

3 SGX-ST : Singapore Exchange Securities Trading Limited Shareholders : Registered holders of Shares, except that where the registered holder is CDP, the term Shareholders shall, where the context admits, mean depositors whose Securities Accounts are credited with Shares Substantial Shareholder : A person who has an interest in Shares, the nominal amount of which represents 5% or more of the nominal amount of all the Shares of the Company. Shares : Ordinary shares of S$0.02 each in the capital of the Company S$ and cents : Singapore dollars and cents, respectively % or per cent : Percentage or per centum Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations. Any reference in this Appendix to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act or any statutory modification thereof and not otherwise defined in this Appendix shall have the same meaning assigned to it under the Act, the Listing Manual or any statutory modification thereof, as the case may be. Any reference to a time of day in this Appendix is made by reference to Singapore time unless otherwise stated. 3

4 PINE AGRITECH LIMITED (Incorporated in Bermuda) 1. INTRODUCTION The Directors propose to table, for the Shareholders consideration and approval, the proposed renewal of the existing shareholders mandate for IPTs ( Shareholders Mandate ), pursuant to Chapter 9 of the Listing Manual. This Appendix is to be circulated to Shareholders together with the Company s Annual Report. The purpose of this Appendix is to explain the rationale and provide information to Shareholders relating to the proposed renewal of the Shareholders Mandate to be tabled at the AGM to be held at Traders Hotel, Bencoolen (Level 2), 1A Cuscaden Road, Singapore on Friday, 23 April 2010 at 9.30 a.m. and at any adjournment thereof. 2. THE PROPOSED RENEWAL OF THE MANDATE The Company had on 22 April 2009 obtained a general mandate (the Mandate ) from Shareholders pursuant to Chapter 9 of the Listing Manual whereby authority was given to the Company, its subsidiaries and associated companies which are considered entities at risk within the meaning of Rule 904(2) of the Listing Manual, in their ordinary course of businesses, to enter into categories of transactions with specified classes of the Company s interested persons. The Shareholders Mandate was expressed to take effect until the next AGM of the Company. The Shareholders Mandate will expire on 23 April 2010, being the date of the forthcoming AGM of the Company. Pursuant to Chapter 9 of the Listing Manual, Shareholders approval is sought for the proposed renewal of the Shareholders Mandate. The Shareholders Mandate enables the Company, its subsidiaries and associated companies which are considered to be entities at risk within the meaning of Rule 904(2) of the Listing Manual, in their ordinary course of businesses, to enter into categories of transactions with specified classes of the Company s interested persons, provided that such transactions are entered into on an arm s length basis and on normal commercial terms. Details of the Shareholders Mandate, including the rationale for, and the benefits to the Company, the review procedures for IPTs and other general information relating to Chapter 9 of the Listing Manual are set out below. 3. CHAPTER 9 OF THE LISTING MANUAL 3.1 Chapter 9 of the Listing Manual governs transactions by a listed company, as well as transactions by the listed company s subsidiaries and associated companies, that are considered to be entities at risk, with the listed company s interested persons. The purpose of Chapter 9 of the Listing Manual is to guard against the risk that interested persons could influence the listed company, its subsidiaries or associated companies to enter into transactions with interested persons that may adversely affect the interests of the listed company or its shareholders. 3.2 In accordance with Chapter 9 of the Listing Manual, except for any transaction below S$100,000, the listed company is required to make an immediate announcement of any IPT of a value equal to or more than 3% of the Group s latest audited NTA. If the aggregate value of all transactions entered into with the same interested person during the same financial year amounts to 3% or more of the Group s latest audited NTA, the listed company must make an immediate announcement of the latest transaction and all future transactions entered into with that same interested person during that financial year. 3.3 Except for any transaction below S$100,000, the listed company must obtain shareholders approval for an IPT of a value equal to, or exceeding:- 5% of the Group s latest audited NTA; or 4

5 5% of the Group s latest audited NTA, when aggregated with other transactions entered into with the same interested person during the same financial year. However, a transaction which has been approved by shareholders, or is the subject of aggregation with another transaction that has been approved by shareholders, need not be included in any subsequent aggregation. 3.4 Based on the latest audited consolidated accounts of the Group for the financial year ended 31 December 2009, the consolidated NTA of the Group was RMB1,563,868,000. Accordingly, for the purposes of Chapter 9 of the Listing Manual, 5% of the Group s latest audited NTA would be approximately RMB78,193,000 (equivalent to approximately S$16,055,000). 3.5 Chapter 9 of the Listing Manual permits a listed company to seek a mandate from its shareholders for recurrent transactions of a revenue or trading nature or those necessary for its day-to-day operations that may be carried out with the listed company s interested persons, but not for the purchase or sale of assets, undertakings or businesses. 3.6 For the purposes of Chapter 9 of the Listing Manual: an associated company means a company in which at least 20% but not more than 50% of its shares are held by the listed company or the group; a controlling shareholder means 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; an entity at risk ( EAR ) means: (iii) the listed company; a subsidiary of the listed company that is not listed on the SGX-ST or an approved exchange; or an associated company of the listed company that is not listed on the SGX-ST or an approved exchange, provided that the listed group, or the listed group and its interested person(s), has control over the associated company; an associate : in relation to any director, chief executive officer, substantial shareholder or controlling shareholder (being an individual) means: (a) (b) (c) his immediate family (i.e. his spouse, child, adopted child, step-child, sibling and parent); 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. 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; 5

6 an approved exchange means a stock exchange that has rules which safeguard the interests of shareholders against interested person transactions according to similar principles to Chapter 9 of the Listing Manual; an interested person means a director, chief executive officer or controlling shareholder of the listed company or an associate of such director, chief executive officer or controlling shareholder; an interested person transaction means a transaction between an entity at risk and an interested person; and a transaction includes:- (iii) (iv) (v) (vi) the provision or receipt of financial assistance; the acquisition, disposal or leasing of assets; the provision or receipt of services; the issuance or subscription of securities; the granting of or being granted options; and the establishment of joint ventures or joint investments; whether or not in the ordinary course of business, and whether or not entered into directly or indirectly (for example, through one of more interposed entities). 4. CATEGORIES OF INTERESTED PERSONS AND INTERESTED PERSON TRANSACTIONS 4.1 The Shareholders Mandate will apply to Recurrent IPTs (as described in paragraph 4.2 below) carried out with the PFH Group ( Interested Persons ). 4.2 The Recurrent IPTs contemplated under this Shareholders Mandate relate to the sale of products to Interested Persons. 4.3 Transactions with Interested Persons which do not fall within the ambit of the Shareholders Mandate will be subject to the relevant provisions of Chapter 9 and/or any other applicable provisions of the Listing Manual. 4.4 The Shareholders Mandate will not cover any transaction with an Interested Person that is below S$100,000 in value as the threshold and aggregation requirements of Chapter 9 of the Listing Manual would not apply to such transactions. 5. RATIONALE FOR AND BENEFITS OF THE SHAREHOLDERS MANDATE 5.1 The Company is principally engaged in the manufacture and sale of a range of soybean-based products such as soy protein isolates, soybean oil and soy oligosaccharide syrup. It sells its soy protein isolates mainly to manufacturers of processed meat products, including the Interested Persons. The Interested Persons have purchased products from the Group totalling, approximately RMB202.6 million, RMB313.3 million, RMB314.5 million, RMB482.8 million and RMB352.0 million for each of the financial years ended 31 December 2005, 2006, 2007, 2008 and 2009 respectively, and these sums represent 25.4%, 19.9%, 19.4%, 33.5% and 37.8% of the Group s turnover respectively. PFH is one of the Company s Substantial Shareholders, which through its whollyowned subsidiary, Loampit Limited, holds a 36.75% stake in the Company. The Interested Persons have been one of the Group s customers since 2002 and the Group expects that their demand for its soy protein isolates will continue to grow with the expansion of the Interested Persons scale of production. Therefore, the Company s Directors believe that the Group will be able to benefit from such Recurrent lpts. In addition to the Interested Persons, the Group also sells soy protein isolates to other customers in the PRC. 5.2 The transactions with the Interested Persons are entered into or are to be entered into by the Group in the ordinary course of business. Such transactions are Recurrent IPTs and likely to occur with some degree of frequency and arise at any time and from time to time in the ordinary course of the Group s business. 6

7 5.3 The Shareholders Mandate and the renewal of the Shareholders Mandate on an annual basis will eliminate the need to convene separate general meetings from time to time to seek Shareholders approval as and when potential transactions with the Interested Persons arise, thereby reducing substantially, the administrative time and expenses in convening such meetings, without compromising the corporate objectives and adversely affecting the business opportunities available to the Group. 5.4 The Shareholders Mandate is intended to facilitate transactions in the Company s ordinary course of business that are transacted from time to time with the Interested Persons, provided that they are carried out on normal commercial terms and are not prejudicial to the Company or its minority Shareholders. 6. REVIEW PROCEDURES FOR THE INTERESTED PERSON TRANSACTIONS 6.1 The Group has implemented certain review procedures to ensure that Recurrent IPTs will be carried out on normal commercial terms which will not be prejudicial to the interests of the Group and its minority Shareholders. These review procedures are as follows:- Procedures for determining Transaction Prices of Recurrent lpts all Recurrent IPTs will be carried out in the same manner as those conducted with any unrelated third party. The Recurrent IPTS will be carried out at prevailing market prices on terms which are no more favourable to the Interested Persons than the usual commercial terms extended to an unrelated third party (including where applicable, preferential rates/prices/discount accorded for bulk purchases/delivery arrangement/credit terms) or otherwise in accordance with applicable industry norms; and where the prevailing market rates or prices are not available due to the nature of the product to be sold, the Group s pricing for such products to be sold to the Interested Persons will be determined in accordance with its usual business practices and pricing policies, at margins to be obtained by the Group for the same or substantially similar types of contracts or transactions with unrelated third parties. In determining the transaction price payable by the Interested Persons for such products, factors such as, but not limited to, quantity, specifications and requirements, duration of contracts, credit terms, delivery arrangement and strategic purposes of the transaction will be taken into account. Approval Limits for Recurrent IPTs In addition, to supplement the internal system procedures to ensure that Recurrent lpts will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders, the following limits for Recurrent IPTs will be applied: (iii) where an individual Recurrent IPT is equal to or in excess of RMB3.0 million, such transaction will be subject to prior approval by the Audit Committee; where an individual Recurrent IPT is below RMB3.0 million, such transaction will be subject to prior approval by the Chief Executive Officer; and where the aggregate value of the Recurrent IPTs in the same financial year is equal to or in excess of RMB50.0 million, all Recurrent IPTs comprising such an amount will be reviewed by the Audit Committee to ensure that they have been carried out on normal commercial terms and in accordance with the procedures set out in the Shareholders Mandate. Recurrent IPTs which have been reviewed by the Audit Committee shall not be aggregated for the purpose of this review. 7

8 Procedures for identification and recording of interested person transactions (iii) the Financial Controller will maintain a list of interested persons and disclose a list of the interested persons to the relevant personnel to enable identification of interested persons. The list of interested persons will be reviewed by the Audit Committee at least on a semiannual basis; the Financial Controller will maintain a register of all transactions with interested persons (including the Interested Persons) recording the basis on which transactions are entered into and the approval or review by the Audit Committee or the Chief Executive Officer, as the case may be; and the internal auditors will review all recorded transactions with interested persons (including the Interested Persons) on a quarterly basis to ensure the proper recording of IPTs (including the Recurrent IPTs) and that procedures for determining the transaction prices of IPTs (including the Recurrent lpts) are adhered to. 6.2 All IPTs will be reviewed quarterly by the Audit Committee to ensure that they are carried out on normal commercial terms and in accordance with the procedures outlined above. All relevant nonquantitative factors will also be taken into account. In its review of the Recurrent lpts under the section Approval Limits for Recurrent IPTs as set out above, or as part of the quarterly review under this section, the Audit Committee would be supported by reports from the Company s internal auditors, or if deemed necessary by the Audit Committee, by reports from external auditors. 6.3 The Board will also ensure that all disclosure, approval and other requirements on Recurrent lpts, including those required by prevailing legislation, the Listing Manual and accounting standards, are compiled with. 6.4 The Audit Committee shall review from time to time the above guidelines and procedures to determine if they are adequate and/or commercially practicable in ensuring that IPTs will be conducted at arm s length basis and on normal commercial terms and are not prejudicial to the Company and its minority Shareholders. This would have to take into account the nature of the operation of the Group, which may not be similar from those at the time of listing. Further, if during these periodic reviews by the Audit Committee, the Audit Committee is of view that the guidelines and procedures as stated above are inappropriate or are not sufficient to ensure that the Recurrent IPTs will be at arm s length basis and on normal commercial terms and will not be prejudicial to the Company and its minority Shareholders, the Company will (pursuant to Rule 920(1)(b)(iv) and (vii) of the Listing Manual) revert to Shareholders for a fresh mandate based on new guidelines and procedures. If a member of the Audit Committee has an interest in a transaction, he will abstain from participating in the review and approval process in relation to that transaction. The Audit Committee will review all other existing and future interested person transactions not subject to the Shareholders Mandate to ensure that they are carried out at arm s length basis and on normal commercial terms and are not prejudicial to the interests of the Company and its minority Shareholders. The Audit Committee will also review all interested person transactions to ensure that the then prevailing rules and regulations of the SGX-ST (in particular Chapter 9 of the Listing Manual) are complied with. 6.5 Mr Ming Kam Sing, the Company s non-executive Chairman and a member of the Audit Committee, is also the Chairman and Executive Director of PFH. Mr Ming Kam Sing will abstain from participation in: the review and/or approval by the Audit Committee of transactions between the Group and the PFH Group; and 8

9 the discussion and review by the Audit Committee on the adequacy of the above guidelines and procedures for transactions entered into between the Group and the PFH Group. 7. VALIDITY PERIOD OF THE RENEWED SHAREHOLDERS MANDATE The renewed Shareholders Mandate will take effect from the passing of the ordinary resolution relating thereto at the AGM, and will (unless revoked or varied by the Company in general meeting) continue in force until the next annual general meeting of the Company. Approval from Shareholders will be sought for the renewal of the Shareholders Mandate at the next annual general meeting and at each subsequent annual general meeting of the Company, subject to satisfactory review by the Audit Committee of its continued application to the transactions with Interested Persons. 8. DISCLOSURE IN ANNUAL REPORT The Board of Directors will also ensure that all disclosure, approval and other requirements on Recurrent lpts, including those required by prevailing legislation, the Listing Manual and accounting standards, are compiled with. In particular, the Group will disclose in its annual report for the current financial year, the Shareholders Mandate and the aggregate value of the Recurrent IPTs carried out pursuant to the Shareholders Mandate during FY It will also announce the aggregate value of the Recurrent IPTs for the subsequent financial periods which it is required to report on pursuant to Rule 705 of the Listing Manual within the required time frame while the Shareholders Mandate remains in force. These disclosures will be in the form set out in Rule 907 of the Listing Manual. 9. DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS The interests of the Directors and the Substantial Shareholders in Shares as at the Latest Practicable Date are set out below: Direct Interest Deemed Interest Number of % Number of % Shares Shares Directors Ming Kam Sing 1 Li Zhuping 2 329,000, Ong Tiong Seng Chan Wai Meng Substantial Shareholders (5% or more) PFH 1 1,102,500, Loampit Limited 3 1,102,500, Elite Union Corporation 2 329,000, Maleque Limited 1 1,102,500, Notes:- (1) Ming Kam Sing is appointed to the board of the Company as a nominee director of PFH. He is also the Chairman and Executive Director of PFH. Ming Kam Sing holds 65% interest in Maleque Limited which holds 46.41% of PFH. PFH holds the entire interest of our substantial shareholder, Loampit Limited. (2) Elite Union is a company incorporated in the BVI and is wholly-owned by Li Zhuping, the Company s Chief Executive Officer. Li Zhuping is deemed to have an interest in all the Shares held by Elite Union Corporation. 9

10 (3) Loampit Limited, a company incorporated in the BVI and is wholly-owned by PFH, a company which shares are listed on the SGX-ST and the Stock Exchange of Hong Kong Limited. PFH is deemed to have an interest in all the Shares held by Loampit Limited. 10. REVIEW BY THE AUDIT COMMITTEE The Audit Committee has reviewed the terms of the proposed renewal of the Shareholders Mandate and has confirmed that the methods or procedures for determining the transaction prices of the Recurrent IPTs have not changed since the last adoption of the Shareholders Mandate on 22 April The Audit Committee is also of the view that such methods or procedures are sufficient to ensure that the Recurrent IPTs will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company or its minority shareholders. However, should the Audit Committee subsequently no longer be of this opinion, the Company will revert to the Shareholders for a fresh mandate based on new guidelines and procedures for transactions with interested persons. 11. DIRECTORS RECOMMENDATIONS The Independent Directors having considered, inter alia, the terms, the rationale and the benefits of the Shareholders Mandate, are of the opinion that the Shareholders Mandate is in the interests of the Company and that the Recurrent IPTs carried out in accordance with the terms of the Shareholders Mandate will not be prejudicial to the interests of the Company and its minority Shareholders. Accordingly, the Independent Directors recommend that the Shareholders vote in favour of the ordinary resolution at the AGM. 12. ABSTENTION FROM VOTING In accordance with Rule 919 of the Listing Manual, Interested Persons and their associates shall abstain from voting on resolutions approving IPTs involving themselves or the Group. 13. DIRECTORS RESPONSIBILITY STATEMENT The Directors have taken all reasonable care to ensure that the facts stated and the opinions expressed in this Appendix are fair and accurate in all material respects and that no material facts have been omitted which would make any such information misleading in any material respect. The Directors jointly and severally accept responsibility accordingly. Where information contained in this Appendix has been extracted from published or otherwise publicly available sources, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from these sources. 10