Cogent IPO Gatefold.indd - Cogent Holdings Limited

Transcription

PROSPECTUS DATED 9 FEBRUARY 2010
With an operating history spanning over 30 years, our Directors believe we are one of the leading
full-service logistics management services providers in Singapore offering Transportation
Management Services, Warehousing and Container Depot Management Services, and
Automotive Logistics Management Services to a wide range of customers including large local
and international corporations such as A.P. Moller-Maersk A/S, The Polyolefin Company (S)
Pte. Ltd., Mitsui O.S.K. Lines and Keppel Fels Limited.
(Registered by the Monetary Authority of Singapore on 9 February 2010.
COGENT HOLDINGS LIMITED
This document is important. If you are in any doubt as to the action
you should take, you should consult your legal, financial, tax or other
professional adviser.
We have made an application to the Singapore Exchange Securities
Trading Limited (the “SGX-ST”) for permission to deal in, and for
quotation of, all the ordinary shares (the “Shares”) in the capital of Cogent
Holdings Limited (the “Company”) already issued, the Invitation Shares
(as defined herein) and the new Shares which may be issued pursuant
to the Cogent Holdings Performance Share Plan (the “ESOP Shares”) or
upon the exercise of the options which may be granted under the Cogent
Holdings Employee Share Option Scheme (the “ESOS Shares”). Such
permission will be granted when we have been admitted to the Official
List of the SGX-ST. The dealing in and quotation of the Shares will be in
Singapore dollars.
Acceptance of applications will be conditional upon, inter alia,
permission being granted to deal in, and for quotation of, all our existing
issued Shares, the ESOP Shares, the ESOS Shares and the Invitation
Shares. If the completion of the Invitation does not occur because the
SGX-ST’s permission is not granted or for any other reasons, monies paid
in respect of any application accepted will be returned to you, subject to
applicable laws, at your own risk, without interest or any share of revenue
or other benefit arising therefrom and you will not have any claims against
us, the Vendors, the Issue Manager and the Joint Underwriters and Joint
Placement Agents.
The SGX-ST assumes no responsibility for the correctness of any of
the statements made, reports contained or opinion expressed in this
Prospectus. Admission to the Official List of the SGX-ST is not to be
taken as an indication of the merits of the Invitation, our Company, our
subsidiaries, our Shares or the Invitation Shares.
A copy of this Prospectus has been lodged with and registered by the
Monetary Authority of Singapore (the “Authority”) on 31 December 2009
and 9 February 2010, respectively. The Authority assumes no esponsibility
for the contents of the Prospectus. Registration of the Prospectus by the
Authority does not imply that the Securities and Futures Act, Chapter 289
of Singapore, or any other legal or regulatory requirements, have been
complied with. The Authority has not, in any way, considered the merits
of the Invitation Shares being offered for investment.
No shares will be allotted or allocated on the basis of this Prospectus
later than six months after the date of registration of this Prospectus by
the Authority.
Investing in our Shares involves risks which are described in the section
entitled “RISK FACTORS” of this Prospectus. Potential investors in our
Company are advised to read the section entitled “RISK FACTORS” and
the rest of this Prospectus carefully and to seek professional advice if
in doubt.
Investors in the Placement will be required to pay a brokerage fee of 1%
of the Invitation Price in connection with their purchase of the Placement
Shares. See “Plan of Distribution”.
Driving efficiency through
integrated logistics
CORPORATE PROFILE
As at the Latest Practicable Date, we have a fleet of more than 100 prime movers, trucks and
lorries and over 400 trailers, and manage and lease up to approximately 4 million square feet of
warehousing space and premises as part of our warehousing and container depot management
services. We also believe that we have one of the largest depot premises in Singapore located
in a single location which can store more than 20,000 TEUs (Twenty-foot Equivalent Units).
Transportation Management Services
• We believe we are one of the leading transportation management services providers
in Singapore.
• Using our extensive fleet, we provide trucking services for both laden and empty containers
between the ports and our warehouses or other designated destinations, and transportation
services for oil and gas equipment, including equipment used for the construction of oil rigs.
• Through our “Dry Hubbing” services, we manage the transportation and inventory of laden
containers at dedicated storage facilities, pending shipment by our customers.
• Other services include ancillary retrieval and transportation services such as the
transportation of petroleum and chemical products from Jurong Island, and transportrelated handling services such as trade and inbound customs documentation.
Warehousing and Container Depot Management Services
Warehousing Management Services
• Through our warehouses in various locations in Singapore, we provide storage space for
electronic components, non-perishable items and other general products.
• We are licensed by the National Environment Agency (“NEA”), Pollution Control Department
and the Singapore Civil Defence Force to store a diverse range of chemicals and hazardous
materials at some of our warehouses where we ensure that all chemicals and compounds are
handled by qualified and trained personnel.
• Our services include packing, palletisation, forklift handling and chemical drumming
services for petrochemical-related customers.
Container Depot Management Services
• We believe our container depot is one of the largest in Singapore which can store more
than 20,000 TEUs in a single location.
• With our fleet of reach stackers, handlers and forklift trucks, we are able to stack empty
containers up to a maximum height of nine containers, thereby optimising storage space
and volume.
• We assess the condition of all incoming containers, and offer cleaning, maintenance and
repair works on containers at the request of our customers.
Invitation in respect of 92,000,000 Invitation Shares comprising 46,000,000 New
Shares and 46,000,000 Vendor Shares as follows:
COGENT
HOLDINGS
LIMITED
(Registration Number: 200710813D)
(Incorporated in the Republic of Singapore on 18 June 2007)
Issue Manager
KIM ENG
Kim Eng Corporate Finance Pte. Ltd.
(Company Registration Number: 200207700C)
Joint Underwriters and Joint Placement Agents
KIM ENG
UOB Kay Hian Private Limited
(Company Registration Number: 197000447W)
(1) 2,000,000 Offer Shares at the Invitation Price (as defined herein) of S$0.22
for each Offer Share by way of public offer; and
(2) 90,000,000 Placement Shares at the Invitation Price (as defined herein) of
S$0.22 for each Placement Share by way of Placement Shares Application
Forms (or such other forms of application as the Issue Manager may, in
consultation with the Company, deem appropriate),
payable in full on application.
Automotive Logistics Management Services
• We focus solely on the processing, transportation and storage of motor vehicles, assisting our
customers with port and customs clearance, vehicular transportation, warehousing and delivery.
• We are licensed by the Singapore Customs to store dutiable motor vehicles on multiple
sites under one Licensed Warehouse licence, which enables us to store vehicles at a site
closest to our customers.
• We are also involved in Export Processing Zone operations which include the de-registration
process and export of second-hand motor vehicles.
• In addition, we assist the Land Transport Authority in the repossession of cars which have
outstanding road taxes and the impounding of illegally modified cars, and the Singapore
Police Force in removal and towing of accident vehicles.
PROSPECTUS DATED 9 FEBRUARY 2010
With an operating history spanning over 30 years, our Directors believe we are one of the leading
full-service logistics management services providers in Singapore offering Transportation
Management Services, Warehousing and Container Depot Management Services, and
Automotive Logistics Management Services to a wide range of customers including large local
and international corporations such as A.P. Moller-Maersk A/S, The Polyolefin Company (S)
Pte. Ltd., Mitsui O.S.K. Lines and Keppel Fels Limited.
(Registered by the Monetary Authority of Singapore on 9 February 2010.
This document is important. If you are in any doubt as to the action
you should take, you should consult your legal, financial, tax or other
professional adviser.
We have made an application to the Singapore Exchange Securities
Trading Limited (the “SGX-ST”) for permission to deal in, and for
quotation of, all the ordinary shares (the “Shares”) in the capital of Cogent
Holdings Limited (the “Company”) already issued, the Invitation Shares
(as defined herein) and the new Shares which may be issued pursuant
to the Cogent Holdings Performance Share Plan (the “ESOP Shares”) or
upon the exercise of the options which may be granted under the Cogent
Holdings Employee Share Option Scheme (the “ESOS Shares”). Such
permission will be granted when we have been admitted to the Official
List of the SGX-ST. The dealing in and quotation of the Shares will be in
Singapore dollars.
Acceptance of applications will be conditional upon, inter alia,
permission being granted to deal in, and for quotation of, all our existing
issued Shares, the ESOP Shares, the ESOS Shares and the Invitation
Shares. If the completion of the Invitation does not occur because the
SGX-ST’s permission is not granted or for any other reasons, monies paid
in respect of any application accepted will be returned to you, subject to
applicable laws, at your own risk, without interest or any share of revenue
or other benefit arising therefrom and you will not have any claims against
us, the Vendors, the Issue Manager and the Joint Underwriters and Joint
Placement Agents.
The SGX-ST assumes no responsibility for the correctness of any of
the statements made, reports contained or opinion expressed in this
Prospectus. Admission to the Official List of the SGX-ST is not to be
taken as an indication of the merits of the Invitation, our Company, our
subsidiaries, our Shares or the Invitation Shares.
A copy of this Prospectus has been lodged with and registered by the
Monetary Authority of Singapore (the “Authority”) on 31 December 2009
and 9 February 2010, respectively. The Authority assumes no esponsibility
for the contents of the Prospectus. Registration of the Prospectus by the
Authority does not imply that the Securities and Futures Act, Chapter 289
of Singapore, or any other legal or regulatory requirements, have been
complied with. The Authority has not, in any way, considered the merits
of the Invitation Shares being offered for investment.
No shares will be allotted or allocated on the basis of this Prospectus
later than six months after the date of registration of this Prospectus by
the Authority.
Investing in our Shares involves risks which are described in the section
entitled “RISK FACTORS” of this Prospectus. Potential investors in our
Company are advised to read the section entitled “RISK FACTORS” and
the rest of this Prospectus carefully and to seek professional advice if
in doubt.
Investors in the Placement will be required to pay a brokerage fee of 1%
of the Invitation Price in connection with their purchase of the Placement
Shares. See “Plan of Distribution”.
Driving efficiency through
integrated logistics
CORPORATE PROFILE
As at the Latest Practicable Date, we have a fleet of more than 100 prime movers, trucks and
lorries and over 400 trailers, and manage and lease up to approximately 4 million square feet of
warehousing space and premises as part of our warehousing and container depot management
services. We also believe that we have one of the largest depot premises in Singapore located
in a single location which can store more than 20,000 TEUs (Twenty-foot Equivalent Units).
• We believe we are one of the leading transportation management services providers
in Singapore.
• Using our extensive fleet, we provide trucking services for both laden and empty containers
between the ports and our warehouses or other designated destinations, and transportation
services for oil and gas equipment, including equipment used for the construction of oil rigs.
• Through our “Dry Hubbing” services, we manage the transportation and inventory of laden
containers at dedicated storage facilities, pending shipment by our customers.
• Other services include ancillary retrieval and transportation services such as the
transportation of petroleum and chemical products from Jurong Island, and transportrelated handling services such as trade and inbound customs documentation.
• Through our warehouses in various locations in Singapore, we provide storage space for
electronic components, non-perishable items and other general products.
• We are licensed by the National Environment Agency (“NEA”), Pollution Control Department
and the Singapore Civil Defence Force to store a diverse range of chemicals and hazardous
materials at some of our warehouses where we ensure that all chemicals and compounds are
handled by qualified and trained personnel.
• Our services include packing, palletisation, forklift handling and chemical drumming
services for petrochemical-related customers.
• We believe our container depot is one of the largest in Singapore which can store more
than 20,000 TEUs in a single location.
• With our fleet of reach stackers, handlers and forklift trucks, we are able to stack empty
containers up to a maximum height of nine containers, thereby optimising storage space
and volume.
• We assess the condition of all incoming containers, and offer cleaning, maintenance and
repair works on containers at the request of our customers.
Invitation in respect of 92,000,000 Invitation Shares comprising 46,000,000 New
Shares and 46,000,000 Vendor Shares as follows:
COGENT
HOLDINGS
LIMITED
(Registration Number: 200710813D)
(Incorporated in the Republic of Singapore on 18 June 2007)
Issue Manager
KIM ENG
Joint Underwriters and Joint Placement Agents
KIM ENG
(Company Registration Number: 197000447W)
(1) 2,000,000 Offer Shares at the Invitation Price (as defined herein) of S$0.22
for each Offer Share by way of public offer; and
(2) 90,000,000 Placement Shares at the Invitation Price (as defined herein) of
S$0.22 for each Placement Share by way of Placement Shares Application
Forms (or such other forms of application as the Issue Manager may, in
consultation with the Company, deem appropriate),
payable in full on application.
• We focus solely on the processing, transportation and storage of motor vehicles, assisting our
customers with port and customs clearance, vehicular transportation, warehousing and delivery.
• We are licensed by the Singapore Customs to store dutiable motor vehicles on multiple
sites under one Licensed Warehouse licence, which enables us to store vehicles at a site
closest to our customers.
• We are also involved in Export Processing Zone operations which include the de-registration
process and export of second-hand motor vehicles.
• In addition, we assist the Land Transport Authority in the repossession of cars which have
outstanding road taxes and the impounding of illegally modified cars, and the Singapore
Police Force in removal and towing of accident vehicles.
COMPETITIVE STRENGTHS
One of the leading players in the Singapore logistics industry
• With our long operating history spanning over 30 years and
our fleet of vehicles and scale of operations, we are able to
transport, store and manage large quantities of laden and
empty containers and cargo, allowing us to provide more
comprehensive logistics services to our customers.
STRATEGIES AND FUTURE PLANS
Experienced and dedicated management team
• Our founder, Executive Chairman and CEO, Mr Tan Yeow
Khoon, and Managing Director, Mr Edwin Tan Yeow Lam,
have over 30 years of experience in the logistics industry.
• They are closely supported by a competent team of
Executive Officers who have between them, over 15 years
of experience in the logistics industry.
Full-service integrated logistics solutions provider
• Our integrated, one-stop logistics business provide a
full suite of services catering to the specific needs of our
customers at competitive rates.
Diversified logistics services structure
• As we provide different logistics services in the logistics value
chain, we are better able to alleviate any adverse impact on our
business operations due to cyclical changes in the economy.
Increasing our scale of operations
• Expansion of container depot operations and
warehousing space
- Continue to seek larger plots of land to
expand our warehousing capacity and scale of
operations, as well as to consolidate our
existing operations on various sites into
standalone integrated full-service logistics hubs.
• Expansion of vehicle logistics operations
- To expand our existing fleet of vehicles to
handle the anticipated increase in demand
for our transportation management services,
as well as our automotive logistics
management services.
Expanding overseas through strategic partnerships,
acquisitions or joint ventures
• Assessing the viability for expanding our business
operations into China, Malaysia, Thailand and
Vietnam.
One of the few Licensed Warehouse and licensed chemical
warehouse operators in the Singapore logistics industry
• Authorised by the Singapore Customs to operate multiple
warehouse sites under one Licensed Warehouse licence,
enabling our customers to store both dutiable and nondutiable goods on a single site, eliminating the need to
incur additional transportation charges transporting duty
paid goods.
• We are also one of the few warehouse operators licensed
by the NEA to handle and store hazardous materials,
positioning us to take advantage of any rise in demand for
chemical storage in the industry.
FINANCIAL HIGHLIGHTS
Revenue (S$’m)
CAGR : 48.0%
Automotive Logistics
Management Services
Warehousing and
Container Depot
Management Services
Transportation
Management Services
60.1
37.2
18.7
11.9
15.6
18.5
FY2006
FY2007
24.6
* Our Automotive
Logistics Management
Services commenced
in August 2008
FY2008
12 months ended 31 December
27.4
14.9
29.4
4.1
16.4
12.5
8.9
1HFY08
1HFY09
6 months ended 30 June
Profit before tax (S$’m) and Margin (%)
CAGR : 122.8%
YoY : 85.6%(1)
15.9%
14.6%
6.5%
Branding and expanding our marketing network
• To focus on enhancing brand awareness
both locally and overseas, and cultivating a
strong image as a reliable and quality logistics
management services provider.
Expanding our range of services provided
• Lateral expansion into other areas of logisticsrelated operations to provide our customers with
a wider range of services.
3.1
32.4
27.5
Keeping abreast of systems, software and vehicular
improvements and upgrades
• To continue to invest in electronic systems to
increase work efficiency, and vehicular upgrades
to enhance the range of cargo transportable and
enhance work processes to reduce costs.
Established relationships with our customers
• With our extensive experience in the logistics industry, we
believe we have a strong understanding of our customers’
needs and requirements.
• Our working relationships with some of our key customers
go back as far as 30 years.
YoY : 7.2%(1)
8.8
9.1%
5.7%
1.8
2.1
4.7
2.5
FY2006
FY2007
FY2008
1HFY08
1HFY09
Transportation Management
6.6%
1.5%
7.7%
4.7%
18.4%
Warehousing & Container
Depot Management
3.1%
6.5%
17.7%
12.6%
13.1%
-
-
25.6%
-
23.8%
Management
Net Profit (S$’m)
CAGR : 133.4%
YoY : 89.4%(1)
7.0
3.7
PROSPECTS
Demand from the petrochemical industry
• Singapore, one of the world’s largest refining centres, is
seeking to increase its refining capacity and therefore create
critical volume of export-oriented refining throughput. The
petrochemicals hub in Jurong Island and the advent of
Jurong Rock Cavern, a massive underground facility for the
storage of crude oil, condensates and naptha, will further
facilitate the importance of Singapore’s refinery industry
and drive further growth as rapidly industrialising countries
in the region increase demand for refined oil.
• Being one of the few logistics companies with experience
in serving customers from the petrochemical industry, and
with an established presence in Jurong Island, we believe
that we are well poised to benefit from the expected
increase in trading and refining activities in Singapore.
1.3
Demand from the oil and gas industry
• Singapore is expected to remain as one of the largest
manufacturers of offshore oil rigs, particularly jack-up rigs,
in the world, thereby increasing the demand for specialised
logistics services.
• Given our experience in providing specialised logistics
services for the oil and gas industry, we are in a position to
secure more contracts for the provision of such specialised
logistics services to manufacturers of offshore oil rigs.
Trend towards outsourcing logistics functions
• Companies have moved towards outsourcing internal
logistics processes to third party logistics firms to focus on
their core businesses and streamline their supply chains.
FY2006
2.0
1.8
FY2007
FY2008
1HFY08
1HFY09
(1) YoY refers to the year-to-year increase for the half year periods of 1H2008 and 1H2009
PROPOSED DIVIDENDS
We intend to recommend and distribute dividends of at least 50% and
at least 20% of our profits attributable to Shareholders in FY2009 and
FY2010 respectively.
• With our long operating history spanning over 30 years and
our fleet of vehicles and scale of operations, we are able to
transport, store and manage large quantities of laden and
empty containers and cargo, allowing us to provide more
comprehensive logistics services to our customers.
• Our founder, Executive Chairman and CEO, Mr Tan Yeow
Khoon, and Managing Director, Mr Edwin Tan Yeow Lam,
have over 30 years of experience in the logistics industry.
• They are closely supported by a competent team of
Executive Officers who have between them, over 15 years
of experience in the logistics industry.
• Our integrated, one-stop logistics business provide a
full suite of services catering to the specific needs of our
customers at competitive rates.
Diversified logistics services structure
• As we provide different logistics services in the logistics value
chain, we are better able to alleviate any adverse impact on our
business operations due to cyclical changes in the economy.
• Expansion of container depot operations and
warehousing space
- Continue to seek larger plots of land to
expand our warehousing capacity and scale of
operations, as well as to consolidate our
existing operations on various sites into
standalone integrated full-service logistics hubs.
• Expansion of vehicle logistics operations
- To expand our existing fleet of vehicles to
handle the anticipated increase in demand
for our transportation management services,
as well as our automotive logistics
management services.
Expanding overseas through strategic partnerships,
acquisitions or joint ventures
• Assessing the viability for expanding our business
operations into China, Malaysia, Thailand and
Vietnam.
One of the few Licensed Warehouse and licensed chemical
warehouse operators in the Singapore logistics industry
• Authorised by the Singapore Customs to operate multiple
warehouse sites under one Licensed Warehouse licence,
enabling our customers to store both dutiable and nondutiable goods on a single site, eliminating the need to
incur additional transportation charges transporting duty
paid goods.
• We are also one of the few warehouse operators licensed
by the NEA to handle and store hazardous materials,
positioning us to take advantage of any rise in demand for
chemical storage in the industry.
FINANCIAL HIGHLIGHTS
Revenue (S$’m)
CAGR : 48.0%
Management Services
Warehousing and
Container Depot
Management Services
Transportation
Management Services
60.1
37.2
18.7
11.9
15.6
18.5
FY2006
FY2007
24.6
* Our Automotive
Logistics Management
Services commenced
in August 2008
FY2008
27.4
14.9
29.4
4.1
16.4
12.5
8.9
1HFY08
1HFY09
Profit before tax (S$’m) and Margin (%)
CAGR : 122.8%
YoY : 85.6%(1)
15.9%
14.6%
6.5%
• To focus on enhancing brand awareness
both locally and overseas, and cultivating a
strong image as a reliable and quality logistics
management services provider.
• Lateral expansion into other areas of logisticsrelated operations to provide our customers with
a wider range of services.
3.1
32.4
27.5
Keeping abreast of systems, software and vehicular
improvements and upgrades
• To continue to invest in electronic systems to
increase work efficiency, and vehicular upgrades
to enhance the range of cargo transportable and
enhance work processes to reduce costs.
• With our extensive experience in the logistics industry, we
believe we have a strong understanding of our customers’
needs and requirements.
• Our working relationships with some of our key customers
go back as far as 30 years.
YoY : 7.2%(1)
8.8
9.1%
5.7%
1.8
2.1
4.7
2.5
FY2006
FY2007
FY2008
1HFY08
1HFY09
Transportation Management
6.6%
1.5%
7.7%
4.7%
18.4%
Warehousing & Container
Depot Management
3.1%
6.5%
17.1%
12.6%
13.1%
-
-
25.6%
-
23.8%
Management
Net Profit (S$’m)
CAGR : 133.4%
YoY : 89.4%(1)
7.0
3.7
PROSPECTS
• Singapore, one of the world’s largest refining centres, is
seeking to increase its refining capacity and therefore create
critical volume of export-oriented refining throughput. The
petrochemicals hub in Jurong Island and the advent of
Jurong Rock Cavern, a massive underground facility for the
storage of crude oil, condensates and naptha, will further
facilitate the importance of Singapore’s refinery industry
and drive further growth as rapidly industrialising countries
in the region increase demand for refined oil.
• Being one of the few logistics companies with experience
in serving customers from the petrochemical industry, and
with an established presence in Jurong Island, we believe
that we are well poised to benefit from the expected
increase in trading and refining activities in Singapore.
1.3
• Singapore is expected to remain as one of the largest
manufacturers of offshore oil rigs, particularly jack-up rigs,
in the world, thereby increasing the demand for specialised
logistics services.
• Given our experience in providing specialised logistics
services for the oil and gas industry, we are in a position to
secure more contracts for the provision of such specialised
Trend towards outsourcing logistics functions
• Companies have moved towards outsourcing internal
logistics processes to third party logistics firms to focus on
their core businesses and streamline their supply chains.
FY2006
2.0
1.8
FY2007
FY2008
1HFY08
1HFY09
(1) YoY refers to the year-to-year increase for the half year periods of 1H2008 and 1H2009
PROPOSED DIVIDENDS
We intend to recommend and distribute dividends of at least 50% and
at least 20% of our profits attributable to Shareholders in FY2009 and
FY2010 respectively.
TABLE OF CONTENTS
CORPORATE INFORMATION ..........................................................................................................
1
DEFINED TERMS AND ABBREVIATIONS ......................................................................................
3
GLOSSARY OF TECHNICAL TERMS ..............................................................................................
10
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS....................................
11
DETAILS OF THE INVITATION..........................................................................................................
12
INDICATIVE TIMETABLE ..................................................................................................................
16
THE INVITATION................................................................................................................................
18
PLAN OF DISTRIBUTION ................................................................................................................
19
CLEARANCE AND SETTLEMENT ..................................................................................................
21
USE OF PROCEEDS AND LISTING EXPENSES ............................................................................
22
SUMMARY ........................................................................................................................................
24
INVITATION STATISTICS ..................................................................................................................
26
RISK FACTORS ................................................................................................................................
27
DIVIDEND POLICY ............................................................................................................................
34
CAPITALISATION AND INDEBTEDNESS ........................................................................................
35
DILUTION ..........................................................................................................................................
37
SELECTED COMBINED FINANCIAL INFORMATION ....................................................................
38
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION ..................................................................................................................
41
GENERAL INFORMATION ON OUR GROUP ..................................................................................
69
SHARE CAPITAL ..........................................................................................................................
RESTRUCTURING EXERCISE ....................................................................................................
GROUP STRUCTURE ..................................................................................................................
PRINCIPAL SHAREHOLDERS ....................................................................................................
MORATORIUM ..............................................................................................................................
69
71
73
74
75
HISTORY AND BUSINESS................................................................................................................
76
BUSINESS OVERVIEW ................................................................................................................
COMPETITIVE STRENGTHS ......................................................................................................
HISTORY ......................................................................................................................................
AWARDS AND CERTIFICATES....................................................................................................
SALES AND MARKETING............................................................................................................
MAJOR CUSTOMERS ..................................................................................................................
MAJOR SUPPLIERS ....................................................................................................................
SAFETY ASSURANCE ................................................................................................................
STAFF TRAINING ........................................................................................................................
76
80
81
82
83
83
85
86
86
i
INSURANCE ................................................................................................................................
INTELLECTUAL PROPERTY........................................................................................................
PROPERTIES AND FIXED ASSETS............................................................................................
GOVERNMENT REGULATIONS ..................................................................................................
LICENCES ....................................................................................................................................
COMPETITION..............................................................................................................................
87
87
88
92
93
95
PROSPECTS, STRATEGIES AND FUTURE PLANS ......................................................................
96
PROSPECTS ................................................................................................................................
ORDER BOOK ..............................................................................................................................
TREND INFORMATION ................................................................................................................
STRATEGIES AND FUTURE PLANS ..........................................................................................
96
97
97
98
DIRECTORS, EXECUTIVE OFFICERS AND STAFF........................................................................
100
MANAGEMENT REPORTING STRUCTURE ..............................................................................
DIRECTORS AND EXECUTIVE OFFICERS ................................................................................
SERVICE AGREEMENTS ............................................................................................................
REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS ............................................
EMPLOYEES ................................................................................................................................
CORPORATE GOVERNANCE......................................................................................................
COGENT HOLDINGS EMPLOYEE SHARE OPTION SCHEME..................................................
COGENT HOLDINGS PERFORMANCE SHARE PLAN ..............................................................
100
101
107
108
109
109
113
119
INTERESTED PERSON TRANSACTIONS AND CONFLICTS OF INTERESTS ............................
127
PAST INTERESTED PERSON TRANSACTIONS ........................................................................
PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS ....................................
CONFLICT OF INTERESTS ........................................................................................................
127
133
139
GENERAL AND STATUTORY INFORMATION ................................................................................
141
APPENDIX A – INDEPENDENT AUDITORS’ REPORT AND COMBINED FINANCIAL
STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008 ........................
A-1
APPENDIX B – INDEPENDENT AUDITORS’ REVIEW REPORT AND COMBINED INTERIM
CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2009 ........
B-1
APPENDIX C – INDEPENDENT AUDITORS’ REPORT AND UNAUDITED PROFORMA
GROUP FINANCIAL INFORMATION................................................................................................
C-1
APPENDIX D – SINGAPORE TAXATION ........................................................................................
D-1
APPENDIX E – SUMMARY OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF OUR
COMPANY..........................................................................................................................................
E-1
APPENDIX F – TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND
ACCEPTANCE ..................................................................................................................................
F-1
APPENDIX G – RULES OF THE COGENT HOLDINGS EMPLOYEE SHARE OPTION
SCHEME ............................................................................................................................................
G-1
APPENDIX H – RULES OF THE COGENT HOLDINGS PERFORMANCE SHARE PLAN ............
H-1
ii
CORPORATE INFORMATION
DIRECTORS
:
Tan Yeow Khoon (Executive Chairman and CEO)
Tan Yeow Lam (Managing Director)
Chan Soo Sen (Lead Independent Director)
Chua Cheow Khoon Michael (Independent Director)
Teo Lip Hua, Benedict (Independent Director)
COMPANY SECRETARY
:
Lim Ka Bee (ACIS)
REGISTERED OFFICE
:
7 Penjuru Close
#05-00
Singapore 608779
REGISTRATION NUMBER
:
200710813D
SHARE REGISTRAR AND
SHARE TRANSFER
OFFICE
:
Boardroom Corporate & Advisory Services Pte. Ltd.
3 Church Street
#08-01 Samsung Hub
Singapore 049483
ISSUE MANAGER
:
9 Temasek Boulevard
#39-00 Suntec Tower Two
Singapore 038989
JOINT UNDERWRITERS
AND JOINT PLACEMENT
AGENTS
:
9 Temasek Boulevard
Singapore 038989
8 Anthony Road, #01-01
Singapore 229957
INDEPENDENT AUDITORS
AND REPORTING
ACCOUNTANTS
:
Deloitte & Touche LLP
Certified Public Accountants
6 Shenton Way
#32-00 DBS Building Tower Two
Singapore 068809
Partner-in-charge: Seah Gek Choo
(Certified Public Accountant, Singapore)
SOLICITORS TO THE
INVITATION
:
WongPartnership LLP
One George Street
#20-01
Singapore 049145
SOLICITORS TO THE
ISSUE MANAGER, JOINT
UNDERWRITERS AND
JOINT PLACEMENT
AGENTS
:
Wee Woon Hong & Associates LLC
30 Raffles Place
#19-04 Chevron House
Singapore 048622
1
PRINCIPAL BANKERS
:
DBS Bank Ltd.
6 Shenton Way
DBS Building Tower One
Singapore 068809
United Overseas Bank Limited
80 Raffles Place
UOB Plaza 1
Singapore 048624
RECEIVING BANK
:
DBS Bank Ltd.
6 Shenton Way
DBS Building Tower One
Singapore 068809
VENDORS
:
Tan Yeow Khoon
No. 28 Jalan Sayang
Singapore 418676
Tan Yeow Lam
No. 8B Lorong L
Telok Kurau
Singapore 425426
Highyield Mines Pte. Ltd.
10 Anson Road
#26-08 International Plaza
Singapore 079903
2
DEFINED TERMS AND ABBREVIATIONS
In this Prospectus and the accompanying Application Forms, and in relation to the Electronic
Applications, the instructions appearing on the screens of ATMs of Participating Banks, the Internet
banking websites of the relevant Participating Banks or the IB websites of the relevant Participating
Banks, unless the context otherwise requires, the following terms or expressions shall have the following
meanings:
Group Companies
“Company”
:
Cogent Holdings Limited
“Group”
:
Our Company and its subsidiaries
“Cogent Investment”
:
Cogent Investment Group Pte. Ltd. (formerly known as HNH
Group Pte. Ltd.)
“Cogent Automotive”
:
Cogent Automotive Logistics Pte. Ltd. (formerly known as HNH
International Pte. Ltd.)
“SHCL”
:
SH Cogent Logistics Pte Ltd
“Soon Hock Transportation”
:
Soon Hock Transportation Pte. Ltd.
Other Companies and Organisations
“APWH”
:
Asia Pacific Wine Hub Pte. Ltd.
“Authority” or “MAS”
:
The Monetary Authority of Singapore
“BCA”
:
The Building and Construction Authority of Singapore
“CDP”
:
The Central Depository (Pte) Limited
“CPF”
:
The Central Provident Fund
“IRAS”
:
The Inland Revenue Authority of Singapore
“Issue Manager”
:
“Joint Underwriters and Joint
Placement Agents”
:
Kim Eng Corporate Finance Pte. Ltd. and UOB Kay Hian Private
Limited
“JTC”
:
Jurong Town Corporation of Singapore
“Keppel Fels”
:
Keppel Fels Limited
“Keppel Logistics”
:
Keppel Logistics Pte Ltd
“LTA”
:
The Land Transport Authority
“Maybank”
:
Malayan Banking Berhad
“Ministry of Manpower”
:
The Ministry of Manpower of Singapore
“Ministry of Transport”
:
The Ministry of Transport of Singapore
“NEA”
:
National Environment Agency of Singapore
3
“SCCS”
:
Securities Clearing & Computer Services (Pte) Ltd
“SCDF”
:
Singapore Civil Defence Force
“SGX-ST”
:
Singapore Exchange Securities Trading Limited
“SHIG”
:
Soon Hock Investment Group Pte. Ltd. (formerly known as
Sealogistics Pte. Ltd.)
“SHPD”
:
Soon Hock Property Development Pte. Ltd. (formerly known as
Soon Hock Container & Warehousing Pte Ltd)
“SLA”
:
Singapore Logistics Association
“URA”
:
Urban Redevelopment Authority of Singapore
“1 Chia Ping”
:
1 Chia Ping Road Singapore 619967
“6 Jalan Papan”
:
A14583 Jalan Papan Singapore 610000 (Lot 450 Mukim 6)
“7 Penjuru Close”
:
7 Penjuru Close Singapore 608779
“8 Penjuru Road”
:
8 Penjuru Road (Lot 4772 Mukim) Singapore 600000
“11 Jalan Terusan”
:
Private Lots A0750602 and A0750603 at 11 Jalan Terusan
“19 Tuas Avenue 20”
:
19 Tuas Avenue 20 Singapore 638830
“20 Tuas South”
:
20 Tuas South Street 1 Singapore 637465
“200 Jalan Sultan”
:
200 Jalan Sultan #12-09 Textile Centre Singapore 199018
“31 Penjuru Lane”
:
31 Penjuru Lane Singapore 609198
“60 Tuas Crescent”
:
60 Tuas Crescent Singapore 638740
“76 Pioneer Road”
:
76 Pioneer Road Singapore 639557
“Jurong Port Road”
:
Private Lot A0750604 at Jurong Port Road
“1H”
:
Financial period of six months ended or, as the case may be,
ending 30 June
“2H”
:
Financial period of six months ended or, as the case may be,
ending 31 December
“Application Forms”
:
The printed application forms to be used for the purpose of the
Invitation and which form part of this Prospectus
“Application List”
:
The list of applications for subscription and purchase of the
Invitation Shares
“Associate”
:
(a)
Properties
General
in relation to an entity, means:
(i)
in a case where the entity is a substantial
shareholder, controlling shareholder, substantial
interest-holder or controlling interest-holder, its
related corporation, related entity, associated
company or associated entity; or
4
(ii)
in any other case, (A) a director or an equivalent
person, (B) where the entity is a corporation, a
controlling shareholder of the entity, (C) where the
entity is not a corporation, a controlling interestholder of the entity, (D) a subsidiary, a subsidiary
entity, an associated company, or an associated
entity, or (E) a subsidiary, a subsidiary entity, an
associated company, or an associated entity, of the
controlling shareholder or controlling interest-holder,
as the case may be,
of the entity; and
(b)
in relation to an individual, means:
(i)
his immediate family;
(ii)
a trustee of any trust of which the individual or any
member of the individual’s immediate family is a
beneficiary or, where the trust is a discretionary
trust, a discretionary object, when the trustee acts in
that capacity; or
(iii)
any corporation in which he and his immediate
family (whether directly or indirectly) have interests
in voting shares of an aggregate of not less than
30% of the total votes attached to all voting shares
“ATM”
:
Automated teller machines
“Audit Committee”
:
The audit committee of our Company as at the date of this
Prospectus and from time to time constituted
“Awards”
:
The contingent awards of Shares granted or which may be
granted pursuant to the Share Plan
“Award Shares”
:
The shares which are the subject of the Awards under the Share
Plan
“Board” or “Board of Directors”
:
The board of Directors of our Company
“CEO”
:
The chief executive officer of our Company
“Companies Act” or “Act”
:
The Companies Act, Chapter 50 of Singapore, as amended,
supplemented or modified from time to time
“Consolidation”
:
The consolidation of every two Shares into one Share, as
described in the section entitled “Share Capital” of this
Prospectus
“Controlling Shareholder”
:
A person who has an interest in our Shares of an aggregate of
not less than 15% of the total votes attached to all our Shares, or
in fact exercises control over our Company
“Customs Act”
:
The Customs Act, Chapter 70 of Singapore, as amended,
5
“Deeds of Non-competition”
:
The deeds of non-competition entered into between our
Company and each of our Executive Directors as described in
the section entitled “Interested Person Transactions and Conflicts
of Interests – Conflict of Interests” of this Prospectus
“Directors”
:
The directors of our Company
“Edwin Tan Yeow Lam”
:
Tan Yeow Lam
“Electronic Applications”
:
Applications for the Invitation Shares made through an ATM of
one of the relevant Participating Banks or the IB website of one
of the relevant Participating Banks, subject to and on the terms
and conditions of this Prospectus
“Environmental Protection and
Management Act”
:
The Environmental Protection and Management Act, Chapter
94A of Singapore, as amended, supplemented or modified from
time to time
“EPS”
:
Earnings per Share
“Executive Directors”
:
The executive Directors of our Company
“Executive Officers”
:
The executive officers of our Group
“Fire Safety Act”
:
The Fire Safety Act, Chapter 109A of Singapore, as amended,
“FY”
:
Financial year ended or, as the case may be, ending 31
December
“Goods and Services Tax Act”
:
The Goods and Services Tax Act, Chapter 117A of Singapore, as
amended, supplemented or modified from time to time
“GPS”
:
Global positioning system
“GST”
:
Goods and Services Tax
“IB”
:
Internet Banking
“Independent Directors”
:
The independent Directors of our Company
“Independent Valuer”
:
CB Richard Ellis (Pte) Ltd
“Invitation”
:
The Placement and Public Offer
“Invitation Price”
:
S$0.22 for each Invitation Share
“Invitation Shares”
:
The 92,000,000 Shares for which our Company and the Vendors
invite applications to subscribe for and/or purchase pursuant to
the Invitation, subject to and on the terms and conditions of this
Prospectus
“IPO”
:
The initial public offering of our Company
“Latest Practicable Date”
:
18 December 2009, being the latest practicable date prior to the
lodgement of this Prospectus with the Authority
“Listing Manual”
:
The Listing Manual of the SGX-ST, as amended, supplemented
or modified from time to time
6
“Management and Underwriting
Agreement”
:
The management and underwriting agreement dated 9
February 2010 entered into between our Company, the Vendors,
the Issue Manager and the Joint Underwriters and Joint
Placement Agents as described in the section entitled “Plan of
Distribution – The Public Offer” of this Prospectus
“Market Day”
:
A day on which the SGX-ST is open for trading in securities
“Motor Vehicles (Third-Party
Risks and Compensation) Act”
:
The Motor Vehicles (Third-Party Risks and Compensation) Act,
Chapter 189 of Singapore, as amended, supplemented or
modified from time to time
“NAV”
:
Net asset value
“New Shares”
:
The 46,000,000 new Shares issued and offered by our Company,
for which our Company invites applications to subscribe for
pursuant to the Invitation, subject to and on the terms and
conditions of this Prospectus
“NTA”
:
Net tangible assets
“Nominating Committee”
:
The nominating committee of our Company as at the date of this
Prospectus and from time to time constituted
“Non-Executive Directors”
:
Non-executive Directors of our Company (including Independent
Directors)
“Offer Shares”
:
2,000,000 Invitation Shares which are the subject of the Public
Offer
“Options”
:
The options granted or which may be granted pursuant to the
Share Option Scheme
“Option Shares”
:
The new Shares which may be allotted and issued upon the
exercise of Options
“Participating Banks”
:
DBS Bank Ltd. (including POSB) (“DBS”), Oversea-Chinese
Banking Corporation Limited (“OCBC”) and United Overseas
Bank Limited and its subsidiary, Far Eastern Bank Limited (the
“UOB Group”)
“Period under Review”
:
The period which comprises FY2006, FY2007, FY2008 and the
six months ended 30 June 2009
“Placement”
:
The placement by the Joint Underwriters and Joint Placement
Agents of the Placement Shares on behalf of our Company and
the Vendors for subscription and/or purchase at the Invitation
Price, subject to and on the terms and conditions of this
Prospectus
“Placement Agreement”
:
The placement agreement between our Company, the Vendors
and the Joint Underwriters and Joint Placement Agents dated 9
February 2010 as described in the section entitled “Plan of
Distribution – The Placement” of this Prospectus
“Placement Shares”
:
90,000,000 Invitation Shares which are the subject of the
Placement
“Prospectus”
:
This prospectus dated 9 February 2010
7
“Public Offer”
:
The offering of Invitation Shares to the public in Singapore,
subject to and on the terms and conditions of this Prospectus
“Q1”
:
Financial period between 1 January and 31 March
“Q2”
:
Financial period between 1 April and 30 June
“Q3”
:
Financial period between 1 July and 30 September
“Q4”
:
Financial period between 1 October and 31 December
“Remuneration Committee”
:
The remuneration committee of our Company as at the date of
this Prospectus and from time to time constituted
“Restructuring Exercise”
:
The restructuring exercise undertaken in connection with the
Invitation as described in the section entitled “General
Information on our Group - Restructuring Exercise” of this
Prospectus
“Securities Account”
:
The securities account maintained by a depositor with CDP but
does not include a securities sub-account
“Securities and Futures Act”
:
The Securities and Futures Act, Chapter 289 of Singapore, as
amended, supplemented or modified from time to time
“Service Agreements”
:
The service agreements entered into between our Company and
each of our Executive Directors as described in the section
entitled “Directors, Executive Officers and Staff - Service
Agreements” of this Prospectus
“Shareholders”
:
Registered holders of Shares, except where the registered holder
is CDP, the term “Shareholders” shall, in relation to such Shares
mean the Depositors whose Securities Accounts are credited
with Shares
“Share Option Scheme”
:
Cogent Holdings Employee Share Option Scheme as described
in the section entitled “Directors, Executive Officers and Staff Cogent Holdings Employee Share Option Scheme” of this
Prospectus
“Share Plan”
:
Cogent Holdings Performance Share Plan as described in the
section entitled “Directors, Executive Officers and Staff - Cogent
Holdings Performance Share Plan” of this Prospectus
“Share Registrar”
:
Boardroom Corporate & Advisory Services Pte. Ltd.
“Shares”
:
Ordinary shares in the capital of our Company
“SIBOR”
:
Singapore Interbank Offered Rate
“Sub-division”
:
The sub-division of each Share in the capital of our Company
into 273 Shares, as described in the section entitled “Share
Capital” of this Prospectus
“Substantial Shareholder”
:
A person who has interest(s) in one or more voting shares in our
Company and the total votes attached to such share(s), is not
less than five per cent. of the total votes attached to all the voting
shares in our Company
“U.S.” or “United States”
:
United States of America
8
“Vendors”
:
Tan Yeow Khoon, Edwin Tan Yeow Lam and Highyield Mines Pte.
Ltd.
“Vendor Shares”
:
The 46,000,000 Shares offered by the Vendors, for which the
Vendors invite applications to purchase pursuant to the Invitation,
subject to and on the terms and conditions of this Prospectus
“$” or “S$” and “cents”
:
The lawful currency of Singapore
“US dollars”
:
United States dollars
“%” or “per cent.”
:
Per centum or percentage
“sq ft”
:
Square foot or square feet, as the case may be
“sq m”
:
Square metre or square metres, as the case may be
Currencies, Units and Others
The expressions “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings
ascribed to them, respectively in Section 130A of the Companies Act.
The terms “associated company”, “associated entity”, “controlling interest-holder”, “controlling
shareholder”, “related corporation”, “related entity”, “subsidiary”, “subsidiary entity” and “substantial
interest-holder” shall have the same meanings ascribed to them, respectively in the Securities and
Futures (Offers of Investments) (Shares and Debentures) Regulations 2005.
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 and
vice versa. References to persons shall include corporations.
Any reference in this Prospectus, the Application Forms or the Electronic Applications to any statute or
enactment is a reference to that statute or enactment as for the time being amended or re-enacted. Any
word defined under the Companies Act and the Securities and Futures Act or any statutory modification
thereof and used in this Prospectus, the Application Forms or the Electronic Applications shall, where
applicable, have the meaning assigned to it under the Companies Act, the Securities and Futures Act or
such statutory modification, as the case may be.
Any reference in this Prospectus and the Application Forms or the Electronic Applications to Shares
being allotted to an applicant includes allotment to CDP for the account of that applicant.
Any reference to a time of day in this Prospectus, the Application Forms and the Electronic Applications
shall be a reference to Singapore time, unless otherwise stated.
Any references to “we”, “our”, and “us” or other grammatical variations thereof in this Prospectus is a
reference to our Company, our Group or any member of our Group, as the context requires.
Any discrepancies in the tables included in this Prospectus between the listed amounts and totals thereof
are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic
aggregation of the figures that precede them.
9
GLOSSARY OF TECHNICAL TERMS
To facilitate a better understanding of the business of our Group, the following glossary provides a
description (which would not be treated as being definitive of their meanings) of some of the technical
terms and abbreviations used in this Prospectus. The terms and their assigned meanings may not
correspond to standard industry meanings or usage of these terms:
“drumming”
:
The process of filling metal drums with chemical products and sealing
them for transportation and/or storage
“dry hubbing”
:
The management of transportation and inventory of laden containers at
dedicated storage facilities pending shipment
“Export Processing Zone”
:
The specific zones authorised by the LTA for the storage of deregistered vehicles pending export
“Licensed Warehouse”
:
A warehouse that is licensed by the Singapore Customs to store
dutiable goods, hazardous goods and other non-dutiable goods without
incurring GST until the goods are released for sale in Singapore
“TEU”
:
Twenty-foot equivalent unit
“ZG Warehouse”
:
Zero-rated GST warehouse, a warehouse that is licensed by the
Singapore Customs to store all goods except dutiable goods, locallymanufactured goods and GST-paid goods without incurring GST until
the goods are removed from the warehouse and released for sale
locally or overseas
10
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
All statements contained in this Prospectus, statements made in press releases and oral statements that
may be made by us or our Directors, Executive Officers or employees acting on our behalf, 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 or phases. However, these words are not the exclusive
means of identifying forward-looking statements. All statements regarding our expected financial position,
business strategy, plans and prospects, and the future prospects of our industry are forward-looking
statements. These forward-looking statements and other matters discussed in this Prospectus regarding
matters that are not historical fact are only predictions. These forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause our actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed
or implied by such forward-looking statements. These risk factors and uncertainties are discussed in more
detail in this Prospectus, in particular, but not limited to, discussions in the section entitled “Risk Factors”.
Given the risks and uncertainties that may cause our actual future results, performance or achievements
to be materially different from that expected, expressed or implied by the forward-looking statements in
this Prospectus, we advise you not to place undue reliance on those statements. Neither we, the Vendors,
the Issue Manager, the Joint Underwriters and Joint Placement Agents nor any other person represents
or warrants to you that our actual future results, performance or achievements will be as discussed in
those statements.
Our actual future results may differ materially from those anticipated in these forward-looking statements
as a result of the risks faced by us. We, the Vendors, the Issue Manager, the Joint Underwriters and Joint
Placement Agents disclaim any responsibility to update any of those forward-looking statements or to
publicly announce any revisions to those forward-looking statements to reflect future developments,
events or circumstances for any reason, even if new information becomes available or other events occur
in the future. We are, however, subject to the provisions of the Securities and Futures Act and the Listing
Manual regarding corporate disclosure. In particular, pursuant to Section 241 of the Securities and
Futures Act, if after the Prospectus is registered but before the close of the Invitation, we become aware
of (a) a false or misleading statement or matter in this Prospectus; (b) an omission from this Prospectus
of any information that should have been included in it under Section 243 of the Securities and Futures
Act; or (c) a new circumstance that has arisen since this Prospectus was lodged with the Authority and
would have been required by Section 243 of the Securities and Futures Act to be included in this
Prospectus, if it had arisen before this Prospectus was lodged and that is materially adverse from the
point of view of an investor, we may lodge a supplementary or replacement prospectus with the Authority.
11
DETAILS OF THE INVITATION
LISTING ON THE SGX-ST
An application has been made to the SGX-ST for permission to deal in and for quotation of all our Shares
already issued, the Invitation Shares and the new Shares which may be issued upon the exercise of the
options to be granted under the Cogent Holdings Employee Share Option Scheme or the Cogent
Holdings Performance Share Plan. Such permission will be granted when our Company has been
admitted to the Official List of the SGX-ST. Acceptance of applications will be conditional upon, inter alia,
the SGX-ST granting permission to deal in, and for quotation of, all our existing issued Shares and the
Invitation Shares. Monies paid in respect of any application accepted will be returned to you, subject to
applicable laws, without interest or any share of revenue or other benefit arising therefrom and at your
own risk, if the said permission is not granted or for any other reason and you will not have any claims
whatsoever against us, the Vendors, the Issue Manager and the Joint Underwriters and Joint Placement
Agents.
No Shares shall be allotted or allocated on the basis of this Prospectus later than six months after the
date of registration of this Prospectus by the Authority.
The SGX-ST assumes no responsibility for the correctness of any statements made, reports contained or
opinion expressed in this Prospectus. Admission to the Official List of the SGX-ST is not to be taken as
an indication of the merits of the Invitation, our Company, our subsidiaries, all our existing issued Shares
and the Invitation Shares.
A copy of this Prospectus has been lodged with and registered by the Authority on 31 December 2009
and 9 February 2010, respectively. The Authority assumes no responsibility for the contents of this
Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and
Futures Act, or any other legal or regulatory requirements, have been complied with. The Authority has
not, in any way, considered the merits of the Invitation Shares being offered or in respect of which an
offer is made for investment.
This Prospectus has been seen and approved by our Directors and the Vendors and they individually and
collectively accept full responsibility for the accuracy of the information given in this Prospectus and
confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts
stated and the opinions expressed in this Prospectus are fair and accurate in all material respects as at
the date of this Prospectus and that there are no material facts the omission of which would make any
statements in this Prospectus misleading and that this Prospectus constitutes full and true disclosure of
all material facts about the Invitation and our Group.
No person has been or is authorised to give any information or to make any representation not contained
in this Prospectus in connection with the Invitation and, if given or made, such information or
representation must not be relied upon as having been authorised by us, the Vendors, the Issue Manager
or any of the Joint Underwriters and Joint Placement Agents. Neither the delivery of this Prospectus and
the Application Forms nor the Invitation shall, under any circumstances, constitute a continuing
representation or create any suggestion or implication that there has been no change, or development
reasonably likely to involve a change, in our affairs, condition or prospects, or all our existing issued
Shares and the Invitation Shares, or in the statements of fact or information contained in this Prospectus
since the date of this Prospectus. Where such changes occur and are material or are required to be
disclosed by law, we will make an announcement of the same to the SGX-ST and the public and, if
required, lodge a supplementary or replacement prospectus with the Authority pursuant to Section 241 of
the Securities and Futures Act and other applicable provisions of the Securities and Futures Act and take
immediate steps to comply with the requirements of the Securities and Futures Act. We will also comply
with all other applicable requirements of the Securities and Futures Act and/or any other requirements of
the Authority and/or the SGX-ST. All applicants should take note of any such announcements,
supplementary or replacement prospectus and, upon the release of the same, shall be deemed to have
notice of such changes. Save as expressly stated in this Prospectus, nothing herein is, or may be relied
upon as, a promise or representation as to our future performance or policies. Neither we, the Vendors,
12
the Issue Manager, the Joint Underwriters and Joint Placement Agents, our Directors, the promoters, the
experts nor any other parties involved in the Invitation is making any representation to any person
regarding the legality of an investment in our Shares by such person under any investment or other laws
or regulations. No information in this Prospectus should be considered to be business, legal or tax
advice. Investors should be aware that they may be required to bear the financial risk of an investment in
our Shares (including the Invitation Shares) for an indefinite period of time. Each prospective investor
should consult his own professional or other advisers for business, financial, legal or tax advice regarding
an investment in our Shares (including the Invitation Shares).
This Prospectus has been prepared solely for the purpose of the Invitation and may not be relied upon by
any other persons other than the applicants in connection with their application for the Invitation Shares
or for any other purpose. This Prospectus does not constitute an offer, solicitation or invitation to
subscribe for and/or purchase the Invitation Shares in any jurisdiction in which such offer, or
solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to
make such offer, solicitation or invitation.
Our Company is subject to the provisions of the Securities and Futures Act and the Listing Manual
regarding corporate disclosure. In particular, if, after this document is lodged but before the close of the
Invitation, we become aware of:
(a)
a false or misleading statement or matter in this document;
(b)
an omission from this document of any information that should have been included in it under
Section 243 of the Securities and Futures Act; or
(c)
a new circumstance that has arisen since this document was lodged with the Authority which would
have been required by Section 243 of the Securities and Futures Act to be included in this
document if it had arisen before this document was lodged,
that is materially adverse from the point of view of an investor, we may lodge a supplementary or
replacement document with the Authority pursuant to Section 241 of the Securities and Futures Act.
Where prior to the lodgement of the supplementary or replacement prospectus, applications have been
made under this Prospectus to subscribe for and/or purchase the Invitation Shares and:
(a)
where the Invitation Shares have not been issued and/or sold to the applicants, our Company shall
(for itself as well as on behalf of the Vendors) either:
(i)
within two Market Days from the date of lodgement of the supplementary or replacement
prospectus, give the applicants notice in writing of how to obtain, or arrange to receive, a
copy of the supplementary or replacement prospectus, as the case may be, and provide the
applicants with an option to withdraw their applications and take all reasonable steps to
make available within a reasonable period the supplementary or replacement prospectus, as
the case may be, to the applicants who have indicated that they wish to obtain, or have
arranged to receive, a copy of the supplementary or replacement prospectus;
(ii)
within seven Market Days from the date of lodgement of the supplementary or replacement
prospectus, give the applicants the supplementary or replacement prospectus, as the case
may be, and provide the applicants with an option to withdraw their applications; or
(iii)
treat the applications as withdrawn and cancelled, in which case the applications shall be
deemed to have been withdrawn and cancelled, and our Company shall (for itself as well as
on behalf of the Vendors) within seven days from the date of lodgement of the
supplementary or replacement prospectus, return all monies paid in respect of any
application to the applicants, without interest or any share of revenue or other benefit arising
therefrom and at their own risk, and the applicants will not have any claim against our
Company, the Issue Manager and the Joint Underwriters and Joint Placement Agents; or
13
(b)
where the Invitation Shares have been issued and/or sold to the applicants, our Company shall (for
itself as well as on behalf of the Vendors) either:
(i)
within two Market Days from the date of lodgement of the supplementary or replacement
prospectus, give the applicants notice in writing of how to obtain, or arrange to receive, a
copy of the supplementary or replacement prospectus and provide the applicants with an
option to return to our Company, those securities which they do not wish to retain title in and
take all reasonable steps to make available within a reasonable period the supplementary or
replacement prospectus, as the case may be, to the applicants who have indicated that they
wish to obtain, or have arranged to receive, a copy of the supplementary or replacement
prospectus;
(ii)
within seven Market Days from the date of lodgement of the supplementary or replacement
prospectus, give the applicants the supplementary or replacement prospectus, as the case
may be, and provide the applicants with an option to return the Invitation Shares, which they
do not wish to retain title in; or
(iii)
(A) in the case of the New Shares, deem the issue as void and refund the applicants’
payments for the New Shares (without interest or any share of revenue or other benefits
arising therefrom and at their own risk) within seven days from the date of lodgement of the
supplementary or replacement prospectus and (B) in the case of the Vendor Shares, deem
the sale of the Vendor Shares as void, and (1) in the case where documents to evidence title
to the Vendor Shares (“title documents”) have been issued to the applicants, within seven
days from the date of lodgement of the supplementary or replacement prospectus, inform
the applicants to return the title documents within 14 Market Days from the date of
lodgement of the supplementary or replacement prospectus, and within seven days from
receipt of the title documents or the date of lodgement of the supplementary or replacement
prospectus, whichever is the later, refund the applicants’ payments for the Vendor Shares
(without interest or any share of revenue or other benefits arising therefrom and at their own
risk) within seven Market Days from the date of lodgement of the supplementary or
replacement prospectus, and the applicants will not have any claim against our Company,
the Vendors, the Issue Manager and the Joint Underwriters and Joint Placement Agents.
An applicant who wishes to exercise his option under paragraph (a)(i) or (a)(ii) to withdraw his application
shall, within 14 Market Days from the date of lodgement of the supplementary or replacement
prospectus, notify our Company of this, whereupon our Company (for itself as well as on behalf of the
Vendors) shall, within seven days from the receipt of such notification, pay to the applicant all monies
paid by the applicant on account of his application for those Invitation Shares without interest or any
share of revenue or other benefit arising therefrom and at his own risk, and he will not have any claim
against our Company, the Vendors, the Issue Manager and the Joint Underwriters and Joint Placement
Agents.
An applicant who wishes to exercise his option under paragraph (b)(i) or b(ii) to return the Invitation
Shares issued to him shall, within 14 Market Days from the date of lodgement of the supplementary or
replacement prospectus, notify our Company of this and return all documents, if any, purporting to be
evidence of title to those Invitation Shares to our Company, whereupon our Company (for itself as well as
on behalf of the Vendors) shall, within seven days from the receipt of such notification and documents, if
any, pay to him all monies paid by him for those Invitation Shares, without interest or any share of
revenue or other benefit arising therefrom and at his own risk, and the issue of those Invitation Shares
shall be deemed to be void, and he will not have any claim against our Company, the Vendors, the Issue
Manager and the Joint Underwriters and Joint Placement Agents.
Under the Securities and Futures Act, the Authority may, in certain circumstances issue a stop order (the
“Stop Order”) to our Company, directing that no or no further Shares to which this document relates, be
allotted, issued or sold. Such circumstances will include a situation where this document (i) contains a
statement or matter, which in the opinion of the Authority is false or misleading; (ii) omits any information
that should be included in accordance with the Securities and Futures Act; (iii) does not, in the opinion of
the Authority, comply with the requirements of the Securities and Futures Act; or (iv) in the opinion of the
Authority, is in the public interest to do so.
14
Where the Authority issues a Stop Order pursuant to Section 242 of the Securities and Futures Act, and:
(a)
in the case where the Invitation Shares have not been issued and/or sold to the applicants, the
applications for the Invitation Shares pursuant to the Invitation shall be deemed to have been
withdrawn and cancelled and our Company shall, within 14 Market Days from the date of the Stop
Order, pay to the applicants all monies the applicants have paid on account of their applications for
the Invitation Shares without interest or any share of revenue or other benefit arising therefrom; or
(b)
in the case where the Invitation Shares have been issued and/or sold to the applicants and the
issue and/or sale of the Invitation Shares pursuant to the Invitation is required by the Securities
and Futures Act to be deemed void, our Company and/or the Vendors shall, subject to compliance
with Singapore laws and our Articles of Association, repurchase the Invitation Shares and our
Company and/or the Vendors shall, within 14 Market Days from the date of the Stop Order, pay to
the applicants all monies paid by them for the Invitation Shares without interest or any share of
revenue or other benefit arising therefrom.
Such monies paid in respect of the applicant’s application will be returned to the applicant, in the case of
applications for Invitation Shares under the Public Offer, at the applicant’s own risk, without interest or any
share of revenue or other benefit arising therefrom, and the applicant will not have any claim against us,
the Vendors, the Issue Manager or any of the Joint Underwriters and Joint Placement Agents.
If we are required by applicable Singapore laws to cancel issued Invitation Shares and repay application
monies to applicants (including instances where a Stop Order is issued), subject to compliance with our
Articles of Association, we will purchase the Invitation Shares at the Invitation Price.
Copies of this Prospectus and the Application Forms and envelopes may be obtained on request, subject
to availability, during office hours from:
9 Temasek Boulevard
Singapore 038989
8 Anthony Road #01-01
Singapore 229957
and from members of the Association of Banks in Singapore, members of the SGX-ST and merchant
banks in Singapore.
A copy of this Prospectus is also available on:
(a)
(b)
the SGX-ST website: http://www.sgx.com; and
the Authority’s website: http://masnet.mas.gov.sg/opera/sdrprosp.nsf.
The Application List will open immediately upon the registration of the Prospectus by the
Authority and will remain open until 12.00 noon on 23 February 2010 or for such further period or
periods as our Directors may, in consultation with the Issue Manager and the Joint Underwriters
and Joint Placement Agents decide, subject to any limitation under all applicable laws PROVIDED
ALWAYS THAT where a supplementary or replacement prospectus has been lodged with the
Authority, the Application List shall be kept open for at least 14 Market Days after the lodgement
of the supplementary or replacement prospectus.
Details of the procedure for applications to subscribe for and/or purchase the Invitation Shares are set out
in Appendix F – “Terms, Conditions and Procedures for Application and Acceptance” to this Prospectus.
15
INDICATIVE TIMETABLE
An indicative timetable for the Invitation and trading in our Shares is set out for the reference of
applicants:
Indicative time/date
Event
9.00 am on 10 February 2010
Commencement of Invitation
12.00 noon on 23 February 2010
Close of Application List and closing date and time for the Invitation
24 February 2010
Balloting of applications, if necessary (in the event of oversubscription for the Invitation Shares)
9.00 a.m. on 25 February 2010
Commence trading on a “ready” basis
2 March 2010
Settlement date for all trades done on a “ready” basis
The above timetable is only indicative as it assumes that the date of closing of the Application List will be
23 February 2010, the date of admission of our Company to the Official List of the SGX-ST will be
25 February 2010, the shareholding spread requirement will be complied with and the Invitation Shares
will be issued and fully paid-up prior to 25 February 2010.
The above timetable and procedures may be subject to such modification as the SGX-ST may, in its
absolute discretion, decide, including the decision to permit trading on a “ready” basis and the
commencement date of such trading.
Investors should consult the SGX-ST’s announcement on “ready” trading date on the Internet (at the
SGX-ST internet website http://www.sgx.com) or the newspapers, or check with their brokers on the date
on which trading on a “ready” basis will commence.
In the event of any changes in the closure of the Application List or the time period during which the
Invitation is open, we will publicly announce the same:
(i)
through an SGXNET announcement to be posted on the internet at the SGX-ST’s internet website
at http://www.sgx.com; and
(ii)
through a paid advertisement in a major Singapore English newspaper such as The Straits Times
or The Business Times.
We and the Vendors will provide details of the results of the Public Offer (including the level of
subscription for the Invitation Shares and the basis of allocation of the Invitation Shares pursuant to the
Invitation), as soon as it is practicable after the closure of the Application List through the channels in (i)
and (ii) above.
We and the Vendors reserve the right to reject or accept, in whole or in part, or to scale down or ballot
any application for the Invitation Shares, without assigning any reason therefor, and no enquiry and/or
correspondence on our and the Vendors’ decision will be entertained. In deciding the basis of allocation,
due consideration will be given to the desirability of allocating our Shares to a reasonable number of
applicants with a view to establishing an adequate market for our Shares.
Where an application is rejected, the full amount of the application monies will be refunded (without
interest or any share of revenue or other benefit arising therefrom) to the applicant, at his own risk within
14 Market Days (or such shorter period as the SGX-ST may require) after the close of the Invitation
(provided that such refunds are made in accordance with the procedures set out in Appendix F – “Terms,
Conditions and Procedures for Application and Acceptance” of this Prospectus).
16
Where an application is accepted in full or in part only, any balance of the application monies will be
refunded (without interest or any share of revenue or other benefit arising therefrom) to the applicant, at
his own risk, within 14 Market Days after the close of the Invitation (provided that such refunds are made
in accordance with the procedures set out in Appendix F – “Terms, Conditions and Procedures for
Application and Acceptance” of this Prospectus).
Where the Invitation does not proceed for any reason, the full amount of application monies (without
interest or any share of revenue or other benefit arising therefrom) will be returned within three Market
Days after the Invitation is discontinued.
17
THE INVITATION
Invitation size
:
Invitation in respect of 92,000,000 Invitation Shares comprising:
(i)
46,000,000 New Shares; and
(ii)
46,000,000 Vendor Shares.
The Invitation Shares will upon issue and allotment, rank pari passu in
all respects with our existing issued Shares.
Invitation Price
:
S$0.22 for each Invitation Share.
The Public Offer
:
The Pulic Offer comprises an invitation by our Company and the
Vendors to the public in Singapore to subscribe for and/or purchase
the 2,000,000 Offer Shares at the Invitation Price, subject to and on
the terms and conditions of this Prospectus.
The Placement
:
The Placement comprises a placement of 90,000,000 Placement
Shares, at the Invitation Price, subject to and on the terms and
conditions of this Prospectus.
Purpose of the Invitation
:
Our Directors consider that the listing of our Company and the
quotation of our Shares on the SGX-ST will enhance our public image
locally and internationally and enable us to tap the capital markets to
fund our business growth. The Invitation will also provide members of
the public, our employees, our business associates and others who
have contributed to the success of our Group with an opportunity to
participate in the equity of our Company.
Listing status
:
Our Shares will be quoted in Singapore dollars on the SGX-ST, subject
to admission of our Company to the Official List of the SGX-ST and
permission for dealing in, and for quotation of, our Shares being
granted by the SGX-ST and the Authority not issuing a Stop Order.
Risk factors
:
Investing in our Shares involves risks which are described, in
particular, but not limited to, in the section entitled “Risk Factors” of this
Prospectus.
18
PLAN OF DISTRIBUTION
The Invitation
The Invitation is for 92,000,000 Invitation Shares offered in Singapore by way of public offer and
placement comprising 2,000,000 Offer Shares and 90,000,000 Placement Shares, managed by Kim Eng
Corporate Finance Pte. Ltd. and jointly underwritten by Kim Eng Corporate Finance Pte. Ltd. and UOB
Kay Hian Private Limited.
The Invitation Price was determined after consultation between our Company, the Vendors, the Issue
Manager and the Joint Underwriters and Joint Placement Agents and after taking into consideration, inter
alia, prevailing market conditions and estimated market demand for our Shares. The Invitation Price is the
same for all Invitation Shares and is payable in full on application.
Investors may apply to subscribe for and/or purchase any number of Invitation Shares in integral multiples
of 1,000 Shares. In order to ensure a reasonable spread of Shareholders, we have the absolute
discretion to prescribe a limit to the number of Invitation Shares to be allotted and/or allocated to any
single applicant and/or to allot and/or allocate Invitation Shares above or under such prescribed limit as
we shall deem fit.
The Public Offer
The Offer Shares are made available to the members of the public in Singapore for subscription and/or
purchase at the Invitation Price. The terms, conditions and procedures for application are described in
Appendix F – “Terms, Conditions and Procedures for Application and Acceptance” of this Prospectus.
In the event of an under-subscription for the Offer Shares as at the close of the Application List, that
number of Offer Shares not subscribed for and/or purchased shall be made available to satisfy excess
application for the Placement Shares to the extent that there is an over-subscription for the Placement
Shares as at the close of the Application List.
In the event of an over-subscription for the Offer Shares as at the close of the Application List and the
Placement Shares are fully subscribed and/or purchased or over-subscribed as at the close of the
Application List, the successful applications for the Offer Shares will be determined by ballot or otherwise
as determined by our Directors and the Vendors in consultation with the Issue Manager and the Joint
Underwriters and Joint Placement Agents and approved by the SGX-ST.
Pursuant to the terms and conditions contained in the Management and Underwriting Agreement signed
between our Company, the Vendors, the Issue Manager and the Joint Underwriters and Joint Placement
Agents dated 9 February 2010, the Issue Manager has agreed to manage the Public Offer and the Joint
Underwriters and Joint Placement Agents have agreed to underwrite the Offer Shares. The Joint
Underwriters and Joint Placement Agents may at their absolute discretion, appoint one or more subunderwriters for the Offer Shares.
The Management and Underwriting Agreement may be terminated by the Issue Manager or the Joint
Underwriters and Joint Placement Agents at any time on or prior to the close of the Application List on
the occurrence of certain events including, inter alia, any change, or any development involving a
prospective change, in local, national, regional or international, financial (including stock market, foreign
exchange market, inter-bank market or interest rates or money market), political, industrial, economic,
legal or monetary conditions, taxation or exchange controls (including without limitation, the imposition of
any moratorium, suspension or material restriction on trading in securities generally on the SGX-ST due
to exceptional financial circumstances or otherwise).
19
The Placement
Application for the Placement Shares may only be made by way of the Application Forms. The terms and
conditions and procedures for application are described in Appendix F – “Terms, Conditions and
Procedures for Application and Acceptance” of this Prospectus.
Pursuant to the terms and conditions in the Placement Agreement signed between our Company, the
Vendors and the Joint Underwriters and Joint Placement Agents dated 9 February 2010, the Joint
Underwriters and Joint Placement Agents have agreed to subscribe for and/or procure subscribers for or
purchase and/or procure purchasers for the Placement Shares at the Invitation Price. The Joint
Underwriters and Joint Placement Agents shall be at liberty to make sub-placement arrangements in
respect of its obligations under the Placement Agreement.
The Placement Agreement may be terminated by the Joint Underwriters and Joint Placement Agents at
any time prior to the dealing of the Placement Shares upon the occurrence of certain events, including,
among other things, certain force majeure events. The Placement Agreement will be conditional upon the
Management and Underwriting Agreement not having been terminated or rescinded pursuant to the
provisions of the Management and Underwriting Agreement and the occurrence of certain events,
including the fulfilment, or waiver by the SGX-ST, of all conditions contained in the letter of eligibility from
the SGX-ST for the listing and quotation of our Shares on the Main Board of the SGX-ST.
In the event of an under-subscription for the Placement Shares as at the close of the Application List, that
number of Placement Shares not subscribed for and/or purchased shall be made available to satisfy
excess applications for the Offer Shares to the extent that there is an over-subscription for the Offer
Subscribers of our Placement Shares may be required to pay brokerage (and if so required, such
brokerage will be up to 1.0% of the Invitation Price), as well as stamp duties and other similar charges.
None of our Directors or Substantial Shareholders intends to subscribe for and/or purchase the Invitation
Shares. To the best of our knowledge as at the Latest Practicable Date, we are unaware of any person
who intends to subscribe for and/or purchase more than 5.0% of the Invitation Shares. However, through
a book building process to assess market demand for our Shares, there may be person(s) who may
indicate interest to subscribe for and/or purchase more than 5.0% of the Invitation Shares.
Further, no Shares shall be allotted and/or allocated on the basis of this Prospectus later than six months
after the date of registration of this Prospectus by the Authority.
Interests of Underwriters or Financial Advisers
Save for Kim Eng Corporate Finance Pte. Ltd.’s role as the Issue Manager and Joint Underwriter and
Joint Placement Agent in connection with the Invitation, and UOB Kay Hian Private Limited’s role as the
Joint Underwriter and Joint Placement Agent, we do not have any material relationship with Kim Eng
Corporate Finance Pte. Ltd. or UOB Kay Hian Private Limited.
20
CLEARANCE AND SETTLEMENT
A letter of eligibility has been obtained from the SGX-ST for the listing and quotation of our Shares on the
Main Board of the SGX-ST. For the purpose of trading on the SGX-ST, a board lot for our Shares will
comprise 1,000 Shares. Upon listing and quotation on the SGX-ST, our Shares will be traded under the
book-entry settlement system of the CDP, and all dealings in and transactions of our Shares through the
SGX-ST will be effected in accordance with the terms and conditions for the operation of securities
accounts with the CDP, as amended from time to time.
The CDP,
acts as a
facilitates
electronic
CDP.
a wholly-owned subsidiary of the SGX-ST, is incorporated under the laws of Singapore and
depository and clearing organisation. The CDP holds securities for its account holders and
the clearance and settlement of securities transactions between account holders through
book-entry changes in the securities accounts maintained by such account holders with the
Our Shares will be registered in the name of the CDP or its nominees and held by the CDP for and on
behalf of persons who maintain, either directly or through depository agents, securities accounts with the
CDP. Persons named as direct securities account holders and depository agents in the depository
register maintained by the CDP, rather than the CDP itself, will be treated, under the Companies Act and
our Articles of Association, as our members in respect of the number of our Shares credited to their
respective securities accounts.
Persons holding our Shares in a securities account with the CDP may withdraw the number of Shares
they own from the book-entry settlement system in the form of physical share certificates. Such share
certificates will not, however, be valid for delivery pursuant to trades transacted on the SGX-ST, although
they will be prima facie evidence of title and may be transferred in accordance with our Articles of
Association. A fee of S$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for each
withdrawal of more than 1,000 Shares will be payable upon withdrawing our Shares from the book-entry
settlement system and obtaining physical share certificates. In addition, a fee of S$2.00 (or such other
amounts as our Directors may decide) will be payable to our share registrar for each share certificate
issued, and stamp duty of S$10.00 is also payable where our Shares are withdrawn in the name of the
person withdrawing our Shares, or S$0.20 per S$100.00 or part thereof of the last-transacted price where
our Shares are withdrawn in the name of a third party. Persons holding physical share certificates who
wish to trade on the SGX-ST must deposit with the CDP their share certificates together with the duly
executed and stamped instruments of transfer in favour of the CDP, and have their respective securities
accounts credited with the number of our Shares deposited before they can effect the desired trades. A
fee of S$20.00 is payable upon the deposit of each instrument of transfer with the CDP.
Transactions in our Shares under the book-entry settlement system will be reflected by the seller’s
securities account being debited with the number of our Shares sold and the buyer’s securities account
being credited with the number of our Shares acquired. No transfer stamp duty is currently payable for the
transfer of our Shares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on the SGX-ST is payable at the rate of 0.04% of the
transaction value, subject to a maximum of S$600.00 per transaction. The clearing fee, instrument of
transfer deposit fees and share withdrawal fee are subject to GST of 7.0% (or such other prevailing rate
from time to time). Dealings in our Shares will be carried out in Singapore dollars and will be effected for
settlement in the CDP on a scripless basis. Settlement of trades on a normal “ready” basis on the SGXST generally takes place on the third Market Day following the transaction date, and payment for the
securities is generally settled on the following day. The CDP holds securities on behalf of investors in
securities accounts. An investor may open a direct securities account with the CDP or a securities subaccount with a depository agent. A depository agent may be a member company of the SGX-ST, bank,
merchant bank or trust company.
21
USE OF PROCEEDS AND LISTING EXPENSES
The net proceeds to be raised from the issue and sale of the Invitation Shares (after deducting the
estimated Invitation expenses of approximately S$2.0 million) are estimated to be approximately S$18.2
million.
Net proceeds from the issue of New Shares
The net proceeds attributable to us from the issue of the New Shares (after deducting our share of
estimated Invitation expenses of approximately S$1.0 million) are estimated to be approximately S$9.1
million. We will not receive any proceeds from the sale of the Vendor Shares.
We intend to use the net proceeds for the following purposes:
S$
Intended Use
(in millions)
Amount allocated for each
dollar of the proceeds raised
from the Invitation
by our Company
(as a % of the net proceeds from
the issue of the New Shares)
Expansion of container depot operations and
warehousing space
6.1
67.0%
Expansion of vehicle logistics operations
2.0
22.0%
Working capital
1.0
11.0%
Total
9.1
100.0%
Please refer to the section entitled “Prospects, Strategies and Future Plans” of this Prospectus for more
information on our plans above.
Pending the deployment of the net proceeds as aforesaid, the net proceeds from the issue of the New
Shares may be added to our Group’s working capital, placed as deposits with banks or financial
institutions, or used for investment in short-term money market or debt instruments, as our Directors may
deem appropriate in their absolute discretion.
The foregoing discussion represents our Company’s best estimate of its allocation of the net proceeds
from the issue of the New Shares raised from the Invitation based on its current plans and estimates
regarding its anticipated expenditures. Actual expenditures may vary from these estimates and the
Company may find it necessary or advisable to reallocate the net proceeds within the categories
described above or to use portions of the net proceeds for other purposes.
In the event that any part of our proposed uses of the net proceeds from the issue of the New Shares do
not materialise or proceed as planned, our Directors will carefully monitor the situation and may
reallocate the proceeds to other purposes and/or hold such funds on short-term deposits for so long as
our Directors deem it to be in the interest of our Company and our Shareholders, taken as a whole. Any
change in the use of the net proceeds from the issue of the New Shares will be subject to the listing rules
of the SGX-ST and appropriate announcements will be made by our Company on SGXNET.
As and when the funds from the Invitation are materially disbursed, our Company will make periodic
announcements via SGXNET on the use of the net proceeds and will provide a status report on the use
thereof in our annual report.
In the opinion of our Directors, no minimum amount must be raised from the Invitation.
22
Net proceeds from the sale of Vendor Shares
The net proceeds attributable to the Vendors from the sale of the Vendor Shares (after deducting the
Vendors’ share of the estimated Invitation expenses of approximately S$1.0 million), are estimated to be
approximately S$9.1 million.
Listing Expenses
The estimated amount of the expenses in relation to the Invitation and the application for listing, is
approximately S$2.0 million. A breakdown of these estimated expenses is as follows:
S$
(’000)
Intended Use
Listing Fees
Amount allocated for each
dollar of the proceeds raised
from the Invitation
(as a % of the gross proceeds)
70
0.3
Professional Fees
838
4.2
Underwriting commission(1), placement commission(2)
and brokerage(3)
607
3.0
Miscellaneous expenses
503
2.5
2,018
10.0
Total
Our Company and the Vendors will bear expenses of approximately S$1.0 million and S$1.0 million,
respectively in the proportion in which the Invitation Shares are offered by our Company and the Vendors.
Notes:
(1)
Pursuant to the Management and Underwriting Agreement, the Joint Underwriters and Joint Placement Agents agreed to
underwrite the Offer Shares for a commission of 2.75% of the Invitation Price for each Offer Share payable by our Company
and the Vendors in the proportion in which the Invitation Shares are offered by our Company and the Vendors.
(2)
Pursuant to the Placement Agreement, the Joint Underwriters and Joint Placement Agents agreed to subscribe for and/or
purchase and procure subscribers and/or purchasers for a placement commission of 3.0% of the Invitation Price for each
Placement Share payable by our Company and the Vendors in the proportion in which the Invitation Shares are offered by our
Company and the Vendors.
(3)
Brokerage will be paid by our Company and the Vendors on the Invitation Shares in the proportion in which the Invitation
Shares are offered by our Company and the Vendors to members of the SGX-ST, merchant banks and members of the
Association of Banks in Singapore in respect of accepted applications made on Application Forms bearing their respective
stamps, or to Participating Banks in respect of successful applications made through Electronic Applications at the rate of
0.25% of the Invitation Price for each Offer Share for UOB Group and OCBC and 0.5% of the Invitation Price for each Offer
Share (subject to a minimum amount of S$10,000) for DBS.
In accordance with applicable accounting standards, a portion of the expenses incurred in connection
with the Invitation will be treated as a one-time charge in our financial statements, which will affect our
financial results for FY2009 and FY2010, approximately S$627,000 of the estimated listing expenses will
be charged to our income statement in FY2009 and approximately S$534,000 of the estimated listing
expenses will be charged to our income statement in FY2010.
Please refer to the section entitled “Plan of Distribution” of this Prospectus for more details on our
management, underwriting and placement arrangements.
23
SUMMARY
The information contained in this summary is derived from and should be read in conjunction with, the full
text of this Prospectus. Because it is a summary, it does not contain all the information that potential
investors should consider before investing in our Shares. Potential investors should read this entire
Prospectus carefully, including the section entitled “Risk Factors” of this Prospectus before making an
investment decision.
OVERVIEW OF OUR GROUP
Our Company was incorporated in Singapore on 18 June 2007 under the Companies Act as a private
limited company, under the name Cogent Holding Pte. Ltd.. Our Company was converted to a public
limited company and the name of our Company was changed to Cogent Holdings Limited in connection
therewith on 29 January 2010. Our Company is the holding company of our Group.
Business
We are a full-service logistics management service provider. We offer a comprehensive range of logistics
services and our business operations can be broadly categorised into the following three business
segments:
(a)
We provide transportation management services which include:
(b)
trucking services for both laden and empty containers between the ports and our
warehouses or other designated destinations; and
dry hubbing services, which refer to the management of transportation and inventory of
laden containers at dedicated storage facilities pending shipment by our customers, and
other ancillary retrieval and transportation services, including the transportation of petroleum
and chemical products from Jurong Island.
We provide warehousing and container depot management services which include:
(c)
packing and drumming and other related ancillary storage services; and
storage of unladen shipping containers and maintenance and repair works on the containers.
We provide automotive logistics management services which include the processing, transportation
and storage of motor vehicles. We also offer a comprehensive range of ancillary services including
port and customs clearance, vehicular transportation, warehousing and delivery of these motor
vehicles.
We are also involved in Export Processing Zone operations which includes de-registration and
export of second-hand motor vehicles and assist the LTA in repossession of cars with outstanding
road taxes and impounding of illegally modified cars.
For more details, please refer to the section entitled “History and Business - Business Overview” of this
Prospectus.
24
We believe that the following are our competitive strengths:
(a)
One of the leading players in the Singapore logistics industry;
(b)
Full-service integrated logistics solutions provider;
(c)
Diversified logistics services structure;
(d)
One of the few Licensed Warehouse and licensed chemical warehouse operators in the Singapore
logistics industry;
(e)
Established relationships with our customers; and
(f)
Experienced and dedicated management team.
For more details, please refer to the section entitled “History and Business - Competitive Strengths” of
this Prospectus.
Our strategies and future plans are as follows:
(a)
Increasing our scale of operations;
(b)
Expanding overseas through strategic partnerships, acquisitions and joint ventures;
(c)
Keeping abreast of systems, software and vehicular improvements and upgrades;
(d)
Branding and expanding our marketing network; and
(e)
Expanding our range of services provided.
For more details, please refer to the section entitled “Prospects, Strategies and Future Plans - Strategies
and Future Plans” of this Prospectus.
OUR CONTACT DETAILS
Our registered office and principal place of business is located at 7 Penjuru Close, #05-00, Singapore
608779. Our telephone number is +65 6266 6161 and our facsimile number is +65 6261 5730.
25
INVITATION STATISTICS
22.0 cents
Invitation Price
NAV
The NAV per Share based on the combined statement of financial position of
our Group as at 30 June 2009:
(a)
before adjusting for the estimated net proceeds from the issue of the
New Shares and based on the pre-Invitation share capital of
273,000,000 Shares
5.5 cents
(b)
after adjusting for the estimated net proceeds from the issue of the
New Shares and based on the post-Invitation share capital of
319,000,000 Shares
7.6 cents
Premium of Invitation Price over the combined NAV per Share as at 30 June
2009:
(a)
before adjusting for the estimated net proceeds from the issue of the
New Shares and based on the pre-Invitation share capital of
273,000,000 Shares
300.0%
(b)
after adjusting for the estimated net proceeds from the issue of the
New Shares and based on the post-Invitation share capital of
319,000,000 Shares
189.5%
Earnings
Historical net EPS of our Group for FY2008 based on the pre-Invitation share
capital of 273,000,000 Shares
2.6 cents
Historical net EPS of our Group for FY2008 based on the pre-Invitation share
capital of 273,000,000 Shares had the Service Agreements been in effect for
FY2008
2.5 cents
Price Earnings Ratio
Historical price earnings ratio based on the historical net EPS of our Group
for FY2008
8.5 times
Historical price earnings ratio based on the historical net EPS of our Group
had the Service Agreements been in effect for FY2008
8.8 times
Net Operating Cash Flow
Historical net operating cash flow per Share for FY2008 based on the preInvitation share capital of 273,000,000 Shares
5.9 cents
Price to Net Operating Cash Flow Ratio
Invitation Price to historical net operating cash flow per Share of our Group
for FY2008 based on the pre-Invitation share capital of 273,000,000 Shares
3.7 times
Market Capitalisation
Market capitalisation based on the post-Invitation share capital of
319,000,000 Shares and the Invitation Price
26
S$70.2 million
RISK FACTORS
Prospective investors should carefully consider and evaluate the following considerations and all other
information contained in this Prospectus before deciding to invest in our Shares. Some of the following
risk factors relate principally to the industry in which our Group operates and the business of our Group in
general. Other considerations relate principally to general economic and political conditions and the
securities market and ownership of our Shares, including possible future sales of Shares.
If any of the following considerations and uncertainties develops into actual events, our business, results
of operations and financial condition could be materially and adversely affected. In such cases, the
trading price of our Shares could decline due to any of these considerations and uncertainties, and
investors may lose all or part of their investment in our Shares. To the best of our Directors’ belief and
knowledge, all the risk factors that are material to investors in making an informed judgement have been
set out below.
RISKS RELATING TO OUR INDUSTRY AND BUSINESS
Economic conditions globally may adversely impact us
We are mainly involved in the provision of transportation management services, warehousing and
container depot management services and automotive management services which are dependent on
the general global economy. The global financial markets have experienced, and may continue to
experience, volatility and liquidity disruptions, which have resulted in the consolidation, failure or near
failure of a number of institutions in the banking and insurance industries. These and other related events
have had a significant impact on the global capital markets associated not only with asset-backed
securities but also with the global credit and financial markets as a whole. These events have resulted in
a general fall in demand for international trade, transportation, and container depot management
business, increased difficulty in borrowing from financial institutions, and an increased risk of counterparty
default.
The economic slowdown has generally resulted in lower storage turnover in our warehouse and storage
facilities, and lowered demand and volume in our ground handling and transportation management
services, thereby negatively impacting our business and results of operations. The global economic
condition has also affected the typically cyclical Singapore real estate and automotive industry.
Any sharp increase in the rental of industrial properties when our leases are due for renewal or rental
revision would adversely impact our operational costs and results of operations. Should our landlords
elect to revise our rental rates upwards and we are unable to pass on such rental increments on to our
sub-lessees, our operational expenses would increase and our profit margins would be adversely affected
as we derive a significant portion of our income under our warehousing operations from the sub-letting of
warehousing premises to third parties.
In addition, any fluctuation in vehicle prices may also adversely impact our results of operations. When
market demand for cars decrease, our customers’ demand for our automotive logistics management
services will correspondingly decrease. In addition, an increased number of motorists may elect to retain
their motor vehicles for a longer period in light of the current economic climate to conserve funds. As
such, the volume of second-hand export cars processed by our Export Processing Zone operations may
also decrease, thereby adversely affecting our financial position and results of operations.
We are dependent on a few of our major customers
For FY2006, FY2007, FY2008 and 1H2009, our top five customers accounted for approximately 28.3%,
34.8%, 42.0% and 35.5% of our revenue, respectively. Please refer to the section entitled “History and
Business - Major Customers” of this Prospectus for further details. We believe that a significant portion of
our revenue will continue to be dependent on these customers. Any material decrease in demand for our
services, non-renewal of existing contracts or termination of services by these customers may adversely
affect our results of operations.
27
A significant portion of our income is dependent on our established relationships with certain key
customers such as Keppel Logistics, A.P. Moller – Maersk A/S, The Polyolefin Company(S) Pte. Ltd. and
MOL (Singapore) Pte. Ltd. We do not enter into exclusive service agreements and our customers are free
to engage the services of our competitors following the expiration of our service agreements. In 2009, our
contracts with Keppel Logistics relating to the provision of warehousing management services and
transportation management services were not renewed upon their expiry. The non-renewal of the
contracts with Keppel Logistics led to a decrease in revenue attributable to Keppel Logistics, bringing its
percentage of revenue contribution down from approximately 23.1% for 1H2008 to 13.1% for 1H2009.
Keppel Logistics has been a major customer since July 2007 and accounted for approximately 7.9% and
21.2% for FY2007 and FY2008, respectively. For more details, please refer to the section entitled “History
and Business – Major Customers” of this Prospectus. Although we have managed to secure a new
contract with Keppel Fels to provide transportation management services, in particular seaport clearance
and local trucking services, we are unable to assure you that we will be able to continue or to provide
additional services to replace the non-renewal of our contract with Keppel Logistics as the renewal of our
contracts and service agreements are dependent on several factors such as goodwill, supply and
demand, competitive rates, quality of service and general economic conditions. We cannot assure you
that we will be able to retain our key customers in the future. In the event any of our key customers
terminate our services, our income, profitability and financial performance would be adversely affected.
We are dependent on our key management personnel
Mr Tan Yeow Khoon, our Executive Chairman and CEO, Mr Edwin Tan Yeow Lam, our Managing Director
and Mr Tan Kok Sian, our Director of Business Development, have been instrumental in the growth and
development of our Company. We believe that our continued growth and success will be dependent upon
our ability to retain our key management personnel. The loss of any of our key management personnel
without any timely and suitable qualified replacements, or the inability to attract, hire and retain suitable
candidates may have an adverse effect on our business and results of operations.
We may be adversely affected by the excess supply of available warehousing space and premises
in Singapore
Our results of operations may be adversely affected by the demand and supply of available warehousing
space. The increase in availability of warehousing space and facilities in Singapore in recent years has
resulted in intense competition locally. In addition, declining property prices may encourage our
customers to acquire their own warehouses, as opposed to sub-leasing from us or employing our
warehousing management services, all of which may also result in a decline in demand for our
warehouses. In the event of excess supply of available warehousing premises or cheaper alternatives in
Singapore, our business and results of operations may be adversely affected by the decrease in demand
for our warehousing management services.
We may not be able to ensure timely renewal of our leases and licences
Our licences and a significant portion of the leases we enter into with our landlords are generally shortterm in nature, and will be expiring within the next two to three years. For example, the lease for our
warehouse at 20 Tuas South and our licences for 9B Benoi Sector and 210 Turf Club are up for renewal
in FY2010, our licence for Private Lot A0848003 Tanjong Kling is up for renewal in FY2011 and the
leases for our warehouses at 6 Jalan Papan and 8 Penjuru Road are up for renewal in FY2012. Please
refer to the section entitled “History and Business – Properties and Fixed Assets” of this Prospectus for
further details of the tenures of these leases and licences. The leases and licences which are expiring in
FY2010, FY2011 and FY2012 account for an aggregate of approximately 14.4% and 20.3% of our
Group’s total revenue in FY2008 and 1H2009, respectively. We are currently in negotiations with our
landlords on the terms of renewal and we cannot assure you that we will be able to renew our leases
and/or licences on commercially favourable terms, if at all. In the event that our leases and/or licences are
not renewed and/or we are unable to find suitable replacement premises or at reasonable rates, our
business would be disrupted and our financial results may be adversely affected.
28
We may not be able to obtain adequate financing for working capital and our future growth plans
We may face difficulties in obtaining adequate or sufficient financing in a volatile financial market where
financial institutions may be increasingly cautious when extending credit facilities to fund our working
capital, operational requirements and future growth. Please see the section entitled “Management’s
Discussion and Analysis of Results of Operations and Financial Condition – Liquidity and Capital
Resources” for further details of our bank borrowings. We cannot assure you that we will be able to obtain
sufficient financing, on a short-term or long-term basis, or on favourable commercial terms, if at all. In the
event we are unable to obtain sufficient financing, our cashflow and financial position will be adversely
affected.
We are exposed to the risk of our customers defaulting under our credit terms and on their rental
payments
In light of the current global economic climate, many organisations may be experiencing cashflow and
liquidity constraints and difficulty in obtaining loans or financing from financial institutions. Although we
currently extend credit terms ranging from 30 days to 60 days to our customers for services rendered
from the date of invoice, actual repayment may now take longer, if at all. In the event of a prolonged
period of non-payment or a default in payment, our cashflow and results of operations will be adversely
affected. In addition, a significant portion of our income under our warehousing management services,
which amounted to approximately 65.9% in FY2008 and 74.9% in 1H2009 is derived from the sub-letting
of warehousing premises to third parties. As our sub-lessees may similarly encounter difficulties in
ensuring timely payment of their rental payment or even default in payment, our results of operations and
financial performance would be adversely affected in the event our sub-lessees default on their rental
payment.
We operate in a highly competitive industry
We operate in a competitive and fragmented industry characterised by several market players offering a
different spectrum of logistics services to various customers. Our success depends on our ability to
provide our customers with a one-stop comprehensive range of services at competitive prices, minimising
the need to employ different logistics companies to cater to their different needs and service
requirements. We are constantly reviewing our processes and range of services to ensure that we deliver
technologically advanced, quality and cost-effective services. However, market competitors may price
their services lower than ours to attract customers. We cannot assure you that we will be able to compete
successfully and retain customers in the future and our failure to remain competitive would adversely
affect our business and results of operations.
We are exposed to general fluctuation in fuel prices
Our logistics business is transportation intensive and is therefore exposed to the effects of fluctuation in
fuel prices. Fuel costs accounted for approximately 10.4%, 7.8%, 6.9% and 3.2% of the Group’s revenue
in FY2006, FY2007, FY2008 and 1H2009, respectively. Any significant increase in fuel prices globally will
result in a direct increase in our operational costs, adversely affecting our profit margin. Although we may
levy fuel surcharges from time to time, our logistics business will continue to be transportation intensive.
We cannot assure you that we will be able to pass on the increase in fuel prices to our customers or
offset the effects of any future increase in fuel prices.
We handle hazardous materials on a daily basis
As part of our warehousing and transportation operations, we are involved in the packing and drumming
of hazardous chemicals and chemical compounds on-site. Although we constantly ensure that we are in
compliance with prevailing governmental and regulatory safety procedures and requirements, there will
still be risks of contamination, chemical spillage, chemical erosion and accidents or injury whether during
the storage and/or transportation stage. Any damages caused or injuries sustained as a result of the
storage or transportation of these hazardous materials may result in the payment of damages, reparation
costs and/or compensation. In the event we are required to make such payments, our profitability and
results of operations would be adversely affected.
29
Our businesses are subject to governmental and regulatory requirements
We are subject to local regulatory and licensing requirements in relation to the operation of our
warehouses, transportation services, container depot management business as well as general
compliance requirements for companies and businesses operating in Singapore. For example, as we are
also involved in the storage and packing of chemical substances and compounds (some of which may or
may not be hazardous) on our premises, we are required to strictly adhere to the guidelines and licensing
requirements of the NEA to prevent any environmental contamination. We are also required to comply
with the fire safety requirements of the SCDF. In addition, any changes in (or to the interpretation or
application of) laws, regulations, rules, codes, guidelines, directives, policies or other requirements
applicable to us may adversely affect our business. In particular, decisions by the relevant governmental
and/or regulatory authorities or agencies relating to the grant, maintenance, cancellation, amendment or
renewal of our licences may adversely affect our business and operations. As such, although we have
been compliant, we cannot assure you that our licences will not be revoked.
We are dependent on our electronic management systems
We are dependent on our electronic management systems such as our container trucking management
system, warehouse management system, container depot management system and vehicle tracking
system. Our electronic management systems will be susceptible to system failures, network and power
disruptions or other factors beyond our control. Although we update our software and conduct systems
checks regularly, we cannot assure you that we will able to rectify or resolve system failures or disruptions
in a timely and cost effective manner. In such an event, our business will be adversely affected.
Failure to keep pace with technological advancements and design improvements may adversely
affect our competitiveness
We operate in a competitive environment where cost-effectiveness, efficiency and the range of services
provided are important factors to our customers. Effective and efficient electronic management systems
are important in streamlining our operations and maximising work efficiency. As the demands and needs
of our customers become increasingly sophisticated, our operating systems and processes would need to
be adjusted accordingly, and our transportation vehicles would need to be increasingly versatile, in order
for us to remain competitive. Failure to keep abreast of technological advancements in operating or
management systems, or the inability to provide design enhanced transportation vehicles to cater to our
customers’ specifications may render us less competitive. In the event that we lose our competitive edge,
our business, results of operation and prospects will be adversely affected.
Currently, our business is concentrated solely on the Singapore logistics market
We are a Singapore-incorporated company and all our businesses and operations are based in
Singapore. We do not have any overseas operations nor offer any cross-border carrier services. As a
result, our business and revenue are reliant on the demand of logistics services locally. Although we have
diversified our operations to include automotive logistics management services and are one of the few
companies who operate Licensed Warehouses under the Customs Act under which we are licensed to
store dutiable motor vehicles, a significant portion of our income is still dependent on our transportation,
warehousing and container depot management services. In the event that there is a decrease in demand
locally for logistics services or failure to maintain our competitive edge within the industry, our business,
results of operations and financial position will be adversely affected.
We may encounter delays and disruptions in our logistics operations
In the logistics industry, timely delivery is important to our customers. We may experience machinery or
vehicular breakdowns, adverse weather or traffic conditions, electronic management system failures or
container backlogs, all of which will contribute to a prolonged lead time for delivery. In the event of such
delays in delivery, we may incur penalty costs for failure to ensure timely delivery or be required to
compensate our customers for any losses they may sustain as a result of such delays. Any such
payments will result in an increase in our operational costs and adversely affect our profitability. In
addition to monetary penalties, our reputation may also be affected when we are unable to meet our
customer’s specifications, which may result in a decline in business opportunities. The occurrence of such
events will adversely affect our business, results of operations and financial performance.
30
We may be involved in legal and other proceedings from time to time
Due to the nature of our business, we may be involved in disputes with various parties from time to time,
such as our customers, other transportation companies or logistics operators. These disputes may result
in legal or other proceedings and therefore cause disruption and delays to our business, in addition to the
additional costs that may be incurred in the settlement or resolution of such disputes. We may also have
disagreements with regulatory bodies in the course of our operations, where we may be subject to
administrative proceedings and/or unfavourable orders, directives or decrees that may result in financial
losses. In the event we are unable to resolve such disputes or proceedings in a timely manner or at all,
our business, operations and results of operations will be adversely affected. Please refer to the section
entitled “General and Statutory Information – Litigation” of this Prospectus for further details.
We may not have sufficient insurance coverage against risks of loss and liability
We are principally involved in the provision of logistical support that involves the transportation and
storage of cargoes. During the transportation and storage process, we may be subject to the risk of
mechanical or vehicular failures which may result in damage to the cargo, mis-delivery or even nondelivery while such cargoes are within our control and possession. In addition, our warehousing and
storage premises may also be subject to the risk of fire, theft and possible contamination. Although our
Directors believe we have sufficient insurance coverage in accordance with industry standards and
business practices and although we may be required to increase our insurance coverage when
necessary, we cannot assure you that our existing insurance coverage will be sufficient to indemnify us
against all such losses. Please refer to the section entitled “History and Business - Insurance” of this
Prospectus for further details.
We may be affected by the fluctuation in interest rates
As at 1 November 2009, we had total consolidated debt of approximately S$37.5 million. Approximately
5.8% of the debt bears fixed interest rates and the rest bears floating interest rates. As a result, the
interest costs we incur for debt with floating interest rates are dependent on the fluctuations in interest
rates. We have not entered into any hedging transactions to mitigate the risk of interest rate fluctuations.
As a result, fluctuations in interest rates could increase our interest costs and adversely affect our cash
flow, financial condition and results of operations.
An outbreak of communicable or virulent diseases may have an adverse effect on us
An outbreak of communicable or virulent diseases, if uncontrolled, could have a material adverse effect
on the global economy, which would in turn have a material adverse effect on our business, financial
condition, prospects and results of operations.
RISKS RELATING TO AN INVESTMENT IN OUR SHARES
Our Executive Directors will hold in aggregate 71.2% of our Company’s share capital after the
Invitation, which may limit the ability of Shareholders to influence decisions that require
Shareholders’ approval
Following the completion of this Invitation, our Executive Directors will hold in aggregate approximately
71.2% of the Shares. Accordingly, our Executive Directors will continue to exercise significant influence
over our matters that require Shareholders’ approval. This concentration of ownership could result in a
delay or prevention of a change in control in the Company or otherwise discourage a potential take-over
bid by potential buyers.
31
There may be volatility in the price of our Shares
Prior to the Invitation, there has been no public market for our Shares. We cannot assure you that an
active trading market for our Shares will develop, if at all. Even if an active market develops, the trading
price of our Shares may be volatile and may fluctuate significantly in response to, inter alia, the following
factors, some of which are beyond our control:
variations in our operating results;
changes in market valuations of similar companies;
announcements by ourselves or our competitors of the gain or loss of significant contracts,
strategic partnerships, acquisitions, joint ventures or capital commitments;
fluctuations in the stock market and global economy;
the successful implementation of our growth strategy;
the employment or departures of key personnel;
any involvement in litigation; and
changes in securities analysts’ recommendations, perceptions or estimates of our financial
performance.
The actual performance of our Group and business may differ materially from the forward-looking
statements in this Prospectus
This Prospectus contains forward-looking statements, which are based on a number of assumptions
which are subject to significant uncertainties and contingencies, many of which are outside our control.
Furthermore, our revenue and financial performance are dependent on a number of external factors,
including demand for our services which may decrease for various reasons such as a global economic
slowdown, increased competition within the industry or changes in applicable laws and regulations. We
cannot assure you that these assumptions will be realised and our actual performance will be as
projected.
Shareholders may experience immediate and substantial dilution
The Invitation Price of our Shares is substantially higher than the NAV based on our post-Invitation issued
share capital. If we were liquidated immediately following the Invitation, each investor subscribing to this
Invitation will receive less than the Invitation Price paid. Please refer to the section entitled “Dilution” of
this Prospectus for further details.
In addition, should we elect to raise funds in the future through the issuance of new Shares, existing
Shareholders who do not or are unable to subscribe or participate in such fund raising exercises will
experience a dilutive effect on their shareholdings.
Any substantial disposal or sale of our Shares may adversely impact the price of our Shares
Any substantial disposal or sale of our Shares in the future may exert a downward pressure on the price
of our Shares. The sale of a substantial number of Shares after the Invitation, or the perception that such
sales may occur, could adversely affect the price of our Shares and affect our future ability to raise funds
through equity or equity-related securities in the future.
Save as disclosed in the section entitled “Moratorium” of this Prospectus, there are no restrictions on our
Directors to dispose of their Shares.
An active trading market for our Shares may not develop and their trading price may fluctuate
significantly
Prior to the Invitation, there has been no public market for our Shares. Although an application has been
made to the SGX-ST for the listing and quotation of our Shares on the Main Board of the SGX-ST, there
can be no assurance that there will be a liquid public market for our Shares after the Invitation. If an
active public market for our Shares does not develop after the Invitation, the market price and liquidity of
our Shares may be adversely affected.
32
Singapore law contains provisions that could discourage a take-over of our Company
We are subject to the Singapore Code of Take-Overs and Mergers (the “Singapore Take-Over Code”).
The Singapore Take-Over Code contains provisions that may delay, deter or prevent a future take-over or
change in control of our Company. Under the Singapore Take-Over Code, any person acquiring an
interest, either individually or together with parties acting in concert, in 30.0% or more of our voting
shares must extend, except with the consent of the Securities Industry Council a take-over offer for our
remaining voting shares in accordance with the Singapore Take-Over Code. A take-over offer is also
required to be made if a person holding between 30.0% and 50.0% inclusive of the voting rights in our
Company, either individually or in concert, acquires an additional 1.0% of our voting shares in any sixmonth period under the Singapore Take-Over Code. While the Singapore Take-Over Code seeks to
ensure an equality of treatment among Shareholders, its provisions may discourage certain types of
transactions involving an actual or threatened change of control of our Company.
33
DIVIDEND POLICY
Our subsidiary, SHCL, declared and paid dividends amounting to S$1,000,000, S$500,000, S$1,500,000
and S$5,000,000 in respect of FY2006, FY2007, FY2008 and FY2009, respectively. Save as disclosed
above, we have not paid any dividends for the Period under Review.
We currently do not have a formal dividend policy. However, we intend to recommend and distribute
dividends of at least 50% of our profits attributable to Shareholders in FY2009 and at least 20% of our
profits attributable to Shareholders in FY2010 (the “Proposed Dividends”). Depending on our Group’s
cash requirements, we may distribute the Proposed Dividends on a quarterly basis after the end of each
respective financial year. Investors should note that the foregoing statement on the Proposed Dividends is
merely a statement of our present intention and shall not constitute a legally binding obligation on our
Company or legally binding statement in respect of our future dividends which may be subject to
modification (including reduction or non-declaration thereof) at our Directors’ sole and absolute discretion.
Investors should not treat the Proposed Dividends as an indication of our Group’s future dividend policy.
No inference should or can be made from any of the foregoing statements as to our actual future
profitability or ability to pay dividends in any of the periods discussed.
There can be no assurance as to the form, amount or timing of any future dividends that will be paid (if
any).
Any declaration and payment of dividends will depend upon our Group’s operating results, financial
conditions, other cash requirements including capital expenditures, the terms of borrowing arrangements
(if any), and other factors deemed relevant by our Directors. Any final dividends paid by us must be
approved by an ordinary resolution of our Shareholders at a general meeting and must not exceed the
amount recommended by our Directors. Our Directors may, without the approval of our Shareholders,
also declare an interim dividend. We must pay all dividends out of profits or pursuant to the Companies
Act.
Information relating to taxes payable on dividends are set out in the section entitled Appendix D –
“Singapore Taxation” of this Prospectus.
34
CAPITALISATION AND INDEBTEDNESS
The following table shows our cash and cash equivalents, capitalisation and indebtedness as at
1 November 2009:
(i)
based on our unaudited management accounts as at 1 November 2009; and
(ii)
as adjusted for the net proceeds from the issue of the 46,000,000 New Shares (after deducting the
estimated expenses in relation to the Invitation).
You should read this table in conjunction with the combined financial statements of our Group set out in
Appendix A and Appendix B of this Prospectus and the section entitled “Management’s Discussion and
Analysis of Results of Operations and Financial Condition - Liquidity and Capital Resources” of this
Prospectus.
As at
1 November 2009
(S$’000)
As adjusted for
the net proceeds
from the issue of
the New Shares
(S$’000)
13,408
22,519
4,996
2,218
1,171
1,428
4,996
2,218
1,171
1,428
9,813
9,813
23,523
3,450
749
23,523
3,450
749
27,722
27,722
Total indebtedness
37,535
37,535
Total shareholders’ equity
18,283
27,394
Total capitalisation and indebtedness
55,818
64,929
Cash and bank balances
Short-term indebtedness:
Bank overdraft
Secured and guaranteed bank loans
Unsecured and guaranteed bank loans
Finance leases
Long-term indebtedness:
Secured and guaranteed bank loans
Unsecured and guaranteed bank loans
Finance leases
As at 1 November 2009, our cash and bank balances amounted to approximately S$13.4 million, of which
approximately S$0.9 million was pledged as securities to the banks.
As at 1 November 2009, our Group has total banking facilities of approximately S$50.2 million. They
comprise mainly overdrafts, term loans, hire purchase facilities, trade financing lines and bank
guarantees. Our banking facilities are secured by one or several of (i) fixed deposits maintained with
banks; (ii) fixed and floating charges over assets and trade receivables; (iii) guarantees from our
Executive Chairman and CEO, Mr Tan Yeow Khoon and our Managing Director, Mr Edwin Tan Yeow Lam;
and (iv) mortgages over certain of our properties. Please refer to the sections entitled “History and
Business - Properties and Fixed Assets” and “Interested Person Transactions and Conflicts of Interests Present and On-going Interested Person Transactions” of this Prospectus for more information on the
guarantees and mortgages, respectively.
35
The interest rate for the bank overdrafts ranges from the respective bank’s prime rate per annum to
3.00% per annum above the respective bank’s prime lending rate. The interest rate for the trade financing
lines is pegged at 0.75% per annum over the respective bank’s prime lending rate. Certain trade financing
lines are charged based on the relevant bank’s prevailing commissions/charges. Bank guarantees are
charged based on 1.00% of the full amount of performance guarantee.
As at 1 November 2009, we have outstanding hire purchase facilities amounting to approximately S$2.2
million.
Contingent Liabilities
As at the Latest Practicable Date, we had contingent liabilities amounting to approximately S$7.1 million.
These contingent liabilities relate mainly to bankers’ guarantees granted in relation to, inter alia, leases
and licences entered into for our properties, our Export Processing Zone agreements and our operating
accounts with PSA.
Please refer to the section entitled “Management’s Discussion and Analysis of Results of Operations and
Financial Condition” of this Prospectus for further information.
36
DILUTION
Dilution is the amount by which the Invitation Price paid by the subscribers and/or purchasers of our
Invitation Shares in this Invitation exceeds the NAV per Share after adjusting for the Invitation.
NAV per Share as at 30 June 2009, before adjusting for the net proceeds from the issue of the New
Shares and based on the pre-Invitation share capital of 273,000,000 Shares is 5.5 cents.
Pursuant to the Invitation in respect of 46,000,000 New Shares at the Invitation Price, our NAV per Share
after adjusting for the estimated proceeds due to us from the Invitation and after adjusting for any
disposal or acquisition which occurred between 30 June 2009 and the date of registration of this
Prospectus, based on the post-Invitation share capital of 319,000,000 Shares is 11.8 cents. This
represents an immediate increase in NAV per Share of 6.3 cents to our existing Shareholders and an
immediate dilution in NAV per Share of 10.2 cents or approximately 46.4% to our new investors. The
following table illustrates the dilution per Share:
Cents
Invitation Price per Share
22.0
NAV per Share based on the pre-Invitation share capital of 273,000,000 Shares
5.5
Increase in NAV per Share attributable to existing Shareholders
6.3
Adjusted NAV per Share after the Invitation and after adjusting for any disposal or
acquisition which occurred between 30 June 2009 and the date of registration of
this Prospectus
11.8
Dilution in NAV per Share to new investors
10.2
The following table summarises the total number of Shares issued by us, the total consideration paid and
the average price per Share paid by our Directors and Substantial Shareholders and by our new investors
in this Invitation.
Number of
Shares
Total
Consideration
(S$)
200,109,000
13,402,733
6.70
Edwin Tan Yeow Lam
72,891,000
4,882,032
6.70
New Investors
46,000,000
10,120,000
22.0
Tan Yeow Khoon
37
Average price
per Share
(cents)
SELECTED COMBINED FINANCIAL INFORMATION
The following selected financial information should be read in conjunction with the full text of this
Prospectus, including the sections entitled “Management’s Discussion and Analysis of Results of
Operations and Financial Condition” and the “Independent Auditors’ Report and Combined
Financial Statements for the Years ended 31 December 2006, 2007 and 2008” and the “Independent
Auditors’ Review Report and Combined Interim Condensed Financial Statements for the Six
Months ended 30 June 2009” as set out in Appendix A and Appendix B of this Prospectus, respectively.
OPERATING RESULTS OF OUR GROUP(1)
Audited
Revenue
Other operating income
Cost of services
Excess of fair values of net identifiable
assets over cost of acquisition
Unaudited
FY2006
S$’000
FY2007
S$’000
FY2008
S$’000
1H2008
S$’000
1H2009
S$’000
27,463
37,160
60,118
27,432
29,417
1,013
586
1,461
428
707
(14,294)
(20,489)
–
–
(30,836)
52
(14,797)
–
(13,953)
–
Employee benefits expense
(7,235)
(9,121)
(12,121)
(6,102)
(5,794)
Depreciation
(2,778)
(3,072)
(4,340)
(1,928)
(2,798)
Changes in fair value of investment
properties
Other operating expenses
Finance costs
Share of loss of associate
Profit before tax
Income tax expense
Profit for the year
258
510
(44)
–
(156)
(1,999)
(2,560)
(3,550)
(1,635)
(1,864)
(651)
(870)
(1,941)
(893)
(888)
(5)
(19)
1,772
2,125
(486)
(301)
–
–
–
8,799
2,505
4,671
(1,796)
(533)
(936)
1,286
1,824
7,003(2)
1,972
3,735
EPS (based on the pre-Invitation
share capital)(cents)(3)
0.5
0.7
2.6(2)
0.7
1.4
EPS (based on the post-Invitation
share capital)(cents)(4)
0.4
0.6
2.2(2)
0.6
1.2
Notes:
(1)
The combined operating results of our Group for the Period under Review have been prepared on the basis that our Group
has been in existence throughout the Period under Review.
(2)
Had the Service Agreements (set out in the section entitled “Directors, Executive Officers and Staff – Service Agreements” of
this Prospectus) been in place with effect from 1 January 2008, the profits after tax for FY2008 would have been
approximately S$6.7 million, and the EPS would have been approximately 2.5 cents and 2.1 cents based on the pre- and
post-Invitation share capital, respectively.
(3)
For comparative purposes, EPS (based on the pre-Invitation share capital) for the periods under review is computed based
on the net profit attributable to Shareholders and the pre-Invitation share capital of 273,000,000 Shares.
(4)
For comparative purposes, EPS (based on the post-Invitation share capital) for the Period under Review is computed based
on the net profit attributable to Shareholders and the post-Invitation share capital of 319,000,000 Shares.
38
FINANCIAL POSITION OF OUR GROUP(1)
Audited
as at
31 December
2008
S$’000
Unaudited
as at
30 June
2009
S$’000
Current Assets
Trade receivables
Other receivables
Held-for-trading investments
5,324
16,075
2,909
23
13,935
13,365
3,116
16
Investment property held-for-sale
24,331
1,500
30,432
–
Total current assets
25,831
30,432
Non-current Assets
Property, plant and equipment
Investment property
Other investment
50,713
556
36
48,915
400
36
Total non-current assets
51,305
49,351
Total Assets
77,136
79,783
Current Liabilities
Bank overdrafts and loans
Current portion of finance leases
Trade payables
Other payables
Income tax payable
23,140
2,240
6,050
17,268
2,029
4,710
1,921
6,281
13,539
2,019
Total current liabilities
50,727
28,470
7,887
1,357
–
880
28,287
1,002
6,000
1,004
Total non-current liabilities
10,124
36,293
Total Liabilities
60,851
64,763
Capital and Reserves
Share capital
Accumulated profits
500
15,785
500
14,520
Total equity
16,285
15,020
Total Liabilities and Equity
77,136
79,783
Net Assets
16,285
15,020
6.0
5.5
ASSETS
LIABILITIES AND EQUITY
Non-Current Liabilities
Bank loans
Finance leases
Loan from related party
Deferred tax liabilities
NAV per Share (cents)(2)
39
Notes:
(1)
The financial positions of our Group for the Period under Review have been prepared on the basis that our Group has been in
existence throughout the Period under Review.
(2)
NAV per Share has been computed based on the net assets as at 31 December 2008 and 30 June 2009, respectively, and
the pre-Invitation share capital of 273,000,000 Shares.
40
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
The following discussion of our results of operations and financial position should be read in conjunction
with the “Independent Auditors’ Report and Combined Financial Statements for the Years ended 31
December 2006, 2007 and 2008” and the “Independent Auditors’ Review Report and Combined
Interim Condensed Financial Statements for the Six Months ended 30 June 2009” as set out in
Appendix A and Appendix B of this Prospectus, respectively. This discussion and analysis contains
forward-looking statements that involve risks and uncertainties. Our Group’s actual results may differ
significantly from those projected in the forward-looking statements. Factors that might cause future
results to differ significantly from those projected in the forward-looking statements include, but are not
limited to, those discussed below and elsewhere in this Prospectus, particularly in the section entitled
“Risk Factors” of this Prospectus.
BASIS OF PREPARATION
The combined financial statements of our Group for FY2006, FY2007, FY2008 and 1H2009 were
prepared on a combined basis as if the current Group structure had been in existence throughout the
Period under Review.
In connection with the Invitation, we undertook the Restructuring Exercise to streamline and rationalise
our Group structure. Please refer to the section entitled “Restructuring Exercise” of this Prospectus for
details.
OVERVIEW
We are a Singapore-based full-service logistics management service provider. We offer a comprehensive
range of logistics services and our business operations can be broadly categorised into the following
three business segments:
(i)
Transportation Management Services, which focuses mainly on providing transportation services
in Singapore for laden and empty containers and other cargoes using our own fleet of
transportation vehicles. Our extensive fleet includes prime movers, trailers and trucks in various
sizes and varieties which gives us the flexibility in asset deployment and economies of scale. We
also provide dry hubbing logistics solutions for our customers by assisting with the management of
transportation and inventory of laden containers at dedicated storage facilities pending shipment;
(ii)
Warehousing and Container Depot Management Services, which focuses mainly on rental of
warehousing storage spaces to third parties and provision of warehousing services such as
packing, stuffing and unstuffing and palletisation. We also provide chemical drumming services to
our petrochemical related customers as part of our warehousing services. In terms of container
depot management services, we provide integrated container services such as storage of empty
containers, handling, washing and repair to leading shipping lines and container leasing
companies; and
(iii)
Automotive Logistics Management Services, which focuses mainly on providing a broad range
of ancillary services such as vehicular storage, vehicular transportation, port clearance and freight
management in support of the automotive industry. We also provide Export Processing Zone
operations which includes de-registration and export of second-hand motor vehicles. Furthermore,
we assist the LTA in the repossession of cars which have outstanding road taxes and the
impounding of illegally modified cars, and the Singapore Police Force in the removal and towing of
accident vehicles to designated police pounds. We also offer repossession of motor vehicles and
vehicle grooming services to finance companies.
Please refer to the section entitled “History and Business” of this Prospectus for further details of our
business activities.
41
Revenue
Our revenue is driven by contributions from our three business segments. The breakdown of our revenue
by business segments for FY2006, FY2007, FY2008, 1H2008 and 1H2009 is set out below for reference:
Revenue
FY2006
S$’000
%
FY2007
S$’000
%
FY2008
S$’000
%
1H2008
S$’000
%
1H2009
S$’000
%
Transportation
Management
Services
15,611
56.8
18,475
49.7
24,607
40.9
12,503
45.6
8,907
30.3
Warehousing
and Container
Depot
Management
Services
11,852
43.2
18,685
50.3
32,428
53.9
14,929
54.4
16,374
55.7
–
–
–
–
3,083
5.2
–
–
4,136
14.0
27,463
100.0
37,160
100.0
60,118
100.0
27,432
100.0
29,417
100.0
Automotive
Logistics
Management
Services (1)
Total
Note:
(1)
Revenue for automotive logistics management services for the period from August 2008 to December 2008.
Our transportation management services segment comprises the following two channels:
(i)
Transportation services, which refers to the provision of transportation services through our fleet of
more than 100 prime movers, trucks and lorries and more than 400 trailers, and transport-related
handling services such as trade and inbound customs documentation services; and
(ii)
Dry hubbing services, which refers to the management of transportation and inventory of laden
containers at dedicated storage facilities pending shipment by our customers.
Revenue is recognised upon the completion and delivery of services to our customers.
Total revenue breakdown by the two main channels for FY2006, FY2007, FY2008, 1H2008 and 1H2009
are as follows:
Revenue
Business
Channel
Transportation
services
Dry hubbing
services
Total revenue
FY2006
S$’000
%
FY2007
S$’000
%
FY2008
S$’000
%
1H2008
S$’000
%
1H2009
S$’000
%
15,435
98.9
18,172
98.4
24,208
98.4
12,227
97.8
8,592
96.5
176
1.1
303
1.6
399
1.6
276
2.2
315
3.5
15,611
100.0
18,475
100.0
24,607
100.0
12,503
100.0
8,907
100.0
42
Our warehousing and container depot management services segment comprises two main channels,
namely (i) warehousing management services; and (ii) container depot management services. Each
channel can be further segmented into the following different service categories:
(a)
Warehousing rental, which refers to the rental of warehousing space and open yards to third
parties; and
(b)
Warehousing services, which refers to the provision of warehousing handling services such as
packing, stuffing and unstuffing of containers, forklift handling, labeling, and palletisation. We also
provide chemical drumming services for our customers from the petrochemical industry.
(a)
Container handling and storage, which refers to the provision of services such as surveying,
stacking and lifting of the containers; and
(b)
Container washing and repair on-site at our depot for incoming containers, damaged containers or
containers which require refurbishment.
Revenue for the service segments are recognised upon the completion of services rendered for container
depot and warehousing services; while revenue from warehousing rental and container storage are
recognised over the term of lease contracts or agreements, which ranges up to 24 months.
Total revenue breakdown by the two channels for FY2006, FY2007, FY2008, 1H2008 and 1H2009 are as
follows:
Revenue
Business
Channel
FY2006
S$’000
%
FY2007
S$’000
%
FY2008
S$’000
%
1H2008
S$’000
%
1H2009
S$’000
%
Warehousing
rental
3,233
27.3
6,290
33.7
13,284
41.0
6,243
41.8
6,825
41.7
Warehousing
services
1,695
14.3
2,288
12.2
6,860
21.2
2,707
18.2
2,286
14.0
Total
4,928
41.6
8,578
45.9
20,144
62.2
8,950
60.0
9,111
55.7
Container
handling and
storage
5,040
42.5
6,532
35.0
7,127
22.0
3,434
23.0
4,069
24.9
Container
washing and
repair
1,884
15.9
3,575
19.1
5,157
15.8
2,545
17.0
3,194
19.4
Total
6,924
58.4
10,107
54.1
12,284
37.8
5,979
40.0
7,263
44.3
11,852
100.0
18,685
100.0
32,428
100.0
14,929
100.0
16,374
100.0
Total revenue
This segment generates revenue from the provision of vehicle related storage, vehicular transportation,
port and customs clearance and freight management services. Revenue from the provision of such
services is recognised upon the completion and delivery of services to our customers. We entered into
this business in August 2008 through the acquisition of Cogent Investment and Cogent Automotive.
43
Revenue analysis of our business segments
Our revenue has increased substantially during the Period under Review. Total revenue increased from
S$27.5 million in FY2006 to S$37.2 million in FY2007, and subsequently to S$60.1 million in FY2008,
representing an annual growth rate of 35.3% and 61.8%, respectively. Between 1H2008 and 1H2009,
revenue increased by approximately S$2.0 million or 7.2% from S$27.4 million in 1H2008 to S$29.4
million in 1H2009. The overall increasing trend was mainly attributed to increasing sales volumes as a
result of increased warehousing space, higher container handling and washing and repair activities and
higher transportation activities, coupled with successful sales strategies to attract and retain customers.
Revenue contribution from our transportation management services segment represented 56.8%, 49.7%,
40.9% and 30.3% of our Group’s revenue in FY2006, FY2007, FY2008 and 1H2009, respectively.
Revenue from our warehousing and container depot management services segment represented 43.2%,
50.3%, 53.9% and 55.7% of our Group’s revenue in FY2006, FY2007, FY2008 and 1H2009, respectively.
The balance revenue contribution of 5.2% and 14.0% for FY2008 and 1H2009, respectively is attributable
to the automotive logistics management services segment, which we entered in August 2008 through the
acquisition of Cogent Investment and Cogent Automotive.
The greater-than-proportionate increases in our warehousing and container depot management services
segment as compared to our transportation management services segment in FY2007 and FY2008 were
largely attributable to our strategies to grow our warehousing segment through the addition of new
warehouses to our portfolio, as well as new warehousing related customers being secured and retained.
The upward trend for revenue contribution from the warehousing and container depot management
services is expected to continue in view of the improving economic conditions.
There was also a broad-based growth in our container depot business, particularly due to the provision of
container handling and storage and container washing and repair services. In FY2007, we experienced
higher turnover for empty containers as a result of high transhipment activities backed by strong global
economy. During the economic downturn in FY2008, containers’ demand was reduced due to lower global
transhipment activities. As such, there was a strong influx of empty containers being returned to our
depot for longer storage periods. This resulted in higher demand for more comprehensive washing and
repair services for incoming containers as compared to simple washing and repair services during the
economic boom. As such, the increase in revenue from our container washing and repair services was
higher than the revenue increase from our container handling and storage activities in FY2008.
In 1H2009, the growth in our Group’s revenue was mainly attributable to revenue contribution from our
automotive logistics management services segment which we acquired in August 2008, as well as higher
revenue attributed to our warehousing and container depot management services segment. This was
mainly due to the increase in revenue from our container washing and repair activities. During the
economic downturn, our customers were sending more of their containers for comprehensive servicing
and refurbishment while their containers were stored for longer periods in our depot. On the other hand,
revenue from our transportation management services segment fell in 1H2009 as compared to 1H2008
due to lower demand for transportation services during the economic downturn.
Our revenue is affected by, inter alia, the following key factors:
(i)
Changes in trade activities globally and in Singapore as our transportation, warehousing and
container depot management services are dependent on the general state of the global economy;
(ii)
Demand and availability of warehousing space in Singapore as rental rates will be revised
accordingly;
(iii)
Our ability to retain existing customers and attract new customers;
(iv)
Our ability to renew our warehouse leases and licences on commercially favourable terms;
(v)
Fluctuations in vehicle prices as it will affect our customers’ demand for automotive logistics
management services; and
44
(vi)
Changes in government policies that affect demand and supply of new and second-hand motor
vehicles.
Please refer to the section entitled “Risk Factors” of this Prospectus for details of other factors which may
affect our revenue.
Our other operating income comprises mainly service income from related parties, gain on disposal of
property, plant and equipment, rental income from investment properties and insurance claims. Service
income from related parties relates to the provision of manpower support and services by our Group to
SHPD. Our Group had employed additional employees solely to provide manpower support and services
to SHPD. The amount of service income received by our Group from SHPD was based solely on the
actual costs incurred by our Group for the provision of such services to SHPD. Please refer to the section
entitled “Interested Person Transactions and Conflicts of Interest - Past Interested Person Transactions” of
this Prospectus for more details. In FY2008, there was a one-time opportunistic sale of scrap metals to a
one-off customer when steel prices rose.
These amounted to approximately 3.7%, 1.6%, 2.4% and 2.4% of our revenue for FY2006, FY2007,
FY2008 and 1H2009, respectively.
Cost of services
Our cost of services comprises mainly expenses incurred in renting or leasing warehouses and land such
as rental and property taxes, container washing and repairs, container and transportation handling
expenses and upkeeping of prime movers, trailers, forklifts and motor vehicles.
These accounted for approximately 52.0%, 55.1%, 51.3% and 47.4% of our revenue in FY2006, FY2007,
FY2008 and 1H2009, respectively.
We set out below the breakdown of our cost of services by our three business segments for FY2006,
FY2007, FY2008, 1H2008 and 1H2009:
Breakdown of cost of services by business segment
Cost of
Services
FY2006
S$’000
%
FY2007
S$’000
%
FY2008
S$’000
%
1H2008
S$’000
%
1H2009
S$’000
%
Transportation
Management
Services
7,382
51.6
9,614
46.9
12,199
39.6
6,578
44.5
3,395
24.3
Warehousing
and Container
Depot
Management
Services
6,912
48.4
10,875
53.1
17,059
55.3
8,219
55.5
8,747
62.7
–
–
–
–
1,578
5.1
–
–
1,811
13.0
14,294
100.0
20,489
100.0
30,836
100.0
14,797
100.0
13,953
100.0
Automotive
Logistics
Management
Services
Total
Cost of services for our transportation management services comprises mainly (i) cost of transportation
handling activities such as PSA charges and shipping charges; and (ii) cost of upkeeping our fleet of
prime movers, trailers, forklifts and lorries such as petrol, diesel and maintenance expenses incurred in
the provision of transportation services.
45
These costs of services accounted for approximately 51.6%, 46.9%, 39.6% and 24.3% of our Group’s
cost of services in FY2006, FY2007, FY2008 and 1H2009, respectively. The general increasing trend in
absolute terms during the Period under Review was in line with the increases in transportation
management services revenues.
Our warehousing and container depot related cost of services accounted for approximately 48.4%,
53.1%, 55.3% and 62.7% of our Group’s cost of services in FY2006, FY2007, FY2008 and 1H2009,
respectively.
Our warehousing related cost of services, which comprises mainly land rental, property taxes and
warehousing rental paid in leasing our warehousing properties, was on an increasing trend in absolute
terms during the Period under Review as more warehouses were added to our portfolio.
Our container depot related cost of services comprises mainly costs of washing and repairing containers,
costs of upkeeping depot handling equipment and land rental expenses. As part of our depot service
offerings, we offer our depot customers on-site servicing for their containers which ranges from simple
washing to complex refurbishment of containers. As wear-and-tear of containers is common, customers
would request to service and refurbish their containers to extend their useful life, especially during a
slowdown in the economy. During the economic downturn in 2008, we experienced higher demand for onsite servicing as customers’ containers remained stored in our depot for longer periods due to lower
demand for containers for transhipment.
We entered into this business in August 2008 through the acquisition of Cogent Investment and Cogent
Automotive. Cost of services for our automotive logistics management services comprises mainly rental of
warehouse and open storage space from third parties at various locations. They accounted for
approximately 5.1% and 13.0% of our Group’s cost of services in FY2008 and 1H2009, respectively.
Factors affecting costs of services
Our cost of services are affected by, inter alia, the following key factors:
(i)
Prices and supply of warehousing and storage space and premises in Singapore;
(ii)
Fluctuations in fuel prices; and
(iii)
Fluctuations in interest rates, labor costs, utility and other overhead costs.
Please refer to the section entitled “Risk Factors” of this Prospectus for details of the above factors and
other factors which may affect our cost of sales.
Employee benefits expenses
Our employee benefits expenses comprise mainly staff salaries and other staff welfare expenses. These
expenses accounted for approximately 26.3%, 24.5%, 20.2% and 19.7% of our revenue in FY2006,
FY2007, FY2008 and 1H2009, respectively. The increasing trend from FY2006 to FY2008 was due to our
increased headcount during the same period. Our headcount increased from 194 in FY2006 to 313 in
FY2007, and further to 355 in FY2008. The increase in headcount in FY2007 was mainly due to the
increase in our operating activities and business expansion, while the higher headcount in FY2008 was
due to the increase in headcount in our automotive logistics management services segment which started
in August 2008.
46
We incurred slightly lower employee benefits expenses of approximately S$5.8 million in 1H2009 as
compared to approximately S$6.1 million in 1H2008, mainly due to the rationalisation and restructuring of
our team undertaken in 2H2008.
Depreciation
Depreciation represented approximately 10.1%, 8.3%, 7.2% and 9.5% of our revenue in FY2006,
FY2007, FY2008 and 1H2009, respectively and relates to property, plant and equipment used in our
business.
In particular, depreciation for buildings amounted to approximately S$0.5 million, S$0.5 million, S$1.0
million and S$1.0 million in FY2006, FY2007, FY2008 and 1H2009, respectively. They accounted for
1.8%, 1.4%, 1.8% and 3.4% of our revenue in FY2006, FY2007, FY2008 and 1H2009, respectively. The
higher depreciation incurred for our buildings in FY2008 and 1H2009 was mainly due to the increase in
our leasehold buildings in FY2008 arising from the completion of the construction of our new building
located at 7 Penjuru Close and the addition of the building at 1 Chia Ping to our warehouse portfolio in
July 2008. Depreciation was previously not provided for 7 Penjuru Close as it was still under construction.
Upon the completion of the building, the construction costs were capitalised and re-classified as a fixed
asset. Depreciation was also not provided for 1 Chia Ping Road previously as we only completed the
acquisition of 1 Chia Ping Road on 31 July 2008.
Depreciation for motor vehicles amounted to approximately S$2.0 million, S$2.3 million, S$2.7 million and
S$1.1 million. This represented 7.1%, 6.1%, 4.5% and 3.6% of our revenue in FY2006, FY2007, FY2008
and 1H2009, respectively. The percentage contribution of the above depreciation reflected a decreasing
trend as some of these assets were fully depreciated during the Period under Review.
Other operating expenses comprise mainly general and administration expenses, general repair and
maintenance, upkeep of motor vehicles, utilities, telecommunication expenses and allowance for doubtful
debts.
These amounted to approximately 7.3%, 6.9%, 5.9% and 6.3% of our revenue in FY2006, FY2007,
FY2008 and 1H2009, respectively. Allowance for doubtful debts represented 0.5%, 0.2%, 0.2% and 0.3%
of our revenue in FY2006, FY2007, FY2008 and 1H2009, respectively.
Finance costs
Finance costs consist mainly of interest expenses incurred on our bank loans and finance leases, as well
as factoring service charges by banks for our trade receivables in order to improve our working capital.
Our finance costs amounted to approximately S$0.7 million, S$0.9 million, S$1.9 million and S$0.9 million
in FY2006, FY2007, FY2008 and 1H2009, respectively, which accounted for 2.4%, 2.3%, 3.2% and 3.0%
of our revenue during the Period under Review, respectively. Significant higher finance costs were
incurred in FY2008 as higher loans were obtained for the construction of our new building located at 7
Penjuru Close, which was completed in November 2007. Prior to the completion of construction of 7
Penjuru Close, interest expense incurred under the construction loans were capitalised as part of the
construction cost. Upon completion of construction, the interest expense incurred thereafter was
recognised under our finance costs. We also incurred higher finance costs for the bank loan taken to
purchase the building at 1 Chia Ping in July 2008.
47
Profit before tax and margin
A breakdown of our profit before tax and profit before tax margin for each of our business segments is set
out below:
Profit
before tax
FY2006
S$’000
%
Transportation
Management
Services
1,024
57.8
285
13.4
1,884
21.4
583
23.3
1,638
35.1
Warehousing
and Container
Depot
Management
Services
372
21.0
1,219
57.4
5,555
63.1
1,875
74.9
2,140
45.8
–
–
–
–
790
9.0
–
–
985
21.1
376
21.2
621
29.2
570
6.5
47
1.8
(92)
(2.0)
1,772
100.0
2,125
100.0
8,799
100.0
2,505
100.0
Automotive
Logistics
Management
Services
Corporate
and others
Total
(1)
FY2007
S$’000
%
FY2008
S$’000
%
1H2008
S$’000
%
1H2009
S$’000
%
4,671
100.0
Note:
(1)
Refers to the provision of Group level corporate services and investment in entities that do not constitute a separately
reportable segment.
Profit before tax margin
FY2006
%
FY2007
%
FY2008
%
1H2008
%
1H2009
%
6.6
1.5
7.7
4.7
18.4
Warehousing and Container Depot Management
Services
3.1
6.5
17.1
12.6
13.1
–
–
25.6
–
23.8
N.A.
N.A.
N.A.
N.A.
N.A.
6.5
5.7
14.6
9.1
15.9
Corporate and others
Overall profit before tax margin
Our overall profit before tax is affected by changes in each of our business segment’s profit before tax
margin and its respective revenue contribution. The profit before tax margin for each of our product
segments may vary widely. As a result, our overall profit margin is affected by the overall sales mix.
Any decrease in the price of our services without a corresponding decrease in our cost of services, or
conversely any increase in our cost of sales without a corresponding increase in the selling price of our
products would have an adverse effect on our gross profit margin. Besides the sales mix, the key factors,
inter alia, that affect our revenue and our cost of services would also affect our profit margins.
Our overall profit before tax margin was 6.5%, 5.7%, 14.6% and 15.9% for FY2006, FY2007, FY2008 and
1H2009, respectively. The increasing trend of our overall profit before tax margin during the Period under
Review was a result of higher margins across all our business segments.
48
Our transportation management services segment recorded profit before tax margins of 6.6%, 1.5%,
7.7% and 18.4% for FY2006, FY2007, FY2008 and 1H2009, respectively. The higher margins in FY2008
and 1H2009 were largely attributable to higher rates being charged to our new customers as a result of
our Group’s successful sales and marketing strategies. In particular, with the drop in transportation
activities in 1H2009 due to the economic slowdown, we incurred significantly lower employee benefits
expenses in our transportation management services segment in 1H2009.
Profit before tax margins for our warehousing and container depot management services segment were
3.1%, 6.5%, 17.1% and 13.1% for FY2006, FY2007, FY2008 and 1H2009, respectively. The profit before
tax margin improvements were largely attributed to the warehousing management services segment. The
higher margins in FY2007 and FY2008 were mainly due to higher margins derived from open storage
warehouse leases, which have much lower operating costs as compared to covered storage warehouse
leases. We were also able to enjoy economies of scale through the sharing of common costs as we
expanded our portfolio of warehouses and service offerings. For our container depot management
services, we were able to enjoy economies of scale from increasing our storage stackable area by
purchasing stackers which allow us to stack up to nine containers high, as well as the integration of our
container depot operations into a single location.
Profit before tax margin for our automotive logistics management services segment was 25.6% and
23.8% for FY2008 and 1H2009, respectively. While we only entered into this new segment in August
2008, we were able to achieve high margins for this segment because as a one-stop full service provider,
we were able to eliminate unnecessary interim transitions between independent specialised operators
which translate to efficiency and cost effectiveness for our customers and achieve economies of scale
through the sharing of common costs by virtue of our complementary business segments.
Income tax expense
Our Company, SHCL, Soon Hock Transportation, Cogent Investment and Cogent Automotive are
incorporated in Singapore. The corporate income tax rate applicable to our Group was 20%, 18%, 18%
and 17% in FY2006, FY2007, FY2008 and 1H2009, respectively. Our Group’s effective income tax rate
for FY2006, FY2007, FY2008 and 1H2009 were approximately 27.4%, 14.2%, 20.4% and 20.0%,
respectively.
Please refer to the section entitled Appendix D – “Singapore Taxation” of this Prospectus for further
details on the tax rates.
Seasonality
For our warehousing and container depot management services, our sales during Q4 (October to
December) are generally higher than other quarters as there are more business activities during the yearend festive season. Sales during Q1 (January to March) are generally lower compared to other quarters
due to slower business activities especially after the Lunar Chinese New Year and shorter month in
February. However, sales began to drop in Q4 2008 in comparison to the previous quarters mainly
because there was a decrease in sales from warehousing and container handling activities due to a lower
number of new in-coming containers when the global financial crisis worsened in late 2008 which led to
lower demand for exports.
From our past experience, there is no distinct seasonal pattern in the business activities of our
transportation management services segment. However, the higher level of sales in Q4 2007 as
compared to previous quarters was mainly due to new customers being secured during Q3 2007.
Save as disclosed above, we typically do not experience any significant seasonality trends in our
revenues.
49
For illustration purposes only, we set out below the revenue breakdown by our business segments for the
past three completed financial years for the quarterly periods indicated:
Quarterly
Revenue
Q1
Transportation
Management
Services
26.3
28.7
Warehousing
and Container
Depot
Management
Services
22.6
Automotive
Logistics
Management
Services(1)
Overall
FY2006 (%)
Q2
Q3
FY2007 (%)
Q2
Q3
Q4
Q1
13.7
24.0
25.0
37.3
16.5
34.3
20.7
28.5
27.7
22.8
22.5
22.4
32.3
20.9
25.1
29.0
25.0
–
–
–
–
–
–
–
–
36.5
63.5
22.9
25.5
18.3
23.2
23.7
34.8
18.0
27.6
26.0
28.4
Q4
Q1
21.2
23.8
24.5
25.2
–
–
24.7
26.9
FY2008 (%)
Q2
Q3
Q4
Note:
(1)
Revenue for automotive logistics management services for the period from August 2008 to December 2008.
Change in Accounting Policies
There have been no changes in our accounting policies for the last three financial years from FY2006 to
FY2008 and for 1H2009.
Inflation
The performance of our Group has not been materially impacted by inflation in FY2006, FY2007, FY2008
and 1H2009.
REVIEW OF RESULTS OF OPERATIONS
FY2006 vs FY2007
Revenue
Our revenue increased by approximately S$9.7 million or 35.3% from S$27.5 million in FY2006 to S$37.2
million in FY2007. The increase in revenue was contributed by (i) an increase of approximately S$2.9
million or 18.3% increase in the revenue from our transportation management services segment from
S$15.6 million in FY2006 to S$18.5 million in FY2007; and (ii) an increase of approximately S$6.8 million
or 57.7% in the revenue from our warehousing and container depot management services segment from
S$11.9 million in FY2006 to S$18.7 million in FY2007.
The increases in sales volumes in the two business segments can be explained by the following:
(i)
The revenue growth in our transportation management services segment was mainly attributable to
new customers being secured in FY2007, as well as higher demand for transportation services,
which was in line with global economic growth. Revenue from transportation services increased by
approximately S$2.7 million or 17.7%, while revenue from dry hubbing services increased by
approximately S$0.1 million or 72.2%. The revenue contribution from our dry hubbing services only
started in April 2006. As such, the higher-than-proportionate increase in revenue from our dry
hubbing services in FY2007 was due to the full year revenue contribution, as well as the increase
in demand of our dry hubbing services from a major customer during the strong economic growth
period in 2007.
50
(ii)
Revenue from our warehousing rental activities increased by approximately S$3.1 million or 94.6%,
while revenue from our warehousing services increased by approximately S$0.6 million or 35.0% in
FY2007. The significant revenue growth in our warehousing rental activities was primarily driven by
increased demand for rental space as we secured new anchor tenants in FY2007. There was no
significant increase in rental rates to our existing customers or new customers in FY2007. This
subsequently led to the increased demand for our warehousing services as we offered more valueadded warehousing supply chain services to our new customers.
(iii)
Our container depot revenue also rose due to a broad-based growth in (i) container depot handling
and storage activities; and (ii) container washing and repair of customers’ containers as a result of
strong transhipment activities backed by the strong global economic growth in FY2007.
Revenue from the container handling and storage activities rose by approximately S$1.5 million or
29.6%, while revenue from container washing and repair activities rose by approximately S$1.7
million or 89.8%. The increase in revenue from container washing and repair activities was directly
caused by the higher turnover volume of container handling and storage activities. The higher-thanproportionate increase in the revenue from container washing and repair activities as compared to
container handling and storage activities was mainly due to a major customer being secured only
in November 2006, which subsequently contributed to a full-year revenue in FY2007. This major
customer utilised significantly more of our container washing and repair services as compared to
our container handling and storage services in FY2007.
Other operating income decreased by approximately S$0.4 million or 42.2% from S$1.0 million in FY2006
to S$0.6 million in FY2007. This was mainly due to a lower service income from SHPD for our provision
of manpower support and services for its Export Processing Zone operations. Please refer to the section
entitled “Interested Person Transactions and Conflicts of Interests - Past Interested Person Transactions”
of this Prospectus for further details. In addition, we recorded a lower gain on disposal of property, plant
and equipment in FY2007 as compared to FY2006.
Cost of services
In line with the 35.3% increase in our revenue, our cost of services increased by approximately S$6.2
million or 43.3% from S$14.3 million in FY2006 to S$20.5 million in FY2007. The increase in cost of
services for each business segment was generally in line with the revenue and sales volume increases
for each respective business segment.
Cost of services increased by approximately S$2.2 million or 30.2% for our transportation management
services segment. This was mainly due to higher costs required to upkeep our prime movers, trailers,
forklifts and trucks when fuel and wear and tear expenses rose, as our transportation business activities
increased.
Cost of services increased by approximately S$4.0 million or 57.3% for our warehousing and container
depot management services segment. This was primarily driven by (i) higher warehouse rental expenses
being incurred which was in line with the increase in our warehousing rental income. Such expenses
include land and warehouse rental expenses for our rented properties and property taxes; and (ii) higher
container washing and repair expenses as our container handling and storage activities increased.
Our employee benefits expenses rose by approximately S$1.9 million or 26.1% from S$7.2 million in
FY2006 to S$9.1 million in FY2007. This increase was directly attributable to an increase in salary
expenses, which was caused by a higher headcount as we expanded our business in FY2007. Our
headcount increased from 194 in FY2006 to 313 in FY2007.
Depreciation
Our depreciation rose by approximately S$0.3 million or 10.6% from S$2.8 million in FY2006 to S$3.1
million in FY2007. The higher depreciation was due to the addition of 28 units of warehousing and depot
handling equipment, 30 prime movers and 153 trailers in FY2007 as we expanded our capacity.
51
Other operating expenses increased by approximately S$0.6 million or 28.1% from S$2.0 million in
FY2006 to S$2.6 million in FY2007 as we incurred higher office and administrative expenses and higher
expenses from general repair and maintenance works, which was in line with our revenue growth in
FY2007.
Finance costs
Our finance costs rose by approximately S$0.2 million or 33.6% from S$0.7 million in FY2006 to S$0.9
million in FY2007. The increase in interest expense was mainly due to (i) factoring service charges
charged by banks for our trade receivables which started in late 2007; and (ii) higher hire purchase
commitments as we invested in additional depot handling equipment, prime movers and trailers during
the year.
Profit before tax
Our profit before tax increased by approximately S$0.3 million or 19.9% from S$1.8 million in FY2006 to
S$2.1 million in FY2007, mainly due to the increase in revenues, which was offset by corresponding
increase in expenses, as aforementioned. As the increase in cost of services was proportionately higher
than the increase in revenues, our overall profit before tax margin decreased marginally from 6.5% in
FY2006 to 5.7% in FY2007.
In particular, profit before tax for our transportation management services segment decreased by
approximately S$0.7 million or 72.2% and its margin decreased from 6.6% in FY2006 to 1.5% in FY2007,
as a result of the increase in cost of services for this segment being proportionately higher than the
increase in its revenue. This was mainly due to the higher fuel charges as diesel prices in FY2007
increased by approximately 17.0% and higher depreciation charges amounting to an approximate
increase of 10.6% being incurred as we increased our fleet of prime movers by 30 and trailers by 153 in
FY2007.
Income tax expense
Our income tax expense fell by approximately S$0.2 million or 38.1% from S$0.5 million in FY2006 to
S$0.3 million in FY2007, mainly due to deferred tax expense of approximately S$0.2 million previously
not recognised. Effective tax rates for FY2006 and FY2007 were approximately 27.4% and 14.2%,
respectively. The lower effective tax rate for FY2007 was also due to higher business deductible expenses
and higher capital allowances as a result of our additions to property, plant and equipment. Please refer
to the section entitled “Management’s Discussion and Analysis of Results of Operations and Financial
Condition – Review of Past Financial Position - Non-Current Assets” of this Prospectus for details of
changes in our property, plant and equipment.
FY2007 vs FY2008
Revenue
Our revenue increased by approximately S$22.9 million or 61.8% from S$37.2 million in FY2007 to
S$60.1 million in FY2008. The substantial increase in revenue was contributed by (i) an increase of
approximately S$6.1 million or 33.2% increase in the revenue from our transportation management
services segment from S$18.5 million in FY2007 to S$24.6 million in FY2008; (ii) S$13.7 million or 73.6%
increase in revenue from our warehousing and container depot management services segment from
S$18.7 million in FY2007 to S$32.4 million in FY2008; and (iii) a maiden 5 months revenue contribution of
approximately S$3.1 million from our automotive logistics management services segment as we entered
into this business in August 2008 through the acquisition of Cogent Investment and Cogent Automotive.
The increases in sales volumes by business segment can be explained by the following:
(i)
The revenue growth in our transportation management services segment was mainly attributable to
new customers being secured in FY2007 who continued their contracts in FY2008, and higher
demand for transportation services which was in line with the global economic growth in the first
three quarters of FY2008. Revenue from transportation services increased by approximately S$6.0
million or 33.2%, while revenue from dry hubbing services increased by approximately S$0.1
million or 31.7%; and
52
(ii)
Our warehousing activities increased in FY2008 as we secured new warehousing customers and
added three new warehouses to our portfolio. This increased our leaseable space and contributed
to the revenue growth.
Revenue from our warehousing rental segment increased by approximately S$7.0 million or
111.2%, while revenue from our warehousing services increased by approximately S$4.6 million or
199.8% in FY2008. The substantial revenue growth in our warehousing rental segment in FY2008
was primarily driven by the rental income obtained from the three warehouses added to our
portfolio in FY2008. We were able to secure new customers for our additional warehouses due to
our increased marketing efforts. This subsequently led to the increased demand for our
warehousing services from the new customers. In addition, we contracted a major customer in
2H2007 who continued to contract with us for warehousing management services in FY2008.
Our container depot revenue rose approximately by S$2.2 million or 21.5% from FY2007 to
FY2008 due to higher demand for (i) container handling and storage activities; and (ii) washing and
repair of customers’ containers, as we expanded our container depot operations. Revenue from the
container handling and storage activities rose by approximately S$0.6 million or 9.1%, while
revenue from the container washing and repair activities rose by approximately S$1.6 million or
44.3%. The substantial higher-than-proportionate increase in container washing and repair revenue
as compared to container handling and storage revenue in FY2008 was due to more containers
being serviced and refurbished at our customers’ request. During the economic downturn in late
FY2008, demand for containers was reduced due to lower global transhipment activities. As such,
there was a strong influx of empty containers being returned to our depot for longer storage
periods. This resulted in higher demand for more comprehensive washing and repair services for
incoming containers as compared to simple washing and repair services during the economic
boom. On the other hand, the lower-than-proportionate increase in our revenue from container
handling and storage activities was due to a lower number of new in-coming containers and
existing containers being stored for a longer period.
Other operating income increased by approximately S$0.9 million or 149.3% from S$0.6 million in
FY2007 to S$1.5 million in FY2008. The significant increase in our other operating income was mainly
due to (i) a one-time opportunistic sale of scrap metals to a customer when steel prices rose which
amounted to approximately S$324,991; (ii) insurance claims resulting from the loss of depot containers
and employee medical claims which resulted in an increase of S$163,926; (iii) increased rental income
from investment properties as we rented out our commercial property at 200 Jalan Sultan in FY2008,
which was previously held as an investment property and not rented out in FY2006 and FY2007 which
accounted for an increase of S$39,065; and (iv) higher service income from SHPD for our provision of
manpower support and services for its Export Processing Zone operations which resulted in an increase
of S$349,344. Please refer to the section entitled “Interested Person Transactions and Conflicts of
Interests - Past Interested Person Transactions” of this Prospectus for further details.
Cost of services
In line with the 61.8% increase in our revenue from FY2007 to FY2008, our cost of services increased by
approximately S$10.3 million or 50.5% from S$20.5 million in FY2007 to S$30.8 million in FY2008. The
increase in cost of services for each business segment was generally in line with the revenue and sales
volume increases for each respective business segment.
Cost of services increased by approximately S$2.6 million or 26.9% for our transportation management
services segment while our revenue for this segment increased by approximately S$6.1 million or 33.2%.
This was mainly due to higher fuel and wear and tear expenses being incurred to maintain our prime
movers, trailers, forklifts and trucks as our business activities increased.
Cost of services increased by approximately S$6.2 million or 56.9% for our warehousing and container
depot management services segment while our revenue for this segment increased by approximately
S$13.7 million or 73.6%. This was primarily driven by (i) higher rental and property taxes for the three
warehouses added to our portfolio in FY2008; and (ii) higher container washing and repair expenses as
our container handling and storage activities increased.
53
Our newly acquired automotive logistics management services segment also contributed approximately
S$1.6 million or 5.1% to our cost of services in FY2008 while revenue for this segment contributed
approximately S$3.1 million to our revenue.
Our employee benefits expenses rose by approximately S$3.0 million or 32.9% from S$9.1 million in
FY2007 to S$12.1 million in FY2008. The increase was directly attributable to an increase in salaries due
to salary increments, and an increase in headcount as we entered into our automotive logistics
management services segment in August 2008. Our total headcount increased from 313 in FY2007 to
355 in FY2008.
Depreciation
Our depreciation increased by approximately S$1.2 million or 41.3% from S$3.1 million in FY2007 to
S$4.3 million in FY2008, mainly due to our corresponding investment in warehousing equipment; as well
as the charging of the depreciation of our newly constructed warehouse located at 7 Penjuru Close
starting from June 2008.
FY2007 to S$3.6 million in FY2008. The higher expenses were mainly attributable to higher office and
administrative expenses and general repair and maintenance expenses, which was in line with the growth
in our business activities in FY2008.
Finance costs
Our finance costs increased by approximately S$1.0 million or 123.1% from S$0.9 million in FY2007 to
S$1.9 million in FY2008. The higher interest expense incurred in FY2008 was mainly due to (i) the term
loan being obtained for the purchase of warehouse at 1 Chia Ping in FY2008; (ii) factoring service
charges from banks for our trade receivables; and (iii) construction loan interest being incurred for 7
Penjuru Close. Prior to the completion of construction for 7 Penjuru Close, interest expense incurred
under the construction loan were capitalised as part of the construction cost. Upon the completion of
construction, the interest expense incurred thereafter is recognised under our finance costs.
Profit before tax
Our profit before tax increased by approximately S$6.7 million or 314.1% from S$2.1 million in FY2007 to
S$8.8 million in FY2008. The increase in profit before tax was mainly due to the addition of three
warehouses to our portfolio in FY2008 and the higher than proportionate increase in revenue as
compared to the increase in expenses. This is partly a result of higher demand for our services backed by
the success of our marketing and sales strategies to attract and retain customers. In addition, we were
able to realise full year’s profit contribution from a major customer whom we contracted in second half of
FY2007 for the provision of warehousing management services.
Our profit before tax margin improved significantly from 5.7% in FY2007 to 14.6% in FY2008, which was
mainly due to better margins derived from the three warehouses added to our portfolio in FY2008. This
was because two of these warehouses are open storage spaces with much lower operating overheads as
compared to covered storage spaces, and the third warehouse located at 7 Penjuru Close, being a newlybuilt warehouse was able to command a higher rental rate than older warehouses.
The overall margin improvement was also partly due to higher rates being charged to our new customers
as a result of our Group’s successful sales and marketing strategies. We also enjoyed economies of scale
through the sharing of common costs as we expanded our business.
In addition, our newly acquired business in the automotive industry in August 2008 was a contributing
factor to our overall higher margin. Our automotive logistics management services segment was able to
command higher prices for its services because as a one-stop full service provider, we were able to
eliminate unnecessary interim transitions between independent specialised operators which translate to
efficiency and cost effectiveness for our customers and achieve economies of scale through the sharing
of common costs by virtue of our complementary business segments.
54
Income tax expense
Our income tax expense increased by approximately S$1.5 million or 496.7% from S$0.3 million in
FY2007 to S$1.8 million in FY2008, due to a significant increase in taxable income. Effective tax rates for
FY2007 and FY2008 were approximately 14.2% and 20.4%, respectively.
1H2008 vs 1H2009
Revenue
Our revenue increased by approximately S$2.0 million or 7.2% from S$27.4 million in 1H2008 to S$29.4
million in 1H2009. The increase in revenue was contributed by (i) an increase of approximately S$1.5
million or 9.7% in the revenue from our warehousing and container depot management services segment
from S$14.9 million in 1H2008 to S$16.4 million in 1H2009; and (ii) the revenue contribution of
approximately S$4.1 million from our automotive logistics management services segment as we entered
into this business in August 2008 through the acquisition of Cogent Investment and Cogent Automotive.
However, this increase was offset by the reduction in revenue from our transportation management
services segment by approximately S$3.6 million or 28.8% from S$12.5 million in 1H2008 to S$8.9
million in 1H2009.
The analysis of our sales volumes by business segment can be explained as follows:
(i)
The decline in revenue in our transportation management services segment was mainly due to
lower demand for transportation services, which was in line with the global economic downturn.
Revenue from transportation services declined by approximately S$3.6 million or 29.7%, while
revenue from dry hubbing services increased by approximately S$39,000 or 14.1%. In contrast, the
business volume from our dry hubbing customers was less affected by the economic downturn. In
particular, our major dry hubbing customer was still receiving strong orders from the People’s
Republic of China even during the global economic slowdown; and
(ii)
Revenue increased by S$0.6 million or 9.3% in our warehousing rental segment in 1H2009
because we were able to book rental income for the full six months in 1H2009 from the addition of
the warehouse at 1 Chia Ping in August 2008 and several customers whose contracts commenced
in 2H2008. However, this was offset by a slight revenue drop in our warehousing services segment
by approximately S$0.4 million or 15.6% in 1H2009, as a result of reduced volume handled for a
major customer whose contract expired in the first quarter of FY2009.
Our container depot revenue rose by approximately S$1.3 million or 21.5%, due to higher demand
for (i) container handling and storage services; and (ii) container washing and repair services.
Revenue from container handling and storage activities increased by approximately S$0.6 million or
18.5% while revenue from container washing and repair services increased by approximately S$0.7
million or 25.5% in 1H2009 as compared to 1H2008. The higher-than-proportionate increase in
container washing and repair revenue as compared to container handling and storage revenue in
1H2009 was due to our customers sending more of their containers for comprehensive servicing
and refurbishment during the economic downturn in 1H2009 when their containers were stored for
longer periods. On the other hand, the increase in our revenue from container handling and storage
activities was mainly due to increased number of new in-coming containers being stored in our
depot and existing containers being stored for a longer period during the economic downturn in
1H2009. In addition, we managed to secure a new customer in November 2008, which contributed
to a full half year revenue in 1H2009.
Other operating income increased by approximately S$0.3 million or 65.2% from S$0.4 million in 1H2008
to S$0.7 million in 1H2009. This increase was mainly due to the receipt of government subsidy from the
Jobs Credit Scheme which was introduced in the Singapore Budget 2009 to encourage businesses to
preserve jobs during the economic downturn. The Company received this subsidy from the Government
in March and June 2009.
55
Cost of services
Despite the 7.2% increase in revenue, our cost of services decreased by approximately S$0.8 million or
5.7% from S$14.8 million in 1H2008 to S$14.0 million in 1H2009.
Our cost of services in the transportation management services segment decreased by approximately
S$3.2 million or 48.4% in 1H2009 as compared to 1H2008, which was in line with the drop in revenue in
this segment. The drop in cost of services was also contributed by the drop in diesel prices which began
in 2H2008.
The aforementioned decrease was however offset by the slight increase in cost of services in our
warehousing and container depot management services segment of approximately S$0.5 million or 6.4%
in 1H2009 as compared to 1H2008. The increase was mainly attributable to (i) higher rental expenses
and property taxes being incurred from the addition of three warehouses in 2008; and (ii) increase in our
container washing and repair expenses as more customers sent their containers for comprehensive
servicing and refurbishment during the economic downturn in 1H2009 when their containers were stored
for longer periods at our depot.
Our automotive logistics management services segment also contributed approximately S$1.8 million or
13.0% to our higher cost of services in 1H2009 as we had acquired this new business in August 2008.
Our employee benefits expenses fell by approximately S$0.3 million or 5.0% from S$6.1 million in
1H2008 to S$5.8 million in 1H2009. The lower employee benefits expenses were mainly due to lower
employee benefits expenses being incurred in our transportation management services segment. This
was a result of the rationalisation and restructuring of our team undertaken in 2H2008, which lowered our
employee benefits expenses in 1H2009 as compared to 1H2008.
Depreciation
Our depreciation increased by approximately S$0.9 million or 45.1% from S$1.9 million in 1H2008 to
S$2.8 million in 1H2009. The increase in depreciation was mainly due to our corresponding investment in
warehousing equipment; as well as the charging of the depreciation of our newly constructed warehouse
located at 7 Penjuru Close starting from June 2008.
1H2008 to S$1.9 million in 1H2009. This increase was primarily contributed by (i) a S$76,000 bad debt;
and (ii) an increase in legal and professional fees of S$102,000.
Finance costs
Our finance costs fell slightly by S$5,000 or 0.6% from S$893,000 in 1H2008 to S$888,000 in 1H2009, as
we converted our overdrafts used for construction of 7 Penjuru Close to a 12-year term loan in June 2009
with lower interest rates.
Profit before tax
Our profit before tax increased by approximately S$2.2 million or 86.5% from S$2.5 million in 1H2008 to
S$4.7 million in 1H2009. Our overall profit before tax margin improved from 9.1% in 1H2008 to 15.9% in
1H2009, which was mainly due to better margin derived from our transportation management segment.
The profit before tax margin for this segment improved significantly from 4.7% in 1H2008 to 18.4% in
1H2009, which was mainly caused by the drop in diesel prices in 1H2009 and lower employee benefits
expenses being incurred in our transportation management services segment in 1H2009.
The overall margin improvement was also partly due to lower expenses and higher rates being charged to
our new customers as a result of our Group’s successful sales and marketing strategies. We charged our
new customers for Container Depot Management Services secured in 1H2009 at an increased rate of
approximately 20.0% over fees charged to existing customers. In addition, the effects of having charged
new customers secured in 2H2008 at an increased rate of approximately 5.0% over fees charged to
56
existing customers for our transportation management services and at an increased rate of approximately
20.0% over fees charged to existing customers for our warehousing management services also
contributed to our overall margin improvement in 1H2009. Our newly acquired business in the automotive
industry in August 2008 was also a contributing factor to our overall higher margins for this segment
because as a one-stop full service provider, we were able to eliminate unnecessary interim transitions
between independent specialised operators which translate to efficiency and cost effectiveness for our
customers and achieve economies of scale through the sharing of common costs by virtue of our
complementary business segments.
Income tax expense
Our income tax expense increased by approximately S$0.4 million or 75.6% from S$0.5 million in 1H2008
to S$0.9 million in 1H2009, mainly due to the increase in taxable income. Effective tax rates for 1H2008
and 1H2009 were approximately 21.3% and 20.0%, respectively.
REVIEW OF PAST FINANCIAL POSITION
Non-current assets
Non-current assets comprised mainly property, plant and equipment and investment properties. Noncurrent assets represented approximately 66.5% and 61.9% of our total assets as at 31 December 2008
and 30 June 2009, respectively. As at 31 December 2008 and 30 June 2009, our non-current assets
amounted to S$51.3 million and S$49.4 million, respectively.
Property, plant and equipment amounted to approximately S$50.7 million and S$48.9 million, which
accounted for 98.8% and 99.1% of our non-current assets as at end of FY2008 and 1H2009, respectively.
The bulk of our property, plant and equipment are made up of leasehold land and buildings and motor
vehicles, which represented approximately 93.6% and 94.3% of our non-current assets as at 31
December 2008 and 30 June 2009, respectively. Motor vehicles mainly comprise prime movers, trailers,
handling equipment and vehicles. The decrease of S$1.8 million in our property, plant and equipment as
at 30 June 2009 was primarily due to (i) the depreciation charges of our motor vehicles of S$1.4 million;
and (ii) disposal of our motor vehicles of approximately S$0.8 million. This was offset by our purchases of
prime movers and handling equipment of approximately S$1.1 million.
The investment property located at 200 Jalan Sultan amounted to approximately S$0.6 million and S$0.4
million as at 31 December 2008 and 30 June 2009, respectively. In July 2009, our Group entered into an
agreement to dispose the property located at 200 Jalan Sultan for a consideration of S$0.4 million.
Accordingly, the fair value of 200 Jalan Sultan was reduced to S$0.4 million as at 30 June 2009 and the
sale of the property was completed on 9 November 2009. This accounted for 1.1% and 0.8% of our noncurrent assets as at end of FY2008 and 1H2009. As at 31 December 2008, another of our investment
property located at 20/20A Tanjong Pagar was reclassified as investment property held-for-sale as our
Group entered into an agreement to dispose the property in December 2008, which was subsequently
disposed in April 2009. These investment properties were stated at their respective fair values at 31
December 2008 and 30 June 2009.
Current assets
Current assets comprised trade receivables, other receivables, held-for-trading investments, investment
property held-for-sale and cash and bank balances. Our current assets as at end of FY2008 and 1H2009
amounted to approximately S$25.8 million and S$30.4 million, which represented 33.5% and 38.1% of
our total assets, respectively.
The largest component of our current assets was trade receivables, which amounted to approximately
S$16.1 million and S$13.4 million as at end of FY2008 and 1H2009, respectively. The decrease of
approximately S$2.7 million in trade receivables was in line with the drop in our revenue in 1H2009 during
the economic slowdown.
57
Other receivables stood at approximately S$2.9 million and S$3.1 million as at end of FY2008 and
1H2009, respectively. Our other receivables mainly comprised (i) prepayments and deposits; and (ii)
amount due from related parties. Prepayments and deposits stood at approximately S$1.8 million and
S$2.0 million as at end of FY2008 and 1H2009, respectively. Deposits comprised mainly rental deposits
for our various warehouses and land rented from third parties and JTC. Amounts due from related parties
relate to amounts due from SHPD, which pertain to our provision of manpower support and services
employment to SHPD for its Export Processing Zone operations. Please refer to the section entitled
“Interested Person Transactions and Conflicts of Interest - Past Interested Person Transactions” of this
Prospectus for details. The marginal increase of S$0.2 million in our other receivables in 1H2009 was
mainly due to the prepayments of deferred IPO expenses incurred for the preparation of our Company’s
proposed listing on the SGX-ST.
Held-for-trading investments, which comprised shares of various publicly listed companies in businesses
unrelated to us, stood at approximately S$23,000 and S$16,000 as at end of FY2008 and 1H2009,
respectively. Our cash and bank balances amounted to approximately S$5.3 million and S$13.9 million as
at end of FY2008 and 1H2009, respectively.
As at 31 December 2008, our investment property held-for-sale referred to the investment property at
20/20A Tanjong Pagar. This property was subsequently disposed at a consideration of S$1.5 million in
April 2009.
Current liabilities
Current liabilities comprised bank overdrafts and loans, obligations under finance leases, trade payables,
other payables and income tax payable. They amounted to approximately S$50.7 million and S$28.5
million and accounted for 83.4% and 44.0% of our total liabilities as at 31 December 2008 and 30 June
2009, respectively.
Current portion of bank overdrafts and loans stood at approximately S$23.1 million and S$4.7 million as
at end of FY2008 and 1H2009, respectively. In FY2008, majority of the bank loans was taken for the
construction of our warehouse building located at 7 Penjuru Close and purchase of the warehouse
located at 1 Chia Ping in FY2008. The significant decrease of approximately S$18.4 million or 79.6% in
our current bank overdrafts and loans was primarily due to the conversion of our S$18.5 million bank
overdraft to a long-term 12-year loan, which was obtained for the construction of the building at 7 Penjuru
Close. Please refer to the section “Capitalisation and Indebtedness” of this Prospectus for more details.
Current portion of our obligations under finance leases stood at approximately S$2.2 million and S$1.9
million as at 31 December 2008 and 30 June 2009, respectively. These finance leases refer mainly to hire
purchase commitments for our prime movers, trailers, handling equipment and vehicles. The reduction in
the amount of current finance leases was mainly due to (i) the repayment of finance leases in the amount
of S$1,257,000 being offset by the increase in new finance leases for prime movers and handling
equipments in the amount of S$262,000 and (ii) the reclassification of the abovementioned repayments
from non-current portion of our finance leases in the amount of S$676,000 in accordance with applicable
accounting policies. Our Group’s obligations under finance leases are secured by our property, plant and
equipment. Please refer to the section entitled “Capitalisation and Indebtedness” of this Prospectus for
more information.
Trade payables stood at approximately S$6.1 million and S$6.3 million at the end of FY2008 and 1H2009,
respectively. Our average third party trade payables’ turnover days increased marginally from 55 days in
FY2008 to 57 days in 1H2009. Please refer to the section entitled “Management’s Discussion and
Analysis of Results of Operations and Financial Condition - Credit Management” of this Prospectus for
more information on our third party trade payables turnover.
Other payables, comprising mainly payables due to related parties and directors, rental deposits, accrued
expenses and dividends payable, stood at approximately S$17.3 million and S$13.6 million as at 31
December 2008 and 30 June 2009, respectively. The largest component of other payables was amounts
due to related parties and directors amounting to approximately S$11.6 million and S$7.1 million as at
the end of FY2008 and 1H2009, respectively. The amount due to directors relates to an unsecured and
interest-free loan of S$1.3 million being obtained to purchase the warehouse at 1 Chia Ping, which was
58
fully repaid in April 2009. The amount due to related parties pertains to a S$6.0 million loan due to SHPD,
which was obtained for the construction of the building at 7 Penjuru Close. These two loans are
considered as Interested Person Transactions during the Period under Review. Please refer to the section
entitled “Interested Person Transactions and Conflicts of Interest - Present and On-going Interested
Person Transactions” of this Prospectus for details on the amounts due to SHPD and directors. As at 30
June 2009, our other payables decreased by approximately S$3.8 million. This was primarily due to the
conversion of the S$6.0 million loan due to a related party to a 3-year term loan and repayable in three
equal instalments, at interest rates equivalent to the annual SIBOR rate when due. This decrease was
offset by a net increase of approximately S$1.9 million in amounts due to directors, which comprised
S$5.0 million of interim dividends being declared for FY2009 and the payment of S$3.1 million of amount
previously due to directors as at 31 December 2008.
Income tax payable stood at approximately S$2.0 million as at the end of FY2008 and 1H2009.
Net current liabilities/assets position
As at 31 December 2008, we were in a net current liabilities position of approximately S$24.9 million. The
main reasons for our net liabilities position were the following:
(i)
S$18.5 million of bank overdrafts being obtained to finance the construction of the building at 7
Penjuru Close;
(ii)
S$6.0 million of loan amount due to a related party being obtained to finance the construction of
the building at 7 Penjuru Close;
(iii)
S$1.3 million of loan amount due to a director being obtained to purchase the warehouse at 1 Chia
Ping; and
(iv)
S$1.5 million of dividends being declared in FY2008 but only paid in 1H2009.
However, our net current liabilities position improved to a net current assets position of approximately
S$2.0 million as at 30 June 2009. This was mainly due to (i) the conversion of the S$18.5 million bank
overdrafts to a long-term 12-year term loan; and (ii) the conversion of the S$6.0 million amount due to
related party to a three-year term loan and repayable in three equal instalments, at interest rates
equivalent to the annual SIBOR rate when due. During the construction phase of our building at 7 Penjuru
Close, the above borrowings taken up to finance the construction were classified as short-term
borrowings. Upon completion of the construction of the buildings, these loans were converted to longterm loans.
Non-current liabilities
Our non-current liabilities comprised long-term portion of bank borrowings and finance leases, loan from
related party and deferred tax liabilities. As at 31 December 2008 and 30 June 2009, our non-current
liabilities of approximately S$10.1 million and S$36.3 million accounted for 16.6% and 56.0% of our total
liabilities, respectively.
The increase in our non-current liabilities of approximately S$26.2 million or 258.5% as at 30 June 2009
was mainly due to (i) the conversion of the S$18.5 million bank overdrafts to a long-term 12-year loan;
and (ii) the conversion of the S$6.0 million amount due to related party to a three-year term loan and
repayable in three equal instalments, at interest rates equivalent to the annual SIBOR rate when due.
Share capital and reserves
Share capital and reserves comprised share capital and accumulated profits. As at the end of FY2008
and 1H2009, our share capital and reserves amounted to approximately S$16.3 million and S$15.0
million, respectively. Please refer to the section entitled “General Information on our Group - Share
Capital” of this Prospectus for more information.
Please also refer to the section entitled “Management’s Discussion and Analysis of Results of Operations
and Financial Condition - Liquidity and Capital Resources” for the reasons for changes in the above
balance sheet items between FY2008 and 1H2009.
59
LIQUIDITY AND CAPITAL RESOURCES
Our operations, business growth and expansion have been funded by a combination of internal and
external sources of funds. Internal sources of funds include mainly cash generated from our operating
activities and cash and bank balances; while external sources comprise mainly borrowings from banks
and other financial institutions and capital contribution from our Shareholders.
The principal uses of these funds are for working capital purposes such as payment of trade payables,
financing of trade receivables balances and operating expenses, as well as for our capital expenditure
and repayment of loans and advances.
Our bank borrowings comprise mainly long-term bank loans. As at 30 June 2009, we had total bank
borrowings of approximately S$35.9 million and total cash and bank balances of approximately S$13.9
million. Please refer to the section entitled “Capitalisation and Indebtedness” of this Prospectus for further
information on our banking facilities.
As at the Latest Practicable Date, we have total banking facilities of S$34.9 million, of which S$24.7
million has been utilised. Further details of our banking facilities can be found in the sections entitled
“Capitalisation and Indebtedness”, Appendix A – “Independent Auditors’ Report and Combined Financial
Statements for the Years ended 31 December 2006, 2007 and 2008” of this Prospectus” and Appendix B
– “Independent Auditors’ Review Report and Combined Interim Condensed Financial Statements for the
Six Months ended 30 June 2009” of this Prospectus.
Our Directors are of the opinion that, as at the Latest Practicable Date, after taking into account our
internal and external sources of funds, our Group has adequate working capital to meet our present
requirements.
To the best of our Directors’ knowledge, we are not in breach of any of the terms and conditions or
covenants associated with any credit arrangement or bank loan which could materially affect our financial
position and results of business operations or the investment by our Shareholders.
We set out below a summary of our Group’s net cash flows for FY2006, FY2007, FY2008 and 1H2009:
FY2006
S$’000
Net cash generated from operating activities
5,164
FY2007
S$’000
FY2008
S$’000
1H2009
S$’000
15,978
12,381
(22,301)
(6,229)
1,287
532
Net cash (used in) / generated from investing activities
(597)
Net cash (used in) / generated from financing activities
(6,490)
18,217
(3,179)
(2,839)
Net (decrease) / increase in cash and cash equivalents
(1,923)
(3,552)
6,570
10,829
(1,807)
(5,359)
1,211
(5,359)
1,211
12,040
Cash and cash equivalents at the beginning of the
financial year / period
116
Cash and cash equivalents at the end of the financial
year / period
(1,807)
FY2006
Cash flow from operating activities
In FY2006, we generated net cash from operating activities of approximately S$5.2 million. This
comprised operating cash flow before working capital changes of approximately S$4.7 million, and
adjusted by net working capital inflows of approximately S$0.9 million which was offset by income tax
payment of approximately S$0.4 million.
60
The net working capital inflows were mainly the result of the following:
(1)
a decrease in other receivables of approximately S$2.8 million; and
(2)
an increase in other payables of approximately S$0.2 million.
The above working capital inflows were offset by the following cash outflows:
(1)
an increase in trade receivables of approximately S$1.1 million; and
(2)
a decrease in trade payables of approximately S$0.9 million.
The increase in our trade receivables was in line with the increase in our Group’s revenue and profit. The
decrease in other receivables was mainly due to a S$3.0 million reduction in non-trade amount due to
related parties. The decrease in third party trade payables was a result of payment made to the contractor
for the construction of 7 Penjuru Close as it constituted a substantial portion of our payables which had to
be settled over a shorter credit term of 30 days. Our average third party trade payables’ turnover days fell
from 88 days and 69 days in FY2005 and FY2006, respectively. The increase in other payables was
mainly due to an increase in amount due to our directors for our working capital purposes.
Cash flow used in investing activities
In FY2006, our net cash used in investing activities amounted to approximately S$0.6 million. This was
mainly attributable to the purchase of property, plant and equipment of approximately S$2.0 million, which
was offset by the proceeds received from the disposal of property, plant and equipment of approximately
S$1.4 million. Please refer to the section entitled “Management’s Discussion and Analysis of Results of
Operations and Financial Condition - Material Capital Expenditures, Divestments and Commitments” of
this Prospectus for more information on the above additions and disposals of property, plant and
equipment.
Cash flow from financing activities
In FY2006, our cash used in financing activities amounted to approximately S$6.5 million. This was
mainly due to (i) dividend payment of S$1.0 million to our shareholders; (ii) repayment of our obligations
under finance leases of approximately S$2.6 million; (iii) increase in pledged deposits amounting to
approximately S$1.3 million; (iv) repayment of bank loans and interests of approximately S$1.2 million;
and (v) repayment of approximately S$1.9 million to related parties. This was offset by an increase in
amount due to directors of approximately S$1.4 million.
FY2007
In FY2007, our net operating cash inflow was approximately S$0.5 million. This comprised operating cash
flow before working capital changes of approximately S$5.4 million, and adjusted for net working capital
outflows of approximately S$4.4 million and income tax payment of approximately S$0.5 million.
The net working capital outflows were mainly the result of the following:
(1)
an increase in trade receivables of approximately S$7.1 million; and
(2)
an increase in other receivables of approximately S$2.3 million.
The above working capital outflows were offset by the following cash inflows:
(1)
an increase in trade payables of approximately S$4.9 million; and
(2)
an increase in other payables of approximately S$63,000.
61
The increases in trade receivables and trade payables were in line with the increase in the Group’s
revenue and profit. The increases in other receivables was mainly due to (i) increases in non-trade
balances due from related parties of approximately S$0.8 million largely due to service income owed by
SHPD for our provision of manpower support and services to SHPD for its Export Processing Zone
operations; (ii) increases in amounts due from external parties of approximately S$1.0 million as a result
of higher cash collections from our depot business; and (iii) increases in prepayments and deposits of
S$0.5 million as we expanded our warehousing portfolio.
In FY2007, our net cash used in investing activities amounted to approximately S$22.3 million. This was
mainly attributable to expenses incurred for the construction of 7 Penjuru Close such as the purchase of
construction and renovations, furniture, fixtures and fittings and warehouse handling equipment for our
new warehouse, which amounted to approximately S$22.7 million. This was offset by the proceeds
received from the disposal of property, plant and equipment of approximately S$0.3 million. Please refer
to the section entitled “Management’s Discussion and Analysis of Results of Operations and Financial
Condition - Material Capital Expenditures, Divestments and Commitments” of this Prospectus for more
information on the above additions and disposals of property, plant and equipment.
In FY2007, we recorded net cash inflow provided by financing activities of approximately S$18.2 million,
which was mainly attributable to (i) new bank borrowings amounting to approximately S$20.9 million
being obtained; (ii) increase in amount due to related parties of approximately S$5.5 million; and (iii)
discharge of pledged deposits of approximately S$1.3 million. This was offset by our net cash used in
financing activities of approximately S$9.3 million, which was mainly due to (i) dividend payment of S$0.5
million to directors; (ii) discharge of our obligations under finance leases of approximately S$4.1 million;
(iii) repayment of amount due to directors of approximately S$1.8 million; and (iv) repayment of bank
loans and interests of approximately S$2.9 million.
FY2008
In FY2008, we generated net cash from operating activities of approximately S$16.0 million. This
adjusted for net working capital inflows of approximately S$1.2 million which was offset by income tax
(1)
a decrease in trade receivables of approximately S$3.4 million;
(2)
a decrease in other receivables of approximately S$1.4 million; and
(3)
The above working capital inflows were offset by the cash outflow arising from a decrease in trade
payables of approximately S$6.3 million.
The decrease in trade receivables in FY2008 was mainly due to the implementation of our Credit Control
Procedures (as defined on page 67 of this Prospectus) on our collection of trade receivables. Our
average third party trade receivables’ turnover days were approximately 107 days and 94 days in FY2007
and FY2008, respectively. Please refer to the section “Management’s Discussion and Analysis of Results
of Operations and Financial Condition - Credit Management” of this Prospectus for more information on
our trade receivables.
The decrease in other receivables was mainly due to the decrease in amounts due from outside parties
as a result of lower cash collections relating to our container handling charges during the economic
downturn in late FY2008.
62
The increase in other payables was mainly attributable to (i) increase in accruals of approximately S$1.0
million which was largely due to higher accruals for property tax; and (ii) increase in rental deposits
obtained from third parties of approximately S$1.1 million as we increased our warehouse portfolio and
secured new customers in FY2008.
In FY2008, we net-off the outstanding trade-related balances due to and due from related parties. As
such, the decrease in trade payables was mainly due to the net off of trade receivables from related
parties.
In FY2008, our net cash used in investing activities amounted to approximately S$6.2 million, which was
mainly due to the purchase of property, plant and equipment of approximately S$7.7 million. This cash
outflow was however offset by (i) the proceeds received from the disposal of property, plant and
equipment of approximately S$0.9 million; and (ii) the cash and bank balances received from our
acquisition of Cogent Investment and Cogent Automotive in August 2008 which amounted to
approximately S$0.5 million.
Financial Condition - Material Capital Expenditures, Divestments and Commitments” of this Prospectus
for more information on the above additions and disposals of property, plant and equipment.
In FY2008, we recorded a net cash outflow from financing activities of approximately S$3.2 million, which
was due to (i) the discharge of our obligations under finance leases of approximately S$3.8 million; (ii)
repayment of bank loans and interest amounting to approximately S$4.7 million; and (iii) increase in
pledged deposits amounting to approximately S$0.1 million. This was offset by (i) new bank borrowings
amounting to approximately S$3.9 million being obtained; and (ii) an increase in amounts due to directors
and related parties of approximately S$1.6 million.
1H2009
In 1H2009, we generated net cash from operating activities of approximately S$12.4 million. This
adjusted for net working capital inflows of approximately S$4.7 million which was offset by income tax
(1)
a decrease in trade receivables of approximately S$2.6 million;
(2)
an increase in trade payables of approximately S$0.2 million; and
(3)
The above working capital inflows were offset by an increase in other receivables of S$0.2 million.
The decrease in trade receivables in 1H2009 was mainly due to the implementation of our Credit Control
Procedures on our collection of trade receivables. Our average third party trade receivables’ turnover days
were approximately 94 days and 95 days in FY2008 and 1H2009, respectively. Please refer to the
section “Management’s Discussion and Analysis of Results of Operations and Financial Condition - Credit
Management” of this Prospectus for more information on our trade receivables. The marginal increase in
trade payables was mainly due to the fact we had taken slightly longer period to repay our trade creditors
as our average third party trade payables’ turnover days rose from 55 days in FY2008 to 57 days in
1H2009.
63
There was an increase in our other payables, mainly due to the increase in rental deposits being obtained
from third parties and increase in accrued income as we purchased the warehouse at 1 Chia Ping in
August 2008. The marginal increase in our other receivables was due to the prepayments of deferred IPO
expenses incurred for the preparation of our Company’s proposed listing on the SGX-ST.
In 1H2009, we recorded net cash inflow provided by investing activities of approximately S$1.3 million,
which was mainly due to the (i) S$1.5 million proceeds received from the disposal of our investment
property at 20/20A Tanjong Pagar; and (ii) proceeds received from the disposal of property, plant and
equipment of approximately S$0.3 million. This cash inflow was however offset by the purchase of
property, plant and equipment of approximately S$0.5 million.
Financial Condition - Material Capital Expenditures, Divestments and Commitments” of this Prospectus
for more information on the above additions and disposals of property, plant and equipment.
In 1H2009, we recorded net cash outflow from financing activities of approximately S$2.8 million, which
was mainly attributable to (i) new bank borrowings amounting to approximately S$4.9 million being
obtained; (ii) increase in amount due to related parties of approximately S$18,000; and (iii) increase in
pledged deposits of approximately S$0.1 million. This was offset by our net cash used in financing
activities of approximately S$7.9 million, which was mainly due to (i) new and the repayment of loans to
directors which amounted to approximately S$3.3 million; (ii) the discharge of our obligations under
finance leases of approximately S$1.4 million; (iii) the repayment of bank loans and interests of
approximately S$1.7 million; and (iv) dividend payment of S$1.5 million to shareholders.
MATERIAL CAPITAL EXPENDITURES, DIVESTMENTS AND COMMITMENTS
The material expenditures of capital investment and divestments made by our Group for FY2006,
FY2007, FY2008, 1H2009 and up to the Latest Practicable Date were as follows:
From
1 July 2009
up to the
Latest
Practicable
Date
S$’000
FY2006
S$’000
FY2007
S$’000
FY2008
S$’000
1H2009
S$’000
Acquisitions
Leasehold land and building
Office and warehouse equipment
Furniture and fittings
Motor vehicles
Leasehold improvements
Construction-in-progress
–
344
14
2,605
43
1,615
–
596
18
6,077
13
21,661
29,297(1)
1,278
189
2,980
715
(23,276)(1)
140
36
–
1,059
–
–
–
57
4
229
20
226
Total
4,621
28,365
11,183
1,235
536
Divestments
Investment properties
Motor vehicles
–
–
206
17
2,632
–
–
–
–
–
503
206
–
–
–
–
1,379
76
–
1,500
9
–
815
–
23,608
400
–
–
127
–
Total
2,855
709
1,455
2,324
24,135
Note:
(1)
This includes the reclassification of construction-in-progress of approximately S$23.3 million upon the completion of the
leasehold property located at 7 Penjuru Close.
64
The purchases of the above assets were financed mainly through internal cash resources, bank
borrowings and finance leases.
Acquisitions
As part of our expansion plans, we invested a total of approximately S$2.3 million in office and
warehouse equipment between FY2006 to 1H2009 for the new warehouses added to our portfolio during
the Period under Review.
During the Period under Review, we acquired approximately S$12.7 million worth of motor vehicles. In
FY2006, we purchased additional depot handling equipment such as forklifts that can stack up to 9
containers which increased our storage capacity for containers at our depot. In FY2007, we invested in
prime movers and trailers in order to handle additional demand relating to our new customers for the
transportation management services segment. We also added depot handling equipment during FY2007
and FY2008.
The acquisitions of leasehold properties and buildings in FY2008 refer mainly to the properties located at
7 Penjuru Close and 1 Chia Ping. We invested approximately S$23.6 million in 7 Penjuru Close and
S$4.6 million in 1 Chia Ping. These acquisitions are part of our strategic plans to increase our
warehousing portfolio. We had capitalised the expenses incurred for the construction of the warehouse at
7 Penjuru Close.
On 18 December 2009, SHCL entered into two sale and purchase agreements with SHPD pursuant to
which SHCL agreed to acquire the properties located at 11 Jalan Terusan and Jurong Port Road
conditional upon, inter alia, SHCL and SHPD obtaining in-principle approval from JTC and the relevant
authorities required by JTC for the assignments of 11 Jalan Terusan and Jurong Port Road by SHPD to
SHCL. As at the date of this Prospectus, we have received in-principle approval from JTC for the
assignments. Please refer to the section entitled “Interested Person Transactions and Conflicts of Interest
– Present and On-going Interested Person Transactions” of this Prospectus for more details.
Divestments
During the Period under Review, we divested approximately S$5.3 million worth of motor vehicles. As part
of our strategic move to rationalise our business operations and efficiency, we divested some of our older
handling equipment, prime movers and trailers.
In 1H2009, we sold off one of our investment properties located at 20/20A Tanjong Pagar for S$1.5
million. In July 2009 and September 2009, the Group entered into agreements to dispose of the
investment property at 200 Jalan Sultan and the leasehold land and building at 19 Tuas Avenue 20 for a
consideration of S$0.4 million and S$6.3 million, respectively. The sale of the property at 200 Jalan Sultan
was completed on 9 November 2009. The sale of the property at 19 Tuas Avenue 20 is pending JTC
approval.
On 15 December 2009, we entered into a sale and purchase agreement with HSBC Institutional Trust
Services (Singapore) Limited (as trustee of Mapletree Logistics Trust) (“Mapletree Logistics Trust”) to
dispose of our property at 7 Penjuru Close for a consideration of S$43.0 million as part of the sale and
lease-back arrangement with Mapletree Logistics Trust and the sale and lease-back arrangement was
completed on the same day.
Capital Commitments
As at the Latest Practicable Date, we do not have any material commitment for capital expenditure.
65
Finance Lease Commitments
As at 31 December 2008 and as at the Latest Practicable Date, our Group has the following outstanding
finance lease commitments:
As at
31 December 2008
S$’000
As at the Latest
Practicable Date
S$’000
Within one year
In the second to fifth year inclusive
After five years
2,240
1,315
42
1,354
684
23
Total
3,597
2,061
Our lease commitments refer mainly to the purchase of our prime movers, trailers, motor vehicles and
handling equipment on hire purchase arrangements. Please refer to the section entitled “History and
Business - Properties and Fixed Assets” of this Prospectus for details on our hire purchase agreements.
Our Group expects to meet our lease commitments through our existing working capital.
Save as disclosed above and in the section entitled “Prospects, Strategies and Future Plans” of this
Prospectus, we do not have other outstanding material commitments on capital expenditures, divestments
and commitments as at the Latest Practicable Date.
FOREIGN EXCHANGE EXPOSURE
Our reporting currency is in S$ and all our operations are carried out in Singapore. Save for one of our
customers who transacts with us in US dollars and contributed less than 5% of our sales for the Period
under Review, our Group does not transact in any other currency. Accordingly, we are not subject to any
material foreign exchange exposure.
Currently, we do not have any hedging policy with respect to foreign exchange exposure. In the event that
we are exposed to any foreign currency risks in future, we will monitor closely and will consider hedging
any material foreign exposure should the need arises. Our Group Financial Controller will monitor our
Group’s foreign exchange exposures and propose the need for hedging transactions where necessary.
We will seek the approval of our Audit Committee prior to the use of any financial instruments for hedging
purposes.
In the event we determine that there is a need to hedge our foreign currency exposure, we will establish a
formal policy and such policy (including the type of financial instrument) shall, upon the recommendation
of our Audit Committee, be subject to the review and approval of our Board prior to implementation.
CREDIT MANAGEMENT
Our Group generally extends credit terms of between 30 days and 60 days to our third party customers.
The credit terms extended to every customer may differ as we would take into account the nature of the
contract, creditworthiness of the customer, level of risk involved, financial background, length of business
relationship, frequency of purchases and the size of the transaction. For credit terms lesser than 60 days,
our sales managers are authorised to grant to customers. For credit terms more than 60 days, our sales
managers will need to seek approval from our Managing Director.
The primary method of repayment of trade debts by our customers is via bank transfers or cheques made
payable to our Group. We do not usually receive cash for repayment of trade debts.
66
Our average third party trade receivables’ turnover for FY2006, FY2007, FY2008 and 1H2009 were as
follows:
Average trade receivables’ turnover(1) (days)
FY2006
FY2007
FY2008
1H2009
106(2)
107(2)
94(2)
95(3)
Notes:
(1)
Excludes amount due from related parties.
(2)
Average trade receivables turnover = (Average trade receivables / revenue) X 365 days.
(3)
Average trade receivables turnover for 1H2009 = (Average trade receivables / revenue) X 180 days.
As we focused on the expansion of our customer base from FY2006 to FY2007, we were more flexible in
our credit terms and payment collection to foster goodwill and potential long-term business relationships
with customers. In FY2008, we had undertaken measures to be more stringent in our payment collection
and engaged third parties to collect long outstanding debts, issued letters of demand and also designated
staff to specifically fulfil credit control functions (“Credit Control Procedures”). However, as many
companies were affected by the economic downturn in FY2008, our third party trade receivables’ turnover
days improved slightly from 107 days in FY2007 to 94 days in FY2008. This improving trend was mainly
due to our ability to shorten our collection period as a result of the implementation of our Credit Control
Procedures on our collection of trade receivables. With the implementation of our Credit Control
Procedures, we believe that the average trade receivables’ turnover days for 1H2009 would have
improved if not for the financial crisis.
Notwithstanding our policies, it has been our practice to allow for longer repayment periods for certain of
our major customers without changing the credit terms of 30 to 60 days on a case-by-case basis after
considering the business prospects of our customers. This arrangement is in line with our strategy of
building long-term business relationships with our customers. As such our average trade receivables
turnover has been generally higher than our policy for FY2006, FY2007, FY2008 and 1H2009.
Our finance team monitors all outstanding trade debts. If a customer fails to issue payment on our invoice
within the credit term granted, our credit control personnel will contact the customer to follow up on the
payment status of the overdue debt. If we are still unable to collect payment, we may proceed to issue a
letter of demand to the customer and may ultimately consider legal action, depending on the materiality of
the debt and our relationship with the customer.
We currently do not have a policy for the general provision of doubtful debts. However, we will make
specific provision for doubtful debts on a case-by-case basis based on the likelihood of recovery of a
particular debt, the credit standing of the customer and the customer’s response to our follow-up on the
outstanding debt. We will write off a debt upon identifying the debt as unrecoverable and as
recommended by our Group Financial Controller and upon approval by our Board of Directors.
Our allowance for doubtful trade debts for FY2006, FY2007, FY2008 and 1H2009 were as follows:
FY2006
FY2007
FY2008
1H2009
Allowance for doubtful trade debts made during
the year (S$’000)
125
87
91
76
As a percentage of revenue (%)
0.5
0.2
0.2
0.3
As a percentage of profit before tax (%)
7.1
4.1
1.0
1.6
There were no significant bad debts written-off and provision for impairment of trade debts in the last
three financial years ended 31 December 2008 and 6 months ended 30 June 2009.
67
Ageing schedule of trade receivables
The ageing schedule of our third party trade receivables of approximately S$12.4 million as at 30 June
2009 is as follows:
Trade receivables
S$’000
Percentage of total
trade receivables
%
0 – 30 days
5,258
42.5
31 – 60 days
2,258
18.3
61 – 90 days
1,540
12.4
438
3.5
2,376
19.2
512
4.1
12,382
100.0
Ageing schedule of trade receivables
91 – 120 days
121 – 150 days
Exceeds 151 days
Total
As at 21 January 2010, 86.1% of the outstanding trade receivables as at 30 June 2009 had been
collected and we are constantly in discussions with our customers to recover the remainder of our trade
debts.
Credit terms extended by our suppliers
Credit terms granted by our third party trade creditors vary from supplier to supplier and are also
dependent on our relationship with them and the nature and size of transactions. Generally, credit terms
granted to us by our trade creditors range from 30 days to 60 days.
Our average third party trade payables turnover for FY2006, FY2007, FY2008 and 1H2009 were as
follows:
Average trade payables’ turnover(1) (days)
FY2006
FY2007
FY2008
1H2009
69(2)
48(2)
55(2)
57(3)
Notes:
(1)
Excludes amount due to related parties.
(2)
Average trade payables turnover = (Average trade payables / purchases) X 365 days.
(3)
Average trade payables turnover for 1H2009 = (Average trade payables / purchases) X 180 days.
Between FY2006 and FY2007, our average third party trade payables’ turnover days improved from 69
days to 48 days. This improving trend was mainly due to the shorter credit term granted by the contractor
for the construction of 7 Penjuru Close.
Upon completion of the construction of 7 Penjuru Close, our average third party trade payables’ turnover
days increased gradually from 48 days in FY2007 to 55 days in FY2008 and further to 57 days in
1H2009, which is within the 60 days credit terms granted to us by most of our other suppliers.
68
GENERAL INFORMATION ON OUR GROUP
SHARE CAPITAL
Our Company has only one class of Shares in its share capital. The rights and privileges of our Shares
are stated in our Articles of Association. A summary of the Articles of Association of our Company
relating to the voting rights of Shareholders is set out in Appendix E of this Prospectus. There are no
founder, management, deferred or unissued Shares reserved for issuance for any purpose.
At an extraordinary meeting held on 18 January 2010, our Shareholders approved, inter alia, the
following:
(a)
the consolidation of every two Shares in our issued share capital into one Share (the
“Consolidation”);
(b)
the sub-division of each Share in our issued share capital into 273 Shares (the “Sub-division”);
(c)
the conversion of our Company into a public limited company and the change of our name to
“Cogent Holdings Limited”;
(d)
the adoption of our new set of Articles of Association;
(e)
the allotment and issue of the Invitation Shares which are the subject of the Invitation. The
Invitation Shares, when issued and fully paid-up, will rank pari passu in all respects with the
existing issued and fully paid-up Shares;
(f)
the adoption of the Cogent Holdings Employee Share Option Scheme and the adoption of the
Cogent Holdings Performance Share Plan and the authorisation of our Directors, pursuant to
Section 161 of the Companies Act, to allot and issue Shares upon the exercise of Options granted
under the Cogent Holdings Employee Share Option Scheme and upon grant of Awards under the
Cogent Holdings Performance Share Plan;
(g)
that authority be given, pursuant to Section 161 of the Companies Act, to our Directors to allot and
issue (i) shares in our Company (whether by way of rights, bonus or otherwise); and (ii) any offer,
agreements or options (collectively, “Instruments”) that might or would require shares to be issued,
including but not limited to the creation and issue of (as well as adjustments to) warrants,
debentures or other instruments convertible into Shares at any time and upon such terms and
conditions and for such purposes and to such persons as our Directors shall in their absolute
discretion deem fit, provided that:
(A)
(1)
the aggregate number of Shares to be issued pursuant to such authority (including
Shares to be issued to in pursuance of Instruments made or granted pursuant to such
authority) (the “Shares Issues”) shall not exceed 50.0% of the total number of shares
in the post-Invitation issued share capital of our Company (excluding treasury shares),
of which the aggregate number of Shares to be issued other than on a pro rata basis
to the then existing shareholders of our Company shall not exceed 20.0% of the
number of shares in the post-Invitation issued share capital of our Company
(excluding treasury shares);
(2)
the aggregate number of Shares to be issued pursuant to such authority by way of a
renounceable issue on a pro rata basis to shareholders of our Company (including
Shares to be issued in pursuance of Instruments made or granted pursuant to such
authority) (the “Renounceable Rights Issues”) does not exceed 100% of the number
of shares in the post-Invitation issued share capital of our Company (excluding
treasury shares); and
(3)
the number of Shares to be issued pursuant to the Shares Issue and the
Renounceable Rights Issues shall not, in aggregate exceed 100% of the total number
of issued Shares (excluding treasury shares).
69
(B)
(h)
for the purpose of determining whether the aggregate number of Shares exceeds the 100%
limit, the percentage of issued Shares (excluding treasury shares) shall be based on the
total number of Shares issued pursuant to such authority (unless the SGX-ST’s prevailing
regulations and requirements otherwise provide).
that without prejudice to the generality of, and pursuant and subject to the approval of the general
mandate to issue Shares set out in (g) above, authority be given to the Directors of the Company
to issue Shares other than on a pro rata basis to shareholders of the Company, at a discount not
exceeding 20.0% to the weighted average price of the Shares for trades done on the SGX-ST for
the full market day on which the placement or subscription agreement is signed (or if not available,
the weighted average price based on the trades done on the preceding market day), at any time
and upon such terms and conditions and for such purposes and to such persons as the Directors
may in their absolute discretion deem fit,
provided that:
(A)
in exercising the authority conferred by this resolution (g), the Company shall comply with
the requirements imposed by the SGX-ST from time to time and the provisions of the Listing
Manual for the time being in force (in each case, unless such compliance has been waived
by the SGX-ST), all applicable legal requirements under the Companies Act and otherwise,
and the Articles of Association for the time being of the Company; and
(B)
(unless revoked or varied by the Company in general meeting) the authority conferred by this
resolution (g) shall continue in force until the conclusion of the next Annual General Meeting
of the Company or the date by which the next Annual General Meeting of the Company is
required by law to be held, whichever is the earlier.
Unless revoked or varied by our Company in general meeting, such authority shall continue in full
force until the conclusion of the next Annual General Meeting of our Company or the date by which
the next Annual General Meeting is required by law or by our Articles of Association to be held,
whichever is earlier, except that our Directors shall be authorised to allot and issue new Shares
pursuant to the Shares Issues and the Renounceable Rights Issues notwithstanding that such
authority has ceased.
For the purposes of this resolution and pursuant to Rules 806(3) and 806(4) of the Listing Manual,
“post-Invitation issued share capital” shall mean the enlarged issued share capital of our Company
after the Invitation (excluding treasury shares), after adjusting for (i) new Shares arising from the
conversion or exercise of any convertible securities; (ii) new Shares arising from exercising of any
convertible securities or share options or vesting of share awards outstanding or subsisting at the
time such authority is given, providing the options or awards were granted in compliance with the
Listing Manual; and (iii) any subsequent bonus issue, consolidation or sub-division of Shares.
As at the Latest Practicable Date, the issued and paid-up share capital of our Company is S$2.00
comprising two Shares. Upon the allotment and issue of (i) the 1,999,998 new Shares to Mr Tan Yeow
Khoon and Mr Edwin Tan Yeow Lam pursuant to the Restructuring Exercise, and (ii) the New Shares
which are the subject of the Invitation, the resultant issued share capital of our Company will be
increased to S$27,976,274 comprising 319,000,000 Shares.
70
Details of changes in our issued share capital since the date of incorporation of our Company and
immediately after the Invitation are as follows:
Number of
Shares
Issued and fully paid Shares as at the date of incorporation of our
Company
Resultant
Issued Share
Capital
(S$)
2
2
Issue of 1,999,998 new Shares pursuant to the Restructuring
Exercise
2,000,000
18,284,767
Consolidation
1,000,000
18,284,767
Sub-division
273,000,000
18,284,767
Pre-Invitation share capital
273,000,000
18,284,767
46,000,000
27,976,274
319,000,000
27,976,274(1)
New Shares to be issued pursuant to the Invitation
Post-Invitation share capital
Note:
(1)
The share capital is nett of estimated expenses payable by our Company in connection with this Invitation, such treatment
being in accordance with applicable accounting standards.
The shareholders’ equity of our Company: (i) as at incorporation; (ii) after adjustment to reflect the
Restructuring Exercise, the Consolidation and the Sub-division; and (iii) after the Invitation are set out
below. These statements should be read in conjunction with the combined financial statements of our
Group set out in Appendix A and Appendix B of this Prospectus.
As at date of
incorporation
(S$)
After adjusting
for the Consolidation,
Sub-division and
Restructuring
Exercise
(S$)
After the
Invitation
(S$)
Share capital
2
18,284,767
27,976,274(1)
Reserves
–
–
(580,607)
Total Shareholders’ equity
2
18,284,767
Shareholders’ equity
27,395,667
Note:
(1)
The share capital is nett of estimated expenses payable by our Company in connection with this Invitation, such treatment
being in accordance with applicable accounting standards.
RESTRUCTURING EXERCISE
We undertook the following restructuring exercises to streamline and rationalise our Group structure in
connection with the Invitation:
(a)
Incorporation of our Company
In accordance with the Companies Act, we were incorporated on 18 June 2007 as a private limited
company under the name Cogent Holding Pte. Ltd. Our principal activity is that of an investment
holding company. At the time of incorporation, we had an issued and paid-up share capital of
S$2.00, comprising two Shares of S$1.00 each, held by Mr Tan Yeow Khoon and Mr Edwin Tan
Yeow Lam.
71
(b)
Acquisition of SHCL
On 18 January 2010, we entered into a sale and purchase agreement with Mr Tan Yeow Khoon and
Mr Edwin Tan Yeow Lam for the acquisition of the entire issued share capital of SHCL for a
consideration of S$12,674,975, based on the NTA of SHCL for FY2008 of S$12,674,975. The
consideration was satisfied by the allotment and issue of 1,400,000 Shares in our Company. The
acquisition was completed on 19 January 2010.
(c)
Acquisition of Soon Hock Transportation
Mr Edwin Tan Yeow Lam for the acquisition of the entire issued share capital of Soon Hock
Transportation for a consideration of S$2,885,386, based on the NTA of Soon Hock Transportation
for FY2008 of S$2,885,386. The consideration was satisfied by the allotment and issue of 300,000
Shares in our Company. The acquisition was completed on 19 January 2010.
(d)
Acquisition of Cogent Investment
Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam acquired a 99% stake in Cogent Investment in
July 2008 from Ms Neo Li Tang for an aggregate consideration of S$792,000 and the remaining 1%
interest in the company in May 2009 from Mr Goh Wee Suan, a former employee of our Group, for
a consideration of S$8,000. The consideration for both acquisitions was based on the NTA of
Cogent Investment as at 31 July 2008 of S$657,482. Cogent Investment is an investment holding
company.
Mr Edwin Tan Yeow Lam for the acquisition of the entire issued share capital of Cogent Investment
for a consideration of S$897,250, based on the NTA of Cogent Investment for FY2008 of
S$897,250. The consideration was satisfied by the allotment and issue of 99,998 Shares in our
Company. The acquisition was completed on 19 January 2010.
(e)
Acquisition of Cogent Automotive
Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam acquired a 33% stake in Cogent Automotive in
August 2008 from Ms Neo Li Tang for an aggregate consideration of S$990,000. Mr Tan Yeow
Khoon acquired another 0.33% interest in the company in May 2009 from Mr Goh Wee Suan for a
consideration of S$10,000. The consideration for both acquisitions was based on the NTA of
Cogent Automotive as at 31 July 2008 of S$1,194,733. The remaining 66.67% interest in Cogent
Automotive was held by Cogent Investment.
Cogent Automotive is involved in the processing, transportation and storage of motor vehicles,
including the operation of Export Processing Zones. Prior to the acquisition by Mr Tan Yeow Khoon
and Mr Edwin Tan Yeow Lam in August 2008, the business operations of Cogent Automotive were
managed by Ms Neo Li Tang.
On 18 January 2010, we entered into a sale and purchase agreement with Cogent Investment, Mr
Tan Yeow Khoon and Mr Edwin Tan Yeow Lam for the acquisition of the entire issued share capital
of Cogent Automotive for a consideration of S$1,827,154, based on the NTA of Cogent Automotive
for FY2008 of S$1,827,154. The consideration was satisfied by the allotment and issue of 200,000
Shares in our Company to Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam and Cogent
Investment. Cogent Investment renounced its Shares to Mr Tan Yeow Khoon and Mr Edwin Tan
Yeow Lam. The acquisition was completed on 19 January 2010.
(f)
Conversion of our Company into a public company
We were converted into a public company on 29 January 2010 and changed our name to Cogent
Holdings Limited.
72
GROUP STRUCTURE
Our Group structure immediately after the Restructuring Exercise and as at the date of this Prospectus is
as follows:
100%
SHCL
100%
100%
Soon Hock
Transportation
100%
Cogent
Automotive
Cogent
Investment
The details of our subsidiaries as at the date of this Prospectus are as follows:
Issued and
paid-up
share capital
Effective
equity
interest held
by our
Company
Provision of
warehousing and
container depot
management
services
S$300,000.00
100.00%
Singapore
Transportation of
containers and
cargoes
S$200,000.00
100.00%
2 January 2004
/ Singapore
Singapore
Investment holding
S$400,000.00
100.00%
29 November
1995 / Singapore
Singapore
Processing,
transportation and
storage of motor
vehicles
S$300,000.00
100.00%
Date and
place of
incorporation
Principal
place of
business
SHCL
1 November
1985 / Singapore
Singapore
Soon Hock
Transportation
11 September
1982 / Singapore
Cogent
Investment
Cogent
Automotive
Name
Principal
business
We do not have any associated companies. Our subsidiaries are not listed on any stock exchange.
73
PRINCIPAL SHAREHOLDERS
Ownership Structure
The Shareholders of our Company and their respective shareholdings immediately before the Invitation
and immediately after the Invitation are set out as follows:
Immediately Before the Invitation
Direct Interest
Deemed Interest
Number of
Number of
Shares
%
Shares
%
After the Invitation
Direct Interest
Deemed Interest
Number of
Number of
Shares
%
Shares
%
194,505,948
71.2
–
–
166,391,000
52.2
–
–
70,850,052
26.0
–
–
60,609,000
19.0
–
–
Chan Soo Sen
–
–
–
–
–
–
–
–
Chua Cheow
Khoon Michael
–
–
–
–
–
–
–
–
Teo Lip Hua,
Benedict
–
–
–
–
–
–
–
7,644,000
2.8
–
–
–
–
–
Public
–
–
–
–
92,000,000
28.8
TOTAL
273,000,000
100.0
319,000,000
100.0
Directors
Tan Yeow Khoon(1)
Edwin Tan Yeow
Lam(1)
Other Shareholders
Highyield Mines
Pte Ltd(2)
–
Notes:
(1)
Our Executive Chairman and CEO, Mr Tan Yeow Khoon is the brother of our Managing Director, Mr Edwin Tan Yeow Lam.
(2)
Pursuant to a financial consulting services agreement dated 2 April 2009 (the “Financial Consulting Services Agreement”),
7,644,000 Shares were transferred to Highyield Mines Pte. Ltd. from Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam as
partial payment for financial consulting services rendered to Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam. Such services
include advising Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam on strategising the portfolio of companies jointly owned by
Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam. In addition, Highyield Mines Pte. Ltd. provided services to the Company in
connection with the Invitation for a cash consideration of S$80,000. The shareholders of Highyield Mines Pte. Ltd. are Mr Gea
Ban Peng and Ms Tan Oon Soon, who each hold 50% of the total issued share capital in Highyield Mines Pte. Ltd..
The Shares held by our Directors and Substantial Shareholders do not carry different voting rights from
the Invitation Shares which are the subject of the Invitation.
Save as disclosed above, there are no other relationships between our Directors and Substantial
Shareholders.
Save as disclosed above, our Company is not directly or indirectly owned or controlled by another
corporation, any government or other natural or legal person whether severally or jointly.
There is no known arrangement the operation of which may, at a subsequent date, result in a change in
the control of our Company.
74
Vendors
The name of the Vendors and the numbers of Shares which they will offer pursuant to the Invitation are
set out below:
Shares held immediately
before the Invitation
Vendor Shares offered
pursuant to the Invitation
Percentage
of preInvitation
share
capital
(%)
Percentage
of preInvitation
share
capital
(%)
Number of
Shares
Name
Number of
Vendor
Shares
Shares held after
the Invitation
Number of
Shares
Percentage
of postInvitation
share
capital
(%)
Material
Relationship
with our
Company
Tan Yeow
Khoon
Executive
Chairman
and CEO
194,505,948
71.2
28,114,948
10.3
166,391,000
52.2
Edwin Tan
Yeow Lam
Managing
Director
70,850,052
26.0
10,241,052
3.8
60,609,000
19.0
Highyield
Mines Pte.
Ltd.
Consultant
to Mr Tan
Yeow Khoon
and Mr Edwin
Tan Yeow Lam
7,644,000
2.8
7,644,000
2.8
–
–
Significant Changes in the Percentage of Shareholdings
Save as disclosed under the sections entitled “General Information on our Group - Restructuring
Exercise” and “General Information on our Group - Share Capital” of this Prospectus, there are no
significant changes in the percentage of shareholdings of our Company during the last three financial
years and up to the Latest Practicable Date.
MORATORIUM
To demonstrate their commitment to our Group, our Executive Directors and Substantial Shareholders, Mr
Tan Yeow Khoon and Mr Edwin Tan Yeow Lam, who in aggregate hold 166,391,000 Shares and
60,609,000 Shares, representing approximately 52.2% and 19.0% of our enlarged issued and paid-up
share capital after the Invitation, respectively, have undertaken not to transfer, dispose or realise any part
of such interests in our Company for a period of six months from the date of our Company’s admission to
the Official List of SGX-ST.
75
HISTORY AND BUSINESS
BUSINESS OVERVIEW
We are a full-service logistics management service provider. We offer a comprehensive range of logistics
services and our business operations can be broadly categorised into the following business segments:
Transportation Management Services;
Warehousing and Container Depot Management Services; and
Automotive Logistics Management Services.
Our Directors believe that we are one of the leading logistics providers of transportation management
services in Singapore. We offer trucking services where we load and transport containers which may be
laden or empty, and other cargoes. We also provide freight-coordination services such as trade and
inbound customs documentation services. Our operations are based in Jurong Island and as at the Latest
Practicable Date, we have a fleet that comprises:
more than 100 prime movers, trucks and lorries. Prime movers are the automotive units that can
be attached and detached from different trailers and used to transport larger cargoes or container
units that need to be loaded onto trailers. Our trucks and lorries are used to transport lighter
loads and smaller-sized cargo such as metal drums; and
more than 400 trailers, which are the un-motorised container base units that can be attached and
detached from the prime movers. We offer a wide range of trailers that include 20-foot trailers, 40foot trailers, 45-foot trailers, low-bed trailers and flat-bed trailers.
76
Our fleet is used to transport and move containers between the ports and our warehouses or our
customers’ designated destinations. We also provide transportation services for oil and gas equipment,
including equipment used for the construction of oil rigs. We own all the prime movers, trailers and other
smaller motor vehicles in our fleet, and are therefore able to minimise operational costs and optimise the
utilisation of each vehicle. Our prime movers are equipped with GPS and their movements and delivery
routes are constantly monitored to optimise efficiency. As we are able to determine the location of our
mobile units at a particular point in time, we can deploy the nearest vehicle to the required destination,
thereby minimising travelling time.
We also provide dry hubbing services, which refer to the management of transportation and inventory of
laden containers at dedicated storage facilities pending shipment by our customers, and other ancillary
retrieval and transportation services, including the transportation of petroleum and chemical products
from Jurong Island. Some of our customers store their surplus stock and end-products on our premises,
where storage costs are cheaper than storing them on-site at their own premises. As and when they
require the retrieval or delivery of certain stock, we will provide retrieval and transportation services. Our
dry hubbing operations are distinct from our depot operations, as the latter only involves the storage of
empty containers.
We provide warehousing management services to our customers who lease our warehouse space and
premises. We also provide warehousing services such as packing and palletisation. Our Group also
provides chemical drumming services to its petrochemical related customers as part of our warehousing
services. In addition, we are able to provide vehicular support such as forklifts to facilitate the
warehousing and storage process. We cater our warehouse leasing services according to the
specifications required by our customers. Based on what is required, we can provide and customise open
space storage areas or areas with cages installed to prevent any unauthorised removal of stored items or
cargo.
We provide warehousing services for products such as electronic components, non-perishable items and
other general products. We are also licensed by the NEA, Pollution Control Department to store a diverse
range of chemicals and hazardous materials at some of our warehouses. We ensure that all chemicals
and chemical compounds stored on our premises are handled by qualified and trained personnel who are
familiar with the applicable safety standards and procedures.
We currently lease certain properties from JTC and other lessors for our warehouses. We may, from time
to time as we view appropriate, enter into arrangements with various lessors, including Mapletree
Logistics Trust, for the sale and lease-back of our properties. Please refer to the section entitled “History
and Business – Properties and Fixed Assets” of this Prospectus for more details.
77
We provide container depot management services to our customers through the storage of unladen
shipping containers. Our Directors believe that we have one of the largest depot premises in Singapore
located in a single location which can store more than 20,000 TEUs. We employ our own management
system to optimise storage space and volume. Empty containers are stored on our open space depot
premises where they can be stacked to a maximum height of nine containers. We have our own reach
stackers, empty container handlers and forklift trucks on-site to enable efficient storage and placement.
We also conduct surveys on all incoming containers to assess their condition and determine whether they
require maintenance or repair. We offer cleaning, maintenance and repair works on containers before
they are stacked and stored on our premises at the request of our customers.
78
Our automotive logistics management operations focus solely on the processing, transportation and
storage of motor vehicles. We offer a comprehensive spectrum of services including port and customs
clearance, vehicular transportation, warehousing, and delivery. By eliminating unnecessary interim
transitions between operators, we are able to deliver the motor vehicles to our customers in a more
efficient and cost-effective manner. As we are able to store dutiable motor vehicles on multiple sites under
one Licensed Warehouse licence issued by the Singapore Customs, we are able to cut down on
transportation time and costs by storing vehicles at a site closest to our customers.
We are also involved in Export Processing Zone operations which include the de-registration process and
export of second-hand motor vehicles. As part of our automotive logistics management services, we
assist the LTA in the repossession of cars which have outstanding road taxes and the impounding of
illegally modified cars. We also assist the Singapore Police Force in the removal and towing of accident
vehicles to the designated police pounds. We also offer repossession of motor vehicles and vehicle
grooming services to finance companies.
79
We believe our principal competitive strengths are as follows:
Our Directors believe that we are one of the leading full-service logistics management service providers
in Singapore within our spheres of operation. We have a long operating history spanning over 30 years in
the Singapore logistics industry. As at the Latest Practicable Date, we have a fleet that comprises more
than 100 prime movers, trucks and lorries, and over 400 trailers. As part of our warehousing and
container depot management services, we manage and lease space and premises of up to approximately
4,000,000 sq ft as at the Latest Practicable Date. We believe that we have one of the largest depot
premises in Singapore located in a single location which can store more than 20,000 TEUs, and that our
scale of operations creates a significant advantage over our competitors in that we have the ability to
transport, store and manage large quantities of laden and empty containers and cargo which allows us to
provide more comprehensive logistics services to many of our customers who are multinational
corporations.
We are able to provide quality one-stop logistics solutions to our customers in Singapore at competitive
rates. Our range of services includes cargo and container transportation, transportation of oil and gas
equipment (including equipment used for the construction of oil rigs), dry hubbing, warehousing, depot
services, port and customs clearance and storage of vehicles at our Export Processing Zone and
Licensed Warehouse. Customers can look to us to provide a full suite of logistics solutions as we are able
to cater specifically to our customers’ needs and requests. Due to the nature of our integrated logistics
business, we are able to offer competitive rates and provide efficient services to our customers.
Diversified logistics services structure
We provide different logistics services in the logistics value chain. As such, we have an advantage
against cyclical changes in the economy. In an economic downturn, there would be decreased trade
activities globally, negatively impacting the export and handling operations of many logistics companies.
However, the decrease in trade activities will also drive up the demand for storage, dry hubbing and depot
services as manufacturers would require storage space for their surplus stock and shipping companies
and container leasing companies would require additional space to store their surplus containers. As we
provide warehousing and container depot management services, we would be able to take advantage of
and benefit from this increase in demand. In an economic uptrend, increased trade activities would drive
up demand for quality and cost-effective logistics services. As we provide transportation management
services, we would be able to take advantage and benefit from this increase in demand. We believe that
due to our diversified logistics services structure, we are better able to alleviate any adverse impact on
our business and operations due to cyclical changes in the economy.
One of the few Licensed Warehouse and licensed chemical warehouse operators in the Singapore
logistics industry
We are one of the few Licensed Warehouse operators in the Singapore logistics industry who have been
authorised by the Singapore Customs to operate multiple warehouse sites under one Licensed
Warehouse licence. A Licensed Warehouse allows the storage of both dutiable and non-dutiable goods
without incurring GST. Once custom duty on the goods has been paid, duty paid goods cannot be stored
in Licensed Warehouses and would need to be transported to non-Licensed Warehouses. As we are not
restricted to confining storage to one single site or warehouse, we are able to delineate specific areas in
our warehouses to store both duty-paid and duty-unpaid goods, enabling our customers to store a wider
range of goods on a single site and eliminating the need to incur additional transportation charges
transporting duty paid goods.
We believe that we are one of the few warehouse operators in the Singapore logistics industry who have
been licensed by the NEA, Pollution Control Department for the handling and storage of hazardous
materials. As the availability of licensed chemical storage warehouses is limited in Singapore, we are well
poised to take advantage of any increase in demand for chemical storage in the industry.
80
We have long standing working relationships with many of our key customers. Our relationships with
some of our key customers go back as far as 30 years. Due to our extensive experience in the logistics
industry, our Directors believe that we have a strong understanding of our customers’ needs and
requirements and have built a strong working relationship with many of them. We are able to leverage on
these relationships to allow us to provide our full suite of logistics solutions to them. Our key customers
include large local and international corporations, such as A. P. Moller – Maersk A/S (which is trading
under the name of Maersk Line and represented in Singapore by its agent, Maersk Singapore Pte. Ltd.),
The Polyolefin Company(S) Pte. Ltd., Mitsui O.S.K Lines (which is represented in Singapore by MOL
(Singapore) Pte. Ltd.) and Keppel Logistics. In August 2007, we commenced the provision of warehouse
management services and transportation management services to Keppel Fels as a sub-contractor of
Keppel Logistics. We ceased this arrangement with Keppel Logistics in July 2009. Based on our
relationship with Keppel Logistics, we were able to secure a new contract directly with Keppel Fels in
August 2009 for the provision of transportation management services, in particular seaport clearance and
local trucking services.
Our key members of management have been with us since our inception and establishment. Our founder
and Executive Chairman and CEO, Mr Tan Yeow Khoon and our Managing Director, Mr Edwin Tan Yeow
Lam, have over 30 years of experience in the logistics industry. Together, they have developed our
operations throughout the years into a full-service integrated logistics solutions provider presently. Our
Executive Chairman and CEO and Managing Director are closely supported by a competent team of
Executive Officers who have between them, over 15 years of experience in the logistics industry, some of
whom have been with our Group for more than 10 years.
HISTORY
Our business commenced operations in the 1960s as a family business providing point to point cargo
transportation services with a small fleet of trucks. In the 1970s, our Executive Chairman and CEO, Mr
Tan Yeow Khoon took over the family operations and set up his own sole proprietorship known as Soon
Hock Transport.
In the late 1980s, our operations were expanded to include small scale container depot services and
warehousing, and we obtained our first two plots of land from JTC located at 31 Penjuru Lane, where our
first office was located, and 29 Penjuru Lane. We established a valuable working relationship with Mitsui
O.S.K Lines (which is represented in Singapore by MOL (Singapore) Pte. Ltd.) and provided container
depot and logistics services for their U.S. shipping routes.
In the early 1990s, we established our Safety Management System for the storage of hazardous
chemicals and compounds in our warehouses. We adopted and complied with prevailing statutory safety
requirements and guidelines promulgated by the NEA, Pollution Control Department to ensure the
observance of high safety standards on our premises. As our business was undergoing expansion, we
entered into dedicated container depot business. As part of our expansion, we acquired Cogent Container
Services Pte Ltd, a limited private exempt company in the container depot business, and took over the
management of this company. With the acquisition of Cogent Container Services Pte Ltd, we owned a
new plot of land at 19 Tuas Avenue 20 and started to expand our container depot business. Between
1991 and 1993, we were able to secure TAL International Container Leasing, a major container leasing
company, Samudera Shipping Line Ltd and Zim Integrated Shipping Services Ltd. as our customers by
providing them with container depot management services.
We obtained our ISO9002:1994 certification in May 1995, which ensures that all our working processes
are properly documented and comply with internationally standardised quality system requirements. Our
Directors believe we were one of the first few logistics operators in Singapore to obtain an ISO
certification. Throughout the late 1990s, we continued to expand our transportation management services
and warehousing and container depot management services by expanding our fleet and warehousing
space.
81
In 2002, pursuant to a reorganisation exercise, we consolidated our container and warehousing
operations and our transportation operations under Cogent Container Services Pte Ltd to streamline
operations and maximise our existing resources. In the same year, Cogent Container Services Pte Ltd
changed its name to SH Cogent Logistics Pte Ltd.
In 2005, our Executive Chairman and CEO, Mr Tan Yeow Khoon, and our Managing Director, Mr Edwin
Tan Yeow Lam, entered into the Export Processing Zone business and commenced the provision of
automotive logistics-related services through SHPD.
In 2006, we commenced the operation of a ZG Warehouse at 31 Penjuru Lane.
In 2007, we implemented GPS track and trace systems for our fleet of motor vehicles and electronic
management systems to streamline our operations and enhance efficiency.
In July 2008, to expand our Export Processing Zone business, our Executive Chairman and CEO, Mr Tan
Yeow Khoon, and Managing Director, Mr Edwin Tan Yeow Lam, acquired Cogent Investment and Cogent
Automotive, which are in the business of vehicle-related storage, transportation, port and customs
clearance, freight management and Export Processing Zone operations. Subsequent to the aforesaid
acquisition, we acquired Cogent Investment and Cogent Automotive from Mr Tan Yeow Khoon and Mr
Edwin Tan Yeow Lam pursuant to the Restructuring Exercise. Please refer to the section entitled “General
Information on our Group - Restructuring Exercise” of this Prospectus for further details on the acquisition
of Cogent Investment and Cogent Automotive. With the acquisition of Cogent Investment and Cogent
Automotive, we will be able to position ourselves as a one-stop comprehensive automotive logistics
services provider where we offer Export Processing Zone services including port and customs clearance,
vehicular transportation, warehousing and delivery. In the same month, we moved into our new company
headquarters at 7 Penjuru Close, which also houses a portion of our Export Processing Zone and
warehousing operations. In December 2008, following the acquisition of Cogent Investment and Cogent
Automotive, SHPD ceased its Export Processing Zone business, and currently has no other operations
apart from the leasing of 11 Jalan Terusan and Jurong Port Road to SHCL. Please see the section
entitled “Interested Person Transactions and Conflicts of Interest – Conflicts of Interest” for further details.
In the same year, we were also certified ISO9001:2000 compliant with regard to our warehousing,
storage and drumming services.
In 2009, we entered into a new contract with Keppel Fels for the provision of transportation management
services, in particular seaport clearance and local trucking services for oil and gas equipment (including
equipment used for the construction of oil rigs). Please refer to the section entitled “History and Business
– Major Customers” of this Prospectus for further details.
In 2009, in connection with the Invitation, we undertook a restructuring exercise to streamline and
rationalise the corporate structure of our Group. Please refer to the section entitled “General Information
on our Group - Restructuring Exercise” of this Prospectus for further details.
AWARDS AND CERTIFICATES
In July 2009, we received the Meritorious Defence Partner Award from the Ministry of Defence in
recognition of our contribution towards National Defence.
In 2008, we obtained ISO9001:2000 certification for our quality management systems. ISO9001:2000 is
an internationally-recognised standard for quality management systems maintained by the International
Organization for Standardization.
82
SALES AND MARKETING
We have a dedicated sales and marketing team comprising six members who focus on the promotion and
marketing of our operations. We direct our marketing efforts at a broad range of customers such as
shipping companies, container leasing companies, manufacturers, parallel importers and automobile
distributors. We adopt a pro-active marketing strategy where we would initiate contact and market our
range of services via direct communication with our customers. Our marketing efforts are primarily
focused on corporations which tend to have larger scales of operations, require efficient handling for large
volumes of cargo or require a diverse range of logistics management solutions. As not many local
operators are equipped to handle large volumes of handling work at competitive prices, our Directors
believe our experience in the industry and ability to do so are effective marketing tools to differentiate
ourselves from our competitors. In addition, with our long operation history and track record, we are able
to capitalise on our existing customer base by approaching related or associated companies of our
customers.
Our marketing and business development strategy is primarily centered on maintaining our established
key customer relationships as well as fostering long-term and strong relationships with prospective
customers. Often, customers are concerned about the reliability and efficiency of the potential service
provider. In this regard, our Directors believe our experience, reputation and track record allow us to
market ourselves effectively to our customers.
MAJOR CUSTOMERS
Our top five customers accounted for approximately 28.3%, 34.8%, 42.0%, and 35.5% of our revenue in
FY2006, FY2007, FY2008 and 1H2009, respectively. Our sales to the following customers accounted for
5.0% or more of our total revenue for the periods indicated below:
As a percentage of total revenue (%)
Name of customer
Services Supplied
FY2006
FY2007
FY2008
1H2009
–(1)
7.9
21.2(2)
13.1
Provision of maintenance
and repair services for
container equipment and
warehouse space for
deposit and storage of
containers
0.2(4)
9.6
7.5
7.7
The Polyolefin
Company(S)
Pte. Ltd.
Provision of forklift and
handling services for cargo,
transportation services for
containers and warehousing
and logistics services
4.8
6.8
4.7
5.7
MOL (Singapore)
Pte. Ltd.(5)
Provision of maintenance
and repair services for
container equipment and
warehouse space for
deposit and storage of
containers
6.7
6.9
4.6
6.1
Katoen Natie
Sembcorp
Jurong Pte Ltd
Provision of trucking
services
–
–
SHPD(7)
Rental of premises and
provision of manpower
support
5.1
0.7
Keppel Logistics
Pte. Ltd.
Provision of warehousing,
local port clearance and
transportation services for
oil and gas equipment,
including oil rigs
A.P. Moller Maersk A/S(3)
10.8
3.1
83
0.1(6)
4.4
Notes:
(1)
Our contracts with Keppel Logistics commenced in August 2007.
(2)
The increase in revenue attributable to Keppel Logistics from FY2007 to FY2008 was due to the revenue attributable to
Keppel Logistics for FY2007 being calculated from August 2007, when our contracts with Keppel Logistics commenced, to
December 2007, whereas the revenue attributable to Keppel Logistics for FY2008 was calculated for the full financial year.
(3)
A.P. Moller – Maersk A/S trades under the name of Maersk Line and is represented by its agent, Maersk Singapore Pte. Ltd.
in Singapore.
(4)
A.P. Moller – Maersk A/S accounted for 0.2% of our total revenue for FY2006 as our contracts with A.P. Moller – Maersk A/S
commenced in November 2006.
(5)
Mitsui O.S.K Lines is represented in Singapore by MOL (Singapore) Pte. Ltd.
(6)
As a result of increasing fuel prices and the corresponding increase in the rates of our transportation management services,
our contracts with Katoen Natie Sembcorp Jurong Pte Ltd ceased in early 2007 as we were unable to come to an agreement
on the rates.
(7)
In FY2008, we sub-let levels four and five of our premises at 7 Penjuru Close to SHPD for its Export Processing Zone
operations. The aggregate amount paid by SHPD for the sub-lease of the premises in FY2008 was approximately
S$1,944,000. In January 2009, we ceased the sub-lease arrangement with SHPD. From FY2006 to FY2008, we provided
manpower support and services to SHPD for its Export Processing Zone operations. The aggregate amounts received from
SHPD for the provision of manpower support and services for FY2006, FY2007 and FY2008 were approximately S$517,000,
S$201,000 and S$550,000, respectively. On 31 December 2008, SHPD ceased the operation of its Export Processing Zone
business following the acquisition of Cogent Investment and Cogent Automotive by Mr Tan Yeow Khoon and Mr Edwin Tan
Yeow Lam in August 2008. On 1 January 2009, we ceased the above transaction with SHPD. Please refer to the section
entitled “Interested Person Transactions and Conflicts of Interest” of this Prospectus for more details.
In August 2007, we commenced the provision of warehouse management services and transportation
management services to Keppel Fels as a sub-contractor of Keppel Logistics. We ceased this
arrangement with Keppel Logistics in July 2009. We entered into a new contract directly with Keppel Fels
in August 2009 for the provision of transportation management services, in particular seaport clearance
and local trucking services.
To the best of our Directors’ knowledge as at the Latest Practicable Date, save as disclosed above, we
are not aware of any information or arrangements which would lead to a cessation or termination of our
current relationship with any of our major customers.
As at the date of this Prospectus, save as disclosed above, none of our Directors or Substantial
Shareholders or their Associates has any interest, direct or indirect, in any of the above customers. Save
as disclosed above, none of our customers accounted for 5.0% or more of our total sales in each of the
last three years ended 31 December 2008 and the six months ended 30 June 2009. In addition, our
business or profitability is not materially dependent on any industrial, financial or commercial contract
including a contract with a customer.
84
MAJOR SUPPLIERS
The suppliers that accounted for 5.0% or more of our total purchases in FY2006, FY2007, FY2008 and
1H2009 are set forth below:
Name of supplier
Products/Services
Supplied
As a percentage of total purchases (%)
FY2006
FY2007
FY2008
1H2009
13.0
17.3
–
–
–
0.2(3)
9.1
9.2
2.9(4)
–(5)
2.5
7.1
8.3
1.2(6)
2.3
2.0
2.6
8.7
6.3
7.5
12.5
10.7
8.2
5.5
3.5
3.7
6.7
7.7
Tong Hong Lee
Engineering
Pte. Ltd.
Provision of container
repair services
4.2
Bitubulk Pte Ltd
Diesel
5.4(2)
Chevron Singapore
Pte. Ltd.
Diesel
Hean Nerng Land
Lease Pte. Ltd.
Warehouse space
Mecpec Trading
Pte. Ltd.
Diesel
Mapletree Property
Management Pte. Ltd.
Warehouse space
PSA Corporation
Limited
Depot handling
services
JTC
Land rental
11.1
12.1(1)
Notes:
(1)
The increase in the percentage of total purchases from Tong Hong Lee Engineering Pte. Ltd. for FY2007 was due to the
increase in the demand for our container washing and repairing services as a result of the commencement of our contracts
with A.P. Moller – Maersk A/S in November 2006, which we outsourced to Tong Hong Lee Engineering Pte. Ltd.
(2)
Our relationship with Bitubulk Pte Ltd commenced in August 2005 but they were our major supplier only for FY2006. We
ceased our business relationships with them purely due to commercial reasons and competitive pricing offered by another
supplier and not due to any disputes between the parties.
(3)
Chevron Singapore Pte. Ltd. accounted for 0.15% of our total purchases for FY2006 as our contracts with Chevron Singapore
Pte. Ltd. commenced in December 2006.
(4)
The decrease in the percentage of total purchases from Chevron Singapore Pte. Ltd. in 1H2009 was due to the decrease in
the trucking volume of our Company as a result of a slowdown in the economy since November 2008, as well as the fall in
diesel rates from the highest rate of S$1.80 per litre in FY2008 to a rate of between S$1.00 to S$1.50 per litre in 1H2009.
(5)
Our contracts with Hean Nerng Land Lease Pte. Ltd. commenced in August 2007.
(6)
The decrease in the percentage of total purchases from Mecpec Trading Pte. Ltd. in FY2007 was due to the commencement
of fuel supply agreements signed with another supplier, Chevron Singapore Pte. Ltd. in December 2006.
As at the date of this Prospectus, none of our Directors or Substantial Shareholders or their Associates,
has any interest, direct or indirect, in any of the above suppliers.
Save as disclosed above, none of our suppliers accounted for 5.0% or more of our total purchases in
each of the last three years ended 31 December 2008 and the six months ended 30 June 2009. In
addition, our business or profitability is not materially dependent on any industrial, financial or commercial
contract including a contract with a supplier.
85
SAFETY ASSURANCE
We have implemented separate internal safety guidelines and procedures for our warehouse, depot, and
transportation operations to minimise the occurrence of accidents. All our operations personnel and
ground staff are required to undergo regular internal training sessions to familiarise themselves with our
internal safety guidelines and procedures in relation to their scope of work. For example, our container
depot personnel are required to undergo proficiency tests to ensure they acquire the adequate knowledge
and skills to handle our reach stackers and our transportation personnel are required to undergo special
driving lessons to ensure they are familiarised with the safety procedures for the operation of heavy
vehicles. We also conduct internal monthly checks at our premises to ensure consistent compliance with
all relevant prevailing safety regulations and procedures.
We have complied with the safety regulations prescribed under the Workplace Safety and Health Act as
required by the Ministry of Manpower. Under the Bizsafe programme implemented by the Workplace
Safety and Health Council, we have fulfilled all conditions required to attain Bizsafe Level 3 status, which
requires an approved independent auditor’s report assessing the implementation of risk management in
our Company and confirming that all requirements under the Workplace Safety and Health (Risk
Management) Regulations have been met.
We are also one of the warehouse operators in Singapore that have been licensed by the NEA, Pollution
Control Department to store a diverse range of chemicals and hazardous materials at our warehouses at
19 Tuas Avenue 20, 60 Tuas Crescent and 31 Penjuru Lane. Please refer to the section entitled “History
and Business – Licences” of this Prospectus for more details. As we are involved in the packing,
drumming and storage of hazardous and flammable chemicals and chemical compounds on-site, we are
required to adhere strictly to prevailing governmental and regulatory safety requirements, procedures and
building specifications in relation to the storage of hazardous material.
Our warehouses are equipped with cleaning and wash areas for personnel who have handled chemical
products to ensure employee safety, sprinkler systems with individual heat-activated sprinkler heads and
effective ventilation systems to ensure proper ventilation. Regular on-site surveys are conducted to
ensure that the risk of contamination, spillage and chemically caused damage is kept to a minimum. In
addition, officers from the NEA, Pollution Control Department and SCDF conduct regular spot checks to
ensure consistent compliance with prevailing safety laws and regulations, requisite building safety
specifications and safe disposal of all hazardous substances. SCDF also conducts annual fire safety
checks to ensure warehouses storing flammable materials have properly maintained fire safety systems
and implemented adequate and sufficient fire safety measures. As at the Latest Practicable Date, we
have not encountered any major accidents, or received any warnings from the authorities, in relation to
our handling and storage of hazardous chemicals.
STAFF TRAINING
We believe that our employees are important assets to our Group and we have adopted several human
resource management policies to attract talent, retain good employees, develop and train our employees
to help them maximise their potential.
We organise both in-house and external-training sessions for our employees to equip and keep them
updated with the relevant skills and knowledge required for the various processes involved in the logistics
services provided. We also seek to ensure that through such training sessions, our employees are familiar
with and comply with ISO9001:2000 quality management requirements.
In-house training sessions are conducted by our respective heads of departments for their department
personnel and focus mainly on work safety. For example, we conduct in-house training courses on fire
fighting, chemical spillage control procedures and general risk management.
External training courses are recommended by our departmental heads, based on job requirements and
the staff’s needs. In terms of external training sessions, we have organised a series of courses for our
employees including Forklift Drivers’ Course, Bizsafe Course on Risk Management, Hazardous Material
Transportation Drivers’ Course, and Safe Prime Mover Driving in the Port.
The amount of expenditure incurred in relation to staff training for FY2006, FY2007 and FY2008 was
S$10,000, S$15,000 and S$20,000, respectively.
86
INSURANCE
Due to the nature of our business, we need to ensure that we have sufficient insurance coverage for our
assets and operations in the event of disruption, and we may also be required to compensate for the loss
of, or damage to, our customers’ goods, when such loss or damage occurs while the goods are in our
possession, custody or control. In view of the above, we have taken out, inter alia, the following insurance
policies:
Industrial all-risks, machinery all-risks, public liability, material damage, fire (covering the
buildings at, inter alia, 7 Penjuru Close, 60 Tuas Crescent and 19 Tuas Avenue 20) and
consequential loss for our warehouses and storage facilities;
Bailee’s legal liability and goods in transit for the goods we transport;
Commercial motor vehicle and machinery and equipment all-risks for our fleet of trailers, prime
movers and other motor vehicles; and
Fidelity guarantee, work injury compensation and foreign worker medical policies.
All the policies are in existence and the premiums have been paid thereon. Total insurance expenses
incurred in FY2006, FY2007 and FY2008 were S$490,000, S$519,000 and S$666,000, respectively. Our
insurance policies are reviewed annually to ensure that we have sufficient insurance coverage.
Due to the nature of our warehousing and transportation business, we may, from time to time, pursue
claims against our insurance policies in relation to work injury, damage to cargo, containers or machinery
and road accidents made against us under the above policies. The amounts of the claims made do not
have a significant impact on the financial position of our Company.
Our Directors believe that our current insurance coverage is adequate and sufficient for our current
operations as at the Latest Practicable Date. As at the Latest Practicable Date, there have been no past
occurrences where our profitability has been affected due to significant damage to our properties or
disruptions to our operations. However, any significant damage to our properties or disruption to our
operations, whether as a result of fire, natural and/or man-made causes, may still negatively impact our
results of operations or financial position.
INTELLECTUAL PROPERTY
Trademarks
We own the following trademarks in Singapore:
Relevant
Specification of
Goods/Services
Place of
application
Class
Registration
Number
SOON HOCK
GROUP
Singapore
39
T0813650Z
Registered
on 3 October
2008
Consultancy services
relating to warehousing;
hire of warehouse
storage space;
logistics services and
warehousing
SH COGENT
GROUP
Singapore
39
T0813651H
Registered
on 3 October
2008
storage space;
hire of warehouse
warehousing
Singapore
39
T0813652F
Registered
on 3 October
2008
hire of warehouse
storage space;
warehousing
Trademark
87
Status(1)
Note:
(1)
Our trademarks are valid for a period of 10 years from the date of registration.
Save as disclosed above, our business or profitability is not materially dependent on any patent or
licence.
Patents
We have submitted an application for the patenting of a container depot management process to the
Intellectual Property Office of Singapore on 2 February 2009.
As at the Latest Practicable Date, we are still in the preliminary stages of our patent application process
and are not aware of any reasons which may result in our failure to obtain the patent. Save as disclosed
above, we do not use or own any patents, trademarks or intellectual property which are material to our
business.
PROPERTIES AND FIXED ASSETS
We are the registered proprietors of the following JTC properties:
Location
Tenure
Approximate
land area(1)
(sq m)
Encumbrances
Annual Rental(2)
(S$)
Usage
30 Tembusu Avenue
Singapore 627808(3)
Leasehold
15-year lease
commencing
1 December
2002
30,000
All monies
mortgage
to DBS
327,600(4)
Depot
19 Tuas Avenue 20
Singapore 638830
Leasehold
30-year lease
commencing
1 September
1989
18,096
All monies
mortgage
to DBS
222,411(5)
Warehouse
1 Chia Ping Road
Singapore 619967(6)
Leasehold
60-year lease
commencing
1 April 1967
14,963
All monies
mortgage
to Maybank
292,369(7)
Warehouse
60 Tuas Crescent
Singapore 638740(8)
Leasehold
28-year lease
commencing 1
July 1996
10,590
All monies
mortgage
to DBS
130,416(9)
Warehouse
Notes:
(1)
Area stated rounded to the nearest sq m.
(2)
Rental amounts stated (rounded to the nearest dollar) are calculated based on the aggregate rental paid for the calendar year
commencing 1 January 2009 to 31 December 2009 and exclude any rental rebate granted by JTC for the year commencing 1
January 2009 to 31 December 2009.
(3)
We occupy the property under a building agreement dated 13 August 2003. Pursuant to the building agreement, the JTC
lease in respect of the property shall be issued upon fulfilment of the conditions stated in the building agreement. We have
fulfilled all conditions in the building agreement. Pursuant to correspondence from JTC dated 10 June 2008, JTC has
requested, inter alia, that a proposed structure on the property be completed before the issuance of the JTC lease. We are in
the final stages of construction of the proposed structure, and the construction works are expected to be completed by the
end of the first quarter of 2010 and barring any unforeseen circumstances, we do not foresee any reasons for delay in relation
to the construction.
(4)
Rental payable is based on the monthly rental of S$27,300.
(5)
Rental payable is based on the monthly rental of S$18,468.92 from January to August 2009. The monthly rental was revised
to S$18,664.91 on 1 September 2009, and shall be subject to revision on the first day of September every year. SHCL
entered into an option agreement with Hetat Pte Ltd (“Hetat”) on 14 September 2009 to dispose of the property and Hetat
exercised the option on 5 October 2009. As at the Latest Practicable Date, the disposal is still pending JTC approval and we
88
are currently occupying the premises based on the rental disclosed pending completion of the sale to Hetat. We have
received conditional approval from JTC for the sale to Hetat on 9 December 2009. Please refer to the section entitled
“Management’s Discussion and Analysis of Results or Operations and Financial Conditions – Material Capital Expenditures,
Divestments and Commitments – Divestments” for further details on the disposal of 19 Tuas Avenue 20.
(6)
We acquired the property from PBI Interstate Pte Ltd pursuant to a sale and purchase agreement dated 22 February 2008.
The sale and purchase of the property was completed and the transfer was effected on 19 August 2008.
(7)
Rental payable is based on the monthly rental of S$24,364.10.
(8)
We occupy the property under a building agreement dated 11 June 2001. Pursuant to the building agreement, the JTC lease
in respect of the property shall be issued upon fulfilment of the conditions stated in the building agreement. We have fulfilled
all conditions in the building agreement and have received the Confirmation of Lease from JTC. JTC is currently in the
process of issuing the lease agreement for the property.
(9)
Rental payable is based on the monthly rental of S$10,810.63 from January to June 2009. The monthly rental was revised to
S$10,925.35 on 1 July 2009, and shall be subject to revision on the first day of July every year.
We currently lease the following properties:
Location
Lease
period
Approximate
land area
leased(1)
(sq m)
Annual
rental(2)
(S$)
Lessor
Usage
7 Penjuru Close
Singapore 608779
7 years
commencing
15 December
2009
16,501
4,316,040(3)
HSBC Institutional
Trust Services
(Singapore) Limited
(as trustee of
Mapletree Logistics
Trust)
Office,
warehouse
and Export
Processing
Zone
31 Penjuru Lane
Singapore 609198
8 years
commencing
18 July 2006
13,601
1,763,964(4)
HSBC Institutional
Trust Services
(Singapore) Limited
(as trustee of
Mapletree Logistics
Trust)
Warehouse
Private Lot
A0750602 at
11 Jalan Terusan
11 years
commencing
1 September 2004
48,118
1,440,000(5)
SHPD(6)
Depot
Private Lot
A0750603 at
11 Jalan Terusan
10 years
7 months 16 days
commencing
16 January 2005
16,260
8 Penjuru Road
(Lot 4772 Mukim 8)
Singapore 600000
3 years
commencing
1 January 2009
22,492
837,600
Collector of Land
Revenue for and
on behalf of the
Government
of Singapore
Warehouse
for motor
vehicles
20 Tuas South
Street 1
Singapore 637465
1 year
commencing
1 September 2009
13,088(7)
794,574
Hean Nerng
Land Lease
Pte. Ltd.(8)
Warehouse
20 Tuas South
Street 1
Singapore 637465
37 months
commencing
1 August 2007
6,544(9)
405,740
Hean Nerng
Land Lease
Pte. Ltd.(8)
Warehouse
172 Sin Ming Drive
Singapore 525720
3 years
commencing
16 October 2008
7,223
552,000
SembWaste
Pte. Ltd.
Storage,
repair and
inspection
of motor
vehicles
89
Location
161 Pasir Panjang
Road, Pasir
Panjang Distripark,
Singapore 118497
165 Pasir Panjang
Road, Pasir
Panjang Distripark,
Singapore 118499
Approximate
land area
leased(1)
(sq m)
Lease
period
41 months
commencing
1 November 2008
8,359
Annual
rental(2)
(S$)
521,539
Lessor
Usage
Bougainvillea
Realty Pte Ltd
Storage of
vehicles
A14582 Jalan Papan
Singapore 610000
(Lot 452 & 550
Mukim 6)
3 years
commencing
1 January 2009
12,220
454,800
Collector of
Land Revenue
for and on
behalf of the
Government
of Singapore
Warehouse
1 Penjuru Road
(Lot 6470N Mukim 5)
Singapore 600000
3 years
commencing
1 March 2009
9,741
348,000
Collector of
Land Revenue
for and on
behalf of the
Government
of Singapore
Warehouse
A14583 Jalan Papan
Singapore 610000
(Lot 450 Mukim 6)
31 months
commencing
1 August 2009
4,030
156,000
Collector of
Land Revenue
for and on
behalf of the
Government
of Singapore
Warehouse
566 Woodlands Road
Singapore 728697
1 year
commencing
26 December 2009
2,489
54,648
Ban Teck Seng
Private Limited
Warehouse
Private Lot A0750604
at Jurong Port Road
8 years 2
months 16 days
commencing
16 June 2007
29,026
–(10)
SHPD(11)
Depot
Notes:
(1)
(2)
Amounts stated have been rounded to the nearest dollar.
(3)
Rental payable for the lease will be based on the following rates:
For the year
commencing
15 December
2009
For the year
commencing
15 December
2010
For the year
commencing
15 December
2011
For the year
commencing
15 December
2012
For the year
commencing
15 December
2013
For the year
commencing
15 December
2014
For the year
commencing
15 December
2015
S$4,316,040
S$4,402,368
S$4,490,424
S$4,580,232
S$4,671,840
S$4,765,284
S$4,860,600
90
(4)
Rental payable is based on the fourth year of occupation commencing 18 July 2009 to 17 July 2010. Rental payable for the
remainder of the lease will be based on the following rates:
For the year
commencing
18 July 2010
For the year
commencing
18 July 2011
For the year
commencing
18 July 2012
For the year
commencing
18 July 2013
S$1,799,244
S$1,826,232
S$1,853,628
S$1,881,432
(5)
Rental stated is the aggregate amount payable for both plots of land at Private Lots A0750602 and A0750603 at 11 Jalan
Terusan.
(6)
We are currently sub-leasing Private Lot A0750602 and Private Lot A0750603 at 11 Jalan Terusan from SHPD, which
occupies the properties pursuant to the building agreements between JTC and SHPD dated 27 September 2004 and 12 April
2005, respectively. We are in the process of assigning the building agreements from SHPD to SHCL. We have obtained inprinciple approval from JTC for the assignments. Please refer to the section entitled “Interested Person Transactions and
Conflicts of Interest – Present and On-going Interested Person Transactions” of this Prospectus for further details of the sublease arrangement.
(7)
Area disclosed is calculated based on the ratio of 1 sq ft : 0.0929 sq m, for an area of 140,882 sq ft.
(8)
We hold the property as a sub-tenant under a tenancy agreement with Hean Nerng Land Lease Pte. Ltd., who has entered
into a head lease with Tuas Technology Park Pte Ltd under a lease agreement dated 24 April 2007.
(9)
Area disclosed is calculated based on the ratio of 1 sq ft : 0.0929 sq m, for an area of 70,441 sq ft.
(10)
No rental was charged to SHCL by SHPD for the sub-lease of this property.
(11)
SHPD occupies the property pursuant to a letter of offer from JTC (with the terms and conditions of the building agreement
attached) dated 19 March 2007 and accepted by SHPD on 20 March 2007. We are currently sub-leasing the premises from
SHPD, and are in the process of assigning SHPD’s rights in relation to the property under the letter of offer to SHCL. We
have obtained in-principle approval from JTC for the assignments. Please refer to the section entitled “Interested Person
Transactions and Conflicts of Interest – Present and On-going Interested Person Transactions” of this Prospectus for further
details on the sub-lease arrangement.
We currently occupy the following properties under contractual licences(1):
Location
Private Lot A0848003
Tanjong Kling
9B Benoi Sector
Singapore 629863
210 Turf Club Road
Singapore 287995
(Lot No. C13, C15,
C20 and Carpark F)
Approximate
land area
covered by
licence(2)
(sq m)
Annual
licence fee
(S$)
Licensor
Usage
3 years
commencing
25 February 2008
17,920.00
601,825.80
JTC
Open Space
3 years
commencing
17 September 2007
16,849.30
522,000.00
JTC
Warehouse
2 years
commencing
16 June 2008
434.77
(excluding area
of Carpark F)
504,600.00
Singapore Agro
Agricultural
Pte Ltd
Retail of
motor
vehicles
Licence
period
Notes:
(1)
As a licensee, we do not have exclusive possession of the property, unlike a lessee, and hence do not have the right to
exclude a person from entering the premises and have no control over the freedom of the owner of the property to enter or
use the premises.
(2)
91
As at the Latest Practicable Date, 11 of our leases and licences will expire in FY2010, FY2011 and
FY2012. These leases and licences accounted for an aggregate of approximately 14.4% and 20.3% of
our Group’s total revenue in FY2008 and 1H2009, respectively. As at the Latest Practicable Date, save for
regulatory reasons which may result in the non-renewal of our leases, our Directors are not aware of any
circumstances which would lead to the non-renewal of these leases. Please refer to the section entitled
“Risk Factors – We may not be able to ensure timely renewal of our leases and licences” of this
Prospectus for more details.
We may, from time to time, acquire or dispose properties or enter into arrangements with third party
lessors, such as Mapletree Logistics Trust, for the sale and lease-back of our properties. On 9 November
2009, we entered into a put and call option agreement for the sale and lease-back of the property at 7
Penjuru Close to Mapletree Logistics Trust. The completion of the sale and lease-back arrangement took
place on 15 December 2009. Please refer to the section entitled “Prospects, Strategies and Future Plans
– Trend Information” of this Prospectus for more details.
GOVERNMENT REGULATIONS
In the course of our operations, we are required to comply with various laws and government regulations.
For example, we are required to comply with the specific laws pertaining to the transport and storage of
hazardous substances under the Environmental Protection and Management Act, when warehousing and
transporting hazardous chemicals. Our handling and storage premises must be categorised as “industrial”
by the URA and approved by the relevant authorities. We are also required to comply with the licensing
requirements promulgated by the NEA Pollution Control Department for the storage and handling of
hazardous chemicals and compounds. The NEA Pollution Control Department is the agency primarily
responsible for monitoring compliance with the abovementioned regulations.
We must also comply with the Fire Safety Act in relation to the storage and transport of flammable
materials and substances, and obtain a storage licence from the SCDF for the storage of flammable
materials. Our storage premises must be equipped with the necessary fire prevention measures, such as
heat activated sprinklers, and have sufficient fire safety measures in place.
Our warehousing operations have to comply with the Customs Act and the licensing requirements of the
Singapore Customs under the Customs Act for the operation of our Licensed Warehouses and ZG
Warehouse. In addition, we are also required to comply with the Goods and Services Tax Act regarding
the levy and exemption of GST on goods, which would include dutiable and/or non-dutiable goods that
are stored at our Licensed Warehouses and ZG Warehouse. The Singapore Customs is the agency
primarily responsible for monitoring and ensuring compliance.
In addition, our Export Processing Zone operations require LTA approval for the storage of de-registered
motor vehicles. Our transportation operations are subject to the laws and regulations under the Motor
Vehicles (Third-Party Risks and Compensation) Act which stipulates the laws regarding third-party risks
and compensation for bodily injury or death arising from the use of motor vehicles. The Ministry of
Transport is the agency primarily responsible for ensuring compliance.
Save as disclosed otherwise, our business operations are not subject to any special legislation or
regulatory controls other than those generally applicable to companies and businesses operating in
Singapore, such as amongst others, labour laws and regulations, the Work Injury Compensation Act and
Workplace Health and Safety Act promulgated by the Ministry of Manpower, signage rules and
regulations promulgated by the BCA and tax rules and regulations promulgated by the IRAS.
92
LICENCES
During the course of our operations, we are required to comply with local regulatory and governmental
licensing requirements. As at the Latest Practicable Date, we hold the following licences:
For the
Operations of
Year of Issue
Certificate
Awarding
Authority
Term of Validity
2009
Petroleum & Flammable
Materials Storage
at 31 Penjuru Lane
Singapore 609198
Petroleum &
Flammable
Materials Storage
Licence No:
FS03032009
SCDF
1 April 2009 to
31 March 2010
2009
31 Penjuru Lane
Singapore 609198
to be occupied or
used as industrial,
warehouse & office
Fire Certificate
No: 2008001342
SCDF
29 July 2009 to
28 July 2010
2009
A motor vehicle
Licensed Warehouse
at 7 Penjuru Close,
#06-00
Singapore 608779
–(1)
Singapore
Customs
This licence
will remain
valid until
cancelled or
revoked.
2009
A motor vehicle
Licensed
Warehouse at:
Motor Vehicle
Licensed
Warehouse Licence
Singapore
Customs
1)
161 Pasir Panjang
Road, Pasir Panjang
Distripark,
Singapore 118497;
No: LWV115
This licence
will remain
valid until
cancelled or
revoked.
2)
172 Sin Ming Drive,
Singapore 525720;
and
3)
76 Pioneer Road
#02-00
Singapore 639577
2009
Storage and usage of
hazardous substances
at 19 Tuas Avenue 20
Singapore 638830
Environmental
Pollution Control
(Hazardous
Substance)
Regulations
Permit No:
S0862P090429
NEA, Pollution
Control
Department
22 August 2009
to 21 August 2011
2009
Storage and usage of
hazardous substances
at 60 Tuas Crescent
Singapore 638740
Environmental
Pollution Control
(Hazardous
Substance)
Regulations
Permit No:
S0862P090428
NEA, Pollution
Control
Department
23 July 2009 to
22 July 2011
93
Year of Issue
For the
Operations of
Certificate
Awarding
Authority
Term of Validity
2009
Storage and usage
of hazardous
substances at
31 Penjuru Lane
Singapore 609198
Environmental
Pollution Control
(Hazardous
Substance)
Regulations
Permit No:
S0862P090759
NEA, Pollution
Control
Department
19 November
2009 to
18 November
2010
2009
ZG Warehouse at
60 Tuas Crescent,
Singapore 638740
ZG Warehouse
Licence
Singapore
Customs
This certificate will
remain valid until
cancelled or
revoked.
Note:
(1)
Pursuant to a letter of approval from Singapore Customs dated 4 March 2009, granting us approval for the operation of a
Licensed Warehouse.
Save as disclosed above, our business or profitability is not materially dependent on any licence. Our
licences are generally renewed on an annual basis. As at the Latest Practicable Date, we have not been
unable to renew our licenses. Save as disclosed above and under the section entitled “Risk Factors” of
this Prospectus, to the best of our Directors’ knowledge, we have obtained all requisite approvals and
licences and complied with all relevant laws and regulations that would materially affect our current
business operations.
94
COMPETITION
We operate in a competitive industry and we are subject to competition from existing competitors and
new market entrants in the future. Our competitors are mainly local logistics companies and our Directors
believe that the principal competitive factors in the logistics industry include, inter alia, experience, track
record, range of services provided, costs, quality of service and marketing strategy.
To the best of our knowledge and belief, our major competitors in the industry for our various business
segments are as follows:
Business Segment
Name of Competitor
Warehousing and Container Depot
Management Services
Warehousing
Poh Tiong Choon Logistics Limited
Freight Links Group (in relation to its warehousing
property management operations)
Poh Tiong Choon Logistics Limited
CWT Limited
Depot
OCWS Logistics Pte Ltd
Eng Kong Holdings Limited
Allied Container Services Pte. Ltd.
Toll (Singapore) Pte. Ltd.
Menlo Worldwide Logistics Pte. Ltd.
To the best of our knowledge, there are no published independent statistics or official sources of
information on the market share of our competitors or for us to accurately measure our market share in
the industry.
None of our Directors, Controlling Shareholders, or Substantial Shareholders has any interest, direct or
indirect, in any of the above competitors.
95
PROSPECTS, STRATEGIES AND FUTURE PLANS
PROSPECTS
The prospects of the logistics industry remain relatively positive and are influenced by the following
factors:
Singapore, being one of the world’s largest refining centres, is seeking to increase its refining capacity
from the current 1.3 million(1) barrels per day to move the refinery industry up to the next level. The
expansion of existing refineries and optimisation of refinery operations will not only help to maintain
Singapore’s share of global refining capacity but more importantly, put the country in a good stead to
enhance the growth of its oil trading activities by creating the critical volume of export-oriented refining
throughput.
Since the formation of Jurong Island’s petrochemicals hub, companies on the island have benefited from
lower operating costs through creating synergistic relationships, sharing facilities, integrated utilities, tax
incentives, and proximity to important regional markets. More often than not, the output of one plant is the
input for neighbouring plants. The advent of Jurong Rock Cavern, a massive underground facility for the
storage of crude oil, condensates and naptha, will further facilitate the importance of the refinery industry
on the island. Given the rapid industrialisation of countries in the region, the demand for refined oil to run
their economies ensure that the refinery industry will continue to be a robust one.
Being one of the few logistics service providers with an established presence in Jurong Island, coupled
with our experience in serving customers from the petrochemical industry, our Directors believe we are
well poised to benefit from the expected increase in trading and refining activities on the island.
In addition, Singapore is one of the largest manufacturers of jack-up rigs in the world, which are used in
oil and gas extractions. Correspondingly, numerous equipment and structures would need to be
transported and stored during the course of each project, which can stretch over a number of years. The
transportation and warehousing industry would have to play an important role in this aspect, particularly
in providing special transportation for machinery and equipment that cannot be fitted to standard
containers such as large generators and turbines.
Singapore is expected to remain one of the largest manufacturers of offshore oil rigs in the world. As
such, our Directors believe that given our experience in providing specialised logistics services for the oil
and gas industry, we are in a position to secure more contracts for the provision of such specialised
Trend towards outsourcing logistics function
In recent years, a large number of companies have continued to focus on their core business processes
and rationalise on relatively less core functions such as logistics. Manufacturing companies and
automotive manufacturers have invested a lot of resources in the management of their supply chains,
which is proving to be a costly proposition. Manufacturers are also seeking to release their warehouse
holdings, thereby minimising their capital assets risk due to depreciation and increasing their liquidity
position. Hence, a trend of outsourcing internal logistics processes to third party logistics firms has
emerged in recent years. This enables manufacturing companies and automotive manufacturers to
streamline their supply chains, bringing greater control and efficiency to the manufacturing companies at
a competitive price and helps to maintain their competitive edge in the market. Consequently, our
Directors believe that this trend of outsourcing provides opportunities for logistics service providers to
grow our business.
(1)
Source: http://www.edb.gov.sg/edb/sg/en_uk/index/industry_sectors/energy/industry_background.html. The above information
has been taken from the webpage entitled “Industry Background” on the website of the Singapore Economic Development
Board (“EDB”). EDB has not consented to the inclusion of such information and thereby is not liable for such information
under Sections 253 and 254 of the Securities and Futures Act. We are unable to verify the accuracy of the relevant
information and have included such information in its proper form and context in this Prospectus.
96
ORDER BOOK
Due to the nature of the business for our transportation management services and automotive logistics
management services, we do not have an order book for these business segments as we provide our
transportation management services and automotive logistics management services to our customers as
and when they are required. Our contracts with customers under these segments do not specify
committed volumes and job orders are generally received and fulfilled on a daily basis and as such an
order book is not relevant for these segments.
For our warehousing and container depot management services business, as at 30 June 2009, we have
secured sub-lease agreements that will give rise to aggregate rental income of approximately S$15.4
million. Since 1 July 2009 to the Latest Practicable Date, we have secured additional sub-lease
agreements that will give rise to further aggregate rental income of approximately S$11.7 million. As
these sub-leases are of a short-term nature, we have 2 sub-leases expiring in FY2009, 28 sub-leases
expiring in FY2010 and 40 sub-leases expiring beyond 2010. Although we have entered into sub-lease
agreements with our customers, they may be subject to termination and default in payment. As such, the
value of our order book is not indicative of our overall financial performance.
TREND INFORMATION
For FY2009, our Directors observe the following trends for our areas of operation:
(i)
Transportation Management Services and Warehousing and Container Depot Management
Services
In light of the current global economic downturn, our Directors observed that there is a decrease
and believe that it is likely that there may be further decrease in demand for transportation
management services. However, our Directors remain confident that there will still be demand for
warehousing and container depot management services. With the export industry being affected,
our Directors have observed a slight peak in demand for warehousing and container depot
management services as exporters and container leasing operators may seek to outsource their
storage needs to minimise expenses and this may continue in the next six months. In addition, our
Directors observed an increase in property prices and foresee a general increase in property
prices in the next six months and rent payable as most of our properties are leased from JTC and
JTC properties have built-in rental increment components. However, such rental increments are
generally capped at 5.5% per annum.
(ii)
We intend to expand our vehicle logistics operations via an increase in numbers in our fleet of
vehicles. Our Directors expect the demand for our automotive logistics management services to
remain stable. The high investment cost and the long term obligations associated with owning
warehouses may result in our customers outsourcing their internal logistics processes to third party
automotive logistics service providers like our Company. Being one of the few Export Processing
Zone operators in Singapore also allows us to be engaged in the operations with respect to the deregistration process and export of second-hand motor vehicles process. Further, our Directors have
observed a slight increase in the prices of both new and second-hand vehicles for FY2009. As
such, our Directors believe that the above factors would translate into stable demand for our
automotive logistics management services.
On 9 November 2009, we entered into a put and call option agreement for the sale and lease-back of the
property at 7 Penjuru Close to Mapletree Logistics Trust at an aggregate consideration of S$43.0 million
on a willing-buyer willing-seller basis and supported by an independent valuation report. The completion
of the sale and lease-back arrangement took place on 15 December 2009. We expect that this
transaction will have a material positive impact on the financial position of our Group as it would allow our
Group to recognise a one-time capital gain of approximately S$19.7 million upon completion of the sale
and lease-back agreement with Mapletree Logistics Trust assuming that the transaction had taken place
on 1 January 2008. Of the S$19.7 million capital gain, S$12.7 million would have been recognised in
FY2008 and the remaining S$7.0 million would have been recorded as deferred income and amortised
97
over seven years in accordance with our Group’s accounting policies. In addition, the gearing of our
Group as at 30 June 2009 (based on total borrowings) would have been lowered from 2.79 to 0.83 as a
result of the sale and lease-back transaction. Please refer to Appendix C – “Independent Auditor’s Report
and Unaudited Proforma Group Financial Information” of this Prospectus for more information.
Save as disclosed above, and as disclosed in the section entitled “Risk Factors” of this Prospectus and
barring any unforeseen circumstances, our Directors are not aware of any other significant recent trends
in production, sales and inventory and in the costs and selling prices of our products or any other known
trends, uncertainties, demands, commitments or events that are reasonably likely to have a material
effect on our net sales or revenue, profitability, liquidity or capital resources, or that would cause financial
information disclosed in this Prospectus to be not necessarily indicative of our future operating results or
financial condition. Please also refer to the section entitled “Cautionary Note on Forward-Looking
Statements” of this Prospectus.
We believe that we are one of the leading players in the Singapore logistics industry in terms of the size
of our fleet of transportation vehicles. With the Singapore Government’s initiative to establish Singapore
as a global integrated logistics hub, our Directors believe that the Singapore logistics industry will
continue to grow and that there will be increasing demand for full-service logistics management services.
As such, we intend to capitalise on our strengths and increase our scale of operations to cater to the
anticipated increase in demand for our logistics services.
(a)
Expansion of container depot operations and warehousing space
We will continue to invest in our assets and seek larger plots of land not only to expand our
warehousing capacity and scale of operations, but also to consolidate our existing operations on
various sites into standalone integrated full-service logistics hubs, offering our customers an
enhanced range of services at competitive prices at any single location. We intend to invest
approximately S$6.1 million towards the expansion of container depot operations and warehousing
space.
(b)
Expansion of vehicle logistics operations
We intend to expand our existing fleet of vehicles. The expansion of our fleet of vehicles and
ancillary equipment will enable us to handle the anticipated increase in demand for our
transportation management services, as well as our automotive logistics management services. We
intend to invest approximately S$2.0 million of the net proceeds from the Invitation to this end. We
also expect to continue to provide specialised logistics solutions to our customers, including those
in the oil and gas industry.
Expanding overseas through strategic partnerships, acquisitions or joint ventures
We are assessing the viability for expanding our business operations into countries such as China,
Malaysia, Thailand and Vietnam. We believe that with our extensive experience in the local logistics
industry, we will be able to apply our expertise overseas to expand our business. We plan to expand
overseas and develop new business opportunities through strategic partnerships, acquisitions or joint
ventures. With our experience in the various aspects of the logistics value chain, our Directors believe that
we will be able to enhance and add value to our strategic partnerships.
Keeping abreast of systems, software and vehicular improvements and upgrades
In order to remain competitive and provide customised logistics management solutions, our Directors
believe that keeping abreast of mechanical or technological advancements is crucial to providing quality
service to our customers. We intend to continue to invest in other electronic management systems to
increase work efficiency and customer convenience, vehicular upgrades or acquire newer models of
transportation and storage vehicles to enhance the range of cargo transportable and enhance our current
work processes to reduce costs.
98
With our track record, our Directors believe branding is increasingly an important factor especially with
our plans to expand overseas. Brand awareness and cognisance will be crucial and we intend to expand
our marketing network to achieve effective brand dissemination through active advertising and marketing
campaigns. We intend to focus on enhancing brand awareness both locally and overseas and cultivating
a strong brand image as a reliable and quality logistics management service provider. Please refer to the
section entitled “History and Business – Sales and Marketing” of this Prospectus for further details.
Based on our current operations, our Directors believe there is still potential for growth into other areas of
logistics-related operations. For example, we may expand our automotive logistics operations to include
conducting pre-delivery inspections for out-going vehicles for our customers who have stored their stock
on our premises. We may also expand our operations to include the facilitation and management of car
auctions, which is currently carried out by our customer, GE Money, who currently stores their
repossessed and impounded cars on our premises. We believe lateral expansion is key to staying
competitive in the logistics industry. By being able to provide our customers with a wider range of
services, we offer our customers increased convenience at competitive rates as we would be able to
streamline our operations.
99
DIRECTORS, EXECUTIVE OFFICERS AND STAFF
MANAGEMENT REPORTING STRUCTURE
Board of Directors
Executive Chairman and
CEO
Tan Yeow Khoon
Managing Director
Edwin Tan Yeow Lam
Director of Business
Development
Tan Kok Sian
General Manager,
Chairman's Office
Yap Chee Sing
General Manager,
Corporate Planning
Heng Lee Chuang
Group Financial
Controller
Loy Suan Choo
General Manager,
Sales & Marketing
Tan Min Cheow,
Benson
General Manager,
Operations
Yeo Peng Koon
100
DIRECTORS AND EXECUTIVE OFFICERS
Our Directors are entrusted with the responsibility for the overall management of our Company. Our
Directors’ particulars are set out below:
Directors
Name
Age
Address
Occupation
Tan Yeow Khoon(1)
55
No. 28 Jalan Sayang Singapore 418676
Executive Chairman and CEO
Edwin Tan Yeow Lam(1)
50
No. 8B Lorong L Telok Kurau
Singapore 425426
Managing Director
Chan Soo Sen
53
335D Pasir Panjang Road
Singapore 118664
Executive Vice President
Chua Cheow Khoon
Michael
59
10 Surrey Road #09-02 Singapore 307748
Chief Investment Officer
Teo Lip Hua, Benedict
46
90 King’s Drive Singapore 266457
Lawyer
Note:
(1)
Our Executive Chairman and CEO, Mr Tan Yeow Khoon is the brother of our Managing Director, Mr Edwin Tan Yeow Lam.
Save as disclosed, none of our Directors are related either by blood or by marriage to each other or by
any other family relationship, or to our Substantial Shareholders.
Information on the areas of responsibility, the business and working experiences of our Directors are set
out below:
Mr Tan Yeow Khoon is our Executive Chairman and CEO and the founder of our Group. Mr Tan Yeow
Khoon has more than 40 years of experience in the logistics services industry. Mr Tan Yeow Khoon began
working in his family business in 1969. In the 1970s, Mr Tan Yeow Khoon took over the family business
and set up his own sole proprietorship known as Soon Hock Transport which provided transportation
management services for the delivery of goods from the Singapore ports to designated premises of its
customers. Mr Tan Yeow Khoon has been instrumental in the growth of the family business, which has
since expanded to include container storage and warehouse management services. As the Executive
Chairman and CEO of our Group, Mr Tan Yeow Khoon oversees all business operations of our Group,
including making major business and finance decisions.
Mr Edwin Tan Yeow Lam is our Managing Director. Since 1976, Mr Edwin Tan Yeow Lam has been
assisting his brother, Mr Tan Yeow Khoon in the operations of the family business throughout its growth
and expansion and has accumulated more than 33 years of experience in the logistics services industry.
As the Managing Director of our Group, Mr Edwin Tan Yeow Lam oversees the business operations of our
Group, in particular the procurement of equipment and goods required for the business of our Group, and
is jointly involved in the decision making process of key business plans of our Group with Mr Tan Yeow
Khoon.
Mr Chan Soo Sen is our Lead Independent Director. Mr Chan is currently the Executive Vice President of
SingBridge International Singapore Pte Ltd, which he joined in June 2009. He also holds directorships in
a few listed companies in Singapore. Mr Chan is a Member of Parliament for Joo Chiat Constituency. Mr
Chan has served in various ministries including the Ministry of Community Development, Youth and
Sports, Ministry of Education, and Ministry of Trade and Industry from 1997 to 2001. In 2001, he was
appointed Minister of State. He retired from ministerial appointments in May 2006 and joined Keppel
Corporation Ltd as Director, Chairman’s Office to oversee general management of staff from July 2006 to
June 2009. Before entering politics, Mr Chan played an instrumental role in the starting up of the ChinaSingapore Suzhou Industrial Park as its founding chief executive officer in 1994 and was also the
executive director of the Chinese Development Assistance Council in 1992. Mr Chan graduated from the
University of Oxford, United Kingdom in 1978 and holds a Master in Management Science from the
University of Stanford, United States of America.
101
Mr Chua Cheow Khoon Michael is our Independent Director. He is currently the chief investment officer of
Sapphire Corporation Limited. He has more than 30 years of experience in financial and management
accounting and general management and has held senior positions in multinational companies including
Gilbeys Australia Pty Ltd, Texas Instruments Singapore Pte Ltd, Fairchild Singapore Pte Ltd, Reckitts &
Colman Singapore Pte Ltd, the Singapore Technologies group of companies and the Sembcorp group of
companies, as well as Delifrance Singapore Pte Ltd. Mr Michael Chua holds a degree in accountancy
from the Mitchell College of Advanced Education and is a Certified Public Accountant of Australia.
Mr Teo Lip Hua, Benedict is our Independent Director. He has more than 18 years of experience in the
legal industry and specialises in corporate finance, mergers and acquisitions, general corporate matters
and China-related matters. He is currently a Functional Director at Drew & Napier LLC. He was previously
a director at Yeo Wee Kiong Law Corporation and a partner in Allen & Gledhill and KhatterWong. He
holds a Bachelor of Laws and a Master of Laws (Chinese Law) from the National University of Singapore.
He is also a member of the Singapore Academy of Law and the Law Society of Singapore.
As at the Latest Practicable Date, the list of present and past directorships of each Director over the last
five years preceding the Latest Practicable Date (excluding those held in our Company) is set out below:
Name
Present Directorships
Past Directorships
Tan Yeow Khoon
Group Companies
Group Companies
Cogent Automotive Logistics Pte. Ltd.
Cogent Investment Group Pte. Ltd.
None
Other Companies
Other Companies
Cogent Builders Pte. Ltd.(2)
Soon Hock Hazmat Pte. Ltd.(3)
Cogent Logistics Pte Ltd(3)
Megafab Engineering Pte Ltd(4)
Soon Hock Investment Group
Pte. Ltd.(5)
Soon Hock Group Engineering
Pte. Ltd.(3)
Soon Hock Tuas Development
Pte. Ltd.(3)
Soon Hock Property Development
Pte. Ltd.(6)
Soon Hock Holding Pte. Ltd.(3)
Soon Hock Realty Pte. Ltd.(3)
E. Grow Techpark Pte. Ltd.(7)
Dimensions Investment Pte Ltd
Group Companies
Group Companies
None
Other Companies
Other Companies
(1)
Edwin Tan Yeow Lam
E. Grow Techpark Pte. Ltd.(7)
Pte. Ltd.(3)
Soon Hock Tuas Development
Pte. Ltd.(3)
Soon Hock Holding Pte. Ltd.(3)
(1)
102
Dimensions Investment Pte Ltd
Soon Hock Investment Group Pte. Ltd. (5)
Pte. Ltd.(6)
Name
Past Directorships
Chan Soo Sen
Group Companies
Group Companies
None
None
Other Companies
Other Companies
Breadtalk Group Limited
Midas Holdings Limited
Sunmoon Food Company Limited
GEP Asia Holdings Pte. Ltd.
MDR Limited
Ong Teng Cheong Labour Leadership
Institute
Heartfelt Care Pte. Ltd.
Group Companies
Group Companies
None
None
Other Companies
Other Companies
MEGA-ZINE Pte. Ltd.
Wan Kang Holdings Pte. Ltd.
Onezine Pte. Ltd.
Sky China Petroleum Services Ltd.
BMD Consulting Pte Ltd
Tianjin Dagang Shengkang Petroleum
Technology Development Co., Ltd
Tianjin Ganghua Petroleum Project
Technology Service Co., Ltd
Group Companies
Group Companies
None
None
Other Companies
Other Companies
None
Yeo Wee Kiong Law Corporation
Chua Cheow Khoon Michael
Notes:
(1)
The principal activity of Asia Pacific Wine Hub Pte. Ltd. is the specialised storage and distribution of wine. Please refer to the
section “Interested Person Transactions and Conflicts of Interests – Conflict of Interests” of this Prospectus for further details.
(2)
The principal activities of Cogent Builders Pte. Ltd. are the provision of general contractor services and building construction
services. Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam are not involved in the day-to-day management of the company.
(3)
This company is inactive as it currently does not engage in any business activities.
(4)
The principal activities of Megafab Engineering Pte Ltd are the manufacture of rattan and cane furniture and mechanical
engineering works. Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam are not involved in the day-to-day management of the
company.
(5)
The principal activity of Soon Hock Investment Group Pte. Ltd. is an investment holding company which will own 100% of the
issued and paid-up share capital of Asia Pacific Wine Hub Pte. Ltd. and currently owns the property located at 76 Pioneer
Road. Please refer to the section “Interested Person Transactions and Conflicts of Interests – Conflict of Interests” of this
Prospectus for further details.
(6)
The principal activity of Soon Hock Property Development Pte. Ltd. is in the business of property development. Please refer to
the section “Interested Person Transactions and Conflicts of Interests – Conflict of Interests” of this Prospectus for further
details.
(7)
The principal activity of E. Grow Techpark Pte. Ltd. is investment holding.
Each of Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam has agreed, pursuant to his Service
Agreement, that he shall not, during the period of employment and up to 24 months after the termination
of his employment, engage, directly or indirectly, in any business which compete with any business
carried on or proposed to be carried on by our Group. Please refer to the section entitled “Directors,
Executive Officers and Staff – Service Agreements” for further details.
103
In addition, each of Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam has agreed, pursuant to separate
Deeds of Non-Competition dated 18 December 2009 that he shall not directly or indirectly carry on or be
engaged or interested in any other business, trade or occupation whatsoever which competes with any
business carried on or proposed to be carried on by our Group for as long as he remains a director
and/or Controlling Shareholder of the Company. Please refer to the section entitled “Interested Persons
Transactions and Conflicts of Interest – Conflict of Interests” for further details.
Executive Officers
Our Directors are assisted by our team of Executive Officers whose particulars are as follows:
Name
Age
Address
Occupation
Tan Kok Sian(1)
55
Block 63 Tampines Ave 1 #11-01
Singapore 529777
Director of Business
Development
Tan Min Cheow, Benson(2)
27
No. 28 Jalan Sayang
Singapore 418676
General Manager, Sales and
Marketing
Yap Chee Sing
49
896 Upper Bukit Timah Road #01-29
Singapore 678189
General Manager, Chairman’s
Office
Heng Lee Chuang
41
Block 648 #08-58 Woodlands Ring Road
Singapore 730648
General Manager, Corporate
Planning
Yeo Peng Koon
52
Block 570 Hougang Street 51 #05-107
Singapore 530570
General Manager, Operations
Loy Suan Choo
37
Block 469B Admiralty Drive #14-67
Singapore 752469
Group Financial Controller
Notes:
(1)
Our Director of Business Development, Mr Tan Kok Sian, is the brother-in-law of our Executive Chairman and CEO, Mr Tan
Yeow Khoon and our Managing Director, Mr Edwin Tan Yeow Lam.
(2)
Our General Manager, Sales and Marketing, Mr Tan Min Cheow, Benson, is the son of our Executive Chairman and CEO, Mr
Tan Yeow Khoon and the nephew of our Managing Director, Mr Edwin Tan Yeow Lam.
Save as disclosed, none of our Executive Officers are related either by blood or by marriage to each
other or by any other family relationship, or to any of our Substantial Shareholders of our Company.
Information on the areas of responsibility, the business and working experiences of our Executive Officers
are set out below:
Mr Tan Kok Sian is our Director of Business Development. He has more than 16 years of experience in
the logistics services industry. He joined SHCL in 1993 and has since been in charge of the business
development of our Group. He oversees the container depot operations of our Group and is responsible
for the sales and marketing and customer relations of our Group. Prior to joining our Group, Mr Tan Kok
Sian worked as an administrator in McGregor Sea & Air Services Ltd. from 1974 to 1993 where he was
responsible for distribution and collection of aviation parts and consignment stocks as well as customer
relations of the company.
Mr Tan Min Cheow, Benson is our General Manager, Sales and Marketing. He joined SHCL in 2004 after
completing his studies. His job responsibilities include liaising with major suppliers of our Group,
managing the sales and marketing and customer relations of our Group, as well as overseeing the
automotive logistics operations of our Group. Mr Tan Min Cheow, Benson has been instrumental in
obtaining certain key contracts for our Group, including contracts for the provision of transportation
management services to Keppel Logistics and Keppel Fels, as well as assisting in securing the contracts
for the provision of transportation and warehousing services to The Polyolefin Company (S) Pte. Ltd.
104
Mr Yap Chee Sing is our General Manager, Chairman’s Office and is responsible for assisting the
Chairman in all matters relating to the operations of our Group. His job responsibilities include liaising
with the management staff and executing management plans assigned by the Chairman. Prior to joining
SHCL in 2008, Mr Yap Chee Sing had accumulated more than 18 years of experience in the logistics
industry. He was Assistant Manager and later promoted to Senior Manager, Purchasing and Logistics at
Asahi Techno Vision (S) Pte Ltd from 1996 to 2008 where he was responsible for the management of the
purchasing, operations and physical distribution department. From 1989 to 1996, he was employed under
the Steamers Maritime Holding Limited group of companies where he held various positions and was
responsible for various aspects of the operations of the company such as transport operations and
shipping sales. Mr Yap Chee Sing holds a Bachelor of Theology from the Southeast Asia Union College,
Singapore and a Bachelor of Science in Business Administration from Walla Walla College, USA.
Ms Heng Lee Chuang is our General Manager, Corporate Planning and oversees all corporate affairs,
property transactions and special projects of our Group. Her job responsibilities include liaising with
regulatory authorities, financial institutions, legal firms and property agents as well as strategising,
executing and negotiating all matters with respect to property acquisitions and disposals. She is also
responsible for all company projects that relate to business development. Prior to joining SHCL in 1993,
Ms Heng Lee Chuang was an accounts executive at Questor Management Pte Ltd from 1991 to 1993,
Chambers Property Management Services Pte Ltd from 1990 to 1991 and Bennette & Bennette
International Pte. Ltd. from 1988 to 1989 where she was responsible for preparing the accounts of the
clients of these companies. Ms Heng Lee Chuang holds a Diploma in Business Studies from Ngee Ann
Polytechnic. She is a member of the Association of Chartered Certified Accountants. Ms Heng Lee
Chuang has been with our Group and its finance and accounting department for more than 16 years. She
is familiar with the finance matters and operations of our Group and was the head of the finance and
accounting department for approximately five and a half years prior to her promotion. As a member of the
Association of Chartered Certified Accountants, Ms Heng Lee Chuang is a qualified accountant, and with
her knowledge and experience, she is well-qualified to be our Group Financial Controller. However, in
recognition of her past performance and contribution to our Group, the Company decided to promote Ms
Heng Lee Chuang to her current position to handle high-level strategic decisions on a Group basis and to
develop new businesses. In view of Ms Heng Lee Chuang’s promotion, Mr Loy Suan Choo was employed
to strengthen the finance and accounting team and assume the post of our Group Financial Controller.
Mr Yeo Peng Koon is our General Manager, Operations. He joined SHCL in 2006 and is responsible for
overseeing the warehousing and transportation operations of our Group. Prior to joining SHCL, Mr Yeo
Peng Koon had accumulated approximately 25 years of experience in the logistics management industry.
He was the personal assistant to the managing director of Pacific Container Godown (Singapore) Pte Ltd
from 1978 to 1997, an operation supervisor at Singapura Warehousing & Transportation and Sin Guan
Chan Transport from 1976 to 1978 and from 1974 to 1976, respectively, where he oversaw the
warehousing and transportation operations of these companies. From 1972 to 1974, he was a shipping
tally clerk at Henry Transport and Agencies where he was responsible for checking and recording of all
on-board consignments.
Mr Loy Suan Choo is the Group Financial Controller and is responsible for the full spectrum of
accounting, taxation and treasury functions in our Group. He is also in-charge of liaising with and
reporting to our Audit Committee on any accounting and financial matters of our Group. He oversees the
day-to-day functioning of the finance and accounting operations, internal controls, regulatory compliance
in taxation and group financial reporting matters, and investor relations of our Group. Prior to joining the
Group in July 2009, he held the positions of senior accountant and finance manager at two listed
companies, namely Acma Limited where he worked from November 2000 to April 2002 and MTQ
Corporation Limited where he worked from July 2002 to July 2009, and was in charge of group financial
reporting, internal audit and taxation matters of these companies. Mr Loy Suan Choo was a senior auditor
at Ernst & Young LLP from 1997 to 2000. Prior to that, he worked in Moore Stephens LLP, a certified
public accounting firm from 1996 to 1997. Mr Loy Suan Choo graduated from Nanyang Technological
University with a Bachelor of Accountancy in 1996. He is a member of the Institute of Certified Public
Accountants of Singapore.
105
As at the Latest Practicable Date, the list of present and past directorships of each Executive Officer over
the last five years preceding the Latest Practicable Date is set out below:
Name
Past Directorships
Tan Kok Sian
Group Companies
Group Companies
None
Other Companies
Other Companies
CDAS Logistics Alliance (Ltd.)(2)
Megafab Engineering Pte Ltd(5)
Pte. Ltd.(4)
SH Tuas Development Pte. Ltd.(4)
Pte. Ltd.(6)
Soon Hock Realty Pte. Ltd.(4)
Hubtra International Pte Ltd
Group Companies
Group Companies
None
None
Other Companies
Other Companies
Soon Hock Investment Group
Pte. Ltd.
None
Group Companies
Group Companies
None
None
Other Companies
Other Companies
None
None
Group Companies
Group Companies
None
None
Other Companies
Other Companies
None
None
Group Companies
Group Companies
None
None
Other Companies
Other Companies
None
None
Group Companies
Group Companies
None
None
Other Companies
Other Companies
None
None
(1)
Tan Min Cheow, Benson
Yap Chee Sing
Heng Lee Chuang
Yeo Peng Koon
Loy Suan Choo
Notes:
(1)
The principal activity of APWH is the specialised storage and distribution of wine. Mr Tan Kok Sian is not involved in the dayto-day management of the company. Please refer to the section “Interested Person Transactions and Conflicts of Interests –
Conflict of Interests” of this Prospectus for further details on the operations of APWH.
106
(2)
CDAS Logistics Alliance (Ltd.) is a company set up by the Container Depot Association (Singapore) (CDAS), an association
for container depot operators in Singapore, to disseminate information to member companies. This company does not carry
out any business operations that compete with our Group. SHCL, as a member of CDAS, obtains updates and information in
relation to the container depot industry through our representative, Mr Tan Kok Sian.
(3)
The principal activities of Cogent Builders Pte. Ltd. are the provision of general contractor services and building construction
services. Mr Tan Kok Sian is not involved in the day-to-day management of the company.
(4)
This company is inactive as it currently does not engage in any business activities.
(5)
The principal activities of Megafab Engineering Pte Ltd are the manufacture of rattan and cane furniture and mechanical
engineering works. Mr Tan Kok Sian is not involved in the day-to-day management of the company.
(6)
The principal activity of SHPD is in the business of property development. Mr Tan Kok Sian is not involved in the day-to-day
management of the company. Please refer to the section “Interested Person Transactions and Conflicts of Interests – Conflict
of Interests” of this Prospectus for further details on the operations of SHPD.
Mr Tan Kok Sian has undertaken, pursuant to a Deed of Non-Competition dated 18 December 2009, that
he shall not, inter alia, engage directly or indirectly in any business which competes with any business
carried on or proposed to be carried on by our Group during the period of his employment.
There are no arrangements or undertakings with any Substantial Shareholders, customers, suppliers or
others, pursuant to which any of our Directors and Executive Officers was appointed.
TERMS OF OFFICE
Our Directors do not currently have a fixed term of office. Every Director shall retire from office once
every three years and for this purpose, at each annual general meeting, one-third of the Directors for the
time being (or, if their number is not a multiple of three, the number nearest to but not less than one-third)
shall retire from office by rotation. A retiring Director shall be eligible for re-election.
The Directors to retire in every year shall be those, subject to retirement by rotation, who have been
longest in office since their last re-election or appointment.
SERVICE AGREEMENTS
On 18 December 2009, our Company entered into separate service agreements (the “Service
Agreements”) with our Executive Chairman and CEO, Mr Tan Yeow Khoon and our Managing Director,
Mr Edwin Tan Yeow Lam.
The Service Agreements are for an initial period of three years (the “Initial Term”) commencing with
effect from the date of admission of our Company to the Official List of the SGX-ST, subject to automatic
renewal for another one-year term on the same terms and conditions upon the expiry thereof. During the
Initial Term, the parties may terminate the respective service agreement by either party giving not less
than six months’ notice in writing to the other. We may also terminate the Service Agreements by notice
upon the occurrence of certain events such as serious misconduct, bankruptcy or criminal conviction.
Pursuant to the terms of the respective Service Agreements, Mr Tan Yeow Khoon and Mr Edwin Tan Yeow
Lam will receive an annual remuneration of S$353,400 and S$228,000, respectively. In addition, each of
Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam shall, in respect of each financial year in which the
unaudited consolidated profit before tax of our Group (before deducting for such Bonus) (the “Profit
Before Tax”) is at least S$2 million, be entitled to a variable bonus equivalent to a percentage of the
Profit Before Tax as follows:
Profit Before Tax
Bonus
S$2 million and above but less than S$5 million
S$5 million and above but less than S$8 million
S$8 million and above
3%
4%
5%
107
Our Group will also extend to each of Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam insurance,
medical and dental benefits in line with our Group’s prevailing policy. All entertainment expenses,
travelling, hotel and other out-of-pocket expenses incurred by our Executives in connection with our
Group’s business will also be borne by our Group.
Under the terms of the Service Agreements, each of Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam
are subject to certain restrictive covenants as described below. Each of Mr Tan Yeow Khoon and Mr
Edwin Tan Yeow Lam are also prohibited, during the term of their Service Agreements and their
termination thereof, to disclose any information, which they know or ought to reasonably know to be
confidential concerning the business of our Group, so far as the information had come to their knowledge
during their appointment with our Company.
Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam are prohibited until 24 months after termination of their
employment to do, inter alia, the following:
(a)
being directly or indirectly engaged or interested in any capacity in or concerned in the conduct of
any other business competing with any business carried on or proposed to be carried on by our
Group; and/or
(b)
solicit for himself or anyone else the business of any supplier, customer or client of our Group.
Our Group has previously entered into various contracts of employment with all of our Executive Officers.
Such contracts typically provide for the salaries payable to our Executive Officers, their working hours,
annual leave and grounds of termination.
Save as disclosed above, there are no other existing or proposed Service Agreements between our
Company or our subsidiaries and any of our Directors or Executive Officers. There are no existing or
proposed service agreements entered into or to be entered into by our Directors with our Company or
any of our subsidiaries which provide for benefits upon termination of employment without cause.
Had the Service Agreements for Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam been effective on 1
January 2008, the total remuneration payable to the Executives for FY2008 would have been
approximately S$831,000 and the profit after income tax would have been approximately S$6.7 million
instead of S$7.0 million.
REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS
The compensation paid or payable to each of our Directors and Executive Officers for services rendered
to us in all capacities for FY2007, FY2008 and FY2009 (estimated), in bands of S$250,000 per annum(1),
were or are as follows:
Directors(1)
Tan Yeow Khoon
Edwin Tan Yeow Lam
Chan Soo Sen
Chua Cheow Khoon Michael
Executive Officers(1)
Tan Kok Sian
Tan Min Cheow, Benson
Yap Chee Sing
Heng Lee Chuang
Yeo Peng Koon
Loy Suan Choo
108
FY2007
FY2008
Band B
Band A
–
–
–
Band B
Band A
–
–
–
FY2007
FY2008
Band
Band
–
Band
Band
–
Band
Band
Band
Band
Band
–
A
A
A
A
A
A
A
A
A
FY2009
(estimated)(2)
Band
Band
Band
Band
Band
B
A
A
A
A
FY2009
(estimated)(2)
Band
Band
Band
Band
Band
Band
A
A
A
A
A
A
Notes:
(1)
Band A: Compensation from S$0 to S$250,000 per annum.
Band B: Compensation of between S$250,001 to S$500,000 per annum.
(2)
For the purposes of this estimation, no account is taken of the bonus or benefits in kind that our Executive Directors are
entitled to under their respective service agreements, the details of which are set out under the section entitled “Directors,
Management and Staff – Service Agreements” of this Prospectus.
We have not set aside or accrued any amounts for the provision of any pension, retirement or similar
benefits for the Period under Review.
The compensation paid to each of our Directors and Executive Officers for each financial year will be
disclosed in bands in our annual report.
EMPLOYEES
All our employees are located in Singapore. We did not have any temporary employees in FY2006,
FY2007 and FY2008, respectively.
Our employees are not unionised. We have had no industrial disputes, strikes or work stoppages by our
employees leading to major production disruption or government intervention since we commenced
operations.
We set out below the total number of our employees and the various departments in which they serve as
at 31 December 2006, 2007 and 2008.
As at
31 December
2006
As at
31 December
2007
As at
31 December
2008
Management(1)
Accounts and Finance
Operations
Administration
7
4
174
9
9
7
287
10
10
10
327
8
Total
194
313
355
Department
Note:
(1)
The management department may, from time to time, be involved in the sales and marketing of our services.
The increase in the number of employees from 31 December 2006 to 31 December 2008 was due to the
increase in size and scope of our business as a result of the commencement of warehouse management
services and transportation services to Keppel Fels as a sub-contractor of Keppel Logistics, as well as
the expansion of our automotive logistics management services.
The basis of determining the remuneration of employees who are related to our Directors and Substantial
Shareholders is the same as the basis for determining the remuneration of other unrelated employees,
and shall depend on factors such as the employee’s work performance, job scope, responsibilities and
seniority of position.
CORPORATE GOVERNANCE
Our Directors recognise the importance of corporate governance and the offering of high standards of
accountability to our Shareholders.
Board Practices
Our Articles of Association provide that our Board will comprise at least one Director. Our Directors do
not currently have a fixed term of office. All Directors are required to submit themselves for re-nomination
and re-election at regular intervals and at least once every three years. A retiring Director shall be eligible
for re-election. Our Directors to retire in each year shall be those, subject to retirement by rotation, who
have been longest in office since their last re-election or appointment.
109
Pursuant to the Code of Corporate Governance issued by the Committee on Corporate Governance (as
from time to time amended, modified or supplemented) (the “Code of Corporate Governance”), the
chairman of the directors and the chief executive officer or managing director of a company should be
separate persons, to ensure an appropriate balance of power, increased accountability and greater
capacity of the Board for independent decision-making.
Although Mr Tan Yeow Khoon serves as the Executive Chairman and CEO of our Company, the Board is
of the opinion that it is not necessary to separate the roles of the Chairman and CEO after taking into
account the size, scope and the nature of the operations of the Group. Mr Tan Yeow Khoon is the founder
of our Group and has played an instrumental role in developing the business of our Group. He has
considerable industry experience and has also provided our Group with strong leadership and vision. It is
hence the view of our Board that it is in the best interests of our Group to adopt a single leadership
structure. Our Board is of the view that there are sufficient safeguards and checks in place to ensure that
management is accountable to our Board as a whole. Our Nominating Committee, Remuneration
Committee and Audit Committee comprise and are all chaired by Independent Directors. In addition, Mr
Chan Soo Sen has been appointed as the Lead Independent Director of our Company and is available to
our Shareholders in respect of concerns which contact through the normal channel of the Chairman has
failed to resolve or for which such contact is inappropriate.
Hence, our Directors are of the view that there are sufficient safeguards and checks to ensure that the
process of decision-making by our Board is independent and based on collective decision-making without
Mr Tan Yeow Khoon being able to exercise considerable concentration of power or influence.
Audit Committee
Our Audit Committee comprises our Independent Directors, Mr Chan Soo Sen, Mr Chua Cheow Khoon
Michael and Mr Teo Lip Hua, Benedict. The Chairman of our Audit Committee is Mr Chua Cheow Khoon
Michael.
Our Audit Committee shall meet periodically to perform the following functions:
(a)
review with the external auditors the audit plan, scope of work, their evaluation of the system of
internal accounting controls, their management letter and our management’s response, and results
of our audits conducted by our internal and external auditors;
(b)
review the half-yearly and annual, and quarterly, if applicable, financial statements and results
announcements before submission to our Board for approval, focusing in particular, on changes in
accounting policies and practices, major risk areas, significant adjustments resulting from the audit,
the going concern statement, compliance with financial reporting standards as well as compliance
with the Listing Manual and any other statutory/regulatory requirements;
(c)
review the effectiveness and adequacies of our internal control and procedures, including
accounting and financial controls and procedures and ensure co-ordination between the external
auditors and our management, reviewing the assistance given by our management to the auditors,
and discuss problems and concerns, if any, arising from the interim and final audits, and any
matters which the auditors may wish to discuss (in the absence of our management where
necessary) and if necessary, appoint a suitable accounting firm as internal auditor for our Group;
(d)
review and discuss with the external auditors any suspected fraud or irregularity, or suspected
infringement of any relevant laws, rules or regulations, which has or is likely to have a material
impact on our Company’s operating results or financial position, and our management’s response;
(e)
consider the appointment or re-appointment of the external auditors and matters relating to the
resignation or dismissal of the auditors;
(f)
review the appointments of, and remuneration of persons (upon appointment and upon renewal of
their respective service contracts), occupying managerial positions who are related to our
Directors, CEO or our Controlling Shareholders;
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(g)
review and approve transactions falling within the scope of Chapter 9 and Chapter 10 of the Listing
Manual (if any);
(h)
review any potential conflicts of interest;
(i)
review the adequacy of potential business risk management processes;
(j)
review and approve all hedging policies and instruments (if any) to be implemented by our Group;
(k)
undertake such other reviews and projects as may be requested by our Board of Directors and
report to our Board its findings from time to time on matters arising and requiring the attention of
our Audit Committee;
(l)
review and establish procedures for receipt, retention and treatment of complaints received by our
Group, inter alia, criminal offences involving our Group or its employees, questionable accounting,
auditing, business, safety or other matters that impact negatively on our Group; and
(m)
generally to undertake such other functions and duties as may be required by statute or the Listing
Manual, and by such amendments made thereto from time to time.
Our Audit Committee will meet, at a minimum, on a quarterly basis. Apart from the duties listed above,
our Audit Committee shall commission and review the findings of internal investigations into matters
where there is any suspected fraud or irregularity, or failure of internal controls or infringement of any
Singapore law, rules or regulations which has or is likely to have a material impact on our Group’s
operating results and/or financial position. Each member of our Audit Committee shall abstain from
reviewing any particular transaction or voting on such resolution in respect of which he is or may be
interested in.
Upon the admission of our Company to the Official List of the SGX-ST, our Audit Committee will appoint a
suitable accounting firm (the “Internal Auditor”) for the purpose of internal audit to review and assess the
system of internal controls of our Group on an annual basis. Before each annual internal audit, the
appointed Internal Auditor will propose an internal audit plan to our Audit Committee and obtain the
approval of our Audit Committee before the appointed Internal Auditor can proceed with the internal audit
plan. The findings of such internal audit will be submitted by the appointed Internal Auditor to our Audit
Committee for their review.
Our Independent Directors do not have any existing business or professional relationship of a material
nature with our Group, our Directors or Substantial Shareholders.
Suitability of our Group Financial Controller
Our Audit Committee notes that Mr Loy Suan Choo has more than 13 years of experience in finance and
accounting, and his most recent experience includes being the finance manager of MTQ Corporation
Limited from July 2002 to July 2009, a company listed on the Main Board of the SGX-ST. Our Audit
Committee further notes that Mr Loy Suan Choo will be guided by our General Manager, Corporate
Planning, Ms Heng Lee Chuang, who has worked for more than 16 years in our Group and is familiar with
the finance matters and operations of our Group. Prior to joining our Group, Ms Heng Lee Chuang has
had former accounts and audit experience in various firms in Singapore. Ms Heng Lee Chuang is also a
member of the Association of Chartered Certified Accountants.
Our Audit Committee has, in the course of preparing for the listing of our Company on SGX-ST, observed
and noted Mr Loy Suan Choo’s responses to questions posed to him at various meetings and
discussions. Based on the responses provided by Mr Loy Suan Choo to such questions, our Audit
Committee is of the view that he has demonstrated his understanding of the business of, and familiarity
with the finance and accounting functions of, our Group.
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Our Audit Committee has also noted the manner in which Mr Loy Suan Choo has worked together with
the Independent Auditors, on the combined financial statements for inclusion in this Prospectus and has
applied the proper accounting treatment. His treatment and preparation of, and his discussion with the
Independent Auditors, on the said combined financial statements demonstrated his knowledge of the
Singapore Financial Reporting Standards, and listing requirements in Singapore. Our Audit Committee
has taken into account Mr Loy Suan Choo’s qualifications and working experience and is of the view that
Mr Loy Suan Choo is competent to perform his functions and duties as the Group Financial Controller.
In addition, our Audit Committee shall, in one year’s time from the listing of our Company on the SGX-ST,
review the suitability for continued service of Mr Loy Suan Choo as our Group Financial Controller and
the overall effectiveness of the finance functions of our Group, taking into consideration the comments of
the Independent Auditors.
Opinion of our Group Financial Controller
Mr Loy Suan Choo has been appointed as our Group Financial Controller from July 2009. In connection
with the Invitation, Mr Loy Suan Choo has worked closely with the Independent Auditors in the
preparation of the financial statements in this Prospectus, and has provided, verified and substantiated
operational information to the Independent Auditors and the working group based on his knowledge of
our Group’s operations, accounting policies and financial position. Through his close involvement in the
preparation of this Prospectus, Mr Loy Suan Choo is of the opinion that the Group’s financial records are
free of material misstatements, and he is not aware of any significant weakness in the controls of the
Group.
Remuneration Committee
Our Remuneration Committee comprises Mr Chan Soo Sen, Mr Chua Cheow Khoon Michael and Mr Teo
Lip Hua, Benedict. The Chairman of our Remuneration Committee is Mr Teo Lip Hua, Benedict.
Our Remuneration Committee will recommend to our Board a framework of remuneration for our
Directors and Group Financial Controller, and determine specific remuneration packages for each
Executive Director and our Group Financial Controller.
The recommendations of our Remuneration Committee shall be submitted for endorsement by our entire
Board. All aspects of remuneration, including but not limited to our Directors’ and Group Financial
Controller’s salaries, allowances, bonuses, options and benefits-in-kind shall be covered by our
Remuneration Committee. Our Remuneration Committee shall also review the remuneration of senior
management and employees related to our Directors. Each member of our Remuneration Committee
shall abstain from voting on any resolutions in respect of his remuneration package or that of employees
related to him.
Nominating Committee
Our Nominating Committee comprises Mr Chan Soo Sen, Mr Chua Cheow Khoon Michael and Mr Teo
Lip Hua, Benedict. The Chairman of our Nominating Committee is Mr Chan Soo Sen.
Our Nominating Committee will be responsible for:
(a)
re-nomination of our Directors having regard to our Director’s contribution and performance;
(b)
determining annually whether or not a director is independent;
(c)
deciding whether or not a director is able to and has been adequately carrying out his duties as a
director; and
(d)
reviewing and approving any new employment of related persons and the proposed terms of their
employment.
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Our Nominating Committee will decide how our Board’s performance is to be evaluated and propose
objective performance criteria, subject to the approval of our Board, which will address how our Board
plans to enhance long-term Shareholders’ value. The performance evaluation will also include
consideration of our Share price performance over a five-year period vis-à-vis the Singapore Straits
Times Index and a benchmark index of its industry peers. Our Board will also implement a process to be
carried out by our Nominating Committee for assessing the effectiveness of our Board as a whole and for
assessing the contribution of each individual Director towards the effectiveness of our Board. Each
member of our Nominating Committee shall abstain from voting on any resolutions in respect of the
assessment of his performance or re-nomination as Director.
COGENT HOLDINGS EMPLOYEE SHARE OPTION SCHEME
On 18 January 2010, our Shareholders adopted a share option scheme known as the Cogent Holdings
Employee Share Option Scheme (the “Share Option Scheme”).
The Share Option Scheme will provide eligible participants with an opportunity to participate in the equity
of our Company and to motivate them towards better performance through increased dedication and
loyalty. The Share Option Scheme, which forms an integral and important component of a compensation
plan, is designed to primarily reward and retain employees of the Group whose services are vital to our
well being and success.
As at the Latest Practicable Date, no Options have been granted under the Share Option Scheme.
Objectives of the Share Option Scheme
The objectives of the Share Option Scheme are as follows:
(a)
to motivate participants of the Share Option Scheme to optimise their performance standards and
efficiency and to maintain a high level of contribution to our Group;
(b)
to retain key employees of the Group whose contributions are essential to the long-term growth
and prosperity of our Group;
(c)
to instil loyalty to, and a stronger identification by participants with the long-term prosperity of, our
Company;
(d)
to attract potential employees with relevant skills to contribute to our Group and to create value for
our Shareholders; and
(e)
to align the interests of participants with the interests of our Shareholders.
Summary of the Share Option Scheme
The rules of the Share Option Scheme may be inspected by Shareholders at the registered office of our
Company for a period of six months from the date of registration of this Prospectus. The following is a
summary of the rules of the Share Option Scheme:
Participants
The Share Option Scheme allows for participation by confirmed employees of the Group and Nonexecutive Directors (including Independent Directors) who have attained the age of 21 years on or before
the relevant date of grant of the Option, provided that none shall be an undischarged bankrupt or have
entered into a composition with his creditors.
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Administration of the Scheme
The Share Option Scheme shall be administered by a committee comprising of members of the
Remuneration Committee and the Nominating Committee (the “Administration Committee”), with
powers to determine, inter alia, the following:
(a)
persons to be granted Options;
(b)
number of Options to be offered; and
(c)
recommendations for modifications to the Share Option Scheme.
However, in compliance with the requirements of the Listing Manual, a participant of the Share Option
Scheme who is a member of the Administration Committee will not be involved in any deliberation or
decision in respect of Options to be granted to that participant.
Size of the Share Option Scheme
The total number of shares over which the Administration Committee may grant Options on any date,
when added to the number of shares issued and issuable in respect of all Options granted under the
Share Option Scheme (including the Share Plan and any other share option schemes of our Company)
shall not exceed 15.0% of the number of issued Shares (including treasury shares, as defined in the
Companies Act) on the day preceding the date of the relevant grant.
Our Directors believe that such a limit gives us sufficient flexibility to decide on the number of Option
Shares to offer to the employees of the Group. The number of eligible participants is expected to grow
over the years. Our Company, in line with its goals of ensuring sustainable growth, is constantly reviewing
its position and considering the expansion of its talent pool which may involve employing new employees.
The employee base, and thus the number of eligible participants will increase as a result. The number of
Options offered must also be significant enough to serve as a meaningful reward for contribution to our
Group. The Administration Committee shall exercise its discretion in deciding the number of Option
Shares to be granted to each employee of the Group which will depend on the performance and value of
the employee to our Group.
Options entitlements
The number of Option Shares to be offered to a participant shall be determined at the absolute discretion
of the Administration Committee, which shall take into account criteria such as rank, past performance,
years of service and potential for future development of that participant.
Options, exercise period and exercise price
The Options that are granted under the Share Option Scheme may have exercise prices that are, at the
discretion of the Administration Committee:
(a)
set at a discount to a price (“Market Price”) equal to the average of the last dealt prices for the
Shares on the SGX-ST for the five consecutive market days immediately preceding the relevant
date of grant of the relevant Option of a Share (subject to a maximum discount of 20.0%), in which
event, such Options may be exercised after the second anniversary from the date of grant of the
Option (“Incentive Option”); or
(b)
fixed at the Market Price (“Market Price Option”). Market Price Options may be exercised after the
first anniversary of the date of grant of that Option.
Options granted under the Share Option Scheme will have a life span of five years.
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Grant of Options
There are no fixed periods for the grant of Options. As such, offers of the grant of Options may be made
at any time from time to time at the discretion of the Administration Committee.
However, in the event that an announcement on any matter of an exceptional nature involving
unpublished price sensitive information is imminent, offers may only be made after the second market day
from the date on which the aforesaid announcement is made.
Termination of Options
Options may lapse or be exercised earlier in circumstances which include the termination of the
employment of the participant in our Group, the bankruptcy of the participant, the death of the participant,
a take-over of our Company, and the winding-up of our Company.
Acceptance of Options
The grant of Options shall be accepted within 30 days from the date of the offer. Offers of Options made
to grantees, if not accepted before the closing date, will lapse. Upon acceptance of the offer, the grantee
must pay our Company a consideration of S$1.00.
Rights of Shares arising from the exercise of Options
New Shares arising from the exercise of Options, when allotted and issued shall be subject to all the
provisions of the Memorandum and Articles of Association of our Company and shall rank pari passu in
all respects with the then existing issued Shares, save for any dividend, rights, allotments or distributions,
the record date of which falls on or before the relevant exercise date of the Options. For such purposes,
record date means the date as at the close of business on which our Shareholders must be registered in
order to participate in any dividends, rights, allotments or other distributions.
Duration of the Share Option Scheme
The Share Option Scheme shall continue in operation for a maximum period of 10 years commencing on
the date on which the Share Option Scheme is adopted by our Company in general meeting, provided
that the Share Option Scheme may continue for any further period thereafter with the approval of our
Shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be
required.
Abstention from voting
Participants who are Shareholders are to abstain from voting on any Shareholders’ resolution relating to
the Share Option Scheme and any modification thereof. Participants may, however, act as proxies of
Shareholders in respect of the votes of such Shareholders in relation to any such resolutions, provided
that specific instructions have been given in the proxy forms on how the votes are to be cast in respect of
the resolution.
Modifications to the Share Option Scheme
The Share Option Scheme may be modified and/or altered from time to time by a resolution of our Board,
subject to the compliance with the requirements of the Listing Manual and the requirements of any other
regulatory authorities as may be necessary.
However, no modification or alteration shall adversely affect the rights attached to Options granted prior to
such modification or alteration except with the written consent of such number of participants under the
Share Option Scheme who, if they exercised their Options in full, would thereby become entitled to not
less than 75.0% of the number of all the Shares which would fall to be allotted upon exercise in full of all
outstanding Options under the Share Option Scheme.
No alteration to certain rules of the Share Option Scheme which would be to the advantage of
participants under the Share Option Scheme, such as the repricing of the exercise price of the Options
and the replacement of existing Options, shall be made except with the prior approval of our
Shareholders in general meeting.
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Grant of Incentive Options with a discounted exercise price
The ability to offer Incentive Options to participants of the Share Option Scheme with exercise prices set
at a discount to the prevailing market prices of our Shares will operate as a means to recognise the
performance of participants as well as to motivate them to continue to excel while encouraging them to
focus more on improving the profitability and return of our Group above a certain level which will benefit
all Shareholders when these are eventually reflected through share price appreciation. Incentive Options
would be perceived in a more positive light by the participants, inspiring them to work hard and produce
results in order to be offered Incentive Options, as only employees of the Group who have made
outstanding contributions to the success and development of our Group would be granted Incentive
Options.
The flexibility to grant Incentive Options is also intended to cater to situations where the stock market
performance has overrun the general market conditions. In such events, the Administration Committee
will have absolute discretion to:
(a)
grant Incentive Options set at a discount to the Market Price of a Share (subject to a maximum
limit of 20.0%); and
(b)
determine the participants to whom, and the Incentive Options to which, such reduction in exercise
prices will apply.
In determining whether to give a discount and the quantum of the discount, the Administration Committee
shall be at liberty to take into consideration factors including the performance of our Company, our Group,
the performance of the participant concerned, the contribution of the participant to the success and
development of our Group and the prevailing market conditions. The Administration Committee will
determine on a case-by-case basis whether a discount will be given, and if so, the quantum of the
discount, taking into account the objective that is desired to be achieved by our Company and the
prevailing market conditions. As the actual discount given will depend on the relevant circumstances, the
extent of the discount may vary from one case to another, and from time to time, subject to a maximum
discount of 20.0% of the Market Price of a Share. The discretion to grant Incentive Options will, however,
be used judiciously.
It is envisaged that our Company may consider granting the Incentive Options under circumstances
including (but not limited to) the following:
(a)
where, due to speculative forces in the stock market resulting in an overrun of the market, the
market price of our Shares at the time of the grant of Incentive Options is not a true reflection of
the financial performance of our Company;
(b)
to enable our Company to offer competitive remuneration packages in the event that the practice of
granting Incentive Options becomes a general market norm. As share options become more
significant components of executive remuneration packages, a discretion to grant Incentive Options
will provide our Company with a means to maintain the competitiveness of our Group
compensation strategy; and/or
(c)
where our Group needs to provide more compelling motivation for specific business units to
improve their performance, grants of Incentive Options will help to align the interests of employees
of the Group with those of our Shareholders by encouraging them to focus more on improving the
profitability and return of our Group above a certain level which will benefit all Shareholders when
these are eventually reflected through share price appreciation. As such, Incentive Options would
be perceived more positively by the employees of the Group who receive such Incentive Options.
Such flexibility in determining the quantum of discount would enable the Administration Committee to
tailor the incentives in the grant of Incentive Options to be commensurate with the performance and
contribution of each individual participant. By individually recognising the degree of performance and
contribution of each participant, the granting of Incentive Options at a commensurate discount would
enable the Administration Committee to provide incentives for better performance, greater dedication and
loyalty of the participants.
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Our Company may also grant Market Price Options without any discount to the market price of our
Shares. Additionally, our Company may, if it deems fit, impose conditions on the exercise of the Options
(whether such Options are granted at the market price or at a discount to the market price), such as
restricting the number of Shares for which the Option may be exercised during the initial years following
its vesting.
Rationale for participation by employees of the Group in the Share Option Scheme
The extension of the Share Option Scheme to employees of the Group allows us to have a fair and
equitable system to reward our Directors and employees of the Group who have made and who continue
to make significant contributions to the long-term growth of our Group.
We believe that the grant of Options to the employees of the Group will enable us to attract, retain and
provide incentives to our Directors and employees of the Group to produce higher standards of
performance as well as encourage greater dedication and loyalty by enabling our Company to give
recognition to past contributions and services as well as motivating participants generally to contribute
towards the long-term growth of our Group.
Rationale for participation by our Non-executive Directors (including Independent Directors) in the
Share Option Scheme
Although our Non-executive Directors are not involved in the day-to-day running of our Group’s
operations, they play an invaluable role in furthering the business interests of our Group by contributing
their experience and expertise. The participation by Non-executive Directors in the Share Option Scheme
will provide our Company with a further avenue to acknowledge and recognise their services and
contributions to our Group as it may not always be possible to compensate them fully or appropriately by
increasing the directors’ fees or other forms of cash payment. For instance, the Non-executive Directors
may bring strategic or other value to our Company which may be difficult to quantify in monetary terms.
The grant of Options to Non-executive Directors will allow our Company to attract and retain experienced
and qualified persons from different professional backgrounds to join our Company as Non-executive
Directors, and to motivate existing Non-executive Directors to take extra efforts to promote the interests of
our Company and/or our Group.
In deciding whether to grant Options to the Non-executive Directors, the Remuneration Committee will
take into consideration, among other things, the contributions made to the growth, development and
success of our Group and the years of service of a particular Non-executive Director. The Remuneration
Committee may also, where it considers relevant, take into account other factors such as the economic
conditions and our Company’s performance.
In order to minimise any potential conflict of interests and to not compromise the independence of the
Non-executive Directors, our Company intends to grant only a nominal number of Options under the
Share Option Scheme to Non-executive Directors. In addition, in the event that any conflict of interests
arises in any matter to be decided by the Board, our Company shall procure that the relevant Nonexecutive Director abstains from voting on such matter at the Board meeting.
Rationale for participation of Controlling Shareholders and their associates
An employee who is a Controlling Shareholder of our Company or an associate of a Controlling
Shareholder shall be eligible to participate in the Share Option Scheme if (a) his participation in the
Share Option Scheme; and (b) the actual number and terms of the options to be granted to him have
been approved by independent Shareholders of our Company in separate resolutions for each such
person. The relevant employee is required to abstain from voting on, and (in the case of employees who
are Directors) refrain from making any recommendation on, the resolutions in relation to the Share Option
Scheme.
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One of the main objectives of the Share Option Scheme is to motivate participants to optimise their
performance standards and efficiency and to maintain a high level of contribution to our Group. The
objectives of the Share Option Scheme apply equally to our employees who are Controlling Shareholders
or their respective associates. Our view is that all deserving and eligible participants should be motivated,
regardless of whether they are Controlling Shareholders or their respective Associates. It is our interest to
incentivise outstanding employees who have contributed to the growth of our Group to continue to remain
with us.
Although our Controlling Shareholders and their respective Associates have or may already have
shareholding interest in our Company, the extension of the Share Option Scheme to allow Controlling
Shareholders and their respective Associates the opportunity to participate in the Share Option Scheme
will ensure that they are equally entitled, with the other employees of our Group, to participate in and
benefit from this system of remuneration. The Share Option Scheme is intended to be part of our
Company’s system of employee remuneration and our Company is of the view that employees who are
Controlling Shareholders or their respective Associates should not be unduly discriminated against by
virtue only of their shareholding in our Company.
Cost of Options granted under the Share Option Scheme to our Company
Any Options granted under the Share Option Scheme would have a fair value. In the event that such
Options are granted at prices below the fair value of the Options, there will be a cost to our Company. The
amounts of such costs may be more significant in the case of Incentive Options, where such Options are
granted with exercise prices set at a discount to the prevailing market price of our Shares. The cost to our
Company of granting Options under the Share Option Scheme would be as follows:
(a)
the exercise of an Incentive Option at the discounted exercise price would translate into a reduction
of the proceeds from the exercise of such Option, as compared to the proceeds that our Company
would have received from such exercise had the exercise been made at the prevailing market price
of our Shares. Such reduction of the proceeds from the exercise of such Option would represent
the monetary cost to our Company;
(b)
as the monetary cost of granting Incentive Options is borne by our Company, the earnings of our
Company would effectively be reduced by an amount corresponding to the reduced interest
earnings that our Company would have received from the difference in proceeds from exercise
price with no discount versus the discounted exercise price. Such reduction would, accordingly,
result in the dilution of our Company’s EPS; and
(c)
the effect of the issue of new Shares upon the exercise of Options, is that our Company’s NTA per
Share will increase if the exercise price is above the NTA per Share and decrease, if the exercise
price is below the NTA per Share.
The costs as discussed above would only materialise upon the exercise of the relevant Options. Share
options have value because the option to buy a company’s share for a fixed price during an extended
future time period is a valuable right, even if there are restrictions attached to such an option. As our
Company is required to account for share-based awards granted to the employees of the Group, the cost
of granting Options will affect our financial results as this cost to our Company would be required to be
charged to our Company’s income statement commencing from the time Options are granted. Subject as
aforesaid, as and when Options are exercised, the cash inflow will add to the NTA of our Company and
its share capital base will grow. Where Options are granted with subscription prices that are set at a
discount to the market prices for our Shares prevailing at the time of the grant of such Options, the
amount of the cash inflow to our Company on the exercise of such Options would be diminished by the
quantum of the discount given, as compared with the cash inflow that would have been received by our
Company had the Options been granted at the market price of our Shares prevailing at the time of the
grant.
The grant of Options will have an impact on our Company’s reported profit under the accounting rules in
the Singapore Financial Reporting Standards which is effective for financial periods beginning on or after
1 January 2005. It requires the recognition of an expense in respect of Options granted. The expenses
will be based on the fair value of the Options at the date of grant (as determined by an option-pricing
model) and will be recognised over the vesting period.
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Details of the number of Options granted pursuant to the Share Option Scheme, the number of Options
exercised and the exercise price (as well as any applicable discounts) will be disclosed in our annual
report.
COGENT HOLDINGS PERFORMANCE SHARE PLAN
On 18 January 2010, our Shareholders adopted a performance share plan known as the Cogent
Holdings Performance Share Plan (the “Share Plan”).
We recognise that the contributions and continued dedication of the employees of the Group and Nonexecutive Directors, are critical to the future growth and development of our Group and have undertaken
a review of employee remuneration and benefits to this end. The Share Plan is a new compensation
scheme that promotes higher performance goals and recognises exceptional achievement. We have
taken steps to align ourselves with and embrace local trends and best practices in compensation.
Unlike the Options granted under the Share Option Scheme, the Share Plan contemplates the award of
fully-paid Shares to participants after certain pre-determined benchmarks have been met. Although we
may, where appropriate, continue to distribute cash bonuses to the employees of the Group and Nonexecutive Directors, we believe that the Share Plan will be more effective than pure cash bonuses in
motivating employees of the Group to work towards pre-determined goals.
As at the Latest Practicable Date, no Awards have been granted under the Share Plan.
Objectives of the Share Plan
The Share Plan is based on the principle of pay-for-performance and is designed to enable us to reward,
retain and motivate employees of the Group to achieve superior performance. The purpose of adopting
the Share Plan in addition to the Share Option Scheme is to give us greater flexibility to align the
interests of employees of the Group, especially key executives, with the interests of Shareholders. The
objectives of the Share Plan are as follows:
(a)
to provide an opportunity for participants of the Share Plan to participate in the equity of our
Company, thereby inculcating a stronger sense of identification with the long-term prosperity of our
Group and promoting organisational commitment, dedication and loyalty of participants towards our
Group;
(b)
to motivate participants to strive towards performance excellence and to maintain a high level of
contribution to our Group;
(c)
to give recognition to contributions made or to be made by participants by introducing a variable
component into their remuneration package; and
(d)
to make employee remuneration sufficiently competitive to recruit new participants and/or to retain
existing participants whose contributions are important to the long-term growth and profitability of
our Group.
Overview of the Share Plan
The Share Plan is designed to reward its participants through the issue of fully-paid Shares according to
the extent to which they complete certain time-based service conditions or achieve their performance
targets over set performance periods.
Awards granted under the Share Plan may be time-based or performance-related, and in each instance,
shall vest only:
(a)
where the Award is time-based, after the satisfactory completion of time-based service conditions,
that is, after the Participant has served our Group for a specified number of years (such Awards
being “time-based Awards’’); or
(b)
where the Award is performance-related, after the Participant achieves a pre-determined
performance target (such Awards being “performance-related Awards’’).
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A time-based Award may be granted, for example, as a supplement to the cash component of the
remuneration packages of senior executive officers our Company seeks to attract and recruit. A
performance-related Award may be granted, for example, with a performance target based on the
successful completion of a project or the successful achievement of certain quantifiable performance
targets, such as sales growth or productivity enhancement.
Performance targets set are based on short to medium-term corporate objectives including market
competitiveness, quality of returns, business growth and productivity growth. These performance targets
include targets set based on criteria such as shareholders’ return, return on equity and EPS. By working
towards and achieving their own performance targets, the participants would also indirectly be assisting
our Company in attaining its corporate objectives and strategic business goals.
No minimum vesting periods are prescribed under the Share Plan for Awards, and the length of the
vesting period in respect of each Award will be determined on a case-by-case basis.
We will announce the following information to the SGX-ST and the public immediately upon the grant of
Awards under the Share Plan:
(a)
total number of participants;
(b)
total number of shares granted; and
(c)
range of number of shares granted to each participant.
Summary of the Share Plan
The rules of the Share Plan may be inspected by Shareholders at the registered office of our Company
for a period of six months from the date of registration of this Prospectus. The following is a summary of
the rules of the Share Plan:
Participants
The Share Plan allows for participation by full-time employees of the Group and Non-executive Directors
(including Independent Directors) who have attained the age of 21 years and above on or before the
relevant date of grant of the Award, provided that none shall be an undischarged bankrupt or have
entered into a composition with his creditors.
Management of the Share Plan
The Share Plan shall be managed by the Administration Committee, which has the absolute discretion to
determine persons who will be eligible to participate in the Share Plan. However, in compliance with the
requirements of the Listing Manual, a participant who is a member of the Administration Committee shall
not be involved in any deliberation or decision in respect of Awards (as the case may be) to be granted to
or held by that participant.
Our Board is responsible for reviewing and approving remuneration packages of our key executives (other
than Executive Directors). Our Remuneration Committee will recommend to our Board a framework of
remuneration for our Directors and key executives and determine specific remuneration packages for
each Executive Director. Our Board and Remuneration Committee aim to build a capable and committed
management team and workforce for our Group, through focused management and progressive policies
and competitive remuneration packages which can attract and retain a pool of talented executive officers
to meet the current and future growth of our Group.
Our Board will be responsible for:
(a)
determining the terms of grant of Awards (and variation thereof) to participants (other than our
Directors); and
(b)
the general administration of the Share Plan such as extension of the duration of the term of the
Share Plan.
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Our Remuneration Committee will be responsible for determining the terms of grant of Awards (and
variation thereof) to our Directors. However, a participant who is a member of the Remuneration
Committee shall not be involved in any deliberation or decision in respect of Awards (as the case may be)
to be granted to or held by such member.
Size of the Share Plan
The (a) total number of new Shares which may be issued pursuant to Awards granted on any date; and
(b) total number of existing Shares which may be purchased from the market for delivery pursuant to
Awards granted under the Share Plan, when added to the number of new Shares issued and issuable in
respect of all Awards granted under the Share Plan (including the Share Option Scheme and any other
share option schemes of our Company), shall not exceed 15.0% of the number of issued Shares
(including treasury shares, as defined in the Companies Act) on the day preceding that date of grant of
the relevant Awards.
To enjoy greater flexibility in structuring remuneration and compensation packages, our Company
believes that it should have a sufficient number of Shares to accommodate Awards issued under the
Share Plan. Taking into consideration the size of the post-Invitation share capital of our Company as well
as the number of eligible participants in the Share Plan, our Directors believe that such limit is necessary
to accommodate the existing number of participants to whom Awards may be granted under the Share
Plan annually over the 10-year period of the Share Plan so as to create a meaningful compensation for
the participants’ contributions.
Awards Entitlement
Awards represent the right of a participant to receive fully-paid Shares free of charge. Awards granted
under the Share Plan may be time-based or performance-related as set out above.
In respect of time-based Awards, a participant is entitled to receive fully-paid Shares free of charge, upon
the expiry of the prescribed vesting periods.
In the case of performance-related Awards, a participant is entitled to receive fully-paid Shares free of
charge subject to certain prescribed performance targets being met.
The vesting periods of Awards (whether time-based or performance-related) will be determined by the
Administration Committee and may not be subject to such time restrictions before vesting.
The selection of a participant, the type of Award (whether time-based or performance-related), the
number of Award Shares to be granted to him, and the prescribed vesting period shall be determined at
the absolute discretion of the Administration Committee, which shall take into account:
(a)
in respect of a participant being an employee of the Group, criteria such as his rank, job
performance, potential for future development and his contribution to the success and development
of our Group; and
(b)
in respect of a participant being a Non-executive Director, criteria such as his contribution to the
success and development of our Group.
In addition, for performance-related Awards, the extent of effort required to achieve the performance
target(s) within the performance period shall also be considered.
The Administration Committee shall decide, in relation to each Award (whether time-based or
performance-related) to be granted to a participant:
(a)
the date on which the Award is to be granted;
(b)
the number of Award Shares;
(c)
the prescribed vesting period(s); and
(d)
the extent to which Award Shares shall be released at the end of each prescribed vesting period.
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In the case of performance-related Awards, the Administration Committee shall also decide on:
(a)
the prescribed performance target(s);
(b)
the performance period during which the prescribed performance target(s) are to be satisfied; and
(c)
the extent to which Award Shares shall be released on the prescribed performance target(s) being
satisfied (whether fully or partially) or exceeded or not being satisfied, as the case may be, at the
end of the performance period.
Grant of Awards
Awards may be granted at any time during the period when the Share Plan is in force. An Award letter
confirming the Award and specifying, amongst others, in relation to a performance-related Award, the
prescribed performance target(s) and the performance period during which the prescribed performance
target(s) are to be satisfied, will be sent to each participant as soon as is reasonably practicable after
making an Award.
Vesting of Awards
Special provisions for the vesting and lapsing of Awards (some at the discretion of the Administration
Committee) under certain circumstances include:
(a)
a participant, being an employee of the Group, ceasing for any reason whatsoever, to be in the
employment of a company in our Group or in the event the company by which the participant is
employed ceases to be a company in our Group;
(b)
a participant, being a Non-executive Director, ceasing to be a director of a company in our Group,
for any reason whatsoever;
(c)
upon the bankruptcy of the participant;
(d)
ill health, injury, disability or death of a participant;
(e)
a participant committing any breach of any of the terms of his Award;
(f)
misconduct on the part of a participant as determined by the Administration Committee in its
discretion;
(g)
a general offer being made of all or any part of our Shares;
(h)
a scheme of arrangement or compromise between our Company and our Shareholders being
sanctioned by the Court under the Companies Act;
(i)
an order for the compulsory winding-up of the Company being made;
(j)
a resolution for a voluntary winding-up (other than for amalgamation or reconstruction) of the
Company being made; and/or
(k)
any other event approved by the Administration Committee.
Upon the occurrence of any of the events specified in paragraphs (g) to (j) above, the Administration
Committee may consider, in its absolute discretion, whether or not to release any Award. If the
Administration Committee decides to release any Award, then in determining the number of Shares to be
vested in respect of such Award, the Administration Committee will have regard to the proportion of the
vesting period(s) which has elapsed and the extent to which the prescribed performance target(s) (if any)
has been satisfied.
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Upon the occurrence of any of the events specified in paragraphs (a) to (f) above, an Award then held by
a participant shall, subject as provided in the rules of the Share Plan and to the extent not yet released,
immediately become void and cease to have effect and the participant shall have no claim whatsoever
against our Company.
Our Company will have the flexibility to deliver Award Shares to participants upon the vesting of their
Awards by way of:
(a)
an issue of new Shares; and/or
(b)
the purchase of existing Shares on behalf of the participants.
It is the intention of our Company that Award Shares will typically be delivered to participants upon the
vesting of their Awards by way of an issue of new Shares. However, our Company anticipates that our
Company may, in very limited circumstances, purchase existing Shares on behalf of the participants upon
the vesting of their Awards. These circumstances include situations when our Shares are undervalued or
when it otherwise makes economic sense to purchase existing Shares.
New Shares, when allotted and issued, and existing Shares, when transferred to the participants upon
the release of Awards shall be subject to all the provisions of the Memorandum and Articles of
Association of our Company and shall rank pari passu in all respects with the then existing issued
Shares, save for any dividends, rights, allotments or distributions on the record date of which falls on or
before the relevant vesting date of the Shares which are the subject of the Awards. For such purposes,
record date means the date as at the close of business on which our Shareholders must be registered in
order to participate in any dividends, rights, allotments or other distributions.
Shares which are the subject of:
(a)
a time-based Award shall, vest upon the expiry of each vesting period in relation to such Award
and our Company shall release to the relevant participant the Award Shares to which his Award
relates on the vesting date; and
(b)
a performance-related Award shall be vested with a participant on the vesting date, which shall be
a Market Day falling as soon as practicable after the review by the Administration Committee of the
performance target(s) prescribed in respect of such Award and determine whether it has been
satisfied and, if so, the extent to which it has been satisfied, and, on the vesting date, the
Administration Committee will procure the allotment or transfer to each participant of the number of
Award Shares so determined.
For the purposes of determining if performance target(s) in respect of performance-related Awards have
been achieved, the Administration Committee has the right to make computational adjustments to the
audited results of our Company or our Group, as the case may be, to take into account such factors as
the Administration Committee may determine to be relevant, including changes in accounting methods,
taxes and extraordinary events. The Administration Committee also has the discretion to amend the
performance target(s) if the Administration Committee decides that a changed performance target would
be a fairer measure of performance, or to waive the performance target where the participant has
achieved a level of performance that the Administration Committee considers satisfactory notwithstanding
that the performance target has not been fulfilled.
Adjustments and Alterations under the Share Plan
If a variation in the share capital of our Company (whether by way of a capitalisation of profits or
reserves, rights issue, reduction, subdivision, consolidation or distribution) shall take place, then:
(a)
the class and/or number of Award Shares to the extent not yet vested; and/or
(b)
the class and/or number of Shares over which future Awards may be granted under the Share
Plan,
123
may, at the option of the Administration Committee, be adjusted in such manner as the Administration
Committee may determine to be appropriate. However, any adjustment shall be made in such a way that
a participant will not receive a benefit that a Shareholder does not receive.
The issue of securities as consideration for an acquisition or a private placement of securities or the
cancellation of issued shares purchased or acquired by our Company by way of a market purchase of
such shares undertaken by our Company on the SGX-ST during the period when a share purchase
mandate granted by our Shareholders (including any renewal of such mandate) is in force shall not
normally be regarded as a circumstance requiring adjustment.
Any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by the auditors.
Modifications to the Share Plan
The Share Plan may be modified and/or altered from time to time by a resolution of our Board, subject to
the prior approval of the SGX-ST and such other regulatory authorities as may be necessary.
However, no modification or alteration shall adversely affect the rights attached to Awards granted prior to
such modification or alteration except with the written consent of such number of participants under the
relevant Plan who, if their Awards were released to them, would thereby become entitled to not less than
75.0% of the aggregate number of all our Shares which would be issued upon exercise in full of all
outstanding Awards under the Share Plan.
No alteration shall be made to certain rules of the Share Plan to the advantage of the holders of the
Awards, as the case may be, except with the prior approval of our Shareholders in general meeting.
Duration of the Share Plan
The Share Plan shall continue in operation at the discretion of the Administration Committee for a
maximum period of 10 years commencing on the date on which the Share Plan is adopted by our
Company in general meeting, provided that the Share Plan may continue beyond the above stipulated
period with the approval of our Shareholders by ordinary resolution in general meeting and of any
relevant authorities which may then be required.
The Share Plan may be terminated at any time by the Administration Committee and by resolution of our
Company in general meeting, subject to all relevant approvals which may be required being obtained. The
termination of the Share Plan shall not affect Awards which have been granted in accordance with the
Share Plan.
Abstention from voting
Participants who are Shareholders are to abstain from voting on any Shareholders’ resolution relating to
the Share Plan and any modification thereof. Participants may, however, act as proxies of Shareholders in
respect of the votes of such Shareholders in relation to any such resolutions, provided that specific
instructions have been given in the proxy forms on how the votes are to be cast in respect of the
resolution.
Rationale for participation by employees of the Group in the Share Plan
The grant of Awards to the employees of the Group allows us to have a fair and equitable system to
reward our Directors and employees of the Group who have made and who continue to make significant
contributions to the long-term growth of our Group.
We believe that the grant of Awards to the employees of the Group will enable us to attract, retain and
provide incentives to our Directors and employees of the Group to produce higher standards of
performance as well as encourage greater dedication and loyalty by enabling our Company to give
recognition to past contributions and services as well as motivating participants generally to contribute
towards the long-term growth of our Group.
124
Rationale for participation by Non-executive Directors (including Independent Directors) in the
Share Plan
Our Non-executive Directors come from diverse professions and working backgrounds. Although they are
not involved in the day-to-day running of our Group’s operations, they are able to contribute their
extensive experience, knowledge, expertise and business contacts to the benefit of our Group and assist
in our Group’s business interests. Leveraging on their contacts, they may also be able to provide our
Group with strategic or significant alliances or opportunities. Our Company therefore regards our Nonexecutive Directors as a resource pool from which we are able to tap business contacts, knowledge,
expertise and experience.
Our Non-executive Directors are presently also members of our Audit Committee, Remuneration
Committee and Nominating Committee. Each of these committees plays an important role in the
corporate governance of our Group.
Currently, our Non-executive Directors are remunerated only by way of directors’ fees. Allowing the
participation by our Non-executive Directors in the Share Plan provides our Company with a further
avenue of acknowledging the services and contributions to our Group and to reward and give recognition
to such services and contributions by way of remuneration comprising a combination of fees and Awards.
This flexibility is important since it may not always be possible to compensate Non-executive Directors
fully or appropriately by increasing the directors’ fees or other forms of cash payment. Having a flexible
remuneration system will enable our Company to continue to attract individuals of great ability and
aptitude to serve as Non-executive Directors. In the long-term, this will help ensure the continuity of good
corporate governance in our Company.
However, as the Share Plan is intended to cater primarily to employees of the Group who will comprise
the bulk of the participants of the Share Plan, our Directors anticipate that awards that may be granted to
our Non-executive Directors pursuant to the Share Plan, would not comprise a significant portion of the
shares available under the Share Plan. Further, in order to minimise any potential conflict of interests
which may arise as a result of granting Awards to Non-executive Directors who are also members of our
Audit Committee, Remuneration Committee or Nominating Committee, any grant of awards to Nonexecutive Directors is anticipated to be minimal, with such grants being made as a token of our
Company’s appreciation for their contributions to our Company and to help further align their interests
with those of our Shareholders. Our Non-executive Directors would generally, continue to be remunerated
for their services by way of directors’ fees.
The Administration Committee shall act judiciously in the exercise of its discretion in respect of the grant
of Awards to our Non-executive Directors. In deciding whether to grant Awards to our Non-executive
Directors, the Administration Committee will take into consideration, among other things, the services and
contributions made to the growth of our Group, attendance and participation in meetings and the years of
service of a particular Non-executive Director. The Administration Committee may also, where it considers
relevant, take into account other factors such as prevailing economic conditions and our performance. A
Non-executive Director will abstain from voting as a Director or a member of the Administration
Committee when the grant of Awards to him is being deliberated.
The grant of Awards to Non-executive Directors of our Company will be subject to and shall comply with
the provisions of Section 76 of the Companies Act.
Rationale for participation of Controlling Shareholders and their associates
An employee who is a Controlling Shareholder of our Company or an Associate of a Controlling
Shareholder shall be eligible to participate in the Share Plan if (a) his participation in the Share Plan and;
(b) the actual number and terms of Shares to be granted to him have been approved by independent
Shareholders of our Company in separate resolutions for each such person. The relevant employee is
required to abstain from voting on, and (in the case of employees who are Directors) refrain from making
any recommendation on, the resolutions in relation to the Share Plan.
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One of the main objectives of the Cogent Holdings Performance Share Plan is to provide an opportunity
for participants to participate in the equity of our Company, thereby promoting organisational commitment,
dedication and loyalty of the participants towards our Group. The objectives of the Cogent Holdings
Performance Share Plan will apply equally to our employees who are Controlling Shareholders or their
respective Associates. Our view is that all deserving and eligible participants should be motivated,
regardless of whether they are Controlling Shareholders or their respective Associates. It is our interest to
incentivise outstanding employees who have contributed to the growth of our Group to continue to remain
with us.
Although our Controlling Shareholders and their Associates have or may already have shareholding
interests in our Company, the extension of the Cogent Holdings Performance Share Plan to allow
Controlling Shareholders and their respective Associates the opportunity to participate in the Share Plan
will ensure that they are equally entitled, with the other employees of our Group, to participate in and
benefit from this system of remuneration. The Cogent Holdings Performance Share Plan is intended to be
part of our Company’s system of employee remuneration and our Company is of the view that employees
who are Controlling Shareholders or their respective Associates should not be unduly discriminated
against by virtue only of their shareholding in our Company.
Financial Effects of the Share Plan
The accounting rules in the Singapore Financial Reporting Standards are effective for financial periods
beginning on or after 1 January 2005. It requires the fair value of employee services received in exchange
for the grant of our Shares to be recognised as an expense. For equity-settled share-based payment
transactions, the total amount to be expensed in the income statement over the vesting period is
determined by reference to the fair value of each Share granted at the grant date and the number of
Shares vested by the vesting date, with a corresponding increase in equity.
Before the end of the vesting period, at each balance sheet date, the entity revises its estimates of the
number of Shares that are expected to vest by the vesting date and recognises the impact of this revision
in the income statement with a corresponding adjustment to equity. After the vesting date, no adjustment
to the income statement would be made.
When new Shares are issued to participants, the share capital will increase. If existing Shares are
purchased, as opposed to new Shares issued for delivery to participants, the Share Plan will have no
impact on our Company’s share capital.
The consolidated NTA will be decreased by the amount of expenses charged to the income statement if
existing Shares are purchased. If new Shares are issued, there would be no effect on the consolidated
NTA due to the offsetting effect of expenses recognised and increased share capital.
During the vesting period, the consolidated EPS would be reduced by both the expense recognised and
the potential ordinary Shares to be issued under the Share Plan. NTA per Share would be diluted as a
result of the reduced NTA if existing Shares are purchased or the increased share capital if new Shares
are issued.
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INTERESTED PERSON TRANSACTIONS AND CONFLICTS OF INTERESTS
INTERESTED PERSON TRANSACTIONS
In general, transactions between our Group and any of our interested persons (namely, our Directors,
CEO or Controlling Shareholders of our Company or the Associates of such Directors, CEO or
Controlling Shareholders) (“interested persons” and each, an “interested person”) would constitute
interested persons transactions for the purposes of Chapter 9 of the Listing Manual.
The following discussion sets out the past, present and ongoing transactions between our Group and
interested persons that are material in the context of the Invitation in FY2006, FY2007, FY2008 and the
period from 1 January 2009 up to the Latest Practicable Date.
Save as disclosed below and in the section entitled “Restructuring Exercise” of this Prospectus, none of
our interested persons was or is interested in any transaction undertaken by our Group which is material
in the context of the Invitation within FY2006, FY2007, FY2008 and the period from 1 January 2009 up to
the Latest Practicable Date.
PAST INTERESTED PERSON TRANSACTIONS
(a)
Transactions with SHPD
SHPD is a company that was previously owned by our Executive Chairman and CEO, Mr Tan Yeow
Khoon and our Managing Director, Mr Edwin Tan Yeow Lam and is now currently owned by our
Executive Chairman and CEO, Mr Tan Yeow Khoon.
(i)
Leasing of 31 Penjuru Lane from SHPD
In FY2006, we leased from SHPD 140,000 sq ft of warehousing space at 31 Penjuru Lane at
a monthly rate of S$65,000. The aggregate amount paid to SHPD under the sub-lease in
FY2006 was approximately S$390,000.
The above transaction was not carried out on an arm’s length basis as we did not engage an
independent third party valuer to assess prevailing market rates when we entered into the
arrangement. In July 2006, we ceased the sub-lease arrangement when SHPD sold 31
Penjuru Lane to Mapletree Logistics Trust pursuant to a sale and lease-back arrangement
with Mapletree Logistics Trust (the “Sale and Lease-back Arrangement”). All amounts due
to SHPD under the sub-lease arrangement had been paid as at the Latest Practicable Date.
(ii)
Leasing of 31 Penjuru Lane to SHPD
In July 2006, pursuant to the Sale and Lease-back Arrangement, SHCL leased 31 Penjuru
Lane directly from Mapletree Logistics Trust, and sub-leased 36,700 sq ft of the premises at
31 Penjuru Lane to SHPD for its sub-leases to third parties at a monthly rate of
approximately S$30,000. In November 2008, the area sub-leased to SHPD was increased to
39,040 sq ft at the same monthly rental rate.
The aggregate amounts received from SHPD under the sub-lease arrangement for FY2006,
FY2007, FY2008 and the period commencing 1 January 2009 up to the Latest Practicable
Date were approximately S$180,000, S$360,000, S$360,000 and S$210,000, respectively.
All amounts due under the sub-lease arrangement have been paid to us as at the Latest
Practicable Date. As we would not have leased the property through SHPD but directly with
the third party tenants, there is no market rate for this sub-lease arrangement. As such, the
above transaction was not carried out on an arm’s length basis. We ceased the sub-lease
arrangement in July 2009.
(iii)
Rental of premises and provision of manpower support to SHPD
In FY2008, we sub-let levels four and five of our premises at 7 Penjuru Close with a total
area of 180,000 sq ft to SHPD for its Export Processing Zone operations. The aggregate
amount paid by SHPD for the sub-lease of the premises in FY2008 was approximately
S$1,944,000. In January 2009, we ceased the sub-lease arrangement with SHPD.
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From FY2006 to FY2008, we provided manpower support and services to SHPD for its
Export Processing Zone operations. The aggregate amounts received from SHPD for the
provision of manpower support and services for FY2006, FY2007 and FY2008 were
approximately S$517,000, S$201,000 and S$550,000, respectively. On 31 December 2008,
SHPD ceased the operation of its Export Processing Zone business following the acquisition
of Cogent Investment and Cogent Automotive by Mr Tan Yeow Khoon and Mr Edwin Tan
Yeow Lam in August 2008. On 1 January 2009, we ceased the above transaction with SHPD.
All amounts due under the above arrangements have been paid to us as at the Latest
Practicable Date. The above transactions were not carried out on an arm’s length basis as
we did not engage an independent third party valuer to assess prevailing market rental rates
at the time of entering into the sub-lease arrangement and we had charged for the provision
of manpower support based solely on actual costs incurred. We have since ceased the
above transactions and we do not intend to enter into similar transactions with SHPD in the
future.
(iv)
Provision of automotive logistics management services to SHPD
SHCL provided automotive logistics management services to SHPD in respect of
transportation of vehicles and port clearing charges. The following table sets out the
aggregate amounts charged by SHCL to SHPD as payment for the provision of automotive
logistics management services made as at 31 December 2006, 31 December 2007, 31
December 2008 and up to the Latest Practicable Date:
Aggregate amounts charged by
SHCL to SHPD as payment for
provision of trucking services
2006
(S$)
As at 31 December
2007
(S$)
2008
(S$)
As at the Latest
Practicable Date
(S$)
675,338
1,270,962
777,593
–
The above transaction was not carried out on an arm’s length basis as we did not engage an
independent third party valuer to assess prevailing market rates that may be charged for
similar services. On 31 December 2008, SHPD ceased the operation of its Export
Processing Zone business following the acquisition of Cogent Investment and Cogent
Automotive by Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam in August 2008. In
December 2008, SHCL ceased providing such services to SHPD. All amounts due to SHCL
under the above transaction have been repaid as at the Latest Practicable Date. We do not
intend to enter into such similar transactions with SHPD in the future.
(v)
Vehicle and equipment rental provided by SHPD
In FY2006, FY2007 and FY2008, SHCL paid an annual amount of approximately S$122,400
to SHPD for the rental of vehicles and equipment in connection with its warehouse,
transportation and container depot operations.
The above transaction was not carried out on an arm’s length basis as rental charges were
based on actual costs incurred. In July 2009, following the transfer of SHPD’s equipment and
vehicles to us, we ceased the above transaction and we do not intend to enter into similar
transactions in the future. As at the Latest Practicable Date, all amounts due under the
above transaction have been repaid.
(vi)
Reimbursement of salaries to SHPD
In FY2006 and FY2007, SHCL paid an annual management fee of S$168,000 to SHPD as
reimbursement of the salaries of Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam which
were drawn from SHPD but in respect of the time and effort they spent managing the
logistics operations of SHCL.
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The above transaction was not carried out on an arm’s length basis as the fees paid to Mr
Tan Yeow Khoon and Mr Edwin Tan Yeow Lam were on a cost-reimbursement basis. In
January 2008, we ceased the above transaction and we do not intend to enter into similar
transactions in the future. As at the Latest Practicable Date, all amounts due under the
above transaction have been repaid.
(b)
Transactions with SHIG
SHIG is a company wholly-owned by our Executive Chairman and CEO, Mr Tan Yeow Khoon.
(i)
Sub-lease of 76 Pioneer Road from SHIG and provision of warehousing management
services to SHIG
In July 2007, we sub-leased the premises at 76 Pioneer Road from SHIG at a monthly rate
of S$66,220. The aggregate amount paid under the sub-lease arrangement was S$397,000.
We ceased the sub-lease arrangement in December 2007 and in January 2008, we
commenced a new arrangement with SHIG pursuant to which we were to source for tenants
and to provide warehousing management services to these tenants at 76 Pioneer Road. As
part of the arrangement, we agreed to pay SHIG 90% of all rentals and service fees received
from tenants procured by us for our use of the premises at 76 Pioneer Road which was
leased out to these tenants. Both parties agreed to renegotiate the terms of this arrangement
at the end of the year due to the general uncertainties of the logistics industry.
In December 2008, both parties agreed to revise the arrangement for FY2008 as the
volatility in the global financial markets had affected rental take-up rates in FY2008. In
addition, the lettable floor area at 76 Pioneer Road had decreased due to ongoing
renovation works carried out by SHIG. Both parties agreed that for FY2008, we would adjust
the percentage of all rentals and service fees paid to SHIG to 53%. As a result of the change
in terms of the arrangement, we paid SHIG an aggregate amount of approximately
S$437,000 for FY2008.
The above transactions were not carried out on an arm’s length basis as rent was paid on a
cost-reimbursement basis and we did not carry out any independent valuations to assess
prevailing market rates. On 31 December 2008, we ceased the above transaction with SHIG
and all amounts due to SHIG under the above transaction have been fully paid.
Pursuant to a tenancy agreement entered into with SHIG on 1 January 2009 (the “76
Pioneer Road Agreement”), we currently sub-lease the premises at 76 Pioneer Road from
SHIG. Pursuant to the 76 Pioneer Road Agreement, we sub-leased 31,676.79 sq m of
warehousing and office space at 76 Pioneer Road from SHIG at a monthly rate of S$0.90
per sq ft. The aggregate rental payable to SHIG under the 76 Pioneer Road Agreement for
the period commencing 1 January 2009 up to the Latest Practicable Date was S$1,850,222.
The rental for the sub-lease is at prevailing market rates for similar premises. Accordingly,
our Directors are of the view that the sub-lease was transacted on an arm’s length basis.
We terminated the 76 Pioneer Road Agreement on 24 December 2009 and do not intend to
enter into similar transactions with SHIG in the future and amounts outstanding under the 76
Pioneer Road Agreement have been repaid.
(ii)
Sub-lease of 6 Jalan Papan from SHIG
Prior to 2007, SHIG leased the premises at 6 Jalan Papan from the Collector of Land
Revenue (for and on behalf of the Government of Singapore). From February 2007 to
September 2007, we sub-leased 3,000 sq m from SHIG at a monthly rate of S$5,800. From
October 2007 to February 2009, the area sub-leased was increased to 4,030 sq m at a
monthly rate of S$7,700. From March 2009 to August 2009, the monthly rate was increased
to S$11,050 (inclusive of a rental rebate of S$1,950). The aggregate amounts paid to SHIG
for FY2007, FY2008 and the period commencing 1 January 2009 up to the Latest
129
Practicable Date under the sub-lease arrangement were approximately S$81,100, S$92,400
and S$79,390, respectively. In August 2009, we ceased the above transaction when the sublease of 6 Jalan Papan was transferred to SHCL. The sub-lease arrangement was not
carried out on an arm’s length basis as rental was charged on actual costs incurred and we
do not intend to enter into similar transactions in future. As at the Latest Practicable Date, all
amounts due under the above transaction have been repaid.
(c)
Sub-lease of warehouse space at 76 Pioneer Road to APWH
APWH is a company indirectly wholly-owned by our Executive Chairman and CEO, Mr Tan Yeow
Khoon, and our Managing Director, Mr Edwin Tan Yeow Lam.
Further to the sub-leasing of 76 Pioneer Road from SHIG disclosed in (b) above, we entered into a
subsequent sub-lease agreement with APWH on 1 January 2009 (the “APWH Agreement”, and
together with the 76 Pioneer Road Agreement, the “Tenancy Agreements”). We sub-let to APWH
an area of 3,716.10 sq m of office space at a monthly rental of S$1.20 per sq ft and 2,431.20 sq m
at a monthly rental of S$1.80 per sq ft for the temperature-controlled wine storage space. The
aggregate rental paid by APWH under the APWH Agreement for the period commencing 1 January
2009 up to the Latest Practicable Date was S$1,120,000.
The rental for the sub-lease is at prevailing market rates for similar premises. Accordingly, our
Directors are of the view that the sub-lease was transacted on an arm’s length basis.
Following the termination of the 76 Pioneer Road Agreement, we terminated the APWH Agreement
on 24 December 2009. We do not intend to enter into similar transactions with APWH in the future
and all amounts outstanding under the above transaction will be repaid prior to our listing on the
SGX-ST.
(d)
Advances from SHCL to Soon Hock Holding Pte. Ltd.
Soon Hock Holding Pte. Ltd. is a company wholly-owned by our Executive Chairman and CEO, Mr
Tan Yeow Khoon, and our Managing Director, Mr Edwin Tan Yeow Lam.
In FY2007 and FY2008, SHCL provided advances to Soon Hock Holding Pte. Ltd. (the “SHH
Advances”) to fund its acquisition of 80% of the total issued share capital in Cogent Builders Pte.
Ltd. The following table sets out the amounts outstanding under the SHH Advances as at 31
December 2007, 31 December 2008 and the Latest Practicable Date:
SHH Advances
2006
(S$)
As at 31 December
2007
(S$)
2008
(S$)
As at the Latest
Practicable Date
(S$)
–
242,323
243,199
–
The largest amount outstanding under the SHH Advances for FY2007, FY2008 and the period
commencing 1 January 2009 up to the Latest Practicable Date was approximately S$243,637. The
above transaction was not carried out on an arm’s length basis as the advances were unsecured
and interest-free. All amounts due to SHCL under the SHH Advances have been repaid as at the
Latest Practicable Date and we do not intend to enter into similar transactions with Soon Hock
Holding Pte. Ltd. in the future.
(e)
Transactions with Cogent Builders Pte. Ltd.
Soon Hock Holding Pte. Ltd. is a company wholly-owned by our Executive Chairman and CEO, Mr
Tan Yeow Khoon, and our Managing Director, Mr Edwin Tan Yeow Lam. Soon Hock Holding Pte. Ltd
owns 80% of the total issued share capital of Cogent Builders Pte. Ltd.
130
(i)
Advances from SHCL
Cogent Builders Pte. Ltd. was engaged by SHPD as the main building contractor for building
and construction works at 11 Jalan Terusan and Jurong Port Road. From 2007 to 2008,
SHCL provided advances to Cogent Builders Pte. Ltd. to fund the construction costs incurred
by Cogent Builders Pte. Ltd. (the “CB Advances”). The following table sets out the amounts
outstanding under the CB Advances as at 31 December 2007, 31 December 2008 and the
Latest Practicable Date:
CB Advances
2006
(S$)
As at 31 December
2007
(S$)
2008
(S$)
As at the Latest
Practicable Date
(S$)
–
9,738
511,482
–
The largest amount outstanding under the CB Advances for FY2007, FY2008 and the period
commencing 1 January 2009 up to the Latest Practicable Date was approximately
S$511,482. The above transaction was not carried out on an arm’s length basis as the
advances were unsecured and interest-free. All amounts due to SHCL under the CB
Advances have been repaid as at the Latest Practicable Date and we do not intend to enter
into similar transactions with Cogent Builders Pte. Ltd. in the future.
(ii)
Provision of services to SHCL
In FY2008 and the period commencing 1 January 2009 up to the Latest Practicable Date,
Cogent Builders Pte. Ltd. provided repair and maintenance services to SHCL in respect of
certain of its properties. The amounts paid in FY2008 and from 1 January 2009 to the Latest
Practicable Date were S$233,160 and S$251,447, respectively. The above transaction was
not carried out on an arm’s length basis as charges levied were based on our management’s
estimates based on costs incurred and not based on independent valuations. We have since
ceased such arrangements with Cogent Builders Pte. Ltd. and we do not intend to enter into
such similar transactions in the future. As at the Latest Practicable Date, all amounts due
under the above transaction have been repaid.
(f)
Transactions with our Directors
(i)
Dividends owing to and advances from our Directors
Our subsidiary, SHCL, had declared dividends amounting to S$1,000,000, S$500,000 and
S$1,500,000 in respect of FY2006, FY2007 and FY2008, respectively. Part of these
dividends to be paid to Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam were not fully paid.
During FY2006, FY2007, FY2008 and the period commencing 1 January 2009 up to the
Latest Practicable Date, Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam had from time to
time made advances to our Group for working capital purposes. These advances were
unsecured and interest-free. The following table sets out the amounts owing to Mr Tan Yeow
Khoon and Mr Edwin Tan Yeow Lam by our Group as at 31 December 2006, 31 December
2007, 31 December 2008 and the Latest Practicable Date:
2006
(S$)
As at 31 December
2007
(S$)
2008
(S$)
As at the Latest
Practicable Date
(S$)
Dividends owing to and advances
from Mr Tan Yeow Khoon
1,999,421
299,469
2,614,646
–
Dividends owing to and advances
from Mr Edwin Tan Yeow Lam
252,659
109,006
505,571
–
131
The above transactions were not made on an arm’s length basis. The largest aggregate
amount outstanding under the loans provided by our Directors for FY2006, FY2007, FY2008
and the period commencing 1 January 2009 up to the Latest Practicable Date was
approximately S$5,022,791. All outstanding amounts due to Mr Tan Yeow Khoon and Mr
Edwin Tan Yeow Lam were repaid on 11 November 2009. We have since ceased such
arrangements with our Directors and we do not intend to enter into such similar transactions
in the future.
(ii)
Guarantees provided by our Executive Chairman and CEO, Mr Tan Yeow Khoon and
Managing Director, Mr Edwin Tan Yeow Lam
During FY2006, FY2007 and FY2008, we had from time to time, entered into certain facility
agreements with certain financial institutions for the purposes of our day-to-day operations.
Some of these facilities were secured by personal guarantees provided by our Executive
Chairman and CEO, Mr Tan Yeow Khoon and our Managing Director, Mr Edwin Tan Yeow
Lam. Information on the guarantees provided in respect of the facilities for our Group are as
follows:
Amount outstanding
under the facilities
as at 31 December
Financial
Institution
Type of
facility
Type of
Guarantee
Amount
Guaranteed
(S$)
Hong
Leong
Finance
Limited
Hire
Purchase
Facility
Joint and
several
personal
guarantee
by Mr Tan
Yeow Khoon
and Mr
Edwin Tan
Yeow Lam
All amounts
outstanding
under the
facilities
–(1)
66,208
Prosperous
Credit
Private
Limited
Hire
Purchase
Facility
Personal
guarantee
by Mr Tan
Yeow Khoon
All amounts
outstanding
under the
facilities
–(2)
172,028
UMF
Hire
(Singapore) Purchase
Limited
Facility
Personal
guarantee
by Mr Tan
Yeow Khoon
All amounts
outstanding
under the
facilities
–(3)
Tokyo
Hire
Leasing
Purchase
(Singapore) Facility
Pte Ltd
Personal
guarantee
by Mr Tan
Yeow Khoon
All amounts
outstanding
under the
facilities
–(4)
Maturity Date
2006
(S$)
2007
(S$)
Amount
outstanding
as at
the Latest
Practicable
Date
(S$)
2008
(S$)
–(1)
–(1)
–(1)
8,970
–(2)
–(2)
23,332
5,829
–(3)
–(3)
120,712
102,136
–(4)
–(4)
Notes:
(1)
This facility matured in June 2007 and all amounts outstanding thereunder have been repaid.
(2)
This facility matured in June 2008 and all amounts outstanding thereunder have been repaid.
(3)
This facility matured in April 2008 and all amounts outstanding thereunder have been repaid.
(4)
This facility was fully repaid in November 2008.
Such guarantees were not granted on an arm’s length basis. The largest aggregate amount
outstanding under the guarantees provided by our Directors for FY2006, FY2007 and
FY2008 was approximately S$640,547. All amounts outstanding under the facilities have
since been repaid. We do not intend to enter into such similar transactions in the future.
132
PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS
(a)
Transactions with SHPD
(i)
Rental of 11 Jalan Terusan and Jurong Port Road from SHPD
We sub-leased 48,118 sq m of container depot premises located at Private Lot A0750602 at
11 Jalan Terusan and 16,260 sq m of container depot premises located at Private Lot
A0750603 at 11 Jalan Terusan from SHPD pursuant to arrangements commencing
September 2004 and January 2005, respectively. The monthly rental paid to SHPD under the
sub-lease arrangement for FY2008 was S$120,000. The aggregate amounts paid to SHPD
under these sub-lease arrangements for FY2006, FY2007, FY2008 and the period
commencing 1 January 2009 up to the Latest Practicable Date were approximately
S$1,323,480, S$1,339,600, S$1,402,400 and S$1,320,000, respectively. The above
transaction was not carried out on an arm’s length basis as rental charged was based on
actual costs incurred as we did not possess any information on prevailing market rates.
In July 2009, we commenced an arrangement to sub-lease 29,026.40 sq m of land located
at Private Lot A0750604 at Jurong Port Road from SHPD. As at the Latest Practicable Date,
no rental has been charged by SHPD for the sub-lease. The above transaction was not
carried out on an arm’s length basis as no rental had been charged.
The rental of 11 Jalan Terusan and Jurong Port Road will continue and cease upon the
completion of the assignments of SHPD’s interests in the properties to SHCL. Please refer to
the section entitled “Interested Person Transactions and Conflicts of Interest – Present and
On-going Interested Person Transactions - Purchase of 11 Jalan Terusan and Jurong Port
Road and certain vehicles and equipment from SHPD” below for further details.
(ii)
Purchase of 11 Jalan Terusan and Jurong Port Road and certain vehicles and
equipment from SHPD
On 18 December 2009, SHCL entered into a conditional sale and purchase agreement for
the purchase of the properties at 11 Jalan Terusan and Jurong Port Road and agreed to
transfer certain vehicles and equipment from SHPD for an aggregate consideration of S$5.5
million. The aggregate purchase price was determined based on two valuation reports issued
by an independent valuer, CB Richard Ellis (Pte) Ltd (the “Independent Valuer”) dated 14
October 2009 and the net book value of the vehicles and equipment. The sale and purchase
of the properties at 11 Jalan Terusan and Jurong Port Road is conditional upon JTC
approval for the assignments of the properties from SHPD to SHCL being obtained. We have
obtained in-principle approval from JTC for the assignments. SHPD has provided an
undertaking to us that it will comply with the terms of the in-principle approval from JTC to
facilitate the assignments of the properties at 11 Jalan Terusan and Jurong Port Road to
SHCL. In addition, SHPD has given an undertaking to our Company that it will lease out the
premises at 11 Jalan Terusan and Jurong Port Road to SHCL exclusively for the period until
the assignments of the properties are completed. Upon completion of the assignments, the
above transactions will cease.
(iii)
Advances from and advances to SHPD
From time to time, SHPD had made separate advances to SHCL and advanced from SHCL
monies for working capital purposes. SHPD had also advanced monies to SHCL to finance
the construction costs of properties including 7 Penjuru Close and 11 Jalan Terusan. The
advances to and from were interest-free and repayable on demand. The following table sets
out the amounts owing to SHPD under the advances from SHPD and the amounts owing
from SHPD under the advances to SHPD as at 31 December 2006, 31 December 2007, 31
December 2008 and the Latest Practicable Date:
2006
(S$)
As at 31 December
2007
(S$)
2008
(S$)
As at the Latest
Practicable Date
(S$)
Advances from SHPD
3,558,492
9,466,712
12,098,289
6,000,000
Advances to SHPD
2,806,807
3,758,261
6,020,480
–
133
Our Directors are of the view that the above advances to SHPD and advances from SHPD
were not made on an arm’s length basis. The largest amount of advances outstanding under
the advances to SHPD for FY2006, FY2007, FY2008 and the period commencing 1 January
2009 up to the Latest Practicable Date was approximately S$6,521,535. The largest amount
of advances outstanding under the advances from SHPD for FY2006, FY2007, FY2008 and
the period commencing 1 January 2009 up to the Latest Practicable Date was approximately
S$12,098,338.
As at 30 June 2009, the net amount owing to SHPD was S$6,076,803. On 30 June 2009,
the amount of S$6,000,000 owing to SHPD was converted to a term loan of an aggregate
amount of S$6,000,000, repayable over three years in three equal instalments, at interest
rates equivalent to the annual SIBOR rate when due. The remaining amount of S$76,803
has been repaid to SHPD as at 18 December 2009.
Our Directors are of the view that the term loan from SHPD to SHCL was made on an arm’s
length basis.
(b)
Transactions with our Directors
(i)
Guarantees provided by our Executive Chairman and CEO, Mr Tan Yeow Khoon and
Managing Director, Mr Edwin Tan Yeow Lam
During FY2006, FY2007, FY2008 and the period commencing 1 January 2009 up to the
Latest Practicable Date, we may from time to time, enter into certain facility agreements with
certain financial institutions for the purposes of our day-to-day operations. Some of these
facilities are secured by personal guarantees provided by our Executive Chairman and CEO,
Mr Tan Yeow Khoon and our Managing Director, Mr Edwin Tan Yeow Lam. Information on the
guarantees provided in respect of the banking facilities for our Group are as follows:
(A)
Guarantees provided for SHCL
Amount outstanding
as at 31 December
Financial
Institution
Type of
facility
Type of
Guarantee
Amount
Guaranteed
(S$)
Maturity Date
2006
(S$)
UOB
Overdraft
facility, term
loan and
performance
guarantee
and credit
card
Joint and
several
personal
guarantee
by Mr Tan
Yeow Khoon
and Mr
Edwin Tan
Yeow Lam
22,260,000
–(1)
475,476
UOB
Hire
purchase
facility
Joint and
several
personal
guarantee
by Mr Tan
Yeow Khoon
and Mr
Edwin Tan
Yeow Lam
2,000,000
1 July 2010
DBS
Overdraft
facility,
term loan
and
accounts
receivables
purchase
facility
Joint and
All amounts
several
outstanding
personal
under the
guarantee
facilities
by Mr Tan
Yeow Khoon
and Mr Edwin
Tan Yeow Lam
134
–(3)
2007
(S$)
–(2)
9,790,081
2008
(S$)
18,555,127 19,929,570
912,236
Amount
outstanding
as at
the Latest
Practicable
Date
(S$)
–
543,209
184,433
12,766,567 7,504,451
7,830,609
Amount outstanding
as at 31 December
Financial
Institution
Type of
facility
Type of
Guarantee
Amount
Guaranteed
(S$)
Maturity Date
2006
(S$)
2007
(S$)
30,229
307,223 1,095,371
DBS
Hire
purchase
facility
Joint and
All amounts
several
outstanding
personal
under the
guarantee
facilities
by Mr Tan
Yeow Khoon
and Mr Edwin
Tan Yeow Lam
12 November
2011
DBS
Bridging
loan
Joint and
All amounts
several
outstanding
personal
under the
guarantee
facilities
by Mr Tan
Yeow Khoon
and Mr Edwin
Tan Yeow Lam
20 May 2013
–(4)
Malayan
Banking
Berhad
Overdraft
facility and
term loan
Personal
guarantee
by Mr Tan
Yeow Khoon
8,600,000
–(5)
–(6)
Malayan
Banking
Berhad
Hire
purchase
facilities
Personal
guarantee
by Mr Tan
Yeow Khoon
8,600,000
OCBC
Hire
purchase
facility
Joint and
several
personal
guarantee
by Mr Tan
Yeow Khoon
and Mr
Edwin Tan
Yeow Lam
Sing
Hire
Investments Purchase
& Finance
Facility
Limited
Hong Leong Hire
Finance
Purchase
Limited
Facility
Amount
outstanding
as at
the Latest
Practicable
Date
(S$)
2008
(S$)
–(4)
–(4)
318,948 3,295,773
825,572
4,422,949
3,027,155
6 November 2,343,319
2015
1,806,862
953,075
604,309
All amounts
outstanding
under the
facilities
30 June 2010
1,039,050
887,872
246,877
Personal
guarantee
by Mr Tan
Yeow Khoon
All amounts
outstanding
under the
facilities
13 July 2010
42,744
7,876
Personal
guarantee
by Mr
Edwin Tan
Yeow Lam
All amounts
outstanding
under the
facilities
8 April 2011
47,675
14,832
8,214
4,013
Personal
guarantee
by Mr
Edwin Tan
Yeow Lam
All amounts
outstanding
under the
facilities
11 July 2011
114,581
89,579
64,577
39,575
Notes:
(1)
The term loan under this facility matured on 30 April 2009.
(2)
This facility commenced in May 2007.
(3)
The term loan under this facility will mature on 30 August 2016
(4)
This facility commenced in May 2009.
135
27,252
–(7)
–(7)
(5)
The term loan under this facility will mature on 31 July 2018.
(6)
There were no overdraft facilities provided in FY2006.
(7)
This facility commenced in August 2008.
(B)
Guarantees provided for Soon Hock Transportation
Amount outstanding
as at 31 December
Financial
Institution
Malayan
Banking
Berhad
Type of
facility
Overdraft
facility and
bankers’
guarantee
Type of
Guarantee
Amount
Secured
(S$)
Maturity Date
Joint and
several
personal
guarantee
by Mr Tan
Yeow Khoon
and Mr Edwin
Tan Yeow Lam
378,000
N.A.(1)
2006
(S$)
2007
(S$)
42,766
166,273
Amount
outstanding
as at
the Latest
Practicable
Date
(S$)
2008
(S$)
–(2)
–(2)
Notes:
(1)
The overdraft facility is repayable on demand.
(2)
The overdraft facility was not utilised in FY2008 and for the period commencing 1 January 2009 up to the
Latest Practicable Date.
(C)
Guarantees provided for Cogent Automotive
Amount outstanding
as at 31 December
Financial
Institution
DBS
Type of
facility
Overdraft
facility
Type of
Guarantee
Amount
Secured
(S$)
Joint and
several
personal
guarantee
from Mr Tan
Kok Sian,
Mr Tan Yeow
Khoon and
Mr Edwin Tan
Yeow Lam
All amounts
outstanding
under the
facilities
Maturity Date
N.A.(1)
2006
(S$)
2007
(S$)
–(2)
Amount
outstanding
as at
the Latest
Practicable
Date
(S$)
2008
(S$)
–(2)
–(2)
–(2)
Notes:
(1)
The overdraft facility is repayable on demand.
(2)
The overdraft facility was not utilised in FY2006, FY2007 and for the period commencing 1 January 2009 up
to the Latest Practicable Date.
Such guarantees were not granted on an arm’s length basis. The largest aggregate amount
outstanding under the guarantees provided by our Directors for FY2006, FY2007, FY2008
and the period commencing 1 January 2009 up to the Latest Practicable Date was
approximately S$37,533,528. We intend to request for the discharge of the personal
guarantees provided by Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam after our listing on
the SGX-ST. Subject to the outcome of ongoing discussions, this is expected to take place
only if the banks agree to discharge such personal guarantees on terms not less favourable
than the existing terms in relation to such loans. Mr Tan Yeow Khoon and Mr Edwin Tan Yeow
Lam will continue to provide the guarantees in the event that the proposed terms of
discharge of the guarantees are on less favourable terms than the existing terms.
136
Chapter 9 of the Listing Manual
Under Chapter 9 of the Listing Manual, where a listed company or any of its subsidiaries or associated
companies over which the listed company has control (other than a subsidiary or associated company
that is listed on an approved foreign stock exchange) proposes to enter into a transaction with the listed
company’s interested persons, shareholders’ approval and/or an immediate announcement is required in
respect of the transaction if the value of the transaction is equal to or exceeds certain financial
thresholds. In particular, shareholders’ approval is required where the value of such a transaction is not
below S$100,000 and is:
(i)
equal to or more than 5.0% of the Group’s latest audited NTA; or
(ii)
equal to or more than 5.0% of the Group’s latest audited NTA, when aggregated with other
transactions entered into with the same interested person during the same financial year.
Definitions under the Listing Manual
Under the Listing Manual:
(a)
the term “interested person” is defined to mean a director, chief executive officer, or controlling
shareholder of the listed company or an associate of any such director, chief executive officer or
controlling shareholder; and
(b)
the term “associate” is defined to mean:
(i)
(ii)
in relation to any director, chief executive officer, substantial shareholder or controlling
shareholder (being an individual):
his immediate family;
the trustee of any trust of which he and his immediate family is a beneficiary or, in the
case of a discretionary trust, is a discretionary object; and
any company in which he and his immediate family (that is, the spouse, child, adopted
child, step-child, sibling or parent) together (directly or indirectly) have an interest of
30% or more;
in relation to a substantial shareholder or a controlling shareholder (being a company)
means any other company which is its subsidiary or holding company or is a subsidiary of
such holding company or one in the equity of which it and/or such other company or
companies taken together (directly or indirectly) have an interest of 30% or more.
137
REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS
Our Audit Committee, which comprises our Independent Directors, will review all interested person
transactions on a quarterly basis to ensure that they are carried out on normal commercial terms and are
not prejudicial to the interests of our Shareholders by ensuring that the following policies are adopted by
the management and reviewed by the internal auditors:
(a)
market rates for the same or substantially similar types of transactions entered into between us and
unrelated third parties will be used as benchmarks to determine whether the terms and price
offered to or received from the interested person are no more favourable than those extended to
unrelated third parties. Quotations will be obtained from at least two third parties and market rates
will be derived through the prices and terms of such comparative offers from these third parties;
(b)
in determining the most competitive pricing, the suitability, quality and cost of the product or
service, and the experience and expertise of the supplier will be taken into consideration;
(c)
in relation to sales by our Group to interested persons, unless otherwise approved by the Audit
Committee, the interested persons will be charged at rates not lower than that charged to
independent third parties; and
(d)
if there is a potential conflict of interests arising out of any transaction to be entered into between
our Group and our Directors or their respective associates, the interested Director(s) shall abstain
from voting at the relevant board meetings of our Company in respect of such transactions and
shall not be counted in the quorum.
All interested persons transactions above S$100,000 are to be approved by a Director who shall not be
an interested person in respect of the particular transaction. Interested person transactions below
S$100,000 do not require such approval.
Any contracts to be made with an interested person shall not be approved unless the pricing is
determined in accordance with our usual business practices and policies, consistent with the usual
margin given or price received by us for the same or substantially similar type of transactions between us
and unrelated parties and the terms are no more favourable than those extended to or received from
unrelated parties.
In addition, we shall monitor all interested person transactions entered into by us categorising the
transactions as follows:
(i)
a “Category 1” interested person transaction is one where the value thereof is in excess of 3% of
the NTA of our Group; and
(ii)
a “Category 2” interested person transaction is one where the value thereof is below or equal to
3% of the NTA of our Group.
All “Category 1” interested person transactions must be approved by our Audit Committee prior to entry,
whereas “Category 2” interested person transactions need not be approved by our Audit Committee prior
to entry but shall be reviewed on a quarterly basis by our Audit Committee.
In the event that a member of the Audit Committee is interested in any of the interested person
transactions, he will abstain from reviewing that particular transaction.
If the Audit Committee deems necessary, internal auditors will be appointed to review interested person
transactions on a quarterly basis to ensure full compliance with the terms of the executed agreements
and rules and regulations implemented by the SGX-ST for both on-going and future interested person
transactions. The report of such internal auditors will be submitted to the Audit Committee for their review.
The Audit Committee will review the quarterly internal audit reports to ascertain that the guidelines and
procedures established to monitor interested person transactions have been complied with.
138
The quarterly report shall detail the basis and procedures used to determine the terms of the transactions
and whether the terms are normal commercial terms and not prejudicial to the interests of our
Shareholders. Please refer to the Section entitled “Directors, Executive Officers and Staff - Corporate
Governance” of this Prospectus for more details of our Audit Committee.
Our Audit Committee will also review all interested person transactions to ensure that the then prevailing
rules and regulations of the SGX-ST (in particular, Chapter 9 of the Listing Manual) are complied with.
We will also endeavour to comply with the principles of and best practices set out in the Listing Manual.
CONFLICT OF INTERESTS
In general, a conflict of interests situation arises when any of our Directors, Controlling Shareholders or
their Associates carries on or has any interest in any other corporation carrying on the same business or
dealing in similar products as our Group.
SHIG is a company wholly-owned by our Executive Chairman and CEO, Mr Tan Yeow Khoon, who is also
a director in SHIG. APWH is a company which will be wholly-owned by SHIG. As at the Latest
Practicable Date, Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam are directors of APWH. Mr Tan Yeow
Khoon and Mr Edwin Tan Yeow Lam are not involved in the day-to-day management of SHIG and APWH.
SHIG and APWH going forward, will be in the business of storage and distribution of wine and related
services, an area of operations which is distinct from our existing industrial warehousing operations. SHIG
and APWH’s operations are targeted at a niche clientele comprising mainly of wine distributors and
companies who require specialised storage facilities to store wines at specific temperatures and
environments. We currently do not provide such specialised storage facilities and services.
We do not believe there are any conflicts of interest between SHIG, APWH and our Group. However, in
the event of any potential conflicts of interest between SHIG, APWH and ourselves, Mr Tan Yeow Khoon
and Mr Edwin Tan Yeow Lam have undertaken that, for as long as they hold any direct or indirect
shareholding in SHIG or APWH and/or are directors of APWH and/or SHIG, as the case may be, they will
abstain from participating in any discussion or voting, as a Director of our Company, on any matter that
may involve or relate to a conflicting interest in our Group (which includes any future plan to expand our
operations to comprise specialised storage facilities).
Accordingly, our Directors are of the view that such potential conflicts of interest have been resolved.
SHPD is a company wholly-owned by our Executive Chairman and CEO, Mr Tan Yeow Khoon. Mr Tan
Yeow Khoon is a director in SHPD and is not involved in the day-to-day affairs and management of
SHPD. SHPD currently has no operations apart from the leasing of 11 Jalan Terusan and Jurong Port
Road to SHCL. We are in the process of transferring these properties to SHCL. In connection therewith,
pursuant to a Deed of Undertaking dated 18 December 2009, SHPD has undertaken that it will lease out
these properties to SHCL exclusively for the period until the transfers of the properties to SHCL are
completed. Upon completion of the transfer process, the transaction will cease. Going forward, SHPD will
be in the business of property development. Accordingly, apart from procuring the abovementioned
undertaking from SHPD, our Directors are of the view that the adoption of measures to mitigate the
conflict of interest between our Group and SHPD are not necessary. Please refer to the section entitled
“Interested Person Transactions and Conflicts of Interest - Present and On-going Interested Person
Transactions” of this Prospectus for more details.
To minimise the incidence of conflicts of interest going forward, each of Mr Tan Yeow Khoon and Mr
Edwin Tan Yeow Lam has also undertaken, pursuant to separate Deeds of Non-Competition, that he shall
not, inter alia, engage directly or indirectly in any business which competes with any business carried on
or proposed to be carried on by our Group so long as he remains a Director and/or Controlling
Shareholder (individually or collectively with each other) of the Company.
139
Save as disclosed above and in the section entitled “Interested Person Transactions” of this Prospectus,
none of our Directors, Controlling Shareholders and key executives or their respective Associates has any
material interest, direct or indirect, in:
(a)
any company carrying on the same business or deals in similar products as our Company or any of
our Subsidiaries;
(b)
any enterprise or company that is our Group’s customer or supplier of goods or services; and/or
(c)
any material transactions to which we were or are to be a party.
140
GENERAL AND STATUTORY INFORMATION
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS
1.
The name, age, address, principal occupation and business and working experience of each of our
Directors and Executive Officers are set out in the section entitled “Directors, Executive Officers
and Staff” of this Prospectus.
2.
Save as disclosed below, none of our Directors or Executive Officers has:
(a)
at any time during the last 10 years, had an application or a petition under any bankruptcy
laws of any jurisdiction filed against him or against a partnership of which he was a partner
at the time when he was a partner or at any time within two years from the date he ceased
to be a partner;
(b)
at any time during the last 10 years, had an application or a petition under any law of any
jurisdiction, filed against an entity (not being a partnership) of which he was a director or an
equivalent person or a key executive, at the time when he was a director or an equivalent
person or a key executive of that entity or at any time within two years from the date he
ceased to be a director or an equivalent person or a key executive of that entity, for the
winding up or dissolution of that entity or, where that entity is the trustee of a business trust,
that business trust, on the ground of insolvency;
(c)
any unsatisfied judgment against him;
(d)
ever been convicted of any offence, in Singapore or elsewhere, involving fraud or dishonesty
which is punishable with imprisonment, or have been the subject of any criminal proceedings
(including any pending criminal proceedings of which he is aware) for such purpose;
(e)
ever been convicted of any offence, in Singapore or elsewhere, involving a breach of any law
or regulatory requirement that relates to the securities or futures industry in Singapore or
elsewhere, or have been the subject of any criminal proceedings (including any pending
criminal proceedings of which he is aware) for such breach;
(f)
at any time during the last 10 years, had judgment entered against him in any civil
proceedings in Singapore or elsewhere involving a breach of any law or regulatory
requirement that relates to the securities or futures industry in Singapore or elsewhere, or a
finding of fraud, misrepresentation or dishonesty on his part, or been the subject of any civil
proceedings (including any pending civil proceedings of which he is aware) involving an
allegation of fraud, misrepresentation or dishonesty on his part;
(g)
ever been convicted in Singapore or elsewhere of any offence in connection with the
formation or management of any entity or business trust;
(h)
ever been disqualified from acting as a director or an equivalent person of any entity
(including the trustee of a business trust), or from taking part directly or indirectly in the
management of any entity or business trust;
(i)
ever been the subject of any order, judgment or ruling of any court, tribunal or governmental
body permanently or temporarily enjoining him from engaging in any type of business
practice or activity;
(j)
ever, to his knowledge, been concerned with the management or conduct, in Singapore or
elsewhere, of the affairs of —
(i)
any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere;
141
(ii)
any entity (not being a corporation) which has been investigated for a breach of any
law or regulatory requirement governing such entities in Singapore or elsewhere;
(iii)
any business trust which has been investigated for a breach of any law or regulatory
requirement governing business trusts in Singapore or elsewhere; or
(iv)
any entity or business trust which has been investigated for a breach of any law or
regulatory requirement that relates to the securities or futures industry in Singapore or
elsewhere,
in connection with any matter occurring or arising during the period when he was so
concerned with the entity or business trust; and
(k)
been the subject of any current or past investigation or disciplinary proceedings, or have
been reprimanded or issued any warning, by the Authority or any other regulatory authority,
exchange, professional body or government agency, whether in Singapore or elsewhere.
Disclosures relating to Mr Tan Yeow Khoon, Mr Edwin Tan Yeow Lam and Mr Yeo Peng Koon
in respect of fines and payments previously made
Mr Tan Yeow Khoon has been fined a sum ranging from S$100 to S$200 for illegal gambling and a
sum of approximately S$200 for allowing a third party to use his PSA pass to enter the premises of
PSA in the 1970s. The sums have been fully paid. In January 2001 and March 2007, Mr Tan Yeow
Khoon paid sums of S$97,810 and approximately S$28,098 to the Inland Revenue of Singapore
(“IRAS”) pursuant to offers of composition made in respect of (i) his omission to declare rental
income for years of assessment from 1993 to 1999, omission to declare commission income for the
year of assessment 1996 and incorrect claim of wife relief for years of assessment from 1994 to
1999; and (ii) his omission to declare interest income for the years of assessment 1997 to 1999,
respectively. The sums have been fully paid.
In February 2007, Mr Edwin Tan Yeow Lam paid a sum of approximately S$32,344 to IRAS
pursuant to an offer of composition made in respect of his omission to declare interest income for
years of assessment 1998 and 1999. The sum has been fully paid.
In 2004, Mr Yeo Peng Koon was fined S$900 for illegal betting. The sum has been fully paid.
Disclosures relating to Mr Chua Cheow Khoon Michael in respect of liquidation of
companies in which he was a past director
Mr Chua Cheow Khoon Michael was an employee of Singapore Technologies Industrial
Corporation Ltd (“STIC”). During his employment with STIC, he was appointed as a director of
Funpolis Asia Pte Ltd (“Funpolis”) and an alternate director of Stars of San Francisco Pte Ltd
(“Stars”), companies in which STIC had equity interests through its subsidiary, Safe Enterprises
Pte. Ltd.
Mr Chua was appointed as a director of Funpolis from 31 October 1995 to 25 January 1999.
Liquidation proceedings were commenced against Funpolis on the grounds of insolvency. Mr Chua
was not a director when Funpolis went into liquidation. He was not involved in the day-to-day
management of Funpolis during the period of his directorship and was not involved in its operations
which led to the commencement of liquidation proceedings.
Mr Chua was also appointed as an alternate director of Stars on 18 April 1997. Liquidation
proceedings were commenced against Stars on the grounds of insolvency. Mr Chua was not
involved in the day-to-day management of Stars and was not involved in its operations which led to
the commencement of liquidation proceedings.
3.
No person (including any Director or Executive Officer) has been, or is entitled to be, given an
option to subscribe for or purchase any Shares in or debentures of our Company and its
subsidiaries.
142
4.
Saved as disclosed under the sections entitled “General Information of our Group – Restructuring
Exercise” and “Interested Person Transactions and Conflicts of Interests”, no Director or expert is
interested, directly or indirectly, in the promotion of, or in any property or assets which have, within
the two years preceding the date of this Prospectus, been acquired or disposed of by or leased to
our Company or any of our subsidiaries or are proposed to be acquired or disposed of by or leased
to our Company or any of our subsidiaries.
SHARE CAPITAL
5.
Save as set out under the section entitled “Share Capital” of this Prospectus, there were no
changes in the share capital of our Company and any of our subsidiaries within the three years
preceding the Latest Practicable Date.
MATERIAL CONTRACTS
6.
The following contracts, not being contracts entered into in the ordinary course of business, have
been entered into by our Company and our subsidiaries within the two years preceding the date of
lodgement of this Prospectus and are or may be material:
(a)
The option to purchase in respect of 20/20A Tanjong Pagar Road Singapore 088443 dated 6
December 2008 between Malathi Sitaram and Sitaram K Raman (on behalf of Tedix
Investments Pte Ltd) and SHCL, and accepted by Tedix Investments Pte Ltd on 6 January
2009;
(b)
The put and call option agreement dated 9 November 2009 and the sale and purchase
agreement dated 15 December 2009 in respect of the sale of 7 Penjuru Close between
SHCL and HSBC Institutional Trust Services (Singapore) Limited (as a trustee of Mapletree
Logistics Trust);
(c)
The sale and purchase agreement dated 22 February 2008 in respect of 1 Chia Ping Road
between PBI Interstate Pte. Ltd. and SHCL;
(d)
The option to purchase in respect of 200 Jalan Sultan dated 28 July 2009 between Everlane
Pte Ltd and Soon Hock Transportation, and accepted by Everlane Pte Ltd on 12 August
2009;
(e)
The option to purchase in respect of 19 Tuas Avenue 20 dated 14 September 2009 between
Hetat Pte Ltd and SHCL, and accepted by Hetat Pte Ltd on 5 October 2009;
(f)
The conditional sale and purchase agreement dated 18 December 2009 between SHPD and
SHCL in relation to the sale of 11 Jalan Terusan to SHCL;
(g)
The conditional sale and purchase agreement dated 18 December 2009 between SHPD and
SHCL in relation to the sale of Jurong Port Road to SHCL;
(h)
The sale and purchase agreement dated 18 January 2010 between our Company and Mr
Tan Yeow Khoon and Mr Edwin Tan Yeow Lam pursuant to which our Company acquired
from Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam the entire share capital of SHCL;
(i)
from Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam the entire share capital of Soon Hock
Transportation;
(j)
from Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam the entire share capital of Cogent
Investment; and
143
(k)
The sale and purchase agreement dated 18 January 2010 between our Company, Cogent
Investment, Mr Tan Yeow Khoon and Mr Edwin Tan Yeow Lam pursuant to which our
Company acquired from Cogent Investment, Mr Tan Yeow Khoon and Mr Edwin Tan Yeow
Lam the entire share capital of Cogent Automotive;
LITIGATION
7.
Save as disclosed below, we are not engaged in any legal or arbitration proceedings, including
those which are pending or known to be contemplated, which may have or have had in the 12
months immediately preceding the date of the lodgement of this document with the Authority, a
material effect on our financial position or profitability. Our Directors have no knowledge of any
proceedings pending or threatened against our Company or any of our subsidiaries or any facts
likely to give rise to any litigation, claims or proceedings which might materially affect the financial
position or the business of our Company or any of our subsidiaries.
In February 2009, a claim was commenced before the High Court against our subsidiary, SHCL, in
respect of a dispute arising from four motor vehicles which were held under a lien by SHCL. The
plaintiff is the registered owner of the four motor vehicles and had engaged a third party agent to
place the vehicles in a warehouse managed by SHCL. As warehousing management fees were
outstanding and owing to SHCL, SHCL did not release the vehicles to the third party agent until all
amounts had been paid. The plaintiff commenced a claim for the losses incurred as a result of its
inability to sell the motor vehicles during the period they were held under lien by SHCL. As at the
Latest Practicable Date, the plaintiff has not specified the exact amount of damages claimed. We
have filed our defence and are awaiting further directions on the proceedings. We will make
announcements on SGXNET as and when there are updates on this claim.
In September 2009, a writ of summons was filed in the District Court against our subsidiary,
Cogent Automotive, in relation to a dispute arising from the reinstatement of premises leased from
South Grand Textiles (Private) Limited (“South Grand”). Cogent Automotive had, with the prior
written approval of South Grand, renovated the leased premises during the lease term and had
subsequently reinstated the premises upon expiry of the lease. There was disagreement as to the
condition of the reinstated premises and South Grand commenced their own reinstatement works
and claimed against Cogent Automotive for reinstatement costs and loss of rental income arising
therefrom. We have accordingly made appropriate provisions amounting to S$88,000 in Cogent
Automotive’s accounts in accordance with applicable accounting standards. As at the Latest
Practicable Date, South Grand has filed their reply to our defence and counterclaim and we are in
discussions with our legal advisers as to our next steps in the proceedings. We will release
announcements on SGXNET as and when there are material developments in relation to this
claim.
MISCELLANEOUS
8.
The nature of our business is stated in this Prospectus. As at the Latest Practicable Date, the
corporations which are deemed to be related to us by virtue of Section 6 of the Companies Act are
set out in the section entitled “Group Structure” of this Prospectus.
9.
Save as disclosed under the sections entitled “Risk Factors” and “Prospects, Strategies and Future
Plans” of this Prospectus, our Directors are not aware of any relevant material information,
including trading factors or risks not mentioned elsewhere in this Prospectus, which is unlikely to
be known or anticipated by the general public and which could materially affect the profits of our
Company and our subsidiaries.
10.
No commission, discount or brokerage has been paid or other special terms granted within the two
years preceding the Latest Practicable Date or is payable to any Director, promoter, expert,
proposed Director or any other person for subscribing or agreeing to subscribe or procure
subscriptions for any shares in, or debentures of, our Company or any of our subsidiaries.
144
11.
We currently have no intention of changing our auditors after the listing of our Company on the
SGX-ST.
The names, addresses and professional qualifications (including any membership in a professional
body) of our Company for FY2007 and FY2008 and the period from 1 January 2009 up to the date
of lodgment of this Prospectus are set out below:
Period
Name, Membership
and Address
Professional Body
Partner-in-charge/
Professional Qualification
18 June 2007 –
1 October 2009
C. C. Yang & Co.
Certified Public
Accountants Singapore
10 Anson Road
#13-16 International Plaza
Singapore 079903
Institute of Certified
Public Accountants
of Singapore
Tan Hwee Mei
Certified Public
Accountant
Singapore
2 October 2009 –
Present
Certified Public
Accountants Singapore
6 Shenton Way
#32-00 DBS Building Tower Two
Singapore 068809
Institute of Certified
Public Accountants
of Singapore
Seah Gek Choo
Certified Public
Accountant
Singapore
12.
No expert employed on a contingent basis by our Company or any of our subsidiaries, has a
material interest, whether direct or indirect, in the shares of our Company or our subsidiaries, or
has a material economic interest, whether direct or indirect, in our Company, including an interest
in the success of the Invitation.
13.
Save as disclosed in this Prospectus, our Directors are not aware of any event which has occurred
since 1 July 2009 up to the Latest Practicable Date, which may have a material effect on the
financial information provided in Appendix A – “Independent Auditors’ Report and Combined
Financial Statements for the Years ended 31 December 2006, 2007 and 2008”, Appendix B –
“Independent Auditors’ Review Report and Combined Interim Condensed Financial Statements for
the Six Months Ended 30 June 2009” and Appendix C - “Independent Auditors’ Report and
Unaudited Proforma Group Financial Information” of this Prospectus.
CONSENTS
14.
Deloitte & Touche LLP, as the Independent Auditors and Reporting Accountants have given and
have not withdrawn their written consent to the issue of this Prospectus with the inclusion herein of
their name and all references thereto, the reports, namely (i) the “Independent Auditors’ Report on
the Combined Financial Statements for the Years ended 31 December 2006, 2007 and 2008” as
set out in Appendix A of this Prospectus; (ii) the “Independent Auditors’ Review Report on the
Combined Interim Condensed Financial Statements for the Six Months Ended 30 June 2009” as
set out in Appendix B of this Prospectus; and (iii) the “Independent Auditors’ Report on the
Unaudited Proforma Group Financial Information” as set out in Appendix C of this Prospectus in
the form and context in which they appear in this Prospectus and to act in such capacity in relation
to this Prospectus.
15.
Kim Eng Corporate Finance Pte. Ltd., named as Issue Manager and Joint Underwriter and Joint
Placement Agent has given, and has not withdrawn its written consent to the issue of this
Prospectus with the inclusion herein of, and all references to, its name and all references thereto in
the form and context in which it appears in this Prospectus, and to act in such capacity in relation
to this Prospectus.
16.
UOB Kay Hian Private Limited, named as Joint Underwriter and Joint Placement Agent has given,
and has not withdrawn its written consent to the issue of this Prospectus with the inclusion herein
of, and all references to, its name and all references thereto in the form and context in which it
appears in this Prospectus, and to act in such capacity in relation to this Prospectus.
145
17.
CB Richard Ellis (Pte) Ltd, named as an Independent Valuer, has given, and has not withdrawn its
written consent to the issue of this Prospectus with the inclusion herein of, and all references to, its
name and all references thereto, the statements on page 133 of this Prospectus under the section
entitled “Interested Person Transactions and Conflicts of Interests” in the form and context in which
it appears in this Prospectus, and to act in such capacity in relation to this Prospectus.
18.
Each of the Solicitors to the Invitation, the Solicitors to the Issue Manager, Joint Underwriters and
Joint Placement Agents, the Joint Placement Agents, the Share Registrar, the Principal Banks and
the Receiving Banks do not make, or purport to make, any statement in this document or any
statement upon which a statement in this document is based and, to the maximum extent
permitted by law, expressly disclaim and take no responsibility for any liability to any person which
is based on, or arises out of, the statements, information or opinions in this document.
RESPONSIBILITY STATEMENT BY OUR DIRECTORS AND THE VENDORS
19.
This Prospectus has been seen and approved by our Directors and the Vendors and they accept
full responsibility for the accuracy of the information given herein and confirm, having made all
reasonable enquiries, that to the best of their knowledge and belief, the facts stated and the
opinions expressed in this Prospectus are fair and accurate in all material respects and there are
no material facts the omission of which would make any statement in this Prospectus misleading.
DOCUMENTS AVAILABLE FOR INSPECTION
20.
The following documents or copies thereof may be inspected at our registered office at 7 Penjuru
Close, #05-00, Singapore 608779 during normal business hours for a period of six months from the
date of registration by the Authority of this Prospectus:
(a)
the Memorandum and Articles of Association of our Company;
(b)
the material contracts referred to in paragraph 6 above;
(c)
the letters of consent referred to in paragraphs 14 to 18 above;
(d)
the valuation reports referred to under the section entitled “Interested Person Transactions
and Conflicts of Interests” of this Prospectus;
(e)
the Service Agreements referred to under the section entitled “Service Agreements” of this
Prospectus;
(f)
the Independent Auditors’ Report and Combined Financial Statements for the Years ended
31 December 2006, 2007 and 2008;
(g)
the Independent Auditors’ Review Report and Combined Interim Condensed Financial
Statements for the Six Months Ended 30 June 2009; and
(h)
the Independent Auditors’ Report and Unaudited Proforma Group Financial Information.
146
APPENDIX A – INDEPENDENT AUDITORS' REPORT AND
COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED
31 DECEMBER 2006, 2007 AND 2008
INDEPENDENT AUDITORS’ REPORT ON THE COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
9 February 2010
The Board of Directors
7 Penjuru Close
#05-00
Singapore 608779
Dear Sirs
We have audited the combined financial statements of Cogent Holdings Limited (the “Company”) and its
subsidiaries (the “Group”). The combined financial statements comprise the combined statements of
financial position as at 31 December 2006, 2007 and 2008, and the related combined statements of
comprehensive income, combined statements of changes in equity and combined statements of cash
flows of the Group for the years ended 31 December 2006, 2007 and 2008 (the “Relevant Periods”), and
a summary of significant accounting policies and other explanatory notes, as set out on pages A-3 to
A-45.
Management’s Responsibility for the Combined Financial Statements
Management is responsible for the preparation and fair presentation of these combined financial
statements in accordance with the Singapore Financial Reporting Standards. This responsibility includes:
devising and maintaining a system of internal accounting controls sufficient to provide a reasonable
assurance that assets are safeguarded against loss from unauthorised use or disposition; and
transactions are properly authorised and that they are recorded as necessary to permit the preparation of
true and fair profit and loss account and balance sheet and to maintain accountability of assets; selecting
and applying appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these combined financial statements based on our audit.
We conducted our audit in accordance with the Singapore Standards on Auditing. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance on whether the combined financial statements are free from material misstatement.
A-1
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the combined financial statements. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the combined financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the combined financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the combined financial statements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the combined financial statements of the Group are properly drawn up in accordance with
the Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of
the Group as at 31 December 2006, 2007 and 2008 and of the results, changes in equity and cash flows
of the Group for the Relevant Periods.
These combined financial statements have been prepared solely in connection with the proposed listing
of Cogent Holdings Limited on the Singapore Exchange Securities Trading Limited. This report is made
solely to you, as a body and for no other purpose. We do not assume responsibility towards or accept
liability to any other person for the contents of this report.
Yours faithfully
Public Accountants and
Singapore
Seah Gek Choo
Partner
A-2
COMBINED STATEMENTS OF FINANCIAL POSITION
As at 31 December 2006, 2007 and 2008
Note
2006
2007
2008
$
$
$
ASSETS
Current assets
Trade receivables
Other receivables
6
7
8
9
3,044,917
10,828,554
707,535
35,462
1,317,825
17,857,839
3,039,388
25,950
5,324,072
16,075,416
2,908,496
22,820
12
14,616,468
–
22,241,002
–
24,330,804
1,500,000
14,616,468
22,241,002
25,830,804
18,865
19,556,375
1,590,000
–
–
44,705,304
2,100,000
–
–
50,713,231
556,000
36,000
21,165,240
46,805,304
51,305,231
Total assets
35,781,708
69,046,306
77,136,035
3,878,055
2,302,455
7,045,496
4,310,165
1,117,748
26,781,709
2,374,099
11,992,069
7,981,825
839,398
23,139,917
2,239,890
6,049,790
17,268,139
2,028,870
18,653,919
49,969,100
50,726,606
6,430,610
929,085
310,441
5,803,022
2,064,192
428,025
7,887,261
1,357,210
880,192
7,670,136
8,295,239
10,124,663
500,000
8,957,653
500,000
10,281,967
500,000
15,784,766
9,457,653
10,781,967
16,284,766
35,781,708
69,046,306
77,136,035
Non–current assets
Investment in associate
Other investment
10
11
12
Current liabilities
Trade payables
Other payables
Income tax payable
13
14
15
16
Non–current liabilities
Bank loans
Finance leases
13
14
17
Capital and reserves
Share capital
Accumulated profits
18
Total equity
Total liabilities and equity
See accompanying notes to combined financial statements.
A-3
COMBINED STATEMENTS OF COMPREHENSIVE INCOME
Years ended 31 December 2006, 2007 and 2008
Note
2006
2007
2008
$
$
$
Revenue
19
27,462,992
37,160,355
60,118,486
20
1,013,331
586,462
1,460,805
Cost of services
(14,294,176)
28
Depreciation
11
Changes in fair value of
investment properties
12
–
(20,489,176)
–
(9,121,540)
(12,121,099)
(2,778,283)
(3,071,859)
(4,340,566)
258,039
510,000
(2,559,620)
(3,550,087)
(1,941,020)
(650,625)
(870,369)
10
(5,038)
(18,865)
1,771,517
22
Profit for the year
23
Other comprehensive income for the year
Total comprehensive income for the year
Basic and diluted earnings per share (cents)
24
A-4
(44,000)
(1,999,236)
21
Income tax expense
52,215
(7,235,487)
Finance costs
Profit before tax
(30,835,588)
(485,864)
2,125,388
(301,074)
–
8,799,146
(1,796,347)
1,285,653
1,824,314
7,002,799
–
–
–
1,285,653
1,824,314
7,002,799
0.5
0.7
2.6
COMBINED STATEMENTS OF CHANGES IN EQUITY
Note
At 1 January 2006
Dividends
25
At 31 December 2006
Dividends
25
At 31 December 2007
Dividends
25
At 31 December 2008
Share
capital
Accumulated
profits
Total
$
$
$
500,000
8,672,000
9,172,000
–
1,285,653
1,285,653
–
(1,000,000)
(1,000,000)
500,000
8,957,653
9,457,653
–
1,824,314
1,824,314
–
A-5
(500,000)
500,000
10,281,967
10,781,967
–
7,002,799
7,002,799
–
(1,500,000)
(1,500,000)
15,784,766
16,284,766
500,000
(500,000)
COMBINED STATEMENTS OF CASH FLOWS
2006
2007
2008
$
$
$
1,771,517
2,125,388
8,799,146
Depreciation
Interest expense
Interest income
Dividend income
Excess of fair values of net tangible
Changes in fair value of investment properties
Allowance for doubtful trade receivables
Share of loss in associate
Fair value loss on held-for-trading investments
Gain on disposal of property, plant and equipment
2,778,283
650,625
(49,475)
(275)
3,071,859
870,369
(36,157)
(2,866)
4,340,566
1,941,020
(13,715)
(355)
–
(258,039)
124,708
5,038
–
(303,226)
–
(510,000)
87,494
18,865
9,512
(201,317)
(52,215)
44,000
91,052
–
3,130
(113,720)
Operating cash flows before movements in working capital
4,719,156
5,433,147
15,038,909
(1,147,995)
2,768,815
(943,483)
208,928
(7,116,779)
(2,294,983)
4,946,573
62,893
3,413,143
1,356,234
(6,340,591)
2,761,831
5,605,421
1,030,851
16,229,526
Operating activities
Profit before tax
Adjustments for:
Trade receivables
Other receivables
Trade payables
Other payables
Cash generated from operations
Income tax paid
(440,994)
Net cash from operating activities
5,164,427
(498,710)
532,141
(251,552)
15,977,974
Investing activities
Interest received
Dividend received
Purchase of other investment
Purchase of property, plant and equipment (Note A)
Proceeds from disposal of property, plant and equipment
Net cash flow arising from acquisition
of subsidiaries (Note 28)
Net cash used in investing activities
49,475
275
–
(2,016,083)
1,368,554
–
(597,779)
A-6
36,157
2,866
–
(22,685,130)
345,479
–
(22,300,628)
13,715
355
(36,000)
(7,661,125)
947,840
505,495
(6,229,720)
COMBINED STATEMENTS OF CASH FLOWS
Years ended 31 December 2006, 2007 and 2008 (Continued)
2006
2007
2008
$
$
$
Financing activities
Dividends paid
Interest paid
Obligations under finance leases
Amount due to (from) directors
Amount (from) due to related parties
New bank borrowings raised
Repayment of bank loans
Pledged deposits
(1,000,000)
(650,625)
(2,556,090)
1,426,915
(1,858,115)
–
(578,484)
(1,273,380)
(500,000)
(1,217,978)
(4,125,460)
(1,843,604)
5,452,371
20,902,310
(1,707,195)
1,256,587
–
(1,941,020)
(3,847,798)
1,290,158
314,206
3,872,477
(2,754,978)
(111,879)
Net cash (used in) from financing activities
(6,489,779)
18,217,031
(3,178,834)
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
(1,923,131)
115,847
(3,551,456)
(1,807,284)
6,569,420
(5,358,740)
Cash and cash equivalents at end of year (Note B)
(1,807,284)
(5,358,740)
1,210,680
Note A
During the years ended 31 December 2006, 2007 and 2008, the Group acquired property, plant and
equipment with an aggregate cost of $4,621,031, $28,364,950 and $10,343,829 of which $2,604,948,
$5,332,211 and $2,682,704 were acquired under finance leases respectively. As at 31 December 2006,
2007 and 2008 cash payment of $2,016,083, $23,032,739 and $7,661,125 were made to purchase
property, plant and equipment respectively.
Note B
Cash and cash equivalents comprise:
2006
2007
2008
$
$
$
Less: Bank overdrafts
3,044,917
(3,278,470)
1,317,825
(6,359,421)
5,324,072
(3,684,369)
Less: Pledged deposits
(233,553)
(1,573,731)
(5,041,596)
(317,144)
1,639,703
(429,023)
Cash and cash equivalents
(1,807,284)
(5,358,740)
1,210,680
A-7
NOTES TO COMBINED FINANCIAL STATEMENTS
31 December 2006, 2007 and 2008
1.
GENERAL
The Company (Registration No. 200710813D) is incorporated in Singapore with its registered office
and principal place of business at 7 Penjuru Close, #05-00, Singapore 608779. The combined
financial statements are expressed in Singapore dollars.
The principal activity of the Company is that of an investment holding company.
The principal activities of the subsidiaries are disclosed below.
Pursuant to a Group restructuring exercise to rationalise the structure of the Company and its
subsidiaries (hereinafter collectively referred to as the “Group”) in preparation for the proposed
listing of the Company on the Singapore Exchange Securities Trading Limited, the Company
underwent a restructuring exercise (“Restructuring Exercise”) involving the following:
(a)
Acquisition of SH Cogent Logistics Pte Ltd (“SHCL”)
On 18 January 2010, the Company entered into a sale and purchase agreement to acquire
the entire interest in SHCL, which are under common control, from the respective
shareholders for a consideration of $12,674,975 based on the net tangible assets of SHCL
as at 31 December 2008. The consideration was satisfied by the allotment and issue of
1,400,000 ordinary shares in the Company. The acquisition was completed on 19 January
2010.
(b)
Acquisition of Soon Hock Transportation Pte. Ltd. (“SHT”)
the entire interest in SHT, which are under common control, from the respective
shareholders for a consideration of $2,885,386 based on the net tangible assets of SHT as
at 31 December 2008. The consideration was satisfied by the allotment and issue of
300,000 ordinary shares in the Company. The acquisition was completed on 19 January
2010.
(c)
Acquisition of Cogent Investment Group Pte. Ltd. (“CIG”) formerly known as HNH
Group Pte. Ltd. and Cogent Automotive Logistics Pte. Ltd. (“CAL”) formerly known as
HNH International Pte. Ltd.
On 31 July 2008, the shareholders of the Company acquired an effective equity interest of
99% in both CIG and CAL from third parties for an aggregate consideration of approximately
$1.78 million.
In May 2009, one of the shareholders of the Company acquired the remaining 1% and
0.33% of equity interest in CIG and CAL respectively for an aggregate consideration of
$18,000.
the entire equity interest of CIG, which are under common control, from the respective
shareholders for a consideration of $897,250 based on the net tangible assets of CIG as at
31 December 2008. The consideration was satisfied by the allotment and issue of 99,998
ordinary shares in the Company. The acquisition was completed on 19 January 2010.
the entire interest of CAL, which are under common control, from the respective
shareholders for a consideration of $1,827,154 based on the net tangible assets of CAL as
at 31 December 2008. The consideration was satisfied by the allotment and issue of
200,000 ordinary shares in the Company and CIG renounced its 66.67% equity interest in
CAL to the respective shareholders. The acquisition was completed on 19 January 2010.
A-8
31 December 2006, 2007 and 2008
1.
GENERAL (Continued)
Upon the completion of the Restructuring Exercise and at the date of this report, the Company has
the following subsidiaries:
Name of subsidiaries
Country of
incorporation
and operations
Attributable
equity interest
of the Group
Principal activity
%
SH Cogent Logistics
Pte Ltd
Singapore
100
Provision of warehousing and
container depot management
services
Soon Hock Transportation
Pte. Ltd.
Singapore
100
Transportation of containers
and cargoes
Cogent Investment Group
Pte. Ltd. (formerly known
as HNH Group Pte. Ltd.)
Singapore
100
Investment holding
Cogent Automotive Logistics
Pte. Ltd. (formerly known
as HNH International
Pte. Ltd.)
Singapore
100
Processing, transportation and
storage of motor vehicles
Basis of preparation of the combined financial statements
For the purpose of preparing this set of combined financial statements, the combined statements of
comprehensive income, combined statements of cash flows and combined statements of changes
in equity for the years ended 31 December 2006, 2007 and 2008 (the “Relevant Periods”) have
been prepared on a combined basis and include the financial information of the companies now
comprising the Group as if the current Group structure had been in existence throughout the
Relevant Periods, or since their respective dates of establishment or acquisition whichever is the
shorter period. The combined statements of financial position of the Group as at 31 December
2006, 2007 and 2008 had been prepared to present the assets and liabilities of the Group as at
those dates as if the current Group structure had been in existence at these dates.
The combined financial statements of the Group for the years ended 31 December 2006, 2007 and
2008 were authorised for issue by the Board of Directors of the Company on 9 February 2010.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The combined financial statements are prepared in accordance with
the historical cost basis, except as disclosed in the accounting policies below, and are drawn up in
accordance with the Singapore Financial Reporting Standards (“FRS”).
ADOPTION OF NEW AND REVISED STANDARDS – The Group has adopted all the new and
revised FRSs and Interpretations of FRS (“INT FRS”) effective from 1 January 2008 since the
beginning of the earliest Relevant Periods presented.
A-9
31 December 2006, 2007 and 2008
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Group has early adopted the following FRSs in advance of their effective date:
FRS 1 (Revised) – Presentation of Financial Statements (Revised)
FRS 1 (Revised) will change the basis for presentation and structure of the combined financial
statements. It does not change the recognition, measurement or disclosure of specific transactions
and other events required by other FRSs.
FRS 108 – Operating Segments
FRS 108 requires operating segments (see Note 26) to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief operating decision
makers in order to allocate resources to the segment and to assess its performance. In contrast,
the predecessor standard (FRS 14 Segment Reporting) required an entity to determine two sets of
segments (primary and secondary segments) using a risks and rewards approach, with the entity’s
system of internal financial reporting to key management personnel serving only as the starting
point for the identification of such segments.
At the date of authorisation of these combined financial statements, the following FRSs, INT FRSs
and amendments to FRSs that were relevant to the Group were issued but not effective:
FRS 27
FRS 103
Amendments to FRS 107
-
INT FRS 117
-
Consolidated and Separate Financial Statements (Revised)
Business Combinations (Revised)
Financial Instruments: Improving Disclosures about
Financial Instruments
Distribution of Non-cash Assets to Owners
Consequential amendments were also made to various standards as a result of these new/revised
standards.
Management anticipates that the adoption of the other FRSs, INT FRSs and amendments to the
FRSs that were issued but effective only in future periods will not have a material impact on the
combined financial statements of the Group in the period of their initial adoption.
BASIS OF COMBINATION - The combined financial statements incorporate the financial
statements of the Company and its subsidiaries and had been prepared using the principles of
merger accounting and on the assumption that the re-organisation of entities controlled by the
same shareholders has been effected as at the beginning of the Relevant Periods presented in
these combined financial statements.
All significant intercompany transactions and balances between Group enterprises are eliminated
on combination.
The acquisition of subsidiaries, other than those involving entities under common control, is
accounted for using the purchase method. The cost of the acquisition is measured at the aggregate
of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control of the acquiree, plus any costs
directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and
contingent liabilities that meet the conditions for recognition under FRS 103 Business
Combinations are recognised at their fair values at the acquisition date, except for non-current
assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 NonCurrent Assets Held for Sale and Discontinued Operations, which are recognised and measured at
fair value less costs to sell.
A-10
31 December 2006, 2007 and 2008
2.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the
excess of the cost of the business combination over the Group’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the
Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent
liabilities exceeds the cost of the business combination, the excess is recognised immediately in
profit or loss.
The interests of non-controlling shareholders in the acquiree is initially measured at the noncontrolling interests’ proportion of the net fair value of the assets, liabilities and contingent liabilities
recognised.
FINANCIAL INSTRUMENTS - Financial assets and financial liabilities are recognised on the
Group’s combined statements of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument
and of allocating interest income or expense over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash receipts or payments through the expected
life of the financial instrument, or where appropriate, a shorter period. Income and expense is
recognised on an effective interest rate basis for debt instruments other than those financial
instruments “at fair value through profit or loss”.
Financial assets
Financial assets at fair value through profit or loss (“FVTPL”)
Financial assets are classified as at FVTPL where the financial asset is either held-for-trading or it
is designated as at FVTPL.
A financial asset is classified as held-for-trading if:
it has been acquired principally for the purpose of selling in the near future; or
it is a part of an identified portfolio of financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as at FVTPL upon
initial recognition if:
such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or
the financial asset forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance is evaluated on a fair value basis, in accordance with
the Group’s documented risk management or investment strategy, and information about the
grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and FRS 39
Financial Instruments: Recognition and Measurement permits the entire combined contract
(asset or liability) to be designated as at FVTPL.
A-11
31 December 2006, 2007 and 2008
2.
Financial assets (Continued)
Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or
loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any
dividend or interest earned on the financial assets. Fair value is determined in the manner
described in Note 4.
Cash and cash equivalents comprise cash on hand and demand deposits, bank overdrafts and
other short-term highly liquid investments that are readily convertible to known amount of cash and
are subject to an insignificant risk of changes in value. Bank overdrafts exclude bank overdraft
drawn on the construction-in-progress.
Loans and receivables
Trade and other receivables are measured at amortised cost using the effective interest method
less impairment. Interest is recognised by applying the effective interest method, except for shortterm receivables where the recognition of interest would be immaterial.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at end of each reporting period.
Financial assets are impaired where there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the estimated future cash
flows of the financial assets have been impacted. The amount of the impairment is the difference
between the asset’s carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate.
The carrying amount of the receivables is reduced through the use of an allowance account.
When a receivable is uncollectible, it is written off against the allowance. Subsequent recoveries of
amounts previously written off are credited to allowance account. Changes in the carrying amount
of the allowances account are recognised in profit or loss.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment loss was recognised, the previously
recognised impairment loss is reversed through profit or loss to the extent the carrying amount of
the receivables at the date the impairment is reversed does not exceed what the amortised cost
would have been had the impairment not been recognised.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from
the asset expire, or it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another entity. If the Group neither transfers nor retains substantially all
the risks and rewards of ownership and continues to control the transferred asset, the Group
recognises its retained interest in the asset and an associated liability for amounts it may have to
pay. If the Group retains substantially all the risks and rewards of ownership of a transferred
financial asset, the Group continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
A-12
31 December 2006, 2007 and 2008
2.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group are classified according to the
substance of the contractual arrangements entered into and the definitions of a financial liability
and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group
after deducting all of the liabilities. Equity instruments are recorded at the proceeds received, net
of direct issue costs.
Other financial liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are
subsequently measured at amortised cost, using the effective interest method, except for shortterm payables where the recognition of interest would be immaterial.
Interest-bearing bank loans are initially measured at fair value, and are subsequently measured at
amortised cost, using the effective interest method. Any difference between the proceeds (net of
transaction costs) and the settlement or redemption of borrowings is recognised over the term of
the borrowings in accordance with the Group’s accounting policy for borrowing costs (see below).
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are
discharged, cancelled or they expire.
LEASES - Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other leases are classified as
operating leases.
The Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the
relevant lease unless another systematic basis is more representative of the time pattern in which
use benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating
and arranging an operating lease are expensed off to the profit or loss as these are immaterial.
The Group as lessee
Assets held under finance leases are recognised as assets of the Group at their fair value at the
inception of the lease or, if lower, at the present value of the minimum lease payments. The
corresponding liability to the lessor is included in the combined statements of financial position as a
finance lease obligation. Lease payments are apportioned between finance charges and reduction
of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are charged directly to profit or loss, unless they are directly attributable
to qualifying assets, in which case they are capitalised in accordance with the Group’s general
policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the
periods in which they are incurred.
A-13
31 December 2006, 2007 and 2008
2.
Financial liabilities and equity instruments (Continued)
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over
the term of the relevant lease unless another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset are consumed. Contingent rentals
arising under operating leases are recognised as an expense in the period in which they are
incurred.
NON-CURRENT ASSETS HELD FOR SALE – Non-current assets and disposal groups are
classified as held for sale if their carrying amount will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as met only when the sale is highly
probable and the asset (or disposal group) is available for immediate sale in its present condition.
Management must be committed to the sale, which should be expected to qualify for recognition as
a completed sale within one year from the date of classification.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of
the assets’ previous carrying amount and fair value less costs to sell.
OTHER INVESTMENTS – Other investments comprise investments in club memberships which
are stated at cost less any impairment in net recoverable value that has been recognised in profit
or loss.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at cost, less
accumulated depreciation and any accumulated impairment loss.
Properties in the course of construction for production, rental or administrative purposes, or for
purposes yet determined, are carried at cost, less any recognised impairment loss. Cost includes
professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the
Group’s accounting policy. Depreciation of these assets, on the same basis as other property
assets, commences when the assets are ready for their intended use.
Depreciation is charged so as to write off the cost of property, plant and equipment over their
estimated useful lives, using the straight-line method, on the following bases:
Motor vehicles
-
25 years or over the period of lease whichever is lower
5 years
5 years
5 years
5 or 10 years
The estimated useful lives and depreciation method are reviewed at each year end, with the effect
of any changes in estimate accounted for on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the same
basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of
the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful
life.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in profit or
loss.
A-14
31 December 2006, 2007 and 2008
2.
Fully depreciated property, plant and equipment still in use are retained in the combined financial
statements.
INVESTMENT PROPERTY - Investment property, which is property held to earn rentals and/or for
capital appreciation, is measured initially at its cost, including transaction costs. Subsequent to
initial recognition, investment property is measured at fair value. Gains or losses arising from
changes in the fair value of investment property are included in profit or loss for the period in which
they arise.
IMPAIRMENT OF ASSETS - At end of each reporting period, the Group reviews the carrying
amounts of its assets to determine whether there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate
the recoverable amount of an individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cashgenerating unit) is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have been determined
had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately in profit or loss.
ASSOCIATES - An associate is an entity over which the Group has significant influence and that is
neither a subsidiary nor an interest in a joint venture. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint
control over those policies.
The results and assets and liabilities of associates are incorporated in these combined financial
statements using the equity method of accounting, except when the investment is classified as held
for sale, in which case it is accounted for under FRS 105 Non-current Assets Held for Sale and
Discontinued Operations. Under the equity method, investments in associates are carried in the
combined statements of financial position at cost as adjusted for post-acquisition changes in the
Group’s share of the net assets of the associates, less any impairment in the value of individual
investments. Losses of an associate in excess of the Group’s interest in that associate (which
includes any long-term interests that, in substance, form part of the Group’s net investment in the
associate) are not recognised, unless the Group has incurred legal or constructive obligations or
made payments on behalf of the associate.
A-15
31 December 2006, 2007 and 2008
2.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable
assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is
recognised as goodwill. The goodwill is included within the carrying amount of the investment and
is assessed for impairment as part of the investment. Any excess of the Group’s share of the net
fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition,
after reassessment, is recognised immediately in profit or loss.
Where a group entity transacts with an associate of the Group, profits and losses are eliminated to
the extent of the Group’s interest in the relevant associate.
PROVISIONS - Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle
the present obligation at the end of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. Where a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the present value of those cash
flows.
When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognised as an asset if it is virtually certain that
reimbursement will be received and the amount of the receivable can be measured reliably.
REVENUE RECOGNITION - Revenue is measured at the fair value of the consideration received
or receivable and represents amounts receivable for services provided in the normal course of
business, net of discounts and sales related taxes.
Management service income
Revenue from rendering of management services includes transportation management services,
warehousing and container depot management services. Such revenue is recognised when
services are rendered to the customers.
Rental income
Revenue generated from rental income includes the rental of warehouse and open storage space.
Such revenue is recognised on a straight-line basis over the term of the relevant leases.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the
interest rate applicable.
Dividend income
Dividend income is recognised when the shareholders’ rights to receive payment have been
established.
A-16
31 December 2006, 2007 and 2008
2.
BORROWING COSTS - Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a substantial period of time
to get ready for their intended use or sale, are added to the cost of those assets, until such time as
the assets are substantially ready for their intended use or sale. Investment income earned on the
temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
RETIREMENT BENEFIT COSTS - Payments to defined contribution retirement benefit plans are
charged as an expense as they fall due. Payments made to state-managed retirement benefit
schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined
contribution plans where the Group’s obligations under the plans are equivalent to those arising in
a defined contribution retirement benefit plan.
EMPLOYEE LEAVE ENTITLEMENT - Employee entitlements to annual leave are recognised when
they accrue to employees. A provision is made for the estimated liability for annual leave as a
result of services rendered by employees up to the end of the reporting period.
INCOME TAX - Income tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as
reported in profit or loss because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are not taxable or tax deductible. The
Group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted
or substantively enacted by the end of the reporting period.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in
the combined financial statements and the corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities
are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investment in
subsidiaries and associate, except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability
is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
A-17
31 December 2006, 2007 and 2008
2.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when they relate to income taxes levied by the
same taxation authority and the Group intends to settle its current tax assets and liabilities on a net
basis.
Current and deferred taxes are recognised as an expense or income in profit or loss.
FOREIGN CURRENCY TRANSACTIONS - The individual financial statements of each Group
entity are measured and presented in the currency of the primary economic environment in which
the entity operates (its functional currency). The combined financial statements of the Group are
presented in Singapore dollars, which is the functional of the Company and the presentation
currency for the combined financial statements.
In preparing the combined financial statements, transactions in currencies other than the entity’s
functional currency are recorded at the rates of exchange prevailing on the date of the transaction.
At end of each reporting period, monetary items denominated in foreign currencies are retranslated
at the rates prevailing on the end of each reporting period. Non-monetary items that are measured
in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on retranslation of
monetary items are included in profit or loss for the period.
3.
CRITICAL ACCOUNTING JUDGEMENTS AND
KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in Note 2, management
is required to make judgements, estimations and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other factors that are considered
to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
(i)
Critical judgements in applying the entity’s accounting policies
Management did not make any material judgements that have significant effect on the
amounts recognised in the combined financial statements, apart from those involving
estimation uncertainties as discussed in (ii) below.
(ii)
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty
at the end of the reporting period, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next year, are
discussed below.
A-18
31 December 2006, 2007 and 2008
3.
CRITICAL ACCOUNTING JUDGEMENTS AND
KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)
Depreciation of property, plant and equipment
The cost of property, plant and equipment is depreciated on a straight line basis over the assets’
estimated useful lives as set out in Note 2 to the combined financial statements. Changes in the
expected level and future usage can impact the economic useful lives of these assets with
consequential impact on the future depreciation charge.
The carrying amounts of property, plant and equipment are stated in Note 11 to the combined
financial statements.
Impairment of property, plant and equipment
The Group assesses annually whether property, plant and equipment exhibit any indication of
impairment. In instances where there are indications of impairment, the recoverable amounts of
property, plant and equipment will be determined based on value-in-use calculations. These
calculations require the use of judgement and estimates. The carrying amounts of the Group’s
property, plant and equipment are disclosed in Note 11 to the combined financial statements.
Allowance for doubtful debts
Allowance for doubtful debts are made in the combined financial statements based on
management’s best estimate of the carrying amount of receivables that are doubtful of collection
after evaluation of collectability and aging analysis of accounts. A considerable amount of
judgement is required in assessing the ultimate realisation of these receivables, including the
current creditworthiness and the past collection history of each customer where the expectation is
different from the original estimate, such difference will impact the carrying value of trade and other
receivables. The carrying amounts of trade and other receivables are disclosed in Notes 7 and 8 to
the combined financial statements respectively.
4.
FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT
(a)
Categories of financial instruments
The following table sets out the financial instruments as at the end of each reporting period:
2006
2007
2008
$
$
$
Financial assets
Loans and receivables (including cash
and bank balances)
14,245,365
35,462
21,767,347
25,950
23,630,072
22,820
24,895,866
56,996,916
57,942,207
Financial liabilities
Amortised cost
A-19
31 December 2006, 2007 and 2008
4.
(Continued)
(b)
Financial risk management policies and objectives
(i)
Credit risk management
The Group’s maximum exposure to credit risk in the event the counterparties fail to
perform their obligations in relation to each class of recognised financial assets is the
carrying amount of those assets as indicated in the combined statements of financial
position.
At the end of the reporting period, there is no significant concentration of credit risk
except for the trade balances due from major customers amounting to $8,667,810
(2007 : $11,148,594; 2006 : $5,356,234) and 53.9% (2007 : 62.4%; 2006 : 49.5%) of
total trade receivables respectively.
Cash and fixed deposits are placed with creditworthy financial institutions.
Further details on credit risk of trade receivables are disclosed in Note 7 to the
combined financial statements.
(ii)
Interest rate risk management
The Group’s exposure to changes in interest rates relates primarily to interest-bearing
bank overdrafts and bank loans as disclosed in Note 13 to the combined financial
statements.
The impact of fluctuations in short-term interest rates on cash balances is relatively
insignificant.
Interest rate sensitivity
The sensitivity analyses below have been determined based on the exposure to
interest rates for non-derivative instruments at the end of the reporting period and the
stipulated change taking place at the beginning of the Relevant Periods and held
constant throughout the reporting period in the case of instruments that have floating
rates.
At the end of the reporting period, it is estimated that a 50 basis point
increase/decrease change in interest rates with all other variables were held constant,
the Group’s profit for the year ended 31 December 2008 would increase/decrease by
$128,516 (2007 : decrease/increase by $156,335; 2006 : increase/decrease by
$36,318). This is mainly attributable to the Group’s exposure to interest rates on its
variable rate borrowings.
(iii)
Foreign exchange risk management
The Group’s transactions are largely denominated in Singapore dollars and the Group
has limited exposure to foreign exchange risk. Any exposure to foreign currency risk
would be negligible. Accordingly, no sensitivity analysis is prepared.
A-20
31 December 2006, 2007 and 2008
4.
(Continued)
(b)
Financial risk management policies and objectives (Continued)
(iv)
Liquidity risk management
The Group monitors and maintains a level of cash and cash equivalents deemed
adequate by management to finance the Group’s operations and mitigate the effects
of fluctuations in cash flows. Funding is obtained from overdraft facilities, term loans
and finance leases.
As at 31 December 2008, the Group’s total current liabilities exceeded its total current
assets by $24,895,802 (2007 : $27,728,098; 2006 : $4,037,451). Subsequent to the
year ended 31 December 2008, bank overdraft of $18,474,787 was converted into a
12 years term loan (Note 13) and an amount due to a related party of $6,000,000
which was repayable on demand, was converted into a loan payable in three equal
annual instalments commencing from 1 July 2010 (Note 16). Accordingly, the Group
improves from a net current liabilities position to a net current assets position
thereafter.
As at 31 December 2008, the Group has unutilised borrowing facilities amounting to
$13,280,665 (2007 : $11,093,904; 2006 : $12,091,188).
Liquidity and interest risk analyses for non-derivative financial liabilities
The following table details the Group’s contracted maturities for its financial liabilities.
The table has been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the Group can be required to pay. The
table includes both interest and principal cash flows.
Contractual cash flows (including interest payments)
Repayable
on demand
Within
Carrying
or within
2 to 5
After
amount
Total
1 year
years
5 years
$
$
11,355,661
13,540,205
11,355,661
15,472,682
24,895,866
$
$
$
11,355,661
6,654,089
–
4,652,612
–
4,165,981
26,828,343
18,009,750
4,652,612
4,165,981
19,973,894
37,023,022
19,973,894
38,722,088
19,973,894
29,610,388
–
5,891,031
–
3,220,669
56,996,916
58,695,982
49,584,282
5,891,031
3,220,669
23,317,929
34,624,278
23,317,929
37,629,566
23,317,929
26,144,282
–
7,455,142
–
4,030,142
57,942,207
60,947,495
49,462,211
7,455,142
4,030,142
At 31 December 2006
Non-interest bearing
Interest bearing
At 31 December 2007
Interest bearing
At 31 December 2008
Interest bearing
A-21
31 December 2006, 2007 and 2008
4.
(Continued)
(b)
Financial risk management policies and objectives (Continued)
(v)
Fair value of financial assets and financial liabilities
The carrying amounts of cash and cash equivalents, trade and other receivables and
payables approximate their respective fair values due to the relatively short-term
maturity of these financial instruments. The fair values of other classes of financial
assets and liabilities are disclosed in the respective notes to the combined financial
statements.
(c)
Capital risk management policies and objectives
The Group manages its capital to ensure that entities in the Group will be able to continue
as a going concern while maximising the return to stakeholders through the optimisation of
the debt and equity balance.
The capital structure of the Group consisted of debts (which included the bank overdrafts,
bank borrowings and finance leases as disclosed in Notes 13 and 14 respectively), cash and
cash equivalents and equity attributable to equity holders of the Company, comprising issued
share capital and accumulated profits.
The bank overdrafts and finance leases are not subject to external imposed capital
requirements except for bank borrowings which the company has complied with.
As a part of the review of capital structure, management considers the cost of capital and
the risks associated with each source of financing. The management of capital structure
includes making decisions relating to payment of dividends and the redemption of existing
loans and has not changed in the Relevant Period.
5.
RELATED PARTY AND OTHER TRANSACTIONS
Related parties are entities with common direct or indirect shareholders and/or directors. Parties
are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operating decisions.
Some of the Group’s transactions and arrangements and terms thereof are with related parties and
the effect of these on the basis determined between the parties is reflected in these combined
financial statements. The balances are unsecured, interest free and repayable on demand.
During the year, except as disclosed in the other notes to the combined financial statements, the
Group entities entered into the following significant transactions with related parties:
Entities with common directors:
Warehousing and related services income
Sales of property, plant and equipment
Service income
Purchase of property, plant and equipment
Management fees
Warehousing and related services expense
2006
2007
2008
$
$
$
1,650,388
–
200,505
(393,894)
(2,027,320)
(81,100)
3,093,571
178,400
549,849
–
(1,961,706)
(325,560)
871,823
971,236
516,684
–
(2,003,880)
(1,263)
A-22
31 December 2006, 2007 and 2008
5.
RELATED PARTY AND OTHER TRANSACTIONS (Continued)
Compensation of directors and key management personnel
The remuneration of directors and other members of key management are as follows:
Short-term benefits
Post-employment benefits
6.
2006
2007
2008
$
$
$
532,496
44,535
721,013
59,759
869,435
63,144
577,031
780,772
932,579
2006
2007
2008
$
$
$
CASH AND BANK BALANCES
Fixed deposits
Cash at bank
Cash on hand
1,678,241
1,256,365
110,311
423,535
507,334
386,956
537,334
4,640,849
145,889
3,044,917
(1,573,731)
1,317,825
(317,144)
5,324,072
(429,023)
1,471,186
1,000,681
4,895,049
As at 31 December 2006, the fixed deposits bore an average effective interest of 3.03% per annum
with tenure of approximately one month to one year.
with tenure of approximately one year.
with tenure of approximately one year.
Significant cash and bank balances of the Group that are not denominated in the functional
currency of the respective entities are as follows:
United States dollars
2006
2007
2008
$
$
$
106,227
A-23
112,678
562,343
31 December 2006, 2007 and 2008
7.
TRADE RECEIVABLES
2006
2007
2008
$
$
$
Outside parties
Allowance for doubtful debts
7,759,008
(371,905)
12,982,665
(459,399)
16,411,097
(550,451)
Related parties (Note 5)
7,387,103
3,441,451
12,523,266
5,334,573
15,860,646
214,770
10,828,554
17,857,839
16,075,416
Trade receivables are provided for based on estimated irrecoverable amounts from the rendering of
services, determined by reference to past default experience.
Before accepting any new customer, the Group will assess the potential customer’s credit quality
and define credit limits by customer. Limits attributed to customers are reviewed periodically.
In determining the recoverability of a trade receivable, the Group considers any change in the
credit quality of the trade receivable from the date credit was initially granted up to the reporting
date.
Accordingly, management believes that there is no further credit provision required in excess of the
allowance for doubtful debts.
As at 31 December 2006, 2007 and 2008, the Group has assigned trade receivables amounting to
$Nil, $4,910,229 and $8,042,354 respectively to a bank for facilities granted to the Group.
The table below is an analysis of trade receivables as at the end of the reporting period:
Not past due and not impaired
Past due but not impaired
Less than 3 months
More than 3 months
Trade receivables not impaired
2007
2008
$
$
$
380,119
1,617,518
5,725,455
3,686,126
6,762,309
6,881,610
9,358,711
5,673,640
4,676,321
10,448,435
16,240,321
10,349,961
10,828,554
17,857,839
16,075,416
371,905
(371,905)
Impaired receivables – collectively assessed (i)
Less: Allowance of impairment
Total trade receivables, net
(i)
2006
459,399
(459,399)
–
–
–
10,828,554
17,857,839
16,075,416
These amounts are stated before any deduction for impairment losses.
A-24
550,451
(550,451)
31 December 2006, 2007 and 2008
7.
TRADE RECEIVABLES (Continued)
The movements in the allowance for impairment of trade receivables are as follows:
8.
2006
2007
2008
$
$
$
Balance at beginning of year
Allowance recognised in profit or loss
247,197
124,708
371,905
87,494
459,399
91,052
Balance at end of year
371,905
459,399
550,451
2006
2007
2008
$
$
$
28,613
22,441
70,008
82,189
168,643
335,641
979,070
826,246
59,108
119,059
608,200
447,705
72,565
946,431
37,678
85,880
1,088,030
677,912
707,535
3,039,388
2,908,496
OTHER RECEIVABLES
Outside parties
Staff loans
Tax recoverable
Deposits
Prepayments
The other receivables due from outside parties which are less than one year, has no fixed
repayment periods and management are of the view that these receivables are not impaired and
are recoverable.
The staff loans are unsecured and interest-free.
9.
HELD-FOR-TRADING INVESTMENTS
Quoted equity investments, at fair value
2006
2007
2008
$
$
$
35,462
25,950
22,820
The fair values of the quoted equity investments are based on closing quoted market prices on the
last market day of the year.
10.
INVESTMENT IN ASSOCIATE
Unquoted shares, at cost
Share of post-acquisition losses and
reserves, net of dividends received
2006
2007
2008
$
$
$
30,000
30,000
–
(11,135)
(30,000)
–
18,865
A-25
–
–
31 December 2006, 2007 and 2008
10.
INVESTMENT IN ASSOCIATE (Continued)
Details of the Group’s associate as at 31 December 2006, 2007 and 2008 are as follows:
Name of associate
Cogent Logistics Pte Ltd
Country of
incorporation/
operations
Singapore
Proportion of
ownership interest
Principal activities
2006
2007
2008
28.6%
28.6%
–
Repairers of containers,
trucks and trading in
containers
The associate is not material to the Group and has not been audited for the Relevant Periods.
The associate was disposed during the year ended 31 December 2008 to shareholders of the
Company at a consideration of $3.
Summarised financial information in respect of the Group’s associate is set out below:
Total assets
Total liabilities
2006
2007
2008
$
$
$
84,628
(18,666)
1,183
(19,913)
–
–
Net assets (liabilities)
65,962
(18,730)
–
Group’s share of associate’s net assets
18,865
–
–
Revenue
33,440
26,281
–
(17,615)
(84,762)
–
(5,038)
(18,865)
Loss for the year
Group’s share of associate’s loss for the year
(1)
(1)
–
The Group’s share of loss in associate is recognised up to the cost of investment in
associate. The unrecognised loss of $5,377 was not recognised in profit or loss for the year
ended 31 December 2007.
A-26
A-27
11.
11,522,707
–
–
11,522,707
–
5,956,372
–
23,340,087
40,819,166
3,595,665
504,120
–
4,099,785
531,525
–
At 31 December 2007
Acquired on acquisition of subsidiaries
Additions
Disposals
Transfer
At 31 December 2008
Accumulated depreciation:
At 1 January 2006
Depreciation for the year
Disposals
At 31 December 2006
Disposals
957,758
264,627
–
880,376
294,860
(217,478)
3,562,363
2,284,094
111,542
1,166,727
–
–
1,687,818
596,276
–
1,549,141
343,882
(205,205)
–
$
$
12,854,668
–
–
(1,331,961)
Office and
warehouse
equipment
Leasehold
land and
building
At 31 December 2006
Additions
Disposals
Cost:
At 1 January 2006
Additions
Disposals
Reclassified as investment properties
PROPERTY, PLANT AND EQUIPMENT
31 December 2006, 2007 and 2008
8,293
7,869
–
19,545
5,879
(17,131)
241,966
52,682
–
189,284
–
–
34,341
18,341
–
37,406
14,066
(17,131)
–
$
Furniture
and fittings
5,984,868
2,252,297
(358,993)
5,576,611
1,962,983
(1,554,726)
22,857,620
21,256,244
727,242
2,252,685
(1,378,551)
–
15,682,411
6,076,988
(503,155)
15,709,790
2,604,948
(2,632,327)
–
$
Motor
vehicles
217,436
15,541
(205,573)
206,995
10,441
–
727,047
89,469
–
714,215
(76,637)
–
282,210
12,832
(205,573)
239,103
43,107
–
–
$
Leasehold
improvements
–
–
–
–
–
–
–
23,275,541
–
64,546
–
(23,340,087)
1,615,028
21,660,513
–
–
1,615,028
–
–
$
Construction
in-progress
11,268,140
3,071,859
(564,566)
10,279,192
2,778,283
(1,789,335)
68,208,162
58,480,737
838,784
10,343,829
(1,455,188)
–
30,824,515
28,364,950
(708,728)
30,390,108
4,621,031
(2,854,663)
(1,331,961)
$
Total
A-28
11.
5,692,002
7,422,922
6,891,397
35,127,164
At 31 December 2008
Carrying amount:
At 31 December 2006
At 31 December 2007
At 31 December 2008
1,852,481
1,061,709
730,060
1,709,882
1,222,385
487,497
–
195,293
36,520
26,048
46,673
16,162
30,511
–
$
Furniture
and fittings
12,881,139
13,378,072
9,697,543
9,976,481
7,878,172
2,692,173
(593,864)
$
Motor
vehicles
657,154
62,065
64,774
69,893
27,404
69,693
(27,204)
$
Leasehold
improvements
–
–
–
–
–
23,275,541
1,615,028
$
Construction
in-progress
50,713,231
44,705,304
19,556,375
17,494,931
13,775,433
4,340,566
(621,068)
$
Total
Interest expense of $347,609 was capitalised during the year ended 31 December 2007 for the construction of leasehold building. The capitalisation rate
was at 5% per annum.
As at 31 December 2006, 2007 and 2008, property, plant and equipment (excluding motor vehicles) of the Group with carrying amount of $7,422,922,
$24,759,422 and $33,964,838 respectively are pledged as security for bank facilities disclosed in Note 13 to the combined financial statements. As at
31 December 2006, 2007 and 2008, motor vehicles with carrying amount of $2,256,261, $6,819,368 and $5,613,503 are under finance lease
arrangements disclosed in Note 14 to the combined financial statements respectively.
4,631,310
1,060,692
–
$
$
At 31 December 2007
Disposals
Office and
warehouse
equipment
Leasehold
land and
building
PROPERTY, PLANT AND EQUIPMENT (Continued)
31 December 2006, 2007 and 2008
31 December 2006, 2007 and 2008
12.
INVESTMENT PROPERTIES
2006
2007
2008
$
$
$
Balance at beginning of year
Reclassified from property, plant and equipment
Transferred to investment property held-for-sale
–
1,331,961
258,039
–
1,590,000
–
510,000
–
Balance at end of year
1,590,000
2,100,000
At fair value:
2,100,000
–
(44,000)
(1,500,000)
556,000
Details of the investment properties are as follows:
Name of properties
Description
20/20A Tanjong Pagar
Singapore 088443
99 years leasehold commercial property
200 Jalan Sultan
#12-09
Singapore 199018
99 years leasehold commercial property
In accordance with the accounting policy of the Group, the investment properties are stated at
valuation based on professional valuation carried out by HBA Group Property Consultants Pte Ltd,
on the basis of open market for existing use as at 31 December 2006, 2007 and 2008.
The investment properties are pledged for banking facilities disclosed in Note 13 to the combined
Subsequent to year ended 31 December 2008, the investment property at 20/20A Tanjong Pagar
was disposed at a consideration of $1,500,000. The Group has entered into an option to dispose
the property in December 2008, accordingly, the investment property has been reclassified as
current asset held for sale as at 31 December 2008.
The gross rental income and direct operating expenses (including repairs and maintenance) arising
from investment properties are as follows:
Gross rental income
Direct operating expenses
A-29
2006
2007
2008
$
$
$
59,524
(19,791)
66,786
(30,914)
145,565
(46,939)
31 December 2006, 2007 and 2008
13.
BANK OVERDRAFTS AND LOANS
Bank loans (1)
Non-current portion of bank loans
Current portion of bank loans
Short-term bank borrowings (2)
Bank overdrafts (1)
2006
2007
2008
$
$
$
7,030,195
(6,430,610)
6,430,609
(5,803,022)
8,868,022
(7,887,261)
599,585
–
3,278,470
627,587
1,992,391
24,161,731
980,761
–
22,159,156
3,878,055
26,781,709
23,139,917
599,585
2,684,043
3,746,567
2,619,978
2,842,403
2,960,619
980,761
4,273,722
3,613,539
7,030,195
8,423,000
8,868,022
2007
2008
The bank loans are repayable as follows:
Within one year
In the second to fifth years inclusive
After fifth year
The annual effective interest rates for the bank loans are as follows:
2006
Bank loans
4.58%
4.50%
4.63%
Bank overdrafts
3.40%
4.95%
4.99%
Bank loans are repayable by 76 to 120 monthly repayments and a final repayment of the balance
amount outstanding.
(1)
The bank loans and overdrafts are secured by certain property, plant and equipment (Note
11), investment properties (Note 12) and personal guarantees from directors of certain
subsidiaries.
(2)
The short-term bank borrowings are secured by the assignment of trade receivables (Note 7).
Subsequent to the year ended 31 December 2008, bank overdrafts of $18,474,787 as at
31 December 2008, has been refinanced and converted to a 12 years term loan with monthly
repayment of $170,149 for the first year, monthly repayment of $174,800 for the second year and
subsequently monthly repayment of $179,533.
The carrying amounts of the Group’s borrowings as at 31 December 2006, 2007 and 2008
approximate their fair values.
A-30
31 December 2006, 2007 and 2008
14.
FINANCE LEASES
Present value of
minimum lease payments
2006
2007
2008
Minimum lease payments
2006
2007
2008
$
$
$
$
$
$
Amounts payable under
finance leases:
Within one year
In the second to fifth years
inclusive
After fifth year
2,459,002 2,552,317 2,382,395
2,302,455 2,374,099 2,239,890
1,001,853 2,232,853 1,421,233
45,532
11,724
48,108
890,950 2,054,124 1,315,384
38,135
10,068
41,826
3,506,387 4,796,894 3,851,736
(274,847) (358,603) (254,636)
3,231,540 4,438,291 3,597,100
Less: Future finance charges
Present value of lease obligations
3,231,540 4,438,291 3,597,100
Less: Amounts due for settlement
within 12 months (shown
under current liabilities)
(2,302,455) (2,374,099)(2,239,890)
Amount due for settlement
after 12 months
929,085 2,064,192 1,357,210
It is the Group’s policy to lease certain of its plant and equipment under finance leases. The
average lease term and the average effective borrowing rate are as follows:
Average
lease term
Average effective
borrowing rate per annum
As at 31 December 2006
60 months
4.32%
60 months
4.32%
60 months
4.85%
Interest rates are fixed at the contracted date, and thus expose the Group to fair value interest rate
risk. All leases are on a fixed repayment basis and no arrangements have been entered into for
contingent rental payments.
The carrying amount of the Group’s finance lease payables as at 31 December 2006, 2007 and
2008 approximate its fair value.
The Group’s obligations under finance leases are secured by its property, plant and equipment
(Note 11).
15.
TRADE PAYABLES
Outside parties
A-31
2006
2007
2008
$
$
$
1,617,223
5,428,273
4,188,380
7,803,689
5,131,014
918,776
7,045,496
11,992,069
6,049,790
31 December 2006, 2007 and 2008
16.
OTHER PAYABLES
Outside parties
Accruals
Amount due to directors
Dividend payable
Rental deposits
2006
2007
2008
$
$
$
771,577
761,854
282,967
2,252,079
–
241,688
289,884
6,214,225
517,426
408,475
–
551,815
948,591
8,326,966
1,509,547
3,320,217
1,500,000
1,662,818
4,310,165
7,981,825
17,268,139
The amount due to directors is unsecured, interest-free and repayable on demand.
Subsequent to the year ended 31 December 2008, amount due to a related party of $6,000,000
which was repayable on demand, was converted into a loan which is repayable in 3 equal annual
instalments commencing from 1 July 2010. The term loan is unsecured and bears interest at
Singapore interbank offer rate.
17.
18.
DEFERRED TAX LIABILITIES
Fair value of
investment
properties
Accelerated
tax
depreciation
Total
$
$
$
At 1 January 2006
Charge to profit or loss (Note 22)
–
51,608
183,396
75,437
183,396
127,045
At 31 December 2006
Charge to profit or loss (Note 22)
Effect of change in tax rate
51,608
91,800
(5,161)
258,833
56,828
(25,883)
310,441
148,628
(31,044)
At 31 December 2007
(Credit) Charge to profit or loss (Note 22)
138,247
(7,920)
289,778
460,087
428,025
452,167
At 31 December 2008
130,327
749,865
880,192
SHARE CAPITAL
The Company has one class of ordinary share which has no par value and carries no right to fixed
income.
The Company was incorporated on 18 June 2007. Accordingly, the share capital in the combined
statements of financial position as at 31 December 2006, 2007 and 2008 represent the share of
the paid-up capital of the subsidiaries and the Company.
A-32
31 December 2006, 2007 and 2008
19.
REVENUE
Transportation management services
Warehousing and container depot
management services
Automotive logistics management services
20.
22.
2007
2008
$
$
$
15,610,943
18,475,185
24,607,221
11,852,049
–
18,685,170
–
32,428,070
3,083,195
27,462,992
37,160,355
60,118,486
OTHER OPERATING INCOME
Interest income from bank deposits
Dividend income
Service income from related parties (Note 5)
Gain on disposal of property, plant
and equipment
Insurance claims
Rental income from investment properties
Sales of scrap metal
Others
21.
2006
2006
2007
2008
$
$
$
49,475
275
516,684
36,157
2,866
200,505
13,715
355
549,849
303,226
21,002
59,524
–
63,145
201,317
18,539
66,786
–
60,292
113,720
182,465
145,565
324,991
130,145
1,013,331
586,462
1,460,805
FINANCE COSTS
2006
2007
2008
$
$
$
Interest expense
Less: Interest included in the cost of
qualifying assets (Note 11)
650,625
Interest expense charged to profit or loss
650,625
870,369
2006
2007
2008
$
$
$
–
1,217,978
1,941,020
(347,609)
–
1,941,020
INCOME TAX EXPENSE
Current
(Over) Under provision in prior years
Deferred tax
373,650
(14,831)
127,045
183,378
112
117,584
1,344,180
–
452,167
485,864
301,074
1,796,347
Income tax is calculated at 18% (2007 : 18%; 2006 : 20%) of the estimated assessable profit for
the year.
A-33
31 December 2006, 2007 and 2008
22.
INCOME TAX EXPENSE (Continued)
The total charge for the year can be reconciled to the accounting profit as follows:
Profit before tax
23.
2006
2007
2008
$
$
$
1,771,517
2,125,388
8,799,146
1,583,846
Tax at domestic income tax rate
Tax effect of expenses non-deductible
(allowable) items
Deferred tax previously not recognised
Exempt income
(Over) Under provision in prior year
354,303
382,570
8,695
158,697
(21,000)
(14,831)
(30,295)
–
(51,313)
112
Total income tax expense
485,864
301,074
267,401
–
(54,900)
–
1,796,347
PROFIT FOR THE YEAR
Profit for the year has been arrived at after charging:
Directors’ remuneration
Retirement benefit scheme contributions included
in employee benefits expense
24.
2006
2007
2008
$
$
$
453,922
562,617
623,871
583,069
124,708
–
777,893
87,494
9,512
989,562
91,052
3,130
EARNINGS PER SHARE
Earnings per share for the Relevant Periods have been calculated based on the profit attributable
to the equity holders of the Company for each of the year and pre-invitational share capital of
273,000,000 shares.
25.
DIVIDENDS
For the year ended 31 December 2006, SHCL declared an interim one-tier tax exempt dividend of
$3.3333 per ordinary share totalling $1,000,000 in respect of the year ended 31 December 2006.
$1.6667 per ordinary share totalling $500,000 in respect of the year ended 31 December 2007.
$5 per ordinary share totalling $1,500,000 in respect of the year ended 31 December 2008.
A-34
31 December 2006, 2007 and 2008
26.
SEGMENT INFORMATION
Services from which reportable segments derive their revenue
For the purpose of the resource allocation and assessment of segment performance, the Group’s
chief operating decision makers have focused on the business operating units which in turn, are
segregated based on their services. This forms the basis of identifying the operating segments of
the Group under FRS 108.
Operating segments are aggregated into a single reportable operating segment if they have similar
economic characteristics and are similar in respect of nature of services and processes and/or their
reported revenue.
The Group’s reportable operating segments under FRS 108 are as follows:
Segment
(a)
Transportation management services
Provision for dry hubbing logistics solutions
and transportation services locally for laden
and empty containers and other cargoes.
(b)
Warehousing and container
depot management services
Rental to warehouses and provision of
warehousing services including packing,
drumming and other related ancilliary storage
services. Provision of storage of unladen
shipping containers and maintenance and
repair works on the containers.
(c)
Automotive logistics management services
Processing, transportation, storage and motor
vehicles and port and customs clearance,
vehicular transportation, warehousing and
delivery of such motor vehicles, export
processing zone operations such as
deregistration and export of second hand
vehicles.
Corporate and others relate to the provision of Group level corporate service and investment in
entities that do not constitute an operating segment. Accordingly, corporate and others are
presented as a reconciliation to the segment information presented.
Segment revenue represents revenue generated from external and internal customers. Segment
profits represent the profit earned by each segment after allocating central administrative costs and
finance costs. This is the measure reported to the chief operating decision makers for the purpose
of resource allocation and assessment of segment performance.
For the purpose of monitoring segment performance and allocating resources, the chief operating
decision makers monitor the tangible and financial assets attributable to each segment. All assets
are allocated to reportable segments. Assets, if any, used jointly by reportable segments are
allocated on the basis of the revenue earned by individual reportable segments.
Information regarding the Group’s reportable segments is presented in the tables below.
A-35
A-36
26.
994,284
1,302,916
(308,632)
Profit before tax
Income tax expense
Profit for the year
558,005
(7,381,765)
(5,201,230)
(1,376,413)
–
(971,359)
(214,865)
–
284,077
372,256
(88,179)
332,382
(6,912,411)
(2,034,257)
(1,401,870)
–
(1,027,877)
(435,760)
–
11,852,049
15,890,543
$
11,852,049
–
$
Transportation
management
services
15,610,943
279,600
Warehousing
and container
depot
management
services
Cost of services
Depreciation
Finance costs
Revenue
Inter-segment revenue
2006
Segment revenue and profit or loss
SEGMENT INFORMATION (Continued)
31 December 2006, 2007 and 2008
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
Automotive
logistics
management
services
–
–
–
286,892
375,945
(89,053)
122,944
–
–
–
258,039
–
–
(5,038)
$
Corporate
and
others
(279,600)
(279,600)
–
–
–
–
–
–
–
–
–
(279,600)
–
(279,600)
$
Intersegment
eliminations
1,285,653
1,771,517
(485,864)
1,013,331
(14,294,176)
(7,235,487)
(2,778,283)
258,039
(1,999,236)
(650,625)
(5,038)
27,462,992
27,462,992
–
$
Total
A-37
26.
$
565,040
(70,736)
494,304
Profit for the year
339,093
(9,613,786)
(5,891,277)
(1,668,048)
–
(1,092,898)
(262,829)
–
18,754,785
1,066,282
1,218,869
(152,587)
117,425
(10,875,390)
(3,230,263)
(1,403,811)
–
(1,466,722)
(607,540)
–
18,685,170
18,685,170
–
$
Transportation
management
services
18,475,185
279,600
Warehousing
and container
depot
management
services
Profit before tax
Income tax expense
Cost of services
Depreciation
Finance costs
Revenue
2007
31 December 2006, 2007 and 2008
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
Automotive
logistics
management
services
–
–
–
543,328
621,079
(77,751)
129,944
–
–
–
510,000
–
–
(18,865)
$
Corporate
and
others
(279,600)
(279,600)
–
–
–
–
–
–
–
–
–
(279,600)
–
(279,600)
$
Intersegment
eliminations
1,824,314
2,125,388
(301,074)
586,462
(20,489,176)
(9,121,540)
(3,071,859)
510,000
(2,559,620)
(870,369)
(18,865)
37,160,355
37,160,355
–
$
Total
A-38
26.
$
–
(4,014,868)
(2,254,266)
–
(2,303,207)
(1,638,460)
–
(7,533,881)
(2,015,579)
–
(1,070,591)
(302,560)
2,163,598
(385,361)
1,778,237
Profit before tax
Income tax expense
Profit for the year
4,592,246
5,587,211
(994,965)
396,748
(17,058,886)
32,460,150
397,856
(12,198,468)
24,886,821
32,428,070
32,080
$
Transportation
management
services
24,607,221
279,600
Warehousing
and container
depot
management
services
Cost of services
Excess of fair values of net identifiable assets
over cost of acquisitions
Depreciation
Finance costs
Revenue
2008
31 December 2006, 2007 and 2008
1,451,761
1,766,224
(314,463)
52,215
(572,350)
(70,721)
–
(176,289)
–
51,785
(1,578,234)
4,059,818
3,083,195
976,623
$
Automotive
logistics
management
services
–
–
–
468,858
570,416
(101,558)
–
–
–
(44,000)
–
–
614,416
–
$
Corporate
and
others
(1,288,303)
(1,288,303)
–
–
–
–
–
–
–
–
–
(1,288,303)
–
(1,288,303)
$
Intersegment
eliminations
7,002,799
8,799,146
(1,796,347)
52,215
(12,121,099)
(4,340,566)
(44,000)
(3,550,087)
(1,941,020)
1,460,805
(30,835,588)
60,118,486
60,118,486
–
$
Total
31 December 2006, 2007 and 2008
26.
Segment assets, liabilities and other segment information
Transportation
management
services
Warehousing
and container
depot
management
services
Automotive
logistics
management
services
Corporate
and
others
Total
$
$
$
$
$
Assets
Segment assets
Investment in associate
19,654,371
18,865
14,483,011
–
–
–
1,625,461
–
35,762,843
18,865
Total assets
19,673,236
14,483,011
–
1,625,461
35,781,708
6,454,449
5,094,303
628,636
189,389
4,901,212
8,445,902
489,112
69,444
–
–
–
–
–
–
–
51,608
11,355,661
13,540,205
1,117,748
310,441
12,366,777
13,905,670
–
51,608
26,324,055
Net assets
7,306,459
577,341
–
1,573,853
9,457,653
Capital expenditure
2,612,795
2,008,236
–
–
4,621,031
Assets
Segment assets
33,216,291
33,704,065
–
2,125,950
69,046,306
Total assets
33,216,291
33,704,065
–
2,125,950
69,046,306
Liabilities
Segment liabilities
Loans and borrowings
Income tax payable
9,858,600
16,464,939
414,894
158,703
10,115,294
20,558,083
424,504
131,075
–
–
–
–
–
–
–
138,247
19,973,894
37,023,022
839,398
428,025
Total liabilities
26,897,136
31,228,956
–
138,247
58,264,339
Net assets
6,319,155
2,475,109
–
1,987,703
10,781,967
Capital expenditure
6,085,983
22,278,967
–
–
28,364,950
2006
Liabilities
Segment liabilities
Income tax payable
Total liabilities
2007
A-39
31 December 2006, 2007 and 2008
26.
Segment assets, liabilities and other segment information (Continued)
Transportation
management
services
Warehousing
and container
depot
management
services
Automotive
logistics
management
services
Corporate
and
others
Total
$
$
$
$
$
Assets
Segment assets
31,850,412
39,201,104
3,969,699
2,114,820
77,136,035
Total assets
31,850,412
39,201,104
3,969,699
2,114,820
77,136,035
8,814,905
5,164,400
875,583
273,280
11,425,209
29,459,878
1,055,676
367,235
3,077,815
–
97,611
109,351
–
–
–
130,326
23,317,929
34,624,278
2,028,870
880,192
Total liabilities
15,128,168
42,307,998
3,284,777
130,326
60,851,269
16,722,244
(3,106,894)
684,922
1,984,494
16,284,766
2,089,725
8,006,331
1,086,557
–
11,182,613
2008
Liabilities
Segment liabilities
Income tax payable
Capital expenditure
Geographical segment information
The Group’s operations are carried out solely in Singapore. Accordingly, no geographical segment
information is presented.
Major customers information
For the year ended 31 December 2006, revenue from one customer from the transportation
management services and warehousing and container depot management services segments
represents $2,962,693 of the Group’s total revenue.
For the year ended 31 December 2007, there was no single customer which accounted for 10% or
more of the Group’s revenue.
For the year ended 31 December 2008, revenue from one customer from the transportation
A-40
31 December 2006, 2007 and 2008
27.
OPERATING LEASE ARRANGEMENTS
The Group as lessee
Minimum lease payments under operating
leases recognised as an expense in the year 3,602,305
2006
2007
2008
$
$
$
5,825,492
9,845,421
At the end of the reporting period, the commitments in respect of operating leases for rental of land
and warehouse premises with a term of more than one year were as follows:
Future minimum lease payable:
Within one year
After fifth year
2006
2007
2008
$
$
$
4,432,258
15,418,907
14,324,788
7,762,989
22,095,601
11,376,440
10,628,012
27,140,484
18,194,048
34,175,953
41,235,030
55,962,544
Operating lease payments represent rentals payable by the Group for certain of its land and
warehouse premises. Leases are negotiated for an average term of seven years, except for leases
with Jurong Town Corporation which are negotiated for an average of 20 or 30 years. Rentals are
fixed for an average of two years.
The Group as lessor
The Group rents out its investment properties and warehouse premises for storage to generate
investment properties rental income and warehouse rental income respectively.
At the end of the reporting period, the Group has contracted with tenants for the following future
minimum lease payments:
Within one year
2006
2007
2008
$
$
$
1,518,522
1,051,530
2,698,164
1,819,229
7,150,573
4,635,303
2,570,052
4,517,393
11,785,876
Operating lease income represents rental receivable from the Group’s investment properties and
warehouse premises. Leases are committed for an average term of 2.4 years and rental income is
fixed for an average of 2.4 years.
A-41
31 December 2006, 2007 and 2008
28
ACQUISITION OF SUBSIDIARIES
On 31 July 2008, the Group acquired CIG and its subsidiary, CAL. CIG and CAL are consolidated
as subsidiaries of the Group accordingly thereafter.
The carrying amounts of net assets which approximate their fair values acquired are as follows:
$
Current assets
Non-current assets
Current liabilities
2,663,205
838,784
(1,558,582)
(91,192)
Net assets
1,852,215
Consideration
1,800,000 (1)
(52,215)
Cash and bank balances acquired
505,495
The acquisition contributed $3,083,195 to the Group’s revenue and $734,591 on to the Group’s
profit before tax for the period between the date of acquisition and the end of the reporting period
as at 31 December 2008.
If the acquisitions were completed on 1 January 2008, total Group’s revenue for the year would
have been $64,622,726 and profit for the year would have been $6,680,335.
(1)
29
Refer to Note 1(c).
COMMITMENTS
(a)
2007
2008
$
$
$
18,673,801
1,422,088
89,690
2,012,187
1,986,687
2,895,780
Capital commitments
Capital expenditure in respect of
acquisition of property, plant and
equipment contracted but not
provided in the combined
financial statements
(b)
2006
Other commitments
Bankers’ guarantees (secured)
A-42
31 December 2006, 2007 and 2008
30.
SUBSEQUENT EVENTS
Subsequent to 31 December 2008, except as disclosed in other notes to the combined financial
statements, the subsequent events of the Group are as follows:
(A)
The subsidiaries of the Group entered into the following with third parties:
(a)
Agreement to sell and leaseback the leasehold property at 7 Penjuru Close,
Singapore 608779;
(b)
Option to dispose the leasehold property at 19 Tuas Avenue 20, Singapore 638830 for
$6,300,000; and
(c)
Agreement to dispose the investment property at 200 Jalan Sultan #12-09, Singapore
199018 for $400,000.
(B)
A subsidiary declared an interim one-tier tax exempt dividend of $16.6667 per ordinary share
totalling $5,000,000 in respect of the year ending 31 December 2009.
(C)
A subsidiary entered into a conditional sale and purchase agreement with a related party to
acquire the properties at 11 Jalan Terusan and Jurong Port Road, and motor vehicles and
office and warehouse equipment for an aggregate consideration of $5,500,000. The
completion of the sale and purchase agreement is conditional upon approval from Jurong
Town Corporation for the reassignment of the land leases to the subsidiary.
(D)
A claim for loss in value of vehicles was filed with the High Court against a subsidiary for lien
over vehicles stored at the subsidiary’s warehouse. Management is currently contesting
against the claim. The Court proceedings are on-going at the date of this report and due to
the uncertainties involved in the outcome of the case, the Group’s legal representative and
management are unable to reasonably estimate the amount of potential loss, should there
be any.
(E)
At an extraordinary meeting held on 18 January 2010, the Shareholders approved, among
other things the following:
(a)
the consolidation of every two Shares of the issued share capital into one Share (the
(b)
the sub-division of each ordinary Share (“Share”) in the issued share capital into 273
Shares (the “Subdivision”);
(c)
the conversion of the Company into a public limited company and the change of name
to “Cogent Holdings Limited”;
(d)
the adoption of a new set of Articles of Association;
(e)
the allotment and issue of the invitation Shares which are the subject of the Invitation.
The invitation Shares, when issued and fully paid-up, will rank pari passu in all
respects with the existing issued and fully paid-up Shares;
A-43
31 December 2006, 2007 and 2008
30.
SUBSEQUENT EVENTS (Continued)
(f)
the adoption of the Cogent Holdings Employee Share Option Scheme and the
adoption of the Cogent Holdings Performance Share Plan and the authorisation of the
directors, pursuant to Section 161 of the Companies Act, to allot and issue Shares
upon the exercise of options granted under the Cogent Holdings Employee Share
Option Scheme;
(g)
the authorisation be given to the directors, pursuant to Section 161 of the Companies
Act, to allot and issue:
(i)
shares in our Company (whether by way of rights, bonus or otherwise); and
(ii)
any offer, agreements or options (collectively, “Instruments”) that might or
would require shares to be issued, including but not limited to the creation and
issue of (as well as adjustments to) warrants, debentures or other instrument
convertible into Shares at any time and upon such terms and conditions and for
such purposes and to such persons as the Directors shall in their absolute
discretion deem fit,
provided that:
(i)
the aggregate number of Shares to be issued pursuant to such authority
(including Shares to be issued to in pursuance of Instruments made or granted
pursuant to such authority) (the “Shares Issues”) shall not exceed 50.0% of the
total number of shares in the post-Invitation issued share capital of the
Company (excluding treasury shares), of which the aggregate number of
Shares to be issued other than on a pro rata basis to the then existing
shareholders of our Company shall not exceed 20.0% of the number of Shares
in the post-invitation issued share capital of our Company (excluding treasury
shares);
(ii)
the aggregate number of Shares to be issued pursuant to such authority by way
of a renounceable issue on a pro rata basis to shareholders of our Company
(including Shares to be issued in pursuance of Instruments made or granted
pursuant to such authority) (the “Renounceable Rights Issues”) does not
exceed 100% of the number of shares in the post-invitation issued share capital
of the Company (excluding treasury shares); and
(iii)
Renounceable Rights Issues shall not, in aggregate exceed 100% of the total
number of issued Shares (excluding treasury shares).
for the purpose of determining whether the aggregate number of Shares exceeds the
100% limit, the percentage of issued Shares (excluding treasury shares) shall be
based on the total number of Shares issued pursuant to such authority (unless the
SGX-ST’s prevailing regulations and requirements otherwise provide).
A-44
31 December 2006, 2007 and 2008
30.
(h)
that without prejudice to the generality of, and pursuant and subject to the approval of
the general mandate to issue Shares set out in (g) above, authority be given to the
directors of the Company to issue Shares other than on a pro rata basis to
shareholders of the Company, at a discount not exceeding 20.0% to the weighted
average price of the Shares for trades done on the SGX-ST for the full market day on
which the placement or subscription agreement is signed (or if not available, the
weighted average price based on the trades done on the preceding market day), at
any time and upon such terms and conditions and for such purposes and to such
persons as the directors may in their absolute discretion deem fit,
provided that:
(i)
in exercising the authority conferred by this resolution (g), the Company shall
comply with the requirements imposed by the SGX-ST from time to time and
the provisions of the Listing Manual for the time being in force (in each case,
unless such compliance has been waived by the SGX-ST), all applicable legal
requirements under the Companies Act and otherwise, and the Articles of
Association for the time being of the Company; and
(ii)
(unless revoked or varied by the Company in general meeting) the authority
conferred by this resolution (g) shall continue in force until the conclusion of the
next Annual General Meeting of the Company or the date by which the next
Annual General Meeting of the Company is required by law to be held,
whichever is the earlier.
Unless revoked or varied by our Company in general meeting, such authority shall
continue in full force until the conclusion of the next Annual General Meeting of the
Company or the date by which the next Annual General Meeting is required by law or
by the Articles of Association to be held, whichever is earlier, except that the directors
shall be authorised to allot and issue new Shares pursuant to the Shares Issues and
the Renounceable Rights Issues notwithstanding that such authority has ceased.
For the purposes of this resolution and pursuant to Rules 806(3) and 806(4) of the
Listing Manual, “post-invitation issued share capital” shall mean the enlarged issued
share capital of the Company after the invitation (excluding treasury shares), after
adjusting for (i) new Shares arising from the conversion or exercise of any convertible
securities; (ii) new Shares arising from exercising of any convertible securities or share
options or vesting of share awards outstanding or subsisting at the time such authority
is given, providing the options or awards were granted in compliance with the Listing
Manual; and (iii) any subsequent bonus issue, consolidation or sub-division of Shares.
A-45
STATEMENT OF DIRECTORS
In the opinion of the directors, the combined financial statements set up on pages A-3 to A-45 are drawn
up so as to give a true and fair view of the state of affairs of the Group as at 31 December 2006, 2007
and 2008, and of the results, changes in equity and cash flows of the Group for the years ended 31
December 2006, 2007 and 2008 and at the date of this statement, there are reasonable grounds to
believe that the Group will be able to pay its debts when they fall due.
ON BEHALF OF THE DIRECTORS
Tan Yeow Khoon
Tan Yeow Lam
9 February 2010
A-46
APPENDIX B – INDEPENDENT AUDITORS' REVIEW REPORT AND
COMBINED INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE
SIX MONTHS ENDED 30 JUNE 2009
INDEPENDENT AUDITORS’ REVIEW REPORT ON THE COMBINED INTERIM CONDENSED
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2009
9 February 2010
7 Penjuru Close
#05-00
Singapore 608779
Dear Sirs
We have reviewed the combined interim condensed financial statements of Cogent Holdings Limited (the
“Company”) and its subsidiaries (the “Group”) which comprise the combined statement of financial
position of the Group as at 30 June 2009, and the related combined statement of comprehensive income,
combined statement of changes in equity and combined statement of cash flows of the Group for the six
months from 1 January 2009 to 30 June 2009, and selected explanatory notes as set out on pages B-3 to
B-16.
Responsibility for the Combined Interim Condensed Financial Statements
Management is responsible for the preparation and presentation of this combined interim condensed
financial statements in accordance with the Singapore Financial Reporting Standard 34, Interim Financial
Reporting (“FRS 34”). Our responsibility is to express a conclusion on this combined interim condensed
financial statements based on our review.
Scope of Review
We conducted our review in accordance with the Singapore Standard on Review Engagements 2410,
Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of
the combined interim condensed financial statements consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with Singapore Standards on
Auditing and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
B-1
Opinion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying
combined interim condensed financial statements is not prepared, in all material respects, in accordance
with FRS 34.
We have not carried out an audit or review in accordance with Singapore Standards on Auditing or
Singapore Standards on Review Engagements on the combined interim condensed financial information
for the six months ended 30 June 2008 and accordingly, we do not express any such assurance on the
combined interim condensed financial information for this period.
This report has been prepared solely in connection with the proposed listing of Cogent Holdings Limited
on the Singapore Exchange Securities Trading Limited. This report is made solely to you, as a body and
for no other purpose. We do not assume responsibility towards or accept liability to any other person for
the contents of this report.
Yours faithfully
Singapore
Seah Gek Choo
Partner
B-2
COMBINED STATEMENT OF FINANCIAL POSITION
As at 30 June 2009
As at
30 June
2009
As at
31 December
2008
$
(Reviewed)
$
(Audited)
13,935,395
13,365,165
3,115,315
15,972
5,324,072
16,075,416
2,908,496
22,820
30,431,847
–
24,330,804
1,500,000
30,431,847
25,830,804
48,915,132
400,000
36,000
50,713,231
556,000
36,000
49,351,132
51,305,231
Total assets
79,782,979
77,136,035
4,710,092
1,920,651
6,281,547
13,539,147
2,018,679
23,139,917
2,239,890
6,049,790
17,268,139
2,028,870
28,470,116
50,726,606
28,286,652
1,002,289
6,000,000
1,003,728
7,887,261
1,357,210
–
880,192
36,292,669
10,124,663
Share capital
Accumulated profits
500,000
14,520,194
500,000
15,784,766
Total equity
15,020,194
16,284,766
79,782,979
77,136,035
Note
ASSETS
Current assets
Trade receivables
Other receivables
8
Non-current assets
Investment property
Other investment
7
8
Current liabilities
Trade payables
Other payables
Income tax payable
9
10
Bank loans
Finance leases
9
10
11
See accompanying notes to combined interim condensed financial statements.
B-3
COMBINED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2009
Note
Revenue
Cost of services
1 January
2009 to
30 June
2009
1 January
2008 to
30 June
2008
$
(Reviewed)
$
(Unaudited)
29,417,203
27,432,391
706,643
427,840
(13,953,024)
(14,796,814)
(5,794,490)
(6,101,811)
Depreciation
(2,797,683)
(1,928,357)
Changes in fair value of investment property
8
Finance costs
Profit before tax
(156,000)
(1,864,235)
(1,635,278)
(887,821)
(893,080)
4,670,593
Income tax expense
12
Profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
Basic and diluted earnings per share (cents)
13
B-4
–
(935,165)
2,504,891
(532,672)
3,735,428
1,972,219
–
–
3,735,428
1,972,219
1.4
0.7
COMBINED STATEMENT OF CHANGES IN EQUITY
Note
Share
capital
Accumulated
profits
Total
$
$
$
500,000
15,784,766
16,284,766
–
(5,000,000)
(5,000,000)
–
3,735,428
3,735,428
500,000
14,520,194
15,020,194
500,000
10,281,967
10,781,967
–
1,972,219
1,972,219
500,000
12,254,186
12,754,186
Reviewed
At 1 January 2009
Dividends
14
At 30 June 2009
Unaudited
At 1 January 2008
At 30 June 2008
B-5
COMBINED STATEMENT OF CASH FLOWS
1 January
2009 to
30 June
2009
1 January
2008 to
30 June
2008
$
(Reviewed)
$
(Unaudited)
Profit before tax
Adjustments for:
Depreciation
Interest expense
Interest income
Change in fair value of investment property
Gain on disposal of property, plant and equipment
4,670,593
2,504,891
2,797,683
887,821
(4,914)
156,000
75,531
6,848
(97,357)
1,928,357
893,080
(2,271)
–
–
–
(25,452)
Operating cash flows before movements in working capital
Trade receivables
Other receivables
Trade payables
Other payables
8,492,205
2,634,720
(206,819)
231,757
2,050,688
5,298,605
(3,138,948)
62,959
1,481,144
3,785,631
13,202,551
Income tax (paid) refund
(821,820)
12,380,731
7,489,391
67,812
7,557,203
Interest received
Proceeds from disposal of investment property
Proceeds from sale of other investment
Proceeds from disposal of property, plant and equipment
4,914
1,500,000
–
(493,967)
275,927
2,271
–
(36,000)
(3,436,169)
47,396
Net cash from (used in) investing activities
1,286,874
(3,422,502)
B-6
COMBINED STATEMENT OF CASH FLOWS (Continued)
1 January
2009 to
30 June
2009
1 January
2008 to
30 June
2008
$
(Reviewed)
$
(Unaudited)
Dividends paid
Interest paid
Amount due from directors
Amount due to (from) related parties
Pledged deposits
(1,500,000)
(887,821)
(1,358,347)
(3,297,765)
18,085
4,921,878
(839,735)
105,120
–
(893,080)
(592,959)
(22,207)
(528,742)
451,116
(581,532)
–
Net cash used in financing activities
(2,838,585)
(2,167,404)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
10,829,020
1,210,680
1,967,297
(5,358,740)
Cash and cash equivalents at end of year (Note A)
12,039,700
(3,391,443)
As at
30 June
2009
As at
30 June
2008
$
(Reviewed)
$
(Unaudited)
13,935,395
(1,571,792)
1,740,528
(4,814,827)
12,363,603
(323,903)
(3,074,299)
(317,144)
12,039,700
(3,391,443)
Note A
B-7
NOTES TO THE COMBINED INTERIM CONDENSED FINANCIAL STATEMENTS
1.
GENERAL
The Company (Registration No. 200710813D) is incorporated in Singapore with its registered office
and principal place of business at 7 Penjuru Close #05-00, Singapore 608779. The combined
interim condensed financial statements are expressed in Singapore dollars.
The principal activity of the Company is that of an investment holding company.
The Group is principally involved in the provision of warehousing and related services, container
related services and transportation services.
The combined interim condensed financial statements of the Group for the six months ended 30
June 2009 were authorised for issue by the Board of Directors on 9 February 2010.
2.
BASIS OF PREPARATION
The combined interim condensed financial statements have been prepared using accounting
policies consistent with the Singapore Financial Reporting Standards and in accordance with
Singapore Financial Reporting Standard 34, Interim Financial Reporting (“FRS 34”).
3.
SIGNIFICANT ACCOUNTING POLICIES
The combined interim condensed financial statements have been prepared in accordance with the
historical cost basis, except held-for-trading investments, investment property held-for-sale and
investment property.
The same accounting policies, presentation and methods of computation are followed in these
combined interim condensed financial statements as were applied in the preparation of the Group’s
combined financial statements for the year ended 31 December 2008.
4.
OPERATIONS IN THE INTERIM PERIOD
The Group typically does not experience any significant seasonality trends in its results.
Nevertheless, the revenue for the last quarter of the year will generally be higher than other
quarters as there are more business activities during festive season. Revenue during the first
quarter will generally be lower compared to other quarters due to slower business activities.
5.
RELATED PARTY TRANSACTIONS
Related parties are entities with common direct or indirect shareholders and/or directors. Parties
are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operating decisions.
Some of the transactions and arrangements of the Group are with related parties and the effects of
these transactions on the basis determined between the parties are reflected in these combined
financial statements. The related party balances are unsecured, interest-free and repayable on
demand unless otherwise stated.
B-8
5.
RELATED PARTY TRANSACTIONS (Continued)
During the period, except as disclosed stated in the other notes to the combined interim
condensed financial statements, the Group entities entered into the following significant
transactions with related parties:
1 January
2009 to
30 June
2009
1 January
2008 to
30 June
2008
$
(Reviewed)
$
(Unaudited)
762,315
(1,706,200)
–
(188,795)
1,566,553
(1,019,439)
360,696
–
Entities with common directors:
Warehousing and related services income
Management fees
Service income
Warehousing and related service expense
6.
FINANCIAL RISK MANAGEMENT POLICIES
As at 31 December 2008, the Group has a net current liabilities of $24,895,802. As at 30 June
2009, the Group has a net current assets of $1,961,731. This was mainly due to the refinancing
and conversion of the bank overdrafts of $18,396,665 drawn on the construction-in-progress to a
12 years term loan (Note 9) and the conversion of an amount due to a related party of $6,000,000
which was repayable on demand to a term loan repayable in three equal annual instalment
commencing from 1 July 2010 (Note 11).
The Group’s overall capital risk management remains unchanged from the last audited financial
year.
7.
PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 June 2009, the Group acquired $1,235,424 of property, plant and
equipment, of which $741,457 were acquired under finance leases.
As at 30 June 2009, property, plant and equipment (excluding motor vehicles) of the Group with
carrying amount of $33,162,260 (31 December 2008 : $33,964,838) is pledged as security for bank
facilities disclosed in Note 9 to the combined interim condensed financial statements. As at 30
June 2009, motor vehicles with carrying amount of $5,496,039 (31 December 2008 : $5,613,503)
are under finance lease arrangements disclosed in Note 10 to the combined interim condensed
8.
INVESTMENT PROPERTY
The disposal of the investment property at 20/20A Tanjong Pagar, Singapore 088443 was
completed during the six months ended 30 June 2009.
The investment property at 200 Jalan Sultan #12-09, Singapore 199018 is stated at fair value
which is also the net recoverable amount. Subsequent to 30 June 2009, the Group entered into an
option to dispose the property for a consideration of $400,000 (Note 17).
B-9
9.
BANK OVERDRAFTS AND LOANS
Bank overdrafts of $18,474,787 drawn on the construction-in-progress during the year ended 31
December 2008 has been refinanced and converted into a 12 years term loan. The term loan
bears interest at 0.5%, 1.0% and 1.5% over the bank’s commercial financing rate in the first year,
second year and thereafter respectively.
The bank loans and overdrafts are secured by certain property, plant and equipment, investment
property, assignment of trade receivables of $3,651,159 as at 30 June 2009 (31 December
2008 : $8,042,354) and personal guarantees from directors of certain subsidiaries.
The carrying amounts of the Group’s borrowings approximate their fair values.
10.
FINANCE LEASES
During the six months ended 30 June 2009, the Group has entered into new finance lease
agreements amounting to $741,457.
The Group’s obligations under finance leases are secured by its property, plant and equipment
(Note 7).
11.
LOAN FROM RELATED PARTY
An amount of $6,000,000 due to related party which was repayable on demand was converted into
a loan repayable in 3 equal annual instalments commencing from 1 July 2010. The loan from the
related party is unsecured and bears interest at Singapore interbank offer rate per annum.
The carrying amount of the loan from related party approximates its fair value.
12.
INCOME TAX EXPENSE
The interim period income tax expense is accrued based on the estimated average annual effective
income tax rate of the respective entities. The statutory income tax rate has decreased to 17% for
the six months ended 30 June 2009.
13.
EARNINGS PER SHARE
For illustrative purpose, the calculation of basic and diluted earnings per share is based on the
profit attributable to the equity holders of the Company for each of the periods ended 30 June 2009
and 2008 and the pre-invitational share capital of 273,000,000 shares.
14.
DIVIDENDS
For the six months ended 30 June 2009, a subsidiary declared an interim one-tier tax exempt
dividend of $16.6667 per ordinary share totalling $5,000,000 in respect of the financial year ending
31 December 2009.
15.
SEGMENT INFORMATION
Services from which reportable segments derive their revenue
For the purpose of the resource allocation and assessment of segment performance, the Group’s
chief operating decision makers have focused on the business operating units which in turn, are
segregated based on their services. This forms the basis of identifying the operating segments of
the Group under FRS 108 – Operating Segments (“FRS 108”).
B-10
15.
Operating segments are aggregated into a single reportable operating segment if they have similar
economic characteristics and are similar in respect of nature of services and processes and/or their
reported revenue.
The Group’s reportable operating segments under FRS 108 are as follows:
Segment
(a)
Transportation management
services
Provision for dry hubbing logistics solutions and
transportation services locally for laden and empty
containers and other cargoes.
(b)
Warehousing and container
depot management service
Rental to warehouses and provision of
warehousing services including packing, drumming
and other related ancilliary storage services.
Provision of storage of unladen shipping containers
and maintenance and repair works on the
containers.
(c)
Automotive logistics management
services
Processing, transportation, storage and motor
vehicles and port and customs clearance, vehicular
transportation, warehousing and delivery of such
motor vehicles, export processing zone operations
such as deregistration and export of second hand
vehicles.
Corporate and others relate to the provision of Group level corporate service and investment in
entities that do not constitute an operating segment. Accordingly, corporate and others are
presented as a reconciliation to the segment information presented.
Segment revenue represents revenue generated from external and internal customers. Segment
profits represent the profit earned by each segment after allocating central administrative costs and
finance costs. This is the measure reported to the chief operating decision makers for the purpose
of resource allocation and assessment of segment performance.
For the purpose of monitoring segment performance and allocating resources, the chief operating
decision makers monitor the tangible and financial assets attributable to each segment. All assets
are allocated to reportable segments. Assets, if any, used jointly by reportable segments are
allocated on the basis of the revenue earned by individual reportable segments.
B-11
15.
Information regarding the Group’s reportable segments is presented in the tables below.
Segment revenue and profit or loss
Transportation
management
services
Warehousing
and container
depot
management
services
Automotive
logistics
management
services
Corporate
and
others
Intersegment
eliminations
Total
$
$
$
$
$
$
8,907,256
520,939
16,373,566
922,902
4,136,381
65,633
–
–
–
(1,509,474)
29,417,203
–
9,428,195
17,296,468
4,202,014
–
(1,509,474)
29,417,203
Cost of services
Depreciation
Change in fair value of
investment property
Finance costs
92,483
(3,395,209)
(2,525,140)
(874,552)
400,529
(8,747,318)
(2,276,098)
(1,825,829)
149,278
(1,810,497)
(993,252)
(97,302)
64,353
–
–
–
–
–
–
–
706,643
(13,953,024)
(5,794,490)
(2,797,683)
–
(363,105)
(204,391)
–
(1,125,217)
(659,480)
–
(375,913)
(23,950)
(156,000)
–
–
–
–
–
(156,000)
(1,864,235)
(887,821)
Profit (loss) before tax
Income tax expense
2,158,281
(327,612)
3,063,055
(465,153)
1,050,378
(159,169)
(91,647)
16,769
(1,509,474)
–
4,670,593
(935,165)
Profit (loss) for the period
1,830,669
2,597,902
891,209
(74,878)
(1,509,474)
3,735,428
12,503,045
139,800
14,929,346
–
–
–
–
–
–
(139,800)
27,432,391
–
12,642,845
14,929,346
–
–
(139,800)
27,432,391
137,410
(6,578,135)
(3,918,278)
(941,028)
(485,005)
(135,210)
243,930
(8,218,679)
(2,183,533)
(987,329)
(1,150,273)
(757,870)
–
–
–
–
–
–
46,500
–
–
–
–
–
–
–
–
–
–
–
427,840
(14,796,814)
(6,101,811)
(1,928,357)
(1,635,278)
(893,080)
Profit (loss) before tax
Income tax expense
722,599
(145,489)
1,875,592
(377,633)
–
–
46,500
(9,550)
(139,800)
–
2,504,891
(532,672)
Profit (loss) for the period
577,110
1,497,959
–
36,950
(139,800)
1,972,219
Six months ended 30 June 2009 (Reviewed)
Revenue
Six months ended 30 June 2008 (Unaudited)
Revenue
Cost of services
Depreciation
Finance costs
B-12
15.
Segment assets, liabilities and other segment information
Transportation
management
services
Warehousing
and container
depot
management
services
Automotive
logistics
management
services
Corporate
and
others
Total
$
$
$
$
$
Assets
Segment assets
26,606,309
47,533,222
5,191,476
451,972
79,782,979
Total assets
26,606,309
47,533,222
5,191,476
451,972
79,782,979
6,009,227
7,373,603
690,365
283,597
10,749,672
34,353,103
1,230,704
505,565
3,061,795
192,978
97,610
109,351
–
–
–
105,215
19,820,694
41,919,684
2,018,679
1,003,728
Total liabilities
14,356,792
46,839,044
3,461,734
105,215
64,762,785
Net assets
12,249,517
694,178
1,729,742
346,757
15,020,194
770,049
144,120
321,255
–
1,235,424
Assets
Segment assets
31,850,412
39,201,104
3,969,699
2,114,820
77,136,035
Total assets
31,850,412
39,201,104
3,969,699
2,114,820
77,136,035
8,814,905
5,164,400
875,583
273,280
11,425,209
29,459,878
1,055,676
367,235
3,077,815
–
97,611
109,351
–
–
–
130,326
23,317,929
34,624,278
2,028,870
880,192
Total liabilities
15,128,168
42,307,998
3,284,777
130,326
60,851,269
16,722,244
(3,106,894)
684,922
1,984,494
16,284,766
2,089,725
8,006,331
1,086,557
–
11,182,613
As at 30 June 2009 (Reviewed)
Liabilities
Segment liabilities
Income tax payable
Capital expenditure
As at 31 December 2008 (Audited)
Liabilities
Segment liabilities
Income tax payable
Capital expenditure
Geographical segment information
The Group’s operations are carried out solely in Singapore. Accordingly, no geographical segment
information is presented.
B-13
15.
Major customers information
The Group generated the following revenue from their major customers from the respective
segments:
For the six months ended 30 June 2009, revenue from one customer from the transportation
For the six months ended 30 June 2008, revenue from one customer from the transportation
16.
CONTINGENT LIABILITY
During the six months ended 30 June 2009, a claim for loss in value of vehicles was filed with the
High Court against a subsidiary for lien over vehicles stored at the subsidiary’s warehouse.
Management is currently contesting against the claim. The Court proceedings are on-going at the
date of this report and due to the uncertainties involved in the outcome of the case, the Group’s
legal representative and management are unable to reasonably estimate the amount of potential
loss, should there be any.
17.
SUBSEQUENT EVENTS
Subsequent to 30 June 2009,
(A)
The subsidiaries of the Group entered into the followings with third parties:
(a)
Agreement to sell and leaseback the leasehold property at 7 Penjuru Close,
Singapore 608779;
(b)
Option to dispose the leasehold property at 19 Tuas Avenue 20, Singapore 638830 for
$6,300,000; and
(c)
Agreement to dispose the investment property at 200 Jalan Sultan #12-09, Singapore
199018 for $400,000.
(B)
A subsidiary entered into a conditional sale and purchase agreement with a related party to
acquire the properties at 11 Jalan Terusan and Jurong Port Road, and motor vehicles and
office and warehouse equipment for an aggregate consideration of $5,500,000. The
completion of the sale and purchase agreement is conditional upon approval from Jurong
Town Corporation for the reassignment of the land leases to the subsidiary.
(C)
At an extraordinary meeting held on 18 January 2010, the Shareholders approved, among
other things the following:
(a)
the consolidation of every two Shares of the issued share capital into one Share (the
(b)
the sub-division of each ordinary Share (“Share”) in the issued share capital into 273
Shares (the “Subdivision”);
B-14
31 December 2006, 2007 and 2008
17.
(c)
the conversion of the Company into a public limited company and the change of name
to “Cogent Holdings Limited”;
(d)
the adoption of a new set of Articles of Association;
(e)
the allotment and issue of the invitation Shares which are the subject of the Invitation.
The invitation Shares, when issued and fully paid-up, will rank pari passu in all
respects with the existing issued and fully paid-up Shares;
(f)
the adoption of the Cogent Holdings Employee Share Option Scheme and the
adoption of the Cogent Holdings Performance Share Plan and the authorisation of the
directors, pursuant to Section 161 of the Companies Act, to allot and issue Shares
upon the exercise of options granted under the Cogent Holdings Employee Share
Option Scheme;
(g)
the authorisation be given to the directors, pursuant to Section 161 of the Companies
Act, to allot and issue:
(i)
shares in our Company (whether by way of rights, bonus or otherwise); and
(ii)
any offer, agreements or options (collectively, “Instruments”) that might or
would require shares to be issued, including but not limited to the creation and
issue of (as well as adjustments to) warrants, debentures or other instrument
convertible into Shares at any time and upon such terms and conditions and for
such purposes and to such persons as the Directors shall in their absolute
discretion deem fit,
provided that:
(i)
the aggregate number of Shares to be issued pursuant to such authority
(including Shares to be issued to in pursuance of Instruments made or granted
pursuant to such authority) (the “Shares Issues”) shall not exceed 50.0% of the
total number of shares in the post-Invitation issued share capital of the
Company (excluding treasury shares), of which the aggregate number of
Shares to be issued other than on a pro rata basis to the then existing
shareholders of our Company shall not exceed 20.0% of the number of Shares
in the post-invitation issued share capital of our Company (excluding treasury
shares);
(ii)
the aggregate number of Shares to be issued pursuant to such authority by way
of a renounceable issue on a pro rata basis to shareholders of our Company
(including Shares to be issued in pursuance of Instruments made or granted
pursuant to such authority) (the “Renounceable Rights Issues”) does not
exceed 100% of the number of shares in the post-invitation issued share capital
of the Company (excluding treasury shares); and
(iii)
Renounceable Rights Issues shall not, in aggregate exceed 100% of the total
number of issued Shares (excluding treasury shares).
B-15
31 December 2006, 2007 and 2008
17.
for the purpose of determining whether the aggregate number of Shares exceeds the 100% limit,
the percentage of issued Shares (excluding treasury shares) shall be based on the total number of
Shares issued pursuant to such authority (unless the SGX-ST’s prevailing regulations and
requirements otherwise provide).
(h)
that without prejudice to the generality of, and pursuant and subject to the approval of
the general mandate to issue Shares set out in (g) above, authority be given to the
directors of the Company to issue Shares other than on a pro rata basis to
shareholders of the Company, at a discount not exceeding 20.0% to the weighted
average price of the Shares for trades done on the SGX-ST for the full market day on
which the placement or subscription agreement is signed (or if not available, the
weighted average price based on the trades done on the preceding market day), at
any time and upon such terms and conditions and for such purposes and to such
persons as the directors may in their absolute discretion deem fit,
provided that:
(i)
in exercising the authority conferred by this resolution (g), the Company shall
comply with the requirements imposed by the SGX-ST from time to time and
the provisions of the Listing Manual for the time being in force (in each case,
unless such compliance has been waived by the SGX-ST), all applicable legal
requirements under the Companies Act and otherwise, and the Articles of
Association for the time being of the Company; and
(ii)
(unless revoked or varied by the Company in general meeting) the authority
conferred by this resolution (g) shall continue in force until the conclusion of the
next Annual General Meeting of the Company or the date by which the next
Annual General Meeting of the Company is required by law to be held,
whichever is the earlier.
Unless revoked or varied by our Company in general meeting, such authority shall
continue in full force until the conclusion of the next Annual General Meeting of the
Company or the date by which the next Annual General Meeting is required by law or
by the Articles of Association to be held, whichever is earlier, except that the directors
shall be authorised to allot and issue new Shares pursuant to the Shares Issues and
the Renounceable Rights Issues notwithstanding that such authority has ceased.
For the purposes of this resolution and pursuant to Rules 806(3) and 806(4) of the
Listing Manual, “post-invitation issued share capital” shall mean the enlarged issued
share capital of the Company after the invitation (excluding treasury shares), after
adjusting for (i) new Shares arising from the conversion or exercise of any convertible
securities; (ii) new Shares arising from exercising of any convertible securities or share
options or vesting of share awards outstanding or subsisting at the time such authority
is given, providing the options or awards were granted in compliance with the Listing
Manual; and (iii) any subsequent bonus issue, consolidation or sub-division of Shares.
18.
COMPARATIVE FIGURES
The comparative figures for the six months ended 30 June 2008 have not been audited nor
reviewed.
B-16
STATEMENT OF DIRECTORS
In the opinion of the directors, the combined interim condensed financial statements of the Group set out
on pages B-3 to B-16 are drawn up so as to give a true and fair view of the state of affairs of the Group
as at 30 June 2009 and of the results, changes in equity and cash flows of the Group for the six months
from 1 January 2009 to 30 June 2009 and at the date of this statement, there are reasonable grounds to
believe that the Group will be able to pay its debts when they fall due.
ON BEHALF OF THE DIRECTORS
Tan Yeow Khoon
Tan Yeow Lam
9 February 2010
B-17
APPENDIX C – INDEPENDENT AUDITORS' REPORT AND
UNAUDITED PROFORMA GROUP FINANCIAL INFORMATION
INDEPENDENT AUDITORS’ REPORT ON THE UNAUDITED PROFORMA GROUP FINANCIAL
INFORMATION
9 February 2010
7 Penjuru Close
#05-00
Singapore 608779
Dear Sirs
This report has been prepared for inclusion in the Preliminary Prospectus dated 9 February 2010 (the
“Preliminary Prospectus”) in respect of initial public offering of shares of Cogent Holdings Limited (the
“Company”). The unaudited Proforma Group financial information comprises the unaudited proforma
combined statements of financial position as at 31 December 2008 and 30 June 2009, and the unaudited
proforma combined statements of comprehensive income and statements of cash flows for the year
ended 31 December 2008 and for the six months ended 30 June 2009 (collectively the “unaudited
Proforma Group financial information”).
We report on the unaudited Proforma Group financial information set out on pages C-3 to C-17 which
have been prepared for illustrative purposes only and based on certain assumptions after making certain
adjustments to show what:
(i)
the unaudited combined results and cash flows for the year ended 31 December 2008 and the
unaudited combined interim results and cash flows for the six months ended 30 June 2009 of the
Company and its subsidiaries (the “Group”) would have been if the Significant Events stated in the
Explanatory Note 1 of the unaudited Proforma Group financial information had occurred on 1
January 2008; and
(ii)
the unaudited combined statement of financial position as at 31 December 2008 and the unaudited
combined interim statement of financial position as at 30 June 2009 of the Group would have been
if the foresaid Significant Events had occurred on 31 December 2008 and 30 June 2009
respectively.
The unaudited Proforma Group financial information, because of their nature, may not give a true picture
of the Group’s actual financial results.
The unaudited Proforma Group financial information is the responsibility of the management of the
Company. Our responsibility is to express an opinion on the unaudited Proforma Group financial
information based on our work.
C-1
We carried out procedures in accordance with Singapore Statement of Auditing Practice 24: Auditors and
Public Offering Documents. Our work, which involved no independent examination of the unaudited
Proforma Group financial information, consisted primarily of comparing the unaudited Proforma Group
financial information to the audited combined financial statements of the Group for the year ended 31
December 2008 and the unaudited combined interim condensed financial statements of the Group for the
six months ended 30 June 2009, considering the evidence supporting the adjustments and discussing the
unaudited Proforma Group financial information with the management of the Company.
In our opinion:
(a)
(b)
the unaudited Proforma Group financial information have been properly prepared:
(i)
on the basis stated in the Explanatory Note 2 of the unaudited Proforma Group financial
information;
(ii)
such basis is consistent with the accounting policies adopted by the Company for its latest
audited combined financial statements for the year ended 31 December 2008, which are
drawn up in accordance with the Singapore Financial Reporting Standards; and
each material adjustment made to the information used in the preparation of the unaudited
Proforma Group financial information is appropriate for the purpose of preparing such financial
information.
Yours faithfully
Singapore
Seah Gek Choo
Partner
C-2
UNAUDITED PROFORMA COMBINED STATEMENT OF FINANCIAL POSITION
Explanatory
note
Audited
combined
statement of
financial
position
Unaudited
proforma
adjustments
Unaudited
proforma
combined
statement of
financial
position
$
$
$
5,324,072
16,075,416
2,908,496
22,820
17,907,542
ASSETS
Current assets
Trade receivables
Other receivables
2(b), 2(c), 2(d), 2(e), 2(f)
23,231,614
16,075,416
2,908,496
22,820
24,330,804
1,500,000
42,238,346
1,500,000
25,830,804
43,738,346
Non-current assets
Other investment
2(d), 2(e), 2(f)
2(c)
50,713,231
556,000
36,000
(19,759,971)
(556,000)
30,953,260
–
36,000
51,305,231
30,989,260
Total assets
77,136,035
74,727,606
Current liabilities
Trade payables
Other payables
Deferred income
Income tax payable
2(d), 2(e)
23,139,917
2,239,890
6,049,790
17,268,139
–
2,028,870
2(e)
2(d)
Bank loans
Finance leases
Deferred income
(18,753,054)
985,838
626,082
50,726,606
2(d)
7,887,261
1,357,210
–
880,192
2(e)
2(c), 2(d)
33,585,472
(2,221,733)
6,014,162
8,465
10,124,663
Share capital
Accumulated profits
2(b), 2(c), 2(d), 2(e)
500,000
15,784,766
4,386,863
2,239,890
6,049,790
17,268,139
985,838
2,654,952
5,665,528
1,357,210
6,014,162
888,657
13,925,557
10,931,811
500,000
26,716,577
Total equity
16,284,766
27,216,577
77,136,035
74,727,606
C-3
UNAUDITED PROFORMA COMBINED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2008
Audited
combined
statement of
comprehensive
income
Unaudited
proforma
adjustments
Unaudited
proforma
combined
statement of
comprehensive
income
$
$
$
2(a), 2(d)
60,118,486
3,156,147
63,274,633
2(c)
1,460,805
2(a), 2(d), 2(e), 2(f)
(30,835,588)
Explanatory
note
Revenue
Cost of services
(39,065)
(6,836,488)
1,421,740
(37,672,076)
Excess of fair values of net
identifiable assets over cost of
acquisition
2(a)
2(a)
(12,121,099)
(221,359)
(12,342,458)
2(a), 2(d), 2(e), 2(f)
(4,340,566)
(2,331)
(4,342,897)
Depreciation
investment property
52,215
2(c)
(44,000)
(52,215)
–
44,000
–
16,822,640
16,822,640
Gain on disposal of investment
and leasehold properties
2(c), 2(d), 2(e)
2(a), 2(c), 2(d)
(3,550,087)
(329,672)
(3,879,759)
Finance costs
2(a), 2(d), 2(e)
(1,941,020)
730,968
(1,210,052)
Profit before tax
Income tax expense
–
8,799,146
2(a), 2(c), 2(d), 2(e), 2(f)
Profit for the year
Other comprehensive income
for the year
Total comprehensive income
for the year
Basic and diluted earnings
per share (cents)
C-4
(1,796,347)
22,071,771
47,539
(1,748,808)
7,002,799
20,322,963
–
–
7,002,799
20,322,963
2.6
7.4
UNAUDITED PROFORMA COMBINED STATEMENT OF CASH FLOWS
Audited
combined
statement of
cash flows
Unaudited
proforma
adjustments
Unaudited
proforma
combined
statement of
cash flows
$
$
$
2(c), 2(d), 2(e), 2(f)
8,799,146
13,461,846
22,260,992
2(d), 2(e), 2(f)
2(d), 2(e)
4,340,566
1,941,020
(13,715)
(355)
Explanatory
note
Profit before tax
Adjustments for:
Depreciation
Interest expense
Interest income
Dividend income
Excess of fair values of net
tangible assets over cost
of acquisition
investment property
Allowance for doubtful trade
receivables
Fair investments loss on
held-for-frading investments
Amortisation of deferred income
Gain on disposal of investment
Gain on disposal of property,
plant and equipment
(91,886)
(754,887)
(52,215)
2(c)
44,000
(52,215)
(44,000)
91,052
3,130
–
2(e)
2(c), 2(d), 2(e)
–
15,038,909
3,413,143
1,356,234
(6,340,591)
2,761,831
2(c), 2(d)
2(d)
–
91,052
(985,838)
(16,822,640)
(113,720)
Operating cash flows before
movements in working capital
Trade receivables
Other receivables
Trade payables
Other payables
4,248,680
1,186,133
(13,715)
(355)
3,130
(985,838)
(16,822,640)
(113,720)
(1,763)
14,731
9,801,504
3,411,380
1,356,234
(6,325,860)
2,761,831
Income tax paid
16,229,526
(251,552)
11,005,089
(251,552)
15,977,974
10,753,537
Interest received
Dividend received
Purchase of other investment
Purchase of property, plant
and equipment
Proceeds from disposal of property,
plant and equipment
Proceeds from disposal of investment
Net cash flow arising from acquisition
of subsidiaries
13,715
355
(36,000)
2(e), 2(f)
(7,661,125)
13,715
355
(36,000)
(4,937,861)
947,840
2(c), 2(d), 2(e)
–
505,495
Net cash (used in) from investing activities
(6,229,720)
C-5
(12,598,986)
947,840
49,700,000
49,700,000
505,495
38,532,419
UNAUDITED PROFORMA COMBINED STATEMENT OF CASH FLOWS (Continued)
Explanatory
note
Audited
combined
statement of
cash flows
Unaudited
proforma
adjustments
Unaudited
proforma
combined
statement of
cash flows
$
$
$
–
(1,941,020)
(3,847,798)
1,290,158
314,206
3,872,477
(2,754,978)
(111,879)
(5,000,000)
754,887
(5,000,000)
(1,186,133)
(3,847,798)
1,290,158
314,206
3,872,477
(23,729,765)
(111,879)
Dividend paid
Interest paid
Amount due to related parties
Pledged deposits
2(b)
2(d), 2(e)
2(d), 2(e)
Net cash used in financing activities
(20,974,787)
(3,178,834)
Net increase in cash and
cash equivalents
Cash and cash equivalents at
beginning of year
6,569,420
end of year (Note A)
(28,398,734)
14,317,802
20,887,222
(5,358,740)
(5,358,740)
1,210,680
15,528,482
Audited
combined
statement of
cash flows
Unaudited
proforma
adjustments
Unaudited
proforma
combined
statement of
cash flows
$
$
$
5,324,072
(3,684,369)
14,317,802
Note A
19,641,874
(3,684,369)
1,639,703
(429,023)
15,957,505
(429,023)
1,210,680
15,528,482
C-6
UNAUDITED PROFORMA COMBINED STATEMENT OF FINANCIAL POSITION
As at 30 June 2009
Explanatory
note
Reviewed
combined
statement of
financial position
Unaudited
proforma
adjustments
Unaudited
proforma
combined
statement of
financial position
$
$
$
13,935,395
13,365,165
3,115,315
15,972
18,123,953
32,059,348
13,365,165
3,115,315
15,972
ASSETS
Current assets
Trade receivables
Other receivables
2(b), 2(c), 2(d), 2(e), 2(f)
Non-current assets
Investment property
Other investment
30,431,847
2(d), 2(e), 2(f)
2(c)
48,915,132
400,000
36,000
48,555,800
(19,636,369)
(400,000)
29,278,763
–
36,000
49,351,132
29,314,763
Total assets
79,782,979
77,870,563
Current liabilities
Trade payables
Other payables
Deferred income
Income tax payable
2(d), 2(e)
4,710,092
1,920,651
6,281,547
13,539,147
–
2,018,679
2(b)
2(e)
2(d)
Bank loans
Finance leases
Deferred income
(5,000,000)
985,838
606,670
28,470,116
2(d)
28,286,652
1,002,289
6,000,000
–
1,003,728
2(e)
2(c), 2(d)
Share capital
Accumulated profits
(1,520,299)
23,542,325
(19,238,163)
6,014,162
59,218
36,292,669
2(c), 2(d), 2(e)
500,000
14,520,194
3,189,793
1,920,651
6,281,547
8,539,147
985,838
2,625,349
9,048,489
1,002,289
6,000,000
6,014,162
1,062,946
23,127,886
16,180,158
500,000
30,700,352
Total equity
15,020,194
31,200,352
79,782,979
77,870,563
C-7
UNAUDITED PROFORMA COMBINED STATEMENT OF COMPREHENSIVE INCOME
Explanatory
note
Reviewed
combined
statement of
comprehensive
income
Unaudited
proforma
adjustments
Unaudited
proforma
combined
statement of
comprehensive
income
$
$
$
Revenue
2(d)
29,417,203
(738,378)
28,678,825
2(c)
706,643
(21,308)
685,335
Cost of services
2(d), 2(e), 2(f)
(13,953,024)
Depreciation
investment property
2(d), 2(e), 2(f)
2(c)
(1,488,222)
(15,441,246)
(5,794,490)
–
(5,794,490)
(2,797,683)
281,007
(2,516,676)
(156,000)
156,000
–
2(c), 2(d)
(1,864,235)
39,666
(1,824,569)
Finance costs
2(d), 2(e)
(887,821)
520,213
(367,608)
Profit before tax
Income tax expense
4,670,593
2(c), 2(d), 2(e), 2(f)
Profit for the period
Other comprehensive income
for the period
Total comprehensive income
for the period
Basic and diluted earnings
per share (cents)
C-8
(935,165)
3,419,571
326,449
(608,716)
3,735,428
2,810,855
–
–
3,735,428
2,810,855
1.4
1.0
UNAUDITED PROFORMA COMBINED STATEMENT OF CASH FLOWS
Reviewed
combined
statement of
cash flows
Unaudited
proforma
adjustments
Unaudited
proforma
combined
statement of
cash flows
$
$
$
2(c), 2(d), 2(e), 2(f)
4,670,593
(1,251,022)
2(d), 2(e), 2(f)
2(d), 2(e)
2,797,683
887,821
(4,914)
(281,007)
(520,213)
2(c)
156,000
(156,000)
Explanatory
note
Profit before tax
Adjustments for:
Depreciation
Interest expense
Interest income
investment property
Allowance for doubtful trade
receivables
Fair value loss on held-for-trading
investments
Gain on disposal of property,
plant and equipment
Operating cash flows before
movements in working capital
Trade receivables
Other receivables
Trade payables
Other payables
75,531
6,848
–
2(e)
8,492,205
2,634,720
(206,819)
231,757
2,050,688
2(d)
2,516,676
367,608
(4,914)
–
75,531
(341,530)
(97,357)
2(c), 2(d)
3,419,571
6,848
(341,530)
(97,357)
222,507
1,322
5,942,433
2,857,227
(206,819)
233,079
2,050,688
Income tax paid
13,202,551
(821,820)
10,876,608
(821,820)
12,380,731
10,054,788
4,914
4,914
1,500,000
1,500,000
Interest received
Proceeds from disposal of
investment property
Purchase of property, plant
and equipment
Proceeds from disposal of property,
plant and equipment
Net cash from investing activities
C-9
(493,967)
(493,967)
275,927
275,927
1,286,874
1,286,874
UNAUDITED PROFORMA COMBINED STATEMENT OF CASH FLOWS (Continued)
Explanatory
note
Dividends paid
Interest paid
Amount due (from) to directors
Amount due to related parties
Pledged deposits
Reviewed
combined
statement of
cash flows
Unaudited
proforma
adjustments
Unaudited
proforma
combined
statement of
cash flows
$
$
$
(1,500,000)
(887,821)
(1,358,347)
(3,297,765)
18,085
4,921,878
(839,735)
105,120
2(d), 2(e)
2(b)
Net cash (used in) from financing activities
520,213
5,000,000
(2,838,585)
Net increase in cash and
cash equivalents
beginning of the period
end of year (Note A)
(1,500,000)
(367,608)
(1,358,347)
1,702,235
18,085
4,921,878
(839,735)
105,120
2,681,628
10,829,020
3,194,270
14,023,290
1,210,680
14,317,802
15,528,482
12,039,700
29,551,772
Reviewed
combined
statement of
cash flows
Unaudited
proforma
adjustments
Unaudited
proforma
combined
statement of
cash flows
$
$
$
13,935,395
(1,571,792)
17,512,072
12,363,603
(323,903)
29,875,675
(323,903)
12,039,700
29,551,772
Note A
C-10
31,447,467
(1,571,792)
Explanatory Notes:
1.
Significant Events
Save for the following significant events relating to acquisitions of subsidiaries and property, plant
and equipment, changes to the capital structure, and disposal of investment property and
leasehold properties of the Group (the “Significant Events”) discussed below, the directors, as at
the date of this report, are not aware of other significant acquisitions and disposal of assets and
subsidiaries subsequent to 31 December 2007 and significant changes made to the capital
structure of the Group subsequent to 31 December 2008:
(a)
The Group acquired an effective equity interest of 99% in both Cogent Investment Group
Pte. Ltd. (“CIG”) (formerly known as “HNH Group Pte. Ltd.”) and its subsidiary, Cogent
Automotive Logistic Pte. Ltd. (“CAL”) (formerly known as HNH International Pte. Ltd.) for an
aggregate consideration of approximately $1.78 million on 31 July 2008 from a third party.
In May 2009, the Group acquired the remaining 1% equity interest in both CIG and CAL for
an aggregate consideration of $18,000 from a third party.
2.
(b)
An interim one-tier tax exempt dividend of $16.6667 per ordinary share totalling $5,000,000
in respect of the year ending 31 December 2009 was declared on 21 May 2009 and paid in
July 2009.
(c)
The Group entered into an agreement to dispose an investment property at 200 Jalan Sultan
#12-09, Singapore 199018 for $400,000.
(d)
The Group entered into an option to dispose a leasehold property at 19 Tuas Avenue 20,
Singapore 638830 to a third party for a consideration of $6,300,000 in September 2009.
(e)
The Group entered into an agreement to sell and leaseback the leasehold property at 7
Penjuru Close, Singapore 608779 with a third party for a consideration of $43,000,000 and
with an operating leaseback arrangement of 7 years at $4,316,040 for the first year and at
an estimated increase of 2% per annum.
(f)
The Group entered into a conditional sale and purchase agreement with a related party to
acquire properties at 11 Jalan Terusan and Jurong Port Road, and motor vehicles and office
and warehouse equipment for an aggregate consideration of $5,500,000 in December 2009.
The completion of the sale and purchase agreement is conditional upon approval from
Jurong Town Corporation for the reassignment of the land leases to the Group.
Basis of preparation of the unaudited Proforma Group financial information
The unaudited Proforma Group financial information has been prepared based on the following:
–
Audited combined financial statements of Cogent Holdings Limited for the year ended 31
December 2008 which were prepared by management in accordance with the Singapore
Financial Reporting Standards (“FRS”) and audited by Deloitte & Touche LLP, Singapore, in
accordance with Singapore Standards on Auditing. The auditors’ report on these financial
statements was not qualified.
–
Unaudited combined interim condensed financial statements of Cogent Holdings Limited for
the six months ended 30 June 2009 which were prepared by management in accordance
with FRS 34 Interim Financial Reporting and reviewed by Deloitte & Touche LLP, Singapore,
in accordance with Singapore Standards on Review Engagements 2410 Review of Interim
Financial Information Performed by the Independent Auditors of the Entity. The auditors’
report on these financial statements was not qualified.
The unaudited Proforma Group financial information for the year ended 31 December 2008 and the
six months ended 30 June 2009 are prepared for illustrative purposes only. These are prepared
based on certain assumptions and after making certain adjustments to show what:
C-11
(i)
the unaudited combined results and cash flows of the Group for the year ended 31 December
2008 and for the six months ended 30 June 2009 would have been if the Significant Events
discussed above had occurred on 1 January 2008; and
(ii)
the unaudited combined statement of financial positions of the Group as at 31 December 2008
and 30 June 2009 would have been if the Significant Events had occurred on 31 December
2008 and 30 June 2009 respectively.
Based on the assumptions discussed above, the following material adjustments have been made to
the audited combined financial statements of Cogent Holdings Limited for the year ended 31
December 2008 and unaudited combined interim condensed financial statements for the six months
ended 30 June 2009, in arriving at the unaudited Proforma Group financial information included
herein:
(a)
Acquisitions of subsidiaries
Unaudited proforma combined statement of comprehensive income
Effect of acquisitions of subsidiaries subsequent to 1 January 2008 and adjusted as
appropriate for the results from 1 January 2008 to 31 July 2008:
Increase
(Decrease)
1 January
2008 to
31 December
2008
$
Revenue
Cost of services
Excess of fair values of net identifiable assets over cost of acquisition
Depreciation
Finance costs
Income tax expense
4,504,240
3,901,831
(52,215)
221,359
94,217
399,920
23,919
133,243
As the recognition of the proforma effect of the results of CIG and CAL has no material impact on
the combined statement of financial position and combined statement of cash flows, no adjustment
was made to the unaudited proforma combined statement of financial position as at 31 December
2008 and unaudited proforma combined statement of cash flows for the year ended 31 December
2008.
The unaudited Proforma Group financial information for the six months ended 30 June 2009 did not
include the effect of the acquisitions of subsidiaries as this event had occurred as at 31 December
2008.
C-12
(b)
Change to capital structure
Unaudited proforma combined statement of financial position
Effect of declaration and payment of interim dividend of $5,000,000 subsequent to 31
December 2008 and adjusted as appropriate for the following:
Increase (Decrease)
Other payables
Accumulated profits
As at
31 December
2008
As at
30 June
2009
$
$
(5,000,000)
–
(5,000,000)
(5,000,000)
(5,000,000)
–
Unaudited proforma combined statement of cash flows
Effect of declaration and payment of interim dividend of $5,000,000 subsequent to 31
December 2008 and adjusted as appropriate for the following:
Increase (Decrease)
Dividend paid
1 January
2008 to
31 December
2008
1 January
2009 to
30 June
2009
$
$
5,000,000
–
–
5,000,000
As the recognition of the proforma effect of the declaration of interim dividend has no effect
on the proforma combined statement of comprehensive income for the year ended 31
December 2008 and for six months ended 30 June 2009, no adjustment was made to the
unaudited proforma combined statements of comprehensive income for the year ended 31
December 2008 and for the six months ended 30 June 2009.
(c)
Disposal of investment property
Effect of disposal of investment property at 200 Jalan Sultan #12-09, Singapore 199018
subsequent to 31 December 2008 and 30 June 2009 and adjusted as appropriate for the
following:
Increase (Decrease)
Investment property
Accumulated profits
As at
31 December
2008
As at
30 June
2009
$
$
400,000
(556,000)
(63,572)
(92,428)
C-13
400,000
(400,000)
(33,520)
33,520
Effect of disposal of investment property at 200 Jalan Sultan #12-09, Singapore 199018
subsequent to 1 January 2008 and adjusted as appropriate for the following:
Increase (Decrease)
Loss on disposal of investment property
Income tax expense
1 January
2008 to
31 December
2008
1 January
2009 to
30 June
2009
$
$
(39,065)
44,000
200,000
(10,952)
(66,431)
(21,308)
156,000
–
(3,297)
(56,978)
Increase (Decrease)
Profit before tax
Loss on disposal of investment property
Trade receivables
Proceeds from disposal of investment property
(d)
1 January
2008 to
31 December
2008
1 January
2009 to
30 June
2009
$
$
(184,113)
(44,000)
200,000
3,800
137,989
(156,000)
–
(3,800)
400,000
–
Disposal of leasehold property
Effect of disposal of leasehold property at 19 Tuas Avenue 20, Singapore 638830
following:
Increase (Decrease)
Bank loans
Income tax payable
Accumulated profits
C-14
As at
31 December
2008
As at
30 June
2009
$
$
3,800,000
(1,821,000)
(278,267)
(2,221,733)
626,082
72,037
3,780,881
3,938,203
(1,730,591)
(283,734)
(2,078,063)
606,670
92,738
3,870,001
Effect of disposal of leasehold property at 19 Tuas Avenue 20, Singapore 638830
Increase (Decrease)
Revenue
Cost of services
Depreciation
Gain on disposal of leasehold property
Finance costs
Income tax expense
1 January
2008 to
31 December
2008
1 January
2009 to
30 June
2009
$
$
(1,348,093)
(340,994)
(180,818)
4,298,181
(59,296)
(119,271)
626,082
(738,378)
(173,296)
(90,409)
–
(36,369)
(54,948)
32,974
Increase (Decrease)
1 January
2008 to
31 December
2008
1 January
2009 to
30 June
2009
$
$
Profit before tax
Depreciation
Interest expense
Trade receivables
Trade payables
3,650,467
(180,818)
(119,271)
4,298,181
(5,563)
14,731
Proceeds from disposal of leasehold property
6,300,000
Interest paid
(119,271)
2,500,000
C-15
(383,356)
(90,409)
(54,948)
–
226,307
1,322
–
(54,948)
–
(e)
Sale and leaseback of leasehold property
Effect of sale and leaseback of leasehold property at 7 Penjuru Close, Singapore 608779
following:
Increase (Decrease)
Bank overdraft and loans
Bank loans
Deferred income
Accumulated profits
As at
31 December
2008
As at
30 June
2009
$
$
24,207,542
(23,438,971)
(18,474,787)
–
7,000,000
12,243,358
24,285,750
(23,405,778)
(1,236,565)
(17,160,100)
7,000,000
12,276,637
Effect of sale and leaseback of leasehold property at 7 Penjuru Close, Singapore 608779
Increase (Decrease)
Cost of services
Depreciation
Finance costs
Income tax expense
1 January
2008 to
31 December
2008
1 January
2009 to
30 June
2009
$
$
3,420,664
(398,709)
12,724,459
(635,616)
(678,760)
1,859,654
(431,902)
–
(465,265)
(295,106)
Increase (Decrease)
1 January
2008 to
31 December
2008
1 January
2009 to
30 June
2009
$
$
Profit before tax
Depreciation
Interest expense
10,338,120
(398,709)
(635,616)
985,838
12,724,459
Proceeds from disposal of leasehold property
562,139
43,000,000
Interest paid
(635,616)
18,474,787
C-16
(962,487)
(431,902)
(465,265)
341,530
–
–
–
(465,265)
–
(f)
Acquisition of property, plant and equipment
Effect of acquisition of property, plant and equipment subsequent to 31 December 2008 and
30 June 2009 and adjusted as appropriate for the following:
Increase (Decrease)
As at
31 December
2008
As at
30 June
2009
$
$
(5,500,000)
5,500,000
(5,500,000)
5,500,000
Effect of acquisition of property, plant and equipment subsequent to 1 January 2008 and
adjusted as appropriate for the following:
Increase (Decrease)
Cost of services
Depreciation
Income tax expense
1 January
2008 to
31 December
2008
1 January
2009 to
30 June
2009
$
$
(145,013)
487,641
(61,673)
(198,136)
241,304
(7,339)
Increase (Decrease)
Profit before tax
Depreciation
1 January
2008 to
31 December
2008
1 January
2009 to
30 June
2009
$
$
(342,628)
487,641
5,500,000
(43,168)
241,304
–
The unaudited Proforma Group financial information, because of their nature, are not
necessarily indicative of the results of the operations, cash flows and financial position would
have been attained had the Significant Events actually occurred earlier. Save as disclosed in
the Explanatory Notes, the management, for the purpose of preparing this set of unaudited
Proforma Group financial information, have not considered the effects of other events.
C-17
APPENDIX D – SINGAPORE TAXATION
The following is a discussion of certain tax matters relating to Singapore income tax, capital gains tax,
stamp duty and estate duty consequences in relation to the purchase, ownership and disposal of our
Shares. The discussion is limited to a general description of certain tax consequences in Singapore with
respect to the ownership of shares and is based on laws, regulations and interpretations now in effect
and available as of the date of this Prospectus. The laws, regulations and interpretations, however, may
change at any time, and any change could be retroactive to the date of issuance of our Shares. These
laws and regulations are also subject to various interpretations and the relevant tax authorities or the
courts of Singapore could later disagree with the explanations or conclusions set out below.
Prospective purchasers of our Shares should consult their tax advisors concerning the tax
consequences of owning and disposing our Shares. Neither our Company, our Directors nor any
other persons involved in this Invitation accepts responsibility for any tax effects or liabilities
resulting from the subscription, purchase, holding or disposal of our Shares.
SINGAPORE TAXATION
Income Tax
General
Both resident and non-resident Singapore companies are subject to tax on income accruing in or derive
from Singapore and on foreign-sourced income received or deemed received in Singapore, subject to
certain exceptions.
Foreign-sourced income in the form of branch profits, dividends and service income received or deemed
received in Singapore by a Singapore resident company shall be exempt from tax provided the following
conditions are met:
(i)
such income has been subject to tax in the foreign jurisdiction from which such income is received;
(ii)
at the time such income is received in Singapore, the highest rate of tax of the foreign jurisdiction
from which such income is received is at least 15%; and
(iii)
the Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the
Singapore resident company.
Individual taxpayers who are Singapore tax residents are subject to tax on income accruing in or derived
from Singapore. All foreign-sourced income received in Singapore on or after 1 January 2004 by
Singapore tax resident individuals (except for income received through a partnership in Singapore) is
exempt from Singapore income tax if the Inland Revenue Authority of Singapore is satisfied that the tax
exemption would be beneficial to the individual.
Non-resident individuals, subject to certain exceptions, are subject to Singapore income tax on income
accruing in or derived from Singapore.
Non-resident individuals are not subject to tax on foreign-sourced income received in Singapore.
A company is tax resident in Singapore if the control and management of its business is exercised in
Singapore. An individual is tax resident in Singapore if he resides in Singapore (except for temporary
absences from Singapore) or if he is physically present or exercises an employment in Singapore (other
than as a director of a company) for 183 days or more during the calendar year preceding the year of
assessment.
D-1
Tax Rates
The corporate tax rate in Singapore is currently 18% with partial exemption on three quarters of the first
S$10,000 and one-half of the next S$290,000 of a company’s normal chargeable income. The Minister
for Finance has, in his 2009 Budget Statement, announced that the corporate tax rate will be reduced to
17% with effect from the Year of Assessment 2010 (i.e. in respect of the financial year ending in 2009).
Currently, a Singapore tax resident individual is subject to tax at progressive rates, ranging from 0% to
20%. Income derived by a non-Singapore tax resident individual is normally taxed at the rate of 20%
except for Singapore employment income which is taxed at a flat rate of 15% or at resident rates,
whichever yields a higher tax.
Dividend Distributions
Singapore introduced the one-tier corporate tax system on 1 January 2003. The five-year transitional
period ceased on 31 December 2007, and with effect from 1 January 2008, all companies have moved to
the one-tier corporate tax system. Under the one-tier corporate tax system, the tax paid by Singapore
companies, whether tax resident in Singapore or not, would constitute a final tax. Dividends payable by
companies under the one-tier corporate tax system would be tax exempt in the hands of its shareholders.
Such dividends are referred to as tax exempt (one-tier) dividends.
As our Company is considered to be tax resident in Singapore, it will be under the one-tier corporate tax
system. As such, when our Company distributes dividends, these dividends will be one-tier tax exempt
dividends and such dividends are tax exempt in the hands of our shareholders.
There is no Singapore withholding tax on dividends paid to non-Singapore tax resident shareholders.
Foreign shareholders are advised to consult their own tax advisors in respect of the tax laws of their
respective countries of residence and the applicability of any double taxation agreement that their country
of residence may have with Singapore.
Gains on Disposal of Shares
Singapore currently does not impose tax on capital gains. However, there are no specific laws or
regulations which deal with the characterisation of capital gains. In general, certain gains may be
construed to be revenue in nature and subject to income tax where they are derived from activities which
the Inland Revenue Authority of Singapore regards as constituting a trade or business carried on in
Singapore.
Profits arising from the disposal of our Shares are not generally taxable in Singapore unless the seller is
deemed to be dealing or trading in shares in Singapore, in which case, the gains on sale would be
taxable as revenue profits.
Stamp Duty
No stamp duty is payable on the allotment or holding of our Shares. Stamp duty is payable on the
instrument of transfer of our Shares at the rate of S$0.20 for every S$100 or any part thereof, computed
based on the consideration for the transfer, or market value, of our Shares, whichever is higher.
The stamp duty is borne by the purchaser, unless otherwise agreed. No stamp duty is payable if no
instrument of transfer is executed or the instrument of transfer is executed outside Singapore.
However, stamp duty may be payable if the instrument of transfer which is executed outside Singapore is
received in Singapore.
The above stamp duty is not applicable to electronic transfers of ordinary shares through the CDP
system.
D-2
Estate Duty
With effect from 15 February 2008, no estate duty is leviable in respect of deaths occurring on or after 15
February 2008.
Goods and Services Tax (“GST”)
The sale of our Shares by a GST-registered investor belonging in Singapore through an SGX-ST member
or to another person belonging in Singapore is an exempt supply not subject to GST. In this regard,
generally, any GST directly or indirectly incurred by the GST-registered investor in making such supplies
may not be set-off against GST to be paid or recovered from the Comptroller of GST, unless certain
requirements of the GST Act are satisfied.
Where our Shares are sold by a GST-registered investor to a person belonging outside Singapore, the
sale is generally a taxable sale subject to GST at zero-rate. Any GST incurred by a GST-registered
investor in the making of this taxable supply in the course or furtherance of a business, subject to the
provision of the GST Act, may be set-off against GST to be paid to the Comptroller of GST.
However, if our Shares are sold by a GST-registered person who is on a fixed input recovery rate, the
above is not applicable as the seller will be entitled to recover input tax based on the fixed rate as agreed
upfront with the Comptroller.
Services consisting of arranging, brokering, underwriting or advising on the issue, allotment or transfer of
ownership of our Shares rendered by a GST-registered person to an investor belonging in Singapore in
connection with the investor’s purchase, sale or holding of our Shares will be subject to GST at the
standard rate (currently at 7%). Similar services supplied contractually to and for the direct benefit of a
person belonging outside Singapore would generally be subject to GST at zero-rate.
D-3
APPENDIX E – SUMMARY OF MEMORANDUM AND ARTICLES OF
ASSOCIATION OF OUR COMPANY
The discussion below provides a summary of the principal objects of our Company as set out in our
Memorandum of Association and certain provisions of our Articles of Association and the laws of
Singapore. This discussion is only a summary and is qualified by reference to Singapore law and our
Memorandum and Articles of Association.
REGISTRATION NUMBER
We are registered in Singapore with the Accounting and Corporate Regulatory Authority. Our company
registration number is 200710813D.
SUMMARY OF OUR ARTICLES OF ASSOCIATION
1.
Directors
(a)
Ability of interested directors to vote
A Director shall not vote in respect of any contract, proposed contract or arrangement or any
other proposal in which he has any personal material interest, and he shall not be counted in
the quorum present at the meeting.
(b)
Remuneration
Fees payable to non-executive Directors shall be a fixed sum (not being a commission on or
a percentage of profits or turnover of the Company) as shall from time to time be determined
by the Company in general meeting. Fees payable to Directors shall not be increased except
at a general meeting convened by a notice specifying the intention to propose such increase.
Any Director who holds any executive office, or who serves on any committee of the
Directors, or who performs services outside the ordinary duties of a Director, may be paid
extra remuneration by way of salary, commission or otherwise, as the Directors may
determine.
The remuneration of a Managing Director shall be fixed by the Directors and may be by way
of salary or commission or participation in profits or by any or all of these modes but shall
not be by a commission on or a percentage of turnover. The Directors shall have power to
pay pensions or other retirement, superannuation, death or disability benefits to (or to any
person in respect of) any Director for the time being holding any executive office and for the
purpose of providing any such pensions or other benefits, to contribute to any scheme or
fund or to pay premiums.
(c)
Borrowing
Our Directors may exercise all the powers of our Company to raise or borrow money, to
mortgage or charge its undertaking, property and uncalled capital, and to secure any debt,
liability or obligation of our Company.
(d)
Retirement Age Limit
There is no retirement age limit for Directors under our Articles of Association. Section 153
of the Companies Act however, provides that no person of or over the age of 70 years shall
be appointed a director of a public company, unless he is appointed or re-appointed as a
director of the Company or authorised to continue in office as a director of the Company by
way of an ordinary resolution passed at an annual general meeting of the Company.
(e)
Shareholding Qualification
There is no shareholding qualification for Directors in the Memorandum and Articles of
Association of the Company.
E-1
2.
Share rights and restrictions
We currently have one class of shares, namely, ordinary shares. Only persons who are registered
on our register of shareholders are recognised as our shareholders. In cases where the person so
registered is CDP, the persons named as the depositors in the depository register maintained by
CDP for the ordinary shares are recognised as our shareholders.
(a)
Dividends and distribution
We may, by ordinary resolution of our shareholders, declare dividends at a general meeting,
but we may not pay dividends in excess of the amount recommended by our Directors. We
must pay all dividends out of profits available for distribution. We may capitalise any sum
standing to the credit of any of the Company’s reserve accounts and apply it to pay
dividends, if such dividends are satisfied by the issue of shares to our shareholders. All
dividends are paid pro rata amongst our shareholders in proportion to the amount paid up on
each shareholder’s ordinary shares, unless the rights attaching to an issue of any ordinary
share provide otherwise. Unless otherwise directed, dividends are paid by cheque or warrant
sent through the post to each shareholder at his registered address. Notwithstanding the
foregoing, the payment by us to CDP of any dividend payable to a shareholder whose name
is entered in the depository register shall, to the extent of payment made to CDP, discharge
us from any liability to that shareholder in respect of that payment.
The payment by the Directors of any unclaimed dividends or other monies payable on or in
respect of a share into a separate account shall not constitute the Company a trustee in
respect thereof. All dividends unclaimed after being declared may be invested or otherwise
made use of by the Directors for the benefit of the Company. Any dividend unclaimed after a
period of six years after having been declared may be forfeited and shall revert to the
Company but the Directors may thereafter at their discretion annul any such forfeiture and
pay the dividend so forfeited to the person entitled thereto prior to the forfeiture.
The Directors may retain any dividends or other monies payable on or in respect of a share
on which our Company has a lien, and may apply the same in or towards satisfaction of the
debts, liabilities or engagements in respect of which the lien exists.
(b)
Voting rights
A holder of our ordinary shares is entitled to attend and vote at any general meeting, in
person or by proxy. Proxies need not be a shareholder. A person who holds ordinary shares
through the SGX-ST book-entry settlement system will only be entitled to vote at a general
meeting as a shareholder if his name appears on the depository register maintained by CDP
at least 48 hours before the general meeting. Except as otherwise provided in our Articles of
Association, two or more shareholders must be present in person or by proxy to constitute a
quorum at any general meeting. Under our Articles of Association, on a show of hands,
every shareholder present in person and by proxy shall have one vote, and on a poll, every
shareholder present in person or by proxy shall have one vote for each ordinary share which
he holds or represents. A poll may be demanded in certain circumstances, including by the
Chairman of the meeting or by any shareholder present in person or by proxy and
representing not less than 10 per cent. of the total voting rights of all shareholders having the
right to attend and vote at the meeting or by any two shareholders present in person or by
proxy and entitled to vote. In the case of a tie vote, whether on a show of hands or a poll, the
Chairman of the meeting shall be entitled to a casting vote.
3.
Change in capital
Changes in the capital structure of our Company (for example, an increase, consolidation,
cancellation, sub-division or conversion of our share capital) require shareholders to pass an
ordinary resolution. General meetings at which ordinary resolutions are proposed to be passed
shall be called by at least 14 days’ notice in writing. The notice must be given to each of our
shareholders who have supplied us with an address in Singapore for the giving of notices and must
set forth the place, the day and the hour of the meeting. The reduction of our share capital is
subject to the conditions prescribed by law.
E-2
4.
Variation of rights of existing shares or classes of shares
Subject to the Companies Act, whenever the share capital of the Company is divided into different
classes of shares, the special rights attached to any class may be varied or abrogated either with
the consent in writing of the holders of three-quarters of the total voting rights of the issued shares
of the class or with the sanction of a special resolution passed at a separate general meeting of the
holders of the shares of the class. To every such separate general meeting, the provisions of our
Articles of Association relating to general meetings of the Company and to the proceedings thereat
shall mutatis mutandis apply, except that the necessary quorum shall be two persons holding or
representing by proxy at least one-third of the total voting rights of the issued shares of the class,
and that any holder of shares of the class present in person or by proxy may demand a poll and
that every such holder shall on a poll have one vote for every share of the class held by him,
provided always that where the necessary majority for such a special resolution is not obtained at
such general meeting, consent in writing if obtained from the holders of three-quarters of the total
voting rights of the issued shares of the class concerned within two months of such general
meeting shall be as valid and effectual as a special resolution carried at such general meeting.
These provisions shall apply to the variation or abrogation of the special rights attached to some
only of the shares of any class as if each group of shares of the class differently treated formed a
separate class the special rights whereof are to be varied or abrogated.
The relevant Article does not impose more significant conditions than the Companies Act in this
regard.
5.
Limitations on foreign or non-resident shareholders
There are no limitations imposed by Singapore law or by our Articles of Association on the rights of
our shareholders who are regarded as non-residents of Singapore, to hold or vote their shares.
E-3
APPENDIX F – TERMS, CONDITIONS AND PROCEDURES FOR
APPLICATION AND ACCEPTANCE
You are invited to apply and subscribe for the Invitation Shares at the Invitation Price for each Invitation
Share subject to the following terms and conditions:
(a)
YOUR APPLICATION FOR THE INVITATION SHARES MUST BE MADE IN LOTS OF 1,000
OFFER SHARES OR INTEGRAL MULTIPLES THEREOF. APPLICATIONS FOR ANY OTHER
NUMBER OF INVITATION SHARES WILL BE REJECTED.
(b)
Your application for Offer Shares may be made by way of printed Offer Shares Application Forms
or by way of Electronic Applications through the ATMs of the Participating Banks (“ATM Electronic
Applications”) or through the IB websites of the relevant Participating Banks (“Internet Electronic
Applications” which, together with ATM Electronic Applications, shall be referred to as “Electronic
Applications”).
Your application for the Placement Shares may only be made by way of printed Placement Shares
Application Forms.
YOU MAY NOT USE CPF FUNDS TO APPLY FOR THE INVITATION SHARES.
(c)
You are allowed to submit only one application in your name either for the Offer Shares or
the Placement Shares. If you submit an application for Offer Shares by way of a printed
Offer Shares Application Form, you MAY NOT submit another application for Offer Shares by
way of an Electronic Application and vice versa. Such separate applications shall be
deemed to be multiple applications and will be liable to be rejected at our discretion, except
in the case of applications by approved nominee companies, where each application is
made on behalf of a different beneficiary.
If you submit an application for Offer Shares by way of an Internet Electronic Application,
you MAY NOT submit another application for Offer Shares by way of an ATM Electronic
Application and vice versa. Such separate applications shall be deemed to be multiple
applications and will be liable to be rejected at our discretion.
If you (being other than an approved nominee company) have submitted an application for
Offer Shares in your own name, you should not submit any other application for Offer
Shares, whether by way of an Application Form or by way of an Electronic Application, for
any other person. Such separate applications shall be deemed to be multiple applications
and will be liable to be rejected at our discretion.
You are allowed to submit only one application in your own name for the Placement Shares.
Any separate application by you for the Placement Shares shall be deemed to be multiple
applications and we have the discretion whether to accept or reject such multiple
applications.
If you (being other than an approved nominee company) have submitted an application for
Placement Shares in your own name, you should not submit any other application for
Placement Shares for any other person. Such separate applications shall be deemed to be
multiple applications and will be liable to be rejected at our discretion.
If you have made an application for Placement Shares, and you have also made a separate
application for Offer Shares either by way of an Application Form or through an Electronic
Application, we shall have the discretion to either (i) reject both of such separate
applications or (ii) accept any one (but not the other) out of such separate applications.
F-1
Conversely, if you have made an application for Offer Shares either by way of an Application
Form or through an Electronic Application, and you have also made a separate application
for Placement Shares, we shall have the discretion to either (i) reject both of such separate
applications or (ii) accept any one (but not the other) out of such separate applications.
Joint applications shall be rejected. Multiple applications for Invitation Shares will be liable
to be rejected at our discretion. If you submit or procure submissions of multiple share
applications (whether for Offer Shares, Placement Shares or both Offer Shares and
Placement Shares), you may be deemed to have committed an offence under the Penal
Code (Chapter 224) of Singapore and the Securities and Futures Act (Chapter 289) of
Singapore, and your applications may be referred to the relevant authorities for
investigation. Multiple applications or those appearing to be or suspected of being multiple
applications may be liable to be rejected at our discretion.
(d)
We will not accept applications from any person under the age of 21 years, undischarged
bankrupts, sole-proprietorships, partnerships, or non-corporate bodies, joint Securities Account
holders of CDP and from applicants whose addresses (as furnished in their Application Forms or,
in the case of Electronic Applications, contained in the records of the relevant Participating Banks)
bear post office box numbers. No person acting or purporting to act on behalf of a deceased
person is allowed to apply under the Securities Account with CDP in the name of the deceased at
the time of application.
(e)
We will not recognise the existence of a trust. Any application by a trustee or trustees must be
made in his/her/their own name(s) and without qualification or, where the application is made by
way of an Application Form by a nominee, in the name(s) of an approved nominee company or
approved nominee companies after complying with paragraph (f) below.
(f)
WE WILL ONLY ACCEPT APPLICATIONS FROM APPROVED NOMINEE COMPANIES.
Approved nominee companies are defined as banks, merchant banks, finance companies,
insurance companies, licensed securities dealers in Singapore and nominee companies controlled
by them. Applications made by persons acting as nominees other than approved nominee
companies shall be rejected.
(g)
IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIES
ACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you do
not have an existing Securities Account with CDP in your own name at the time of your application,
your application will be rejected (if your application is by way of an Application Form), or you will
not be able to complete your Electronic Application (if your application is by way of an Electronic
Application). If you have an existing Securities Account but fail to provide your Securities Account
number or provide an incorrect Securities Account number in section B of the Application Form or
in your Electronic Application, as the case may be, your application is liable to be rejected. Subject
to paragraph (h) below, your application shall be rejected if your particulars such as name,
NRIC/passport number, nationality, permanent residence status and CDP Securities Account
number provided in your Application Form or in the records of the relevant Participating Bank at the
time of your Electronic Application, as the case may be, differ from those particulars in your
Securities Account as maintained with CDP. If you possess more than one individual direct
Securities Account with CDP, your application shall be rejected.
(h)
If your address as stated in the Application Form or, in the case of an Electronic
Application, in the records of the relevant Participating Bank, as the case may be, is
different from the address registered with CDP, you must inform CDP of your updated
address promptly, failing which the notification letter on successful allotment and other
correspondence from the CDP will be sent to your address last registered with CDP.
F-2
(i)
We reserve the right to reject any application which does not conform strictly to the
instructions set out in the Application Form and this Prospectus or which does not comply
with the instructions for Electronic Applications or with the terms and conditions of this
Prospectus or, in the case of an application by way of an Application Form, which is
illegible, incomplete, incorrectly completed or which is accompanied by an improperly
drawn or improper form of remittance. We further reserve the right to treat as valid any
applications not completed or submitted or effected in all respects in accordance with the
instructions set out in the Application Forms or with the terms and conditions of this
Prospectus and also to present for payment or other processes all remittances at any time
after receipt and to have full access to all information relating to, or deriving from, such
remittances or the processing thereof.
(j)
We reserve the right to reject or accept, in whole or in part, or to scale down or to ballot any
application, without assigning any reason therefor, and we will not entertain any enquiry and/or
correspondence on our decision. This right applies to applications made by way of Application
Forms and by way of Electronic Applications. In deciding the basis of allotment which will be at our
discretion, we will give due consideration to the desirability of allotting and/or allocating the
Invitation Shares to a reasonable number of applicants with a view to establishing an adequate
market for the Shares.
(k)
Share certificates will be registered in the name of CDP and will be forwarded only to CDP. It is
expected that CDP will send to you, at your own risk, within 15 Market Days after the close of the
Application List, a statement of account stating that your Securities Account has been credited with
the number of the Invitation Shares allotted to you, if your application is successful. This will be the
only acknowledgement of application monies received and is not an acknowledgement by us. You
irrevocably authorise CDP to complete and sign on your behalf as transferee or renouncee any
instrument of transfer and/or other documents required for the issue or transfer of the Invitation
Shares allotted to you. This authorisation applies to applications made by way of Application Forms
and by way of Electronic Applications.
(l)
In the event of an under-subscription for the Offer Shares as at the close of the Application List, the
number of the Offer Shares under-subscribed shall be made available to satisfy applications for the
Placement Shares to the extent that there is an over-subscription for Placement Shares as at the
close of the Application List.
In the event of an under-subscription for the Placement Shares as at the close of the Application
List, that number of the Placement Shares under-subscribed shall be made available to satisfy
applications for the Invitation Shares to the extent that there is an over-subscription for Offer
In the event of an over-subscription for the Offer Shares as at the close of the Application List and
the Placement Shares are fully subscribed or over-subscribed as at the close of the Application
List, the successful applications for the Offer Shares will be determined by ballot or otherwise as
determined by our Directors, after consultation with the Issue Manager and the Joint Underwriters
and Joint Placement Agents, and approved by the SGX-ST.
(m)
You consent to the disclosure of your name, NRIC/passport number, address, nationality,
permanent resident status, CDP Securities Account number, CPF Investment Account number (if
applicable) and share application amount from your account with the relevant Participating Bank to
the Registrar for the Invitation and Share Transfer Office, SCCS, SGX-ST, CDP, the Company and
the Issue Manager. You irrevocably authorise CDP to disclose the outcome of your application,
including the number of Offer Shares allotted to you pursuant to your application, to the Company,
the Issue Manager, the Joint Underwriters and Joint Placement Agents and any other parties so
authorised by CDP, the Company, the Issue Manager and/or the Joint Underwriters and Joint
Placement Agents. CDP shall not be liable for any delays, failures or inaccuracies in the recording,
storage or in the transmission or delivery of data relating to Electronic Applications.
F-3
(n)
Any reference to “you” or the “applicant” in this section shall include an individual, a corporation, an
approved nominee and trustee applying for the Offer Shares by way of an Application Form or by
way of an Electronic Application, or for the Placement Shares though the Joint Placement Agents.
(o)
By completing and delivering an Application Form or by making and completing an Electronic
Application, by (in the case of an ATM Electronic Application) pressing the “Enter” or “OK” or
“Confirm” or “Yes” or any other relevant key on the ATM (as the case may be) or by (in the case of
an Internet Electronic Application) clicking “Submit” or “Continue” or “Yes” or “Confirm” or any other
relevant key on the IB website screen in accordance with the provisions herein, you:
(p)
(i)
irrevocably offer to subscribe for and/or purchase the number of the Invitation Shares
specified in your application (or such smaller number for which the application is accepted)
at the Invitation Price and agree that you will accept such Invitation Shares as may be
allotted to you, in each case on the terms of, and subject to the conditions set out in, this
Prospectus and our Memorandum of Association and Articles;
(ii)
agree that in the event of any inconsistency between the terms and conditions for application
set out in this Prospectus and those set out in the ATMs or the IB websites of the relevant
Participating Banks, the terms and conditions set out in this Prospectus shall prevail;
(iii)
agree that the aggregate Invitation Price for the Invitation Shares applied for is due and
payable to us forthwith;
(iv)
warrant the truth and accuracy of the information contained, and representations and
declarations made, in your application, and acknowledge and agree that such information,
representations and declarations will be relied on by our Company and the Vendors in
determining whether to accept your application and/or whether to allot and/or allocate any
Invitation Shares to you; and
(v)
agree and warrant that, if the laws of any jurisdictions outside Singapore are applicable to
your application, you have complied with all such laws and none of our Company, the
Vendors, the Issue Manager, the Joint Underwriters and Joint Placement Agents will infringe
any such laws as a result of the acceptance of your application.
Our acceptance of applications will be conditional upon, inter alia, our Company being satisfied
that:
(i)
permission has been granted by the SGX-ST to deal in and for quotation of all the existing
Shares (including the Vendor Shares) and the New Shares on the Official List of the SGXST;
(ii)
the Management and Underwriting Agreement and the Placement Agreement referred to
under the section entitled “Plan of Distribution” of this Prospectus have become
unconditional and have not been terminated or cancelled prior to such date as our Company
may determine; and
(iii)
no stop order has been issued by the Authority under the Securities and Futures Act.
(q)
We will not hold any application in reserve.
(r)
We will not allot and/or allocate Shares on the basis of this Prospectus later than six months after
the date of registration of this Prospectus.
(s)
In the event that a stop order in respect of the Invitation Shares is served by the Authority or other
competent authority; and
(i)
if the Invitation Shares have not been issued and/or sold, we will (as required by law) deem
all applications as withdrawn and cancelled and we shall refund the application monies
(without interest or any share of revenue or other benefit arising therefrom) to you within 14
days of the date of the stop order; or
F-4
(i)
if the Invitation Shares have been issued and/or sold but trading has not commenced, the
issue and/or sale of the Invitation Shares will (as required by law) be deemed to be void;
and:
(aa)
in the case where the Invitation Shares have been issued, we shall refund the
application monies (without interest or any share of revenue or other benefit arising
therefrom) to you within 14 days of the date of the stop order; or
(bb)
in the case where the Invitation Shares have been sold, (1) we will inform you to
return such documents to our Company within 14 days from the date of the stop
order; and (2) we will refund the application monies (without interest or any share of
revenue or other benefit arising therefrom) to you within 7 days from the receipt of
those documents (if applicable) or the date of the stop order, whichever is later.
This shall not apply where only an interim stop order has been served.
In the event that an interim stop order in respect of the Invitation Shares is served by the
Authority or other competent authority, no Invitation Shares shall be issued and/or sold to
you until the Authority revokes the interim stop order.
(t)
Additional terms and conditions for applications by way of Application Forms are set out on pages
F-6 to F-9 of the Prospectus.
(u)
Additional terms and conditions for Electronic Applications are set out on pages F-9 to F-16 of this
Prospectus.
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING APPLICATION FORMS
You shall make an application by way of Application Forms made on and subject to the terms and
conditions of this Prospectus including but not limited to the terms and conditions appearing below as
well as those set out under this Appendix F, as well as the Memorandum of Association and the Articles
of our Company.
(a)
Your application must be made using the WHITE Application Forms and official envelopes “A” and
“B” for the Offer Shares or the BLUE Application Forms for Placement Shares accompanying and
forming part of this Prospectus. Attention is drawn to the detailed instructions contained in the
respective Application Forms and this Prospectus for the completion of the Application Forms
which must be carefully followed. We reserve the right to reject applications which do not
conform strictly to the instructions set out in the Application Forms and this Prospectus or
to the terms and conditions of this Prospectus or which are illegible, incomplete, incorrectly
completed or which are accompanied by improperly drawn or improper forms of
remittances.
(b)
Your Application Forms must be completed in English. Please type or write clearly in ink using
BLOCK LETTERS.
(c)
All spaces in the Application Forms except those under the heading “FOR OFFICIAL USE ONLY”
must be completed and the words “NOT APPLICABLE” or “N.A.” should be written in any space
that is not applicable.
(d)
Individuals, corporations, approved nominee companies and trustees must give their names in full.
You must make your application, in the case of individuals, in your full name as it appears in your
identity card (if applicants have such an identification document) or in your passport and, in the
case of corporations, in your full name as registered with a competent authority. If you are a nonindividual completing the Application Form under the hand of an official, you must state the name
and capacity in which that official signs. If you are a corporation completing the Application Form,
you are required to affix your Common Seal (if any) in accordance with your Memorandum and
Articles of Association, Articles or equivalent constitutive documents. If you are a corporate
F-5
applicant and your application is successful, a copy of your Memorandum and Articles of
Association, Articles or equivalent constitutional documents must be lodged with the Registrar for
the Invitation and the Share Transfer Office. We reserve the right to require you to produce
documentary proof of identification for verification purposes.
(e)
Please note that:
(i)
You must complete page 1 and Sections A and B of the Application Forms.
(ii)
You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Forms.
Where paragraph 7(a) is deleted, you must also complete Section C of the Application
Forms with particulars of the beneficial owner(s).
(iii)
If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, on
page 1 of the Application Forms, your application is liable to be rejected.
(f)
You (whether you are an individual or corporate applicant, whether incorporated or unincorporated
and wherever incorporated or constituted) will be required to declare whether you are a citizen or a
permanent resident of Singapore or corporation in which citizens or permanent residents of
Singapore or any body corporate constituted under any statute of Singapore have an interest in the
aggregate of more than 50% of the issued share capital of or interests in such corporations. If you
are an approved nominee company, you are required to declare whether the beneficial owner of
the Invitation Shares is a citizen or permanent resident of Singapore or a corporation (whether
incorporated or unincorporated and wherever incorporated or constituted) in which citizens or
permanent residents of Singapore or any body corporate (whether incorporated or unincorporated
and wherever incorporated or constituted under any statute of Singapore) have an interest in the
aggregate of more than 50% of the issued share capital of or interests in such corporation.
(g)
Your application must be accompanied by a remittance in Singapore currency for the full amount
payable, in respect of the number of Invitation Shares applied for, in the form of a BANKER’S
DRAFT or CASHIER’S ORDER drawn on a bank in Singapore, made out in favour of “COGENT
SHARE ISSUE ACCOUNT” crossed “A/C PAYEE ONLY”, with your name and address written
clearly on the reverse side. We will not accept applications accompanied by ANY OTHER FORM
OF PAYMENT. We will reject remittances bearing “NOT TRANSFERABLE” or “NON
TRANSFERABLE” crossings. No acknowledgement or receipt will be issued by our Company or
the Issue Manager for applications and application monies received.
Monies paid in respect of unsuccessful applications are expected to be returned (without interest or
any share of revenue or other benefit arising therefrom) to you by ordinary post within 24 hours of
ballotting at your own risk. Where your application is rejected or accepted in part only, the full
amount or the balance of the application monies, as the case may be, will be refunded (without
interest or any share of revenue or other benefit arising therefrom) to you by ordinary post at your
own risk within 14 Market Days after the close of the Application List, provided that the remittance
accompanying such application which has been presented for payment or other processes has
been honoured and application monies have been received in the designated share issue account.
In the event that the Invitation is cancelled by us following the termination of the Management
Agreement and/or the Underwriting and Placement Agreements or the Invitation does not proceed
for any reason, the application monies received will be refunded (without interest or any share of
revenue or any other benefit arising therefrom) to you by ordinary post or telegraphic transfer at
your own risk within 5 Market Days of the termination of the Invitation. In the event that the
Invitation is cancelled by us following the issuance of a stop order by the Authority, the application
monies received will be refunded (without interest or any share of revenue or other benefit arising
therefrom) to you by ordinary post or telegraphic transfer at your own risk within 14 Market Days
from the date of the stop order,
(h)
Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the
meanings assigned to them in this Prospectus.
F-6
(i)
By completing and delivering the Application Form, you agree that
(i)
in consideration of us having distributed the Application Form to you and agreeing to close
the Application List at 12.00 noon on 23 February 2010 or such other time or date as we
may, in consultation with the Issue Manager and the Joint Underwriters and Joint Placement
Agents decide, and by completing and delivering the Application Form, you agree that:
(aa)
your application is irrevocable; and
(bb)
your remittance will be honoured on first presentation and that any application monies
returnable may be held pending clearance of your payment without interest or any
share of revenue or other benefit arising therefrom;
(ii)
all applications, acceptances and contracts resulting therefrom under the Invitation shall be
governed by and construed in accordance with the laws of Singapore and that you
irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
(iii)
in respect of the Invitation Shares for which your application has been received and not
rejected, acceptance of your application shall be constituted by written notification and not
otherwise, notwithstanding any remittance being presented for payment by or on our behalf;
(iv)
you will not be entitled to exercise any remedy of rescission for misrepresentation at any
time after acceptance of your application; and
(v)
in making your application, reliance is placed
Prospectus and neither our Company, our
Underwriters and Joint Placement Agents nor
shall have any liability for any information not so
solely on the information contained in this
Directors, the Issue Manager, the Joint
any other person involved in the Invitation
contained.
Applications for Invitation Shares
(a)
Your application for Offer Shares MUST be made using the WHITE Offer Shares Application Form
and WHITE official envelopes “A” and “B”. ONLY ONE APPLICATION should be enclosed in each
envelope.
(b)
You must:
(i)
enclose the WHITE Offer Shares Application Form, duly completed and signed, together with
the correct remittance in accordance with the terms and conditions of this Prospectus in the
WHITE envelope “A” provided;
(ii)
in the appropriate spaces on WHITE envelope “A”:
(aa)
write your name and address;
(bb)
state the number of Offer Shares applied for;
(cc)
tick the relevant box to indicate the form of payment; and
(dd)
affix adequate Singapore postage;
(iii)
SEAL WHITE envelope “A”;
(iv)
write, in the special box provided on the larger WHITE envelope “B” addressed to COGENT
HOLDINGS LIMITED C/O BOARDROOM CORPORATE & ADVISORY SERVICES PTE
LTD, 3 CHURCH STREET, #08-01 SAMSUNG HUB, SINGAPORE 049483, the number of
Offer Shares for which the application is made; and
F-7
(v)
(c)
insert WHITE envelope “A” into WHITE envelope “B”, seal WHITE envelope “B”, affix
adequate Singapore postage on WHITE envelope “B” (if despatching by ordinary post) and
thereafter DESPATCH BY ORDINARY POST OR DELIVER BY HAND at your own risk to
COGENT HOLDINGS LIMITED C/O BOARDROOM CORPORATE & ADVISORY
SERVICES PTE LTD, 3 CHURCH STREET, #08-01 SAMSUNG HUB, SINGAPORE 049483,
so as to arrive by 12.00 noon on 23 February 2010 or such other date and time as we
may, in consultation with the Issue Manager and the Joint Underwriters and Joint
Placement Agents, decide. Local Urgent Mail or Registered Post must NOT be used.
No acknowledgement of receipt will be issued for any application or remittance received.
Applications that are illegible, incomplete or incorrectly completed or accompanied by improperly
drawn remittances or improper form of remittance or which are not honoured upon their first
presentation are liable to be rejected.
Applications for Placement Shares
(a)
Your application for Placement Shares MUST be made using the BLUE Placement Shares
Application Form. ONLY ONE APPLICATION should be enclosed in each envelope.
(b)
The completed BLUE Placement Shares Application Form and your remittance (in accordance with
the terms and conditions of this Prospectus) for the full amount payable in respect of the number of
Placement Shares you have applied for, with your name and address written clearly on the reverse
side, must be enclosed and sealed in an envelope to be provided by you. The sealed envelope
must be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at your own risk to
COGENT HOLDINGS LIMITED C/O BOARDROOM CORPORATE & ADVISORY SERVICES PTE
LTD, 3 CHURCH STREET, #08-01 SAMSUNG HUB, SINGAPORE 049483, to arrive by 12.00
noon on 23 February 2010 or such other date and time as we may, in consultation with the
Issue Manager and the Joint Underwriters and Joint Placement Agents, decide. Local Urgent
Mail or Registered Post must NOT be used. No acknowledgement of receipt will be issued for
any application or remittance received.
(c)
Applications that are illegible, incomplete or incorrectly completed or accompanied by improperly
drawn remittances or improper form of remittance or which are not honoured upon their first
presentation are liable to be rejected.
ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS
The procedures for Electronic Applications at ATMs of the Participating Banks are set out on the ATM
screens (in the case of ATM Electronic Applications) and the IB website screens (in the case of Internet
Electronic Applications) of the relevant Participating Banks. Currently, the UOB Group and DBS are the
only Participating Banks through which Internet Electronic Applications can be made. For illustration
purposes, the procedures for Electronic Applications through the ATMs and the IB website of the UOB
Group are set out respectively in the sections “Steps for ATM Electronic Applications through ATMs of the
DBS (including POSB)” and “Steps for Internet Electronic Applications through the IB website of DBS”
(the “Steps”) appearing on pages F-13 to F-16 of this Prospectus.
The Steps set out the actions that you must take at an ATM or IB website of UOB to complete an
Electronic Application. Please read carefully the terms of this Prospectus, the Steps and the terms and
conditions for Electronic Applications set out below before making an Electronic Application. Any
reference to “you” or the “applicant” in this section “Additional Terms and Conditions for Electronic
Applications” and the Steps shall refer to you making an application for Offer Shares through an ATM or
the IB website of a Participating Bank.
Applicants applying for Offer Shares by way of Electronic Applications may incur an administrative fee
and/or such related charges as stipulated by respective Participating Banks from time to time.
You must have an existing bank account with and be an ATM cardholder of one of the Participating Banks
before you can make an Electronic Application at the ATMs of the relevant Participating Bank. An ATM
card issued by one Participating Bank cannot be used to apply for Offer Shares at an ATM belonging to
other Participating Banks. Upon the completion of your ATM Electronic Application transaction, you will
F-8
receive an ATM transaction slip (“Transaction Record”) confirming the details of your Electronic
Application. The Transaction Record is for your retention and should not be submitted with any printed
Application Form.
You must ensure that you enter your own Securities Account number when using the ATM card
issued to you in your own name. If you fail to use your own ATM card or do not key in your own
Securities Account number, your application will be rejected. If you operate a joint bank account
with any of the Participating Banks, you must ensure that you enter your own Securities Account
number when using the ATM card issued to you in your own name. Using your own Securities
Account number with an ATM card which is not issued to you in your own name will render your
Electronic Application liable to be rejected.
For an Internet Electronic Application, you must have a bank account with and a User Identification ID
(“User ID”) and a Personal Identification Number (“PIN”) given by the relevant Participating Banks. Upon
completion of your Internet Electronic Application through the IB website of DBS, there will be an onscreen confirmation (“Confirmation Screen”) of the application which can be printed out by you for your
record. This printed record of the Confirmation Screen is for your retention and should not be submitted
with any printed Application Form.
You must ensure, when making an Internet Electronic Application, that your mailing address selected for
application is in Singapore and the application is being made in Singapore and you will be asked to
declare accordingly. Otherwise, your application is liable to be rejected. You shall make an Electronic
Application on the terms, and subject to the conditions, of this Prospectus including but not limited to the
terms and conditions appearing below and those set out under this section as well as the Memorandum
of Association and Articles of our Company.
(a)
In connection with your Electronic Application, you are required to confirm statements to the
following effect in the course of activating the ATM or the IB website for your Electronic Application:
(i)
that you have received a copy of this Prospectus (in the case of ATM Electronic
Applications only) and have read, understood and agreed to all the terms and
conditions of application for Offer Shares and this Prospectus prior to effecting the
Electronic Application and agree to be bound by the same;
(ii)
that you consent to the disclosure of your name, NRIC/passport number, address,
nationality, permanent resident status, CDP Securities Account number, and share
application amount (the “Relevant Particulars”) from your account with the relevant
Participating Bank to the Share Registrar, the SGX-ST, CDP, SCCS, the Company, the
Issue Manager and the Joint Underwriters and Joint Placement Agents (the “Relevant
Parties”); and
(iii)
that this is your only application and it is made in your own name and at your own
risk.
Your application will not be successfully completed and cannot be recorded as a completed
transaction in the ATM or on the IB website unless you press the “Enter” or “OK” or “Confirm” or
“Yes” or any other relevant key on the ATM or click “Confirm” or “OK” or “Submit” or “Continue” or
“Yes” or any other relevant button on the IB website. By doing so, you shall be treated as signifying
your confirmation of each of the above three statements. In respect of statement 1(ii) above, your
confirmation, by pressing the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant key, shall
signify and shall be treated as your written permission, given in accordance with the relevant laws
of Singapore including Section 47(2) of the Banking Act (Chapter 19) of Singapore to the
disclosure by that Participating Bank of the Relevant Particulars to the Relevant Parties.
(b)
BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOT APPLYING
FOR OFFER SHARES AS A NOMINEE OF ANY OTHER PERSON AND THAT ANY
ELECTRONIC APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE BY YOU AS
BENEFICIAL OWNER.
F-9
YOU SHALL MAKE ONLY ONE ELECTRONIC APPLICATION AND SHALL NOT MAKE ANY
OTHER APPLICATION FOR OFFER SHARES, WHETHER AT AN ATM OR THE IB WEBSITE (IF
ANY) OF ANY PARTICIPATING BANK OR ON AN APPLICATION FORM. IF YOU HAVE MADE
AN APPLICATION FOR OFFER SHARES ON AN APPLICATION FORM, YOU SHALL NOT
MAKE AN ELECTRONIC APPLICATION AND VICE VERSA.
(c)
You must have sufficient funds in your bank account with your Participating Bank at the time you
make your Electronic Application, failing which your Electronic Application will not be completed.
Any Electronic Application which does not conform strictly to the instructions set out on
the screens of the ATM or IB website through which your Electronic Application is being
made shall be rejected.
You may make an ATM Electronic Application at an ATM of any Participating Bank or an Internet
Electronic Application at the IB website of a relevant Participating Bank for Offer Shares using cash
only by authorising such Participating Bank to deduct the full amount payable from your account
with such Participating Bank.
(d)
You irrevocably agree and undertake to subscribe for and/or purchase the number of Offer Shares
applied for as stated on the Transaction Record or the Confirmation Screen or any lesser number
of Offer Shares that may be allotted to you in respect of your Electronic Application. In the event
that we decide to allot or allocate any lesser number of such Offer Shares or not to allot or allocate
any Offer Shares to you, you agree to accept such decision as final. If your Electronic Application is
successful, your confirmation (by your action of pressing the “Enter” or “OK” or “Confirm” or “Yes” or
any other relevant key on the ATM or clicking “Confirm” or “OK” or any other relevant key on the IB
website screen) of the number of Offer Shares applied for shall signify and shall be treated as your
acceptance of the number of Offer Shares that may be allotted to you and your agreement to be
bound by the Memorandum of Association and Articles of our Company.
(e)
We will not keep any applications in reserve. Where your Electronic Application is unsuccessful,
the full amount of the application monies will be refunded (without interest or any share of revenue
or other benefit arising therefrom) in Singapore currency to you by being automatically credited to
your account with your Participating Bank within 24 hours after balloting, provided that the
remittance in respect of such application which has been presented for payment or other
processes has been honoured and the application monies have been received in the designated
share issue account. Trading on a “WHEN ISSUED” basis, if applicable, is expected to
commence after such refund has been made.
Where your Electronic Application is rejected or accepted in part only, the full amount or the
balance of the application monies, as the case may be, will be refunded in Singapore currency
(without interest or any share of revenue or other benefit arising therefrom) to you by being
automatically credited to your account with your Participating Bank within 14 days after the close of
the Application List, provided that the remittance in respect of such application which has been
presented for payment or other processes has been honoured and the application monies have
been received in the designated share issue account.
Responsibility for timely refund of application monies arising from unsuccessful or partially
unsuccessful Electronic Applications lies solely with the respective Participating Banks. Therefore,
you are strongly advised to consult your Participating Bank as to the status of your Electronic
Application and/or the refund of any monies to you from an unsuccessful or partially successful
Electronic Application, to determine the exact number of Offer Shares allotted to you before trading
the Offer Shares on the SGX-ST. None of the SGX-ST, the CDP, the SCCS, the Participating
Banks, our Company, our Directors, the Issue Manager and the Joint Underwriters and Joint
Placement Agents assumes any responsibility for any loss that may be incurred as a result of you
having to cover any net sell positions or from buy-in procedures activated by the SGX-ST.
(f)
If your Electronic Application is made through the ATMs of DBS (including POSB), OCBC Bank or
the UOB Group, and is unsuccessful, no notification will be sent by the relevant Participating
Banks.
F-10
If your Internet Electronic Application made through the IB websites of DBS or UOB Group is
unsuccessful, no notification will be sent by such Participating Bank.
If you make an Electronic Application through an ATM or the IB website of one of the following
Participating Banks, you may check the provisional results of your Electronic Application as follows:
Operating
Hours
Service
expected from
Internet Banking
http://www.dbs.com (1)
24 hours
Evening of the
balloting day
ATM (Other Transactions “IPO Enquiry”)
ATM/Phone
Banking
24 hours
Evening of the
balloting day
http://www.uobgroup.com (1)(2)
Internet
Banking
24 hours
Evening of the
balloting day
ATM/PhoneBanking/
Internet Banking/
http://www.ocbc.com (3)
ATM/Phone
Banking
24 hours
Evening of the
balloting day
Bank
Telephone
Available at
DBS
1800 339 6666
(for POSB
account holders)
1800 111 1111
(for DBS
account holders)
UOB Group
OCBC
1 800 222 2121
1 800 363 3333
Notes:
(1)
If you make your Internet Electronic Applications through the IB website of DBS or UOB Group, you may check the
result through the same channels listed in the table above in relation to ATM Electronic Applications made at ATMs of
DBS or UOB Group.
(2)
If you make your Electronic Application through the ATMs or IB website of UOB Group, you may check the results of
your application through UOB Personal UniBanking, UOB Group ATMs or UOB PhoneBanking Services.
(2)
If your make your Electronic Application through the ATMs of OCBC Bank, you may check the result of your
application through the same channels listed in the table above.
(g)
Electronic Applications shall close at 12.00 noon on 23 February 2010 or such other time or
date as our Company and the Vendors may, in consultation with the Manager, decide. All
Internet Electronic Applications must be received by 12.00 noon on 23 February 2010.
Subject to paragraph (j) below, an Internet Electronic Application is deemed to be received when it
enters the designated information system of the relevant Participating Bank.
(h)
We do not recognise the existence of a trust. Any Electronic Application by a trustee must be made
in your own name and without qualification. We will reject any application by any person acting as
nominee, except those made by approved nominee companies only.
(i)
You are deemed to have irrevocably requested and authorised us to:
(i)
register the Offer Shares allotted to you in the name of CDP for deposit into your Securities
Account;
(ii)
send the relevant Share certificate(s) to CDP;
(iii)
return or refund (without interest or any share of revenue or other benefit arising therefrom)
the application monies in Singapore currency, should your Electronic Application be rejected,
by automatically crediting your bank account with your Participating Bank with the relevant
amount within 24 hours of balloting; and
F-11
(iv)
return or refund (without interest or any share of revenue or other benefit arising therefrom)
the balance of the application monies in Singapore currency, should your Electronic
Application be accepted in part only, by automatically crediting your bank account with your
Participating Bank with the relevant amount within 14 days after the close of the Application
List.
(j)
You irrevocably agree and acknowledge that your Electronic Application is subject to risks of
electrical, electronic, technical and computer-related faults and breakdowns, fires, acts of God and
other events beyond the control of the Participating Banks, our Company and the Issue Manager
and if, in any such event, we, the Issue Manager and/or the relevant Participating Bank do not
record or receive your Electronic Application, or data relating to your Electronic Application or the
tape containing such data is lost, corrupted, destroyed or not otherwise accessible, whether wholly
or partially for whatever reason, you shall be deemed not to have made an Electronic Application
and you shall have no claim whatsoever against us, the Issue Manager and/or the relevant
Participating Bank for the Offer Shares applied for or for any compensation, loss or damage.
(k)
All your particulars in the records of your Participating Bank at the time you make your Electronic
Application shall be deemed to be true and correct and your Participating Bank and the Relevant
Parties shall be entitled to rely on the accuracy thereof. If there has been any change in your
particulars after making your Electronic Application, you shall promptly notify your Participating
Bank.
(l)
You should ensure that your personal particulars as recorded by both CDP and the relevant
Participating Bank are correct and identical; otherwise, your Electronic Application is liable
to be rejected. You should promptly inform CDP of any change in address, failing which the
notification letter on successful allotment will be sent to your address last registered with CDP.
(m)
By making and completing an Electronic Application, you are deemed to have agreed that:
(i)
In consideration of our Company and the Vendors making available the Electronic
Application facility through the ATMs of the Participating Banks acting as our agents, at the
ATMs and the IB websites (if any):
(aa)
your Electronic Application is irrevocable; and
(bb)
your Electronic Application, our acceptance and the contract resulting therefrom under
the Invitation shall be governed by and construed in accordance with the laws of
Singapore and you irrevocably submit to the non-exclusive jurisdiction of the
Singapore courts;
(ii)
none of our Company, the Vendors, our Directors, the Issue Manager or the Participating
Banks shall be liable for any delays, failures or inaccuracies in the recording, storage or in
the transmission or delivery of data relating to your Electronic Application to our Company or
CDP due to breakdowns or failure of transmission, delivery or communication facilities or any
risks referred to in paragraph (j) above or to any cause beyond their respective controls;
(iii)
in respect of Offer Shares for which your Electronic Application has been successfully
completed and not rejected, acceptance of your Electronic Application shall be constituted by
written notification by or on behalf of our Company and the Vendors and not otherwise,
notwithstanding any payment received by or on behalf of our Company and the Vendors;
(iv)
you will not be entitled to exercise any remedy of rescission for misrepresentation at any
time after acceptance of your application; and
(v)
in making your application, reliance is placed solely on information contained in this
Prospectus and that none of the Company, the Vendors, the Issue Manager and the Joint
Underwriters and Joint Placement Agents nor any other person involved in the Invitation
shall have any liability for any information not so contained.
F-12
The instructions for Electronic Applications will appear on the ATM screens and the IB website screens of
the respective Participating Banks. For illustrative purposes, the steps for making an Electronic
Application through the ATMs or IB website of UOB Group are shown below. Instructions for Electronic
Applications appearing on the ATM screens and the IB website screens (if any) of the relevant
Participating Banks (other than UOB Group) may differ from that represented below.
STEPS FOR ELECTRONIC APPLICATIONS THROUGH ATMS AND THE IB WEBSITE OF THE UOB
GROUP
The instructions for Electronic Applications will appear on the ATM screens and the IB website screens of
the respective Participating Banks. For illustrative purposes, the steps for making an Electronic
Application through the ATMs or IB website of UOB Group are shown below. Instructions for Electronic
Applications appearing on the ATM screens and the IB website screens (if any) of the relevant
Participating Banks (other than UOB Group) may differ from that represented below.
Owing to space constraints on UOB Group’s ATM screens, the following terms will appear in abbreviated
form:
“&”
:
and
“A/C” and “A/CS”
:
Account and Accounts, respectively
“ADDR”
:
Address
“AMT”
:
Amount
“APPLN”
:
Application
“CDP”
:
“CPF”
:
Central Provident Fund Board
“CPFINVT A/C”
:
CPF Investment Account
“ESA”
:
Electronic Share Application
“IC/PSSPT”
:
NRIC or Passport Number
“NO” or “NO.”
:
Number
“PERSONAL NO”
:
Personal Identification Number
“REGISTRARS”
:
Share Registrars
“SCCS”
:
“UOB/ICB CPFIS”
:
UOB or ICB CPF Investment Scheme
“YR”
:
Your
Steps for Electronic Application through the ATMs of UOB Group
Step 1
:
Insert your personal Unicard, Uniplus card or UOB Visa/Master card and key in your
personal identification number.
2
:
Select “CASH CARD/OTHER TRANSACTIONS”.
3
:
Select “SECURITIES APPLICATION”.
4
:
Select the share counter which you wish to apply for.
F-13
5
:
Read and understand the following statements which will appear on the screen:
–
THIS OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE
IN, OR ACCOMPANIED BY, A COPY OF THE PROSPECTUS/DOCUMENT OR
SUPPLEMENTARY DOCUMENTS. ANYONE WISHING TO ACQUIRE THESE
SECURITIES (OR UNITS OF SECURITIES) WILL NEED TO MAKE AN
APPLICATION IN THE MANNER SET OUT IN THE PROSPECTUS/
DOCUMENT OR SUPPLEMENTARY DOCUMENTS
(Press “ENTER” to continue)
–
PLEASE CALL 1800-22-22-121 IF YOU WOULD LIKE TO FIND OUT WHERE
YOU CAN OBTAIN A COPY OF THE PROSPECTUS/DOCUMENT OR
SUPPLEMENTARY DOCUMENT
–
WHERE APPLICABLE, A COPY OF THE PROSPECTUS/DOCUMENT OR
SUPPLEMENTARY DOCUMENT HAS BEEN LODGED WITH AND
REGISTERED BY THE SGX-ST WHO ASSUMES NO RESPONSIBILITY FOR
THE
CONTENTS
OF
THE
PROSPECTUS/DOCUMENT
OR
SUPPLEMENTARY DOCUMENT
(Please press “ENTER” key to confirm that you have read and understood the
above statements.)
6
:
Read and understand the following terms which will appear on the screen:
–
YOU HAVE READ, UNDERSTOOD & AGREED TO ALL THE TERMS OF THE
PROSPECTUS/DOCUMENTS/SUPPLEMENTARY DOCUMENT & THIS
ELECTRONIC APPLICATION
–
YOU CONSENT TO DISCLOSE YR NAME, IC/PSSPT, NATIONALITY, ADDR,
APPLN AMT, CPFINVT A/C NO & CDP A/C NO FROM YOUR A/CS TO CDP,
CPF, SCCS, REGISTRARS, SGX-ST AND ISSUER/VENDOR(S)
–
THIS IS YOUR ONLY FIXED PRICE APPLN & IS IN YOUR NAME & AT YR
RISK
(Please press “ENTER” to confirm)
7
:
Screen will display:
NRIC/Passport No. XXXXXXXXXXXX
IF YOUR NRIC NO / PASSPORT NO IS INCORRECT, PLEASE CANCEL THE
TRANSACTION AND NOTIFY THE BRANCH PERSONALLY.
(Press “CANCEL” or “CONFIRM”)
8
:
Select mode of payment i.e. “CASH ONLY”. You will be prompted to select Cash
Account type to debit (i.e., “CURRENT ACCOUNT / I- ACCOUNT”, “CAMPUS” OR
“SAVINGS ACCOUNT / TX ACCOUNT”). Should you have a few accounts linked to
your ATM card, a list of linked account numbers will be displayed for you to select
9
:
After you have selected the account, your Securities Account number will be displayed
for you to confirm or change. (This screen with your Securities Account number will be
shown for applicants whose Securities Account number is already stored in the ATM
system of UOB). For an applicant who is using UOB’s ATM for the first time to apply
for Shares, the Securities Account number will not be stored in the ATM system of
UOB, and the following screen will be displayed for your input of your Securities
Account number.
F-14
10
:
Read and understand the following terms which will appear on the screen:
1.
PLEASE DO NOT APPLY FOR YOUR JOINT A/C HOLDER OR OTHER
THIRD PARTIES
2.
PLEASE USE YOUR OWN ATM CARD
3.
DO NOT KEY IN THE CDP A/C NO. OF YOUR JOINT A/C HOLDER OR
OTHER THIRD PARTIES
4.
KEY IN YOUR CDP A/C NO. (12 DIGITS) 1681-XXXX-XXXX
5.
PRESS ENTER KEY
11
:
Key in your Securities Account number (12 digits) and press the “ENTER” key.
12
:
Select your nationality status.
13
:
Key in the number of Shares you wish to apply for and press the “ENTER” key.
14
:
Check the details of your Electronic Application on the screen and press “ENTER” key
to confirm your Electronic Application.
15
:
Select “NO” if you do not wish to make any further transactions and remove the
Transaction Record. You should keep the Transaction Record for your own reference
only.
Owing to space constraints on UOB Group’s IB website screens, the following terms will appear in
abbreviated form:
“CDP”
:
“CPF”
:
The Central Provident Fund
“NRIC” or “I/C”
:
National Registration Identity Card
“PR”
:
Permanent resident
“SGD” or “$”
:
Singapore Dollars
“SCCS”
:
“SGX”
:
Steps for Internet Electronic Application through the IB website of UOB Group
Step 1
:
Connect to UOB website at http://www.uobgroup.com.
2
:
Locate the Login icon on the top left hand corner next to “Internet Banking”.
3
:
Click on Login and at the drop list select “UOB Personal Internet Banking”.
4
:
Enter your Username and Password and click “Submit”.
5
:
Select “Investment Services” (IPO Application should be the default transaction that
appears, if not click IPO Application).
6
:
Read the IMPORTANT notice and complete the declarations found on the bottom of
the page by answering Yes/No to the questions.
7
:
Click “Continue”.
F-15
8
:
Select your country of residence (you must be residing in Singapore to apply), and
click “Continue”.
9
:
Select the IPO counter from the drop list (if there are concurrent IPOs), and click
“Continue”.
10
:
Check the share counter and select the mode of payment and account number to
debit and click on “Continue”.
11
:
Read the important instructions and click on “Confirm” to confirm that:
12
:
1.
You have read, understood and agreed to all the terms and conditions of
this application and Prospectus/Document or Supplementary Document.
2.
You consent to disclose your name, NRIC or passport number, address,
nationality, Securities Account number, CPF Investment Account number
(if applicable), and application details to the share registrars, CDP, SGXST, SCCS, CPF Board, issuer/ vendor(s).
3.
This application is made in your own name, for your own account and at
your own risk.
4.
For Fixed/MAX price share application, this is your only application. For
Tender price share application, this is your only application for at the
selected tender price.
5.
For FOREIGN CURRENCY securities, subject to the terms of the issue,
please note the following: The application monies will be debited from
your bank account in S$, based on the bank’s prevailing board rates at the
time of application. The different prevailing board rates at the time of the
application and at the time of refund of application monies may result in
either a foreign exchange profit or loss, or application monies may be
debited and refunds credited in S$ at the same exchange rate.
6.
For 1st-Come-1st Serve securities, the number of securities applied for
may be reduced, subject to the availability at the point of application.
Check your personal details, details of the share counter you wish to apply for and
account to debit.
Select:
(a)
“Nationality”
Enter:
(b)
your Securities Account number; and
(c)
the number of Shares applied for.
Click “Submit”
13
:
Check your personal particulars (name, NRIC/Passport number and nationality),
details of the share counter you wish to apply for, Securities Account number, account
to debit and number of shares applied for.
14
:
Click “Confirm”, “Edit” or “Cancel”.
15
:
Print the Confirmation Screen (optional) for your reference and retention only.
F-16
APPENDIX G – RULES OF THE COGENT HOLDINGS EMPLOYEE SHARE
OPTION SCHEME
1.
NAME OF THE SCHEME
The Scheme shall be called the “Cogent Holdings Employee Share Option Scheme”.
2.
DEFINITIONS
2.1
In the Scheme, unless the context otherwise requires, the following words and expressions shall
have the following meanings:
“ Administration Committee”
The committee comprising of members of the nominating
committee and remuneration committee of the Company to
administer the Scheme
“Adoption Date”
The date on which the Scheme is adopted by the Company in
general meeting
“Aggregate Subscription
Cost”
The total amount payable for Shares which may be acquired on
the exercise of an Option
“Articles”
The Articles of Association of the Company, as amended from
time to time
“Associates”
Has the meaning ascribed to it in the SGX-ST Listing Manual
“Auditors”
The auditors of the Company for the time being
“Board”
The board of directors of the Company
“CDP”
“CPF”
Central Provident Fund
“Companies Act”
modified or supplemented from time to time
“Company”
Cogent Holdings Limited, a public company incorporated in
Singapore with limited liability
“control”
The capacity to dominate decision making, directly or indirectly,
in relation to the financial and operating policies of the Company
A person who: (a) holds directly or indirectly 15.0% or more of
the number of all voting shares in a company; or (b) in fact
exercises control over a company, unless otherwise determined
“Date of Grant”
In relation to an Option, the date on which the Option is granted
pursuant to Rule 6
“Director”
A person holding office as a director for the time being of the
Company and/or its Subsidiaries, as the case may be
“Employee”
An employee of the Group selected by the Administration
Committee to participate in the Scheme
G-1
“Executive Director”
A director for the time being of the Company and/or any of its
Subsidiaries, holding office in an executive capacity in the
Company and/or such Subsidiary
“Exercise Period”
The period for the exercise of an Option, being a period
commencing:
(a)
after the first anniversary of the Date of Grant and expiring
on the tenth anniversary of such Date of Grant in the case
of a Market Price Option; and
(b)
after the second anniversary of the Date of Grant and
expiring on the tenth anniversary of such Date of Grant in
the case of an Incentive Option
“Exercise Price”
The price at which a Participant shall subscribe for each Share
upon the exercise of an Option which shall be the price as
determined in accordance with Rule 7, as adjusted in
accordance with Rule 12
“Grantee”
The person to whom an offer of an Option is made
“Group”
The Company and its Subsidiaries
“Incentive Option”
An Option granted with the Exercise Price set at a discount to
the Market Price
“Market Day”
A day on which the SGX-ST is open for trading in securities
“Market Price”
A price equal to the average of the last dealt prices for the
Shares on the SGX-ST over the five consecutive Trading Days
immediately preceding the Date of Grant of that Option, as
determined by the Administration Committee by reference to the
daily official list or any other publication published by the SGXST, rounded to the nearest whole cent in the event of fractional
prices
“Market Price Option”
An Option granted with the Exercise Price set at the Market
Price
“Non-executive Director”
A director (other than an Executive Director) from time to time of
the Company and/or any of its Subsidiaries
“Option”
The right to subscribe for Shares granted or to be granted to an
Employee pursuant to the Scheme and for the time being
subsisting
“Participant”
The holder of an Option
“Record Date”
The date as at the close of business (or such other time as may
have been prescribed by the Company) on which Shareholders
must be registered in order to participate in the dividends, rights,
allotments or other distributions (as the case may be)
“Rules”
Rules of the Scheme
“Scheme”
The Cogent Holdings Employee Share Option Scheme, as the
same may be modified or altered from time to time
G-2
“Securities Account”
The securities account maintained by a Depositor with CDP
“Shareholders”
Registered holders of Shares, except where the registered
holder is CDP, the term “Shareholders” shall, in relation to such
Shares, mean the Depositors whose Securities Accounts are
credited with Shares
“SGX-ST”
“SGX-ST Listing Manual”
Listing Manual of the SGX-ST
“Shares”
Ordinary shares in the capital of the Company
“Subsidiary”
A company (whether incorporated within or outside Singapore
and wheresoever resident) being a subsidiary for the time being
of the Company within the meaning of Section 5 of the
Companies Act
“Trading Day”
A day on which the Shares are traded on the SGX-ST
“S$”
Singapore dollar
“%”
2.2
The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings
ascribed to them respectively by Section 130A of the Companies Act.
2.3
Words importing the singular number shall, where applicable, include the plural number and vice
versa. Words importing the masculine gender shall, where applicable, include the feminine and
neuter gender.
2.4
Any reference to a time of a day in the Scheme is a reference to Singapore time.
2.5
Any reference in the Scheme 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 any statutory
modification thereof and used in the Scheme shall have the meaning assigned to it under the
Companies Act.
3.
OBJECTIVES OF THE SCHEME
3.1
The Scheme is a share incentive plan. The Scheme is proposed on the basis that it is important to
retain staff whose contributions are essential to the well-being and prosperity of the Group and to
give recognition to outstanding Employees who have contributed to the growth of the Group.
3.2
The objectives of the Scheme are as follows:
(a)
the motivation of each Participant to optimise his performance standards and efficiency and
to maintain a high level of contribution to the Group;
(b)
the retention of key employees of the Group whose contributions are essential to the longterm growth and profitability of the Group;
(c)
to instill loyalty to, and a stronger identification by the Participants with the long-term
prosperity of, the Company;
(d)
to attract potential employees with relevant skills to contribute to the Group and to create
value for the Shareholders of the Company; and
(e)
to align the interests of the Participants with the interests of the Shareholders.
G-3
4.
ELIGIBILITY OF PARTICIPANTS
4.1
The Employee’s eligibility to participate in the Scheme shall be at the absolute discretion of the
Administration Committee. Such person must:
(i)
be confirmed in his/her employment with the Group;
(ii)
have attained the age of 21 years on or before the Date of Grant; and
(iii)
not be an undischarged bankrupt and must not have entered into a composition with his
creditors.
4.2
Non-executive Directors who satisfy the eligibility requirements in Rule 4.1(ii) and (iii) shall also be
eligible to participate in the Scheme.
4.3
Persons who are Controlling Shareholders and their respective Associates shall, if each such
person meets the eligibility criteria in Rule 4.1 and 4.2, be eligible to participate in the Scheme
Provided That:
(i)
their participation in the Scheme is specifically approved by independent Shareholders in a
separate resolution for each such person;
(ii)
the aggregate number of Shares which may be offered by way of grant of Options to all
Controlling Shareholders and their respective Associates under the Scheme shall not exceed
25% of the total number of Shares available under the Scheme; and
(iii)
the number of Shares which may be offered by way of grant of Options to each Controlling
Shareholder and his respective Associate under the Scheme shall not exceed 10% of the
total number of Shares available under the Scheme.
No Option shall be granted to such Controlling Shareholders or their respective Associates unless
the actual number and terms of Options to be granted shall be approved by independent
Shareholders in a separate resolution for each such person. A circular, letter or notice to
Shareholders proposing such a resolution shall include a clear rationale for the proposed
participation by such Controlling Shareholders or their respective Associates. Such circular, letter or
notice to Shareholders shall also include a clear rationale for the number and terms (including
Exercise Price) of the Options to be granted.
4.4
Subject to the Companies Act and any requirement of the SGX-ST, the terms of eligibility for
participation in the Scheme may be amended from time to time at the absolute discretion of the
Administration Committee, which would be exercised judiciously.
5.
MAXIMUM ENTITLEMENT
Subject to Rule 4, Rule 11 and Rule 12, the aggregate number of Shares in respect of which
Options may be offered to a Grantee for subscription in accordance with the Scheme shall be
determined at the discretion of the Administration Committee, which would be exercised judiciously,
who shall take into account criteria such as the rank and responsibilities within the Group,
performance, years of service/appointment and potential for future development of the Grantee and
the performance of the Company.
6.
GRANT AND ACCEPTANCE OF OPTIONS
6.1
Subject as provided in Rule 11, the Administration Committee may grant Options at any time
during the period when the Scheme is in force, provided that in the event that an announcement on
any matter of an exceptional nature involving unpublished price sensitive information is made,
Options may only be granted on or after the second Market Day from the date on which such
announcement is released.
G-4
6.2
The Letter of Offer to grant an Option shall be in, or substantially in, the form set out in Schedule
A, subject to such modification as the Administration Committee may from time to time determine.
6.3
An Option shall be personal to the person to whom it is granted and shall not be transferred (other
than to a Participant’s personal representative on the death of that Participant), charged, assigned,
pledged or otherwise disposed of, in whole or in part, except with the prior approval of the
Administration Committee.
6.4
The grant of an Option under this Rule 6 shall be accepted by the Grantee within 30 days from the
Date of Grant of that Option and, in any event, not later than 5.00 p.m. on the thirtieth day from
such Date of Grant by completing, signing and returning the Acceptance Form in or substantially in
the form set out in Schedule B, subject to such modification as the Administration Committee may
from time to time determine, accompanied by payment of S$1.00 as consideration.
6.5
If a grant of an Option is not accepted in the manner as provided in Rule 6.4, such offer shall, upon
the expiry of the 30-day period, automatically lapse and become null, void and of no effect.
7.
EXERCISE PRICE
Subject to any adjustment pursuant to Rule 12, the Exercise Price for each Share in respect of
which an Option is exercisable shall be determined by the Administration Committee, in its absolute
discretion, on the Date of Grant, at:
(a)
a price equal to the Market Price; or
(b)
a price which is set at a discount to the Market Price, provided that:
(i)
the maximum discount shall not exceed 20.0% of the Market Price (or such other
percentage or amount as may be determined by the Administration Committee and
permitted by the SGX-ST); and
(ii)
the Shareholders in general meeting shall have authorised, in a separate resolution,
the making of offers and grants of Options under the Scheme at a discount not
exceeding the maximum discount as aforesaid.
8.
RIGHTS TO EXERCISE OPTIONS
8.1
Subject as provided in Rule 8 and Rule 9, a Market Price Option or an Incentive Option, as the
case may be, shall be exercisable, in whole or in part, during the Exercise Period applicable to that
Option.
8.2
An Option shall, to the extent unexercised, immediately lapse without any claim whatsoever against
the Company:
(a)
in the event of misconduct on the part of the Participant as determined by the Administration
Committee in its discretion;
(b)
subject to Rule 8.3(b), where the Participant ceases at any time to be in the employment of
any of the Group, for any reason whatsoever;
(c)
the bankruptcy of the Participant or the happening of any other event which results in his
being deprived of the legal or beneficial ownership of an Option; or
(d)
the company by which he is employed ceasing to be a company within the Group, or the
undertaking or part of the undertaking of such company being transferred otherwise than to
another company within the Group.
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For the purpose of Rule 8.2(b), the Participant shall be deemed to have ceased to be so employed
as of the last day of his employment. For avoidance of doubt, no Option shall lapse pursuant to
Rule 8.2(b) in the event of any transfer of employment of a Participant between companies in the
Group.
8.3
In any of the following events, namely:
(a)
(b)
8.4
where the Participant ceases at any time to be in the employment of the Group by reason of:
(i)
ill health, injury or disability (in each case, evidenced to the satisfaction of the
Administration Committee);
(ii)
redundancy;
(iii)
retirement at or after the legal retirement age; or
(iv)
retirement before the legal retirement age with the consent of the Administration
Committee; or
where the Participant ceases at any time to be in the employment of any of the companies in
the Group by reason of any other event approved in writing by the Administration Committee,
(i)
the Participant may exercise any Option:
(ii)
in the case where the cessation of employment or cessation to be a Director, as the
case may be, occurs after the first day of the Exercise Period in respect of such
Option, within the period of 18 months after the date of such cessation of employment
or such cessation to be a director, as the case may be, or before the expiry of the
Exercise Period in respect of that Option, whichever is earlier, and upon expiry of such
period the Option shall lapse; and
(iii)
in the case where the cessation of employment or cessation to be a Director, as the
case may be, occurs before the first day of the Exercise Period in respect of such
Option, within the period of 18 months after the first day of the Exercise Period in
respect of that Option, and upon expiry of such period the Option shall lapse.
If a Participant dies, whether or not while still in the employment of any of the companies in the
Group and at the date of his death holds any unexercised Option, such Option shall continue to be
exercisable by the duly appointed personal representatives of the Participant:
(a)
in the case where death occurs after the first day of the Exercise Period in respect of such
Option, within the period of 18 months after the date of such cessation of employment or
before the expiry of the Exercise Period in respect of that Option, whichever is earlier, and
upon expiry of such period the Option shall lapse; and
(b)
in the case where the death occurs before the first day of the Exercise Period in respect of
such Option, within the period of 18 months after the first day of the Exercise Period in
respect of that Option, and upon expiry of such period, the Option shall lapse.
9.
TAKE-OVER AND WINDING-UP OF THE COMPANY
9.1
Notwithstanding Rule 8 but subject to Rule 9.5, in the event of a take-over being made for the
Shares, a Participant shall be entitled to exercise any Option held by him and as yet unexercised,
in respect of such number of Shares comprised in that Option as may be determined by the
Administration Committee in its absolute discretion, in the period commencing on the date on
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which such offer is made or, if such offer is conditional, the date on which such offer becomes or is
declared unconditional, as the case may be, and ending on the earlier of:
(a)
the expiry of six months thereafter, unless prior to the expiry of such six-month period, at the
recommendation of the officer and with the approvals of the Administration Committee and
the SGX-ST, such expiry date is extended to a later date (in either case, being a date falling
not later than the expiry of the Exercise Period relating thereto); or
(b)
the date of expiry of the Exercise Period relating thereto,
whereupon the Option then remaining unexercised shall lapse.
Provided that if during such period, the offeror becomes entitled or bound to exercise rights of
compulsory acquisition under the provisions of the Companies Act and, being entitled to do so,
gives notice to the Participants that it intends to exercise such rights on a specified date, the
Option shall remain exercisable by the Participant until the expiry of such specified date or the
expiry of the Exercise Period relating thereto, whichever is earlier. Any Option not so exercised
shall lapse provided that the rights of acquisition or obligations to acquire shall have been
exercised or performed, as the case may be. If such rights or obligations have not been exercised
or performed, the Option shall, notwithstanding Rule 8, remain exercisable until the expiry of the
Exercise Period relating thereto.
9.2
If under any applicable laws, the court sanctions a compromise or arrangement proposed for the
purposes of, or in connection with, a scheme for the reconstruction of the Company or its
amalgamation with another company or companies, each Participant shall be entitled,
notwithstanding Rule 8 but subject to Rule 9.5, to exercise any Option then held by him, in respect
of such number of Shares comprised in that Option as may be determined by the Administration
Committee in its absolute discretion, during the period commencing on the date upon which the
compromise or arrangement is sanctioned by the court and ending either on the expiry of 60 days
thereafter or the date upon which the compromise or arrangement becomes effective, whichever is
later (but not after the expiry of the Exercise Period relating thereto), whereupon the Option shall
lapse and become null and void.
9.3
If an order is made for the winding-up of the Company on the basis of its insolvency, all Options, to
the extent unexercised, shall lapse and become null and void.
9.4
In the event a notice is given by the Company to its members to convene a general meeting for the
purposes of considering and, if thought fit, approving a resolution to voluntarily wind-up the
Company, the Company shall on the same date as or soon after it dispatches such notice to each
member of the Company give notice thereof to all Participants (together with a notice of the
existence of the provision of this Rule 9.4) and thereupon, each Participant (or his personal
representative) shall be entitled to exercise all or any of his Options at any time not later than two
business days prior to the proposed general meeting of the Company by giving notice in writing to
the Company, accompanied by a remittance for the Aggregate Subscription Cost whereupon the
Company shall as soon as possible and in any event, no later than the business day immediately
prior to the date of the proposed general meeting referred to above, allot the relevant Shares to the
Participant credited as fully paid.
9.5
If in connection with the making of a general offer referred to in Rule 9.1 or the scheme referred to
in Rule 9.2 or the winding-up referred to in Rule 9.4, arrangements are made (which are confirmed
in writing by the Auditors, acting only as experts and not as arbitrators, to be fair and reasonable)
for the compensation of Participants, whether by the continuation of their Options or the payment of
cash or the grant of other options or otherwise, a Participant holding an Option, as yet not
exercised, may not, at the discretion of the Administration Committee, be permitted to exercise that
Option as provided for in this Rule 9.
9.6
To the extent that an Option is not exercised within the periods referred to in this Rule 9, it shall
lapse and become null and void.
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10.
EXERCISE OF OPTIONS, ALLOTMENT AND LISTING OF SHARES
10.1 Subject to Rule 8.1, an Option may be exercised, in whole or in part, by a Participant giving notice
in writing to the Company in or substantially in the form set out in Schedule C, subject to such
modification as the Administration Committee may from time to time determine. Such notice must
be accompanied by payment in cash for the Aggregate Subscription Cost in respect of the Shares
for which that Option is exercised and any other documentation the Administration Committee may
require. An Option shall be deemed to be exercised upon receipt by the Company of the said
notice, duly completed, and the Aggregate Subscription Cost. All payments made shall be made by
cheque, cashiers’ order, banker’s draft or postal order made out in favour of the Company or such
other mode of payment as may be acceptable to the Company.
10.2 Subject to all such consents or other required action of any competent authority under any
regulations or enactment for the time being in force as may be necessary and subject to the
compliance with the terms of the Scheme and the Memorandum and Articles of Association of the
Company, the Company shall, within 10 Market Days after the exercise of an Option, allot the
relevant Shares and despatch to CDP the relevant share certificates by ordinary post or such other
mode as the Administration Committee may deem fit. The Company shall, as soon as practicable
after such allotment, apply to the SGX-ST for permission to deal in and for quotation of such
Shares, if necessary.
10.3 Shares which are allotted on the exercise of an Option by a Participant shall be issued in the name
of CDP to the credit of the securities account of that Participant maintained with CDP, the securities
sub-account of that Participant maintained with a Depository Agent or the CPF investment account
maintained with a CPF agent bank.
10.4 Shares allotted and issued on exercise of an Option shall:
(a)
be subject to all the provisions of the Memorandum and Articles of Association of the
Company; and
(b)
rank in full for all entitlements, including dividends or other distributions declared or
recommended in respect of the then existing Shares, the Record Date for which is on or
after the relevant date upon which such exercise occurred, and shall in all other respects
rank pari passu with other existing Shares then in issue.
10.5 The Company shall keep available sufficient unissued Shares to satisfy the full exercise of all
Options for the time being remaining capable of being exercised.
11.
LIMITATION ON THE SIZE OF THE SCHEME
The total number of new Shares over which the Administration Committee may grant Options on
any date, when added to the number of new Shares issued and issuable in respect of (a) all
Options granted under the Scheme, and (b) all awards granted under any other share option, share
incentive, performance share or restricted share plan implemented by the Company and for the
time being in force, shall not exceed 15.0% of the number of all issued Shares (excluding treasury
shares, as defined in the Companies Act) on the day preceding that date.
12.
ADJUSTMENT EVENTS
12.1 If a variation in the issued ordinary share capital of the Company (whether by way of a
capitalisation of profits or reserves or rights issue, reduction, subdivision, consolidation, distribution
or otherwise) shall take place, then:
(a)
the Exercise Price of the Shares, class and/or number of Shares comprised in an Option to
the extent unexercised; and/or
(b)
the class and/or number of Shares over which Options may be granted under the Scheme,
shall be adjusted in such manner as the Administration Committee may determine to be
appropriate.
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12.2 Unless the Administration Committee considers an adjustment to be appropriate, the issue of
securities as consideration for an acquisition or a private placement of securities, or the
cancellation of issued Shares purchased or acquired by the Company by way of a market purchase
of such Shares undertaken by the Company on the SGX-ST during the period when a share
purchase mandate granted by the Shareholders (including any renewal of such mandate) is in
force, shall not normally be regarded as a circumstance requiring adjustment.
12.3 Notwithstanding the provisions of Rule 12.1:
(a)
no such adjustment shall be made if as a result the Participant receives a benefit that a
Shareholder does not receive; and
(b)
any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by
the Auditors (acting only as experts and not as arbitrators) to be in their opinion, fair and
reasonable.
12.4 Upon any adjustment required to be made pursuant to this Rule 12, the Company shall notify the
Participant (or his duly appointed personal representatives where applicable) in writing and deliver
to him (or his duly appointed personal representatives where applicable) a statement setting forth
the Exercise Price thereafter in effect and class and/or number of Shares thereafter to be issued
on the exercise of the Option. Any adjustment shall take effect upon such written notification being
given.
13.
ADMINISTRATION OF THE SCHEME
13.1 The Scheme shall be administered by the Administration Committee in its absolute discretion with
such powers and duties as are conferred on it by the Board, provided that no member of the
Administration Committee shall participate in any deliberation or decision in respect of Options to
be granted to him or held by him.
13.2 The Administration Committee shall have the power, from time to time, to make and vary such
regulations (not being inconsistent with the Scheme) for the implementation and administration of
the Scheme as they think fit. Any matter pertaining or pursuant to the Scheme and any dispute
and uncertainty as to the interpretation of the Scheme, any rule, regulation or procedure
thereunder or any rights under the Scheme shall be determined by the Administration Committee.
13.3 Neither the Scheme nor the grant of Options under the Scheme shall impose on the Company or
the Administration Committee any liability whatsoever in connection with:
(a)
the lapsing or early expiry of any Options pursuant to any provision of the Scheme;
(b)
the failure or refusal by the Administration Committee to exercise, or the exercise by the
Administration Committee of, any discretion under the Scheme; and/or
(c)
any decision or determination of the Administration Committee made pursuant to any
provision of the Scheme.
13.4 Any decision or determination of the Administration Committee made pursuant to any provision of
the Scheme (other than a matter to be certified by the Auditors) shall be final, binding and
conclusive.
14.
NOTICES
14.1 Any notice required to be given by a Participant to the Company shall be sent or made to the
principal place of business of the Company or such other addresses (including electronic mail
addresses) or facsimile number, and marked for the attention of the Administration Committee, as
may be notified by the Company to him in writing.
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14.2 Any notices or documents required to be given to a Participant or any correspondence to be made
between the Company and the Participant shall be given or made by the Administration Committee
(or such person(s) as it may from time to time direct) on behalf of the Company and shall be
delivered to him by hand or sent to him at his home address, electronic mail address or facsimile
number according to the records of the Company or the last known address, electronic mail
address or facsimile number of the Participant.
14.3 Any notice or other communication from a Participant to the Company shall be irrevocable, and
shall not be effective until received by the Company. Any other notice or communication from the
Company to a Participant shall be deemed to be received by that Participant, when left at the
address specified in Rule 14.2 or, if sent by post, on the day following the date of posting or, if sent
by electronic mail or facsimile transmission, on the day of despatch.
15.
MODIFICATIONS TO THE SCHEME
15.1 Any or all the provisions of the Scheme may be modified and/or altered at any time and from time
to time by resolution of the Administration Committee, except that:
(a)
no modification or alteration shall alter adversely the rights attaching to any Option granted
prior to such modification or alteration except with the consent in writing of such number of
Participants who, if they exercised their Options in full, would thereby become entitled to not
less than 75.0% of the number of all the Shares which would fall to be allotted upon exercise
in full of all outstanding Options;
(b)
any modification or alteration which would be to the advantage of Participants under the
Scheme shall be subject to the prior approval of the Shareholders in general meeting; and
(c)
no modification or alteration shall be made without the prior approval of the SGX-ST and
such other regulatory authorities as may be necessary.
15.2 Notwithstanding anything to the contrary contained in Rule 15.1, the Administration Committee may
at any time by resolution (and without other formality, save for the prior approval of the SGX-ST)
amend or alter the Scheme in any way to the extent necessary to cause the Scheme to comply
with any statutory provision or the provision or the regulations of any regulatory or other relevant
authority or body (including the SGX-ST).
15.3 Written notice of any modification or alteration made in accordance with this Rule 15 shall be given
to all Participants.
16.
TERMS OF EMPLOYMENT UNAFFECTED
The terms of employment of a Participant shall not be affected by his participation in the Scheme,
which shall neither form part of such terms nor entitle him to take into account such participation in
calculating any compensation or damages on the termination of his employment for any reason.
17.
DURATION OF THE SCHEME
17.1 The Scheme shall continue to be in force at the discretion of the Administration Committee, subject
to a maximum period of 10 years commencing on the Adoption Date, provided always that the
Scheme may continue beyond the above stipulated period with the approval of the Shareholders by
ordinary resolution in general meeting and of any relevant authorities which may then be required.
17.2 The Scheme may be terminated at any time by the Administration Committee, at the discretion of
the Administration Committee, or by resolution of the Company in general meeting, subject to all
relevant approvals which may be required and if the Scheme is so terminated, no further Options
shall be offered by the Company hereunder.
17.3 The termination of the Scheme shall not affect Options which have been granted and accepted as
provided in Rule 6.4, whether such Options have been exercised (whether fully or partially) or not.
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18.
TAXES
All taxes (including income tax) arising from the exercise of any Option granted to any Participant
under the Scheme shall be borne by that Participant.
19.
COSTS AND EXPENSES OF THE SCHEME
19.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issue
and allotment of any Shares pursuant to the exercise of any Option in CDP’s name, the deposit of
share certificate(s) with CDP, the Participant’s securities account with CDP, or the Participant’s
securities sub-account with a Depository Agent or CPF investment account with a CPF agent bank.
19.2 Save for the taxes referred to in Rule 18 and such other costs and expenses expressly provided in
the Scheme to be payable by the Participants, all fees, costs and expenses incurred by the
Company in relation to the Scheme including but not limited to the fees, costs and expenses
relating to the allotment and issue of Shares pursuant to the exercise of any Option shall be borne
by the Company.
20.
DISCLAIMER OF LIABILITY
Notwithstanding any provisions herein contained, the Administration Committee and the Company
shall not under any circumstances be held liable for any costs, losses, expenses and damages
whatsoever and howsoever arising in any event, including but not limited to the Company’s delay in
issuing the Shares or applying for or procuring the listing of the Shares on the SGX-ST in
accordance with Rule 10.2.
21.
DISCLOSURE IN ANNUAL REPORT
The following disclosures (as applicable) will be made by the Company in its annual report for so
long as the Scheme continues in operation:
(a)
the names of the members of the Administration Committee;
(b)
the information in respect of Options granted to the following Participants in the table set out
below:
(i)
Directors of the Company;
(ii)
Participants who are Controlling Shareholders of the Company and their Associates;
and
(iii)
Participants, other than those in (i) and (ii) above, who receive 5.0% or more of the
total number of Shares comprised in Options available under the Scheme.
Name of
Participant
Number of
Shares
comprised
in Options
granted during
financial year
under review
(including
terms)
Aggregate
number
of Shares
comprised
in Options
granted since
commencement
of Scheme
to end
of financial
year under
review
G-11
Aggregate
number
of Shares
comprised
in Options
exercised since
commencement
of Scheme
to end
of financial
year under
review
Aggregate
number
of Shares
comprised
in Options
outstanding
as at end
of financial
year under
review
(c)
the number of Incentive Options during the financial year under review in the following
bands:
Discount to the Market Price
%
Aggregate number of
Incentive Options
granted during
the financial year
under review
Proportion of Incentive
Options to Market Price
Options granted during
the financial year
under review
0-10
11-20
(d)
22.
Disclosure in the annual report of information on Options granted to directors and employees
of the Company’s parent company and its subsidiaries would not be necessary as such
persons are not Participants.
ABSTENTION FROM VOTING
Participants who are Shareholders are to abstain from voting on any Shareholders’ resolution
relating to the Scheme.
23.
DISPUTES
Any disputes or differences of any nature arising hereunder shall be referred to the Administration
Committee and its decision shall be final and binding in all respects.
24.
GOVERNING LAW
The Scheme shall be governed by, and construed in accordance with, the laws of the Republic of
Singapore. The Participants, by accepting Options in accordance with the Scheme, and the
Company submit to the exclusive jurisdiction of the courts of the Republic of Singapore.
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Schedule A
LETTER OF OFFER
Serial No:
Date:
To:
[Name]
[Designation]
[Address]
Private and Confidential
Dear Sir/Madam,
1.
We have the pleasure of informing you that, pursuant to the Cogent Holdings Employee Share
Option Scheme (the “Share Option Scheme”), you have been nominated to participate in the
Share Option Scheme by the Administration Committee (the “Administration Committee”)
appointed by the Board of Directors of Cogent Holdings Limited (the “Company”) to administer the
Share Option Scheme. Terms as defined in the Share Option Scheme shall have the same
meaning when used in this letter.
2.
Accordingly, in consideration of the payment of a sum of S$1.00, an offer is hereby made to grant
you an option (the “Option”), to subscribe for and be allotted
Shares at the price
of S$
for each Share.
3.
The Option is personal to you and shall not be transferred, charged, pledged, assigned or
otherwise disposed of by you, in whole or in part, except with the prior approval of the
Administration Committee.
4.
The Option shall be subject to the terms of the Share Option Scheme, a copy of which is available
for inspection at the business address of the Company.
5.
If you wish to accept the offer of the Option on the terms of this letter, please sign and return the
enclosed Acceptance Form with a sum of S$1.00 not later than 5.00 p.m. on
, failing
which this offer will lapse.
Yours faithfully,
For and on behalf of
Name:
Designation:
G-13
Schedule B
ACCEPTANCE FORM
Serial No:
Date:
To:
The Administration Committee,
Cogent Holdings Employee Share Option Scheme,
Closing Date for Acceptance of Offer:
Number of Shares Offered:
Exercise Price for each Share: S$
Total Amount Payable:
S$
I have read your Letter of Offer dated
and agree to be bound by the terms of the
Letter of Offer and the Share Option Scheme referred to therein. Terms defined in your Letter of Offer
shall have the same meanings when used in this Acceptance Form.
I hereby accept the Option to subscribe for
Shares at S$
for each Share. I
enclose cash for S$1.00 in payment for the purchase of the Option/I authorise my employer to deduct the
sum of S$1.00 from my salary in payment for the purchase of the Option.
I understand that I am not obliged to exercise the Option.
I confirm that my acceptance of the Option will not result in the contravention of any applicable law or
regulation in relation to the ownership of shares in the Company or options to subscribe for such shares.
I agree to keep all information pertaining to the grant of the Option to me confidential.
I further acknowledge that you have not made any representation to induce me to accept the offer and
that the terms of the Letter of Offer and this Acceptance Form constitute the entire agreement between
us relating to the offer.
G-14
Please print in block letters
Name in full
:
Designation
:
Address
:
Nationality
:
*NRIC/Passport No.
:
Signature
:
Date
:
Note:
*
Delete accordingly
G-15
Schedule C
FORM OF EXERCISE OF OPTION
Total number of ordinary shares (the “Shares”)
offered at S$
for each Share
(the “Exercise Price”) under the Cogent
Holdings Employee Share Option Scheme
on
(Date of Grant)
:
Number of Shares previously allotted thereunder
:
Outstanding balance of Shares to be allotted
thereunder
:
Number of Shares now to be subscribed
:
To:
The Administration Committee,
Cogent Holdings Employee Share Option Scheme,
1.
Pursuant to your Letter of Offer dated
exercise the Option to subscribe for
“Company”) at S$
for each Share.
2.
I enclose a *cheque/cashier’s order/banker’s draft/postal order no.
S$
by way of subscription for the total number of the said Shares.
3.
I agree to subscribe for the said Shares subject to the terms of the Letter of Offer, the Cogent
Holdings Employee Share Option Scheme and the Memorandum and Articles of Association of the
Company.
4.
I declare that I am subscribing for the said Shares for myself and not as a nominee for any other
person.
5.
I request the Company to allot and issue the Shares in the name of The Central Depository (Pte)
Limited (“CDP”) for credit of my *Securities Account with CDP/Sub-Account with the Depository
Agent/CPF investment account with my Agent Bank specified below and I hereby agree to bear
such fees or other charges as may be imposed by CDP in respect thereof.
G-16
and my acceptance thereof, I hereby
Shares in Cogent Holdings Limited (the
for
Please print in block letters
Name in full
:
Designation
:
Address
:
Nationality
:
*NRIC/Passport No.
:
*Direct Securities
Account No.
:
OR
*Sub-Account No.
:
Name of Depository Agent
:
OR
*CPF Investment
Account No.
:
Name of Agent Bank
:
Signature
:
Date
:
Note:
*
Delete accordingly
G-17
APPENDIX H – RULES OF THE COGENT HOLDINGS PERFORMANCE
SHARE PLAN
1.
NAME OF THE PLAN
This Plan shall be called the “Cogent Holdings Performance Share Plan”.
2.
DEFINITIONS
2.1
In this Plan, unless the context otherwise requires, the following words and expressions shall have
the following meanings:
“Administration Committee”
The Administration Committee comprising of members of the
nominating committee and remuneration committee of the
Company to administer the Plan
“Adoption Date”
The date on which the Plan is adopted by the Company in
general meeting
“Articles”
The Articles of Association of the Company, as amended or
modified from time to time
“Associates”
Has the meaning ascribed to it in the SGX-ST Listing Manual
“Auditors”
The auditors for the time being of the Company
“Award”
A contingent award of Shares granted under Rule 5
“Award Letter”
A letter in such form as the Administration Committee shall
approve, confirming an Award granted to a Participant by the
Administration Committee
“Board”
The board of directors of the Company
“CDP”
“Companies Act”
modified or supplemented from time to time
“Company”
Cogent Holdings Limited, a public company incorporated in
Singapore with limited liability
“control”
The capacity to dominate decision-making, directly or indirectly,
in relation to the financial and operating policies of a company
A person who: (a) holds directly or indirectly 15.0% or more of
the number of all voting shares in a company; or (b) in fact
exercises control over a company, unless otherwise determined
“Date of Grant”
In relation to an Award, the date on which the Award is granted
pursuant to Rule 5
“Director”
A person holding office as a director for the time being of the
Company and/or any of its Subsidiaries, as the case may be
“Employee”
An employee of the Group selected by the Administration
Committee to participate in the Plan
H-1
“Executive Director”
A director for the time being of the Company and/or any of its
Subsidiaries, holding office in an executive capacity in the
Company and/or such Subsidiary
“Group”
The Company and its Subsidiaries
“Market Day”
A day on which the SGX-ST is open for trading of securities
“New Shares”
The new Shares which may be allotted and issued from time to
time pursuant to the release of Awards granted under the Plan
“Non-executive Director”
A director (other than an Executive Director) from time to time
of the Company and/or any of its Subsidiaries
“Participant”
The holder of an Award
“Performance Condition”
In relation to a Performance-related Award, the condition
specified on the Date of Grant in relation to that Award
“Performance-related Award”
An Award in relation to which a Performance Condition is
specified
“Performance Period”
In relation to a Performance-related Award, a period, the
duration of which is to be determined by the Administration
Committee on the Date of Grant, during which the Performance
Condition is to be satisfied
“Plan”
The Cogent Holdings Performance Share Plan, as the same
may be modified or altered from time to time
“Record Date”
The date as at the close of business (or such other time as
may have been prescribed by the Company) on which
Shareholders must be registered in order to participate in the
dividends, rights, allotments or other distributions (as the case
may be)
“Release”
In relation to an Award, the release at the end of the Vesting
Period relating to that Award of all or some of the Shares to
which that Award relates in accordance with Rule 7 and, to the
extent that any Shares which are the subject of the Award are
not released pursuant to Rule 7, the Award in relation to those
Shares shall lapse accordingly, and “Released” shall be
construed accordingly
“Released Award”
An Award in respect of which the Vesting Period relating to that
Award has ended and which has been released in accordance
with Rule 7
“Rules”
Rules of the Plan
“SGX-ST”
“SGX-ST Listing Manual”
Listing Manual of the SGX-ST
“Cogent Holdings Employee
Share Option Scheme”
The share option scheme that may be adopted by the
Company on terms determined by the Company as may be
modified or altered from time to time.
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“Securities Accounts”
The securities account maintained by a Depositor with CDP
“Shareholders”
Registered holders of Shares, except where the registered
holder is CDP, the term “Shareholders” shall, in relation to such
Shares, mean the Depositors whose Securities Accounts are
credited with Shares
“Shares”
Ordinary shares in the capital of the Company
“Subsidiary”
A company (whether incorporated within or outside Singapore
and wheresoever resident) being a subsidiary for the time
being of the Company within the meaning of Section 5 of the
Companies Act
“Trading Day”
A day on which the Shares are traded on the SGX-ST
“Vesting”
In relation to Shares which are the subject of a Released
Award, the absolute entitlement to all or some of the Shares
which are the subject of a Released Award and “Vest” and
“Vested” shall be construed accordingly
“Vesting Date”
In relation to Shares which are the subject of a Released
Award, the date (as determined by the Administration
Committee and notified to the relevant Participant) on which
those Shares have Vested pursuant to Rule 7
“Vesting Period”
In relation to an Award, a period or periods, the duration of
which is to be determined by the Administration Committee at
the Date of Grant
“S$”
Singapore dollars
“%”
2.2
The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings
ascribed to them, respectively, in Section 130A of the Companies Act.
2.3
Words importing the singular number shall, where applicable, include the plural number and vice
versa. Words importing the masculine gender shall, where applicable, include the feminine and
neuter gender.
2.4
Any reference to a time of a day in the Plan is a reference to Singapore time.
2.5
Any reference in the Plan 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 and used in the Plan shall
have the meaning assigned to it under the Companies Act.
3.
OBJECTIVES OF THE PLAN
3.1
The Plan is a performance incentive scheme which will form an integral part of the Group’s
incentive compensation program.
3.2
The objectives of the Plan are as follows:
(a)
provide an opportunity for Participants to participate in the equity of the Company, thereby
inculcating a stronger sense of identification with the long term prosperity of the Group and
promoting organisational commitment, dedication and loyalty of Participants towards the
Group;
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(b)
motivate Participants to strive towards performance excellence and to maintain a high level
of contribution to the Group;
(c)
give recognition to contributions made or to be made by Participants by introducing a
variable component into their remuneration package; and
(d)
make employee remuneration sufficiently competitive to recruit new Participants and/or to
retain existing Participants whose contributions are important to the long term growth and
profitability of the Group.
4.
ELIGIBILITY OF PARTICIPANTS
4.1
Any person shall be eligible to participate in the Plan at the absolute discretion of the
Administration Committee if at the Date of Grant such person must:
(a)
be confirmed in his/her employment with the Group;
(b)
he shall have attained the age of 21 years; and
(c)
he shall not be an undischarged bankrupt and must not have entered into a composition with
his/her creditors.
4.2
Non-executive Directors who satisfy the eligibility requirements in Rule 4.1(b) and (c) shall also be
eligible to participate in the Plan.
4.3
Persons who are Controlling Shareholders and their respective Associates shall, if each such
person meets the eligibility criteria in Rule 4.1 and 4.2, be eligible to participate in the Plan
Provided That:(i)
their participation in the Plan is specifically approved by independent Shareholders in a
separate resolution for each such person;
(ii)
the aggregate number of Shares which may be awarded to all Controlling Shareholders and
their respective Associates under the Plan shall not exceed 25% of the total number of
Shares available under the Plan; and
(iii)
the number of Shares which may be awarded to each Controlling Shareholder and his
respective Associate under the Plan shall not exceed 10% of the total number of Shares
available under the Plan.
No Award shall be granted to such Controlling Shareholders or their respective Associates unless
the actual number and terms of Awards to be granted shall be approved by independent
Shareholders in a separate resolution for each such person. A circular, letter or notice to
Shareholders proposing such a resolution shall include a clear rationale for the proposed
participation by such Controlling Shareholders or their respective Associates. Such circular, letter or
notice to Shareholders shall also include a clear rationale for the number of the Awards to be
granted.
4.4
Controlling Shareholders and their Associates who have contributed to the success and
development of the Group are, subject to the absolute discretion of the Administration Committee,
eligible to participate in the Plan provided that the participation by each such Controlling
Shareholder or Associate and each grant of Awards to any one of them may be effected only with
the specific prior approval of independent Shareholders at a general meeting in separate
resolutions and to approve the actual number and terms of Awards to be granted. The Company
will at such time provide the rationale and justification for any proposal to grant Awards to
Controlling Shareholders or their Associates.
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4.5
The eligibility of Participants to participate in the Plan, and the number of Shares which are the
subject of each Award to be granted to a Participant in accordance with the Plan and the Vesting
Period shall be determined at the absolute discretion of the Administration Committee, which shall
take into account,
(a)
the financial performance of the Group;
(b)
in respect of a Participant being an Employee, criteria such as his rank, job performance,
potential for future development and his contribution to the success and development of the
Group; and
(c)
in respect of a Participant being an Non-executive Director, criteria such as his contribution
to the success and development of the Group.
In addition, for Performance-related Awards, the extent of effort required to achieve the
Performance Condition within the Performance Period shall also be considered.
4.6
Subject to the Companies Act and any requirement of the SGX-ST, the terms of eligibility for
participation in the Plan may be amended from time to time at the absolute discretion of the
Administration Committee, which would be exercised judiciously.
5.
GRANT OF AWARDS
5.1
Subject as provided in Rule 8, the Administration Committee may grant Awards to Employees as
the Administration Committee may select in its absolute discretion, at any time during the period
when the Plan is in force.
5.2
The Administration Committee shall decide, in its absolute discretion, in relation to each Award:
(a)
the Participant;
(b)
the Date of Grant;
(c)
the number of Shares which are the subject of the Award;
(d)
the prescribed Vesting Period(s);
(e)
the extent to which Shares which are the subject of that Award shall be Released at the end
of each prescribed Vesting Period; and
(f)
in the case of a Performance-related Award, the Performance Period and the Performance
Condition,
PROVIDED THAT:
(i)
any grant of an Award to Non-executive Directors will be subject to and shall comply with the
provisions of Section 76 of the Companies Act; and
(ii)
subject to Rules 5.3 and 6, the Vesting Period(s) shall not be of shorter duration than the
minimum vesting periods prescribed under the SGX-ST Listing Manual in respect of
employee share options.
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5.3
The Administration Committee may amend or waive the Vesting Period(s) and, in the case of a
Performance related Award, the Performance Period and/or the Performance Condition in respect
of any Award:
(a)
in the event of a general offer (whether conditional or unconditional) being made for all or
any part of the Shares, or a scheme of arrangement or compromise between the Company
and its Shareholders being sanctioned by the Court under the Companies Act, or a proposal
to liquidate or sell all or substantially all of the assets of the Company; or
(b)
in the case of a Performance-related Award, if anything happens which causes the
Administration Committee to conclude that:
(i)
a changed Performance Condition would be a fairer measure of performance, and
would be no less difficult to satisfy; or
(ii)
the Performance Condition should be waived as the Participant has achieved a level of
performance that the Administration Committee considers satisfactory notwithstanding
that the Performance Condition may not have been fulfilled,
and shall notify the Participants of such change or waiver (but accidental omission to give notice to
any Participant(s) shall not invalidate any such change or waiver).
5.4
As soon as reasonably practicable after making an Award, the Administration Committee shall send
to each Participant an Award Letter confirming the Award and specifying in relation to the Award:
(a)
the Date of Grant;
(b)
the number of Shares which are the subject of the Award;
(c)
the prescribed Vesting Period(s);
(d)
the extent to which Shares which are the subject of that Award shall be released at the end
of each prescribed Vesting Period; and
(e)
in the case of a Performance-related Award, the Performance Period and the Performance
Condition.
5.5
Participants are not required to pay for the grant of Awards.
5.6
An Award or Released Award shall be personal to the Participant to whom it is granted and no
Award or Released Award or any rights thereunder shall not be transferred, charged, assigned,
pledged, mortgaged, encumbered or otherwise disposed of, in whole or in part, and if a Participant
shall do, suffer or permit any such act or thing as a result of which he would or might be deprived
of any rights under an Award or Released Award, that Award or Released Award shall immediately
lapse.
6.
EVENTS PRIOR TO THE VESTING DATE
6.1
An Award, to the extent not yet Released, shall forthwith become void and cease to have effect on
the occurrence of any of the following events (and in such an event, the Participant shall have no
claim whatsoever against the Company, its Directors or employees):
(a)
a Participant, being an Employee, ceasing for any reason whatsoever, to be in the
employment of the Company and/or the relevant Subsidiary or in the event the company by
which the Employee is employed ceases to be a company in the Group;
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(b)
a Participant, being a Non-executive Director, ceasing to be a director of the Company
and/or the relevant Subsidiary, as the case may be, for any reason whatsoever;
(c)
upon the bankruptcy of the Participant or the happening of any other event which results in
him being deprived of the legal or beneficial ownership of or interest in such Award;
(d)
ill health, injury, disability or death of a Participant;
(e)
a Participant commits any breach of any of the terms of his Award;
(f)
misconduct on the part of a Participant as determined by the Company in its discretion;
(g)
a take-over, winding-up or reconstruction of the Company; and/or
(h)
any other event approved by the Administration Committee.
For the purpose of Rule 6.1(a) above, an Employee shall be deemed to have ceased to be in the
employment of the Company or the Subsidiary (as the case may be) on the date on which he gives
notice of termination of employment, unless prior to the date on which termination takes effect, the
Employee has (with the consent of the Company or the Subsidiary (as the case may be))
withdrawn such notice.
For the purpose of Rule 6.1(b), a Participant shall be deemed to have ceased to be an Nonexecutive Director as of the date the notice of resignation of or termination of directorship, as the
case may be, is tendered by or is given to him, unless such notice shall be withdrawn prior to its
effective date.
6.2
The Administration Committee may in its absolute discretion and on such terms and conditions as
it deems fit, preserve all or any part of any Award notwithstanding the provisions of any other Rules
including Rules 6.1 and 7.1. Further to such exercise of discretion, the Awards shall be deemed not
to have become void nor cease to have effect in accordance with the relevant provisions in Rule
6.1.
6.3
Without prejudice to the provisions of Rules 5.3 and 7.1, to the extent of an Award yet to be
Released, if any of the following occurs:
(a)
a general offer (whether conditional or unconditional) being made for all or any part of the
Shares;
(b)
a scheme of an arrangement or compromise between the Company and its Shareholders
being sanctioned by the Court under the Companies Act;
(c)
an order for the compulsory winding-up of the Company is made; or
(d)
a resolution for a voluntary winding-up (other than for amalgamation or reconstruction) of the
Company being made,
the Administration Committee may consider, at its discretion, whether or not to Release such
Award. If the Administration Committee decides to Release such Award, then in determining the
number of Shares to be Vested in respect of such Award, the Administration Committee will have
regard to the proportion of the Vesting Period(s) which has elapsed and the extent to which the
Performance Condition (if any) has been satisfied. Where such Award is Released, the
Administration Committee will, as soon as practicable after such Release, procure the allotment or
transfer to each Participant of the number of Shares so determined, such allotment or transfer to
be made in accordance with Rule 7.
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7.
RELEASE OF AWARDS
7.1
(a)
In relation to each Performance-related Award, as soon as reasonably practicable after the
end of the relevant Performance Period, the Administration Committee shall review the
Performance Condition specified in respect of that Award and determine whether it has been
satisfied and, if so, the extent to which it has been satisfied.
If the Administration Committee determines in its sole discretion that the Performance
Condition has not been satisfied or if the relevant Participant (being an Employee) has not
continued to be an Employee from the Date of Grant up to the end of the relevant
Performance Period, that Award shall lapse and be of no value and the provisions of Rule 7
(save for this Rule 7.1(a)) shall be of no effect.
The Administration Committee shall have the discretion to determine whether the
Performance Condition has been satisfied (whether fully or partially) or exceeded and, in
making any such determination, the Administration Committee shall have the right to make
computational adjustments to the audited results of the Company or the Group, as the case
may be, to take into account such factors as the Administration Committee may determine to
be relevant, including changes in accounting methods, taxes and extraordinary events.
Subject to:
(i)
(in relation to a Performance-related Award) the Administration Committee having
determined that the Performance Condition has been satisfied;
(ii)
the relevant Participant (being an Employee) having continued to be an Employee
from the Date of Grant up to the end of the relevant Vesting Period;
(iii)
the Administration Committee being of the opinion that the job performance of the
relevant Participant has been satisfactory;
(iv)
such consents (including any approvals required by the SGX-ST) as may be
necessary;
(v)
compliance with the terms of the Award, the Plan, the Articles and the Memorandum
of Association of the Company;
(vi)
where Shares are to be allotted or transferred on the release of an Award, the
Participant having a securities account with CDP and compliance with the applicable
requirements of CDP; and
(vii)
where New Shares are to be allotted on the release of an Award, the Company being
satisfied that the Shares which are the subject of the Released Award will be listed for
quotation on the SGX-ST,
upon the expiry of each Vesting Period in relation to an Award, the Company shall Release
to the relevant Participant the Shares to which his Award relates on the Vesting Date.
(b)
Shares which are the subject of a Released Award shall be Vested to a Participant on the
Vesting Date, which shall be a Market Day falling as soon as practicable after the Release of
such Award in accordance with Rule 7.1(a) and, on the Vesting Date, the Administration
Committee will procure the allotment or transfer to each Participant of the number of Shares
so determined.
(c)
Where New Shares are allotted upon the Vesting of any Award, the Company shall, as soon
as practicable after such allotment, apply to the SGX-ST for the listing and quotation of such
Shares.
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7.2
Shares which are allotted or transferred on the Release of an Award to a Participant shall be
registered in the name of, or transferred to, CDP to the credit of the securities account of that
Participant maintained with CDP or the securities sub-account of that Participant maintained with a
Depository Agent.
7.3
New Shares allotted and issued, and existing Shares procured by the Company on behalf of the
Participants for transfer, upon the Release of an Award shall:
8.
(a)
be subject to all the provisions of the Articles and the Memorandum of Association of the
Company; and
(b)
rank for any dividend, right, allotment or other distribution on the Record Date of which is on
or after the relevant Vesting Date and (subject as aforesaid) will rank pari passu in all
respects with the Shares then existing.
LIMITATION ON THE SIZE OF THE PLAN
The aggregate number of Shares which may be issued and/or transferred pursuant to Awards
granted under the Plan on any date, when added to the number of Shares issued and issuable
and/or transferred and transferrable in respect of (a) all Awards granted under the Plan, and (b) all
options granted under any other share option, share incentive, performance share or restricted
share plan implemented by the Company and for the time being in force, shall not exceed 15.0% of
the number of all issued Shares (excluding treasury shares, as defined in the Companies Act) on
the day preceding that date.
9.
ADJUSTMENT EVENTS
9.1
If a variation in the issued share capital of the Company (whether by way of a capitalisation of
profits or reserves, rights issue, reduction, subdivision, consolidation, distribution or otherwise)
shall take place, then:
(a)
the class and/or number of Shares which are the subject of an Award to the extent not yet
Vested and the rights attached thereto; and/or
(b)
the class and/or number of Shares in respect of which Awards may be granted under the
Plan,
may, at the option of the Administration Committee, be adjusted in such manner as the
Administration Committee may determine to be appropriate, provided that any such adjustment
shall be made in such a way that a Participant will not receive a benefit that a Shareholder does
not receive.
9.2
Unless the Administration Committee considers an adjustment to be appropriate, the issue of
securities as consideration for an acquisition or a private placement of securities, or the
cancellation of issued Shares purchased or acquired by the Company by way of a market purchase
of such Shares undertaken by the Company on the SGX-ST during the period when a share
purchase mandate granted by Shareholders (including any renewal of such mandate) is in force,
shall not normally be regarded as a circumstance requiring adjustment.
9.3
Notwithstanding the provisions of Rule 9.1, any adjustment (except in relation to a capitalisation
issue) must be confirmed in writing by the Auditors (acting only as experts and not as arbitrators)
to be in their opinion, fair and reasonable.
9.4
Upon any adjustment being made pursuant to this Rule 9, the Company shall notify the Participant
(or his duly appointed personal representatives where applicable) in writing and deliver to him (or
his duly appointed personal representatives where applicable) a statement setting forth the class
and/or number of Shares thereafter to be issued or transferred on the Vesting of an Award and the
date on which such adjustment shall take effect.
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9.5
Notwithstanding the provisions of Rule 9.1 or that no adjustment is required under the provisions of
the Plan, the Administration Committee may, in any circumstances where it considers that no
adjustment should be made or that it should take effect on a different date or that an adjustment
should be made to any of the matters referred to in Rule 9.1 notwithstanding that no adjustment is
required under the said provisions (as the case may be), request the Auditors to consider whether
for any reasons whatsoever the adjustment or the absence of an adjustment is appropriate or
inappropriate as the case may be, and, after such consideration, no adjustment shall take place or
the adjustment shall be modified or nullified or an adjustment made (instead of no adjustment
made) in such manner and on such date as shall be considered by such Auditors (acting only as
experts and not as arbitrators) to be in their opinion appropriate.
10.
ADMINISTRATION OF THE PLAN
10.1 The Plan shall be administered by the Administration Committee in its absolute discretion, with
such powers and duties as are conferred on it by the Board, provided that no member of the
Administration Committee shall participate in any deliberation or decision in respect of Awards
granted or to be granted to him or held by him.
10.2 The Administration Committee shall have the power, from time to time, to make and vary such
arrangements, guidelines and/or regulations (not being inconsistent with the Plan) for the
implementation and administration of the Plan, to give effect to the provisions of the Plan and/or to
enhance the benefit of the Awards and the Released Awards to the Participants, as it may, in its
absolute discretion, think fit.
10.3 The Company shall bear the costs of establishing and administering the Plan.
11.
NOTICES
11.1 A Participant shall not by virtue of being granted any Award be entitled to receive copies of any
notices or other documents sent by the Company to Shareholders of the Company.
11.2 Any notice or other communication between the Company and a Participant may be given by
sending the same by prepaid post or by personal delivery to, in the case of the Company, its
registered office and, in the case of the Participant, his address as notified by him to the Company
from time to time.
11.3 Any notice or other communication sent by post:
12.
(a)
by the Company shall be deemed to have been received 24 hours after the same was put in
the post properly addressed and stamped;
(b)
by the Participant shall be deemed to have been received when the same is received by the
Company at the registered office of the Company.
MODIFICATIONS TO THE PLAN
12.1 Any or all the provisions of the Plan may be modified and/or altered at any time and from time to
time by resolution of the Board, except that:
(a)
no modification or alteration shall be made which would adversely affect the rights attached
to any Award granted prior to such modification or alteration except with the prior consent in
writing of such number of Participants who, if their Awards were Released to them upon the
expiry of all the Vesting Periods applicable to their Awards, would be entitled to not less than
75.0% of the aggregate number of the Shares which would fall to be vested upon the
Release of all outstanding Awards upon the expiry of all the Vesting Periods applicable to all
such outstanding Awards;
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(b)
no modification or alteration to the definitions of “Associate”, “Administration Committee”,
“Controlling Shareholders”, “Employee”, “Participant”, “Performance Period” and “Vesting
Period” and the provisions of Rules 4, 5, 7, 8, 9, 10 and this Rule 12 shall be made to the
advantage of Participants except with the prior approval of the Shareholders of the Company
in general meeting; and
(c)
no modification or alteration shall be made without the prior approval of the SGX-ST and
such other regulatory authorities as may be necessary.
12.2 Notwithstanding anything to the contrary contained in Rule 12.1, the Board may at any time by
resolution (and without other formality, save for the prior approval of the SGX-ST) amend or alter
the Plan in any way to the extent necessary to cause the Plan to comply with any statutory
provision or the provision or the regulations of any regulatory or other relevant authority or body
(including the SGX-ST).
12.3 Written notice of any modification or alteration made in accordance with this Rule 12 shall be given
to all Participants but accidental omission to give notice to any Participant(s) shall not invalidate
any such modifications or alterations.
13.
TERMS OF EMPLOYMENT UNAFFECTED
Notwithstanding the provisions of any other Rule:
14.
(a)
the Plan or any Award shall not form part of any contract of employment between the
Company and/or any Subsidiary and/or any Employee and the rights and obligations of any
individual under the terms of the office or employment with any such company shall not be
affected by his participation in the Plan or any right which he may have to participate in it or
any Award which he may be granted and the Plan or any Award shall afford such an
individual no additional rights to compensation or damages in consequence of the
termination of such office or employment for any reason whatsoever (whether lawful or not);
and
(b)
the Plan shall not confer on any person any legal or equitable rights (other than those
constituting the Awards themselves) against the Company and/or any Subsidiary directly or
indirectly or give rise to any cause of action at law or in equity against any such company, its
directors or employees.
DURATION OF THE PLAN
14.1 The Plan shall continue to be in operation at the discretion of the Administration Committee for a
maximum period of 10 years commencing on the Adoption Date, provided always that the Plan
may, subject to applicable laws and regulations, continue beyond the above stipulated period with
the approval of the Shareholders of the Company by ordinary resolution in general meeting and of
any relevant authorities which may then be required.
14.2 The Plan may be terminated at any time by the Administration Committee and by resolution of the
Company in general meeting, subject to all relevant approvals which may be required and if the
Plan is so terminated, no further Awards shall be granted by the Company hereunder.
14.3 The termination of the Plan shall not affect Awards which have been granted, whether such Awards
have been Released (whether fully or partially) or not.
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15.
ANNUAL REPORT DISCLOSURE
The Company shall make the following disclosures in its annual report to Shareholders for the
duration of the Plan:
(a)
the names of the members of the Administration Committee;
(b)
information as required in the table below for the following Participants:
(i)
Participants who are Directors;
(ii)
Participants who are Controlling Shareholders and their Associates; and
(iii)
Participants, other than those in (i) and (ii) above, who receive Awards comprising
Shares representing 5.0% or more of the aggregate of:
(1)
total number of New Shares available under the Plan; and
(2)
the total number of existing Shares purchased for delivery of Released Awards
under the Plan.
Name of
Participant
(c)
Number of New
Shares allotted
pursuant to
Release of
Awards under
the Plan during
financial year
under review
(including terms)
Number of
existing Shares
purchased for
delivery pursuant
to Release of
Awards under
the Plan during
financial year
under review
(including terms)
Aggregate
number of New
Shares allotted
and existing
Shares
purchased
for delivery since
commencement
of the Plan to
end of financial
year under review
Aggregate
number of Shares
comprised un
Awards which
have not been
Released as at
the end of the
financial year
under review
in relation to the Plan, the following particulars:
(i)
the aggregate number of Shares comprised in Awards granted since the
commencement of the Plan to the end of the financial year under review;
(ii)
the aggregate number of Shares comprised in Awards which have Vested during the
financial year under review and in respect of such Awards, the proportion of:
(1)
New Shares issued; and
(2)
where applicable, existing Shares purchased, including the range of prices at
which such Shares have been purchased,
upon the Vesting of Released Awards; and
(iii)
(d)
the aggregate number of Shares comprised in Awards which have not been Released
as at the end of the financial year under review.
If any of the disclosures above in the foregoing of this Rule 15 is not applicable, an
appropriate negative statement will be included in the annual report.
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16.
ABSTENTION FROM VOTING
Participants who are Shareholders are to abstain from voting on any Shareholders’ resolution
relating to the Plan. Participants may act as proxies of Shareholders of the Company in respect of
the votes of such Shareholders in relation to any such resolution provided that specific instructions
have been given in the proxy forms on how the votes are to be cast in respect of the resolution.
17.
TAXES, COSTS AND EXPENSES OF THE PLAN
17.1 Notwithstanding anything herein, each Participant shall be responsible for all fees of CDP relating
to or in connection with the issue and allotment or transfer of any Shares pursuant to the Release
of any Award in CDP’s name, the deposit of share certificate(s) with CDP, the Participant’s
securities account with CDP, or the Participant’s securities sub-account with a CDP Depository
Agent.
17.2 The Participants shall be responsible for obtaining any governmental or other official consent that
may be required by any country or jurisdiction in order to permit the grant or Vesting of the relevant
Award. All taxes (including income tax) arising from the grant or Vesting of any Award under the
Plan shall be borne by that Participant. The Company shall not be responsible for any failure by the
Participant to obtain any such consent or for any tax or other liability to which the Participant may
become subject as a result of his participation in the Plan.
18.
DISCLAIMER OF LIABILITY
Notwithstanding any provisions herein contained, the Company, its Directors or employees or the
Administration Committee shall not under any circumstances be held liable for any costs, losses,
expenses liabilities or damages whatsoever and howsoever arising in respect of any matter under
or in connection with the Plan, including but not limited to any delay or failure to issue, or procure
the transfer of, the Shares or to apply for or procure the listing of new Shares on the SGX-ST in
accordance with Rule 7.1(c) (and any other stock exchange on which the Shares are quoted or
listed).
19.
DISPUTES
Any disputes or differences of any nature arising hereunder (other than matters to be confirmed by
the Auditors in accordance with the Plan) shall be referred to the Administration Committee and its
decision shall be final and binding in all respects (including any decisions pertaining to disputes as
to interpretation of the Plan or any Rule, regulation, procedure thereunder or as to any rights under
the Plan).
20.
GOVERNING LAW
The Plan shall be governed by, and construed in accordance with, the laws of the Republic of
Singapore. The Participants, by being granted Awards in accordance with the Plan, and the
Company submit to the exclusive jurisdiction of the courts of the Republic of Singapore.
H-13

Cogent IPO Gatefold.indd - Cogent Holdings Limited

Transcription

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