GITI TIRE PTE. LTD.

Transcription

GITI TIRE PTE. LTD.

GITI TIRE PTE. LTD.
INFORMATION MEMORANDUM DATED 31 OCTOBER 2014
GITI TIRE PTE. LTD.
(Incorporated in the Republic of Singapore on 17 July 1993)
(UEN/Company Registration No. 199304649R)
S$750,000,000
Multicurrency Medium Term Note Programme
(the “Programme”)
This Information Memorandum has not been registered as a prospectus with the Monetary Authority of Singapore.
Accordingly, this Information Memorandum and any other document or material in connection with the offer or
sale, or invitation for subscription or purchase, of notes (the “Notes”) to be issued from time to time by GITI Tire
Pte. Ltd. (the “Issuer”) pursuant to the Programme may not be circulated or distributed, nor may the Notes be
offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly,
to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures
Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person
pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA or
(iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of
which is to hold investments and the entire share capital of which is owned by one or more individuals, each
of whom is an accredited investor; or
(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each
beneficiary of the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest
(howsoever described) in that trust shall not be transferred within six months after that corporation or that trust
has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:
(1) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person
arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(2) where no consideration is or will be given for the transfer;
(3) where the transfer is by operation of law;
(4) as specified in Section 276(7) of the SFA; or
(5) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures)
Regulations 2005 of Singapore.
Application has been made to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for
permission to deal in and quotation for any Notes which are agreed at the time of issue thereof to be so listed on
the SGX-ST. Such permission will be granted when such Notes have been admitted to the Official List of the
SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions
expressed or reports contained herein. Admission to the Official List of the SGX-ST and quotation of any Notes
on the SGX-ST is not to be taken as an indication of the merits of the Issuer, its subsidiaries, its associated
companies (if any), the Programme or such Notes.
Arranger
TABLE OF CONTENTS
Pages
NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY OF THE PROGRAMME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SELECTED CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PURPOSE OF THE PROGRAMME AND USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CLEARING AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SINGAPORE TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUBSCRIPTION, PURCHASE AND DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
4
5
9
10
15
41
57
62
77
78
79
83
APPENDICES
I.
II.
III.
IV.
GENERAL AND OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AUDITED FINANCIAL STATEMENTS OF GITI TIRE PTE. LTD. AND ITS
SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 . . . . . . . . . . . .
AUDITED FINANCIAL STATEMENTS OF GITI TIRE PTE. LTD. AND ITS
SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013 . . . . . . . . . . . .
UNAUDITED MANAGEMENT ACCOUNTS OF GITI TIRE PTE. LTD. AND ITS
SUBSIDIARIES FOR THE PERIOD ENDED 30 JUNE 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85
87
166
249
[THIS PAGE INTENTIONALLY LEFT BLANK]
NOTICE
Australia and New Zealand Banking Group Limited (the “Arranger”) has been authorised by the Issuer to
arrange the Programme described herein. Under the Programme, the Issuer may, subject to compliance with all
relevant laws, regulations and directives, from time to time issue Notes denominated in Singapore dollars and/or
any other currencies.
This Information Memorandum contains information with regard to the Issuer, its subsidiaries and associated
companies (if any), the Programme and the Notes. The Issuer confirms that this Information Memorandum
contains all information which is or may be material in the context of the Programme or the issue and offering of
the Notes, that the information contained in this Information Memorandum is true and accurate in all material
respects, that the opinions, expectations and intentions expressed in this Information Memorandum have been
carefully considered, are based on all relevant considerations and facts existing at the date of this Information
Memorandum and are fairly, reasonably and honestly held by the directors of the Issuer, and that there are no
other facts the omission of which in the context of the Programme or the issue and offering of the Notes would or
might make any such information or expressions of opinion, expectation or intention misleading in any material
respect.
Notes may be issued in series having one or more issue dates and the same maturity date, and on identical terms
(including as to listing) except (in the case of Notes other than variable rate notes (as described under “Summary
of the Programme”)) for the issue dates, issue prices and/or the dates of the first payment of interest, or (in the
case of variable rate notes) for the issue prices and rates of interest. Each series may be issued in one or more
tranches on the same or different issue dates. The Notes will be issued in bearer form or registered form and may
be listed on a stock exchange. The Notes will initially be represented by either a Temporary Global Note (as
defined herein) in bearer form or a Permanent Global Note (as defined herein) in bearer form or a registered
Global Certificate (as defined herein) which shall be deposited on the issue date with or registered in the name of,
or in the name of a nominee of, either CDP (as defined herein) or a common depositary for Euroclear Bank
S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”) or
otherwise delivered as agreed between the Issuer and the relevant Dealer(s) (as defined herein). Subject to
compliance with all relevant laws, regulations and directives, the Notes may have maturities of such tenor as may
be agreed between the Issuer and the relevant Dealer(s) and may be subject to redemption or purchase in whole
or in part. The Notes will bear interest at a fixed, floating, variable or hybrid rate or may not bear interest or may
be such other notes as may be agreed between the Issuer and the relevant Dealer(s). The Notes will be repayable
at par, at a specified amount above or below par or at an amount determined by reference to a formula, in each
case with terms as specified in the Pricing Supplement (as defined herein) issued in relation to each series or
tranche of Notes. Details applicable to each series or tranche of Notes will be specified in the applicable Pricing
Supplement which is to be read in conjunction with this Information Memorandum.
The maximum aggregate principal amount of the Notes to be issued, when added to the aggregate principal
amount of all Notes outstanding (as defined in the Trust Deed referred to herein) shall be S$750,000,000 (or its
equivalent in any other currencies) or such increased amount in accordance with the terms of the Programme
Agreement.
No person has been authorised to give any information or to make any representation other than those contained
in this Information Memorandum and, if given or made, such information or representation must not be relied
upon as having been authorised by the Issuer, the Arranger or any of the Dealers. Save as expressly stated in this
Information Memorandum, nothing contained herein is, or may be relied upon as, a promise or representation as
to the future performance or policies of the Issuer or any of its subsidiaries or associated companies (if any).
Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or
supplied under or in relation to the Programme may be used for the purpose of, and does not constitute an offer
of, or solicitation or invitation by or on behalf of the Issuer, the Arranger or any of the Dealers to subscribe for or
purchase, the Notes in any jurisdiction or under any circumstances in which such offer, solicitation or invitation
is unlawful, or not authorised or to any person to whom it is unlawful to make such offer, solicitation or
invitation. The distribution and publication of this Information Memorandum or any such other document or
information and the offer of the Notes in certain jurisdictions may be restricted by law. Persons who distribute or
publish this Information Memorandum or any such other document or information or into whose possession this
Information Memorandum or any such other document or information comes are required to inform themselves
about and to observe any such restrictions and all applicable laws, orders, rules and regulations.
The Notes have not been, and will not be, registered under the Securities Act or with any securities regulatory
authority of any state or other jurisdiction of the United States and the Notes are subject to U.S. tax law
requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United
States or to, or for the account or benefit of, U.S. persons.
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supplied under or in relation to the Programme shall be deemed to constitute an offer of, or an invitation by or on
behalf of the Issuer, the Arranger or any of the Dealers to subscribe for or purchase, any of the Notes.
This Information Memorandum and any other documents or materials in relation to the issue, offering or sale of
the Notes have been prepared solely for the purpose of the initial sale by the relevant Dealer(s) of the Notes from
time to time to be issued pursuant to the Programme. This Information Memorandum and such other documents
or materials are made available to the recipients thereof solely on the basis that they are persons falling within the
ambit of Section 274 and/or Section 275 of the SFA and may not be relied upon by any person other than persons
to whom the Notes are sold or with whom they are placed by the relevant Dealer(s) as aforesaid or for any other
purpose. Recipients of this Information Memorandum shall not reissue, circulate or distribute this Information
Memorandum or any part thereof in any manner whatsoever.
Neither the delivery of this Information Memorandum (or any part thereof) nor the issue, offering, purchase or
sale of the Notes shall, under any circumstances, constitute a representation, or give rise to any implication, that
there has been no change in the prospects, results of operations or general affairs of the Issuer or any of its
subsidiaries or associated companies (if any) or in the information herein since the date hereof or the date on
which this Information Memorandum has been most recently amended or supplemented.
The Arranger and the Dealers have not separately verified the information contained in this Information
Memorandum. None of the Arranger, any of the Dealers or any of their respective officers, employees or agents
is making any representation or warranty expressed or implied as to the merits of the Notes or the subscription
for, purchase or acquisition thereof, or the creditworthiness or financial condition or otherwise of the Issuer or its
subsidiaries or associated companies (if any). Further, none of the Arranger nor any of the Dealers makes any
representation or warranty as to the Issuer, its subsidiaries or associated companies (if any) or as to the accuracy,
reliability or completeness of the information set out herein (including the legal and regulatory requirements
pertaining to Sections 274, 275 and 276 or any other provisions of the SFA) and the documents which are
incorporated by reference in, and form part of, this Information Memorandum.
supplied under or in relation to the Programme or the issue of the Notes is intended to provide the basis of any
credit or other evaluation and should not be considered as a recommendation by the Issuer, the Arranger or any
of the Dealers that any recipient of this Information Memorandum or such other document or information (or
such part thereof) should subscribe for or purchase any of the Notes. A prospective purchaser shall make its own
assessment of the foregoing and other relevant matters including the financial condition and affairs and the
creditworthiness of the Issuer and its subsidiaries and associated companies (if any), and obtain its own
independent legal or other advice thereon, and its investment shall be deemed to be based on its own independent
investigation of the financial condition and affairs and its appraisal of the creditworthiness of the Issuer and its
subsidiaries and associated companies (if any). Accordingly, notwithstanding anything herein, none of the
Arranger, the Dealers or any of their respective officers, employees or agents shall be held responsible for any
loss or damage suffered or incurred by the recipients of this Information Memorandum or such other document
or information (or such part thereof) as a result of or arising from anything expressly or implicitly contained in or
referred to in this Information Memorandum or such other document or information (or such part thereof) and the
same shall not constitute a ground for rescission of any purchase or acquisition of any of the Notes by a recipient
of this Information Memorandum or such other document or information (or such part thereof).
To the fullest extent permitted by law, neither the Arranger nor any of the Dealers accepts any responsibility for
the contents of this Information Memorandum or for any other statement, made or purported to be made by the
Arranger or any of the Dealers or on its behalf in connection with the Issuer, the Group (as defined herein), the
Programme or the issue and offering of the Notes. The Arranger and each Dealer accordingly disclaims all and
any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise
have in respect of this Information Memorandum or any such statement.
The following documents published or issued from time to time after the date hereof shall be deemed to be
incorporated by reference in, and to form part of, this Information Memorandum: (1) any annual reports, audited
consolidated accounts and/or unaudited financial statements of the Issuer and its subsidiaries and associated
companies (if any) and (2) any supplement or amendment to this Information Memorandum issued by the Issuer.
This Information Memorandum is to be read in conjunction with all such documents which are incorporated by
reference herein and, with respect to any series or tranche of Notes, any Pricing Supplement in respect of such
series or tranche. Any statement contained in this Information Memorandum or in a document deemed to be
incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this
Information Memorandum to the extent that a statement contained in this Information Memorandum or in such
subsequent document that is also deemed to be incorporated by reference herein modifies or supersedes such
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earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part of this Information Memorandum.
Copies of all documents deemed incorporated by reference herein are available for inspection at the specified
office of the Principal Paying Agent (as defined herein).
Any purchase or acquisition of the Notes is in all respects conditional on the satisfaction of certain conditions set
out in the Programme Agreement (as defined herein) and the issue of the Notes by the Issuer pursuant to the
Programme Agreement. Any offer, invitation to offer or agreement made in connection with the purchase or
acquisition of the Notes or pursuant to this Information Memorandum shall (without any liability or
responsibility on the part of the Issuer, the Arranger or any of the Dealers) lapse and cease to have any effect if
(for any other reason whatsoever) the Notes are not issued by the Issuer pursuant to the Programme Agreement.
Any discrepancies in the tables included herein between the listed amounts and totals thereof are due to rounding.
The attention of recipients of this Information Memorandum is drawn to the restrictions on resale of the Notes set
out under “Subscription, Purchase and Distribution” on pages 83 to 84 of this Information Memorandum.
Any person(s) who is invited to purchase or subscribe for the Notes or to whom this Information
Memorandum is sent shall not make any offer or sale, directly or indirectly, of any Notes or distribute or
cause to be distributed any document or other material in connection therewith in any country or
jurisdiction except in such manner and in such circumstances as will result in compliance with any
applicable laws and regulations.
It is recommended that persons proposing to subscribe for or purchase any of the Notes consult their own
legal and other advisers before purchasing or acquiring the Notes.
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FORWARD-LOOKING STATEMENTS
All statements contained in this Information Memorandum that are not statements of historical fact constitute
“forward-looking statements”. Some of these statements can be identified by forward-looking terms such as
“expect”, “believe”, “plan”, “intend”, “estimate”, “anticipate”, “may”, “will”, “would” and “could” or similar
words. However, these words are not the exclusive means of identifying forward-looking statements. All
statements regarding the expected financial position, business strategy, plans and prospects of the Issuer and/or
the Group (as defined herein) (including statements as to the Issuer’s and/or the Group’s revenue and
profitability, prospects, future plans and other matters discussed in this Information Memorandum regarding
matters that are not historical facts and including the financial forecasts, profit projections, statements as to the
expansion plans of the Issuer and/or the Group, expected growth in the Issuer and/or the Group and other related
matters), if any, are forward-looking statements and accordingly, are only predictions. These forward-looking
statements involve known and unknown risks, uncertainties and other factors that may cause the actual results,
performance or achievements of the Issuer and/or the Group to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements. These factors include,
among others:
• changes in general political, social and economic conditions;
• changes in currency exchange and interest rates;
• demographic changes;
• changes in competitive conditions; and
• other factors beyond the control of the Issuer and the Group.
Some of these factors are discussed in greater detail in this Information Memorandum, in particular, but not
limited to, discussion under the section “Risk Factors”.
Given the risks and uncertainties that may cause the actual future results, performance or achievements of the
Issuer or the Group to be materially different from the results, performance or achievements expected, expressed
or implied by the financial forecasts, profit projections and forward-looking statements in this Information
Memorandum, undue reliance must not be placed on those forecasts, projections and statements. The Issuer, the
Arranger and the Dealers do not represent or warrant that the actual future results, performance or achievements
of the Issuer or the Group will be as discussed in those statements.
Neither the delivery of this Information Memorandum nor the issue of any Notes by the Issuer shall under any
circumstances constitute a continuing representation or create any suggestion or implication that there has been
no change in the affairs of the Issuer, the Group or any statement of fact or information contained in this
Information Memorandum since the date of this Information Memorandum or the date on which this Information
Memorandum has been most recently amended or supplemented.
Further, the Issuer, the Arranger and the Dealers disclaim any responsibility, and undertake no obligation, to
update or revise any forward-looking statements contained herein to reflect any changes in the expectations with
respect thereto after the date of this Information Memorandum or to reflect any change in events, conditions or
circumstances on which any such statements are based.
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DEFINITIONS
The following definitions have, where appropriate, been used in this Information Memorandum:
“Agency Agreement”
:
The Agency Agreement dated 31 October 2014 between (1) the
Issuer, as issuer, (2) Deutsche Bank AG, Singapore Branch, as
principal paying agent, CDP transfer agent and CDP registrar (3)
the Non-CDP Paying Agent, as non-CDP paying agent and nonCDP transfer agent (4) the Non-CDP Registrar, as non-CDP
registrar, and (5) the Trustee, as trustee, as amended, varied or
supplemented from time to time.
“Arranger”
:
Australia and New Zealand Banking Group Limited.
“Bearer Notes”
:
Notes in bearer form.
“Business Day”
:
In respect of each Note, (a) a day (other than a Saturday, Sunday or
gazetted public holiday) on which Euroclear, Clearstream,
Luxembourg and the Depository, as applicable, are operating, (b) a
day (other than a Saturday, Sunday or gazetted public holiday) on
which banks and foreign exchange markets are open for general
business in the country of the Principal Paying Agent’s specified
office and (c) (if a payment is to be made on that day) (i) (in the
case of Notes denominated in Singapore dollars) a day (other than a
Saturday, Sunday or gazetted public holiday) on which banks and
foreign exchange markets are open for general business in
Singapore, (ii) (in the case of Notes denominated in Euros) a day
(other than a Saturday, Sunday or gazetted public holiday) on which
the TARGET System is open for settlement in Euros, (iii) (in the
case of Notes denominated in Renminbi) (A) if cleared through the
Depository, a day (other than a Saturday, Sunday or gazetted public
holiday) on which banks and foreign exchange markets are open for
business and settlement of Renminbi payments in Singapore and
Hong Kong; and (B) if cleared through Euroclear and Clearstream,
Luxembourg, a day (other than a Saturday, Sunday or gazetted
public holiday) on which commercial banks and foreign exchange
markets settle payments in Hong Kong and London; and/or (iv) (in
the case of Notes denominated in a currency other than Singapore
dollars, Euros and Renminbi) a day (other than a Saturday, Sunday
or gazetted public holiday) on which banks and foreign exchange
markets are open for general business in Singapore and the principal
financial centre for that currency.
“Calculation Agent”
:
In relation to any Series of Notes, the person appointed as
calculation agent for that Series and as specified in the applicable
Pricing Supplement.
“CDP” or the “Depository”
:
The Central Depository (Pte) Limited.
“CDP Registrar”
:
Deutsche Bank AG, Singapore Branch.
“CDP Transfer Agent”
:
“Certificate”
:
A registered certificate representing one or more Registered Notes
of the same Series, being substantially in the form set out in Part II
of Schedule 1 to the Trust Deed and, save as provided in the
Conditions of the Notes, comprising the entire holding by a holder
of Registered Notes of that Series.
“Companies Act”
:
The Companies Act, Chapter 50 of Singapore, as amended or
modified from time to time.
“Conditions”
:
In relation to the Notes of any Series, the terms and conditions
applicable thereto, which shall be substantially in the form set out in
Part III of Schedule 1 to the Trust Deed, as modified, with respect to
any Notes represented by a Global Note or, as the case may be,
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Global Certificate, by the provisions of such Global Note or Global
Certificate, shall incorporate any additional provisions forming part
of such terms and conditions set out in the Pricing Supplement(s)
relating to the Notes of such Series and shall be endorsed on the
Definitive Notes or, as the case may be, Certificates, subject to
amendment and completion as referred to in the first paragraph
appearing after the heading “Terms and Conditions of the Notes” as
set out in Part III of Schedule 1 to the Trust Deed, and any reference
to a particularly numbered Condition shall be construed
accordingly.
“Couponholders”
:
The holders of the Coupons.
“Coupons”
:
The interest coupons appertaining to an interest bearing Definitive
Note.
“Dealers”
:
Persons appointed as dealers under the Programme.
“Definitive Note”
:
A definitive Bearer Note, being substantially in the form set out in
Part I of Schedule 1 to the Trust Deed and having, where
appropriate, Coupons and/or a Talon attached on issue.
“Directors”
:
The directors (including alternate directors, if any) of the Issuer as
at the date of this Information Memorandum.
“Euro”
:
The currency of the member states of the European Union that
adopt the single currency in accordance with the Treaty establishing
the European Community, as amended from time to time.
“FY”
:
Financial year ended or ending 31 December.
“Global Certificate”
:
A Certificate representing Registered Notes of one or more
Tranches of the same Series that are registered in the name of, or in
the name of a nominee of, (i) a depositary common to Euroclear and
Clearstream, Luxembourg, (ii) the Depository and/or (iii) any other
clearing system, being substantially in the form set out in Schedule
4 of the Trust Deed.
“Global Note”
:
A global Note representing Bearer Notes of one or more Tranches
of the same Series, being a Temporary Global Note and/or, as the
context may require, a Permanent Global Note, in each case without
Coupons or a Talon.
“Group”
:
The Issuer and its subsidiaries.
“Issuer”
:
GITI Tire Pte. Ltd.
“ITA”
:
Income Tax Act, Chapter 134 of Singapore, as amended or modified
from time to time.
“MAS”
:
The Monetary Authority of Singapore.
“m2”
:
square metres.
“Non-CDP Notes”
:
Each Series of Notes other than Notes which have been or will be
cleared through CDP.
“Non-CDP Paying Agent”
:
Deutsche Bank AG, Hong Kong Branch.
“Non-CDP Registrar”
:
Deutsche Bank Luxembourg S.A.
“Non-CDP Transfer Agent”
:
“Noteholders”
:
The holders of the Notes.
“Notes”
:
The multicurrency medium term notes of the Issuer issued or to be
issued pursuant to the Programme Agreement and constituted by the
Trust Deed (and shall, where the context so admits, include the
Global Notes, the Definitive Notes and any related Coupons and
Talons, the Global Certificates and the Certificates).
6
“Permanent Global Note”
:
A Global Note representing Bearer Notes of one or more Tranches
of the same Series, either on issue or upon exchange of interests in a
Temporary Global Note, being substantially in the form set out in
Schedule 3 to the Trust Deed.
“PRC”
:
The People’s Republic of China (excluding the Hong Kong Special
Administrative Region, the Macau Special Administrative Region
and Taiwan).
“Pricing Supplement”
:
In relation to any Tranche or Series, a pricing supplement
supplemental to this Information Memorandum, specifying the
relevant issue details in relation to such Tranche or, as the case may
be, Series, substantially in the form of Appendix 2 to the
Programme Agreement.
“Principal Paying Agent”
:
(1) (in the case of Notes cleared through CDP) Deutsche Bank AG,
Singapore Branch and (2) (in the case of Non-CDP Notes) the NonCDP Paying Agent.
“Programme”
:
The S$750,000,000 Multicurrency Medium Term Note Programme
established by the Issuer pursuant to the Programme Agreement.
“Programme Agreement”
:
The Programme Agreement dated 31 October 2014 made between
(1) the Issuer, as issuer, (2) the Arranger, as arranger, and (3)
Australia and New Zealand Banking Group Limited, as dealer, as
amended, varied or supplemented from time to time.
“Registered Notes”
:
Notes in registered form.
“Registrar”
:
(1) (in the case of Notes cleared through CDP) the CDP Registrar
and (2) (in the case of Non-CDP Notes) the Non-CDP Registrar.
“Renminbi” or “RMB”
:
The lawful currency for the time being of the PRC.
“Securities Act”
:
Securities Act of 1933 of the United States, as amended.
“Series”
:
(1) (in relation to Notes other than variable rate notes) a Tranche,
together with any further Tranche or Tranches, which are (a)
expressed to be consolidated and forming a single series and (b)
identical in all respects (including as to listing) except for their
respective issue dates, issue prices and/or dates of the first payment
of interest and (2) (in relation to variable rate notes) Notes which
are identical in all respects (including as to listing) except for their
respective issue prices and rates of interest.
“SFA”
:
Securities and Futures Act, Chapter 289 of Singapore, as amended
or modified from time to time.
“SGX-ST”
:
Singapore Exchange Securities Trading Limited.
“Shares”
:
Ordinary shares in the capital of the Issuer.
“subsidiary”
:
Any company which is for the time being a subsidiary (within the
meaning of Section 5 of the Companies Act).
“S$” and “cents”
:
Singapore dollars and cents respectively.
“Talons”
:
Talons for further Coupons.
“TARGET System”
:
The Trans-European Automated Real-Time Gross Settlement
Express Transfer (known as TARGET 2) System which was
launched on 19 November 2007 or any successor thereto.
“Temporary Global Note”
:
A Global Note representing Bearer Notes of one or more Tranches
of the same Series on issue, being substantially in the form set out in
Schedule 2 to the Trust Deed.
“Tranche”
:
Notes which are identical in all respects (including as to listing).
7
“Transfer Agent”
:
(1) in the case of notes cleared through CDP) the CDP Transfer
Agent and (2) (in the case of Non-CDP Notes) the Non-CDP
Transfer Agent.
“Trust Deed”
:
The Trust Deed dated 31 October 2014 made between (1) the Issuer,
as issuer, and (2) the Trustee, as trustee, as amended, varied or
supplemented from time to time.
“Trustee”
:
DB International Trust (Singapore) Limited.
“United States” or “U.S.”
:
United States of America.
“US dollars”
:
United States dollars.
“%”
:
Per cent.
Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the
masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall,
where applicable, include corporations. Any reference to a time of day in this Information Memorandum shall be
a reference to Singapore time unless otherwise stated. Any reference in this Information Memorandum to any
enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under
the Companies Act or the SFA or any statutory modification thereof and used in this Information Memorandum
shall, where applicable, have the meaning ascribed to it under the Companies Act or, as the case may be, the
SFA.
8
CORPORATE INFORMATION
Board of Directors
:
Ms. Michelle Liem Mei Fung
Dr. Tan Enk Ee
Mr. Lei Huai Chin
Company Secretary
:
Ms. Chang Ah Moy
Registered Office
:
9 Oxley Rise, #01-02
The Oxley
Singapore 238697
Auditors to the Issuer
:
Deloitte & Touche LLP
6 Shenton Way, OUE Downtown 2, #32-00
Singapore 068809
Arranger and Dealer of the Programme :
Australia and New Zealand Banking Group Limited
10 Collyer Quay, Level 30
Ocean Financial Centre
Singapore 049315
Legal Advisers to the Arranger, the :
Trustee, the Principal Paying Agent, the
Non-CDP Paying Agent, the CDP
Registrar, the Non-CDP Registrar, the
CDP Transfer Agent, the Non-CDP
Transfer Agent
Allen & Gledhill LLP
One Marina Boulevard #28-00
Singapore 018989
Legal Advisers to the Issuer
Latham & Watkins LLP
9 Raffles Place, #42-02
Republic Plaza
Singapore 048619
:
Principal Paying Agent, CDP Registrar :
and CDP Transfer Agent
Deutsche Bank AG, Singapore Branch
One Raffles Quay
#16-00 South Tower
Singapore 048583
Non-CDP Paying Agent and Non-CDP :
Transfer Agent
Deutsche Bank AG, Hong Kong Branch
Level 52, International Commerce Centre
1 Austin Road West, Kowloon
Hong Kong
Non-CDP Registrar
:
2, Boulevard Konrad Adenauer
L-1115 Luxembourg
Luxembourg
Trustee for the Noteholders
:
DB International Trust (Singapore) Limited
One Raffles Quay
#16-00 South Tower
Singapore 048583
9
SUMMARY OF THE PROGRAMME
The following summary is derived from, and should be read in conjunction with, the full text of this Information
Memorandum (and any relevant supplement to this Information Memorandum), the Trust Deed, the Agency
Agreement and the relevant Pricing Supplement.
Issuer
:
GITI Tire Pte. Ltd.
Arranger
:
Australia and New Zealand Banking Group Limited.
Dealers
:
Australia and New Zealand Banking Group Limited and/or such
other Dealers as may be appointed by the Issuer in accordance with
the Programme Agreement.
Trustee
:
DB International Trust (Singapore) Limited.
Principal Paying Agent, CDP Transfer :
Agent and CDP Registrar
Non-CDP Paying Agent and Non-CDP :
Transfer Agent
Non-CDP Registrar
:
Description
:
S$750,000,000 Multicurrency Medium Term Note Programme.
Programme Size
:
The maximum aggregate principal amount of the Notes outstanding
at any time shall be S$750,000,000 (or its equivalent in other
currencies) or such increased amount in accordance with the terms
of the Programme Agreement.
Currency
:
Subject to compliance with all relevant laws, regulations and
directives, Notes may be issued in Singapore dollars or any other
currency agreed between the Issuer and the relevant Dealer(s).
Purpose
:
Net proceeds arising from the issue of the Notes under the
Programme (after deducting issue expenses) will be used for general
corporate purposes, including refinancing of borrowings, and
financing investments and general working capital of the Issuer or
its subsidiaries.
Method of Issue
:
Notes may be issued from time to time under the Programme on a
syndicated or non-syndicated basis. Each Series may be issued in
one or more Tranches, on the same or different issue dates. The
minimum issue size for each Series shall be agreed between the
Issuer and the relevant Dealer(s). The specific terms of each Series
or Tranche will be specified in the relevant Pricing Supplement.
Issue Price
:
Notes may be issued at par or at a discount, or premium, to par.
Maturities
:
Subject to compliance with all relevant laws, regulations and
directives, Notes may have maturities of such tenor as may be
agreed between the Issuer and the relevant Dealer(s).
Mandatory Redemption
:
Unless previously redeemed or purchased and cancelled, each Note
will be redeemed at its redemption amount on the maturity date
shown on its face.
Interest Basis
:
Notes may bear interest at fixed, floating, variable or hybrid rates or
such other rates as may be agreed between the Issuer and the
relevant Dealer(s) or may not bear interest.
Fixed Rate Notes
:
Fixed Rate Notes will bear a fixed rate of interest which will be
payable in arrear on specified dates and at maturity.
Floating Rate Notes
:
Floating Rate Notes which are denominated in Singapore dollars
will bear interest to be determined separately for each Series by
reference to S$ SIBOR or S$ SWAP RATE (or in any other case
such other benchmark as may be agreed between the Issuer and the
10
relevant Dealer(s)), as adjusted for any applicable margin. Interest
periods in relation to the Floating Rate Notes will be agreed
between the Issuer and the relevant Dealer(s) prior to their issue.
Floating Rate Notes which are denominated in other currencies will
bear interest to be determined separately for each Series by
reference to such other benchmark as may be agreed between the
Issuer and the relevant Dealer(s).
Variable Rate Notes
:
Variable Rate Notes will bear interest at a variable rate determined
in accordance with the Conditions of the Notes. Interest periods in
relation to the Variable Rate Notes will be agreed between the
Issuer and the relevant Dealer(s) prior to their issue.
Hybrid Notes
:
Hybrid Notes will bear interest, during the fixed rate period to be
agreed between the Issuer and the relevant Dealer(s), at a fixed rate
of interest which will be payable in arrear on specified dates and,
during the floating rate period to be agreed between the Issuer and
the relevant Dealer(s), at the rate of interest to be determined by
reference to S$ SIBOR or S$ SWAP RATE (or such other
benchmark as may be agreed between the Issuer and the relevant
Dealer(s)), as adjusted for any applicable margin (provided that if
the Hybrid Notes are denominated in a currency other than
Singapore dollars, such Hybrid Notes will bear interest to be
determined separately by reference to such benchmark as may be
agreed between the Issuer and the relevant Dealer(s)), in each case
payable at the end of each interest period to be agreed between the
Issuer and the relevant Dealer(s).
Zero Coupon Notes
:
Zero Coupon Notes may be issued at their nominal amount or at a
discount to it and will not bear interest other than in the case of late
payment.
Form and Denomination of Notes
:
The Notes will be issued in bearer form or registered and in such
denominations as may be agreed between the Issuer and the relevant
Dealer(s). Each Tranche or Series of Bearer Notes may initially be
represented by a Temporary Global Note or a Permanent Global
Note. Each Temporary Global Note may be deposited on the
relevant issue date with CDP, a common depositary for Euroclear
and Clearstream, Luxembourg and/or any other agreed clearing
system and will be exchangeable, upon request as described therein,
either for a Permanent Global Note or Definitive Notes (as indicated
in the applicable Pricing Supplement). Each Permanent Global Note
may be exchanged, unless otherwise specified in the applicable
Pricing Supplement, upon request as described therein, in whole
(but not in part) for Definitive Notes upon the terms therein. Each
Tranche or Series of Registered Notes will initially be represented
by a Global Certificate. Each Global Certificate may be registered
in the name of, or in the name of a nominee of, CDP, a common
depositary for Euroclear and Clearstream, Luxembourg and/or any
other agreed clearing system. Each Global Certificate may be
exchanged, upon request as described therein, in whole (but not in
part) for Certificates upon the terms therein. Save as provided in the
Conditions of the Notes, a Certificate shall be issued in respect of
each Noteholder’s entire holding of registered Notes of one Series.
Custody of the Notes
:
Notes which are to be listed on the SGX-ST may be cleared through
CDP. Notes which are to be cleared through CDP are required to be
kept with CDP as authorised depository. Notes which are cleared
through Euroclear and/or Clearstream, Luxembourg are required to
be kept with a common depositary on behalf of Euroclear and
Clearstream Luxembourg.
11
Status of the Notes
:
The Notes and Coupons of all Series will constitute direct,
unconditional, unsubordinated and unsecured obligations of the
Issuer and shall at all times rank pari passu, without any preference
or priority among themselves, and pari passu with all other present
and future unsecured obligations (other than subordinated
obligations and priorities created by law) of the Issuer.
Optional Redemption and Purchase
:
If so provided on the face of the Note and the relevant Pricing
Supplement, Notes may be redeemed (either in whole or in part)
prior to their stated maturity at the option of the Issuer and/or the
holders of the Notes. Further, if so provided on the face of the Note
and the relevant Pricing Supplement, Notes may be purchased by
the Issuer (either in whole or in part) prior to their stated maturity at
the option of the Issuer and/or the holders of the Notes.
Redemption upon Change of Control
:
If, for any reason, a Change of Control Event occurs, the Issuer will
within seven days of such occurrence give notice to the Noteholders
of the occurrence of such event (the “Change of Control Event
Notice”) (provided that failure by the Issuer to give such notice
shall not prejudice the Noteholder of such option) and shall, at the
option of the holder of any Note, redeem such Note at 101 per cent.
of its principal amount, together with interest accrued to the date
fixed for redemption, on the date falling 60 days from the date of
the Change of Control Event Notice (or if such date is not a
business day, on the next day which is a business day). To exercise
such option, the holder must deposit (in the case of Bearer Notes)
such Note (together with all unmatured Coupons and unexchanged
Talons) with the Principal Paying Agent at its specified office,
together with a duly completed option exercise notice in the form
obtainable from the Principal Paying Agent, any other Paying
Agent, the Registrar, any other Transfer Agent or the Issuer (as
applicable), no later than 30 days from the date of the Change of
Control Event Notice. Any Note so deposited may not be withdrawn
(except as provided in the Agency Agreement) without the prior
consent of the Issuer.
For the purposes of the above, a “Change of Control Event”
occurs when Michelle Liem Mei Fung, William Liem, Tan Enk Ee
and their respective close family members, including their spouses,
children aged 18 and above and such child’s spouse, parent and
parent in-law, sibling and such sibling’s spouse, spouse’s sibling
and child’s parent in-law cease to have in aggregate an interest
(whether directly or indirectly) of a majority of the voting rights of
the Issuer’s issued and fully paid-up capital.
Negative Pledge
:
The Issuer has covenanted with the Trustee in the Trust Deed that so
long as any of the Notes or Coupons remains outstanding, neither
the Issuer nor any of its Principal Subsidiaries (other than a Listed
Subsidiary) will, and the Issuer will ensure that none of its Principal
Subsidiaries (other than a Listed Subsidiary) will, create or permit
to subsist, any mortgage, charge, lien, pledge or other form of
encumbrance or security interest upon the whole or any part of its
present or future undertakings, assets or revenues (including any
uncalled capital) to secure any International Investment Securities,
or any guarantee or indemnity in respect of any International
Investment Securities, without at the same time or prior thereto
according to the Notes and the Coupons the same security as is
created or subsisting to secure any such International Investment
Securities, guarantee or indemnity or such other security as shall be
approved by an Extraordinary Resolution (as defined in the Trust
Deed) of the Noteholders.
12
Terms used in this paragraph have the meaning ascribed to them in
the Conditions.
Financial Covenants
:
The Issuer has further covenanted with the Trustee in the Trust
Deed that so long as any of the Notes remains outstanding, it will
ensure that:
(i)
the Consolidated Tangible Net Worth will not at any time be
less than RMB2,500,000,000;
(ii) the ratio of Consolidated Total Debt to Consolidated Total
Assets shall not be more than 0.6:1 as at the end of any Test
Period;
(iii) the ratio of Consolidated Secured Debt to Consolidated Total
Assets shall not be more than 0.5:1 as at the end of any Test
Period; and
(iv) the ratio of Consolidated EBITDA to Consolidated Interest
Expense shall not be less than 2.5:1 for any Test Period.
the Conditions.
Non-Disposal Covenants
:
long as any of the Notes remain outstanding, it will not, and will
ensure that none of its Principal Subsidiaries (other than a Listed
Subsidiary) will (whether by a single transaction or number of
related or unrelated transactions and whether at one time or over a
period of time) sell, transfer, lease out, lend or otherwise dispose of
(A) all or substantially all of its assets or (B) any part of its assets
which, either alone or when aggregated with all other disposals
required to be taken into account under Clause 15.1.28 of the Trust
Deed, is substantial in relation to its assets or those of itself and its
subsidiaries taken as a whole or the disposal of which (either alone
or when so aggregated) would have a material adverse effect on it
and its subsidiaries, taken as a whole. The following disposals shall
not be taken into account:
(i)
disposals in the ordinary course of business;
(ii) any disposal by the Issuer or by a Principal Subsidiary to the
Issuer or to any other Principal Subsidiary (or to a subsidiary
which becomes a Principal Subsidiary after such disposal and
shall continue to be a Principal Subsidiary following the date
of issue of the first audited consolidated accounts of the Group
prepared as at a date later than the date of such disposal);
(iii) any disposal of assets which are obsolete, excess or no longer
required for the purpose of its business; and
(iv) any disposal approved by the Noteholders by way of an
Extraordinary Resolution.
the Conditions.
Accounts
:
long as any of the Notes remain outstanding, it shall send to the
Trustee and make available on its website or on the website
administered by the SGX-ST:
(i)
as soon as the same are published, but in any event no later
than 135 days after the end of each financial year, copies of
the audited consolidated accounts of the Group prepared in
accordance with generally accepted accounting principles and
practices in force in Singapore or IFRS consistently applied
13
(except as otherwise stated in such accounts or the notes
thereto) and a copy of the report of the Issuer’s auditors
thereon; and
(ii) as soon as the same are published, but in any event no later
than 105 days after the end of each financial half-year, copies
of the unaudited half-yearly consolidated accounts of the
Group.
Dividend Restriction
:
long as any of the Notes remain outstanding, it shall not pay any
dividend in cash, reduce its capital or make any other cash
distribution to its shareholders unless:
(i)
the aggregate of such dividend or distribution paid in a
financial year will not at any time be more than 30 per cent. of
the consolidated annual profits of the Group for the
immediately preceding financial year; and
(ii) no Event of Default has occurred and is unwaived and no
Event of Default shall occur as a consequence of the payment
of such dividend or distribution.
Events of Default
:
See Condition 10 of the Notes.
Taxation
:
All payments in respect of the Notes and the Coupons by the Issuer
shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed,
levied, collected, withheld or assessed by or within Singapore or
any authority thereof or therein having power to tax, unless such
withholding or deduction is required by law. In such event, the
Issuer shall pay such additional amounts as will result in the receipt
by the Noteholders and the Couponholders of such amounts as
would have been received by them had no such deduction or
withholding been required, save for certain exceptions. For further
details, please see the section on “Singapore Taxation” herein.
Listing
:
Each Series of the Notes may, if so agreed between the Issuer and
the relevant Dealer(s), be listed on the SGX-ST or any stock
exchange(s) as may be agreed between the Issuer and the relevant
Dealer(s), subject to all necessary approvals having been obtained.
Selling Restrictions
:
For a description of certain restrictions on offers, sales and
deliveries of Notes and the distribution of offering material relating
to the Notes, see the section on “Subscription, Purchase and
Distribution” herein. Further restrictions may apply in connection
with any particular Series or Tranche of Notes.
Governing Law
:
The Programme and any Notes issued under the Programme will be
governed by, and construed in accordance with, the laws of
Singapore.
14
TERMS AND CONDITIONS OF THE NOTES
The following is the text of the terms and conditions which, subject to completion and amendment and as
supplemented or varied in accordance with the provisions of the relevant Pricing Supplement, will be endorsed
on the Notes in definitive form issued in exchange for the Global Note(s) or the Global Certificate(s)
representing each Series. Either (i) the full text of these terms and conditions together with the relevant
provisions of the Pricing Supplement or (ii) these terms and conditions as so completed, amended, supplemented
or varied (and subject to simplification by the deletion of non-applicable provisions), shall be endorsed on such
Notes. Unless otherwise stated, capitalised terms that are not defined in these Conditions will have the meanings
given to them in the relevant Pricing Supplement. Those definitions will be endorsed on such Bearer Notes or on
the Certificates relating to such Registered Notes. References in the Conditions to “Notes” are to the Notes of
one Series only, and not to all Notes that may be issued under the Programme, details of the relevant Series
being shown on the face of the relevant Notes and in the relevant Pricing Supplement.
The Notes are constituted by a Trust Deed (as amended, restated and supplemented from time to time, the “Trust
Deed”) dated 31 October 2014 made between (1) GITI Tire Pte. Ltd. (the “Issuer”) and (2) DB International Trust
(Singapore) Limited (the “Trustee”, which expression shall wherever the context so admits include such company
and all other persons for the time being the trustee or trustees of the Trust Deed), as trustee for the Noteholders (as
defined below), and (where applicable) the Notes are issued with the benefit of a deed of covenant (as amended and
supplemented from time to time, the “Deed of Covenant”) dated 31 October 2014, relating to the Notes (“CDP
Notes”) cleared or to be cleared through the Central Depository (Pte) Limited (the “Depository”) executed by the
Issuer. These terms and conditions (the “Conditions”) include summaries of, and are subject to, the detailed
provisions of the Trust Deed, which include the form of the Bearer Notes, Certificates, Coupons and Talons referred
to below. The Issuer has entered into an Agency Agreement (as amended, restated and supplemented from time to
time, the “Agency Agreement”) dated 31 October 2014 made between (1) the Issuer, (2) Deutsche Bank AG,
Singapore Branch, as principal paying agent (in such capacity, the “Principal Paying Agent”), transfer agent in
respect of CDP Notes (in such capacity, the “CDP Transfer Agent” and registrar in respect of CDP Notes (in such
capacity, the “CDP Registrar”), (3) Deutsche Bank AG, Hong Kong Branch, as paying agent in respect of Notes
cleared or to be cleared through a clearing system other than CDP (“Non-CDP Notes”) (in such capacity, the “NonCDP Paying Agent” and, together with any other paying agents that may be appointed, the “Paying Agents”) and
transfer agent in respect of Non-CDP Notes (in such capacity, the “Non-CDP Transfer Agent” and, together with
any other transfer agent that may be appointed, the “Transfer Agents”), (4) Deutsche Bank Luxembourg S.A., as
registrar in respect of Non-CDP Notes (in such capacity, the “Non-CDP Registrar, and together with any other
registrar that may be appointed, the “Registrars”) and (5) the Trustee, as trustee. The Noteholders and the holders
(the “Couponholders”) of the coupons (the “Coupons”) appertaining to the interest-bearing Notes in bearer form
and, where applicable in the case of such Notes, talons for further Coupons (the “Talons”) are bound by and are
deemed to have notice of all of the provisions of the Trust Deed, the Agency Agreement, the relevant Calculation
Agency Agreement (as defined in the Trust Deed) and the Deed of Covenant. For the purposes of these Conditions,
all references to (a) the Principal Paying Agent shall, with respect to a Series of Non-CDP Notes, be deemed to be a
reference to the Non-CDP Paying Agent, (b) the Registrar shall, in the case of a series of CDP Notes, be deemed to
be a reference to the CDP Registrar and, in the case of a series of Non-CDP Notes, be deemed to be a reference to
the Non-CDP Registrar, and (c) the Transfer Agent shall, in the case of a series of CDP Notes, be deemed to be a
reference to the CDP Transfer Agent and, in the case of a series of Non-CDP Notes, be deemed to be a reference to
the Non-CDP Transfer Agent, and (unless the context otherwise requires) all such references shall be construed
accordingly.
Copies of the Trust Deed, the Agency Agreement, the relevant Calculation Agency Agreement and the Deed of
Covenant are available for inspection at the principal office of the Trustee for the time being and at the respective
specified offices of the Paying Agents for the time being.
1.
Form, Denomination and Title
(a) Form and Denomination
(i) The Notes of the Series of which this Note forms part (in these Conditions, the “Notes”) are issued in
bearer form (“Bearer Notes”) or in registered form (“Registered Notes”) in each case in the
Denomination Amount shown hereon.
(ii) This Note is a Fixed Rate Note, a Floating Rate Note, a Variable Rate Note, a Hybrid Note or a Zero
Coupon Note (depending upon the Interest Basis shown on its face).
(iii) Bearer Notes are serially numbered and issued with Coupons (and where appropriate a Talon) attached,
save in the case of Notes that do not bear interest in which case references to interest (other than in
relation to default interest referred to in Condition 7(h)) in these Conditions are not applicable.
15
(iv) Registered Notes are represented by registered certificates (“Certificates”) and, save as provided in
Condition 2(c), each Certificate shall represent the entire holding of Registered Notes by the same holder.
(b) Title
(i) Title to the Bearer Notes and the Coupons and Talons appertaining thereto shall pass by delivery. Title
to the Registered Notes shall pass by registration in the register that the Issuer shall procure to be kept
by the Registrar in accordance with the provisions of the Agency Agreement (the “Register”).
(ii) Except as ordered by a court of competent jurisdiction or as required by law, the holder of any Note,
Coupon or Talon shall be deemed to be and may be treated as the absolute owner of such Note, Coupon
or Talon as the case may be, for the purpose of receiving payment thereof or on account thereof and for
all other purposes, whether or not such Note, Coupon or Talon shall be overdue and notwithstanding any
notice of ownership, theft, loss or forgery thereof or any writing thereon made by anyone, and no person
shall be liable for so treating the holder.
(iii) For so long as any of the Notes is represented by a Global Note (as defined below) or, as the case may
be, a Global Certificate (as defined below), and such Global Note or Global Certificate is held by a
common depositary for Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société
anonyme (“Clearstream, Luxembourg”) and/or the Depository, each person who is for the time being
shown in the records of Euroclear, Clearstream, Luxembourg and/or the Depository as the holder of a
particular principal amount of such Notes (in which regard any certificate or other document issued by
Euroclear, Clearstream, Luxembourg and/or the Depository as to the principal amount of such Notes
standing to the account of any person shall be conclusive and binding for all purposes save for manifest
error) shall be treated by the Issuer, the Paying Agents, the Transfer Agents, the Registrars, the
Calculation Agent (as defined below), all other agents of the Issuer and the Trustee as the holder of such
principal amount of Notes other than with respect to the payment of principal, premium, interest,
distribution, redemption, purchase and/or any other amounts in respect of the Notes, for which purpose
the bearer of the Global Note or, as the case may be, the person whose name is shown on the Register
shall be treated by the Issuer, the Paying Agents, the Transfer Agents, the Registrars, the Calculation
Agent, all other agents of the Issuer and the Trustee as the holder of such Notes in accordance with and
subject to the terms of the Global Note or, as the case may be, the Global Certificate (and the
expressions “Noteholder” and “holder of Notes” and related expressions shall be construed
accordingly). Notes which are represented by the Global Note or, as the case may be, the Global
Certificate will be transferable only in accordance with the rules and procedures for the time being of
Euroclear, Clearstream, Luxembourg and/or the Depository.
(iv) In these Conditions, “Global Note” means the relevant Temporary Global Note representing each Series
or the relevant Permanent Global Note representing each Series, “Global Certificate” means the
relevant Global Certificate representing each Series that is registered in the name of, or in the name of a
nominee of, (1) a common depositary for Euroclear and/or Clearstream, Luxembourg, (2) the
Depository and/or (3) any other clearing system, “Noteholder” means the bearer of any Bearer Note or
the person in whose name a Registered Note is registered (as the case may be) and “holder” (in relation
to a Note, Coupon or Talon) means the bearer of any Bearer Note, Coupon or Talon or the person in
whose name a Registered Note is registered (as the case may be), “Series” means (1) (in relation to
Notes other than Variable Rate Notes) a Tranche, together with any further Tranche or Tranches, which
are (A) expressed to be consolidated and forming a single series and (B) identical in all respects
(including as to listing) except for their respective issue dates, issue prices and/or dates of the first
payment of interest and (2) (in relation to Variable Rate Notes) Notes which are identical in all respects
(including as to listing) except for their respective issue prices and rates of interest and “Tranche”
means Notes which are identical in all respects (including as to listing).
(v) Words and expressions defined in the Trust Deed or used in the applicable Pricing Supplement (as defined
in the Trust Deed) shall have the same meanings where used in these Conditions unless the context
otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the
Trust Deed and the applicable Pricing Supplement, the applicable Pricing Supplement will prevail.
2.
No Exchange of Notes and Transfers of Registered Notes
(a) No Exchange of Notes
Registered Notes may not be exchanged for Bearer Notes. Bearer Notes of one Denomination Amount may
not be exchanged for Bearer Notes of another Denomination Amount. Bearer Notes may not be exchanged
for Registered Notes.
16
(b) Transfer of Registered Notes
Subject to Conditions 2(e) and 2(f) below, one or more Registered Notes may be transferred upon the
surrender (at the specified office of the Registrar or any Transfer Agent) of the Certificate representing such
Registered Notes to be transferred, together with the form of transfer endorsed on such Certificate (or
another form of transfer substantially in the same form and containing the same representations and
certifications (if any), unless otherwise agreed by the Issuer) duly completed and executed and any other
evidence as the Registrar or such other Transfer Agent may require to prove the title of the transferor and the
authority of the individuals that have executed the form of transfer. In the case of a transfer of part only of a
holding of Registered Notes represented by one Certificate, a new Certificate shall be issued to the transferee
in respect of the part transferred and a further new Certificate in respect of the balance of the holding not
transferred shall be issued to the transferor. All transfers of Notes and entries on the Register will be made
subject to the detailed regulations concerning transfers of Notes scheduled to the Agency Agreement. The
regulations may be changed by the Issuer, with the prior written approval of the Registrar and the Trustee. A
copy of the current regulations will be made available by the Registrar to any Noteholder upon request.
(c) Exercise of Options or Partial Redemption in Respect of Registered Notes
In the case of an exercise of the Issuer’s or Noteholders’ option in respect of, or a partial redemption of, a
holding of Registered Notes represented by a single Certificate, a new Certificate shall be issued to the
holder to reflect the exercise of such option or in respect of the balance of the holding not redeemed. In the
case of a partial exercise of an option resulting in Registered Notes of the same holding having different
terms, separate Certificates shall be issued in respect of those Notes of that holding that have the same terms.
New Certificates shall only be issued against surrender of the existing Certificates to the Registrar or any
Transfer Agent. In the case of a transfer of Registered Notes to a person who is already a holder of
Registered Notes, a new Certificate representing the enlarged holding shall only be issued against surrender
of the Certificate representing the existing holding.
(d) Delivery of New Certificates
Each new Certificate to be issued pursuant to Condition 2(b) or 2(c) shall be available for delivery within
five business days of receipt of the form of transfer or Exercise Notice (as defined in Condition 6(e)) and
surrender of the Certificate for exchange. Delivery of the new Certificate(s) shall be made at the specified
office of the Registrar or such other Transfer Agent (as the case may be) to whom delivery or surrender of
such form of transfer, Exercise Notice or Certificate shall have been made or, at the option of the holder
making such delivery or surrender as aforesaid and as specified in the relevant form of transfer, Exercise
Notice or otherwise in writing, be mailed by uninsured post at the risk of the holder entitled to the new
Certificate to such address as may be so specified, unless such holder requests otherwise and pays in advance
to the Registrar or the relevant Transfer Agent the costs of such other method of delivery and/or such
insurance as it may specify. In this Condition 2(d), “business day” means a day (other than a Saturday,
Sunday gazetted public holiday) on which banks are open for business in the place of the specified office of
the Registrar or the relevant Transfer Agent (as the case may be).
(e) Transfers Free of Charge
Transfers of Notes and Certificates on registration, transfer, exercise of an option or partial redemption shall
be effected without charge by or on behalf of the Issuer, the Registrar or the Transfer Agents, but upon
payment of any tax or other governmental charges that may be imposed in relation to it (or the giving of such
indemnity and/or security and/or prefunding as the Registrar or the relevant Transfer Agent may require) in
respect of tax or charges.
(f) Closed Periods
No Noteholder may require the transfer of a Registered Note to be registered (i) during the period of 15 days
prior to any date on which Notes may be called for redemption by the Issuer at its option pursuant to
Condition 6(d), (ii) after any such Note has been called for redemption or (iii) during the period of seven
days ending on (and including) any Record Date (as defined in Condition 7(b)(ii)).
3.
Status
The Notes and Coupons of all Series constitute direct, unconditional, unsubordinated and unsecured
obligations of the Issuer and shall at all times rank pari passu, without any preference or priority among
themselves, and pari passu with all other present and future unsecured obligations (other than subordinated
obligations and priorities created by law) of the Issuer.
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4.
Covenants
(a) Negative Pledge
The Issuer has covenanted with the Trustee in the Trust Deed that so long as any of the Notes or Coupons
remains outstanding, neither the Issuer nor any of its Principal Subsidiaries (other than a Listed Subsidiary)
will, and the Issuer will ensure that none of its Principal Subsidiaries (other than a Listed Subsidiary) will,
create or permit to subsist, any mortgage, charge, lien, pledge or other form of encumbrance or security
interest upon the whole or any part of its present or future undertakings, assets or revenues (including any
uncalled capital) to secure any International Investment Securities, or any guarantee or indemnity in respect
of any International Investment Securities, without at the same time or prior thereto according to the Notes
and the Coupons the same security as is created or subsisting to secure any such International Investment
Securities, guarantee or indemnity or such other security as shall be approved by an Extraordinary
Resolution (as defined in the Trust Deed) of the Noteholders.
In these Conditions:
(i) “International Investment Securities” means any present or future indebtedness which is in the form
of, or represented or evidenced by, bonds, notes, debentures, loan stock or other debt securities which
for the time being are, or are intended to be or capable of being, quoted, listed or dealt in or traded on
any stock exchange or over-the-counter or other securities market, having an original maturity of more
than 365 days from the date of issue, but excluding any collateralised mortgage backed securities
(whether or not so quoted, listed, dealt or traded). For the avoidance of doubt, bilateral and syndicated
loans arranged or granted by a bank or other financial institution would not be International Investment
Securities;
(ii) “Listed Subsidiary” means a subsidiary of the Issuer the Voting Shares of which are listed on any stock
exchange and includes any of its subsidiaries;
(iii) “Principal Subsidiary” means any subsidiary of the Issuer:
(1) whose total assets, as shown by the accounts of such subsidiary (consolidated in the case of a
corporation which itself has subsidiaries), based upon which the latest audited consolidated
accounts of the Group have been prepared, are at least 10 per cent. of the total assets of the Group
as shown by such audited consolidated accounts; or
(2) whose total revenue, as shown by the accounts of such subsidiary (consolidated in the case of a
corporation which itself has subsidiaries), based upon which the latest audited consolidated
accounts of the Group have been prepared, is at least 10 per cent. of the total revenue of the Group
as shown by such audited consolidated accounts,
provided that if any such subsidiary (the “transferor”) shall at any time transfer the whole or any part
of its business, undertaking or assets to another subsidiary or the Issuer (the “transferee”) then:
(A) if the whole of the business, undertaking and assets of the transferor shall be so transferred, the
transferor shall thereupon cease to be a Principal Subsidiary and the transferee (unless it is the
Issuer) shall thereupon become a Principal Subsidiary; and
(B) if a part only of the business, undertaking and assets of the transferor shall be so transferred, the
transferor shall remain a Principal Subsidiary and the transferee (unless it is the Issuer) shall
thereupon become a Principal Subsidiary.
Any subsidiary which becomes a Principal Subsidiary by virtue of (A) above or which remains or
becomes a Principal Subsidiary by virtue of (B) above shall continue to be a Principal Subsidiary until
the earlier of (aa) the date of issue of the first audited consolidated accounts of the Group prepared as at
a date later than the date of the relevant transfer which show the assets or, as the case may be, the
revenue as shown by the accounts of such subsidiary (consolidated in the case of a corporation which
itself has subsidiaries), based upon which such audited consolidated accounts have been prepared, to be
less than 10 per cent. of the total assets or, as the case may be, the total revenue of the Group, as shown
by such audited consolidated accounts and (bb) a report by the Auditors (as defined in the Trust Deed)
as described below which shows the total assets of such subsidiary to be less than 10 per cent. of the
total assets of the Group or, as the case may be, the total revenue of the Group, as shown by such report
of the Auditors. A report by the Auditors, who shall also be responsible for producing any pro-forma
accounts required for the above purposes, that in their opinion a subsidiary is or is not a Principal
Subsidiary shall, in the absence of manifest error, be conclusive;
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(iv) “subsidiary” has the meaning ascribed to it in Section 5 of the Companies Act, Chapter 50 of
Singapore; and
(v) “Voting Shares” means, in relation to a subsidiary of the Issuer, shares or stock conferring upon the
holders of such shares or stock the right generally to vote at a general meeting of shareholders or
stockholders of such subsidiary (irrespective of whether or not, at the time, shares or stock of any other
class or classes shall have, or might have, voting power by reason of the happening of any contingency).
(b) Financial Covenants
The Issuer has further covenanted with the Trustee in the Trust Deed that so long as any of the Notes
remains outstanding, it will ensure that:
(i)
the Consolidated Tangible Net Worth will not at any time be less than RMB2,500,000,000;
(ii) the ratio of Consolidated Total Debt to Consolidated Total Assets shall not be more than 0.6:1 as at the
end of any Test Period;
(iii) the ratio of Consolidated Secured Debt to Consolidated Total Assets shall not be more than 0.5:1 as at
the end of any Test Period; and
(iv) the ratio of Consolidated EBITDA to Consolidated Interest Expense shall not be less than 2.5:1 for any
Test Period.
For the purposes of these Conditions:
(1) “Consolidated EBITDA” means, in relation to any Test Period, the profits before tax of the Group for
that Test Period:
(A) before deducting any Consolidated Interest Expense;
(B) before taking into account any items treated as exceptional or extraordinary items;
(C) before deducting any amount attributable to amortisation of goodwill and intangible assets or
depreciation of tangible assets;
(D) before foreign currency gains or losses (including losses related to currency remeasurements or
borrowed moneys); and
(E) taking no account of any charge or loss for impairment or any reversal of any previous impairment
charge or loss,
in each case, to the extent deducted or taken into account, as the case may be, for the purposes of
determining the profits of the Group from ordinary activities before tax;
(2) “Consolidated Interest Expense” means, in relation to any Test Period, the consolidated aggregate
amount of interest and other financing charges (excluding any capitalised interest) as shown under the
line item “Finance Costs” in the most recent available consolidated profit and loss account of the Group
(whether audited or unaudited) during that Test Period;
(3) “Consolidated Tangible Net Worth” means, at any particular time, the amount (expressed in
Renminbi) for the time being, calculated in accordance with generally accepted accounting principles or
standards accepted in Singapore, equal to the aggregate of:
(A) the capital of the Issuer for the time being issued and paid up;
(B) the amounts standing to the credit of the capital and revenue reserves (including the reserves,
statutory surplus, exchange reserve, retained earnings and profit and loss account) on a consolidated
basis; and
(C) the amount standing to the credit of the revaluation surplus on a consolidated basis,
all as shown in the then latest audited statement of financial position or, as the case may be, unaudited
six-months consolidated statement of financial position of the Group but after (to the extent that the
following items have not already been added, deducted or excluded in arriving at the amounts referred
to in (A), (B) and (C) above):
(aa) making such adjustments as may be appropriate in respect of any variation in the issued and paid up
share capital, and the capital and revenue reserves on a consolidated basis of the Issuer since the
date of the latest audited consolidated statement of financial position or, as the case may be,
unaudited six-months consolidated statement of financial position of the Group;
19
(bb) excluding any sums set aside for future taxation; and
(cc) deducting:
(I)
an amount equal to any distribution by any member of the Group out of profits earned prior to
the date of the latest audited consolidated statement of financial position or, as the case may
be, unaudited six-months consolidated statement of financial position of the Group and which
have been declared, recommended or made since that date except so far as provided for in such
statement of financial position and/or paid or due to be paid to members of the Group;
(II) any amounts attributable to minority interests;
(III) all goodwill and other intangible assets;
(IV) any debit balances on consolidated profit and loss account; and
(V) any negative amount attributable to a revaluation of assets on a consolidated basis since the
date of the latest audited consolidated statement of financial position or, as the case may be,
unaudited six-months statement of financial position of the Group;
(4) “Consolidated Secured Debt” means, at any particular time, the portion of Consolidated Total Debt
encumbered by any security interest over any asset of the Group;
(5) “Consolidated Total Assets” means, at any particular time, the consolidated amount of the book values
of all the assets of the Group, determined as assets in accordance with generally accepted accounting
principles or standards in Singapore as shown in the then latest audited full year consolidated statement
of financial position or, as the case may be, unaudited six-months consolidated statement of financial
position of the Group;
(6) “Consolidated Total Debt” means, at any particular time, in relation to the Group, an amount
(expressed in Renminbi) (excluding accrued expenses and trade payables) as shown in the then latest
audited full year consolidated statement of financial position or, as the case may be, unaudited sixmonths consolidated statement of financial position of the Group, in accordance with generally accepted
accounting principles or standards in Singapore, equal to the aggregate of:
(A) bank overdrafts, bank borrowings and all other indebtedness of the Group (excluding indebtedness
incurred in the ordinary course of business and indebtedness referred to in paragraph (C) below);
(B) the liabilities of the Issuer under the Trust Deed or the Notes and the principal amount of any notes,
bonds or debentures of any member of the Group whether issued for cash or a consideration other
than cash;
(C) indebtedness of the Group representing the deferred purchase price of assets or services (other than
goods or services obtained on normal commercial terms in the ordinary course of trading); and
(D) any redeemable preference shares issued by any member of the Group and which is regarded by
generally accepted accounting principles or standards in Singapore as debt or other liability of the
Group,
where such aggregate amount falls to be calculated, no amount shall be taken into account more than
once in the same calculation, and, if and to the extent any of the preceding items would appear as a
liability upon the consolidated statement of financial position of the Group; and
(7) “Test Period” means each period of two consecutive financial half-years ending on the last day of each
financial half-year of the Group.
(c) Non-Disposal Covenant
The Issuer has covenanted with the Trustee in the Trust Deed that so long as any of the Notes remain
outstanding, it will not, and will ensure that none of its Principal Subsidiaries (other than a Listed
Subsidiary) will (whether by a single transaction or number of related or unrelated transactions and whether
at one time or over a period of time) sell, transfer, lease out, lend or otherwise dispose of (A) all or
substantially all of its assets or (B) any part of its assets which, either alone or when aggregated with all
other disposals required to be taken into account under Clause 15.1.28 of the Trust Deed, is substantial in
relation to its assets or those of itself and its subsidiaries taken as a whole or the disposal of which (either
alone or when so aggregated) would have a material adverse effect on it and its subsidiaries, taken as a
whole. The following disposals shall not be taken into account:
(i) disposals in the ordinary course of business;
20
(ii) any disposal by the Issuer or by a Principal Subsidiary to the Issuer or to any other Principal Subsidiary
(or to a subsidiary which becomes a Principal Subsidiary after such disposal and shall continue to be a
Principal Subsidiary following the date of issue of the first audited consolidated accounts of the Group
prepared as at a date later than the date of such disposal);
(iii) any disposal of assets which are obsolete, excess or no longer required for the purpose of its business;
and
(iv) any disposal approved by the Noteholders by way of an Extraordinary Resolution.
(d) Accounts
outstanding, it shall send to the Trustee and make available on its website or on the website administered by
the SGX-ST:
(i) as soon as the same are published, but in any event no later than 135 days after the end of each financial
year, copies of the audited consolidated accounts of the Group prepared in accordance with generally
accepted accounting principles and practices in force in Singapore or IFRS consistently applied (except
as otherwise stated in such accounts or the notes thereto) and a copy of the report of the Issuer’s auditors
thereon; and
(ii) as soon as the same are published, but in any event no later than 105 days after the end of each financial
half-year copies of the unaudited half-yearly consolidated accounts of the Group.
(e) Dividend Restriction
outstanding, it shall not pay any dividend in cash, reduce its capital or make any other cash distribution to its
shareholders unless:
(i) the aggregate of such dividend or distribution paid in a financial year will not at any time be more than
30 per cent. of the consolidated annual profits of the Group for the immediately preceding financial
year; and
(ii) no Event of Default has occurred and is unwaived and no Event of Default shall occur as a consequence
of the payment of such dividend or distribution.
5.
(I) Interest on Fixed Rate Notes
(a) Interest Rate and Accrual
Each Fixed Rate Note bears interest on its Calculation Amount from the Interest Commencement Date
in respect thereof and as shown on the face of such Note at the rate per annum (expressed as a
percentage) equal to the Interest Rate shown on the face of such Note payable in arrear on each Interest
Payment Date or Interest Payment Dates shown on the face of such Note in each year and on the
Maturity Date shown on the face of such Note if that date does not fall on an Interest Payment Date.
The first payment of interest will be made on the Interest Payment Date next following the Interest
Commencement Date (and if the Interest Commencement Date is not an Interest Payment Date, will
amount to the Initial Broken Amount shown on the face of such Note), unless the Maturity Date falls
before the date on which the first payment of interest would otherwise be due. If the Maturity Date is
not an Interest Payment Date, interest from the preceding Interest Payment Date (or from the Interest
Commencement Date, as the case may be) to the Maturity Date will amount to the Final Broken
Amount shown on the face of the Note.
Interest will cease to accrue on each Fixed Rate Note from the due date for redemption thereof unless,
upon due presentation and subject to the provisions of the Trust Deed, payment of the Redemption
Amount shown on the face of the Note is improperly withheld or refused, in which event interest at such
rate will continue to accrue (as well after as before judgment) at the rate and in the manner provided in
this Condition 5(I) to the Relevant Date (as defined in Condition 8).
(b) Calculations
In the case of a Fixed Rate Note, interest in respect of a period of less than one year will be calculated
on the Day Count Fraction shown on the face of the Note. The amount of interest payable per
Calculation Amount in respect of any Note shall be calculated by multiplying the product of the Interest
Rate and the Calculation Amount, by the Day Count Fraction shown on the Note and rounding the
resultant figure to the nearest sub-unit of the Relevant Currency (with halves rounded up).
21
(II) Interest on Floating Rate Notes or Variable Rate Notes
(a) Interest Payment Dates
Each Floating Rate Note or Variable Rate Note bears interest on its Calculation Amount from the
Interest Commencement Date in respect thereof and as shown on the face of such Note, and such
interest will be payable in arrear on each interest payment date (“Interest Payment Date”). Such
Interest Payment Date(s) is/are either shown hereon as Specified Interest Payment Date(s) or, if no
Specified Interest Payment Date(s) is/are shown hereon, Interest Payment Date shall mean each date
which (save as mentioned in these Conditions) falls the number of months specified as the Interest
Period on the face of the Note (the “Specified Number of Months”) after the preceding Interest
Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date
(and which corresponds numerically with such preceding Interest Payment Date or the Interest
Commencement Date, as the case may be), provided that the Agreed Yield (as defined in
Condition 5(II)(c)) in respect of any Variable Rate Note for any Interest Period (as defined below)
relating to that Variable Rate Note shall be payable on the first day of that Interest Period. If any Interest
Payment Date referred to in these Conditions that is specified to be subject to adjustment in accordance
with a Business Day Convention would otherwise fall on a day that is not a business day (as defined
below), then if the Business Day Convention specified is (1) the Floating Rate Business Day
Convention, such date shall be postponed to the next day which is a business day unless it would
thereby fall into the next calendar month, in which event (i) such date shall be brought forward to the
immediately preceding business day and (ii) each subsequent such date shall be the last business day of
the month in which such date would have fallen had it not been subject to adjustment, (2) the Following
Business Day Convention, such date shall be postponed to the next day that is a business day, (3) the
Modified Following Business Day Convention, such date shall be postponed to the next day that is a
business day unless it would thereby fall into the next calendar month, in which event such date shall be
brought forward to the immediately preceding business day or (4) the Preceding Business Day
Convention, such date shall be brought forward to the immediately preceding business day.
The period beginning on the Interest Commencement Date and ending on the first Interest Payment Date
and each successive period beginning on an Interest Payment Date and ending on the next succeeding
Interest Payment Date is herein called an “Interest Period”.
Interest will cease to accrue on each Floating Rate Note or Variable Rate Note from the due date for
redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed,
payment of the Redemption Amount is improperly withheld or refused, in which event interest will
continue to accrue (as well after as before judgment) at the rate and in the manner provided in this
Condition 5(II) to the Relevant Date.
(b) Rate of Interest – Floating Rate Notes
(i) Each Floating Rate Note bears interest at a floating rate determined by reference to a Benchmark as
stated on the face of such Floating Rate Note, being (in the case of Notes which are denominated in
Singapore dollars) SIBOR (in which case such Note will be a SIBOR Note) or Swap Rate (in which
case such Note will be a Swap Rate Note) or in any other case (or in the case of Notes which are
denominated in a currency other than Singapore dollars) such other Benchmark as is set out on the
face of such Note.
Such floating rate may be adjusted by adding or subtracting the Spread (if any) stated on the face of
such Note. The “Spread” is the percentage rate per annum specified on the face of such Note as
being applicable to the rate of interest for such Note. The rate of interest so calculated shall be
subject to Condition 5(V)(a) below.
The rate of interest payable in respect of a Floating Rate Note from time to time is referred to in
these Conditions as the “Rate of Interest”.
(ii) The Rate of Interest payable from time to time in respect of each Floating Rate Note will be
determined by the Calculation Agent on the basis of the following provisions:
(1) in the case of Floating Rate Notes which are SIBOR Notes:
(A) the Calculation Agent will, at or about the Relevant Time on the relevant Interest
Determination Date in respect of each Interest Period, determine the Rate of Interest for
such Interest Period which shall be the offered rate for deposits in Singapore dollars for a
period equal to the duration of such Interest Period which appears on the Reuters Screen
22
ABSIRFIX01 Page under the caption “ABS SIBOR FIX – SIBOR AND SWAP OFFER
RATES – RATES AT 11:00 HRS SINGAPORE TIME” and under the column headed
“SGD SIBOR” (or such other replacement page thereof for the purpose of displaying
SIBOR or such other Screen Page as may be provided hereon) and as adjusted by the
Spread (if any);
(B) if no such rate appears on the Reuters Screen ABSIRFIX01 Page under the column headed
“SGD SIBOR” (or such other replacement page thereof or if no rate appears on such other
Screen Page as may be provided hereon) or if the Reuters Screen ABSIRFIX01 Page (or
such other replacement page thereof or such other Screen Page as may be provided hereon)
is unavailable for any reason, the Calculation Agent will request the principal Singapore
offices of each of the Reference Banks to provide the Calculation Agent with the rate at
which deposits in Singapore dollars are offered by it at approximately the Relevant Time
on the Interest Determination Date to prime banks in the Singapore interbank market for a
period equivalent to the duration of such Interest Period commencing on such Interest
Payment Date in an amount comparable to the aggregate principal amount of the relevant
Floating Rate Notes. The Rate of Interest for such Interest Period shall be the arithmetic
mean (rounded up, if necessary, to four decimal places) of such offered quotations and as
adjusted by the Spread (if any), as determined by the Calculation Agent;
(C) if on any Interest Determination Date two but not all the Reference Banks provide the
Calculation Agent with such quotations, the Rate of Interest for the relevant Interest Period
shall be determined in accordance with (B) above on the basis of the quotations of those
Reference Banks providing such quotations; and
(D) if on any Interest Determination Date one only or none of the Reference Banks provides
the Calculation Agent with such quotations, the Rate of Interest for the relevant Interest
Period shall be the rate per annum which the Calculation Agent determines to be the
arithmetic mean (rounded up, if necessary, to four decimal places) of the rates quoted by
the Reference Banks or those of them (being at least two in number) to the Calculation
Agent at or about the Relevant Time on such Interest Determination Date as being their
cost (including the cost occasioned by or attributable to complying with reserves, liquidity,
deposit or other requirements imposed on them by any relevant authority or authorities) of
funding, for the relevant Interest Period, an amount equal to the aggregate principal
amount of the relevant Floating Rate Notes for such Interest Period by whatever means
they determine to be most appropriate and as adjusted by the Spread (if any) or if on such
Interest Determination Date one only or none of the Reference Banks provides the
Calculation Agent with such quotation, the Rate of Interest for the relevant Interest Period
shall be the rate per annum which the Calculation Agent determines to be the arithmetic
mean (rounded up, if necessary, to four decimal places) of the prime lending rates for
Singapore dollars quoted by the Reference Banks at or about the Relevant Time on such
Interest Determination Date and as adjusted by the Spread (if any);
(2) in the case of Floating Rate Notes which are Swap Rate Notes:
(A) the Calculation Agent will, at or about the Relevant Time on the relevant Interest
Determination Date in respect of each Interest Period, determine the Rate of Interest for
such Interest Period as being the rate which appears on the Reuters Screen ABSFIX01
Page under the caption “SGD SOR rates as of 11:00hrs London Time” under the column
headed “SGD SOR” (or such replacement page thereof for the purpose of displaying the
swap rates of leading reference banks) at or about the Relevant Time on such Interest
Determination Date and for a period equal to the duration of such Interest Period and as
adjusted by the Spread (if any);
(B) if on any Interest Determination Date no such rate is quoted on Reuters Screen ABSFIX01
Page (or such other replacement page as aforesaid) or Reuters Screen ABSFIX01 Page (or
such other replacement page as aforesaid) is unavailable for any reason, the Calculation
Agent will determine the Rate of Interest for such Interest Period as being the rate (or, if
there is more than one rate which is published, the arithmetic mean of those rates (rounded
up, if necessary, to the nearest 1/16 per cent.)) for a period equal to the duration of such
Interest Period published by a recognised industry body where such rate is widely used
(after taking into account the industry practice at that time), or by such other relevant
authority as the Calculation Agent and Issuer may agree; and
23
(C) if on any Interest Determination Date the Calculation Agent is otherwise unable to determine
the Rate of Interest under paragraph (b)(ii)(2)(A) and or if no agreement on the relevant
authority is reached between the Calculation Agent and the Issuer under paragraph
(b)(ii)(2)(B) above, the Rate of Interest shall be determined by the Calculation Agent to be
the rate per annum equal to the arithmetic mean (rounded up, if necessary, to four decimal
places) of the rates quoted by the Singapore offices of the Reference Banks or those of them
(being at least two in number) to the Calculation Agent at or about 11.00 a.m. (Singapore
time) on the first business day following such Interest Determination Date as being their cost
(including the cost occasioned by or attributable to complying with reserves, liquidity,
deposit or other requirements imposed on them by any relevant authority or authorities) of
funding, for the relevant Interest Period, an amount equal to the aggregate principal amount
of the relevant Floating Rate Notes for such Interest Period by whatever means they
determine to be most appropriate and as adjusted by the Spread (if any), or if on such day one
only or none of the Singapore offices of the Reference Banks provides the Calculation Agent
with such quotation, the Rate of Interest for the relevant Interest Period shall be the rate per
annum equal to the arithmetic mean (rounded up, if necessary, to four decimal places) of the
prime lending rates for Singapore dollars quoted by the Singapore offices of the Reference
Banks at or about 11.00 a.m. (Singapore time) on such Interest Determination Date and as
adjusted by the Spread (if any); and
(3) in the case of Floating Rate Notes which are not SIBOR Notes or Swap Rate Notes or which
are denominated in a currency other than Singapore dollars, the Calculation Agent will
determine the Rate of Interest in respect of any Interest Period at or about the Relevant Time on
the Interest Determination Date in respect of such Interest Period as follows:
(A) if the Primary Source (as defined below) for the Floating Rate is a Screen Page (as defined
below), subject as provided below, the Rate of Interest in respect of such Interest Period
shall be:
(aa) the Relevant Rate (as defined below) (where such Relevant Rate on such Screen Page
is a composite quotation or is customarily supplied by one entity); or
(bb) the arithmetic mean of the Relevant Rates of the persons whose Relevant Rates appear
on that Screen Page, in each case appearing on such Screen Page at the Relevant Time
on the Interest Determination Date,
and as adjusted by the Spread (if any);
(B) if the Primary Source for the Floating Rate is Reference Banks or if paragraph
(b)(ii)(3)(A)(aa) applies and no Relevant Rate appears on the Screen Page at the Relevant
Time on the Interest Determination Date or if paragraph (b)(ii)(3)(A)(bb) applies and
fewer than two Relevant Rates appear on the Screen Page at the Relevant Time on the
Interest Determination Date, subject as provided below, the Rate of Interest shall be the
rate per annum which the Calculation Agent determines to be the arithmetic mean
(rounded up, if necessary, to four decimal places) of the Relevant Rates that each of the
Reference Banks is quoting to leading banks in the Relevant Financial Centre (as defined
below) at the Relevant Time on the Interest Determination Date and as adjusted by the
Spread (if any); and
(C) if paragraph (b)(ii)(3)(B) applies and the Calculation Agent determines that fewer than two
Reference Banks are so quoting Relevant Rates, the Rate of Interest shall be the Rate of
Interest determined on the previous Interest Determination Date.
(iii) On the last day of each Interest Period, the Issuer will pay interest on each Floating Rate Note to
which such Interest Period relates at the Rate of Interest for such Interest Period.
(iv) For the avoidance of doubt, in the event that the Rate of Interest in relation to any Interest Period is
less than zero, the Rate of Interest in relation to such Interest Period shall be equal to zero.
(c) Rate of Interest – Variable Rate Notes
(i) Each Variable Rate Note bears interest at a variable rate determined in accordance with the provisions
of this paragraph (c). The interest payable in respect of a Variable Rate Note on the first day of an
Interest Period relating to that Variable Rate Note is referred to in these Conditions as the “Agreed
Yield” and the rate of interest payable in respect of a Variable Rate Note on the last day of an Interest
Period relating to that Variable Rate Note is referred to in these Conditions as the “Rate of Interest”.
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(ii) The Agreed Yield or, as the case may be, the Rate of Interest payable from time to time in respect
of each Variable Rate Note for each Interest Period shall, subject as referred to in paragraph (c)(iv)
below, be determined as follows:
(1) not earlier than 9.00 a.m. (Singapore time) on the ninth business day nor later than 3.00 p.m.
(Singapore time) on the third business day prior to the commencement of each Interest Period, the
Issuer and the Relevant Dealer (as defined below) shall endeavour to agree on the following:
(A) whether interest in respect of such Variable Rate Note is to be paid on the first day or the
last day of such Interest Period;
(B) if interest in respect of such Variable Rate Note is agreed between the Issuer and the
Relevant Dealer to be paid on the first day of such Interest Period, an Agreed Yield in
respect of such Variable Rate Note for such Interest Period (and, in the event of the Issuer
and the Relevant Dealer so agreeing on such Agreed Yield, the Interest Amount (as
defined below) for such Variable Rate Note for such Interest Period shall be zero); and
(C) if interest in respect of such Variable Rate Note is agreed between the Issuer and the
Relevant Dealer to be paid on the last day of such Interest Period, a Rate of Interest in
respect of such Variable Rate Note for such Interest Period (an “Agreed Rate”) and, in the
event of the Issuer and the Relevant Dealer so agreeing on an Agreed Rate, such Agreed
Rate shall be the Rate of Interest for such Variable Rate Note for such Interest Period; and
(2) if the Issuer and the Relevant Dealer shall not have agreed either an Agreed Yield or an Agreed
Rate in respect of such Variable Rate Note for such Interest Period by 3.00 p.m. (Singapore
time) on the third business day prior to the commencement of such Interest Period, or if there
shall be no Relevant Dealer during the period for agreement referred to in (1) above, the Rate
of Interest for such Variable Rate Note for such Interest Period shall automatically be the rate
per annum equal to the Fall Back Rate (as defined below) for such Interest Period.
(iii) The Issuer has undertaken to the Principal Paying Agent and the Calculation Agent that it will as
soon as possible after the Agreed Yield or, as the case may be, the Agreed Rate in respect of any
Variable Rate Note is determined but not later than 10.30 a.m. (Singapore time) on the next
following business day:
(1) notify or cause the Relevant Dealer to notify the Principal Paying Agent and the relevant
Calculation Agent of the Agreed Yield or, as the case may be, the Agreed Rate for such
Variable Rate Note for such Interest Period; and
(2) cause such Agreed Yield or, as the case may be, Agreed Rate for such Variable Rate Note to be
notified by the Principal Paying Agent to the relevant Noteholder at its request.
(iv) For the purposes of sub-paragraph (ii) above, the Rate of Interest for each Interest Period for which
there is neither an Agreed Yield nor Agreed Rate in respect of any Variable Rate Note or no
Relevant Dealer in respect of the Variable Rate Note(s) shall be the rate (the “Fall Back Rate”)
determined by reference to a Benchmark as stated on the face of such Variable Rate Note(s), being
(in the case of Variable Rate Notes which are denominated in Singapore dollars) SIBOR (in which
case such Variable Rate Note(s) will be SIBOR Note(s)) or Swap Rate (in which case such Variable
Rate Note(s) will be Swap Rate Note(s)) or (in any other case or in the case of Variable Rate Notes
which are denominated in a currency other than Singapore dollars) such other Benchmark as is set
out on the face of such Variable Rate Note(s).
Such rate may be adjusted by adding or subtracting the Spread (if any) stated on the face of such
Variable Rate Note. The “Spread” is the percentage rate per annum specified on the face of such
Variable Rate Note as being applicable to the rate of interest for such Variable Rate Note. The rate
of interest so calculated shall be subject to Condition 5(V)(a) below.
The Fall Back Rate payable from time to time in respect of each Variable Rate Note will be
determined by the Calculation Agent in accordance with the provisions of Condition 5(II)(b)(ii) above
(mutatis mutandis) and references therein to “Rate of Interest” shall mean “Fall Back Rate”.
(v) If interest is payable in respect of a Variable Rate Note on the first day of an Interest Period relating
to such Variable Rate Note, the Issuer will pay the Agreed Yield applicable to such Variable Rate
Note for such Interest Period on the first day of such Interest Period. If interest is payable in respect
of a Variable Rate Note on the last day of an Interest Period relating to such Variable Rate Note, the
Issuer will pay the Interest Amount for such Variable Rate Note for such Interest Period on the last
day of such Interest Period.
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(vi) For the avoidance of doubt, in the event that the Rate of Interest in relation to any Interest Period is
less than zero, the Rate of Interest in relation to such Interest Period shall be equal to zero.
(d) Definitions
As used in these Conditions:
“Benchmark” means the rate specified as such in the applicable Pricing Supplement;
“business day” means, in respect of each Note:
(i) a day (other than a Saturday, Sunday or gazetted public holiday) on which Euroclear, Clearstream,
Luxembourg and the Depository, as applicable, are operating;
(ii) a day (other than a Saturday, Sunday or gazetted public holiday) on which banks and foreign
exchange markets are open for general business in the country of the Principal Paying Agent’s
specified office; and
(iii) if a payment is to be made on that day:
(1) (in the case of Notes denominated in Singapore dollars) a day (other than a Saturday, Sunday
or gazetted public holiday) on which banks and foreign exchange markets are open for general
business in Singapore;
(2) (in the case of Notes denominated in Euros) a day (other than a Saturday, Sunday or gazetted
public holiday) on which the TARGET System is open for settlement in Euros;
(3) (in the case of Notes denominated in Renminbi):
(A) if cleared through the Depository, a day (other than a Saturday, Sunday or gazetted public
holiday) on which banks and foreign exchange markets are open for business and
settlement of Renminbi payments in Singapore and Hong Kong; and
(B) if cleared through Euroclear and Clearstream, Luxembourg, a day (other than a Saturday,
Sunday or gazetted public holiday) on which commercial banks and foreign exchange
markets settle payments in Hong Kong and London; and/or
(4) (in the case of Notes denominated in a currency other than Singapore dollars, Euros and
Renminbi) a day (other than a Saturday, Sunday or gazetted public holiday) on which banks
and foreign exchange markets are open for general business in Singapore and the principal
financial centre for that currency;
“Calculation Agent” means in relation to any Series of Notes, the person appointed as the calculation
agent pursuant to the terms of the Agency Agreement or, as the case may be, the Calculation Agency
Agreement as specified in the applicable Pricing Supplement;
“Calculation Amount” means the amount specified as such on the face of any Note, or if no such
amount is so specified, the Denomination Amount of such Note as shown on the face thereof;
“Euro” means the currency of the member states of the European Union that adopt the single currency
in accordance with the Treaty establishing the European Community, as amended from time to time;
“Interest Commencement Date” means the Issue Date or such other date as may be specified as the
Interest Commencement Date on the face of such Note;
“Interest Determination Date” means, in respect of any Interest Period, that number of business days
prior thereto as is set out in the applicable Pricing Supplement or on the face of the relevant Note;
“Primary Source” means the Screen Page specified as such in the applicable Pricing Supplement and
(in the case of any Screen Page provided by any information service other than the Reuters Monitor
Money Rates Service (“Reuters”)) agreed to by the Calculation Agent;
“Reference Banks” means the institutions specified as such in the applicable Pricing Supplement or, if
none, three major banks selected by the Calculation Agent in the interbank market that is most closely
connected with the Benchmark;
“Relevant Currency” means the currency in which the Notes are denominated;
“Relevant Dealer” means, in respect of any Variable Rate Note, the Dealer party to the Programme
Agreement referred to in the Agency Agreement with whom the Issuer has concluded or is negotiating
an agreement for the issue of such Variable Rate Note pursuant to the Programme Agreement;
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“Relevant Financial Centre” means, in the case of interest to be determined on an Interest
Determination Date with respect to any Floating Rate Note or Variable Rate Note, the financial centre
with which the relevant Benchmark is most closely connected or, if none is so connected, Singapore;
“Relevant Rate” means the Benchmark for a Calculation Amount of the Relevant Currency for a period
(if applicable or appropriate to the Benchmark) equal to the relevant Interest Period;
“Relevant Time” means, with respect to any Interest Determination Date, the local time in the Relevant
Financial Centre at which it is customary to determine bid and offered rates in respect of deposits in the
Relevant Currency in the interbank market in the Relevant Financial Centre;
“Renminbi” or “RMB” means the lawful currency of the People’s Republic of China;
“Screen Page” means such page, section, caption, column or other part of a particular information
service (including, but not limited to, the Bloomberg agency and Reuters) as may be specified hereon
for the purpose of providing the Benchmark, or such other page, section, caption, column or other part
as may replace it on that information service or on such other information service, in each case as may
be nominated by the person or organisation providing or sponsoring the information appearing there for
the purpose of displaying rates or prices comparable to the Benchmark; and
“TARGET System” means the Trans-European Automated Real-Time Gross Settlement Express
Transfer (known as TARGET 2) System which was launched on 19 November 2007 or any successor
thereto.
(III) Interest on Hybrid Notes
(a) Interest Rate and Accrual
Each Hybrid Note bears interest on its Calculation Amount from the Interest Commencement Date in
respect thereof and as shown on the face of such Note.
(b) Fixed Rate Period
(i) In respect of the Fixed Rate Period shown on the face of such Note, each Hybrid Note bears interest
on its Calculation Amount from the first day of the Fixed Rate Period at the rate per annum
(expressed as a percentage) equal to the Interest Rate shown on the face of such Note payable in
arrear on each Interest Payment Date or Interest Payment Dates shown on the face of the Note in
each year and on the last day of the Fixed Rate Period if that date does not fall on an Interest
Payment Date.
(ii) The first payment of interest will be made on the Interest Payment Date next following the first day
of the Fixed Rate Period (and if the first day of the Fixed Rate Period is not an Interest Payment
Date, will amount to the Initial Broken Amount shown on the face of such Note), unless the last day
of the Fixed Rate Period falls before the date on which the first payment of interest would otherwise
be due. If the last day of the Fixed Rate Period is not an Interest Payment Date, interest from the
preceding Interest Payment Date (or from the first day of the Fixed Rate Period, as the case may be)
to the last day of the Fixed Rate Period will amount to the Final Broken Amount shown on the face
of the Note.
(iii) Where the due date of redemption of any Hybrid Note falls within the Fixed Rate Period, interest
will cease to accrue on the Note from the due date for redemption thereof unless, upon due
presentation and subject to the provisions of the Trust Deed, payment of principal (or Redemption
Amount, as the case may be) is improperly withheld or refused, in which event interest at such rate
will continue to accrue (as well after as before judgment) at the rate and in the manner provided in
this Condition 5(III) and the Agency Agreement to the Relevant Date.
(iv) In the case of a Hybrid Note, interest in respect of a period of less than one year will be calculated
on the Day Count Fraction shown on the face of the Note during the Fixed Rate Period.
(c) Floating Rate Period
(i) In respect of the Floating Rate Period shown on the face of such Note, each Hybrid Note bears
interest on its Calculation Amount from the first day of the Floating Rate Period, and such interest
will be payable in arrear on each interest payment date (“Interest Payment Date”). Such Interest
Payment Date(s) is/are either shown hereon as Specified Interest Payment Date(s) or, if no
Specified Interest Payment Date(s) is/are shown hereon, Interest Payment Date shall mean each
date which (save as mentioned in these Conditions) falls the number of months specified as the
Interest Period on the face of the Note (the “Specified Number of Months”) after the preceding
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Interest Payment Date or, in the case of the first Interest Payment Date, after the first day of the
Floating Rate Period (and which corresponds numerically with such preceding Interest Payment
Date or the first day of the Floating Rate Period, as the case may be). If any Interest Payment Date
referred to in these Conditions that is specified to be subject to adjustment in accordance with a
Business Day Convention would otherwise fall on a day that is not a business day, then if the
Business Day Convention specified is (1) the Floating Rate Business Day Convention, such date
shall be postponed to the next day which is a business day unless it would thereby fall into the next
calendar month, in which event (i) such date shall be brought forward to the immediately preceding
business day and (ii) each subsequent such date shall be the last business day of the month in which
such date would have fallen had it not been subject to adjustment, (2) the Following Business Day
Convention, such date shall be postponed to the next day that is a business day, (3) the Modified
Following Business Day Convention, such date shall be postponed to the next day that is a business
day unless it would thereby fall into the next calendar month, in which event such date shall be
brought forward to the immediately preceding business day or (4) the Preceding Business Day
Convention, such date shall be brought forward to the immediately preceding business day.
(ii) The period beginning on the first day of the Floating Rate Period and ending on the first Interest
Payment Date and each successive period beginning on an Interest Payment Date and ending on the
next succeeding Interest Payment Date is herein called an “Interest Period”.
(iii) Where the due date of redemption of any Hybrid Note falls within the Floating Rate Period, interest
will cease to accrue on the Note from the due date for redemption thereof unless, upon due
presentation thereof, payment of principal (or Redemption Amount, as the case may be) is
improperly withheld or refused, in which event interest will continue to accrue (as well after as
before judgment) at the rate and in the manner provided in this Condition 4(III) and the Agency
Agreement to the Relevant Date.
(iv) The provisions of Condition 5(II)(b) shall apply to each Hybrid Note during the Floating Rate
Period as though references therein to Floating Rate Notes are references to Hybrid Notes.
(IV) Zero Coupon Notes
Where a Note the Interest Basis of which is specified to be Zero Coupon is repayable prior to the
Maturity Date and is not paid when due, the amount due and payable prior to the Maturity Date shall be
the Early Redemption Amount of such Note (determined in accordance with Condition 6(h)). As from
the Maturity Date, the rate of interest for any overdue principal of such a Note shall be a rate per annum
(expressed as a percentage) equal to the Amortisation Yield (as defined in Condition 6(h)).
(V) Calculations
(a) Determination of Rate of Interest and Calculation of Interest Amounts
The Calculation Agent will, as soon as practicable after the Relevant Time on each Interest
Determination Date determine the Rate of Interest and calculate the amount of interest payable (the
“Interest Amounts”) in respect of each Calculation Amount of the relevant Floating Rate Notes,
Variable Rate Notes or (where applicable) Hybrid Notes for the relevant Interest Period. The amount of
interest payable in respect of any Floating Rate Note, Variable Rate Note or (where applicable) Hybrid
Note shall be calculated by multiplying the product of the Rate of Interest and the Calculation Amount,
by the Day Count Fraction shown on the Note and rounding the resultant figure to the nearest sub-unit
of the Relevant Currency (with halves rounded up). The determination of any rate or amount, the
obtaining of each quotation and the making of each determination or calculation by the Calculation
Agent shall (in the absence of manifest error) be final and binding upon all parties.
(b) Notification
The Calculation Agent will cause the Rate of Interest and the Interest Amounts for each Interest Period
and the relevant Interest Payment Date to be notified to the Principal Paying Agent, the Trustee and the
Issuer as soon as possible after their determination but in no event later than the fourth business day
thereafter. In the case of Floating Rate Notes, the Calculation Agent will also cause the Rate of Interest
and the Interest Amounts for each Interest Period and the relevant Interest Payment Date to be notified
to Noteholders in accordance with Condition 16 as soon as possible after their determination. The
Interest Amounts and the Interest Payment Date so notified may subsequently be amended (or
appropriate alternative arrangements made by way of adjustment) without notice in the event of an
extension or shortening of the Interest Period by reason of any Interest Payment Date not being a
business day. If the Floating Rate Notes, Variable Rate Notes or, as the case may be, Hybrid Notes
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become due and payable under Condition 10, the Rate of Interest and Interest Amounts payable in
respect of the Floating Rate Notes, Variable Rate Notes or, as the case may be, Hybrid Notes shall
nevertheless continue to be calculated as previously in accordance with this Condition but no
publication of the Rate of Interest and Interest Amounts need to be made unless the Trustee requires
otherwise.
(c) Determination or Calculation by the Trustee
If the Calculation Agent does not at any material time determine or calculate the Rate of Interest for an
Interest Period or any Interest Amount, the Trustee shall do so. In doing so, the Trustee shall apply the
provisions of this Condition, with any necessary consequential amendments, to the extent that, in its
opinion, it can do so, and, in all other respects, it shall do so in such manner as it shall deem fair and
reasonable in all the circumstances.
(d) Calculation Agent and Reference Banks
The Issuer will procure that, so long as any Floating Rate Note, Variable Rate Note or Hybrid Note
remains outstanding, there shall at all times be three Reference Banks (or such other number as may be
required) and, so long as any RMB Note (as defined below), Floating Rate Note, Variable Rate Note,
Hybrid Note or Zero Coupon Note remains outstanding, there shall at all times be a Calculation Agent. If
any Reference Bank (acting through its relevant office) is unable or unwilling to continue to act as a
Reference Bank or the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent
fails duly to establish the Rate of Interest for any Interest Period or to calculate the Interest Amounts, the
Issuer will appoint another bank with an office in the Relevant Financial Centre to act as such in its place.
The Calculation Agent may not resign from its duties without a successor having been appointed as
aforesaid.
6.
Redemption and Purchase
(a) Final Redemption
Unless previously redeemed or purchased and cancelled as provided below, this Note will be redeemed at its
Redemption Amount on the Maturity Date shown on its face (if this Note is shown on its face to be a Fixed
Rate Note, Hybrid Note (during the Fixed Rate Period) or Zero Coupon Note) or on the Interest Payment
Date falling in the Redemption Month shown on its face (if this Note is shown on its face to be a Floating
Rate Note, Variable Rate Note or Hybrid Note (during the Floating Rate Period)).
(b) Purchase at the Option of Issuer
If so provided hereon, the Issuer shall have the option to purchase all or any of the Fixed Rate Notes,
Floating Rate Notes, Variable Rate Notes or Hybrid Notes at their Redemption Amount on any date on
which interest is due to be paid on such Notes and the Noteholders shall be bound to sell such Notes to the
Issuer accordingly. To exercise such option, the Issuer shall give irrevocable notice to the Noteholders
within the Issuer’s Purchase Option Period shown on the face hereof. Such Notes may be held, resold or
surrendered to the Principal Paying Agent for cancellation. The Notes so purchased, while held by or on
behalf of the Issuer, shall not entitle the holder to vote at any meetings of the Noteholders and shall not be
deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the
purposes of Conditions 10, 11 and 12.
In the case of a purchase of some only of the Notes, the notice to Noteholders shall also contain the
certificate numbers of the Bearer Notes or, in the case of Registered Notes, shall specify the principal
amount of Registered Notes drawn and the holder(s) of such Registered Notes, to be purchased, which shall
have been drawn by or on behalf of the Issuer in such place and in such manner as may be agreed between
the Issuer and the Trustee, subject to compliance with any applicable laws. So long as the Notes are listed on
the Singapore Exchange Securities Trading Limited (the “SGX-ST”) or any other or further stock exchange
on which the Notes are listed and which is for the time being approved for the purposes of the Trust Deed by
the Trustee (a “Stock Exchange”), the Issuer shall comply with the rules of such Stock Exchange in relation
to the publication of any purchase of such Notes.
(c) Purchase at the Option of Noteholders
(i) If so provided hereon, each Noteholder shall have the option to have all or any of his Variable Rate
Notes purchased by the Issuer at their Redemption Amount on any Interest Payment Date and the Issuer
will purchase such Variable Rate Notes accordingly. To exercise such option, a Noteholder shall deposit
(in the case of Bearer Notes) such Variable Rate Notes to be purchased (together with all unmatured
Coupons and unexchanged Talons) with the Principal Paying Agent or any other Paying Agent at its
29
specified office or (in the case of Registered Notes) the Certificate representing such Variable Rate
Note(s) to be purchased with the Registrar or any Transfer Agent at its specified office, together with a
duly completed option exercise notice in the form obtainable from the Principal Paying Agent, any
Paying Agent, the Registrar or any Transfer Agent (as applicable) within the Noteholders’ VRN
Purchase Option Period shown on the face hereof. Any Variable Rate Notes or Certificates representing
such Variable Rate Notes so deposited may not be withdrawn (except as provided in the Agency
Agreement) without the prior consent of the Issuer. Such Variable Rate Notes may be held, resold or
surrendered for cancellation, in the case of Bearer Notes, by surrendering each such Variable Rate Note
(together with all unmatured Coupons and unexchanged Talons) to the Principal Paying Agent and, in
the case of Registered Notes, by surrendering the Certificate representing such Variable Rate Notes to
the Registrar. The Variable Rate Notes so purchased, while held by or on behalf of the Issuer, shall not
entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding
for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of
Conditions 10, 11 and 12.
(ii) If so provided hereon, each Noteholder shall have the option to have all or any of his Fixed Rate Notes,
Floating Rate Notes or Hybrid Notes purchased by the Issuer at their Redemption Amount on any date
on which interest is due to be paid on such Notes and the Issuer will purchase such Notes accordingly.
To exercise such option, a Noteholder shall deposit (in the case of Bearer Notes) such Note to be
purchased (together with all unmatured Coupons and unexchanged Talons) with the Principal Paying
Agent or any other Paying Agent at its specified office or (in the case of Registered Notes) the
Certificate representing such Note(s) to be purchased with the Registrar or any Transfer Agent at its
specified office, together with a duly completed option exercise notice in the form obtainable from the
Principal Paying Agent, any Paying Agent, the Registrar or any Transfer Agent (as applicable) within
the Noteholders’ Purchase Option Period shown on the face hereof. Any Notes or Certificates so
deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior
consent of the Issuer. Such Notes may be held, resold or surrendered for cancellation, in the case of
Bearer Notes, by surrendering such Note (together with all unmatured Coupons and unexchanged
Talons) to the Principal Paying Agent and, in the case of Registered Notes, by surrendering the
Certificate representing such Notes to the Registrar. The Notes so purchased, while held by or on behalf
of the Issuer, shall not entitle the holder to vote at any meetings of the Noteholders and shall not be
deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for
the purposes of Conditions 10, 11 and 12.
(d) Redemption at the Option of the Issuer
If so provided hereon, the Issuer may, on giving irrevocable notice to the Noteholders falling within the
Issuer’s Redemption Option Period shown on the face hereof, redeem all or, if so provided, some of the
Notes at their Redemption Amount or integral multiples thereof and on the date or dates so provided. Any
such redemption of Notes shall be at their Redemption Amount, together with interest accrued to the date
fixed for redemption.
All Notes in respect of which any such notice is given shall be redeemed on the date specified in such notice
in accordance with this Condition.
In the case of a partial redemption of the Notes, the notice to Noteholders shall also contain the certificate
numbers of the Bearer Notes or, in the case of Registered Notes, shall specify the principal amount of
Registered Notes drawn and the holder(s) of such Registered Notes, to be redeemed, which shall have been
drawn by or on behalf of the Issuer in such place and in such manner as may be agreed between the Issuer
and the Trustee, subject to compliance with any applicable laws. So long as the Notes are listed on any Stock
Exchange, the Issuer shall comply with the rules of such Stock Exchange in relation to the publication of any
redemption of such Notes.
(e) Redemption at the Option of Noteholders
(i) If so provided hereon, the Issuer shall, at the option of the holder of any Note, redeem such Note on the
date or dates so provided at its Redemption Amount, together with interest accrued to the date fixed for
redemption. To exercise such option, the holder must deposit (in the case of Bearer Notes) such Note
(together with all unmatured Coupons and unexchanged Talons) with the Principal Paying Agent or any
other Paying Agent at its specified office or (in the case of Registered Notes) the Certificate
representing such Note(s) with the Registrar or any Transfer Agent at its specified office, together with a
duly completed option exercise notice (“Exercise Notice”) in the form obtainable from the Principal
Paying Agent, any other Paying Agent, the Registrar, any Transfer Agent or the Issuer (as applicable)
30
within the Noteholders’ Redemption Option Period shown on the face hereof. Any Note or Certificate so
deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior
consent of the Issuer.
(ii) If, for any reason, a Change of Control Event occurs, the Issuer will within seven days of such
occurrence give notice to the Noteholders of the occurrence of such event (the “Change of Control
Event Notice”) (provided that failure by the Issuer to give such notice shall not prejudice the
Noteholder of such option) and shall, at the option of the holder of any Note, redeem such Note at
101 per cent. of its principal amount, together with interest accrued to the date fixed for redemption, on
the date falling 60 days from the date of the Change of Control Event Notice (or if such date is not a
business day, on the next day which is a business day). To exercise such option, the holder must deposit
(in the case of Bearer Notes) such Note (together with all unmatured Coupons and unexchanged Talons)
with the Principal Paying Agent at its specified office, together with a duly completed option exercise
notice in the form obtainable from the Principal Paying Agent, any other Paying Agent, the Registrar,
any other Transfer Agent or the Issuer (as applicable), no later than 30 days from the date of the Change
of Control Event Notice. Any Note so deposited may not be withdrawn (except as provided in the
Agency Agreement) without the prior consent of the Issuer.
For the purposes of this Condition 6(e)(ii), a “Change of Control Event” occurs when Michelle Liem
Mei Fung, William Liem, Tan Enk Ee and their respective close family members, including their
spouses, children aged 18 and above and such child’s spouse, parent and parent in-law, sibling and such
sibling’s spouse, spouse’s sibling and child’s parent in-law cease to have in aggregate an interest
(whether directly or indirectly) of a majority of the voting rights of the Issuer’s issued and fully paid-up
capital.
(f) Redemption for Taxation Reasons
If so provided hereon, the Notes may be redeemed at the option of the Issuer in whole, but not in part, on any
Interest Payment Date or, if so specified hereon, at any time on giving not less than 30 nor more than 60
days’ notice to the Noteholders (which notice shall be irrevocable), at their Redemption Amount or (in the
case of Zero Coupon Notes) Early Redemption Amount (as defined in Condition 6(h) below) (together with
interest accrued to (but excluding) the date fixed for redemption), if (i) the Issuer has or will become obliged
to pay additional amounts as provided or referred to in Condition 8, or increase the payment of such
additional amounts as a result of any change in, or amendment to, the laws (or any regulations, rulings or
other administrative pronouncements promulgated thereunder) of Singapore, or any change in the
application or official interpretation of such laws, regulations, rulings or other administrative
pronouncements, which change or amendment is made public on or after the Issue Date or any other date
specified in the Pricing Supplement, and (ii) such obligations cannot be avoided by the Issuer taking
reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90
days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a
payment in respect of the Notes then due. At least 15 days prior to the publication of any notice of
redemption pursuant to this paragraph, the Issuer shall deliver to the Principal Paying Agent and the Trustee
a certificate signed by a duly authorised signatory of the Issuer stating that the Issuer is entitled to effect such
redemption and setting forth a statement of facts showing that the conditions precedent to the right of the
Issuer so to redeem have occurred, and an opinion of independent legal, tax or any other professional
advisers of recognised standing to the effect that the Issuer has or is likely to become obliged to pay such
additional amounts as a result of such change or amendment.
(g) Purchases
The Issuer or any of its subsidiaries may at any time purchase Notes at any price (provided that they are
purchased together with all unmatured Coupons and unexchanged Talons relating to them) in the open
market or otherwise, provided that in any such case such purchase or purchases is in compliance with all
relevant laws, regulations and directives.
Notes purchased by the Issuer or any of its subsidiaries may be surrendered by the purchaser through the
Issuer to, in the case of Bearer Notes, the Principal Paying Agent and, in the case of Registered Notes, the
Certificates representing such Notes to the Registrar for cancellation or may at the option of the Issuer or
relevant subsidiary be held or resold.
For the purposes of these Conditions, “directive” includes any present or future directive, regulation,
request, requirement, rule or credit restraint programme of any relevant agency, authority, central bank
department, government, legislative, minister, ministry, official public or statutory corporation, selfregulating organisation, or stock exchange.
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(h) Early Redemption of Zero Coupon Notes
(i) The Early Redemption Amount payable in respect of any Zero Coupon Note, the Early Redemption
Amount of which is not linked to an index and/or formula, upon redemption of such Note pursuant to
Condition 6(f) or upon it becoming due and payable as provided in Condition 10, shall be the Amortised
Face Amount (calculated as provided below) of such Note unless otherwise specified hereon.
(ii) Subject to the provisions of sub-paragraph (iii) below, the Amortised Face Amount of any such Note
shall be the scheduled Redemption Amount of such Note on the Maturity Date discounted at a rate per
annum (expressed as a percentage) equal to the Amortisation Yield (which, if none is shown hereon,
shall be such rate as would produce an Amortised Face Amount equal to the issue price of the Notes if
they were discounted back to their issue price on the Issue Date) compounded annually.
(iii) If the Early Redemption Amount payable in respect of any such Note upon its redemption pursuant to
Condition 6(f) or upon it becoming due and payable as provided in Condition 10 is not paid when due,
the Early Redemption Amount due and payable in respect of such Note shall be the Amortised Face
Amount of such Note as defined in sub-paragraph (ii) above, except that such sub-paragraph shall have
effect as though the date on which the Note becomes due and payable were the Relevant Date. The
calculation of the Amortised Face Amount in accordance with this sub-paragraph will continue to be
made (as well after as before judgment) until the Relevant Date, unless the Relevant Date falls on or
after the Maturity Date, in which case the amount due and payable shall be the scheduled Redemption
Amount of such Note on the Maturity Date together with any interest which may accrue in accordance
with Condition 5(IV).
Where such calculation is to be made for a period of less than one year, it shall be made on the basis of
the Day Count Fraction shown hereon.
(i) Cancellation
All Notes purchased by or on behalf of the Issuer or any of its subsidiaries may be surrendered for
cancellation, in the case of Bearer Notes, by surrendering each such Note together with all unmatured
Coupons and all unexchanged Talons to the Principal Paying Agent at its specified office and, in the case of
Registered Notes, by surrendering the Certificate representing such Notes to the Registrar and, in each case,
if so surrendered, shall, together with all Notes redeemed by the Issuer, be cancelled forthwith (together with
all unmatured Coupons and unexchanged Talons attached thereto or surrendered therewith). Any Notes or
Certificates so surrendered for cancellation may not be reissued or resold.
7.
Payments
(a) Principal and Interest in respect of Bearer Notes
Payments of principal and interest in respect of the Bearer Notes will, subject as mentioned below, be made
against presentation and surrender of the relevant Notes or Coupons, as the case may be:
(i) in the case of a currency other than Renminbi, at the specified office of the Principal Paying Agent by a
cheque drawn in the currency in which payment is due on, or, at the option of the holders, by transfer to
an account maintained by the payee in that currency with, a Bank; and
(ii) in the case of Renminbi, by transfer to a relevant account maintained by or on behalf of the Noteholder.
If a holder does not maintain a relevant account in respect of a payment to be made under the Notes, the
Issuer reserves the right, in its sole discretion and upon such terms as it may determine, to make
arrangements to pay such amount to that holder by another means, provided that the Issuer shall not
have any obligation to make any such arrangements.
In this Condition:
“Bank” means a bank in the principal financial centre for such currency or, in the case of Euro, in a city
in which banks have access to the TARGET System; and
“relevant account” means the Renminbi account maintained by or on behalf of the Noteholder with a
bank in Singapore or Hong Kong.
(b) Principal and Interest in Respect of Registered Notes
(i) Payments of principal in respect of Registered Notes will, subject as mentioned below, be made against
presentation and surrender of the relevant Certificates at the specified office of any of the Transfer
Agents or of the Registrar and in the manner provided in Condition 7(b)(ii).
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(ii) Interest on Registered Notes shall be paid to the person shown on the Register at the close of business
(A) in the case of a currency other than Renminbi, on the fifteenth day before the due date for payment
thereof; and (B) in the case of Notes denominated in Renminbi, on the fifth business day before the due
date for payment (the “Record Date”). Payments of interest on each Registered Note shall be made:
(A) in the case of a currency other than Renminbi, by a cheque drawn in the currency in which payment
is due on and mailed to the holder (or to the first named of joint holders) of such Note at its address
appearing in the Register. Upon application by the holder to the specified office of the Registrar or
any other Transfer Agent before the Record Date, such payment of interest may be made by transfer
to an account maintained by the payee in that currency with, a Bank; and
(B) in the case of Renminbi, by transfer to the registered account of the Noteholder. If a holder does not
maintain a registered account in respect of a payment to be made under the Notes, the Issuer
reserves the right, in its sole discretion and upon such terms as it may determine, to make
arrangements to pay such amount to that holder by another means, provided that the Issuer shall not
have any obligation to make any such arrangements.
In this Condition 7(b):
“registered account” means the Renminbi account maintained by or on behalf of the Noteholder with a
bank in Singapore or Hong Kong, details of which appear on the Register at the close of business on the
fifth business day before the due date for payment.
(c) Payments subject to law etc.
All payments are subject in all cases to any applicable fiscal or other laws, regulations and directives, but
without prejudice to the provisions of Condition 8. No commission or expenses shall be charged to the
Noteholders or Couponholders in respect of such payments.
(d) Appointment of Agents
The Principal Paying Agent, the Non-CDP Paying Agent, the CDP Transfer Agent, the Non-CDP Transfer
Agent, the CDP Registrar and the Non-CDP Registrar initially appointed by the Issuer and their specified
office(s) are listed below. The Issuer reserves the right at any time to vary or terminate the appointment of
the Principal Paying Agent, the Non-CDP Paying Agent, any other Paying Agent, the Calculation Agent, the
CDP Transfer Agent, the Non-CDP Transfer Agent, any other Transfer Agent, the CDP Registrar, the NonCDP Registrar and any other Registrar and to appoint additional or other Paying Agents, Calculation Agents,
Transfer Agents and Registrars provided that they will at all times maintain (i) a Principal Paying Agent
having a specified office in Singapore and (in the case of Non-CDP Notes) a Non-CDP Paying Agent, as the
case may be, (ii) a Calculation Agent where the Conditions so require, (iii) a Transfer Agent in relation to
Registered Notes and (iv) a Registrar in relation to Registered Notes.
Notice of any such change or any change of any specified office will promptly be given to the Noteholders
in accordance with Condition 16.
The Agency Agreement may be amended by the Issuer, the Principal Paying Agent, the Non-CDP Paying
Agent, the CDP Transfer Agent, the Non-CDP Transfer Agent, the CDP Registrar, the Non-CDP Registrar
and the Trustee, without the consent of any holder, for the purpose of curing any ambiguity or of curing,
correcting or supplementing any defective provision contained therein or in any manner which the Issuer, the
Principal Paying Agent, the Non-CDP Paying Agent, the CDP Transfer Agent, the Non-CDP Transfer
Agent, the CDP Registrar, the Non-CDP Registrar and the Trustee may mutually deem necessary or
desirable and which does not, in the opinion of the Issuer, the Principal Paying Agent, the Non-CDP Paying
Agent, the CDP Transfer Agent, the Non-CDP Transfer Agent, the CDP Registrar, the Non-CDP Registrar
and the Trustee, adversely affect the interests of the Noteholders.
(e) Unmatured Coupons and Unexchanged Talons
(i) Bearer Notes which comprise Fixed Rate Notes and Hybrid Notes should be surrendered for payment
together with all unmatured Coupons (if any) relating to such Notes (and, in the case of Hybrid Notes,
relating to interest payable during the Fixed Rate Period), failing which an amount equal to the face
value of each missing unmatured Coupon (or, in the case of payment not being made in full, that
proportion of the amount of such missing unmatured Coupon which the sum of principal so paid bears
to the total principal due) will be deducted from the Redemption Amount due for payment. Any amount
so deducted will be paid in the manner mentioned above against surrender of such missing Coupon
within a period of five years from the Relevant Date for the payment of such principal (whether or not
such Coupon has become void pursuant to Condition 9).
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(ii) Subject to the provisions of the relevant Pricing Supplement upon the due date for redemption of any
Bearer Note comprising a Floating Rate Note, Variable Rate Note or Hybrid Note, unmatured Coupons
relating to such Note (and, in the case of Hybrid Notes, relating to interest payable during the Floating
Rate Period) (whether or not attached) shall become void and no payment shall be made in respect of
them.
(iii) Upon the due date for redemption of any Bearer Note, any unexchanged Talon relating to such Note
(whether or not attached) shall become void and no Coupon shall be delivered in respect of such Talon.
(iii) Where any Bearer Note comprising a Floating Rate Note, Variable Rate Note or Hybrid Note is
presented for redemption without all unmatured Coupons, and where any Bearer Note is presented for
redemption without any unexchanged Talon relating to it (and, in the case of Hybrid Notes, relating to
interest payable during the Floating Rate Period), redemption shall be made only against the provision
of such indemnity as the Issuer may require.
(iv) If the due date for redemption or repayment of any Note is not a due date for payment of interest,
interest accrued from the preceding due date for payment of interest or the Interest Commencement
Date, as the case may be, shall only be payable against presentation (and surrender if appropriate) of the
relevant Bearer Note or Certificate.
(f) Talons
On or after the Interest Payment Date for the final Coupon forming part of a Coupon sheet issued in respect
of any Bearer Note, the Talon forming part of such Coupon sheet may be surrendered at the specified office
of the Principal Paying Agent on any business day in exchange for a further Coupon sheet (and if necessary
another Talon for a further Coupon sheet) (but excluding any Coupons that may have become void pursuant
to Condition 9).
(g) Non-business days
Subject as provided in the relevant Pricing Supplement or subject as otherwise provided in these Conditions,
if any date for the payment in respect of any Note or Coupon is not a business day, the holder shall not be
entitled to payment until the next following business day and shall not be entitled to any further interest or
other payment in respect of any such delay.
(h) Default Interest
If on or after the due date for payment of any sum in respect of the Notes, payment of all or any part of such
sum is not made against due presentation of the Notes or, as the case may be, the Coupons, the Issuer shall
pay interest on the amount so unpaid from such due date up to the day of actual receipt by the relevant
Noteholders or, as the case may be, Couponholders (as well after as before judgment) at a rate per annum
determined by the Principal Paying Agent to be equal to two per cent. per annum above (in the case of a
Fixed Rate Note or a Hybrid Note during the Fixed Rate Period) the Interest Rate applicable to such Note,
(in the case of a Floating Rate Note or a Hybrid Note during the Floating Rate Period) the Rate of Interest
applicable to such Note or (in the case of a Variable Rate Note) the variable rate by which the Agreed Yield
applicable to such Note is determined or, as the case may be, the Rate of Interest applicable to such Note, or
in the case of a Zero Coupon Note, as provided for in the relevant Pricing Supplement. So long as the default
continues then such rate shall be re-calculated on the same basis at intervals of such duration as the Principal
Paying Agent may select, save that the amount of unpaid interest at the above rate accruing during the
preceding such period shall be added to the amount in respect of which the Issuer is in default and itself bear
interest accordingly. Interest at the rate(s) determined in accordance with this paragraph shall be calculated
on the Day Count Fraction shown on the face of the Note and the actual number of days elapsed, shall accrue
on a daily basis and shall be immediately due and payable by the Issuer.
(i) Renminbi Fallback
Notwithstanding the foregoing, if by reason of Inconvertibility, Non-transferability or Illiquidity, the Issuer
is not, in its sole and absolute discretion, able to satisfy payments of principal or interest in respect of RMB
Notes when due in Renminbi in Singapore, the Issuer shall, on giving not less than 10 nor more than 30
business days’ irrevocable notice to the Noteholders prior to the due date for payment, settle any such
payment in Singapore dollars on the due date, at the Singapore Dollar Equivalent, of any such Renminbi
denominated amount. The due date for payment shall be the originally scheduled due date or such postponed
due date as shall be specified in the notice referred to above, which postponed due date may not fall more
than 20 days after the originally scheduled due date. Interest on the Notes will continue to accrue up to but
excluding any such date for payment of principal.
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In such event, payments of the Singapore Dollar Equivalent of the relevant principal or interest in respect of
the Notes shall be made by transfer to a Singapore dollar denominated account maintained by the payee
with, or by a Singapore dollar denominated cheque drawn on, a bank in Singapore.
All notifications, opinions, determinations, certificates, calculations, quotations and decisions given,
expressed, made or obtained for the purposes of the provisions of this Condition 7(i) by the Calculation
Agent will be binding on the Issuer, the Agents and all Noteholders.
In this Condition:
“Determination Business Day” means a day (other than a Saturday, Sunday or gazetted public holiday) on
which commercial banks are open for general business (including dealings in foreign exchange) in
Singapore;
“Determination Date” means the day which is seven Determination Business Days before the due date of
the relevant amount under these Conditions;
“Governmental Authority” means the Monetary Authority of Singapore or any other governmental authority
or any other entity (private or public) charged with the regulation of the financial markets of Singapore;
“Illiquidity” means the general Renminbi exchange market in Singapore becomes illiquid as a result of
which the Issuer cannot obtain sufficient Renminbi in order to satisfy its obligation to pay interest or
principal in respect of the Notes as determined by the Issuer in good faith and in a commercially reasonable
manner following consultation with two Renminbi Dealers selected by the Issuer;
“Inconvertibility” means the occurrence of any event that makes it impossible (where it had been
previously possible) for the Issuer to convert any amount due in respect of the Notes in the general Renminbi
exchange market in Singapore, other than where such impossibility is due solely to the failure of the Issuer
to comply with any law, rule or regulation enacted by any Governmental Authority (unless such law, rule or
regulation is enacted after the Issue Date and it is impossible for the Issuer, due to an event beyond its
control, to comply with such law, rule or regulation);
“Non-transferability” means the occurrence of any event that makes it impossible for the Issuer to transfer
Renminbi between accounts inside Singapore or from an account inside Singapore to an account outside
Singapore and outside the PRC or from an account outside Singapore and outside the PRC to an account
inside Singapore, other than where such impossibility is due solely to the failure of the Issuer to comply with
any law, rule or regulation enacted by any Governmental Authority (unless such law, rule or regulation is
enacted after the Issue Date and it is impossible for the Issuer, due to an event beyond its control, to comply
with such law, rule or regulation);
“PRC” means the People’s Republic of China (excluding the Hong Kong Special Administrative Region, the
Macau Special Administrative Region and Taiwan);
“Renminbi Dealer” means an independent foreign exchange dealer of international repute active in the
Renminbi exchange market in Singapore;
“RMB Notes” means Notes denominated in RMB or in respect of which payment of principal is due in
RMB;
“Singapore Dollar Equivalent” means the Renminbi amount converted into Singapore dollars using the
relevant Spot Rate for the relevant Determination Date; and
“Spot Rate” means, for a Determination Date, the Calculation Agent’s spot rate of Renminbi/Singapore
dollar exchange as determined by the Calculation Agent at or around 11.00 a.m. (Singapore time) on such
date, and if a spot rate is not readily available, the Calculation Agent may determine the rate taking into
consideration all available information which the Calculation Agent deems relevant, including pricing
information obtained from the Renminbi non-deliverable exchange market in Singapore or elsewhere and the
PRC domestic foreign exchange market in Singapore.
8.
Taxation
All payments in respect of the Notes and the Coupons by the Issuer shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future taxes, duties, assessments or governmental
charges of whatever nature imposed, levied, collected, withheld or assessed by or within Singapore or any
authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In
such event, the Issuer shall pay such additional amounts as will result in the receipt by the Noteholders and the
Couponholders of such amounts as would have been received by them had no such deduction or withholding
35
been required, except that no such additional amounts shall be payable in respect of any Note or Coupon
presented (or in respect of which the Certificate representing it is presented) for payment:
(a) by or on behalf of a holder who is subject to such taxes, duties, assessments or governmental charges by
reason of his being connected with Singapore otherwise than by reason only of the holding of such Note
or Coupon or the receipt of any sums due in respect of such Note or Coupon (including, without
limitation, the holder being a resident of, or a permanent establishment in Singapore; or
(b) more than 30 days after the Relevant Date except to the extent that the holder thereof would have been
entitled to such additional amounts on presenting the same for payment on the last day of such period of
30 days.
As used in these Conditions, “Relevant Date” in respect of any Note or Coupon means the date on which
payment in respect thereof first becomes due or (if any amount of the money payable is improperly withheld
or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the date
falling seven days after that on which notice is duly given to the Noteholders in accordance with Condition
16 that, upon further presentation of the Note (or relative Certificate) or Coupon being made in accordance
with the Conditions, such payment will be made, provided that payment is in fact made upon presentation,
and references to “principal” shall be deemed to include any premium payable in respect of the Notes, all
Redemption Amounts, Early Redemption Amounts and all other amounts in the nature of principal payable
pursuant to Condition 6, “interest” shall be deemed to include all Interest Amounts and all other amounts
payable pursuant to Condition 5 and any reference to “principal” and/or “premium” and/or “Redemption
Amounts” and/or “interest” and/or “Early Redemption Amounts” shall be deemed to include any
additional amounts which may be payable under these Conditions.
9.
Prescription
Claims against the Issuer for payment in respect of the Notes and Coupons (which, for this purpose, shall not
include Talons) shall be prescribed and become void unless made within five years from the appropriate
Relevant Date for payment.
10. Events of Default
If any of the following events (“Events of Default”) occurs, the Trustee at its discretion may, and if so
requested by holders of at least 25 per cent. in principal amount of the Notes then outstanding or if so
directed by an Extraordinary Resolution shall, in each case, subject to it being indemnified and/or secured
and/or pre-funded to its satisfaction give notice in writing to the Issuer that the Notes are immediately
repayable, whereupon the Redemption Amount of such Notes or (in the case of Zero Coupon Notes) the
Early Redemption Amount of such Notes together with accrued interest to the date of payment shall become
immediately due and payable:
(a)
the Issuer does not pay any sum payable by it under any of the Notes at the place at and in the currency
in which it is expressed to be payable (in the case of principal) when due and (in any other case) within
three business days of its due date;
(b)
the Issuer does not perform or comply with any one or more of its obligations (other than the payment
obligation of the Issuer referred to in paragraph (a)) under any of the Issue Documents or any of the
Notes and, if that default is capable of remedy, it is not remedied within 21 days after notice of such
default has been given by the Trustee to the Issuer;
(c)
any representation, warranty or statement by the Issuer in any of the Issue Documents or any of the
Notes or in any document delivered under any of the Issue Documents or any of the Notes is not
complied with in any respect or is or proves to have been incorrect in any respect when made or
deemed repeated and, if the event resulting in such non-compliance or incorrectness is capable of
remedy, it is not remedied within 21 days after notice of such non-compliance or incorrectness has
been given by the Trustee to the Issuer;
(d)
(i) any other indebtedness of the Issuer or any of its Principal Subsidiaries in respect of borrowed
moneys is or is declared to be or is capable of being rendered due and payable prior to its stated
maturity by reason of any event of default or the like (however described) or is not paid when due
or within any agreed applicable grace period; or
(ii) the Issuer or any of its Principal Subsidiaries fails to pay when properly called upon to do so any
guarantee of indebtedness for borrowed moneys,
36
provided however that no Event of Default shall occur under this Condition 10(d) unless and until the
aggregate amount of indebtedness in respect of which one or more of the events mentioned above in this
Condition 10(d) has/have occurred equals or exceeds RMB75,000,000 (or its equivalent in other
currency or currencies);
(e) the Issuer or any of its Principal Subsidiaries is (or is deemed by law or a court to be) insolvent or
unable to pay its debts, stops, suspends or threatens to stop or suspend payment of all or any material
part of its indebtedness, begins negotiations or takes any other step with a view to the deferral,
rescheduling or other readjustment of all or any material part of its indebtedness (or of any part which it
will be unable to pay when due), proposes or makes a general assignment or an arrangement or
composition with or for the benefit of the relevant creditors or a moratorium is agreed or declared in
respect of or affecting all or any material part of the indebtedness of the Issuer or any of its Principal
Subsidiaries;
(f) a distress, attachment, execution or other similar legal or creditors’ process is levied, enforced or sued
out on or against all or any material part of the property, assets or revenues of the Issuer or any of its
Principal Subsidiaries and is not discharged or stayed within 21 days;
(g) any security on or over the whole or any part of the property or assets of the Issuer or any of its
Principal Subsidiaries becomes enforceable or any step is taken to enforce it (including the taking of
possession or the appointment of a receiver, manager or other similar person), provided however that no
Event of Default will occur under this Condition 10(g) unless and until the aggregate amount of the
indebtedness secured by any security in respect of which one or more of the events mentioned in this
Condition 10(g) has/have occurred equals or exceeds RMB75,000,000 (or its equivalent in other
currency or currencies);
(h) a meeting is convened, a petition or originating summons is presented, an order is made, a resolution is
passed or any other similar legal process is taken by any person (other than a petition or originating
summons or other similar legal process which is of a frivolous or vexatious nature and, in each case,
which are stayed within 21 days of the earlier of (i) its service on the Issuer or a Principal Subsidiary or
(ii) the Issuer or a Principal Subsidiary becoming aware of such petition or originating summons or legal
process) with a view to the winding-up or dissolution of the Issuer or any of its Principal Subsidiaries or
for the appointment of a liquidator (including a provisional liquidator), receiver, manager, judicial
manager, trustee, administrator, agent or similar officer of the Issuer or any of its Principal Subsidiaries
or over the whole or any material part of the property or assets of the Issuer or any of its Principal
Subsidiaries (except for the purposes of and followed by a reconstruction, amalgamation, reorganisation
or consolidation on terms approved by the Noteholders by way of an Extraordinary Resolution);
(i) the Issuer or any of its Principal Subsidiaries ceases or threatens to cease to carry on all or any material
part of its business or disposes or threatens to dispose of the whole or any material part of its property or
assets (save as permitted by, and in accordance with, the provisions of Clause 15.1.28 of the Trust
Deed);
(j) any step is taken by any person acting under the authority of any national, regional or local government
with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or any material
part of the assets of the Issuer or any of its Principal Subsidiaries;
(k) any action, condition or thing (including the obtaining of any necessary consent) at any time required to
be taken, fulfilled or done for any of the purposes stated in Clause 14.3 of the Trust Deed is not taken,
fulfilled or done, or any such consent ceases to be in full force and effect without modification or any
condition in or relating to any such consent is not complied with (unless that consent or condition is no
longer required or applicable);
(l) it is or will become unlawful for the Issuer to perform or comply with any one or more of its obligations
under any of the Issue Documents or any of the Notes;
(m) any of the Issue Documents or any of the Notes ceases for any reason (or is claimed by the Issuer not) to
be the legal and valid obligations of the Issuer, binding upon it in accordance with its terms;
(n) any litigation, arbitration or administrative proceeding (other than those of a frivolous or vexatious
nature which are contested in good faith and, in each case, which are discharged within 21 days of their
commencement) against the Issuer or any of its Principal Subsidiaries is current or pending (i) to
restrain the exercise of any of the rights and/or the performance or enforcement of or compliance with
any of the obligations of the Issuer under any of the Issue Documents or any of the Notes or (ii) which
has or could reasonably be expected to have a material adverse effect on the Issuer;
37
(o) any event occurs which, under the law of any relevant jurisdiction, has an analogous or equivalent effect
to any of the events mentioned in paragraph (e), (f), (g), (h) or (j); and
(p) the Issuer or any of its Principal Subsidiaries is declared by the Minister of Finance to be a declared
company under the provisions of Part IX of the Companies Act, Chapter 50 of Singapore.
11. Enforcement of Rights
At any time after an Event of Default has occurred or after the Notes shall have become due and payable, the
Trustee may, at its discretion and without further notice, institute such proceedings against the Issuer as it
may think fit to enforce repayment of the Notes, together with accrued interest, and/or to enforce the
provisions of the Issue Documents but it shall not be bound to take any such proceedings unless (a) it shall
have been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by
Noteholders holding not less than 25 per cent. in principal amount of the Notes outstanding and (b) it shall
have been indemnified and/or secured and/or pre-funded to its satisfaction. No Noteholder or Couponholder
shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound to do so, fails
or neglects to do so within a reasonable period and such failure or neglect shall be continuing.
12. Meeting of Noteholders and Modifications
The Trust Deed contains provisions for convening meetings of Noteholders of a Series to consider any
matter affecting their interests, including modification by Extraordinary Resolution of the Notes of such
Series (including these Conditions insofar as the same may apply to such Notes) or any of the provisions of
the Trust Deed.
The Trustee or the Issuer at any time may, and the Trustee upon the request in writing by Noteholders
holding not less than one-tenth of the principal amount of the Notes of any Series for the time being
outstanding and after being indemnified and/or secured and/or pre-funded to its satisfaction against all costs
and expenses shall, convene a meeting of the Noteholders of that Series. An Extraordinary Resolution duly
passed at any such meeting shall be binding on all the Noteholders of the relevant Series, whether present or
not and on all relevant Couponholders, except that any Extraordinary Resolution proposed, inter alia, (a) to
amend the dates of maturity or redemption of the Notes or any date for payment of interest or Interest
Amounts on the Notes, (b) to reduce or cancel the principal amount of, or any premium payable on
redemption of, the Notes, (c) to reduce the rate or rates of interest in respect of the Notes or to vary the
method or basis of calculating the rate or rates of interest or the basis for calculating any Interest Amount in
respect of the Notes, (d) to vary any method of, or basis for, calculating the Redemption Amount or the Early
Redemption Amount including the method of calculating the Amortised Face Amount, (e) to vary the
currency or currencies of payment or denomination of the Notes, (f) to take any steps that as specified
hereon may only be taken following approval by an Extraordinary Resolution to which the special quorum
provisions apply or (g) to modify the provisions concerning the quorum required at any meeting of
Noteholders or the majority required to pass the Extraordinary Resolution, will only be binding if passed at a
meeting of the Noteholders of the relevant Series (or at any adjournment thereof) at which a special quorum
(provided for in the Trust Deed) is present.
The Trustee may agree, without the consent of the Noteholders or Couponholders, to (i) any modification of
any of the provisions of the Trust Deed or any of the Issue Documents which in the opinion of the Trustee is
of a formal, minor or technical nature or is made to correct a manifest error or to comply with mandatory
provisions of Singapore law or is required by Euroclear, Clearstream, Luxembourg, the Depository and/or
any other clearing system in which the Notes may be held and (ii) any other modification (except as
mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of
the provisions of the Trust Deed or any of the Issue Documents which is in the opinion of the Trustee may
be expedient to make and not materially prejudicial to the interests of the Noteholders. Any such
modification, authorisation or waiver shall be binding on the Noteholders and the Couponholders and, if the
Trustee so requires, such modification, authorisation or waiver shall be notified to the Noteholders as soon as
practicable.
In connection with the exercise of its functions (including but not limited to those in relation to any proposed
modification, waiver, authorisation or substitution) the Trustee shall have regard to the interests of the
Noteholders as a class and shall not have regard to the consequences of such exercise for individual
Noteholders or Couponholders.
These Conditions may be amended, modified, or varied in relation to any Series of Notes by the terms of the
relevant Pricing Supplement in relation to such Series.
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13. Replacement of Notes, Certificates, Coupons and Talons
If a Note, Certificate, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed it may be replaced,
subject to applicable laws, regulations and stock exchange or other relevant authority regulations, at the
specified office of the Principal Paying Agent (in the case of Bearer Notes, Coupons or Talons) and of the
Registrar (in the case of Certificates), or at the specified office of such other Paying Agent or Transfer
Agent, as the case may be, as may from time to time be designated by the Issuer for the purpose and notice
of whose designation is given to Noteholders in accordance with Condition 16, on payment by the claimant
of the fees and costs incurred in connection therewith and on such terms as to evidence, undertaking,
security and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed Note,
Certificate, Coupon or Talon is subsequently presented for payment, there will be paid to the Issuer on
demand the amount payable by the Issuer in respect of such Note, Certificate, Coupon or Talon) and
otherwise as the Issuer may require. Mutilated or defaced Notes, Certificates, Coupons or Talons must be
surrendered before replacements will be issued.
14. Further Issues
The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue
further notes having the same terms and conditions as the Notes of any Series and so that the same shall be
consolidated and form a single Series with such Notes, and references in these Conditions to “Notes” shall
be construed accordingly.
15. Indemnification of the Trustee
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from
responsibility, including provisions relieving it from taking proceedings to enforce repayment unless
indemnified and/or secured and/or pre-funded to its satisfaction. The Trust Deed also contains a provision
entitling the Trustee or any corporation related to it to enter into business transactions with the Issuer or any
of its subsidiaries without accounting to the Noteholders or Couponholders for any profit resulting from such
transactions.
Each Noteholder shall be solely responsible for making and continuing to make its own independent
appraisal and investigation into the financial condition, creditworthiness, condition, affairs, status and nature
of the Issuer, and the Trustee shall not at any time have any responsibility for the same and each Noteholder
shall not rely on the Trustee in respect thereof.
16. Notices
Notices to the holders of Registered Notes shall be in the English language or, if not in the English
Language, be accompanied by a certified translation into the English language, shall be valid if mailed to
them at their respective addresses in the Register and shall be deemed to have been given on the fourth
weekday (being a day other than a Saturday, Sunday or gazetted public holiday) after the date of mailing.
Notwithstanding the foregoing, notices to the holders of Notes will be valid if published in a daily newspaper
of general circulation in Singapore (or, if the holders of any Series of Notes can be identified, notices to such
holders will also be valid if they are given to each of such holders). It is expected that such publication will
be made in The Business Times. Notices will, if published more than once or on different dates, be deemed
to have been given on the date of the first publication in such newspaper as provided above. Couponholders
shall be deemed for all purposes to have notice of the contents of any notice to the holders of Bearer Notes in
accordance with this Condition 16.
So long as the Notes are represented by a Global Note or a Global Certificate and such Global Note or
Global Certificate is held in its entirety on behalf of Euroclear, Clearstream, Luxembourg and/or the
Depository, there may be substituted for such publication in such newspapers the delivery of the relevant
notice to Euroclear, Clearstream, Luxembourg and/or (subject to the agreement of the Depository) the
Depository for communication by it to the Noteholders, except that if the Notes are listed on the SGX-ST
and the rules of such exchange so require or permit, notice will in any event be published in accordance with
the first paragraph above. Any such notice shall be deemed to have been given to the Noteholders on the
seventh day after the day on which the said notice was given to Euroclear, Clearstream, Luxembourg and/or
the Depository.
Notices to be given by any Noteholder pursuant hereto (including to the Issuer) shall be in writing and given
by lodging the same, together with the relative Note or Notes, with the Principal Paying Agent (in the case of
Bearer Notes) or the Registrar (in the case of Certificates). Whilst the Notes are represented by a Global
Note or a Global Certificate, such notice may be given by any Noteholder to the Principal Paying Agent or,
39
as the case may be, the Registrar through Euroclear, Clearstream, Luxembourg and/or the Depository in such
manner as the Principal Paying Agent or, as the case may be, the Registrar and Euroclear, Clearstream,
Luxembourg and/or the Depository may approve for this purpose.
Notwithstanding the other provisions of this Condition, in any case where the identities and addresses of all
the Noteholders are known to the Issuer, notices to such holders may be given individually by recorded
delivery mail to such addresses and will be deemed to have been given two days from the date of despatch to
the Noteholders.
17. Contracts (Rights of Third Parties) Act
No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of
Third Parties) Act, Chapter 53B of Singapore.
18. Governing Law and Jurisdiction
(a) Governing Law
The Trust Deed, the Notes and the Coupons and the Talons are governed by, and shall be construed in
accordance with, the laws of Singapore.
(b) Jurisdiction
The courts of Singapore are to have jurisdiction to settle any disputes that may arise out of or in connection
with the Trust Deed, the Notes, the Coupons or the Talons and accordingly any legal action or proceedings
arising out of or in connection with the Trust Deed, the Notes, the Coupons or the Talons may be brought in
such courts. The Issuer has in the Trust Deed irrevocably submitted to the jurisdiction of such courts.
(c) No Immunity
The Issuer agrees that in any legal action or proceedings arising out of or in connection with the Trust Deed,
the Notes and the Coupons against it or any of its assets, no immunity from such legal action or proceedings
(which shall include, without limitation, suit, attachment prior to award, other attachment, the obtaining of
an award, judgment, execution or other enforcement) shall be claimed by or on behalf of the Issuer or with
respect to any of its assets and irrevocably waives any such right of immunity which it or its assets now have
or may hereafter acquire or which may be attributed to it or its assets and consent generally in respect of any
such legal action or proceedings to the giving of any relief or the issue of any process in connection with
such action or proceedings including, without limitation, the making, enforcement or execution against any
property whatsoever (irrespective of its use or intended use) of any order, award or judgment which may be
made or given in such action or proceedings.
Principal Paying Agent, CDP Registrar and CDP Transfer Agent
Deutsche Bank AG, Singapore Branch
One Raffles Quay
#16-00 South Tower
Singapore 048583
Non-CDP Paying Agent and Non-CDP Transfer Agent
Deutsche Bank AG, Hong Kong Branch
Level 52, International Commerce Centre
1 Austin Road West, Kowloon
Hong Kong
Non-CDP Registrar
2 Boulevard Konrad Adenauer
L-1115
Luxembourg
40
THE GROUP
1.
INTRODUCTION
The Issuer was incorporated in Singapore on 17 July 1993. The Issuer is an investment holding company of the
Group and the Group conducts its businesses through the Issuer’s subsidiaries and associates.
The Group is one of the largest tire manufacturers and distributors in the PRC, as well as a major exporter of tires
from the PRC into the international market. Its business comprises the development, manufacturing, marketing
and sale of passenger car radial (“PCR”) tires, truck and bus radial (“TBR”) tires and bias tires. The Group’s
manufacturing activities are primarily based in the PRC, where it operates seven internationally-accredited tire
manufacturing production facilities located in the cities of Anhui, Fujian, Chongqing, Yinchuan and Hualin. The
Group currently owns a 49.5% shareholding interest in PT Gajah Tunggal Tbk. (“Gajah Tunggal”), Indonesia’s
largest integrated tire manufacturer.
The Group sells and distributes its products to replacement market customers and original equipment
manufacturer (“OEM”) customers in the PRC and over 100 countries globally. The Group has one of the largest
tire sales and distribution networks in the PRC, comprising 64 regional sales teams supported by 17 logistics
centres and covering over 20,000 points of sale nationwide. Globally, the Group sells its products to countries in
the Americas, the European Union, Middle East and Africa and Asia Pacific. North America comprises the
Group’s largest export market, contributing approximately 20% and 20% of the Group’s total sales for the year
ended 31 December 2013 and the period ended 30 June 2014, respectively.
In June 2014, the Group announced the proposed construction of a tire production facility in South Carolina in
the United States, which will focus on manufacturing passenger tires for the OEM and replacement markets.
Significant milestones in the development of the Group’s business include the following:
Year
Milestone
1993
GITI Tire (Anhui) Co. Ltd. established as a joint venture with the Anhui government to
manufacture bias tires – the Group subsequently acquired a 100% ownership interest in GITI Tire
(Anhui) Co. Ltd. in 1997
GITI Tire (Fujian) Co. Ltd. established
Commenced manufacture of PCR tires at the Anhui plant
First proprietary sales and distribution centre established
Completion of a PCR tire manufacturing plant in Fujian and commencement of production
Acquisition of a TBR tire manufacturing plant by GITI Tire (Anhui) Co. Ltd. from the Anhui local
government; Anhui manufacturing facilities ranked number one manufacturing plant in China by
sales revenue, according to the China Tire Association
Acquisition of a TBR tire production facility in Chongqing, a 70% interest in a PCR and bias tire
production facility in Yinchuan and a 70% interest in another TBR tire production facility in
Yinchuan
Acquisition of a 44.43% interest in Hualin Tyre (since renamed GITI Tire Corporation), a Shanghai
stock exchange-listed tire manufacturer
Group ranked as the leading TBR tire manufacturer in China by the China Tire Association
Acquisition of a 22.5% shareholding in Gajah Tunggal; establishment of key sales and marketing
distribution subsidiaries in Europe and the United States
Long-term tire distribution agreement entered into with Bridgestone, significantly increasing the
Group’s distribution of products into the United States
Establishment of a test centre in the United Kingdom and a sales and marketing subsidiary in
Canada
Group ranked as the 14th largest tire producer globally by Tire Business, a leading automotive
services industry periodical
Group’s shareholding interest in Gajah Tunggal increased to 49%
Establishment of a new sales and marketing subsidiary in France
Group awarded the General Motors Supplier Quality Excellence Award
Two new research and development centres established in the United States and Germany; Group
ranked as the 11th largest tire producer globally by Tire Business, a leading automotive services
industry periodical
Group announced the proposed construction of a greenfield tire production facility in South
Carolina in the United States
1995
1996
1998
2000
2001
2002
2003
2004
2005
2006
2007
2009
2010
2011
2012
2013
2014
41
2.
GROUP STRUCTURE
The following chart sets out the structure of the Group’s key subsidiaries and associated companies as at the date
of this Information Memorandum.
GITI TIRE PTE. LTD.
Investment Holding
100%
100%
Denham Pte Ltd
Investment Holding
49.5%
100%
GITI Tire (China)
Investment Co., Ltd.
Investment Holding
Corporate & distribution
PT Gajah Tunggal Tbk
Indonesia-based tire manufacturer
listed on Jakarta Stock Exchange
100%
R&D
Companies
GITI Tire Global Enterprise Pte Ltd
Investment Holding
100%
100%
100%
GITI Tire
(USA)
Ltd.
GITI Tire
(Canada)
Ltd.
GITI Tire
Global
Trading
Pte. Ltd.
Sales &
marketing
Sales &
marketing
Sales &
marketing
100%*
GITI Tire
do Brasil
Importacao,
Comercio e
Distribuicao
de Pneus Ltda
Sales &
marketing
100%
100%
GITI Tire
(UK)
Ltd.
Research and
Development
Centers
GITI Tire
Deutsche land
GmbH
Sales &
marketing
Sales &
marketing
21.34%
49%
44.4%
100%
GITI Tire
Corporation
51%
GITI Tire
(Fujian)
Co., Ltd.
Investment Holding
(A-shares listed on
Shanghai Stock
Exchange)
Manufacturer of
tire products
Other operations
100%
100%
100%
78.66%
70%
GITI Tire
(Chongqing)
Co., Ltd.
GITI Tire
(Anhui)
Co., Ltd.
GITI Radial
Tire (Anhui)
Co., Ltd.
GITI Tire
(Hualin)
Co., Ltd.
GITI Tire
(Yinchuan)
Co., Ltd.
GITI
Greatwall Tire
(Yinchuan)
Co., Ltd.
Manufacturer of
tire products
Manufacturer of
tire products
Manufacturer of
tire products
Manufacturer of
tire products
Manufacturer of
tire products
Manufacturer of
tire products
30%
Tire Related
Business
Listed Companies
Overseas Sales & Marketing
Tire Manufacturing
* 0.1% is held by Primewell-Inoac Pte. Ltd., a 100% subsidiary of GITI Tire Pte. Ltd.
3.
BUSINESS STRENGTHS
The Group believes that its principal competitive strengths are as follows:
Leading tire manufacturer and supplier in the PRC
The Group has conducted operations in the PRC for over 20 years, during which it has grown organically and
through acquisitions to become one of the largest tire manufacturers and distributors in the PRC. According to an
April 2014 report by the China Tire Association, the Group had a market share of 14.4% and 6.4% of the total
production volumes of PCR tires and TBR tires, respectively, in the PRC in 2013. The Group’s market share of
PCR tires and TBR tires were, respectively, the largest and fourth largest among the tire manufacturers cited in
the report.
The Group believes that the domestic PRC market remains a significant growth driver for its business. According
to the 2014 World Tyre Forecast Service from LMC International, the PRC is the second largest market for tires
globally, and the fastest-growing market for tires. The Group believes that its long operating track record and
leading market position in the PRC will continue to enable it to benefit from the growth of the PRC market in the
medium to long term.
The Group’s sale revenues in the PRC have achieved a compound annual growth rate of 20.0% for PCR tires and
18.8% for TBR tires from 2003 to 2013.
As a result of the Group’s leading market position and the economies of scale from its extensive operations in the
PRC, the Group believes that it is able to:
• assert pricing power in the Chinese tire replacement market to protect its market position and profitability;
• capitalise on its significant market presence to further strengthen its brand equity;
• utilise consolidated purchasing power to obtain competitive pricing for raw materials and retain flexibility in
allocating raw materials between different plants;
• deploy resources in a cost-effective manner to build a comprehensive portfolio of high-quality products that
meets the diverse needs of customers globally;
• respond quickly to changes in customer demand on a national scale and in a cost-efficient manner; and
• attract, train and retain talented employees as well as leverage the experience and expertise of its management.
42
With this platform, the Group believes that it is well-positioned to capitalise on the growth of the automobile and
tire markets in the PRC and to consolidate the Group’s position as a leading tire manufacturer in the PRC.
One of the largest tire sales and distribution networks in the PRC, with expanding international sales and
distribution capability
The Group has one of the largest tire sales and distribution networks in the PRC, which enables it to effectively
access and penetrate the Chinese tire replacement market. The Group’s 64 provincial sales teams in the PRC are
supported by 17 logistics centres and 10 regional operation centres across the PRC. The Group has developed
sophisticated information technology systems that deliver up-to-date information on inventory availability,
products, customers’ payment histories and order patterns, which are designed to improve the effectiveness and
immediacy of the sales teams’ interactions with customers and enhance its customer service. The Group’s broad
distribution network connects its seven manufacturing plants, which are strategically located along key
transportation routes in the PRC, to around 1,600 direct customers, who in turn distribute the Group’s products to
approximately 20,000 points of sale nationwide within the PRC.
The Group has also cultivated strong relationships with its replacement sales distributors through dedicated
professional sales and technical teams, with a view to enhancing the promotion of the Group’s tire products to
secondary distributors and end-users. In 2009, the Group established a retail alliance programme to upgrade the
tire retail stores of participating wholesale and retail customers to improve their branding with the Group’s
corporate identity, using a uniform layout and standardised services. As at the date of this Information
Memorandum, over 12,000 stores have participated in the retail alliance programme, giving the Group strong
brand visibility within the PRC.
The Group’s extensive sales and distribution network in the PRC is complemented by its expanding international
presence, as the Group has worked to increase its export sales relative to the Group’s domestic sales, particularly
for high-value segments of the market such as high-performance PCR and winter tire product lines. The Group
conducts sales and distribution operations through international subsidiaries in North America, South America,
Europe and Asia, which together allow it to distribute its products in over 100 countries. The Group has also
secured supply agreements with reputable partners such as the Bridgestone Group, Walmart and Discount Tire.
Balanced product and market mix enables the Group to capture global and domestic demand growth in
the tire sector while tempering the impact of shifts in global economic conditions
The constitution of the Group’s tire sales, both in terms of product and markets, provides the Group with a
significantly diversified product and market mix, positioning the Group to capture global and domestic demand
growth across a number of segments. The Group sells PCR tires, TBR tires and bias tires, each of which
addresses a particular segment of the tire market, demand for which is driven by different factors. The Group’s
sale of PCR tires, TBR tires and bias tires represented 56%, 41% and 3% of the Group’s total sales for the year
ended 31 December 2013, and 59%, 39% and 2% of the Group’s total sales for the six months ended 30 June
2014, respectively. The Group believes that its diverse product range allows it to temper the impact of demand
downturns in any single product.
The Group also benefits from geographical diversity in its overall sales mix. Sales to the domestic PRC market
and the export market represented 56% and 44%, respectively, of the Group’s total sales for the year ended
31 December 2013, and 55% and 45%, respectively, of the Group’s total sales for the six months ended 30 June
2014. Of the Group’s export sales for the six months ended 30 June 2014, 71% were to the mature and developed
markets of North America and Europe, and 29% were to the high-growth and emerging markets of Asia-Pacific
(excluding the PRC), Latin America and Middle East and Africa. The Group believes that this market mix
provides it with additional earnings stability, as the overall impact of fluctuations in each of these markets
relative to the Group’s financial performance as a whole is reduced. This mix also provides the Group with the
flexibility to react to fluctuations in geographical demands by, for instance, channelling more of the Group’s tires
either to other export markets or domestically if sales to any particular export region is weak. For example, the
Group has increased its export sales, from 43% of its total sales in 2011, to 44% of its total sales in 2013, to
mitigate a slowdown in sales in the domestic PRC market arising from the slowdown in PRC economic growth in
recent years.
Comprehensive product portfolio with commitment to multi-brand strategy
The Group offers a comprehensive range of products to its customers, and serves as a one-stop solutions provider
for its clients. As at the date of this Information Memorandum, the Group offered approximately 140 patterns of
PCR tires, 220 patterns of TBR tires and 70 patterns of bias tires in full sizes for all types of vehicles, ranging
from sedans, multipurpose vehicles, small commercial vehicles, buses, light trucks and aircrafts and other
43
industrial vehicles, comparable to any major global tire manufacturer. The Group believes that its full product
line-up is comparable to those of major international tire manufacturers, and allows it to meet the demand of
customers domestically and globally.
The Group places a strong emphasis on quality. The Group believes that a strict quality assurance system results
in reliable and consistent quality of the Group’s tire products, enhancing customers’ confidence in its products.
The Group’s focus on applying and enforcing stringent quality control measures has resulted in it being awarded
a number of key internationally recognised quality certifications, including ISO/TS 16949 (Quality System)
certification. See “– Accreditations and Awards” for more details.
Competitive cost structure
The Group believes that its large-scale operations in the PRC enable it to benefit from significant economies of
scale which in turn permit it to lower operating costs particularly in respect of costs associated with labour, raw
materials and facilities. As the Group’s business has grown rapidly over the years, the Group has centralised
several key operating functions, including purchasing, at a corporate level to achieve greater economies of scale
and to enable it to exercise greater leverage over suppliers. The Group uses its consolidated purchasing power to
obtain competitive prices for raw materials. The Group’s domestic and export sales management and research
and development functions are also centralised at a corporate level. The Group has also standardised
manufacturing processes across all plants to achieve what it believes to be an optimal level of operating and cost
efficiencies. The Group believes that its integrated and centralised management approach has enabled it to
continuously improve operating efficiency, ensure continuity, lower overall operating costs and improve
competitiveness.
Well-developed research and development capabilities
The Group has well-developed in-house research and development capabilities with a sizeable research and
development staff headcount and global presence. In 2013, the Group established two research and development
centres in the United States and Germany to complement its existing research and development centres in the
PRC and the United Kingdom, further extending its research and development capabilities around the world. As
at 30 June 2014, the Group has a team of more than 600 engineers focused on research and development. The
Group’s research and development team includes a number of senior advisors who were senior technical staff at
leading global tire manufacturers. The Group uses a number of leading tire-industry technologies, such as
computer-aided design and engineering and finite element analysis for structural analysis, which allow the Group
to shorten product development time, improve product design, reliability, performance and technical properties
and reduce cost and waste.
The Group also subjects its products to rigorous voluntary testing and certification as part of the research and
development process. The Group’s tires are tested at international testing centres such as the National Quality
Examination Centre for Rubber Tires, Smithers Scientific Services, Inc. (USA) and TUV SUD Automotive
GmbH in Germany. The Group has also entered into formal technology and research agreements with leading
research institutes and organisations both in the PRC and internationally.
With the Group’s well-developed research and development capabilities, the Group believes it is able to
continually upgrade its tire technology to remain competitive with other global tire manufacturers, and quickly
develop new products in response to local and international trends.
Experienced and well-integrated management team
The Group has an experienced management team with a diverse range of backgrounds and substantial expertise
in the tire industry in both the PRC and the international markets. The Group’s executive directors and senior
managers have an average of over 20 years of experience in the tire industry and extensive experience working
with domestic partners in the PRC as well as with international players. A number of the Group’s executive
directors and senior managers also have had prior experience working with other reputable global tire companies.
The Group believes that its management team’s knowledge of tire products and the tire industry, together with its
application of international business standards and management practices, constitute essential elements of its
success and future development.
See “– Directors and Senior Management” for further details on the Group’s directors and senior management.
4.
BUSINESS STRATEGIES
The Group’s overall business objective is to retain and strengthen its present position as a leading tire
manufacturer in the rapidly growing PRC market and to further expand its international distribution capabilities.
44
The Group aims to associate its products with safety, high performance, superior quality, durability,
environmental friendliness, comfort, control and value. The Group believes that these goals are key to growing
its market share both in the PRC and globally. To achieve these objectives, the Group is pursuing the following
business strategies:
Leverage the Group’s leading position to capture greater market share in the PRC market
The Group intends to increase its market share and consolidate its position as a market leader in the PRC through
the following:
• continuing to build on its relationships with tire retailers to promote and sell the Group’s products;
• improving supply chain operations to enhance customer service;
• increasing production capacity by expanding operations in key manufacturing plants, building new plants in
strategic locations or selectively acquiring tire production assets or other tire manufacturers that are
commercially attractive to the Group. Any such acquisitions must meet the criteria of enhancing economies of
scale to enhance the Group’s profitability and providing a platform for strategic growth in the domestic and
international tire markets; and
• adjusting the Group’s product mix to align with market trends. For example, in the PRC, the Group focused on
the sale of PCR tires in 2012 and 2013, as market demand for TBR tires decreased with the slowdown in
Chinese economic growth and a decrease in infrastructural projects as a result of tightening credit control by
the Chinese government.
The Group has recently also launched Speedwork Autocare, a new full-service store concept for automobile care
and servicing. At present, two Speedwork Autocare centres have been established around the Shanghai
metropolitan region, and the Group intends to expand into other regions within the PRC in the medium- to longterm future. The Group believes this and other initiatives will further enhance the Group’s brand visibility and
cultivate a larger customer base in the PRC.
Expand the Group’s international presence with an increased focus in international markets as well as
rapidly growing emerging markets
Beyond the PRC, the Group intends to increase its market share in key mature markets, in particular North
America. The Group also intends to continue to develop its business in key emerging markets such as
Asia-Pacific (excluding the PRC), Latin America and Middle East and Africa. The Group plans to implement its
expansion strategies through the following:
• introducing high-quality new products with premium performance;
• continuing its multi-brand marketing approach with a focus on the Group’s GITI, GT Radial, Primewell and
Runway brands;
• growing existing sales, increasing its market presence and improving its ability to service customers in key
markets, thereby increasing customer recognition of the Group’s products and promoting brand loyalty;
• expanding export sales through strategic alliances with key tire distributors and retailers.
• developing and launching value-added service programmes, such as road assistance programmes and training
for TBR tire retailers, on the Group’s products in partnership with distributors and retailers, and providing
customers with specialised support from the Group’s technical sales teams; and
• establishing strong relationships with other reputable tire distributors and expanding export sales through
strategic alliances. The Group has entered into long-term supply contracts with the Bridgestone Group,
Walmart and Discount Tire, and intends to enter into further supply contracts with other distributors with a
view to developing these relationships over the longer term into strategic partnerships.
Expand sales with strategic original equipment manufacturers
The Group views sales to OEM customers as a key component of its marketing strategy both in the PRC and
internationally, because it believes that OEM relationships generate a number of substantial benefits that translate
into improved overall sales and profits. These benefits include the following:
• establishing an OEM relationship affords a window into the future of car design, which allows the Group to
more quickly recognise and respond to technical trends in the tire market;
• securing an OEM contract with a well-known automobile manufacturer brings with it prestige, recognition and
a public endorsement of the Group’s products;
45
• as car owners often replace tires with the same brand and type of tire which was original equipment on a new
car, strong sales to OEMs improve the Group’s secondary sales when those tires are replaced; and
• exposure to OEM customers allows the Group to cross-sell its tires to domestic and international markets
covered by these OEM customers as the relationships with them develop.
The Group’s current OEM customers include major international automobile companies like General Motors,
Volkswagen, Renault, Nissan as well as fast-growing Chinese automobile manufacturers for passenger and
commercial vehicles, such as Geely, Chery, Greatwall and JAC. The Group intends to build on these existing
OEM customer relationships and to work closely with these customers on their vehicle development programmes
to capture opportunities to further expand its business.
Execute a marketing strategy targeted towards expanding and strengthening its brand equity
The Group aims to associate its products with high performance, superior quality, safety, durability, comfort,
control and value. The Group presently prices its tires more competitively than some of the leading international
brands but at a premium to most other Chinese brands. As the brand awareness of its tires grows, the Group
believes that it will be able to reduce the discount at which it prices its tires relative to international brands,
thereby improving profit margins. To reach this goal, the Group intends to implement the following measures:
• further expand brand recognition with both wholesale and retail customers. The Group’s focus is on the sales of
premium mass market tire products, which cater to end-customers who seek product quality and performance,
as well as good value. The Group plans to work closely with its dealers to implement localised marketing
strategies more effectively in both the PRC and international markets;
• continue to conduct product campaigns through the Group’s racing team sponsorship, the implementation of
corporate social responsibility programmes, participation in trade shows, as well as the use of electronic, print
and outdoor media;
• improve its overall product offering by focusing research and development efforts on enhancing product
performance and quality; and
• build on the established networks and to expand on brands offered in North America. The Group currently
offers its Dextero brand of tires through Walmart, in addition to its GT Radial, Primewell, and Runway brands
of tires in the United States market.
Achieve higher margins by improving product mix, and focus on optimising costs
The Group reviews its product mix and product lines on an ongoing basis with a view to optimising its profit
margins while catering to its customers’ evolving needs and requirements. The Group plans to leverage its strong
technological capabilities to enhance its global competitiveness and generate higher profit margins by focusing
on higher-value products.
The Group also plans to achieve higher margins through a number of cost reduction initiatives, including:
• continuing to invest in research and development capabilities and improving process designs to increase
production efficiency and optimise operations;
• further strengthening central functions such as purchasing, information technology, training and human
resources to take advantage of economies of scale, thereby reducing overhead costs and lowering per-unit and
fixed costs;
• securing sources of key components and equipment through opportunistic investments in, and/or acquisitions
of component manufacturers; and
• actively pursuing plans to mitigate price volatility in raw materials.
Pursue prudent financial and investment measures and good corporate governance practices
The Group believes that a prudent financial profile will enable it to better protect its business during any
downturn in the industry or the economies of the countries in which it operates. Given the capital intensive nature
of its business and the strategic requirements of its growth aspirations, the Group maintains a proactive approach
towards liability and liquidity risk management, which includes the following initiatives:
• diversifying funding sources from a panel of reputable international and PRC-based financial institutions as
well as from other financing sources, with a view to optimising its financing exposures and funding cost mix;
and
• carefully managing its debt maturity profile to ensure well-spread debt maturities while maintaining an optimal
capital structure tailored to the nature of the business.
46
The Group continuously seeks to improve its financial practices, risk management and credit policies to improve
its working capital, liquidity and financial performance. The Group also regularly reviews its financial profile to
maintain sustainable growth through financial prudence.
5.
PRODUCTS
The Group manufactures and sells tires for a broad range of vehicles, such as passenger cars, trucks, buses,
agricultural vehicles, industrial vehicles and aircraft. The Group’s products can be classified under three broad
categories: PCR tires, TBR tires, and bias tires.
Radial tires
PCR tires and TBR tires are radial tires. Radial tires are steel-belted tires that have plies (which is a type of fabric
woven from tire cord) that run from head to head (side to side) perpendicularly against the circumference of the
tire along with multiple layers of steel belts running the circumference of the tire tread. Radial tires tend to be
better suited for comfortable ride and safer higher-speed operation in good road conditions, and generally offer
better vehicle handling, longer tread life and better shock absorption compared to bias tires.
The diagram below shows the cross-section of a typical PCR tire:
The diagram below shows the cross-section of a typical TBR tire:
Bias tires
Bias tires are tires that have nylon plies that run at an angle from each side with different layers having opposing
angles that criss-cross the tire. Bias tires are primarily suited for use on off-road or poor road conditions and are
durable and resistant to bursting resulting from overloading. Bias tires are in general less technologically
advanced than radial tires and their manufacture is typically more labour intensive and is less automated. As
such, these tires are generally priced more competitively with lower margins as compared to radial tires.
47
The diagram below shows the cross-section of a typical bias tire:
Others
The Group also manufactures various other specialty tires, including aircraft tires, which currently account for
less than 1% of its annual revenues.
Product mix
The table below sets out the revenues generated by each major type of the Group’s products for the periods
indicated:
Year ended 31 December
2011
2012
2013
(RMB
(% of total
(RMB
(% of total
(RMB
(% of total
millions)
revenue)
millions)
revenue)
millions)
revenue)
Six months ended
30 June
2014
(RMB
(% of total
millions)
revenue)
PCR tires . . . . . . . . . . . . . .
TBR tires . . . . . . . . . . . . . .
Bias . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . .
8,923
9,051
690
24
48%
48%
4%
*
8,864
7,542
578
29
52%
45%
3%
*
9,425
6,768
460
32
56%
41%
3%
*
4,374
2,892
157
13
59%
39%
2%
*
Total . . . . . . . . . . . . . . . . .
18,688
100%
17,013
100%
16,685
100%
7,436
100%
Note:
*
Not significant.
The Group regularly reviews its product mix to meet market demand and also to execute its strategy of producing
more high margin tires to increase its overall profit margin.
48
Brands
The Group markets its tires under various brand names, as described below. The Group markets and sells its tires
under multiple brands in order to target different market segments. The following is a summary of the Group’s
brand portfolio:
The Group’s products are structured into two main categories of brands:
• Main brands:
GITI, GT Radial, Primewell, and Runway are sold both in the PRC as well as internationally.
• Supporting brands: Greatwall, Yinlun and Hualin are the Group’s key supporting brands which are sold
throughout the PRC, where they enjoy an especially strong reputation and historical brand recognition in local
regions in the PRC. The Dextero and Roadking brands also provide the Group with additional diversity in its
product portfolio.
The Group’s differentiation of its brands allows it to:
• increase its aggregate market share by sales through different channels such as distributors, retailers and
manufacturers on a regional, national and international level;
• compete more effectively and flexibly by finely grading its pricing and offering multiple product lines; and
• be more precise in addressing different market preferences, price levels, tire usage, and regional tastes.
The Group employs a multi-brand strategy to avoid diluting the brand equity of its primary brands.
Sales Channels
The Group sells and distributes its tire products in three different markets:
• Domestic replacement market: The domestic replacement market comprises direct or indirect (through
wholesalers) sales of tires to existing owners or users of automobiles in the PRC as replacement tires;
• Domestic OEM market: The domestic OEM market comprises sales to automobile manufacturers in the PRC
who install the Group’s brands of tires onto the new vehicles that they produce; and
• Export market:
The export market comprises replacement and OEM sales to overseas countries.
49
The table below sets out the Group’s revenue as between the three markets for the periods indicated:
2011
2012
2013
(RMB
(% of total
(RMB
(% of total
(RMB
(% of total
millions)
revenue)
millions)
revenue)
millions)
revenue)
Six months ended
30 June
2014
(RMB
(% of total
millions)
revenue)
Domestic replacement
market . . . . . . . . . . . . . .
Domestic OEM market . . .
Export market . . . . . . . . . .
6,505
4,228
7,955
34%
23%
43%
6,006
3,717
7,290
35%
22%
43%
5,264
4,079
7,342
32%
24%
44%
2,062
1,992
3,382
28%
27%
45%
Total . . . . . . . . . . . . . . . . .
18,688
100%
17,013
100%
16,685
100%
7,436
100%
Domestic replacement markets
The domestic replacement market represents the largest of the Group’s three markets and comprised 34%, 35%
and 32%, respectively, of the Group’s revenue for the years ended 31 December 2011, 2012, and 2013. For the
six months ended 30 June 2014, the domestic replacement market constituted 28% of the Group’s revenue. The
Group sells products to around 1,600 direct customers in the PRC, including wholesalers, retailers and vehicle
fleets. These direct customers, in turn, distribute the Group’s products to approximately 20,000 points of sale
nationwide (including over 12,000 stores that have participated in the Group’s retail alliance programme). To
avoid competing with its wholesale customers, the Group generally does not sell tires directly to end-users
(except to certain vehicle fleet owners).
Domestic OEM market
The domestic OEM market represents an important market segment as securing OEM contracts with well-known
and well-established automobile manufacturers brings with it prestige of recognition and a public endorsement of
products. The domestic OEM market comprised 23%, 22% and 24%, respectively, of the Group’s revenue for the
years ended 31 December 2011, 2012, and 2013. For the six months ended 30 June 2014, the domestic
replacement market constituted 27% of the Group’s revenue.
In 2013, the Group sold its tire products to all of the ten largest heavy truck and bus manufacturers and six of the
ten largest passenger car manufacturers, according to the China Association of Automobile Manufacturers. The
company’s domestic OEM customers include manufacturers of fast-growing Chinese brands, such as Geely,
Chery, Greatwall and JAC, as well as international brands, such as Volkswagen, Chevrolet and Suzuki. The
Group intends to build upon the long-term relationships that it has established with leading car manufacturers,
and aims and develop new relationships with other established automobile manufacturers to enhance the market
recognition and prestige of its brands and products.
Export market
The Group commenced exporting its tires from the PRC in 1995. Since then, the Group’s export sales have
grown rapidly, with replacement sales accounting for the majority of the Group’s export market revenue. The
Group exports its products to distributors and OEM customers in over 100 countries worldwide. The United
States and Europe are the Group’s key export markets.
The table below sets out the Group’s revenue in each of the specified regions for the export market for the
periods indicated:
2011
2012
2013
(RMB
(% of total
(RMB
(% of total
(RMB
(% of total
millions)
revenue)
millions)
revenue)
millions)
revenue)
Six months ended
30 June
2014
(RMB
(% of total
millions)
revenue)
North America . . . . . . . . .
Europe . . . . . . . . . . . . . . . .
Asia (excluding PRC) . . . .
Middle East . . . . . . . . . . . .
Other regions(1) . . . . . . . . .
2,823
2,651
529
775
1,177
15%
14%
3%
4%
7%
2,905
1,956
393
944
1,092
17%
11%
2%
6%
7%
3,394
1,807
399
701
1,041
20%
11%
2%
4%
7%
1,499
902
186
313
482
20%
12%
3%
4%
6%
Total . . . . . . . . . . . . . . . . .
7,955
43%
7,290
43%
7,342
44%
3,382
45%
Note:
(1) Other regions include Africa, Oceania and South America.
50
The Group has established a number of key international subsidiaries to spearhead its international sales and
marketing efforts. GITI Tire (USA) Ltd. and GITI Tire (Canada) Ltd. act as the Group’s sales representatives in
North America. GITI Tire (Europe) B.V., GITI Tire (UK) Limited and GITI Tire Deutscheland GmbH act as the
Group’s sales representatives in the respective markets. GITI Tire do Brasil Importacao, Comercio e Distribuicao
de Pneus Ltda was established in 2013 to act as the Group’s sales representative in South America.
The Group has entered into long-term supply agreements with certain affiliates of Bridgestone Group, one of the
largest tire retailers in the United States, to sell the Group’s own-brand tires through certain Bridgestone retail
outlets across North America. Since 2012, the Group has also entered into supply contracts with distributors in
the United States including Walmart and Discount Tire.
6.
ACCREDITATIONS AND AWARDS
The Group is committed to maintaining rigorous quality control procedures, and has obtained the ISO quality
system ISO / TS 16949 accreditation for all of its seven key manufacturing plants. In addition, all tire products
produced by the Group’s manufacturing plants are certified with Safety Certifications from the National Tires
Certification Committee and China Compulsory Product Certifications from Beijing Zhonghuan Combination
Quality Certification Co, Ltd. Products which are exported to regions such as the United States and Europe are
also required to meet quality criteria set by local regulatory and quality assurance bodies.
The following are some of the key certifications and accreditations that the Group has obtained for its products:
The Group has also garnered various quality awards from a number of its key customers. For example, the Group
was awarded the Supplier of the Year award by General Motors in 2005, 2006 and 2009, as well as the General
Motors Supplier Quality Excellence Award in 2012 and 2013. In addition, the Group has received Excellent
Supplier Awards from each of Foton, JAC and Dongfeng Commercial Vehicle for each year from 2008 until
2013. In 2012, the Group also received a Perfect Quality Award from Fiat Chrysler APAC, in recognition of its
performance as an OEM supplier.
The following are some of the key customer and enterprise accreditations and awards that the Group has obtained
over the past few years:
7.
RAW MATERIALS
The principal raw materials and components the Group uses in manufacturing its tires are natural rubber,
synthetic rubber, nylon and polyester cord, steel wire, and carbon black. For the year ended 31 December 2013
and the six months ended 30 June 2014, the Group incurred an aggregate cost of RMB 9.8 billion and RMB 4.1
billion, respectively, for key raw materials and components, representing approximately 59% and 55%,
respectively, of its total revenue for such periods.
The Group’s raw material procurement decisions are centralised on a corporate level. The purchasing department
liaises with the suppliers and procures and arranges delivery of raw materials and components to the production
plants. By centralising its purchases, the Group is able to take advantage of economies of scale in securing bulk
discounts and exercising more efficient control and management over its raw material supplies, including flexible
allocation of raw materials between different plants depending on the requirements at a particular time. To
51
reduce the risk that the Group will be unable to obtain adequate supply, the Group maintains relationships with
multiple suppliers for each of its key raw materials. For the three years ended 31 December 2013 and the
six months ended 30 June 2014, the Group did not experience any material difficulty in sourcing any of its key
raw materials.
Natural rubber prices and global oil prices have been extremely volatile over the past few years. As the Group’s
ability to pass on these raw material cost increases to its customers is typically limited due to market factors, the
Group actively pursues steps to mitigate the impact of price volatility in the raw materials that it uses, as well as
to ensure adequate supply. These steps include the following:
• Leverage buying power. As one of the largest tire producers in China, the Group has significant buying
power in respect of its raw materials, which it enhances by centralising its purchasing function at its corporate
headquarters. The Group also seeks to concentrate purchases from its PRC-based and international suppliers so
as to maximise its buying power.
• Leverage R&D capability. The Group has sought to develop new compounds in order to contain cost. For
example, partially substituting natural rubber with synthetic rubber and vice versa, depending on the relative
price trend between them.
• Vertical integration. Two subsidiaries of the Group, GITI Steel Cord (Hubei) Co., Ltd. and Anhui Prime
Cord Fabrics Co., Ltd., currently produce steel wire and nylon cord, two of the key raw materials in the tire
manufacturing process. The Group believes that its vertical integration into key components of its supply chain
help it to mitigate supply risks and control quality.
• Long-term supply contracts. To ensure that it does not experience any material difficulty in sourcing key raw
materials, the Group seek to enter into long-term supply contracts for its key raw materials so as to guarantee
minimum supplies.
8.
MANUFACTURING PLANTS
The Group operates seven principal tire manufacturing plants, with plants located in the cities of Anhui, Fujian,
Chongqing, Yinchuan and Hualin in the PRC.
Anhui. The Group owns two manufacturing plants which are located in Hefei city in the Anhui province. GITI
Tire (Anhui) Co. Ltd. commenced production at the end of 1993, while GITI Radial Tire (Anhui) Company Ltd
commenced production in 2007. The Group’s two Anhui plants together constitute the Group’s largest plants,
occupying a total site area of approximately 1,076,000 m2 of land. The Group’s two Anhui plants produce TBR
tires and PCR tires.
Fujian. The Group commenced production at its plant in Putian city in Fujian province, its second largest
plant, in 2000. The plant currently occupies a total site area of approximately 828,000 m2 of land and produces
TBR and PCR tires.
Chongqing. The Group acquired its Chongqing plant in November 2002, and commenced production at the
Chongqing plant in 2003. The plant occupies a total site area of approximately 207,000 m2 of land and produces
TBR tires.
Yinchuan. To establish a strategic foothold in northwest China, the Group acquired two plants in Yinchuan in
December 2002 which occupy a total land area of approximately 545,000 m2. Production at these plants
commenced in January 2003. One of the two plants produces bias tires and other tire products, while the other
produces TBR tires.
Hualin. With a view to expanding its market in northeast China and its production of TBR tires, the Group
acquired control of Hualin Tyre (since renamed GITI Tire Corporation) in December 2003. The tire
manufacturing operation in Hualin was subsequently injected into GITI Tire (Hualin) Company Ltd which
occupies a total land area of approximately 607,000 m2 and produces a full range of TBR, PCR and Bias tires.
The Group’s manufacturing plants have a combined year-end production capacity of approximately 146,000 tires
per day as at 30 June 2014.
52
The table below sets out the approximate daily aggregate production capacity of the Group’s production facilities
for the periods indicated:
As at 31 December
2011 2012 2013
As at
30 June
2014
Daily production capacity by product (’000)
PCR tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TBR tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bias tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111
23
9
114
23
4
116
22
4
119
22
5
Total daily production capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
143
141
142
146
In June 2014, the Group announced the proposed construction of a tire production facility in South Carolina in
the United States, which will focus on manufacturing passenger tires for the OEM and replacement markets in
North and South America. The Group believes that expanding its production operations in the Americas will give
it a significant advantage by allowing it to shorten its supply chain and align its manufacturing operations more
closely with the needs of its customers in the region.
Production Process
The following diagram illustrates the Group’s production process for its tires.
The Group has implemented a comprehensive quality control system at all of its plants. Strict quality control
measures have been instituted to ensure that the quality of the raw materials purchased meet the Group’s required
specifications. The Group conducts inspections at each stage of the production process to ensure that the various
components meet the relevant specifications and standards, and subjects its tires to a final inspection before
packaging them for delivery. With the use of an internal numbering system, the Group is able to track the
employee group responsible for a particular production process for each tire produced.
The Group is also committed to maintaining a high standard of quality control procedures, as reflected by its
achievement in obtaining ISO9001 accreditation and ISO/TS 16949 certification for all of its seven
manufacturing plants. All tires manufactured by the Group that are required to be accredited with safety
certifications by the National Tires Certification Committee are accredited with the China Compulsory Product
Certification. The TBR and PCR tires produced for export to the European market also satisfy standards for the
European E-mark Safety Certification as accredited by TÜV Automotive GmbH Tire/Wheel Test Center in
Germany, and all of the Group’s products for export to the United States have been accredited with the DOT
Certification from the Department of Transportation of the United States. In addition, the Group has obtained
certifications from the relevant regulatory authorities in Brazil and the Middle East for its tire products.
The Group follows government regulations on safety in the work place and requires that all of its employees
follow these safety rules. Safety-related training is provided to all employees, and the Group has established
53
safety standards specific to each stage of its production process. The Group also maintains personal injury
insurance coverage for its employees.
To ensure compliance with relevant environmental laws and regulations, the Group has instituted anti-pollution
measures at each of its plants, and carries out regular inspections to ensure that these systems are complied with.
In addition, all of the Group’s factories have obtained QS14001 Environmental Management accreditation. As at
the date of this Information Memorandum, the Group is not aware of any failure to comply with material
environmental laws and regulations currently in place.
9.
RESEARCH AND DEVELOPMENT
The Group maintains state-of-the-art research and development capabilities with a research and development
staff headcount of over 600 engineers globally as at 30 June 2014. In 2013, the Group established two research
and development centres in United States and Germany to complement its existing research and development
centres in the PRC and the United Kingdom. The Group uses a number of leading tire-industry technologies,
such as computer-aided design and engineering and finite element analysis for structural analysis, all of which
are intended to shorten product development time, improve product design, reliability, performance and technical
properties and reduce cost and waste.
The Group also subjects its products to voluntary testing and certification as part of the research and
development process. The Group’s tires are tested at international testing centres such as the National Quality
Examination Centre for Rubber Tires, Smithers Scientific Services, Inc. (USA) and TUV SUD Automotive
GmbH in Germany. The Group has also entered into formal technology and research agreements with leading
research institutes and organisations both in the PRC and overseas.
10. EMPLOYEES
As at 30 June 2014, the Group had approximately 19,000 employees.
The Group’s employees’ remuneration generally includes a salary, bonus and allowances. The Group’s
compensation programmes are designed to tie its employees’ income to its employees with welfare benefits
including medical care, housing subsidies and retirement benefits in accordance with applicable regulations.
In accordance with applicable Chinese laws and regulations, as well as compulsory requirements of the local
authorities where the plants are located, the Group participates in pension contribution, medical insurance,
unemployment insurance, accident insurance, and maternity insurance plans for its employees. The amount of
contribution as a percentage of the employees’ salaries varies from plant to plant, depending on relevant salary
levels, location of the plant and other factors such as the average age of the employees.
Where required by Chinese regulations, the Group has workers’ unions at its plants that protect employees’ rights
and welfare benefits, encourage employee participation in management decisions, and assist in mediating
disputes between it and individual employees. The Group has not been subjected to any strikes or other labour
disturbances that have interfered with its operations, and the Group believes that its relationship with its
employees is good.
11. INTELLECTUAL PROPERTY
The Group believes that the trademarks which are of material importance and most significant to the Group’s
business are those using the words “GITI”, “GT Radial”, “Primewell”, “Runway”, “Yinlun”, “Greatwall”,
Hualin”, “Dextero” and “Roadking”. For each of these, the Group owns the trademark, as well as the rights to the
product name, in each of the countries where the Group sells products under those names, other than in relation
to the “GT Radial” mark in the United States, where the Group holds a non-exclusive right to use the mark.
The Group is not aware of any material infringement of its trademarks during the past three years and believes
that it have taken all reasonable measures to prevent any infringement of its trademarks.
The Group is not aware of any claim pending or threatened against it or any of its subsidiaries asserting
infringement of any trademark owned by third parties.
12. INSURANCE
The Group maintains insurance coverage against loss of and damage to its fixed assets caused by natural
disasters and accidents (including fire hazards and explosions). The Group also maintains insurance cover against
loss of profits as a result of business cessation or interruption caused by the abovementioned loss and damage to
its fixed assets. Furthermore, the Group maintains product liability insurance for products the Group sells in the
international markets.
54
The Group has not made any material insurance claims during the past three years. The Group reviews the scope
of its insurance coverage needs on an annual basis, and believes that the current insurance coverage of its assets,
properties and products is adequate and sufficient for its operations.
13. LEGAL PROCEEDINGS
The Group is from time to time involved in legal proceedings in the normal course of business. However, as at
the date of this Information Memorandum, the Group is not aware of material legal proceedings, pending or
threatened, that could have a material adverse effect on its financial condition or results of operations.
14. PT GAJAH TUNGGAL TBK
In 2005, the Issuer acquired a stake in Gajah Tunggal, an Indonesia-based tire manufacturer listed on the Jakarta
Stock Exchange which is the largest integrated tire manufacturer in Indonesia. Gajah Tunggal’s principal
businesses include the development, manufacture and sale of radial tires, bias tires, motorcycle tires, inner tubes,
flaps, rim tape, tire cords and synthetic and processed rubber. As at the date of this Information Memorandum,
the Group has a shareholding interest of 49.5% in Gajah Tunggal, and two of its directors have been appointed to
the board of directors of Gajah Tunggal. As at 30 June 2014, the market capitalisation of Gajah Tunggal was
Rp.6,376.7 billion.
The Group has historically recorded its economic interest in Gajah Tunggal using the equity accounting method.
Due to recent changes in Singapore Financial Reporting Standard 110 Consolidated Financial Statements
(“FRS 110”), pursuant to which the Group is deemed to have “control” over Gajah Tunggal, the Group will be
required to consolidate the financial results and financial position of Gajah Tunggal into its financial results and
financial position for the financial year ending 2014, and the revenues, expenses, assets, liabilities and cash flows
of Gajah Tunggal will accordingly be fully incorporated into the Group’s results of operations and financial
condition. As Gajah Tunggal’s functional reporting currency is the Indonesian rupiah, the financial results of the
Group will consequently also be affected by movements in the exchange rate between the Indonesian rupiah and
the RMB.
15. DIRECTORS AND SENIOR MANAGEMENT
Board of Directors of the Issuer
Ms. Michelle Liem Mei Fung, aged 48, was appointed as a Director of the Issuer in December 1998. She is
currently a shareholder and director of GITI Holdings Ltd, the ultimate holding company of the Issuer, and a
director of GT Asia Pacific Holdings Pte Ltd. She has been a non-executive director of Tuan Sing Holdings, a
company listed on the Singapore Exchange, since April 2001. Ms. Liem is also the Managing Director of Nuri
Holdings, a director of Habitat Properties Pte Ltd, Conservation International Singapore Limited and other
companies. Ms. Liem is the Honorary Consul of the Grand Duchy of Luxembourg in Singapore, Co-Chair of the
Global Advisory Board (Asia Cabinet) and member of Council of the University of Chicago Booth School of
Business. She holds a Bachelor of Science (Economics) degree from the London School of Economics and an
MBA from the University of Chicago.
Dr. Tan Enk Ee, aged 46, was appointed as a Director of the Issuer in January 2006 and executive Director and
the Chairman in April 2010. He joined the Group in July 2003 as a director of GITI Tire Corporation, which is
listed on the SSE, and has been an executive Director of the Group, in charge of the Group’s sales and marketing
since 2006. Dr. Tan is also a director of Gajah Tunggal. Dr. Tan serves on the Conservation International Board
of Directors and the MIT Sloan Asian Executive Board.
Mr. Lei Huai Chin, aged 50, was appointed as a Director of the Issuer in February 1999 and as the Managing
Director in April 2010. He joined the Group in 1998 and is responsible for overseeing the overall operations as
well as the Group’s finances. Mr. Lei has been a director of Giti Tire Corporation, which is listed on the
Shanghai Stock Exchange (“SSE”), since July 2003. Mr. Lei is also a director of Gajah Tunggal. Mr. Lei has
worked in the area of finance and general management and has over 18 years of experience in the tire and
chemical industries.
Senior Management of the Group
Mr. Lei Huai Chin – See above.
Dr. Tan Enk Ee – See above.
Mr. Wu Zhimin, aged 42, is the Executive Director in charge of the Group’s PRC sales and marketing. He
joined the Group in 2004 and has been a director of GITI Tire Corporation since April 2006. Prior to joining the
55
Group, Mr. Wu worked for McKinsey & Company, where he worked in the area of strategy and marketing in the
Asia Pacific region.
Mr. Herve Frederic Richert, aged 50, is the Executive Director in charge of the Group’s International Sales and
Marketing – Passenger Car Tires and Corporate Development. Prior to joining the Group in January 2008,
Mr. Richert held various management positions across Europe, the United States and Asia at Michelin AsiaPacific in Singapore, including vice-president of business development, chief financial officer and executive
vice-president of Corporate Development Asia Pacific. Mr. Richert has over 25 years of experience in the tire
industry, specialising in strategy, corporate development, marketing, legal and finance functions.
Mr. Christopher James Bloor, aged 50, is the Executive Director in charge of the Group’s Sales and Marketing
– Commercial Vehicle Tires and joined the Group in April 2009. Mr. Bloor has 34 years of experience in the tire
business and has held many technical, operational sales and managerial positions in Europe and Asia. He worked
with the Michelin Group for 29 years, and has also served as an executive director of Michelin UK PLC.
Mr. Liao Shuien-Wen, aged 62, is the Executive Director in charge of the Group’s manufacturing operations
and has been with the Group since 1994, when he joined GITI Tire (Anhui) Co., Ltd. Mr. Liao has been a
director of GITI Tire Corporation since November 2006. Prior to joining the Group, Mr. Liao worked at other tire
companies and has approximately 39 years’ experience in engineering and management in the tire industry.
Mr. Phang Wai Yeen, aged 60, is the Executive Director in charge of the Group’s research and development
and joined the Group in 2007. He has over 29 years’ experience in general management, in sales, technical and
marketing in the automotive industry as well as the tire business. He has also served as an Executive Director of
Silverstone Berhad (now a subsidiary of Toyo Tire & Rubber Co. Ltd, Japan), an integrated tire manufacturer in
Malaysia.
Dr. Michel Dube, aged 59, joined and was appointed as the Executive Director in charge of the GITI Group’s
quality assurance in 2007. Dr. Dube has over 30 years of experience in the tire industry. Prior to joining the
Group in 2007, Dr. Dube held various portfolios for another leading global tire company, Michelin. During his
career with Michelin, Dr. Dube worked in North America, Europe and Asia, and he last held the position of vice
president and quality director of Michelin Europe Passenger Car & Light Truck Tire, and was responsible for the
development and implementation of corporate strategies for quality assurance and quality control in relation to
tire manufacturing and distribution. In 2010, Dr. Dube was seconded to Gajah Tunggal, a publicly listed
Indonesian tire company and an affiliate of the GITI Group, as its Vice President Manufacturing for radial tyres.
Since 2012, Dr Dube was also appointed as a member of its Board of Directors. He holds a Ph.D in Chemistry
from the University of Montreal in Canada.
Dr. Shen Wei Jia, aged 60, is the Executive Director in charge of the Group’s corporate relations and subsidiary
companies. He joined the Group in October 2004 as a vice president of GITI China Investment. He has been a
director of GITI China Investment since September 2005 and a director of GITI Tire Corporation since May
2005. Prior to joining the Group, Dr. Shen held general management positions in various companies. Dr. Shen
has more than 13 years of managerial experience in the manufacturing industry.
56
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following sets out the audited consolidated financial statements of the Group for the financial years ended
31 December 2011, 31 December 2012 and 31 December 2013 and the unaudited consolidated financial
statements of the Group for the six months ended 30 June 2013 and 30 June 2014. Results for the interim period
should not be considered indicative of results for any other period or for the full financial year. The application of
FRS 110, which takes effect from financial years beginning on or after 1 January 2014 with full retrospective
application, requires the Group to consolidate the financial results and financial position of Gajah Tunggal
commencing from fiscal year 2014. The consolidated financial statements of the Group set out herein and
disclosed in the Information Memorandum has not applied FRS 110, and has not consolidated the financial
results and financial position of Gajah Tunggal.
Consolidated statement of profit or loss and other comprehensive income for the financial years ended
31 December 2011, 31 December 2012 and 31 December 2013 and the six months ended 30 June 2013 and
30 June 2014
For the financial year
For the six months
ended 31 December
ended 30 June
2011
2012
2013
2013
2014
(RMB in millions)
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,688 17,013 16,685
8,087
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,515) (13,427) (12,280) (6,032)
7,436
(5,327)
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling and distribution expenses . . . . . . . . . . . . . . . . . . . . . . . .
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of results of an associate . . . . . . . . . . . . . . . . . . . . . . . . .
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,173
399
(1,885)
(803)
245
(786)
3,586
293
(1,923)
(980)
384
(683)
4,405
272
(2,044)
(828)
39
(595)
2,055
89
(922)
(374)
138
(297)
2,109
65
(985)
(463)
54
(290)
Profit before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
343
(18)
677
(108)
1,249
(413)
689
(172)
490
(201)
Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of income tax:
Exchange difference arising on translation of foreign
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
325
569
836
517
289
(110)
(91)
(491)
(146)
54
Total comprehensive income for the year . . . . . . . . . . . . . . .
215
478
345
371
343
Profit for the year attributable to:
Owner of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . .
309
16
473
96
679
157
450
67
231
58
325
569
836
517
289
199
16
382
96
188
157
304
67
285
58
215
478
345
371
343
Total comprehensive income attributable to:
Owner of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
Consolidated statements of financial position as at 31 December 2011, 31 December 2012, 31 December
2013 and 30 June 2014
As at 31 December
As at 30 June
2011
2012
2013
2014
(RMB in millions)
Non-current assets
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest in an associate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount due from immediate holding company . . . . . . . . . . . . . . . . . . . .
Deposits for purchase of property, plant and equipment . . . . . . . . . . . . . .
Other receivables – non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,006
190
2
6
1,404
96
237
1,620
22
—
5,543
173
2
29
1,683
100
338
1,710
24
2
5,198
168
2
40
1,212
100
335
584
33
4
5,186
165
2
47
1,316
100
278
607
77
3
Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,583
9,604
7,676
7,781
Current assets
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount due from immediate holding company . . . . . . . . . . . . . . . . . . . .
Amounts due from related companies/parties . . . . . . . . . . . . . . . . . . . . . .
Restricted bank deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank balances and cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,047
2,582
5
398
433
746
822
3,234
2,477
5
394
459
407
1,063
2,913
2,942
5
394
471
520
1,120
2,964
2,698
5
394
584
517
1,203
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,033
8,039
8,365
8,365
Current liabilities
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts due to related companies/parties . . . . . . . . . . . . . . . . . . . . . . . .
Tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings – due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,862
—
76
63
6,271
4,321
—
119
96
5,938
4,273
14
150
145
3,988
4,148
17
147
50
4,497
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,272
10,474
8,570
8,859
Net current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,239) (2,435)
(205)
(494)
Total assets less current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,344
7,169
7,471
7,287
Non-current liabilities
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings – due after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
2,346
36
12
1,916
57
12
3,186
91
19
2,767
103
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,393
1,985
3,289
2,889
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,951
5,184
4,182
4,398
Capital and reserves
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,758
2,628
1,758
2,889
1,758
1,760
1,758
1,972
Equity attributable to owner of the Company . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,386
565
4,647
537
3,518
664
3,730
668
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,951
5,184
4,182
4,398
58
Consolidated statement of cash flows for the financial years ended 31 December 2011, 31 December 2012
and 31 December 2013 and the six months ended 30 June 2013 and 30 June 2014
For the financial year
For the six months
ended 31 December
ended 30 June
2011
2012
2013
2013
2014
(RMB in millions)
Net cash from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,106
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (493)
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (339)
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . .
274
Cash and cash equivalents at beginning of the year . . . . . . . . . . . . . . . . . .
487
Effect of foreign exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . .
61
Cash and cash equivalents at end of the year, represented by bank
balances and cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
822
996 1,631
404
521
(338) (637) (366) (405)
(414) (893)
(37)
(57)
244
101
1
59
822 1,063 1,063 1,120
(3)
(44)
4
24
1,063
1,120
1,068
1,203
Review of the Group’s performance and financial position for the six months ended 30 June 2014
The Group’s revenue for the six months ended 30 June 2014 was RMB 7,436 million, representing a decrease of
8% from RMB 8,087 million for the six months ended 30 June 2013. Despite an increase in sales volume, the
decrease was mainly due to lower average selling price as a result of price adjustments made amidst lower raw
material costs, market conditions and product mix.
The Group’s total assets as at 30 June 2014 was RMB 16,146 million, representing an increase of 1% from
RMB 16,041 million as at 31 December 2013. The increase was primarily due to an increase in interest in an
associate to RMB 1,316 million as at 30 June 2014 from RMB 1,212 million as at 31 December 2013, on account
of Gajah Tunggal’s improved results of operations. This was partially offset by a decrease in trade and other
receivables to RMB 2,698 million as at 30 June 2014 from RMB 2,942 million as at 31 December 2013 mainly
due to lower revenue.
The Group’s total borrowings remained relatively stable at RMB 7,264 million as at 30 June 2014, compared to
RMB 7,174 million as at 31 December 2013. Borrowings – due within one year increased to RMB 4,497 million
as at 30 June 2014 from RMB 3,988 million as at 31 December 2013. Borrowings – due after one year decreased
to RMB 2,767 million as at 30 June 2014 from RMB 3,186 million as at 31 December 2013. The above changes
were primarily as a result of the change in the Group’s borrowing profile as relatively more loans were nearing
their maturities.
The Group’s total equity as at 30 June 2014 was RMB 4,398 million, representing an increase of 5% from
RMB 4,182 million as at 31 December 2013, mainly due to the increase in reserves on account of the profit of the
Group for the six months ended 30 June 2014.
The Group’s net cash from operating activities was RMB 521 million for the six months ended 30 June 2014,
representing an increase of 29% from RMB 404 million for the six months ended 30 June 2013, mainly due to
improved working capital management. Net cash used in investing activities was RMB 405 million for the
six months ended 30 June 2014, representing an increase of 11% from RMB 366 million for the six months
ended 30 June 2013, mainly due to increased payments made on account of property, plant and equipment. Net
cash used in financing activities was RMB 57 million for the six months ended 30 June 2014 compared to
RMB 37 million for the six months ended 30 June 2013, as there were less borrowings and a higher cash balance
as at 30 June 2014 compared to 30 June 2013.
Review of the Group’s performance and financial position for the year ended 31 December 2013
The Group’s revenue for the year ended 31 December 2013 was RMB 16,685 million, representing a decrease of
2% from RMB 17,013 million for the year ended 31 December 2012. Sales remained relatively stable primarily
due to a combined effect of an increase in sales volume, driven mainly by stronger demand in the PCR segment
particularly in export market, lower average selling price as a result of price adjustments made amidst lower raw
material costs, market conditions and product mix.
The Group’s total assets as at 31 December 2013 of RMB 16,041 million represented a decrease of 9% from
RMB 17,643 million as at 31 December 2012. This was mainly attributable to a decrease in property, plant and
equipment, interest in an associate, inventories and decrease in amount due from immediate holding company.
Property, plant and equipment decreased to RMB 5,198 million as at 31 December 2013 from
RMB 5,543 million as at 31 December 2012 primarily as a result of depreciation and new purchases.
59
Interest in an associate decreased to RMB 1,212 million as at 31 December 2013 from RMB 1,683 million as at
31 December 2012 as a result of a decrease in Gajah Tunggal’s financial results during this period, which was
primarily due to the foreign exchange losses of Gajah Tunggal on account of the translational adjustment of
Gajah Tunggal’s outstanding US Dollar denominated bond when the Rupiah weakened in 2013.
Inventories decreased to RMB 2,913 million as at 31 December 2013 from RMB 3,234 million as at
31 December 2012 as the Group lowered inventory turnover days. The foregoing was partially offset by an
increase in trade and other receivables to RMB 2,942 million as at 31 December 2013 from RMB 2,477 million
as at 31 December 2012, as a result of an increase in trade and notes receivables.
The Group’s total borrowings decreased to RMB 7,174 million as at 31 December 2013 from RMB 7,854 million
as at 31 December 2012 as the Group improved its profit for the year, operating cashflow, loan profile and
leverage. Borrowings – due within one year decreased to RMB 3,988 million as at 31 December 2013 from
RMB 5,938 million as at 31 December 2012 primarily on account of repayment of borrowings and loans
reaching its maturity. Borrowings – due after one year increased to RMB 3,186 million as at 31 December 2013
from RMB 1,916 million as at 31 December 2012, as a result of continuing initiatives in improving the Group’s
loan profile with the percentage of short term borrowings to total borrowings decreasing from 76% in 2012 to
56% in 2013.
The Group’s total equity as at 31 December 2013 was RMB 4,182 million, representing a decrease of 19% from
RMB 5,184 million as at 31 December 2012 mainly due to changes in total comprehensive income and reserves
in 2013.
The Group’s net cash from operating activities was RMB 1,631 million for the year ended 31 December 2013,
representing an increase of 64% from RMB 996 million for the year ended 31 December 2012, mainly due to the
increase in profit for the year. Net cash used in investing activities was RMB 637 million for the year ended
31 December 2013, representing an increase of 88% from RMB 338 million for the year ended 31 December
2012, mainly due to payments of RMB 417 million for property, plant and equipment and the payment of an
amount of RMB 171 million for the acquisition of the remaining shareholding of GITI Tire (Yinchuan) Co., Ltd.
(“GITI Yinchuan”) and GITI Greatwall Tire (Yinchuan) Co., Ltd. (“GITI Greatwall Yinchuan”) , which owns
the Yinchuan factories in 2013. Net cash used in financing activities was RMB 893 million for the year ended
31 December 2013 from RMB 414 million for the year ended 31 December 2012, mainly due to decreased
repayment of loans and the payment of dividends.
Review of the Group’s performance and financial position for the year ended 31 December 2012
The Group’s revenue for the year ended 31 December 2012 was RMB 17,013 million, representing a decrease of
9% from RMB 18,688 million for the year ended 31 December 2011. The decrease in revenue was mainly due to
a combined effect of a decrease in sales in both the domestic and export markets, and lower average selling
prices.
The Group’s total assets as at 31 December 2012 was RMB 17,643 million, representing a decrease of 5% from
RMB 18,616 million as at 31 December 2011. This was mainly attributable to a decrease in property, plant and
equipment, inventories and trade and other receivables. Property, plant and equipment decreased to
RMB 5,543 million as at 31 December 2012 from RMB 6,006 million as at 31 December 2011 as a result of
depreciation and new purchases. Inventories decreased to RMB 3,234 million as at 31 December 2012 from
RMB 4,047 million as at 31 December 2011 as a result of the Group having rebalanced its inventory levels and
lower raw material costs. Interest in an associate increased to RMB 1,683 million as at 31 December 2012 from
RMB 1,404 million as at 31 December 2011, on account of Gajah Tunggal’s improved results of operations.
The Group’s total borrowings decreased to RMB 7,854 million as at 31 December 2012 from RMB 8,617 million
as at 31 December 2011 as the Group improved its working capital level, loan profile and leverage. Borrowings –
due within one year decreased to RMB 5,938 million as at 31 December 2012 from RMB 6,271 million as at
31 December 2011. Borrowings – due after one year decreased to RMB 1,916 million as at 31 December 2012
from RMB 2,346 million as at 31 December 2011. The decrease in borrowings was primarily due to increased
repayments for the year which led to a decrease in total borrowings. Trade and other payables decreased to RMB
4,321 million as at 31 December 2012 from RMB 4,862 million as at 31 December 2011, primarily as a result of
lower raw material costs.
The Group’s total equity as at 31 December 2012 was RMB 5,184 million, representing an increase of 5% from
RMB 4,951 million as at 31 December 2011 mainly due to increased total comprehensive income earned in 2012.
The Group’s net cash from operating activities was RMB 996 million for the year ended 31 December 2012,
representing a decrease of 10% from RMB 1,106 million for the year ended 31 December 2011 mainly due to
60
decrease in trade and other payables, which was set off against increased profit for the period. Net cash used in
investing activities was RMB 338 million for the year ended 31 December 2012, representing a decrease of 31%
from RMB 493 million for the year ended 31 December 2011, mainly due to the deposit paid for the acquisition
of the remaining shareholding of GITI Yinchuan and GITI Greatwall Yinchuan, which owns the Yinchuan
factories, and payment made for the acquisition of additional interest in Gajah Tunggal in 2011. Net cash used in
financing activities was RMB 414 million for the year ended 31 December 2012, representing an increase of 22%
from RMB 339 million for the year ended 31 December 2011 mainly due to increased repayments.
61
RISK FACTORS
Prior to making an investment or divestment decision, prospective investors or existing holders of the Notes
should carefully consider all the information set forth in this Information Memorandum including the risk factors
set out below.
Any of the following risks could adversely affect the Group’s business, financial condition, results of operations
or prospects and investors could, as a result, lose all or part of their investment. The risk factors set out below do
not purport to be complete or comprehensive of all the risk factors that may be involved in the business, assets,
financial condition, performance or prospects of, or the properties owned by, the Group or any decision to
purchase, own or dispose of the Notes. Additional risk factors and uncertainties which the Issuer is currently
unaware of may also impair its business, assets, financial condition, performance or prospects. If any of the
following risk factors develop into actual events, the business, assets, financial condition, performance or
prospects of the Group could be materially and adversely affected. In such cases, the ability of the Issuer to
comply with its obligations under the Trust Deed and the Notes may be adversely affected.
Limitations of this Information Memorandum
This Information Memorandum does not purport to nor does it contain all information that a prospective investor
in or existing holder of the Notes may require in investigating the Group, prior to making an investment or
divestment decision in relation to the Notes issued under the Programme. Neither this Information Memorandum
nor any document or information (or any part thereof) delivered or supplied under or in relation to the
Programme or the Notes (or any part thereof) is intended to provide the basis of any credit or other evaluation
and should not be considered a recommendation by the Issuer, the Arranger or any of the Dealers that any
recipient of this Information Memorandum or any such other document or information (or such part thereof)
should subscribe for or purchase or sell any of the Notes.
This Information Memorandum is not, and does not purport to be, investment advice. A prospective investor
should make an investment in the Notes only after it has determined that such investment is suitable for its
investment objectives. Determining whether an investment in the Notes is suitable is a prospective investor’s
responsibility, even if the investor has received information to assist it in making such a determination. Each
person receiving this Information Memorandum acknowledges that such person has not relied on the Group, the
Arranger or any of the Dealers or any person affiliated with each of them in connection with its investigation of
the accuracy or completeness of the information contained herein or of any additional information considered by
it to be necessary in connection with its investment or divestment decision. Any recipient of this Information
Memorandum contemplating subscribing for or purchasing or selling the Notes should determine for itself the
relevance of the information contained in this Information Memorandum and any such other document or
information (or any part thereof) and its investment or divestment should be, and shall be deemed to be, based
solely on its own independent investigation of the financial condition and affairs, and its own appraisal of the
credit worthiness of the Group, the terms and conditions of the Notes and any other factors relevant to its
decision, including the merits and risks involved. A prospective investor should consult with its legal, tax and/or
other advisers prior to deciding to make an investment in the Notes.
RISKS RELATING TO THE ISSUER’S AND THE GROUP’S BUSINESS, FINANCIAL CONDITION
AND/ OR RESULTS OF OPERATIONS
The tire industry as a whole is highly competitive and subject to significant market volatility, which creates
significant competitive pressures for the Group and its business.
The Group sells its products both in the PRC and overseas and consequently faces competition from both
domestic tire manufacturers in the PRC as well as international tire manufacturers in other countries. Many of
these competitors have longer operating histories, a larger customer base, greater financial resources and superior
research and development and marketing and capabilities than the Group. The price at which the Group is able to
sell its products is also affected by the pricing policies of its competitors, and there can be no assurance that the
Group will be able to compete successfully against such current or future competitors. If the Group is unable to
successfully maintain its competitive position, its business growth and results of operations could be materially
and adversely affected.
In addition, the tire manufacturing industry in the PRC is relatively fragmented, which leads to significant
competition among domestic PRC manufacturers. Increased competition may reduce selling prices generally, the
growth of its customer base and/or reduce market share, and may result in higher selling and promotional
expenses. In addition, any material consolidation among other tire manufacturers within the PRC market could
result in one or more of the Group’s competitors achieving a stronger position in the domestic market, which
62
could affect the Group’s overall competitiveness. Any of these developments may have a material and adverse
impact on the Group’s business growth and results of operations.
Prices of the Group’s principal raw materials are subject to significant volatility as a result of price and
currency fluctuations.
The principal raw materials the Group uses in manufacturing tires are natural rubber, steel wire and various
petroleum-based products, including synthetic rubber, nylon and polyester cord and carbon black. Natural rubber
prices and global oil prices are volatile and are expected to remain highly volatile in the future, which has a direct
impact on the Group’s cost of sales. The Group also uses electricity, natural gas and fuel oil in its production
process, the prices of which are subject to market movements. Many of the Group’s key raw materials are also
priced in US dollars, which exposes the Group to currency risk as its revenues are largely denominated in RMB.
While the Group benefits from a natural hedge in light of the fact that a significant portion of its export sales are
conducted in US dollars and Euro, there can be no assurance that the Group’s non-RMB revenues will be
sufficient to offset the impact of a significant appreciation in the value of the US dollar against the RMB.
The Group’s ability to manage its exposure to fluctuations in raw material costs depends primarily on its ability
to minimise its carried inventory of raw materials and its ability to adjust the prices for its products so that raw
materials costs are reflected in the prices paid by its customers. The Group’s ability to pass on part or all of its
raw material cost increases to its customers largely depends on market conditions, including the actions of
competitors. Changes in the prices the Group charges for its products may lag behind any increases in raw
material costs. In addition, to maintain price competitiveness and market share, the Group may decide not to
increase the price of its tires, even if there has been an increase in raw material costs. Any fluctuation in the
prices of raw materials may materially and adversely the Group’s profit margins and operating results.
Shortages of raw materials could limit the Group’s production volumes.
To produce tires, the Group requires significant quantities of raw materials and components, primarily natural
and synthetic rubber, nylon and polyester cord, steel wire, carbon black and a variety of chemical compounds.
Any interruptions in the supply of or shortages of any of these key raw materials could limit the Group’s ability
to produce tires or, if the shortages are severe, could mean that it might be required to shut down production. Any
disruption to the Group’s operations would materially and adversely affect its financial condition and operating
results.
The Group’s future growth and prospects may be adversely affected if it fails to market products on a timely
and effective basis, improve product mix, increase production volume or enhance production efficiency.
The Group’s continued profitability will also depend on its ability to bring new products and value-added
customer services to the market in line with market demand, as well as its ability to optimise product mix and
develop and implement more efficient production techniques. The Group’s future growth and prospects are also
dependent upon its ability to expand production capacity. The Group expects to expand its production capacity
over the next few years to meet market demand for its products, and has recently announced the proposed
construction of a tire production facility in South Carolina in the United States to better enable to it to reach the
North American and South American markets. However, the Group’s ability to successfully build its
manufacturing network will depend in large part on its continued financial and operational success. If the Group
fails to timely implement any of its future plans and growth strategies, its business, financial condition and
operating results could be materially and adversely affected.
Export sales constitute a significant part of the Group’s revenues, and such international operations may be
materially and adversely affected by regulatory actions that occur in countries over which the Group has no
control.
In 2011, 2012 and 2013, the Group’s export sales amounted to 43%, 43% and 44% of its revenue, respectively.
Countries where the Group exports tire products have in the past imposed additional tariffs on tires from the
PRC, and there is no assurance that these countries will not initiate other trade protectionist actions in the form of
anti-dumping measures, taxes, trade laws, tariffs and regulatory requirements against PRC-manufactured tire
products in the future. In particular, from 2009 to 2012, the Group’s tire sales into the United States were
impacted by tariffs that were imposed by the United States government on imports of tires manufactured in the
PRC. In addition in June 2014, the United Steelworkers union in North America filed a petition with the United
States government alleging that tires from the PRC were unfairly priced and subsidised by the PRC government,
leading to market share losses for United States tire makers and job losses for their workers. As a result, the
United States Department of Commerce and the United States International Trade Commission have initiated
63
anti-dumping and countervailing duty investigations against certain passenger and light truck tire imports from
the PRC, and further import tariffs may be subsequently imposed on the Group’s products. Although the Group
had previously put into place various measures to reduce the impact from the tariffs imposed between 2009 and
2012, and had managed to successfully increase prices on some of its products to offset the impact on its overall
margins, there can be no assurance that the Group will be able to successfully manage these risks in future.
Certain of the Group’s other export markets, including the European Union, have put into place product
standards to mandate the use of local products or labour in imported tires. Such product standards are inherently
disadvantageous to exporters of tires into these markets, including the Group, and the Group has in the past had
to expend significant resources to meet these requirements in the relevant markets. In the event that the European
Union or any of the Group’s other export markets impose additional product standards on tire imports, there can
be no assurance that the Group will be able to comply with any such new standards, and its sales into these
territories could potentially be curtailed, which could materially and adversely affect its financial condition and
business.
If additional protectionistic measures are initiated by foreign governments, the Group may be subject to
additional costs on its products, which could reduce the demand for its tire products. Certain countries where the
Group exports products, or may consider exporting to in the future, are or may also become subject to various
trade sanctions which are implemented by the United States or other governmental authorities. While the Group
takes steps to ensure it is in compliance of trade sanctions in each of the jurisdictions in which it does business,
such compliance could also substantially impact the Group’s export sales and its ability to distribute its products
into key export jurisdictions, including the United States. Any such restrictions could materially and adversely
affect the Group’s international operations, which would have a correspondingly negative impact on the Group’s
business, financial condition and prospects.
In addition, in October 2014, the Indonesian Business Competition Supervisory Commission issued an
announcement that it was investigating alleged price-fixing activities among six tire manufacturers in Indonesia,
including the Group’s Indonesian-listed associate company, Gajah Tunggal. Gajah Tunggal has publicly
responded that it does not believe it has contravened any local Indonesian laws or regulations, and that it intends
to vigorously contest these allegations. However, if it is convicted of these allegations, Gajah Tunggal could be
liable for fines of up to 25 billion Indonesian rupiah. If any such fines or other sanctions are imposed upon Gajah
Tunggal, this could negatively impact its reputation, operating and financial condition and prospects, and could
indirectly affect the Group as whole.
The Group’s results of operations have been affected and may continue to be affected by its investment in
Gajah Tunggal.
The Group’s results of operations have historically been affected by the results of Gajah Tunggal, in which it has
a 49.5% ownership interest. Due to recent changes in FRS 110 under which the Group is deemed to have
“control” over Gajah Tunggal, the Group will be required to consolidate the financial results and financial
position of Gajah Tunggal into its financial results and financial position for the financial year ending 2014.
Gajah Tunggal’s revenues are primarily denominated in Indonesian rupiah, and it uses the Indonesian rupiah as
its functional reporting currency. As a result, the Group will be exposed to fluctuations in the currency exchange
rate between the Indonesian rupiah and the RMB once the financial results of Gajah Tunggal are consolidated
into the financial results of the Group. For example, a significant depreciation in the value of the Indonesian
rupiah against the RMB or other global currencies would require Gajah Tunggal to apply a higher proportion of
its Indonesian rupiah reserves to meet its payment obligations in respect of its US dollar-denominated supply
arrangements and its US dollar denominated debt. This could negatively affect the reported revenues of Gajah
Tunggal in the Group’s financial statements. The Issuer understands from Gajah Tunggal that it continually
monitors its foreign exchange exposures in order to minimise the impact of currency risk on its business, but
there can be no assurance that Gajah Tunggal will continue to be successful at managing these exposures, or that
any hedging arrangements in the Indonesian market, if required, would be available to Gajah Tunggal on a costeffective basis or at all. Any negative impact caused by exchange rate movements or other factors on Gajah
Tunggal’s financial results will also have an indirect negative impact on the financial results of the Group. For
further information regarding the Group’s investment in Gajah Tunggal, see “The Group – PT Gajah Tunggal
Tbk”.
For the Group’s international expansion plans to succeed, it will be required to capture greater market share
in mature markets, and it may not succeed in doing so to the extent it expects or at all.
The global tire market is highly competitive and dominated by large global tire companies such as Bridgestone,
Goodyear and Michelin. For the Group’s international expansion plans to succeed, it needs to capture greater
64
market share from other tire manufactures who are more established in international markets. There is no
assurance that the Group will succeed in such competitive markets. In the event that the Group’s products are
unable to gain better acceptance in these overseas markets, its export sales will suffer, thus affecting profits.
The Group’s future growth and prospects may be adversely affected if it is unable to keep up with customers’
quality expectations and emerging technological trends affecting the tire market.
Technological innovation is an integral feature of the global tire industry. Innovative technologies continue to be
introduced, and present an as-yet unpredictable challenge to general tire manufacturers. These innovations have
traditionally been developed and marketed by leading tire manufacturers such as Michelin, Goodyear and
Bridgestone. To the extent that these new technologies become mainstream, the Group may have to alter or retool its production processes and incur capital expenditure to keep up with market trends. While the Group has a
research and development programme focused on improving and modifying production technology and product
design to achieve higher product quality and increased environmental friendliness and reduce production costs,
there can be no assurance that it will be able to successfully accomplish any such transition. Failure to keep pace
with technological advances or to implement such improvements in commercial applications on a timely basis
will impede efforts to remain competitive, increase sales and reduce production costs, and as a result the Group’s
operating margins and financial results could be materially and adversely affected.
Termination of the Group’s third party manufacturing and distribution arrangements could adversely affect
its operating results.
The Group has entered into manufacturing and distribution agreements with a number of significant tire retailers
and distributors, such as Bridgestone in the United States. These contractual arrangements are valuable and
consistent sources of sales revenue for the Group. Each of these arrangements is subject to termination in
accordance with their terms, and the Group’s third party customers and partners may decide in accordance with
the terms of such agreements to terminate their arrangements with the Group. In the event of any such
termination, the Group’s business and financial results could be materially and adversely affected.
The Group’s business success depends on its ability to retain key senior management members and further
recruit qualified personnel.
The Group is dependent on its senior management, in particular, its executive directors and the general managers
of its plants, for setting strategic direction and managing the Group’s business, which is crucial to its success. If
the Group loses the services of its key senior management members or key senior officers, it may be difficult to
find and integrate any replacement personnel within a short period of time. Any disruption to the existing
functions of the Group’s management team may have a material and adverse effect on its operations and the
growth of its business. See “The Group – Directors and Senior Management”.
The Group’s future success is also dependent upon its continued ability to attract and retain key qualified
personnel. Competition for qualified personnel is intense both in the PRC and globally. If the Group cannot
recruit and retain sufficient qualified employees, its capabilities may be limited, which may have a material and
adverse impact on its operations.
The Group may experience difficulties in conducting or integrating any future acquisitions.
As part of the Group’s past growth strategy, the Group has made several acquisitions of companies and assets.
The Group continues to review inorganic growth opportunities, and may in future make additional strategic
acquisitions or enter into strategic partnerships to expand its production capacity and further penetrate existing or
new markets. There can be no assurance that the Group will be able to identify appropriate investments or
acquisitions, continue to acquire businesses on satisfactory terms, or that any acquired business will be integrated
successfully into the Group’s operations, or that it will be able to operate such business profitably. Acquisitions
and ventures into new business lines involve numerous risks, including difficulties in assimilating the operations
and technologies of the acquired businesses, personnel turnover and diversion of management attention away
from other business concerns. Failure to achieve the desired level of synergies from any investment or
acquisition could have a material adverse effect on the Group’s business, financial condition and results of
operations.
Unexpected production interruptions may materially and adversely affect the Group’s financial condition and
results of operations.
The Group’s tire manufacturing processes depend upon a stable supply of energy and certain critical equipment
which are subject to unexpected interruptions. The Group’s production facilities could be adversely affected by
65
events such as the breakdown of equipment, difficulties or delays in obtaining spare parts and equipment, raw
material shortages, power shortages and blackouts, fire, natural disasters, civil disorders, industrial accidents and
the need to comply with regulations concerning matters such as hygiene, safety and environmental protection. In
addition, it has been reported that China’s growing power shortages have affected cities such as Shanghai and
Guangzhou. If the cities where the Group has operations are affected by power outages or must ration their use of
power or there are material production interruptions, its production volumes and results of operations may be
materially and adversely affected. As the Group has also committed to deliver specified quantities of tires,
subject to permitted variances, under certain distribution contracts, significant interruptions in operations may
cause the Group to be unable to meet its delivery obligations and therefore subject to claims from its distributors.
The economic conditions in the PRC and other parts of the world may adversely impact demand for the
Group’s products, resulting in an adverse effect on its business, financial condition and results of operations.
The sales of the Group’s tires are dependent upon economic conditions and their impact on vehicle production
and use. A weakening of economic conditions or consumer demand could negatively affect the Group’s financial
results, as demand for its personal and commercial tire products decreases in key markets. An economic
downturn could also cause financial difficulties for the Group’s customers, dealers or suppliers, which would
adversely impact the demand and sales, as well as the supply and distribution, of the Group’s products.
Consumer confidence, recessionary trends, inflationary trends, credit availability (including financing and
payment plans for the purchase of vehicles) and interest rates, may impact consumer demand and sales levels
both in the PRC and globally. The global financial crisis that began in 2008 has led to challenging economic
conditions in China, North America and Europe, including a decrease in consumer demand for automobiles and a
slowdown in investment in the vehicle industry, and the Group’s results of operations in 2008 were adversely
affected as a result. There can be no assurance that the market conditions will not deteriorate again.
Given the Group’s reliance on both the domestic PRC and international markets, an economic downturn in the
global economy generally could reduce the Group’s sales values, margins and prices, thereby materially and
adversely affecting its business, financial condition and operating results. In addition, the volatility of the
financial markets may result in increased interest expense on the Group’s bank borrowings and a reduction in the
amount of banking facilities currently available to it.
The Group has net current liabilities and significant borrowings and interest payment obligations, which
could limit the funds available for expansion, new products and various business purposes.
The Group’s business and operations are capital intensive. The Group has relied on a significant amount of shortterm and long-term borrowings to fund a portion of its capital requirements, and expect to continue to do so in
the future. As at 30 June 2014, the Group has net current liabilities of RMB 494 million and total borrowings of
RMB 7,264 million, which comprise mainly of short-term borrowings of RMB 4,497 million. These short-term
borrowings are primarily from commercial banks in the PRC. The Group has historically repaid a significant
portion of these short-term loans by rolling over the loans on an annual basis. However, there can be no
assurance the Group will be able to continue to roll over its short-term loans when they become due.
The Group also has significant financing cost of RMB 290 million for the six months ended 30 June 2014.
Interest payments reduce funds available for the Group’s working capital, capital expenditures, acquisitions and
other business purposes, and limit its ability to respond to changing market conditions or expand through
acquisitions, increase its vulnerability to adverse economic and industry conditions and place it at a competitive
disadvantage compared to those of its competitors that have less indebtedness. As the Group does not currently
hedge its interest rate exposure, any significant increase in interest rates would substantially increase its
borrowing costs and could materially and adversely affect its financial condition and results of operations.
From time to time, the Group may need to raise additional funds to finance more rapid expansion, meet
unanticipated operating cash losses, develop new or enhanced products or services, respond to competition or
brand pressures, invest in or acquire businesses or technologies, or respond to unanticipated requirements or
developments. The ability to arrange financing or refinancing is dependent on a number of factors, including the
Group’s future performance, general economic and capital market conditions and credit availability from banks
or other lenders, and other factors, many of which are beyond its control and cannot be predicted with certainty.
In response to inflationary pressures, certain PRC banks may have halted or reduced new lending in certain
industries for a short period of time. If sufficient funds are unavailable to meet the Group’s needs or refinancing
cannot be obtained on commercially acceptable terms, if at all, then the Group may not be able to repay its
borrowings, particularly its short-term borrowings, upon maturity, or, expand, introduce new products or services
or compete effectively. This could materially and adversely affect the Group’s financial condition and results of
operations.
66
The Group must comply with product liability laws and may be subject to product liability claims and product
recalls which may require it to incur substantial costs in a manner that could have a material adverse effect on
its financial condition and results of operations.
Product quality or the perception thereof significantly influences a customer’s decision to purchase tires, and any
material product defect could require us to publicly undertake service actions or recall campaigns. Any negative
incidents involving the Group’s products or any service actions or recall campaigns in the future could require
the Group to incur considerable expense correcting problems and could influence purchasing decisions of
customers of its products, thereby negatively affecting future sales and profitability. For example, the Group has
recalled products in the United Kingdom in the past, and there can be no assurance that future recalls or claims
having a material adverse effect on the Group will not occur. Furthermore, many of the Group’s supply,
distribution and original equipment manufacturer agreements include standard indemnity clauses under which it
has agreed to hold its distributors and original equipment manufacturers harmless for any expenses or liabilities
resulting from defects in its tires.
As the Group’s export sales increase, the risk of product liability claims increases, especially in the United States.
In the ordinary course of business, the Group is a defendant and potential defendant in certain product liability
claims relating to its tire products. Although the Group is vigorously defending these claims, the outcome and
amount of damages (including punitive damages if any) are uncertain. The Group maintains product liability
insurance for the products that it sells in the international markets. However, there is no assurance that all product
liability claims or related expenses will be covered adequately, or at all, by the insurance policies it carries.
Moreover, the Group does not maintain product liability insurance for the products sold in the PRC market and it
believes that the decision to purchase product liability insurance is entirely commercial. After taking into
consideration the Group’s historical records relating to product liability in the PRC and balancing the associated
risks and costs, the Group decided that it is not in its best interests to subscribe for such product liability
insurance at this juncture. Any product liability claim, if not fully insured, may have a material and adverse effect
on the Group’s reputation and results of operations.
The Group’s distribution of tires into the United States requires it to comply with the United States’
Transportation Recall Enhancement, Accountability, and Documentation Act (the “TREAD Act”). The TREAD
Act imposes numerous requirements with respect to the early warning reporting of property damage, injury and
fatality claims and tire recalls and also requires tire manufacturers, among other things, to conform with revised
and more rigorous tire standards, once the revised standards are implemented. These expenditures are likely to
increase the Group’s cost of distributing its tires. In addition, while the Group believes that its tires are free from
design and manufacturing defects, there can be no assurance that any other product liability claim or product
recall of its tires under the TREAD Act or otherwise, could occur in the future. Any claim or recall could have a
material adverse effect on the Group’s reputation, operating results and financial condition. In addition,
compliance with TREAD Act regulations and other regulatory requirements in the future entails significant
administrative and capital expenditures by tire manufacturers in order to implement the monitoring regime
required under those regulations and could materially and adversely affect the Group’s earnings and competitive
position.
Infringement of the Group’s intellectual property rights may materially and adversely affect its results of
operations.
The Group’s products are marketed under various brands and it has made substantial investments in the
registration and protection of its intellectual property rights. The Group has obtained or applied for trademarks on
various brand names as set out in the section headed “The Group – Intellectual Property”. Policing unauthorised
use of intellectual property is difficult and sometimes practically impossible in China. If the Group is unable to
protect its intellectual property rights from infringement, its reputation and brand equity may be compromised,
and its business, operating results and prospects may be materially and adversely affected.
In addition, while the Group has the right to use the words “GT Radial”, due to its generic nature, the Group is
unable to register trademark rights for the words “GT Radial” or otherwise obtain rights to the exclusive use of
the words “GT Radial” in the United States, unless the words “GT Radial” accompany a distinguishable design
or logo. Accordingly, the Group will not be able to prevent other companies from using a mark containing the
words “GT Radial” in the United States. Unauthorised use of any of the Group’s intellectual property or use of
any marks containing the words “GT Radial” may result in confusion in the market and may lead to decreased
revenue for the Group and also loss of market share, thereby adversely affecting its results of operations.
67
Compliance with environmental and occupational health and safety laws and regulations may require the
Group to incur costs or restrict its operations in a manner that could have a material adverse effect on its
financial condition and results of operations.
The Group is subject to a variety of environmental protection and health and safety laws and regulations,
including those that regulate the use, handling, treatment, storage, discharge and disposal of substances and
hazardous wastes used or generated in its manufacturing facilities. The Group is required to invest financial and
managerial resources to comply with environmental and safety laws and regulations and anticipate that it will be
required to do so in the future in order to comply with laws in the PRC and the primary markets to which it sells.
If national or local environmental protection authorities enact additional regulations or enforce current or new
regulations in a more rigorous manner, the Group may be required to incur additional expenditures for
environmental and health and safety compliance, which could have an adverse impact on its financial condition.
In addition, environmental liability insurance is not common in the PRC, and the Group does not currently
maintain such insurance. Therefore, any significant environmental liability claims successfully brought against
the Group would adversely affect its business. While the Group has imposed rigorous environmental and health
and safety guidelines in its manufacturing plants, the large size of its manufacturing workforce renders it very
difficult to completely eliminate human errors, and accidents have occurred at the plants in the past. In addition,
certain subsidiaries of the Group in the PRC have been notified by local governmental authorities that they are
not in compliance with regard to certain environmental regulations, and have been ordered to take action to
address such alleged non-compliance. While the Group believes that it has undertaken all rectification efforts that
are required to bring it into compliance with applicable environmental laws, it remains possible that regulatory
authorities whether in the PRC or otherwise may in future take action against the Group for environmental noncompliance. Failure by the Group to comply with present and future environmental and safety laws or the
occurrence of accidents and injuries could subject the Group to future penalties, liabilities or suspension or
termination of production and/or distribution. Environmental and safety laws could also restrict the Group’s
ability to expand its facilities or could require it to acquire costly equipment or to incur other additional expenses
in connection with its manufacturing and distribution processes.
The Group is in the process of addressing certain PRC law requirements arising from its ownership interests
in GITI Tire Corporation, which could potentially result in the Group having to substantially reorganise its
operations in GITI Tire Corporation and/or to conduct a share reform in relation to the share capital of GITI
Tire Corporation.
As at the date of this Information Memorandum, the Group owned 151.07 million non-tradable shares
(representing approximately 44.4% of the entire issued share capital) of GITI Tire Corporation. In the course of
acquiring its ownership interests in GITI Tire Corporation, the Group reached an in-principle agreement with the
PRC regulatory authorities that it would consider injecting some or all of its other PRC tire manufacturing plants
into GITI Tire Corporation so as to avoid a conflict of interests between Giti Tire Corporation and the other tire
businesses which are held by the Group’s majority shareholders. Since the completion of its acquisition of the
shares of GITI Tire Corporation, the Group has, in consultation with the PRC regulatory authorities,
implemented a number of business arrangements with GITI Tire Corporation that are intended to avoid any
conflicts of interest between GITI Tire Corporation and the other tire businesses which are held by the Group’s
majority shareholders. It remains possible, however, that the PRC regulatory authorities could take the view that
these measures are not sufficient to address the competitive concerns relating to GITI Tire Corporation, and in
such an event the Group may be required to implement additional initiatives in order to comply with the
requirements of the onshore regulatory authorities with respect to its shareholding in GITI Tire Corporation.
In addition, the PRC government has historically maintained a policy that companies listed on PRC stock
exchanges will be required to carry out share reform programmes with the objective that all shares of PRC-listed
companies become tradable on the relevant PRC stock exchanges. The share reform plan, including the
compensation to be paid to holders of tradable shares, must be agreed upon by holders of non-tradable shares and
holders of tradable shares. While the Group continues to engage with holders of the tradable shares of GITI Tire
Corporation, it has not reached any agreement to date with these holders on the terms of the conversion
including, among other things, the consideration that would be payable to holders of the tradable shares of GITI
Tire Corporation. As a result, the Group is not currently able to ascertain the timing of the share reform and has
yet to propose or implement a share reform programme for GITI Tire Corporation or formulate definitive plans
to convert its non-tradable shares held in GITI Tire Corporation to tradable shares.
From time to time, the Group has received various requests and demands, including threats of litigation or other
actions, from the holders of the tradable shares of GITI Tire Corporation, that are targeted at accelerating the
share reform process. The Group believes that such requests or demands are without legal basis, and has
successfully defended against such claims to date. However, there can be no assurance that the PRC government
68
will not enact subsequent changes or adjustments to its policies in a manner that would require the Group to carry
out the share reform in the near future. Any such share reform could result in a significant transfer of value to the
holders of the tradable shares of GITI Tire Corporation, and could potentially result in additional costs or dilution
of the Group’s equity interest in GITI Tire Corporation.
In addition, because the Group has not carried out the share reform for GITI Tire Corporation, its shares in GITI
Tire Corporation are not tradable on the Shanghai Stock Exchange and GITI Tire Corporation is unable to issue
shares to raise additional capital in the PRC capital market or conduct material asset reorganisations. This could
affect the ability of Giti Tire Corporation to issue new shares to raise financing.
The Group is controlled by a small number of shareholders, whose interests may not be aligned with the
interests of the Noteholders.
The Issuer is a wholly owned subsidiary of GT Asia Pacific Holdings Pte Ltd (“GT Asia”), which is in turn
100% owned by GITI Holdings Ltd. (“GITI Holdings”). GITI Holdings is 51% owned by Ms. Michelle Liem
Mei Fung, 25%-owned by Mr. William Liem and 24% owned by Dr. Tan Enk Ee, who are together considered to
be a single group of ultimate controlling shareholders. As a result, GT Asia, GITI Holdings and such group of
ultimate controlling shareholders have the ability to exercise significant influence over certain matters that
require shareholders’ approval, including payments of dividend, appointment of the directors and senior
managers. The interests of GT Asia as the Issuer’s controlling shareholder, and GITI Holdings and such group of
ultimate controlling shareholders could diverge or differ from the interests of the Group or the Noteholders, and
they may take actions that favour their own interests and may not be in the best interests of the Group or the
Noteholders.
RISKS RELATING TO THE PRC
Adverse changes in the PRC’s economic, political and social conditions as well as governmental policies could
have a material adverse effect on the PRC’s overall economic growth, which could in turn adversely affect the
Group’s financial condition and results of operations.
Substantially all of the Group’s assets are located in the PRC, and the Group derives a substantial portion of its
revenue from operations in the PRC. Accordingly, the Group’s results of operations, financial condition and
prospects are subject to economic, political and legal developments in the PRC. The PRC’s economy differs from
the economies of developed countries in many respects, including the extent of government involvement, level of
development, growth rate, control of capital reinvestment and foreign exchange and allocation of resources.
While the PRC’s economy has experienced significant growth in the past 30 years, growth has been uneven
across different regions and economic sectors and there is no assurance that such growth can be sustained. Since
the second half of 2008, the global economic slowdown, continued weakness in the United States economy and
the sovereign debt crisis in Europe have collectively added downward pressure to the PRC’s economic growth.
The PRC’s real GDP growth rate declined from 9.3% in 2011 to 7.8% in 2012 and 7.7% in 2013. If the business
environment in the PRC deteriorates as a result of the slowdown in the PRC’s economic growth, the Group’s
business may be materially adversely affected. There may also be new regulations or policies, or readjustments
of previously implemented regulations or policies requiring the Group to change its business plan, adjust its
corporate structure or undertake other measures, which may increase its costs or limit its ability to operate.
Certain laws and regulations may also give the PRC governmental authorities the right to require the Group to
relocate its manufacturing plants. Although the Group will be entitled to receive compensation from the local
government, any such relocation and relinquishment will result in a disruption to manufacturing operations and
production supply as the Group will have to cease production, and the Group will incur substantial additional
costs for the relocation and the construction of new manufacturing facilities. There is no assurance that the Group
may be able to procure other suitable properties and relocate in a timely manner and at a reasonable cost. All of
the foregoing could adversely affect the Group’s business and operating results.
Government control of currency conversion and future movements in exchange rates may adversely affect the
Group’s financial condition and results of operations.
The Group operates both domestically and internationally and are exposed to foreign exchange risk arising from
various currency exposures, primarily with respect to the US dollar and European currencies. The Group’s
international operations are increasingly important and it expects earnings from export sales to continue to be a
significant part of its total revenue. The value of the RMB against the US dollar and other currencies fluctuates
and is affected by, among other things, changes in domestic and international political and economic conditions.
Any significant fluctuations in the value of foreign currencies, especially the weakening of the US dollar against
the RMB, may adversely affect the Group’s results of operations.
69
Currently, the RMB is not a freely convertible currency. The existing foreign exchange regulations have
significantly reduced government foreign exchange controls for transactions under the current account, including
trade and service-related foreign exchange transactions and payment of dividends. Foreign exchange transactions
under the capital account, including principal payments in respect of foreign currency-denominated obligations,
continue to be subject to significant foreign exchange controls and require the approval of SAFE. These
limitations could affect the Group’s ability to obtain foreign exchange through debt or equity financing, or to
obtain foreign exchange financing for capital expenditures, thereby affecting its business, results and financial
condition. The PRC government has stated publicly that it intends to make the RMB freely convertible in the
future. However, the Group cannot predict whether the PRC government will continue its existing foreign
exchange policy or when the PRC government will allow free conversion of RMB, or that it will have sufficient
foreign exchange to meet its foreign exchange requirements.
The PRC legal system is evolving and uncertainties with respect to the PRC legal system could materially
adversely affect the Group.
A significant portion of the Group’s business and operations is conducted in China and governed by PRC laws,
rules and regulations. The PRC legal system is based on written statutes and their interpretation by the Supreme
People’s Court and the regulations promulgated. Prior court decisions may be cited for reference but have limited
precedential value. The PRC government has promulgated laws and regulations over the past 20 years regarding
matters such as corporate organisation and governance, issuance and trading of securities, shareholders’ rights,
foreign investment, commerce, taxation and trade. However, many of these laws and regulations are relatively
new and evolving, are subject to different interpretations and may involve uncertainties and be inconsistently
implemented and enforced. In addition, only a limited volume of published court decisions may be cited for
reference, and such cases have limited precedential value as they are not binding on subsequent cases. These
uncertainties relating to the interpretation, implementation and enforcement of the PRC laws and regulations and
a system of jurisprudence that gives only limited precedential value to prior court decisions can affect the legal
remedies and protections and recourse available to the Group. In addition, any litigation in the PRC can be
protracted and result in substantial costs and diversion of resources and management.
It may be difficult to effect service of process upon, or to enforce against, the Group or its directors or
members of its senior management who reside in the PRC in connection with judgments obtained in non-PRC
courts.
A number of the Group’s directors and the majority of the Group’s senior managers reside within the PRC, and
substantially all of their assets and substantially all of the Group’s assets are located within the PRC. As a result,
it may not be possible to effect service of process outside the PRC upon most of the Group’s directors and senior
management, including for matters arising under applicable securities law. A judgment of a court of another
jurisdiction may be reciprocally recognised or enforced if the jurisdiction has a treaty with the PRC or if
judgments of the PRC courts have been recognised before in that jurisdiction, subject to the satisfaction of other
requirements. However, the PRC does not have treaties providing for the reciprocal recognition and enforcement
of judgments of courts with Singapore, Japan, the United Kingdom, the United States and many other countries.
As a result, recognition and enforcement in the PRC of judgments from various jurisdictions is uncertain.
The Group’s PRC subsidiaries are subject to PRC laws and regulations which may restrict its ability to pay
dividends or make other distributions.
The Issuer is a holding company incorporated in Singapore and a substantial part of the Group’s operations are
conducted through its operating subsidiaries incorporated in China. The ability of these subsidiaries to make
dividend and other payments to the Group may be restricted by a number of factors, including the applicable
foreign exchange laws and other laws and regulations. In particular, under PRC law, certain operating
subsidiaries are required to allocate at least 10% of net profit after tax to a “statutory reserve fund” until the
balance of such fund has reached 50% of such subsidiary’s registered capital. This statutory reserve fund,
together with the registered capital of a PRC operating subsidiary, is not distributable as cash dividends. In
addition, the profit available for distribution from the Group’s PRC operating subsidiaries is determined in
accordance with generally accepted accounting principles in the PRC whereas the Issuer’s profit available for
distribution is determined in accordance with Singapore Financial Reporting Standards, which may be different.
As a result, there may not have sufficient distributions from its PRC subsidiaries to enable dividends or profit
distributions to be made to the Group in the future.
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The Issuer may be deemed a PRC resident enterprise under the PRC Enterprise Income Tax Law and be
subject to PRC taxation on its worldwide income.
Under the PRC Enterprise Income Tax Law and its implementing rules (both of which became effective on
1 January 2008), enterprises organised under the laws of jurisdictions outside the PRC with their “de facto
management bodies” located within the PRC are considered PRC resident enterprises for tax purposes and
therefore may be subject to the PRC enterprise income tax at the rate of 25% on their worldwide income.
However, it is currently unclear under what circumstances the “de facto management body” of a foreign
enterprise, which is not controlled by PRC companies, would be considered to be located within the PRC. As
such, the Issuer may be treated as a PRC resident enterprise for enterprise income tax purposes and its worldwide
income may be subject to the PRC enterprise income tax, which could materially and adversely affect the
Group’s business, financial condition and results of operations.
RISKS RELATING TO THE NOTES
If the Group is unable to comply with the restrictions and covenants in its debt agreements, including, among
others, the Trust Deed, there could be a default under the terms of these agreements or the Trust Deed, which
could cause repayment of the Group’s debt to be accelerated.
The Group’s debt agreements contain covenants that restrict the Group’s business activities. The Group’s ability
to comply with such covenants depends on Group’s future operating performance. If the Group is unable to
comply with the restrictions and covenants in the Group’s current or future debt and other agreements (some of
which are secured), or the Trust Deed, there could be a default under the terms of these agreements. In the event
of a default under these agreements, the holders of the debt could terminate their commitments to lend to the
Group, accelerate repayment of the debt and declare all amounts borrowed due and payable, terminate the
agreements or exercise their enforcement or foreclosure remedies, as the case may be. Furthermore, some of the
Group’s debt agreements, including the Trust Deed, contain cross-acceleration or cross-default provisions. As a
result, the Group’s default under one debt agreement may cause the acceleration of repayment of debt or result in
a default under the other debt agreements, including the Trust Deed. If any of these events occur, there is no
assurance that the Group’s assets and cash flow would be sufficient to repay in full all of its indebtedness, or that
the Group would be able to find alternative financing. Even if the Group could obtain alternative financing, there
is no assurance that it would be on terms that are favourable or acceptable to the Group.
The insolvency laws of Singapore, the PRC and other local insolvency laws may differ from those of another
jurisdiction with which the holders of the Notes are familiar.
As the members of the Group were incorporated under the laws of, among others, Singapore, and the PRC and
additional members may be incorporated in any jurisdiction, any insolvency proceeding relating to any members
of the Group may involve insolvency laws of Singapore, the PRC or any other jurisdiction, the procedural and
substantive provisions of which may differ from comparable provisions of the local insolvency laws of
jurisdictions with which the holders of the Notes are familiar.
The Notes are unsecured obligations.
The Notes are unsecured obligations of the Issuer. The payment obligations under the Notes may be adversely
affected if:
• the Issuer enters into bankruptcy, liquidation, reorganisation or other winding-up proceedings;
• there is a default in payment under the future secured indebtedness or other unsecured indebtedness of the
Issuer; or
• there is an acceleration of any indebtedness of any of the Issuer.
If any of these events were to occur, the assets of the Issuer may not be sufficient to pay amounts due on the
Notes.
The Issuer may not be able to redeem the Notes upon the due date for redemption thereof.
Following the occurrence of a Change of Control Event (as defined in Condition 6(e)(ii) of the Notes), the Issuer
may, at the option of the holder of any Note, be required to redeem such Note in accordance with the Conditions
of the Notes. If such event(s) were to occur, the Issuer may not have sufficient cash in hand and may not be able
to arrange financing to redeem the Notes in time, or on acceptable terms, or at all. The ability to redeem the
Notes in such event may also be limited by the terms of other debt instruments. The Issuer’s failure to repay,
71
repurchase or redeem Notes could constitute an event of default under the Notes, which may also constitute a
default under the terms of other indebtedness of the Group.
There may be less publicly available information about the Issuer than is available in certain other
jurisdictions.
The Issuer is a private company, and therefore there is less publicly available information about the Issuer than
would be available for publicly listed companies.
Any published unaudited interim financial statements which are deemed to be incorporated by reference in
this Information Memorandum will not have been audited.
Any published unaudited interim financial statements in respect of the Group which have been included in this
Information Memorandum or which are, from time to time, deemed to be incorporated by reference in this
Information Memorandum will not have been reviewed or audited by the auditors of the Group. Accordingly,
there can be no assurance that, had an audit been conducted in respect of such financial statements, the
information presented therein would not have been materially different.
The Trustee’s right to request for information from the Issuer is limited.
The Trustee may only request from the Issuer such information as it shall require for the purpose of the discharge
of the duties, powers, trusts, authorities and discretions vested in the Trustee by the Trust Deed or by operation of
law, provided that so long as no Potential Event of Default or Event of Default has occurred, such information
shall not extend to information which is of a proprietary or price sensitive nature or information which is
confidential (whether arising from a contractual obligation or otherwise). As such, the Noteholders may not be
able to request for information through the Trustee in certain circumstances.
The Notes may not be a suitable investment for all investors.
Each potential investor in the Notes must determine the suitability of that investment in light of its own
circumstances. In particular, each potential investor should:
• have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of
investing in the Notes and the information contained or incorporated by reference in this Information
Memorandum or any applicable supplement to this Information Memorandum;
• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular
financial situation, an investment in the Notes and the impact such investment will have on its overall
investment portfolio;
• have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including
Notes with principal or interest payable in one or more currencies, or where the currency for principal or
interest payments is different from the potential investor’s currency;
• understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevant indices and
financial markets; and
• be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic,
interest rate and other factors that may affect its investment and its ability to bear the applicable risks.
Some Notes are complex financial instruments. Sophisticated institutional investors generally do not purchase
complex financial instruments as stand-alone investments. They purchase complex financial instruments as a way
to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall
portfolios. A potential investor should not invest in Notes which are complex financial instruments unless it has
the expertise (either alone or with a financial adviser) to evaluate how the Notes will perform under changing
conditions, the resulting effects on the value of the Notes and the impact such investment will have on the
potential investor’s overall investment portfolio.
Investment activities may be subject to legal investment laws and regulations, or review or regulation by certain
authorities. Each potential investor should consult its legal advisers to determine whether and to what extent
(1) Notes are legal investments for them, (2) Notes can be used as collateral for various types of borrowing and
(3) other restrictions apply to its purchase of any Notes. Financial institutions should consult their legal advisers
or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based
capital or similar rules.
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Provisions in the Trust Deed and the terms and conditions of the Notes may be modified.
The terms and conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters
affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including
Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary
to the majority.
The terms and conditions of the Notes also provide that the Trustee may agree, without the consent of the
Noteholders or Couponholders, to (i) any modification of any of the provisions of the Trust Deed which in the
opinion of the Trustee is of a formal, minor or technical nature, is made to correct a manifest error or to comply
with mandatory provisions of Singapore law or is required by Euroclear and/or Clearstream, Luxembourg and/or
CDP and/or any other clearing system in which the Notes may be held, and (ii) any other modification (except as
mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the
provisions of the Trust Deed which is in the opinion of the Trustee not materially prejudicial to the interests of
the Noteholders.
A change in Singapore law which governs the Notes may adversely affect Noteholders.
The Notes are governed by Singapore law in effect as at the date of issue of the Notes. No assurance can be given
as to the impact of any possible judicial decision or change to Singapore law or administrative practice after the
date of issue of the Notes.
The Notes may be represented by Global Notes or Global Certificates and holders of a beneficial interest in a
Global Note or Global Certificate must rely on the procedures of the relevant Clearing System (as defined
below).
Notes issued under the Programme may be represented by one or more Global Notes or Global Certificates. Such
Global Notes or Global Certificates will be deposited with or registered in the name of, or in the name of a
nominee of, Common Depositary, or lodged with CDP (each of Euroclear, Clearstream, Luxembourg and CDP, a
“Clearing System”). Except in the circumstances described in the relevant Global Note or Global Certificate,
investors will not be entitled to receive Definitive Notes. The relevant Clearing System will maintain records of
their accountholders in relation to the Global Notes and Global Certificates. While the Notes are represented by
one or more Global Notes or Global Certificates, investors will be able to trade their beneficial interests only
through the relevant Clearing System.
While the Notes are represented by one or more Global Notes or Global Certificates, the Issuer will discharge its
payment obligations under the Notes by making payments to the Common Depositary or, as the case may be, to
CDP, for distribution to their accountholders or, as the case may be, to the Principal Paying Agent or, as the case
may be, the Non-CDP Paying Agent for distribution to the holders as appearing in the records of the relevant
Clearing System. A holder of a beneficial interest in a Global Note or Global Certificate must rely on the
procedures of the relevant Clearing System to receive payments under the relevant Notes. The Issuer bears no
responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the
Global Notes or Global Certificates.
Holders of beneficial interests in the Global Notes and Global Certificates will not have a direct right to vote in
respect of the relevant Notes. Instead, such holders will be permitted to act only to the extent that they are
enabled by the relevant Clearing System to appoint appropriate proxies.
The Notes issued under the Programme may have limited liquidity.
There can be no assurance as to the liquidity of the Notes or that an active trading market will develop. If such a
market were to develop, the Notes may trade at prices that may be higher or lower than the initial issue price
depending on many factors, including prevailing interest rates, the Issuer’s operations and the market for similar
securities. The Dealers are not obliged to make a market in the Notes and any such market making, if
commenced, may be discontinued at any time at the sole discretion of the relevant Dealer(s). No assurance can be
given as to the liquidity of, or trading market for, the Notes.
The market value of the Notes issued under the Programme may fluctuate.
Trading prices of the Notes are influenced by numerous factors, including the operating results and/ or financial
condition of the Issuer, its subsidiaries and/or associated companies (if any), political, economic, financial and
any other factors that can affect the capital markets, the industry, the Issuer, its subsidiaries and/ or associated
companies generally. Adverse economic developments, in Singapore as well as countries in which the Issuer, its
subsidiaries and/or associated companies (if any) operate or have business dealings, could have a material
73
adverse effect on the business, financial performance and financial condition of the Issuer, its subsidiaries and
associated companies (if any).
An investment in the Notes is subject to interest rate risk.
Noteholders may suffer unforeseen losses due to fluctuations in interest rates. Generally, a rise in interest rates
may cause a fall in note prices, resulting in a capital loss for the Noteholders. However, the Noteholders may
reinvest the interest payments at higher prevailing interest rates. Conversely, when interest rates fall, note prices
may rise. The Noteholders may enjoy a capital gain but interest payments received may be reinvested at lower
prevailing interest rates.
An investment in the Notes is subject to inflation risk.
Noteholders may suffer erosion on the return of their investments due to inflation. Noteholders would have an
anticipated rate of return based on expected inflation rates on the purchase of the Notes. An unexpected increase
in inflation could reduce the actual returns.
The market prices of Notes issued at a substantial discount or premium tend to fluctuate more in relation to
general changes in interest rates than do prices for conventional interest-bearing securities.
The market values of securities issued at a substantial discount or premium to their nominal amount tend to
fluctuate more in relation to general changes in interest rates than do prices for conventional interest- bearing
securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared
to conventional interest-bearing securities with comparable maturities.
Exchange rate risks and exchange controls may result in Noteholders receiving less interest or principal than
expected.
The Issuer will pay principal and interest on the Notes in the currency specified. This presents certain risks
relating to currency conversions if Noteholder’s financial activities are denominated principally in a currency or
currency unit (the “Investor’s Currency”) other than the currency in which the Notes are denominated. These
include the risk that exchange rates may significantly change (including changes due to devaluation of the
currency in which the Notes are denominated or revaluation of the Investor’s Currency) and the risk that
authorities with jurisdiction over the Investor’s Currency may impose or modify exchange controls. An
appreciation in the value of the Investor’s Currency relative to the currency in which the Notes are denominated
would decrease (i) the Investor’s Currency equivalent yield on the Notes, (ii) the Investor’s Currency equivalent
value of the principal payable on the Notes and (iii) the Investor’s Currency equivalent market value of the
Notes. Government and monetary authorities may impose (as some have done in the past) exchange controls that
could adversely affect an applicable exchange rate. As a result, Noteholders may receive less interest or principal
than expected, or no interest or principal.
Changes in market interest rates may adversely affect the value of fixed rate Notes.
Investment in fixed rate Notes involves the risk that subsequent changes in market interest rates may adversely
affect the value of fixed rate Notes.
The Singapore tax treatment of the Notes may change.
The Notes to be issued from time to time under the Programme during the period from the date of this
Information Memorandum to 31 December 2018 are, pursuant to the ITA and MAS Circular FSD Cir 02/2013
entitled “Extension and Refinement of Tax Concessions for Promoting the Debt Market” issued by MAS on
28 June 2013, intended to be “qualifying debt securities” for the purposes of the ITA, subject to the fulfilment of
certain conditions more particularly described in the section “Singapore Taxation”.
However, there is no assurance that such Notes will continue to enjoy the tax concessions in connection
therewith should the relevant tax laws or MAS circulars be amended or revoked at any time.
Notes subject to optional redemption may have a lower market value than Notes that cannot be redeemed.
An optional redemption feature is likely to limit the market value of the Notes. During any period when the
Issuer elects to redeem the Notes, the market value of those Notes generally will not rise substantially above the
price at which they can be redeemed. This also may be true prior to any redemption period.
The Issuer may redeem the Notes when its cost of borrowing is lower than the interest rate on the Notes. At that
time, Noteholders generally would not be able to reinvest the redemption proceeds at an effective interest rate as
74
high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate.
Noteholders should consider reinvestment risk in light of other investments available at that time.
RISKS RELATED TO RMB-DENOMINATED NOTES
Notes denominated in RMB (“RMB Notes”) may be issued under the Programme. RMB Notes contain particular
risks for potential investors.
RMB is not freely convertible; there are significant restrictions on remittance of RMB into and outside the
PRC.
RMB is not freely convertible at present. The PRC government continues to regulate conversion between RMB
and foreign currencies. In 2011, the PRC government issued certain new rules imposing significant restrictions to
the remittance of RMB into and out of the PRC, including, among other things, restrictions on the remittance of
RMB into the PRC by way of direct investments or loans. On 25 February 2011, the Ministry of Commerce
promulgated the Circular on Issues Concerning Foreign Investment Management under which prior written
consent from the Ministry of Commerce (Foreign Investment Department) (“MOC”) is required for certain
circumstances relating to foreign investors making investments with RMB funds. On 3 June 2011, the People’s
Bank of China (the “PBOC”) issued the Circular on Clarifications of Relevant Issues Concerning Cross-Border
Renminbi Affairs under which approval from the PBOC is required in addition to approval from the MOC for
certain circumstances relating to foreign investors making investments with RMB funds.
As these regulations and rules are relatively new, there is some uncertainty regarding their interpretation and
enforcement. Moreover, there is no assurance that the PRC government will continue to gradually liberalise the
control over cross-border remittances of RMB funds in the future or that new PRC regulations will not be
promulgated in the future which have the effect of restricting or eliminating the remittance of RMB funds into or
out of the PRC. Each investor should consult its own advisors to obtain a more detailed explanation of how the
PRC regulations and rules may affect their investment decisions.
There is only limited availability of RMB outside the PRC, which may affect the liquidity of RMB Notes
and the Issuer’s ability to source RMB outside the PRC to service such RMB Notes.
As a result of the restrictions by the PRC government on cross-border RMB fund flows, the availability of RMB
outside of the PRC is limited and subject to certain deposit restrictions.
Although it is expected that the offshore RMB market will continue to grow in depth and size, its growth is
subject to many constraints as a result of PRC laws and regulations on foreign exchange. There is no assurance
that new PRC rules and regulations will not be promulgated or amended in the future which will have the effect
of restricting availability of RMB offshore. The limited availability of RMB outside the PRC may affect the
liquidity of RMB Notes. To the extent the Issuer is required to source RMB in the offshore market to service its
RMB Notes, there is no assurance that the Issuer will be able to source such RMB on satisfactory terms, if at all.
If RMB is not available in certain circumstances as described under the Notes, the Issuer can make payments
under the Notes in a currency other than RMB.
Investment in RMB Notes is subject to exchange rate risks.
The value of RMB against the US dollar and other foreign currencies fluctuates and is affected by changes in the
PRC and international political and economic conditions and other factors. All payments of interest and principal
will be made with respect to RMB Notes in RMB save as provided in the terms and conditions in accordance
with Condition 7(i). If an investor measures its investment returns by reference to a currency other than RMB, an
investment in the RMB Notes entails foreign exchange related risks, including possible significant changes in the
value of RMB relative to the currency by reference to which an investor measures its investment returns.
Depreciation of the RMB against such currency could cause a decrease in the effective yield of the RMB Notes
below their stated coupon rates and could result in a loss when the return on the RMB Notes is translated into
such currency. In addition, there may be tax consequences for investors as a result of any foreign currency gains
resulting from any investment in RMB Notes.
Payments in respect of RMB Notes will only be made to investors in the manner specified in such RMB
Notes.
All payments to investors in respect of RMB Notes will be made solely (i) when RMB Notes are represented by
global certificates, by transfer to a RMB bank account maintained in Singapore in accordance with prevailing
CDP rules, or (ii) when RMB Notes are in definitive form, by transfer to a RMB bank account maintained in
75
Singapore in accordance with prevailing rules and regulations. In the event that a holder of RMB Notes fails to
maintain a valid RMB account with a bank in Singapore and accordingly, payments are unsuccessful, it is
possible that such amounts may be settled in a currency other than RMB. The Issuer cannot be required to make
payment by any other means (including in any other currency or in bank notes, by check or draft or by transfer to
a bank account in the PRC).
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PURPOSE OF THE PROGRAMME AND USE OF PROCEEDS
The net proceeds arising from the issue of the Notes under the Programme (after deducting issue expenses) will
be used for general corporate purposes, including refinancing of borrowings, financing investments and general
working capital of the Issuer or its subsidiaries.
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CLEARING AND SETTLEMENT
Clearance and Settlement under the Depository System
In respect of Notes which are accepted for clearance by CDP in Singapore, clearance will be effected through an
electronic book-entry clearance and settlement system for the trading of debt securities (“Depository System”)
maintained by CDP. Notes that are to be listed on the SGX-ST may be cleared through CDP.
CDP, a wholly-owned subsidiary of Singapore Exchange Limited, is incorporated under the laws of Singapore
and acts as a depository and clearing organisation. CDP holds securities for its accountholders and facilitates the
clearance and settlement of securities transactions between accountholders through electronic book-entry
changes in the securities accounts maintained by such accountholders with CDP.
In respect of Notes which are accepted for clearance by CDP, the entire issue of the Notes is to be held by CDP
in the form of a Global Note or a Global Certificate for persons holding the Notes in securities accounts with
CDP (“Depositors”). Delivery and transfer of Notes between Depositors is by electronic book-entries in the
records of CDP only, as reflected in the securities accounts of Depositors. Although CDP encourages settlement
on the third business day following the trade date of debt securities, market participants may mutually agree on a
different settlement period if necessary.
Settlement of over-the-counter trades in the Notes through the Depository System may only be effected through
certain corporate depositors (“Depository Agents”) approved by CDP under the Companies Act to maintain
securities sub-accounts and to hold the Notes in such securities sub-accounts for themselves and their clients.
Accordingly, Notes for which trade settlement is to be effected through the Depository System must be held in
securities sub-accounts with Depository Agents. Depositors holding the Notes in direct securities accounts with
CDP, and who wish to trade Notes through the Depository System, must transfer the Notes to be traded from
such direct securities accounts to a securities sub-account with a Depository Agent for trade settlement.
CDP is not involved in money settlement between Depository Agents (or any other persons) as CDP is not a
counterparty in the settlement of trades of debt securities. However, CDP will make payment of interest and
repayment of principal on behalf of issuers of debt securities.
Although CDP has established procedures to facilitate transfer of interests in the Notes in global form among
Depositors, it is under no obligation to perform or continue to perform such procedures, and such procedures may
be discontinued at any time. None of the Issuer, the Principal Paying Agent or any other agent will have the
responsibility for the performance by CDP of its obligations under the rules and procedures governing its
operations.
Clearance and Settlement under Euroclear and/or Clearstream, Luxembourg
Euroclear and Clearstream, Luxembourg each holds securities for participating organisations and facilitates the
clearance and settlement of securities transactions between their respective participants through electronic bookentry changes in the accounts of such participants, thereby eliminating the need for physical movements of
certificates and any risks from lack of simultaneous transfer. Euroclear and Clearstream, Luxembourg provide to
their respective participants, among other things, services for safekeeping, administration, clearance and
settlement of internationally-traded securities and securities lending and borrowing. Euroclear and Clearstream,
Luxembourg each also deals with domestic securities markets in several countries through established depository
and custodial relationships. The respective systems of Euroclear and Clearstream, Luxembourg have established
an electronic bridge between their two systems which enables their respective participants to settle trades with
one another. Euroclear and Clearstream, Luxembourg participants are financial institutions throughout the world,
including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain
other organisations. Indirect access to Euroclear or Clearstream, Luxembourg is also available to other financial
institutions, such as banks, brokers, dealers and trust companies which clear through or maintain a custodial
relationship with a Euroclear or Clearstream, Luxembourg participant, either directly or indirectly.
A participant’s overall contractual relations with either Euroclear or Clearstream, Luxembourg are governed by
the respective rules and operating procedures of Euroclear or Clearstream, Luxembourg and any applicable laws.
Both Euroclear and Clearstream, Luxembourg act under those rules and operating procedures only on behalf of
their respective participants, and have no record of, or relationship with, persons holding any interests through
their respective participants. Distributions of principal with respect to book-entry interests in the Notes held
through Euroclear or Clearstream, Luxembourg will be credited, to the extent received by the relevant Paying
Agent, to the cash accounts of the relevant Euroclear or Clearstream, Luxembourg participants in accordance
with the relevant system’s rules and procedures.
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SINGAPORE TAXATION
The statements below are general in nature and are based on certain aspects of current tax laws in Singapore
and administrative guidelines and circulars issued by MAS in force as at the date of this Information
Memorandum and are subject to any changes in such laws, administrative guidelines or circulars, or the
interpretation of those laws, guidelines or circulars, occurring after such date, which changes could be made on
a retroactive basis. These laws, guidelines and circulars are also subject to various interpretations and the
relevant tax authorities or the courts could later disagree with the explanations or conclusions set out below.
Neither these statements nor any other statements in this Information Memorandum are intended or are to be
regarded as advice on the tax position of any holder of the Notes or of any person acquiring, selling or otherwise
dealing with the Notes or on any tax implications arising from the acquisition, sale or other dealings in respect
of the Notes. The statements made herein do not purport to be a comprehensive or exhaustive description of all
the tax considerations that may be relevant to a decision to subscribe for, purchase, own or dispose of the Notes
and do not purport to deal with the tax consequences applicable to all categories of investors, some of which
(such as dealers in securities or financial institutions in Singapore which have been granted the relevant
Financial Sector Incentive(s)) may be subject to special rules or tax rates. Prospective holders of the Notes are
advised to consult their own professional tax advisers as to the Singapore or other tax consequences of the
acquisition, ownership of or disposal of the Notes, including, in particular, the effect of any foreign, state or
local tax laws to which they are subject. It is emphasised that none of the Issuer, the Arranger and any other
persons involved in the Programme accepts responsibility for any tax effects or liabilities resulting from the
subscription for, purchase, holding or disposal of the Notes.
1.
Interest and Other Payments
Subject to the following paragraphs, under Section 12(6) of the ITA, the following payments are deemed to be
derived from Singapore:
(a) any interest, commission, fee or any other payment in connection with any loan or indebtedness or with any
arrangement, management, guarantee, or service relating to any loan or indebtedness which is (i) borne,
directly or indirectly, by a person resident in Singapore or a permanent establishment in Singapore (except in
respect of any business carried on outside Singapore through a permanent establishment outside Singapore
or any immovable property situated outside Singapore) or (ii) deductible against any income accruing in or
derived from Singapore; or
(b) any income derived from loans where the funds provided by such loans are brought into or used in
Singapore.
Such payments, where made to a person not known to the paying party to be a resident in Singapore for tax
purposes, are generally subject to withholding tax in Singapore. The rate at which tax is to be withheld for such
payments (other than those subject to the 15.0% final withholding tax described below) to non-resident persons
(other than non-resident individuals) is currently 17.0%. The applicable rate for non-resident individuals is
currently 20.0%. However, if the payment is derived by a person not resident in Singapore otherwise than from
any trade, business, profession or vocation carried on or exercised by such person in Singapore and is not
effectively connected with any permanent establishment in Singapore of that person, the payment is subject to a
final withholding tax of 15.0%. The rate of 15.0% may be reduced by applicable tax treaties.
However, certain Singapore-sourced investment income derived by individuals from financial instruments is
exempt from tax, including:
(a) interest from debt securities derived on or after 1 January 2004;
(b) discount income (not including discount income arising from secondary trading) from debt securities derived
on or after 17 February 2006; and
(c) prepayment fee, redemption premium and break cost from debt securities derived on or after 15 February
2007,
except where such income is derived through a partnership in Singapore or is derived from the carrying on of a
trade, business or profession.
In addition, as the Programme as a whole is arranged by Australia and New Zealand Banking Group Limited,
which is a Financial Sector Incentive (Bond Market) Company (as defined in the ITA) at such time, any tranche
of the Notes (the “Relevant Notes”) issued as debt securities under the Programme during the period from the
date of this Information Memorandum to 31 December 2018 would be, pursuant to the ITA and the MAS
Circular FSD Cir 02/2013 entitled “Extension and Refinement of Tax Concessions for Promoting the Debt
79
Market” issued by MAS on 28 June 2013 (the “MAS Circular”), qualifying debt securities (“QDS”) for the
purposes of the ITA, to which the following treatment shall apply:
(i) subject to certain prescribed conditions having been fulfilled (including the furnishing of a return on debt
securities for the Relevant Notes in the prescribed format within such period as the relevant authorities may
specify and such other particulars in connection with the Relevant Notes as the relevant authorities may
require to MAS and such other relevant authorities as may be prescribed, and the inclusion by the Issuer in
all offering documents relating to the Relevant Notes of a statement to the effect that where interest, discount
income, prepayment fee, redemption premium or break cost from the Relevant Notes is derived by a person
who is not resident in Singapore and who carries on any operation in Singapore through a permanent
establishment in Singapore, the tax exemption for qualifying debt securities shall not apply if the nonresident person acquires the Relevant Notes using the funds and profits of such person’s operations through
the Singapore permanent establishment), interest, discount income (not including discount income arising
from secondary trading), prepayment fee, redemption premium and break cost (collectively, the “Qualifying
Income”) from the Relevant Notes derived by a holder who is not resident in Singapore and who (aa) does
not have any permanent establishment in Singapore or (bb) carries on any operation in Singapore through a
permanent establishment in Singapore but the funds used by that person to acquire the Relevant Notes are
not obtained from such person’s operation through a permanent establishment in Singapore, are exempt from
Singapore tax;
(ii) subject to certain conditions having been fulfilled (including the furnishing of a return on debt securities for
the Relevant Notes in the prescribed format within such period as the relevant authorities may specify and
such other particulars in connection with the Relevant Notes as the relevant authorities may require to MAS
and such other relevant authorities as may be prescribed), Qualifying Income from the Relevant Notes
derived by any company or body of persons (as defined in the ITA) in Singapore is subject to income tax at a
concessionary rate of 10.0% (except for holders of the relevant Financial Sector Incentive(s) who may be
taxed at different rates); and
(iii) subject to:
(aa) the Issuer including in all offering documents relating to the Relevant Notes a statement to the effect
that any person whose interest, discount income, prepayment fee, redemption premium or break cost
derived from the Relevant Notes is not exempt from tax shall include such income in a return of income
made under the ITA; and
(bb) the furnishing of a return on debt securities for the Relevant Notes in the prescribed format within such
period as the relevant authorities may specify and such other particulars in connection with the Relevant
Notes as the relevant authorities may require to MAS and such other relevant authorities as may be
prescribed,
payments of Qualifying Income derived from the Relevant Notes are not subject to withholding of tax by the
Issuer.
Notwithstanding the foregoing:
(A) if during the primary launch of any tranche of Relevant Notes, the Relevant Notes of such tranche are issued
to fewer than four persons and 50.0% or more of the issue of such Relevant Notes is beneficially held or
funded, directly or indirectly, by related parties of the Issuer, such Relevant Notes would not qualify as
QDS; and
(B) even though a particular tranche of Relevant Notes are QDS, if, at any time during the tenure of such tranche
of Relevant Notes, 50.0% or more of the issue of such Relevant Notes is held beneficially or funded, directly
or indirectly, by any related party(ies) of the Issuer, Qualifying Income derived from such Relevant Notes
held by:(i) any related party of the Issuer; or
(ii) any other person where the funds used by such person to acquire such Relevant Notes are obtained,
directly or indirectly, from any related party of the Issuer,
shall not be eligible for the tax exemption or concessionary rate of tax as described above.
The term “related party”, in relation to a person, means any other person who, directly or indirectly, controls
that person, or is controlled, directly or indirectly, by that person, or where he and that other person, directly or
indirectly, are under the control of a common person.
80
The terms “prepayment fee”, “redemption premium” and “break cost” are defined in the ITA as follows:
“prepayment fee”, in relation to debt securities and qualifying debt securities, means any fee payable by the
issuer of the securities on the early redemption of the securities, the amount of which is determined by the
terms of the issuance of the securities;
“redemption premium”, in relation to debt securities and qualifying debt securities, means any premium
payable by the issuer of the securities on the redemption of the securities upon their maturity; and
“break cost”, in relation to debt securities and qualifying debt securities, means any fee payable by the issuer
of the securities on the early redemption of the securities, the amount of which is determined by any loss or
liability incurred by the holder of the securities in connection with such redemption.
References to “prepayment fee”, “redemption premium” and “break cost” in this Singapore tax disclosure have
the same meaning as defined in the ITA.
Where interest, discount income, prepayment fee, redemption premium or break cost (i.e. the Qualifying Income)
is derived from the Relevant Notes by any person who is not resident in Singapore and who carries on any
operations in Singapore through a permanent establishment in Singapore, the tax exemption available for QDS
under the ITA (as mentioned above) shall not apply if such person acquires such Relevant Notes using the funds
and profits of such person’s operations through a permanent establishment in Singapore. Any person whose
interest, discount income, prepayment fee, redemption premium or break cost (i.e. the Qualifying Income)
derived from the Relevant Notes is not exempt from tax (including for the reasons described above) shall include
such income in a return of income made under the ITA.
Under the Qualifying Debt Securities Plus Scheme (“QDS Plus Scheme”), subject to certain conditions having
been fulfilled (including the furnishing of a return on debt securities in respect of the QDS in the prescribed
format within such period as the relevant authorities may specify and such other particulars in connection with
the QDS as the relevant authorities may require to MAS and such other relevant authorities as may be
prescribed), income tax exemption is granted on Qualifying Income derived by any investor from QDS
(excluding Singapore Government Securities) which:(a) are issued during the period from 16 February 2008 to 31 December 2018;
(b) have an original maturity of not less than 10 years;
(c) cannot be redeemed, called, exchanged or converted within 10 years from the date of their issue; and
(d) cannot be re-opened with a resulting tenure of less than 10 years to the original maturity date.
However, even if a particular tranche of the Relevant Notes are QDS which qualify under the QDS Plus Scheme,
if, at any time during the tenure of such tranche of Relevant Notes, 50.0% or more of the issue of such Relevant
Notes is beneficially held or funded, directly or indirectly, by any related party(ies) of the Issuer, Qualifying
Income from such Relevant Notes derived by:
(aa) any related party of the Issuer; or
(bb) any other person where the funds used by such person to acquire such Relevant Notes are obtained, directly
or indirectly, from any related party of the Issuer,
shall not be eligible for the tax exemption under the QDS Plus Scheme as described above.
The MAS Circular states that, with effect from 28 June 2013, the QDS Plus Scheme will be refined to allow QDS
with certain standard early termination clauses (as prescribed in the MAS Circular) to qualify for the QDS Plus
Scheme at the point of issuance of such debt securities. MAS has also clarified that if such debt securities are
subsequently redeemed prematurely pursuant to such standard early termination clauses before the 10th year
from the date of issuance of such debt securities, the tax exemption granted under the QDS Plus Scheme to
Qualifying Income accrued prior to such redemption will not be clawed back. Under such circumstances, the
QDS Plus status of such debt securities will be revoked prospectively for such outstanding debt securities (if
any), and holders thereof may still enjoy the tax benefits under the QDS scheme if the QDS conditions continue
to be met.
MAS has stated that, notwithstanding the above, QDS with embedded options with economic value (such as call,
put, conversion or exchange options which can be triggered at specified prices or dates and are built into the
pricing of such debt securities at the onset) which can be exercised within ten years from the date of issuance of
such debt securities will continue to be excluded from the QDS Plus Scheme from such date of issuance.
81
2.
Capital Gains
Any gains considered to be in the nature of capital made from the sale of the Notes will not be taxable in
Singapore. However, any gains derived by any person from the sale of the Notes which are gains from any trade,
business, profession or vocation carried on by that person, if accruing in or derived from Singapore, may be
taxable as such gains are considered revenue in nature.
Holders of the Notes who apply or who are required to apply Singapore Financial Reporting Standard 39
(“FRS 39”) may, for Singapore income tax purposes, be required to recognise gains or losses (not being gains or
losses in the nature of capital) on the Notes, irrespective of disposal, in accordance with FRS 39. Please see the
section below on “Adoption of FRS 39 Treatment for Singapore Income Tax Purposes”.
3.
Adoption of FRS 39 Treatment for Singapore Income Tax Purposes
The Inland Revenue Authority of Singapore has issued a circular entitled “Income Tax Implications Arising from
the Adoption of FRS 39 – Financial Instruments: Recognition and Measurement” (the “FRS 39 Circular”). The
ITA has since been amended to give effect to the FRS 39 Circular.
The FRS 39 Circular generally applies, subject to certain “opt-out” provisions, to taxpayers who are required to
comply with FRS 39 for financial reporting purposes.
Holders of the Notes who may be subject to the tax treatment under the FRS 39 Circular should consult their own
accounting and tax advisers regarding the Singapore income tax consequences of their acquisition, holding or
disposal of the Notes.
4.
Estate Duty
Singapore estate duty has been abolished with respect to all deaths occurring on or after 15 February 2008.
82
SUBSCRIPTION, PURCHASE AND DISTRIBUTION
The Programme Agreement provides for Notes to be offered from time to time through one or more Dealers. The
price at which a Series or Tranche will be issued will be determined prior to its issue between the Issuer and the
relevant Dealer(s). The obligations of the Dealers under the Programme Agreement will be subject to certain
conditions set out in the Programme Agreement. Each Dealer (acting as principal) will subscribe or procure
subscribers for Notes from the Issuer pursuant to the Programme Agreement.
United States
The Notes have not been and will not be registered under the Securities Act, and the Notes may not be offered or
sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions
exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings
given to them by Regulation S under the Securities Act (“Regulation S”).
The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United
States or its possessions or to a United States person, except in certain transactions permitted by U.S. tax
regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of
1986, as amended, and regulations thereunder.
Each Dealer has agreed that, and each further Dealer appointed under the Programme will be required to agree
that, except as permitted by the Programme Agreement, it will not offer, sell or deliver the Notes, (i) as part of
their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution of an
identifiable tranche of which such Notes are a part, as determined and certified to the Principal Paying Agent or,
as the case may be, the Non-CDP Paying Agent by such Dealer (or, in the case of an identifiable tranche of Notes
sold to or through more than one Dealer, by each of such Dealers with respect to Notes of an identifiable tranche
purchased by or through it, in which case the Paying Agent or, as the case may be, the Non-CDP Paying Agent
shall notify such Dealer when all such Dealers have so certified), within the United States or to, or for the
account or benefit of, U.S. persons, and it will have sent to each Dealer to which it sells Notes during the
distribution compliance period a confirmation or other notice setting out the restrictions on offers and sales of the
Notes within the United States or to, or for the account or benefit of, U.S. persons.
In addition, until 40 days after the commencement of the offering of any identifiable tranche of Notes, an offer or
sale of Notes within the United States by any dealer that is not participating in the offering of such Notes may
violate the registration requirements of the Securities Act.
Hong Kong
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be
required to represent and agree, that:
(i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes
other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of
Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in
the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions)
Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of
that Ordinance; and
(ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession
for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document
relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the
public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with
respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to
“professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and
any rules made under that Ordinance.
Singapore
Each Dealer has acknowledged that this Information Memorandum has not been registered as a prospectus with
the MAS. Accordingly, each Dealer has represented and agreed that it has not offered or sold any Notes or
caused the Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell any
Notes or cause the Notes to be made the subject of an invitation for subscription or purchase, and has not
circulated or distributed, nor will it circulate or distribute, this Information Memorandum or any other document
or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes, whether
directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the
83
SFA, (ii) to a relevant person pursuant to Section 275(1), or to any person pursuant to Section 275(1A), and in
accordance with the conditions specified in Section 275, of the SFA or (iii) otherwise pursuant to, and in
accordance with the conditions of, any other applicable provision of the SFA.
General
Each Dealer has agreed that it will comply with all applicable securities laws, regulations and directives in each
jurisdiction in which it subscribes for, purchases, offers, sells or delivers Notes or any interest therein or rights in
respect thereof or has in its possession or distributes, any other document or any Pricing Supplement.
Any person who may be in doubt as to the restrictions set out in the SFA or the laws, regulations and directives
in each jurisdiction in which it subscribes for, purchases, offers, sells or delivers the Notes or any interest therein
or rights in respect thereof and the consequences arising from a contravention thereof should consult his own
professional advisers and should make his own inquiries as to the laws, regulations and directives in force or
applicable in any particular jurisdiction at any relevant time.
84
APPENDIX I
GENERAL AND OTHER INFORMATION
INFORMATION ON DIRECTORS
1.
(a)
The name, age and position of each of the Directors are set out below:
Name
Age
Position
Ms. Michelle Liem Mei Fung . . . . . . . . . .
Dr. Tan Enk Ee . . . . . . . . . . . . . . . . . . . . .
Mr. Lei Huai Chin . . . . . . . . . . . . . . . . . .
48
46
50
Director
Director
Director
2.
As at the date of this Information Memorandum, no option to subscribe for shares in, or debentures of, the
Issuer has been granted to, or was exercised by, any Director of the Issuer.
3.
The interests of the Directors and the substantial shareholders of the Issuer in the Shares as at the date of this
Information Memorandum are as follows:
Directors
Direct Interest
Number of Number of
Shares
Shares
Ms. Michelle Liem Mei Fung(1) . . . . . . . . . . . . . . . . . . . . . . . .
Dr. Tan Enk Ee(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Lei Huai Chin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
Deemed Interest
Number of
Shares
%
2,400,000,000
2,400,000,000
—
100
100
—
Substantial Shareholders
Direct Interest
Number of
Shares
%
GT Asia Pacific Holdings Pte. Ltd . . . . . . . . . . . . . . . . . . . . . . .
GITI Holdings Ltd(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,400,000,000
—
Deemed Interest
Number of
Shares
%
100
—
— 2,400,000,000
—
100
Note:
(1) Ms. Michelle Liem Mei Fung and Dr. Tan Enk Ee are deemed to have an interest in the shares in the Issuer by virtue of their 51% and
24% shareholding interest, respectively, in GITI Holdings Ltd., which in turn owns 100% of GT Asia Pacific Holdings Pte. Ltd.
Mr. William Liem has a 25% shareholding interest in GITI Holdings Ltd.
SHARE CAPITAL
4.
As at the date of this Information Memorandum, there is only one class of ordinary shares in the Issuer. The
rights and privileges attached to the Shares are stated in the Articles of Association of the Issuer.
5.
The issued share capital of the Issuer as at the date of this Information Memorandum is as follows:
Share Designation
Issued Share Capital
Number of
Shares
Amount
Ordinary Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,400,000,000
S$300,000,000
BORROWINGS
6.
Save as disclosed in Appendix III, the Group had as at 31 December 2013 no other borrowings or
indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptances (other
than normal trading bills) or acceptance credits, mortgages, charges, hire purchase commitments, guarantees
or other material contingent liabilities.
WORKING CAPITAL
7.
The Directors are of the opinion that, after taking into account the present banking facilities and the net
proceeds of the issue of the Notes, the Issuer will have adequate working capital for their present
requirements.
CHANGES IN ACCOUNTING POLICIES
8.
Except as disclosed in this Information Memorandum with respect to FRS 110, there has been no significant
change in the accounting policies of the Issuer since its audited financial accounts for the financial year
ended 31 December 2013.
85
LITIGATION
9.
There are no legal or arbitration proceedings pending or threatened against the Issuer or any of its
subsidiaries the outcome of which may have or have had during the 12 months prior to the date of this
Information Memorandum a material adverse effect on the financial position of the Issuer or the Group.
MATERIAL ADVERSE CHANGE
10. There has been no material adverse change in the financial condition or business of the Issuer or the Group
since 31 December 2013.
CONSENTS
11. Deloitte & Touche LLP has given and has not withdrawn its written consent to the issue of this Information
Memorandum with the references herein to its name and, where applicable, reports in the form and context
in which they appear in this Information Memorandum.
DOCUMENTS AVAILABLE FOR INSPECTION
12. Copies of the following documents may be inspected at the registered office of the Issuer at 9 Oxley Rise,
#01-02, The Oxley, Singapore 238697 during normal business hours for a period of six months from the date
of this Information Memorandum:
(a) the Memorandum and Articles of Association of the Issuer;
(b) the Trust Deed;
(c) the letter of consent referred to in paragraph 11 above;
(d) the audited financial statements of the Issuer and its subsidiaries for the financial years ended
31 December 2012 and 31 December 2013; and
(e) the unaudited financial statements of the Issuer and its subsidiaries for the six months ended 30 June
2014.
FUNCTIONS, RIGHTS AND OBLIGATIONS OF THE TRUSTEE
13. The functions, rights and obligations of the Trustee are set out in the Trust Deed.
86
APPENDIX II
AUDITED FINANCIAL STATEMENTS OF GITI TIRE PTE. LTD. AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
The information in this Appendix II has been reproduced from the annual report of GITI Tire Pte. Ltd. and its
subsidiaries for the financial year ended 31 December 2012 and has not been specifically prepared for inclusion
in this Information Memorandum.
87
APPENDIX III
AUDITED FINANCIAL STATEMENTS OF GITI TIRE PTE. LTD. AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEAR ENDED 31 DECEMBER 2013
The information in this Appendix III has been reproduced from the annual report of GITI Tire Pte. Ltd. and its
subsidiaries for the financial year ended 31 December 2013 and has not been specifically prepared for inclusion
in this Information Memorandum.
166
APPENDIX IV
UNAUDITED MANAGEMENT ACCOUNTS OF GITI TIRE PTE. LTD. AND ITS SUBSIDIARIES FOR
THE PERIOD ENDED 30 JUNE 2014
The information in this Appendix IV has been reproduced from the unaudited management accounts of GITI Tire
Pte. Ltd. for the period ended 30 June 2014 and has not been specifically prepared for inclusion in this
Information Memorandum.
249
GITI Tire Pte Ltd. & Its Subsidiaries
Consolidated Statement Of Profit or Loss and Comprehensive Income
For the 6 months period ended June 30, 2014
Unaudited Management Accounts
6 months ended June 30
Revenue
2014
2013
RMB millions
RMB millions
7,436
8,087
Cost of sales
(5,327)
(6,032)
Gross profit
2,109
2,055
Other income
65
89
Selling and distribution expenses
(985)
(922)
Administrative expenses
(463)
(374)
54
138
(290)
(297)
490
689
(201)
(172)
289
517
Owner of the Company
231
450
Non-controlling interests
58
67
289
517
54
(146)
343
371
Owner of the Company
285
304
58
67
343
371
Share of results of an associate
Finance costs
Profit before tax
Income tax expense
Profit for the year
Profit for the year attributable to:
Other comprehensive income, net of income tax:
Items that may be reclassified subsequently to profit or loss:
Exchange difference arising on translation of foreign operations
Total comprehensive income for the year
Total comprehensive income attributable to:
Consolidated Statements Of Financial Position
As at December 31, 2013 and June 30, 2014
Audited Financial Statements
As at June 30
As at December 31
2014
2013
RMB millions
RMB millions
NON-CURRENT ASSETS
Property, plant and equipment
Prepaid lease payments
Goodwill
Intangible assets
Interest in an associate
5,186
5,198
165
168
2
2
47
40
1,316
1,212
Available-for-sale investments
100
100
Deferred tax assets
278
335
Amount due from immediate holding company-L
607
584
Other receivables
Deposits for purchase of property, plant and equipment
3
4
77
33
7,781
7,676
CURRENT ASSETS
Inventories
2,964
2,913
Trade and other receivables
2,698
2,942
Prepaid lease payments -S
5
5
Amount due from immediate holding company-S
394
394
Amounts due from related companies/parties
584
471
Restricted bank deposits
517
520
Bank balances and cash
1,203
1,120
8,365
8,365
4,148
4,273
147
150
CURRENT LIABILITIES
Trade and other payables
Amounts due to related companies/parties
Derivative financial instruments
17
14
Tax payable
50
145
4,497
3,988
8,859
8,570
Borrowings - due within one year
NET CURRENT LIABILITES
(494)
TOTAL ASSETS LESS CURRENT LIABILITIES
7,287
(205)
7,471
NON-CURRENT LIABILITIES
Trade and other payables
Borrowings - due after one year
Deferred tax liabilities
19
12
2,767
3,186
103
91
2,889
3,289
4,398
4,182
Share capital
1,758
1,758
Reserves
1,972
1,760
Equity attributable to owner of the Company
3,730
3,518
NET ASSETS
CAPITAL AND RESERVES
TOTAL EQUITY
668
664
4,398
4,182
Consolidated Statement Of Cash Flows
For the 6 months period ended June 30, 2014
6 months ended June 30
2014
2013
RMB millions
RMB millions
Operating activities
Profit before tax
490
689
Adjustments for:
Amortisation of intangible assets
Depreciation of property, plant and equipment
Impairment loss recognised (reversed) on inventories
2
2
333
368
33
Impairment loss recognised on trade receivables
(2)
2
1
290
297
Interest income
(26)
(51)
Loss on disposal of property, plant and equipment
-
Interest expense
Release of prepaid lease payments
1
3
Share of results of an associate
(54)
Gain on disposal of long term investment
(2)
Loss from fair value adjustments on forward exchange contracts
Operating cash flows before movements in working capital
3
(138)
-
4
-
1,075
1,170
(Increase) Decrease in inventories
(74)
100
Decrease (Increase) in trade and other receivables
245
(377)
(Increase) Decrease in amounts due from related companies
Decrease in trade and other payables
Increase in amounts due to related companies
Cash generated from operations
(72)
48
(155)
(86)
22
22
1,041
877
Income taxes paid
(227)
(172)
Interest paid
(293)
(301)
521
404
(381)
(228)
Net cash from operating activities
Investing activities
Purchases of and deposit paid for property, plant and equipment
Deposit for acquisition of property, plant and equipment
(44)
7
(6)
(8)
Proceeds on disposal of property, plant and equipment
4
24
Interest received
8
7
Dividends received from an associate
7
Deposit for acquisition of subsidiary
-
Acquisition of intangible assets
Government grants received
7
Net cash used in investing activities
(405)
(171)
3
(366)
Financing activities
Restricted deposits
3
New borrowings raised
Borrowings repaid
(49)
3,238
5,229
(3,177)
(5,099)
Dividends paid to immediate holding company
(73)
(118)
Dividends paid to non-controlling interest
(48)
Net cash used in financing activities
(57)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Effect of foreign exchange rate changes
Cash and cash equivalents at end of the period, represented by bank balance
and cash
(37)
59
1
1,120
1,063
24
4
1,203
1,068

GITI TIRE PTE. LTD.

Transcription

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