DEFINING DESIGN
QUALITY
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2.4 Source of Funds
The Companies Act permits the Company to purchase or acquire Shares out of its capital and/or distributable
profits, provided that:
(a)
the Company is able to pay its debts in full at the time it purchases or acquires the Shares and will be
able to pay its debts as they fall due in the normal course of business in the 12 months immediately
following the purchase or acquisition; and
(b)
the value of the Company’s assets is not less than the value of its liabilities (including contingent
liabilities), and will not become less than the value of its liabilities (including contingent liabilities) after
the purchase or acquisition of Shares.
The Company intends to use internal sources of funds, or a combination of internal resources and external
borrowings, to finance its purchase(s) or acquisition(s) of Shares.
2.5 Financial Effects
It is not possible for the Company to realistically calculate or quantify the impact of purchases or acquisitions
that may be made pursuant to the Share Purchase Mandate on the NTA and EPS of the Group, as the resultant
effect will depend on,
inter alia
, the aggregate number of Shares purchased or acquired, the purchase prices
paid for such Shares, whether the purchase or acquisition is made out of capital or profits, whether the Shares
purchased or acquired are held in treasury or cancelled, how the Shares held in treasury are subsequently
dealt with by the Company in accordance with Section 76K of the Companies Act, and the amounts (if any)
borrowed by the Company to fund the purchases or acquisitions.
Where a purchase or an acquisition of Shares is made out of distributable profits, such purchase or acquisition
(including costs incidental to the purchase or acquisition) will correspondingly reduce the amount available
for the distribution of cash dividends by the Company. Where a purchase or an acquisition of Shares is made
out of capital, the amount available for the distribution of cash dividends by the Company will not be reduced.
Where a purchase or an acquisition of Shares is financed by internal resources and/or external borrowings,
there may be an increase in the Group’s gearing ratio, and a decline in the Group’s current ratio and
Shareholders’ funds. The actual impact on the Group’s gearing and current ratios will depend on,
inter alia
,
the number of Shares purchased or acquired and the prices at which the Shares are purchased or acquired.
The Directors do not propose to exercise the Share Purchase Mandate to such an extent that the Group’s
working capital requirements and ability to service its debts would be adversely affected. The purchase(s)
or acquisition(s) of Shares will be effected taking into account,
inter alia
, the Group’s working capital
requirements, availability of financial resources, the Group’s expansion and investment plans and prevailing
market conditions. The Company intends to exercise the Share Purchase Mandate with a view to enhancing
the Group’s NTA per share and/or EPS.
For illustrative purposes only
and on the basis of the following assumptions:
(a)
the purchase or acquisition by the Company of the maximum of 19,455,326 Shares (representing 10%
of the issued Shares (excluding treasury shares) as at the Latest Practicable Date) was made on 1
January 2014;
(b)
in the case of Market Purchases, the Company purchased or acquired Shares at the Maximum Price
of S$1.029 for each Share (being 105% of the Average Closing Price as at the Latest Practicable Date),
and in the case of Off-Market Purchases, the Company purchased or acquired Shares at the Maximum
Price of S$1.176 for each Share (being 120% of the Highest Last Dealt Price as at the Latest Practicable
Date);
(c)
the purchase or acquisition of Shares by the Company, which required funds amounting to, in the
case of Market Purchases, S$20,019,530, and in the case of Off-Market Purchases, S$22,879,463,
was financed entirely using internal sources of funds, and the Company received dividends from its
subsidiaries to finance the purchase or acquisition;
(d)
the Singapore corporate tax rate applied was 17%; and
(e)
the cash reserves applied by the Group to pay for the purchase or acquisition of Shares, would
otherwise have earned negligible return,
the financial effects of purchases or acquisitions of Shares by the Company pursuant to the Share Purchase
Mandate on the audited financial statements of the Company and the Group for FY2014 are set out below:
Letter To Shareholders
