VALLIANZ HOLDINGS LIMITED

Transcription

1 CIRCULAR DATED 22 JUNE 2017 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ IT CAREFULLY. This Circular has been prepared by Vallianz Holdings Limited (the Company ) and is circulated to the shareholders of the Company together with the 2017 Annual Report (as defi ned herein), which encloses the Notice of Annual General Meeting and Proxy Form. If you are in any doubt as to the contents herein and course of action, you should consult your stockbroker, bank manager, solicitor, accountant or any other professional adviser immediately. If you have sold or transferred all your shares in the capital of the Company held through CDP, you need not forward this Circular, the Notice of Annual General Meeting and the enclosed Proxy Form to the purchaser or the transferee as arrangements will be made by CDP for a separate Circular with the Notice of Annual General Meeting and the enclosed Proxy Form to be sent to the purchaser or the transferee. If you have sold or transferred all your shares in the capital of the Company represented by physical share certifi cate(s), you should immediately forward this Circular, the Notice of Annual General Meeting and the enclosed Proxy Form to the purchaser or transferee or to the bank, stockbroker or agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee. This Circular has been reviewed by the Company s sponsor, Provenance Capital Pte. Ltd. (the Sponsor ) for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited ( SGX-ST ) Listing Manual, Section B: Rules of Catalist. It has not been examined or approved by the SGX-ST, and the SGX-ST and the Sponsor take no responsibility for the contents of this Circular, including the correctness of any of the statements made, reports contained or opinions expressed in this Circular. The contact person for the Sponsor is Ms. Wong Bee Eng. Tel: (65) wongbe@provenancecapital.com VALLIANZ HOLDINGS LIMITED (Incorporated in the Republic of Singapore) (Company Registration No E)

2 DEFINITIONS In this Circular, the following defi nitions apply throughout unless otherwise stated or the context otherwise requires: 2016 AGM The annual general meeting of the Company held on 07 April Annual Report The annual report of the Company for the fi nancial period from 1 January 2016 to 31 March EGM The extraordinary general meeting of the Company held on 31 December 2014 ACRA AGM approved exchange The Accounting and Corporate Regulatory Authority of Singapore Annual general meeting of the Company 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 Catalist Rules Associate in relation to any director, chief executive offi cer, 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 benefi ciary 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; and in relation to a substantial shareholder or 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 other companies taken together (directly or indirectly) have an interest of 30% or more associated company Audit Committee Auditors Average Closing Price Board A company in which at least 20% but not more than 50% of its shares are held by the Company or the Group The audit committee of the Company, comprising Independent Directors, Mr. Bote de Vries, Mr. Yeo Jeu Nam and Mr. Wong Leong Jeam, as at the Latest Practicable Date The auditors of the Company for the time being Has the meaning given to it in paragraph of this Circular The board of directors of the Company as at the Latest Practicable Date 2

3 DEFINITIONS Catalist Catalist Rules CDP CEO The sponsor-supervised listing platform of the SGX-ST The rules in Section B: Rules of Catalist of the Listing Manual, as amended, supplemented or modifi ed from time to time The Central Depository (Pte) Limited The chief executive offi cer of the Company Circular This circular to Shareholders dated 22 June 2017 Companies Act Company Constitution Controlling Shareholder The Companies Act, Chapter 50 of Singapore, as amended or modifi ed from time to time Vallianz Holdings Limited The constitution of the Company for the time being in force as originally framed, or as amended or modifi ed from time to time A person who: in fact exercises control over the Company; or holds, directly or indirectly, 15% or more of the nominal amount of all voting shares, excluding treasury shares, in the Company, unless the SGX-ST determines otherwise date of the making of the offer Directors EGM EPS entity at risk Has the meaning given to it in paragraph of this Circular The directors of the Company Extraordinary general meeting of the Company Earnings per Share For the purpose of this Circular, any of: (c) the Company; a subsidiary of the Company that is not listed on the SGX-ST or an approved exchange; or an associated company of the Company that is not listed on the SGX-ST or an approved exchange, provided that the Group, or the Group and its Interested Persons, has control over such associated company ESOS Financial Controller Group The employee share option scheme of the Company known as Vallianz Employees Share Option Scheme The fi nancial controller of the Company The Company and its subsidiaries 3

4 DEFINITIONS Independent Director Interested Person Interested Person Transaction Latest Practicable Date Listing Manual Market Day Market Purchase Maximum Price Notice of AGM NTA Off-Market Purchase Ordinary Resolutions Proxy Form public Rawabi Holding Rawabi Group Rawabi Interested Person Transactions Rawabi IPT Mandate Relevant Period ROE An independent director of the Company A director, chief executive offi cer, or controlling shareholder of the Company, or an Associate of any such director, chief executive offi cer, or controlling shareholder Transactions between an entity at risk and an Interested Person 09 June 2017, being the latest practicable date prior to the printing of this Circular The listing manual of the SGX-ST as may be amended, supplemented or modifi ed from time to time A day on which the SGX-ST is open for trading in securities Has the meaning given to it in paragraph of this Circular Has the meaning given to it in paragraph of this Circular The notice of AGM dated 22 June 2017 convening the upcoming AGM to be held on 07 July 2017 Net tangible assets Has the meaning given to it in paragraph of this Circular The ordinary resolutions relating to the proposed renewals of each of the Share Buyback Mandate and/or the Rawabi IPT Mandate as set out in the Notice of AGM The proxy form in respect of the upcoming AGM as attached to the 2017 Annual report Has the meaning given to it in paragraph 2.9 of this Circular Rawabi Holding Company Limited Rawabi Holding and its Associates Has the meaning given to it in the Appendix to this Circular General mandate given by Shareholders for the Rawabi Interested Person Transactions The period commencing from the date on which the Ordinary Resolution relating to the renewal of the Share Buyback Mandate is passed and expiring on the date the next AGM is held or is required by law to be held, whichever is the earlier Return on equity 4

5 DEFINITIONS Securities Account SGX-ST Share Buyback Mandate Shareholders Share Options Shares SIC Sponsor subsidiary Substantial Shareholder Take-over Code Vallianz PSP S$ US$ and US$ cents A securities account maintained by a Depositor with CDP but does not include a securities sub-account Singapore Exchange Securities Trading Limited General mandate given by Shareholders to authorise the Directors to purchase or otherwise acquire, on behalf of the Company, Shares in accordance with the terms set out in this Circular as well as the rules and regulations set forth in the Companies Act and the Catalist Rules Registered holders of Shares in the Register of Members of the Company, except that where the registered holder is CDP, the term Shareholders shall, where the context admits, mean the persons named as depositors in the Depository Register maintained by CDP and into whose Securities Accounts those Shares are credited Options to subscribe for Shares granted pursuant to the ESOS Ordinary shares in the capital of the Company Securities Industry Council Provenance Capital Pte. Ltd. Has the meaning given to it in section 5 of the Companies Act A Shareholder who has an interest in fi ve per cent or more of the voting shares of the Company The Singapore Code on Take-overs and Mergers, as amended or modifi ed from time to time The performance share plan of the Company known as Vallianz Performance Share Plan Singapore dollars United States dollars and cents respectively % or per cent Per centum or percentage The terms depositor, Depository Register and depository agent shall have the meanings ascribed to them respectively in section 81SF of the Securities and Futures Act, Chapter 289 of Singapore. 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. References to persons shall include corporations. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defi ned under the Companies Act or Catalist Rules or any statutory modifi cation thereof and used in this Circular shall have the meaning assigned to it under the Companies Act or Catalist Rules or any statutory modifi cation thereof, as the case may be. 5

6 DEFINITIONS Any reference to a time of a day in this Circular shall be a reference to Singapore time unless otherwise stated. Any discrepancies in the tables included herein between the amounts in the columns of the tables and the totals thereof are due to rounding. Accordingly, fi gures shown as totals in certain tables may not be an arithmetic aggregation of the fi gures that precede them. In this Circular, the fi gures in United States dollars which are expressed in Singapore dollars (and vice versa) are expressed based on the exchange rate of US$0.723 : S$1.00. Such conversions are provided solely for convenience of the readers and should not be confused as representations that the United States dollars amounts stated in this Circular could have been or would have been converted into Singapore dollar amounts or vice versa, at the stated rates or at any rate or at all. 6

7 Board of Directors: Registered office: Yeo Chee Neng, Non-Executive Vice Chairman 12 International Business Park Ling Yong Wah, Executive Director and CEO #03-02 Yeo Jeu Nam, Non-Executive Independent Director Singapore Bote De Vries, Non-Executive Independent Director Wong Leong Jeam, Non-Executive Independent Director 2 2 June 2017 T o: The Shareholders of Vallianz Holdings Limited D ear Sir/Madam, (1) THE PROPOSED RENEWAL OF THE SHARE BUYBACK MANDATE; AND (2) THE PROPOSED RENEWAL OF THE SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS WITH THE RAWABI GROUP. 1. I NTRODUCTION 1.1 A GM. We refer to the notice of AGM dated 22 June 2017 convening the upcoming AGM to be held on 07 July 2017 and the Ordinary Resolutions. 1.2 C ircular. The purpose of this Circular is to provide Shareholders with information relating to the following proposals set to be tabled at the upcoming AGM: the proposed renewal of the Share Buyback Mandate; and the proposed renewal of the Rawabi IPT Mandate, as further explained in paragraphs 2 and 3 of this Circular and to seek the necessary approvals in relation thereto at the upcoming AGM. 2. T HE PROPOSED RENEWAL OF THE SHARE BUYBACK MANDATE 2.1 The Share Buyback Mandate. Sections 76B, 76C, 76DA and 76E of the Companies Act allow a listed company to purchase its own shares. At the EGM held on 20 April 2011, Shareholders had approved a mandate to enable the Company to purchase or acquire its issued Shares at any time during the duration and on the terms of the Share Buyback Mandate. T he Share Buyback Mandate was last renewed at the 2016 AGM and the Share Buyback Mandate will, unless renewed, expire on the date of the upcoming AGM to be held on 07 July Accordingly, Shareholders approval is being sought for the renewal of the Share Buyback Mandate at the upcoming AGM in accordance with the terms set out below. 2.2 Rationale. The renewal of the Share Buyback Mandate authorising the Company to purchase or acquire its Shares would give the Company the fl exibility to undertake Share purchases or acquisitions up to the ten per cent limit described in paragraph below at any time during the period when the Share Buyback Mandate is in force. The rationale for the Company to undertake the purchase or acquisition of its issued Shares is as follows: In managing the business of the Group, the management team strives to increase Shareholders value by improving, inter alia, the ROE of the Group. In addition to growth and expansion of the business, Share buybacks may be considered as one of the ways through which the ROE of the Group may be enhanced. 7

8 2.2.2 The Company has at present two share-based incentive schemes for its employees, namely the Vallianz PSP and the ESOS. Shares which are purchased by the Company pursuant to the Share Buyback Mandate and held in treasury may be used to satisfy vested awards under the Vallianz PSP or Share Options exercised under the ESOS, thus giving the Company greater fl exibility to select the method of providing Shares under these schemes. The use of treasury shares in lieu of issuing new Shares would also mitigate the dilution impact on existing Shareholders The Share Buyback Mandate will provide the Company with the fl exibility to purchase or acquire its issued Shares if and when circumstances permit, during the period when the proposed Share Buyback Mandate is in force. It is an expedient, effective and costeffi cient way for the Company to return to its Shareholders surplus funds over and above its ordinary capital requirements, if any, which are in excess of its fi nancial requirements, taking into account its growth and expansion plans. In addition, the Share Buyback Mandate allows the Company to have greater fl exibility over, inter alia, the Company s share capital structure and its dividend policy Th e purchase or acquisition of Shares under the proposed Share Buyback Mandate will help mitigate short-term share price volatility (by way of stabilising the supply and demand of issued Shares) and off-set the effects of short-term share price speculation, supporting the fundamental value of the issued Shares and thereby bolstering Shareholders confi dence and employees morale. While the Share Buyback Mandate would authorise a purchase or acquisition of Shares up to the said ten per cent limit during the duration referred to in paragraph below, Shareholders should note that purchases or acquisitions of Shares pursuant to the Share Buyback Mandate may not be carried out to the full ten per cent limit as authorised or at all and the purchases or acquisitions of Shares pursuant to the Share Buyback Mandate would be made only as and when the Directors consider it to be in the best interests of the Company and/or Shareholders and in circumstances which they believe will not result in any material adverse effect to the fi nancial position of the Company or the Group, or result in the Company being delisted from the SGX-ST. The Directors will use their best efforts to ensure that after a purchase or acquisition of Shares by the Company pursuant to the Share Buyback Mandate, the number of Shares remaining in the hands of the public will not fall to such a level as to cause market illiquidity or adversely affect the orderly trading or listing status of the Shares on the SGX-ST. 2.3 Au thority and limits of the Share Buyback Mandate. The authority and limitations placed on purchases or acquisitions of Shares by the Company under the proposed Share Buyback Mandate are summarised below: Ma ximum 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 which may be purchased or acquired pursuant to the Share Buyback Mandate is limited to that number of Shares representing not more than ten per cent of the total number of issued Shares (ascertained as at the date of the last AGM or (if different) at the date of the general meeting at which the renewal of the Share Buyback Mandate is to be approved, whichever is higher, unless the Company has effected a reduction of the share capital of the Company by way of a special resolution in accordance with section 78 of the Companies Act at any time during the Relevant Period, in which event the total number of issued Shares shall be taken to be the total number of issued Shares as so altered). Any shares of the Company which are held as treasury shares will be disregarded for the purposes of computing the ten per cent limit. 8

9 For illustrative purposes only, on the basis of 4,322,800,385 Shares in issue as at the Latest Practicable Date (excluding treasury shares) and assuming no further Shares are issued on or prior to the upcoming AGM, not more than 432,280,038 Shares (representing ten per cent of the total number of Shares as at that date, excluding treasury shares) may be purchased or acquired by the Company pursuant to the proposed Share Buyback Mandate during the period referred to in paragraph below Du ration of authority Purchases or acquisitions of Shares pursuant to the proposed Share Buyback Mandate may be made, at any time and from time to time, on and from the date of the upcoming AGM at which the renewal of the Share Buyback Mandate is to be approved up to: (c) the date on which the following AGM is held or is required by law to be held; the date on which the authority conferred by the Share Buyback Mandate is revoked or varied (in accordance with the Companies Act) by the Shareholders in a general meeting; or the date on which the purchases or acquisitions of Shares pursuant to the proposed Share Buyback Mandate are carried out to the full extent mandated, whichever is the earliest. The authority conferred on the Directors by the Share Buyback Mandate to purchase or acquire Shares may be renewed by Shareholders at the following AGM or at an EGM to be convened immediately after the conclusion or adjournment of the following AGM. When seeking the approval of Shareholders for the renewal of the Share Buyback Mandate, the Company is required to disclose details pertaining to purchases or acquisitions of Shares pursuant to the proposed Share Buyback Mandate made during the previous 12 months, including the total number of Shares purchased or acquired, the purchase price per Share or the highest and lowest prices paid for such purchases or acquisitions of Shares, where relevant, and the total consideration paid for such purchases or acquisitions Ma nner of purchases or acquisitions of Shares Purchases or acquisitions of Shares may be made by way of: on -market purchase(s) ( Market Purchase ) transacted on the SGX-ST through the ready market, and which may be transacted through one or more duly licensed stock brokers appointed by the Company for the purpose; and/or of f-market purchase(s) ( Off-Market Purchase ) effected pursuant to an equal access scheme in accordance with section 76C of the Companies Act. The Directors may impose such terms and conditions which are not inconsistent with the Share Buyback Mandate, the Catalist Rules and the Companies Act, as they consider fi t in the interests of the Company in connection with or in relation to any equal access scheme or schemes. An Off-Market Purchase must, however, satisfy all the following conditions: offers for the purchase or acquisition of Shares shall be made to every person who holds Shares to purchase or acquire the same percentage of their Shares against the total number of issued Shares; all of the abovementioned persons shall be given a reasonable opportunity to accept the offers made to them; and 9

10 (c) the terms of all the offers shall be the same except that there shall be disregarded, where applicable: (i) (ii) (iii) differences in consideration attributable to the fact that offers may relate to Shares with different accrued dividend entitlements; differences in consideration attributable to the fact that offers may relate to Shares with different amounts remaining unpaid (if applicable); and differences in the offers introduced solely to ensure that each person is left with a whole number of Shares. Pursuant to the Catalist Rules, if the Company wishes to make an Off-Market Purchase in accordance with an equal access scheme, it shall issue an offer document to all Shareholders containing at least the following information: (c) (d) (e) (f) (g) the terms and conditions of the offer; the period and procedures for acceptances; the reasons for the proposed purchase or acquisition of Shares; the consequences, if any, of the purchases or acquisitions of Shares by the Company that will arise under the Take-over Code or other applicable take-over rules; whether the purchases or acquisitions of Shares, if made, would have any effect on the listing of the Shares on the SGX-ST; details of any purchases or acquisitions of Shares made by the Company in the previous 12 months (whether by way of Market Purchases or Off-Market Purchases), giving the total number of Shares purchased or acquired, the purchase price per Share or the highest and lowest prices paid for the purchases or acquisitions of Shares, where relevant, and the total consideration paid for the purchases or acquisitions; and whether the Shares purchased or acquired by the Company will be cancelled or kept as treasury shares Pu rchase price The purchase price (excluding brokerage, stamp duties, commission, applicable goods and services tax and other related expenses) to be paid for a Share will be determined by the Directors or a committee of Directors that may be constituted for the purposes of effecting purchases or acquisitions of Shares by the Company under the Share Buyback Mandate. However, the purchase price to be paid for the Shares pursuant to such purchases or acquisitions of the Shares must not exceed: in the case of a Market Purchase, 105% of the Average Closing Price; and in the case of an Off-Market Purchase pursuant to an equal access scheme in accordance with section 76C of the Companies Act, 120% of the Average Closing Price, (the Maximum Price ) in either case, excluding related expenses of the purchase or acquisition. 10

11 For the purposes of determining the Maximum Price: Average Closing Price means the average of the closing market prices of the Shares for the last fi ve Market Days on which transactions in the Shares were recorded on the SGX-ST immediately preceding the date of the Market Purchase by the Company or, as the case may be, the date of the making of the offer pursuant to the Off-Market Purchase, and deemed to be adjusted for any corporate action which occurs after the relevant fi ve Market Days period; and date of the making of the offer means the date on which the Company announces its intention to make an offer for an Off-Market Purchase, stating therein the purchase price (which shall not be more than the Maximum Price for an Off-Market Purchase) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase. 2.4 Status of purchased or acquired Shares. Any Share which is purchased or acquired by the Company is deemed cancelled immediately on purchase or acquisition unless such Share is held by the Company as a treasury share. Upon such cancellation, all rights and privileges attached to that Share will expire. 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. All Shares purchased or acquired by the Company (other than treasury shares held by the Company to the extent permitted under the Companies Act) will be automatically de-listed by the SGX-ST, and (where applicable) all certifi cates in respect thereof will be cancelled and destroyed by the Company as soon as reasonably practicable following settlement of any such purchase or acquisition. 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 ten per cent 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 but subject always to the Take-over Code: sell the treasury shares for cash; transfer the treasury shares for the purposes of or pursuant to an employees share scheme; 11

12 (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. The Directors will also consider and decide whether to purchase or acquire Shares to satisfy the Shares awarded under the Vallianz PSP or pursuant to an exercise of Share Options granted under the ESOS. The Shares purchased or acquired under the Share Buyback Mandate will be held as treasury shares or cancelled by the Company taking into consideration the then prevailing circumstances and requirements of the Company. 2.6 Reporting requirements. The Company shall notify ACRA within 30 days of a purchase or acquisition of Shares by the Company on the SGX-ST or otherwise. Such notifi cation shall include details of the purchases or acquisitions, including the date of the purchase or acquisition, the total number of Shares purchased or acquired by the Company, the number of Shares cancelled, the number of Shares held as treasury shares, the Company s total issued share capital before and after the purchase or acquisition of Shares, the amount of consideration paid by the Company for the purchase or acquisition of Shares, whether the Shares were purchased or acquired out of profi ts or the capital of the Company and such other particulars as may be required in the prescribed form. Within 30 days of the passing of the resolution to renew the Share Buyback Mandate, the Company shall lodge a copy of such resolution with ACRA. The Catalist Rules specify that a listed company shall notify the SGX-ST of all purchases or acquisitions of its Shares not later than 9.00 a.m.: in the case of a Market Purchase, on the Market Day following the day on which the Market Purchase was made; and in the case of an Off-Market Purchase, on the second Market Day after the close of acceptance of the offer for the Off-Market Purchase. The notifi cation of such purchases or acquisitions of Shares to the SGX-ST shall be in such form and shall include such details that the SGX-ST may prescribe. The Company shall make arrangements with its stock brokers to ensure that they provide to the Company, in a timely fashion, the necessary information which will enable the Company to make the notifi cations to the SGX-ST. The Company, upon undertaking any sale, transfer, cancellation and/or use of treasury shares, will comply with Rule 704(31) of the Catalist Rules, which provides that an issuer must make an immediate announcement thereof, stating the following: (c) (d) (e) (f) 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 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. 12

13 2.7 Source of funds. The Company may only apply funds legally available for the purchase or acquisition of the Shares as provided in the Constitution and in accordance with the applicable laws in Singapore. The Company may not purchase or acquire its Shares for a consideration other than in cash or, in the case of a Market Purchase, for settlement otherwise than in accordance with the trading rules of the SGX-ST. The Companies Act permits the Company to purchase or acquire its own Shares out of capital, as well as from its distributable profi ts, so long as the Company is solvent (as defi ned in section 76F(4) of the Companies Act). Apart from using its internal sources of funds, the Company may obtain or incur borrowings to fi nance its purchase or acquisition of Shares. The Company intends to use internal sources of funds or borrowings or a combination of both to fi nance any of the Company s purchase or acquisition of Shares pursuant to the Share Buyback Mandate. In purchasing or acquiring Shares pursuant to the Share Buyback Mandate, the Directors will principally consider the availability of internal resources. In addition, the Directors will also consider the availability of external fi nancing. However, in considering the option of external fi nancing, the Directors will consider particularly the prevailing gearing level of the Group. The Directors will only make purchases or acquisitions pursuant to the Share Buyback Mandate in circumstances which they believe will not result in any material adverse effect to the fi nancial position of the Company or the Group. 2.8 Financial effects. It is not possible for the Company to realistically calculate or quantify the impact of purchases or acquisitions of Shares that may be made pursuant to the Share Buyback Mandate on the NTA and EPS of the Group and the Company as the resultant effect would depend on, inter alia, the aggregate number of Shares purchased or acquired, whether the purchase or acquisition is made out of capital or profi ts, the purchase prices paid for such Shares and the amount (if any) borrowed by the Company to fund such purchases or acquisitions and whether the Shares purchased or acquired are cancelled or held as treasury shares. The repurchased Shares may be cancelled or held as treasury shares. If the Shares are cancelled, the Company s total issued share capital will be diminished by the total number of Shares repurchased by the Company. The NTA of the Group will also be reduced by the aggregate purchase price paid by the Company for the Shares. If the Shares are held as treasury shares, the issued share capital of the Company will not be affected. Under the Companies Act, purchases or acquisitions of Shares by the Company may be made out of the Company s capital or profi ts so long as the Company is solvent. Where the consideration paid by the Company for the purchase or acquisition of Shares is made out of profi ts, such consideration (excluding brokerage, stamp duties, commission, applicable goods and services tax and other related expenses) will correspondingly reduce the amount of profi ts available for the distribution of cash dividends by the Company. Where the consideration paid by the Company for the purchase or acquisition of Shares is made out of capital, the amount of profi ts available for the distribution of cash dividends by the Company will not be reduced. The Directors do not propose to exercise the Share Buyback Mandate to such an extent that it would have a material adverse effect on the working capital requirements of the Group. The purchase or acquisition of the Shares will only be effected after considering relevant factors such as the working capital requirements, the availability of fi nancial resources, the expansion and investment plans, of the Group and the prevailing market conditions. The proposed Share Buyback Mandate will be exercised with a view to enhancing the EPS and/or the NTA value per Share of the Group. 13

14 For illustrative purposes only, the fi nancial effects of the Share Buyback Mandate on the Group and the Company based on the audited fi nancial statements of the Group and the Company for the fi nancial period from 1 January 2016 to 31 March 2017 are shown in the following tables and are based on the assumptions set out below: (c) Based on 4,322,800,385 Shares in issue as at the Latest Practicable Date and assuming no further Shares are issued on or prior to the upcoming AGM, not more than 432,280,038 Shares (representing ten per cent of the issued ordinary share capital of the Company (excluding treasury shares) as at that date) may be purchased or acquired by the Company pursuant to the proposed Share Buyback Mandate. In the case of Market Purchases by the Company and assuming that the Company purchases or acquires 432,280,038 Shares at the Maximum Price of S$0.018 for one Share (being the price equivalent to 105% of the Average Closing Price of the Shares for the fi ve consecutive Market Days on which the Shares were traded on the SGX-ST immediately preceding the Latest Practicable Date), the maximum amount of funds required for the purchase or acquisition of the 432,280,038 Shares (excluding brokerage, stamp duties, commission, applicable goods and services tax and related expenses) is approximately US$5,624,136. In the case of Off-Market Purchases by the Company and assuming that the Company purchases or acquires 432,280,038 Shares at the Maximum Price of S$0.021 for one Share (being the price equivalent to 120% of the Average Closing Price of the Shares for the fi ve consecutive Market Days on which the Shares were traded on the SGX-ST immediately preceding the Latest Practicable Date), the maximum amount of funds required for the purchase of the 432,280,038 Shares (excluding brokerage, stamp duties, commission, applicable goods and services tax and related expenses) is approximately US$6,561,492. For illustrative purposes only, based on the assumptions set out in sub-paragraphs to (c) above and further assuming that: (i) (ii) (iii) such purchase or acquisition of Shares is fi nanced solely by internal sources of funds available as at 31 March 2017 and external borrowings; the Share Buyback Mandate had been effective on 1 January 2016; and the Company had purchased or acquired 432,280,038 Shares (representing ten per cent of its issued ordinary share capital as at the Latest Practicable Date) on 31 March 2017, the fi nancial effects of the purchase and acquisition of such Shares by the Company pursuant to the Share Buyback Mandate: (1) by way of purchases made entirely out of capital and held as treasury shares; and (2) by way of purchases made entirely out of capital and cancelled, on the audited fi nancial statements of the Group and the Company for the fi nancial period from 1 January 2016 to 31 March 2017 are set out below: 14

15 (1) Purchases made entirely out of capital and held as treasury shares Before Share Buyback (US$ 000) Group After Share Buyback assuming Market Purchase (US$ 000) After Share Buyback assuming Off-Market Purchase (US$ 000) Before Share Buyback (US$ 000) Company After Share Buyback assuming Market Purchase (US$ 000) After Share Buyback assuming Off-Market Purchase (US$ 000) As at 31 March 2017 Share capital 203, , , , , ,918 Capital and other reserves (23,676) (23,676) (23,676) (169,355) (169,355) (169,355) Minority interests (2,636) (2,636) (2,636) Treasury shares (5,624) (6,561) (5,624) (6,561) Shareholders funds 180, , ,681 34,563 28,939 28,002 NTA 177, , ,045 34,563 28,939 28,002 Cash and cash equivalents 45,568 39,944 39,007 4,823 (801) (1,738) Current assets 297, , , , , ,119 Current liabilities 267, , , , , ,320 Working capital 30,166 24,542 23,605 (21,640) (27,264) (28,201) Loss after tax and minority interest (158,247) (158,247) (158,247) (274,427) (274,427) (274,427) Number of issued Shares ( 000) 4,322,800 4,322,800 4,322,800 4,322,800 4,322,800 4,322,800 Treasury Shares ( 000) 432, , , ,280 Weighted average number of Shares ( 000) 3,613,478 3,181,198 3,181,198 3,613,478 3,181,198 3,181,198 Financial ratios NTA/Share (1) (US$ cents) EPS (2) (US$ cents) (4.38) (4.97) (4.97) (7.59) (8.63) (8.63) Current ratio (3) (times) ROE (4) (%) (87.80) (90.62) (91.11) (793.99) (948.30) (980.04) Notes: (1) NTA per Share is calculated based on the NTA and 4,322,800,385 and 3,890,520,347 Shares in issue as at 31 March 2017 and after the share buyback respectively. (2) EPS is based on the weighted average number of 3,613,477,461 and 3,181,197,423 Shares in issue as at 31 March 2017 and after the share buyback respectively. (3) Current ratio equals current assets divided by current liabilities. (4) ROE equals loss after tax and minority interest divided by Shareholders funds. 15

16 (2) Purchases made entirely out of capital and cancelled Before Share Buyback (US$ 000) Group After Share Buyback assuming Market Purchase (US$ 000) After Share Buyback assuming Off-Market Purchase (US$ 000) Before Share Buyback (US$ 000) Company After Share Buyback assuming Market Purchase (US$ 000) After Share Buyback assuming Off-Market Purchase (US$ 000) As at 31 March 2017 Share capital 203, , , , , ,357 Capital and other reserves (23,676) (23,676) (23,676) (169,355) (169,355) (169,355) Minority interests (2,636) (2,636) (2,636) Shareholders funds 180, , ,681 34,563 28,939 28,002 NTA 177, , ,045 34,563 28,939 28,002 Cash and cash equivalents 45,568 39,944 39,007 4,823 (801) (1,738) Current assets 297, , , , , ,119 Current liabilities 267, , , , , ,320 Working capital 30,166 24,542 23,605 (21,640) (27,264) (28,201) Loss after tax and minority interest (158,247) (158,247) (158,247) (274,427) (274,427) (274,427) Number of issued Shares ( 000) 4,322,800 3,890,520 3,890,520 4,322,800 3,890,520 3,890,520 Weighted average number of Shares ( 000) 3,613,478 3,181,198 3,181,198 3,613,478 3,181,198 3,181,198 Financial ratios NTA/Share (1) (US$ cents) EPS (2) (US$ cents) (4.41) (4.97) (4.97) (7.59) (8.63) (8.63) Current ratio (3) (times) ROE (4) (%) (87.80) (90.62) (91.11) (793.99) (948.30) (980.04) Notes: (1) NTA per Share is calculated based on the NTA and 4,322,800,385 and 3,890,520,347 Shares in issue as at 31 March 2017 and after the share buyback respectively. (2) EPS is based on the weighted average number of 3,613,477,461 and 3,181,197,423 Shares in issue as at 31 March 2017 and after the share buyback respectively. (3) Current ratio equals current assets divided by current liabilities. (4) ROE equals loss after tax and minority interest divided by Shareholders funds. Shareholders should note that the financial effects set out above are purely for illustration purposes and based only on the abovementioned assumptions. In particular, it is important to note that the above financial analysis is based on the Company s and the Group s historical numbers for the financial period from 1 January 2016 to 31 March 2017 and is not necessarily representative of the future financial performance of the Company and the Group. The Company will take into account both financial and non-financial factors (for example, equity market conditions and the performance of the Shares) in assessing the relative impact of a Share purchase or acquisition before execution. Although the proposed Share Buyback Mandate would authorise the Company to purchase or acquire up to ten per cent of the total number of issued Shares (excluding treasury shares), the Company may not necessarily purchase or be able to purchase the entire ten per cent of the total number of its issued Shares. In addition, the Company may cancel all or part of the Shares repurchased or hold all or part of the Shares repurchased in treasury. 16

17 Shareholders who have any doubt as to their tax positions or any tax implications arising from the Share Buyback Mandate in their respective jurisdictions should consult their own professional advisers. 2.9 Catalist Rules. While the Catalist Rules do not expressly prohibit purchase or acquisitions of shares by a Catalist company during any particular time or times, because a Catalist company would be considered an insider in relation to any proposed purchase or acquisition of its issued shares, the Company will not purchase any Shares pursuant to the Share Buyback Mandate after a development which could have a material effect on the price of the Shares has occurred or has been the subject of a consideration and/or a decision of the Board until such time as such information has been publicly announced. In particular, in line with the best practices guide on securities dealing issued by the SGX-ST, the Company will not purchase or acquire any Shares through Market Purchases during the period of: one month immediately preceding the announcement of the Company s full-year results; and two weeks immediately preceding the announcement of the Company s fi rst three quarterly results. The Company is required under Rule 723 of the Catalist Rules to ensure that at least ten per cent of its Shares are in the hands of the public. The public, as defi ned under the Catalist Rules, are persons other than the Directors, CEO, Substantial Shareholders or Controlling Shareholders of the Company or its subsidiaries, as well as the Associates of such persons. Based on the interests of Directors and Substantial Shareholders as recorded in the Register of Directors shareholdings and the Register of Substantial Shareholders as at the Latest Practicable Date, approximately 2,344,232,065 Shares representing approximately 54.23% of the issued Shares (excluding treasury shares), were in the hands of the public. Assuming that the Company purchases its Shares up to the full ten per cent limit pursuant to the Share Buyback Mandate from the public (as defi ned in the Catalist Rules), the number of Shares in the hands of the public not taking into account treasury shares would be reduced to 1,911,952,028 Shares, representing approximately 44.23% of the reduced issued share capital of the Company (excluding treasury shares). Accordingly, the Company is of the view that there is a suffi cient number of issued Shares held in the hands of the public which would permit the Company to undertake purchases or acquisitions of its issued Shares up to the full ten per cent limit pursuant to the Share Buyback Mandate without affecting 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 such a level as to cause market illiquidity. In undertaking any purchases or acquisitions of Shares through Market Purchases, the Directors will use their best efforts to ensure that, notwithstanding such purchases or acquisitions, a suffi cient fl oat in the hands of the public will be maintained so that such purchases or acquisitions of Shares will not adversely affect the listing status of the Shares on the SGX-ST, cause market illiquidity or adversely affect the orderly trading of the Shares Take-over Code implications. 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 Under Rule 14 of the Take-over Code, a Shareholder and persons acting in concert with the Shareholder will incur an obligation to make a mandatory take-over offer if, inter alia, he and persons acting in concert with him increase their voting rights in the Company to 30% or more or, if they, together holding between 30% and 50% of the Company s voting rights, increase their voting rights in the Company by more than one per cent in any period of six months. 17

18 If, as a result of any purchase or acquisition by the Company of the Shares, the proportionate interest in the voting capital of the Company of a Shareholder and persons acting in concert with him 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 and persons acting in concert with him obtains or consolidates effective control of the Company, such Shareholder or persons acting in concert with him 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 ( concert parties ) comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal), co-operate, through the acquisition by any of them of shares in a company to obtain or consolidate effective control of the company. Unless the contrary is established, the Take-over Code presumes, inter alia, the following individuals and companies to be persons acting in concert: (c) (d) (e) (f) (g) (h) a company with its parent company, subsidiaries, its fellow subsidiaries, any associated companies of the foregoing companies, any company whose associated companies include any of the foregoing companies, and any person who has provided fi nancial assistance (other than a bank in the ordinary course of business) to any of the foregoing companies for the purchase of voting rights; a company with any of its directors, together with their close relatives, related trusts and any companies controlled by any of the directors, their close relatives and related trusts; a company with any of its pension funds and employee share schemes; a person with any investment company, unit trust or other fund whose investment such person manages on a discretionary basis but only in respect of the investment account which such person manages; a fi nancial or other professional adviser, including a stockbroker, with its client 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 shareholdings of the adviser and any of those funds in the client total ten per cent 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 or where they have reason to believe a bona fi de offer for their company may be imminent; partners; and an individual with his close relatives, related trusts, any person who is accustomed to act according to his instructions, companies controlled by any of the foregoing persons and any person who has provided fi nancial assistance (other than a bank in the ordinary course of business) to any of the foregoing persons and/or entities for the purchase of voting rights. For this purpose, ownership or control of at least 20% but not more than 50% of the voting rights of a company will be regarded as the test of associated company status. The circumstances under which Shareholders, including Directors and persons acting in concert with them respectively, will incur an obligation to make a take-over offer under Rule 14 of the Takeover Code after a purchase or acquisition of Shares by the Company are set out in Appendix 2 of the Take-over Code. 18

19 Based on the interests of Directors and Substantial Shareholders as recorded in the Register of Directors shareholdings and the Register of Substantial Shareholders as at the Latest Practicable Date, Swiber Holdings Limited and Rawabi Holdings hold 903,534,986 and 672,000,000 Shares representing 20.90% and 15.55% of the issued share capital of the Company respectively (based on 3,415,544,719 Shares in issue as at the Latest Practicable Date excluding treasury shares) 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 and their concert parties will incur an obligation to make a take-over offer under Rule 14 if, as a result of the Company purchasing or acquiring Shares: the voting rights of such Directors and their concert parties would increase to 30% or more; or in the event that such Directors and their concert parties hold between 30% and 50% of the Company s voting rights, if the voting rights of such Directors and their concert parties would increase by more than one per cent in any period of six months. In calculating the percentage of voting rights of such Directors and their concert parties, treasury shares shall be excluded. Under Appendix 2 of the Take-over Code, a Shareholder who is not acting in concert with the Directors will not be required to make a take-over offer under Rule 14 if, as a result of the Company purchasing or acquiring its Shares: the voting rights of such Shareholder 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 one per cent in any period of six months. Such Shareholder need not abstain from voting in respect of the resolution authorising the renewal of the Share Buyback Mandate. However, Shareholders will be subject to the provisions of Rule 14 of the Take-over Code if they acquire Shares after the purchase of Shares by the Company. For this purpose, an increase in the percentage of voting rights as a result of the purchase of Shares by the Company will be taken into account in determining whether a Shareholder and persons acting in concert with him have increased their voting rights by more than one per cent in any period of six months. Shareholders (including Directors) and their concert parties who hold more than 50% of the Company s voting rights are under no obligation to make a take-over offer if the voting rights of such Shareholders and their concert parties were to increase as a result of the Company purchasing or acquiring Shares. Based on the interests of the Substantial Shareholders as recorded in the Register of Substantial Shareholders as at the Latest Practicable Date, in the event the Company undertakes to purchase Shares up to the maximum limit of ten per cent of the issued and paid-up share capital of the Company, none of the Substantial Shareholders and the parties acting in concert with each of them will be required to make a take-over offer for the Shares held by the other Shareholders pursuant to Rule 14 of the Take-over Code. 19