(a) Rationalise the Share Capital of the Company

The Proposed Share Consolidation will rationalise the share capital of the Company by reducing the number of Existing Shares issued and outstanding. With all things being equal, it is expected that the theoretical trading price and net tangible asset (&ldquo NTA&rdquo ) of each Consolidated Share would be higher than the current trading price and NTA of each Existing Share following the decrease in the number of Existing Shares in issue after the Proposed Share Consolidation.

   

(b) Facilitating Future Corporate Action(s)

The Proposed Share Consolidation can also facilitate future possible corporate action(s) of the Company. As disclosed in the Company&rsquo s announcement on 25 January 2021 containing the Company&rsquo s responses to the SGX-ST&rsquo s queries on the unusual price movements in the Company&rsquo s shares, the Group is currently engaging in various discussions on opportunities and projects. As and when any definitive agreement is reached, the Company will make the relevant announcement at the appropriate time and in compliance with the applicable rules. For the avoidance of doubt, the Company is only in the midst of various preliminary discussions. There is no certainty as to whether there will be any definitive developments arising from such discussions.

 

(c) Increase in the market interest and attractiveness of the Company and its Consolidated Shares

In addition, the Proposed Share Consolidation increases market interest and activity in the Consolidated Shares, and generally make the Consolidated Shares more attractive to investors, including institutional investors and increase coverage of the Company amongst research houses and fund managers, thus providing a more diverse shareholder base, liquidity and exposure for strong corporate brand value.

 

(d) Reduction of the Magnitude of Volatility of the Share Price

As share trading may involve certain minimum fixed expenses (such as minimum brokerage fees), trading in lowly-priced shares may translate to higher transaction costs, relative to the trading price, for each board lot of shares. In addition, lowly-priced shares are generally more prone to speculation and market manipulation, which may result in excessive share price volatility.

 

The Board therefore believes that the Proposed Share Consolidation may serve to (i) reduce the volatility of its share price and reduce fluctuations in the Company&rsquo s market capitalisation, and (ii) reduce the percentage transaction cost for trading in each board lot of Consolidated Shares. Eventually, this will help to enhance trading liquidity of the Company&rsquo s shares.