Baguio chairman's dividend doubles before IPO
Environmental services provider Baguio Green Group, a candidate for listing on the main board of the Hong Kong stock exchange, paid its chairman a HK$36 million dividend for last year, more than double the previous year, according to its listing prospectus.
The dividend was paid in January, four months before the company's initial public offering (IPO), in which it plans to raise up to HK$120 million by selling 100 million shares at an indicative range of 80 HK cents to HK$1.20 each.
Baguio's chief financial officer, Iris Cheung Siu-chun, said yesterday the dividend was paid to chairman Ng Wing-hong as a reward for his contribution to the company over the past 30 years.
"It is reasonable as it was paid according to our previous dividend payout ratio of 45 to 50 per cent," she said at an IPO media briefing.
The company paid Ng a HK$15.6 million dividend in 2012 and HK$6.5 million in 2011.
Ng, whose shareholding in Baguio will be reduced to 75 per cent after the completion of the flotation, attributed the increase in dividend to a profit boost from a one-off gain last year.
Baguio reported a net profit of HK$62.5 million last year, driven by the one-off gain of HK$27.4 million from the disposal of investment properties. In 2012, it posted a net profit of HK$28.88 million, and HK$13.59 million in 2011.
Assuming the adjustment option to increase the offering size by 15 per cent is not exercised and the offer price is fixed at the mid-point of the indicative range - HK$1 per share - the company said it would raise HK$59 million in net proceeds. It plans to spend 28.2 per cent or HK$16.6 million on expanding service capacity and broadening its spectrum of services by acquiring additional equipment and vehicles.
It provides four major types of services, including cleaning services, landscaping services, pest management services and waste management and recycling services, and had a 14.3 per cent market share in terms of total industry revenue last year.
The share offer opens today and will close at noon on Thursday, with 90 per cent of the shares reserved for institutional investors and the balance set aside for retail investors. Dealing in its shares is expected to begin on May 22.