For personal use only
ZINGMOBILE GROUP LIMITED (To be renamed Pixie Group Limited)
A company incorporated in Singapore with Company Registration No. 200700159Z ARBN 126 494 880 For an offer of Shares at an issue price of A$0.06 to raise A$9,000,000, with an over-subscription facility for a further A$2,000,000 million (Offer)
PROSPECTUS This Prospectus is a re-compliance prospectus for the purposes of satisfying Chapters 1 and 2 of the ASX Listing Rules and to satisfy ASX requirements for re-admission following a change to the nature and scale of the Company’s activities. The Offer is subject to certain conditions precedent, including receiving conditional ASX approval for re-quotation of the Company’s Shares on the ASX.
IMPORTANT INFORMATION This is an important document that should be read in its entirety. If you do not understand it you should consult your professional advisers without delay.
For personal use only
Contents Important Information
02
01
Chairman’s Letter
06
07
Investigating Accountant’s Report
76
02
Indicative Timetable
08
08
Risk Factor
82
03
Investment Overview
09
09
Directors and Corporate Governance
87
04
Industry Overview
29
10
The Offer
110
05
Business Overview
37
11
Additional Information
117
06
Financial Information
53
12
Glossary
129
Corporate Directory
133
For personal use only
Important Information Change in nature and scale of activities and re-compliance with Chapters 1 and 2 of the ASX Listing Rules The Company has historically operated as a digital mobile marketing contents provider in the Asia Pacific region. As announced to the ASX on 11 June 2015, the Company has entered into a Share Purchase Agreement pursuant to which it has agreed, subject to Shareholder approval, to acquire 100% of the issued shares of Pixie Entertainment Group Pte. Ltd (Pixie) in consideration of the issue of approximately 500 million shares in the Company (Consideration Shares). Pixie is the holding company of the Pixie Entertainment group of companies, including Roylmark Holdings Sdn Bhd and Bizmac Sdn Bhd, each being a Malaysian subsidiary (Pixie Group). The Pixie Group is a Singapore-headquartered group of companies that manages lifestyle outlets in Malaysia.
This is Replacement Prospectus (Prospectus) dated 13 October 2015 which replaces in its entirety the original prospecturs dated 1 October 2015 in relation to the Offer of Shares in the Company. As Zingmobile Group Limited is not established in Australia, its general corporate activities (apart from any offering of securities in Australia) are not regulated by the Corporations Act 2001 of the Commonwealth of Australia or by the Australian Securities and Investments Commission but instead are regulated by the Singapore Companies Act and Singapore Accounting & Corporate Regulatory Authority (ACRA).
2
The acquisition of shares in Pixie (Proposed Transaction) will result in a significant change in the nature and scale of the Company’s activities which requires approval of its Shareholders under Chapter 11 of the ASX Listing Rules. The Company has convened a General Meeting to be held on Saturday, 24 October 2015 to seek Shareholder approval for, amongst other approvals, the acquisition of shares in Pixie and the change in the nature and scale of the Company’s activities. The Company’s securities will be suspended from trading on ASX from the date of the General Meeting and will not be reinstated until satisfaction of the conditions to ASX approving the Company’s re-compliance with the admission requirements of Chapters 1 and 2 of the ASX Listing Rules. There is a risk that the Company may not be able to meet the requirements of ASX for re-quotation on ASX. Should this occur, the Shares will not be able to be traded on the ASX until such time as those requirements can be met, if at all.
For personal use only
The Company has applied to ASX for quotation of the CDIs which are being offered. Neither ASIC nor ASX or their officers take any responsibility for the contents of this Prospectus or for the merits of the investment to which this Prospectus relates. Purpose of Prospectus
CDIs Successful applicants will receive CHESS Depository Interests (CDIs) in respect of fully paid ordinary Shares in the Company. CDIs are a form of beneficial interest in Shares held by a depositary nominee. The issue of CDIs is necessary to allow ASX trading of a company incorporated in Singapore. CDIs give a holder similar, but not identical, rights to a holder of Shares. More details regarding CDIs are contained in Section 10.7.1. References in this Prospectus to “Shares”, “ Consideration Shares”, “Offer Shares” and “New Shares” include references to “CDIs” as appropriate. Lodgement This is a Replacement Prospecturs dated 13 October 2015 which replaces in its entirety the original prospectus dated 1 October 2015 in relation to the Offer of Shares in the Company. A copy of this Replacement Prospectus was lodged with ASIC on 13 October.
This Prospectus is being issued in relation to the Offer and for the purposes of compliance with Listing Rule 1.1, Condition 3 to assist the Company to meet the requirements of ASX for re-admission to the Official List following a change to the nature and scale of the Company’s activities. No CDIs or other securities will be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in the Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus. It is important that you read this Prospectus in its entirety and seek professional advice where necessary. The Shares which are the subject of this Prospectus should be considered highly speculative.
3
Conditional Offer and Consolidation
For personal use only
In accordance with the terms and conditions outlined in Section 10.2, completion of the Offer under this Prospectus is subject to all approvals or consents required from any Government Agency to implement the Offer being obtained (or deemed obtained) on terms reasonably acceptable to the Company and not withdrawn, including ASX providing a conditional approval letter to the Company confirming that, subject to completion of the Proposed Transaction, the equity securities of the Company will be re-admitted to Official Quotation. For the Company’s equity securities to be re-admitted to Official Quotation, the Company will need to, amongst other things, re-comply with Chapters 1 and 2 of the ASX Listing Rules, raise the minimum subscription (refer Section 10.3) and complete the Proposed Transaction. Further details of the outstanding conditions precedent to Completion are set in Sections 5.7 and 10.4. If these conditions precedent are not met, the Company will not proceed with the Offer and will repay all application monies received, without interest and in accordance with the Corporations Act. Exposure Period In accordance with ASIC class order 00/168 there is no exposure period as the Shares offered by this Prospectus are of the same class as the Company’s existing Shares which, at the time of lodgement of this Prospectus, are quoted on the ASX which is a prescribed financial market. Web Site – Electronic Prospectus A copy of this Prospectus can be downloaded from the website of the Company at www.zingmobile.net and from the company announcements platform of the ASX website (ASX Code: currently ZMG). The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. You may obtain a hard copy of this Prospectus free of charge by contacting the Company. Other than as otherwise stated in this Prospectus, no document or information included on the Company’s website is incorporated by reference into this Prospectus. Disclaimer No person is authorised by the Company to give any information or make any representation that is not contained in the Prospectus. Any information or representation not contained in this Prospectus may not be relied on as having been authorised by the Company, its Directors or any other person. The Company’s and Pixie Group’s business, financial condition, results of operations and prospects may have changed since the date of this Prospectus. This Prospectus contains forward-looking statements concerning the Company’s and Pixie Group’s business, operations, financial performance and condition as well as the Company’s and Pixie Group’s plans, objectives and expectations for its business, operations and financial performance and condition. Any statements contained in this Prospectus that are not of historical facts may be deemed to be forward-looking statements. You can identify these statements by words such as “aim”, “anticipate”, “assume”, “believe”, “could”, “due”, “estimate”, “expect”, “goal”, “intend”, “may”, objective”, “plan”, “predict”, “potential”, “positioned”, “should”, “target”, “will”, “would” and other similar expressions that are predictions of or indicate future events and future trends. These forward-looking statements are based on current expectations, estimates and projections about the Company’s and Pixie Group’s business and the industries in which the Company and Pixie Group operate and management’s beliefs and assumptions. These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond the Company’s and/ or Pixie Group’s control.
4
As a result, any or all of the Company’s and Pixie Group’s forward-looking statements in this Prospectus may turn out to be inaccurate. Factors that may cause such differences include, but are not limited to, the risks described in the Section under the heading “Risk factors” at Section 8.
For personal use only
You should consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. These forward-looking statements speak only as at the date of this Prospectus. Unless required by law, the Company and Pixie Group do not intend to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise. You should, however, review the factors and risks the Company and Pixie Group describe in the reports to be filed from time to time with the ASX after the date of this Prospectus. This Prospectus contains market data and industry forecasts that were obtained from industry publications, third-party market research and publicly available information. These publications generally state that the information contained in them has been obtained from sources believed to be reliable, but the Company has not independently verified the accuracy and completeness of such information. Some numerical figures included in this Prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that preceded them. This Prospectus also includes trademarks, trade names and service marks that are the property of other organisations.
Defined words and abbreviations Defined terms and abbreviations used in this Prospectus are defined in the Glossary in Section 12. Time All references to time in this Prospectus refer to Sydney time unless stated otherwise. Currency All financial amounts contained in this Prospectus are expressed in Australian Dollars unless otherwise stated or as noted below. The reporting currency for the Company is Singapore Dollars and on this basis all financial accounts, pro forma statements and other financial report extracts are stated in SGD, unless otherwise stated. Photographs and diagrams Photographs and diagrams used in this Prospectus that do not have descriptions are for illustration only and should not be interpreted to mean that any person shown in them endorses this Prospectus or its contents or that the assets shown in them are owned by the Company. Diagrams used in this Prospectus are illustrative only. Unless otherwise stated, all data contained in graphs and tables is based on information available as at the date of this Prospectus.
5
1
Chairman's letter
For personal use only
1 October 2015 Dear Shareholders, On behalf of the Directors of Zingmobile Group Limited (Zingmobile or the Company), it is my pleasure to introduce this Prospectus to you. This Prospectus has been issued by the Company to enable the Company to re-comply with Chapters 1 and 2 of the ASX Listing Rules and for the offer of 150,000,000 new Shares at A$0.06 per Share to raise A$9 million (with an over-subscription facility for a further A$2 million) (Offer). The Company has been an ASX-listed company since November 2007 and currently operates as a digital mobile marketing contents provider in the Asia Pacific region. Following an analysis of the business and its prospects for future growth, the Board of Directors has decided it is essential to significantly change the nature and scale of the Company’s activities. The Company is proposing to acquire Pixie Group, an established lifestyle entertainment and food and beverage (F&B) group of companies that manage both a live entertainment outlet and a bistro in Malaysia, and after completion of the Proposed Transaction proposes to rename itself Pixie Group Limited. On completion of the acquisition pursuant to the Share Purchase Agreement (Completion), the nature of the Company’s business will change to a lifestyle entertainment and F&B group with a focus on future expansion in the Malaysia and Singapore markets. Subject to satisfaction of certain conditions precedent to Completion (refer to Section 5.7), the Company will wholly own Pixie Group. We believe the restructured Board that will be in place post the Proposed Transaction has the necessary background to focus on the sound development of the Company's business targets whilst building shareholder wealth in the process. Further details on each of the Company's current and proposed directors are contained in section 9.1 of this Prospectus. The current Board believes that the decision to acquire Pixie Group will deliver a significant opportunity to create increased value for current and future shareholders. The Board believes the main drivers of value from the Proposed Transaction are:
to return the Company to a better financial standing, profitability and cash flow position by focusing on Pixie Group’s business in the lifestyle entertainment and F&B industry, which the Board believes will enhance shareholder value and improve prospects of the Company;
to increase the market capitalisation of the Company and potentially widen the investor base, thereby leading to a possible increase in investor interest in the Company and increase in liquidity; and
to facilitate the transformation of Pixie Group into a regional lifestyle entertainment and F&B Group through implementing proposed growth strategies as disclosed in this Prospectus.
This Prospectus contains detailed information about the Proposed Transaction, the industry in which the Company will operate if the Proposed Transaction is implemented and its financial and operating performance. As with other companies, the Company is subject to a range of risks. The risks of investing in the Company are fully detailed in Section 8 and I encourage you to read this document carefully and in its entirety before making your investment decision. The Board is confident that the Company's business, in conjunction with the growth profile of the lifestyle entertainment and F&B industries and the expertise of the Board and management team, provides a strong platform for growth.
6
8
For personal use only
If you have any questions about the Proposed Transaction or this Prospectus, please contact the Company or consult your licensed financial adviser, stockbroker or other professional adviser. If you have any questions regarding your holding in Shares or other share registry matters, please contact Boardroom on +61 (02) 9290 9600. Yours sincerely,
Chairman & Chief Executive Officer
9
7
For personal use only
2
8
Indicative timetable
Event
Date1
Lodgement of the original Prospectus with ASIC
1 October 2015
Application for re-admission with ASX
1 October 2015
Lodgement of the Replacement Prospectus with ASIC
13 October 2015
General Meeting
24 October 2015
Suspension of the Company's securities from trading on the ASX2
24 October 2015
Close of Offer
26 October 2015
Completion of Capital Raising and Proposed Transaction
30 October 2015
Expected date for re-quotation on ASX
6 November 2015
1.
These dates are indicative only and may change. The Company reserves the right to vary the dates set out above subject to Corporations Act and other applicable laws.
2.
In accordance with ASX requirements, Shares will be suspended from trading on ASX from the date of the General Meeting if the Proposed Transaction is approved until such time that the Company re-complies with Chapters 1 and 2 of the Listing Rules.
10
For personal use only
3
Investment overview
This Section is a summary only and not intended to provide full information for investors intending to apply for Shares offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirely. Question
Response
Further Information
INTRODUCTION Who is the issuer of Zingmobile Group Limited is a Singapore incorporated Section 5.1 this Prospectus? company listed on the ASX. What is the Proposed The Company announced to ASX on 11 June 2015, that the Section 5.1 Transaction? Company has agreed, subject to Shareholder approval and the satisfaction of certain other conditions, to acquire Pixie, in return for the issue of 500,000,000 Shares to the Pixie Vendors (Consideration Shares). On completion of the Proposed Transaction, the Company will own Pixie, which holds a 100% interest in each of Roylmark Holdings Sdn Bhd and Bizmac Sdn Bhd, its Malaysian subsidiaries (Pixie Subsidiaries). Pixie is a company limited by shares, incorporated in Singapore, with both Pixie Subsidiaries being incorporated in Malaysia. In conjunction with and conditional on the Proposed Transaction, Zingmobile is proposing to complete the Zingmobile Business Sale.
11
9
For personal use only
Question
Response
Further Information
What is the Offer?
In order to re-comply with the requirements of Chapters 1 and Section 10.1 2 of the ASX Listing Rules, the Company is seeking to raise and Section A$9 million at A$0.06 per Share (with an over-subscription 10.2 facility for a further A$2 million), to be issued to selected investors. The minimum total subscriptions required for the Offer to complete are A$7 million. Details of the Offer are set out in Section 10. Successful completion of the Proposed Transaction is expected to enable the Company to meet the readmission requirements imposed by the ASX on the Company, allowing the Company's Shares to trade on the ASX. The Offer will be open to selected investors with registered addresses in Australia (including selected retail investors), and other institutional and high net worth individual investors to whom it is lawful to make an offer pursuant to this Prospectus. Shares will be issued in the form of CHESS Depositary Interests (or CDIs), which are a form of beneficial interest in Shares held by a depositary nominee. See Section 10.7.1 for more detail on CDIs.
What Shareholder ASX requires the Company to obtain the approval of Notice of and other approvals Shareholders of the Proposed Transaction in accordance with Meeting and Listing Rule 11.1. The Company is also required to seek Section 11.2 are required? Shareholder approval for various other matters in respect to the Proposed Transaction, including changing the Company's name to "Pixie Group Limited" following Completion. The Company has called the General Meeting to be held on Saturday, 24 October 2015, in order for Shareholders to consider the Proposed Transaction and associated approvals. The acquisition of the Consideration Shares by the Pixie Vendors will also require a waiver from the Securities Industry Council of Singapore (SIC) from the general offer provisions of the Singapore Takeovers Code as it will involve an acquisition of more than 30% of the Company's Shares by the Pixie Vendors (Whitewash Waiver). What resolutions will At the General Meeting of Shareholders to be held on Section 5.6 be considered at the Saturday, 24 October 2015, Shareholders will be asked to vote and Section 11.2 on the following resolutions: General Meeting? (a) (b) (c)
the change in company name; a change in the nature and scale of the Company’s activities; the acquisition of Pixie and the issue of the Consideration Shares to Pixie Shareholders;
10 12
Question
Response
For personal use only
(d)
(e) (f)
Further Information
the sale of the Company's main undertaking to a related party in respect of the Zingmobile Business Sale; the issue of shares pursuant to the Offer; and the election of new Directors.
What is the The Company’s business model has historically been that of a Section 5.2 Company's strategy digital mobile marketing contents provider in the Asia Pacific and Section 5.3 Region. and business model? Following completion of the Proposed Transaction, the Company’s primary focus will be on the Pixie Group and its business model, which is generally to:
Who is Pixie Group?
currently operate two outlets in Kuala Lumpur, Malaysia a live entertainment outlet and a bistro, each targeting different market segments;
pursue plans to acquire or open additional venues in Malaysia and Singapore, through organic growth and M&A opportunities;
pursue plans to invest in a new venue at, and providing management services to, a one-stop entertainment hub (Entertainment Hub) in Malaysia, which hub includes clubs, F&B outlets, karaoke lounges, spa and fitness centre;
seek to expand into the premium market segment of F&B business ranging from fine dining restaurants, cafes, lounges and bars, including by seeking collaboration opportunities; and
seek to grow the management service business to provide management entertainment services (including consultancy) in Malaysia to a portfolio of clubbing outlets, karaoke lounges, F&B outlets, spa and fitness centres through a potential collaboration with a local property developer.
Pixie, as the holding company, was incorporated on 9 Section 5.3 February 2015 in Singapore and together with the Pixie Subsidiaries forms the Pixie Group. Prior to Pixie's incorporation, both Pixie Subsidiaries operated in the lifestyle entertainment business since 2014. Pixie Group is a Singapore headquartered group that manages two outlets - a live entertainment outlet and a bistro in Malaysia. Pixie Mansion @ Chandelier and Pixie Luxe are both located in Kuala Lumpur, Malaysia.
11 13
Question
Response
Further Information
For personal use only
Who are the Pixie The Pixie Vendors comprise parties who are unrelated to the Section 11.4 Vendors? Company and who currently own Pixie. The majority of the Pixie Vendors are either seed capital investors in Pixie Group or new Pixie Group investors who acquired their Pixie shareholding for cash from seed capitalist investors. The remainder are predominantly parties that have been involved in the development of the Pixie Group business model or otherwise have assisted with facilitating the transaction with the Company. Details of the Pixie Vendors are set out in Section 11.3 of this Prospectus. What financial information about the Pixie Group has been disclosed in this Prospectus?
Pixie, as the holding company, has only been incorporated Section 6 since February 2015 and its accounts have not been subject to an audit. Audited accounts for each of the Pixie Subsidiaries have been included in Section 6 of this Prospectus. The periods covered by these accounts include the 2014 financial years, being the period when (or just before) the Pixie Subsidiaries commenced their current businesses. Accordingly, the audited accounts which have been disclosed relate to the entire period which is relevant to investors.
Section 11.1 What material The Company is a party to the following material contracts: and Section contracts have the Company and Pixie Share Purchase Agreement, to which the Pixie Vendors 5.3.4(v) are also a party; and Group entered into?
Business Sale Agreement with Zingmobile Holdings Pte. Ltd, a company owned by the Company's current Chairman and Chief Executive Officer and director, Mr Siew Kiet Teo, entered into in respect of the Zingmobile Business Sale.
In addition, Pixie Group has supply arrangements with various beverage suppliers. These arrangements are on usual industry terms and, in accordance with industry practice, Pixie Group does not have long term contractual commitments with these suppliers. Who are the The Company currently has two directors: Company’s Directors? Mr Teo Siew Kiet, Chairman and Chief Executive Officer
Section 9.1
Ms Khoo Phaik Ean Patricia, Non-executive Director.
12 14
For personal use only
Question
Response
Further Information
The Company intends to appoint the following incoming directors following completion of the Proposed Transaction:
Mr Hoo Voon Him, Executive Chairman
Mr Tin Yu Jiann, CEO and Executive Director
Mr Shensean Chen, Non-executive Director
Mr Tan Zhi Xiong, Ian, Non-executive Director
Ms Lay Chin Moey, Non-executive Director.
It is intended that both Mr Teo Siew Kiet and Ms Khoo Phaik Ean Patricia will resign from the Board following the appointment of the incoming directors. Information about the background and experience of each proposed director and key management is set out in Sections 9.1 and 9.2. What is the financial The Company is currently listed on the ASX and its annual Section 6 position of the report is available from its website www.zingmobile.net. Company? Pixie was incorporated in February 2015 and as at 31 March 2015 the Pixie Group had:
Cash balance of S$108,861;
Total assets of S$931,423;
Net assets of S$176,188; and
Shareholders equity of S$176,188.
Further financial information regarding the Company is set out in Section 6 of this Prospectus. Which accounting standards does the Company use?
The financial information regarding the Company and Pixie Section 6 set out in Section 6 of this Prospectus has been prepared and presented in accordance with generally accepted accounting principles in Singapore, which are equivalent to International Financial Reporting Standards (IFRS) and Australian International Financial Reporting Standards (AIFRS).
What are the key differences between Singaporean and Australian company law?
As the Company is not incorporated in Australia, its general Section 11.6 corporate activities (apart from any offering of Shares in Australia) are not regulated by the Corporations Act or by ASIC but instead are regulated by the Singapore Companies Act and ACRA.
13 15
For personal use only
Question
Response
Further Information
Although there are similarities between the two jurisdictions from a company law perspective, there are differences with respect to operation of certain laws and regulations concerning shares of publicly listed companies including but not limited to:
corporate procedures;
takeovers;
substantial shareholders reporting;
related party transactions;
protection of minority shareholders; and
the Australian "two strikes" rule.
For a more detailed description of differences in the above, please refer to Section 11.6 What benefits are being paid to Directors?
The new Directors will be paid directors’ fees for operating the Section 9.3.3 Company following the successful listing of the Company on the ASX:
Mr Hoo Voon Him, Chairman will be paid a base salary of S$120,000 per annum and director fees of S$60,000 per annum;
Mr Tin Yu Jiann, Executive Director will be paid a base salary of S$120,000 per annum and director fees of S$60,000 per annum;
Mr Shensean Chen, Non-executive Director will be paid S$12,000 per annum;
Mr Tan Zhi Xiong, Ian, Non-executive Director will be paid S$12,000 per annum; and
Ms Lay Chin Moey, Non-executive Director will be paid S$12,000 per annum.
For further information on the Directors’ remuneration and interests please refer to Section 9.3.3. What benefits are being paid to other persons?
The Company will pay various service providers who have Section 11.9. assisted with the preparation of the documentation required 1 to enable the Company to prepare this Prospectus. These persons include accountants and solicitors. Full details of amounts paid, or to be paid, are included at Section 11.9.1.
14 16
For personal use only
Question
Response
Further Information
To what extent will the Company follow the corporate governance recommendations set by the ASX Corporate Governance Council?
A statement disclosing the extent to which the Company Section 9.3.1 intends to follow the corporate governance recommendations set by the ASX Corporate Governance Council is included at Section 9.3.1.
How will the Company ensure it complies with its corporate governance policies?
The Company’s proposed Directors collectively have Section 9.3 experience in the management and administration of listed companies and may consult with legal advisers in relation to any applicable of laws or regulations.
What is the effect of the Proposed Transaction and the Offer on the Company
The Proposed Transaction, including the Offer, will provide Section 5.5 the Company with cash and reserves with which to repay existing debt and grow a business that specialises in the operation and management of entertainment lifestyle and F&B outlets in Malaysia and Singapore.
Further information on the Company’s corporate governance policies and practices as at the date of this Prospectus are included at Section 9.3.
The capital structure of the Company will be impacted by the number of Shares which will be issued pursuant to the Offer. Existing shareholders will hold 9.2% of the total Shares on issue if A$9,000,000 is raised under this Prospectus and the Consideration Shares are issued. The Pixie Vendors will hold 69.9% of the total Shares after the Consideration Shares and Offer Shares are issued (assuming no Pixie Vendor participates in the Offer). Accordingly, the Proposed Transaction and Offer will have a dilutionary effect on the Company’s existing Shareholders, even more so if the over subscription facility is utilised. The future of the Company will be dependent on many things, some of which are outside of the control of the Company. Specifically in relation to the funds raised under this Prospectus, the future growth of the Company will be dependent on the Company’s ability to successfully manage its existing Lifestyle Outlets and embark on its future plans to grow its portfolio.
15 17
For personal use only
Question
Response
Further Information
Who are the Substantial Holders and who will be the Substantial Holders after Completion of the Proposed Transaction and the Offer?
Those Shareholders holding 5% or more of the Shares on issue both as at the date of this Prospectus and on completion of the Proposed Transaction and the issue of securities pursuant to the Offer (assuming a raising of A$9,000,000 and assuming all Consideration Shares and Offer Shares are issued) are as follows: As at the date of this Prospectus: Holder Name
Number
%
Teo Siew Kiet
22,806,653
34.80
Uob Kay Hian Private Limited
11,618,278
17.73
Citicorp Nominees Pty Ltd
6,780,896
10.35
HSBC Custody Nominees (Australia) Pty Ltd
5,815,194
8.87
3,300,000
5.04
Evason Investments Ltd
Following completion of the Proposed Transaction and the Offer (based on a raising of A$9,000,000): Holder Name
Number
%
Fortress Capital Asset Management (M) Sdn Bhd
113,300,00
15.83
Sens Bhd
81,100,000
11.33
Hoo Voon Him
41,200,000
5.76
Sim Heok Hoo
45,000,000
6.29
Tan Zhi Xiong, Ian
37,500,000
5.24
Tin Yu Jiann
34,100,000
4.77
Capital
Sdn
Will the Company The Company does not expect to pay dividends in the near Section 11.4.3 pay dividends? future.
16 18
For personal use only
Question
Response
Further Information
Where will the Shares Shareholders will receive CHESS Depository Interests (CDIs) Section 10.7.1 be quoted? in respect of fully paid Shares in the Company. The issue of CDIs is necessary to allow ASX trading of a company incorporated in Singapore. An application has been made to the ASX for re-admission of the Company to the Official List of ASX and for official quotation of the CDIs being offered pursuant to this Prospectus. Section 10.9 Will any Shares be No Shares issued under the Offer will be subject to escrow. escrowed? Certain securities in the Company will be classified by ASX as restricted securities, including all of the Consideration Shares to be issued to the Pixie Vendors, and will be required to be held in escrow for up to 24 months from the date of reinstatement to trading on the ASX (if such reinstatement occurs). During the period in which these securities are prohibited from being transferred, trading in Shares may be less liquid which may impact on the ability of a Shareholder to dispose of his or her Shares in a timely manner. The Company will announce to the ASX full details (quantity and duration) of the Shares required to be held in escrow prior to the Shares re-commencing trading on the ASX. When will I know if A holding statement confirming your allocation under the Section 10.5.5 my application was Offer will be sent to you if your Application is successful. Holding statements are expected to be issued on or about no successful? later than 7 Business Days after the close of the Offer. How can I obtain By speaking to your accountant, stockbroker or other further advice? professional adviser. If you require assistance or additional copies of this Prospectus please contact Boardroom on +61 (02) 9290 9600. Contact details
For further details, see the Corporate Directory at the end of Corporate this Prospectus. Directory
THE OFFER What is the Offer?
By this Prospectus, the Company makes an offer of Section 10 150,000,000 Shares at an issue price of A$0.06 per Share to raise A$9 million. The Offer will be open to selected investors (including retail investors) with registered addresses in Australia, and other institutional and high net worth individual investors whom it is lawful to make the Offer and who are identified by the Company and its brokers. The Offer has an over subscription facility for a further A$2 million. The Offer is subject to a minimum total subscription of A$7 million.
17 19
Question
Response
Further Information
For personal use only
As noted in section 11.1.2 of this Prospectus, ZHPL and Mr Teo Siew Kiet have agreed to use best endeavours to secure investment of at least A$4 million from investors, who will participate in the Offer, for the purpose of repaying existing borrowers. CDIs
Shares will be issued in the form of CHESS Depositary Section 10.7.1 Interests (or CDIs), which are a form of beneficial interest in Shares held by a depositary nominee. See Section 10.7.1 for more detail on CDIs. The issue of CDIs is necessary to allow the Offer Shares to trade electronically on ASX. The ASX uses an electronic system, called Clearing House Electronic Subregister System (CHESS) for clearing and settlement of trades in shares and other securities quoted on the financial market of the ASX. CDIs are frequently used for trading shares of companies incorporated outside of Australia, and trade in a similar manner to ordinary shares. Each CDI will represent an interest in one Share. CDIs give a holder similar, but not identical, rights to a holder of Shares. More details regarding CDIs are contained in Section 10.7.1. References in this Prospectus to ‘‘Shares’’, "Offer Shares", "New Shares" and "Consideration Shares" include references to ‘‘CDIs’’ as appropriate.
How will funds raised The gross funds raised by the Offer will be A$9,000,000, Section 5.4 under the Offer be before costs associated with the Proposed Transaction and the Offer, which the Company intends to use: used?
repay existing borrowings, which comprise of a number of loan arrangements with non-related parties as described in Section 5.4;
to pay expenses of the Offer and Proposed Transaction;
provide funds for expansion capital to expand its portfolio of entertainment and F&B business in Malaysia and Singapore;
provide funds for the continued development and enhancement of the existing venue offering; and
for general working capital.
There is an over-subscription facility for a further A$2 million. A minimum total subscription of A$7 million also applies to the Offer. The different scenarios and use of funds are illustrated in section 5.4.
18 20
For personal use only
Question
Response
Further Information
What are the key dates Lodgement of this Replacement Prospectus with ASIC: 13 Section 2 of the Offer? October 2015. Opening Date for the Offer: 13 October 2015. Closing Date for the Offer: 26 October 2015. Expected date for Shares to commence trading on ASX: 6 November 2015. The above dates are indicative only and may change without notice. The Company reserves the right to extent the Closing Date or close the Offer early without notice. What is the Offer Price?
The Offer Price is A$0.06 per Share.
Section 10.2
What rights and liabilities are attached to the Shares being offered?
All Shares issues under the Offer will rank equally with Section 11.4 existing Shares on issue on the terms set out in Section 11.4.
When will the CDIs be quoted?
Application for Official Quotation by the ASX of the CDIs Section 10.7 offered pursuant to this Prospectus has been made to ASX. Completion of the Offer is conditional on ASX approving this application.
Is the Offer underwritten?
No, the Offer is not underwritten.
How do I apply for Shares under the Offer?
All Application Forms for the Offer must be completed in Section 10.5.2 accordance with the instructions accompanying the Application Form.
Where do I send the Application Form?
Application Forms should be sent to:
A summary of the rights and liabilities attaching to the Shares is set out in Section 11.4.
Section 10.11
Section 10.5.2
Mailing address: Zingmobile Group Limited C/- Boardroom Pty Limited GPO Box 3993, SYDNEY NSW 2000 Delivery address: Zingmobile Group Limited C/- Boardroom Pty Limited Level 12, 225 George Street, Sydney NSW 2000
19 21
Question
Response
Further Information
For personal use only
KEY INVESTMENT HIGHLIGHTS What are the key The Directors of the Company are of the view that the investment highlights Proposed Transaction provides the following non-exhaustive of the Proposed list of key highlights: Transaction?
Aiming for exceptional service offerings through quality customer service Pixie Group aims to achieve high quality standards for its service offerings ranging from live entertainment and performances, music and lighting to customer service and F&B offerings.
Broad target customer base The Pixie Board believes that Pixie Group has successfully built its outlets in a way which attracts customers looking for a lifestyle experience in a safe environment. Each outlet is conceptualised and designed to cater to a different type of lifestyle experience. This approach aims to cover a broad spectrum of target customer groups.
Strategic location to tap into different market segments The Pixie Board believes that both Pixie Mansion @ Chandelier and Pixie Luxe are situated at prime locations in Kuala Lumpur which allow these outlets to tap into different market segments. The venues were carefully selected by Pixie management relying on their experience in site identification. Both outlets are located within close proximity to high traffic residential and commercial areas in Kuala Lumpur. Pixie Mansion @ Chandelier attracts upper middle to upper class customer groups, whereas Pixie Luxe taps into a more middle class target market.
Experienced management team with clear vision Pixie Management has experience in the lifestyle entertainment and the F&B industry, managing clubs and nightlife entertainment in Asia, in particular in Malaysia and Singapore. They have on average six years of experience in the entertainment and F&B industries.
20 22
For personal use only
Question
Response
Further Information
The Pixie Board also has short to medium term plans to grow Pixie Group into a preferred lifestyle entertainment and F&B service provider in Malaysia and Singapore. The Pixie Board believes that by leveraging on the experience of the management team, coupled a with a strong and clear vision, the Pixie Group success story can grow to greater heights.
Effective internal control and hands on approach The Pixie Board believes that the standard operating procedures in place across head office and the two outlets are important for Pixie Group to achieve economies of scale and ensure high standards of service across the venues. Pixie Management has implemented standard operating policies across major operational functions which are communicated to all levels of employees, from general managers to service staff including waiters, bar staff and the security team. Pixie Management has also put in place internal control procedures to ensure efficiency and effectiveness of operations.
Rapidly growing entertainment and F&B sectors as well as consumer spending in Malaysia Both the live entertainment outlet sector and food service sector in Malaysia are expected to continue to grow in size over the coming years. The growth of the entertainment outlet segment in Malaysia to date is evidenced by the successes of large live entertainment providers such as Pixie, the OS Club Group, Yes Club Group, W Club Group and Soju Group. The outlook for both the live entertainment outlet sector and food service sector in Malaysia is anticipated to continue to be positive, due to a combination of factors such as Malaysian economic growth, a rising population and urbanisation, an expanding middle class, increased affluence and sophistication of the Malaysian consumer, rising per capita income, an expanding tourism industry, increase in corporate and private events and busier lifestyles leading to Malaysians actively seeking precious leisure time.
21 23
Question
For personal use only
Response
Further Information
Business expansion and acquisition plans for growth The Pixie Board intends to embark on the following future plans aiming to achieve business growth and greater diversification into different segments in the areas of lifestyle entertainment and F&B:
pursue plans to acquire or open additional venues in Malaysia and Singapore, through organic growth and M&A opportunities;
pursue plans to invest in a new venue at, and providing management services to, a one-stop entertainment hub (Entertainment Hub) in Malaysia, which hub includes clubs, F&B outlets, karaoke lounges, spa and fitness centre;
seek to expand into the premium market segment of F&B business ranging from fine dining restaurants, cafes, lounges and bars, including by seeking collaboration opportunities; and
seek to grow the management service business to provide management entertainment services in Malaysia to a portfolio of clubbing outlets, karaoke lounges, F&B outlets, spa and fitness centres through a potential collaboration with a local property developer.
The Board believes that, collectively, these future plans and strategies will establish Pixie Group as a regional lifestyle entertainment and F&B group characterised by the following three core business segments in (i) lifestyle entertainment; (ii) F&B; and (iii) management consultancy services.
Low capital expenditure requirements Pixie Group does not own any real property and it leases, from independent third parties, all of the premises at which its operations are located. The Pixie Board believes that its leasing strategy reduces Pixie Group’s capital investment requirements significantly. Currently, Pixie Group does not intend to acquire any real property.
22 24
For personal use only
Question
Response
Further Information
As part of its future plans, Pixie Group intends to focus on collaborating with third parties and entering into joint venture arrangements which are aimed at allowing Pixie Group to operate without the need for significant capital expenditure, at least in the area of property investment. In particular, the Pixie Board is currently exploring a potential collaboration with a Malaysian property developer which would see Pixie Group appointed as the 'lifestyle' manager to various entertainment and F&B ventures in an Entertainment Hub located in Malaysia. The Pixie Board believes this will allow the Company to continue to improve its profitability. KEY RISK FACTORS What are the key risks Please note, the business, assets and operations of the of investing in Shares Company are subject to certain risk factors that have the potential to influence the operating and financial in the Company? performance of the Company in the future. These risks can impact on the value of an investment in the securities of the Company. The key risks associated with an investment in the Company are summarised below. Further risks concerning an investment in the Company are set out in Section 8. Re-quotation of Shares on ASX
Section 8.1.1
There is a risk that the Company may not be able to meet the requirements of the ASX for re-quotation of its Shares on ASX. Conditions Precedent to completion
Section 8.1.2
The Proposed Transaction is subject to a number of conditions precedent which, if not satisfied, may mean the Proposed Transaction does not proceed. The Proposed Transaction will not complete (and no Shares can be issued pursuant to the Offer or the Proposed Transaction) until ASX has confirmed that the Company has re-complied with Chapters 1 and 2 of the listing rules (but for the outstanding conditions regarding Completion and the issue of Shares).
23 25
Question
Response
Further Information
For personal use only
Limited trading history and implementation of future Section 8.1.3 plans Pixie was established in 2014 and therefore has a limited trading history. As an early stage business, the Pixie Business also has a limited financial history that may make it difficult for investors to assess its past performance. There is a risk that the Company does not fulfil its future plans, including its expansion strategy to expand the business into new markets. This could be due to factors relating to the economy or a failure on the Company's part to execute the strategy as expected. Concentration of ownership of shares
Section 8.1.4
The investment being sought by the Company through the Offer will be a minority stake in the Company, of between 17.1% and 24.5% in total. Depending on the number of Shares finally issued under the Offer, the Pixie Vendors will hold approximately 66.8% to 73.3% of the total issued Shares in the Company and will be in a position to exert considerable control over the decisions made by the Company, including in relation to the election of Directors, the appointment of new management and the potential outcome of matters requiring a Shareholder vote. There is a risk that the interests of the Pixie Vendors may be different to the interests of other Shareholders. Please also see risk 8.1.5 in relation to the application of the Singapore Takeovers Code. Liquidity and dilution risk
Section 8.1.5
There is a significant liquidity risk since only a relatively small percentage of the Shares will be held by non-Pixie Vendor Shareholders, and the Pixie Vendors will enter into restriction agreements for a period of up to two years from re-quotation of the Shares on the ASX (see further at Section 10.9), meaning they will not be able to be traded freely for the relevant restriction period. In addition, there is future dilution risk to minority Shareholders should the Company seek to raise further equity. This risk arises particularly if the Pixie Vendors elect to participate in future Share issues and minority Shareholders are unwilling or unable to participate in those capital raisings.
24 26
For personal use only
Question
Response
Further Information
Singapore Takeovers Code restrictions may not apply after Section 8.1.6 Completion After Completion, Pixie Vendors and their associates will hold Shares carrying over 49% of the voting rights of the Company. This means that they will be free to acquire further Shares without the requirement under Rule 14 of the Singapore Takeovers Code (to make a general offer for the Company) applying.
This means minority Shareholders will have reduced rights under the Singapore Takeovers Code in relation to their minority holdings. Singapore law applies to the Shares
Sections 8.1.7, 11.4 In addition to differences in Singapore takeover law and 11.6 compared with Australian takeover law, there are other differences in Shareholder rights arising from the fact that Singapore law will govern the rights attaching to Shares and the fact that investors will receive CDIs. These difference include:
certain minority shareholder rights (such as statutory derivative actions, requisitioning shareholder meetings, and oppression remedies) are only available to direct shareholdings, which can be achieved by converting CDIs into Shares,
no annual vote on a remuneration report or "two strikes" rule, and
less restrictive related party transaction regulation.
25 27
Question
Response
Further Information
For personal use only
Brand value susceptible to changes in customer preferences Section 8.1.8 Pixie Group operates in a fast-changing environment of consumer preferences. As a consequence, failure by Pixie Group to predict or respond to any such changes could adversely impact Pixie Group's future financial performance. Over time, the Pixie brand names and related intellectual property, and the reputation and value associated with these brands, could be adversely affected by a number of factors including:
failure to provide the high quality of customer service and products expected by customers;
disputes with third parties - such as employees, landlords, suppliers and customers; or
adverse media (including social media).
Relationships with landlords and suppliers
Section 8.1.9
Pixie Group is reliant on its relationships with its landlords as it leases both its head office space and the premises at which its outlets currently operate. Accordingly, Pixie Group's profitability may be impacted if it is unable to renew its leases, in particular the ones relating to the outlets, on favourable terms or if its lease arrangements with the landlords are terminated for any reason. Pixie Group also relies on sourcing products from various suppliers and any material adverse change in its relationships with its suppliers, its terms of trade or the ability of key suppliers to service orders could have an adverse impact on the Company's prospects. In particular, beverage sales are a key revenue driver for Pixie Group, and any adverse change in pricing, supply availability, or factors beyond Pixie Group's control (such as future import restrictions on imported beverages, or taxes and duties) would adversely affect the Company's profits. Competition
Section 8.1.10
The markets in which Pixie Group operates are subject to vigorous competition, and there can be no assurances that the competitive environment will not change adversely due to actions of competitors or changes in consumer preferences. The actions of current or new competitors can have a significant effect on the results of Pixie Group's businesses.
26 28
Question
Response
For personal use only
Reliance on key personnel
Further Information Section 8.1.11
The Company relies on the experience and knowledge of its management team. The Company is also dependent on its ability to recruit and retain suitably qualified personnel. The loss of personnel may have a material adverse effect on the Company. M&A, growth prospects and company expansion plans
Section 8.1.12
The Company's growth prospects are dependent on a number of factors, including its ability to expand its portfolio of entertainment and food and beverage venues across Asia and secure proposed collaboration and joint venture arrangements. The Company may not be able to achieve its growth targets if it is unable to find suitable mergers, joint ventures, acquisitions or opportunities (including new venues). The Company may be unsuccessful in a merger, acquisition or new business opportunity, or a business investment made by the Company may not perform to the level expected. A potential collaboration may not eventuate or a formalized venture may be unsuccessful. New ventures such as the proposed consulting business are unproven and risky, and management may not be able to profitably develop the new venture resulting in a loss of investment. The Company may also face challenges in securing funding for its expansion plans. Further, if funding is obtained it may involve debt (which would expose the Company to additional financial risks), or equity funding (which may dilute the holdings of existing shareholders). Economic conditions, including increased costs The Malaysian entertainment sector, and therefore the Pixie Group business, is susceptible to current economic conditions. A downturn in economic growth or performance can significantly impact consumer confidence and consumer discretionary spending in sectors such as entertainment and F&B in which Pixie Group operates. This means that in an economic downturn a business like Pixie Group's business may be subjected to a downturn in revenue and hence decrease in profitability.
Section 8.1.13
27 29
Question
Response
Further Information
For personal use only
The performance of the Pixie Group business may also be impacted by increases in operating expenses, including purchasing costs, costs associated with employees and rents, all of which can adversely affect profit margins. Risk associated with regulatory environment
Section 8.1.14
Pixie’s main operating activities are based in Malaysia and subject to Malaysian laws and regulations. Pixie Group is required to comply with all relevant laws, including obtain various licences, approvals and registrations required to operate nightlife and clubbing outlets in Malaysia. New outlets acquired or opened by the Company may be dependent on the ability of the Company to obtain relevant licences and approvals and may increase compliance costs of the Company. This may lead to uncertainty and may cause delays in expansion plans. In addition, in Malaysia it is usual practice for key licences needed for operation of a business at the premises (such as entertainment and liquor licences) to be held by the landlord. This means that a breach of licence conditions or failure to renew may be caused by the landlord and this may be outside of the control of Pixie Group.
28 30
Industry overview
For personal use only
4 4.1
Introduction
4.1.1
Entertainment in Malaysia
The Malaysian entertainment outlet sector is part of the broader hospitality industry, which includes hotels and resorts, as well as the associated food and beverages outlets. The entertainment outlet sector is a multi-billion ringgit industry, with revenue generated by entertainment outlets in Malaysia being estimated at approximately RM4.7 billion (approximately A$1.57 billion) in 2014. There are indications that people in Malaysia are increasingly seeking unique, authentic experiences in the entertainment venues they visit, as they view it as part of the modern lifestyle. As work-life balance becomes increasingly difficult to achieve in Malaysia, hard earned leisure time, including entertainment, has taken on a new significance. Due to increasing per capita income, Malaysians seek out new avenues in which to spend their wealth, including entertainment. For example, live entertainment clubs which are perceived as premium and chic outlets, are receiving increasing attention as places where the growing middle class and corporate professionals go to mingle. The various segments of the entertainment outlet sector are illustrated and discussed below.
Figure 1:
Segmentation of the Entertainment Outlet Sector in Malaysia
Note: Pixie Mansion @ Chandelier is involved in the live entertainment club segment of the entertainment outlet sector, as indicated by the dotted box. Source: Infobusiness Research
In general, Malaysian entertainment outlets offer a wide range of entertainment services, in addition to alcoholic and non-alcoholic beverages, and a range of food services.
Live entertainment clubs ---- entertainment outlets that are a cross between discotheques and bars/pub/lounges. The premises are often large (more than 5,000 square feet) and stylishly decorated. They provide various concepts, including high value entertainment performances such as live bands, skits, catwalk and model shows, as well as DJ sets. To attract patrons, they also offer different theme nights on a weekly/fortnightly/monthly
31
29
For personal use only
basis. These places also cater for corporate events where admissions are exclusive in nature and are not opened to the public for a fixed period of time;
Discotheques ---- entertainment outlets for dancing to live or recorded music and often featuring sophisticated sound systems, elaborate lighting and other effects;
Karaoke outlets ---- entertainment outlets that provide devices playing popular songs to which people sing the words to the songs they choose;
Bars/pubs/lounges ---- entertainment outlets with piped-in music and/or small live bands that offer alcoholic drinks and light meals. Some establishments also offer games such as darts and pool. Bars/pubs/lounges are usually smaller in size than live entertainment clubs; and
Others ---- this category of entertainment outlet includes outlets hosting cabarets, concerts and theatres (performing arts and dramas), as well as cinemas.
Source: Extracted from report on The Malaysian Entertainment Outlet Sector prepared by Infobusiness 4.1.2
Food Service
The growth in revenue from the F&B industry in Malaysia is an indicator that dining out is becoming popular among Malaysians, especially those living in urban areas where people lead more hectic lives and are busy with their daily life activities such as working, studying, and operating their businesses. There are several factors which may influence a customer's decision to select a particular type of dining out venue, including price of the food, household income and other household demographics. People are attracted to dining out due to the convenience factor which translates to time saving in their busy lives, as well as the pleasure of joining in the social aspects of dining out. The F&B service industry is an integral sector in all communities worldwide, whether it be in a small village or a large metropolitan city. Consumers in Malaysia are able to select dining options in a range of cuisines and pricing points, be it a simple snack from the local hawker stall or a five-course meal at an international hotel. The food service sector in Malaysia today is a sizeable and still rapidly growing. The various segments of the food service sector are illustrated in Figure 2 and discussed below. Figure 2:
Food service Full service restaurants
Quick service restaurants
Cafes/ bistros
Low end eateries
Others
Note: Pixie Luxe is involved in the café/bistro segment of the food service sector
30
32
For personal use only
The food service sector can be divided into the following five key segments:
Full-service restaurants - these outlets introduce the traditional idea of dining out to Malaysians, they are restaurants which invite the guests to be seated at tables while the server takes their order and serves the food and drinks to the guests (thereby providing a full service). This segment may be categorized into two types of full-service operations, fine dining and casual dining restaurants.
Quick service restaurant/ fast food - these outlets focus on speed of service and convenience in dining out. The fast-food restaurants often fall under this category. They often have simple decor, inexpensive food items and are characterised by speedy service.
Café and Bistro - these are informal restaurants offering a range of meals, snacks and sandwiches. Cafés and bistros derive a significant proportion of their revenue from drinks.
Low-end eateries ---- this category includes coffee shops, hawker stalls-holders, food courts and kiosks which offer food at competitive prices with minimal customer service being provided to patrons.
Others ---- this "other" category includes bars, pubs, canteens, social caterers for special events and contract caterers for airlines, railways and other institutions
4.2
Industry Trends
4.2.1
Live Entertainment Club Segment
The live entertainment club segment of the Malaysian entertainment outlet sector has evolved over the past two decades. In the past, there were limited choices for the public to experience club-like entertainment. Today, the live entertainment club segment offers a wide range of entertainment services to attract patrons, often using service differentiation as a way of seeking to retain customers in a competitive market. For example, entertainment outlets offer various combinations of entertainment services, including, but not limited to, live bands, catwalk and model shows, theme nights, skits and DJ sets. A major factor behind the evolution of the live entertainment clubs in Malaysia is that Malaysians are also becoming more affluent, sophisticated and well-travelled. Through holiday experiences, as well as business travel, Malaysians experience live entertainment shows in major Asian cities such as Bangkok, Jakarta, Singapore, Hong Kong, Macau and Taipei, and when they return look for similar experiences at home. Entrepreneurial Malaysians have adapted these overseas entertainment concepts and introduced them in Malaysia. Live entertainment outlets have become popular social venues for people who choose to relax and enjoy the atmosphere with their friends or business associates. The expansion of the middle class in the cities has also contributed to this phenomenon. In general, Malaysians are keen to try new concepts in the live entertainment scene, as evidenced by the successes of live entertainment clubs such as the Pixie Group, OS Club Group, Yes Club Group, W Club Group and Soju Group. Patrons are actively seeking out unique experiences and personalised interactions with their discretionary spending, which the live entertainment clubs are able to provide. Source: Extracted from report on The Malaysian Entertainment Outlet Sector prepared by Infobusiness
33
31
4.2.2
Food Service Sector
For personal use only
In Malaysia it is not unusual for consumers to have breakfast, lunch and dinner out daily, as well as eating out for snacks in between meals. This is more commonly practiced by young married couples or young single adults who are gainfully employed. It is, however, also common for families to have dinner out on average at least once a week, at the street stalls, food court, coffee shops, low-end restaurants and the like. Dining at mid- to high-end restaurants is generally seen as being reserved for special occasions such as birthdays, weddings, anniversaries, festive celebrations, corporate functions and the like. Malaysian cuisine is varied and has historically been influenced by Chinese, Malay, Indian and Middle Eastern cuisines. In recent decades, western cuisine from Europe, the USA and Australia have also started to influence the local Malaysian cuisine. Today, restaurants that offer exotic cuisine from the USA and Japan are gaining popularity amongst middle to high income consumers, particularly those located in urban areas who are in their 20s to their late-40s. Although Malaysia’s foodservice sector has largely retained its Asian origins, it is rapidly modernising and upgrading to reach standards similar to those found in other developed nations.
4.3
Key Market Drivers
4.3.1
Economic growth
Malaysia has a diversified economy and that contributes to its resilience to global economic trends. Between 2010 and 2014, Malaysia charted an average economic expansion of 5.7% (figure 3). In 2014, the Malaysian economy grew by a GDP of RM47.4 billion or by 6% to reach RM835 billion. It is anticipated that GDP will experience further growth of between 5% and 6% per annum in the period between 2015 and 2020. This growth is expected to translate into increased private consumption spending by Malaysian consumers. As Malaysia is an export oriented economy, it is also expected exports from Malaysia will increase in response to economic recoveries in its major export destinations. A continued healthy expansion of the Malaysian economy is expected to be the key driver behind the continued growth of the live entertainment club segment in the country, due to increased discretionary income in the hands of both individuals and businesses willing to spend on corporate entertainment.
32
34
Figure 3:
For personal use only
% 8.0
Economic Growth of Malaysia
7.2
7.0 6.0
5.1
5.0
6.0
5.6 4.7
4.0 3.0 2.0 1.0 0.0
2010
2011
2012
2013
2014
Source: Infobusiness Research
Source: Extracted from report on The Malaysian Entertainment Outlet Sector prepared by Infobusiness 4.3.2
Rising population and urbanisation
An expanding Malaysian population, along with increasing urbanisation, are key drivers in the recent growth of live entertainment clubs in the country. Such clubs are generally situated in more affluent and densely populated areas. The population of Malaysia grew to 30.3 million in 2014 from 28.6 million in 2010, with a compounded annual growth rate of 1.5%. The urbanisation rate in Malaysia was recorded at 72.8% in 2011 and is anticipated to reach 75% in 2020. This concentration of the population in urban areas aids the continued growth of live entertainment clubs. The demographic profile of the Malaysian population in terms of age grouping also has an impact on the demand for entertainment services. The age groups of between 20 to 29, 30 to 39 and 40 to 49, comprise 20.0%, 15.2% and 11.7% of the population in Malaysia, respectively. Collectively, these three age groups, (which are historically the most likely to seek live entertainment services) accounted for 14.2 million people or 46.9% of the population in Malaysia in 2014. Source: Extracted from report on The Malaysian Entertainment Outlet Sector prepared by Infobusiness 4.3.3
Rising per capita income
A key characteristic of the live entertainment club segment is its reliance on per capita income and leisure time. Per capita income in Malaysia has grown by 26.9% to RM34,123 in 2014 from RM26,882 in 2010. It is projected to further increase to RM45,728 by 2020, which would represent an increase of 34% since 2014. To achieve this, the Malaysian government plans to further broaden the economic base, venturing into knowledge-intensive economic activities to generate higher paying jobs, improving overall efficiency and capacity through increased productivity and innovation, and introducing new sources of growth. Increasing per capita income has improved the spending power of consumers, which in turn, allows consumers to spend more on entertainment services, thus having a direct impact on the continual growth of the live entertainment club segment.
33 35
Figure 5:
Per Capita Income in Malaysia
RM 40,000
For personal use only
35,000 30,000
26,882
29,683
30,698
31,844
2011
2012
2013
34,123
25,000 20,000 15,000 10,000 5,000 0
2010
2014
Source: Infobusiness Research
Source: Extracted from report on The Malaysian Entertainment Outlet Sector prepared by Infobusiness 4.3.4
Expanding tourism industry
Increasing numbers of tourists and their respective expenditure have positively impacted the entertainment outlet sectors. Foreign tourism was recorded at 27.4 million visitors in 2014, an 11.4% growth from the 24.6 million recorded visitors to Malaysia in 2010. Affordable travel via low cost carriers and the Malaysian government’s continued promotion of the country as an attractive tourist destination have positively contributed to the increasing number of foreign and domestic tourists in Malaysia leading to an increase in tourist-based spending. Domestic tourism has expanded strongly in the past five years, with 169.3 million domestic visitors recorded in 2014, when compared with 115.5 million domestic visitors in 2010. In terms of tourist expenditure, foreign tourists spent RM73.9 billion in Malaysia in 2014, of which RM2.8 billion was estimated to have been spent on entertainment, while domestic tourists spent RM62.2 billion in 2014, of which RM1.9 billion was estimated to have been spent on entertainment. Kuala Lumpur remained the top tourist destination, registering approximately 23 million visitors in 2013, followed by Selangor with 22 million visitors, Johor with 13 million visitors and Penang with 8.4 million visitors. The entertainment outlet sectors, which includes the live entertainment club segment, will continue to be an important avenue for tourists seeking entertainment services. Source: Extracted from report on The Malaysian Entertainment Outlet Sector prepared by Infobusiness 4.3.5
Corporate and private events
In addition to food and beverages, the wide variety of entertainment services such as live bands and skits offered by live entertainment clubs provide attractive alternative venues where corporations can hold corporate events. These include corporate annual parties, product launches, customer appreciation events and the like. Private events are also held by customers to celebrate their special days such as birthdays, particularly among the younger urban professionals who opt for the kind of ambiance and atmosphere offered by live entertainment clubs. Source: Extracted from report on The Malaysian Entertainment Outlet Sector prepared by Infobusiness
34 36
For personal use only
4.3.6
Busier lifestyle
The busier lifestyle of today’s urban society has made eating out more of a convenience than a luxury. Just as instant noodles and pre-packaged meals have become common place at the supermarket for consumers, patronage at restaurants and other eating venues for meals in general has become more frequent. Parents take children out for meals because they are too tired to cook, and young adults choose to have their meals outside the home with friends while enjoying the many dining options available. The experience and observation of Pixie Group management is that restaurant patrons are also visiting restaurants more frequently to celebrate birthdays and other special occasions such as Valentine’s Day and Mother’s Day as families seek time and effort saving options for meals. Other days that are being celebrated as special occasion days include sports event days such as the World Cup Football and key English Premier League matches.
4.4
Competitive Landscape
4.4.1
Service Differentiation
Due partly to the relatively keen competition in this sector, most entertainment outlets have a theme and use this as a service differentiation tool to attract customers. In particular, live entertainment clubs offer different theme nights on a weekly/fortnightly/monthly basis, which are aimed at attracting repeated patronage from customers. This includes special choreographed live performances and costume-play events. This type of offering allows the venue to set itself apart from its competitors. In a competitive and customer-focused market, setting the establishment apart is crucial to establishing a firm customer base. Patrons visit entertainment outlets on both weekdays and weekends. Live entertainment clubs are able to attract more patrons with their high value entertainment performances such as live bands, DJ sets, skits as well as catwalk and model shows, as compared to the conventional venues such as most bars/pubs/lounges where only alcoholic beverages are offered. Unlike discotheques which are usually visited by patrons on the weekends, live entertainment clubs are also able to attract patrons on weekdays with their value added entertainment service offerings. This further enhances the attractiveness of live entertainment clubs to the general public. Other methods used by live entertainment clubs to differentiate themselves include happy hour promotions and liquor bottle promotions. Source: Extracted from report on The Malaysian Entertainment Outlet Sector prepared by Infobusiness
37
35
4.4.2
Customer service
For personal use only
Excellent customer service is a defining aspect in live entertainment clubs. It is with customer service that a venue gets its first opportunity to impress and create a lasting great impression on its customers. Excellent customer service is very important to patrons in Malaysia and so the live entertainment clubs do their best to provide a high quality level of service. This, in turn, leads to customer satisfaction and customer loyalty, encouraging repeat visits to the venue. Live entertainment clubs also often employ public relations officers to find new ways to further enhance customer service. The notable live entertainment club groups in the Klang Valley in Malaysia are as follows:
Pixie Group;
OS Club Group;
Yes Club Group;
W Club Group; and
Soju Group.
Source: Extracted from report on The Malaysian Entertainment Outlet Sector prepared by Infobusiness 4.4.3
Food Quality
Food quality has positive and significant effects on customer satisfaction and loyalty in Malaysia. As lifestyles become busier in today’s society, eating out is increasingly becoming more of a convenience rather than a luxury. In addition, food service outlets patrons are also visiting F&B outlets more frequently to celebrate special occasions as families seek time and effort-saving options for meals. Consumers have also become more demanding in what they expect from food service outlets due to increased media exposure from lifestyle television shows and restaurant reviews in magazines and newspapers. It is important for a food service outlet to be creative in developing its brand in order to capture the attention of discerning consumers and to remain competitive in the food service industry. It is anticipated that a key growth area will be eateries that provide new and interesting concepts for increasingly worldly diners who are willing to pay for high quality food and service.
4.5
Outlook and Prospects
The live entertainment outlet segment is expected to continue to grow in size over the coming years, as evidenced by the successes of large live entertainment providers such as the Pixie Group, the OS Club Group, Yes Club Group, W Club Group and Soju Group. Rising affluence, increased sophistication and hectic lifestyles are among some of the major factors that drive Malaysians to continue to consume alcoholic beverages on a daily basis, either at home or more often, in entertainment outlets. The outlook for the live entertainment club segment is anticipated to continue to be positive, due to a combination of factors such as economic growth, a rising population and urbanisation, an expanding middle class, increased affluence and sophistication, rising per capita income, an expanding tourism industry and an increase in corporate and private events. Source: Extracted from report on The Malaysian Entertainment Outlet Sector prepared by Infobusiness
36
38
5
For personal use only
5.1
Business Overview The Company
The Company is a Singapore incorporated company listed on the Official List of the ASX (ASX: ZMG). The Company currently operates as a digital mobile marketing contents provider in the Asia Pacific region. Given the current market conditions and competitiveness, the Board considers it doubtful that the business carried on by Zingmobile Group can generate sufficient funds to meet the high-interest loan repayments of about A$4 million which must be repaid the earlier of 7 Business Days after readmission of the Company; and 31 December 2015. The Company has, for the past 12 months, continued to evaluate alternative activities outside the digital mobile marketing sector and was pleased to be in a position to enter negotiations with Pixie. On 11 June 2015, the Company announced to ASX that it has entered into a Share Purchase Agreement to acquire the entire issued share capital of Pixie (Proposed Transaction). The Proposed Transaction will result in a significant change to the nature and scale of the Company’s activities. Please refer to the Notice of Meeting for further details regarding the Proposed Transaction. On completion of the Proposed Transaction pursuant to the Share Purchase Agreement, the nature of the Company's business will change to become a lifestyle entertainment and F&B group with a focus on the Malaysia and Singapore markets. Subject to satisfaction of certain conditions precedent to Completion (refer to Section 5.7), the Company will wholly own the Pixie Group which currently operates two venues located in Kuala Lumpur, Malaysia. In conjunction with and conditional on the Proposed Transaction, Zingmobile has entered into a business sale agreement with Zingmobile Holdings Pte. Ltd (ZHPL), to sell its existing digital mobile content and services business (Zingmobile Business Sale). The terms of the sale include a sale price of S$80,406, being equal to the net tangible asset value of the Zingmobile business as at 31 March 2015. In addition to the cash consideration, ZHPL and Mr Teo Siew Kiet are also required to use best endeavours to take all steps necessary to implement the Proposed Transaction and the Offer and introduce investors to subscribe for at least A$4 million under the Offer. ZHPL is a company wholly owned by Mr Teo Siew Kiet, the Company's current Chairman and Chief Executive Officer and largest shareholder. The Zingmobile Business Sale is conditional on, amongst other things, ZMG shareholder approval.
5.2
Zingmobile Business Overview
The Company commenced operations in 2002 when it first offered mobile content to mobile users in Singapore. The Company is continuing to venture into new technical platforms after its success in launching the "payment gateway business". New platforms and markets are currently being explored. The Company is currently a Singapore ba sed company that develops and markets digital mobile content direct to consumers in Asia. Payments for the Group’s products and services are billed by the carriers to which customers subscribe. The Company collects payment direct from these carriers, which retain a portion of revenue in exchange for this relationship. Further information on the business of the Company is included in its annual report which is available at www.zingmobile.net.
39
37
5.3
Overview of Pixie Group
5.3.1
Introduction
For personal use only
Pixie Group is a lifestyle entertainment and food and beverage (F&B) group focusing on delivering premium lifestyle experience to its customers by striving to deliver exceptional service and a diverse offering. The Pixie Group business was founded in 2014 by Mr Hoo Voon Him, Mr Tin Yu Jian and the late Mr Kwek Kon Chun, each with experience in managing nightlife and clubbing outlets in Singapore and Malaysia. Pixie Group is currently profitable, although it has a limited trading history. See Section 8.1.3 for a description of some of the investment risks relating to an early stage business. At present, Pixie Group, through the Pixie Subsidiaries operates two lifestyle outlets in Kuala Lumpur, Malaysia under the following brand names: (i)
Pixie Mansion @ Chandelier; and
(ii) Pixie Luxe, (Collectively, to be referred as Lifestyle Outlets) Each of the Lifestyle Outlets has its own unique lifestyle concept to capture two very different target customer groups. Both outlets are operated at night to cater for social gatherings, after-work activities and private functions. Apart from aiming to improve the revenue, profitability and cash flow position of the Company through the service offerings of the Lifestyle Outlets, the board of directors of Pixie (Pixie Board) has expansion plans to grow Pixie Group to be a successful lifestyle entertainment and F&B group in both Malaysia and Singapore region (the Region). As part of the expansion plan, within the next 24 months the Pixie Board plans to embark on a regional expansion plan focused on growing its entertainment business through M&A, collaboration with a local property developer which would see Pixie Group open a new venue and be appointed as manager of another entertainment hub, expanding into different areas of the F&B segment and providing management and consultancy services to other entertainment and food and beverage businesses in the Region. Further information on the future plans is set out in Section 5.3.6. There is no assurance that these plans will be successfully executed, however. Having a strong vision to provide its customers with a personalized and unique experience through its exceptional service offerings, Pixie Group strives to be a market leader in both the entertainment and F&B sectors in Malaysia, with a planned expansion into other parts of the Region.
38
40
5.3.2
Group Structure
For personal use only
Upon completion of Proposed Transaction and Zingmobile Business Sale, the group structure of the Company will be as follows:
Pixie Group Limited (Singapore)
100% Pixie Entertainment Group Pte Ltd (Singapore) 100% Roylmark Holdings Sdn Bhd (Malaysia)
Pixie Luxe
(i)
100% Bizmac Sdn Bhd (Malaysia)
Pixie Mansion @ Chandelier
Pixie Entertainment Group Pte Ltd Pixie was incorporated on 9 February 2015 in Singapore under the Companies Act, Singapore as a private company limited by shares. Pixie is an investment holding company. As at the date of Prospectus, Pixie has two wholly-owned subsidiaries, namely Bizmac and Roylmark.
(ii)
Bizmac Sdn Bhd Bizmac was incorporated in Malaysia on 6 December 2007 as a private limited company under the Malaysian Companies Act, 1965, under the name of Fantasi Awan Biru Sdn Bhd and assumed its present name on 3 June 2009. Bizmac is principally involved in the business of entertainment, food and beverage and commenced its operation on 15 July 2014. The Bizmac business recently underwent a key change aimed at growing its market share through the relocation of Pixie Mansion to Pixie Mansion@ Chandelier.
(iii)
Roylmark Holdings Sdn Bhd Roylmark was incorporated on 26 March 2013 in Malaysia under the Malaysian Companies Act, 1965 as a private limited company. Roylmark is principally involved in the food and beverage business and commenced its operation on 20 January 2014.
41
39
5.3.3
Business
At present, Pixie Group, through the Pixie Subsidiaries operates two lifestyle outlets in Kuala Lumpur, Malaysia under the respective brand names:
For personal use only
(i)
Pixie Mansion @ Chandelier; and
(ii) Pixie Luxe. A summary of Lifestyle Outlets is as follows: Pixie Mansion @ Chandelier1
Pixie Luxe
Operator
Bizmac
Roylmark
Address
Lot 119, No 22 Jalan, 2/87G, Off Jalan Taman Seputeh, 58200 Kuala Lumpur, Malaysia
S-1-29 to 31 The Scott Garden, (Kompleks Rimbun Scott) 289, Jalan Kelang Lama, 58000 Kuala Lumpur, Malaysia
Operation hours
6.00 pm to 12.00 am, daily
5.00 pm to 12.00 am, daily
Lease term
1 August 2015 ---- 31 July 20182
1 August 2013 ---- 31 July 20163
Target customer group
Upper-middle class to upper class from working professionals and executives to wealthy individuals
Middle class (middle to upper middle class), focused on young adults and urban individuals
Notes: 1.
(i)
Operated under the brand name of ‘Pixie Mansion’ at No. 1, Jalan Kia Peng, 50450 Kuala Lumpur, Malaysia from 15 July 2014 to 30 June 2015. It was relocated to the current premises and commenced operations under ‘Pixie Mansion @ Chandelier’ on 1 August 2015.
2.
Includes an option to renew the term for a further one (1) year from the expiry of the initial term on 31 July 2018.
3.
Includes an option to renew the term for a further three (3) years from the expiry of the initial term on 31 July 2016 (Second Term) and an option to renew the term for a further three (3) years from after the expiry of the Second Term.
Pixie Mansion @ Chandelier Pixie Mansion @ Chandelier is a live entertainment outlet featuring interactive live entertainment and music in a trendy, stylish and hip ambience equipped with state-of-the art lighting. Pixie Mansion @ Chandelier is conceptualised and designed to cater for customers looking for a new luxury entertainment experience. Pixie Mansion @ Chandelier is strategically located in Taman Seputeh, Kuala Lumpur, which is surrounded by offices, shopping malls, hotels and mid to high-end residential buildings within close proximity to Mid Valley City, Bangsar, Bangsar South, Kuala Lumpur. The location is well connected through major highways of the Kuala Lumpur Metropolitan Area. Pixie Mansion @ Chandelier’s entertainment hall includes a stage walk way for live performances including entertainment by DJs, singers, band performances and models. The premise also includes three (3) exclusive KTV rooms for private events and functions.
40
42
For personal use only
Pixie Mansion @ Chandelier targets mainly upper-middle to upper class from working professionals and executives to wealthy individuals. In view of its target segment, the venue seeks to attract customers looking for a premium lifestyle experience by offering quality products and personalised customer service. Management anticipates that Pixie Mansion @ Chandelier will be able to command a premium from its beverages through its superior service offerings. Prior to relocating to the current premises on 1 August 2015, Pixie Mansion @ Chandelier was operated under the brand name of ‘Pixie Mansion’ at Jalan Kia Peng, Kuala Lumpur. Both locations share the same lifestyle concept, business model and target customer group. Notwithstanding that the financial results of Bizmac were affected during the brief relocation period, the Pixie Board is confident that the relocation will not have material adverse impact on the financial performance for the financial year ended 31 December 2015. The Pixie Board is also of the view that the relocation will benefit Pixie Group in the longer term due to savings on rental, better location, enhancement of the interior and ambience of the outlet. (ii)
Pixie Luxe Pixie Luxe is a bistro with a chic and contemporary ambience providing a chilled out and relaxing atmosphere for social gatherings, after-work activities and occasionally for private functions. The innovative interior design of the outlet features ‘wall art’ by local artists aimed at showcasing local culture. The location is well connected via major highways to other parts of the Kuala Lumpur metropolitan area. Pixie Luxe is located at the Scott Garden, Kuala Lumpur, a lifestyle retail circle, which is home to retail outlets, cafés, F&B and other entertainment outlets. The Scott Garden is a high traffic area and within close proximity to the densely populated of Kuala Lumpur metropolitan area, including Old Klang Road and Mid Valley City. The outlet targets middle class customers ranging from young adults to urban individuals.
5.3.4
Critical success factors and core competencies
(i)
Live Entertainment and Performances Live entertainment and performances are one of the most important elements of Pixie Group’s premium entertainment business, i.e. Pixie Mansion @ Chandelier. Pixie Management continually monitors the latest trends and developments in the live entertainment business, evaluates new concepts globally and keeps the performances, music, visual effects, design and decoration and sound equipment in the outlets up to date. In order to control the quality of live entertainment and performances, Pixie Management sources and recruits performers and artists including singers, models and DJ from overseas to attract a broad spectrum of its target customer base. As a measure of motivating and retaining talent, performers and artists are allowed to receive appreciation tokens from customers as rewards for their outstanding performances. Apart from monitoring customer satisfaction levels of live entertainment through observation and obtaining customer feedback, Pixie Management also rotates the performers and artists to deliver new and exciting entertainment and performances to customers.
43
41
(ii)
Customer Service
For personal use only
Pixie Management recognises the importance of delivering exceptional service through its customer service and strongly believes that both quality and efficient customer service attributes to the success of its Lifestyle Outlets. It relies on outlet staff to deliver superior services to customers. As part of ensuring that the quality of customer service is up to the highest standard, the Pixie Board places great emphasis on staff training. Pixie Group also enrols its employees in external training courses on a need basis. The Pixie Board believes that its employees receive relevant training which helps to maintain a high level of customer service. Pixie management, together with outlet managers are in charge of the recruitment and retention of staff and related matters within the Lifestyle Outlets. Pixie Management has adopted various initiatives to facilitate recruitment of staff. The Pixie Board believes that employee recognition is very important in the entertainment and F&B sectors due to its service focused nature. Pixie Group offers attractive wages, benefits, focused training and internal promotion opportunities to its outlet staff to manage employee retention. The Pixie Board considers good customer relations are crucial to Pixie Group’s success and takes customer feedback and complaints seriously. Upon receiving a complaint, the outlet managers or managers on duty propose solutions to the customer immediately and record the complaint for internal reference. For complaints related to compliance matters, the relevant managers will report these to the management team. Where complaints are related to nondaily operation and compliance matters, the relevant managers will direct the complaints to the Pixie operation department for further handling. (iii)
Location The Directors consider the locations of the Lifestyle Outlets are crucial to Pixie Group’s success and its profitability. The ability to identify suitable locations for the new outlet is important. The factors that are taken into consideration while selecting a new site including the accessibility of the site to potential customers, traffic, size and structure of the premises, any restrictions on the opening hours of the premises and the rental rate. Leveraging on Pixie Management’s experience in the area, Pixie Management has unique insights into the site selection process, including the selection, evaluation, inspection and approval of each new outlet site prior to development.
(iv)
Music and lightings Music and lighting are important in creating an ambience in the outlets, in particular for Pixie Mansion @ Chandelier. The talent team including DJs and bands works very closely with the technical team in delivering quality music. Performers and artists are supported with a team of technical staff from the soundman to the lighting specialist, tailored to complement their performances with suitable music and lighting to create an energetic and lively atmosphere across the entertainment hall. Both the music and lighting are managed by an in-house technical team who are trained and well versed with the music and lighting equipment in the outlets to ensure high quality performances. Coupled with employing professionals with the necessary skills to operate the music and lighting equipment, Pixie Group invests in high quality music and lighting equipment.
42
44
For personal use only
Pixie Mansion @ Chandelier also plays a variety of live music through bands and DJs. Music is often mixed and matched by DJs and hence the range of music played in the outlets is extensive. (v)
Beverage Beverage is the key revenue driver for Pixie Group, Pixie Management believe that it is important that both Lifestyle Outlets offer an extensive range of beverages to cater to different customer needs, in particular Pixie Mansion @ Chandelier which offers mainly alcoholic beverages. To ensure that Pixie Mansion @ Chandelier can deliver quality and diverse product ranges, Pixie Group continues to work with reputable and reliable beverage suppliers who seek to use premium drinks, being mainly spirits, champagne and beers. Supply arrangements with beverage suppliers are on usual industry terms. In accordance with industry practice Pixie Group does not have long term contractual commitments with beverage suppliers. Given the competitive nature of the beverage industry in Malaysia this is not considered to be a material risk. All of the suppliers to Pixie Group are local, and Pixie Group does not import its own beverages.
(vi)
Branding and Reputation The popularity of the Lifestyle Outlets is an important success factor which the Pixie Group actively seeks to manage. There are many variables which determine the popularity and reputation of the Lifestyle Outlets. The Pixie Board believes that part of the attractiveness of Lifestyle Outlets is derived from its crowd, reputation, image and branding. Pixie Management recognises this balance and through its experience and ongoing customer relationships, Pixie Group builds and maintains the outlets’ popular images through delivering a high level of customer service and diverse range of offerings , at all times seeking to create a positive image and reputation for its outlets.
(vii)
Licences and permits A number of regulatory requirements apply to Pixie Group and its business in Malaysia. As the Pixie Subsidiaries manage entertainment and F&B outlets, they are required to hold a number licences, approvals and registrations including:
entertainment licence to provide entertainment at the Pixie Mansion @ Chandelier;
business premise licence to operate the outlets;
licences for signage and advertising at the outlets;
where relevant, the food establishment licence;
a public house licence (liquor licence) for the sale of intoxicating liquor in Pixie Mansion @ Chandelier; and
annual licences issued in relation to the public performance of live or recorded musical works and public playing of sound recordings and/or music videos.
As Pixie Mansion @ Chandelier began operation at its current venue on 1 August 2015, management is still in the process of working with the landlord to ensure that all permits necessary for the outlet to provide a broad range of entertainment options and beverage choices have been secured.
45
43
Pixie Management takes compliance with relevant laws and regulations in Malaysia seriously and seeks to ensure that all necessary licences and permits are held and remain valid at all relevant times.
For personal use only
(viii)
Marketing and Promotion Marketing plays a key role in promoting the Lifestyle Outlets as well as building brand awareness. Marketing is carried out through various means including electronic direct marketing, social media, advertisements. Pixie Group sends marketing materials to its customers through email, short message service and social media to update customers on special events and promotional activities undertaken by the outlets. Direct marketing is undertaken by the Marketing Team which provides greater flexibility in terms of managing timing and cost as well as maintaining confidentiality of customers’ database. Online media is a key driver of the Pixie outlet businesses. The marketing strategy is driven by central planning creating consistent marketing materials and messages which are then implemented at the site level. Each site has its own individual web page which is updated regularly informing its customers of the latest events and promotions. Each outlet is responsible for maintaining its own Facebook page. Currently, Pixie Group has attracted more than 5,000 followers on Facebook across both outlets. Pixie Group organises events, marketing programmes and campaigns regularly at Pixie Mansion @ Chandelier. Pixie’s events are mainly costume play and special night performances. The outlets also host themed parties in conjunction with festivals and special occasions such as Valentines’ Day, Chinese New Year, Christmas.
(ix)
Operation Management The Pixie Board believes that the Standard Operating Procedures in place across head office and the two outlets is important for Pixie Group to achieve economies of scale and ensure a high standards of service across the venues. Pixie Management has implemented Standard Operating Procedures across major operational functions which are communicated to all level of employees, from general managers to service staff including waiters, bar and the security team. The accounting system used by Pixie Group provides accurate and timely reporting, including daily sales and headcounts which help in generating monthly management accounts (including profit and loss and cash flow statement) which enable Pixie Management to make well informed decision. Pixie Management has also put in place internal control procedures to ensure efficiency and effectiveness of operations.
5.3.5
Competitive Strengths
Pixie Board believes that Pixie Group has competitive advantages over its competitors in the following areas: (i)
Continually aiming for exceptional service offerings through quality customer service Pixie Group continuously aims to achieve high quality standards for its service offerings ranging from live entertainment and performances, music and lighting to customer service and food and beverage offerings.
44
46
For personal use only
Pixie Management are focused on keeping abreast of the latest trends and developments in the entertainment and F&B industries. Pixie Management invests great effort in recruiting and retaining performers. Service staff are required to regularly undergo training in order to focus them on delivering high quality performance and customer service. To maintain consistency in service, Pixie Group has a set of comprehensive standard operating procedures, which are implemented across the Pixie head office and both outlets. (ii)
Broad target customer base The Pixie Board believes that Pixie Group has successfully built its outlets in a way which attracts customers looking for a lifestyle experience in a safe environment. Each outlet is conceptualised and designed to cater to a different type of lifestyle experience. This approach aims to cover a broad spectrum of target customer groups. The lifestyle outlets are built to the Pixie Group’s specifications with a view to providing a quality lifestyle experience for its customers, from live performance, beverage to personalised customer service. Management at Pixie Mansion @ Chandelier proposes to regularly introduce new and innovative events, promotions and entertainment, aiming to deliver excitement to customers and to satisfy their expectations.
(iii)
Strategic location to tap into different market segments The Pixie Board believes that both Pixie Mansion @ Chandelier and Pixie Luxe are situated at prime locations in Kuala Lumpur which allow these outlets to tap into different market segments. The venues were carefully selected by Pixie management relying on their experience in site identification. Both outlets are located within close proximity to high traffic residential and commercial areas in Kuala Lumpur. Pixie Mansion @ Chandelier attracts upper middle to upper class customer groups, whereas Pixie Luxe taps into a more middle class target market.
(iv)
Experienced management team with clear vision Pixie Management has experience in the lifestyle entertainment and the F&B industry, managing clubs and nightlife entertainment in Asia, in particular in Malaysia and Singapore. They have on average six years of experience in the entertainment and F&B industries. The Pixie Board also has well defined short to medium term plans to grow Pixie Group into a preferred lifestyle entertainment and F&B service provider in Malaysia and Singapore. The Pixie Board believes that by leveraging on the experience of the management team, coupled a with a strong and clear vision, the Pixie Group success story can grow to greater heights.
(v)
Effective internal control and hands on approach The Pixie Board believes that the Standard Operating Procedures in place across head office and the two outlets are important for Pixie Group to achieve economies of scale and ensure a high standards of service across the venues. Pixie Management has implemented standard operating policies across major operational functions which are communicated to all levels of employees, from general managers to service staff including waiters, bar staff and the security team.
47
45
For personal use only
The accounting system used by Pixie Group provides accurate and timely reporting, including daily sales and headcounts which help in generating monthly management accounts (including profit and loss and cashflow statements) to facilitate informed decision making by management. Management has also put in place internal control procedures to ensure efficiency and effectiveness of operations. (vi)
Rapidly growing entertainment and F&B sectors as well as consumer spending in Malaysia Both the live entertainment outlet sector and food service sector in Malaysia are expected to continue to grow in size over the coming years. The growth of the entertainment outlet segment to date is evidenced by the successes of large live entertainment providers such as Pixie and the Soju Group. The outlook for both the live entertainment outlet sector and food service sector is anticipated to continue to be positive, due to a combination of factors such as Malaysian economic growth, a rising population and urbanisation, an expanding middle class, increased affluence and sophistication of the Malaysian consumer, rising per capita income, an expanding tourism industry, increase in corporate and private events and busier lifestyles.
(vii)
Low capital expenditure requirements Pixie Group does not own any real property and it leases, from independent third parties, all of the premises at which its operations are located. The Pixie Board believes that its leasing strategy reduces Pixie Group’s capital investment requirements significantly. Currently, Pixie Group does not intend to acquire any real property. As part of its future plans, Pixie Group intends to focus on collaborating with third parties and entering into joint venture arrangements which are aimed at allowing Pixie Group to operate without the need for significant capital expenditure, at least in the area of property investment. In particular, the Pixie Board is currently exploring a potential collaboration with a Malaysian property developer which would see Pixie Group appointed as the 'lifestyle' manager to various entertainment and F&B ventures in an Entertainment Hub located in Malaysia. The Pixie Board believes this will, if successfully implemented, allow the Company to continue to improve its profitability.
5.3.6
Future plans and strategies
Pixie Group aims to achieve a continued business growth and a greater business diversification into different segments of lifestyle entertainment and food and beverage in the future as follows: (i)
Regional expansion As part its regional expansion plan, Pixie Group is in discussion with an entertainment group in Singapore to explore potential mergers and acquisitions (M&A) to penetrate into the Singapore market. The M&A would, if implemented, increase the number of entertainment outlets as well as the profile of Pixie Group. As a result, Pixie Group plans to emerge as a regional player in the entertainment industry.
46
48
For personal use only
(ii)
Managing entertainment hub Given Pixie Board’s experience in managing entertainment businesses, Pixie Group is exploring a collaboration opportunity with a local property developer to manage a one-stop entertainment hub (Entertainment Hub) in a new township in Malaysia. The Entertainment Hub provides comprehensive entertainment services, including, amongst others, clubs, F&B outlets, karaoke lounges, spa and fitness centre. The opportunities would also allow Pixie to open another new live entertainment outlet within the Entertainment Hub adding on to the live entertainment outlets portfolio.
(iii)
Expanding into premium segment of F&B business To strengthen Pixie Group’s lifestyle F&B portfolio, Pixie Board intends to expand into premium segment of F&B business. Pixie is exploring collaboration opportunities to manage premium lifestyle F&B outlets in Malaysia, ranging from fine dining restaurants, cafes, lounge and bars. The Pixie Board hopes that Pixie will be the new force in the premium lifestyle segment of F&B sector through this opportunity.
(iv)
Loyalty Program Pixie Group intends to introduce a loyalty program to Lifestyle Outlets’ customers. The membership program would enable Pixie Group to offer benefits to, and obtain prepayments from, members to be used for future purchases. To join the Loyalty Program, customers will be required to provide personal details and pay a joining fee. Such joining fee is made available to the member as credit to be used in settling his/her bill at Lifestyle Outlets, which essentially allows members to use their membership cards as a debit card or a prepaid card. By introducing the Loyalty Programme, the Pixie Group hopes to realise the following benefits: Customer retention By having customers pay a joining fee which essentially is a credit deposit, Pixie Group can seek to ensure that the customer will return to the outlets in the future as he/she is not only affiliated with Lifestyle Outlets members, but he/she would also have the intention utilise his/her credit balance. Membership database and spending profile Pixie Group regularly promotes the outlets through direct marketing. The membership database represents a high quality targeted database of customers for the advertisement of all outlets events. This membership database is, moreover, an effective tool to market and promote new outlets. The membership database records transaction billings and credit deposits when a member recharges his/her account. The Group can review the database to gain insight on visit frequency and spending behaviour, which not only assists Pixie Group in managing the operations but also helps, in providing customer satisfaction.
49
47
(v)
Management consultancy service to entertainment and food and beverage Leveraging on Pixie Management’s experience in entertainment business, Pixie Group intends to provide management consultancy services to entertainment and F&B businesses.
For personal use only
The scope of the management consultancy services may include, amongst others, site selection, outlet set-up and design, business operation training, marketing and promotion, branding, operation and financial framework. The management consultancy business hopes to be able to increase the revenue stream as well as enhancing the profit margin of Pixie Group. The management consultancy for entertainment businesses may also include services in sourcing for suppliers and performers. This may increase Pixie Group’s revenue in terms of commission or consultancy fee, at the same time, it may potentially have economies of scale for its own entertainment outlets with stronger bargaining power with suppliers. Collectively, the future plans and strategies will establish Pixie Group as a regional lifestyle entertainment and F&B group characterised by three (3) core business segments as depicted below. There is no assurance that these plans will be successfully executed, however: Pixie Group
5.4
Lifestyle Entertainment
Food & Beverage
Management Consultancy Services
Live Entertainment Clubs
Restaurants
Entertainment
Karaoke Lounges
Pubs and Bistros
Food and Beverage
Others
Cafes and Lounges
Funding allocation and business objectives
As at 30 June 2015, Pixie Group had cash reserves of approximately S$305,838 (A$305,502) while the Company had cash reserves as at 30 June 2015 of approximately S$1,689,149 (A$1,687,293). Subject to and conditional upon Completion, the Company will utilise the funds as set out below. The Board believes that, upon Completion, the Company will have sufficient working capital to achieve the Company's objectives as detailed above. Note that "working capital" is different from acquisition capital, and the Company may not have sufficient capital to expend on M&A and expansion if only the minimum amount is raised under the Offer. However, under both minimum and maximum capital raising scenarios the Company will have sufficient working capital for its business activities.
48
50
For personal use only
The following table shows the expected use of funds: Minimum
Maximum (not including overallotment)
Number of Placement shares
116,666,667
150,000,000
Raising amount A$
7,000,000
9,000,000
Redemption of borrowings (note 1)
4,000,000
4,000,000
Transaction costs
1,310,000
1,470,000
- Placement fees (8% of funds raised)
560,000
720,000
- Agency fees (0.5% of enterprise value of Pixie)
150,000
150,000
- Professional fees
500,000
500,000
- Listing fee & other compliance costs
100,000
100,000
Working Capital (note 2)
1,690,000
1,530,000
Expansion
-
2,000,000
TOTAL
7,000,000
9,000,000
Proposed utilisation of proceeds
Note 1: The Company currently has in place loan arrangements with a number of non-related party lenders, which were entered into between July 2011 and May 2015 and provided working capital funding to the Company. The loan balances as at 31 March 2015 are reflected as borrowings in the Company's financial statements (refer Section 6). Since that date, interest has continued to accrue, and the above proposed utilisation of proceeds is expected to be sufficient to discharge all principal and accrued interest at Completion. The Company has entered into binding agreements with each of the lenders under those loan arrangements to extend the repayment date of the loans to the earlier of 7 business days after re-admission of the Company; and 31 December 2015. During this time all rights of the lenders, other than right to accrue interest, have been suspended. Note 2: Working capital amounts will principally be applied towards the general operating expenses of the Pixie Business. Based on historical financial results, the annual operating expenses for the Malaysian subsidiaries amounted to approximately RM5 million (equivalent to approximately S$1.5 million to S$1.6 million). In addition to historical operating expenses, the working capital raised in the Offer will enable the Company to undertake enhanced promotional activities. The amount allocated to working capital under the minimum capital raising scenario is higher than under the maximum raising scenario because of the proposed allocation of funding to expansion and M&A. However, if less than A$2 million is required for expansion purposes then the balance would be applied towards working capital purposes, including enhanced promotional activities for the existing business.
51
49
In the event that amount of fund raised exceeded A$9 million (if any or all of the A$2 million over subscription facility is utilised) then any excess will be used for expansion capital and working capital.
For personal use only
The AUD to SGD conversion in this section of the Prospectus has been calculated using an exchange rate of 1 AUD to 1.0011 SGD Note that the above expenditures will be subject to modification on an ongoing basis depending on the results obtained from the Company's marketing and sales activities in respect to the Pixie Group business. Due to market conditions, the development of new opportunities and/or any number of other factors (including the risk factors outlined in Section 8), actual expenditure levels may differ significantly to the above estimates.
5.5
Capital Structure
The capital structures of the Company before and following the Completion of the Proposed Transaction and Capital Raising are summarised below: Before
After Completion -
After Completion -
After Completion -
Completion
minimum raising
maximum raising
oversubscriptions
(A$7,000,000)
(A$9,000,000)
(A$11,000,000)
Shares
%
Shares
%
Shares
%
Shares
%
65,532,823
100
65,532,823
9.6
65,532,823
9.2
65,532,823
8.7
Nil
0
500,000,000
73.3
500,000,000
69.9
500,000,000
66.8
Nil
0
116,666,667
17.1
150,000,000
20.9
183,333,333
24.5
65,532,823
100
682,199,490
100
715,532,823
100
748,866,156
100
Existing ZMG shareholders Pixie Vendors Capital Raising Total
50
1
The table above assumes that there are no securities in Zingmobile issued between the date of this announcement and the date of issue of the Consideration Shares other than pursuant to the Capital Raising.
2
Capital Raising assumes a minimum of A$7 million and a maximum of A$9 million is raised at A$0.06. In the event that amount of fund raised exceeded A$9 million (if any or all of the A$2 million over subscription facility is utilised) then any excess will be used for expansion capital and working capital and further dilution would occur.
52
5.6
Proposed Transaction Approvals
For personal use only
At a high level, the Proposed Transaction, Zingmobile Business Sale and Offer will involve the following Shareholder approvals: (a)
simple majority approval of the Proposed Transaction under ASX Listing Rule 11.1.2 for a change in the nature and scale of ZMG's activities and Shareholder approval under LR 7.1 for the issue of the Consideration Shares;
(b)
Zingmobile Business Sale, as the purchaser is a related party, will require ASX LR 10.1 Shareholder approval by simple majority, with the benefit of an independent expert's report (IER). It is also expected that this sale will require ASX LR 11.2 approval (disposal of main undertaking) by simple majority;
(c)
the Offer will require simple majority approval by Shareholders under ASX LR 7.1;
(d)
the change of name of Zingmobile to "Pixie Group Limited" will require a special resolution of Shareholders under Singapore Law; and
(e)
the Whitewash Resolution, as described below.
The Singapore Code on Take-overs and Mergers (Singapore Takeovers Code) applies to the Company as it is a Singapore incorporated public company with a primary listing overseas. As the Consideration Shares to be issued pursuant to the Proposed Transaction will constitute more than 30% of the enlarged total number of shares of ZMG, the Proposed Transaction will trigger a mandatory general offer by the vendors of Pixie Group under the Singapore Takeovers Code. Hence, an application was made by the vendors of Pixie Group to the Securities Industry Council of Singapore (SIC) for a whitewash waiver. The SIC has granted the whitewash waiver subject to, amongst other conditions, a majority of independent shareholders approving at a general meeting, before the issue of the Consideration Shares, a resolution (Whitewash Resolution) by way of a poll to waive their rights to receive a general offer from the vendors and their concert parties and the appointment of an independent financial adviser (IFA) to advise independent shareholders of ZMG on the Whitewash Resolution. Under Singapore law, the IFA must either hold a Singapore capital markets services licence for advising on corporate finance (CMS Licence) or if the IFA is a licenced bank in Singapore, it is registered under the Singapore Securities and Futures Act and exempted from the requirement to hold a CMS Licence. Shareholders should note that the allotment and issue of the Consideration Shares will result in the Pixie Vendors and their associates holding Shares carrying over 49% of the voting rights of the Company, and that they will thereafter be free to acquire further Shares without the requirement under Rule 14 of the Singapore Takeovers Code (to make a general offer for the Company) applying.
53
51
5.7
Outstanding Conditions Precedent for Proposed Transaction
For personal use only
The obligation of the Company and the Pixie Vendors to complete the Proposed Transaction remains subject to and conditional upon the satisfaction of the following conditions: (a)
shareholders of the Company approving: (i)
the change of name of the Company from Zingmobile Group Limited to "Pixie Group Limited";
(ii)
the change to the nature and scale of the activities of the Company for the purposes of the ASX Listing Rules;
(iii)
the issue of the Consideration Shares, including for the purposes of the Company obtaining an exemption from the SIC and associated Whitewash Waiver under the Singapore Takeovers Code (see section 5.6 above);
(iv)
the issue of shares in the capital of the Company pursuant to the Capital Raising; and
(v)
the Zingmobile Business Sale;
(b)
each Pixie Vendor, to the extent required by the ASX, entering into a binding escrow agreement in the form required by the ASX;
(c)
ASX having indicated in writing that it will grant permission for the official listing of the Company on ASX and official quotation of the Company's Shares on ASX (subject only to Completion and customary pre-quotation listing conditions); and
(d)
each Pixie Vendor's warranty given under the Share Purchase Agreement being true and correct and not misleading as at the date of the Share Purchase Agreement, the completion date of the Proposed Transaction (Completion Date) and at all times between the date of the Share Purchase Agreement and the Completion Date.
The Proposed Transaction will not complete (and no Shares can be issued pursuant to the Offer or the Proposed Transaction) until ASX has confirmed that the Company has re-complied with Chapters 1 and 2 of the listing rules (but for the outstanding conditions regarding Completion and the issue of Shares).
52
54
Financial Information
6
For personal use only
6.1
Introduction
The financial information set out in this Section 6 summarises the selected financial data derived from the audited and Reviewed financial statements of Zingmobile Group Limited (‘‘Zingmobile’’), pro forma unaudited and Reviewed consolidated financial information of Pixie Entertainment Group Pte. Ltd. (‘‘Pixie’’) and audited financial information of Bizmac Sdn. Bhd. (‘‘Bizmac’’) and Roylmark Holdings Sdn. Bhd. (‘‘Roylmark’’) (collectively ‘‘Pixie Subsidiaries’’), in addition to a pro forma consolidated statement of financial position as at 31 March 2015. This section contains the following financial information, prepared by the Directors: Zingmobile
Summary historical audited consolidated statement of comprehensive income and statement of cash flows for financial year ended 2013 (‘‘FY2013’’) and financial year ended 2014 (‘‘FY2014’’); and
Summary Reviewed pro forma consolidated statement of financial position as at 31 March 2015.
Pixie
Summary historical Reviewed pro forma consolidated income statement and consolidated statement of cash flow for the FY2014;
Summary historical audited statement of comprehensive income and statement of cash flow of Pixie Subsidiaries for FY2014; and
Summary Reviewed pro forma consolidated statement of financial position as at 31 March 2015, together referred to as the Historical Financial Information.
6.2
Basis of preparation and presentation of the Historical Financial Information
The Historical Financial Information has been prepared in accordance with Singapore Financial Reporting Standards (FRS) unless stated. Singapore FRS are equivalent to IFRS and AIFRS. The financial information is presented in an abbreviated form insofar as it does not include all of the disclosures, statements or comparative information as required by FRS as applicable to annual financial reports of Zingmobile and Pixie (collectively, "Combined Group’’). The key accounting policies of Zingmobile and Pixie relevant to the Financial Information are set out in Section 6.6. The Company will continue to apply the Singapore Financial Reporting Standards (FRS) to its financial statements after re-quotation. The Directors of Zingmobile and Pixie are responsible for the inclusion of all financial information in this Prospectus. The Historical Financial Information has been Reviewed and reported on by One Assurance LLP as set out in the Investigating Accountant’s Report in Section 7. Investors should note the scope and limitations of that report (refer to Section 7).
55
53
Zingmobile
For personal use only
The Historical Financial Information of Zingmobile has been extracted from the audited financial statements for FY2013 and FY2014 and Reviewed financial statements for the period ended 31 March 2015, which were audited and Reviewed by One Assurance LLP, Public Accountant and Chartered Account of Singapore who issued an unqualified opinion in respect of these periods and express a conclusion that nothing has come to their attention that leads them to believe that these financial statements are not presented fairly. The audited and Reviewed reports are prepared in accordance with the FRS. Pixie The Historical Financial Information of Pixie has been extracted from the Reviewed financial statements for FY2014 and period ended 31 March 2015 which were Reviewed by Business Assurance who expressed a conclusion that nothing has come to their attention to believe that these financial statements are not presented fairly. The Reviewed reports were prepared in accordance with the FRS. The Historical Financial Information of Pixie Subsidiaries has been extracted from the audited financial statements for FY2014, which were audited by OKL & Partners Plt for Roylmark and Y.L. Chee & Co for Bizmac in Malaysia and who issued an unqualified audit opinion in respect of the audited period. The audited reports of the Pixie Subsidiaries were prepared in accordance with the Private Entity Reporting Standards and Companies Act in Malaysia. 6.3
General factors affecting the operating results of Zingmobile and Pixie
Below is a discussion of the main factors which affected Zingmobile’s and Pixie’s operations and relative financial performance over the historical period. The discussion of these general factors is intended to provide a summary only and does not detail all factors that affected Zingmobile’s and Pixie’s historical operating and financial performance, nor everything which may affect Zingmobile’s and Pixie’s operations and financial performance in the future. The information in this section should also be read in conjunction with the risk factors set out in Section 8 and the other information contained in this Prospectus. 6.4
Management discussion and analysis of the Historical Financial Information (a)
Zingmobile
The Company commenced operations in 2002 when it first offered mobile content to mobile users in Singapore. The Company is continuing to venture into new technical platforms after its success in launching the "payment gateway business". New platforms and markets are currently being explored. The Company is currently a Singapore based company that develops and markets digital mobile content direct to consumers in Asia. Payments for the Group’s products and services are billed by the carriers to which customers subscribe. The Company collects payment direct from these carriers, which retain a portion of revenue in exchange for this relationship. Further information on the business of the Company is included in its annual report which is available at www.zingmobile.net.
54
56
6.4
Management discussion and analysis of the Historical Financial Information (a)
Zingmobile (continued)
For personal use only
Historical consolidated statement of comprehensive income Audited S$ Revenue Cost of Sales Gross Profit Other Income Other gains/ (losses) (net) Expenses Ex- Distribution and marketing Ex- Administrative Ex- Other operating Expenses Ex- Finance
FY2014 15,134,291 (6,954,284) 8,180,007 142,775 186,598
FY2013 9,763,574 (3,908,774) 5,854,800 485,597 (360,400)
(445,292) (6,818,878) (444,109) (363,099)
(412,858) (3,308,865) (1,197,886) (281,734)
438,002 (276,576)
778,654 (339,960)
Profit after tax
161,426
438,694
Other Comprehensive income Currency translation differences arising from consolidation losses
(28,020)
(22,208)
Total comprehensive income
133,406
416,486
43,775 117,651 161,426
194,787 243,907 438,694
15,755 117,651 133,406
172,579 243,907 416,486
Profit before Income tax Income tax expense
Profit attributable to: Equity holders of the Company Non-controlling interests
Total Comprehensive income attributable to: Equity holders of the Company Non-Controlling interests
The Historical consolidated statement of comprehensive income have been extracted from the audited financial statements of Zingmobile for FY2013 and FY2014.
The surge of income from FY2013 to FY2014 was mainly due to the successful launching of new initiatives in 2H 2014. These new initiatives continue to push the growth in 1H 2015. Overheads were largely comprised of administrative costs, marketing and operating costs.
57
55
6.4
Management discussion and analysis of the Historical Financial Information (continued) (a)
Zingmobile (continued)
For personal use only
Historical consolidated statement of cash flows Audited S$ CASH FLOWS FROM OPERATING ACTIVITIES Profit after tax Adjustments for: Ad- Income tax expense Ad- Amortisation Ad- Depreciation Ad- Interest income Ad- Interest expense Ad- Loss on disposal of intangible asset Ad- Goodwill written off
Change in working capital, net of effects from acquisition and disposal of subsidiaries - Trade and other receivables - Trade and other payables Cash (used in)/ provided by operations Income tax paid Net cash (used in)/ provided by operating activities CASH FLOW FROM INVESTING ACTIVITIES Additions to plant and equipment Disposal of intangible assets Purchase of intangible assets Disposal/ (acquisition) of an associated company Acquisition of subsidiaries Interest received Acquisition of subsidiaries Net cash provided by/ (used in) investing activities
56
FY2014
FY2013
161,426
438,694
276,576 296,607 182,008 363,099 129,985 197,052 1,606,753
339,960 833,162 172,955 (16,503) 281,734 2,050,002
(4,324,520) 1,671,904 (1,045,863)
259,169 898,585 3,207,756
(58,409)
-
(1,104,272)
3,207,756
(160,262) 1,553,870 15,419
(286,272) (1,895,660) (15,419)
9,000
(1,174,653) 16,503 -
1,418,027
(3,355,501)
58
For personal use only
CASH FLOW FROM FINANCING ACTIVITIES (Decrease)/ increase in finance lease liabilities Proceeds from borrowings Repayment of borrowings Interest paid Net cash provided by financing activities
(68,794) 1,461,486 (305,400) (363,099) 724,193
226,676 934,225 (500,000) (281,734) 379,167
Net increase in cash and cash equivalents
1,037,948
231,422
666,920
457,706
(28,020)
(22,208)
Cash and cash equivalents Beginning of financial year Effects of currency translation on cash and cash equivalents End of financial year
1,676,848
666,920
The historical consolidated statement of cash flows have been extracted from the audited financial statements of Zingmobile for FY2013 and FY2014
59
57
6.4
Management discussion and analysis of the Historical Financial Information (continued) (a)
Zingmobile (continued)
For personal use only
Historical consolidated statement of cash flows (continued) Zingmobile running costs over the historical period were mainly funded by external borrowings. (b)
Pixie
Pixie is a lifestyle entertainment and F&B group focusing on delivering premium lifestyle experience to its customers through exceptional service offerings. At present, Pixie, through the Pixie Subsidiaries operates two lifestyle outlets (‘‘Lifestyle Outlets’’) in Kuala Lumpur, Malaysia under the following brand names: (i)
Pixie Mansion @ Chandelier
(ii) Pixie Luxe The historical pro forma financial statements are presented on the assumption in which Pixie (incorporated in Singapore on 9 February 2015), the holding company of Pixie Subsidiaries has been incorporated on 31 December 2014 for the purpose to illustrate the operating and financial performance of the Lifestyle Outlets as a group. For further details, please refer to section 5 entitled ‘‘Business Overview - Overview of Pixie Group’’ in section 5 of this Prospectus. Historical pro forma consolidated income statement S$ Revenue Cost of Sales Gross Profit Other Income Expenses Ex- Administrative and other operating expenses Profit before Income tax Income tax expense Profit after tax Other Comprehensive income Currency translation differences arising from consolidation Total comprehensive income
Reviewed FY2014 4,320,656 (2,065,840) 2,254,816 502,719 (1,515,971) 1,241,564 (333,677) 907,887
(3,613) 904,274
The historical pro forma consolidated income statement has been extracted from the Reviewed financial statements of Pixie FY2014
58
60
6.4
Management discussion and analysis of the Historical Financial Information (continued)
For personal use only
(b)
Pixie (continued)
Historical pro forma consolidated income statement (continued) Revenue The Lifestyle Outlets, Pixie Luxe and Pixie Mansion commenced operations on 20 January 2014 and 15 July 2014 respectively. Revenue is mainly derived from the sales of beverages in the Lifestyle Outlets which accounted for approximately 87% of total revenue for FY2014. Cost of Sales Cost of sales comprises mainly purchases of beverages from suppliers, net of applicable rebates and returns that Pixie receives from its suppliers. Pixie has supply arrangements with reputable and reliable beverage suppliers to ensure consistent supply of beverages available throughout the year to enable it to meet growing demand. Gross Profit Margin Gross profit margin for Pixie Group is approximately 52% in FY2014. Expenses Expenses comprise mainly (a) operating, administrative expenses; and (b) staff costs which accounted for approximately 23% and 10% of total revenue for FY2014 respectively. Operating and administrative expenses, comprising mainly rental of the Lifestyle Outlets’ premises, maintenance of the premises and equipment in each outlet, marketing and advertising expenditure, entertainment expenses and utilities which amounted to approximately S$1.27 million in FY 2014. Historical pro forma consolidated statement of cash flow S$ CASH FLOWS FROM OPERATING ACTIVITIES Profit after tax Adjustment for : Ad- Depreciation Ad- Income tax expense
Reviewed FY2014 907,887 94,602 333,677
Changes in working capital Decrease in inventory Decrease in other receivables Increase in trade and other payables Net cash inflow from operating activities
(80,970) (204,395) 474,830 1,525,631
CASH FLOWS FROM INVESTING ACTIVITY Additions to plant and equipment Net cash inflow from investing activity
(473,014) (473,014)
61
59
6.4
Management discussion and analysis of the Historical Financial Information (continued) (b)
Pixie (continued)
For personal use only
Historical pro forma consolidated statement of cash flow (continued) Reviewed FY2014
S$ CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid Director’s financing Issuance of shares Adjustment arising from merge accounting Net cash inflow from financing activities
(754,593) 3,000 30,000,000 (30,011,249) (762,842)
Net increase and cash and cash equivalents at the beginning and end of financial year.
289,775
The historical pro forma consolidated statement of cash flow have been extracted from the Reviewed financial statements of Pixie for FY 2014
Historical statement of comprehensive income Audited Bizmac S$ Revenue Cost of Sales Gross Profit
FY2014 1,172,302 (575,564) 596,738
Roylmark FY2014 3,148,354 (1,490,276) 1,658,078
Other Income
128,680
374,039
Expenses Ex- Administrative and other operating Ex- expenses Profit before Income tax Income tax expense
(573,109) 152,309
(942,862) 1,089,255
(52,233)
(281,444)
Profit after tax
100,076
807,811
Other Comprehensive income Currency translation differences Total comprehensive income
(1,242) 98,843
(1,904) 805,907
The financial information presented in SGD was derived from the audited financial statement presented in MYR by translating at the exchange rate of 2.5842 using 12-month weighted average exchange rate for the year ended 31 December 2014 (Source: www.oanda.com).
60
62
6.4
Management discussion and analysis of the Historical Financial Information (continued)
For personal use only
(b)
Pixie (continued)
Historical statement of cash flows
S$ CASH FLOWS FROM OPERATING ACTIVITIES Profit after tax Adjustments for: Ad- Depreciation Ad- Income tax
Bizmac FY2014
Audited Roylmark FY2014
100,076
807,811
39,432 52,233
55,170 281,444
Changes in working capital: Increase in inventory (Increase)/ decrease in other receivables Increase in trade and other payables Net cash inflow from operating activities
(25,264) (147,640) 231,714 250,551
(59,711) 12,668 148,784 1,246,166
CASH FLOWS FROM INVESTING ACTIVITY Additions to plant and equipment Net cash outflow from investing activity
(193,516) (193,516)
(270,753) (270,753)
CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid Issuance of shares Net cash inflow from financing activities
(58,045) 19,538 (38,507)
(696,547) (696,547)
Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effects of currency translation on cash and cash equivalents
18,528 60
278,866 1,097
Cash and cash equivalents at the end of the year
15,725
(2,863)
(8,913) 271,050
The financial information presented in SGD was derived from the audited financial statement presented in MYR by translating at the exchange rate of 2.6453 using closing rate for the year ended 31 December 2014 (Source: www.oanda.com).
63
61
6.5
Pro forma consolidated statement of financial position at 31 March 2015
For personal use only
The table below sets out the Reviewed historical statement of consolidated financial Position of Zingmobile and the Pixie Pro Forma consolidated historical statement of financial position as at 31 March 2015 both for the minimum and the maximum fund raising scenarios stated in section 6.5.2(4). Pro Forma consolidated statement of financial position is provided for illustrative purposes only and is not represented as being necessarily indicative of Zingmobile’s view of its future financial position.
Non-current assets Plant and equipment Investment in associated company Intangible asset Deferred tax asset
Notes/ Pro Forma adjustmen Zingmobile t Reviewed S$ S$
Pro Forma Combined Group (Min Raising) S$
6.5.2.3
410,093
347,245
(410,093)
347,245
6.5.2.3 6.5.2.3 6.5.2.3
49,414 3,705,703 66,333 4,231,543
347,245
(49,414) (3,705,703) (66,333)
347,245
7,407,786
50,197 425,120
(7,407,786)
50,197 425,120 2,001,954
1,401,633 8,809,419 13,040,962
108,861 584,178 931,423
6.5.2.3
5,082,704
320,017
(5,082,704)
320,017
6.5.2.3 6.5.2.3
1,515,517 80,118 6,678,339
410,427 730,444
(1,515,517) (80,118)
410,427 730,444
6.5.2.3 6.5.2.3
24,791 24,791 755,235
(2,576,514)
Total liabilities
2,576,514 2,576,514 9,254,853
24,791 24,791 755,235
Net assets
3,786,109
176,188
Current assets 6.5.2.3 Inventories Trade & other receivables 6.5.2.3 Cash and cash 6.5.3 equivalents Total assets Current liabilities Trade & other payables Current income tax liabilities Borrowings
Non-current liability Deferred tax liabilities Borrowings
Equity Share capital Other reserves (Accumulated losses)/ (Retained profit Non-controlling interest Total equity
62
Pro Forma Pixie adjustment Reviewed (Min Raising) S$ S$
6.5.4 6.5.2.3 6.5.6 6.5.2.3
10,849,990 30,000,000 (1,417,701) (29,967,576) (6,169,217) 523,037 3,786,109
143,764 176,188
491,460 2,477,271 2,824,516
2,069,281
(1,100,902) 1,417,701 (1,686,778) (523,037)
39,749,088 (29,967,576) (7,712,231) 2,069,281
64
For personal use only
6.5
Pro forma consolidated statement of financial position at 31 March 2015 (continued) Notes/ Pro adjustmen t Zingmobile Reviewed S$ S$ Non-current assets Plant and equipment Investment in associated company Intangible assets Deferred tax asset
6.5.2.3 6.5.2.3 6.5.2.3 6.5.2.3
Current assets Inventories 6.5.2.3 Trade & other receivables 6.5.2.3 Cash and cash 6.5.3 equivalents Total assets
Pixie Reviewed S$
Pro Forma Pro Forma Combined adjustment Group (Max (Max Raising) Raising) S$ S$
410,093
347,245
(410,093)
49,414 3,705,703 66,333 4,231,543
347,245
(49,414) (3,705,703) (66,333)
7,407,786
50,197 425,120
(7,407,786)
1,401,633 8,809,419 13,040,962
108,861 584,178 931,423
2,333,484
347,245 347,245
50,197 425,120 3,843,978 4,319,295 4,666,540
Current liabilities Trade & other payables Current income tax liabilities Borrowings
6.5.2.3
5,082,704
320,017
(5,082,704)
320,017
6.5.2.3 6.5.2.3
1,515,517 80,118 6,678,339
410,427 730,444
(1,515,517) (80,118)
410,427 730,444
Non-current liabilities Deferred tax liabilities Borrowings
6.5.2.3 6.5.2.3
24,791 24,791 755,235
(2,576,514)
Total liabilities
2,576,514 2,576,514 9,254,853
24,791 24,791 755,235
Net assets
3,786,109
176,188
Equity Share capital Other reserves (Accumulated losses)/ Retained profits Non-controlling interests Total equity
6.5.4 6.5.2.3 6.5.6 6.5.2.3
10,849,990 30,000,000 (1,417,701) (29,967,576) (6,169,217) 523,037 3,786,109
143,764 176,188
3,911,305
741,122 41,591,112 1,417,701 (29,967,576) (1,686,778) (523,037)
(7,712,231) 3,911,305
63
65
6.5.1
Pro forma adjustments
For personal use only
The following transactions contemplated in this Prospectus which are to take place, referred to as the Pro forma Adjustments, and are presented as if they had occurred on or before 31 March 2015. With the exception of the subsequent event disclosed in section 5.3.3 (i) (relocation of Pixie Mansion) and pro forma transactions noted below no material transactions have occurred between 31 March 2015 and the date of this Prospectus which the Directors consider require disclosure. 6.5.2
Pro forma transactions 1. The issue of 500,000,000 ordinary shares at an issue price of A$0.06 as consideration for the acquisition of 100% of the issued capital of Pixie; 2. Adjustments to Zingmobile working capital balances between 31 March 2015 and 1 October 2015 to reflect further loan amounts borrowed and repayment of Zingmobile’s borrowings of S$3,878,612 paid out of Offer proceeds. This is the estimated amount that will be owed to the various non-related party lenders at Completion of the Offer - see Section 5.4 for further detail; 3. Sale of Zingmobile business for S$80,406; 4. Offer proceeds of minimum raising (‘‘Min raising’’) of A$7 million (S$7,007,700) and maximum raising (‘‘Max raising’’) of A$9 million (S$9,009,900) with direct transaction costs of S$,1,194,906 (Min raising) and S$1,355,082 (Max raising) and indirect transactions cost of S$121,495. The above Pro Forma transactions are translated using an exchange rate of 1.0011 from AUD to SGD on 31 July 2015 (Source www.oanda.com). If an additional A$2,000,000 in oversubscriptions is raised this would increase pro forma cash balances, net of incremental capital raising costs.
6.5.3
Pro Forma cash and cash equivalents
S$
Pro Forma adjustment
Cash and cash equivalents at 31 March 2015 Pro Forma transaction: Disposal of Zingmobile business Proceeds from capital raising Repayment of borrowings Transaction costs (estimated) Acquisition of Pixie Pro Forma cash and cash equivalents
64
6.5.2(3) 6.5.2(4) 6.5.2(2) 6.5.2(4) 6.5.2(1)
Pro Forma figure (Min Pro Forma figure raising) (Max raising) 1,401,633 1,401,633 (1,321,227) 7,007,700 (3,878,612) (1,316,401) 108,861 2,001,954
(1,321,227) 9,009,900 (3,878,612) (1,476,577) 108,861 3,843,978
66
6.5.4
Pro Forma share capital Pro Forma adjustment
For personal use only
S$ Share capital at 31 March 2015 Pro forma transaction: Reverse acquisition accounting Proceeds from capital raising Direct transaction costs (estimated) Acquisition of Pixie Pro Forma share capital 6.5.5
6.6.a 6.5.2(4) 6.5.2(4) 6.5.2(1)
(6,913,696) 7,007,700 (1,194,906) 30,000,000 39,749,088
(6,913,696) 9,009,900 (1,355,082) 30,000,000 41,591,112
Pro forma adjustment
Pro Forma figure (Min raising) 65,532,823
Pro Forma figure (Max raising) 65,532,823
6.5.2(1) 6.5.2(4)
500,000,000 116,666,667 698,866,153
500,000,000 150,000,000 715,532,823
Number of shares issued at 31 March 2015 Pro Forma transactions: Issuance of shares to acquire Pixie Issuance of shares for capital raising Total shares issued post transaction Pro Forma accumulated losses
S$ Accumulated losses at 31 March 2015 Pro Forma transactions: Reverse acquisition accounting Loss on disposal of Zingmobile business Acquisition of Pixie Indirect transaction costs (estimated) Pro Forma accumulated losses 6.6
Pro Forma figure (Max raising) 10,849,990
Pro Forma number of shares
S$
6.5.6
Pro Forma figure (Min raising) 10,849,990
Pro Forma adjustment
6.6.a 6.5.2(3) 6.5.2(1) 6.5.2(4)
Pro Forma figure (Min/Max Raising) (6,169,217) 6,019,032 (7,584,315) 143,764 (121,495) (7,712,231)
Accounting policies Set out below are the key accounting policies adopted in the preparation of the Historical Financial Information. The Historical Financial Information has been prepared on a going concern basis. Under the principals of FRS103: ‘‘Business Combinations’’, the transaction between Zingmobile and Pixie is being treated as a reverse acquisition. Pixie is the accounting acquirer and Zingmobile is the accounting acquiree. The consideration in a reverse acquisition is deemed to have been incurred by legal subsidiary Pixie in the form of equity instruments issued to the shareholders of legal parent Zingmobile. 67 The acquisition date fair value of the consideration transferred has been determined by reference to the fair value of the issued shares of Zingmobile immediately prior to the business combination. As Zingmobile is a listed entity, it is considered that its fair value is a more reliable basis and 65 that the consideration effectively transferred is S$3,936,294 (less the net asset value acquired S$3,786,109), resulting an excess consideration over net assets of S$150,185. a.
Revenue
Pro Forma transactions: Reverse acquisition accounting Loss on disposal of Zingmobile business Acquisition of Pixie Indirect transaction costs (estimated) Pro Forma accumulated losses 6.6
6.6.a 6.5.2(3) 6.5.2(1) 6.5.2(4)
6,019,032 (7,584,315) 143,764 (121,495) (7,712,231)
Accounting policies
For personal use only
Set out below are the key accounting policies adopted in the preparation of the Historical Financial Information. The Historical Financial Information has been prepared on a going concern basis. Under the principals of FRS103: ‘‘Business Combinations’’, the transaction between Zingmobile and Pixie is being treated as a reverse acquisition. Pixie is the accounting acquirer and Zingmobile is the accounting acquiree. The consideration in a reverse acquisition is deemed to have been incurred by legal subsidiary Pixie in the form of equity instruments issued to the shareholders of legal parent Zingmobile. The acquisition date fair value of the consideration transferred has been determined by reference to the fair value of the issued shares of Zingmobile immediately prior to the business combination. As Zingmobile is a listed entity, it is considered that its fair value is a more reliable basis and that the consideration effectively transferred is S$3,936,294 (less the net asset value acquired S$3,786,109), resulting an excess consideration over net assets of S$150,185. a. 6.6.
Revenue
Sales comprise the fair value of the consideration received or receivable for the sale of goods Accounting policies (continued) and rendering of services in the ordinary course of the Combined Group’s activities. Sales are presented, net of value-added tax, rebates and discounts, and after eliminating sales within a. Revenue (continued) the Combined Group. The Combined Group recognised revenue when the amount of revenue and related cost can be reliably measured, it is probable that the collectability of the related receivables is reasonably assured. b. (a)
Combined Group accounting
68
Subsidiaries Consolidation Subsidiaries are all entities (including structured entities) over which the Combined Group has control. The Combined Group controls an entity when the Combined Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Combined Group. They are deconsolidated from the date on that control ceases. In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between group entities are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Combined Group. Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests which are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their respective interests in a subsidiary, even if this results in the non-controlling interests having a deficit balance.
66 (b)
Transactions with non-controlling interests Changes in the Combined Group’s ownership interest in a subsidiary that do not result in
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Combined Group.
For personal use only
6.6.
6.6.
Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests which are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their Accounting policies (continued) respective interests in a subsidiary, even if this results in the non-controlling interests having a deficit balance. b. Combined Group accounting (continued) a. Revenue (continued) (b) Transactions withrecognised non-controlling interests The Combined Group revenue when the amount of revenue and related cost can be reliably measured, it is probable that the collectability of the related receivables is reasonably Changes in the Combined Group’s ownership interest in a subsidiary that do not result in assured. a loss of control over the subsidiary are accounted for as transaction with equity owner b. of the Combined Group Company. Any accounting difference between the change in the carrying amounts of the noncontrolling interest and the fair value of the consideration paid or received is recognised (a) Subsidiaries Accounting policies (continued)to the equity holders of the Company. within equity attributable c.
Consolidation Plant and equipment
Subsidiaries are all entities (including structured entities) over which the Combined PlantGroup and equipment areThe recognised atGroup cost less accumulated and accumulated has control. Combined controls an entitydepreciation when the Combined Group is impairment losses. exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are Subsequent expenditurefrom relating to plant and equipment that has already recognised is fully consolidated the date on which control is transferred to thebeen Combined Group. addedThey to the amount of the asseton only it ceases. is probable that future economic are carrying deconsolidated from the date thatwhen control benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. the consolidated financial statements, transactions, balances and In preparing unrealised gains on transactions between group entities are eliminated. Unrealised Depreciation method to allocate but depreciable amountsanover their estimated useful The losses are also eliminated are considered impairment indicator of lives. the asset estimated useful lives are as follows: transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Combined Group. 69 Useful lives Non-controlling interests are that part of the net results Computer and software 5 yearsof operations and of net assets of a subsidiary attributable to the interests which are not owned directly or indirectly by Furniture and fittings 5 years the equity holders of the Company. They are shown separately in the consolidated Office equipment 5 years statement of comprehensive income, statement of changes Renovation 5 years in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their respective interests in a subsidiary, this results method in the non-controlling interests The residual values, estimated useful liveseven and ifdepreciation of plant and equipment having a deficit balance.as appropriate, at each balance sheet date. The effects of any are reviewed, and adjusted revision are recognised in profit or loss when the changes arise. (b) Transactions with non-controlling interests d. Intangible assets Changes in the Combined Group’s ownership interest in a subsidiary that do not result in aGoodwill loss of control over the subsidiary are accounted for as transaction with equity owner on acquisitions of the Company. Any difference between the change in the carrying amounts of the noncontrolling and theoffair value of theand consideration or received is recognised Goodwill oninterest acquisitions subsidiaries businesses paid on or after 1 January 2010 within equity the equity holders of the transferred, Company. the amount of any nonrepresents theattributable excess of thetosum of the consideration controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. Goodwill on acquisition of subsidiaries and businesses prior to 1 January 2010 and acquisition of associated companies represents the excess of the cost of the acquisition over the fair value of the Combined Group’s share of the identifiable net assets acquired Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated impairment losses. Goodwill on associated companies is included in the carrying amount of the investments. Gains and losses on the disposal of subsidiaries and associated companies include the 67 carrying amount of goodwill relating to the entity sold, except for goodwill arising from 69 acquisitions prior to 1 January 2001. Such goodwill was adjusted against retained profits in the year of acquisition and is not recognised in profit or loss on disposal. e.
Borrowing costs
represents the excess of the sum of the consideration transferred, the amount of any noncontrolling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired.
For personal use only
6.6.
6.6
Goodwill on acquisition of subsidiaries and businesses prior to 1 January 2010 and acquisition of associated companies represents the excess of the cost of the acquisition over the fair value of the Combined Group’s share of the identifiable net assets acquired Accounting policies (continued) Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost d. Intangible assets (continued) accumulated impairment losses. c. lessPlant and equipment on associated companies isatincluded the carrying amount of the investments. PlantGoodwill and equipment are recognised cost lessinaccumulated depreciation and accumulated impairment losses. Gains and losses on the disposal of subsidiaries and associated companies include the carryingexpenditure amount of relating goodwillto relating to the entity sold, for goodwill arising from Subsequent plant and equipment thatexcept has already been recognised is acquisitions prior to 1 January 2001. Such goodwill was adjusted against retained profits added to the carrying amount of the asset only when it is probable that future economic in the year of acquisition and is notflow recognised in profit orand lossthe on cost disposal. benefits associated with the item will to the Company of the item can be measured reliably. e. Borrowing costs Depreciation method to allocate depreciable amounts over their estimated useful lives. The Accounting policies Borrowinguseful costs are (continued) recognised in profit or loss using the effective interest method. estimated lives are as follows: f.
Investments in subsidiaries and associated company Useful lives
Computer and software 5 years Investments in subsidiaries and associate company are carried at cost less accumulated Furniture and fittings 5 years 70 impairment losses in the Company’s balance sheet. On disposal of such investments, the Office equipment 5 years difference between disposal proceeds and the carrying amounts of the investments are Renovation 5 years recognised in profit or loss. The residual values, of estimated useful assets lives and depreciation method of plant and equipment g. Impairment non-financial are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in profit or loss when the changes arise. (a) Goodwill d.
Intangible assets separately as an intangible asset is tested for impairment annually Goodwill recognised and whenever there is indication that the goodwill may be impaired. Goodwill on acquisitions For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Goodwill on acquisitions of subsidiaries (‘‘CGU’’) and businesses after from 1 January 2010 Combined Group’s cash-generating-units expectedon to or benefit synergies represents the excess of the sum of the consideration transferred, the amount of any nonarising from the business combination. controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest inloss the is acquiree over the fairthe value of the identifiable assets acquired.the An impairment recognised when carrying amount of anet CGU, including goodwill, exceeds the recoverable amount of the CGU. The recoverable amount of a CGU Goodwill onofacquisition of subsidiaries businesses prior to 1 January 2010 and is the higher the CGU’s fair value less costand to sell and value-in-use. acquisition of associated companies represents the excess of the cost of the acquisition overtotal the fair value of the Combined share first of thetoidentifiable assets amount acquiredof The impairment loss of a CGUGroup’s is allocated reduce thenet carrying goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the Goodwill oncarrying subsidiaries is recognised separately as intangible assets and carried at cost basis of the amount of each asset in the CGU. less accumulated impairment losses. An impairment loss on goodwill is recognised as an expense and is not reversed in a Goodwill on period. associated companies is included in the carrying amount of the investments. subsequent
(b)
Gains andassets losses on the disposal of subsidiaries and associated companies include the Intangible carrying of goodwill relating to the entity sold, except for goodwill arising from Plant and amount equipment acquisitions prior to 1 January 2001. Such goodwill was adjusted against retained profits Investments in subsidiaries and associated company in the year of acquisition and is not recognised in profit or loss on disposal.
Intangible assets, plant and equipment and investments in subsidiaries and associated Borrowing company are costs tested for impairment whenever there is any objective evidence or indication that these assets may be impaired. Borrowing costs are recognised in profit or loss using the effective interest method.
e.
68
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash inflows that are largely independent of those 70 from other assets. If this is the case, the recoverable amount is determined for the CGU to which the asset belongs. If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying
An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the recoverable amount of the CGU. The recoverable amount of a CGU is the higher of the CGU’s fair value less cost to sell and value-in-use.
For personal use only
6.6
The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU. Accounting policies (continued) An impairment loss on goodwill is recognised as an expense and is not reversed in a f. subsequent Investments innon-financial subsidiaries and associated company g. Impairment of assets (continued) period. Investments inassets subsidiaries and associate company are carried at cost less accumulated (b) Intangible impairment losses in the Company’s balance sheet. On disposal of such investments, the Plant and equipment difference between disposal proceeds and company the carrying amounts of the investments are Investments in subsidiaries and associated recognised in profit or loss. Intangible assets, plant and equipment and investments in subsidiaries and associated Impairment of non-financial assets company are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired. (a) Goodwill g.
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair Goodwill recognised separately as an intangible asset is tested for impairment annually value less cost to sell and the value-in-use) is determined on an individual asset basis and whenever there is indication that the goodwill may be impaired. unless the asset does not generate cash inflows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the CGU to For the purpose of impairment testing of goodwill, goodwill is allocated to each of the which the asset belongs. Combined Group’s cash-generating-units (‘‘CGU’’) expected to benefit from synergies arising from the business combination. If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carryingfor amount of the asset (orgoodwill CGU) is reduced to its recoverable amount. An impairment an asset other than is reversed only if, there has been a impairment loss loss is recognised when the carrying amount of a CGU, including the change inexceeds the estimates used to determine amount sinceofthe last goodwill, the recoverable amount ofthe theasset’s CGU. recoverable The recoverable amount a CGU The difference between the carrying amount andamount recoverable amount impairment recognised. of this asset isisrecognised increased as to an its is the higher loss of thewas CGU’s fair valueThe lesscarrying cost to sell and value-in-use. impairment loss in profit or loss, unless the asset is carried at revalued amount, in which revised recoverable amount, provided that this amount does not exceed the carrying case, such impairment loss is treated as a revaluation amount would have been determined (netfirst of decrease. any accumulated amortisation The totalthat impairment loss of a CGU is allocated to reduce the carrying amount or of depreciation) had no loss beentorecognised the of asset priorpro-rata years. on the goodwill allocated toimpairment the CGU and then the other for assets theinCGU An impairment loss for an asset other than basis of the carrying amount of each asset ingoodwill the CGU.is reversed only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last g. Impairment of non-financial assets impairment lossloss wason recognised. The carrying as amount of thisand asset increased An impairment goodwill is recognised an expense is is not reversedtoinits a 71 revised recoverable amount, provided that this amount does not exceed the carrying (b) Intangible assets subsequent period. amount would have been determined (net of any accumulated amortisation or Plant andthat equipment depreciation) had no impairment loss been recognised for the asset in prior years. Investments in subsidiaries and associated company (continued) (b) Intangible assets Plant and equipment g. A reversal Impairment of non-financial lossassociated for assets an asset other than goodwill is recognised in profit or Investmentsof inimpairment subsidiaries and company loss, unless the asset is carried at revalued amount, in which case, such reversal is treated (b) Intangible assets increase. However, to the extent that an impairment loss on the same as a revaluation Intangible assets, plant and equipment and investments in subsidiaries and associated Plant andasset equipment revalued previously recognisedwhenever as an expense, of that impairment is company are was tested for impairment there aisreversal any objective evidence or Investments in subsidiaries and associated company (continued) also recognised in profit or loss. indication that these assets may be impaired. h. (a)
h. (a)
A reversal of impairment loss for an asset other than goodwill is recognised in profit or assets For Financial the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair loss, unless the asset is carried at revalued amount, in which case, such reversal is treated value less cost to sell and the value-in-use) is determined on an individual asset basis as a revaluation increase. However, to the extent that an impairment loss on the same Classification unless the asset does not generate cash inflows that are largely independent of those revalued asset was previously recognised as an expense, a reversal of that impairment is from other assets. If this is the case, the recoverable amount is determined for the CGU to also recognised inGroup profit or loss. The Combined classifies its financial assets as loans and receivables. The which the asset belongs. classification depends on the nature of the asset and the purpose for which the assets Financial assets were If theacquired. recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. Classification determines the classification of its financial assets at initial recognition and Management in the case of assets classified as held-to-maturity, re-evaluates this designation at as each The difference between the carrying amount and recoverable amount is recognised an The Combined Group classifies its financial assets as loans and receivables. The balance sheet date. impairment loss in profit or loss, unless the asset is carried at revalued amount, in which classification depends on the nature of the asset and the purpose for which the assets case, such impairment loss is treated as a revaluation decrease. were acquired. Loans and receivables Management determinesare thenon-derivative classification offinancial its financial assets at fixed initialor recognition and Loans and receivables assets with determinable in the case of assets classified as held-to-maturity, re-evaluates this designation at each payments that are not quoted in an active market. They are presented as current assets, 69 balancefor sheet date. 71 except those expected to be realised later than 12 months after the balance sheet date which are presented as non-current assets. Loans and receivables are presented as ‘‘trade Loans and receivables’’ receivables and ‘‘cash and cash equivalents’’ on the balance sheet. and other Loans and receivables are non-derivative financial assets with fixed or determinable
Plant and equipment Investments in subsidiaries and associated company (continued)
6.6
A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense, a reversal of that impairment is Accounting policiesin (continued) also recognised profit or loss. f. h.
Investments in subsidiaries and associated company Financial assets
For personal use only
Investments in subsidiaries and associate company are carried at cost less accumulated (a) Classification impairment losses in the Company’s balance sheet. On disposal of such investments, the difference between disposal proceeds and the carrying amounts of the investments are The Combined Group classifies its financial assets as loans and receivables. The recognised in profit or loss. classification depends on the nature of the asset and the purpose for which the assets acquired. of non-financial assets g. were Impairment determines the classification of its financial assets at initial recognition and (a) Management Goodwill in the case of assets classified as held-to-maturity, re-evaluates this designation at each balance date. separately as an intangible asset is tested for impairment annually Goodwillsheet recognised and whenever there is indication that the goodwill may be impaired. Loans and receivables For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Loans and receivables are non-derivative (‘‘CGU’’) financialexpected assets with fixed orfrom determinable Combined Group’s cash-generating-units to benefit synergies payments that are not quoted in an active market. They are presented as current assets, arising from the business combination. except for those expected to be realised later than 12 months after the balance sheet date which are presented assets.the Loans and receivables presented as ‘‘trade An impairment loss as is non-current recognised when carrying amount ofare a CGU, including the and other exceeds receivables’’ and ‘‘cash and cash equivalents’’ the balance sheet. goodwill, the recoverable amount of the CGU. on The recoverable amount of a CGU (b)
is the higher of the CGU’s fair value less cost to sell and value-in-use. Recognition and derecognition The total impairment loss of a CGU is allocated first to reduce the carrying amount of Regular purchases andCGU salesand of financial assets are assets recognised trade date- the goodwillway allocated to the then to the other of theonCGU pro-rata ondate the on which thecarrying Combined Groupofcommits to in purchase or sell the asset. basis of the amount each asset the CGU.
6.6.
Financial assets are the rightsas to an receive cashand flows the financial An impairment lossderecognised on goodwillwhen is recognised expense is from not reversed in a assets have expired or have been transferred and the Combined Group has transferred subsequent period. substantially all risks and rewards of ownership. On disposal of a financial asset, the between the carrying amount and the sale proceeds is recognised in profit or Accounting policies (b) difference Intangible assets(continued) loss. Any amount previously recognised in other comprehensive income relating to that Plant and equipment asset is reclassified to profit or loss. inassets subsidiaries and associated company h. Investments Financial (continued) (c) Initial measurement Intangible assets, plant and equipment and investments in subsidiaries and associated company are tested for impairment whenever there is any objective evidence or Financial are initially recognised at fair value plus transaction costs. Transaction indicationassets that these assets may be impaired. costs for financial assets at fair value through profit or loss are recognised immediately 72 as Forexpenses. the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair (d)
(e)
value less cost to sell and the value-in-use) is determined on an individual asset basis Subsequent unless the measurement asset does not generate cash inflows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the CGU to Loans andasset receivables which the belongs.are subsequently carried at amortised cost using the effective interest method. If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying Impairment amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The Combinedbetween Group assesses at each balance sheet date whether is objective The difference the carrying amount and recoverable amount isthere recognised as an evidence that a financial asset or a group of financial assets is impaired and impairment loss in profit or loss, unless the asset is carried at revalued amount,recognises in which an allowance for impairment when such exists. case, such impairment loss is treated as a evidence revaluation decrease. Loans and receivables
70
Significant financial difficulties of the debtor, probability that the debtor will enter 71 bankruptcy and default or significant delay in payments are objective evidence that these financial assets are impaired. The carrying amount of these assets is reduced through the use of an impairment
(c) Initial measurement Financial assets are initially recognised at fair value plus transaction costs. Transaction costs for financial assets at fair value through profit or loss are recognised immediately as expenses. (d)
For personal use only
6.6.
Subsequent measurement
Accounting policies (continued) Loans and receivables are subsequently carried at amortised cost using the effective method. h. interest Financial assets (continued) (e) Impairment (c) Initial measurement The Combined assesses at each at balance sheet date whether costs. there Transaction is objective Financial assets Group are initially recognised fair value plus transaction evidence that a financial asset a group of financial is impaired and recognises costs for financial assets at fairor value through profit orassets loss are recognised immediately an allowance for impairment when such evidence exists. as expenses. (d)
(e)
i.
Loans and receivables Subsequent measurement Significant financial difficulties of the debtor, thatcost theusing debtor enter Loans and receivables are subsequently carriedprobability at amortised thewill effective bankruptcy and default or significant delay in payments are objective evidence that these interest method. financial assets are impaired. Impairment The carrying amount of these assets is reduced through the use of an impairment The Combined Group assesses at each as balance sheet date whether is objective allowance account which is calculated the difference between the there carrying amount evidence that a financial asset or afuture group cash of financial assets is impaired and recognises and the present value of estimated flows, discounted at the original effective an allowance for impairment when such evidence exists. interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Loans and receivables Subsequent recoveries of amounts previously written off are recognised against the same Significant financial difficulties of the debtor, probability that the debtor will enter line item in profit or loss. bankruptcy and default or significant delay in payments are objective evidence that these financial assets are impaired. The impairment allowance is reduced through profit or loss in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively The carrying these assets reduced throughimpaired the use isofincreased an impairment measured. Theamount carryingof amount of theis asset previously to the allowance which is calculated the difference the carrying extent thataccount the new carrying amountasdoes not exceedbetween the amortised cost amount had no and the present of estimated future cash flows, discounted at the original effective impairment beenvalue recognised in prior periods. interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Borrowings
Subsequent amounts previously are recognised Borrowings are recoveries presentedofas current liabilitieswritten unlessoffthe Combined against Group the hassame an line item in profit loss.settlement for at least 12 months after the balance sheet date, in unconditional right to or defer which case they are presented as non-current liabilities. The impairment allowance is reduced through profit or loss in a subsequent period when the amount of impairment lossatdecreases related decrease objectively Borrowings are initially recognised fair valueand (netthe of transaction costs)can andbe subsequently measured. The carrying of between the assetthe previously is increased to and the carried at amortised cost. Any amount difference proceeds impaired (net of transaction costs) extent thatvalue the new carrying inamount does the of amortised cost had no the redemption is recognised profit or loss not overexceed the period the borrowings using impairment been recognised in prior periods. the effective interest method. i.
Borrowings 73
Borrowings are presented as current liabilities unless the Combined Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date, in which case they are presented as non-current liabilities. Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
73
71
6.6.
Accounting policies (continued) j.
Offsetting financial instruments
For personal use only
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset and there is an intention to settle on a net basis or realise the net asset and settle the liabilities simultaneously. k.
Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Combined Group prior to the end of financial year which are unpaid. They are classified as current liabilities if payment is due within one year or less. Otherwise, they are presented as non-current liabilities. Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method. l.
Fair value estimation of financial assets and liabilities
The fair values of financial instruments traded in active markets (such as exchange traded and over-the-counter securities and derivatives) are based on quoted market prices at the balance sheet date. The quoted market prices used for financial assets are the current bid prices; the appropriate quoted market prices used for financial liabilities are the current asking prices. m.
Income taxes
Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries, associated companies and joint ventures, except where the Combined Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised.
72
74
6.6.
Accounting policies (continued)
For personal use only
m.
Income taxes (continued) Deferred income tax is measured: (i)
at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date; and
(ii)
based on the tax consequence that will follow from the manner in which the Combined Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities except for investment properties. Investment property measured at fair value is presumed to be recovered entirely through sale. Current and deferred income taxes are recognised as income or expense in profit or loss, except to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition.
n.
Employee compensation
Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset. (a)
Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Combined Group pays fixed contributions into separate entities such as the General Provident Fund on a mandatory, contractual or voluntary basis. The Combined Group has no further payment obligations once the contributions have been paid.
(b)
Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.
o. (a)
Currency translation Functional and presentation currency Items included in the financial statements of each entity in the Combined Group are measured using the currency of the primary economic environment in which the entity operates (‘‘functional currency’’). The financial statements are presented in Singapore Dollars, which is the functional currency of the Combined Group.
75
73
6.6.
Accounting policies (continued)
For personal use only
o. (b)
Currency translation (continued) Transactions and balances Transactions in a currency other than the functional currency (‘‘foreign currency’’) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency translation differences resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in profit or loss. However, in the consolidated financial statements, currency translation differences arising from borrowings in foreign currencies and other currency instruments designated and qualifying as net investment hedges and net investment in foreign operations, are recognised in other comprehensive income and accumulated in the currency translation reserve. When a foreign operation is disposed of or any loan forming part of the net investment of the foreign operation is repaid, a proportionate share of the accumulated currency translation differences is reclassified to profit or loss, as part of the gain or loss on disposal. Foreign exchange gains and losses that relate to borrowings are presented in the income statement within ‘‘finance cost’’. All other foreign exchange gains and losses impacting profit or loss are presented in the income statement within ‘‘other losses ---- net’’. Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair values are determined.
(c)
Translation of Combined Group entities’ financial statements The results and financial position of all the Combined Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i)
assets and liabilities are translated at the closing exchange rates at the reporting date;
(ii) income and expenses are translated at average exchange rate (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and (iii) all resulting currency translation differences are recognised in other comprehensive income and accumulated in the currency translation reserve. These currency translation differences are reclassified to profit or loss on disposal or partial disposal of the entity giving rise to such reserve. Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and translated at the closing rates at the reporting date.
74
76
6.6.
Accounting policies (continued)
For personal use only
p.
Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents include cash on hand, deposits with financial institutions which are subject to an insignificant risk of change in value, and bank overdrafts. Bank overdrafts are presented as current borrowings on the balance sheet. q.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account. r.
Dividends to Company’s shareholders
Dividends to the Company’s shareholders are recognised when the dividends are approved for payment. 6.7
Dividend policy It is anticipated that following completion of the Proposed Transaction, Zingmobile will focus on the growth and development of the Pixie business. Zingmobile does not expect to declare any dividends in the near term. Any future determination as to the payment of dividends by Zingmobile will be at the discretion of the Board and will depend on the availability of distributable earnings and operating results and financial condition of the Combined Group, future capital requirements and general business and other factors considered relevant by the Board. No assurance in relation to the payment of dividends or franking credit attaching to dividends can be given by Zingmobile.
77
75
Investigating Accountant’s Report
For personal use only
7
76
78
77
For personal use only
78
For personal use only
79
For personal use only
80
For personal use only
81
For personal use only
8
Risk factors
For personal use only
This Section identifies the areas that are believed to be the major risks associated with an investment in the Company. The Company's business after Completion (when it is combined with the Pixie Group business) will be subject to risk factors, a number of which are beyond the Company's control. These risks may be both specific to the Company's business activities and of a general nature. Individually, or in combination, these risks might affect the future operating performance and the value of an investment in the Company. There can be no guarantee that the Company will achieve its stated objectives or that any forwardlooking statements will eventuate. An investment in the Company should be considered in light of the risks, both general and specific. Each of the risks set out below could, if they eventuate, have a material adverse impact on the Company’s operating performance and profits. Before deciding to invest in the Company, potential investors should read the entire Prospectus, and specifically consider the factors contained within this Section in order to fully appreciate the risks associated with an investment in the Company. You should carefully assess these factors in light of your personal circumstances and seek professional advice from your stockbroker, accountant, lawyer or other professional adviser before deciding whether to invest. While these are not the only risks and uncertainties we face, management believes that the most significant risks and uncertainties are as set out below.
8.1
Risks specific to the Company and the Shares
8.1.1
Re-quotation of shares on ASX
The acquisition of Pixie Group constitutes a significant change in the nature and scale of the Company’s activities and the Company needs to comply with Chapters 1 and 2 of the ASX Listing Rules as if it were seeking admission to the official list of the ASX. There is a risk that the Company may not be able to meet the requirements of the ASX for re-quotation of its Shares on the ASX, which would result in the investors’ funds being returned. Should this occur, the Shares will not be able to be traded on the ASX until such time as those requirements can be met, if at all. It is a risk for existing shareholders in the Company who may be prevented from trading their existing shares should the Company be suspended until such time as it does re-comply with the ASX Listing Rules. 8.1.2
Conditions precedent to completion
The Proposed Transaction is subject to a number of conditions precedents as summarised in Section 5.6 of this Prospectus. If these conditions are not satisfied or waived by the relevant due date, the Proposed Transaction may not proceed, in which case the Company will need to evaluate whether it can continue as a going concern. 8.1.3
Limited trading history and implementation of future plans
Pixie was established in 2014 and therefore has a limited trading history. As an early stage business, the Pixie Business also has a limited financial history that may make it difficult for investors to assess its past performance. There is a risk that the Company does not fulfil its future plans, including its expansion strategy to expand the business into new markets. This could be due to factors relating to the economy or a failure on the Company's part to execute the strategy as expected.
82
84
8.1.4
Concentration of ownership of shares
For personal use only
The investment being sought by the Company through the Offer will be a minority stake in the Company, of between 17.1% and 24.5% in total. Depending on the number of Shares finally issued under the Offer, the Pixie Vendors will hold approximately 66.8% to 73.3% of the total issued Shares in the Company and will be in a position to exert considerable control over the decisions made by the Company, including in relation to the election of Directors, the appointment of new management and the potential outcome of matters requiring a Shareholder vote. There is a risk that the interests of the Pixie Vendors may be different to the interests of other Shareholders. Please also see risk 8.1.6 in relation to the application of the Singapore Takeovers Code. 8.1.5
Liquidity and dilution risk
There is a significant liquidity risk since only a relatively small percentage of the Shares will be held by non-Pixie Vendor Shareholders and the Pixie Vendors will enter into restriction agreements for a period of up to two years from re-quotation of the Shares on the ASX (see further at Section 10.9), meaning they will not be able to be traded freely for the relevant restriction period. In addition, there is future dilution risk to minority Shareholders should the Company seek to raise further equity. This risk arises particularly if the Pixie Vendors elect to participate in future Share issues and minority Shareholders are unwilling or unable to participate in those capital raisings. 8.1.6
Singapore Takeovers Code restrictions may not apply after Completion
After Completion, Pixie Vendors and their associates will hold Shares carrying over 49% of the voting rights of the Company. This means that they will be free to acquire further Shares without the requirement under Rule 14 of the Singapore Takeovers Code (to make a general offer for the Company) applying. This means minority Shareholders will have reduced rights under the Singapore Takeovers Code in relation to their minority holdings. It is also less likely that minority Shareholders will receive a control premium for their Shares if a control transaction was to take place. 8.1.7
Singapore law applies to the Shares
In addition to differences in Singapore takeover law compared with Australian takeover law, there are other differences in Shareholder rights arising from the fact that Singapore law will govern the rights attaching to Shares and the fact that investors will receive CDIs. These difference include:
certain minority shareholder rights (such as statutory derivative actions, requisitioning shareholder meetings, and oppression remedies) are only available to direct shareholdings, which can be achieved by converting CDIs into Shares,
no annual vote on a remuneration report or "two strikes" rule (which would apply to an Australian incorporated company listed on ASX), and
less restrictive related party transaction regulation compared with an Australian public company.
Sections 11.4 and 11.6 set out further detail regarding applicable Singapore law.
85
83
8.1.8
Brand value susceptible to changes in customer preferences
For personal use only
Pixie Group operates in a fast-changing environment of consumer preferences. As a consequence, failure by Pixie Group to predict or respond to any such changes could adversely impact Pixie Group's future financial performance. Over time, Pixie’s brand names, reputation and value associated with these brands, could be adversely affected by a number of factors including:
failure to provide the high quality of customer service and products expected by customers;
disputes with third parties - such as employees, landlords, suppliers and customers;
adverse media (including social media).
The Company may have to invest funds in refreshing or updating its product and service offerings in response to changing markets, and this could lead to an unsatisfactory return on investment or a delay in profitability. If an investment is unsuccessful, this could also lead to a substantial loss of investment as there is unlikely to be a ready market for an underperforming or loss making entertainment and F&B business. 8.1.9
Relationships with landlords and suppliers
Pixie Group is reliant on its relationships with its landlords as it leases both its head office space and the premises at which its outlets currently operate. Accordingly, Pixie Group's profitability may be impacted if it is unable to renew its leases, in particular the ones relating to the outlets, on favourable terms or if its lease arrangements with the landlords are terminated for any reason. The Company relies on sourcing products from various suppliers and any material adverse change in the Company’s relationships with its suppliers, its terms of trade, or the ability of key suppliers to service orders could have an adverse impact on the Company’s prospects. Furthermore, the reliance on sourcing products from suppliers exposes the Company to further risks of delivery delays or quality problems that may adversely affect the business. In particular, beverage sales are a key revenue driver for Pixie Group, and any adverse change in pricing, supply availability, or factors beyond Pixie Group's control (such as future import restrictions on imported beverages, or taxes and duties) would adversely affect the Company's profits. Pixie Group's beverage suppliers are local, and so Pixie Group is not directly exposed to currency risk or international trade risks. However, to the extent that these risks are faced by Pixie Group's suppliers it is possible that increased costs, or disruptions in supply, could be indirectly passed on to the Company, which would adversely affect its earnings. 8.1.10
Competition
The markets in which Pixie Group operates are subject to vigorous competition. There can be no assurance that the competitive environment will not change adversely due to actions of competitors or changes in customer preferences. The Company’s financial performance or operating margins could be adversely affected if the actions of competitors or potential competitors become more effective, or if new competitors enter the market and the Company is unable to counter these actions. The entertainment and F&B markets are experiencing the emergence of new providers of these types of services, as well as providers of innovative entertainment and F&B service offerings. Potential risks relate to other providers of these services operating on a lower cost basis or becoming more competitive and providing more innovative solutions placing pressure on Pixie Group’s profits.
84
86
For personal use only
8.1.11
Reliance on key personnel
The Company relies on the experience and knowledge of its senior management and key personnel. The Company is also dependent on its ability to recruit and retain suitably qualified key management and personnel. In the event that such key management and personnel left and it was unable to recruit suitable replacements, there can be no assurance given that these could have a material adverse effect on the Company. 8.1.12
M&A, growth prospects and company expansion plans and funding
The Company's growth prospects are dependent on a number of factors, including its ability to expand its portfolio of F&B and venues across Asia and secure proposed collaboration and joint venture arrangements. The Company may not be able to achieve its growth targets if it is unable to find suitable M&A targets, joint ventures or opportunities (including new venues). The Company may be unsuccessful in M&As or new business opportunities. Business investments made by the Company may not perform to the level expected. A potential collaboration may not eventuate or a formalised joint venture may be unsuccessful. New ventures such as a proposed consulting business are unproven and risky, and management may not be able to profitably develop the new venture resulting in a poor performance of investments. The Company may also face challenges in securing funding for its expansion plans. If debt funding is obtained, this may have an impact on the Company's balance sheet and may lead to ongoing repayment obligations. If the Company issues equity to fund its expansion plans, or business operations otherwise, this will lead to dilution of existing Shareholders. 8.1.13
Economic conditions, including increased costs
The Malaysian entertainment sector, and therefore the Pixie Group business, is susceptible to current economic conditions. A downturn in economic growth or performance can significantly impact consumer confidence and consumer discretionary spending in sectors such as entertainment and F&B in which Pixie Group operates. This means that in an economic downturn a business like Pixie Group's business may be subjected to a downturn in revenue and hence decrease in profitability. The performance of the Pixie Group business may also be impacted by increases in operating expenses, including purchasing costs, costs associated with employees and rents, all of which can adversely affect profit margins 8.1.14
Risks associated with regulatory environment
Pixie Group’s current operating activities are based in Malaysia and subject to Malaysian laws and regulations. Pixie Group is required to comply with all relevant laws, including obtain various licences, approvals and registrations required to operate Pixie Outlets in Malaysia. New outlets to be acquired or opened by Pixie Group may be dependent on the ability of the Company to obtain relevant licences and approvals and may increase compliance costs of the Company. This may lead to uncertainties and may cause delays in expansion plans. In addition, in Malaysia it is usual practice for key licences needed for operation of a business at the premises (such as entertainment and liquor licences) to be held by the landlord. This means that a breach of licence conditions or failure to renew may be caused by the landlord and this may be outside of the control of Pixie Group. The landlord's position as licence holder may also put them in a stronger negotiating position when it comes to lease renewal negotiations.
87
85
8.2
General Risks
8.2.1
Market conditions
For personal use only
The Shares are to be quoted on ASX, where the Share price may rise or fall. The Shares issued or sold under the Prospectus carry no guarantee in respect of profitability, dividends, return of capital, or the price at which they may trade on ASX. The value of the Shares will be determined by the share market and will be subject to a range of factors, many or all of which may be beyond the control of the Company and the management team. 8.2.2
Economic conditions
The performance of the Company is likely to be affected by changes in economic conditions. Profitability of the business may be affected by some of the matters listed below. The Directors make no forecast in regard to:
the future demand for the Company’s services;
general financial issues which may affect policies, exchange rates, inflation and interest rates;
deterioration in economic conditions, possibly leading to reductions in business spending and other potential revenues which could be expected to have a corresponding adverse impact on the Company's operating and financial performance;
the strength of the equity and share markets in Australia and throughout the world;
financial failure or default by the Company or any other company which is or may become involved in a contractual relationship with the Company; and
industrial disputes in Malaysia and outside Malaysia .
8.2.3
Government policies & legislation
The Company may be affected by changes to government policies and legislation, including those relating to the entertainment, liquor and F&B licensing in Malaysia and intellectual property.
86
88
Directors and Corporate Governance
For personal use only
9 9.1
Board of Directors
9.1.1
Existing Directors
The Company currently has a Board of 2 Directors. One executive director and one independent nonexecutive director. The current Board is:
Mr Teo Siew Kiet, Chairman and Chief Executive Officer
Ms Khoo Phaik Ean Patricia, Non-executive Director
Subject to the Shareholder approval and completion of the Proposed Transaction, it is intended that the current Board of Directors, will step down and the new directors referred to below will be appointed. Ms Foo Soon Soo will remain as company secretary.
89
87
9.1.2
Proposed Directors and composition of the new Board
For personal use only
The Company is proposed to have a Board of two executive Directors and three non-executive, independent Directors, subject to the Shareholders approval and completion of the Proposed Transaction. The following persons have agreed to replace the two outgoing existing Directors noted above. Directors
Experience
Mr Hoo Voon Him
Mr Hoo Voon Him co-founded Pixie Group together with Mr Tin Yu Jiann and the late Mr Kwek Kon Chun. Mr Hoo Voon Him has more than six years of experience in managing nightlife and clubbing outlets throughout Asia. He is currently the Executive Chairman of V Capital Sdn Bhd, a corporate advisory services firm based on Malaysia. Mr Hoo Voon Him holds a Postgraduate Certificate in law in the specialisation of Banking and Finance Law from the University of London.
Chairman
Mr Tin Yu Jiann Executive Director
Mr Shensean Chen Non-Executive Director
Mr Tan Zhi Xiong, Ian Non-Executive Director
Ms Lay Chin Moey Non-Executive Director
88
Mr Tin Yu Jiann co-founded Pixie Group together with Mr Hoo Voon Him and the late Mr Kwek Kon Chun. He is also the Founder and Managing Director of Neverland Group. Mr Tin has more than six years of experience in managing nightlife and clubbing outlets in Singapore and Malaysia where he was responsible for overseeing the entire operations, providing strategic direction and business development advice to Neverland Group. He is currently the strategic partner to St. James Power Station, a nightclub and entertainment group in Singapore. He is also the member of Singapore Nightlife Business Association. Mr Tin holds a Bachelor of Business (Business Administration) from Royal Melbourne Institute of Technology, Australia. Mr Shensean Chen is the Non-Executive Director of Bizmac, who has great passion for entertainment and hospitality industries. After attending law school, he gained experience in events management and soon after began his foray into the entertainment industry at Pixie Mansion since early 2014. There, he was responsible for overseeing the dance club’s operations and finances. As a Director of Bizmac, Mr Chen provides advisory services to Pixie Group, including assisting with the strategic direction and streamlining of operations. Mr Tan Zhi Xiong, Ian has close to 10 years of experience in banking industry as a Forex Trader in New York, United States of America and Singapore. Mr Tan holds a Bachelor of Science majoring in Biochemistry and Microbiology and a Masters of Commerce majoring in accounting and finance both from the University of Sydney. Ms Lay Chin Moey was previously with Kelly Services (M) Sdn Bhd (‘‘Kelly’’) in Malaysia for seven years. Kelly is a Fortune 500 company headquartered in Troy, Michigan, USA offering human resource solutions including talent management, recruitment and outsourcing and consulting services. She obtained a Certificate in Business Administration from Stamford College, Malaysia and attended training by Society for Human Resources Management.
90
9.1.3
Terms of Appointment of Proposed Directors
For personal use only
The table below sets out the terms of agreement for the Company's appointment of the Proposed Directors: Directors
Terms of Appointment
Mr Hoo Voon Him
Mr Hoo Voon Him's role as the Chairman is governed by a letter of appointment between Mr Hoo Vin Him and the Company. The agreement stipulates the following terms and conditions:
Executive Chairman
(a) Remuneration: a base salary of S$120,000 per annum and director fees of S$60,000 per annum are payable to Mr Hoo Voon Him and are subject to annual review by the Board and the Nomination and Remuneration Committee. (b) Bonus: Mr Hoo Voon Him is eligible for a performance bonus which will be determined by the Board based on his and the Group's performance. (c) Term and termination: Mr Hoo Voon Him's service agreement may be terminated by him or the Company by giving no less than 6 months notice. The Company may also suspend or terminate Mr Hoo Voon Him immediately in certain circumstances, including in the event of his dishonesty, serious or persistent misconduct, failure to perform his duties or his bankruptcy. Mr Tin Yu Jiann CEO and Executive Director
Mr Tin Yu Jiann's role as Executive Director is governed by a letter of appointment between Mr Tin Yu Jiann and the Company. The agreement stipulates the following terms and conditions: (a) Remuneration: a base salary of S$120,000 per annum and director fees of S$60,000 per annum are payable to Mr Tin Yu Jiann and are subject to annual review by the Board and the Nomination and Remuneration Committee. (b) Bonus: Mr Tin Yi Jiann is eligible for a performance bonus which will be determined by the Board based on his and the Group's performance. (b) Term and termination: Mr Tin Yu Jiann's service agreement may be terminated by him or the Company by giving no less than 6 months notice. The Company may also suspend or terminate Mr Tin Yu Jiann immediately in certain circumstances, including in the event of his dishonesty, serious or persistent misconduct, failure to perform his duties or his bankruptcy. .
Please refer to Section 9.3.3 of this Prospectus for disclosure of the fees which will be paid to the proposed non-executive Directors of the Company.
91
89
9.2
Proposed senior management
For personal use only
Currently the Company does not have any senior management personnel. Subject to the completion of the Proposed Transaction, the Board proposes to appoint the following persons as the members of the senior management team: Senior Management
Experience
Mr Hoo Voon Him Executive Chairman
Please refer to Section 9.1.3 above.
Mr Tin Yu Jiann
Please refer to Section 9.1.3 above.
Executive Director Mr Adrian How General Manager
Mr Choy Wai Hong Regional Group Manager
Ms Yong Sze Wan Cheryl Chief Financial Officer
90
Mr Adrian How is responsible for the overall operations and marketing of Pixie Group. He has experience in nightlife and clubbing industry. He has more than fifteen years of experience in managing nightlife and clubbing outlet in Kuala Lumpur, Malaysia including Nouvo Club Group, Zouk Club Group, Mist/Milk Club Group, Neverland Group. Mr How received various awards throughout his career including Best Employee of the Year 2002 by Nouvo Club, 5 Years Services Award by Zouk Club, Nominated Best Customer Service Hospitality Award by Juice Magazine Year 2006. Mr. Choy Wai Hong is responsible for the regional business expansion of Pixie Group. He has more than 20 years of experience in F&B and academic sectors. He has six years in senior management roles in Singapore clubs including Neverland Group, Lo & Behold Group and Zouk Clubs Group. He brings with him vast experience in the area of operations and corporate communication of nightlife and clubbing outlets. Mr Choy Wai Hong’s in depth understanding of clubbing outlets’ operation flows has helped to facilitate in evaluation, planning, execution, management of the Lifestyle Outlets. Ms Yong Sze Wan Cheryl is responsible for the accounting and finance function of Pixie Group. Ms Yong has over 10 years of experience in audit and financial reporting. Prior to joining Pixie, she worked in companies listed on the Singapore Exchange and has held various audit positions in one of the Big Four public accounting firms in Singapore. Ms Yong holds a Bachelor of Commerce from the University of Queensland, Australia and is a member of CPA Australia.
92
9.2.1
Terms of services agreements with senior management
For personal use only
The table below sets out the terms of the Company's services agreements with senior management: Senior Management
Terms of agreement
Mr Hoo Voon Him Executive Chairman
Please refer to Section 9.1.3 above.
Mr Tin Yu Jiann
Please refer to Section 9.1.3 above.
Executive Director
9.3
Corporate governance
The Board of Zingmobile is committed to administering its corporate governance policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with Zingmobile’s needs. The Board supports the principles of effective corporate governance and is committed to adopting high standards of performance and accountability, commensurate with the size of the Company and its available resources. Accordingly, the Board has adopted corporate governance principles and practices designed to promote responsible management and conduct of the Company’s business. The Company seeks to follow the recommendations for listed companies as outlined in ASX Corporate Governance Council's Principles of Corporate Governance and Recommendations 3rd edition (Recommendations) where appropriate for its size and the complexity of its operations. The following governance related documents can be found on the Company's website at www.zingmobile.net under the section marked "Corporate Governance":
Board Charter; Code of Conduct; Audit and Risk Management Committee Charter; Remuneration and Nomination Committee Charter; Continuous Disclosure Policy; and Share Trading Policy.
After completion of the Proposed Transaction the corporate governance documents will be located on the Pixie Group Limited website: http://pixie-group.co
93
91
9.3.1
Departures from Recommendations
For personal use only
The Company reports any departures from the Recommendations in its annual report. The Company’s compliance and departures from the Recommendations as at the date of this Prospectus areas follows: Corporate Governance Council recommendation
Company Policy Compliance
and
Degree
of
Compliance
Principle 1: Lay solid foundations for management and oversight 1.1
A listed entity should disclose: (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management.
The Company has established the respective roles and responsibilities of its Board and management, and those matters expressly reserved to the Board and those delegated to management, and has documented this in its Board Charter.
Complies
The responsibilities of the Board include but are not limited to: (a) Developing and corporate strategy.
approving
the
(b) Evaluating, approving and monitoring the strategic and financial plans and objectives of the Company. (c) Evaluating, approving and monitoring the annual budgets and business plans. (d) Determining the Company's dividend policy, the operation of the Company's dividend re-investment plan and the amount and timing of all dividends. (e) Evaluating, approving and monitoring major capital expenditure, acquisitions, divestitures and other corporate transactions where the monetary value is greater than AUD$250,000; and (f) Evaluating, approving and monitoring capital management, including the issue of securities of the Company. Currently the business operations of the Company are conducted by the Board. Following completion, the responsibility for the business operations of the Company will be vested in management, who will report to the Board on a regular basis.
92
94
For personal use only
Corporate Governance Council recommendation
Company Policy Compliance
1.2
The Company undertakes appropriate checks before appointing a person, or putting forward to shareholders a candidate for election as a director and provides shareholders with all material information in its possession relevant to a decision on whether or not to elect a director.
Complies
The Company currently has a written contract with its executive director and the terms of engagement of its nonexecutive director have been approved by the Board.
Complies following Completion
A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.
1.3
A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.
and
Degree
of
Compliance
The Company has entered into a written agreement with each of its proposed Directors (both executive and nonexecutive) and senior executives setting out the terms of their appointment following Completion. These contracts are conditional on Completion occurring. The material terms of any employment, service or consultancy agreement the Company has entered into with its Chief Executive Officer, any of its directors, and any other person or entity who is a related party of the Chief Executive Officer or any of its directors will be disclosed in accordance with ASX Listing Rule 3.16.4 (taking into consideration the exclusions from disclosure outlined in that rule).
93 95
For personal use only
Corporate Governance Council recommendation
Company Policy Compliance
1.4
The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. The Company Secretary is responsible for the application of best practice in corporate governance and also supports the effectiveness of the Board by:
The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.
and
Degree
of
Compliance Complies
(a) ensuring a good flow of information between the Board, its committees, and Directors; (b) monitoring policies and procedures of the Board; (c) advising the Board through the Chairman of corporate governance policies; and (d) conducting and reporting matters of the Board, including the despatch of Board agendas, briefing papers and minutes. 1.5
1.6
A listed entity should: have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them.
The Board values diversity and recognises the benefits it can bring to the organisation’s ability to achieve its goals.
A listed entity should:
(a) The board has responsibility for reviewing the performance of the Chair, board, any committees and individual directors. The details are documented in the Board Charter which is available on the Company's website.
(a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.
Does not comply
At this point in time, the Board does not consider the Board and the Company are of a size that raises the need for a formal diversity policy. The Board will adopt a diversity policy and establish measurable objectives for achieving gender diversity when it has grown to a point where it is appropriate to do so. Does not comply
(b) Given the size and scale of operations of the Company, the Company only has an informal review processes in place. This will be reviewed by the new Directors following Completion.
94 96
For personal use only
Corporate Governance Council recommendation
Company Policy Compliance
1.7
(a) The Board has in place informal processes for reviewing the performance of senior executives and management to reflect the performance of the Company. The Board is responsible for evaluating the performance of senior executives. Given the size and scale of operations of the Company, the Company only has informal review processes in place. This will be reviewed by the new Directors following Completion.
A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.
and
Degree
of
Compliance Does not comply
(b) As disclosed in the annual report of the Company, performance reviews of the Company's senior executives are carried out on an informal basis and any issues arising from the review are addressed.
Principle 2: Structure the Board to add value 2.1
The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter committee;
of
(4) the members of committee; and
the the
(5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; OR (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the
As the Board currently consists of only two directors, the roles and responsibilities of a nomination committee are currently undertaken by the Board.
Does not comply
Following Completion, the Remuneration and Nomination Committee will have three members, Mr Ian Tan (Chairman) who is a non-executive director of the Board and Mr Hoo Voon Him and Mr Tin Yu Jiann, who are both on the Board in an executive capacity. On this basis, the Company does not comply with the recommendation that a majority of the committee members are independent directors. The Board considers that Mr Hoo Voon Him and Mr Tin Yu Jiann’s experience and insights in the industry, including the market practices in Malaysia and Singapore, will add value to the committee and outweigh any disadvantage of these directors not being independent.The Board has adopted a Remuneration and Nomination Committee Charter which describes the role, composition, functions and
95 97
For personal use only
Corporate Governance Council recommendation
2.2
Company Policy Compliance
and
Degree
of
board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.
responsibilities of a Remuneration and Nomination Committee and is disclosed on the Company's website, although the Company does not currently have such committee and that role is undertaken by the Board.
A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.
The mix of skills and diversity which the Board is looking to achieve in its composition is:
Compliance
Complies
(a) a broad range of business experience; (b) technical expertise and skills required to discharge duties; and (c) an understanding of the markets and the regulatory requirements for an ASX listed Company.
2.3
(a) the names of the directors considered by the board to be independent directors;
The Board considers the independence of directors having regard to the relationships listed in Box 2.3 of the Principles and Recommendations.
(b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and
The Board currently has two directors, one executive director and one independent non-executive director. As such, half, not majority of the Board are independent. The directors consider the size of the Board to be appropriate given the size and scale of operations and stage of development of the Company. The Board considers it appropriate for Mr Teo Siew Kiet to be the Chairman of the Company given his experience as founder and CEO of the Company.
A listed entity should disclose:
(c) the length of service of each director.
Complies
Following Completion, the Board will comprise five directors of which three are to be considered independent. The independent directors are Shensean Chen, Ian Tan and Lay Chin Moey. While after Completion and issue of Shares under the Offer Mr Ian Tan will hold just over 5% of the Company, the Board is of the view that Mr Ian Tan is an independent director as he will not hold an executive role with the Company and will have no influence over the day to day operations of the Company. Mr Ian Tan does not hold any executive position with
96 98
For personal use only
Corporate Governance Council recommendation
Company Policy Compliance
and
Degree
of
Compliance
Pixie Group. In this respect, the Board has decided to determine the independence of Mr Ian Tan using the criteria set out in the ZMG Board Charter, which provides that an independent director is a nonexecutive director who (amongst other things) does not hold 10% or more of the Shares. Mr Shensean Chen is considered to be independent as he is a non-executive director with no influence over the Company’s operations and the role he previously held with Bizmac was also a non-executive role. Mr Shensean Chen does not have a substantial holding in the Company. Ms Lay Chin Moey is also considered to be independent as her role with the Company is limited to a nonexecutive role and she does not have a substantial holding in the Company. The minimum number of Directors under Singapore law is one Singapore resident director, and under the Articles of Association, the maximum is to be determined by the directors from time to time and until otherwise determined it is 10. 2.4
A majority of the board of a listed entity should be independent directors.
The Board currently has two directors, one executive director and one independent non-executive director. As such, half, not majority of the Board are independent. The directors consider the size of the Board to be appropriate given the size and scale of operations and stage of development of the Company.
Complies following Completion
Following Completion, there will be five directors of which three directors are considered by the Board to be independent. 2.5
The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.
The Board considers it appropriate for Mr Teo Siew Kiet to be the Chairman of the Company given his experience as founder and CEO of the Company. Following Completion, Mr Hoo Voon Him will be the executive Chairman due to his experience.
Does not comply
97 99
For personal use only
Corporate Governance Council recommendation
Company Policy Compliance
2.6
It is a policy of the Company, that new Directors undergo an induction process in which they are given a full briefing on the Company. Where possible this includes meetings with key executives, tours of the premises, an induction package and presentations.
A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.
and
Degree
of
Compliance Complies
In order to achieve continuing improvement in Board performance, all Directors are encouraged to undergo continual professional development.
Principle 3: Act ethically and responsibly 3.1
A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it.
The Company is committed to promoting good corporate conduct grounded by strong ethics and responsibility. The Company has established a Code of Conduct (Code), which addresses matters relevant to the Company's legal and ethical obligations to its stakeholders. It may be amended from time to time by the Board, and is disclosed on the Company's website.
Complies
The Code applies to all Directors, employees, contractors and officers of the Company. The Code will be formally reviewed by the Board each year.
98 100
Corporate Governance Council recommendation
Company Policy Compliance
and
Degree
of
Compliance
For personal use only
Principle 4: Safeguard the integrity in corporate reporting 4.1
The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter committee;
of
the
(4) the relevant qualifications and experience of the members of the committee; and
Due to the size of the Board, the Company does not have a separate audit committee. The roles and responsibilities of the audit committee are undertaken by the Board. Following Completion, the Audit and Risk Management Committee will comprise an independent non-executive director as Chairman (Mr Ian Tan) and two executive directors (Mr Hoo Voon Him and Mr Tin Yu Jiann). The Board considers that Mr Hoo Voon Him’s and Mr Tin Yu Jiann’s experience in accounting and finance will add value to the committee. On this basis, the Company does not comply with the recommendation that all of the committee members are non-executive directors. The Board believes that the advantage brought to the committee by Mr Hoo Voon Him’s and Mr Tin Yu Jiann’s expertise outweighs any disadvantages of them not being independent directors.
Does not comply
(5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; OR (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.
99 101
For personal use only
Corporate Governance Council recommendation
Company Policy Compliance
and
Degree
of
Compliance
4.2
The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.
Before the Board approves the Company financial statements for each financial period it will receive from the Chief Executive Officer and the Chief Financial Officer or equivalent a declaration that, in their opinion, the financial records of the Company for the relevant financial period have been properly maintained and that the financial statements for the relevant financial period comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Company and the consolidated entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.
Complies
4.3
A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.
Currently, an external audit of the Company is undertaken by One Assurance LLP.
Complies
The external auditor attends the annual general meetings of the company and is available to answer shareholder questions. The Board considers the qualifications and experience of the external auditor when considering potential appointees to the position. The rotation of external audit engagement partners is also considered by the full board in the light of relevant legislative and professional standards.
100 102
Corporate Governance Council recommendation
Company Policy Compliance
and
Degree
of
Compliance
For personal use only
Principle 5: Make timely and balanced disclosure 5.1
A listed entity should:
The Company is committed to:
(a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and
(a) ensuring that shareholders and the market are provided with full and timely information about its activities;
(b) disclose that policy or a summary of it.
Complies
(b) complying with the continuous disclosure obligations contained in the Listing Rules; and (c) providing equal opportunity for all stakeholders to receive externally available information issued by the Company in a timely manner. The Company has adopted a Continuous Disclosure Policy, which is disclosed on the Company's website. The Disclosure Policy sets out policies and procedures for the Company's compliance with its continuous disclosure obligations under the ASX Listing Rules, and addresses financial markets communication, media contact and continuous disclosure issues. It forms part of the Company's corporate policies and procedures and is available to all staff. The Company Secretary manages the policy. The policy will develop over time as best practice and regulations change and the Company Secretary will be responsible for communicating any amendments. This policy will be reviewed by the Board annually.
101 103
Corporate Governance Council recommendation
Company Policy Compliance
and
Degree
of
Compliance
Principle 6: Respect the rights of security holders
For personal use only
6.1
A listed entity should provide information about itself and its governance to investors via its website.
The Company provides information about itself and its governance to investors via its website at www.zingmobile.net. The Company is committed to maintaining a Company website with general information about the Company and its operations and information specifically targeted at keeping the Company's shareholders informed about the Company. In particular, where appropriate, after confirmation of receipt by ASX, the following will be posted to the Company website:
Complies
(a) relevant announcements made to the market via ASX; (b) media releases; (c) investment updates; (d) Company presentations and media briefings; (e) copies of press announcements for three years; and
releases and the preceding
(f) copies of annual and half yearly reports including financial statements for the preceding three years or as at the latest available date. Following Completion, this information will be provided via the following Pixie Group website: http:/pixie-group.co
102 104
For personal use only
Corporate Governance Council recommendation
Company Policy Compliance
6.2
The Company has a Shareholder Communication Policy which will be adopted on and from Completion and which aims to ensure that Shareholders are informed of all major developments of the Company. The policy will be disclosed on the Company's new website http://pixie-group.co following Completion.
A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.
Information is Shareholders via:
and
Degree
communicated
of
Compliance Complies following Completion
to
(a) reports to Shareholders; (b) ASX announcements; (c) annual general meetings; and (d) the Company website. This Shareholder Communication policy will be formally reviewed by the Board each year. While the Company aims to provide sufficient information to Shareholders about the Company and its activities, it understands that Shareholders may have specific questions and require additional information. To ensure that Shareholders can obtain all relevant information to assist them in exercising their rights as Shareholders, the Company has made available a telephone number and relevant contact details (via the website) for Shareholders to make their enquiries. 6.3
A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.
The Board encourages full participation of Shareholders at meetings to ensure a high level of accountability and identification with the Company's strategies and goals.
Does not comply
However, due to the size and nature of the Company, the Board does not consider a policy outlining the policies and processes that it has in place to facilitate and encourage participating at meetings of shareholders to be appropriate at this stage.
103 105
For personal use only
Corporate Governance Council recommendation
Company Policy Compliance
6.4
Shareholders are given the option to receive communications from, and send communication to, the Company and its share registry electronically. To ensure that shareholders can obtain all relevant information to assist them in exercising their rights as shareholders, the Company has made available a telephone number and relevant contact details (via the website) for shareholders to make their enquiries.
Complies
Due to the size of the Board, the Company does not have a separate Risk Committee. The Board is responsible for the oversight of the Company's risk management and control framework.
Does not comply
A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.
and
Degree
of
Compliance
Principle 7: Recognise and manage risk 7.1
The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter committee;
of
(4) the members of committee; and
the the
(5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; OR (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.
Following Completion, the Audit and Risk Management Committee will comprise an independent non-executive director as Chairman (Mr Ian Tan) and two executive directors (Mr Hoo Voon Him and Mr Tin Yu Jiann). The Board considers that Mr Hoo Voon Him’s and Mr Tin Yu Jiann’s experience in risk management will add value to the committee. On this basis, the Company does not comply with the recommendation that a majority of the committee members are independent. The Board believes that the advantage brought to the committee by Mr Hoo Voon Him’s and Mr Tin Yu Jiann’s expertise outweighs any disadvantages of them being executive directors. The Board has adopted an Audit and Risk Management Committee Charter which describes the role, composition, functions and responsibilities of the Risk Committee and is disclosed on the Company's website. Under the Charter, responsibility and control of risk management is delegated to the Audit and Risk Management Committee.
104 106
Corporate Governance Council recommendation
Company Policy Compliance
and
Degree
of
Compliance
For personal use only
The risk management system covers: (a) operational risk; (b) financial reporting; (c) compliance I regulations; and (d) system I IT process risk. 7.2
The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place.
The Audit and Risk Management Committee will review the Company's risk management framework annually to satisfy itself that it continues to be sound, to determine whether there have been any changes in the material business risks the Company faces and to ensure that the Company is operating within the risk appetite set by the Board.
Complies
Arrangements put in place by the Audit and Risk Management Committee to monitor risk management include, but are not limited to: (a) monthly reporting to the Board in respect of operations and the financial position of the Company; and (b) quarterly rolling forecasts prepared.
7.3
A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role it performs; OR (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.
7.4
A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.
The Company does not have, and does not intend to establish, an internal audit function. To evaluate and continually improve the effectiveness of the Company's risk management and internal control processes, the Board relies on ongoing reporting and discussion of the management of material business risks as outlined in the Company's Risk Management Policy.
Does not comply
Given the speculative nature of the Company's business, it will be subject to general risks and certain specific risks. These are outlined in detail in Section 8.
Complies
The Company will identify those economic, environmental and/or social sustainability risks to which it has a material exposure, and disclose how it intends to manage those risks in each of its corporate governance statements.
105 107
Corporate Governance Council recommendation
Company Policy Compliance
and
Degree
of
Compliance
Principle 8: Remunerate fairly and responsibly
For personal use only
8.1
The board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter committee;
of
(4) the members of committee; and
the the
(5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; OR (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.
Due to the size of the Board, the Company does not have a separate remuneration committee. The roles and responsibilities of a remuneration committee are currently undertaken by the Board.
Does not comply
The Company previously had a Remuneration and Nomination Committee. The duties of the committee are set out in the Company's Remuneration and Nomination Committee Charter which is available on the Company's website.
Following Completion, the Remuneration and Nomination Committee will have three members, Mr Ian Tan (Chairman) who is a non-executive director of the Board and Mr Hoo Voon Him and Mr Tin Yu Jiann, who are both on the Board in an executive capacity. On this basis, the Company does not comply with the recommendation that a majority of the committee members are independent directors. The Board considers that Mr Hoo Voon Him and Mr Tin Yu Jiann’s experience and insights in the industry, including the market practices in Malaysia and Singapore, will add value to the committee and outweigh any disadvantage of these directors not being independent.
106 108
For personal use only
Corporate Governance Council recommendation
Company Policy Compliance
and
Degree
of
Compliance
8.2
A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.
Details of the Company's policies on remuneration will be set out in the Company's "Remuneration Report" in each Annual Report published by the Company. This disclosure will include a summary of the Company's policies regarding the deferral of performance-based remuneration and the reduction, cancellation or clawback of the performance-based remuneration in the event of serious misconduct or a material misstatement in the Company's financial statements.
Complies following Completion
8.3
A listed entity which has an equity-based remuneration scheme should:
The Company is not proposing to introduce any equity based remuneration scheme at this time.
N/A
In accordance with ASX Listing Rule 12.9, the Company has adopted a trading policy which sets out the following information:
Complies
(a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it. Share Trading Policy
(a) closed periods in which directors, employees and contractors of the Company must not deal in the Company's securities; (b) trading in the Company's securities which is not subject to the Company's trading policy; and (c) the procedures for obtaining written clearance for trading in exceptional circumstances. The Company's Security Trading Policy is available on the Company's website.
107 109
9.3.2
Interests of directors
Shareholdings of all Directors in the Company are as follows:
For personal use only
Name
Role
Shareholding as at the date of this Prospectus
Shareholding as at Completion
Existing Board 1 Mr Teo Kiet2
Siew
Ms Khoo Phaik Ean Patricia
Chairman and Chief 22,806,653 Executive Officer
22,806,653
Non-executive Director
-
Executive Chairman
Nil
41,200,000
Mr Tin Yu Jiann
Chief Executive Officer
Nil
34,100,000
Mr Chen
Non-Executive Director
Nil
16,700,000
Zhi
Non-Executive Director
Nil
37,500,000
Chin
Non-Executive Director
Nil
24,000,000
Proposed Board3 Mr Hoo Him
Voon
Shensean
Mr Tan Xiong, Ian Ms Lay Moey Notes:
108
1.
Mr Teo Siew Kiet and Ms Khoo Phaik Ean, Patricia are currently directors of the Company but will step down upon completion of the Proposed Transaction.
2.
Mr. Teo Siew Kiet holds 3,300,000 shares, representing 5.34% interest in the Company through his shareholding in Evason Investment Ltd
3.
Mr Hoo Voon Him, Mr Tin Yu Jiann, Mr Shensean Chen, Mr Tan Zhi Hong, Ian and Ms Lay Chin Moey are not currently Directors of the Company but are proposed to become Directors upon shareholders’ approval and completion of the Proposed Transaction.
110
For personal use only
9.3.3
Remuneration of Directors
The Constitution provides that the fees payable to Directors will not be more that the aggregate fixed sum determined by a general meeting of Shareholders. This does not include remuneration paid to directors in respect of any executive role they hold with the Company or any bonuses. The aggregate fees for Directors has been set at an amount not to exceed S$300,000 per annum. Mr Teo Siew Kiet and Ms Khoo Phaik Ean, Patricia are currently directors of the Company but will step down upon completion of the Proposed Transaction. The remuneration of the current Board is disclosed in the Company's annual report which can be found at http://www.zingmobile.net/asx.html . Mr Hoo Voon Him, Mr Tin Yu Jiann, Mr Shensean Chen, Mr Tan Zhi Hong, Ian and Ms Lay Chin Moey are not currently Directors of the Company but are proposed to become Directors upon shareholders’ approval and completion of the Proposed Transaction. The annual remuneration (inclusive of superannuation and exclusive of salaries and bonuses) proposed to be payable to each of the new Directors is as follows: Name
Role
Annual Remuneration (S$)
Mr Hoo Voon Him
Executive Chairman
190,200* per annum
Mr Tin Yu Jiann
Chief Executive Officer
190,200* per annum
Mr Shensean Chen
Non-Executive Director
12,000 per annum
Mr Tan Zhi Xiong, Ian
Non-Executive Director
12,000 per annum
Ms Lay Chin Moey
Non-Executive Director
12,000 per annum
* comprising of $120,000 salary, $60,000 director fees and $10,200 Central Provident Fund (Company's contribution).
111
109
10
For personal use only
10.1
The Offer The Offer
Under this Prospectus, the Company is offering 150,000,000 Shares for subscription at an Offer Price of A$0.06 per Share to raise A$9,000,000. Oversubscriptions of up to a further 33,333,333 Shares may be accepted to raise up to a further A$2,000,000. The Shares offered under this Prospectus will rank equally with the existing Shares on issue, the terms and conditions of which are set out in Section 11.4. The Offer will open on the Opening Date and will remain open until the Closing Date. The Company reserves the right to either open or close the Offer at an earlier time or date or to extend the time or date without prior notice. Applicants are encouraged to submit their Application Forms as early as possible. As noted in section 11.1.2 of this Prospectus, ZHPL and Mr Teo Siew Kiet have agreed to use best endeavours to secure investment of at least A$4 million from investors, who will participate in the Offer, for the purpose of repaying existing borrowings. The Company has entered into binding agreements with each lender to extend the repayment date of those loans to the earlier of 7 Business Days after re-admission of the Company; and 31 December 2015. During this time all rights of the lenders, other than right to accrue interest, have been suspended.
10.2
Key terms and purpose of the Offer
The Offer is an offer of Shares, at an issue price of A$0.06 per Share to raise A$9,000,000. Oversubscriptions of up to a further 33,333,333 Shares may be accepted to raise up to a further A$2,000,000. The Minimum Subscription is $A7,000,000. This Prospectus is a re-compliance prospectus for the purposes of satisfying Chapters 1 and 2 of the ASX Listing Rules and to satisfy the ASX requirements for re-admission following a change to the nature and scale of the Company’s activities. Completion of the Offer under this Prospectus is subject to the following conditions precedent:
the Company re-complying with Chapters 1 and 2 of the ASX Listing Rules (including completion of the Consolidation and settlement of the Proposed Transaction); and
the Company receiving conditional approval for re-quotation of the Company’s Shares on the ASX.
If these conditions precedent are not met, the Company will not proceed with the Offer and will repay all application monies received, without interest and in accordance with the Corporations Act. The Shares offered under this Prospectus will rank equally with the existing Shares on issue.
10.3
Minimum subscription
If the minimum subscription to the Offer of A$7,000,000 has not been raised within four (4) months after the date of this Prospectus, the Company will not issue any Shares and will repay all application monies for the Shares within the time prescribed under the Corporations Act, without interest.
110
112
10.4
Conditions Precedent
For personal use only
The Conditions Precedent to the Proposed Transaction, including the Offer are set out in Section 5.7.
10.5
Applications
10.5.1
Who may apply
The Offer is open to persons who have received an invitation from the Company or a representative of the Company to participate. 10.5.2
How to apply
Applications for Shares may only be made on an Application Form attached to or accompanying this Prospectus. An investor applying under the Offer should complete and lodge an Application Form with the Company from whom they received an invitation to participate. Application Forms must be completed in accordance with the instructions set out on the reverse of the Application Form. By making an Application, an Applicant declares that they were given access to this Prospectus, together with an Application Form. The Corporations Act prohibits any person from passing an Application Form to another person unless it is attached to, or accompanied by, a hard copy of this Prospectus. Applications under the Offer must be for a minimum amount of $2,010.00 (equivalent to 33,500 Shares). There is no maximum value of Shares that may be applied for under the Offer. However, the Company reserves the right to reject or scale back any Applications in the Offer. The Company also reserves the right to aggregate any Applications which they believe may be multiple Applications from the same person. The Company may determine a person to be eligible to participate in the Offer, and may amend or waive the Offer Application procedures or requirements, in its discretion in compliance with applicable laws. The Offer opens at 9.00am (Sydney time) on the Opening Date and is expected to close at 5.00pm (Sydney time) on the Closing Date. The Company may, subject to the Corporations Act, elect to close the Offer or any part of it early, extend the Offer or any part of it, or accept late Applications either generally or in particular cases. The Company may impose an earlier closing date. Applicants are therefore encouraged to submit their Applications as early as possible after the Opening Date. 10.5.3
Payment methods
Completed Application Forms and accompanying cheques (to the extent cash is payable under the Offer), made payable to ‘‘Zingmobile Group Limited Share Application Account’’ and crossed ‘‘Not Negotiable’’, must be mailed or delivered to the address set out on the Application Form by no later than 5:00pm (Sydney time) on the Closing Date. Offer applications for which cash is payable must be accompanied by the payment in full in Australian currency. The Company reserves the right to close the Offers early or to extend the Closing Date.
111 113
10.5.4
Application Monies
For personal use only
Application Monies will be held on trust for Applicants until the issue or transfer of Shares to successful Applicants. Application Monies will be fully or partially refunded where an Application is rejected or accepted in part only, the Offer is withdrawn and/or cancelled, or ASX does not grant permission for Shares to be quoted within three months after the date of this Prospectus. No interest will be paid on refunded amounts. 10.5.5
Acceptance of Applications
An Application in the Offer is an offer by the Applicant to the Company a to subscribe for Shares for all or any of the Application Amount specified in and accompanying the Application Form, at the Offer Price. An Application is made by an Applicant on the terms and conditions set out in this Prospectus including any supplementary or replacement prospectus and the Application Form (including the conditions regarding quotation on ASX in Section 5.7). To the extent permitted by law, an Application by an applicant under the Offer is irrevocable. The allocation of Shares will be determined by the Company. Initial statements of holding are expected to be dispatched on or about no later than 7 Business Days after the close of the Offer. If you sell Shares before receiving a holding statement, you do so at your own risk.
10.6
Re-compliance with Chapters 1 and 2 of the ASX Listing Rules
The Company’s Shares are currently suspended from trading and will continue to be suspended from trading and will not be reinstated to Official Quotation until the ASX approves the Company’s recompliance with Chapters 1 and 2 of the ASX Listing Rules, which will not occur until completion of the Acquisition. In the event that the Company does not receive conditional approval for re-quotation on the ASX, it will not proceed with the Offer and will repay all application monies received, without interest.
10.7
ASX listing and CDIs
Application for Official Quotation by the ASX of the Shares offered pursuant to this Prospectus has been made to ASX. If the Shares are not admitted to Official Quotation by the ASX before the expiration of 3 months after the date of issue of this Prospectus, or such period as varied by the ASIC, the Company will not issue any Shares and will repay all application monies for the Shares within the time prescribed under the Corporations Act, without interest. The fact that the ASX may grant Official Quotation to the Shares is not to be taken in any way as an indication of the merits of the Company or the Shares now offered for subscription.
114
112
For personal use only
10.7.1
CDIs
What are CDIs?
CHESS Depositary Interests, or CDIs, are a form of beneficial interest in Shares (sometimes called a depositary receipt), rather than a holding of Shares themselves. This means that a depositary nominee holds Shares on behalf of the CDI holder as trustee, and passes through all benefits accruing to the underlying Shares such as dividends, capital returns, bonus issues, and rights to take up new shares in entitlement issues. One CDI represents an interest in one underlying Share.
Why issue CDIs?
The issue of CDIs instead of Shares is necessary because under Singapore law, Singaporean companies cannot participate in uncertificated electronic share trading systems such as ASX’s CHESS system. Accordingly, Shares will instead be issued directly to CHESS Depositary Nominees Pty Ltd (CDN), which is a special purpose subsidiary of ASX that has been set up to act as depositary nominee and trustee for CDI holders. Successful Applicants will receive CDIs which represent an interest in the Shares held by CDN. The Company will issue holding statements for CDIs in exactly the same way that holding statements are issued for uncertificated shares that are traded on ASX.
What are the main The main difference is that a CDI holder is not the registered holder differences between Shares of Shares. The Shares are held in the name of CDN, which issues CDIs representing those Shares. However, as the beneficial owner of the and CDIs? same number of Shares which are represented by a number of CDIs, a CDI holder effectively has all the benefits of share ownership with the exception of the right to vote in person at a general meeting. CDI holders must instead return voting direction forms in advance of the general meeting, which direct CDN how to vote on a particular resolution. CDN is then obliged under the ASX Settlement Rules to lodge proxy votes in accordance with the directions of CDI holders. Other aspects of direct Share ownership are, in effect, enjoyed by CDI holders including direct payment of dividends and other distributions, direct receipt of notices of meeting, annual reports and other information from the Company, and rights to take up new Shares in entitlement issues. The Share Registry will maintain a register of CDI holders to facilitate direct communications and dealing in this way. A CDI holder will not incur any additional ASX or ASX Settlement fees or charges as a result of holding CDIs rather than Shares. Can CDIs be converted into Holders of CDIs can elect to convert their CDIs into the underlying Shares? Shares. This will result in the cancellation of the CDIs and the transfer of the Shares from CDN to the former holder of the CDIs. However, any such Shares cannot be traded on ASX unless they are first converted back into CDIs by reversing the above procedure. CDI holders should contact their sponsoring participant (this will usually be the stockbroker who bought the CDIs for you) or the Share Registry for more information on the procedure.
115
113
10.8
Issue
For personal use only
Subject to the minimum subscription to the Offer being reached, completion of the Acquisition and the ASX granting conditional approval for the Company to be admitted to the Official List, the issue of Shares offered by this Prospectus will take place as soon as practicable after the Closing Date. Pending the issue of the Shares or payment of refunds pursuant to this Prospectus, all application monies will be held by the Company in trust for the subscribers in a separate bank account as required by the Corporations Act. The Company, however, will be entitled to retain all interest that accrues on the bank account and the subscribers waive the right to claim interest.
10.9
Restricted Securities
Subject to the Company re-complying with Chapters 1 and 2 of the ASX Listing Rules, certain securities in the Company will be classified by the ASX as restricted securities and will be required to be held in escrow for up to 24 months from the date of reinstatement to Official Quotation. These restrictions will apply to all of the Consideration Shares. The period of restriction will be 24 months from the date of reinstatement to Official Quotation for the majority of the Consideration Shares. The Company will announce to the ASX details of duration of the escrow applicable to the securities in the Company prior to the Shares commencing trading on the ASX. During the period in which these securities are prohibited from being transferred, trading in Shares may be less liquid, which may impact on the ability of a Shareholder to dispose of Shares in a timely manner.
10.10 International Offer Restrictions This Prospectus does not constitute an offer of new ordinary shares (New Shares) of the Company in any jurisdiction in which it would be unlawful. In particular, this Prospectus may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside Australia except to the extent permitted below. No action has been taken to register or qualify the Shares or otherwise permit a public offering of the Shares the subject of this Prospectus in any jurisdiction outside Australia. China The information in this Prospectus does not constitute a public offer of the New Shares, whether by way of sale or subscription, in the People's Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan). The New Shares may not be offered or sold directly or indirectly in the PRC to legal or natural persons other than directly to "qualified domestic institutional investors". Malaysia No approval from, or recognition by, the Securities Commission of Malaysia has been or will be obtained in relation to any offer of New Shares. The New Shares may not be offered or sold in Malaysia except pursuant to, and to persons prescribed under, Part I of Schedule 6 of the Malaysian Capital Markets and Services Act.
114
116
For personal use only
Singapore This Prospectus and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this Prospectus and any other document or materials in connection with the offer or sale, or invitation for subscription or purchase, of New Shares, may not be issued, circulated or distributed, nor may the New Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore except pursuant to and in accordance with exemptions in Subdivision (4) Division 1, Part XIII of the Securities and Futures Act, Chapter 289 of Singapore (SFA), or as otherwise pursuant to, and in accordance with the conditions of any other applicable provisions of the SFA. This Prospectus has been given to you on the basis that you are (i) an existing holder of the Company’s shares, (ii) an "institutional investor" (as defined in the SFA) or (iii) a "relevant person" (as defined in section 275(2) of the SFA). In the event that you are not an investor falling within any of the categories set out above, please return this document immediately. You may not forward or circulate this Prospectus to any other person in Singapore. Any offer is not made to you with a view to the New Shares being subsequently offered for sale to any other party. There are on-sale restrictions in Singapore that may be applicable to investors who acquire New Shares. As such, investors are advised to acquaint themselves with the SFA provisions relating to resale restrictions in Singapore and comply accordingly.
10.11 Not underwritten The Offer is not underwritten.
10.12 Commissions payable The Company and Pixie have had discussions with a number of brokers in Australia, Singapore and Malaysia who may assist, on a best efforts basis, with securing investors for the Offer from those jurisdictions. If any particular broker secures investors for the Company who participate in the Offer, the Company will pay commission of 8% of the amount subscribed by the investors introduced by the relevant broker.
10.13 Effect of the fundraising on the future of the Company The Board believes that on Completion of the Offer, the Company will have sufficient funds available to it from the cash proceeds of the Offer to fulfil the purposes of the Offer and meet the Company's stated business objectives.
10.14 Brokerage, commission and stamp duty No brokerage, commission or stamp duty is payable by Applicants who apply for Shares using an Application Form. Investors who buy or sell Shares on ASX may be subject to brokerage and other transaction costs. Under current legislation, there is no stamp duty payable on the sale or purchase of shares on ASX.
117
115
10.15 Clearing House Sub-Register Systems CHESS and Issuer Sponsorship
For personal use only
The Company participates in ASX’s Clearing House Electronic Sub-register System (CHESS) and in accordance with the ASX Listing Rules and ASX Settlement Operating Rules. CHESS is an electronic transfer and settlement system for transactions in securities quoted on ASX under which transfers are affected in an electronic form. When the Shares become approved financial products (as defined in ASX Settlement Operating Rules), holdings will be registered in one of two sub-registers, being an electronic CHESS sub-register or an issuer sponsored sub-register. For all successful Applicants, the Shares of a Shareholder who is a participant in CHESS or a Shareholder sponsored by a participant in CHESS will be registered on the CHESS sub-register. All other Shares will be registered on the issuer sponsored sub-register. Following Completion of the Offer, Shareholders will be sent a holding statement that sets out the number of Shares that have been allocated to them. This statement will also provide details of a Share holder’s Holder Identification Number (HIN) for CHESS holders or, where applicable, the Securityholder Reference Number (SRN) of issuer sponsored holders. Shareholders will subsequently receive statements showing any changes to their Shareholding. Certificates will not be issued. Shareholders will receive subsequent statements during the first week of the following month if there has been a change to their holding on the register and as otherwise required under ASX Listing Rules and the Corporations Act. Additional statements may be requested at any other time either directly through the Shareholder’s sponsoring broker in the case of a holding on the CHESS sub-register or through the Share Registry in the case of a holding on the issuer sponsored sub-register. The Company and the Share Registry may charge a fee for these additional issuer sponsored statements. 10.16
Investor Enquiries
If you have further queries relating to aspects of this Prospectus please call Boardroom on +61 (02) 9290 9600. between 8.30am and 5.00pm (Sydney time) Monday to Friday (excluding public holidays) during the Offer. If you have queries or uncertainties relating to any matter you should consult your broker, accountant or other financial adviser before deciding whether to invest.
116
118
Additional information
For personal use only
11 11.1
Material Contracts
11.1.1
Share Purchase Agreement
The Company and each of the Vendors have entered into a Share Purchase Agreement under which the Company conditionally agreed to acquire the entire issued share capital of Pixie. The key terms of the Share Purchase Agreement are set out below: (a)
Completion: Completion is to occur on satisfaction or waiver by the Company of the conditions precedent detailed below.
(b)
Conditions precedent: The obligation of the Company and the Vendors to complete the Share Purchase Agreement remain subject to and conditional upon:
shareholders of the Company approving: (i)
the change of name of the Company from Zingmobile Group Limited to "Pixie Group Limited";
(ii)
the issue of Consideration Shares to the shareholders in Pixie;
(iii)
the issue of shares in the capital of the Company pursuant to the Offer;
(iv)
the change to the nature and scale of the activities of the Company; and
(v)
to the extent required, the issue of the Consideration Shares as required under the Singapore Takeovers Code and/or the Company obtaining a Whitewash Waiver;
each Pixie Vendor, to the extent required by the ASX, entering into a binding escrow agreement in the form required by the ASX;
ASX having indicated in writing that it will grant permission for the official listing of the Company on ASX and official quotation of the Company's Shares on ASX (subject only to Completion and customary pre- quotation listing conditions); and
each Vendors' Warranty being true and correct and not misleading as at the date of the Share Sale Agreement, the Completion Date and at all times between the date of the Share Sale Agreement and the Completion Date.
(c)
Consideration: The Company must issue 500,000,000 Shares to the Vendors (in aggregate).
(d)
Warranties: In addition to customary warranties for an agreement of this nature, the Share Purchase Agreement contains additional representations and warranties from the Vendors in favour of the Company. These include, but are not limited to, representations and warranties in respect to the Pixie shares and the due execution of the Share Purchase Agreement.
(e)
Termination: The Company may terminate the Share Purchase Agreement if:
the conditions precedent under the Share Purchase Agreement are not satisfied or waived by the Company before 5:00 pm (WST) on 31 December 2015, including if a warranty given by the Vendors has been breached, is untrue or misleading; or
the other party has committed a breach of the Share Purchase Agreement.
119
117
11.1.2
Business Sale Agreement relating to sale of existing Zingmobile business
For personal use only
Subject to the acquisition of the Pixie Group under the Proposed Transaction, the Company intends to sell the ZMG Business to ZHPL, a related party. ZHPL is a related party of the Company as Mr Teo Siew Kiet is a director of the Company and the sole director and shareholder of ZHPL. ZHPL is therefore a related party of the Company for the purposes of the ASX Listing Rules. The Company has entered into the Business Sale Agreement under which the Company proposes to sell its existing Business, conditional on the Company obtaining shareholder approval of the sale. Completion of the Business Sale Agreement is conditional on:
completion of the Sale Purchase Agreement;
completion of the Offer;
approval of the sale of the Company's Business by the Company's shareholders; and
each Warranty being materially true and correct and not misleading as at the date of the Business Sale Agreement, the Business Sale Agreement Completion Date and at all times between the date of the Business Sale Agreement and the Business Sale Agreement Completion Date.
In the Zingmobile Business Sale Agreement, the Company acknowledges that ZHPL and Mr Teo Siew Kiet have obtained for the Company the valuable opportunity to acquire Pixie Group, and are instrumental in implementing the Proposed Transaction for the benefit of Shareholders, including introducing new investors under the Offer to enable the Company to repay existing debt. In addition to payment of the purchase price of S$80,406, being equal to the net tangible asset value of the Zingmobile business as at 31 March 2015, ZHPL and Mr Teo Siew Kiet agree to use best endeavours to:
take all steps necessary to implement the Proposed Transaction, including facilitating preparation of a prospectus for the Offer; and
introduce investors to subscribe at least A$4 million under the Offer in order to ensure repayment of the existing A$4 million short term borrowings. This obligation does not constitute a guarantee of funds or an underwriting of any part of the Offer.
In addition to customary warranties for an agreement of this nature, the BSA contains additional representations and warranties from the Company and ZHPL. These include, but are not limited to, representations and warranties in respect of the assets of the ZMG Business and the funding of the consideration by ZHPL. The Company may terminate the Business Sale Agreement if:
118
any conditions precedent under the Business Sale Agreement has become incapable of being satisfied before completion and the relevant condition precedent has not been waived; or
ZHPL does not pay the purchase price to the Company and perform all other obligations required to give ZHPL full possession and benefit of the ZMG's Business.
120
For personal use only
11.2
Notice of Meeting and SIC approval
The Company is also required to seek Shareholder approval for various other matters in respect to the Proposed Transaction, including the changing of the Company's name to "Pixie Group Limited" following Completion. The Company has called the General Meeting to be held on Saturday, 24 October 2015, in order for Shareholders to consider the Proposed Transaction and associated approvals. The Company has obtained, in respect of the acquisition of the Consideration Shares by the Pixie Vendors, a waiver from the Securities Industry Council of Singapore (SIC) from the general offer provisions of the Singapore Takeovers Code as it will involve an acquisition of more than 30% of the Company's Shares by the Pixie Vendors (Whitewash Waiver). The Whitewash Waiver has been granted subject to, amongst other conditions, a majority of independent shareholders approving at a general meeting, before the issue of the Consideration Shares, a resolution (Whitewash Resolution) by way of a poll to waive their rights to receive a general offer from the vendors and their concert parties and the appointment of an independent financial adviser to advise independent Shareholders on the Whitewash Resolution. Shareholders should note that the allotment and issue of the Consideration Shares will result in the Pixie Vendors and their associates holding Shares carrying over 49% of the voting rights of the Company, and that they will thereafter be free to acquire further Shares without the requirement under Rule 14 of the Singapore Takeovers and Mergers Code (to make a general offer for the Company) applying. At the General Meeting of Shareholders to be held on Saturday, 24 October 2015, Shareholders will be asked to vote on the following resolutions: (a) (b) (c) (d) (e) (f)
the change in company name; a change in the nature and scale of the Company’s activities; the acquisition of Pixie and the issue of the Consideration Shares to Pixie Shareholders; the disposal of the Company's main undertaking to a related party in respect of the Zingmobile Business Sale; the issue of shares pursuant to the Offer; and the election of Directors.
121
119
11.3
List of Pixie Vendors
For personal use only
Shareholder
Shareholding
Shareholding
Shareholding Percentage
Percentage in
Percentage in ZMG
in ZMG (assuming A$9
Pixie
(assuming A$7
million fundraising)
million fundraising) Fortress
Capital
Asset
22.66%
16.61%
15.83%
Sens Capital Sdn Bhd
16.22%
11.89%
11.33%
Sim Heok Hoo
9.00%
6.60%
6.29%
Hoo Voon Him
8.24%
6.04%
5.76%
Tan Zhi Xiong, Ian
7.50%
5.50%
5.24%
Tin Yu Jiann
6.82%
5.00%
4.77%
Low Li Chieh
5.00%
3.66%
3.49%
Lay Chin Moey
4.8%
3.52%
3.35%
Shensean Chen
3.34%
2.45%
2.33%
Tan Wee Ched
3%
2.20%
2.10%
Lim Fang Tseng
3%
2.20%
2.10%
V Capital Sdn Bhd
2.78%
2.04%
1.94%
Chen Kong Yooung
2.24%
1.64%
1.57%
Chong Chee Hoong
1.94%
1.42%
1.36%
Terrence Loh Thien Leng
1.16%
0.85%
0.81%
Yong Yoon Hee
0.92%
0.67%
0.64%
Loo Kok Seong
0.70%
0.51%
0.49%
Kiang TaiHui
0.68%
0.50%
0.48%
Total
100%
73.29%
69.88%
Management (M) Sdn Bhd
120
122
For personal use only
11.4
Description of rights attaching to Shares
11.4.1
Introduction
The Shares issued under the Offer will be fully paid ordinary shares and will rank equally in all respects with the Shares that are currently on issue. The rights attaching to the Shares are set out in the Company’s Memorandum and Articles of Association (its constituent documents, which are the equivalent of an Australian company’s Constitution) and, in certain circumstances, are regulated by Singaporean law (in particular the Companies Act of Singapore), the ASX Listing Rules, and the ASX Settlement Operating Rules. As a Singaporean company, the Company is not subject to many provisions of the Corporations Act of Australia, in particular the takeovers and related party transaction provisions of that Act (see Section 11.6 below for more information). A summary of the Memorandum and Articles of Association is set out below. It is not intended to be an exhaustive summary or constitute a definitive statement of the rights and obligations of the Company’s Shareholders. Investors are accordingly encouraged to inspect the Memorandum and Articles of Association and may do so free of charge at the Company’s registered office and the office of the Company’s local agent during normal business hours. For the avoidance of doubt, the summary applies to CDI holders, unless specified otherwise. 11.4.2
Voting at a general meeting
Subject to the Companies Act, the Listing Rules and any rights or restrictions for the time being attached to any class of shares, at general meetings of shareholders:
every shareholder entitled to vote may vote in person or by proxy, attorney or representative.
on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote; and
on a poll, every person present who is a shareholder or a proxy, attorney or representative has one vote for every fully paid share and a fraction of a vote for every partly paid share equivalent to the proportion which the amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited) for that share, ignoring any amounts paid in advance of a call.
Voting at any shareholder meeting is by a show of hands unless a poll is demanded by the chairperson of the meeting, three shareholders who are present, or shareholders holding at least 10% of the votes that may be cast on the resolution on a poll. However, as noted in Section 10.7.1 above, holders of CDIs can attend but cannot vote in person at a general meeting, and must instead direct CDN how to vote in advance of the meeting. Any notice of meeting issued to holders will include a form permitting the holder to direct CDN to cast proxy votes in accordance with the holder's written instructions. 11.4.3
Dividends
The Directors may in their discretion declare and pay dividends out of the profits of the Company and may fix the amount and timing for payment and the method of payment of any such dividend. In addition, the Directors may implement, on such terms and conditions as they think fit, a dividend reinvestment plan. 11.4.4
Issue of further Shares
Subject to the Companies Act and the Listing Rules, the Directors may issue Shares, options and other convertible securities to any persons, on any terms, conditions, and at an issue price as they think fit. 123
121
Directors may also issue shares with any preferential, deferred or special rights, privileges or conditions or with any restrictions (whether in regard to dividend, voting, return of share capital or otherwise).
For personal use only
11.4.5
Winding up
Subject to the Memorandum and Articles of Association, the Companies Act, the Listing Rules and the rights attaching to shares issued on special terms and conditions, on a winding up of the Company any assets available for distribution to shareholders will be distributed to them in proportion to the amount paid up (not credited) on shares held by them. A CDI Holder will be entitled to the same economic benefit from their CDIs as they would if they held the underlying Share. 11.4.6
Unmarketable parcel sale provisions
If a Shareholder holds a number of CDIs which is less than a marketable parcel (as defined in the Listing Rules ---- currently having an aggregate value of less than A$500) the Company may sell the CDIs held by, and on behalf of, each unmarketable parcel holder on any terms and at a price which the Directors determine provided that the procedures set out in the Memorandum and Articles of Association and Listing Rules are followed. Holders of unmarketable parcels have the right to opt out of any such sale procedure. 11.4.7
Shareholder rights
Shareholders in a Singapore incorporated company have certain rights to requisition shareholder meetings (at least two members holding not less than 10% of the total number of issued shares in the company), and rights to apply to courts in Singapore to seek relief for oppressive conduct. They have statutory derivative action rights to bring legal proceedings on behalf of the company in certain circumstances (though shareholders of companies listed in Singapore do not have such statutory derivative rights). However, CDI holders will not have these shareholder rights unless they convert their CDIs into shares first. Unlike the ‘‘two strikes’’ rule in the Australian Corporations Act, Singapore corporate law does not require a vote on a company’s remuneration report with implications for directors’ board positions. 11.4.8
Variation or cancellation of rights
Subject to the Companies Act, all or any of the rights attached to any class of shares (unless otherwise provided by the terms of issue of the shares of that class) may be varied or cancelled with the consent in writing of the holders of at least 75% of the issued shares in the particular class or the approval of a special resolution passed at a meeting of holders of shares in that class. 11.4.9
Takeovers
If a takeover bid or similar transaction is made in relation to the Shares of which CDN is the registered holder, under the ASX Settlement Operating Rules, CDN must not accept the offer made under the takeover bid unless authorised by the relevant CDI holder. 11.4.10 Transfer of CDIs CDI holders who wish to trade their CDIs will be transferring the beneficial interest in the Shares rather than the legal title. Subject to the Memorandum and Articles of Association, CDIs may be transferred by a proper transfer effected in accordance with ASX Settlement Operating Rules, by a written instrument of transfer which complies with the Memorandum and Articles of Association or by any other method permitted by the Listing Rules or ASX Settlement Operating Rules.
122
124
For personal use only
The Board may refuse to register a transfer of CDIs or Shares where permitted to do so under the Memorandum and Articles of Association, Listing Rules or ASX Settlement Operating Rules. The Board must not refuse to register a transfer of CDIs or Shares when required by the Companies Act, Listing Rules or ASX Settlement Operating Rules.
11.5
Taxation implications
Set out below is a general overview of the Australian taxation implications for investors who acquire the Shares on capital account. This report is based on legislation applicable at the time of its preparation. Given the complexity of taxation laws, it does not cover all possible implications for particular investors. As the tax position of each investor may vary depending on their individual circumstances, this report should not be considered advice specific to any particular investor. Before lodging an application, each investor should seek independent professional advice with respect to the tax consequences applicable to their individual circumstances. 11.5.1
Taxation of dividends
The Company is a Singapore incorporated company listed on the Official List of the ASX. The treatment of the dividends which are paid to investors will vary depending on whether or not the investor is an Australian resident or foreign resident. The taxation treatment will also vary depending on the extent to which dividend withholding tax is paid in Singapore. Dividends Received By Australian Resident Shareholders For Australian resident individuals, dividends on the Shares will be taxable income of the shareholder in the tax year in which they are paid (or deemed to be paid) to the shareholder. If dividend withholding tax is paid in Singapore on the dividend, the shareholder may be entitled to a foreign income tax offset in respect of the tax withheld. This should reduce the amount of Australian tax payable on the dividend. Dividends Received By Non-Resident Shareholders Australian tax would not be imposed on dividends paid to non-resident shareholders. 11.5.2
Disposal of Shares
As noted above, the following overview of Australian tax implications associated with disposal of Shares is confined to investors who hold their shares on capital account. Australian income tax laws impose tax on capital gains (CGT). Persons who acquire Shares on revenue account or for a share trading purpose should seek independent professional advice as the issues are complex and the tax implications depend heavily on individual circumstances. Disposal of Shares by Australian Resident Shareholders Disposal of some or all of the Shares held on capital account by Australian resident investors will give rise to a CGT event and investors may become liable to pay CGT if they make a capital gain on disposal, or another CGT event occurs in respect of the Shares. To calculate the amount of gain that is subject to tax initially requires the cost base of shares to be subtracted from the consideration (money or property) received from their disposal. If the calculation results in a negative number then a capital loss has been made. 125
123
Market value of shares at the time of their disposal may be substituted as consideration if the disposal is for nil or not undertaken on an arm’s length dealing basis.
For personal use only
If the shareholder has also derived capital losses in the income year, or has accumulated capital losses that are deductible, then those losses may be offset against the capital gain derived from the disposal of the shares. A capital loss cannot be offset against ordinary taxable income but may be carried forward and offset against future capital gains. However, utilisation of carried forward capital losses is subject to various loss integrity tests. Consideration of these loss provisions is beyond the scope of this report. For those investors that are companies, a net capital gain made on the disposal of Shares (after any capital losses are offset) must be included in the company’s taxable income and subject to tax at the prevailing general corporate tax rate (30%). Investors who are either individuals or complying superannuation funds (or another similar form of qualifying entity), and dispose of Shares held for at least 12 months, may be entitled to a CGT discount of 50% and 33 1/3% respectively. Companies are not entitled to any discount and special rules apply for trusts. The net capital gain remaining after permitted offsets and discounts is added to the investor’s other taxable income and the total amount is then subject to tax at the investor’s marginal tax rate. Where shares are held by a trust (and the trust is not taxed as a company for Australian tax purposes) then a CGT discount of 50% is generally available. When the capital gain is distributed to the beneficiary by the trustee of the trust, the capital gain needs to be grossed up and the relevant beneficiary(s) will need to determine for themselves whether or not they are able to access the CGT discount provisions. Disposal of Shares by Non-Australian Resident Shareholders Foreign residents are only subject to CGT on the disposal of taxable Australian property. For tax purposes, Shares will generally only be considered taxable Australian property where the following conditions are satisfied:
the investor owns an interest of 10% or more in Zingmobile; and
more than 50% of the value of Zingmobile relates to assets that are taxable Australian real property such as land and buildings or interests in land and buildings. For example, leasehold rights over land situated in Australia are considered to be taxable Australian real property.
Based on information contained in the Prospectus regarding the planned operation of the business, Zingmobile shares are unlikely to be taxable Australian property. 11.5.3
GST & Transfer Duty
No GST is applicable to the issue or transfer of the Shares given that, under current law, shares in a company are a financial supply for GST purposes. Transfer duty will not be payable on Shares issued pursuant to the Prospectus.
124
126
For personal use only
11.5.4
Investors should obtain their own advice
The summary set out above is based on Australian tax law current at the date of drafting. It is a summary only and does not take into account any individual’s, or other entity’s, particular circumstances. The particular circumstances of each investor may affect the implications of the investment of that investor. It is the responsibility of each Applicant to be satisfied as to the particular taxation treatment that applies to each investment. Persons who are considering making an investment in Zingmobile should seek independent professional advice with respect to the tax consequences applicable to their individual circumstances before investing.
11.6
Differences between Australian and Singapore Companies law
Corporate procedures The general company law structure of Singapore and Australia is reasonably similar, being based in legislation with a common law background of directors’ duties. As with Australian company law, many corporate procedures require approval by a special resolution of shareholders under Singapore law including a change of company name, alteration of the Memorandum or Articles of Association, and approval of capital reductions. Takeovers Acquisitions of shares in a Singaporean public company are regulated under the Securities and Futures Act (Chapter 289) of Singapore and the Singapore Code on Take-overs and Mergers. The threshold above which acquisitions by a person, together with parties acting in concert with it, are regulated is 30%. This is higher than the 20% threshold which applies to Australian public companies. Subject to the exceptions noted below, a person will be required to make a general offer for all of the shares in a company if it acquires shares which (taken together with shares held or acquired by persons acting in concert with it) carry 30% or more of the voting rights of the company. Where a person and its concert parties hold between 30% and 50% of the voting rights in a company and the person (or its concert party) acquires in any period of 6 months additional shares carrying more than 1% of the voting rights, the person will also be required to make a general offer for all the shares in the company not already owned by it. The Securities Industry Council of Singapore may waive compliance with the obligation to make a general offer in certain circumstances, including where a majority of the holders of voting rights of the company approve by way of a poll at a general meeting a waiver of their rights to receive a general offer. A person who (together with its concert parties) already holds more than 50% of the voting rights in a Singapore public company is not restricted from making further acquisitions above that level, and is not obliged to make a general offer as a result of making any such further acquisitions. Substantial shareholder reporting Substantial shareholder reporting applies at the 5% shareholding percentage level, and at every change in a percentage level after that. Details of acquisitions and disposals by substantial shareholders must generally be given to the company within 2 business days after the transaction occurs.
127
125
Related party transactions
For personal use only
Related party transactions (that is, transactions between a public company and a director, an entity controlled by a director, or a parent company of the public company) are regulated in Australia under the Corporations Act by a requirement for disinterested shareholder approval, unless the transaction is on ‘‘arm’s length terms’’, represents no more than reasonable remuneration, or complies with other limited exemptions. Under Singaporean law, loan transactions (including granting security or guarantees for loans) in favour of directors of public companies are regulated but otherwise the rules regarding related party transactions are not as restrictive as under Australian law. Issues of shares or other equity securities to Directors of the Company will be regulated under the Listing Rules to exactly the same extent as a listed Australian company.
11.7
ASX Waivers and Exemptions
The Offer issue price per Share is A$0.06. This does not meet the requirement in Listing Rule 2.1 condition 2 that quoted securities be issued or sold for at least 20 cents in cash. The Company has applied for, and has been granted, a waiver from this Listing Rule so as to permit the Offer being made at A$0.06 per Share.
11.8
Consents
Written consents to be named in, or for the inclusion of attributed statements in, this Prospectus have been given and, at the time of lodgement of this Prospectus with ASIC, had not been withdrawn by the following parties:
126
One Assurance LLP has given, and has not withdrawn prior to lodgement of this Prospectus with ASIC, its written consent to be named in this Prospectus as the auditor and investigating accountant to the Company in the form and context it is so named and to the inclusion of its Investigating Accountant Report in Section 7;
Infobusiness has given, and has not withdrawn prior to lodgement of this Prospectus with ASIC, its written consent to be named in this Prospectus as the research report provider to the Company in the form and context it is so named and the statements in Section 4 attributed to it;
Y.L Chee & Co has given, and has not withdrawn prior to lodgement of this Prospectus with ASIC, its written consent to be named in this Prospectus as the auditor to Bizmac in the form and context it is so named;
OKL & Partners Plt has given, and has not withdrawn prior to lodgement of this Prospectus with ASIC, its written consent to be named in this Prospectus as the auditor to Roylmark in the form and context it is so named; and
Baker & McKenzie has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its written consent to be named in this Prospectus as Australian legal adviser to the Company in the form and context it is so named.
128
For personal use only
No entity or person referred to above in Section 11.8 has made any statement that is included in this Prospectus or any statement on which a statement made in this Prospectus is based, except as stated above. Each of the persons and entities referred to above in this Section 11.8 has not authorised or caused the issue of this Prospectus, does not make any offer of Shares and expressly disclaims and takes no responsibility for any statements in or omissions from this Prospectus except as stated above in this Section 11.8. In addition, as permitted by ASIC Class Order [CO 00/193] this Prospectus may include or be accompanied by certain statements fairly representing a statement by an official person, or from a public official document or a published book, journal or comparable publication.
11.9
Interests and benefits
This Section sets out the extent of the interests and fees of certain persons involved Proposed Transaction. Other than as set out below or elsewhere in this Prospectus, no:
Director or proposed Director of Zingmobile;
person named in this Prospectus and who has performed a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus;
financial services licensee involved in the Proposed Transaction and identified in this Prospectus; or
promoter of Zingmobile,
holds at the time of lodgement of this Prospectus with ASIC, or has held in the two years before lodgement of this Prospectus with ASIC, an interest in:
the formation or promotion of Zingmobile; or
property acquired or proposed to be acquired by Zingmobile in connection with its formation or promotion.
and no amount (whether in cash, Shares or otherwise) has been paid or agreed to be paid, nor has any benefit been given or agreed to be given to any such persons for services in connection with the formation or promotion of Zingmobile or to any Director or proposed Director to induce them to become, or qualify as, a Director of Zingmobile.
129
127
For personal use only
11.9.1
Interests of advisers
Except as otherwise set out herein or as previously disclosed to members in the Company’s annual reports prepared in accordance with the provisions of the Singapore Companies Act, no Director, expert or professional adviser named in this Prospectus now has, or during the last two years has had, any interest in the promotion of the Company or any property proposed to be acquired by the Company in connection with its formation or promotion. Further, no sums have been paid or agreed to be paid to a Director, expert or professional adviser in cash or shares or otherwise by any person (in the case of a Director) either to induce him/her to become, or to qualify him/her as, a Director or otherwise for services rendered by him in connection with the promotion or formation of the Company or (in the case of an expert or professional adviser) for services rendered by the expert or professional adviser in connection with the promotion or formation of the Company save and except that:
One Assurance LLP has acted as the auditor and investigating accountant to the Company and has performed work in relation to the Investigating Accountant's Report in Section 7. In respect of this work, the Company has paid or agreed to pay approximately S$100,000 (excluding GST and disbursements).
Infobusiness has acted as the provider of a research services on the Malaysian entertainment and F&B industry. The Company has paid or agreed to pay an amount of approximately RM 42,000 excluding GST and disbursements) in respect of these services.
Baker & McKenzie has acted as Australian legal adviser to the Company and has performed work in relation to Australian legal matters. The Company has paid or agreed to pay an amount of approximately A$200,000 (excluding GST and disbursements) in respect of these services. Further amounts may be paid to Baker & McKenzie in accordance with time-based charges.
At the date of this Prospectus, no such payments have been made save as set out herein and, and also save as set out herein, all such payments made in the period since incorporation of the Company have been paid or are payable in cash.
11.10 Related party transactions At the date of this Prospectus, no material transactions with related parties exist that the Directors are aware of, other than those disclosed in this Prospectus.
11.11
Litigation
So far as the Company is aware, there is no current or threatened civil litigation, arbitration proceedings or administrative appeals, or criminal or governmental prosecutions of a material in which the Group is directly or indirectly concerned which is likely to have a material adverse effect on the business or financial position of the Group.
11.12 Statement of Directors The Directors consent to the lodgement and issue of this Prospectus and have not withdrawn their consent.
128
130
12
Glossary
For personal use only
A$ means Australian dollars. ABN means Australian Business Number. ACRA means Singapore Accounting & Corporate Regulatory Authority. Applicant means a person who has applied to subscribe for CDIs under the Offer. Application means an application for Offer Shares under this Prospectus made by an Applicant under an Application Form. Application Form means the form accompanying or attached to this Prospectus by which an Applicant may apply for CDIs. ASIC means the Australian Securities and Investments Commission. ASX means Australian Securities Exchange of Exchange Centre, 20 Bridge St, Sydney NSW 2000. ASX Corporate Governance Principles means the ASX Corporate Governance Principles and Recommendations (3rd Edition) of the ASX Corporate Governance Council as at the date of this Prospectus. ASX Listing Rules or Listing Rules means the listing rules of ASX Bizmac means Bizmac Sdn Bhd, a company incorporated in Malaysia Board means the board of directors of the Company. Business Sale Agreement means the business sale agreement between the Company and Zingmobile Holdings Pte Ltd in relation to the sale by the Company of its digital mobile content and services business. CDI means CHESS Depository Interests issued by CDN, where each CDI represents a beneficial interest in one Share, as described in Section 10.7.1. CDI Holder means a holder of CDIs. CDN means CHESS Depositary Nominees Pty Ltd (ABN 75 071 346 506), in its capacity as depositary of the CDIs under the ASX Settlement Operating Rules. CGT means Australian Capital Gains Tax. CGU means cash-generating-units. Chairman means chair person of the Board. CHESS means Clearing House Electronic Subregister System established and operated by ASX Settlement. Chief Executive Officer means Chief Executive Officer of the Company. Chief Financial Officer means Chief Financial Officer of the Company. Closing Date means 26 October 2015.
131
129
CMS Licence means a Singapore capital markets services licence for advising on corporate finance. Company or Zingmobile means Zingmobile Group Limited, a company incorporated in Singapore, registration number 200700159Z.
For personal use only
Completion has the meaning given in Section 1. Consideration Shares means the 500,000,000 Shares to be issued to the Pixie Vendors pursuant to the Proposed Transaction. Constitution means the memorandum and articles of Zingmobile. Corporations Act means Corporations Act 2001 (Cth). Directors means the directors of Zingmobile, and Director means any one of them. DTA means a Double Tax Agreement that shareholder's resident country has with Australia. Entertainment Hub means a one-stop hub including clubs, F&B outlets, karaoke lounges, spa and fitness centre in Malaysia. F&B means food and beverage (industry). Financial Information has the meaning given in Section 6. FRS means Singapore Financial Reporting Standards. FY2013 means the year ended 31 December 2013 FY2014 means the year ended 31 December 2014. Government Agency means: (a)
a government or government department or other body;
(b)
a governmental, semi-governmental or judicial person including a statutory corporation;
(c)
a person (whether autonomous or not) who is charged with the administration of law.
Group means the consolidated group comprising Zingmobile and its Subsidiaries. GST has the meaning given in section 195----1 of the A New Tax System (Goods and Services) Tax Act 1999 (Cth). HIN means Shareholder’s Holder Identification Number for CHESS holders. Historical Financial Information has the meaning as set out in Section 6.1. IFA means independent financial adviser. KPI means key performance indicator. Lifestyle Outlets means Pixie Mansion @ Chandelier and Pixie Luxe. Opening Date means 13 October 2015. Pixie means Pixie Entertainment Group Pte Ltd, a limited liability company incorporated in Singapore.
130
132
Pixie Board means the board of directors of Pixie. Pixie Group means Pixie, Bizmac and Roylmark collectively.
For personal use only
Pixie Luxe means a bistro operated by Roylmark. Pixie Management means the management of Pixie Group. Pixie Mansion @ Chandelier means live entertainment outlet operated by Bizmac, which was previously operated under the brand name of ‘Pixie Mansion’ Pixie Outlets means Pixie Mansion @ Chandelier and Pixie Luxe collectively. Pixie Share means a fully paid ordinary share in the capital of Pixie. Pixie Subsidiaries means 100% interest Pixie holds in each of Roylmark and Bizmac. Pixie Vendors means the various separate shareholders of Pixie as detailed in Section 11.2 of this Prospectus. Proposed Transaction has the meaning given in Section 1 Prospectus means this document and any supplementary or replacement prospectus in relation to this document. M&A means mergers and acquisitions. New Shares has the meaning given in Section 11.10. Notice of Meeting means the notice of general meeting of the Company's Shareholders dated 1 October 2015 at which, amongst other things, approvals relating to the Proposed Transactions will be sought from the Shareholders. Offer means the offer of 150,000,000 new Shares at A$0.06 per Share to raise A$9 million (with an over-subscription facility of a further A$2 million). Offer Price means A$0.06 per Share. Offer Shares means New Shares offered by the Company under this Prospectus in relation to the Offer. Official List means the official list of entities that ASX has admitted and not removed. Official Quotation means the quotation of the Company's CDIs on ASX. Recommendations means those outlined in ASX Corporate Governance Council's Principles of Corporate Governance and Recommendations 3rd edition. Reviewed or Reviewed in relation to financial statements means reviewed by the relevant auditor in accordance with applicable standards for review engagements, which is not an audit. Roylmark means Roylmark Holdings Sdn Bhd, a company incorporated in Malaysia Section means a section of this Prospectus. SFA means Securities and Futures Act of Singapore.
133
131
Share means an ordinary fully paid share in the Company, or CDIs over those Shares, as the context requires (and includes the Shares). Shareholder means a holder of Shares or CDIs.
For personal use only
Share Purchase Agreement means the share purchase agreement between the Company, Pixie and the Vendors to be executed in respect of the Proposed Transaction. SIC means the Securities Industries Council of Singapore. Singapore Takeovers Code means the Singapore Code on Take-overs and Mergers. SRN means Securityholder Reference Number of issuer sponsored holders. Substantial Holders means Shareholders holding 5% or more of the Shares on issue both as at the date of this Prospectus and on completion of the Proposed Transaction and the issue of securities pursuant to the Offers(assuming the Minimum Offer Subscription). TFN means Australian Tax File Number Whitewash Resolution means the passing of a resolution by the majority of independent shareholders approving the Whitewash Waiver at a general meeting, before the issue of the Consideration Shares. Whitewash Waiver means waiver from the Securities Industry Council of Singapore (SIC) from the general offer provisions of the Singapore Takeovers Code as it will involve an acquisition of more than 30% of the Company's Shares. ZHPL means Zingmobile Holdings Pte. Ltd. Zingmobile Business Sale means sale of existing digital mobile content and services business of Zingmobile. Zingmobile Group means the Company and its subsidiaries.
132
134
For personal use only
Corporate directory Company
Registered Office
Zingmobile Group Limited
Company Matters Pty Limited, Level 12, 680 George Street, SYDNEY, NSW, AUSTRALIA, 2000
(to be renamed "Pixie Group Limited") ABN 126 494 880 Current ASX Code: ZMG Proposed ASX Code: PEG
Directors Current Directors
Proposed Directors
Mr Teo Siew Kiet
Mr Hoo Voon Him
(Executive Chairman and CEO)
(Executive Chairman)
Ms Patricia Khoo Phaik Ean
Mr Tin Yu Jiann
(Non-executive Director)
(Executive Director) Mr Shensean Chen (Non-executive Director) Mr Tan Zhi Xiong, Ian (Non-executive Director) Ms Lay Chin Moey (Non-Executive Director)
Auditors and Investigating Accountant
Australian Legal Adviser
One Assurance LLP 20 Maxwell Road, #07-08 Maxwell House, Singapore 069113
Baker & McKenzie Level 27, 50 Bridge Street Sydney, New South Wales 2000 Australia
Share Registry
Singapore Legal Adviser
BOARDROOM PTY LIMITED
Baker & McKenzie. Wong & Leow 8 Marina Blvd Singapore 018981
Level 12, 225 George Street, SYDNEY, New South Wales 2000 Australia
135
133
134
For personal use only
Zingmobile Group Limited ABN 93 117 439 200
(to be renamed Pixie Group Limited)
Application Form
For personal use only
Fill out this Application form if you wish to apply for Shares(in the form of CDIs) in Zingmobile Group Limited x Please read the Replacement Prospectus dated 13 October 2015. x Follow the instructions to complete this Application form (see reverse). Offer Closes x Print clearly in capital letters using black or blue pen.
A
B
Number of shares you are applying for
5.00pm 26 October 2015
Total amount payable
x $0.06 per share =
Minimum of 33,500 Shares to be applied for
C
D
E F
G
H
Write the name(s) you wish to register the Shares in (see reverse for instructions) Applicant 1 Name of Applicant 2 or < Account Designation > Name of Applicant 3 or < Account Designation >
Write your postal address here Number / Street
Suburb/Town
State
Postcode
Important please note if the name & address details above in sections C & D do not match exactly with your registration details held at CHESS, any Securities issued as a result of your application will be held on the Issuer Sponsored subregister.
CHESS participant – Holder Identification Number (HIN)
X
Enter your Tax File Number(s), ABN, or exemption category Applicant #1 Applicant #2 Applicant #3
Cheque payment details –
ÍPIN CHEQUE(S) HERE
Please enter details of the cheque(s) that accompany this application. Name of drawer of cheque
Cheque No.
Contact telephone number (daytime/work/mobile)
BSB No.
I
Account No.
Cheque Amount A$
Email address
Successful applicants will receive CHESS Depository Interests (CDIs) in respect of fully paid ordinary Shares in the Company. More details regarding CDIs are contained in Section 10.7.1 of the Replacement Prospectus. By submitting this Application form, I/We declare that this Application is completed and lodged according to the Replacement Prospectus and the instructions on the reverse of the Application form and declare that all details and statements made by me/us are compete and accurate. I/We agree to be bound by the constitution of Zingmobile Group Limited (the Company). I/We was/were given access to the Replacement Prospectus together with the application form. I/We represent, warrant and undertake to the Company that our subscription for the above Shares will not cause the Company or me/us to violate the laws of Australia or any other jurisdiction which may be applicable to this subscription for Shares in the Company.
Guide to the Application Form
YOU SHOULD READ THE REPLACEMENT PROSPECTUS CAREFULLY BEFORE COMPLETING THIS APPLICATION FORM. Please complete all relevant sections of the appropriate Application Form using BLOCK LETTERS. These instructions are cross-referenced to each section of the Application Form.
Instructions
For personal use only
A.
If applying for Shares insert the number of Shares for which you wish to subscribe at Item A (not less than 33,500 Multiply by $0.06 AUD to calculate the total for Shares and enter the $amount at B.
C.
Write your full name. Initials are not acceptable for first names.
D.
Enter your postal address for all correspondence. All communications to you from the Company will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.
E.
If you are sponsored in CHESS by a stockbroker or other CHESS participant, you may enter your CHESS HIN if you would like the allocation to be directed to your HIN. NB: your registration details provided must match your CHESS account exactly.
F.
resident. Where applicable, please enter the TFN /ABN of each joint Applicant. Collection of TFN's is authorised by taxation laws. Quotation of your TFN is not compulsory and will not affect your Application Form. G.
Complete cheque details as requested. Make your cheque payable to Zingmobile Group Limited Share Application Account, cross it and mark it "Not negotiable". Cheques must be made in Australian currency, and cheques must be drawn on an Australian Bank.
H.
Enter your contact details so we may contact you regarding your Application Form or Application Monies.
I.
Enter your email address so we may contact you regarding your Application Form or Application Monies or other correspondence.
Enter your Australian tax file number ("TFN") or ABN or exemption category, if you are an Australian
Correct Forms of Registrable Title Note that ONLY legal entities can hold the Shares. The Application must be in the name of a natural person(s), companies or other legal entities acceptable to the Company. At least one full given name and surname is required for each natural person. Examples of the correct form of registrable title are set out below. Type of Investor
Correct Form of Registrable Title
Incorrect Form of Registrable Title
Individual
Mr John David Smith
J D Smith
Company
ABC Pty Ltd
ABC P/L
Joint Holdings
Mr John David Smith & Mrs Mary Jane Smith
John David & Mary Jane Smith
Trusts
Mr John David Smith
John Smith Family Trust
Deceased Estates
Mr Michael Peter Smith
John Smith (deceased)
Partnerships
Mr John David Smith & Mr Ian Lee Smith
John Smith & Son
Clubs/Unincorporated Bodies
Mr John David Smith
Smith Investment Club
Superannuation Funds
John Smith Pty Limited
John Smith Superannuation Fund
or
ABC Co
Lodgement Mail your completed Application Form with cheque(s) attached to the following address: Mailing address:
Delivery address:
Zingmobile Group Limited C/- Boardroom Pty Limited GPO Box 3993 SYDNEY NSW 2001
Zingmobile Group Limited C/- Boardroom Pty Limited Level 12 225 George Street SYDNEY NSW 2000
It is not necessary to sign or otherwise execute the Application Form. If you have any questions as to how to complete the Application Form, please contact Boardroom Limited on 1300 737 760 (within Australia) and + 61 2 9290 9600 (outside Australia). Privacy Statement:
Boardroom Pty Limited advises that Chapter 2C of the Corporations Act 2001 (Cth) requires information about you as a shareholder (including your name, address and details of the shares you hold) to be included in the public register of the entity in which you hold shares. Information is collected to administer your share holding and if some or all of the information is not collected then it might not be possible to administer your share holding. Your personal information may be disclosed to the entity in which you hold shares. You can obtain access to your personal information by contacting us at the address or telephone number shown on the Application Form. Our privacy policy is available on our website (http://www.boardroomlimited.com.au/Privacy.html).
