CIRCULAR DATED 12 AUGUST 2013 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ THIS CIRCULAR, IN PARTICULAR THE SECTION ENTITLED “IMPORTANT NOTICE TO SHAREHOLDERS” CAREFULLY. If you are in any doubt as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. If you have sold or transferred all issued and paid-up ordinary shares in the capital of Synear Food Holdings Limited (the “Company” or “Synear”), you should immediately forward this Circular together with the Notice of Special General Meeting and the accompanying proxy form to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee. The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular. This Circular, the Exit Offer Letter and the Acceptance Forms (all as defined herein) shall not be construed as, may not be used for the purpose of, and do not constitute, a notice or proposal or advertisement or an offer or invitation or solicitation in any jurisdiction or in any circumstance in which such a notice or proposal or advertisement or an offer or invitation or solicitation is unlawful or not authorised, or to any person to whom it is unlawful to make such a notice or proposal or advertisement or an offer or invitation or solicitation. SYNEAR FOOD HOLDINGS LIMITED (Incorporated in Bermuda) (Company Registration No. 38042) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED VOLUNTARY DELISTING OF SYNEAR FOOD HOLDINGS LIMITED PURSUANT TO RULES 1307 AND 1309 OF THE SGX-ST LISTING MANUAL Independent Financial Adviser to the Independent Directors of Synear Food Holdings Limited ERNST & YOUNG CORPORATE FINANCE PTE LTD (Incorporated in the Republic of Singapore) (Company Registration No. 199702967E) IMPORTANT DATES, TIMES AND VENUE Last date and time for lodgement of proxy form : 2 September 2013 at 10.00 a.m. Date and time of Special General Meeting : 4 September 2013 at 10.00 a.m. Venue of Special General Meeting : Eagle Room 1 and 2, Level 3 Laguna National Golf & Country Club 11 Laguna Golf Green Singapore 488047
Transcript
CIRCULAR DATED 12 AUGUST 2013
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE
READ THIS CIRCULAR, IN PARTICULAR THE SECTION ENTITLED “IMPORTANT NOTICE TO
SHAREHOLDERS” CAREFULLY. If you are in any doubt as to the course of action you
should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax
adviser or other professional adviser immediately.
If you have sold or transferred all issued and paid-up ordinary shares in the capital of Synear Food Holdings
Limited (the “Company” or “Synear”), you should immediately forward this Circular together with the Notice
of Special General Meeting and the accompanying proxy form to the purchaser or transferee or to the bank,
stockbroker or other agent through whom the sale or transfer was effected for onward transmission to the
purchaser or transferee.
The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of
the statements made, reports contained or opinions expressed in this Circular.
This Circular, the Exit Offer Letter and the Acceptance Forms (all as defined herein) shall not be construed
as, may not be used for the purpose of, and do not constitute, a notice or proposal or advertisement or an
offer or invitation or solicitation in any jurisdiction or in any circumstance in which such a notice or proposal
or advertisement or an offer or invitation or solicitation is unlawful or not authorised, or to any person to whom
it is unlawful to make such a notice or proposal or advertisement or an offer or invitation or solicitation.
SYNEAR FOOD HOLDINGS LIMITED(Incorporated in Bermuda)
(Company Registration No. 38042)
CIRCULAR TO SHAREHOLDERS
IN RELATION TO THE
PROPOSED VOLUNTARY DELISTING OF SYNEAR FOOD HOLDINGS LIMITED
PURSUANT TO RULES 1307 AND 1309 OF THE SGX-ST LISTING MANUAL
Independent Financial Adviser to the Independent Directors of Synear Food Holdings Limited
ERNST & YOUNG CORPORATE FINANCE PTE LTD(Incorporated in the Republic of Singapore)
(Company Registration No. 199702967E)
IMPORTANT DATES, TIMES AND VENUE
Last date and time for lodgement of proxy form : 2 September 2013 at 10.00 a.m.
Date and time of Special General Meeting : 4 September 2013 at 10.00 a.m.
Venue of Special General Meeting : Eagle Room 1 and 2, Level 3
Laguna National Golf & Country Club
11 Laguna Golf Green
Singapore 488047
IMPORTANT NOTICE TO SHAREHOLDERS
1. CONDITIONS OF THE DELISTING AND EXIT OFFER
• The Delisting and the Exit Offer are conditional on:
(a) the Delisting Resolution being approved by a majority of at least 75% of the total
number of issued Shares (excluding treasury shares) held by the Shareholders
present and voting, on a poll, either in person or by proxy at the SGM;
(b) the Delisting Resolution not being voted against by 10% or more of the total
number of issued Shares (excluding treasury shares) held by the Shareholders
present and voting, on a poll, either in person or by proxy at the SGM; and
(c) the receipt of confirmation from the SGX-ST that the SGX-ST has no objection to
the Company’s application to delist the Company from the Official List of the
SGX-ST.
• The Offeror who owns 17.60% of the issued Shares, together with the Promoters and
the Non-Acceptance Undertaking Shareholders who collectively own 58.38% of the
issued Shares, will be voting an aggregate of 75.98% of the issued Shares in favour of
the Delisting Resolution at the SGM. Hence, unless the Delisting Resolution is voted
against by 10% or more of the total number of Shares (excluding treasury shares) held
by Shareholders present and voting, on a poll, either in person or by proxy at the SGM,
the Delisting Resolution will be passed at the SGM.
• The Exit Offer is not conditional upon a minimum number of acceptances being
received.
2. CONSEQUENCE OF DELISTING
• If the Delisting Resolution is passed, it is expected that the Exit Offer will close at 5.30
p.m. on 18 September 2013, or such other date(s) as may be announced from time to
time by or on behalf of the Offeror (the “Closing Date”).
• The Delisting of the Shares will take place approximately two (2) to three (3) weeks after
the Closing Date.
• If the Company is delisted from the Official List of the SGX-ST, it is likely to be difficult
for Shareholders who do not accept the Exit Offer to sell their Shares in the absence of
a public market for the Shares as there is no arrangement for Shareholders to exit. Even
if such Shareholders were able to sell their Shares, they may receive a lower price as
compared to the Exit Offer Price and where such transfer or sale of Shares involves a
change in the beneficial ownership of those Shares, the prior written consent of (or,
depending on the circumstances, notice to) the Bermuda Monetary Authority will be
required.
3. NO COMPULSORY ACQUISITION
• There will not be any compulsory acquisition in the present case as the Promoters and
the Non-Acceptance Undertaking Shareholders have undertaken not to accept the Exit
Offer in respect of approximately 58.38% of the total number of issued Shares.
4. OVERSEAS SHAREHOLDERS
• The availability of the Exit Offer to the Shareholders whose addresses are outside
Singapore may be affected by the laws of the relevant overseas jurisdictions. Where
there are potential restrictions on sending the Exit Offer Letter and the relevant
Acceptance Forms to any overseas jurisdiction, the Offeror, UBS and CDP have each
reserved the right not to send these documents to such overseas jurisdictions.
• Overseas Shareholders may, nonetheless, obtain copies of the Exit Offer Letter, the
relevant Acceptance Forms and any related documents, during normal business hours,
from the date of the Exit Offer Letter and up to the Closing Date, from the Offeror
through its receiving agent, Boardroom Corporate & Advisory Services Pte. Ltd., at 50
Raffles Place, #32-01 Singapore Land Tower, Singapore 048623. Alternatively, an
Overseas Shareholder may write in to the Offeror through Boardroom Corporate &
Advisory Services Pte. Ltd. at the address listed above to request for the Exit Offer
Letter, the relevant Acceptance Forms and any related documents to be sent to an
address in Singapore by ordinary post at the Overseas Shareholder’s own risk (the last
day for despatch in respect of such request shall be a date falling three (3) market days
prior to the Closing Date).
5. THE ADVICE OF THE INDEPENDENT FINANCIAL ADVISER AND THE RECOMMENDATION
OF THE INDEPENDENT DIRECTORS
• EYCF is of the view that the financial terms of the Exit Offer are not fair, given that the
EV/EBITDA Ratio implied by the Exit Offer Price of 3.7 times is below the median
EV/EBITDA Ratios of both the Category I Comparable Companies and Category II
Comparable Companies of 7.9 times and 4.1 times, respectively, and the significant
discount implied by the Exit Offer Price to the NAV (being 60.0%) and the RNAV of the
Group (being 58.0%).
• EYCF is also of the view that on balance and taking into account: (i) that the P/E Ratio
implied by the Exit Offer Price is above the median P/E Ratios of both the Category I
Comparable Companies and Category II Comparable Companies; (ii) the premiums
implied by the Exit Offer Price when compared against the historical trading
performance of the Shares; (iii) the premiums implied by the Exit Offer Price in respect
of the 3-month and 6-month VWAPs when compared against the relevant VWAPs of the
Comparable Transactions; (iv) that prior to the Joint Announcement Date the Shares
have not traded above the P/NAV Ratio of 0.4 times implied by the Exit Offer Price since
April 2011; and (v) the absence of a competing offer, the financial terms of the Exit Offer
are reasonable and are not prejudicial to the interests of the Shareholders.
• EYCF advised the Independent Directors to recommend that Shareholders vote in
favour of the Delisting Resolution and accept the Exit Offer in the event the Delisting
Resolution is passed and Shareholders do not intend and are not prepared to hold
shares in an unlisted company.
• The Independent Directors concur with the advice by EYCF in respect of the Exit Offer
and adopt the recommendation of EYCF in respect of the Exit Offer.
Important Notice
The information in this section is qualified by, and should be read in conjunction with, the more
detailed information contained in the rest of this Circular. Shareholders should also read the
Exit Offer Letter for further details of the Exit Offer.
Unless otherwise defined, the terms “acting in concert” and “associates” shall have the
meanings ascribed to them in the Code.
The terms “depositor” and “depository register” shall have the meanings ascribed to them in
Section 130A of the Singapore Companies Act.
The term “Controlling Shareholder” shall have the meaning ascribed to it in the Listing Manual.
References to “you” and “your” in this Circular are to the Shareholders.
The headings in this Circular are inserted for convenience only and shall be ignored in construing
this Circular.
Words importing the singular shall, where applicable, include the plural and vice versa and words
importing one gender shall include the other gender. References to persons shall, where
applicable, 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 in the Bermuda Companies Act, the Singapore
Companies Act, the Listing Manual or the Code or any statutory modification thereof and used in
this Circular shall, where applicable, have the meaning assigned to it under the Bermuda
Companies Act, the Singapore Companies Act, the Listing Manual or the Code or any statutory
modification thereof, as the case may be, unless the context otherwise requires.
Any reference to a time of day and date in this Circular is made by reference to Singapore time
and date, unless otherwise stated.
Any discrepancies in this Circular between the listed amounts and the total thereof are due to
rounding. Accordingly, figures shown in totals in this Circular may not be an arithmetic aggregation
of the figures that precede them.
In this Circular, the issued share capital of the Company as at the Latest Practicable Date is
HKD137,500,000 comprising 1,375,000,000 Shares. The Company does not hold any treasury
shares as at the Latest Practicable Date.
Forward-looking Statements
All statements other than statements of historical facts included in this Circular are or may be
forward-looking statements. Forward-looking statements include but are not limited to those using
words such as “aim”, “seek”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “project”, “plan”,
“potential”, “strategy”, “forecast”, “possible”, “probable” and similar expressions or future or
conditional verbs such as “if”, “will”, “would”, “should”, “could”, “may” or “might”. These statements
reflect the Company’s current expectations, beliefs, hopes, intentions or strategies regarding the
future and assumptions in light of currently available information. Such forward-looking
statements are not guarantees of future results, performance, events or achievements and involve
known and unknown risks and uncertainties. Accordingly, actual results may differ materially from
those described in such forward-looking statements. Given the risks and uncertainties involved,
Shareholders and investors should not place undue reliance on such forward-looking statements,
and neither the Company nor EYCF assumes any obligation to update publicly or revise any
forward-looking statement.
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INDICATIVE TIMETABLE
Date of despatch of the Exit Offer
Letter(1) and this Circular
: 12 August 2013
Date of commencement of the Exit
Offer(1)
: 12 August 2013
Last date and time for lodgment of
proxy forms for the SGM(2)
: 2 September 2013 at 10.00 a.m.
Date and time of the SGM : 4 September 2013 at 10.00 a.m.
Expected last date of trading in the
Shares on the SGX-ST prior to the
Delisting
: To be announced by or on behalf of the Company
Expected Closing Date and time of
the Exit Offer(1)
: 5.30 p.m. on 18 September 2013, or such other
date(s) as may be announced from time to time by
or on behalf of the Offeror
Expected date for the Delisting of the
Shares
: Approximately two (2) to three (3) weeks after the
Closing Date, or such other date as may be
announced from time to time by the Company
Expected date(s) for the payment of
the Exit Offer Price, in respect of
valid acceptances of the Exit Offer
: (a) In respect of acceptances of the Exit Offer
which are complete in all respects and are
received on or before the date on which the
Exit Offer becomes or is declared to be
unconditional in all respects, within 10 days of
that date; or
(b) In respect of acceptances which are valid and
complete in all respects and are received after
the Exit Offer becomes or is declared to be
unconditional in all respects, but before the
Exit Offer closes, within 10 days of the date of
receipt of such acceptances
Notes:
(1) Based on information extracted from the Exit Offer Letter.
(2) Proxy forms should be duly completed and deposited at the office of the Singapore Share Transfer Agent,
Boardroom Corporate & Advisory Services Pte. Ltd., at 50 Raffles Place, Singapore Land Tower, #32-01, Singapore
048623, not less than 48 hours before the time appointed for holding the SGM. Completion and return of a proxy
form will not preclude a Shareholder from attending and voting in person at the SGM in place of his proxy.
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Shareholders should note that, save for the date of despatch of the Exit Offer Letter and this
Circular, the last date and time for lodgment of proxy forms for the SGM, the date and time of the
SGM and the date of commencement of the Exit Offer, the above timetable is indicative only and
may be subject to change. For events listed above which are described as “expected”, please
refer to future announcement(s) by or on behalf of the Company and/or the Offeror via SGXNET
for the exact dates and times of such events.
Please note that the Exit Offer is conditional upon the Delisting Resolution being passed at the
SGM and the receipt of the SGX-ST No Objection Confirmation but will not be conditional upon a
minimum number of acceptances being received. Please also note that approving the Delisting
Resolution at the SGM does not automatically mean that you have accepted the Exit Offer. Please
refer to Appendix I of the Exit Offer Letter which sets out procedures for acceptance of the Exit
Offer if you wish to accept the Exit Offer.
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LETTER TO SHAREHOLDERS
SYNEAR FOOD HOLDINGS LIMITED(Incorporated in Bermuda)
(Company Registration Number 38042)
Board of Directors:
Li Wei (Executive Chairman)
Wang Peng (Deputy Executive Chairman and Chief Executive Officer)
Li Wenjun (Executive Director)
Cai Hong (Finance Director)
Chan Wai Meng (Independent Director)
Lee Liang Ping (Independent Director)
David Chan Yin (Independent Director)
Registered Office:
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
12 August 2013
To: The Shareholders of Synear Food Holdings Limited
Dear Sir/Madam
PROPOSED VOLUNTARY DELISTING OF SYNEAR FOOD HOLDINGS LIMITED PURSUANT
TO RULES 1307 AND 1309 OF THE LISTING MANUAL
1. INTRODUCTION
1.1. On 15 October 2012, the Company and the Offeror jointly announced that the Offeror had
presented to the Directors a formal proposal (the “Delisting Proposal”) to seek the
voluntary delisting of the Company from the Official List of the SGX-ST pursuant to Rules
1307 and 1309 of the Listing Manual. Under the terms of the Delisting Proposal, UBS will
make, for and on behalf of the Offeror, the Exit Offer to acquire all the Offer Shares at the
Exit Offer Price of S$0.186 in cash for each Offer Share. A copy of the Joint Announcement
is available on the website of the SGX-ST at http://www.sgx.com.
1.2. The Directors have reviewed the Delisting Proposal and decided to (a) apply to the SGX-ST
for the Delisting; and (b) convene an SGM to seek the approval of Shareholders for the
Delisting.
1.3. The purpose of this Circular is to provide Shareholders with information relating to the
Delisting Proposal and the Exit Offer, the recommendation of the Independent Directors on
the Exit Offer, and to seek Shareholders’ approval at the SGM for the Delisting Resolution
to be proposed at the SGM, notice of which is set out in Appendix IX to this Circular.
2. THE DELISTING PROPOSAL
Under the terms of the Delisting Proposal, the Offeror is making the Exit Offer to acquire the
Offer Shares. The Delisting and the Exit Offer are conditional upon the Approval of Delisting
Resolution Condition and the SGX-ST No Objection Confirmation Condition being satisfied.
2.1. Rules 1307 and 1309 of the Listing Manual
Under Rule 1307 of the Listing Manual, the SGX-ST may agree to an application by the
Company to delist from the Official List of the SGX-ST if:
(a) the Company convenes an SGM to obtain Shareholders’ approval for the Delisting;
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(b) the Delisting Resolution has been approved by a majority of at least 75% of the total
number of issued Shares (excluding treasury shares) held by the Relevant
Shareholders present and voting, on a poll, either in person or by proxy at the SGM
(the Directors and Controlling Shareholders need not abstain from voting on the
Delisting Resolution); and
(c) the Delisting Resolution has not been voted against by 10% or more of the total
number of issued Shares (excluding treasury shares) held by the Relevant
Shareholders present and voting, on a poll, either in person or by proxy at the SGM.
In addition, under Rule 1309 of the Listing Manual, if the Company is seeking to delist from
the SGX-ST:
(i) a reasonable exit alternative, which should normally be in cash, should be offered to
the Relevant Shareholders; and
(ii) the Company should normally appoint an independent financial adviser to advise on
the Exit Offer.
2.2. Application to the Securities Industry Council
The information relating to the applications made by the Offeror to the SIC to seek
clarification regarding the extent to which the provisions of the Code applied to the Exit
Offer and the SIC’s rulings on the applications have been extracted from paragraph 8 of the
Letter to Shareholders in the Exit Offer Letter and reproduced below. All terms and
expressions used in the extract below shall have the same meanings as those defined in the
Exit Offer Letter, unless otherwise stated.
8. REGULATORY APPROVALS
An application was made by the Offeror to the Securities Industry Council (the
“SIC”) to seek clarification regarding the extent to which the provisions of the Code
applied to the Exit Offer. The SIC ruled on 30 August 2012, inter alia, that:
(a) the Exit Offer is exempted from compliance with the following provisions of the
Code:
(i) Rule 20.1 on keeping the Exit Offer open for 14 days after it is revised;
(ii) Rule 22 on the offer timetable;
(iii) Rule 28 on acceptances; and
(iv) Rule 29 on the right of acceptors to withdraw their acceptances;
(b) subject to the following conditions:
(i) disclosure in the Delisting Circular of the consolidated net tangible assets
per Share of the group comprising Synear, its subsidiaries and
associated companies based on the latest published accounts; and
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(ii) the Exit Offer remaining open for at least:
(A) 21 days after the date of the despatch of this Exit Offer Letter if this
Exit Offer Letter is despatched after Shareholders’ approval for the
Delisting has been obtained; or
(B) 14 days after the date of the announcement of Shareholders’
approval of the Delisting Proposal if this Exit Offer Letter is
despatched on the same date as the Delisting Circular;
(c) in relation to the Promoter Irrevocable Undertakings, that such Promoter
Irrevocable Undertakings do not constitute special deals for the purposes of
Rule 10 of the Code;
(d) the Non-Acceptance Undertaking Shareholders are not regarded as parties
acting in concert with the Offeror for the purposes of the Exit Offer by virtue of
the execution of the Non-Acceptance Irrevocable Undertakings by them,
subject to the Non-Acceptance Undertaking Shareholders and the Offeror
providing the SIC with statutory declarations confirming, inter alia, that there
are no existing business dealings between the Non-Acceptance Undertaking
Shareholders and the Offeror;
(e) LW and WP (collectively, the “Relevant Directors”) are exempted from the
requirement to make a recommendation to the Shareholders in respect of the
Exit Offer. Nevertheless, the Relevant Directors must still assume
responsibility for the accuracy of the facts stated and opinions expressed in
documents or advertisements issued by, or on behalf of, Synear to the
Shareholders in connection with the Exit Offer; and
(f) after the release of the joint announcement made by the Offeror and Synear
in relation to the Delisting and the Exit Offer (the “Joint Announcement”), LW
and/or Genki will not incur a mandatory offer obligation for Synear under Rule
14.1 of the Code in the event that LW and/or Genki acquire further Shares on
the market such that LW and/or Genki’s voting rights in Synear increase by
more than 1% in any six (6) month period.
3. THE EXIT OFFER
The information relating to the Exit Offer has been extracted from paragraph 2 of the Letter
to Shareholders in the Exit Offer Letter and reproduced below. All terms and expressions
used in the extract below shall have the same meanings as those defined in the Exit Offer
Letter, unless otherwise stated.
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2. THE EXIT OFFER
UBS, for and on behalf of the Offeror, hereby offers to acquire all the Offer Shares,
on the terms and subject to the conditions set out in this Exit Offer Letter (including
the Acceptance Forms), and on the following basis:
2.1 Consideration
For each Offer Share: S$0.186 in cash (the “Exit Offer Price”).
The Exit Offer Price shall be applicable to any number of Offer Shares that are
tendered in acceptance of the Exit Offer.
Shareholders may choose to accept the Exit Offer in respect of all or part of their
holdings of Offer Shares. Each Shareholder who accepts the Exit Offer will receive
S$186 for every 1,000 Offer Shares tendered for acceptance under the Exit Offer.
The Offer Shares will be acquired fully paid and free from all liens, equities,
mortgages, charges, encumbrances, rights of pre-emption and other third party
rights and interests of any nature whatsoever (“Encumbrances”), and together with
all rights, benefits and entitlements attached thereto as at the Joint Announcement
Date and thereafter attaching thereto (including the right to receive all dividends
and other distributions, if any, which may be announced, declared, paid or made
thereon by Synear on or after the Joint Announcement Date).
Acceptance of the Exit Offer by a Shareholder will be deemed to constitute an
unconditional and irrevocable warranty by that Shareholder that each Offer Share
in respect of which the Exit Offer is accepted and sold by him, as or on behalf of the
beneficial owner(s), is fully paid and free from all Encumbrances, and together with
all rights, benefits and entitlements attached thereto as at the Joint Announcement
Date and thereafter attaching thereto (including the right to receive all dividends
and other distributions, if any, which may be announced, declared, paid or made
thereon by Synear on or after the Joint Announcement Date).
The Exit Offer will also be extended, on the same terms and conditions, to all new
Shares unconditionally issued or to be issued prior to the close of the Exit Offer,
pursuant to the valid exercise of any options (each, a “Share Option”) to subscribe
for new Shares granted under Synear’s employee share option scheme, the Synear
Employee Share Options Scheme (the “Scheme”). For the purpose of the Exit
Offer, the expression “Offer Shares” shall include such Shares. There are currently
no Share Options granted pursuant to the Scheme.
2.2 Conditions
The Delisting and the Exit Offer will be conditional on:
(a) the resolution for the Delisting (the “Delisting Resolution”) being approved by
a majority of at least 75% of the total number of issued Shares (excluding
treasury shares) held by the Shareholders present and voting, on a poll, either
in person or by proxy at the SGM (the Directors and controlling Shareholders
need not abstain from voting on the Delisting Resolution);
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(b) the Delisting Resolution not being voted against by 10% or more of the total number
of issued Shares (excluding treasury shares) held by the Shareholders present and
voting, on a poll, either in person or by proxy at the SGM
((a) and (b) collectively, the “Approval of Delisting Resolution Condition”); and
(c) receipt of confirmation from the SGX-ST (the “SGX-ST No Objection
Confirmation”) that the SGX-ST has no objection to Synear’s application to
delist from the Official List of the SGX-ST (the “SGX-ST No Objection
Confirmation Condition”).
The Exit Offer will not be conditional on a minimum number of acceptances being
received by the Offeror.
Under Rule 1307 of the Listing Manual, all Shareholders (including the Offeror
and parties acting in concert with the Offeror who hold Shares) are entitled to
vote on the Delisting Resolution.
The Offeror, which owns 241,952,440 Shares as at the Latest Practicable Date,
representing approximately 17.60% of all the Shares (excluding treasury shares), is
entitled to and intends to vote all its Shares in favour of the Delisting Resolution at
the SGM. Similarly, the Promoters (as defined herein) and the Non-Acceptance
Undertaking Shareholders (as defined herein), who collectively own 802,706,000
Shares as at the Latest Practicable Date, representing approximately 58.38% of all
the Shares (excluding treasury shares), have undertaken pursuant to their
respective Promoter Irrevocable Undertakings (as defined herein) and Non-
Acceptance Irrevocable Undertakings (as defined herein), to vote all their
respective Shares in favour of the Delisting Resolution at the SGM. Accordingly, the
Offeror, the Promoters and the Non-Acceptance Undertaking Shareholders
collectively own 1,044,658,440 Shares as at the Latest Practicable Date,
representing approximately 75.98% of all the Shares (excluding treasury shares).
Further details of the Promoter Irrevocable Undertakings and the Non-Acceptance
Irrevocable Undertakings are set out in paragraphs 2.4 and 2.5 of this Exit Offer
Letter respectively.
An application will be made by Synear to the SGX-ST to delist Synear from the
Official List of the SGX-ST following the fulfillment of the Approval of Delisting
Resolution Condition.
Shareholders are to note that if either (a) the Approval of Delisting Resolution
Condition or (b) the SGX-ST No Objection Confirmation Condition is not
fulfilled, the Delisting will not proceed and Synear will remain listed on the
Official List of the SGX-ST. The Exit Offer will also lapse and all acceptances
of the Exit Offer will be returned.
2.3 Duration
The Exit Offer is open for acceptance from the date of despatch of this Exit Offer
Letter. Shareholders may choose to accept the Exit Offer before the SGM. However,
such acceptances would be conditional and if either:
(a) the Delisting Resolution is not approved at the SGM; or
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(b) the SGX-ST No Objection Confirmation is not received by Synear,
the Approval of Delisting Resolution Condition and/or the SGX-ST No Objection
Confirmation Condition (as the case may be) will not be fulfilled and the Exit Offer
will lapse, and both the Shareholders and the Offeror will cease to be bound by any
prior acceptances of the Exit Offer by any Shareholder.
If the Delisting Resolution is approved by the Shareholders at the SGM, the Exit
Offer will continue to be opened for acceptance by the Shareholders for at least 14
days after the SGM. Accordingly, the Exit Offer will close at 5:30 p.m. on
18 September 2013 or such later date(s) as may be announced from time to time
by or on behalf of the Offeror (the “Closing Date”). If the Approval of Delisting
Resolution Condition and the SGX-ST No Objection Confirmation Condition are
fulfilled on or before the Closing Date, the Exit Offer will continue to be opened for
acceptance by the Shareholders for at least 14 days after the date of the later of the
announcement(s) of the satisfaction of the Approval of Delisting Resolution
Condition and the SGX-ST No Objection Confirmation Condition.
4. INFORMATION ON THE OFFEROR AND ITS CONCERT PARTIES
The information relating to the Offeror has been extracted from paragraph 3 of the Letter to
Shareholders in the Exit Offer Letter and reproduced below. Additional information on the
Offeror is set out in Appendix III to this Circular. All terms and expressions used in the
extract below shall have the same meanings as those defined in the Exit Offer Letter, unless
otherwise stated.
3. INFORMATION ON THE OFFEROR
The Offeror is a special purpose vehicle incorporated in the British Virgin Islands on
8 February 2012 for the purposes of the Delisting and the Exit Offer. Its principal
activity is that of investment holding.
As at the Latest Practicable Date, the shareholding structure of the Offeror is as
follows:
Number of shares in
the Offeror
Percentage of issued
shares in the Offeror
(%)
Genki 6,637 66.37
Union 2,539 25.39
Elite 824 8.24
Total: 10,000 100.00
As at the Latest Practicable Date, Genki has a direct interest in
457,460,000 Shares, representing approximately 33.27% of the issued
share capital of Synear. Genki is wholly-owned by LW, Synear’s Executive
Chairman.
13
As at the Latest Practicable Date, Union has a direct interest in 175,000,000
Shares, representing approximately 12.73% of the issued share capital of Synear.
Union is wholly-owned by WP, Synear’s Deputy Executive Chairman and Chief
Executive Officer.
As at the Latest Practicable Date, Elite has a direct interest in 56,799,000 Shares,
representing approximately 4.13% of the issued share capital of Synear. Elite is
wholly-owned by FQ, a cousin of LW.
The shareholding structure of the Offeror set out in the table above reflects the
relative shareholding proportion of Genki, Union and Elite in Synear.
As at the Latest Practicable Date, the aggregate direct shareholding interest of
Genki, Union and Elite in Synear is 689,259,000 Shares, representing
approximately 50.13% of the issued share capital of Synear.
The board of directors of the Offeror is comprised of LW, WP and FQ.
5. IRREVOCABLE UNDERTAKINGS
The information relating to the undertakings obtained by the Offeror has been extracted
from paragraph 2 of the Letter to Shareholders in the Exit Offer Letter and reproduced
below. All terms and expressions used in the extract below shall have the same meanings
as those defined in the Exit Offer Letter, unless otherwise stated.
2.4 Promoter Irrevocable Undertakings
Each of Li Wei (“LW”), Wang Peng (“WP”) and Fu Qiang (“FQ”) (collectively, the
“Promoters”) has provided separate irrevocable undertakings (the “Promoter
Irrevocable Undertakings” and each a “Promoter Irrevocable Undertaking”) in
favour of the Offeror in respect of the Shares held by them (if any) and Shares held
by Genki Holdings Limited (“Genki”), Union Success International Limited
(“Union”) and Elite Era Holdings Limited (“Elite”) respectively. Please refer to
paragraph 3 for further details.
Pursuant to their respective Promoter Irrevocable Undertakings, the Promoters
have undertaken, inter alia, the following:
(a) not to, and procure Genki, Union and Elite (as the case may be) not to, directly
or indirectly, accept the Exit Offer (including any revised or improved Exit Offer
by or on behalf of the Offeror) in respect of Shares held by Genki, Union and
Elite respectively and any Shares which they or Genki, Union or Elite (as the
case may be) may, directly or indirectly, acquire on or after the date of their
Promoter Irrevocable Undertakings (in each case, in respect of each Promoter
and Genki, Union or Elite (as the case may be), the “Promoter Relevant
Shares”);
(b) vote or procure the voting of all the Promoter Relevant Shares in favour of the
Delisting Resolution at the SGM;
(c) not to transfer or otherwise dispose of any of the Promoter Relevant Shares
during the period commencing from the date of each Promoter Irrevocable
Undertaking and ending on the Closing Date; and
14
(d) the funding for the Exit Offer will be contributed by Genki, Union and Elite in
accordance with their respective shareholding proportions in the Offeror as set
out in paragraph 3 of this Exit Offer Letter.
The Promoter Irrevocable Undertakings shall expire on the earlier of the following
dates: (i) the date of the SGM if the Delisting Resolution is not approved at the SGM
or (ii) the date when the Exit Offer (including any revised or improved Exit Offer by
or on behalf of the Offeror) is withdrawn, lapses or closes.
2.5 Non-Acceptance Irrevocable Undertakings
The following Shareholders (the “Non-Acceptance Undertaking Shareholders”)
have provided irrevocable undertakings (the “Non-Acceptance Irrevocable
Undertakings” and each a “Non-Acceptance Irrevocable Undertaking”) in favour
of the Offeror in respect of their Shares:
(a) Royson Investments Group Limited who as at the Latest Practicable Date
holds 52,391,000 Shares representing approximately 3.81% of the issued
share capital of Synear;
(b) Huge Wealth Group Holdings Limited who as at the Latest Practicable Date
holds 24,661,000 Shares representing approximately 1.79% of the issued
share capital of Synear;
(c) Su Yang who as at the Latest Practicable Date holds 19,559,000 Shares
representing approximately 1.42% of the issued share capital of Synear;
(d) Yang Qingwei who as at the Latest Practicable Date holds 13,252,000 Shares
representing approximately 0.96% of the issued share capital of Synear; and
(e) Chen Yang who as at the Latest Practicable Date holds 3,584,000 Shares
representing approximately 0.26% of the issued share capital of Synear.
Each of the Non-Acceptance Undertaking Shareholders has undertaken under its
respective Non-Acceptance Irrevocable Undertaking, inter alia, the following:
(a) not to, directly or indirectly, accept the Exit Offer (including any revised or
improved Exit Offer by or on behalf of the Offeror) in respect of any of its
Shares and any Shares which it may, directly or indirectly, acquire on or after
the date of its Non-Acceptance Irrevocable Undertaking (the “Non-
Acceptance Relevant Shares”);
(b) vote or procure the voting of all its Non-Acceptance Relevant Shares in favour
of the Delisting Resolution at the SGM; and
(c) not to transfer or otherwise dispose of any of its Non-Acceptance Relevant
Shares during the period commencing from the date of its Non-Acceptance
Irrevocable Undertaking and ending on the Closing Date.
The Non-Acceptance Irrevocable Undertakings shall expire on the earlier of the
following dates: (i) the date of the SGM if the Delisting Resolution is not approved
at the SGM or (ii) the date when the Exit Offer (including any revised or improved
Exit Offer by or on behalf of the Offeror) is withdrawn, lapses or closes.
15
6. RATIONALE FOR THE DELISTING PROPOSAL AND THE OFFEROR’S INTENTIONS
FOR THE COMPANY
The information relating to the Offeror’s rationale for the Delisting Proposal and the
Offeror’s intentions for the Company has been extracted from paragraph 5 of the Letter to
Shareholders in the Exit Offer Letter and reproduced below. All terms and expressions used
in the extract below shall have the same meanings as those defined in the Exit Offer Letter,
unless otherwise stated.
5. RATIONALE FOR THE DELISTING
5.1 Opportunity to Realise Investments with an Upfront Premium
The Exit Offer Price represents a premium of approximately 10.1% over the last
transacted price per Share of S$0.169 as at 9 October 2012, being the last full day
of trading in the Shares on the SGX-ST immediately prior to the Joint
Announcement Date (the “Last Trading Day”), and a premium of approximately
20.8%, 31.0% and 37.8% over the volume weighted average price (“VWAP”) per
Share for the one-month, three-month and six-month periods, respectively, up to
and including the Last Trading Day. Additionally, prior to the Last Trading Day, the
Exit Offer Price was equal to the highest price traded since 25 February 2011.
Through the Delisting Proposal, the accepting Shareholders will have an
opportunity to realise their investments in Synear for a cash consideration at a
premium over the market prices of the Shares up to and including the Last Trading
Day as reflected in paragraph 7.1, an option which may not otherwise be readily
available due to the low trading liquidity of the Shares, without incurring brokerage
and other trading costs.
As the Shares have been trading at a higher price since the Joint Announcement
Date, there is no assurance that the market price will be maintained at the level as
at the Latest Practicable Date after the Closing Date or if the Delisting Resolution
is not approved by the Shareholders at the SGM.
5.2 Low Trading Liquidity
The trading liquidity of the Shares on the SGX-ST in the past year has been
generally thin. The average daily trading volume of the Shares for the 12-month,
six-month, three-month and one-month periods up to and including the Last Trading
Day are as follows:
Period prior to the
Last Trading Day
Average Daily
Trading Volume(1)(2)
Last 12 months 988,518
Last six (6) months 996,072
Last three (3) months 1,189,613
Last one (1) month 2,034,318
Last Trading Day 6,578,000
16
Notes:
(1) Source: Bloomberg L.P.
(2) The average daily trading volume is computed based on the total trading volume for all the days
on which there was trading in Shares on the SGX-ST and for the relevant periods immediately
prior to and including the Last Trading Day, divided by the total number of days on which there was
trading in Shares on the SGX-ST.
The Exit Offer will provide an exit option for those Shareholders who wish to realisetheir entire investment in the Shares but find it difficult to do so as a result of the lowtrading liquidity of the Shares.
5.3 Compliance Costs of Maintaining Listing
In maintaining Synear’s listing status, Synear incurs additional compliance andassociated costs. Synear will be able to gain cost-savings as a non-listed entity bydispensing with costs associated with complying with SGX-ST listing requirementsand other regulatory requirements as well as human resources that have to becommitted for such compliance. The Delisting, if approved, will eliminate the costsof compliance with the SGX-ST listing rules and regulations, thereby allowingSynear to focus its resources on its business operations.
5.4 No Need for Access to Capital Markets
In the last five (5) years, Synear has not carried out any exercise to raise cashfunding on the SGX-ST. Synear is unlikely to require access to Singapore capitalmarkets to finance its operations in the foreseeable future. Accordingly, it is notnecessary for Synear to maintain a listing on the SGX-ST.
5.5 Offeror’s Intentions
The Offeror has no current intention of (a) making material changes to Synear’sexisting business, (b) re-deploying Synear’s fixed assets, or (c) discontinuing theemployment of the employees of Synear and its subsidiaries, other than in theordinary course of business. Nonetheless, the Offeror retains the flexibility at anytime to consider options or opportunities which may present themselves, and whichit regards to be in the interests of the Offeror and/or Synear. Following the close ofthe Exit Offer, the Offeror will conduct a comprehensive review of the operations,management and financial position of Synear and its subsidiaries, and will evaluatevarious strategic options following the privatisation of Synear, including listing theshares of the Offeror or any of its subsidiaries on a recognised stock exchange inthe future if market conditions are favourable.
7. IMPLICATIONS OF DELISTING AND COMPULSORY ACQUISITION
7.1. Delisting
Shareholders should note that shares of unquoted companies are generally valued at a
discount to the shares of comparable listed companies as a result of the lack of
marketability. If the Company is delisted from the Official List of the SGX-ST, it is likely
to be difficult for Shareholders who do not accept the Exit Offer to sell their Shares
in the absence of a public market for the Shares as there is no arrangement for
Shareholders to exit. Even if such Shareholders were able to sell their Shares, they
may receive a lower price as compared to the Exit Offer Price and where such transfer
or sale of Shares involves a change in the beneficial ownership of those Shares, the
prior written consent of (or, depending on the circumstances, notice to) the Bermuda
Monetary Authority will be required.
17
Shareholders should also note that, under the Code, except with the consent of the SIC,
neither the Offeror nor any person acting in concert with it may, within six (6) months of the
closure of the Exit Offer, make a second offer to, or acquire any Shares from, any
Shareholder on terms better than those made available under the Exit Offer.
As an unquoted company, the Company will no longer be obliged to comply with the listing
requirements of the SGX-ST, in particular the continuing corporate disclosure requirements
under Chapter 7 and Appendices 7.1 to 7.4 of the Listing Manual. Nonetheless, as a
company incorporated in Bermuda, the Company will still need to comply with the Bermuda
Companies Act, the memorandum of association of the Company and its Bye-Laws, and the
interests of Shareholders who do not accept the Exit Offer will be protected to the extent
provided for by the Bermuda Companies Act, the memorandum of association of the
Company and the Bye-Laws.
If the Company is delisted from the Official List of the SGX-ST, each depositor who holds
Shares that are deposited with CDP and does not accept the Exit Offer will be entitled to
one share certificate representing his delisted Shares. The Singapore Share Transfer Agent
will arrange to forward the share certificates to such depositors for their physical
safekeeping.
Shareholders who are in doubt of their position should seek independent
professional advice.
7.2. Compulsory Acquisition
The information relating to the rights of compulsory acquisition has been extracted from
paragraph 6 of the Letter to Shareholders in the Exit Offer Letter and reproduced below. All
terms and expressions used in the extract below shall have the same meanings as those
defined in the Exit Offer Letter, unless otherwise stated.
6. COMPULSORY ACQUISITION
Under Section 102 of the Companies Act 1981 (as amended) of Bermuda (the
“Bermuda Companies Act”), where an offeror who has, within four (4) months after
the making of an offer under a scheme or contract:
(a) obtained acceptances from shareholders holding not less than 90% in value of
the shares in a Bermuda-incorporated company (the “Target”) (other than
shares already held, at the date of the offer, by the offeror, the offeror’s
subsidiaries, and nominees of the offeror or its subsidiaries); and
(b) where, at the date of the offer, shares in the Target whose transfer is involved,
are already held by the offeror, the offeror’s subsidiaries, and nominees of the
offeror or its subsidiaries to a value greater than 10% of the total issued shares
of the Target, such accepting shareholders also represent not less than 75%
in number of the holders of such shares
18
(the “Approval Threshold”), the offeror may at any time within two (2) months
beginning from the date on which the Approval Threshold is achieved, give notice
under Section 102(1) of the Bermuda Companies Act to any dissenting shareholder
that the offeror wishes to acquire his shares (the “Acquisition Notice”). When such
Acquisition Notice is given, upon the expiry of one (1) month from the date on which
the notice was given, the offeror shall be entitled and bound to acquire those shares
on the same terms of the offer (unless an application is made by the dissenting
shareholder(s) to court within one (1) month from the date on which the notice was
given and the court thinks fit to order otherwise).
Section 102(2) of the Bermuda Companies Act provides, inter alia, that once the
offeror (together with its subsidiaries and nominees) holds 90% or more in value of
the shares in the Target including those held at the date of the transfer, such offeror
shall within one (1) month give notice of that fact to the remaining shareholders of
the Target, and any such remaining shareholder may within three (3) months from
the giving of the said notice to him, give notice (an “Offeree Notice”) requiring the
offeror to acquire his shares in the Target. Where a remaining shareholder gives an
Offeree Notice with respect to any shares in the Target, the offeror shall be entitled
and bound to acquire those shares on the same terms of the original offer (or on
such other terms as may be agreed or as the court, on the application of either the
offeror or the shareholder, thinks fit to order), notwithstanding that the offeror may
not have issued the Acquisition Notice.
Under Section 103 of the Bermuda Companies Act, holders of not less than 95% of
the shares in a Bermuda-incorporated company (the “purchasers”) may give notice
to the remaining shareholders of the intention to acquire their shares on the terms
set out in the notice. When such a notice is given, the purchasers shall be entitled
and bound to acquire the shares of the remaining shareholders on the terms set out
in the notice unless a remaining shareholder applies to the court to have the court
appraise the value of such shares. The procedure in connection with such an
acquisition is set out in Section 103 of the Bermuda Companies Act.
In view of the Promoters and the Non-Acceptance Undertaking Shareholders
having executed the Promoter Irrevocable Undertakings and the Non-Acceptance
Irrevocable Undertakings respectively pursuant to which they undertook, inter alia,
not to, accept the Exit Offer (including any revised or improved Exit Offer made by
or on behalf of the Offeror) in respect of their Promoter Relevant Shares and
Non-Acceptance Relevant Shares (as the case may be), it is envisaged that
Sections 102 and 103 of the Bermuda Companies Act in relation to compulsory
acquisition will not be applicable, as the Promoter Relevant Shares and the
Non-Acceptance Relevant Shares collectively represent approximately 58.38% of
the total number of issued Shares.
Shareholders who are in doubt of their position under the Bermuda Companies Act
are advised to seek their own independent legal advice.
19
8. FINANCIAL ASPECTS OF THE EXIT OFFER
The information on the benchmarking of the Exit Offer has been extracted from paragraph
7 of the Letter to Shareholders in the Exit Offer Letter and reproduced below. All terms and
expressions used in the extract below shall have the same meanings as those defined in the
Exit Offer Letter, unless otherwise stated.
7. FINANCIAL ASPECTS OF THE EXIT OFFER
7.1 Market Price Comparisons
The Exit Offer Price represents the following premium over the historical
transacted prices of the Shares on the SGX-ST:
DescriptionShare Price(1)
(S$)
Premium over
Share Price(2)
(%)
(a) Last transacted price per Share on
31 July 2013 (being the Latest
Practicable Date)
0.183 1.6
(b) Last transacted price per Share on
9 October 2012 (being the Last Trading
Day)
0.169 10.1
(c) VWAP for the one-month period prior to
and including the Last Trading Day
0.154 20.8
(d) VWAP for the three-month period prior
to and including the Last Trading Day
0.142 31.0
(e) VWAP for the six-month period prior to
and including the Last Trading Day
0.135 37.8
(f) VWAP for the 12-month period prior to
and including the Last Trading Day
0.131 42.0
Notes:
(1) Source: Bloomberg L.P..
(2) Computed based on the share prices which were rounded to the nearest three (3) decimal
places.
20
7.2 Closing Prices of the Shares
The closing price of the Shares on the SGX-ST, as reported by Bloomberg L.P.,
on (a) the Latest Practicable Date was S$0.183, and on (b) 9 October 2012,
being the Last Trading Day, was S$0.169. The highest, lowest and last closing
prices and trading volume of the Shares on the SGX-ST on a monthly basis from
April 2012 to September 2012 (being the six (6) calendar months preceding the
Joint Announcement Date), as reported by Bloomberg L.P., are set out below:
Highest
closing
price of
the month
(S$)
Lowest
closing
price of
the month
(S$)
Last
closing
price of
the month
(S$)
Volume of
the Shares
traded
(’000)
April 2012 0.128 0.122 0.122 11,790
May 2012 0.134 0.122 0.132 25,190
June 2012 0.136 0.128 0.134 13,024
July 2012 0.140 0.130 0.134 16,909
August 2012 0.141 0.133 0.137 11,003
September 2012 0.167 0.133 0.153 32,187
7.3 Highest and Lowest Closing Prices of the Shares
As reported by Bloomberg L.P., during the period commencing six (6) months
preceding the Joint Announcement Date and ending on the Latest Practicable
Date (being 15 April 2012 to 31 July 2013 (both dates inclusive)):
(a) the highest closing price of the Shares on the SGX-ST was S$0.196, which
was transacted on 14 January 2013; and
(b) the lowest closing price of the Shares on the SGX-ST was S$0.122, which
was transacted on 30 April 2012 and 14 May 2012.
21
9. OVERSEAS SHAREHOLDERS
9.1. The information relating to the availability of the Exit Offer and the documents relating to the
Delisting to Overseas Shareholders has been extracted from paragraph 12 of the Letter to
Shareholders in the Exit Offer Letter and reproduced below. All terms and expressions used
in the extract below shall have the same meanings as those defined in the Exit Offer Letter,
unless otherwise stated.
12. OVERSEAS SHAREHOLDERS
The availability of the Exit Offer to the Shareholders whose addresses are outside
Singapore, as shown on the Register of Members of Synear or, as the case may be,
in the records of CDP (each, an “Overseas Shareholder”) may be affected by the
laws of the relevant overseas jurisdictions. Accordingly, any Overseas Shareholder
should inform himself about and observe any applicable legal requirements, and
exercise caution in relation to the Exit Offer, as this Exit Offer Letter and the
Acceptance Forms have not been reviewed by any regulatory authority in any
overseas jurisdiction. Where there are potential restrictions on sending this
Exit Offer Letter and the relevant Acceptance Forms to any overseas
jurisdiction, the Offeror, UBS and CDP each reserves the right not to send
these documents to such overseas jurisdictions.
Copies of this Exit Offer Letter, the relevant Acceptance Forms and any other formal
documentation relating to the Exit Offer are not being, and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any
jurisdiction where the making of or the acceptance of the Exit Offer would violate the
applicable law of that jurisdiction (“Restricted Jurisdiction”) and will not be
capable of acceptance by any such use, instrumentality or facility within any
Restricted Jurisdiction and persons receiving such documents (including
custodians, nominees and trustees) must not mail or otherwise forward, distribute
or send them in or into or from any Restricted Jurisdiction.
The Exit Offer (unless otherwise determined by the Offeror and permitted by
applicable law and regulation) will not be made, directly or indirectly, in or into, or
by the use of mails of, or by any means or instrumentality (including, without
limitation, telephonically or electronically) of interstate or foreign commerce of, or
any facility of a national, state or other securities exchange of, any Restricted
Jurisdiction and the Exit Offer will not be capable of acceptance by any such use,
means, instrumentality or facilities.
Overseas Shareholders may, nonetheless, obtain copies of this Exit Offer Letter,
the relevant Acceptance Forms and any related documents, during normal business
hours, from the date of this Exit Offer Letter and up to the Closing Date, from the
Offeror through its receiving agent, Boardroom Corporate & Advisory Services Pte.
Ltd., at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623.
Alternatively, an Overseas Shareholder may write in to the Offeror through
Boardroom Corporate & Advisory Services Pte. Ltd. at the address listed above to
request for this Exit Offer Letter, the relevant Acceptance Forms and any related
documents to be sent to an address in Singapore by ordinary post at the Overseas
Shareholder’s own risk (the last day for despatch in respect of such request shall
be a date falling three (3) market days prior to the Closing Date).
22
It is the responsibility of any Overseas Shareholder who wishes to (a) request for
this Exit Offer Letter, the relevant Acceptance Forms and any related documents,
and/or (b) accept the Exit Offer, to satisfy himself as to the full observance of the
laws of the relevant jurisdiction in that connection, including the obtaining of any
governmental or other consent which may be required, and compliance with all
necessary formalities or legal requirements and the payment of any taxes, imposts,
duties or other requisite payments due in such jurisdiction. Such Overseas
Shareholder shall be liable for any such taxes, imposts, duties or other requisite
payments payable and the Offeror, UBS, CDP and/or any person acting on its
behalf shall be fully indemnified and held harmless by such Overseas Shareholder
for any such taxes, imposts, duties or other requisite payments as the Offeror, UBS,
CDP and/or any person acting on its behalf may be required to pay. In (a)
requesting for this Exit Offer Letter, the relevant Acceptance Forms and/or any
related documents and/or (b) accepting the Exit Offer, the Overseas Shareholder
represents and warrants to the Offeror, CDP and UBS that he is in full observance
of the laws of the relevant jurisdiction in that connection, and that he is in full
compliance with all necessary formalities or legal requirements.
ANY OVERSEAS SHAREHOLDER WHO IS IN ANY DOUBT ABOUT HIS
POSITION SHOULD CONSULT HIS PROFESSIONAL ADVISER IN THE
RELEVANT JURISDICTION.
The Offeror and UBS each reserves the right to (a) reject any acceptance of the Exit
Offer where it believes, or has reason to believe, that such acceptance may violate
the applicable laws of any jurisdiction; and (b) notify any matter, including the
despatch of this Exit Offer Letter, any formal documentation relating to the Exit
Offer, and the fact that the Exit Offer has been made, to any or all Shareholders
(including the Overseas Shareholders) by announcement to the SGX-ST and if
necessary, paid advertisement in a newspaper published and circulated in
Singapore, in which case such notice shall be deemed to have been sufficiently
given notwithstanding any failure by any Shareholder to receive or see such
announcement or advertisement.
10. INFORMATION IN RESPECT OF THE DIRECTORS
10.1. Independence of Directors
All the Directors, except for the Relevant Directors, are independent for the purposes of the
Exit Offer and are required to make a recommendation to Shareholders in respect of the
Exit Offer. The SIC has ruled on 30 August 2012 that the Relevant Directors will be
exempted from the requirement of making a recommendation to Shareholders on the Exit
Offer as they face irreconcilable conflicts of interests in relation to the Exit Offer for the
reasons as set out below:
(a) Li Wei, the Executive Chairman of the Company, who at the Latest Practicable Date
holds a shareholding interest (both direct and indirect) of approximately 50.87% in the
Company and is a party acting in concert with the Offeror. Li Wei has also given an
Irrevocable Undertaking to the Offeror to vote in favour of the Delisting Resolution and
accept the Exit Offer in respect of all his Shares; and
(b) Wang Peng, the Deputy Executive Chairman and Chief Executive Officer, who at the
Latest Practicable Date holds a shareholding interest (both direct and indirect) of
approximately 30.32% in the Company and is a party acting in concert with the Offeror.
Wang Peng has also given an Irrevocable Undertaking to the Offeror to vote in favour of
the Delisting Resolution and accept the Exit Offer in respect of all his Shares.
23
All the Directors (including, for the avoidance of doubt, the Relevant Directors) are
responsible for the accuracy of facts stated and completeness of the information given by
the Company to Shareholders in respect of the Exit Offer, including information contained
in announcements and documents issued by or on behalf of the Company in connection
with the Exit Offer.
10.2. Interest in Shares of the Directors
The interests of the Directors who have an interest, direct or indirect, in the Shares as at
the Latest Practicable Date are set out below.
Name
Direct Interest Deemed Interest
No. of
Shares
% of Issued
Shares
No. of
Shares
% of issued
Shares
Li Wei(1) – – 699,412,440 50.87
Wang Peng(2) – – 416,952,440 30.32
Notes:
(1) Li Wei is deemed to be interested in the Shares held by Genki and the Offeror. He has a 100% interest in
Genki, which in turn has a 66.37% interest in the Offeror.
(2) Wang Peng is deemed to be interested in the Shares held by Union and the Offeror. He has a 100% interest
in Union, which in turn has a 25.39% interest in the Offeror.
10.3. Dealings in Shares by the Directors
Save as disclosed below, none of the Directors have dealt for value in the Shares during the
period commencing six (6) months prior to the Joint Announcement Date and ending on the
Latest Practicable Date.
Name of Party(1)(2)
Date of
Transaction
Number of Shares
acquired
Transacted Price
per Share
(S$)
Offeror 15 October 2012 92,247,000 0.186
16 October 2012 (1) 7,352,000 (1) 0.185
(2) 4,976,000 (2) 0.186
17 October 2012 150,000 0.186
6 November 2012 95,000 0.186
7 November 2012 40,000 0.186
8 November 2012 95,000 0.186
9 November 2012 704,000 0.186
12 November 2012 161,000 0.186
14 November 2012 1,795,000 0.186
15 November 2012 368,000 0.186
16 November 2012 500,000 0.186
19 November 2012 431,000 0.186
20 November 2012 717,000 0.186
21 November 2012 811,000 0.186
24
Name of Party(1)(2)
Date of
Transaction
Number of Shares
acquired
Transacted Price
per Share
(S$)
22 November 2012 70,000 0.186
23 November 2012 105,000 0.186
30 November 2012 2,262,000 0.186
3 December 2012 323,000 0.186
4 December 2012 4,299,000 0.186
5 December 2012 2,916,000 0.186
6 December 2012 1,058,000 0.186
7 December 2012 3,179,000 0.186
10 December 2012 2,450,000 0.186
11 December 2012 2,777,000 0.186
12 December 2012 2,940,000 0.186
13 December 2012 2,352,000 0.186
14 December 2012 2,020,000 0.186
17 December 2012 94,000 0.186
18 December 2012 26,000 0.186
19 December 2012 1,698,000 0.186
20 December 2012 4,000 0.186
21 December 2012 150,000 0.186
24 December 2012 50,000 0.186
26 December 2012 110,000 0.186
27 December 2012 580,000 0.186
28 December 2012 7,000 0.186
31 December 2012 269,000 0.186
2 January 2013 111,000 0.186
3 January 2013 211,000 0.186
4 January 2013 78,000 0.186
7 January 2013 310,000 0.186
8 January 2013 566,000 0.186
9 January 2013 268,000 0.186
10 January 2013 1,111,000 0.186
11 January 2013 210,000 0.186
14 January 2013 76,133,440 0.186
17 January 2013 30,000 0.186
21 January 2013 360,000 0.186
22 January 2013 1,590,000 0.186
23 January 2013 159,000 0.186
24 January 2013 143,000 0.186
25
Name of Party(1)(2)
Date of
Transaction
Number of Shares
acquired
Transacted Price
per Share
(S$)
25 January 2013 105,000 0.186
28 January 2013 485,000 0.186
29 January 2013 450,000 0.186
30 January 2013 40,000 0.186
31 January 2013 275,000 0.186
4 February 2013 153,000 0.186
5 February 2013 208,000 0.186
7 February 2013 125,000 0.186
8 February 2013 15,000 0.186
13 February 2013 142,000 0.186
14 February 2013 552,000 0.186
18 February 2013 925,000 0.186
19 February 2013 100,000 0.186
20 February 2013 224,000 0.186
27 February 2013 184,000 0.186
28 February 2013 333,000 0.186
1 March 2013 377,000 0.186
4 March 2013 370,000 0.186
11 March 2013 21,000 0.186
12 March 2013 41,000 0.186
13 March 2013 1,952,000 0.186
14 March 2013 270,000 0.186
18 March 2013 203,000 0.186
19 March 2013 245,000 0.186
20 March 2013 90,000 0.186
21 March 2013 43,000 0.186
22 March 2013 106,000 0.186
25 March 2013 87,000 0.186
26 March 2013 5,000 0.186
27 March 2013 30,000 0.186
28 March 2013 130,000 0.186
1 April 2013 83,000 0.186
2 April 2013 593,000 0.186
3 April 2013 881,000 0.186
4 April 2013 296,000 0.186
5 April 2013 307,000 0.186
8 April 2013 130,000 0.186
26
Name of Party(1)(2)
Date of
Transaction
Number of Shares
acquired
Transacted Price
per Share
(S$)
9 April 2013 55,000 0.186
10 April 2013 133,000 0.186
11 April 2013 138,000 0.186
12 April 2013 210,000 0.186
15 April 2013 69,000 0.186
16 April 2013 13,000 0.186
17 April 2013 213,000 0.186
18 April 2013 72,000 0.186
19 April 2013 30,000 0.186
22 April 2013 155,000 0.186
23 April 2013 3,175,000 0.186
24 April 2013 307,000 0.186
25 April 2013 715,000 0.186
26 April 2013 68,000 0.186
29 April 2013 108,000 0.186
30 April 2013 80,000 0.186
2 May 2013 46,000 0.186
3 May 2013 66,000 0.186
6 May 2013 277,000 0.186
7 May 2013 115,000 0.186
8 May 2013 1,420,000 0.186
9 May 2013 722,000 0.186
13 May 2013 40,000 0.186
14 May 2013 172,000 0.186
15 May 2013 311,000 0.186
17 May 2013 220,000 0.186
23 May 2013 767,000 0.186
27 May 2013 70,000 0.186
28 May 2013 148,000 0.186
Notes:
(1) Li Wei and Wang Peng are deemed to be interested in the Shares acquired by the Offeror. Li Wei has a
100% interest in Genki, which in turn has a 66.37% interest in the Offeror. Wang Peng has a 100% interest
in Union, which in turn has a 25.39% interest in the Offeror.
(2) The information on the dealings in the Shares by the Offeror is reproduced from paragraph 6 of Appendix
III of the Exit Offer Letter.
27
11. INFORMATION IN RESPECT OF THE SUBSTANTIAL SHAREHOLDERS
The interests of the substantial Shareholders in the Shares as recorded in the register of
substantial Shareholders as at the Latest Practicable Date are as set out below.
Name
Direct Interest Deemed Interest
No. of
Shares
% of Issued
Shares
No. of
Shares
% of issued
Shares
Genki 457,460,000 33.27 241,952,440(1) 17.60
Li Wei – – 699,412,440(2) 50.87
Union 175,000,000 12.73 241,952,440(1) 17.60
Wang Peng – – 416,952,440(3) 30.32
Offeror 241,952,440 17.60 – –
Notes:
(1) Genki and Union are interested in the Shares held by the Offeror by virtue of the 66.37% and 25.39%
interest in the Offeror respectively.
(2) Li Wei is deemed to be interested in the Shares held by Genki and the Offeror. He has a 100% interest in
Genki, which in turn has a 66.37% interest in the Offeror.
(3) Wang Peng is deemed to be interested in the Shares held by Union and the Offeror. He has a 100% interest
in Union, which in turn has a 25.39% interest in the Offeror.
12. CONFIRMATION OF FINANCIAL RESOURCES
The confirmation of financial resources has been extracted from paragraph 9 of the Letter
to Shareholders in the Exit Offer Letter and reproduced below. All terms and expressions
used in the extract below shall have the same meanings as those defined in the Exit Offer
Letter, unless otherwise stated.
9. CONFIRMATION OF FINANCIAL RESOURCES
UBS, being the financial adviser of the Offeror for the Delisting and in connection
with the Exit Offer, has confirmed that sufficient financial resources are available
to the Offeror to satisfy full acceptance of the Exit Offer by the holders of the Offer
Shares (excluding the Promoter Relevant Shares held by the Promoters and the
Non-Acceptance Relevant Shares held by the Non-Acceptance Undertaking
Shareholders) on the basis of the Exit Offer Price.
13. ADVICE OF EYCF TO THE INDEPENDENT DIRECTORS
EYCF has been appointed as the independent financial adviser to the Independent
Directors. The IFA Letter setting out its advice to the Independent Directors is set out in
Appendix I to this Circular. Shareholders are advised to read and consider the IFA Letter in
its entirety.
The information relating to the advice of EYCF to the Independent Directors and the key
factors taken into consideration by EYCF have been extracted from paragraph 8 of the IFA
Letter and reproduced below. Shareholders are advised to read the following extract in
conjunction with, and in the context of the full text of the IFA Letter. All terms and
expressions used in the extract below shall have the same meanings as those defined in the
IFA Letter, unless otherwise stated.
28
In arriving at our advice on the Exit Offer, we have reviewed and deliberated on the
factors which we consider to be relevant and to have a significant bearing on our
assessment of the Delisting Proposal and the Exit Offer. The factors we have considered
in our evaluation, which are discussed in detail in Sections 6 and 7 of this letter and
which we have relied upon, are as follows:
(a) the Exit Offer Price represents premiums of approximately 19.2%, 42.0%, 37.8%,
31.0%, and 20.8% over the VWAPs for the periods 2 years, 1 year, 6 months, 3
months and 1 month prior to the Joint Announcement Date, respectively;
(b) the Exit Offer Price represents a premium of approximately 10.1% over the last
transacted price prior to the Joint Announcement Date;
(c) over the last two years prior to the Joint Announcement Date, the market price of
the Shares has traded between a low of S$0.109 and a high of S$0.245. We note
further that prior to the Joint Announcement Date, the Shares have not traded at or
above the Exit Offer Price since 25 February 2011;
(d) for the period following the Joint Announcement Date up to the Latest Practicable
Date, the Company’s Share price had traded between S$0.168 and S$0.196 per
Share. The Exit Offer Price of S$0.186 represents a discount of 1.6% to the VWAP
of the Shares over this period;
(e) the last transacted price of S$0.183 as at the Latest Practicable Date is lower than
the Exit Offer Price;
(f) for the period from two years prior to the Joint Announcement Date up to the Joint
Announcement Date, the Shares were traded on 487 market days out of the total
511 market trading days or on approximately 95.3% of the total number of market
trading days during the period. However, the Shares had a thin average daily
trading volume of only 1,710,556 Shares or 0.39% of the free float for the 2-year
period;
(g) the average daily traded volume of the Shares for the periods 1 year, 6 months, 3
months and 1 month prior to the Joint Announcement Date represents
approximately 0.22%, 0.22%, 0.27% and 0.46% of the free float, respectively;
(h) the EV/EBITDA Ratio of the Company implied by the Exit Offer Price of 3.7 times
is within the range but below the average and the median of the EV/EBITDA Ratios
of both the Category I Comparable Companies and Category II Comparable
Companies;
(i) the P/E Ratio of the Company implied by the Exit Offer Price of 22.2 times is within
the range of the P/E Ratios, below the average but above the median P/E Ratios of
the Category I Comparable Companies, and above the average and median P/E
Ratios of the Category II Comparable Companies;
(j) the P/NAV Ratio of the Company implied by the Exit Offer Price of 0.4 times is within
the range but significantly below the average and median of the P/NAV Ratios of
both the Category I Comparable Companies and the Category II Comparable
Companies;
29
(k) the premium implied by the Exit Offer Price for the last transacted price which the
Shares were traded prior to the Joint Announcement Date of approximately 10.1%
is below the range of premiums of the Comparable Transactions;
(l) the premium implied by the Exit Offer Price for the 1-month VWAP which the Shares
were traded prior to the Joint Announcement Date of approximately 20.8% is within
the range of premiums of the Comparable Transactions but is below the average
and median premiums of the Comparable Transactions;
(m) the premium implied by the Exit Offer Price for the 3-month VWAP which the Shares
were traded prior to the Joint Announcement Date of approximately 31.0% is within
the range and above the average and median premiums of the Comparable
Transactions;
(n) the premium implied by the Exit Offer Price for the 6-month VWAP which the Shares
were traded prior to the Joint Announcement Date of approximately 37.8% is within
the range and above the average and median premiums of the Comparable
Transactions;
(o) the Shares have not, prior to the Joint Announcement Date, traded above the
P/NAV Ratio of 0.4 times implied by the Exit Offer Price since 11 April 2011. Since
21 August 2008, the Shares have not been traded at or above NAV;
(p) based on the unaudited RNAV of the Group, the Exit Offer Price represents a
discount of approximately 58.1%. While the unaudited RNAV is a relevant basis for
comparison, it is not necessarily a realisable value as the market value of the PPE
and any tax liabilities arising from the sale of the PPE may vary depending on
prevailing market and economic conditions.
Based on the unaudited balance sheet of the Group as at 31 March 2013, the
largest asset component of the Group is PPE at RMB2,093.1 million, which
accounted for approximately 59.2% of the unaudited total assets of the Group as at
31 March 2013. For illustrative purposes only, assuming a hypothetical sale of the
Group’s PPE due to changes to or cessation of the businesses and operations of
the Group, we note from the management of the Company that under such
situation, the value which is realisable from the hypothetical sale of PPE is likely to
be lower than the amount reflected in the unaudited balance sheet of the Group as
at 31 March 2013;
(q) we note that while the Company is continuing with its expansion projects, the profit
performance of the Group has declined over the last two-year period and the
Company has stated that it expects business conditions to remain very challenging
in the next reporting period and the next 12 months;
(r) the Offeror, and persons acting in concert with it, and the Non-Acceptance
Undertaking Shareholders collectively holding approximately 75.98% of the total
number of issued Shares, as at the Latest Practicable Date. As such, unless the
Delisting Resolution is voted against by 10% or more of the total number of Shares
(excluding treasury shares) held by Shareholders present and voting, on a poll,
either in person or by proxy at the SGM, the Delisting Resolution is guaranteed of
being passed at the SGM;
30
(s) the implications of delisting and the likelihood that that Sections 102 and 103 of the
Bermuda Companies Act in relation to compulsory acquisition will not be applicable;
(t) the Offeror has no immediate intention to propose any changes to the businesses
and operations of the Company nor to redeploy the fixed assets of the Company;
and
(u) the absence of an alternative offer as at the Latest Practicable Date.
In arriving at our conclusion, we have considered the information available to us
as at the Latest Practicable Date. The summary of the analyses we have
undertaken is set out as items (a) to (u) above.
After having considered carefully the information available to us as at the Latest
Practicable Date, we are of the view that the financial terms of the Exit Offer are not
fair, given that: (i) the EV/EBITDA Ratio implied by the Exit Offer Price of 3.7 times
is below the median EV/EBITDA Ratios of both the Category I Comparable
Companies and Category II Comparable Companies of 7.9 times and 4.1 times,
respectively; and (ii) the significant discount implied by the Exit Offer Price to the
NAV (being 60.0%) and the RNAV of the Group (being 58.0%).
However, on balance and taking into account: (i) that the P/E Ratio implied by the
Exit Offer Price is above the median P/E Ratios of both the Category I Comparable
Companies and Category II Comparable Companies; (ii) the premiums implied by
the Exit Offer Price when compared against the historical trading performance of
the Shares; (iii) the premiums implied by the Exit Offer Price in respect of the
3-month and 6-month VWAPs when compared against the relevant VWAPs of the
Comparable Transactions; (iv) that prior to the Joint Announcement Date the
Shares have not traded above the P/NAV Ratio of 0.4 times implied by the Exit Offer
Price since April 2011; and (v) the absence of a competing offer, we are also of the
view that the financial terms of the Exit Offer are reasonable and are not prejudicial
to the interests of the Shareholders.
Accordingly, we advise the Independent Directors to recommend that
Shareholders vote in favour of the Delisting Resolution and accept the Exit Offer
in the event the Delisting Resolution is passed and Shareholders do not intend and
are not prepared to hold shares in an unlisted company.
We wish to further highlight to the Shareholders that unless the Delisting
Resolution is voted against by 10% or more of the total number of Shares
(excluding treasury shares) held by Shareholders present and voting, on a poll,
either in person or by proxy at the SGM, the Delisting Resolution will be passed at
the SGM given that the Offeror, and persons acting in concert with it, and the
Non-Acceptance Undertaking Shareholders collectively own or control 75.98% of
the total number of Shares as at the Latest Practicable Date.
Shareholders may wish to sell their Shares in the open market if they are able to obtain
a price higher than the Exit Offer Price net of related expenses (such as brokerage and
trading costs).
31
We wish to further highlight to Shareholders that the market price of the Shares
may be supported by the Exit Offer since the Joint Announcement Date, and there
is no assurance that the market price will be maintained at the level as at the Latest
Practicable Date if the Approval Delisting Resolution Condition is not met and the
Exit Offer is not made.
The Independent Directors should note that we have arrived at our recommendation
based on information made available to us prior to and including the Latest Practicable
Date. Our advice on the Exit Offer cannot and does not take into account the future
trading activity or patterns or price levels that may be established for the Shares as these
are governed by factors beyond the scope of our review, and would not fall within our
terms of reference in connection with our evaluation of the Exit Offer.
14. INDEPENDENT DIRECTORS’ RECOMMENDATIONS
The Independent Directors, having considered carefully the terms of the Exit Offer and the
advice given by EYCF, concur with the advice by EYCF in respect of the Exit Offer.
Accordingly, the Independent Directors adopt the recommendation in respect of the Exit
Offer as set out in paragraph 13 above.
Shareholders are advised to read the IFA Letter set out in Appendix I to this Circular and
other relevant information set out in this Circular carefully before deciding whether to accept
or reject the Exit Offer. In rendering the above advice and giving the above
recommendation, the Independent Directors have not had regard to the specific investment
objectives, financial situation, tax position or particular needs and constraints of any
individual Shareholder. As each Shareholder would have different investment objectives
and profiles, the Independent Directors recommend that any Shareholder who may require
specific advice in relation to his investment portfolio should consult his stockbroker, bank
manager, solicitor, accountant, tax adviser or other professional adviser immediately.
Accordingly, the Independent Directors wish to highlight to Shareholders that EYCF’s
advice to the Independent Directors in respect of the Exit Offer should not be relied upon
by any Shareholder as the sole basis for deciding whether or not to accept the Exit Offer.
Shareholders should note that the advice by EYCF to the Independent Directors in respect
of the Exit Offer is based on information made available to EYCF prior to, and including, the
Latest Practicable Date, and cannot and does not take into account the future trading
activity or patterns or price levels that may be established for the Shares after the Latest
Practicable Date as these are governed by factors beyond the scope of EYCF’s review.
15. SPECIAL GENERAL MEETING
The SGM, notice of which is set out in Appendix IX to this Circular, will be held at Eagle
Room 1 and 2, Level 3, Laguna National Golf & Country Club, 11 Laguna Golf Green,
Singapore 488047 on 4 September 2013 at 10.00 a.m. for the purpose of considering and,
if thought fit, passing, with or without amendments, the Delisting Resolution set out in the
notice of SGM.
16. ACTION TO BE TAKEN BY SHAREHOLDERS
16.1. Voting at the SGM
Shareholders will find enclosed with this Circular the notice of SGM and a proxy form. If a
Shareholder is unable to attend the SGM and wishes to appoint a proxy to attend and vote
on his behalf, he should complete, sign and return the attached proxy form (“Member Proxy
32
Form”) in accordance with the instructions printed thereon as soon as possible and, in any
event, so as to reach the Company’s Singapore Share Transfer Agent at 50 Raffles Place,
#32-01, Singapore Land Tower, Singapore 048623 not less than 48 hours before the time
fixed for the SGM (or any adjournment thereof). The completion and return of a Member
Proxy Form by a Shareholder does not preclude him from attending and voting in person at
the SGM if he subsequently so wishes, in place of his proxy.
Depositors who wish to attend and vote at the SGM, and whose names are shown in the
records of CDP as at a time not earlier than 48 hours prior to the time fixed for the SGM,
may attend as CDP’s proxies. Depositors who are individuals and wish to attend the SGM
in person need not take any further action and can attend and vote at the SGM without the
lodgment of any proxy form. Depositors who are individuals and who cannot attend the
SGM personally and wish to appoint their nominees to attend and vote on their behalf, and
depositors who are not individuals, will find enclosed with this Circular a proxy form (the
“Depositor Proxy Form”) which they must complete, sign and return in accordance with the
instructions printed thereon as soon as possible and, in any event, so as to reach the office
of the Company’s Singapore Share Transfer Agent at 50 Raffles Place, #32-01, Singapore
Land Tower, Singapore 048623, not less than 48 hours before the time fixed for the SGM
or any adjournment thereof. The completion and return of a Depositor Proxy Form by a
depositor does not preclude him from attending and voting in person at the SGM if he
subsequently so wishes, in place of his proxy.
16.2. Acceptance of the Exit Offer
The Exit Offer Letter and the Acceptance Forms have been despatched together with this
Circular.
If you hold Offer Shares that are deposited with CDP, you should receive a FAA for Offer
Shares together with the Exit Offer Letter. If you have not received the FAA, you may obtain
a copy of the FAA for Offer Shares from CDP, at 4 Shenton Way #02-01, SGX Centre 2,
Singapore 068807, upon production of satisfactory evidence that you are a depositor.
If you hold Offer Shares that are represented by share certificate(s) and are not deposited
with CDP, you may request and obtain a copy of the FAT from the office of the Offeror’s
#32-01 Singapore Land Tower, Singapore 048623, upon production of satisfactory evidence
that you are a Shareholder.
The Exit Offer may only be accepted by the relevant Shareholder to whom the Exit Offer
Letter is addressed.
Shareholders may choose to accept the Exit Offer before the SGM. However, such
acceptance is conditional upon (a) the Approval of Delisting Resolution Condition
and (b) the SGX-ST No Objection Confirmation Condition being fulfilled.
If you wish to accept the Exit Offer, you should complete, sign and return the relevant
Acceptance Form in accordance with the provisions and instructions in the Exit Offer Letter
and that Acceptance Form.
Shareholders should note that if either (a) the Delisting Resolution is not passed at
the SGM or (b) the SGX-ST No Objection Confirmation is not received by the
Company, the Approval of Delisting Resolution Condition and/or the SGX-ST No
Objection Confirmation Condition (as the case may be) will not be fulfilled and the
Exit Offer will lapse and both the Shareholders and the Offeror will cease to be bound
by any prior acceptances of the Exit Offer by any Shareholder.
33
The detailed procedures for acceptance and additional information on settlement of the Exit
Offer are set out in Appendix II entitled “Procedures for Acceptance and Other Details of the
Exit Offer” to this Circular and Appendix I entitled “Procedures for Acceptance and Other
Details of the Exit Offer” to the Exit Offer Letter for your information.
If you decide not to accept the Exit Offer, you do not have to take any action. In the event
that the Delisting Resolution is approved by the Shareholders and the SGX-ST No
Objection Confirmation is received by the Company, you will continue to hold unquoted
Shares in the Company as an unlisted company. If you hold Shares that are deposited with
CDP, a share certificate in respect of your Shares that are deposited with CDP will be sent,
by ordinary post and at your own risk, to your address as it appears in the records of CDP,
after the Company has been delisted from the Official List of the SGX-ST.
17. DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors (including the Relevant Directors and those who may have delegated detailed
supervision of this Circular) collectively and individually accept full responsibility for the
accuracy of the information given in this Circular (other than those relating to the Offeror,
the parties acting in concert with it, the Exit Offer, the recommendations of the Independent
Directors, EYCF’s review letter and the Independent Joint Auditors’ review report on the
interim financial information of the Group for 1Q2013 set out in Appendix VII and
Appendices I, II, III and VIII) and confirm after making all reasonable enquiries that, to the
best of their knowledge and belief, this Circular constitutes full and true disclosure of all
material facts about the Group in the context of the Delisting, all opinions expressed are fair
and accurate and the Directors are not aware of any material facts the omission of which
would make any statement in this Circular misleading.
In respect of the IFA Letter and the Valuation Report, the responsibility of the Directors has
been to ensure that the facts stated therein with respect to the Group are, to the best of their
knowledge and belief, fair and accurate in all material respects.
The recommendations of the Independent Directors to Shareholders set out in paragraph
14 entitled “Independent Directors’ Recommendations” of this Letter to Shareholders is the
responsibility of the Independent Directors.
Where information in this Circular has been extracted or reproduced from published or
otherwise publicly available sources or obtained from the Offeror or the parties acting in
concert with it, the sole responsibility of the Directors has been to ensure that such
information has been accurately and correctly extracted from such sources, or as the case
may be, accurately reflected or reproduced in this Circular in its proper form and context.
18. CONSENTS
18.1. EYCF, the independent financial adviser, has given and has not withdrawn its written
consent to the issue of this Circular with the inclusion of its name in this Circular, its advice
to the Independent Directors set out in paragraph 13 of this Letter to Shareholders, the
“Letter from EYCF to the Independent Directors” set out in Appendix I to this Circular, its
review letter on the interim financial information of the Group for 1Q2013 set out in
Appendix VII to this Circular and all references thereto in the form and context in which they
appear in this Circular.
18.2. BDO Limited and BDO LLP, the Independent Joint Auditors of the Company, have given and
have not withdrawn their written consent to the issue of this Circular with the inclusion of
their names in this Circular, the Independent Joint Auditors’ Report of the Group for FY2012
34
set out in Appendix VI to this Circular, their review report on the interim financial information
of the Group for 1Q2013 set out in Appendix VII to this Circular and all references thereto
in the form and context in which they respectively appear in this Circular.
18.3. LCH, the independent valuer, has given and has not withdrawn its written consent to the
issue of this Circular with the inclusion of its name in this Circular, the Valuation Report set
out in Appendix VIII to this Circular and all references thereto in the form and context in
which they appear in this Circular.
19. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection at the office of the
Company’s Singapore Share Transfer Agent at 50 Raffles Place, #32-01, Singapore Land
Tower, Singapore 048623 during normal business hours, from the date of this Circular until
the date of the SGM:
(a) the memorandum of association of the Company and the Bye-Laws;
(b) the Annual Reports of the Company for FY2010, FY2011 and FY2012;
(c) the letter from EYCF to the Independent Directors set out in Appendix I to this Circular;
(d) the audited financial statements of the Group for FY2012 set out in Appendix VI to this
Circular;
(e) the interim financial information of the Group for 1Q2013 and EYCF’s review letter and
the Independent Joint Auditors’ review report set out in Appendix VII to this Circular;
(f) the Valuation Report set out in Appendix VIII to this Circular;
(g) the letter from the Offeror to the Company dated 14 October 2012 in respect of the
Delisting Proposal;
(h) the letters of consent referred to in paragraph 18 of this Letter to the Shareholders;
and
(i) the Joint Announcement.
20. ADDITIONAL INFORMATION
Your attention is drawn to the Appendices which form part of this Circular.
Yours faithfully
For and on behalf of the Directors
Cai Hong
Director
Synear Food Holdings Limited
35
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APPENDIX I
LETTER FROM EYCF TO THE INDEPENDENT DIRECTORS
Ernst & Young Corporate Finance Pte Ltd One Raffles Quay North Tower, Level 18 Singapore 048583
Mailing Address: Robinson Road PO Box 384 Singapore 900734
Tel: +65 6535 7777 Fax: +65 6532 7662 ey.com
12 August 2013
The Independent Directors of
Synear Food Holdings Limited
Xisha Road East, Jinshui District
Zhengzhou City, Henan Province
PRC 450008
Dear Sirs:
PROPOSED VOLUNTARY DELISTING OF SYNEAR FOOD HOLDINGS LIMITED (“SYNEAR”
OR THE “COMPANY”) PURSUANT TO RULES 1307 AND 1309 OF THE SINGAPORE
EXCHANGE SECURITIES TRADING LIMITED (“SGX-ST”) LISTING MANUAL (THE “LISTING
MANUAL”) (THE “DELISTING”)
1 INTRODUCTION
On 15 October 2012 (the “Joint Announcement Date”), the Company and Fortune Domain
Limited (“Fortune Domain” or the “Offeror”) jointly announced that the Offeror had
presented to the directors of the Company (the “Directors”) a formal proposal to seek the
voluntary delisting of the Company from the Official List of the SGX-ST pursuant to Rules
1307 and 1309 of the Listing Manual (the “Delisting Proposal”).
Under the Delisting Proposal, UBS AG, Singapore Branch (“UBS”), for and on behalf of the
Offeror, will make a cash offer (the “Exit Offer”), conditional on the approval of shareholders
of the Company (the “Shareholders”) for the Delisting being obtained, to acquire all the
issued ordinary shares in the capital of the Company (the “Shares”) held by all the
Shareholders, other than those Shares already held, directly or indirectly, by the Offeror as
at the date of the Exit Offer and Shares held by the Company as treasury shares (the “Offer
Shares”). The terms and conditions of the Delisting Proposal are set out in the circular to the
Shareholders dated 12 August 2013 (the “Circular”), the letter dated 12 August 2013 from
the Offeror to the Shareholders in relation to the Exit Offer (the “Exit Offer Letter”), and the
relevant Exit Offer Form of Acceptance and Authorisation (“FAA”) and/or Exit Offer Form of
Acceptance and Transfer (“FAT”), at S$0.186 in cash for each Offer Share (the “Exit Offer
Price”) accepted under the Exit Offer.
Ernst & Young Corporate Finance Pte Ltd (“EYCF”) has been appointed as the independent
financial adviser to the Directors who are considered independent in relation to the Exit Offer
(the “Independent Directors”), for the purpose of advising on the Exit Offer.
I-1
This letter sets out, inter alia, our evaluation of the financial terms of the Exit Offer and ouradvice thereon. It forms part of the Circular which provides, inter alia, the details of the ExitOffer and the Delisting Proposal, and the recommendation of the Independent Directors inrelation to the Exit Offer. Unless otherwise defined, all terms in the Circular have the samemeaning in this letter.
2 TERMS OF REFERENCE
EYCF has been appointed to advise the Independent Directors on the financial terms of theExit Offer and to make a recommendation for or against acceptance of the Exit Offer,pursuant to Rule 1309(2) of the Listing Manual and Rules 7.1 and 24.1(b) of the SingaporeCode on Take-overs and Mergers (the “Code”).
EYCF’s views as set forth in this letter are based on the prevailing market conditions,economic conditions, and financial conditions, and our analysis of the information providedin the Circular as well as information provided to us by the Company and its management,as of the Latest Practicable Date. Accordingly, this opinion shall not take into account anyevent or condition which occurs after the Latest Practicable Date. Shareholders should takenote of any announcement and/or event relevant to their consideration of the Exit Offer andthe Delisting Proposal which may be released by the Company after the Latest PracticableDate.
We have confined our evaluation and analysis of the Exit Offer to the financial terms thereof.It is not within our terms of reference to assess the rationale for, commercial merits and/orcommercial risks of the Delisting Proposal and the Exit Offer, and to comment on the financialmerits and/or financial risks of the Delisting Proposal and the Exit Offer where theassessment of such financial merits and/or financial risks involves our reviewing ofnon-publicly available information of the companies involved to which we have no accessand with which we have not been furnished. It is also not within our terms of reference tocompare the relative merits of the Delisting Proposal and the Exit Offer vis-à-vis anyalternative transaction that the Company may consider in the future, and as such, we do notexpress an opinion thereon. We have not been requested or authorised to solicit, and wehave not solicited, any indication of interest from any third party with respect to the Shares.
The scope of our appointment does not require us to express, and we do not express, a viewon the future prospects of the Company, its subsidiaries and/or any of its associated or jointventure companies. We are, therefore, not expressing any view herein as to the prices atwhich the shares of the Company may trade or on the future financial performance of theCompany, its subsidiaries and/or any of its associated or joint venture companies uponcompletion of the Exit Offer. No financial or profit forecasts, business plans or managementaccounts of the Company, its subsidiaries and/or any of its associated or joint venturecompanies have been specifically prepared for the purpose of evaluating the Exit Offer.Accordingly, we will not be able to comment on the expected future performance or prospectsof the Company, its subsidiaries and/or any of its associated or joint venture companies.However, we may draw upon the views of the Directors and/or the senior management of theCompany, to the extent deemed necessary and appropriate by us, in arriving at our opinionas set out in this letter.
In the course of our evaluation of the Exit Offer, we have held discussions with the Directorsand senior management of the Company. We have also examined and relied on publicly
I-2
available information in respect of the Company collated by us as well as informationprovided to us by the Company, including information in the Circular. We have notindependently verified such information furnished by the Directors and/or seniormanagement of the Company or any representation or assurance made by them, whetherwritten or verbal, and accordingly cannot and do not warrant or accept responsibility for theaccuracy or completeness of such information, representation or assurance. Nevertheless,the Directors have confirmed to us that after making all reasonable enquires, to the best oftheir knowledge and belief, all material information relating to the Company has beendisclosed to us, that such information constitutes a full and true disclosure, in all materialrespects, of all material facts and there is no material information the omission of whichwould make any of the information contained herein or in the Circular (other than thoserelating to the Delisting Proposal, the Exit Offer and the Valuation Report (as defined below))inaccurate, incomplete or misleading in any material respect. The Directors have jointly andseverally accepted such responsibility accordingly.
We have also made reasonable enquiries and exercised reasonable judgement in assessingsuch information and have found no reason to doubt the reliability of such information. Wehave further assumed that all statements of fact, belief, opinion and intention made by theDirectors in the Circular have been reasonably made after due and careful enquiry. We havenot conducted a comprehensive review of the business, operations and financial condition ofthe Company, its subsidiaries or any of its associated or joint venture companies. We havenot made an independent valuation or appraisal of the assets and liabilities of the Company,its subsidiaries or any of its associated or joint venture companies. However, we have beenfurnished with the valuation report from LCH (Asia-Pacific) Surveyors Limited (“LCH” or the“Valuer”) dated 19 July 2013 and set out as Appendix VIII to the Circular (the “ValuationReport”) in respect of the real properties, plant and equipment held by the Company and itssubsidiaries (the “Group”). We are not experts and do not regard ourselves to be experts inthe appraisal and evaluation of the real properties, plant and equipment held by the Group,and have relied solely on the Valuation Report.
In preparing this letter, we have not had regard to the specific investment objectives, financialsituation, tax position and/or unique needs and constraints of any Shareholder. As differentShareholders would have different investment objectives, we would advise the IndependentDirectors to recommend that any individual Shareholder who may require specific advice inrelation to his Shares should consult his stockbroker, bank manager, solicitor, accountant orother professional advisers.
This letter and our opinion are addressed solely for the use and benefit of the IndependentDirectors in connection with and for the purpose of their consideration of the Exit Offer, andthe recommendations made by them to the Shareholders shall remain the responsibility ofthe Independent Directors.
The Company has been separately advised in the preparation of the Circular (other than thisletter). We were not involved and have not provided any advice, whether financial orotherwise, in the preparation, review and verification of this Circular (other than this letter).Accordingly, we do not take any responsibility for, and express no views on, whetherexpressed or implied, the contents of the Circular (other than this letter).
Our opinion in relation to the Exit Offer should be considered in the context of the entirety ofthis letter and the Circular.
I-3
The Exit Offer is conditional upon, inter alia, the approval of the resolution to be proposed at
the special general meeting (“SGM”) to approve the Delisting (the “Delisting Resolution”)
by Shareholders being obtained at the SGM, but is not conditional upon a minimum number
of acceptances being received.
3 THE DELISTING PROPOSAL AND EXIT OFFER
Under the terms of the Delisting Proposal, the Offeror is making the Exit Offer to acquire the
Offer Shares. Details of the Delisting Proposal and the Exit Offer are set out in Sections 2 and
3 of the Circular, and a summary of the key terms of the Exit Offer is as follows:
3.1 Exit Offer Price. The Exit Offer Price for each Offer Share will be S$0.186 in cash.
The Exit Offer Price shall be applicable to any number of Offer Shares that are tendered in
acceptance of the Exit Offer.
Shareholders may choose to accept the Exit Offer in respect of all or part of their holdings
of Offer Shares. Each Shareholder who accepts the Exit Offer will receive S$186.00 for every
1,000 Offer Shares tendered for acceptance under the Exit Offer.
The Offer Shares will be acquired fully paid and free from all liens, equities, mortgages,
charges, encumbrances, rights of pre-emption and other third party rights and interests of
any nature whatsoever (“Encumbrances”), and together with all rights, benefits and
entitlements attached thereto as at the Joint Announcement Date and thereafter attaching
thereto (including the right to receive all dividends and other distributions, if any, which may
be announced, declared, paid or made thereon by Synear on or after the Joint
Announcement Date).
Acceptance of the Exit Offer by a Shareholder will be deemed to constitute an unconditional
and irrevocable warranty by that Shareholder that each Offer Share in respect of which the
Exit Offer is accepted and sold by him, as or on behalf of the beneficial owner(s), is fully paid
and free from all Encumbrances, and together with all rights, benefits and entitlements
attached thereto as at the Joint Announcement Date and thereafter attaching thereto
(including the right to receive all dividends and other distributions, if any, which may be
announced, declared, paid or made thereon by Synear on or after the Joint Announcement
Date).
The Exit Offer will also be extended, on the same terms and conditions, to all new Shares
unconditionally issued or to be issued pursuant to the valid exercise of any options (each, a
“Share Option”) to subscribe for new Shares granted under Synear’s employee share option
scheme, the Synear Employee Share Options Scheme (the “Scheme”). For the purpose of
the Exit Offer, the expression “Offer Shares” shall include such Shares. As at the Latest
Practicable Date, there are currently no Share Options granted pursuant to the Scheme.
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3.2 Conditions. The Delisting and the Exit Offer will be conditional on:
(a) the Delisting Resolution being approved by a majority of at least 75% of the total
number of issued Shares (excluding treasury shares) held by the Shareholders present
and voting, on a poll, either in person or by proxy at the SGM to be convened for the
Shareholders to vote on the Delisting Resolution (the Directors and controlling
Shareholders need not abstain from voting on the Delisting Resolution);
(b) the Delisting Resolution not being voted against by 10% or more of the total number of
issued Shares (excluding treasury shares) held by the Shareholders present and voting,
on a poll, either in person or by proxy at the SGM (together with (a) above, the
“Approval of Delisting Resolution Condition”); and
(c) the receipt of confirmation from the SGX-ST (the “SGX-ST No Objection
Confirmation”) that the SGX-ST has no objection to the Company’s application to delist
from the Official List of the SGX-ST (the “SGX-ST No Objection Confirmation
Condition”).
The Exit Offer will not be conditional on a minimum number of acceptances being received
by the Offeror.
Under Rule 1307 of the Listing Manual, all Shareholders (including the Offeror and parties
acting in concert with the Offeror who hold Shares) are entitled to vote on the Delisting
Resolution. Accordingly, Li Wei (“LW”) (the Company’s Executive Chairman), Wang Peng
(“WP”) (the Company’s Deputy Executive Chairman and Chief Executive Officer) and Fu
Qiang (“FQ”) (a cousin of LW (collectively, the “Promoters”) and certain Shareholders whose
particulars are set out in Appendix III to the Circular (the “Non-Acceptance Undertaking
Shareholders”) have undertaken to vote all the Promoter Relevant Shares and the
Non-Acceptance Relevant Shares (defined in Section 7.5.2 of this letter) in favour of the
Delisting Resolution at the SGM. Such undertakings are pursuant to the separate irrevocable
undertakings by the Promoters (the “Promoter Irrevocable Undertakings”) and by the
Non-Acceptance Undertaking Shareholders (the “Non-Acceptance Irrevocable
Undertakings”).
As at the Latest Practicable Date, the Offeror, Genki Holdings Limited (“Genki”), Union
Success International Limited (“Union”), Elite Era Holdings Limited (“Elite”) and the
Non-Acceptance Undertaking Shareholders collectively hold an aggregate of 1,044,658,440
Shares, representing approximately 75.98% of the total number of issued Shares.
Additional information on the Promoter Irrevocable Undertakings and the Non-Acceptance
Irrevocable Undertakings are set out in Section 5 of the Circular and Paragraph 2 of the
Letter to Shareholders in the Exit Offer Letter.
3.3 Acceptances. Shareholders may choose to accept the Exit Offer before the SGM. However,
such acceptance would be conditional and if the Approval of Delisting Resolution Condition
is not satisfied, the condition to the Exit Offer will not be fulfilled and the Exit Offer will lapse.
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3.4 Promoter Irrevocable Undertakings and Non-Acceptance Irrevocable Undertakings.The Offeror has obtained irrevocable undertakings from the Promoters and the Non-Acceptance Undertaking Shareholders not to, directly or indirectly, accept the Exit Offer(including any revised Exit Offer made by or on behalf of the Offeror) in respect of thePromoter Relevant Shares and the Non-Acceptance Relevant Shares (as the case may be).
Save as set out in Section 5 of the Circular and Paragraph 2 of the Letter to Shareholdersin the Exit Offer Letter, as at the Latest Practicable Date, none of the Offeror nor any partyacting in concert with it has received any irrevocable undertaking from any party to acceptor reject the Exit Offer.
4 INFORMATION ON THE OFFEROR
The Offeror is a special purpose vehicle incorporated in the British Virgin Islands on 8February 2012 for the purposes of the Delisting and the Exit Offer. As set out in Section 4 ofthe Circular and Paragraph 3 of the Letter to Shareholders in the Exit Offer Letter, theshareholding structure of the Offeror is as follows:
(a) Genki which holds 66.37% of the Offeror;
(b) Union which holds 25.39% of the Offeror; and
(c) Elite which holds 8.24% of the Offeror.
As at the Latest Practicable Date, the total number of Shares owned or controlled by theOfferor and persons acting in concert with it (including the aggregate shareholding interestof Genki, Union and Elite) is 931,211,440 Shares, representing approximately 67.72% of thetotal number of issued Shares.
Additional information on the Offeror is set out in Appendix III to the Circular and AppendixII to the Exit Offer Letter.
5 INFORMATION ON THE COMPANY AND THE GROUP
The Company was incorporated in Bermuda on 23 February 2006 and listed on the MainBoard of the SGX-ST on 18 August 2006. The Company is one of the largest quick freezefood producers in the People’s Republic of China (“PRC” or “China”). Based in ZhengzhouCity, Henan Province, the PRC, the Group also have production facilities in Chengdu,Sichuan Province and Huzhou, Zhejiang Province.
As at the Latest Practicable Date, the Company had a market capitalisation of approximatelyS$251.63 million.
Additional information on the Company and the Group is set out in Appendix IV to theCircular.
6 RATIONALE FOR THE DELISTING
We reproduce below the rationale for the Delisting as set out in Section 6 of the Circular andParagraph 5 of the Letter to Shareholders in the Exit Offer Letter.
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“5.1 Opportunity to Realise Investments with an Upfront Premium
The Exit Offer Price represents a premium of approximately 10.1% over the lasttransacted price per Share of S$0.169 as at 9 October 2012, being the last full day oftrading in the Shares on the SGX-ST immediately prior to the Joint Announcement Date(the “Last Trading Day”), and a premium of approximately 21.2%, 31.1% and 37.6%over the volume weighted average price (“VWAP”) per Share for the one-month,three-month and six-month periods, respectively, up to and including the Last TradingDay. Additionally, prior to the Last Trading Day, the Exit Offer Price was equal to thehighest price traded since 25 February 2011.
Through the Delisting Proposal, the accepting Shareholders will have an opportunity torealise their investments in Synear for a cash consideration at a premium over themarket prices of the Shares up to and including the Last Trading Day, as reflected inparagraph 7.1, an option which may not otherwise be readily available due to the lowtrading liquidity of the Shares, without incurring brokerage and other trading costs.
As the Shares have been trading at a higher price since the Joint Announcement Date,there is no assurance that the market price will be maintained at the level as at theLatest Practicable Date after the Closing Date or if the Delisting Resolution is notapproved by the Shareholders at the SGM.
5.2 Low Trading Liquidity
The trading liquidity of the Shares on the SGX-ST in the past year has been generallythin. The average daily trading volume of the Shares for the 12-month, six-month,three-month and one-month periods up to and including the Last Trading Day are asfollows:
Period prior to the Last Trading Day
Average Daily Trading
Volume(1)(2)
Last 12 months 988,518
Last six (6) months 996,072
Last three (3) months 1,189,613
Last one (1) month 2,034,318
Last Trading Day 6,578,000
Notes:
(1) Source: Bloomberg L.P.
(2) The average daily trading volume is computed based on the total trading volume for all the days onwhich there was trading in Shares on the SGX-ST and for the relevant periods immediately prior to andincluding the Last Trading Day, divided by the total number of days on which there was trading inShares on the SGX-ST.
The Exit Offer will provide an exit option for those Shareholders who wish to realise theirentire investment in the Shares but find it difficult to do so as a result of the low tradingliquidity of the Shares.
5.3 Compliance Costs of Maintaining Listing
In maintaining Synear’s listing status, Synear incurs additional compliance andassociated costs. Synear will be able to gain cost-savings as a non-listed entity by
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dispensing with costs associated with complying with SGX-ST listing requirements andother regulatory requirements as well as human resources that have to be committedfor such compliance. The Delisting, if approved, will eliminate the costs of compliancewith the SGX-ST listing rules and regulations, thereby allowing Synear to focus itsresources on its business operations.
5.4 No Need for Access to Capital Markets
In the last five (5) years, Synear has not carried out any exercise to raise cash fundingon the SGX-ST. Synear is unlikely to require access to Singapore capital markets tofinance its operations in the foreseeable future. Accordingly, it is not necessary forSynear to maintain a listing on the SGX-ST.
5.5 Offeror’s Intentions
The Offeror has no current intention of (a) making material changes to Synear’s existingbusiness, (b) re-deploying Synear’s fixed assets, or (c) discontinuing the employmentof the employees of Synear and its subsidiaries, other than in the ordinary course ofbusiness. Nonetheless, the Offeror retains the flexibility at any time to consider optionsor opportunities which may present themselves, and which it regards to be in theinterests of the Offeror and/or Synear. Following the close of the Exit Offer, the Offerorwill conduct a comprehensive review of the operations, management and financialposition of Synear and its subsidiaries, and will evaluate various strategic optionsfollowing the privatisation of Synear, including listing the shares of the Offeror or any ofits subsidiaries on a recognised stock exchange in the future if market conditions arefavourable.”
7 EVALUATION OF THE FINANCIAL TERMS OF THE EXIT OFFER
In our analysis and evaluation of the Exit Offer, and our recommendation thereon, we havetaken into consideration the following factors:
(a) Market quotation and historical trading activity of the Shares;
(b) Comparison of the valuation measures of the Company implied by the Exit Offer Priceagainst those of selected comparable listed companies;
(c) Comparison with recent successful delisting and subsequent privatisation transactionsof companies listed on the SGX-ST;
(d) Analysis of the net asset value (“NAV”) and revalued net asset value (the “RNAV”) of theGroup and the discount implied by the Exit Offer Price to the NAV and RNAV of theGroup; and
(e) Other relevant considerations.
The factors above are discussed in more detail in the following sections.
7.1 Market quotation and historical trading activity of the Shares
We set out below a chart which shows the daily closing prices for the Shares and volumetraded (excluding married trades) for the period from two (2) years prior to the Joint
I-8
Announcement Date and up to the Latest Practicable Date. We have also marked significant
dates during the given period, including the Company’s announcements in connection with
its financial results, joint venture arrangements and investments.
Share Prices for the Period from Two Years prior to the
Joint Announcement Date and up to the Latest Practicable Date
0
20
40
60
80
100
120
0.00
0.05
0.10
0.15
0.20
0.25
0.30
Oct-
11-2
010
No
v-1
1-2
010
Dec-1
1-2
010
Jan-1
1-2
011
Feb
-11-2
011
Mar-
11-2
011
Ap
r-11- 2
011
May-1
1-2
011
Jun-1
1-2
011
Jul-11- 2
011
Aug
-11-2
011
Sep
-11-2
011
Oct-
11- 2
011
No
v-1
1-2
011
Dec-1
1-2
011
Jan- 1
1-2
012
Feb
-11-2
012
Mar-
11-2
012
Ap
r-11- 2
012
May-1
1-2
012
Jun-1
1-2
012
Jul-11-2
012
Aug
-11-2
012
Sep
-11-2
012
Oct-
11- 2
012
No
v-1
1-2
012
Dec-1
1-2
012
Jan-1
1-2
013
Feb
- 11-2
013
Mar-
11-2
013
Ap
r-11- 2
013
May-1
1-2
013
Jun- 1
1-2
013
Jul-11-2
013
Tra
din
g V
olu
me (
Mill
ions)
Share
Price (
S$)
Volume Share Price Announcements Offer Price
Exit Offer Price = S$0.186
1
3
4
5
2
78
6
9
10
12
11
13
15 October 2012 : Joint Announcement Date
1416
15
18
17
Source: CapitalIQ, Company announcements
Notes:
(1) On 1 November 2010, the Company announced unaudited earnings results for the third quarter and nine
months ended 30 September 2010. For the quarter, the Company reported revenues of RMB398.9 million
compared with RMB408.9 million for the same period the previous year. For the period, the Company reported
profit before tax of RMB22.4 million and profit of RMB19.0 million, compared with profit before tax of RMB41.1
million and profit of RMB34.6 million the previous year. For the period, the Company reported net cash used
in operating activities of RMB65.2 million and purchase of property, plant and equipments of RMB47.7 million,
compared with net cash used in operating activities of RMB6.9 million and purchase of property, plant and
equipments of RMB8.5 million for the same period the previous year.
(2) On 24 February 2011, the Company reported unaudited group earnings results for the year ended 31
December 2010. For the period, the Company reported profit before tax of RMB141.5 million and profit
attributable to the owners of the company of RMB117.7 million on total revenue of RMB1,918.3 million,
compared to profit before tax of RMB198.9 million and profit attributable to the owners of the company of
RMB169.4 million on total revenue of RMB1,870.0 million for the same period the previous year.
(3) On 27 April 2011, the Company declared final dividend of RMB0.008727 per Share for the financial year
ended 31 December 2010.
(4) On 11 May 2011, the Company announced unaudited group earnings results for the first quarter ended 31
March 2011. For the period, the Company reported profit attributable to the owners of the company of
RMB31.5 million and profit before income tax of RMB42.7 million on revenue of RMB545.8 million compared
to profit attributable to the owners of the company of RMB50.0 million and profit before income tax of
RMB58.3 million on revenue of RMB531.1 million for the same period the previous year.
(5) On 3 August 2011, the Company reported group earnings results for the second quarter and six months ended
30 June 2011. For the quarter, the Company reported revenue was RMB476.9 million as compared to
RMB451.0 million for the same period the previous year. Profit before income tax was RMB30.0 million as
compared to RMB47.3 million for the same period the previous year. Profit after tax for the period was
RMB22.6 million as compared to RMB41.1 million for the same period the previous year.
(6) On 21 October 2011, the Company announced a clarification on media reports over the recall of its savoury
dumpling products due to bacterial contamination.
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(7) On 9 November 2011, the Company reported unaudited consolidated earnings results for the third quarter and
nine months ended 30 September 2011. For the quarter, the Company reported total revenue of RMB421.9
million compared to RMB398.9 million for the previous year. Profit before income tax was RMB9.4 million
compared to RMB22.4 million for the previous year. Profit after tax for the period was RMB7.0 million
compared to RMB19.0 million for the previous year. For the nine months, the Company reported total revenue
of RMB1,443.9 million compared to RMB1,381.0 million for the previous year. Profit before income tax was
RMB82.0 million compared to the previous year’s RMB127.9 million.
(8) On 28 February 2012, the Company reported unaudited group earnings results for the full year ended 31
December 2011. For the year, the Company reported total revenue of RMB1,830.4 million compared to
RMB1,918.3 million for the previous year. Profit before income tax was RMB26.9 million compared to the
previous year’s RMB141.5 million. Profit for the year attributable to the owners of the company was RMB6.5
million compared to RMB117.7 million for the previous year.
(9) On 9 January 2012, the Company provided earnings guidance for the fourth quarter ended 31 December
2011. For the quarter, the Company expected to report a loss as compared to a profit for the corresponding
period in 2010. The estimated loss was deemed to be associated with the adverse publicity concerning a
batch of the Company’s products, which resulted in a significant negative impact on the Company’s revenue
in fourth quarter of 2011.
(10) On 8 May 2012, the Company reported unaudited earnings results for the first quarter ended 31 March 2012.
For the period, the Company reported revenue of RMB496.5 million against RMB545.8 million for the previous
year. Profit before income tax was RMB31.9 million against RMB42.7 million for the previous year. Profit for
the period attributable to the owners of the company was RMB23.8 million against RMB31.5 million for the
previous year.
(11) On 6 August 2012, the Company reported unaudited group earnings results for the second quarter and six
months ended 30 June 2012. For the quarter, the Company reported revenue was RMB444.3 million as
compared to RMB476.9 million for the same period the year before. Profit before income tax was RMB21.6
million as compared to RMB30.0 million for the same period the previous year. Profit after tax for the period
was RMB15.4 million as compared to RMB22.6 for the same period the previous year. For the six months, the
Company reported revenue was RMB940.8 million as compared to the previous year’s RMB1,022.7 million.
Profit before income tax was RMB53.5 million as compared to RMB72.7 million for the same period the
previous year.
(12) On 15 October 2012, the Company and the Offeror jointly announced that the Offeror has presented to the
Directors a formal proposal to seek the voluntary delisting of the Company from the Official List of the SGX-ST
pursuant to Rules 1307 and 1309 of the Listing Manual.
(13) On 29 November 2012, the Company reported unaudited consolidated earnings results for the third quarter
and nine months ended 30 September 2012. For the quarter, the Company reported total revenue of
RMB406.9 million compared to RMB421.2 million for the previous year. Profit before income tax was RMB13.0
million compared to RMB9.4 million for the same period the previous year. Profit after tax for the period was
RMB7.5 million compared to RMB7.0 million for the previous year. For the nine months, the Company
reported total revenue of RMB1,347.7 million compared to RMB1,443.9 million for the previous year. Profit
before income tax was RMB66.5 million compared to RMB82.0 million for the same period the previous year.
(14) On 26 February 2013, the Company reported unaudited group earnings results for the full year ended 31
December 2012. For the year, the Company reported total revenue of RMB1,874.6 million compared to
RMB1,830.4 million for the previous year. Profit after tax for the year was RMB68.0 million compared to
RMB6.5 million the previous year.
(15) On 23 April 2013, the Company informed its shareholders that the Company’s production plant in Sichuan
Province suffered minor physical damage as a result of the earthquake which took place in southwestern
Sichuan Province on 20 April 2013. The Company also informed that the plant has been temporarily shut
down to ensure the well-being of staff at the plant.
(16) On 15 May 2013, the Company reported unaudited earnings results for the first quarter ended 31 March 2013. For
the period, the Company reported revenue of RMB502.7 million against RMB496.5 million for the previous year.
Profit before income tax was RMB20.5 million against RMB31.9 million for the same period the previous year. Profit
for the period attributable to the owners of the company was RMB13.4 million or 1.0 cent per basic share against
RMB23.8 million or 1.7 cents per basic share for the previous year.
(17) On 18 May 2013, the Company informed its shareholders about an accident that took place at the Company’s
new plant in Zhengzhou City, which resulted in the cessation of operations at the plant.
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(18) On 8 July 2013, the Company announced that while the operations have resumed at the Sichuan Plant,
investigations by The State Admission of Work Safety in Zhengzhou are still ongoing at the Zhengzhou Plant
and operations will only resume after the relevant authorities are satisfied that it is safe to do so.
Additional information on the volume-weighted average price (“VWAP”) of the Share and
other trading statistics is set out below:
Lowest
Traded
Price
(S$)
Highest
Traded
Price
(S$)
VWAP
(S$)
Premium/
(Discount) of
Exit Offer Price
over/to VWAP
(%)
Average
Daily
Traded
Volume(1)
Daily Trading
Volume as a
Percentage of
the Free Float(2)
(%)
Periods prior to the Joint Announcement Date
Last 2 years 0.109 0.245 0.156 19.2 1,710,556 0.39
Last 1 year 0.109 0.169 0.131 42.0 988,518 0.22
Last 6 months 0.122 0.169 0.135 37.8 996,072 0.22
Last 3 months 0.130 0.169 0.142 31.0 1,189,613 0.27
Last 1 month 0.138 0.169 0.154 20.8 2,034,318 0.46
Last Trading Date(3) 0.169 0.169 0.169 10.1 6,578,000 1.48
Periods after the Joint Announcement Date
Between the Joint
Announcement Date
and the Latest
Practicable Date 0.168 0.196 0.189 (1.6) 1,838,195 0.41
Yamada Green Resources Limited Singapore 117.1 1.7 11.8 0.9
High 7.3 28.2 2.1
Low 1.7 4.5 0.2
Average 4.3 12.4 1.0
Median 4.1 9.5 0.8
Synear (Implied by the
Exit Offer Price) Singapore 255.8 3.7 22.2 0.4
Source: CapitalIQ, OneSource and company reports
Notes:
(1) Market capitalisation for the Comparable Companies is based on the outstanding number of shares and theclosing price as at Latest Practicable Date as obtained from CapitalIQ. Market capitalisation of Synear isapproximately S$255.8 million based on the Exit Offer Price of S$0.186 per Share and the total outstandingShares of 1,375,000,000.
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(2) For the Comparable Companies, EV is computed based on the latest available consolidated financial results,except for market capitalisation which is as at the Latest Practicable Date, and EBITDA is computed basedon a trailing 12-month basis from the interim unaudited consolidated financial results. EV of Synear is basedon the equity consideration of approximately S$255.8 million implied by the Exit Offer Price and theCompany’s latest unaudited consolidated financial results as at 31 March 2013. EBITDA of Synear iscomputed based on the Company’s unaudited consolidated results for the 12 months ended 31 March 2013.
(3) Net profit attributable to shareholders of the Comparable Companies and Synear are computed on a trailing12-month basis based on the companies’ interim unaudited consolidated financial results and the Company’sunaudited consolidated results for the 12 months ended 31 March 2013, respectively.
(4) P/NAV Ratio is the ratio of a company’s share price as at the Latest Practicable Date divided by itsconsolidated net asset value per share as at the latest available financial results.
(5) The financial statements of the Comparable Companies are reported in various currencies, which may or maynot be in Singapore dollars and which may be different from the respective currencies that their shares aretraded in. For the purposes of computing and comparing the valuation measures, financial figures in relationto the balance sheet of the Comparable Companies have been translated (if applicable) to Singapore dollarsusing a suitable exchange rate as at the balance sheet date as obtained from CapitalIQ, while earning figureshave been translated (if applicable) to Singapore dollars using a suitable average exchange rate for therelevant financial period, as obtained from CapitalIQ. Closing share prices of the Comparable Companies asat the Latest Practicable Date have been translated (if applicable) to Singapore dollars using a suitableexchange rate as at the Latest Practicable Date, as obtained from CapitalIQ.
7.2.1 Comparison of EV/EBITDA Ratios
The EV/EBITDA Ratio illustrates the ratio of the market value of an entity’s businessin relation to its historical pre-tax operating cashflow performance and disregards theentity’s existing capital structure.
We note that for the Category I Comparable Companies as at the Latest PracticableDate, the range of EV/EBITDA Ratios is between 2.1 times and 33.9 times, while theaverage EV/EBITDA Ratio is 12.9 times, and the median EV/EBITDA Ratio is 7.9times.
We also note that for the Category II Comparable Companies as at the LatestPracticable Date, the range of EV/EBITDA Ratios is between 1.7 times and 7.3 times,while the average EV/EBITDA Ratios is 4.3 times and the median EV/EBITDA Ratio is4.1 times.
The EV/EBITDA Ratio of the Company implied by the Exit Offer Price of 3.7 times iswithin the range but below the average and the median of the EV/EBITDA Ratios ofboth the Category I Comparable Companies and Category II Comparable Companies.
7.2.2 Comparison of P/E Ratios
The P/E Ratio illustrates the ratio of the market capitalisation of an entity in relation tothe historical net profit attributable to its shareholders.
We note that for the Category I Comparable Companies as at the Latest PracticableDate, the range of P/E Ratios is between 1.7 times and 59.1 times, while the averageP/E Ratio is 26.8 times, and the median P/E Ratio is 13.3 times.
We also note that for the Category II Comparable Companies as at the LatestPracticable Date, the range of P/E Ratios is between 4.5 times and 28.2 times, whilethe average P/E Ratio is 12.4 times, and the median P/E Ratio is 9.5 times.
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The P/E Ratio of the Company implied by the Exit Offer Price of 22.2 times is within
the range of the P/E Ratios, below the average but above the median P/E Ratio of the
Category I Comparable Companies, and above the average and median P/E Ratios of
the Category II Comparable Companies.
7.2.3 Comparison of P/NAV Ratios
The P/NAV Ratio represents an asset-based relative valuation which takes into
consideration the net tangible assets of a company.
We note that for the Category I Comparable Companies as at the Latest Practicable
Date, the range of P/NAV Ratios is between 0.2 times and 4.4 times, while the average
P/NAV Ratio is 1.6 times, and the median P/NAV Ratio is 1.0 time.
We also note that for the Category II Comparable Companies as at the Latest
Practicable Date, the range of P/NAV Ratios is between 0.2 times and 2.1 times, while
the average P/NAV Ratio is 1.0 time, and the median P/NAV Ratio is 0.8 times.
The P/NAV Ratio of the Company implied by the Exit Offer Price of 0.4 times is within
the range but significantly below the average and median of the P/NAV Ratios of both
the Category I Comparable Companies and the Category II Comparable Companies.
Further analysis on the NAV and RNAV of the Group and the discount implied by the
Exit Offer Price to the NAV and RNAV of the Group is discussed in Section 7.4 of this
letter.
7.3 Comparison with Recent Successful Delisting and Subsequent Privatisation
Transactions of Companies listed on the SGX-ST
We have also examined recent similar successful transactions by listed companies on the
SGX-ST involving delistings (as defined under Chapter 10 of the Listing Manual) and
subsequent privatisations (the “Comparable Transactions”) announced in the period two
years prior to the Joint Announcement Date. Our analysis of the Comparable Transactions is
to illustrate the premiums/discounts represented by each of the respective offer prices to the
average traded prices prior to the announcements of such Comparable Transactions.
The Independent Directors and Shareholders should note that due to the differences in, inter
alia, business activities, scale of operations, geographical spread of activities, track record
and future prospects, accounting standards and policies, any comparison made with respect
to the Comparable Transactions are for illustrative purposes only. The Comparable
Transactions are not directly comparable to the terms and conditions of the Delisting. The
premium any offeror is prepared to pay for in any particular delisting or privatisation
transaction depends on various factors, including prevailing market conditions and general
economic and business risks. The conclusions drawn from such comparisons, therefore, may
not necessarily reflect the perceived or implied market valuation for the Company. In
addition, we wish to highlight that the list of Comparable Transactions is by no means
exhaustive.
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Premium/(Discount) of the Offer Price
over Relevant Prices prior to
Announcement (%)
Company
Date
Announced
Last
Transacted
Price
1-month
VWAP
3-month
VWAP
6-month
VWAP
China Angel Food Limited 15 Nov 2010 13.3 21.3 30.6 47.2
Reyoung Pharmaceutical
Holdings Limited 30 Nov 2010 23.3 20.2 25.9 30.2
Map Technology Holdings
Limited 3 Dec 2010 30.0 33.4 18.1 19.6
Financial One Corp 22 Dec 2010 15.5 18.9 19.9 18.3
Time Watch Investments
Limited 22 Mar 2011 14.9 28.0 35.7 39.2
EDMI Limited 3 Jun 2011 14.1 23.9 22.8 19.3
CMZ Holdings Ltd 3 Aug 2011 24.2 32.9 26.7 28.4
Centraland Limited 12 Aug 2011 11.1 n.a. 11.1 9.0
Pacific Shipping Trust 04 Oct 2011 15.0 19.0 21.0 21.0
Wanxiang International
Limited 11 Oct 2011 45.5 61.5 56.5 47.7
CHT (Holdings) Limited1 31 Oct 2011 100.0 62.2 62.2 50.0
Leeden Limited2 8 Nov 2011 35.7 37.4 28.3 28.2
Meiban Group Ltd 15 Mar 2012 42.9 41.8 37.0 38.4
Cerebos Pacific Limited 1 Aug 2012 22.7 22.9 22.9 31.2
Gul Technologies Limited 13 Sep 2012 40.6 57.6 71.2 76.9
High 45.5 61.5 71.2 76.9
Low 11.1 18.9 11.1 9.0
Average 24.9 32.2 30.6 32.5
Median 23.0 28.0 26.3 29.3
Synear
(Implied by the Exit Offer Price) 10.1 20.8 31.0 37.8
Source: CapitalIQ, company circulars and company reports
Notes:
(1) In computing the high, low, mean and median market premia of the Successful Delisting Transactions, wehave excluded CHT (Holdings) Limited as an outlier.
(2) The market premia over the relevant VWAP, prior to Leeden Limited’s offer announcement, were calculatedbased on the VWAP on the market day (19 October 2011) prior to the holding announcement date, 20 October2011, in response to the query from the SGX-ST indicating that certain substantial shareholders of LeedenLimited were in discussions with an investor in relation to a possible acquisition of Leeden’s shares.
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We note the following with regard to the Comparable Transactions:
(a) the premium implied by the Exit Offer Price for the last transacted price which the
Shares were traded prior to the Joint Announcement Date of approximately 10.1% is
below the range of premiums of the Comparable Transactions;
(b) the premium implied by the Exit Offer Price for the 1-month VWAP which the Shares
were traded prior to the Joint Announcement Date of approximately 20.8% is within the
range of premiums of the Comparable Transactions but is below the average and
median premiums of the Comparable Transactions;
(c) the premium implied by the Exit Offer Price for the 3-month VWAP which the Shares
were traded prior to the Joint Announcement Date of approximately 31.0% is within the
range and above the average and median premiums of the Comparable Transactions;
and
(d) the premium implied by the Exit Offer Price for the 6-month VWAP which the Shares
were traded prior to the Joint Announcement Date of approximately 37.8% is within the
range and above the average and median premiums of the Comparable Transactions.
7.4 Analysis of the NAV and RNAV of the Group and Discount Implied by the Exit Offer
Price to the NAV and RNAV of the Group
In an NAV-based valuation, a valuation analysis is performed for a company’s identified fixed,
financial and other assets. The derived aggregate value of these assets is then “netted”
against the estimated value of all existing liabilities, resulting in an indication of the value of
the shareholders’ equity.
The net asset backing method is appropriate when the entity being valued is predominantly
an investment company which does not carry on any business operations of a commercial
nature. The method is also appropriate where (i) the entity’s business is to cease operations,
and/or (ii) the entity intends to convert the uses of all or most of its assets. This method may
ignore the ability of the asset base of the entity to generate ongoing future earnings and
sustain an earnings-based valuation.
In this regard, we note that the Offeror has no immediate intention to propose any change to
the businesses and operations of the Group or to redeploy the fixed assets of the Group. As
set out in Section 6 of the Circular and Paragraph 5 of the Letter to Shareholders in the Exit
Offer Letter, the Offeror’s intentions relating to the Group are as follows:
“The Offeror has no current intention of (a) making material changes to Synear’s existing
business, (b) re-deploying Synear’s fixed assets, or (c) discontinuing the employment of the
employees of Synear and its subsidiaries, other than in the ordinary course of business.
Nonetheless, the Offeror retains the flexibility at any time to consider options or opportunities
which may present themselves, and which it regards to be in the interests of the Offeror
and/or Synear. Following the close of the Exit Offer, the Offeror will conduct a comprehensive
review of the operations, management and financial position of Synear and its subsidiaries,
I-24
and will evaluate various strategic options following the privatisation of Synear, including
listing the shares of the Offeror or any of its subsidiaries on a recognised stock exchange in
the future if market conditions are favourable.”
Given the above, we have deemed that the following asset-based analyses would not be the
primary consideration in our overall evaluation of the Exit Offer and should be regarded for
illustrative purposes only.
The NAV, which is reflected in a company’s financial statements, is calculated as total assets
less all liabilities, and determined by relevant accounting policies and procedures. The RNAV
figures takes into account adjustments to a company’s principal assets based on their
estimated current market values.
Based on the Company’s unaudited consolidated financial statements as at 31 March 2013,
the unaudited NAV of the Group was about RMB3,221.5 million (approximately S$643.00
million) or RMB2.34 per Share (approximately S$0.468 per Share). We note that the Exit
Offer Price represents a discount of approximately 60.0% to the unaudited NAV as at 31
March 2013 or a P/NAV Ratio of 0.40 times.
We also note that, as at the Latest Practicable Date, the P/NAV Ratio of the Company implied
by the Exit Offer Price of 0.4 times is within the range of P/NAV Ratios of the Category I
Comparable Companies of between 0.2 times and 4.4 times and of the Category II
Comparable Companies of between 0.2 times and 2.1 times. We further note that, as at the
Latest Practicable Date, of the five Category I Comparable Companies, two were trading
below their respective NAVs, and four of the six Category II Comparable Companies were
trading below their respective NAVs.
We have also considered how the Share price has traded against the Group’s NAV per Share
for the two years prior the Joint Announcement Date and up to the Latest Practicable Date.
0.0x
0.1x
0.2x
0.3x
0.4x
0.5x
0.6x
Oct-
11
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10
No
v-1
1-2
01
0
De
c-1
1-2
01
0
Ja
n-1
1-2
01
1
Fe
b-1
1-2
01
1
Ma
r-1
1-2
01
1
Ap
r-1
1-2
01
1
Ma
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1-2
01
1
Ju
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1-2
01
1
Ju
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1-2
01
1
Au
g- 1
1-2
01
1
Se
p-1
1-2
01
1
Oct-
11
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11
No
v-1
1-2
01
1
De
c-1
1-2
01
1
Ja
n-1
1-2
01
2
Fe
b-1
1-2
01
2
Ma
r-1
1-2
01
2
Ap
r-1
1-2
01
2
Ma
y-1
1-2
01
2
Ju
n-1
1- 2
01
2
Ju
l-1
1-2
01
2
Au
g-1
1-2
01
2
Se
p-1
1-2
01
2
Oct-
11
-20
12
No
v-1
1-2
01
2
De
c-1
1-2
01
2
Ja
n-1
1-2
01
3
Fe
b-1
1-2
01
3
Ma
r-1
1-2
01
3
Ap
r-1
1-2
01
3
Ma
y-1
1-2
01
3
Ju
n-1
1-2
01
3
Ju
l-1
1-2
01
3
P/N
AV
Implied by the Exit Offer Price = 0.4x
Source: CapitalIQ, EYCF analysis
I-25
As set out in the chart above, we note that since 11 April 2011 and prior to the Joint
Announcement Date, the Shares have not traded above the P/NAV Ratio of 0.4 times implied
by the Exit Offer Price. We also note that since 21 August 2008, the Shares have not been
traded at or above NAV.
Additional information on the P/NAV Ratio of the Company is set out below:
Periods prior to the Joint
Announcement Date
Historical P/NAV Ratio
Last one
year
Last two
years
High 0.37x 0.55x
Low 0.23x 0.23x
Average 0.28x 0.34x
Median 0.28x 0.30x
P/NAV Ratio (Implied by the Exit Offer Price) 0.40x
We have also taken into consideration whether there are any factors which, based on
applicable accounting standards and policies, have not been disclosed in the Group’s
announced financial results that may have a material impact on the unaudited NAV of the
Group as at 31 March 2013. The management of the Company and the Directors have
confirmed that, save as disclosed in the unaudited financial statements of the Group as at 31
March 2013 and to the best of their knowledge, there is no material information undisclosed
in accordance with the applicable accounting standards and policies (including any asset
impairment, surplus in revaluation and material contingent liabilities) that may materially
impact the NAV of the Group as at the Latest Practicable Date.
In our review of the unaudited balance sheet of the Group as at 31 March 2013, we have also
considered whether there are any intangible assets that would not appear in the valuation
based on the unaudited NAV of the Group as at 31 March 2013. The management of the
Company and the Directors have confirmed that, to the best of their knowledge, there are no
intangible assets which should be disclosed in the balance sheet of the Group in accordance
with the applicable accounting standards and policies as at the Latest Practicable Date.
We have also taken into consideration any tangible asset of the Group that should be valued
and reflected at a different amount from the amount that is recorded in the unaudited
financial statements as at 31 March 2013.
The Company has appointed the Valuer to conduct, in connection with the Exit Offer, an
independent valuation of the Group’s real properties (including land use rights) (the
“Properties”), plant and equipment (“Plant and Equipment”) (collectively, “PPE”). The
Valuation Report dated 19 July 2013 is set out as Appendix VIII to the Circular.
I-26
We note that the valuations are the Valuer’s opinion on the market values of the PPE, which
as set out in the Valuation Report is defined as intended to mean “the estimated amount for
which an asset or liability should exchange on the valuation date between a willing buyer and
a willing seller in an arm’s length transaction, after proper marketing and where the parties
had each acted knowledgeably, prudently and without compulsion” for the Properties, and
“an opinion, expressed in terms of money, at which the property would change hands
between a willing buyer and a willing seller, neither being under any compulsion to buy or to
sell and both having reasonable knowledge of relevant facts, as of a specific date and
assuming that the business earnings support the value reported, without verification” for the
Plant and Equipment. With respect to the Properties, we further note that the Valuer has
made the valuation on the assumption that the owner in each of the properties “sells its
relevant property interest in the market in its existing states without the benefit of a deferred
terms contract, leaseback, joint venture, management agreement or any other similar
arrangement which could serve to increase the values of the property interest.” With respect
to the Plant and Equipment, we further note that the Valuer has made the valuation on the
assumption that “the Plant and Equipment will be used for the purpose for which it was
designed and built or to which it is currently adapted. It is not intended to represent the
amount that might be realised from piecemeal disposition of the Plant and Equipment in the
open market or for other alternate use.”
For illustration purposes only, as set out in the Valuation Report, the summary of values of
the Properties is as follows:
No. Property
Market Value in its existing state attributable to the Group
as at 31 March 2013
(in RMB)
Land Building
Construction
in Progress Total
1. A factory complex located at
Yong He Economic Zone,
Guangzhou Development District,
Guangzhou City,
Guangdong Province,
PRC
22,080,000 48,040,000 10,550,000 80,670,000
2. A factory complex located at
No. 15 Ying Cai Street,
Hui Ji District,
Zhengzhou City,
Henan Province,
PRC
610,870,000 440,310,000 96,740,000 1,147,920,000
3. A factory complex located at
Eastern Side of Xue Dian Road,
Xue Dian Zhen,
Xinzheng City,
Henan Province,
PRC
29,980,000 34,860,000 – 64,840,000
I-27
No. Property
Market Value in its existing state attributable to the Group
According to the information provided by the Company and as set out in the Valuation Report,
we note that:
(a) with respect to the Properties 1, 2, 4 and 5, approximately RMB1.3 million, RMB12.4
million, RMB37.6 million and RMB6.5 million, respectively, would be further needed for
completion of the construction;
(b) with respect to the Properties 1, 2, 4 and 5, the valuation amount of the property upon
completion of the scheduled developments would be approximately RMB82.0 million,
RMB1,160.3 million, RMB187.8 million and RMB135.7 million, respectively; and
(c) with respect to the Property 1, the valuation amount of the property upon completion of
the development would be approximately RMB92.6 million, if the Company further
develops the land to its allowable development area under the specific construction
planning permits received by the Company, as mentioned in the Valuation Certificate of
the Valuation Report.
We note that, based on information provided by the Company, the potential tax liabilities that
may be incurred by the Group on the hypothetical disposal of the Properties are business tax
and related surcharges at 5.6% and current enterprise income tax on the taxable profit from
the sale of the Properties at 25%. The aforesaid tax liabilities will not crystallise if the Group
does not dispose of its interests in the Properties. We also note the Company’s confirmation
that it has no immediate plans to dispose of its interests in the Properties and as such, the
aforesaid tax liabilities are not likely to crystallise. The market values as shown in the table
above exclude such potential tax liabilities.
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For illustration purposes only, as set out in the Valuation Report, the summary of values ofthe Plant and Equipment is as follows:
No. Department
Fair Market Value in continued use
as at 31 March 2013
(in RMB)
1. Machinery and Equipment 399,720,400
2. Electronic and Office Equipment 13,625,400
3. Motor Vehicles 3,833,700
4. Construction-in-Progress (CIP) 134,413,900
Total 551,593,400
We note that, as set out in the Valuation Report and based on information provided by theCompany, the potential tax liabilities that may be incurred by the Group on the hypotheticaldisposal of the Plant and Equipment are value added tax and related surcharges at 19.04%and current enterprise income tax on the taxable profit from the sale of the Plant andEquipment at 25%. The aforesaid tax liabilities will not crystallise if the Group does notdispose of its interests in the Plant and Equipment. We also note that the Company has noimmediate plans to dispose of its interests in the Plant and Equipment and as such, theaforesaid tax liabilities are not likely to crystallise. The market values as shown in the tableabove exclude such potential tax liabilities. We further note from the Valuation Report thatthe Plant and Equipment under the CIP department refers mainly to the equipment installedat the properties that are currently in use or under development.
Based on the unaudited balance sheet of the Group as at 31 March 2013, the book value ofthe PPE is approximately RMB2,093.1 million (approximately S$417.8 million). Based on theValuation Report, the market value of the PPE as at 31 March 2013 is approximatelyRMB2,124.5 million (approximately S$424.1 million), excluding any potential tax liabilities.
Given the above and as informed by the management of the Company, the revaluation deficitarising from the revaluation of the PPE is approximately RMB161.6 million (approximatelyS$32.3 million), including potential tax liabilities based on calculations provided by themanagement of the Company of approximately RMB193.1 million that would arise if the PPEwere to be sold at the amount of the valuation as set out in the Valuation Report. We notethat the Company has confirmed that it has no immediate plans to dispose of its interests inthe PPE and, as such, the aforesaid tax liabilities are not likely to crystallise.
For discussion purposes only, the unaudited RNAV of the Group is approximatelyRMB3,059.8 million or RMB2.225 per Share (approximately S$610.7 million or S$0.444 perShare) as computed by the management of the Company after taking into accountadjustments due to the revaluation of the PPE as set out in the Valuation Report and thepotential tax liabilities that would arise if the PPE were to be sold at the amount of thevaluation as set out in the Valuation Report. Based on the unaudited balance sheet of theGroup as at 31 March 2013, the NAV of the Group is RMB3,221.5 million (approximatelyS$643.0 million or S$0.468 per Share). Based on the unaudited RNAV per Share of S$0.444computed above, the Exit Offer Price represents a discount of approximately 58.1%.
I-29
In the table below, we have set out the adjustments which were made in determining the
RNAV of the Group.
(RMB’000)
Group’s unaudited NAV (as at 31 March 2013) 3,221,457
Add: Revaluation surplus arising from the revalued PPE 31,463
Less: Potential tax liabilities (that would arise if the PPE were to be sold) (193,107)
RNAV of the Group (as at 31 March 2013) 3,059,813
While the unaudited RNAV per Share is a relevant basis for comparison, the Independent
Directors should note that it is not necessarily a realisable value as the market value of the
PPE and any tax liabilities arising from the sale of the PPE may vary depending on prevailing
market and economic conditions.
We also note that based on the unaudited balance sheet of the Group as at 31 March 2013,
the largest asset component of the Group is PPE at RMB2,093.1 million, which accounted for
approximately 59.2% of the unaudited total assets of the Group as at 31 March 2013. For
illustrative purposes only, assuming a hypothetical sale of the Group’s PPE due to changes
to or cessation of the businesses and operations of the Group, we note from the management
of the Company that under such situation, the value which is realisable from the hypothetical
sale of PPE is likely to be lower than the amount reflected in the unaudited balance sheet of
the Group as at 31 March 2013.
7.5 Other Relevant Considerations
We have also considered the following in our evaluation on the Exit Offer:
7.5.1 Financial outlook for the Group
In the announcement of the Company’s unaudited financial statements for the three
months ended 31 March 2013, the following commentary was made on the competitive
conditions of the industry in which the Group operates and any known factors or events
that may affect the group in the next reporting period and the next 12 months:
“The Group may continue to face cost pressures from rising raw material prices and
labour costs. The Group therefore expects the economic climate and business
conditions to remain very challenging in the next reporting period and in the next
twelve months.”
In the Company’s annual report for the financial year ended 31 December 2012, the
following commentary was made on the expansion projects of the Group:
“On the operational front, as part of our strategies to strengthen our production
capabilities and broaden Synear’s distribution network in the PRC, the Group
commenced production at two new facilities.
I-30
The Guangzhou plant, which entered production in early 2012, has a total production
capacity of 100,000 metric tonnes per annum and will primarily cater to the consumer
markets in Guangdong Province and Hong Kong.
For our new facility in Zhengzhou, the first phase of its production facilities have been
completed and put into operations since the beginning of the year. Construction for the
second phase is well underway, with full completion expected by the end of 2013.
When fully completed, the new Zhengzhou facility will bring an additional production
capacity of 500,000 metric tonnes per annum to the Group.”
While the Company is continuing with its expansion projects, we note that the profit
performance of the Group has declined over the last two-year period and that the
Company has stated that it expects business conditions to remain very challenging in
the next reporting period and the next 12 months.
7.5.2 Irrevocable Undertakings
As at the Latest Practicable Date, the Promoters and the Non-Acceptance Undertaking
Shareholders have undertaken to vote all the Promoter Relevant Shares and the
Non-Acceptance Relevant Shares in favour of the Delisting Resolution at the SGM.
Such undertakings are pursuant to the separate Promoter Irrevocable Undertakings
and the Non-Acceptance Irrevocable Undertakings.
Pursuant to the Promoter Irrevocable Undertakings, the Promoters have undertaken,
inter alia, (a) not to, and procure Genki, Union and Elite (as the case may be) not to,
directly or indirectly, accept the Exit Offer (including any revised or improved Exit Offer
by or on behalf of the Offeror) in respect of Shares held by Genki, Union and Elite
respectively and any Shares which they or Genki, Union or Elite (as the case may be)
may, directly or indirectly, acquire on or after the date of their Promoter Irrevocable
Undertakings (in each case, in respect of each Promoter and Genki, Union or Elite (as
the case may be), the “Promoter Relevant Shares”); (b) vote or procure the voting of
all the Promoter Relevant Shares in favour of the Delisting Resolution at the SGM; (c)
not to transfer or otherwise dispose of any of the Promoter Relevant Shares during the
period commencing from the date of each Promoter Irrevocable Undertaking and
ending on the Closing Date; and (d) the funding for the Exit Offer will be contributed
by Genki, Union and Elite in accordance with their respective shareholding proportions
in the Offeror as set out in Paragraph 3 of the Exit Offer Letter.
Each of the Non-Acceptance Undertaking Shareholders has undertaken under its
respective Non-Acceptance Irrevocable Undertaking, inter alia, (a) not to, directly or
indirectly, accept the Exit Offer (including any revised or improved Exit Offer by or on
behalf of the Offeror) in respect of any of its Shares and any Shares which it may,
directly or indirectly, acquire on or after the date of its Non-Acceptance Irrevocable
Undertaking (the “Non-Acceptance Relevant Shares”); (b) vote or procure the voting
of all its Non-Acceptance Relevant Shares in favour of the Delisting Resolution at the
SGM; and (c) not to transfer or otherwise dispose of any of its Non-Acceptance
Relevant Shares during the period commencing from the date of its Non-Acceptance
Irrevocable Undertaking and ending on the Closing Date.
I-31
Additional information on the Promoter Irrevocable Undertakings and the Non-
Acceptance Irrevocable Undertakings are set out in Section 5 of the Circular and
Paragraph 2 of the Letter to Shareholders in the Exit Offer Letter.
As at the Latest Practicable Date, the Offeror, and persons acting in concert with it, and
the Non-Acceptance Undertaking Shareholders collectively hold an aggregate of
1,044,658,440 Shares, representing approximately 75.98% of the total number of
issued Shares.
7.5.3 Control of the Company
In accordance with the Listing Manual, the Delisting Proposal is subject to, inter alia,
the following:
(a) the Delisting Resolution is approved by a majority of at least 75% of the total
number of issued Shares (excluding treasury shares) held by the Shareholders
present and voting, on a poll, either in person or by proxy at the SGM (the
Directors and Controlling Shareholders need not abstain from voting on the
Delisting Resolution); and
(b) the Delisting Resolution is not voted against by 10% or more of the total number
of issued Shares (excluding treasury shares) held by the Shareholders present
and voting, on a poll, either in person or by proxy at the SGM.
As set out in Section 5 of the Circular and Paragraph 2 of the Letter to Shareholders
in the Exit Offer Letter, the Offeror has received Irrevocable Undertakings from the
Promoters and the Non-Acceptance Undertaking Shareholders to vote in favour of the
Delisting Resolution at the SGM in respect of all the Promoter Relevant Shares and the
Non-Acceptance Relevant Shares (defined in Section 7.5.2 of this letter).
As at the Latest Practicable Date, the Offeror, and persons acting in concert with it, and
the Non-Acceptance Undertaking Shareholders collectively hold an aggregate of
1,044,658,440 Shares, representing approximately 75.98% of the total number of
issued Shares. We note that this satisfies one of the two required conditions for the
approval of the Delisting Proposal as pursuant to the Listing Manual. We further note
that unless the Delisting Resolution is voted against by 10% or more of the total
number of Shares (excluding treasury shares) held by Shareholders present and
voting, on a poll, either in person or by proxy at the SGM, the Delisting Resolution is
guaranteed of being passed at the SGM.
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7.5.4 Implications of Delisting and compulsory acquisition
We recommend that Independent Directors advise the Shareholders to read Section 7
of the Circular carefully with respect to the implications of the Delisting and compulsory
acquisition. The said section is reproduced as follows:
“7.1 Delisting
Shareholders should note that shares of unquoted companies are generally
valued at a discount to the shares of comparable listed companies as a result of
the lack of marketability. Following the Delisting, it is likely to be difficult for
Shareholders who do not accept the Exit Offer to sell their Shares in the
absence of a public market for the Shares as there is no arrangement for
Shareholders to exit. If the Company is delisted from the Official List of the
SGX-ST, even if such Shareholders were able to sell their Shares, they may
receive a lower price as compared to the Exit Offer Price and where such
transfer or sale of Shares involves a change in the beneficial ownership of
those Shares, the prior written consent of the Bermuda Monetary Authority
will be required.
Shareholders should also note that, under the Code, except with the consent of
the SIC, neither the Offeror nor any person acting in concert with it may, within six
(6) months of the closure of the Exit Offer, make a second offer to, or acquire any
Shares from, any Shareholder on terms better than those made available under
the Exit Offer.
As an unquoted company, the Company will no longer be obliged to comply with
the listing requirements of the SGX-ST, in particular the continuing corporate
disclosure requirements under Chapter 7 and Appendices 7.1 to 7.4 of the Listing
Manual. Nonetheless, as a company incorporated in Bermuda, the Company will
still need to comply with the Bermuda Companies Act, the memorandum of
association of the Company and its Bye-Laws, and the interests of Shareholders
who do not accept the Exit Offer will be protected to the extent provided for by the
Bermuda Companies Act, the memorandum of association of the Company and
the Bye-Laws.
If the Company is delisted from the Official List of the SGX-ST, each depositor
who holds Shares that are deposited with CDP and does not accept the Exit Offer
will be entitled to one share certificate representing his delisted Shares. The
Singapore Share Transfer Agent will arrange to forward the share certificates to
such depositors for their physical safekeeping.
Shareholders who are in doubt of their position should seek independent
professional advice.
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7.2. Compulsory Acquisition
The information relating to the rights of compulsory acquisition has been
extracted from paragraph 6 of the Letter to Shareholders in the Exit Offer Letter
and reproduced below. All terms and expressions used in the extract below shall
have the same meanings as those defined in the Exit Offer Letter, unless
otherwise stated.
6. COMPULSORY ACQUISITION
Under Section 102 of the Companies Act 1981 (as amended) of Bermuda
(the “Bermuda Companies Act”), where an offeror who has, within four (4)
months after the making of an offer under a scheme or contract:
(a) obtained acceptances from shareholders holding not less than 90% in
value of the shares in a Bermuda-incorporated company (the “Target”)
(other than shares already held, at the date of the offer, by the offeror,
the offeror’s subsidiaries, and nominees of the offeror or its
subsidiaries); and
(b) where, at the date of the offer, shares in the Target whose transfer is
involved, are already held by the offeror, the offeror’s subsidiaries, and
nominees of the offeror or its subsidiaries to a value greater than 10%
of the total issued shares of the Target, such accepting shareholders
also represent not less than 75% in number of the holders of such
shares
(the “Approval Threshold”), the offeror may at any time within two (2) months
beginning from the date on which the Approval Threshold is achieved, give
notice under Section 102(1) of the Bermuda Companies Act to any
dissenting shareholder that the offeror wishes to acquire his shares (the
“Acquisition Notice”). When such Acquisition Notice is given, upon the expiry
of one (1) month from the date on which the notice was given, the offeror
shall be entitled and bound to acquire those shares on the same terms of the
offer (unless an application is made by the dissenting shareholder(s) to
court within one (1) month from the date on which the notice was given and
the court thinks fit to order otherwise).
Section 102(2) of the Bermuda Companies Act provides, inter alia, that once
the offeror (together with its subsidiaries and nominees) holds 90% or more
in value of the shares in the Target including those held at the date of the
transfer, such offeror shall within one (1) month give notice of that fact to the
remaining shareholders of the Target, and any such remaining shareholder
may within three (3) months from the giving of the said notice to him, give
notice (an “Offeree Notice”) requiring the offeror to acquire his shares in the
Target. Where a remaining shareholder gives an Offeree Notice with respect
to any shares in the Target, the offeror shall be entitled and bound to acquire
those shares on the same terms of the original offer (or on such other terms
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as may be agreed or as the court, on the application of either the offeror or
the shareholder, thinks fit to order), notwithstanding that the offeror may not
have issued the Acquisition Notice.
Under Section 103 of the Bermuda Companies Act, holders of not less than
95% of the shares in a Bermuda-incorporated company (the “purchasers”)
may give notice to the remaining shareholders of the intention to acquire
their shares on the terms set out in the notice. When such a notice is given,
the purchasers shall be entitled and bound to acquire the shares of the
remaining shareholders on the terms set out in the notice unless a remaining
shareholder applies to the court to have the court appraise the value of such
shares. The procedure in connection with such an acquisition is set out in
Section 103 of the Bermuda Companies Act.
In view of the Promoters and the Non-Acceptance Undertaking
Shareholders having executed the Promoter Irrevocable Undertakings and
the Non-Acceptance Irrevocable Undertakings respectively pursuant to
which they undertook, inter alia, not to, accept the Exit Offer (including any
revised or improved Exit Offer made by or on behalf of the Offeror) in
respect of their Promoter Relevant Shares and Non-Acceptance Relevant
Shares (as the case may be), it is envisaged that Sections 102 and 103 of
the Bermuda Companies Act in relation to compulsory acquisition will not be
applicable, as the Promoter Relevant Shares and the Non-Acceptance
Relevant Shares collectively represent approximately 58.38% of the total
number of issued Shares.
Shareholders who are in doubt of their position under the Bermuda
Companies Act are advised to seek their own independent legal advice.”
7.5.5 Offeror’s intentions for the Company
We note that the Offeror has no immediate intention to propose any changes to the
businesses and operations of the Company nor to redeploy the fixed assets of the
Company. Section 6 of the Circular and Paragraph 5 of the Letter to Shareholders in
the Exit Offer Letter states that with respect to the intentions of the Offeror relating to
the Company, the Offeror has no current intention of (a) making material changes to
the Company’s existing business, (b) re-deploying the Company’s fixed assets, or (c)
discontinuing the employment of the employees of the Company and its subsidiaries,
other than in the ordinary course of business.
7.5.6 Alternative offer from third parties
We understand from the Directors that, as at the Latest Practicable Date, there is no
other alternative offer or proposal to the Company which is comparable to the Delisting
Proposal and the Exit Offer. We also note that there is no publicly available evidence
of an alternative offer for the Shares from any third party.
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8 OUR ADVICE ON THE EXIT OFFER
In arriving at our advice on the Exit Offer, we have reviewed and deliberated on the factors
which we consider to be relevant and to have a significant bearing on our assessment of the
Delisting Proposal and the Exit Offer. The factors we have considered in our evaluation,
which are discussed in detail in Sections 6 and 7 of this letter and which we have relied upon,
are as follows:
(a) the Exit Offer Price represents premiums of approximately 19.2%, 42.0%, 37.8%,
31.0%, and 20.8% over the VWAPs for the periods 2 years, 1 year, 6 months, 3 months
and 1 month prior to the Joint Announcement Date, respectively;
(b) the Exit Offer Price represents a premium of approximately 10.1% over the last
transacted price prior to the Joint Announcement Date;
(c) over the last two years prior to the Joint Announcement Date, the market price of the
Shares has traded between a low of S$0.109 and a high of S$0.245. We note further
that prior to the Joint Announcement Date, the Shares have not traded at or above the
Exit Offer Price since 25 February 2011;
(d) for the period following the Joint Announcement Date up to the Latest Practicable Date,
the Company’s Share price had traded between S$0.168 and S$0.196 per Share. The
Exit Offer Price of S$0.186 represents a discount of 1.6% to the VWAP of the Shares
over this period;
(e) the last transacted price of S$0.183 as at the Latest Practicable Date is lower than the
Exit Offer Price;
(f) for the period from two years prior to the Joint Announcement Date up to the Joint
Announcement Date, the Shares were traded on 487 market days out of the total 511
market trading days or on approximately 95.3% of the total number of market trading
days during the period. However, the Shares had a thin average daily trading volume of
only 1,710,556 Shares or 0.39% of the free float for the 2-year period;
(g) the average daily traded volume of the Shares for the periods 1 year, 6 months, 3
months and 1 month prior to the Joint Announcement Date represents approximately
0.22%, 0.22%, 0.27% and 0.46% of the free float, respectively;
(h) the EV/EBITDA Ratio of the Company implied by the Exit Offer Price of 3.7 times is
within the range but below the average and the median of the EV/EBITDA Ratios of both
the Category I Comparable Companies and Category II Comparable Companies;
(i) the P/E Ratio of the Company implied by the Exit Offer Price of 22.2 times is within the
range of the P/E Ratios, below the average but above the median P/E Ratios of the
Category I Comparable Companies, and above the average and median P/E Ratios of
the Category II Comparable Companies;
I-36
(j) the P/NAV Ratio of the Company implied by the Exit Offer Price of 0.4 times is within the
range but significantly below the average and median of the P/NAV Ratios of both the
Category I Comparable Companies and the Category II Comparable Companies;
(k) the premium implied by the Exit Offer Price for the last transacted price which the
Shares were traded prior to the Joint Announcement Date of approximately 10.1% is
below the range of premiums of the Comparable Transactions;
(l) the premium implied by the Exit Offer Price for the 1-month VWAP which the Shares
were traded prior to the Joint Announcement Date of approximately 20.8% is within the
range of premiums of the Comparable Transactions but is below the average and
median premiums of the Comparable Transactions;
(m) the premium implied by the Exit Offer Price for the 3-month VWAP which the Shares
were traded prior to the Joint Announcement Date of approximately 31.0% is within the
range and above the average and median premiums of the Comparable Transactions;
(n) the premium implied by the Exit Offer Price for the 6-month VWAP which the Shares
were traded prior to the Joint Announcement Date of approximately 37.8% is within the
range and above the average and median premiums of the Comparable Transactions;
(o) the Shares have not, prior to the Joint Announcement Date, traded above the P/NAV
Ratio of 0.4 times implied by the Exit Offer Price since 11 April 2011. Since 21 August
2008, the Shares have not been traded at or above NAV;
(p) based on the unaudited RNAV of the Group, the Exit Offer Price represents a discount
of approximately 58.1%. While the unaudited RNAV is a relevant basis for comparison,
it is not necessarily a realisable value as the market value of the PPE and any tax
liabilities arising from the sale of the PPE may vary depending on prevailing market and
economic conditions.
Based on the unaudited balance sheet of the Group as at 31 March 2013, the largest
asset component of the Group is PPE at RMB2,093.1 million, which accounted for
approximately 59.2% of the unaudited total assets of the Group as at 31 March 2013.
For illustrative purposes only, assuming a hypothetical sale of the Group’s PPE due to
changes to or cessation of the businesses and operations of the Group, we note from
the management of the Company that under such situation, the value which is
realisable from the hypothetical sale of PPE is likely to be lower than the amount
reflected in the unaudited balance sheet of the Group as at 31 March 2013;
(q) we note that while the Company is continuing with its expansion projects, the profit
performance of the Group has declined over the last two-year period and the Company
has stated that it expects business conditions to remain very challenging in the next
reporting period and the next 12 months;
(r) the Offeror, and persons acting in concert with it, and the Non-Acceptance Undertaking
Shareholders collectively holding approximately 75.98% of the total number of issued
Shares, as at the Latest Practicable Date. As such, unless the Delisting Resolution is
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voted against by 10% or more of the total number of Shares (excluding treasury shares)
held by Shareholders present and voting, on a poll, either in person or by proxy at the
SGM, the Delisting Resolution is guaranteed of being passed at the SGM;
(s) the implications of delisting and the likelihood that that Sections 102 and 103 of the
Bermuda Companies Act in relation to compulsory acquisition will not be applicable;
(t) the Offeror has no immediate intention to propose any changes to the businesses and
operations of the Company nor to redeploy the fixed assets of the Company; and
(u) the absence of an alternative offer as at the Latest Practicable Date.
In arriving at our conclusion, we have considered the information available to us as at
the Latest Practicable Date. The summary of the analyses we have undertaken is set
out as items (a) to (u) above.
After having considered carefully the information available to us as at the Latest
Practicable Date, we are of the view that the financial terms of the Exit Offer are not
fair, given that: (i) the EV/EBITDA Ratio implied by the Exit Offer Price of 3.7 times is
below the median EV/EBITDA Ratios of both the Category I Comparable Companies
and Category II Comparable Companies of 7.9 times and 4.1 times, respectively; and
(ii) the significant discount implied by the Exit Offer Price to the NAV (being 60.0%) and
the RNAV of the Group (being 58.0%).
However, on balance and taking into account: (i) that the P/E Ratio implied by the Exit
Offer Price is above the median P/E Ratios of both the Category I Comparable
Companies and Category II Comparable Companies; (ii) the premiums implied by the
Exit Offer Price when compared against the historical trading performance of the
Shares; (iii) the premiums implied by the Exit Offer Price in respect of the 3-month and
6-month VWAPs when compared against the relevant VWAPs of the Comparable
Transactions; (iv) that prior to the Joint Announcement Date the Shares have not traded
above the P/NAV Ratio of 0.4 times implied by the Exit Offer Price since April 2011; and
(v) the absence of a competing offer, we are also of the view that the financial terms of
the Exit Offer are reasonable and are not prejudicial to the interests of the Shareholders.
Accordingly, we advise the Independent Directors to recommend that Shareholders
vote in favour of the Delisting Resolution and accept the Exit Offer in the event the
Delisting Resolution is passed and Shareholders do not intend and are not prepared
to hold shares in an unlisted company.
We wish to further highlight to the Shareholders that unless the Delisting Resolution
is voted against by 10% or more of the total number of Shares (excluding treasury
shares) held by Shareholders present and voting, on a poll, either in person or by
proxy at the SGM, the Delisting Resolution will be passed at the SGM given that the
Offeror, and persons acting in concert with it, and the Non-Acceptance Undertaking
Shareholders collectively own or control 75.98% of the total number of Shares as at
the Latest Practicable Date.
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Shareholders may wish to sell their Shares in the open market if they are able to obtain a price
higher than the Exit Offer Price net of related expenses (such as brokerage and trading costs).
We wish to further highlight to Shareholders that the market price of the Shares may be
supported by the Exit Offer since the Joint Announcement Date, and there is no assurance
that the market price will be maintained at the level as at the Latest Practicable Date if the
Approval Delisting Resolution Condition is not met and the Exit Offer is not made.
The Independent Directors should note that we have arrived at our recommendation based
on information made available to us prior to and including the Latest Practicable Date. Our
advice on the Exit Offer cannot and does not take into account the future trading activity or
patterns or price levels that may be established for the Shares as these are governed by
factors beyond the scope of our review, and would not fall within our terms of reference in
connection with our evaluation of the Exit Offer.
We have prepared this letter for the use of the Independent Directors in connection with and for
the purposes of their consideration of the Exit Offer, but any recommendations made by the
Independent Directors in respect of the Exit Offer shall remain their responsibility. A copy of this
letter may be reproduced in the Circular.
Whilst a copy of this letter may be reproduced in the Circular, no other person may reproduce,
disseminate or quote this letter (or any part thereof) for any purpose (other than the intended
purpose in relation to the Delisting Proposal and the Exit Offer) at any time and in any manner
without the prior written consent of EYCF in each specific case. This opinion is governed by, and
construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated
herein and does not apply by implication to any other matter.
Yours faithfully,
For and on behalf of
Ernst & Young Corporate Finance Pte Ltd
Luke Pais Elisa Montano
Managing Director Director
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APPENDIX II
PROCEDURES FOR ACCEPTANCE AND OTHER DETAILS OF
THE EXIT OFFER
The following section on the procedures for the acceptance of the Exit Offer is reproduced from
Appendix I to the Exit Offer Letter, and all terms an expressions used in the extract below shall
bear the same meanings as attributed to them in the Exit Offer Letter unless otherwise stated.
PLEASE TAKE NOTE THAT APPROVING THE DELISTING RESOLUTION AT THE SGM
DOES NOT AUTOMATICALLY MEAN THAT YOU HAVE ACCEPTED THE EXIT OFFER.
1. PROCEDURES FOR ACCEPTANCE OF THE EXIT OFFER BY DEPOSITORS WHOSE
SECURITIES ACCOUNTS ARE AND/OR WILL BE CREDITED WITH OFFER SHARES
(a) Depositors whose Securities Accounts are credited with Offer Shares
If you have Offer Shares standing to the credit of the balance of your Securities
Account, you are entitled to receive this Exit Offer Letter together with the FAA. If you
wish to accept the Exit Offer, you should complete and sign the accompanying FAA
in accordance with the provisions and instructions herein and in this Exit Offer Letter
(including this Appendix I), and the provisions and instructions printed on the FAA
(which provisions and instructions shall be deemed to form part of the terms of the
Exit Offer) and forward the duly completed and signed FAA, either by hand to:
FORTUNE DOMAIN LIMITED
c/o The Central Depository (Pte) Limited
4 Shenton Way #02-01
SGX Centre 2
Singapore 068807
or by post (in the enclosed pre-addressed envelope) at your own risk, to:
UBS AG, Singapore Branch for and on behalf of
FORTUNE DOMAIN LIMITED
c/o The Central Depository (Pte) Limited
Robinson Road Post Office
P.O. Box 1984
Singapore 903934
so as in either case to arrive not later than 5:30 p.m. on the Closing Date.
If you have sold or transferred all your Offer Shares, you need not forward this Exit
Offer Letter and/or the FAA to the purchaser or the transferee (the “Purchaser”) as
arrangements will be made by CDP for a separate Exit Offer Letter and FAA to be
sent to the Purchaser. Purchasers should note that CDP will, for and on behalf of the
Offeror, send a copy of this Exit Offer Letter and the FAA by ordinary post at the
Purchasers’ own risk to their respective addresses as maintained in the records of
CDP.
II-1
If you wish to accept the Exit Offer, you must insert in Section A of the FAA the
number of Offer Shares in respect of which the Exit Offer is accepted, which should
not exceed the number of Offer Shares standing to the credit of the “Free Balance”
of your Securities Account as at 5:00 p.m. on the date of receipt by CDP (the “Date
of Receipt”) (or in the case where the Date of Receipt is on the Closing Date, 5:30
p.m. on the Closing Date), for and on behalf of the Offeror, of the relevant FAA in
respect of which the Exit Offer is accepted, provided always that such Date of
Receipt must fall on or before the Closing Date.
If the number of Offer Shares in respect of which the Exit Offer is accepted, as
inserted by you in Section A of the FAA, exceeds the number of Offer Shares
standing to the credit of the “Free Balance” of your Securities Account as at 5:00 p.m.
on the Date of Receipt (or, in the case where the Date of Receipt is on the Closing
Date, 5:30 p.m. on the Closing Date), or if no such number of Offer Shares is inserted
in Section A of the FAA by you, then YOU SHALL BE DEEMED TO HAVE
ACCEPTED THE EXIT OFFER IN RESPECT OF ALL THE OFFER SHARES
STANDING TO THE CREDIT OF THE “FREE BALANCE” OF YOUR SECURITIES
ACCOUNT AS AT 5:00 P.M. ON THE DATE OF RECEIPT (OR IN THE CASE
WHERE THE DATE OF RECEIPT IS ON THE CLOSING DATE, 5:30 P.M. ON THE
CLOSING DATE), PROVIDED ALWAYS THAT THE DATE OF RECEIPT IS ON OR
BEFORE THE CLOSING DATE.
(b) Depositors whose Securities Accounts will be credited with Offer Shares
If you have purchased additional Offer Shares on the SGX-ST, you should also
receive this Exit Offer Letter together with a FAA. You may accept the Exit Offer in
respect of such additional Offer Shares only AFTER the “Free Balance” of your
Securities Account has been credited with such number of Offer Shares. The
provisions and instructions set out in paragraph 1(a) above in this Appendix I shall
apply in the same way to your acceptance(s) in respect of such additional Offer
Shares. If you do not receive that FAA, you may obtain such a FAA upon production
of satisfactory evidence that you have purchased the Offer Shares on the SGX-ST,
from The Central Depository (Pte) Limited, 4 Shenton Way #02-01, SGX Centre 2,
Singapore 068807.
If upon receipt by CDP, for and on behalf of the Offeror, of the FAA, it is established
that the Offer Shares have not been, or will not be, credited to the “Free Balance” of
your Securities Account (as, for example, where you sell or have sold such Offer
Shares), your acceptance is liable to be rejected and none of CDP, UBS and the
Offeror accepts any responsibility or liability for the consequences of such a
rejection.
IF YOU PURCHASE OFFER SHARES ON THE SGX-ST ON A DATE NEAR TO THE
CLOSING DATE, YOUR ACCEPTANCE IN RESPECT OF SUCH OFFER SHARES
WILL BE REJECTED IF THE “FREE BALANCE” OF YOUR SECURITIES
ACCOUNT IS NOT CREDITED WITH SUCH OFFER SHARES BY 5:30 P.M. ON
THE CLOSING DATE. NONE OF CDP, UBS AND THE OFFEROR ACCEPTS ANY
RESPONSIBILITY OR LIABILITY FOR THE CONSEQUENCES OF SUCH A
REJECTION.
II-2
(c) Depositors whose Securities Accounts are and will be credited with Offer
Shares
If you have Offer Shares credited to the “Free Balance” of your Securities Account,
and have purchased additional Offer Shares on the SGX-ST which are in the process
of being credited to the “Free Balance” of your Securities Account, you may accept
the Exit Offer in respect of the Offer Shares already standing to the credit of the “Free
Balance” of your Securities Account and may accept the Exit Offer in respect of the
additional Offer Shares purchased which are in the process of being credited to your
Securities Account only AFTER the “Free Balance” of your Securities Account has
been credited with such number of Offer Shares. If such number of additional Offer
Shares purchased is not credited to the “Free Balance” of your Securities Account by
5:30 p.m. on the Closing Date, your acceptance in respect of such Offer Shares is
liable to be rejected. None of CDP, UBS and the Offeror accepts any responsibility
or liability for the consequences of such a rejection.
(d) General
Depository agents (as defined under Section 130A of the Companies Act) may also
accept the Exit Offer via the SGX-SSH service provided by CDP as listed in Schedule
3 of the Terms and Conditions for User Services for Depository Agents (the
“Electronic Acceptance”). Such Electronic Acceptances must be submitted NOT
LATER THAN 5.30 P.M. ON THE CLOSING DATE. CDP has been authorised by the
Offeror to receive Electronic Acceptances on its behalf. Such Electronic Acceptances
will be deemed irrevocable and subject to each of the terms and conditions contained
in the FAA and this Exit Offer Letter as if the FAA had been duly completed and
submitted to CDP.
No acknowledgement will be given for any submission of a FAA made by hand or by
post to CDP or deposited into drop-boxes located at CDP’s premises.
For reasons of confidentiality, CDP will not entertain telephone enquiries relating to
the number of Offer Shares credited to your Securities Account. You can verify such
number (i) through CDP Online if you have registered for CDP Internet Access
Service or (ii) through CDP Phone Service if you have a T-Pin. Alternatively, you may
proceed to CDP in person with your identity card or passport to verify the number of
Offer Shares credited to your Securities Account.
CDP will, upon receipt for and on behalf of the Offeror of the duly completed and
signed FAA and all other relevant documents (if any), transfer the Offer Shares in
respect of which you have accepted the Exit Offer from the “Free Balance” of your
Securities Account to a “Suspense Account” pending the Exit Offer becoming or
being declared to be unconditional in all respects in accordance with its terms and
until the consideration for the Offer Shares has been despatched to you. In the event
that the Exit Offer does not become or is not declared to be unconditional in all
respects in accordance with its terms, the relevant number of Offer Shares in respect
of which you have accepted the Exit Offer will be transferred to the “Free Balance”
of your Securities Account as soon as possible but, in any event, not later than 14
days from the lapse of the Exit Offer.
II-3
In the event that the Exit Offer becomes or is declared to be unconditional in all
respects in accordance with its terms, CDP will send you a notification letter stating
the number of Offer Shares debited from your Securities Account together with
payment of the Exit Offer Price by way of a cheque in Singapore currency drawn on
a bank operating in Singapore for the appropriate amount, or in such other manner
as you may have agreed with CDP for the payment of any cash distributions.
All communications, certificates, notices, documents and remittances to be delivered
or sent to you will be sent to you by ordinary post to your address as maintained in
the records of CDP and at your own risk. The Offeror, UBS or CDP shall not be liable
for any loss in transmission of the FAA. The election made or deemed to be made by
you in the FAA shall be deemed to be irrevocable and any instructions received by
the Offeror, UBS or CDP after the FAA has been received shall be disregarded.
If you do not have any existing Securities Account in your name as at the time and
date of acceptance of the Exit Offer, your acceptance as contained in the FAA will be
rejected.
2. PROCEDURES FOR ACCEPTANCE OF THE EXIT OFFER BY SHAREHOLDERS WHO
HOLD OFFER SHARES WHICH ARE NOT DEPOSITED WITH CDP
If you hold Offer Shares which are not deposited with CDP, you are entitled to receive this
Exit Offer Letter together with the FAT. If you wish to accept the Exit Offer, you should
complete and sign the FAT (which is available upon request from Fortune Domain Limited
c/o Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place #32-01
Singapore Land Tower Singapore 048623) in accordance with the provisions and
instructions herein and in this Exit Offer Letter (including this Appendix I), and the
provisions and instructions printed on the FAT (which provisions and instructions shall be
deemed to form part of the terms of the Exit Offer) and forward, at your own risk, the duly
completed and signed FAT, together with the relevant share certificate(s), other
document(s) of title and/or any other relevant document(s) required by the Offeror, by
1 An “interested person” is defined in the Note on Rule 23.12 of the Code to mean:
(a) a director, chief executive officer or Substantial Shareholder of the Company;
(b) the immediate family of a director, the chief executive officer or a Substantial Shareholder (being an
individual) of the Company;
(c) the trustees, acting in their capacity as such trustees, of any trust of which a director, the chief executive
officer or a Substantial Shareholder (being an individual) and his immediate family is a beneficiary;
(d) any company in which a director, the chief executive officer or a Substantial Shareholder (being an individual)
together and his immediate family together (directly or indirectly) have an interest of 30% or more;
(e) any company that is the subsidiary, holding company or fellow subsidiary of the Substantial Shareholder
(being a company); or
(f) any company in which a Substantial Shareholder (being a company) and any of the companies listed in (e)
above together(directly or indirectly) have an interest of 30% or more.
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< Audited > < Unaudited >
FY2010 FY2011 FY2012 1Q2013
(RMB’000)
Profit before income tax 141,524 26,887 103,006 20,452
Income tax expense (23,834) (20,341) (34,968) (7,012)
Profit for the year/period
attributable to the owners of the
Company 117,690 6,546 68,038 13,440
Other comprehensive income for
the year/period – – – –
Total comprehensive income for
the year/period attributable to
the owners of the Company 117,690 6,546 68,038 13,440
Earnings per share for profit
attributable to the owners of the
Company during the year/period
Basic and diluted earnings per
share (RMB cents) 8.6 0.5 4.9 1.0
The above summary of the audited profit and loss statements of the Group for FY2010,
FY2011 and FY2012 should be read together with the audited financial statements of the
Group for the relevant years and related notes thereto, copies of which are available for
inspection at the office of the Company’s Singapore Share Transfer Agent at 50 Raffles
Place, #32-01, Singapore Land Tower, Singapore 048623.
The unaudited interim consolidated statement of comprehensive income of the Group as at
31 March 2013 is set out in Appendix VII of this Circular.
7.2. Statement of Financial Position
A summary of the audited consolidated statement of financial position of the Group as at 31
December 2012 and the unaudited statements of financial position of the Group as at 31
March 2013 is set out below.
31/12/2012 31/03/2013
<Audited> <Unaudited>
RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment 1,347,063 1,370,630
Deposits paid for property, plant and equipment and
land use rights 37,214 23,071
Land use rights 726,377 722,430
2,110,654 2,116,131
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31/12/2012 31/03/2013
<Audited> <Unaudited>
RMB’000 RMB’000
Current assets
Inventories 210,823 207,830
Trade receivables 542,265 493,002
Prepayments, other receivables and deposits 176,085 169,110
Tax recoverable – –
Cash and bank balances 518,836 546,908
1,448,009 1,416,850
TOTAL ASSETS 3,558,663 3,532,981
EQUITY AND LIABILITIES
Equity attributable to the owners of the Company
Share capital 140,758 140,758
Reserves 3,067,259 3,080,699
Total equity 3,208,017 3,221,457
Current liabilities
Trade payables 233,874 179,687
Accrued liabilities, other payables and
deposits received 100,389 118,012
Tax payables 16,383 13,825
Total liabilities 350,646 311,524
TOTAL EQUITY AND LIABILITIES 3,558,663 3,532,981
The above summary of the audited consolidated statement of financial position of the Group
as at 31 December 2012 should be read together with the audited financial statements of the
Group for the relevant year and related notes thereto, copies of which are available for
inspection at the office of the Company’s Singapore Share Transfer Agent at 50 Raffles
Place, #32-01, Singapore Land Tower, Singapore 048623.
The unaudited interim statements of financial position of the Group as at 31 March 2013 is
set out in Appendix VII of this Circular.
The consolidated net asset value per Share of the Group based on the latest published
accounts as at 31 March 2013 (the “Consolidated Group NAV per Share”) is RMB2.34. The
Consolidated Group NAV per Share as at 31 March 2013 was calculated based on the issued
share capital of 1,375,000,000 Shares.
As at the Latest Practicable Date, the Directors are not aware of any fact or circumstance
that would result in any material change to the Consolidated Group NTA per Share as at 31
March 2013.
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7.3. Significant Accounting Policies and Changes
A summary of the significant accounting policies of the Group is set out in Note 4 to the
audited financial statements of the Group for FY2012, which are set out in Appendix VI to this
Circular.
As at the Latest Practicable Date, there is no change in the accounting policy of the Company
which will cause the figures as disclosed in this Circular not to be comparable to a material
extent.
7.4. Material Changes
Save as disclosed in publicly available information on the Company (including but not limited
to announcements released by the Company in respect of its financial results such as the
unaudited consolidated financial statements of the Group for 1Q2013 as announced on 22
May 2013 and set out in Appendix VII to this Circular), as at the Latest Practicable Date,
there have been no known material changes in the financial position of the Company since
31 December 2012, being the date to which the Company’s last published audited accounts
were made up.
Pursuant to the requirements of the Listing Manual, the Company is required to announce the
unaudited consolidated financial statements of the Group for the six (6) months ended 30
June 2013 by 14 August 2013 via SGXNET. Shareholders may wish to take note of the
announcement to be released by the Company in relation to such results.
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APPENDIX V
RELEVANT PROVISIONS IN THE BYE-LAWS OF THE COMPANY
The rights of Shareholders in respect of capital, voting and dividends are contained in the
Bye-laws of the Company, the relevant provisions of which are set out below:
SHARE CAPITAL
3(1). The share capital of the Company at the date on which these Bye-laws come into effect
shall be divided into shares of a par value of HK$0.10 each.
3(2). Any power of the Company to purchase or otherwise acquire its own shares shall be
exercisable by the Board upon such terms and subject to such conditions as it thinks fit
and shall also be subject to the Act, the Company’s memorandum of association and, for
so long as the shares of the Company are listed on the Designated Stock Exchange, the
prior approval of the Members in general meeting for such purchase or acquisition. Such
approval of the Members shall remain in force until (i) the conclusion of the annual general
meeting of the Company following the passing of the resolution granting the said authority
or (ii) the date by which such annual general meeting is required to be held or (iii) it is
revoked or varied by ordinary resolution of the Company in general meeting, whichever is
the earliest, and may thereafter be renewed by the Members in general meeting. For so
long as the shares of the Company are listed on the Designated Stock Exchange, the
Company shall make an announcement to the Designated Stock Exchange of any
purchase or acquisition by the Company of its own shares on the market day following the
day of such purchase or acquisition.
3(3). Neither the Company nor any of its subsidiaries shall give, whether directly or indirectly,
whether by means of loan, guarantee, provision of security or otherwise, any financial
assistance for the purpose of the acquisition or proposed acquisition by any person of any
shares in the Company, but nothing in this Bye-law shall prohibit transactions permitted
under the Act.
ALTERATION OF CAPITAL
4. The Company may from time to time by ordinary resolution in accordance with Section 45
of the Act:–
(a) increase its capital by such sum, to be divided into shares of such amounts, as the
resolution shall prescribe;
(b) consolidate and divide all or any of its capital into shares of larger amount than its
existing shares;
(c) divide its shares into several classes and without prejudice to any special rights
previously conferred on the holders of existing shares attach thereto respectively any
preferential, deferred, qualified or special rights, privileges, conditions or such
restrictions which in the absence of any such determination by the Company in
general meeting, as the Directors may determine provided always that where the
Company issues shares which do not carry voting rights, the words “non-voting” shall
appear in the designation of such shares and where the equity capital includes
shares with different voting rights, the designation of each class of shares, other than
those with the most favourable voting rights, must include the words “restricted
voting” or “limited voting”;
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(d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by
the memorandum of association (subject, nevertheless, to the Act), and may by such
resolution determine that, as between the holders of the shares resulting from such
sub-division, one or more of the shares may have any such preferred rights or be
subject to any such restrictions as compared with the other or others as the Company
has power to attach to unissued or new shares;
(e) change the currency denomination of its share capital;
(f) make provision for the issue and allotment of shares which do not carry any voting
rights; and
(g) cancel any shares which, at the date of the passing of the resolution, have not been
taken, or agreed to be taken, by any person, and diminish the amount of its capital
by the amount of the shares so cancelled.
5. The Board may settle as it considers expedient any difficulty which arises in relation to any
consolidation and division under the last preceding Bye-law and in particular but without
prejudice to the generality of the foregoing may issue certificates in respect of fractions of
shares or arrange for the sale of the shares representing fractions and the distribution of
the net proceeds of sale (after deduction of the expenses of such sale) in due proportion
amongst the Members who would have been entitled to the fractions, and for this purpose
the Board may authorise some person to transfer the shares representing fractions to their
purchaser or resolve that such net proceeds be paid to the Company for the Company’s
benefit. Such purchaser will not be bound to see to the application of the purchase money
nor will his title to the shares be affected by any irregularity or invalidity in the proceedings
relating to the sale.
6. The Company may from time to time by special resolution, subject to any confirmation or
consent required by law, reduce its authorised or issued share capital or any share
premium account or other undistributable reserve in any manner permitted by law.
7. Except so far as otherwise provided by the conditions of issue, or by these Bye-laws, any
capital raised by the creation of new shares shall be treated as if it formed part of the
original capital of the Company, and such shares shall be subject to the provisions
contained in these Bye-laws with reference to the payment of calls and instalments,
transfer and transmission, forfeiture, lien, cancellation, surrender, voting and otherwise.
SHARE RIGHTS
8. Subject to any special rights conferred on the holders of any shares or class of shares, any
share in the Company (whether forming part of the present capital or not) may be issued
with or have attached thereto such rights or restrictions whether in regard to dividend,
voting, return of capital or otherwise as the Company may by ordinary resolution
determine or, if there has not been any such determination or so far as the same shall not
make specific provision, as the Board may determine.
9(1). In the event of preference shares being issued the total nominal value of issued
preference shares shall not at any time exceed the total nominal value of the issued
ordinary shares and preference shareholders shall have the same rights as ordinary
shareholders as regards receiving of notices, reports and balance sheets and attending
general meetings of the Company, and preference shareholders shall also have the right
to vote at any meeting convened for the purpose of reducing the capital or winding-up or
sanctioning a sale of the undertaking or where the proposition to be submitted to the
meeting directly affects their rights and privileges or when the dividend on the preference
shares is more than six (6) months in arrear.
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9(2). Subject to Sections 42 and 43 of the Act, any preference shares may be issued or
converted into shares that, at a determinable date or at the option of the Company or the
holder if so authorised by its memorandum of association, are liable to be redeemed on
such terms and in such manner as the Company before the issue or conversion may by
ordinary resolution of the Members determine.
9(3). The Company has power to issue further preference capital ranking equally with, or in
priority to, preference shares already issued.
VARIATION OF RIGHTS
10. Whenever the share capital of the Company is divided into different classes of shares,
subject to the provisions of the Statutes, preference capital other than redeemable
preference capital may be repaid and the special rights attached to any class may be
varied or abrogated either with the consent in writing of the holders of three-quarters in
nominal value of the issued shares of the class or with the sanction of a special resolution
passed at a separate general meeting of the holders of the shares of the class (but not
otherwise) and may be so repaid, varied or abrogated either whilst the Company is a going
concern or during or in contemplation of a winding-up. To every such separate general
meeting and all adjournments thereof all the provisions of these Bye-laws relating to
general meetings of the Company and to the proceedings thereat shall mutatis mutandis
apply, except that the necessary quorum (other than at an adjourned meeting) shall be two
persons at least holding or representing by proxy at least one-third in nominal value of the
issued shares of the class and at any adjourned meeting of such holders, two holders
present in person or by proxy (whatever the number of shares held by them) shall be a
quorum and that any holder of shares of the class present in person or by proxy may
demand a poll and that every such holder shall on a poll have one vote for every share of
the class held by him, provided always that where the necessary majority for such a
special resolution is not obtained at such general meeting, consent in writing if obtained
from the holders of three-quarters in nominal value of the issued shares of the class
concerned within two months of such general meeting shall be as valid and effectual as
a special resolution carried at such general meeting. The foregoing provisions of this
Bye-law shall apply to the variation or abrogation of the special rights attached to some
only of the shares of any class as if each group of shares of the class differently treated
formed a separate class the special rights whereof are to be varied.
11. The special rights conferred upon the holders of any shares or class of shares shall not,
unless otherwise expressly provided in the rights attaching to or the terms of issue of such
shares, be deemed to be varied, modified or abrogated by the creation or issue of further
shares ranking pari passu therewith.
SHARES
12(1). Subject to the Act, no shares may be issued by the Board without the prior approval of the
Company in general meeting but subject thereto and to these Bye-laws and without
prejudice to any special rights or restrictions for the time being attached to any shares or
any class of shares, the unissued shares of the Company (whether forming part of the
original or any increased capital) shall be at the disposal of the Board, which may offer,
allot, grant options over or otherwise dispose of them to such persons, at such times and
for such consideration and upon such terms and conditions as the Board may in its
absolute discretion determine but so that no shares shall be issued at a discount, provided
always that:–
(a) no shares shall be issued to transfer a controlling interest in the Company without the
prior approval of the Members in general meeting;
V-3
(b) (subject to any direction to the contrary that may be given by the Company in general
meeting) any issue of shares for cash to Members holding shares of any class shall
be offered to such Members in proportion as nearly as may be to the number of
shares of such class then held by them and the provisions of the second sentence of
Bye-law 12(2) with such adaptations as are necessary shall apply; and
(c) any other issue of shares, the aggregate of which would exceed the limits referred to
in Bye-law 12(3), shall be subject to the approval of the Company in general meeting.
Neither the Company nor the Board shall be obliged, when making or granting any
allotment of, offer of, option over or disposal of shares, to make, or make available, any
such allotment, offer, option or shares to Members or others with registered addresses in
any particular territory or territories being a territory or territories where, in the absence of
a registration statement or other special formalities, this would or might, in the opinion of
the Board, be unlawful or impracticable. Members affected as a result of the foregoing
sentence shall not be, or be deemed to be, a separate class of members for any purpose
whatsoever.
12(2). Except as permitted under the rules or regulations of the Designated Stock Exchange or
any direction given by the Company in general meeting, all new shares shall before issue
be offered to such persons who as at the date of the offer are entitled to receive notices
from the Company of general meetings in proportion, as far as the circumstances admit,
to the amount of the existing shares to which they are entitled. The offer shall be made by
notice specifying the number of shares offered, and limiting a time within which the offer,
if not accepted, will be deemed to be declined. After the expiration of that time, or on the
receipt of an intimation from the person to whom the offer is made that he declines to
accept the shares offered, the Board may dispose of those shares in such manner as they
think most beneficial to the Company. The Board may likewise so dispose of any new
shares which (by reason of the ratio which the new shares bear to shares held by persons
entitled to an offer of new shares) cannot, in the opinion of the Board, be conveniently
offered under this Bye-law 12(2).
12(3). Notwithstanding Bye-law 12(2) above but subject to the Statutes, the Company in general
meeting may by ordinary resolution grant to the Directors a general authority, either
unconditionally or subject to such conditions as may be specified in the said ordinary
resolution, for further issues of shares where the aggregate number of shares to be issued
pursuant to such authority does not exceed fifty per cent. (50%) (or such other limit, if any,
as may be prescribed by the Designated Stock Exchange) of the issued share capital of
the Company at the time of the passing of the said ordinary resolution, of which the
aggregate number of shares to be issued other than on a pro rata basis to Members does
not exceed twenty per cent. (20%) (or such other limit, if any, as may be prescribed by the
Designated Stock Exchange) of the issued share capital of the Company at the time of the
passing of the said ordinary resolution Provided that such general authority shall only
remain in force until (i) the conclusion of the annual general meeting of the Company
following the passing of the resolution granting the said authority or (ii) the date by which
such annual general meeting is required to be held or (iii) it is revoked or varied by
ordinary resolution of the Company in general meeting, whichever is the earliest.
12(4). The Board may issue warrants conferring the right upon the holders thereof to subscribe
for any class of shares or securities in the capital of the Company on such terms as it may
from time to time determine, Provided that such issue must be specifically approved by the
Company in general meeting if required by the rules or regulations of the Designated
Stock Exchange.
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13. The Company may in connection with the issue of any shares exercise all powers of
paying commission and brokerage conferred or permitted by the Act. Subject to the Act,
the commission may be satisfied by the payment of cash or by the allotment of fully or
partly paid shares or partly in one and partly in the other.
14. Except as required by law, no person shall be recognised by the Company as holding any
share upon any trust and the Company shall not be bound by or required in any way to
recognise (even when having notice thereof) any equitable, contingent, future or partial
interest in any share or any fractional part of a share or (except only as otherwise provided
by these Bye-laws or by law) any other rights in respect of any share except an absolute
right to the entirety thereof in the registered holder.
15(1). Subject to the terms and conditions of any application for shares, the Board shall allot
shares applied for within ten (10) market days of the closing date of any such application
(or such other period as may be approved by the Designated Stock Exchange).
15(2). Subject to the Act and these Bye-laws, the Board may at any time after the allotment of
shares but before any person has been entered in the Register as the holder, recognise
a renunciation thereof by the allottee in favour of some other person and may accord to
any allottee of a share a right to effect such renunciation upon and subject to such terms
and conditions as the Board considers fit to impose.
TRANSFER OF SHARES
46. Subject to these Bye-laws, any Member may transfer all or any of his shares by an
instrument of transfer in the form acceptable to the Board provided always that the
Company shall accept for registration an instrument of transfer in a form approved by the
Designated Stock Exchange.
47. The instrument of transfer of any share shall be signed by or on behalf of both the
transferor and the transferee and be witnessed, provided always that an instrument of
transfer in respect of which the transferee is the Depository shall be effective although not
signed or witnessed by or on behalf of the Depository and provided further that when a
corporation executes an instrument of transfer under seal, the affixation and attestation of
the corporation’s seal may be accepted as compliance with the requirements of this
Bye-law. The Board may also resolve, either generally or in any particular case, upon
request by either the transferor or transferee, to accept mechanically executed transfers.
The transferor shall be deemed to remain the holder of the share until the name of the
transferee is entered in the Register in respect thereof. Nothing in these Bye-laws shall
preclude the Board from recognising a renunciation of the allotment or provisional
allotment of any share by the allottee in favour of some other person.
48(1) The Board may, in its absolute discretion and without giving any reason therefor, refuse to
register a transfer of any share (not being a fully paid up share) to a person of whom it
does not approve, or any share issued under any share incentive scheme for employees
upon which a restriction on transfer imposed thereby still subsists, and it may also, without
prejudice to the foregoing generality, refuse to register a transfer of any share (not being
a fully paid up share) on which the Company has a lien or, except in the case of a transfer
to executors, administrators or trustees of the estate of a deceased Member, a transfer of
any share to more than three (3) joint holders.
48(2) No transfer shall be made to an infant or to a person of unsound mind or under other legal
disability.
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48(3) The Board in so far as permitted by any applicable law may, in its absolute discretion, at
any time and from time to time transfer any share upon the Register to any branch register
or any share on any branch register to the Register or any other branch register. In the
event of any such transfer, the shareholder requesting such transfer shall bear the cost of
effecting the transfer unless the Board otherwise determines.
48(4) Unless the Board otherwise agrees (which agreement may be on such terms and subject
to such conditions as the Board in its absolute discretion may from time to time determine,
and which agreement the Board shall, without giving any reason therefor, be entitled in its
absolute discretion to give or withhold), no shares upon the Register shall be transferred
to any branch register nor shall shares on any branch register be transferred to the
Register or any other branch register and all transfers and other documents of title shall
be lodged for registration, and registered, in the case of any shares on a branch register,
at the relevant Registration Office, and, in the case of any shares on the Register, at the
Office or such other place in Bermuda at which the Register is kept in accordance with the
Act.
48(5) Save as provided in the Bye-laws, there shall be no restriction on the transfer of fully paid
up shares (except where required by law or the rules or regulations of the Designated
Stock Exchange).
49. Without limiting the generality of the last preceding Bye-law, the Board may decline to
recognise any instrument of transfer unless:–
(a) a fee of such sum (not exceeding two Singapore dollars (S$2.00) or such other
maximum sum as the Designated Stock Exchange may determine to be payable) as
the Board may from time to time require is paid to the Company in respect thereof;
(b) the instrument of transfer is in respect of only one class of share;
(c) the instrument of transfer is lodged at the Office or such other place in Bermuda at
which the Register is kept in accordance with the Act or the Registration Office (as
the case may be) accompanied by the relevant share certificate(s) and such other
evidence as the Board may reasonably require to show the right of the transferor to
make the transfer (and, if the instrument of transfer is executed by some other person
on his behalf, the authority of that person so to do); and
(d) if applicable, the instrument of transfer is duly and properly stamped.
50. If the Board refuses to register a transfer of any share, it shall, within one (1) month after
the date on which the transfer was lodged with the Company, send to each of the
transferor and transferee notice of the refusal.
51. The registration of transfers of shares or of any class of shares may, after notice has been
given by advertisement in an appointed newspaper and in accordance with the
requirements of the Designated Stock Exchange be suspended at such times and for such
periods (not exceeding in the whole thirty (30) days in any year) as the Board may
determine.
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TRANSMISSION OF SHARES
52. In the case of the death of a Member, the survivor or survivors where the deceased
Member was a joint holder, and the legal personal representatives of the deceased
Member where the deceased Member was a sole holder, shall be the only persons
recognised by the Company as having any title to the deceased Member’s interest in the
shares. Nothing herein shall release the estate of a deceased joint holder from any liability
in respect of any share which had been jointly held by such deceased Member with other
persons. Subject to the provisions of the Act, for the purpose of this Bye-law, legal
personal representative means the executor or administrator of a deceased Member or
such other person as the Board may, in its absolute discretion, decide as being properly
authorised to deal with the shares of a deceased Member. Where two or more persons are
registered as joint holders of a share or shares, then in the event of the death of any joint
holder or holders the remaining joint holder or holders shall be absolutely entitled to the
said share or shares and the Company shall recognise no claim in respect of the estate
of any joint holder except in the case of the last survivor of such joint holders.
53. Subject to Section 52 of the Act, any person becoming entitled to a share in consequence
of the death or bankruptcy or winding-up of a Member may, upon such evidence as to his
title being produced as may be required by the Board, elect either to become the holder
of the share or to have some person nominated by him registered as the transferee
thereof. If he elects to become the holder he shall notify the Company in writing either at
the Registration Office or Office, as the case may be, to that effect. If he elects to have
another person registered he shall execute a transfer of the share in favour of that person.
The provisions of these Bye-laws relating to the transfer and registration of transfers of
shares shall apply to such notice or transfer as aforesaid as if the death or bankruptcy of
the Member had not occurred and the notice or transfer were a transfer signed by such
Member.
54. A person becoming entitled to a share by reason of the death or bankruptcy or winding-up
of a Member shall be entitled to the same dividends and other advantages to which he
would be entitled if he were the registered holder of the share. However, the Board may,
if it thinks fit, withhold the payment of any dividend payable or other advantages in respect
of such share until such person shall become the registered holder of the share or shall
have effectually transferred such share, but, subject to the requirements of Bye-law 74(2)
being met, such a person may vote at meetings.
GENERAL MEETINGS
55. An annual general meeting of the Company shall be held in each year other than the year
in which its statutory meeting is convened at such time (within a period of not more than
fifteen (15) months after the holding of the last preceding annual general meeting unless
a longer period would not infringe the rules or regulations of the Designated Stock
Exchange, if any) and place as may be determined by the Board. In addition, for so long
as the shares of the Company are listed on the Designated Stock Exchange, the interval
between the close of the Company’s financial year and the date of the Company’s annual
general meeting shall not exceed four (4) months or such other period as may be
prescribed or permitted by the Designated Stock Exchange.
56. Each general meeting, other than an annual general meeting, shall be called a special
general meeting. General meetings may be held in any part of the world as may be
determined by the Board.
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57. The Board may whenever it thinks fit call special general meetings, and, subject to the Act,
Members holding at the date of deposit of the requisition not less than one-tenth of the
paid up capital of the Company carrying the right of voting at general meetings of the
Company shall at all times have the right, by written requisition to the Board or the
Secretary of the Company, to require a special general meeting to be called by the Board
for the transaction of any business specified in such requisition; and such meeting shall
be held within two (2) months after the deposit of such requisition. If within twenty-one (21)
days of such deposit the Board fails to proceed to convene such meeting the
requisitionists themselves may do so in accordance with the provisions of Section 74(3)
of the Act.
PROCEEDINGS AT GENERAL MEETINGS
60(1). Members may participate in any general meeting by means of such telephone, electronic
or other communication facilities as permit all persons participating in the meeting to
communicate with each other simultaneously and instantaneously, and participation in
such a meeting shall constitute presence in person at such meeting.
60(2). All business shall be deemed special that is transacted at a special general meeting, and
also all business that is transacted at an annual general meeting, with the exception of
declaring a dividend, the reading, considering and adopting of the accounts and balance
sheet and the reports of the Directors and Auditors and other documents required to be
annexed to the balance sheet, the election of Directors and appointment of Auditors and
other officers in the place of those retiring, the fixing of the remuneration of the Auditors,
and the voting of remuneration or extra remuneration to the Directors.
60(3). No business, other than the appointment of a chairman of a meeting, shall be transacted
at any general meeting unless a quorum of Members is present at the time when the
meeting proceeds to business. Except as herein otherwise provided, two (2) Members
present in person shall form a quorum, provided that if the Company shall at any time have
only one Member, one Member present in person or by proxy, or being a corporation by
its representative duly authorized, shall form a quorum for the transaction of business at
any general meeting of the Company held during such time. For the purposes of this
Bye-law Member includes a person attending as a proxy or as a duly authorized
representative of a corporation which is a Member.
61. If within thirty (30) minutes (or such longer time not exceeding one hour as the chairman
of the meeting may determine to wait) after the time appointed for the meeting a quorum
is not present, the meeting, if convened on the requisition of Members, shall be dissolved.
In any other case it shall stand adjourned to the same day in the next week at the same
time and place or to such time and place as the Board may determine. If at such adjourned
meeting a quorum is not present within half an hour from the time appointed for holding
the meeting, the meeting shall be dissolved.
62. The president of the Company or the chairman shall preside as chairman at every general
meeting. If at any meeting the president or the chairman, as the case may be, is not
present within fifteen (15) minutes after the time appointed for holding the meeting, or if
neither of them is willing to act as chairman, the Directors present shall choose one of their
number to act, or if one Director only is present he shall preside as chairman if willing to
act. If no Director is present, or if each of the Directors present declines to take the chair,
or if the chairman chosen shall retire from the chair, the Members present in person or by
proxy and entitled to vote shall elect one of their number to be chairman.
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63. The chairman may, with the consent of any meeting at which a quorum is present (and
shall if so directed by the meeting), adjourn the meeting from time to time and from place
to place as the meeting shall determine, but no business shall be transacted at any
adjourned meeting other than the business which might lawfully have been transacted at
the meeting had the adjournment not taken place. When a meeting is adjourned for
fourteen (14) days or more, at least seven (7) clear days’ Notice of the adjourned meeting
shall be given specifying the time and place of the adjourned meeting but it shall not be
necessary to specify in such notice the nature of the business to be transacted at the
adjourned meeting and the general nature of the business to be transacted. Save as
aforesaid, it shall be unnecessary to give notice of an adjournment.
64. If an amendment is proposed to any resolution under consideration but is in good faith
ruled out of order by the chairman of the meeting, the proceedings on the substantive
resolution shall not be invalidated by any error in such ruling. In the case of a resolution
duly proposed as a special resolution, no amendment thereto (other than a mere clerical
amendment to correct a patent error) may in any event be considered or voted upon.
VOTING
65. Subject to any special rights or restrictions as to voting for the time being attached to any
shares by or in accordance with these Bye-laws, at any general meeting (i) on a show of
hands every Member present in person (or being a corporation, is present by a
representative duly authorised under Section 78 of the Act), or by proxy shall have one
vote and the chairman of the meeting shall determine which proxy shall be entitled to vote
where a Member (other than the Depository) is represented by two proxies, and (ii) on a
poll every Member present in person or by proxy or, in the case of a Member being a
corporation, by its duly authorised representative shall have one vote for every fully paid
share of which he is the holder or which he represents and in respect of which all calls due
to the Company have been paid, but so that no amount paid up or credited as paid up on
a share in advance of calls or instalments is treated for the foregoing purposes as paid up
on the share. A resolution put to the vote of a meeting shall be decided on a show of hands
unless (before or on the declaration of the result of the show of hands or on the withdrawal
of any other demand for a poll) a poll is demanded:–
(a) by the chairman of such meeting; or
(b) by at least three Members present in person (or in the case of a Member being a
corporation by its duly authorised representative) or by proxy for the time being
entitled to vote at the meeting; or
(c) by a Member or Members present in person (or in the case of a Member being a
corporation by its duly authorised representative) or by proxy and representing not
less than one-tenth of the total voting rights of all Members having the right to vote
at the meeting; or
(d) by a Member or Members present in person (or in the case of a Member being a
corporation by its duly authorised representative) or by proxy and holding shares in
the Company conferring a right to vote at the meeting being shares on which an
aggregate sum has been paid up equal to not less than one-tenth of the total sum
paid up on all shares conferring that right; or
(e) where the Depository is a Member, by at least three proxies representing the
Depository.
A demand by a person as proxy for a Member or in the case of a Member being a
corporation by its duly authorised representative shall be deemed to be the same as a
demand by a Member.
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66. Unless a poll is duly demanded and the demand is not withdrawn, a declaration by the
chairman that a resolution has been carried, or carried unanimously, or by a particular
majority, or not carried by a particular majority, or lost, and an entry to that effect made in
the minute book of the Company, shall be conclusive evidence of the fact without proof of
the number or proportion of the votes recorded for or against the resolution.
67. If a poll is duly demanded the result of the poll shall be deemed to be the resolution of the
meeting at which the poll was demanded.
68. A poll demanded on the election of a chairman, or on a question of adjournment, shall be
taken forthwith. A poll demanded on any other question shall be taken in such manner
(including the use of ballot or voting papers or tickets) and either forthwith or at such time
(being not later than thirty (30) days after the date of the demand) and place as the
chairman directs. It shall not be necessary (unless the chairman otherwise directs) for
notice to be given of a poll not taken immediately.
69. The demand for a poll shall not prevent the continuance of a meeting or the transaction
of any business other than the question on which the poll has been demanded, and, with
the consent of the chairman, it may be withdrawn at any time before the close of the
meeting or the taking of the poll, whichever is the earlier.
70. On a poll votes may be given either personally or by proxy.
71. A person entitled to more than one vote on a poll need not use all his votes or cast all the
votes he uses in the same way.
72. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman
of such meeting shall be entitled to a second or casting vote in addition to any other vote
he may have.
73. Where there are joint holders of any share any one of such joint holder may vote, either
in person or by proxy, in respect of such share as if he were solely entitled thereto, but if
more than one of such joint holders be present at any meeting the vote of the senior who
tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders, and for this purpose seniority shall be determined by the
order in which the names stand in the Register in respect of the joint holding. Several
executors or administrators of a deceased Member in whose name any share stands shall
for the purposes of this Bye-law be deemed joint holders thereof.
74(1). A Member who is a patient for any purpose relating to mental health or in respect of whom
an order has been made by any court having jurisdiction for the protection or management
of the affairs of persons incapable of managing their own affairs may vote, whether on a
show of hands or on a poll, by his receiver, committee, curator bonis or other person in the
nature of a receiver, committee or curator bonis appointed by such court, and such
receiver, committee, curator bonis or other person may vote on a poll by proxy, and may
otherwise act and be treated as if he were the registered holder of such shares for the
purposes of general meetings, provided that such evidence as the Board may require of
the authority of the person claiming to vote shall have been deposited at the Office, head
office or Registration Office, as appropriate, not less than forty-eight (48) hours before the
time appointed for holding the meeting, or adjourned meeting or poll, as the case may be.
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74(2). Any person entitled under Bye-law 53 to be registered as the holder of any shares may
vote at any general meeting in respect thereof in the same manner as if he were the
registered holder of such shares, provided that forty-eight (48) hours at least before the
time of the holding of the meeting or adjourned meeting, as the case may be, at which he
proposes to vote, he shall satisfy the Board of his entitlement to such shares, or the Board
shall have previously admitted his right to vote at such meeting in respect thereof.
75. No Member shall, unless the Board otherwise determines, be entitled to attend and vote
and to be reckoned in a quorum at any general meeting unless he is duly registered and
all calls or other sums presently payable by him in respect of shares in the Company have
been paid.
76. If:–
(a) any objection shall be raised to the qualification of any voter; or
(b) any votes have been counted which ought not to have been counted or which might
have been rejected; or
(c) any votes are not counted which ought to have been counted;
the objection or error shall not vitiate the decision of the meeting or adjourned meeting on
any resolution unless the same is raised or pointed out at the meeting or, as the case may
be, the adjourned meeting at which the vote objected to is given or tendered or at which
the error occurs. Any objection or error shall be referred to the chairman of the meeting
and shall only vitiate the decision of the meeting on any resolution if the chairman decides
that the same may have affected the decision of the meeting. The decision of the chairman
on such matters shall be final and conclusive.
PROXIES
77(1). Any Member entitled to attend and vote at a meeting of the Company who is the holder of
two or more shares shall be entitled to appoint not more than two proxies to attend and
vote instead of him at the same general meeting provided that if the Member is the
Depository:–
(a) the Depository may appoint more than two proxies to attend and vote at the same
general meeting and each proxy shall be entitled to exercise the same powers on
behalf of the Depository as the Depository could exercise, including, notwithstanding
Bye-law 65, the right to vote individually on a show of hands;
(b) unless the Depository specifies otherwise in a written notice to the Company, the
Depository shall be deemed to have appointed as the Depository’s proxies to vote on
behalf of the Depository at a general meeting of the Company each of,the Depositors
who are individuals and whose names are shown in the records of the Depository as
at a time not earlier than forty-eight (48) hours prior to the time of the relevant general
meeting supplied by the Depository to the Company and notwithstanding any other
provisions in these Bye-laws, the appointment of proxies by virtue of this Bye-law
77(1)(b) shall not require an instrument of proxy or the lodgement of any instrument
of proxy;
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(c) the Company shall accept as valid in all respects the form of instrument of proxy
approved by the Depository (the “CDP Proxy Form”) for use at the date relevant to
the general meeting in question naming a Depositor (the “Nominating Depositor”) and
permitting that Nominating Depositor to nominate a person or persons other than
himself as the proxy or proxies appointed by the Depository. The Company shall, in
determining rights to vote and other matters in respect of a completed CDP Proxy
Form submitted to it, have regard to the instructions given by and the notes (if any)
set out in the CDP Proxy Form. The submission of any CDP Proxy Form shall not
affect the operation of Bye-law 77(1)(b) and shall not preclude a Depositor appointed
as a proxy by virtue of Bye-law 77(1)(b) from attending and voting at the relevant
meeting but in the event of attendance by such Depositor the CDP Proxy Form
submitted bearing his name as the Nominating Depositor shall be deemed to be
revoked;
(d) the Company shall reject any CDP Proxy Form of a Nominating Depositor if his name
is not shown in the records of the Depository as at a time not earlier than forty-eight
(48) hours prior to the time of the relevant general meeting supplied by the
Depository to the Company; and
(e) on a poll the maximum number of votes which a Depositor, or proxies appointed
pursuant to a CDP Proxy Form in respect of that Depositor, is able to cast shall be
the number of shares credited to the Securities Account of that Depositor as shown
in the records of the Depository as at a time not earlier than forty-eight (48) hours
prior to the time of the relevant general meeting supplied by the Depository to the
Company, whether that number is greater or smaller than the number specified in any
CDP Proxy Form or instrument of proxy executed by or on behalf of the Depository.
77(2). In any case where an instrument of proxy appoints more than one proxy (including the
case when a CDP Proxy Form is used), the proportion of the shareholding concerned to
be represented by each proxy shall be specified in the instrument of proxy.
77(3) A proxy need not be a Member. In addition, subject to Bye-law 77(1), a proxy or proxies
representing either a Member who is an individual or a Member which is a corporation
shall be entitled to exercise the same powers on behalf of the Member which he or they
represent as such Member could exercise, including, notwithstanding Bye-law 65, the right
to vote individually on a show of hands. On a poll, a proxy need not use all the votes he
is entitled to cast or cast all such votes in the same way.
78. The instrument appointing a proxy shall be in writing under the hand of the appointor or
of his attorney duly authorised in writing or, if the appointor is a corporation, either under
its seal or under the hand of an officer, attorney or other person authorised to sign the
same or, in the case of the Depository, signed by its duly authorised officer by some
method or system of mechanical signature as the Depository may deem appropriate. In
the case of an instrument of proxy purporting to be signed on behalf of a corporation by
an officer thereof it shall be assumed, unless the contrary appears, that such officer was
duly authorised to sign such instrument of proxy on behalf of the corporation without
further evidence of the fact.
79. The instrument appointing a proxy and (if required by the Board) the power of attorney or
other authority (if any) under which it is signed on behalf of the appointor (which shall, for
this purpose, include a Depositor), or a certified copy of such power or authority, shall be
delivered to such place or one of such places (if any) as may be specified for that purpose
in or by way of note to or in any document accompanying the notice convening the meeting
(or, if no place is so specified at the Registration Office or the Office, as may be
appropriate) not less than forty-eight (48) hours before the time appointed for holding the
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meeting or adjourned meeting at which the person named in the instrument proposes to
vote or, in the case of a poll taken subsequently to the date of.a meeting or adjourned
meeting, not less than twenty-four (24) hours before the time appointed for the taking of
the poll and in default the instrument of proxy shall not be treated as valid. No instrument
appointing a proxy shall be valid after the expiration of twelve (12) months from the date
named in it as the date of its execution, except at an adjourned meeting or on a poll
demanded at a meeting or an adjourned meeting in cases where the meeting was
originally held within twelve (12) months from such date. Delivery of an instrument
appointing a proxy shall not preclude a Member from attending and voting in person at the
meeting convened and in such event, the instrument appointing a proxy shall be deemed
to be revoked.
80. Instruments of proxy shall be in any usual or common form (including any form approved
from time to time by the Depository) or in such other form as the Board may approve
(provided that this shall not preclude the use of the two-way form) and the Board may, if
it thinks fit, send out with the notice of any meeting forms of instrument of proxy for use
at the meeting. The instrument of proxy shall be deemed to confer authority to demand or
join in demanding a poll and to vote on any amendment of a resolution put to the meeting
for which it is given as the proxy thinks fit. The instrument of proxy shall, unless the
contrary is stated therein, be valid as well for any adjournment of the meeting as for the
meeting to which it relates.
81. A vote given in accordance with the terms of an instrument of proxy shall be valid
notwithstanding the previous death or insanity of the principal, or revocation of the
instrument of proxy or of the authority under which it was executed, provided that no
intimation in writing of such death, insanity or revocation shall have been received by the
Company at the Office or the Registration Office (or such other place as may be specified
for the delivery of instruments of proxy in the notice convening the meeting or other
document sent therewith) two (2) hours at least before the commencement of the meeting
or adjourned meeting, or the taking of the poll, at which the instrument of proxy is used.
82. Anything which under these Bye-laws a Member may do by proxy he may likewise do by
his duly appointed attorney and the provisions of these Bye-laws relating to proxies and
instruments appointing proxies shall apply mutatis mutandis in relation to any such
attorney and the instrument under which such attorney is appointed.
CORPORATIONS ACTING BY REPRESENTATIVES
83(1). Any corporation which is a Member may by resolution of its directors or other governing
body authorise such person as it thinks fit to act as its representative at any meeting of the
Company or at any meeting of any class of Members. The person so authorised shall be
entitled to exercise the same powers on behalf of such corporation as the corporation
could exercise if it were an individual Member and such corporation shall for the purposes
of these Bye-laws be deemed to be present in person at any such meeting if a person so
authorised is present thereat.
83(2). Where a Member is the Depository (or its nominee, in each case, being a corporation), it
may authorise such persons as it thinks fit to act as its representatives at any meeting of
the Company or at any meeting of any class of Members provided that the authorisation
shall specify the number and class of shares in respect of which each such representative
is so authorised. Each person so authorised under the provisions of this Bye-law shall be
entitled to exercise the same rights and powers as if such person was the registered
holder of the shares of the Company held by the Depository (or its nominee) in respect of
the number and class of shares specified in the relevant authorisation including the right
to vote individually on a show of hands.
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83(3). Any reference in these Bye-laws to a duly authorised representative of a Member being a
corporation shall mean a representative authorised under the provisions of this Bye-law.
DIVIDENDS AND OTHER PAYMENTS
136. The Board may, subject to these Bye-laws and in accordance with the Act, declare a
dividend in any currency to be paid to the Members and such dividend may be paid in cash
or wholly or partly in specie in which case the Board may fix the value for distribution in
specie of any assets. The Board may declare and make such other distributions (in cash
or in specie) to the Members as may be lawfully made out of the assets of the Company.
The Company in general meeting may also, subject to these Bye-laws and in accordance
with the Act, declare a dividend or such other distribution to be paid to the Members but
no dividend or distribution shall be declared by the Company in general meeting in excess
of the amount recommended by the Board.
137. Without prejudice to the generality of the above Bye-law 136 if at any time the share
capital of the Company is divided into different classes, the Board may pay such dividends
in respect of those shares in the capital of the Company which confer on the holders
thereof deferred or non-preferential rights as well as in respect of those shares which
confer on the holders thereof preferential rights with regard to dividend and provided that
the Board acts bona fide the Board shall not incur any responsibility to the holders of
shares conferring any preference for any damage that they may suffer by reason of the
payment of any dividend on any shares having deferred or non-preferential rights and may
also pay periodically any fixed dividend which is payable on any shares of the Company.
138. No dividend shall be paid or distribution made if to do so would render the Company
unable to pay its liabilities as they become due or the realisable value of its assets would
thereby become less than the aggregate of its liabilities and its issued share capital and
share premium accounts.
139. Except in so far as the rights attaching to, or the terms of issue of, any share otherwise
provide:–
(a) all dividends shall be declared and paid according to the amounts paid up on the
shares in respect of which the dividend is paid, but no amount paid up on a share in
advance of calls shall be treated for the purposes of this Bye-law as paid up on the
share; and
(b) all dividends shall be apportioned and paid pro rata according to the amounts paid up
on the shares during any portion or portions of the period in respect of which the
dividend is paid.
140. The Board may deduct from any dividend or other moneys payable to a Member by the
Company on or in respect of any shares all sums of money (if any) presently payable by
him to the Company on account of calls or otherwise.
141. No unpaid dividend or distribution or other moneys payable by the Company shall bear
interest as against the Company.
142. Any dividend, interest or other sum payable in cash to the holder of shares may be paid
by cheque or warrant sent through the post addressed to the holder at his registered
address or, in the case of joint holders, addressed to the holder whose name stands first
in the Register in respect of the shares at his address as appearing in the Register or
addressed to such person and at such address as the holder or joint holders may in writing
direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise
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direct, be made payable to the order of the holder or, in the case of joint holders, to the
order of the holder whose name stands first on the Register in respect of such shares, and
shall be sent at his or their risk and payment of the cheque or warrant by the bank on which
it is drawn shall constitute a good discharge to the Company notwithstanding that it may
subsequently appear that the same has been stolen or that any endorsement thereon has
been forged. Any one of two or more joint holders may give effectual receipts for any
dividends or other moneys payable or property distributable in respect of the shares held
by such joint holders.
143. All dividends or bonuses unclaimed for one (1) year after having been declared may be
invested or otherwise made use of by the Board for the benefit of the Company until
claimed. Any dividend or bonuses unclaimed after a period of six (6) years from the date
of declaration shall be forfeited and shall revert to the Company. The payment by the
Board of any unclaimed dividend or other sums payable on or in respect of a share into
a separate account shall not constitute the Company a trustee in respect thereof,
144. Whenever the Board or the Company in general meeting has resolved that a dividend be
paid or declared, the Board may further resolve that such dividend be satisfied wholly or
in part by the distribution of specific assets of any kind and in particular of paid up shares,
debentures or warrants to subscribe securities of the Company or any other company, or
in any one or more of such ways, and where any difficulty arises in regard to the
distribution the Board may settle the same as it thinks expedient, and in particular may
issue certificates in respect of fractions of shares, disregard fractional entitlements or
round the same up or down, and may fix the value for distribution of such specific assets,
or any part thereof, and may determine that cash payments shall be made to any Members
upon the footing of the value so fixed in order to adjust the rights of all parties, and may
vest any such specific assets in trustees as may seem expedient to the Board and may
appoint any person to sign any requisite instruments of transfer and other documents on
behalf of the persons entitled to the dividend, and such appointment shall be effective and
binding on the Members. The Board may resolve that no such assets shall be made
available to Members with registered addresses in any particular territory or territories
where, in the absence of a registration statement or other special formalities, such
distribution of assets would or might, in the opinion of the Board, be unlawful or
impracticable and in such event the only entitlement of the Members aforesaid shall be to
receive cash payments as aforesaid. Members affected as a result of the foregoing
sentence shall not be or be deemed to be a separate class of Members for any purpose
whatsoever.
145(1). Whenever the Board or the Company in general meeting has resolved that a dividend be
paid or declared on any class of the share capital of the Company, the Board may further
resolve either:–
(a) that such dividend be satisfied wholly or in part in the form of an allotment of shares
credited as fully paid up, provided that the Members entitled thereto will be entitled
to elect to receive such dividend (or part thereof if the Board so determines) in cash
in lieu of such allotment. In such case, the following provisions shall apply:–
i the basis of any such allotment shall be determined by the Board;
ii the Board, after determining the basis of allotment, shall give not less than two
(2) weeks’ Notice to the holders of the relevant shares of the right of election
accorded to them and shall send with such notice forms of election and specify
the procedure to be followed and the place at which and the latest date and time
by which duly completed forms of election must be lodged in order to be
effective;
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iii the right of election may be exercised in respect of the whole or part of that
portion of the dividend in respect of which the right of election has been
accorded; and
iv the dividend (or that part of the dividend to be satisfied by the allotment of
shares as aforesaid) shall not be payable in cash on shares in respect whereof
the cash election has not been duly exercised (“the non-elected shares”) and in
satisfaction thereof shares of the relevant class shall be allotted credited as fully
paid up to the holders of the non-elected shares on the basis of allotment
determined as aforesaid and for such purpose the Board shall capitalise and
apply out of any part of the undivided profits of the Company (including profits
carried and standing to the credit of any reserves or other special account) as
the Board may determine, such sum as may be required to pay up in full the
appropriate number of shares of the relevant class for allotment and distribution
to and amongst the holders of the non-elected shares on such basis; or
(b) that the Members entitled to such dividend shall be entitled to elect to receive an
allotment of shares credited as fully paid up in lieu of the whole or such part of the
dividend as the Board may think fit. In such case, the following provisions shall
apply:–
i the basis of any such allotment shall be determined by the Board;
ii the Board, after determining the basis of allotment, shall give not less than two
(2) weeks’ Notice to the holders of the relevant shares of the right of election
accorded to them and shall send with such notice forms of election and specify
the procedure to be followed and the place at which and the latest date and time
by which duly completed forms of election must be lodged in order to be
effective;
iii the right of election may be exercised in respect of the whole or part of that
portion of the dividend in respect of which the right of election has been
accorded; and
iv the dividend (or that part of the dividend in respect of which a right of election
has been accorded) shall not be payable in cash on shares in respect whereof
the share election has been duly exercised (“the elected shares”) and in lieu
thereof shares of the relevant class shall be allotted credited as fully paid up to
the holders of the elected shares on the basis of allotment determined as
aforesaid and for such purpose the Board shall capitalise and apply out of any
part of the undivided profits of the Company (including profits carried and
standing to the credit of any reserves or other special account) as the Board
may determine, such sum as may be required to pay up in full the appropriate
number of shares of the relevant class for allotment and distribution to and
amongst the holders of the elected shares on such basis.
145(2). (a) The shares allotted pursuant to the provisions of paragraph (1) of this Bye-law shall
rank pari passu in all respects with shares of the same class (if any) then in issue
save only as regards participation in the relevant dividend or in any other
distributions, bonuses or rights paid, made, declared or announced prior to or
contemporaneously with the payment or declaration of the relevant dividend unless,
contemporaneously with the announcement by the Board of their proposal to apply
the provisions of sub-paragraph (a) or (b) of paragraph (2) of this Bye-law in relation
to the relevant dividend or contemporaneously with their announcement of the
distribution, bonus or rights in question, the Board shall specify that the shares to be
allotted pursuant to the provisions of paragraph (1) of this Bye-law shall rank for
participation in such distribution, bonus or rights.
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(b) The Board may do all acts and things considered necessary or expedient to give
effect to any capitalisation pursuant to the provisions of paragraph (1) of this Bye-law,
with full power to the Board to make such provisions as it thinks fit in the case of
shares becoming distributable in fractions (including provisions whereby, in whole or
in part, fractional entitlements are aggregated and sold and the net proceeds
distributed to those entitled, or are disregarded or rounded up or down or whereby
the benefit of fractional entitlements accrues to the Company rather than to the
Members concerned). The Board may authorise any person to enter into on behalf of
all Members interested, an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made pursuant to
such authority shall be effective and binding on all concerned.
145(3). The Company may upon the recommendation of the Board by ordinary resolution resolve
in respect of any one particular dividend of the Company that notwithstanding the
provisions of paragraph (1) of this Bye-law a dividend may be satisfied wholly in the form
of an allotment of shares credited as fully paid up without offering any right to shareholders
to elect to receive such dividend in cash in lieu of such allotment.
145(4). The Board may on any occasion determine that rights of election and the allotment of
shares under paragraph (1) of this Bye-law shall not be made available or made to any
Members with registered addresses in any territory where, in the absence of a registration
statement or other special formalities, the circulation of an offer of such rights of election
or the allotment of shares would or might, in the opinion of the Board, be unlawful or
impracticable, and in such event the provisions aforesaid shall be read and construed
subject to such determination. Members affected as a result of the foregoing sentence
shall not be or be deemed to be a separate class of Members for any purpose whatsoever.
145(5). Any resolution declaring a dividend on shares of any class, whether a resolution of the
Company in general meeting or a resolution of the Board, may specify that the same shall
be payable or distributable to the persons registered as the holders of such shares at the
close of business on a particular date, notwithstanding that it may be a date prior to that
on which the resolution is passed, and thereupon the dividend shall be payable or
distributable to them in accordance with their respective holdings so registered, but
without prejudice to the rights inter se in respect of such dividend of transferors and
transferees of any such shares. The provisions of this Bye-law shall mutatis mutandis
apply to bonuses, capitalisation issues, distributions of realised capital profits or offers or
grants made by the Company to the Members.
RESERVES
146. Before recommending any dividend, the Board may set aside out of the profits of the
Company such sums as it determines as reserves which shall, at the discretion of the
Board, be applicable for any purpose to which the profits of the Company may be properly
applied and pending such application may, also at such discretion, either be employed in
the business of the Company or be invested in such investments as the Board may from
time to time think fit and so that it shall not be necessary to keep any investments
constituting the reserve or reserves separate or distinct from any other investments of the
Company. The Board may also without placing the same to reserve carry forward any
profits which it may think prudent not to distribute.
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CAPITALISATION
147. The Company may, upon the recommendation of the Board, at any time and from time to
time pass an ordinary resolution to the effect that it is desirable to capitalise all or any part
of any amount for the time being standing to the credit of any reserve or fund (including
the profit and loss account) whether or not the same is available for distribution and
accordingly that such amount be set free for distribution among the Members or any class
of Members who would be entitled thereto if it were distributed by way of dividend and in
the same proportions, on the footing that the same is not paid in cash but is applied either
in or towards paying up the amounts for the time being unpaid on any shares in the
Company held by such Members respectively or in paying up in full unissued Shares,
debentures or other obligations of the Company, to be allotted and distributed credited as
fully paid up among such Members, or partly in one way and partly in the other, and the
Board shall give effect to such resolution provided that, for the purposes of this Bye-law,
a share premium account and any reserve or fund representing unrealised profits, may be
applied only in paying up in full unissued shares of the Company to be issued to such
Members credited as fully paid. In carrying sums to reserve and in applying the same the
Board shall comply with the provisions of the Act.
148. The Board may settle, as it considers appropriate, any difficulty arising in regard to any
distribution under the last preceding Bye-law and in particular may issue certificates in
respect of fractions of shares or authorise any person to sell and transfer any fractions or
may resolve that the distribution should be as nearly as may be practicable in the correct
proportion but not exactly so or may ignore fractions altogether, and may determine that
cash payments shall be made to any Members in order to adjust the rights of all parties,
as may seem expedient to the Board. The Board may appoint any person to sign on behalf
of the persons entitled to participate in the distribution any contract necessary or desirable
for giving effect thereto and such appointment shall be effective and binding upon the
Members.
V-18
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APPENDIX VI
AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
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APPENDIX VII
INTERIM FINANCIAL INFORMATION OF THE GROUPFOR THE THREE MONTHS ENDED 31 MARCH 2013 AND EYCF’S REVIEW
LETTER AND THE INDEPENDENT JOINT AUDITORS’ REVIEW REPORT
1
SYNEAR FOOD HOLDINGS LIMITED
First Quarter Financial Statements for the Three Months ended 31 March 2013
PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3),HALF-YEAR AND FULL YEAR RESULTS
1(a) A statement of comprehensive income (for the group) together with a comparative statement for thecorresponding period of the immediately preceding financial year
Revenue 502,671 496,526 1.2Cost of sales (382,305) (369,740) 3.4Gross profit 120,366 126,786 (5.1)Other income and gains 528 3,394 (84.4)Selling and distribution expenses (71,508) (72,215) (1.0)Administrative expensesOther expenses
(28,901)(33)
(26,060)-
10.9N.M.
Profit before income tax 20,452 31,905 (35.9)Income tax expense (7,012) (8,086) (13.3)Profit for the period attributable to the owners of the Company 13,440 23,819 (43.6)Other comprehensive income for the period - - N.M.Total comprehensive income for the period attributable to the owners of theCompany 13,440 23,819 (43.6)
Earnings per share for profit attributable to the owners of the Company-Basic (RMB cents) 1.0 1.7-Diluted (RMB cents) N/A N/A
N.M. – not meaningful
Note: The Company was incorporated in Bermuda under The Companies Act 1981 of Bermuda on 23 February2006 as an exempted company with limited liability and listed on the Main Board of the SGX-ST on 18August 2006. The principal activity of the Company is investment holding.
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2
Profit before income tax is arrived at after charging/(crediting) the following:
Losses on disposal of property, plant and equipment 33 - N.M.
Minimum lease payment underoperating leases for warehouses, productionfacilities and leasehold buildings
6,235 8,124 (23.3)
Government grant - 1,021 (N.M.)
N.M. – not meaningful
VII-3
3
1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statementas at the end of the immediately preceding financial year
Non-current assetsProperty, plant and equipment 1,370,630 1,347,063 - -Deposits paid for property, plant and equipment andland use rights 23,071 37,214 - -Land use rights 722,430 726,377 - -Investments in subsidiaries - - 410,345 410,345
2,116,131 2,110,654 410,345 410,345
Current assetsInventories 207,830 210,823 - -Trade receivables 493,002 542,265 - -Prepayments, other receivables and deposits 169,110 176,085 - -Due from subsidiaries - - 1,767,917 1,770,446Cash and bank balances 546,908 518,836 524 453
Equity attributable to the owners of the CompanyShare capital 140,758 140,758 140,758 140,758Reserves 3,080,699 3,067,259 2,034,617 2,036,876Total equity 3,221,457 3,208,017 2,175,375 2,177,634
Current liabilitiesTrade payables 179,687 233,874 - -Accrued liabilities, other payables and deposits received 118,012 100,389 3,411 3,610Tax payables 13,825 16,383 - -
311,524 350,646 3,411 3,610
TOTAL EQUITY AND LIABILITIES 3,532,981 3,558,663 2,178,786 2,181,244
VII-4
4
1(b)(ii) Aggregate amount of group’s borrowings and debt securities
Amount repayable in one year or less, or on demand
As at 31/03/2013 As at 31/12/2012Secured Unsecured Secured UnsecuredRMB’000 RMB’000 RMB’000 RMB’000
- - - -
Amount repayable after one year
As at 31/03/2013 As at 31/12/2012Secured Unsecured Secured UnsecuredRMB’000 RMB’000 RMB’000 RMB’000
- - - -
Details of any collateral:
As at 31 March 2013, certain of the Group’s land use rights with a net book value of approximatelyRMB592,361,000 (31 December 2012: RMB595,540,000) has been pledged to a bank in the PRC forbanking facilities of RMB300,000,000 (31 December 2012: RMB300,000,000). The facilities have notbeen utilised as at the reporting date.
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1(c) A statement of cash flows (for the group), together with a comparative statement for thecorresponding period of the immediately preceding financial year
Cash flows from operating activitiesProfit before income tax 20,452 31,905Adjustments for:Interest income (528) (1,975)Amortisation of land use rights 3,947 4,050Depreciation 26,331 20,720Losses on disposal of property, plant and equipment 33 -Operating profit before working capital changes 50,235 54,700Decrease /(increase) in inventories 2,993 (5,943)Decrease /(increase) in trade receivables 49,263 (132,308)Decrease in prepayments, other receivables and deposits 6,975 18,144(Decrease) / increase in trade payables (54,187) 5,847Increase in accrued liabilities, other payables and deposits received 17,623 1,883Cash generated from/(used in) operating activities 72,902 (57,677)Income taxes paid (9,570) (657)Net cash generated from /(used in) operating activities 63,332 (58,334)
Cash flows from investing activitiesPurchases of property, plant and equipment (33,297) (30,328)Deposits paid for property, plant and equipment (2,491) -Purchase of land use rights - (5,174)Interest received 528 1,975Net cash used in investing activities (35,260) (33,527)
Net increase/(decrease) in cash and cash equivalents 28,072 (91,861)Cash and cash equivalents at beginning of financial period 518,836 564,941
Cash and cash equivalents at end of financial period 546,908 473,080
Analysis of balances of cash and cash equivalentsCash and bank balances 546,908 473,080
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6
1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes inequity other than those arising from capitalisation issues and distributions to shareholders, together with acomparative statement for the corresponding period of the immediately preceding financial year
Balance as at 1 January 2012 140,758 1,741,690 25,599 191,223 1,040,709 3,139,979Profit for the period - - - - 23,819 23,819Other comprehensive income for the period - - - - - -Total comprehensive incomefor the period - - - - 23,819 23,819
Balance as at 31 March 2012 140,758 1,741,690 25,599 191,223 1,064,528 3,163,798
Balance as at 1 January 2013 140,758 1,741,690 25,599 202,265 1,097,705 3,208,017Profit for the period - - - - 13,440 13,440Other comprehensive income for the period - - - - - -Total comprehensive incomefor the period - - - - 13,440 13,440
Balance as at 31 March 2013 140,758 1,741,690 25,599 202,265 1,111,145 3,221,457
Balance as at 1 January 2012 140,758 1,741,690 307,565 (2,101) 2,187,912Loss for the period - - - (2,190) (2,190)Other comprehensive income for the period - - - - -Total comprehensive income for the period - - - (2,190) (2,190)Balance as at 31 March 2012 140,758 1,741,690 307,565 (4,291) 2,185,722
Balance as at 1 January 2013 140,758 1,741,690 307,565 (12,379) 2,177,634Loss for the period - - - (2,259) (2,259)Other comprehensive income for the period - - - - -Total comprehensive income for the period - - - (2,259) (2,259)Balance as at 31 March 2013 140,758 1,741,690 307,565 (14,638) 2,175,375
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7
1(d)(ii)Details of any changes in the company's share capital arising from rights issue, bonus issue, sharebuy-backs, exercise of share options or warrants, conversion of other issues of equity securities,issue of shares for cash or as consideration for acquisition or for any other purpose since the end ofthe previous period reported on. State also the number of shares that may be issued on conversion ofall the outstanding convertibles as at the end of the current financial period reported on and as atthe end of the corresponding period of the immediately preceding financial year
There were no changes in the Company’s share capital for the three months ended 31 March 2013.
1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the currentfinancial period and as at the end of the immediately preceding year.
As at 31 March 2013 As at 31 December 2012Total number of issued shares 1,375,000,000 1,375,000,000Less : Treasury shares - -Total number of issued shares excludingtreasury shares 1,375,000,000 1,375,000,000
1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at theend of the current financial period reported on.
Not applicable. During the current financial period and the immediately preceding financial year, theCompany does not have any outstanding treasury shares.
2. Whether the figures have been audited, or reviewed and in accordance with which standard (e.g. theSingapore Standard on Auditing 910 (Engagements to Review Financial Statements), or anequivalent standard)
The consolidated statement of financial position of the Group as at 31 March 2013 and the consolidatedstatement of comprehensive income, consolidated statement of changes in equity and consolidatedstatement of cash flows of the Group for the three-month financial period ended 31 March 2013, and thestatement of financial position of the Company as at 31 March 2013 and the statement of changes in equityof the Company for the three-month financial period then ended, prepared in this results announcement arepresented in accordance with International Accounting Standard 34 Interim Financial Reporting and havenot been audited, but have been reviewed by the auditors of the Company, in accordance with theInternational Standard on Review Engagements 2410 Review of Interim Financial Information Performedby the Independent Auditor of the Entity. Certain financial information of this announcement has beenextracted for the interim financial information for the financial period ended 31 March 2013.
3. Where the figures have been audited or reviewed, the auditors’ report (including any qualificationsor emphasis of matter)
Please refer to the attached independent auditors’ review report for the three months ended 31 March2013.
4. Whether the same accounting policies and methods of computation as in the issuer’s most recentlyaudited annual financial statements have been applied
The Group has adopted the same accounting policies and methods of computations as stated in the auditedfinancial statements of the Group for the year ended 31 December 2012, except for the adoption of the newand amended International Financial Reporting Standards (“IFRSs”) which become effective on 1 January2013. The adoption of these new and amended IFRSs did not give rise to significant changes in thefinancial statements.
5. If there are any changes in the accounting policies and methods of computation, including anyrequired by an accounting standard, what has changed, as well as the reasons for, and the effect of,the change
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Not applicable
6. Earnings per ordinary share of the group for the current period reported on and the correspondingperiod of the immediately preceding financial year, after deducting any provision for preferencedividends
The calculation of basic earnings per ordinary share is computed on the Group’s net profit attributable tothe owners divided by the number of ordinary shares in issue of 1,375,000,000 for the three months ended31 March 2013 and 2012.
There were no potential ordinary shares in existence for the three months ended 3 March 2013 and 2012and accordingly, no diluted earnings per share has been presented.
7. Net asset value (for the issuer and group) per ordinary share based on issued share capital of theissuer at the end of the (a) current period reported on and (b) immediately preceding financial year
Group Company<Unaudited> <Unaudited> <Unaudited> <Unaudited>31/03/2013 31/12/2012 31/03/2013 31/12/2012
Net asset value per ordinary share(RMB cents)
234.3 233.3 158.2 158.4
Net assets value per ordinary share of the Group/Company was calculated based on:-(1) the shareholders’ equity of the Group and the actual shareholder’s equity of the Company as at 31
March 2013 and 31 December 2012; and(2) the ordinary shares in issue of 1,375,000,000 as at 31 March 2013 and 31 December 2012.
8. A review of the performance of the group, to the extent necessary for a reasonable understanding ofthe group’s business. The review must discuss any significant factors that affected the turnover,costs, and earnings of the group for the current financial period reported on, including (whereapplicable) seasonal or cyclical factors. It must also discuss any material factors that affected thecash flow, working capital, assets or liabilities of the group during the current financial periodreported on
Review of performance
Revenue
Our revenue increased slightly by approximately RMB6.2 million or 1.2% from RMB496.5 million for thethree months ended 31 March 2012 to RMB502.7 million for the three months ended 31 March 2013. Theincrease in the Group’s revenue was contributed by the increase in the sales of our other products includingglutinous rice dumplings, and specialty desserts and snacks by approximately RMB66.3 million or 84.0%from RMB78.9 million for the three months ended 31 March 2012 to RMB145.2 million for the threemonths ended 31 March 2013. The increase was partly offset by (i) the decrease in the sales of oursavoury dumpling products by approximately RMB23.6 million or 11.5% from RMB206.0 million for thethree months ended 31 March 2012 to RMB182.4 million for the three months ended 31 March 2013 and(ii) the decrease in the sales of glutinous sweet dumpling products by approximately RMB36.5 million or17.2% from RMB211.6 million for three months ended 31 March 2012 to RMB175.1 million for the threemonths ended 31 March 2013.
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Cost of sales and gross profit margin
Our cost of sales increased by approximately RMB12.6 million or 3.4% from RMB369.7 million for thethree months ended 31 March 2012 to RMB382.3 million for the three months ended 31 March 2013. Theincrease in our cost of sales was in line with the surge in our sales.
Overall gross profit margin decreased by 1.6 percentage points from 25.5% for the three months ended 31March 2012 to 23.9% for the three months ended 31 March 2013. The decrease in gross profit margin wasmainly due to the change in our product mix during the first quarter of 2013.
Other income and gains
Other income and gains decreased by approximately RMB2.9 million or 84.4% from RMB3.4 million forthe three months ended 31 March 2012 to RMB0.5 million for the three months ended 31 March 2013.The decline was due mainly to the decrease in interest income as a result of lower fixed deposits for thethree months ended 31 March 2013 as compared to the same period in prior year.
Selling and distribution expenses
Selling and distribution expenses decreased slightly by approximately RMB0.7 million or 1.0% fromRMB72.2 million for the three months ended 31 March 2012 to RMB71.5 million for the three monthsended 31 March 2013. The decline was mainly due to the decrease in our advertising and promotionalactivities.
Administrative expenses
Administrative expenses increased by approximately RMB2.8 million or 10.9% from RMB26.1 million forthe three months ended 31 March 2012 to RMB28.9 million for the three months ended 31 March 2013.The increase was mainly due to increase in salaries and welfares as a result of new recruitment ofadministrative staffs for the operation of the new factory in Zhengzhou.
Depreciation
Depreciation expenses increased by approximately RMB5.6 million or 27.1% from RMB20.7 million forthe three months ended 31 March 2012 to RMB26.3 million for the three months ended 31 March 2013.The increase was mainly due to depreciation for new machineries for our factories and facilitates inZhengzhou.
Taxation
Our income tax expenses decreased by approximately RMB1.1 million or 13.3% from RMB8.1 million forthe three months ended 31 March 2012 to RMB7.0 million for the three months ended 31 March 2013.The decline is in line with the decrease in our profit before income tax.
Review on statement of financial position / cashflowThe cash and cash equivalents as at 31 March 2013 amounted to RMB546.9 million, representing anincrease of RMB28.1 million or 5.4% as compared to RMB518.8 million as at 31 December 2012. Theincrease was mainly due to the net cash generated from the operating activities amounting to RMB63.3 millionduring the period. However, the increase was offset by the net cash used in investing activities amounting toRMB35.3 million mainly spent in acquisitions of machineries.
Trade receivables decreased by RMB49.3 million or 9.1% from RMB542.3 million as at 31 December2012 to RMB493.0 million as at 31 March 2013. This was mainly due to the fact that the sales recorded inMarch 2013 was generally less than that in December 2012 as peak season had passed when weapproached the second quarter. The credit terms granted to our distributors remain at the range of 30 daysto 110 days, in view of the prevailing economic conditions.
Trade payables decreased by RMB54.2 million or 23.2% from RMB233.9 million as at 31 December 2012to RMB179.7 million as at 31 March 2013. This was mainly due to less purchases of raw materials were
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made relatively in March 2013 compared to December 2012. The credit terms granted from our creditorsremain at the range of 30 days to 90 days.
Accrued liabilities, other payables and deposits received increased by RMB17.6 million or 17.5% fromRMB100.4 million as at 31 December 2012 to RMB118.0 million as at 31 March 2013. The increase wasmainly due to the increase in outstanding payments to suppliers for machinery as more machinery waspurchased prior to this period end.
Other than disclosed above, the variances of the Group’s cash flow and from the statement of financialposition items for the comparative periods were the results of the Group’s normal ongoing operations.
9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, anyvariance between it and the actual results
Not applicable
10. A commentary at the date of the announcement of the competitive conditions of the industry inwhich the group operates and any known factors or events that may affect the group in the nextreporting period and the next 12 months
The Group may continue to face cost pressures from rising raw material prices and labor costs. The Grouptherefore expects the economic climate and business conditions to remain very challenging in the nextreporting period and in the next twelve months.
On 15 October 2012, we and Fortune Domain Limited (the “Offeror”), jointly announced that the Offerorhad presented to our Directors a formal proposal (the "Delisting Proposal") to seek the voluntary delistingof the Company (the "Delisting") from the Official List of the Singapore Exchange Securities TradingLimited (the "SGX-ST") pursuant to Rules 1307 and 1309 of the listing manual of the SGX-ST.
Under the Delisting Proposal, UBS AG, Singapore Branch, for and on behalf of the Offeror, will make acash offer (the "Exit Offer"), conditional on the approval of shareholders of the Company (the"Shareholders") for the Delisting being obtained, to acquire all the issued ordinary shares in the capital ofthe Company (the "Shares") held by all the Shareholders, other than those Shares already held, directly orindirectly, by the Offeror as at the date of the Exit Offer and Shares held by the Company as treasuryshares.
The Company has submitted the draft circular in relation of the Delisting (“Circular”) to the SGX-ST. TheCompany has not received approval in respect of the draft Circular and there is no assurance that any suchapproval from the SGX-ST will be forthcoming. The Board will update Shareholders on the Delisting indue course.
Due to the recent earthquake occurred in the south-western Sichuan Province, we have recently shut downour plant in Sichuan Province as a precautionary measure to ensure the well-being of staff at the plant.Barring unforeseen circumstances, we plan to resume operations by the end of June 2013.
11. Dividend
(a) Current Financial Period Reported On
Any dividend declared for the current financial period reported on?
None
(b) Corresponding Period of the Immediately Preceding Financial Year
Any dividend declared for the corresponding period of the immediately preceding financial year?
None
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(c) Date Payable
Not applicable
(d) Books Closure Date
Not applicable
12. If no dividend has been declared/recommended, a statement to that effect
No dividend has been declared or recommended for the three months ended 31 March 2013.
13. Interested Person Transactions
Name of Interested Person GroupAggregate value of all interestedperson transactions during thefinancial period under review(excluding transaction less thanS$100,000 and transactions
conducted under shareholders’mandate pursuant to Rule 920)
Aggregate value of all interestedperson transactions conductedunder shareholders’ mandatepursuant to Rule 920 (excludingtransaction less than S$100,000)
Three months ended Three months ended31/03/2013<Unaudited>
Canada and the United States of America for various purposes since 1988. He is a Fellow of The HKIS and a valuer
on the List of Property Valuers for Undertaking Valuation for Incorporation or Reference in Listing Particulars and
Circulars and Valuation in Connection with Takeovers and Mergers published by The HKIS.
2. Ms. Elsa Ng Hung Mui has been conducting valuation of real properties in Hong Kong and mainland China since
1994. She is a Member of The HKIS and a valuer on the List of Property Valuers for Undertaking Valuation for
Incorporation or Reference in Listing Particulars and Circulars and Valuation in Connection with Takeovers and
Mergers published by The HKIS.
VIII-16
SUMMARY OF VALUES
Properties held and occupied by the Group under long-term title certificates in the PRC and
valued on market value basis
Property
Amount of Valuations
in its existing state
attributable to
the Group as at
31 March 2013
RMB
1. A factory complex located at
No. 8 Chun Fen Road
Yong He Economic Zone
Guangzhou Development District
Guangzhou City
Guangdong Province
The People’s Republic of China, 511356
廣東省廣州市廣州開發區永和經濟區春分路 8 號
80,670,000
(100% interest)
2. A factory complex located at
No. 15 Ying Cai Street
Hui Ji District
Zhengzhou City
Henan Province
The People’s Republic of China, 450045
河南省鄭州市惠濟區英才街 15 號(鄭州思念食品有限公司)
1,147,920,000
(100% interest)
3. A factory complex located at
Eastern Side of Xue Dian Road
Xue Dian Zhen
Xinzheng City
Henan Province
The People’s Republic of China, 451162
河南省新鄭市薛店鎮薛店大道東側(鄭州思念食品有限公司)
64,840,000
(100% interest)
4. A factory complex located at
Yi Nian Cun
Feng Ming Zhen
Pengshan Xian
Sichuan Province
The People’s Republic of China, 620800
四川省彭山縣凰鳴鎮易埝村
150,240,000
(100% interest)
VIII-17
Property
Amount of Valuations
in its existing state
attributable to
the Group as at
31 March 2013
RMB
5. A factory complex located at
No.137 Xin Zhu Road
Wu Xing District
Huzhou City
Zhejiang Province
The People’s Republic of China, 313000
浙江省湖州市新竹路 137 號
129,260,000
(100% interest)
TOTAL: RMB1,572,930,000
RENMINBI YUAN ONE THOUSAND
FIVE HUNDRED SEVENTY TWO
MILLION NINE HUNDRED AND
THIRTY THOUSAND
VIII-18
VALUATION CERTIFICATE
Properties held and occupied by the Group under long-term title certificates in the PRC andvalued on market value basis
Property Description and tenure
Particulars of
occupancy
Amount of
valuation in
its existing state
attributable to
the Group as at
31 March 2013
RMB
1. A factory complex
located at
No. 8 Chun Fen
Road
Yong He
Economic Zone
Guangzhou
Development
District
Guangzhou City
Guangdong
Province
The PRC, 511356
廣東省廣州市廣州開發區永和開發區春分路 8 號
(廣州南國思念食品有限公司)
The property comprises a parcel
of land having a total site area of
approximately 50,000.00 sq.m.
(see Note 1 below) with 10
various major buildings and
structures erected thereon.
The buildings and structures
include two various single to
2-storey workshops, a 4-storey
composite building and 5 various
single storey supporting facilities
buildings which were completed in
between 2009 and 2011. They
have a total gross floor area of
approximately 15,369.8903 sq.m.
(see Note 2 below).
Construction works in the property
were noted at the time of
inspection. We were given to
understand that the development
would be for warehouse and
workshop usage, and it is
expected to be completed in
2013/2014. The scheduled
construction consists of two single
storey warehouses with a total
gross floor area of approximately
4,750 sq.m. upon completion (see
Notes 3 and 4 below).
The property is subject to a right
to use the land for a term till 27
May 2057 for industrial factory
and ancillary facilities usages.
As inspected and
confirmed by the
management of the
Company, as at the
Valuation Date, the
property was
occupied by the
Group for
manufacturing,
ancillary office,
warehouse and
other supporting
facilities purposes.
80,670,000
(100% interest)
(See Note 6 below)
Notes:
1. The right to possess the land is held by the State and the right to use the land have been granted by the State to
廣州南國思念食品有限公司 (translated as Guangzhou Nanguo Synear Food Co. Ltd., and hereinafter referred to as
“Guangzhou Synear”) vide the following way:
(i) Pursuant to a State-owned Land Use Rights Certificate known as 07 Guo Yong (05) Di 000089 Hao
(07 國用 (05) 第 000089 號) dated 9 August 2007 and issued by the People’s Government of Guangzhou City,
the legally interested party in the land having a site area of approximately 50,000.00 sq.m. is Guangzhou
Synear for a term till 27 May 2057 for industrial factory and ancillary facilities usages.
VIII-19
2. According to a Building Ownership Certificates known as Yue Fang Di Quan Zheng Sui Zi Di 0510007952 Hao
(粵房地權證穗字第 0510007952 號) dated 14 March 2011 and issued by the People’s Government of Guangzhou
City, the legally interested party in the buildings erected on the land was Guangzhou Synear. The area breakdowns
for each of the buildings covered in the certificate are as follows:
Buildings (no. of storey) Gross Floor Area
(sq.m.)
(i). Workshop (2-storey) 6,372.3968
(ii). Workshop (single storey) 4,333.2060
(iii). Composite Building (4-storey) 4,131.9166
(iv). Sewage Treatment Station (single storey) 67.5004
(v). Boiler Room (single storey) 341.8032
(vi). Water Pump room (single storey) 50.8024
(vii). 2 various guardhouses (single storey) 72.2649
Total: 15,369.8903
3. Pursuant to a Construction Planning Permit (建設工程規劃許可證) Sui Kai Gui Jian Zheng (2011)203 Hao (穗開規建證 (2011) 203 號) dated 17 October 2011 and issued by廣州開發區規劃局 (translated as Planning Bureau of
Guangzhou Development Zone), Guangzhou Synear is permitted to develop a single storey cold storage
warehouse, a 2-storey workshop complex and 2 single storey warehouse having a total gross floor area of
approximately 19,318.00 sq.m. upon completion.
4. Pursuant to a Construction Planning Permit (建設工程施工許可證) Sui Kai Jian Shi (2012) 61 Hao (穗開建施 (2012)
61 號) dated 13 June 2012 and issued by廣州開發區建設和環境管理局 (translated as Construction and Environment
Management Bureau of Guangzhou Development Zone), a single storey cold storage warehouse, a 2-storey
workshop complex and 2 single storey warehouses having a total gross floor area of approximately 19,318.00 sq.m
were permitted to commence construction.
5. Pursuant to a copy of the Enterprise Legal Person Business Licence dated 23 May 2012, Guangzhou Synear is a
company with limited liability for an operational period commencing from 22 May 2007 to 22 May 2057.
6. According to the information provided by the management of the Company, the cost of the construction in progress
item was approximately RMB10,550,000 as at 31 March 2013 and further RMB1,300,000 is required to invest for
completion of the construction. In our valuation, the construction in progress (“CIP”) items was reported at cost spent
as at the Valuation Date. For information purpose, breakdowns of our valuation amount were as follows:
RMB
Land Element 22,080,000
Building Element 48,040,000
CIP 10,550,000
7. For illustration purpose, the valuation amount of the property upon completion of the scheduled developments would
be approximately RMB81,970,000. If the Company further develop the land to its allowable development area under
the permits as mentioned in Notes 3 and 4 above, the valuation amount of the property upon completion of the
development would be approximately RMB92,570,000.
VIII-20
Property Description and tenure
Particulars of
occupancy
Amount of
valuation in
its existing state
attributable to
the Group as at
31 March 2013
RMB
2. A factory complex
located at
No. 15 Ying Cai
Street
Hui Ji District
Zhengzhou City
Henan Province
The PRC, 450045
河南省鄭州市惠濟區英才街15號(鄭州思念食品有限公司)
The property comprises three
parcels of adjoining land having a
total site area of approximately
261,045.52 sq.m. (see Note 1
below) with 19 various major
buildings and structures erected
thereon.
The buildings and structures
include two 2-storey workshops, 2
single storey cold storage
warehouses, 2 various single to
2-storey warehouses, two 6-storey
dormitories and 11 various single
to 5-storey supporting facilities
which were completed in between
2011 and 2012. They have a total
gross floor area of approximately
101,357.08 sq.m. (see Note 2
below).
Construction works in the property
were noted at the time of
inspection. We were given to
understand that the development
would be for workshop and
dormitory usages, and it is
expected to be completed in
2013. The scheduled construction
consists of 2 workshops and 4
dormitories with a total gross floor
area of approximately 66,196.47
sq.m. upon completion.
The property is subject to a right
to use the land for a term till 26
October 2059 for industrial factory
and ancillary facilities usages.
As inspected and
confirmed by the
management of the
Company, as at the
Valuation Date, the
property was
occupied by the
Group for
manufacturing,
ancillary office,
warehouse and
other supporting
facilities purposes.
1,147,920,000
(100% interest)
(See Note 4 below)
Notes:
1. The right to possess the land is held by the State and the right to use the land have been granted by the State to
鄭州思念食品有限公司 (translated as Zhengzhou Synear Food Co. Ltd., and hereinafter referred to as “Zhengzhou
Synear”) vide the following way:
(i) A parcel of land having a site area of approximately 97,104.40 sq.m.
Pursuant to a State-owned Land Use Rights Certificate known as Zheng Guo Yong (2011) Di 0069 Hao
(鄭國用 (2011) 第 0069) dated 22 February 2011 and issued by the People’s Government of Zhengzhou City,
the legally interested party in the land having a site area of approximately 97,104.40 sq.m. is Zhengzhou
Synear for a term till 26 October 2059 for industrial factory and ancillary facilities usages.
(ii) A parcel of land having a site area of approximately 30,037.19 sq.m.
Pursuant to a State-owned Land Use Rights Certificate known as Zheng Guo Yong (2011) Di 0070 Hao
(鄭國用 (2011) 第 0070) dated 22 February 2011 and issued by the People’s Government of Zhengzhou City,
the legally interested party in the land having a site area of approximately 30,037.19 sq.m. is Zhengzhou
Synear for a term till 26 October 2059 for industrial factory and ancillary facilities usages.
VIII-21
(iii) A parcel of land having a site area of approximately 133,903.93 sq.m.
Pursuant to a State-owned Land Use Rights Certificate known as Zheng Guo Yong (2011) Di 0071 Hao
(鄭國用 (2011) 第 0071) dated 22 February 2011 and issued by the People’s Government of Zhengzhou City,
the legally interested party in the land having a site area of approximately 133,903.93 sq.m. is Zhengzhou
Synear for a term till 26 October 2059 for industrial factory and ancillary facilities usages.
2. According to the on-site inspection on 26 October 2012, 19 various supporting facilities buildings (listed below)
without title certificates and with a total gross floor area of approximately 101,357.08 sq.m. were erected on the land
in Note 1. We noticed that some of the buildings listed below are classified as construction in progress (“CIP”) items
under the accounts of the Company. In our valuation, we have taken into account of these buildings on the
assumption that they are able to be transferred together with the land and other buildings as a unique interest
without further encumbrances/premium. Details of the buildings are as follows:
(xiv). Water Treatment Room (single storey) 562.00
(xv). Boiling Room and Coal Storage (single storey) 1,081.71
(xvi). Chiller Plant (2-storey) 2,585.16
(xvii). Switch Room (2-storey) 521.14
(xviii). Repairs Room (2-storey) 622.64
(xix). Toilet (2-storey) 273.80
Total: 101,357.08
3. Pursuant to a copy of the Enterprise Legal Person Business Licence dated 31 May 2011, Zhengzhou Synear is a
company with limited liability for an operational period commencing from 29 September 2005 to 28 September 2020.
4. According to the information provided by the management of the Company, the cost of the CIP item was
approximately RMB96,740,000 as at 31 March 2013 and further RMB12,360,000 is required to invest for completion
of the construction. In our valuation, the CIP items were reported at cost spent as at the Valuation Date. For
information purpose, breakdowns of our valuation amount were as follows:
RMB
Land Element 610,870,000
Building Element 440,310,000
CIP 96,740,000
5. For illustration purpose, the valuation amount of the property upon completion of the scheduled developments would
be approximately RMB1,160,280,000.
VIII-22
Property Description and tenure
Particulars of
occupancy
Amount of
valuation in
its existing state
attributable to
the Group as at
31 March 2013
RMB
3. A factory complex
located at
Eastern Side of
Xue Dian Road
Xue Dian Zhen
Xinzheng City
Henan Province
The PRC, 451162
河南省新鄭市薛店鎮薛店大道東側(鄭州思念食品有限公司)
The property comprises a parcel
of land having a site area of
approximately 34,749.78 sq.m.
(see Note 1 below) with 6 various
major buildings and structures
erected thereon.
The buildings and structures
include 2 single storey workshops,
3 single storey warehouses, and a
5-storey office, canteen and
dormitory complex which were
completed in 2008. They have a
total gross floor area of
approximately 40,153.70 sq.m.
(see Note 2 below).
The property is subject to a right
to use the lands for a term till
August 2054 for factory and
ancillary facilities usages.
As inspected and
confirmed by the
management of the
Company, as at the
Valuation Date, the
property was
occupied by the
Group for
warehouse and
other supporting
facilities purposes.
64,840,000
(100% interest)
Notes:
1. The right to possess the land is held by the State and the right to use the land have been granted by the State to
the Group vide the following ways:
(i) Pursuant to a State-owned Land Use Rights Certificate known as Xin Tu Guo Yong (2007) Di 123 Hao
(新土國用 (2007) 第 123 號) dated 20 March 2007 and issued by the People’s Government of Xinzheng City,
the legally interested party in the land having a site area of approximately 34,749.78 sq.m. is 鄭州思念食品有限公司 (Zhengzhou Synear Food Co. Ltd., and hereinafter referred to as “Zhengzhou Synear”) for a term till
August 20354 for factory and ancillary facilities usages.
2. According to the on-site inspection on 25 October 2012, 6 various supporting facilities buildings (listed below)
without title certificates and with a total gross floor area of approximately 40,153.70 sq.m. were erected on the land
in Note 1. In our valuation, we have taken into account of these buildings on the assumption that they are able to
be transferred together with the land and other buildings as a unique interest without further
encumbrances/premium. Details of the buildings are as follows:
Buildings (no. of storey) Gross Floor Area
(sq.m.)
(i). Workshop (single storey) 6,094.45
(ii). Workshop (single storey) 10,421.52
(iii). Warehouse (single storey)6,405.00
(iv). Warehouse (single storey)
(v). Warehouse (single storey) 6,985.68
(vi). Office, Canteen and Dormitory Complex (5-storey) 10,247.05
Total: 40,153.70
3. Pursuant to a copy of the Enterprise Legal Person Business Licence dated 31 May 2011, Zhengzhou Synear is a
company with limited liability for an operational period commencing from 29 September 2005 to 28 September 2020.
4. For information purpose, breakdowns of our valuation amount were as follows:
RMB
Land Element 29,980,000
Building Element 34,860,000
VIII-23
Property Description and tenure
Particulars of
occupancy
Amount of
valuation in
its existing state
attributable to
the Group as at
31 March 2013
RMB
4. A factory complex
located at
Yi Nian Cun
Feng Ming Zhen
Pengshan Xian
Sichuan Province
The PRC, 620800
四川省彭山縣凰嗚鎮易埝村(四川思念食品有限公司)
The property comprises two
parcels of adjoining land having a
total site area of approximately
89,776.50 sq.m. (see Note 1
below) with 15 various major
buildings and structures erected
thereon.
The buildings and structures
include a 3-storey office, two
2-storey workshops, 2 single
storey cold storage warehouses,
2 single storage warehouse, a
6-storey dormitory and 7 single
supporting facilities which were
completed in between 2007 and
2012. They have a total gross
floor area of approximately
33,756.76 sq.m. (see Note 2
below).
Construction works in the property
were noted at the time of
inspection. We were given to
understand that the development
would be for warehouse usage
and expect to be completed in
2013. The scheduled construction
consists of a warehouse with a
gross floor area of approximately
17,142.47 sq.m. upon completion.
The property is subject to a right
to use the land for a term till 11
April 2054 and 27 December 2061
for industrial factory and ancillary
facilities usages respectively.
As inspected and
confirmed by the
management of the
Company, as at the
Valuation Date, the
property was
occupied by the
Group for
manufacturing,
ancillary office,
warehouse and
other supporting
facilities purposes.
150,240,000
(100% interest)
(See Note 4 below)
Notes:
1. The right to possess the land is held by the State and the right to use the land have been granted by the State to
四川思念食品有限公司 (translated as Sichuan Synear Food Co. Ltd., and hereinafter referred to as “Sichuan Synear”)
vide the following way:
(i) A parcel of land having a site area of approximately 36,004.50 sq.m.
Pursuant to a State-owned Land Use Rights Certificate known as Peng Guo Yong (2007) Di 00653 Hao
(彭國用 (2007) 第 00653) dated 5 May 2007 and issued by the People’s Government of Pengshan County, the
legally interested party in the land having a site area of approximately 36,004.50 sq.m. is Sichuan Synear for
a term till 11 April 2054 for industrial factory and ancillary facilities usages.
(ii) A parcel of land having a site area of approximately 53,772.00 sq.m.
Pursuant to a State-owned Land Use Rights Certificate known as Peng Guo Yong (2012) Di 00695 Hao
(彭國用 (2012)第 00695) dated 1 April 2012 and issued by the People’s Government of Pengshan County, the
legally interested party in the land having a site area of approximately 53,772.00 sq.m. is Sichuan Synear for
a term till 27 December 2061 for industrial factory and ancillary facilities usages.
VIII-24
2. According to the on-site inspection on 1 November 2012, 15 various supporting facilities buildings (listed below)
without title certificates and with a total gross floor area of approximately 33,765.76 sq.m. were erected on the land
in Note 1. In our valuation, we have taken into account of these buildings on the assumption that they are able to
be transferred together with the land and other buildings as a unique interest without further
encumbrances/premium. Details of the buildings are as follows:
