Global Investments

[Boon]

GIL RELEASES DIVIDEND GUIDANCE OF 0.75 CENTS PER SHARE

http://info.sgx.com/webcoranncatth.nsf/V...B0041941E/$file/11_20120409_1H2012DividendGuidance.pdf?openelement [SGX Announcement]

This is certainly a good piece of news and would translate to double digit yields.

As earlier mentioned:

To maintain its 1.50 cents distribution, GIL needs to generate free cash-flow of $12.4 million. In FY 2011, it generated FCF of $9.4 million but with the redemption of Pepper Notes 6 and possible suspension of coupons from its European Notes, its FCF may drop this year (but partially mitigated by contribution from the newly purchased CLO coupons). In other words, the quanta of the DPU will depend solely on STAM ability to utilize the rights proceed (of $35 million) and $42 million cash to purchase assets with decent yield and potential for capital appreciation.

It is likely that some of the current cash hoard will be used to fund the interim dividend but hopefully with some astute transactions, GIL would be able to make up the short-fall in their distributions in 2H 2012.

Please refer to the AGM presentation dated 21 April 2011:

http://www.globalinvestmentslimited.com/...tation.pdf

On page 13, it is stated that GIL will "continue to maintain the dividend policy of distributing majority of the cash economic income as semi-annual dividends."

On page 8 of this presentation,it is shown that the cash economic income (CEI) for FY2010 was S$0.022 per share but the dividend payout for FY2010 was only S$0.01 per share. This means CEI per share carried forward to 2011 was S$0.012, amounting to S$4.7 million (number of shares then was 393 millions)

From page 16 to page 25 of the current Annual Report FY2011, one can work out the total CEI for FY2011 to be about S$12.7 millions. however, the total dividend payout for FY2011 was only S$8.25 million, again CEI of S$4.4 million is available to be carried forward to 2012.

Therefore, CEI of S$4.7 million and S$4.4 million combined carried forward is more than enough to cover dividend payout for HY2012 totaling S$6.2 million. CEI derived from Year 2012 should be enough to cover dividend payout for the second half of 2012.

(Vested)