UNI-ASIA FINANCE CORPORATIONuniasia.listedcompany.com/misc/ipo.pdf · BUILDING ON OUR STRENGTHS FOR...
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UNI-ASIA FINANCE CORPORATION Registration No. CR-72229 Incorporated in the Cayman Islands with limited liability on 17 March 1997 Manager, Underwriter and Placement Agent INVITATION IN RESPECT OF 65,400,000 NEW SHARES OF US$0.16 EACH: - a) 3,300,000 Offer Shares at S$0.55 each by way of public offer; b) 62,100,000 Placement Shares at S$0.55 each by way of placement, comprising:- i) 57,640,000 Placement Shares at S$0.55 for each Placement Share by way of Placement Shares Application Forms (or such other forms of application as the Manager deems appropriate); ii) 500,000 Internet Placement Shares at S$0.55 for each Internet Placement Share reserved for applications made through the Internet website of DBS Vickers Securities Online (Singapore) Pte Ltd; and iii) 3,960,000 Reserved Shares at S$0.55 each reserved for our employees, business associates and others who have contributed to the success of our Group, payable in full on application (subject to the Over-allotment Option). PROSPECTUS DATED 8 AUGUST 2007 (Registered by the Monetary Authority of Singapore on 8 August 2007) This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax, or other professional adviser. We have made an application to the Singapore Exchange Securities Trading Limited (“SGX-ST”) for permission to deal in, and for quotation of, all the ordinary shares of US$0.16 each (the “Shares”) in the capital of Uni-Asia Finance Corporation (the “Company”) already issued, the new shares which are the subject of this Invitation (the “New Shares”), the new Shares which may be issued upon the exercise of the options to be granted under the Uni-Asia Share Option Scheme (the “Option Shares”) and the new Shares which may be issued upon the exercise of the Over-allotment Option (as defined below) (the “Additional Shares”). Such permission will be granted when we have been admitted to the Official List of the SGX-ST. The dealing and quotation of the Shares will be in Singapore dollars. Acceptance of applications will be conditional upon, inter alia, permission being granted by the SGX-ST to deal in, and for quotation of, all the existing issued Shares, the New Shares, the Option Shares and the Additional Shares. If the completion of the Invitation does not occur because the SGX-ST’s permission is not granted or for any other reasons, moneys paid in respect of any application accepted will be returned to you at your own risk, without interest or any share of revenue or other benefit arising therefrom and you will not have any claims against us or the Manager. In connection with the Invitation, we have granted the Manager an over-allotment option (the “Over-allotment Option”) exercisable by the Manager during the period commencing on the date of commencement of trading of the Shares on the SGX-ST (the “Commencement Date”) and expiring on the date falling 30 days after the Commencement Date. The Manager may subscribe and/or procure subscribers for up to an aggregate of 9,810,000 Shares, representing 15 per cent. of the New Shares. The Manager may over-allot and effect transactions which stabilise or maintain the market price of the Shares, subject to compliance with the laws of Singapore. Such stabilisation, if commenced, may be discontinued by the Manager at any time at the Manager’s discretion in accordance with the laws of Singapore. The SGX-ST assumes no responsibility for the correctness of any of the statements or opinions made or reports contained in this Prospectus. Admission to the Official List of the SGX-ST is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries, our Shares, the New Shares, the Option Shares or the Additional Shares. A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the “Authority”) on 29 June 2007 and 8 August 2007 respectively. The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act (Cap. 289), or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of the shares or units of shares, as the case may be, being offered or in respect of which an invitation is made, for investment. Investing in our Shares involves risks which are described in the section entitled “RISK FACTORS” of this Prospectus. No Shares will be allotted and/or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus.
Transcript of UNI-ASIA FINANCE CORPORATIONuniasia.listedcompany.com/misc/ipo.pdf · BUILDING ON OUR STRENGTHS FOR...
UNI-ASIA FINANCE CORPORATION
Registration No. CR-72229
Incorporated in the Cayman Islands with
limited liability on 17 March 1997
UNI-ASIA FINANCE CORPORATIONSUITE A, 26TH FLOORADMIRALTY CENTRE TOWER I18 HARCOURT ROADHONG KONG
Manager, Underwriter and Placement Agent
INVITATION IN RESPECT OF 65,400,000 NEW SHARES OF US$0.16 EACH: -a) 3,300,000 Offer Shares at S$0.55
each by way of public offer;
b) 62,100,000 Placement Shares at S$0.55 each by way of placement, comprising:-
i) 57,640,000 Placement Shares at S$0.55 for each Placement Share by way of Placement Shares Application Forms (or such other forms of application as the Manager deems appropriate);
ii) 500,000 Internet Placement Shares at S$0.55 for each Internet Placement Share reserved for applications made through the Internet website of DBS Vickers Securities Online (Singapore) Pte Ltd; and
iii) 3,960,000 Reserved Shares at S$0.55 each reserved for our employees, business associates and others who have contributed to the success of our Group,
payable in full on application (subject to the Over-allotment Option).
PROSPECTUS DATED 8 AUGUST 2007 (Registered by the Monetary Authority of Singapore on 8 August 2007)
This document is important. If you are in any doubt as to the action you should take, you should consult your legal, fi nancial, tax, or other professional adviser.
We have made an application to the Singapore Exchange Securities Trading Limited (“SGX-ST”) for permission to deal in, and for quotation of, all the ordinary shares of US$0.16 each (the “Shares”) in the capital of Uni-Asia Finance Corporation (the “Company”) already issued, the new shares which are the subject of this Invitation (the “New Shares”), the new Shares which may be issued upon the exercise of the options to be granted under the Uni-Asia Share Option Scheme (the “Option Shares”) and the new Shares which may be issued upon the exercise of the Over-allotment Option (as defi ned below) (the “Additional Shares”). Such permission will be granted when we have been admitted to the Offi cial List of the SGX-ST. The dealing and quotation of the Shares will be in Singapore dollars.
Acceptance of applications will be conditional upon, inter alia, permission being granted by the SGX-ST to deal in, and for quotation of, all the existing issued Shares, the New Shares, the Option Shares and the Additional Shares. If the completion of the Invitation does not occur because the SGX-ST’s permission is not granted or for any other reasons, moneys paid in respect of any application accepted will be returned to you at your own risk, without interest or any share of revenue or other benefi t arising therefrom and you will not have any claims against us or the Manager.
In connection with the Invitation, we have granted the Manager an over-allotment option (the “Over-allotment Option”) exercisable by the Manager during the period commencing on the date of commencement of trading of the Shares on the SGX-ST (the “Commencement Date”) and expiring on the date falling 30 days after the Commencement Date. The Manager may subscribe and/or procure subscribers for up to an aggregate of 9,810,000 Shares, representing 15 per cent. of the New Shares. The Manager may over-allot and effect transactions which stabilise or maintain the market price of the Shares, subject to compliance with the laws of Singapore. Such stabilisation, if commenced, may be discontinued by the Manager at any time at the Manager’s discretion in accordance with the laws of Singapore.
The SGX-ST assumes no responsibility for the correctness of any of the statements or opinions made or reports contained in this Prospectus. Admission to the Offi cial List of the SGX-ST is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries, our Shares, the New Shares, the Option Shares or the Additional Shares.
A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the “Authority”) on 29 June 2007 and 8 August 2007 respectively. The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act (Cap. 289), or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of the shares or units of shares, as the case may be, being offered or in respect of which an invitation is made, for investment.
Investing in our Shares involves risks which are described in the section entitled “RISK FACTORS” of this Prospectus.
No Shares will be allotted and/or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus.
UNI-ASIA FINANCE CORPORATION
UNI-ASIA FINANCECORPORATION
We are an Asia-based structured fi nance arrangement and Alternative Assets directinvestment fi rm. We provide transport-related
fi nance arrangement and investment management
of alternative assets such as ships, distressed assets
and real estate. Our offi ces in Tokyo, Hong Kong and
Singapore serve clients that include established
international shipping and aviation companies as
well as transport conglomerates like the Evergreen
Group and P.T. Berlian Laju Tanker TBK.
OUR BUSINESS
Distressed Assets Investment
> We invest in or purchase Non-Performing Loans (“NPLs”) and other distressed assets in Asia
> Between 1998 and 2004, we made 6 direct investments that included 24 NPL accounts, realising a return of over 8 times our investment within 6 years. In addition to our principal investments in NPLs, we have launched two private distressed investment funds - AAA Series I and II Funds
Property Investment
Property Investment and Management -Japan
> Our associated company, Capital Advisers, is engaged in the investment in and management of residential and hotel related real estate assets in Japan
> Capital Advisers manages and invests in private property funds and the size of assets under management is close to US$500 million
Principal Investment in Properties - PRC
> In January 2007, we established a wholly-owned property investment company, Uni-Asia Guangzhou, to explore property investment opportunities in the PRC
> In June 2007, Uni-Asia Guangzhou completed the acquisition of 14 offi ce units in Guangzhou which will be leased to third parties
STRUCTURED FINANCE
Our structured fi nance department provides an integrated service to clients by offering fi nancing solutions together with charter arrangement services tailor-made to our clients’ needs. Our services include acting as the arranger and agent for the structured fi nancing provided by third party fi nancial institutions, and offering tax-enhanced structured services and products, including mortgage fi nancing, tax-oriented leases,as well as export credit agency (“ECA”) backed credit, ship charter arrangement, and balance sheet management.
ALTERNATIVE ASSETS INVESTMENT
Our Alternative Assets Investments division leverages on our specialist skills in structured fi nance arrangement and credit analysis to invest in, either as the principal investor or in partnership with other investors, three key Alternative Asset classes:
Ship Investment
> We invest in ships through equity investment in ship owning companies and investment funds
> Our strategy is to invest in ships for commercial use that will produce attractive investment returns due to the high expected demand for, or anticipated shortfall in the supply of these ships
> Since 2004, we have launched three private shipping investment funds – Searex Series I and II Funds, and the Akebono Fund
> Besides being an investor in the various funds, we have played a variety of roles including administrator, fi scal agent, registrar and project manager, which provides us with a monthly fee income
BUILDING ON OUR STRENGTHS FOR GROWTH
EXPERIENCED AND COMMITTED MANAGEMENT TEAM
> Executive Directors, Executive Offi cers and employees collectively own approximately 19.7% of our post-Invitation issued share capital and we believe that this has helped align their interests with those of our Company.
> Clear understanding of industry requirements, client-driven focus and established investment strategy
SUCCESSFUL TRACK RECORD OF INTEGRATED CAPABILITIES IN OUR SPECIALIST FIELDS
> Comprehensive range of value-added and innovative structures
> Scalable execution capabilities
> Effective internal processes and practices
ABILITY TO LEVERAGE ON OUR LONG-TERM RELATIONSHIPS WITH OUR WELL-ESTABLISHED NETWORK
> We can leverage on our long-term business relationships, built through our investments, partners, corporate shareholders and brokers, to identify new business opportunities and to formulate new and innovative structures to address the requirements of business associates. Our corporate shareholders include Evergreen International S.A., HSH Nordbank AG, Exeno Yamamizu, and The Chuo Mitsui Trust & Banking Company, Limited
> We have a track record of obtaining repeat businesses from our existing clients as well as new referrals from existing network
> The strengths and geographical spread of these relationships enable us to provide cross-border services
OUR GROWTH STRATEGIES
We aim to be a leading Asia-based structured fi nance arrangement and Alternative Assets direct investment fi rm. We intend to build on our existing strengths in structured
fi nance and Alternative Assets investments to provide
one-stop and innovative fi nancing solutions to our clients
as well as to explore and develop Alternative Assets
investment opportunities by leveraging on our expertise and
relationships. We believe that globalisation and economic
growth will offer us opportunities in terms of cross-border
fi nancing and investments and allow us to build a wider
presence and network within the region.
IN SUMMARY, WE INTEND TO:
> Continue to focus and leverage on our integrated capabilities and well-established relationships
> Expand and diversify our structured fi nance client and Alternative Assets investment portfolios and broaden our geographic coverage within Asia
> Launch new ship investment funds
We intend to use the net proceeds received by us from the issue of the New Shares in the Invitation for investments in the Akebono Fund; new container vessels; ship investments; distressed assets and/or real estate assets.
OUR FINANCIALPERFORMANCE
INCOME BY BUSINESS SEGMENTS IN FY2006
OPERATING PROFITEBITDA (US$ million)
FY2004
8.1
FY2005
9.4
FY2006
10.0CAGR 11.3
%
TOTAL INCOMERevenue (US$ million)
FY2005
18.3
FY2006FY2004
14.8
19.5CAGR 1
4.7%
NET PROFITNet Income (US$ million)
9.4
11.4
7.9
CAGR 20.0
%
6.0% Distressed assets Investment/ Management
6.3% Others1
0.3% Property Investment/ Management
1 This line item is referenced in Note 3 to the
consolidated fi nancial statements of our
Company for FY2006 under the line item
“Unallocated”
FY2005 FY2006FY2004
56.6% Ship Investment/ Management
30.8% Structured Finance
> Based on the mandates secured as at the Latest Practicable Date, we expect to recognise fee income of approximately US$10.5 million in FY2007
> We also expect to receive fee income as well as investment returns in respect of new investment funds that are established, including the Akebono Fund
> The gross dividend payout ratio in respect of FY2007 is up to 50 per cent. of the Company’s consolidated profi ts available for distribution for FY2007
Applications for the Shares may be made through:
> ATMs of DBS Bank (including POSB), OCBC and UOB Group,
> Internet banking websites of DBS Bank and UOB Group, or
> Printed application forms which form part of the Prospectus
OUR INCOME STREAMS
INDICATIVE TIMETABLE
OVERVIEW OF INCOME STREAMS TO OUR GROUP
STRUCTURED FINANCEALTERNATIVE ASSETS INVESTMENT
LEGEND
Date and Time Event
8 August 2007, 8:00 p.m. Opening date and time for ATM applications
15 August 2007, 12:00 noon Closing date and time for the Invitation
17 August 2007, 9:00 a.m. Commence trading on a “ready” basis
Shipping Companies/Ship Owners
> Finance arrangement fees
> Charter brokerage fees
> Agency fees
Joint Venture Ship Investments
> Investment returns
> Finance arrangement fees
> Project management fees
> Administration and agency fees
Akebono Fund> Investment returns
> Finance arrangement fees
> Administration and agency fees
> Project management fees
> Incentive fees
Property and Distressed Assets Investment> Investment returns
> Incentive fees
> Administration and agency fees
Page
CORPORATE INFORMATION .............................................................................................................. 4
DEFINITIONS ........................................................................................................................................ 6
GLOSSARY OF TECHNICAL TERMS.................................................................................................. 14
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS .............................................. 16
TAKE-OVERS........................................................................................................................................ 18
PURCHASE BY OUR COMPANY OF OUR OWN SHARES .............................................................. 19
ATTENDANCE AT GENERAL MEETINGS .......................................................................................... 20
SELLING RESTRICTIONS .................................................................................................................. 21
DETAILS OF THE INVITATION
Listing on the SGX-ST ................................................................................................................ 23
Indicative Timetable for Listing .................................................................................................... 26
PLAN OF DISTRIBUTION .................................................................................................................... 27
PROSPECTUS SUMMARY
Overview...................................................................................................................................... 29
Competitive Strengths ................................................................................................................ 32
Prospects .................................................................................................................................... 33
Business Strategy and Future Plans .......................................................................................... 35
Consolidated Results of our Group ............................................................................................ 36
Our Contact Details .................................................................................................................... 36
THE INVITATION .................................................................................................................................. 37
EXCHANGE RATES ............................................................................................................................ 39
RISK FACTORS
Risks Relating to our Group........................................................................................................ 40
Risks Relating to the Industries which We Operate In................................................................ 44
Risks Relating to Ownership of our Shares ................................................................................ 46
INVITATION STATISTICS .................................................................................................................... 49
USE OF PROCEEDS ............................................................................................................................ 50
DIVIDEND POLICY .............................................................................................................................. 51
SHARE CAPITAL.................................................................................................................................. 52
PRINCIPAL SHAREHOLDERS
Ownership Structure.................................................................................................................... 55
Moratorium .................................................................................................................................. 57
CAPITALISATION AND INDEBTEDNESS .......................................................................................... 58
CONTENTS
1
DILUTION.............................................................................................................................................. 59
SELECTED FINANCIAL INFORMATION AND OTHER DATA
Consolidated Results of our Group ............................................................................................ 60
Reconciliation of our Consolidated Results as set out in this Prospectus to our Audited Consolidated Financial Statements .................................... 61
Consolidated Financial Positions of our Group .......................................................................... 62
Pro Forma Financial Statements for the Financial Year ended 31 December 2006 .................. 64
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
Overview...................................................................................................................................... 65
Review of Results of Operations ................................................................................................ 69
Review of Financial Position........................................................................................................ 73
Indebtedness .............................................................................................................................. 74
Liquidity and Capital Resources.................................................................................................. 75
Capital Expenditure, Investments, Divestments and Commitments............................................ 77
Foreign Exchange Exposure ...................................................................................................... 79
Critical Accounting Policies ........................................................................................................ 80
Significant Changes in Accounting Policies ................................................................................ 84
GROUP STRUCTURE .......................................................................................................................... 85
GENERAL INFORMATION ON OUR GROUP
Corporate Development .............................................................................................................. 87
Business Overview...................................................................................................................... 90
Sales and Marketing .................................................................................................................. 102
Major Clients .............................................................................................................................. 102
Business Partners ...................................................................................................................... 103
Intellectual Property .................................................................................................................... 104
Insurance .................................................................................................................................... 105
Regulations Governing our Group’s Activities in Hong Kong, Japan, Singapore
and the PRC.............................................................................................................................. 106
Seasonality.................................................................................................................................. 109
Competition ................................................................................................................................ 110
Competitive Strengths ................................................................................................................ 110
Exchange Controls ...................................................................................................................... 112
Properties .................................................................................................................................... 114
Prospects .................................................................................................................................... 115
Order Book .................................................................................................................................. 117
Business Strategy and Future Plans .......................................................................................... 117
MANAGEMENT REPORTING STRUCTURE ...................................................................................... 119
DIRECTORS, MANAGEMENT AND STAFF
Directors ...................................................................................................................................... 120
Executive Officers........................................................................................................................ 123
Management Committee ............................................................................................................ 124
Employees .................................................................................................................................. 126
CONTENTS
2
Remuneration .............................................................................................................................. 129
Service Agreements.................................................................................................................... 130
CORPORATE GOVERNANCE ............................................................................................................ 132
UNI-ASIA SHARE OPTION SCHEME.................................................................................................. 134
INTERESTED PERSON TRANSACTIONS AND POTENTIAL CONFLICTS OF INTERESTS
Interested Person Transactions .................................................................................................. 141
Potential Conflicts of Interests .................................................................................................... 143
DESCRIPTION OF OUR ORDINARY SHARES .................................................................................. 146
TAXATION ............................................................................................................................................ 148
CLEARANCE AND SETTLEMENT ...................................................................................................... 157
GENERAL AND STATUTORY INFORMATION
Information on Directors and Executive Officers ........................................................................ 158
Share Capital .............................................................................................................................. 168
Bank Borrowings and Working Capital........................................................................................ 168
Material Contracts ...................................................................................................................... 168
Litigation ...................................................................................................................................... 168
Management, Underwriting and Placement Arrangements ........................................................ 168
Miscellaneous.............................................................................................................................. 170
Consents .................................................................................................................................... 172
Responsibility Statement by our Directors .................................................................................. 172
Documents Available for Inspection ............................................................................................ 173
APPENDIX A – Directors’ Report on the Consolidated Financial Statements for the Year ended 31 December 2004 ...................................................................................... A-2
Auditors’ Report on the Consolidated Financial Statements for the Yearended 31 December 2004 ...................................................................................... A-5
Consolidated Financial Statements for the Year ended 31 December 2004 ............ A-6
APPENDIX B – Directors’ Report on the Consolidated Financial Statements for the Year ended 31 December 2005 ...................................................................................... B-2
Auditors’ Report on the Consolidated Financial Statements for the Yearended 31 December 2005 ...................................................................................... B-5
Consolidated Financial Statements for the Year ended 31 December 2005 ............ B-6
APPENDIX C – Directors’ Report on the Consolidated Financial Statements for the Year ended 31 December 2006 ...................................................................................... C-2
Auditors’ Report on the Consolidated Financial Statements for the Yearended 31 December 2006 ...................................................................................... C-5
Consolidated Financial Statements for the Year ended 31 December 2006 ............ C-6
APPENDIX D – Summary of the Constitution of our Company .......................................................... D-1
APPENDIX E – Summary of Cayman Islands Company Law ............................................................ E-1
APPENDIX F – Rules of the Uni-Asia Share Option Scheme ............................................................ F-1
APPENDIX G – Terms, Conditions and Procedures for Application and Acceptance ........................ G-1
CONTENTS
3
BOARD OF DIRECTORS : Motokuni Yamashiro (Executive Director)Kazuhiko Yoshida (Executive Director)Michio Tanamoto (Executive Director)Hamilton Jian Ren Chueh (Non-Executive Director)Jörg Wilhelm Schelp (Non-Executive Director)Robert Van Jin Nien (Non-Executive Director)V-Nee Yeh (Independent Non-Executive Director)Ang Miah Khiang (Independent Non-Executive Director)Ronnie Teo Heng Hock (Independent Non-Executive Director)
JOINT COMPANY SECRETARIES : Joanna Lim Lan Sim, ACISLim Aik Kun, ACIS
REGISTERED OFFICE : Ugland HouseP.O. Box 309Grand CaymanCayman IslandsBritish West Indies
HEAD OFFICE AND PRINCIPAL : Suite A, 26th FloorPLACE OF BUSINESS Admiralty Centre Tower I
18 Harcourt RoadHong Kong
SHARE REGISTRAR AND : Lim Associates (Pte) LtdSINGAPORE SHARE 3 Church Street #08-01TRANSFER AGENT Samsung Hub
Singapore 049483
MANAGER, UNDERWRITER AND : DBS Bank LtdPLACEMENT AGENT 6 Shenton Way
DBS Building Tower OneSingapore 068809
AUDITORS : PricewaterhouseCoopers Certified Public Accountants22nd Floor Prince’s BuildingCentralHong Kong
Partner-in-charge: Colin Shaftesley
SOLICITORS TO THE INVITATION : Allen & Gledhill LLPAND LEGAL ADVISERS TO THE One Marina Boulevard #28-00COMPANY ON SINGAPORE LAW Singapore 018989
LEGAL ADVISERS TO THE : Harney Westwood & RiegelsCOMPANY AS TO BRITISH P.O. Box 71 Road TownVIRGIN ISLANDS LAW Tortola, British Virgin Islands
CORPORATE INFORMATION
4
LEGAL ADVISERS TO THE : Maples and CalderCOMPANY AS TO CAYMAN 1504 One International Finance CentreISLANDS LAW 1 Harbour View Street
Hong Kong
LEGAL ADVISERS TO THE : Richards ButlerCOMPANY AS TO HONG 20th Floor, Alexandra HouseKONG LAW 16-20 Chater Road
CentralHong Kong
LEGAL ADVISERS TO THE : Tanaka Law OfficeCOMPANY AS TO JAPAN LAW 10th Floor, Landic Akasaka Building
3-4 Akasaka 2-ChomeMinato-kuTokyo, 107-0052Japan
LEGAL ADVISERS TO THE : Lauseed & Tittan Law FirmCOMPANY AS TO PRC LAW 11/F, Tower A
Chengjiandasha Plaza18 Beitaipingzhuang RoadBeijing 100088PRC
SOLICITORS TO THE MANAGER, : Rajah & TannUNDERWRITER AND 4 Battery Road #26-01PLACEMENT AGENT Bank of China Building
Singapore 049908
PRINCIPAL BANKERS : The Hong Kong and Shanghai Banking Corporation LimitedPacific Place BranchTwo Pacific Place88 QueenswayHong Kong
Mizuho Corporate Bank LtdHong Kong Branch17/F, Two Pacific Place88 Queensway Hong Kong
Hang Seng Bank Limited83 Des Voeux Road, CentralHong Kong
RECEIVING BANK : DBS Bank Ltd6 Shenton WayDBS Building Tower OneSingapore 068809
CORPORATE INFORMATION
5
In this Prospectus and the accompanying Application Forms, the following definitions apply where thecontext so admits:-
“AAA” : AAA Strategic Investment Limited, a company incorporated inthe Cayman Islands and held by a charitable trust. AAA ownsand operates the AAA Series I Fund and AAA Series II Fund
“AAA Series I Fund” : The investment fund owned and operated by AAA, comprisingthe proceeds from the issue of the AAA Series I Notes and theassets into which any such proceeds have been converted
“AAA Series I Notes” : The US$5 million of Performance Notes issued by AAA to ourCompany and one other investor which is an independent thirdparty
“AAA Series II Fund” : The investment fund owned and operated by AAA, comprisingthe proceeds from the issue of the AAA Series II Notes and theassets into which any such proceeds have been converted
“AAA Series II Notes” : The US$15 million of Performance Notes issued by AAA to ourCompany and the same investor who subscribed to the AAASeries I Notes
“Additional Shares” : Up to 9,810,000 new Shares (representing 15 per cent. of theNew Shares) which may be issued on the terms and subject tothe conditions of this Prospectus, upon the exercise of the Over-allotment Option by the Manager
“Akebono Capital Limited” : Akebono Capital Limited, a company incorporated in the BritishVirgin Islands and held by a charitable trust. Akebono CapitalLimited owns and operates the Akebono Fund
“Akebono Fund” : The investment fund owned and operated by Akebono CapitalLimited, comprising the proceeds from the issue of thePerformance Notes and the assets into which any suchproceeds have been converted
“Application Forms” : The printed application forms to be used for the purpose of theInvitation and which form part of this Prospectus
“Application List” : The list of applications for subscription of the New Shares
“Articles” or “Articles of : The articles of association of the Company as adopted on 26Association” June 2007 and as amended from time to time
“Associate” : (a) In relation to any Director, chief executive officer,Substantial Shareholder or Controlling Shareholder (beingan individual) means:
(i) his immediate family;
(ii) the trustees, acting in their capacity as suchtrustees, of any trust of which he or his immediatefamily is a beneficiary or, in the case of adiscretionary trust, is a discretionary object; or
DEFINITIONS
6
(iii) any company in which he and his immediate familytogether (directly or indirectly) have an interest of 30per cent. or more of the aggregate of the nominalamount of all the voting shares; and
(b) in relation to a Substantial Shareholder or a ControllingShareholder (being a company) means any othercompany which is its subsidiary or holding company or isa fellow subsidiary of any such holding company or one inthe equity of which it and/or such other company orcompanies taken together (directly or indirectly) have aninterest of 30 per cent. or more
“associated company” : A company in which at least 20% but not more than 50% of itsshares are held by our Group
“ATM” : Automated teller machines of a Participating Bank
“Audit Committee” : The audit committee of our Company for the time being
“Board” or “Board of Directors” : The board of Directors of our Company as at the date of thisProspectus, unless otherwise stated
“Capital Advisers” : Capital Advisers Co., Ltd, a company incorporated on 24February 2000 in Japan and an associated company of ourCompany
“Cayman Companies Law” : The Companies Law, Cap. 22 (Law 3 of 1961, as consolidatedand revised) of the Cayman Islands
“CMTB” : The Chuo Mitsui Trust and Banking Co. Ltd, a companyincorporated in Japan
“Companies Act” : The Companies Act (Chapter 50) of Singapore
“Companies Ordinance” : The Companies Ordinance (Chapter 32 of the Laws of HongKong)
“Company” or “Uni-Asia” : Uni-Asia Finance Corporation, an exempted companyincorporated on 17 March 1997 in the Cayman Islands withlimited liability
“Controlling Shareholder” : In relation to a corporation,
(a) person who has an interest in the voting shares of acorporation and who exercises control over thecorporation; or
(b) a person who has an interest of 15 per cent. or more ofthe aggregate of the nominal amount of all the votingshares in a corporation, unless he does not exercisecontrol over the corporation
“Directors” : The directors of our Company as at the date of this Prospectus,unless otherwise stated
“ECA” : Export credit agency
DEFINITIONS
7
“Electronic Applications” : Applications for the Offer Shares made through an ATM orthrough IB websites in accordance with the terms and conditionsof this Prospectus
“EPS” : Earnings per Share
“EuroAsia II” : EuroAsia II, Inc., a private company incorporated in Panama,whose principal activity is ship owning
“Evergreen” or “Evergreen : Evergreen International S.A., a private company incorporated in International S.A.” Panama and part of the Evergreen Group, a Substantial
Shareholder of our Company
“Evergreen Group” : Evergreen and its subsidiaries including Evergreen InternationalStorage and Terminal Corp, EVA Airways, Evergreen MarineCorp., Gaining Enterprise S.A., Greencompass Marine S.A.,Evergreen Marine (UK) Limited (formerly known as HatsuMarine Limited), Italia Marittima and Evergreen InternationalCorp.
“Executive Directors” : The executive Directors of our Company as at the date of thisProspectus
“Executive Officers” : The executive officers of our Group as at the date of thisProspectus
“Exeno Yamamizu” or “Yamamizu” : Exeno Yamamizu Corporation, a company incorporated in Japan
“FY” : Financial year ended or, as the case may be, ending 31December
“GCAP Fund” : YK Japan Residential Holdings, a fund established in 2004which is jointly managed by Grosvenor Asia and CapitalAdvisers through Grosvenor Capital Advisers Fund ManagementCo., Ltd.
“Grosvenor” : Grosvenor Group Limited, an international property companyincorporated in the United Kingdom
“Grosvenor Asia” : The group of companies within the Grosvenor Group whichoperates the businesses of Grosvenor in Asia
“Grosvenor Group” : Grosvenor and its subsidiaries
“Group” : Our Company together with our subsidiaries
“Harmonic Shipping” : Harmonic Shipping S.A., a private company incorporated inPanama, engaged in the business of ship owning
“Hatsu Marine” : Evergreen Marine (UK) Limited, formerly known as Hatsu MarineLimited, a company incorporated in the UK and part of theEvergreen Group
“Hong Kong” : The Hong Kong Special Administrative Region of the PRC
“HSH Nordbank” : HSH Nordbank AG, a company incorporated in Germany
DEFINITIONS
8
“IB” : Internet Banking
“Independent Directors” or : The independent non-executive Directors of our Company as at“Independent Non-Executive the date of this ProspectusDirectors”
“Infinite Asset” : Infinite Asset Management (Pte.) Limited, a wholly-ownedsubsidiary of Akebono Capital Limited and the intermediateholding company for the shipping SPCs incorporated inSingapore
“Internet Placement Shares” : The 500,000 Placement Shares available for application throughthe Internet website of DBS Vickers Securities Online(Singapore) Pte Ltd, subject to and on the terms and conditionsof this Prospectus
“Invitation” : The invitation by us to the public in Singapore to subscribe forthe New Shares at the Invitation Price, subject to and on theterms and conditions of this Prospectus
“Invitation Price” : S$0.55 for each New Share
“Italia Marittima” : Italia Marittima S.p.A., formerly known as Lloyd Triestino diNavigazione S.p.A., a company incorporated in Italy and part ofthe Evergreen Group
“Latest Practicable Date” : 19 June 2007, being the latest practicable date for the purposesof lodgment of this Prospectus
“Listing Date” : The date trading in the Shares commences on the SGX-ST
“Listing Manual” : The Listing Manual of the SGX-ST
“Management and Underwriting : The conditional management and underwriting agreement dated Agreement” 8 August 2007 entered into between our Company, the Manager
and the Underwriter relating to the Invitation
“Market Day” : A day on which the SGX-ST is open for trading in securities
“Matin Shipping Limited” : Matin Shipping Limited, a company incorporated in Hong Kong,engaged in the business of ship owning
“Memorandum” or “Memorandum : The memorandum of association of the Company as adopted on of Association” 26 June 2007 and as amended from time to time
“MOFTEC” : The Ministry of Foreign Trade and Economic Cooperation of thePRC
“NAV” : Net asset value
“New Shares” : The 65,400,000 Shares which are the subject of this Invitation
“NTA” : Net tangible assets
“Offer” : The offer by our Company of the Offer Shares to the public inSingapore for subscription at the Invitation Price, subject to andon the terms and conditions of this Prospectus
DEFINITIONS
9
“Offer Shares” : 3,300,000 New Shares which are the subject of the Offer
“Option” : The right to subscribe for Shares granted or to be granted to anemployee pursuant to the Scheme and for the time beingsubsisting
“Option Shares” : The new Shares which may be allotted and issued upon theexercise of the Options pursuant to the Scheme
“Over-allotment Option” : The option granted by us to the Manager to require us to issueup to 9,810,000 Additional Shares at the Invitation Price solelyfor the purpose of covering over-allotment of Shares (if any),upon the terms and subject to and on the terms and conditionsof this Prospectus and referred to in the section entitled “Over-allotment and Stabilisation” of this Prospectus
“Pacific Leasing Corporation” : , a company incorporated in the PRC and anindependent third party
“Panmax” : Panmax Tanker S.A., a special purpose company established inPanama
“PER” : Price earnings ratio
“Placement” : The placement of the Placement Shares by the PlacementAgent on behalf of our Company for subscription at the InvitationPrice, subject to and on the terms and conditions of thisProspectus
“Placement Shares” : 62,100,000 of the New Shares (including the Internet PlacementShares and the Reserved Shares), which are the subject of thePlacement
“PRC” or “China” : The People’s Republic of China which, for the purposes of thisProspectus and for geographical reference, excludes HongKong, the Macau Special Administrative Region and Taiwan
“Prospectus” : This Prospectus dated 8 August 2007 issued by our Company inrespect of the Invitation
“Reserved Shares” : The 3,960,000 Placement Shares reserved for our employees,business associates and others who have contributed to thesuccess of our Group
“Rich Containership S.A.” : A special purpose company incorporated in Panama, engaged inthe business of ship owning
“Scheme” : The Uni-Asia Share Option Scheme adopted by our Companyon 26 June 2007 and as described in the section entitled “Uni-Asia Share Option Scheme” of this Prospectus
“Searex” : Searex Asset Management Limited, a company incorporated inthe British Virgin Islands and held by a charitable trust. Searexowns and operates the Searex Series I Fund and Searex SeriesII Fund
DEFINITIONS
10
“Searex Series I Fund” : The investment fund owned and operated by Searex comprisingthe proceeds from the issue of the Searex Series I Notes, theassets into which any such proceeds have been converted andall loans advanced to Searex in relation to shipping interestsacquired for the benefit of the holders of the Searex Series INotes
“Searex Series I Notes” : The US$17 million Performance Notes issued by Searex to ourCompany and five other investors
“Searex Series II Fund” : The investment fund owned and operated by Searex comprisingthe proceeds from the issue of the Searex Series II Notes, theassets into which any such proceeds have been converted andall loans advanced to Searex in relation to shipping interestsacquired for the benefit of the holders of the Searex Series IINotes
“Searex Series II Notes” : The US$23 million Performance Notes issued by Searex to thesame investors who subscribed for the Searex Series I Notesand to four additional new investors
“Securities Account” : The securities account maintained by a depositor with CDP
“Service Agreements” : The service agreements entered into between our Company andeach of our Executive Directors Mr. Motokuni Yamashiro, Mr.Kazuhiko Yoshida and Mr. Michio Tanamoto
“SFA” : The Securities and Futures Act (Chapter 289) of Singapore
“SFC” : The Securities and Futures Commission of Hong Kong
“SFO” : Securities and Futures Ordinance, Chapter 571 of the Laws ofHong Kong
“Share Lending Agreement” : An agreement dated 8 August 2007 entered into between Mr.Motokuni Yamashiro and the Manager pursuant to which Mr.Motokuni Yamashiro may lend up to 9,810,000 Shares to theManager representing 15 per cent. of the New Shares, for thepurpose of facilitating settlement of the over-allotment of Shares(if any) in connection with the Invitation
“Shareholders” : Registered holders of Shares
“Shares” : Ordinary shares of US$0.16 each in the capital of our Company
“SPC” : Special purpose company
“Substantial Shareholders” : Persons who have an interest in the Shares, the nominal amountof which is not less than 5 per cent. of the aggregate of thenominal amount of all the voting Shares of our Company
“Sunrise Shipping S.A.” : Sunrise Shipping S.A., a private company incorporated inPanama, engaged in the business of ship owning
“Uni-Asia Guangzhou” : , or Uni-Asia Guangzhou PropertyManagement Company Limited, a private company incorporatedin Guangzhou, the PRC, engaged in the business of propertyinvestment and management
DEFINITIONS
11
“Uni-Ships and Management : Uni-Ships and Management Limited, a company incorporated in Limited” Hong Kong. Uni-Ships and Management Limited is a joint
venture between Maritime 24 (Pte) Ltd, Uni-Asia, Uni-FastLimited and Wealth Ocean which each respectively has ashareholding of 30%, 30%, 30% and 10%. It provides projectmanagement, accounting and administration services to Uni-Asia’s investment fund vehicles
“UK” or “United Kingdom” : England, Wales, Scotland and Northern Ireland
“US”, “USA” or “United States” : The United States of America
“Wealth Ocean” : Wealth Ocean Services Limited, a company incorporated inHong Kong and an independent third party. Wealth Ocean isengaged in marine-related activities
Currencies, Units of Measurement and Others
“€” : Euro, the lawful currency of certain nations within the EuropeanUnion
“HK$” : Hong Kong dollars, the lawful currency of Hong Kong
“JPY” or “Yen” : Japanese Yen, the lawful currency of Japan
“%” or “per cent.” : Per centum or Percentage
“Renminbi” or “RMB” : PRC Renminbi, the lawful currency of the People’s Republic ofChina
“S$” and “cents” : Singapore dollars and cents respectively, the lawful currency ofthe Republic of Singapore
“sq ft” : Square feet
“sq m” : Square metres
“US dollars” or “US$” : United States dollars, the lawful currency of the United States ofAmerica
Other Corporations and Agencies
“CDP” : The Central Depository (Pte) Limited
“CPF” : The Central Provident Fund
“DBS”, “DBS Bank”, “Manager”, : DBS Bank Ltd“Underwriter”, “Placement Agent” or “Receiving Bank”
“MAS” or the “Authority” : The Monetary Authority of Singapore
“Participating Banks” : DBS Bank (including POSB), United Overseas Bank Limited(“UOB”) and its subsidiary, Far Eastern Bank Limited (the “UOBGroup”), and Oversea-Chinese Banking Corporation Limited(“OCBC”)
DEFINITIONS
12
“SGX-ST” : Singapore Exchange Securities Trading Limited
“Share Registrar” : Lim Associates (Pte) Ltd
In this Prospectus, unless otherwise specified, conversions of US dollars into Singapore dollars arebased on the rate of US$1.00 to S$1.52 and conversions of Yen to US dollars are based on the rate ofUS$1.00 to 118.9 Yen. This exchange rate is for reference only. No representation is made by us that anyamount in US$ has been, could have been or could be converted at the above rates or at any other ratesor at all.
All figures are translated (where relevant) for the purposes of this Prospectus from square metre, tosquare feet at 1 square metre = 10.764 square feet.
The expressions “Depositor”, “Depository Agent” and “Depository Register” shall have the meaningsascribed to them respectively in Section 130A of the Companies Act.
Words importing the singular shall, where applicable, include the plural and vice versa and wordsimporting the masculine gender shall, where applicable, include the feminine and neuter genders andvice versa. References to persons shall include corporations.
Any reference in this Prospectus, the Application Forms and Electronic Applications to any statute orenactment is a reference to that statute or enactment as for the time being amended or re-enacted. Anyword defined under the Companies Act, the Cayman Companies Law, the SFA or any statutorymodification thereof and used in this Prospectus, the Application Forms and Electronic Applications shall,where applicable, have the meaning assigned to it under the Companies Act, the Cayman CompaniesLaw, the SFA or any statutory modification thereof, as the case may be.
Any reference in this Prospectus, the Application Forms and the Electronic Applications to Shares beingallotted and/or allocated to an applicant includes allotment and/or allocation to CDP for the account ofthat Applicant.
Any reference to a time of day in this Prospectus shall be a reference to Singapore time unless otherwisestated.
References in this Prospectus to “our Group”, “we”, “our”, and “us” refer to our Group.
Certain names with Chinese or Japanese characters have been translated into English names. Suchtranslations are provided solely for the convenience of Singapore-based investors and for identificationpurposes only. They may not be registered with the relevant PRC or Japanese authorities (as the casemay be) and should not be construed as representations that the English names actually represent theChinese or Japanese characters. In the case of any inconsistency between the English names and theirrespective official Chinese or Japanese names (as the case may be), the Chinese or Japanese namesshall prevail.
Any discrepancies in the tables included herein between the listed amounts and the totals thereof are dueto rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation ofthe figures that precede them.
DEFINITIONS
13
To facilitate a better understanding of our business, the following glossary provides a description of someof the technical terms and abbreviations as they relate to us and as they are used in this Prospectus, andmay not correspond to standard industry definitions or usage of the terms:
“Alternative Assets” : A general term to describe non-mainstream investment assets. For Uni-Asia, at the Latest Practicable Date, the Alternative Assets we invest ininclude ships, distressed assets (including NPLs and other distressedassets in Asia (excluding Japan)), property (including hotel andresidential properties in Japan and commercial properties in the PRC)
“Bareboat Charter” : Charter in which a bare ship is chartered without crew. The Charterertakes over the vessel for a stipulated sum with minimum restrictions,usually for five or more years
“Bulk Carriers” : A ship designed for homogeneous cargo stowed in bulk and not enclosedin any container
“Bunkers” : Fuel for vessels. Type will vary depending upon propulsion mode ofvessel. Steamships use heavy fuel oil, diesels use range of fuels fromheavy to light, and gas turbines generally use kerosene
“Charterer” : Person given use of vessel or all or part of the carrying capacity of avessel to transport cargo/passengers for specified time
“Charter Party” : Document of contract/agreement by which shipowner agrees to lease andthe Charterer agrees to hire entire ship and all/ part of cargo space foragreed sum under certain conditions
“Charter Rates” : The tariff applied for chartering tonnage in a particular trade
“DWT” : Dead Weight Tons is the total weight of a vessel including all items onboard the vessel when the vessel is loaded to her maximum loading limit
“Handy Max” : Tankers of about 40,000 to 60,000 DWT
“Handy Size” : Tankers of about 10,000 to 40,000 DWT
“IRR” : Internal rate of return, which is the interest rate received for aninvestment that consists of payments and income. The IRR is the interestrate corresponding to a zero net present value. Net IRR takes intoaccount direct transaction costs of a transaction
“NPL(s)” : Non-performing loan whereby the borrower of the loan is in default or ishighly likely to default. Collateral or guarantees agreed for the loan,therefore, may or may not be available when such loan is in default
“Performance Notes” : An evidence of entitlement issued by the issuer of the note pursuant to adeed of covenant created by the issuer and subscribed by the noteholders pursuant to a subscription agreement. They are redeemed semi-annually, in whole or in part, calculated based on net cash recoveredfrom the underlying assets of the issuer. Note redemptions aredetermined based on the total original cost of recovered assets less thededuction of fees and other expenses incurred in recovery of suchassets. Recovery amounts from assets in excess of that required forperformance note repayments are paid out as interest on theperformance note
GLOSSARY OF TECHNICAL TERMS
14
“TEU” : Twenty foot equivalent unit
“Time Charter” : Charter for varying periods of time, typically between one and 10 years,under which owner hires out vessel to Charterer, fully manned,provisioned, stored and insured. The Charterer is usually responsible forbunkers, port charges, canal tolls and any crew overtime connected withcargo
“Tokumei Kumiai” or “TK” : A form of silent partnership structure used in Japan. TK is used in verysophisticated cross-border tax structuring and is created by a contractualagreement between two or more parties: the “proprietor” or “operator” andthe “silent” or “limited” partners. The silent partner contributes cash orasset to the operator who manages asset for the business designated inthe partnership agreement. The economic benefits are shared betweenthe parties
GLOSSARY OF TECHNICAL TERMS
15
All statements contained in this Prospectus, statements made in press releases and oral statements thatmay be made by us or our Directors, Executive Officers or employees acting on our behalf, that are notstatements of historical fact, constitute “forward-looking statements”. You can identify some of theseforward-looking statements by terms such as “expects”, “believes”, “plans”, “intends”, “estimates”,“anticipates”, “may”, “will”, “would” and “could” or similar words. However, you should note that thesewords are not the exclusive means of identifying forward-looking statements. All statements regarding ourexpected financial position, business strategies, plans and prospects are forward-looking statements.
These forward-looking statements, including without limitation, statements as to:
(a) our revenue and profitability;
(b) expected growth in demand;
(c) expected industry trends;
(d) anticipated expansion plans; and
(e) other matters discussed in this Prospectus regarding matters that are not historical fact,
are only predictions. These forward-looking statements involve known and unknown risks, uncertaintiesand other factors that may cause our actual results, performance or achievements to be materiallydifferent from any future results, performance or achievements expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include, among others:
(a) changes in political, social and economic conditions and the regulatory environment in Hong Kong,the PRC, Japan and other countries in which we conduct business;
(b) changes in currency exchange rates;
(c) our anticipated growth strategies and expected internal growth;
(d) changes in customer preferences;
(e) changes in competitive conditions and our ability to compete under such conditions;
(f) changes in our future capital needs and the availability of financing and capital to fund such needs;and
(g) other factors beyond our control.
Some of these risk factors are discussed in more detail under the section entitled “Risk Factors” of thisProspectus.
Given the risks and uncertainties that may cause our actual future results, performance or achievementsto be materially different than expected, expressed or implied by the forward-looking statements in thisProspectus, undue reliance must not be placed on these statements which apply only as at the date ofthis Prospectus. Neither our Company, the Manager, Underwriter and Placement Agent, nor any otherperson represents or warrants that our actual future results, performance or achievements will be asdiscussed in those statements.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
16
Our actual results may differ materially from those anticipated in these forward-looking statements as aresult of the risks faced by us. We and the Manager, Underwriter and Placement Agent, disclaim anyresponsibility to update any of those forward-looking statements or publicly announce any revisions tothose forward-looking statements to reflect future developments, events or circumstances. We are,however, subject to the provisions of the SFA and the Listing Manual of the SGX-ST regarding corporatedisclosure. In particular, pursuant to Section 241 of the SFA, if after this Prospectus is registered butbefore the close of the Invitation, we become aware of (a) a false or misleading statement or matter inthis Prospectus; (b) an omission from this Prospectus of any information that should have been includedin it under Section 243 of the SFA; or (c) a new circumstance that has arisen since this Prospectus waslodged with the Authority and would have been required by Section 243 of the SFA to be included in thisProspectus, if it had arisen before this Prospectus was lodged and that is materially adverse from thepoint of view of an investor, we may lodge a supplementary or replacement Prospectus with the Authority.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
17
Pursuant to Section 88 of the Cayman Companies Law, where a scheme or contract involving the transferof Shares or any class of shares in the Company to another company, whether a company (the“transferee company”) has, within four months after the making of the offer in that behalf by thetransferee company, been approved by the holders of not less than 90 per cent. in value of the sharesaffected, the transferee company may, at any time within two months after the expiration of the said fourmonths, give notice in the prescribed manner to any dissenting shareholder that it desires to acquire hisshares, and where such notice is given the transferee company shall, unless on an application made bythe dissenting shareholder within one month from the date on which the notice was given, unless thecourt thinks fit to order otherwise, be entitled and bound to acquire those shares on the terms on whichunder the scheme or contract the shares of the approving shareholders are to be transferred to thetransferee company.
Apart from Section 88 of the Cayman Companies Law, there are no other statutory requirements underany Cayman Islands laws or regulations on take-over offers for our Shares which would be applicable tous.
With effect from 15 October 2005 and following legislative amendments to the SFA, we are subject toSections 138, 139 and 140 of the SFA and the Singapore Code on Take-overs and Mergersnotwithstanding that we are a corporation incorporated in the Cayman Islands.
TAKE-OVERS
18
Under the laws of the Cayman Islands, a company may, if authorised by its articles of association,purchase its own shares. Our Company has such power to purchase our own Shares pursuant to Article14 of our Articles. Such power to purchase our own Shares shall, subject to the Cayman Companies Lawand our Articles (and if applicable, the rules and regulations of the SGX-ST and other regulatoryauthorities), be exercisable by our Directors upon such terms and subject to such conditions as they thinkfit, in accordance with Article 14.
Under the laws of the Cayman Islands, such purchases may be effected out of profits of our Company orout of proceeds of a fresh issue of Shares made for that purpose or, in the manner authorised by ourArticles, by a payment out of capital. At no time may our Company purchase our Shares if, as a result ofthe purchase, there would no longer be any member of our Company holding our Shares. Only fully paidShares may be purchased by our Company. A payment out of capital by our Company for the purchase ofour Shares is not lawful unless immediately following the date on which the payment out of capital isproposed to be made, our Company shall be able to pay our debts as they fall due in the ordinary courseof business. Shares purchased by our Company shall be treated as cancelled and our Company’s issued,but not our authorised, capital will be diminished accordingly.
For further details on the constitution of our Company, please refer to Appendix D of this Prospectus.
Our Company presently has no intention of purchasing our own Shares after the listing. However, if wedecide to do so later, we will seek our Shareholders’ approval in accordance with our Articles and therules of the SGX-ST.
Our Company will make prompt public announcement of any such share purchase and has also given anundertaking to the SGX-ST to comply with all requirements that the SGX-ST may impose in the event ofany such share purchase.
PURCHASE BY OUR COMPANY OF OUR OWN SHARES
19
Under the Cayman Companies Law, only those persons who agree to become shareholders of a CaymanIslands company and whose names are entered on the register of members of such a company areconsidered members, with rights to attend and vote at general meetings. Accordingly, Depositors holdingShares through CDP would not be recognised as members of our Company, and would not have a rightto attend and to vote at general meetings of our Company. In the event that Depositors wish to attendand vote at general meetings of our Company, CDP will have to appoint them as proxies, pursuant to theArticles. In accordance with Article 63(b), unless CDP specifies otherwise in a written notice to ourCompany, CDP shall be deemed to have appointed as CDP’s proxies each of the Depositors who areindividuals and whose names are shown in the records of CDP, as at a time not earlier than forty-eight(48) hours prior to the time of the relevant general meeting, supplied by CDP to our Company. Therefore,Depositors who are individuals can attend and vote at the general meetings of our Company without thelodgment of any proxy form. Depositors who cannot attend a meeting personally may enable theirnominees to attend as CDP’s proxies. Depositors who are not individuals can only be represented at ageneral meeting of our Company if their nominees are appointed by CDP as CDP’s proxies. Proxy formsappointing nominees of Depositors as proxies of CDP would need to be executed by CDP as membersand must be deposited at the specified place and within the specified time frame to enable the nomineesto attend and vote at the relevant general meeting of our Company.
ATTENDANCE AT GENERAL MEETINGS
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Singapore
This Prospectus does not constitute an offer, solicitation or invitation to subscribe for the New Shares inany jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to anyperson to whom it is unlawful to make such offer, solicitation or invitation. No action has been or will betaken under the requirements of the legislation or regulations of, or of the legal regulatory requirements ofany jurisdiction, except for the filing and/or registration of this Prospectus in Singapore in order to permitan offering of the New Shares and the distribution of this Prospectus in Singapore. The distribution of thisProspectus and the offering of the New Shares in certain jurisdictions may be restricted by the relevantlaws in such jurisdictions. Persons who may come into possession of this Prospectus are required by usand the Manager, Underwriter and Placement Agent to inform themselves about, and to observe andcomply with, any such restrictions at their own expense and without liability to us and the Manager,Underwriter and Placement Agent. Persons to whom a copy of this Prospectus has been issued shall notcirculate the same to any other person or reproduce or otherwise distribute this Prospectus or anyinformation herein for any purpose whatsoever, nor permit or cause the same to occur.
Hong Kong
The Underwriter has represented and agreed that:
(a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, anyNew Shares other than (i) to “professional investors” as defined in the Securities and FuturesOrdinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (ii) in othercircumstances which do not result in the document being a “prospectus” as defined in theCompanies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the publicwithin the meaning of that Ordinance; and
(b) it has not issued or had in its possession for the purposes of issue, and will not issue or have in itspossession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement,invitation or document relating to the New Shares, which is directed at, or the contents of which arelikely to be accessed or read by, the public of Hong Kong (except if permitted to do so under thesecurities laws of Hong Kong) other than with respect to New Shares which are or are intended tobe disposed of only to persons outside Hong Kong or only to “professional investors” as defined inthe Securities and Futures Ordinance (Cap. 571) and any rules made under that Ordinance.
The contents of this Prospectus have not been reviewed by any regulatory authority in Hong Kong. Youare advised to exercise caution in relation to the Invitation. If you are in any doubt about any of thecontents of this Prospectus, you should obtain independent professional advice.
Japan
No public offering or secondary offering of our Company’s Shares within the meaning of the Securitiesand Exchange Law will be made in Japan, and thus no registration statement in respect of the offeringand placement of our Company’s Shares will be filed. Therefore, this Prospectus may not be issued,circulated, distributed or otherwise used in Japan except as mentioned below.
This Prospectus may be issued only for the purpose of private placement within the meaning of theabove Law. In this connection, a notification of the private placement will be filed with the financialauthority pursuant to the provision of the Cabinet Office Ordinance on the Disclosure of Corporate Affairsand Other Matters.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the ProspectusDirective (each, a “Relevant Member State”) an offer to the public of any New Shares contemplated bythis Prospectus may not be made in that Relevant Member State except that an offer to the public in thatRelevant Member State of any New Shares may be made at any time under the following exemptionsunder the Prospectus Directive, if they have been implemented in that Relevant Member State:
(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not soauthorised or regulated, whose corporate purpose is solely to invest in securities;
SELLING RESTRICTIONS
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(b) to any legal entity which has two or more of (i) an average of at least 250 employees during thelast financial year; (ii) a total balance sheet of more than €43,000,000; and (iii) an annual netturnover of more than €50,000,000, as shown in its last annual or consolidated accounts;
(c) by the Underwriter to fewer than 100 natural or legal persons (other than qualified investors asdefined in the Prospectus Directive) subject to obtaining the prior consent of the Underwriter forany such offer; or
(d) in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of New Shares shall result in a requirement for the publication by us or theUnderwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer to the public” in relation to any New Shares inany Relevant Member State means the communication in any form and by any means of sufficientinformation on the terms of the offer and any New Shares to be offered so as to enable an investor todecide to purchase any New Shares, as the same may be varied in that Member State by any measureimplementing the Prospectus Directive in that Member State and the expression “Prospectus Directive”means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant MemberState.
United Kingdom
The Underwriter has represented, warranted and agreed that:
(a) it has only communicated or caused to be communicated and will only communicate or cause to becommunicated any invitation or inducement to engage in investment activity (within the meaning ofsection 21 of the Financial Services and Markets Act 2000, as amended (the “FSMA”)) received byit in connection with the issue or sale of any New Shares in circumstances in which section 21(1)of the FSMA does not apply to us; and
(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anythingdone by it in relation to the New Shares in, from or otherwise involving the United Kingdom.
United States of America
The New Shares have not been and will not be registered under the Securities Act and may not beoffered or sold within the United States or to, or for the account or benefit of, U.S. persons except incertain transactions exempt from the registration requirements of the Securities Act. Terms used in thisparagraph have the meanings given to them by Regulation S.
The New Shares are subject to U.S. tax law requirements and may not be offered, sold or delivered withinthe United States or its possessions or to a United States person, except in certain transactions permittedby U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the UnitedStates Internal Revenue Code and regulations thereunder.
The Underwriter has agreed that, except as permitted by the Placement Agreement, it will not offer, sellor deliver New Shares, (i) as part of their distribution at any time or (ii) otherwise until 40 days after thelater of the commencement of the offering of New Shares and the closing date, within the United Statesor to, or for the account or benefit of, U.S. persons, and such Underwriter will have sent to each dealer towhich it sells New Shares during the distribution compliance period relating thereto a confirmation orother notice setting forth the restrictions on offers and sales of the New Shares within the United Statesor to, or for the account or benefit of, U.S. persons.
In addition, until 40 days after the later of the commencement of the offering of New Shares and theclosing date, any offer or sale of New Shares within the United States by any dealer (whether or notparticipating in the offering) may violate the registration requirements of the Securities Act.
SELLING RESTRICTIONS
22
LISTING ON THE SGX-ST
We have applied to the SGX-ST for permission to deal in and for quotation of, all our existing issuedShares, the New Shares, the Additional Shares and the Option Shares. Such permission will be grantedwhen our Company has been admitted to the Official List of the SGX-ST. Acceptance of applications willbe conditional upon, inter alia, permission being granted by the SGX-ST to deal in, and for quotation of,all our existing issued Shares, the New Shares, the Additional Shares and the Option Shares. Moniespaid in respect of any application accepted will be returned to you, without interest or any share ofrevenue or other benefit arising therefrom and at your own risk, if the said permission is not granted or forany other reasons (including where the Authority issues a stop order) and you will not have any claimswhatsoever against us and the Manager, Underwriter and Placement Agent.
In connection with the Invitation, we have granted to the Manager an Over-allotment Option exercisableby the Manager during the period commencing on the date of commencement of trading of the Shares onthe SGX-ST (the “Commencement Date”) and expiring on the date falling 30 days after theCommencement Date. The Manager may subscribe for up to an aggregate of 9,810,000 AdditionalShares, representing approximately 15 per cent. of the New Shares, solely to cover over-allotments ofShares (if any) in the Invitation. In connection with the Invitation, the Manager may over-allot or effecttransactions which stabilise or maintain the market price of the Shares, subject to compliance with thelaws of Singapore. Such stabilisation, if commenced, may be discontinued by the Manager at any time atthe Manager’s discretion in accordance with the laws of Singapore.
The SGX-ST assumes no responsibility for the correctness of any statements or opinions made orreports contained in this Prospectus. Admission to the Official List of the SGX-ST is not to be taken as anindication of the merits of the Invitation, our Company, our subsidiaries, our Shares, the New Shares, theOption Shares or the Additional Shares.
A copy of this Prospectus has been lodged with and registered by the Authority. The Authority assumesno responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority doesnot imply that the SFA, or any other legal or regulatory requirements, have been complied with. TheAuthority has not, in any way, considered the merits of our Shares, the New Shares, the Option Shares orthe Additional Shares, as the case may be, being offered or in respect of which an invitation is made, forinvestment.
We are subject to the provisions of the SFA and the Listing Manual regarding corporate disclosure. Inparticular, if after this Prospectus is registered but before the close of the Invitation, we become aware of:
(a) a false or misleading statement or matter in the Prospectus;
(b) an omission from this Prospectus of any information that should be have been included in it underSection 243 of the SFA; or
(c) a new circumstance that has arisen since this Prospectus was lodged with the Authority whichwould have been required by Section 243 of the SFA to be included in this Prospectus if it hadarisen before this Prospectus was lodged,
that is materially adverse from the point of view of an investor, we may lodge a supplementary orreplacement prospectus with the Authority pursuant to Section 241 of the SFA.
Where applications have been made for the New Shares prior to the lodgment of the supplementary orreplacement prospectus, we shall, within seven days from the date of lodgment of the supplementary orreplacement prospectus, either:
(a) provide the applicants with a copy of the supplementary or replacement prospectus and, as thecase may be, provide the applicants with an option to withdraw their applications; or
DETAILS OF THE INVITATION
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(b) subject to compliance with the Cayman Companies Law, treat the applications as withdrawn andcancelled and return all monies paid, without interest or any share of revenue or other benefitarising therefrom, in respect of any application accepted within seven days from the date oflodgment of the supplementary or replacement prospectus.
Any applicant who wishes to exercise his option to withdraw his application shall, within 14 days from thedate of lodgment of the supplementary or replacement prospectus, notify us whereupon we shall, withinseven days from the receipt of such notification, return the application monies without interest or anyshare of revenue or other benefit arising therefrom and at the applicant’s own risk.
Under the SFA, the Authority may, in certain circumstances issue a stop order (the “Stop Order”) to ourCompany, directing that no or no further Shares to which this Prospectus relates, be allotted, issued orsold. Such circumstances will include a situation where this Prospectus (i) contains a statement or matter,which in the opinion of the Authority is false or misleading; (ii) omits any information that should beincluded in accordance with the SFA; or (iii) does not, in the opinion of the Authority, comply with therequirements of the SFA.
Where the Authority issues a Stop Order pursuant to Section 242 of the SFA:
(a) in the case where the New Shares have not been issued and/or sold to the applicants, theapplications of the New Shares pursuant to the Invitation shall be deemed to have been withdrawnand cancelled and our Company shall, within 14 days from the date of the Stop Order, pay to theapplicants all monies the applicants have paid on account of their applications for the New Shares;or
(b) in the case where the New Shares have been issued and/or sold to the applicants, the issue and/orsale of the New Shares pursuant to the Invitation is required by the SFA to be deemed void andour Company shall, subject to compliance with the Cayman Companies Law and our Articles,repurchase the New Shares and our Company shall, within 14 days from the date of the StopOrder, pay to the applicants all monies paid by them for the New Shares.
Such monies paid in respect of your application will be returned to you at your own risk, without interestor any share of revenue or other benefit arising therefrom, and you will not have any claim against us andthe Manager, Underwriter and Placement Agent.
This Prospectus has been seen and approved by our Directors and they individually and collectivelyaccept full responsibility for the accuracy of the information given in this Prospectus and confirm, havingmade all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and allexpressions of opinion, intention and expectation in this Prospectus are fair and accurate in all materialrespects as at the date of this Prospectus and that there are no material facts the omission of whichwould make any statements in this Prospectus misleading, and that this Prospectus constitutes full andtrue disclosure of all material facts about the Invitation and our Group.
Neither our Company and the Manager, Underwriter and Placement Agent, nor any other parties involvedin the Invitation is making any representation to any person regarding the legality of an investment bysuch person under any investment or other laws or regulations. No information in this Prospectus shouldbe considered as being business, legal or tax advice regarding an investment in our Shares. Eachprospective investor should consult his own professional or other advisers for business, legal or taxadvice regarding an investment in our Shares.
No Shares shall be allotted or allocated on the basis of this Prospectus later than six months after thedate of this Prospectus.
DETAILS OF THE INVITATION
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No person has been or is authorised to give any information or to make any representation not containedin this Prospectus in connection with the Invitation and, if given or made, such information orrepresentation must not be relied upon as having been authorised by us and, the Manager, Underwriterand Placement Agent. Neither the delivery of this Prospectus and the Application Forms nor anydocuments relating to the Invitation, nor the Invitation shall, under any circumstances, constitute acontinuing representation or create any suggestion or implication that there has been no change ordevelopment reasonably likely to invoke a change in our affairs or in the statements of fact or informationcontained in this Prospectus since the date of this Prospectus. Where such changes occur, we may lodgea supplementary or replacement Prospectus with the Authority and make an announcement of the sameto the SGX-ST and/or the Authority and will comply with the requirements of the SFA and/or any otherrequirements of the SGX-ST and/or the Authority. All applicants should take note of any suchannouncements and, upon the release of such an announcement, shall be deemed to have notice ofsuch changes. Save as expressly stated in this Prospectus, nothing herein is, or may be relied upon as,a promise or representation as to our future performance or policies.
This Prospectus has been prepared solely for the purpose of the Invitation and may not be relied upon byany other persons other than the applicants in connection with their application for the New Shares or forany other purpose.
This Prospectus does not constitute an offer, solicitation or invitation of the New Shares in anyjurisdiction in which such offer, or solicitation or invitation is unlawful or unauthorised nor does itconstitute an offer, solicitation or invitation to any person to whom it is unlawful to make suchoffer, solicitation or invitation.
Copies of this Prospectus and the Application Forms and envelopes may be obtained on request, subjectto availability, during office hours, from:
DBS BANK LTD6 SHENTON WAY #36-01
DBS BUILDING TOWER ONESINGAPORE 068809
and where available, from branches of DBS Bank Ltd (including POSB), members of the Association ofBanks in Singapore, members of the SGX-ST and merchant banks in Singapore.
A copy of this Prospectus is also available on:
(a) the SGX-ST website: http://www.sgx.com; and
(b) the Authority’s website: http://masnet.mas.gov.sg/opera/sdrprosp.nsf.
The Application List will open at 10.00 a.m. on 15 August 2007 and will remain open until noon onthe same day or such further period or periods as our Directors may, in consultation with theManager, in their absolute discretion decide, subject to any limitation under all applicable lawsand regulations. PROVIDED ALWAYS THAT where a supplementary prospectus or replacementprospectus is lodged with the Authority, the Application List will be kept open for at least 14 daysafter the lodgment of the supplementary or replacement prospectus.
Details of the procedure for application and acceptance to subscribe for the New Shares are set out inAppendix G – “Terms, Conditions and Procedures for Application and Acceptance” of this Prospectus.
DETAILS OF THE INVITATION
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INDICATIVE TIMETABLE FOR LISTING
An indicative timetable on the trading of initial public offering shares on a “when issued” basis is set outbelow for reference of applicants:
Indicative time/date Event
8 August 2007 Commencement of Invitation
12.00 noon on 15 August 2007 Close of Application List
16 August 2007 Balloting of applications, if necessary (in the event of over-subscription for the Offer Shares)
9.00 a.m. on 17 August 2007 Commence trading on a “ready” basis
22 August 2007 Settlement date for all trades done on a “ready” basis
The above timetable is only indicative as it assumes that the date of closing of the Application List will be15 August 2007, the date of admission of our Company to the Official List of the SGX-ST will be 17August 2007, the shareholding spread requirement will be complied with and the New Shares will beissued and fully paid-up prior to 17 August 2007. The actual date on which our Shares will commencetrading on a “ready” basis will be announced when it is confirmed by the SGX-ST.
The above timetable and procedures may be subject to such modification as the SGX-ST may, in itsabsolute discretion, decide, including the decision to permit trading on a “ready” basis and thecommencement date of such trading. The commencement of trading on a “ready” basis will beentirely at the discretion of the SGX-ST. All persons trading in our Shares before their SecuritiesAccounts with CDP are credited with the relevant number of Shares do so at the risk of sellingShares which neither they nor their nominees, as the case may be, have been allotted or areotherwise beneficially entitled to.
Investors should consult the SGX-ST’s announcement on “ready” listing date on the internet (at the SGX-ST website http://www.sgx.com) or the newspaper(s), or check with their brokers on the date on whichtrading on a “ready” basis will commence.
In the event of any changes in the closure of the Application List or the time period during which theInvitation is open, we will publicly announce the same:
(i) through an SGXNET announcement to be posted on the internet at the SGX-ST websitehttp://www.sgx.com; and
(ii) in a local English newspaper.
DETAILS OF THE INVITATION
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The Invitation is for 65,400,000 New Shares (plus a maximum of 9,810,000 Additional Shares which maybe issued upon the exercise of the Over-allotment Option) offered in Singapore by way of public offer andplacement comprising 3,300,000 Offer Shares and 62,100,000 Placement Shares (including the InternetPlacement Shares and the Reserved Shares) managed and underwritten by DBS Bank Ltd.
The Invitation Price is determined by us in consultation with the Manager, based on market conditionsand estimated market demand for our Shares determined through a book-building process. The InvitationPrice is the same for each New Share and is payable in full on application.
Investors may apply to subscribe for any number of New Shares in integral multiples of 1,000 Shares. Inorder to ensure a reasonable spread of Shareholders, we have the absolute discretion to prescribe a limitto the number of New Shares to be alloted to any single applicant and/or to allot New Shares above orunder such prescribed limit as we shall deem fit.
Offer Shares
Pursuant to the terms and conditions contained in the Management and Underwriting Agreement enteredinto between us and DBS Bank as set out in the section entitled “General and Statutory Information” ofthis Prospectus, DBS Bank has agreed to underwrite the Offer Shares. DBS Bank is committed to takeand to pay for all of the Offer Shares. The Offer is open to members of the public in Singapore.
Placement Shares
Pursuant to the terms and conditions contained in the Placement Agreement entered into between usand DBS Bank as set out in the section entitled “General and Statutory Information” of this Prospectus,DBS Bank agreed to subscribe and/or procure subscribers for the Placement Shares. Under thePlacement, the Placement Agent intends to offer the Placement Shares to investors (includinginstitutional and other investors).
Subscribers of the Placement Shares (excluding Reserved Shares) may be required to pay brokerage ofone per cent. of the aggregate Invitation Price for the number of Placement Shares subscribed as well asapplicable stamp duties and goods and services tax to the Placement Agent.
Reserved Shares
3,960,000 Placement Shares shall be reserved for our employees, business associates and others whohave contributed to the success of our Group. These Reserved Shares are not subject to any moratoriumand may be disposed of after the admission of our Company to the Official List of the SGX-ST. However,none of them will be offered more than five per cent. of the total Invitation size.
The terms, conditions and procedures for application are described in Appendix G of this Prospectus.
Clawback and Re-Allocation
The New Shares may be reallocated between the Placement and the Offer at the discretion of theManager.
In the event of an under-subscription for the Reserved Shares as at the close of the Application List, thenumber of Reserved Shares under-subscribed shall be made available to satisfy applications forPlacement Shares by way of Placement Application Forms or in any other form of application as may bedeemed appropriate by the Manager to the extent that there is an over-subscription for such PlacementShares as at the close of the Application List, or to satisfy excess applications for Offer Shares to theextent that there is an over-subscription for Offer Shares as at the close of the Application List.
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In the event of an under-subscription for the Internet Placement Shares to be applied for through theInternet website of DBS Vickers Securities Online (Singapore) Pte Ltd as at the close of the ApplicationList, that number of Internet Placement Shares not subscribed for shall be made available to satisfyapplications for the Placement Shares by way of Placement Shares Application Forms (or such otherforms of application as the Manager may, in consultation with the Company, deem appropriate) to theextent that there is an over-subscription for such Placement Shares (not including the Internet PlacementShares) as at the close of the Application List or to satisfy excess applications for the Offer Shares to theextent that there is an over-subscription for the Offer Shares as at the close of the Application List.
Over-allotment and Stabilisation
In connection with the Invitation, and in consideration of the parties’ mutual obligations under theManagement and Underwriting Agreement, we have granted the Manager an Over-allotment Option tosubscribe for up to 9,810,000 Additional Shares, representing approximately 15 per cent. of the NewShares, at the Invitation Price exercisable during the period commencing on the Commencement Dateand expiring on the date falling 30 days after the Commencement Date. The Manager may subscribe forthe Additional Shares solely for the purpose of covering over-allotments (if any) made in connection withthe Invitation.
In addition, Mr. Motokuni Yamashiro has entered into the Share Lending Agreement with the Manager toloan up to 9,810,000 Shares to the Manager for the purpose of facilitating settlement of the over-allotmentof Shares (if any) in connection with the Invitation.
As disclosed in the sub-section entitled “Moratorium” of the section entitled “Principal Shareholders” ofthis Prospectus, Mr. Yamashiro’s entire post-Invitation shareholdings of 31,250,000 Shares will be subjectto a moratorium, save for up to 9,810,000 Shares that may be lent to DBS Bank pursuant to the over-allotment and price stabilisation activities effected in connection with the Invitation. At the conclusion ofthe price stabilisation activities, all Shares lent by DBS Bank are required to be returned to Mr. MotokuniYamashiro and will thereafter be subject to the moratorium undertaking.
In connection with the Invitation, the Manager may, at its discretion but subject always to applicable lawsand regulations in Singapore, over-allot or effect transactions which stabilise or maintain the market priceof the Shares at levels which might not otherwise prevail in the open market. Such transactions may beeffected on the SGX-ST and in all jurisdictions where it is permissible to do so, in each case, incompliance with all applicable laws and regulatory requirements. Such stabilisation activities, ifcommenced, may be discontinued by the Manager at any time at the Manager’s discretion.
Each of Founders Corporation, Exeno Yamamizu, Mitsui & Co., Ltd and Yamasa Co., Ltd has given anundertaking in favour of our Company to subscribe for an aggregate of 15,000,000 Placement Shares.Founders Corporation is beneficially owned as to 64% and 36% by Mr. Kazuhiko Yoshida and Mr. MichioTanamoto, our Executive Directors, respectively.
Save as disclosed above, none of our Directors or Substantial Shareholders intend to subscribe for anyNew Shares in the Invitation.
Save as disclosed above, and to the best of our knowledge and belief, we are not aware of any personwho intends to subscribe for more than five per cent. of the New Shares. However, further to a book-building process to access market demand for our Shares, there may be persons who may be allocatedShares amounting to more than five per cent. of the New Shares.
No Shares shall be allotted or allocated on the basis of this Prospectus later than six months after thedate of this Prospectus.
PLAN OF DISTRIBUTION
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OVERVIEW
Introduction
Uni-Asia is an Asia-based structured finance arrangement and Alternative Assets direct investment firm.Our principal activities are in: (1) structured finance – the finance arrangement of transport related assets(such as ships and aircraft), and the provision of ship charter arrangement and agency services; and (2)Alternative Assets investment/management – direct investments in and/or the arrangement andadministration of Alternative Assets investments such as ships, distressed assets and real estate. As atthe Latest Practicable Date, our Group has 32 staff in three offices in Tokyo, Hong Kong and Singapore.
Uni-Asia was established in Hong Kong in 1997 by founders Motokuni Yamashiro, Kazuhiko Yoshida,Michio Tanamoto and Takanobu Himori who were Japanese bankers. Each of the founders has over 25years experience in the banking industry working in corporate loan syndication and structured financearrangement. Mr. Himori left our Company in March 2004. The other founders continue to lead thebusiness and as at the Latest Practicable Date, they own, directly and indirectly, a significant aggregateequity interest in Uni-Asia of approximately 23.9%.
Activities
Uni-Asia was founded to arrange structured finance transactions for companies mainly in the shippingand, to some extent, aviation industries. Our initial focus was on finance arrangement for companies inthe transport sector. Our business expanded to include investment in Alternative Assets such as NPLsdistressed debt, shipping assets and real estate assets in May 1998.
(1) Structured Finance
Our structured finance department provides an integrated service to our clients by offering financingsolutions together with charter arrangement services tailor-made to our clients’ needs. The solutions donot normally involve the use of our balance sheet capital to make loans. We typically act only as thearranger and agent for the structured financing provided by third party financial institutions. We arrangefinancing for asset acquisitions by our clients and also offer tax-enhanced structured services andproducts, including mortgage financing, tax-oriented leases such as UK tax leases and Japaneseoperating leases, as well as ECA backed credit, ship charter arrangement, and balance sheetmanagement. We receive an arrangement fee on each completed transaction.
We have been active in the arrangement of structured finance since our founding in 1997. In this time, wehave built up a portfolio of clients and have identified potential clients to whom we market to directly or onan opportunistic basis. We have also developed relationships with the key banks which providesyndicated loan financing. Our clients include established international shipping and aviation companiesfrom Taiwan, Greece, Indonesia, Japan, Hong Kong, Korea, the UK and Italy.
Some key products and services which we offer our clients include mortgage financing, tax-orientedleases, ECA backed credit, ship charter arrangement and balance sheet management.
We acted as arranger for structured financing in the form of loans and leases in the aggregate amount ofapproximately US$561.6 million, US$987.5 million and US$637.7 million in FY2004, FY2005 and FY2006respectively.
Selected key transactions completed include:
� UK Tax Lease for Hatsu Marine
� Arrangement of a Japanese Operating Lease
� Ship Charter Arrangement for Niki Shipping Company Inc
� Mortgage Financing for CIDO Holding Co., Ltd.
� JBIC Financing
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(2) Alternative Assets Investment
Our Alternative Assets Investments division leverages on our specialist skills in structured financearrangement and credit analysis to invest in, either as the principal investor or in partnership with otherinvestors, three key Alternative Asset classes: (i) ship investment (such as bulk carriers, product tankersand container vessels); (ii) distressed assets investment (including NPLs and other distressed assets inAsia (excluding Japan)); and (iii) property investment (including hotel and property investment in Japanand commercial property investment in the PRC).
We invest in the following three key alternative asset classes:
(i) Ship Investment
As a progression from our structured finance business as an arranger of financing for transport relatedassets, we branched out into direct investments in ships through equity investment in the ship owningcompanies and also through subscription of Performance Notes issued by special investment fundvehicles established by us.
Our asset finance department aims to invest in ships for commercial use that will produce attractiveinvestment returns because of factors such as high expected demand for, or anticipated shortfall in, thesupply of such ships.
Selected key transactions completed include:
� Mortgage financing and equity syndication for Searex
� Multiple roles as investor, administrator and fiscal agent of Searex
� Multiple roles as administrator, registrar, fiscal agent and project manager to the Akebono Fund
(ii) Distressed Assets Investment
We started to invest directly in distressed assets in 1998 to capitalise on opportunities for us to use ourown capital to purchase NPLs and other distressed assets in Asia (excluding Japan) including the PRC,Hong Kong, Thailand, Malaysia, Indonesia, the Philippines and Korea. We usually invest in NPLs throughspecial investment fund vehicles established by us and which issue Performance Notes to Uni-Asia itselfand selected institutional co-investors to raise funding for distressed assets investments.
Our NPL investment strategy is to leverage on our network of industry contacts to find opportunities thatsatisfy our criteria of high cashflow generation and a significant asset base on which we can get security.Opportunities are sourced through a network of industry contacts which include financial institutions, suchas banks, and accounting firms active in NPL transactions. We aim to recover the NPLs and exit theinvestments to realise a return through various debt recovery policies. Debt collection and monitoring ofindividual NPL transactions are applied either through an agent bank, receiver or liquidator, or led by us ifthe asset is located in the PRC, Taiwan or Hong Kong. We focus on the recovery of the debt repaymentsunder the NPLs. We do not actively engage in the secondary trading of NPLs with the specific purpose ofon-selling to another purchaser of NPLs.
A strong performance track record has been steadily built up since 1998 to 2004. We, as sole principal,made six investments that included 24 NPL accounts with a value of approximately US$30.5 million andrealised a return of over eight times within the period of approximately six years.
AAA Series II Fund has made 19 NPL investments representing 58 NPL accounts since July 2003 to theLatest Practicable Date. The two-year investment period ended in July 2005 and the recovery period willend in July 2008.
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We also act as the administrator of the distressed assets investment funds providing administrationservices such as monitoring, book-keeping and reporting services. We earn an administration fee on thedrawdown of funds (for investment into NPLs) and an incentive fee for investment out-performanceagainst a target hurdle rate. We also earn an agency fee for services to be provided in our capacity asthe registrar and the fiscal agent of the funds.
(iii) Property Investment
Property Investment and Management – Japan
We invest into real estate in Japan through Capital Advisers. Capital Advisers focuses on investment inand management of residential and hotel related real estate assets in Japan. It seeks investments acrossa range of locations with a focus on balanced risk and return. Capital Advisers was established in 1998as our wholly-owned subsidiary. In May 2003, Capital Advisers raised Yen 985 million (or approximatelyUS$8.2 million) in shareholders’ equity capital from a number of independent third party investors as partof its strategic expansion. Our shareholding interest in Capital Advisers was diluted to 44.8% and as aresult, Capital Advisers became our associated company.
Capital Advisers, by itself or in cooperation with its business partners, looks for the appropriate propertyprojects to invest in. At the initial stage of an investment, it arranges the investment structure, establishesa SPC which owns the property in the form of a trust, arranges equity contribution to the SPC, arrangesnon-recourse loan, from financial institutions on behalf of the SPC. Capital Advisers itself may invest inthe SPC as a minority investor. Capital Advisers also acts as the asset manager of the assets owned bythe SPC and manages the SPC’s assets including the invested property on behalf of the SPC, eventuallyon behalf of the investors. At the end of the investment period or sometimes during the investment period,in order to maximise investors’ return, Capital Advisers also engages in a selling procedure as the assetmanager. Capital Advisers manages over Yen 58.5 billion (or approximately US$491.9 million) in assetswhich includes a contribution of approximately Yen 2.0 billion (or approximately US$16.8 million) of itsown capital as at the end of 2006.
� Property Investment – Japan
In 2000, we, through our then wholly-owned subsidiary Capital Advisers, established an investmentpartnership with Grosvenor Asia to invest in residential properties in Tokyo.
The investment partnership was followed by the establishment of the GCAP Fund in 2004. TheGCAP Fund is jointly managed by Grosvenor Asia and Capital Advisers through Grosvenor CapitalAdvisers Fund Management Co., Ltd. and is anticipated to grow to more than Yen 20 billion (orapproximately US$194.4 million) when fully invested based on its historical borrowing capabilityand committed equity funds of Yen 6.3 billion (or approximately US$61.2 million).
The equity size of each investment fund ranged from US$1.4 million to US$38.5 million. The equityinvestors to the funds are financial institutions, real estate companies and corporations mainlybased in Japan and Southeast Asia. Capital Advisers itself invested Yen 2.0 billion (orapproximately US$16.8 million) as a minority equity investor as at 31 December 2006.
� Hotel Properties Investment – Japan
In 2001, Capital Advisers directed its attention to the asset investment/management business inthe hotel property sector. In the hotel property sector, Capital Advisers focuses mainly oninvestment in limited-service hotels. Capital Advisers typically enters into hotel propertiesinvestments as both the asset manager and a minority investor although there was one exceptionin which Capital Advisers had become the majority investor as a result of an additional equityinjection. The number of hotels in which Capital Advisers has been engaged in as asset managerand invested in as minority investor totalled 11 by the end of 2006. Capital Advisers, as the assetmanager in hotel property investments, employs a team which is experienced in the hotel sectorand not only manages the hotel assets but also monitors the hotel operation itself. The total assetof the hotel investments was over Yen 16.9 billion (or approximately US$142.5 million) as at 31
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December 2006. The total equity invested was about Yen 5.4 billion (or approximately US$45.5million), of which Capital Advisers had an interest of between 5.0% and 51.9%. In relation to thehotel property investment, in 2004, Capital Advisers invested in another asset managementcompany which manages a Japanese real estate investment trust (J-REIT) specializing in hotelproperties. As at the Latest Practicable Date, Capital Advisers has a 5% shareholding interest inthis asset management company. The J-REIT was listed in Japan on 14 June 2006. In view ofCapital Advisers’ growth and expansion strategy, they may from time to time consider various fundraising options, such as new equity injection. In the event of a new equity injection, our interest inCapital Advisers may be diluted.
� Residential Investment – Japan
Since February 2004, Capital Advisers has also been engaged in the investment in and assetmanagement of residential properties, with a focus on small-sized studio apartment buildings. Thenumber of these types of buildings managed and/or invested in by Capital Advisers reached 10 in2004, 31 in 2005 and 50 in 2006. Between 2004 and 2006, the equity interests held by CapitalAdvisers in its residential property investments were between 5.8% to 10% in equity and suchequity interests were redeemed through the sales of the relevant properties.
Capital Advisers earns an arrangement, asset management and administration fee for its servicesas the asset manager of the property investment portfolio. It also participates in the return toinvestors in the portfolio through its position as a minority equity investor in the property investmentfunds.
Principal Investments in Properties – PRC
In January 2007, we established a wholly-owned property investment company, Uni-Asia Guangzhou, inGuangzhou, Guangdong Province, the PRC, with a paid-in capital of US$3.0 million. Our Group willcontinue to explore property investment opportunities in the PRC under new property guidelinesintroduced by the PRC government in July 2006, and property investment opportunities in SoutheastAsia. At the end of June 2007, Uni-Asia Guangzhou completed the acquisition of 14 office units withgross floor area of 1,304 sq m of the China Shine Plaza, a commercial development in the Tianhecommercial district in Guangzhou. We intend to lease the office units to third parties.
Please refer to the section entitled “General Information on our Group” in this Prospectus for more details.
COMPETITIVE STRENGTHS
We believe that our key competitive strengths are as follows:
Experienced Executive Directors and Management Team
Our Executive Directors and management team comprise experienced professionals in the structuredfinance industry and alternative asset investments. Our co-founders and Executive Directors, MessrsMotokuni Yamashiro, Kazuhiko Yoshida and Michio Tanamoto co-founded Uni-Asia in 1997. A summaryof their work experience may be found in the section entitled “Directors, Management and Staff” in thisProspectus.
We believe that we have a clear understanding of our industry requirement and possess a client-drivenfocus and an established investment strategy. Our staff is committed to provide value-added andinnovative services to our clients. Our Executive Directors, Executive Officers and employees of ourCompany collectively own approximately 19.7% of our post-Invitation issued share capital. We believethat this has helped align their interests with those of our Company and foster a sense of commitment. Inaddition, we have in place an employee share option scheme to motivate and foster a stronger sense ofownership amongst our staff. Please refer to the section entitled “Uni-Asia Share Option Scheme” in thisProspectus for further details of our Scheme.
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We have a successful track record of integrated capabilities in our specialist fields
We have a strong background and experience in finance arrangement and investment in AlternativeAssets. Based on our track record, we have been able to successfully identify opportunities, formulatestructures and execute them effectively. By leveraging on this strength, we focus on activities where ourexperience and established relationships provide a competitive advantage. Further details of selected keytransactions may be found in the section entitled “General Information on our Group – BusinessOverview” in this Prospectus.
As transport-related finance arrangement and Alternative Asset investments are specialised fields, webelieve that we are able to achieve the following competitive advantages:
� Comprehensive range of value-added and innovative structures
� Scalable execution capabilities
� Effective internal processes and practices
We are able to leverage on our relationships with our well-established network
We have a well-established and strong network of contacts. The engagement of clients and provision ofservices are carried out with the objective of creating and maintaining long-term relationships. In additionto our client relationships, we have also been able to build other long-term business relationships throughour investments, partners, corporate shareholders and brokers. We have been able, and will continue, toleverage on these relationships and network to support us in identifying new business opportunities andin assisting us to formulate new and innovative structures to address the requirements of our businessassociates. This has resulted in us obtaining repeat businesses from our existing clients as well as newreferrals from our existing network. The strengths and geographical spread of these relationships enableus to provide cross-border services to our clients such as the recovery of PRC NPLs acquired fromJapanese banks and ship finance in Asia financed by European financial institutions.
Please refer to the section entitled “General Information on our Group – Competitive Strengths” in thisProspectus for more details.
PROSPECTS
Shipping
Shipping is a global industry which is generally influenced by demand and supply dynamics such as thedemand for movement of cargoes, the resultant tonne-mile demand of vessels as well as the supply ofvessels tonnage capacity. Fuel cost, which typically makes up a significant portion of the operating cost ofships, is also a factor affecting the performance of the shipping industry.
Shipping comprises different shipping sectors servicing different industries, governed under differentregulations and each having its own supply and demand dynamics. The major types of ships include drybulk ships, container vessels, product tankers and crude tankers. Dry bulk ships carry dry commoditiessuch as ore, coal, grains, fertiliser, bauxite, soy beans, cement, potash and salt. Container vessels carrymetal boxes containing cargoes such as cars and equipment. Product tankers carry mainly refined oilproducts such as gasoline and diesel, and other non-refrigerated cargoes such as edible oils andchemicals. Crude tankers carry crude oil and petroleum.
The dry bulk shipping trade is usually dependent on the demand for and price of commodities. Steelproduction is a key driver of the dry bulk shipping trade through seaborne demand for coking coal andiron ore. The container shipping trade is usually dependent on the global economic growth, trade growth,industrial production and consumer consumption. The product and oil tanker industry is usuallydependent on global industrial production, refinery throughput, utilisation rate in refineries, global crudeoil inventory levels and the weather season.
PROSPECTUS SUMMARY
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We believe that the demand for maritime vessels will be driven largely by the continued growth in theworld economy and seaborne trade. Such demand will provide us with opportunities to leverage on ourtrack record and experience in structured finance and ship charter arrangements to establish new clientrelationships and to offer our existing clients innovative and customised structured finance solutions aswell as ship charter arrangement services.
Structured finance focusing on the shipping industry is dominated mainly by financial institutions. Webelieve that we are able to compete effectively with them by leveraging on our track record, our widenetwork and our strong relationships with our business partners and customers, which includeestablished shipping banks and shipowners.
Whilst the shipping industry may be cyclical, we believe that our structured finance operations are notsignificantly subject to such cycles as we believe that there continues to be opportunities for us to providestructured financing solutions as ship renewal is an ongoing process. In a shipping down-cycle, wegenerally observe the trend of older ships being scrapped and new ones being built given the lower costof new builds. In the shipping up-cycle, we generally observe that there will be an increase in demand forships as ship owners seek to increase their fleet to capitalise on the favourable freight rates. We believethat there continues to be opportunities for us to provide structured finance solutions and ancillary shipbrokerage services at different stages of the shipping cycle. We further believe that the shipyards’ orderbooks in the coming years will continue to be sustained and thus present opportunities for us to providemore structured finance solutions to shipowners and operators.
Alternative Assets Investment
The Alternative Assets investment class includes investments in ships, distressed assets and real estate.Distressed assets typically include debt obligations such as junk bonds, corporate bonds, commercial andindustrial loans, credit card receivables and auto loans. Investors in distressed assets purchase debtobligations of companies that are financially troubled and are struggling or are unable to service theirdebt obligations and they earn a return through recovery of distressed debt, through appreciation in thevalue of the distressed debt investment, or through leveraged buyouts.
Our investments in ships are usually made through equity interests in ship owning companies or throughPerformance Notes held in ship investment funds. Our direct and indirect investments in the differenttypes of ships are made after careful consideration and due diligence and based on our Directors’ outlookof the various shipping sectors. We believe that we can leverage on our expertise knowledge in theshipping sector to tap on the opportunities to source for new ship investments and/or to buy or sellmaritime vessels.
Our investments in distressed assets are mainly made through NPLs and we are also seekingopportunities in the distressed real estate market in Asia (excluding Japan). Such opportunities will bedependent on factors such as the respective countries’ macroeconomic environment and policies,performance in key industry sectors, access to capital and liquidity, competition and prevailing marketconditions. We believe that we will be able to leverage on our well-established network and familiarity withthe distressed asset markets in the region to identify and invest in suitable distressed assets.
The performance of Alternative Assets investments are dependent on the unique characteristics of eachtype of alternative asset and the country of origin of these assets. These investments are thereforerelatively opportunistic in nature. We believe that such non-mainstream opportunities are available in Asiaand we intend to seek new ship investments, real estate investments and distressed asset investments inAsia. We also believe that our experience in Alternative Assets investments, our capabilities in deal-making, due diligence, valuation, structuring and financing, together with our well-established network ofcontacts in Asia will enable us to effectively identify and evaluate opportunities for cross-borderinvestments in these assets.
Please refer to the section entitled “General Information on our Group – Prospects” in this Prospectus formore details.
PROSPECTUS SUMMARY
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BUSINESS STRATEGY AND FUTURE PLANS
We aim to be a leading Asia-based structured finance arrangement and Alternative Assets directinvestment firm. Our primary business strategy is to build on our existing strengths in structured financeand Alternative Assets investments, to provide one-stop and innovative financing solutions to our clientsas well as to explore and develop Alternative Assets investment opportunities by leveraging on ourexpertise and relationships.
We intend to continue to look for new market opportunities by leveraging on our core capabilities withinour specialist fields. Globalisation and economic growth also offer us opportunities in terms of cross-border financing and investments and allow us to build a wider presence and network within the region.
The principal elements of our strategy for growth and expansion of our business include:
� Continue to focus and leverage on our integrated capabilities and well-established relationships
� Structured finance: Expand and diversify our client portfolio and broaden our geographic coveragewithin Asia
� Alternative Assets investment: Expand and diversify our investment portfolio and broaden ourgeographic coverage within Asia
� New ship investment funds
Please refer to the section entitled “General Information on our Group – Business Strategy and FuturePlans” in this Prospectus for more details.
PROSPECTUS SUMMARY
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CONSOLIDATED RESULTS OF OUR GROUP
You should read the following consolidated financial results of our Group in conjunction with the Reportson the Consolidated Financial Statements for the years ended 31 December 2004, 2005 and 2006 setout in Appendices A, B and C of this Prospectus respectively and the related notes thereto.
Restated(1) Audited AuditedUS$’000 FY2004 FY2005 FY2006
Fee income(2) 5,599 12,234 9,922Investment returns 6,682 5,011 7,983Income from defaulted loans 1,862 – –Interest income 339 936 1,543Other income 317 86 22
Total income 14,799 18,267 19,470
Employee benefits expense (5,087) (5,481) (6,084)Depreciation expense (77) (106) (278)Other expenses (1,821) (3,316) (3,107)Reversal of impairment loss on loans receivable 250 – –Gain/(loss) on disposal of fixed assets – 2 (16)
(6,735) (8,901) (9,485)
Operating profit 8,064 9,366 9,985
Finance costs – interest expense (46) (42) (83)Share of profit of Associates after tax 96 594 1,929
Profit before income tax 8,114 9,918 11,831Income tax expense (179) (479) (398)
Profit for the year 7,935 9,439 11,433 (3)
EPS(4) (pre-Invitation) US$0.045 US$0.054 US$0.065 (3)
EPS(5) (post-Invitation) US$0.033 US$0.039 US$0.048 (3)
Notes:
(1) Please refer to the discussion on “Reconciliation of our Consolidated Results of Operations as set out in this Prospectus toour Audited Consolidated Financial Statement” on page 61 of this Prospectus for the reconciliation of the restated figures tothe audited financial statements for the respective financial year.
(2) Our fee income includes income generated from related party transactions as discussed in Note 29 to the consolidatedfinancial statements of our Company for FY2006.
(3) Our profit for the year and the EPS for FY2006 would not be materially affected had the Service Agreements as described inthe section entitled “Directors, Management and Staff – Service Agreements” been in place at the beginning of FY2006.
(4) For comparative purposes, the EPS (pre-Invitation) is computed by dividing the profit for the year by our pre-Invitation sharecapital of 175,000,000 Shares.
(5) For comparative purposes, the EPS (post-Invitation) is computed by dividing the profit for the year by our post-Invitation sharecapital of 240,400,000 Shares.
OUR CONTACT DETAILS
The address of our principal place of business is Suite A, 26th Floor Tower I Admiralty Centre, 18 HarcourtRoad, Hong Kong. Our telephone number is +852 2528 5016. Our facsimile number is +852 2528 5020.
PROSPECTUS SUMMARY
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Issue Size : 65,400,000 New Shares (excluding the Additional Shares that maybe issued under the Over-allotment Option) comprising 3,300,000Offer Shares and 62,100,000 Placement Shares.
The New Shares, upon issue and allotment, will rank pari passu inall respects with the existing issued Shares.
Invitation Price : S$0.55 for each New Share.
The Offer : The Offer comprises an offering of 3,300,000 Offer Shares atS$0.55 each to members of the public in Singapore, subject to andon the terms and conditions of this Prospectus.
The Placement : The Placement comprises a placement of 62,100,000 PlacementShares including 500,000 Internet Placement Shares at S$0.55each and 3,960,000 Reserved Shares at S$0.55 each, subject toand on the terms and conditions of this Prospectus.
Reserved Shares : 3,960,000 Placement Shares will be reserved for our employees,business associates and others who have contributed to thesuccess of our Group.
Purpose of our Invitation : Our Directors consider that the listing of our Company and thequotation of our Shares on the SGX-ST will enhance our publicimage in Singapore and overseas and enable us to tap the capitalmarkets for the expansion of our operations. The Invitation will alsoprovide members of the public, our employees and businessassociates as well as those who have contributed to our successwith an opportunity to participate in the equity of our Company. Inaddition, the proceeds of the Invitation will provide us with additionalcapital to finance our business expansion.
Use of Proceeds : Based on the Invitation Price, we estimate that the aggregate netproceeds attributable to us from the issue of the New Shares in theInvitation (assuming the Over-allotment Option is not exercised) willbe approximately S$32.2 million, after deducting underwritingcommissions and other estimated expenses in relation to theInvitation of approximately S$3.8 million.
We intend to use the net proceeds received by us primarily for thefollowing purposes:
(i) approximately US$12.2 million for investment in the AkebonoFund;
(ii) approximately US$2.6 million to further finance ourinvestment in Rich Containership S.A., which will acquire anew container vessel (4,300 TEU) with delivery expected inSeptember 2008; and
(iii) approximately US$2.4 million for investment in another newcontainer vessel (4,300 TEU) with delivery targeted for 2008.
The remaining proceeds will be used for other ship investments,distressed asset investments and/or investment in real estateassets.
THE INVITATION
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Over-Allotment Option : In connection with the Invitation, and in consideration of the parties’mutual obligations under the Management and UnderwritingAgreement entered into between our Company and the Managerand Underwriter on 8 August 2007, we have granted the Manageran Over-allotment Option to subscribe for up to 9,810,000Additional Shares, representing approximately 15 per cent. of theNew Shares, at the Invitation Price exercisable during the periodcommencing on the Commencement Date and expiring on the datefalling 30 days after the Commencement Date. The Manager maysubscribe for the Additional Shares solely for the purpose ofcovering over-allotment of Shares (if any) made in connection withthe Invitation.
Listing status : Prior to the Invitation, there had been no public market for ourShares. Our Shares will be quoted in Singapore dollars on the MainBoard of the SGX-ST, subject to admission of our Company to theSGX-ST and permission for dealing in and for quotation of ourShares being granted by the SGX-ST and the Authority not issuinga stop order.
THE INVITATION
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The exchange rate between S$ and US$ as at the Latest Practicable Date is S$1.54 to US$1.00.
The following table sets forth the high and low exchange rates between S$ and US$ for each month inthe past six months. The table indicates how many S$ can be bought with US$1.00.
S$ / US$ RateHigh Low
December 2006 1.55 1.53
January 2007 1.55 1.53
February 2007 1.54 1.53
March 2007 1.53 1.52
April 2007 1.52 1.51
May 2007 1.53 1.51
June 2007 (to Latest Practicable Date) 1.54 1.53
Source: Bloomberg L.P.
The following table sets forth, for each of the financial periods indicated, the average and closingexchange rates between the S$ and US$, calculated by using the average of the closing exchange rateson the last day of each month during each financial period.
S$ / US$ RateAverage At Period End
FY2004 1.69 1.63
FY2005 1.66 1.66
FY2006 1.59 1.54
Source: Bloomberg L.P.
The above exchange rates have been calculated with reference to exchange rates quoted fromBloomberg L.P. and shall not be construed as representation that the S$ amounts actually represent suchUS$ amounts or could be converted into US$ at the rate indicated or any other rate.
Bloomberg L.P. has not consented to the inclusion of the exchange rates quoted under this section and isthereby not liable for these statements under Sections 253 and 254 of the SFA. Our Company hasincluded the above exchange rates in their proper form and context in this Prospectus and has notverified the accuracy of these statements.
Please refer to the section entitled “General Information on our Group – Exchange Controls” in thisProspectus for a description of the exchange controls that exist in Japan, Hong Kong and the PRC.
EXCHANGE RATES
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Investors should consider carefully the following risk factors (which are not intended to be exhaustive) andall other information contained in this Prospectus, before deciding to invest in our Shares. You should alsonote that certain of the statements set forth below constitute “forward-looking statements” that involverisks and uncertainties.
If any of the following risk factors and uncertainties develops into actual events, our business, financialcondition or results of operations or cash flows may be adversely affected. In such circumstances, thetrading price of our Shares could decline and investors may lose all or part of their investment. To thebest of our Directors’ belief and knowledge, all the risk factors that are material to investors in making aninformed judgement have been set out below.
RISKS RELATING TO OUR GROUP
We are dependent on the services of key management personnel.
Our Directors believe that the reason for our continued success is, to a certain extent, attributable to theexpertise and experience of our three Executive Directors, namely Mr. Motokuni Yamashiro, Mr. KazuhikoYoshida and Mr. Michio Tanamoto. Our management personnel make key decisions to maximise ourrevenue and earnings in a cyclical and highly volatile environment. Please refer to the section entitled“Directors, Management and Staff” in this Prospectus for more details. Our success will depend, in part,on our ability to hire and retain key members of our management team. If any of our Executive Directorsceases to be involved in our Group’s management in the future and we fail to find any suitable personnelto replace any one or all of them, our operations, profitability and prospects may be adversely affected.
Our financial performance is unpredictable and dependent on prevailing market conditions.
Our overall revenue and profits tend to be difficult to predict. Our financial performance is dependent onprevailing market conditions and we cannot predict with certainty our future revenue or profitability. Themajority of our income is earned mainly from our transaction-based business which depends on gainingand executing finance arrangement mandates, or identifying and executing direct investments intoAlternative Assets. We also have some recurrent income from management fees, administration fees andinterest from Performance Notes from our direct investment business. Future revenue and profitability isdependent on our consistently gaining business from our customers for finance arrangement and makingsuccessful direct investments that would exceed our target investment hurdle rate.
Our Directors believe that our direct investment business performance depends on our ability to (i) sourcefor investment opportunities; (ii) negotiate investment terms that provide us with a positive investmentreturn that satisfy our investment criteria and exit relatively illiquid investment assets to realise our targetinvestment return rate; and (iii) continue to raise further funds from co-investors for new investmentswhen necessary.
As Alternative Assets are generally not traded over the counter or on any recognised stockexchanges, it may be difficult to sell or realise the value of these investments and recover theamounts we originally paid for them.
We invest in three key Alternative Asset classes, namely (i) ship investment consisting primarily of bulkcarriers, product tankers and container vessels mainly manufactured by Japanese shipyards; (ii)distressed assets (including NPLs and other distressed assets in Asia (excluding Japan)); and (iii)property investment (including hotel and property investment in Japan and commercial propertydevelopment in the PRC). As Alternative Assets are not traded over the counter or in any recognisedstock exchanges, their liquidity is subject to market conditions. Should market conditions deteriorate, itmay be difficult to sell or realise the value of these investments and recover the amounts we originallypaid for them. This could have a material adverse effect on our business, financial condition and results ofoperations.
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We face the risk of not being able to earn the income we would have earned from our investmentin the NPL if the debtor is not able to service the loan and interest and we may be unable torecover the original amount we had paid for the NPL.
Our investments in NPLs are dependent on the underlying distressed debtor’s ability to service its debtand the anticipated cashflow return from recovering the NPL. There is a risk that the distressed debtormight not be able to service its loan and the interest payable on the loan. In such circumstances, we facethe prospect of losing the income we could have earned from our investment in the NPL, had the debtorbeen able to service the loan and interest in excess of the original amount we paid for the NPL. Thiscould have a material adverse effect on our business, financial condition and results of operations. OurCompany does not currently participate directly in any NPLs. Our investments in NPLs are made throughinvestments in distressed assets investment funds such as the AAA Series I and II Funds. In the eventthat a distressed debtor is unable to service its loans and interest to the relevant funds, the risk faced byour Company is that we may receive lower or no distributions in respect of our investments in such funds.
We may be indirectly adversely affected by the risks involved in the business of our associatedcompany, Capital Advisers, in Japan.
Our associated company, Capital Advisers, is a company incorporated in Japan engaged in theinvestments in and management of real estate assets, including hotel and residential properties, inJapan. As at the Latest Practicable Date, Capital Advisers is engaged in investments in respect of 13hotels, three of which are under construction. Apart from the fluctuations of market values of propertiesdirectly or indirectly invested in by Capital Advisers, its business involves several substantial risks,including the risks of insufficient funding for its projects, inability to comply with changing laws orregulations governing its securitisation business, and having only minority control in projects where it isnot the majority investor. We can neither enumerate all such risks nor specify the probability of any lossdue to such events.
A significant portion of our revenue is derived from the Asia-Pacific region and adverse economicconditions in these markets would adversely affect our financial condition and operating results.
For FY2006, a significant portion of our revenue was derived from the Asia-Pacific region. Economicdevelopment has a significant impact on the activities of industries in which most of our customersoperate. Economic conditions in the Asia-Pacific region can be unstable, and other factors such as war,acts of terrorism, political instability or disease may harm or halt economic growth in the region. Forexample, the Asian financial crisis of 2001 created a significant downturn in economic growth whichaffected the entire region. Similarly, the outbreak of severe acute respiratory syndrome that affected HongKong, the PRC, Singapore, Taiwan and Vietnam, amongst others, severely impacted the economies ofthe affected areas. If a similar wide-ranging health scare, such as a spread of avian influenza or “bird-flu”or another financial crisis or a large-scale act of terrorism, or any other adverse social or political incidentshould occur, the economic conditions in the affected markets would likely be severely harmed. Anydeterioration in economic condition in these regions may result in a decline in demand for financingarrangements or cause companies to halt their expansion plans. In such cases, our business, financialcondition and operating results would be materially and adversely affected.
An adverse judgment or settlement in respect of any claim against us could have a materialadverse effect on our financial condition or results of operations.
Our business involves arranging financing transactions for third parties. Although the contracts we enterinto may contain disclaimer provisions against certain potential liabilities, we may still be subject to claimsby clients and could be held liable for our clients’ role in certain circumstances such as disagreement overthe performance of a contract. If this happens, we could be required to pay substantial damages to thesuccessful claimants. This could have a material adverse effect on our financial condition or results ofoperations.
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Our business is heavily dependent on our reputation and any adverse publicity could have anadverse effect on our business and financial performance.
Our business relies to a large extent on relationships and a reputation for delivering quality service togain new clients and maintain existing ones. Should we provide a level of service that a client is notsatisfied with or becomes involved with any disputes in respect of a transaction involving us, then we maysuffer damage to our reputation and receive adverse publicity, either of which or together could have anadverse effect on our business and financial performance.
We may not be able to obtain the financing required to fund our transactions.
In order to finance transactions in which we are involved as either principal investor or finance arranger,our Group raises financing from various financial institutions with which we have enjoyed positiverelationships. Should such financing not be available in future, our business and financial performancecould be adversely affected.
Our ship investment funds/companies may not be able to purchase or acquire new vesselsmeeting our requirements at prices or delivery times acceptable to us.
The ship investment funds/companies that we establish and/or invest in may be required to make downpayments and progress payments during the construction of new vessels, but do not derive any revenuefrom these vessels until after their delivery. There can be no assurance that such new vessels will becompleted on schedule or at all. While the ship investment funds/companies may receive penaltypayments from the shipbuilder, experience delays in the delivery of, or failure to deliver, one or more ofthe new vessels could have an adverse effect on the business, financial condition and results ofoperations of the ship investment funds/companies and, in turn, the return on the ship investmentfunds/companies that we invest in.
We may be subject to other third-party obligations and contingent liabilities which may affect ourfinancial performance.
We commonly invest alongside third parties in our direct investment transactions. Our Directors believethat the inability of co-investors to fulfil their obligations may result in us being required to contributeadditional capital that we did not initially intend to contribute or not completing transactions that weotherwise might have. It is possible that if the co-investors fail to raise enough funds, we may have tocontribute more capital to achieve our target level of fund raising, and as a result, adversely affect ourcash flow.
We depend on our ability to raise third party funds from time to time to finance direct investmentopportunities. There can be no assurance that we will be able to obtain such funds on acceptable terms,or at all.
In addition, we have provided a guarantee in favour of Xing Long Maritime S.A. (“Xing Long”) toguarantee the performance by Panmax Tanker S.A. (“Panmax”) of its obligations under a contractbetween Xing Long and Panmax for the construction and sale of a 50,000 DWT product tanker (the“Tanker”) for approximately Yen 4.69 billion (or approximately US$39.5 million) (the “ShipsalesContract”). Panmax is an SPC established for the purposes of acquiring the Tanker and has beenacquired by the Akebono Fund on 19 June 2007. For further details, please refer to the section entitled“Business Overview – Alternative Assets Investment – Ship investment” in this Prospectus. As such, wemay be subject to claims by Xing Long in respect of their losses arising from any default by Panmax of itsobligations under the Shipsales Contract. In the event of such claims being made, our financialperformance may be adversely affected. In the event of a default by Panmax of its payment obligationsunder the Shipsales Contract, our Company may enforce a share charge provided by Infinite Asset andacquire Panmax in accordance with the terms thereof. Depending on market conditions, our Companymay either sell the shipbuilding contract or continue the shipbuilding contract and take delivery of thevessel. If we take delivery of the vessel, we would then have the option to charter it out to third party orsell it in the open market. If our Company is unable to sell the shipbuilding contract or the vessel (after ithas taken delivery of the vessel) at favourable prices, our financial performance may be significantlyaffected.
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We are exposed to foreign currency and interest rate fluctuations.
We are exposed to adverse fluctuations in foreign currency exchange rates and foreign exchange risks.The invoicing currency of our income is mainly US$. Our operating expenses are mainly denominated inHK$, US$, Yen and S$, which are the local currencies of the countries in which we currently operate.
Our foreign exchange risk arises mainly from a mismatch between our income and expenses. To theextent that our income and expenses are not naturally matched in the same currency and to the extentthat there are timing differences in the collections and payments, we may be susceptible to foreignexchange exposure. Any significant fluctuation in the foreign exchange rates of the principal invoicingcurrency of our income against the principal currencies for our operating costs could result in us incurringnet foreign exchange losses and will have an adverse impact on our financial results.
We may enter into hedging arrangements to manage our foreign exchange risks. For further details,please refer to the section entitled “Management’s Discussion and Analysis of Financial Position andResults of Operations – Foreign Exchange Exposure”. However, there is no assurance that such effortsand our use of hedging arrangements will successfully hedge against all foreign currency fluctuations.
Our consolidated financial statements are presented in US$. Foreign currency transactions are translatedin US$. Such translation can result in foreign currency translation losses which may adversely affect ourfinancial position.
The Hong Kong dollar has been pegged to the US dollar at the rate of HK$7.80 to US$1.00 since 17October 1983. In the event that this pegged exchange rate were to be changed or there were to be arevaluation of the Hong Kong dollar, it could adversely affect our financial results.
The investment in ships is a leveraged investment, therefore, significant rises in the borrowing rate canadversely affect cash flow and profitability of each ship investment project as charter hire is normally fixedfor the period of charter.
Changes in the accounting, legal and tax regimes could limit the functionality of the financingstructures that we have developed and lessen demand from our clients.
We operate in and across a variety of accounting, legal and tax regimes. Change in these regimes, whilstproviding opportunities, could also limit the functionality of the financing structures that we havedeveloped for our clients, a large number of which are based on optimising tax efficiency, which couldadversely affect our finance arrangement business. Changes may reduce the efficiency of structures andhence lessen demand from our clients for these products.
We are subject to claims arising from disputes over the interpretation or enforceability of ourdocumentation.
We enter into a number of highly structured transactions that require detailed documentation. As a result,the risk of dispute over interpretation or enforceability of the documentation, or errors in the preparation ofthe documentation may be higher than for other investments. As a result, we may be subject to claimsarising from such disputes by our clients or other counterparts. If these claims are successful, we may berequired to compensate the claimant and our financial condition and results of operations may beadversely affected.
We may not be able to manage our expansion activities effectively.
With respect to our Company’s expansion into new geographic regions, our current approach is toconsider only new geographic and industry sectors that have synergistic potential with our existingbusiness. Expansion of our operations, including potential expansion into new geographic markets andproducts, although undertaken within a strategy of keeping risks low and seeking synergistic benefits,may result in loss of initial investment costs such as initial capital outlay if not managed effectively. If weare unable to manage our expansion activities effectively, our financial condition and results of operationsmay be adversely affected.
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We may be affected by terrorist attacks and other acts of violence or war.
Terrorist attacks such as those that occurred in the USA on 11 September 2001, and armed conflict suchas the war in Iraq, may negatively affect our business. Political and economic instability in some regionsof the world may also result from such terrorist attacks and armed conflicts and could negatively impactour financial condition. We are unable to predict the consequences of any of these terrorist attacks orarmed conflicts and we are unable to foresee events that could have a material adverse impact on ourbusiness. In the event of such attacks or conflicts, our business, financial condition and results ofoperations may be adversely affected.
RISKS RELATING TO THE INDUSTRIES WHICH WE OPERATE IN
The financial services industry is highly competitive and we may not be able to keep up with thecompetition.
The financial services industry is highly competitive and it is expected to remain so. We compete on thebasis of a number of factors including customer relationships, quality of service, innovation,responsiveness to customer needs, flexibility, reputation and price. Many competitors have greaterfinancial and marketing resources and larger customer bases than us. An increase in competition and ourfailure to keep up with the intense competition may have a material and adverse effect on our financialcondition and results of operations.
The financial services industry is highly regulated and our business operations may be affectedby future changes in applicable laws and regulations.
As the financial services industry is a highly regulated industry, many aspects of our business, such asthe financing structures adopted, are subject to approvals and exemptions by the relevant authorities.Changes in such laws and regulations or their interpretation or enforcement may result in us beingrequired to obtain or not getting the requisite approvals or exemptions required for our businessoperations and a consequent increase in our costs of compliance. There can be no assurance thatchanges in such laws and regulations or in their interpretation or enforcement, will not have a materialadverse impact on our business, financial condition and results of operations. In addition, there can alsobe no assurance that all regulatory bodies or authorities will take the same view as us with regard to theinterpretation or application of such laws and regulations.
We are subject to the cyclical upturns and downturns in the shipping industry.
We believe that the shipping industry (in particular, the dry bulk, product tanker and container segments)may undergo a cyclical downturn in business cycle. Factors which may have an adverse effect on theshipping industry business cycle include a deterioration in the condition of the global economy, areduction in the volume of international trade and excess supply of or insufficient demand for maritimevessels. While a cyclical downturn would directly affect our Company’s direct ship investment throughlower charter income, cyclical upturns may also affect our Company by slowing down our ship acquiringactivities due to high vessel prices. Our financial performance is dependent on the cyclical upturns anddownturns in the shipping industry, and there may be material and adverse impact on our business,financial condition and results of operations.
The shipping industry is highly competitive, which may result in volatile charter rates and whichmay have a material adverse effect on our operating results.
The shipping industry is highly fragmented with many owners of vessels and is characterised by intensecompetition. The industry is affected by developments in the major world economies that influence tradepatterns and is fragmented among many global, regional and local carriers. Many of the factorsinfluencing the supply of and demand for shipping capacity are outside our control and the nature, timingand degree of changes in industry conditions are unpredictable. Charter rates are based in part on supplyand demand of vessels and are extremely competitive. Over the last decade, charter rates have beenvolatile. Our operating results are dependent on, amongst other things, performance of our direct shipinvestments, which are, in turn, dependent on the prevailing charter rates in a given time period.Fluctuations in charter rates may also have an impact on our Company’s investments in ship investmentfunds, particularly where the underlying vessels are chartered on a short-term basis. In such cases, thedistributions of interest under the Performance Notes held by us in respect of our investments in such
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ship investment funds may be lower in the event of lower prevailing charter rates of the vessels undermanagement by the relevant ship investment funds. This is because such distributions of interest aregenerally derived from the charter income of the ship investment funds, less the operating and otherexpenses (such as interest expenses) incurred in relation to the relevant vessels. There can be noassurance that charter rates will be stable or increase over time. In the event that the shipping industryexperiences a downturn, the performance of our direct ship investments as well as investments in shipinvestment funds and, in turn, our operating results and overall performance, may be materially andadversely affected.
Our insurance policies may not provide us with adequate coverage against all risks.
Standard Protection & Indemnity insurance has been arranged for vessels owned by the ship investmentfunds/companies that we invest in. However there can be no assurance that all risks are adequatelyinsured against, that any particular claim will be paid or that adequate insurance coverage can beobtained at commercially reasonable rates in the future.
The shipping industry is highly regulated and we, or the ship investment funds that we invest in,may incur additional costs in meeting new regulations or limit our ability to do business.
The shipping industry is highly regulated, and operations of shipowners, including the ship investmentfunds which we invest in, are affected by extensive and changing environmental protection laws and otherregulations in the form of numerous international conventions, national, state and local laws and nationaland international regulations in force in the jurisdictions in which our vessels operate, as well as in thecountry or countries in which such vessels are registered. Compliance with such laws and regulationsmay entail significant expenses for shipowners, including the funds/companies which we invest in,including expenses for ship modifications and changes in operating procedures. In the event that suchadditional costs are incurred, the performance of our investment in such funds/companies and, in turn,our overall performance, may be materially and adversely affected.
We may also incur substantial costs in order to comply with existing and future environmental and healthand human safety requirements, including, among others, obligations relating to air emissions,maintenance and inspection, development and implementation of emergency procedures and insurancecoverage. Shipowners, including the ship investment funds/companies which we invest in, could also facesubstantial liability for penalties, fines, damages and remediation costs associated with hazardoussubstance spills or other discharges into the environment involving operations of shipowners, includingthe ship investment funds/companies which we invest in, under environmental laws and regulations. Suchcosts could have a material adverse effect on the business, financial condition and results of operationsof ship owners and in turn, the performance of the ship investment funds/companies we invest in. Thismay materially and adversely affect our overall performance.
The operating certificates and licenses of vessels are renewed periodically during each vessel’s requiredannual survey. However, government regulation of vessels, particularly in the areas of safety andenvironmental impact may change in the future and require shipowners to incur significant capitalexpenditure on their ships to keep them in compliance. In addition, shipowners are required by variousgovernmental bodies to obtain permits and licenses required for the operation of their shipping business.These permits may become costly or impossible to obtain or renew. In the event that such additionalcosts are incurred, the performance of our investment in such funds/companies and, in turn, our overallperformance, may be materially and adversely affected.
Governments could requisition vessels during a period of war or emergency without adequatecompensation, resulting in loss of earnings.
Governments could requisition or seize vessels for title or for hire. Requisition for title occurs when agovernment takes control of a vessel and becomes her owner. Also, a government could requisitionvessels for hire which occurs when a government takes control of a vessel and effectively becomes hercharterer at dictated charter rates. Generally, requisitions occur during a period of war and emergency.Government requisition of one or more of the vessels owned by the ship investment funds/companies thatwe invest in may adversely impact their business, financial condition and operating results. This couldhave a material adverse effect on our business, financial condition and results of operations.
RISK FACTORS
45
We are subject to the cyclical upturns and downturns in the property industry in the countrieswhere we have property investments and this may affect the rental yield and capital value of suchproperties.
The property industry is affected by cyclical upturns and downturns in its business cycle. Factors whichmay have an adverse effect on the property industry business cycle include a deterioration in thecondition of the domestic or global economy, an increase in interest rates, a reduction in businessconfidence, an increase in the opportunity cost to investors of investing in real estate relative to otherassets and negative changes to fundamental or speculative demand for real estate. A cyclical upturn mayaffect our Company as high property prices may have the effect of lowering our Company’s ability to growour property portfolio. Our financial performance is dependent on the cyclical upturns and downturns inthe property industry, and there may be material and adverse impact on our business, financial conditionand results of operations.
Our historical financial performance may not be indicative of our future financial performance.
As our revenue and profits may be adversely affected by external factors beyond our control, investorsshould be aware that there is no guarantee that we will increase or maintain our historical profit levelsand therefore investors should not take our historical profit levels as an indication of our future financialperformance. Factors which may affect our performance include general economic conditions includingbusiness confidence, inflation rates, interest rates and levels of international trade; government policy,legislation and/or regulation; and levels of competition within the industries that we operate in.
RISKS RELATING TO OWNERSHIP OF OUR SHARES
Investors in our Shares will face immediate and substantial dilution in the net asset value perShare and may experience future dilution.
Our Invitation Price is substantially higher than our NAV per Share of 51.7 cents as at 31 December 2006(adjusted for net proceeds from the Invitation and based on our post-Invitation issued share capital).Thus, there is an immediate and substantial dilution in the NAV per Share for investors who subscribe forour Shares pursuant to the Invitation. If we were liquidated for NAV immediately following the Invitation,each shareholder subscribing to the Invitation would receive less than the price they paid for their Shares.In addition, if and when we issue new Shares, you may not be able to or may choose not to participate inan offering of these newly issued Shares, and as a result, you may experience significant dilution infuture. Details of the immediate dilution of our Shares incurred by new investors are described under thesection entitled “Dilution” in this Prospectus.
We may require additional funding for our future growth.
Although we have identified our future growth plans set out in the section entitled “General Information onour Group – Future Plans” in this Prospectus as the avenues to pursue growth in our business, theproceeds from the Invitation will not be sufficient to fully cover the estimated costs of implementing allthese plans. We may also find opportunities to grow through acquisitions which cannot be predicted atthis juncture. Under such circumstances, secondary issue(s) of securities after the Invitation may benecessary to raise the required capital to develop these growth opportunities. If new Shares placed tonew and/or existing Shareholders are issued after the Invitation, they may be priced at a discount to thethen prevailing market price of our Shares trading on the SGX-ST, in which case, existing Shareholders’equity interest may be diluted. If we fail to utilise the new equity to generate a commensurate increase inearnings, our EPS will be diluted, and this could lead to a decline in our Share price. Any additional debtfinancing may, apart from increasing interest expense and gearing, contain restrictive covenants withrespect to dividends, future fund raising exercises and other financial and operational matters. If we areunable to procure the additional funding that may be required, our growth or financial performance will beadversely affected.
RISK FACTORS
46
You may not be able to attend general meetings of our Company.
Under the Cayman Companies Law, only those persons who agree to become shareholders of a CaymanIslands company and whose names are entered on the register of members of such a company areconsidered members, with rights to attend and vote at general meetings. Depositors holding Sharesthrough CDP will not be recognised as members of our Company, and will not have a right to attend andto vote at general meetings of our Company. In the event that Depositors wish to attend and vote atgeneral meetings of our Company, CDP will have to appoint them as proxies, pursuant to the Articles. Forfurther details, please refer to the section entitled “Attendance at General Meetings” in this Prospectus.
We are a Cayman Islands incorporated company and the rights and protection accorded to ourShareholders may not be the same as those applicable to shareholders of a Singaporeincorporated company.
We are incorporated in the Cayman Islands as an exempted company with limited liability under theCayman Companies Law. The Companies Act may provide shareholders of Singapore-incorporatedcompanies with certain rights and protection of which there may be no corresponding or similarprovisions under the Cayman Companies Law. As such, if you invest in our Shares, you may or may notbe accorded the same level of shareholder rights and protection that a shareholder of a Singapore-incorporated company would be accorded under the Companies Act.
We have set out in Appendix D and Appendix E a summary of the Memorandum of Association andselected Articles of our Company and a summary of certain provisions under the Cayman CompaniesLaw. Explanatory statements on specific issues in relation to Cayman Companies Law have been set outin pages E-1 to E-5 of this Prospectus. Each of the summaries and explanatory statements is notintended to be and does not constitute legal advice and any person wishing to have advice on thedifferences between the Cayman Companies Law and the Companies Act and/or the laws of anyjurisdiction with which he is not familiar is recommended to seek independent legal advice. Copies of theMemorandum of Association and the Articles of our Company are available for inspection at such placeand time as set out in the section entitled “General and Statutory Information – Documents Available ForInspection” in this Prospectus.
Singapore law contains provisions that could discourage a takeover of our Company.
The Singapore Code on Take-overs and Mergers contains certain provisions that may delay, deter orprevent a future takeover or change in control of our Company. Any person acquiring an interest, eitheron his own or together with parties acting in concert with him, in 30.0 per cent. or more of our votingshares may be required to extend a takeover offer for our remaining voting shares. A takeover offer is alsorequired to be made if a person holding between 30.0 per cent. and 50.0 per cent. (both inclusive) of thevoting rights in our Company (either on his own or together with parties acting in concert with him)acquires more than 1.0 per cent. of our voting shares in any six-month period.
These provisions may discourage or prevent certain types of transactions involving an actual orthreatened change of control of our Company. Some of our Shareholders, who may include you, maytherefore be disadvantaged as a transaction of that kind might have allowed the sale of Shares at a priceabove the prevailing market price.
The Invitation may not result in an active or liquid market for our Shares.
Prior to the Invitation, there has not been a public market for the Shares. We cannot predict the extent towhich a trading market will develop or how liquid the market might become. The Invitation Price for theShares will be determined by a book-building process by agreement between our Company and theManager, Underwriter and Placement Agent, after taking into consideration, inter alia, prevailing marketconditions and estimated market demand for the Shares and may not be indicative of the market price atwhich our Shares will trade after the Invitation. You may not be able to resell your Shares at a price that isattractive to you.
RISK FACTORS
47
Future sales of Shares could adversely affect the prevailing market price of Shares.
The trading prices of our Shares could be subject to fluctuations in response to variations in our results ofoperations, changes in general economic conditions, changes in accounting principles, or otherdevelopments affecting us, our customers or our competitors, changes in financial estimates by securitiesanalysts, the operating and stock price performance of other companies and other events or factors,many of which are beyond our control. Although it is currently intended that our Shares will remain listedon the SGX-ST, there is no guarantee of the continued listing of our Shares.
The Singapore securities market is relatively small, which may cause the market price of ourShares to be more volatile.
The SGX-ST is relatively small and may be more volatile than stock exchanges in the United States andcertain other countries. The relatively small market capitalisation of, and trading volume on, the SGX-ST,compared to certain other global stock exchanges, may cause the market price of securities listed on theSGX-ST, including our Shares, to fluctuate more than those listed on larger global stock exchanges.
It may not be possible for Shareholders to effect service of process within Singapore or to enforcein Singapore any judgment obtained in Singapore or in the Singapore courts upon us or certainDirectors. Judgments of the Singapore courts may also not be enforceable in the Cayman Islandscourts.
We are a company incorporated with limited liability and of unlimited duration under the laws of theCayman Islands. Save for Mr. Michio Tanamoto, Mr. Ang Miah Khiang and Mr. Ronnie Teo Heng Hock, allof our Directors reside outside Singapore. Substantially all of our assets and the assets of such personsare located outside Singapore. As a result, it may not be possible for investors to effect service of processwithin Singapore upon us or such persons or to enforce in Singapore a judgment obtained in courtsagainst us or such persons. Judgments of the Singapore courts may not be enforceable in the CaymanIslands courts.
RISK FACTORS
48
S$0.55
51.9 cents(1)
51.7 cents(1)
6.0 per cent.
6.4 per cent.
9.9 cents(1)
5.5 times
10.2 cents(1)
5.4 times
S$132.2 million
Invitation Price
NAV
NAV per Share of our Group as at 31 December 2006:
(a) before adjusting for the estimated net proceeds from the Invitation andbased on the pre-Invitation share capital of 175,000,000 Shares
(b) after adjusting for the estimated net proceeds from the Invitation and basedon the post-Invitation share capital of 240,400,000 Shares
Premium of Invitation Price over the NAV per Share as at 31 December 2006:
(a) before adjusting for the estimated net proceeds from the Invitation andbased on the pre-Invitation share capital of 175,000,000 Shares
(b) after adjusting for the estimated net proceeds from the Invitation and basedon the post-Invitation share capital of 240,400,000 Shares
EPS
Historical EPS of our Group for FY2006 based on the pre-Invitation share capitalof 175,000,000 Shares
Price Earnings Ratio
Historical PER based on the Invitation Price and the historical EPS of our Groupfor FY2006
Net Operating Cash Flow(2)
Historical net operating cash flow per Share of our Group for FY2006, based onthe pre-Invitation share capital of 175,000,000 Shares
Price to Net Operating Cash Flow Ratio
Ratio of Invitation Price to historical net operating cash flow per Share of ourGroup for FY2006 based on the pre-Invitation share capital of 175,000,000Shares
Market Capitalisation
Our market capitalisation based on the Invitation Price and the post-Invitationshare capital of 240,400,000 Shares
Notes:
(1) Based on the exchange rate of US$1.00 : S$1.52 for illustrative purpose only.
(2) Net operating cash flow is defined as the net profit attributable to Shareholders with depreciation added back.
(3) The above Invitation statistics have been computed on the assumption that the Over-allotment Option is not exercised.
INVITATION STATISTICS
49
Based on the Invitation Price, we estimate that the aggregate net proceeds attributable to us from theissue of the New Shares in the Invitation (assuming the Over-allotment Option is not exercised) will beapproximately S$32.2 million, after deducting underwriting commissions and other estimated expenses inrelation to the Invitation of approximately S$3.8 million, out of which S$1.3 million was incurred in 2006and S$2.5 million is estimated to be incurred in 2007.
We intend to use the net proceeds received by us primarily for the following purposes:
(i) approximately US$12.2 million for investment in the Akebono Fund;
(ii) approximately US$2.6 million to further finance our investment in Rich Containership S.A., whichwill acquire a new container vessel (4,300 TEU) with delivery expected in September 2008; and
(iii) approximately US$2.4 million for investment in another new container vessel (4,300 TEU) withdelivery targeted for 2008.
The remaining proceeds will be used for other ship investments, distressed assets investments and/orinvestments in real estate assets.
To the extent that the net proceeds from the Invitation are not immediately applied for the abovepurposes, it is the present intention of our Directors to place such net proceeds on short-term depositswith licenced banks and/or financial institutions or used for investment in short-term money market ordebt instruments.
For further details on our plans above, please refer to the sections entitled “General Information on ourGroup – Prospects” and “General Information on our Group – Business Strategy and Future Plans” in thisProspectus.
As the Invitation is underwritten on a firm commitment basis, there is no minimum amount which must beraised from the Invitation.
For each Singapore dollar of the proceeds from the Invitation (assuming that the Over-allotment Option isnot exercised in full):
(i) approximately 51.4 cents will be used to pay for investment in the Akebono Fund;
(ii) approximately 11.1 cents will be used to further finance our investment in Rich Containership S.A.,which will acquire a new container vessel (4,300 TEU) with delivery expected in September 2008;
(iii) approximately 10.0 cents will be used to pay for investment in another new container vessel (4,300TEU) with delivery targeted for 2008;
(iv) approximately 7.0 cents will be used to pay for expenses incurred in connection with the Invitation;and
(v) approximately 20.5 cents will be used for other ship investments, distressed assets investmentsand/or investments in real estate assets.
If the Over-allotment Option is exercised in full, the additional net proceeds (after the payment of the fees,commissions and other expenses related to the subscription of the Additional Shares pursuant to theexercise of the Over-allotment Option) which we will receive is approximately US$3.4 million. Such netproceeds will be used for the purposes stipulated above, as our Directors may deem appropriate.
USE OF PROCEEDS
50
Subject to the Cayman Companies Law, our Directors may from time to time declare a dividend or otherdistribution.
Our dividend payments and the rates of such dividend payments for FY2004, FY2005 and FY2006 areset out below:
Gross dividend amounts Dividend per Share(US$’000) (US$)
FY2004 1,400 0.05
FY2005 1,400 0.05
FY2006 1,680 0.06
In determining our dividends in respect of FY2007, we will take into account factors including theprevailing state of financial and foreign exchange markets and interest rate levels. Subject to the factorsstated herein, our Directors intend to recommend and distribute up to 50% of our consolidated profitsavailable for distribution for FY2007.
The amount of our past dividends is not indicative of the amount that we will pay in the future. Futuredividends will be paid by us as and when approved by our Shareholders and Directors. Our Directors maydeclare an interim dividend without seeking our Shareholders’ approval. Any such dividend payments willbe subject to the level of our future earnings, cash flow, financial condition, working capital needs,investment plans and other factors deemed relevant by our Directors, including such legal or contractualrestrictions as may apply from time to time. There can be no assurance that dividends will be paid in thefuture or as to the timing of any dividends that are to be paid in the future.
Payments of cash dividends and distributions, if any, will be made in US$ to the CDP on behalf ofShareholders who maintain, either directly or through depository agents, Securities Accounts with theCDP. Except for Shareholders who have elected to receive cash dividends and distributions in US$, theCDP will convert such proceeds into S$ and cause such S$ to be delivered to the relevant Shareholders’respective direct Securities Accounts with the CDP or to depository agents for distribution toShareholders who maintain securities sub-accounts with such depository agents, as the case may be.The amount of S$ payable to Shareholders upon conversion of any such cash dividends or distributionswill be affected by fluctuations in the exchange rate between S$ and US$. Neither we nor the CDP shallbe liable to any Shareholder for any currency exchange loss in respect of any such conversion.
You should note that all the foregoing statements are merely statements of our present intention and shallnot constitute legally binding statements in respect of our future dividends which may be subject tomodification (including reduction or non-declaration thereof) in our Directors’ sole and absolute discretion.
For information relating to taxes payable on dividends, please refer to the section entitled “Taxation” ofthis Prospectus.
Our foreign subsidiaries may declare and pay cash dividends to our Company, if any, in the currencies oftheir respective countries of incorporation, which may be converted into US$.
DIVIDEND POLICY
51
Our Company (Registration Number CR-72229) was incorporated in the Cayman Islands on 17 March1997 under the Cayman Companies Law as an exempted company with limited liability under the nameof Uni-Asia Finance Corporation. As at the date of incorporation, our authorised share capital wasUS$60,000,000 comprising 60,000,000 ordinary shares of US$1.00 each.
Save as disclosed below, there have been no material changes in our share capital since inception.
On 17 March 1997, two initial subscribers of our Company were issued one subscriber share each forcash at par of US$1.00.
On 8 April 1997, together with the two subscriber shares transferred to it, Evergreen was allotted andissued 4,999,998 further shares of US$1.00 each by our Company, credited as fully paid, for cash at parof US$1.00.
On 8 April 1997, we allotted and issued 5,000,000 shares of US$1.00 each to Motokuni Yamashiro,credited as fully paid, for cash at par of US$1.00.
On 1 September 1997, we allotted and issued 5,000,000 shares of US$1.00 each to Takugin International(Asia) Ltd, credited as fully paid, for cash at par of US$1.00, which were then transferred to The then-Hokkaido Takushoku Bank, Ltd on 8 October 1997.
On 20 March 1998, our Company allotted and issued for cash at par of US$1.00 and credited as fullypaid:
(i) 2,000,000 shares of US$1.00 each to Hamburgische Landesbank Girozentrale which weresubsequently transferred to HSH Nordbank on 28 July 2003;
(ii) 2,000,000 shares of US$1.00 each to Sojitz (Hong Kong) Limited (formerly known as Nissho IwaiHong Kong Corporation Limited);
(iii) 2,000,000 shares of US$1.00 each to The Sumitomo Trust and Banking Co., Ltd.;
(iv) 1,000,000 shares of US$1.00 each to JAFCO Investment (Asia Pacific) Ltd. (formerly known asNomura/JAFCO Investment (Asia) Limited); and
(v) 1,000,000 shares of US$1.00 each to ORIX Investment and Management Private Limited.
On 24 March 1998, we allotted and issued 2,000,000 shares of US$1.00 each to Fastwin InvestmentLimited, credited as fully paid, for cash at par of US$1.00.
On 25 March 1998, we allotted and issued 1,000,000 shares of US$1.00 each to Tokio Marine & NichidoFire Insurance Co., Ltd. (formerly known as The Tokio Marine and Fire Insurance Company Limited),credited as fully paid, for cash at par of US$1.00.
On 9 November 1998, The then-Hokkaido Takushoku Bank, Ltd transferred 3,000,000 of its shares in ourCompany to The Chuo Mitsui Trust & Banking Company, Limited. On 16 November 1998, The then-Hokkaido Takushoku Bank, Ltd transferred its remaining 2,000,000 shares in our Company to TheResolution and Collection Corporation (formerly known as The Resolution and Collection Bank, Ltd).
On 30 December 1998, we allotted and issued 1,500,000 shares of US$1.00 each to FoundersCorporation, credited as fully paid, for cash at par of US$1.00.
On 8 February 1999, we allotted and issued 500,000 shares of US$1.00 each to CSK Venture CapitalCo., Ltd as Investment Manager for the CSK-2 Investment Fund, credited as fully paid, for cash at par ofUS$1.00.
SHARE CAPITAL
52
At a general meeting held on 26 June 2007, our Shareholders approved, inter alia, the following:
(a) the adoption of a new set of Memorandum and Articles of Association;
(b) the increase in our authorised share capital from US$60,000,000, divided into 60,000,000 ordinaryshares of US$1.00 each to US$120,000,000 divided into 120,000,000 ordinary shares of US$1.00each;
(c) the consolidation of 16 ordinary shares of US$1.00 each into 1 ordinary share of US$16.00 each(the “Consolidation”);
(d) the division of each ordinary share of US$16.00, into 100 ordinary shares of US$0.16 each (the“Sub-division”);
(e) the issue and allotment of the New Shares, which are the subject of this Invitation. The NewShares, when issued, allotted and fully paid up, will rank pari passu in all respects with the existingissued and fully paid up Shares;
(f) that authority be given to the Directors to grant the Over-allotment Option to the Manager and toallot and issue up to 9,810,000 Additional Shares pursuant to the exercise of the Over-allotmentOption;
(g) the establishment of the Scheme and that authority be given to our Directors to issue and allotOption Shares pursuant to the exercise of Options under the Scheme;
(h) that Options may be granted under the Scheme with an exercise price set at a discount of up to 20per cent. of the market price for the Shares at the time of grant, provided that the exercise price perShare shall not be less than the par value of that Share; and
(i) that authority be given to our Directors, to (i) issue shares in our Company whether by way ofrights, bonus or otherwise; (ii) make or grant offers, agreements or options (collectively,“Instruments”) that might or would require shares to be issued, including but not limited to thecreation and issue of (as well as adjustments to) warrants, debentures or other instrumentsconvertible into shares, at any time and upon such terms and conditions and for such purposesand to such persons as our Directors may in their absolute discretion deem fit, and (iii) issueshares in pursuance of any Instrument made or granted under such authority, provided that theaggregate number of shares to be issued pursuant to such authority (including shares to be issuedin pursuance of Instruments made or granted under such authority) shall not exceed 50 per cent. ofthe post-Invitation issued share capital of our Company and that the aggregate number of sharesto be issued other than on a pro rata basis to the then existing shareholders of our Company(including shares to be issued in pursuance of Instruments made or granted under such authority)shall not exceed 20 per cent. of the post-Invitation issued share capital of our Company. Unlessrevoked or varied by our Company in general meeting, such authority shall continue in full forceuntil the conclusion of the next annual general meeting is required by law or by our Articles to beheld, whichever is earlier, except that the Directors shall be authorised to issue and allot newshares pursuant to any Instrument made or granted under such authority notwithstanding theauthority conferred may have ceased to be in force.
For the purposes of the above resolution and pursuant to Rules 806(3) and 806(4) of the ListingManual, “post-Invitation issued share capital” means the enlarged issued and paid-up share capitalof the Company after the Invitation, after adjusting for (i) new shares arising from the conversion orexercise of any convertible securities; and (ii) any subsequent consolidation or sub-division ofshares.
SHARE CAPITAL
53
Our Shares are issued in registered form. As at the Latest Practicable Date, there is only one class ofshares in the capital of our Company, being the Shares. A summary of selected Articles of our Companyrelating to, among other things, the voting rights of our Shareholders is set out in Appendix D of thisProspectus. There are no founder, management, deferred or unissued Shares reserved for issuance forany purpose.
As at the Latest Practicable Date, our issued and paid-up capital comprised US$28,000,000 divided into28,000,000 ordinary shares of US$1.00 each, all of which were fully paid. Details of the changes in ourissued and paid-up capital as at 31 December 2006, being the date of our last audited accounts, and ourissued and paid-up share capital immediately after the Invitation are as follows:
Number of Shares Paid-up Capital(’000) (US$’000)
Issued and fully paid-up ordinary shares as at 1 January 2006 28,000 28,000
Issued and fully paid-up ordinary shares as at 31 December 2006 28,000 28,000
Consolidation of 16 shares of US$1.00 each into 1 share of US$16.00 each 1,750 28,000
Sub-division of each share of US$16.00 each immediately after the consolidation into 100 shares of US$0.16 each 175,000 28,000
Pre-Invitation Share Capital 175,000 28,000
New Shares to be issued pursuant to the Invitation 65,400 10,464
Post-Invitation Share Capital 240,400 38,464
Our authorised share capital and shareholders’ funds as at 31 December 2006, before and afteradjustments to reflect the increase in authorised share capital and the Invitation are set forth below.These statements should be read in conjunction with the “Report on the Consolidated FinancialStatements for the Year ended 31 December 2006”, as set out in Appendix C of this Prospectus.
Immediatelyafter the
ConsolidationAs at and Immediately
31 December 2006 Sub-division after Invitation(US$) (US$) (US$)
Authorised Share Capital
Ordinary shares of US$1.00 each 60,000,000 – –
Ordinary shares of US$0.16 each – 120,000,000 120,000,000
Shareholders’ Equity
Issued and paid-up share capital 28,000,000 28,000,000 38,464,000
Other Reserves (222,704) (222,704) 11,325,100
Retained earnings 31,989,107 31,989,107 31,989,107
Total shareholders’ equity 59,766,403 59,766,403 81,778,207
The New Shares to be issued will rank equally in all respects with all Shares currently in issue and willqualify for all dividends or other distributions declared, made or paid in respect of a record date whichfalls after the date of their issue.
SHARE CAPITAL
54
OWNERSHIP STRUCTURE
Our Directors and Substantial Shareholders of our Company and their respective shareholdingsimmediately before the Invitation (as at the Latest Practicable Date, assuming that the Consolidation andSub-division of the Shares in issue had taken place) and immediately after the Invitation (assuming thatthe Over-allotment Option is not exercised at all) are set out below:
Before the Invitation After the Invitation
Direct Interest Deemed Interest Direct Interest Deemed Interest
Number of Number of Number of Number of
Shares % Shares % Shares % Shares %
Directors
Motokuni Yamashiro 31,250,000 17.9 – – 31,250,000 13.0 – –
Kazuhiko Yoshida – – 10,437,500 6.0 (1) – – 11,937,500 5.0
Michio Tanamoto – – 10,437,500 6.0 (1) – – 11,937,500 5.0
Hamilton Jian Ren Chueh – – – – – – – –
Jörg Wilhelm Schelp(2) – – – – – – – –
Robert Van Jin Nien(3) – – – – – – – –
Independent Directors
V-Nee Yeh – – – – – – – –
Ang Miah Khiang – – – – – – – –
Ronnie Teo Heng Hock – – – – – – – –
Substantial Shareholders
Evergreen International S.A.(4) 31,250,000 17.9 – – 31,250,000 13.0 – –
The Chuo Mitsui Trust & Banking Company, Limited(5) 18,750,000 10.7 – – 18,750,000 7.8 – –
Sojitz (Hong Kong) Limited(6) 12,500,000 7.1 – – 12,500,000 5.2 – –
The Sumitomo Trust and Banking Co., Ltd(7) 12,500,000 7.1 – – 12,500,000 5.2 – –
Fastwin Investment Limited(8) 12,500,000 7.1 – – 12,500,000 5.2 – –
HSH Nordbank AG(9) 12,500,000 7.1 – – 12,500,000 5.2 – –
Founders Corporation(10)(14) 10,437,500 6.0 – – 11,937,500 5.0 – –
Dr. Chang Yung Fa and his associates – – 31,250,000 17.9 – – 31,250,000 13.0
Hopewell Holdings Limited(8) – – 12,500,000 7.1 – – 12,500,000 5.2
Exeno Yamamizu(11)(14) 2,125,000 1.2 – – 5,125,000 2.1 – –
Mitsui & Co., Ltd.(12)(14) 3,718,750 2.1 – – 8,968,750 3.7 – –
Yamasa Co., Ltd(13)(14) 3,718,750 2.1 – – 8,968,750 3.7 – –
Others 23,750,000 13.7 – – 23,750,000 9.9 – –
Public – – – – 50,400,000 21.0 – –
Total 175,000,000 100.0 240,400,000 100.0
PRINCIPAL SHAREHOLDERS
55
Notes:
(1) Mr. Kazuhiko Yoshida and Mr. Michio Tanamoto hold 64% and 36% of the shares respectively in Founders Corporation, whichin turn holds 6.0% (pre-Invitation) or 5.0% (post-Invitation) of the Shares in our Company. Mr. Yoshida and Mr. Tanamoto areExecutive Directors of our Company.
(2) Mr. Jörg Wilhelm Schelp is a nominee director of our Substantial Shareholder, HSH Nordbank AG.
(3) Mr. Robert Van Jin Nien is a nominee director of our Substantial Shareholder, Fastwin Investment Limited.
(4) Evergreen International S.A. is one of the major shipping companies of the Evergreen group. It owns and operates ships andcontainers. Evergreen International S.A. is wholly-owned by Dr. Chang Yung Fa and his associates (as defined in Section 4(6)of the SFA), Mr. Chang Kuo Hua, Mr. Chang Kuo Ming and Mr. Chang Kuo Cheng. Dr. Chang and his associates are, byvirtue of Section 4(5) of the SFA, deemed to be interested in the Shares held by Evergreen International S.A.
(5) The Chou Mitsui Trust and Banking Company, Limited is a financial institution in Japan specialising in trust banking productsand services.
(6) Sojitz (Hong Kong) Limited is a subsidiary of Sojitz Corporation, which is a trading company.
(7) The Sumitomo Trust and Banking Co., Ltd is a financial institution in Japan providing asset management, custody servicesand commercial banking services.
(8) Fastwin Investment Limited is a wholly-owned subsidiary of Hopewell Holdings Limited, a public listed company in Hong Kongwith business interests in property investment and development, highway infrastructure, hotel and hospitality and constructionbusinesses.
(9) HSH Nordbank AG is one of the leading banks in Northern Europe and the world’s leading provider of ship finance andcovers the entire value chain in the transportation segment.
(10) Founders Corporation is beneficially owned as to 64% by Mr. Kazuhiko Yoshida and 36% by Mr. Michio Tanamoto. Mr. Yoshidaand Mr. Tanamoto are Executive Directors of our Company. Founders Corporation has given an undertaking to our Companyto subscribe for 1,500,000 Placement Shares under the Invitation.
(11) Exeno Yamamizu was established in Tokyo in April 1947, and its major shareholders include NYK Line and Mitsui O.S.K.Lines, Ltd. Exeno Yamamizu is one of the companies of the Yamamizu Shipping Group, which is a ship broker in Japan.Exeno Yamamizu has given an undertaking to our Company to subscribe for 3,000,000 Placement Shares under theInvitation.
(12) Mitsui & Co., Ltd. is a public company listed on the Tokyo Stock Exchange. Mitsui & Co., Ltd. has given an undertaking to ourCompany to subscribe for 5,250,000 Placement Shares under the Invitation.
(13) Yamasa Co., Ltd was established in Okayama in December 1967 and is a manufacturer of amusement related hardware aswell as software. Yamasa Co., Ltd has given an undertaking to our Company to subscribe for 5,250,000 Placement Sharesunder the Invitation.
(14) On 25 October 2006, The Resolution and Collection Corporation disposed of its entire shareholding interest of 6.07% in ourCompany (pre-Invitation) to Founders Corporation, Exeno Yamamizu, Mitsui & Co. Ltd., and Yamasa Co. Ltd.
Save as disclosed above, there are no other relationships among our Directors, Executive Officers andSubstantial Shareholders. Save as disclosed above, to the best of the knowledge of our Directors, we arenot directly or indirectly owned or controlled by any other corporation, any government or other natural orlegal person whether severally or jointly.
The Shares held by our Directors and Substantial Shareholders do not carry different voting rights fromthe New Shares which are the subject of the Invitation.
There is no known arrangement the operation of which may, at a subsequent date, result in a change inthe control of our Company.
There were no significant changes in the percentages of ownership of our Directors and SubstantialShareholders in our Company from our incorporation until the Latest Practicable Date.
Immediately following the Invitation and assuming the Over-allotment Option is not exercised, theauthorised share capital of our Company will be US$120,000,000 divided into 750,000,000 Shares, ofwhich 240,400,000 Shares will be issued fully paid or credited as fully paid, and 509,600,000 Shares willremain unissued. Other than pursuant to the exercise of the Over-allotment Option, we do not have anypresent intention to issue any of the authorised but unissued share capital.
Save as disclosed herein, there has been no alteration in our share capital since our incorporation.
PRINCIPAL SHAREHOLDERS
56
MORATORIUM
To demonstrate their commitment to our Group, Mr. Motokuni Yamashiro, Founders Corporation,Evergreen, The Chuo Mitsui Trust & Banking Company, Limited, Fastwin Investment Limited, HSHNordbank AG, Sojitz (Hong Kong) Limited, The Sumitomo Trust and Banking Co. Ltd, Exeno Yamamizu,Yamasa Co., Ltd and Mitsui & Co., Ltd who will hold in aggregate 166,250,000 Shares representing69.2% of our Company’s post-Invitation share capital (including the 15,000,000 Placement Shares thatFounders Corporation, Exeno Yamamizu, Yamasa Co., Ltd and Mitsui & Co., Ltd have together given anundertaking to subscribe for), have undertaken not to sell, transfer or otherwise dispose of or enter intoany agreement that will directly or indirectly constitute or will be deemed as a disposal of any part of theirrespective shareholding in our Company for a period of six months commencing from the date ofadmission of our Company to the Official List of the SGX-ST.
Our Executive Directors, Mr. Kazuhiko Yoshida and Mr. Michio Tanamoto, who hold 64% and 36% of theissued share capital of Founders Corporation have each given his respective undertaking that he will notsell, transfer or otherwise dispose of or enter into any agreement that will directly or indirectly constituteor will be deemed as a disposal of any part of his respective interest in Founders Corporation for a periodof six months commencing from the date of admission of our Company to the Official List of the SGX-ST.
In addition, Mr. Kazuhiko Yoshida and Mr. Michio Tanamoto undertake that they shall not, for a period ofsix months commencing on the date of admission of our Company to the Official List of the SGX-ST,without the prior written consent of the Manager (such consent not to be unreasonably withheld ordelayed), exercise their respective voting rights in relation to their shareholdings in Founders Corporationto approve any issue of shares of Founders Corporation if such issuance would cause their combinedshareholdings in the share capital of Founders Corporation to fall below 51%.
PRINCIPAL SHAREHOLDERS
57
The following information should be read in conjunction with the “Report on the Consolidated FinancialStatements for the Year Ended 31 December 2006” set out in Appendix C of this Prospectus.
The following table shows our cash and cash equivalents and capitalisation as at the Latest PracticableDate:
(a) on an actual basis based on our Group’s unaudited consolidated balance sheet; and
(b) as adjusted to reflect the allotment and issue of 65,400,000 ordinary shares of US$0.16 each atthe Invitation Price of S$0.55 each pursuant to the Invitation and the net proceeds from theInvitation, after deducting estimated expenses related to the Invitation.
As atthe Latest Practicable Date
Actual As adjusted(US$’000) (US$’000)
Cash and bank balances 27,184 49,199
Short-term indebtedness – Secured(1) 4,127 4,127
Short-term indebtedness – Unsecured – –
Total short-term indebtedness 4,127 4,127
Long-term indebtedness – –
Total short and long-term indebtedness 4,4,127 4,127
Shareholders’ equity 60,443 82,455
Total capitalisation and indebtedness 64,570 86,582
Note:
(1) Our Company has an aggregate of US$5.2 million of deposits. Such deposits are secured by a pledge.
Save as disclosed above, since the Latest Practicable Date, there were no material changes in our totalcapitalisation and indebtedness, except for changes in our retained earnings arising from the day-to-dayoperations in the ordinary course of our business.
Contingent Liabilities
Please refer to the section entitled “Management’s Discussion and Analysis of Financial Position andResults of Operations – Indebtedness” for further details on our contingent liabilities.
CAPITALISATION AND INDEBTEDNESS
58
Dilution is the amount by which the Invitation Price paid by the subscribers of our Shares in this Invitationexceeds the NAV per Share after the Invitation. Our NAV per Share as at 31 December 2006 and basedon our pre-Invitation share capital of 175,000,000 Shares, was 51.9 cents per Share.
Based on the issue of 65,400,000 New Shares at the Invitation Price for each New Share pursuant to theInvitation and after deducting the estimated issue expenses, the adjusted NAV of our Company as at 31December 2006 would have been 51.7 cents per Share based on the post-Invitation issued and paid-upshare capital of 240,400,000 Shares. This represents an immediate decrease in NAV of 0.2 cents perShare to our existing Shareholders and an immediate dilution of 3.3 cents per Share to our new investorspursuant to the Invitation (“New Investors”).
The following table illustrates such dilution per Share:
Per Share (Cents)
Invitation Price 55
NAV per Share as at 31 December 2006 and based on the pre-Invitation share capital of 175,000,000 Shares 51.9 (1)
Decrease in NAV per Share attributable to existing Shareholder 0.2 (1)
Adjusted NAV per Share after the Invitation(2) (3) 51.7 (1)
Dilution in NAV per Share to New Investors 3.3 (1)
Notes:
(1) Based on the exchange rate of US$1 : S$1.52 for illustrative purpose only.
(2) Assuming the Over-allotment Option is not exercised. If the Over-allotment Option is exercised in full, the NAV per Shareimmediately after the Invitation would be 51.8 cents per Share.
(3) The computed NAV per Share does not take into account the actual financial performance from 1 January 2007 up to theLatest Practicable Date. Depending on the actual financial results and the net gain or loss from translation of the financialstatements of our subsidiaries, the NAV per Share may be higher or lower than the computed NAV per Share.
The following table summarises the total number of Shares acquired by our Directors and SubstantialShareholders and their Associates during the three years prior to the date of lodgment of this Prospectus,the total consideration paid by them and the effective cash cost per share to them.
Total Effective cashNo. of shares consideration cost per share
acquired (US$) (US$)
Directors and their Associates
Founders Corporation 1,062,500 265,200 0.2496
DILUTION
59
The following tables present the selected consolidated financial information of our Group as at and for thefinancial years ended 31 December 2004, 2005 and 2006.
The selected consolidated financial information for the financial years ended 31 December 2004, 2005and 2006 have been extracted from the Reports on the Consolidated Financial Statements for the yearsended 31 December 2004, 2005 and 2006 set out in Appendices A, B and C of this Prospectus withoutmaterial adjustments. These selected consolidated financial information should be read in conjunctionwith the Reports on the Consolidated Financial Statements for the years ended 31 December 2004, 2005and 2006 set out in Appendices A, B and C of this Prospectus and the related notes thereto.
With effect from the financial year ended 31 December 2005, we changed our presentation of the incomestatement as set out in the audited financial statements by presenting an analysis of expenses usingclassification based on their nature. For the financial year ended 31 December 2004, we presented ananalysis of expenses based on their function within our Group in the income statement as set out in theaudited financial statements.
For comparison purposes, the selected consolidated financial information contained in this section of thisProspectus has been presented using the classification and format in the audited consolidated financialstatements of our Group for the financial years ended 31 December 2005 and 2006. As a result, certainbalances in respect of the financial year ended 31 December 2004 were reclassified and restated. Thereclassification and restatement had no impact on the consolidated net profit and consolidated net assetsof our Group for the financial year ended 31 December 2004. Please refer to the section on reconciliationfor details of the reclassification of the comparative figures for the financial year ended 31 December2004.
CONSOLIDATED RESULTS OF OUR GROUP
Restated(1) Audited AuditedUS$’000 FY2004 FY2005 FY2006
Fee income(2) 5,599 12,234 9,922Investment returns 6,682 5,011 7,983Income from defaulted loans 1,862 – –Interest income 339 936 1,543Other income 317 86 22
Total income 14,799 18,267 19,470
Employee benefits expense (5,087) (5,481) (6,084)Depreciation expense (77) (106) (278)Other expenses (1,821) (3,316) (3,107)Reversal of impairment loss on loans receivable 250 – –Gain/(loss) on disposal of fixed assets – 2 (16)
(6,735) (8,901) (9,485)
Operating profit 8,064 9,366 9,985
Finance costs – interest expense (46) (42) (83)Share of profit of associates after tax 96 594 1,929
Profit before income tax 8,114 9,918 11,831Income tax expense (179) (479) (398)
Profit for the year 7,935 9,439 11,433 (3)
EPS(4) (pre-Invitation) US$0.045 US$0.054 US$0.065 (3)
EPS(5) (post-Invitation) US$0.033 US$0.039 US$0.048 (3)
SELECTED FINANCIAL INFORMATION AND OTHER DATA
60
Notes:
(1) Please refer to the section below for the reconciliation of the restated figures to the audited financial statements for therespective financial year.
(2) Our fee income includes income generated from related party transactions as discussed in Note 29 to the consolidatedfinancial statements of our Company for FY2006.
(3) Our profit for the year and the EPS for FY2006 would not be materially affected had the Service Agreements as described inthe section entitled “Directors, Management and Staff – Service Agreements” been in place at the beginning of FY2006.
(4) For comparative purposes, the EPS (pre-Invitation) is computed by dividing the profit for the year by our pre-Invitation sharecapital of 175,000,000 Shares.
(5) For comparative purposes, the EPS (post-Invitation) is computed by dividing the profit for the year by our post-Invitation sharecapital of 240,400,000 Shares.
RECONCILIATION OF OUR CONSOLIDATED RESULTS AS SET OUT IN THIS PROSPECTUS TOOUR AUDITED CONSOLIDATED FINANCIAL STATEMENTS
The table below sets out the reconciliation of the restated figures to the audited consolidated financialstatements for the financial year ended 31 December 2004:
Annual ReportOriginal Reclassification Restated
US$’000
Fee income 5,599 – 5,599Investment returns 6,682 – 6,682Income from defaulted loans 1,862 – 1,862Interest income 339 – 339Other income 317 – 317
Total income 14,799 – 14,799
By function (1)
Administrative expenses (6,985) 6,985 –Reversal of impairment loss on loans receivable 250 (250) –
(6,735) 6,735 –
By nature (1)
Employee benefits expense – (5,087) (5,087)Depreciation expense – (77) (77)Other expenses – (1,821) (1,821)Reversal of impairment loss on loans receivable – 250 250
– (6,735) (6,735)
Operating profit 8,064 – 8,064
Finance costs – interest expense (46) – (46)Share of profit of associates after tax 96 – 96
Profit before income tax 8,114 – 8,114Income tax expense (179) – (179)
Profit for the year 7,935 – 7,935
Note:
(1) Expenses in the income statement as set out in the audited consolidated financial statements of our Group for the financialyear ended 31 December 2004 were presented according to their functions. For comparison purposes, the expenses havebeen reclassified according to their nature using the classification and format in the audited consolidated financial statementsfor the financial years ended 31 December 2005 and 2006.
SELECTED FINANCIAL INFORMATION AND OTHER DATA
61
CONSOLIDATED FINANCIAL POSITIONS OF OUR GROUP
Restated(1) Audited AuditedAs at As at As at
31 December 2004 31 December 2005 31 December 2006US$’000
ASSETSNon-current assetsProperty, plant and equipment 122 147 652Loans receivable 150 50 2,500Investments 8,289 15,437 19,249Investments in associates 6,928 6,648 8,472Amounts due from associates 4,781 756 –Deposit for purchase of vessel – – 3,944
20,270 23,038 34,817
Current assetsLoans receivable 1,200 100 3,050Rental and utility deposits paid 227 433 375Deposits pledged as collateral 12,614 10,082 5,053Accounts receivable 93 465 1,491Derivative financial instruments – – 163Prepaid expenses 247 267 235Interest receivable 54 20 74Amount due from associate – – 4Cash and bank balances 24,000 27,544 22,205Tax receivable – – 105
38,435 38,911 32,755
Total assets 58,705 61,949 67,572
EQUITYCapital and reserves attributable to equity holdersShare capital 28,000 28,000 28,000Other Reserves – – (223)Retained earnings 12,517 21,956 31,989
Total equity 40,517 49,956 59,766
LIABILITIESNon-current LiabilitiesDeferred tax liabilities 178 264 636
178 264 636
Current LiabilitiesAmount due to associate – 11 1Borrowings 12,526 9,041 4,222Accounts payable 2,267 227 278Derivative financial instruments – – 144Accrued expenses 1,783 2,023 2,462Tax payable 34 427 63Dividend payable 1,400 – –
Total current liabilities 18,010 11,729 7,170
Total equity and liabilities 58,705 61,949 67,572
Total liabilities 18,188 11,993 7,806
Net assets 40,517 49,956 59,766
SELECTED FINANCIAL INFORMATION AND OTHER DATA
62
Note:
(1) Deposits pledged as collateral was previously classified under cash and bank balances in the audited consolidated financialstatements for the financial year ended 31 December 2004. For comparative purposes, this balance had been reclassifiedusing the classification and format in the audited consolidated financial statements for the financial years ended 31 December2005 and 2006.
SELECTED FINANCIAL INFORMATION AND OTHER DATA
63
PRO FORMA FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2006
On 17 April 2007, we launched the Akebono Fund in order to take advantage of the Singapore MaritimePort Authority’s Maritime Finance Incentive (“MFI”) schemes. On 13 September 2006, our wholly-ownedsubsidiary, Uni-Asia Capital (Singapore) Limited, was designated as an Approved Shipping InvestmentManager (“ASIM”) under the Income Tax Act, Chapter 134 of Singapore (the “SITA”) by the SingaporeMaritime Port Authority (“MPA”). At the same time, the MPA had also granted a designation of ApprovedShipping Investment Enterprise (“ASIE”), for the Akebono Fund. Our Company has committed to invest inthe Akebono Fund, together with other investors, by way of subscription for a principal amount ofUS$42.9 million Performance Notes issued or to be issued by the Akebono Fund pursuant to the terms ofa subscription agreement dated 17 April 2007.
Paragraph 23 of Part IX of the Fifth Schedule to the Securities and Futures (Offer of Investments)(Shares and Debentures) Regulations 2005 (“SFR”) requires the Prospectus to include pro formafinancial statements for the most recent completed financial year where our Company has, inter alia,acquired any asset or any entity, or entered into any agreement, to acquire any asset or entity, during theperiod between the beginning of the most recent completed financial year and the date of registration ofthe Prospectus with the Authority and the net book value of that asset would have accounted for 10% ormore of the net assets of our Group in respect of our most recent completed financial year.
As our total committed investment amount in the Akebono Fund exceeds 10% of the net assets of ourGroup for FY2006, we are, accordingly, required under paragraph 23 of Part IX of the Fifth Schedule tothe SFR, to include pro forma financial information in this Prospectus.
In this regard, we have applied to the Authority and the Authority has granted us a waiver fromcompliance with the requirement under paragraph 23 of Part IX of the Fifth Schedule to the SFR toinclude pro forma financial statements for the financial year ended 31 December 2006, on the bases setout below.
We do not have available all financial information on the Akebono Fund’s ship investments from whichsuch pro forma financial statements can be prepared. Although our Company has identified certainvessels, consisting of existing vessels and/or newbuilds that were or may be proposed to be acquired bythe Akebono Fund, the actual decision to acquire such vessels may be subject to change. In the eventthat the Akebono Fund decides to acquire existing vessels from the funds that our Company currentlyinvests in, our Company may have access to the financial information relating to the historicalperformance of the vessels.
Even if financial information on the potential vessels to be acquired by the Akebono Fund is available, webelieve that it would not be advisable for our Company to rely on such financial information as a basis forpreparing any pro forma financial statements for inclusion in this Prospectus, for the following reasons:
(i) the historical financial performance of the vessel would not be relevant as the future performanceof the vessel would be dependent on various factors, including deployment and tenure of thecharters and charter rates. Charter rates are dictated by global trends and may differ from year toyear. Given that the factors contributing to the financial performance of the vessel in the currentyear may differ from those of previous years, should our Company prepare the pro forma accountsbased on the historical financial information of the vessel, it may be misleading to investors whomay rely on the pro forma accounts in this Prospectus to make an investment decision, as such proforma financial information may not be indicative of the future performance of the vessel and,consequently, our Company; and
(ii) our Company may not be in a position to verify the accuracy and validity of such underlyingfinancial information.
SELECTED FINANCIAL INFORMATION AND OTHER DATA
64
The following discussion should be read in conjunction with our audited consolidated financial statementstogether with the related notes thereto, all of which are included elsewhere in this Prospectus. Thisdiscussion contains forward-looking statements that involve risks and uncertainties. Our actual resultsmay differ significantly from those projected in the forward-looking statements. Factors that might causefuture results to differ significantly from those projected in the forward-looking statements include, but arenot limited to, those discussed below and elsewhere in this Prospectus, particularly in the section entitled“Risk Factors”.
OVERVIEW
Uni-Asia is an Asia-based structured finance arrangement and Alternative Assets direct investment firm.Our principal activities are in: (1) structured finance – the finance arrangement of transport related assets(such as ships and aircraft), and the provision of ship charter arrangement and agency services; and (2)Alternative Assets investment/management – direct investments in and/or the arrangement andadministration of Alternative Assets investments such as ships, distressed assets and real estate.
We have an established base of clients that include Evergreen Group, CIDO Shipping Group andDainichi-Invest Corporation.
Income
Our income comprises primarily of: (i) fee income; (ii) investment returns; (iii) income from defaultedloans; (iv) interest income; and (v) other income. Our investment returns comprise mainly realised gain oninvestments, return on Performance Notes and fair value adjustments on Performance Notes. Return onPerformance Notes comprises interest income from Performance Notes.
We derive income primarily from four main business segments, namely: (i) structured finance; (ii) shipinvestment/management; (iii) distressed assets investment/management; and (iv) propertyinvestment/management.
(1) Structured finance
This business segment relates to the finance arrangement of transport related assets (such as ships andaircrafts) and ship charter arrangement and agency services. We act as agent of and participate in thearrangement of syndicated commercial loans, tax oriented leases, and charter brokerage and wespecialise mainly in shipping in Asia. Our income from structured finance accounted for 18.0%, 39.2%and 30.8% of our total income in FY2004, FY2005 and FY2006, respectively. In our structured financebusiness, our Company will mainly act as finance arranger. As at 31 December 2003, our Company hadbeen contracted to arrange financing for 10 containerships, for which we would collect a fee of US$0.69million in respect of each ship (totalling US$6.9 million for all 10 ships), including completion fees ofUS$0.55 million per ship (totalling US$5.5 million for all 10 ships). As at 31 December 2006, a total of sixcontainerships have been delivered and the fees received in respect of these containerships have beenrecognised as income for FY2005 or, as the case may be, FY2006. The remaining fees will be recognisedas income in the year of the delivery of the relevant vessels. As at the Latest Practicable Date, twoadditional containerships had already been delivered in the first half of FY2007. The third containership isexpected to be delivered in the 3rd quarter of FY2007 and the last containership is expected to bedelivered in the 1st quarter of FY2008.
Although our Company has, historically, participated in syndicated loans, we do not, moving forward,expect that participation in syndicated loans to be a material component of our income. As such, ourCompany does not regard itself to be exposed to any material credit and interest rate risks arising fromparticipation in syndicated loans. The income received from participation in syndicated loans in FY2004,FY2005 and FY2006 were not significant, and are set out as follows:
� FY2004: US$12,000 (representing 0.08% of the total income for that year)
� FY2005: US$10,000 (representing 0.05% of the total income for that year)
� FY2006: US$8,000 (representing 0.04% of the total income for that year)
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
In this regard, the reference to the line item “Interest income – participation in syndicated loans” in Note 7to the audited consolidated financial statements of our Company for FY2006 (on page C-24 of thisProspectus) should be construed as interest income derived from our Company’s participation in the twobridging loans provided by our Company to Harmonic Shipping S.A. (in respect of US$0.2 million) andSunrise Shipping S.A. (in respect of US$0.1 million) and a syndicated loan to Evergreen Marine (UK)Limited, formerly known as Hatsu Marine Limited (in respect of which our Company’s income fromparticipation was US$8,000). As at the Latest Practicable Date, the syndicated loan to Evergreen Marine(UK) Limited has been repaid in full.
Our income from structured finance includes (a) arrangement fee; (b) brokerage fee; and (c) agency fee.
(2) Alternative Assets investment/management
(i) Ship investment/management
Our ship investment activities comprise mainly direct and indirect ship investments. Our ship managementactivities comprise mainly the arrangement and administration of ships/ship investments held by usand/or third-parties. Our income from ship investment/management accounted for 64.8%, 49.3% and56.6% of our total income in FY2004, FY2005 and FY2006, respectively.
Our indirect ship investments include investments made in funds such as the Searex Series I Fund andthe Searex Series II Fund in FY2004. We also act as the administrator and agent of the Searex Series IFund and the Searex Series II Fund responsible for managing and arranging debt finance for the funds.
Our income from ship investment/management activities include (a) arrangement fee for arrangingfinancing for our ship investments made in partnership with other investors as well as, if any, shipinvestments by us in principal; (b) administration fee and incentive fee; (c) project management fee; (d)agency fee; (e) ship charter brokerage fee; and (f) investment returns from our direct investments and ourinvestments made through investment funds, including fair value adjustments on the Performance Notesas well as the vessels in which we may have an investment.
(ii) Distressed assets investment/management
Our distressed assets investment/management activities comprise mainly the investment in and disposalof distressed assets in Asia (excluding Japan) and/or administration of distressed assets held by usand/or directly by third-parties. Our income from distressed assets investment/management accounted for15.8%, 5.6% and 6.0% of our total income in FY2004, FY2005 and FY2006, respectively.
Our income from distressed assets investment/management activities include fees for the provision ofagency, advisory and administration services, incentive fees and investment returns from the recovery ofinvestments in NPLs including fair value adjustments on the Performance Notes.
(iii) Property investment/management
Our property investment in Japan is held through Capital Advisers. Capital Advisers was our wholly-owned subsidiary before it became our associated company in May 2003 when Capital Advisers raisednew equity capital from a number of independent third-party investors. Prior to May 2003, propertyincome from Capital Advisers was consolidated in our consolidated financial statements. From May 2003,equity accounting was applied on property income from Capital Advisers after Capital Advisers becameour associated company.
In 2004, we held a 5.3% interest in AP Real Estate Ltd. (“AP”) and a 10% interest in RS PropertyInvestment (“RS”). AP and RS are principally engaged in the investment and management of propertiesin Japan. As at 31 December 2006, we held Performance Notes of Yen 10,000 (or approximately US$84)in AP and we no longer have any interest in RS.
66
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
Factors affecting our income
The key factors affecting our income include the following:
(a) the performance of the shipping industry;
(b) the opportunities in the real estate market in the PRC and other parts of Asia;
(c) the opportunities available in the distressed assets markets in Asia;
(d) the fair value of our investments;
(e) the macroeconomic policies of countries in Asia such as the PRC and Japan; and
(f) the economic environment in Asia.
Income recognition
Our arrangement fees are recognised on delivery of the asset and upon completion of the transactionwhen all obligations associated with the transaction are completed and when the amount of income canbe measured reliably.
Our agency fees and commissions are recognised when pre-agreed duties and functions of acting as anagent have been rendered.
Our project management fees are recognised on an accrual basis.
Our administration fee, agency fee and incentive fee from distressed loans are recognised as theycrystallise according to the pre-agreed terms of contract.
Our interest income is recognised on a time-proportion basis using the effective yield basis.
Fair value adjustments on financial assets through profit or loss
Our financial statements are prepared in conformity with the International Financial Reporting Standards(“IFRS”). Pursuant to the IFRS, certain financial assets are measured at their fair values. PerformanceNotes are investments with income and maturity values which fluctuate based on the distributionsreceived from underlying assets, which are generally investments in property development companies,defaulted loans or shipping companies. Fair values of Performance Notes are determined by our interestin the fair values of each scheme’s underlying assets. Gains and losses arising from changes in the fairvalue of all securities are recognised in the consolidated income statement as they arise. We recogniseda net gain on fair value adjustments on Performance Notes and other investments of US$1.4 million,US$1.8 million and US$3.3 million in FY2004, FY2005 and FY2006, respectively.
Employee benefits expense
Our employee benefits expense includes salaries (including Director’s remuneration), pension costs fordefined contribution plans, staff residencies cost and other welfare cost and allowances. Employeebenefits expense accounted for 75.5%, 61.6% and 64.1% of our total operating expenses in FY2004,FY2005 and FY2006, respectively.
Depreciation expense
Our depreciation expense include depreciation expense for leasehold improvements, depreciationexpense for office equipment, depreciation expense for furniture and fixtures and depreciation expensefor motor vehicles. Depreciation expense accounted for 1.1%, 1.2% and 2.9% of our total operatingexpenses in FY2004, FY2005 and FY2006, respectively.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
Other expenses
Our other expenses include rental expenses under operating leases for office premises, auditors’remuneration, travelling and entertainment expense, net foreign exchange loss, professional services feesand miscellaneous expenses. Other expenses accounted for 27.0%, 37.3% and 32.8% of our totaloperating expenses in FY2004, FY2005 and FY2006, respectively.
Operating profit margin
Our operating profit margins for FY2004, FY2005 and FY2006 are 54.5%, 51.3% and 51.3%,respectively.
Finance cost
Our finance cost comprise of interest expense to financial institutions (non-related companies) beingmainly interest on our bank loans and overdrafts.
Share of profit from associates after tax
Our Group’s share of profit from associates after tax represents our Group’s share of profit in CapitalAdvisers and Uni-Ships and Management Limited, and it amounted to US$0.1 million, US$0.6 million andUS$1.9 million for FY2004, FY2005 and FY2006, respectively.
Our Group’s share of profit from associates after tax increased to US$1.9 million in FY2006 from US$0.6million in FY2005 mainly due to an increase in profit of Capital Advisers in FY2006. Capital Advisersrealised a gain on disposal of its investment in three hotels in FY2006.
Capital Advisers was our wholly-owned subsidiary prior to 2 May 2003 and became our associatedcompany on 2 May 2003. We currently hold an equity interest of 44.8% in Capital Advisers. Uni-Ships andManagement Limited became our associated company on 25 January 2005 and we maintain an equityinterest of 30.0% of Uni-Ships and Management Limited.
As at 31 December 2006, Capital Advisers invested in and acted as the asset manager of eleven hotelsin Japan. The size of assets under management by Capital Advisers as at the end of FY2006 was Yen58.5 billion (or approximately US$491.9 million).
Taxation
Our tax on profits has been calculated at rates of taxation prevailing in the jurisdictions in which ourGroup operates. As at the Latest Practicable Date, the prevailing corporate tax rates for the variousjurisdictions in which our Group operates are as follows: 17.5% for Hong Kong, 18% for Singapore, 33%for the PRC and 40.65% for Japan.
Our Company was incorporated in the Cayman Islands as an exempted company with limited liabilityunder the Cayman Companies Law and, accordingly, is exempted from payment of Cayman Islandsincome tax. Apart from Uni-Asia Services and Agency Limited which was incorporated in Hong Kong, ourCompany’s other subsidiaries were incorporated in Singapore, Hong Kong, the PRC, British Virgin Islandsand Japan. Offshore Property Investment Corporation, a wholly-owned subsidiary of the Company, wasincorporated in the British Virgin Islands under the International Business Companies Act of the BritishVirgin Islands and was subsequently reregistered under the BVI Business Companies Act, and isaccordingly exempted from payment of the British Virgin Islands income tax.
Our Company conducts our business mainly in Asia and we have accumulated tax losses ofapproximately US$6.7 million from Hong Kong as at the end of FY2006. These tax losses will be carriedforward against our future profits which are taxable in Hong Kong.
No deferred income tax asset has been recognised by us in respect of these un-utilised tax losses duringFY2004, FY2005 and FY2006. Deferred income tax assets are recognised for tax losses carried forwardonly to the extent that the realisation of the related tax benefit through the future taxable profits isprobable in future, in accordance with our accounting policy.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
REVIEW OF RESULTS OF OPERATIONS
The following tables show income by the business segment and geographical segment for each of theperiods under review:
Income by Business Segment
FY2004 FY2005 FY2006
US$’000 % US$’000 % US$’000 %
(i) Structured finance income 2,669 18.0 7,165 39.2 5,994 30.8
(ii) Ship investment/management income 9,594 64.8 8,997 49.3 11,013 56.6
(iii) Distressed assets investment/management income 2,336 15.8 1,019 5.6 1,177 6.0
(iv) Property investment/management income (99) (0.6) 186 1.0 53 0.3
Unallocated 299 2.0 900 4.9 1,233 6.3
Total income 14,799 100.0 18,267 100.0 19,470 100.0
Unallocated income represents interest income from cash and cash equivalents.
Income by Geographical Segment
FY2004 FY2005 FY2006
US$’000 % US$’000 % US$’000 %
Income
Global (indeterminate location)(1) 8,353 56.5 8,918 48.8 8,896 45.7
Asia (excluding Japan)(2) 6,156 41.6 3,052 16.7 6,823 35.1
Japan(3) (9) (0.1) 5,397 29.6 2,518 12.9
Unallocated(4) 299 2.0 900 4.9 1,233 6.3
Total 14,799 100.0 18,267 100.0 19,470 100.0
Notes:
(1) The global segment represents (a) income derived from our investment in ship investment funds, which do not have a fixedgeographical location; (b) income from activities including ship finance arrangement and management for special purposecompanies holding vessels, which have no fixed geographical location; and (c) structured finance income from our Europeanclient in the case of FY2004.
(2) The Asia (excluding Japan) segment represents activities with assets or customers located in Taiwan, Indonesia, the PRCand Korea, which includes structured finance, shipping finance/investment/management and distressed assets investments.
(3) The Japan segment represents income from activities (including structured finance arrangement) with assets or customerslocated in Japan.
(4) Income from the unallocated segment represents interest income from our cash and cash equivalents held by our head officein Hong Kong and our subsidiary in Singapore.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
FY2005 vs FY2004
Income
Our income in FY2005 increased by 23.4% from US$14.8 million in FY2004 to US$18.3 million inFY2005 mainly due to an increase in income from structured finance by US$4.5 million and an increasein interest income from cash and cash equivalents of US$0.6 million, offset by a decrease in distressedassets income of US$1.3 million.
Structured finance
Our income from structured finance increased by 168.5% from US$2.7 million in FY2004 to US$7.2million in FY2005 mainly due to an increase in the value of syndicated loans arranged in FY2005.
We arranged 12 syndicated loans and ship charter arrangement transactions totalling approximatelyUS$930.2 million and generating US$7.1 million in arrangement, brokerage and agency fees in FY2005,as compared to five syndicated loans and tax leases totalling approximately US$417.3 million andgenerating US$2.6 million in arrangement and agency fees in FY2004.
Ship investment/management
Our income from ship investment/management in FY2005 was US$9.0 million compared to US$9.6million in FY2004.
Our income from ship investment/management in FY2005 include fee income comprising arrangementfees and agency fees of US$1.0 million, administration fees and incentive fees of US$2.5 million primarilydue to the higher level of administration fees received as a result of the launch of the Searex Series I andSeries II Funds, project management fees of US$0.8 million, as well as investment returns comprisinginterest on Performance Notes of US$2.5 million and fair value adjustment on Performance Notes ofUS$2.4 million.
Our income from ship investment/management in FY2004 include fee income comprising arrangementfees and agency fees of US$1.3 million, administration fees and incentive fees of US$1.4 million,investment returns comprising interest on ship investments and Performance Notes of US$2.5 million andUS$2.6 million respectively, fair value adjustment on Performance Notes of US$1.6 million and others ofUS$0.2 million.
A second shipping fund Searex Series II Fund with an asset size of approximately US$100 million wassuccessfully launched in December 2004. This fund contributed a total US$0.4 million fee income andinvestment return to us in FY2005. During the year, the Searex Series I Fund sold a small handy sizebulk carrier, Ocean Time, in FY2005.
As at 31 December 2005, our total ship investments through equity shares and Performance Notesamounted to US$3.7 million and US$9.7 million respectively.
Distressed assets investment/management
Our income from distressed assets investment/management decreased by 56.4% from US$2.3 million inFY2004 to US$1.0 million in FY2005.
The decrease in income was mainly due to the full recovery in FY2004 of one distressed asset which wedirectly invested in which contributed US$1.9 million of income in FY2004. We recorded fee incomecomprising agency, advisory, administration and incentive fees of US$0.3 million and investment returncomprising return on Performance Notes of US$0.1 million in FY2004 from AAA Series I Fund and AAASeries II Fund.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
We recorded fee income comprising agency, advisory, administration and incentive fees of US$0.7 millionand investment return comprising return on Performance Notes of US$0.3 million in FY2005 from AAASeries I Fund and AAA Series II Funds. As at 31 December 2005, the nominal value of the PerformanceNotes outstanding on the balance sheets of AAA Series I Fund and AAA Series II Fund was US$5.3million (2004: US$5.6 million) of which our share of interest was US$1.7 million (2004: US$1.8 million).
Property investment/management
We recorded interest return on Performance Notes issued by AP and RS of US$0.1 million and fairvaluation gain from our investments in AP and RS of US$0.1 million.
As at 31 December 2005, we held Performance Notes on AP and RS of Yen 10,000 (or approximatelyUS$84) and Yen 23.2 million (or approximately US$0.2 million) respectively.
Operating expenses
Our operating expenses increased by 32.2% from US$6.7 million in FY2004 to US$8.9 million in FY2005mainly due to an increase in rental of US$0.2 million following the relocation of our office in Hong Kong,an increase in employee benefits expense of US$0.4 million due to an increase in our headcount andsalary adjustments, an increase in professional fees of US$0.5 million and an increase in net foreignexchange loss of US$0.4 million arising from translation losses mainly from our investments in Japan.
Operating profit and operating profit margin
Our operating profit increased by 16.1% from US$8.1 million in FY2004 to US$9.4 million in FY2005. Ouroperating profit margin decreased slightly from 54.5% in FY2004 to 51.3% in FY2005. The decrease inour operating profit margin is mainly due to the increase in our operating expenses relating to an increasein professional fees by US$0.5 million and office rental expenses by US$0.2 million.
Taxation
Our tax expense increased from US$0.2 million in FY2004 to US$0.5 million in FY2005 mainly due tohigher taxable income recorded in FY2005.
Profit for the year
Based on the foregoing, our profit for the year increased by 18.9% from US$7.9 million in FY2004 toUS$9.4 million in FY2005 mainly due to an increase in structured finance income in FY2005.
FY2006 vs FY2005
Income
Our income increased by 6.6% from US$18.3 million in FY2005 to US$19.5 million in FY2006 dueprimarily to a US$2.0 million increase in income from ship investment/management, a US$0.2 millionincrease in income from our distressed assets investment/management activities and a US$0.3 millionincrease in interest income, offset by a US$1.2 million decrease in income from structured finance and aUS$0.1 million decrease in income from property investment/management.
Structured finance
Our income from structured finance decreased by 16.3% from US$7.2 million in FY2005 to US$6.0million in FY2006 mainly due to a decrease in the number and total volume of syndicated transactionsarranged in FY2006.
We arranged six syndicated loans and ship charter arrangement transactions totalling approximatelyUS$459.9 million and generating US$6.0 million in arrangement, brokerage and agency fees in FY2006as compared to 12 syndicated loans and ship charter arrangement transactions totalling approximatelyUS$930.2 million and generating US$7.1 million in arrangement, brokerage and agency fees in FY2005.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
Ship investment/management
Our income from ship investment/management in FY2006 totalled US$11.0 million as compared toUS$9.0 million in FY2005. This increase of US$2.0 million was mainly due to (a) increase of US$1.8million in investment return in respect of our Performance Notes in Searex I; and (b) an increase ofUS$1.3 million in the fair valuation gain due to the improvement of the shipping market, offset by areduction of approximately US$1.0 million in fee income derived from ship investment/management.
Our income from ship investment/management in FY2006 include fee income comprising arrangementand agency fees of US$1.4 million, administration fees and incentive fees of US$1.9 million, as well asinvestment returns comprising interest in Performance Notes of US$4.3 million, fair value adjustment onPerformance Notes of US$1.2 million and fair value adjustments on ship investments of US$1.9 million.As at 31 December 2006, our total ship investments through equity shares and Performance Notesamounted to US$8.3 million and US$9.7 million respectively.
Distressed assets investment/management
Our income from distressed assets investment/management increased by 15.5% from US$1.0 million inFY2005 to US$1.2 million in FY2006.
In FY2006, we recorded fee income comprising agency, advisory, administration and incentive fees ofUS$0.7 million and investment return comprising return on Performance Notes of US$0.4 million and fairvalue adjustment on performance notes from AAA Series I and Series II Funds of US$0.1 million. AAASeries I Fund expired in FY2006. As at 31 December 2006, the aggregate nominal value of thePerformance Notes outstanding on the balance sheet of AAA Series II Fund totalled US$2.7 million (theaggregate nominal value of the Performance Notes outstanding on the balance sheets of AAA Series Iand II Funds totalled US$5.3 million as at 31 December 2005) of which our share of interest was US$0.9million (our share of interest of AAA Series I and Series II Funds totalled US$1.7 million as at 31December 2005). Drawdown of AAA Series II Performance Notes took place on 21 December 2006 andAAA Series I Performance Notes were fully redeemed on 22 December 2006.
Property investment/management
We recorded fair value adjustment on our investment in Performance Notes in RS of approximatelyUS$50,000 in FY2006. These Performance Notes on RS were fully redeemed in March 2006. As at 31December 2006, we held Performance Notes on AP of Yen 10,000 (or approximately US$84).
Operating expenses
Our operating expenses increased by 6.6% from US$8.9 million in FY2005 to US$9.5 million in FY2006due primarily to an increase in our rental expenses of US$0.2 million following the relocation of our officein Hong Kong, Singapore and Japan and an increase of US$0.6 million in employee benefits expensedue to an increase in our headcount and salary adjustments. There was a reduction of foreign exchangeloss of US$0.3 million in FY2006 as compared to FY2005.
Operating profit and operating profit margin
Our operating profit increased by 6.6% from US$9.4 million in FY2005 to US$10.0 million in FY2006. Ouroperating profit margin remained consistent at 51.3% for FY2005 and FY2006.
Taxation
Our tax expense was US$0.4 million in FY2006 as compared to US$0.5 million in FY2005. Our taxexpense in FY2006 was mainly attributable to taxable income earned in Singapore and an increase indeferred tax liability provision made in relation to the withholding tax of 20% that had been withheld inaccordance with Japanese tax laws, in respect of the profits arising from our Company’s investment inCapital Advisers.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
Profit for the Year
Our profit for the year increased by 21.1% from US$9.4 million in FY2005 to US$11.4 million in FY2006based on the foregoing and due partly to a US$1.3 million increase in our share of profit from CapitalAdvisers, our associated company.
REVIEW OF FINANCIAL POSITION
Non-current assets
As at 31 December 2006, our non-current assets amounted to US$34.8 million, comprising US$0.7million in property, plant and equipment, US$2.5 million in loans receivable, US$3.9 million in deposit forthe acquisition of a vessel, US$19.2 million in investments and US$8.5 million in investments inassociates.
Our investments of US$19.2 million comprised mainly US$9.7 million in Performance Notes of unlistedshipping companies, US$8.3 million in shares of shipping companies engaged in ship investment andmanagement and US$1.0 million in unlisted Performance Notes of distressed debt.
Our investments in associates of US$8.5 million comprise mainly of our investment in Capital Advisers.
Our loans receivables of US$2.5 million refers to the bridging loan granted to Sunrise Shipping S.A. Theinterest rate payable on this bridging loan is 6% per annum. As at the Latest Practicable Date, thebridging loan remains payable and will mature on 11 September 2011.
Current assets
As at 31 December 2006, our current assets amounted to US$32.8 million, comprising US$3.1 million ofloans receivables, US$0.4 million of rental and utility deposits paid, US$5.1 million of deposits pledged ascollateral, US$1.5 million of accounts receivable, US$0.2 million of prepaid expenses, US$0.1 million taxreceivable, approximately US$74,000 of interest receivable, US$22.2 million of cash and bank balances,approximately US$4,000 of amount due from associates and US$0.16 million of derivative financialinstruments.
Our loans receivables of US$3.0 million refers primarily to the bridging loan granted to HarmonicShipping S.A. The interest payable on this bridging loan was set as the rate of LIBOR + 2% per annum.The bridging loan was fully repaid on 30 April 2007.
As shown in the Group’s balance sheet as at 31 December 2006, there is an amount of US$5.1 million ofdeposits. This amount is pledged as collateral for a Japanese Yen denominated revolving bank loanfacilities used for hedging.
Non-Current Liabilities
This refers to our deferred tax liabilities of US$0.6 million as at 31 December 2006.
Current Liabilities
As at 31 December 2006, our current liabilities amounted to US$7.2 million, comprising US$4.2 million ofborrowings, US$0.3 million of accounts payable, US$2.5 million of accrued expenses, tax payable ofapproximately US$63,000, amount due to associate of approximately US$1,000 and US$0.1 million ofderivative financial instruments.
The borrowings of US$4.2 million is revolving on an annual basis and bears an interest rate of floatingYen LIBOR and were secured against our cash deposits as at 31 December 2006. Our cash deposits asat 31 December 2006 is US$5.1 million.
Equity
As at 31 December 2006, our equity comprised an issued share capital of US$28.0 million, retainedearnings of US$32.0 million and other reserves of US$(0.2) million.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
INDEBTEDNESS
Borrowings and collaterals
As at 31 December 2006, we had total outstanding borrowings amounting to US$4.2 million, which relateto a loan of Yen 502.0 million (or approximately US$4.2 million). This loan is secured by a cash deposit ofUS$5.1 million.
As at 31 December 2006, our material credit facilities include the following:
Borrowingsoutstanding
as atBank and type of Facility 31 December Duration of Purpose of facility amount 2006 the facility the facility Interest rate
Mizuho Corporate US$5.0 million Nil Revolving loan Working capital 0.5% per Bank, Ltd., Revolving facility annum over Loan Facility Cost of Funds(1)
Mizuho Corporate US$10.0 million Nil Up to 1 year Hedging – Bank, Ltd., Foreign from 1 April instruments Exchange Facility 2005, subject
to automatic renewal
Hong Kong and Yen 1,648 Yen 502.0 30 April 2007 Hedging 0.30% over 1,2, Shanghai Banking million million to 1 April 2008 instruments 3 or 6 months Corporation, (or approximately (or approximately JPY LIBOR Revolving JPY Loan US$13.8 million) US$4.2 million)
Note:
(1) Actual cost to the bank of funding an advance or other credit utilisation or any sum due under the facilities in the currency ofthe sum.
The following table summarises our repayment obligations in connection with our bank borrowings as at31 December 2006:
AuditedAs at 31 December 2006
US$’000
Payable:- within one year 4,222- after one year but within five years –
Total borrowings 4,222
Contingent liabilities
On 27 November 2006, our Group extended a performance guarantee to Xing Long Maritime S.A for theamount of Yen 4.69 billion (or approximately US$39.5 million) for the due performance by Panmax underthe Shipsales Contract.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Our operations have been funded through a combination of cash generated from our operating activitiesand external cash reserves. The principal uses of these funds are to meet working capital requirementsand operating costs, and for capital expenditure, repayment of borrowings and investments. We anticipatethat cash generated from our operating and investing activities, together with our cash and cashequivalents, will be sufficient to fund the operations of our business and meet our current working capitalrequirements for the next 12 months.
The following table summarises our cash flow data in FY2004, FY2005 and FY2006:
US$’000 FY2004 FY2005 FY2006
Net cash generated from operating activities 2,928 2,659 1,146
Net cash flow generated from investing activities 15,618 5,245 114
Net cash used in financing activities (4,590) (4,930) (6,524)
Cash and cash equivalents at the end of the year 24,000 27,544 22,205
Operating activities
In FY2004, we recorded a profit before tax of US$8.1 million. After adjusting for non-cash and non-operational items (comprising primarily depreciation, interest income and expenses, results of associates,net foreign exchange loss, income from defaulted loans and investment returns) of US$9.2 million andworking capital changes of US$3.7 million, the cash generated from operations was US$2.6 million. Wereceived interest on bank balances of US$0.3 million. These resulted in net cash generated fromoperating activities of US$2.9 million in FY2004.
In FY2005, we recorded a profit before tax of US$9.9 million. After adjusting for non-cash and non-operational items (comprising primarily depreciation, interest income and expenses, results of associates,net foreign exchange loss, gain on disposal of fixed assets and investment returns) of US$6.0 million andworking capital changes of US$2.2 million, the cash generated from operations was US$1.7 million. Wereceived interest on bank balances of US$0.9 million. These resulted in net cash generated fromoperating activities of US$2.7 million in FY2005.
In FY2006, we recorded a profit before tax of US$11.8 million. After adjusting for non-cash and non-operational items (comprising primarily depreciation, interest income and expenses, results of associates,net foreign exchange loss, loss on disposal of fixed assets and investment returns) of US$10.9 millionand working capital changes of US$0.4 million, the cash generated from operations was US$0.4 million.We received interest on bank balances of US$1.2 million and paid income tax of US$0.5 million. Theseresulted in net cash generated from operating activities of US$1.1 million in FY2006.
In FY2004, the working capital inflows were mainly the result of a decrease in accounts receivable ofUS$0.6 million, an increase in accounts payable of US$1.9 million and an increase in accrued expensesof US$1.3 million.
In FY2005, the working capital outflows were mainly the result of an increase in rental and utility depositspaid of US$0.2 million, an increase in accounts receivable of US$0.2 million and a decrease in accountspayable of US$2.0 million.
In FY2006, the working capital outflows were mainly the result of an increase in accounts receivable ofUS$1.1 million and offset by an increase in accrued expenses of US$0.4 million.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
Investing activities
Net cash generated from investing activities was US$15.6 million in FY2004 mainly due to proceeds fromsale of investments in EuroAsia III, Inc, and AP Real Estate Ltd. of US$2.6 million, dividend received frominvestments in EuroAsia III, Inc, and Searex Series I Fund of US$2.9 million, repayment of principal andinterest from loans to Capital Advisers of US$4.9 million, loans repayment from Hatsu Marine and SearexSeries I Fund of US$2.0 million, sale of default loans of US$1.6 million, reduction of US$4.6 million indeposits pledged as collateral in respect of a Japanese Yen borrowing in respect of our investment inCapital Advisers, following the partial repayment of such Japanese Yen borrowing, interests received onPerformance Notes of US$2.7 million from AAA Series I and Series II Funds and Searex I Fund andproceeds from settlement of foreign exchange contracts of US$10.3 million for AAA Series I and Series IIFunds. This was partially offset by cash used for the purchase of investments in AAA Series I and SeriesII Funds and Searex Series I Fund of US$4.6 million, and loans advanced to Ever Union Ltd. (which, atthe relevant time, was an investee company under the Searex Series II Fund) of US$1.1 million andpurchase of foreign exchange contracts of US$10.3 million.
Net cash used in investing activities was US$5.3 million in FY2005 mainly due to the purchase ofinvestments in AAA Series I and II Funds, Searex Series I and II Funds, Falcon Containership S.A.,Fortitude Containership S.A., Union Containership S.A. and Harmonic Shipping S.A., of US$9.8 millionand purchase of foreign exchange contracts of US$25.4 million. This was partially offset by proceeds fromsale of investments in AAA Series I and Series II Funds, Searex Series I and Series II Funds, Euroasia II,Glad Mate Ltd, RS Property Investment and AP Real Estate Ltd of US$2.9 million, repayment of principaland interest from loans to associate of US$4.1 million, loan repayment of US$1.2 million extended toHatsu Marine and Ever Union Ltd., decrease in deposits pledged as collateral of US$2.5 million, interestsreceived on Performance Notes of US$4.4 million from Searex I Fund, AAA Series I and II Funds andCapital Advisers and settlement of foreign exchange contracts of US$25.5 million.
Net cash generated from investing activities was US$0.1 million in FY2006 mainly due to proceeds fromredemption of Performance Notes of AAA Series I and Series II Funds and Searex Series I and Series IIFunds of US$3.8 million, repayment of principal and interest from loans to associate of US$0.8 million,repayment of a loan extended to Harmonic Shipping S.A., Sunrise Shipping S.A. and Hatsu Marine ofUS$11.5 million, interest received on Performance Notes of US$4.7 million from AAA Series I and SeriesII Funds and Searex Series I and Series II Funds and a reduction of US$5.0 million in deposits pledgedas collateral in respect of a Japanese Yen borrowing in respect of our investment in Capital Advisers,following the partial repayment of such Japanese Yen borrowing. This was partially offset by cash used forpurchase of Performance Notes of AAA Series I Fund and Searex Series II Fund of US$1.5 million,payment of shareholders loan of US$2.8 million to Harmonic Shipping S.A. and Sunrise Shipping S.A.,loans advanced to Harmonic Shipping S.A. and Sunrise Shipping S.A of US$16.9 million, deposit paid forpurchase of a vessel of approximately US$3.9 million from Xing Long, and purchase of fixed assets ofUS$0.8 million.
Financing activities
Net cash used in financing activities was US$4.6 million in FY2004. This was mainly due to interest paidon bank borrowings of US$0.1 million, repayment of bank borrowings of US$4.8 million and dividend paidto shareholders of US$0.8 million. This was partially offset by new bank borrowings of US$1.1 million.
Net cash used in financing activities was US$4.9 million in FY2005 mainly due to interest paid onborrowings of US$0.1 million, repayment of borrowings of US$3.5 million and dividend payment ofUS$1.4 million.
Net cash used in financing activities was US$6.5 million in FY2006 mainly due to interest paid onborrowings of US$0.1 million, repayment of bank borrowings of US$7.0 million and dividend payment ofUS$1.4 million. The cash outflows, including a cash outflow of US$0.2 million from interim expensesincurred in respect of the Invitation, were partially offset by cash inflow from new bank borrowings ofUS$2.2 million.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
CAPITAL EXPENDITURE, INVESTMENTS, DIVESTMENTS AND COMMITMENTS
Capital Expenditure
Our capital expenditure for the past three financial years from FY2004 to FY2006, and for the period from1 January 2007 up to the Latest Practicable Date, are as follows:
From1 January 2007up to the Latest
US$’000 FY2004 FY2005 FY2006 Practicable Date
Leasehold improvements 49 2 666 –
Office equipment 58 38 55 89
Furniture and fixtures – – 117 1
Motor vehicles – 93 0 0
Total 107 133 838 90
Our material investments and divestments for the past three financial years from FY2004 to FY2006, andfor the period from 1 January 2007 up to the Latest Practicable Date, are as follows:
Investments and Divestments
From1 January 2007up to the Latest
US$’000 FY2004 FY2005 FY2006 Practicable Date
Investment
AAA Strategic Investment- Series II 1,467 285 140 –
EuroAsia II 50 – – –EuroAsia III 109 – –Searex Assets Management Limited
- Series I 5,000 706 – –- Series II – 4,500 1,435 –
Glad Mate 1,000 – – –Container Vessel Fund – 1,926 – 214Harmonic Shipping S.A. – 2,100 65 3,230Sunrise Shipping S.A. – – 2,700 –Uni-Ships and Management Limited – 39 – –Rich Containership S.A. – – – 1,000Matin Shipping Limited – – – 1,203Akebono Capital Limited – – – 2,800
Total 7,626 9,556 4,340 8,447
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
From1 January 2007up to the Latest
US$’000 FY2004 FY2005 FY2006 Practicable Date
Divestments
AAA Strategic Investment- Series I 320 151 28 –- Series II 311 150 967 –
EuroAsia II 113 113 75 259EuroAsia III 500 – – –Searex Assets Management Limited
- Series I 2,353 530 1,382 –- Series II – – 1,272 4,663
Ocean Target Limited 1,130 – – –Ocean Time Limited 928 – – –South China International Leasing Co Ltd 366 – – –Glad Mate Ltd – 1,249 – –RS Property Investment – 185 105 –AP Real Estate Ltd. 284 262 – –Harmonic Shipping S.A. – – – 5,391Other Investments 61 – – –
Total 6,366 2,640 3,829 10,313
Capital Commitments
We do not have any material capital commitments as at the Latest Practicable Date.
The following table summarises our proposed investments as at the Latest Practicable Date:
US$’000
Investments
Shipping funds and investments 12,200Investment in vessels- Investment in container vessels 5,000
17,200
Our planned capital expenditure for FY2007 will be financed from internal sources. Please refer to thesection entitled “General Information on our Group – Business Strategy and Future Plans” for furtherdetails.
Lease Commitments
Our lease commitments comprise rent payable by our Group for the leased properties disclosed in thesection entitled “General Information on our Group – Properties”. As at the Latest Practicable Date, wehave the following lease commitments in respect of our properties:
US$’000
Within one year 1,176Later than one year and not later than five years 647
Total 1,823
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
FOREIGN EXCHANGE EXPOSURE
Our foreign exchange exposures give rise to market risk associated with exchange rate movementsagainst the US$, our functional and reporting currency.
As a result of our global operations, we conduct our business in various foreign currencies, principallyUS$, HK$, S$ and Yen. Our income is denominated mainly in US$ while our operating expenses aremainly denominated in HK$, US$, S$ and Yen. Our investments are mainly denominated in US$ and Yenand our cash and cash equivalents are mainly denominated in US$.
Our foreign exchange risk arises mainly from a currency mismatch between our income and expenses. Tothe extent that our income and expenses are not naturally matched in the same currency and to theextent that there are timing differences in the collections and payments, we may be susceptible to foreignexchange exposure.
Our net foreign exchange losses are as follows:
FY2004 FY2005 FY2006
Net foreign exchange loss (US$’000) 20 453 180
As a % of our Group’s profit before tax (%) 0.2 4.6 1.5
Our income is mainly denominated in US$ in FY2004, FY2005 and FY2006. Our operating expensesdenominated in the various currencies for the last three financial years from FY2004 to FY2006 are asfollows:
As a percentage of operating expenses (%) FY2004 FY2005 FY2006
HK$ 44.1 47.3 48.6
US$ 32.3 26.8 33.8
Yen 10.0 15.1 6.0
S$ 13.1 9.9 11.0
Others 0.5 0.9 0.6
Total 100.0 100.0 100.0
During the past three financial years, we have had no significant exposure to foreign currency risk fromour investments. Our exposure to foreign exchange was mainly due to fluctuations between Yen and US$investments in Japan, including our investment in Capital Advisers, as well as our operations in Japanand Singapore where our operating expenses are mainly denominated in Yen and S$.
We seek to minimise our exposure to foreign currency movements on certain significant Yen denominatedassets by borrowing a comparable amount of Yen. Our borrowings as at 31 December 2004, 2005 and2006 amounted to Yen 1.2 billion, Yen 1.1 billion and Yen 0.5 billion respectively (or approximatelyUS$11.6 million, US$9.3 million and US$4.2 million respectively), hedging against Yen denominatedequity investments in, and shareholder’s loans extended to, Capital Advisers of Yen 1.2 billion, Yen 0.84billion and Yen 1.0 billion as at 31 December 2004, 2005 and 2006 respectively (or approximatelyUS$11.6 million, US$7.1 million and US$8.4 million respectively).
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
Moving forward, our Company intends to hedge all ship investments that are not denominated in US$. Allfuture hedging transactions would be subject to an approval process, including the review of ourCompany’s terms by our Management Committee as stated in our Company’s standard operatingprocedure (“SOP”) for investments, which sets out certain requirements in respect of such derivativestransactions:
(a) A back-to-back guarantee for the forward contract should be arranged with the bank and therelevant SPC;
(b) For each forward contract provided to an SPC, the forward contract should be completed within amaximum period of 6 months;
(c) For each forward contract entered into by our Company on behalf of the SPC, the contract amountshould not exceed a maximum amount of US$10 million, and the total value of forward contractsentered into by our Company on behalf of our SPCs should not, at any time, exceed the maximumamount of US$20 million in aggregate;
(d) A certain margin on the contract amount should be charged by our Company to that SPC forproviding the financial arrangement;
(e) The purpose of entering into foreign exchange contracts is limited for hedging purposes only.Foreign exchange contracts shall not be entered into for the purposes of speculation; and
(f) The forward contract arrangement should be approved by one of our Executive Directors and ourCompany’s head of our finance department, provided that no outstanding contract is expected atyear end.
If one or more of the above criteria is not met, our Company may seek the approval of our ExecutiveDirectors by consulting the Review Committee (in accordance with the procedure as discussed under thesection entitled “Internal Investment Approval Process” on page 125 of this Prospectus). We intend tominimise our exposure to foreign currency movements on Yen denominated transactions by entering intoforward foreign exchange contracts. As at the end of FY2004 and FY2005, we had no outstanding foreignexchange contracts. As at the end of 2006, there was a Yen 1 billion (or approximately US$8.6 million)US$ forward contract outstanding which was guaranteed by a back-to-back arrangement with a shippingSPC for the equivalent amount in Yen upon maturity of that contract. Moving forward, we may enter intosimilar arrangements to hedge future transactions on behalf of our shipping SPCs. As at the LatestPracticable Date, we had no outstanding foreign exchange contracts.
The foreign exchange gain/(losses) on Yen borrowings in FY2004, FY2005 and FY2006 that were offsetagainst exchange movements on the net investment in Capital Advisers were US$262,000, US$(879,000)and US$(61,000), respectively.
In FY2006, we continued to undertake the net investment hedge against our investment in CapitalAdvisers. We continue to monitor the level of hedging amounts on an ongoing basis.
CRITICAL ACCOUNTING POLICIES
Our consolidated financial information has been prepared in accordance with IFRS, which requires us tomake judgments, estimates and assumptions that affect (1) the reported amounts of our assets andliabilities; (2) the disclosure of our contingent assets and liabilities at the end of each fiscal period; and (3)the reported amounts of revenues and expenses during each fiscal period. We continually evaluate theseestimates based on our own historical experience, knowledge and assessment of current business andother conditions, our expectations regarding the future based on available information and reasonableassumptions, which together form our basis for making judgments about matters that are not readilyapparent from other sources. Since the use of estimates is an integral component of the financialreporting process, our actual results could differ from those estimates. Some of our accounting policiesrequire a higher degree of judgment than others in their application.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
When reviewing our financial statements, investors should consider (1) our selection of critical accountingpolicies; (2) the judgment and other uncertainties affecting the application of those policies; and (3) thesensitivity of reported results to changes in conditions and assumptions. We believe the followingaccounting policies involve the most significant judgment and estimates used in the preparation of ourfinancial statements.
Financial Assets
We classify our financial assets in the following categories: (a) at fair value through profit or loss; and (b)loans and receivables. The classification depends on the purpose for which the financial assets wereacquired. Management determines the classification of our assets at initial recognition and re-evaluatesthis designation at every reporting date.
(a) Financial assets at fair value through profit or loss
This category has two sub-categories: ‘financial assets held for trading’ and those designated at fairvalue through profit and loss at inception. A financial asset is classified in this category if acquiredprincipally for the purpose of selling in the short term or if so designated by management.Derivatives are also categorised as ‘held for trading’ unless they are designated as hedges. Assetsin this category are classified as current assets if they are either held for trading or are expected tobe realised within 12 months of the balance sheet date.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments thatare not quoted in an active market. These are included in current assets, except for maturitiesgreater than 12 months after the balance sheet date. These are classified as non-current assets.Loans are classified as “Loans Receivable” in the balance sheet.
Purchases and sales of investments are recognised at trade date – the date on which we commit to buyor sell the asset. Investments are initially recognised at fair value plus transaction costs for all financialassets not carried at fair value through profit or loss. In the income statement, investments are initiallyrecognised at fair value and transaction costs are expensed. Investments are derecognised when therights to receive cash flows from the investments have expired or have been transferred and we havetransferred substantially all the risks and rewards of ownership. Financial assets at fair value throughprofit and loss are subsequently carried at fair value.
Fair values for unquoted securities are estimated by our relevant project team and approved by ourExecutive Directors. In determining fair valuation, our project team makes use of market-basedinformation and fair valuation models such as discounted cash flow models. In many instances, ourproject team also relies on financial data of investees and on estimates provided by the management ofthe investee companies as to the effect of future developments.
Performance Notes are investments with income and maturity values which fluctuate based on thedistributions received from underlying assets, which are generally investments in property developmentcompanies, defaulted loans or shipping companies. Fair values of Performance Notes or other collectiveinvestment schemes are determined by our Group’s interest in the fair values of each scheme’sunderlying assets. Gains and losses arising from changes in the fair value of all securities are recognisedin the consolidated income statement as they arise.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
Fair valuation methodology
Following the admission of our Company to the Official List of the SGX-ST, we will adopt the following fairvaluation methodology for the three categories of investments by our Company:
(i) Fair valuation on vessels:
Our investments into ships are conducted through our SPCs. There are two components to the fairvaluation exercise involved. There can be a valuation of the underlying vessel or there can be a valuationon the SPC holding the vessel. The valuation of the underlying vessel would be conducted by anindependent valuer while the fair valuation of the SPC would be to recognise a fair valuation of the netassets held by the SPC. We have adopted the following process for the internal approval of the fairvaluation of our vessels:
(1) the valuation of the underlying vessel is first conducted by an independent professional appraisersuch as Marine-Net Co., Ltd.;
(2) the valuation of the SPCs would be conducted by our relevant asset finance team responsible forour investment in the relevant SPC. The asset finance team would propose a fair value that wouldbe submitted to our overall finance department (the “Finance Department”) for their review andapproval;
(3) our Finance Department would review the fair value proposed by the relevant asset finance team. Ifour Finance Department does not agree with the proposed fair value, they will discuss theirconcerns with the relevant asset finance team and, if necessary, obtain a second valuation of theunderlying vessel or vessels from another independent professional appraiser. When the proposedfair value is agreed between our Finance Department and the relevant asset finance team, theproposed fair value would be submitted to the Audit Committee for their review and approval; and
(4) the Audit Committee would review the fair value proposed by the Finance Department. If the AuditCommittee does not agree with the proposed fair value, they will discuss their concerns with ourFinance Department and, if necessary, obtain a further valuation of the underlying vessel orvessels from another independent professional appraiser. The proposed fair valuation is adoptedonly after the approval of the Audit Committee has been obtained.
Our fair valuation methodology is as follows: fair valuation exercise at the SPC level would include thecharter income or excess cash which have not been declared or paid to investors. According to IAS 39,the financial asset that recorded in the balance sheet of an entity shall be measured at fair market value(“FMV”) through profit or loss at each financial reporting date. Therefore, our Company’s investments ininvestee companies that engaged in the business of vessel investments and vessel chartering shall bemeasured at FMV at each financial reporting date in accordance with the methodology as describedbelow:
� Using the method of equity pick up, the FMV measurement of investment in each investeecompany is the aggregate of:
1) FMV (See Note 1 below) of vessel owned by the investee company held by our Company;and
2) Net Asset Value (“NAV”) (See Note 2 below) of the investee company held by our Company.
� Any gain or loss on FMV of investments in investee companies between the current and priorfinancial reporting date shall be charged to the profit and loss account for the current financialreporting period as fair market value gain or loss, provided however that the managementconsiders no pick-up of FMV gains on the vessel which is under construction. In any event, themanagement will not pickup FMV gains on vessels under construction and FMV loss will becharged to the profit and loss accounts where the vessel has been acquired but not delivered.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
� Note 1: The valuation report is prepared by the independent professional appraiser, currentlyMarine-Net Co., Ltd. based on discounted cash flow models. Such valuation would be carried outparticularly in the case where the investee company accounts for its vessels at book cost or marketvalue.
� Note 2: NAV is determined based on the management account of the investee company as ateach financial reporting date.
(ii) Fair valuation on distressed assets investments:
As our Company has no direct investments into NPLs, any fair valuations on NPLs would be done atfunds level. In the case of AAA Series I and II funds, AAA Strategic Investment Limited (“AAA”) wouldconduct a fair valuation of its NPL investment portfolio at half yearly interval. With regards to itsmethodology, AAA would combine the discounted future streams of projected cash recovery of its NPL,and each NPL’s future steam of projected cash recovery is in fact assessed independently. Since thecircumstance of each NPL varies, there is no standard benchmark for the discount rate to apply.Determination of the appropriate discount rate to apply to each NPL’s future cash flow is subjective andwill depend on the prevailing condition of that particular NPL. However subjective it may be, AAA hasbeen conservative in its application and mostly takes into consideration future cash recovery streams withdegree of certainty. AAA also applies discount rates as much as 40% to 50% to minimise any possibleover-estimation of the recoverable amount.
(iii) Fair valuation on property investments:
Our investment in properties would be classified into investments with either long term or short tomedium term investment purposes. For long term investment projects (which are principally investmentassets with the intention to hold the property on a long-term investment purposes for at least threeyears), our Company will adopt the net assets valuation methodology by discounting the expectedcashflow from the investment project. For short to medium term property projects (which are principallyinvestment assets for trading purposes and which are held for one to two years), a fair valuation may beconducted by an external valuer.
General internal approval procedure
The internal approval process for making fair value adjustments involves the submission of eachdepartment’s separate fair valuation for each reporting period to our Company’s Finance Department. Inevaluating the fair value adjustments proposed by each department, the Finance Department wouldconsider, among other things, whether it agrees with the assumptions as reported by each department.The fair value adjustments approved by the Finance Department will be subject to the final approval ofour Company’s Audit Committee’s approval. If our Audit Committee disagrees with any of the proposedfair valuation adjustments, our Audit Committee may require the Finance Department and/or the relevantdepartments proposing the fair value adjustments, to re-evaluate the fair value adjustments.
Although our Directors use their best judgement in estimating the fair value of investments, there areinherent limitations in any estimation techniques. Future confirming events will also affect the estimates offair value and the effect of such events on the estimates of fair value, including the ultimate liquidation ofinvestments, could be material to these consolidated financial statements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
SIGNIFICANT CHANGES IN ACCOUNTING POLICIES
In FY2004, FY2005 and FY2006, we prepared our financial statements in accordance with IFRS. Thenew/revised IFRS became effective for financial periods beginning on or after 1 January 2005 and we hadearlier adopted the following standards in FY2004:
� IAS 28 (revised 2003) ‘Investments in Associates’� IAS 31 (revised 2003) ‘Interests in Joint Ventures’� IAS 32 (revised 2003) ‘Financial Instruments: Disclosure and Presentation’� IAS 39 (revised 2003) ‘Financial Instruments: Recognition and Measurement’
In particular, the early adoption of these standards resulted in a change as to how we accounted forcertain investments. Previously we had equity accounted for certain investments which were classified asour associates. Under the revised scope of IAS 28, these associates are required to be remeasured atfair value through profit or loss. Where applicable, the FY2003 comparative figures were amended totake into account of the remeasurement of associates in accordance with the transitional provisions of therevised standard.
In FY2005, we adopted all applicable new/revised standards under the IFRS. The adoption of thesenew/revised standards resulted in some changes to the accounting policies of our Group. Please refer toAppendix B – “Report on the Consolidated Financial Statements for the Year Ended 31 December 2005”of this Prospectus for details of our Group’s accounting policies.
IAS 39 (Amendment) The Fair Value Option came into effect from 1 January 2006. This amendmentchanges the definition of financial instruments classified at fair value through profit or loss and restrictsthe ability to designate financial instruments as part for this category. We believe that this amendmentshould not have a significant impact on the classification of financial instruments, as we should be able tocomply with the amended criteria for the designation of financial instruments at fair value through profitand loss. We have applied this amendment from annual periods beginning 1 January 2006.
IFRS 7, Financial Instruments: Disclosures, and a complementary Amendment to IAS 1, Presentation ofFinancial Statements – Capital Disclosures (effective from 1 January 2007). IFRS 7 introduces newdisclosures to improve the information about financial instruments. It requires the disclosure of qualitativeand quantitative information about exposure to risks arising from financial instruments, including specifiedminimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis tomarket risk. It replaces IAS 30, Disclosures in the Financial Statements of Banks and Similar FinancialInstitutions, and disclosure requirements in IAS 32, Financial Instruments: Disclosure and Presentation. Itis applicable to all entities that report under IFRS. The amendment to IAS 1 introduces disclosures aboutthe level of an entity’s capital and how it manages capital. We assessed the impact of IFRS 7 and theamendment to IAS 1 and concluded that the main additional disclosures will be the sensitivity analysis tomarket risk and the capital disclosures required by the amendment of IAS 1. We will apply IFRS 7 andthe amendment to IAS 1 from annual periods beginning 1 January 2007.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALPOSITION AND RESULTS OF OPERATIONS
The structure of our Group (including our associated companies) and the principal business activities ofthe members of our Group are set out below. Our Group structure set out below does not include directequity investments in ships held by us. Please refer to the table set out in “Ship investment” in the sectionentitled “Business Overview – Alternative Assets Investment” for more details.
Offshore Property Investment Corporation
(incorporated in the British Virgin Islands) Investment holding
Uni-Asia Capital (Singapore) Limited
(incorporated in Singapore)
Ship charter arrangementand project management
Uni-Ships and Management
Limited (incorporated in
Hong Kong) Ship management
44.8%100%
30% %001 %001
Uni-Asia Services and Agency Limited
(incorporated in Hong Kong)
Dormant
Capital Advisers Co., Ltd (incorporated in Japan)
Property investment
Uni-Asia Finance Corporation (Japan)
(incorporated in Japan) Finance arrangement
Uni-Asia Capital Co. Ltd
(incorporated in Hong Kong) Investment
holding
Uni-Asia Fund Management Co. Ltd
(incorporated in Hong Kong)
Dormant
100%
100% 100%
The Company (incorporated in the Cayman Islands)
Direct investment and structured finance arrangement
(Uni-Asia Guangzhou Property Management
Company Limited) (incorporated in PRC)
Property investment and management
100%
GROUP STRUCTURE
85
The details of each subsidiary and associated company of our Company as at the date of this Prospectusare set out in the table below. Entities that are used as investment vehicles by our Company, as set outon page 93 of this Prospectus are not presented as subsidiaries in this table.
Date and Countryof incorporation/ Principal place Percentage
Name establishment Principal business of business owned
Subsidiaries
Offshore Property 23 April 1998, Investment holding ARK Mori Building, 100%Investment Corporation British Virgin West 24F, 1-12-32,
Islands Akasaka, Minato-ku,Tokyo,
Japan 107-6024
Uni-Asia Capital 27 June 1997, Investment holding Suite A, 26th Floor 100%Company Limited Hong Kong Admiralty Centre Tower I
18 Harcourt RoadHong Kong
Uni-Asia Capital 7 August 1997, Ship charter 8 Shenton Way, 100%(Singapore) Limited Singapore arrangement and #37-04,
project management Singapore 068811
Uni-Asia Finance 9 November 1998, Finance arrangement ARK Mori Building, 100%Corporation (Japan) Japan West 24F, 1-12-32,
Akasaka, Minato-ku, Tokyo,
Japan 107-6024
Uni-Asia Fund 27 June 1997, Dormant Suite A, 26th Floor 100%Management Company Hong Kong Admiralty Centre Tower I Limited 18 Harcourt Road
Hong Kong
9 January 2007, Property investment Room 2401, 100%the PRC and management Guangdong Foreign
(Uni-Asia Guangzhou Economic & Trade BuildingProperty Management 351, Tianhe Road, Company Limited) Guangzhou
PRC
Uni-Asia Services and 27 June 1997, Dormant Suite A, 26th Floor 100%Agency Limited Hong Kong Admiralty Centre Tower I
18 Harcourt RoadHong Kong
Associated companies(2)
Capital Advisers Co., Ltd 24 February 2000, Property investment ARK Mori Building, 44.8%(1)
Japan West 24F, 1-12-32, Akasaka, Minato-ku,
Tokyo, Japan 107-6024
Uni-Ships and 25 January 2005, Ship management Suite A, 26th Floor 30%(1)
Management Limited Hong Kong Admiralty Centre Tower I18 Harcourt Road
Hong Kong
Notes:
(1) The remaining shareholding interest is held by independent third-parties.(2) In addition to the associated companies, our Company also has direct equity investments in vessels through various SPCs as
detailed under the sub-section entitled “Alternative Assets Investment” on page 93.
GROUP STRUCTURE
86
CORPORATE DEVELOPMENT
We were established as an exempted company with limited liability in the Cayman Islands under theCayman Companies Law on 17 March 1997 by founders Motokuni Yamashiro, Kazuhiko Yoshida, MichioTanamoto and Takanobu Himori who were Japanese bankers. Each of the founders has over 25 yearsexperience in the banking industry working in corporate loan syndication and structured financearrangement. Mr. Himori left our Company in March 2004. The other founders continue to lead thebusiness and as at the Latest Practicable Date, they own, directly and indirectly, a significant aggregateequity interest in Uni-Asia of approximately 23.9%.
Our Company was founded to arrange structured finance transactions for companies mainly in theshipping and, to some extent, aviation industries. Our initial focus was on finance arrangement forcompanies in the transport sector. Our business expanded to include investment in alternative assetssuch as NPLs, distressed assets, shipping assets and real estate assets in May 1998.
We provide a range of customised structured finance solutions and services such as the arrangement ofship and aircraft leases, mortgage financing, charter arrangements for vessels, tax-enhanced leases andloans and balance sheet management for clients. Since our establishment up to the end of 2006, we havearranged financing for transactions in the form of loans and/or leases transactions worth approximatelyUS$5.6 billion. In FY2004, FY2005 and FY2006, we arranged structured finance transactions totallingUS$561.6 million, US$987.5 million and US$637.7 million respectively.
In May 1998, we entered the distressed assets market in the aftermath of the Asia economic crisis whenlocal governments and banks in Asia were seeking to dispose of their non-performing loan assets orNPLs. Initially, we focused on acquiring NPL accounts represented by PRC-based borrowers fromJapanese banks with whom our management had established relationships, either as Uni-Asia’s client orindustry contact. We expanded our NPL investments over time by carefully identifying, selecting andnegotiating the purchase of distressed assets with attractive financial returns. Most of these NPLs weresourced through our client network or through brokers.
We also invested in NPLs through AAA, a private investment company, held by a charitable trust butadministered by us, which invested in NPLs in Asia. We, along with a Japanese financial institution,subscribed to Performance Notes issued by AAA in August 2001, up to a maximum face value of US$5million.
In August 2001, we invested US$1.0 million in, and acted as the administrator and agent of, our firstAsian distressed assets investment fund known as AAA Series I Fund with a size of US$5.0 million. As at31 December 2006, this fund’s net IRR was approximately 156.6%. In July 2003, we launched a secondUS$15 million Asian distressed assets investment fund, called AAA Series II Fund which is also heldthrough AAA. As at the Latest Practicable Date, this fund’s net IRR was approximately 20.44% assumingthat the value of AAA Series II Fund is realised as at the Latest Practicable Date. We are also theadministrator and agent of AAA Series II Fund, bringing the total funds under management within thisdivision to US$20 million. We together with the same Japanese financial institution in AAA Series I Fundinvested US$5 million and US$10 million respectively in AAA Series II Fund. Both investment facilitiesfocus on distressed asset investment opportunities in Asia, excluding Japan. (Please refer to the sectionentitled “General Information on our Group – Business Overview – Distressed assets investment” belowfor further details of the AAA Series I Fund and AAA Series II Fund.) As at the Latest Practicable Date,the AAA Series I Fund has expired and the Performance Notes have been fully redeemed.
In 2002, we set up an asset finance department to focus on asset-backed financing in the maritimetransport sector. This division gradually diversified into making direct investments in shipping assets.
Building on our experience in investing in maritime vessels, our first shipping investment fund SearexSeries I Fund with an asset size of up to US$117.5 million was launched in January 2004 through privateinvestment company Searex which is held by a charitable trust. We subscribed for Performance Notes ofUS$5 million in the fund along with five other investors based in Asia. By 2004, this fund had invested insix vessels. We arranged a non-recourse loan of US$100.5 million for the ship portfolio.
GENERAL INFORMATION ON OUR GROUP
87
A second shipping investment fund Searex Series II Fund which is also held through Searex and with anasset size of up to US$100 million was successfully closed in December 2004. By 2005, this fundacquired five vessels. Like Searex Series I Fund, we subscribed for US$5 million of Performance Notes inSearex Series II Fund along with other institutional investors in Asia. We arranged financing of aroundUS$77 million for the ship portfolio.
We are the administrator and agent of both Searex Series I Fund and Searex Series II Fund, responsiblefor managing and arranging debt finance for the funds.
As part of our continued growth, Uni-Ships and Management Limited was incorporated in January 2005in Hong Kong to provide accounting and administration services for the fund vehicles and act as theproject manager for the Searex Series II Fund. Uni-Ships and Management Limited is a joint venturebetween Maritime 24 (Pte) Ltd, Uni-Asia, Uni-Fast Limited and Wealth Ocean with each having ashareholding of 30%, 30%, 30% and 10% respectively.
In April 2005, the number of investors in the Searex Series II Fund increased to 10 through theintroduction of another institutional investor which acquired US$0.5 million in Performance Notes at parfrom us. In August 2006, we redeemed US$1.3 million Performance Notes and we acquired an additionalUS$1.4 million Performance Notes from Uni-Fast Limited in September 2006. Following such redemptionand acquisition, we held a total of US$4.7 million Performance Notes in the Searex Series II Fund. As atthe Latest Practicable Date, the Performance Notes of Searex Series II Fund have been fully redeemed.
In July 2005, the aggregate principal of the Searex Series I Fund was increased from US$17 million to upto US$19.4 million. We subscribed for an additional US$705,882 in Performance Notes issued by theSearex Series I Fund.
A third private shipping joint venture, the container vessel fund, was launched in 2005, specialising ininvestment in container vessels. We, together with three partners, invested in three panamax 3,500 TEUcontainer vessels for US$56.3 million each, or an aggregate of US$168.9 million. The vessels will be builtby Hyundai Mipo Dockyard Co Ltd, Korea with delivery in 2007. Our Company, with 38% equity interest inthe shipping joint venture, arranged financing for the three vessels. The container vessels have beenchartered out to Italia Marittima of the Evergreen Group under an eight-year bareboat charter agreement,commencing on delivery of the vessels in 2007.
On 13 September 2006, our wholly-owned subsidiary, Uni-Asia Capital (Singapore) Limited, wasdesignated as an ASIM under the SITA by the MPA. At the same time, the MPA had also granted theAkebono Fund a designation of ASIE.
Our ASIM designation is for an initial period of 10 years commencing on the subscription date of theSingapore fund by investors, subject to a review by MPA at the end of the fifth year. Pursuant to our ASIMdesignation, we are eligible for a concessionary tax rate of 10% for income derived from managing anASIE such as the Akebono Fund. In the event that we no longer qualify for the ASIM designation, theprevailing corporate tax rate of 18% will apply.
The ASIE designation for the Akebono Fund is for an initial period of up to 10 years commencing fromthe date of its establishment, subject to a review by MPA at the end of the fifth year. Pursuant to its ASIEdesignation, the Akebono Fund is eligible for a tax exemption on income derived from the chartering orfinance leasing of (a) any sea-going ship to (i) a person who is neither resident in nor a permanentestablishment in Singapore; or (ii) an approved international shipping enterprise; or (b) any sea-goingSingapore ship to persons described in (a) (i) and (ii) above or a shipping enterprise within the meaningof Section 13A of the SITA. The tax exemption will be valid for the life of vessels acquired by ASIE duringthe incentive period of up to 10 years. For instance, if an ASIE acquires a vessel during the 10-yearincentive period, charters it for 20 years and disposes of it thereafter, lease income on the charter willenjoy tax exemption for the entire 20 years. The qualifying income of the Akebono Fund under the taxexemption shall also include hedging gains derived in connection with the management of its portfolio ofvessels, and share of profits or dividends remittances from shipholding special purpose vehicles ownedby the Akebono Fund that are declared out of qualifying activities.
GENERAL INFORMATION ON OUR GROUP
88
On 17 April 2007, we launched our first Singapore fund, the Akebono Fund, in order to take advantage ofthe MPA’s MFI schemes. Our Company has invested in the Akebono Fund, together with other investors,by way of subscription for a principal amount of US$42.9 million Performance Notes issued by theAkebono Fund.
Going forward, our ship investment division is expected to continue to look for joint venture investments inshipping assets.
In addition to our investments in shipping assets, we have also invested in real estate assets.
In June 1998, we commenced investments in real estate in Japan. In February 2000, Capital Adviserswas established as our wholly-owned subsidiary engaged in investment in and management of realestate assets in the hotel and residential sector. The equity size of each investment ranged from US$1.4million to US$38.5 million.
In 2000, our Company and Grosvenor Asia jointly established an investment partnership with anotherinvestor to invest in residential properties in Tokyo. Grosvenor is an international property developmentand investment group. It has regional operating companies covering Australia, Asia Pacific, US, UK andEurope and an international fund management business which operates across all these markets. Theinvestment started in 2000 and was followed in 2004 with the establishment of the GCAP Fund. TheGCAP Fund is jointly managed by Grosvenor Asia and Capital Advisers through Grosvenor CapitalAdvisers Fund Management Co., Ltd.
In the residential sector, Capital Advisers has also been engaged in asset management with a focus onsmall-size studio apartment buildings since February 2004. The number of the buildings of this investmentreached 10 in 2004, 31 in 2005 and 50 in 2006. The investor to this investment is one of the largestfinancial institutions in Japan. Capital Advisers sometimes joins in this investment as a developer of thebuildings in order to enjoy additional return.
In 2001, Capital Advisers directed its attention to the asset management business in the hotel propertyinvestment. In the hotel sector, Capital Advisers mainly focuses on the investment in limited-servicehotels. Since 2001, the number of hotels which Capital Advisers has engaged in as the asset managerand invested in as a minority investor has increased to 11 in 2006. The characteristics of Capital Advisersas the asset manager in hotel property investments is its capability to not only manage the assets butalso monitor the hotel operation itself by keeping the staff who have sufficient work experience in hotelbusiness within Capital Advisers. Capital Advisers invested in another asset management company whichmanages a Japanese real estate investment trust (J-REIT) specializing in hotel properties. The J-REITwas listed in Japan on 14 June 2006. As at 31 December 2006, the total asset of the hotel investmentswas over Yen 16.9 billion (or approximately US$142.5 million). The total equity invested was about Yen 5.4billion (or approximately US$45.5 million), out of which Capital Advisers had an interest of between 5.0%and 51.9%.
On 2 May 2003, the equity base of Capital Advisers increased to Yen 892.5 million (or approximatelyUS$7.4 million) as a result of an issue of 9,850 new shares to a number of institutional investors, venturecapital firms, corporations etc. The total funds raised amounted to Yen 985 million (or approximatelyUS$8.2 million). The subscription price of Yen 100,000 (or approximately US$832) per share wasdetermined with reference to a valuation conducted by Partners C.P.A. Office, an independent certifiedpublic accountant. As a result, our equity interest in Capital Advisers was diluted to 44.8% with CapitalAdvisers becoming our associated company.
In January 2007, we made a direct investment into office units in Guangzhou, the PRC, through ourwholly-owned property investment company, Uni-Asia Guangzhou. Going forward, we will continue to lookfor investment opportunities in distressed properties and/or other properties in the PRC and other parts ofAsia.
GENERAL INFORMATION ON OUR GROUP
89
BUSINESS OVERVIEW
We are an Asia-based structured finance arrangement and Alternative Assets direct investment firm. Ourprincipal activities are in: (1) structured finance – the finance arrangement of transport related assets(largely ships and, to some extent, aircraft), and the provision of ship charter arrangement and agencyservices; and (2) Alternative Assets investment/management – direct investments in and/or thearrangement and administration of Alternative Assets investments such as ships, distressed assets andreal estate. As at the Latest Practicable Date, we have 32 staff in three offices in Tokyo, Hong Kong andSingapore.
Structured Finance
Our structured finance department provides an integrated service to our clients by offering financingsolutions together with charter arrangement services tailor-made to our clients’ needs. The solutions donot normally involve the use of our balance sheet capital to make loans. We typically act only as thearranger and agent for the structured financing provided by third-party financial institutions. We arrangefinancing for asset acquisitions by our clients and also offers tax-enhanced structured services andproducts, including mortgage financing, tax-oriented leases such as UK tax leases and Japaneseoperating leases, as well as ECA backed credit, ship charter arrangement and balance sheetmanagement. We receive an arrangement fee on each completed transaction.
We have been active in the arrangement of structured finance since our founding in 1997. In this time wehave built up a portfolio of clients and have identified potential clients to whom we market to directly or onan opportunistic basis. We have also developed relationships with the key banks which providesyndicated loan financing. Our clients include established international shipping and aviation companiesfrom Taiwan, Greece, Indonesia, Japan, Hong Kong, Korea, the UK and Italy.
Some key products and services which we offer our clients include mortgage financing, tax-orientedleases, ECA backed credit, ship charter arrangement and balance sheet management.
The following table provides a brief description of our key products:
Product Description
Mortgage financing A type of finance arrangement where the borrower will mortgage the asset as acollateral for the loan
Tax-oriented lease A financing structure which takes advantage of tax incentives and benefits withina jurisdiction in order to minimise cost of capital for investors or to maximise taxsavings for investors. The economic benefits are eventually shared between theinvestors and the lessee. The cost savings stem from fixed asset depreciationand tax allowances. Types of tax-oriented leases include UK tax leases andJapanese operating leases
ECA backed credit Co-financing with export credit agencies including the Japan Bank forInternational Cooperation (“JBIC”)
Ship charter arrangement The arrangement of charters for ship owners that want to charter out theirvessels to third-parties or the arrangement of vessels for potential chartererswho are looking for ships to charter. Types of charter arrangement includebareboat charter, being the charter of bare ship; or time charter, being thecharter under which owner charters out vessel to charterer together with shipmanagement including crew, insurance and technical management, for a fixedperiod of time
Balance sheet management The service of reviewing and analyzing the balance sheet of a client andstructuring and tailoring financing alternatives that would best suit the financialposition of our client
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We acted as arranger for structured financing in the form of loans and leases in the aggregate amount ofapproximately US$561.6 million, US$987.5 million and US$637.7 million in FY2004, FY2005 and FY2006respectively.
The type of structured finance arrangement we are engaged in is tailor-made to the specific requirementsof our clients and the asset to be acquired. Typically, potential projects usually commence with a detaileddue diligence review of the risks and return in relation to the clients. During the due diligence, weinvestigate the asset to be acquired, examining among other things its specifications, condition and legaltitle of the asset to be acquired. Our client’s financial condition and ability to repay the debt are alsoassessed. Factors such as the intended use of the asset and the market demand for driving the asset’sintended utilisation all factor into the assessment of the viability of the project. The findings andconclusions of the due diligence and analysis are then submitted to our Management Committee which isresponsible for approving the proposal to engage our clients. Upon approval and engagement, we willassist our clients in the preparation of an information memorandum. This information memorandumcontains a detailed summary of the asset, the acquirer, the industry or sector, the proposed terms of thefinancing, and financial analysis of the project. The information memorandum is then presented totargeted institutions. Those institutions which express interest in providing finance are then given theopportunity to perform their own independent due diligence and eventually one or more institutions areselected which best matches the terms requested by our clients. Throughout the entire process, we actas a co-ordinator between our clients and the lender to manage the process and help the counterpartiesagree on the terms of finance.
Following the execution of a loan agreement and related documents between our clients and thesyndication group, we would usually also act as the facility agent responsible for the administration of thesyndicated loan during the life of the loan, for which we receive agency fees.
Selected key transactions completed include:
UK Tax Lease for Hatsu Marine: Uni-Asia arranged two UK tax leases for Hatsu Marine, a part of theEvergreen Group, in 2002 to acquire two 6,332 TEU E-type container vessels manufactured by MitsubishiHeavy Industries, Ltd. Under these transactions, two European banks financed the acquisition of twoUS$71.5 million container vessels which were delivered in 2002 and 2003, respectively. Upon delivery,the vessels were leased to Hatsu Marine under a finance lease agreement on terms satisfactory to allparties.
Arrangement of a Japanese Operating Lease: Uni-Asia arranged a Japanese Operating Lease for aJapanese leasing company in March 2002 to acquire a 1,618 TEU container vessel for US$29 million anddelivery by the end of March 2002. Under this structure, the lessor, the Japanese investors introduced byUni-Asia and a Japanese leasing company, entered into a Tokumei Kumiai agreement to own and charterships, whereby the Japanese investors invested 30% of the purchase price of the vessel in the TK andthe remaining 70% financing was in the form of debt. Upon delivery, the vessel was chartered to a third-party shipping company for a period of 11.5 years by way of a Bareboat Charter.
Ship Charter Arrangement for Niki Shipping Company Inc: Niki Shipping Company Inc, a private companyincorporated in Greece and which is an independent third-party, entered into shipbuilding contracts inSeptember 2004 for four 5,060 TEU container vessels to be built by Hanjin Heavy Industries in Korea.Uni-Asia arranged a 15-year Bareboat Charter between Niki Shipping Company Inc and Italia Marittima,part of the Evergreen Group, for the four container carriers.
Mortgage Financing for CIDO Holding Co., Ltd.: Uni-Asia and HSH Nordbank, an independent third-partyfinancial institution which is also a shareholder in Uni-Asia, jointly arranged a US$127.8 millionsyndicated loan in March 2005 for CIDO Holding Co., Ltd which is an independent third-partyincorporated in the Cayman Islands, to acquire four 4,075 unit type pure car carriers, with delivery fromMarch 2006 to September 2007. The loan was successfully syndicated out to third-party lendinginstitutions.
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JBIC Financing: Uni-Asia arranged a US$113.8 million financing for Evergreen in the acquisition of two6,724 TEU container vessels using a buyer’s credit provided by JBIC and Nippon Export and InvestmentInsurance in the first half of 2006. The two container vessels, manufactured by Mitsubishi HeavyIndustries Ltd., will be delivered in October and December 2007, respectively. In this financing structure,JBIC will fund 40% of the facility amount and the remaining 60% will be funded by a consortium oflenders. The facility agreement was signed in July 2006.
Alternative Assets Investment
Our Alternative Assets Investments division leverages on our specialist skills in structured financearrangement and credit analysis to invest in, either as the principal investor or in partnership with otherinvestors, three key Alternative Asset classes: (i) ship investment (such as bulk carriers, product tankersand container vessels); (ii) distressed assets investment (including NPLs and other distressed assets inAsia (excluding Japan)); and (iii) property investment (including hotel and property investment in Japanand commercial property investment in the PRC).
Ship investment
As a progression from our structured finance business as an arranger of financing for transport relatedassets, we branched out into direct investments in ships through equity investment in the ship owningcompanies and also through subscription of Performance Notes issued by special investment fundvehicles established by us.
Our asset finance department aims to invest in ships for commercial use that will produce attractiveinvestment returns because of factors such as high expected demand for, or anticipated shortfall in, thesupply of such ships.
In order to further facilitate our Group’s investments in ships and leverage on this area of our expertise,our Group established two closed-end investment funds in 2004, Searex Series I Fund and Searex SeriesII Fund, with an investment term of five years each. The equity of the investment funds is held throughSearex which, in turn, is held by a charitable trust to ensure the funds function as a whole as anindependent entity in accordance with recognised corporate principles. Investors participate in the shipinvestments by subscribing for Performance Notes issued by the ship investment fund. PerformanceNotes obligate the holder to provide the committed investment amount to the fund over a two-yeardrawdown period as the fund calls for funds to invest. Profits from the sale of the ships are distributed ona pro-forma basis to Performance Note holders semi-annually at the discretion of the fund. Byestablishing these ship investment funds, we benefit not only from the larger capital pool available forinvestment, providing risk diversification; we also earn administration fees and incentive fees based onthe performance of such funds.
In 2002, we participated in two bulk carriers’ new building projects, namely, EuroAsia II, Inc. and EuroAsiaIII, Inc., in Japan. The total investment cost or acquisition price of each vessel was US$16.8 million. OurGroup made an investment of US$0.6 million in EuroAsia II, Inc. and US$0.5 million in EuroAsia III, Inc.,representing a 15% equity interest in EuroAsia II, Inc. and EuroAsia III, Inc. The outstanding balance wasfinanced by debt from independent financial institutions. Our Group’s investment into EuroAsia II, Inc. andEuroasia III, Inc. was made in the form of share capital and shareholder’s loan. In addition to share capitalof US$1,500 each into the two projects, we made shareholders’ loan of US$0.6 million to EuroAsia II, Inc.and US$0.5 million to EuroAsia III, Inc. Our Company’s investment in EuroAsia III, Inc. was completedand disposed of in October 2004 resulting in a capital gain of approximately US$1.5 million. OurCompany’s investment in EuroAsia II, Inc. was disposed of in April 2007, resulting in a capital gain ofapproximately US$2.8 million. Our net investment return after factoring in fair value adjustment wasUS$1.3 million.
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In 2006, we invested in the equity of two SPCs each holding a bulk carrier, namely, Harmonic ShippingS.A. (“Harmonic”) and Sunrise Shipping S.A. (“Sunrise”). The total investment made by our Group intoHarmonic totaled US$2.1 million comprising share capital of US$4,040 and shareholders’ loan of US$2.1million. In addition, we also provided a bridging loan of US$3.0 million to Harmonic as at 31 December2006. The investment made by our Group into Sunrise totaled US$2.7 million comprising share capital ofUS$4,600 and shareholders’ loan of US$2.7 million. In addition, we provided a bridging loan of US$2.22million to Sunrise which was repaid and renewed to US$2.5 million as at 31 December 2006. OurCompany’s investment in Harmonic was disposed of in April 2007, resulting in a capital gain ofapproximately US$2.8 million. Our net investment return after factoring in fair value adjustment wasUS$2.4 million. The bulk carrier held by Sunrise is chartered to a third party for a period of five yearscommencing in September 2006.
Listed below are our direct equity investments as at the Latest Practicable Date.
Year of Investment Duration of charter Investment vehicle Type of vessel acquisition interest held contracts
Sunrise Shipping Bulk Carrier 2006 46% September 2006 toS.A. (1)(2) September 2011
Falcon Containership Container vessel 2005 (delivered 38% April 2007 to S.A. (1)(3) in April 2007) April 2015
Fortitude Containership Container vessel 2005 (delivered 38% June 2007 toS.A. (1)(3) in June 2007) June 2015
Union Containership Container vessel 2005 (to be delivered 38% September 2007 to S.A. (1)(3) in September 2007) September 2015
Rich Containership Container vessel 2006(6) (to be 50% September 2008 to S.A. (1)(4) delivered in 2008) September 2018
Matin Shipping Limited (5) Bulk Carrier to be acquired in 2007 40% 2011 to 2016and delivered in 2011
Notes:
(1) Incorporated in Panama (2) The amount invested by our Company in Sunrise Shipping S.A. for the purchase of the bulk carrier is US$4,600 in equity and
approximately US$2.7 million in shareholders’ loans as well as a bridge loan of approximately US$2.5 million.(3) The SPCs owning these vessels are proposed to be acquired by the Akebono Fund in the second half of 2007.(4) The amount invested by our Company in Rich Containership S.A. for the purchase of the container vessel is US$5,000 in
equity and approximately US$1.0 million in shareholders’ loans.(5) Incorporated in Hong Kong. The amount invested by our Company in Matin Shipping Limited for the purchase of the bulk
carrier is US$400 in equity and approximately US$1.2 million in shareholders’ loans.(6) Rich Containership S.A. has entered into an option agreement for the acquisition of the vessel in 2006.
Listed below is the ship investment of Searex Series I Fund as at the Latest Practicable Date.
Year of Investment Duration of charter Investment vehicle Type of vessel acquisition interest held contracts
Searex (1) Product Tanker 2004 100% January 2004 to January2009
Note:
(1) The SPC owning this vessel is proposed to be acquired by the Akebono Fund in the second half of 2007 or early 2008.
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We also act as the administrator, registrar and fiscal agent of the Searex Series I Fund and the SearexSeries II Fund (collectively, the “Searex Funds”), for which we charge a monthly fee for each ship held bythe Searex Funds. We are also engaged under a number of management agreements with individualspecial purpose vehicles, each of which directly hold the shipping assets, to arrange financing for theacquisition of a ship by the special purpose vehicle, for which we charge a financing arrangement fee andmay also receive an incentive fee, subject to the financial return of the ship upon disposal. Each acquiredship is held by a special purpose vehicle established by each of the Searex Funds. The individual specialpurpose vehicles also appoint a project manager, which is responsible for sourcing and negotiatingemployment of vessels held by the special purpose vehicle and remarketing of ships for disposal. Theproject manager of the Searex Series I Fund is Exeno Yamamizu and the project manager of the SearexSeries II Fund is Uni-Ships and Management Limited. Exeno Yamamizu is one of the largest shippingbrokers in Asia and their client network covers major shipping companies. Uni-Ships and ManagementLimited is a joint venture between Maritime 24 (Pte) Ltd, Uni-Asia, Uni-Fast Limited and Wealth Oceanwhere each has a shareholding of 30%, 30%, 30% and 10%, respectively.
� Searex Series I Fund
In January 2004, the ship investment fund Searex Series I Fund was established with fundingraised by an issue of Performance Notes totalling US$17.0 million by Searex. We subscribed forUS$5.0 million of the Performance Notes and five co-investors subscribed for the remainingUS$12.0 million of the Performance Notes. We arranged a non-recourse loan for the fund in theamount of US$100.5 million. There are a total of six investors in Searex Series I Fund, includingUni-Asia, which are companies engaged in shipping related businesses.
As at the Latest Practicable Date, the Searex Series I Fund held one ship and had disposed of fiveships. The return on investment on the five disposed ships was approximately 3.7 times ourinvestment and distributions paid out in 2004, 2005 and 2006 have amounted in aggregate toapproximately US$14.5 million in principal and US$30.5 million in profit in relation to these fiveships. The one ship currently held by Searex Series I Fund is chartered out. This ship is proposedto be acquired by the Akebono Fund in the second half of 2007 or early 2008, following which theSearex Series I Fund will be terminated.
� Searex Series II Fund
In December 2004, we established a second ship investment fund following the success of SearexSeries I Fund. The principal investment amount of the Searex Series II Fund was US$23.0 millionof Performance Notes. The investors of the Searex Series II Fund comprised all the investors of theSearex Series I Fund, which includes our Company, and three new investors. The other investors inthe Searex Series II Fund are independent parties. We subscribed for US$5.0 million of thePerformance Notes and eight co-investors subscribed for the remaining US$18 million of thePerformance Notes. The number of investors in the Searex Series II Fund was increased to 10 inApril 2005 when another investor acquired US$0.5 million of Performance Notes from us at parvalue. Our total commitment to the fund was reduced to US$4.5 million. In August 2006, weredeemed US$1.3 million of Performance Notes and we acquired an additional US$1.4 million ofPerformance Notes from Uni-Fast Limited in September 2006. Following such acquisition, we helda total of US$4.7 million Performance Notes in the Searex Series II Fund. On 9 May 2007, ourPerformance Notes in the Searex Series II Fund were redeemed in full, following which we nolonger hold any outstanding Performance Notes in the Searex Series II Fund. We arrangedfinancing of around US$77 million, giving the Searex Series II Fund a total investment capability ofup to US$100.0 million.
Searex Series II Fund has disposed of five ships. The return on investment on the five disposedships was approximately 1.4 times our investment. No distributions were paid out under the fund for2004 and 2005 and distributions paid out in 2006 amounted in aggregate to approximately US$0.6million. Following such disposals, the Searex Series II Fund is intended to be terminated.
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� Akebono Fund
Listed below is the ship investment of Akebono Fund as at the Latest Practicable Date.
Year of Investment Duration of charter Investment vehicle Type of vessel acquisition interest held contracts
Sentic Limited Bulk Carrier 2007 100% June 2007 toJuly 2008
Panmax Tanker S.A. Product Tanker 2007 100% Nil
On 17 April 2007, we launched the Akebono Fund in order to take advantage of the MPA’s MFIschemes. The principal investment amount of the Akebono Fund by the Company, together withother investors, was US$42.9 million of Performance Notes. We are committed to subscribe forUS$15.0 million of the Performance Notes and the other five co-investors are committed tosubscribe for the remaining US$27.9 million of the Performance Notes. As at the Latest PracticableDate, our Company has subscribed for US$2.8 million of Performance Notes. The remainingundrawn commitment by our Company to subscribe for US$12.2 million of Performance Notes isintended to be funded from the proceeds of the Invitation.
As at the Latest Practicable Date, the Akebono Fund held one bulk carrier from a third-party,acquired another product tanker by acquiring Panmax Tanker S.A. from our Group and intends toacquire three container vessels from our Group and one product tanker from Searex Series I Fund.We will also act as the administrator, registrar, fiscal agent and project manager of the AkebonoFund for which we charge a monthly fee for each ship held by the Akebono Fund.
� Recent ship investments
On 2 May 2007, we made an investment in a Panama-incorporated company, Rich ContainershipS.A. (“Rich Containership”), through a joint venture with Wisdom Marine Lines S.A. (“Wisdom”).Wisdom is not related to our Company, the Directors or the Substantial Shareholders of ourCompany. Pursuant to the joint venture, we have subscribed for a 50% equity interest in RichContainership for a total consideration of US$5,000. The remaining 50% equity interest in RichContainership is held by Wisdom. On 6 September 2006, Rich Containership entered into acontract with, inter alia, Hyundai Mipo Dockyard Co., Ltd. in respect of the purchase option of a4,300 TEU container vessel, which is due for delivery in September 2008. On 3 May 2007, wemade a shareholder’s loan of approximately US$1.0 million to Rich Containership.
On 28 May 2007, we made another investment in a Hong Kong-incorporated company, MatinShipping Limited (“Matin”), through a joint venture with Uni-Fast Limited (“Uni-Fast”). Uni-Fast isnot related to our Company, the Directors or the Substantial Shareholders of our Company.Pursuant to the joint venture, we have subscribed for a 40% equity interest in Matin for a totalconsideration of US$400. The remaining 60% equity interest in Matin is held by Uni-Fast. As at theLatest Practicable Date, Matin is in the process of entering into a contract with, inter alia, ImabariShipbuilding Co., Ltd. to acquire a 37,300 DWT bulk carrier, which is expected to be delivered in2011. On 31 May 2007, we made a shareholder’s loan of approximately US$1.2 million to Matin.
As the vessels to be acquired by Matin and Rich Containership are in the process of being builtand will only be delivered in 2011 and 2008 respectively, the Auditors of our Company haveconfirmed that the investments by our Company in Matin and Rich Containership will have noimpact on the profit and loss statement for FY2006 as set out in Appendix C of this Prospectus,had they been made at the beginning of FY2006. In addition, the Auditors have also confirmed thathad these investments been made at the end of FY2006, they would also have no significantimpact on the balance sheet as set out in Appendix C of this Prospectus, other than thereclassification of the cash amount of US$2,203,162 (being the aggregate amount for thesubscription for shares and provision of shareholder loans in Matin and Rich Containership), to“Investments” under the said balance sheet.
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� Ship Investment Portfolio
As at the end of FY2004, the total value* of our ship investment portfolio (comprising vesselsowned by ship-owning companies in which we have an interest and vessels owned by investmentfunds in which we have an interest) was approximately US$149.4 million. Through variousacquisitions and disposals of vessels since the end of FY2004, the total value* of our shipinvestment portfolio has increased to approximately US$403.0 million as at the Latest PracticableDate. Please refer to the section entitled “Alternative Assets Investments – Ship investment” atpage 92 of this Prospectus for more information.
The following table sets out the value* of vessels in our ship investment portfolio, with a breakdownof the value* of vessels owned by ship-owning companies in which we have an interest andvessels owned by investment funds in which we have an interest, as at the end of each of FY2004,FY2005, FY2006 and as at the Latest Practicable Date.
Notes:
(1) The decrease in portfolio size was due to disposal of vessels in FY2006. The value* of vessels disposed during theperiod totalled US$37.8 million in 2004, US$71.0 million in 2005, US$89.6 million in 2006 and US$78.8 million from 1January 2007 up to the Latest Practicable Date.
(2) The increase in the value of the vessels owned by investment funds in which our Company has an interest, fromUS$66 million as at 31 December 2006 to US$105 million as at the Latest Practicable Date, is due primarily to thelaunch of the Akebono Fund in April 2007. As at the Latest Practicable Date, the Akebono Fund held two shipinvestments - Sentic Limited (where the acquisition price of the underlying vessel is US$26.4 million) and PanmaxTanker S.A. (where the acquisition price of the underlying vessel is US$46.7 million). The increase in the value of thevessels in which our Company has an interest, from US$236 million as at 31 December 2006 to US$298 million as atthe Latest Practicable Date, is due primarily to our Company’s investments in Rich Containership S.A. (where theacquisition price of the underlying vessel is US$71 million) and Matin Shipping (where the acquisition price of theunderlying vessel is US$31 million).
* Value of vessels is an aggregation of the total acquisition price paid or to be paid for each relevant vessel at the timeof acquisition and does not represent our proportionate interest in the ship investment portfolio.
Value of Vessels in our Ship Investment Portfolio (US$’million)
as at 31 December2004
as at 31 December2005
as at 31 December2006(1)
as at LatestPracticable Date(2)
Value* of vessels owned by ship-owning companies in which we have an interest
Value* of vessels owned by investment funds in which we have an interest
117155
66105
33
214
236
298
0
50
100
150
200
250
300
350
400
450
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� Selected key transactions completed:
Mortgage Financing and Equity Syndication for Searex: Uni-Asia acted as the finance arranger forSearex for a US$100.5 million non-recourse loan in January 2004. The proceeds were used bySearex to acquire six vessels in 2004. Searex issued US$17.0 million of Performance Notes toinvestors out of which we subscribed for US$5.0 million, representing 29.4% of the total issuedPerformance Notes. The remaining 70.6% of the Performance Notes were issued to third-partyinvestors. This deal demonstrates our track record as finance arranger and alternative investmentadministrator.
Multiple roles as investor, administrator and fiscal agent of Searex: In addition to being an equityinvestor, we also acted as administrator and fiscal agent for Searex. For Searex Series I Fund, sixvessels comprising bulk carriers and tankers were acquired in 2004 and 2005. As at the LatestPracticable Date, the fund disposed of five vessels and the remaining vessel is currently charteredout to third-party operators. As the investor of the fund, we were able to share in the investmentreturns of the fund. As the fund administrator and fiscal agent, we received performance bonusalong with annual administration fees.
Container vessel joint venture: A third private shipping joint venture between us and three otherpartners was launched in 2005 specializing in investment in container vessels. This joint ventureinvested US$56.3 million each in three panamax 3,500 TEU container vessels, or US$168.8 millionin total. The vessels are being built by Hyundai Mipo Dockyard Co Ltd, Korea with delivery in 2007.Uni-Asia, with a 38% equity interest in the shipping joint venture, arranged financing for the threevessels. The 38% equity interest of our Company in the shipping joint venture comprises (i)US$380 paid in capital; and (ii) up to US$0.9 million in a shareholder’s loan. The container vesselshave been chartered out to Italia Marittima of the Evergreen Group under an eight-year bareboatcharter agreement, which has commenced following delivery of two vessels in April 2007 and June2007.
We have established a special purpose company in Panama, Panmax Tanker S.A. (“Panmax”),which entered into a contract with Xing Long Maritime S.A. (“Xing Long”) on 28 November 2006for the construction and sale of a 50,000 DWT product tanker for approximately Yen 4.69 billion (orapproximately US$39.5 million) (the “Shipsales Contract”). We provided a guarantee to Xing Longto guarantee the performance by Panmax of its obligations under the Shipsales Contract, includingthe obligation to pay for the price of the vessel. The guarantee will remain effective until thefulfillment of all obligations of Panmax under the Shipsales Contract. The following table sets outthe payment obligations of Panmax under the Shipsales Contract and the intended manner offinancing such payments:
Actual / Indicative Instalment amount Details of Intended Manner of FinancingInstalment Timeline payable to (Dependent on stage Xing Longof construction)
30 November 2006 Yen 469 million This instalment was initially financed through a (approximately bridging loan of US$4.1 million provided by ourUS$4.0 million) Company on 30 November 2006. Such bridging loan
was repaid and replaced by another bridging loan ofUS$4.0 million on 28 May 2007. The interest payableunder this bridging loan was set at the rate of LondonInter-Bank Offer Rate (“LIBOR”) + 3% per annumwith maturity date being 28 May 2008. This bridgingloan may be refinanced in 2008 by way of anunsecured bank loan with a third-party financialinstitution at a lower interest rate than that under thebridging loan.
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Actual / Indicative Instalment amount Details of Intended Manner of FinancingInstalment Timeline payable to (Dependent on stage Xing Longof construction)
31 May 2007 Yen 469 million This instalment was primarily financed through a (approximately bridging loan of US$4.0 million provided by one ofUS$4.0 million) the three sponsors of the Akebono Fund. This
bridging loan may be refinanced in 2008 by way of anunsecured bank loan with a third-party financialinstitution at a lower interest rate than that under thebridging loan.
Around March Yen 469 million This instalment is intended to be financed from2010 (approximately the proceeds of an issue of Performance Notes by
US$4.0 million) the Akebono Fund.
Around July 2010 Yen 469 million This instalment is intended to be financed from(approximately the proceeds of an issue of Performance Notes byUS$4.0 million) the Akebono Fund, which issue may occur before
April 2010.
Around November Yen 2,814 million This instalment is intended to be financed 2010 (approximately through debt financing from a third-party financial
US$23.7 million) institution and drawn down upon delivery of vessel.
Our Company envisages that we may furnish similar guarantees in future in the ordinary course ofour business. In this connection, Panmax received a guarantee from Orix Corporation which is ourshareholder for the due performance of the contractual obligations of Xing Long. We also provideda bridging loan of 10% of the contract price to Panmax for payment of the first 10% of the contractprice. Such bridging loan is targeted to be repaid around May 2008, or earlier if Panmax refinancesthe bridging loan with a third-party financial institution. Upon such refinancing, the bridging loanprovided by our Company would be discharged and we would be paid in full. On 19 June 2007, theentire issued share capital of Panmax, comprising 100 nil-paid shares of par value US$100 each,was transferred to Infinite Asset from the nominee company then holding such shares. With thecompletion of the transfer, Panmax became a wholly-owned subsidiary of Infinite Asset.Subsequently, Infinite Asset paid an aggregate amount of US$10,000 in respect of the then-unpaidamounts on the shares, upon which the shares became fully-paid shares in the capital of Panmax.Upon transfer of Panmax to the Akebono Fund, Infinite Asset has undertaken to indemnify us fromall claims which may arise from any default by Panmax of its obligations under the ShipsalesContract. Such indemnity is supported by a share charge given by Infinite Asset in favour of ourCompany over the entire share capital of Panmax. In the event of any default by Infinite Asset onits obligations under its indemnity to us, the share charge allows us to take over the ownership ofthe shares of Panmax on the tenth day after any such default by Infinite Asset. Our Directorsbelieve that the exposure of our Company in giving the guarantee to Xing Long would be mitigatedsince we would, in the event of any default by Infinite Asset under its indemnity, be entitled to takepossession of Panmax, which we may subsequently sell to other third-parties. It is the commercialintention of our Company that such sale would only take place if a replacement guarantee isobtained from the buyer of the vessel, to replace the guarantee given by our Company to XingLong (subject to the credit standing of the replacement guarantor being acceptable to Xing Long).In addition, our Directors believe that the likelihood of a default by Panmax is mitigated by the factthat a material portion of the additional funds required by Panmax to fulfil its payment obligationsunder the Shipsales Contract would be provided by further issuances of Performance Notes by theAkebono Fund to investors who have already committed to subscribe for a total of US$42.9 millionprincipal amount of Performance Notes, from time to time up to April 2010, of which US$11.5million is intended to be utilised towards funding the payment obligations of Panmax. Nonetheless,in the event of a default by Panmax of its payment obligations under the Shipsales Contract, the
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commercial intention of our Company is to enforce the share charge and acquire Panmax inaccordance with the terms thereof. Depending on market conditions, our Company may either sellthe shipbuilding contract or continue the shipbuilding contract and take delivery of the vessel. If weacquire Panmax and take delivery of the vessel, we would then have the option to charter it out tothird-party or sell it in the open market. These would, again, depend on the prevailing marketconditions at the time. As at the Latest Practicable Date, the net asset value of Infinite Asset wasUS$7.7 million. Infinite Asset is a shipholding SPC and its only material assets are currentlyPanmax Tanker S.A. (which will own a product tanker) and Sentic Limited (which owns a bulkcarrier).
Distressed Assets Investment
We started to invest directly in distressed assets in 1998 to capitalise on opportunities for us to useour own capital to purchase NPLs and other distressed assets in Asia (excluding Japan) includingthe PRC, Hong Kong, Thailand, Malaysia, Indonesia, the Philippines and Korea. We usually investin NPLs through special investment fund vehicles established by us and which issue PerformanceNotes to Uni-Asia itself and selected institutional co-investors to raise funding for distressed assetsinvestments.
Our NPL investment strategy is to leverage on our network of industry contacts to find opportunitiesthat satisfy our criteria of high cashflow generation and a significant asset base on which we canget security. Opportunities are sourced through a network of industry contacts which includefinancial institutions, such as banks, and accounting firms active in NPL transactions. We aim torecover the NPLs and exit the investments to realise a return through various debt recoverypolicies. Debt collection and monitoring of individual NPL transactions are applied either through anagent bank, receiver or liquidator, or led by us if the asset is located in the PRC, Taiwan or HongKong. We focus on the recovery of the debt repayments under the NPLs. We do not activelyengage in the secondary trading of NPLs in which we buy distressed assets with the specificpurpose of on-selling to another purchaser of NPLs.
Between 1998 and 2004, we made six direct investments that included 24 NPL accounts with avalue of approximately US$30.5 million and realised a return of over eight times our investmentwithin the period of approximately six years.
We also invest in distressed assets through AAA, a Cayman Islands incorporated investmentvehicle that is held by a charitable trust. AAA functions independently from Uni-Asia in accordancewith recognised corporate principles. AAA was incorporated in the Cayman Islands on 26 July2001, and registered in Hong Kong on 14 August 2001. It has two distressed assets investmentfunds, AAA Series I Fund and AAA Series II Fund, funded by the issuance of Performance Notesto us and a third-party independent Japanese financial institution. AAA Series I Fund and AAASeries II Fund were established in August 2001 and July 2003 respectively.
The Performance Notes under the AAA Series I Fund and the AAA Series II Fund obligate theholder to provide the committed investment amount to the fund over a two-year drawdown periodas the fund calls for funds to invest. Proceeds from the recovery of NPLs are distributed toperformance noteholders semi-annually at the discretion of the fund.
� AAA Series I Fund
AAA Series I Fund is a distressed assets investment fund with the financial capability to invest upto US$5.0 million with a five-year term and two-year drawdown period. This fund has closed andthe Performance Notes have been fully redeemed. We committed US$1.0 million as principal whenthe AAA Series I Fund was started in August 2001. AAA Series I Fund had an internal rate ofreturn of approximately 156.6% from its inception in 2001 to 31 December 2006 based on 22 NPLinvestments, each representing an NPL account. The AAA Series I Fund has expired as at theLatest Practicable Date.
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� AAA Series II Fund
AAA Series II Fund is a distressed assets investment fund with the financial capability to invest upto US$15.0 million with a five-year term and two-year drawdown period due to expire in September2008. We committed US$5.0 million as principal when the AAA Series II Fund was formed in July2003.
AAA Series II Fund has made 19 NPL investments representing 58 NPL accounts since July 2003to the Latest Practicable Date. The two-year drawdown period ended in July 2005 and the recoveryperiod will end in July 2008.
The AAA Series I and AAA Series II Funds target distressed or non-performing loan opportunities in Asia(excluding Japan) in the manufacturing, leasing, finance and hotel property sectors. The aim is to realisean investment return of over 20% within a 1-5 year time horizon. As at 31 December 2006, the PRC andHong Kong accounted for approximately 80.2% of the total nominal value of AAA’s NPL investments ofUS$70.3 million and the rest are located in Thailand, Indonesia, Korea, Malaysia and the Philippines.
We also act as the administrator of the distressed assets investment funds providing administrationservices such as monitoring, book-keeping and reporting services. We earn an administration fee on thedrawdown of funds (for investment into NPLs) and an incentive fee for investment out-performanceagainst a target hurdle rate. We also earn an agency fee for services to be provided in our capacity asthe registrar and the fiscal agent of the funds.
We have made arrangements with an administrative services provider in the PRC to carry outadministrative and clerical services (such as appointment booking and minute taking), including anyadministrative work or liaison work with our PRC contacts. Other than the registration with theAdministration for Industry and Commerce of Guangzhou (as stated in the section entitled “GeneralInformation on our Group – Regulations governing our Group’s activities in Hong Kong, Japan, Singaporeand the PRC – Scope of our activities in the PRC” in this Prospectus), we do not require any registrationor licensing under PRC law for our activities in the PRC that arise only from the management andadministration of the debtors of our NPLs who are located in the PRC.
Selected key transactions completed include:
Restructuring and recovery of a leasing company in the PRC: We acquired a 40% equity interest in a jointventure leasing company in the PRC in 1998 and took over the management of the restructuring andrecovery exercise of the joint venture’s non-performing assets. The joint venture leasing company wassold to a third-party in 2004.
Liquidation of Pacific Leasing: We acquired the NPLs of Pacific Leasing, a sino-foreign joint ventureleasing company in Shanghai, in 1999. Pacific Leasing was an independent third-party companyincorporated in the PRC. In 2000, Pacific Leasing’s license expired and it entered into a period ofvoluntary liquidation. We became the largest creditor with a 31.1% exposure to Pacific Leasing’s totaldebt. The recovery measures and efforts taken by us were successful and highlighted our strong workouttechniques and strategies. Pacific Leasing set a precedent in Shanghai as:
� the first bankruptcy case applied by overseas creditors� the first bankruptcy case against a sino-foreign joint venture leasing company in the PRC� the first bankruptcy case against non-bank financial institutions licensed by MOFTEC
The case was accepted by the court, and Uni-Asia and related parties finalised the lawsuit successfully inDecember 2002. Our Company has recovered 22.59% out of the total registered debt owed to us byPacific Leasing. Following the liquidation of Pacific Leasing, there were no further outstanding amountsthat remained recoverable.
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Property Investment
Property Investment and Management - Japan
We invest in real estate in Japan through Capital Advisers. Capital Advisers focuses on investment in andmanagement of residential and hotel related real estate assets in Japan. It seeks investments across arange of locations with a focus on balanced risk and return. Capital Advisers was established in 1998 asour wholly-owned subsidiary. In May 2003, Capital Advisers raised Yen 985 million (or approximatelyUS$8.2 million) in shareholders’ equity capital from a number of independent third-party investors as partof its strategic expansion. Our shareholding interest in Capital Advisers was diluted to 44.8% and as aresult, Capital Advisers became our associated company.
Capital Advisers, by itself or in cooperation with its business partners, looks for the appropriate propertyto invest in. At the initial stage of the investment, it arranges the investment structure, establishes a SPCwhich owns the property in the form of a trust, arranges equity contribution to the SPC, arranges non-recourse loan from financial institutions on behalf of the SPC. Capital Advisers itself may invest in theSPC as a minority investor. Capital Advisers also acts as the asset manager of the assets owned by theSPC and manages the SPC’s assets including the invested property on behalf of the SPC, eventually onbehalf of the investors. At the end of the investment period or sometimes during the investment period, inorder to maximise investors’ return, Capital Advisers also engages in a selling procedure as the assetmanager. Capital Advisers manages over Yen 58.5 billion (or approximately US$491.9 million) in assetswhich includes a contribution of approximately Yen 2.0 billion (or approximately US$16.8 million) of itsown capital as at the end of 2006.
� Property Investment - Japan
In 2000, we, through our then wholly-owned subsidiary Capital Advisers, established an investmentpartnership with Grosvenor Asia to invest in residential properties in Tokyo.
The Grosvenor Group is an international property development and investment group. It hasregional operating companies covering Australia, Asia Pacific, the Americas, Britain and Irelandand Continental Europe and an international fund management business which operates across allthese markets.
The investment partnership was followed by the establishment of the GCAP Fund in 2004. TheGCAP Fund is jointly managed by Grosvenor Asia and Capital Advisers through Grosvenor CapitalAdvisers Fund Management Co., Ltd. and is anticipated to grow to more than Yen 20 billion (orapproximately US$194.4 million) when fully invested based on its historical borrowing capabilityand committed equity funds of Yen 6.3 billion (or approximately US$61.2 million).
The equity size of each investment fund ranged from US$1.4 million to US$38.5 million. The equityinvestors to the funds are financial institutions, real estate companies and corporations mainlybased in Japan and Southeast Asia. Capital Advisers itself invested Yen 2.0 billion (orapproximately US$16.8 million) as a minority equity investor as at 31 December 2006.
� Hotel Properties Investment - Japan
In 2001, Capital Advisers directed its attention to the asset investment/management business inthe hotel property sector. In the hotel property sector, Capital Advisers focuses mainly oninvestment in limited-service hotels. The number of hotels in which Capital Advisers has beenengaged in as asset manager and invested in as minority investor totalled 11 by the end of 2006.Capital Advisers, as the asset manager in hotel property investments, employs a team which isexperienced in the hotel sector and not only manages the hotel assets but also monitors the hoteloperation itself. The total asset of the hotel investments was over Yen 16.9 billion (or approximatelyUS$142.5 million) as at 31 December 2006. The total equity invested was about Yen 5.4 billion (orapproximately US$45.5 million), of which Capital Advisers’ interest ranged from 5.0% to 51.9%. In
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relation to the hotel property investment, in 2004, Capital Advisers invested in another assetmanagement company engaged in Japanese real estate investment trust which specialises in hotelproperties and which was listed in Japan on 14 June 2006. In view of Capital Advisers’ growth andexpansion strategy, they may from time to time consider various fund raising options, such as newequity injection. In the event of a new equity injection, our interest in Capital Advisers may bediluted.
� Residential Investment - Japan
Since February 2004, Capital Advisers has also been engaged in the investment in and assetmanagement of residential properties, with a focus on small-size studio apartment buildings. Thenumber of these type of buildings managed and/or invested in by Capital Advisers reached 10 in2004, 31 in 2005 and 50 in 2006.
Capital Advisers earns an arrangement, asset management and administration fee for its servicesas the asset manager of the property investment portfolio. It also participates in the return toinvestors in the portfolio as a minority equity investor in the property investment funds.
Principal Investments in Properties - PRC
In January 2007, we established a wholly-owned property investment company, Uni-Asia Guangzhou, inGuangzhou, Guangdong Province, the PRC, with a paid-in capital of US$3.0 million. Our Group willcontinue to explore property investment opportunities in the PRC under new property guidelinesintroduced by the PRC government in July 2006, and property investment opportunities in SoutheastAsia. At the end of June 2007, Uni-Asia Guangzhou completed the acquisition of 14 office units withgross floor area of 1,304 sq m of the China Shine Plaza, a commercial development in the Tianhecommercial district in Guangzhou. We intend to lease the office units to third-parties.
SALES AND MARKETING
We conduct sales and marketing activities out of our three offices in Hong Kong, Japan and Singapore.We use our network of industry contacts and existing client base, built up from over nine years ofestablishing the business to source for investment opportunities. Most marketing activities in structuredfinance advisory are done directly where senior professionals meet existing and potential clients toprovide proposals for transactions or advice on existing deals. We also receive referrals from our existingclients and business partners with whom we have developed relationships.
Co-investors of the direct investment funds we invested in are sourced primarily through our broadnetwork base and client relationships. Our Directors believe that we have repeatedly demonstrated anability to secure ties with strategic partners and co-investors in each of our Alternative Assets investmentfunds due to our extensive contact base. Likewise, deals are also sourced through our internal contactbase along with sourcing agents and industry referrals.
MAJOR CLIENTS
For FY2004, FY2005 and FY2006, we generated total fee income from our five largest clients ofapproximately US$5.0 million, US$9.9 million and US$8.8 million, respectively, representing 90.2%,80.8% and 89.2% of our total fee income during the corresponding period. The aggregate fee incomereceived from our clients as a proportion of our total income was approximately 34.1%, 54.1% and 45.4%for FY2004, FY2005 and FY2006 respectively.
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The following table sets forth our clients who account for 5% or more of our total fee income received forFY2004, FY2005 and FY2006 below:
As a percentage of total fee income (%)Name of Clients FY2004 FY2005 FY2006
CIDO Holding Co., group of companies(1) – 16.1 –
Dainichi-Invest Corporation(2) – 17.5 –
Evergreen Group(3) 29.4 11.6 34.8
Mitsubishi Heavy Industries(4) – 9.0 22.1
Niki Shipping Company INC(5) 6.6 – –
P.T. Berlian Laju Tanker TBK(6) 9.2 – –
Wisdom Marine Lines S.A.(7) – – 5.6
Funds and joint ventures set up by us
AAA Strategic Investment Limited 5.4 5.7 6.7
Container Vessel Fund(8) – 16.1 –
Searex Asset Management Ltd 39.5 19.5 19.9
Notes:
(1) Korea-based shipping group(2) Japanese shipping company(3) Taiwan-based transport conglomerate in aviation and shipping(4) Japanese ship/transport equipment conglomerate(5) Greek shipping company(6) Indonesian shipping conglomerate, listed on the SGX-ST, Jakarta Stock Exchange and Surabaya Stock Exchange(7) Taiwanese shipping company(8) Comprising Falcon Containership S.A , Fortitude Containership S.A. and Union Containership S.A.
Save as disclosed in the section entitled “Interested Person Transactions” in this Prospectus, none of ourDirectors or Substantial Shareholders is related to or has had any interest in clients who accounted for5% or more of our total revenue for FY2004, FY2005 and FY2006.
BUSINESS PARTNERS
Relationship with HSH Nordbank
We have a close working relationship with HSH Nordbank, one of our shareholders and the largestshipping bank in the world focusing on container vessels, tankers, bulk carriers and roll-on-roll-off ships.HSH Nordbank has a strong presence in Germany, Scandinavia, Greece, and the United States, althoughclients from across Europe and Asia represent a significant portion of their credit portfolio. We act as amarketing intermediary for HSH Nordbank in Asia in sourcing maritime transactions and also partnerHSH Nordbank in arranging debt syndication.
A recent example where we and HSH Nordbank worked in partnership was in arranging the US$127.8million term loan facilities for CIDO Holding Co., Ltd. to finance the purchase of ships. We and HSHNordbank as joint coordinating arrangers, project-managed the transaction and marketed the transactionto debt syndicate lenders. HSH Nordbank was also the senior lender being the underwriter to the loan.
In addition, HSH Nordbank was a co-lender in the Searex Series I Fund.
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Relationship with Exeno Yamamizu
We and Exeno Yamamizu have jointly managed the Searex Series I Fund since the end of 2003 wherewe have acted as administrator, registrar, fiscal agent and sometimes finance arranger for transactionsand Exeno Yamamizu has been overall project manager. Exeno Yamamizu is one of the largest shippingbrokers in Asia and their client network covers major shipping companies. This cooperation has broughtus a broader market coverage in terms of chartering and sale and purchase of vessels. A new jointventure company, Uni-Ships and Management Limited, was established in 2005 to carry out theresponsibilities of project manager for Searex Series II Fund.
Relationship with Grosvenor Asia
Grosvenor is an international property development and investment group. It has regional operatingcompanies covering Australia, Asia Pacific, the United States, Britain and Ireland and Continental Europeand an international fund management business which operates across all these markets. Grosvenorinvests in and manages offices, shopping centres, retail, residential and industrial property. Anchored byits ownership and management of the Mayfair and Belgravia estates in Central London, Grosvenor is oneof the largest, private real estate companies in the UK and has been operating in Asia for over 10 years.
In 2000, we and Grosvenor Asia jointly established an investment partnership with another investor toinvest in residential properties in Tokyo. This was followed in 2004 with the establishment of the GCAPFund. The fund is jointly managed by Grosvenor Asia and Capital Advisers through Grosvenor CapitalAdvisers Fund Management Co., Ltd.
Relationship with CMTB
CMTB is one of the largest trust banks in Japan and our 10.7% Shareholder. We collaborated with CMTBthrough Capital Advisers, our then wholly-owned subsidiary, to invest in property projects in Japan and inaddition, CMTB has been cooperating with Capital Advisers on various other transactions such astransfer agency and lending arrangements since 2002.
INTELLECTUAL PROPERTY
We market our services under our “Uni-Asia” logo and name as shown below:
Uni-Asia Finance Corporation
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We are the registered proprietors of our “Uni-Asia” logo. As at the Latest Practicable Date, the detailsrelating to the registration of our trademark are as follows:
Place of Registration RegistrationTrademark Application Class number Date Status
Uni-Asia device Hong Kong 35(1) and 36(2) 300421091 17 May 2005 Registered
“UNI-ASIA FINANCE Hong Kong 35(1) and 36(2) 300421073 17 May 2005 Registered CORPORATION”
Hong Kong 35(1) and 36(2) 300421082 17 May 2005 Registered
“UNI-ASIA FINANCE Japan 35(1) and 36(2) 4911813 2 December 2005 Registered CORPORATION”
Uni-Asia device Japan 35(1) and 36(2) 4914362 9 December 2005 Registered
Uni-Asia device Taiwan 35(1) and 36(2) 01199347 1 March 2006 Registered
“UNI-ASIA ” Taiwan 35(1) 01212538 1 June 2006 Registered
Taiwan 36(1) 01212539 1 June 2006 Registered
Uni-Asia device, PRC 35(1) and 36(2) – – Application “UNI-ASIA FINANCE submitted on CORPORATION” and 17 June 2005,
Pending(3)
Uni-Asia device Singapore 35(1) T05/08232H 19 May 2005 Registered
Uni-Asia device Singapore 36(2) T05/08233F 19 May 2005 Registered
“UNI-ASIA FINANCE Singapore 35(1) T05/08206I 19 May 2005 Registered CORPORATION”
“UNI-ASIA FINANCE Singapore 36(2) T05/08207G 19 May 2005 Registered CORPORATION”
Notes:
(1) Class 35 relates to business management and organisation consultancy and business management assistance.
(2) Class 36 relates to, inter alia, financial consultancy, financial planning services, investment advisory services, investmentmanagement services, management of funds, assets and trusts for others, debt financing, provision and financing of loans,real estate management, and banking services.
(3) Currently, we have no reason to believe that the trademark application in the PRC will be declined by the relevant authoritiesin the PRC, and we are not of the view that the delay in the trademark registration in the PRC would pose a material risk toour Company’s financial performance.
INSURANCE
As at the Latest Practicable Date, we have in place insurance policies in respect of the following (subjectto exceptions and exclusions and the conditions of the respective policy):
(i) personal accident, medical and travel insurance policies for our employees as well as employees’compensation insurance;
(ii) office insurance against, inter alia, loss of or damage to property and interruption of the operationsof business;
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(iii) burglary insurance against loss by theft or burglary or any damage to our property or to ourpremises that arose due to any such theft and burglary or to any attempted threat in respect of ourcurrent manufacturing facility and the office equipment, furniture, fixtures and fittings locatedtherein; and
(iv) Protection and Indemnity insurance as well as hull and machinery insurance for the vessels ownedby ship investment funds/companies that we invested in.
Our Directors believe that the above insurance policies are adequate for our business.
REGULATIONS GOVERNING OUR GROUP’S ACTIVITIES IN HONG KONG, JAPAN, SINGAPOREAND THE PRC
Overview
Scope of our activities in Hong Kong
Our operations are principally conducted from Hong Kong, although the activities which we carry on inHong Kong do not comprise activities that require our Company or any of our subsidiaries to be licencedin Hong Kong.
Structured Finance
In relation to our structured finance business, we act as an arranger of financing, but do not ourselveslend money to third-parties. We are accordingly not required to be regulated under the BankingOrdinance (Cap. 155 of the Laws of Hong Kong) nor do we require a licence for the purposes of theMoney Lenders Ordinance (Cap. 163 of the Laws of Hong Kong).
In relation to the advice which we impart to third-parties in relation to our structured financing activities,such advice does not constitute advising in relation to securities for the purposes of the SFO as therelevant products arranged for third-parties comprise bank loans, finance leases or other banking-specificproducts. Moreover, such advice does not amount to corporate finance advice for the purposes of theSFO, again because the relevant products do not constitute securities as defined in that Ordinance.
Alternative Assets Investment
In relation to the fund structures which we have devised and established for the purposes of effectinginvestment by us, as principal, and by co-investors, in both ships and NPLs (and other distressed assets),the various roles performed by us do not fall to be regulated under the SFO.
We act as administrator, registrar and fiscal agent of the two funds, the Searex Series I Fund and theSearex Series II Fund, dedicated to investment in ships, and the two funds, the AAA Series I Fund andthe AAA Series II Fund, dedicated to investment in distressed debt assets, being typically NPLs.
Each of the fund vehicles, namely Searex and AAA, is a limited liability company, in each case, managedby the board of directors of the relevant company. It is the responsibility of each such board to originateand implement all transactions relevant to the fund, including acquisitions and disposals of the underlyinginvestments. In this regard, prior to implementing any such transaction, the relevant fund vehicle reportsto a monitoring committee that represents the parties who have invested in the underlying notes (namely,the Searex Series I Notes and the Searex Series II Notes, or the AAA Series I Notes and the AAA SeriesII Notes, as the case may be).
The composition of the monitoring committee of the Searex Series I Fund comprises five individuals, twoof whom are our representatives (the other three being the representatives of other investors in theSearex Series I Notes). The composition of the monitoring committee of the Searex Series II Fundcomprises seven individuals, one of whom is our representative (the other six being the representatives ofother investors in the Searex Series II Notes). In cases where the relevant fund (Searex Series I Fundand Searex Series II Fund) proposes to implement any investment related matter, such as acquiring ordisposing the shares of a single purpose vehicle, itself owning a ship, Searex prepares a report for themonitoring committee which, having raised any queries, has the right to issue, or not issue, a “notice of
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awareness”. Should such a notice be issued, Searex may, but is not obliged to, proceed with thetransaction. If such a notice is not issued, Searex would internally consider suitable modifications bemade to the proposal such that it might become acceptable to the investors. The monitoring committee forthe Searex Series I Fund and the Searex Series II Fund acts on the basis of a simple majority of itsmonitoring committee members, and is therefore not under our control.
In the case of the AAA Series I Fund and the AAA Series II Fund, each is operated along lines similar tothose described above. Accordingly, management of both such funds resides in the board of directors ofAAA itself. The monitoring committee applicable to both the AAA Series I Fund and the AAA Series IIFund comprises three individuals, two of whom are our representatives. All decisions of the monitoringcommittee concerning the issue, or not, of a “notice of awareness” require the unanimous consent of thecommittee’s members, meaning that the monitoring committee is not under our control.
Our Directors have given due consideration to the question of whether or not any of the activities of ourCompany fall under the regulation of SFO and are aware, in particular, that the following constitute“regulated activities”:
� dealing in securities (requiring a type 1 licence);� advising on securities (requiring a type 4 licence);� asset management (requiring a type 9 licence).
Our Directors are satisfied that we do not perform any activity that is regulated under the SFO, in whichregard, our Directors confirm that Uni-Asia does not deal in or manage assets for and on behalf of therelevant funds, either in our capacity as administrator or as one of the parties represented on the variousmonitoring committees. Moreover, our Company does not provide any form of investment advice to thefunds in relation to their respective investment decisions.
Finally, our Directors have noted that, in any event, the underlying assets of both the Searex Series IFund and the Searex Series II Fund and both the AAA Series I Fund and the AAA Series II Fund wouldnot, generally, be considered as “securities” for the purposes of the SFO. In the case of the Searex SeriesI Fund and the Searex Series II Fund, the underlying investments are made through special purposevehicles, each a private company (within the meaning of section 29 of the Companies Ordinance) which,in turn, owns the underlying ship. Securities in such private companies are expressly exempted from thedefinition of securities in the SFO. Moreover, the underlying assets of the AAA Series I Fund and the AAASeries II Fund generally comprise NPLs, being assets that would not ordinarily be considered assecurities for the purposes of the SFO.
In relation to our Company’s role as subscriber to the Funds, a money lender’s licence is not consideredby our Directors to be necessary as our Company’s ordinary business does not primarily or mainlyinvolve the lending of money, in the ordinary course of that business.
Scope of our activities in Japan
We have one subsidiary in Japan, Uni-Asia Finance Corporation (Japan), involved in finance arrangementin Japan and the provision of related advisory services.
Uni-Asia Finance Corporation (Japan) has obtained a registration from the Governor of Tokyo Prefectureto carry on the business of money lending (the registration being transliterated as a “KashikingyoTouroku”). The registration which expired on 26 December 2006 was renewed and extended to 26December 2009 and remains in full force and effect. So far as our Directors are aware, no other licencesor registrations are necessary for Uni-Asia Finance Corporation (Japan) to carry on its business inaccordance with its current scope and practice.
However, Uni-Asia Finance Corporation (Japan) will have to apply for newly created registration under thenew Financial Instruments and Exchange Law (the “Law”) (presently the Securities and Exchange Law) ifit will be engaged in the solicitation to potential clients to acquire interest in general or limited partnershipor Tokumei Kumiai. The new Law extends the coverage of the regulation to such interest which has notbeen regulated. The major part of the Law, including the registration regulation will enter into force onsuch date on or before 13 December 2007 as will be designated by the Cabinet Order.
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In addition, we have a 44.8% interest in Capital Advisers Co., Ltd., a company which invests in andmanages certain real estate assets, including hotel and residential properties.
Capital Advisers has obtained:
(i) a registration from the Governor of Tokyo Prefecture to carry on the business of money lending (theregistration being transliterated as a “Kashikingyo Touroku”). The current registration expires on 17September 2007 and remains in full force and effect;
(ii) a Housing and Property Dealer Licence (transliterated as a “Takuchi Tatemono TorihikigyoMenkyo”) which expires on 30 August 2007 and remains in full force and effect; and
(iii) a registration from the Prime Minister to carry on the business of selling interest in the various trustfunds (such registration being transliterated as “Shintaku-Juekiken Hanbaigyo Touroku”) whichexpires on 17 May 2008.
However, Capital Advisers will in the future have to apply for newly created registration under the newFinancial Instruments and Exchange Law mentioned above, unless it changes the modes of transactionsit structures. The new Law extends the coverage of regulation to such products as have not been underany regulation. Also, the above “Shintaku-Juekiken Hanbaigyo Touroku” will be abolished and uniformlyregulated with other business of financial products under the new Law. We understand that CapitalAdvisers intends to seek registration under the new Law. When such registration is granted under the newLaw, its existing registration from the Prime Minister to carry on the business of selling interest in thevarious trust funds (“Shintaku-Juekiken Hanbaigyo Touroku”) will be superseded and will automaticallyexpire. As such, Capital Advisers will not maintain their current registration alongside the new registrationunder the new Law (when granted).
We also understand that Capital Advisers intends to renew the registration from the Governor of TokyoPrefecture to carry on the business of money lending, as well as the Housing and Property DealerLicence upon their expiry.
So far as our Directors are aware, no other consents, licences, registrations or the like are necessary orrequired for Capital Advisers to carry on its business in accordance with its current scope and practice. Inany event, Capital Advisers is no longer our wholly-owned subsidiary and is only our associatedcompany.
Scope of our activities in Singapore
We have one subsidiary in Singapore, Uni-Asia Capital (Singapore) Limited, whose principal businessesare:
(i) to provide loans to shipping clients, typically secured by vessel mortgages;
(ii) to arrange ship chartering; and
(iii) to provide project management.
Uni-Asia Capital (Singapore) Limited acts as administrator, registrar, fiscal agent and project manager toAkebono Capital Limited, which is the issuer of the Performance Notes in relation to the Akebono Fund.
Akebono Capital Limited is a limited liability company, managed by its board of directors. It is theresponsibility of the board to originate and implement all transactions relevant to the fund, includingacquisitions and disposals of the underlying investments. Prior to implementing any such transaction, theboard will consult the monitoring committee that represents the parties who have invested in theunderlying notes. The board of Akebono Capital Limited prepares a report for the monitoring committeewhich, having raised any queries, has the right to issue, or not issue, a “notice of awareness”. Shouldsuch a notice be issued, Akebono Capital Limited may, but is not obliged to, proceed with the transaction.If such a notice is not issued, Akebono Capital Limited would internally consider suitable modifications bemade to the proposal such that it might become acceptable to the investors.
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The composition of the monitoring committee comprises four individuals, one of whom is ourrepresentative (the other three being the representatives of other investors in the Akebono Fund),meaning that the monitoring committee is not under our control. The monitoring committee for theAkebono Fund acts on the basis of a simple majority of its monitoring committee members, except whereunanimous approval of all the representatives of the monitoring committee is required in relation tocertain cases such as the proposal by the issuer of the Performance Notes for any modification of anyprovision of the administration and project management agreement or any arrangement in respect of theobligations of the issuer thereunder.
In the case of a transaction with an affiliate of any sponsor of the Akebono Fund, namely Mitsui & Co.,Ltd, Exeno Yamamizu and our Company, a valuation of the relevant asset from a professional valuer(other than the sponsor) or from other persons (if approved by the representatives of the monitoringcommittee (other than those nominated by the sponsor whose affiliate will be involved in the transaction))shall be obtained, unless such requirement is waived by representatives of the monitoring committee(other than those nominated by the Sponsor whose affiliate will be involved in the transaction).
With regard to the business of providing loans to shipping clients, Uni-Asia Capital (Singapore) Limitedhas obtained a renewal of its Certificate of Exemption under Section 36 No. 1752 dated 4 November2004, issued by the Government of Singapore pursuant to the Moneylenders Act, Chapter 188 ofSingapore (the “Moneylenders Act”).
Uni-Asia Capital (Singapore) Limited first obtained a Certificate of Exemption dated 14 January 2002 andwhich was effective from 4 January 2002 and expiring on 3 January 2008. The Certificate of Exemptionprovides an exemption to Uni-Asia Capital (Singapore) Limited from compliance with the provisions of theMoneylenders Act in respect of loans granted to finance or re-finance the purchase of a vessel(s),vessel’s engines, vessel’s parts and related equipment and components, for commercial or industrialpurposes and/or for working capital in connection with which the vessel is inter-alia granted as securityfor the loan and/or generally in connection with ship finance. Uni-Asia Capital (Singapore) Limited did notprovide any loans in Singapore prior to obtaining the Certificate of Exemption.
So far as our Directors are aware, apart from the exemption referred to above, no other consents,licences, registrations or the like are necessary or required for Uni-Asia Capital (Singapore) Limited tocarry on its business in accordance with its current scope and practice.
Scope of our activities in the PRC
We have one subsidiary in the PRC, Uni-Asia Guangzhou, involved in property investment andmanagement.
Uni-Asia Guangzhou has earlier obtained approval for the establishment of the company from the Bureauof Foreign Trade and Economic Cooperation of Tianhe District, Guangzhou Municipality and was dulyregistered with the Administration for Industry and Commence of Guangzhou. Uni-Asia Guangzhou cancarry on the business of leasing, operating and management of its owned properties according to therequirements under the business licence issued by the Administration for Industry and Commence ofGuangzhou (which will expire on 9 January 2037) and within the approved scope of business.
So far as our Directors are aware, no other consents, licences, registrations or the like are necessary orrequired for Uni-Asia Guangzhou to carry on its business in accordance with its current scope andpractice.
SEASONALITY
There is no apparent seasonality observed within the industries in which we operate. However, weexperience some seasonality in the recognition of profits. We concentrate on marketing and salesactivities in the first half of each financial year and typically only complete our transactions and profitsfrom such transactions are only realised and recorded in the second half of the financial year.
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COMPETITION
Our Directors believe that competition in our industry is intense and we have to compete with companiesthat may have wider name recognition, more resources, a broader range of services including the abilityto provide debt directly, as well as arranging it, and a longer operating history than us.
Our Directors believe we face competition from the finance arrangement departments of commercialbanks and investment banks, funds that make direct investments into Alternative Assets and propertycompanies that make secondary acquisitions of property.
The market in Asia for finance arrangement and direct investments is very competitive and many financialinstitutions operate in our key geographical markets of Hong Kong, the PRC, Japan and Singapore. OurDirectors do not believe any of our competitors have the exact same mix and focus of business as us,however each of our competitors tends to compete with us on a particular type of activity, such as only infinance arrangement or only in direct investment into ships, NPLs or property.
Our Directors believe that we are able to effectively compete with our competitors based on our focus onour strengths (as stated in the section entitled “General Information on our Group – CompetitiveStrengths” of this Prospectus) and by providing our customers with a level of service that meets orexceeds their expectations, hence leading to repeat business from satisfied customers, as well asreferrals from them for new business opportunities.
Our Directors have identified the following competitors in each area of our business:
Area of business Competitors
Structured finance Banks, financial advisory and consulting firms, hedge funds, leasingcompanies and ship brokers
Distressed assets Hedge funds
Property investment/management Property funds, property developers and real estate investment trusts
Ship investment Shipping companies and shipping trusts
COMPETITIVE STRENGTHS
We believe that our key competitive strengths are as follows:
Experienced Executive Directors and Management Team
Our Executive Directors and management team are experienced professionals in the structured financeindustry and alternative asset investments. Our co-founders and Executive Directors, Messrs MotokuniYamashiro, Kazuhiko Yoshida and Michio Tanamoto co-founded Uni-Asia in 1997. A summary of theirwork experience is set out below and further details may be found in the section entitled “Directors,Management and Staff” in this Prospectus:
� Mr. Motokuni Yamashiro is our Chairman and Executive Director. Mr. Yamashiro has over 40 yearsof experience in the banking sector. Prior to founding our Company, he was with The HokkaidoTakushoku Bank since 1967 and was the Chairman of Takugin International (Asia) Limited, theoffshore merchant banking arm of The Hokkaido Takushoku Bank between 1992 to 1997.
� Mr. Kazuhiko Yoshida is our Chief Executive Officer and Executive Director. He has over 27 years ofexperience in banking and credit analysis, specialising in structured finance of maritime vesselsand aircraft. Prior to founding our Company, he was a senior manager in Sumitomo Trust andBanking Co., Ltd. following which, he was a director/deputy general manager of TakuginInternational (Asia) Limited, the offshore merchant banking arm of The Hokkaido Takushoku Bank,from 1992 to 1997. Mr. Yoshida is also currently a director of Capital Advisers.
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� Mr. Michio Tanamoto is our Chief Operating Officer and Executive Director. Mr. Tanamoto has over26 years of experience in banking based in Japan, Hong Kong and Singapore. Prior to foundingUni-Asia in 1997, he joined The Hokkaido Takushoku Bank in 1980 and was the senior manager ofTakugin International (Asia) Limited, the offshore merchant banking arm of The HokkaidoTakushoku Bank between 1988 and 1993. Following which, he was the deputy general manager ofthe Singapore Branch of The Hokkaido Takushoku Bank from 1995 to 1997.
We believe that we have a clear understanding of our industry requirement and possess a client-drivenfocus and an established investment strategy. Our staff is committed to provide value-added andinnovative services to our clients. Our Executive Directors, Executive Officers and employees collectivelyown approximately 19.7% of our post-Invitation issued share capital. We believe that this has helped aligntheir interests with those of our Company and foster a sense of commitment. In addition, we have in placean employee share option scheme to motivate and foster a stronger sense of ownership amongst ourstaff. Please refer to the section entitled “Uni-Asia Share Option Scheme” in this Prospectus for furtherdetails of our Scheme.
We have a successful track record of integrated capabilities in our specialist fields
We have a strong background and experience in finance arrangement and investment in AlternativeAssets. Based on our track record, we have been able to successfully identify opportunities, formulatestructures and execute them effectively. By leveraging on this strength, we focus on activities where ourexperience and established relationships provide a competitive advantage. Further details of selected keytransactions may be found in the section entitled “General Information on our Group – BusinessOverview” in this Prospectus.
As transport-related finance arrangement and alternative asset investments are specialised fields, webelieve that we are able to achieve the following competitive advantages:
� Comprehensive range of value-added and innovative structures
We offer a comprehensive range of services that helps our clients achieve their business and/orfinancing objectives. We provide a range of customised structured finance products and servicessuch as the arrangement of ship and aircraft leases, mortgage financing, charter arrangements forvessels, tax-enhanced leases and loans and balance sheet management. The availability of such abroad and comprehensive product range enables us to offer our clients integrated and innovativesolutions. It also allows us to cater to any periodic change in requirements in any of our targetindustries.
� Scalable execution capabilities
Our business allows us to explore multiple opportunities based on common product requirementsacross geographic markets. We are able to leverage on our existing competencies, resources andnetwork to execute our expansion initiatives into new sectors and across geographical locations.We believe that we are one of the few industry participants who have in-house capabilities for bothstructured finance and Alternative Assets investment. This combination has also allowed us todevelop long-term relationships with and meet the needs of our existing and new clients throughour comprehensive range of services.
� Effective internal processes and practices
We have developed internal business processes and practices to enable us to function efficientlyand effectively in our dealings with clients and our approach to other relationships. We believe thatour intimate knowledge of global transport and Alternative Assets markets and trends provides uswith an advantage over our competitors in structuring and investments. We believe that this focushas allowed us to structure customised solutions to our clients’ requirements. In addition, with our“boutique” size and lean organisational structure, we are able to function with greater flexibility andspeed in comparison to some of our larger competitors.
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We are able to leverage on our relationships with our well-established network
We have a well-established and strong network of contacts. The engagement of clients and provision ofservices are carried out with the objective of creating and maintaining long-term relationships. In additionto our client relationships, we have also been able to build other long-term business relationships throughour investments, partners, corporate shareholders and brokers. We have been able, and will continue, toleverage on these relationships and network to support us in identifying new business opportunities andin assisting us to formulate new and innovative structures to address the requirements of our businessassociates. This has resulted in us obtaining repeat businesses from our existing clients as well as newreferrals from our existing network. The strengths and geographical spread of these relationships enableus to provide cross-border services to our clients such as the recovery of PRC NPLs acquired fromJapanese banks and ship finance in Asia financed by European financial institutions.
EXCHANGE CONTROLS
Our operations are largely located in Hong Kong, Japan, Singapore and the PRC.
Hong Kong
Pursuant to Article 112 of the Basic Law of the Hong Kong Special Administrative Region of the People’sRepublic of China (Cap 2101), there are no foreign exchange control policies in Hong Kong. The HongKong dollar is freely convertible. Profits, royalties, interest and capital can also be freely converted andrepatriated.
Japan
Foreign exchange matters are regulated by the Law on the Foreign Exchange and Foreign Trade (“FEFTLaw”), and cabinet orders and ministerial ordinances thereunder. Under the FEFT Law, capitaltransactions as defined by the FEFT Law including investment from and to Japan as well as trans-borderpayments may be freely conducted except for certain extraordinary cases such as transaction with certaincountries or for certain business where permit or notification for review prior to the transaction is required.Neither our Company nor our Shares fall under such exception. Nevertheless, a report after thetransaction is normally required for a capital transaction exceeding Yen 100 million (or Yen 1 billion forsome transactions) and for a trans-border payment exceeding Yen 30 million except in case of settlementof international trade. Also, notification prior to the transaction is required for physical import and export ofcash or negotiable instruments exceeding Yen 1 million or of gold exceeding 1 kilogramme.
Singapore
There are currently no exchange controls in Singapore.
PRC
In 1994, the PRC reformed the foreign exchange system, combined the RMB exchange rates, adoptedthe bank exchange settlement system and set up a unified inter-bank foreign exchange market.
Since 1 December 1996, the PRC has introduced a new system of foreign exchange control under whichRMB is convertible on current accounts, but strict administrative measures are still in place for capitalaccount. Foreign exchange is not allowed to circulate or to be used in lieu in the settlement of accountsexcept in free trade zones. Any organisation or individual with international balance of payment (includingoverseas-invested businesses, foreign financial institutions and the resident PRC offices of foreign legalpersons except for those of international organisations and foreign embassies or consulates) shoulddeclare for statistical purposes their international balances and go through the foreign exchangesettlement and sales procedure when collecting foreign exchange in export and paying foreign exchangein import. The control over the confirmation of foreign exchange payment to banks in Mainland China andthe control over export tax refund are closely linked.
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Material Measures
The State Administration of Foreign Exchange (“SAFE”) in the PRC achieves its targets mainly through aforeign exchange registration system, account categorization system and annual survey system.
� Foreign Exchange Registration
A foreign investment enterprise should, within 30 days after obtaining the business license, applyfor going through the procedure of foreign exchange registration with its domiciled branch of SAFE.After examining the documents submitted by the enterprises, SAFE shall issue a ForeignExchange Registration Certificate for Foreign Investment Enterprises (the “RegistrationCertificate”) to the qualified applicant.
After the Registration Certificate is issued, in cases of changes made to name, address andbusiness scope, share transfers, capital increase, mergers and acquisitions etc., relevantdocuments shall be submitted to SAFE for record. The enterprise should also apply for anamendment of the Registration Certificate.
� Foreign Exchange Accounts
After acquiring the Registration Certificate, the foreign investment enterprise shall open foreignexchange accounts with designated foreign exchange banks.
� Foreign Exchange Annual Inspection
SAFE shall make annual inspections on the Registration Certificate. Upon completion of the annualinspection, the Registration Certificate will be valid for a term of one year.
Guidelines to foreign investment enterprises
� Control over foreign exchange receipts and expenditure under current account transactions
“Current account transactions” or refer to those components in the current account ofthe balance of payments, such as goods, services and unilateral transfer.
All foreign exchange receipts of domestic entities for current account transactions shall berepatriated and shall not be deposited abroad in violation of the relevant government regulationswithout authorisation.
All foreign exchange receipts for current account transactions shall be sold to the designatedforeign exchange banks in accordance with the regulations issued by the State Council on the saleand purchase of foreign exchange and making payments in foreign exchange, and such receiptsmay also be upon approval, deposited in the foreign exchange account at the designated banks forforeign exchange operations.
Purchase of foreign exchange for current account transactions shall be conducted with thedesignated foreign exchange banks, in accordance with the regulations issued by the State Councilon the sale and purchase of foreign exchange and making payments in foreign exchange, upon thepresentation of valid documents and commercial bills.
The collection of export proceeds and the payments for imports in foreign exchange by domesticentities shall be processed in accordance with the relevant government regulations governing theverification procedures for export proceeds and import payments.
� Control over foreign exchange receipts and expenditure under capital account transactions
“Capital account transactions” or refer to the increase and decrease of assets andliabilities in the balance of payments as a result of the inflow and outflow of capital, including directinvestment, loans and portfolio investment etc.
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Unless otherwise specified by the State Council, all foreign exchange receipts for capital accounttransactions shall be repatriated.
All foreign exchange receipts for capital account transactions shall be placed in the foreignexchange account at the designated foreign exchange banks in accordance with the relevantgovernment regulations; such receipts can also be sold to the designated foreign exchange banksupon the approval by the exchange administration agencies.
The source of foreign exchange for overseas investment by domestic entities shall be reviewed bythe exchange administration agencies before the application for such investments is filed forapproval by the relevant government agencies. If approval is granted, remittance of funds shall thentake place in accordance with the regulations on overseas investment issued by the State Council.
External borrowing in loans by foreign investment enterprises shall be filed with the exchangeadministration agencies for records.
PROPERTIES
Property interests owned by our Group
Uni-Asia Guangzhou acquired 14 office units with gross floor area of 1,304 sq m of the China ShinePlaza, a commercial development in the Tianhe commercial district in Guangzhou. Going forward, we willcontinue to look for investment opportunities in distressed properties and/or other properties in the PRCand other parts of Asia. Please refer to the section entitled “General Information On Our Group –Business Overview – Alternative Assets Investment” in this Prospectus for details on our investments.
Location Held by Gross Area Use of Property
7/F, 9 Lin He Xi Road, Tianhe Uni-Asia Guangzhou 1,304 sq m Office District, Guangzhou
Property interests leased by our Group
We currently lease the following real properties:
Use ofLocation Tenure Gross Area Property Annual Rental Lessor
Suite A, 26.F., 3 years expiring 10,159 Office of HK$3,413,424 Given Admiralty Centre, 31 October 2008 sq ft Uni-Asia Investments Tower I, 18 Harcourt Finance LimitedRoad, Admiralty, CorporationHong Kong
ARK Mori Building, 3 years expiring 46.8 Office of Yen 7,200,888(1) Mori Building West 24F, 1-12-32, 31 July 2009 sq m Uni-Asia Co., Ltd.Akasaka, Minato-ku, Finance Tokyo, Japan Corporation 107-6024 (Japan)
Apartment B, 5/F., 2 years expiring 2,700 Director’s HK$780,000 Grandchamp Twin Brook, No. 43 21 April 2009 sq ft apartment Enterprise Repulse Bay Road, Limited Hong Kong
Apartment 5B, 2 years expiring 2,375 Director’s HK$672,000 The Repulse Taggart Tower II, 30 April 2008 sq ft apartment BayThe Repulse Bay, Company, 109 Repulse Bay Limited Road, Hong Kong
Use ofLocation Tenure Gross Area Property Annual Rental Lessor
261 River Valley Road, 1 year expiring 3,142 Director’s S$126,000 Chung Swee #16-17 Aspen Heights, 31 October 2007 sq ft apartment Kiat Singapore 238307
Flat F1, 5/F., Block F, 2 years expiring 1,988 Expatriate HK$552,000 Profit Power Beverly Hill, No. 6 24 January 2009 sq ft apartment International Broadwood Road, LimitedHong Kong
Flat A, 10/F, Tower 9, 2 years expiring 1,438 Expatriate HK$642,000 Chang Tze- The Leighton Hill, 11 October 2008 sq ft apartment Kwan2B Broadwood Road, Hong Kong
Flat 04, 14/F, 2 years expiring 1,898 Expatriate HK$504,000 Silver Nicety Sunning Court, 9 February 2009 sq ft apartment Co Ltd 8 Hoi Ping Road, Causeway Bay, Hong Kong
8 Shenton Way, 3 years expiring 236 Office of S$165,303.84 MGP Raffle#37-04, 30 November 2009 sq m Uni-Asia Pte. LimitedSingapore Capital068811 (Singapore)
Ltd
180A Bencoolen 2 years expiring 86 Expatriate S$25,200 Cheong Kee Street, #07-02, 31 August 2008 sq m apartment Fong andSingapore 189647 Lee Mun
Teng
Room 2401, 1 year expiring 55 Office of RMB33,000 Guangdong Guangdong Foreign 30 November 2007 sq m Uni-Asia Tea Import &Economic & Trade Guangzhou Export Co., Building Limited351 Tianhe Road PropertyGuangzhou ManagementPRC Sub-Company
Note:
(1) For 2006 only, the landlord has granted a rebate of the rental for the first two months of the year, equivalent to a total of Yen997,670.
PROSPECTS
Shipping
Shipping is a global industry which is generally influenced by demand and supply dynamics such as thedemand for movements of cargos, the resultant tonne-mile demand of vessels as well as the supply ofvessels tonnage capacity. Fuel cost, which typically makes up a significant portion of the operating cost ofships, is also a factor affecting the performance of the shipping industry.
Shipping comprises different shipping sectors servicing different industries, governed under differentregulations and each having its own supply and demand dynamics. The major types of ships include drybulk ships, container vessels, product tankers and crude tankers. Dry bulk ships carry dry commoditiessuch as ore, coal, grains, fertiliser, bauxite, soy beans, cement, potash and salt. Container vessels carrymetal boxes containing cargoes such as cars and equipment. Product tankers carry mainly refined oilproducts such as gasoline, diesel and other non-refrigerated cargos such as edible oils and chemicals.Crude tankers carry crude oil and petroleum.
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The dry bulk shipping trade is usually dependent on the demand for and price of commodities. Steelproduction is a key driver of the dry bulk shipping trade through seabourne demand for coking coal andiron ore. The container shipping trade is usually dependent on the global economic growth, trade growth,industrial production and consumer consumption. The product and oil tanker industry is usuallydependent on global industrial production, refinery throughput, utilisation rate in refineries, global crudeoil inventory levels and the weather season.
We believe that the demand for maritime vessels will be driven largely by the continued growth in theworld economy and seaborne trade. Such demand will provide us with opportunities to leverage on ourtrack record and experience in structured finance and ship charter arrangements to establish new clientrelationships and to offer our existing clients innovative and customised structured finance solutions aswell as ship charter arrangement services.
Structured finance focusing on the shipping industry is dominated mainly by financial institutions. Webelieve that we are able to compete effectively with them by leveraging on our track record, our widenetwork and our strong relationships with our business partners and customers, which includeestablished shipping banks and shipowners.
Whilst the shipping industry may be cyclical, we believe that our structured finance operations are notsignificantly subject to such cycles as we believe that there continues to be opportunities for us to providestructured financing solutions as ship renewal is an ongoing process. In a shipping down-cycle, wegenerally observe the trend of older ships being scrapped and new ones being built given the lower costof new builds. In the shipping up-cycle, we generally observe that there will be an increase in demand forships as ship owners seek to increase their fleet to capitalise on the favourable freight rates. We believethat there continues to be opportunities for us to provide structured finance solutions and ancillary shipbrokerage services at different stages of the shipping cycle. We further believe that the shipyards’ orderbooks in the coming years will continue to be sustained and thus present opportunities for us to providemore structured finance solutions to shipowners and operators.
Alternative Assets Investment
The Alternative Assets investments class includes investments in ships, distressed assets and realestate. Distressed assets typically include debt obligations such as junk bonds, corporate bonds,commercial and industrial loans, credit card receivables and auto loans. Investors in distressed assetspurchase debt obligations of companies that are financially troubled and are struggling or are unable toservice their debt obligations and they earn a return through recovery of distressed debt, throughappreciation in the value of the distressed debt investment, or through leveraged buyouts.
Our investments in ships are usually made through equity interests in ship owning companies or throughPerformance Notes held in ship investment funds. Our direct and indirect investments in the differenttypes of ships are made after careful consideration and due diligence and based on our Directors’ outlookof the various shipping sectors. We believe that we can leverage on our expertise knowledge in theshipping sector to tap on the opportunities to source for new ship investments and/or to buy or sellmaritime vessels.
Our investments in distressed assets are mainly made through NPLs and we are also seekingopportunities in the distressed real estate market in Asia (excluding Japan). Such opportunities will bedependent on factors such as the respective countries’ macroeconomic environment and policies,performance in key industry sectors, access to capital and liquidity, competition and prevailing marketconditions. We believe that we will be able to leverage on our well-established network and familiarity withthe distressed asset markets in the region to identify and invest in suitable distressed assets.
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The performance of Alternative Assets investments are dependent on the unique characteristics of eachtype of alternative asset and the country of origin of these assets. These investments are thereforerelatively opportunistic in nature. We believe that such non-mainstream opportunities are available in Asiaand we intend to seek new ship investments, real estate investments and distressed asset investments inAsia. We also believe that our experience in Alternative Assets investments, our capabilities in deal-making, due diligence, valuation, structuring and financing, together with our well-established network ofcontacts in Asia will enable us to effectively identify and evaluate opportunities for cross-borderinvestments in these assets.
ORDER BOOK
Due to the nature of our business, we do not maintain an order book. Our revenue stream includesrevenue from fee income, investment returns, and other income. Based on our mandates secured as atthe Latest Practicable Date, we expect to recognise fee income including arrangement, agency andcharter brokerage fees and administration fees, of approximately US$10.5 million in FY2007. We willcontinue to receive administration fees from the fleet of vessels held under the funds administered by us.We also expect to receive fee income as well as investment returns in respect of new investment fundsincluding the Akebono Fund referred to in the section entitled “General Information on our Group –Business Strategy and Future Plans” below.
BUSINESS STRATEGY AND FUTURE PLANS
We aim to be a leading Asia-based structured finance arrangement and Alternative Assets directinvestment firm. Our primary business strategy is to build on our existing strengths in structured financeand Alternative Assets investments to provide one-stop and innovative financing solutions to our clientsas well as to explore and develop Alternative Assets investment opportunities by leveraging on ourexpertise and relationships.
We intend to continue to look for new market opportunities by leveraging on our core capabilities withinour specialist fields. Globalisation and economic growth also offer us opportunities in terms of cross-border financing and investments and allow us to build a wider presence and network within the region.
The principal elements of our strategy for growth and expansion of our business are described below.
Continue to focus and leverage on our integrated capabilities and well-established relationships
We intend to continue to focus on our specialist fields in structured finance arrangements and AlternativeAssets investments and to build on our well-established relationships with clients.
We aim to build on our well-established relationships with our structured finance clients by offeringcustomised products to meet their specific requirements. We are sensitive to our clients’ needs and webelieve that such client-driven product customisation strategy applied through our comprehensive rangeof innovative financial products and services will strengthen our future growth.
We also intend to focus on investments in Alternative Assets through our various credit and riskassessments, sound management, industry and geographical diversification as well as strong internalprocesses and practices. While our associated company, Capital Advisers, will continue to play an integralrole in our property investment in Japan, we also plan to look for opportunities in property investment inother parts of Asia.
Structured Finance: Expand and diversify our client portfolio and broaden our geographiccoverage within Asia
We have been growing our revenues since our establishment in 1997. We believe that a key factor to thisgrowth has been the introduction of new and innovative financial products to our clients. We are focusedon the acquisition of new clients as well as developing existing client relationships. We believe that thereare opportunities in the area of structured finance arrangement, particularly in the shipping sector. Weintend to concentrate on building new relationships with regional shipping companies by offering tax-
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driven leasing and bareboat and time charter opportunities tailor-made specifically to clients’requirements and investment appetite. In such transactions, our Company will act as finance arrangerand will not participate as a lender. Through our role as finance arranger, we intend to secure up-frontfees via structured finance arrangements and to receive brokerage commission through the arrangementsof charter including bareboat and time charters.
Alternative Assets Investment: Expand and diversify our investment portfolio and broaden ourgeographic coverage within Asia
We intend to continue to search for suitable Alternative Assets investments that will meet our stringentcriteria to expand and diversify our Alternative Assets investment portfolio. At the same time, we arecontinuously working on recovering our NPL portfolio to maximise our returns on our investments. Weintend to leverage on our expertise and network in distressed asset investments in the Asian region tofurther explore and develop investment opportunities in other parts of Asia such as the PRC andThailand. We will continue to identify investment opportunities and intend to utilise our capital to directlyinvest in distressed assets and/or real estate assets in the PRC and other parts of Asia.
For example, we intend to invest directly into new sectors such as distressed real estate in Asia(excluding Japan), hotels and residential and other commercial properties to make use of our synergyand the capabilities of Capital Advisers and our Alternative Assets investment.
New ship investment funds
As part of our principal business to invest in shipping assets either directly or through specialised fundvehicles, we directly invested in three container vessels in 2005.
We intend to continue to seek opportunities to invest in and/or launch new joint ventures in shipinvestments. As such, we have on 17 April 2007 launched a new fund in Singapore, the Akebono Fund,to take advantage of the Maritime Port Authority’s Maritime Finance Incentive Scheme. The AkebonoFund, which will have an initial size of approximately US$300 million, has acquired a product tanker and abulk carrier and will invest in container vessels and another product tanker. Our committed investmentportion in this fund is US$15.0 million, which payment obligation will crystallise upon the acquisition of thevessels by the fund. On 13 September 2006, our wholly-owned subsidiary, Uni-Asia Capital (Singapore)Limited, was designated as an ASIM under the Singapore Income Tax Act by the MPA. At the same time,the MPA also granted a designation of ASIE for the Akebono Fund.
Our ASIM designation is for an initial period of 10 years commencing on the subscription date of theAkebono Fund by investors, subject to a review by MPA at the end of the fifth year. Pursuant to our ASIMdesignation, we are eligible for a concessionary tax rate of 10% for income derived from managing anASIE, such as the Akebono Fund.
The ASIE designation for the Akebono Fund is for an initial period of up to 10 years commencing fromthe date of its establishment, subject to a review by MPA at the end of the fifth year. Pursuant to its ASIEdesignation, the Akebono Fund is eligible for tax exemption on income derived from the chartering orfinance leasing of (a) any sea-going ship to (i) a person who is neither resident in nor a permanentestablishment in Singapore; (ii) an approved international shipping enterprise; or (b) any sea-goingSingapore ship to persons described in (a)(i) and (a)(ii) above or a shipping enterprise within the meaningof Section 13A of the SITA. The tax exemption will be valid for the life of vessels acquired by ASIE duringthe incentive period of up to 10 years. For instance, if an ASIE acquires a vessel during the 10-yearincentive period, charters it for 20 years and disposes of it thereafter, lease income on the charter willenjoy tax exemption for the entire 20 years. The qualifying income of the Akebono Fund shall alsoinclude hedging gains derived in connection with the management of its portfolio of vessels, and share ofprofits or dividends remittances from shipholding special purpose vehicles owned by the Akebono Fundthat are declared out of qualifying activities.
In addition to the launch of the Akebono Fund and our investment in Rich Containership, we also intendto directly invest in one additional container vessel, due for delivery in 2008.
Please refer to the section entitled “Use of Proceeds” in this Prospectus for further details.
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ORGANISATION STRUCTURE
The following chart shows our management reporting structure as at the Latest Practicable Date.
Structured Finance Division
Executive Director & Head of Structured Finance Division
Michio Tanamoto
Asset Finance Department (AFD) Head of AFD (EVP) Masaki Fukumori
Struc tured Finance Department (SFD) Head of SFD (SVP) Kenji Fukuyado
Distressed Assets/ Properties Investment Department (DAID) Head of DAID (EVP) Masahiro Iwabuchi
Finance Department Head of Finance
(SVP) Clementine Man
Ting Ng
CEO Kazuhiko Yoshida
Board of Directors
Management Committee
Motokuni Yamashiro Kazuhiko Yoshida Michio Tanamoto
Agency & Documentation Department (ADD) Head of ADD (EVP)
Thomas Cheung Fook-Loi
MANAGEMENT REPORTING STRUCTURE
119
DIRECTORS
Our Company has nine directors, including our three Independent Directors. The Management Committeeconsists of three Directors, namely Mr. Yamashiro, Mr. Yoshida and Mr. Tanamoto.
The following table provides information regarding our Directors as at the date of this Prospectus.
Country ofPrincipal
Name Age Address Principal Occupation Residence
Executive Directors
Motokuni Yamashiro 65 Flat B, 5/F., Twin Brook, Chairman of the Hong Kong No. 43 Repulse Bay Road, Company Hong Kong
Kazuhiko Yoshida 55 Apartment 5B, Chief Executive Officer Hong Kong Taggart Tower II, of the Company The Repulse Bay, 109 Repulse Bay Road, Hong Kong
Michio Tanamoto 50 261 River Valley Road, Chief Operating Officer Singapore #16-17 Aspen Heights, of the Company Singapore 238307
Non-Executive Directors
Hamilton Jian Ren Chueh 58 9Fl., 59 Sec. 1 Ho-ping President, Evergreen Taiwan East Rd, Taipei, Taiwan International Corp.
Jörg Wilhelm Schelp 52 Frahmredder 102A, 22393, Senior Vice President, Germany Hamburg Germany HSH Nordbank AG
Robert Van Jin Nien 59 13D, Dragon Garden, Executive Director, Hong Kong No. 1 Chun Fai Terrace, Hopewell Holdings Limited Tai Hang Road, Hong Kong
Independent Directors
V-Nee Yeh 48 24/F., Hong Villa, No. 12, Chairman, Argyle Street Hong Kong Bowen Road, Hong Kong Management Limited
Ang Miah Khiang 53 17A Brighton Avenue, Executive Director, Singapore Singapore 559252 DP Information Network
Pte Ltd
Ronnie Teo Heng Hock 58 19 Lentor Plain, Managing Director, Singapore Singapore 786521 Financial Re-engineering
Pte. Ltd.
Our Directors’ working and business experience are set out below:
Executive Directors
Mr. Motokuni Yamashiro is the Chairman, Director and one of the founders who established ourCompany in 1997. Mr. Yamashiro is responsible for business development and the overall planning of ourGroup. He was with The Hokkaido Takushoku Bank since 1967 and was the chairman of TakuginInternational (Asia) Limited, the offshore merchant banking arm of The Hokkaido Takushoku Bankbetween 1992 and 1997. Takugin International (Asia) Limited provided structured finance solutions for theaviation and shipping industries, provided project financing for construction of properties, including hotelsand buildings and also provided corporate financing to Chinese financial institutions and othercorporations. He has over 40 years of experience in banking. Since 1993, Mr. Yamashiro has been a
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member of the China Committee of the Japanese Ministry of Finance, and in 1995, he was awarded theShenzhen Honorary Citizenship by the Shenzhen Municipal Government. Between 2002 and 2006, Mr.Yamashiro was an executive director in Capital Advisers. Mr. Yamashiro graduated with a bachelor’sdegree in law from Keio University of Japan in 1967. In addition to Japanese, he speaks fluent Mandarinand Cantonese.
Mr. Kazuhiko Yoshida is the Chief Executive Officer, Director and one of the founders who establishedour Company in 1997. Mr. Yoshida is responsible for business development and the overall managementof our Group. He has over 27 years of experience in banking and credit analysis, specialising instructured finance of maritime vessels and aircraft. Between 1986 and 1992, he was a senior manager inSumitomo Trust and Banking Co., Ltd. following which, he was a director/deputy general manager ofTakugin International (Asia) Limited, the offshore merchant banking arm of The Hokkaido TakushokuBank, from 1992 to 1997. Takugin International (Asia) Limited provided structured finance solutions for theaviation and shipping industries, provided project financing for construction of properties, including hotelsand buildings and also provided corporate financing to Chinese financial institutions and othercorporations. Mr. Yoshida is also currently a director of Capital Advisers. Mr. Yoshida obtained a bachelor’sdegree in engineering from Hokkaido University in Japan in 1976.
Mr. Michio Tanamoto is the Chief Operating Officer, Director, and one of the founders who establishedour Company in 1997. Mr. Tanamoto is responsible for the marketing of our Group’s structured financeand ship investment businesses. He has over 26 years of experience in banking based in Japan, HongKong and Singapore. In 1980, Mr. Tanamoto joined The Hokkaido Takushoku Bank and was the seniormanager of Takugin International (Asia) Limited, the offshore merchant banking arm of The HokkaidoTakushoku Bank between 1988 and 1993. Takugin International (Asia) Limited provided structuredfinance solutions for the aviation and shipping industries, provided project financing for construction ofproperties, including hotels and buildings and also provided corporate financing to Chinese financialinstitutions and other corporations. Following which, Mr. Tanamoto was the deputy general manager of theSingapore Branch of The Hokkaido Takushoku Bank from 1995 to 1997. Mr. Tanamoto is also currently adirector of Capital Advisers. He obtained a bachelor’s degree in law from Hitotsubashi University of Japanin 1980.
Non-Executive Directors
Mr. Hamilton Jian Ren Chueh was appointed as a Non-Executive Director of the Company in March2005. Mr. Chueh has over 33 years of experience in shipping and air transportation. In 1974, he beganhis career with the Evergreen Group, where he was a manager in Evergreen Marine Corp. (Taiwan) Ltd,which was listed on the main board of the Taiwan Stock Exchange in 1987. He joined EvergreenInternational Corp as an executive officer in 1982, where he was their president between 2004 and 2006,and the Vice Chairman since January 2007. Mr. Chueh is also currently an executive director atEvergreen Reinsurance Company and Greencompass Marine S.A. Mr. Chueh holds an executivemaster’s degree in business administration in shipping and transportation management from the NationalTaiwan Ocean University.
Mr. Jörg Wilhelm Schelp was appointed as a Non-Executive Director of the Company in January 2005.Mr. Schelp has extensive experience in ship finance. In 1986, he joined HSH Nordbank AG and iscurrently a senior vice-president in the shipping department. Mr. Schelp was responsible for managing thebank’s shipping client relationships in Asia until recently, when he took over such client relationships inthe Middle East and Europe. Mr. Schelp received a law degree at the University of Bielefeld and wasadmitted to the German Bar Association in 1983.
Mr. Robert Van Jin Nien was appointed as a Non-Executive Director of the Company in June 2006. Mr.Nien has extensive experience in property and infrastructure projects in Hong Kong and the PRC PearlRiver Delta area. Between 1972 and 1976, he was a manager at Citibank, N.A., following which he joinedand, since 1980, has been an executive director of Hopewell Holdings Limited, which is listed on the mainboard of the Stock Exchange of Hong Kong Limited. Mr. Nien holds a bachelor’s degree in economicsfrom the University of Pennsylvania and a master’s degree in business administration from the WhartonGraduate School of Business.
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Independent Directors
Mr. V-Nee Yeh was appointed as an Independent Director in April 2005. Mr. Yeh is a co-founder of ValuePartners Limited and the chairman of Argyle Street Management Limited. He was a council member ofthe Hong Kong Stock Exchange until its merger into the Hong Kong Exchanges and Clearing Limited andwas a member of the Hong Kong Stock Exchange’s Listing Committee until May 2006. He was also amember of the Listing Committee of the China Securities Regulatory Commission from 1993 to 2003. Mr.Yeh sits on the Takeovers & Mergers Panel and the Takeovers Appeals Committee of SFC. He is also adirector of Arnhold Holdings Limited, Kingway Brewery Holdings Limited and Next Media Limited, whichare listed companies in Hong Kong. Mr. Yeh worked with the Lazard Houses (New York, Hong Kong andLondon) in corporate finance, capital markets and risk arbitrage from 1984 onwards, until his resignationfrom Lazard Brothers Capital Markets as a partner in 1990. He graduated at the School of Law atColumbia University and was admitted a member of the California Bar Association in 1984.
Notwithstanding such directorships, our Board of Directors believe that Mr. Yeh is able to devote sufficienttime to the affairs of our Company. In this regard, our Board has discussed with Mr. Yeh on the frequencyof the meetings of the Board of Directors, as well as the meetings of the Board Committees of which heis a member. Mr. Yeh is fully aware of the commitment required of him in his role as our IndependentDirector, including his duties as the Chairman of our Remuneration Committee. Since Mr. Yeh’sappointment as our Independent Director in April 2005, our Board has noted his efficiency in respondingto our requests and enquiries. Our Board has also noted the high level of commitment demonstrated byhim attending most of our Board meetings and/or participating in conference calls and contributing todiscussions with helpful and practical perspectives. In addition, our Board values the contribution offinancial expertise and corporate experience from Mr. Yeh, which would complement the background ofthe other members of the Board. For the reasons set out above, our Board is of the view that Mr. Yeh willbe able to commit sufficient time and attention to the matters of our Company. Our Board also believesthat Mr. Yeh will be able to fulfil his responsibilities to our Company and discharge his duties to ourCompany as an Independent Director of our Company.
Mr. Ang Miah Khiang was appointed as our Independent Director on 26 June 2007. Mr. Ang is currentlythe executive director of DP Information Network Pte Ltd (“DP”), a credit and business informationbureau, and is responsible for corporate and strategic development. Prior to joining DP, Mr. Ang was themanaging director of GE Commercial Financing (Singapore) Ltd. He is also independent director ofseveral listed companies in Singapore. Mr. Ang holds a bachelor of accountancy degree from the then-University of Singapore and is a Certified Public Accountant.
Mr. Ronnie Teo Heng Hock was appointed as our Independent Director on 26 June 2007. Mr. Teo iscurrently the managing director of Financial Reengineering Pte. Ltd., a management consulting firmspecialising in providing investment and treasury advisory services and project financing. Mr. Teo waspreviously the managing director of DBS Asset Management Ltd and the general manager of DBSFinance Limited. Mr. Teo holds a bachelor of social sciences (Honours) degree in economics from thethen-University of Singapore.
Save that Mr. Hamilton Jian Ren Chueh, Mr. Jörg Wilhelm Schelp and Mr. Robert Van Jin Nien areexecutive officers or directors of Evergreen International S.A., HSH Nordbank and Hopewell HoldingsLimited respectively, which are our Substantial Shareholders, none of our Directors and ExecutiveOfficers are related to each other or our Substantial Shareholders.
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EXECUTIVE OFFICERS
Our Company has five Executive Officers. The following table provides information regarding ourExecutive Officers as at the date of this Prospectus.
Country ofPrincipal
Name Age Address Principal Occupation Residence
Masaki Fukumori 45 Flat A, 10/F., Tower 9, Executive Vice President, Hong KongThe Leighton Hill, Head of Asset Finance 2B Broadwood Road, Department Hong Kong
Masahiro Iwabuchi 44 Rm. 1, 5/F., Block F, Executive Vice President, Hong Kong Beverly Hill, No. 6 Head of Distressed Asset/ Broadwood Road, Properties Investment Hong Kong Department
Kenji Fukuyado 43 Flat 1404 Sunning Court, Senior Vice President, Hong Kong 8 Hoi Ping Road, Head of Structured Causeway Bay, Hong Kong Finance Department
Clementine Man Ting Ng 36 Unit 1633, Tower 4, Senior Vice President, Hong Kong Hong Kong Parkview, Head of Finance 88 Tai Tam Reservoir Road,Hong Kong
Thomas Cheung Fook-Loi 51 12A Monmouth Place, Executive Vice President, Hong Kong9L Kennedy Road, Head of Agency and Wanchai, Hong Kong Documentation Department
Our Executive Officers’ working and business experience are set out below:
Mr. Masaki Fukumori joined our Group in August 1997 and acted as Head of our Structured FinanceDivision until he initiated the Asset Finance Department in 2002. He is the executive vice presidentresponsible for our Asset Finance Department and information technology. He has extensive experiencein marketing and syndication in the banking industry specialising in the shipping and aviation sectorsspanning over 20 years. Between 1985 and 1993, he was a marketing manager at Hokkaido TakushokuBank. After which, he was a senior marketing manager at Takugin International (Asia) Ltd. from 1993 to1997. He is also currently a director of Akebono Capital Limited, Searex, Kabushikikaisha Tenshodo,Harmonic Shipping S.A., Fortitude Containership S.A., Union Containership S.A., Falcon ContainershipS.A. and Sunrise Shipping S.A. Mr. Fukumori holds a bachelor’s degree in business administration fromYokohama National University obtained in 1985.
Mr. Masahiro Iwabuchi was appointed as the executive vice-president responsible for the distressedasset/properties investment department in April 1998. He has extensive experience in the bankingindustry throughout Asia including Japan, Indonesia, Singapore, Hong Kong and the PRC, having spentsome 13 years with The Hokkaido Takushoku Bank. He is also currently a director of AAA. Mr. Iwabuchigraduated with a bachelor’s degree in economics from Hirosaki University of Japan in 1985. In addition toJapanese, Mr. Iwabuchi speaks fluent Mandarin.
Mr. Kenji Fukuyado was appointed as the senior vice-president responsible for the structured financedepartment in January 2006. Prior to joining us, Mr. Fukuyado worked in the banking and finance industryin Hong Kong and Japan and was a manager at The Hokkaido Takushoku Bank between 1987 and 1998.He joined our Group in 2001 and was the Vice President of Uni-Asia Finance Corp (Japan) from April2001 to May 2003 and the managing director from May 2003 to December 2005. Mr. Fukuyado graduatedwith a bachelor’s degree in law from Waseda University in 1987.
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Ms. Clementine Man Ting Ng joined our Company in February 2004 and is the senior vice-presidentresponsible for the finance department. She has over 14 years’ experience in the financial industry,including fund management, private equity and equity research. Ms. Ng started her career in Hong Kongas a manager with the hedge fund group Gaiacorp in 1992 and took on various responsibilities in thefinance industry prior to joining us in February 2004, including an investment analyst at Amsteel FinanceCorporation, an investment associate with the direct investment arm of AIG Investment Corporation, anda director at Kaizen Property Management Limited. Ms. Ng graduated with a bachelor’s degree incommerce from the University of British Columbia, Canada and holds a master’s of businessadministration degree from the Judge Business School, University of Cambridge, UK.
Mr. Thomas Cheung Fook-Loi joined our Company in May 1997 and is the executive vice-presidentresponsible for our Group’s agency and documentation department. Mr. Cheung has over 20 years ofexperience in credit and documentation work at European and Japanese banks. He started his bankingcareer at Barclays Bank in 1977 and joined the then Banque Paribas as an assistant manager in 1986.Prior to joining us, Mr. Cheung was an assistant general manager at Takugin International (Asia) Ltdbetween 1987 and 1997.
Save as disclosed in the section entitled “Directors”, there is no arrangement, or understanding with aSubstantial Shareholder, customer or supplier of our Company or any other person, pursuant to whichany of our Directors or Executive Officers was selected as a Director or Executive Officer of ourCompany.
MANAGEMENT COMMITTEE
The Management Committee has the responsibility to maintain oversight of our Group’s business as awhole. Its authority includes each division’s business targets, budgets, new clients/transactions andhuman resources related policies.
The Management Committee oversees and monitors the activities of the Structured Finance, DistressedAssets Investment and Ship Investment departments and meets regularly once each month or whenneeded. Members of the Management Committee include Mr. Yamashiro, Mr. Yoshida and Mr. Tanamoto.Mr. Yoshida is the Chairman of the Management Committee and is responsible for the DistressedAssets/Properties Investment Department and Mr. Tanamoto is responsible for the Structured Financeand Asset Finance (Ship Investment) Departments. Each Executive Director is responsible for theexecution of the relevant department’s budget, strategy and internal organisation, such as headcountremuneration, staff reporting lines, business targets and departmental procedures.
The Management Committee has the authority to approve transactions with a net value of up to 10% ofour Group’s net worth at the last audited balance sheet date, except for loans to or investment in CapitalAdvisers, where the authority to approve relates to transactions of up to a total value of US$12 million.Any transaction exceeding the Management Committee’s authority of approval would be subject to Boardapproval.
Proposed finance arrangement transactions are screened by the Management Committee, based onfactors such as potential return, risks, market conditions and testing the assumptions which underlie theproposed transaction. Approval is granted to deals that have a reasonable likelihood of success and meetour Group’s risk/return criteria.
Internal Investment Approval Process
Each department is expected to seek internal approval before making an investment. Proposedinvestments need to go through a three-stage approval process depicted in the chart above.
In the first stage a report would need to be prepared for approval and review by the Review Committeecomprising the Management Committee and various department heads. The Chairman of the ReviewCommittee and Management Committee will give approval or authorisation for the project team toproceed with the next stage of application. In the second stage, a detailed report and analysis would beprepared to be reviewed and approved by the Review Committee. Should the project meet our Group’sinvestment criteria, the Chairman will recommend the investment for final approval. In the final stage, adetailed final report is submitted to Management Committee for their final approval. The ManagementCommittee will give the final approval for any investment project.
Transactions are monitored on a continuous basis. A key person from the project team will be designatedto monitor each investment. The Management Committee maintains oversight through direct contact withexecutives, a monthly status report from each department of its activities and latest results and a monthlyand six-monthly budget from each department.
Risk management policy
Our Group’s principal risks are market risk, credit risk and foreign exchange risk. The following sets out adescription of our Group’s risk management policy:
(i) Market risk and credit risk
Our Group seeks to minimise these risks by performing detailed reviews of loan counterparties or assetissuers prior to purchase approval, and by either selling on participated loans to other parties or enteringinto offsetting loans payable when Directors wish to preserve our Group’s liquidity. Our Group seeks tominimise adverse movements in market price of financial instruments by extensive due diligenceprocedures to ensure acquisition at prices below their perceived fair value.
Head of project team sounds out investment idea to Uni-Asia
Concept Paper
Appraisal Paper
Final Investment
Report
Stage 1
Stage 2
Stage 3
Review Committee
Concept Paper (CP) to be issued as quickly as possible
Addressees of review committee have up to 5 days to comment on CP
The Chairman of review committee will give authorization to project team within 7 days from receipt of CP
The project team will provide bi-weekly status report on investment idea to review committee
Project team will begin to prepare Appraisal Report (AP) following authorization from Chairman of review committee
Review Committee
AP to be issued after thorough due diligence by project team andsent to addressees
Review committee to review AP and submit written comments within 7 days or as promptly as possible
The Chairman will give authorization to the project team to submit project to Management Committee within 10 days. If approved, go to stage 3
Project team will begin to prepare Final Investment Report following authorization from Chairman of review committee
Final Investment Report to be issued and sent to Management Committee
Management Committee
Members of Management Committee have not less than 7 days before a decision is due
Meetings must be held in person. In the event member is absent, he/she will forfeit his/her right to vote and attending members will make decision based on unanimous vote
An official action sheet will be filled out
Monitoring
If CP approved, go to stage 2
If AP approved, go to stage 3
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(ii) Foreign exchange and interest rate risk
Our Directors review the currency exposures and enter into foreign currency forward contracts whenconsidered necessary to hedge against adverse currency movements. Our Group uses the followingderivative instruments for both hedging purposes: Forward rate agreements are individually negotiatedinterest rate futures that call for a cash settlement at a future date for the difference between a contractedrate of interest and the current market rate, based on a notional principal amount.
Currency and interest rate swaps are commitments to exchange one set of cashflows for another. Swapsresult in an economic exchange of currencies or interest rates (for example, fixed rate for floating rate) ora combination of all these (i.e. cross-currency interest rate swaps). No exchange of principal takes place,except for certain currency swaps. Our Group’s credit risk represents the potential cost to replace theswap contracts if counterparties fail to perform their obligation. This risk is monitored on an ongoing basiswith reference to the current fair value, a proportion of the notional amount of the contracts and theliquidity of the market. To control the level of credit risk taken, our Group assesses counterparties usingthe same techniques as for its lending activities.
(iii) Liquidity risk
Our Group will maintain sufficient cash and marketable securities, the availability of funding through anadequate amount of committed credit facilities and the ability to close out market positions.
Our risk management policy with respect to market and credit risks in loans, ship investments and othermatters related to the shipping industry, is administered by our relevant/respective departments, whoreport to the Management Committee on a monthly basis. In this regard, our asset finance departmentwill be responsible for market and credit risks in loans and ship investments, and our structured financedepartment will be responsible to monitor the credit worthiness of our shipping clients for financearrangement. Our risk management policy with respect to foreign exchange, interest rate and liquidityrisks, is administered by our overall finance department, who reports to the Management Committee on amonthly basis. Our risk management policy with respect to our direct investments in distressed assetsand property is administered by our distressed assets/investment department, who is responsible tomonitor, among other things, the risks and issues relating to our distressed assets investments and theeconomic and market conditions of the property market in the areas in which we have invested in or areconsidering to invest in. The distressed assets/investment department reports to the ManagementCommittee on a monthly basis.
EMPLOYEES
As at the Latest Practicable Date, we employed a total of 32 full-time employees and we do not have anypart-time employees.
We set out below the total number of our employees and the various departments in which they serveand their geographical distribution as at the end of each of FY2004, FY2005 and FY2006.
Department FY2004 FY2005 FY2006
Structured finance, asset finance, and ship investment 7 9 11 and management
Distressed assets investment and management 4 4 4
Agency and documentation 3 3 3
Finance and Accounting 3 3 4
Executive Directors 3 3 3
General affairs/others 5 5 6
Total 25 27 31
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Country FY2004 FY2005 FY2006
Hong Kong 20 21 24
Singapore 2 3 4
Japan 3 3 3
Total 25 27 31
Our relationship with staff
We believe that our staff is one of our most valuable assets which has contributed to the success of ourGroup. Since we came into existence, we have not experienced any significant turnover of staff nor anydisruption to our business operations due to labour disputes.
Benefits
Hong Kong
We provide mandatory provident fund schemes for our staff in Hong Kong (“MPF schemes”), medicalinsurance schemes, housing allowance scheme and certain allowances for our staff.
Under the MPF schemes, we are required to contribute 5% of the staff’s monthly relevant income subjectto a maximum contribution of HK$1,000. Such contribution is not required for staff with a monthly relevantincome of less than HK$4,000. In addition to the mandatory contributions, we make a voluntarycontribution to top up the total contributions to a maximum of 10% of our staff’s monthly relevant incometo the MPF scheme, depending on seniority of our staff.
Our staff in Hong Kong are required to contribute 5% of their monthly relevant income or HK$1,000 to thescheme, whichever is lower and they may make additional voluntary contributions to the MPF scheme inany amount.
For staff joining before 1 July 1997, contributions from us and the staff are 100% vested in the staff assoon as they are paid to the MPF schemes but all benefits derived from the mandatory contributionsmust be preserved until the staff reach the retirement age of 65 (subject to exceptions such as earlyretirement between the ages of 60 to 64, death, total incapacity and permanent departure from HongKong). For staff joining after 1 July 1997, the employer’s contribution under the MPF scheme will bevested in the staff according to a vesting schedule. Our contributions to the MPF schemes can be used tooffset any long service payments or severance payments payable and it is deductible against profits tax.
Singapore
Under the CPF scheme, we and our staff in Singapore have to contribute a total amount equal to 33% ofthe total ordinary wages of local staff (below the age of 50) to the CPF scheme, subject to a maximumlevel of monthly relevant income of S$4,500 for the current year. Ordinary wage refers to monthly salary,overtime, monthly allowances etc.
CPF deduction is also applicable on the bonus portion of staff’s income, known as the Additional wage.The Additional wage subject to CPF deduction is the difference between S$76,500 and the total ordinarywages subject to CPF contributions for the current year. This total amount (i.e. S$76,500) is currentlypegged at a level equivalent to 17 times the maximum level of monthly income which is subject to CPFdeduction.
Both the employer and its foreign employees are not required to contribute to the CPF scheme in respectof a foreign staff hired on an employment pass, work permit or professional visit pass.
The employer and its foreign employees are required to contribute to the CPF scheme in respect offoreign employees who are Singapore permanent residents. The mandatory CPF contribution in respectof Singapore permanent residents are at reduced rates of 9% in the first year following the timepermanent resident status is granted to the foreign staff (4% from the employer and 5% from the
employee), 24% in the second year (9% from the employer and 15% from the employee), and thereafterat the full rate. The employer and employee may however, jointly apply to the CPF for either the employeror both the employer and employee to contribute to the CPF scheme at the full rate prescribed forSingapore citizens. Such application, once approved, is irrevocable, unless the contract of employment isterminated. The levels of contribution to the CPF by us and the aforementioned employees and our Groupall assume that the employee’s salary is above S$750. Reduced contributions are applicable for salariesbelow this amount.
The maximum level of monthly income subject to CPF deductions for 2006 is S$4,500.
For staff below the age of 50, the total CPF contribution rate of 33% for year 2006 is made up of 20%from the staff and 13% from our Group.
For staff between the age of 50 to 55, the current total CPF contribution rate is 27% (18% from staff and9% from our Group) in 2006.
Contributions from us and the staff are 100% vested in the staff as soon as they are paid into the CPFschemes but all benefits derived from the mandatory contributions will be retained in each respectivestaff’s account (subject to deduction for any amount that has been utilised under the approved withdrawalscheme for purchase of housing accommodation, etc.) until the staff reaches the retirement age of 62 orearlier.
Contributions paid by the staff and us (i.e. 20% and 13%) are expenses deductible against staff incomefor personal income tax and profits for company corporate tax.
Japan
We provide our employees with the health, pension insurance, workmen’s accident compensation andunemployment insurance schemes.
Employees who are permanent staff are covered by a health insurance scheme. We and our employeesshare equally in the cost of the premium. The cost of the premium is paid monthly and the generalpremium rate was 8.2% of the respective salaries for each employee of the age of 40 or less and 9.45%for employees of over 40 years in age. Under the scheme, 70% of medical costs is covered includinghigh-cost medical benefits, transportation expenses, disability benefits, lump-sum allowance for childcareand nursing, maternity allowance and funeral expenses.
Ordinary employees participate in the employees’ pension plan. Both the employer and the employeebear the insurance premium payment equally. We deduct the insurance premium from the employee’smonthly salary. The premium rate was 13.934%.
The workmen’s Accident Compensation Insurance covers the expenses to compensate an employee forinjuries or diseases sustained or incurred during work or commuting to work. The insurance premium ispaid by us. The premium was 0.5%. Benefits from this insurance cover includes the expenses of medicaltreatment, absence from work for four days or more, compensation for any irrecoverable physicalfunctional impediment or disability, compensation for the bereaved family in the case of an employeepassing away and funeral costs of an employee who has passed away.
Unemployment Insurance provides benefits to employees if they are made redundant. The premium isshared between us and our employee 1.05% and 0.7% respectively. The insurance premium is deductedfrom the employee’s monthly salary. This insurance provides benefits to job-seeking people who leftusand have the will and the ability to work. To receive such benefits, the job-seeking person must haveworked for the same employer as an insured employee for six months or longer and that person musthave worked for at least 14 days or longer during the past one year period prior to the date ofunemployment.
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PRC
Under PRC laws and regulations, a PRC-incorporated company must contribute to social welfare plans(including retirement insurance, unemployment insurance, medical insurance, and workmen’s accidentcompensation insurance) for each of its employees.
As at the Latest Practicable Date, we do not have any direct employees in the PRC and therefore do notcontribute to the social welfare plans under PRC laws and regulations. In the event that we have anyemployees in the PRC in the future, we will comply with such PRC laws and regulations as may benecessary.
REMUNERATION
The compensation paid to our Directors and Executive Officers for services rendered to us and oursubsidiaries on an aggregate basis and in remuneration bands during the last two most recent completedfinancial years and the current financial year (estimate) is as follows:-
Actual EstimatedFY2005 FY2006 FY2007
Directors
Executive DirectorsMotokuni Yamashiro F F FKazuhiko Yoshida E F FMichio Tanamoto E E E
Non-Executive DirectorsHamilton Jian Ren Chueh X X XJörg Wilhem Schelp X X XRobert Van Jin Nien – X X
Actual EstimatedFY2005 FY2006 FY2007
Directors
Independent Non-Executive DirectorsV-Nee Yeh A A AAng Miah Khiang – – ARonnie Teo Heng Hock – – A
Executive Officers
Masaki Fukumori E E EMasahiro Iwabuchi B B BKenji Fukuyado C B BClementine Man Ting Ng A B BThomas Cheung Fook-Loi B B B
Notes:
Band A: Compensation from S$1 to S$250,000 per annum.Band B: Compensation from S$250,001 to S$500,000 per annum.Band C: Compensation from S$500,001 to S$750,000 per annum.Band D: Compensation from S$750,001 to S$1,000,000 per annum.Band E: Compensation from S$1,000,001 to S$1,250,000 per annum.Band F: Compensation from S$1,250,001 to S$1,500,000 per annum.Band X: No compensation was paid for the relevant period.
No amounts have been set aside or accrued by our Group to provide for pension, retirement or similarbenefits for our Directors and Executive Officers.
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SERVICE AGREEMENTS
Particulars of Directors’ service contracts
Executive Directors
Mr. Motokuni Yamashiro has entered into a service agreement with our Company pursuant to which hehas agreed to act as an Executive Director for an initial term of one year with effect from 7 August 2007.Each of Mr. Kazuhiko Yoshida and Mr. Michio Tanamoto has entered into a service agreement with ourCompany pursuant to which each has agreed to act as an Executive Director for an initial term of threeyears with effect from 7 August 2007. The term of service shall be renewed and extended automaticallyon the expiry of such initial term for an indefinite term, unless and until either party has given at least sixmonths’ written notice of termination or unless the employment is summarily terminated upon any breachby the employee.
Separately from the above, Mr. Motokuni Yamashiro, Mr. Kazuhiko Yoshida and Mr. Michio Tanamoto haveeach given an undertaking to our Company as follows:
� Mr. Yamashiro has undertaken that he will not resign as an Executive Director of our Company andhe will not exercise any right to terminate any service agreement that he may enter into with ourCompany within the period of one year commencing from the date of listing of our Company on theSGX-ST, and after such one-year period, within a period of one year commencing from the date ofresignation of any other Executive Director, save that the foregoing undertaking shall terminate inthe event that a take-over offer has been made in accordance with the Singapore Code on Take-overs and Mergers or any other applicable law or regulation (including Cayman Islands law) by aperson (whether individually or together with parties acting in concert with him) and subsequent tosuch take-over offer, more than 50% of the issued share capital of our Company is acquired orotherwise controlled by that person (whether individually or together with parties acting in concertwith him); and
� each of Mr. Yoshida and Mr. Tanamoto has undertaken that he will not resign as an ExecutiveDirector of our Company and he will not exercise any right to terminate any service agreement thathe may enter into with our Company within the period of three years commencing from the date oflisting of our Company on the SGX-ST, and after such three-year period, within a period of oneyear commencing from the date of resignation of any other Executive Director, save that theforegoing undertaking shall terminate in the event that a take-over offer has been made inaccordance with the Singapore Code on Take-overs and Mergers or any other applicable law orregulation (including Cayman Islands law) by a person (whether individually or together with partiesacting in concert with him) and subsequent to such take-over offer, more than 50% of the issuedshare capital of our Company is acquired or otherwise controlled by that person (whetherindividually or together with parties acting in concert with him).
Each of these Executive Directors is entitled to the respective basic salary and housing allowance set outbelow (after the first year of appointment, annual reviews of the housing allowance shall be made anddecided at the discretion of our Directors payable monthly in arrears). In addition, each of the ExecutiveDirectors is also entitled to a discretionary performance bonus to be determined in the following manner:
Consolidated Profit Before Tax (“CPBT”) Performance Bonus, as a percentage of CPBT
Less than US$8.0 million –US$8.0 million or more but not more than 7.50%
US$12.0 millionMore than US$12.0 million The aggregate of (i) 7.50% of the first US$12.0 million
and (ii) 10.0% of the remaining amount of CPBT
Consolidated Profit Before Tax means, in respect of a financial year of our Company, the auditedconsolidated profit before tax of our Company, our subsidiaries and our associated companies and beforepayment of the respective performance bonus to the Executive Directors for that financial year, butexcluding any extraordinary profit. The performance bonus will be payable in respect of the financial yearended 31 December 2007 and in respect of each financial year thereafter.
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An Executive Director may not vote on any resolution of the Directors regarding the amount ofremuneration (including housing allowance and bonuses payable to him). The current basic annualsalaries and housing allowance of our Executive Directors are as follows:
Name Annual Salary Housing Allowance(US$) (US$)
Mr. Motokuni Yamashiro 180,000 111,075Mr. Kazuhiko Yoshida 180,000 104,412 Mr. Michio Tanamoto 180,000 79,245
Our Executive Directors’ salaries are paid net of any tax payable by the relevant Director in respect of anyremuneration payable to the Director under the Service Agreements with our Company.
Under the Service Agreement, each of the Executive Directors has agreed that during the course of hisemployment with our Company, he will not engage in the conduct of any other business and will not use,divulge or communicate to any person any trade secrets or other confidential information of our Company.In addition, each Executive Director has agreed that he will not, for 12 months after the termination of hisemployment under his respective Service Agreement: (i) carry on for his own account any businesscarried on by our Company, subsidiaries and associates within Hong Kong and Singapore; (ii) assist, withtechnical advice, any party engaged in the business of our Company, subsidiaries and associates withinHong Kong and Singapore; (iii) solicit any party who at any time during the last 12 months of hisemployment with our Company was a customer of our Company or any of our subsidiaries; and (iv) offeremployment by himself or solicit or arrange for employment by any other person of any of the employeesof our Company or any of our subsidiaries.
We may terminate the Service Agreement by giving not less than six months’ notice to any ExecutiveDirector. Following such termination, we shall pay to such Executive Director an amount of up to 70% ofhis basic salary per month for 12 months following the date on which the Service Agreement has beenterminated by us, provided that the Service Agreement is not terminated due to any breach committed bysuch Executive Director, and we have not waived the non-competition provisions described above.
Our Company believes that such termination fees are fair and reasonable in view of the specialisednature of our Company’s business, together with the fact that the Executive Directors are subject to non-competition obligations (as described above) for a period of 12 months following the termination of theiremployment under their respective Service Agreements. Given that the Executive Directors are precludedfrom seeking alternative employment during such 12-month restriction period, our Company believes thatit is only fair and reasonable that the Executive Directors are compensated for agreeing to suchrestrictions. In the event that the amount of termination fees payable is lower than 5% of the NTA of ourCompany (based on the most recent audited financial statements of our Company at the time of thepayment of the termination fees), the payment of such termination fees shall be subject to the approval ofour Audit Committee. In the event that the amount of termination fees payable is equal to or exceeds 5%of the NTA of our Company (based on the most recent audited financial statements of our Company atthe time of the payment of the termination fees), the payment of such termination fees shall be subject tothe requirements of Chapter 9 of the SGX-ST Listing Manual in relation to interested person transactions,as the same may be amended or modified from time to time.
Save as disclosed in the section entitled “Service Agreements – Particulars of Directors’ ServiceContracts”, none of our Directors has or is proposed to have a service contract with us other thancontracts expiring or determinable by the employer within one year without the payment of compensation(other than statutory compensation).
Save for the above, there are no other existing or proposed service agreements entered into or to beentered into by our Directors or Executive Officers.
Had the Service Agreements been in existence for FY2006, the aggregate remuneration paid to theExecutive Directors in FY2006 would have been approximately US$2.42 million instead of US$2.43million and the Profit Before Tax of our Group for FY2006 would have been US$11.84 million instead ofUS$11.83 million.
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Our Directors recognise the importance of corporate governance and the offering of high standards ofaccountability to our Shareholders of our Company.
Our Board of Directors has formed three committees: (i) the Nominating Committee; (ii) the RemunerationCommittee; and (iii) the Audit Committee.
Nominating Committee
Our Nominating Committee comprises Mr. Ang Miah Khiang, Mr. Ronnie Teo Heng Hock, Mr. V-Nee Yehand Mr. Kazuhiko Yoshida. The Chairman of the Nominating Committee is Mr. Ronnie Teo Heng Hock. OurNominating Committee will be responsible for:
(a) re-nomination of our Directors having regard to the Director’s contribution and performance;
(b) determining annually whether or not a Director is independent; and
(c) deciding whether or not a Director is able to and has been adequately carrying out his duties as aDirector.
The Nominating Committee will decide how the Board’s performance is to be evaluated and proposeobjective performance criteria, subject to the approval of the Board, which address how the Board hasenhanced long-term Shareholders’ value. The Board will also implement a process to be carried out bythe Nominating Committee for assessing the effectiveness of the board as a whole and for assessing thecontribution of each individual Director to the effectiveness of the Board. Each member of the NominatingCommittee shall abstain from voting on any resolution in respect of the assessment of his performance orre-nomination as Director.
Remuneration Committee
Our Remuneration Committee comprises Mr. Ang Miah Khiang, Mr. Ronnie Teo Heng Hock and Mr. V-NeeYeh. The Chairman of the Remuneration Committee is Mr. V-Nee Yeh. Our Remuneration Committee willrecommend to our Board of Directors a framework of remuneration for our Directors and key executives,and determine specific remuneration packages for each Executive Director.
The recommendations of our Remuneration Committee should be submitted for endorsement by theentire Board. All aspects of remuneration, including but not limited to directors’ fees, salaries, allowances,bonuses, options issued under the Scheme and benefits in kind shall be covered by our RemunerationCommittee. Each member of the Remuneration Committee shall abstain from voting on any resolution inrespect of his remuneration package.
Audit Committee
Our Company established an Audit Committee on 26 June 2007 with written terms of reference incompliance with the Code of Corporate Governance 2005, as issued by the Ministry of Finance,Singapore. The primary duties of the Audit Committee are to review and supervise the financial reportingprocess and internal control procedures of our Group.
The Audit Committee has four members comprising our Directors, Mr. Ang Miah Khiang, Mr. HamiltonJian Ren Chueh, Mr. Ronnie Teo Heng Hock and Mr. V-Nee Yeh. Mr. Ang Miah Khiang is the Chairman ofthe Audit Committee.
The Audit Committee shall meet periodically to perform the following functions:
(a) review with the external auditors the audit plan, their evaluation of the system of internal controls(including the fair valuation process), their audit report, their management letter and ourmanagement’s response;
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(b) review the financial statements before submission to our Board of Directors for approval, focusingin particular, on changes in accounting policies and practices, major risk areas, significantadjustments resulting from the audit, any adjustments resulting from fair valuation of ourCompany’s investments the going concern statement, compliance with accounting standards aswell as compliance with any stock exchange and statutory/regulatory requirements;
(c) review, with the assistance of the internal auditor, the internal control and procedures and ensureco-ordination between the external auditors and our management, reviewing the assistance givenby our management to the auditors, and discuss problems and concerns, if any, arising from theinterim and final audits, and any matters which the auditors may wish to discuss (in the absence ofour management where necessary);
(d) review and discuss with the external auditors any suspected fraud or irregularity, or suspectedinfringement of any relevant laws, rules or regulations, which has or is likely to have a materialimpact on our Group’s operating results or financial position, and our management’s response;
(e) consider the appointment or re-appointment of the external auditors and matters relating toresignation or dismissal of the auditors;
(f) review transactions falling within the scope of Chapter 9 and Chapter 10 of the Listing Manual;
(g) undertake such other reviews and projects as may be requested by our Board of Directors andreport to our Board of Directors its findings from time to time on matters arising and requiring theattention of our Audit Committee; and
(h) generally to undertake such other functions and duties as may be required by statute or the ListingManual, and by such amendments made thereto from time to time.
Apart from the duties listed above, the Audit Committee shall commission and review the findings ofinternal investigations into matters where there is any suspected fraud or irregularity, or failure of internalcontrols or infringement of any Singapore law, rule or regulation which has or is likely to have a materialimpact on our Company’s operating results and/or financial position.
BOARD PRACTICE
Our Articles provide that our Board of Directors shall consist of between one and nine Directors. Save asdisclosed in the section entitled “Service Agreements – Particulars of Directors’ Service Contracts”, ourDirectors do not have fixed terms of office. At each annual general meeting, one-third of the Directors forthe time being shall retire from office by rotation, provided that no Director holding office as ExecutiveDirector whose term of office under a service contract with the Company is a fixed term that is unexpiredand continuing as at the time of the relevant annual general meeting, shall be subject to retirement byrotation or be taken into account in determining the number of Directors to retire. The Directors to retire inevery year shall be those who have been longest in office since their last re-election or appointment. Aretiring Director shall be eligible for re-election.
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On 26 June 2007, our Shareholders approved a share option scheme known as the Uni-Asia ShareOption Scheme, the rules of which are set out in Appendix F of this Prospectus. The Scheme complieswith the relevant rules of Chapter 8 of the Listing Manual. The Scheme will provide eligible participantswith an opportunity to participate in the equity of our Company as well as to motivate them to performbetter through increased loyalty and dedication to our Company. The Scheme, which forms an integraland important component of a remuneration and compensation plan, is designed to primarily reward andretain Executive Directors and employees whose services are crucial to our Group’s well being,development and success.
As at the Latest Practicable Date, no Options (as defined in Rule 2 of the Scheme) have been grantedunder the Scheme.
A summary of the Rules of the Scheme is set out as follows:
1. Objectives
The objectives of the Scheme are as follows:
(a) to motivate each participant to optimise his performance standards and efficiency and tomaintain a high level of contribution to our Group;
(b) to retain key employees and Directors whose contributions are essential to the long-termgrowth and profitability of our Group;
(c) to instil loyalty to, and a stronger identification by the participants with the long-termprosperity of, our Group;
(d) to attract potential employees with relevant skills to contribute to our Group and to createvalue for our Shareholders; and
(e) to align the interests of the participants with the interests of our Shareholders.
2. Participants
Under the rules of the Scheme, Executive, Non-Executive and Independent Directors and full-timeemployees of our Group are eligible to participate in the Scheme. Directors who are ControllingShareholders of our Company and their Associates are not eligible to participate in the Scheme.
To be eligible to participate in the Scheme, a participant (“Participant”) must:
(i) be confirmed in his/her employment with our Company or our Subsidiaries and not be onprobation and have been in the full-time service of our Company or any of our Subsidiariesfor at least 12 months on or prior to the date of the grant of the Option (the “Date of Grant”);
(ii) have attained the age of 21 years on or before the Date of Grant; and
(iii) not be an undischarged bankrupt and must not have entered into a composition with hiscreditors.
3. Scheme administration
The Scheme shall be administered by a committee comprising Directors (including Directors whomay be participants of the Scheme) (“Committee”), with powers to determine, inter alia, thefollowing:
(a) persons to be granted Options;
(b) number of Options to be offered; and
(c) recommendations for modifications to the Scheme.
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The Committee comprises members of the Remuneration Committee. A member of the Committeewho is also a Participant of the Scheme must not be involved in its deliberation in respect ofOptions granted or to be granted to him.
4. Size of the Scheme
The nominal amount of the aggregate number of Shares over which the Committee may grantOptions on any date, when aggregated with the nominal amount of the number of Shares issuedand issuable in respect all Options granted under the Scheme and any other share option schemesof our Company, shall not exceed 15 per cent. of the issued share capital of our Company on theday preceding the date of the relevant grant.
Our Company believes that this 15 per cent. limit set by the SGX-ST gives our Company sufficientflexibility to decide upon the number of Option Shares to offer to our existing and new employees.15 per cent. of our post-Invitation issued share capital constitutes approximately 36,060,000Shares. As it is intended that the Scheme shall last for 10 years, assuming that there is no changein the total issued share capital of our Company, the number of Option Shares in respect of whichOptions may be granted in a year will average approximately 3,606,000. The number of eligibleparticipants is expected to grow over the years. Our Company, in line with its goals of ensuringsustainable growth, is constantly reviewing our position and considering the expansion of our talentpool which may involve employing new employees. The employee base, and therefore the numberof eligible participants will increase as a consequence. If the number of Options available under theScheme is limited, we may only be able to grant a small number of Options to each eligibleparticipant which may not be a sufficiently attractive incentive. Our Company is of the opinion that itshould have sufficient number of Options to offer to new employees as well as to existingemployees. The number of Options offered must also be significant enough to constitute ameaningful reward for contribution to our Group. However, this does not mean that the Committeewill issue Option Shares up to the prescribed limit. The Committee shall exercise its discretion indeciding the number of Option Shares to be granted to each employee, which will depend on, interalia, the employee’s performance and value to our Group.
5. Entitlement
Subject to such adjustments as may be made under the Rules, the number of Options to beoffered to a Participant of the Scheme shall be determined at the absolute discretion of theCommittee, who shall take into account criteria such as the rank, performance, years of serviceand potential for future development of that Participant.
6. Participants in other schemes
Participants who participate in the Scheme are eligible to participate in other schemesimplemented by other companies, if approved by the Committee.
7. Grant of Options
Subject to the Rules, the Committee may make offers of grant of Options (“Offers”) to such eligibleParticipants as it may in its sole and absolute discretion select at any time during the period whenthe Scheme is in force, except that no Offers shall be made during the period of 30 daysimmediately preceding the date our Company announces its interim and/or final results (whicheverthe case may be). In the event of our Company announcing any matter of an exceptional natureinvolving unpublished price sensitive information (“Exceptional Announcements”), Offers mayonly be made on or after the third Market Day on which such Exceptional Announcement isreleased.
8. Acceptance of Offer
The Offer to a Participant, if not accepted by the Participant before 5.00 p.m. on the 30th day fromthe date of such Offer, will lapse. Upon acceptance of the Offer, the Participant to whom the Optionis granted will pay to our Company a consideration of US$1.00 or such other amount and deliversuch other documentation as the Committee may require.
9. Exercise price and exercise period
Subject to any adjustment to be made pursuant to the Rules, the exercise price for each Share inrespect of which an Option is exercisable shall be determined by the Committee at its absolutediscretion and fixed by the Committee at:
(a) a price equal to the average of the last dealt prices for a Share on the SGX-ST for the periodof three consecutive Market Days immediately prior to the relevant Date of Grant (“MarketPrice”) but in no event shall the exercise price per Share be less than its par value (“MarketPrice Options”); or
(b) a price which is set at a discount to the Market Price, provided that the maximum discountshall not exceed 20 per cent. of the Market Price but in no event shall the exercise price perShare be less than its par value (“Incentive Options”).
Each eligible Participant who has been granted Market Price Options shall be entitled to exerciseat any time after the first anniversary of the Date of Grant of that Option, Provided always that theOptions granted to employees shall be exercised before the tenth anniversary of the relevant Dateof Grant and Options granted to Non-Executive Directors and Independent Directors shall beexercised before the fifth anniversary of the relevant Date of Grant, or such earlier date as may bedetermined by the Committee, failing which all unexercised Options shall immediately lapse andbecome null and void and a Participant shall have no claims against our Company.
Each eligible Participant who has been granted Incentive Options shall be entitled to exercise atany time after the second anniversary of the Date of Grant of that Option, Provided always that theOptions granted to employees shall be exercised before the tenth anniversary of the relevant Dateof Grant and Options granted to Non-Executive Directors and Independent Directors shall beexercised before the fifth anniversary of the relevant Date of Grant, or such earlier date as may bedetermined by the Committee, failing which all unexercised Options shall immediately lapse andbecome null and void and a Participant shall have no claims against our Company.
10. Variation of share capital
If a variation in our issued share capital occurs (whether by way of capitalisation or rights issue,reduction of capital, sub-division or consolidation of Shares or distribution), the exercise price, thenominal value, class and/or number of Shares comprised in an Option or over which Options maybe granted will be adjusted in such manner as the Committee may determine to be appropriateand upon the written confirmation of our auditors (acting only as experts and not as arbitrators) thatin their opinion, such adjustment is fair and reasonable. The issue of Shares as consideration foran acquisition by us or a private placement of Shares will not be regarded as a circumstancerequiring adjustment. An increase in the number of issued Shares as a consequence of theexercise of Options or other convertibles issued by us will also not be a circumstance requiringadjustment.
11. Exercise of Options
Options which are accepted by the Participants may be exercised during the periods and at therelevant exercise prices. All Options must be exercised before the expiry of 10 years from the Dateof Grant in the case of employees and before the expiry of five years in the case of Non-ExecutiveDirectors and Independent Directors, or such earlier date as may be determined by the Committee,failing which the Options shall be deemed to have expired and shall cease to be valid.
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Special provisions dealing with the lapsing or permitting the earlier exercise of Options undercertain circumstances include:
(a) the termination of the Participant’s employment or appointment in our Group, as the casemay be;
(b) the bankruptcy of the Participant;
(c) the death of the Participant;
(d) a take-over of our Company; and
(e) the winding-up of our Company (voluntary or otherwise).
12. Shares issued under the Scheme
Shares arising from the exercise of the Options shall be subject to the provisions of theMemorandum of Association and Articles of our Company. The Shares so allotted will upon issuerank pari passu in all respects with the then existing issued Shares for any dividends, rights,allotments or distributions the record date (“Record Date”) of which falls after the relevant date ofexercise of the Option. “Record Date” means the date fixed by our Company for the purposes ofdetermining entitlements of Shareholders to dividends, rights, allotments or other distributions.
13. Changes in the Scheme
Subject to the prior approval of the SGX-ST or any other stock exchange on which the Shares arelisted or quoted and other regulatory authorities as may be necessary, the Scheme may be alteredfrom time to time by a resolution of the Committee. However, no alteration shall be made whichwould adversely affect the rights attached to Options granted prior to such alteration except withthe prior consent in writing of such number of Participants who, if they exercised their Options infull, would thereby become entitled to not less than ¾ in nominal amount of all Shares which wouldbe allotted and issued upon exercise in full of all outstanding Options. Also, no alteration shall bemade to certain rules of the Scheme to the advantage of Participants except with the prior approvalof our Shareholders in general meeting.
14. Duration of the scheme
The Scheme shall continue in operation for a maximum period of ten years commencing on theAdoption Date. “Adoption Date” means the date upon which the Scheme is adopted by ourShareholders which is 26 June 2007. The Scheme may be continued for any further periodthereafter with the approval of our Shareholders in general meeting and of any relevant authoritieswhich may then be required.
Grant of Options at Discounted Exercise Price
The Scheme which forms an integral component of our remuneration and compensation plan, is designedto reward and retain eligible Participants whose services are crucial to our well-being and success. Theability to grant Options with exercise prices set at a discount to the prevailing Market Prices of ourShares, is intended, inter alia, to operate as a means to recognise Participants for their outstandingperformance as well as to motivate them to continue to excel while encouraging them to focus more onimproving our profitability and return above a certain level which will benefit all Shareholders when theseare eventually reflected through share price appreciation. The flexibility in determining the quantum ofdiscount would enable the Committee to tailor the incentives in the grant of Options to commensuratewith the performance and contribution of each individual Participant.
The flexibility of granting Options with discounted prices is also intended to cater for situations where themarket conditions are bullish and the market price of our Shares are traded at high premiums. In suchevents, we may grant Options to our employees at a discount to the Market Price.
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In deciding whether to give a discount and the quantum of such discount, the Committee shall be atliberty to take into consideration factors including performance of our Company, the years of service andindividual performance of the Participant concerned, the contribution of the Participant to our success anddevelopment, and the prevailing market conditions. All Participants, regardless of their rank, shall beeligible to a discount of up to 20 per cent.
It is envisaged that we may consider granting the Options with Exercise Prices set at a discount to theMarket Price of our Shares prevailing at the time of grant under circumstances including (but not limitedto) to the following:
(a) where, due to speculative forces in the stock market resulting in an overrun of the market, themarket price of our Shares at the time of the grant of Options is not a true reflection of our financialperformance;
(b) to enable us to offer competitive remuneration packages in the event that the practice of grantingOptions with exercise prices that have a discount element becomes a general market norm. Asshare options become more significant components of executive remuneration packages, adiscretion to grant Options with discounted prices will provide us with a means to maintain thecompetitiveness of our remuneration and compensation strategy; and/or
(c) where we need to provide more compelling motivation for specific business units to improve theirperformance, grants of share options with discounted exercise prices will help to align the interestsof employees to those of our Shareholders by encouraging them to focus more on improving ourprofitability and returns above a certain level which will benefit all Shareholders when these areeventually reflected through share price appreciation. Options granted at a discount are perceivedmore positively by the employees who receive such Options.
The Committee will determine on a case-by-case basis whether a discount will be given, and if so, thequantum of the discount, taking into account the objective that is desired to be achieved by us and theprevailing market conditions. As the actual discount given will depend on the relevant circumstances, theextent of the discount may vary from one case to another, subject to a maximum discount of 20 per cent.of the Market Price of the Share, as described above.
The discretion to grant Options to subscribe for Shares at an exercise price set at a discount to theMarket Price will, however, be used judiciously. The amount of the discount may vary from one offer toanother, and from time to time, subject to a limit of 20 per cent. on the quantum of discount in respect ofOptions granted under the Scheme.
In respect of our Independent Directors, we have presently not made any decision on the terms of thegrant of Options and on whether Options will be granted at a discount to the Market Price. However,should we decide in the future to grant Options to them at a discount, such decision will be based onfactors such as the individual performance of the Participant and the contribution of the Participant to oursuccess and development.
We may also grant Options without any discount to the Market Price. Additionally, we may, if we deem fit,impose conditions on the exercise of the Options (whether such Options are granted at the Market Priceor at a discount to the Market Price), such as restricting the number of Shares for which the Option maybe exercised during the initial years following its vesting.
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Participants in the Scheme
Participation of our Group Employees
The extension of the Scheme to Group employees allows us to have a fair and equitable system toreward Directors and employees who have made and who continue to make significant contributions toour Group’s long-term growth.
We believe the Scheme will enable us to attract, retain and provide incentives to its Participants toproduce higher standards of performance as well as encourage greater dedication and loyalty by enablingus to give recognition to past contributions and services as well as motivating Participants generally tocontribute towards our long-term growth.
Participation of our Non-Executive Director and Independent Directors
The Scheme contemplates the participation by any person who is or may become our Non-ExecutiveDirectors. Our Non-Executive Directors and Independent Directors, although not involved in the day-to-day running of our operations, play an invaluable role in furthering the business interests of our Group bycontributing their experience and expertise. We believe that by allowing our Non-Executive Directors andIndependent Directors to participate in the Scheme, we will be able to provide them with an opportunity toparticipate in our equity. Our Non-Executive Directors and Independent Directors are closely associatedwith our business operations even though they do not hold office in an executive capacity. To allow themto participate in the Scheme will instil in them a greater sense of involvement and belonging in our Group,thereby enhancing our working relationship with them.
In addition, our Independent Directors are also members of our Audit Committee. They thereforeundertake a major role in our corporate governance. It is therefore in our long-term interest that weacknowledge the services of these Directors who are members of our Audit Committee by allowing themto participate in the Scheme. Their participation in the Scheme will also attract future suitable and morequalified persons to sit on our Audit Committee. This will help to ensure the continuity of good corporategovernance in our Company in the long term.
To reflect our recognition of the valuable contributions and efforts of our Non-Executive Directors andIndependent Directors, the Scheme will allow us flexibility in providing reward to these Directors in acombination of Director’s fees and Options as it may not always be possible to compensate them fully orappropriately by increasing the Directors’ fees or other forms of cash payment. We also hope that bybeing able to offer share options, it will be able to attract more well-qualified persons to act as Non-Executive Directors and Independent Directors of our Company.
We believe that the grant of Options to our Independent Directors will not give rise to any conflict ofinterests. In any event, to minimise any potential conflict of interests and not to compromise theindependence of our Independent Directors, we intend to grant only a nominal number of Options underthe Scheme to such Independent Directors. In addition, in the event that any conflict of interests arises inany matter to be decided by our Board, we shall procure that the relevant Independent Director abstainfrom voting on such matter at our Board meeting.
Disclosures in Annual Reports
Details of the number of Options granted, the number of Options exercised and the subscription price (aswell as the discounts involved, if any) will be disclosed in our annual report.
Financial Effects of The Scheme
International Financial Reporting Standard 2 on Share-based Payment (“IFRS 2”) is effective for financialstatements covering periods beginning on or after 1 January 2005, and was in force at the date theScheme was approved. IFRS 2 requires the fair value of employee services received in exchange for thegrant of options to be recognised as an expense. For equity-settled share-based payment transactions,the total amount to be expensed in the income statement over the vesting period is determined byreference to the fair value of each option granted, excluding the impact of any non-market vestingconditions.
At each balance sheet date, the Company revises its estimates of the number of options that areexpected to become exercisable. It recognises the impact of the revision of original estimates, if any, inthe income statement with a corresponding adjustment to equity.
Share options are treated as potential ordinary shares in calculating dilutive earnings per share.Employee share options with fixed or determinable terms and non-vested ordinary share are treated asoptions in the calculation of diluted earnings per share, even though they are contingent on vesting. Theyare treated as outstanding on the grant date.
During the vesting period, the consolidated earnings per Share would be reduced by both the expenserecognised and the potential ordinary shares to be issued under the Scheme. When the options areexercised, the consolidated net tangible assets will be increased by the amount of cash received insubscription for the Option Shares. On a per Share basis, the effect is accretive if the subscription price isabove the net tangible assets per Share but dilutive otherwise.
We have made an application to the SGX-ST for permission to deal in, and for quotation of, our Shareswhich may be issued upon the exercise of the Options to be granted under the Scheme. The approval ofthe SGX-ST is not to be taken as an indication of the merits of our Company, our subsidiaries, ourShares, the New Shares, the Option Shares or the Additional Shares.
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INTERESTED PERSON TRANSACTIONS AND POTENTIAL CONFLICTS OF INTEREST
INTERESTED PERSON TRANSACTIONS
In general, transactions between our Group and any of our interested persons (namely, our Directors,Chief Executive Officer or Controlling Shareholders or the Associates of such Directors, Chief ExecutiveOfficer or Controlling Shareholders) would constitute “Interested Person Transactions” for the purposes ofChapter 9 of the Listing Manual.
Our interested persons include Mr. Motokuni Yamashiro, Mr. Kazuhiko Yoshida, Mr. Michio Tanamoto, Mr.Robert Van Jin Nien, Mr. Jörg Wilhem Schelp, Mr. Hamilton Jian-Ren Chueh, Mr. V-Nee Yeh, Mr. Ang MiahKhiang and Mr. Ronnie Teo Heng Hock who are our Directors and the Evergreen Group. Save asdisclosed below, none of our Controlling Shareholders, Directors, Executive Officers, or their respectiveAssociates, has any interest, direct or indirect, in any transaction undertaken by our Group within the pastthree years ended 31 December 2006 and from 1 January 2007 up to the Latest Practicable Date.
Past, Present and Ongoing Transactions
Transactions with the Evergreen Group
Historically, part of our loan syndication business has involved Uni-Asia arranging loan facilities, operatingleases and, or finance leases for the Evergreen Group.
Evergreen International S.A. is a private, Panamanian company controlled as to 100% by Dr. Chang andhis associates, Mr. Chang Kuo Hua, Mr. Chang Kuo Ming and Mr. Chang Kuo Cheng. It is a holdingcompany with direct and indirect interests in a number of companies engaged in the ownership andoperation of shipping and aircraft fleets, including various major members of the Evergreen Group.
Although no member of our Group is in the business of lending money to Evergreen or any othercompany of the Evergreen Group, Uni-Asia has earned and continues to earn fees from these companiesas a result of arranging loans or other financing transactions, such as operating leases and financeleases, for these companies, the lenders or financiers of which are syndicates of banks or other lendinginstitutions whose participants are independent of and not interested persons of our Company.
The fees which Uni-Asia earns from these transactions comprise arrangement fees, paid at the outset,typically on or around drawdown of a loan facility or on the initial leasing of the asset, i.e. the ship oraircraft, in relation to an operating lease or finance lease. In addition, Uni-Asia earns ongoing annualagency fees, over the tenor of the facilities, in relation to its role as agent of the syndicate members. Theannual agency fees earned are minimal in comparison to the arrangement fees in respect of any loan orfinancing transaction.
In the normal course of business, we arrange loans or other financial transactions for the EvergreenGroup. Such transactions are of an ad-hoc nature and have been carried out on an arm’s length basis.We also act as facility agent for these loans and financial transactions.
The aggregate fees, including arrangement fees, agency fees and interest income, received from theEvergreen Group in each of the past three years ended 31 December 2006 and from 1 January 2007 upto the Latest Practicable Date are as follows:
From 1 January 2007
to Latest FY2004 FY2005 FY2006 Practicable Date
Aggregate fees received (US$ ’000) 1,682 1,452 3,483 51
The fees received from Evergreen are based on our normal rates charged to our other customers at therelevant time. Such transactions, if continued after our listing on the SGX-ST, will be subject to the reviewprocedures described in “Guidelines For Future Interested Person Transactions” below, to ensure thatthey are continued on an arm’s length basis.
Guidelines For Future Interested Person Transactions
In the event that we enter into certain transactions with interested persons in the future, such futuretransactions with interested persons must comply with the requirements of the Listing Manual. Asrequired by the Listing Manual, our Articles of Association require a Director to abstain from voting in anycontract or arrangement in which he has a personal material interest. Our internal control procedures willbe designed to ensure that all Interested Person Transactions are conducted at arm’s length and onnormal commercial terms.
Any interested person transaction will be properly documented and submitted semi-annually to our AuditCommittee for its review to ensure that all Interested Person Transactions are conducted at arm’s lengthand on normal commercial terms. In the event that a member of our Audit Committee is interested in anyInterested Person Transaction, he will abstain from reviewing that particular transaction. Our AuditCommittee will include the review of all such Interested Person Transaction as part of the standardprocedures while examining the adequacy of our internal controls.
Our Audit Committee will ensure that all provisions and disclosure requirements on all such InterestedPerson Transactions, including those required by prevailing legislation, the Listing Manual and accountingstandards, as the case may be, are complied with.
Our Directors will ensure that all disclosure requirements on Interested Person Transactions, includingthose required by prevailing legislation, will be subject to shareholders’ approval if deemed necessary bythe Listing Manual. We will disclose in our annual report the aggregate value of Interested PersonTransactions conducted during the financial year.
Review Procedures for Future Interested Person Transactions
Our Audit Committee will review and approve Interested Person Transactions, to ensure that they are onan arm’s length basis, that is, that the transactions are transacted on terms and prices not morefavourable to the interested person than if they were transacted with a third-party and we and ourshareholders have not been disadvantaged in accordance with the following review procedures:
(i) all Interested Person Transactions (either individually or as part of a series or if aggregated withother transactions involving the same Interested Person during the same financial year) belowS$100,000 will not require the approval of the Audit Committee;
(ii) all Interested Person Transactions (either individually or as part of a series or if aggregated withother transactions involving the same Interested Person during the same financial year) below orequal to 3% of the last audited NTA of our Group will not require approval of the Audit Committeeprior to such transactions being entered into, but will require approval by a Director who shall notbe an Interested Person in respect of the particular transaction. Any contracts to be made with anInterested Person shall not be approved unless the pricing is determined in accordance with ourusual business practices and policies, consistent with the usual profit margin built-in or discountgiven or price received by us for the same or substantially similar type of transactions between usand unrelated parties and the terms are no more favourable to the interested person than thoseextended to or received from unrelated parties; and
(iii) all Interested Person Transactions (either individually or as part of a series or if aggregated withother transactions involving the same Interested Person during the same financial year) in excessof 3% of the last audited NTA of our Group will be reviewed by and will require approval by theAudit Committee prior to such transactions being entered into.
We intend to prepare relevant information (such as pricing guidelines, pricing for similar existingcustomers and quotations obtained from third-parties) to assist our Audit Committee in its review of allInterested Person Transactions.
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Before any agreement or arrangement that is not in our ordinary course of business is transacted, priorapproval must be obtained from our Audit Committee. In the event that a member of the Audit Committeeis interested in any of the Interested Person Transaction, he will abstain from reviewing that particulartransaction. Any decision to proceed with such an agreement or arrangement would be recorded forreview by the Audit Committee.
We also intend to comply with the provisions in Chapter 9 of the Listing Manual in respect of all futureInterested Person Transactions, and if required under the Listing Manual, we will seek our Shareholders’approval for such transactions.
Other Review Procedures
In view that part of our loan syndication business has historically involved the arrangement of loanfacilities, operating leases and/or finance leases for the Evergreen Group, we will, in the interests of goodcorporate governance, apply the same review and approval procedures as those applicable to futureInterested Person Transactions, to all our future transactions with the Evergreen Group, for so long asEvergreen holds a direct and/or indirect shareholding interest of five per cent. or more in our Company.However, as Evergreen is not an interested person for the purposes of Chapter 9 of the Listing Manual,our transactions with Evergreen Group will not be subject to the disclosure requirements under Chapter 9of the Listing Manual. The requirements under Chapter 9 of the Listing Manual will only apply totransactions with the Evergreen Group in the event of Evergreen becoming an interested person in thefuture.
POTENTIAL CONFLICTS OF INTERESTS
Our non-Executive Director, Mr. Robert Van Jin Nien, has a 0.08% shareholding interest in and is also adirector of Hopewell Holdings Limited (“Hopewell”), a company in the principal business of propertydevelopment. Hopewell is our substantial shareholder, and is currently publicly listed in Hong Kong. OurBoard believes that Mr. Nien’s interests in Hopewell does not give rise to a material conflict of interests,given that he does not have a material shareholding interest in Hopewell. In the event that Mr. Nien or theBoard is of the view that any material conflict of interests should arise, Mr. Nien will abstain fromdeliberating and participating in the decision-making process of our Board, in relation to any such matterin question.
Our Independent Director, Mr. V-Nee Yeh, is a director and non-executive chairman of Argyle StreetManagement Limited (“ASM”), a fund management company that manages other funds investing indistressed assets, including the ASM Asia Recovery Fund. Mr. Yeh holds units in the ASM Asia RecoveryFund and also has a 33.33% shareholding interest in Argyle Street Management (Holdings) Limited(“ASMH”), which in turn owns 100% of ASM. As Mr. Yeh does not have majority control over ASM, hedoes not control the decision-making of the board or investment committee of ASM. Our Board believesthat potential conflicts of interests would be minimised by the fact that Mr. Yeh is an independent non-executive director of our Company and is not involved in the day-to-day business of our Group. Inaddition, as a Director of our Company, Mr. Yeh will also have a duty to disclose any conflicts of interest,as soon as he becomes aware of the same. He will also abstain from voting in respect of any matterwhere a conflict of interests arises and is required to act in the interests of our Company and ourshareholders as a whole when performing his duties as an Independent Director of our Company. OurBoard believes that his professional background in distressed assets fund management is beneficial to usas he would have a better understanding of our business. In connection with Mr. Yeh’s appointment as ourIndependent Director, we will, prior to the registration of this Prospectus with the MAS, enter into aconfidentiality agreement with Mr. Yeh, pursuant to which Mr. Yeh will be required to keep confidential andnot use, divulge, disclose or deliver to any person (except as authorised or required by his duties or bylaw) any information acquired by him in the course of his role as director of the Company and which (i) isa trade secret or know-how of our Company or is otherwise the confidential property of our Company orany of its related corporations; or (ii) was acquired by the director under a duty of confidentiality. Mr. Yehwill also be required to use his best endeavours to prevent the publication or disclosure of any trade
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secret or know-how of our Company, or confidential information concerning the business or the finance ofour Company or any of our related companies or of any person or company with whom our Companydeals. The above confidentiality requirements shall continue to apply after the termination of Mr. Yeh’sappointment without limit in time, but shall cease to apply to information or knowledge which may comeinto the public domain other than by breach of these provisions.
Each of our Executive Directors, Mr. Motokuni Yamashiro, Mr. Kazuhiko Yoshida and Mr. Michio Tanamoto,has an option to subscribe for new shares in our associated company, Capital Advisers. Mr. Yoshida andMr. Tanamoto are also directors of Capital Advisers. None of their options, if fully exercised, would eachamount to more than 1.63% of the enlarged share capital of Capital Advisers. They do not currently holdany shares directly in Capital Advisers. In order to minimise any potential conflicts of interests, each ofMr. Motokuni Yamashiro, Mr. Kazuhiko Yoshida and Mr. Michio Tanamoto will abstain from deliberating andparticipating in the decision-making process of our Board, in relation to any issues concerning ourtransactions with Capital Advisers. In addition, as our Directors each of Mr. Motokuni Yamashiro, Mr.Kazuhiko Yoshida and Mr. Michio Tanamoto will also have a duty to disclose any conflicts of interest, assoon as he becomes aware of the same. They will also be required to act in the interests of ourCompany and our Shareholders as a whole when performing their duties as our Directors.
Save as disclosed above and in the section entitled “Interested Person Transactions” in this Prospectus:-
(a) none of our Directors, Executive Officers, Controlling Shareholders or any of their Associates hashad any interest, direct or indirect, in any transactions to which our Company was or is to be aparty;
(b) none of our Directors, Executive Officers, Controlling Shareholders or any of their Associates hasany interest, direct or indirect, in any company carrying on the same business or a similar tradewhich competes materially and directly with the existing business of our Group; and
(c) none of our Directors, Executive Officers, Controlling Shareholders or any of their Associates hasany interest, direct or indirect, in any company that is our customer or supplier of goods andservices.
Mitigation
Upon completion of the Invitation, there is no single Controlling Shareholder of our Group.
We believe that any potential conflicts of interest are addressed as follows:
� We have established policies and procedures, including internal audit controls, to ensure that ourtransactions with our Controlling Shareholders and their affiliates are entered into on arm’s lengthand normal commercial terms. In this regard, our Company has appointed an internal auditor (the“Internal Auditor”) to undertake the role of the internal audit function. The Internal Auditor will beresponsible for assessing the internal auditing and reporting controls and procedures within ourGroup and to make recommendations, as appropriate, to the Audit Committee.
� Upon our listing on the SGX-ST, we will be subject to the SGX-ST rules on Interested PersonTransactions. The objective of these rules is to ensure that our Interested Person Transactions donot prejudice the interests of our Shareholders as a whole. These rules require us to make promptannouncements, disclosures in our annual reports and/or seek Shareholders’ approval for certainmaterial Interested Person Transactions. Further, our Audit Committee may have to, and we mayhave to appoint independent financial advisers to, review such Interested Person Transactions andstate whether or not it is, or they are, of the view that such transactions are on normal commercialterms and are not prejudicial to our interests and our minority Shareholders.
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INTERESTED PERSON TRANSACTIONS AND POTENTIAL CONFLICTS OF INTEREST
� Our Audit Committee will review Interested Person Transactions on a periodic basis to ensurecompliance with our policies and procedures, including internal audit controls, and with the relevantprovisions of the SGX-ST rules. The review will include an examination of the nature of thetransactions and such relevant supporting data as the Audit Committee may deem necessary. If amember of our Audit Committee has an interest in a transaction, he will abstain from participatingin the review and approval process of the Audit Committee in relation to that transaction. Our AuditCommittee will also review the policies and procedures to ensure that they are adequate to achievethe objectives of ensuring that our Interested Person Transactions are entered into on arm’s lengthand normal commercial terms.
� Our Directors owe fiduciary duties to us, including the duty to act in good faith and in our bestinterests. Our Directors have a duty to disclose any conflict of interest, as soon as they becomeaware of any conflict, including a conflict that arises from a directorship in a competing company orfrom a personal investment in a competing company and, in such event, such Director may onlyvote in respect of any such decision if his fiduciary duties so allow and only in accordance withsuch duties. Our Directors are also subject to a duty of confidentiality, which precludes a Directorfrom disclosing to any third-party information that is confidential to us.
� Our Audit Committee will review any conflicts of interest disclosed to our Board and the exercise ofDirectors’ fiduciary duties in this respect. Upon disclosure of an actual or potential conflict ofinterest by a Director, our Audit Committee will consider whether a conflict of interest does in factexist and whether it is appropriate that such Director abstain from voting in respect of a matterwhere the conflict of interest arises. The review will include an examination of the nature of theconflict and such relevant supporting data as our Audit Committee may deem reasonablynecessary. If any member of our Audit Committee has a conflict of interest which is brought beforeour Audit Committee, such member shall not participate in any proceedings of our Audit Committeein relation to such conflict of interest.
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INTERESTED PERSON TRANSACTIONS AND POTENTIAL CONFLICTS OF INTEREST
DESCRIPTION OF OUR ORDINARY SHARES
146
The following description of our share capital summarises certain provisions of our Articles. Suchsummaries do not purport to be complete and are subject to, and are qualified in their entirety byreference to and all of the provisions of our Articles (copies of which are available for inspection at theplace referred to on page 173 of this Prospectus), Cayman Companies Law and the Companies Act.
Share capital
The authorised share capital of our Company is US$120,000,000 divided into 750,000,000 Shares ofUS$0.16 par value each.
Dividend rights
Dividends and interim dividends on our Shares may be declared from time to time by our Directors on apari passu basis.
Variation of rights
If at any time the share capital of our Company is divided into different classes of shares, preferencecapital other than redeemable preference capital may be repaid and the rights attached to any class maybe varied with the sanction of a special resolution passed at a general meeting of the holders of theshares of that class or, if such special resolution is not passed within two months of such meeting, withthe consent in writing of the holders of three-fourths of the issued shares of that class.
Transfer of shares
No Member may transfer shares in our Company unless the prior consent of our Directors has beenobtained and the provisions set out in the Articles concerning pre-emption having been complied with.
Where a Member transfers or proposes to transfer shares in connection with a property settlementagreement or by court decree in connection with any marriage dissolution or similar proceeding, or abankruptcy or insolvency proceeding or the death or liquidation of such Member, our Company will havethe first right to repurchase all the shares owned by such Member in accordance with the terms of theArticles.
Meetings of shareholders
As our Company is an exempted company, it may but shall not be required to hold annual generalmeetings.
Extraordinary general meetings can be called on the requisition of Members holding not less than one-tenth of the paid-up voting capital of our Company or by our Directors.
Limitations on non-Cayman Islands shareholders
There are no limitations on non-Cayman Islands shareholders.
Access to books and records and dissemination of information
Our Directors shall determine whether and to what extent the accounts and books of our Company shallbe open to the inspection of Members. Our Directors may cause to be prepared and laid before ourCompany in general meeting profit and loss accounts, balance sheets and group accounts, if any.
Election and removal of directors
Our Company may by ordinary resolution appoint and remove any Director. Our Directors may alsoappoint a Director to hold office until the next annual general meeting of our Company and such Directorwould then be eligible for re-election thereat.
Indemnification of Directors and officers
The Directors and officers of our Company and any trustee acting in relation to our Company’s affairs andtheir heirs, executors, administrators and personal representatives shall be indemnified out of the assetsof our Company for and against all actions, proceedings and damages which shall be incurred by reasonof any act done or omitted in the execution of their duty except due to wilful neglect or default.
Amendment of Memorandum of Association and Articles
Our Company may amend the Memorandum and Articles of Association of our Company by specialresolution.
Certain provisions of Cayman Islands Company Law
Please refer to Appendix E of this Prospectus for a summary of Cayman Islands Company Law.
Share Registrar and Singapore Share Transfer Agent
A register of holders of our Shares will be maintained by Lim Associates (Pte) Ltd in Singapore, and LimAssociates (Pte) Ltd will also serve as Singapore share transfer agent for our Shares.
DESCRIPTION OF OUR ORDINARY SHARES
147
TAXATION
148
The following is a discussion of certain tax matters arising under the current tax laws of the CaymanIslands, Singapore, Hong Kong, Japan and the PRC and is not intended to be and does not constitutelegal or tax advice. While this discussion is considered to be a correct interpretation of existing laws inforce, no assurance can be given that courts or fiscal authorities responsible for the administration ofsuch laws will agree with this interpretation or that changes in such laws will not occur. The discussion islimited to a general description of certain tax consequences in the respective countries with respect toownership of our Shares by investors in those respective countries, and does not purport to be acomprehensive nor exhaustive description of all of the tax considerations that may be relevant to adecision to purchase our Shares. Prospective investors should consult their tax advisors regarding taxand other tax consequences of owning and disposing our Shares. It is emphasised that neither ourCompany, our Directors nor any other persons involved in the Invitation accepts responsibility for any taxeffects or liabilities resulting from the subscription for, purchase, holding or disposal of our Shares.
CAYMAN ISLANDS TAXATION
Pursuant to section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, our Companyhas obtained an undertaking from the Governor in Cabinet:
(a) that no law which is enacted in the Cayman Islands imposing any taxes to be levied on profits orincome or gains or appreciation shall apply to the Company or its operations; and
(b) in addition, that no tax to be levied on profits, income gains or appreciations or which is in thenature of estate duty or inheritance tax shall be payable by the Company:
(i) on or in respect of the shares, debentures or other obligations of the Company; or
(ii) by way of withholding in whole or in part of any relevant payment as defined in Section 6(3)of the Tax Concession Law (1999 Revision).
The undertaking is for a period of twenty years, commencing 8 April 1997.
The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income,gains or appreciations and there is not taxation in the nature of inheritance tax or estate duty. There areno other taxes likely to be material to our Company levied by the Government of the Cayman Islandssave certain stamp duties which may be applicable, from time to time, on certain instruments executed inor brought within the jurisdiction of the Cayman Islands. The Cayman Islands are not party to any doubletax treaties.
SINGAPORE TAXATION
Individual Income Tax
An individual is a tax resident in Singapore in a year of assessment if, in the preceding year, he wasphysically present in Singapore or exercised an employment in Singapore (other than as a director of acompany) for 183 days or more, or if he resides in Singapore.
The following income received in Singapore by non-resident individuals is exempt from Singapore incometax:
(a) all foreign sourced income; and
(b) Singapore-sourced investment income from financial instruments.
For individual tax residents of Singapore, the income specified in (a) and (b) above is exempt from taxexcept where such income is derived through a partnership in Singapore or is derived through carryingon of a trade, business or profession.
Thus, an individual taxpayer is only subject to Singapore income tax on income (other than certaininvestment income and one-tier dividends which are exempt from tax) accrued in or derived fromSingapore, irrespective of whether that person is a resident or non-resident of Singapore.
The tax rate for a resident individual varies according to the individual’s circumstances, but is subject tothe current maximum rate of 20% for the year of assessment 2007 (i.e. calendar year 2006). A non-resident individual is normally taxed at the corporate tax rate, except that Singapore employment incomeis taxed at a flat rate of 15% or at resident rates, whichever yields a higher tax.
Corporate Income Tax
A corporate taxpayer is regarded as resident for Singapore tax purposes if its business is controlled andmanaged in Singapore.
A Singapore resident corporate taxpayer is subject to Singapore income tax on income accrued in orderived from Singapore, and on foreign sourced income received in Singapore. However, foreigndividends, branch profits and foreign sourced service income received in Singapore by a Singaporeresident company are exempt from Singapore tax if certain conditions are met. In addition, one-tierdividends received by a resident company are also exempt from Singapore income tax.
A non-resident corporate taxpayer, with certain exceptions, is subject to income tax only on income that isaccrued in or derived from Singapore, and on foreign sourced income received in Singapore, subject tocertain exceptions. One-tier dividends received by a non-resident Singapore company are also exemptfrom Singapore income tax. There is no withholding tax on dividends paid by a Singapore residentcompany to non-resident shareholders.
The corporate tax rate is presently 18%. In calculating a company’s chargeable income, 75% of up to thefirst S$10,000 of chargeable income and 50% of up to the next S$290,000 are exempt from corporate taxwith effect from year of assessment 2008. The remaining chargeable income will be fully taxable at thecorporate tax rate of 18%. The tax exemptions referred to above do not apply to Singapore dividendincome.
Dividend Distributions
Singapore moved to the one-tier corporate tax system with effect from 1 January 2003. Under thissystem, the tax collected from corporate profits is final and all Singapore dividends paid by Singapore taxresident companies to their shareholders are exempt from tax (“one-tier tax exempt dividends”).
If the company is a Singapore tax resident company under the one-tier corporate tax system, it candistribute one-tier tax exempt dividends to its shareholders. Such dividends are exempt from Singaporeincome tax in the hands of its shareholders.
Gains on Disposal of our Shares
Singapore does not impose tax on capital gains. However, there are no specific laws or regulations whichdeal with the characterisation of gains. In general, gains may be construed to be of an income nature andsubject to Singapore income tax if they arise from activities which the Inland Revenue Authority ofSingapore regards as the carrying on of a trade or business in Singapore.
Any profits from the disposal of our Shares are not taxable in Singapore unless the seller is regarded ashaving derived gains of an income nature, in which case, the disposal profit would be taxable.
Stamp Duty
There is no stamp duty payable on the subscription of our Shares.
Stamp duty is payable in Singapore on an instrument of transfer of our Shares at the rate of S$0.20 forevery S$100.00 or any part thereof, computed based on the consideration for or market value of ourShares, whichever is higher.
TAXATION
149
The purchaser is liable for stamp duty, unless there is an agreement to the contrary. No stamp duty ispayable if no instrument of transfer is executed or the instrument of transfer is executed outsideSingapore. However, stamp duty may be payable if the instrument of transfer which is executed outsideSingapore is received in Singapore.
The above stamp duty is not applicable to electronic transfers of shares effected through the CentralDepository system.
Estate Duty
Singapore estate duty is imposed on the value of immovable property situated in Singapore owned byindividuals who are not domiciled in Singapore, subject to specific exemption limits. Movable assets ofnon-domiciles will be exempt from estate duty with respect to deaths occurring on or after 1 January2002. Singapore estate duty is imposed on the value of most immovable property situated in Singaporeand on most movable property, wherever it may be, owned by individuals who are domiciled in Singapore,subject to specific exemption limits.
Accordingly, our Shares held by an individual domiciled in Singapore are subject to Singapore estate dutyupon such individual’s death. Singapore estate duty is payable to the extent that the value of our Sharesaggregated with any other assets subject to Singapore estate duty exceeds S$600,000. Unless otherexemptions apply to the other assets, for example, the separate exemption limit for residential properties,any excess beyond S$600,000 will be taxed at 5 per cent. of the first S$12,000,000 of the individual’sSingapore chargeable assets and thereafter at 10 per cent. Individuals, whether or not domiciled inSingapore should consult their own tax advisors regarding the Singapore estate duty consequences oftheir ownership of our Shares.
Goods and Services Tax (“GST”)
The sale of shares is considered a supply of services for GST purposes. Generally, a supply of servicesmade by a GST-registered person is subject to GST at the current rate of 7% unless the supply ofservices can qualify for zero-rating (i.e. charge GST at 0%) under Section 21(3) of the Goods andServices Tax Act (Cap. 117A) (“GST Act”) or can qualify for exemption under the Fourth Schedule to theGST Act.
The sale of shares by a GST-registered investor in the course of or furtherance of a business carried onby him through the Singapore Exchange or to another person belonging in Singapore qualifies forexemption under the Fourth Schedule to the GST Act. However, any input GST which is incurred by theinvestor in making exempt supplies is not recoverable from the Comptroller of GST.
If the sale of shares by a GST-registered investor is made to another person belonging outsideSingapore, and that person is outside Singapore when the sale is executed, the sale would qualify forzero-rating under Section 21(3)(j) of the GST Act. Input GST which is incurred by the investor in makingzero-rated supplies is fully recoverable from the Comptroller of GST.
Brokerage, handling and clearing fees in connection with the sale or acquisition of shares charged by aGST-registered person (e.g. broker) to an investor belonging to Singapore is subject to GST at the currentrate of 7%. Similar services rendered to an investor belonging outside Singapore should qualify for zero-rating provided that the investor is outside Singapore when the services are performed and the servicesprovided do not benefit any Singapore persons.
TAXATION
150
HONG KONG TAXATION
Profits Tax
Hong Kong profits tax is chargeable on every person, including corporations, partnerships, trustees andbodies of persons carrying on any trade, profession or business in Hong Kong in respect of his/itsassessable profits (excluding profits arising from the sale of capital assets) arising in or derived fromHong Kong from the conduct of such trade, profession or business. Non-residents in receipt of suchprofits are also subject to profit tax. The current profits tax rate is 17.5% for corporations while soleproprietorships, partnerships and other unincorporated businesses are taxed at a rate of 16%.
Stamp Duty
Stamp duty is payable on contract note for sale or purchase of any Hong Kong stock (i.e. stock thetransfer of which is required to be registered in Hong Kong) at the rate of 0.2% of the consideration or, ifhigher, the value of the Hong Kong stock being sold or transferred. This is payable half by the vendor andhalf by the purchaser.
Other Taxes
Currently, there is no capital gains tax or turnover or sales taxes in Hong Kong.
Professional Tax Advice Recommended
If you are unsure about the taxation implications of subscribing for, purchasing, holding, disposing of,dealing in, or the exercise of any rights in relation to the New Shares, you should consult an expert. OurCompany, our Directors or any person involved in the Invitation do not accept responsibility for any taxeffects on or liabilities resulting from the subscription for, purchase, holding, disposing of, dealing in, orthe exercise of any rights in relation to the New Shares.
JAPAN TAXATION
General
Individual income taxes in Japan consist of national income tax and local inhabitant tax. An individual witha domicile or residence in Japan for a period of one year or longer (“resident”) is subject to national andlocal income taxes on worldwide income, while an individual other than a resident (“non-resident”)having no permanent facility in Japan is subject to only national income tax solely upon income fromsources within Japan. A resident who does not possess Japanese nationality and has maintained aresidence or domicile in Japan over a period of no more than five years in the last ten years, is treated as“a non-permanent resident”. A non-permanent resident taxpayer is subject to national and local incometaxes solely on income derived from sources within Japan and income derived from foreign sources paidin Japan or remitted to Japan.
National income tax rates are progressive, ranging from 5% to 40% in 2007. Local inhabitant tax rate is10% in 2007. However, interest income, capital gains from transfer of stocks etc. are taxed separatelyfrom other income at special rates specified in the Special Taxation Measures Law.
Japanese corporate taxes consist of corporate income tax (national tax), income tax and enterprise tax(local tax) and other local taxes.
Domestic corporations, including subsidiaries and joint ventures established under the Japanese law byforeign enterprises are subject to corporate income tax on their worldwide income and other corporatetaxes.
Foreign corporations operating in Japan through branches are liable for the corporate income tax on theentire income from sources within Japan and other corporate taxes.
TAXATION
151
Dividends
With respect to individual taxpayers, dividend income may be taxed as aggregate income or separatelyfrom other income at their choice. Withholding income tax will be imposed on dividends if dividends bepaid through a paying agent in Japan. The withholding tax rate for dividends from shares listed in Japanand overseas is 10%, comprising national tax of 7% and local tax of 3% until 31 March 2009, and 20%thereafter, comprising national tax of 15% and local tax of 5%.
Corporate taxpayers enjoy a benefit of deduction from gross income a certain portion of dividend.
Capital Gain
With respect to individual taxpayers, capital gains derived from the transfer of stocks are taxed separatelyfrom other income by filing a return. The current tax rate applied to these capital gains is 20%, comprisingnational tax of 15% and local tax of 5% (10% for listed stocks, comprising national tax of 7% and local taxof 3% until 31 December 2008).
As for corporate taxpayers, capital gains from the sale of securities are subject to ordinary corporateincome taxes in the same manner as ordinary income.
Inheritance Tax
Inheritance tax is imposed on the total value of all properties acquired through inheritance or bequest,less liabilities and funeral expenses. Properties are appraised based on current prices or values at thetime of acquisition. Our Shares held by an individual domiciled in Japan are generally subject toJapanese Inheritance Tax upon such individual’s death.
PRC TAXATION
Tax Legislation
At present, the State Organisations that have authority to formulate tax laws or tax policy mainly includethe National People’ s Congress (the “NPC”) and its Standing Committee, State Council, Ministry ofFinance, State Administration of Taxation, Tariff and Classification Committee of the State Council, andGeneral Administration of Customs.
(a) Tax laws are enacted by the NPC, e.g. the Individual Income Tax Law of the People’s Republic ofChina; or enacted by the Standing Committee of the NPC, e.g. the Tax Collection andAdministration Law of the People’s Republic of China.
(b) The administrative regulations and rules concerning taxation are formulated by the State Council,e.g., the Detailed Rules for the Implementation of the Tax Collection and Administration Law of thePeople’s Republic of China, the Detailed Regulations for the Implementation of the IndividualIncome Tax Law of the People’s Republic of China and the Provisional Regulations of the People’sRepublic of China on VAT.
(c) The departmental rules concerning taxation are formulated by the Ministry of Finance, the StateAdministration of Taxation, the Tariff and Classification Committee of the State Council, and theGeneral Administration of Customs, e.g., the Detailed Rules for the Implementation of theProvisional Regulations of the People’s Republic of China on VAT and the Provisional Measures forVoluntary Reporting of the Individual Income Tax.
TAXATION
152
Foreign Investment Taxation
According to the “Circular on Questions related to Provisional Regulations concerning Taxations includingValue-Added Tax, Consumption Tax and Business Tax Applicable to Foreign Investment Enterprises andForeign Enterprises”
, the following tax categories are applicable to foreign investment enterprises:
(1) Value-Added Tax
(2) Consumption Tax
(3) Business Tax
(4) Income Tax
(5) Land Value-Added Tax
(6) Resources Tax
(7) Stamp Tax
(8) Animal Slaughter Tax
(9) Urban Real Estate Tax
(10) Vehicle and Shipping License Tax
(11) Contract Tax
Customs Tax is also applicable for foreign investment enterprises with imports and exports.
The most important tax categories are as follows:
(a) Income Tax on foreign investment enterprises
The applicable income tax laws, regulations, notices and decisions (collectively referred to as“Applicable Foreign Enterprises Tax Law”) related to foreign investment enterprises and theirinvestors include, without limitation to, the following:
(i) Income Tax Law of the PRC on Foreign Investment Enterprises and Foreign Enterprisesadopted by the NPC on 9 April 1991
which came into effect on 1 July 1991 and would be revoked on 1 January 2008;
(ii) Implementing Rules of the Income Tax Law of the PRC on Foreign Investment Enterprisesand Foreign Enterprises promulgated by the State Council on 30 June 1991 and came into effect on 1 July 1991;
(iii) Notice Relating to Income Tax for Foreign Investment Enterprises and Foreign Enterprises Ina Number of Law Enforcement Issues
promulgated by State Tax Bureau on 21 August 2000 and effective on 1 July2000; and
(iv) The Enterprise Income Tax Law of the PRC adopted by theNPC on 16 March 2007 and effective on 1 January 2008.
TAXATION
153
According to the Applicable Foreign Enterprises Tax Law, before the Enterprise Income Tax Law ofthe PRC comes into effect, a foreign investment enterprise isrequired to pay a national income tax at a rate of 30% of their taxable income and a local incometax at a rate of 3% of their taxable income. The main tax preference is as follow:
(i) A foreign investment enterprise engaged in production having a period of operation of notless than 10 years shall be exempted from income tax for the first two profit making yearsand a 50% reduction in the income tax payable for the next three years. The income taxconcession for foreign investment enterprises engaged in the exploitation of resources suchas petroleum, natural gas, rare metals and precious metals are regulated separately by theState Council.
(ii) Foreign investment enterprises established in special economic zones, foreign enterpriseshaving an establishment in special economic zones engaged in production or businessoperations and foreign investment enterprises engaged in production in economic andtechnological zones may pay income tax at a reduced rate of 15%. Foreign investmententerprises engaged in production established in coastal economic open zones or in the oldurban districts of cities where the special economic zones or the economic and technologicaldevelopment zones are located may pay income tax at a reduced rate of 24%.
The Enterprise Income Tax Law of the PRC sets a new income taxrate of 25% for all resident enterprises. The main tax rates are as follows:
(i) A preferential rate of 20% to eligible small low-profit enterprises and a preferential rate of15% to hi-tech enterprises receiving priority support from the State (Article 28)
(ii) More tax preferential treatment to venture investment enterprises (Article 31) and toenterprises investing in environmental protection, energy and water conservation, worksafety, etc. (Article 34).
(iii) Preferential tax policy on investment in agriculture, forestry, animal husbandry, fisheries andinfrastructure construction, income from environmental protection projects and eligibletechnology transfer (Article 27).
(iv) Direct tax reduction or exemption with a substitute preferential policy for labor serviceenterprises, welfare enterprises and enterprises making comprehensive use of resources(Articles 30 and 33).
(v) Transitional measures for enterprises enjoying the existing statutory tax preferentialtreatment: old enterprises established before the Enterprise Income Tax Law of the PRCbecomes effective, who were entitled to enjoy an income tax rate of 15% or 24% under thecurrent tax laws may, pursuant to the regulations of the State Council, continue to enjoy agradually increasing transitional income tax rate within five years after the new EnterpriseIncome Tax Law becomes effective. Old enterprises entitled to enjoy regular tax reductionand exemption treatment under the current income tax laws may continue to enjoy remainingincentives in accordance with the requirements and period specified by the current incometax laws. However, for enterprises that have not made any profits and thus not enjoyed suchpreferential treatment, the period for enjoying preferential treatment shall be calculated fromthe year in which the new Enterprise Income Tax Law becomes effective. The State Councilshall develop measures for implementing such transitional incentives (Article 57).
(b) Value-Added Tax
All units and individuals which and who, in the territory of the PRC, sell goods, render servicessuch as processing, repair and spare parts replacement, or import goods, shall be the taxpayers ofvalue-added tax.
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154
The value-added tax rate in the PRC shall be:
(i) 17% for sales or import of goods and providing service of processing and repair services;
(ii) 13% for sales or import of grain, edible oil coal gas, natural gas, coal products for civil use,books, newspapers, magazines, etc.; and
(iii) 0% for export goods, except for those that the State Council has made special provisions.
(c) Business Tax
There are nine business tax rates, ranging from 5% (communications and transportation industry)to 20% (recreation industry).
(d) Consumption Tax
Consumption tax has, in all, 11 tax items and 25 tax rates (tax volumes), from the lowest 3% to thehighest 45%. The tax rate is generally decided by prices in the production process, however, thetax rate for yellow rice wine, beer, petrol and diesel oil is determined by the quantity in production.The taxable export consumer goods, except those subject to special State provisions, should beexempt from consumption tax.
(e) Land Value-Added Tax
There are four categories of tax rates applicable under Land Value-Added Tax:
(i) For the part of increased value that does not surpass 50% of the deduction of fixed items,the tax rate is 30%.
(ii) For the part of increased value that surpasses 50% but no more than 100% of the deductionof fixed items, the tax rate is 40%.
(iii) For the part of increased value that surpasses 100% but no more than 200% of thededuction of fixed items, the tax rate is 50%.
(iv) For the part of increased value that surpasses 200% of the deduction of fixed items, the taxrate is 60%.
(f) Urban Real Estate Tax
The owner or lessee (agent and user in cases where the owner and lesseet is unidentifiable) is thetax payer. The Urban Real Estate Tax of foreign investment enterprises should be levied quarterlyat an annual tax rate of 1.2%, and they may enjoy a 30% reduction of assessed tax.
(g) Customs Tax
(i) Import: Tariffs and import-related value-added tax shall be exempted with respect toimported equipment for foreign investment enterprises’ own use within the total amount ofinvestment in foreign business investment projects that transfer technology and areconsistent with the category of encouragement and the restricted B category under the“Catalogue of Industries Guidance for Foreign Business Investment” ,with the exception of commodities listed in the “Catalogue of Import Commodities for ForeignBusiness Investment Projects with no Tax Exemption”
.
(ii) Export: Foreign investment enterprises that export self-manufactured products, with theexception of restricted exports, shall be exempt from export-related tax, subject to foreignrules and regulations.
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155
(iii) Bonded commodities: The necessary imports for foreign investment enterprises to produceexports, such as raw materials, fuel, parts and components, accessories or packagingmaterials are regarded by Customs as bonded commodities.
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156
Upon listing and quotation on the SGX-ST, our Shares will be traded under the book-entry settlementsystem of the CDP, and all dealings in and transactions of the Shares through the SGX-ST will beeffected in accordance with the terms and conditions for the operation of Securities Accounts with theCDP, as amended from time to time.
Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalf ofpersons who maintain, either directly or through depository agents, Securities Accounts with CDP.Persons named as direct Securities Account holders and depository agents in the depository registermaintained by the CDP will not be treated, under our Articles and the Cayman Companies Law asmembers of our Company in respect of the number of Shares credited to their respective SecuritiesAccounts.
Persons holding the Shares in Securities Account with CDP may withdraw the number of Shares theyown from the book-entry settlement system in the form of physical share certificates. Such sharecertificates will, however, not be valid for delivery pursuant to trades transacted on the SGX-ST, althoughthey will be prima facie evidence of title and may be transferred in accordance with our Articles. A fee ofS$10 for each withdrawal of 1,000 Shares or less and a fee of S$25 for each withdrawal of more than1,000 Shares is payable upon withdrawing the Shares from the book-entry settlement system andobtaining physical share certificates. In addition, a fee of S$2 or such other amount as our Directors maydecide, is payable to the Share Registrar for each share certificate issued and a stamp duty of S$10 isalso payable where our Shares are withdrawn in the name of the person withdrawing our Shares orS$0.20 per S$100 or part thereof of the last-transacted price where it is withdrawn in the name of a third-party. Persons holding physical share certificates who wish to trade on the SGX-ST must deposit withCDP their share certificates together with the duly executed and stamped instruments of transfer in favourof CDP, and have their respective securities accounts credited with the number of Shares depositedbefore they can effect the desired trades. A fee of S$20 is payable upon the deposit of each instrumentof transfer with CDP.
Transactions in our Shares under the book-entry settlement system will be reflected by the seller’sSecurities Account being debited with the number of Shares sold and the buyer’s Securities Accountbeing credited with the number of Shares acquired. No transfer of stamp duty is currently payable for theShares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on the SGX-ST is payable at the rate of 0.05 per cent.of the transaction value subject to a maximum of S$200 per transaction. The clearing fee, instrument oftransfer deposit fee and share withdrawal fee may be subject to Singapore Goods and Services Tax.
Dealings of our Shares will be carried out in Singapore dollars and will be effected for settlement on CDPon a scripless basis. Settlement of trades on a normal “ready” basis on the SGX-ST generally takesplace on the third Market Day following the transaction date, and payment for the securities is generallysettled on the following business day. CDP holds securities on behalf of investors in Securities Accounts.An investor may open a direct account with CDP or a sub-account with a CDP agent. The CDP agentmay be a member company of the SGX-ST, bank, merchant bank or trust company.
CLEARANCE AND SETTLEMENT
157
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS
1. The name, age, address, principal occupation and business and working experience of each of ourDirectors and Executive Officers are set out in the section entitled “Directors, Management andStaff” in this Prospectus.
2. The present and past directorships other than directorships held in our Company (held in the fiveyears preceding the Latest Practicable Date) of each of our Directors, in other companies are asfollows:
Name Present Directorships Past Directorships
Executive Directors
Motokuni Yamashiro Group Companies Group Companies
Uni-Asia Fund Management Co., Ltd Offshore Property InvestmentUni-Asia Services and Agency Co., Corporation Ltd Uni-Asia Capital Co., Ltd
Uni-Asia Capital (Singapore) Limited
Associated Companies Associated Companies
None Capital Advisers
Other Companies Other Companies
None None
Kazuhiko Yoshida Group Companies Group Companies
Offshore Property Investment NoneCorporation
Uni-Asia Capital Co., LtdUni-Asia Capital (Singapore) LimitedUni-Asia Finance Corporation (Japan)Uni-Asia Fund Management Co., LtdUni-Asia Guangzhou PropertyManagement Co. Ltd.
Uni-Asia Services and Agency Co., Ltd
Associated Companies Associated Companies
Capital Advisers None
Other Companies Other Companies
Founders Corporation NoneProsperity Containership S.A.
Michio Tanamoto Group Companies Group Companies
Uni-Asia Capital Co., Ltd NoneUni-Asia Capital (Singapore) LimitedUni-Asia Finance Corporation (Japan)Uni-Asia Guangzhou PropertyManagement Co. Ltd.
Associated Companies Associated Companies
Capital Advisers NoneUni-Ships and Management Limited
GENERAL AND STATUTORY INFORMATION
158
Name Present Directorships Past Directorships
Michio Tanamoto Other Companies Other Companies
Euro Asia II Inc., Panama NoneEuro Asia III Inc., Panama Founders CorporationOcean Target Limited (in liquidation)Ocean Time Limited (in liquidation)Prosperity Containership S.A.
Non-Executive Directors
Hamilton Jian Ren Chueh Group Companies Group Companies
None None
Associated Companies Associated Companies
None None
Other Companies Other Companies
Asia Leasing Limited (in liquidation) Evergreen Energy TechnologyEvergreen International Corporation Corporation (Singapore) Pte. LtdEvergreen Laurel Hotel (Paris) S.A. (liquidated)Evergreen Reinsurance CoGreencompass Marine S.A.Uniglory HK Ltd.
Jörg Wilhelm Schelp Group Companies Group Companies
None None
Associated Companies Associated Companies
None None
Other Companies Other Companies
None None
Robert Van Jin Nien Group Companies Group Companies
None None
Associated Companies Associated Companies
None None
Other Companies Other Companies
Acewise Holdings Limited Allway Gardens Management &Amco Finance Holdings S.A. Services Limited (liquidated)Anber Investments Limited Art Way Limited (liquidated)Banbury Investments Limited Daring March Company LimitedBayern Gourmet Food Company (liquidated)Limited EAC Holdings (BVI) Limited
Beecroft International Limited (liquidated)Boro Investment Limited East Asia Capital (L) LimitedChee Shing Company Limited (liquidated)Consolidated Construction Empresa de Construcoes eResources Limited Fabquip Hong Kong Limited
Converse Limited (liquidated)Delta Roads Limited Fair Bong Limited (liquidated)Dover Hills Investments Limited Fomento Predial Hopewell (Macau)Exgratia Company Limited LimitadaFastwin Investment Limited Fungus Company Limited (liquidated)
GENERAL AND STATUTORY INFORMATION
159
Name Present Directorships Past Directorships
Robert Van Jin Nien Other Companies Other Companies
Forbes Resources Limited Harapbaik Construction (Malaysia) Galette Company Limited Sdn. Bhd. (liquidated)Goldhill Investments (B.V.I.) Limited Hofine Limited (liquidated) Goldhill Investments Limited Hopewell 102 Limited (liquidated)Goldmax Resources Limited Hopewell 104 Limited (liquidated)Goldvista Properties Limited Hopewell Credit Limited (liquidated)Gomark Holdings Ltd. Hopewell Engineering & ConstructionGuangzhou-Shenzhen Superhighway Limited (liquidated)(Holdings) Ltd. Hopewell Finance Limited (liquidated)
Happy Gain Resources Limited Hopewell Guangzhou Ring RoadHCNH Insurance Brokers Limited (Hong Kong) Limited (liquidated)HH Finance Limited Hopewell Humen DevelopmentHH Nominees Limited Limited (liquidated)HITEC Management Limited Hopewell International LimitedHong Kong Bowling City Limited (liquidated)Hong Kong Insurance Agency Limited Hopewell Shunde Highway 105HOPEC Engineering Design Limited Limited (liquidated)Hopewell 106 Limited Hopewell Xintang Development Hopewell 108 Limited (H.K.) Limited (liquidated)Hopewell 110 Limited Hopewell Xintang DevelopmentHopewell (Broadview Villa) Car Parks Limited (liquidated)Management Limited Indonesia Slipform Holding (L) Ltd
Hopewell Centre Management Limited (liquidated)Hopewell China Development Limited Indonesia Slipform (L) Ltd Hopewell Construction Company, (liquidated) Limited Indonesia Tileman (BVI) Limited
Hopewell Development Company (liquidated)Limited Indonesian Tileman Holding (L) Ltd
Hopewell Engineering & Construction (liquidated)(B.V.I.) Limited Indonesia Tileman (L) Ltd
Hopewell Engineering & Construction (liquidated)(Macau) Limited Indonesia Tileman Nominee (BVI)
Hopewell Engineering Design Limited Limited (liquidated)Hopewell Hitec (B.V.I.) Limited Joyful Year Limited (liquidated)Hopewell Holdings Limited Kanematsu Power (South China)Hopewell Hospitality Company Limited Co. Ltd. (liquidated)Hopewell Housing Limited Kanetalho Properties LimitedHopewell Huang Gang Development (liquidated)(B.V.I.) Limited Mega Hotels International Limited
Hopewell Huang Gang Development (liquidated)Limited Newpac (Hong Kong) Limited
Hopewell-Kanematsu (China) (liquidated)Development Holdings Limited Newpac Limited (liquidated)
Hopewell Ma Chung Development Onway Company, Limited (H.K.) Limited (liquidated)
Hopewell Ma Chung Development Power Project Services (L) LtdLimited (liquidated)
Hopewell Properties (B.V.I.) Limited Singway Company, Limited Hopewell Property Management (liquidated)Company Limited Suffield Company Limited
Hopewell Rail Limited (liquidated)Hopewell Slipform Engineering Tanjung Jati Slipform (BVI) Limited Limited (liquidated)
Hopewell Tileman Limited Tanjung Jati Slipform Construction Hopewell Tileman Power System Limited (liquidated)Corp. (in liquidation) Tileman Asia (Hong Kong) Limited
H-Power Investor Limited (liquidated)
GENERAL AND STATUTORY INFORMATION
160
Name Present Directorships Past Directorships
Robert Van Jin Nien Other Companies Other Companies
Indonesia Project Management (L) Ltd. Truedale Company Limited Intek Resources Limited (liquidated)International Trademart Company Tuxhouse Holdings Limited Limited (liquidated)
IT Catering and Services Limited Valeside Investment LimitedKammer Investment Limited (liquidated)Kinghill Investment Limited Venlint Holdings Limited Kowloon Panda Hotel (B.V.I.) Limited (liquidated)Kowloon Panda Hotel Limited Wenshan Holdings Limited Ladway Limited (liquidated)Lok Foo Company Limited Ying Tat Estates Limited Lucky Sino Limited (liquidated)Manley High Investments Limited Manrose Limited Mega Hotels Management Limited Melo Hope Limited (formerly known asHopewell Shunde Roads Limited)
Mingway Company LimitedNomusa Limited Nova City Property Management Limited
Nova Taipa Gardens Property Management Limited
Nova Taipa-Urbanizacoes, Limitada Orchard Resources LimitedPaking LimitedPanda Place Management Limited Parkgate Enterprises Limited Perfect Joy LimitedPhindorie Company LimitedPowell Resources Ltd.Primax Investment Limited Procelain Properties Ltd.PT. Hi Power Tubanan 1 Singway (B.V.I.) Company Limited Sky Hover Investment Limited Slipform Engineering LimitedSlipform Engineering (Macau) Limited Slipform Engineering (U.S.A.) Inc.Slipform Projects (Philippines), Inc.(in liquidation)
Supreme Choice Investments Limited Tanjung Jati Construction (BVI) Limited Tanjung Jati Holding (BVI) Limited Tileman Engineering Services Limited Tileman Transportation Systems Limited Tubanan Power Limited Vibo Limited Wetherall Investments (B.V.I.) Limited Wetherall Investments Limited Wholeson Investment Ltd.Yeeko Investment Limited Yuba Company Limited
GENERAL AND STATUTORY INFORMATION
161
Name Present Directorships Past Directorships
Independent Directors
V-Nee Yeh Group Companies Group Companies
None None
Associated Companies Associated Companies
None None
Other Companies Other Companies
AFI Master Fund, Ltd. Allman Holdings LimitedAnber Limited (in liquidation) ASM Asia Recovery FundArgyle Street Management (Holdings) ASM Asia Recovery (Holdings)Limited (dissolved)
Argyle Street Management Limited ASM Asia Recovery (Master) FundArnhold Holdings Limited ASM Hudson River FundAzure Fixed Income Fund, Ltd. Bioneering Limited (Struck off)Azure India Real Estate Fund, Ltd Budi Ikhtiar Sdn. Bhd. (liquidated)Azure Non-U.S. Real Estate Fund, Ltd China Travel International InvestmentCheetah Group Holdings Limited Hong Kong LimitedCheetah Investment Management CIM Adviosrs LimitedLimited Compass Technology Holdings
Cheetah Korea Value Fund LimitedChina Law International Limited Easeway Engineering LimitedCogent Spring Limited Glenwell Orient LimitedCompass Capital Preservation Fund, Globpac Development LimitedLtd. (liquidated)
Compass Global Equity Fund, Ltd. HC Capital (BVI) LimitedCompass Global Fixed Income Fund, HC Capital LimitedLtd. HCG Insurance Services Limited
Cotteen Investments Limited Hebei An Neng Hsin ChongCyberstreet Developments Limited Construction Company LimitedDeventer Limited Host Leader International LimitedFirmwin Peak Limited (deregistered)Focal Point Investments Limited Hsin Chong Development (China)G&H Acquisitions I, Inc. LimitedG&H Acquisitions II, Inc. Hsin Chong Johnson Controls IFMG&H Acquisitions III, Inc. LimitedG&H Real Estate LLC Insight One Investments LimitedG and H Enterprises (Liberia) Ltd. Ocean Grand Chemicals HoldingsGHY Company Limited Limited (in liquidation) Go-CDMA Limited Pacific Squaw Creek, Inc.Goldian Limited Sucasa Sdn. Bhd.Harrots Limited Transpac Industrial HoldingsHC Liberia Ltd. LimitedHCV Pacific Partners LLC Value Partners Private EquityHsin Chong Construction (BVI) Ltd. Limited (formerly known as VPHsin Chong Construction Group Ltd. Private Equity Limited)Hsin Chong Development (Vietnam) Yu Ming Investments LimitedLimited
Hsin Chong Holdings (BVI) LimitedHsin Chong Holdings (H.K.) LimitedHsin Chong International HoldingsLimited
GENERAL AND STATUTORY INFORMATION
162
Name Present Directorships Past Directorships
V-Nee Yeh Other Companies Other Companies
Hysan Development Company LimitedJapan High Yield Property Fund Limited
Japan Regional Assets Manager Limited
Key Finance LimitedKingway Brewery Holdings LimitedKSDC LimitedMandarin IT Fund IMandarin IT Fund IIMandarin Venture Partners Ltd.Mandarin VP (BVI) Limited Mandarin VP (HK) LimitedMariscal LimitedMensa Management LimitedNext Media LimitedOrient Partners Inc.Orient Realty Inc.Pacventure Developments, Inc.Pedder Street Asia Absolute Return Fund Limited
Pedder Street Asia Absolute Return Master Fund Limited
Rife Yard LimitedRocheland Company LimitedShun Kin Enterprises LimitedShun Tak Holdings LimitedSteel China Access Capital PartnersLimited
Summit Insurance (Asia) LimitedTarget Asia Fund LimitedTopway Investments LimitedValue Partners Hong Kong LimitedValue Partners LimitedVP Special Situations I LimitedWebswin LimitedWellhurst Company LimitedWrights Point LimitedYeh-Lloyds Partners Ltd.
Ang Miah Khiang Group Companies Group Companies
None None
Associated Companies Associated Companies
None None
Other Companies Other Companies
Anwell Technologies Limited East Asia GE Commercial Finance Asia Enterprises Holding Limited LtdBRIS Information Services Sdn Bhd Eucon Holding Limited(as alternate director) GE Capital Trade Services Ltd
DP Credit Bureau Pte Ltd GE Commercial FinancingDP Information Network Pte Ltd (Singapore) LtdHeller Factoring (Malaysia) Sdn Bhd HIG Asia Pacific Management Pte (in liquidation) Ltd (in liquidation)
Pan Asian Water Solutions Limited Kasikorn Factoring Co, LtdRAM-DP Information Services Sdn Bhd Rotol Singapore Ltd Sei Woo Technologies Limited TUV SUD PSB Corporation Pte. Ltd
GENERAL AND STATUTORY INFORMATION
163
Name Present Directorships Past Directorships
Ronnie Teo Heng Hock Group Companies Group Companies
None None
Associated Companies Associated Companies
None None
Other Companies Other Companies
Behringer Corporation Ltd Cheung Woh Technologies LtdBerger International Limited DM Analytics Pte Ltd (liquidated)Berger Paints Singapore Pte Ltd Speedy-Tech Electronics Ltd Financial Reengineering Pte Ltd Stewardship Capital Pte LtdShanghai Asia Holdings Ltd Stewardship Equity Pte LtdStewardship Learning Pte Ltd (liquidated) (in liquidation) Stewardship Partners Pte Ltd
SunVic Chemical Holdings Limited (liquidated)
3. The present and past directorships (held in the five years preceding the Latest Practicable Date) ofeach of our Executive Officers are as follows:
Name Present Directorships Past Directorships
Executive Officers
Masaki Fukumori Group Companies Group Companies
None None
Associated Companies Associated Companies
None None
Other Companies Other Companies
Akebono Capital Limited Fortitude Maritime Inc.Ever Union Ltd Shine Line Ltd.Falcon Containership S.A.Fortitude Containership S.A.Glad Mate Ltd Harmonic Shipping S.A.Honest Rays LtdInfinite Asset Management (Pte) Limited
Join Mate LtdKabushikikaisha TenshodoKok Shipping Inc Matin Shipping LimitedNova Shipping S.A.Panmax Tanker S.A.Prosperity Containership S.A.Rich Containership S.A.Searex Asset Management LtdSentic LimitedSunny Law Co., LtdSunrise Shipping S.A.Union Ace LtdUnion Containership S.A.Wave Dancer Ltd
GENERAL AND STATUTORY INFORMATION
164
Name Present Directorships Past Directorships
Masahiro Iwabuchi Group Companies Group Companies
Uni-Asia Guangzhou Property NoneManagement Co. Ltd.
Associated Companies Associated Companies
None None
Other Companies Other Companies
AAA Strategic Investment Ltd None
Kenji Fukuyado Group Companies Group Companies
None Uni-Asia Capital (Singapore) LimitedUni-Asia Finance Corporation (Japan)
Associated Companies Associated Companies
None None
Other Companies Other CompaniesNone None
Clementine Man Ting Ng Group Companies Group Companies
None None
Associated Companies Associated Companies
None None
Other Companies Other Companies
None Kaizen Property Management Limited
Thomas Cheung Fook-Loi Group Companies Group Companies
None None
Associated Companies Associated Companies
None None
Other Companies Other Companies
None None
4. Save as disclosed in this section of the Prospectus, none of our Directors or Executive Officers isor was involved in any of the following events:-
(a) during the last ten years, an application or a petition under any bankruptcy laws of anyjurisdiction filed against him or against a partnership of which he was a partner at the timehe was a partner or at any time within two years from the date he ceased to be a partner;
(b) during the last ten years, an application or a petition under any law of any jurisdiction filedagainst an entity (not being a partnership) of which he was a director or an equivalentperson or a key executive, at the time when he was a director or an equivalent person or akey executive of that entity or at any time within two years from the date he ceased to be adirector or an equivalent person or a key executive of that entity, for the winding-up ordissolution of that entity or, where the entity is the trustee of a business trust, that businesstrust, on the ground of insolvency;
GENERAL AND STATUTORY INFORMATION
165
(c) any unsatisfied judgments against him;
(d) a conviction of any offence, in Singapore or elsewhere, involving fraud or dishonesty which ispunishable with imprisonment, or has been the subject of any criminal proceedings(including any pending criminal proceedings which he is aware of) for such purpose;
(e) a conviction of any offence, in Singapore or elsewhere, involving a breach of any law orregulatory requirement that relates to the securities or futures industry in Singapore orelsewhere, or has been the subject of any criminal proceedings (including pending criminalproceedings which he is aware of) for such breach;
(f) during the last ten years, judgment entered against him in any civil proceeding in Singaporeor elsewhere involving a breach of any law or regulatory requirement that relates to thesecurities or futures industry in Singapore or elsewhere, or a finding of fraud,misrepresentation or dishonesty on his part, been the subject of or any civil proceedings(including any pending civil proceedings which he is aware of) involving an allegation offraud, misrepresentation or dishonesty on his part;
(g) a conviction in Singapore or elsewhere of any offence in connection with the formation ormanagement of any entity or business trust;
(h) disqualification from acting as a director or an equivalent person of any entity (including thetrustee of a business trust), or from taking part directly or indirectly in the management ofany entity or business trust;
(i) the subject of any order, judgment or ruling of any court, tribunal or governmental bodypermanently or temporarily enjoining him from engaging in any type of business practice oractivity;
(j) to his knowledge, been concerned with the management or conduct, in Singapore orelsewhere, of affairs of:
(i) any corporation which has been investigated for a breach of any law or regulatoryrequirement governing corporations in Singapore or elsewhere;
(ii) any entity (not being a corporation) which has been investigated for a breach of anylaw or regulatory requirement governing such entities in Singapore or elsewhere;
(iii) any business trust which has been investigated for a breach of any law or regulatoryrequirement governing business trusts in Singapore or elsewhere; or
(iv) any entity or business trust which has been investigated for a breach of any law orregulatory requirement that relates to the securities or futures industry in Singapore orelsewhere,
in connection with any matter occurring or arising during the period when he was soconcerned with the entity or business trust; and
(k) the subject of any current or past investigation or disciplinary proceedings, or has beenreprimanded or issued any warning, by the Authority or any other regulatory authority,exchange, professional body or government agency, whether in Singapore or elsewhere.
One of our Independent Directors, Mr. V-Nee Yeh, was a non-executive director and member of theaudit committee of Ocean Grand Chemicals Holdings Limited (“OGC”). OGC is a companyincorporated in Bermuda with limited liability and is currently listed on the Stock Exchange of HongKong Limited (“HKSE”).
GENERAL AND STATUTORY INFORMATION
166
In early July 2006, OGC’s auditors, PricewaterhouseCoopers, alerted the OGC audit committee ofpotential accounting irregularities. OGC audit committee then instructed Deloitte & Touche ForensicServices Limited (“DTFS”) to enquire into certain accounting issues relating to certain of itssubsidiaries. In the course of its investigations, DTFS found material discrepancies in the actualcash and bank balances of one of OGC’s subsidiaries as compared to the management accountsof that subsidiary previously provided by that subsidiary to OGC. DTFS also noted that asubstantial amount of money was transferred out from the bank accounts of one of OGC’ssubsidiaries on 17 July 2006 to payees that were not companies within the OGC group ofcompanies. Trading of OGC shares on the HKSE was suspended on 17 July 2006 and remainssuspended as at the Latest Practicable Date.
The OGC board of directors resolved to apply to the Hong Kong and Bermuda courts for theappointment of provisional liquidators in order to protect the assets of OGC and safeguard theinterests of the creditors and shareholders of OGC. Pursuant to the Order of the High Court dated24 July 2006, Messrs Lai Kar Yan and Joseph Kin Ching Lo, both of Messrs Deloitte ToucheTohmatsu, have been appointed jointly and severally as the provisional liquidators of OGC. Takinginto account the appointment of provisional liquidators to protect the interests of OGC, Mr. Yeh,together with both independent non-executive directors, resigned from the OGC board of directorson 26 July 2006. An enquiry was commenced by the Securities and Futures Commission of HongKong into the affairs of OGC and Ocean Grand Holdings Limited (the parent company of OGC alsolisted on the HKSE). As far as Mr. Yeh is aware, as at the Latest Practicable Date, the investigationsby DTFS and SFC on the aforesaid matters are still ongoing.
According to the latest announcement of OGC dated 27 December 2006, the hearing of thepetitions to wind up OGC was adjourned to 16 April 2007 and the provisional liquidatorsinvestigations into OGC are continuing.
5. The aggregate remuneration paid to our Directors for services rendered in all capacities to ourCompany and our subsidiaries for the last financial year ended 31 December 2006 wasapproximately US$2.5 million. For the current financial year ending 31 December 2007, theaggregate remuneration payable to Directors by our Group (including fees paid under any serviceagreements with the Directors) is estimated to be approximately US$2.7 million.
6. Save as disclosed in the section entitled “Service Agreements” of this Prospectus, there are noexisting or proposed service contracts between our Executive Directors or Executive Officers andour Company or any of our subsidiaries.
7. There is no shareholding qualification for Directors under our Articles.
8. No option to subscribe for shares in, or debentures of, our Company or any of our subsidiaries hasbeen granted to, or was exercised by, any of our Directors or Executive Officers within the lastfinancial year.
9. Save for any options to be granted under the Uni-Asia Share Option Scheme, our Company has nointention of granting any options to subscribe for any shares in or debentures of our Company orany of our subsidiaries. As at the date of this Prospectus, no options have been granted or agreedto be granted under the Uni-Asia Share Option Scheme.
10. None of our Directors is interested, directly or indirectly, in the promotion of, or in any property orassets which have, within the two years preceding the date of this Prospectus, been acquired ordisposed of by or leased to, our Company or any of our subsidiaries, or are proposed to beacquired or disposed of by or leased to our Company or any of our subsidiaries.
11. None of our Directors or Executive Officers or Substantial Shareholders of our Company have anysubstantial interest, direct or indirect, in any company carrying on a similar trade as our Companyor our subsidiaries.
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12. No sum or benefit has been paid or is agreed to be paid to any Director, Executive Officer orexpert, or to any firm in which such Director, Executive Officer or expert is a partner or anycorporation in which such Director, Executive Officer or expert holds shares or debentures, in cashor shares or otherwise, by any person to induce him to become, or to qualify him as, a Director orExecutive Officer, or otherwise for services rendered by him or by such firm or corporation inconnection with the promotion or formation of our Company.
13. None of our Directors has any interest in any existing contract or arrangement which is significantin relation to the business of our Company and our subsidiaries, taken as a whole.
SHARE CAPITAL
14. As at the Latest Practicable Date, there is only one class of shares in the capital of our Company.There are no founder, management or deferred shares. The rights and privileges attached to ourShares are stated in our Articles.
15. Save as disclosed in the sections entitled “Share Capital” and “General Information on our Group”of this Prospectus, there were no changes in the issued and paid-up share capital of our Companyand our subsidiaries within the three years preceding the Latest Practicable Date.
16. No shares in, or debentures of, our Company or any of our subsidiaries have been issued, or areproposed to be issued, as fully or partly paid for cash or for a consideration other than cash, duringthe last two years. A summary of the provisions of our Articles relating to, inter alia, theremuneration, voting rights on proposals, arrangements or contracts in which Directors areinterested, borrowing powers of our Directors, the voting rights and dividend rights of members ofour Company are set out in Appendix D “Summary of the Constitution of our Company” andAppendix E “Summary of Cayman Islands Company Law” of this Prospectus.
BANK BORROWINGS AND WORKING CAPITAL
17. Save as disclosed under the section entitled “Capitalisation and Indebtedness” in this Prospectus,our Group had no other borrowings or indebtedness in the nature of borrowings including bankoverdrafts and liabilities under acceptances (other than normal trading bills) or acceptance credits,mortgages, charges, hire purchase commitments, guarantees or other contingent liabilities as atthe Latest Practicable Date.
MATERIAL CONTRACTS
18. Our Company and our subsidiaries have not entered into any material contracts, not beingcontracts entered into in the ordinary course of business, within the two years preceding the dateof lodgment of this Prospectus.
LITIGATION
19. As at the Latest Practicable Date, neither our Company nor any of our subsidiaries are engaged inany legal or arbitration proceedings as plaintiff or defendant including those which are pending orknown to be contemplated which may have or have had in the last 12 months before the date oflodgment of this Prospectus, a material effect on the financial position or the profitability of ourCompany or any of our subsidiaries.
MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS
20. Pursuant to the Management and Underwriting Agreement dated 8 August 2007 entered intobetween our Company and DBS Bank as the Manager and the Underwriter, our Companyappointed DBS Bank to manage the Invitation. DBS Bank will receive a management fee from ourCompany for its services rendered in connection with the Invitation.
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168
Pursuant to the Management and Underwriting Agreement, the Underwriter has agreed tounderwrite the Offer Shares for a commission of 2.75 per cent. of the Invitation Price for each OfferShare payable by our Company pursuant to the Invitation. DBS Bank may, at its absolutediscretion, appoint one or more sub-underwriters to sub-underwrite the Offer Shares.
21. Pursuant to the Placement Agreement dated 8 August 2007 (the “Placement Agreement”) enteredinto between our Company and DBS Bank as Placement Agent, DBS Bank has agreed tosubscribe for and/or procure subscribers for the Placement Shares for a placement commission of2.75 per cent. of the Invitation Price for each Placement Share (save that the placementcommission payable in respect of the aggregate of 15,000,000 Placement Shares, to besubscribed by Founders Corporation, Exeno Yamamizu, Mitsui & Co., Ltd., and Yamasa Co., Ltd,shall be 1.75 per cent. of the Invitation Price for each Placement Share), to be paid by ourCompany. DBS Bank may, at its absolute discretion, appoint one or more sub-placement agents forthe Placement Shares.
In respect of the Offer Shares, brokerage will be paid to members of the SGX-ST, merchant banksand members of the Association of Banks in Singapore in respect of successful applications madeon Application Forms bearing their respective stamps, or to Participating Banks in respect ofsuccessful applications made through Electronic Applications at their respective ATMs or their IBwebsites. Subscribers of the Placement Shares (excluding Reserved Shares) may be required topay brokerage of 1.0 per cent. of the Invitation Price.
22. The Management and Underwriting Agreement may be terminated by DBS Bank at any time on orbefore the close of the Application List on the occurrence of certain events including, inter alia:
(a) there shall come to the knowledge of the Manager or the Underwriter any breach of certainrepresentations and warranties in the Management and Underwriting Agreement or that anyof certain representations and warranties by our Company as provided in the Managementand Underwriting Agreement is untrue, inaccurate or misleading; or
(b) any event or circumstance occurring after the date of the Management and UnderwritingAgreement, which if it had occurred before the date of the Management and UnderwritingAgreement, would have rendered any of the warranties in the Management and UnderwritingAgreement untrue, inaccurate or misleading in any respect; or
(c) there shall have been, since the date of the Management and Underwriting Agreement:
(i) any material adverse change (whether or not foreseeable at the date of theManagement and Underwriting Agreement) in, or any development (which hasoccurred or is likely to occur) involving a prospective material adverse change, in thebusiness or in the condition (financial or otherwise) or prospects of our Company or ofour Group as a whole; or
(ii) any new or prospective introduction of or any change or prospective change in anylegislation, regulation, order, policy, rule, guideline or directive (including withoutprejudice to the generality of the foregoing, in respect of any laws or regulationsrelating to taxation or exchange controls) in Singapore or elsewhere (whether or nothaving the force of law and including, without limitation, any directive or request issuedby the Authority, the Securities Industry Council of Singapore or the SGX-ST or otherauthorities in the Cayman Islands, Hong Kong, Japan or the PRC) or in theinterpretation or application thereof any court, government body, regulatory authorityor other competent authority; or
GENERAL AND STATUTORY INFORMATION
169
(iii) any event or series of events resulting in or representing a change, or anydevelopment involving a prospective change, in local, national, regional orinternational financial (including stock market, foreign exchange market, inter-bankmarkets or interest rates or money markets), political, industrial, economic, legal ormonetary conditions, taxation or exchange controls (including but without limitation,the imposition of any moratorium, suspension or material restriction on trading insecurities generally on the SGX-ST due to exceptional financial circumstances orotherwise); or
(iv) any imminent threat or occurrence of any local, national or international outbreak orescalation of hostilities, insurrection or armed conflict (whether or not involvingfinancial markets); or
(v) any other occurrence of any nature whatsoever;
which event or events shall in the sole opinion of DBS Bank (1) result in or be likely to resultin a material adverse fluctuation or adverse conditions in the stock market in Singapore oroverseas; or (2) be likely to prejudice the success of the subscription or offer of the NewShares (whether in the primary market or in respect of dealings in the secondary market); or(3) make it impracticable, inadvisable, inexpedient or uncommercial to proceed with any ofthe transactions contemplated in the Management and Underwriting Agreement; or (4) belikely to have a material adverse effect on the business, trading position, operations orprospects of our Company or of our Group as a whole; or (5) be such that no reasonableunderwriter would have entered into the Management and Underwriting Agreement; or (6)result or be likely to result in the issue of a stop order by the Authority in accordance withSection 242 of the SFA (notwithstanding that a supplementary or replacement Prospectus issubsequently registered with the Authority pursuant to Section 241 of the SFA); or (7) makeit uncommercial or otherwise contrary to or outside the usual commercial practices ofunderwriters in Singapore for DBS Bank to observe or perform or be obliged to observe orperform the terms of the Management and Underwriting Agreement; or
(d) if any of the matters referred above to in this paragraph 22 comes to the notice of DBS Bankand our Company fails to lodge a supplementary or replacement Prospectus or documentwithin a reasonable time after being notified of such a material misrepresentation oromission or fails to promptly take such steps as DBS Bank may reasonably require to informinvestors of the lodgment of such a supplementary prospectus or document.
23. The Placement Agreement is conditional upon the Management and Underwriting Agreement nothaving been terminated or rescinded pursuant to the provisions of the Management andUnderwriting Agreement. In the event that the Management and Underwriting Agreement isterminated or rescinded, our Company reserves the right, at the absolute discretion of ourDirectors, to cancel the Invitation.
24. Save as disclosed in paragraphs 20 to 23 above, we do not have any material relationship with theManager, Underwriter or Placement Agent.
MISCELLANEOUS
25. The nature of the business of our Company has been stated earlier in this Prospectus. Thecorporations which by virtue of Section 6 of the Companies Act are deemed to be related to ourCompany are set out in the section entitled “Group Structure” in this Prospectus.
26. There has been no previous issue of Shares by our Company or offer for sale of our Shares to thepublic within the two years preceding the date of this Prospectus.
GENERAL AND STATUTORY INFORMATION
170
27. The estimated aggregate expenses in connection with the Invitation and the application for listing,including underwriting commission, placement commission, brokerage, management fees, auditors’fee, solicitors’ fee, and all other incidental expenses in relation to the Invitation can be broken downas follows:
Percentage ofgross proceeds
Amount of the Invitation(S$’000) (%)
Listing fees 75 0.2
Professional fees and charges 1,828 5.1
Underwriting and placement commission and brokerage 907 2.5
Miscellaneous expenses 962 2.7
Total estimated expenses 3,772 10.5
The above expenses will be borne by our Company.
28. There have been no public takeover offers by third-parties in respect of our Shares or by us inrespect of other companies’ shares or units of a business trust which have occurred during the lastand current financial year and up to the Latest Practicable Date.
29. No amount of cash or securities or benefit has been paid or given to any promoter within the twoyears preceding the Latest Practicable Date or is proposed or intended to be paid or given to anypromoter at any time.
30. Save as disclosed in the section entitled “General and Statutory Information – Management,Underwriting and Placement Arrangements” in this Prospectus, no commission, discount orbrokerage has been paid or other special terms granted within the two years preceding the LatestPracticable Date or is payable to any Director, promoter, expert, proposed director or any otherperson for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptionsfor any shares in, or debentures of, our Company or any of our subsidiaries.
31. No expert is interested, directly or indirectly, in the promotion of, or in any property or assets whichhave, within the two years preceding the Latest Practicable Date, been acquired or disposed of byor leased to our Company or any of our subsidiaries or are proposed to be acquired or disposed ofby or leased to our Company or any of our subsidiaries.
32. We did not employ, on a contingent basis, any expert who has a material interest, whether direct orindirect, in our Shares, or has a material economic interest, whether direct or indirect, in ourCompany including an interest in the success of the Invitation.
33. Save as disclosed in the sections entitled “Risk Factors” and “Prospects”, our Directors are notaware of any relevant material information including trading factors or risks which are unlikely to beknown or anticipated by the general public and which could materially affect the profits of ourCompany and our subsidiaries.
34. Save as disclosed in the sections entitled “Risk Factors” and “Prospects”, the financial conditionand operations of our Group are not likely to be affected by any of the following:
(a) known trends or demands, commitments, events or uncertainties that will result in or arereasonably likely to result in our Group’s net sales, profitability, liquidity or capital resourcesincreasing or decreasing in any material way;
(b) material commitments for capital expenditure;
GENERAL AND STATUTORY INFORMATION
171
(c) unusual or infrequent events or transactions or any significant economic changes thatmaterially affected the amount of reported income from our operations; and
(d) known trends or uncertainties that have had or that we reasonably expect will have amaterial favourable or unfavourable impact on our revenues or operating income.
35. We currently have no intention of changing our auditors after the listing of our Company on theSGX-ST.
36. Save as disclosed under the section entitled “Use of Proceeds” in this Prospectus, no property hasbeen purchased or acquired or proposed to be purchased or acquired by our Company or oursubsidiaries which is to be paid for wholly or partly out of the proceeds of the Invitation or thepurchase or acquisition of which has not been completed at the date of the issue of thisProspectus other than property in respect of which the contract for the purchase or acquisitionwhereof was entered into in our ordinary course of business or in the ordinary course of businessof our subsidiaries, such contract not being made in contemplation of the Invitation nor theInvitation in consequence of the contract.
37. Save as disclosed in the section entitled “General Information on our Group – Business Overview”in this Prospectus, our Directors are not aware of any event which has occurred since 31December 2006 and up to the Latest Practicable Date which may have a material effect on thefinancial position and results of our Group.
CONSENTS
38. The Auditors have given and have not withdrawn their written consent to the issue of thisProspectus with the inclusion herein of the Reports on the Consolidated Financial Statements ofour Group for FY2004, FY2005 and FY2006 (each of which has not been prepared for thepurposes of incorporation in this Prospectus) as set out in Appendices A, B and C, in the form andcontext in which they are included in this Prospectus and references to their name in the form andcontext in which they are included in this Prospectus.
39. The Manager, Underwriter and Placement Agent has given and has not withdrawn its writtenconsent to the issue of this Prospectus with the inclusion herein of, and all references to, its nameand references thereto in the form and context in which it appears in this Prospectus, and to act insuch capacity in relation to this Prospectus.
40. Each of the Manager, Underwriter and Placement Agent, the Solicitors to the Invitation, theSolicitors to the Manager, Underwriter and Placement Agent, the legal advisers to our Company asto Hong Kong law, Cayman Islands law, British Virgin Islands law, Japan law and PRC law, theShare Registrar and Singapore Share Transfer Agent, does not make, or purport to make, anystatement in this Prospectus or any statement upon which a statement in this Prospectus is basedand, to the maximum extent permitted by law, expressly disclaim and take no responsibility for anyliability to any person which is based on, or arises out of, the statements, information or opinions inthis Prospectus.
RESPONSIBILITY STATEMENT BY OUR DIRECTORS
41. This Prospectus has been seen and approved by our Directors and they individually andcollectively accept full responsibility for the accuracy of the information given herein and confirm,having made all reasonable enquiries, that to the best of their knowledge and belief, the factsstated and the opinions expressed herein are fair and accurate in all material respects as of thedate hereof and there are no material facts the omission of which would make any statements inthis Prospectus misleading and that this Prospectus constitutes full and true disclosure of allmaterial facts about the Invitation and our Group.
GENERAL AND STATUTORY INFORMATION
172
DOCUMENTS AVAILABLE FOR INSPECTION
42. The following documents or copies thereof may be inspected at 8 Shenton Way, #37-04, Singapore068811 during normal business hours for a period of six months from the date of registration by theAuthority of this Prospectus:
(a) the Memorandum and Articles of our Company;
(b) the Reports on the Consolidated Financial Statements for the years ended 31 December2004, 2005 and 2006 set out in Appendices A, B, and C of this Prospectus respectively;
(c) the audited financial statements, where available, of each of our subsidiaries for the yearsended 31 December 2004, 2005 and 2006;
(d) the service agreements referred to in the section entitled “Directors, Management and Staff –Service Agreements” in this Prospectus; and
(e) the letters of consent referred to in paragraphs 38 and 39 in the section entitled “Generaland Statutory Information – Consents” in this Prospectus.
GENERAL AND STATUTORY INFORMATION
173
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
REPORTS AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2004
A-1
APPENDIX A
The consolidated financial statements for the year ended 31 December 2004 and the auditors’ report onthe consolidated financial statements for the year ended 31 December 2004 were not prepared forpurposes of inclusion in the Prospectus and, save for references to page numbers which have beenaltered to conform to the pagination of the Prospectus, have been reproduced and are set out on pagesA-6 to A-48 and page A-5, respectively.
DIRECTORS’ REPORT TO THE SHAREHOLDERS OF UNI-ASIA FINANCE CORPORATION
The directors submit their report together with the audited consolidated financial statements of Uni-AsiaFinance Corporation (the “Group”) for the year ended 31 December 2004.
General information
The principal activities of the Group continue to be in finance arrangement and investment management.The Group acted in the capacity of principal investor, finance arranger and fund administrator for thevarious classes of investments mentioned below. At the end of December 2003, a new investment line inshipping was launched within the asset finance division and subsequently became a major businesssegment within the Group.
The four major operation areas are described hereunder.
– Structured Finance – Finance arrangement, acting as agent of and participating in syndicatedcommercial loans and tax oriented leases; mainly in shipping in Asia.
– Ship Investment/Management – Acquisition and disposal of ships and the investment managementof assets held by the Group and on behalf of third parties.
– Distressed Assets Investment/Management – Acquisition and disposal of distressed Asian assetsand the investment management of assets held by the Group and on behalf of third parties.
– Property Investment/Management – Arrangement of investments and co-investments in thedevelopment and trading of Japanese hotels, commercial and residential properties and theinvestment management of the properties held by the Group and on behalf of third parties.
The Group also retains working capital for the purpose of investment in additional projects or businesseswhere the directors deem there to be short-term or long-term opportunities in niche areas where theGroup is able to extend its relevant expertise.
Operating and Financial Review
1. Structured Finance
The Group undertakes structured finance activities under its Hong Kong and Tokyo operations.The Group arranged 6 syndicated loans and tax leases totalling US$402 million during 2004 (2003:8 loans/leases totalling US$404.9 million), generating US$2,383,000 (2003: US$3,060,000) inmanagement fees and US$251,000 (2003: US$283,000) in agency fees.
As at 31 December 2004, the outstanding loans the Group had participating in totalledUS$250,000 generating US$12,000 in interest income during the year (2003: total outstanding wasUS$767,000 generating US$30,000 in interest income).
The directors view that the general business circumstances in this area in 2005 would continue toremain robust due to the strong demand of shipping transportation brought about by the economicgrowth in China and the rebound of Asian economies.
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APPENDIX A – DIRECTORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
DIRECTORS’ REPORT TO THE SHAREHOLDERS OF UNI-ASIA FINANCE CORPORATION (Continued)
2. Ship Investment/Management
The Ship Investment/Management division undertakes to carry out shipping investmentmanagement for the Group and for third parties. In December 2003, the Group ventured intoshipping investment and acted as the investor and administrator of a US$17 million fund, SearexAsset Management Limited. The Group participated in the fund by the way of subscribing to a29.4% interest in the outstanding performance notes. From these shipping investmentmanagement activities including the role as debt arranger and administrator of the fund, the Groupearned a total of US$9,594,000 (2003: US$1,136,000) including US$1,157,000 as upfront fee fromarrangement of 7 syndicated/bilateral loans totalling US$109 million, US$63,000 as agency fee,US$184,000 as brokerage commission, US$1,415,000 as fund management fee andUS$6,682,000 as investment return. As at 31 December 2004, the total outstanding amountinvested in the ships/shipping fund was US$4,247,000.
The directors view the business circumstances in this area would remain positive in the near termbut would exercise caution in its longer term strategies as this buoyant shipping cycle has persistedfor more than 18 months. The business outlook envisaged in asset finance is expected to remainstrong for reasons already mentioned.
3. Distressed Assets Investment/Management
The Distressed Assets Investment/Management division carries out Non-Performing Loans (NPLs)acquisitions and disposal for the Group and for the managed funds.
A total of US$1,862,000 was recovered in 2004 from distressed assets directly invested by theGroup (2003: US$1,245,000).
AAA Strategic Investment Limited (AAA) is a co-investment fund administrated by the Group inparticipation with a Japanese financial institution. Direct and indirect total contribution from AAA tothe Group amounted to US$436,000 in 2004 (2003: US$1,014,000). As at 31 December 2004, thenominal value of the notes issued by AAA was US$5,644,000 (2003: US$3,776,000) of which theGroup’s participation reached US$1,793,000 (2003: US$926,000).
The directors anticipate changes and a higher degree of competition in the distressed assetsmarket in 2005. The Group will not only focus on new NPL investment opportunities for AAA butalso, future expansion and investments in the PRC distressed assets market in partnership withinternational players and local professional institutions.
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APPENDIX A – DIRECTORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
DIRECTORS’ REPORT TO THE SHAREHOLDERS OF UNI-ASIA FINANCE CORPORATION (Continued)
4. Property Investment Management
The Group’s property investment in Japan has been conducted mainly through Capital AdvisersCo., Limited (CA). Since 1 May 2003, CA has become an associated company in which the Groupmaintains an equity interest of 44.8%. As at 31 December 2004, the Group’s outstandinginvestment in CA totalled US$7,836,000 including US$3,082,000 as ordinary capital andUS$4,754,000 as shareholders’ loan. Contribution from CA to the Group in 2004 was US$242,000(2003: US$601,000).
CA focuses on investment in residential projects and limited service hotels through thearrangement of new property funds or existing property funds advised, administrated and managedby the company. The company would take minority equity participations in the projects. During theyear, CA launched a new fund structure with the participation of a Japanese financial institutionspecialising in the investment of medium/small sized residential properties. As at 31 December2004, CA had invested JPY1,209 million (2003: JPY1,400 million) direct or indirectly in Japaneseproperties generating JPY478 million (2003: JPY652 million) as the total income during the year.Profit before taxation was JPY58 million (2003: JPY140 million). The main reason for thesignificant reduction in profit was due to its corporate re-structuring and management reshufflingexercise.
The directors view CA’s performance in 2005 would rebound in view of the new arrangementteam’s broadened investment perspective and wider deal sourcing capabilities in spite of the stillcompetitive and challenging market conditions.
5. Non-core business
Non-core business conducted during the year comprises direct investment in non-core assets ofUS$451,000 (2003: US$905,000).
The Group earned a pre-tax profit of US$8,114,000 (2003: US$3,442,000). The administrativeexpenses totalled US$6,985,000 (2003: US$6,352,000).
On behalf of the board
Kazuhiko YoshidaManagement Director, Chief Executive Officer11 January 2006
A-4
APPENDIX A – DIRECTORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
AUDITORS’ REPORT TO THE SHAREHOLDERS OFUNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
We have audited the accompanying consolidated balance sheet of Uni-Asia Finance Corporation (the“Company”) and its subsidiaries (together, the “Group”) as of 31 December 2004 and the relatedconsolidated statements of income, cash flows and changes in shareholders’ equity for the year thenended. These financial statements set out on pages 5 to 47 are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statements based on ouraudit and to report our opinion solely to you, as a body, in accordance with our agreed terms ofengagement, and for no other purpose. We do not assume responsibility towards or accept liability to anyother person for the contents of this report.
We conducted our audit in accordance with International Standards on Auditing. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.
In our opinion, the accompanying consolidated financial statements give a true and fair view of thefinancial position of the Group as of 31 December 2004, and of the results of its operations and cashflows for the year then ended in accordance with International Financial Reporting Standards.
PricewaterhouseCoopersCertified Public Accountants
Hong Kong, 11 January 2006
A-5
APPENDIX A – AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2004
Note 2004 2003US$’000 US$’000
Fee income 4 5,599 5,194Investment returns 5 6,682 1,121Income from defaulted loans 1,862 1,245Interest income 6 339 351Other income 317 501
Total income 14,799 8,412
Administrative expenses 7 (6,985) (6,352)Reversal of impairment loss on loans receivable 250 –Loss on disposal of fixed assets – (34)
(6,735) (6,386)
Profit from operations 8,064 2,026
Finance costs - interest expense 6 (46) (216)Deemed gain on dilution of investment in an associate 18(c) – 1,332Share of results of associates after tax 8 96 300
Profit before taxation 8,114 3,442Taxation 10 (179) (6)
Profit for the year 7,935 3,436
Earnings per share
- basis and diluted 13 US$0.283 US$0.123
A-6
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2004
Note 2004 2003US$’000 US$’000
Assets
Non-current assetsFixed assets 15 122 92Loans receivable 16 150 250Investments 17 8,289 4,806Investments in associates 18 6,928 6,576Amounts due from associates 18,29 (h) 4,781 9,631
20,270 21,355
Current assetsLoans receivable 16 1,200 1,808Rental and utility deposits paid 227 193Accounts receivable 19 93 726Prepaid expenses 247 209Interest receivable 54 52Cash and bank balances 20 36,614 27,250
38,435 30,238
Total assets 58,705 51,593
Current liabilities Accounts payable 23 2,267 340Accrued expenses 1,783 502Tax payable 34 34Borrowings 24 12,526 15,895Dividend payable 12,22 1,400 840
Total current liabilities 18,010 17,611
Total assets less current liabilities 40,695 33,982
A-7
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED BALANCE SHEET (Continued)AS AT 31 DECEMBER 2004
Note 2004 2003US$’000 US$’000
Shareholders’ equity
Capital and reservesShare capital 21 28,000 28,000Retained earnings 12,517 5,982
Total shareholders’ equity 40,517 33,982
Non-current liabilitiesDeferred tax liabilities 10 178 –
Total non-current liabilities 178 –
Total shareholders’ equity and non-current liabilities 40,695 33,982
…………………........ …………………........Director Director
A-8
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEAR ENDED 31 DECEMBER 2004
Note 2004 2003US$’000 US$’000
At the beginning of the year 33,982 31,386
Profit for the year 7,935 3,436
Dividend 12 (1,400) (840)
At the end of the year 22 40,517 33,982
A-9
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2004
Note 2004 2003US$’000 US$’000
Cash flows from operating activities
Cash generated from /(used in) operations 26(a) 2,628 (2,274)Interest received on bank balances 300 293Tax paid – (709)
Net cash generated from /(used in) operating activities 2,928 (2,690)
Cash flows from investing activities
Cash flows from investments:Purchase of investments (4,642) (3,570)Proceeds from sales of investments 2,619 2,464Dividend received from investments 2,929 –Net cash outflow on deemed disposal of subsidiary company 26(b) – (10,800)
Rental income from investments – 35
Cash flows from associates:Repayment of principal and interest from loans to associate 4,937 221
Cash flows from other investing activities:
Purchase of fixed assets (107) (91)Loan interest received – 22Loans advanced (1,100) –Loans repaid 1,969 2,012Interest received from syndicated loans 37 –Proceeds from sale of defaulted loans 1,584 –Proceeds from sales of property development projects held for sale – 1,384
Proceeds received form interest on performance notes 2,702 292
Purchase of foreign exchange contracts (10,265) –Proceeds from settlement of foreign exchange contracts 10,325 –
Net cash generated from/(used in) investing activities 10,988 (8,031)
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APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED CASH FLOW STATEMENT (Continued)FOR THE YEAR ENDED 31 DECEMBER 2004
Note 2004 2003US$’000 US$’000
Cash flows from financing activities
Interest paid on borrowings (45) (218)Decrease/(Increase) in deposits pledged ascollateral 4,630 (923)
New borrowing made 1,053 9,179Repayment of borrowings (4,758) –Repayment of preferred capital – (2,647)Dividend paid (840) (840)
Net cash generated from financing activities 40 4,551
Increase/(decrease) in cash and cash equivalents 13,956 (6,170)
Movements in cash and cash equivalents:
Cash and cash equivalents at beginning of year 10,006 16,242Net increase/(decrease) in cash and cashequivalents 13,956 (6,170)
Effects of exchange rate changes 38 (66)
Cash and cash equivalents at end of the year 20 24,000 10,006
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APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
1 General
The Company is an exempted company incorporated in the Cayman Islands on 17 March 1997with limited liability. The principal activities of the Group are the arrangement of, acting as agent ofand participation in syndicated commercial loans, arrangement, management and co-investment indevelopment and trading of Japanese property assets and the acquisition, management anddisposal of distressed Asian assets and shipping business.
2 Accounting policies
(a) Basis of preparation
The consolidated financial statements (the “Financial Statements”) are prepared under thehistorical cost convention as modified by the revaluation of investments, defaulted loans and otherfinancial assets and liabilities (including derivative instruments) at fair value through profit or loss.The principal accounting policies adopted by the Group in arriving at these Financial Statementsare set out below. The Financial Statements are prepared in accordance with and comply withInternational Financial Reporting Standards (IFRS).
In 2004, the Group has early adopted the following revised IFRS issued up to and including 31March 2004. The 2003 comparative figures have been amended as required, in accordance withthe requirements of the following relevant standards:
IAS 28 (revised 2003) Investments in AssociatesIAS 31 (revised 2003) Interests in Joint VenturesIAS 32 (revised 2003) Financial Instruments: Disclosure and PresentationIAS 39 (revised 2003) Financial Instruments: Recognition and Measurement
The early adoption of these standards has resulted in the reclassification of certain associates anda joint venture to investments. Due to the reclassified assets having the same equity pick-up valueand fair value, there was no change to net profit or shareholders’ equity arising from thereclassification.
In 2005, the Group will adopt the IFRS below, which are relevant to its operations:
IAS 1 (revised 2003) Presentation of Financial StatementsIAS 8 (revised 2003) Accounting Policies, Changes in Accounting Estimates and
ErrorsIAS 10 (revised 2003) Events after the Balance Sheet DateIAS 16 (revised 2003) Property, Plant and EquipmentIAS 17 (revised 2003) Leases IAS 21 (revised 2003) The Effects of Changes in Foreign Exchange RatesIAS 24 (revised 2003) Related Party DisclosuresIAS 27 (revised 2003) Consolidated and Separate Financial Statements IAS 33 (revised 2003) Earnings per ShareIAS 36 (revised 2004) Impairment of Assets
A-12
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Accounting policies (Continued)
(b) Subsidiaries
Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, hasan interest of more than one half of the voting rights or otherwise has power to exercise controlover the operations, have been consolidated. Subsidiaries are consolidated from the date on whicheffective control is transferred to the Group and are no longer consolidated from the date ofdisposal. All inter-company transactions, balances and unrealised surpluses and deficits ontransactions between Group companies have been eliminated. Where necessary, accountingpolicies for subsidiaries have been changed to ensure consistency with the policies adopted by theGroup.
(c) Associates
Associates are all entities, other than those investments where IAS 28 does not apply, over whichthe Group has significant influence but not control, generally accompanying a shareholding ofbetween 20% and 50% of the voting rights. Investments in associates are accounted for using theequity method of accounting and are initially recognised at cost. The Group’s investments inassociates are detailed in Note 18.
The Group’s share of its associates post-acquisition profits or losses is recognised in the incomestatement and its share of post-acquisition movements in reserves is recognised in reserves. Thecumulative post-acquisition movements are adjusted against the carrying amount of theinvestment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associatethe Group does not recognise any further losses, unless it has incurred obligations or madepayments on behalf of the associate.
(d) Income recognition
Income constitutes fee income, investment returns, fair value adjustments and interest income.
Fee income is recorded when the amount of revenue can be measured reliably and it is probablethat the economic benefits associated with the transaction will flow to the Group. Interest income isrecognised on a time-proportion basis using the effective yield basis. All other revenue isrecognized on an accruals basis.
(e) Fixed assets
Fixed assets are stated at cost less accumulated depreciation.
Leasehold improvements are depreciated over the remaining period of the lease while all otherfixed assets are depreciated at the following rates on a straight-line basis, which is deemedsufficient to write off their costs to their residual values over their estimated useful lives: Officeequipment 33 1/3 percent per annum and other fixed assets 25 percent per annum.
Gain and losses on disposals are determined by comparing proceeds with carrying amounts andare included in the consolidated income statement.
A-13
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Accounting policies (Continued)
(f) Loans receivable
Loans originated by the Group comprise of participations in syndicated loans and are stated atamortised cost less any impairment losses. Impairment losses are dealt with in the consolidatedincome statement.
Defaulted loans are classified and measured at their fair value. Fair value is determined using adiscounted cash flow valuation technique that takes into consideration the probability weightedexpected cash recoveries on a loan-by-loan basis and the estimated costs anticipated in thecollection of loan repayments, including staff costs, legal fees, loan recovery commission or taxespayable. Changes in fair values are dealt with in the consolidated income statement.
(g) Investments
The Group classifies its financial assets in the following categories: at fair value through profit orloss and loans receivable. The classification depends on the purpose for which the financial assetswere acquired. Management determines the classification of its assets at initial recognition and re-evaluates this designation at every reporting date.
a) Financial assets at fair value through profit or loss
This category has two sub-categories: ‘financial assets held for trading’ and those designatedat fair value through profit and loss at inception. A financial asset is classified in this categoryif acquired principally for the purpose of selling in the short term or if so designated bymanagement. Derivatives are also categorised as ‘held for trading’ unless they aredesignated as hedges. Assets in this category are classified as current assets if they areeither held for trading or are expected to be realised within 12 months of the balance sheetdate.
b) Loans receivable
Loans receivable are non-derivative financial assets which are not quoted in an activemarket. These are included in current assets, except for maturities greater than 12 monthsafter the balance sheet date.
Purchases and sales of investments are recognised at trade date - the date on which the groupcommits to sell the asset. Investments are initially recognised at fair value plus transaction costs forall financial assets not carried at fair value through profit or loss. Financial assets carried at fairvalue through profit or loss, are initially recognised at fair value and transaction costs are expensedin the income statement. Investments are derecognised when the rights to receive cashflows fromthe investments have expired or have been transferred and the Group has transferred substantiallyall the risks and rewards of ownership. Available for sale financial assets and financial assets at fairvalue through profit and loss are subsequently carried at fair value.
A-14
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Accounting policies (Continued)
(g) Investments (Continued)
Fair values for unquoted securities are estimated by the directors. In determining fair valuation, thedirectors make use of market-based information and fair valuation models such as discounted cashflow models. In many instances the directors also rely on financial data of investees and onestimates provided by the management of the investee companies as to the effect of futuredevelopments.
Purchases and sales of investments are recognised on the trade date, which is the date that theGroup commits to purchase or sell the asset. Realised and unrealised gains and losses arisingfrom changes in the fair value of investments are included in the consolidated income statement inthe period in which they arise.
Performance notes are investments, which do not classify as jointly controlled entities, with incomeand maturity values which fluctuate based on the distributions received from underlying assets,which are generally shares in property development companies, defaulted loans or shippingcompanies. Fair values of performance notes or other collective investment schemes aredetermined by the Group’s interest in the fair values of each scheme’s underlying assets. Gainsand losses arising from changes in the fair value of all securities are recognized in the consolidatedincome statement as they arise.
Although the directors use their best judgement in estimating the fair value of investments, thereare inherent limitations in any estimation techniques. Future confirming events will also affect theestimates of fair value and the effect of such events on the estimates of fair value, including theultimate liquidation of investments, could be material to these consolidated financial statements.
(h) Cash and cash equivalents
Cash and cash equivalents are carried in the consolidated balance sheet at cost and comprise ofcash and bank balances with an original maturity of less than three months.
(i) Borrowings
Borrowings are recognized initially at the proceeds received, net of transaction costs incurred. Insubsequent periods, fixed term borrowings are stated at amortised cost using the effective yieldmethod; any difference between proceeds (net of transaction costs) and the redemption value isrecognized in the consolidated income statement over the period of the borrowings.
A-15
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Accounting policies (Continued)
(j) Deferred taxation
Deferred income tax is provided, using the liability method, for all temporary differences arisingbetween the tax bases of assets and liabilities and their carrying values for financial reportingpurposes. Deferred tax is measured using the tax rate currently enacted, or substantially enacted,at the balance sheet date.
The principal temporary differences arise from depreciation on fixed assets. Deferred tax assetsrelating to the carry forward of unused tax losses are recognized to the extent that it is probablethat future taxable profit will be available against which the unused tax losses can be utilized.
(k) Employee benefits
Pension obligations
Group companies have various defined contribution pension schemes in accordance with the localconditions and practices in the countries in which they operate. A defined contribution plan is apension plan under which the Group pays fixed contributions into a separate entity (a fund) and willhave no legal or constructive obligations to pay further contributions if the fund does not holdsufficient assets to pay all employees benefits relating to employee services in the current and priorperiods.
For defined contribution plans, the company pays contributions to publicly or privately administeredpension insurance plans on a mandatory, contractual or voluntary basis.
Once the contributions have been paid, the company has no further payment obligations. Theregular contributions constitute net periodic costs for the year in which they are due and as suchare included in staff costs.
(l) Financial instruments
Financial instruments carried on the consolidated balance sheet include cash and bank balances,loans, investments, receivables, payables and borrowings. The particular recognition methodsadopted are disclosed in the individual policy statements associate with each item.
The Group’s principal foreign exchange hedging is conducted by funding a major portion ofJapanese operations using Yen borrowings secured by US$ deposits, which are stated gross onthe consolidated balance sheet.
Disclosures in respect of financial risks to which the Group is exposed are shown in Note 27.
A-16
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Accounting policies (Continued)
(l) Financial instruments (Continued)
Derivatives are initially recognised at fair value on the date a derivative contract is entered into andare subsequently re-measured at their fair value. The method of recognising the resulting gain orloss depends on whether the derivative is designated a hedging instrument, and if so, the nature ofthe item being hedged. The Group designates certain derivatives as either: (1) hedges of the fairvalue of recognised assets or liabilities or a firm commitment (fair value hedge); (2) hedges ofhighly probable forecast transactions (cash flow hedges); or (3) hedges of net investments inforeign operations.
The Group documents at the inception of the transaction the relationship between hedginginstruments and hedged items, as well as its risk management objective and strategy forundertaking various hedge transactions. The Group also documents its assessment, both at hedgeinception and on an ongoing basis, of whether the derivatives that are used in hedging transactionsare highly effective in offsetting changes in fair values or cash flows of hedged items.
(a) Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedgesare recorded in the consolidated income statement, together with any changes in the fairvalue of the hedged asset or liability that are attributable to the hedged risk.
(b) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated andqualify as cash flow hedges are recognised in equity. The gain or loss relating to theineffective portion is recognised immediately in the consolidated income statement.
Amounts accumulated in equity are recycled in the income statement in the periods whenthe hedged item will affect profit or loss (for instance when the forecast sale that is hedgedtakes place). However, when the forecast transaction that is hedged results in therecognition of a non-financial asset or a liability, the gains and losses previously deferred inequity are transferred from equity and included in the initial measurement of the cost of theasset or liability.
When a hedging instrument expires or it sold, or when a hedge no longer meets the criteriafor hedge accounting, any cumulative gain or loss existing in equity at that time remains inequity and is recognised when the forecast transaction is ultimately recognised in the incomestatement. When a forecast transaction is no longer expected to occur, the cumulative gainor loss that was reported in equity is immediately transferred to the consolidated incomestatements.
A-17
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Accounting policies (Continued)
(l) Financial instruments (Continued)
(c) Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly to cash flowhedges. Any gain or loss on the hedging instrument relating to the effective portion of thehedge is recognised in equity; the gain or loss relating to the ineffective portion is recognisedimmediately in the income statement.
Gains and losses accumulated in equity are included in the income statement when theforeign operation is disposed of.
(d) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair valueof any derivative instruments that do not qualify for hedge accounting are recognisedimmediately in the consolidated income statement.
(m) Foreign currency translation
(a) Measurement currency
Items included in the financial statements of each entity within the Group are measuredusing the currency that best reflects the economic substance of the underlying events andcircumstances relevant to that entity (“the measurement currency”). The consolidatedfinancial statements are presented in United States dollars, which is the measurementcurrency of the parent.
(b) Transactions and balances
Transactions in foreign currencies are translated at exchange rates ruling at the transactiondates. Monetary assets and liabilities expressed in foreign currencies at the consolidatedbalance sheet date are translated at rates of exchange ruling at the consolidated balancesheet date. All exchange differences are dealt with in the consolidated income statement,except for exchange differences arising from the Group’s net investment in foreign entities,and from monetary liabilities that are effective hedges of the Group’s net investment inforeign entities.
(c) Group companies
Income statements and cash flows of foreign entities are translated into the Group’sreporting currency at average exchange rates for the year and their balance sheets aretranslated at the exchange rates ruling on 31 December.
Exchange differences arising from the translation of the net investment in foreign entities andborrowings and other currency instruments designated as hedges of such investments aretaken directly to equity. When a foreign entity is sold, such exchange differences arerecognised in the consolidated income statement as part of the gain or loss on sale.
A-18
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Accounting policies (Continued)
(n) Leases
Leases where a significant portion of the risks and rewards of ownership are retained by the lessorare classified as operating leases. Payments made under operating leases (net of any incentivesreceived form the lessor) are charged to the consolidated income statement on a straight-line basisover the period of the lease.
(o) Dividends
Dividends are recorded in the Group’s financial statements in the period in which they areapproved by the Group’s shareholders or directors.
(p) Segment reporting
A business segment is a group of assets and operations engaged in providing products or servicesthat are subject to risks and returns that are different from those of other business segments. Ageographical segment is engaged in providing products or services within a particular economicenvironment that are subject to risks and returns that are different from those of segmentsoperating in other economic environments.
A-19
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3 Segment information
Primary reporting format - business segments
The Group is organised on a worldwide basis into four main business segments (departments):(1) structured finance; (2) ship investment/management; (3) distressed assetsinvestment/management; and (4) property investment/management.
The segment results for the year ended 31 December 2004 are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Revenue 2,669 9,594 2,336 (99) 299 14,799
Profits from operations 729 7,797 1,576 (421) (1,617) 8,064Share of results of associates – – – 96 – 96Finance costs - interestexpenses – (2) – (44) – (46)
Profit before taxation 729 7,795 1,576 (369) (1,617) 8,114Less: Taxation – – – (179) – (179)
Profit for the year 729 7,795 1,576 (548) (1,617) 7,935
Other segment items areas follows:
Capital expenditure 21 29 20 2 35 107Depreciation 41 1 8 12 15 77
The segment results for the year ended 31 December 2003 are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Revenue 3,432 1,136 2,360 1,192 292 8,412
Profits from operations 1,308 289 1,431 28 (1,030) 2,026Share of results of associates – – – 300 – 300Deemed gain dilution ofinvestment in an associate – – – 1,332 – 1,332
Finance costs – interestexpenses – – – (116) (100) (216)
Profit before taxation 1,308 289 1,431 1,544 (1,130) 3,442Less: Taxation (5) – – (1) – (6)
Profit for the year 1,303 289 1,431 1,543 (1,130) 3,436
Other segment items areas follows:
Capital expenditure 42 7 14 1 27 91Depreciation 24 3 5 9 8 49
A-20
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3 Segment information (Continued)
The segment assets and liabilities as at 31 December 2004 for the year then ended are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Segment assets 1,472 7,433 1,916 6,544 – 17,365Associates – – – 6,928 – 6,928Unallocated assets – – – – 34,412 34,412
Total assets 1,472 7,433 1,916 13,472 34,412 58,705
Segment liabilities 2,391 788 307 89 – 3,575Unallocated liabilities – – – – 14,613 14,613
Total liabilities 2,391 788 307 89 14,613 18,188
The segment assets and liabilities as at 31 December 2003 for the year then ended are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Segment assets 1,910 4,582 1,732 11,530 – 19,754Associates – – – 6,576 – 6,576Unallocated assets – – – – 25,263 25,263
Total assets 1,910 4,582 1,732 18,106 25,263 51,593
Segment liabilities 284 160 262 22 – 728Unallocated liabilities – – – – 16,883 16,883
Total liabilities 284 160 262 22 16,883 17,611
Segment assets consist primarily of fixed assets, receivables and operating cash. They excludetaxation, certain investments and cash and cash equivalents.
Segment liabilities comprise operating liabilities and exclude items such as taxation and certaincorporate borrowings.
Capital expenditure comprises planned additions to fixed assets, all in Asia-ex Japan (Note 15).
A-21
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3 Segment information (Continued)
Secondary reporting format - geographical segments
The Group’s four business segments operate in three main geographical areas, even through theyare managed on a worldwide basis.
Global - the global segment represents activities with assets or customers with no fixed location,which include shipping finance/investment/management.
Asia (ex-Japan) - the Asia (ex-Japan) segment represents activities with assets or customerslocated in Asia (ex-Japan), which include structured finance, asset and shippingfinance/investment/management and distressed Asian investments.
Japan - the Japan segment represents activities with assets or customers located in Japan, andinclude real estate investment/management.
2004 2003US$’000 US$’000
IncomeGlobal 8,353 413Asia (ex-Japan) 6,156 4,631Japan (9) 3,076Unallocated 299 292
14,799 8,412
Total assetsGlobal 7,433 4,582Asia (ex-Japan) 3,388 3,642Japan 6,544 11,530Unallocated 34,412 25,263
51,777 45,017Investments in associates 6,928 6,576
58,705 51,593
Capital expenditureAsia (ex-Japan) 107 91
With the exception of Hong Kong, Singapore and Japan no other individual country contributedmore than 10% of consolidated sales or assets.
Income and total assets attributable to business segments are based on the country in which thecustomer is located. Income and assets not attributable to business segments are disclosed asunallocated. There are no sales between the segments. Total assets and capital expenditure arewhere the assets are located.
A-22
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4 Fee income
2004 2003US$’000 US$’000
Corporate finance arrangement and agency fees 3,086 2,873Front-end fees for finance arrangement of containership (note below) – 1,137
Property fund management and administrative fees – 502Agency, advisory, administration and incentives feesfrom distressed loans (Note 29) 303 682
Agency, arrangement, administration and incentivefees from shipping finance and management (Note 29) 2,210 –
5,599 5,194
Note:
Contingent assets
At 31 December 2003, the Company had been contracted to arrange finance for 10 containerships, for which the Company will collect a US$685,000 fee in respect of each ship. Front-end feesof US$137,000 per ship totalling US$1,137,000, to which the Company had received or wereentitled at the balance sheet date, have been booked as income for the year ended 31 December2003. Completion fees of US$548,000 per ship totalling US$5,548,000 were to be received ondelivery and financing of each ship. Under the commission agreement, further services arerequired to be delivered by the Company and significant contingencies exist such that the directorsare not certain that the completion fees will be received for the year ended 31 December 2003 andconsequently only front-end fees have been booked as income for the year ended 2003. Thecontingent asset of US$5,548,000 at 31 December 2003 was recognised as income during 2004when circumstances were no longer contingent.
At 31 December 2004, the Company had no such outstanding contracts.
A-23
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5 Investment returns
2004 2003US$’000 US$’000
Share of results of jointly controlled entities – 349Rental income from property development projects held for sale – 35Realised gains on investments 2,482 84Return on performance notes - distressed debt (Note 29) 103 292Return on performance notes - properties 35 81Return on performance notes - shipping business (Note 29) 2,589 –Gain on foreign exchange contracts and swap contractsentered into on behalf of an associate (Note 29) 63 –
Fair value adjustments on performance notes – distressed debt 31 –Fair value adjustments on performance notes – shipping business 1,600 –Fair value adjustments on performance notes – properties (221) –Fair value adjustment on other investments – 280
6,682 1,121
6 Interest income and expense
2004 2003US$’000 US$’000
Interest income from:– cash and cash equivalents 299 293– participation in syndicated loans 40 58
339 351
Interest expense on:– borrowings 46 186– preferred capital – 30
46 216
A-24
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7 Administrative expenses
2004 2003US$’000 US$’000
Depreciation (Note 15) 77 49Rental expenses under operating leases:– office premises 376 485– staff residencies 384 404
Staff costs (Note 9) 4,703 4,305Auditors’ remuneration 85 60Traveling and entertainment 825 845Net foreign exchange loss/(gain) 20 (489)Miscellaneous expenses 313 347Professional service fees – proposed initial public offering 103 –– others 99 346
6,985 6,352
8 Results of associates
The Group’s share of results of associates after taxation are as follows:
2004 2003US$’000 US$’000
Capital Advisers Co. Ltd. 242 600Less: share of tax of Capital Advisers Co. Ltd (Note 18) (146) (300)
96 300
9 Staff costs
2004 2003US$’000 US$’000
Salaries (including director’s remuneration) 4,490 3,991Pension costs - defined contribution plans 114 131Other welfare and allowances 99 183
4,703 4,305
A-25
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9 Staff costs (Continued)
The weighed average number of employees is as follows:
2004 2003US$’000 US$’000
Full time 25 29
Hong Kong 20 19Japan 3 8Singapore 2 2
25 29
From 2 May 2003, when it ceased to be a subsidiary, staff employed by Capital Advisers Co. Ltd.ceased to be included in the Group’s staff numbers. The annual weighted average of full time staffat Capital Advisers Co. Ltd. during the period from 2 May 2003 to 31 December 2003 was 11.
10 Taxation
(a) Taxation
2004 2003US$’000 US$’000
Current tax 1 6Deferred tax 178 –
179 6
Tax on profits has been calculated at rates of taxation prevailing in the jurisdictions in which the Groupoperates.
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the taxrate of the home country of the Company as follows:
2004 2003US$’000 US$’000
Profit before tax 8,114 3,442
Tax calculated at a tax rate of 17.5% (2003: 17.5%) 1,420 602Effect of different tax rates in other countries 103 446Income not subject to tax (1,344) (1,042)
Tax charge 179 6
A-26
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10 Taxation (Continued)
(a) Taxation (Continued)
Note:
Income not subject to taxation is only included to the extent that it negates profits at group tax rate.Further adjustments are not made as the contingent tax asset is not accrued.
(b) Deferred taxation
2004 2003US$’000 US$’000
Income statement charge 178 –
At end of the year 178 –
Deferred income tax assets are recognized for tax losses carried forward only to the extent that therealization of the related tax benefit is probable. The Group has tax losses of US$8,897,000 (2003:US$7,637,000) and US$1,000 (2003: US$269,000) for the Company in Hong Kong and Uni-AsiaFinance Corporation (Japan) respectively to carry forward against future taxable income of thosecompanies, which have not been recognized in these consolidated financial statements due touncertainty of their recoverability. These tax losses have no expiry dates.
11 Profit attributable to shareholders
The profit attributable to shareholders is dealt with in the consolidated accounts to the extent of aprofit of US$3,436,000 and US$7,935,000 for the year ended 2003 and 2004 respectively.
12 Dividend
The Company declared a dividend of US$0.03 and US$0.05 per share for the years ended 2003and 2004 respectively.
A-27
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13 Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of theCompany by the weighted average number of ordinary shares in issue during the Relevant Periods.
(b) Diluted
Diluted earnings per share is calculated adjusting the weighted average number of ordinary sharesoutstanding to assume conversation of all dilutive interests during the Relevant Periods. The Grouphas one category of potential ordinary shares: share options issued in 2004 by an associatecompany. There is no impact on earnings per share as the share options issued by the associateare anti-dilutive.
2004 2003US$’000 US$’000
Profit attributable to equity holders of the Company 7,935 3,436
Weighted average number of ordinary shares in issue 28,000 28,000
Earnings per share (US$ per share) - basic and diluted 0.283 0.123
14 Emoluments for directors and highest paid individuals
(a) Directors’ emoluments
2004 2003US$’000 US$’000
Fees 1,116 1,465
Other emoluments:Basic salaries, housing allowances, share options,other allowances and benefits in kind 249 256
Discretionary bonuses 750 86Contributions to pensions schemes for directors (andpast directors) - as directors 3 3
2,118 1,810
There were no independent non-executive directors appointed to the Group during the year.
A-28
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14 Emoluments for directors and highest paid individuals (Continued)
The emoluments of the directors fell within the following bands.
Number of Number ofdirectors directors
2004 2003
Emoluments bands HK$Nil - HK$1,000,000 5 5HK$1,000,001 - HK$1,500,000 – –HK$2,000,001 - HK$2,500,000 – 2HK$2,500,001 - HK$3,000,000 – 1HK$3,000,001 - HK$3,500,000 – 1HK$3,500,001 - HK$4,000,000 – 1HK$4,500,001 - HK$5,000,000 1 –HK$5,500,001 - HK$6,000,000 2 –
8 10
(b) Five highest paid individuals
The five individuals whose emoluments were the highest in the Group for the Relevant include 3(2003: 3) directors whose emoluments are reflected in the analysis presented above. Theemoluments payable to the remaining 2 (2003: 2) individuals are as follows:
2004 2003US$’000 US$’000
Basic salaries, housing allowances, share options,other allowances and benefits in kind 574 546
Bonuses 550 220Pensions 40 39
1,164 805
The emoluments fee within the following bands:
Number of individuals2004 2003
Emoluments bands HK$2,000,001 - HK$2,500,000 – –HK$2,500,001 - HK$3,000,000 – 1HK$3,000,001 - HK$3,500,000 1 1HK$5,000,001 - HK$5,500,000 1 –
2 2
(c) During the year (2003 : nil), no emoluments were paid by the companies comprising the Group toany of the directors or the five highest paid individuals as an inducement to join or upon joining theGroup or as compensation for loss of office.
A-29
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15 Fixed assets
Leasehold Furnitureimprove- Office and Motor
ments equipment fixtures vehicles TotalUS$’000 US$’000 US$’000 US$’000 US$’000
CostAt 1 January 2003 361 258 74 64 757Additions 16 72 3 – 91Disposals – (12) (28) – (40)Subsidiary sold (42) (58) (8) – (108)Exchange translation 1 1 20 – 22
At 31 December 2003 336 261 61 64 722
Accumulated depreciationAt 1 January 2003 324 178 57 64 623Charge 4 36 9 – 49Disposals – (2) (3) – (5)Subsidiary sold (5) (32) (5) – (42)Exchange translation – 5 – – 5
At 31 December 2003 323 185 58 64 630
Net book value At 31 December 2003 13 76 3 – 92
Cost
At 1 January 2004 336 261 61 64 722Additions 49 58 – – 107Exchange translation – 2 – – 2
At 31 December 2004 385 321 61 64 831
Accumulateddepreciation
At 1 January 2004 323 185 58 64 630Charge 31 45 1 – 77Exchange translation 2 – – – 2
At 31 December 2004 356 230 59 64 709
Net book value
At 31 December 2004 29 91 2 – 122
A-30
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16 Loans receivable
2004 2003US$’000 US$’000
Defaulted loans purchased at fair valueRepayable on demand, and in default:Defaulted loans purchased at fair value, at fair valueNominal value of US$3,310,000 – 291
Participation in loansRepayable within one yearInterest rate at:LIBOR plus 1.6% p.a. (2003: LIBOR plus 1.6% p.a.) – 417LIBOR plus 1.25% p.a. (2003: LIBOR plus 1.25% p.a.) 100 1005% unsecured (2003: Interest free) 1,100 1,000
1,200 1,808
Participation in loansRepayable between one and two yearsInterest rate at:LIBOR plus 1.25% p.a. (2003: LIBOR plus 1.25% p.a.) 150 200
Repayable between two and five yearsInterest rate at:LIBOR plus 1.25% p.a. (2003: LIBOR plus 1.25% p.a.) – 50
150 250
Loans receivable 1,350 2,058
A-31
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16 Loans receivable (Continued)
Notes:
(a) Income from defaulted loans is detailed in the consolidated income statements - Fair valuegains on defaulted loans.
During the year, most of the fair value gains consisted of cash receipts from the underlyingloans.
2004 2003US$’000 US$’000
Cash recovered 1,862 1,245
(b) Loans receivable approximate to their fair values due to being floating rate loans.
17 Investments
2004 2003US$’000 US$’000
Non-Hong Kong
Unlisted shares 191 264Unlisted shares - shipping business (Note (a) below) 1,451 2,533Unlisted performance notes - properties investment (Note 29(c)) 607 1,083Unlisted partnership – –Unlisted performance notes - distressed debt (Note 29(c)) 1,793 926Unlisted performance notes – shipping (Note 29(c)) 4,247 –
Investments 8,289 4,806
A-32
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17 Investments (Continued)
Note:
(a) Within unlisted shares - shipping business are investments totalling US$451,000 (2003:US$905,000) in two shipping companies which own and run cargo ships respectively.
Principalactivities and
Country/place and Issued and fully paid % of place ofName date of incorporation up share capital holdings operation
Niigata Seimitsu Japan JPY3,874,300,000 0.2% ManufacturingCo. Ltd. 17 January 1981 Electronic
Devices
EuroAsia II Inc., Panama US$10,000 15% ShippingPanama 12 April 2002 investment
andmanagement
- Hong Kong
EuroAsia III Inc., Panama US$10,000 15% ShippingPanama 12 April 2002 investment
andmanagement
- Hong Kong
AP Real Estate Cayman Islands US$1,000 5.9% JapaneseLtd. 12 April 2000 property
investmentandmanagement
- Japan
RS Property Cayman Islands US$1,000 10% JapaneseInvestment 28 August 2000 property
investmentandmanagement
- Japan
Searex Asset British Virgin Islands US$1,000 Note ShippingManagement 30 December 2003 28(c) investmentLimited and
management- Hong Kong
AAA Strategic Cayman Islands US$1,000 Note DistressedInvestment 26 July 2001 28(c) debtsLimited investment
andmanagement
- Hong Kong
A-33
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18 Investments in associates
(a) Movement of investments in associates
2004 2003US$’000 US$’000
Capital Advisers Co. Ltd.At the beginning of year 6,576 –Investment in associate – 5,553Share of results after tax 96 300Exchange differences 256 723
Investments in associates at end of the year 6,928 6,576
(b) Summary of significant associates’ assets, liabilities and result
A summary of Capital Advisers Co. Ltd.’s assets, liabilities and results are as follows:
2004 2003US$’000 US$’000
Investments in property related projects 11,755 14,405Cash and cash equivalents 7,494 10,662Other assets 6,588 1,847
Total assets 25,837 26,914Amount due to Uni-Asia Finance Corporation (4,781) (9,631)Other liabilities (5,562) (2,605)Minority interest (29) –
Shareholders’ equity (of which Company has 44.8%interest, 2003: 44.8%) 15,465 14,678
Shareholders’ equity- Company’s 44.8% interest 6,928 6,576
A-34
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18 Investments in associates (Continued)
For theperiod from
For the 2 May 2003year ended to
31 December 31 December2004 2003
US$’000 US$’000
Results to 31 December 2004, translated at anaverage rate of Yen 107.94583 (2003: Yen114.0026 to US$1):
Revenue 4,539 4,865Staff costs (1,974) (1,298)Interest expense (210) (227)Other expenses (1,815) (1,999)
Profit before tax 540 1,341Taxation (325) (672)
Profit after tax 215 669
Profit before tax - Company’s interest 242 601Taxation - Company’s interest (146) (301)
Profit after tax - Company’s interest 96 300
Note: The Group loss arising from Capital Advisers Co. Ltd. during the period from 1 January2003 to 2 May 2003 was US$100,000. Prior to 2 May 2003, Capital Advisers Co. Ltd. wasconsolidated as a subsidiary.
A-35
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18 Investments in associates (Continued)
(c) Details of associates
As at 31 December 2004, details of the associates, all of which are unlisted, were as follows:
PrincipalCountry/place Issued and Attributable activities andand date of fully paid up equity place of
Name incorporation share capital interest operation
2004 - Indirectly held:
Capital Advisers Co. Japan Yen892,500,000 44.8% JapaneseLtd. (Note below) 24 February 2000 common shares property
investment andmanagementJapan
(Note) On 2 May 2003, 9,850 new shares in Capital Advisers Co. Ltd. (“Capital Advisers”) wereissued to non-related parties for cash which diluted the Group’s interest in Capital Advisersfrom 100% to 44.8%. The Group sold none of its existing shares in Capital Advisers, butdue to the issuance of new shares at a premium above its net assets, it recognised a“deemed gain on dilution of investment in an associate” of US$1,332,000.
Calculation of deemed gain on dilution of investment in an associate
For year ended31 December 2003
Share Yen’000 US$’000
Company’s share of CA net asset valuebefore dilution 100% 508,621 4,221
Cash received from share issurance 985,000 8,174
CA net asset value after dilution 1,493,621 12,395
Company’s share of CA net asset valueafter dilution 44.8% 669,142 5,553
Less Company’s share of CA net assetvalue before dilution (508,621) (4,221)
Deemed gain on dilution 160,521 1,332
There was no dilution of investment in associates during the year ended 31 December2004.
A-36
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18 Investments in associates (Continued)
(d) Amounts due from associates
The amounts due from associates constituted the principal balance and interest accrued on anunsecured revolving short term loan facility of US$4,754,000 equivalent to Yen 489,000,000 (2003:US$9,631,000 equivalent to Yen 1,030,000,000. The loan was subject to interest at 3% per annumfrom 2 May 2003, when Capital Advisers ceased to be a subsidiary and thereon 1 April 2004, theinterest rate was revised to 1.375% per annum. Interest charged on amounts due from associatesduring the year was US$101,000 (2003: US$221,000).
(e) Amounts due to associates
The amounts due to associate are unsecured, interest free and with no fixed repayment terms.
19 Accounts receivable
In general, the Group grants a credit period of 7 to 60 days to its customers. The aging analysis ofthe accounts receivable is as follows:
2004 2003US$’000 US$’000
0-30 days 77 69231-60 days – –61-90 days – –Over 90 days 16 34
93 726
20 Cash and bank balances
2004 2003US$’000 US$’000
Cash at bank and in hand 1,942 1,909Short term bank deposits 34,672 25,341
Cash and bank balances 36,614 27,250Less: Deposits pledged as collateral 12,614 17,244
Cash and cash equivalents 24,000 10,006
The effective interest rate on short term bank deposits was 1.15% (2003: 0.08%) and thesedeposits have an average maturity of 35 days.
Within cash and bank balances as at 31 December 2004 are US$12,614,000 (2003:US$17,244,000) of deposits pledged as collateral against Japanese Yen denominated revolvingbank loan facilities.
A-37
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
21 Share capital
2004 2003US$’000 US$’000
Authorized:60,000,000 shares of US$1 each 60,000 60,000
Issued and fully paid:28,000,000 shares of US$1 each 28,000 28,000
22 Reserves
Share Retained ExchangeNote capital earnings difference Total
US$’000 US$’000 US$’000 US$’000
Balance at 1 January 2004 28,000 5,982 – 33,982Net investment hedge – – (262) (262)Currency translation difference – – 262 262
Profit for the year and total recognised income for 2004 – 7,935 – 7,935
Dividend 12 – (1,400) – (1,400)
Balance at 31 December 2004 28,000 12,517 – 40,517
Balance at 1 January 2003 28,000 3,386 – 31,386Net investment hedge – – (633) (633)Current translation difference – – 633 633
Profit for the year and total recognised income for 2003 – 3,436 – 3,436
Dividend 12 – (840) – (840)
Balance at 31 December 2003 28,000 5,982 – 33,982
A-38
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23 Accounts payable
The aging analysis of the accounts payable is as follows:
2004 2003US$’000 US$’000
0-30 days 2,246 19131-60 days 3 9261-90 days – 4Over 90 days 18 53
2,267 340
24 Borrowings
2004 2003US$’000 US$’000
Repayable per terms of revolving loan facility bank borrowings 12,526 15,895
Included in borrowings is a secured loan of Yen1.18 billion (approximately US$11,473,000)collateralised by a cash deposit of approximately US$12,614,000 with the same financial institution(2003: a loan totalling Yen1.7 billion, (approximately US$15,895,000) collateralised byapproximately US$17,244,000).
Fair value of borrowings approximate the carrying amounts due to their being floating rateinstruments and no changes to the Group’s credit risk.
2004 2003US$’000 US$’000
Weighted average effective interest rates:Bank borrowing - JPY 0.34% 0.46%Bank borrowing - US$ 2.84% –Cash deposit 1.15% 0.80%
A-39
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24 Borrowings (Continued)
The borrowings of the Group are at floating Yen LIBOR rates:
2004 2003US$’000 US$’000
Term borrowings matured within one year 1,053 –Revolving secured loan due within one year 11,473 15,895
12,526 15,895
Total borrowings 12,526 15,895
25 Subsidiary companies
(a) Details of principal investments in subsidiaries
Details of the principal subsidiaries within the Group at the date of this report are as follows:
Name Country/place Issued and Attributable Principal activitiesand date of fully paid up equity and placeincorporation share capital interest of operation
Directly held:
Uni-Asia Capital Singapore US$1,000,000 100% Corporate finance and(Singapore) 7 August 1997 investment advisory Limited services Singapore
Off-Shore British Virgin Islands US$1 100% Holding and Property 23 April 1998 investment companyInvestment BVI Corporation
Uni-Asia Services Hong Kong HKD20 100% Inactiveand Agency 27 June 1997 Hong KongLimited
Indirectly held:
Uni-Asia Finance Japan Yen 10,000,000 100% CorporateCorporation 9 November 1998 finance services Japan(Japan)
(b) Amounts due from subsidiaries
The amounts due from subsidiaries are unsecured, at an interest rate of 2% per annum and withno fixed repayment terms.
A-40
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25 Subsidiary companies (Continued)
(c) Amounts due to subsidiaries
The amounts due to subsidiaries are unsecured, interest free and with no fixed repayment terms.
26 Cash generated from/(used in) operations
(a) Reconciliation of profit before taxation to cash generated from/(used in) operations
2004 2003US$’000 US$’000
Profit before taxation 8,114 3,442Adjustments for:Depreciation 77 49Interest income (339) (350)Interest expenses 46 216Results of associates (96) (1,632)Interest from loans to associate (86) (221)Net foreign exchange (gain)/loss 20 (489)(Increase)/decrease in rental and utility deposits paid (33) 407(Increase)/decrease in accounts receivable 552 (9,527)(Increase)/decrease in prepaid expenses (38) 3Increase in accounts payable 1,924 8,143Increase/(decrease) in accrued expenses 1,281 (68)Increase in rental and utility deposits received – 85Loss on disposal of fixed assets – 34Decrease in deferred income – –Recovery on loans and interest receivable (250) –Investment returns (6,682) (1,121)Income from defaulted loans (1,862) (1,245)
Cash generated from/(used in) operations 2,628 (2,274)
A-41
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26 Cash generated from/(used in) operations (Continued)
(b) Net cash outflow on deemed disposal of subsidiary company
On 2 May 2003, 9,850 new shares Advisers Co. Ltd. (“Capital Advisers”) were issued to non-related parties which diluted the Group’s interest in Capital Advisers from 100% to 44.80% (Note18). Net cash outflow from the deemed disposal of subsidiary company is as follows:
2004 2003US$’000 US$’000
Fixed assets – 66Jointly controlled entities – 6,817Property development projects held for sales – 5,049Rental and utility deposits paid – 124Accounts receivable – 1,635Prepaid expenses – 42Cash and cash equivalents – 10,800Utility and rental deposits received – (220)Accounts payable – (8,532)Tax payable – (8)Borrowings – (11,552)
Net assets disposed of – 4,221Deemed gain on dilution of investments in an associate – 1,332Adjustment to investment in an associate – (5,553)
Sales proceeds – –Cash of subsidiary disposed of – 10,800
(c) Major non-cash transactions
During the year ended 31 December 2004, the share of taxation of associate amounted toUS$146,000 (2003: US$301,000).
A-42
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27 Financial instruments
(a) Risks
The Group holds monetary assets and liabilities, transacts in foreign exchange transactions withthird parties and has mismatched Yen denominated assets and liabilities. All these operations giverise to risk exposures.
Financial instruments traded or held include cash and cash equivalents, investments, loansreceivable and borrowings.
Off-balance sheet derivative financial instruments are contracts whose value is derived from one ormore underlying financial instruments or indices defined in the contract, which include forward rateagreements.
Forward rate agreements are used to manage the Group’s own exposures to foreign exchange riskas part of its asset and liability management process. The principal derivative instruments used bythe Group are foreign exchange rate related contracts. Most of the Group’s derivative positionshave been entered into to hedge investments in subsidiaries.
(i) Market risk
Market risk is the risk that the value of a financial instrument will fluctuate as a result ofchanges in market prices, whether those changes are caused by factors specific to theindividual financial instrument or by factors affecting all financial instruments traded in orindexed to a market. The Group is exposed to market risk on financial instruments that arevalued at market prices and primarily consist of investments, loans, property developmentprojects and marketable securities.
(ii) Foreign exchange risk
Foreign exchange risk is the risk that the value of financial instruments and other assets andliabilities will fluctuate as a result of changes in foreign exchanges rates. The Group isexposed to foreign exchange risk primarily from the net position of Yen denominated cashand cash equivalents, investments and borrowings.
(iii) Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate as a result ofchanges in market interest rates and the cash flow risks associated with the variability ofcash flows from floating rate financial instruments. The Group is exposed to interest rate riskprimarily from interest rate re-pricing differences between customers’ loans, borrowings, cashand cash equivalents and shareholders’ capital.
(iv) Credit risk
Credit risk is the risk of loss resulting from the failure of counterparties to meet the terms oftheir obligations. The Group is exposed to credit risk through loans and investments, andthrough counterparty default risk on transactions, including foreign exchange transactions inthe process of settlement.
A-43
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27 Financial instruments (Continued)
(a) Risks (Continued)
(v) Liquidity risk
Liquidity risk is the risk of loss resulting from the failure of the Group to meet its fundingrequirements or to execute a transaction at a reasonable price. The Group is exposed toliquidity risk relating to the gaps between the maturity of assets held against the maturity ofthe funding of the Group’s activities.
(b) Risk management
The Group’s principal risks are market risk, credit risk and foreign exchange risk. The directorsconsider the interest rate risk and liquidity risk of the Group to be immaterial.
Market risk and credit risk
The Group seeks to minimise these risks by performing detailed reviews of loan counterparties orasset issuers prior to purchase approval, and by either selling on participated loans to other partiesor entering into offsetting loans payable when the directors wish to preserve the Group’s liquidity.The Group seeks to minimize adverse movements in market price of financial instruments byextensive due diligence procedures to ensure acquisition at prices below their perceived fair value.
Foreign exchange risk
The directors review their currency exposures and enter into foreign currency forward contractswhen considered necessary to hedge against adverse currency movements.
The Group uses the following derivative instruments for both hedging purposes:
Forward rate agreements are individually negotiated interest rate futures that call for a cashsettlement at a future date for the difference between a contracted rate of interest and the currentmarket rate, based on a notional principal amount.
Currency and interest rate swaps are commitments to exchange one set of cash flows for another.Swaps result in an economic exchange of currencies or interest rates (for example, fixed rate forfloating rate) or a combination of all these (ie, cross-currency interest rate swaps). No exchange ofprincipal takes place, except for certain currency swaps. The Group’s credit risk represents thepotential cost to replace the swap contracts if counterparties fail to perform their obligation. Thisrisk is monitored on an ongoing basis with reference to the current fair value, a proportion of thenotional amount of the contracts and the liquidity of the market. To control the level of credit risktaken, the Group assesses counterparties using the same techniques as for its lending activities.
(c) Fair value
The directors consider the carrying amount of all financial assets and liabilities included in theconsolidated balance sheet are a reasonable estimate of their fair values.
A-44
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
28 Commitments
(a) Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
2004 2003US$’000 US$’000
Motor vehicle 81 –
(b) Lease commitments
Commitments, under non-cancellable operating leases with a term of more than one year, fall due:
2004 2003US$’000 US$’000
Within one year 643 542Later than one year and not later than five years 399 480Later than five years – –
1,042 1,022
The Group contracted to a new non-cancellable operating lease covering the period from 1 April2003 to 30 September 2006, at a monthly rent of US$14,000.
(c) Investment commitments
2004 2003US$’000 US$’000
Un-drawn investment commitments at 31st December 12,484 4,834
The Group holds 20% of the performance notes – series 1 issued by AAA Strategic InvestmentLimited and 33.33% of the performance notes – series 2, a distressed debt fund managed by theGroup. No commitments remain outstanding for series 1 at 31 December 2004 (2003: US$Nil).Total commitments for series 2 amount to US$5,000,000 (2003: US$5,000,000) of which acumulative amount of US$1,894,000 has been called and paid to 31 December 2004 (2003:US$427,000).
The Group also holds 29.4% of the performance notes – series 1 issued by Searex AssetManagement Limited and 21.7% of the performance notes – series 2, a shipping managementcompany managed by the Group. No commitments remain outstanding for series 1 at 31December 2004 (2003: US$Nil). Total commitments for series 2 amount to US$5,000,000 of whichno amount called and paid to 31 December 2004 (2003: US$Nil).
A-45
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
28 Commitments (Continued)
(c) Investment commitments (Continued)
The Group holds a 15% interest in both Euroasia II Inc. Panama and Euroasia III Inc. Panama,each of which has been established for the sole purpose of contracting, take delivery of andoperating a cargo vessel. No commitments remain outstanding as at 31 December 2004 (2003:US$1,166,000) of which no amount (2003: US$905,000) has been called and paid to 31 December2004.
The Group holds a 33.3% interest in Glad Mate Limited, which has been established for the solepurpose of contracting, the building of, take delivery of, and operating a cargo vessel. The Grouphad an outstanding commitment of US$4,378,000 at 31 December 2004 in relation to thisenterprise (2003: US$Nil).
29 Related party transactions
Related parties include investments, associates, jointly controlled entities, and propertydevelopment projects held for sale where the Group holds a beneficial interest in, and is alsocontracted as a service provider to manage or administer such investment, company, entity orproperty.
Related party transactions are carried out under normal commercial terms and conditions andgenerate fee income as disclosed in Note 4, investment returns as disclosed in Note 5, directors’remunerations and other allowances as disclosed in Note 14, investments in associates andamounts due from associates as disclosed in Note 18.
Related party balances comprise the unlisted performance notes as disclosed in Note 17.
The following transactions were carried out with related parties:
2004 2003US$’000 US$’000
Agency, arrangement, administration and incentive fees from shipping finance, investment and management (Note (a)) 2,210 –
Agency, advisory, administration and incentive fees from distressed loans (Note (b)) 303 682
Return on performance notes – shipping business (Note (c)) 2,589 –
Return on performance notes – distressed debt (Note (c)) 103 292
Proceeds on sales of the associates to another associates (Note (d)) 709 –
Incentive fees receivable from associates 6 –Interest return on performance note – distressed debt 25 –
Amount due from associates (Note (b)) 4,781 9,631
A-46
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29 Related party transactions (Continued)
Notes:
(a) The Group is entitled to receive from Searex Asset Management Limited, as investment of theGroup, the following fees:
(i) a minimum administration fee of US$5,000 per month for each shipping asset owned bySearex Asset Management Limited, including the vessels being acquired which are subjectof a memorandum of agreement, payable quarterly in advance.
(ii) a brokerage fee of approximately 0.75% to 1.25% on the sum of the daily charter hire of avessel.
(iii) an incentive fee of approximately 10% of the sum of the net proceeds, accumulated cashbalance and liabilities outstanding from the disposal of certain vessels.
(iv) a loan arrangement fee of approximately 1% of the purchase price of a vessel.
(b) The Group is entitled to receive from AAA Strategic Investment Limited, as investment of theGroup, the following fees:
(i) an administration fee of US$75,000 per annum for performance notes series 1 payable semi-annually in advance and an administration fee for performance notes series 2 payable semi-annually in advance in the amount of US$50,000 for the full or partial issuance ofperformance notes each of the first three US$5 million amounts up to a maximum ofUS$150,000.
(ii) an agency fee of US$25,000 per annum for performance notes series 1 payable semi-annually in advance, and an agency fee for performance notes series 2, payable semi-annually in advance, in the amount of US$50,000 per annum for the full or partial issuanceof each of the first three US$5 million tranches of performance notes.
(iii) an incentive fee, calculated on an asset by asset basis, in addition to the administration fee.The initial incentive fee is calculated as twenty percent of the cumulative cash recoveredfrom each asset in excess of one hundred and ten percent of that asset’s initial cost. Thesubsequent incentive fee is calculated as twenty percent of additional cash recovered fromeach asset in excess of that asset’s additional cost. The incentive fee is calculated and paidsemi-annually.
(c) Performance notes are redeemed semi-annually, in whole or in part, calculated based on net cashrecovered from the underlying assets. Performance note redemptions are determined based onthe total original cost of recovered assets less the deduction of fees and other expenses incurred inrecovery of such assets. Recovery amounts from assets in excess of that required for performancenote repayments are paid out as interest on those performance notes.
(d) In March 2004, the Company disposed of its equity interest in two investments, Ocean TimeLimited and Ocean Target Limited, to a related party, Searex Asset Management Limited.
A-47
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29 Related party transactions (Continued)
(e) The Company entered into a two year Cap transaction of notational amount of US$27,000,000(2003: US$Nil) with a bank at an interest rate cap of 2.25% on 31 March 2004. The Companyassigned and transferred all the rights and obligations to a subsidiary company of Searex AssetManagement Limited, a related party of the Group, effective from 13 April 2004. The Company hasno residual interest or obligations in relation to the transaction after the assignment. The Companyalso entered into US$/Yen foreign currency forward contracts with the same subsidiary company ofSearex Asset Management Limited during 2004, of principal amounts of US$10m and US$1.3m,both contracts expired during the years.
(f) The Group also purchased loans originally advanced to a related party, South China InternationalLeasing Co. Ltd. (“SCIL”). On 9th September 2004, the Company sold its equity and loan interestin SCIL to an unrelated party at a total consideration of US$1,666,000.
(g) The amounts due are unsecured, interest free and have no fixed repayment terms.
(h) The amounts due from associates constituted loans to Capital Advisers.
The principal balance and interest accrued on an unsecured revolving short term loan facility ofUS$4,754,000 equivalent to Yen 489,000,000 (2003: US$9,631,000 equivalent toYen1,030,000,000). The loan was subject to interest at 3% per annum from 2 May 2003, whenCapital Advisers Co. Ltd ceased to be a subsidiary and thereon 1 April 2004, the interest rate wasrevised to 1.375% per annum. Interest charged on amounts due from Capital Advisers Co. Ltdduring the year was US$101,000 (2003: US$221,000).
30 Post balance sheet events
On 25 January 2005, a new joint venture, Uni Ships and Management Ltd., was incorporated inHong Kong, of which the Company holds 30% of its common shares. The principal activities of thejoint venture are the provision of project management services for Searex Asset ManagementLimited, and accounting and other supporting services to the underlying shipping companies.
On 21 March 2005, the Company entered into three contracts to guarantee payment on thepurchase of three container vessels, of US$56,280,000 per vessel.
31 Approval of the consolidated financial statements
The consolidated financial statements were approved by the board of directors on 11 January2006.
A-48
APPENDIX A – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B-1
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
REPORTS AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2005
APPENDIX B
The consolidated financial statements for the year ended 31 December 2005 and the auditors’ report onthe consolidated financial statements for the year ended 31 December 2005 were not prepared forpurposes of inclusion in the Prospectus and, save for references to page numbers which have beenaltered to conform to the pagination of the Prospectus, have been reproduced and are set out on pagesB-6 to B-47 and page B-5, respectively.
DIRECTORS’ REPORT TO THE SHAREHOLDERS OF UNI-ASIA FINANCE CORPORATION
The directors submit their report together with the audited consolidated financial statements of Uni-AsiaFinance Corporation (the “Company”) and its subsidiaries (together the “Group”) for the year ended 31stDecember 2005.
General Information
The principal activities of the Group remained substantially the same as the previous year- financearrangement and investment management. The Group acted in the capacities of principal investor,finance arranger and fund administrator for various classes of alternative investments in ships, distressedassets and real estate. The main sources of income for the Group include fee income, investment returns,interest income and other income generated from the four departments listed below.
- Structured Finance department focuses on finance arrangement in the shipping sector in Asia.The Group acts as the arranger, packager and agent and participates in syndicated commercialloans and tax oriented leases.
- Asset Finance department focuses on investment and management of ships including theacquisition and disposal of ships and the investment management of assets held by the Groupand on behalf of third parties.
- Distressed Assets Investment department focuses on investment and management activities inAsia including the acquisition and disposal of distressed Asian assets and the investmentmanagement of assets held by the Group and on behalf of third parties.
- Japan real estate department focuses on the investment and management of real estateprojects in Japan including the arrangement of investment and co-investment in thedevelopment and trading of Japanese hotels, commercial and residential properties and theinvestment management of the properties held by the Group and on behalf of third parties.
The Group is also seeking investment opportunities in new areas, projects or business where it will beable to capitalize on its finance packaging expertise.
The directors would like to report that the Group’s listing application in April 2005 to the Hong Kong StockExchange was rejected. The directors would like to continue to explore the possibility of bringing theCompany public.
Operating and Financial Review
1. Structured Finance
Structured finance activities are conducted mainly out of the Hong Kong and Tokyo offices. Duringthe year, the Group arranged syndicated transactions totalling US$930m (2004: US$546m).
The structured finance department generated arrangement and brokerage fee income ofUS$3,494k (2004: US$2,383k) and agency fees of US$289k (2004: US$251k).
The directors are of the view that the business of finance arrangement will remain competitive.
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APPENDIX B – DIRECTORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
DIRECTOR’S REPORT TO THE SHAREHOLDERSOF UNI-ASIA FINANCE CORPORATION (Continued)
Operating and Financial Review (continued)
2. Asset Finance
The asset finance department carries out the business of shipping investment management for theGroup and for third parties. In December 2003, the Group ventured into shipping investment andacted as the investor and administrator of two investment facilities held under Searex AssetManagement Limited. The Group participated in the fund by way of subscribing to a 29.4% and19.57% interest in the outstanding performance notes. In 2005, the Group invested into 3 containervessel projects namely Falcon, Fortitude and Union.
Through shipping investment management, debt arrangement and fund administration, thedepartment recorded total income of US$8,997k (2004: US$9,594k). A detailed breakdown of themajor income is as follows: US$1,785k as arrangement and project management fees (2004:US$1,344k), US$65k as agency fee (2004: US$63k), US$2,552k as fund management fee (2004:US$1,415k) and US$4,500k as investment return (2004: US$6,682k). As at 31st December 2005,the total outstanding investment in the ships/shipping fund was US$9.7m (2004: US$4,247k).
The directors are of the view that the shipping market would remain opportunistic in the short termdriven by China’s continued economic prosperity. The anticipated increase in vessel supply isexpected to put pressure on capital values and freight rates. In the medium term, the Group willexercise greater degree of caution in future investments and dispositions.
3. Distressed Assets Investment
The distressed assets investment department carries out the acquisition and disposition of non-performing loans (NPLs) for the Group and for the managed funds.
There was no recovery in 2005 from NPLs invested directly by the Group (2004: US$1,862k). Onlymoderate NPL investments were made in 2005 due primarily to a change in market dynamics andincreased investment risk.
AAA Strategic Investment Limited (AAA) is a co-investment fund administrated by the Group inparticipation with a Japanese financial institution. Contribution from AAA to the Group amounted toUS$1,019k in 2005 (2004: US$405k). As at 31st December 2005, the nominal value of the notesissued by AAA was US$5,293k (2004: US$5,644k) of which the Group’s participation reachedUS$1,746k (2004: US$1,793k).
The directors are of the view that investing into NPLs has become less attractive. As a result, theGroup has extended from investment in NPLs to distressed real estate projects. The Group iscurrently conducting investment and due diligence on real estate projects in Asia.
4. Real Estate Investment Management in Japan
The Group’s property investment in Japan is conducted through Capital Advisers Co., Limited (CA),an associated company in which the Group maintains an equity interest of 44.8%. As at 31stDecember 2005, the Group’s outstanding investment in CA totaled US$6,585k (2004: US$6,928k)including US$756k as shareholders’ loan (2004: US$4,781k). Net Contribution from CA to theGroup in 2005 was US$570k (2004: US$96k).
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APPENDIX B – DIRECTORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
DIRECTOR’S REPORT TO THE SHAREHOLDERSOF UNI-ASIA FINANCE CORPORATION (Continued)
Operating and Financial Review (continued)
4. Real Estate Investment Management in Japan (continued)
CA focuses on investment in residential projects and limited service hotels through thearrangement of new property funds or existing property funds advised, administrated and managedby the company. The company would take minority equity participations in the projects. As at 31stDecember 2005, CA had invested JPY1,533m (2004: JPY1,209m) direct or indirectly in Japaneseproperties generating JPY949m (2004: JPY478m) in total income during the year. Profit beforetaxation was JPY276m (2004: JPY58m).
In 2005, the property funds under CA’s management reached JPY43.7 billion with an increase ofJPY23.6 billion from the previous year. Also, CA has entered into the hotel operation business inAugust, 2005 by purchasing all the shares of the hotel operating company, Sun–Vista.
The directors are of view that the Japan real estate market will continue to improve. CA willcontinue to expand its real estate fund business and the hotel operation business in 2006 targetingsales of JPY2,293m and ordinary income of JPY554m.
The Group reported a net profit before tax of US$9,918k (2004: US$8,114k) after factoring in totalexpenses of US$8,903k (2004: US$6,985k) of which US$575k (2004: US$103k) was attributable tothe listing exercise in Hong Kong in 2005.
On behalf of the board
Kazuhiko YoshidaManaging Director, Chief Executive OfficerHong Kong, 16th June 2006
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APPENDIX B – DIRECTORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
AUDITORS’ REPORT TO THE SHAREHOLDERS OFUNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
We have audited the accompanying consolidated balance sheet of Uni-Asia Finance Corporation (the“Company”) and its subsidiaries (together, the “Group”) as of 31 December 2005 and the relatedconsolidated statement of income, cash flows and changes in shareholders’ equity for the year thenended. These financial statements set out on pages 5 to 47 are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statements based on ouraudit and to report our opinion solely to you, as a body, in accordance with our agreed terms ofengagement, and for no other purpose. We do not assume responsibility towards or accept liability to anyother person for the contents of this report.
We conducted our audit in accordance with International Standards on Auditing. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.
In our opinion, the accompanying consolidated financial statements give a true and fair view of thefinancial position of the Group as of 31 December 2005, and of the results of its operations and cashflows for the year then ended in accordance with International Financial Reporting Standards.
PricewaterhouseCoopersCertified Public Accountants
Hong Kong, 16th June 2006
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APPENDIX B – AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2005
Note 2005 2004US$’000 US$’000
ASSETSNon-current assetsProperty, plant and equipment 16 147 122Loans receivable 17 50 150Investments 18 15,437 8,289Investments in associates 20(a) 6,648 6,928Amounts due from associates 31(h) 756 4,781
23,038 20,270
Current assetsLoans receivable 17 100 1,200Rental and utility deposits paid 433 227Deposits pledged as collateral 32 10,082 12,614Accounts receivable 21 465 93Prepaid expenses 267 247Interest receivable 20 54Cash and bank balances 22 27,544 24,000
38,911 38,435
Total assets 61,949 58,705
EQUITYCapital and reserves attributable to equity holders of the companyShare capital 23 28,000 28,000Retained earnings 21,956 12,517
Total equity 49,956 40,517
The notes on pages 11 to 47 are an integral part of these consolidated financial statements.
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED BALANCE SHEET (Continued)AS AT 31 DECEMBER 2005
Note 2005 2004US$’000 US$’000
LIABILITIESNon-current LiabilitiesDeferred tax liabilities 11(b) 264 178
264 178
Current LiabilitiesAmount due to associate 31(g) 11 –Borrowings 26 9,041 12,526Accounts payable 25 227 2,267Accrued expenses 2,023 1,783Tax payable 427 34Dividend payable 13,24 – 1,400
Total current liabilities 11,729 18,010
Total equity and liabilities 61,949 58,705
Approved by board of directors on 16 June 2006and signed on its behalf by:
…………………….…. ……………………….Director Director
The notes on pages 11 to 47 are an integral part of these consolidated financial statements.
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2005
Note 2005 2004US$’000 US$’000
Fee income 5 12,234 5,599Investment returns 6 5,011 6,682Income from defaulted loans – 1,862Interest income 7 936 339Other income 86 317
Total income 18,267 14,799
Employee benefits expense 10 (5,481) (5,087)Depreciation expense 16 (106) (77)Other expenses 8 (3,316) (1,821)Reversal of impairment loss on loans receivable – 250
Gain on disposal of fixed assets 2 –
(8,901) (6,735)
Operating profit 9,366 8,064
Finance costs - interest expense 7 (42) (46)Share of profit of associates after tax 9 594 96
Profit before income tax 9,918 8,114Income tax expense 11 (479) (179)
Profit for the year 9,439 7,935
Earnings per share for profit attributable to the equity holders of the companyduring the year
- basic and diluted 14 US$0.337 US$0.283
The notes on pages 11 to 47 are an integral part of these consolidated financial statements.
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEAR ENDED 31 DECEMBER 2005
Note 2005 2004US$’000 US$’000
At the beginning of the year 40,517 33,982
Net investment hedge (879) 262
Currency translation difference 879 (262)
Profit for the year 9,439 7,935
Dividend 13 – (1,400)
At the end of the year 24 49,956 40,517
The notes on pages 11 to 47 are an integral part of these consolidated financial statements.
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2005
Note 2005 2004US$’000 US$’000
Cash flows from operating activities
Cash generated from operations 28(a) 1,733 2,628Interest received on bank balances 927 300Income tax paid (1) –
Net cash generated from operating activities 2,659 2,928
Cash flows from investing activities
Cash flows from investments:Purchase of investment (9,825) (4,642)Proceeds from sales of investments 2,911 2,619Dividend received from investments 2 2,929
Cash flows from associates:Repayment of principal and interest from loans to associate 4,085 4,937
Cash flows from other investing activities:
Purchase of fixed assets (134) (107)Loans advanced – (1,100)Loan repayments received 1,200 1,969Interest received from syndicated loans 48 37Proceeds from sale of defaulted loans – 1,584Decrease in deposits pledged as collateral 2,533 4,630Proceeds received from interest on performance notes 4,359 2,702
Purchase of foreign exchange contracts (25,433) (10,265)Proceeds from settlement of foreign exchange contracts 25,499 10,325
Net cash generated from investing activities 5,245 15,618
The notes on pages 11 to 47 are an integral part of these consolidated financial statements.
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED CASH FLOW STATEMENT (Continued)FOR THE YEAR ENDED 31 DECEMBER 2005
Note 2005 2004US$’000 US$’000
Cash flows from financing activities
Interest paid on borrowings (45) (45)Proceed from borrowings – 1,053Repayment of borrowings (3,485) (4,758)Dividend paid to company shareholders (1,400) (840)
Net cash used in from financing activities (4,930) (4,590)
Increase in cash equivalents 2,974 13,956
Movements in cash and cash equivalents:
Cash and cash equivalents at beginning of year 24,000 10,006Net increase in cash and cash equivalents 2,974 13,956Effects of exchange rate changes 570 38
Cash and cash equivalents at end of the year 22 27,544 24,000
The notes on pages 11 to 47 are an integral part of these consolidated financial statements.
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
1 General information
Uni-Asia Finance Corporation (the “Company”) and its subsidiaries (together, the “Group”) principalactivities are the arrangement of, acting as agent of and participation in syndicated commercialloans, arrangement, management and co-investment in development and trading of Japaneseproperty assets and the acquisition, management and disposal of distressed Asian assets andshipping business.
The Company is an exempted company incorporated in the Cayman Islands on 17th March 1997with limited liability.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financialstatements are set out below. These policies have been consistently applied to all the yearspresented, unless otherwise stated.
(a) Basis of preparation
The consolidated financial statements of Uni-Asia Finance Corporation have been prepared inaccordance with International Financial Reporting Standards (IFRS). The consolidated financialstatements have been prepared under the historical cost convention as modified by the revaluationof financial assets and financial liabilities (including derivative instruments) at fair value throughprofit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain criticalaccounting estimates. The areas where assumptions and estimates are significant to theconsolidated financial statements are disclosed in note 4.
Interpretations and amendments to published standards effective in 2005
The following amendments and interpretations to standards are mandatory for the Group’saccounting periods beginning on or after 1st January 2005:
- IFRIC 2, Members’ Shares in Co-operative Entities and Similar Instruments (effective from 1stJanuary 2005);
- SIC 12 (Amendment), Consolidation – Special Purpose Entities (effective 1st January 2005); and- IAS 39 (Amendment), Transition and Initial Recognition of Financial Assets and FinancialLiabilities (effective from 1 January 2005).
Management assessed the relevance of these amendments and interpretations with respect to theGroup’s operations and concluded that they are not relevant to the Group.
Standards, interpretations and amendments to published standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards have been publishedthat are mandatory for the Group’s accounting periods beginning on or after 1st January 2006 orlater periods but which the Group has not early adopted, as follows:
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies (Continued)
(a) Basis of preparation (Continued)
IAS 39 (Amendment) The Fair Value Option (effective from 1 January 2006). This amendmentchanges the definition of financial instruments classified at fair value through profit or loss andrestricts the ability to designate financial instruments as part of this category. The Group believesthat this amendment should not have a significant impact on the classification of financialinstruments, as the Group should be able to comply with the amended criteria for the designationof financial instruments at fair value through profit and loss. The Group will apply this amendmentfrom annual periods beginning 1 January 2006
IFRS 7, Financial Instruments: Disclosures, and a complementary Amendment to IAS 1,Presentation of Financial Statements - Capital Disclosures (effective from 1 January 2007). IFRS 7introduces new disclosures to improve the information about financial instruments. It requires thedisclosure of qualitative and quantitative information about exposure to risks arising from financialinstruments, including specified minimum disclosures about credit risk, liquidity risk and marketrisk, including sensitivity analysis to market risk. It replaces IAS 30, Disclosures in the FinancialStatements of Banks and Similar Financial Institutions, and disclosure requirements in IAS 32,Financial Instruments: Disclosure and Presentation. It is applicable to all entities that report underIFRS. The amendment to IAS 1 introduces disclosures about the level of an entity’s capital and howit manages capital. The Group assessed the impact of IFRS 7 and the amendment to IAS 1 andconcluded that the main additional disclosures will be the sensitivity analysis to market risk and thecapital disclosures required by the amendment of IAS 1. The Group will apply IFRS 7 and theamendment to IAS 1 from annual periods beginning 1 January 2007.
(b) Consolidation
(i) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the powerto govern the financial and operating policies generally accompanying a shareholding of more thanone half of the voting rights. The existence and effect of potential voting rights that are currentlyexercisable or convertible are considered when assessing whether the Group controls anotherentity. Subsidiaries are fully consolidated from the date on which control is transferred to theGroup. They are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by theGroup. The cost of an acquisition is measured as the fair value of the assets given, equityinstruments issued and liabilities incurred or assumed at the date of exchange, plus costs directlyattributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilitiesassumed in a business combination are measured initially at their fair values at the acquisitiondate, irrespective of the extent of any minority interest. The excess of the cost of acquisition overthe fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. Ifthe cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, thedifference is recognized directly in the consolidated income statement.
Inter-company transactions, balances and unrealized gains on transactions between groupcompanies are eliminated. Unrealized losses are also eliminated but considered an impairmentindicator of the asset transferred. Accounting policies of subsidiaries have been changed wherenecessary to ensure consistency with the policies adopted by the Group.
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies (Continued)
(b) Consolidation (Continued)
(ii) Associates
Associates are all entities, other than those investment where IAS 28 does not apply, over whichthe Group has significant influence but not control, generally accompanying a shareholding ofbetween 20% to 50% of the voting rights. Investments in associates are accounted for using theequity method of accounting and are initially recognized at cost. The Group’s investments inassociates are detailed in Note 20.
The Group’s share of its associates’ post-acquisition profits or losses is recognized in the incomestatement, and its share of post-acquisition movements in reserves is recognized in reserves. Thecumulative post-acquisition movements are adjusted against the carrying amount of theinvestment. When the Group’s share of losses in an associate equals or exceeds its interest in theassociates, including any other unsecured receivables, the Group does not recognize furtherlosses, unless it has incurred obligations or made payments on behalf of the associate.
Unrealized gains on transactions between the Group and its associates are eliminated to the extentof the Group’s interest in the associates. Unrealized losses are also eliminated unless thetransaction provides evidence of an impairment of the asset transferred. Accounting policies ofassociates have been changed where necessary to ensure consistency with the policies adoptedby the Group.
Investments held by venture capital or similar entities are excluded from the scope of IAS 28 wherethose investments are designated, upon initial recognition, as at fair value through profit or loss andare accounted for in accordance with IAS 39. Certain investments of the Group have applied thisscope exemption with changes in fair value recognised in profit or loss in the period of change. Thedirectors have determined that the Group does not carry on its business through these associates.
(c) Revenue and other income recognition
Arrangement fees are recognized on delivery and upon completion of the transaction when allobligations associated with the transaction are completed and when the amount of revenue can bemeasured reliably.
Agency fees and commissions are recognized when pre-agreed duties and functions of acting asan agent has been rendered.
Project management fees are recognized on an accruals basis.
Administration / Agency Fee / Incentive fee from distressed Loans are recognized as theycrystallize according to the pre-agreed terms of contract.
Interest Income is recognized on a time-proportion basis using the effective yield basis.
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies (Continued)
(d) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation.
Leasehold improvements are depreciated over the remaining period of the lease while all otherfixed assets are depreciated at the following rates on a straight-line basis, which is deemedsufficient to write off their costs to their residual values over their estimated useful lives: officeequipment at 33 1/3% per annum and other fixed assets at 25% per annum.
Gain and losses on disposals are determined by comparing proceeds with carrying amounts andare included in the consolidated income statement.
(e) Financial Assets
The Group classifies its financial assets in the following categories: at fair value through profit orloss and loans and receivables. The classification depends on the purpose for which the financialassets were acquired. Management determines the classification of its assets at initial recognitionand re-evaluates this designation at every reporting date.
a) Financial assets at fair value through profit or loss
This category has two sub-categories: ‘financial assets held for trading’ and those designatedat fair value through profit and loss at inception. A financial asset is classified in this categoryif acquired principally for the purpose of selling in the short term or if so designated bymanagement. Derivatives are also categorised as ‘held for trading’ unless they aredesignated as hedges. Assets in this category are classified as current assets if they areeither held for trading or are expected to be realized within 12 months of the balance sheetdate.
b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinablepayments that are not quoted in an active market. These are included in current assets,except for maturities greater than 12 months after the balance sheet date. These areclassified as non-current assets. Loans are classified as “Loans Receivable” in the balancesheet.
Purchases and sales of investments are recognised at trade date - the date on which the Groupcommits to sell the asset. Investments are initially recognised at fair value plus transaction costs forall financial assets not carried at fair value through profit or loss. Financial assets carried at fairvalue through profit or loss, are initially recognised at fair value and transaction costs are expensedin the income statement. Investments are derecognised when the rights to receive cash flows fromthe investments have expired or have been transferred and the Group has transferred substantiallyall the risks and rewards of ownership. Financial assets at fair value through profit and loss aresubsequently carried at fair value.
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies (Continued)
(e) Financial assets (Continued)
Fair values for unquoted securities are estimated by the directors. In determining fair valuation, thedirectors make use of market-based information and fair valuation models such as discounted cashflow models. In many instances the directors also rely on financial data of investees and onestimates provided by the management of the investee companies as to the effect of futuredevelopments.
Performance notes are investments with income and maturity values which fluctuate based on thedistributions received from underlying assets, which are generally investments in propertydevelopment companies, defaulted loans or shipping companies. Fair values of performance notesor other collective investment schemes are determined by the Group’s interest in the fair values ofeach scheme’s underlying assets. Gains and losses arising from changes in the fair value of allsecurities are recognized in the consolidated income statement as they arise.
Although the directors use their best judgement in estimating the fair value of investments, thereare inherent limitations in any estimation techniques. Future confirming events will also affect theestimates of fair value and the effect of such events on the estimates of fair value, including theultimate liquidation of investments, could be material to these consolidated financial statements.
(f) Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank balances and short term bank deposits withan original maturity of less than three months.
(g) Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings aresubsequently stated at amortized cost; any difference between the proceeds (net of transactioncosts) and the redemption value is recognized in the income statement over the period of theborrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defersettlement of the liability for at least 12 months after the balance sheet date.
(h) Deferred taxation
Deferred income tax is provided in full, using the liability method, on temporary differences arisingbetween the tax bases of assets and liabilities and their carrying amounts in the consolidatedfinancial statements. However, the deferred income tax, if it is not accounted for, arises from initialrecognition of an asset or liability in a transaction other than a business combination that at thetime of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax isdetermined using tax rates (and laws) that have been enacted or substantially enacted by thebalance sheet date and are expected to apply when the related deferred income tax asset isrealized or the deferred income tax liability is settled.
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies (Continued)
(h) Deferred taxation (Continued)
Deferred income tax assets are recognized to the extent that it is probable that future taxable profitwill be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiariesand associates, except where the timing of the reversal of the temporary difference is controlled bythe Group and it is probable that the temporary difference will not reverse in the foreseeable future.
(i) Employee benefits
Pension obligations
Group companies have various defined contribution pension schemes in accordance with the localconditions and practices in the countries in which they operate. A defined contribution plan is apension plan under which the Group pays fixed contributions into a separate entity (a fund) and willhave no legal or constructive obligations to pay further contributions if the fund does not holdsufficient assets to pay all employees benefits relating to employee services in the current and priorperiods.
For defined contribution plans, the Company pays contributions to publicly or privately administeredpension insurance plans on a mandatory, contractual or voluntary basis.
Once the contributions have been paid, the Company has no further payment obligations. Theregular contributions constitute net periodic costs for the year in which they are due and as suchare included in staff costs.
(j) Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into andare subsequently re-measured at their fair value. The method of recognising the resulting gain orloss depends on whether the derivative is designated a hedging instrument, and if so, the nature ofthe item being hedged. The Group designates certain derivatives as hedges of net investments inforeign operations.
The Group documents at the inception of the transaction the relationship between hedginginstruments and hedged items, as well as its risk management objective and strategy forundertaking various hedge transactions. The Group also documents its assessment, both at hedgeinception and on an ongoing basis, of whether the derivatives that are used in hedging transactionsare highly effective in offsetting changes in fair values or cash flows of hedged items.
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APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies (Continued)
(j) Derivative financial instruments and hedging activities (Continued)
(a) Net investment hedge
The effective portion of changes in the fair value of derivatives that are designated andqualify as Net Investment hedge are recognised in equity. The gain or loss relating to theineffective portion is recognised immediately in the consolidated income statement.
Gains and losses accumulated in equity are included in the consolidated income statementwhen the foreign operation is disposed of.
(b) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair valueof any derivative instruments that do not qualify for hedge accounting are recognisedimmediately in the consolidated income statement.
(k) Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured usingthe currency of the primary economic environment in which the entity operates (‘thefunctional currency’). The consolidated financial statements are presented in United StatesDollars, which is the Company’s functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchangerates prevailing at the dates of the transactions. Foreign exchange gains and losses resultingfrom the settlement of such transactions and from the translation at year-end exchange ratesof monetary assets and liabilities denominated in foreign currencies are recognized in theincome statement, except when deferred in equity as qualifying cash flow hedges andqualifying net investment hedges.
(c) Group companies
The results and financial position of all the group entities (none of which has the currency ofa hyperinflationary economy) that have a functional currency different from the presentationcurrency are translated into the presentation currency as follows:
B-18
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Summary of significant accounting policies (Continued)
(k) Foreign currency translation (Continued)
(c) Group companies
(i) assets and liabilities for each balance sheet presented are translated at the closing rate atthe date of that balance sheet;
income and expenses for each income statement are translated at average exchange rates(unless this average is not a reasonable approximation of the cumulative effect of the ratesprevailing on the transaction dates, in which case income and expenses are translated at thedates of the transactions); and
(ii) all resulting exchange differences are recognised as a separate component of equity. Onconsolidation, exchange differences arising from the translation of the net investment inforeign operations, and of borrowings and other currency instruments designated as hedgesof such investments, are taken to shareholders’ equity. When a foreign operation is sold,exchange differences that were recorded in equity are recognised in the income statementas part of the gain or loss on sale.
(iii) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treatedas assets and liabilities of the foreign entity and translated at the closing rate.
(l) Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by thelessor are classified as operating leases. Payments made under operating leases (net of anyincentives received form the lessor) are charged to the consolidated income statement on astraight-line basis over the period of the lease.
(m) Dividend distributions
Dividend distributions to the Company’s shareholders are recognised as a liability in the Group’sfinancial statements in the period in which dividends are approved.
(n) Segment reporting
A business segment is a group of assets and operations engaged in providing products or servicesthat are subject to risks and returns that are different from those of other business segments. Ageographical segment is engaged in providing products or services within a particular economicenvironment that are subject to risks and returns that are different from those of segmentsoperating in other economic environments.
B-19
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3 Segment information
Primary reporting format - business segments
At 31 December 2005, the Group is organised on a worldwide basis into four main businesssegments (departments): (1) structured finance; (2) ship investment/management; (3) distressedassets investment/management; and (4) property investment/management.
The segment results for the year ended 31 December 2005 are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Income 7,165 8,997 1,019 186 900 18,267
Operating profits 4,710 6,920 22 (588) (1,698) 9,366Share of profit of associates – 24 – 570 – 594Finance costs - interest expenses – – – (42) – (42)
Profit before income tax 4,710 6,944 22 (60) (1,698) 9,918Less: income tax expenses (92) (92) – (295) – (479)
Profit for the year 4,618 6,852 22 (355) (1,698) 9,439
Other segment items are as follows:
Capital expenditure 26 37 24 2 44 133Depreciation 43 22 14 1 26 106
The segment results for the year ended 31 December 2004 are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000Income 2,669 9,594 2,336 (99) 299 14,799
Operating profits 729 7,797 1,576 (421) (1,617) 8,064Share of profit of associates – – – 96 – 96Finance costs – interest expenses – (2) – (44) – (46)
Profit before income tax 729 7,795 1,576 (369) (1,617) 8,114Less: income tax expense – – – (179) – (179)
Profit for the year 729 7,795 1,576 (548) (1,617) 7,935
Other segment items are as follows:
Capital expenditure 21 29 20 2 35 107Depreciation 41 1 8 12 15 77
B-20
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3 Segment information (Continued)
The segment assets and liabilities as at 31 December 2005 for the year then ended are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Segment assets 1,708 14,679 2,332 5,871 – 24,590Associates – 63 – 6,585 – 6,648Unallocated assets – – – – 30,711 30,711
Total assets 1,708 14,742 2,332 12,456 30,711 61,949
Segment liabilities 556 891 63 362 0 1,872
Unallocated liabilities – – – – 11,521 11,521
Total liabilities 556 891 63 362 11,521 13,393
The segment assets and liabilities as at 31 December 2004 for the year then ended are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Segment assets 1,472 7,433 1,916 6,544 – 17,365Associates – – – 6,928 – 6,928Unallocated assets – – – – 34,412 34,412
Total assets 1,472 7,433 1,916 13,472 34,412 58,705
Segment liabilities 2,391 788 307 89 – 3,575Unallocated liabilities – – – – 14,613 14,613
Total liabilities 2,391 788 307 89 14,613 18,188
Segment assets consist primarily of property, plant and equipment, receivables and operating cash.They exclude taxation, certain investments and cash and cash equivalents. The unallocated portionrepresents mainly cash balances held by the Group which is not distinguishable into any particularsegment.
Segment liabilities comprise operating liabilities and exclude items such as taxation and certaincorporate borrowings.
Capital expenditure comprises planned additions to property, plant and equipment (Note 16).
B-21
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3 Segment information (Continued)
Secondary reporting format - geographical segments
The Group’s four business segments operate in three main geographical areas, even through theyare managed on a worldwide basis.
Global - the global segment represents activities with assets or customers with no fixed location,which include shipping finance/investment/management.
Asia (ex-Japan) - the Asia (ex-Japan) segment represents activities with assets or customerslocated in Asia (ex-Japan), which include structured finance, asset and shippingfinance/investment/management and distressed Asian investments.
Japan - the Japan segment represents activities with assets or customers located in Japan, andinclude real estate investment/management.
2005 2004US$’000 US$’000
IncomeGlobal 8,918 8,353Asia (ex-Japan) 3,052 6,156Japan 5,397 (9)Unallocated 90 299
18,267 14,799
Total assets Global 14,742 7,433Asia (ex-Japan) 4,040 3,388Japan 5,872 6,544Unallocated 30,710 34,412
55,364 51,777Investments in associates 6,585 6,928
61,949 58,705
Capital expenditure 133 107
Income and total assets attributable to business segments are based on the country in which thecustomer is located. Income and assets not attributable to business segments are disclosed asunallocated. There are no sales between the segments. Total assets and capital expenditure arewhere the assets are located.
B-22
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4 Critical accounting estimates
Estimates are continually evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accountingestimates will, by definition, seldom equal the related actual results. The estimates andassumptions that have a significant risk of causing a material adjustment to the carrying amountsof assets and liabilities are discussed below.
Fair value of derivatives and other financial instruments
The fair value of financial instruments that are not traded in an active market are determined byusing valuation techniques. The Group uses its judgment in selecting methods and makesassumptions that are based on market conditions existing at each balance sheet date. The Grouphas used discounted cash flow analysis to value investments which were not traded in an activemarket. Management has used discount rates which it believes would be able to reasonablycapture the expected recovery from the underlying projects.
5 Fee income
2005 2004US$’000 US$’000
Corporate finance arrangement, brokerage and agency fees 8,138 3,881
Project Management fee 844 –Agency, advisory, administration and incentives fees from distressed loans (Note 31) 700 303
Administration and incentive fees from shipping investment management 2,552 1,415
12,234 5,599
Note:
Contingent assets
At 31st December 2003, the Company had been contracted to arrange finance for 10 containerships, for which the Company will collect a US$685k fee in respect of each ship. Completion feesof US$548k per ship totalling US$5,548k were to be received on delivery and financing of eachship.
There were only 2 ships delivered in 2005 which have been included as income for the year ended31st December 2005 and the remaining contingent asset of US$4,452k at 31st December 2005 willbe recognised as income in future years when circumstances are no longer contingent.
B-23
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6 Investment returns
2005 2004US$’000 US$’000
Realized gains on investments 250 2,482Return on performance notes - distressed debt (Note 31) 318 103
Return on performance notes - properties 47 35Return on performance notes - shipping business (Note 31) 2,491 2,589Gain on foreign exchange contracts and swap 67 63Fair value adjustments on performance notes - distressed debt – 31
Fair value adjustments on performance notes - shipping business 2,423 1,600
Fair value adjustments on performance notes - properties 79 (221)
Fair value adjustment on other investments (664) –
5,011 6,682
Investments measured at fair value through profit or loss include fair value adjustments and returnson performance notes. Return on performance notes comprises of interest income paid to noteholders during the year.
7 Interest income and expense
2005 2004US$’000 US$’000
Interest income from:– cash and cash equivalents 900 299– participation in syndicated loans 36 40
936 339
Interest expense on:– borrowings 42 46
42 46
B-24
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8 Other expenses
2005 2004US$’000 US$’000
Rental expenses under operating leases:– office premises 601 376
Auditors’ remuneration 105 85Traveling and entertainment 863 825Net foreign exchange loss 453 20Professional service fees – proposed initial public offering 575 103
Miscellaneous expenses 719 412
3,316 1,821
9 Results of associates
The Group’s share of results of associates after taxation are as follows:
2005 2004US$’000 US$’000
Capital Advisers Co. Ltd. 1,126 242
Less: share of tax of Capital Advisers Co. Ltd (Note 20) (556) (146)
Uni Ship and Management Ltd. 29 –Less: Share of tax of Uni-Ship and Management Ltd.(Note 20) (5) –
594 96
10 Employee benefit expense
2005 2004US$’000 US$’000
Salaries (including director’s remuneration) 4,817 4,490Pension costs - defined contribution plans 145 114Staff residencies, other welfare and allowances 519 483
5,481 5,087
B-25
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10 Employee benefits expense (Continued)
The weighed average number of employees is as follows:
2005 2004US$’000 US$’000
Full time 27 25
Hong Kong 21 20Japan 3 3Singapore 3 2
27 25
11 Income tax expense and deferred taxation
(a) Income tax expense
2005 2004US$’000 US$’000
Current tax 393 1Deferred tax 86 178
479 179
The tax on the Group’s profit before tax differs from the theoretical amount that would arise usingthe weighted average tax rate applicable to the profits of the consolidated companies as follows:
2005 2004US$’000 US$’000
Profit before tax 9,918 8,114
Domestic tax rates applicable to profits in the respective countries 1,736 1,420Effect of different tax rates in other countries 359 103Income not subject to tax (1,616) (1,344)
Tax charge 479 179
Note:
Income not subject to taxation is only included to the extent that it negates profits at group tax rate.Further adjustments are not made as the contingent tax asset is not accrued.
B-26
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11 Income tax expense and deferred taxation (Continued)
(b) Deferred taxation
Total US$’000
At 1 January 2004 –Charged to income statement 178
At 31 December 2004 178Charged to income statement 86
At 31 December 2005 264
Deferred income tax assets are recognized for tax losses carried forward only to the extent that therealization of the related tax benefit is probable. The Group has tax losses of US$8,103k (2004:US$8,897k) and US$ Nil (2004: US$1k) for the Company in Hong Kong and Uni-Asia FinanceCorporation (Japan) respectively to carry forward against future taxable income of thosecompanies, which have not been recognized in these consolidated financial statements due touncertainty of their recoverability.
12 Profit attributable to shareholders
The profit attributable to shareholders is dealt with in the consolidated financial statements to theextent of a profit of US$9,439k and US$7,935k for the year ended 2005 and 2004 respectively.
13 Dividends
The dividends paid in 2005 and 2004 were US$1,400k and US$840k respectively (US$ 0.05/US$0.03 per share). A dividend in respect of the year ended 31st December 2005 of US$0.05 pershare amounting to a total dividend of US$1,400k was approved at the Board of Directors meetingon 13 January 2006. These financial statements do not reflect this dividend payable.
14 Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of theCompany by the weighted average number of ordinary shares in issue during the year.
B-27
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14 Earnings per share (Continued)
(b) Diluted
Diluted earnings per share is calculated adjusting the weighted average number of ordinary sharesoutstanding to assume conversion of all dilutive ordinary shares during the year. The Group hasone category of potential ordinary shares: share options issued in 2004 by an associate company.These share options are not considered to have a dilutive effect on earnings per share.
2005 2004US$’000 US$’000
Profit attributable to equity holders of the Company 9,439 7,935
Weighted average number of ordinary shares in issue 28,000 28,000
Earnings per share (US$ per share) - basic and diluted 0.337 0.283
15 Emoluments for directors and highest paid individuals
(a) Directors’ emoluments
2005 2004US$’000 US$’000
Fees 1,223 1,116
Other emoluments:Basic salaries, housing allowances and other allowances and benefits in kind 275 249
Discretionary bonuses 750 750Contributions to pensions schemes for directors (and past directors) - as directors 3 3
2,251 2,118
There were 3 independent non-executive directors were appointed to the Group during the year.
B-28
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15 Emoluments for directors and highest paid individuals (Continued)
The emoluments of the directors fell within the following bands.
Number of Number ofdirectors directors
2005 2004
Emoluments bandsUS$ Nil – US$15,000 8 5US$15,001 – US$ 600,000 – –US$600,001 – US$700,000 – 1US$700,001 – US$800,000 3 2
11 8
(b) Five highest paid individuals
The five individuals whose emoluments were the highest in the Group for the year include 3 (2004:3) directors whose emoluments are reflected in the analysis presented above. The emolumentspayable to the remaining 2 (2004: 2) individuals are as follows:
2005 2004US$’000 US$’000
Basic salaries, housing allowances and other allowances and benefits in kind 446 574
Bonuses 627 550Pensions 20 40
1,093 1,164
The emoluments fall within the following bands:
Number of individuals2005 2004
Emoluments bandsUS$300,000 – US$450,000 1 1US$450,001 – US$700,000 – 1US$700,001 – US$750,000 1 –
2 2
(c) No emoluments were paid in both 2004 and 2005 by the companies comprising the Group to anyof the directors or the five highest paid individuals as an inducement to join or upon joining theGroup or as compensation for loss of office.
B-29
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16 Property, plant and equipment
Leasehold Furnitureimprove- Office and Motor
ments equipment fixtures vehicles TotalUS$’000 US$’000 US$’000 US$’000 US$’000
CostAt 1 January 2005 385 321 61 64 831Additions 2 38 – 93 133Disposals – (2) – (64) (66)Exchange translation (8) (2) – – (10)Written off (9) (96) (8) – (113)
At 31 December 2005 370 259 53 93 775
Accumulated depreciationAt 1 January 2005 356 229 60 63 708Charge 27 57 1 21 106Disposals – (1) – (64) (65)Exchange translation (6) (2) – – (8)Written off (9) (96) (8) – (113)
At 31 December 2005 368 187 53 20 628
Net book valueAt 31 December 2005 2 72 0 73 147
Cost
At 1 January 2004 336 261 61 64 722Additions 49 58 – – 107Exchange translation – 2 – – 2
At 31 December 2004 385 321 61 64 831
Accumulated depreciationAt 1 January 2004 323 185 58 64 630Charge 31 45 1 – 77Exchange translation 2 – – – 2
At 31 December 2004 356 230 59 64 709
Net book valueAt 31 December 2004 29 91 2 – 122
B-30
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17 Loans receivable
2005 2004US$’000 US$’000
Participation in loansRepayable within one yearInterest rate at:LIBOR plus 1.25% p.a. (2004: LIBOR plus 1.25% p.a.) 100 100Nil (2004: 5% unsecured) – 1,100
100 1,200
Participation in loansRepayable between one and two yearsInterest rate at:LIBOR plus 1.25% p.a. (2004: LIBOR plus 1.25% p.a.) 50 150
50 150
Loans receivable 150 1,350
The carrying amount of the loans approximates their fair value. Income from defaulted loans isdetailed in the consolidated income statement.
2005 2004US$’000 US$’000
Cash recovered – 1,862
B-31
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18 Investments
2005 2004US$’000 US$’000
Non-Hong Kong
Unlisted shares 191 191Unlisted shares - shipping business (Note (a) below) 3,699 1,451Unlisted performance notes - properties investment (Note 31(e)) 55 607Unlisted performance notes - distressed debt (Note 31(e)) 1,746 1,793Unlisted performance notes – shipping (Note 31(e)) 9,746 4,247
15,437 8,289
Note:
(a) Within unlisted shares - shipping business are investments totalling US$3,664k (2004: US$451k) intwo shipping companies which own and run cargo ships respectively.
Country/place Issued and fullyand date of paid up share % of
Name incorporation capital holdings Principal activities
Niigata Seimitsu Japan JPY3,874,300,000 0.2% ManufacturingCo. Ltd. 17 January 1981 electronic devices
EuroAsia II Inc., Panama US$10,000 15% Shipping investment andPanama 12 April 2002 management
EuroAsia III Inc., Panama US$10,000 15% Shipping investment and Panama 12 April 2002 management
AP Real Estate Cayman Islands US$1,000 5.9% Japanese propertyLtd. 12 April 2000 investment and
management
RS Property Cayman Islands US$1,000 10% Japanese propertyInvestment 28 August 2000 investment and
management
B-32
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18 Investments (Continued)
Country/place Issued and fullyand date of paid up share % of
Name incorporation capital holdings Principal activities
Searex Asset British Virgin Islands US$1,000 Series 1: Shipping investment and Management 30 December 2003 29.4% managementLimited Series 2:
19.57%
AAA Strategic Cayman Islands US$1,000 Series 1: Distressed debtsInvestment 26 July 2001 20% investment and Limited Series 2: management
33%
Fortitude Panama US$1,000 38% Shipping owningContainership 26 November 2004 and charteringS.A.
Union Panama US$1,000 38% Shipping owningContainership 26 November 2004 and charteringS.A.
Falcon Panama US$1,000 38% Shipping owningContainership 26 November 2004 and charteringS.A.
19 Derivative financial Instruments
a) Forward foreign exchange contracts
There were no outstanding contracts at 31 December 2005 (2004: Nil). Gains and losses onforward foreign exchange contracts are recognised directly in the consolidated income statement.
b) Interest Rate Swaps
There were no outstanding contracts at 31 December 2005 (2004: Nil). Gains and losses oninterest rate swaps are recognised directly in the consolidated income statement.
c) Hedge of net Investment in foreign entity
The Group’s Yen-denominated borrowing is designated as a hedge of the net investment in anassociate of the Group, Capital Advisers Co, Ltd. The fair value of the borrowing was JPY1,065mThe foreign exchange loss US$879k (2004: US$262k gain) on translation of the borrowings to USdollar at balance sheet date was recognised in reserves in shareholders equity (Note 24).
B-33
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20 Investments in associates
(a) Movement of investments in associates
2005 2004US$’000 US$’000
Capital Advisers Co. Ltd.At the beginning of year 6,928 6,576Share of results after tax 570 96Exchange differences (913) 256
Investments in associates at end of the year 6,585 6,928
2005 2004US$’000 US$’000
Uni-Ships and Management Ltd.At the beginning of year – –Investment in associate 39 –Share of results after tax 24 –
Investments in associates at end of the year 63 –
6,648 6,928
(b) Summary of significant associates’ assets, liabilities and resultsA summary of Capital Advisers Co. Ltd.’s assets, liabilities and results are as follows:
2005 2004US$’000 US$’000
Investments in property related projects 13,018 11,755Cash and cash equivalents 6,240 7,494Other assets 12,181 6,588
Total assets 31,439 25,837Amount due to Uni-Asia Finance Corporation (756) (4,781)Other liabilities (15,956) (5,562)Minority interest (29) (29)
Shareholders’ equity (of which Company has 44.8% interest, 2004: 44.8%) 14,698 15,465
Shareholders’ equity- Company’s 44.8% interest 6,585 6,928
B-34
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20 Investments in associates (Continued)
For the For theyear ended year ended
31 December 31 December2005 2004
US$’000 US$’000
Results to 31 December 2005, translated at an average rate of JPY110.85 (2004: JPY114.00) to US$1:
Revenue 11,382 4,539Staff costs (2,354) (1,974)Interest expense (201) (210)Other expenses (6,314) (1,815)
Profit before tax 2,513 540Taxation (1,241) (325)
Profit after tax 1,272 215
Profit before tax - Company’s interest 1,126 242Taxation - Company’s interest (556) (146)
Profit after tax - Company’s interest (of which Company has 44.8% interest, 2004: 44.8%) 570 96
A summary of Uni Ships and Management Limited’s assets, liabilities and results are as follows:
2005 2004US$’000 US$’000
Cash and cash equivalents 231 –Other assets 10 –
Total assets 241 –Other liabilities (32) –
Shareholders’ equity (of which Company has 30% interest) 209 –
Shareholders’ equity- Company’s 30% interest 63 –
B-35
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20 Investments in associates (Continued)
For the For theyear ended year ended
31 December 31 December2005 2004
US$’000 US$’000
Revenue 229 –Other expenses (131) –
Profit before tax 98 –Taxation (17) –
Profit after tax 81 –
Profit before tax - Company’s interest 29 –Taxation - Company’s interest (5) –
- Profit after tax - Company’s interest (of which Company has 30%) 24 –
(c) Details of associates
As at 31 December 2005, details of the associates, all of which are unlisted, were as follows:
Country/place Issued and Attributable Principal activitiesand date of fully paid up equity and place of
Name incorporation share capital interest operation
Indirectly held:
Capital Advisers Japan JPY892,500,000 44.8% Japanese property Co. Ltd. 24 February 2000 common shares investment and
management Japan
Directly held:
Uni-Ships and Hong Kong HK$1,000,000 30% Hong Kong Project Management 25 January 2005 common shares management forLtd. vessels
B-36
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20 Investments in associates (Continued)
(d) Amounts due from associates
The amounts due from associates constituted the principal balance and interest accrued on anunsecured revolving short term loan facility of US$756k equivalent to JPY89m (2004: US$4,754kequivalent to JPY489m). The interest rate was revised to 1.375% per annum. Interest charged onamounts due from associates for the year was US$60k (2004: US$101k).
(e) Amounts due to associates
The amounts due to associate are unsecured, interest free and with no fixed repayment terms.
21 Accounts receivable
In general, the Group grants a credit period of 7 to 60 days to its customers. The aging analysis ofthe accounts receivable is as follows:
2005 2004US$’000 US$’000
30 days or less 464 77Over 90 days 1 16
465 93
22 Cash and bank balances
2005 2004US$’000 US$’000
Cash at bank and in hand 5,565 1,942Short term bank deposits 21,979 22,058
Cash and cash equivalents 27,544 24,000
The effective interest rate on short term bank deposits was 0.2% (2004: 1.15%) and these depositshave an average maturity of 35 days.
B-37
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23 Share capital
2005 2004US$’000 US$’000
Authorized:60,000,000 shares of US$1 each 60,000 60,000
Issued and fully paid:28,000,000 shares of US$1 each 28,000 28,000
24 Reserves
Share Retained ExchangeNote capital earnings difference Total
US$’000 US$’000 US$’000 US$’000
Balance at 1st January 2005 28,000 12,517 – 40,517Net investment hedge – – (879) (879)Currency translation difference – – 879 879
Profit for the year and total recognized income for 2005 – 9,439 – 9,439
Balance at 31st December 2005 28,000 21,956 – 49,956
Balance at 1st January 2004 28,000 5,982 – 33,982Net investment hedge – – 262 262Currency translation difference – – (262) (262)Profit for the year and total recognized income for 2004 – 7,935 – 7,935
Dividend 13 – (1,400) – (1,400)
Balance at 31st December2004 28,000 12,517 – 40,517
B-38
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25 Accounts payable
The aging analysis of the accounts payable is as follows:
2005 2004US$’000 US$’000
30 days or less 226 2,246Between 31-60 days – 3Between 61-90 days 1 –Over 90 days – 18
227 2,267
26 Borrowings
2005 2004US$’000 US$’000
Term borrowings matured within one year – 1,053Revolving secured loan due within one year 9,041 11,473
9,041 12,526
Included in borrowings is a secured loan of JPY1.065 billion (approximately US$9,041k)collateralized by a cash deposit of US$10,082k with the same financial institution (2004: a loan ofJPY1.18 billion, (approximately US$11,473k) collateralized by US$12,614k).
Fair value of borrowings approximate the carrying amounts due to their being floating rateinstruments and no changes to the Group’s credit risk.
2005 2004
Weighted average effective interest rates:Bank borrowing - JPY 0.34% 0.34%Bank borrowing - US$ 2.97% 2.84%Cash deposit 0.20% 1.15%
B-39
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26 Borrowings (Continued)
The borrowings of the Group are at floating JPY LIBOR rates:
2005 2004US$’000 US$’000
Term borrowings matured within one year – 1,053Revolving secured loan due within one year 9,041 11,473
Total borrowings 9,041 12,526
27 Subsidiary companies
(a) Details of principal investments in subsidiaries
Details of the principal subsidiaries within the Group at the date of this report are as follows:
Country/place Issued and Attributable Principal activitiesand date of fully paid up equity and place
Name incorporation share capital interest of operation
Directly held:
Uni-Asia Capital Singapore US$1,000,000 100% Ship chartering(Singapore) 7 August 1997 arrangementLimited
Off-Shore British Virgin Islands US$1 100% Holding and Property 23 April 1998 investment companyInvestment BVICorporation
Uni-Asia Hong Kong HKD20 100% InactiveServices and 27 June 1997 Hong KongAgency Limited
Indirectly held:
Uni-Asia Finance Japan JPY 10,000,000 100% Corporate finance Corporation 9 November 1998 services Japan(Japan)
(b) Amounts due from subsidiaries
The amounts due from subsidiaries are unsecured, at an interest rate of 2% per annum.
B-40
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27 Subsidiary companies (Continued)
(c) Amounts due to subsidiaries
The amounts due to subsidiaries are unsecured, interest free and with no fixed repayment terms.
28 Cash generated from operations
(a) Reconciliation of profit before taxation to cash generated from operations
2005 2004US$’000 US$’000
Profit before taxation 9,918 8,114
Adjustments for:Depreciation 106 77Interest income (940) (339)Interest expenses 42 46Results of associates (594) (96)Interest from loans to associate (60) (86)Net foreign exchange loss 452 20Increase in rental and utility deposits paid (207) (33)(Increase)/decrease in accounts receivable (165) 552Increase in prepaid expenses (19) (38)(Decrease)/increase in accounts payable (2,038) 1,924Increase in accrued expenses 240 1,281Increase in amount due to associates 11 –Decrease in deferred income (2) –Recovery on loans and interest receivable – (250)Investment returns (5,011) (6,682)Income from defaulted loans – (1,862)
Cash generated from operations 1,733 2,628
(b) Major non-cash transactions
During the year ended 31 December 2005, the share of taxation of associate amounted toUS$561k (2004: US$146k).
B-41
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29 Financial risk management
(a) Financial risk factors
The Group holds monetary assets and liabilities, transacts in foreign exchange transactions withthird parties and has mismatched Yen denominated assets and liabilities. All these operations giverise to risk exposures.
Financial instruments traded or held include cash and cash equivalents, investments, loans andreceivables and borrowings.
Forward rate agreements are used to manage the Group’s own exposures to foreign exchange riskas part of its asset and liability management process. The principal derivative instruments used bythe Group are foreign exchange rate related contracts. Most of the Group’s derivative positionshave been entered into to hedge investments in subsidiaries.
(i) Market risk
Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes inmarket prices, whether those changes are caused by factors specific to the individual financialinstrument or by factors affecting all financial instruments traded in or indexed to a market. TheGroup is exposed to market risk on financial instruments that are valued at market prices andprimarily consist of investments, loans, property development projects and marketable securities.
(ii) Foreign exchange risk
The Group has certain investments in Japan, whose net assets are exposed to foreign currencytranslation risk. Currency exposure arising from the net assets of the Group’s foreign operations ismanaged primarily through borrowings denominated in the relevant foreign currencies.
(iii) Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate as a result ofchanges in market interest rates and the cash flow risks associated with the variability of cashflows from floating rate financial instruments. The Group is exposed to interest rate risk primarilyfrom interest rate re-pricing differences between customers’ loans, borrowings, cash and cashequivalents and shareholders’ capital.
(iv) Credit risk
Credit risk is the risk of loss resulting from the failure of counterparties to meet the terms of theirobligations. The Group is exposed to credit risk through loans and investments, and throughcounterparty default risk on transactions, including foreign exchange transactions in the process ofsettlement.
B-42
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29 Financial Risk Management (Continued)
(v) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities,the availability of funding through an adequate amount of committed credit facilities and the abilityto close out market positions.
(b) Risk management
The Group’s principal risks are market risk, credit risk and foreign exchange risk. The directorsconsider the interest rate risk and liquidity risk of the Group to be immaterial.
Market risk and credit risk
The Group seeks to minimise these risks by performing detailed reviews of loan counterparties orasset issuers prior to purchase approval, and by either selling on participated loans to other partiesor entering into offsetting loans payable when the directors wish to preserve the Group’s liquidity.The Group seeks to minimize adverse movements in market price of financial instruments byextensive due diligence procedures to ensure acquisition at prices below their perceived fair value.
Foreign exchange and interest rate risk
The directors review their currency exposures and enter into foreign currency forward contractswhen considered necessary to hedge against adverse currency movements.
The Group uses the following derivative instruments for both hedging purposes:
Forward rate agreements are individually negotiated interest rate futures that call for a cashsettlement at a future date for the difference between a contracted rate of interest and the currentmarket rate, based on a notional principal amount.
Currency and interest rate swaps are commitments to exchange one set of cash flows for another.Swaps result in an economic exchange of currencies or interest rates (for example, fixed rate forfloating rate) or a combination of all these (i.e. cross-currency interest rate swaps). No exchange ofprincipal takes place, except for certain currency swaps. The Group’s credit risk represents thepotential cost to replace the swap contracts if counterparties fail to perform their obligation. Thisrisk is monitored on an ongoing basis with reference to the current fair value, a proportion of thenotional amount of the contracts and the liquidity of the market. To control the level of credit risktaken, the Group assesses counterparties using the same techniques as for its lending activities.
Liquidity risk
The Group will maintain sufficient cash and marketable securities, the availability of fundingthrough an adequate amount of committed credit facilities and the ability to close out marketpositions.
B-43
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29 Financial Risk Management (Continued)
(c) Fair value estimation
The fair value of financial instruments traded in active is based on quoted market prices at thebalance sheet date. The quoted market price used for financial assets held by the Group is thecurrent bid price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. The Group uses a variety ofmethods and makes assumptions that are based on market conditions existing at each balancesheet date. Quoted market prices or dealer quotes for similar instruments are used for long-termdebt. Other techniques, such as estimated discounted cash flows, are used to determine fair valuefor the remaining financial instruments. The fair value of interest rate swaps is calculated as thepresent value of the estimated future cash flows. The fair value of forward foreign exchangecontracts is determined using quoted forward exchange rates at the balance sheet date.
The nominal value less impairment provision of trade receivables and payables are assumed toapproximate their fair values.
30 Commitments
(a) Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred are as follows:
2005 2004US$’000 US$’000
Motor vehicle – 81Leasehold Improvement 515 –
(b) Lease commitments
Commitments, under non-cancellable operating leases with a term of more than one year, fall due:
2005 2004US$’000 US$’000
Within one year 1,096 643Later than one year and not later than five years 1,156 399
2,252 1,042
B-44
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 Commitments (Continued)
(c) Investment commitments
2005 2004US$’000 US$’000
Un-drawn investment commitments at 31st December – 12,484
Investment for Harmonic Shipping 4 –Shareholder Loans 1,283 –
The Company committed to purchase 38% of the share capital of Harmonic Shipping whoseprincipal activity is the owning of ships.
Shareholder loans represent the outstanding balance of maximum commitment to FortitudeContainership S.A., Union Containership S.A. and Falcon Containership S.A. as contained in theshareholders loan agreement dated 15 August 2005.
31 Related party transactions
Related parties include investments, associates and property development projects held for salewhere the Group holds a beneficial interest in, and is also contracted as a service provider tomanage or administer such investment, company, entity or property.
Related party transactions are carried out under normal commercial terms and conditions andgenerate fee income as disclosed in Note 5, investment returns as disclosed in Note 6, directors’remunerations and other allowances as disclosed in Note 15, investments in associates andamounts due from associates as disclosed in Note 20.
Related party balances comprise the unlisted performance notes as disclosed in Note 18.
The following transactions were carried out with related parties:
2005 2004US$’000 US$’000
Agency, arrangement, administration and incentive fees from shipping finance, investment and management (Note (a)) 2,387 2,210
Agency, advisory, administration and incentive fees from distressed loans (Note (b)) 700 303
Administration service fee (Note (c)) 51 –Arrangment fee from shipping investment management (Note (d)) 1,982 –Return on performance notes – shipping business (Note (e)) 2,491 2,589Return on performance notes – distressed debt (Note (e)) 318 103Gain on sales of investment (Note (f)) 248 709
B-45
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 Related party transactions (Continued)
2005 2004US$’000 US$’000
Amount due to associates (Note (g)) 11 –Amount due from associates (Note (h)) 756 4,781
Notes:
(a) The Group is entitled to receive from Searex Asset Management Limited, an investment of theGroup, the following fees:
(i) a minimum administration fee of US$5,000 per month for each shipping asset owned bySearex Asset Management Limited, including the vessels being acquired which are subjectof a memorandum of agreement, payable quarterly in advance.
(ii) a brokerage fee of approximately 0.75% to 1.25% on the sum of the daily charter hire of avessel.
(iii) an incentive fee of approximately 10% of the sum of the net proceeds, accumulated cashbalance and liabilities outstanding from the disposal of certain vessels.
(iv) a loan arrangement fee of approximately 1% of the purchase price of a vessel.
(b) The Group is entitled to receive from AAA Strategic Investment Limited, an investment of theGroup, the following fees:
(i) an administration fee of US$75k per annum for performance notes series 1 payable semi-annually in advance and an administration fee for performance notes series 2 payable semi-annually in advance in the amount of US$50k for the full or partial issuance of performancenotes each of the first three US$5 million amounts up to a maximum of US$150k.
(ii) an agency fee of US$25k per annum for performance notes series 1 payable semi-annuallyin advance, and an agency fee for performance notes series 2, payable semi-annually inadvance, in the amount of US$50k per annum for the full or partial issuance of each of thefirst three US$5 million tranches of performance notes.
(iii) an incentive fee, calculated on an asset by asset basis, in addition to the administration fee.The initial incentive fee is calculated as 20% of the cumulative cash recovered from eachasset in excess of 110% of that asset’s initial cost. The subsequent incentive fee iscalculated as twenty percent of additional cash recovered from each asset in excess of thatasset’s additional cost. The incentive fee is calculated and paid semi-annually.
B-46
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 Related party transactions (Continued)
(c) The Group is entitled to receive from Uni Ships and Management Limited (USML), an associatedcompany of the Group, a monthly administration service fee of US$6,335 in respect to theadministration, accounting and financial matters of USML.
(d) The Group is entitled to receive from Fortitude Containership SA, Falcon Containership SA andUnion Containership SA, investments of the Group, the following fees:
(i) project arrangement fee being 1% of the contract price of the vessel.
(ii) finance arrangement fee being 1% of the contract price of the vessel.
(iii) administration fee of US$7,000/month.
(e) Performance notes are redeemed semi-annually, in whole or in part, calculated based on net cashrecovered from the underlying assets. Performance note redemptions are determined based onthe total original cost of recovered assets less the deduction of fees and other expenses incurred inrecovery of such assets. Recovery amounts from assets in excess of that required for performancenote repayments are paid out as interest on those performance notes.
(f) In June 2005, the Company disposed of its equity interest in Glade Mate Investments, to a relatedparty, Searex Asset Management Limited.
(g) The amounts due to associate are unsecured, interest free and have no fixed repayment terms.
(h) The amounts due from associates constituted loans to Capital Advisers Co. Ltd.
The principal balance and interest accrued on an unsecured revolving short term loan facility ofUS$756k equivalent to JPY89 million (2004: US$4,791k equivalent to JPY489 million). The interestrate was revised to 1.375% per annum since May 2004 Interest charged on amounts due fromCapital Advisers Co. Ltd during the year was US$60k (2004: US$101k).
32 Deposits pledged as collateral
As at 31st December 2005, the Group had US$10,082k (2004: US$12,614k) of deposits pledgedas collateral against Japanese Yen denominated revolving bank loan facilities.
33 Post balance sheet events
On 8 March 2006, Uni-Asia purchased 38% of share capital of Harmonic Shipping whose principalactivity is the owning of ships.
34 Approval of the consolidated financial statements
The consolidated financial statements were approved by the board of directors on 16th June 2006.
B-47
APPENDIX B – CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
REPORTS AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2006
The consolidated financial statements for the year ended 31 December 2006 and the auditors’ report onthe consolidated financial statements for the year ended 31 December 2006 were not prepared forpurposes of inclusion in the Prospectus and, save for references to page numbers which have beenaltered to conform to the pagination of the Prospectus, have been reproduced and are set out on pagesC-6 to C-51 and page C-5, respectively.
C-1
APPENDIX C
DIRECTORS’ REPORT TO THE SHAREHOLDERS OF UNI-ASIA FINANCE CORPORATION
The directors submit their report together with the audited consolidated financial statements of Uni-AsiaFinance Corporation (the “Company”) and its subsidiaries (together the “Group”) for the year ended 31stDecember 2006.
General Information
The principal activities of the Group are finance arrangement and investment management. The Groupacted in the capacities of principal investor, finance arranger and fund administrator for various classes ofalternative investments in ships, distressed assets and real estate. The main sources of income for theGroup include fee income, investment returns, interest income and other income generated from the fourdepartments/units listed below.
– Structured Finance department focuses on finance arrangement in the shipping sector in Asia. TheGroup acts as the arranger, packager, charter broker and agent and participates in syndicatedcommercial loans and tax oriented leases.
– Asset Finance department focuses on investment and management of ships including theacquisition and disposal of ships and the investment management of assets held by the Group andon behalf of third parties.
– Distressed Assets Investment department focuses on investment and management activities inAsia including the acquisition and disposal of distressed Asian assets and the investmentmanagement of assets held by the Group and on behalf of third parties.
– Real estate activities are conducted through our 44.8% owned associated company engaged in theinvestment and management of real estate projects in Japan including the arrangement ofinvestment and co-investment in the development and trading of Japanese hotels, commercial andresidential properties and the investment management of the properties held by the Group and onbehalf of third parties.
The Group is also seeking investment opportunities in new areas, projects or business where it will beable to capitalize on its finance packaging and investment expertise in ships and real estate.
Operating and Financial Review
1. Structured Finance
Structured finance activities are conducted mainly out of the Hong Kong and Tokyo offices. Duringthe year, the Group arranged syndicated transactions totalling US$460m (2005: US$930m).
The structured finance department generated arrangement and brokerage fee income ofUS$5,707k (2005: US$6,842k) and agency fees of US$258k (2005: US$289k).
The directors are of the view that the business of finance arrangement will remain competitive andthe Group will continue to focus on providing enhanced value added services to our clients.
C-2
APPENDIX C – DIRECTORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
Operating and Financial Review (Continued)
2. Asset Finance
The asset finance department is engaged in shipping investment management for the Group andfor third parties. In December 2003, the Group ventured into shipping investment and acted as theinvestor and administrator of two investment facilities held under Searex Asset ManagementLimited. As at December 2006, the Group participated in the fund by way of subscribing to a29.39% and 28.26% interest in the outstanding performance notes. In 2006, the Group alsoinvested 46% in Sunrise Shipping S.A and 40.4% in Harmonic Shipping S.A.
Through shipping investment management, debt arrangement and fund administration, thedepartment recorded total income of US$11,013k (2005: US$8,997k). A detailed breakdown of themajor income is as follows: US$1,289k as arrangement and project management fees (2005:US$1,785k), US$63k as agency fee (2005: US$65k), US$1,939k as fund management fee (2005:US$2,552k) and US$7,403k as investment return (2005: US$4,500k). As at 31st December 2006,the total outstanding investment in the ships/shipping fund was US$18m (2005: US$13.4m).
The directors are of the view that the shipping market would remain opportunistic. The Group isexpected to launch a new shipping fund in Singapore in the near term and to launch new shippingjoint ventures to grow the size of the funds under management.
3. Distressed Assets Investment
The distressed assets investment department carries out the acquisition and disposition of non-performing loans (NPLs) for the Group and for the managed funds.
AAA Strategic Investment Limited (AAA) is a co-investment fund administrated by the Group inparticipation with a Japanese financial institution. Contribution from AAA to the Group amounted toUS$1,177k in 2006 (2005: US$1,019k). As at 31st December 2006, the nominal value of the notesissued by AAA was US$2,674k (2005: US$5,294k) of which the Group’s participation reachedUS$891k (2005: US$1,746k).
The directors are of the view that investing into NPLs has become less attractive. As a result, theGroup has extended from investment in NPLs to distressed and/or real estate projects. The Groupis currently conducting investment and due diligence on real estate investments in Asia; inparticular, China.
C-3
APPENDIX C – DIRECTORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
Operating and Financial Review (Continued)
4. Real Estate Investment Management in Japan
The Group’s property investment in Japan is conducted through Capital Advisers Co., Limited (CA),an associated company in which the Group maintains an equity interest of 44.8%. As at 31stDecember 2006, the Group’s outstanding investment in CA totaled US$8,397k (2005: US$6,585k).Net Contribution from CA to the Group in 2006 was US$1,918k (2005: US$570k).
CA focuses on investment in residential projects and limited service hotels through thearrangement of new property funds or existing property funds advised, administrated and managedby the company. The company would take minority equity participations in the projects. As at 31stDecember 2006, CA had invested JPY1,324m (2005: JPY1,534m) directly or indirectly in Japaneseproperties along with property of sales of generating JPY3,419m (2005: JPY1,262m) in totalincome during the year. Profit before taxation was JPY970m (2005: JPY279m).
In 2006, the property funds under CA’s management reached JPY58.4 billion with an increase ofJPY14.7 billion from the previous year.
The directors are of view that the Japan real estate market will continue to improve. CA willcontinue to expand its real estate fund business and the hotel operation business in 2007.
The Group reported a net profit before tax of US$11,831k (2005: US$9,918k) after factoring in totalexpenses of US$9,485k (2005: US$8,901k).
On behalf of the board
Kazuhiko YoshidaManaging Director, Chief Executive Officer
Hong Kong, 27 June 2007
C-4
APPENDIX C – DIRECTORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
AUDITORS’ REPORT TO THE SHAREHOLDERS OFUNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
We have audited the accompanying consolidated financial statements of Uni-Asia Finance Corporation(the “Company”) and its subsidiaries (together, the “Group”) which comprise the consolidated balancesheet as of 31 December 2006 and the consolidated income statement, consolidated statement ofchanges in shareholders’ equity and consolidated cash flow statement for the year then ended and asummary of significant accounting policies and other explanatory notes.
Directors’ responsibility for the financial statements
Directors are responsible for the preparation and fair presentation of these consolidated financialstatements in accordance with International Financial Reporting Standards. This responsibility includes:designing, implementing and maintaining internal control relevant to the preparation and fair presentationof financial statements that are free from material misstatement, whether due to fraud or error; selectingand applying appropriate accounting policies; and making accounting estimates that are reasonable in thecircumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.We conducted our audit in accordance with International Standards on Auditing. Those standards requirethat we comply with ethical requirements and plan and perform the audit to obtain reasonable assurancewhether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe entity’s internal control. An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimates made by management, as well as evaluating theoverall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit.
Opinion
In our opinion, the accompanying consolidated financial statements give a true and fair view of thefinancial position of the Group as of 31 December 2006, and of its financial performance and its cashflows for the year then ended in accordance with International Financial Reporting Standards.
PricewaterhouseCoopersCertified Public Accountants
Hong Kong, 27 June 2007(Partner-in-charge: Colin Shaftesley)
C-5
APPENDIX C – AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2006
Note 2006 2005US$’000 US$’000
ASSETSNon-current assetsProperty, plant and equipment 15 652 147Loans receivable 16 2,500 50Investments 17 19,249 15,437Investments in associates 19(a) 8,472 6,648Loan amounts due from associates 29(i) – 756Deposit for purchase of vessel 3,944 –
34,817 23,038
Current assetsLoans receivable 16 3,050 100Rental and utility deposits paid 375 433Deposits pledged as collateral 30 5,053 10,082Accounts receivable 20 1,491 465Derivative financial instruments 18 163 –Prepaid expenses 235 267Interest receivable 74 20Amount due from associates 29(j) 4 –Cash and bank balances 21 22,205 27,544Tax receivable 105 –
32,755 38,911
Total assets 67,572 61,949
The notes on pages C12 to C51 are an integral part of these consolidated financial statements.
C-6
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED BALANCE SHEET (Continued)AS AT 31 DECEMBER 2006
Note 2006 2005US$’000 US$’000
EQUITYCapital and reserves attributable to equity holders of the companyShare capital 22 28,000 28,000Other reserves (223) –Retained earnings 31,989 21,956
Total equity 59,766 49,956
LIABILITIESNon-current LiabilitiesDeferred tax liabilities 11(b) 636 264
636 264
Current LiabilitiesAmount due to associate 29(j) 1 11Borrowings 24 4,222 9,041Accounts payable 23 278 227Derivative financial instruments 18 144 –Accrued expenses 2,462 2,023Tax payable 63 427
Total current liabilities 7,170 11,729
Total equity and liabilities 67,572 61,949
Approved by board of directors on 27 June 2007and signed on its behalf by:
Director Director
The notes on pages C12 to C51 are an integral part of these consolidated financial statements.
C-7
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006
Note 2006 2005US$’000 US$’000
Fee income 5 9,922 12,234Investment returns 6 7,983 5,011Interest income 7 1,543 936Other income 22 86
Total income 19,470 18,267
Employee benefits expense 10 (6,084) (5,481)Depreciation expense 15 (278) (106)Other expenses 8 (3,107) (3,316)(Loss)/ gain on disposal of fixed assets (16) 2
(9,485) (8,901)
Operating profit 9,985 9,366
Finance costs - interest expense 7 (83) (42)Share of profit of associates after tax 9 1,929 594
Profit before income tax 11,831 9,918Income tax expense 11 (398) (479)
Profit for the year 11,433 9,439
Earnings per share ($US per share) for profit attributable to the equity holders of the company during the year
- basic and diluted 13 US$0.408 US$0.337
The notes on pages C12 to C51 are an integral part of these consolidated financial statements.
C-8
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEAR ENDED 31 DECEMBER 2006
Share Retained OtherNote capital earnings reserve Reserve Total
US$’000 US$’000 US$’000 US$’000 US$’000
Balance at 1 January 2006 28,000 21,956 – – 49,956Net investment hedge – – – (61) (61)Currency translation difference – – – 61 61Profit for the year – 11,433 – – 11,433IPO expense – – (223) – (223)Dividend paid 12 – (1,400) – – (1,400)
Balance at 31 December 2006 28,000 31,989 (223) – 59,766
Balance at 1 January 2005 28,000 12,517 – – 40,517Net investment hedge – – – (879) (879)Currency translation difference – – – 879 879Profit for the year – 9,439 – – 9,439
Balance at 31 December 2005 28,000 21,956 – – 49,956
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction fromthe proceeds of the IPO. Since the IPO process is still underway at 31 December 2006, the relatedincremental costs are shown as a direct balance under other reserve.
The notes on pages C12 to C51 are an integral part of these consolidated financial statements.
C-9
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006
Note 2006 2005US$’000 US$’000
Cash flows from operating activitiesCash generated from Group’s operations 26(a) 444 1,733Interest received on bank balances 1,197 927Income tax paid (495) (1)
Net cash generated from operating activities 1,146 2,659
Cash flows from investing activitiesCash flows from investments:Purchase of investments (4,340) (9,825)Proceeds from sales of investments 3,830 2,911Dividend received from investments – 2
Cash flows from associates:Repayment of principal and interest from loans to associate 758 4,085
Cash flows from other investing activities:Purchase of fixed assets (838) (134)Proceeds from disposal of fixed assets 38 –Deposit for purchase of vessel (3,944) –Loans advanced (16,930) –Loan repaid 11,530 1,200Interest received from syndicated loans 291 48Decrease in deposits pledged as collateral 5,029 2,533Proceeds received from interest on performance notes 4,690 4,359Purchase of foreign exchange contracts – (25,433)Proceeds from settlement of foreign exchange contracts and swaps – 25,499
Net cash generated from investing activities 114 5,245
The notes on pages C12 to C51 are an integral part of these consolidated financial statements.
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
CONSOLIDATED CASH FLOW STATEMENT (Continued)FOR THE YEAR ENDED 31 DECEMBER 2006
Note 2006 2005US$’000 US$’000
Cash flows from financing activitiesInterest paid on borrowings (82) (45)New borrowings 2,220 –Repayment of borrowings (7,039) (3,485)Dividend paid (1,400) (1,400)IPO expenses (223) –
Net cash used in financing activities (6,524) (4,930)
Net (decrease)/increase in cash and cash equivalents (5,264) 2,974
Movements in cash and cash equivalents:Cash and cash equivalents at beginning of year 27,544 24,000Net (decrease) / increase in cash and cash equivalents (5,264) 2,974Effects of exchange rate changes (75) 570
Cash and cash equivalents at end of the year 21 22,205 27,544
The notes on pages C12 to C51 are an integral part of these consolidated financial statements.
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
1 General information
The principal activities of Uni-Asia Finance Corporation (the “Company”) and its subsidiaries(together, the “Group”) are the arrangement of, acting as agent of and participation in syndicatedcommercial loans, arrangement, management and co-investment in development and trading ofJapanese property assets and the acquisition, management and disposal of distressed Asianassets and shipping business.
The Company is an exempted company incorporated in the Cayman Islands on 17 March 1997with limited liability.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financialstatements are set out below. These policies have been consistently applied to all the yearspresented, unless otherwise stated.
(a) Basis of preparation
The consolidated financial statements of Uni-Asia Finance Corporation have been preparedin accordance with International Financial Reporting Standards (IFRS). The consolidatedfinancial statements have been prepared under the historical cost convention as modified bythe revaluation of financial assets and financial liabilities (including derivative instruments) atfair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certaincritical accounting estimates. The areas where assumptions and estimates are significant tothe consolidated financial statements, are disclosed in note 4.
The following new standards, amendments to standards and interpretations are mandatoryfor financial year ending 31 December 2006.
Amendment to IAS 39, Amendment to ‘The fair value option’, effective for annual periodsbeginning on or after 1 January 2006. This amendment does not have any impact on theclassification and valuation of the Group’s financial instruments which were classified at fairvalue through profit or loss prior to 1 January 2006 as the Group was able to comply with theamended criteria for the designation of financial instruments at fair value through profit orloss;
Amendment to IAS 21, Amendment ‘Net investment in a foreign operation’, effective forannual periods beginning on or after 1 January 2006. This amendment is not relevant for theGroup;
The following new standards, amendments to standards and interpretations have beenissued but are not effective for 2006 and have not been early adopted:
IFRIC 8, ‘Scope of IFRS 2’, effective for annual periods beginning on or after 1 May 2006.Management is currently assessing the impact of IFRIC 8 on the Group’s operations;
C-12
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
2 Summary of significant accounting policies (Continued)
(a) Basis of preparation (Continued)
IFRIC 9, ‘Reassessment of Embedded Derivatives’, effective for annual periods beginning onor after 1 June 2006. Management believes that this interpretation should not have asignificant impact on the reassessment of embedded derivatives as the Group alreadyassess if embedded derivative should be separated using principles consistent with IFRIC 9;and
IFRS 7, ‘Financial instruments: Disclosures’, effective for annual periods beginning on orafter 1 January 2007. IAS 1, ‘Amendments to capital disclosures’, effective for annualperiods beginning on or after 1 January 2007. The Group assessed the impact of IFRS 7and the amendment to IAS 1 and concluded that the main additional disclosures will be thesensitivity analysis to market risk and capital disclosures required by the amendment of IAS1. The Group will apply IFRS 7 and the amendment to IAS 1 from annual periods beginning1 January 2007.
IFRS 8, ‘Operating Segments’ effective from annual periods beginning on or after 1 January2009.
Other standards, amendments, and interpretations mandatory for accounting periodsbeginning on or after 1 January 2006 are not relevant to the Group’s operation.
(b) Consolidation
(i) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Grouphas the power to govern the financial and operating policies generally accompanying ashareholding of more than one half of the voting rights. The existence and effect ofpotential voting rights that are currently exercisable or convertible are consideredwhen assessing whether the Group controls another entity. Subsidiaries are fullyconsolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition ofsubsidiaries by the Group. The cost of an acquisition is measured as the fair value ofthe assets given, equity instruments issued and liabilities incurred or assumed at thedate of exchange, plus costs directly attributable to the acquisition. Identifiable assetsacquired and liabilities and contingent liabilities assumed in a business combinationare measured initially at their fair values at the acquisition date, irrespective of theextent of any minority interest. The excess of the cost of acquisition over the fair valueof the Group’s share of the identifiable net assets acquired is recorded as goodwill. Ifthe cost of acquisition is less than the fair value of the net assets of the subsidiaryacquired, the difference is recognized directly in the consolidated income statement.
Inter-company transactions, balances and unrealized gains on transactions betweengroup companies are eliminated. Unrealized losses are also eliminated but consideredan impairment indicator of the asset transferred. Accounting policies of subsidiarieshave been changed where necessary to ensure consistency with the policies adoptedby the Group.
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
2 Summary of significant accounting policies (Continued)
(b) Consolidation (Continued)
(ii) Associates
Associates are all entities, over which the Group has significant influence but notcontrol, generally accompanying a shareholding of between 20% to 50% of the votingrights. Investments in associates are accounted for using the equity method ofaccounting and are initially recognized at cost. The Group’s investments in associatesare detailed in Note 19.
The Group’s share of its associates’ post-acquisition profits or losses is recognized inthe income statement, and its share of post-acquisition movements in reserves isrecognized in reserves. The cumulative post-acquisition movements are adjustedagainst the carrying amount of the investment. When the Group’s share of losses inan associate equals or exceeds its interest in the associates, including any otherunsecured receivables, the Group does not recognize further losses, unless it hasincurred obligations or made payments on behalf of the associate.
Unrealized gains on transactions between the Group and its associates are eliminatedto the extent of the Group’s interest in the associates. Unrealized losses are alsoeliminated unless the transaction provides evidence of an impairment of the assettransferred. Accounting policies of associates have been changed where necessary toensure consistency with the policies adopted by the Group.
Investments held by venture capital or similar entities are excluded from the scope ofIAS 28 where those investments are designated, upon initial recognition, as at fairvalue through profit or loss and are accounted for in accordance with IAS 39. Certaininvestments of the Group have applied this scope exemption with changes in fair valuerecognised in profit or loss in the period of change. The directors have determined thatthe Group does not carry on its business through these associates.
(c) Revenue and other income recognition
Arrangement fees are recognized on delivery and upon completion of the transaction/service when all obligations associated with the transaction are completed and when theamount of revenue can be measured reliably.
Agency fees and commissions are recognized when pre-agreed duties and functions ofacting as an agent has been rendered.
Project management fees are recognized on an accrual basis.
Administration / Agency Fee / Incentive fee from distressed Loans are recognized as theycrystallize according to the pre-agreed terms of contract.
Interest Income is recognized on a time-proportion basis using the effective yield basis.
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
2 Summary of significant accounting policies (Continued)
(d) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation.
Leasehold improvements are depreciated over the remaining period of the lease while allother fixed assets are depreciated at the following rates on a straight-line basis, which isdeemed sufficient to write off their costs to their residual values over their estimated usefullives: office equipment at 33 1/3% per annum and other fixed assets at 25% per annum.
Gain and losses on disposals are determined by comparing proceeds with carrying amountsand are included in the consolidated income statement.
(e) Financial assets
The Group classifies its financial assets in the following categories: at fair value throughprofit or loss and loans and receivables. The classification depends on the purpose for whichthe financial assets were acquired.
a) Financial assets at fair value through profit or loss
This category has two sub-categories: ‘financial assets held for trading’ and thosedesignated at fair value through profit and loss at inception. A financial asset isclassified in this category if acquired principally for the purpose of selling in the shortterm or if so designated by management. Derivatives are also categorised as ‘held fortrading’ unless they are designated as hedges. Assets in this category are classifiedas current assets if they are either held for trading or are expected to be realizedwithin 12 months of the balance sheet date.
b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinablepayments that are not quoted in an active market. These are included in currentassets, except for maturities greater than 12 months after the balance sheet date.These are classified as non-current assets. Loans are classified as “LoansReceivable” in the balance sheet.
Purchases and sales of investments are recognised at trade date - the date on which theGroup commits to sell the asset. Investments are initially recognised at fair value plustransaction costs for all financial assets not carried at fair value through profit or loss.Financial assets carried at fair value through profit or loss, are initially recognised at fairvalue and transaction costs are expensed in the income statement. On initial recognition theGroup designates financial assets and liabilities at fair value through profit or loss where agroup of financial assets, financial liabilities or both is managed and its performance isevaluated on a fair value basis in accordance with the Group investment strategy.
C-15
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
2 Summary of significant accounting policies (Continued)
(e) Financial assets (Continued)
Investments are derecognised when the rights to receive cash flows from the investmentshave expired or have been transferred and the Group has transferred substantially all therisks and rewards of ownership. Financial assets at fair value through profit and loss aresubsequently carried at fair value.
Fair values for unquoted securities are estimated by the directors. In determining fairvaluation, the directors make use of market-based information and fair valuation modelssuch as discounted cash flow models. In many instances the directors also rely on financialdata of investees and on estimates provided by the management of the investee companiesas to the effect of future developments.
Performance notes are investments with income and maturity values which fluctuate basedon the distributions received from underlying assets, which are generally investments inproperty development companies, defaulted loans or shipping companies. Fair values ofperformance notes or other collective investment schemes are determined by the Group’sinterest in the fair values of each scheme’s underlying assets.
Gains and losses arising from changes in the fair value of all securities are recognized in theconsolidated income statement as they arise.
Although the directors use their best judgement in estimating the fair value of investments,there are inherent limitations in any estimation techniques. Future confirming events will alsoaffect the estimates of fair value and the effect of such events on the estimates of fair value,including the ultimate liquidation of investments, could be material to these consolidatedfinancial statements.
(f) Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank balances and short term bankdeposits with an original maturity of less than three months.
(g) Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowingsare subsequently stated at amortized cost; any difference between the proceeds (net oftransaction costs) and the redemption value is recognized in the income statement over theperiod of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right todefer settlement of the liability for at least 12 months after the balance sheet date.
C-16
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
2 Summary of significant accounting policies (Continued)
(h) Deferred taxation
Deferred income tax is provided in full, using the liability method, on temporary differencesarising between the tax bases of assets and liabilities and their carrying amounts in theconsolidated financial statements. However, the deferred income tax, if it is not accountedfor, arises from initial recognition of an asset or liability in a transaction other than a businesscombination that at the time of the transaction affects neither accounting nor taxable profit orloss. Deferred income tax is determined using tax rates (and laws) that have been enactedor substantially enacted by the balance sheet date and are expected to apply when therelated deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized to the extent that it is probable that future taxableprofit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments insubsidiaries and associates, except where the timing of the reversal of the temporarydifference is controlled by the Group and it is probable that the temporary difference will notreverse in the foreseeable future.
(i) Employee benefits
Pension obligations
Group companies have various defined contribution pension schemes in accordance with thelocal conditions and practices in the countries in which they operate. A defined contributionplan is a pension plan under which the Group pays fixed contributions into a separate entity(a fund) and will have no legal or constructive obligations to pay further contributions if thefund does not hold sufficient assets to pay all employees benefits relating to employeeservices in the current and prior periods.
For defined contribution plans, the Company pays contributions to publicly or privatelyadministered pension insurance plans on a mandatory, contractual or voluntary basis.
Once the contributions have been paid, the Company has no further payment obligations.The regular contributions constitute net periodic costs for the year in which they are due andas such are included in staff costs.
Bonus scheme
The Company pays out bonus to employees based on the overall corporate performance, thedepartment being able to achieve the annual budget and the employee’s performance andcontribution to the Company.
C-17
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
2 Summary of significant accounting policies (Continued)
(j) Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is enteredinto and are subsequently re-measured at their fair value. The method of recognising theresulting gain or loss depends on whether the derivative is designated a hedging instrument,and if so, the nature of the item being hedged. The Group designates certain derivatives ashedges of net investments in foreign operations.
The Group documents at the inception of the transaction the relationship between hedginginstruments and hedged items, as well as its risk management objective and strategy forundertaking various hedge transactions. The Group also documents its assessment, both athedge inception and on an ongoing basis, of whether the derivatives that are used inhedging transactions are highly effective in offsetting changes in fair values or cash flows ofhedged items.
(a) Net investment hedge
The effective portion of changes in the fair value of derivatives that are designated andqualify as net investment hedge are recognised in equity. The gain or loss relating tothe ineffective portion is recognised immediately in the consolidated incomestatement.
Gains and losses accumulated in equity are included in the consolidated incomestatement when the foreign operation is disposed of.
(b) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fairvalue of any derivative instruments that do not qualify for hedge accounting arerecognised immediately in the consolidated income statement.
(k) Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities aremeasured using the currency of the primary economic environment in which the entityoperates (‘the functional currency’). The consolidated financial statements arepresented in United States Dollars, which is the Company’s functional andpresentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using theexchange rates prevailing at the dates of the transactions. Foreign exchange gainsand losses resulting from the settlement of such transactions and from the translationat year-end exchange rates of monetary assets and liabilities denominated in foreigncurrencies are recognized in the income statement, except when deferred in equity asqualifying cash flow hedges and qualifying net investment hedges.
C-18
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
2 Summary of significant accounting policies (Continued)
(k) Foreign currency translation (Continued)
(c) Group companies
The results and financial position of all the group entities (none of which has thecurrency of a hyperinflationary economy) that have a functional currency different fromthe presentation currency are translated into the presentation currency as follows:
Assets and liabilities for each balance sheet presented are translated at the closingrate at the date of that balance sheet.
Income and expenses for each income statement are translated at average exchangerates (unless this average is not a reasonable approximation of the cumulative effectof the rates prevailing on the transaction dates, in which case income and expensesare translated at the dates of the transactions).
All resulting exchange differences are recognised as a separate component of equity.On consolidation, exchange differences arising from the translation of the netinvestment in foreign operations, and of borrowings and other currency instrumentsdesignated as hedges of such investments, are taken to shareholders’ equity. When aforeign operation is sold, exchange differences that were recorded in equity arerecognised in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity aretreated as assets and liabilities of the foreign entity and translated at the closing rate.
(l) Leases
Leases in which a significant portion of the risks and rewards of ownership are retained bythe lessor are classified as operating leases. Payments made under operating leases (net ofany incentives received form the lessor) are charged to the consolidated income statementon a straight-line basis over the period of the lease.
(m) Dividend distributions
Dividend distributions to the Company’s shareholders are recognised as a liability in theGroup’s financial statements in the period in which dividends are approved.
(n) Segment reporting
A business segment is a group of assets and operations engaged in providing products orservices that are subject to risks and returns that are different from those of other businesssegments. A geographical segment is engaged in providing products or services within aparticular economic environment that are subject to risks and returns that are different fromthose of segments operating in other economic environments.
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
3 Segment information
Primary reporting format - business segments
At 31 December 2006, the Group is organised on a worldwide basis into four main businesssegments (departments): (1) structured finance; (2) ship investment/management; (3) distressedassets investment/management; and (4) property investment/management.
The segment results for the year ended 31 December 2006 are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Income 5,994 11,013 1,177 53 1,233 19,470
Operating profits/ (losses) 3,271 8,463 246 (295) (1,700) 9,985Share of profit of associates – 11 – 1,918 – 1,929Finance costs – interest expenses – (32) – (51) – (83)
Profit before income tax 3,271 8,442 246 1,572 (1,700) 11,831Less: income tax expenses (29) (30) – (372) 33 (398)
Profit for the year 3,242 8,412 246 1,200 (1,667) 11,433
Other segment items are as follows: Capital expenditure 163 307 126 9 233 838Depreciation 67 99 38 3 71 278
The segment results for the year ended 31 December 2005 are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Income 7,165 8,997 1,019 186 900 18,267
Operating profits/ (losses) 4,710 6,920 22 (588) (1,698) 9,366Share of profit of associates – 24 – 570 – 594Finance costs – interest expenses – – – (42) – (42)
Profit before income tax 4,710 6,944 22 (60) (1,698) 9,918Less: income tax expense (92) (92) – (295) – (479)
Profit for the year 4,618 6,852 22 (355) (1,698) 9,439
Other segment items are as follows: Capital expenditure 26 37 24 2 44 133Depreciation 43 22 14 1 26 106
C-20
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
3 Segment information (Continued)
The segment assets and liabilities as at 31 December 2006 for the year then ended are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Segment assets 2,086 28,972 2,194 1,227 – 34,479Investment in Associates – 75 – 8,397 – 8,472Unallocated assets – – – – 24,621 24,621
Total assets 2,086 29,047 2,194 9,624 24,621 67,572
Segment liabilities 852 1,198 95 744 – 2,889Unallocated liabilities – – – – 4,917 4,917
Total liabilities 852 1,198 95 744 4,917 7,806
The segment assets and liabilities as at 31 December 2005 for the year then ended are as follows:
DistressedShip assets Property
Structured investment/ investment/ investment/finance management management management Unallocated Group
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Segment assets 1,708 14,679 2,332 5,871 – 24,590Investment in Associates – 63 – 6,585 – 6,648Unallocated assets – – – – 30,711 30,711
Total assets 1,708 14,742 2,332 12,456 30,711 61,949
Segment liabilities 556 891 63 362 – 1,872Unallocated liabilities – – – – 10,121 10,121
Total liabilities 556 891 63 362 10,121 11,993
Segment assets consist primarily of property, plant and equipment, receivables and operating cash.
They exclude certain investments and cash and cash equivalents. The unallocated portionrepresents mainly cash balances held by the Group which is not distinguishable into any particularsegment.
Segment liabilities comprise operating liabilities and exclude items such as certain corporateborrowings.
Capital expenditure comprises incurred additions to property, plant and equipment (Note 15).
C-21
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
3 Segment information (Continued)
Secondary reporting format - geographical segments
The Group’s four business segments operate in three main geographical areas, even though theyare managed on a worldwide basis.
Global - the global segment represents activities with assets or customers with no fixed location,which include structured finance and ship investment/ management.
Asia (ex-Japan) - the Asia (ex-Japan) segment represents activities with assets or customerslocated in Asia (ex-Japan), which include structured finance, ship investment/management anddistressed assets investment/management.
Japan - the Japan segment represents activities with assets or customers located in Japan, whichinclude structured finance, ship investment/management and property investment/management.
2006 2005US$’000 US$’000
IncomeGlobal 8,896 8,918Asia (ex-Japan) 6,823 3,052Japan 2,518 5,397Unallocated 1,233 900
19,470 18,267
Total assets Global 28,972 14,679Asia (ex-Japan) 4,280 4,040Japan 1,227 5,871Unallocated 24,621 30,711
59,100 55,301Investments in associates 8,472 6,648
67,572 61,949
Capital expenditure 838 133
Income and total assets attributable to business segments are based on the country in which thecustomer is located. Income and assets not attributable to business segments are disclosed asunallocated. There are no sales between the segments. Total assets and capital expenditure arewhere the assets are located.
C-22
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
4 Critical accounting estimates
Estimates are continually evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accountingestimates will, by definition, seldom equal the related actual results. The estimates andassumptions that have a significant risk of causing a material adjustment to the carrying amountsof assets and liabilities are discussed below.
Fair value of derivatives and other financial instruments
The fair value of financial instruments that are not traded in an active market are determined byusing valuation techniques. The Group uses its judgment in selecting methods and makesassumptions that are based on market conditions existing at each balance sheet date. The Grouphas used discounted cash flow analysis or other similar methodologies to value investments whichwere not traded in an active market.
5 Fee income
2006 2005US$’000 US$’000
Corporate finance arrangement, brokerage and agency fees 7,317 8,138Project Management fee – 844Agency, advisory, administration and incentives fees from distressed loans (Note 29) 667 700
Administration and incentive fees from shipping investment management 1,938 2,552
9,922 12,234
Note:
Contingent assets
At 31 December 2003, the Company had been contracted to arrange finance for 10 containerships, for which the Company will collect a US$685k fee in respect of each ship. Completion feesof US$548k per ship totalling US$5,480k were to be received on delivery and financing of eachship.
There were totally 6 ships delivered up to end of 2006 which have been included as income for theyear ended 2005 or 2006 and the remaining contingent asset of US$2,192k at 31 December 2006will be recognised as income in future years when circumstances are no longer contingent.
C-23
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
6 Investment returns
2006 2005US$’000 US$’000
Realized (losses)/ gains on investments (2) 250Return on performance notes - distressed debt (Note 29) 371 318Return on performance notes - properties 1 47Return on performance notes - shipping business (Note 29) 4,291 2,491Unrealised / realized gain on foreign exchange contracts 19 67Fair value adjustments on performance notes - distressed debt 139 –Fair value adjustments on performance notes - shipping business 1,214 2,423Fair value adjustments on performance notes - properties 50 79Fair value adjustment on unlisted shares - shipping business 1,900 (664)
7,983 5,011
During the year, total fair value adjustments relating to performance notes amounted to US$3,303k(December 2005: US$1,838k). Return on performance notes comprises interest income paid tonote holders during the year. Refer further to note 2(e) in respect of the accounting policy for fairvaluation on performance notes.
7 Interest income and expense
2006 2005US$’000 US$’000
Interest income from:- cash and cash equivalents 1,233 900- participation in syndicated loans 310 36
1,543 936
Interest expense on:- borrowings 83 42
83 42
C-24
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
8 Other expenses
2006 2005US$’000 US$’000
Rental expenses under operating leases:- office premises 752 601
Auditors’ remuneration 77 105Traveling and entertainment 801 863Net foreign exchange loss 180 453Professional service fees 252 351Miscellaneous expenses 436 368 Expense for IPO 609 575
3,107 3,316
9 Results of associates
The Group’s share of results of associates after taxation is as follows:
2006 2005US$’000 US$’000
Capital Advisers Co. Ltd. 3,743 1,126Less: share of tax of Capital Advisers Co. Ltd (Note 19) (1,825) (556)Uni Ship and Management Ltd. 14 29Less: Share of tax of Uni-Ship and Management Ltd. (Note 19) (3) (5)
1,929 594
10 Employee benefit expense
2006 2005US$’000 US$’000
Salaries (including director’s remuneration) 5,187 4,817Pension costs - defined contribution plans 147 145Staff residencies, other welfare and allowances 750 519
6,084 5,481
C-25
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
10 Employee benefits expense (Continued)
The weighed average number of employees is as follows:
2006 2005US$’000 US$’000
Full time 30 27
Hong Kong 24 21Japan 3 3Singapore 3 3
30 27
11 Income tax expense and deferred taxation
(a) Income tax expense
2006 2005US$’000 US$’000
Current tax 26 393Deferred tax 372 86
398 479
The tax on the Group’s profit before tax differs from the theoretical amount that would ariseusing the weighted average tax rate applicable to the profits of the consolidated companiesas follows:
2006 2005US$’000 US$’000
Profit before tax 11,831 9,918
Domestic tax rates applicable to profits in the respective countries 2,071 1,736Effect of different tax rates in other countries 1,173 359Income not subject to tax (2,846) (1,616)
Tax charge 398 479
Note:
Income not subject to taxation is only included to the extent that it negates profits at grouptax rate. Further adjustments are not made as the contingent tax asset is not recognised.
C-26
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
11 Income tax expense and deferred taxation (Continued)
(b) Deferred taxation
TotalUS$’000
At 1 January 2005 178Charged to income statement 86
At 31 December 2005 264Charged to income statement 372
At 31 December 2006 636
Deferred income tax assets are recognized for tax losses carried forward only to the extentthat the realization of the related tax benefit is probable. The Group has estimated taxlosses of US$6,746k (2005: US$7,104k) in Hong Kong to carry forward against futuretaxable income of those companies, which have not been recognized in these consolidatedfinancial statements due to uncertainty of their recoverability.
12 Dividends
The dividends paid in 2006 and 2005 were US$1,400k and US$1,400k respectively (US$0.05 pershare). A dividend in respect of the year ended 31st December 2006 of US$0.06 per shareamounting to a total dividend of US$1,680k was approved at the Board of Directors meeting on 24January 2007. These financial statements do not reflect this dividend payable.
13 Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders ofthe Company by the weighted average number of ordinary shares in issue during the year.
C-27
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
13 Earnings per share (Continued)
(b) Diluted
Diluted earnings per share is calculated adjusting the weighted average number of ordinaryshares outstanding to assume conversion of all dilutive ordinary shares during the year. TheGroup has one category of potential ordinary shares: share options issued in 2004 by anassociate company. These share options are not considered to have a dilutive effect onearnings per share.
2006 2005US$’000 US$’000
Profit attributable to equity holders of the Company 11,433 9,439
Weighted average number of ordinary shares in issue 28,000 28,000
Earnings per share (US$ per share) - basic and diluted 0.408 0.337
14 Emoluments for directors and highest paid individuals
(a) Directors’ emoluments
2006 2005US$’000 US$’000
Fees & basic salaries 1,364 1,223
Other emoluments:Housing allowances and other allowances and benefits in kind 334 275Discretionary bonuses 750 750Contributions to pensions schemes for directors 3 3
2,451 2,251
There were three independent non-executive directors who were appointed to the Group inApril 2005 and two of them resigned in April 2006.
C-28
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
14 Emoluments for directors and highest paid individuals (Continued)
The emoluments of the directors fell within the following bands.
Number of Number ofdirectors directors
2006 2005
Emoluments bands US$ Nil – US$15,000 7 8US$15,001 - US$ 700,000 – –US$700,001 - US$800,000 1 3US$800,001 - US$900,000 2 –
10 11
(b) Five highest paid individuals
The five individuals whose emoluments were the highest in the Group for the year include 3(2005: 3) directors whose emoluments are reflected in the analysis presented above. Theemoluments payable to the remaining 2 (2005: 2) individuals are as follows:
2006 2005US$’000 US$’000
Basic salaries, housing allowances and other allowances and benefits in kind 459 446
Bonuses 550 627Pension Costs 27 20
1,036 1,093
The emoluments fall within the following bands:
Number of individuals2006 2005
Emoluments bands US$300,000 – US$450,000 1 1US$450,001 – US$700,000 – –US$700,001 – US$750,000 1 1
2 2
(c) No emoluments were paid in both 2005 and 2006 by the companies comprising the Group toany of the directors or the five highest paid individuals as an inducement to join or uponjoining the Group or as compensation for loss of office.
C-29
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
15 Property, plant and equipment
Leasehold Furnitureimprove- Office and Motor
ments equipment fixtures vehicles TotalUS$’000 US$’000 US$’000 US$’000 US$’000
CostAt 1 January 2006 370 259 53 93 775Additions 666 55 117 – 838Disposals (53) (13) – (93) (159)Exchange translation (1) – 1 – –Written off (316) (67) (38) – (421)
At 31 December 2006 666 234 133 – 1,033
Accumulated depreciationAt 1 January 2006 368 187 53 20 628Charge 181 57 17 23 278Disposals (53) (10) – (43) (106)Exchange translation – (1) – – (1)Written off (315) (65) (38) – (418)
At 31 December 2006 181 168 32 – 381
Net book value At 31 December 2006 485 66 101 – 652
CostAt 1 January 2005 385 321 61 64 831Additions 2 38 – 93 133Disposals – (2) – (64) (66)Exchange translation (8) (2) – – (10)Written off (9) (96) (8) – (113)
At 31 December 2005 370 259 53 93 775
Accumulated depreciationAt 1 January 2005 356 229 60 63 708Charge 27 57 1 21 106Disposals - (1) – (64) (65)Exchange translation (6) (2) – – (8)Written off (9) (96) (8) – (113)
At 31 December 2005 368 187 53 20 628
Net book valueAt 31 December 2005 2 72 – 73 147
C-30
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
16 Loans receivable
2006 2005US$’000 US$’000
Participation in loansRepayable within one yearInterest rate at:LIBOR plus 1.25% p.a. (2005: LIBOR plus 1.25% p.a.) 50 100LIBOR plus 2% p.a.(2005: Nil) 3,000 –
3,050 100
Participation in loansRepayable between one and two yearsInterest rate at:LIBOR plus 1.25% p.a. (2005: LIBOR plus 1.25% p.a.) – 506% p.a. 2,500 –
2,500 50
Loans receivable 5,550 150
The carrying amount of the loans approximates their fair value.
17 Investments
2006 2005US$’000 US$’000
Non-Hong KongUnlisted shares 191 191Unlisted shares – shiping business (Note (a) below) 8,288 3,699Unlisted performance notes – properties investment (Note 29(f)) – 55Unlisted performance notes – distressed debt (Note 29(f)) 1,031 1,746Unlisted performance notes – shipping (Note 29 (f)) 9,739 9,746
19,249 15,437
Note: Investments are designated at fair value through profit or loss.
C-31
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
17 Investments (Continued)
(a) Within unlisted shares - shipping business are investments totalling US$8,288k (2005:US$3,699k) in six shipping companies which own and run cargo ships.
Country/place Issued and Dec 2006 Dec 2005
and date of fully paid up % of % of PrincipalName incorporation share capital holdings holdings activities
Niigata Seimitsu Japan JPY3,874,300,000 0.14% 0.14% ManufacturingCo. Ltd. 17 January 1981 electronic devices
EuroAsia II Inc., Panama US$10,000 15% 15% Shipping investmentPanama 12 April 2002 and management
EuroAsia III Inc., Panama US$10,000 – 15% Shipping investmentPanama 12 April 2002 and management
AP Real Estate Cayman Islands US$1,000 5.26% 5.26% Japanese propertyLtd. 12 April 2000 investment and
management
RS Property Cayman Islands US$1,000 – 10% Japanese propertyInvestment 28 August 2000 investment and
management
Searex Asset British Virgin Islands US$1,000 Series 1 : Series 1 : Shipping investmentManagement 30 December 2003 29.39% 29.41% and managementLimited Series 2: Series 2:
28.26% 19.57%
AAA Strategic Cayman Islands US$1,000 Series 1: Series 1: Distressed debtsInvestment Limited 26 July 2001 20% 20% investment and
Series 2: Series 2: management33.3% 33.3%
Fortitude Panama US$1,000 38% 38% Ship owning andContainership S.A. 26 November 2004 chartering
Union Panama US$1,000 38% 38% Ship owning andContainership S.A. 26 November 2004 chartering
Falcon Panama US$1,000 38% 38% Ship owning andContainership S.A. 26 November 2004 chartering
Harmonic Shipping Panama US$10,000 40.4% ** Ship owning andS.A. 29 April 2005 chartering
Sunrise Shipping Panama US$10,000 46% – Ship owning andS.A. 17 April 2006 chartering
** As 31 December 2005, the Group had a commitment to purchase 40.4% of the sharecapital of Harmonic Shipping S.A.
Please refer to Note 19(f) for those entities which have applied the exemption under IAS 28and have been fair valued in accordance with IAS 39.
C-32
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
17 Investments (Continued)
Performance notes:
(a) Distressed debt performance notes are redeemed semi-annually, in whole or in part, basedon net cash recovered from underlying assets funded by the original note’s issuance.Remaining performance notes are redeemed at their principal amounts on such other dateas may be agreed to by the subscribers of the performance notes.
(b) Shipping performance notes are redeemed semi-annually, in whole or in part, based on netcash recovered from the operation or the disposal of underlying assets. There are nomaturity dates for the shipping performance notes invested by the Group.
18 Derivative financial Instruments
(a) Forward foreign exchange contracts
There was a JPY 1 billion (US$8.6m) USD forward contract outstanding at 31 December2006 (2005: Nil). The transaction was entered alongside a back-to-back arrangementcontract with Harmonic Shipping S.A. for the equivalent amount in Yen upon maturity of thatcontract. Unrealised gain or losses on forward foreign exchange contracts are recogniseddirectly in the consolidated income statement.
(b) Hedge of net Investment in foreign entity
The Group’s Yen denominated borrowing is designated as a hedge of the net investment inan associate of the Group, Capital Advisers Co, Ltd. The fair value of the borrowing wasJPY502m (US$4.222m) (2005: JPY1,065m (US$9.041m)). The foreign exchange lossUS$61k (2005: US$879k Loss) on translation of the borrowings to US dollar at balancesheet date was recognised in reserves in shareholders equity.
C-33
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
19 Investments in associates
(a) Movement of investments in associates
2006 2005US$’000 US$’000
Capital Advisers Co. Ltd.At the beginning of year 6,585 6,928Share of results after tax 1,918 570Exchange differences (106) (913)
8,397 6,585
Uni-Ships and Management Ltd.At the beginning of year 63 –Investment in associate – 39Share of results after tax 11 24Exchange differences 1 –
75 63
8,472 6,648
(b) Summary of significant associates’ assets, liabilities and results
A summary of Capital Advisers Co. Ltd.’s assets, liabilities and results are as follows:
2006 2005US$’000 US$’000
Investments in property related projects 11,135 13,018Cash and cash equivalents 10,767 6,240Other assets 26,861 12,181
Total assets 48,763 31,439
Amount due to Uni-Asia Finance Corporation (4) (756)Other liabilities (29,973) (15,956)Minority interest (42) (29)
Shareholders’ equity 18,744 14,698
Company’s 44.8% interest in shareholders’ equity 8,397 6,585
C-34
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
19 Investments in associates (Continued)
For the For theyear ended year ended
31 December 31 December2006 2005
US$’000 US$’000
Results to 31 December 2006, translated at an average rate of JPY116.15 (2005: JPY114.00) to US$1:
Revenue 29,435 11,382Staff costs (3,180) (2,354)Interest expense (176) (201)Other expenses (17,724) (6,314)
Profit before tax 8,355 2,513Taxation (4,075) (1,241)
Profit after tax 4,280 1,272
Profit before tax - Company’s interest 3,743 1,126Taxation - Company’s interest (1,825) (556)
Profit after tax - Company’s interest (of which Company has 44.8% interest, 2005: 44.8%) 1,918 570
A summary of Uni Ships and Management Limited’s assets, liabilities and results are as follows:
2006 2005US$’000 US$’000
Cash and cash equivalents 277 231Other assets 4 10
Total assets 281 241Other liabilities (31) (32)
Shareholders’ equity 250 209
Company’s 30% interest shareholders’ equity 75 63
C-35
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
19 Investments in associates (Continued)
For the For theyear ended year ended
31 December 31 December2006 2005
US$’000 US$’000
Revenue 724 229Other expenses (676) (131)
Profit before tax 48 98Taxation (8) (17)
Profit after tax 40 81
Profit before tax - Company’s interest 14 29Taxation - Company’s interest (3) (5)
- Profit after tax - Company’s interest (of which Company has 30%) 11 24
(c) Details of associates
As at 31 December 2006, details of the associates, both of which are unlisted, were asfollows:
Dec 2006 Dec 2005 PrincipalCountry/place Issued and Attributable Attributable activities andand date of fully paid up equity equity place of
Name incorporation share capital interest interest operation
Indirectly held:
Capital Advisers Japan JPY892,500,000 44.8% 44.8% Japan PropertyCo. Ltd. 24 February 2000 common common investment and
shares shares management
Directly held:
Uni-Ships and Hong Kong HK$1,000,000 30% 30% Hong KongManagement 25 January 2005 common common ProjectLtd. shares shares management
for vessels
C-36
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
19 Investments in associates (Continued)
(d) Loan due from associates
Loan due from associates was fully settled in March 2006 (2005: US$756k equivalent toJPY89m). Interest charged on loan due from associates for the year was US$2k (2005:US$60k).
(e) Amounts due from associates
The amounts due from associate are unsecured, interest free and with no fixed repaymentterms.
(f) Other associates
The following investments apply the IAS 28 scope exclusion and are fair valued inaccordance with IAS 39 (see note 2(b)(ii))
Total profit % Country of Total Total Total (loss) interest
Name incorporation assets liabilities income after tax heldUS$’000 US$’000 US$’000 US$’000
2006
Fortitude Containership S.A.* Panama 7,364 (7,528) 14 (442) 38.00%Union Containership S.A. * Panama 7,365 (7,530) 14 (452) 38.00%Falcon Containership S.A.* Panama 7,362 (7,497) 14 (406) 38.00%Harmonic Shipping S.A. Panama 27,018 (26,106) 4,003 265 40.40%Sunrise Shipping S.A Panama 23,166 (22,558) 1,152 (205) 46.00%
72,275 (71,219) 5,197 (1,240)
2005
Fortitude Containership S.A. Panama 7,347 (7,069) 8 (152) 38.00%Union Containership S.A. Panama 7,347 (7,060) 8 (151) 38.00%Falcon Containership S.A. Panama 7,346 (7,075) 8 (153) 38.00%
22,040 (21,204) 24 (456)
*vessels to be delivered in 2007.
C-37
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
20 Accounts receivable
In general, the Group grants a credit period of 7 to 60 days to its customers. The aging analysis ofthe accounts receivable is as follows:
2006 2005US$’000 US$’000
30 days or less 1,491 464Over 90 days – 1
1,491 465
21 Cash and bank balances
2006 2005US$’000 US$’000
Cash at bank and in hand 6,946 5,565Short term bank deposits 15,259 21,979
Cash and cash equivalents 22,205 27,544
The effective interest rate on short term bank deposits was 0.36% (2005: 0.2%) and these depositshave an average maturity below 30 days.
22 Share capital
2006 2005US$’000 US$’000
Authorized:60,000,000 shares of US$1 each 60,000 60,000
Issued and fully paid:28,000,000 shares of US$1 each 28,000 28,000
C-38
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
23 Accounts payable
The aging analysis of the accounts payable is as follows:
2006 2005US$’000 US$’000
30 days or less 278 226Between 61-90 days – 1
278 227
24 Borrowings
2006 2005US$’000 US$’000
Repayable per terms of revolving loan facility - Secured 4,222 9,041
Included in borrowings is a secured loan of JPY502m (approximately US$4,222k) collateralized bya cash deposit of US$5,053k with the same financial institution (2005: a loan totaling JPY9,041kcollateralized by a cash deposit of approximately US$10,082k with the same financial institution).
The fair value of borrowings approximate the carrying amounts.
2006 2005
Weighted average effective interest rates:Bank borrowing - JPY 0.42% 0.34%Bank borrowing - US$ 5.73% 2.97%Cash deposit 0.36% 0.20%
The borrowings of the Group are at floating JPY LIBOR rates:
2006 2005US$’000 US$’000
Revolving secured loan due within one year 4,222 9,041
Total borrowings 4,222 9,041
C-39
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
25 Subsidiary companies
(a) Details of principal investments in subsidiaries
Details of the principal subsidiaries within the Group at the date of this report are as follows:
Dec 2006 Dec 2005 PrincipalCountry/place Issued and Attributable Attributable activities andand date of fully paid up equity equity place of
Name incorporation share capital interest interest operation
Directly held:
Uni-Asia Capital Singapore US$1,000,000 100% 100% Ship chartering(Singapore) 7 August 1997 arrangementLimited Singapore
Off-Shore Property British Virgin Islands US$1 100% 100% Holding andInvestment 23 April 1998 investment
Corporation company BVI
Uni-Asia Capital Hong Kong HKD20 100% 100% Property Company Limited 27 June 1997 Investment
Hong Kong
Uni-Asia Fund Hong Kong HKD20 100% 100% DormantManagement 27 June 1997 Hong KongCompany Limited
Uni-Asia Services Hong Kong HKD20 100% 100% Dormantand Agency 27 June 1997 Hong KongLimited
Panmax Tanker Panama * 100% 100% Shipping HoldingS.A. 30 October 2006 Panama
Indirectly held:
Uni-Asia Finance Japan JPY 10,000,000 100% 100% CorporateCorporation 9 November 1998 finance services(Japan) Japan
* The Group has no direct share ownership in the company, but is deemed to havecontrol and all risks and rewards of Panmax Tanker S.A.
(b) Amounts due from /to subsidiaries
The amounts due from/ to subsidiaries are unsecured, interest free and with no fixedrepayment terms.
C-40
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
26 Cash generated from operations
(a) Reconciliation of profit before taxation to cash generated from operations
2006 2005US$’000 US$’000
Profit before taxation 11,831 9,918
Adjustments for:Depreciation 278 106Interest income (1,543) (940)Interest expenses 83 42Results of associates (1,929) (594)Interest from loans to associate (2) (60)Net foreign exchange loss 180 452Decrease/(Increase)in rental and utility deposits paid 60 (207)(Increase) in accounts receivable (1,053) (165)Decrease/(increase) in prepaid expenses 31 (19)Increase/(decrease) in accounts payable 51 (2,038)Increase in accrued expenses 438 240(Decrease)/increase in amount due to associates (10) 11(Increase) in amount due from associates (4) –Loss/(Gain) on disposal of fixed assets 16 (2)Investment returns (7,983) (5,011)
Cash generated from operations 444 1,733
C-41
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
27 Financial risk management
(a) Financial risk factors
The Group holds financial assets and liabilities, transacts in foreign exchange transactionswith third parties and has mismatched Yen denominated assets and liabilities. All theseoperations give rise to risk exposures.
Financial instruments traded or held include cash and cash equivalents, investments, loansand receivables and borrowings.
Forward rate agreements are used to manage the Group’s own exposures to foreignexchange risk as part of its asset and liability management process. The principal derivativeinstruments used by the Group are foreign exchange rate related contracts. Most of theGroup’s derivative positions have been entered into to hedge investments in subsidiaries.
(i) Market risk
Market risk is the risk that the value of a financial instrument will fluctuate as a resultof changes in market prices, whether those changes are caused by factors specific tothe individual financial instrument or by factors affecting all financial instrumentstraded in or indexed to a market. The Group is exposed to market risk on financialinstruments that are valued at market prices and primarily consist of investments,loans, property development projects and marketable securities.
(ii) Foreign exchange risk
The Group has certain investments in Japan, whose net assets are exposed to foreigncurrency translation risk. Currency exposure arising from the net assets of the Group’sforeign operations is managed primarily through borrowings denominated in therelevant foreign currencies.
C-42
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
27 Financial risk management (Continued)
The table below summarizes the Group’s exposure to currency risk. (Amounts shown are in US$‘000 equivalent)
As at 31 December 2006
Yen US$ Other Total
ASSETSNon-current assetsProperty, plant and equipment 7 557 88 652Loans receivable – 2,500 – 2,500Investments 191 19,058 – 19,249Investments in associates 8,397 75 – 8,472Deposit for purchase of vessel 3,944 – – 3,944
12,539 22,190 88 34,817
Current assetsLoans receivable – 3,050 – 3,050Deposit pledged as collateral – 5,053 – 5,053Cash and bank balances 1,099 21,061 45 22,205Other current assets 189 1,864 394 2,447
1,288 31,028 439 32,755
13,827 53,218 527 67,572
LIABILITIESNon-current liabilitiesDeferred tax liabilities – 636 – 636
– 636 – 636
Current liabilitiesBorrowings 4,222 – – 4,222Other current liabilities 73 1,964 911 2,948
4,295 1,964 911 7,170
C-43
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
27 Financial risk management (Continued)
As at 31 December 2006
Yen US$ Other Total
ASSETSNon-current assetsProperty, plant and equipment 1 144 2 147Loans receivable – 50 – 50Investments 246 15,191 – 15,437Investments in associates 6,585 63 – 6,648Loan amounts due from associate 756 – – 756
7,588 15,448 2 23,038
Current assetsLoans receivable – 100 – 100Deposit pledged as collateral – 10,082 – 10,082Cash and bank balances 5,306 21,884 354 27,544Other current assets 8 662 515 1,185
5,314 32,728 869 38,911
12,902 48,176 871 61,949
LIABILITIESNon-current liabilitiesDeferred tax liabilities – 264 – 264
– 264 – 264
Current liabilitiesBorrowings 9,041 – – 9,041Other current liabilities 286 1,412 990 2,688
9,327 1,412 990 11,729
(iii) Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate as aresult of changes in market interest rates and the cash flow risks associated with thevariability of cash flows from floating rate financial instruments. The Group is exposedto interest rate risk primarily from interest rate re-pricing differences betweencustomers’ loans, borrowings, cash and cash equivalents and shareholders’ capital.
C-44
APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
27 Financial risk management (Continued)
(iv) Credit risk
Credit risk is the risk of loss resulting from the failure of counterparties to meet theterms of their obligations. The Group is exposed to credit risk through loans andinvestments, and through counterparty default risk on transactions, including foreignexchange transactions in the process of settlement.
(v) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketablesecurities, the availability of funding through an adequate amount of committed creditfacilities and the ability to close out market positions.
(b) Risk management
The Group’s principal risks are market risk, credit risk and foreign exchange risk. Thedirectors consider the interest rate risk and liquidity risk of the Group to be immaterial.
Market risk and credit risk
The Group seeks to minimise these risks by performing detailed reviews of loancounterparties or asset issuers prior to purchase approval, and by either selling onparticipated loans to other parties or entering into offsetting loans payable when the directorswish to preserve the Group’s liquidity. The Group seeks to minimize adverse movements inmarket price of financial instruments by extensive due diligence procedures to ensureacquisitions at prices below their perceived market value.
Foreign exchange and interest rate risk
The Group operates internationally and is exposed to foreign exchange risk arising fromvarious currency exposures in particular Japanese Yen. Foreign exchange risk arises fromfuture commercial transactions, recognised assets and liabilities and net investments inforeign operations. To manage their foreign exchange risk the Group may use forward foreignexchange contracts. Foreign exchange risk arises when the future commercial transaction orrecognised assets or liabilities are denominated in a currency that is not the entity’sfunctional currency.
The Group has certain investments in foreign operations, which are exposed to foreigncurrency translation risk. Currency exposure arising from these investments of the Group’sforeign operations is managed through borrowings denominated in the relevant foreigncurrencies.
The Group may also manage exposure to interest rate risk through the use of interest rateswaps. These are commitments to exchange one set of cash flows for another. Swaps resultin an economic exchange of currencies or interest rates (for example, fixed rate for floatingrate) or a combination of all these (i.e. cross-currency interest rate swaps). No exchange ofprincipal takes place, except for certain currency swaps. The Group’s credit risk representsthe potential cost to replace the swap contracts if counterparties fail to perform theirobligation. This risk is monitored on an ongoing basis with reference to the current fair value,a proportion of the notional amount of the contracts and the liquidity of the market. Tocontrol the level of credit risk taken, the Group assesses counterparties using the sametechniques as for its lending activities.
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
27 Financial Risk Management (Continued)
Liquidity risk
The Group will maintain sufficient cash and marketable securities, the availability of fundingthrough an adequate amount of committed credit facilities and the ability to close out marketpositions.
(c) Fair value estimation
The fair value of financial instruments that are not traded in an active market (for example,over-the-counter derivatives) is determined by using valuation techniques. The Group uses avariety of methods and makes assumptions that are based on market conditions existing ateach balance sheet date. Quoted market prices or dealer quotes for similar instruments areused for long-term debt. Other techniques, such as estimated discounted cash flows, areused to determine fair value for the remaining financial instruments. The fair value of interestrate swaps is calculated as the present value of the estimated future cash flows. The fairvalue of forward foreign exchange contracts is determined using quoted forward exchangerates at the balance sheet date.
The nominal value less impairment provision of trade receivables and payables are assumedto approximate their fair values.
28 Commitments
(a) Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is asfollows:
2006 2005US$’000 US$’000
Leasehold Improvement – 515
(b) Lease commitments
Commitments, under non-cancellable operating leases with a term of more than one year,fall due:
2006 2005US$’000 US$’000
Within one year 1,053 1,096Later than one year and not later than five years 890 1,156
1,943 2,252
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
28 Commitments (Continued)
(c) Investment commitments
2006 2005US$’000 US$’000
Investment for Harmonic Shipping S.A. – 4Shareholder loans 1,283 1,283
In 2005 the Company committed to purchase 40.4% of the share capital of HarmonicShipping whose principal activity is the owning of ships and the transaction was completed inMarch 2006.
Shareholder loans represent the outstanding balance of the maximum commitment toFortitude Containership S.A., Union Containership S.A. and Falcon Containership S.A. ascontained in the shareholders loan agreements dated 15 August 2006.
In November 2006, the Group entered, through its wholly owned subsidiary, Panmax TankerS.A., into a shipbuilding contract for the construction and purchase of a product tankeramounting to JPY4.69 billion for delivery in 2010.
29 Related party transactions
Related parties include investments, associates and property development projects held for salewhere the Group holds a beneficial interest in, and is also contracted as a service provider tomanage or administer such investment, company, entity or property.
Related party transactions are carried out under normal commercial terms and conditions andgenerate fee income as disclosed in Note 5, investment returns as disclosed in Note 6, directors’remunerations and other allowances as disclosed in Note 14, investments in associates andamounts due from associates as disclosed in Note 19.
Related party balances comprise the unlisted performance notes and unlisted shares as disclosedin Note 17.
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
29 Related party transactions (Continued)
The following transactions were carried out with related parties:
2006 2005US$’000 US$’000
Income Statement
Agency, arrangement, administration and incentive fees from shipping finance, investment and management (Note (a)) 1,986 2,387
Agency, advisory, administration and incentive fees from distressed loans (Note (b)) 667 700
Administration service fee (Note (c)) 226 51Arrangement fee from shipping investment management (Note (d) & (e)) 423 1,982Return on performance notes – shipping business (Note (f)) 4,291 2,491Return on performance notes – distressed debt (Note (f)) 371 318Gain on sales of investment (Note (g)) – 248Loan interest income from loan to investment company (Note (h)) 300 –Loan interest income from loan to associate company (Note(i)) 2 60
Balance Sheet
Loan due from investment company (Note (h)) 5,500 –Loan due from associates (Note (i)) – 756Amount due from associates (Note (j)) 4 –Amount due to associates (Note (j)) 1 11
Notes:
(a) The Group is entitled to receive from Searex Asset Management Limited, an investment ofthe Group, the following fees:
(i) a minimum administration fee of US$5K per month for each shipping asset owned bySearex Asset Management Limited, including the vessels being acquired which aresubject of a memorandum of agreement, payable quarterly in advance.
(ii) a brokerage fee for the arrangement of chartering of vessel.
(iii) an incentive fee up to 10% of the sum of the net proceeds, accumulated cash balanceand liabilities outstanding from the disposal of certain vessels.
(iv) a loan arrangement fee for the finance arrangement of a vessel.
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
29 Related party transactions (Continued)
(b) The Group is entitled to receive from AAA Strategic Investment Limited, an investment of theGroup, the following fees:
(i) an administration fee of US$75k per annum for performance notes series 1 payablesemi-annually in advance and an administration fee for performance notes series 2payable semi-annually in advance in the amount of US$50k for the full or partialissuance of performance notes of each of the first three US$5 million amounts up to amaximum of US$150k.
(ii) an agency fee of US$25k per annum for performance notes series 1 payable semi-annually in advance, and an agency fee for performance notes series 2, payable semi-annually in advance, in the amount of US$50k per annum for the full or partialissuance of each of the first three US$5 million tranches of performance notes.
(iii) an incentive fee, calculated on an asset by asset basis, in addition to theadministration fee. The initial incentive fee is calculated as 20% of the cumulativecash recovered from each asset in excess of 110% of that asset’s initial cost. Thesubsequent incentive fee is calculated as twenty percent of additional cash recoveredfrom each asset in excess of that asset’s additional cost. The incentive fee iscalculated and paid semi-annually.
(iv) Performance Note Series 1 Fund was fully redeemed in December 2006
(c) The Group is entitled to receive from Uni Ships and Management Limited (USML), anassociated company of the Group, a monthly administration service fee of US$6,335 inrespect to the administration, accounting and financial matters of USML. In September 2006,the Group received an incentive fee of US$150k from USML.
(d) The Group is entitled to receive from Fortitude Containership S.A., Falcon Containership SAand Union Containership SA, investments of the Group, a monthly administration fee ofUS$7K per month in respect of administration of each company.
(e) The Group is entitled to receive from Sunrise Shipping S.A., investment of the Group, amonthly administration fee of US$5K per month in respect of administration of the company.In addition, as per the shareholders agreement, the Group is entitled to receive a fee forfinancing arrangement for the outstanding contract price of the vessel of Sunrise ShippingS.A..
(f) Performance notes are redeemed semi-annually, in whole or in part, calculated based on netcash recovered from the underlying assets. Performance note redemptions are determinedbased on the total original cost of recovered assets less the deduction of fees and otherexpenses incurred in recovery of such assets. Recovery amounts from assets in excess ofthat required for performance note repayments are paid out as interest on thoseperformance notes.
(g) In June 2005, the Company disposed of its equity interest in Glade Mate Investment, to arelated party, Searex Asset Management Limited.
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
29 Related party transactions (Continued)
(h) Loan due from investment companies
(i) Harmonic Shipping S.A.
The outstanding principal balance of US$3million is charged on floating interest rate of2% per annum over LIBOR with a final maturity date on 13 March 2007.
(ii) Sunrise Shipping S.A.
The outstanding balance of US$2.5million is charged on interest rate of 6% perannum with a final maturity date on 10 Sep 2011.
(i) Loan due from associates constituted loans to Capital Advisers Co. Ltd.
The principal balance and interest accrued on an unsecured revolving short term loan facilityhas been fully settled (2005: US$756k equivalent to JPY489 million). The interest rate wasrevised to 1.375% per annum since May 2004 Interest charged on amounts due from CapitalAdvisers Co. Ltd during the year was US$2k (Dec 2005: US$60k).
(j) The amount due from associates and the amount due to associate are unsecured, interestfree and have no fixed repayment term.
30 Deposits pledged as collateral
As at 31 December 2006, the Group had US$5,053k (2005: US$10,082k) of deposits pledged ascollateral against Japanese Yen denominated revolving bank loan facilities.
31 Contingencies
In November 2006, Panmax Tanker S.A. (“Panmax”), a wholly owned subsidiary of the Group,entered into a shipbuilding contract with Xing Long Maritime S.A for the construction and sale of aproduct tanker with delivery in 2010. The Group issued a performance guarantee amounting toJPY4.69billion to Xing Long Maritime S.A. for the due performance by Panmax for the ship salescontract.
32 Post balance sheet events
On 4 January 2007, the Group has made a deposit amounting to RMB700k for purchasing officesin Guangzhou. The final payment of RMB 6.3 million will be fully settled by April 2007.
On 9 January 2007, Guangzhou Yayuan Property Management Company Limited was set up andon 5 February 2007, the Group injected US$3million into this newly established wholly ownedsubsidiary of the Group. The primary business of this new subsidiary is to carry out propertyinvestment activities in Guangzhou.
On 7 February 2007, the Group entered into JPY1.02 billion (US$8.5m) forward contract withmaturity on 13 March 2007. This transaction was entered alongside a back-to-back arrangementcontract with Harmonic Shipping S.A. for the equivalent amount in Yen upon maturity of thatcontract.
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
UNI-ASIA FINANCE CORPORATION(Incorporated in the Cayman Islands with limited liability)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
32 Post balance sheet events (Continued)
On 12 March 2007 the Group provided additional US$3.2m shareholder’s loan to HarmonicShipping SA for financing of working capital.
On 11 April 2007 the Group provided additional US$0.2m shareholder’s loan to FalconContainership S.A. for financing of working capital.
On 17 April 2007 the Company launched a shipping fund in Singapore, the Akebono ShippingFund 1. The fund has raised equity of US$42.9 million through the issuance of performance notesto investors. The Company has committed to subscribe for US$12.2 million of performance notes.On 25 May 2007, the Group injected US$ 2.8 million as 1st installment of 35% subscription ofAkebono performance notes.
Outstanding loans due from Harmonic Shipping S.A (amounting USD$8.4m) were fully repaid on30 April 2007.
On 1 May 2007, the Group, on behalf of Panmax Tanker S.A, entered into JPY469m (US$ 3,933k)USD forward contract with maturity date on 31 May 2007.
On 2 May 2007, the Group, on behalf of Matin Shipping Limited, entered into JPY357.5m (US$2,998k) USD forward contract with maturity date on 31 May 2007.
On 3 May 2007, the Group injected US$5k and granted a shareholder’s loan of US$995k to RichContainership S.A. representing a 50% interest in the newly set up SPC. The principal activity ofthis company is ship chartering.
On 7 May 2007, the outstanding US$4,663k performance note from Series II, of Searex AssetManagement Limited, were fully redeemed.
On 28 May 2007, the Group has extended the US$4 million loan to Panmax Tanker S.A. forsettlement of 1st instalment of shipbuilding contract with Xing Long Maritime S.A.
On 30 May 2007, Mitsui & Co. Ltd has provided US$4m loan to Panmax Tanker S.A for settlementof 2nd installment of shipbuilding contract with Xing Long Maritime S.A.
On 31 May 2007, the Group injected US$400 and granted a shareholder’s loan of US$1,203k toMatin Shipping Ltd representing a 40% interest in the newly set up SPC. The principal activity ofthis company is ship chartering.
On 19 June 2007, Panmax Tanker S.A. was injected into the Akebono Fund. The transfer isdeemed as a disposal from the Group’s perspective. The Group holds a 35% interest in AkebonoFund.
33 Approval of the consolidated financial statements
The consolidated financial statements were approved by the board of directors on 27 June 2007.
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APPENDIX C – CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2006
Set out below is a summary of certain provisions of the Memorandum and Articles of Association of ourCompany.
1. MEMORANDUM OF ASSOCIATION
The Memorandum of Association of the Company was adopted on 26 June 2007 and states, interalia, that the liability of members of the Company is limited, that the objects for which the Companyis established are unrestricted and the Company shall have full power and authority to carry outany object not prohibited by the Cayman Companies Law or any other law of the Cayman Islands.
The Memorandum of Association is available for inspection at the address specified in “Generaland Statutory Information – Documents Available for Inspection” on page 173 of this Prospectus.
2. ARTICLES OF ASSOCIATION
The Articles of Association of the Company were adopted on 26 June 2007 and include provisionsto the following effect:
2.1 Classes of Shares
The share capital of the Company consists of ordinary shares. The authorised capital of theCompany at the date of adoption of the Articles of Association is US$120,000,000 divided into750,000,000 Shares.
2.2 Directors
2.2.1 Power to vote on a proposal, arrangement or contract in which he is interested
A Director (or his alternate Director in his absence) shall not vote on any resolution of theDirectors in respect of any contract or arrangement or proposed contract or arrangement inwhich he has directly or indirectly a personal material interest.
2.2.2 Power to vote on remuneration for himself and other Directors, and quorum at such Boardmeetings
The remuneration to be paid to the Directors shall be such remuneration as the Companyfrom time to time shall determine in general meeting and shall not be increased exceptpursuant to an ordinary resolution passed at a general meeting where notice of theproposed increase shall have been given in the notice convening the general meeting. ADirector cannot vote on his own remuneration. Fees payable to non-executive Directorsshall be by a fixed sum, and not by a commission on or a percentage of profits or turnover.Salaries payable to executive Directors may not include a commission on or a percentageof turnover. Such remuneration shall be deemed to accrue from day to day. The Directorsshall also be entitled to be paid their travelling, hotel and other expenses properly incurredby them in going to, attending and returning from meetings of the Directors, or anycommittee of the Directors, or general meetings of the Company, or otherwise in connectionwith the business of the Company, or to receive a fixed allowance in respect thereof as maybe determined by the Directors from time to time, or a combination partly of one suchmethod and partly the other.
2.2.3 Borrowing powers of Directors
The Directors may exercise all the powers of the Company to borrow money and tomortgage or charge its undertaking, property and uncalled capital or any part thereof andissue debentures, debenture stock and other securities whether outright or as security forany debt, liability or obligation of the Company or of any third party. These provisions maybe varied by amendments to the Articles of Association of the Company.
APPENDIX D – SUMMARY OF THE CONSTITUTION OF OUR COMPANY
D-1
2.2.4 Age limit for retirement of Directors
There is no age limit imposed under the Articles of Association of the Company forretirement of Directors.
2.2.5 Shareholding qualification of Directors
A shareholding qualification for Directors may be fixed by the Company in general meeting,but unless and until so fixed no qualification shall be required.
2.3 Variation of rights of existing shares or classes of shares
If at any time the share capital of the Company is divided into different classes of shares,preference capital other than redeemable preference capital may be repaid and the rights attachedto any class (unless otherwise provided by the terms of issue of the shares of that class) may,whether or not the Company is being wound-up, be varied with the sanction of a SpecialResolution (which is defined in the Articles of Association of the Company to be a resolutionapproved by not less than sixty-seven percent (67%) of such Members present in person or byproxy at a general meeting of the Company) passed at a general meeting of the holders of theshares of that class, provided always that where the necessary majority for such a SpecialResolution is not obtained at such general meeting, consent in writing if obtained from the holdersof three-fourths of the issued shares of the class concerned within two months of such generalmeeting shall be as valid and effectual as a Special Resolution carried at such general meeting.
The provisions of these Articles relating to general meetings shall apply to every such generalmeeting of the holders of one class of shares except that the necessary quorum shall be oneperson holding or representing by proxy at least one-third of the issued shares of the class and thatany holder of shares of the class present in person or by proxy may demand a poll.
The rights conferred upon the holders of the shares of any class issued with preferred or otherrights shall not, unless otherwise expressly provided by the terms of issue of the shares of thatclass, be deemed to be varied by the creation or issue of further shares ranking pari passutherewith.
2.4 Alteration of Capital
(a) Subject to and in so far as permitted by the provisions of the Cayman Companies Law, theCompany may from time to time by Ordinary Resolution (which is defined in the Articles ofAssociation of the Company to be a resolution passed by a simply majority of Memberspresent in person or by proxy at a general meeting of the Company or approved in writing byall the Members entitled to vote at a general meeting) alter or amend its Memorandumotherwise than with respect to its name and objects and may, without restricting thegenerality of the foregoing:
(i) increase the share capital by such sum to be divided into shares of such amount orwithout nominal or par value as the resolution shall prescribe and with such rights,priorities and privileges annexed thereto, as the Company in general meeting maydetermine;
(ii) consolidate and divide all or any of its share capital into shares of larger amount thanits existing shares;
(iii) by subdivision of its existing shares or any of them divide the whole or any part of itsshare capital into shares of smaller amount than is fixed by the Memorandum or intoshares without nominal or par value; and
(iv) cancel any shares which at the date of the passing of the resolution have not beentaken or agreed to be taken by any person.
APPENDIX D – SUMMARY OF THE CONSTITUTION OF OUR COMPANY
D-2
(b) All new shares created hereunder shall be subject to the same provisions with reference tothe payment of calls, lien, transfer, transmission, forfeiture and otherwise as the shares in theoriginal share capital.
(c) Without prejudice to Article 14 of the Articles of Association and subject to the provisions ofthe Cayman Companies Law, the Company may by Special Resolution reduce its sharecapital and any capital redemption reserve fund.
2.5 Rights, preferences and restrictions attaching to each class of shares
Subject to the provisions, if any, in that behalf in the Memorandum and to any direction that may begiven by the Company in general meeting and without prejudice to any special rights previouslyconferred on the holders of existing shares, the Directors may allot, issue, grant options over orotherwise dispose of shares of the Company (including fractions of a share) with or withoutpreferred, deferred or other special rights or restrictions, whether in regard to dividend, voting,return of capital or otherwise and to such persons, at such times and on such other terms as theythink proper. The Company shall not issue shares in bearer form.
Subject to any special rights conferred on the holders of any shares or class of shares, any sharein the Company may be issued with or have attached thereto such preferred, deferred, qualified orother special rights or restrictions, whether with regard to dividend, voting, return of capital orotherwise, as the Company may be ordinary resolution determine or, if there has not been anysuch determination or so far as the same shall not make specific provision, as the Board maydetermine.
Except as permitted under the rules or regulations of the SGX-ST or any direction given by theCompany in general meeting, all new shares shall before issue be offered to such persons who asat the date of the offer are entitled to receive notices from the Company of general meetings inproportion, as far as the circumstances admit, to the amount of the existing shares to which theyare entitled. The offer shall be made by notice specifying the number of shares offered, and limitinga time within which the offer, if not accepted, will be deemed to be declined. After the expiration ofthat time, or on the receipt of an intimation from the person to whom the offer is made that hedeclines to accept the shares offered or any part thereof, the Directors may dispose of thoseshares in such manner as they think most beneficial to the Company. The Directors may likewiseso dispose of any new shares which (by reason of the ratio which the new shares bear to sharesheld by persons entitled to an offer of new shares) cannot, in the opinion of the Directors, beconveniently offered.
Subject to the provisions of the Cayman Companies Law and the Memorandum, shares may beissued on the terms that they are, or at the option of the Company of the holder are, to beredeemed on such terms and in such manner as the Company, before the issue of the shares, mayby Special Resolution determine.
Subject to the provisions of the Cayman Companies Law and the Memorandum, the Company maypurchase its own shares, including any redeemable shares, in any manner provided that suchmanner of purchase has first been authorised by the Company in general meeting and may takepayment therefor in any manner authorised by the Cayman Companies Law, including out ofcapital.
2.6 Time limit for lapse of dividend entitlement
There is no time limit imposed under the Articles of Association of the Company for lapse ofdividend entitlements of Shareholders.
2.7 Restrictions on ownership of shares
There are no limitations on the right to own shares.
APPENDIX D – SUMMARY OF THE CONSTITUTION OF OUR COMPANY
D-3
1. Introduction
The Cayman Companies Law is derived, to a large extent, from the older Companies Acts ofEngland, although there are significant differences between the Cayman Companies Law and thecurrent Companies Act of England. Set out below is a summary of certain provisions of theCayman Companies Law, although this does not purport to contain all applicable qualifications andexceptions or to be a complete review of all matters of corporate law and taxation which may differfrom equivalent provisions in jurisdictions with which interested parties may be more familiar.
2. Incorporation
The Company was incorporated in the Cayman Islands as an exempted company with limitedliability on 17 March 1997 under the Cayman Companies Law (1995 Revision). As such, itsoperations must be conducted mainly outside the Cayman Islands. The Company is required to filean annual return each year with the Registrar of Companies of the Cayman Islands and pay a feewhich is based on the size of its authorised share capital.
3. Share capital
The Cayman Companies Law permits a company to issue ordinary shares, preference shares,redeemable shares or any combination thereof. Investors should note that the position underCayman Companies Law is different from that under Singapore law, which provides that shares ofa company incorporated in the Cayman Islands shall have a par value.
The Cayman Companies Law provides that where a company issues shares at a premium,whether for cash or otherwise, a sum equal to the aggregate amount of the value of the premia onthose shares shall be transferred to an account called the “share premium account”. At the optionof a company, these provisions may not apply to premia on shares of that company allottedpursuant to any arrangement in consideration of the acquisition or cancellation of shares in anyother company and issued at a premium. The Cayman Companies Law provides that the sharepremium account may be applied by a company, subject to the provisions, if any, of itsmemorandum and articles of association, in such manner as the company may from time to timedetermine including, but without limitation:
(a) paying distributions or dividends to members;
(b) paying up unissued shares of the company to be issued to members as fully paid bonusshares;
(c) in the redemption and repurchase of shares (subject to the provisions of section 37 of theCayman Companies Law);
(d) writing-off the preliminary expenses of the company;
(e) writing-off the expenses of, or the commission paid or discount allowed on, any issue ofshares or debentures of the company; and
(f) providing for the premium payable on redemption or purchase of any shares or debenturesof the company.
No distribution or dividend may be paid to members out of the share premium account unlessimmediately following the date on which the distribution or dividend is proposed to be paid thecompany will be able to pay its debts as they fall due in the ordinary course of business.
The Cayman Companies Law provides that, subject to confirmation by the Grand Court of theCayman Islands, a company limited by shares or a company limited by guarantee and having ashare capital may, if so authorised by its articles of association, by special resolution reduce itsshare capital in any way.
APPENDIX E – SUMMARY OF CAYMAN ISLANDS COMPANY LAW
E-1
Subject to the detailed provisions of the Cayman Companies Law, a company limited by shares ora company limited by guarantee and having a share capital may, if so authorised by its articles ofassociation, issue shares which are to be redeemed or are liable to be redeemed at the option ofthe company or a shareholder. In addition, such a company may, if authorised to do so by itsarticles of association, purchase its own shares, including any redeemable shares. However, if thearticles of association do not authorise the manner of purchase, a company cannot purchase anyof its own shares unless the manner of purchase has first been authorised by an ordinaryresolution of the company. At no time may a company redeem or purchase its shares unless theyare fully paid. A company may not redeem or purchase any of its shares if, as a result of theredemption or purchase, there would no longer be any member of the company holding shares. Apayment out of capital by a company for the redemption or purchase of its own shares is not lawfulunless immediately following the date on which the payment is proposed to be made, the companyshall be able to pay its debts as they fall due in the ordinary course of business.
There is no statutory restriction in the Cayman Islands on the provision of financial assistance by acompany for the purchase of, or subscription for, its own or its holding company’s shares.Accordingly, a company may provide financial assistance if the directors of the company consider,in discharging their duties of care and to act in good faith, for a proper purpose and in the interestsof the company, that such assistance can properly be given. Such assistance should be on anarm’s-length basis.
Investors should note that the position under Cayman Companies Law is different from that underSingapore law, which provides statutory restrictions against a company giving financial assistanceto any person directly or indirectly for the purpose of, or in connection with, the acquisition of thatcompany’s shares or shares of its holding company. Financial assistance includes the making of aloan, the giving of a guarantee, the provision of security, and the release of a debt or obligation.
4. Dividends and distributions
With the exception of section 34 of the Cayman Companies Law, there are no statutory provisionsrelating to the payment of dividends. Based upon English case law which is likely to be persuasivein the Cayman Islands in this area, dividends may be paid only out of profits. In addition, section 34of the Cayman Companies Law permits, subject to a solvency test and the provisions, if any, of thecompany’s memorandum and articles of association, the payment of dividends and distributions outof the share premium account (see paragraph 3 above for further details).
5. Shareholders’ suits
The Cayman Islands courts can be expected to follow English case law precedents. The rule inFoss v. Harbottle (and the exceptions thereto which permit a minority shareholder to commence aclass action against or derivative actions in the name of the company to challenge (a) an act whichis ultra vires the company or illegal, (b) an act which constitutes a fraud against the minority wherethe wrongdoers are themselves in control of the company, and (c) an action which requires aresolution with a qualified (or special) majority which has not been obtained) has been applied andfollowed by the courts in the Cayman Islands.
6. Protection of minorities
In the case of a company (not being a bank) having a share capital divided into shares, the GrandCourt of the Cayman Islands may, on the application of members holding not less than one fifth ofthe shares of the company in issue, appoint an inspector to examine into the affairs of the companyand to report thereon in such manner as the Grand Court shall direct.
Any shareholder of a company may petition the Grand Court of the Cayman Islands which maymake a winding up order if the court is of the opinion that it is just and equitable that the companyshould be wound up.
APPENDIX E – SUMMARY OF CAYMAN ISLANDS COMPANY LAW
E-2
Claims against a company by its shareholders must, as a general rule, be based on the generallaws of contract or tort applicable in the Cayman Islands or their individual rights as shareholdersas established by the company’s memorandum and articles of association.
The English common law rule that the majority will not be permitted to commit a fraud on theminority has been applied and followed by the courts of the Cayman Islands.
Investors should note that the position under Cayman Companies Law is different from that underSingapore law, which provides that the rights of minority shareholders are entrenched in theCompanies Act, which provides that shareholders may apply to the Singapore courts for an orderto remedy situations where (i) a company’s affairs are being conducted or the powers of thecompany’s directors are being exercised in a manner oppressive to, or in disregard of the interestsof one or more of the company’s shareholders as shareholders of the company; or (ii) a companyhas done an act, or threatens to do an act, or the members or holders of debentures have passedor propose to pass some resolution, which unfairly discriminates against, or is otherwise prejudicialto, one or more of the company’s shareholders.
7. Disposal of assets
The Cayman Companies Law contains no specific restrictions on the powers of directors todispose of assets of a company. As a matter of general law, in the exercise of those powers, thedirectors must discharge their duties of care and to act in good faith, for a proper purpose and inthe interests of the company.
Investors should note that the position under Cayman Companies Law is different from that underSingapore law, which provides that prior approval of the company at a general meeting is requiredbefore the directors can carry into effect any proposals for disposing of the whole or substantiallythe whole of the company’s undertaking or property, notwithstanding anything in a company’smemorandum or articles of association.
8. Accounting and auditing requirements
The Cayman Companies Law requires that a company shall cause to be kept proper books ofaccount with respect to:
(a) all sums of money received and expended by the company and the matters in respect ofwhich the receipt and expenditure takes place;
(b) all sales and purchases of goods by the company; and
(c) the assets and liabilities of the company.
Proper books of account shall not be deemed to be kept if there are not kept such books as arenecessary to give a true and fair view of the state of the company’s affairs and to explain itstransactions.
9. Register of members
An exempted company may, subject to the provisions of its articles of association, maintain itsprincipal register of members and any branch registers at such locations, whether within or withoutthe Cayman Islands, as its directors may, from time to time, think fit. There is no requirement underthe Cayman Companies Law for an exempted company to make any returns of members to theRegistrar of Companies in the Cayman Islands. The names and addresses of the members are,accordingly, not a matter of public record and are not available for public inspection.
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10. Inspection of books and records
Members of a company will have no general right under the Cayman Companies Law to inspect orobtain copies of the register of members or corporate records of the company. They will, however,have such rights as may be set out in the company’s articles of association.
11. Special resolutions
The Cayman Companies Law provides that a resolution is a special resolution when it has beenpassed by a majority of not less than two-thirds (or such greater number as may be specified in thearticles of association of the company) of such members as, being entitled to do so, vote in personor, where proxies are allowed, by proxy at a general meeting of which notice specifying theintention to propose the resolution as a special resolution has been duly given. Written resolutionssigned by all the members entitled to vote for the time being of the company may take effect asspecial resolutions if this is authorised by the articles of association of the company.
Investors should note that the position under Cayman Companies Law is different from that underSingapore law, which provides that a special resolution must be passed by at least three-fourths ofmembers voting (in person or by proxy) at a general meeting of which not less than 21 days’written notice has been duly given.
12. Subsidiary owning shares in parent
The Cayman Companies Law does not prohibit a Cayman Islands company acquiring and holdingshares in its parent company provided its objects so permit. The directors of any subsidiary makingsuch acquisition must discharge their duties of care and to act in good faith, for a proper purposeand in the interests of the subsidiary.
Investors should note that the position under Cayman Companies Law is different from that underSingapore law, which prohibits a company from being a member of a company which is its holdingcompany, and any allotment or transfer of shares in a company to its subsidiary is deemed to bevoid.
13. Reconstructions
There are statutory provisions which facilitate reconstructions and amalgamations approved by amajority in number representing 75 per cent. in value of shareholders or creditors, depending onthe circumstances, as are present at a meeting called for such purpose and thereafter sanctionedby the Grand Court of the Cayman Islands. Whilst a dissenting shareholder would have the right toexpress to the Grand Court his view that the transaction for which approval is sought would notprovide the shareholders with a fair value for their shares, the Grand Court of the Cayman Islandsis unlikely to disapprove the transaction on that ground alone in the absence of evidence of fraudor bad faith on behalf of management and if the transaction were approved and consummated thedissenting shareholder would have no rights comparable to the appraisal rights (i.e. the right toreceive payment in cash for the judicially determined value of his shares) ordinarily available, forexample, to dissenting shareholders of United States corporations.
14. Take-overs
Where an offer is made by a company for the shares of another company and, within four monthsof the offer, the holders of not less than 90 per cent. of the shares which are the subject of the offeraccept, the offeror may at any time within two months after the expiration of the said four months,by notice require the dissenting shareholders to transfer their shares on the terms of the offer. Adissenting shareholder may apply to the Grand Court of the Cayman Islands within one month ofthe notice objecting to the transfer. The burden is on the dissenting shareholder to show that theGrand Court should exercise its discretion, which it will be unlikely to do unless there is evidence offraud or bad faith or collusion as between the offeror and the holders of the shares who haveaccepted the offer as a means of unfairly forcing out minority shareholders.
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15. Indemnification
Cayman Islands law does not limit the extent to which a company’s articles of association mayprovide for indemnification of officers and directors, except to the extent any such provision may beheld by the Cayman Islands courts to be contrary to public policy (e.g. for purporting to provideindemnification against the consequences of committing a crime).
16. Liquidation
A company is placed in liquidation either by an order of the court or by a special resolution (or, incertain circumstances, an ordinary resolution) of its members. A liquidator is appointed whoseduties are to collect the assets of the company (including the amount (if any) due from thecontributories (shareholders)), settle the list of creditors and discharge the company’s liability tothem, rateably if insufficient assets exist to discharge the liabilities in full, and to settle the list ofcontributories and divide the surplus assets (if any) amongst them in accordance with the rightsattaching to the shares.
17. Stamp duty on transfers
No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islandscompanies except those which hold interests in land in the Cayman Islands.
18. Exchange control
There are no exchange control regulations or currency restrictions in the Cayman Islands.
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1. NAME OF THE SCHEME
The Scheme shall be called the “Uni-Asia Share Option Scheme”.
2. DEFINITIONS
2.1 In the Scheme, unless the context otherwise requires, the following words and expressions shallhave the following meanings:
“Act” The Companies Act, Chapter 50 of Singapore, as amended,modified or supplemented from time to time.
“Adoption Date” The date on which the Scheme is adopted by the Company ingeneral meeting.
“Aggregate Subscription Cost” The total amount payable for Shares which may be acquired onthe exercise of an Option.
“Articles” The articles of association of our Company as amended,supplemented or modified from time to time.
“Associate” Shall have the meaning assigned to it in the Listing Manual ofthe SGX-ST.
“Auditors” The auditors of the Company for the time being.
“Board” The board of directors of the Company.
“Cayman Companies Law” The Companies Law, Cap. 22 (Law 3 of 1961, as consolidatedand revised) of the Cayman Islands.
“CDP” The Central Depository (Pte) Limited.
“Committee” A committee comprising directors of the Company who areconcurrently members of the remuneration committee of theBoard, duly authorised, appointed and nominated by the Boardpursuant to the Rules to administer the Scheme.
“Company” or “Uni-Asia” Uni-Asia Finance Corporation, an exempted companyincorporated on 17 March 1997 in the Cayman Islands withlimited liability.
“control” The capacity to dominate decision-making, directly or indirectly,in relation to the financial and operating policies of theCompany.
“Controlling Shareholder” A Shareholder exercising control over the Company and unlessrebutted, a person who controls directly or indirectly ashareholding of fifteen (15) per cent. or more of the Company’sissued share capital shall be presumed to be a ControllingShareholder of the Company.
“CPF” Central Provident Fund.
“Date of Grant” In relation to an Option, the date on which the Option isgranted pursuant to Rule 6.
“Director” A person holding office as a director for the time being of theCompany or its Subsidiaries, as the case may be.
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“Employee” An employee of our Group (including any Group ExecutiveDirector) selected by the Committee to participate in theScheme in accordance with Rule 4.1.
“Exercise Period” Subject as provided in Rules 8 and 9, the period for theexercise of an Option, being a period commencing:
(1) in the case of an Market Price Option granted to anEmployee (other than Options granted to Non-ExecutiveDirectors), a period commencing after the firstanniversary of the Date of Grant and expiring on the tenthanniversary of such Date of Grant, or such other shorterperiod determined by the Committee; and
(2) in the case of a Market Price Option granted to Non-Executive Directors, a period commencing after the firstanniversary of the Date of Grant and expiring on the fifthanniversary of such Date of Grant, or such other shortperiod determined by the Committee,
Provided that in the case of an Incentive Option, such Optionmay not be exercised before the second anniversary of theDate of Grant.
“Exercise Price” The price at which a Participant shall subscribe for each Shareupon the exercise of an Option which shall be the price asdetermined in accordance with Rule 7.1, as adjusted inaccordance with Rule 12.
“Grantee” The person to whom an offer of an Option is made.
“Group” The Company and its Subsidiaries (as they may exist from timeto time).
“Group Executive Director” A Director who performs an executive function within ourGroup.
“HK$” Hong Kong dollar.
“Incentive Option” An Option granted with the Exercise Price set at a discount tothe Market Price.
“Market Day” A day on which the Stock Exchange is open for trading insecurities.
“Market Price” A price equal to the average of the last dealt prices for theShares on the Stock Exchange over the three (3) consecutiveTrading Days immediately preceding the Date of Grant of thatOption, as determined by the Committee by reference to thedaily official list or any other publication published by the StockExchange, rounded to the nearest whole cent in the event offractional prices.
“Market Price Option” An Option granted with the Exercise Price set at the MarketPrice.
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“Non-Executive Director” A Director of the Company or its Subsidiaries, as the case maybe, other than a Group Executive Director.
“Offer Date” The date on which an offer to grant an Option is madepursuant to the Scheme.
“Option” The right to subscribe for Shares granted or to be granted to anEmployee pursuant to the Scheme and for the time beingsubsisting.
“Participant” The holder of an Option.
“Rules” Rules of the Uni-Asia Share Option Scheme.
“Scheme” The Uni-Asia Share Option Scheme, as the same may bemodified or altered from time to time.
“Securities Account” The securities account maintained by a Depositor with CDP.
“SGX-ST” Singapore Exchange Securities Trading Limited.
“Shareholders” Registered holders of Shares.
“Shares” Ordinary shares of par value US$0.16 each in the capital of theCompany.
“Stock Exchange” The Singapore Exchange Securities Trading Limited and anyother stock exchange on which the Shares are quoted or listed.
“Subsidiaries” A company which is for the time being a subsidiary of theCompany as defined by Section 5 of the Act.
“Trading Day” A day on which the Shares are traded on the Stock Exchange.
“S$” Singapore dollar.
“US$” United States dollar.
2.2 The terms “Depositor” and “Depository Agent” shall have the meanings ascribed to themrespectively by Section 130A of the Act and the term “Associate” shall have the meaning ascribedto it by the Listing Manual or any other publication prescribing rules or regulations for corporationsadmitted to the Official List of the SGX-ST (as modified, supplemented or amended from time totime).
2.3 Words importing the singular number shall, where applicable, include the plural number and viceversa. Words importing the masculine gender shall, where applicable, include the feminine andneuter gender.
2.4 Any reference to a time of a day in the Scheme is a reference to Singapore time.
2.5 Any reference in the Scheme to any enactment is a reference to that enactment as for the timebeing amended or re-enacted. Any word defined under the Companies Act, the CaymanCompanies Law, or any statutory modification thereof and used in the Scheme shall have themeaning assigned to it under the Act or the Cayman Companies Law, as the case may be.
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3. OBJECTIVES OF THE SCHEME
The Scheme is a share incentive plan. The Scheme is proposed on the basis that it is important toretain staff whose contributions are essential to the well-being and prosperity of the Group and togive recognition to outstanding Employees and Non-Executive Directors who have contributed tothe growth of the Group. The Scheme will give Participants an opportunity to have a personalequity interest in the Company at no direct cost to its profitability and will help to achieve thefollowing positive objectives:
(a) to motivate each Participant to optimise his performance standards and efficiency and tomaintain a high level of contribution to the Group;
(b) to retain key employees and Directors of the Group whose contributions are essential to thelong-term growth and profitability of the Group;
(c) to instil loyalty to, and a stronger identification by the Participants with the long-termprosperity of, the Company;
(d) to attract potential employees with relevant skills to contribute to the Group and to createvalue for the Shareholders of the Company; and
(e) to align the interests of the Participants with the interests of the Shareholders.
4. ELIGIBILITY OF PARTICIPANTS
4.1 Employees and Non-Executive Directors (other than Controlling Shareholders and their Associates)are eligible to participate in the Scheme.
4.2 The Employee’s eligibility to participate in the Scheme shall be at the absolute discretion of theCommittee, which would be exercised judiciously, and in addition, such person must:
(a) be confirmed in his/her employment with the Group and not be on probation and have beenin the full time service of the Group for at least 12 months on or prior to the Date of Grant;
(b) have attained the age of twenty-one (21) years on or before the Date of Grant; and
(c) not be an undischarged bankrupt and must not have entered into a composition with hiscreditors.
4.3 Employees and Non-Executive Directors who are Controlling Shareholders and their Associatesare not eligible to participate in the Scheme.
4.4 Subject to the Act and any requirement of the Stock Exchange, the terms of eligibility forparticipation in the Scheme may be amended from time to time at the absolute discretion of theCommittee, which would be exercised judiciously.
4.5 Participants who participate in the Scheme are eligible to participate in other schemesimplemented by other companies, if approved by the Committee.
5. MAXIMUM ENTITLEMENT
Subject to Rule 4 and Rule 11, the aggregate number of Shares in respect of which Options maybe offered to a Grantee for subscription in accordance with the Scheme shall be determined at thediscretion of the Committee, which would be exercised judiciously, who shall take into accountcriteria such as the rank within the Group, performance, years of service and potential for futuredevelopment of the Grantee.
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6. GRANT AND ACCEPTANCE OF OPTIONS
6.1 Subject as provided in Rule 11, the Committee may grant Options at any time during the periodwhen the Scheme is in force, except that no Options may be offered and/or granted during theperiod of 30 days immediately preceding the date the Company announces its interim and/or finalresults (whichever the case may be). In the event that an announcement on any matter of anexceptional nature involving unpublished price sensitive information is made, Options may only begranted on or after the third Market Day from the date on which such announcement is released.
6.2 The Letter of Offer to grant an Option shall be in, or substantially in, the form set out in ScheduleA, subject to such modification as the Committee may from time to time determine.
6.3 An Option shall be personal to the person to whom it is granted and shall not be transferred (otherthan to a Participant’s personal representative on the death of that Participant), charged, assigned,pledged or otherwise disposed of, in whole or in part, except with the prior approval of theCommittee.
6.4 The grant of an Option under this Rule 6 shall be accepted by the Grantee within thirty (30) daysfrom the Date of Grant of that Option and, in any event, not later than 5.00 p.m. on the 30th dayfrom such Date of Grant by completing, signing and returning the Acceptance Form in orsubstantially in the form set out in Schedule B, subject to such modification as the Committee mayfrom time to time determine, accompanied by payment of US$1.00 as consideration.
6.5 If a grant of an Option is not accepted in the manner as provided in Rule 6.4, such offer shall, uponthe expiry of the thirty (30) day period, automatically lapse and become null, void and of no effect.
7. EXERCISE PRICE
7.1 Subject to any adjustment pursuant to Rule 12, the Exercise Price for each Share in respect ofwhich an Option is exercisable shall be determined by the Committee, in its absolute discretion, onthe Date of Grant, at:
(a) a price equal to the Market Price; or
(b) a price which is set at a discount to the Market Price, provided that:
(i) the maximum discount shall not exceed twenty (20) per cent. of the Market Price; and
(ii) the Shareholders in general meeting shall have authorised, in a separate resolution,the making of offers and grants of Options under the Scheme at a discount notexceeding the maximum discount as aforesaid.
The Exercise Price shall in no event be less than the nominal value of a Share.
7.2 In making any determination under Rule 7.1(b) on whether to give a discount and the quantum ofsuch discount, the Committee shall be at liberty to take into consideration such criteria as theCommittee may, at its absolute discretion, deem appropriate, including but not limited to:
(a) the performance of the Company and its Subsidiaries, as the case may be, taking intoaccount financial parameters such as net profit after tax, return on equity and earningsgrowth;
(b) the years of service and individual performance of the Participant;
(c) the contribution of the Participant to the success and development of the Company and/orthe Group; and
(d) the prevailing market conditions.
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8. RIGHTS TO EXERCISE OPTIONS
8.1 Options granted with the Exercise Price set at Market Price shall only be exercisable, in whole or inpart (provided that an Option may be exercised in part only in respect of 1000 Shares or anymultiple thereof), at any time, by a Participant after the first anniversary of the Date of Grant of thatOption, Provided always that the Options (other than Options granted to Non-Executive Directors)shall be exercised before the tenth anniversary of the relevant Date of Grant and Options grantedto Non-Executive Directors shall be exercised before the fifth anniversary of the relevant Date ofGrant, or such earlier date as may be determined by the Committee, failing which all unexercisedOptions shall immediately lapse and become null and void and a Participant shall have no claimagainst the Company.
8.1 Options granted with the Exercise Price set at a discount to Market Price shall only be exercisable,in whole or in part (provided that an Option may be exercised in part only in respect of 1000Shares or any multiple thereof), at any time, by a Participant after the second anniversary of theDate of Grant of that Option, Provided always that the Options (other than Options granted to Non-Executive Directors and Independent Directors) shall be exercised before the tenth anniversary ofthe relevant Date of Grant and Options granted to Non-Executive Directors and IndependentDirectors shall be exercised before the fifth anniversary of the relevant Date of Grant, or suchearlier date as may be determined by the Committee, failing which all unexercised Options shallimmediately lapse and become null and void and a Participant shall have no claim against theCompany.
8.3 An Option shall, to the extent unexercised, immediately lapse without any claim whatsoever againstthe Company:
(a) in the event of misconduct on the part of the Participant as determined by the Committee inits discretion;
(b) subject to Rule 8.4(b), where the Participant ceases at any time to be in the employment ofany of our Group, for any reason whatsoever;
(c) the bankruptcy of the Participant or the happening of any other event which results in hisbeing deprived of the legal or beneficial ownership of an Option; or
(d) the company by which he is employed ceasing to be a company within our Group, or theundertaking or part of the undertaking of such company being transferred otherwise than toanother company within our Group.
For the purpose of Rule 8.3(b), the Participant shall be deemed to have ceased to be so employedas of the last day of his employment.
For avoidance of doubt, no Option shall lapse pursuant to Rule 8.3(b) in the event of any transfer ofemployment of a Participant between the Group.
8.4 In any of the following events, namely:
(a) where the Participant ceases at any time to be in the employment of any of our Group or, inthe case of a Non-Executive Director, ceases at any time to be a Director, by reason of:
(i) ill health, injury or disability (in each case, evidenced to the satisfaction of theCommittee);
(ii) redundancy;
(iii) retirement at or after the legal retirement age; or
(iv) retirement before the legal retirement age with the consent of the Committee; or
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(b) any other event approved in writing by the Committee,
the Participant may exercise any Option:
(i) in the case where the cessation of employment or cessation to be a director, as thecase may be, occurs after the first day of the Exercise Period in respect of suchOption, within the period of eighteen (18) months after the date of such cessation ofemployment or such cessation to be a director, as the case may be, or before theexpiry of the Exercise Period in respect of that Option, whichever is earlier, and uponexpiry of such period the Option shall lapse; and
(ii) in the case where the cessation of employment or cessation to be a director, as thecase may be, occurs before the first day of the Exercise Period in respect of suchOption, within the period of eighteen (18) months after the first day of the ExercisePeriod in respect of that Option, and upon expiry of such period the Option shalllapse.
8.5 If a Participant dies, whether or not while still in the employment of the Group or, in the case of aNon-Executive Director, still in the appointment as a Director, and at the date of his death holdsany unexercised Option, such Option shall continue to be exercisable by the duly appointedpersonal representatives of the Participant:
(a) in the case where death occurs after the first day of the Exercise Period in respect of suchOption, within the period of eighteen (18) months after the date of such cessation ofemployment or before the expiry of the Exercise Period in respect of that Option, whicheveris earlier, and upon expiry of such period the Option shall lapse; and
(b) in the case where the death occurs before the first day of the Exercise Period in respect ofsuch Option, within the period of eighteen (18) months after the first day of the ExercisePeriod in respect of that Option, and upon expiry of such period, the Option shall lapse.
9. TAKE-OVER AND WINDING-UP OF THE COMPANY
9.1 Notwithstanding Rule 8 but subject to Rule 9.5, in the event of a take-over being made for theShares, a Participant shall be entitled to exercise any Option held by him and as yet unexercised,in respect of such number of Shares comprised in that Option as may be determined by theCommittee in its absolute discretion, in the period commencing on the date on which such offer ismade or, if such offer is conditional, the date on which such offer becomes or is declaredunconditional, as the case may be, and ending on the earlier of:
(a) the expiry of six (6) months thereafter, unless prior to the expiry of such six-month period, atthe recommendation of the officer and with the approvals of the Committee and the StockExchange, such expiry date is extended to a later date (in either case, being a date fallingnot later than the expiry of the Exercise Period relating thereto); or
(b) the date of expiry of the Exercise Period relating thereto,
whereupon the Option then remaining unexercised shall lapse.
Provided that if during such period, the offeror becomes entitled or bound to exercise rights ofcompulsory acquisition under the provisions of the Act and, being entitled to do so, gives notice tothe Participants that it intends to exercise such rights on a specified date, the Option shall remainexercisable by the Participant until the expiry of such specified date or the expiry of the ExercisePeriod relating thereto, whichever is earlier. Any Option not so exercised shall lapse provided thatthe rights of acquisition or obligations to acquire shall have been exercised or performed, as thecase may be. If such rights or obligations have not been exercised or performed, the Option shall,notwithstanding Rule 8, remain exercisable until the expiry of the Exercise Period relating thereto.
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9.2 If under any applicable laws, the court sanctions a compromise or arrangement proposed for thepurposes of, or in connection with, a scheme for the reconstruction of the Company or itsamalgamation with another company or companies, each Participant shall be entitled,notwithstanding Rule 8 but subject to Rule 9.5, to exercise any Option then held by him, in respectof such number of Shares comprised in that Option as may be determined by the Committee in itsabsolute discretion, during the period commencing on the date upon which the compromise orarrangement is sanctioned by the court and ending either on the expiry of 60 days thereafter or thedate upon which the compromise or arrangement becomes effective, whichever is later (but notafter the expiry of the Exercise Period relating thereto), whereupon the Option shall lapse andbecome null and void.
9.3 If an order is made for the winding-up of the Company on the basis of its insolvency, all Options, tothe extent unexercised, shall lapse and become null and void.
9.4 In the event a notice is given by the Company to its members to convene a general meeting for thepurposes of considering and, if thought fit, approving a resolution to voluntarily wind-up theCompany, the Company shall on the same date as or soon after it dispatches such notice to eachmember of the Company give notice thereof to all Participants (together with a notice of theexistence of the provision of this Rule 9.4) and thereupon, each Participant (or his personalrepresentative) shall be entitled to exercise all or any of his Options at any time not later than two(2) Business Days prior to the proposed general meeting of the Company by giving notice in writingto the Company, accompanied by a remittance for the Aggregate Subscription Cost whereupon theCompany shall as soon as possible and in any event, no later than the Business Day immediatelyprior to the date of the proposed general meeting referred to above, allot the relevant Shares to theParticipant credited as fully paid.
9.5 If in connection with the making of a general offer referred to in Rule 9.1 or the scheme referred toin Rule 9.2 or the winding-up referred to in Rule 9.4, arrangements are made (which are confirmedin writing by the Auditors, acting only as experts and not as arbitrators, to be fair and reasonable)for the compensation of Participants, whether by the continuation of their Options or the payment ofcash or the grant of other options or otherwise, a Participant holding an Option, as yet notexercised, may not, at the discretion of the Committee, be permitted to exercise that Option asprovided for in this Rule 9.
9.6 To the extent that an Option is not exercised within the periods referred to in this Rule 9, it shalllapse and become null and void.
10. EXERCISE OF OPTIONS, ALLOTMENT AND LISTING OF SHARES
10.1 Subject to Rules 8.1, an Option may be exercised, in whole or in part, by a Participant giving noticein writing to the Company in or substantially in the form set out in Schedule C, subject to suchmodification as the Committee may from time to time determine. Such notice must beaccompanied by payment in cash for the Aggregate Subscription Cost in respect of the Shares forwhich that Option is exercised and any other documentation the Committee may require. AnOption shall be deemed to be exercised upon receipt by the Company of the said notice, dulycompleted, and the Aggregate Subscription Cost. All payments made shall be made by cheque,cashiers’ order, banker’s draft or postal order made out in favour of the Company or such othermode of payment as may be acceptable to the Company.
10.2 Subject to such consents or other required action of any competent authority under any regulationsor enactment for the time being in force as may be necessary and subject to the compliance withthe terms of the Scheme and the Memorandum of Association and Articles of the Company, theCompany shall, within ten (10) Market Days after the exercise of an Option, allot the relevantShares and despatch to CDP the relevant share certificates by ordinary post or such other modeas the Committee may deem fit.
The Company shall, as soon as practicable after such allotment, apply to the Stock Exchange forpermission to deal in and for quotation of such Shares, if necessary.
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10.3 Shares which are allotted on the exercise of an Option by a Participant shall be issued in the nameof CDP to the credit of the securities account of that Participant maintained with CDP, the securitiessub-account of that Participant maintained with a Depository Agent or (where applicable) the CPFinvestment account maintained with a CPF agent bank.
10.4 Shares allotted and issued on exercise of an Option shall:
(a) be subject to all the provisions of the Memorandum of Association and Articles of theCompany; and
(b) rank in full for all entitlements, including dividends or other distributions declared orrecommended in respect of the then existing Shares, the Record Date for which is on orafter the relevant date upon which such exercise occurred, and shall in all other respectsrank pari passu with other existing Shares then in issue.
“Record Date” means the date fixed by the Company for the purposes of determining entitlementsto dividends or other distributions to or rights of holders of Shares.
10.5 The Company shall keep available sufficient unissued Shares to satisfy the full exercise of allOptions for the time being remaining capable of being exercised.
11. LIMITATION ON THE SIZE OF THE SCHEME
The aggregate nominal amount of new Shares over which the Committee may grant Options onany date, when added to the nominal amount of new Shares issued and issuable in respect of (a)all Options granted under the Scheme, and (b) all awards granted under any other share option,share incentive, performance share or restricted share plan implemented by the Company and forthe time being in force, shall not exceed fifteen (15) per cent. of the issued share capital of theCompany on the day preceding that date.
12. ADJUSTMENT EVENTS
12.1 If a variation in the issued ordinary share capital of the Company (whether by way of acapitalisation of profits or reserves or rights issue, reduction, subdivision, consolidation, distributionor otherwise) shall take place, then:
(a) the Exercise Price of the Shares, the nominal amount, class and/or number of Sharescomprised in an Option to the extent unexercised; and/or
(b) the nominal amount, class and/or number of Shares over which Options may be grantedunder the Scheme,
shall be adjusted in such manner as the Committee may determine to be appropriate.
12.2 Unless the Committee considers an adjustment to be appropriate, the following (whether singly orin combination) shall not be regarded as events requiring adjustment:
(a) any issue of securities as consideration for an acquisition or a private placement of securitiesor pursuant to any initial public offering of the Shares on the SGX-ST;
(b) any increase in the number of issued Shares as a consequence of the exercise of options orother convertibles issued from time to time by the Company entitling the holders thereof toacquire new Shares in the capital of the Company (including the exercise of any Optionsgranted pursuant to the Scheme and any previous or future employee share optionscheme(s));
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(c) any issue of Shares pursuant to any scrip dividend scheme for the time being of theCompany; and
(d) any reduction in the number of issued Shares as a result of the cancellation of issuedShares purchased by the Company by way of market purchase(s) effected on the SGX-STon which the Company is listed pursuant to a share purchase mandate (or any renewalthereof) given by the Shareholders of the Company in general meeting and for the timebeing in force.
12.3 Notwithstanding the provisions of Rule 12.1:
(a) no such adjustment shall be made if as a result:
(i) the Exercise Price shall fall below the nominal amount of a Share and if suchadjustment would, but for this paragraph (a), result in the Exercise Price being lessthan the nominal amount of a Share, the Exercise Price payable shall be the nominalamount of a Share; or
(ii) the Participant receives a benefit that a Shareholder does not receive; and
(b) any adjustment (except in relation to a capitalisation issue) must be confirmed in writing bythe Auditors (acting only as experts and not as arbitrators) to be in their opinion, fair andreasonable.
12.4 Upon any adjustment required to be made pursuant to this Rule 12, the Company shall notify theParticipant (or his duly appointed personal representatives where applicable) in writing and deliverto him (or his duly appointed personal representatives where applicable) a statement setting forththe Exercise Price thereafter in effect and the nominal value, class and/or number of Sharesthereafter to be issued on the exercise of the Option. Any adjustment shall take effect upon suchwritten notification being given.
13. ADMINISTRATION OF THE SCHEME
13.1 The Scheme shall be administered by the Committee in its absolute discretion with such powersand duties as are conferred on it by the Board, provided that no member of the Committee shallparticipate in any deliberation or decision in respect of Options to be granted to him or held by him.The Committee has powers to determine, inter alia, the following:
(a) persons to be granted Options;
(b) number of Options to be offered; and
(c) recommendations for modifications to the Scheme.
13.2 The Committee shall also have the power, from time to time, to make and vary such regulations(not being inconsistent with the Scheme) for the implementation and administration of the Schemeas they think fit. Any matter pertaining or pursuant to the Scheme and any dispute and uncertaintyas to the interpretation of the Scheme, any rule, regulation or procedure thereunder or any rightsunder the Scheme shall be determined by the Committee.
13.3 Neither the Scheme nor the grant of Options under the Scheme shall impose on the Company orthe Committee any liability whatsoever in connection with:
(a) the lapsing or early expiry of any Options pursuant to any provision of the Scheme;
(b) the failure or refusal by the Committee to exercise, or the exercise by the Committee of, anydiscretion under the Scheme; and/or
APPENDIX F – RULES OF THE UNI-ASIA SHARE OPTION SCHEME
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(c) any decision or determination of the Committee made pursuant to any provision of theScheme.
Any decision or determination of the Committee made pursuant to any provision of the Scheme(other than a matter to be certified by the Auditors) shall be final, binding and conclusive.
14. NOTICES
14.1 Any notice required to be given by a Participant to the Company shall be sent or made to theprincipal place of business of the Company or such other addresses (including electronic mailaddresses) or facsimile number, and marked for the attention of the Committee, as may be notifiedby the Company to him in writing.
14.2 Any notices or documents required to be given to a Participant or any correspondence to be madebetween the Company and the Participant shall be given or made by the Committee (or suchperson(s) as it may from time to time direct) on behalf of the Company and shall be delivered tohim by hand or sent to him at his home address, electronic mail address or facsimile numberaccording to the records of the Company or the last known address, electronic mail address orfacsimile number of the Participant.
14.3 Any notice or other communication from a Participant to the Company shall be irrevocable, andshall not be effective until received by the Company. Any other notice or communication from theCompany to a Participant shall be deemed to be received by that Participant, when left at theaddress specified in Rule 14.2 or, if sent by post, on the day following the date of posting or, if sentby electronic mail or facsimile transmission, on the day of despatch.
15. MODIFICATIONS TO THE SCHEME
15.1 Any or all the provisions of the Scheme may be modified and/or altered at any time and from timeto time by resolution of the Committee, except that:
(a) no modification or alteration shall alter adversely the rights attaching to any Option grantedprior to such modification or alteration except with the consent in writing of such number ofParticipants who, if they exercised their Options in full, would thereby become entitled to notless than three-quarters in nominal amount of all the Shares which would fall to be allottedupon exercise in full of all outstanding Options;
(b) any modification or alteration which would be to the advantage of Participants under theScheme shall be subject to the prior approval of the Shareholders in general meeting; and
(c) no modification or alteration shall be made without the prior approval of the Stock Exchangeand such other regulatory authorities as may be necessary.
15.2 Notwithstanding anything to the contrary contained in Rule 15.1, the Committee may at any time byresolution (and without other formality, save for the prior approval of the Stock Exchange) amend oralter the Scheme in any way to the extent necessary to cause the Scheme to comply with anystatutory provision or the provision or the regulations of any regulatory or other relevant authority orbody (including the Stock Exchange).
Written notice of any modification or alteration made in accordance with this Rule 15 shall be givento all Participants.
APPENDIX F – RULES OF THE UNI-ASIA SHARE OPTION SCHEME
F-11
16. TERMS OF EMPLOYMENT UNAFFECTED
The terms of employment of a Participant shall not be affected by his participation in the Scheme,which shall neither form part of such terms nor entitle him to take into account such participation incalculating any compensation or damages on the termination of his employment for any reason.
17. DURATION OF THE SCHEME
17.1 The Scheme shall continue to be in force at the discretion of the Committee, subject to a maximumperiod of ten (10) years commencing on the Adoption Date, provided always that the Scheme maycontinue beyond the above stipulated period with the approval of the Shareholders by ordinaryresolution in general meeting and of any relevant authorities which may then be required.
17.2 The Scheme may be terminated at any time by the Committee, at the discretion of the Committee,or by resolution of the Company in general meeting, subject to all relevant approvals which may berequired and if the Scheme is so terminated, no further Options shall be offered by the Companyhereunder.
17.3 The termination of the Scheme shall not affect Options which have been granted and accepted asprovided in Rule 6.4, whether such Options have been exercised (whether fully or partially) or not.
18. TAXES
All taxes (including income tax) arising from the exercise of any Option granted to any Participantunder the Scheme shall be borne by that Participant.
19. COSTS AND EXPENSES OF THE SCHEME
19.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issueand allotment of any Shares pursuant to the exercise of any Option in CDP’s name, the deposit ofshare certificate(s) with CDP, the Participant’s securities account with CDP, or the Participant’ssecurities sub-account with a Depository Agent or (where applicable) the CPF investment accountwith a CPF agent bank.
19.2 Save for the taxes referred to in Rule 18 and such other costs and expenses expressly provided inthe Scheme to be payable by the Participants, all fees, costs and expenses incurred by theCompany in relation to the Scheme including but not limited to the fees, costs and expensesrelating to the allotment and issue of Shares pursuant to the exercise of any Option shall be borneby the Company.
20. DISCLAIMER OF LIABILITY
Notwithstanding any provisions herein contained, the Committee and the Company shall not underany circumstances be held liable for any costs, losses, expenses and damages whatsoever andhowsoever arising in any event, including but not limited to the Company’s delay in issuing theShares or applying for or procuring the listing of the Shares on the Stock Exchange in accordancewith Rule 10.2.
21. DISCLOSURE IN ANNUAL REPORT
The following disclosures (as applicable) will be made by the Company in its annual report for solong as the Scheme continues in operation:
(a) the names of the members of the Committee administering the Scheme;
APPENDIX F – RULES OF THE UNI-ASIA SHARE OPTION SCHEME
F-12
(b) the information in respect of Options granted to the following Participants in the table set outbelow:
(i) Directors of the Company; and
(ii) Participants, other than those in (i) above, who receive five (5) per cent. or more of thetotal number of Options available under the Scheme.
Name of Number of Aggregate Aggregate AggregateParticipant Shares number of number of number of
comprised Shares Shares Sharesin Options comprised comprised comprised
granted in Options in Options in Optionsduring granted exercised outstanding
financial since since as at end ofyear under commencement commencement financial year
review of Scheme of Scheme under review(including to end of to end of
terms) financial year financial yearunder review under review
(c) the number of Incentive Options during the financial year under review in the followingbands:
Discount to the Aggregate number of Proportion ofMarket Price Incentive Options Incentive Options
% granted during the to Market Price Optionsfinancial year under review granted during the
financial year under review
0-10
11-20
22. ABSTENTION FROM VOTING
Participants who are Shareholders are to abstain from voting on any Shareholders’ resolutionrelating to the Scheme.
23. DISPUTES
Any disputes or differences of any nature arising hereunder shall be referred to the Committee andits decision shall be final and binding in all respects.
24. GOVERNING LAW
The Scheme shall be governed by, and construed in accordance with, the laws of Singapore. TheParticipants, by accepting Options in accordance with the Scheme, and the Company submit to theexclusive jurisdiction of the courts of Singapore.
APPENDIX F – RULES OF THE UNI-ASIA SHARE OPTION SCHEME
F-13
Schedule A
UNI-ASIA SHARE OPTION SCHEME
LETTER OF OFFER
Serial No:
Date:
To: [Name][Designation][Address]
Private and Confidential
Dear Sir/Madam,
1. We have the pleasure of informing you that, pursuant to the Uni-Asia Share Option Scheme(“Scheme”), you have been nominated to participate in the Scheme by the Committee (the“Committee”) appointed by the Board of Directors of Uni-Asia Finance Corporation (the “Company”)to administer the Scheme. Terms as defined in the Scheme shall have the same meaning whenused in this letter.
2. Accordingly, in consideration of the payment of a sum of US$1.00, an offer is hereby made to grantyou an option (the “Option”), to subscribe for and be allotted Shares at the priceof S$ for each Share.
3. The Option is personal to you and shall not be transferred, charged, pledged, assigned orotherwise disposed of by you, in whole or in part, except with the prior approval of the Committee.
4. The Option shall be subject to the terms of the Scheme, a copy of which is available for inspectionat the business address of the Company.
5. If you wish to accept the offer of the Option on the terms of this letter, please sign and return theenclosed Acceptance Form with a sum of US$1.00 not later than 5.00 p.m. on ,failing which this offer will lapse.
Yours faithfully,For and on behalf ofUni-Asia Finance Corporation
Name:Designation:
APPENDIX F – RULES OF THE UNI-ASIA SHARE OPTION SCHEME
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APPENDIX F – RULES OF THE UNI-ASIA SHARE OPTION SCHEME
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Schedule B
UNI-ASIA SHARE OPTION SCHEME
ACCEPTANCE FORM
Serial No:
Date:
To: The Committee,Uni-Asia Share Option SchemeUni-Asia Finance Corporation
Closing Date for Acceptance of Offer:
Number of Shares Offered:
Exercise Price for each Share: S$
Total Amount Payable:
I have read your Letter of Offer dated and agree to be bound by the terms of the Letterof Offer and the Scheme referred to therein. Terms defined in your Letter of Offer shall have the samemeanings when used in this Acceptance Form.
I hereby accept the Option to subscribe for Shares at S$ for each Share. Ienclose cash for US$1.00 in payment for the purchase of the Option/I authorise my employer to deductthe sum of US$1.00 from my salary in payment for the purchase of the Option.
I understand that I am not obliged to exercise the Option.
I confirm that my acceptance of the Option will not result in the contravention of any applicable law orregulation in relation to the ownership of shares in the Company or options to subscribe for such shares.
I agree to keep all information pertaining to the grant of the Option to me confidential.
I further acknowledge that you have not made any representation to induce me to accept the offer andthat the terms of the Letter of Offer and this Acceptance Form constitute the entire agreement betweenus relating to the offer.
Please print in block letters
Name in full :
Designation :
Address :
Nationality :
*NRIC/Passport No. :
Signature :
Date :
Note:
* Delete accordingly
APPENDIX F – RULES OF THE UNI-ASIA SHARE OPTION SCHEME
F-16
APPENDIX F – RULES OF THE UNI-ASIA SHARE OPTION SCHEME
F-17
Schedule C
UNI-ASIA SHARE OPTION SCHEME
FORM OF EXERCISE OF OPTION
Total number of ordinary shares of US$0.16 each (the “Shares”) offered at S$ for eachShare (the “Exercise Price”) under the Schemeon (Date of Grant) :
Number of Shares previously allotted thereunder :
Outstanding balance of Shares to be allottedthereunder :
Number of Shares now to be subscribed :
To: The Committee,Uni-Asia Share Option Scheme,Uni-Asia Finance Corporation
1. Pursuant to your Letter of Offer dated and my acceptance thereof, I herebyexercise the Option to subscribe for Shares in Uni-Asia Finance Corporation(the “Company”) at S$ for each Share.
2. I enclose a *cheque/cashier’s order/banker’s draft/postal order no. forby way of subscription for the total number of the said Shares.
3. I agree to subscribe for the said Shares subject to the terms of the Letter of Offer, the Uni-AsiaShare Option Scheme and the Memorandum of Association and Articles of the Company.
4. I declare that I am subscribing for the said Shares for myself and not as a nominee for any otherperson.
5. I request the Company to allot and issue the Shares in the name of The Central Depository (Pte)Limited (“CDP”) for credit of my *Securities Account with CDP/Sub-Account with the DepositoryAgent/CPF investment account with my Agent Bank specified below and I hereby agree to bearsuch fees or other charges as may be imposed by CDP in respect thereof.
Please print in block letters
Name in full :
Designation :
Address :
Nationality :
*NRIC/Passport No. :
*Direct SecuritiesAccount No. :
OR
*Sub-Account No. :
Name of DepositoryAgent :
OR
*CPF InvestmentAccount No. :
Name of Agent Bank :
Signature :
Date :
Note:
* Delete accordingly
APPENDIX F – RULES OF THE UNI-ASIA SHARE OPTION SCHEME
F-18
Applications are invited for the subscription of the New Shares at the Invitation Price, subject to thefollowing terms and conditions:
1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 NEW SHARES OR INTEGRALMULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF NEW SHARESWILL BE REJECTED.
2. Your application for the Offer Shares may be made by way of the printed WHITE Offer SharesApplication Forms or by way of Automated Teller Machine (“ATMs”) belonging to the ParticipatingBanks (“ATM Electronic Applications”) or the Internet Banking (“IB”) websites of the relevantParticipating Banks (“Internet Electronic Applications”).
Application for Internet Placement Shares (also referred to as “Internet Electronic Application”) mayonly be made by way of an Internet Electronic Application through the website of DBS VickersSecurities Online (Singapore) Pte Ltd (“DBS Vickers Online”) at “www.dbsvonline.com” if you havean Internet trading account with DBS Vickers Online. Internet Electronic Applications, both throughthe IB websites of the relevant Participating Banks and the website of DBS Vickers Online, shall,together with ATM Electronic Applications, be referred to as “Electronic Applications”.
Applications for Placement Shares (other than Internet Placement Shares and Reserved Shares)may only be made by way of the printed BLUE Placement Shares Application Forms or in suchother forms of application as the Manager deems appropriate.
Application for Reserved Shares may only be made by way of the printed PINK Reserved SharesApplication Forms.
You may not use your CPF funds to apply for the New Shares.
3. You (being other than an approved nominee company) are allowed to submit ONLY oneapplication in your own name for:
(a) the Offer Shares by any one of the following:
�� Offer Shares Application Form;
�� ATM Electronic Application; or
�� Internet Electronic Application; or
(b) the Placement Shares (other than the Reserved Shares) by any one of the following:
�� Internet Electronic Application;
�� Placement Shares Application Form; or
�� in such other forms of application as the Manager deems appropriate.
If more than one application is submitted for either the Offer Shares or Placement Shares(other than the Reserved Shares), such separate applications shall be deemed to bemultiple applications and shall be rejected.
If you have made an application for the Placement Shares (other than the Reserved Shares),you should not make any application for the Offer Shares and vice versa. Such separateapplications shall be deemed to be multiple applications and shall be rejected.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
Joint or multiple applications will be rejected. Persons submitting or procuring submissions ofmultiple share applications (whether for Offer Shares, Placement Shares or both Offer Shares andPlacement Shares) may be deemed to have committed an offence under the Penal Code (Chapter224) of Singapore and the Securities and Futures Act (Chapter 289) of Singapore and suchapplications may be referred to the relevant authorities for investigation. Multiple applications orthose appearing to be or suspected of being multiple applications (other than as provided herein)will be liable to be rejected at the discretion of our Company.
An applicant who has made an application for Reserved Shares using a Reserved SharesApplication Form may:
(a) submit one separate application for Offer Shares in his own name either by way of an OfferShares Application Form or through an Electronic Application; or
(b) submit one separate application for Placement Shares (other than the Reserved Shares) byway of a Placement Shares Application Form or one separate application by way of anInternet Electronic Application through the website of DBS Vickers Online or such otherforms of application as the Manager deems appropriate,
provided he adheres to the terms and conditions of this Prospectus. Such separate applications willnot be treated as multiple applications.
4. We will not accept applications from any person under the age of 21 years, undischargedbankrupts, sole-proprietorships, partnerships, non-corporate bodies, joint Securities Accountholders of CDP and applicants whose addresses (furnished in their printed Application Forms or insuch other forms of application as the Manager deems appropriate or, in the case of ElectronicApplications, contained in the records of the relevant Participating Banks or DBS Vickers Online, asthe case may be) bear post office box numbers. No person acting or purporting to act on behalf ofa deceased person is allowed to apply under the Securities Account with CDP in the deceasedname at the time of application.
In addition, applicants who wish to subscribe for the Placement Shares through the website of DBSVickers Online:
(a) must not be corporations, sole-proprietorships, partnerships, or any other business entities;
(b) must be over the age of 21 years;
(c) must not be undischarged bankrupts;
(d) must apply for the Placement Shares in Singapore;
(e) must have a mailing address in Singapore; and
(f) must be customers who maintain trading accounts with DBS Vickers Online.
5. We will not recognise the existence of a trust. Any application by a trustee or trustees must bemade in his/their own name(s) and without qualification or, where the application is made by way ofa printed Application Form by a nominee, in the name(s) of an approved nominee company orapproved nominee companies after complying with paragraph 7 below.
6. WE WILL ONLY ACCEPT NOMINEE APPLICATIONS FROM APPROVED NOMINEECOMPANIES. Approved nominee companies are defined as banks, merchant banks, financecompanies, insurance companies, licenced securities dealers in Singapore and nomineecompanies controlled by them. Applications made by nominees other than approved nomineecompanies will be rejected.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
7. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIESACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you donot have an existing Securities Account with CDP in your own name at the time of application, yourapplication will be rejected (if you apply by way of an Application Form) or you will not be able tocomplete your Electronic Application (if you apply by way of an Electronic Application). If you havean existing Securities Account but fail to provide your Securities Account number or provide anincorrect Securities Account number in section B of the Application Form or in your ElectronicApplication, as the case may be, your application is liable to be rejected. Subject to paragraph 8below, your application shall be rejected if your particulars such as name, NRIC/passport number,nationality, permanent residence status and CDP Securities Account number, provided in yourApplication Form, or in the case of an Electronic Application, contained in the records of therelevant Participating Bank or DBS Vickers Online at the time of your Electronic Application, as thecase may be, differ from those particulars in your Securities Account as maintained by CDP. If youhave more than one individual direct Securities Account with CDP, your application shall berejected.
8. If your address as stated in the Application Form or, in the case of an ElectronicApplication, contained in the records of the relevant Participating Bank or DBS VickersOnline, as the case may be, is different from the address registered with CDP, you mustinform CDP of your updated address promptly, failing which the notification letter onsuccessful allocation will be sent to your address last registered with CDP.
9. Our Company reserves the right to reject any application which does not conform strictly to theinstructions set out in the Application Forms and this Prospectus (including the instructions set outin the Electronic Applications) or which does not comply with the instructions for ElectronicApplications or with the terms and conditions of this Prospectus or, in the case of an application byway of an Application Form, which is illegible, incomplete, incorrectly completed or which isaccompanied by an improperly drawn up or improper form of remittance. Our Company furtherreserves the right to treat as valid any applications not completed or submitted or effected in allrespects in accordance with the instructions set out in the Application Forms and this Prospectus(including the instructions set out in the Electronic Applications), and also to present for payment orother processes all remittances at any time after receipt and to have full access to all informationrelating to, or deriving from, such remittances or the processing thereof.
10. Our Company reserves the right to reject or to accept, in whole or in part, or to scale down or toballot any application, without assigning any reason therefor, and we will not entertain any enquiryand/or correspondence on our decision except in respect of applications which have been ballotedbut subsequently rejected where the reasons for such rejection will be provided to the Applicant.This right applies to applications made by way of Application Forms and by way of ElectronicApplications. In deciding the basis of allotment, our Company will give due consideration to thedesirability of allotting the New Shares to a reasonable number of applicants with a view toestablishing an adequate market for the Shares.
11. Share certificates will be registered in the name of CDP and will be forwarded only to CDP. It isexpected that CDP will send to you, at your own risk, within 15 Market Days after the close of theApplication List, a statement of account stating that your Securities Account has been credited withthe number of New Shares allotted to you. This will be the only acknowledgement of applicationmonies received and is not an acknowledgement by our Company. You irrevocably authorise CDPto complete and sign on your behalf as transferee or renounce any instrument of transfer and/orother documents required for the issue or transfer of the New Shares allotted to you. Thisauthorisation applies to applications made by way of printed Application Forms, or such otherforms of application as the Manager deems appropriate and by way of Electronic Applications.
12. The New Shares may be reallocated between the Placement and the Offer at the discretion of theManager.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
In the event of an under-subscription for the Reserved Shares as at the close of the ApplicationList, the number of Reserved Shares under-subscribed shall be made available to satisfyapplications for Placement Shares by way of Placement Shares Application Forms or in any otherform of application as may be deemed appropriate by the Manager to the extent that there is anover-subscription for such Placement Shares as at the close of the Application List or to satisfyexcess applications for Offer Shares, to the extent that there is an over-subscription for OfferShares as at the close of the Application List.
In the event of an under-subscription for Internet Placement Shares to be applied for through thewebsite of DBS Vickers Online as at the close of the Application List, that number of InternetPlacement Shares under-subscribed shall be made available to satisfy applications for PlacementShares by way of Placement Shares Application Forms to the extent that there is an over-subscription for such Placement Shares as at the close of the Application List or to satisfy excessapplications for Offer Shares, to the extent that there is an over-subscription for Offer Shares as atthe close of the Application List.
In the event of an over-subscription for Offer Shares as at the close of the Application List and/orPlacement Shares (including Internet Placement Shares) are fully subscribed or over-subscribedas at the close of the Application List, the successful applications for Offer Shares will bedetermined by ballot or otherwise as determined by our Directors, in consultation with the Manager,and approved by the SGX-ST.
13. You irrevocably authorise CDP to disclose the outcome of your application, including the number ofNew Shares allotted to you pursuant to your application, to our Company, the Manager, theUnderwriter, the Placement Agent, DBS Vickers Online and any other parties so authorised byCDP, our Company and the Manager.
14. Any reference to “you” or the “Applicant” in this section shall include an individual, a corporation, anapproved nominee company or trustee applying for Offer Shares by way of an Offer SharesApplication Form or by way of an Electronic Application and a person applying for PlacementShares (including Internet Placement Shares) by way of Placement Shares Application Form or byway of an Internet Placement Application.
15. By completing and delivering an Application Form or such other application as the Manager deemsappropriate and, in the case of an ATM Electronic Application, by pressing the “Enter” or “OK” or“Confirm” or “Yes” key or any other relevant key on the ATM or in the case of an Internet ElectronicApplication, by clicking “Submit” or “Continue” or “Yes” or “Confirm” or any other button on the IBwebsite of the relevant Participating Banks or the website of DBS Vickers Online (as the case maybe) in accordance with the provisions herein, you:
(a) irrevocably offer, agree and undertake to subscribe for the number of New Shares specifiedin your application (or such smaller number for which the application is accepted) at theInvitation Price for each New Share and agree that you will accept such New Shares as maybe allotted to you, in each case on the terms of, and subject to the conditions set out in, thisProspectus and the Memorandum and Articles of Association of our Company;
(b) agree that in the event of any inconsistency between the terms and conditions for applicationset out in this Prospectus and those set out in the website of DBS Vickers Online, or the IBwebsites or ATMs of the Participating Banks, the terms and conditions set out in thisProspectus shall prevail;
(c) agree that the aggregate Invitation Price for the New Shares applied for is due and payableto the Company upon application;
(d) warrant the truth and accuracy of the information contained, and representations anddeclarations made, in your application, and acknowledge and agree that such information,representations and declarations will be relied on by our Company in determining whether toaccept your application and/or whether to allot any New Shares to you; and
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
(e) agree and warrant that if the laws of any jurisdictions outside Singapore are applicable toyour application, you have complied with all such laws and none of our Company, theManager, Underwriter and Placement Agent will infringe any such laws as a result of theacceptance of your application.
16. Our acceptance of applications will be conditional upon, inter alia, our Company being satisfiedthat:
(a) permission has been granted by the SGX-ST to deal in, and for quotation of, all the issuedShare and, the New Shares on the Official List of the SGX-ST;
(b) the Management and Underwriting Agreement and the Placement Agreement referred to inthe section entitled “General and Statutory Information” of this Prospectus have becomeunconditional and have not been terminated; and
(c) the Monetary Authority of Singapore (the “Authority”) has not issued a stop order whichdirects that no or no further Shares to which this Prospectus relates be alloted or issued(“Stop Order”).
17. In the event that a Stop Order in respect of the New Shares is issued by the Authority or othercompetent authority, and:
(a) the New Shares have not been issued, we will (as required by law) deem all applications tobe withdrawn and cancelled and our Company shall refund the application monies (withoutinterest or any share of revenue or other benefit arising therefrom and at your own risk) toyou within 14 days of the date of the Stop Order; or
(b) if the New Shares have already been issued but trading has not commenced, the issue will(as required by law) be deemed void and we will refund your payment for the New Shares(without interest or any share of revenue or other benefit arising therefrom and at your ownrisk) to you within 14 days from the date of the Stop Order.
This shall not apply where only an interim Stop Order has been issued.
18. In the event that an interim Stop Order in respect of the New Shares is served by the Authority orother competent authority, no Shares shall be issued to you until the Authority revokes the interimStop Order.
19. The Authority is not able to serve a Stop Order in respect of the New Shares if the New Shareshave been issued and listed on the SGX-ST and trading in them has commenced.
20. We will not hold any application in reserve.
21. We will not allot or allocate any Shares on the basis of this Prospectus later than six months afterthe date of registration of this Prospectus.
22. All payments in respect of any application for New Shares, and all refunds in respect of anyunsuccessful application thereto, shall be made in Singapore currency.
23. Additional terms and conditions for applications by way of Application Forms are set out in thesection entitled “Additional Terms and Conditions for Applications Using Printed Application Forms”on pages G-6 to G-10 of this Prospectus.
24. Additional terms and conditions for applications by way of Electronic Applications are set out in thesection entitled “Additional Terms and Conditions for Electronic Applications” on pages G-11 to G-20 of this Prospectus.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATIONFORMS
Applications by way of Application Forms shall be made on and subject to the terms andconditions of this Prospectus, including but not limited to the terms and conditions appearingbelow as well as those set out under the section “TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE” on pages G-1 to G-20 of this Prospectus, as well as theMemorandum and Articles of Association of our Company.
1. Your application for the Offer Shares must be made using the WHITE Offer Shares ApplicationForms and WHITE official envelopes “A” and “B”, accompanying and forming part of thisProspectus.
Applications for Placement Shares (other than Internet Placement Shares and Reserved Shares)by way of Application Forms must be made using the BLUE Placement Shares Application Formsaccompanying and forming part of this Prospectus or in such other forms of application as theManager deems appropriate.
Without prejudice to the rights of the Company, the Manager has been authorised to accept, forand on behalf of the Company, such other form of applications, as the Manager deemsappropriate. Applications for Reserved Shares must be made using the Pink Reserved SharesApplication Forms.
We draw your attention to the detailed instructions contained in the respective Application Formsand this Prospectus for the completion of the Application Forms which must be carefully followed.Our Company reserves the right to reject applications which do not conform strictly to theinstructions set out in the Application Forms and this Prospectus or to the terms andconditions of this Prospectus or which are illegible, incomplete, incorrectly completed orwhich are accompanied by improperly drawn remittances.
2. You must complete your Application Forms in English. Please type or write clearly in ink usingBLOCK LETTERS.
3. You must complete all spaces in your Application Forms except those under the heading “FOROFFICIAL USE ONLY” and you must write the words “NOT APPLICABLE” or “N.A.” in any spacethat is not applicable.
4. Individuals, corporations, approved nominee companies and trustees must give their names in full.If you are an individual, you must make your application using your full name as it appears in youridentity card (if you have such an identification document) or in your passport and, in the case ofcorporations, in your full names as registered with a competent authority. If you are not anindividual, you must complete the Application Form under the hand of an official who must statethe name and capacity in which he signs the Application Form. If you are a corporation completingthe Application Form, you are required to affix your Common Seal (if any) in accordance with yourmemorandum and articles of association or equivalent constitutive documents. If you are acorporate Applicant and your application is successful, a copy of your memorandum and articles ofassociation or equivalent constitutive documents must be lodged with our Company’s ShareRegistrar and Singapore Share Transfer gent. Our Company reserves the right to require you toproduce documentary proof of identification for verification purposes.
5. (a) You must complete Sections A and B and sign page 1 of the Application Form.
(b) You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Form.Where paragraph 7(a) is deleted, you must also complete Section C of the Application Formwith particulars of the beneficial owner(s).
(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, onpage 1 of the Application Form, your application is liable to be rejected.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
6. You (whether an individual or corporate Applicant, whether incorporated or unincorporated andwherever incorporated or constituted) will be required to declare whether you are a citizen orpermanent resident of Singapore or a corporation in which citizens or permanent residents ofSingapore or any body corporate constituted under any statute of Singapore having an interest inthe aggregate of more than 50 per cent. of the issued share capital of or interests in suchcorporations. If you are an approved nominee company, you are required to declare whether thebeneficial owner of the New Shares is a citizen or permanent resident of Singapore or acorporation, whether incorporated or unincorporated and wherever incorporated or constituted, inwhich citizens or permanent residents of Singapore or any body corporate incorporated orconstituted under any statute of Singapore have an interest in the aggregate of more than 50 percent. of the issued share capital of or interests in such corporation.
7. You may apply for the New Shares using only cash. Each application must be accompanied by acash remittance in Singapore currency for the full amount payable, in respect of the number of NewShares applied for, in the form of a BANKER’S DRAFT, CASHIER’S ORDER or POSB CASHIER’SORDER drawn on a bank in Singapore, made out in favour of “UNI-ASIA SHARE ISSUEACCOUNT” crossed “A/C PAYEE ONLY” with your name and address written clearly on the reverseside. APPLICATIONS NOT ACCOMPANIED BY ANY PAYMENT OR ACCOMPANIED BY ANYOTHER FORM OF PAYMENT WILL NOT BE ACCEPTED. REMITTANCES BEARING “NOTTRANSFERABLE” OR “NON TRANSFERABLE” CROSSINGS WILL BE REJECTED.
No acknowledgement of receipt will be issued by our Company or the Manager for applications orapplication monies received.
8. Monies paid in respect of unsuccessful applications are expected to be returned (without interest orany share of revenue or other benefit arising therefrom) to you by ordinary post within 24 hours ofthe balloting at your own risk. Where your application is rejected or accepted in part only, the fullamount or the balance of the application monies, as the case may be, will be refunded (withoutinterest or any share of revenue or other benefit arising therefrom) to you by ordinary post at yourown risk within 14 Market Days after the close of the Application List, provided that the remittanceaccompanying such application which has been presented for payment or other processes hasbeen honoured and the application monies have been received in the designated share issueaccount.
9. Capitalised terms used in the Application Forms and defined in this Prospectus shall bear themeanings assigned to them in this Prospectus.
10. By completing and delivering the Application Form, you agree that:
(a) in consideration of our Company having distributed the Application Form to you and agreeingto close the Application List at 12:00 noon on 15 August 2007 or such other time or date asour Directors may, in consultation with the Manager, decide and by completing and deliveringthis Application Form:
(i) your application is irrevocable; and
(ii) your remittance will be honoured on first presentation and that any monies returnablemay be held pending clearance of your payment without interest or any share ofrevenue or other benefit arising therefrom;
(b) all applications, acceptances or contracts resulting therefrom under the Invitation shall begoverned by and construed in accordance with the laws of Singapore and that youirrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
(c) in respect of the New Shares for which your application has been received and not rejected,acceptance of your application shall be constituted by written notification by or on behalf ofour Company and not otherwise, notwithstanding any remittance being presented forpayment by or on behalf of our Company;
(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at anytime after acceptance of your application;
(e) reliance is placed solely on information contained in this Prospectus and that none of ourCompany, the Manager, Underwriter and Placement Agent or any other person involved inthe Invitation shall have any liability for any information not so contained;
(f) you consent to the disclosure of your name, NRIC/passport number, address, nationality,permanent resident status, CDP Securities Account number and share application amount toour Share Registrar, SGX-ST, CDP, SCCS, our Company, the Manager, Underwriter andPlacement Agent;
(g) you irrevocably agree undertake to subscribe the number of New Shares applied for asstated in the Application Form or any smaller number of such New Shares that may beallotted and/or allocated to you in respect of your application. In the event that our Companydecides to allot and/or allocate any smaller number of New Shares or not to allot and/orallocate any New Shares to you, you agree to accept such decision as final; and
(h) you irrevocably authorise CDP to complete and sign on your behalf as transferee orrenouncee any instrument of transfer and/or other documents required for the issue ortransfer of the New Shares that may be alloted to you.
Applications for Offer Shares
1. Your application for Offer Shares MUST be made using the WHITE Offer Shares Application Formsand WHITE official envelopes “A” and “B”.
2. You must:
(a) enclose the WHITE Offer Shares Application Form, duly completed and signed, together withyour correct remittance in accordance with the terms and conditions of this Prospectus, inthe WHITE official envelope “A” provided;
(b) in appropriate spaces on the WHITE official envelope “A”:
(i) write your name and address;
(ii) state the number of Offer Shares applied for;
(iii) tick the relevant box to indicated the form of payment; and
(v) affix adequate Singapore postage;
(c) SEAL THE WHITE OFFICIAL ENVELOPE “A”;
(d) write, in the special box provided on the larger WHITE official envelope “B” addressed toDBS Bank Ltd, Equity Capital Markets, 6 Shenton Way, #36-01 DBS Building TowerOne, Singapore 068809, the number of Offer Shares you have applied for; and
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
(e) insert WHITE official envelope “A” into WHITE official envelope “B”, seal WHITE officialenvelope “B”, affix adequate Singapore postage on WHITE official envelope “B” (ifdespatching by ordinary post) and thereafter DESPATCH BY ORDINARY POST ORDELIVER BY HAND the documents at your own risk to DBS Bank Ltd, Equity CapitalMarkets, 6 Shenton Way, #36-01 DBS Building Tower One, Singapore 068809, so as toarrive by 12:00 noon on 15 August 2007 or such other time or date as our Directors may, inconsultation with the Manager, decide. Local Urgent Mail or Registered Post must NOTbe used. No acknowledgement of receipt will be issued for any application or remittancereceived.
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation may be rejected.
4. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of receiptwill be issued for any application or remittance received.
Applications for Placement Shares (other than Internet Placement Shares and Reserved Shares)
1. Your application for Placement Shares (other than Internet Placement Shares and ReservedShares) must be made using the BLUE Placement Shares Application Forms or in such otherforms of application as the Manager deems appropriate.
2. The completed and signed BLUE Placement Shares Application Form and your remittance, inaccordance with the terms and conditions of this Prospectus, for the full amount payable in respectof the number of Placement Shares applied for with your name, CDP Securities Account numberand address written clearly on the reverse side, must be enclosed and sealed in an envelope to beprovided by you. You must affix adequate Singapore postage on the envelope (if despatching byordinary post) and thereafter the sealed envelope must be DESPATCHED BY ORDINARY POSTOR DELIVERED BY HAND at your own risk to DBS Bank Ltd, Equity Capital Markets, 6Shenton Way, #36-01 DBS Building Tower One, Singapore 068809, for the attention of EquityCapital Markets, to arrive by 12:00 noon on 15 August 2007 or such other time or date as ourDirectors may, in consultation with the Manager, decide. Local Urgent Mail or Registered Postmust NOT be used. No acknowledgement receipt will be issued for any application or remittancereceived.
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation may be rejected.
4. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of receiptwill be issued for any application or remittance received.
5. Alternatively, you may remit your application monies by electronic transfer to the account of DBSBank Ltd, Shenton Way Branch, Current Account No. 003-710216-4 in favour of “UNI-ASIASHARE ISSUE ACCOUNT” for the number of Placement Shares applied for by 12.00 noon on 15August 2007. Applicants who remit their application monies via electronic transfer should senda copy of the telegraphic transfer advice slip to DBS Bank Ltd, Equity Capital Markets, 6Shenton Way #36-01, DBS Building Tower One, Singapore 068809, for the attention of EquityCapital Markets, to arrive by 12.00 noon on 15 August 2007, or such other time or date as ourDirectors may, in consultation with the Manager, decide.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
Applications for Reserved Shares
1. Your application for Reserved Shares must be made using the PINK Reserved Shares ApplicationForms or in such other forms of application as the Manager deems appropriate.
2. The completed and signed PINK Reserved Shares Application Form and your remittance, inaccordance with the terms and conditions of the Prospectus, for the full amount payable in respectof the number of Reserved Shares applied for with your name, CDP Securities Account numberand address written clearly on the reverse side, must be enclosed and sealed in an envelope to beprovided by you. You must affix adequate Singapore postage on the envelope (if despatching byordinary post) and thereafter the sealed envelope must be DESPATCHED BY ORDINARY POSTOR DELIVERED BY HAND at your own risk to Lim Associates (Pte) Ltd, 3 Church Street, #08-01 Samsung Hub, Singapore 049483, for the attention of Mr. David Woo, to arrive by 12:00 noonon 15 August 2007 or such other time or date as our Directors may, in consultation with theManager, decide. Local Urgent Mail or Registered Post must NOT be used.
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation may be rejected.
4. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of receiptwill be issued by any application or remittance received.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS
The procedures for Electronic Applications are set out on the ATM screens (in the case of ATM ElectronicApplications) and in the case of Internet Electronic Applications on the IB website screens of the relevantParticipating Banks and the website screen of DBS Vickers Online (the “Steps”). Currently, DBS Bank andUOB Group are the only Participating Banks through which the Internet Electronic Applications throughthe IB websites may be made.
For illustration purposes, the procedures for Electronic Applications through ATMs, the IB website of DBSBank and the website of DBS Vickers Online are set out in the paragraphs “Steps for ATM ElectronicApplications for Offer Shares through ATMs of DBS Bank (including POSB ATMs)” and the “Stepsfor Internet Electronic Applications for Offer Shares through the IB website of DBS Bank” and the“Steps for Internet Electronic Applications for Placement Shares through the website of DBSVickers Online” appearing on pages G-16 to G-20 of this Prospectus.
Please read carefully the terms of this Prospectus, the Steps and the terms and conditions for ElectronicApplications set out below before making an Electronic Application. Any reference to “you” or the“Applicant” in the “Additional Terms and Conditions for Electronic Applications”, and the Steps shall referto you making an application for Offer Shares through an ATM or the IB website of a relevant ParticipatingBank, or an application for Internet Placement Shares through the website of DBS Vickers Online.
The Steps set out the actions that you must take at ATMs or the IB website of DBS Bank or the websiteof DBS Vickers Online to complete an Electronic Application. The actions that you must take at the ATMsor the IB websites of the other Participating Banks are set out on the ATM screens or the IB websitescreens of the relevant Participating Banks.
You must have an existing bank account with and be an ATM cardholder of the relevant ParticipatingBanks before you can make an Electronic Application at the ATMs of the relevant Participating Banks. AnATM card issued by one Participating Bank cannot be used to apply for the Offer Shares at an ATMbelonging to other Participating Banks. Upon the completion of your ATM Electronic Applicationtransaction, you will receive an ATM transaction slip (“Transaction Record”), confirming the details of yourATM Electronic Application. The Transaction Record is for your retention and should not be submitted withany printed Application Form.
You must ensure that you enter your own Securities Account Number when using the ATM cardissued to you in your own name. If you fail to use your own ATM card or do not key in your ownSecurities Account number, your application will be rejected. If you operate a joint bank accountwith any of the Participating Banks, you must ensure that you enter your own Securities Accountnumber when using the ATM card issued to you in your own name. Using your own SecuritiesAccount number with an ATM card which is not issued to you in your own name will render yourElectronic Application liable to be rejected.
For an Internet Electronic Application, you must have a bank account with and/or a User Identification(“User ID”) and a Personal Identification Number (“PIN”) given by the relevant participating Banks or DBSVickers Online, in the case of you applying for Internet Placement Shares through the website of DBSVickers Online. Upon completion of your Internet Electronic Application through the IB website of DBS,there will be an on-screen confirmation (“Confirmation Screen”) of the application which can be printedout by you for your record. This printed record of the Confirmation Screen is for your retention and shouldnot be submitted with any printed Application Form.
If you are making an Internet Electronic Application, you must ensure that the mailing address of youraccount selected for the application is in Singapore and you must declare that the application is beingmade in Singapore. Otherwise, your application is liable to be rejected. In this connection, you will beasked to declare that you are in Singapore at the time when you make the application.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
Your Electronic Application shall be made on the terms and subject to the conditions of thisProspectus, including but not limited to, the terms and conditions appearing below and those setout under the section on “TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION ANDACCEPTANCE” on pages G-1 to G-20 of this Prospectus, as well as the Memorandum and Articlesof Association of our Company.
1. In connection with your Electronic Application for the Offer Shares or Placement Shares in the caseof you applying for Internet Placement Shares through the website of DBS Vickers Online, you arerequired to confirm statements to the following effect in the course of activating the ElectronicApplication:
(a) that you have received a copy of this Prospectus (in the case of ATM ElectronicApplications only) and have read, understood and agreed to all the terms andconditions of application for the Offer Shares or Internet Placement Shares and thisProspectus prior to effecting the Electronic Application and agree to be bound by thesame;
(b) that you consent to the disclosure of your name, NRIC/passport number, address,nationality, permanent resident status, CDP Securities Account number, and shareapplication amount (the “Relevant Particulars”) from your account with the relevantParticipating Bank or DBS Vickers Online, as the case may be, to our Share Registrar,SGX-ST, CDP, SCCS, our Company, the Manager, the Underwriter and the PlacementAgent (the “Relevant Parties”); and
(c) that this is your only application for the Offer Shares or Placement Shares (other thanReserved Shares), as the case may be, and it is made in your name and at your ownrisk.
Your application will not be successfully completed and cannot be recorded as a completedtransaction unless you press the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant key inthe ATM or click “ Confirm” or “OK” or “Submit” or “Continue” or “Yes” or any other relevant buttonon the Internet screen. By doing so, you shall be treated as signifying your confirmation of each ofthe above three statements. In respect of statement 1(b) above, your confirmation, by pressing the“Enter” or “OK” or “Confirm” or “Yes” or any other relevant key or by clicking “Confirm” or “OK” or“Submit” or “Continue” or “Yes” or any other relevant button, shall signify and shall be treated asyour written permission, given in accordance with the relevant laws of Singapore, including Section47(2) of the Banking Act (Chapter 19) of Singapore, to the disclosure by that Participating Bank orDBS Vickers Online, as the case may be, of the Relevant Particulars of your account(s) with thatParticipating Bank or DBS Vickers Online to the Relevant Parties.
2. BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOT APPLYINGFOR OFFER SHARES AS NOMINEE OF ANY OTHER PERSON AND THAT ANY ELECTRONICAPPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE BY YOU AS BENEFICIALOWNER.
YOUR SHALL MAKE ONLY ONE ELECTRONIC APPLICATION FOR OFFER SHARES ANDSHALL NOT MAKE ANY OTHER APPLICATION FOR OFFER SHARES, WHETHER AT THEATMS OF ANY PARTICIPATING BANK OR THE IB WEBSITES OF ANY RELEVANTPARTICIPATING BANK OR THE WEBSITE OF DBS VICKERS ONLINE, AS THE CASE MAY BE,ON THE APPLICATION FORMS. IF YOU HAVE MADE AN APPLICATION FOR OFFER SHARESON AN APPLICATION FORM, YOU SHALL NOT MAKE AN ELECTRONIC APPLICATION FOROFFER SHARES AND VICE VERSA.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
3. You must have sufficient funds in your bank account with your Participating Bank at the time youmake your Electronic Application at the ATM or IB website of the relevant Participating Bank, failingwhich such Electronic Application will not be completed. Any Electronic Application made at theATM or IB website of the relevant Participating Bank which does not conform strictly to theinstructions set out in this Prospectus or on the screens of the ATM or IB website of the relevantParticipating Bank through which your Electronic Application is being made shall be rejected.
For Offer Shares, you may make an ATM Electronic Application at the ATM of anyParticipating Bank or an Internet Electronic Application at the IB websites of the relevantParticipating Banks, using only cash by authorising such Participating Bank to deduct thefull amount payable from your account with such Participating Bank. If you make anapplication to subscribe for Internet Placement Shares through the website of DBS VickersOnline, you must have sufficient funds in your nominated automatic payment account withan automatic payment facility (direct debit/credit authorisation or “GIRO”) with DBS VickersOnline. Your application will be rejected if there are insufficient funds in your account forDBS Vickers Online to deduct the full amount payable from your account for yourapplication.
4. You irrevocably agree and undertake to subscribe for and to accept the number of Offer Shares orPlacement Shares, as the case may be, applied for as stated on the Transaction Record or theConfirmation Screen or any lesser number of such Offer Shares or Placement Shares that may beallotted and/or allocated to you in respect of your Electronic Application. In the event that ourCompany decides to allot and/or allocate any lesser number of such Offer Shares or PlacementShares or not to allot any Offer Shares or Placement Shares to you, you agree to accept suchdecision as final. If your Electronic Application is successful, your confirmation (by your action ofpressing the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant key on the ATM or clicking“Confirm” or “OK” or “Submit” or “Continue” or “Yes” or any other relevant button on the Internetscreen) of the number of Offer Shares or Placement Shares applied for shall signify and shall betreated as your acceptance of the number of Offer Shares or Placement Shares that may beallotted and/or allocated to you and your agreement to be bound by the Memorandum and Articlesof Association of our Company. You also irrevocably authorise CDP to complete and sign on yourbehalf as tranferee or renouncee any instrument of transfer and/or other documents required forthe issue or transfer of the New Shares that may be alloted to you.
5. We will not keep any application in reserve. Where your Electronic Application is unsuccessful, thefull amount of the application monies will be refunded (without interest or any share of revenue orother benefit arising therefrom) to you by being automatically credited to your account with yourParticipating Bank or if you have applied for the Internet Placement Shares through DBS VickersOnline, by ordinary post or such other means as DBS Vickers Online may agree with you, at yourown risk, within 24 hours of the balloting provided that the remittance in respect of such applicationwhich has not been presented for payment or other processes has been honoured and theapplication monies have been received in the designated share issue account. Trading on a “when-issued” basis, if applicable, is expected to commence after such refund has been made.
Where your Electronic Application is rejected or accepted in part only, the full amount or thebalance of the application monies, as the case may be, will be refunded (without interest orany share of revenue or other benefit arising therefrom) to you by being automaticallycredited to your account with your Participating Bank or if you have applied for the InternetPlacement Shares through DBS Vickers Online, by ordinary post or such other means asDBS Vickers Online may agree with you, at your own risk, within 14 Market Days after theclose of the Application List provided that the remittance in respect of such applicationwhich has been presented for payment or other processes has been honoured and theapplication monies have been received in the designated share issue account.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
Responsibility for timely refund of application monies from unsuccessful or partially successfulElectronic Applications lies solely with the respective Participating Banks and with DBS VickersOnline (as the case may be). Therefore, you are strongly advised to consult your Participating Bankor DBS Vickers Online as to the status of your Electronic Application and/or the refund of anymoney to you from unsuccessful or partially successful Electronic Application, to determine theexact number of Shares allotted and/or allocated to you before trading the Shares on the SGX-ST.None of the SGX-ST, the CDP, the SCCS, the Participating Banks, DBS Vickers Online, ourCompany, the Manager, the Underwriter and the Placement Agent assume any responsibility forany loss that may be incurred as a result of you having to cover any net sell positions or from buy-in procedures activated by the SGX-ST.
If your Electronic Application is unsuccessful, no notification will be sent by the relevantParticipating Bank or DBS Vickers Online.
It is expected that successful applicants who applied for Internet Placement Shares through thewebsite of DBS Vickers Online will be notified of the results of their application through the websiteof DBS Vickers Online no later than the evening of the day immediately prior to the commencementof trading of the Shares on the SGX-ST.
6. Applicants who make ATM Electronic Applications for Offer Shares through the ATMs of thefollowing banks may check the provisional results of their ATM Electronic Applications as follows:
Bank Telephone Other Channels Operating Hours Serviceexpected from
DBS Bank 1800-339 6666 Internet Banking 24 hours a day Evening of the(for POSB account holders) www.dbs.com(1) balloting day
1800-111 1111(for DBS account holders)
OCBC 1800-363 3333 ATM/ Internet Banking/ 24 hours a day Evening of thePhonebanking (2) balloting day
UOB Group 1800-222 2121 ATM (Other Transactions 24 hours a day Evening of the“IPO Enquiry”) balloting daywww.uobgroup.com (1) (3)
Notes:
(1) If you have made your Internet Electronic Application through the IB websites of DBS Bank or UOB Group, you maycheck the results of your application through the same channels listed in the table above in relation to ATM ElectronicApplication made at the ATMs of DBS Bank or UOB Group.
(2) If you have made your Internet Electronic Application through the ATM of the OCBC Bank, you may check the resultsof your application through OCBC ATMs, OCBC Personal Internet Banking or OCBC Phone banking services.
(3) If you have made your Electronic Application through the ATM or the IB website of the UOB Group, you may checkthe results of your application through UOB Personal Internet Banking, UOB ATMs or UOB Phone Banking services.
7. ATM Electronic Applications shall close at, and Internet Electronic Application and InternetPlacement Application must be received by, 12:00 noon on 15 August 2007, or such othertime and date as our Directors may, in consultation with the Manager decide. Subject toparagraph 9 below, all Internet Electronic Applications and Internet Placement Applications aredeemed to be received when they enter the designated information system of the relevantParticipating Bank or DBS Vickers Online, as the case may be.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
8. You are deemed to have irrevocably requested and authorised our Company to:
(a) register the Offer Shares or Placement Shares, as the case may be, allotted and/or allocatedto you in the name of CDP for deposit into your Securities Account;
(b) send the relevant Share certificate(s) to CDP;
(c) return or refund (without interest or any share of revenue earned or other benefit arisingtherefrom) the application monies, should your Electronic Application be unsuccessful, byautomatically crediting your bank account with your Participating Bank or if you have appliedfor the Internet Placement Shares through DBS Vickers Online, by ordinary post or suchother means as DBS Vickers Online may agree with you, at your risk, within 24 hours of theballoting PROVIDED THAT the remittance in respect of such application which has beenpresented for payment or such other proccess has been honoured and application moniesreceived in the designated share issue account; and
(d) return or refund (without interest or any share of revenue or other benefit arising therefrom)the balance of the application monies, should your Electronic Application be accepted in partonly, by automatically crediting your bank account with your Participating Bank or if you haveapplied for the Internet Placement Shares through DBS Vickers Online, by ordinary post orsuch other means as DBS Vickers Online may agree with you, at your risk, within 14 MarketDays after the close of the Application List PROVIDED THAT the remittance in respect ofsuch application which has been presented for payment or such other proccess has beenhonoured and application monies received in the designated share issue account.
9. You irrevocably agree and acknowledge that your Electronic Application is subject to risks ofelectrical, electronic, technical and computer-related faults and breakdown, fires, acts of God andother events beyond the control of the Participating Banks, DBS Vickers Online, our Company, theManager, Underwriter and Placement Agent, and in any such event our Company, the Manager,DBS Vickers Online and/or the relevant Participating Bank do not receive your ElectronicApplication, or data relating to your Electronic Application or the tape or any other devicescontaining such data is lost, corrupted or not otherwise accessible, whether wholly or partially forwhatever reason, you shall be deemed not to have made an Electronic Application and you shallhave no claim whatsoever against our Company, the Manager, Underwriter and Placement Agent,DBS Vickers Online and/or the relevant Participating Bank for the Offer Shares or PlacementShares, as the case may be, applied for or for any compensation, loss or damage.
10. We do not recognise the existence of a trust. Any Electronic Application by a trustee must be madein his own name and without qualification. Our Company will reject any application by any personacting as nominee (other than approved nominee companies).
11. All your particulars in the records of your Participating Bank or DBS Vickers Online at the time youmake your Electronic Application shall be deemed to be true and correct and your ParticipatingBank, DBS Vickers Online and any other Relevant Parties shall be entitled to rely on the accuracythereof. If there has been any change in your particulars after making your Electronic Application,you shall promptly notify your Participating Bank or DBS Vickers Online (as the case may be).
12. You should ensure that your personal particulars as recorded by both CDP and the relevantParticipating Bank or DBS Vickers Online (as the case may be) are correct and identical,otherwise, your Electronic Application is liable to be rejected. You should promptly inform CDPof any change in address, failing which the notification letter on successful allotment will be sent toyour address last registered with CDP.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
13. By making and completing an Electronic Application, you are deemed to have agreed that:
(a) in consideration of our Company making available the Electronic Application facility, throughthe Participating Banks and DBS Vickers Online acting as agents of our Company, at theATMs and the IB websites of the relevant Participating Banks (if any) and at the website ofDBS Vickers Online:
(i) your Electronic Application is irrevocable; and
(ii) your Electronic Application, the acceptance by our Company and the contract resultingtherefrom under the Invitation shall be governed by and construed in accordance withthe laws of Singapore and you irrevocably submit to the non-exclusive jurisdiction ofthe Singapore courts;
(b) none of our Company, the Manager, Underwriter and Placement Agent, the ParticipatingBanks or DBS Vickers Online shall be liable for any delays, failures or inaccuracies in therecording, storage or in the transmission or delivery of data relating to your ElectronicApplication to our Company or CDP due to breakdowns or failure of transmission, delivery orcommunication facilities or any risks referred to in paragraph 9 above or to any causebeyond their respective controls;
(c) in respect of the Offer Shares or the Placement Shares, as the case may be, for which yourElectronic Application has been successfully completed and not rejected, acceptance of yourElectronic Application shall be constituted by written notification by or on behalf of ourCompany and not otherwise, notwithstanding any payment received by or on behalf of ourCompany;
(d) you will not be entitled to exercise any remedy for rescission for misrepresentation at anytime after acceptance of your application; and
(e) reliance is placed solely on information contained in this Prospectus and that none of ourCompany, the Manager, Underwriter and Placement Agent nor any other person involved inthe Invitation shall have any liability for any information not so contained.
Steps for ATM Electronic Applications for Offer Shares through ATMs of DBS Bank (IncludingPOSB ATMs)
Instructions for ATM Electronic Applications will appear on the ATM screens of the Participating Banks.For illustration purposes, the steps for making an ATM Electronic Application through a DBS Bank ATM(including POSB ATM) are shown below. Certain words appearing on the screen are in abbreviated form(“A/c”, “amt”, “appln”, “&”, “I/C”, “SGX” and “No.” refer to “Account”, “amount”, “application”, “and”, “NRIC”,“SGX-ST” and “Number” respectively. Instructions for ATM Electronic Applications on the ATM screens ofParticipating Banks (other than DBS Bank (including POSB ATMs)), may differ slightly from thoserepresented below.
Step
1. Insert your personal DBS Bank or POSB ATM Card
2. Enter your Personal Identification Number
3. Select “CASHCARD & MORE SERVICES”
4. Select “LANGUAGE” (FOR CUSTOMERS USING MULTI-LANGUAGE CARD)
5. Select “ESA-IPO SHARE/INVESTMENTS”
6. Select “ELECTRONIC SECURITY APPLICATION (IPOS/BOND/ST-NOTES)”
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
7. Read and understand the following statements which will appear on the screen:
� THE OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE IN, ORACCOMPANIED BY, A COPY OF THE PROSPECTUS/DOCUMENT OR PROFILESTATEMENT (AND IF APPLICABLE, A COPY OF THE REPLACEMENT ORSUPPLEMENTARY PROSPECTUS/DOCUMENT OR PROFILE STATEMENT) WHICH CANBE OBTAINED FROM ANY DBS/POSB BRANCH IN SINGAPORE AND, WHEREAPPLICABLE, THE VARIOUS PARTICIPATING BANKS DURING BANKING HOURS,SUBJECT TO AVAILABILITY.
� IN THE CASE OF SECURITIES OFFERING THAT IS SUBJECT TO APROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENT REGISTERED WITHTHE AUTHORITY, ANYONE WISHING TO ACQUIRE THESE SECURITIES (OR UNITS OFSECURITIES) SHOULD READ THE PROSPECTUS/DOCUMENT OR PROFILESTATEMENT (AS SUPPLEMENTED OR REPLACED, IF APPLICABLE) BEFORESUBMITTING HIS APPLICATION WHICH WILL NEED TO BE MADE IN THE MANNER SETOUT IN THE PROSPECTUS/DOCUMENT OR PROFILE STATEMENT (ASSUPPLEMENTED OR REPLACED, IF APPLICABLE). A COPY OF THEPROSPECTUS/DOCUMENT OR PROFILE STATEMENT, AND IF APPLICABLE, A COPYOF THE REPLACEMENT OR SUPPLEMENTARY PROSPECTUS/DOCUMENT ORPROFILE STATEMENT HAS BEEN LODGED WITH AND REGISTERED BY THEMONETARY AUTHORITY OF SINGAPORE WHO ASSUMES NO RESPONSIBILITY FORITS OR THEIR CONTENTS.
� PRESS THE “ENTER” KEY TO CONFIRM THAT YOU HAVE READ AND UNDERSTOOD.
8. Select “UNIASIA” to display details
9. PRESS THE “ENTER” KEY TO ACKNOWLEDGE:
� YOU HAVE READ, UNDERSTOOD AND AGREED TO ALL TERMS OF THE APPLICATIONAND PROSPECTUS/DOCUMENT OR PROFILE STATEMENT, AND IF APPLICABLE, THEREPLACEMENT OR SUPPLEMENTARY PROSPECTUS/DOCUMENT OR PROFILESTATEMENT.
� YOU CONSENT TO DISCLOSE YOUR NAME, NRIC/PASSPORT NO., ADDRESS,NATIONALITY, CDP SECURITIES A/C NO., CPF INVESTMENT A/C NO. AND SECURITYAPPLICATION AMOUNT FROM YOUR BANK A/C(S) TO SHARE AND SHARE APPLNAMOUNT FROM YOUR BANK A/C(S) TO SHARE REGISTRARS, SGX, SCCS, CDP, CPFAND THE ISSUER/VENDOR(S).
� FOR FIXED AND MAX PRICE SECURITY APPLICATION, THIS IS YOUR ONLYAPPLICATION AND IT IS MADE IN YOUR OWN NAME AND AT YOUR OWN RISK.
� THE MAXIMUM PRICE FOR EACH SHARE IS PAYABLE IN FULL ON APPLICATION ANDSUBJECT TO REFUND IF THE FINAL PRICE IS LOWER.
� FOR TENDER SECURITY APPLICATIONS, THIS IS YOUR ONLY APPLICATION AT THESELECTED TENDER PRICE AND IS MADE IN YOUR OWN NAME AND AT YOUR OWNRISK.
� YOU ARE NOT A US PERSON AS REFERRED TO IN THE PROSPECTUS/DOCUMENTOR PROFILE STATEMENT AND IF APPLICABLE, THE REPLACEMENT ORSUPPLEMENTARY PROSPECTUS/DOCUMENT OR PROFILE STATEMENT.
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
� THERE MAY BE A LIMIT ON THE MAXIMUM NUMBER OF SECURITIES THAT YOU CANAPPLY FOR SUBJECT TO AVAILABILITY, YOU MAY BE ALLOCATED A SMALLERNUMBER OF SECURITIES THAN YOU APPLIED FOR OR (IN THE CASE OF AN EARLIERCLOSURE UPON FULL SUBSCRIPTION) YOUR APPLICATION MAY BE REJECTED IFALL THE AVAILABLE SECURITIES HAVE BEEN FULLY ALLOCATED TO EARLIERAPPLICANTS.
10. Select your nationality
11. Select the payment method (i.e. by cash, CPF Funds, or a combination of cash and CPF Funds)
12. Select the DBS Bank account (AutoSave/Current/Savings/Savings Plus) or the POSB account(current/ savings) from which to debit your application monies
13. Enter the number of securities you wish to apply for using cash
14. Enter your own 12-digit CDP Securities Account number (Note: This step will be omittedautomatically if your CDP Securities Account number has already been stored in the Bank’srecords)
15. Check the details of your share application, your NRIC/passport number and CDP SecuritiesAccount number and number of securities on the screen and press the “ENTER” key to confirmapplication
16. Remove the Transaction Record for your reference and retention only
Steps for Internet Electronic Application for Offer Shares through the IB website of DBS Bank
For illustrative purposes, the steps for making an Internet Electronic Application through the DBS Bank IBwebsite is shown below. Certain words appearing on the screen are in abbreviated form (“A/c”, “amt”, “&”,“I/C”, “SGX” and “No.” refer to “Account”, “amount”, “and”, “NRIC”, “SGX-ST” and “Number” respectively)
Step
1. Click on to DBS Bank website at www.dbs.com
2. Login to Internet banking
3. Enter your User ID and PIN
4. Select “Electronic Security Application (ESA)”
5. Click “Yes” to proceed and to warrant that you have observed and complied with all applicable lawsand regulations
6. Select your country of residence and click “I confirm”
7. Click on “UNIASIA” and click the “Submit” button
8. Click “Confirm” to confirm:
(a) You have read, understood and agreed to all terms of application and theProspectus/Document or Profile Statement and if applicable, the Supplementary orReplacement Prospectus/ Document or Profile Statement
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
(b) You consent to disclose your name, I/C or Passport number, address, nationality, CDPSecurities Account number., CPF Investment account number (if applicable) andsecurities application amount from your DBS/POSB Account(s) to Share Registrars,SGX, SCCS, CDP, CPF Board and issuer/vendor(s)
(c) You are not a US Person (as such term is defined in Regulation S under the USSecurities Act of 1933, as amended)
(d) You understand that the securities mentioned herein have not been and will not beregistered under the U.S. Securities Act of 1933 as amended (the “U.S. Securities Act”)or the securities laws of any State of the United States and may not be offered or soldin the United States or to, or for the account or benefit of any “U.S. person” (asdefined in Regulation S under the U.S. Securities Act) except pursuant to anexemption from or in a transaction subject to, the registration requirements of the U.S.Securities Act and applicable State security laws. There will be no public offer of thesecurities mentioned herein in the United States. Any failure to comply with thisrestriction may constitute a violation of the United States securities laws
(e) This application is made in your own name and at your own risk
(f) For FIXED/MAX price securities application, this is your only application. For TENDERprice securities application, this is your only application at the selected tender price
9. Fill in details for share application and click “Submit”
10. Check the details of your share application, your I/C/passport No. and click “OK” to confirm yourapplication
11. Print Confirmation Screen (optional) for your reference & retention only
Steps for Internet Electronic Application for Placement Shares through the website of DBS VickersOnline
For illustrative purposes, the steps for making an application through the website of DBS Vickers Online isshown below:
Step
1. Access the website at www.dbsvonline.com
2. Login with user ID and password
3. Click on IPO Centre hyperlink to go to the IPO Section
4. Click on the IPO issue hyperlink
5. Click “Yes” to represent, warrant and confirm, inter alia, that you are in Singapore, you haveobserved and complied with all applicable laws and regulations, you have a mailing address inSingapore, you have read, understood and agreed to the “APPLICATION TERMS ANDCONDITIONS” and the “GENERAL TERMS AND DISCLAIMERS” and you are not a U.S. person(as such term is defined in Regulation S under the US Securities Act of 1933, as amended)
6. Confirm the IPO applying for and its details by clicking on the “Next” button
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
7. Click “Yes, I have read the above terms and conditions and wish to subscribe” and click “Submit” toconfirm, inter alia:
(a) You have read, understood and agreed to the terms and conditions set out in theProspectus/Document or Profile Statement including the notes and instructions for thecompletion of this Application Form and that this application has been made in accordancewith the Prospectus/Document or Profile Statement including such notes and instructions.
(b) You have read and understood the disclaimers.
(c) You have read, understood and agreed to the “APPLICATION TERMS AND CONDITIONS”and the “GENERAL TERMS AND DISCLAIMERS”.
(d) You consent to the disclosure of your name, NRIC or passport number, address, nationalityand permanent resident status, CDP Securities Account number, CPF Investment Accountnumber (as applicable) and share application amount from your account with DBS VickersOnline to the Share Registrar, SCCS, SGX-ST, CDP, CPF (if applicable), Issuer and theIssue Manager.
(e) This application is your only application for the Shares and it is made in your own name andat your own risk.
(f) This application is made in Singapore.
(g) You understand that these are not deposits or other obligations of or guaranteed or insuredby DBS Vickers Online and are subject to investment risks, including the possible loss of theprincipal amount invested.
(h) You declare that (i) you are not under 21 years of age, (ii) you are not a corporation, sole-proprietorship, partnership or any other business entity, (iii) you are not an undisclosedbankrupt, (iv) you are in Singapore, (v) you have a mailing address in Singapore and (vi) youare not a US person (within the meaning of Regulation S under the US Securities Act of1933, as amended).
8. Fill in amount of share applied for and preferred payment mode, then click “Submit”
9. Check and verify details of your share application and your personal particulars on the screen
10. Enter your password and click “Submit” to continue
11. Click on “Application Status” to check your IPO application details
12. Print page for your reference and retention only
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APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE
UNI-ASIA FINANCECORPORATION
We are an Asia-based structured fi nance arrangement and Alternative Assets directinvestment fi rm. We provide transport-related
fi nance arrangement and investment management
of alternative assets such as ships, distressed assets
and real estate. Our offi ces in Tokyo, Hong Kong and
Singapore serve clients that include established
international shipping and aviation companies as
well as transport conglomerates like the Evergreen
Group and P.T. Berlian Laju Tanker TBK.
UNI-ASIA FINANCE CORPORATION
Registration No. CR-72229
Incorporated in the Cayman Islands with
limited liability on 17 March 1997
UNI-ASIA FINANCE CORPORATIONSUITE A, 26TH FLOORADMIRALTY CENTRE TOWER I18 HARCOURT ROADHONG KONG
Manager, Underwriter and Placement Agent
INVITATION IN RESPECT OF 65,400,000 NEW SHARES OF US$0.16 EACH: -a) 3,300,000 Offer Shares at S$0.55
each by way of public offer;
b) 62,100,000 Placement Shares at S$0.55 each by way of placement, comprising:-
i) 57,640,000 Placement Shares at S$0.55 for each Placement Share by way of Placement Shares Application Forms (or such other forms of application as the Manager deems appropriate);
ii) 500,000 Internet Placement Shares at S$0.55 for each Internet Placement Share reserved for applications made through the Internet website of DBS Vickers Securities Online (Singapore) Pte Ltd; and
iii) 3,960,000 Reserved Shares at S$0.55 each reserved for our employees, business associates and others who have contributed to the success of our Group,
payable in full on application subject to the Over-allotment Option.
PROSPECTUS DATED 7 AUGUST 2007 (Registered by the Monetary Authority of Singapore on 7 August 2007)
This document is important. If you are in any doubt as to the action you should take, you should consult your legal, fi nancial, tax, or other professional adviser.
We have made an application to the Singapore Exchange Securities Trading Limited (“SGX-ST”) for permission to deal in, and for quotation of, all the ordinary shares of US$0.16 each (the “Shares”) in the capital of Uni-Asia Finance Corporation (the “Company”) already issued, the new shares which are the subject of this Invitation (the “New Shares”), the new Shares which may be issued upon the exercise of the options to be granted under the Uni-Asia Share Option Scheme (the “Option Shares”) and the new Shares which may be issued upon the exercise of the Over-allotment Option (as defi ned below) (the “Additional Shares”). Such permission will be granted when we have been admitted to the Offi cial List of the SGX-ST. The dealing and quotation of the Shares will be in Singapore dollars.
Acceptance of applications will be conditional upon, inter alia, permission being granted by the SGX-ST to deal in, and for quotation of, all the existing issued Shares, the New Shares, the Option Shares and the Additional Shares. If the completion of the Invitation does not occur because the SGX-ST’s permission is not granted or for any other reasons, moneys paid in respect of any application accepted will be returned to you at your own risk, without interest or any share of revenue or other benefi t arising therefrom and you will not have any claims against us or the Manager.
In connection with the Invitation, we have granted the Manager an over-allotment option (the “Over-allotment Option”) exercisable by the Manager during the period commencing on the date of commencement of trading of the Shares on the SGX-ST (the “Commencement Date”) and expiring on the date falling 30 days after the Commencement Date. The Manager may subscribe and/or procure subscribers for up to an aggregate of 9,810,000 Shares, representing 15 per cent. of the New Shares. The Manager may over-allot and effect transactions which stabilise or maintain the market price of the Shares, subject to compliance with the laws of Singapore. Such stabilisation, if commenced, may be discontinued by the Manager at any time at the Manager’s discretion in accordance with the laws of Singapore.
The SGX-ST assumes no responsibility for the correctness of any of the statements or opinions made or reports contained in this Prospectus. Admission to the Offi cial List of the SGX-ST is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries, our Shares, the New Shares, the Option Shares or the Additional Shares.
A copy of this Prospectus has been lodged on 29 June 2007 with and registered on 7 August 2007 by the Monetary Authority of Singapore (the “Authority”). The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act (Cap. 289), or any other legal or regulatory requirements have been complied with. The Authority has not, in any way, considered the merits of the shares or units of shares, as the case may be, being offered or in respect of which an invitation is made, for investment.
Investing in our Shares involves risks which are described in the section entitled “RISK FACTORS” of this Prospectus.
No Shares will be allotted and/or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus.
UNI-ASIA FINANCE CORPORATION
