DECLOUT LIMITED (Incorporated in the Republic of Singapore on 21 August 2010) (Company Registration No W) CIRCULAR TO SHAREHOLDERS

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1 CIRCULAR DATED 14 APRIL 2014 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. If you have sold or transferred all your shares in the capital of DeClout Limited (the Company ) held through The Central Depository (Pte) Limited ( CDP ), you need not forward this Circular to the purchaser or transferee as arrangements will be made by CDP for a separate Circular to be sent to the purchaser or transferee. If you have sold or transferred all your shares represented by physical share certificate(s), you should hand this Circular to the purchaser or transferee or to the bank, stockbroker or agent through whom you effected the sale or transfer, for onward transmission to the purchaser or transferee. This Circular has been prepared by the Company and its contents have been reviewed by the Company s sponsor, Canaccord Genuity Singapore Pte. Ltd. (the Sponsor ), for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (the SGX-ST ). The Sponsor has not independently verified the contents of this Circular. This Circular has not been examined or approved by the SGX-ST. The SGX-ST assumes 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 Karen Soh, Managing Director, Corporate Finance, Canaccord Genuity Singapore Pte. Ltd. at 77 Robinson Road #21-02 Singapore , telephone (65) DECLOUT LIMITED (Incorporated in the Republic of Singapore on 21 August 2010) (Company Registration No W) CIRCULAR TO SHAREHOLDERS in relation to (1) The proposed investment in Tinglobal Holdings Limited AND THE PUT OPTION; and (2) THE proposed share buy back mandate. IMPORTANT DATES AND TIMES Last date and time for lodgement of Proxy Form Date and time of Extraordinary General Meeting Place of Extraordinary General Meeting : 27 April 2014 at 11 a.m. : 29 April 2014 at 11 a.m. (or as soon thereafter following the conclusion or adjournment of the AGM to be held at 10 a.m. on the same day and at the same place) : Raffles Hotel Casuarina Suite A 1 Beach Road Singapore

2 TABLE OF CONTENTS DEFINITIONS...1 LETTER TO SHAREHOLDERS EGM THE PROPOSED INVESTMENT AND THE PUT OPTION FINANCIAL EFFECTS OF THE PROPOSED INVESTMENT AND THE PUT OPTION RELATIVE FIGURES UNDER RULE DIRECTORS SERVICE CONTRACTS THE PROPOSED SHARE BUY BACK MANDATE INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS RECOMMENDATION BY THE DIRECTORS ABSTENTION FROM VOTING EXTRAORDINARY GENERAL MEETING AND CIRCULAR TO SHAREHOLDERS ACTIONS TO BE TAKEN BY SHAREHOLDERS DIRECTORS RESPONSIBILITY STATEMENT CAUTIONARY STATEMENT DOCUMENTS AVAILABLE FOR INSPECTION...33 APPENDIX A SHAREHOLDING OF THE EXISTING SHAREHOLDERS...34 APPENDIX B GROUP STRUCTURE OF PROCURRI CORPORATION PTE. LTD...35 NOTICE OF EXTRAORDINARY GENERAL MEETING...37 PROXY FORM

3 DEFINITIONS In this Circular, the following definitions apply throughout except where the context otherwise requires: A Deadlock Purchase Notice : Has the meaning ascribed to it in section 2.3.7(a) of this Circular ACRA : The Accounting and Corporate Regulatory Authority of Singapore AGM : The annual general meeting of the Company Amortisation Expenses : The amortisation expenses arising from the intangible assets arising from (i) the acquisition of Tinglobal Limited by Tinglobal; or (ii) the acquisition of Tinglobal by ASVIDA UK; or (iii) any acquisition of businesses or companies within the Procurri Group Approval Date : Has the meaning ascribed to it in section 6.3(a) of this Circular Articles : The articles of association of the Company ASVIDA Asia : ASVIDA Asia Pte. Ltd. ASVIDA UK : ASVIDA UK Limited, a wholly-owned subsidiary of Procurri Corp which in turn is a 50.1% subsidiary of the Company Audit Committee : The audit committee of the Company, comprising Mr Hew Koon Chan, Mr Ho Chew Thim and Ms Ch ng Li-Ling, as at the Latest Practicable Date Average Closing Price : Has the meaning ascribed to it in section 6.3(d) of this Circular B Deadlock Purchase Notice : Has the meaning ascribed to it in section 2.3.7(b) of this Circular Board : The board of directors of the Company as at the date of this Circular Call Option : Has the meaning ascribed to it in section of this Circular Call Option Period : Has the meaning ascribed to it in section of this Circular Catalist Rules : Listing Manual Section B: Rules of Catalist of the SGX-ST, as may be amended, varied or supplemented from time to time CDP : The Central Depository (Pte) Limited 1

4 DEFINITIONS Circular : This Circular to Shareholders dated 14 April 2014 Companies Act : The Companies Act (Chapter 50) of Singapore as amended, modified or supplemented from time to time Company : DeClout Limited Completion : Has the meaning ascribed to it in section of this Circular Consideration Shares : Has the meaning ascribed to it in section of this Circular Cumulative Dividends : Has the meaning ascribed to it in section of this Circular day of the making of the offer : Has the meaning ascribed to it in section 6.3(d) of this Circular Deadlock : The situation where the requisite consent in respect of the Reserved Matters is not obtained within the stipulated timeframe in accordance with the terms of the Investment Agreement DeClout Directors : Has the meaning ascribed to it in section of this Circular DeClout ESOS : The employee share option scheme of the Company which was approved on 5 October 2012 pursuant to a written resolution passed by Shareholders, as amended or modified from time to time DeClout PSP : The performance share plan of the Company which was approved on 5 October 2012 pursuant to a written resolution passed by Shareholders, as amended or modified from time to time Director : A director of the Company as at the Latest Practicable Date, and Directors shall refer to all of the directors of the Company EBITDA : Earnings before interest, taxation, depreciation and amortisation expenses EGM : The extraordinary general meeting of the Company, notice of which is set out on pages 37 to 40 of this Circular EPS : Earnings per Share 2

5 DEFINITIONS Existing Shareholders : The Management Existing Shareholders, the NVM Existing Shareholders and the Shackleton Existing Shareholder FY2013 : The financial year ended 31 December 2013 FY2014 : The financial year ending 31 December 2014 Group : The Company and its subsidiaries Investment : The investment in Tinglobal pursuant to which ASVIDA UK will subscribe for 104,081,633 new ordinary shares in the capital of Tinglobal amounting to a 51% stake in Tinglobal on an enlarged basis Investment Agreement : Has the meaning ascribed to it in section 2.1 of this Circular Investment Amount : Has the meaning ascribed to it in section of this Circular Investment Shares : The 104,081,633 new ordinary shares in the capital of Tinglobal Latest Practicable Date : 4 April 2014, being the latest practicable date prior to the printing of this Circular Loan Notes : Has the meaning ascribed to it in section of this Circular Market Day : A day on which the SGX-ST is open for securities trading Market Purchase : Has the meaning ascribed to it in section 6.3(c)(i) of this Circular Management Existing Shareholders : David James Gutteridge and Mathew George Jordan Maximum Price : Has the meaning ascribed to it in section 6.3(d) of this Circular Memorandum : The memorandum of association of the Company Minority Directors : Has the meaning ascribed to it in section of this Circular NTA : Net tangible assets 3

6 DEFINITIONS NVM Existing Shareholders : Northern 2 VCT Plc, Northern 3 VCT Plc, Northern Venture Trust Plc and NVM Nominees Limited Off-Market Purchase : Has the meaning ascribed to it in section 6.3(c)(ii) of this Circular Option Shares : Has the meaning ascribed to it in section of this Circular Procurri Corp : Procurri Corporation Pte. Ltd. Procurri Group : Procurri Corp and its subsidiaries and associate companies (if any) Proposals : Has the meaning ascribed to it in section 1 of this Circular Purchase Price : Has the meaning ascribed to it in section 6.6(a) of this Circular Put Option : Has the meaning ascribed to it in section of this Circular Put Option Period : Has the meaning ascribed to it in section of this Circular Relevant Parties : Has the meaning ascribed to it in section 6.10 of this Circular Relevant Period : The period commencing from the date on which the resolution relating to the proposed Share Buy Back Mandate is passed in a general meeting and expiring on the earliest of the date of the next AGM is held or is required by law to be held, or the date the said mandate is revoked or varied by the Company in a general meeting Reserved Matters : Certain reserved matters, including those relating to a material change to the general nature of the business of the Tinglobal Group, changes to the share or loan capital of Tinglobal and changes to the memorandum and articles of Tinglobal Rule 14 : Has the meaning ascribed to it in section 6.10 of this Circular SGX-ST : Singapore Exchange Securities Trading Limited Shackleton Existing Shareholder : Shackleton Secondaries L.P. Share : An ordinary share in the capital of the Company 4

7 DEFINITIONS Shareholders : Persons who are registered holders of Shares in the Register of Members of the Company except where the registered holder is CDP, the term Shareholders shall, where the context admits, mean the Depositors in the Depository Register maintained by CDP and into whose securities accounts those Share are credited Share Buy Back : The purchase or acquisition by the Company of its own Shares pursuant to the proposed Share Buy Back Mandate Share Buy Back Mandate : The general and unconditional mandate given by Shareholders at the EGM to authorise the Directors to exercise all powers of the Company to purchase or otherwise acquire issued Shares within the Relevant Period 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 SIC : Securities Industry Council Substantial Shareholder : A person who has an interest in not less than 5% of the issued voting Shares Take-over Code : The Singapore Code on Take-overs and Mergers Tinglobal : Tinglobal Holdings Limited Tinglobal Board : The board of directors of Tinglobal Tinglobal Group : Tinglobal and its subsidiaries Tinglobal Shares : Ordinary shares in the capital of Tinglobal Tinglobal Shareholder : A shareholder of Tinglobal W&I Policy : The warranty and indemnity insurance policy taken out by the Management Existing Shareholders and Tinglobal in relation to the liabilities of the Existing Shareholders and the Company which may arise under the warranties and indemnities within the Investment Agreement % or per cent : Per centum or percentage GBP : Pound sterling S$ and cents : Singapore dollars and cents, respectively 5

8 DEFINITIONS The terms Depositor, Depository Agent and Depository Register shall have the respective meanings ascribed to them in Section 130A of the Companies Act. The term associate shall have the same meaning ascribed to it in the Catalist Rules. 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 defined under the Companies Act, the Catalist Rules or any modification thereof and used in this Circular shall have the meaning assigned to it under the Companies Act, the Catalist Rules or any modification thereof, as the case may be. Any reference to a time of day in this Circular shall be a reference to Singapore time unless stated otherwise. Any discrepancy with the tables in this Circular between the listed amounts and the totals thereof is due to rounding. 6

9 DECLOUT LIMITED (Company Registration No.: W) (Incorporated in the Republic of Singapore on 21 August 2010) Directors: Registered Office: Mr Wong Kok Khun (Chairman and Group Chief Executive Officer) Mr Wong Chee Keong (Executive Director) Mr Koh Soon Teck Winston (Executive Director) Mr Ho Chew Thim (Lead Independent Director) Mr Hew Koon Chan (Independent Director) Ms Ch ng Li-Ling (Independent Director) 29 Tai Seng Avenue #05-01 Natural Cool Lifestyle Hub Singapore April 2014 To: The Shareholders of the Company Dear Sir / Madam 1. EGM The Directors propose to convene an EGM to be held on 29 April 2014 to seek the approval of the Shareholders in relation to the following proposals: (a) the proposed Investment in Tinglobal Holdings Limited and the Put Option; and (b) the proposed Share Buy Back Mandate, collectively, the Proposals CIRCULAR TO SHAREHOLDERS The purpose of this Circular is to provide Shareholders with relevant information relating to the Proposals, and to seek Shareholders approval for the Proposals by way of resolutions, at the forthcoming EGM. 2. THE PROPOSED INVESTMENT AND THE PUT OPTION 2.1. INTRODUCTION On 11 March 2014, the Company announced that it had entered into an investment agreement dated 11 March 2014 ( Investment Agreement ) with (i) ASVIDA UK; (ii) Procurri Corp; (iii) Tinglobal; (iv) NVM Private Equity Limited; (v) Shackleton Finance Limited; and (vi) the Existing Shareholders, for a proposed Investment in Tinglobal. Pursuant to the Investment Agreement, ASVIDA UK will subscribe for 104,081,633 Investment Shares in Tinglobal for an Investment Amount of GBP6.12 million. 7

10 2.2. INFORMATION ON TINGLOBAL Tinglobal is a private company limited by shares and incorporated in England. The Tinglobal Group is principally engaged in the European enterprise market for refurbished and reconfigured mid range computer equipment including servers, storage, associated networking infrastructure, parts and services. Immediately prior to Completion, Tinglobal will have an issued share capital of approximately GBP147,333 comprising 100,000,000 Tinglobal Shares of GBP0.001 each and 47,333,333 B ordinary shares of GBP0.001 each. Further details of the respective shareholdings of the Existing Shareholders are set out in Appendix A. The B ordinary shares are held by the NVM Existing Shareholders and the Shackleton Existing Shareholder and the B ordinary shares are not entitled to dividends and have no voting rights. The purpose of the B ordinary shares is to provide for certain arrangements between the Existing Shareholders made prior to the proposed Investment, and in the event any consideration is to be received by the Existing Shareholders pursuant to the Call Option, the Put Option and/or a Deadlock, such consideration will be allocated between the Existing Shareholders in accordance with their prior arrangements and respective holding of the Tinglobal Shares and B ordinary shares. For the avoidance of doubt, the B ordinary shares and the prior arrangements between the Existing Shareholders only affect the allocation between the Existing Shareholders of any consideration paid and will not increase the consideration payable by the Group pursuant to the Call Option, the Put Option and/or a Deadlock. Tinglobal owns 100% of the equity interest in Tinglobal Limited, which in turn owns 100% of the equity interest in each of (i) Tindirect Limited, (ii) Powercore International Limited, and (iii) Powercore Holdings Limited. Based on the audited financial statements of Tinglobal as at 31 May 2013, the book value and net tangible liabilities of the Tinglobal Group is approximately GBP1.2 million and GBP6.1 million respectively. The net loss of the Tinglobal Group is approximately GBP0.3 million for the financial year ended 31 May As at Completion, Tinglobal will also have outstanding loan notes issued by certain existing shareholders in an aggregate amount of approximately GBP6.62 million (the Loan Notes ) PRINCIPAL TERMS OF THE INVESTMENT Consideration Pursuant to the Investment Agreement, ASVIDA UK, a wholly-owned subsidiary of Procurri Corp which, in turn, is a 50.1% subsidiary of the Company, will subscribe for 104,081,633 Investment Shares, amounting to a 51.0% stake in the total voting rights and economic interest in Tinglobal on an enlarged basis, for a cash consideration of GBP6.12 million (the Investment Amount ). The Investment Amount will be used solely for the repayment of the Loan Notes. The Investment Amount was arrived at, on a willing buyer and willing seller basis, after negotiations which were conducted at arm s length between the Company and Tinglobal, and takes into account, inter alia, the EBITDA of the Tinglobal Group based on its management accounts for the 12-month period ended 31 December

11 The Investment Amount will be funded through internal resources of the Company and proceeds from the rights issue which was completed by the Company in October Such funds may be provided to Procurri Corp by the Company either by way of a capital injection or a shareholder s loan. Procurri Corp will also be funding a portion of the Investment Amount through a bank borrowing of S$5 million pursuant to which the Company and ASVIDA Asia (a wholly-owned subsidiary of the Company) will be providing corporate guarantees to the financing bank. Please refer to Appendix B for the group structure of Procurri Corp before and after the completion of the proposed Investment, as well as after the proposed Investment and assuming the Call Option has lapsed and the Put Option was exercised Conditions Precedent The completion of the proposed Investment (the Completion ) is conditional upon: (a) the receipt of the approval of the Shareholders; (b) Tinglobal having only two (2) classes of securities, being the 100,000,000 Tinglobal Shares and the 47,333,333 B ordinary shares (which are not entitled to dividends and have no voting rights); (c) The Management Existing Shareholders entering into supplemental agreements to their existing service agreements with Tinglobal in the agreed form; (d) Tinglobal and the Management Existing Shareholders providing ASVIDA UK with confirmation from the relevant insurer in the agreed form that the W&I Policy has been taken out; (e) the consent from certain lenders of Tinglobal as required under the relevant facility agreements; and (f) the enterprise management incentive share option scheme operated by Tinglobal being terminated and there being no other similar employee share option scheme in place; on or before the long stop date, being 31 May 2014 or such other dates as the parties may agree. As at the Latest Practicable Date, none of the above-mentioned conditions have been fulfilled Adjustment to Shareholding Interest in Tinglobal by ASVIDA UK Where the EBITDA for the Tinglobal Group based on its audited consolidated accounts for FY2014 is within one of the ranges set out in the table below, the parties agree to procure that either the: (a) Tinglobal Shares held by the Existing Shareholders shall be transferred from the Existing Shareholders (pro rata to their existing shareholdings) to ASVIDA UK; or (b) additional new Tinglobal Shares shall be issued by Tinglobal to ASVIDA UK, so as to result in ASVIDA UK holding in aggregate such percentage shareholding of Tinglobal Shares as set out in the table below on an enlarged basis (and ignoring any resulting fractional entitlements to Tinglobal Shares): 9

12 EBITDA of the Tinglobal Group for FY2014 Resultant percentage holding of Tinglobal Shares by ASVIDA UK Less than GBP2.0 million but greater than GBP1.9 million 53.7% Equal to or less than GBP1.9 million but greater than GBP1.8 million 56.7% Equal to or less than GBP1.8 million but greater than GBP1.7 million 58.3% Equal to or less than GBP1.7 million 60.0% The parties to the Investment Agreement shall agree whether the Tinglobal Shares will be transferred from the Existing Shareholders to ASVIDA UK (under section 2.3.3(a)) or issued by Tinglobal to ASVIDA UK (under section 2.3.3(b)) upon the delivery of the audited consolidated accounts for FY2014. In the event that an agreement cannot be reached within the stipulated deadline, decision on the adjustment method will be decided by ASVIDA UK. In the event new Tinglobal Shares are issued under section 2.3.3(b), there will not be any material impact on the Company s consolidated income statement Board Composition Upon Completion, the Tinglobal Board shall consist of seven (7) directors and shall comprise: (a) four (4) directors to be nominated by ASVIDA UK (the DeClout Directors ); and (b) three (3) directors to be nominated by the Existing Shareholders (the Minority Directors ), of which one will be nominated by the NVM Existing Shareholders. ASVIDA UK is entitled to appoint and remove one (1) of the DeClout Directors to act as the chairman of the Tinglobal Board as long as ASVIDA UK is the largest shareholder of Tinglobal, whether directly or indirectly Call Option Pursuant to the terms of the Investment Agreement, the Existing Shareholders grant ASVIDA UK an option to acquire all the Tinglobal Shares and B ordinary shares held by the Existing Shareholders (the Option Shares ) during the period from 31 March 2015 to 31 May 2015 (both dates inclusive) (the Call Option Period ) (the Call Option ). On Completion and in consideration of the Call Option, Procurri Corp shall issue such number of ordinary shares in itself (the Consideration Shares ) as will provide the Existing Shareholders (as a group) with a total percentage shareholding in the capital of Procurri Corp based on the formula set out below: Z%= Y% x EV (Tinglobal Group) EV (Procurri Group + Tinglobal Group) 10

13 where (1) Z% = percentage shareholding in the capital of Procurri Corp to be issued to the Existing Shareholders in total; (2) Y% = total percentage shareholding in the capital of Tinglobal held by the Existing Shareholder (as a group) immediately prior to the exercise of the Call Option; (3) EV = net asset value as at 31 December 2014 plus Cumulative Dividends paid between completion of the proposed Investment and 31 December 2014, plus six (6) times of net profit after tax and adding back Amortisation Expenses for the period of 12 months ending on 31 December 2014; (4) For the purpose of determining the EV and in the event that either the Procurri Group or the Tinglobal Group acquires new subsidiaries during the year, the net profit after tax and adding back Amortisation Expenses shall be determined as though the acquisition(s) were made at the beginning of the 12-month period ending on 31 December 2014, to the extent only that the financial results of the new subsidiaries are audited by the auditors of Procurri Group for the period of inclusion; and (5) Cumulative Dividends means the aggregate of any dividend paid by a relevant entity from Completion to 31 December In the event that the Company decides to exercise the Call Option, the Company shall obtain Shareholders approval, if required, pursuant to the rules of the Catalist Rules Put Option Pursuant to the terms of the Investment Agreement, in the event that: (a) the Call Option has lapsed; or (b) the Call Option has been exercised, but a listing of Procurri Corp does not take place prior to 31 December 2015, ASVIDA UK grants the Existing Shareholders an option to require ASVIDA UK or such other party as may be procured by ASVIDA UK to purchase all and not only some of the Option Shares (in the event of 2.3.6(a)) or, the Consideration Shares (in the event of (b)), as the case may be (the Put Option ) during the period of the Put Option. The Put Option shall be exercisable during the period from 1 March 2016 to 31 May 2016 (both dates inclusive) or, if later, such date which falls 60 days after the annual report and accounts for the Tinglobal Group for the period of 12 months ending on 31 December 2015 are signed (the Put Option Period ). The consideration in cash for the entire Existing Shareholders Option Shares or Consideration Shares (as the case may be) pursuant to the Put Option shall be the lower of: i. A% of GBP18 million; or ii. A% of eight (8) times the net profit after tax and adding back Amortisation Expenses of the Tinglobal Group for the period of 12 months ending on 31 December 2015, 11

14 where (1) A% equals the percentage held by the Existing Shareholder of the total number of Option Shares or Consideration Shares (as the case may be) prior to exercise of the Put Option Deadlock Mechanism Pursuant to the Investment Agreement, the Reserved Matters will require the consent of at least one (1) DeClout Director and one (1) Minority Director. A Deadlock is deemed to have arisen if the requisite consent in respect of the Reserved Matters is not obtained within the stipulated timeframe in accordance with the terms of the Investment Agreement. In the event the Deadlock is not resolved within the stipulated timeframe in accordance with the terms of the Investment Agreement, and provided that the period for exercise of both the Call Option and the Put Option have expired: (a) ASVIDA UK may notify the Existing Shareholders of its intention to purchase each of the Existing Shareholders Tinglobal Shares and Tinglobal B ordinary shares ( A Deadlock Purchase Notice ) at the lower of the following: (i) A% of GBP18 million; or (ii) A% of eight (8) times the net profit after tax adding back Amortisation Expenses of the Tinglobal Group based on the audited financial results for the period between 1 January and 31 December prior to the occurrence of the Deadlock, where (1) A% equals the percentage held by each of the Existing Shareholder of the total number of Tinglobal Shares prior to the occurrence of the Deadlock. (b) If ASVIDA UK fails to acquire the Existing Shareholders Tinglobal Shares in accordance with the terms of the Investment Agreement, the Existing Shareholders may notify ASVIDA UK of its intention to purchase the ASVIDA UK s Tinglobal Shares ( B Deadlock Purchase Notice ) at the lower of the following, subject to the approval of Shareholders, if necessary: (i) B% of GBP18 million; or (ii) B% of eight (8) times the net profit after tax and adding back Amortisation Expenses of the Tinglobal Group based on the audited financial results for the period between 1 January and 31 December prior to the occurrence of the Deadlock, where (1) B% equals the percentage held by ASVIDA UK of the total number of Tinglobal Shares prior to the occurrence of the Deadlock. 12

15 (c) If neither the Existing Shareholders nor ASVIDA UK acquires the others stake in Tinglobal in accordance with process stated above and the A Deadlock Purchase Notice or the B Deadlock Purchase Notice is not issued within three (3) months from the first date that the A Deadlock Purchase Notice can be given, any shareholder of Tinglobal may send a written notice to the directors of Tinglobal requiring them to commence a marketing process for the third party sale of the Tinglobal Group (which, for the avoidance of doubt, may include a sale to a Tinglobal Shareholder, save that no Tinglobal Shareholder shall be obliged to purchase or sell any Tinglobal Shares or Tinglobal B ordinary shares pursuant to this third party sale). In the event no third party or Tinglobal Shareholder is willing to acquire the Tinglobal Group despite the best efforts of the Tinglobal Board within three (3) months of the commencement of the marketing process, Tinglobal shall (unless otherwise agreed by the Tinglobal Shareholders) be wound up, and the assets distributed to the Tinglobal Shareholders in accordance with the articles of association and applicable law. In the event of a Deadlock, the Company shall obtain Shareholders approval in the event of either 2.3.7(a), 2.3.7(b) or 2.3.7(c), where applicable, pursuant to the rules of the Catalist Rules RATIONALE FOR THE PROPOSED INVESTMENT The Board believes that the proposed Investment will: (a) enable the Group to establish a strong foothold in the European market and increase overseas revenue for its IT Asset Recovery and Independent Maintenance Services business; (b) enable the Group to become more competitive globally due to greater economies of scale and the ability to undertake and deploy cross-continent projects in Asia, Europe and North America. Procurri Corp will also be able to pool local resources, demand, and supply from ASVIDA Asia, Procurri LLC and Tinglobal. The Company intends to undertake an internal restructuring exercise involving Procurri Corp and ASVIDA Asia to rationalise the group structure, and will be making the necessary announcements on this in due course; and (c) improve the future financial performance of its IT Asset Recovery and Independent Maintenance Services business to the Group. 3. FINANCIAL EFFECTS OF THE PROPOSED INVESTMENT AND THE PUT OPTION Based on the audited consolidated financial statements of the Group for FY2013 and the audited consolidated financial statements of the Tinglobal Group for the financial year ended 31 May 2013, the pro forma financial effects of the proposed Investment and the Put Option are set out below, assuming: i. an exchange rate of GBP1:S$2.1; ii. the Company s share of the expenses incurred in connection with the proposed Investment and the Put Option is approximately S$164,000 (in proportion to its effective 50.1% equity interest in Tinglobal); and iii. the total consideration for the entire equity interest in the Tinglobal Group (after assuming that the Put Option is exercised) will be funded by a S$5 million bank borrowing and the remaining balance by the Company s internal resources. 13

16 The unaudited pro forma financial effects of the proposed Investment and the Put Option is for illustration purposes only and do not reflect the actual financial results of the Company after Completion of the proposed Investment and the Put Option NTA PER SHARE Assuming that the proposed Investment and the Put Option have been completed on 31 December 2013, the effect on the NTA per share of the Company as at 31 December 2013 will be as follows: Before the proposed Investment After the proposed Investment After the proposed Investment and exercise of the Put Option (1) Consolidated NTA (2) attributable to the Shareholders of the Company (S$ 000) 29,546 23,128 (3) 13,868 (3) Number of Shares (excluding treasury shares ( 000) 306, , ,762 Consolidated NTA per Share attributable to the Shareholders of the Company (cents) Notes: 3.2. EPS (1) Consideration to be paid upon the exercise of the Put Option for the remaining interest in the Tinglobal Group is assumed to be GBP8.82 million (based on 49% of GBP18 million). After the exercise of the Put Option, Tinglobal will be a wholly-owned subsidiary of ASVIDA UK, and the Company will have an effective interest of 50.1% in the Tinglobal Group. (2) Consolidated NTA excludes non-controlling interests of S$1.3 million. (3) Adjusted for goodwill. Assuming that the proposed Investment and the Put Option have been completed on 1 January 2013, the effect on the EPS of the Company for FY2013 will be as follows: Before the proposed Investment After the proposed Investment After the proposed Investment and exercise of the Put Option Consolidated profit after taxation and non-controlling interests (S$ 000) 1,940 1,590 1,410 (1) Weighted average number of Shares 236, , ,717 EPS (cents)

17 Note: (1) Consolidated profit after taxation and non-controlling interests assumes the Group s effective interest of 50.1% share of the proposed investment of Tinglobal s profit after tax GEARING Before the proposed Investment After the proposed Investment Total (cash)/net borrowing (1) as at 31 December 2013 (S$ 000) (4,232) 768 Shareholders equity (S$ 000) 36,305 36,305 Gearing (times) Not meaningful 0.02 Note: (1) Net borrowing means the aggregate liabilities arising from interest bearing borrowings less cash at bank, on hand and short term bank deposits. 4. RELATIVE FIGURES UNDER RULE 1006 The relative figures for the proposed Investment and the Put Option computed on the relevant bases set out in Rule 1006 of the Catalist Rules are as follows: Rule 1006 Bases of calculation Relative figure based on the Investment Amount of GBP6.12 million Relative figure based on the investment amount of GBP14.94 million (1) (a) (b) (c) (d) (e) Net asset value of the assets to be disposed of, compared with the Group s net asset value Net profits attributable to the assets acquired, compared with the Group s net profits Aggregate value of the consideration given, compared with the Group s market capitalisation (4) Number of equity securities issued by the Group as consideration for an acquisition, compared with the number of equity securities previously in issue Aggregate volume or amount of proven and probable reserves to be disposed of, compared with the aggregate of the Group s proven and probable reserve Not applicable Not applicable (10.9%) (2) (21.3%) (3) 25.9% 63.2% Not applicable Not applicable Not applicable Not applicable 15

18 Notes: (1) For illustration purposes only and based on the assumption that (1) the Call Option has not been exercised; and (2) ASVIDA UK acquires the entire share capital of Tinglobal pursuant to the exercise of the Put Option for a total consideration of GBP14.94 million for 100% equity interest (based on GBP6.12 million for the initial 51% interest and GBP8.82 million for the remaining 49% interest in Tinglobal pursuant to the Put Option). (2) Based on the audited consolidated financial statements of the Group for FY2013, the Group s net profit before tax was approximately S$800,000. Based on the audited consolidated financial statements of the Tinglobal Group for the financial year ended 31 May 2013, the Tinglobal Group incurred a net loss before tax of approximately GBP162,000 (equivalent to approximately S$340,000 based on an exchange rate of GBP1:S$2.1). The relevant ratio is computed based on the Group s effective interest of 25.55% in the Tinglobal Group. (3) The relevant ratio is computed based on the Group s effective interest of 50.1% in the Tinglobal Group. (4) The Company s market capitalisation of approximately S$49.6 million was computed based on the Company s existing issued share capital of 306,761,520 Shares and the volume weighted average price of the Company s Shares of S$ on 7 March 2014, being the last traded day preceding the date of the Investment Agreement. There was no transacted trade on 10 March Having regard to the above, the proposed Investment and the Put Option constitute a discloseable transaction pursuant to Rule 1010 and read together with Rule 1006 of the Catalist Rules. Notwithstanding that none of the relative figures under Rule 1006 of the Catalist Rules exceed 75%, the parties to the Investment Agreement have agreed to obtain Shareholders approval for the proposed Investment and the Put Option. 5. DIRECTORS SERVICE CONTRACTS No person is proposed to be appointed as a director of the Company in connection with the proposed Investment. Accordingly, no service contract is proposed to be entered into between the Company and any such person in connection with the proposed Investment. 6. THE PROPOSED SHARE BUY BACK MANDATE 6.1. INTRODUCTION The Companies Act allows a Singapore-incorporated company to purchase or otherwise acquire its issued ordinary shares, stocks and preference shares if the purchase or acquisition is permitted under the company s articles of association. Any purchase or acquisition of Shares by the Company would have to be made in accordance with, and in the manner prescribed by, the Companies Act and the Catalist Rules and such other laws and regulations as may for the time being be applicable. As the Company is listed on Catalist, it is also required to comply with Part XI of Chapter 8 of the Catalist Rules, which relates to the purchase or acquisition by an issuer of its own shares. Article 52 of the Company s Articles expressly permits the Company to purchase its issued Shares. 16

19 It is a requirement under the Companies Act and the Catalist Rules that a company which wishes to purchase or otherwise acquire its own shares should obtain approval of its shareholders to do so at a general meeting. Accordingly, approval is being sought from the Shareholders at the EGM for the adoption of the proposed Share Buy Back Mandate for the purchase by the Company of its issued Shares. If approved, the proposed Share Buy Back 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 or by the Company s Articles to be held, unless prior thereto, Share Buy Backs are carried out to the full extent mandated or the proposed Share Buy Back Mandate is revoked or varied by the Company in a general meeting. Subject to its continued relevance to the Company, the proposed Share Buy Back Mandate will be put to Shareholders for renewal at each subsequent AGM RATIONALE FOR THE PROPOSED SHARE BUY BACK MANDATE The proposed Share Buy Back Mandate would give the Company the flexibility to undertake buy backs of its Shares at any time, subject to market conditions, during the period when the proposed Share Buy Back Mandate is in force. A Share Buy Back at the appropriate price level is one of the ways through which the return on equity of the Group may be enhanced. Further, amongst others, a Share Buy Back provides the Company with a mechanism to facilitate the return of surplus cash over and above its ordinary capital requirements in an expedient and cost-efficient manner. Share Buy Backs will also allow the Directors greater control over the Company s share capital structure, dividend payout and cash reserves. The buy back of Shares may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the EPS and/or the NTA per Share of the Company and the Group, and will only be made when the Directors believe that such buy back would benefit the Company and its Shareholders. The buy back of Shares may also help the Company to reduce the dilution impact arising from any issues of options pursuant to the DeClout ESOS or grant of share awards pursuant to the DeClout PSP. Pursuant to the Companies Act, Shares purchased or otherwise acquired pursuant to the proposed Share Buy Back Mandate may be held or dealt with as treasury shares. Shareholders should note that purchases or acquisitions of Shares pursuant to the proposed Share Buy Back Mandate will only be made when the Directors believe that such purchases or acquisitions would be made in circumstances which would not have a material adverse effect on the financial position of the Company and when the Directors believe that such purchases or acquisitions would benefit the Company and its Shareholders TERMS OF THE PROPOSED SHARE BUY BACK MANDATE The authority and limitations placed on the Share Buy Back under the proposed Share Buy Back Mandate are summarised below: (a) Maximum number of Shares Only Shares which are issued and fully paid-up may be purchased or acquired by the Company. 17

20 The total number of Shares that may be purchased or acquired is limited to that number of Shares representing not more than 10% of the issued share capital of the Company, ascertained as at the date of the EGM at which the proposed Share Buy Back Mandate is approved (the Approval Date ), unless the Company has, at any time during the Relevant Period, reduced its share capital by a special resolution under Section 78C of the Companies Act, or the court has, at any time during the Relevant Period, made an order under Section 78I of the Companies Act confirming the reduction of the share capital of the Company, in which event the total number of Shares of the Company shall be taken to be the total number of Shares of the Company as altered by the special resolution of the Company or the order of the court, as the case may be. For purposes of calculating the percentage of issued Shares referred to above, any of the Shares which are held as treasury shares will be disregarded. For illustrative purposes only, based on the existing issued and paid-up share capital of the Company of 306,761,520 Shares as at the Latest Practicable Date, and assuming that no further Shares are issued on or prior to the EGM, not more than 30,676,152 Shares (representing approximately 10% of the Shares in issue as at the date of the EGM) may be purchased or acquired by the Company pursuant to the proposed Share Buy Back Mandate. (b) Duration of authority Purchases or acquisitions of Shares may be made during the Relevant Period, which is at any time and from time to time, on and from the Approval Date, up to the earlier of: (i) the date on which the next AGM is held or required by law or the Company s Articles to be held; (ii) the date on which the authority contained in the proposed Share Buy Back Mandate is varied or revoked by the Shareholders in a general meeting; or (iii) the date on which the Share Buy Backs are carried out to the full extent mandated. The proposed Share Buy Back Mandate may be renewed at each AGM or other general meeting of the Company. (c) Manner of purchases or acquisitions of Shares Purchases or acquisitions of Shares may be made by way of, inter alia: (i) on-market purchases ( Market Purchase ), transacted on Catalist through the ready market or through one or more duly licensed stockbrokers appointed by the Company for the purpose; and/or (ii) off-market purchases ( Off-Market Purchase ) (if effected otherwise than on Catalist) in accordance with any 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 Catalist Rules. 18

21 The Directors may impose such terms and conditions, which are consistent with the proposed Share Buy Back Mandate, the Catalist Rules and the Companies Act, as they consider fit in the interests of the Company in connection with or in relation to an equal access scheme or schemes. Under the Companies Act, an equal access scheme must satisfy all the following conditions: (i) 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; (ii) all of those persons shall be given a reasonable opportunity to accept the offers made; and (iii) the terms of the offers are the same, except that there shall be disregarded: (aa) differences in consideration attributable to the fact that offers may relate to Shares with different accrued dividend entitlements; (bb) (if applicable) differences in consideration attributable to the fact that offers relate to Shares with different amounts remaining unpaid; and (cc) differences in the offers introduced solely to ensure that each person is left with a whole number of Shares. In addition, the Catalist Rules provide 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: (i) the terms and conditions of the offer; (ii) the period and procedures for acceptances; (iii) the reasons for the proposed Share Buy Back; (iv) the consequences, if any, of the proposed Share Buy Backs by the Company that will arise under the Take-over Code or other applicable takeover rules; (v) whether the proposed Share Buy Backs, if made, would have any effect on the listing of the Shares on Catalist; (vi) details of any proposed Share Buy Backs (whether Market Purchases or Off-Market Purchases in accordance with an equal access scheme) made by the Company in the previous 12 months, 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; and (vii) whether the Shares purchased by the Company will be cancelled or kept as treasury shares. 19

22 (d) 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, subject to compliance with the Catalist Rules, where applicable. However, the purchase price to be paid for the Shares must not exceed: (i) in the case of a Market Purchase, 105% of the Average Closing Price (as defined hereinafter); and (ii) in the case of an Off-Market Purchase pursuant to an equal access scheme, 120% of the Average Closing Price (as defined hereinafter), (the Maximum Price ) in either case, excluding related expenses of the purchase or acquisition. For the above purposes of determing the Maximum Price: Average Closing Price means the average of the closing market prices of the Shares over the last five (5) Market Days on Catalist, on which transactions in the Shares were recorded, immediately preceding the day of the Market Purchase or, as the case may be, the day of the making of the offer pursuant to the Off-Market Purchase, and deemed to be adjusted for any corporate action that occurs after such five-market Day period; and day of the making of the offer means the day 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 calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase STATUS OF PURCHASED SHARES UNDER THE PROPOSED SHARE BUY BACK 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 in accordance with the Companies Act. 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 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: (a) Maximum Holdings The number of Shares held as treasury shares cannot at any time exceed 10% of the total number of issued Shares. 20

23 (b) 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. (c) Disposal and Cancellation Where Shares are held as treasury shares, the Company may at any time: (i) sell the treasury shares for cash; (ii) transfer the treasury shares for the purposes of or pursuant to an employee s share scheme; (iii) transfer the treasury shares as consideration for the acquisition of shares in or assets of another company or assets of a person; (iv) cancel the treasury shares; or (v) sell, transfer or otherwise use the treasury shares for such other purposes as may be prescribed by the Minister of Finance. In addition, under the Catalist Rules, an immediate announcement must be made of any sale, transfer, cancellation and/or use of treasury shares. Such announcement must include details such as the date of the sale, transfer, cancellation and/or use of such treasury shares, the purpose of such sale, transfer, cancellation and/or use of such treasury shares, the number of treasury shares which have been sold, transferred, cancelled and/or used, the number of treasury shares before and after such sale, transfer, cancellation and/or use, the percentage of the number of treasury shares against the total number of issued Shares (of the same class as the treasury shares) which are listed before and after such sale, transfer, cancellation and/or use and the value of the treasury shares if they are used for a sale or transfer, or cancelled SOURCE OF FUNDS FOR SHARE BUY BACK The Companies Act permits the Company to purchase or acquire its own Shares out of capital, as well as from its distributable profits, and only if the Company is solvent. The Company may not purchase or acquire its Shares on Catalist for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the SGX-ST. 21

24 When Shares are purchased or acquired, and cancelled: (a) if the Shares are purchased or acquired entirely out of the capital of the Company, the Company shall reduce the amount of its share capital by the total amount of the purchase price paid by the Company for the Shares (excluding brokerage, stamp duties, applicable goods and services tax, clearance fees and other related expenses) (the Purchase Price ); (b) if the Shares are purchased or acquired entirely out of profits of the Company, the Company shall reduce the amount of its profits available for the distribution of cash dividends by the total amount of the Purchase Price; or (c) where the Shares are purchased or acquired out of both the capital and the profits of the Company, the Company shall reduce the amount of its share capital and profits available for the distribution of cash dividends proportionately by the total amount of the Purchase Price. The Company will use internal resources and/or external borrowings to fund purchases of Shares pursuant to the proposed Share Buy Back Mandate. In purchasing or acquiring Shares pursuant to the proposed Share Buy Back Mandate, the Directors will principally consider the availability of internal resources. In addition, the Directors will also consider the availability of external financing. However, in considering the option of external financing, the Directors will consider particularly the prevailing gearing level of the Group and the costs of such financing. The Directors do not propose to exercise the proposed Share Buy Back Mandate in a manner and to such extent that the liquidity and capital adequacy position of the Group would be materially adversely affected FINANCIAL EFFECTS OF THE PROPOSED SHARE BUY BACK MANDATE It is not possible for the Company to realistically calculate or quantify the impact of purchases that may be made pursuant to the proposed Share Buy Back Mandate on the NTA and the EPS of the Company and the Group as the resultant effect would depend on, inter alia, the aggregate number of Shares purchased or acquired, the purchase prices paid for such Shares, the amount (if any) borrowed by the Company to fund the purchases or acquisitions, whether the purchase or acquisition is made out of profits and/or capital, and whether the Shares purchased or acquired are held in treasury or cancelled. The Directors do not propose to exercise the proposed Share Buy Back 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 requirement, the availability of financial resources, the expansion and investment plans of the Group, and the prevailing market conditions. The proposed Share Buy Back Mandate will be exercised with a view to enhance the EPS and/or the NTA per Share of the Group. 22