EGM Circular DD 10 October-10

CIRCULAR DATED 10 OCTOBER 2011 This Circular is issued by C.K.
Tang Limited and is important as it contains the recommendation of the Independent Directors (as defined herein) of C.K. Tang Limited and the advice of CIMB Bank Berhad, Singapore Branch to the Independent Directors of C.K. Tang Limited. This Circular requires your immediate attention. Please read it carefully. If you are in any doubt in relation to this Circular, the Selective Capital Reduction (as defined herein) or as to the action that you should take, you should consult your stockbroker, bank manager, solicitor or other professional adviser immediately. If you have sold or transferred all your issued and fully paid-up ordinary shares in C.K. Tang Limited, you should immediately forward this Circular together with the Notice of Extraordinary General Meeting and the attached proxy form to the purchaser or transferee or to the bank, stockbroker or agent through whom you effected the sale or transfer, for onward transmission to the purchaser or transferee. This Circular shall not be construed as, may not be used for the purposes of, and does not constitute a notice or proposal or advertisement or an offer or invitation or solicitation in any jurisdiction or in any circumstance in which such a notice or proposal or advertisement or an offer or invitation or solicitation is unlawful or not authorised, or to any person to whom it is unlawful to make such a notice or proposal or advertisement or an offer or invitation or solicitation.
C.K. TANG LIMITED

(Incorporated in Singapore) (Company Registration No.: 196100023H)
CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED SELECTIVE CAPITAL REDUCTION BY C.K. TANG LIMITED PURSUANT TO THE COMPANIES ACT, CHAPTER 50 OF SINGAPORE Independent Financial Adviser to the Independent Directors of C.K. Tang Limited
CIMB Bank Berhad

Singapore Branch
(13491-P)
(Incorporated in Malaysia)
IMPORTANT DATES AND TIMES Last date and time for lodgement of Proxy Form Date and time of Extraordinary General Meeting Venue of Extraordinary General Meeting : : : 25 October 2011 at 9.30 a.m. 27 October 2011 at 9.30 a.m. RELC International Hotel 30 Orange Grove Road Level 5 (Room 507) Singapore 258352
TABLE OF CONTENTS
CONTENTS 1. 2. 3. 4. 5. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SELECTIVE CAPITAL REDUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONFIRMATION OF FINANCIAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RATIONALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TU3 LLPS INTENTIONS FOR THE COMPANY AND NO RIGHT OF COMPULSORY ACQUISITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SHAREHOLDERS APPROVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ADMINISTRATIVE PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXEMPTIONS BY THE SIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ADVICE OF THE IFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PAGE 7 8 9 9
10 11 11 12 12 14 15 15 15 15 17
6. 7. 8. 9.
10. INDEPENDENCE AND RECOMMENDATION OF THE DIRECTORS . . . . . . . . . . . . . . 11. EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. ACTION TO BE TAKEN BY SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. INFORMATION RELATING TO CPFIS INVESTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 14. RESPONSIBILITY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX 1 LETTER FROM TU3 LLP DATED 8 SEPTEMBER 2011 . . . . . . . . . . . . . . APPENDIX 2 REPORT OF THE FA IN CONNECTION WITH THE SELECTIVE CAPITAL REDUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX 3 VALUATION SUMMARY ISSUED BY JONES LANG LASALLE PROPERTY CONSULTANTS PTE LTD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX 4 VALUATION REPORT ISSUED BY JONES LANG LASALLE PROPERTY CONSULTANTS PTE LTD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX 5 LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS OF C.K. TANG LIMITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX 6 ADDITIONAL INFORMATION ON TU3 LLP . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX 7 ADDITIONAL INFORMATION ON THE COMPANY . . . . . . . . . . . . . . . . . . APPENDIX 8 GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX 9 AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE GROUP FOR FY 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTICE OF EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
27
34
57 82 86 93
108 153
DEFINITIONS
Except where the context otherwise requires, the following definitions apply throughout this Circular: Articles Books Closure Date : : Articles of Association of the Company The date (to be determined by the Company) on which the Transfer Books and the Register of Members are closed for the purposes of the Selective Capital Reduction Shall have the meaning ascribed to it in paragraph 2.4 of this Circular This circular to Shareholders issued by the Company in relation to the proposed Selective Capital Reduction The Singapore Code on Take-overs and Mergers The Companies Act, Chapter 50 of Singapore C.K. Tang Limited Shall have the meaning ascribed to it in paragraph 6.1 of Appendix 6 to this Circular Parties acting or deemed to be acting in concert with TU3 LLP in connection with the Selective Capital Reduction High Court of the Republic of Singapore The Central Provident Fund Agent banks included under the CPFIS CPF Investment Scheme Investors who purchased Shares using their CPF savings under the CPFIS The voluntary delisting of the Company from the Official List of the SGX-ST under Rules 1307 and 1309 of the Listing Manual Shall have the meaning ascribed to it in paragraph 1.3 of this Circular Shall have the meaning ascribed to it in paragraph 1.3 of this Circular The portions of the property at 310/320 Orchard Road Singapore 238864/238865, which are owned by the Group and are the subject of the Valuation Summary and Valuation Report, as set out in Appendices 3 and 4 to this Circular The directors of the Company (including the Independent Directors) as at the Latest Practicable Date
Cash Distribution
Circular
Code Companies Act Company or CKT Company Securities
: : : :
Concert Parties
Court CPF CPF Agent Banks CPFIS CPFIS Investors
: : : : :
Delisting
Delisting Date
Delisting Proposal
Department Store Property
Directors
DEFINITIONS
EGM : Extraordinary general meeting of the Company as adjourned to be held on 27 October 2011, notice of which is set out on page 153 of this Circular, or any adjournment thereof The exit offer made on 31 July 2009 by Oversea-Chinese Banking Corporation Limited, for and on behalf of TU3 LLP, to acquire all the Shares other than those held by TU3 LLP for S$0.83 per Share, conditional upon the approval of the resolution to approve the Delisting PricewaterhouseCoopers Corporate Finance Pte Ltd, the financial adviser to the Company for the Selective Capital Reduction Shall have the meaning ascribed to it in paragraph 2.4(iii) of this Circular Report from the FA in connection with the Selective Capital Reduction Extraordinary general meeting of the Company that was proposed to be held on 15 September 2011 and was subsequently adjourned Notice of extraordinary general meeting of the Company held on 15 September 2011, which was subsequently adjourned Financial year ended or ending (as the case may be) on 31 March of a particular year as stated The Company and its subsidiaries CIMB Bank Berhad, Singapore Branch, the independent financial adviser to the Independent Directors for the Selective Capital Reduction The Directors who consider themselves to be independent for the purposes of making the recommendation to Participating Shareholders in relation to the Selective Capital Reduction, namely, Ernest Seow Teng Peng, Cecil Vivian Richard Wong, Foo Tiang Sooi and Michel Grunberg 3 October 2011, being the latest practicable date prior to the printing of this Circular Letter dated 18 August 2011 sent by the Company to the Shareholders in relation to the proposed Selective Capital Reduction The SGX-ST Listing Manual
Exit Offer
FA or PwCCF
Fair Market Value
FA Report
First EGM
First Notice of EGM
FY
Group IFA or CIMB Bank Berhad
: :
Independent Directors
Latest Practicable Date
Letter
Listing Manual
DEFINITIONS
LLP Act : Limited Liability Partnerships Act, Chapter 163A of Singapore Memorandum of Association of the Company Shall have the meaning ascribed to it in paragraph 1.3 of this Circular 18 August 2011, being the date of the Letter Notice of EGM of the Company to be held on 27 October 2011, a copy of which was enclosed in a letter to Shareholders dated 27 September 2011 Net tangible assets Shall have the meaning ascribed to it in paragraph 2.1 of this Circular The address of each Shareholder as set out in the Register of Members The register of holders of the Shares, as maintained by the Share Registrar Selective capital reduction to be undertaken by the Company pursuant to the Companies Act Singapore Exchange Securities Trading Limited Registered holders of the Shares Boardroom Corporate & Advisory Services Pte. Ltd. Issued and paid-up ordinary shares in the Company Securities Industry Council of Singapore Singapore dollars and cents respectively, being the lawful currency of the Republic of Singapore Tang Holdings Private Limited The transfer books of the Company, as maintained by the Share Registrar Tang UnityTwo LLP, a limited liability partnership registered under the LLP Act Tang UnityThree LLP, a limited liability partnership registered under the LLP Act The unsolicited letter dated 8 September 2011 from TU3 LLP to the Company TWS and UPL
Memorandum Non-Participating Shareholders Notice Date Notice of EGM
: :
: :
NTA Participating Shareholders
: :
Registered Address
Register of Members
Selective Capital Reduction
SGX-ST Shareholders Share Registrar Shares SIC S$ and cents
: : : : : :
Tang Holdings Transfer Books
: :
TU2 LLP
TU3 LLP
TU3 LLP Letter
TU3 LLP Partners
DEFINITIONS
TU3 Securities : Shall have the meaning ascribed to it in paragraph 6.1 of Appendix 7 to this Circular Tang Wee Kit Tang Wee Sung Untien Pte. Ltd. The valuation report dated 3 October 2011 of the Department Store Property from the Valuer setting out, inter alia, their valuation of the Department Store Property which is reproduced in Appendix 4 to this Circular The valuation summary dated 30 June 2011 of the Department Store Property from the Valuer setting out, inter alia, their valuation of the Department Store Property which is reproduced in Appendix 3 to this Circular Jones Lang LaSalle Property Consultants Pte Ltd, the valuer appointed by the Company, in connection with the Selective Capital Reduction, to value the Department Store Property and to issue the Valuation Summary and the Valuation Report Per centum or percentage
TWK TWS UPL Valuation Report
: : : :
Valuation Summary
Valuer
% or per cent.
The headings in this Circular are inserted for convenience only and shall be ignored in construing this Circular. Any discrepancies in the tables in this Circular between the listed amounts and the totals thereof are due to rounding. Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall, where applicable, include corporations. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Companies Act, the Code or any statutory modification thereof and not otherwise defined in this Circular shall, where applicable, have the same meaning assigned to it under the Companies Act, the Code or any statutory modification thereof, as the case may be, unless the context otherwise requires. Any reference to a time of day and date in this Circular is made by reference to Singapore time and date respectively unless otherwise stated.
FORWARD-LOOKING STATEMENTS
All statements other than statements of historical facts included in this Circular are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as expect, anticipate, believe, intend, project, plan, strategy, forecast and similar expressions or future or conditional verbs such as if, will, would, should, could, may and might. These statements reflect the Companys and the Non-Participating Shareholders current expectations, beliefs, hopes, intentions or strategies regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual results may differ materially from those described in such forward-looking statements. Shareholders and investors should not place undue reliance on such forward-looking statements, and neither the Company, the Non-Participating Shareholders, the Valuer, the FA nor the IFA undertakes any obligation to update publicly or revise any forward-looking statements, subject to compliance with all applicable laws and regulations and/or any other regulatory or supervisory body or agency.
LETTER TO SHAREHOLDERS C.K. TANG LIMITED

Directors: Ernest Seow Teng Peng Cecil Vivian Richard Wong Foo Tiang Sooi Michel Grunberg Soh Yew Hock 10 October 2011 To: The Shareholders of C.K. Tang Limited
Registered Office: 310 Orchard Road Singapore 238864
Dear Sir/Madam PROPOSED SELECTIVE CAPITAL REDUCTION BY C.K. TANG LIMITED PURSUANT TO THE COMPANIES ACT 1. 1.1 INTRODUCTION First Notice of EGM and Adjournment. On 18 August 2011, the Company issued a First Notice of EGM to the Shareholders to seek the approval of Shareholders for the proposed Selective Capital Reduction to be undertaken by the Company. On 13 September 2011, two days before the First EGM, the Company was directed by the SIC to ask for an adjournment of the First EGM for the purpose of appointing an independent financial adviser to opine on the proposed Selective Capital Reduction. In line with this direction, the Directors proposed and the Shareholders approved that the First EGM be adjourned to 9.30 a.m. on 27 October 2011. Circular. The purpose of this Circular is to provide Shareholders with relevant information as at the Latest Practicable Date pertaining to the Company and to set out the advice of the IFA to the Independent Directors and the recommendation of the Independent Directors with regard to the proposed Selective Capital Reduction to be tabled at the EGM. This Circular contains all information in relation to the proposed Selective Capital Reduction as set out in the Letter. Background. On 8 May 2009, the Company and TU3 LLP jointly announced that the Company had received a delisting proposal (Delisting Proposal) from TU3 LLP to seek the voluntary delisting of the Company from the Official List of the SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual (Delisting). Under the Delisting Proposal, Oversea-Chinese Banking Corporation Limited, for and on behalf of TU3 LLP, made an exit offer (Exit Offer) to acquire all the Shares other than those held by TU3 LLP for S$0.83 per Share, conditional upon the approval of the resolution to approve the Delisting. The Exit Offer was made on 24 June 2009, and on 31 July 2009, the Shareholders voted in favour of the resolution to approve the Delisting and accordingly, the Exit Offer became unconditional. The Exit Offer closed on 14 August 2009 and the Company was delisted from the Official List of the SGX-ST on 24 August 2009 (Delisting Date). As at the Latest Practicable Date, TU3 LLP, TU2 LLP, Kerith Holdings LLP and TWK (the Non-Participating Shareholders) own or control
1.2
1.3
LETTER TO SHAREHOLDERS
232,601,053 Shares, representing approximately 98.2 per cent. of the total number of Shares1 and the remaining Shares representing 1.8 per cent. of the total number of Shares are held by other Shareholders. 2. 2.1 SELECTIVE CAPITAL REDUCTION Realise Value of Shares. The Company proposes to implement the Selective Capital Reduction and cancel all the Shares held by the Shareholders, except those held by the Non-Participating Shareholders, to provide the remaining Shareholders (the Participating Shareholders) with an avenue to realise the value of their Shares following the Delisting. Reduce Share Capital. The Selective Capital Reduction will involve reducing the share capital of the Company from S$47,848,113.86 comprising 236,984,226 Shares to S$42,149,988.96 comprising 232,601,053 Shares, representing a reduction of the issued share capital of the Company by approximately 1.8 per cent. Process. (i) The Selective Capital Reduction will be effected by:
2.2
2.3
cancelling the amount of S$5,698,124.90 constituting part of the total paid-up share capital of the Company held by the Participating Shareholders; and cancelling 4,383,173 of the said Shares constituting part of the total issued share capital of the Company held by the Participating Shareholders.
(ii)
2.4
Cash Distribution. The aggregate sum of S$5,698,124.90 arising from the Selective Capital Reduction (the Cash Distribution) will be returned to the Participating Shareholders, on the basis of S$1.30 for each Share held by each Participating Shareholder that is cancelled as a result of the Selective Capital Reduction. The price of S$1.30 for each Share so cancelled represents: (i) a premium of 44.4 per cent. over S$0.90 per Share which was the highest price per Share transacted on the SGX-ST in the 10-year period prior to the Delisting Date; a premium of 56.6 per cent. over S$0.83 per Share which was the last transacted price on the SGX-ST on 6 August 2009; a premium of 15.0 per cent. over the fair market value per Share of S$1.13 as set out in the FA Report (Fair Market Value); and
(ii)
(iii)
(iv) a premium of 27.5 per cent. over the book value per Share of S$1.02 as at 31 March 2011. Participating Shareholders will be entitled to any dividends declared, paid or made by the Company the record date for which is on or before the Books Closure Date.
Unless otherwise stated, references in this Circular to percentages of total number of Shares are based on a total of 236,984,226 Shares, which is the total number of issued and paid-up Shares.
2.5 TU3 LLP Proposal. On 8 September 2011, TU3 LLP wrote to and informed the Company that it will pay another S$0.70 for each Share held by each Participating Shareholder that is cancelled as a result of the Selective Capital Reduction, bringing the aggregate payment of each such cancelled Share to S$2.00. The TU3 LLP Letter was sent to all Shareholders and provides that such payment is conditional upon the Selective Capital Reduction becoming effective. The TU3 LLP Letter is set out in Appendix 1 to this Circular. The aggregate price of S$2.00 for each Share so cancelled represents: (i) a premium of 122.2 per cent. over S$0.90 per Share which was the highest transacted price on the SGX-ST in the 10-year period before the Delisting Date; a premium of 141.0 per cent. over $0.83 per Share which was the last transacted price on the SGX-ST on 6 August 2009; a premium of 77.0 per cent. over the Fair Market Value; and
(ii)
(iii)
(iv) a premium of 96.1 per cent. over the book value per Share of S$1.02 as at 31 March 2011. 3. CONFIRMATION OF FINANCIAL RESOURCES Oversea-Chinese Banking Corporation Limited confirms that sufficient financial resources are available to (i) TU3 LLP to satisfy payment of the sum of S$3,068,221.10 representing the total sum that TU3 LLP will pay to all Participating Shareholders if the Selective Capital Reduction is effective in accordance with the Companies Act (the TU3 LLP Payment) and (ii) the Company to pay the Cash Distribution if the Selective Capital Reduction becomes effective. The Company confirms that it has received the TU3 LLP Payment, and that it is authorised to pay, on behalf of TU3 LLP, to all Participating Shareholders S$0.70 for each Share cancelled pursuant to the Selective Capital Reduction. The Directors are of the opinion that the financial resources available to the Company and the Companys share capital base following the Selective Capital Reduction will be sufficient for the foreseeable near-term operating needs of the Company. 4. RATIONALE The Selective Capital Reduction is an internal corporate exercise that is proposed by the Company for the Participating Shareholders. The Selective Capital Reduction would enable the Company to return the aggregate sum of S$5,698,124.90 to the Participating Shareholders in respect of the cancellation of the Shares held by them. Following the Delisting, it has been difficult for the Participating Shareholders to realise their investment in the Shares given the lack of a public market for the Shares. With the Selective Capital Reduction, the Participating Shareholders will have an opportunity to realise the value of their Shares. If the Participating Shareholders do not approve the Selective Capital Reduction, there is no guarantee another opportunity will arise in the future for them to realise the value of their Shares.
PwCCF has been appointed the financial adviser for the Selective Capital Reduction. The FA Report is set out in Appendix 2 to this Circular. The FA Report, amongst other things, sets out the analysis for the valuation of the Group. In the analysis set out in the FA Report, the FA has relied on information contained in the Valuation Summary issued by Jones Lang LaSalle Property Consultants Pte Ltd as set out in Appendix 3 to this Circular. Based on the analysis set out in the FA Report, including the qualifications made therein, the FA is of the opinion that the Fair Market Value per Share is S$1.13. Although the Fair Market Value per Share is S$1.13, there is no guarantee that the Fair Market Value will not change as it is dependent on the Companys future performance and future economic conditions in Singapore, as well as the impact of the uncertainties surrounding the current global economic climate. The Non-Participating Shareholders have confirmed that they have no plans for the redevelopment of the Department Store Property in the foreseeable future. The Cash Distribution of S$1.30 per Share represents: (i) (ii) an excess of S$0.17 per Share over the Fair Market Value; and a premium of 15.0 per cent. over the Fair Market Value.
The Cash Distribution of S$1.30 per Share includes a premium of S$0.17 per Share over and above the Fair Market Value which is intended to recognise the cost savings and elimination of the administrative burden borne by maintaining the status of a public company and having numerous minority shareholders. It is also to provide a gesture of goodwill to the Participating Shareholders. 5. TU3 LLPS INTENTIONS FOR THE COMPANY AND NO RIGHT OF COMPULSORY ACQUISITION The Companys retail business was founded by the late Mr. Tang Choon Keng, the father of TWS and TWK, and has been part of the familys business for more than half a century. The Company has a rich history and tradition as Singapores premier department store with its flagship store in the heart of Singapores most famous shopping district. In view of the above, TWS and TWK currently have no intention of (i) discontinuing the traditional retail business started by their father, (ii) disposing of the Department Store Property, (iii) redeveloping the Department Store Property, or (iv) entering into any arrangements for a real estate investment trust in respect of the Department Store Property. TU3 LLP currently has no intention to (i) propose any major changes to the businesses of the Company, (ii) redeploy the fixed assets of the Company, or (iii) discontinue the employment of any of the employees of the Group, other than in the ordinary course of business. TU3 LLP is not entitled to, and will not avail itself of, the rights of compulsory acquisition under Section 215 of the Companies Act. It should also be noted that Participating Shareholders will also have no right and are not entitled to require TU3 LLP to acquire their Shares under Section 215(3) of the Companies Act.
10
6. SHAREHOLDERS APPROVAL Shareholders approval is being sought for the proposed Selective Capital Reduction in accordance with the provisions of the Companies Act. Pursuant to Section 78G of the Companies Act, the Selective Capital Reduction requires (i) a special resolution2 to be passed by the Shareholders approving the Selective Capital Reduction and (ii) the approval and confirmation by the Court of the Selective Capital Reduction. A copy of the Order of Court approving the Selective Capital Reduction will subsequently be lodged with the Registrar of Companies of Singapore (Registrar). The Non-Participating Shareholders and their concert parties will not be voting on the special resolution relating to the Selective Capital Reduction at the EGM. 7. ADMINISTRATIVE PROCEDURES The following paragraphs set out the administrative procedures for the Selective Capital Reduction. 7.1 Books Closure Date. Participating Shareholders registered in the Register of Members as at the Books Closure Date will be entitled to receive S$1.30 for each Share registered in their respective names as at the Books Closure Date. Settlement of Cash Distribution. Subject to the conditions in paragraph 6 above being satisfied, on the lodgement of a copy of the Order of Court confirming the Selective Capital Reduction together with the other documents prescribed under the Companies Act with the Registrar, the special resolution for the Selective Capital Reduction shall take effect, and payment of the Cash Distribution pursuant to the Selective Capital Reduction will be made as set out below. Participating Shareholders whose Shares are registered in the Register of Members as at the Books Closure Date will have the cheques for payment of their entitlements to the Cash Distribution despatched to them by ordinary post at their own risk at the Registered Addresses. A Participating Shareholder who wishes to record any change in his Registered Address should notify the Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 of such change before the Books Closure Date. 7.3 Settlement of TU3 LLP Payment. The Company has received the TU3 LLP Payment and has been authorised by TU3 LLP to utilise that amount to pay, on TU3 LLPs behalf, to all Participating Shareholders S$0.70 for each Share cancelled pursuant to the Selective Capital Reduction. Participating Shareholders whose Shares are registered in the Register of Members as at the Books Closure Date will have the cheques for payment of their entitlements to the TU3 LLP Payment despatched to them by ordinary post at their own risk at the Registered Addresses. A Participating Shareholder who wishes to record any change in his Registered Address should notify the Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 of such change before the Books Closure Date.
7.2
A special resolution requires the approval by a majority of not less than 75% of Shareholders present and voting at the EGM.
11
8. 8.1 EXEMPTIONS BY THE SIC Exemptions by the SIC. In its letter dated 4 October 2011, the SIC exempted the proposed Selective Capital Reduction from Rules 14, 15, 16, 17, 20.1, 21, 22, 28, 29 and 33.2 and Note 1(b) on Rule 19 of the Code, subject to the following conditions: (i) the Non-Participating Shareholders and their concert parties abstain from voting on the proposed Selective Capital Reduction; the Directors who are acting in concert with the Non-Participating Shareholders abstain from making a recommendation on the proposed Selective Capital Reduction to the Shareholders; and the Company appoints an independent financial adviser to advise the Shareholders on the proposed Selective Capital Reduction.
(ii)
(iii)
8.2
Independence of Director. In its letter dated 4 October 2011, the SIC ruled that Mr. Soh Yew Hock is exempted from the requirement to make a recommendation to Participating Shareholders on the Selective Capital Reduction as he faces a conflict of interest in doing so being a party acting in concert with the Non-Participating Shareholders. Mr. Soh is a non-executive director of Tang Holdings which is majority owned (indirectly) and controlled by TWK. TWK is a Non-Participating Shareholder for the purposes of the Selective Capital Reduction. Tang Holdings is therefore a party acting in concert with the Non-Participating Shareholders. Accordingly, Mr. Soh as a director of Tang Holdings is presumed to be a party acting in concert with the Non-Participating Shareholders and would face a conflict of interest that would render him inappropriate to join the remaining Directors in making a recommendation to Participating Shareholders on the Selective Capital Reduction. Scope of Responsibility. In view of the relationships between Mr. Soh Yew Hock and Tang Holdings and between Tang Holdings and TWK as set out in the paragraph above, and as Mr. Soh faces a conflict of interest with respect to the requirement to make a recommendation to Participating Shareholders on the Selective Capital Reduction, Mr. Soh has been exempted by the SIC from the requirement under the Code to make a recommendation to the Participating Shareholders on the Selective Capital Reduction. However, Mr. Soh remains responsible for the accuracy of the facts stated or opinions expressed in documents and advertisements issued by, or on behalf of, the Company in connection with the Selective Capital Reduction. ADVICE OF THE IFA IFA. CIMB Bank Berhad, Singapore Branch has been appointed as the independent financial adviser to advise the Independent Directors in respect of the Selective Capital Reduction. Shareholders should consider carefully the advice of the IFA to the Independent Directors and the recommendation of the Independent Directors before deciding whether to vote in favour of the Selective Capital Reduction at the EGM. The IFAs advice is set out in its letter dated 7 October 2011 which is reproduced in Appendix 5 to this Circular (the IFA Letter). Key Factors Taken into Consideration by the IFA. In arriving at its advice, the IFA has relied on the following key considerations as set out in section 6 of the IFA Letter and reproduced in italics below. The considerations set out below should be considered and read in conjunction with, and in the context of, the full text of the IFA Letter. Unless otherwise defined or the context otherwise requires, all capitalised terms below shall have the same meanings as defined in the IFA Letter.
8.3
9. 9.1
9.2
12
In arriving at our advice to the Independent Directors on the Selective Capital Reduction, we have considered, inter alia, the following factors which should be considered and read in the context of the full text of this Letter: (i) The P/E, EV/EBITDA and P/NTA multiples as implied by the SCR Consideration is significantly higher than the mean and median of these multiples of the Comparable Companies (on a historical basis); The SCR Consideration represents a premium of 96.2% over the NTA of the Group as at FY2011, and represents a premium of 96.2% and 104.7% respectively over the Revalued NTA of the Group on an existing use basis and on a redevelopment basis, as at FY2011; The implied EV/EBITDA and P/E multiples of the Company based on the SCR Consideration is significantly higher than the range of multiples of the target companies based on the Precedent Departmental Store Transactions;
(ii)
(iii)
(iv) The implied EV/Sales multiple of the Company based on the SCR Consideration is higher than the EV/Sales of the target companies based on the Precedent Departmental Store Transactions; (v) The implied P/NTA multiple of the Company based on the SCR Consideration is higher than the mean and median P/NTA of the target companies based on the Precedent Departmental Store Transactions;
(vi) The P/NTA and P/RNTA multiples as implied by the SCR Consideration is higher than the P/NTA and P/RNTA multiples of the target companies based on the Precedent Real Estate Transactions; (vii) The SCR Consideration represents a significant premium over all historical VWAP benchmark of the Shares in the preceding 10 years prior to the Delisting Date, and up until the announcement of the Selective Capital Reduction; (viii) The SCR Consideration represents a significant premium of 140.96% over the Delisting Offer price; (ix) The SCR Consideration represents a premium of 122.22% over the highest closing price of the Shares of S$0.900 over the last 10 years prior to the Delisting Offer; (x) The EV/Sales, P/E, P/NTA and P/RNTA multiples as implied by the SCR Consideration is more favourable when compared with these multiples as implied by the Delisting Offer;
(xi) The premia implied by the SCR Consideration represents a significant premium to the average premium implied by the Precedent Delistings; (xii) No dividend has been paid by the Company in the last 5 financial years; (xiii) The Offeror already has statutory control of the Company as it owns, or controls, directly and indirectly, 98.2% of the Shares; (xiv) The Offeror does not intend to dispose of the Department Store Property, or redevelop the Department Store Property;
13
(xv) The Selective Capital Reduction is currently the only offer available to Participating Shareholders; and (xvi) The Shares are illiquid as the Shares has been delisted from the SGX-ST subsequent to the Delisting Offer in August 2009, and the Offeror has stated that the Selective Capital Reduction will be the final offer made by the Offeror in respect of the Shares, and that no further offers will be made by the Offeror; 9.3 Advice of the IFA. Based on the IFAs assessment of the financial terms of the Selective Capital Reduction from a financial point of view, the IFA has advised the Independent Directors to make the following recommendations to the Participating Shareholders in relation to the Selective Capital Reduction, as set out in section 6 of the IFA Letter and reproduced in italics below. The recommendations set out below should be considered and read in conjunction with, and in the context of, the full text of the IFA Letter. Unless otherwise defined or the context otherwise requires, all capitalised terms below shall have the same meanings as defined in the IFA Letter. Based upon, and having considered, inter alia, the factors described above and the information that has been made available to us at the Latest Practicable Date, we are of the opinion that as of the Latest Practicable date, the Selective Capital Reduction is on balance, fair and reasonable from a financial point of view. Accordingly, we would advise the Independent Directors to recommend that, in the absence of a superior offer, Participating Shareholders should vote in favour of the Selective Capital Reduction. We recommend that the Independent Directors advise the Participating Shareholders of our opinion in this Circular. We would also advise the Independent Directors to caution the Participating Shareholders that they should not rely on our advice to the Independent Directors as the sole basis for deciding whether or not to vote in favour of the Selective Capital Reduction. In rendering the above advice, we have not had regard to the specific investment objectives, financial situation, tax position or particular needs and constraints of any individual Shareholder. As each Shareholder would have different investment objectives and profiles, we would advise that any individual Shareholder who may require specific advice in relation to his investment objectives or portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. Shareholders should note that the opinion and advice of CIMB should not be relied upon by any Shareholder as the sole basis for deciding whether or not to vote in favour of the Selective Capital Reduction. 10. 10.1 INDEPENDENCE AND RECOMMENDATION OF THE DIRECTORS Independence. All Directors, save for Mr. Soh Yew Hock, consider themselves to be independent for the purpose of making recommendations to the Participating Shareholders in respect of the Selective Capital Reduction. Recommendation of Independent Directors. The Independent Directors, having considered carefully the terms of the Selective Capital Reduction and the advice given by the IFA, concur with the advice given by the IFA in respect of the Selective Capital Reduction as extracted in paragraph 9 above.
10.2
14
The Independent Directors are of the opinion that the Selective Capital Reduction is in the best interests of the Company and accordingly recommend that the Participating Shareholders vote in favour of the special resolution relating to the Selective Capital Reduction at the EGM. SHAREHOLDERS ARE ADVISED TO READ THE IFA LETTER SET OUT IN APPENDIX 5 TO THIS CIRCULAR CAREFULLY. 10.3 No Regard to Specific Objectives. In making their recommendation, the Independent Directors have not had regard to the specific objectives, financial situation, tax status, risk profiles or unique needs and constraints of any individual Shareholder. Accordingly, the Independent Directors recommend that any individual Shareholder who may require advice in the context of his specific investment portfolio should consult his stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. EXTRAORDINARY GENERAL MEETING The EGM will be held at RELC International Hotel, 30 Orange Grove Road, Level 5 (Room 507), Singapore 258352 on 27 October 2011 at 9.30 a.m., for the purpose of considering and, if thought fit, passing the special resolution set out in the Notice of EGM. 12. ACTION TO BE TAKEN BY SHAREHOLDERS You will find enclosed with this Circular, the Notice of EGM and Proxy Form in relation to the EGM. If you are unable to attend the EGM and wish to appoint a proxy to attend and vote on your behalf, you should complete, sign and return the Proxy Form in accordance with the instructions printed thereon as soon as possible and, in any event, so as to reach the registered office of the Company at 310 Orchard Road, Singapore 238864 no later than forty-eight (48) hours before the time fixed for the EGM. Your completion and return of the Proxy Form will not prevent you from attending and voting in person at the EGM if you so wish, in place of your proxy. If you have previously returned a duly executed Proxy Form to the Company prior to the adjourned EGM held on 15 September 2011, you do not need to re-submit the Proxy Form enclosed in this Circular. However, if you wish to re-submit your Proxy Form, you should write to the Company expressly renouncing and withdrawing your previously submitted Proxy Form, and submitting a new Proxy Form in its place. A copy of this Circular is available on the website of the Company at http://www.tangs.com. Please refer to the Companys website for further announcements in relation to the Selective Capital Reduction. 13. INFORMATION RELATING TO CPFIS INVESTORS CPFIS Investors who wish to attend and vote at the EGM are advised to consult their respective CPF Agent Banks should they require further information and if they are in any doubt as to the action they should take, CPFIS Investors should seek independent professional advice. 14. RESPONSIBILITY STATEMENT The Directors (including any who may have delegated detailed supervision of this Circular) have taken all reasonable care to ensure that the facts stated and all opinions expressed in this Circular (other than the FA Report at Appendix 2 to this Circular for which the FA has taken 15
11.
responsibility, the Valuation Summary and the Valuation Report at Appendices 3 and 4 to this Circular for which the Valuer has taken responsibility, the IFA Letter at Appendix 5 to this Circular for which the IFA has taken responsibility, and paragraph 5 and Appendices 1 and 6 to this Circular for which TU3 LLP has taken responsibility) are fair and accurate and that no material facts have been omitted from this Circular, and they jointly and severally accept responsibility accordingly. Where any information has been extracted or reproduced from published or publicly available sources (other than the FA Report at Appendix 2 to this Circular for which the FA has taken responsibility, the Valuation Summary and the Valuation Report at Appendices 3 and 4 to this Circular for which the Valuer has taken responsibility, the IFA Letter at Appendix 5 to this Circular for which the IFA has taken responsibility, and paragraph 5 and Appendices 1 and 6 to this Circular for which TU3 LLP has taken responsibility), the sole responsibility of the Directors has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in this Circular. In respect of the IFA Letter, the sole responsibility of the Directors has been to ensure that the facts stated with respect to the Group are fair and accurate.
Yours faithfully For and on behalf of the Board of Directors of C.K. TANG LIMITED
Ernest Seow Teng Peng Director
16
APPENDIX 1 LETTER FROM TU3 LLP DATED 8 SEPTEMBER 2011
17
APPENDIX 2 REPORT OF THE FA IN CONNECTION WITH THE SELECTIVE CAPITAL REDUCTION
18 August 2011 C.K. Tang Limited 310 Orchard Road Singapore 238864 Dear Sirs Report in connection with the Proposed Selective Capital Reduction to be undertaken by C.K. Tang Limited Group (CK Tang)
1.
INTRODUCTION CK Tang was delisted from the Singapore Exchange on 14 August 2009 through TU3 LLP, Tang UnityTwo LLP, Kerith Holdings LLP and Tang Wee Kit (the Non-Participating Shareholders) owning approximately 97.8% of the total number of shares. Subsequently, some of the remaining minority shareholders had sold their shares to the Non-Participating Shareholders, resulting in the Non-Participating Shareholders holding approximately 98.2% in CK Tang. Other than the Non-Participating Shareholders, there are currently approximately another 472 registered shareholders (the Participating Shareholders). To provide an opportunity for the Participating Shareholders to realise their investments in CK Tang, the Company is proposing to undertake a selective capital reduction exercise with the view to cancel all the shares held by the Participating Shareholders (Selective Capital Reduction), should the Participating Shareholders approve the resolution to be tabled at the EGM. It is in this context that PricewaterhouseCoopers Corporate Finance Pte Ltd (PwCCF) has been appointed to assist CK Tang to determine the underlying value of CK Tang.
2.
TERMS OF REFERENCE This valuation report (Report) has been prepared solely for the Board of CK Tang in connection with the proposed Selective Capital Reduction and is not intended for any legal or court proceedings. PwCCF will estimate the Fair Market Value of CK Tangs retail businesses (Retail Business) so as to determine the sum-of-the-parts valuation of CK Tang as a group, inclusive of the market value of the department store property (Department Store Property). For the Department Store Property, we have been furnished with a valuation summary of the Department Store Property (Valuation Summary) held by CK Tang. With respect to the Valuation Summary, we are not experts and do not hold ourselves to be experts in the evaluation or appraisal of the Department Store Property and have relied solely upon the Valuation 18
Summary prepared by the Jones Lang LaSalle Property Consultants Pte Ltd (the Independent Property Valuer). The Valuation Summary prepared by the Independent Property Valuer is set out in Appendix B of the Letter. We have held discussions with the Directors and the management of the Company and have examined publicly available information collated by us as well as information, written and verbal, provided to us by the Directors and the management of the Company and its professional advisers. We have not independently verified such information, whether written or verbal, and accordingly we cannot and do not represent or warrant, expressly or impliedly, and do not accept any responsibility for the accuracy, completeness or adequacy of such information. We have nevertheless made enquiries and exercised our judgment as we deemed necessary or appropriate in assessing such information and are not aware of any reason to doubt the reliability of the information. The financial information and key assumptions to our valuation analysis contained in this Report remains the responsibility of management. We have relied on the information provided by the management but we have not and are not required to carry out an audit or review of the financial statement or forecast, or any component of the financial statements or forecast of CK Tang. We have also not made an independent evaluation or appraisal of the assets and liabilities of CK Tang. 3. SUMMARY OF THE INDICATIVE VALUATION OF CK TANG BASED ON SUM-OF-THEPARTS ANALYSIS To determine the value of CK Tang, PwCCF has estimated the Fair Market Value of CK Tangs retail businesses and relied on the market value of the Department Store Property as appraised by the Independent Property Valuer. We set out below the indicative valuation of CK Tang as follows:
S$ million Enterprise Value (EV) of Retail Business Market Value of Department Store Property Enterprise Value Less: Net Debt Less: Minority Interest Equity Value of CK Tang No. of Shares Outstanding (million) Fair Market Value Per Share (S$) 8.2 360.0 368.2 100.9 (0.003) 267.3 236.99 1.13 Reference Refer to Section 4 Refer to Section 5
As computed above, the Fair Market Value Per Share based on the sum-of-the-parts valuation of CK Tang is S$1.13. 19
4.
VALUATION APPROACH OF THE RETAIL BUSINESS The valuation approach for the Retail Business is its estimated Fair Market Value. Fair Market Value is defined as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arms length transaction. In arriving at our estimation of the Retail Business Fair Market Value, we have relied on the accuracy and completeness of information furnished to us by the management and other professional advisers. As such, we have not carried out any work to verify the accuracy, correctness or completeness of such information. Accordingly, we will not be responsible for the accuracy and completeness of such information. By its nature, valuation work cannot be regarded as an exact science, and the conclusions arrived at in many cases will of necessity be subjective and dependent on the exercise of individual judgement. There is, therefore, no indisputable single value and we normally express our valuation expectation as falling within expected ranges.
4.1
Explanation of the Market Approach Under the Market Approach, the value of the business is determined based on an appropriate capitalisation multiple derived from the current trading multiples of comparable companies and applied to the earnings of a company. The earnings are computed after making adjustments for any non-recurring or extraordinary revenues or costs and only considering those revenues that are likely to be earned in the normal course of business. The market approach entails the following main steps: Determination of an appropriate earnings estimate Estimation of appropriate valuation multiple based on the comparable companies Application of multiple to earnings to determine value, adjusting for any discounts/premia on the valuation.
20
The computed enterprise value range for the Retail Business is as set out below:
S$ million Normalised FY11 EBITDA EV/EBITDA Range Enterprise Value S$2.343 3.5x S$8.2 Reference Refer to Section 4.2 Refer to Section 4.3
4.2
Estimation of FY11 Normalised Earnings In estimating the normalised earnings of CK Tang, we have used the audited results for the financial year ended 31 March 2011 (i.e. FY11). In computing the maintainable earnings, we have adjusted for any non-recurring or exceptional items. In addition, we have noted managements views of the present and future economic and financial environment, expected business strategies and the general market conditions that CK Tang will continue to operate under. These assumptions are significant and could substantially impact our valuation analysis. We have used the earnings before interest, tax, depreciation and amortisation expenses (EBITDA) as the relevant earnings estimate and set out below are the adjustments made to arrive at the FY11 Normalised EBITDA:
S$ million FY11 EBITDA Adjustment for rental expenses Normalised FY11 EBITDA 16.906 -14.563 2.343
4.3
Estimation of Valuation Multiples The Market Approach requires PwCCF to generate a peer set of companies (Comparable Companies) which have been selected based on similarity of business with CK Tang. PwCCF has determined the earnings multiple based on the Comparable Companies. We, however, recognise that the Comparable Companies listed here are not exhaustive and to the best of our knowledge and belief and after discussion with the management of the Company, there is no company listed on the SGX-ST which may be considered directly comparable to CK Tang in terms of composition of business activities, scale of operations, geographical spread of activities, track record, financial performance, future prospects, asset base, risk profile and other relevant criteria. Accordingly, any comparisons made with respect to the Comparable Companies can only serve as an illustrative guide.
21
4.3.1 Analysis of the Comparable Companies A brief description of the Comparable Companies is set out as below:
Comparable Companies Enterprise Value(2) (S$ million) 64 Market Capitalisation(1) (S$ million) 146
Description
Revenue(3) (S$ million) 334
Isetan (Singapore) Limited (Isetan)
The groups principal activities are operating department stores and supermarkets and trading general merchandise. The group operates in Singapore. The groups principal activities are retailing and department store operations, property management and holding companies. Other activities include property investment and development, building contractors, leisure operators and hoteliers. The group operates a chain of four Metro department stores in Singapore and another chain of four stores is held in Jakarta and Bandung in Indonesia. Operations of the group are carried out in ASEAN countries, Hong Kong, China and Australia.
Metro Holdings Limited (Metro)
394
597
151
(Source: CapIQ as at Latest Practicable Date) Notes: (1) (2) The market capitalisation of the Comparable Companies is as at the Latest Practicable Date (Source: Cap IQ). EV of the Comparable Companies is based on the market capitalisation as at the Latest Practicable Date and the consolidated net debt and minority interest set out in their latest available announced results as at the Latest Practicable Date (Source: Cap IQ, SGX-ST announcement). The revenue of the Comparable Companies is based on the latest available full-year results as at the Latest Practicable Date (Source: Cap IQ, SGX-ST announcement, annual report).
(3)
22
In our evaluation, we have considered the following widely used valuation parameters: Valuation Parameters EV/EBITDA Description EV or Enterprise Value is the sum of a companys market capitalisation, minority interests, short-term and long-term debt less cash and cash equivalents. EBITDA stands for historical earnings before interest, tax, depreciation and amortisation expenses. The EV/EBITDA ratio compares the market value of a companys business to its pre-tax operating cashflow performance. The EV/EBITDA multiple is an earnings-based valuation methodology. However, unlike the P/E ratio, it does not take into account the capital structure of a company as well as its interest, taxation, depreciation and amortisation charges. P/E or price-to-earnings ratio is the ratio of the market capitalisation relative to its profit after tax attributable to the shareholders (the PATMI). The P/E ratio is affected by, inter alia, the capital structure of a company, its tax position as well as its accounting policies relating to depreciation and intangible assets. P/B or price-to-book value ratio is the ratio of the market capitalisation of a company relative to its book value. The P/B ratio is affected by differences in their respective accounting policies including their depreciation and asset valuation policies. The book value of a company provide an estimate of the value of a company assuming a hypothetical sale of all its assets and repayment of its liabilities and obligations, with the balance being available for distribution to its shareholders. It is an asset-based valuation methodology and this approach is meaningful to the extent that it measures the value of each share that is backed by the assets of a company.
P/E
P/B
23
For illustrative purposes only, the table below sets out the valuation ratios for the Comparable Companies:
Financial year ended
Comparable Companies
EV/Revenue(1) (times) 0.2 2.6*
EV/EBITDA(1) (times) 3.5 7.5*
P/E(1) (times) 12.7 6.4*
P/B(1) (times) 0.8 0.6*
Isetan Metro
(2)
31 Dec 2010 31 Mar 2010
(Source: CapIQ as at Latest Practicable Date) Notes: * (1) Outliers specifically excluded. The revenue, EBITDA, earnings after tax and book value of the Comparable Companies are based on the latest available full-year results as at the Latest Practicable Date (Source: Cap IQ, SGX-ST announcement, annual report). Based on the segmental information for the financial year 31 March 2010, the earnings of Metro is increasingly derived from the property division which is involved in leasing of shopping and office spaces, operating of hotels and investing in property related investment.
(2)
Hence, it is noted that Isetan is the only Comparable Company and that the only meaningful valuation ratio is EV/EBITDA given that the normalized FY11 earnings for CK Tang is negative. In our analysis, we have only used trading multiples based market approach as similar transaction multiples were not available. 5. VALUATION OF THE DEPARTMENT STORE PROPERTY BY THE INDEPENDENT PROPERTY VALUER The Independent Property Valuer was commissioned to assess the market value of the Department Store Property and has adopted the income capitalisation approach to determine the value of the Department Store Property. The income capitalisation approach is a widely accepted method for the purpose of valuing income producing properties. Under the income capitalisation approach, the gross revenue is adjusted to reflect long term vacancy, operating expenses, property tax and management fees, to determine the net income of the property. The net income is capitalized for the balance term of the lease tenure at a capitalisation rate which is appropriate for the type of use, tenure and quality of the property. The capitalisation rate adopted is based on the comparables sales of similar types.
24
A copy of the Valuation Summary prepared by the Independent Property Valuer is attached at Appendix B of the Letter. Their opinion of the market value of the Department Store Property for its existing use as a department store, free from all encumbrances is S$360 million. 6. DETERMINATION OF THE FAIR MARKET VALUE PER SHARE In determining the Fair Market Value Per Share of CK Tang, we have compared the computed Fair Market Value Per Share to the revalued NAV (the RNAV) of the Group. RNAV is determined after adjusting mainly for the revaluation of the Companys key property assets based on its estimated current market values. 6.1 Analysis of the RNAV of the Group We have checked with management whether there are any tangible assets which should be valued at an amount that is materially different from that which is recorded in the audited balance sheet of the Group as at 31 March 2011. The audited balance sheet of the Group as at 31 March 2011 has included the market value of the department store property as appraised by the Independent Property Valuer at S$360 million hence there is no revaluation surplus or deficit arising in respect of the Department Store Property as at 31 March 2011. The following table sets out an analysis of the historical RNAV of the Group:
FYE 31 March Department Store Property Value (S$ million) Audited RNAV (S$ million) Audited RNAV Per Share (S$)
(Source: Relevant shareholder circulars, annual reports) Notes: (1) (2) (3) Computed based on 236,996,226 fully diluted Shares assuming full conversion of the 12,000 outstanding options into 12,000 Shares as at 31 March 2009. Computed based on 236,988,226 fully diluted Shares assuming full conversion of the 4,000 outstanding options into 4,000 Shares as at 31 March 2010. Computed based on 236,988,226 fully diluted Shares assuming full conversion of the 4,000 outstanding options into 4,000 Shares as at 31 March 2011.
FY09 340.0 219.6 0.93

(1)
FY10 350.0 223.6 0.94

(2)
FY11 360.0 241.5 1.02(3)
Based on the above, we note that the audited RNAV Per Share as at 31 March 2011 is higher than both the historical audited RNAV Per Share as at 31 March 2009 and 31 March 2010.
25
The higher audited RNAV Per Share as at 31 March 2011 is largely attributed to the increase in the Department Store Property from S$340 million as at 31 March 2009 to S$ 360 million as at 31 March 2011. The following table sets out a comparison of the Fair Market Value Per Share of S$1.13 against the historical audited RNAV of the Group:
FYE 31 March Audited RNAV Per Share (S$) Premium against the Fair Market Value Per Share of S$1.13 FY09 0.93 21.5% FY10 0.94 20.2% FY11 1.02 10.8%
The Fair Market Value Per Share of S$1.13 represents a premium of 21.5% and 20.2% over the historical audited RNAV Per Share as at 31 March 2009 and 31 March 2010 respectively. As at 31 March 2011, the Fair Market Value Per Share of S$1.13 represents a premium of 10.8% over the audited RNAV Per Share of S$1.02. 7. CONCLUSION AND RECOMMENDATION Based on the above analysis including the qualifications made therein, we are of the opinion that the Fair Market Value Per Share is S$1.13. This letter is governed by, and construed in accordance, with the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter. Nothing herein shall confer or be deemed or is intended to confer any rights of benefits to any third party and the Contracts (Rights of Third Parties) Act 2001 and any re-enactment thereof shall not apply.
Yours truly For and on behalf of PricewaterhouseCoopers Corporate Finance Pte Ltd
Kan Yut Keong Managing Director
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APPENDIX 3 VALUATION SUMMARY ISSUED BY JONES LANG LASALLE PROPERTY CONSULTANTS PTE LTD
Jones Lang LaSalle Property Consultants Pte Ltd Jones Lang LaSalle Property Management Pte Ltd 9 Ra es Place #39-00 Republic Plaza Singapore 048619 tel +65 6220 3888 fax +65 6438 3362 Company Reg No. 198004794D Agency Licence No. L3007326E Company Reg No. 197600508N
Certi cate No. SG04/00074
Certi cate no. SG04/00075
Valuation (Land & Building)
Your Ref : Our Ref : TKC:CHH:aa:110477 C.K. Tang Limited 310 Orchard Road Singapore 238864 June 30, 2011 Dear Sir, VALUATION OF 310 ORCHARD ROAD TANGS STORE SINGAPORE 238864 (THE PROPERTY) We have been instructed by the Board of Directors of C.K. Tang Limited to determine the market value of the Department Store Property for its existing use belonging to C.K. Tang Properties (Singapore) Pte Ltd, a wholly-owned subsidiary of C.K. Tang Limited. We have prepared a valuation summary in accordance with the instructions of the Board of Directors for the specific purpose of its inclusion in the Letter to be issued in connection with the Selective Capital Reduction for C.K. Tang Limited. Unless otherwise defined or the context otherwise requires, all terms defined in the Letter shall have the same meaning herein. RELIANCE ON THIS LETTER The opinion of value contained in this Letter is not a guarantee or prediction but is based on the information obtained from reliable and reputable agencies and sources, the Board of Directors and other related parties. Whilst Jones Lang LaSalle Property Consultants Pte Ltd has endeavoured to obtain accurate information, it has not independently verified all the information provided by the Board of Directors or other reliable and reputable agencies. The methodology used in valuing the Department Store Property namely, the capitalization approach is used to determine the market value for its existing use.
27
The resultant value is, in our opinion, the best estimate but it is not to be construed as a guarantee or prediction and it is fully dependent upon the accuracy of the assumptions made. Every Shareholder who intends to make a decision concerning the Selective Capital Reduction should understand the assumptions and methodologies made in the Letter to appreciate the context in which the values are arrived at and also carry out their independent assessment with regards to the Selective Capital Reduction. We do not take any responsibility for any decision made by the Shareholders. We have not carried out investigations on site in order to determine the suitability of ground conditions, nor have we undertaken archaeological, ecological or environmental surveys. Our valuation is made on the basis that the aforesaid conditions and surveys are satisfactory. VALUATION RATIONALE The valuation of the Department Store Property is assessed based on the market value for its existing use as a department store. Existing Use Value In arriving at our opinion of market value, we have adopted the capitalisation of net income approach. OPINION OF VALUE A summary of our valuation and details relating to the Department Store Property is set out in the following page. DISCLAIMER We have prepared this valuation summary which appears in the Letter and specifically disclaim liability to any person in the event of any omission from or false or misleading statement included in the Letter, other than in respect of the information provided within the valuation summary. We do not make any warranty or representation as to the accuracy of the information in any part of the Letter other than as expressly made or given in this valuation summary. Jones Lang LaSalle has relied upon the Department Store Propertys data supplied by the Board of Directors which we assume to be true and accurate. Jones Lang LaSalle takes no responsibility for inaccurate data supplied by the client and subsequent conclusions related to such data. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions and are our unbiased professional analyses, opinions and conclusions. We have no present or prospective interest in the Department Store Property and are not a related corporation of nor do we have a relationship with the Board of Directors, adviser or other party/parties whom we are contracting with. The valuers compensation is not contingent upon the reporting of a predetermined
28
value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. We hereby certify that our valuers undertaking these valuations are authorized to practise as valuers and have the necessary expertise and experience in valuing similar types of properties. We have enclosed the general principles adopted in the preparation of this valuation summary.
Yours faithfully, JONES LANG LASALLE PROPERTY CONSULTANTS PTE LTD
Tan Keng Chiam B.Sc. (Est. Mgt.) MSISV AD041-2004796D Regional Director
29
VALUATION SUMMARY
Property : 310 Orchard Road Tangs Store Singapore 238864 (The Property) Lots U4579P and U4580W Town Subdivision 27 Estate In Fee Simple A 5-level department store with an office at the 7th storey located within a 7-storey podium block with 2 basement levels of the Department Store Property. Strata Lot No. U4579P U4580W Total Strata Floor Area 11,649 sq.m. 6,120 sq.m. 17,769 sq.m.*
Legal Description Tenure Brief Description of Department Store Property
: : :
Strata Floor Area
* including void, lift motor room and roof slabs
Owner Lease Agreement
: :
C.K. Tang Properties (Singapore) Ltd The Department Store Property is leased to C.K. Tang Limited for a term of 5 years commencing from July 1, 2008. Hotel with a gross plot ratio of 5.6+.
Master Plan Zoning (2008 Edition) Market Value for its existing use as at June 30, 2011
S$360,000,000/(Singapore Dollars Three Hundred And Sixty Million).
JONES LANG LASALLE

TKC:CHH:aa:110477 June 30, 2011
30
GENERAL PRINCIPLES ADOPTED IN THE PREPARATION OF VALUATIONS AND REPORTS These are the general principles upon which our Valuations and Reports are normally prepared; they apply unless we have specifically mentioned otherwise in the body of the report. 1) VALUATION STANDARDS All work are carried out in accordance with the Singapore Institute of Surveyors and Valuers (SISV) Valuation Standards and Guidelines and International Valuation Standards (IVS), subject to variations to meet local laws, customs, practices and market conditions. 2) VALUATION BASIS Our valuations are made on the basis of Market Value, defined by the SlSV as follows: Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion. 3) CONFIDENTIALITY Our Valuations and Reports are confidential to the party to whom they are addressed or their other professional advisors for the specific purpose(s) to which they refer. No responsibility is accepted to any other parties and neither the whole, nor any part, nor reference thereto may be included in any published document, statement or circular, or published in any way, nor in any communication with third parties, without our prior written approval of the form and context in which they will appear. 4) SOURCE OF INFORMATION Where it is stated in the report that information has been supplied by the sources listed, this information is believed to be reliable and we shall not be responsible for its accuracy nor make any warranty or representation of the accuracy of the information. All other information stated without being attributed directly to another party is obtained from our searches of records, examination of documents or enquiries with the relevant authorities. 5) DOCUMENTATION We do not normally read leases or documents of title and, where appropriate, we recommend that lawyers advice on these aspects should be obtained. We assume, unless informed to the contrary, that all documentation is satisfactorily drawn and that good title can be shown and there are no encumbrances, restrictions, easements or other outgoings of an onerous nature which would have an effect on the value of the interest under consideration.
31
6)
TOWN PLANNING AND OTHER STATUTORY REGULATIONS Information on Town Planning is obtained from the set of Master Plan, Development Guide Plans (DGP) and Written Statement published by the competent authority. Unless otherwise instructed, we do not normally carry out requisitions with the various public authorities to confirm that the property is not adversely affected by any public schemes such as road and drainage improvements. If reassurance is required, we recommend that verification be obtained from your lawyers. Our valuations are prepared on the basis that the premises and any improvements thereon comply with all relevant statutory regulations. It is assumed that they have been, or will be issued with a Certificate of Statutory Completion by the competent authority.
7)
TENANTS Enquiries as to the financial standing of actual or prospective tenants are not normally made unless specifically requested. Where properties are valued with the benefit of lettings, it is therefore assumed that the tenants are capable of meeting their obligations under the lease and that there are no arrears of rent or undisclosed breaches of covenant.
8)
STRUCTURAL SURVEYS We have not carried out a building survey nor any testing of services, nor have we inspected those parts of the property which are inaccessible. We cannot express an opinion about or advise upon the condition of uninspected parts and this Report should not be taken as making any implied representation or statement about such parts. Whilst any defects or items of disrepair are noted during the course of inspection, we are not able to give any assurance in respect of rot, termite or past infestation or other hidden defects.
9)
SITE CONDITIONS We do not normally carry out investigations on site in order to determine the suitability of the ground conditions and services for the existing or any new development, nor have we undertaken any archaeological, ecological or environmental surveys. Unless we are otherwise informed, our valuations are on the basis that these aspects are satisfactory and that, where development is proposed, no extraordinary expenses or delays will be incurred during the construction period.
10)
OUTSTANDING DEBTS In the case of buildings where works are in hand or have recently been completed, we do not normally make allowance for any liability already incurred, but not yet discharged, in respect of completed works, or obligations in favour of contractors, sub-contractors or any members of the professional or design team.
32
11)
INSURANCE VALUE Our opinion of the insurance value is our assessment of the reinstatement cost for insurance purpose and it comprises the total cost of completely rebuilding the property to be insured, together with allowances for inflation, demolition and debris removal, professional fees, the prevailing G.S.T. (goods and services tax) and, if applicable, compliance with current regulations and by-laws.
Copyright Jones Lang LaSalle Year 2009
33
APPENDIX 4 VALUATION REPORT ISSUED BY JONES LANG LASALLE PROPERTY CONSULTANTS PTE LTD
Our Ref : TKC:aa:110737
C.K. Tang Limited 310 Orchard Road Singapore 238864 3 October 2011 Dear Sirs,
Certi cate No. SG04/00074
Certi cate no. SG04/00075
VALUATION OF DEPARTMENT STORE PROPERTY AS PART OF THE ENTIRE SITE COMPRISING LOTS 972L, 973C, 974M AND 975W TOWN SUBDIVISION 27 (KNOWN AS TANG PLAZA SITE (TPS)) LOCATED AT THE JUNCTION OF ORCHARD ROAD AND SCOTTS ROAD, SINGAPORE. We have been instructed by the C.K. Tang Limited to estimate the value of the Department Store Property, as apportioned from our opinion of the market value of TPS on the assumption that it is a vacant redevelopment site as at June 30, 2011, after deducting development charges, in line with the permissible planning parameters and guidelines, and subject to formal planning approval under the Planning Act (Cap. 232). We have prepared the valuation for the specific purpose of its inclusion in the Circular to be issued in connection with the Selective Capital Reduction exercise. Unless otherwise defined or the context otherwise requires, all terms defined in the Circular shall have the same meaning herein. 1.0 RELIANCE ON THIS REPORT This is a valuation report that we, Jones Lang LaSalle Property Consultants Pte Ltd, have carried out for the purpose stated above. The opinion of values contained in the valuation report is not a guarantee or prediction but is based on the information obtained from reliable and reputable agencies and sources, C. K. Tang Limited and other related parties. Whilst Jones Lang LaSalle Property Consultants Pte Ltd has endeavoured to obtain accurate information, it has not independently verified all the information provided by the company or other reliable and reputable agencies. The methodologies used in valuing the TPS as a vacant redevelopment site are namely, the direct comparison, capitalization approach and discounted cash flow approach to determine the gross development value of the proposed development, and the residual approach and direct comparison approach to determine the land value, are based on our professional opinion and estimates of the current and future results and are not guarantees or predictions. The valuation methodologies are summarized in this report. Each methodology is based on a set of assumptions as to the income and expenses taking into consideration the changes in economic conditions and other relevant factors affecting the values.
34
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 1.0 RELIANCE ON THIS REPORT (CONTD) The resultant values are, in our opinion, the best estimate but they are not to be construed as a guarantee or prediction and they are fully dependent upon the accuracy of the assumptions made. Every Shareholder who intends to make a decision concerning the Offer should review the valuation report to understand the assumptions and methodologies made in the valuation report to appreciate the context in which the values are arrived at and also carry out their independent assessment with regards to the Offer. We do not take any responsibility for any decision made by the Shareholder. We have not carried out investigations on site in order to determine the suitability of ground conditions, nor have we undertaken archaeological, ecological or environmental surveys. Our valuation is made on the basis that the aforesaid conditions and surveys are satisfactory. 2.0 2.1 BACKGROUND INFORMATION ON TANG PLAZA Ownership The Company has informed us that Tang Plaza is a strata titled development comprising 7 strata lots with two subsidiary proprietors namely Tang Holdings Private Limited and C.K. Tang Properties (Singapore) Pte Ltd. The Management Corporation Strata Title Plan No. 1673 was formed to manage all strata lots and the common properties within Tang Plaza such as the carparks, driveways, walkways, kiosks and roofs, etc. Tang Plaza currently occupies Lots 972L, 973C, 974M and 975W Town Subdivision 27. Tang Holdings Private Limited, a private entity majority controlled by TWK, owns 5 strata lots (approximately 71.7% by share value) comprising the 4 strata shops located on the 1st storey and the strata lot comprising the hotel, known as Singapore Marriott Hotel, which is part commercial and part hotel use. C.K. Tang Properties (Singapore) Pte Ltd, a wholly owned subsidiary of CKT, owns 2 strata lots (approximately 28.3% by share value) comprising the Department Store Property, which forms part of the commercial use within Tang Plaza. 2.2 Statutory Provisions that may be relevant As Tang Plaza is a strata subdivided development, the Land Titles (Strata) Act (Cap. 158) and the Building Maintenance And Strata Management Act 2004 are applicable. Should there be any collective sales made possible by the enhancement in the value of the land over the existing use value, the disposition of the TPS is subject to the rules and regulations within the statutes stated above.
3 October 2011
35
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 2.0 BACKGROUND INFORMATION ON TANG PLAZA (CONTD) Section 84A (1) Part VA of the Land Titles (Strata) Act (Cap. 158) provides as follows: 84A.(1) An application for an order for the sale of all the lots and common property in a strata title plan may be made by (a) the subsidiary proprietors of the lots with not less than 90% of the share values and not less than 90% of the total area of all the lots (excluding the area of any accessory lot) as shown in the subsidiary strata certificates of title where less than 10 years have passed since the date of the issue of the latest Temporary Occupation Permit on completion of any building (not being any common property) comprised in the strata title plan or, if no Temporary Occupation Permit was issued, the date of the issue of the latest Certificate of Statutory Completion for any building (not being any common property) comprised in the strata title plan, whichever is the later; or the subsidiary proprietors of the lots with not less than 80% of the share values and not less than 80% of the total area of all the lots (excluding the area of any accessory lot) as shown in the subsidiary strata certificates of title where 10 years or more have passed since the date of the issue of the latest Temporary Occupation Permit on completion of any building (not being any common property) comprised in the strata title plan or, if no Temporary Occupation Permit was issued, the date of the issue of the latest Certificate of Statutory Completion for any building (not being any common property) comprised in the strata title plan, whichever is the later, who have agreed in writing to sell all the lots and common property in the strata title plan to a purchaser under a sale and purchase agreement which specifies the proposed method of distributing the sale proceeds to all the subsidiary proprietors (whether in cash or kind or both), subject to an order being made under subsection (6) or (7). [21/99;46/2007]
3 October 2011
(b)
For the avoidance of doubt, the extraction (and any conclusions that may be drawn or implied from such extraction) should not be construed or deemed to be in the nature of a legal advice or opinion for which all liability in respect thereof is hereby disclaimed. Please obtain independent legal advice and counsel in your interpretation and understanding of these extractions.
36
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 2.0 2.3 BACKGROUND INFORMATION ON TANG PLAZA (CONTD) Apportionment of Each Subsidiary Proprietors Interest in a Collective Sale Methods of Distribution The methods of distribution of the sale proceeds in a collective sale are prescribed in the Valuation Standards and Guidelines issued by the Singapore Institute of Surveyors and Valuers (SISV). The methods of distribution include the following: (i) Based purely on share value This may be used when the units are of the same or similar strata/floor areas with same or similar share values. (ii) Based purely on strata/floor area This may be used when the units are of the same strata/floor area. (iii) Based on a combination of share value and strata/floor area This may be used where there are wide differences in the share value and/or strata/floor area among the various units. (iv) Based on valuation This may be used when the general attributes of the property are to be considered. A valuation is made of a typical unit of each type or category disregarding renovations, facing, floor level, etc. Alternatively, the valuation of the individual units can be carried out, taking into account differences in unit size, orientation and storey/level, etc. All units in the development are assumed to be in a fair and reasonable state of repair and maintenance. In the case of retail units, the Valuer should also take into consideration the siting of the unit. It should be noted that the valuation method will involve additional costs. Besides these methods, there may be other variations or a combination of the above methods. In all cases, the Valuer should justify in his report the recommended approach for the distribution of sale proceeds. In the event of a disagreement in valuations, the dispute may be referred to SISV for final adjudication by the SISV Valuation Review Panel.
3 October 2011
37
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 2.0 BACKGROUND INFORMATION ON TANG PLAZA (CONTD) It is reasonable to expect that the method of distribution proposed for the majority and minority unit owners may differ. Under such circumstances, the difference may be resolved by both Valuers for the majority and minority owners or the majority and minority owners themselves meeting to discuss their basis for the proposed method of distribution and to reconcile the difference. In the event that the difference cannot be reconciled, the matter will be adjudicated by the Strata Titles Board. It is essential to note that the final test of the proposed method is that the opposing minority owners must not be disadvantaged by the method of distribution and the proposed method is fair and reasonable to all owners. 2.4 Description of Tang Plaza The entire development, known as Tang Plaza, is a strata titled retail-cum-hotel development comprising 7 strata lots. The legal description, strata floor areas and the share values are summarized as follows:
Registered Subsidiary Proprietors* Tang Holdings Private Limited Tang Holdings Private Limited Tang Holdings Private Limited Tang Holdings Private Limited Tang Holdings Private Limited Strata Lot Nos TS 27* U4929M U4582P U4583T U4584A U4930L Strata Floor Area* (sq.m.) 46,278 75 66 65 61 Net Floor Area (sq.m.) 43,443 75 66 65 61
3 October 2011
Use Hotel/Commercial Shop Shop Shop Shop
Share Value* 7,125 12 11 11 10
Void (sq.m.) 2,835 0 0 0 0
Sub-Total Department Store C.K. Tang Properties (Singapore) Pte Ltd C.K. Tang Properties (Singapore) Pte Ltd U4579P
7,169 1,845
46,545 11,649
2,835 403
43,710 11,246
Department Store
U4580W
986
6,120
108
6,012
Sub-Total Total
* Source: SLA
2,831 10,000
17,769 64,314
511 3,346
17,258 60,968
38
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 2.0 2.4.1 BACKGROUND INFORMATION ON TANG PLAZA (CONTD) Tang Holdings Private Limiteds Interest in Tang Plaza Hotel and Shops Tang Holdings Private Limited owns 5 strata lots comprising the 31-storey hotel/commercial premises with a basement, known as the Singapore Marriott Hotel and 4 shops located on the 1st storey. The total strata floor area is 46,545 sq.m. and the total share value is 7,169/10,000. This forms approximately 71.7% of the total share values within Tang Plaza. 2.4.2 C.K. Tang Properties (Singapore) Pte Ltds Interest in Tang Plaza Department Store Property The Department Store Property is a 7-storey retail podium with 2 basement levels which is part of a retail-cum-hotel development known as Tang Plaza. The Department Store Property comprises 2 strata lots namely: U4579P and U4580W TS 27 with strata floor areas of 11,649 sq.m. (including void of 403 sq.m.) and 6,120 sq.m. (including void of 108 sq.m.) respectively (total: 17,769 sq.m.). The share values are 1,845/10,000 and 986/10,000 respectively (total: 2,831/10,000) and collectively form approximately 28.3% of the total share values within Tang Plaza. 2.5 Description of TPS TPS comprises 4 plots of land and together they form almost an L shaped plot of land with frontages of about 145m along Orchard Road and about 90m along Scotts Road. It is generally flat and above the road level. The details of the site are summarized below:
Lot No. (TS 27) 972L 973C 974M 975W Total Site Area (sq.m.) 12,610.7 1,639.4 297.0 81.1 14,628.2 Tenure Estate In Fee Simple Estate In Fee Simple Estate In Fee Simple Estate In Fee Simple Registered Proprietors All subsidiary proprietors of all the strata lots All subsidiary proprietors of all the strata lots All subsidiary proprietors of all the strata lots All subsidiary proprietors of all the strata lots
3 October 2011
39
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 2.0 2.6 BACKGROUND INFORMATION ON TANG PLAZA (CONTD) Legal Description Of Department Store Property The detailed breakdown of the Department Store Property is shown below:
Useable Floor Area (sq.m.) Strata Floor Area (sq.m.) Useable Floor Area (sq.m.) Strata Floor Area (sq.m.) Total Strata Floor Area (sq.m.) U4579P and U4580W 0 979 933 1,153 1,153 954 780 85 83 0 6,120 38 3,461 2,839 3,853 3,598 1,733 849 157 107 1,134 17,769 2,831
3 October 2011
Level Lot No TS 27 2nd Basement 1st Basement 1st Storey 2nd Storey 3rd Storey 4th Storey 5th Storey Roof Lift Motor Room 7th Storey Total Share Values
Void U4579P
Void U4580W
Use Commercial
38 2,482 1,906 2,658 2,413 450 69 72 24 1,134 11,246
0 0 0 42 32 329 0 0 0 0 403 1,845
38 2,482 1,906 2,700 2,445 779 69 72 24 1,134 11,649
0 979 919 1,153 1,153 954 733 85 36 0 6,012
0 0 14 0 0 0 47 0 47 0 108 986
Lift Well Department Store Department Store Department Store Department Store Department Store Roof Roof Lift Motor Room Office
40
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 2.0 2.7 2.7.1 BACKGROUND INFORMATION ON TANG PLAZA (CONTD) Planning Guidelines Master Plan 2008 Zoning and Uses The site is zoned Hotel. At least 60% of the total floor area shall be used for hotel room floors and hotel related uses as defined in the Planning (Development Charge) Rules. Commercial and residential uses may be considered by the competent authority subject to control on the use quantum as determined by the competent authority and they shall not exceed 40% of the total floor area. 2.7.2 Detailed Control Plans There must be activity-generating uses at the 1st storey and basement level along the boundaries of Orchard Road and Scotts Road, and there must be activity-generating uses on the 1st storey. 2.7.3 Baseline Plot Ratio and Development Potential The baseline search was not carried out for the site. According to the written permission and grant of provision permission number ES 20070611R0153 dated 19 December 2007 and 9 July 2007 respectively, the existing gross floor area indicated was 59,241.3 sq.m. comprising 33,040.2 sq.m. for commercial use and 26,201.1 sq.m. for hotel use. We have been informed by the management corporation that development charge was paid in 2006. Therefore, we assume that the baseline plot ratio is 4.05 representing a total gross floor area of approximately 59,241.3 sq.m. in the proportion stated above.
Existing Use Site Area Gross Floor Area Plot Ratio Use Commercial Percentage of Use Residential Percentage of Use Hotel Percentage of Use 33,040.2 55.77% 0 0 26,201.1 44.23% 14,628.2 59,241.3 4.05 Scenario 1 14,628.2 90,109.7 6.16 36,038.4 40.00% 0 0 54,071.3 60.00% Scenario 2 14,628.2 90,109.7 6.16 19,368.1 21.50% 16,670.3 18.50% 54,071.3 60.00%
3 October 2011
Gross Floor Area (sq.m.) Gross Floor Area (sq.m.)
41
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 2.0 BACKGROUND INFORMATION ON TANG PLAZA (CONTD) TPS is able to increase its gross floor area by approximately 30,868.4 sq.m. under the current planning guidelines subject to payment of development charges. Of which 27,864.7 sq.m. or 90.2% of the additional allowable gross floor area is to be allocated for hotel and hotel related uses. The rest of the 3,003.7 sq.m. or 9.8% are for commercial or residential uses. 2.7.4 Planning Application As at date of this report, there is no planning application for the redevelopment of TPS. 2.7.5 Hotel Conversion In the Circular No. URA/PB/2008/01-CUDD dated January 14, 2008, titled Revised approach to evaluating hotel conversion application issued by URA, addresses the conversion of hotel as follows: Objective The Urban Redevelopment Authority (URA) and the Singapore Tourism Board (STB) have discontinued the Hotel Safeguarding Policy introduced in 1997. Applications to convert sites zoned for Hotel use to other uses will be considered under the national planning framework, taking into account the prevailing planning intentions as reflected in the Master Plan. URA will also continue to take into account the sufficiency of hotel developments when evaluating such applications. The change puts the land use regulatory framework for Hotels in line with other uses. . . . . . . . . . . . . . . . . . (i) Under the Hotel Safeguarding Policy introduced in 1997, hotels within designated areas were not allowed to convert to other uses. Hotels located outside these designated areas on the other hand could be converted to other uses such as residential or commercial, subject to planning approval. Henceforth, applications to convert sites zoned for Hotel use to other uses will be considered under the national planning framework, taking into account the prevailing planning intentions as reflected in the Master Plan. In addition, URA will continue to take into account the sufficiency of hotel developments when evaluating such applications. The change puts the land use regulatory framework for Hotels in line with other uses. Under its Tourism 2015 plan, STB is targeting 17 million visitors and S$30 billion in tourism receipts by 2015. To meet these targets, the number of hotel rooms would need to be increased by 2015. The revised approach to evaluating hotel conversion applications will ensure that the location and number of hotel rooms safeguarded are in line with planning intentions and strategic planning objectives. 42
3 October 2011
(ii)
(iii)
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 2.0 BACKGROUND INFORMATION ON TANG PLAZA (CONTD) (iv) As a general rule, hotels will not be allowed to be converted to other uses where: (a) (b) The hotels are located on sites zoned for hotel use in the Master Plan; and The hotels are located within sites zoned for other uses but where there is a specific planning or sales requirement for a minimum hotel quantum to be provided.
3 October 2011
2.7.6
Urban Design Guidelines For Orchard Planning Area: The development of TPS is subject to further planning guidelines and considerations that are governed by the Urban Redevelopment Authority (URA). They are stipulated in the Urban Design Guidelines for the Orchard Planning Area. We have highlighted amongst many others the following:
2.7.6.1 Orchard Road Development Commission (ORDEC): Circular No: URA/PB/2010/06-CUDG dated May 3, 2010 The ORDEC was established as part of a series of incentives to enhance and rejuvenate Orchard Road. The aim is to encourage bold, new, innovative developments that will create a positive impact on Orchard Road. Redevelopment and major Addition & Alteration (A&A) proposals that innovatively add value to Orchard Road and our city can be supported with development incentives and be allowed to deviate from current planning parameters, upon the ORDECs recommendation. Joint proposals between two or more developments which could bring about enhancement and rejuvenation of the streetblock, are encouraged. The parameters that can be considered by the ORDEC are: Gross plot ratio (GPR)/gross floor area (GFA); Land use and use quantum; and Building Height
43
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 2.0 BACKGROUND INFORMATION ON TANG PLAZA (CONTD)
3 October 2011
2.7.6.2 Art Incentive Revision To The Art Incentive Scheme For New Developments In Central Area Circular No: URA/PB/2009/06-CUDG dated April 29, 2009 The Guidelines for the Art Incentive Scheme for New Developments In Central Area (Scheme) were first introduced in September 2005 by the Urban Redevelopment Authority (URA) to encourage the provision and integration of public art works within new developments in the Central Area. This Circular supersedes the earlier Circular URA/PB/2005/23-CUDD released on 5 September 2005 and is to be read in conjunction with the overall 10% bonus GFA budget in URAs Circular No: URA/PB/2009/03-DCG dated 29 April 2009 on Framework for Managing Bonus Gross Floor Area Incentives. Only cost items that directly affect and contribute to the value of the art work can be included in the assessment of the value of the art work for the purpose of computing the additional GFA that can be applied for under the Scheme. This excludes costs incurred in procuring the art work (e.g. travel expenses, artists tools, freight charges, insurance, submission fees, etc.). Under the Scheme, the additional GFA for the provision of integrated art work is capped at a maximum of 1.0% of the total prescribed Gross Plot Ratio (GPR) for the development under the Master Plan 2008 or 700 sq.m., whichever is lower. The additional GFA for the provision of free-standing art work is capped at a maximum of 0.5% of the total prescribed GPR for the development under the Master Plan 2008 or 350 sq.m., whichever is lower. 2.7.6.3 Height Control Circular: URA/PB/2006/13-CUDD dated June 5, 2006 Relaxation Of Residential Building Heights In The Downtown Core, Orchard And Rochor (Part) Planning Areas Within Central Area TPS is located within the zone whereby the maximum permissible height of 30 storeys. However, the competent authority is prepared to consider higher level subject to further evaluation.
44
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 3.0 REDEVELOPMENT SCENARIOS OF TPS The site is zoned Hotel with the permissible base plot ratio as prescribed under the Planning Act Master Plan 2008 at 5.6+. TPS is within the demarcated boundary where it qualifies for a 10% increase above the base plot ratio i.e. 5.6 X 1.1 = 6.16. We have not taken into consideration the various incentive schemes offered by the authorities as each is to be evaluated on individual merits and are subject to various terms and conditions. As such, we have broadly considered 2 possible redevelopment scenarios based on the following planning parameters and guidelines, subject to formal planning approval as follows: Site Area Existing Plot Ratio Existing Gross Floor Area : : : Approximately 14,628.2 sq.m. 4.05 33,040.2 sq.m. (commercial) (hotel) (Total: 59,241.3 sq.m.) 6.16 Approximately 90,109.7 sq.m. The Singapore Marriott Hotel is zoned hotel in the 2008 Master Plan. As a general rule, the hotel cannot be converted to other uses. Hence, at least 60% of the total floor area shall be used for hotel room floors and hotel related uses as defined in the Planning (Development Charge) Rules. and 26,201.1 sq.m.
3 October 2011
Allowable Plot Ratio Total Gross Floor Area Hotel Use
: : :
3.1
Assumptions: For both scenarios 1 and 2, the hotel component shall have a proposed gross floor of 60% of the total gross floor areas for hotel and hotel related uses. In addition, it will require approximately 5% out of the total 40% of commercial gross floor areas for commercial uses such as ballrooms, meeting rooms and related uses. We assume that it will be a high-rise 5-star hotel comprising approximately 837 rooms with rooms sizes ranging between 43 sq.m. to 90 sq.m. The hotel will have recreational amenities such as gym, spa and swimming pool. The rest of the 35% for commercial use shall be allocated to retail use for scenario 1 and retail-cum-residential uses for scenario 2. The bases of gross floor area allocation and costing for the scenarios above are drawn on our experience of past projects and, are indicative only. Suitably experienced technical assistance from architects, hotel operators, quantity surveyors and planners are required to validate such assumptions. Accordingly, further studies are necessary to verify and validate the findings in this report. 45
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 3.0 3.1.1 REDEVELOPMENT SCENARIOS OF TPS (CONTD) Scenario 1 We are proposing, for scenario 1, approximately 65% or 58,571.3 sq.m. of the total gross floor area will be allocated for hotel use (including 5% commercial uses for the ballrooms, meeting rooms and related uses) and the rest of the 35% or 31,538.4 sq.m. of total gross floor areas will be for retail use. Assuming a site coverage of approximately 50% as the building footprint for the retail podium, each retail level shall cover an average gross floor area of approximately 7,314 sq.m. The retail component could have about 4 to 5 levels or more levels depending on the design considerations. The net lettable floor area is assumed to be 70% of the 31,538.4 sq.m. 3.1.2 Scenario 2 In this scenario, approximately 65% or 58,571.3 sq.m. of the total gross floor area will be for hotel use (including 5% commercial uses for the ballrooms, meeting rooms and related uses). The rest of the approximately 35% or 31,538.4 sq.m. of total gross floor areas will be for retail use and residential use. There is a requirement for the basement and 1st storey to have activity-generating uses. Assuming a site coverage of approximately 50% as the building footprint for the retail podium and in order to meet the planning requirements of providing activity-generating uses at the basement level and the 1st storey, the total gross floor area required will be approximately 14,868.1 sq.m. (16.5%) and the rest of the gross floor areas of 16,670.3 sq.m. (18.5%) shall be for residential uses. We have applied an additional 10% bonus plot ratio for use as balconies, therefore the total gross floor areas of the residential component will be 18,337.3 sq.m. The saleable residential floor area is estimated to be approximately 17,420.5 sq.m. and it will accommodate about 87 (averaging 200 sq.m. each) luxurious apartments with communal facilities.
3 October 2011
46
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 3.0 REDEVELOPMENT SCENARIOS OF TPS (CONTD)
3 October 2011
Scenario 1 Use Commercial Percentage of Use Residential Gross Floor Area (sq.m.) 31,538.4 35%
Scenario 2 Gross Floor Area (sq.m.) 14,868.1 16.50% 16,670.3 (18,337.33 including additional 10% of gross floor area for balconies) 18.50% 58,571.3 65% 60% for Hotel and its related use with 5% of commercial use for ballrooms, meeting rooms and related uses 35% is allocated to commercial use Subject to URA evaluation, 35% of the commercial use may be allocated to commercial and residential. We are proposing 16.5% to be allocated to retail use and 18.5% to residential use.
Percentage of Use Hotel Percentage of Use Basis of Proportion for retail and hotel use
58,571.3 65% 60% for Hotel and its related use with 5% of commercial use for ballrooms, meeting rooms and related uses 35% is allocated to commercial use
4.0
VALUATION RATIONALE The valuation of the Department Store Property is assessed based on the market value of the Department Store Property, as apportioned from our opinion of the market value of TPS on the assumption that it is a vacant redevelopment site as at June 30, 2011, after deducting development charges, in line with the permissible planning parameters and guidelines, and subject to formal planning approval under the Planning Act (Cap. 232).
4.1 4.1.1
Methods of Valuation Discounted Cash Flow Approach In arriving at our valuation figure, we have adopted the DCF approach to ascertain the gross development value of the hotel and retail components.
47
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 4.0 VALUATION RATIONALE (CONTD) Under the DCF approach, the net incomes are discounted at an appropriate discount rate to arrive at the net present values. The net incomes are derived by deducting from the gross income, the vacancy, management fees, the operating expenses incurred in the maintenance and service charges and other outgoings including property tax, leasing cost, agency fees and other related expenses. We have undertaken a discounted cash flow analysis over a 5/10-year period. The projected net income is discounted to arrive at the present value. The terminal value of the hotel and retail components are derived by capitalizing the 5th/10th year net income and they are discounted to give the net present value. The 5/10 years discounted cash flow and present value of the terminal value will give rise to the gross development value. 4.1.2 Capitalization Approach The capitalization approach involves the addition of all income receivables and a deduction of all outgoings after providing for structural vacancy to determine the net income of the retail components. The net income receivables is assumed to be a level of annuity in accordance with the tenure of the property and is capitalized using an appropriate capitalization rate derived, where possible, from the analysis of relevant sales evidence and appropriate adjustments for rental shortfalls and overages are made to arrive at the gross development value. 4.1.3 Residual Approach This method entails the determination of the gross development values of the TPS from which the developers profit, marketing/legal fees, construction cost, financing cost, professional fees, holding cost for the land, stamp duties and legal fees for the land and property tax and development charges are deducted to arrive at the residual land values. 4.1.4 Direct Comparison Approach In this method, we have taken into consideration the prevailing market conditions and have made due adjustments for differences between the Property and the comparables in terms of location, tenure, size, shape, design and layout, age and condition of buildings, dates of transactions, development potential and other factors affecting its value to determine the gross development value.
3 October 2011
48
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 4.0 4.2 4.2.1 VALUATION RATIONALE (CONTD) Valuation Assumptions Scenario 1
Hotel Gross Development Value Discounted Cashflow and Direct Comparison Approach Residual Approach and Direct Comparison Approach Retail Discounted Cashflow, Direct Comparison Approach and Direct Capitalisation Residual Approach and Direct Comparison Approach
3 October 2011
Land Value
Valuation parameters and assumptions: Gross Floor Area No. of Rooms Average Room Rate Building Efficiency Net Floor Area Average Gross Rent Gross Development Value Occupancy Rate Cost of Construction Professional Fee Capitalisation Rate Discounted Rate Terminal Yield Final Cost Period of Construction Planning Period Hotel 54,071.3 sq.m. Commercial 4,500 sq.m. 837 S$407 for 1st year S$1,356,033 per room 67% for 1st year stabilised at 78% from 4th year onwards S$500 psf on GFA 8% 7.25% 4.75% 3.25% 3 years 9 months Commercial 31,538.4 sq.m. 70% 22,076.9 sq.m. S$25 psf per month S$4,389 psf on net floor area 97% S$500 psf on GFA 8% 5% 8.00% 5.25% 3.25% 3 years 9 months
49
C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 4.0 4.2.2 VALUATION RATIONALE (CONTD) Scenario 2
Hotel Gross Development Value Discounted Cashflow and Direct Comparison Approach Residual Approach and Direct Comparison Approach Retail Discounted Cashflow, Direct Comparison Approach and Direct Capitalisation Residual Approach and Direct Comparison Approach Residential Direct Comparison
3 October 2011
Land Value
Residual Approach
Valuation parameters and assumptions: Gross Floor Area Hotel 54,071.3 sq.m. Commercial 4,500 sq.m. 837 rooms S$407 for 1st year S$1,356,033 per room 67% for 1st year stabilised at 78% from 4th year onwards S$500 psf on GFA 8% 7.25% 4.75% 3.25% 3 years 9 months Commercial 14,868 sq.m. 75% 11,151.0 sq.m. S$30 psf per month S$5,332 psf on net floor area 97% 18,337 sq.m. (including bonus plot ratio for balconies) 87 apartments 95% 17,420.2 sq.m. S$4,500 psf on net floor area
No. of Rooms/Apartment Average Room Rate Building Efficiency Net Floor Area Average Gross Rent Gross Development Value Occupancy Rate
Cost of Construction Professional Fee Capitalisation Rate Discounted Rate Terminal Yield Final Cost Period of Construction Planning Period
S$500 psf on GFA 8% 5% 8.00% 5.25% 3.25% 3 years 9 months
S$500 psf on GFA 8% 3.25% 3 years 9 months
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C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 5.0 VALUATION RESULTS OF TPS The results of our valuation of TPS are summarized as follows:
Scenario 1 Hotel Gross Development Value Cost of Development such as cost of construction, professional fees, financing cost, contingencies, stamp duty, legal fees, marketing fees, holding cost, goods and services tax and property tax, and developers profit Residual Land Value (including Development Charges) Development Charges Residual Land Value (excluding Development Charges) S$1,135,000,000 Retail S$1,043,000,000 Total S$2,178,000,000
3 October 2011
S$ 491,000,000
S$ 478,000,000
S$ 969,000,000
S$ 644,000,000
S$ 565,000,000 Scenario 2
S$1,209,000,000 S$ 227,900,000 S$ 981,100,000
Hotel Gross Development Value S$1,135,000,000
Retail S$640,000,000
Residential S$844,000,000
Total S$2,619,000,000
Cost of Development such as cost of construction, professional fees, financing cost, contingencies, stamp S$ 491,000,000 duty, legal fees, marketing fees, holding cost, goods and services tax and property tax, and developers profit Residual Land Value (including Development Charges) Development Charges Residual Land Value (excluding Development Charges) S$ 644,000,000
S$266,500,000
S$357,000,000
S$1,114,500,000
S$373,500,000
S$487,000,000
S$1,504,500,000 S$ 267,600,000 S$1,236,900,000
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C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 6.0 OPINION OF VALUE Based on the above, the following table outlines our opinion of the values for the Department Store Property as apportioned from the market value of TPS as a vacant Redevelopment Site as at June 30, 2011, according to the 2 scenarios are as follows:
Description of Property Market values of TPS on the assumption that it is available as a vacant redevelopment site after deducting development charge, in line with the permissible planning parameters and guidelines, and subject to formal planning approval under the Planning Act (Cap. 232) Estimated values of the Department Store Property as apportioned from the market values of TPS as a vacant Redevelopment Site after deducting development charges based on share value/net floor area (28.3%) Scenario 1 Scenario 2
3 October 2011
S$981,100,000
S$1,236,900,000
S$277,700,000
S$ 350,000,000
The percentage of the Departmental Store Property as apportioned from market value of TPS based on share values or net floor areas are the same at 28.3%. We are unable to apportion using the valuation method or a combination of various methods incorporating the valuation method as we are not able to obtain the necessary relevant information to enable us to assess the existing use value of the Tang Holdings Private Limiteds interest, which is required under the valuation method. Even if Tang Holdings Private Limiteds interest can be established, the final apportionment is still subject to both parties agreeing on the collective sale as well as the method of apportionment. Whilst not expressing a legal opinion or rendering legal advice (for which all liability is hereby disclaimed), our understanding of the extractions of the Land Titles (Strata) Act, as set out earlier, is that the two subsidiary proprietors need to mutually agree and no single party can move the motion to conduct a collective sale independently in order to fulfil the requirement of having more than 80% share value agreeing. 7.0 DISCLAIMER We have prepared this valuation summary which appears in the Circular and specifically disclaim liability to any person in the event of any omission from or false or misleading statement included in the Circular, other than in respect of the information provided within the valuation reports. We do not make any warranty or representation as to the accuracy of the information in any part of the Circular other than as expressly made or given in this valuation report.
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C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. 7.0 DISCLAIMER (CONTD) Jones Lang LaSalle has relied upon the properties data supplied by the C.K Tang Limited which we assume to be true and accurate. Jones Lang LaSalle takes no responsibility for inaccurate data supplied by the client and subsequent conclusions related to such data. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, unbiased professional analyses, opinions and conclusions. Our findings are based on our best knowledge with regards to the permissible planning parameters and they may be subject to further changes, verifications and approvals by the relevant authorities. We have no present or prospective interest in the Department Store Property and are not a related corporation of nor do we have a relationship with the C.K Tang Limited, adviser or other party/parties whom we are contracting with. The valuers compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. This letter is governed by, and construed in accordance with Singapore law, and is strictly limited to the matters stated herein and does not apply by implication to any other matter. This letter has been produced for the benefit of the C.K Tang Limited and may be relied upon by the C.K Tang Limited, and the IFA for the sole purposes of the IFAs Letter. No other person shall be entitled to rely, reproduce, disseminate or quote this letter (or any part thereof) for any other purposes at any time and in any manner except with our prior written consent in each specific case. We hereby certify that our valuers undertaking these valuations are authorized to practice as valuers and have the necessary expertise and experience in valuing similar types of properties. We have enclosed the general principles adopted in the preparation of this valuation and report.
3 October 2011
Yours faithfully, JONES LANG LASALLE PROPERTY CONSULTANTS PTE LTD
Tan Keng Chiam B. Sc. (Est. Mgt.) MSISV Licence No: AD041-2004796D Regional Director
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C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. GENERAL PRINCIPLES ADOPTED IN THE PREPARATION OF VALUATIONS AND REPORTS These are the general principles upon which our valuations and reports are normally prepared; they apply unless we have specifically mentioned otherwise in the body of the report. (1) GUIDANCE NOTES All work is carried out in accordance with the Practice Statements in the SISVs Valuation Standards and Guidelines and RICS Appraisal and Valuation Manual published by RICS Business Services Limited, a wholly owned subsidiary of The Royal Institution of Chartered Surveyors subject to variation to meet local established law, custom, practice and market conditions. (2) VALUATION BASIS Our valuations are made on the basis of open market value. This is intended to mean the best price at which the sale of an interest in the property would have been completed unconditionally for cash consideration on the date of valuation, assuming: (a) (b) a willing seller; that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the negotiation and agreement of price and terms and for the completion of the sale; that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation; that no account is taken of any additional bid by a prospective purchaser with a special interest; and that both parties to the transaction had acted knowledgeably, prudently and without compulsion.
3 October 2011
(c)
(d)
(e)
No allowances are made for any expenses or taxation which might arise in the event of a disposal. All property is considered as if free and clear of all mortgages, encumbrances and other outstanding premiums, charges and liabilities. (3) CONFIDENTIALITY Our valuations and reports are confidential to the party to whom they are addressed or their other professional advisors for the specific purpose(s) to which they refer. No responsibility is accepted to any other parties and neither the whole, nor any part, nor reference thereto may be included
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C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore.
3 October 2011
in any published document, statement or circular, or published in any way, nor in any communication with third parties, without our prior written approval of the form and context in which it will appear. (4) SOURCE OF INFORMATION Where it is stated in the report that information has been supplied by the sources listed, this information is believed to be reliable and there is no responsibility of this should it prove not to be so. All other information stated without being attributed directly to another party is obtained from our searches of records, examination of documents or enquiries with the relevant authorities. (5) DOCUMENTATION We do not normally read leases or documents of title and, where appropriate, we recommend that lawyers advice on these aspects should be obtained. We assume, unless informed to the contrary, that all documentation is satisfactorily drawn and that good title can be shown and there are no encumbrances, restrictions, easements or other outgoings of an onerous nature which would have an effect on the value of the interest under consideration. (6) TOWN PLANNING AND OTHER STATUTORY REGULATIONS Information on Town Planning is obtained from the set of Master Plan, Development Guide Plans (DGP) and Written Statement published by the competent authority. Unless otherwise instructed, we do not normally carry out requisitions with the various public authorities to confirm that the property is not adversely affected by any public schemes such as road and drainage improvements. If reassurance is required, we recommend that verification be obtained from your lawyers. Our valuations are prepared on the basis that the premises and any improvements thereon comply with all relevant statutory regulations. It is assumed that they have been, or will be issued with a Certificate of Statutory Completion by the competent authority. (7) TENANTS Enquiries as to the financial standing of actual or prospective tenants are not normally made unless specifically requested. Where properties are valued with the benefit of lettings, it is therefore assumed that the tenants are capable of meeting their obligations under the lease and that there are no arrears of rent or undisclosed breaches of covenant.
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C.K. Tang Limited Department Store Property As Part Of The Entire Site Comprising Lots 972L, 973C, 974M And 975W Town Subdivision 27 (Known As Tang Plaza Site (TPS)) Located At The Junction Of Orchard Road And Scotts Road, Singapore. (8) STRUCTURAL SURVEYS We have not carried out a building survey nor any testing of services, nor have we inspected those parts of the property which are inaccessible. We cannot express an opinion about or advise upon the condition of uninspected parts and this letter should not be taken as making any implied representation or statement about such parts. Whilst any defects or items of disrepair are noted during the course of inspection, we are not able to give any assurance in respect of rot, termite or past infestation or other hidden defects. (9) SITE CONDITIONS We do not normally carry out investigations on site in order to determine the suitability of the ground conditions and services for the existing or any new development, nor have we undertaken any archaeological, ecological or environmental surveys. Unless we are otherwise informed, our valuations are on the basis that these aspects are satisfactory and that, where development is proposed, no extraordinary expenses or delays will be incurred during the construction period. (10) OUTSTANDING DEBTS In the case of buildings where works are in hand or have recently been completed, we do not normally make allowance for any liability already incurred, but not yet discharged, in respect of completed works, or obligations in favour of contractors, sub-contractors or any members of the professional or design team. (11) INSURANCE VALUE Our opinion of the insurance value is our assessment of the reinstatement cost for insurance purpose and it comprises the total cost of completely rebuilding the property to be insured, together with allowances for inflation, demolition and debris removal, professional fees, the prevailing G.S.T. (goods and services tax) and, if applicable, compliance with current regulations and by-laws.
3 October 2011
@ Copyright Jones Lang LaSalle 2011
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APPENDIX 5 LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS OF C.K. TANG LIMITED CIMB BANK BERHAD
(13491-P) SINGAPORE BRANCH (Incorporated in Malaysia)
50 Raffles Place #09-01 Singapore Land Tower Singapore 048623 7 October 2011 To: The Independent Directors C.K. Tang Limited 310 Orchard Road, Singapore 238864.
Dear Sirs, SELECTIVE CAPITAL REDUCTION EXERCISE BY C.K. TANG LIMITED (THE COMPANY) TO CANCEL ALL THE SHARES HELD BY THE SHAREHOLDERS OF THE COMPANY (THE SHAREHOLDERS), EXCEPT THOSE HELD BY TANG UNITYTHREE LLP, TANG UNITYTWO LLP, KERITH HOLDINGS LLP, TANG WEE KIT AND OTHER PARTIES ACTING IN CONCERT WITH THESE SHAREHOLDERS (NON-PARTICIPATING SHAREHOLDERS)
1.
INTRODUCTION Following on and in relation to an offer made by Oversea-Chinese Banking Corporation Limited for and on behalf of Tang UnityThree LLP (the Offeror) on 8 May 2009 (Delisting Offer),the Companys shares were delisted from the SGX-ST. (Delisting Date) On 18 August 2011, the Company proposed a selective capital reduction to cancel the remaining 4,383,173 shares or 1.8% of the issued share capital of the Company (the SCR Shares) not owned by the Non-Participating Shareholders (Selective Capital Reduction). The aggregate sum of S$5,698,124.90 will be returned to the shareholders holding these shares (Participating Shareholders) under the Selective Capital Reduction, on the basis of S$1.30 for each SCR Share held by each Participating Shareholder that is so cancelled as a result of the Selective Capital Reduction. On 8 September 2011, the Offeror agreed to pay an additional S$0.70 in cash for each SCR Share, which effectively revised the amount that will be received by a Participating Shareholder for the cancellation of each SCR Share to S$2.00 in cash. The Securities Industry Council (SIC) has ruled that the Selective Capital Reduction falls within the SICs definition of an exit offer in accordance with the Singapore Code on Take-Overs and Mergers, and accordingly, an independent financial adviser will need to be appointed by the Company pursuant to this Selective Capital Reduction. CIMB Bank Berhad, Singapore Branch (CIMB) has been appointed as the independent financial adviser to advise the Independent Directors of the Company.
57
APPENDIX 5 LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS OF C.K. TANG LIMITED
This Letter sets out, inter alia, our evaluation of the financial terms of the Selective Capital Reduction and our advice thereon. It forms part of the circular dated 10 October 2011 issued by the Company providing, inter alia, details of the Selective Capital Reduction and the recommendations of the Independent Directors in respect thereof (together with the appendices to the circular shall be collectively known herein as the Circular). The Non-Participating Shareholders have agreed to abstain from voting on the resolution to approve the Selective Capital Reduction and accordingly, only Participating Shareholders shall be entitled to vote on the resolution to approve the Selective Capital Reduction. Unless otherwise defined or the context otherwise requires, all terms defined in the Circular shall have the same meanings herein. Any differences between the amounts and the totals thereof are due to rounding. Accordingly, figures shown as totals may not be an arithmetic aggregation of the figures that precede them. 2. TERMS OF REFERENCE We have been appointed to advise on the financial terms of the Selective Capital Reduction and whether Participating Shareholders should vote for or against the resolution to approve the Selective Capital Reduction, pursuant to Rules 7.1 and 24.1(b) of the Code. We have not been asked to conduct a valuation of the Company (and its assets) and we do not, whether expressly or by implication, purport to do so. We have confined our evaluation to the financial terms of the Selective Capital Reduction and our terms of reference do not require us to evaluate or comment on the commercial risks and/or commercial merits of the Selective Capital Reduction or the future prospects of the Company and its subsidiaries (the Group) or any of its associated companies and we have not made such evaluation or comment. However, we may draw upon the views of the Directors and/or the management of the Company or make such comments in respect thereof (to the extent deemed necessary or appropriate by us) in arriving at our opinion as set out in this Letter. We have not been requested, and we do not express any opinion on the relative merits of the Selective Capital Reduction as compared to any other alternative transaction. We have not been requested or authorized to solicit, and we have not solicited, any indications of interest from any third party with respect to the issued and paid-up ordinary shares in the capital of the Company (the Shares). We have held discussions with the Directors and the management of the Company and have examined and relied on publicly available information collated by us as well as information, both written and verbal, provided to us by the Directors, the management of the Company and the Companys other professional advisers (especially the reports by Jones Lang LaSalle Property Consultants Pte Ltd (the Independent Property Valuers) in their valuation summary dated 30 June 2011 (the Valuation Summary) and valuation report dated 3 October 2011 (the Valuation Report) set out in Appendix 3 and 4 of the Circular respectively). We have not independently verified such information, whether written or verbal, and accordingly we cannot and do not warrant or make any representation (whether express or implied) regarding, or accept any responsibility for, the accuracy, completeness or adequacy of such information. However, we have made such enquiries and exercised our judgment as we deem necessary on such information and have found no reason to doubt the reliability of the information. We have relied upon the assurances of the Directors (including those who may have delegated supervision of the Circular) that they have taken all reasonable care to ensure that the facts stated and opinions expressed by them or the Company in the Circular are fair and accurate in all material respects. The Directors have confirmed to us, that to the best of their knowledge and 58
belief, all material information relating to the Group, or its associated companies and the Selective Capital Reduction have been disclosed to us, that such information is fair and accurate in all material respects and that there are no other material facts and circumstances the omission of which would make any statement in the Circular inaccurate, incomplete or misleading in any material respect. The Directors have jointly and severally accepted such responsibility accordingly. We have not made any independent evaluation or appraisal of the assets and liabilities and of the Group or of any of its associated companies and we have not been furnished with any such evaluation or appraisal, except for the valuation report dated 30 June 2011 issued by PricewaterhouseCoopers Corporate Finance Pte Ltd (PwCCF), the Valuation Summary and Valuation Report dated 30 June 2011 and 3 October 2011 respectively issued by the Independent Property Valuers, all three reports of which were issued in connection with the Selective Capital Reduction. A copy of each of these three reports has been reproduced in Appendix 2, 3 and 4 respectively in the Circular. With respect to such reports, we are not experts in the evaluation or appraisal of the assets concerned and we have placed sole reliance on these summary valuation reports for such asset appraisal and have not made any independent verification of the contents thereof. Our analysis and opinion are based upon market, economic, industry, monetary and other conditions prevailing as at 3 October 2011 (the Latest Practicable Date), as well as the information made available to us as at the Latest Practicable Date. Such conditions may change significantly over a short period of time. Shareholders should take note of any documents relevant to their consideration of the Selective Capital Reduction which may be released or published by or on behalf of the Company, and the Offeror after the Latest Practicable Date. In rendering our advice, we have not had regard to the specific investment objectives, financial situation, tax position, risk profile or particular needs and constraints of any individual Shareholder. As each Shareholder would have different investment objectives and profiles, any Shareholder who may require specific advice in the context of his specific investment objectives or portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. The Company has been separately advised in the preparation of the Circular (other than this Letter). We were not involved in and have not provided any advice in the preparation, review and verification of the Circular (other than this Letter). Accordingly, we take no responsibility for, and express no views (express or implied) on, the contents of the Circular (other than this Letter). 3. THE SELECTIVE CAPITAL REDUCTION The Circular sets out, inter alia, the following key terms and conditions of the Selective Capital Reduction: 3.1 Realise Value of Shares. The Company proposes to implement the Selective Capital Reduction and cancel all the Shares held by the Shareholders, except those held by the Non-Participating Shareholders, to provide the Participating Shareholders with an avenue to realize the value of their Shares following the Delisting Offer.
59
3.2 Reduce Share Capital. The Selective Capital Reduction will involve reducing the share capital of the Company from S$47,848,113.86 comprising 236,984,226 Shares to S$42,149,988.96 comprising 232,601,053 Shares, representing a reduction of the issued share capital of the Company by approximately 1.8 per cent. Process. (i) The Selective Capital Reduction will be effected by:
3.3
cancelling the amount of S$5,698,124.90 constituting part of the total paid-up share capital of the Company held by the Participating Shareholders; and cancelling 4,383,173 of the SCR Shares constituting part of the total issued share capital of the Company held by the Participating Shareholders.
(ii)
3.4
Cash Distribution. The aggregate sum of S$5,698,124.90 arising from the Selective Capital Reduction (the Cash Distribution) will be returned to the Participating Shareholders, on the basis of S$1.30 for each SCR Share held by each Participating Shareholder that is so cancelled as a result of the Selective Capital Reduction. Participating Shareholders will be entitled to any dividends declared, paid or made by the Company, the record date for payment for which is on or before the Books Closure Date.
3.5
Offeror Proposal. On 8 September 2011, the Offeror wrote to and informed the Company that it would pay an additional S$0.70 for each SCR Share held by the Participating Shareholder that was so cancelled as a result of the Selective Capital Reduction, bringing the aggregate payment of each SCR Share to S$2.00. The Offerors letter was sent to all Shareholders and provides that such payment would be conditional upon the Selective Capital Reduction becoming effective. The Offerors letter is set out in Appendix 1 to this Circular. Collectively, the aggregate amount to be received by a Participating Shareholder for each SCR Share is S$2.00 in cash (SCR Consideration), assuming the Selective Capital Reduction becomes effective.
3.6
Shareholders Approval. Shareholders approval is accordingly being sought for the Selective Capital Reduction. Under the Companies Act, Chapter 50 of Singapore (Companies Act), the Selective Capital Reduction would require (i) a special resolution to be passed by the Shareholders, and (ii) the approval and confirmation of the High Court of the Republic of Singapore (Court) of the Selective Capital Reduction. The Non-Participating Shareholders will not be voting on the special resolution relating to the approval of the Selective Capital Reduction at the EGM (as defined below). Extraordinary General Meeting. An Extraordinary General Meeting (EGM) will be held at RELC International Hotel, 30 Orange Grove Road, Level 5 (Room 507), Singapore 258352 on 27 October 2011, as mentioned in the Circular, to seek Shareholders approval as per 3.6 above. Rationale. The rationale for the Selective Capital Reduction is set out in Section 4 of the Circular, parts of which has been reproduced in toto (and in italics for easy reference) below. The Selective Capital Reduction is an internal corporate exercise that is proposed by the Company for Participating Shareholders.
3.7
3.8
60
Following the delisting of the Company from SGX-ST, it has been difficult for the Participating Shareholders to realise their investment in the Shares given the lack of a public market for the Shares. With the Selective Capital Reduction, the Participating Shareholders will have an opportunity to realise the value of their Shares. If the Participating Shareholders do not approve the Selective Capital Reduction there is no guarantee another opportunity will arise in the future for them to realise the value of their Shares. Please read the Circular in its entirety in order to fully understand these key terms and the other terms of the Selective Capital Reduction. 4. VALUATION REPORT PREPARED BY THE FINANCIAL ADVISER For completeness, PwCCF, the financial adviser to the Company for the Selective Capital Reduction, performed a valuation in connection with the Selective Capital Reduction, to estimate the equity value of the Company as a group, (which would include the department store property (Department Store Property). PwCCFs valuation report, which has been appended as Appendix 2 in the Circular, valued the Company at a fair market value per Share of S$1.13. Section 3 of PwCCFs valuation report, which provides a summary of the indicative valuation of the Company, is shown below, and has been reproduced in toto (and in italics for easy reference) below. SUMMARY OF THE INDICATIVE VALUATION OF CK TANG BASED ON SUM-OF-THEPARTS ANALYSIS To determine the value of CK Tang, PwCCF has estimated the Fair Market value of CK Tangs retail businesses and relied on the market value of the Department Store Property as appraised by the Independent Property Valuer. We set out below the indicative valuation of CK Tang as follows:
S$ million Enterprise Value Market Value of Department Store Property Enterprise Value Less: Net Debt Less: Minority Interest Equity Value of CK Tang No. of Shares Outstanding (million) Fair Market Value per Share (S$) 8.2 360.0 368.2 100.9 (0.003) 267.3 236.99 1.13
As computed above, the Fair Market Value Per Share based on the sum-of-the-parts valuation of CK Tang is S$1.13.
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Shareholders are advised that the summary from PwCCFs valuation report above should be considered and read in conjunction with, and in the context of, the full text of the valuation report as appended in Appendix 2 of the Circular. In particular, Shareholders should note that the Department Store Property was then valued based on its existing use as a departmental store, as stated in the Valuation Summary. 5. 5.1 FINANCIAL EVALUATION OF THE TERMS OF THE SELECTIVE CAPITAL REDUCTION Methodology In assessing the financial terms of the Selective Capital Reduction, we have considered the following: (i) (ii) (iii) Valuation multiples of listed companies which are broadly comparable to the Group; Net Tangible Asset and Revalued Net Tangible Asset of the Group; Financial terms of comparable acquisitions of departmental stores in Malaysia and Singapore;
(iv) Historical trading performance of the Shares; (v) Comparison with the Delisting Offer;
(vi) Premia paid in selected delistings of companies listed on the SGX-ST; (vii) Dividend track record of the Company and selected alternative investments; and (viii) Other relevant considerations which have a significant bearing on our assessment. General bases and assumptions We have relied on the following general bases in our analysis: (i) As at the Latest Practicable Date, the issued capital of the Company comprises of 236,984,226 Shares, with a share capital of S$47,848,113.86, of which 232,601,053 or 98.2% Shares are being held by the Non-Participating Shareholders, and the remaining 4,383,173 or 1.8% held by Participating Shareholders. The underlying financial and market data used in our analysis, including securities prices, trading volumes, free float data and foreign exchange rates have been extracted from Bloomberg L.P., FactSet, MergerMarket, Thomson Research, SGX-ST and other public filings as at the Latest Practicable Date. CIMB makes no representation or warranties, express or implied, as to the accuracy or completeness of such information.
(ii)
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Valuation Ratios We have applied the following valuation multiples in our analysis:
Valuation Multiples General Description P/E or price-to-earnings multiple illustrates the market price of a companys shares relative to its earnings per share. The P/E multiple is affected by, inter alia, the capital structure of a company, its tax position as well as its accounting policies relating to depreciation and intangible assets. EV or enterprise value is the sum of a companys market capitalization, preferred equity, minority interests, short and long term debt less its cash and cash equivalents. EV/EBITDA EBITDA stands for earnings before interest, tax, depreciation and amortisation expenses, inclusive of share of associates income and excluding exceptional items. The EV/EBITDA multiple illustrates the market value of a companys business relative to its pre-tax operating cashflow performance, without regard to the companys capital structure. P/NTA or price-to-NTA ratio is the ratio of the market capitalisation of a company relative to its book net tangible asset. The P/NTA ratio is affected by differences in their respective accounting policies including their depreciation and asset valuation policies. P/NTA The NTA of a company provides an estimate of the value of a company assuming a hypothetical sale of all its tangible assets and repayment of its liabilities and obligations, with the balance being available for distribution to its shareholders. It is an asset-based valuation methodology and this approach is meaningful to the extent that it measures the value of each share that is backed by the tangible assets of a company.
P/E
5.2
Shares of the Company have been delisted Shareholders should note that the Shares have been delisted from the SGX-ST, and that the following are the implications or consequences which may arise as a result of the delisting of the Shares: (i) The delisted Shares are generally valued at a discount to the shares of comparable listed companies as a result of lack of marketability; Following the delisting of the Shares, it is likely to be difficult for the Companys shareholders to sell their Shares in the absence of a public market for the Shares as there is no arrangement for such Shareholders to exit, other than provided for in this Selective Capital Reduction; and As the Company has been delisted from the Official List of the SGX-ST, it is no longer obliged to comply with the requirements of the SGX-ST, in particular the continuing corporate disclosure requirements under Chapter 7 and Appendices 7.1 to 7.4 of the 63
(ii)
(iii)
Listing Manual, and Shareholders no longer enjoy the same level of protection, transparency and accountability afforded and imposed on the Company by the Listing Manual. Nonetheless, as a company incorporated in Singapore, the Company will still need to comply with the Companies Act and its memorandum and articles of association and the interests of Shareholders will be protected to the extent provided for by the Companies Act. However, our assessment of the financial terms of the Selective Capital Reduction necessitates the review and analysis of publicly available information, which would include information of other listed companies. Accordingly, when making a comparison with other listed companies, shareholders should note the implications or consequences of the delisted status of the Shares as mentioned above. 5.3 Comparable Companies Analysis We have compared the valuation multiples of the Company implied by the SCR Consideration with those of comparable listed companies (the Comparable Companies). A brief description of the Comparable Companies is set out below.
Market Capitalization (S$ mil) 132.0
Companies Isetan Singapore Limited (Isetan)
Sales (S$ mil) 334.1
Key Activities
Operates departmental stores in Singapore. Trades general merchandise with wholesale and retail operators. Operates departmental stores in Singapore Develops and invests in properties Undertakes building contract works Distributes building construction materials and
Metro Holdings Limited Singapore (Metro Holdings)
547.9
175.2
Source: Bloomberg L.P. and CIMB analysis
We wish to highlight that the Comparable Companies above are not exhaustive and they differ from the Company in terms of, inter alia, market capitalization, size of operations, composition of business activities, asset base, geographical spread, track record, financial performance, operating and financial leverage, risk profile, liquidity, accounting policies, future prospects and other relevant criteria.
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The valuation multiples of the Comparable Companies set out below are based on their respective last transacted share prices as at the Latest Practicable Date.
Historical P/NTA(3) (x) 0.7x 0.4x 0.6x 0.6x 2.0x
Comparable Companies Isetan Metro Holdings Mean Median Company (Implied by the SCR Consideration)
Source: Bloomberg L.P. and CIMB analysis
Notes: (1) (2)
EV/EBITDA(1),(2) (x) 7.0x 3.8x 5.4x 5.4x 33.2x
P/E(4) (x) 10.3x 6.1x 8.2x 8.2x 67.7x
Based on earnings and EBITDA over last twelve months. EBITDA figures exclude exceptional items. The EV of the respective Comparable Companies are based on (i) their market capitalization as at the Latest Practicable Date; (ii) their preferred equity, minority interests and net debt (if any) as set out in their respective latest available financial statements as at the Latest Practicable Date. The P/NTA multiples of the Comparable Companies are based on their respective NTA values as set out in their latest available results as at the Latest Practicable Date. Calculated as the last twelve months (LTM) P/E multiple.
(3) (4)
The valuation multiples of the comparable companies above do not incorporate the premium typically required to acquire control as they reflect the trades of non-controlling stakes. We note that at the SCR Consideration: (i) The P/E multiple of the Shares implied by the SCR Consideration is significantly higher than the range of the P/E multiples of the Comparable Companies (on a historical basis); The EV/EBITDA multiple of the Shares implied by the SCR Consideration is significantly higher than the range of the EV/EBITDA multiples of the Comparable Companies (on a historical basis); The P/NTA multiple of the Shares implied by the SCR Consideration is significantly higher than the range of the P/NTA multiple of the Comparable Companies.
(ii)
(iii)
This is despite the implications or consequences arising from the delisted status of the Shares. 5.4 Analysis of the NTA and RNTA of the Group It is necessary to make a distinction between NTA and RNTA for the purpose of applying the asset based valuation approach. NTA as reflected in the accounts of a company is based on the value of a companys net assets as determined by accounting procedures and does not necessarily reflect the prevailing market value of the underlying assets. On the other hand, RNTA is determined after adjusting for the revaluation of a companys key assets based on their estimated current market values.
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Analysis of the NTA of the Group Based on the Groups latest audited consolidated financial statements for FY2011, the NTA of the Group was approximately S$241.5 million or approximately S$1.02 per Share. The table below sets out the premium of the SCR Consideration to the NTA per Share as at FY2011:
Implied Premium in the SCR Consideration 96.2%
As at FY2011 NTA NTA per Share S$241.5 million S$1.02
Source: Groups audited financial statements for FY2011 and CIMB analysis
Based on the above, we note that the SCR Consideration represents a significant premium of approximately 96.2% to the NTA per Share as at FY2011. None of the assets of the Group were revalued in the above NTA analysis of the Group, save for the Department Store Property, which was revalued to S$360 million in March 2011 for FY2011. We note that the assets of the Group relate mainly to (i) property, plant and equipment, (ii) cash and bank balances, and (iii) inventory. The material component of property, plant and equipment relates to the freehold land on which the departmental store of the Group is situated. Analysis of the RNTA of the Group In carrying out our analysis of the RNTA of the Group, we will consider (i) the RNTA of the Group based on the Department Store Propertys existing use, and (ii) the RNTA of the Group based on the value of the Department Store Property as apportioned from the Independent Property Valuers opinion of the market value of the entire site comprising Lots 972L, 973C, 974M and 975W Subdivision 27 (Tang Plaza Site) on the assumption that it is a vacant redevelopment site and such other terms as set out in the Valuation Report. This value of the Department Store Property is obtained from the Valuation Report (the Redevelopment Site Value). From the Valuation Summary, the market value of the Department Store Property for its existing use is S$360 million. From the Valuation Report, the estimated Redevelopment Site Value of the Department Store Property is S$350 million (there are 2 estimated values in the report, arrived at based on different scenarios, and this is the higher of both values). (i) RNTA of the Group based on the Department Store Propertys existing use Based on the Groups latest audited consolidated financial statements for FY2011, the net book value of the Department Store Property is S$360 million. Adopting the market value of the Department Store Property as disclosed in the Valuation Summary, there will be no revaluation surplus or deficit arising in respect of the Department Store Property, as the net book value of the Department Store Property approximates the market value of the Department Store Property for its existing use. As a result, the RNTA of the Group is the same as the NTA of the Group as at FY2011, this being S$241.5 million.
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The table below sets out the computation of the RNTA of the Group and the premium of the SCR Consideration to the RNTA per Share based on the Department Store Propertys existing use after taking into account adjustments for any relevant assets and liabilities as follows:
NTA of the Group as at FY2011 (S$ million) Add/(Less): Gross revaluation surplus/(deficit) on Department Store Property RNTA of the Group as at FY2011 (S$ million) RNTA per Share as at FY2011 (S$) Premium of SCR Consideration to RNTA per Share (%)
Source: Groups audited financial statements for FY2011, Valuation Summary and CIMB analysis
241.5 241.5 1.02 96.2
Consequently, the RNTA per share of the Group as at FY2011 based on the Department Store Propertys existing use is S$1.02 per share, and the SCR Consideration represents a 96.2% premium to the RNTA per share of the Group based on the Department Store Propertys existing use. (ii) RNTA of the Group based on the Redevelopment Site Value of the Department Store Property In connection with the Selective Capital Reduction, the Company has commissioned the Independent Property Valuers to independently estimate the value of the Department Store Property as apportioned from their opinion of the market value of the Tang Plaza Site on the assumption that it is a vacant redevelopment site as at 30 June 2011, after deducting development charges, in line with the permissible parameters and guidelines, and subject to formal planning approval under the Planning Act (Cap. 232). In the Valuation Report, the Independent Property Valuer considered two scenarios, both of which are described in full in the Valuation Report. One scenario gives a higher estimated Redevelopment Site Value of the Department Store Property. Save for the Department Store Property which has been valued in accordance with the Valuation Report, the other assets of the Group have not been revalued for the specific purpose of determining the RNTA of the Group in this subsection. In the Valuation Report, the Independent Property Valuers have stipulated Tang Plaza Site is zoned Hotel. The Independent Property Valuers have also cited Circular No. URA/PB/2008/01-CUDD dated January 14, 2008, and reproduced an extract of that circular, in the Valuation Report, which provides that As a general rule, hotels will not be allowed to be converted to other uses where: (a) (b) The hotels are located on sites zoned for hotel use in the Master Plan; and The hotels are located within sites zoned for other uses but where there is a specific planning or sales requirement for a minimum hotel quantum to be provided.
Please read and consider the Valuation Report in its entirety.
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For the purposes of our analysis of the RNTA of the Group based on the Redevelopment Site Value of the Department Store Property, we have used the higher estimated Redevelopment Site Value of the Department Store Property. From the Valuation Report, this higher estimated Redevelopment Site Value of the Department Store Property is S$350 million. Based on the Groups latest audited consolidated financial statements for FY2011, the net book value of the Department Store Property is S$360 million. Therefore, there will be a revaluation deficit of S$10 million arising from the Redevelopment Site Value of the Department Store Property. The table below sets out the computation of the RNTA of the Group and the premium of the SCR Consideration to the RNTA per Share based on the Redevelopment Site Value of the Department Store Property (and using the higher estimated value in the Valuation Report), after taking into account adjustments for any relevant assets and liabilities as follows:
NTA of the Group as at FY2011 (S$ million) (Less): Gross revaluation deficit arising from the Redevelopment Site Value of the Department Store Property (S$ million) RNTA of the Group as at FY2011 (S$ million) RNTA per Share as at FY2011 (S$) Premium of SCR Consideration to RNTA per Share (%)
241.5 (10.0) 231.5 0.98 104.7
Source: Groups audited financial statements for FY2011, Valuation Report dated 3 October 2011 and CIMB analysis
Based on the table above, the RNTA per Share as of FY2011 is S$0.98. The SCR Consideration of S$2.00 represents a premium of approximately 104.7% to the RNTA per Share as at FY2011. The Independent Directors should note that, although the RNTA per Share based on the Redevelopment Site Value of the Department Store Property forms part of our analyses, whether the value is realizable or not in the market is at best uncertain, and more likely than not, will not be realised in the forseeable future in the light of the intention of the Offeror stated below. In the Appendix 1 of the Circular, which reproduces the letter to the Shareholders dated 18 August 2011, the Company states that the Non-Participating Shareholders have confirmed that they have no plans for the redevelopment of the portions of property at 310/320 Orchard Road, Singapore 238864/238865 which are owned by the Company and its subsidiaries, in the forseeable future. In that letter, the Non-Participating Shareholders are the Offeror, Tang UnityTwo LLP, Kerith Holdings LLP and TWK. It is also stated on (a) page 10 of the Circular that the Offeror currently has no intention to (i) propose any major changes to the business of the Company; (ii) redeploy the fixed assets of the Company; or (iii) discontinue the employment of any of the employees of the Group, other than in the ordinary course of business.; and
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(b) page 10 of the Circular that TWS and TWK currently have no intention of (i) discontinuing the traditional retail business started by their father, (ii) disposing of the Department Store Property, (iii) redeveloping the Department Store Property, or (iv) entering into any arrangements for a real estate investment trust in respect of the Department Store Property.
Please note that both the market value of the Department Store Property on an existing use basis or the Redevelopment Site Value of the Department Store Property and the value of the other assets of the Company may fluctuate depending on prevailing market conditions. Shareholders should also note that the analysis of the RNTA of the Group based on the Redevelopment Site Value of the Department Store Property should be considered and read in conjunction with the entirety of the Valuation Report. 5.5 Precedent Transaction Analysis We have identified and reviewed the financial terms of (i) successful acquisitions of departmental store operators over the last 5 years prior to the Latest Practicable Date and for which information is publicly available (the Precedent Departmental Store Transactions) and (ii) successful privatisation or delistings of real estate companies over the last 2 years prior to the Latest Practicable Date and for which information is publicly available (the Precedent Real Estate Transactions) Precedent Departmental Store Transactions A brief description of the target companies comprising the Precedent Departmental Store Transactions is set out below:
Location of Target Companys retail operations
Target
Acquirer
Transaction Type
Year of Completion
Deal Value (S$ million)
Total Sales of Target Company (S$ million)
Robinson and ALF Global Company Private Limited Limited (Robinson) Courts Singapore Limited (Courts) Parkson Malaysia Sdn Bhd (Parkson) Singapore Retail Group Ltd East Crest International Limited
Privatization
2008
Singapore
666.7
388.0
Acquisition of controlling stake Acquisition of controlling stake
2007
Singapore
180.7
345.9
2007
Malaysia
85.2
392.1
Source: Mergermarket and CIMB analysis
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A comparison of the Selective Capital Reduction against the Precedent Departmental Transactions is set out below:
Deal Value (S$ mil) 666.7 180.7 85.2 P/NTA(1) (x) 2.4x 0.8x n/a 1.6x 1.6x 2.0x EV/Sales(1)(2) (x) 1.8x 0.5x 0.2x 0.8x 0.5x 3.7x EV/EBITDA(1)(2) (x) 19.4x n/a 0.2x 9.8x 9.8x 33.2x P/E(1) (x) 16.7x 5.9x 8.3x 10.3x 8.3x 67.7x
Target Robinson Courts Parkson Mean Median Company (Implied by the SCR Consideration)

Notes: (1) (2) Based on earnings, sales, net tangible assets and EBITDA over last twelve months prior to the relevant announcement dates for each of the Precedent Departmental Store Transactions. The EV of the respective target companies above were based on (i) their implied equity value based on the respective offer price; (ii) their preferred equity, minority interests and net debt (if any) as set out in their respective latest available financial statements as at the relevant announcement date for each of the Precedent Departmental Store Transactions.
Precedent Real Estate Transactions A brief description of the target companies comprising the Precedent Real Estate Transactions is set out below:
Location of Target Companys operations Total Sales of Target Company (S$ million)
Target Allgreen Properties Ltd (Allgreen) MCL Land Limited (MCL Land)
Acquirer Brookvale Investments Pte Ltd Hongkong Land Holdings Limited
Transaction Type
Year of Completion
Deal Value (S$ million)
Privatization
2011
Singapore
1,177.2
883.8
Delisting
2010
Singapore
165.6
35.8
Soilbuild Group Dolphin Holdings Acquisitions Limited Pte Ltd (Soilbuild)
Delisting
2010
Singapore
195.3
106.1
Source: Company offering documents and CIMB analysis
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A comparison of the Selective Capital Reduction against the Precedent Real Estate Transactions is set out below. Note that for the purposes of our analysis, we have only take into consideration the P/NTA and P/RNTA ratios, as we deem that these ratios are the most relevant in the context of our analysis.
Deal Value (S$ mil) 1,177.2 165.6 195.3 P/NTA(1) (x) 1.0x 0.9x 1.3x 1.1x 1.0x 2.0x P/RNTA(1) (x) 0.8x 0.7x 1.1x 0.9x 0.8x 2.0x(2)
Target Allgreen MCL Land Soilbuild Mean Median Company (Implied by the SCR Consideration)
Notes: (1) (2)
Based on earnings, sales, net tangible assets, revalued net tangible assets and EBITDA over last twelve months prior to the relevant announcement dates for each of the Precedent Real Estate Transactions. The P/RNTA multiple as implied by the SCR Consideration is based on Scenario 2, as set out in the Valuation Report. We have used Scenario 2 for the purposes of our Precedent Real Estate Transaction analysis as this scenario gives a higher value for the Department Store Property when compared with Scenario 1.
We wish to highlight that the Precedent Departmental Store Transactions and Precedent Real Estate Transactions differ from the Selective Capital Reduction and may not be directly comparable to the Selective Capital Reduction, in terms of, inter alia, transaction structure, period of transaction and the characteristics of the target company and other relevant criteria. As such, any comparison made is necessarily limited and merely serves only as an illustrative guide. (i) The implied EV/EBITDA and P/E multiples of the Company based on the SCR Consideration is significantly higher than the range of multiples of the target companies based on the Precedent Departmental Store Transactions analysis above; The implied EV/Sales multiple of the Company based on the SCR Consideration is higher than the EV/Sales of the target companies based on the Precedent Departmental Store Transactions analysis above; The implied P/NTA multiple of the Company based on the SCR Consideration is higher than the mean and median P/NTA of the target companies based on the Precedent Departmental Store analysis above; and
(ii)
(iii)
(iv) The implied P/NTA and P/RNTA multiples of the Company based on the SCR Consideration is higher than the P/NTA and P/RNTA multiples of the target companies based on the Precedent Real Estate Transaction analysis above. This is despite the implications or consequences arising from the delisted status of the Shares.
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5.6 Share Price Performance of the Company We have compared the SCR Consideration to the historical price performance of the Shares and considered the historical trading volume of the Shares prior the Delisting Date. 5.6.1 Market Price Performance and Trading Activity of the Shares We set out below (i) the premia implied by the SCR Consideration over the historical volume weighted average transacted price (VWAP) of the Shares; (ii) the historical trading volume of the Shares for the 10-year period prior to and up until the Delisting Date; and (iii) the Shares purchased by the Offeror for the period after the Delisting Date and up until the Latest Practicable Date.
Average daily trading volume as a percentage of total number of shares as at the Latest Practicable Date(2) (%)
Price (S$)
Premium of SCR Consideration over Price (%)
Highest closing price (S$)
Average daily Lowest closing trading price volume(1) (S$)
Period prior to and up until the Delisting Date 10-year VWAP 5-year VWAP 3-year VWAP 3-month prior to Delisting Date 1-month prior to Delisting Date Last traded price on Delisting Date Delisting Offer price 0.448 0.605 0.717 0.824 346.04 230.79 178.85 142.62 0.900 0.900 0.900 0.885 0.150 0.360 0.450 0.680 164,046 205,147 175,851 132,357 0.07 0.09 0.07 0.06
0.848
135.84
0.885
0.820
57,889
0.02
0.830
140.96
0.830
0.825
225,000
0.09
0.830
140.96
n/a
n/a
n/a
n/a
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Average daily trading volume as a percentage of total number of shares as at the Latest Practicable Date(2) (%)
Price (S$)
Premium of SCR Consideration over Price (%)
Highest price (S$)
Lowest price (S$)
Number of Shares purchased
Share purchase by the Offeror after the Delisting Date and up until the Latest Practicable Date Share purchase 4 Nov 2009 Share purchase 25 Nov 2009 Share purchase 31 Mar 2010 Share purchase 15 Jul 2010 Share purchase 8 Sep 2010 Share purchase 31 Dec 2010 Share purchase 16 Feb 2011 0.830 0.830 0.830 0.830 0.830 0.830 0.830 140.96 140.96 140.96 140.96 140.96 140.96 140.96 n/a n/a n/a n/a n/a n/a n/a 623,100 127,000 96,001 77,000 21,000 10,000 1,750 0.26 0.05 0.06 0.03 0.01 0.00 0.00
Source: Bloomberg L.P., Company information and CIMB Analysis

Notes: (1) (2) The average daily trading volume of the Shares is calculated based on the total volume of Shares traded during the relevant period divided by the number of days in which the Shares were traded during that period. Total number of ordinary shares of the Company as at the Latest Practicable Date is 236,984,226.
We note the following: (i) The Shares have never traded at or above the SCR Consideration during the preceding 10 years prior to the Delisting Date; The SCR Consideration represented a significant premium of 122.22% over the highest closing price of the Shares of S$0.900 over the last 10 years prior to the Delisting Date; During the 3-months and 1-month period preceding the Delisting Date, the SCR Consideration represented a significant premium of between approximately 142.62% and 135.84% respectively over the corresponding VWAP of the Shares;
(ii)
(iii)
(iv) The SCR Consideration represented a significant premium of approximately 140.96% over the closing price of the Shares on the last traded Market Day prior to Delisting Date; (v) The SCR Consideration represented a significant premium of approximately 140.96% over the Delisting Offer price;
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(vi) The SCR Consideration represented a significant premium of approximately 140.96% over the transacted price of the shares in the period after the Delisting Date and up until the Latest Practicable Date; and Shareholders should also note that the Shares have been delisted from the SGX-ST and that although there has been some transactions in the Shares subsequent to the Delisting Date, there is no assurance that there will be a ready market for the Shares and hence Shareholders may not be able to sell their Shares (or at prices they expect) in the future when they wish to do so. 5.7 Comparison with the Delisting Offer On 8 May 2009, the Offeror made the Delisting Offer for all the Shares in the capital of the Company that the Offeror and other Non-Participating Shareholders does not already own. The price offered by the Offeror in this Delisting Offer was S$0.83 in cash for each of the Shares pursuant to this corporate exercise. The table below sets out a comparison of the financial terms of the Delisting Offer and the Selective Capital Reduction:
Selective Capital Reduction S$ 2.00 3.7x 33.2x
(1)
Delisting Offer Relevant Offer Price Implied EV/Sales Implied EV/EBITDA Implied P/E Implied P/NTA Implied P/RNTA S$ 0.83 1.4x 59.5x n.m 0.9x 0.9x
67.7 2.0x 2.0x
Note: (1) This P/E multiple is not meaningful as the Company incurred a loss after taxation in the financial year ended 31 March 2009.
Based on the above, we note that: (i) The SCR Consideration of S$2.00 is significantly higher than the Delisting Offer price of S$0.83; and The SCR Consideration is more favourable when compared to the Delisting Offer in terms of Implied EV/Sales, Implied P/E, Implied P/NTA and Implied P/RNTA, but less favourable in terms of Implied EV/EBITDA. However, Shareholders should note that the Company incurred a loss in the financial year ended 31 March 2009.
(ii)
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Shareholders should note that the above comparison of the Delisting Offer and the Selective Capital Reduction offer did not take into consideration the market conditions then prevailing, the general sentiments of market with regards to shares as well as the relative demand for shares of the particular industry, actual or perceived growth prospects of the industry and the Company concerned as well as the financial performance or expected financial performance during the period. 5.8 Precedent Delistings Analysis For the purpose of providing an illustrative guide as to whether the financial terms of the Selective Capital Reduction is attractive, we have compared the financial terms of the Selective Capital Reduction with those in recent successful delisting of companies listed on the SGX-ST, as well as privatization of companies where the offeror already has control of the target, in the last 2 years (Precedent Delistings). Shareholders should note that in the Selective Capital Reduction, the Offeror already has statutory control of the Company, and that the Company has already been delisted subsequent to the Delisting Offer. This analysis merely serves as an analysis and a basis for us to form an opinion on the financial terms of the Selective Capital Reduction when compared with Precedent Delistings, and this analysis should be considered in conjunction with and in the context of the implications or consequences of delisted shares as mentioned in Section 5.2 of this Letter. We wish to highlight that the premium that an offeror pays in any particular delisting offer depends on various factors such as the potential synergy that the offeror can gain by acquiring the target, the presence of competing bids for the target, prevailing market conditions and sentiments, attractiveness and profile of the targets business and assets, size of consideration and existing and desired level of control in the target. The comparison below is made without taking into consideration the underlying liquidity of the shares and the performance of the shares of the relevant companies above. Further, the list of target companies involved in the Precedent Delistings set out in the analysis above are not directly comparable with the Company in terms of size of operations, market capitalization, business activities, asset base, geographical spread, track record, accounting policy, financial performance, operating and financial leverage, future prospects and other relevant criteria. Hence, the comparison of the Selective Capital Reduction with the Precedent Delistings set out above is for illustration purpose only. Conclusion drawn from the comparisons made may not reflect any perceived market valuation of the Company.
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A summary of the relevant financial terms of the Precedent Delistings is set out below.
Premium/(Discount) prior to PreAnnouncement Share Price(1) Last transacted price (%) P/NTA Implied by Offer Price(2)
Date of Announcement Privatizations China Video Surveillance Limited Avaplus Ltd Jurong Cement Limited
(3)
1-month (%)
3-month (%)
2-Feb-10 12-Mar-10 25-Jan-10 02-Jun-10 23-Jul-10

(4)
140.9 122.2 95.3 37.2 41.7 55.8 23.8 28.4 4.8 39.1
132.9 122.1 97.5 20.9 N/A 62.6 30.7 33.8 4.7 40.6
91.9 109.5 119.3 19.1 N/A 67.9 27.5 34.6 7.5 45.3
0.8x 1.1x 0.8x 1.2x 1.9x 1.8x 1.1x 1.3x 1.5x 1.0x
Eng Kong Holdings Limited RSH Limited Kim Eng Holdings Limited Passion Holdings Limited Sinomem Technology Limited JK Yaming International Holdings Ltd All Green Properties Ltd Delistings Man Wah Holdings Ltd Giant Wireless Technology Limited Evergro Properties Limited China Precision Technology Ltd Chartered Semiconductor Manufacturing Ltd.(6) Iconic Holdings Limited Aqua-Terra Supply Co. Ltd(7) SSH Corporation Ltd.
(8)
06-Jan-11 09-Mar-11 05-Mar-11 04-May-11 23-May-11
05-Jun-09 30-Jun-09 12-Jul-09 03-Sep-09 7-Sep-09 26-Oct-09 8-Dec-09 8-Dec-09 09-Dec-09 25-Feb-10 02-Mar-10 06-Apr-10 10-May-10 04-Aug-10
9.5 (26.0) 16.0 19.2 22.9 9.7 33.6 19.2 22.8 47.1 95.3 58.6 31.4
10.8 (32.5) 39.6 25.8 41.0 18.1 38.6 21.4 12.7 43.7 97.5 57.5 39.0
32.7 (41.6) 56.0 49.3 64.0 18.1 31.5 27.4 2.9 56.3 (17.1) 119.3 52.3 38.1
1.0x 2.9x 1.8x 0.9x 1.1x 0.9x 1.0x 1.4x 0.8x 0.7x 1.9x 1.4x 0.7x 0.6x
China Lifestyle Food & Beverages Group Limited Keda Communications Ltd. Ionics EMS, Inc. Jurong Cement Limited Zhongguo Pengjie Fabrics Limited Eastern Asia Technology Limited
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Premium/(Discount) prior to PreAnnouncement Share Price(1) Last transacted price (%) 25.6 13.5 14.9 23.3 30.0 15.5 14.9 14.1 35.5 23.8 18-Aug-11 141.0 P/NTA Implied by Offer Price(2) 0.9x 1.3x 0.9x 1.6x 1.6x 0.7x 1.3x 1.5x 1.2x 1.1x 2.0x
Date of Announcement MCL Land Limited Soilbuild Group Holdings Ltd IDT Holdings (Singapore) Limited(5) Reyoung Pharmaceutical Holdings Limited Map Technology Holdings Limited Financial One Corp Time Watch Investments Limited EDMI Limited Mean Median Company (Implied by the SCR Consideration over the Delisting Offer Price)(9) 26-Aug-10 21-Sep-10 05-Oct-10 30-Nov-10 03-Dec-10 22-Dec-10 22-Mar-11 03-Jun-11
1-month (%) 27.3 15.6 17.4 20.5 33.1 18.9 28.0 24.1 38.1 29.4 136.1
3-month (%) 31.4 18.5 20.0 25.9 18.0 19.9 35.7 22.9 38.8 31.5 142.6
Source: Relevant offer documents and Bloomberg L.P.

Notes: (1) Market premia/discounts calculated relative to the closing price of the respective target companies one day prior to the respective announcement dates and VWAP of the 1-month and 3-month period prior to the respective announcement dates. The P/NTA ratio is based on the offering document of the respective target companies as implied by the offer price. The market premia were computed based on the final offer price of S$2.50 for each share and prices over the relevant periods prior to the first voluntary unconditional offer announcement on 18 December 2009. The market premia were computed based on prices over the relevant periods prior 16 December 2010 being the date which the holding announcement in relation to a potential offer was announced. The market premia were computed based on the offer price of S$0.361 for each share after adjusting for the dividend for the financial year ending December 2011 of S$0.011 per Share, which the offeror has renounced in favour of the accepting shareholders. The market premia were computed based on prices over the relevant periods prior to 29 May 2009 being the date which the holding announcement in relation to a potential offer was announced. The market premia were computed based on the consideration of S$0.2300 in cash and 0.1250 new shares in KS Energy Services Limited at the corresponding implied KS Energy share price as at the latest practicable date of the circular issued in relation to the Selective Capital Reduction of arrangement. The market premia were computed based on the consideration of S$0.1600 in cash and 0.1000 new shares in KS Energy at the corresponding implied KS Energy share price as at the latest practicable date of the circular issued in relation to the Selective Capital Reduction of arrangement. The Companys pre-announcement share price refers to the last transacted price of S$0.83 on 6 August 2009, being the last day that the Companys shares were publicly traded on SGX-ST pursuant to the Delisting Offer.
(2) (3) (4) (5)
(6) (7)
(8)
(9)
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We note that the market price premia multiples implied by the SCR Consideration are significantly above the corresponding mean and median premia of the Precedent Delistings, while the P/NTA multiple implied by the SCR Consideration is above the corresponding mean and median P/NTA multiple of the Precedent Delistings. This is despite the implications or consequences arising from the delisted status of the Shares. 5.9 Dividend Analysis For the purpose of assessing the Selective Capital Reduction, we have considered the historical dividend record of the Shares for the last 5 financial years from FYE07 to FYE11 and compared them with the returns which a Shareholder may potentially obtain by re-investing the proceeds from the Selective Capital Reduction in other selected alternative equity investments. 5.9.1 Historical dividends paid by the Company We note that no dividends has been paid from FYE07 to FYE11. Moreover the Company incurred losses in each of the fiscal years from FYE07 to FYE10. 5.9.2 Investment in selected alternative investments Shareholders who vote in favour the Selective Capital Reduction may re-invest the proceeds from the Selective Capital Reduction in selected alternative equity investments including the equity of the Comparable Companies and/or a broad market index instrument such as the STI Exchange Traded Fund (STI ETF). For illustration purpose, the dividend yields of these selected alternative investments based on their ordinary dividends declared in respect of their respective last financial year are as follows.
Dividend Yield(1) Comparable Companies Isetan Metro Holdings Mean Median STI ETF
Source: Bloomberg L.P., annual reports of the Comparable Companies and CIMB analysis
Note: (1) Dividend yield of each selected alternative investment is computed as the ordinary dividend per share divided by the closing market price on the Latest Practicable Date (or where there was no trading on such date, the last available closing market price prior thereto).
2.36% 2.56% 2.46% 2.46% 2.04%
The above analysis suggests that a shareholder who receives the SCR Consideration may potentially experience an increase in investment income if he re-invests the proceeds from the SCR Consideration in the shares of the Comparable Companies or the STI ETF. This is on the
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assumption that the Comparable Companies and the STI ETF maintain their respective net dividend per share at the same level as that set out above. We wish to highlight that the above dividend analysis serves only as an illustrative guide and is not an indication of the Companys future dividend policy nor that of any of the Comparable Companies or the STI ETF. Furthermore, an investment in the equity of the Comparable Companies or the STI ETF also presents different risk-return profiles compared to an investment in the Shares. Moreover, there is no assurance that the Company or any of the above selected alternative investments will continue to pay dividends in the future or maintain the level of dividends paid in past periods. 5.10 Other Considerations
5.10.1 Offeror already has statutory control of the Company As at the Latest Practicable Date, the Offeror owns or controls 232,601,053 Shares, representing approximately 98.2 per cent. of the existing issued share capital of the Company, and has statutory control of the Company, which places the Offeror in a position to significantly influence, inter alia, the management, operating and financial policies of the Company and is in a position to pass all ordinary and special resolutions on matters in which the Offeror and its concert parties do not have an interest, at general meetings of Shareholders. 5.10.2 Liquidity of Shares The Shares have been delisted from the SGX-ST. Shareholders should note that shares of unquoted companies are generally valued at a discount to the shares of comparable listed companies due to the lack of marketability. Following the Delisting Offer, it may have been difficult for Participating Shareholders to realize their investment in the Shares given the lack of a public market for the Shares. The Selective Capital Reduction however, provides an opportunity for Participating Shareholders to realize the value of their Shares at a premium to the shares of comparable listed companies. We have not been provided with any information that leads us to believe that another opportunity will arise in the future for the Participating Shareholders to realize the value of their Shares. Hence, if the Participating Shareholders do not approve the Selective Capital Reduction, there is no assurance that another opportunity will arise in the future for them to realize the value of their Shares. In this connection, it is relevant to know that in the Offerors letter to the Company dated 8 September 2011, it is stipulated that We wish to state that this will be our final gesture of goodwill. In the event the Selective Capital Reduction is not approved we will be content for the relevant shareholders holding in total 1.8% of the issued share capital to remain as Minority shareholders of the Company indefinitely. The above extract has been reproduced in toto and implies that the Offeror will not make any further offers to the Participating Shareholders with regards to the SCR Shares, after the Selective Capital Reduction.
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6. SUMMARY OF ANALYSIS In arriving at our advice to the Independent Directors on the Selective Capital Reduction, we have considered, inter alia, the following factors which should be considered and read in the context of the full text of this Letter: (i) The P/E, EV/EBITDA and P/NTA multiples as implied by the SCR Consideration is significantly higher than the mean and median of these multiples of the Comparable Companies (on a historical basis); The SCR Consideration represents a premium of 96.2% over the NTA of the Group as at FY2011, and represents a premium of 96.2% and 104.7% respectively over the Revalued NTA of the Group on an existing use basis and on a redevelopment basis, as at FY2011; The implied EV/EBITDA and P/E multiples of the Company based on the SCR Consideration is significantly higher than the range of multiples of the target companies based on the Precedent Departmental Store Transactions;
(ii)
(iii)
(iv) The implied EV/Sales multiple of the Company based on the SCR Consideration is higher than the EV/Sales of the target companies based on the Precedent Departmental Store Transactions; (v) The implied P/NTA multiple of the Company based on the SCR Consideration is higher than the mean and median P/NTA of the target companies based on the Precedent Departmental Store Transactions;
(vi) The P/NTA and P/RNTA multiples as implied by the SCR Consideration is higher than the P/NTA and P/RNTA multiples of the target companies based on the Precedent Real Estate Transactions; (vii) The SCR Consideration represents a significant premium over all historical VWAP benchmark of the Shares in the preceding 10 years prior to the Delisting Date, and up until the announcement of the Selective Capital Reduction; (viii) The SCR Consideration represents a significant premium of 140.96% over the Delisting Offer price; (ix) The SCR Consideration represents a premium of 122.22% over the highest closing price of the Shares of S$0.900 over the last 10 years prior to the Delisting Offer; (x) The EV/Sales, P/E, P/NTA and P/RNTA multiples as implied by the SCR Consideration is more favourable when compared with these multiples as implied by the Delisting Offer;
(xi) The premia implied by the SCR Consideration represents a significant premium to the average premium implied by the Precedent Delistings; (xii) No dividend has been paid by the Company in the last 5 financial years; (xiii) The Offeror already has statutory control of the Company as it owns, or controls, directly and indirectly, 98.2% of the Shares;
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(xiv) The Offeror does not intend to dispose of the Department Store Property, or redevelop the Department Store Property; (xv) The Selective Capital Reduction is currently the only offer available to Participating Shareholders; and (xvi) The Shares are illiquid as the Shares has been delisted from the SGX-ST subsequent to the Delisting Offer in August 2009, and the Offeror has stated that the Selective Capital Reduction will be the final offer made by the Offeror in respect of the Shares, and that no further offers will be made by the Offeror; Based upon, and having considered, inter alia, the factors described above and the information that has been made available to us at the Latest Practicable Date, we are of the opinion that as of the Latest Practicable date, the Selective Capital Reduction is on balance, fair and reasonable from a financial point of view. Accordingly, we would advise the Independent Directors to recommend that, in the absence of a superior offer, Participating Shareholders should vote in favour of the Selective Capital Reduction. We recommend that the Independent Directors advise the Participating Shareholders of our opinion in this Circular. We would also advise the Independent Directors to caution the Participating Shareholders that they should not rely on our advice to the Independent Directors as the sole basis for deciding whether or not to vote in favour of the Selective Capital Reduction. In rendering the above advice, we have not had regard to the specific investment objectives, financial situation, tax position or particular needs and constraints of any individual Shareholder. As each Shareholder would have different investment objectives and profiles, we would advise that any individual Shareholder who may require specific advice in relation to his investment objectives or portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. Shareholders should note that the opinion and advice of CIMB should not be relied upon by any Shareholder as the sole basis for deciding whether or not to vote in favour of the Selective Capital Reduction.
Yours faithfully For and on behalf of CIMB BANK BERHAD, SINGAPORE BRANCH
MAH KAH LOON HEAD CORPORATE FINANCE
ERIC WONG DIRECTOR CORPORATE FINANCE
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APPENDIX 6 ADDITIONAL INFORMATION ON TU3 LLP

1. REGISTERED OFFICE The registered office of TU3 LLP is at 320 Orchard Road, #04-00, Marriott Hotel, Singapore 238865. 2. PARTNERS The names, addresses and descriptions of the partners of TU3 LLP (the TU3 LLP Partners) as at the Latest Practicable Date are as follows:
Name Tang Wee Sung Untien Pte. Ltd. Address 4 Victoria Park Close, Singapore 266552 320 Orchard Road, #04-00, Marriott Hotel Singapore 238865 Description Partner Partner
In addition, TWS holds a majority of the voting rights of TU3 LLP. 3. PRINCIPAL ACTIVITIES TU3 LLP carries on an investment holding business. TU3 LLP is a limited liability partnership registered under the LLP Act on 8 April 2009. As at the Latest Practicable Date, TU3 LLP does not own any subsidiaries, but holds 27,579,292 Shares, representing approximately 11.6 per cent. of the total number of Shares. 4. SUMMARY OF FINANCIAL INFORMATION The following table summarises the audited income statement of TU3 LLP for the financial period from 8 April 2009 (date of registration) to 31 December 2009, as well as for the financial year ended 31 December 2010: (a) Income Statement3
TU3 LLP For the financial For the financial period from year from 8 April 2009 1 January 2010 to (date of registration) 31 December 2010 to 31 December 2009 S$000 S$000 (Audited) (Audited) Interest income Other operating expenses Financial expenses Loss from operations before taxation Taxation Net loss for the year 7 (20) (13) (13) (36) (36) (36)
TU3 LLP, as a limited liability partnership, does not issue dividends.
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The following table summarises the audited balance sheet of TU3 LLP as at 31 December 2010: (b) Balance Sheet
TU3 LLP As at 31 December 2010 S$000 (Audited) Equity Capital Accumulated losses Total equity Investment in an associate Current assets Cash & bank balances Total current assets Current liabilities Accrued operating expenses Non-trade payable to a partner Total current liabilities Net current liabilities Net Assets 5 8,307 8,312 (7,946) 15,594 366 366 15,643 (49) 15,594 23,540
5. 5.1
MATERIAL CHANGES IN FINANCIAL POSITION Financial Position. Save as a result of the TU3 LLP Payment, there have been no known material changes in the financial position of TU3 LLP since 31 December 2010, being the date to which the last published audited accounts of TU3 LLP were made up. General. Save as disclosed in this Circular, as at the Latest Practicable Date, there have been no material changes to the information previously published by or on behalf of TU3 LLP since the Notice Date. Company. Save as disclosed in publicly available information on the Company, as at the Latest Practicable Date, there have been, within the knowledge of TU3 LLP, no known material changes in the financial position or prospects of the Company since 31 March 2011, being the date to which the Companys last published audited accounts were made up.
5.2
5.3
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5.4 Accounting Policies. As at the Latest Practicable Date, there are no significant accounting policies nor any points from the notes of the accounts of TU3 LLP which are of major relevance for the interpretation of the accounts of TU3 LLP referred to in this Circular. As at the Latest Practicable Date, there are no changes in the accounting policies of TU3 LLP which will cause the figures disclosed in paragraph 4 of this Appendix 6 to be not comparable to a material extent. 6. 6.1 DISCLOSURE OF INTEREST OF TU3 LLP AND CONCERT PARTIES IN THE SHARES Holdings of the Shares. Save as disclosed in this paragraph 6.1, as at the Latest Practicable Date, none of TU3 LLP, the TU3 LLP Partners or the Concert Parties, owns, controls or has agreed to acquire any Shares or securities which carry voting rights in the Company, or instruments convertible into, rights to subscribe for or options in respect of such Shares or such securities (Company Securities). (i) (ii) (iii) As at the Latest Practicable Date, TU3 LLP holds 27,579,292 Shares4, representing approximately 11.6 per cent. of the total number of Shares. As at the Latest Practicable Date, no TU3 LLP Partner has direct interests in Shares. Save as disclosed below and in paragraphs 6.1(i) and 6.1(ii) above, as at the Latest Practicable Date, no other Concert Party has any interest in the Shares.
Concert Parties TU2 LLP(1) Kerith Holdings LLP(2) TWK Total
Notes: (1) TU2 LLP is a limited liability partnership registered under the LLP Act. The partners of TU2 LLP are (i) TWS and (ii) UPL. TU2 LLP carries on an investment holding business. UPL is a private limited company incorporated in Singapore. The entire issued share capital of UPL comprises one ordinary share held by TWK. As at the Latest Practicable Date, UPL does not own any Shares. TWS holds a majority of the voting rights of TU2 LLP and therefore has an interest in the Shares held by TU2 LLP. Kerith Holdings LLP is a limited liability partnership registered under the LLP Act. The partners of Kerith Holdings LLP are (i) TWS, (ii) UPL and (iii) TWK. Kerith Holdings LLP carries on an investment holding business. TWS holds a majority of the voting rights of Kerith Holdings LLP and therefore has an interest in the Shares held by Kerith Holdings LLP.
Number of Shares 163,385,129 29,246,632 12,390,000 205,021,761
Percentage of Total Number of Shares 68.9 12.3 5.2 86.5
(2)
7.
DEALINGS None of the persons referred to in paragraph 6 above has dealt for value in any Shares during the period commencing three months prior to the Notice Date and ending on the Latest Practicable Date.
8.
MARKET PRICES As the Company was delisted from the SGX-ST on 24 August 2009, the Shares are not quoted on the SGX-ST. Accordingly, no closing prices are available for the Shares (i) on the Latest Practicable Date, (ii) the latest business day immediately preceding the Notice Date and (iii) at the end of each of and during the six calendar months preceding the Notice Date.
TWS holds a majority of the voting rights of TU3 LLP and therefore has an interest in the Shares held by TU3 LLP.
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9. 9.1 GENERAL No Agreement having any Connection with or Dependence upon the Selective Capital Reduction. Except as disclosed in the TU3 LLP Letter and this Appendix 6, as at the Latest Practicable Date, there is no agreement, arrangement or understanding between (i) TU3 LLP or any of the Concert Parties and (ii) any of the current or recent directors of the Company or any of the current or recent Shareholders or any person having any connection with or dependence upon the Selective Capital Reduction. Transfer of Shares. TU3 LLP and its Concert Parties reserve the right to transfer any Shares to any of its Concert Parties or TU3 LLP (as the case may be) or for the purpose of granting security in favour of financial institutions which have extended or shall extend credit facilities to it. No Payment or Benefit to Directors of the Company. As at the Latest Practicable Date, there is no agreement, arrangement or understanding for any payment or other benefit to be made or given to any Director or any director of a related corporation (as defined in Section 6 of the Companies Act) of the Company as compensation for loss of office or otherwise in connection with the Selective Capital Reduction. Transfer Restrictions. The Memorandum and Articles do not contain any restrictions on the right to transfer Shares, which has the effect of requiring holders of such Shares, before transferring them, to offer them for purchase to members of the Company or to any person. Indemnity and Other Arrangements. As at the Latest Practicable Date, neither TU3 LLP nor any of its Concert Parties has entered into any arrangement with any person of the kind referred to in Note 7 on Rule 12 of the Code, including indemnity or option arrangements, and any agreement or understanding, formal or informal, or whatever nature, relating to the Shares which may be an inducement to deal or refrain from dealing in the Shares. Irrevocable Undertakings. As at the Latest Practicable Date, neither TU3 LLP nor any Concert Party has received any irrevocable undertaking from any party to vote in favour of the Selective Capital Reduction. RESPONSIBILITY STATEMENT FROM TU3 LLP PARTNERS The TU3 LLP Partners (including any who may have delegated detailed supervision of paragraph 5 and Appendices 1 and 6 to this Circular) have taken all reasonable care to ensure that the facts stated and all opinions expressed in paragraph 5 and Appendices 1 and 6 to this Circular in so far as they relate solely to TU3 LLP, are fair and accurate and that no material facts relating solely to TU3 LLP have been omitted from paragraph 5 and Appendices 1 and 6 to this Circular, and they jointly and severally accept responsibility accordingly. Where any information in paragraph 5 and Appendices 1 and 6 to this Circular relating to TU3 LLP and the Selective Capital Reduction has been extracted or reproduced from published or otherwise publicly available sources or obtained from the Company, the sole responsibility of the TU3 LLP Partners has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in paragraph 5 and Appendices 1 and 6 to this Circular.
9.2
9.3
9.4
9.5
9.6
10.
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APPENDIX 7 ADDITIONAL INFORMATION ON THE COMPANY

1. 1.1 THE COMPANY Registered Office. 238864. The registered office of the Company is at 310 Orchard Road, Singapore
1.2
Principal Activities. The principal activities of the Company are those of departmental store retailing and general merchandising. The Company has subsidiaries, which are mainly engaged in the wholesaling and retailing of merchandise. DIRECTORS The names, addresses and descriptions of the Directors as at the Latest Practicable Date are set out below: Name Ernest Seow Teng Peng Cecil Vivian Richard Wong Foo Tiang Sooi Michel Grunberg Address 2 Avon Road, Singapore 439780 14 Joan Road, Singapore 298892 1C Victoria Park Road, Singapore 266481 953 Bukit Timah Road, #07-05 The Nexus, Singapore 589651 100 Arthur Road, Singapore 439831 Designation Director Director Director Director
2.
Soh Yew Hock 3. 3.1 SHARE CAPITAL
Director
Share Capital of the Company. As at the Latest Practicable Date, the Company has only one class of shares comprising ordinary shares and an issued and fully paid-up share capital of S$47,848,113.86 divided into 236,984,226 Shares. There has been no issue of new Shares by the Company since 31 March 2011.
3.2
Capital, Dividends and Voting Rights. The rights of Shareholders in respect of capital, dividends and voting are contained in the Articles. For ease of reference, selected texts of the Articles relating to the rights of Shareholders in respect of capital, dividends and voting have been reproduced in Appendix 8 to this Circular. Convertible Instruments. As at the Latest Practicable Date, except for 4,000 options issued under the C.K. Tang Share Option Scheme 2002, there are no outstanding instruments convertible into, rights to subscribe for, and options in respect of Shares or securities which carry voting rights affecting Shares. Sale of Shares. During the period commencing six months prior to the Notice Date, and ending on the Latest Practicable Date, there were no sales of Shares by the Shareholders.5
3.3
3.4
As at 4 October 2011, 28,000 Shares were transferred from various nominee banks to the beneficial owners of such Shares.
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4. 4.1 SUMMARY OF FINANCIAL PERFORMANCE AND POSITION Financial Information of the Group. A summary of the consolidated income statement of the Group for the past three financial years ended 31 March 2009, 2010 and 2011 is set out below. The following summary financial information should be read together with the audited financial statements and related notes thereto: (a) Consolidated Income Statement
Group FY 2010 S$000 (Audited) 158,105 3,845 (11,522) (79,304) (24,350) (14,491) (6,801) (31,622) (3,343) 3 384 (9,096) (1,121) (10,217) (4.3) 94
FY 2009 S$000 (Audited) Turnover Other operating income Changes in stocks of finished goods and goods-in-transit Purchases and related expenses Staff costs Marketing related expenses Depreciation Other operating expenses Financial expenses Financial income Share of net profit of associated company (Loss)/Profit from operations before taxation Taxation Net (loss)/profit for the year (Loss)/profit per Share (cents) NTA per Share (cents) Dividend per Share (cents) 165,485 4,383 (7,796) (86,345) (27,022) (17,540) (7,201) (25,700) (3,763) 5 497 (4,997) (641) (5,638) (2.4) 93
FY 2011 S$000 (Audited) 154,147 2,878 (1,651) (78,940) (24,841) (12,622) (5,546) (22,262) (2,358) 4 197 9,006 (2,006) 7,000 3.0 102
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The following table summarises the audited consolidated balance sheet of the Group as at 31 March 2011: (b) Consolidated Balance Sheet
Group FY 2011 S$000 (Audited) Share Capital and reserves Share capital Reserves Shareholders equity Non-controlling interests Total equity Fixed assets Associated company Available-for-sale investments Current assets Stocks Trade and other debtors Available-for-sale investments Cash & cash equivalents Total current assets Current liabilities Trade and other creditors Deferred revenue Bank borrowings Provision for tax Total current liabilities Net current liabilities Non-current liabilities Bank borrowings Deferred tax liabilities Net Assets 118,250 2,606 241,532 46,513 143 500 2,915 50,071 (9,030) 16,894 5,880 376 17,891 41,041 47,848 193,687 241,535 (3) 241,532 370,713 704 1
4.2
Accounting Policies. As at the Latest Practicable Date, there are no significant accounting policies nor any points from the notes of the accounts of the Group which are of major relevance for the interpretation of the accounts of the Group referred to in this Circular.
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As at the Latest Practicable Date, there are no changes in the accounting policies of the Group which will cause the figures disclosed in this paragraph 4 to be not comparable to a material extent. 5. 5.1 MATERIAL CHANGES Financial Position. Save as disclosed in publicly available information on the Group, as at the Latest Practicable Date, there have been no known material changes in the financial position of the Company since 31 March 2011, being the date to which the Companys last published audited accounts were made up. General. As at the Latest Practicable Date, there have been no material changes to the information previously published by or on behalf of the Group since the Notice Date. NTA per Share. As at the Latest Practicable Date, the Directors are not aware of any fact or circumstance that would significantly change the NTA per Share as at 31 March 2011. DISCLOSURE OF INTERESTS Disclosure of Interests of the Company and the Directors (i) As at the Latest Practicable Date, the Company and its subsidiaries do not own any shares or instruments convertible into, rights to subscribe for and options in respect of shares of TU3 LLP or securities which carry voting rights in TU3 LLP (TU3 Securities), whether directly or indirectly. Neither the Company nor its subsidiaries have dealt for value in the TU3 Securities during the period commencing six months prior to the Notice Date and ending on the Latest Practicable Date. As at the Latest Practicable Date, none of the Directors has any direct or deemed interests in the TU3 Securities.
5.2
5.3
6. 6.1
(ii)
(iii)
(iv) None of the Directors has dealt for value in the TU3 Securities during the period commencing six months prior to the Notice Date and ending on the Latest Practicable Date. (v) As at the Latest Practicable Date, none of the Directors has any direct or deemed interests in the Shares.
(vi) None of the Directors has dealt for value in the Shares during the period commencing six months prior to the Notice Date, and ending on the Latest Practicable Date. (vii) There (i) are no service contracts between any Director or proposed director with the Company or any of its subsidiaries with more than 12 months to run, which the employing company cannot, within the next 12 months, terminate without payment of compensation and (ii) were no such service contracts entered into or amended between any of the Directors or proposed director and the Company or any of its subsidiaries during the period between the start of the six months immediately preceding the Notice Date and the Latest Practicable Date.
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(viii) There are no payments or other benefits which will be made or given to any Director or any director of any corporation, which is by virtue of Section 6 of the Companies Act, deemed to be related to the Company, as compensation for loss of office or otherwise in connection with the Selective Capital Reduction. (ix) There are no agreements or arrangements made between any Director and any other person in connection with or which are conditional upon the outcome of the Selective Capital Reduction. (x) As at the Latest Practicable Date, none of the Directors has entered into any material contract with the Group in the period beginning three years before the Notice Date.
(xi) As at the Latest Practicable Date, none of the Directors has any material personal interest, whether direct or indirect, in any material contract entered into by TU3 LLP. 6.2 Disclosure of Interests of PwCCF (i) None of PwCCF, its related corporations or funds whose investments are managed by PwCCF or its related corporations on a discretionary basis, owns or controls any Shares as at the Latest Practicable Date. None of PwCCF, its related corporations or funds whose investments are managed by PwCCF or its related corporations on a discretionary basis has dealt for value in the Shares during the period commencing six months prior to the Notice Date and ending on the Latest Practicable Date.
(ii)
6.3
Disclosure of Interests of IFA (i) None of the IFA, its related corporations or funds whose investments are managed by the IFA or its related corporations on a discretionary basis, owns or controls any Shares as at the Latest Practicable Date. None of the IFA, its related corporations or funds whose investments are managed by the IFA or its related corporations on a discretionary basis has dealt for value in the Shares during the period commencing six months prior to the Notice Date and ending on the Latest Practicable Date.
(ii)
7.
MATERIAL CONTRACTS WITH INTERESTED PERSONS Neither the Company nor any of its subsidiaries has entered into any material contracts (other than those entered into in the ordinary course of business) with interested persons (as defined in the Note on Rule 23.12 of the Code) during the period beginning three years before the Notice Date and ending on the Latest Practicable Date.
8.
MATERIAL LITIGATION As at the Latest Practicable Date, the Directors are not aware of any litigation, claims or proceedings pending or threatened against the Company or any of its subsidiaries, or any facts likely to give rise to any litigation, claims or proceedings which might materially affect the financial position of the Group.
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9. 9.1 VALUATION REPORT Bases of Valuation. The valuation of the Department Store Property was arrived on the bases of valuation as set out in section 4.0 entitled Valuation Rationale and the section entitled General Principles Adopted in the Preparation of Valuations and Reports of the Valuation Report, which should be considered and read in conjunction with, and in the context of, the full text of the Valuation Report. Potential Tax Liability. Based on the higher valuation of the Department Store Property on a redevelopment basis as set out in Scenario 2 of the Valuation Report (Valuation Amount), on the assumption that the Department Store Property would be sold at the Valuation Amount, and on the basis that the Company is holding the Department Store Property for long-term investment purposes and has no plans to be in the business of trading and dealing in property, the potential income tax liability on gains realised on such a sale on the Company would be nil. The Company has no immediate plans to dispose of its interests in the Department Store Property. Accordingly, the Valuation Amount of the Department Store Property does not take into consideration any potential income tax liability. 10. 10.1 GENERAL No Restriction on Transfer of Shares. There is no restriction in the Memorandum or Articles on the right to transfer any Shares, which has the effect of requiring the holders of such Shares, before transferring them, to offer them for purchase to members of the Company or to any person. Consent of the Share Registrar. The Share Registrar has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of its name and all references to itself in the form and context in which they respectively appear in this Circular. Consent of the FA. PwCCF has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of its FA Report dated 18 August 2011 to the Directors as set out in Appendix 2 and the inclusion of its name and all references to itself and the FA Report in the form and context in which they respectively appear in this Circular. Consent of the Valuer. The Valuer has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of the Valuation Summary and the Valuation Report as set out in Appendices 3 and 4 and the inclusion of its name and all references to itself and the Valuation Summary and the Valuation Report in the form and context in which they respectively appear in this Circular. Consent of the IFA. CIMB Bank Berhad, Singapore Branch has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of its letter dated 7 October 2011 to the Independent Directors as set out in Appendix 5 and the inclusion of its name and all references to itself and the said letter in the form and context in which they respectively appear in this Circular.
9.2
10.2
10.3
10.4
10.5
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11. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents will be available for inspection at the registered office of the Company at 310 Orchard Road, Singapore 238864 during normal business hours, from the date of this Circular until the date of the EGM: (i) (ii) (iii) the Memorandum and Articles; the Directors Report and audited accounts of the Company for FY 2011; the Letter;
(iv) the TU3 LLP Letter set out in Appendix 1 to this Circular; (v) the FA Report set out in Appendix 2 to this Circular;
(vi) the Valuation Summary and Valuation Report set out in Appendices 3 and 4 to this Circular; (vii) the IFA Letter set out in Appendix 5 to this Circular; and (viii) the letters of consent referred to in paragraph 10 above.
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APPENDIX 8 GENERAL INFORMATION

1. 1.1 CAPITAL, DIVIDENDS AND VOTING RIGHTS The rights of Shareholders in respect of capital, dividends and voting are contained in the Articles, the relevant provisions of which are set out below: 1.1.1 Rights in respect of Capital SHARES 5. (A) Save to the extent permitted by the Act, none of the funds of the Company or of any subsidiary thereof shall be directly or indirectly employed in the purchase or subscription of or in loans upon the security of the Companys shares. Notwithstanding the provisions of Article 5(A) but subject to the Act, the Company may purchase or otherwise acquire its issued shares on such terms and in such manner as the Company may from time to time think fit. If required by the Act, any share that is so purchased or acquired by the Company shall, unless held in treasury in accordance with the Act, be deemed to be cancelled immediately on purchase or acquisition by the Company. On the cancellation of a share as aforesaid, the rights and privileges attached to that share shall expire. In any other instance, the Company may hold or deal with any such share which is so purchased or acquired by it in such manner as may be permitted by, and in accordance with, the Act.
Issue of Shares. Prohibition against financial assistance.
(B)
6.
Save as provided by Section 161 of the Act, no shares may be issued by the Directors without the prior approval of the Company in General Meeting but subject thereto and to the provisions of these Articles, the Directors may allot and issue shares or grant options over or otherwise dispose of the same to such persons on such terms and conditions and at such time as the Company in General Meeting may approve. The rights attached to shares issued upon special conditions shall be clearly defined in the Memorandum of Association of the Company or these Articles. Without prejudice to any special right previously conferred on the holders of any existing shares or class of shares but subject to the Act and these Articles, shares in the Company may be issued by the Directors and any such shares may be issued with such preferred, deferred, or other special rights or such restrictions, whether with regard to dividend, voting, return of capital or otherwise as the Directors may determine.
7.
Special Rights.
93

8. The Company shall not exercise any right in respect of treasury shares other than as provided by the Act. Subject thereto, the Company may deal with its treasury shares in the manner authorised by, or prescribed pursuant to, the Act. If at any time the share capital is divided into different classes, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of the Act, whether or not the Company is being wound up, be varied or abrogated with the sanction of a Special Resolution passed at a separate General Meeting of the holders of shares of the class and to every such Special Resolution the provisions of Section 184 of the Act shall with such adaptations as are necessary apply. To every such separate General Meeting the provisions of these Articles relating to General Meetings shall mutatis mutandis apply. Provided Always That: (a) the necessary quorum shall be two persons at least holding or representing by proxy or by attorney one-third of the issued shares of the class and that any holder of shares of the class present in person or by proxy or by attorney may demand a poll, but where the necessary majority for such a Special Resolution is not obtained at the Meeting, consent in writing if obtained from the holders of three-fourths of the issued shares of the class concerned within two months of the Meeting shall be as valid and effectual as a Special Resolution carried at the Meeting; or where all the issued shares of the class are held by one person, the necessary quorum shall be one person and such holder of shares of the class present in person or by proxy or by attorney may demand a poll.
Creation or issue of further shares with special rights. Treasury Shares.
9.
Variation of rights.
(b)
10.
The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall, unless otherwise expressly provided by the terms of issue of the shares of that class or by these Articles as are in force at the time of such issue, be deemed to be varied by the creation or issue of further shares ranking equally therewith. The Company may pay commissions or brokerage on any issue of shares at such rate or amount and in such manner as the Directors may deem fit. Such commission or brokerage may be satisfied by the payment of cash or the allotment of fully or partly paid shares or partly in one way and partly in the other. If any shares of the Company are issued for the purpose of raising money to defray the expenses of the construction of any works or the provisions of any plant which cannot be made profitable for a long period, the Company may, subject to the conditions and restrictions mentioned in the Act pay interest on 94
11.
Power to pay commission and brokerage.
12.
Power to charge interest on capital.

such of the shares (excluding treasury shares) as is for the time being paid up and may charge the same to capital as part of the cost of the construction or provision. 13. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these Articles or by law otherwise provided) any other rights in respect of any share, except an absolute right to the entirety thereof in the registered holder. If two or more persons are registered as joint holders of any share, any one of such persons may give effectual receipts for any dividend payable in respect of such share and the joint holders of a share shall, subject to the provisions of the Act, be severally as well as jointly liable for the payment of all instalments and calls and interest due in respect of such shares. Such joint holders shall be deemed to be one Member and the delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all such holders. No person shall be recognised by the Company as having title to a fractional part of a share or otherwise than as the sole or a joint holder of the entirety of such share. If by the conditions of allotment of any shares the whole or any part of the amount of the issue price thereof shall be payable by instalments, every such instalment shall, when due, be paid to the Company by the person who for the time being shall be the registered holder of the share or his personal representatives, but this provision shall not affect the liability of any allottee who may have agreed to pay the same. ALTERATION OF CAPITAL 47. Subject to any special rights for the time being attached to any existing class of shares, any new shares in the Company shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the General Meeting resolving upon the creation thereof shall direct and if no direction be given as the Directors shall determine subject to the provisions of these Articles and in particular (but without prejudice to the generality of the foregoing) such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the Company or otherwise. Unless otherwise determined by the Company in General Meeting any new shares shall before issue be offered in the first instance to all the then holders of any class of shares in 95
Rights and privileges of new shares. Exclusion of equities.
14.
Joint holders.
15.
Fractional part of a share.
16.
Payment of instalments.
48.
Issue of new shares to Members.

proportion as nearly as may be to the number of the existing shares to which they are entitled. In offering such shares in the first instance to all the then holders of any class of shares the offer shall be made by notice specifying the number of shares offered and limiting the time within which the offer if not accepted will be deemed to be declined and after the expiration of that time or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the Directors may dispose of those shares in such manner as they think most beneficial to the Company and the Directors may dispose of or not issue any such shares which by reason of the proportion borne by them to the number of holders entitled to any such offer or by reason of any other difficulty in apportioning the same cannot, in the opinion of the Directors, be conveniently offered under this Article. 49. Except so far as otherwise provided by the conditions of issue or by these Articles all new shares shall be subject to the provisions of these Articles with reference to allotments, payment of calls, liens, transfers, transmissions, forfeiture and otherwise. The Company may by Ordinary Resolution: (a) (b) consolidate and divide all or any of its share capital; subdivide its shares or any of them (subject nevertheless to the provisions of the Act). Provided always that in such subdivision the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; and subject to the provisions of these Articles and the Act, convert any class of shares into any other class of shares.
Power to reduce capital. New shares otherwise subject to provisions of Articles.
50.
Power to consolidate subdivide and convert shares.
(c)
51.
The Company may by Special Resolution reduce its share capital in any manner and with and subject to any incident authorised and consent required by law. Without prejudice to the generality of the foregoing, upon cancellation of a share purchased or otherwise acquired by the Company pursuant to these Articles and the Act, the number of issued shares of the Company shall be diminished by the number of the shares so cancelled, and, where any such cancelled share was purchased or acquired out of the capital of the Company, the amount of share capital of the Company shall be reduced accordingly.
96

1.1.2 Rights in respect of Dividends DIVIDENDS 117. The Company may by Ordinary Resolution declare dividends but (without prejudice to the powers of the Company to pay interest on share capital as hereinbefore provided) no dividend shall be payable except out of the profits of the Company, or in excess of the amount recommended by the Directors. Subject to any rights or restrictions attached to any shares or class of shares and except as otherwise permitted under the Act: (a) all dividends in respect of shares shall be paid in proportion to the number of shares held by a Member but where shares are partly paid all dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the partly paid shares; and all dividends shall be apportioned and paid proportionately to the amounts so paid or credited as paid during any portion or portions of the period in respect of which the dividend is paid.
Payment of dividends.
118.
Apportionment of dividends.
(b)
For the purposes of this Article, an amount paid or credited as paid on a share in advance of a call is to be ignored. 119. If and so far as in the opinion of the Directors the profits of the Company justify such payments, the Directors may pay the fixed preferential dividends on any class of shares carrying a fixed preferential dividend expressed to be payable on a fixed date on the half-yearly or other dates (if any) prescribed for the payment thereof by the terms of issue of the shares, and subject thereto may also from time to time pay to the holders of any other class of shares interim dividends thereon of such amounts and on such dates as they may think fit. No dividend or other moneys payable on or in respect of a share shall bear interest against the Company. The Directors may deduct from any dividend or other moneys payable to any Member on or in respect of a share all sums of money (if any) presently payable by him to the Company on account of calls or in connection therewith. The Directors may retain any dividend or other moneys payable on or in respect of a share on which the 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.
Payment of preference and interim dividends.
120.
Dividends not to bear interest.
121.
Deduction for debts due to Company.
122.
Retention of dividends on shares subject to lien.
97

123. The Directors may retain the dividends payable on shares in respect of which any person is under the provisions as to the transmission of shares hereinbefore contained entitled to become a Member or which any person under those provisions is entitled to transfer until such person shall become a Member in respect of such shares or shall duly transfer the same. The payment by the Directors of any unclaimed dividends or other moneys payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof. All dividends and other moneys payable on or in respect of a share that are unclaimed after first becoming payable may be invested or otherwise made use of by the Directors for the benefit of the Company and any dividend or moneys unclaimed after a period of six years from the date they are first payable may be forfeited and if so shall revert to the Company but the Directors may at any time thereafter at their absolute discretion annul any such forfeiture and pay the moneys so forfeited to the person entitled thereto prior to the forfeiture. The Company may, upon the recommendation of the Directors, by Ordinary Resolution direct payment of a dividend in whole or in part by the distribution of specific assets and in particular of paid up shares or debentures of any other company or in any one or more of such ways; and the Directors shall give effect to such Resolution and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights of all parties and may vest any such specific assets in trustees as may seem expedient to the Directors. Any dividend or other moneys payable in cash on or in respect of a share may be paid by cheque or warrant sent through the post to the registered address of the Member or person entitled thereto, or, if several persons are registered as joint holders of the share or are entitled thereto in consequence of the death or bankruptcy of the holder to any one of such persons or to such persons and such address as such persons may by writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or to such person as the holder or joint holders or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and payment of the cheque if purporting to be endorsed or the receipt of any such person shall be a good discharge to the Company. Every such cheque or warrant shall be sent at the risk of the person entitled to the money represented thereby. A transfer of shares shall not pass the right to any dividend declared on such shares before the registration of the transfer. 98
Retention of dividends on shares pending transmission.
124.
Unclaimed dividends or other moneys.
125.
Payment of dividend in specie.
126.
Dividends payable by cheque.
127.
Effect of transfer.

RESERVES 128. The Directors may from time to time set aside out of the profits of the Company and carry to reserve such sums as they think proper which, at the discretion of the Directors, shall be applicable for meeting contingencies or for the gradual liquidation of any debt or liability of the Company or for repairing or maintaining the works, plant and machinery of the Company or for special dividends or bonuses or for equalising dividends or for any other purpose to which the profits of the Company may properly be applied and pending such application may either be employed in the business of the Company or be invested. The Directors may divide the reserve into such special funds as they think fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided. The Directors may also without placing the same to reserve carry forward any profits which they may think it not prudent to divide.
Power to carry profit to reserve.
129.
Manner of dealing with reserves.
BONUS ISSUES AND CAPITALISATION OF PROFITS AND RESERVES 130. The Company may, upon the recommendation of the Directors, by Ordinary Resolution: (a) issue bonus shares for which no consideration is payable to the Company, to the Members holding shares in the Company in proportion to their then holdings of shares; and/or capitalise any sum for the time being standing to the credit of any of the Companys reserve accounts or any sum standing to the credit of the profit and loss account or otherwise available for distribution, provided that such sum be not required for paying the dividends on any shares carrying a fixed cumulative preferential dividend and accordingly that the Directors be authorised and directed to appropriate the sum resolved to be capitalised to the Members holding shares in the Company in the proportions in which such sum would have been divisible amongst them had the same been applied or been applicable in paying dividends and to apply such sum on their behalf either in or towards paying up the amounts (if any) for the time being unpaid on any shares held by such Members respectively, or in paying up in full new shares or debentures of the Company, such shares or debentures to be allotted and distributed and credited as fully paid up to and amongst such Members in the proportion aforesaid or partly in one way and partly in the other.
Power to issue free bonus shares and/or to capitalise profits.
(b)
99

131. Whenever such a Resolution as aforesaid shall have been passed, the Directors may do all acts and things considered necessary or expedient to give effect to any such bonus issue and/or capitalisation with full power to the Directors to make such provisions as they think fit for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all the Members interested into an agreement with the Company providing for any such bonus issue or capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all such Members. Rights in respect of Voting GENERAL MEETINGS 52. (A) Subject to the provisions of the Act, the Company shall in each year hold a General Meeting as its Annual General Meeting in addition to any other meetings in that year and not more than fifteen months shall elapse between the date of one Annual General Meeting of the Company and that of the next; provided that so long as the Company holds its First Annual General Meeting within eighteen months of its incorporation, it need not hold it in the year of its incorporation or in the following year. All General Meetings other than Annual General Meetings shall be called Extraordinary General Meetings.
Annual General Meeting. Power of Directors to give effect to bonus issue and/or capitalisations.
1.1.3
(B)
Extraordinary General Meetings. Time and place.
53.
The time and place of any General Meeting shall be determined by the Directors. The Directors may, whenever they think fit, convene an Extraordinary General Meeting and Extraordinary General Meetings shall also be convened on such requisition or, in default, may be convened by such requisitionists, as provided by Section 176 of the Act. If at any time there are not within Singapore sufficient Directors capable of acting to form a quorum at a meeting of Directors, any Director may convene an Extraordinary General Meeting in the same manner as nearly as possible as that in which meetings may be convened by the Directors. NOTICE OF GENERAL MEETINGS
54.
Calling of Extraordinary General Meetings.
55.
Subject to the provisions of the Act, at least fourteen days notice in writing (exclusive both of the day on which the notice is served or deemed to be served and of the day for which the notice is given) of every General Meeting shall be given in the manner hereinafter mentioned to such persons (including the Auditors) as 100
Notice of Meetings.

are under the provisions herein contained and the Act entitled to receive notice from the Company. Provided that a General Meeting notwithstanding that it has been called by a shorter notice than that specified above shall be deemed to have been duly called if it is so agreed: (a) in the case of an Annual General Meeting by all the Members entitled to attend and vote thereat; and in the case of an Extraordinary General Meeting by that number or majority in number of the Members having a right to attend and vote thereat, being a majority together holding not less than 95 per cent. of the total voting rights of all the Members having a right to vote at that General Meeting.
(b)
Provided also that the accidental omission to give notice to, or the non-receipt by any person entitled thereto, shall not invalidate the proceedings at any General Meeting. 56. (A) Every notice calling a General Meeting shall specify the place and the day and hour of the Meeting, and there shall appear with reasonable prominence in every such notice a statement that a Member entitled to attend and vote is entitled to appoint a proxy to attend and to vote instead of him and that a proxy need not be a Member. In the case of an Annual General Meeting, the notice shall also specify the Meeting as such. In the case of any General Meeting at which business other than routine business is to be transacted, the notice shall specify the general nature of the business; and if any resolution is to be proposed as a Special Resolution or as requiring special notice, the notice shall contain a statement to that effect.
Routine Business. Contents of Notice.
(B)
(C)
57.
Routine business shall mean and include only business transacted at an Annual General Meeting of the following classes, that is to say: (a) (b) declaring dividends; reading, considering and adopting the balance sheet, the reports of the Directors and Auditors, and other accounts and documents required to be annexed to the balance sheet; appointing Auditors and fixing the remuneration of Auditors or determining the manner in which such remuneration is to be fixed; and fixing the remuneration of the Directors proposed to be paid under Article 85. 101
(c)
(d)

PROCEEDINGS AT GENERAL MEETINGS 58. No business shall be transacted at any General Meeting unless a quorum is present. Except as herein otherwise provided, two Members shall form a quorum save that: (a) in the event of a corporation being beneficially entitled to the whole of the issued shares in the capital of the Company one person representing such corporation shall be a quorum and shall be deemed to constitute a Meeting and, if applicable, the provisions of Section 179 of the Act shall apply; and in the event the Company has only one Member, the Company may pass a resolution by that Member recording the resolution and signing the record in accordance with the provisions of Section 184G of the Act.
Quorum.
(b)
For the purpose of this Article, Member includes a person attending by proxy or by attorney or as representing a corporation which is a Member. 59. If within half an hour from the time appointed for the Meeting a quorum is not present, the Meeting if convened on the requisition of Members shall be dissolved. In any other case it shall stand adjourned to the same day in the next week at the same time and place, or to such other day and at such other time and place as the Directors may determine, and if at such adjourned Meeting a quorum is not present within fifteen minutes from the time appointed for holding the Meeting, the Meeting shall be dissolved. No notice of any such adjournment as aforesaid shall be required to be given to the Members. Subject to the provisions of the Act, the Members may participate in a General Meeting by means of a conference telephone or a video conference telephone or similar communications equipment by which all persons participating in the General Meeting are able to hear and be heard by all other Members without the need for a Member to be in the physical presence of another Member(s) and participation in the General Meeting in this manner shall be deemed to constitute presence in person at such meeting. The Members participating in any such General Meeting shall be counted in the quorum for such General Meeting and subject to there being a requisite quorum under these Articles, all resolutions agreed by the Members in such General Meeting shall be deemed to be as effective as a resolution passed at a meeting in person of the Members duly convened and held. A General Meeting conducted by means of a conference telephone or a video conference telephone or similar communications equipment as aforesaid is deemed to be held at the place agreed upon by the Members attending the General 102
Adjournment if quorum not present.
60.
General Meeting via conference telephone, video conference telephone or similar communications equipment.

Meeting, provided that at least one of the Members present at the General Meeting was at that place for the duration of the General Meeting. 61. Subject to any additional requirements as may be imposed by the Act, all resolutions of the Members shall be adopted by a simple majority vote of the Members present and voting. Subject to the provisions of the Act, a resolution in writing signed by every Member of the Company entitled to vote or being a corporation by its duly authorised representative shall have the same effect and validity as an Ordinary Resolution of the Company passed at a General Meeting duly convened, held and constituted, and may consist of several documents in the like form, each signed by one or more of such Members. The Chairman of the Board of Directors shall preside as Chairman at every General Meeting. If there be no such Chairman or if at any Meeting he be not present within ten minutes after the time appointed for holding the Meeting or be unwilling to act, the Members present shall choose some Director to be Chairman of the Meeting or, if no Director be present or if all the Directors present decline to take the Chair, one of their number present, to be Chairman. The Chairman may, with the consent of any Meeting at which a quorum is present (and shall if so directed by the Meeting in accordance with Article 64) adjourn the Meeting from time to time (or sine die) and from place to place, but no business shall be transacted at any adjourned Meeting except business which might lawfully have been transacted at the Meeting from which the adjournment took place. When a Meeting is adjourned for thirty days or more or sine die, notice of the adjourned Meeting shall be given as in the case of the original Meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned Meeting. At any General Meeting a resolution put to the vote of the Meeting shall be decided on a show of hands unless a poll be (before or on the declaration of the result of the show of hands) demanded: (a) (b) by the Chairman; or by at least two Members present in person or by proxy or by attorney or in the case of a corporation by a representative and entitled to vote at the meeting; by any Member or Members present in person or by proxy or by attorney or in the case of a corporation by a representative and representing not less than one-tenth of the total voting rights of all the Members having the right to vote at the Meeting; or 103
Voting.
62.
Resolutions in writing.
63.
Chairman.
64.
Adjournment.
65.
Method of Voting.
(c)

(d) by a Member or Members present in person or by proxy or by attorney or in the case of a corporation by a representative, holding not less than 10 per cent. of the total number of paid-up shares of the Company (excluding treasury shares).
Unless a poll be so demanded (and the demand be not withdrawn) a declaration by the Chairman that a resolution has been carried or carried unanimously or by a particular majority or lost and an entry to that effect in the minute book shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution. A demand for a poll may be withdrawn. 66. If a poll be duly demanded (and the demand be not withdrawn) it shall be taken in such manner (including the use of ballot or voting papers) as the Chairman may direct and the result of a poll shall be deemed to be the resolution of the Meeting at which the poll was demanded. The Chairman may appoint scrutineers and may adjourn the Meeting to some place and time fixed by him for the purpose of declaring the result of the poll. If any votes be counted which ought not to have been counted or might have been rejected, the error shall not vitiate the result of the voting unless it be pointed out at the same Meeting or at any adjournment thereof and not in any case unless it shall in the opinion of the Chairman be of sufficient magnitude. In the case of equality of votes, whether on a show of hands or on a poll, the Chairman of the Meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a second or casting vote. A poll demanded on any question shall be taken either immediately or at such subsequent time (not being more than thirty days from the date of the Meeting) and place as the Chairman may direct. No notice need be given of a poll not taken immediately. The demand for a poll shall not prevent the continuance of a Meeting for the transaction of any business, other than the question on which the poll has been demanded. VOTES OF MEMBERS 71. Subject to these Articles and to any special rights or restrictions as to voting attached to any class of shares hereinafter issued on a show of hands every Member entitled to vote who is present in person or by proxy or attorney or in the case of a corporation by
Voting rights of Members. Taking a poll.
67.
Votes counted in error.
68.
Chairmans casting vote.
69.
Time for taking a poll.
70.
Continuance of business after demand for a poll.
104

a representative shall have one vote and on a poll every such Member shall have one vote for every share of which he is the holder. 72. Where there are joint registered holders of any share any one of such persons may vote and be reckoned in a quorum at any Meeting either personally or by proxy or by attorney or in the case of a corporation by a representative as if he were solely entitled thereto and if more than one of such joint holders be so present at any Meeting that one of such persons so present whose name stands first in the Register in respect of such share shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased Member in whose name any share stands shall for the purpose of this Article be deemed joint holders thereof. A Member of unsound mind or whose person or estate is liable to be dealt with in any way under the law relating to mental disorders may vote whether on a show of hands or on a poll by his committee, curator bonis or such other person as properly has the management of his estate and any such committee, curator bonis or other person may vote by proxy or attorney. Provided that such evidence as the Directors may require of the authority of the person claiming to vote shall have been deposited at the Office not less than forty-eight hours before the time appointed for holding the Meeting. Subject to the provisions of these Articles and the Act every Member shall be entitled to be present and to vote at any General Meeting either personally or by proxy or by attorney or in the case of a corporation by a representative and to be reckoned in a quorum in respect of shares fully paid and in respect of partly paid shares where calls are not due and unpaid. No objection shall be raised to the qualification of any voter except at the Meeting or adjourned Meeting at which the vote objected to is given or tendered and every vote not disallowed at such Meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairman of the Meeting whose decision shall be final and conclusive. On a poll votes may be given either personally or by proxy or by attorney or in the case of a corporation by its representative and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way. An instrument appointing a proxy shall be in writing and: (a) in the case of an individual shall be signed by the appointor or by his attorney; and
Voting rights of joint holders.
73.
Voting rights of Members of unsound mind.
74.
Right to vote
75.
Objections.
76.
Votes on a poll.
77.
Appointment of proxies.
105

(b) in the case of a corporation shall be either under the common seal or signed by its attorney or by an officer on behalf of the corporation.
The Directors may, but shall not be bound to, require evidence of the authority of any such attorney or officer. 78. 79. A proxy need not be a Member. An instrument appointing a proxy or the power of attorney or other authority, if any, must be left at the Office or such other place (if any) as is specified for the purpose in the notice convening the Meeting not less than forty-eight hours before the time appointed for the holding of the Meeting or adjourned Meeting (or in the case of a poll before the time appointed for the taking of the poll) at which it is to be used and in default shall not be treated as valid unless the Directors otherwise determine. An instrument appointing a proxy shall be in the following form with such variations if any as circumstances may require or in such other form as the Directors may accept and shall be deemed to include the right to demand or join in demanding a poll, to move any resolution or amendment thereto and to speak at the meeting: C.K. TANG LIMITED I/We, of a Member/Members of the abovenamed Company hereby appoint of or whom failing of to vote for me/us and on my/our behalf at the (Annual, Extraordinary or Adjourned, as the case may be) General Meeting of the Company to be held on the day of and at every adjournment thereof. As Witness my/our hand this day of
Proxy need not be a Member. Deposit of proxies.
80.
Form of proxies.
An instrument appointing a proxy shall, unless the contrary is stated thereon, be valid as well for any adjournment of the Meeting as for the Meeting to which it relates and need not be witnessed. 81. A vote given in accordance with the terms of an instrument of proxy (which for the purposes of these Articles shall also include a power of attorney) shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy, or of the authority under which the proxy was executed or the transfer of the share in respect of which the proxy was given. Provided 106
Intervening death or insanity of principal not to revoke proxy.

that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the Company at the Office (or such other place as may be specified for the deposit of instruments appointing proxies) before the commencement of the Meeting or adjourned Meeting (or in the case of a poll before the time appointed for the taking of the poll) at which the proxy is used. 82. Any corporation which is a Member may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any Meeting of the Company or of any class of Members. The person so authorised shall be entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if it were an individual Member and such corporation shall for the purposes of these Articles (but subject to the Act) be deemed to be present in person at any such Meeting if a person so authorised is present thereat. The Company shall be entitled to treat a certificate under the seal of the corporation as conclusive evidence of the appointment of representative under this Article.
Corporations acting by representatives.
107
APPENDIX 9 AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE GROUP FOR FY 2011
Co. Reg. No. 196100023H
C.K. Tang Limited and its subsidiaries

Annual Financial Statements 31 March 2011
108
C.K. Tang Limited and its subsidiaries General Information
Directors Ernest Seow Teng Peng Cecil Vivian Richard Wong Foo Tiang Sooi Michel Grunberg Soh Yew Hock Company Secretary Cecilia Tan La Hiong Foo Siang Larng Registered Office 310 Orchard Road Singapore 238864 Tel: (65) 67375500 Fax: (65) 67371130 Auditors Ernst & Young LLP Banker Oversea-Chinese Banking Corporation Limited United Overseas Bank Share Registrar Boardroom Corporate & Advisory Services Pte Ltd 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 Tel: (65) 65365355 Fax: (65) 65361360 (Appointed on 4 May 2011) (Resigned on 4 May 2011)
(Appointed on 1 February 2011)
Index Page Directors Report Statement by Directors Independent Auditors Report Balance Sheets Consolidated Statement of Comprehensive Income Statements of Changes in Equity Consolidated Cash Flow Statement Notes to the Financial Statements 1 3 4 5 6 7 9 10
109
C.K. Tang Limited and its subsidiaries Directors Report
The directors are pleased to present their report to the members together with the audited consolidated financial statements of C.K. Tang Limited (the Company) and its subsidiaries (collectively, the Group) and the balance sheet and statement of changes in equity of the Company for the financial year ended 31 March 2011.
Directors The directors of the Company in office at the date of this report are: Ernest Seow Teng Peng Cecil Vivian Richard Wong Foo Tiang Sooi Michel Grunberg Soh Yew Hock
(Appointed on 1 February 2011)
Arrangements to enable directors to acquire shares and debentures Except for the C.K. Tang Share Option Scheme 2002 (the Scheme) as disclosed below, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.
Directors interests in shares and debentures According to the register of directors shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, no director of the Company who held office at the end of the financial year had any interest in shares of the Company or of related corporations, either at the beginning of the financial year or at the end of the financial year.
Share options Details of the options to subscribe for ordinary shares of the Company pursuant to the Scheme are as follows: Aggregate Aggregate options options granted exercised/ since expired/ commencement cancelled since of Scheme to end commencement of of Scheme to end financial year of financial year
Date of grant
Exercise period
Exercise price $ 0.20
Options granted during the year
Options outstanding as at 31.3.2011
2.5.2002
2.5.2003 to 2.5.2012
4,213,000
(4,209,000)
4,000
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110
C.K. Tang Limited and its subsidiaries Directors Report
Share options (contd) The options under the Scheme do not entitle the holders to participate in any share issue of any other corporation in the Group by virtue of the options. Except for the above, no other options to take up unissued shares of the Company or any subsidiary were granted and no shares were issued by virtue of the exercise of options to take up unissued shares of the Company or any subsidiary. There were no unissued shares of any subsidiary under option at the end of the financial year.
Directors contractual benefits Except as disclosed in the financial statements, since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest.
Auditors Ernst & Young LLP have expressed their willingness to accept reappointment as auditors.
On behalf of the Board of Directors
Cecil Vivian Richard Wong Director
Foo Tiang Sooi Director
Singapore 1 August 2011
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C.K. Tang Limited and its subsidiaries Statement by Directors
We, Cecil Vivian Richard Wong and Foo Tiang Sooi, being two of the directors of C.K. Tang Limited, do hereby state that, in the opinion of the directors,
(a)
the accompanying balance sheets, consolidated statement of comprehensive income, statements of changes in equity and consolidated cash flow statement together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2011, and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the financial year ended on that date, and
(b)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
On behalf of the Board of Directors
Cecil Vivian Richard Wong Director
Foo Tiang Sooi Director
Singapore 1 August 2011
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C.K. Tang Limited and its subsidiaries Independent Auditors Report To the members of C.K. Tang Limited
Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of C.K. Tang Limited (the "Company") and its subsidiaries (collectively, the "Group") set out on pages 5 to 43, which comprise the balance sheets of the Group and the Company as at 31 March 2011, the statements of changes in equity of the Group and the Company, the consolidated statement of comprehensive income and consolidated cash flow statement of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information. Management's responsibility for the consolidated financial statements Management is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the "Act") and Singapore Financial Reporting Standards, and for 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 accounts and balance sheets and to maintain accountability of assets. Auditors' responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the consolidated financial statements that give a true and fair view 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 consolidated 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 consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2011 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date. Report on other legal and regulatory requirements In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
Ernst & Young LLP Public Accountants and Certified Public Accountants Singapore 1 August 2011 - 4 -
113
C.K. Tang Limited and its subsidiaries Balance Sheets as at 31 March 2011
Group Note 2011 $000 2010 $000
Company 2011 2010 $000 $000
Share capital and reserves Share capital Reserves Shareholders equity Non-controlling interests Total equity Fixed assets Subsidiaries Associated company Available-for-sale investments Current assets Stocks Trade and other debtors Available-for-sale investments Cash and cash equivalents 10 11 9 21 16,894 5,880 376 17,891 41,041 Current liabilities Trade and other creditors Deferred revenue Bank borrowings Provision for tax Derivatives 12 13 14 46,513 143 500 2,915 50,071 Net current liabilities Non-current liabilities Bank borrowings Deferred tax liabilities 13 20 118,250 2,606 241,532 118,750 2,639 223,570 824 88,508 936 88,262 (9,030) 40,948 341 12,400 1,408 69 55,166 (17,781) 44,147 143 991 45,281 (14,573) 37,580 341 9,400 246 47,567 (22,346) 18,545 7,328 377 11,135 37,385 15,590 4,215 376 10,527 30,708 14,613 4,610 377 5,621 25,221 6 7 8 9 4 5 47,848 193,687 241,535 (3) 241,532 370,713 704 1 47,848 175,715 223,563 7 223,570 361,949 790 1 47,848 40,660 88,508 88,508 10,039 93,865 1 47,848 40,414 88,262 88,262 10,532 101,011 1
The accounting policies and explanatory notes form an integral part of the financial statements.
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C.K. Tang Limited and its subsidiaries Consolidated Statement of Comprehensive Income for the year ended 31 March 2011
Group Note 2011 $000 154,147 2,878 (1,651) (78,940) (24,841) (12,622) (5,546) (22,262) (2,358) 4 197 9,006 (2,006) 7,000 2010 $000 158,105 3,845 (11,522) (79,304) (24,350) (14,491) (6,801) (31,622) (3,343) 3 384 (9,096) (1,121) (10,217)
Turnover Other operating income Changes in stocks of finished goods and goods-in-transit Purchases and related expenses Staff costs Marketing related expenses Depreciation Other operating expenses Financial expenses Financial income Share of net profit of associated company Profit/(loss) from operations before taxation Taxation Net profit/(loss) for the year
15 16
18 6 19 19
17 20
Other comprehensive income: Currency translation differences Translation differences on advances to subsidiaries Net surplus on revaluation of freehold property net of deferred tax 6, 20 Net gain on available-for-sale investment 9 Other comprehensive income for the year, net of tax
433 (576) 11,093 12 10,962
2,593 368 11,050 145 14,156
Total comprehensive income for the year Net profit/(loss) attributable to: Equity holders of the Company Non-controlling interests
17,962
3,939
7,010 (10) 7,000
(10,210) (7) (10,217)
Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests
17,972 (10) 17,962
3,943 (4) 3,939
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115
C.K. Tang Limited and its subsidiaries
Statements of Changes in Equity for the year ended 31 March 2011
Group
Share capital $000 Revenue reserve $000 (49,268) (10,210) (10,210) (59,478) 117 7,010 7,010 (52,468) (10,210) 14,153 3,943 117 175,715 7,010 10,962 17,972 193,687 171,655 128 (7) 3 (4) (117) 7 (10) (10) (3) Total reserves $000 47,848 117 117 47,848 47,848 253,917 (8,169) 290 11,093 (143) 12 11,093 (143) 12 242,824 (8,026) 278 11,050 2,958 145 11,050 2,958 145 231,774 (10,984) 133
Asset revaluation reserve $000 Translation reserve $000 Noncontrolling interests $000
Fair value adjustment reserve $000
Discount on acquisition of noncontrolling interests $000
Total equity $000 219,631 (10,217) 14,156 3,939 (117) 117 223,570 7,000 10,962 17,962 241,532
Balance at 1 April 2009
Net loss for the year Other comprehensive income for the year
116
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Total comprehensive income/(loss) for the year Acquisition of non-controlling interests Discount on acquisition of non-controlling interests
Balance at 31 March 2010
Net profit/(loss) for the year Other comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year
Balance at 31 March 2011
C.K. Tang Limited and its subsidiaries Statements of Changes in Equity for the year ended 31 March 2011 (contd)
Company
Share capital $000
Fair value adjustment reserve $000
Revenue reserve $000
Total reserves $000
Total equity $000
Balance at 1 April 2009 Net loss for the year Other comprehensive income for the year Total comprehensive income/(loss) for the year Balance at 31 March 2010 Net profit for the year Other comprehensive income for the year Total comprehensive income for the year Balance at 31 March 2011
47,848
133
47,390 (7,254)
47,523 (7,254)
95,371 (7,254)
145
145
145
47,848 47,848
145 278 12 12 290
(7,254) 40,136 234 234 40,370
(7,109) 40,414 234 12 246 40,660
(7,109) 88,262 234 12 246 88,508
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117
C.K. Tang Limited and its subsidiaries Consolidated Cash Flow Statement for the year ended 31 March 2011 Group Note Cash flows from operating activities Profit/(loss) before taxation Adjustments: Depreciation Fixed assets written off Stocks written off Write-back of impairment on fixed assets (Write-back of)/allowance for stocks obsolescence Allowance for impairment loss relating to debtors Provision for/(write-back of) closure costs Loss/(gain) on disposal of fixed assets Loss on disposal of investment in a subsidiary Reversal of provision for expired liabilities Interest expense Interest income Dividends received from available-for-sale investments Gain on disposal of available-for-sale investments Exchange differences, net Share of net profit of associated company Fair value loss on derivatives Operating profit before working capital changes Decrease in stocks Decrease/(increase) in trade and other debtors Increase/(decrease) in trade and other creditors (Decrease)/increase in deferred revenue Cash generated from operations Interest paid Income taxes paid Net cash flows from operating activities Cash flows from investing activities Proceeds from disposal of investment in a subsidiary Proceeds from sale of available-for sale investments Proceeds from sale of fixed assets Purchase of fixed assets Dividends received from available-for-sale investments Interest received Dividends received from associated company Net cash flows used in investing activities Cash flows from financing activities Repayment of bank loan Decrease/(increase) in fixed deposits pledged Net cash flows used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 21 2011 $000 9,006 5,546 117 422 (21) (795) 263 438 15 (227) 2,358 (4) (26) (47) (161) (197) 16,687 2,024 1,185 5,354 (198) 25,052 (2,475) (611) 21,966 2010 $000 (9,096) 6,801 43 834 (76) 2,030 180 (70) (27) 8,482 (1,199) 3,343 (3) (18) (33) (384) 69 10,876 5,306 (11) (2,693) 217 13,695 (3,002) (246) 10,447
60 39 (3,222) 26 4 283 (2,810)
511 48 (3,005) 18 3 283 (2,142)
(12,400) 3 (12,397) 6,759 10,938 17,697
(5,230) (9) (5,239) 3,066 7,872 10,938
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C.K. Tang Limited and its subsidiaries Notes to the Financial Statements - 31 March 2011
1.
Corporate information C.K. Tang Limited (the Company) is a limited liability company incorporated in Singapore. On 24 August 2010, the Company was delisted from the Singapore Exchange Securities Trading Limited and remains as a public limited liability company. The registered office and principal place of business of the Company is located at 310 Orchard Road, Singapore 238864. The principal activities of the Company are those of departmental store retailing and general merchandising. The principal activities of the subsidiaries are disclosed in Note 7 to the financial statements.
2. 2.1
Summary of significant accounting policies Basis of preparation The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS) and on a historical cost basis, except as discussed in the accounting policies below. The financial statements are presented in Singapore Dollars (SGD or $) and all values are rounded to the nearest thousand ($000) except where otherwise indicated.
2.2
Changes in accounting policies The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards and Interpretations of FRS (INT FRS) that are effective for annual periods beginning on or after 1 April 2010. The adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group and the Company except as disclosed below: FRS 103 Business Combinations (revised) and FRS 27 Consolidated and Separate Financial Statements (revised) The revised FRS 103 Business Combinations and FRS 27 Consolidated and Separate Financial Statements are applicable for annual periods beginning on or after 1 July 2009. As of 1 April 2010, the Group adopted both revised standards at the same time in accordance with their transitional provisions. FRS 103 Business Combinations (revised) The revised FRS 103 introduces a number of changes to the accounting for business combinations that will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. Changes in significant accounting policies resulting from the adoption of the revised FRS 103 include: Transaction costs would no longer be capitalised as part of the cost of acquisition but will be expensed immediately; Consideration contingent on future events are recognised at fair value on the acquisition date and any changes in the amount of consideration to be paid will no longer be adjusted against goodwill but recognised in profit or loss; The Group elects for each acquisition of a business, to measure non-controlling interest at fair value, or at the non-controlling interests proportionate share of the acquirees identifiable net assets, and this impacts the amount of goodwill recognised; and When a business is acquired in stages, the previously held equity interests in the acquiree is remeasured to fair value at the acquisition date with any corresponding gain or loss recognised in profit or loss, and this impacts the amount of goodwill recognised.
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2. 2.2
Summary of significant accounting policies (contd) Changes in accounting policies (contd) FRS 103 Business Combinations (revised) (contd) According to its transitional provisions, the revised FRS 103 has been applied prospectively. Assets and liabilities that arose from business combinations whose acquisition dates are before 1 April 2010 are not adjusted. The adoption of the revised FRS 103 does not impact the Groups consolidated financial statements. The changes will affect future acquisitions. FRS 27 Consolidated and Separate Financial Statements (revised) Changes in significant accounting policies resulting from the adoption of the revised FRS 27 include: A change in the ownership interest of a subsidiary that does not result in a loss of control is accounted for as an equity transaction. Therefore, such a change will have no impact on goodwill, nor will it give rise to a gain or loss recognised in profit or loss; Losses incurred by a subsidiary are allocated to the non-controlling interest even if the losses exceed the non-controlling interest in the subsidiarys equity; and When control over a subsidiary is lost, any interest retained is measured at fair value with the corresponding gain or loss recognised in profit or loss.
According to its transitional provisions, the revised FRS 27 has been applied prospectively, and does not impact the Groups consolidated financial statements in respect of transactions with non-controlling interests, attribution of losses to non-controlling interests and disposal of subsidiaries before 1 April 2010. The changes will affect future transactions with non-controlling interests. 2.3 Standards issued out but net yet effective The Group has not adopted the following standards and interpretations that have been issued but not yet effective: Effective for annual periods beginning on or after 1 January 2012 1 January 2011 1 July 2011 1 January 2011
Reference FRS 12 FRS 24 FRS 107 INT FRS 114
Description Amendments to FRS 12 Deferred Tax Recovery of Underlying Assets Related Party Disclosures (Revised) Amendment to FRS 107 Disclosures Transfers of Financial Assets FRS 19-The Limit on a Defined Benefit Asset, Minimum Funding Requirement and their Interaction amendments relating to Prepayments of a Minimum Funding Requirements
INT FRS 115 INT FRS 119 FRS 101
Agreements for the Construction of Real Estate Extinguishing Financial Liabilities with Equity Instruments
1 January 2011 1 July 2010 1 January 2011 1 July 2010 1 January 2011 1 January 2011 1 January 2011 1 January 2011
Improvements to FRSs issued in 2010 - Amendments to First-time Adopting of Financial Reporting Standards FRS 103 - Amendments to Business Combinations - Amendments to Financial Instruments: Disclosures FRS 107 - Amendments to Presentation of Financial Statements FRS 1 - Amendments to Interim Financial Reporting FRS 34 - Amendments to Customer Loyalty Programmes INT FRS 113
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2. 2.3
Summary of significant accounting policies (contd) Standards issued out but net yet effective (contd) Except for the revised FRS 24, the directors expect that the adoption of the other standards and interpretations above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of the revised FRS 24 is described below. Revised FRS 24 Related Party Disclosures The revised FRS 24 clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised FRS 24 expands the definition of a related party and would treat two entities as related to each other whenever a person (or a close member of that persons family) or a third party has control or joint control over the entity, or has significant influence over the entity. The revised standard also introduces a partial exemption of disclosure requirements for government-related entities. The Group is currently determining the impact of the changes to the definition of a related party has on the disclosure of related party transaction. As this is a disclosure standard, it will have no impact on the financial position or financial performance of the Group when implemented in the financial year ending 31 March 2012.
2.4
Basis of consolidation Business combinations from 1 April 2010 The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intragroup transactions are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as change to other comprehensive income. If the contingent consideration is classified as equity, it is not be remeasured until it is finally settled within equity. In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss. The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interests proportionate share of the acquiree identifiable net assets.
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2. 2.4
Summary of significant accounting policies (contd) Basis of consolidation (contd) Business combinations from 1 April 2010 (contd) Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Groups previously held equity interest in the acquiree (if any), over the net fair value of the acquirees identifiable assets and liabilities is recorded as goodwill. In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date. Business combinations before 1 April 2010 In comparison to the above mentioned requirements, the following differences applied: Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquirees identifiable net assets. Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree are not reassessed on acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract. Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent measurements to the contingent consideration affected goodwill.
2.5
Transactions with non-controlling interests Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated balance sheet, separately from equity attributable to owners of the Company. Changes in the Company owners ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.
2.6
Foreign currency Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the closing rate of exchange ruling at the balance sheet date. Nonmonetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
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2. 2.6
Summary of significant accounting policies (contd) Foreign currency (contd) Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance sheet date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Groups net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation. The assets and liabilities of foreign operations are translated into SGD at the closing exchange rate ruling at that balance sheet date and their statement of comprehensive income are translated at average exchange rates for the year. All resulting exchange differences are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount of exchange differences recognised in other comprehensive income relating to that particular foreign operation is recognised in profit or loss as a component of the gain or loss on disposal.
2.7
Fixed assets All items of fixed assets are initially recorded at cost. The cost of fixed assets includes all costs that are directly attributable to bringing the assets to the location and working condition. Dismantlement, removal and restoration costs are included in fixed assets if the obligation for dismantling and removing the items or restoring the site is incurred as a consequence of acquiring or using the assets. Subsequent to recognition, fixed assets are stated at cost or valuation less accumulated depreciation and any accumulated impairment losses. The carrying values of fixed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Land and buildings are subsequently revalued on an asset-by-asset basis, to their fair values. Fair value is determined from market-based evidence by appraisal that is undertaken by professionally qualified valuers. Revaluations are made annually to ensure that their carrying amount does not differ materially from their fair value at the balance sheet date. When an asset is revalued, any increase in the carrying amount is recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets existing surplus on the same asset carried in the asset revaluation reserve. Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in respect of an asset, is transferred directly to revenue reserve on retirement or disposal of the asset. Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the estimated useful life of the asset as follows: Years Freehold building Building improvements Fixtures, fittings, furniture and equipment Motor vehicles 50 5 - 10 3 - 10 5
Freehold property is located at 310 and 320 Orchard Road, Singapore and comprises building improvements, freehold land and building. Building improvements represent the integral part of the freehold property which is not moveable.
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2. 2.7
Summary of significant accounting policies (contd) Fixed assets (contd) Construction-in-progress is not depreciated until such time as the relevant assets are completed and put into operational use. The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, period and method of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of fixed assets. An item of fixed assets is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in profit or loss in the year the asset is derecognised.
2.8
Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when an annual impairment testing for an asset is required, the Group makes an estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the assets or cash-generating units recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.
2.9
Subsidiaries A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. In the Companys separate financial statements, investments in subsidiaries are accounted for at cost less any impairment loss.
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2. 2.10
Summary of significant accounting policies (contd) Associated company An associated company is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associated company is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associated company. The Groups investments in associated company is accounted for using the equity method. Under the equity method, the investment in associated company is carried in the balance sheet at cost plus postacquisition changes in the Groups share of net assets of the associated company. Goodwill relating to associated company is included in the carrying amount of the investment and is neither amortised nor tested individually for impairment. Any excess of the Groups share of the net fair value of the associated companys identifiable asset, liabilities and contingent liabilities over the cost of the investment is deducted from the carrying amount of the investment and is recognised as income as part of the Groups share of results of the associated company in the period in which the investment is acquired. The profit or loss reflects the share of the results of operations of the associated company. Where there has been a change recognised in other comprehensive income by the associated company, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associated company are eliminated to the extent of the interest in the associated company. The Groups share of the profit or loss of its associated company is shown on the face of profit or loss after tax and non-controlling interests in the subsidiaries of associated company. When the Groups share of losses in an associated company equals or exceeds its interest in the associated company, Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associated company. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Groups investment in its associated company. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associated company is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associated company and its carrying value and recognises the amount in profit or loss. The financial statements of the associated companies are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. Upon loss of significant influence over the associated company, the Group measures any retained investment at its fair value. Any difference between the carrying amount of the associated company upon loss of significant influence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in profit or loss. The most recent available audited financial statements of the associated company is used by the Group in applying the equity method. Where the dates of the audited financial statements used are not coterminous with those of the Group, the share of results is arrived at from the last audited financial statements available and unaudited management financial statements to the end of the Groups accounting period. Consistent accounting policies are applied for like transactions and events in similar circumstances.
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2. 2.11
Summary of significant accounting policies (contd) Financial assets Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that has been recognised directly in other comprehensive income is recognised in profit or loss. All regular purchases and sales of financial assets are recognised or derecognised on the trade date i.e. the date that the Group commits to purchase or sell the asset. Regular purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. (a) Loans and receivables Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. (b) Available-for-sale financial assets Available-for-sale financial assets include equity and debt securities. Equity investments classified as available-for sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions. After initial recognition, available-for-sale financial assets are subsequently measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.
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2. 2.12
Summary of significant accounting policies (contd) Impairment of financial assets The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset is impaired. (a) Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in profit or loss. When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset. To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. 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 was recognised, the previously recognised impairment loss is reversed to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. (b) Available-for-sale financial assets In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its costs. Significant is to be evaluated against the original cost of the investment and prolonged against the period in which the fair value has been below its original cost. If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from other comprehensive income and recognised in profit or loss. Reversals of impairment losses in respect of equity instruments are not recognised in profit or loss; increase in their fair value after impairment are recognised directly in other comprehensive income.
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2. 2.13
Summary of significant accounting policies (contd) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and deposits with financial institutions which are subject to an insignificant risk of changes in value.
2.14
Stocks Stocks are stated at the lower of cost (determined on the weighted average basis) and net realisable value. Cost includes all costs in bringing the stocks to their present location and condition. Net realisable value is the estimated normal selling price, less estimated costs necessary to make the sale. Provision is made for deteriorated, damaged, obsolete and slow-moving stocks.
2.15
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 an outflow of resources will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.16
Government grants Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Where the grant relates to an expense item, it is recognised in the profit or loss over the period necessary to match them on a systematic basis to the costs that it is intended to compensate.
2.17
Deferred revenue Deferred revenue represents the revenue allocated to the rebate dollars issued under the Tangs Fashion Lifestyle loyalty programme (see Note 2.22(a)) that are expected to be redeemed but are still outstanding as at the balance sheet date.
2.18
Financial liabilities Initial recognition and measurement Financial liabilities are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of other financial liabilities, plus directly attributable transaction costs.
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2. 2.18
Summary of significant accounting policies (contd) Financial liabilities (contd) Subsequent measurement The measurement of financial liabilities depends on their classification as follows: Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised in profit or loss. The Group has not designated any financial liabilities upon initial recognition at fair value through profit or loss. Other financial liabilities After initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
2.19
Borrowing costs Borrowing costs are generally expensed as incurred except to the extent that they are capitalised. Borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditure and borrowing costs are being incurred. Borrowing costs are capitalised until the assets are ready for their intended use.
2.20
Employee benefits (a) Defined contribution plan The Group and the Company participate in the national pension schemes as defined by the laws of the countries in which they have operations. The Singapore companies in the Group make contributions to the Central Provident Fund (CPF) scheme in Singapore and its subsidiary companies outside Singapore make contributions to their respective countries pension schemes. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related services are performed.
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2. 2.20
Summary of significant accounting policies (contd) Employee benefits (contd) (b) Employee leave entitlement Employee entitlements to annual leave are recognised as a liability when they accrue to employees. The estimated liability for annual leave is recognised for services rendered by employees up to balance sheet date. (c) Employee share option plans Employees of the Group receive remuneration in the form of share options as consideration for services rendered. Equity-settled transactions The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which the share options are granted. In valuing the share options, no account is taken of any performance conditions, other than conditions linked to the price of the shares of the Company (market conditions), if applicable. The cost of equity-settled transactions is recognised in profit or loss together with a corresponding increase in the employee share option reserve, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting date). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Groups best estimate of the number of options that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. The employee share option reserve is transferred to share capital when the options are exercised if new shares are issued.
2.21
Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104. (a) As lessee Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. (b) As lessor Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.22(e).
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2. 2.22
Summary of significant accounting policies (contd) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable. (a) Sale of goods Revenue is recognised upon the transfer of significant risks and rewards of ownership of the goods to the customer, which generally coincides with delivery and acceptance of the goods sold. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. The Group operates the Tangs Fashion Lifestyle loyalty programme which allows customers to accumulate rebate dollars when they purchase products in the Groups stores. The rebate dollars can be redeemed to offset future purchases from the Groups stores. The Group has recognised the full revenue from the sale of goods and recognised a separate liability for the obligation to exchange the rebate dollars for awards. (b) Revenue on rebate dollars Revenue on rebate dollars is recognised based on the number of rebate dollars that have been redeemed to offset purchase of goods . (c) Interest income Interest income is recognised using the effective interest method. (d) Dividend income Dividend income is recognised when the Groups right to receive payment is established. (e) Rental income Rental income from operating leases (net of any incentives given to the lessee) from the letting of premises is recognised on a straight-line basis over the lease terms.
2.23
Income tax (a) Current tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the end of the reporting period, in the countries where the Group operates and generates taxable income. Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. (b) Deferred tax Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
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2. 2.23
Summary of significant accounting policies (contd) Income tax (contd) (b) Deferred tax (contd) Deferred tax liabilities are recognised for all taxable temporary differences, except: x Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or loss; and In respect of taxable temporary differences associated with investments in subsidiaries and associated companies, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. In respect of deductible temporary differences and carry-forward of unused tax credits and unused tax losses, if it is not probable that taxable profit will be available against which the deductible temporary differences and carry-forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recorded. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority. (c) Sales tax Revenues, expenses and assets are recognised net of the amount of sales tax except where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables that are stated with the amount of sales tax included. The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
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2. 2.24
Summary of significant accounting policies (contd) Contingencies A contingent liability is: (a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or a present obligation that arises from past events but is not recognised because: (i) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or The amount of the obligation cannot be measured with sufficient reliability.
(b)
(ii)
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined. 2.25 Related parties A party is considered to be related to the Group if: (a) The party, directly or indirectly through one or more intermediaries, (i) (ii) (iii) (b) (c) (d) (e) (f) controls, is controlled by, or is under common control with, the Group; has an interest in the Group that gives it significant influence over the Group; or has joint control over the Group;
The party is an associate; The party is a jointly-controlled entity; The party is a member of the key management personnel of the Group or its parent; The party is a close member of the family of any individual referred to in (a) or (d); or The party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or The party is a post-employment benefit plan for the benefit of the employees of the Group, or of any entity that is a related party of the Group.
(g)
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3.
Significant accounting estimates and judgements Estimates and assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Groups and the Companys accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. (a) Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: (i) Impairment of investments in subsidiaries and advances to subsidiaries The Company assesses at each reporting date whether there is an indication that the investments in subsidiaries and advances to subsidiaries may be impaired. This requires an estimation of the value in use of the cash generating units. Estimating the value in use requires the Company to make an estimate of the expected future cash flows from the cash-generating units and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of the Companys investments in subsidiaries and advances to subsidiaries at 31 March 2011 are disclosed in Note 7 to the financial statements. (ii) Useful lives of fixtures, fittings, furniture and equipment The cost of fixtures, fittings, furniture and equipment is depreciated on a straight-line basis over their respective useful lives. Management estimates the useful lives of these fixtures, fittings, furniture and equipment to be 3-10 years. These are common life expectancies applied in the industry. The carrying amounts of the Groups and the Companys fixtures, fittings, furniture and equipment at 31 March 2011 are disclosed in Note 6 to the financial statements. Changes in the expected level of usage could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. (iii) Valuation of freehold property The Group has revalued the freehold property located at 310/320 Orchard Road, Singapore 238864/238865, based on the valuation report by an independent professional valuer on an open market basis. This requires an estimation of the market value of the freehold property based on available market information. Any changes in the market value would create an impact on the valuation of the freehold property. The carrying amount of the Groups freehold property is disclosed in Note 6 to the financial statements. (iv) Income taxes The Group has exposure to income taxes in Singapore and Malaysia jurisdictions. Significant judgement is involved in determining the group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amounts of the Groups tax payables and deferred tax liabilities at 31 March 2011 were $2,915,000 (2010: $1,408,000) and $2,606,000 (2010: $2,639,000) respectively.
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3.
Significant accounting estimates and judgements (contd) (a) Key sources of estimation uncertainty (contd) (v) Allowance for stocks obsolescence A review is made periodically on stocks for excess stocks, obsolescence and declines in net realisable value below cost and an allowance is recorded against the stocks balance for any such declines. These reviews require management to estimate future demand for the products. Possible changes in these estimates could result in revisions to the valuation of stocks. (vi) Accrued closure costs The Group has recognised accrued closure costs associated with the reinstatement costs and termination of lease agreements costs for store premises. In determining the amount, assumptions and estimates are made in relation to expected costs of reinstatement/termination and the timing of these costs. The carrying amount of accrued closure costs as of 31 March 2011 was $2,010,000 (2010: $1,560,000). (b) Critical judgements made in applying accounting policies The following is the judgement made by management in the process of applying the Groups accounting policies that have the most significant effect on the amounts recognised in the financial statements. Impairment review of fixed assets and financial assets The Group follows the guidance of FRS 36 and 39 in determining when a fixed asset or financial asset is impaired. The determination requires significant judgement of, among other factors, the duration and extent to which the fair value of the asset is less than its carrying value; and the financial health of and near-term business outlook for the business operations or financial asset, including factors such as industry and sector performance, changes in operating and financing cash flow. The carrying amounts of the Groups and Companys fixed assets and financial assets at 31 March 2011 are disclosed in Note 6, Note 9 and Note 11 to the financial statements respectively.
4.
Share capital Group and Company 2011 No. of shares '000 Issued and fully paid At beginning and end of financial year 236,984 Amount $'000 47,848 No. of shares '000 236,984 2010 Amount $'000 47,848
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction. The ordinary shares have no par value. The C.K. Tang Share Option Scheme 2002 (the Scheme) approved by the members of the Company provides an opportunity for employees of the Company and its subsidiaries, other than substantial shareholders of the Company, to participate in the equity of the Company. The Scheme shall continue to be in force for a period of 10 years from 31 January 2002. However the period may be extended with the approval of members at a general meeting of the Company and of any relevant authorities which may then be required.
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4.
Share capital (contd) At the end of the financial year, details of the options granted under the Scheme on the unissued ordinary shares of the Company were as follows: No. of Balance Options Balance holders as at Options lapsed/ Options as at as at 1.4.2010 granted cancelled exercised 31.3.2011 31.3.2011 4,000 4,000 1
Date of grant 2.5.2002
Exercise price $ 0.20
Exercise period 2.5.2003 2.5.2012
5.
Reserves Group 2011 $000 Asset revaluation reserve Translation reserve Fair value adjustment reserve Revenue reserve Discount on acquisition of non-controlling interests 253,917 (8,169) 290 (52,468) 117 193,687 (a) 2010 $000 242,824 (8,026) 278 (59,478) 117 175,715 Company 2011 2010 $000 $000 290 40,370 40,660 278 40,136 40,414
The asset revaluation reserve represents increases in the fair value of freehold land and building and decreases to the extent that such decrease relates to an increase on the same asset previously recognised in other comprehensive income. The translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Groups presentation currency. The fair value adjustment reserve represents the cumulative fair value changes of available-forsale financial assets until they are disposed of or impaired. The discount on acquisition of non-controlling interests represents the difference between the consideration and the book value of the interest acquired of $117,000.
(b)
(c)
(d)
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6.
Fixed assets
At valuation Fixtures, fittings, furniture and equipment $000 At cost
Group
Freehold land $000
Building and building improvements $000
Motor vehicles $000
Constructionin-progress $000
Total $000
Cost or valuation At 1 April 2009 Additions Disposals/write-offs Disposal of subsidiary Reclassifications Revaluation surplus Elimination of accumulated depreciation on revaluation Exchange differences At 31 March 2010 and 1 April 2010 Additions Disposals/write-offs Revaluation surplus Elimination of accumulated depreciation on revaluation Exchange differences At 31 March 2011 Accumulated depreciation and impairment At 1 April 2009 Charge for the financial year Disposals/write-offs Disposal of subsidiary Write-back of impairment loss Elimination due to upward revaluation Exchange differences At 31 March 2010 and 1 April 2010 Charge for the financial year Disposals/write-offs Write-back of impairment loss Elimination due to upward revaluation Exchange differences At 31 March 2011 Net carrying amount At 31 March 2010 At 31 March 2011
308,921 9,086 318,007 10,220 328,227
31,079 2,120 (1,206) 31,993 1,029 (1,249) 31,773
65,512 3,005 (3,667) (7,349) 307 272 58,080 3,179 (2,549) (84) 58,626
675 (124) (136) 4 419 (60) 359
315 (307) 8 43 51
406,502 3,005 (3,791) (7,485) 11,206 (1,206) 276 408,507 3,222 (2,609) 11,249 (1,249) (84) 419,036
1,206 (1,206) 1,249 (1,249)
46,828 5,509 (3,603) (2,638) (76) 159 46,179 4,273 (2,378) (21) (73) 47,980
500 86 (124) (86) 3 379 24 (60) 343
47,328 6,801 (3,727) (2,724) (76) (1,206) 162 46,558 5,546 (2,438) (21) (1,249) (73) 48,323
318,007 328,227
31,993 31,773
11,901 10,646
40 16
8 51
361,949 370,713
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6.
Fixed assets (contd) At cost Company Cost At 1 April 2009 Additions Disposals/write-offs Reclassifications At 31 March 2010 and 1 April 2010 Additions Disposals/write-offs At 31 March 2011 Accumulated depreciation and impairment At 1 April 2009 Charge for the financial year Disposals/write-offs At 31 March 2010 and 1 April 2010 Charge for the financial year Disposals/write-offs At 31 March 2011 Net carrying amount At 31 March 2010 At 31 March 2011 Fixtures, fittings, furniture and equipment $000 48,256 2,518 (2,712) 178 48,240 3,040 51,280 Motor vehicles $000 540 (124) 416 (60) 356 Construction -inprogress $000 178 (178) 43 43
Total $000 48,974 2,518 (2,836) 48,656 3,083 (60) 51,679
36,908 3,535 (2,712) 37,731 3,553 41,284
454 63 (124) 393 23 (60) 356
37,362 3,598 (2,836) 38,124 3,576 (60) 41,640
10,509 9,996
23
43
10,532 10,039
As at 31 March 2011, the value of the freehold property of the Group located at 310/320 Orchard Road, Singapore 238864/238865, was $360,000,000 (2010 : $350,000,000) based on an independent professional valuation report dated 31 March 2011. The valuation was carried out by Jones Lang LaSalle Property Consultants Pte Ltd, a firm of professional valuers, on an open market existing use basis. Had the freehold property been stated at cost, its carrying amount at the end of the financial year would have been approximately $68,627,000 (2010 : $69,238,000). Freehold land and building of the Group with a carrying amount of $360,000,000 (2010: $350,000,000) have been pledged to secure banking facilities as stated in Note 13 to the financial statements. As at 31 March 2011, the freehold land of the Group has been stated at a valuation of approximately $328,227,000 (2010: $318,007,000). No depreciation is provided on the freehold land in accordance with the Groups accounting policy. 7. Subsidiaries Company 2011 2010 $000 $000 Unquoted equity shares at cost Impairment losses 165,958 (45,258) 120,700 39,304 (37,086) 2,218 (29,053) 93,865 - 29 165,958 (45,258) 120,700 37,086 (37,086) (19,689) 101,011
Advances to subsidiaries Impairment losses
Advances from subsidiaries Total
138
7.
Subsidiaries (contd) The advances to subsidiaries are unsecured, interest-free and are not expected to be repayable within the next twelve months from the balance sheet date. The impairment loss on advances to subsidiaries is measured as the difference between the carrying amount of the advances and the present value of estimated future cash flows discounted at the respective subsidiaries effective borrowing rates. Details of the subsidiaries are as follows:
Country of incorporation and place of business Effective equity interest held by the Group 2011 2010 % % 100 100 100 100 100 100 Cost of investment 2011 2010 $000 $000 750 101 22,000 750 101 22,000
Name of company
Principal activities
Clinton (Pte.) Ltd Associated Catering Pte Ltd Gamut Marketing Pte Ltd C.K. Tang Properties (Singapore) Pte Ltd Tangs Department Store (Holdings) Sdn Bhd C.K.Tang Sdn. Bhd Gamut Marketing Sdn Bhd Held by subsidiaries Island Shop International Pte. Ltd. C.K. Tang Properties (M) Sdn Bhd Timeless Value Sdn Bhd Island Catering Sdn Bhd
Dormant Food catering, operation of beverage outlets and cafes Retailing of fashion apparel and trading in general merchandise Maintaining and owning property Dormant
Singapore Singapore Singapore
Singapore Malaysia
100 100
100 100
120,700 14,000
120,700 14,000
Dormant Retailing of fashion apparel and trading in general merchandise Retailing of fashion apparel and trading in general merchandise Dormant Dormant Food catering, operation of beverage outlets and cafes
Malaysia Malaysia
100 100
100 100
** 8,407
** 8,407
Singapore
100
100
Malaysia Malaysia Malaysia
100 100 70
100 100 70
165,958
165,958
**
Denotes amounts less than $1,000.
8.
Associated company Group 2011 $000 Unquoted equity shares at cost Share of post-acquisition reserves 3 701 704 2010 $000 3 787 790
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8.
Associated company (contd)

Country of incorporation and place of business Effective equity interest held by the Group 2011 2010 % %
Name of company Held by C.K.Tang Properties (Singapore) Pte Ltd Legacy (Tang Plaza) Pte Ltd
Principal activities
Cost of investment 2011 2010 $000 $000
Letting out premises and equipment and provision of related ancillary services
Singapore
28.31
28.31
The summarised financial information of the associated company is as follows: 2011 $000 Assets and liabilities: Total assets Total liabilities Results: Revenue Net profit for the financial year 9. Available-for-sale investments Group 2011 $000 Non-current Equity shares at cost - unquoted Impairment loss 131 (130) 1 Current Equity shares at cost - quoted Fair value adjustment reserve Equity shares at fair value - quoted Total available-for-sale financial assets 86 290 376 377 2010 $000 131 (130) 1 99 278 377 378 Company 2011 2010 $000 $000 1 1 86 290 376 377 1 1 99 278 377 378 4,278 (1,843) 2010 $000 3,371 (575)
2,419 696
1,989 1,356
The above unquoted investment includes a 26% interest in Bianca (S) Pte Ltd (Bianca), a company incorporated in Singapore, amounting to $130,000 by Gamut Marketing Pte Ltd (Gamut). In the opinion of the directors, Gamut does not exercise significant influence over Biancas financial and operating policy decisions. Accordingly, the investment has not been accounted for as an associated company. Other than the amount invested, Gamut has no further financial commitment in respect of Bianca. The fair value of unquoted equity shares above cannot be reliably determined as these equity shares do not have quoted market prices in an active market nor are other methods of reasonably estimating the fair values readily available. Accordingly, these investments are not re-measured to their fair values. Movements in fair value adjustment reserve during the financial year: Group and Company 2011 2010 $000 $000 At beginning of financial year Disposal of investments Net unrealised gain on investments At end of the financial year 278 (27) 39 290 133 145 278
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140
10.
Stocks Group 2011 $000 Balance sheets: Goods-in-transit Raw materials Finished goods 2010 $000 Company 2011 2010 $000 $000
174 16,720 16,894
258 74 18,213 18,545
71 15,519 15,590
129 14,484 14,613
Statement of comprehensive income: Stocks recognised as an expense in cost of sales Inclusive of the following charges: - Stocks (written-back)/written-down - Stocks written-off
80,698 (795) 422
84,024 2,030 834
69,337 516 239
69,989 (16) 143
The write-back of allowance for stocks obsolescence is made during the current financial year when the related stocks were sold. 11. Trade and other debtors Group 2011 $000 Trade debtors Rental and other deposits Prepayments Tax recoverable Sundry debtors Allowance for impairment Total trade and other debtors Less: Prepayments Add: Cash and cash equivalents (Note 21) Total loans and receivables 4,884 712 316 56 293 (381) 5,880 (316) 17,891 23,455 2010 $000 5,675 1,028 343 47 513 (278) 7,328 (343) 11,135 18,120 Company 2011 2010 $000 $000 3,843 218 252 13 155 (266) 4,215 (252) 10,527 14,490 3,731 381 258 13 409 (182) 4,610 (258) 5,621 9,973
Trade and sundry debtors are non-interest bearing and are generally on 30 days terms. They are recognised at their original invoice amounts which represent their fair value on initial recognition. Trade debtors that are past due but not impaired The Group and the Company have trade debtors amounting to $1,274,000 (2010: $1,558,000) and $709,000 (2010: $819,000) that are past due at the balance sheet date but not impaired. These debtors are unsecured and the analysis of their aging at the balance sheet date is as follows:Less than 30 days 30 to 60 days 61 to 90 days 91 to 120 days More than 120 days 944 175 59 9 87 1,274 870 27 147 3 511 1,558 489 147 38 35 709 336 7 68 51 357 819
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11.
Trade and other debtors (contd) Trade and other debtors that are impaired The Groups and Companys trade and other debtors that are individually impaired at the balance sheet date and the movement of the allowance accounts used to record the impairment are as follows: Group 2011 $000 Trade debtors - nominal amounts Other debtors - nominal amounts Allowance for impairment - trade debtors - other debtors 298 83 (298) (83) Movement in allowance account:(i) Trade debtors At 1 April Charge for the financial year Write-back against allowance At 31 March (ii) Other debtors At 1 April Charge for the financial year Write-back against allowance Written off At 31 March 68 17 (2) 83 103 (35) 68 17 17 210 248 (160) 298 91 180 (61) 210 182 223 (156) 249 81 152 (51) 182 2010 $000 210 68 (210) (68) Company 2011 2010 $000 $000 249 17 (249) (17) 182 (182)
Trade and other debtors that are individually determined to be impaired at the balance sheet date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements. 12. Trade and other creditors Trade creditors Other creditors Accrued retirement benefits and unutilised leave Accrued closure costs Other accrued operating expenses Total trade and other creditors Add: Bank borrowings (Note 13) Total financial liabilities at amortised cost 35,828 2,966 71 2,010 5,638 46,513 118,750 165,263 31,486 2,761 188 1,560 4,953 40,948 131,150 172,098 35,249 2,788 62 1,310 4,738 44,147 44,147 30,005 2,565 163 1,265 3,582 37,580 9,400 46,980
Trade and other creditors are non-interest bearing and are generally on 30 to 60 days terms. They are recognised at their original invoice amounts which represent their fair value on initial recognition. During the year, there was a reversal of provision for expired liabilities of $227,000 (2010: $1,199,000) (Note 16). As at 31 March 2011, other creditors included deposits received of $283,000 (2010: $280,000). Accrued closure costs relate mainly to provision for reinstatement costs and termination of lease agreements costs.
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13.
Bank borrowings Group 2011 $000 Current (secured): Loan A: SGD fixed rate Loan B: SGD floating rate 500 500 Non-current (secured): Loan B: SGD floating rate 2010 $000 11,900 500 12,400 Company 2011 2010 $000 $000 9,400 9,400
118,250
118,750
The Groups and Companys bank Loan A and Loan B balances are secured by the following: Open mortgage over freehold land and building (Note 6) at 310/320 Orchard Road, Singapore 238864/238865 which is owned by a wholly-owned subsidiary, C.K. Tang Properties (Singapore) Pte Ltd; Corporate Guarantee from the Company; and Lease Agreement between wholly-owned subsidiary, C.K. Tang Properties (Singapore) Pte Ltd and the Company, and the rental proceeds thereto, to be assigned to the Bank.
Loan A The Groups and the Companys bank Loan A amounting to $11,900,000 and $9,400,000 respectively were fully repaid as at 31 March 2011. The Groups and the Companys bank loan A carried an effective interest rate of 2.5% p.a. (2010: 2.92% p.a.) and 2.37% p.a. (2010: 2.92% p.a.) respectively. Loan B The Groups bank Loan B amounting to $118,750,000 (2010: $119,250,000) carries a floating interest rate of 1.73% p.a. (2010: 1.89% p.a.) which is re-priced at one to six months duration. The loan is repayable in 9 equal semi-annual principal instalments of $250,000 each commencing on 31 December 2008 and a lump sum payment of $117,750,000 on 30 June 2013. The fourth and fifth instalments amounting to $500,000 have been paid during the year. As at 31 March 2011, the effective interest rate for the term loan was 1.79% p.a. (2010: 2.34% p.a.).
14.
Derivatives 2011 $'000 Group Interest rate swap Interest rate swap In 2010, an interest rate swap was entered into by the Group to partially hedge the interest rate risk arising from a floating rate term loan amounting to $15,000,000. Under the interest rate swap arrangement, the Group effectively received a floating interest equal to 6-month SIBOR and paid fixed interest rate of 1.23% per annum. The interest rate swap had a notional amount of $15,000,000 and matured in November 2010. The Group did not apply hedge accounting in respect of the above interest rate swap contract. As at 31 March 2010, the total fair value of the interest rate swap was $69,000. No new interest rate swaps were entered into by the Company during the current financial year. Contract/ notional amount Assets Liabilities 2010 $'000 Contract/ notional amount Assets 15,000 Liabilities 69
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143
15.
Turnover Turnover represents invoiced value of the sale of the Groups own goods and concessionaire sales on net basis, net of discounts and excluding goods and services tax. Intra-group transactions have been excluded from the Groups turnover.
16.
Other operating income Group 2011 $000 Dividend income from available-for-sale investments Rental income Reversal of provision for expired liabilities Sale of scrapped stocks Others 26 1,621 227 424 580 2,878 2010 $000 18 2,022 1,199 50 556 3,845
17.
Profit/(loss) from operations before taxation This is determined after charging/(crediting) the following: Depreciation of fixed assets Directors emoluments Directors fees - directors of the Company - directors of the subsidiaries Foreign exchange gain, net Fixed assets written off Stocks written off Loss/(gain) on disposal of fixed assets Loss on disposal of investment in a subsidiary Operating lease expenses Allowance for impairment loss relating to debtors, net (Write-back of)/allowance for stocks obsolescence, net Reversal of provision for expired liabilities Write-back of impairment on fixed assets Provision for/(write-back of) closure costs 5,546 605 104 15 (120) 117 422 15 6,986 263 (795) (227) (21) 438 6,801 496 174 48 (54) 43 834 (27) 8,482 9,390 180 2,030 (1,199) (76) (70)
18.
Staff costs Wages, salaries and bonuses Provident fund contributions Other staff related expenses Jobs Credit subsidy 21,193 2,226 1,500 (78) 24,841 22,113 2,364 1,015 (1,142) 24,350
On 22 January 2009, the Singapore Finance Minister announced the introduction of a Jobs Credit Scheme (the Scheme). Under this Scheme, the Group received a 12% cash grant on the first $2,500 of each months wages for each employee on their Central Provident Fund payroll. Subsequently, the Group received 6% and 3% for the remaining 2 quarters respectively. The Scheme was for one and a half years.
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144
18.
Staff costs (contd) The above included key management personnel emoluments. The details are as follows: Group 2011 $000 Key management personnel emoluments: Salaries and bonuses (net of Jobs Credit subsidy) Provident fund contributions Other staff related expenses 1,535 49 174 1,758 Comprising amounts paid to : Directors of the Company Other key management personnel 2010 $000 1,569 74 173 1,816
605 1,153 1,758
496 1,320 1,816
19.
Financial expenses/(income) Financial expenses comprise interest expense on bank borrowings, of $2,358,000 (2010: $3,343,000). Financial income comprises interest income on fixed deposits, of $4,000 (2010: $3,000).
20.
Taxation The major components of income tax expense for the years ended 31 March are as follows: Group 2011 $000 (i) Statement of comprehensive income Current taxation - current year - (overprovision)/underprovision in respect of prior year Deferred taxation - current year 2010 $000
2,118 (155) 1,963 43 43
906 354 1,260 (139) (139) 1,121
Total income tax charge (ii) Statements of changes in equity Deferred income tax related to items charged directly to equity Net surplus on revaluation of freehold property Income tax expense reported in equity
2,006
156 156
156 156
The reconciliation of the tax expense and the product of accounting profit/(loss) multiplied by the applicable tax rate is as follows: Accounting profit/(loss) Tax at 17% (2010 : 17%) Adjustments: Tax effect of expenses not deductible for tax purposes Tax effect of income not subject to tax Tax effect of different tax rate in Malaysia Current tax (overprovision)/underprovision in respect of prior year Utilisation of deferred tax assets previously not recognised Deferred tax assets not recognised Others 9,006 1,531 2,422 (1,856) (85) (155) (206) 380 (25) 2,006 - 36 (9,096) (1,546) 8,937 (6,550) (430) 354 (139) 483 12 1,121
145
20.
Taxation (contd) Deferred taxation as at 31 March related to the following: Group 2011 $000 Deferred tax liability: Revaluation of freehold property to fair value Differences in depreciation 2010 $000 Company 2011 2010 $000 $000
1,782 824 2,606
1,703 936 2,639
824 824
936 936
Unrecognised tax losses As at 31 March 2011, the Group had unutilised tax losses of approximately $27,862,000 (2010: $29,233,000) and unabsorbed capital allowances of approximately $3,732,000 (2010: $4,761,000) available for set off against future profits, and giving rise to deferred tax assets of $5,334,000 (2010: $5,779,000). The deferred tax assets are not recognised due to uncertainty of its recoverability. The use of the unutilised tax losses and unabsorbed capital allowances is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate. 21. Cash and cash equivalents Group 2011 $000 Fixed deposits Cash and bank balances Cash and cash equivalents 694 17,197 17,891 2010 $000 197 10,938 11,135 Company 2011 2010 $000 $000 10,527 10,527 5,621 5,621
Bank balances do not earn interest. Fixed deposits are placed for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective fixed deposit rates. The fixed deposits as at 31 March 2011 earned an effective interest rate of 2.65% p.a. (2010: 1.50% p.a.). As at 31 March 2011, $194,000 of fixed deposits (2010: $197,000) had been pledged to secure banking facilities. For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise the following at the balance sheet date: Group 2011 $000 Fixed deposits, cash and bank balances Less: Fixed deposits pledged Cash and cash equivalents 17,891 (194) 17,697 2010 $000 11,135 (197) 10,938
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22.
Related party information Besides the related party information disclosed elsewhere in the financial statements, there are no other related party transactions.
23.
Contingent liabilities and commitments (a) Contingent liabilities Contingent liabilities not provided for in the financial statements: Company 2011 2010 $000 $000 Guarantees provided by the Company to secure banking and other facilities of certain subsidiaries 122,827 136,231
In addition to the above, in the ordinary course of business, to enable its subsidiaries to operate as going concerns for at least twelve months from the financial year end, the Company has given undertakings to provide continuing financial support to certain subsidiaries. (b) Non-cancellable operating lease commitments The Group has various operating lease agreements for the retail outlets and most of these leases contain renewal options with provision for rental adjustments. Group 2011 $000 Future minimum lease payments - not later than 1 year - 1 year to 5 years - more than 5 years 7,601 23,747 2,785 34,133 24. Future rental income Rental income receivable from non-cancellable operating leases Group and Company 2011 2010 $000 $000 Future minimum rental income receivable - not later than 1 year - 1 year to 5 years 2010 $000 9,471 5,831 15,302
1,476 7 1,483
1,495 1,495
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25.
Financial instruments Financial risk management objectives and policies The main risks arising from the Groups financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The Groups risk management approach seeks to minimise the potential material effects from such risk exposure. The Board reviews and agrees policies for managing each of these risks and ensures appropriate measures are implemented in a timely and effective manner. Interest rate risk The Group obtains additional financing through bank borrowings. The Groups exposure to market risk for changes in interest rates results mainly from its debt obligations. The Group uses derivative financial instruments to partially hedge its interest rate risk and manages its interest cost partially by using a mix of fixed and variable debt. To manage this mix in a cost-efficient manner, the Group enters into interest rate swaps. At the balance sheet date, after taking into account the effect of an interest rate swap, approximately Nil% (2010: 11%) of the Groups borrowings are at fixed rates of interest. The Groups loans at floating rates are contractually re-priced at intervals of 1 to 6 months. Sensitivity analysis for interest rate risk At 31 March 2011, if SGD interest rates had been 50 (2010: 50) basis points lower/higher with all other variables held constant, the Groups profit net of taxation (2010: Groups loss net of taxation) would have been $121,515 (2010: $119,315) higher/lower (2010: lower/higher), arising mainly as a result of lower/higher interest expense on floating rate bank borrowings. Information relating to the Groups interest rate exposure is disclosed in the notes on the Groups borrowings. Liquidity risk In the management of its liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate to finance the Groups operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of bank borrowings and ensures compliance with loan covenants. The Group relies on bank borrowings as a significant source of liquidity. As at 31 March 2011, the Group and the Company have available unutilised overdraft and short-term bank loan facilities of approximately $37.59 million (2010: $24.20 million) and $36.06 million (2010: $23.30 million) respectively.
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25.
Financial instruments (contd) Liquidity risk (contd) Analysis of financial instruments by the remaining contractual maturities The table below summarises the maturity profile of the Groups and the Companys financial assets and liabilities at the balance sheet date based on contractual undiscounted payments.
2011 Within 2 to 5 years $000 2010 Within 2 to 5 years $000
Group
Within 1 year $000
Total $000
Within 1 year $000
Total $000
Financial assets: Available-for-sale investments Trade and other debtors (excluding prepayments) Cash and cash equivalents Total undiscounted financial assets Financial liabilities: Trade and other creditors Bank borrowings Derivatives Total undiscounted financial liabilities Total net undiscounted financial liabilities Company Financial assets: Available-for-sale investments Trade and other debtors (excluding prepayments) Cash and cash equivalents Total undiscounted financial assets Financial liabilities: Trade and other creditors Bank borrowings Advances from subsidiaries Total undiscounted financial liabilities Total net undiscounted financial liabilities
376 5,564 17,891 23,831
1 1
377 5,564 17,891 23,832
377 6,985 11,135 18,497
1 1
378 6,985 11,135 18,498
46,513 2,039 48,552 (24,721)
121,312 121,312 (121,311)
46,513 123,351 169,864 (146,032)
40,948 14,016 69 55,033 (36,536)
124,343 124,343 (124,342)
40,948 138,359 69 179,376 (160,878)
376 3,963 10,527 14,866
1 1
377 3,963 10,527 14,867
377 4,352 5,621 10,350
1 1
378 4,352 5,621 10,351
44,147 44,147 (29,281)
29,053 29,053 (29,052)
44,147 29,053 73,200 (58,333)
37,580 9,423 47,003 (36,653)
19,689 19,689 (19,688)
37,580 9,423 19,689 66,692 (56,341)
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25.
Financial instruments (contd) Foreign currency risk The Group purchases stocks from several countries and, as a result, is exposed to movements in foreign currency rates. The Company is also exposed to foreign exchange movements on its investments in and advances to foreign subsidiaries. Currently, the Group does not normally hedge its foreign currency exposure using derivative financial instruments. However, management monitors foreign currency exposure and will consider hedging significant foreign currency exposure should the need arise. It is the policy of the Group not to trade in derivative foreign currency contracts. Whenever possible, in their respective dealings with third parties, the companies in the Group use their respective functional currencies to minimise foreign currency risk. The Groups foreign exchange exposures are primarily from US dollar (USD), Malaysian Ringgit (MYR), Euro (EUR), Hong Kong dollar (HKD) and Sterling Pound (GBP). The following balances of the Group and the Company are denominated in foreign currencies:
2011 EUR HKD $000 $000 62 35 49 2010 EUR HKD $000 $000 27 254 21
MYR $000 Group Trade and other debtors Cash and cash equivalents Trade and other creditors 952 3,578 399
USD $000 5 20
GBP $000 49
MYR $000 1,300 1,941 701
USD $000 8 225
GBP $000 265
Company Cash and cash equivalents Trade and other creditors
11
15
62 36
49
43
1 23
27 253
21
Sensitivity analysis for foreign currency risk The Groups profit/(loss) net of taxation does not change significantly to a reasonably possible change in the exchange rates except for MYR. The following table demonstrates the sensitivity to a reasonably possible change in the MYR (against SGD), with all other variables held constant, of the Groups profit/(loss) net of tax. Group 2011 2010 $000 $000 Profit net Loss net of taxation of taxation Increase/ Increase/ (decrease) (decrease) MYR strengthened 3% (2010: 3%) weakened 3% (2010: 3%) 103 (103) (63) 63
The Companys profit/(loss) net of taxation does not change significantly to a reasonably possible change in the exchange rates.
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25.
Financial instruments (contd) Credit risk The Groups maximum exposure to credit risk in the event of the counterparties failure to perform their obligations as at 31 March 2011 in relation to each class of recognised financial asset is the carrying amount of those assets as stated in the balance sheets. Credit risk is managed through the application of credit approvals, credit limits and monitoring procedures. The credit risk concentration profile of the Groups net trade debtors by geographical locations as at 31 March is as follows: Group 2011 $000 Singapore Malaysia 3,339 1,247 4,586 % of total 73 27 100 $000 4,015 1,450 5,465 2010 % of total 73 27 100
The Group has no significant concentration of credit risk in relation to any single external debtor. Financial assets that are neither past due or impaired Trade and other debtors that are neither past due nor impaired mainly comprise debtors with good payment records. Cash and cash equivalents and investment securities are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of defaults. Financial assets that are impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 11 to the financial statements. Market price risk Market price risk is the risk that the fair value or future cash flows of the Groups financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates). The Groups exposure to equity price risk is not significant as the Group does not have significant investment in quoted equity instruments. The Group does not have exposure to commodity price risk. 26. Fair values of financial instruments A. Fair value of financial instruments that are carried at fair value Fair value hierarchy The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: x x x Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices), and Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
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26.
Fair values of financial instruments (contd) A. Fair value of financial instruments that are carried at fair value (contd) Fair value hierarchy (contd) The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy: Quoted prices in active Significant markets for other Significant identical observable unobservable instruments inputs inputs (Level 1) (Level 2) (Level 3) $000 $000 $000
Group Financial assets: Available-for-sale financial assets (Note 9): - Equity instruments (quoted) At 31 March 2011 Determination of fair value
Total $000
376 376
376 376
Equity instruments (quoted) (Note 9): Fair value is determined directly by reference to their published market bid price at the balance sheet date. Derivatives (Note 14): Interest rate swaps are valued using a valuation technique with market observable inputs. The most frequently applied valuation techniques include swap models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties and interest rate curves. B. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value Cash and cash equivalents, trade and other debtors, trade and other creditors The carrying amount approximates fair value due to their short-term nature. Bank borrowings The fair values of bank borrowings with interest rates that are repriced frequently between one to six months approximate their carrying amounts. 27. Capital management The primary objective of the Groups capital management is to ensure that it maintains healthy capital ratios in order to support its business operations and investments and to maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group also monitors its compliance with bank borrowings covenants. No changes were made in the objectives, policies or processes during the years ended 31 March 2011 and 31 March 2010. 28. Authorisation of financial statements The financial statements for the financial year ended 31 March 2011 were authorised for issue in accordance with a resolution of the directors on 1 August 2011.
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NOTICE OF EXTRAORDINARY GENERAL MEETING
C.K. TANG LIMITED

NOTICE OF EXTRAORDINARY GENERAL MEETING NOTICE IS HEREBY GIVEN THAT an Extraordinary General Meeting of C.K. Tang Limited (the Company) adjourned by the Shareholders on 15 September 2011 will be held at RELC International Hotel, 30 Orange Grove Road, Level 5 (Room 507), Singapore 258352 on 27 October 2011 at 9.30 a.m., for the purpose of considering and, if thought fit, passing the following resolution as a Special Resolution: SPECIAL RESOLUTION That pursuant to Article 51 of the Articles of Association of the Company, and subject to the confirmation of the High Court of the Republic of Singapore, the share capital of the Company be reduced from S$47,848,113.86 comprising 236,984,226 ordinary shares to S$42,149,988.96 comprising 232,601,053 ordinary shares, and that such reduction be effected by: (i) cancelling the amount of S$5,698,124.90 constituting part of the total paid-up share capital of the Company held by all the shareholders of the Company (excluding Tang UnityThree LLP, Tang UnityTwo LLP, Kerith Holdings LLP and Tang Wee Kit), such shareholders holding in aggregate 4,383,173 of the said ordinary shares constituting part of the total issued share capital of the Company (the Participating Shareholders); and cancelling 4,383,173 of the said ordinary shares constituting part of the total issued share capital of the Company held by the Participating Shareholders,
(ii)
and the aggregate sum of S$5,698,124.90 arising from such reduction of the share capital be returned to the Participating Shareholders, on the basis of S$1.30 for each ordinary share in the capital of the Company held by each Participating Shareholder so cancelled.
BY ORDER OF THE BOARD
ERNEST SEOW TENG PENG DIRECTOR Singapore 27 September 2011

Notes: 1. 2. 3. A shareholder of the Company entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint a proxy to attend and vote on his behalf. A proxy need not also be a shareholder. The instrument appointing a proxy must be lodged at the registered office of the Company at 310 Orchard Road, Singapore 238864 not less than 48 hours before the time appointed for the Extraordinary General Meeting. A corporation which is a shareholder of the Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at the Extraordinary General Meeting in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.
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C.K. TANG LIMITED

Proxy Form
Extraordinary General Meeting

I/We of being a member/members of C.K. Tang Limited (the Company), hereby appoint:
Proportion of Shareholdings Name* Address NRIC/ Passport Number No. of Shares %
(Name), with NRIC/Passport Number (Address)
and/or failing him/her (delete as appropriate)

Proportion of Shareholdings Name* Address NRIC/ Passport Number No. of Shares %
as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Extraordinary General Meeting of the Company to be held on 27 October 2011 at 9.30 a.m. at RELC International Hotel, 30 Orange Grove Road, Level 5 (Room 507), Singapore 258352, and at any adjournment thereof. The proxy is to vote on the business before the Extraordinary General Meeting of the Company as indicated below. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion, as he/she will on any other matter arising at the Extraordinary General Meeting of the Company. NUMBER OF VOTES** SPECIAL RESOLUTION To approve the reduction of the share capital of the Company from S$47,848,113.86 comprising 236,984,226 ordinary shares to S$42,149,988.96 comprising 232,601,053 ordinary shares Dated this day of 2011 Total Number of Shares held in the Register of Members: For Against
Signature(s) of Member(s) or Common Seal

*
If no person is named in the space below, the Chairman of the Extraordinary General Meeting shall be my/our proxy to vote, for or against the Special Resolution to be proposed at the Extraordinary General Meeting as indicated below, for me/us and on my/our behalf at the Extraordinary General Meeting and at any adjournment thereof. Please indicate how you wish to vote, i.e. either For or Against. If you wish to exercise all your votes For or Against, please indicate with an X within the box provided. Otherwise, please indicate the number of votes to be used For and Against.
**
IMPORTANT (PLEASE READ THE NOTES BELOW)

Notes: 1. Please insert the total number of ordinary shares of the Company (Shares) held by you. If no number is inserted, this proxy form shall be deemed to relate to all the Shares held by you. A shareholder of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote on his behalf. Such proxy need not be a shareholder of the Company. Your completion and return of this proxy form will not prevent you from attending and voting in person at the Extraordinary General Meeting if you so wish, in place of your proxy or proxies. Where a shareholder appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each proxy. If no such proportion or number is specified the first named proxy may be treated as representing 100% of the shareholding and any second named proxy as an alternate to the first named. The instrument appointing a proxy or proxies, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof, shall be deposited at the registered office of the Company at 310 Orchard Road, Singapore 238864, not less than 48 hours before the time set for holding the Extraordinary General Meeting. The instrument appointing a proxy or proxies shall be in writing under the hand of the appointor or of his attorney duly authorised in writing; or if such appointor is a corporation under its common seal, or under the hand of its director/officer/ attorney duly authorised in writing. An instrument appointing a proxy or proxies to vote at a meeting shall be deemed to include the power to demand or concur in demanding a poll on behalf of the appointor. A corporation which is a shareholder may authorise by resolution of its directors or other governing body, such person as it thinks fit to act as its representative at the Extraordinary General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.
2.
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General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies.
TOPPAN VITE PTE. LTD. SCR1110002

EGM Circular DD 10 October-10

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EGM Circular DD 10 October-10

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CIRCULAR DATED 10 OCTOBER 2011 This Circular is issued by C.K.

C.K. TANG LIMITED

CIMB Bank Berhad

Code Companies Act Company or CKT Company Securities

Court CPF CPF Agent Banks CPFIS CPFIS Investors

Department Store Property

Fair Market Value

First Notice of EGM

Group IFA or CIMB Bank Berhad

Latest Practicable Date

Memorandum Non-Participating Shareholders Notice Date Notice of EGM

NTA Participating Shareholders

Selective Capital Reduction

SGX-ST Shareholders Share Registrar Shares SIC S$ and cents

Tang Holdings Transfer Books

TU3 LLP Letter

TU3 LLP Partners

TWK TWS UPL Valuation Report

LETTER TO SHAREHOLDERS C.K. TANG LIMITED

Registered Office: 310 Orchard Road Singapore 238864

Ernest Seow Teng Peng Director

APPENDIX 1 LETTER FROM TU3 LLP DATED 8 SEPTEMBER 2011

APPENDIX 2 REPORT OF THE FA IN CONNECTION WITH THE SELECTIVE CAPITAL REDUCTION

APPENDIX 2 REPORT OF THE FA IN CONNECTION WITH THE SELECTIVE CAPITAL REDUCTION

APPENDIX 2 REPORT OF THE FA IN CONNECTION WITH THE SELECTIVE CAPITAL REDUCTION

APPENDIX 2 REPORT OF THE FA IN CONNECTION WITH THE SELECTIVE CAPITAL REDUCTION

APPENDIX 2 REPORT OF THE FA IN CONNECTION WITH THE SELECTIVE CAPITAL REDUCTION

Revenue(3) (S$ million) 334

Isetan (Singapore) Limited (Isetan)

Metro Holdings Limited (Metro)

APPENDIX 2 REPORT OF THE FA IN CONNECTION WITH THE SELECTIVE CAPITAL REDUCTION

APPENDIX 2 REPORT OF THE FA IN CONNECTION WITH THE SELECTIVE CAPITAL REDUCTION

EV/Revenue(1) (times) 0.2 2.6*

EV/EBITDA(1) (times) 3.5 7.5*

P/E(1) (times) 12.7 6.4*

P/B(1) (times) 0.8 0.6*

31 Dec 2010 31 Mar 2010

APPENDIX 2 REPORT OF THE FA IN CONNECTION WITH THE SELECTIVE CAPITAL REDUCTION

FY09 340.0 219.6 0.93

FY10 350.0 223.6 0.94

FY11 360.0 241.5 1.02(3)

APPENDIX 2 REPORT OF THE FA IN CONNECTION WITH THE SELECTIVE CAPITAL REDUCTION

Kan Yut Keong Managing Director

Certi cate No. SG04/00074

Certi cate no. SG04/00075

Valuation (Land & Building)

Yours faithfully, JONES LANG LASALLE PROPERTY CONSULTANTS PTE LTD

Legal Description Tenure Brief Description of Department Store Property

Strata Floor Area

* including void, lift motor room and roof slabs

Owner Lease Agreement

S$360,000,000/(Singapore Dollars Three Hundred And Sixty Million).

JONES LANG LASALLE

Copyright Jones Lang LaSalle Year 2009

Certi cate No. SG04/00074

Certi cate no. SG04/00075

Use Hotel/Commercial Shop Shop Shop Shop

Share Value* 7,125 12 11 11 10

Void (sq.m.) 2,835 0 0 0 0

38 2,482 1,906 2,658 2,413 450 69 72 24 1,134 11,246

0 0 0 42 32 329 0 0 0 0 403 1,845

38 2,482 1,906 2,700 2,445 779 69 72 24 1,134 11,649

0 979 919 1,153 1,153 954 733 85 36 0 6,012