SBSTransit – BT
SBS Transit, Vicom drop share issue general mandate
Move in response to shareholders’ expectations
IN a move that must have delighted shareholders, SBS Transit and Vicom – both subsidiaries of transport group ComfortDelGro – decided at their respective annual general meeting yesterday to drop a general mandate to issue shares.
In his AGM address, Lim Jit Poh, who is chairman of both companies, said: ‘We have decided to remove the general mandate to issue shares up to 50 per cent from this year’s AGM agenda. You will recall that we reduced the mandate to issue shares on a non-pro rata basis from 20 per cent to 10 per cent last year. We have now gone one step further and reduced it to zero.’
‘Such is our response to the changing business environment and investors’ expectations. We do not take our shareholders for granted. We respect their rights, just as they have shown confidence and trust in us.’
Earlier in his address, Mr Lim touched on the economic crisis and the group’s continued stress on the importance of good corporate governance.
The decision to drop the share issue mandate came despite a move by the regulatory authorities to allow companies to issue shares up to 100 per cent of their existing capital through pro-rata renounceable rights issues – versus 50 per cent previously.
Mr Lim also addressed the issue of an apparent dip in both companies’ dividend payout ratio, saying the management remained committed to the policy of paying half of its net profit as ordinary dividends.
‘Analysts say that this is a sharp drop compared to the previous years,’ he said.
‘What they have forgotten is that we paid out more than 50 per cent in dividends in previous years because we had to use all of our Section 44 tax credits within an approved time frame. We have always said that if we have no use for excess cash, we will declare more dividends,’ he added.
Mr Lim said SBS and Vicom are ‘monitoring and cutting costs where necessary as well as controlling all receivables’.
Capital expenditure has been frozen, and ‘all senior staff have had their salaries frozen and bonuses reduced’. He added: ‘The board has also decided that directors’ fees for 2008 should remain at the same level as that of the previous year even though there is a case for an upward revision in light of added responsibilities and duties.’
Mr Lim said the companies are financially sound and that ‘we are comfortable with our management practices and pursuits despite the present financial and economic crisis’.