SINGAPORE – Best World International has said that although it stopped paying dividends during its trading suspension period, it gave some $140 million in cash back to its shareholders through off-market equal access offers twice in 2022.
“It should be noted that these equal access offers were extended to all shareholders and amounted to a significant amount distributed to shareholders, enhancing total shareholder return,” said the beauty products distributor on Thursday.
Best World was responding to Singapore Exchange (SGX) queries on the company’s dividends and remuneration policy, on the back of information received by SGX that the company’s directors were paid handsomely, even as no dividends have been declared.
The total remuneration of Best World’s executive directors ranged from $7.5 million to $12.8 million each for the financial year ended December 2022.
In its filing, Best World clarified that more than 90 per cent of each executive director’s annual compensation was in the form of performance-based bonuses that were calculated based on the audited group profit before tax of the preceding financial year.
The group said: “The annual remuneration package for each of the executive directors has progressively been more performance-based as the group increased its turnover and profitability over the years.
“The remuneration policy for the executive directors is also consistent with the board’s aim to continually create and sustain long-term growth and profitability of the group.”
Best World added that its remuneration committee engaged human resource advisory firm HRGuru for a benchmarking exercise that was completed in August 2023.
The results of that exercise will be announced in its upcoming financial year 2023 annual report.
Addressing concerns regarding “a lack of dividends” mentioned by SGX, Best World estimates that it paid out more than $121 million in dividends from 2004 to 2019. The company said it did not pay out dividends in recent years to conserve cash.
This was primarily to support its “operating cash needs, expansion into new markets, investing in production capabilities, setting up or refurbishing two to three regional centres per year, current merger and acquisition (M&A) obligations, and capitalising on M&A opportunities that may arise”.
It further expects a continued decline in revenue contributions from China in the face of consumers’ “growing feeling of economic uncertainty ahead”.
“On the grounds of prudence, the company conserves cash to address uncertainties that may arise, especially given the current high interest rate environment,” it said.
Lastly, Best World said it conducted share buybacks totalling about $14.6 million from November 2022 to Thursday, since the group’s trading suspension was lifted. This would provide liquidity opportunities for thinly traded shares such as Best World’s, said the firm, adding that the practice is “widely recognised” for returning shareholder value over the long term.
“Moving forward, the company will review its cash requirement and re-evaluate accordingly if circumstances change for the group in the short to medium term.”
Best World shares closed five cents, or 2.9 per cent, higher at $1.75 on Friday. THE BUSINESS TIMES
