Ocean Sky International Limited - Ocean Sky International Ltd ...
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Ocean Sky International Limited - Ocean Sky International Ltd ...
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PROSPECTUS DATED 12 MARCH 2003<br />
(Registered with the Monetary Authority of Singapore on 12 MARCH 2003)<br />
This document is important. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager,<br />
solicitor, accountant, or other professional adviser.<br />
Application has been made to the Singapore Exchange Securities Trading <strong>Limited</strong> ("SGX-ST") for permission to deal in and for quotation for all the ordinary<br />
shares of S$0.05 each (the "Shares") in the capital of <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong> (the “Company”), comprising both existing issued Shares and those<br />
new Shares (the “New Shares”) which are the subject of this Invitation as well as the new Shares (the “Option Shares”) to be issued pursuant to the<br />
Company’s <strong>Ocean</strong> <strong>Sky</strong> Share Option Scheme. Such permission will be granted when the Company has been admitted to the Official List of the SGX-ST.<br />
Acceptance of applications of the New Shares will be conditional upon the SGX-ST granting permission to deal in and for quotation for all of our existing<br />
issued and fully paid-up Shares and the New Shares as well as Option Shares. Monies paid in respect of any application accepted will, in the event such<br />
permission is not granted, be returned to you at your own risk without any share of revenue or other benefit arising therefrom, and you will not have any<br />
claims against the Company or the Manager, SBI E2-Capital Pte <strong>Ltd</strong>. Quotations of and dealing in the Shares will be in Singapore dollars.<br />
The SGX-ST assumes no responsibility for the correctness of any of the statements made or reports contained in this Prospectus. Admission to the Official List<br />
of the SGX-ST is not to be taken as an indication of the merits of the Invitation, the Company, its subsidiaries or the Shares, the New Shares or the Option Shares.<br />
A copy of this Prospectus, together with copies of the Application Forms (as defined herein), has been lodged with and registered by the Monetary Authority<br />
of Singapore (the "Authority"). The Authority assumes no responsibility for the contents of the Prospectus. Registration of the Prospectus by the Authority<br />
does not imply that the Securities and Futures Act 2001 (Act 42 of 2001), or any other legal or regulatory requirements, have been complied with. The<br />
Authority has not, in any way, considered the merits of the Shares, the New Shares or the Option Shares, as the case may be, being offered or in respect<br />
of which an invitation is made, for investment.<br />
No Shares shall be allotted or allocated on the basis of this Prospectus later than six months after the<br />
date of registration of this Prospectus with the Authority.<br />
Investing in the Shares involves risks which are described in the “Risk Factors” section<br />
beginning on page 24 of this Prospectus.<br />
<strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong><br />
(Incorporated in the Republic of Singapore on 8 September 1988)<br />
Invitation in respect of 92,000,000 New Shares of<br />
S$0.05 each comprising:-<br />
(a) 9,200,000 Offer Shares at S$0.23 for each<br />
Offer Share by way of public offer; and<br />
(b) 82,800,000 Placement Shares by way of<br />
placement, comprising:-<br />
(i) minimum of 79,300,000 Placement Shares<br />
at S$0.23 for each Placement Share; and<br />
(ii) up to 3,500,000 Reserved Shares at S$0.21<br />
for each Reserved Share reserved for<br />
management and staff, business associates<br />
and those who have contributed to the<br />
success of our Group,<br />
payable in full on application.<br />
Manager<br />
A member of Softbank Investment Group<br />
Joint Lead Placement Agents<br />
SBI E2-Capital Securities <strong>Limited</strong> UOB Kay Hian Private <strong>Limited</strong><br />
Sub-Placement Agents<br />
Kim Eng Ong Asia DMG & Partners<br />
Securities Pte <strong>Ltd</strong> Securities Pte <strong>Ltd</strong><br />
Underwriter for Public Offer<br />
UOB Kay Hian Private <strong>Limited</strong>
CONTENTS<br />
CORPORATE INFORMATION .............................................................................................................. 3<br />
DEFINITIONS ........................................................................................................................................ 5<br />
GLOSSARY OF TECHNICAL TERMS .................................................................................................. 10<br />
Page<br />
DETAILS OF THE INVITATION<br />
LISTING ON THE STOCK EXCHANGE ................................................................................................ 11<br />
INDICATIVE TIMETABLE FOR LISTING ................................................................................................ 13<br />
STRUCTURE OF INVITATION .............................................................................................................. 14<br />
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS ........................................................ 16<br />
SELLING RESTRICTIONS .................................................................................................................... 16<br />
PLAN OF DISTRIBUTION .................................................................................................................... 16<br />
PROSPECTUS SUMMARY .................................................................................................................. 18<br />
THE INVITATION .................................................................................................................................... 20<br />
ISSUE STATISTICS .............................................................................................................................. 22<br />
RISK FACTORS .................................................................................................................................... 24<br />
EXCHANGE RATES .............................................................................................................................. 29<br />
DIVIDEND POLICY ................................................................................................................................ 30<br />
CAPITALISATION AND INDEBTEDNESS ............................................................................................ 31<br />
CONTINGENT LIABILITIES .................................................................................................................. 32<br />
DILUTION .............................................................................................................................................. 33<br />
SELECTED CONSOLIDATED FINANCIAL INFORMATION ................................................................ 34<br />
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF<br />
OPERATIONS ........................................................................................................................................ 36<br />
LIQUIDITY AND CAPITAL RESOURCES ............................................................................................ 40<br />
PROFIT ESTIMATE ................................................................................................................................ 41<br />
OUR HISTORY ...................................................................................................................................... 42<br />
OUR INDUSTRY .................................................................................................................................... 44<br />
OUR BUSINESS .................................................................................................................................... 45<br />
COMPETITION AND COMPETITIVE STRENGTHS ............................................................................ 53<br />
PROSPECTS AND FUTURE PLANS .................................................................................................... 57<br />
OUR MAJOR CUSTOMERS .................................................................................................................. 59<br />
OUR MAJOR SUPPLIERS .................................................................................................................... 60<br />
1
Page<br />
OUR EMPLOYEES ................................................................................................................................ 61<br />
CREDIT POLICY .................................................................................................................................... 62<br />
INTELLECTUAL PROPERTY ................................................................................................................ 62<br />
PROPERTIES AND FIXED ASSETS .................................................................................................... 63<br />
DIRECTORS, MANAGEMENT AND STAFF<br />
DIRECTORS .......................................................................................................................................... 66<br />
MANAGEMENT ...................................................................................................................................... 68<br />
STAFF .................................................................................................................................................... 71<br />
MANAGEMENT REPORTING STRUCTURE ........................................................................................ 72<br />
SERVICE AGREEMENTS ...................................................................................................................... 73<br />
DIRECTORS’ AND EXECUTIVE OFFICERS’ REMUNERATION ..........................................................<br />
REMUNERATION OF EMPLOYEES RELATED TO DIRECTORS AND SUBSTANTIAL<br />
74<br />
SHAREHOLDERS .................................................................................................................................. 75<br />
OCEAN SKY SHARE OPTION SCHEME ............................................................................................ 76<br />
CORPORATE GOVERNANCE .............................................................................................................. 81<br />
INTERESTED PERSONS TRANSACTIONS ........................................................................................ 84<br />
POTENTIAL CONFLICT OF INTERESTS ............................................................................................ 88<br />
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP<br />
SHARE CAPITAL .................................................................................................................................... 89<br />
OWNERSHIP STRUCTURE AND PRINCIPAL SHAREHOLDERS ...................................................... 92<br />
MORATORIUM ...................................................................................................................................... 92<br />
GROUP STRUCTURE .......................................................................................................................... 93<br />
COMPANIES WITHIN OUR GROUP .................................................................................................... 94<br />
LETTER FROM AUDITORS AND REPORTING ACCOUNTANTS IN RELATION<br />
TO THE PROFIT ESTIMATE OF THE GROUP FOR THE FINANCIAL YEAR<br />
ENDED 31 DECEMBER 2002 .............................................................................................................. 96<br />
ACCOUNTANTS’ REPORT .................................................................................................................... 97<br />
MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS ........................................ 139<br />
EXCHANGE CONTROLS ...................................................................................................................... 140<br />
GENERAL AND STATUTORY INFORMATION .................................................................................... 141<br />
APPENDIX A - TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION .................... A-1<br />
APPENDIX B - DESCRIPTION OF SINGAPORE COMPANY LAW RELATING TO SHARES ............ B-1<br />
APPENDIX C - DESCRIPTION OF SINGAPORE LAW RELATING TO TAXATION ............................ C-1<br />
APPENDIX D - RULES OF THE OCEAN SKY SHARE OPTION SCHEME ........................................ D-1<br />
2
CORPORATE INFORMATION<br />
Board of Directors : Ang Boon Cheow Edward (Executive Chairman)<br />
Ang Boon Chong (Executive Director)<br />
Ang Siew Tiong (Executive Director)<br />
Ng Ya Ken @ Ng Ah Kan (Non-Executive Director)<br />
Teo Kiang Kok (Independent Director)<br />
Chua Keng Hiang (Independent Director)<br />
Company Secretary : Chong Yea Ling (ACIS)<br />
Registrar and Share Transfer : Lim Associates (Pte) <strong>Ltd</strong><br />
Office 10 Collyer Quay, #19-08<br />
<strong>Ocean</strong> Building<br />
Singapore 049315<br />
Registered Office : 22 Tampines Street 92<br />
Singapore 528876<br />
Manager : SBI E2-Capital Pte <strong>Ltd</strong><br />
5 Shenton Way,<br />
#09-07 UIC Building<br />
Singapore 068808<br />
Underwriter : UOB Kay Hian Private <strong>Limited</strong><br />
80 Raffles Place<br />
#30-01 UOB Plaza 1<br />
Singapore 048624<br />
Joint Lead Placement Agents : SBI E2-Capital Securities <strong>Limited</strong><br />
43/F Jardine House<br />
One Connaught Place, Central<br />
Hong Kong<br />
UOB Kay Hian Private <strong>Limited</strong><br />
80 Raffles Place<br />
#30-01 UOB Plaza 1<br />
Singapore 048624<br />
Auditors and Reporting : BDO <strong>International</strong><br />
Accountants Certified Public Accountants<br />
5 Shenton Way<br />
#07-00 UIC Building<br />
Singapore 068808<br />
Solicitors to the Invitation and : Shook Lin & Bok<br />
Legal Advisors to our Company 1 Robinson Road<br />
on Singapore Law #18-00 AIA Tower<br />
Singapore 048542<br />
3
Legal Advisors to our Company : Jin Mao Law Firm<br />
on PRC Law 21st Floor, Universal Mansion 168,<br />
Yu Yuan Road<br />
Shanghai 200040,<br />
PRC<br />
Principal Bankers : United Overseas Bank <strong>Limited</strong><br />
80 Raffles Place,<br />
UOB Plaza 1<br />
Singapore 048624<br />
The Hongkong and Shanghai Banking Corporation <strong>Limited</strong><br />
21 Collyer Quay,<br />
HSBC Building<br />
Singapore 049320<br />
The Development Bank of Singapore <strong>Ltd</strong><br />
6 Shenton Way,<br />
DBS Building Tower Two<br />
Singapore 068809<br />
Receiving Banker : United Overseas Bank <strong>Limited</strong><br />
80 Raffles Place<br />
UOB Plaza 1<br />
Singapore 048624<br />
Contact Details of Our Company : 22 Tampines Street 92<br />
Singapore 528876<br />
Telephone : (65) 6789-9988<br />
Facsimile : (65) 6789-9933<br />
Website : www.oceanskyintl.com<br />
(information contained on our website does<br />
not constitute a part of this Prospectus)<br />
4
DEFINITIONS<br />
For the purpose of this Prospectus and the accompanying Application Forms, the following definitions<br />
have, where appropriate, been used:-<br />
COMPANIES WITHIN OUR GROUP<br />
“<strong>Ocean</strong> <strong>Sky</strong> Group” or “our Group” : Our Company and its subsidiaries<br />
Singapore<br />
“ATSG” : ATS Garments (S) Pte <strong>Ltd</strong><br />
“Bloom Time” : Bloom Time Trading (2002) Pte <strong>Ltd</strong><br />
“<strong>Ocean</strong> <strong>Sky</strong> “ or “our Company” : <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong><br />
“Sunglobe” : Sunglobe Pte <strong>Ltd</strong><br />
Malaysia<br />
“Eng Soon” : Eng Soon Garments Sdn Bhd<br />
Brunei<br />
“Milteq” : Milteq Tenthouse Sdn Bhd<br />
“PDAC” : P.D.A.C <strong>Ocean</strong> <strong>Sky</strong> Sdn Bhd<br />
Hong Kong<br />
“OGHK” : <strong>Ocean</strong> Gateway <strong>International</strong> Company <strong>Ltd</strong><br />
“OSHK” : <strong>Ocean</strong> <strong>Sky</strong> Textile (H.K.) <strong>Limited</strong><br />
Cambodia<br />
“Suntex” : Suntex Pte <strong>Ltd</strong><br />
El Salvador<br />
“Hoon’s” : Hoon’s Apparel <strong>International</strong> (SAL) S.A. de C.V.<br />
“Pacific <strong>Sky</strong>” : Pacific <strong>Sky</strong> Apparel (SAL), S.A. de C.V.<br />
Honduras<br />
“Blue <strong>Ocean</strong>” : Blue <strong>Ocean</strong> Apparel, SA<br />
“Uniwear” : Uniwear Garments Honduras, SA<br />
US<br />
“OS Marketing” : <strong>Ocean</strong> Star Marketing (USA), Inc.<br />
“OS Sourcing” : <strong>Ocean</strong> Star Sourcing (USA), Inc.<br />
PRC<br />
“ Sing Cheng” : Sing Cheng (Guangzhou) Apparel & Accessories Pte <strong>Ltd</strong><br />
“OS Apparel” : <strong>Ocean</strong> Star Apparel (Guangzhou) Pte <strong>Ltd</strong><br />
5
GENERAL<br />
“Act” : The Companies Act, Chapter 50, of Singapore<br />
“Application Forms” : The printed application forms for the Invitation Shares which<br />
are the subject of the Invitation and which form part of this<br />
Prospectus<br />
“Application List” : The list for applications and subscription of the Invitation<br />
Shares<br />
“Associate” : The immediate family (being spouse, child, sibling and<br />
parent) of a Director, Substantial Shareholder or Controlling<br />
Shareholder, and any company in which a Director,<br />
Substantial Shareholder or controlling Shareholder and his<br />
immediate family together (directly or indirectly) have an<br />
interest of 30% or more<br />
“ATM” : Automated teller machine<br />
“ATS Holdings (2000)” : ATS Holdings (2000) Pte <strong>Ltd</strong><br />
“Audit Committee” : Our audit committee<br />
“Authority” : The Monetary Authority of Singapore<br />
“Capitalisation Exercise” : The capitalisation exercise carried out in connection with the<br />
Invitation, more fully described on page 31 of this<br />
Prospectus<br />
“CDP” : The Central Depository (Pte) <strong>Limited</strong><br />
“CPF” : Central Provident Fund<br />
“Depository Agent” : An entity registered as a depository agent with the CDP for<br />
the purpose of maintaining a Securities Account<br />
“Directors” : The directors of the Company as at the date of this<br />
Prospectus<br />
“Electronic Applications” : Applications for the offer Shares made through an ATM of<br />
one of the Participating Banks in accordance with the terms<br />
and conditions of the Prospectus<br />
“EPS” : Earnings per Share<br />
“EU” : European Union<br />
“Executive Officers” : Our executive officers as at the date of this Prospectus<br />
“HY” : Half year ended 30 June<br />
“FY” : Financial year ended 31 December<br />
“Hong Kong” : The Hong Kong Special Administrative Region of the PRC<br />
“Independent Director” : Our non-executive independent Directors as at the date of<br />
this Prospectus<br />
6
“Invitation” : The invitation to the public in respect of the Invitation<br />
Shares, subject to and on the terms and conditions of this<br />
Prospectus<br />
“Invitation Shares” : 92,000,000 Shares which are the subject of the Invitation,<br />
comprising 92,000,000 New Shares<br />
“Issue Price” : S$0.23 for each Invitation Share, except for Reserved<br />
Shares<br />
“Joint Lead Placement Agents” : SBI E2-Capital Securities <strong>Limited</strong> and UOB Kay Hian<br />
Private <strong>Limited</strong>, and “Joint Lead Placement Agent’ means<br />
any of them<br />
“Latest Practicable Date” : 28 February 2003, being the latest practicable date prior to<br />
the printing of this Prospectus<br />
“Manager” : SBI E2-Capital Pte <strong>Ltd</strong><br />
“Market Day” : A day on which the SGX-ST is open for trading in securities<br />
“NA” : Not applicable<br />
“NAV” : Net asset value<br />
“New Shares” : The 92,000,000 new Shares for which the Company invites<br />
applications to subscribe, subject to and on the terms of this<br />
Prospectus<br />
“NM” : Not meaningful<br />
“NTA” : Net tangible asset<br />
“Offer” : The offer by the Company to the public for subscription of<br />
the Offer Shares at the Issue Price, subject to and on the<br />
terms and conditions of this Prospectus<br />
“Offer Shares” : 9,200,000 Invitation Shares which are the subject of the<br />
Offer<br />
“Option Shares” : The new Shares that may be issued pursuant to the<br />
Scheme<br />
“Participating Banks” : The Development Bank of Singapore <strong>Ltd</strong> (including its<br />
POSBank Services division); Overseas-Chinese Banking<br />
Corporation <strong>Limited</strong> (“OCBC”) Group (comprising OCBC<br />
and Bank of Singapore <strong>Limited</strong>); and the United Overseas<br />
Bank <strong>Limited</strong> (“UOB”) Group (comprising UOB and Far<br />
Eastern Bank <strong>Limited</strong>)<br />
“Placement” : The placement by the Placement Agent on behalf of the<br />
Company of the Placement Shares for subscription at the<br />
Issue Price, subject to and on the terms and conditions of<br />
this Prospectus<br />
“Placement Shares” : The 82,800,000 Invitation Shares which are the subject of<br />
the Placement<br />
7
“PRC” : People’s Republic of China, but for the purposes of this<br />
Prospectus and for geographical reference only (unless<br />
otherwise indicated) excludes Taiwan, Macau and Hong<br />
Kong<br />
“Prospectus” : This amended Preliminary Prospectus issued by our<br />
Company in respect of the Invitation and lodged with the<br />
Authority on 17 February 2003<br />
“Reserved Share Price” : $0.21 for each Reserved Share<br />
“Reserved Shares” : Up to 3,500,000 of the Placement Shares reserved for<br />
management and staff, business associates and those who<br />
have contributed to the success of our Group<br />
“SCCS” : Securities Clearing & Computer Services (Pte) <strong>Ltd</strong><br />
“Scheme” : The <strong>Ocean</strong> <strong>Sky</strong> Share Option Scheme, particulars of which<br />
are set out at page 76 of this Prospectus<br />
“Securities Account” : Securities account maintained by a depositor with CDP<br />
“SGX-ST” : The Singapore Exchange Securities Trading <strong>Limited</strong><br />
“Shares” : Ordinary shares of S$0.05 each in the capital of the<br />
Company<br />
“Substantial Shareholder” : A person who holds directly or indirectly 5%, or more of the<br />
total issued share capital in our Company<br />
“Shareholders” : The shareholders of our Company at any point in time<br />
“Underwriter” : UOB Kay Hian Private <strong>Limited</strong><br />
“US” : United States of America<br />
“sq ft” : Square feet<br />
“% or “per cent.” : Percentage<br />
CURRENCIES<br />
“B$” : Brunei dollars<br />
“colones” : El Salvador colones<br />
“HK$” : Hong Kong dollars<br />
“HNL” : Honduras lempiras<br />
“RM” : Malaysian ringgit<br />
“RMB” : Chinese renminbi<br />
“$” or “S$” or and “Cents” : Singapore dollars and cents respectively<br />
“US$” or “USD” and “US Cents” : United States dollars and cents respectively<br />
8
The expressions “our”, “ourselves”, “us”, “we” or other grammatical variations thereof shall, unless<br />
otherwise stated, mean our Company and our subsidiaries.<br />
The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings ascribed to<br />
them, respectively, in the Act.<br />
Words importing the singular shall, where applicable, include the plural and vice versa and words<br />
importing the masculine gender shall, where applicable, include the feminine and neuter genders and<br />
vice versa. References to persons shall include corporations.<br />
Any reference in this Prospectus and the Application Forms to any enactment is a reference to that<br />
enactment as for the time being amended or re-enacted. Any word defined in the Act or any statutory<br />
modifications thereof and used in this Prospectus and the Application Forms, where applicable, shall<br />
have the meaning assigned to it under the Act or statutory modification as the case may be.<br />
Any reference in this Prospectus or the Application Forms to shares being allotted to an applicant<br />
includes allotment to the CDP for the account of that applicant.<br />
Any reference to a time of day in this Prospectus will be a reference to Singapore time, unless otherwise<br />
stated.<br />
9
GLOSSARY OF TECHNICAL TERMS<br />
To facilitate a better understanding of our business, the following glossary provides an explanation on<br />
some of the technical terms and abbreviations used in this Prospectus.<br />
“SCM” : Supply chain management refers to the integration of internal and external supply<br />
chain solution services from manufacturing, sourcing and procurement of raw<br />
materials and accessories prior to the manufacturing process to logistic management<br />
of our manufactured apparels. It includes services such as providing fashion trends<br />
advices, designs, product development, sampling and testing, research data to assist<br />
our customers in their product development process. It also includes handling<br />
import/export customs documentation, insurance, import duty, shipping and inland<br />
transport matters for our customers in the process of delivering the manufactured<br />
apparels to our customers’ warehouses.<br />
“ERP” : Enterprise Resource Planning is a complete enterprise wide business solution used<br />
to integrate all departments and functions in a company into a single computer<br />
system. It consists of software modules for business areas such as marketing and<br />
sales, field service, product design and development, production and inventory<br />
control, procurement, distribution, industrial facilities management, process design<br />
and development, manufacturing, quality, human resources, finance and accounting,<br />
and information services.<br />
10
DETAILS OF THE INVITATION<br />
LISTING ON THE STOCK EXCHANGE<br />
We have applied to the SGX-ST for permission to deal in and for quotation for all our Shares already<br />
issued and the New Shares as well as the Option Shares on the SGX-ST. Such permission will be<br />
granted when we have been admitted to the Official List of the SGX-ST. Our allocation of the Invitation<br />
Shares will be conditional upon the completion of the Invitation, which is subject to certain conditions,<br />
including the SGX-ST granting permission to deal in and for quotation for all our issued Shares and the<br />
New Shares as well as the Option Shares. If the completion of the Invitation does not occur because the<br />
SGX-ST’s permission is not granted or for any reason, moneys paid in respect of any allocation will be<br />
returned to you at your own risk, without interest or any share of revenue or other benefit arising<br />
therefrom and you will not have any claim against us or the Manager.<br />
The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions<br />
expressed or reports contained in this Prospectus. Admission to the Official List of the SGX-ST is not to<br />
be taken as an indication of the merits of the Invitation, our Company, our subsidiaries, our Shares, the<br />
New Shares or the Option Shares.<br />
A copy of this Prospectus together with copies of the Application Forms, have been lodged with the<br />
Monetary Authority of Singapore (the “Authority”), which takes no responsibility for its contents.<br />
Where the Authority issues a stop order pursuant to Section 242 of the Securities and Futures Act 2001,<br />
and<br />
(a) in the case where the Invitation Shares have not been issued to the applicants, the applications of<br />
the Invitation Shares pursuant to the Invitation shall be deemed to have been withdrawn and<br />
cancelled and our Company shall, within 14 days from the date of the stop order, pay to the<br />
applicants all moneys the applicants have paid on account of their application for the Invitation<br />
Shares; or<br />
(b) in the case where the Invitation Shares have been issued to the applicants, the issue of the<br />
Invitation Shares pursuant to the Invitation shall be deemed to be void and our Company shall,<br />
within 14 days from the date of the stop order, pay to the applicants all moneys paid by them for<br />
the Invitation Shares.<br />
We have obtained approvals from our Directors for this Prospectus. Our Directors individually and<br />
collectively accept full responsibility for the accuracy of the information given in this Prospectus and<br />
confirm, having made all reasonable enquiries, that, to the best of their knowledge and belief, the facts<br />
contained in this Prospectus are true and accurate and not misleading; all expressions of opinion,<br />
intention and expectation contained herein are honestly held and made after due and careful<br />
consideration; this Prospectus constitutes full and true disclosure of all material facts about this Invitation<br />
and our Group and our Shares; and there are no other material facts the omission of which would make<br />
any statement herein misleading.<br />
The Invitation Shares are offered for subscription or purchase solely on the basis of the information<br />
contained and the representations made in this Prospectus.<br />
We have not authorised any person to give any information or to make any representation not contained<br />
in this Prospectus in connection with the Invitation and, if given or made, such information or<br />
representation must not be relied upon as having been authorised by our Company, or the Manager.<br />
Neither the delivery of this Prospectus and the Application Forms or any documents relating to the Offer<br />
or the Placement nor the Invitation shall, under any circumstances, constitute a continuing representation<br />
or create any suggestion or implication that there has been no change in the affairs of our Company or<br />
our Group or any statements of fact or information contained in this Prospectus since the date of this<br />
Prospectus. Where such changes occur, our Company may make an announcement of the same to the<br />
SGX-ST. You should take note of any such announcement and, upon release of such announcement,<br />
11
shall be deemed to have notice of such changes. Save as expressly stated in this Prospectus, nothing<br />
herein is, or may be relied upon as, a promise or representation as to the future performance or policies<br />
of our Company or our subsidiaries.<br />
This Prospectus has been prepared solely for the purpose of the Invitation and may only be relied upon<br />
by you in connection with your application for the Invitation Shares and may not be relied upon by any<br />
other person or for any other purpose.<br />
This Prospectus does not constitute an offer of, or invitation or solicitation to subscribe for and/or to<br />
purchase, the Invitation Shares in any jurisdiction in which such offer or invitation or solicitation is<br />
unauthorised or unlawful nor does it constitute an offer or invitation or solicitation to any person to whom<br />
it is unlawful to make such offer or invitation or solicitation.<br />
Copies of this Prospectus and the Application Forms and envelopes may be obtained on request, subject<br />
to availability, from:-<br />
SBI E2-Capital Pte <strong>Ltd</strong> UOB Kay Hian Private <strong>Limited</strong><br />
5 Shenton Way, 80 Raffles Place<br />
#09-07 UIC Building #30-01 UOB Plaza 1<br />
Singapore 068808 Singapore 048624<br />
and from members of the Association of Banks in Singapore and members of the Stock Exchange and<br />
merchant banks in Singapore.<br />
The Application List will open at 10.00 a.m. on 20 March 2003 and will remain open until 12.00<br />
noon on the same day or for such further period or periods as our Directors may, in consultation<br />
with the Manager decide, subject to any limitations under all applicable laws. Where a<br />
supplementary or replacement prospectus has been lodged with the Authority, the Application<br />
List shall be kept open for at least 14 days after the lodgement of the supplementary or<br />
replacement prospectus. Where an applicant has notified our Company within 14 days from the<br />
date of the lodgement of the supplementary or replacement prospectus of his wish to exercise<br />
his option under the Securities and Futures Act to withdraw his application made prior to the<br />
lodgement of the supplementary or replacement prospectus, our Company shall pay to him all<br />
monies paid by him on account of his application for the Invitation Shares, without interest or any<br />
share of revenue or other benefit arising therefrom and at the applicant’s risk, within 7 days from<br />
the receipt of such notification.<br />
Details for the procedure for application for the Invitation Shares are set out in Appendix A to this<br />
Prospectus.<br />
12
INDICATIVE TIMETABLE FOR LISTING<br />
In accordance with the Stock Exchange’s News Release of 28 May 1993 on the trading of initial public<br />
offering shares on a “when issued” basis, the indicative timetable is set out below for the reference of<br />
applicants:-<br />
Indicative date/time Event<br />
20 March 2003, 12.00 noon Close of Application List<br />
21 March 2003 Balloting of applications, or otherwise as may be<br />
approved by the SGX-ST (in the event of an oversubscription<br />
for the Offer Shares)<br />
24 March 2003, 9.00 a.m. Commence trading on a “when issued” basis<br />
31 March 2003 Last day of trading on a “when issued” basis<br />
1 April 2003, 9.00 a.m. Commence trading on a “ready” basis<br />
4 April 2003 Settlement date for all trades done on a “when<br />
issued” basis and for trades done on a “ready” basis<br />
on 1 April 2003<br />
The above timetable is only indicative as it assumes that the date of closing of the Application List will be<br />
on 20 March 2003, the date of admission of our Shares to the Official List of the SGX-ST will be 24<br />
March 2003, the Stock Exchange’s shareholding spread requirement will be complied with and the<br />
Invitation Shares will be issued and fully paid-up prior to 24 March 2003. The actual date on which our<br />
Shares will commence trading on a “when issued” basis will be announced when it is confirmed by the<br />
Stock Exchange.<br />
The above timetable and procedure may be subject to such modification as the Stock Exchange may, in<br />
its discretion, decide, including the decision to permit trading on a “when issued” basis and the<br />
commencement date of such trading. The commencement of trading on a “when issued” basis will<br />
be entirely at the discretion of the Stock Exchange. All persons trading in our Shares on a “when<br />
issued” basis do so at their own risk. In particular, persons trading in our Shares before their<br />
Securities Accounts with the CDP are credited with the relevant number of Shares do so at the<br />
risk of selling Shares which neither they nor their nominees, as the case may be, have been<br />
allotted or allocated with or are otherwise beneficially entitled to. Such persons are also exposed<br />
to the risk of having to cover their net sell positions earlier if “when issued” trading ends sooner<br />
than the indicative date mentioned above. Persons who have a net sell position traded on a<br />
“when issued” basis should close their position on or before the first day of “ready” basis<br />
trading.<br />
In the event of any changes in the closure of the Application List or the time period during which the<br />
Invitation is open, we will publicly announce the same:-<br />
(i) through a MASNET announcement to be posted on the Internet at the SGX-ST Web-site<br />
http://www.sgx.com; and<br />
(ii) in a local English newspaper, namely, The Straits Times.<br />
Investors should consult the SGX-ST announcement on “ready” listing date on the Internet (at the SGX-<br />
ST website http://www.sgx.com), INTV or the newspapers, or check with their brokers on the date on<br />
which trading on a “ready” basis will commence.<br />
We will provide details of the results of the Invitation through the channels in (i) and (ii) above.<br />
13
STRUCTURE OF INVITATION<br />
This section should be read in conjunction with, and is qualified in its entirety by reference to, the section<br />
entitled “Terms and Conditions and Procedures For Application” in Appendix A of this Prospectus.<br />
The Invitation comprises:-<br />
(a) 9,200,000 Offer Shares at S$0.23 for each Offer Share by way of public offer; and<br />
(b) 82,800,000 Placement Shares by way of placement, comprising:-<br />
(i) minimum of 79,300,000 Placement Shares at S$0.23 for each Placement Share for<br />
application by way of Placement Shares Application Forms; and<br />
(ii) up to 3,500,000 Reserved Shares at S$0.21 for each Reserved Share reserved for<br />
management and staff, business associates and those who have contributed to the success<br />
of our Group,<br />
payable in full on application.<br />
The Invitation is open for application by members of the public in Singapore, subject to and on the terms<br />
and conditions in this Prospectus (including Appendix A). Applications for the Invitation Shares may be<br />
made using the following methods:-<br />
Application for Offer Shares by way of Offer Shares Application Forms or ATM Applications<br />
Applications for the Offer Shares may only be made by way of the printed Offer Shares Application<br />
Forms or through ATMs belonging to the Participating Banks.<br />
An applicant (other than an approved nominee company) who has made an application for Offer Shares<br />
in his own name may not submit another separate application for Offer Shares whether by way of an<br />
Application Form or by way of an ATM Application, for any other person. Such separate applications shall<br />
be deemed to be multiple applications and shall be rejected.<br />
An applicant who has made an application for Offer Shares by way of an Offer Shares Application<br />
Form may not make another separate application for Offer Shares by way of an ATM Application<br />
and vice versa. Such separate applications shall be deemed to be multiple applications and shall<br />
be rejected.<br />
An applicant who has made an application for Offer Shares either by way of an Offer Shares<br />
Application Form or by way of an ATM Application shall not make any separate application for<br />
Placement Shares by way a Placement Shares Application Form. Such separate application shall<br />
be deemed to be multiple applications and shall be rejected.<br />
In the event of an under-subscription for the Offer Shares as at the close of the Application List, that<br />
number of Offer Shares shall be made available to satisfy applications for the Placement Shares, to the<br />
extent there are excess applications for the Placement Shares as at the close of the Application List.<br />
In the event of an over-subscription for the Offer Shares as at the close of the Application List and the<br />
Placement Shares are fully taken up as at the close of the Application List, the successful applications<br />
for Offer Shares will be determined by ballot or otherwise as determined by our Directors and approved<br />
by the SGX-ST.<br />
Additional terms and conditions for the application of Offer Shares by way of Application Forms and ATM<br />
Applications are set out on pages A-1 to A-13 in Appendix A of this Prospectus.<br />
14
Application for Placement Shares by way of Placement Shares Application Forms<br />
An applicant who applies for the Placement Shares by way of a Placement Shares Application Form shall<br />
not make any separate application for the Placement Shares (using another Placement Shares<br />
Application Form) or for the Offer Shares (either using an Offer Share Application Form or by way of an<br />
ATM Application). Such separate applications will be deemed to be multiple applications and shall be<br />
rejected.<br />
In the event that any of the Placement Shares are not taken up, that number of Placement Shares will be<br />
made available to satisfy applications for the Offer Shares, to the extent there is an over subscription for<br />
the Offer Shares as at the close of the Application List.<br />
Additional terms and conditions for the application of the Placement Shares by way of Placement Shares<br />
Application Forms are set out on pages A-1 to A-13 in Appendix A of this Prospectus.<br />
15
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS<br />
All statements contained in this Prospectus, statements made in the press releases and oral statements<br />
that may be made by our Company or our officers, Directors or employees acting on our behalf, that are<br />
not statements of historical fact, constitute “forward-looking statements”. Some of these statements can<br />
be identified by words that have a bias towards, or are, forward-looking such as “anticipate”, “believe”,<br />
“could”, “estimate”, “expect”, “forecast”, “if”, “intend”, “may”, “plan”, “possible”, “probable”, “project”,<br />
“should”, “will” and “would” or similar words. However, these words are not the exclusive means of<br />
identifying forward-looking statements. All statements regarding our Group’s expected financial position,<br />
business strategy, plans and prospects and future prospects of our Group’s industry are forward-looking<br />
statements. These forward-looking statements, including statements as to our Group’s revenue and<br />
profitability, prospects, future plans and other matters discussed in this Prospectus regarding matters that<br />
are not historic fact, are only predictions. These forward-looking statements involve known and unknown<br />
risks, uncertainties and other factors that may cause our Group’s actual, future results, performance or<br />
achievements to be materially different from any future results, performance or achievements expected,<br />
expressed or implied by such forward-looking statements.<br />
Given the risks and uncertainties that may cause our Group’s future results, performance or<br />
achievements to be materially different from that expected, expressed or implied by the forward-looking<br />
statements in this Prospectus, undue reliance must not be placed on these statements. Neither our<br />
Company nor any other person represents or warrants that our Group’s actual future results,<br />
performance or achievements will be as discussed in those statements. Where any update or revision to<br />
any of those forward-looking statements to reflect material future developments, events or circumstances<br />
is necessary, we will promptly make an announcement of the same to the SGX-ST and the public.<br />
SELLING RESTRICTIONS<br />
This Prospectus does not constitute an offer, solicitation or invitation to subscribe for and/or purchase our<br />
Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to<br />
any person to whom it is unlawful to make such offer, solicitation or invitation. No action has been or will<br />
be taken under the requirement of the legislation or regulations of, or of the legal or regulatory authorities<br />
of, any jurisdiction, except for the filing and/or registration of this Prospectus in Singapore in order to<br />
permit a public offering of our Shares and the public distribution of this Prospectus in Singapore. The<br />
distribution of this Prospectus and the offering of our Shares in certain jurisdictions may be restricted by<br />
the relevant laws in such jurisdiction. Persons who may come into possession of this Prospectus are<br />
required by us, the Underwriters and the Joint Lead Placement Agents to inform themselves about, and<br />
to observe and comply with, any such restrictions.<br />
PLAN OF DISTRIBUTION<br />
The Issue Price is determined by us in consultation with the Manager, the Underwriter and the Joint<br />
Lead Placement Agents, based on market conditions and the market demand for our Shares. The Issue<br />
Price is the same for all Invitation Shares and is payable in full on application.<br />
Offer Shares<br />
The Offer Shares are made available to the members of the public in Singapore for subscription at the<br />
Issue Price. The terms and conditions and procedures for application and acceptance are described in<br />
Appendix A on pages A-1 to A-13 of this Prospectus.<br />
Pursuant to the terms and conditions contained in the Management and Underwriting Agreement signed<br />
between our Company, the Manager and the Underwriter dated 12 March 2003, the Underwriter have<br />
agreed to underwrite our Offer Shares.<br />
In the event of an under-subscription for the Offer Shares as at the close of the Application List, that<br />
number of Offer Shares not subscribed for shall be made available to satisfy excess application for the<br />
Placement Shares to the extent there is an over-subscription for the Placement Shares as at the close of<br />
the Application List.<br />
16
In the event of an over-subscription for the Offer Shares as at the close of the Application List and/or the<br />
Placement Shares are fully subscribed or over-subscribed as at the close of the Application List, the<br />
successful applications for the Offer Shares will be determined by ballot or otherwise as determined by<br />
our Directors and approved by the SGX-ST.<br />
Placement Shares (Excluding Reserved Shares)<br />
Application for the Placement Shares may only be made by way of Application Forms. The terms and<br />
conditions and procedures for application and acceptance are described in Appendix A on pages A-1 to<br />
A-13 of this Prospectus.<br />
Pursuant to the terms and conditions in the Placement Agreement signed between our Company and the<br />
Joint Lead Placement Agents dated 12 March 2003, the Joint Lead Placement Agents have agreed to<br />
subscribe for or procure subscriptions for the Placement Shares at the Issue Price.<br />
In the event of an under-subscription for the Placement Shares as at the close of the Application List,<br />
that number of Placement Shares not subscribed for shall be made available to satisfy excess<br />
applications for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at<br />
the close of the Application List.<br />
Reserved Shares<br />
To recognise contributions to our Group, we have reserved up to 3,500,000 Placement Shares for<br />
subscription by the management and staff, business associates and those who have contributed to the<br />
success of our Group at the Reserved Share Price. These Reserved Shares are not subject to any<br />
moratorium and may be disposed of after the admission of our Company to the Official List of the SGX-<br />
ST. In the event that any of the Reserved Shares are not taken up, they will be made available to satisfy<br />
excess applications for the Placement Shares to the extent there is an over-subscription for the<br />
Placement Shares as at the close of the Application List or, in the event of an under-subscription for the<br />
Placement Shares as at the close of the Application List, to satisfy excess applications made by<br />
members of the public for the Offer Shares to the extent there is an over-subscription for the Offer<br />
Shares as at the close of the Application List.<br />
None of our Directors or Substantial Shareholder intends to subscribe for the Invitation Shares in the<br />
Invitation. To the best of our knowledge, we are unaware of any person who intends to subscribe for<br />
more than 5% of the Invitation Shares. However, through a book-building process to assess market<br />
demand for our Shares, there may be person(s) who may indicate his interest to subscribe for more than<br />
5% of the Invitation Shares. If such person(s) were to make an application for more than 5% of the<br />
Invitation Shares pursuant to the Invitation and subsequently allocated or allotted such number of<br />
Shares, we will make the necessary announcements at an appropriate time.<br />
Further, no Shares shall be allocated or allotted on the basis of this Prospectus later than six months<br />
after the date of this Prospectus.<br />
17
PROSPECTUS SUMMARY<br />
The following summary is qualified in its entirety by, and is subject to, the more detailed information and<br />
financial statements (including the notes thereto) appearing elsewhere in this Prospectus. Terms defined<br />
elsewhere in this Prospectus have the same meanings when used herein. Prospective investors should<br />
carefully consider all the information presented in this Prospectus, particularly the matters set out under<br />
“Risk Factors” beginning on page 24 of this Prospectus before making an investment decision.<br />
References in this Prospectus to “our Group”, “we”, “our”, and “us” refer to <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong><br />
<strong>Limited</strong> and its subsidiaries.<br />
OUR GROUP<br />
Our Company was incorporated in Singapore under the Companies Act (Chapter 50) of Singapore on 8<br />
September 1988 as a private limited company under the name of <strong>Ocean</strong> <strong>Sky</strong> Textile Pte <strong>Ltd</strong> (Company<br />
Registration number 198803225E). On 7 February 2003, our Company was converted into a public<br />
limited company and changed its name to <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong>.<br />
We are a global one-stop specialty apparel manufacturer with supply chain management (“SCM”)<br />
capabilities. With our headquarters in Singapore, our Group reaches out to customers globally through<br />
twelve strategically located production and sourcing operations around the world in Singapore, Malaysia,<br />
Cambodia, Brunei, Hong Kong, the PRC, Honduras, El Salvador and the US. For FY2001, we had a total<br />
production capacity of 2.9 million dozens and turnover of S$180 million. For FY2002, we had a total<br />
production capacity of 3.6 million dozens and estimated turnover of S$221 million.<br />
We manufacture a variety of specialty apparel for Men, Ladies, Kids, Babies and Infants in accordance<br />
with our customers’ requirements. The types of products we manufacture include T-shirts, polo-shirts,<br />
blouses, shorts, pants, skirts, dresses, jackets, cardigans, robes, undergarments, sleepwear, lounge<br />
wear, maternity wear, children’s wear, baby wear, baby blanket and bibs. We are equipped to handle a<br />
wide assortment of fabrics such as interlock, fancy ribs, jacquard and French ferry.<br />
While concentrating on our core business of specialty apparel manufacturing, we are expanding rapidly<br />
into related activities, such as providing SCM services ranging from sourcing of raw materials prior to the<br />
manufacturing process to logistic management of our manufactured goods. We have also set up a<br />
knitting plant in the US to provide additional SCM services. Developing SCM services and expansion into<br />
related activities are in line with our plans to provide our customers with better and faster services, since<br />
we will have better control over the quality and supply of raw materials, as well as timely delivery of<br />
manufactured goods to our customers.<br />
Timely delivery is further enhanced by the strategic location of our global operations. Having production<br />
operations near to the place of delivery of the finished goods means that we are able to make fast and<br />
timely deliveries at relatively low transport costs. Having global production and sourcing operations also<br />
mean that we are able to source for good quality raw materials at competitive prices, thus maintaining<br />
high quality of our finished products at competitive prices. To manage the large scale global operations,<br />
we have implemented production tracking systems internally to further ensure that we keep track of our<br />
productions and that our delivery deadlines are met.<br />
Our global operations also allow us to serve customers throughout the world, thus allowing us to support<br />
a wide and varied customer base. In addition, our compliance with social and environmental obligations<br />
(such as to keep our factories pollution-free and ensure that there are no instances of exploitation of<br />
labour) also attracted and retained customers who are concerned about socio-environmental issues. Our<br />
Group has a portfolio of client base which includes mainly well-known international companies such as<br />
Gap Inc., May Department Stores, Sears, Mervyn’s, Target, Foot Locker, Inc., Phillips-Van Heusen and<br />
Eddie Bauer, Inc.<br />
In the Year 2002 Enterprise 50 Awards, an annual event organised by Accenture and The Business<br />
Times with support of the Economic Development Board, we were ranked 4th position amongst the best<br />
50 local enterprises.<br />
18
The next phase of our growth will see us expanding the scope of our SCM services and also into other<br />
domains of the value chain of apparel business, such as fabric manufacturing and processing. We will<br />
also expand beyond our existing markets. We will continue our commitment to produce high quality<br />
products and implement internal control and tracking systems that will improve our efficiency and<br />
productivity. Details of our prospects and future plans are set out on pages 57 to 58 of this Prospectus<br />
under the heading “Prospects and Future Plans”.<br />
Our principal and registered office is located at 22 Tampines Street 92, Singapore 528876. Our telephone<br />
number is (+65) 6789-9988 and our internet website is at http://www.oceanskyintl.com. Information<br />
contained in our website does not constitute part of this Prospectus.<br />
19
THE INVITATION<br />
Issue Size : 92,000,000 Invitation Shares comprising 9,200,000 Offer Shares and<br />
82,800,000 Placement Shares. The Invitation Shares will, upon issue and<br />
allotment, rank pari passu in all respects with our existing issued Shares.<br />
Issue Price : S$0.23 for each Invitation Share (except in the case of the Reserved<br />
Shares to be offered to the management and staff, business associates<br />
and those who have contributed to the success of our Group, where the<br />
price is $0.21 for each such Reserved Share).<br />
Purpose of Invitation : Our Directors consider that the listing and quotation of our Shares on the<br />
Official List of the SGX-ST will enhance our public image and enable us<br />
to tap the capital markets for the expansion of our business operations.<br />
The Invitation will also provide the members of the public, our Group’s<br />
management, staff, business associates and those who have contributed<br />
to the success of our Group with an opportunity to participate in the<br />
equity of our Company.<br />
Use of Proceeds : The net proceeds attributable to us from the issue of our New Shares<br />
(after deducting the estimated expenses in relation to the Invitation) will<br />
be approximately S$19.3 million. We intend to use the net proceeds for<br />
the following purposes:-<br />
(i) approximately S$6.0 million for the setting up and expansion of<br />
production facilities in locations such as Central America, the<br />
PRC, Brunei and Cambodia;<br />
(ii) approximately S$4.0 million for our expansion through potential<br />
acquisitions, joint ventures and/or strategic alliances in fabric and<br />
textile manufacturing, where the opportunity arises, failing which<br />
the funds will be used for our general working capital<br />
requirements;<br />
(iii) approximately S$1.5 million for investment in developing<br />
embroidery and screen printing services;<br />
(iv) approximately S$2.1 million to finance our knitting plant in the US;<br />
and<br />
(v) approximately S$0.5 million for the expansion and improvement of<br />
our pre-manufacturing supply chain management services in the<br />
areas of fabric & accessories sourcing, product development,<br />
design & trend services and technical & sampling;<br />
(vi) approximately S$3.0 million for the implementation of the new ERP<br />
and real-time production systems;<br />
(vii) the balance for use as general working capital for our Group.<br />
While we have from time to time had preliminary discussions regarding<br />
potential investments, joint ventures and acquisitions in the ordinary<br />
course of our business, we do not currently have any agreements or<br />
understandings to make any such investment, joint venture or acquisition.<br />
20
Pending the deployment of the net proceeds from the Invitation as<br />
aforesaid, the net proceeds may be used to invest in short term money<br />
market instruments, certificates of deposit, time deposits, other shortterm,<br />
interest-bearing instruments, or to repay short-term bank<br />
borrowings, as our Directors may deem fit.<br />
Reserved Shares : Up to 3,500,000 of the Placement Shares will be reserved for our<br />
management and staff, business associates and those who have<br />
contributed to our success. In the event that any of the Reserved Shares<br />
are not taken up, they will be made available to satisfy applications for<br />
the Placement Shares, or in the event of an under-subscription of the<br />
Placement Shares, to satisfy excess applications for the Offer Shares.<br />
Listing Status : Our Shares will be quoted on the SGX-ST, subject to our admission to<br />
the Official List of the SGX-ST and permission for dealing in and for<br />
quotation for our Shares being granted by the SGX-ST.<br />
21
ISSUE PRICE<br />
ISSUE STATISTICS<br />
NET TANGIBLE ASSETS (“NTA”)<br />
NTA per Share, based on the audited balance sheet of our Group as at 30<br />
June 2002, adjusted for the payment of interim dividend and the Capitalisation<br />
Exercise referred to on page 31 of this Prospectus:-<br />
– Before adjusting for the estimated net proceeds from the Invitation and<br />
based on the pre-Invitation share capital of 293,661,720 Shares<br />
– After adjusting for the estimated net proceeds from the Invitation and<br />
based on the post-Invitation share capital of 385,661,720 Shares<br />
Premium of Issue Price over NTA per Share as at 30 June 2002<br />
– Before adjusting for the estimated net proceeds from the Invitation and<br />
based on the pre-Invitation share capital of 293,661,720 Shares<br />
– After adjusting for the estimated net proceeds from the Invitation and<br />
based on the post-Invitation share capital of 385,661,720 Shares<br />
EARNINGS<br />
Historical net earnings per Share for FY2001 based on the pre-Invitation share<br />
capital of 293,661,720 Shares<br />
Adjusted historical net earnings per Share for FY2001 had the service<br />
agreements been in place from the beginning of FY2001 and based on the<br />
pre-Invitation share capital of 293,661,720 Shares<br />
Estimated net earnings per Share for FY2002 based on the pre-Invitation<br />
share capital of 293,661,720 Shares<br />
NET OPERATING CASH FLOW (1)<br />
Historical net operating cash flow per Share for FY2001 based on the pre-<br />
Invitation share capital of 293,661,720 Shares<br />
Adjusted historical net operating cash flow per Share for FY2001 had the<br />
service agreements been in place from the beginning of FY2001 and based on<br />
the pre-Invitation share capital of 293,661,720 Shares<br />
PRICE EARNINGS RATIO (2)<br />
Historical price earnings ratio based on the historical net earnings per Share<br />
for FY2001<br />
Adjusted price earnings ratio based on the adjusted historical net earnings per<br />
Share for FY2001 had the service agreements been in place from the<br />
beginning of FY2001<br />
Estimated price earnings ratio based on the unaudited net earnings per Share<br />
for FY2002<br />
22<br />
: S$0.23<br />
: S$0.07<br />
: S$0.10<br />
: 228.8%<br />
: 122.6%<br />
: S$0.032<br />
: S$0.029<br />
: S$0.047<br />
: S$0.051<br />
: S$0.048<br />
: 7.1 times<br />
: 8.0 times<br />
: 4.9 times
PRICE TO CASH FLOW RATIO<br />
Historical price to net operating cash flow based on the historical net operating<br />
cash flow per Share for FY2001<br />
Adjusted price to net operating cash flow based on the adjusted historical net<br />
operating cash flow per Share for FY2001 had the service agreements been in<br />
place from the beginning of FY2001<br />
Notes :-<br />
(1) Net operating cash flow is defined as profit after taxation attributable to Shareholders after<br />
adding back amortisation, depreciation and loss on disposal of fixed assets.<br />
(2) Had the Service Agreements set out on page 73 of this Prospectus been effected at the<br />
beginning FY2001, the estimated total remuneration for the Directors would have been<br />
S$2,870,000 instead of S$1,521,000, and profit after tax in respect of FY2001 would have<br />
been S$8,477,000, instead of S$9,496,000. The adjusted net earnings per Share for<br />
FY2001 based on the pre-Invitation share capital of 293,661,720 Shares would have been<br />
S$0.029 instead of S$0.032. The adjusted price earning ratio in FY2001 would have been<br />
8.0 times instead of 7.1 times.<br />
23<br />
: 4.5 times<br />
: 4.8 times
RISK FACTORS<br />
You should carefully evaluate each of the following considerations and all of the other information set<br />
forth in this Prospectus before deciding to invest in the Invitation Shares. Some of the following<br />
considerations relate principally to the industry in which we operate and our business in general. Other<br />
considerations relate principally to general economic and political conditions, the securities market and<br />
ownership of the Invitation Shares, including possible future dilution in value of our Shares.<br />
If any of the following considerations and uncertainties develop into actual events, our business, financial<br />
condition or results of operations could be materially adversely affected. In such case, the trading price of<br />
our Shares could decline due to any of these considerations, and you may lose all or part of your<br />
investment.<br />
RISKS RELATING TO OUR INDUSTRY AND OUR BUSINESS<br />
We operate in a competitive environment<br />
We operate in a competitive environment. If we are not able to compete effectively with our competitors,<br />
for example, as regard to quality and services, our profitability and prospects will be severely affected.<br />
We cannot ensure that we will be able to compete successfully in the future against our existing or<br />
potential competitors or that our business, financial condition and results of operations will not be<br />
adversely affected by increased competition.<br />
We are affected by political, social, economic and regulatory conditions in the countries where we<br />
operate<br />
Our Group’s head office is located in Singapore. We have operations in Singapore, Cambodia, Malaysia,<br />
Brunei, El Salvador, Honduras, the US, Hong Kong and the PRC. Our customers and suppliers are<br />
located throughout the world, such as the US, Europe and Asia. We are affected by the political, social<br />
and economic conditions in the countries in which we operate and/or where our customers and suppliers<br />
are located. Factors such as fluctuations in exchange rates, economic recession, inflation, changes in<br />
governmental or regulatory policies, labour conditions, implementation of import and export controls and<br />
in policies on foreign investments can affect our operations and financial results. Our revenue and profits<br />
will be adversely affected if there is any change in policies and/or other economic and/or political<br />
developments that have a negative impact on our operations and business.<br />
We are exposed to risks associated with setting up new operations in new territories<br />
We have plans to expand our operations into new territories and diversify our operations. These future<br />
expansion plans may subject us to additional risks in managing such foreign operations. These risks may<br />
relate to human resource issues like staff recruitment and training, and other operational matters such as<br />
the development of new markets with customers, consultants and suppliers. We may also incur<br />
unexpected or additional costs which may affect the results of our operations. Other risks may include<br />
adoption and/or expansion in government policies, limitations on repatriation of profits and unanticipated<br />
changes in regulatory requirements. These uncertainties may have an adverse impact on the profitability<br />
of our Group.<br />
Our subsidiaries’ abilities to pay out dividends to us is subject to various restrictions<br />
Our Company’s significant assets are our equity interests in our subsidiaries. The ability of our<br />
subsidiaries to pay dividends or make other distributions to us may be restricted by, among other things,<br />
the availability of funds, the terms of various credit arrangements entered into by such subsidiaries, as<br />
well as statutory and other legal restrictions. In addition, although there are currently no foreign exchange<br />
control regulation which restrict the ability of our subsidiaries to distribute dividends to us, we cannot<br />
guarantee that the relevant regulations will not be changed and that the ability of our subsidiaries to<br />
distribute dividends to us will not be restricted in the future. In such event, there could be an adverse<br />
impact on our ability to pay out dividends to Shareholders.<br />
24
Our taxation status may be subject to change<br />
Our operational subsidiaries in Cambodia, Brunei, Honduras and El Salvador have been granted tax<br />
exempt status. Our operational subsidiaries in El Salvador and Honduras have been tax exempted since<br />
their incorporation in 2000 (for a period of 10 years) and 2001 (for a period of 20 years) respectively,<br />
while our subsidiaries in Cambodia and Brunei have been granted tax exempt status from mid-2001 (for<br />
a period of 3 years) and beginning of 2002 (for a period of 8 years) respectively. Tax exemption in these<br />
four countries resulted in tax savings amounting to approximately 6.9% of our Group’s estimated profit<br />
before tax in 2002. There is no assurance that the aforesaid tax treatments will not change in the future.<br />
If there are any changes in the tax treatments under the applicable tax laws in the aforementioned<br />
jurisdictions, our Group’s performance and profitability may be adversely affected.<br />
We are susceptible to fluctuations in foreign exchange rates which could result in us incurring<br />
foreign exchange losses<br />
Our revenue and a significant proportion of our costs are denominated in US$.<br />
Notwithstanding the fact that we have a natural hedge between our revenue and purchases, any<br />
significant fluctuations in the US$ against the respective local currencies of our subsidiaries arising from<br />
timing differences due to credit terms given by our suppliers and by us to our customers, would result in<br />
us incurring foreign exchange losses.<br />
In view of the nature of our business which spans several countries, foreign exchange risks will continue<br />
to be an integral aspect of our risk profile in the future.<br />
For more information on our foreign exchange gains and losses, please refer to page 131 of our<br />
Accountants’ Report.<br />
We may be unable to secure sufficient export quota<br />
Apparel manufacturers in certain exporting countries (including Cambodia, Singapore and Malaysia) are<br />
allotted a quota by the local trade departments on the amount of apparel products they can produce for<br />
export to the US. Therefore, our Group’s ability to export from these countries is dependent on our ability<br />
to secure the required level of quota. There can be no assurance that we will continue to be allocated the<br />
level of quota as we currently hold. Such quota requirements are effective up to 31 December 2004. If<br />
we are unable to secure sufficient export quota, our revenue and profitability may be affected.<br />
We are reliant on the US market<br />
For each of the three financial years ended 1999, 2000 and 2001, sales of our Group’s products to the<br />
US, which is the largest market of our Group, accounted for over 90% of our Group’s turnover. Our<br />
Group’s sales and profitability will be adversely affected by any economic, political, regulatory or social<br />
factors, or any domestic security concerns, which may result in a downturn in the US economy or affect<br />
our ability to export to the US.<br />
Our operations can be affected by natural disasters in Central America<br />
Our operations in El Salvador and Honduras in Central America can be affected by the occurrence of<br />
natural disasters which might destroy the infrastructure and transport systems of the countries and in<br />
turn affect our operations. Depending on the extent of destruction should it occur, our operations in those<br />
countries may be disrupted and in turn the profitability of our Group might be affected. While we have<br />
insurance cover against losses arising from such natural disasters, we cannot ensure that such<br />
insurance will be sufficient to fully indemnify us against all such losses.<br />
Product liability<br />
We are subject to laws and regulations relating to manufacturer’s liability arising out of our goods<br />
exported to our customers in the US. Where required by our customers, we take up product liability<br />
insurance against such liability. There is no certainty that such insurance will be sufficient to fully<br />
indemnify us against all such liabilities.<br />
We are dependent on foreign labour in Brunei<br />
Brunei accounts for about 25% of our current manufacturing capacity and a substantial proportion of our<br />
workforce in Brunei are foreign workers. If there are any changes in the regulations in Brunei with regard<br />
to foreign labour laws resulting in us being unable to source for sufficient labour, our performance and<br />
profitability will be affected.<br />
25
We are dependent on our major customers<br />
Our Group’s sales to our top major customer, Gap Inc., under its three international brand names are as<br />
follows:-<br />
Name Of Brand FY1999 FY2000 FY2001<br />
% % %<br />
Old Navy 34.1 32.0 47.2<br />
Gap 37.6 30.5 18.8<br />
Banana Republic – – 6.4<br />
Although these brands have been awarding us contracts for the manufacture of their apparels, they are<br />
not bound to do so as our Group has not formally entered into any long term sales contracts with them.<br />
There is no assurance that these brands, for whatever reasons, will not reduce orders or our selling price<br />
significantly with our Group in the future. As such, our Group’s operations and profitability may be<br />
adversely affected should any of these brands reduce their orders or our selling price significantly.<br />
We are exposed to credit risks of our customers<br />
As at 31 December 2001, our trade receivables of S$13.7 million accounted for approximately 28.3% of<br />
our current assets. Therefore, our financial position and profitability is dependent on the credit<br />
worthiness of our customers. Whilst we have not encountered any significant bad debts for the last three<br />
financial years ended 1999, 2000 and 2001, there is no assurance that risks of default by our customers<br />
will not increase in the future.<br />
We are reliant on certain key personnel<br />
Our Group’s success has been attributable to the vision, expertise and managerial skills of Mr Ang Boon<br />
Cheow Edward and Mr Ang Boon Chong. The loss of their services without any timely replacements<br />
could have an adverse effect on our operations and consequently our profitability.<br />
RISKS RELATING TO OWNERSHIP OF OUR SHARES<br />
Our Shares have never been traded publicly before and this Invitation may not result in an active<br />
or liquid market for our Shares. The market prices of, and trading volumes in, our Shares may be<br />
volatile which could negatively affect an investment in our Shares.<br />
Prior to this Invitation, there was no public market for our Shares. We have applied to have our Shares<br />
listed and quoted on the SGX-ST. The SGX-ST listing and quotation does not, however, guarantee that a<br />
trading market for our Shares will develop or, if a market does develop, the liquidity of that market for our<br />
Shares. Therefore, we cannot predict whether an active trading market for our Shares will develop or how<br />
liquid that market might become. The trading prices and trading volume of our Shares may also face<br />
such volatility after it is listed and quoted on the SGX-ST that it could have a negative effect on the<br />
investment of our Shares.<br />
The Invitation Price has been determined through negotiations between us and the Manager based on<br />
several factors and may not be indicative of the market price for Shares after the Invitation. The market<br />
price of our Shares may be significantly affected by, among others, the following factors:<br />
� our Group’s actual or anticipated results of operations;<br />
� new services or products offered by us or our competitors;<br />
� announcements by us or our competitors of significant contracts, acquisitions, partnerships, joint<br />
ventures or capital commitments;<br />
� the loss of a major client or supplier;<br />
� additions or departures of key personnel;<br />
26
� changes in, or our failure to meet, securities analysts’ expectations;<br />
� changes in market valuations of other similar companies;<br />
� legislative and regulatory developments affecting the apparel and textile industries;<br />
� developments in the apparel and textile industries;<br />
� investor perception of investments relating to Asia;<br />
� broad share price fluctuations;<br />
� involvement in litigation; and<br />
� general market conditions and other factors beyond our control.<br />
Future sales of our Shares could affect our Share price<br />
Any future sale or availability of the Shares can have a downward pressure on our share price.<br />
There will be 385,661,720 Shares immediately following the Invitation. Such Shares, except for those<br />
under moratorium, may be sold in the public market in Singapore. Please refer to “Moratorium” on page<br />
92 of this Prospectus for more details on the moratorium.<br />
The sale of a significant number of Shares, including these Shares which are subject to moratorium, in<br />
the public market after the Invitation, or the perception that such sales may occur, could materially and<br />
adversely affect the market price of the Shares. These factors would also affect our ability to raise funds<br />
in new Share offerings.<br />
Except otherwise described in the section entitled “Moratorium” in this Prospectus, there will be no<br />
restrictions on the ability of the substantial Shareholders to sell their Shares either on the SGX-ST or<br />
otherwise.<br />
Overseas Shareholders may not be able to participate in rights offerings or certain other equity<br />
issues<br />
If we offer or cause to be offered to holders of our Shares rights to subscribe for additional Shares or any<br />
right of any other nature, we will have discretion or we may be subject to regulations as to the procedure<br />
to be followed in making such rights available to holders of Shares or in disposing of such rights for the<br />
benefit of such holders and making the net proceeds available to such holders. We may not offer such<br />
rights to the holders of Shares having an address in jurisdictions outside Singapore. Accordingly,<br />
Shareholders having an address outside Singapore may be unable to participate in rights offerings and<br />
may experience a dilution in their holdings as a result.<br />
New investors will incur immediate dilution and may experience further dilution<br />
The Invitation Price of our Shares is substantially higher than the NTA per share of S$0.10 (after the<br />
payment of interim dividend and adjusted for the net proceeds from the Invitation) as at 30 June 2002. If<br />
we were liquidated for NTA immediately following this Invitation, each shareholder subscribing to this<br />
Invitation would receive less than the price they paid for their shares. In addition, we have or intend to<br />
grant our employees share options to acquire our shares under the scheme adopted by us. To the extent<br />
such outstanding options are ultimately exercised, there will be further dilution to investors participating in<br />
this Invitation.<br />
We may require additional funding for our future growth which might lead to dilution<br />
Our operating expenses and capital requirements can be affected by (1) the success of our operations;<br />
(2) the level of resources to attract, maintain and expand our customer base and maintain our<br />
infrastructure and facilities; and (3) the need to incorporate the latest technologies and enhance our<br />
operational capabilities.<br />
27
Accordingly, the timing and the quantum of such operating expenses and capital expenditure cannot be<br />
accurately predicted.<br />
If we require additional funding, we may raise capital by issuing equity or debt securities or by borrowing<br />
funds from banks or other sources. We cannot assure you that any additional financing we may need will<br />
be available on terms favourable to us. In addition, any additional capital raised through the sale of equity<br />
may dilute your equity interest in us. An issue of Shares or other securities in the case of a rights issue<br />
requires additional investment by Shareholders. Further, an issue of Shares below the then prevailing<br />
market price will also affect the value of the Shares then held by Shareholders.<br />
It is also possible that our subsidiaries may need to raise capital independently from us, in which case<br />
we would have to either raise capital to fund our portion of such a capital-raising transaction or suffer a<br />
dilution of our interest in those subsidiaries. Any additional debt-financing may contain restrictive<br />
covenants with respect to dividends, future fundraising exercises and other financial and operational<br />
matters. If we are unable to secure additional funds when required to meet our business requirements,<br />
we may not be able to, amongst others:<br />
� fully realise our future plans;<br />
� create additional market-specific business units;<br />
� attract, train and retain key professionals;<br />
� enhance our manufacturing capabilities through adoption of new technologies; and<br />
� respond to competitive pressures or unanticipated requirements,<br />
in which case our business results would suffer.<br />
28
EXCHANGE RATES<br />
Our revenues and a significant proportion of our costs are in USD but our financial statements are in S$.<br />
As a result, the USD to S$ exchange rate is important to us and can result in significant exchange gains<br />
or losses.<br />
The following table set forth, for the fiscal periods indicated, the exchange rates between S$ and USD<br />
adopted or used by our Group based on the rates as listed in The Business Times for the relevant period.<br />
The tables illustrate how many S$ it would take to buy one USD. These transactions should not be<br />
construed as a representation that those S$ or USD amounts could have been, or could be, converted<br />
into USD or S$ respectively, as the case may be, at any particular rate, the rate stated below, or at all.<br />
Currently, there are no exchange control restrictions in Singapore in respect of USD.<br />
S$ per USD<br />
Average Period End<br />
Financial year ended 31 December 1999 1.694 1.667<br />
Financial year ended 31 December 2000 1.730 1.737<br />
Financial year ended 31 December 2001 1.790 1.850<br />
6 months period ended 30 June 2002 1.790 1.770<br />
29
We do not have a fixed dividend policy.<br />
DIVIDEND POLICY<br />
Our Company may, by ordinary resolution, declare dividends at a general meeting, but it may not pay<br />
dividends in excess of the amount recommended by our Directors. Our Directors may declare an interim<br />
dividend without seeking Shareholders’ approval. On 9 December 2002, we declared an interim dividend<br />
of $6.0 million, which has been paid to the then registered shareholders of our Company. Our Company<br />
shall pay all dividends out of our profits or in accordance with Section 69 of the Companies Act.<br />
Our Directors, intend, subject to the factors stated herein and in the absence of any circumstances which<br />
might reduce the amount of revenue reserve available to pay dividends, to recommend and distribute not<br />
less than 25% of our net profit attributable to Shareholders as dividends for the year ending 31<br />
December 2003 (the “Proposed Dividend”). However, investors should note that all the foregoing<br />
statements, including the statements on the Proposed Dividend, are merely statements of our present<br />
intention and shall not constitute legally binding statements in respect of our future dividends which may<br />
be subject to modification (including reduction or non-declaration thereof) in our Directors’ sole and<br />
absolute discretion. Investors should not treat the Proposed Dividend as an indication of our Group’s<br />
future dividend policy. No inference should or can be made from any of the foregoing statements as to<br />
our actual future profitability or ability to pay dividends in any of the periods discussed.<br />
In making their recommendation for future cash dividends, our Directors will consider, among other<br />
things, our future earnings, operations, capital requirements, cash flow and financial conditions, as well<br />
as maximising shareholders’ value, general business conditions and other factors which they may<br />
consider appropriate.<br />
30
CAPITALISATION AND INDEBTEDNESS<br />
In connection with the Invitation, we carried out the Capitalisation Exercise which involved the following:<br />
(i) the capitalisation of $12,013,086 out of retained profits, and $636,500 out of share premium<br />
account for a bonus issue of 12,649,586 ordinary shares of $1 each; and<br />
(ii) the sub-division of each ordinary share of S$1.00 in the existing authorised and issued and paidup<br />
share capital into 20 ordinary Shares of S$0.05 each (“Sub-division of Shares”).<br />
The following table shows our bank and cash balances, capitalisation and indebtedness as at 30<br />
September 2002:-<br />
� on an actual basis after the payment of interim dividends; and<br />
� as adjusted to give effect to the application of net proceeds from the Invitation.<br />
You should read this table in conjunction with:-<br />
� our consolidated financial statements and the related notes included in this Prospectus; and<br />
� the section in this Prospectus entitled “Management’s Discussion and Analysis of Financial<br />
Condition and Results of Operations.”<br />
As at<br />
30 September 2002 As Adjusted for the<br />
(Unaudited) Proceeds of the Invitation<br />
$’000 $’000<br />
Cash and cash equivalents 15,597 34,897<br />
Borrowings<br />
Secured :<br />
Short-term portion of long-term loans 486 486<br />
Long-term loans 3,696 3,696<br />
Short-term borrowings 35,064 35,064<br />
Finance lease creditors 2,737 2,737<br />
Total borrowings 41,983 41,983<br />
Shareholders’ equity<br />
Issued and paid-up capital 2,000 19,283<br />
Share application account 670 (2) –<br />
Share premium account – 14,700<br />
Reserves 26,447 (1) 14,434<br />
Total shareholders’ equity 29,117 48,417<br />
Total capitalisation and indebtedness 71,100 90,400<br />
Note :<br />
(1) Adjusted for payment of interim dividend of $6 million.<br />
(2) 33,500 ordinary shares of S$1 each were issued on 10 December 2002 at an average premium of S$19 per share.<br />
As at 31 January 2003, we have cash and cash equivalents of $15,273,000. We have secured short-term<br />
loans of $1,214,000, secured long-term loans of $5,096,000, unsecured short-term borrowings of<br />
$25,082,000 and unsecured finance lease creditors of $3,001,000.<br />
31
As at 31 January 2003, our Group have capital commitments of $2,335,000 and operating lease<br />
commitments of $23,414,000.<br />
The term loans are secured by way of a legal charge over our Company’s leasehold property at 22<br />
Tampines Street 92, Singapore 528876, a subsidiary’s freehold property at 3043, Yorkshire Way, Rowland<br />
Heights, California 91748, US and a fixed deposit amounting to $713,000. The remaining facilities are<br />
being secured by personal guarantees provided by certain of our Executive Directors and we will proceed<br />
to procure the discharge of these personal guarantees. Should we be unable to procure the discharge of<br />
these personal guarantees, the respective Executive Directors will continue to give such personal<br />
guarantees. Our Directors are of the view that it is unlikely that there will be any significant change in the<br />
interest rates or amounts of such facilities as a result of the discharge of these personal guarantees.<br />
As at 31 January 2003, the short-term borrowings bear interest rates ranging from 2.8% to 5.5% per<br />
annum.<br />
As at 31 January 2003, the secured term loans bear interest rates ranging from 2.65% to 5.86% per<br />
annum.<br />
Save as disclosed on page 30 of this Prospectus under the section “Dividend Policy”, we have not paid<br />
any dividend since 30 September 2002. Except for the changes in reserves due to the Capitalisation<br />
Exercise, profits earned and foreign currency translation adjustments after 30 September 2002, there are<br />
no other changes in our total capitalisation and indebtedness. Based on our shareholders’ equity of $29.1<br />
million as at 30 September 2002, our net gearing ratio, as defined by total indebtedness less cash and<br />
cash equivalents divided by shareholders’ equity, is 0.9 times.<br />
CONTINGENT LIABILITIES<br />
As at the date of lodgement of this Prospectus with the Authority, our Group has no contingent liabilities<br />
save as disclosed in the Accountants’ Report at page 135 of this Prospectus.<br />
32
DILUTION<br />
Dilution is the amount by which the Issue Price paid by the purchasers of our Shares in this Invitation<br />
exceeds our NTA per Share after the Invitation. The audited NTA per Share of our Group as at 30 June<br />
2002 after payment of interim dividend and before adjusting for the net proceeds from the Invitation<br />
based on our issued and paid up share capital of 293,661,720 Shares is approximately S$0.07 per<br />
Share. NTA per ordinary Share is determined by dividing our net tangible book value (total tangible<br />
assets less total liabilities) as at 30 June 2002 by the number of issued ordinary Shares at that date.<br />
Pursuant to the Invitation in respect of 92,000,000 New Shares at the Issue Price of S$0.23 per Share,<br />
our Group’s NTA per Share after payment of interim dividend and after adjusting for the estimated net<br />
proceeds from the Invitation and based on the post-Invitation issued and paid-up share capital of<br />
385,661,720 Shares will be S$0.10.<br />
This represents an immediate increase in NTA per Share of S$0.03 per Share to our existing<br />
Shareholders and an immediate dilution in NTA per Share of 0.13 per Share to our new investors. The<br />
following table illustrates this per Share dilution:<br />
Per Share ($)<br />
Offer Price per Share 0.23<br />
Net tangible book value per Share as of 30 June 2002 after payment of interim dividend 0.07<br />
Increase in net tangible book value per Share attributable to new investors 0.03<br />
Net tangible book value per Share after the Invitation 0.10<br />
Dilution in net tangible book value per Share to new investors 0.13<br />
The following table summarises as at the date of this Prospectus, the total number of shares issued by<br />
us, the total consideration paid to us and the average price paid per share by our existing Shareholders<br />
and to be paid by our new public investors in the Invitation.<br />
No. of Shares % Consideration % Average<br />
($’million) Price per Share<br />
($)<br />
Existing Shareholders 293,661,720 76.14 20.54 49.34 0.07<br />
New public investors 92,000,000 23.86 21.09 50.66 0.23<br />
33
SELECTED CONSOLIDATED FINANCIAL INFORMATION<br />
The following information should be read in conjunction with the full text of this Prospectus, including the<br />
Accountants’ Report. Our financial statements are prepared and presented in accordance with Singapore<br />
Accounting Standards.<br />
RESULTS OF OPERATIONS OF OUR GROUP<br />
Audited Unaudited Audited<br />
6 months 6 months<br />
period period<br />
ended 30 ended 30<br />
FY1999 FY2000 FY2001 June 2001 June 2002<br />
$’000 $’000 $’000 $’000 $’000<br />
Revenue 56,705 104,645 179,988 74,606 92,013<br />
Cost of sales (42,879) (82,289) (143,640) (57,582) (70,349)<br />
Gross profit 13,826 22,356 36,348 17,024 21,664<br />
Other operating income (1) 375 174 874 67 142<br />
Distribution costs<br />
Administrative and other operating<br />
(1,644) (3,088) (4,445) (2,021) (2,764)<br />
expenses (5,963) (11,008) (18,825) (7,417) (8,956)<br />
Profit from operations 6,594 8,434 13,952 7,653 10,086<br />
Finance costs (541) (1,494) (1,989) (1,000) (518)<br />
Share of results of associated company – (7) 18 – –<br />
Profit before taxation 6,053 6,933 11,981 6,653 9,568<br />
Taxation (1,649) (1,348) (2,430) (1,353) (1,916)<br />
Profit after taxation 4,404 5,585 9,551 5,300 7,652<br />
Minority interests – 25 (55) 48 –<br />
Profit attributable to the Shareholders 4,404 5,610 9,496 5,348 7,652<br />
Earnings per Share (cents) (2) 1.50 1.91 3.23 1.82 2.61<br />
Notes:-<br />
(1) Other operating income comprises mainly sales of excess apparel quota rights to other apparel manufacturers, interest<br />
income and other miscellaneous sales.<br />
(2) For comparative purposes, the net earnings per Share has been calculated based on profit attributable to Shareholders and<br />
on the pre-Invitation issued share capital of 293,661,720 Shares.<br />
34
FINANCIAL POSITION OF OUR GROUP<br />
Audited<br />
As at 31 December<br />
1999 2000 2001<br />
As at 30<br />
June 2002<br />
$’000 $’000 $’000 $’000<br />
Fixed assets 7,350 15,628 22,129 23,915<br />
Goodwill 20 17 – 1,496<br />
Associated companies – 43 61 –<br />
Investments 50 250 250 250<br />
Deferred expenditure 899 324 – 635<br />
8,319 16,262 22,440 26,296<br />
Current assets 17,435 31,208 48,308 77,860<br />
Current liabilities (18,777) (30,312) (42,117) (69,291)<br />
Net current (liabilities)/ assets (1,342) 896 6,191 8,569<br />
Non-current liabilities (1,675) (6,235) (6,986) (6,190)<br />
5,302 10,923 21,645 28,675<br />
Share capital 200 200 2,000 2,000 (2)<br />
Foreign currency translation reserve – (10) 513 (55)<br />
Share application account – – – 670 (2)<br />
Retained profits 5,102 10,712 18,408 26,060<br />
Shareholders’ equity 5,302 10,902 20,921 28,675<br />
Minority interests – 21 724 –<br />
5,302 10,923 21,645 28,675<br />
NTA per Share (cents) (1) 1.49 3.60 7.37 9.04<br />
Notes:-<br />
(1) For comparative purposes, the NTA per Share has been calculated based on the pre-Invitation share capital of 293,661,720<br />
Shares.<br />
(2) 33,500 ordinary shares of S$1 each were issued on 10 December 2002 at an average premium of S$19 per share.<br />
35
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND<br />
RESULT OF OPERATIONS<br />
The following discussion of our financial condition and results of operations should be read in conjunction<br />
with the Accountants’ Report, the Statement of Adjustments in relation to the Accountants’ Report and<br />
the related notes included elsewhere in this Prospectus. This discussion contains forward-looking<br />
statements that involve risks and uncertainties. Our actual results may differ from those projected in the<br />
forward-looking statements. Factors that might cause future results to differ significantly from those<br />
projected in the forward-looking statements include, but are not limited to, those discussed below and<br />
elsewhere in this Prospectus, particularly in “Risk Factors”.<br />
OVERVIEW<br />
We are primarily engaged in the business of manufacturers of specialty apparel for adults and children<br />
such as T-shirts, polo-shirts, blouses, shorts, pants, skirts, dresses, jackets, cardigans, robes,<br />
undergarments, sleepwear, lounge wear, maternity wear, children’s wear, baby wear, baby blanket and<br />
bibs.<br />
Our turnover and profit before taxation are mainly attributable to the manufacture of specialty apparel and<br />
the provision of related supply chain management (“SCM”) services. Our major market is the US market<br />
which makes up more than 90% of our total sales. The remaining turnover is derived from Europe,<br />
Japan and Canada markets.<br />
REVENUE<br />
Factors affecting our revenues are as follows:<br />
Ability to satisfy customers’ requirements<br />
Generally, our customers’ key requirements are timely delivery and quality. In the event that we are<br />
unable to satisfy these requirements, our sales will be adversely affected as these customers will reduce<br />
or minimize their orders to us.<br />
General economic condition of our market<br />
General economic conditions in our major market, the US, will affect consumers’ disposable income and<br />
spending patterns. Fluctuations in economic conditions will affect demand for our products.<br />
Seasonality factors<br />
We normally experienced higher sales in the second half of our financial year due to the year-end festive<br />
and holiday period. Approximately 55% to 60% of our sales are realised in the second half of the year.<br />
COST OF SALES<br />
Cost of sales comprises cost of direct materials, cost of direct labour, specialised support services and<br />
manufacturing overheads.<br />
Cost of direct materials comprises costs of fabric and accessories, freight inwards and laboratory testing<br />
expenses. They account for approximately 65% to 70% of our cost of sales. The production of fabric<br />
requires raw materials such as cotton. The cost of cotton is affected by market demand and supply and<br />
climatic conditions. Cost of direct labour accounts for approximately 20% to 25% of cost of sales. Direct<br />
labour comprises salaries and wages, statutory contributions, other staff costs of production and factory<br />
personnel and sub-contracting services. Direct labour costs are affected by wage levels, labour market<br />
conditions and government regulations such as pension fund contributions. Sub-contracting services are<br />
for outsourcing work which supplement our own manufacturing activities. Specialised support services<br />
comprise embroidery, screen printing and special garment treatment. Such charges account for<br />
approximately 3% to 8% of our cost of sales. Manufacturing overheads, accounting for approximately 5%<br />
to 8% of our cost of sales, comprise depreciation, rental, utilities, staff welfare, factory supplies, quota<br />
entitlements, repairs and maintenance.<br />
36
OPERATING EXPENSES<br />
Our operating expenses consist of the following:<br />
Distribution costs comprise transport and freight charges relating to exports.<br />
Administrative and other operating expenses comprise expenses from general administration, marketing,<br />
merchandising, finance, shipping and logistics, management information system, technical, product<br />
development, purchasing and production planning departments. The expenses also include bank<br />
charges, courier charges, depreciation, salaries and remuneration and statutory contributions, insurance,<br />
office supplies, staff welfare, telecommunications, travelling, utilities and exchange differences.<br />
Finance costs comprise interest payable to banks and finance companies.<br />
REVIEW OF PERFORMANCE<br />
FY1999 TO FY2000<br />
The increase of 84.5% in turnover to $104.6 million in FY2000 as compared to FY1999 was attributed to<br />
the following factors:<br />
(a) increased orders from existing customers; and<br />
(b) the setting up of our own Hong Kong marketing and sourcing subsidiary which help us to secure<br />
new customers such as Foot Locker, Inc.<br />
Cost of sales increased in FY2000 as a result of the increase in turnover. Sub-contracting charges as a<br />
percentage of turnover was higher in FY2000 compared with FY1999 due mainly to utilisation of subcontracting<br />
services in Brunei to meet customers’ orders while our second factory was still under<br />
construction. However, this increase in sub-contracting charges was partially offset by savings in labour<br />
costs.<br />
Operating expenses were 14.9% of turnover in FY2000 compared with 14.4% in FY1999. The marginal<br />
increase was due mainly to bank charges and interest expense due to the increase usage of bank<br />
facilities to support our business growth. The higher bank interest was also the result of a term loan<br />
taken up to finance the purchase of our Singapore premises at Tampines Street 92 which act as the<br />
Group headquarters. This was offset by a lower rate of increase in salaries and wages. Distribution<br />
costs as a percentage of our operating expenses remained unchanged.<br />
Profit before taxation increased by 14.5% from S$6.1 million to S$6.9 million. The rate of increase was<br />
lower than the rate of increase in turnover due mainly to lower gross profit margin. Our lower gross profit<br />
margin arose from the higher sub-contracting charges incurred during the period.<br />
FY2000 TO FY2001<br />
Our turnover increased by 72% to $180 million in FY2001 as compared with FY2000. We were able to<br />
secure additional orders from existing customers such as Old Navy (a label of Gap, Inc.) because of our<br />
standing as a reliable vendor and our ability to satisfy customers’ requirements.<br />
Other income increased primarily due to sales of excess quota rights of S$391,000 in FY2001 compared<br />
with only S$61,000 in FY2000. Such sales of excess quota rights do not contribute significantly to our<br />
business.<br />
The increase in cost of sales was in line with the increase in turnover. As our Brunei operations became<br />
fully operational, we reduced our reliance on sub-contracting services and hence incurred lower subcontracting<br />
charges. However, our labour costs and other factory overheads, such as factory rental, as<br />
a percentage of turnover increased because our new plants in El Salvador and Honduras were not<br />
operating at the optimal level during their start-up phase.<br />
37
Operating expenses were 14.0% of turnover in FY2001 compared with 14.9% in FY2000. The decrease<br />
in operating expenses ratio (expressed as a percentage of turnover) was due to decrease in distribution<br />
costs and bank charges and interest. The decrease in distribution costs was due to our ability to<br />
negotiate and secure lower transportation rates from the transport companies. Bank charges and<br />
interest expense registered a lower rate of increase due to lower utilisation of banking facilities because<br />
of funds generated from operations and lower interest rates. The decrease was partly offset by increase<br />
in our salaries and wages expenses due to the increase in headcount to support our expansion.<br />
Our profit before taxation increased to S$12 million in FY2001. Despite the lower gross profit margin, we<br />
were able to maintain the profit before taxation margin due to savings in operating expenses.<br />
PERIOD ENDED 30 JUNE 2002 COMPARED WITH PERIOD ENDED 30 JUNE 2001<br />
Our turnover increased by 23% in HY2002 over the same period in HY2001 due to the factories in El<br />
Salvador, Honduras and Brunei becoming fully operational and the higher level of productivity in all our<br />
plants. The higher turnover was also the result of sales contributed by new customers such as Phillips-<br />
Van Heusen and our added extension of SCM services to our customers.<br />
Our gross profit margin increased to 23.5% as compared to 22.8% in the previous corresponding period.<br />
With better production planning, we performed most of the manufacturing in-house and hence incurred<br />
lower sub-contracting charges.<br />
Operating expenses were 13.3% of turnover in HY2002 compared with 14.0% in HY2001. The decrease<br />
in operating expenses ratio was due to lower interest expense arising from lower utilisation of banking<br />
facilities. The decrease in interest expenses was also due to lower interest rates enjoyed by our Group in<br />
HY2002 as compared to HY2001. The decrease in interest expenses was partly offset by a marginal<br />
increase in distribution costs due to some air shipment to meet customers’ delivery schedule.<br />
Our profit before taxation increased by 43.8% from $6.7 million to $9.6 million. This was due to the<br />
increase in turnover and gross profit and better control of operating expenses.<br />
38
REVIEW OF FINANCIAL POSITION<br />
30 June 2002 vs 31 December 2001<br />
Non-current assets<br />
Fixed assets comprise land and buildings, building improvements and electrical fittings, furniture and<br />
fittings, motor vehicles, plant and machinery, factory and office equipment and motor vehicles. During the<br />
period, the Group acquired fixed assets amounting to $3.5 million. These additions to fixed assets consist<br />
mainly of a residential property in US and additional plant, machinery and equipment in our existing<br />
plants. This was offset by depreciation charge and currency realignment of $1.7 million. Therefore, this<br />
resulted in a net increase in fixed assets of $1.8 million for the period.<br />
Investments of $250,000 comprise club membership of $100,000 in a golf club and an investment in a<br />
unit trust managed by a bank of $150,000. There was no change during the 6 months period ended 30<br />
June 2002.<br />
Goodwill represents mainly goodwill on consolidation arising from the acquisition of the remaining 30%<br />
interest in PDAC in Brunei of approximately $1.6 million less amortisation of approximately $0.1 million.<br />
This acquisition was made because of PDAC’s importance as a manufacturing facility, performance and<br />
tax-exempt status. This will also enable us to have full operational and management control of PDAC.<br />
Deferred expenditure represents the cost of export quota entitlements less amounts charged to the profit<br />
and loss account upon utilisation. During the period, the Group acquired export quota entitlements which<br />
can be utilised for the FY2002 to FY2004 period amounting to $0.8 million. This was offset by an<br />
amortisation charge of $0.2 million. As a result, there was an increase in deferred expenditure of $0.6<br />
million.<br />
Current assets<br />
Current assets consist mainly of inventories, trade debtors, other debtors, deposits and prepayments and<br />
cash and bank balances.<br />
Current assets increased by nearly $30 million from $48 million to $78 million. The increase was mainly<br />
due to the increase in inventories and trade debtors. The inventory balance of $34 million as at 30 June<br />
2002 comprise mainly raw materials and work-in-progress. This was maintained to meet higher<br />
production demand in second half of 2002.<br />
The increase in current assets was also a result of $17 million increase in trade debtors. As our accounts<br />
receivable collection period is between 30 to 45 days and due to the fact we also recorded higher<br />
turnover in the month of June 2002, our trade debtors increased.<br />
Current liabilities<br />
Current liabilities consist mainly of trade creditors, other creditors and accruals, finance lease creditors,<br />
amount due to bankers and provision for taxation.<br />
Current liabilities increased by $27 million from $42 million to $69 million. This was mainly due to<br />
increase in trade payables (trade creditors plus trust receipts) of $28 million and is consistent with the<br />
increase in sales volume in FY2002.<br />
39
Non-current liabilities<br />
Non-current liabilities consist of finance lease creditors, long-term bank loans and deferred taxation.<br />
There was a reduction in non-current liabilities of $0.8 million due mainly to repayments of the term loan<br />
in respect of the Singapore premises of $0.3 million and finance lease obligations of $0.6 million.<br />
Shareholders’ equity<br />
Shareholders’ equity comprises share capital, share application account, foreign currency translation<br />
reserve and retained profits.<br />
Shareholders’ equity increased from $21.6 million as at 31 December 2001 to $28.7 million as at 30 June<br />
2002. The share application account is in respect of the issue of 33,500 shares of S$1 each at an<br />
average premium of $19 per share. Upon issue of the shares in December 2002, the amount of<br />
$636,500 was transferred to share capital and share premium accounts. The increase in retained profits<br />
was due to the profit for the period of $7.7 million. At the same time, the Group incurred a foreign<br />
currency translation loss of $0.6 million.<br />
LIQUIDITY AND CAPITAL RESOURCES<br />
6 months period<br />
FY2000 FY2001 ended 30 June 2002<br />
$’000 $’000 $’000<br />
Net cash from / (used in) operating activities 3,426 22,485 (10,762)<br />
Net cash used in investing activities (9,667) (11,401) (5,750)<br />
Net cash from /(used in) financing activities 5,121 1,445 (957)<br />
Net (decrease) / increase in cash and cash equivalents (1,120) 12,529 (17,469)<br />
In FY2000, we generated cash from operating activities before changes in working capital of S$10.7<br />
million. Net cash used in working capital amounted to S$4.4 million. This was mainly due to increase in<br />
stocks and debtors of S$6.1 million and S$1.0 million respectively offset by increase in creditors of S$3<br />
million. The increase in both stocks and creditors was in line with the increase in turnover from $56.7<br />
million in FY1999 to $104.6 million in FY2000. After payment of interest and income tax totalling S$2.9<br />
million, net cash generated from operating activities amounted to S$3.4 million. Net cash used in<br />
investing activities was mainly for purchase of fixed assets of S$9.1 million. The purchase of fixed assets<br />
relate mainly to our purchase of a factory building amounting to S$5.8 million in Singapore and additional<br />
plant, machinery and equipment in our existing plants. There was a net cash inflow from financing<br />
activities of S$5.1 million due mainly to receipts of bank term loans of S$5.3 million.<br />
In FY2001, we generated net cash from operating activities before changes in working capital of S$19.6<br />
million. Net cash generated from working capital amounted to S$6.6 million. The increase in debtors<br />
and creditors was in line with the increase in turnover from $104.6 million in FY2000 to $180.0 million in<br />
FY2001. This was mainly due to increase in creditors of S$12.7 million offset by increase in debtors of<br />
S$5.6 million. The increase in debtors and creditors was in line with the increase in turnover from $104.6<br />
million in FY2000 to $180.0 million in FY2001. After payment of interest and income tax totalling S$3.7<br />
million, net cash generated from operating activities amounted to S$22.5 million. Net cash used in<br />
investing activities was mainly for purchase of fixed assets amounted to S$8.8 million. Fixed assets<br />
purchased relate mainly to plant, machinery and equipment in our existing plants and new plants in<br />
Honduras and El Salvador. There was a net cash inflow from financing activities of S$1.4 million due<br />
mainly to net proceeds from finance lease financing of S$1.8 million offset by repayment of term loans of<br />
S$0.4 million.<br />
40
In HY2002, we generated net cash from operating activities before changes in working capital of S$11.5<br />
million. Net cash used in working capital amounted to S$20.6 million. This was mainly due to increase<br />
in stocks and debtors of S$19.7 million and S$17.8 million respectively offset by increase in creditors of<br />
S$17.3 million. After payment of interest and income tax totalling S$1.7 million, net cash used in<br />
operating activities amounted to S$10.8 million. Net cash used in investing activities was mainly for<br />
purchase of fixed assets of S$3.5 million, acquisition of minority interests' stakes in subsidiaries of S$1.4<br />
million and expenditure deferred of S$0.9 million. There was a net cash outflow from financing activities<br />
of S$1.0 million due mainly to repayment of finance lease financing and term loans.<br />
We had financed our growth through both internal and external sources. Our internal sources of cash<br />
comprise cash generated from operations and capital provided by our Shareholders. Our external<br />
sources of liquidity comprise bank facilities, hire purchase creditors and suppliers’ credit.<br />
As at the Latest Practicable Date, our material sources of unused liquidity are unutilised banking<br />
facilities amounting to an aggregate of approximately US$20.0 million. Taking into account the amount of<br />
unutilised facilities, our cash and cash equivalents on hand and the net proceeds from the issue of the<br />
Invitation Shares, our Directors are of the opinion that our Group has adequate working capital for our<br />
present requirements.<br />
PROFIT ESTIMATE<br />
Barring any unforeseen circumstances, our Directors estimate that our Group will achieve a profit before<br />
tax and profit after tax of $16.6 million and $13.8 million respectively, on a turnover of $221.0 million for<br />
FY2002.<br />
Our Directors believe that our Group will be able to achieve the profit estimate as most of our revenue is<br />
based on secured customer orders. Based on the audited results for the six months ended 30 June<br />
2002, our Group achieved a turnover, profit before taxation and profit after taxation of $92.0 million, $9.6<br />
million and $7.7 million respectively.<br />
Our turnover is estimated to increase by 22.8% from $180.0 million in FY2001 to $221.0 million in<br />
FY2002 due to the full-year contribution of our manufacturing facilities in El Salvador, Honduras and<br />
Brunei. We have also secured new customers such as Phillips-Van Heusen.<br />
We enjoyed higher profit margins due to our subsidiaries becoming fully operational, a higher level of<br />
productivity and better production planning. These had contributed to the increase in our profit before tax<br />
from $12.0 million in FY2001 to $16.6 million in FY2002. We have also benefited from tax savings<br />
because of tax-exempt status enjoyed by certain of our subsidiaries granted in FY2001 and FY2002.<br />
For the nine months ended 30 September 2002, we achieved a Group turnover, profit before tax and<br />
profit after tax of $171.0 million, $13.7 million and $11.4 million, respectively based on our unaudited<br />
management accounts. This represented 77.4%, 82.5% and 82.6% of the respective estimates. In the<br />
second half of the year, we had incurred additional airfreight costs amounting to $3.5 million due to<br />
unforeseen US port closures. We had also provided for staff bonus and directors’ fee amounting to $3.5<br />
million in the second half of the year. For the remaining three months of FY2002, we expect to recognise<br />
additional turnover and profit before tax of $50.0 million and $2.9 million respectively based on secured<br />
customers’ orders.<br />
State of order book<br />
As at 1 January 2003, we have secured confirmed customers’ orders for our products amounting to $53<br />
million which is scheduled to be fulfilled in the current financial year.<br />
41
OUR HISTORY<br />
Our Company was incorporated as <strong>Ocean</strong> <strong>Sky</strong> Knitted Garments Factory Pte <strong>Ltd</strong> in Singapore under the<br />
Companies Act on 8 September 1988 as a private limited company, and the name was changed to<br />
<strong>Ocean</strong> <strong>Sky</strong> Textile Pte <strong>Ltd</strong> on 9 October 1989. Our executive Directors Messrs Ang Boon Cheow Edward,<br />
Ang Boon Chong and Ang Siew Tiong, acquired our Company on 14 August 1995. On 7 February 2003,<br />
we converted to a public limited company and changed our name to <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong>.<br />
The growth and development of our Group can be described in the following three phases:-<br />
Regionalisation<br />
Our Group’s total turnover was less than $1.7 million when our Executive Directors acquired the<br />
company in 1995. Operating out of a single factory in Kallang Basin Industrial Estate, our customers then<br />
were mainly local exporters. As our business grew and realising the high costs of operations in<br />
Singapore, we embarked on our regional expansion plans by setting up and acquiring cost-competitive<br />
production capacities in the region to compete more effectively in the apparel industry.<br />
In 1997, we set up an operations base in Malaysia to expand our production capacity. We acquired our<br />
subsidiary, Eng Soon, which operated a factory in Johor, Malaysia. We also established Suntex in<br />
Cambodia. Through Suntex, we were able to expand our production capacity by almost fourfolds.<br />
In 1998, in response to increased customer demand, we expanded further into the region by<br />
incorporating PDAC and setting up factories through it in Brunei. The PDAC factories increased our total<br />
production capacity by more than 70%. By 1998, through our expansion in Cambodia and Brunei, we<br />
were well-positioned and have established a strong foundation for the next phase of our globalisation<br />
plans.<br />
A sales and marketing subsidiary, OSHK, was set up in Hong Kong in 1999 as Hong Kong is the regional<br />
hub for the apparel industry. This office plays a vital role in enabling our Group to be in the forefront in<br />
the region’s biggest apparel buying centre and to secure a good share of the business.<br />
In 2000, we acquired a S$5.8 million factory building in Singapore, which now houses our management<br />
headquarters and our production base in Singapore. The acquisition of this factory building boosted our<br />
image and presence in the Singapore market. We also managed to increase our production efficiency<br />
through consolidating our operations.<br />
Globalisation<br />
In the next phase of development of our business, we expanded to El Salvador and Honduras in order to<br />
take advantage of the close proximity to the US market (which is our major market). In addition, we are<br />
able to enjoy the tax-free and quota-free benefits in those two countries.<br />
In 2000, we established Hoon’s in El Salvador and set up a factory through it. In the following year, we<br />
established Uniwear in Honduras and established a factory through it. Being close to the US market,<br />
transport costs is lowered and delivery time shortened, which resulted in shorter lead times and more<br />
competitive prices.<br />
In the first half of 2002, we set up OS Sourcing in Los Angeles as a marketing and sourcing office, thus<br />
further increasing our foothold in the US market.<br />
With the accession of the PRC into the World Trade Organisation, we initiated the next stage of our<br />
development beginning in the middle of 2001. In furtherance of our plans to develop our operations in the<br />
Hong Kong/China region, we began setting up subsidiaries in the PRC and an additional subsidiary in<br />
Hong Kong. In June 2002, we set up OS Apparel which commenced its manufacturing operations in<br />
November 2002. In the second half of 2002, we incorporated OGHK in Hong Kong and set up our<br />
second PRC subsidiary, Sing Cheng, to position ourselves for future business opportunities in Hong<br />
Kong and the PRC.<br />
42
The following table shows our growth in turnover from 1995 to 2001:-<br />
Year Turnover (S$’000)<br />
1995 1,700<br />
1996 10,129<br />
1997 14,359<br />
1998 27,397<br />
1999 56,705<br />
2000 104,645<br />
2001 179,988<br />
Development of SCM Services<br />
We recognise that there is potential in the demand for SCM services by our customers. To this end, our<br />
three offices in Singapore, Hong Kong and the US have started providing such services since 2000 and<br />
mainly to our customers served by our Central American operations. In FY2001, one quarter of our sales<br />
generated from our Central American orders include the provision of SCM services.<br />
We also recognise that we will be able to have better control over our supply of raw materials if we<br />
produce them ourselves. To produce raw materials required for our production, in addition to the<br />
marketing and sourcing functions of OS Sourcing, we expanded its business scope to include the<br />
manufacture of fabric. In October 2002, we set up a knitting plant in the US to provide knitted fabric to<br />
our production operations in Central America. As at November 2002, the production capacity of our<br />
knitting plant is estimated to be 300,000 to 350,000 pounds per month. By operating our own knitting<br />
plant, we are able to ensure consistent supply of high quality fabric and timely delivery of these fabric to<br />
meet our production requirements.<br />
Between June to September 2002, to facilitate the further development of SCM services in Central<br />
America, we set up three new subsidiaries, namely, Pacific <strong>Sky</strong>, OS Marketing and Blue <strong>Ocean</strong> in El<br />
Salvador, the US and Honduras respectively. OS Marketing is set up to undertake marketing services<br />
while Pacific <strong>Sky</strong> and Blue <strong>Ocean</strong> are set up to provide manufacturing services. Blue <strong>Ocean</strong> commenced<br />
production in October 2002 while OS Marketing and Pacific <strong>Sky</strong> have not commenced operations.<br />
As at 30 June 2002, we operated in nine countries with twelve production and sourcing operations with<br />
approximately 6,900 employees. Our turnover has grown from S$1.7 million when we first started in<br />
1995 to almost S$180 million in FY2001. For the six months ended 30 June 2002, our turnover is S$92.0<br />
million.<br />
In the Year 2002 Enterprise 50 Awards, an annual event organised by Accenture and The Business<br />
Times with support of the Economic and Development Board, we were ranked 4th position amongst the<br />
best 50 local enterprises.<br />
43
OUR INDUSTRY<br />
Apparel is one of the oldest and largest export industries in the world. Most nations produce for the<br />
international textile and apparel market, making this one of the most global of all industries. Apparel is<br />
the typical “starter” industry for countries engaged in export-oriented industrialisation, and played the<br />
leading role in East Asia’s early export growth.<br />
Our Directors believe that Singapore remains an important business hub to the apparel manufacturers for<br />
business and management efficiencies due to its political stability, advanced business infrastructure and<br />
the authorities’ efforts in encouraging local manufacturers to develop operations both locally and<br />
internationally. However, changes in the global trading arena in recent years have made it imperative for<br />
local apparel manufacturers to change their strategies and emphasis. Frequent seasonal changes, price<br />
competitiveness and labour-intensive nature of the apparel manufacturing industry have made it essential<br />
for the industry to diversify and expand globally in order to take advantage of lower labour and operations<br />
costs, shorter lead time and readily availability of raw materials. Size of production capacity and<br />
geographical spread of operations of the manufacturers have thus become the key criteria taken into<br />
consideration by apparel retail companies when assigning orders.<br />
Besides the need to globalise, manufacturers also need to comply with stringent rules and regulations on<br />
social, labour, health and environmental standards set by the importing countries. We believe that to be<br />
successful in the industry, one of the critical success factors is the ability of the manufacturer to introduce<br />
and implement the required industrial and social standards in the countries where they operate.<br />
There is an increasing trend for apparel retail companies to out-source manufacturing function as well as<br />
other functions such as apparel designing, material sourcing, logistic and documentation management,<br />
etc. In other words, they are looking for a more comprehensive solution for their business in the whole<br />
apparel supply chain. We observe that most established apparel manufacturers in the global scene are<br />
capable of offering the supply chain management services in various degrees.<br />
In setting up of production operations, global apparel manufacturers are being drawn to Asian countries<br />
for the tapping of production capabilities. Growth of the apparel industry in Asia is expected to be<br />
accelerated by comparatively cheaper labour and freeing of trade restrictions in Asia. Amongst the Asian<br />
countries, our Directors believe the PRC will achieve the most significant growth in the apparel industry.<br />
With its accession to the World Trade Organisation, trade restrictions will be freed and at the same time,<br />
barriers of entry to the PRC market are expected to be lowered. Because of the abundance of<br />
comparatively cheaper labour in the PRC, global apparel manufacturers are expected to target the PRC<br />
as a preferred location for setting up production facilities<br />
In addition to the PRC, developing countries in Central America are also popular production bases<br />
because of their geographical advantage for penetrating the US consumer market, which is the world’s<br />
largest apparel importer. Close proximity to the US market means shorter delivery time and shorter leadtime,<br />
as well as cheaper transportation costs. Labour is also abundant and comparatively cheaper in<br />
these countries. In addition, these Central American countries enjoy free quota and duty-free status<br />
granted by the US. A combination of these factors sets the scene for growth of the apparel industry in<br />
developing countries in the Central America region.<br />
Our Directors are of the view that the above-mentioned trends and developments would bring about<br />
challenges and opportunities for the apparel manufacturing industry. As business rules would become<br />
more productivity-oriented in the future, manufacturers would have to constantly upgrade their<br />
management and production skills and technology in order to compete effectively on productivity and<br />
product and service quality in the highly globalised market.<br />
44
OUR BUSINESS<br />
Introduction<br />
We are a global one-stop specialty apparel manufacturer with SCM capabilities. While concentrating on<br />
our core business of being a specialty apparel manufacturer, our Group is fast expanding into related<br />
industries, such as providing SCM solution services ranging from sourcing of raw materials prior to the<br />
manufacturing process to logistic management of manufactured apparel. With our headquarters located<br />
in Singapore, our Group reaches out to our global customers through twelve strategically located<br />
production, sourcing and marketing operations around the world in nine different countries, namely<br />
Singapore, Malaysia, Cambodia, Brunei, Hong Kong, the PRC, Honduras, El Salvador and the US. Our<br />
Group has a total annual production capacity of 2.9 million dozens and annual turnover of S$180 million<br />
for FY2001.<br />
Our headquarters in Singapore co-ordinates all SCM services and provides administrative, management<br />
and financial support services to all our subsidiaries.<br />
China<br />
Hong Kong<br />
Cambodia<br />
Malaysia<br />
Singapore<br />
��<br />
�<br />
� �<br />
�<br />
Brunei<br />
� �<br />
��<br />
Although located in different parts of the world, each of our Group’s subsidiaries does not operate in<br />
isolation but in close and constant consultation with one another to maximise business and cost<br />
efficiencies. Taking into account all factors, including customers’ preference, costs, transportation and<br />
capacities, apparels of an order taken in one country may be manufactured in another. All production<br />
plants and offices are linked centrally to the headquarters in Singapore through the fully integrated<br />
computerised system to enable our Group to streamline our global operations and integrate our business<br />
processes for optimal business efficiencies. The geographic expansion of our Group into global strategic<br />
locations has also enabled our Group to take advantage of lower labour, productions and transportation<br />
costs. Ability to manufacture apparel close to our Group’s main export market, the US, has drastically<br />
shortened lead and delivery times. Currently, we have a total of nine production plants around the world.<br />
We have one production plant in each of Singapore, Malaysia, Cambodia, Brunei, the PRC, the US and<br />
EI Salvador, and two production plants in Honduras.<br />
With our core business in apparel manufacturing, our Group has expanded into related activities by<br />
providing pre-manufacturing SCM services, such as the design of apparel and the sourcing of materials,<br />
as well as post-manufacturing SCM services, such as logistic management and customs declaration and<br />
documentation. We have also acquired a knit factory in the US to provide additional SCM services.<br />
45<br />
�<br />
US<br />
El Salvador<br />
� �<br />
Production Plant, Sourcing & Marketing Office<br />
Production Plant<br />
Sourcing & Marketing Office<br />
Honduras
Our Group has a portfolio of client base which includes well-known international companies, such as<br />
Gap Inc., May Department Stores, Sears, Mervyn’s, Target, Foot Locker, Inc., Phillips-Van Heusen and<br />
Eddie Bauer, Inc. Our Group’s apparel products are wide-ranging and evolving according to fashion<br />
trends.<br />
Our Group is capable of manufacturing apparels from an assortment of fabrics, such as interlock, fancy<br />
ribs, jacquard and French ferry. The categories of apparels manufactured include Men, Ladies, Kids,<br />
Babies and Infants. The variety of products we manufacture also includes T-shirts, polo-shirts, blouses,<br />
shorts, pants, skirts, dresses, jackets, cardigans, robes, undergarments, sleepwear, lounge wear,<br />
maternity wear, children’s wear, baby wear, baby blanket and bibs.<br />
BUSINESS PROCESS<br />
Our Group recognises that in order to stay competitive in this intense business environment, we need to<br />
constantly deliver top quality products at competitive price and within shortest delivery time, and at the<br />
same time, provide prompt value-added services in the apparel supply chain. Towards this end, we have<br />
adopted effective and streamlined business processes in our operations, which can be broadly classified<br />
into three stages:-<br />
� Sales, marketing, sourcing and merchandising (collectively known as “pre-manufacturing supply<br />
chain management services”);<br />
� Apparel manufacturing; and<br />
� Logistics management and customs clearance (collectively known as “post-manufacturing supply<br />
chain management services”).<br />
The key stages of our business process are summarised in the chart on the following page :-<br />
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Sales / Marketing /<br />
Sourcing / Merchandising<br />
Apparel Manufacturing<br />
Logistics Management &<br />
Custom Clearance<br />
Fabric Manufacturing<br />
& Sourcing<br />
Accessories Sourcing<br />
Customers’<br />
Buying Objectives<br />
Product Development<br />
Production Planning<br />
Purchase of Materials<br />
Storage of Materials<br />
Inspection of Materials<br />
Cutting<br />
Sewing<br />
Apparel Inspection<br />
Pressing / Packing<br />
Final<br />
Quality Assurance<br />
Logistics<br />
Management<br />
Shipping<br />
Documentations<br />
Custom Clearance<br />
Warehousing<br />
Design & Trend<br />
Buyers Confirmation<br />
of Orders<br />
Embroidery/ Screen<br />
Printing, etc<br />
Apparel Dyeing /<br />
Washing<br />
47<br />
Technical & Sampling<br />
Real-Time<br />
Production<br />
Management<br />
System<br />
ERP<br />
System<br />
SUPPLY CHAIN MANAGEMENT INTEGRATED SERVICES
Pre-Manufacturing Supply Chain Management Services<br />
Understanding Customers’ Buying Objectives<br />
Our Group is strongly committed to providing best services to all our customers. Our Marketing and<br />
Merchandising Departments undertake to fully understand each customer’s market positioning, lines of<br />
products and product styles through regular contacts. During the marketing stage for each potential<br />
order, our personnel will also try to fully understand the objectives of the order so as to provide the best<br />
solutions for the customer.<br />
By attending trade shows, conducting market researches and through our global sourcing network, our<br />
Group continuously gathers information on latest and upcoming fashion trends and developments. This<br />
practice has enabled our Group to effectively share constructive information with our customers to assist<br />
them with their product development process. It has also enabled our Group to promptly respond to<br />
customers’ requests for samples and quotations and the subsequent delivery of orders.<br />
Fabric and Accessories Sourcing, Design & Trend Services, Technical & Sampling<br />
Through our Group’s wide global network, we are able to effectively source for fabric and accessories<br />
according to our customers’ requirements at competitive prices and from reliable suppliers. At the same<br />
time, our Group’s Technical Department is able to provide valuable technical advices on fabric selection,<br />
consumption, cutting and sewing constructions. The Department would also analyse and recommend<br />
the best production processes and sequence to adopt for each order based on the technical capabilities<br />
of each production base so as to achieve maximum productivity and cost efficiency. The Department<br />
also plays an important role in the evaluation, testing and modifying samples to the satisfaction of the<br />
customers.<br />
Product Development<br />
Through keeping abreast with latest and upcoming fashion trends and researches, our Product<br />
Development Department pro-actively develops new product designs for our customers’ considerations.<br />
Together with the Marketing and Merchandising Departments, the Product Development Department<br />
works closely with our customers so as to meet their requirements and assist them in their product<br />
development process.<br />
Production Planning<br />
Upon receipt of confirmation of orders from our customers, the Global Factory Planning Department<br />
would develop the production schedule taking into consideration clients’ preference of production<br />
location, factory capacities, manufacturing methods, source of fabric and accessories, delivery<br />
destination, transportation costs, etc.<br />
Purchase of Materials<br />
Once production schedule has been determined, the Purchasing Department would purchase the<br />
required fabrics and accessories according to customer’s requirements. All fabric and accessories<br />
purchased are subjected to in-coming quality inspection to ensure that they meet the specifications,<br />
quality and quantity ordered.<br />
Storage of Fabrics & Accessories<br />
Each fabric and accessories delivery is checked against the order. The fabric and accessories are then<br />
weighted, labelled and recorded before being neatly and systematically stored to enable accurate and<br />
easy retrieval.<br />
Apparel Manufacturing<br />
Our Group adopts fully or semi-automated streamlined production processes in all our global operations<br />
in order to maximise productivity at minimal cost and to reduce human errors. At the same time, our<br />
Group has put in place stringent quality control policies and adopts total quality inspection throughout the<br />
entire production process to ensure strict compliance to customers’ quality, quantity and social<br />
requirements.<br />
Our Group has also began our first phase of integration of both the operations and management<br />
processes through real-time production management and ERP systems. These systems enable both the<br />
management and customers to effectively monitor real-time production processes at every stage. They<br />
also enable full flexibility in administering changes to orders at any stage of the production process.<br />
Through these systems, defects, bottlenecks are quickly and easily detected, addressed and resolved at<br />
early stages thus drastically reducing wastage and time.<br />
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Inspection of Fabrics & Accessories<br />
Required fabrics and accessories are retrieved from store and are thoroughly checked again for defects<br />
such as flaws in material, inconsistency in colour tone and printing defects. Any defective fabrics and<br />
accessories detected are rejected, returned and replaced immediately. At the same time shrinkage and<br />
twisting tests are conducted. Fabrics are sent for steaming, washing or dyeing, if required.<br />
Cutting<br />
Using computer-aided design (CAD) equipment, patterns of various components of the apparel to be<br />
manufactured are drawn out using the computer. The computer also arranges all the different<br />
components into a marker layout. The marker layout would be placed to achieve the most efficient<br />
cutting method so that fabric wastage would be kept to the minimum.<br />
Before actual cutting is undertaken, the Cutting Department would develop cutting plans using<br />
information from the fabric testing report, styling, embroidery requirements, patterns and marker layouts<br />
provided, etc. Fabric to be used is first spread and checked once more for defects. The fabric are then<br />
cut using the cutting machine and sent to the Sewing Department for assembly.<br />
Embroidery & Screen Printing<br />
If required, embroidery are added to the cut fabrics using our in-house embroidery facilities undertaken<br />
by a team of experienced embroidery staff and closely supervised and monitored by the embroidery<br />
managers to ensure consistency and accuracy. If necessary, screen-printing works are out-sourced and<br />
undertaken by our contractors who are selected based on stringent standards and requirements. Quality<br />
checks are carried out both in-house and at the contractors’ premises to ensure strict compliance to<br />
customers’ requirements.<br />
Sewing and Construction<br />
The Sewing Department plans and develops the best handling and sewing methods for each order.<br />
Samples, handling and sewing methods are clearly shown and explained to our teams of experienced<br />
sewers before commencement of the sewing process in a safe, clean, comfortable and systematic<br />
environment. All required tools, eg. machinery, needles, accessories, etc. for the process are checked<br />
and assembled before commencement of production to reduce disruption. New recruits will be placed on<br />
the sewing line only after they have undergone strict on-the-job training and attachment to experienced<br />
sewers.<br />
Line supervisors and checkers conduct quality checks throughout the entire sewing process to ensure<br />
that the sewers adopt the recommended best handling and sewing methods. This is to ensure<br />
consistency and meeting the required standards at the optimal productivity level. These regular quality<br />
checks also enable unacceptable construction works to be detected and corrected immediately.<br />
Completed apparel are checked and tallied daily to ensure that production is on schedule for timely<br />
delivery.<br />
Apparel Dyeing / Washing<br />
The completed apparel are then washed using our in-house washing facilities. Sample washing will be<br />
conducted and sent for size, specification, appearance and quality checks before bulk washing is<br />
undertaken. Water quality and temperature are monitored closely throughout the entire washing process.<br />
If required, special dying works are undertaken by our appointed contractors with strict quality control<br />
and 100% quality checks at the contractors’ premises.<br />
Apparel Quality Inspection<br />
Each and every completed apparel is subjected to 100% thorough quality check before it can be sent for<br />
pressing and packing. For example, a T-shirt is subject to 15 or more measurement checks in addition to<br />
sewing quality, colour tone, printing and stain checks, etc.<br />
Pressing, Packing & Final Quality Assurance<br />
The outline of the apparel is drawn on the pressing board, which would enable another measurement<br />
check to be conducted during the pressing stage. The apparels are then tagged, folded and packed<br />
according to customers’ handling and shipping requirements. All apparels are subjected to one final<br />
inspection and recording before being put into cartons. Each carton will be checked and tallied before<br />
being sealed and loaded onto containers for shipment.<br />
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Post-Manufacturing Supply Chain Management<br />
By working closely with our various agencies, our Global Logistics Department would determine the<br />
most efficient and cost effective shipping and transportation routes for timely delivery of the goods to our<br />
customers.<br />
We also offer post-manufacturing services beyond the usual free on board (F.O.B.) mode. For some<br />
customers using our manufacturing bases in El Salvador and Honduras, we offer handling of shipping<br />
documentation, customs documentation and clearance, insurance coverage arrangement, import duty<br />
payment on behalf of customers, and inland transport of manufactured apparels to customers’<br />
warehouses from port of disembarkation, etc. We intend to expand these SCM services beyond El<br />
Salvador and Honduras in the near future.<br />
These post-manufacturing SCM services add value to the apparel supply chain, help customers reduce<br />
delivery time and save cost, and at the same time give our Group a greater control over the whole supply<br />
and delivery processes to enhance our competitiveness in the market.<br />
OUR MANUFACTURING CAPACITY<br />
Our manufacturing capacity for the past 3 financial years and for the 6 months period ended 30 June<br />
2002 is as follows:-<br />
Location Number of Sewers Annual Annual Percentage of<br />
Manufacturing Manufacturing Utilisation<br />
Capacity Utilisation %<br />
(in sewing man- (in sewing manhours)<br />
hours)<br />
’000 ’000<br />
FY1999<br />
Singapore 80 194 175 90<br />
Malaysia 50 120 102 85<br />
Cambodia 1,000 2,336 1,986 85<br />
Brunei 450 1,098 988 90<br />
Honduras – – – –<br />
El Salvador – – – –<br />
Total 1,580 3,748 3,251 87<br />
FY2000<br />
Singapore 120 291 268 92<br />
Malaysia 70 169 148 88<br />
Cambodia 1,200 2,803 2,523 90<br />
Brunei 700 1,708 1,571 92<br />
Honduras 220 532 468 88<br />
El Salvador 250 606 515 85<br />
Total 2,560 6,109 5,493 90<br />
FY2001<br />
Singapore 150 364 349 96<br />
Malaysia 120 289 260 90<br />
Cambodia 1,228 2,869 2,668 93<br />
Brunei 1,100 2,684 2,577 96<br />
Honduras 250 604 544 90<br />
El Salvador 300 727 654 90<br />
Total 3,148 7,537 7,052 94<br />
6 month period<br />
ended 30 June 2002<br />
Singapore 190 230 221 96<br />
Malaysia 130 157 141 90<br />
Cambodia 1,440 1,682 1,598 95<br />
Brunei 1,100 1,342 1,288 96<br />
Honduras 300 362 344 95<br />
El Salvador 576 698 663 95<br />
Total 3,736 4,471 4,255 95<br />
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SOCIAL COMPLIANCE<br />
We believe in maintaining our Group as an ethical and responsible corporation. To this end, we have in<br />
place an in-house committee chaired by our Executive Chairman, which ensures that our operations<br />
comply with social issues such as the protection of human rights and non-exploitation of labour. Our inhouse<br />
committee also ensures that we provide adequate staff benefits and maintain good relations with<br />
our employees. As part of our compliance with environmental and social requirements, we ensure that all<br />
manufacturing plants are non-polluting and environment-friendly.<br />
Most of our major customers, especially the US customers, are concerned with social and environmental<br />
issues such as the protection of human rights, labour union, anti-pollution and social health<br />
requirements. We are able to gain the confidence and support of these major US customers because we<br />
have put in place an effective in-house compliance mechanism to ensure that we consistently comply<br />
with such environmental and social requirements.<br />
QUALITY ASSURANCE<br />
Our Group places considerable emphasis on quality assurance in our operations as well as timely<br />
delivery of our goods. We ensure that every staff is aware of their responsibility to ensure that our goods<br />
are of high quality.<br />
Most of our customers sell our products under internationally renowned brand names. Understandably,<br />
they place great emphasis on the quality of their products. To ensure that our staff are well trained and<br />
aware of the procedures which they have to follow to ensure quality of our goods, we compile handbooks<br />
incorporating guidelines on all our functions and operations. Our quality assurance team monitors the<br />
adherence of our Group’s production guidelines by implementing a policy of 100% checks on all goods at<br />
each step of the production process. Stringent quality control procedures are set in place at each stage<br />
of our production process. We also exercise quality control during the purchase of raw materials and<br />
accessories. Raw materials and accessories are purchased only from approved suppliers who meet our<br />
standards. All materials and accessories are inspected before they are used for production to ensure that<br />
they are of the required specifications and free from defects. All finished products are subject to a final<br />
inspection before delivery.<br />
As the manufacture of apparels remains a labour-intensive process, staff in all departments are trained to<br />
pro-actively look out for potential human errors in the various stages of production. In our in-house<br />
training progress, our staff is exposed to each and every step of the production process so that they<br />
could understand how their work would affect the rest of the process and vice versa. Such training helps<br />
our staff to appreciate the importance of their individual roles and understand the concept of total quality<br />
management.<br />
We also encourage communication amongst staff concerning work process and quality assurance. Daily<br />
production meetings and the weekly inter-department meetings are held for our staff to meet and discuss<br />
measures which can be taken to ensure smooth flow of work process and to reduce wastage and human<br />
errors to the minimum.<br />
MARKETING<br />
Our Group’s overall marketing activities are headed by our Executive Director and Chief Operating<br />
Officer, Mr Ang Boon Chong. He establishes and maintains relationships with our customers in the<br />
apparel industry. This is done by keeping in close contact with our customers’ buying offices and<br />
appointed agents.<br />
Our Executive Chairman, Mr Ang Boon Cheow Edward, markets our services and products during his<br />
frequent overseas visits to our customers. Through such visits, we are able to understand the plans and<br />
development of our customers and are able to package our sales proposals tailored to their development<br />
plans.<br />
We have a total of 80 staff in our marketing team, with 50 of them based in Singapore, 25 in Hong Kong,<br />
and 5 in the US.<br />
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Our marketing team is not only well-versed in the latest trends and tastes in fashion, but also have good<br />
working knowledge on fabric, styling, production process and costing. Our team is able to give advice to<br />
help our customers make better decisions as they understand the background and requirements of our<br />
customers, such as their financial status, product line, buying power and product trends.<br />
We develop new businesses mainly through direct marketing. Our Marketing Department not only keeps<br />
abreast of upcoming fashion trends, but also industry developments through regular participation in local<br />
and overseas trade shows. Our Marketing Department approaches potential customers through direct<br />
contacts and presentations after in-depth analysis and exchanging information on the potential<br />
customers’ product styles and requirements within our global network.<br />
In order to be on the forefront of fashion trends, our Marketing Department also source for the latest<br />
designs through trade directories such as the World Global Style Network, which is an online network<br />
used by designers to exchange their views on current fashion trends, with highlights of their own designs.<br />
AWARDS AND ACCREDITATION<br />
In the Year 2000 Enterprise 50 Awards, an annual event organised by Accenture and The Business<br />
Times with support of the Economic Development Board, our Company’s good business performance<br />
had enabled US to earn 19th position amongst the best 50 local enterprises.<br />
In 2001, we were ranked 13th in the Enterprise 50 Awards and were also given the prestigious ‘Shining<br />
Star Award’, given in recognition of our Group’s contributions to the apparel industry.<br />
In 2002, we were ranked 4th in the Enterprise 50 Awards.<br />
We also received awards from our buyers overseas in recognition of the high standard of our service,<br />
which include, Outstanding Performance Award from May Department Stores <strong>International</strong> and<br />
Outstanding Award from the Associated Merchandising Corporation of USA.<br />
In January 2003, Suntex, our Cambodian subsidiary, was awarded the Certificate of High Dignitary<br />
Sovathara from the Royal Government of Cambodia for its good performance.<br />
52
COMPETITION AND COMPETITIVE STRENGTHS<br />
COMPETITION<br />
As an export-oriented enterprise, our overall competition environment and our market competition are<br />
subject largely to global developments. We identify the following three developments as the main factors<br />
that would affect the competition in our business:<br />
Increasing Demand for Manufacturers with Global Capability<br />
As a growing trend, US and EU apparel retail companies are concentrating on developing marketable<br />
brand names internationally in order to increase their business. In order to reach out to customers in<br />
various countries worldwide in short lead time, these apparel retail companies are outsourcing to<br />
manufacturers who are not just cost competitive but also have a wide spread of operation capability near<br />
to their markets. These apparel retail companies are likely to look for manufacturers with global operation<br />
capability and the size and flexibility to respond to their specific requirements within short notices.<br />
We expect that more apparel manufacturers would globalise their operations. Operating in nine<br />
countries, our Group is well positioned in this regard and would continue to explore new avenues to<br />
further expand and strengthen our global operations to meet future challenges.<br />
Increasing Demand for Reliable and Responsible Manufacturers<br />
Apparel retail companies are more cautious nowadays in the selection of manufacturers. The apparel<br />
business is subject to fast changes in fashion trends and keen competition in the retailing market.<br />
Besides cost competitiveness, short lead time and timely delivery have become the most crucial factors<br />
to apparel retail companies when selecting manufacturers. Also, with the global market becoming more<br />
and more transparent, they would like to make sure that the manufacturers who undertake their jobs<br />
must comply with stipulated social, labour, health and environmental standards.<br />
The US and EU apparel retail companies are more likely to appoint manufacturers who have proven<br />
track records as reliable and responsible enterprises. In this regard, we envisage that our competition will<br />
be from manufacturers with equally established track records.<br />
Impacts of Trade Liberalisation<br />
Our Directors are of the opinion that the abolition of the textile and apparel quota system in 2005, via<br />
agreements entered into under the auspices of the World Trade Organisation, would generally result in<br />
increased competition. Manufacturers, including ourselves, can take advantage of the liberalisation to set<br />
up more apparel manufacturing operations without being restricted by quotas on export. Hence, we may<br />
face new players who may be established players in other markets to compete in our existing markets.<br />
Trade liberalisation would also bring about new opportunities for venturing into new businesses related to<br />
the industry, such as trading and retailing of apparels, in the once protected markets such as the PRC.<br />
We envisage that the industry would become more integrated in the future. Companies with bigger<br />
resources and larger network are more likely to be able to take full advantage of this industry integration.<br />
The apparel business is one of the world’s largest and most globalised businesses. Opportunities for<br />
growth and for integration are abundant. To the best of our knowledge, some of our main competitors are<br />
Sing Lun Holdings <strong>Limited</strong> in Singapore, PCCS Group Berhad in Malaysia and Carry Wealth Holdings<br />
<strong>Ltd</strong> in Hong Kong.<br />
53
COMPETITIVE STRENGTHS<br />
Over the years, through continuous reviewing, management upgrading, process streamlining and<br />
improvement and investments on globalisation of operations and business integration, our Directors<br />
believe that we had established the following competitive strengths:<br />
Commitment on Quality and Timely Delivery<br />
Since the inception of the Group by our Directors, we had set a high standard on quality assurance and<br />
timely delivery and staged a strong commitment to achieve the standard. The Group’s whole operational<br />
process is subjected to continuous and frequent reviews and improvements to reflect new requirements<br />
in the marketplace. Detailed operational and manufacturing procedures and quality assurance<br />
procedures are documented. Staff are in turn trained and instructed to follow and comply strictly with the<br />
procedures. We also inculcate a working culture within the Group for close consultation and coordination<br />
among various operational bases, and among the various departments and levels of staff involved in the<br />
various stages of the operational process. Work progress for each and every order at various stages are<br />
recorded and monitored and through the integrated management information system (“MIS”) shared<br />
among staff involved. Informal and formal meetings are frequently held to inform and discuss work<br />
progress and issues to proactively ensure that good quality and timely delivery are achieved all the times.<br />
Our Directors also continuously seek new ways to achieve better quality and shortening of lead time.<br />
Where possible and viable, automation and semi-automation processes are introduced to achieve better<br />
quality and faster and more efficient work. In our globalisation plan, our investments in establishing<br />
factories in Honduras and El Salvador had created strategic advantage in geographical proximity with our<br />
main market, the US. This geographical proximity leads to faster delivery time as well as saving in<br />
transportation cost for our customers.<br />
Sizeable, Strategically Located and Cost-Competitive Global Operational Capability<br />
As the apparel industry is becoming more and more globalised, there is a growing trend for established<br />
apparel retail companies to select manufacturers who have sizeable capability which are strategically<br />
located worldwide to offer cost-competitive solutions.<br />
Size of operations is an important consideration factor as, to a great extent, it reflects the manufacturers’<br />
readiness and flexibility to respond to customers’ specific requirements and ensure timely delivery.<br />
Having a global annual production capacity of 3.6 million dozens (as at end of FY2002), our various<br />
operational bases worldwide, working closely together as a team, has the size, range and flexibility to<br />
meet the challenging requirements of the industry.<br />
With a global operational network, we are in a better position to offer more attractive solutions in<br />
materials sourcing and production locations to the customers. Our sourcing and manufacturing bases in<br />
the three regions, namely, Southeast Asia, Hong Kong/China and Central America/US, complement one<br />
another in terms of competitive strengths. Our Brunei factories are not subjected to quota restriction; our<br />
Cambodia operations, besides being cost-competitive, has secured sufficient quota for the next two<br />
years; our Hong Kong subsidiary plays a strategic role in Hong Kong’s apparel trading hub, in trends and<br />
market information gathering, in keeping in close touch with decision-makers of our customers, in<br />
sourcing good and cost-competitive materials from the PRC and in securing additional business for our<br />
Group; our factories in the PRC (one of which has been operational since November 2002) provide<br />
additional cost-competitiveness advantage to our overall global operations as labour there is cheap and<br />
abundant; our factories in Honduras and El Salvador, besides providing quota-free and import duty-free<br />
advantages, are close to our US customers and help them cut down lead time and transportation cost;<br />
our subsidiaries in the US create competitive advantage in marketing, in providing material sourcing and<br />
other SCM service, and in fabric manufacturing to support our Central American operations and<br />
contribute additional competitive strength to our Group in general; and our Singapore and Malaysia<br />
factories have the capability to design and manufacture more high-end and complex products.<br />
In short, each of our Group’s operational bases has its own unique competitive strength. The<br />
combination of these strengths provides the necessary synergy crucial in securing large orders from big<br />
apparel retail companies in the global market.<br />
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Good Social Compliance Records<br />
We are able to gain the confidence and respect from major customers, in particular, customers in the US,<br />
through our excellent records in compliance with social and environmental policies, such as the<br />
protection of human rights, labour union requirements, anti-pollution requirements and social health<br />
requirements (the “environmental and social requirements”). As part of our compliance with<br />
environmental and social requirements, we ensure that all manufacturing plants are non-polluting and<br />
environment-friendly. We also maintain cordial relationships with labour unions and offer our workers<br />
essential employee benefits and ensure that they are not subject to exploitation.<br />
We believe in maintaining our Group as an ethical and responsible corporation. To this end, we have in<br />
place an in-house committee (chaired by our Executive Chairman Mr Ang Boon Cheow Edward) to<br />
ensure that such environmental and social requirements are being complied with. Our major international<br />
customers place great emphasis on environmental and social compliance requirements, and as a<br />
general policy, they select only manufacturers who produce their goods in compliance with such<br />
requirements.<br />
SCM Capability<br />
The integration into the SCM gives us a greater control over the timely delivery of our goods to our<br />
customers and at the same time helps customers save cost and time. Equally importantly, it strengthens<br />
our working relations with our customers and thereby enhances our long-term competitiveness. As part<br />
of our SCM services, we offer sales on Delivery Duty Paid (“DDP”) terms, i.e. goods are delivered to the<br />
customers’ warehouse and in connection therewith, we make payment for all applicable customs import<br />
duties.<br />
For our buyers, the availability of SCM services would enable them to focus their resources on their core<br />
business of product design and development and the marketing of their brands and products. At the<br />
same time these buyers could also enjoy savings in operating costs, improved quality of goods and faster<br />
delivery time and hence enhance their competitiveness.<br />
For us, the provision of SCM services to our buyers would result in tangible benefits in terms of better<br />
margins, as well as intangible benefits in terms establishing closer working relationships with our<br />
customers. We will have better understanding of our customers’ needs and more control over their logistic<br />
arrangement, all of which would in turn lead to improvement in delivery time and productivity. The SCM<br />
arrangement also strengthens the relations and mutual trust between our customers and us and<br />
enhances our competitive edge in the apparel industry.<br />
Professional and Experienced Management Team and Staff<br />
Our management team, comprising the Executive Directors and Executive Officers, has been<br />
instrumental in spearheading our growth over the past few years. Each management team member has<br />
an average of more than 10 years of industry experience. The team works closely to formulate and<br />
ensure the implementation of growth strategies of our Group.<br />
Under their leadership, our Group has successfully identified and will continue to identify new business<br />
opportunities for expansion. The management team is able to guide and motivate staff of all levels to<br />
perform to the best of their ability in an open and participative working environment. The senior<br />
management exercises a very hands-on approach in carrying out their work.<br />
We adopt an open working environment where feedback and ideas from staff are sought and evaluated<br />
constantly. Our staff also maintains close contact and rapport with our customers in order to understand<br />
their needs in order to serve them better. Where applicable, we adopt their suggestions and implement<br />
changes. Such changes not only let our staff and customers feel that they are being valued by us, but<br />
also enable us to serve the needs of our customers better.<br />
55
Our global operations provide our management team and staff valuable opportunities to gain knowledge<br />
and experience from their exposure in these countries. We are well positioned to draw on these<br />
experiences and utilise our skills and knowledge in the event that we seek to operate in other countries<br />
in the future.<br />
Efficient MIS and Production Tracking and Management Systems<br />
Customers increasingly expect the manufacturers to have an advanced and efficient management<br />
system in place so as to provide quick and accurate responses to the queries and needs of the<br />
customers. We achieve high level of efficiency and competitiveness through the intensive use of<br />
advanced information technology through our management information system and operations<br />
management systems. We have in place an online computer system for all general and financial<br />
management functions of our Group. We started the initial phase of our real-time production tracking and<br />
management system in Singapore. The full system will be implemented in phases and will eventually link<br />
up all the factories and sourcing bases under our Group. These information and operations management<br />
systems allow us to plan and manage our operations better, pinpoint and forecast possible problems, and<br />
enhance the speed and increase flexibility, options and solutions for both our customers and our<br />
management.<br />
We set our production standards and procedures with inputs from managers from all our production<br />
bases. Manuals on various operational functions are compiled from these inputs and feedback and<br />
distributed to all factories for compliance. Our Directors believe that this gives us a competitive edge and<br />
enables us to maintain our high standards of production and to reduce costs which will in turn generate<br />
profits for our Group.<br />
56
PROSPECTS AND FUTURE PLANS<br />
PROSPECTS<br />
Our Directors are of the view that we have now laid a foundation and infrastructure in the apparel<br />
manufacturing business and established a network of customers and suppliers in the industry to enable<br />
us to further advance the business and explore new opportunities in the future.<br />
Our Directors believe that prospects for future apparel business for our Group should be promising and<br />
challenging based on the following observations :-<br />
Liberalisation of the Global Market<br />
Our Directors have observed that the apparel industry is gradually evolving into a scenario whereby<br />
major apparel manufacturers will operate on a global scale. Liberalisation of the global market would<br />
enhance the transparency and operational efficiency of the market and open up new market<br />
opportunities in the world. As more members of the World Trade Organisation around the world are<br />
required to lift their import restrictions of apparel into their domestic markets, we believe that more<br />
opportunities will be created for us to penetrate these markets.<br />
Increase in Demand for Apparel Manufacturers with Integrated Services<br />
There is a growing trend for customers to farm out part or all of the supply chain tasks to the<br />
manufacturers outside of their region. There is thus increasing demand for apparel manufacturers who<br />
can provide additional value-added services to customers. In addition, major customers in the US and<br />
other markets would continue to rely mainly on sizeable and reputable manufacturers with production<br />
facilities and management methods that measure up to their stringent requirements.<br />
We believe that with our global operations and provision of SCM services we are positioned to meet this<br />
demand. Furthermore, our reputation and track record, as well as our large-scaled operations therefore<br />
give us an advantage over our competitors.<br />
FUTURE PLANS<br />
Our plans for the next five years are as set out below:<br />
a. We will be expanding the range and profile of our customers beyond our current main market in<br />
the US. In this respect, we would explore new markets in Europe, Japan and the emerging PRC.<br />
b. We will continue to expand and upgrade our production capacity and capability worldwide. The<br />
PRC and Central America are locations in which we would invest substantially in the next few<br />
years. Subsequently, we will be looking at investments in Vietnam. In the long term, we would also<br />
be exploring investment opportunities in some Sub-Sahara African countries with the intention of<br />
creating strategic advantages to enter the European market.<br />
c. We will continue to improve our efficiency and productivity through production management and<br />
process refinement. We will also continue to invest in more efficient ways of production and in<br />
management tools. We will set aside a budget to automate part of our production process to cater<br />
for more complicated styling jobs. We expect to integrate the real-time production and<br />
management control systems for all our global operations by end 2003.<br />
57
d. We will expand the scope of our SCM services and offer it to more customers outside the Central<br />
American region. We target to provide SCM services to all of our customers in the Central<br />
American region and to one quarter of our orders worldwide within the next five years. With the<br />
anticipated completion of the integration of our real-time production and management control<br />
system globally by the end of 2003, the quality, scope and efficiency of our SCM services would<br />
be greatly enhanced. We believe that a well-developed SCM capability could emerge as a very<br />
unique competitive edge, and possibly a critical success factor in our competition in the global<br />
market in the long term.<br />
e. We will continue to explore and integrate into other domains of the value chain of the apparel<br />
business such as fabric manufacturing and processing, and screen printing. Where opportunities<br />
arise, we will expand our capabilities and business by acquiring or forming strategic partnerships<br />
or joint ventures with other manufacturers in these domains, who can add value to our business by<br />
allowing us to have greater involvement in businesses on which our present business is reliant.<br />
We may effect this by way of strategic acquisitions or forming alliances or joint ventures with<br />
upstream service providers such as fabric mills. We believe that this will give us additional<br />
competitive edge over our competitors.<br />
58
OUR MAJOR CUSTOMERS<br />
Our customers range from specialty brand retailers, retail chains, wholesalers to department stores,<br />
discount stores and mail-order houses. They include the following renowned companies:-<br />
– Gap Inc.;<br />
– Foot Locker, Inc.;<br />
– May Department Stores;<br />
– Sears;<br />
– Mervyn’s;<br />
– Target Corporation;<br />
– Phillips-Van Heusen; and<br />
– Eddie Bauer, Inc.<br />
Famous brand names owned by our customers include the following:-<br />
– Gap, Banana Republic and Old Navy (owned by Gap Inc);<br />
– Lady Foot Locker, Foot Locker, Champs, East Bay, Everlast and Team Edition (owned by Foot<br />
Locker, Inc);<br />
– John Ashford, Christie Brooks, Just Friends, Lord & Taylor and Spotted Frogs (owned by May<br />
Department Stores);<br />
– CRB and TKS (owned by Sears);<br />
– High Sierra, Sprockets and Private Luxuries (owned by Mervyn’s);<br />
– Circo and Cherokee (owned by Target’s)<br />
– IZOD, Geoffrey Beene, Phillips-Van Heusen and Arrow (owned by Phillips-Van Heusen); and<br />
– Eddie Bauer (owned by Eddie Bauer, Inc.)<br />
The table below sets forth the respective portion of revenue for the applicable period attributable to our<br />
customers who accounted for more than 5% of our Group revenue in any of the last 3 financial years<br />
ended 31 December 1999, 2000 and 2001:-<br />
Name Of Customer FY1999 FY2000 FY2001<br />
% % %<br />
Gap Inc.<br />
Old Navy 34.1 32.0 47.2<br />
Gap 37.6 30.5 18.8<br />
Banana Republic – – 6.4<br />
Total for Gap Inc. 71.7 62.5 72.4<br />
Foot Locker, Inc. – 7.7 7.2<br />
May Department Stores 6.6 4.7 3.9<br />
None of our Directors or substantial Shareholders has any interest, direct or indirect, in any of the major<br />
customers mentioned above.<br />
We have signed non-binding master agreements with certain of our customers including Gap Inc., which<br />
sets out the broad terms concerning future purchase orders to be issued by these customers to us. Such<br />
arrangement is a common industry practice as it facilitates the frequent orders which we receive from<br />
these customers from time to time.<br />
59
OUR MAJOR SUPPLIERS<br />
With our globalised and strategically located sourcing and manufacturing bases, we are able to source<br />
for a wide assortment of good quality fabrics and accessories, as well as support services at competitive<br />
prices. We source and purchase materials for our customers both regionally and globally.<br />
In our selection of suppliers (whether from our customers’ pre-approved list or from our source of<br />
suppliers) and the making of our order allocations amongst the suppliers, we take into consideration the<br />
quality of service, quality of components, reliability, delivery time and credit terms provided by the<br />
suppliers.<br />
We have a varied and steady source of fabric supply from countries such as China, Taiwan, Korea, Hong<br />
Kong, the US, Malaysia and Singapore.<br />
The table below sets forth the respective portion of purchases for the applicable period attributable to our<br />
suppliers who accounted for more than 5% of our Group purchases in any of the past three financial<br />
years ended 31 December 1999, 2000 and 2001:-<br />
Name Of Supplier Products supplied FY1999 FY2000 FY2001<br />
% % %<br />
Nice Dyeing Factory <strong>Limited</strong> Fabric 3.6 6.3 15.2<br />
Kam Hing Piece Works <strong>Limited</strong> Fabric 8.5 13.1 18.2<br />
<strong>Ocean</strong>ic Textiles Pte <strong>Ltd</strong> Fabric 2.6 3.4 6.4<br />
South Asia Textile Industries Pte <strong>Ltd</strong> Fabric 4.5 3.6 6.8<br />
To the best of our Directors’ knowledge at the date of this Prospectus, we are not aware of any<br />
information or arrangements which would lead to a cessation or termination of our current relationship<br />
with any of our major suppliers.<br />
None of our Directors or substantial Shareholders has any interest, direct or indirect, in any of our<br />
Group’s major suppliers mentioned above.<br />
60
OUR EMPLOYEES<br />
Staff Strength<br />
Our full-time staff strength as at 30 June 2002 is 6,900, comprising 6,489 production staff and 411 office<br />
staff.<br />
Staff Training<br />
Due to the nature of our business, the constant training and retraining of our staff is necessary to ensure<br />
that we are able to service our customers and keep in touch with the latest designs and developments in<br />
the industry. Accordingly, we have always placed strong emphasis on staff training and professional<br />
development.<br />
Designers and production managers are constantly updated with the latest trends in the industry. They<br />
are sent to attend seminars on apparel design and materials at local institutions. Conscious efforts are<br />
made to train supervisors and managers on production techniques, material waste control, quality<br />
assurance and compliance to work schedule.<br />
Other than training on sales and procedures, our Group also emphases on imparting and orientation of<br />
our staff on the working culture of our Group. This enables us to inculcate the spirit of teamwork among<br />
the staff and prepare them for meeting new challenges in the future.<br />
Production and Quality Assurance Staff<br />
Our Group practises intensive on-the-job training for our staff in order to uphold a high standard of<br />
production and customer service. Our in-house training programmes also play an important part in<br />
preparing supervisors and managers to take up higher postings needed for our fast expansion of<br />
business overseas. Further, to ensure that we have sufficient managers and supervisors in the course of<br />
our business expansion, as well as for the personal improvement of our staffs, we have an in-house proactive<br />
training scheme to train and prepare our staff to take up higher postings in new factories and<br />
offices overseas.<br />
We develop and update handbooks and manuals on all the functions of the operations, which are well<br />
documented in both electronic and hard copies. These handbooks and manuals are the main references<br />
used for training our workers on work standards and procedures across the various locations.<br />
We train our managerial and supervisory staff to understand the various production techniques and<br />
procedures, waste control, quality assurance measures and other matters related to their work. Besides<br />
providing training on the specific skills and procedures required for the job, we also emphases on the<br />
need to develop a healthy work culture amongst staffs. For example, to enhance better teamwork and<br />
understanding of work difficulties of other staffs and departments, we expose our staff to the job nature<br />
and problems faced by others.<br />
Our staff in Singapore also frequently attend training courses conducted by the local polytechnics,<br />
Singapore Textile and Fashion Federation, regional trade and fashion shows, seminars and talks on the<br />
fashion industry and investment opportunities relating to the industry.<br />
Sales, Marketing and Support Staff<br />
Our sales, marketing and support staffs are kept informed on the latest business developments and<br />
market trends from trade magazines and journals, through participation in fashion fairs and trade<br />
conventions and regular meetings with our customers. The purpose of these meetings is to explore ways<br />
to improve customers’ preference for our services, over our competitors.<br />
61
CREDIT POLICY<br />
Generally, the terms of our sales are mainly under letters of credit at sight. However, the average<br />
collection period normally ranged between 30 to 45 days due mainly to the processing time required to<br />
check the export documents and to effect remittance by our customers. We monitor closely all<br />
outstanding debts and review our debtors’ collectability continuously. We have not experienced any<br />
material bad debts in the past three financial years.<br />
INTELLECTUAL PROPERTY<br />
We are not dependent on any trademark or patent and we have not paid or received any royalties for any<br />
licenses or use of any intellectual property.<br />
62
PROPERTIES AND FIXED ASSETS<br />
The following are details of the properties leased by our Company or our subsidiaries:-<br />
Location/Use Approximate Approximate<br />
Land Area Lessee Term Annual rental<br />
(Sq. ft.)<br />
Singapore<br />
22 Tampines Street 92 71,250 Our 30 years from 1 August 1990 S$199,813<br />
Singapore 528876 Company (lease transferred to our<br />
Company on 30 December<br />
/ Office cum production<br />
Brunei<br />
1999), with an option to renew<br />
for a further term of 30 years<br />
Block A, Units 1 to 12,<br />
Simpang 607 Lot No.39178<br />
EDR No. BD33728 Kg Beribi<br />
Mukim Gadong BE1118<br />
54,250 PDAC 5 years from 1 March 2001 B$300,000<br />
/ Office cum production<br />
Block B, Units 13 to 24, 54,250 PDAC 5 years from 1 March 2001 B$477,600<br />
Simpang 607 Lot No.39178<br />
EDR No. BD33728 Kg Beribi<br />
Mukim Gadong BE1118<br />
/ Office cum production<br />
Wisma Jasa, Kg PDAC<br />
Serambangun Daerah<br />
Tutong, TA2541<br />
- units 1 to 5 11,500 2 years from 1 August 2001 B$90,000<br />
- unit 6 2,300 3 years from 1 August 2002 B$18,000<br />
- unit 7 2,300 5 years from 1 October 1999 B$18,000<br />
- unit 8 2,300 3 years from 1 October 2002 B$18,000<br />
- unit 9 2,300 7 years from 1 November 1999 B$28,055<br />
- units 10 & 11 4,600 3 years from 1 September 2002 B$30,000<br />
- unit 12 2,300 3 years from 1 September 2002 B$18,000<br />
- unit 13 2,300 5 years from 1 July 2000 B$18,000<br />
- unit 14 2,300 5 years from 1 July 2000 B$18,000<br />
- unit 15 2,300 5 years from 1 August 2000 B$18,000<br />
- units 16 to 18 6,900 5 years from 1 May 2000 B$54,000<br />
/ Office cum production<br />
EDR BD 10747 Lot No. 41,208 Milteq 3 years from 1 January 2003, B$180,000<br />
11763, District of Brunei with an option to renew for a<br />
Muara and EDR BD 12681 further term of 3 years<br />
Lot No. 13823, Brunei/ Muara<br />
District<br />
/ Office cum production<br />
Cambodia<br />
No.8 Veng Sreng St Sangkat 441,740 Suntex 70 years from 1 January 2003, Between<br />
Choam Chao, Khan Dangkor, with an option to renew for a US$24,000 to<br />
Phnom Penh (1)<br />
further term of 70 years US$79,800<br />
/ Office cum production<br />
Note:-<br />
(1) Please refer to pages 86 to 87 of this Prospectus for more details on the terms of this lease.<br />
63
Location/Use Approximate Approximate<br />
Land Area Lessee Term Annual rental<br />
(Sq. ft.)<br />
El Salvador<br />
Zona Franca Internacional 66,575 Hoon’s 5 years from 1 December 2001 US$259,775<br />
Edificio, No.2 KM 28 ½<br />
Carretera A Camalapa, La<br />
Paz<br />
/ Office cum production<br />
Honduras<br />
10, Zip Rio Blanco, 35,150 Uniwear 3 years from 1 May 2001 US$108,977<br />
San Pedro Sula<br />
/ Office cum production<br />
35, Zip Bufalo Villanueva, 26,363 Blue <strong>Ocean</strong> renewed monthly US$135,160<br />
Cortes<br />
/ Office cum production<br />
Hong Kong<br />
Unit 1202-3 No. 476 Castle 3,291 OSHK 16 October 2000 to 30 HK$560,786<br />
Peak Road September 2003<br />
/ Office<br />
Unit 1204 No. 476 Castle 1,505 OSHK 8 May 2002 to 30 HK$211,302<br />
Peak Road September 2003<br />
/ Office<br />
Malaysia<br />
No. 3, 5 & 7, Jalan 18,000 Eng Soon 2 years from 1 April 2002 RM100,800<br />
Perdagangan 12,<br />
Taman University, Skudai,<br />
81300 Johor Bahru, Johor<br />
/ Office cum production<br />
No. 26, Jalan 6,000 Eng Soon 2 years from 16 June 2002 RM22,800<br />
Perdagangan 12,<br />
Taman University, Skudai,<br />
81300 Johor Bahru, Johor<br />
/ Production<br />
PRC<br />
No. 84 Shi Nan Road, Dong 73,905 OS Apparel 6 years from 1 July 2002 Between<br />
Chong, Panyu, Guangzhou RMB508,716 to<br />
RMB549,432<br />
/ Office cum production<br />
US<br />
586 N. Gilbert Street, 35,833 OS Sourcing 3 years from 1 October 2002 Between<br />
Fullerton, California 92833 US$247,678 to<br />
US$267,888<br />
/ Office cum production<br />
64
The following are details of the property owned by our subsidiary:-<br />
Location/Use Approximate Owned by Net Book Value as at<br />
Land Area 30 June 2002<br />
(Sq. ft.)<br />
US<br />
3043 Yorkshire Way, 17,270 OS Sourcing US$550,000<br />
Rowland Heights,<br />
California 91748<br />
/ Accommodation<br />
65
DIRECTORS, MANAGEMENT AND STAFF<br />
DIRECTORS<br />
The Board of Directors is entrusted with the responsibility for the overall management of our Group. The<br />
names, ages, addresses and principal occupations of our Directors are listed below:-<br />
Name Age Residential Country of Position<br />
Address Principal<br />
Residence<br />
Ang Boon Cheow Edward 46 17B Leedon Park Singapore Executive Chairman;<br />
Singapore 267895 Chief Executive<br />
Officer<br />
Ang Boon Chong 40 17C Leedon Park Singapore Executive Director;<br />
Singapore 267896 Chief Operating<br />
Officer<br />
Ang Siew Tiong 41 781 Upper Changi Singapore Executive Director;<br />
Road East Vice President,<br />
Sunhaven #08-35 Production<br />
Singapore 486069<br />
Ng Ya Ken @ Ng Ah Kan 55 57 Sunbird Circle Singapore Non-Executive<br />
Singapore 487293 Director<br />
Teo Kiang Kok 47 11 Hillview Way Singapore Independent<br />
Singapore 669182 Director<br />
Chua Keng Hiang 47 942 Tampines Ave 5 Singapore Independent<br />
#10-237 Director<br />
Singapore 520942<br />
Information on the area of responsibility and working experience of our Directors are set out below:-<br />
Ang Boon Cheow Edward<br />
Mr Ang Boon Cheow Edward is the Executive Chairman and Chief Executive Officer of our Group and<br />
has been a Director since 1995. Mr Ang has been instrumental in charting the strategic development of<br />
our Group since its inception in 1995. In his current role, Mr Ang focuses on formulating, implementing<br />
and leading our Group’s operations towards further global expansions and diversification into related<br />
industries for optimum business efficiencies. Prior to joining our Company, Mr Ang was the Managing<br />
Director of Ang Tong Seng Brothers Enterprises Pte <strong>Ltd</strong>, which was involved in the business of building<br />
and civil engineering contractors, since 1992.<br />
Mr Ang graduated with a Business Degree from the University of Oklahoma, the US, and has achieved a<br />
career in the apparel industry, spanning seven years. His knowledge and expertise of the apparel<br />
industry has been recognised by his peers in the industry. Having served two years as Vice-President,<br />
Group III Committee of the Textile & Fashion Federation between 30 June 2000 to 18 July 2002, Mr Ang<br />
was elected by his peers to the position of President of the Federation in July 2002.<br />
Mr Ang is the brother of our Director Mr Ang Boon Chong, and is also the uncle of our Director, Mr Ang<br />
Siew Tiong. Mr Ang is also the husband of our Vice President, Global Administration and Human<br />
Resource, Ms Hoon Pang Heng Joanna.<br />
Ang Boon Chong<br />
Mr Ang Boon Chong, Executive Director and Chief Operating Officer, is the co-founder of our Company<br />
and has been a Director since 1995. Mr Ang is responsible for formulating and implementing our<br />
Group’s business policies and expansion plans, particularly in the areas of marketing, merchandising and<br />
66
production. He has been instrumental for our Group’s fully integrated business operations and has<br />
successfully introduced and managed total quality programmes for our Group’s global operations.<br />
Besides playing a vital role in providing overall direction in the day-to-day management of our Group, Mr<br />
Ang is committed to building the customers base and in maintaining and developing good business<br />
relationship with our global customers. Before his directorship in our Company, Mr Ang was the Executive<br />
Director of Ghim Li Fashion Co. Pte <strong>Ltd</strong> from 1991 to 1995. Prior to joining Ghim Li Fashion Co. Pte <strong>Ltd</strong>,<br />
he was the Managing Director of Polly Garments Pte <strong>Ltd</strong> from 1987 to 1990.<br />
Having been directly involved in the apparel industry for the last fifteen years, Mr Ang has accumulated<br />
comprehensive knowledge and understanding of the industry and its related industries. Mr Ang will<br />
continue to play a leading role in guiding future business expansions and growth of our Group.<br />
Mr Ang Boon Chong is the brother of our Director, Mr Ang Boon Cheow Edward and is also the uncle of<br />
our Director, Mr Ang Siew Tiong. He is the husband of Ms Lim Li Kian, our Senior Manager, Bills.<br />
Ang Siew Tiong<br />
Mr Ang Siew Tiong joined our Company as an Executive Director since our Group’s inception in 1995.<br />
Mr Ang focuses on the core of our Group’s business by managing and supervising all aspect of our<br />
Group’s production processes. Mr. Ang works closely with the management to ensure seamless<br />
production flow in all of our Group’s production bases. Bearing in mind our Group’s overall goals, vision<br />
and mission, Mr. Ang has successfully introduced fully integrated, centrally controlled production systems<br />
for our Group’s global production bases. Mr Ang is credited for ensuring customers’ satisfaction in our<br />
Group’s ability to meet with their quality, quantity and compliance requirements and expectations. Prior to<br />
joining us in 1995, Mr Ang was working with Ghim Li Fashion Co. Pte <strong>Ltd</strong> from 1989 to 1995 and held the<br />
position of General Manager of the Fiji factory of Ghim Li Fashion Co. Pte <strong>Ltd</strong> between 1993 to 1995.<br />
Having thirteen years of extensive experience in the apparel industry, Mr Ang constantly keeps abreast of<br />
production developments, adapting effective advanced production processes to our Group’s operations<br />
whenever applicable to ensure maximum production and business efficiencies.<br />
Mr Ang Siew Tiong is the nephew of our Directors, Mr Ang Boon Cheow Edward and Mr Ang Boon<br />
Chong. He is also the husband of our Senior Manager, Global Factory Planning, Ms Chu Siew Hwa.<br />
Ng Ya Ken @ Ng Ah Kan<br />
Mr Ng Ya Ken @ Ng Ah Kan was appointed as our Non-Executive Director on 7 February 2003. He was<br />
trained as an economist with a Masters degree (M. Soc. Sc.) from University of Waikato, New Zealand.<br />
He currently runs his own consulting firm, Multinet Management Consultants, a firm which he had set up<br />
in 1995. Between 1992 and 1995, he practised market research and management consulting, first at the<br />
Marketing Institute of Singapore and later at the Enterprise Promotion Centres as its Senior Consulting<br />
Manager. In his consulting career, Mr Ng has served companies from a wide spectrum of industries,<br />
including banking, telecommunications, statutory bodies, manufacturing and service industries.<br />
Mr Ng is the brother-in-law of Mr Ang Boon Cheow Edward and Ms Hoon Pang Heng Joanna.<br />
Teo Kiang Kok<br />
Mr Teo Kiang Kok was appointed as our Independent Director on 7 February 2003. He is a senior partner<br />
of Shook Lin & Bok, a firm of advocates and solicitors. Mr Teo has more than 18 years of experience in<br />
legal practice and is currently the head of corporate finance and China practice groups in Shook Lin &<br />
Bok. His main areas of practice are corporate finance, international finance and securities.<br />
Chua Keng Hiang<br />
Mr Chua Keng Hiang was appointed as our Independent Director on 7 February 2003. He is a practising<br />
public accountant with KK Chua & Co. Prior to becoming a partner of the firm in 1999, Mr Chua had<br />
worked in various fields ranging from public accounting, merchant banking and the manufacturing<br />
industry. He holds an honours degree in Accountancy from the then University of Singapore and he is a<br />
member of the Institute of Certified Public Accountants of Singapore and the Chartered Association of<br />
Certified Accountants of the United Kingdom.<br />
67
MANAGEMENT<br />
Our day-to-day operations are entrusted to our Executive Directors who are assisted by a management<br />
team of experienced key Executive Officers. The names, ages, addresses and positions of the Executive<br />
Officers are set out below:-<br />
Name Age Residential Country of Position<br />
Address Principal<br />
Residence<br />
Chong Chiak Yee 31 Flat A 22/Floor Tower 1, Hong Kong General Manager<br />
The Waterfront, (Hong Kong)<br />
No.1 Austin Road West,<br />
Kowloon<br />
Chu Siew Hwa 36 781 Upper Changi Rd East Singapore Senior Manager,<br />
Sunhaven #08-35 Global Factory<br />
Singapore 486069 Planning<br />
Go Kim Huay 35 443 Tampines Street 43 Singapore Senior Marketing<br />
#02-55 Manager<br />
Singapore 520443<br />
Hoon Pang Heng Joanna 40 17B Leedon Park Singapore Vice President,<br />
Singapore 267695 Global Administration<br />
and Human<br />
Resource<br />
Kuok Wai Peng 33 192 Joo Chiat Terrace Singapore Manager, Global<br />
Singapore 427337 Logistics<br />
Lee Ching Lian Bernadette 34 15 Lorong M Singapore Manager,<br />
Telok Kurau #01-03 Product<br />
Hong Yun Court Development<br />
Singapore 425303<br />
Lim Li Kian 37 17C Leedon Park Singapore Senior Manager,<br />
Singapore 267895 Bills<br />
Lo Siu So 55 186, Bukit Batok West Singapore Senior<br />
Avenue 6 Technical Manager<br />
Singapore 650186<br />
Tan Kim Teck Albert 43 No. 8 Veng Sreng St Cambodia General Manager<br />
Sangkat Choam Chao, (Cambodia)<br />
Khan Dangkor, Phnom<br />
Penh, Cambodia<br />
Woo Ah Toong 39 27 Moulmein Rise Singapore Finance Controller<br />
#09-27<br />
Singapore 308140<br />
Yeh Wu Ping 52 3043 Yorkshire Way, US General Manager<br />
Rowland Heights, (US)<br />
California 91748<br />
68
Information on the area of responsibility and working experience of our Executive Officers are set out<br />
below:-<br />
Chong Chiak Yee<br />
Ms Chong Chiak Yee, General Manager, Hong Kong is responsible for our Group’s overall business<br />
operations in Hong Kong. Ms Chong plans and implement marketing strategies in identifying and<br />
developing new businesses and client base globally. She is also responsible for sourcing of raw<br />
materials and fabric supplies from the North Asia region. She has been in the apparel industry for more<br />
than 10 years and is vastly experienced. Ms Chong was a Merchandiser with Sung Garment Sdn Bhd<br />
between 1990 to 1995 prior to joining the <strong>Ocean</strong> <strong>Sky</strong> Group in 1995.<br />
Chu Siew Hwa<br />
Ms Chu Siew Hwa, Senior Manager, Global Factory Planning, is responsible for our Group’s entire<br />
Factory Planning Department. She allocates production schedules according to each of our Group’s<br />
production bases’ quota, capacity and abilities. Ms Chu formulates, implements and monitors our<br />
Group’s productions, capacities, processes and budget planning through analyzing production<br />
requirements and schedules. She also implement revenue-maximising procurement and inventory<br />
strategies, which reduce inventory exposure and enable flexibility in inventory management and product<br />
planning. Ms Chu was working at Ghim Li Fashion Co Pte <strong>Ltd</strong> from 1987 to 1999 and last held the<br />
position of Factory Planning Manager prior to joining the <strong>Ocean</strong> <strong>Sky</strong> Group in 2000. Ms Chu is the wife<br />
of our Director, Mr Ang Siew Tiong.<br />
Go Kim Huay<br />
Ms Go Kim Huay, Senior Manager, Marketing, is responsible for the overall management of the<br />
Marketing Department. Through market research and analysis, Ms Go plans, implements and lead her<br />
team in identifying and developing new business opportunities and expanding existing customers base.<br />
She is also responsible for keeping abreast of latest development in the apparel and fashion industries.<br />
Ms Go holds a Bachelor of Arts (Honors) from the National University of Malaysia. Prior to joining us in<br />
1997, she has many years of relevant experience as a merchandiser in various companies, including Soi<br />
Yong (between April to December 1996), Ghim Li Fashion Co. Pte <strong>Ltd</strong> (between 1995 and 1996) and F Y<br />
Singapore Garment Pte <strong>Ltd</strong> (between 1992 to 1995).<br />
Hoon Pang Heng Joanna<br />
Ms Hoon Pang Heng Joanna, Vice President, Global Administration and Human Resource is responsible<br />
for developing, formulating and implementing human resources strategies that support the operational<br />
and strategic requirements of our Group. She pays particular attention in ensuring flexibility in<br />
accommodating diverse HR issues arising out of each of our Group’s production and operational bases.<br />
She oversees and guides the development of effective recruitment strategies, competitive remuneration<br />
and incentive policies and staff retention and training programmes. She is also responsible for<br />
formulating our Group’s administrative functions. Ms Hoon holds a Bachelor of Business Administration<br />
degree from the University of Oklahoma, US. She was the Assistant Vice President, Corporate Banking,<br />
Keppel Bank for five years from 1992 to 1997. She was the Human Resource and Finance Manager in<br />
Ang Tong Seng Brothers Enterprises Pte <strong>Ltd</strong> from 1998 to 1999 prior to joining us in May 1999. Ms Hoon<br />
is the wife of our Director, Mr Ang Boon Cheow Edward.<br />
Kuok Wai Peng<br />
Ms Kuok Wai Peng, Manager, Global Logistics, is responsible for our Group’s entire Shipping and<br />
Logistics Department. She oversees our Group’s seamless shipping activities for both import of raw<br />
materials and apparel exports. Ms Kuok keeps abreast of shipping practices, bilateral trade programs,<br />
port analysis, cargo prospects, and agencies management in order to achieve cost effective shipping and<br />
delivery management. Ms Kuok graduated with a Diploma in Business Administration (Finance) from the<br />
Singapore Polytechnic. She was the Operations Executive with Kuok Oils & Grains Pte <strong>Ltd</strong> for nine years<br />
prior to joining the <strong>Ocean</strong> <strong>Sky</strong> Group in 2000.<br />
69
Lee Ching Lian Bernadette<br />
Ms Lee Ching Lian Bernadette, Manager, Product Development is responsible for our Group’s Creative<br />
and Product Development Department. She leads and implements brand, product and promotional<br />
developments through understanding the various brands and products concepts. She keeps abreast of<br />
customers’ requirements through in-depth study and analyzing fashion trends and developments. She is<br />
also responsible for our Group’s product sales, advertising and pricing strategies. Ms Lee obtained a<br />
Bachelor of Science, Economics from the University of London and was a merchandiser with FILA<br />
Marketing (Singapore) Pte <strong>Ltd</strong> between 1999 and 2001 prior to joining us in 2001. Between 1995 to<br />
1999, she was a Vice President, Marketing, in Ossia <strong>International</strong> Pte <strong>Ltd</strong> and in the years 1994 and<br />
1995, she was a merchandiser in Esquel Enterprise Pte <strong>Ltd</strong>. Prior to these, Ms Lee was an Assistant<br />
Field Executive in Forbes Management Consultants between 1992 to 1993.<br />
Lim Li Kian<br />
Ms Lim Li Kian, Senior Manager, Bills is responsible for our Group’s entire Bills and Credit Management<br />
Department. She develops and monitors our Group’s import and export bills activities through strict<br />
credit evaluations, administration and risk management. Ms Lim maintains a close working relationships<br />
with our Group’s bankers in securing banking and credit facilities. Ms Lim has gained in-depth<br />
experience and expertise having spent the last fifteen years in the shipping and bills fields. She was the<br />
Shipping/Bills Manager with Ghim Li Fashion Co Pte <strong>Ltd</strong> prior to joining the <strong>Ocean</strong> <strong>Sky</strong> Group in 1995.<br />
Ms Lim is the wife of our Director, Mr Ang Boon Chong.<br />
Lo Siu So<br />
Mr Lo Siu So, Senior Technical Manager, is responsible for leading and developing efficient and effective<br />
technical programmes for all our production bases of our Group’s operations. He plays a vital role by<br />
studying and recommending the best production processes and sequence to adopt based on the<br />
technical capabilities of each production base to ensure maximum productivity level at the highest cost<br />
efficiency. Mr Lo is also responsible for facilitating maintenance and conducting regular checks to ensure<br />
our Group’s technical facilities are at optimal operating capacity at all times. Mr Lo has relevant work<br />
experience in technical positions in the apparel industry. Prior to joining the <strong>Ocean</strong> <strong>Sky</strong> Group in 2000,<br />
Mr Lo was the Factory Manager in Kim Koon Garment Industries Pte <strong>Ltd</strong> between 1991 to 1996.<br />
Tan Kim Teck Albert<br />
Mr Tan Kim Teck Albert, General Manager of Suntex in Cambodia is responsible for the entire<br />
management and production facilities in Cambodia. He plays a vital role in recommending, leading and<br />
implementing our Group’s expansion plans in Cambodia. In compliance with our Group’s overall targets,<br />
he manages and monitors the entire business and production facilities to ensure optimum operations<br />
capacity. Mr Tan has been with us since 1998. Back in 1996, Mr Tan joined Forte Insurance Cambodia<br />
<strong>Limited</strong> as the Marketing Manager, and was promoted to the position of the General Manager in charge<br />
of computers, cars and insurance in 1997. Prior to his employment with Forte Trading, he was a sales<br />
and marketing personnel with Trans Eurocars between 1992 and 1996.<br />
Woo Ah Toong<br />
Mr Woo Ah Toong, Finance Controller, joined our Group in February 2001 and is responsible for the<br />
overall planning and management of our Group’s financial, taxation and corporate governance functions.<br />
Mr Woo also plays an important advisory role towards the formulation of our Group’s strategic<br />
development plans based on financial analysis and recommendations to the management. Mr Woo has<br />
fourteen years of accounting and financial management experience and has spent seven years as the<br />
Financial Controller of a listed company prior to joining our Group. Between 1987 and 1994, Mr Woo was<br />
working in an international accounting firm before leaving as an audit manager. Mr Woo graduated with a<br />
Bachelor of Commerce Degree from the Melbourne University and is a member of the Institute of<br />
Certified Public Accountants of Singapore.<br />
70
Yeh Wu Ping<br />
Mr Yeh Wu Ping, General Manager of OS Sourcing, is responsible for the overall operations of our<br />
Group’s marketing and sourcing facilities in the US. In close consultation with our Group’s various<br />
production bases, he is responsible for sourcing of raw materials and fabric supplies from the US to meet<br />
buyers’ specific requirements. Mr Yeh is also responsible for developing our Group’s marketing, sourcing<br />
and supply chain management businesses in the US. Mr Yeh graduated from the Overseas Chinese<br />
Business College and has acquired in-depth experience and expertise of the apparel industry having<br />
spent the last 29 years in it. Prior to joining us in 2002, Mr Yeh was a Purchasing Manager for fabric in<br />
Ghim Li Fashion Co. Pte <strong>Ltd</strong> between 1996 to 2001, and the General Manager of King Sewing Industrial<br />
Co. <strong>Ltd</strong> between 1983 to 1995.<br />
STAFF<br />
Our Group had a total of 2,045, 2,911 and 6,391 employees as at 31 December 1999, 2000 and 2001<br />
respectively. Our full-time staff strength as at 30 June 2002 is 6,900, comprising 6,489 production staff<br />
and 411 office staff.<br />
71
MANAGEMENT REPORTING STRUCTURE<br />
Our management reporting structure is as follows:<br />
ANG BOON CHEOW EDWARD<br />
Executive Chairman &<br />
Chief Executive Officer<br />
72<br />
ANG BOON CHONG<br />
Director & Chief Operating<br />
Officer<br />
WOO AH TOONG<br />
Finance<br />
Controller<br />
KUOK WAI<br />
PENG<br />
Manager,<br />
Global Logistics<br />
HOON PANG<br />
HENG<br />
JOANNA<br />
Vice President,<br />
Global<br />
Administration<br />
and Human<br />
Resource<br />
YEH WU<br />
PING<br />
General<br />
Manager<br />
(US)<br />
TAN KIM<br />
TECK<br />
ALBERT<br />
General<br />
Manager<br />
(Cambodia )<br />
CHONG<br />
CHIAK YEE<br />
General<br />
Manager<br />
(Hong Kong)<br />
LO SIU SO<br />
Senior<br />
Technical<br />
Manager<br />
LEE CHING<br />
LIAN<br />
BERNADETTE<br />
Manager,<br />
Product<br />
Development<br />
GO KIM<br />
HUAY<br />
Senior<br />
Marketing<br />
Manager<br />
CHU SIEW<br />
HWA<br />
Senior<br />
Manager,<br />
Global<br />
Factory<br />
Planning<br />
ANG SIEW<br />
TIONG<br />
Director & Vice<br />
President,<br />
Production<br />
LIM LI KIAN<br />
Senior Manager,<br />
Bills
SERVICE AGREEMENTS<br />
On 5 February 2003, our Company entered into a service agreement with our Executive Chairman , Mr<br />
Ang Boon Cheow Edward, and our Executive Director, Mr Ang Boon Chong respectively. (the “Service<br />
Agreements”). The term of the Service Agreements commences on 1 January 2003 and is for a period of<br />
3 years, renewable for a further term of 3 years at the option of our Company. The Service Agreements<br />
may be terminated upon either party giving to the other party no less than 6 months’ written notice.<br />
Pursuant to the terms of their service agreement, Ang Boon Cheow Edward and Ang Boon Chong will<br />
each receive a monthly gross salary of S$40,000 and be entitled to an annual wage supplement<br />
equivalent to three (3) months of their monthly salary.<br />
Upon the listing of the Company, Ang Boon Cheow Edward and Ang Boon Chong will also each be<br />
entitled to receive an annual incentive bonus (the “Incentive Bonus”) of a sum calculated based on the<br />
audited aggregate net profit (excluding extraordinary items and before deducting the Incentive Bonus)<br />
before tax of our Group as a whole (the “PBT”). If the employment under the Service Agreements is for<br />
less than a full Financial Year of our Group, the Incentive Bonus for that Financial Year shall be<br />
apportioned in respect of the actual number of days of such employment on the basis of a 365-day<br />
Financial Year.<br />
The Incentive Bonus under the Service Agreements is calculated in the manner set out below:<br />
PBT Incentive Bonus<br />
PBT < S$5 million 3% of PBT<br />
S$5 million < PBT < S$10 million 4% of PBT<br />
S$10 million < PBT < S$15 million 5% of PBT<br />
PBT > S$15 million 6% of PBT<br />
Mr Ang Boon Cheow Edward and Mr Ang Boon Chong will each be entitled to the sole use of a motor<br />
car of such make and model as the Directors shall decide to enable to him to perform his duties. Under<br />
the Service Agreements, our Company will also acquire one golf club membership for each of Mr Ang<br />
Boon Cheow Edward and Mr Ang Boon Chong and pay for requisite membership or admission fees.<br />
Upon the completion of the initial term of 3 years, the golf club membership shall beneficially belong to<br />
Mr Ang Boon Cheow Edward and Mr Ang Boon Chong.<br />
73
DIRECTORS’ AND EXECUTIVE OFFICERS’ REMUNERATION<br />
The remuneration paid to our Directors and Executive Officers on a proforma basis and in remuneration<br />
bands for FY2000 and FY2001 are as follows:-<br />
(a) Directors in each remuneration band for FY2000<br />
Directors Up to S$250,000 S$250,001 to S$500,001 to<br />
S$500,000 S$750,000<br />
Ang Boon Cheow �<br />
Edward<br />
Ang Boon Chong �<br />
Ang Siew Tiong �<br />
(b) Executive Officers in each remuneration band for FY2000<br />
None of the remuneration of our Executive Officers exceed S$250,000 for FY2000.<br />
(c) Directors in each remuneration band for FY2001<br />
Directors Up to S$250,000 S$250,001 to S$500,001 to<br />
S$500,000 S$750,000<br />
Ang Boon Cheow �<br />
Edward<br />
Ang Boon Chong �<br />
Ang Siew Tiong �<br />
(d) Executive Officers in each remuneration band for FY2001<br />
None of the remuneration of our Executive Officers exceed S$250,000 for FY2001.<br />
The estimated remuneration paid and to be paid to our Directors and Executive Officers each in<br />
remuneration bands for FY2002 are as follows:-<br />
(a) Directors in each remuneration band for FY2002<br />
Directors Up to S$250,000 S$250,001 to S$750,001 to<br />
S$500,000 S$1,000,000<br />
Ang Boon Cheow �<br />
Edward<br />
Ang Boon Chong �<br />
Ang Siew Tiong �<br />
(b) Executive Officers in each remuneration band for FY2002<br />
None of the remuneration of our Executive Officers exceed S$250,000 for FY2002.<br />
74
REMUNERATION OF EMPLOYEES RELATED TO DIRECTORS AND SUBSTANTIAL<br />
SHAREHOLDERS<br />
We have 12 remunerated employees who are related to our Directors and Substantial Shareholders. The<br />
positions of these related employees and their relationships with our Directors and/or Substantial<br />
Shareholders are as follows:-<br />
Name of Related Employee Position in our Group Relationship<br />
Hoon Pang Heng Joanna Vice President, Global<br />
Administration and<br />
Human Resource<br />
Wife of Ang Boon Cheow Edward<br />
Lim Li Kian Senior Manager, Bills Wife of Ang Boon Chong<br />
Chu Siew Hwa Senior Manager, Wife of Ang Siew Tiong<br />
Global Factory Planning<br />
Hoon Pang Wan Finance Manager Sister-in-law of<br />
(Global Control & Audit) Ang Boon Cheow Edward<br />
Ang Kang Er Manager Father of Ang Boon Cheow Edward<br />
and Ang Boon Chong<br />
Foo Ah Kiah Sample Sewer Supervisor Sister-in-law of Ang Boon Cheow<br />
Edward and Ang Boon Chong<br />
Jennie Ang Chen Ni Administrative Executive Niece of Ang Boon Cheow Edward<br />
and Ang Boon Chong<br />
Pek Sew Leng Store Supervisor (Cambodia) Brother-in-law of Ang Boon Cheow<br />
Edward and Ang Boon Chong<br />
Pek Poh San Administrative and Human Nephew of Ang Boon Cheow Edward<br />
Resource Manager (Cambodia) and Ang Boon Chong<br />
Ang Kiang Long Factory Manager (Honduras) Cousin-in-law of Ang Boon Chong<br />
Sevino Augustina Arevalo Accountant (Honduras) Cousin-in-law of Ang Boon Chong<br />
Ang Kiang Leng Manager, Sunglobe Cousin-in-law of Ang Boon Chong<br />
The basis of determining the remuneration of these related employees is the same as the basis of<br />
determining the remuneration of other unrelated employees. In FY2001, the annual remuneration figures<br />
(including CPF contributions and bonuses) of these related employees is S$809,000. This represented<br />
approximately 6.7% of our profit before tax.<br />
The aggregate remuneration (including CPF contributions and bonuses) paid to our Directors and the<br />
related employees, assuming that the Service Agreements have been in existence during the financial<br />
year ended 2001, is approximately S$3,679,000, which is approximately 25.7% of our profit before tax<br />
and before payment to our Directors and related employees in FY2001.<br />
Adjustments to the remuneration packages for these related employees will be reviewed annually by the<br />
Remuneration Committee to ensure that they are in line with our staff remuneration policy and<br />
commensurate with their job scope and level of responsibility.<br />
ANNUAL REPORT DISCLOSURE<br />
The total remuneration paid to the Directors as well as Executive Officers and employees who are related<br />
to the Directors and Substantial Shareholders will be disclosed in our annual report.<br />
75
OCEAN SKY SHARE OPTION SCHEME<br />
We have implemented a share option scheme known as the “<strong>Ocean</strong> <strong>Sky</strong> Share Option Scheme” (the<br />
“Scheme”). The Scheme was approved by our Shareholders at an Extraordinary General Meeting held on<br />
30 January 2003. The rules of the Scheme (the “Rules”) are set out in Appendix D of this Prospectus.<br />
Terms used herein, unless otherwise defined, have the same meaning as contained in the Rules.<br />
Purpose of the Scheme<br />
We believe the Scheme is essential to enhance our competitiveness as an employer to recruit and retain<br />
suitably qualified staff to meet our business needs.<br />
We further recognise that the retention of the services of highly qualified and experienced employees is<br />
integral to the success and to the continued growth of our Group in an industry where experience and<br />
commitment are valued qualities and may necessarily command a premium. Accordingly, we hope by<br />
instituting the Scheme we will be able to :-<br />
(i) motivate employees to achieve and maintain a high level of performance and contribution;<br />
(ii) make total employee remuneration sufficiently competitive to recruit and retain employees whose<br />
contributions are important to long term growth and profitability of our Company; and<br />
(iii) foster an ownership culture within our Company which aligns the interests of employees with the<br />
interests of our Shareholders.<br />
Eligibility<br />
The Scheme allows participation by full-time employees, Executive and Non-Executive Directors of our<br />
Company as well as our subsidiaries and associated companies which our Group has control, who have<br />
attained the age of 21 years and above on or before the relevant date of offer of an option provided that<br />
none of the participants shall be an undischarged bankrupt, and who, in the absolute discretion of the<br />
committee tasked with the management of the Scheme (the “Committee”), are eligible to participate in<br />
the Scheme. Participation by an eligible person who, in relation to our Company, has control of our<br />
Company’s affairs (“Controlling Shareholders”), and their associates, is, however, subject to approval by<br />
the independent Shareholders of our Company in separate resolutions for each such persons. As at the<br />
date of this Prospectus, ATS Holdings (2000), Mr Ang Boon Cheow Edward and Mr Ang Boon Chong are<br />
the Controlling Shareholders.<br />
The Non-Executive Directors of our Company, although not involved in the day to day running of our<br />
Group, play an invaluable role in the success of our Company by contributing their wealth of expertise<br />
and experience to the Board of Directors for the benefit of our Group. Currently, all our Non-Executive<br />
Directors are members of the Audit Committee. The Audit Committee of our Company undertakes a<br />
major role in the corporate governance of our Group. It is desirable therefore, that the Non-Executive<br />
Directors of our Company who form the back-bone of our Company’s Audit Committee be allowed to<br />
participate in the Scheme as well.<br />
By allowing so, we give recognition and acknowledgement to the outstanding services made by Non-<br />
Executive Directors of our Company. Their participation in the Scheme will also attract future Independent<br />
Directors of great ability and aptitude to sit on the Audit Committee. In the long term, this will help ensure<br />
the continuity of good corporate governance in our Company.<br />
We recognise that where our employees and Executive Directors of our subsidiaries and associated<br />
companies have participated in the Scheme, they would be in a position to contribute to the development<br />
and success of our Group. Only those who are likely to contribute to the development and success of our<br />
Group will be selected to participate in the Scheme.<br />
Where our subsidiaries or associated companies implement their own employees’ share option schemes<br />
or share ownership schemes, the employees of these subsidiaries or associated companies shall at the<br />
absolute discretion of the Committee and on a case by case basis, be eligible to participate in the<br />
Scheme only if selected by the Committee.<br />
76
Rationale for participation of Mr Ang Boon Cheow Edward<br />
Mr Ang Boon Cheow Edward, our Executive Chairman and Chief Executive Officer, holds an aggregate<br />
of approximately 65.53% of our Company’s shareholdings (directly and indirectly) after the Invitation. he<br />
is one of the co-founders of our Group and has led our Group in our development over the years. He is<br />
responsible for overseeing the overall management of our Group, and has been pivotal in charting the<br />
direction and growth of our Group. Two key factors to the success of the Group are his knowledge and<br />
contacts in the apparel industry, in which he has more than 7 years of experience.<br />
We believe that Mr Ang will continue to play a key role in the growth and future development of our<br />
Group and that there are further potential contributions which he can make. As such, it is our intention to<br />
provide incentives to him under the Scheme in addition to the remuneration package offered to him (as<br />
described on page 73 of this Prospectus under the section “Service Agreements”). By allowing him to<br />
participate in the Scheme, Mr Ang will have the opportunity to participate in the future appreciation of our<br />
Company’s share price through an increase in his shareholdings to a more significant level that<br />
commensurates with our Company’s future growth.<br />
Rationale for participation of Mr Ang Boon Chong<br />
Mr Ang Boon Chong, our Executive Director and Chief Operating Officer, holds an aggregate of<br />
approximately 63.73% of our Company’s shareholdings (directly and indirectly) after the Invitation. Being<br />
one of the co-founders of our Group, he has played an important role in our growth since our inception.<br />
Mr Ang has been instrumental in formulating and implementing the expansion plans of our Group and<br />
has been the main driving force in the global expansion of our operations.<br />
With his strong business acumen and extensive knowledge of the apparel industry, we believe he has the<br />
potential and ability to contribute to the further success of our Group and for that reason, it is our<br />
intention to provide him with incentives under the Scheme (in addition to the remuneration package<br />
offered to him as described on page 73 of this Prospectus under the section “Service Agreements”). By<br />
participating in the Scheme, Mr Ang will thus be able to share in any future appreciation of our<br />
Company’s share price through an increase in his shareholdings to a more significant level that<br />
commensurates with our Company’s future growth.<br />
The participation by Mr Ang Boon Cheow Edward and Mr Ang Boon Chong in the Scheme will take place<br />
only after the listing of our Company on the Official List of the SGX-ST. Their participation in the<br />
Scheme, has been approved by shareholders of our Company at the Extraordinary General Meeting held<br />
on 30 January 2003. Pursuant to the SGX-ST Listing Manual, any specific grant of Options to each of Mr<br />
Ang Boon Cheow Edward, Mr Ang Boon Chong and any other Controlling Shareholders and/or their<br />
associates, will have to be by way of separate resolutions approved by independent shareholders of our<br />
Company in a general meeting. Clear justification or rationale for participation, the specific grants to be<br />
made and any discount shall be disclosed on the circular seeking such approval. Details of the number of<br />
Options granted, the number of Options exercised and the subscription price (including any discount) will<br />
be disclosed in the annual report of our Company.<br />
Size of the Scheme<br />
The size of the Scheme (the “Scheme Size”) has been fixed at 15% of our issued share capital from time<br />
to time. We believe this Scheme Size is reasonable, taking into account the nature of our business in the<br />
industry, the contributions of our employees and our share capital.<br />
Exercise Period<br />
The period for the exercise of an option granted under the Scheme (the “Option”) shall be the period<br />
commencing on (and including) the first anniversary (for options granted at Market Price, as defined<br />
below), or the second anniversary (for options granted at a discount to the Market Price) of the relevant<br />
date of grant of the Option and expiring on (and including) the day immediately preceding the tenth<br />
anniversary of the date of grant of the Option or such other shorter period as determined by the<br />
Committee or prescribed under any relevant laws, regulations or rules of the SGX-ST from time to time.<br />
77
Issue Price<br />
The Exercise Price (as defined under the Scheme) for each Share in respect of which an Option is<br />
exercisable shall be determined and fixed by the Committee and shall be either :<br />
(a) the market value equal to the weighted average share price of the Shares for the last trading day<br />
immediately preceding the relevant date of grant of the Option (the “Market Price”); or<br />
(b) the nominal value of the Shares, whichever is greater; or<br />
(c) a price set at a discount to the Market Price or the nominal value of the Shares, whichever is<br />
greater.<br />
Options with discounted Exercise Price will only be granted to deserving executives and employees of<br />
our Group whose performance have been consistently sterling and/or whose future contributions and<br />
value-add to our Group would be invaluable.<br />
The amount of discount in respect of such Options is to be determined during the financial period when<br />
the Options are granted and the maximum discount shall not exceed 20% of the Market Price (or such<br />
other percentage or amount as may be prescribed or permitted for the time being by the SGX-ST).<br />
Our Company believes that the ability to offer discounted Options (“Incentive Options”) will operate as a<br />
means to compliment good executives and employees for their outstanding performance and a reward for<br />
their valuable and dedicated service to our Group. Incentive Options will not only motivate good<br />
executives and employees to continue to excel and become more dedicated and loyal to our Group, it<br />
also secures our employment of them through the implementation of a longer vesting period before the<br />
Incentive Options may be fully exercised.<br />
Further, our Company believes that the grant of Incentive Options to such executives and employees will<br />
provide an added incentive for them to focus more on improving the profitability and returns of our Group<br />
and enhance shareholder value, which will benefit all Shareholders when these are eventually reflected<br />
through share price appreciation. Incentive Options would also be perceived as an added privilege by the<br />
executives and employees of our Group, thus inspiring them to work hard and produce good results to<br />
qualify themselves for Incentive Options.<br />
In this respect, our Group has proposed that the quantum of discount to be given will be determined, at<br />
the absolute discretion of the Committee, based on the performance of our Group with reference to our<br />
Group’s earnings per Share growth during the financial period (the “Last Financial Period”) immediately<br />
preceding the financial period when the Options are granted as compared to the financial period prior to<br />
the Last Financial Period, in accordance with Rule 8 in the Rules of the Scheme, as set out in Appendix<br />
D of this Prospectus.<br />
Our Company has decided that regardless of the level of growth during the financial period when the<br />
Options are granted, the equivalent discount quantum for its Incentive Options will only be up to a<br />
maximum of 20%. Our Company feels that if the employees are able to drive the growth of our Group, a<br />
discount of up to 20% for the Incentive Options should be a reasonable and fair quantum to sufficiently<br />
reward them for their effort.<br />
In any case, our Company is of the view that a discount quantum of up to 20% will enable our Group to<br />
have greater flexibility to use share options as a means of building a variable component into the<br />
remuneration package of our employees without compromising on their performance standard and<br />
efficiency. It would enable our Group to introduce a refreshing manner of motivating employees to<br />
maximise their performance which they would also benefit as Shareholders of our Company thereby<br />
spurring them to optimise their performance standards and efficiency, which is vital to our Group’s<br />
success.<br />
Further, the ability to grant Incentive Options to our employees would help our Group to persuade<br />
employees to accept necessary caps on their salary growth and enable us to retain good employees who<br />
have the motivation and attributes to pursue continuous improvement in performance and are able to add<br />
value to our Company.<br />
78
The number and proportion of any Incentive Options granted will be disclosed accordingly in our<br />
Company’s annual reports as provided for in Rule 14 of the Scheme.<br />
In determining the discount (if any) on such Options to be granted to an eligible employee under the<br />
Scheme, the Committee will take into consideration the following :<br />
(a) the performance of our Company and our Group;<br />
(b) the individual performance of such employee ; and<br />
(c) the contribution of the Participant to the success and development of our Company and/or our<br />
Group; and<br />
(d) the benefits received by such employee under any other employee remuneration plans or scheme<br />
of our Group, including the Profit Sharing Plan.<br />
Financial Effects of the Scheme<br />
The Scheme will increase our issued share capital to the extent of the new Shares that will be issued<br />
and allotted pursuant to the exercise of Options.<br />
Any Options granted under the Scheme would have a fair value. The impact from the issue and allotment<br />
of new Shares upon the exercise of options on our net tangible asset per Share will be accretive if the<br />
Exercise Price is above the net tangible asset per Share, but dilutive otherwise. This impact however, will<br />
materialise only upon the actual exercise of the relevant Options.<br />
In addition, where the Options are granted at a discounted Exercise Price, there will be a cost to our<br />
Company, as<br />
a) the exercise of such Option necessarily translates into a reduction of the proceeds from the<br />
exercise, such reduction being represented by the discount granted;<br />
b) the monetary cost of granting Options with discounted Exercise Price is borne by us, our earnings<br />
would effectively be reduced by an amount corresponding to the reduced interest earnings that we<br />
would have received from the difference in proceeds from Exercise Price with no discount versus<br />
the discounted Exercise Price, therefore, a dilution of our earnings per Share would necessarily<br />
result.<br />
The above costs would only materialise upon the exercise of the relevant Options.<br />
Vesting Period<br />
In respect of an Option granted with the Exercise Price pegged at the Market Price, the holder of such<br />
Option is permitted to exercise all the Shares comprised in the Option on (and including) the first<br />
anniversary of the relevant date of the grant of the Option and expiring on (and including) the day<br />
immediately preceding the tenth anniversary of the relevant date of the grant of the Option, or the expiry<br />
of such other period of time as may from time to time be determined by the Committee or prescribed<br />
under the relevant laws, regulations and rules of the SGX-ST.<br />
In respect of an Incentive Option granted after the listing of our Company, the holder of such Incentive<br />
Option is permitted to exercise all the Shares comprised in the Incentive Option on (and including) the<br />
second anniversary of the relevant date of grant of Incentive Option and expiring on (and including) the<br />
day immediately preceding the tenth anniversary of the relevant date of the grant of the Option, or the<br />
expiry of such other period of time as may from time to time be determined by the Committee or<br />
prescribed under the relevant laws, regulations and rules of the SGX-ST for such Incentive Options.<br />
As at the date of this Prospectus, no Options have been granted. Upon the listing of our Company on<br />
SGX-ST, the relevant laws, regulations and rules of the SGX-ST shall apply and the Scheme shall be<br />
subject in accordance thereto.<br />
79
SGX-ST Requirements<br />
The Company shall disclose the following in its annual report:-<br />
(a) the names of the members of the Committee administering the Scheme; and<br />
(b) the information required in the table below for the following participants:-<br />
(i) Directors of the Company;<br />
(ii) Participants who are Controlling Shareholders of the Company and their associates;<br />
and<br />
(iii) Participants, other than those in (i) and (ii) above, who receive 5% or more of the total<br />
number of options available under the Scheme:-<br />
Name of No. of Options Aggregate Aggregate Aggregate<br />
Participant granted during Options granted Options Options<br />
financial year since exercised since outstanding as<br />
under review commencement commencement at the end of the<br />
(include Exercise of the Scheme to of the Scheme to financial year<br />
Price) the end of the the end of the under review<br />
financial year financial year<br />
under review under review<br />
(iv) the number and proportion of options granted at a discount during the financial year<br />
under review, such information to be disclosed in respect of every 10% discount<br />
range, up to 20%.<br />
(c) (i) the names of and number and terms of Options granted to each Employee who<br />
receives 5% of more of the total number of Options available to Employees under the<br />
Scheme, during the financial year under review; and<br />
(ii) the aggregate number of Options granted to the Employees for the financial year<br />
under review, and since the commencement of the Scheme to the end of the financial<br />
year under review.<br />
(d) an appropriate negative statement that directors or employees of the parent company and<br />
its subsidiaries are not eligible to participate in the Scheme and that all the Options granted<br />
are not at a discount.<br />
80
CORPORATE GOVERNANCE<br />
Corporate governance refers to the processes and structure by which the business and affairs of a<br />
company are directed and managed, in order to enhance long term shareholder value through enhancing<br />
corporate performance and accountability, whilst taking into account the interests of other stakeholders.<br />
Good corporate governance therefore embodies both enterprise (performance) and accountability<br />
(conformance).<br />
With a view towards good corporate governance, our Company has adopted the recommendations of the<br />
Code of Corporate Governance issued on 21 March 2001 and implemented the corporate governance<br />
model as set out below :<br />
(A) Executive Committee<br />
Our Company recognises that in the ordinary course of our operations, there are instances where it<br />
would not be time or cost efficient to convene a meeting of all Directors to approve general matters that<br />
are routine or immaterial.<br />
In this regard, our Company has formed an Executive Committee comprising Executive Directors of our<br />
Company, namely, Ang Boon Cheow Edward, Ang Boon Chong and Ang Siew Tiong, to whom our Board<br />
of Directors have delegated recurring operational matters and matters that are not material.<br />
Recurring operational matters include :<br />
(a) reviewing our Company’s and our Group’s financial requirements and to approve matters relating<br />
to:<br />
� opening and closing of bank accounts;<br />
� opening and closing of securities trading accounts;<br />
� change in banking signatories and arrangements;<br />
(b) approving the incorporation, acquisition and/or disposal of company or companies resulting from<br />
internal re-structuring and re-organisation within our Group;<br />
(c) authorising the affixation of the Common Seal of our Company in accordance with its Articles of<br />
Association to all such documents as are necessary in connection therewith;<br />
(d) reviewing and approving yearly business plans of all operating companies within our Group<br />
including amendments thereto;<br />
(e) reviewing quarterly and monthly reports of all operating companies within our Group;<br />
(f) reviewing and decide on appropriate actions on major variances in budgets for operating<br />
companies within our Group; and<br />
(g) reviewing and approving remuneration packages of all senior appointments (other than Directors),<br />
of all companies within our Group;<br />
Matters that are considered immaterial include :<br />
(a) approving the incorporation and acquisition of companies other than those intended for material<br />
transactions; and<br />
(b) approving the disposal/de-registration/application for strike off/liquidation of companies whose<br />
values are not material.<br />
Pursuant to the recommendations under the Code of Corporate Governance issued on 21 March 2001,<br />
and in compliance thereof, we have also formed the following committees :<br />
81
(B) Audit Committee<br />
Our business and operations are presently under the management and close supervision of our<br />
Executive Directors who are assisted by a team of key Executive Officers. The overall management is<br />
overseen by our Chief Executive Officer, Mr Ang Boon Cheow Edward.<br />
After the listing, our Executive Directors and Executive Officers will manage the business and operations<br />
of our Group. The Audit Committee will assist our Board of Directors with regard to discharging its<br />
responsibility to safeguard our Company’s assets, maintain adequate accounting records, and develop<br />
and maintain effective systems of internal controls with an overall objective to ensure that our<br />
management has created and maintained an effective control environment in our Company, and that our<br />
management demonstrates and stipulates the necessary aspect of our Group’s internal control structure<br />
among all parties.<br />
Our Audit Committee comprises our Independent Directors Mr Teo Kiang Kok and Mr Chua Keng Hiang,<br />
and our Non-Executive Director, Mr Ng Ya Ken @ Ng Ah Kan. Our Audit Committee will be chaired by Mr<br />
Chua Keng Hiang.<br />
Our Audit Committee will meet quarterly to discuss and review the following:-<br />
(a) review with the external auditors the audit plan, their evaluation of the system of internal controls,<br />
their audit report, their management letter and our management’s response;<br />
(b) review the quarterly and annual financial statements and balance sheet and profit and loss<br />
accounts before submission to our Board of Directors for approval, focusing in particular, on<br />
changes in accounting policies and practices, major risk areas, significant adjustments resulting<br />
from the audit, the going concern statement, compliance with accounting standards as well as<br />
compliance with any stock exchange and statutory/ regulatory requirements;<br />
(c) review the internal controls and procedures and ensure co-ordination between the external<br />
auditors and our management, reviewing the assistance given by our management to the auditors,<br />
and discuss problems and concerns, if any arising from the interim and final audits, and any<br />
matters which the auditors may wish to discuss (in the absence of our management where<br />
necessary);<br />
(d) review and discuss with the external auditors any suspected fraud or irregularity, or suspected<br />
infringement of any relevant laws, rules or regulations, which has or is likely to have a material<br />
impact on our Group’s operating results or financial position, and our management’s response;<br />
(e) consider the appointment or re-appointment of the external auditors and matters relating to<br />
resignation or dismissal of the auditors;<br />
(f) review transactions falling within the scope of Chapter 9 of the SGX-ST Listing Manual;<br />
(g) undertake such other reviews and projects as may be requested by our Board of Directors and will<br />
report to our Board of Directors its findings from time to time on matters arising and requiring the<br />
attention of our Audit Committee; and<br />
(h) generally undertake such other functions and duties as may be required by statute of the Listing<br />
Manual, and by such amendments made thereto from time to time.<br />
In addition, all future transactions with related parties shall comply with the requirements of the SGX-ST<br />
Listing Manual. As required by paragraph 1(9)(e) of Appendix 2.2 of the Listing Manual, our Directors<br />
shall abstain from voting in any contract or arrangement or proposed contract / arrangement in which he<br />
has a personal material interest.<br />
82
(C) Remuneration Committee<br />
Our Remuneration Committee comprises our Executive Chairman, Mr Ang Boon Cheow Edward and our<br />
Independent Directors, Mr Teo Kiang Kok and Mr Chua Keng Hiang. Our Remuneration Committee is<br />
chaired by Mr Chua Keng Hiang.<br />
Our Remuneration Committee is responsible for the following:<br />
(a) to recommend to the Board a framework of remuneration for the Board and key executives, and to<br />
determine specific remuneration packages for each Executive Director and the Chief Executive<br />
Officer (or executive of equivalent rank), if the Chief Executive Officer is not an Executive Director,<br />
such recommendations to be made in consultation with the Chairman of the Board and submitted<br />
for endorsement by the entire Board and should cover all aspects of remuneration, including but<br />
not limited to director’s fees, salaries, allowances, bonuses, options, and benefits in kind.<br />
(b) in the case of service contracts, to consider what compensation commitments the directors’<br />
contracts of service, if any, would entail in the event of early termination with a view to be fair and<br />
avoid rewarding poor performance.<br />
(c) in respect of the Scheme and such other long-term incentive schemes (if any) including share<br />
schemes as may be implemented, to consider whether Directors should be eligible for benefits<br />
under the such long-term incentive schemes.<br />
(D) Nominating Committee<br />
Our Nominating Committee comprises our Executive Chairman, Mr Ang Boon Cheow Edward, and our<br />
Independent Directors, Mr Teo Kiang Kok and Mr Chua Keng Hiang. Our Nominating Committee is<br />
chaired by Mr Teo Kiang Kok. All Directors should be required to submit themselves for re-nomination<br />
and re-election at regular intervals and at least every three years.<br />
The Nominating Committee is responsible for the following:<br />
(a) to make recommendations to the Board on all board appointments, including re-nominations,<br />
having regard, to the Director’s contribution and performance (e.g. attendance, preparedness,<br />
participation and candour) including, if applicable, as an Independent Director;<br />
(b) to determine annually whether or not a Director is independent, bearing in mind the circumstances<br />
set forth in Code and any other salient factors;<br />
(c) in respect of a Director who has multiple board representations on various companies, to decide<br />
whether or not such Director is able to and has been adequately carrying out his/her duties as<br />
Director, having regard to the competing time commitments that are faced when serving on<br />
multiple boards; and<br />
(d) decide how the Board’s performance may be evaluated and propose objective performance<br />
criteria, as approved by the Board that allows comparison with its industry peers, and address how<br />
the Board has enhanced long term Shareholders’ value.<br />
83
INTERESTED PERSONS TRANSACTIONS<br />
Save as disclosed below, there has been no interested persons transaction as defined under Chapter 9<br />
of the Listing Manual in the past three financial years:<br />
PAST INTERESTED PERSONS TRANSACTIONS<br />
Use of Premises by Ang Tong Seng Brothers Enterprises Pte <strong>Ltd</strong> (“ATSB”)<br />
ATSB is 91.25% owned by our Substantial Shareholder, ATS Holdings (2000). The other 8.75% is owned<br />
by an unrelated third party. Since the commencement of our lease at our premises at 22 Tampines Street<br />
92, Singapore 528876 on 30 December 1999, we have had an arrangement for ATSB to use<br />
approximately 1,250 square feet of the premises (the “Shared Premises”). The Shared Premises were<br />
used by ATSB for their office. Under this arrangement, no rent was paid by ATSB. This arrangement was<br />
terminated and ATSB moved out of the Shared Premises in end-November 2002. We do not expect such<br />
transactions with ATSB to recur in the future.<br />
Renovation Contract with ATSB<br />
In FY2000 and FY2001, our Company engaged ATSB to carry out renovation works to our premises at<br />
22 Tampines Street 92, Singapore 528876. The contract amount was S$214,000 for FY2000 and<br />
S$199,000 for FY2001. The renovation contract was conducted on arms’ length basis and on normal<br />
commercial terms which ATSB offers to other unrelated third parties. Apart from the said transactions in<br />
FY2000 and FY2001, we have not entered into any similar contracts with ATSB in the past 3 financial<br />
years.<br />
We do not envisage such renovation contract to recur in the future. However, if we do enter into similar<br />
contracts with ATSB in the future, we shall comply with the requirements of the SGX-ST Listing Manual,<br />
including (if necessary) the obtaining of approval from the Shareholders.<br />
Acquisition of ATSG from ATS Holdings (2000)<br />
With a view of restructuring our Group for the purpose of the public listing of our Company, pursuant to a<br />
deed of restructuring dated 15 June 2000, ATS Holdings (2000) transferred its shares in ATSG to our<br />
Company. The consideration for this transfer is S$959,000 being the audited NTA value of ATSG.<br />
The above transfer was transacted based on NTA of ATSG as at 1 January 1999 and was conducted on<br />
arms’ length basis.<br />
Acquisition of Sunglobe<br />
Ms Hoon Pang Heng, Joanna, Ms Lim Li Kian and Ms Chu Siew Hwa are the wives of Mr Ang Boon<br />
Cheow Edward, Mr Ang Boon Chong and Mr Ang Siew Tiong respectively. Ms Hoon held 57% of the<br />
issued and paid up capital of Sunglobe, and Ms Lim and Ms Chu held 38% and 5% respectively.<br />
Pursuant to a sale and purchase agreement dated 10 December 2002, Ms Hoon, Ms Lim and Ms Chu<br />
transferred their entire interests in Sunglobe to our Company with effect from 1 January 2002, and the<br />
consideration for each of the transfers is S$186,151, S$124,100 and S$16,329 respectively.<br />
The above transfers were transacted based on the NTA value of Sunglobe as at 31 December 2001 and<br />
were conducted on arms’ length basis.<br />
84
Amount due from/to our Directors<br />
There were the following amounts due from/to our Directors, Mr Ang Boon Cheow Edward and Mr Ang<br />
Boon Chong, as at the end of the last 3 financial years and as at 30 June 2002:<br />
As at<br />
As at 31 December 30 June<br />
1999 2000 2001 2002<br />
$’000 $’000 $’000 $’000<br />
Due from Directors 250 250 — —<br />
Due to Directors — — 290 777<br />
Provision for directors’ fees 542 527 1,000 —<br />
The amount due from Directors as at 31 December 1999 and 2000 has been settled subsequently.<br />
The amount due to Directors was unsecured, interest-free and had no fixed terms of repayment. This<br />
balance has been fully repaid subsequent to 30 June 2002.<br />
Save as disclosed above, there are no other outstanding balances with our Directors and no further<br />
advances will be made to our Directors.<br />
Management Fees Paid to ATS Holdings (2000)<br />
The following amounts of management fees were paid to ATS Holdings (2000) by our Company in the<br />
last 3 financial years and for the 6 months period ended 30 June 2002:<br />
6 months<br />
ended 30 June<br />
FY1999 FY2000 FY2001 2002<br />
$’000 $’000 $’000 $’000<br />
Management fees — 350 650 300<br />
The management fees were charged at a rate of S$50,000 per month. The management fees paid were<br />
for management services provided by ATS Holdings (2000) in relation to the day-to-day management,<br />
administration and human resource services to our Company. This arrangement was discontinued with<br />
effect from October 2002.<br />
We do not envisage such management services to be provided by ATS Holdings (2000) in the future.<br />
However, if we do enter into similar contracts with ATS Holdings (2000) in the future, we shall comply<br />
with the requirements of the SGX-ST Listing Manual, including (if necessary) the obtaining of approval<br />
from the Shareholders.<br />
Professional Services<br />
Our Independent Director, Mr Teo Kiang Kok, is a senior partner of Shook Lin & Bok, a firm of advocates<br />
and solicitors, which will be receiving a fee from us for legal services rendered by the firm in connection<br />
with the Invitation. Although Mr Teo Kiang Kok is a partner of Shook Lin & Bok, he was not the partner<br />
rendering the legal services in connection with the Invitation and does not have any interest in our<br />
Group.<br />
It is envisaged that we may continue to engage the services of Shook Lin & Bok in future as and when<br />
the need arises. As matters involving our Group will be handled by other partners and associates of the<br />
firm, our Directors are of the view that the provision of such services will not interfere with Mr Teo Kiang<br />
Kok’s independent judgement in his role as our Independent Director. In the event that Mr Teo Kiang Kok<br />
is interested in any matter handled by Shook Lin & Bok involving our Group, including and not limited to<br />
the Invitation, he will adhere to the procedures and guidelines for interested person transactions as set<br />
out on page 87 of this Prospectus and abstain from reviewing and voting on that particular transaction.<br />
85
Consultancy Services<br />
Our Non-Executive Director, Mr Ng Ya Ken @ Ng Ah Kan had provided consultancy services in relation<br />
to business developments, market research and assessment of investment opportunities on an ad hoc<br />
basis. In particular, Mr Ng was engaged in 2002 to advise on our Company’s investment plans in the<br />
PRC. This project had been completed and a fee of S$35,000 was charged to our Company. For the<br />
period from January 2002 to December 2002, Mr Ng has been engaged to provide such consultancy<br />
services on a retainer basis at a monthly retainer fee of $3,500.<br />
The total fees paid to Mr Ng in the past 3 financial years and for the 6 months period ended 30 June<br />
2002 are as follows :-<br />
6 months ended<br />
FY1999 FY2000 FY2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Consultancy fees — 3 38 47<br />
Maintenance of Property Contract with ATSB<br />
ATSB was awarded a service contract by our Company for the maintenance of our premises at 22<br />
Tampines Street 92, Singapore 528876 for an annual maintenance fee of up to S$150,000. The amount<br />
of the maintenance fee payable was based on actual invoiced work done by ATSB. The scope of work<br />
comprises general maintenance and repair works for various parts of the premises, including the roofs,<br />
windows, doors, turf, carpet, driveway, drains, tiles, lighting, as well as plumbing and sanitary services.<br />
The period of this service contract is from 1 January 2002 to 31 December 2002 and similar contracts<br />
have been entered into in 2001.<br />
The amount of maintenance fees paid to ATSB in the past 3 financial years and for the 6 months period<br />
ended 30 June 2002 is as follows:<br />
6 months ended<br />
FY1999 FY2000 FY2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Maintenance fees paid to ATSB — — 87 56<br />
The above transaction was conducted on arms’ length basis and on normal commercial terms which<br />
ATSB offers to other unrelated third parties. Our Directors are of the view that the terms of the<br />
maintenance contract with ATSB are fair and on arms’ length basis. We do not envisage such<br />
transactions to recur in the future. However, if we do enter into similar transactions with ATSB in the<br />
future, we shall comply with the requirements of the SGX-ST Listing Manual, including (if necessary) the<br />
obtaining of approval from the Shareholders.<br />
CURRENT INTERESTED PERSONS TRANSACTIONS<br />
Lease by Suntex Investment Co. <strong>Ltd</strong> (“SI”) to Suntex<br />
SI is a Cambodian corporation privately owned by our Directors Ang Boon Cheow Edward and Ang Boon<br />
Chong. Suntex is currently our wholly owned Cambodian subsidiary.<br />
SI owns the premises at No. 8, Veng Sreng St, Sangkat Choam Chao, Khan Dangkor, Phnom Penh,<br />
Cambodia, with an area of 441,740 sq ft, and has granted Suntex a lease of the premises. The lease<br />
commenced on 1 January 2003 and is for a period of 70 years, renewable for a further term of 70 years<br />
at the option of Suntex. The lease may be terminated at the option of Suntex by serving a notice of not<br />
less than three months to SI.<br />
SI had granted a lease of the same premises to Suntex in 1999 at a monthly rent of US$400, and from 1<br />
January 2000 to 31 December 2002 at a monthly rent of US$2,000. The rent paid by Suntex under the<br />
above lease in the past 3 financial years and for the 6 months period ended 30 June 2002 is as set out<br />
below :-<br />
6 months ended<br />
FY1999 FY2000 FY2001 30 June 2002<br />
US$’000 US$’000 US$’000 US$’000<br />
Rent paid by Suntex 5 24 24 12<br />
86
The annual rent for the subsequent years under the new lease is as follows :-<br />
Year Rent per year (US$)<br />
2003 42,000<br />
2004 46,200<br />
2005 50,400<br />
2006 54,600<br />
2007 58,800<br />
2008 63,000<br />
2009 67,200<br />
2010 71,400<br />
2011 75,600<br />
2012 79,800<br />
2013 onwards 79,800<br />
The rent to be paid in 2003 is less than 1% of our profit before tax for FY2002.<br />
The rent paid and to be paid by Suntex on the premises is reflective of the market rental rates in<br />
Cambodia. Our Directors are of the view that the terms of the lease with SI are fair and on arms’ length<br />
basis, and we intend to continue with such lease for as long as it is beneficial to our Group or until we<br />
are able to procure alternative premises at a competitive rental. We are not seeking a shareholders’<br />
mandate in relation to the abovementioned interested person transaction with SI as we do not expect the<br />
value of the transaction to be material. We will, however, comply with the requirements of the SGX-ST<br />
Listing Manual and (if necessary) obtain the approval from the Shareholders for any future similar<br />
transactions with SI.<br />
REVIEW PROCEDURES FOR FUTURE INTERESTED PERSONS TRANSACTIONS<br />
The Audit Committee, when formed, will review and approve all interested persons transactions to ensure<br />
that they are on arms’ length basis, that is, the transactions with the interested person are transacted on<br />
terms and prices not more favourable to the interested person than if they were transacted with a third<br />
party and that our Company has not been disadvantaged in any other way. Our Company will prepare<br />
relevant information to assist the Audit Committee in its review. Before any agreement or arrangement<br />
that is not in the ordinary course of business of our Group is transacted, prior approval must be obtained<br />
from the Audit Committee. In the event that a member of the Audit Committee is interested in any of the<br />
interested persons transactions, he will abstain from reviewing that particular transaction. Any decision to<br />
proceed with such agreement or arrangement would be recorded for review by the Audit Committee.<br />
Prior to the renewal of the lease agreement between Suntex and SI (as stated in this Prospectus under<br />
the section “Current Interested Persons Transaction”), we will compare the new rental rates to the then<br />
prevailing market rental rates to ensure that the new rental rates are reflective of the then prevailing<br />
market rental rates in Cambodia. In addition, an annual review by the Audit Committee will be carried out<br />
to ensure that the terms of the renewal are fair and on arms’ length basis.<br />
Our Company will also comply with the provisions in Chapter 9 of the SGX-ST Listing Manual in respect<br />
of all future interested persons transactions and if required under the SGX-ST Listing Manual or the Act,<br />
our Company will seek Shareholders’ approval for such transactions.<br />
87
POTENTIAL CONFLICT OF INTERESTS<br />
Ang Suan Hong is the sister of Ang Boon Cheow Edward and Ang Boon Chong, and Ang Tiong is their<br />
brother. Gan Cheng Chan is the husband of Ang Suan Hong.<br />
Based on publicly available information, our Directors understand that Ang Suan Hong, Ang Tiong and<br />
Gan Cheng Chan are shareholders of Jes Fashion Co. Pte <strong>Ltd</strong> (formerly known as Ghim Li Fashion Co.<br />
Pte <strong>Ltd</strong>), a company in the business of apparel manufacturing and trading. Ghim Li Fashion<br />
Manufacturing Pte <strong>Ltd</strong>, which is in the business of manufacturing apparel, is a wholly-owned subsidiary<br />
of Jes Fashion Co. Pte <strong>Ltd</strong>.<br />
As disclosed at page 66 of this Prospectus under the section “Directors, Management and Staff -<br />
Directors”, Ang Boon Chong and Ang Siew Tiong were working in Jes Fashion Co. Pte <strong>Ltd</strong> (then known<br />
as Ghim Li Fashion Co. Pte <strong>Ltd</strong>) prior to their appointment as Directors in our Company in 1995.<br />
Our Directors do not have any interest, direct or indirect, in either Jes Fashion Co. Pte <strong>Ltd</strong> or Ghim Li<br />
Fashion Manufacturing Pte <strong>Ltd</strong> and are not in any way involved in the business of these two companies.<br />
Conversely, Ang Suan Hong, Ang Tiong and Gan Cheng Chan do not have any interest, direct or indirect,<br />
in our Group and are not in any way involved in the business of our Group. As disclosed on page 53 of<br />
this Prospectus under the section “Competition and Competitive Strengths”, we compete with many other<br />
apparel manufacturers from all parts of the world. Hence, the possibility of a conflict of interest situation<br />
arising from direct competition with the aforesaid companies is relatively low.<br />
Save as disclosed above, none of our Directors, Executive Officers or Substantial Shareholders has any<br />
interest, direct or indirect, in any company carrying on the same business or dealing in similar products<br />
as our Group.<br />
88
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP<br />
SHARE CAPITAL<br />
Our Company was incorporated in the Republic of Singapore under the Act as a private limited company<br />
on 8 September 1988 under the name of <strong>Ocean</strong> <strong>Sky</strong> Knitted Garments Factory Pte <strong>Ltd</strong>. We changed our<br />
name to <strong>Ocean</strong> <strong>Sky</strong> Textile Pte <strong>Ltd</strong> on 9 October 1989. On 7 February 2003, we were converted into a<br />
public limited company and changed our name to <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong>.<br />
At extraordinary general meetings held on 30 January 2003, and on 15 February 2003, our Shareholders<br />
approved inter-alia, the following:-<br />
(a) the capitalisation of $12,013,086 out of retained profits, and $636,500 out of share premium<br />
account for a bonus issue of 12,649,586 ordinary shares of $1 each;<br />
(b) the sub-division of each ordinary share of S$1.00 in the existing authorised and issued and paidup<br />
share capital into 20 ordinary shares of S$0.05 each (“Sub-division of Shares”);<br />
(c) conversion of our Company into a public limited company and the change of our name to <strong>Ocean</strong><br />
<strong>Sky</strong> <strong>International</strong> <strong>Limited</strong>;<br />
(d) the adoption of a new set of Articles of Association;<br />
(e) the adoption of the Scheme, the participation in the Scheme by Mr Ang Boon Cheow Edward, Mr<br />
Ang Boon Chong and any other Controlling Shareholders and/or their associates, and any specific<br />
grant of Options to each of these persons will have to be by way of separate resolutions approved<br />
by independent shareholders of our Company in a general meeting, and that the Directors of our<br />
Company be authorised to allot and issue Shares upon the exercise of options granted under the<br />
Scheme;<br />
(f) the issue of 92,000,000 New Shares pursuant to the Invitation which when fully paid, allotted and<br />
issued, will rank pari passu in all respects with the existing issued Shares (the “Issue of New<br />
Shares”); and<br />
(g) the authorisation of our Directors, pursuant to Section 161 of the Act and subject to the provisions<br />
of the Articles of Association of our Company and the approval of the SGX-ST, to allot and issue<br />
(i) shares; (ii) convertible securities; (iii) additional convertible securities issued pursuant to rights,<br />
bonus or other capitalisation issues (notwithstanding that such authority may have ceased to be in<br />
force at the time the securities are issued, provided that the adjustment does not give the holder of<br />
the convertible securities a benefit that a Shareholder does not receive); or (iv) shares arising from<br />
the conversion of securities in (ii) and additional convertible securities in (iii), notwithstanding that<br />
such authority may have ceased to be in force at the time the shares are to be issued), in our<br />
Company (whether by way of rights, bonus or otherwise) at any time and upon such terms and<br />
conditions and for such purposes and to such persons as our Directors may in their absolute<br />
discretion deem fit Provided That the aggregate number of such shares and convertible securities<br />
to be issued shall not exceed 50% of the issued share capital of our Company immediately prior to<br />
the proposed issue (calculated based on the issued share capital of our Company at the time this<br />
resolution is passed, after adjusting for new shares arising from the conversion of convertible<br />
securities or employee share options on issue at the date of this resolution, and after adjusting for<br />
any subsequent consolidation or sub-division of shares) and Provided That the aggregate number<br />
of such shares and convertible securities to be issued other than on a pro-rata basis to the then<br />
existing Shareholders of our Company shall not exceed 20% of the issued share capital of our<br />
Company immediately prior to the proposed issue and, unless revoked or varied by our Company<br />
in general meeting, such authority shall continue in force until the conclusion of the next annual<br />
general meeting of our Company or the date by which the next general meeting of our Company is<br />
required by law to be held, whichever is the earlier.<br />
89
Details of the changes in the issued and paid-up share capital of our Company since incorporation are<br />
set out below :-<br />
Number of shares $<br />
Issued and paid-up ordinary shares of $1.00 each 2,000,000 2,000,000<br />
as at 30 June 2002<br />
Issue of ordinary shares to Yeo Yeok Soo 30,000 30,000<br />
on 10 December 2002<br />
Issue of ordinary shares to Yeh Wu Ping 3,500 3,500<br />
on 10 December 2002<br />
Bonus issue on 30 January 2003 12,649,586 12,649,586<br />
14,683,086 14,683,086<br />
After sub-division of each ordinary shares of $1.00 each<br />
into 20 ordinary shares of $0.05 each on 30 January 2003<br />
293,661,720 14,683,086<br />
New Shares to be issued pursuant to the Invitation 92,000,000 4,600,000<br />
385,661,720 19,283,086<br />
Our Company’s shareholders’ equity prior to and after the Invitation is set out below. These statements<br />
should be read in conjunction with the Accountants’ Report of this Prospectus.<br />
Authorised Share Capital<br />
Prior to the Invitation After Invitation<br />
S$‘000 S$‘000<br />
Ordinary shares of S$0.05 each 100,000 100,000<br />
Shareholders’ Equity<br />
Share capital 14,683 19,283<br />
Share premium — 14,700<br />
Retained profits (2)<br />
8,047 8,047<br />
22,730 42,030<br />
Note :-<br />
(1) Based on net issue proceeds of approximately $19.3 million less par value of New Shares based on an Issue Price of S$0.23<br />
per New Share.<br />
(2) After adjusting for payment of interim dividend and the Capitalisation Exercise.<br />
We have only one class of shares. Save for new Shares that may be issued pursuant to the Scheme,<br />
there are no founder, management, deferred or unissued shares reserved for issue for any purpose. No<br />
Option has or will be granted under the Scheme prior to the listing of our Company on the SGX-ST. The<br />
rights and privileges of these Shares are stated in our Articles of Association.<br />
90
Pursuant to the bonus issue, ATS Holdings (2000) renounced 1,950,000 shares of their entitlements to<br />
the following persons:<br />
Names Number of shares of $1 each<br />
Ang Boon Cheow Edward 1,065,000<br />
Ang Boon Chong 710,000<br />
Wong Siew Hui 175,000<br />
1,950,000<br />
91
OWNERSHIP STRUCTURE AND PRINCIPAL SHAREHOLDERS<br />
Our Shareholders and their respective shareholdings immediately before and after the Invitation are<br />
summarised below:-<br />
Directors<br />
Direct Interest<br />
Before the Invitation After the Invitation<br />
No. of Shares of No. of Shares of<br />
S$0.05 each % S$0.05 each %<br />
Ang Boon Cheow Edward 21,300,000 7.25 21,300,000 5.52<br />
Ang Boon Chong 14,200,000 4.84 14,200,000 3.68<br />
Ang Siew Tiong (1)<br />
Substantial Shareholders<br />
ATS Holdings (2000) (2)<br />
Persons holding less than 5%<br />
14,441,196 4.92 14,441,196 3.75<br />
235,382,723 80.15 235,382,723 61.03<br />
Yeo Yeok Soo 4,332,359 1.48 4,332,359 1.12<br />
Yeh Wu Ping 505,442 0.17 505,442 0.13<br />
Wong Siew Hui 3,500,000 1.19 3,500,000 0.91<br />
Public — — 92,000,000 23.86<br />
TOTAL 293,661,720 100.00 385,661,720 100.00<br />
Notes :-<br />
(1) Mr Ang Siew Tiong is the nephew of our Directors, Mr Ang Boon Cheow Edward and Mr Ang Boon Chong.<br />
(2) ATS Holdings (2000) is 60% owned by our Director, Mr Ang Boon Cheow Edward and 40% owned by our Director, Mr Ang<br />
Boon Chong.<br />
Save as disclosed above, there is no other relationship between our Directors and Substantial<br />
Shareholders of our Company.<br />
MORATORIUM<br />
To demonstrate their commitment to our Group, our Substantial Shareholder, ATS Holdings (2000) which<br />
has interests in 235,382,723 Shares, representing in aggregate, 61.03% of our Company’s issued and<br />
paid up share capital after the Invitation, has undertaken not to realise or transfer any part of its<br />
respective interests in our Company for a period of six (6) months commencing from the date of our<br />
admission (“Listing Date”) of our Company to the Official List of the SGX-ST. Messrs Ang Boon Cheow<br />
Edward and Ang Boon Chong have each undertaken not to sell, transfer or otherwise dispose of any part<br />
of their respective interests in ATS Holdings (2000) for a period of six (6) months from the date of<br />
admission of our Company to the Official List of the SGX-ST.<br />
Similarly, our Executive Directors, Messrs Ang Boon Cheow Edward, Ang Boon Chong and Ang Siew<br />
Tiong, who in aggregate have interests in 49,941,196 Shares representing 12.95% of our Company’s<br />
issued and paid up share capital after the Invitation respectively, have undertaken not to realise or<br />
transfer any part of their respective interests in our Company for a period of six (6) months commencing<br />
from the Listing Date of our Company to the Official List of the SGX-ST.<br />
92
GROUP STRUCTURE<br />
Our Group structure is as follows:-<br />
Our Company<br />
Singapore Hong Kong US Brunei Cambodia Malaysia PRC El Salvador Honduras<br />
93<br />
Blue <strong>Ocean</strong><br />
Hoon’s<br />
PDAC Suntex Eng Soon OS Apparel<br />
OS Marketing<br />
OGHK<br />
Bloom Time (1)<br />
Uniwear<br />
Pacific <strong>Sky</strong><br />
Sing Cheng<br />
OS Sourcing<br />
OSHK<br />
Sunglobe<br />
ATSG<br />
Milteq (2)<br />
Notes :-<br />
(1) Except for Bloom Time, which is 33% owned by our Company, all our subsidiaries are 100% owned by our Company.<br />
(2) Milteq is incorporated in Brunei.
COMPANIES WITHIN OUR GROUP<br />
The details of the companies within our Group as at the date of lodgement of this Prospectus with the<br />
Authority, none of which are listed on any stock exchange, are set out as follows:-<br />
Date and Place of Paid-up Capital/ Equity Held<br />
Name of Company Incorporation Principal Business Contributed Capital by our Group<br />
Subsidiaries held by our Company<br />
ATSG 4 January 1995, Investment holding S$500,002 100%<br />
Singapore<br />
Blue <strong>Ocean</strong> (1)<br />
9 September 2002, Manufacturing of HNL6,250 100%<br />
Honduras apparels<br />
Eng Soon 27 October 1997, Manufacturing of RM175,002 100%<br />
Malaysia apparels<br />
Hoon’s 19 September 2000, Manufacturing of US$1,050,000 100%<br />
El Salvador apparels<br />
OS Marketing 16 September 2002, Inactive US$2 100%<br />
US<br />
OS Sourcing 26 December 2001, Manufacturing and US$200,000 100%<br />
US sourcing of textiles<br />
and fabrics, distribution<br />
of apparels and provision<br />
of related SCM services<br />
OGHK (2)<br />
OS Apparel (6)<br />
OSHK (3)<br />
Pacific <strong>Sky</strong> (4)<br />
PDAC (5)<br />
Sing Cheng (6)<br />
31 July 2002, Inactive HK$10,000 100%<br />
Hong Kong<br />
12 June 2002, Manufacturing of US$245,711 100%<br />
PRC apparels<br />
29 November 1999, Marketing and sourcing HK$10,000 100%<br />
Hong Kong of textiles and apparels<br />
and provision of related<br />
SCM services<br />
18 June 2002, Inactive 200,000 colones 100%<br />
El Salvador<br />
29 May 1997, Manufacturing of B$500,000 100%<br />
Brunei apparels<br />
13 September 2002, Inactive HK$150,000 100%<br />
PRC<br />
Sunglobe 10 April 1992, Import and export S$310,000 100%<br />
Singapore and trading of textiles<br />
and apparels<br />
Suntex (7)<br />
Uniwear (8)<br />
18 October 1996, Manufacturing of US$1,200,000 100%<br />
Cambodia apparels<br />
30 April 2001, Manufacturing of HNL5,525,000 100%<br />
Honduras apparels<br />
94
Date and Place of Paid-up Capital/ Equity Held<br />
Name of Company Incorporation Principal Business Contributed Capital by our Group<br />
Subsidiary held by ATSG<br />
Milteq (9)<br />
Associated Companies<br />
26 June 2001, Manufacturing of B$100,000 100%<br />
Brunei apparels<br />
Bloom Time 30 January 2002, Inactive S$3 33%<br />
Singapore<br />
Perkasa <strong>Ocean</strong> <strong>Sky</strong> 29 March 2000, Under members’ B$50,000 45%<br />
Industrial Sdn Bhd (10)<br />
Brunei voluntary winding-up<br />
Notes:-<br />
(1) Our Directors Ang Boon Cheow Edward and Ang Boon Chong each holds 1 share out of the total of 250 shares in Blue<br />
<strong>Ocean</strong> in trust for our Company.<br />
(2) Our Director Ang Boon Chong holds 1 share out of the total of 10,000 shares in OGHK in trust for our Company.<br />
(3) Our Director Ang Boon Chong holds 1 share out of the total of 10,000 shares in OSHK in trust for our Company.<br />
(4) Our Director Ang Boon Chong holds 1 share out of a total of 2,000 shares in Pacific <strong>Sky</strong> in trust for our Company.<br />
(5) PDAC is 70% held by our Company. The remaining 30% is held by an unrelated individual, in trust for our Company.<br />
(6) Our Company has given an undertaking to the China Securities Regulatory Commission that the interests and assets of OS<br />
Apparel and Sing Cheng will only be consolidated to the extent of the contributed capital by our Company in these two<br />
companies.<br />
(7) Our Directors Ang Boon Cheow Edward and Ang Boon Chong each holds 1 share in Suntex out of a total of 100 shares in<br />
trust for our Company.<br />
(8) Our Directors Ang Boon Cheow Edward, Ang Boon Chong and Ang Siew Tiong each holds 1 share out of the total of 55,250<br />
shares in Uniwear in trust for our Company.<br />
(9) Milteq is 70% held by ATSG. The remaining 30% is held by an unrelated individual in trust for ATSG.<br />
(10) Perkasa <strong>Ocean</strong> <strong>Sky</strong> Industrial Sdn Bhd was an associated company of our Group, which has been put into members’<br />
voluntary liquidation on 27 August 2002.<br />
All of our subsidiaries are wholly owned by our Company directly or indirectly and save for the holding of<br />
shares on trust for our Company as disclosed above, none of our Directors or Substantial Shareholders<br />
has any direct interest in any of our subsidiaries.<br />
95
LETTER FROM AUDITORS AND REPORTING ACCOUNTANTS IN RELATION TO THE PROFIT<br />
ESTIMATE OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2002<br />
12 March 2003<br />
The Board of Directors<br />
<strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong><br />
22 Tampines Street 92<br />
Singapore 528876<br />
Dear Sirs<br />
This letter has been prepared for inclusion in the Prospectus of <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong> (the<br />
“Company”) to be lodged with the Monetary Authority of Singapore on 12 March 2003 in connection with<br />
the Invitation to subscribe for 92,000,000 ordinary shares of $0.05 each in the capital of the Company<br />
(“New Shares”) comprising 9,200,000 Offer Shares at $0.23 for each Offer Share by way of public offer<br />
and 82,800,000 Placement Shares by way of placement, comprising a minimum of 79,300,000<br />
Placement Shares at $0.23 for each Placement Share, and up to 3,500,000 Reserved Shares at $0.21<br />
for each Reserved Share payable in full on application.<br />
We have reviewed the profit estimate of the Company and its subsidiaries (the “Group”) (the “estimate”)<br />
for the financial year ended 31 December 2002 set out on page 41 of the Prospectus in accordance with<br />
Singapore Standards on Auditing applicable to the examination of prospective financial information. The<br />
Directors are responsible for the estimate including the bases and assumptions on which the estimate is<br />
based. The estimate includes results shown by the audited financial statements for the six months<br />
financial period ended 30 June 2002.<br />
Based on our examination of the evidence supporting the assumptions, nothing has come to our<br />
attention which cause us to believe that these assumptions do not provide a reasonable basis for the<br />
estimate. Further, in our opinion, the estimate, so far as the accounting policies and calculations are<br />
concerned, is properly prepared on the basis of the assumptions, is consistent with the accounting<br />
policies normally adopted by the Group, and is presented in accordance with Singapore Statements of<br />
Accounting Standard.<br />
Yours faithfully<br />
BDO <strong>International</strong><br />
Certified Public Accountants<br />
Singapore<br />
Lee Joo Hai<br />
Partner-in-charge<br />
96
12 March 2003<br />
The Board of Directors<br />
<strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong><br />
22 Tampines Street 92<br />
Singapore 528876<br />
Dear Sirs<br />
ACCOUNTANTS’ REPORT<br />
We have audited the accompanying consolidated financial statements of <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong><br />
(the “Company”) and its subsidiary companies (collectively the “Group”), comprising the Group’s<br />
consolidated balance sheets as at 31 December 1999, 2000, 2001 and 30 June 2002, the Group’s<br />
consolidated profit and loss accounts, statements of cash flows and changes in shareholders’ equity for<br />
each of the financial years ended 31 December 1999, 2000, 2001 and six months financial period ended<br />
30 June 2002 as set out on pages 98 to 138 of the Prospectus. These consolidated financial statements<br />
of the Group are the responsibility of the Company’s Directors. Our responsibility is to express an<br />
opinion on these financial statements based on our audits. We have not audited the Group’s profit and<br />
loss account and statement of cash flows for the six months financial period ended 30 June 2001 which<br />
are only shown on pages 99, 101 to 103 and are presented for comparative purpose only. These<br />
unaudited financial statements are the sole responsibility of the Company’s Directors.<br />
We conducted our audits in accordance with Singapore Standards on Auditing. Those standards require<br />
that we plan and perform the audit to obtain reasonable assurance about whether the financial<br />
statements are free of material misstatement. An audit includes examining, on a test basis, evidence<br />
supporting the amounts and disclosure in the financial statements. An audit also includes assessing the<br />
accounting principles used and significant estimates made by the Directors, as well as evaluating the<br />
overall financial statement presentation. We believe that our audits provide a reasonable basis for our<br />
opinion.<br />
In our opinion, the accompanying consolidated financial statements of the Group presents fairly, in all<br />
material respects, the consolidated financial position of the Group as at 31 December 1999, 2000, 2001<br />
and 30 June 2002 and of the Group’s consolidated results of operations and its consolidated changes in<br />
shareholders’ equity and cash flows for each of the financial years ended 31 December 1999, 2000,<br />
2001 and six months financial period ended 30 June 2002 and are in accordance with Singapore<br />
Statements of Accounting Standard.<br />
This report has been prepared for inclusion in the Prospectus dated 12 March 2003 in connection with<br />
the Invitation to subscribe for 92,000,000 ordinary shares of $0.05 each in the capital of the Company<br />
(“New Shares”) comprising:-<br />
(a) 9,200,000 Offer Shares at $0.23 for each Offer Share by way of public offer; and<br />
(b) 82,800,000 Placement Shares by way of placement, comprising<br />
(i) minimum of 79,300,000 Placement Shares at $0.23 for each Placement Share; and<br />
(ii) up to 3,500,000 Reserved Shares at $0.21 for each Reserved Share,<br />
payable in full on application.<br />
No audited financial statements of the Group has been prepared for any period subsequent to 30 June<br />
2002.<br />
Yours faithfully<br />
BDO <strong>International</strong><br />
Certified Public Accountants<br />
Singapore<br />
Lee Joo Hai<br />
Partner-in-charge<br />
97
GROUP BALANCE SHEETS<br />
Non-current assets<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
Note $’000 $’000 $’000 $’000<br />
Fixed assets 4 7,350 15,628 22,129 23,915<br />
Goodwill 5 20 17 — 1,496<br />
Associated companies 6 — 43 61 —<br />
Investments 7 50 250 250 250<br />
Deferred expenditure 8 899 324 — 635<br />
8,319 16,262 22,440 26,296<br />
Current assets 9 17,435 31,208 48,308 77,860<br />
Less:-<br />
Current liabilities 10 18,777 30,312 42,117 69,291<br />
Net current (liabilities)/assets (1,342) 896 6,191 8,569<br />
Non-current liabilities 23 (1,675) (6,235) (6,986) (6,190)<br />
5,302 10,923 21,645 28,675<br />
Capital and reserves<br />
Share capital<br />
Foreign currency<br />
25 200 200 2,000 2,000<br />
translation reserve 26 — (10) 513 (55)<br />
Share application account 27 — — — 670<br />
Retained profits 28 5,102 10,712 18,408 26,060<br />
5,302 10,902 20,921 28,675<br />
Minority interests — 21 724 —<br />
5,302 10,923 21,645 28,675<br />
The accompanying notes form an integral part of and should<br />
be read in conjunction with these financial statements.<br />
98
GROUP PROFIT AND LOSS ACCOUNTS<br />
Unaudited<br />
(Based on<br />
management<br />
accounts<br />
presented for<br />
comparative<br />
purpose only)<br />
Financial year ended Six months Six months<br />
31 December financial financial<br />
period ended period ended<br />
Note 1999 2000 2001 30 June 2002 30 June 2001<br />
$’000 $’000 $’000 $’000 $’000<br />
Revenue 29 56,705 104,645 179,988 92,013 74,606<br />
Cost of sales (42,879) (82,289) (143,640) (70,349) (57,582)<br />
Gross profit 13,826 22,356 36,348 21,664 17,024<br />
Other operating income 375 174 874 142 67<br />
Distribution costs (1,644) (3,088) (4,445) (2,764) (2,021)<br />
Administrative and other<br />
operating expenses (5,963) (11,008) (18,825) (8,956) (7,417)<br />
Profit from operations 30 6,594 8,434 13,952 10,086 7,653<br />
Finance costs 31 (541) (1,494) (1,989) (518) (1,000)<br />
Share of results of<br />
associated company — (7) 18 — —<br />
Profit before taxation 6,053 6,933 11,981 9,568 6,653<br />
Taxation 32 (1,649) (1,348) (2,430) (1,916) (1,353)<br />
Profit after taxation 4,404 5,585 9,551 7,652 5,300<br />
Minority interests — 25 (55) — 48<br />
Profit attributable to<br />
shareholders 4,404 5,610 9,496 7,652 5,348<br />
Earnings per share<br />
(in cents) based on the<br />
pre-invitation share capital<br />
of 293,661,720<br />
ordinary shares of<br />
$0.05 each 33 1.50 1.91 3.23 2.61 1.82<br />
The accompanying notes form an integral part of and should<br />
be read in conjunction with these financial statements<br />
99
GROUP STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY<br />
Share capital<br />
Financial year ended Six months<br />
31 December financial<br />
period ended<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Balance brought forward 200 200 200 2,000<br />
Issue of shares — — 1,800 —<br />
Balance carried forward 200 200 2,000 2,000<br />
Foreign currency<br />
translation reserve<br />
Balance brought forward — — (10) 513<br />
Currency translation differences — (10) 523 (568)<br />
Balance carried forward — (10) 513 (55)<br />
Share application account<br />
Balance brought forward — — — —<br />
Share application<br />
pending allotment — — — 670<br />
Balance carried forward — — — 670<br />
Retained profits<br />
Balance brought forward 698 5,102 10,712 18,408<br />
Issue of shares — — (1,800) —<br />
Profit attributable to<br />
shareholders 4,404 5,610 9,496 7,652<br />
Balance carried forward 5,102 10,712 18,408 26,060<br />
The accompanying notes form an integral part of and should<br />
be read in conjunction with these financial statements.<br />
100
GROUP STATEMENTS OF CASH FLOWS<br />
Financial year ended Six months<br />
Unaudited<br />
(Based on<br />
management<br />
accounts<br />
presented for<br />
comparative<br />
purpose only)<br />
Six months<br />
31 December financial financial<br />
period ended period ended<br />
1999 2000 2001 30 June 2002 30 June 2001<br />
$’000 $’000 $’000 $’000 $’000<br />
Cash flows from operating activities<br />
Profit before taxation 6,053 6,933 11,981 9,568 6,653<br />
Adjustments for:-<br />
Amortisation of purchased goodwill 2 2 18 104 18<br />
Amortisation of negative goodwill — — — (5) —<br />
Depreciation of fixed assets 755 1,379 2,335 1,393 967<br />
Goodwill on consolidation written off 7 8 — — —<br />
Interest expense 541 1,494 1,989 518 1,000<br />
Interest Income (2) (4) (112) (37) (66)<br />
Loss on disposal of fixed assets 5 50 137 9 2<br />
Amortisation of deferred expenditure 1,922 963 2,991 228 1,395<br />
Reserves on consolidation credited (129) — — — —<br />
Share of associated company loss/(gain) — 7 (18) — —<br />
Unrealised foreign exchange (loss)/gain (31) (150) 292 (264) 41<br />
Operating profit before working<br />
capital changes 9,123 10,682 19,613 11,514 10,010<br />
Working capital changes:-<br />
Increase in stocks (4,444) (6,129) (234) (19,720) (14,521)<br />
Increase in debtors (2,102) (1,036) (5,552) (17,778) (12,350)<br />
(Increase)/ Decrease in amount<br />
due by ultimate holding company (1,753) 186 169 72 22<br />
Increase in amount due by<br />
related company (108) (408) (106) (524) (272)<br />
(Increase)/ Decrease in amounts<br />
due by related parties (360) 12 (1,108) 81 (1)<br />
Increase in creditors 3,507 2,985 12,733 17,317 11,109<br />
Issue of shares to minority shareholders — 50 647 — —<br />
Cash generated from/(used in)<br />
operations 3,863 6,342 26,162 (9,038) (6,003)<br />
Interest paid (541) (1,494) (1,989) (518) (1,000)<br />
Tax paid (332) (1,422) (1,688) (1,206) (1,033)<br />
Net cash from/(used in)<br />
operating activities 2,990 3,426 22,485 (10,762) (8,036)<br />
101
GROUP STATEMENTS OF CASH FLOWS (Cont’d)<br />
Cash flows from investing activities<br />
Unaudited<br />
(Based on<br />
management<br />
accounts<br />
presented for<br />
comparative<br />
purpose only)<br />
Financial year ended Six months Six months<br />
31 December financial financial<br />
period ended period ended<br />
1999 2000 2001 30 June 2002 30 June 2001<br />
$’000 $’000 $’000 $’000 $’000<br />
Acquisition of subsidiaries (A) 347 19 — (1,444) —<br />
Deferred expenditure capitalised (2,694) (370) (2,746) (885) (1,089)<br />
(Investment)/Divestment in<br />
associated company — (50) — 61 —<br />
Purchase of fixed assets (4,747) (9,109) (8,783) (3,534) (5,565)<br />
Proceeds from disposal of fixed assets 1 43 128 52 —<br />
Purchase of investment (50) (200) — — —<br />
Net cash used in investment activities (7,143) (9,667) (11,401) (5,750) (6,654)<br />
Cash flows from financing activities<br />
Receipt of term loans — 5,320 — — —<br />
Receipt/(Repayment) of finance<br />
lease financing (net) 1,944 112 1,768 (745) 283<br />
Repayment of term loans — (315) (435) (249) (250)<br />
Interest income received 2 4 112 37 66<br />
Net cash from /(used in)<br />
financing activities 1,946 5,121 1,445 (957) 99<br />
102
GROUP STATEMENTS OF CASH FLOWS (Cont’d)<br />
Financial year ended Six months<br />
Unaudited<br />
(Based on<br />
management<br />
accounts<br />
presented for<br />
comparative<br />
purpose only)<br />
Six months<br />
31 December financial financial<br />
period ended period ended<br />
1999 2000 2001 30 June 2002 30 June 2001<br />
$’000 $’000 $’000 $’000 $’000<br />
(Decrease)/Increase in cash and<br />
cash equivalents<br />
Cash and cash equivalents<br />
(2,207) (1,120) 12,529 (17,469) (14,591)<br />
at beginning of financial year<br />
Effect of exchange differences on<br />
200 (1,987) (3,107) 9,422 (3,107)<br />
cash and cash equivalents 20 — — — —<br />
Cash and cash equivalents<br />
at end of financial year (B) (1,987) (3,107) 9,422 (8,047) (17,698)<br />
A. Acquisition of subsidiary companies<br />
Fixed assets 2,416 507 — — —<br />
Goodwill 29 8 — 1,595 —<br />
Deferred expenditure 126 — — — —<br />
Current assets 4,520 923 — 520 —<br />
Cash and bank balances 427 19 — 533 —<br />
Current liabilities (6,450) (1,461) — (725) —<br />
Minority interest — 4 — 724 —<br />
Non-current liabilities (20) — — — —<br />
Reserve on consolidation (129) — — — —<br />
Purchase consideration 919 — — 2,647 —<br />
Less:-<br />
Cash and bank balances acquired 427 19 — 533 —<br />
Amount due to holding company 839 — — — —<br />
Net cash (inflow)/outflow from<br />
acquisition of subsidiaries (347) (19) — 2,114 —<br />
Shares application pending allotment — — — (670) —<br />
B. Cash and cash equivalents<br />
(347) (19) — 1,444 —<br />
Unaudited<br />
(Based on<br />
management<br />
accounts<br />
presented for<br />
comparative<br />
purpose only)<br />
As at 31 December As at As at<br />
1999 2000 2001 30 June 2002 30 June 2001<br />
$’000 $’000 $’000 $’000 $’000<br />
Cash and bank balances 1,949 7,444 18,205 11,092 5,086<br />
Bank overdraft (72) — — — —<br />
Trust receipts (3,864) (10,551) (8,783) (19,139) (22,784)<br />
(1,987) (3,107) 9,422 (8,047) (17,698)<br />
The accompanying notes form an integral part of and should<br />
be read in conjunction with these financial statements.<br />
103
STATEMENTS OF ADJUSTMENTS<br />
31 December 2000<br />
Balance sheet<br />
Adjustments<br />
Audited arising from Adjusted<br />
consolidated deconsolidation consolidated<br />
financial of a subsidiary financial<br />
statements (Note A) statements<br />
$’000 $’000 $’000<br />
Non-current assets 16,750 (488) 16,262<br />
Current assets 31,237 (29) 31,208<br />
Current liabilities (30,828) 516 (30,312)<br />
Non-current liabilities (6,235) — (6,235)<br />
Total assets 10,924 10,923<br />
Share capital 200 — 200<br />
Foreign currency translation reserve (10) — (10)<br />
Retained profits 10,713 (1) 10,712<br />
Minority interest 21 — 21<br />
Profit and loss account<br />
10,924 10,923<br />
Revenue 104,645 — 104,645<br />
Cost of sales (82,289) — (82,289)<br />
Gross profit 22,356 22,356<br />
Other operating income 216 (42) 174<br />
Distribution costs (3,088) — (3,088)<br />
Administrative and other operating expenses (11,049) 41 (11,008)<br />
Profit from operations 8,435 8,434<br />
Finance costs (1,494) — (1,494)<br />
Share of results of associated company (7) — (7)<br />
Profit before taxation 6,934 6,933<br />
Taxation (1,348) — (1,348)<br />
Profit after taxation 5,586 — 5,585<br />
Minority interest 25 25<br />
Profit attributable to shareholders 5,611 (1) 5,610<br />
104
STATEMENTS OF ADJUSTMENTS (Cont’d)<br />
31 December 2001<br />
Adjustments<br />
Audited arising from Adjusted<br />
consolidated deconsolidation consolidated<br />
financial of a subsidiary financial<br />
statements (Note A) statements<br />
$’000 $’000 $’000<br />
Non-current assets 22,960 (520) 22,440<br />
Current assets 47,823 485 48,308<br />
Current liabilities (42,120) 3 (42,117)<br />
Non-current liabilities (6,986) — (6,986)<br />
Total assets 21,677 — 21,645<br />
Share capital 2,000 — 2,000<br />
Foreign currency translation reserve 513 — 513<br />
Retained profits 18,440 (32) 18,408<br />
Minority interest 724 — 724<br />
Profit and loss account<br />
21,677 21,645<br />
Revenue 179,988 —- 179,988<br />
Cost of sales (143,596) (44) (143,640)<br />
Gross profit 36,392 36,348<br />
Other operating income 874 — 874<br />
Distribution costs (4,445) — (4,445)<br />
Administrative and other operating expenses (18,827) 2 (18,825)<br />
Profit from operations 13,994 13,952<br />
Finance costs (1,999) 10 (1,989)<br />
Share of results of associated company 18 — 18<br />
Profit before taxation 12,013 11,981<br />
Taxation (2,430) — (2,430)<br />
Profit after taxation 9,583 9,551<br />
Minority interest (55) — (55)<br />
Profit attributable to shareholders 9,528 (32) 9,496<br />
105
STATEMENTS OF ADJUSTMENTS (Cont’d)<br />
30 June 2002<br />
Balance sheet<br />
106<br />
Adjustments<br />
Audited arising from Adjusted<br />
consolidated deconsolidation consolidated<br />
financial of a subsidiary financial<br />
statements (Note A) statements<br />
$’000 $’000 $’000<br />
Non-current assets 26,296 — 26,296<br />
Current assets 77,892 (32) 77,860<br />
Current liabilities (69,291) — (69,291)<br />
Non-current liabilities (6,190) — (6,190)<br />
Total assets 28,707 28,675<br />
Share capital 2,000 — 2,000<br />
Foreign currency translation reserve (55) — (55)<br />
Share application account 670 — 670<br />
Retained profits 26,092 (32) 26,060<br />
Profit and loss account<br />
28,707 28,675<br />
Revenue 92,013 — 92,013<br />
Cost of sales (70,349) — (70,349)<br />
Gross profit 21,664 21,664<br />
Other operating income 142 — 142<br />
Distribution costs (2,764) — (2,764)<br />
Administrative and other operating expenses (8,956) — (8,956)<br />
Profit from operations 10,086 10,086<br />
Finance costs (518) — (518)<br />
Profit before taxation 9,568 9,568<br />
Taxation (1,916) — (1,916)<br />
Profit attributable to shareholders 7,652 7,652<br />
Note A — Elimination of assets and liabilities of a subsidiary which was acquired in the financial year ended 31 December 2000<br />
and subsequently disposed off in the six months financial period ended 30 June 2002.
NOTES TO THE FINANCIAL STATEMENTS<br />
1. GENERAL CORPORATE INFORMATION<br />
<strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> Pte <strong>Ltd</strong> (“Company”) is a company domiciled and incorporated in<br />
Singapore with its registered office and principal place of business at 22 Tampines Street 92,<br />
Singapore 528876. On 7 February 2003, the Company was converted into a public limited<br />
company and changed its name to <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong>.<br />
The principal activities of the Company are those of manufacturing of specialty apparels and<br />
provision of related SCM services and investment holding.<br />
The principal activities of the subsidiary companies are set out in Note 2 to the financial<br />
statements.<br />
The number of employees of the Group as at 30 June 2002 was 6,900 (2001: 6,391).<br />
2. BASIS OF PRESENTATION OF FINANCIAL INFORMATION<br />
The financial information set out in this report is expressed in Singapore dollars (unless otherwise<br />
stated) and shows the Balance Sheets, Profit and Loss Accounts, Statement of Cash Flows and<br />
Movements of Shareholders’ Equity of the Group for each of the three financial years ended 31<br />
December 1999 to 2001 and six months financial period ended 30 June 2002.<br />
The financial information is based on the audited financial statements of the Group, after making<br />
such adjustments considered necessary. Such Group financial information are presented on the<br />
basis of the accounting policies set out in Note 3 of this report.<br />
All material inter-group transactions and balances have been eliminated in the preparation of the<br />
Group’s financial statements.<br />
BDO <strong>International</strong>, Certified Public Accountants, Singapore has been appointed the auditor of the<br />
Company, ATS Garments (S) Pte <strong>Ltd</strong> and Sunglobe Pte <strong>Ltd</strong> for the financial years ended 31<br />
December 1999 to 2001 and six months financial period ended 30 June 2002.<br />
BDO Binder, Certified Public Accountants, Malaysia has audited the financial statements of Eng<br />
Soon Garments Sdn Bhd for the financial years ended 31 December 1999 to 2001 and six months<br />
financial period ended 30 June 2002.<br />
BDO <strong>International</strong>, Certified Public Accountants, Hong Kong has audited the financial statements<br />
of <strong>Ocean</strong> <strong>Sky</strong> Textile (H.K.) <strong>Limited</strong> for the financial years ended 31 December 1999 to 2001 and<br />
six months financial period ended 30 June 2002.<br />
Foo, Kon & Tan, Certified Public Accountants, Negara Brunei Darussalam has audited the financial<br />
statements of P.D.A.C <strong>Ocean</strong> <strong>Sky</strong> Sdn Bhd for the financial years ended 31 December 2000 (year<br />
of acquisition) to 2001 and six months financial period ended 30 June 2002.<br />
KPMG Peat, Marwick, Mitchell & Co. (Latin America), S.A. has audited the financial statements of<br />
Hoon’s Apparel <strong>International</strong> (SAL) S.A. de C.V. for the financial years ended 31 December 2000 to<br />
2001 and six months financial period ended 30 June 2002.<br />
107
2. BASIS OF PRESENTATION OF FINANCIAL INFORMATION (Cont’d)<br />
KPMG, Cambodia has audited the financial statements of Suntex Pte <strong>Ltd</strong> for the financial years<br />
ended 31 December 1999 to 2001 and six months financial period ended 30 June 2002.<br />
Deloitte & Touche C.A., S.A., Honduras has audited the financial statements of Uniwear Garments<br />
Honduras S.A. for the financial year ended 31 December 2001 and six months financial period<br />
ended 30 June 2002.<br />
Widdows Kong and Associates, Certified Public Accountants, Negara Brunei Darussalam has<br />
audited the financial statements of Milteq Tenthouse Sdn Bhd for the financial period ended 31<br />
December 2001 and six months financial period ended 30 June 2002.<br />
The financial statements of <strong>Ocean</strong> Star Sourcing (USA), Inc, is not audited as an audit is not<br />
required according to the laws in the country of incorporation.<br />
The auditors’ reports on the audited financial statements of companies within the Group were not<br />
subject to any qualification for the past three financial years ended 31 December 1999 to 2001 and<br />
six months financial period ended 30 June 2002.<br />
As at 30 June 2002, the particulars of subsidiary companies are as follows:-<br />
Percentage<br />
Date and place Issued and of equity<br />
Name of of incorporation paid-up held by Principal Cost of<br />
company and operations capital the Group activities Investments<br />
% $’000<br />
ATS Garments 4 January 1995 $500,002 100 Investment 958<br />
(S) Pte <strong>Ltd</strong> Singapore holding<br />
Eng Soon 27 October 1997 RM175,002 100 Manufacturing 78<br />
Garments Malaysia of apparels<br />
Sdn Bhd<br />
Hoon’s Apparel 19 September 2000 US$1,050,000 100 Manufacturing 1,937<br />
<strong>International</strong> El Salvador of apparels<br />
(SAL) S.A. de C.V.<br />
<strong>Ocean</strong> <strong>Sky</strong> Textile 29 November 1999 HK$10,000 100 Marketing and 2<br />
(H.K.) <strong>Limited</strong> Hong Kong sourcing of<br />
textiles and<br />
apparels and<br />
provision of<br />
related SCM<br />
services<br />
<strong>Ocean</strong> Star 26 December 2001 US$150,000 100 Manufacturing 285<br />
Sourcing USA and sourcing of<br />
(USA), Inc. textiles and<br />
fabrics, distribution of<br />
apparels and<br />
provision of<br />
related SCM<br />
services<br />
P.D.A.C <strong>Ocean</strong> 29 May 1997 B$500,000 100 Manufacturing 2,050<br />
<strong>Sky</strong> Sdn Bhd Brunei of apparels<br />
108
2. BASIS OF PRESENTATION OF FINANCIAL INFORMATION (Cont’d)<br />
Percentage<br />
Date and place Issued and of equity<br />
Name of of incorporation paid-up held by Principal Cost of<br />
company and operations capital the Group activities Investments<br />
% $’000<br />
Uniwear Garments 30 April 2001 HNL5,525,000 100 Manufacturing 606<br />
Honduras S.A. Honduras of apparels<br />
Sunglobe Pte <strong>Ltd</strong> 10 April 1992 $310,000 100 Import and 326<br />
Singapore export and<br />
trading of<br />
textiles and<br />
apparels<br />
Suntex Pte <strong>Ltd</strong> 18 October 1996 US$1,200,000 100 Manufacturing 1,864<br />
Cambodia of apparels<br />
* Pacific <strong>Sky</strong> 18 June 2002 US$22,857 100 Inactive<br />
Apparel (SAL), El Salvador<br />
S.A. de C.V.<br />
* <strong>Ocean</strong> Star 12 June 2002 #US$245,711 100 Inactive<br />
Apparel PRC<br />
(Guangzhou)<br />
Pte <strong>Ltd</strong><br />
8,106<br />
* These subsidiaries were not included in the consolidated financial statements they were only incorporated in June 2002<br />
and have not commenced operations as at 30 June 2002. No financial statements have been prepared since respective<br />
dates of incorporation and statutory auditors have not yet been appointed.<br />
# The registered capital were contributed in two portion of US$100,000 and US$145,711 on 10 September 2002 and 6<br />
December 2002 respectively.<br />
Subsidiary of ATS<br />
Garments (S)<br />
Pte <strong>Ltd</strong><br />
Milteq Tenthouse 26 June 2001 B$25,000 100 Manufacturing<br />
Sdn Bhd Brunei of apparels<br />
Subsequent to 30 June 2002, the Company incorporated certain subsidiary companies as<br />
disclosed in Note 41 (iii) of the financial statements.<br />
109
3. SIGNIFICANT ACCOUNTING POLICIES<br />
Statement of compliance<br />
The financial statements of the Group have been prepared in accordance with the Statements of<br />
Accounting Standard (“SAS”) issued by the Institute of Certified Public Accountants of Singapore<br />
and the applicable disclosure requirements of the Singapore Companies Act, Chapter 50.<br />
Basis of preparation of financial statements<br />
The financial statements of the Group, expressed in Singapore dollars, have been prepared in<br />
accordance with the historical cost convention.<br />
Basis of consolidation<br />
The consolidated financial statements include the financial statements of the Group made up to the<br />
end of the respective financial years.<br />
The financial statements of the subsidiary companies are included in the consolidated financial<br />
statements from the dates of acquisitions of the subsidiary companies concerned. All intercompany<br />
transactions have been eliminated on consolidation and the consolidated financial<br />
statements reflect external transactions only.<br />
In the case of the subsidiary, Suntex Investments Co. <strong>Ltd</strong> (Cambodia), which was acquired in the<br />
financial year ended 31 December 2000 and subsequently disposed off in the six months financial<br />
period ended 30 June 2002, Suntex Investments Co. <strong>Ltd</strong> (Cambodia) was deconsolidated in the<br />
two financial years ended 31 December 2001 for the purpose of presentation of the consolidated<br />
financial statements to reflect the companies that are in the Group as at 30 June 2002 and the<br />
adjustments arising from the deconsolidation are disclosed in the Statements of Adjustments.<br />
Goodwill arising on acquisition represents the excess of the cost of investment in subsidiaries over<br />
the fair value of the identifiable net assets acquired. Negative goodwill arising on acquisition<br />
represents the excess of the fair value of the identifiable net assets acquired over the cost of<br />
acquisition. With effect from 1 January 2001, the Group has adopted SAS 22 Business<br />
Combination (2000) and amortise goodwill over a period of up to 20 years. Both negative goodwill<br />
and goodwill on acquisition arising prior to 1 January 2001 have been credited or charged in full to<br />
the retained profits brought forward; such goodwill have not been retrospectively capitalised and<br />
amortised, as allowed under SAS 22 Business Combination (2000).<br />
Fixed assets and depreciation<br />
Fixed assets are stated at cost less accumulated depreciation. The cost of an asset comprises its<br />
purchase price and any direct attributable costs of bringing the asset to working condition for its<br />
intended use. Expenditure for additions, improvements and renewals are capitalised and<br />
expenditure for maintenance and repairs are charged to the profit and loss accounts. When fixed<br />
assets are sold or retired, their cost and accumulated depreciation are removed from the financial<br />
statements and any gain or loss resulting from their disposal is included in the profit and loss<br />
accounts.<br />
110
3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)<br />
Fixed assets and depreciation (Cont’d)<br />
Depreciation is calculated on the straight line method so as to write off the cost of fixed assets over<br />
their estimated useful lives. The annual rates used for this purpose are as follows:-<br />
Land and buildings 5 — 20<br />
Furniture and fittings 10 — 33<br />
Motor vehicles 10 — 20<br />
Plant and machinery 10 — 33<br />
Factory equipment 10 — 33<br />
Office equipment 10 — 20<br />
Electrical fittings 10 — 33<br />
Fully depreciated assets are retained in the financial statements until such time when they are no<br />
longer in use.<br />
Impairment<br />
The carrying amounts of the Group’s non-current assets are reviewed at each balance sheet date<br />
to determine whether there is any indication of impairment. If any such indication exists, the<br />
asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying<br />
amount of the asset or its cash generating unit exceeds its recoverable amount. Impairment<br />
losses are recognised in the profit and loss accounts.<br />
The recoverable amount is the higher of an asset’s net selling price and value in use. The net<br />
selling price is the amount obtainable from the sale of an asset in an arm’s length transaction.<br />
Value in use is the present value of estimated future cash flows expected to arise from the<br />
continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts<br />
are estimated for individual assets or, if it is not possible, for the cash generating unit.<br />
An impairment loss is reversed if there has been a change in the estimates used to determine the<br />
recoverable amounts. An impairment loss is reversed only to the extent that the asset’s carrying<br />
amount does not exceed the carrying amount that would have been determined, net of<br />
depreciation or amortisation, if no impairment loss has been recognised. Reversals of impairment<br />
are recognised in the profit and loss accounts.<br />
Foreign currency transactions and translation<br />
(i) Monetary assets and liabilities maintained in foreign currencies are translated into<br />
Singapore dollars at the approximate rates of exchange ruling at the balance sheet date.<br />
Transactions during the financial year have been converted at the rates prevailing on the<br />
transaction dates. All exchange differences are dealt with in the profit and loss accounts.<br />
(ii) Translation of financial statements of foreign operations<br />
Foreign operations are subsidiaries whose activities are based or conducted outside<br />
Singapore.<br />
Foreign operations whose activities are not integral to those of the parent<br />
The financial statements of the foreign subsidiaries are translated into Singapore dollars at<br />
the approximate rates of exchange ruling at the balance sheet date. The results of foreign<br />
subsidiaries are translated into Singapore dollars at the average exchange rate for the<br />
financial year. Exchange differences due to such currency translations are taken directly to<br />
foreign currency translation reserves.<br />
111<br />
%
3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)<br />
Foreign currency transactions and translation (Cont’d)<br />
Foreign operations whose activities are integral to those of the parent<br />
All monetary items are translated into Singapore dollars at the rates of exchange prevailing at the<br />
balance sheet date and all non-monetary items are recorded at the rates of exchange when the<br />
relevant transactions occurred. The results of the foreign subsidiaries are translated into<br />
Singapore dollars at the annual average exchange rates. All resulting exchange differences are<br />
taken to the profit and loss accounts.<br />
Associated companies<br />
An associated company is defined as a company, not being a subsidiary, in which the Group has<br />
an interest of at least 20% of equity and in whose financial and operating policy decisions, the<br />
Group exercises significant influence.<br />
Associated companies are accounted for under the equity method whereby the Group’s share of<br />
the profits less losses of associated companies is included in the consolidated profit and loss<br />
accounts. The Group’s share of the post-acquisition retained profits less accumulated losses and<br />
reserves is added to the amount of the investment in associated companies in the consolidated<br />
balance sheet.<br />
The Group’s share of these results is arrived at based on the latest available audited financial<br />
statements or unaudited management financial statements of the associated companies.<br />
Investments<br />
Investments held on a long-term basis are stated at cost less impairment losses, if any.<br />
Goodwill<br />
This represents the excess of purchase consideration over the book value of net assets taken over<br />
from a sole proprietorship and is amortised over a period of 10 years effective from 1998. The<br />
Directors decided to write off the balance of purchased goodwill in the six months financial period<br />
ended 30 June 2002 as they are of the opinion that the goodwill would not generate any further<br />
future economic benefits.<br />
Stocks and work-in-progress<br />
Stocks and work-in-progress are stated at the lower of cost and net realisable value. Cost is<br />
determined on a “first-in-first-out” basis. Manufactured work-in-progress and finished goods<br />
include cost of materials, direct labour and an appropriate portion of manufacturing overheads.<br />
Net realisable value is the price at which stocks can be realised in the normal course of business<br />
after allowing for the costs of realisation. Provision is made for obsolete, slow-moving and<br />
defective stocks.<br />
Related parties<br />
For the purposes of these financial statements, parties are considered to be related to the Group if<br />
the Group has the ability, directly or indirectly, to control the party or exercise significant influence<br />
over the party in making financial and operating decisions, or vice versa, or where the Group and<br />
the party are subject to common control or common significant influence. Related parties may be<br />
individuals or other entities.<br />
Debtors<br />
Debtors are stated at their cost less provision for doubtful debts.<br />
Known bad debts are written off and specific provisions are made for those debts considered to be<br />
doubtful of collection.<br />
112
3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)<br />
Cash and cash equivalents<br />
Cash and cash equivalents comprise cash balances, bank deposits and short-term highly liquid<br />
investments which are readily convertible into known amounts of cash and which are subject to an<br />
insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and<br />
cash equivalents are presented net of trust receipts and which form an integral part of the Group’s<br />
cash management.<br />
Creditors<br />
Creditors are carried at cost which is the fair value of the consideration to be paid in the future for<br />
goods and services received, whether or not billed to the Group.<br />
Employee benefits<br />
As required by law, the Group make contributions to the state pension scheme. Contributions are<br />
recognised as compensation expense in the same financial year as the employment that gives rise<br />
to the contribution.<br />
Provisions<br />
A provision is recognised in the balance sheet when there is a legal or constructive obligation as a<br />
result of a past event, and it is probable that an outflow of economic benefits will be required to<br />
settle the obligation.<br />
Taxation<br />
Taxation for the financial year comprise current and deferred taxes. Taxation is recognised in the<br />
profit and loss accounts except to the extent that it relates to items recognised directly in equity, in<br />
which case such taxation is recognised in equity.<br />
Current tax is the expected tax payable on the taxable income for the financial year, using tax rates<br />
enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in<br />
respect of previous financial years.<br />
Deferred tax is provided using the balance sheet liability method, providing for temporary<br />
differences between the carrying amounts of assets and liabilities for financial reporting purposes<br />
and the amounts used for taxation purposes. The amount of deferred tax provided is based on the<br />
expected manner of realisation or settlement of the carrying amount of assets and liabilities, using<br />
tax rates enacted or substantially enacted at the balance sheet date.<br />
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits<br />
will be available against which the asset can be utilised. Deferred tax assets are reduced to the<br />
extent that it is no longer probable that the related tax benefit will be realised.<br />
Deferred expenditure<br />
Deferred expenditure which consists of quota costs is stated at cost less accumulated amortisation<br />
and write off.<br />
Quotas are the rights acquired under apparel quotas paid by a subsidiary company and is stated at<br />
cost. The rights when utilised or expired are charged to the profit and loss accounts.<br />
Finance leases<br />
Where assets are financed by lease agreements, including hire-purchase agreements, that give<br />
rights approximating to ownership, the assets are capitalised as if they had been purchased<br />
outright at the values equivalent to the present value of the total rental payable during the period of<br />
the leases and the corresponding lease commitments are included under liabilities.<br />
113
3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)<br />
Finance leases (Cont’d)<br />
The excess of the lease payments over the recorded lease obligations is treated as finance<br />
charges which are charged to the profit and loss accounts in equal instalments over the period of<br />
lease or hire-purchase.<br />
Rentals on operating leases are charged to the profit and loss accounts.<br />
Revenue recognition<br />
Revenue from sales of goods is recognised upon passage of title to the customers which generally<br />
coincides with their delivery and acceptance.<br />
Rental and interest income are recognised on an accrual basis.<br />
Share capital<br />
Ordinary share capital is recognised at the fair value of the consideration received by the<br />
Company.<br />
Financial instruments<br />
Financial instruments carried on the balance sheet include cash and cash equivalents, finance<br />
lease creditors, bank borrowings, trade debtors and creditors, other debtors and creditors,<br />
balances with related companies and related parties. The particular recognition methods adopted<br />
are disclosed in the individual policy statements associated with each item.<br />
Segment reporting<br />
A segment is a distinguishable component of the Group that is engaged either in providing<br />
products or services (business segment), or in providing products or services within a particular<br />
economic environment (geographical segment), which is subject to risks and rewards that are<br />
different from those of other segments.<br />
Segment information is presented in respect of the Group’s geographical segments. The<br />
geographical segments, is based on the Group’s management and internal reporting structure.<br />
Segment capital expenditure is the total cost incurred during the financial year to acquire segment<br />
assets that are expected to be used for more than one financial year.<br />
114
4. FIXED ASSETS<br />
Group Leasehold Furniture Motor Plant and Factory Office Electrical<br />
31 December 1999 buildings and fittings vehicles machinery equipment equipment fittings Total<br />
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
Cost<br />
Balance as at 1.1.1999 – 114 46 863 87 44 89 1,243<br />
Additions 459 104 1,334 2,546 101 194 9 4,747<br />
Acquisition of subsidiaries 939 140 125 1,149 86 115 29 2,583<br />
Disposals – – (8) – – – – (8)<br />
Balance as at 31.12.1999 1,398 358 1,497 4,558 274 353 127 8,565<br />
Accumulated Depreciation<br />
Balance as at 1.1.1999 – 25 12 194 21 21 22 295<br />
Charged for the financial<br />
year 61 33 154 413 26 55 13 755<br />
Acquisition of subsidiaries 39 11 17 79 6 12 3 167<br />
Disposals – – (2) – – – – (2)<br />
115<br />
Balance as at 31.12.1999 100 69 181 686 53 88 38 1,215<br />
Net Book Value<br />
As at 31.12.1999 1,298 289 1,316 3,872 221 265 89 7,350<br />
As at the balance sheet date, the Group had fixed assets purchased under finance lease contracts with a net book value of $1,914,000.<br />
A motor vehicle of the Group with a net book value at balance sheet date of $113,000 is registered in the name of a Director who is holding the motor<br />
vehicle in trust for the Group.
4. FIXED ASSETS (Cont’d)<br />
Leasehold<br />
Group land and Furniture Motor Plant and Factory Office Electrical<br />
31 December 2000 buildings and fittings vehicles machinery equipment equipment fittings Total<br />
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
Cost<br />
Balance as at 1.1.2000 1,398 358 1,497 4,558 274 353 127 8,565<br />
Additions 6,688 273 548 314 324 600 362 9,109<br />
Acquisition of subsidiaries 298 31 39 103 9 32 54 566<br />
Currency realignment 59 9 5 63 5 8 2 151<br />
Disposals – – (52) (2) – (62) – (116)<br />
Balance as at 31.12.2000 8,443 671 2,037 5,036 612 931 545 18,275<br />
Accumulated Depreciation<br />
Balance as at 1.1.2000 100 69 181 686 53 88 38 1,215<br />
Charged for the financial<br />
year 404 63 190 498 43 136 45 1,379<br />
Acquisition of subsidiaries 12 4 9 8 1 3 22 59<br />
Currency realignment 5 1 1 9 1 1 1 19<br />
Disposals – – (12) (1) – (12) – (25)<br />
116<br />
Balance as at 31.12.2000 521 137 369 1,200 98 216 106 2,647<br />
Net Book Value<br />
As at 31.12.2000 7,922 534 1,668 3,836 514 715 439 15,628<br />
As at the balance sheet date, the Group had fixed assets purchased under finance lease contracts with a net book value of $4,361,000.<br />
A motor vehicle of the Group with a net book value at balance sheet date of $101,000 is registered in the name of a Director who is holding the motor<br />
vehicle in trust for the Group.<br />
The leasehold building with a net book value at balance sheet date of $5,469,000 has been pledged to a bank for banking facilities granted (Note 22).
4. FIXED ASSETS (Cont’d)<br />
Leasehold<br />
Group land and Furniture Motor Plant and Factory Office Electrical<br />
31 December 2001 buildings and fittings vehicles machinery equipment equipment fittings Total<br />
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
Cost<br />
Balance as at 1.1.2001 8,443 671 2,037 5,036 612 931 545 18,275<br />
Additions 987 316 764 4,578 1,271 562 305 8,783<br />
Currency realignment 156 – 23 129 26 52 8 394<br />
Disposals – (1) (321) (1) – (2) – (325)<br />
Balance as at 31.12.2001 9,586 986 2,503 9,742 1,909 1,543 858 27,127<br />
Accumulated Depreciation<br />
Balance as at 1.1.2001 521 137 369 1,200 98 216 106 2,647<br />
Charged for the financial<br />
year 492 88 264 962 205 241 83 2,335<br />
Currency realignment 13 1 6 35 4 10 7 76<br />
Disposals – – (58) (1) – (1) – (60)<br />
117<br />
Balance as at 31.12.2001 1,026 226 581 2,196 307 466 196 4,998<br />
Net Book Value<br />
As at 31.12.2001 8,560 760 1,922 7,546 1,602 1,077 662 22,129<br />
As at the balance sheet date, the Group had fixed assets purchased under finance lease contracts with a net book value of $6,279,000.<br />
Certain motor vehicles of the Group with a net book value at year end of $272,000 are registered in the names of a Director and an employee who are<br />
holding these motor vehicles in trust for the Group.<br />
The leasehold building with a net book value at balance sheet date of $5,398,000 has been pledged to a bank for banking facilities granted (Note 22).
4. FIXED ASSETS (Cont’d)<br />
Freehold Leasehold<br />
Group land and land and Furniture Motor Plant and Factory Office Electrical<br />
30 June 2002 buildings buildings and fittings vehicles machinery equipment equipment fittings Total<br />
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
Cost<br />
Balance as at 1.1.2002 – 9,586 986 2,503 9,742 1,909 1,543 858 27,127<br />
Additions 991 323 360 473 854 292 184 57 3,534<br />
Currency realignment (11) (125) (20) (19) (98) (57) (33) (7) (370)<br />
Disposals – – – (84) – – – – (84)<br />
Balance as at 30.6.2002 980 9,784 1,326 2,873 10,498 2,144 1,694 908 30,207<br />
Accumulated Depreciation<br />
Balance as at 1.1.2002 – 1,026 226 581 2,196 307 466 196 4,998<br />
Charged for the financial<br />
period 7 278 53 192 557 122 134 50 1,393<br />
Currency realignment – (19) (4) (5) (30) (8) (8) (2) (76)<br />
Disposals – – – (23) – – – – (23)<br />
118<br />
Balance as at 30.6.2002 7 1,285 275 745 2,723 421 592 244 6,292<br />
Net Book Value<br />
As at 30.6.2002 973 8,499 1,051 2,128 7,775 1,723 1,102 664 23,915<br />
As at the balance sheet date, the Group had fixed assets purchased under finance lease contracts with a net book value of $6,115,000.<br />
Certain motor vehicles of the Group with a net book value at year end of $239,000 are registered in the names of a Director and an employee who are<br />
holding these motor vehicles in trust for the Group.<br />
The leasehold building with a net book value at balance sheet date of $5,308,000 has been pledged to a bank for banking facilities granted (Note 22).
5. GOODWILL<br />
Negative<br />
Goodwill goodwill<br />
Group Purchased arising on arising on<br />
31 December 1999 goodwill consolidation consolidation Total<br />
$’000 $’000 $’000 $’000<br />
Cost<br />
Balance as at 1.1.1999 25 – – 25<br />
Currency realignment (3) – – (3)<br />
Balance as at 31.12.1999 22 – – 22<br />
Accumulated amortisation<br />
Balance as at 1.1.1999 – – – –<br />
Amortisation for the financial year 2 – – 2<br />
Balance as at 31.12.1999 2 – – 2<br />
Net book value 20 – – 20<br />
31 December 2000<br />
Cost<br />
Balance as at 1.1.2000 22 – – 22<br />
Currency realignment 3 – – 3<br />
Balance as at 31.12.2000 25 – – 25<br />
Accumulated amortisation<br />
Balance as at 1.1.2000 2 – – 2<br />
Amortisation for the financial year 2 – – 2<br />
Currency realignment 4 – – 4<br />
Balance as at 31.12.2000 8 – – 8<br />
Net book value 17 – – 17<br />
31 December 2001<br />
Cost<br />
Balance as at 1.1.2001 25 – – 25<br />
Currency realignment 2 – – 2<br />
Balance as at 31.12.2001 27 – – 27<br />
Accumulated amortisation<br />
Balance as at 1.1.2001 8 – – 8<br />
Amortisation for the financial year 18 – – 18<br />
Currency realignment 1 – – 1<br />
Balance as at 31.12.2001 27 – – 27<br />
Net book value – – – –<br />
119
5. GOODWILL (Cont’d)<br />
Negative<br />
Goodwill goodwill<br />
Group Purchased arising on arising on<br />
30 June 2002 goodwill consolidation consolidation Total<br />
$’000 $’000 $’000 $’000<br />
Cost<br />
Balance as at 1.1.2002 27 – – 27<br />
Additions – 1,667 (72) 1,595<br />
Written off (27) – – (27)<br />
Balance as at 30.6.2002 – 1,667 (72) 1,595<br />
Accumulated amortisation<br />
Balance as at 1.1.2002 27 – – 27<br />
Amortisation for the financial period – 104 (5) 99<br />
Amount utilised (27) – – (27)<br />
Balance as at 30.6.2002 – 104 (5) 99<br />
Net book value – 1,563 (67) 1,496<br />
6. ASSOCIATED COMPANIES<br />
The investment in associated companies are made up as follows:-<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Unquoted equity shares, at cost – 50 50 –<br />
Share of results in associated company – (7) 11 –<br />
– 43 61 –<br />
The following information relates to associated companies:-<br />
Name of company<br />
and (Country of Percentage<br />
incorporation of equity held Cost of<br />
and place of Principal by the Group investments<br />
business operations) activities 30 June 2002 30 June 2002<br />
% $’000<br />
Perkasa <strong>Ocean</strong> <strong>Sky</strong> Inactive – –<br />
Industrial Sdn Bhd (under members’<br />
(Brunei) voluntary<br />
winding-up)–<br />
Bloom Time Trading Inactive 33.33 # –<br />
(2002) Pte <strong>Ltd</strong><br />
(Singapore)<br />
–<br />
120
6. ASSOCIATED COMPANIES (Con’d)<br />
Note :-<br />
# Cost of investment is $1.00.<br />
The cost of investment in associated company as at 31 December 2000 and 2001 represent<br />
investment in Perkasa <strong>Ocean</strong> <strong>Sky</strong> Industrial Sdn Bhd, which went into members’ voluntary winding<br />
up as at 27 August 2002. Bloom Time Trading (2002) Pte <strong>Ltd</strong> was acquired on 30 January 2002.<br />
7. INVESTMENTS<br />
Group<br />
As at 31 December As at<br />
Note 1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Club membership, at cost (a) 50 100 100 100<br />
Principal sum of amounts under (b)<br />
fund management, at cost – 150 150 150<br />
50 250 250 250<br />
Principal sum of amounts under<br />
fund management, at market value – 136 134 135<br />
(a) The club membership is registered in the name of a Director who is holding it in trust.<br />
(b) No provision for diminution in value is made as the Directors considered that there is no<br />
permanent impairment in value.<br />
8. DEFERRED EXPENDITURE<br />
Preliminary<br />
and<br />
Group pre-operating<br />
31 December 1999 expenses Quotas Total<br />
$’000 $’000 $’000<br />
Cost<br />
Balance as at 1.1.1999 – – –<br />
Acquisition of subsidiary 253 – 253<br />
Additions – 2,694 2,694<br />
Balance as at 31.12.1999 253 2,694 2,947<br />
Accumulated amortisation<br />
Balance as at 1.1.1999 – – –<br />
Acquisition of subsidiary 126 – 126<br />
Amortisation for the financial year 127 1,795 1,922<br />
Balance as at 31.12.1999 253 1,795 2,048<br />
Net book value – 899 899<br />
121
8. DEFERRED EXPENDITURE (Cont’d)<br />
Preliminary<br />
and<br />
Group pre-operating<br />
expenses Quotas Total<br />
31 December 2000 $’000 $’000 $’000<br />
Cost<br />
Balance as at 1.1.2000 253 2,694 2,947<br />
Additions – 370 370<br />
Currency realignment 11 53 64<br />
Balance as at 31.12.2000 264 3,117 3,381<br />
Accumulated amortisation<br />
Balance as at 1.1.2000 253 1,795 2,048<br />
Amortisation for the financial year – 963 963<br />
Currency realignment 11 35 46<br />
Balance as at 31.12.2000 264 2,793 3,057<br />
Net book value – 324 324<br />
31 December 2001<br />
Cost<br />
Balance as at 1.1.2001 264 3,117 3,381<br />
Additions – 2,746 2,746<br />
Written off (264) – (264)<br />
Currency realignment – 217 217<br />
Balance as at 31.12.2001 – 6,080^ 6,080<br />
Accumulated amortisation<br />
Balance as at 1.1.2001 264 2,793 3,057<br />
Amortisation for the financial year – 2,991 2,991<br />
Amount utilised (264) – (264)<br />
Currency realignment – 296 296<br />
Balance as at 31.12.2001 – 6,080^ 6,080<br />
Net book value – – –<br />
^ - The cost of quotas was fully amortised as at 31 December 2001<br />
122
8. DEFERRED EXPENDITURE (Cont’d)<br />
Preliminary<br />
and<br />
Group pre-operating<br />
expenses Quotas Total<br />
$’000 $’000 $’000<br />
30 June 2002<br />
Cost<br />
Balance as at 1.1.2002 – – –<br />
Additions – 885 885<br />
Currency realignment – (25) (25)<br />
Balance as at 30.6.2002 – 860 860<br />
Accumulated amortisation<br />
Balance as at 1.1.2002 – – –<br />
Amortisation for the financial period – 228 228<br />
Currency realignment – (3) (3)<br />
Balance as at 30.6.2002 – 225 225<br />
Net book value – 635 635<br />
9. CURRENT ASSETS<br />
Group<br />
As at 31 December As at<br />
Note 1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Stocks 11 7,089 13,358 13,592 33,713<br />
Trade debtors<br />
Other debtors, deposits and<br />
5,741 8,471 13,678 30,970<br />
prepayments 12 1,739 1,081 1,174 1,588<br />
Amount due by holding company 13 912 726 557 485<br />
Amounts due by related parties 14 – – 1,097 –<br />
Amount due by associated company 15 – 123 – –<br />
Fixed deposit 16 5 5 5 12<br />
Cash and bank balances 1,949 7,444 18,205 11,092<br />
17,435 31,208 48,308 77,860<br />
123
10. CURRENT LIABILITIES<br />
Group<br />
As at 31 December As at<br />
Note 1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Trade creditors 8,895 12,910 23,069 40,908<br />
Other creditors and accruals 17 2,104 2,726 5,039 3,767<br />
Finance lease creditors 18 672 812 1,774 1,555<br />
Amounts due to related parties 19 106 12 – 327<br />
Amount due to related company 20 1,567 1,265 1,158 634<br />
Amount due to associated company 21 – 185 71 –<br />
Amount due to bankers 22 3,936 11,048 9,269 19,625<br />
Taxation 1,497 1,354 1,737 2,475<br />
18,777 30,312 42,117 69,291<br />
11. STOCKS<br />
At cost<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Raw materials 5,256 7,231 5,778 18,191<br />
Work-in-progress 786 4,982 6,581 13,183<br />
Finished goods 1,047 1,145 1,233 2,339<br />
7,089 13,358 13,592 33,713<br />
12. OTHER DEBTORS, DEPOSITS AND PREPAYMENTS<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Amount due by Directors 250 250 – –<br />
Sundry debtors 414 53 51 303<br />
Deposit for fixed assets purchased 789 – 67 460<br />
Other deposits 286 571 669 658<br />
Prepayments – 106 387 167<br />
Tax recoverable – 101 – –<br />
1,739 1,081 1,174 1,588<br />
124
12. OTHER DEBTORS, DEPOSITS AND PREPAYMENTS (Cont’d)<br />
The amount due by Directors are non-trade in nature, unsecured, interest-free and had no fixed<br />
terms of repayment.<br />
13. AMOUNT DUE BY HOLDING COMPANY<br />
The immediate and ultimate holding company is ATS Holdings (2000) Pte <strong>Ltd</strong>, a company<br />
incorporated in Singapore.<br />
The amount due is non-trade in nature, unsecured, interest-free and has no fixed terms of<br />
repayment.<br />
14. AMOUNTS DUE BY RELATED PARTIES<br />
The amounts due by related parties, which are companies in which there is a common Director/<br />
shareholder and where shareholders are spouses of certain Directors of the Company, are trade in<br />
nature, unsecured, interest-free and have no fixed terms of repayment.<br />
15. AMOUNT DUE BY ASSOCIATED COMPANY<br />
The amount due is non-trade in nature, unsecured, interest-free and has no fixed terms of<br />
repayment.<br />
16. FIXED DEPOSIT<br />
The fixed deposit is pledged to a licensed bank as security for bankers’ guarantees issued in favour<br />
of third parties.<br />
17. OTHER CREDITORS AND ACCRUALS<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Accrued operating expenses 1,562 2,148 3,700 2,890<br />
Provision for Directors’ fees 542 527 1,000 –<br />
Amounts due to Directors – – 290 777<br />
Other creditors – 51 49 100<br />
2,104 2,726 5,039 3,767<br />
The amounts due to Directors are non-trade in nature, unsecured, interest-free and have no fixed<br />
terms of repayment.<br />
125
18. FINANCE LEASE CREDITORS<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Minimum finance lease instalments<br />
- payable within one year 886 945 2,035 1,778<br />
- payable within two to five years 1,604 1,710 2,620 2,035<br />
2,490 2,655 4,655 3,813<br />
Finance charges allocated to future periods (337) (390) (622) (525)<br />
2,153 2,265 4,033 3,288<br />
Payable within one year 672 812 1,774 1,555<br />
Payable after one year 1,481 1,453 2,259 1,733<br />
2,153 2,265 4,033 3,288<br />
19. AMOUNTS DUE TO RELATED PARTIES<br />
The amounts due as at 31 December 1999 and 2000 were relating to trade transactions and were<br />
unsecured, interest-free and have no fixed terms of repayment.<br />
The amounts due as at 30 June 2002 arose from purchase of unquoted investment in a<br />
corporation and is unsecured, interest free and have no fixed terms of repayment.<br />
20. AMOUNT DUE TO RELATED COMPANY<br />
The amount due is non-trade in nature, unsecured, interest-free and has no fixed terms of<br />
repayment.<br />
21. AMOUNT DUE TO ASSOCIATED COMPANY<br />
The amount due is non-trade in nature, unsecured, interest-free and has no fixed terms of<br />
repayment.<br />
126
22. AMOUNTS DUE TO BANKERS<br />
Current<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Trust receipts - unsecured 3,864 10,551 8,783 19,139<br />
Bank overdraft - unsecured 72 – – –<br />
Term loans - secured – 497 486 486<br />
Non-current<br />
3,936 11,048 9,269 19,625<br />
Term loans - secured – 4,508 4,084 3,835<br />
The bank term loans are repayable over 120 and 60 monthly instalments commencing January<br />
2000 and November 2000 respectively.<br />
Interest charged on the bank loans ranged from 4.75% to 6.25% (2001: 4.75% to 5.75%,<br />
2000: 6.25% to 6.75%) per annum.<br />
The term loans are secured by way of an open mortgage on the Group’s leasehold building (Note<br />
4).<br />
The unsecured banking facilities are granted by personal guarantees of certain Directors of the<br />
Company jointly and severally.<br />
23. NON-CURRENT LIABILITIES<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
Note $’000 $’000 $’000 $’000<br />
Finance lease creditors 18 1,481 1,453 2,259 1,733<br />
Amounts due to bankers 22 – 4,508 4,084 3,835<br />
Deferred taxation 24 194 274 643 622<br />
1,675 6,235 6,986 6,190<br />
127
24. DEFERRED TAXATION<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Balance at beginning of financial year 94 194 274 643<br />
Acquisition of subsidiaries 5 – – –<br />
Foreign exchange differences – 1 2 (2)<br />
Transfer from/(to) profit and loss account 95 79 367 (19)<br />
Balance at end of financial year 194 274 643 622<br />
Deferred taxation at balance sheet date represents timing differences between the tax written down<br />
value and the net book value of the fixed assets computed at statutory income tax rate.<br />
128
25. SHARE CAPITAL<br />
Authorised:-<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Ordinary shares of $1<br />
each at beginning<br />
of financial year/period<br />
(1999, 2000, 2001: 250,000,<br />
2002: 2,000,000)<br />
Increase in authorised<br />
share capital by the<br />
creation of an<br />
additional Nil<br />
(2001: 1,750,000)<br />
ordinary shares of $1<br />
250 250 250 2,000<br />
each<br />
Ordinary shares<br />
of $1 each at end<br />
of financial year/period<br />
(1999, 2000: 250,000,<br />
2001 and<br />
– – 1,750 –<br />
30.6.2002 : 2,000,000) 250 250 2,000 2,000<br />
Issued and fully paid:-<br />
Ordinary shares of $1<br />
each at beginning<br />
of financial year/period<br />
(1999, 2000, 2001: 200,001,<br />
2002: 2,000,000) 200 200 200 2,000<br />
1,799,999 ordinary shares<br />
of $1 each allotted by<br />
way of bonus issue of<br />
approximately 9 bonus<br />
shares for every 1<br />
ordinary share held<br />
through the capitalisation<br />
of $1,799,999 from the<br />
retained profits – – 1,800 –<br />
Ordinary shares of $1<br />
each at end<br />
of financial year/period<br />
(1999, 2000: 200,001,<br />
2001 and<br />
30.6.2002: 2,000,000) 200 200 2,000 2,000<br />
These newly issued shares rank pari passu in all respects with the existing shares already in issue.<br />
129
26. FOREIGN CURRENCY TRANSLATION RESERVE<br />
The foreign currency translation reserve comprise all foreign exchange differences arising from the<br />
translation of the financial statements of foreign subsidiaries and associated company that are not<br />
integral to the operations of the Company and is non-distributable. Movement in this reserve is set<br />
out in the consolidated statement of changes in shareholders’ equity.<br />
27. SHARE APPLICATION ACCOUNT<br />
The above represents outstanding share application as at 30 June 2002 of which 33,500 ordinary<br />
shares of $1 each were issued on 10 December 2002 at an average premium of $19 per share.<br />
Movement in the share application account is set out in the consolidated statement of changes in<br />
shareholders’ equity.<br />
28. RETAINED PROFITS<br />
Retained profits are analysed as follows:-<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
The Company 2,543 5,427 8,983 18,013<br />
Subsidiary companies 2,559 5,292 9,414 8,047<br />
Associated company – (7) 11 –<br />
5,102 10,712 18,408 26,060<br />
29. REVENUE<br />
Revenue of the Group represents invoiced value of goods sold less return inwards and discounts<br />
allowed net of goods and service tax.<br />
130
30. PROFIT FROM OPERATIONS<br />
The above is arrived at:-<br />
After charging:-<br />
Group<br />
Financial year ended Six months financial<br />
31 December period ended<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Amortisation of deferred expenditure 1,922 963 2,991 228<br />
Amortisation of goodwill 2 2 18 104<br />
Auditors’ remuneration<br />
- of the Company<br />
- current year 19 20 21 21<br />
- prior year – 7 6 –<br />
- other auditors of the subsidiary companies 11 28 30 26<br />
Bad trade debts written off – 4 – –<br />
Depreciation of fixed assets 755 1,379 2,335 1,393<br />
Directors’ fee<br />
- Directors of the Company 544 526 1,130 –<br />
- over provision in previous year – (109) – –<br />
Directors’ remuneration<br />
- Directors of the Company 390 603 391 257<br />
Foreign exchange losses – 24 – –<br />
Goodwill written off 7 8 – –<br />
Loss on disposal of fixed assets 5 50 137 9<br />
Operating leases<br />
- rental expense 205 800 2,438 1,325<br />
Pre-operating expenses – 7 – –<br />
Staff costs 5,273 11,268 27,579 18,075<br />
and crediting:-<br />
Amortisation of negative goodwill – – – 5<br />
Foreign exchange gain 38 – 511 158<br />
Interest income<br />
- bank interest 2 4 112 37<br />
Rental income<br />
- associated company – 670 – –<br />
- third parties – – 19 –<br />
Reserves on consolidation credited 129 – – –<br />
131
31. FINANCE COSTS<br />
Group<br />
Financial year ended Six months financial<br />
31 December period ended<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Interest expense<br />
- bank interest 235 404 496 22<br />
- finance lease 59 143 232 124<br />
- trust receipts 247 676 905 262<br />
- term loan – 271 356 110<br />
541 1,494 1,989 518<br />
32. TAXATION<br />
Group<br />
Financial year ended Six months financial<br />
31 December period ended<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Current financial year/ period 1,554 1,269 2,059 1,935<br />
Under provision of income tax – – 4 –<br />
Deferred taxation 95 79 367 (19)<br />
1,649 1,348 2,430 1,916<br />
Reconciliation of<br />
effective tax rate<br />
Profit before taxation 6,053 6,933 11,981 9,568<br />
Taxation using statutory<br />
tax rate of 22%<br />
(2001: 24.5%)<br />
(2000: 25.5%)<br />
(1999: 26%) 1,574 1,768 2,935 2,105<br />
Expenses not deductible for tax<br />
Effect of different tax rates in<br />
75 13 179 167<br />
other countries – (433) (684) (356)<br />
1,649 1,348 2,430 1,916<br />
33. EARNINGS PER SHARE<br />
Earnings per share is calculated by dividing the profit attributable to shareholders by the preinvitation<br />
share capital of 293,661,720 ordinary shares of $0.05 each.<br />
132
34. FINANCIAL RISK MANAGEMENT<br />
The Group is exposed to interest rate and other market risks arising from the normal course of<br />
business. The Group does not hold or issue derivative financial instruments for trading purposes or<br />
to hedge against fluctuation, if any, in interest rates and foreign exchange rates.<br />
(a) Credit risk<br />
The Group has a credit policy in place and the exposure to credit risk is monitored on an<br />
ongoing basis. Credit evaluations are performed on all customers.<br />
The maximum exposure to credit risk is represented by the carrying amount of each financial<br />
asset in the balance sheet.<br />
(b) Interest rate risk<br />
The Group’s exposure to market risk for changes in interest rates relate primarily to interestbearing<br />
fixed deposits and debt obligations with financial institutions.<br />
(c) Foreign currency risk<br />
The Group incurs foreign currency risk on transactions and balances that are denominated in<br />
a currency other than Singapore dollars. The currency giving rise to this risk is primarily US<br />
dollars. Those exposures are managed using natural hedges that arise from offsetting assets<br />
and liabilities that are denominated in foreign currency.<br />
(d) Fair values<br />
The carrying amounts of the financial assets and liabilities in the financial statements<br />
represent their respective net fair values.<br />
35. SIGNIFICANT RELATED PARTIES TRANSACTIONS<br />
In addition to the related party information disclosed elsewhere in the financial statements, the<br />
following are related parties transactions during the financial year/period at terms and rates agreed<br />
between the parties:-<br />
Group<br />
Associated company<br />
Financial year ended Six months financial<br />
31 December period ended<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Purchases – 5,183 1,828 –<br />
Rental income – 670 – –<br />
Holding company<br />
Management fees expense – 350 650 300<br />
Related company<br />
Renovation work expenses – 214 199 –<br />
Maintenance services expenses – – 87 56<br />
133
35. SIGNIFICANT RELATED PARTIES TRANSACTIONS (Cont’d)<br />
Related parties<br />
Group<br />
Financial year ended Six months financial<br />
31 December period ended<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Company in which there is a<br />
common Director/shareholder<br />
- rental expenses 8 42 42 21<br />
Company in which the<br />
shareholders are spouses<br />
of the Directors<br />
- sales – – 549 –<br />
Spouses of the Directors<br />
- acquisition of subsidiary Company – – – 327<br />
36. OPERATING LEASE COMMITMENTS<br />
As at balance sheet date, there were operating lease commitments for rental payable in<br />
subsequent accounting periods as follows:-<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Within one year 460 1,968 2,297 3,047<br />
Within two to five years 1,232 5,907 5,872 6,263<br />
After five years 5,015 5,143 4,075 6,847<br />
The rent payable under the lease is subject to yearly revision. The above commitments were<br />
based on prevailing rental rate for the respective financial year.<br />
37. CAPITAL COMMITMENTS<br />
As at the balance sheet date, the Group had the following capital commitments contracted but not<br />
provided for in the financial statements:-<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Purchase of property 4,023 – – –<br />
Purchase of machinery – – – 151<br />
Purchase of motor vehicles – – 232 185<br />
Expansion of factory building 243 – – 708<br />
134
38. CONTINGENT LIABILITIES - Secured<br />
Group<br />
As at 31 December As at<br />
1999 2000 2001 30 June 2002<br />
$’000 $’000 $’000 $’000<br />
Fixed deposit pledged to a<br />
licensed bank as security<br />
for bankers’ guarantees<br />
issued in favour of<br />
third parties 5 5 5 12<br />
In the opinion of the Directors, no loss is anticipated.<br />
39. SEGMENT REPORTING<br />
Business segments<br />
The Group’s only principal business segment is manufacturing of specialty apparels and provision<br />
of related SCM services. Therefore, no business segment information is presented.<br />
Geographical segments<br />
The Group’s business segments operate in three main geographical areas. Sales revenue is<br />
based on country in which the customer is located. Segment assets consist primarily of fixed<br />
assets, receivables, and cash and bank balances. Capital expenditure comprises additions to fixed<br />
assets. Segment assets and capital expenditure are shown by the geographical area in which the<br />
assets are located.<br />
South East North and<br />
and Central<br />
Singapore North Asia America Consolidated<br />
$’000 $’000 $’000 $’000<br />
30 June 2002<br />
Segment assets 80,161 16,117 7,878 104,156<br />
Capital expenditure 382 1,472 1,680 3,534<br />
31 December 2001<br />
Segment assets 50,301 16,265 4,183 70,749<br />
Capital expenditure 1,355 3,937 3,491 8,783<br />
31 December 2000<br />
Segment assets 37,967 8,983 520 47,470<br />
Capital expenditure 7,046 1,834 229 9,109<br />
31 December 1999<br />
Segment assets 19,227 6,527 – 25,754<br />
Capital expenditure 1,585 3,162 – 4,747<br />
135
39. SEGMENT REPORTING (Cont’d)<br />
Geographical segments (Cont’d)<br />
30 June 2002<br />
United States<br />
of America Others Consolidated<br />
$’000 $’000 $’000<br />
Total revenue by geographical markets 84,615 7,398 92,013<br />
31 December 2001<br />
Total revenue by geographical markets 169,056 10,932 179,988<br />
31 December 2000<br />
Total revenue by geographical markets 94,789 9,856 104,645<br />
31 December 1999<br />
Total revenue by geographical markets 53,564 3,141 56,705<br />
40. DIVIDENDS<br />
The Company has not paid or proposed any dividend for the three financial years ended 31<br />
December 1999, 2000 and 2001 and six months financial period ended 30 June 2002 except as<br />
disclosed in Note 41 (v) to the financial statements.<br />
41. SUBSEQUENT EVENTS<br />
(i) At an Extraordinary General Meetings held on 10 December 2002 the shareholders of the<br />
Company approved, inter alia, the following:-<br />
(a) the increase in the authorised share capital of the Company from $2,000,000 to<br />
$100,000,000 by the creation of an additional 98,000,000 ordinary shares of $1.00<br />
each; and<br />
(b) the issue of 33,500 ordinary shares of $1.00 each as consideration for the acquisition<br />
of additional interests in the subsidiaries at an average premium of $19 per share.<br />
(ii) At Extraordinary General Meetings held on 30 January 2003 and on 15 February 2003 the<br />
shareholders approved inter alia, the following:-<br />
(a) the capitalisation of $12,013,086 out of retained profits, and $636,500 out of share<br />
premium account for a bonus issue of 12,649,586 ordinary shares of $1 each;<br />
(b) the sub-division of each ordinary share of $1.00 in the existing authorised and issued<br />
and paid up share capital into 20 ordinary shares of $0.05 each (“Sub-division of<br />
shares”) ;<br />
(c) conversion of the Company into a public limited company and the change of the<br />
Company name to <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong>;<br />
136
41. SUBSEQUENT EVENTS (Cont’d)<br />
(d) the adoption of a new set of Articles of Assocation;<br />
(e) the adoption of the Scheme, the participation in the Scheme by Mr Ang Boon Cheow<br />
Edward, Mr Ang Boon Chong and any other Controlling Shareholders and/or their<br />
associates, and any specific grant of Options to each of these persons will have to be<br />
by way of separate resolutions approved by independent shareholders of our Company<br />
in a general meeting, and that the Directors of the Company be authorised to allot and<br />
issue Shares upon the exercise of options granted under the Scheme;<br />
(f) the issue of 92,000,000 New Shares pursuant to the Invitation which when fully paid,<br />
allotted and issued, will rank pari passu in all respects with the existing issued shares<br />
(the “Issued of New Shares”); and<br />
(g) the authorisation of our Directors, pursuant to Section 161 of the Act and subject to the<br />
provisions of the Articles of Association of our Company and the approval of the SGX-<br />
ST, to allot and issue (i) shares; (ii) convertible securities; (iii) additional convertible<br />
securities issued pursuant to rights, bonus or other capitalisation issues<br />
(notwithstanding that such authority may have ceased to be in force at the time the<br />
securities are issued, provided that the adjustment does not give the holder of the<br />
convertible securities a benefit that a Shareholder does not receive); or (iv) shares<br />
arising from the conversion of securities in (ii) and additional convertible securities in<br />
(iii), notwithstanding that such authority may have ceased to be in force at the time the<br />
shares are to be issued), in our Company (whether by way of rights, bonus or<br />
otherwise) at any time and upon such terms and conditions and for such purposes and<br />
to such persons as our Directors may in their absolute discretion deem fit provided that<br />
the aggregate number of such shares and convertible securities to be issued shall not<br />
exceed 50% of the issued share capital of our Company immediately prior to the<br />
proposed issue (calculated based on the issued share capital of our Company at the<br />
time this resolution is passed, after adjusting for new shares arising from the<br />
conversion of convertible securities or employee share options on issue at the date of<br />
this resolution, and after adjusting for any subsequent consolidation or sub-division of<br />
shares) and provided that the aggregate number of such shares and convertible<br />
securities to be issued other than on a pro-rata basis to the then existing Shareholders<br />
of our Company shall not exceed 20% of the issued share capital of our Company<br />
immediately prior to the proposed issue and, unless revoked or varied by our Company<br />
in general meeting, such authority shall continue in force until the conclusion of the next<br />
annual general meeting of our Company or the date by which the next general meeting<br />
of our Company is required by law to be held, whichever is the earlier.<br />
(iii) The Company incorporated the following subsidiary companies:-<br />
Percentage<br />
Date and place of equity<br />
of incorporation Issued and held by the<br />
Name of company and operations paid-up capital Group Principal activities<br />
%<br />
Blue <strong>Ocean</strong> Apparel, 9 September 2002<br />
SA Honduras HNL6,250 100 Inactive<br />
<strong>Ocean</strong> Star Marketing 16 September 2002<br />
(USA), Inc. USA US$2 100 Inactive<br />
<strong>Ocean</strong> Gateway 31 July 2002<br />
<strong>International</strong> Hong Kong HK$10,000 100 Inactive<br />
Company <strong>Ltd</strong><br />
Sing Cheng 2 September 2002<br />
(Guangzhou) PRC HK$149,529 100 Inactive<br />
Apparel & Accessories<br />
Pte <strong>Ltd</strong><br />
137
(iv) Subsequent to the balance sheet date, shares were issued by the subsidiaries and capital<br />
contribution made into a subsidiary as follows:-<br />
Name of subsidiary Shares issued / Purpose<br />
(Country of Incorporation) capital contribution<br />
<strong>Ocean</strong> Star Sourcing 50,000 shares of To provide additional<br />
(USA), Inc US$1 each working capital<br />
(USA)<br />
Milteq Tenthouse Sdn Bhd 75,000 ordinary shares of To provide additional<br />
(Brunei) B$1 each working capital<br />
<strong>Ocean</strong> Star Apparel Cash portion of US$100,000 To provide for<br />
(Guangzhou) Machinery and equipment of working capital<br />
Pte <strong>Ltd</strong> US$145,711<br />
(v) Dividend<br />
An interim dividend declared payable by the Board of Directors on 9 December 2002 and<br />
subsequently paid to the shareholders is set out below:-<br />
Net dividend declared<br />
$’000<br />
An interim dividend of approximately $3.85 per share less tax of<br />
22% for the financial year ended 31 December 2002 6,000<br />
138
MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS<br />
Pursuant to the Management and Underwriting Agreement dated 12 March 2003 (the “Management and<br />
Underwriting Agreement”) entered into between our Company, the Manager and the Underwriter, our<br />
Company appointed the Manager to manage the Invitation. The Manager will receive a management fee<br />
from our Company for its services rendered in connection with the Invitation.<br />
Pursuant to the Management and Underwriting Agreement, the Underwriter has agreed to underwrite the<br />
Offer Shares for a commission of 1.5% of the Issue Price for each Offer Share payable by our Company<br />
pursuant to the Invitation.<br />
Pursuant to the Placement Agreement dated 12 March 2003 (the “Placement Agreement”), entered into<br />
between our Company and the Joint Lead Placement Agents, the Joint Lead Placement Agents has<br />
agreed to subscribe for and/or purchase or procure subscriptions and/or purchasers for the Placement<br />
Shares for a placement commission of 2.5% of the Issue Price for each Placement Share, to be paid by<br />
our Company. The number of Placement Shares each Joint Lead Placement Agents has agreed to<br />
subscribe or procure subscriptions for is as follows:-<br />
SBI E2-Capital Securities <strong>Limited</strong> 4,000,000 Placement Shares<br />
UOB Kay Hian Private <strong>Limited</strong> 78,800,000 Placement Shares (including up to 3,500,000<br />
Reserved Shares)<br />
Brokerage will be paid by our Company on the Invitation Shares at the rate of 1.0% of the Issue Price for<br />
each Offer Share. For the Offer Shares, the brokerage will be paid to members of the Association of<br />
Banks in Singapore, members of the SGX-ST and merchant banks in respect of successful applications<br />
made on Application Forms bearing their respective stamps, or to the Participating Banks in respect of<br />
successful applications made through Electronic Applications at their respective ATMs.<br />
Save as aforesaid, no commission, discount or brokerage has been paid or other special terms granted<br />
within the two years preceding the date of this Prospectus or is payable to any Directors, promoter,<br />
expert, proposed Director or any other person for subscribing or agreeing to subscribe, or procuring or<br />
agreeing to procure subscription for any shares in, or debentures of, our Company or any of its<br />
subsidiaries.<br />
The Management and Underwriting Agreement may be terminated by the Manager on behalf of the<br />
Underwriter at any time on or before the close of the Application List on the occurrence of certain events.<br />
These events include any changes in national or international monetary, financial, political or economic<br />
conditions which result or are likely to result in, inter alia, the conditions in the Singapore stock market<br />
being materially and adversely affected or the success of the Invitation being materially prejudiced.<br />
In the event the Management and Underwriting Agreement is terminated, our Company reserves the<br />
right, at the absolute discretion of the Directors, to cancel the Invitation.<br />
The Placement Agreement is conditional upon the Management and Underwriting Agreement not being<br />
terminated or rescinded pursuant to the provisions of the Management and Underwriting Agreement.<br />
139
EXCHANGE CONTROLS<br />
MALAYSIA<br />
Based on the exchange control regulations in Malaysia issued by Bank Negara Malaysia, foreign funds<br />
brought into Malaysia and the profits made therefrom are subject to the following rules:-<br />
(a) The principal amount of the foreign funds brought into Malaysia when repatriated will not attract<br />
any levy; and<br />
(b) Prior to 2 May 2001, all profits realised in the utilisation of such foreign funds in portfolio<br />
investments, when repatriated within 12 months starting from the month the profits are realised,<br />
attracted a standard 10% levy. With effect from 2 May 2001, the 10% levy is abolished. No such<br />
levy is imposed on the repatriation of profits made from the sale of other types of assets, including<br />
real property.<br />
The criteria set by Bank Negara Malaysia in determining whether an investment is considered a portfolio<br />
investment include:-<br />
(i) whether it is a short-term investment with concern on safety of capital, returns and likelihood of<br />
appreciation;<br />
(ii) whether the investor has significant influence over the operations of the investee company; and<br />
(iii) whether the investor holds less than 10% of the equity or voting rights in the investee group of<br />
companies.<br />
Whilst there is currently no restriction on the repatriation of non-levyable profits from Malaysia, including<br />
dividends, Bank Negara Malaysia requires documentary evidence to be furnished to the remitting banks<br />
to show that the funds to be remitted are not subject to levy.<br />
Currently, there is no restriction on the ability of our Malaysian subsidiary to transfer funds to our<br />
Company in the form of cash dividends.<br />
THE PRC<br />
The present position under PRC law relating to foreign exchange control, taking into account the<br />
promulgation of the recent new regulations and the extent the existing provisions stipulated in previous<br />
regulations do not contradict these new regulations, are as follows:-<br />
1. Foreign investment enterprises may have their own foreign currency account and are permitted to<br />
retain a certain percentage of their recurrent foreign exchange earnings.<br />
2. Foreign investment enterprises may require foreign exchange for their ordinary trading activities<br />
such as trade services and payment of interest on foreign debts may purchase foreign exchange<br />
from designated foreign exchange banks if the application is supported by proper payment notices<br />
or supporting documents.<br />
3. Foreign investment enterprises may require foreign exchange for the payment of dividends that are<br />
payable in foreign currencies under applicable regulations, such as distributing profits to their<br />
foreign investors. They can withdraw funds in their foreign exchange bank accounts kept with<br />
designated foreign exchange banks, subject to the due payment of tax on such dividends. Where<br />
the amount of the funds in foreign exchange is insufficient, the enterprise may, upon the<br />
presentation of the resolutions of the Directors on the profit distribution plan of the particular<br />
enterprise, purchase foreign exchange from designated foreign exchange banks.<br />
4. Foreign investment enterprises may apply to the Bank of China or other designated foreign<br />
exchange banks to remit the profits out of the PRC to the foreign parties to equity or co-operative<br />
joint ventures or the foreign investors in wholly foreign-owned enterprises if the requirements<br />
provided by the PRC laws, rules and regulations are met.<br />
140
GENERAL AND STATUTORY INFORMATION<br />
1. SHARE CAPITAL<br />
(a) As at the date of this Prospectus, there is only one class of shares in the capital of our<br />
Company. There are no founder, management or deferred shares. The rights of and<br />
privileges attached to the Shares are stated in the Articles of Association of our Company.<br />
(b) Our Company was incorporated on 8 September 1988. It presently has an authorised share<br />
capital of S$100,000,000 divided into 2,000,000,000 Shares of S$0.05 each.<br />
(c) Upon completion of the Invitation, the issued and paid-up share capital of our Company will<br />
be increased to S$19,283,086 divided into 385,661,720 Shares.<br />
(d) Save as disclosed below, there were no changes in the issued share capital of our Company<br />
or its subsidiaries within the three years preceding the date of this Prospectus:-<br />
Resultant<br />
Number of Issued<br />
shares issued/ Consideration/ Share capital/<br />
Date of Contributed Issue Purpose of Contributed<br />
Issue Capital Price Issue Capital<br />
Our Company<br />
15 May 2001 1,799,999 S$1 Bonus issue S$2,000,000<br />
ordinary shares<br />
of S$1 each<br />
per share<br />
10 December 2002 33,500 ordinary S$20 Share swap for S$2,033,500<br />
shares of S$1 per share minority interests’<br />
each stake in subsidiaries<br />
30 January 2003 12,649,586 S$1 Bonus issue S$14,683,086<br />
ordinary shares per share<br />
of S$1 each<br />
Blue <strong>Ocean</strong><br />
28 October 2002 250 shares of HNL100 Cash HNL25,000<br />
HNL100 each per share On incorporation<br />
Hoon’s<br />
2 April 2001 1,000 ordinary US$11.43 Cash US$11,429<br />
shares of 100<br />
colones each<br />
per share On incorporation<br />
17 December 2001 90,875 ordinary US$11.43 Capitalisation of debt US$1,050,000<br />
shares of 100 per share To provide for<br />
colones each working capital<br />
OGHK<br />
2 August 2002 10,000 shares HK$1 Cash HK$10,000<br />
of HK$1 each per share On incorporation<br />
141
Resultant<br />
Number of Issued<br />
shares issued/ Consideration/ Share capital/<br />
Date of Contributed Issue Purpose of Contributed<br />
Issue Capital Price Issue Capital<br />
OS Apparel<br />
10 September 2002 US$100,000 — Cash<br />
To provide for<br />
working capital and<br />
capital contribution<br />
US$100,000<br />
6 December 2002 US$145,711 — Machinery and US$245,711<br />
equipment<br />
To provide for<br />
working capital and<br />
capital contribution<br />
OS Marketing<br />
8 November 2002 2 shares of US$2 Cash US$2<br />
US$1 each On incorporation<br />
OS Sourcing<br />
2 January 2002 200,000 US$1 Cash US$200,000<br />
shares of per share To provide for<br />
US$1 each working capital<br />
Pacific <strong>Sky</strong><br />
27 May 2002 2,000 shares of 100 colones Cash 200,000<br />
100 colones each per share On incorporation colones<br />
PDAC<br />
25 August 2000 500,000 shares B$1 Cash B$500,000<br />
of B$1 each per share To provide for<br />
working capital<br />
Sing Cheng<br />
5 December 2002 HK$149,529 — Cash<br />
To provide for<br />
working capital and<br />
capital contribution<br />
HK$149,529<br />
Uniwear<br />
3 April 2002 55,250 shares HNL100 Capitalisation of debt HNL5,525,000<br />
of HNL100 each per share To provide for<br />
working capital<br />
Subsidiary held<br />
by ASTG<br />
Milteq<br />
14 July 2001 25,000 ordinary B$1 Cash B$25,000<br />
shares of per share On incorporation<br />
B$1 each<br />
23 August 2002 75,000 ordinary B$1 Cash B$100,000<br />
shares of per share To provide for<br />
B$1 each working capital<br />
142
(e) Save as disclosed in paragraph (d) above, no shares in or debentures of our Company or<br />
any of its subsidiaries have been issued, or is proposed to be issued, as fully or partly paidup<br />
for cash, or for a consideration other than cash, within the three years preceding the date<br />
of this Prospectus.<br />
(f) Save as provided under the Scheme, no person has been granted or is entitled to be<br />
granted an option to subscribe for shares in, or debentures of, our Company or any of its<br />
subsidiaries.<br />
2. INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS<br />
(a) The names, addresses, ages, principal occupations and business and working experience of<br />
all the Directors and Executive Officers of our Group are set out in the section entitled<br />
“Directors, Management and Staff” at pages 66 to 71 of this Prospectus.<br />
(b) The list of present directorships and past directorships of each Director (other than our<br />
Company) as at the date of this Prospectus and over the five years preceding the date of<br />
this Prospectus is set out as follows:-<br />
Name Present Directorships Past Directorships<br />
Group Companies Group Companies<br />
Ang Boon Cheow Edward ATS Garments (S) Pte <strong>Ltd</strong><br />
Blue <strong>Ocean</strong> Apparel, SA<br />
Eng Soon Garments Sdn Bhd<br />
<strong>Ocean</strong> Gateway <strong>International</strong><br />
Company <strong>Ltd</strong><br />
<strong>Ocean</strong> <strong>Sky</strong> Textile (H.K.) <strong>Limited</strong><br />
<strong>Ocean</strong> Star Apparel<br />
(Guangzhou) Pte <strong>Ltd</strong><br />
<strong>Ocean</strong> Star Marketing (USA), Inc.<br />
<strong>Ocean</strong> Star Sourcing (USA), Inc.<br />
Sing Cheng (Guangzhou)<br />
Apparel & Accessories Pte <strong>Ltd</strong><br />
Suntex Pte <strong>Ltd</strong><br />
Uniwear Garments Honduras, SA<br />
Sunglobe Pte <strong>Ltd</strong><br />
Other Companies Other Companies<br />
Ang Tong Seng Brothers Suntex Construction &<br />
Enterprises Pte <strong>Ltd</strong> Development Co <strong>Ltd</strong><br />
ATS Holdings (2000) Pte <strong>Ltd</strong><br />
Bloom Time Trading (2002) Pte <strong>Ltd</strong><br />
Lenco Holdings Pte <strong>Ltd</strong><br />
Naga Mutiara Construction &<br />
Development Sdn Bhd<br />
Nicon Development Pte <strong>Ltd</strong><br />
Suntex Investment Co <strong>Ltd</strong><br />
Uniem Trading (2002) Sdn Bhd<br />
Uniwear Embroidery Honduras<br />
(2002) SA<br />
143
Name Present Directorships Past Directorships<br />
Ang Boon Chong Group Companies Group Companies<br />
ATS Garments (S) Pte <strong>Ltd</strong> Sunglobe Pte <strong>Ltd</strong><br />
Blue <strong>Ocean</strong> Apparel, SA<br />
Eng Soon Garments Sdn Bhd<br />
Hoon’s Apparel <strong>International</strong><br />
(SAL) S.A. de C.V.<br />
Milteq Tenthouse Sdn Bhd<br />
<strong>Ocean</strong> Gateway <strong>International</strong><br />
Company <strong>Ltd</strong><br />
<strong>Ocean</strong> <strong>Sky</strong> Textile<br />
(H.K.) <strong>Limited</strong><br />
<strong>Ocean</strong> Star Apparel<br />
(Guangzhou) Pte <strong>Ltd</strong><br />
<strong>Ocean</strong> Star Marketing (USA), Inc.<br />
<strong>Ocean</strong> Star Sourcing (USA), Inc.<br />
Sing Cheng (Guangzhou)<br />
Apparel & Accessories Pte <strong>Ltd</strong><br />
Suntex Pte <strong>Ltd</strong><br />
Uniwear Garments Honduras, SA<br />
Other Companies Other Companies<br />
ATS Holdings (2000) Pte <strong>Ltd</strong> Suntex Construction &<br />
Ang Tong Seng Brothers Development Co <strong>Ltd</strong><br />
Enterprises Pte <strong>Ltd</strong><br />
Lenco Holdings Pte <strong>Ltd</strong><br />
Suntex Investment Co <strong>Ltd</strong><br />
Ang Siew Tiong Group Companies Group Companies<br />
Eng Soon Garments Sdn Bhd Sunglobe Pte <strong>Ltd</strong><br />
<strong>Ocean</strong> Star Apparel<br />
(Guangzhou) Pte <strong>Ltd</strong><br />
Other Companies Other Companies<br />
– –<br />
Ng Ya Ken @ Ng Ah Kan Group Companies Group Companies<br />
– –<br />
Other Companies Other Companies<br />
– –<br />
144
Name Present Directorships Past Directorships<br />
Teo Kiang Kok (1) Group Companies Group Companies<br />
– –<br />
Other Companies Other Companies<br />
Asean Emerging Companies GRP <strong>Limited</strong><br />
Growth Fund <strong>Ltd</strong> IPC Corporation <strong>Ltd</strong><br />
Circuits Plus Holdings <strong>Ltd</strong> Kingboard Copper Foil<br />
Food Junction Holdings <strong>Ltd</strong> Holdings <strong>Limited</strong><br />
Giant Wireless Technology Malaysian Emerging<br />
<strong>Limited</strong> Companies Growth<br />
HG Metal Manufacturing Fund <strong>Ltd</strong><br />
<strong>Limited</strong> Solid Resources<br />
Hyflux <strong>Ltd</strong> Investment <strong>Ltd</strong><br />
Jadason Enterprises <strong>Ltd</strong> Mayfran<br />
Miyoshi Precision <strong>Limited</strong> <strong>International</strong> <strong>Ltd</strong><br />
New Wave Technologies <strong>Ltd</strong><br />
Praxair Surface Technologies<br />
Pte <strong>Ltd</strong><br />
SLAB Services Pte <strong>Ltd</strong><br />
SM Summit Holdings <strong>Limited</strong><br />
Swing Media Technology Group <strong>Limited</strong><br />
Tat Seng Packaging Group <strong>Ltd</strong><br />
Teamsphere <strong>Limited</strong><br />
The Vittoria Fund <strong>Ltd</strong><br />
The Vittoria One <strong>Ltd</strong><br />
Unisteel Technology <strong>Ltd</strong><br />
Chua Keng Hiang Group Companies Group Companies<br />
– –<br />
Other Companies Other Companies<br />
CF Consulting Pte <strong>Ltd</strong> Dong Da Enterprises<br />
First Engineering <strong>Ltd</strong> (Hong Kong) <strong>Limited</strong><br />
Jadason Enterprises <strong>Ltd</strong> Futek Incorporated<br />
Provisions Suppliers Corporation Futek Malaysia Sdn Bhd<br />
<strong>Limited</strong> Futek Electonics<br />
Tat Seng Packaging Group <strong>Ltd</strong> (Shenzhen) Co <strong>Ltd</strong><br />
IPC Capital Pte <strong>Ltd</strong><br />
Mintwell Co Pte <strong>Ltd</strong><br />
Mintwell Industry Pte <strong>Ltd</strong><br />
Panton <strong>International</strong> <strong>Ltd</strong><br />
Torita Corporation <strong>Ltd</strong><br />
Torita Property Co.<br />
Note :<br />
(1) Companies in which Mr Teo Kiang Kok was appointed as director for purpose of incorporation or as nominee<br />
director only and in the course of his professional practice have not been included.<br />
(c) The list of present directorships and past directorships of each Executive Officer as at the<br />
date of this Prospectus and over the five years preceding the date of this Prospectus is set<br />
out as follows:-<br />
145
Name Present Directorships Past Directorships<br />
Chong Chiak Yee Alison – –<br />
Chu Siew Hwa Sunglobe Pte <strong>Ltd</strong> –<br />
Go Kim Huay – –<br />
Hoon Pang Heng Joanna ATS Holdings (2000) Pte <strong>Ltd</strong> –<br />
Lenco Holdings Pte <strong>Ltd</strong><br />
Sunglobe Pte <strong>Ltd</strong><br />
Kuok Wai Peng – –<br />
Lee Ching Lian Bernadette – –<br />
Lim Li Kian ATS Holdings (2000) Pte <strong>Ltd</strong> –<br />
Lenco Holdings Pte <strong>Ltd</strong><br />
Sunglobe Pte <strong>Ltd</strong><br />
Lo Siu So – –<br />
Tan Kim Teck Albert – –<br />
Woo Ah Toong – Electrimec Asia Pacific<br />
Pte <strong>Ltd</strong><br />
Terasaki Electric Company<br />
(Far East) Pte <strong>Ltd</strong><br />
Yeh Wu Ping – –<br />
(d) Save as disclosed in this Prospectus, none of the Directors and Executive Officers is related<br />
to one another or to any Substantial Shareholder of our Company.<br />
(e) The interests of the Directors and Substantial Shareholders in the Shares as at the date of<br />
this Prospectus and as recorded in the Register of Shareholdings maintained under the<br />
provisions of the Act are as follows:-<br />
Shares registered in the<br />
Shares in which the<br />
Directors and Substantial<br />
names of Directors and Shareholders are deemed<br />
Substantial Shareholders to have an interest<br />
No. of Shares of No. of Shares of<br />
S$0.05 each % S$0.05 each %<br />
Directors<br />
Ang Boon Cheow Edward (1) 21,300,000 7.25 235,382,723 80.15<br />
Ang Boon Chong (1) 14,200,000 4.84 235,382,723 80.15<br />
Ang Siew Tiong 14,441,196 4.92 – –<br />
Substantial Shareholders<br />
ATS Holdings (2000) 235,382,723 80.15 – –<br />
Note:<br />
(1) Ang Boon Cheow Edward and Ang Boon Chong are deemed to be Shareholders of our Company by virtue of<br />
their shareholding in ATS Holdings (2000).<br />
146
(f) There is no shareholding qualification for Directors in the Articles of Association of our<br />
Company.<br />
(g) Save as disclosed below, none of our Directors or Executive Officers or controlling<br />
shareholders is or was involved in any of the following events:-<br />
(i) a petition under any bankruptcy laws filed in the last 10 years in any jurisdiction<br />
against him or any partnership in which he was a partner;<br />
(ii) a petition under any law of any jurisdiction filed in the last 10 years against a<br />
corporation of which he was a director or key executive for the winding up of that<br />
corporation on the ground of insolvency;<br />
(iii) unsatisfied judgments against him;<br />
(iv) a conviction of any offence, in Singapore or elsewhere, involving fraud or dishonesty<br />
which is punishable with imprisonment for 3 months or more, or has been the subject<br />
of any criminal proceedings (including any pending criminal proceedings which he is<br />
aware of) for such purpose;<br />
(v) a conviction of any offence in Singapore or elsewhere, involving a breach of any law<br />
or regulatory requirement that relates to the securities or futures industry in Singapore<br />
or elsewhere, or been the subject of any criminal proceedings (including any criminal<br />
proceedings which he is aware of) for such breach;<br />
(vi) judgement has been entered against him, during the last 10 years, in any civil<br />
proceedings in Singapore or elsewhere involving a breach of any law or regulatory<br />
requirement that relates to the securities or futures industry in Singapore or<br />
elsewhere, or a finding of fraud, misrepresentation or dishonesty on his part, or the<br />
subject of any civil proceedings (including any pending civil proceedings which is<br />
aware of) involving an allegation of fraud, misrepresentation or dishonesty on his part;<br />
(vii) a conviction in Singapore or elsewhere of any offence in connection with the formation<br />
or management of any corporation;<br />
(viii) disqualification from acting as a director of any company, or from taking part in any<br />
way directly or indirectly in the management of any company;<br />
(ix) the subject of any order, judgement or ruling of any court, tribunal or governmental<br />
body permanently or temporarily enjoining him from engaging in any type of business<br />
practice or activity; and<br />
(x) to his knowledge, been concerned with the management or conduct, in Singapore or<br />
elsewhere, of the affairs of (i) any corporation which has been investigated for a<br />
breach of any law or regulatory requirement governing corporations in Singapore or<br />
elsewhere; or (ii) any corporation or partnership which has been investigated for a<br />
breach of any law or regulatory requirement that relates to the securities or futures<br />
industry in Singapore or elsewhere, in connection with any matter occurring or arising<br />
during the period when he was so concerned with the corporation or partnership.<br />
From 1994 to 1997, Mr Chua Keng Hiang was involved in the management of a company<br />
incorporated in China when the company was on two occasions interviewed by the Chinese<br />
authorities for non-compliance with certain customs regulations. In one of the occasions, the<br />
company’s bonded warehouse staff abused the facilities for personal gain and absconded. In<br />
another occasion, the company’s local agent engaged to handle the company’s imports<br />
misrepresented to the company and breached certain customs regulations. No charges<br />
were brought against the company in both instances.<br />
147
(h) Save as disclosed at page 73 of this Prospectus at the section entitled Service Agreements,<br />
there are no existing or proposed service contracts between the Directors and our Company<br />
or any of its subsidiaries.<br />
(i) The aggregate emoluments (including CPF thereon) paid or distributed by our Group to the<br />
Directors for services rendered in all capacities to our Company and its subsidiaries for<br />
FY2001 amounted to S$1,520,960. For FY2002, the unaudited aggregate emoluments<br />
payable to the Directors under the arrangements with our Group in force as at the date of<br />
this Prospectus was estimated to be approximately S$2,068,800 (including CPF thereon).<br />
(j) Save as disclosed at pages 76 to 80 of this Prospectus at the section entitled <strong>Ocean</strong> <strong>Sky</strong><br />
Share Option Scheme, no option to subscribe for securities of our Company or any of its<br />
subsidiaries has been granted to, or was exercised by, any Director or Executive Officer<br />
within the two years preceding the date of this Prospectus.<br />
(k) Save as disclosed at pages 84 to 87 of this Prospectus under the section entitled “Interested<br />
Persons Transactions”, none of the Directors or substantial Shareholders of our Company is<br />
interested, directly or indirectly, in the promotion of, or in any assets acquired or disposed of<br />
by, or leased to, our Company or any of its subsidiaries within the two years preceding the<br />
date of this Prospectus, or in any proposal for such acquisition or disposal or lease as<br />
aforesaid.<br />
(l) Save as disclosed at page 88 of this Prospectus under the section entitled “Potential Conflict<br />
of Interests”, none of the Directors, Executive Officers or substantial Shareholders or any of<br />
their Associates has any interest, direct or indirect, in any company carrying on the same<br />
trade as our Company or any of its subsidiaries taken as a whole.<br />
(m) None of the Directors is materially interested in any existing contract or arrangement<br />
subsisting at the date of this Prospectus which is significant in relation to the business of our<br />
Company and its subsidiaries.<br />
(n) No sum or benefit has been paid or has been agreed to be paid to any Director or to any<br />
firm in which a Director is a partner or corporation in which such Director holds shares or<br />
debentures in cash or in shares or otherwise by any person to induce him to become, or to<br />
qualify him as, a Director or otherwise for services rendered by him or such firm or<br />
corporation in connection with the promotion or formation of our Company.<br />
3. ARTICLES OF ASSOCIATION<br />
The provisions in the Articles of Association of our Company relating to transfers of shares, the<br />
voting rights of Shareholders of our Company, restrictions on the voting rights of the Directors,<br />
class rights and the variation thereof, the borrowing powers of the Directors and the remuneration<br />
of the Directors are as follows:-<br />
Memorandum of Association<br />
The Memorandum of Association of our Company states, among others, that the liability of<br />
members of our Company is limited, and that the objects for which our Company is established<br />
include those of an investment holding company.<br />
The objects of our Company are set out in full in clause 3 of the Memorandum of Association<br />
which is available for inspection at our registered office as stated in the section titled “Documents<br />
for Inspection”.<br />
The complete listing of our objects and purposes can be found at page 1 to 3 of our Company’s<br />
Memorandum of Association.<br />
148
Articles of Association<br />
Provisions relating to Directors<br />
The provisions in the Articles of Association of our Company relating to (a) a Director’s power to<br />
vote on a proposal, arrangement or contract in which the Director is materially interested; (b) the<br />
Director’s power, in the absence of an independent quorum, to vote compensation to themselves<br />
or any members of their body; (c) borrowing powers exercisable by the Directors and how such<br />
borrowing powers can be varied; (d) retirement or non-retirement of Directors under an age limit<br />
requirement; and (e) number of shares, if any, required for Director’s qualification, are as follows:<br />
Article 76<br />
A Director shall not be required to hold any shares of the Company by way of qualification. A<br />
Director who is not a member of the Company shall nevertheless be entitled to receive notice of<br />
and to attend and speak at General Meetings.<br />
Article 77<br />
The ordinary remuneration (directors’ fees) of the Directors, which shall from time to time be<br />
determined by an Ordinary Resolution of the Company, shall not be increased except pursuant to<br />
an Ordinary Resolution passed at a General Meeting where notice of the proposed increase shall<br />
have been given in the notice convening the General Meeting and shall (unless such resolution<br />
otherwise provides) be divisible among the Directors as they may agree, or failing agreement,<br />
equally, except that any Director who shall hold office for part only of the period in respect of which<br />
such remuneration or fees are payable shall be entitled only to rank in such division for a<br />
proportion of remuneration or fees related to the period during which he has held office. The<br />
ordinary remuneration (fees) of an executive Director may not include a commission on or a<br />
percentage of turnover and the ordinary remuneration or fees of a non-executive Director shall be<br />
a fixed sum, and not by a commission on or a percentage of profits or turnover.<br />
Article 78<br />
Any Director who holds any executive office, or who serves on any committee of the Directors, or<br />
who otherwise performs services which in the opinion of the Directors are outside the scope of the<br />
ordinary duties of a Director, may be paid such extra remuneration by way of salary, commission or<br />
otherwise as the Directors may determine, other than by a commission on or percentage of<br />
commission or turnover, Provided that such extra remuneration in case of an executive Director<br />
shall not by way of commission on or a percentage of turnover and in the case of a non-executive<br />
Director shall be by a fixed sum, and not by a commission on or a percentage of profits or<br />
turnover.<br />
Article 90<br />
The Directors to retire by rotation shall include (so far as necessary to obtain the number required)<br />
any Director who is due to retire at the meeting by reason of age or who wishes to retire and not to<br />
offer himself for re-election. Any further Directors so to retire shall be those of the other Directors<br />
subject to retirement by rotation who have been longest in office since their last re-election or<br />
appointment and so that as between persons who became or were last re-election Directors on the<br />
same day, those to retire shall (unless they otherwise agree among themselves) be determined by<br />
ballot. A retiring Director shall be eligible for re-election.<br />
Article 91<br />
The Company at the meeting at which a Director retires under any provision of these presents may<br />
by Ordinary Resolution fill the office being vacated by electing thereto the retiring Director or some<br />
other person eligible for appointment. In default, the retiring Director shall be deemed to have<br />
been reelected except in any of the following cases :<br />
(a) where at such meeting it is expressly resolved not to fill such office or a resolution for the<br />
reelection of such Director is put to the meeting and lost; or<br />
149
(b) Where such Director has given notice in writing to the Company that he is unwilling to be<br />
reelected; or<br />
(c) where the default is due to the moving of a resolution in contravention of the next following<br />
Article; or<br />
(d) where such Director has attained any retiring age applicable to him as Director.<br />
The retirement shall not have effect until the conclusion of the meeting except where a resolution<br />
is passed to elect some other person in the place of the retiring Director or a resolution for his<br />
re-election is put to the meeting and lost and accordingly a retiring Director who is re-election or<br />
deemed to have been reelected will continue in office without a break.<br />
Article 100<br />
A Director shall not vote in respect of any contract or arrangement or any other proposal<br />
whatsoever in which he has any interest, directly or indirectly. A Director shall not be counted in<br />
the quorum at a meeting in relation to any resolution on which he is debarred from voting.<br />
Article 108<br />
Subject as hereinafter provided and to the provisions of the Statutes, the Directors may exercise all<br />
the powers of the Company to borrow money, to mortgage or charge its undertaking, property and<br />
uncalled capital and to issue debentures and other securities, whether outright or as collateral<br />
security for any debt, liability or obligation of the Company or of any third party.<br />
Provisions relating to rights, preferences and restrictions attaching to Shares<br />
The provisions in the Articles of Association of our Company relating to the rights, preferences and<br />
restrictions attaching to each class of the shares, including: (a) dividend rights, including the time<br />
limit after which dividend entitlement lapses and an indication of the party in whose favour this<br />
entitlement operates; (b) voting rights, including whether Directors stand for re-election at<br />
staggered intervals and the impact of that arrangement where cumulative voting is permitted or<br />
required; (c) rights to share in our Company’s profits; (d) rights to share in any surplus in the event<br />
of liquidation; (e) redemption provisions; (f) sinking fund provisions; (g) liability to further capital<br />
calls by our Company, are as follows:<br />
Article 4(A)<br />
Subject to these presents, no shares may be issued by the Directors without the prior approval of<br />
the Company in General Meeting pursuant to Section 161 of the Act, but subject thereto and the<br />
terms of such approval, and to Article 5, and to any special rights attached to any shares for the<br />
time being issued, the Directors may allot (with or without conferring a right of renunciation) or<br />
grant options over or otherwise dispose of the same to such persons on such terms and conditions<br />
and for such consideration and at such time and whether or not subject to the payment of any part<br />
of the amount thereof in cash or otherwise as the Directors may think fit, and any shares may,<br />
subject to compliance with Sections 70 and 75 of the Act, be issued with such preferential,<br />
deferred, qualified or special rights, privileges, conditions or restrictions, whether as regards<br />
dividend, return of capital, participation in surplus, voting, conversion or otherwise, as the Directors<br />
may think fit, and preference shares may be issued which are or at the option of the Company are<br />
liable to be redeemed, the terms and manner of redemption being determined by the Directors in<br />
accordance with the Act, Provided Always that:<br />
(a) no shares shall be issued to transfer a controlling interest in the Company without the<br />
specific prior approval of the Company in General Meeting; and<br />
(b) no shares shall be issued at a discount or options granted over unissued shares except in<br />
accordance with the Act.<br />
150
Article 18<br />
The Directors may from time to time make calls upon the members in respect of any moneys<br />
unpaid on their shares (whether on account of the nominal value of the shares or, when permitted,<br />
by way of premium) but subject always to the terms of issue of such shares. A call shall be<br />
deemed to have been made at the time when the resolution of the Directors authorising the call<br />
was passed and may be made payable by instalments.<br />
Article 19<br />
Each member shall (subject to receiving at least fourteen days’ notice specifying the time or times<br />
and place of payment) pay to the Company at the time or times and place so specified the amount<br />
called on his shares. The joint holders of a share shall be jointly and severally liable to pay all calls<br />
in respect thereof. A call may be revoked or postponed as the Directors may determine.<br />
Article 21<br />
Any sum (whether on account of the nominal value of the share or by way of premium) which by<br />
the terms of issue of a share becomes payable upon allotment or at any fixed date shall for all the<br />
purposes of these presents be deemed to be a call duly made and payable on the date on which<br />
by the terms of issue the same becomes payable. In the case of non-payment, all the relevant<br />
provisions of these presents as to payment of interest and expenses, forfeiture or otherwise shall<br />
apply as if such sum had become payable by virtue of a call duly made and notified.<br />
Article 23<br />
The Directors may if they think fit receive from any member willing to advance the same all or any<br />
part of the moneys (whether on account of the nominal value of the shares or by way of premium)<br />
uncalled and unpaid upon the shares held by him and such payment in advance of calls shall<br />
extinguish pro tanto the liability upon the shares in respect of which it is made and upon the<br />
moneys so received (until and to the extent that the same would but for such advance become<br />
payable) the Company may pay interest at such rate (not exceeding eight per cent. per annum) as<br />
the member paying such sum and the Directors may agree. Capital paid on shares in advance of<br />
calls shall not, whilst bearing interest, confer a right to participate in profits.<br />
Article 63<br />
Subject to any special rights or restrictions as to voting attached by or in accordance with these<br />
presents to any class of shares, on a show of hands every member who is present in person or by<br />
proxy shall have one vote, the chairman of the meeting to determine which proxy shall be entitled<br />
to vote where a member is represented by two proxies, and on a poll every member who is<br />
present in person or by proxy shall have one vote for every share of which he is the holder. A<br />
member who is bankrupt shall not, while his bankruptcy continues, be entitled to exercise his rights<br />
as a member, or attend, vote or act at any meeting of the Company.<br />
Article 89<br />
At each Annual General Meeting, one-third of the Directors for the time being (or, if their number is<br />
not a multiple of three, the number nearest to but not less than one-third) shall retire from office by<br />
rotation, Provided that no Director holding office as Managing Director shall be subject to<br />
retirement by rotation or be taken into account in determining the number of Directors to retire. For<br />
the avoidance of doubt, each Director (other than a Director holding office as Managing Director)<br />
shall retire at least once every three years.<br />
Article 90<br />
The Directors to retire by rotation shall include (so far as necessary to obtain the number required)<br />
any Director who is due to retire at the meeting by reason of age or who wishes to retire and not to<br />
offer himself for re-election. Any further Directors so to retire shall be those of the other Directors<br />
subject to retirement by rotation who have been longest in office since their last re-election or<br />
appointment and so that as between persons who became or were last re-elected Directors on the<br />
same day, those to retire shall (unless they otherwise agree among themselves) be determined by<br />
ballot. A retiring Director shall be eligible for reelection.<br />
151
Article 122<br />
The Directors may from time to time set aside out of the profits of the Company and carry to<br />
reserve such sums as they think proper which, at the discretion of the Directors, shall be<br />
applicable for any purpose to which the profits of the Company may properly be applied and<br />
pending such application may either be employed in the business of the Company or be invested.<br />
The Directors may divide the reserve into such special funds as they think fit and may consolidate<br />
into one fund any special funds or any parts of any special funds into which the reserve may have<br />
been divided. The Directors may also, without placing the same to reserve, carry forward any<br />
profits. In carrying sums to reserve and in applying the same, the Directors shall comply with the<br />
provisions of the Statutes.<br />
Article 124<br />
If and so far as in the opinion of the Directors, the profits of the Company justify such payments,<br />
the Directors may declare and pay the fixed dividends on any class of shares carrying a fixed<br />
dividend expressed to be payable on fixed dates on the half-yearly or other dates prescribed for<br />
the payment thereof and may also from time to time declare and pay interim dividends on shares<br />
of any class of such amounts and on such dates and in respect of such periods as they think fit.<br />
Article 125<br />
Unless and to the extent that the rights attached to any shares or the terms of issue thereof<br />
otherwise provide, all dividends shall (as regards any shares not fully paid throughout the period in<br />
respect of which the dividend is paid) be apportioned and paid pro rata according to the amounts<br />
paid on the shares during any portion or portions of the period in respect of which the dividend is<br />
paid. For the purposes of this Article, no amount paid on a share in advance of calls shall be<br />
treated as paid on the share.<br />
Article 126<br />
No dividend shall be paid otherwise than out of profits available for distribution under the<br />
provisions of the Statutes or, pursuant to Section 69 of the Act and in the form of stock dividends,<br />
out of the share premium account. Any dividend unclaimed after six (6) years from the date of<br />
declaration shall be made forfeit and revert to the Company.<br />
Article 134<br />
The Directors may, with the sanction of an Ordinary Resolution of the Company, capitalise any<br />
sum standing to the credit of any of the Company’s reserve accounts as representing profits<br />
available for distribution under the provisions of the Statutes or, pursuant to Sections 69 or 70 of<br />
the Act, the Company’s share premium account or capital redemption reserve, by appropriating<br />
such sum to the persons registered as the holders of shares in the Register of Members or (as the<br />
case may be) the Depository Register at the close of business on the date of the resolution (or<br />
such other date as may be specified therein or determined as therein provided) in proportion to<br />
their then holdings of shares and applying such sum on their behalf in paying up in full unissued<br />
shares or (subject to any special rights previously conferred on any shares or class of shares for<br />
the time being issued) unissued shares of any other class not being redeemable shares, for<br />
allotment and distribution credited as fully paid up to and amongst them as bonus shares in the<br />
proportion aforesaid. The Directors may do all acts and things considered necessary or expedient<br />
to give effect to any such capitalisation, with full power to the Directors to make such provisions as<br />
they think fit for any fractional entitlements which would arise on the basis aforesaid (including<br />
provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the<br />
Company rather than to the members concerned). The Directors may authorise any person to<br />
enter on behalf of all the members interested into an agreement with the Company providing for<br />
any such capitalisation and matters incidental thereto and any agreement made under such<br />
authority shall be effective and binding on all concerned.<br />
152
Article 146<br />
If the Company shall be wound up (whether the liquidation is voluntary, under supervision, or by<br />
the court) the Liquidator may, with the authority of a Special Resolution, divide among the<br />
members in specie or in kind the whole or any part of the assets of the Company and whether or<br />
not the assets shall consist of property of one kind or shall consist of properties of different kinds,<br />
and may for such purpose set such value as he deems fair upon any one or more class or classes<br />
of property and may determine how such division shall be carried out as between the members of<br />
different classes of members. The Liquidator may, with the like authority, vest any part of the<br />
assets in trustees upon such trusts for the benefit of members as the Liquidator with the like<br />
authority shall think fit, and the liquidation of the Company may be closed and the Company<br />
dissolved, but so that no contributory shall be compelled to accept any shares or other property in<br />
respect of which there is a liability.<br />
Provisions relating to variation of rights of Shareholders<br />
The provisions of our Articles of Association relating to the actions necessary to change the rights<br />
of our Shareholders are as follows:<br />
Article 9<br />
(A) Whenever the share capital of the Company is divided into different classes of shares, the<br />
variation or abrogation of the special rights attached to any class may, subject to the<br />
provisions of the Act, be made either with the consent in writing of the holders of threequarters<br />
in nominal value of the issued shares of the class or with the sanction of a Special<br />
Resolution passed at a separate General Meeting of the holders of the shares of the class<br />
(but not otherwise) and may be so made either whilst the Company is a going concern or<br />
during or in contemplation of a winding-up. To every such separate General Meeting all the<br />
provisions of these presents relating to General Meetings of the Company and to the<br />
proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall<br />
be two or more persons holding at least one-third in nominal value of the issued shares of<br />
the class present in person or by proxy or attorney and that any holder of shares of the<br />
class present in person or by proxy or attorney may demand a poll and that every such<br />
holder shall on a poll have one vote for every share of the class held by him where the class<br />
is a class of equity shares within the meaning of Section 64(1) of the Act or at least one vote<br />
for every share of the class where the class is a class of preference shares within the<br />
meaning of Section 180(2) of the Act, Provided Always that where the necessary majority for<br />
such a Special Resolution is not obtained at such General Meeting, the consent in writing, if<br />
obtained from the holders of three-quarters in nominal value of the issued shares of the<br />
class concerned within two months of such General Meeting, shall be as valid and effectual<br />
as a Special Resolution carried at such General Meeting.<br />
(B) The provisions in Article 9(A) shall mutatis mutandis apply to any repayment of preference<br />
capital (other than redeemable preference capital) and any variation or abrogation of the<br />
rights attached to preference shares or any class thereof.<br />
(C) The special rights attached to any class of shares having preferential rights shall not unless<br />
otherwise expressly provided by the terms of issue thereof be deemed to be varied by the<br />
creation or issue of further shares ranking as regards participation in the profits or assets of<br />
the Company in some or all respects pari passu therewith but in no respect in priority<br />
thereto.<br />
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Article 42<br />
A reference to a member shall be a reference to a registered holder of shares in the Company, or<br />
where such registered holder is CDP, the Depositors on behalf of whom CDP holds the shares,<br />
provided that:-<br />
(A) a Depositor shall only be entitled to attend any General Meeting and to speak and vote<br />
thereat if his name appears on the Depository Register maintained by CDP forty-eight (48)<br />
hours before the General Meeting as a Depositor on whose behalf CDP holds shares in the<br />
Company, the Company being entitled to deem each such Depositor, or each proxy of a<br />
Depositor who is to represent the entire balance standing to the Securities Account of the<br />
Depositor, to represent such number of shares as is actually credited to the Securities<br />
Account of the Depositor as at such time, according to the records of CDP as supplied by<br />
CDP to the Company, and where a Depositor has apportioned the balance standing to his<br />
Securities Account between two proxies, to apportion the said number of shares between<br />
the two proxies in the same proportion as previously specified by the Depositor in appointing<br />
the proxies; and accordingly no instrument appointing a proxy of a Depositor shall be<br />
rendered invalid merely by reason of any discrepancy between the proportion of Depositor’s<br />
shareholding specified in the instrument of proxy, or where the balance standing to a<br />
Depositor’s Securities Account has been apportioned between two proxies the aggregate of<br />
the proportions of the Depositor’s shareholding they are specified to represent, and the true<br />
balance standing to the Securities Account of a Depositor as at the time of the General<br />
Meeting, if the instrument is dealt with in such manner as is provided above;<br />
(B) the payment by the Company to CDP of any dividend payable to a Depositor shall to the<br />
extent of the payment discharge the Company from any further liability in respect of the<br />
payment;<br />
(C) the delivery by the Company to CDP of provisional allotments or share certificates in respect<br />
of the aggregate entitlements of Depositors to new shares offered by way of rights issue or<br />
other preferential offering or bonus issue shall to the extent of the delivery discharge the<br />
Company from any further liability to each such Depositor in respect of his individual<br />
entitlement; and<br />
(D) the provisions in these presents relating to the transfers, transmissions or certification of<br />
shares shall not apply to the transfer of book-entry securities (as defined in the Statutes).<br />
Provisions relating to Annual General Meetings and Extraordinary General Meetings<br />
An Annual General Meeting shall be held once in every year, at such time (within a period of not<br />
more than fifteen months after the holding of the last preceding Annual General Meeting) and<br />
place as may be determined by the Directors. All other General Meetings shall be called<br />
Extraordinary General Meetings.<br />
Article 48<br />
The Directors may whenever they think fit, and shall on requisition in accordance with the Statutes,<br />
proceed with proper expedition to convene an Extraordinary General Meeting.<br />
Article 49<br />
Any Extraordinary General Meeting at which it is proposed to pass a Special Resolution or (save<br />
as provided by the Statutes) a resolution of which special notice has been given to the Company,<br />
shall be called by twenty-one days’ notice in writing at the least and an Annual General Meeting or<br />
any other Extraordinary General Meeting, by fourteen days’ notice in writing at the least. The<br />
period of notice shall in each case be exclusive of the day on which it is served or deemed to be<br />
served and of the day on which the meeting is to be held and shall be given in manner hereinafter<br />
mentioned to all members other than such as are not under the provisions of these presents<br />
entitled to receive such notices from the Company, Provided that a General Meeting<br />
notwithstanding that it has been called by a shorter notice than that specified above shall be<br />
deemed to have been duly called if it is so agreed:<br />
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(A) in the case of an Annual General Meeting by all the members entitled to attend and vote<br />
thereat; and<br />
(B) in the case of an Extraordinary General Meeting by a majority in number of the members<br />
having a right to attend and vote thereat, being a majority together holding not less than 95<br />
per cent. in nominal value of the shares giving that right;<br />
Provided also that the accidental omission to give notice to or the non-receipt of notice by any<br />
person entitled thereto shall not invalidate the proceedings at any General Meeting. At least<br />
fourteen days’ notice of any General Meeting shall be given by advertisement in the daily press<br />
and in writing to any stock exchange upon which the shares in the Company may be listed.<br />
Article 50<br />
(A) Every notice calling a General Meeting shall specify the place and the day and hour of the<br />
meeting, and there shall appear with reasonable prominence in every such notice a<br />
statement that a member entitled to attend and vote is entitled to appoint a proxy to attend<br />
and vote instead of him and that a proxy need not be a member of the Company.<br />
(B) In the case of an Annual General Meeting, the notice shall also specify the meeting as such.<br />
(C) In the case of any General Meeting at which business other than routine business (“special<br />
business”) is to be transacted, the notice shall specify the general nature of such business,<br />
and if any resolution is to be proposed as a Special Resolution, the notice shall contain a<br />
statement to that effect.<br />
Provisions relating to rights of non-resident or foreign Shareholders<br />
The provisions of our Articles of Association relating to the rights to own Shares, including the<br />
rights of non-resident or foreign Shareholders to hold or exercise voting rights on their Shares, are<br />
as follows:<br />
Article 5<br />
(A) Subject to any direction to the contrary that may be given by the Company in General<br />
Meeting and as permitted by the rules of the Designated Stock Exchange, all new shares<br />
shall before issue be offered to such persons who as at the date (as determined by the<br />
Directors) of the offer are entitled to receive notices from the Company of General Meetings<br />
in proportion, as nearly as the circumstances admit, to the amount of the existing shares to<br />
which they are entitled. The offer shall be made by notice specifying the number of shares<br />
offered, and limiting a time within which the offer, if not accepted, will be deemed to be<br />
declined, and, after the expiration of that time, or on the receipt of an intimation from the<br />
person to whom the offer is made that he declines to accept the shares offered, the<br />
Directors may dispose of those shares in such manner as they think most beneficial to the<br />
Company. The Directors may likewise so dispose of any new shares which (by reason of<br />
the ratio which the new shares bear to shares held by persons entitled to an offer of new<br />
shares) cannot, in the opinion of the Directors, be conveniently offered under this Article<br />
5(A).<br />
(B) The Company may, notwithstanding Article 5(A) above, authorise the Directors not to offer<br />
new shares to members to whom by reason of foreign securities laws, such offers may not<br />
be made without registration of the shares or a prospectus or other document, but to sell the<br />
entitlements to the new shares on behalf of such members on such terms and conditions as<br />
the Company may direct.<br />
155
Article 35<br />
(A) There shall be no restriction on the transfer of fully paid up shares (except where required<br />
by law or by the rules, bye-laws or listing rules of any stock exchange on which the shares in<br />
the Company may be listed) but the Directors may in their discretion decline to register any<br />
transfer of shares upon which the Company has a lien, and in the case of shares not fully<br />
paid up, may refuse to register a transfer to a transferee of whom they do not approve,<br />
Provided Always that in the event of the Directors refusing to register a transfer of shares,<br />
the Company shall within ten market days after the date on which the application for a<br />
transfer of shares was made, serve a notice in writing to the applicant stating the facts which<br />
are considered to justify the refusal as required by the Statutes.<br />
(B) The Directors may decline to register any instrument of transfer unless:<br />
(a) such fee not exceeding S$2.00 as the Directors may from time to time require is paid<br />
to the Company in respect thereof;<br />
(b) the instrument of transfer, duly stamped in accordance with any law for the time being<br />
in force relating to stamp duty, is deposited at the Office or at such other place (if any)<br />
as the Directors may appoint accompanied by the certificates of the shares to which it<br />
relates, and such other evidence as the Directors may reasonably require to show the<br />
right of the transferor to make the transfer and, if the instrument of transfer is<br />
executed by some other person on his behalf, the authority of the person so to do;<br />
and<br />
(c) the instrument of transfer is in respect of only one class of shares.<br />
Article 43<br />
Except as required by the Statutes or law, no person shall be recognised by the Company as<br />
holding any share upon any trust, and the Company shall not be bound by or compelled in any<br />
way to recognise (even when having notice thereof) any equitable, contingent, future or partial<br />
interest in any share, or any interest in any fractional part of a share, or (except only as by these<br />
presents or by the Statutes or law otherwise provided) any other right in respect of any share,<br />
except an absolute right to the entirety thereof in the registered holder and nothing in these<br />
presents contained relating to CDP or to Depositors or in any depository agreement made by the<br />
Company with any common depository for shares shall in any circumstances be deemed to limit,<br />
restrict or qualify the above.<br />
Article 4(A)<br />
(A) Subject to these presents, no shares may be issued by the Directors without the prior<br />
approval of the Company in General Meeting pursuant to Section 161 of the Act, but subject<br />
thereto and the terms of such approval, and to Article 5, and to any special rights attached<br />
to any shares for the time being issued, the Directors may allot (with or without conferring a<br />
right of renunciation) or grant options over or otherwise dispose of the same to such<br />
persons on such terms and conditions and for such consideration and at such time and<br />
whether or not subject to the payment of any part of the amount thereof in cash or otherwise<br />
as the Directors may think fit, and any shares may, subject to compliance with Sections 70<br />
and 75 of the Act, be issued with such preferential, deferred, qualified or special rights,<br />
privileges, conditions or restrictions, whether as regards dividend, return of capital,<br />
participation in surplus, voting, conversion or otherwise, as the Directors may think fit, and<br />
preference shares may be issued which are or at the option of the Company are liable to be<br />
redeemed, the terms and manner of redemption being determined by the Directors in<br />
accordance with the Act, Provided Always that:<br />
(a) no shares shall be issued to transfer a controlling interest in the Company without the<br />
specific prior approval of the Company in General Meeting; and<br />
(b) no shares shall be issued at a discount or options granted over unissued shares<br />
except in accordance with the Act.<br />
156
4. MATERIAL CONTRACTS<br />
The following contracts, not being contracts entered into in the ordinary course of business, have<br />
been entered into by our Group within the two years preceding the date of this Prospectus and are<br />
or may be material:-<br />
(a) Share Swap Agreement dated 10 December 2002 between Yeh Wu Ping and our Company<br />
in relation to the transfer (with effect from 1 January 2002) of 40,000 shares of US$1.00<br />
each (representing 20%) in the issued share capital of OS Sourcing by Mr Yeh to our<br />
Company at a consideration of S$70,000, which is to be satisfied by the allotment of 3,500<br />
ordinary shares of S$1.00 each in our Company.<br />
(b) Share Swap Agreement dated 10 December 2002 between Yeo Yeok Soo and our Company<br />
in relation to the transfer (with effect from 1 January 2002) of 13,812 shares of HNL 100<br />
each (representing 25%) in the issued share capital of Uniwear by Mr Yeo to our Company<br />
at a consideration of S$120,000, which is to be satisfied by the allotment of 6,000 ordinary<br />
shares of S$1.00 each in our Company.<br />
(c) Share Swap Agreement dated 10 December 2002 between Yeo Yeok Soo and our Company<br />
in relation to the transfer (with effect from 1 January 2002) of 22,969 shares of 100 colones<br />
each (representing 25%) in the issued share capital of Hoon’s by Mr Yeo to our Company at<br />
a consideration of S$480,000, which is to be satisfied by the allotment of 24,000 ordinary<br />
shares of S$1.00 each in our Company.<br />
(d) Sale and Purchase Agreement dated 10 December 2002 between Ms Hoon Pang Heng,<br />
Joanna, Ms Lim Li Kian and Ms Chu Siew Hwa (who are the wives of Mr Ang Boon Cheow<br />
Edward, Mr Ang Boon Chong and Mr Ang Siew Tiong respectively) and our Company.<br />
Pursuant to this agreement, Ms Hoon, Ms Lim and Ms Chu transferred their entire interests<br />
in Sunglobe to our Company, and the consideration for each of the transfers is S$186,151,<br />
S$124,100 and S$16,329 respectively.<br />
(e) Joint Venture Agreement dated 17 August 2002 between Ydm Pehin Orang Kaya Pekerma<br />
Lela Dato Paduka Haji Awang Chuchu bin Penglima Asgar Dato Paduka Awang Abdullah<br />
and our Company in relation to the operations and management of PDAC.<br />
(f) Sale and Purchase Agreement dated 17 August 2002 between Yong Foh Kong, Fong Foh<br />
Chen and our Company in relation to the purchase of 150,000 shares (representing 30%)<br />
in the issued share capital of PDAC by our Company for a consideration of B$1,700,000.<br />
(g) Joint Venture Agreement dated 8 October 2002 between ATSG and Mohamed Ali bin Haji<br />
Awang Enchi and Yong Foh Chen in relation to the operations and management of Milteq.<br />
(h) Service Agreement dated 5 February 2003 between Mr Ang Boon Cheow Edward and our<br />
Company.<br />
(i) Service Agreement dated 5 February 2003 between Mr Ang Boon Chong and our Company.<br />
(j) Management and Underwriting Agreement dated 12 March 2003 entered into between SBI<br />
E2-Capital Pte <strong>Ltd</strong> as the Manager, UOB Kay Hian Private <strong>Limited</strong> as the Underwriter and<br />
our Company.<br />
(k) Placement Agreement dated 12 March 2003 entered into between SBI E2-Capital Securities<br />
<strong>Limited</strong> and UOB Kay Hian Private <strong>Limited</strong> as Joint Lead Placement Agents and our<br />
Company.<br />
(l) Depository Agreement dated 12 March 2003 between our Company and the CDP, pursuant<br />
to which the CDP agreed to act as depository for our Company’s securities for trades in our<br />
securities through SGX-ST.<br />
157
5. WORKING CAPITAL<br />
The Directors are of the opinion that, after taking into account the present banking facilities and<br />
the net proceeds from the issue of New Shares by our Company, our Group will have adequate<br />
working capital for its present requirements.<br />
In the opinion of the Directors, there are no minimum amounts which must be raised by the issue<br />
of the New Shares in order to provide for the following:-<br />
(i) the purchase price or any property purchased or to be purchased;<br />
(ii) estimated preliminary expenses (including underwriting and placement commission) for the<br />
Invitation payable by our Company;<br />
(iii) the repayment of any money borrowed by our Company in respect of any of the foregoing<br />
matters; and<br />
(iv) working capital.<br />
Although no minimum amount must be raised by the Invitation in order to provide for the items set<br />
out above, the estimated amount to be provided for the item set out in (ii) above is approximately<br />
S$1.7 million. Such amount is proposed to be provided out of the proceeds of the Invitation or, in<br />
the event the Invitation is cancelled, out of the existing banking facilities or internal funds.<br />
6. LOAN CAPITAL AND OTHER BORROWINGS<br />
Save as disclosed on page 31 of this Prospectus and the “Accountants’ Report”, our Group had no<br />
other borrowings or indebtedness in the nature of borrowings including bank overdrafts and<br />
liabilities under acceptances (other than normal trading bills) or acceptance credits, mortgages,<br />
charges, hire purchase commitments, guarantees or other material contingent liabilities as at 30<br />
June 2002.<br />
7. FINANCIAL CONDITION AND OPERATIONS OF OUR GROUP<br />
Save as disclosed in this Prospectus, the Directors are not aware of any material information<br />
including trading factors or risks which are unlikely to be known or anticipated by the general public<br />
and which could materially affect the profits of our Company and its subsidiaries.<br />
Save as disclosed in this Prospectus, the financial condition and operations of our Group are not<br />
likely to be affected by any of the following:-<br />
(i) known trends or known demands, commitments, events or uncertainties that will result in or<br />
are reasonably likely to result in our Group’s liquidity increasing or decreasing in any<br />
material way;<br />
(ii) material commitments for capital expenditure;<br />
(iii) unusual or infrequent events or transactions or any significant economic changes that<br />
materially affected the amount of reported income from operations; and<br />
(iv) known trends or uncertainties that have had or that our Group expects to have a material<br />
favourable or unfavourable impact on revenues or operating income.<br />
8. LITIGATION<br />
We are not engaged in any litigation either as plaintiff or defendant, in respect of any claims or<br />
amounts which is material in the context of the Invitation, and our Directors have no knowledge of<br />
any proceedings pending or threatened against our Group or any facts likely to give rise to any<br />
litigation, claims or proceedings which might have a material effect on the financial position or<br />
business of our Group.<br />
158
9. GENERAL<br />
(a) The nature of the business of our Company has been stated earlier in this Prospectus. The<br />
corporations which, by virtue of Section 6 of the Act, are deemed to be related to our<br />
Company are set out under the section “Companies Within Our Group” on page 94 of this<br />
Prospectus.<br />
(b) No application for Shares will be allotted or issued on the basis of this Prospectus later than<br />
six (6) months after the date of registration of this Prospectus with the Authority.<br />
(c) The time of opening of the Application List is stated on page 12 of this Prospectus.<br />
(d) The amount payable on application and allotment is S$0.23 for each Offer and Placement<br />
Share, and S$0.21 for each Reserved Share.<br />
(e) There has been no previous issue of Shares by our Company or offer for sale of its Shares<br />
to the public within the two years preceding the date of this Prospectus.<br />
(f) No property has been purchased or acquired or proposed to be purchased or acquired by<br />
our Company or its subsidiaries which is to be paid for wholly or partly out of the proceeds<br />
of the issue of New Shares or the purchase or acquisition of which has not been completed<br />
at the date of this Prospectus other than property the contract for the purchase or<br />
acquisition whereof was entered into in the ordinary course of business of our Company or<br />
its subsidiaries, the contract not being made in contemplation of the Invitation nor the<br />
Invitation in consequence of the contract.<br />
(g) Save as disclosed on page 139 under the section “Management, Underwriting and<br />
Placement Arrangements”, no commission, discount or brokerage has been paid or other<br />
special terms granted within the preceding two years or is payable to any Director, promoter,<br />
expert, proposed Director or any other person for subscribing or agreeing to subscribe or<br />
procuring or agreeing to procure subscription for any shares in or debentures of our<br />
Company or its subsidiaries.<br />
(h) No sums have been paid or are agreed to be paid to any Director or any firm in which a<br />
Director is a partner in cash or in shares or otherwise or to any person to induce him to<br />
become a Director or in connection with the promotion of our Company.<br />
(i) The preliminary expenses of this issue and of the application for listing is approximately<br />
S$10,000 in respect of SGX-ST’s application fee. The expenses payable by our Company in<br />
connection with the Invitation, including underwriting commission, brokerage, management<br />
fee and all other incidental expenses in relation to this Invitation, are estimated to amount to<br />
approximately S$1.7 million which will be borne by our Company. Fees payable to the SGX-<br />
ST for the listing are payable by our Company. The breakdown of these estimated expenses<br />
is as follows :-<br />
S$’000<br />
Listing fees 10<br />
Professional fees 800<br />
Underwriting commission, placement commission and brokerage 527<br />
Miscellaneous expenses 342<br />
Total estimated expenses of the Invitation 1,679<br />
(j) No amount of cash or securities or benefit has been or is intended to be paid or given to any<br />
promoter within the two years preceding the date of this Prospectus or is proposed or<br />
intended to be paid or given to any promoter at any time in respect of this Invitation.<br />
159
(k) Application monies received by our Company in respect of successful applications (including<br />
successfully balloted applications which are subsequently rejected) will be placed in a<br />
separate non-interest bearing account with United Overseas Bank <strong>Limited</strong> (the “Receiving<br />
Bank”). In the ordinary course of its business, the Receiving Bank will deploy these monies<br />
in the interbank money market. All profits derived from the deployment of such moneys will<br />
accrute to the Receiving Bank. Any refund of all or part of the application monies to<br />
unsuccessful or partially successful applicants will be made without any interest or any<br />
share of such net revenue.<br />
(l) We intend to continue to recommend BDO <strong>International</strong> for appointment as Auditors of our<br />
Company in the foreseeable future.<br />
10. CONSENTS<br />
(a) The Auditors and Reporting Accountants have given and have not withdrawn their written<br />
consent to the issue of this Prospectus with the inclusion herein of the Accountants’ Report<br />
and the letter on the profit estimate of the Group for the financial year ended 31 December<br />
2002 in the form and context in which they appear in this Prospectus and references to its<br />
name in the form and context in which it appears in this Prospectus and to act in such<br />
capacity in relation to this Prospectus.<br />
(b) The Manager, the Registrar and Share Transfer Office, the Underwriter, the Joint Lead<br />
Placement Agents, the Receiving Banker, the Principal Bankers, the Solicitors to the<br />
Invitation and the Legal Advisers to our Company on PRC law, have each given and have<br />
not withdrawn their respective written consents to the issue of this Prospectus with the<br />
inclusion herein of their respective names and references to their respective names in the<br />
forms and context in which they respectively appear in this Prospectus and to act in such<br />
respective capacities in relation to this Prospectus.<br />
11. STATEMENT BY THE MANAGER<br />
The Manager acknowledges that, to the best of its knowledge and belief based on the information<br />
made available to it by our Company, this Prospectus constitutes full and true disclosure of all<br />
material facts about the Invitation and our Company and its subsidiaries and it is not aware of any<br />
other facts the omission of which would make any statements herein misleading. The Manager is<br />
also satisfied that the profit estimate for the financial year ended 31 December 2002 has been<br />
stated by the Directors after due and careful enquiry.<br />
12. STATEMENT BY THE DIRECTORS OF OUR COMPANY<br />
The Prospectus has been seen and approved by the Directors of our Company and they<br />
collectively and individually accept full responsibility for the truth and accuracy of the information<br />
given herein and confirm, having made all reasonable enquiries, that to the best of their knowledge<br />
and belief, there are no other facts the omission of which would make any statement herein<br />
misleading, and that this Prospectus constitutes full and true disclosure of all material facts about<br />
the Invitation and our Company and its subsidiaries. The Directors confirm that the profit estimate<br />
of our Group for the financial year ended 31 December 2002 set out on page 41 of the Prospectus<br />
has been stated by them after due and careful enquiry.<br />
160
13. DOCUMENTS FOR INSPECTION<br />
The following documents may be inspected at the Registered Office of our Company during<br />
normal business hours for a period of six months from the date of this Prospectus:-<br />
(a) the Memorandum and Articles of Association of our Company;<br />
(b) the letter from the Auditors and Reporting Accountants in relation to the profit estimate of<br />
the Group for the financial year ended 31 December 2002 as set out on page 96 of this<br />
Prospectus;<br />
(c) the Accountants’ Report referred to on pages 97 to 138 of this Prospectus, together with the<br />
Statements of Adjustments;<br />
(d) the audited financial statements of our Company and of its subsidiaries for FY1999,<br />
FY2000, FY2001 and the 6 months ended 30 June 2002;<br />
(e) the material contracts referred to on page 157 of this Prospectus;<br />
(f) the letters of consent referred to on page 160 of this Prospectus; and<br />
(g) the Service Agreements referred to on page 73 of this Prospectus.<br />
161
APPENDIX A - TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION<br />
You are invited to apply for the New Shares at the Issue Price subject to the following terms and<br />
conditions:-<br />
1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 NEW SHARES AND HIGHER<br />
INTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF<br />
NEW SHARES WILL BE REJECTED.<br />
2. Your application for Offer Shares may be made by way of printed Offer Shares Application Forms<br />
or by way of Electronic Applications through ATMs of the Participating Banks (“ATM Electronic<br />
Applications”) or through Internet Banking (“IB”) websites of the relevant Participating Banks<br />
(“Internet Electronic Applications” which, together with ATM Electronic Applications, shall be<br />
referred to as “Electronic Applications”). Your application for the Placement Shares may only be<br />
made by way of Placement Shares Application Forms. YOU MAY NOT USE CPF FUNDS TO<br />
APPLY FOR THE NEW SHARES.<br />
3. You are allowed to submit only one application in your own name for the Offer Shares. If<br />
you submit an application for Offer Shares by way of an Application Form, you MAY NOT<br />
submit another application for Offer Shares by way of an Electronic Application and vice<br />
versa. Such separate applications shall be deemed to be multiple applications and shall be<br />
rejected.<br />
If you submit an application for Offer Shares by way of Internet Electronic Application, you<br />
MAY NOT submit another application for Offer Shares by way of ATM Electronic Application<br />
and vice versa. Such separate applications shall be deemed to be multiple applications and<br />
shall be rejected.<br />
If you (being other than an approved nominee company) have submitted an application for Offer<br />
Shares in your own name, you should not submit any other application for Offer Shares, whether<br />
by way of an Application Form or by way of an Electronic Application, for any other person. Such<br />
separate applications shall be deemed to be multiple applications and shall be rejected.<br />
If you have made an application for Placement Shares (other than the Reserved Shares),<br />
you should not make any application for Offer Shares either by way of an Application Form<br />
or by way of an Electronic Application and vice versa. Such separate applications shall be<br />
deemed to be multiple applications and shall be rejected.<br />
Conversely, if you have made an application for Offer Shares either by way of an Electronic<br />
Application or by way of an Application Form, you may not make any application for<br />
Placement Shares. Such separate applications shall be deemed to be multiple applications<br />
and shall be rejected.<br />
Joint or multiple applications shall be rejected. If you submit or procure submissions of<br />
multiple share applications for Offer Shares, Placement Shares or both Offer Shares and<br />
Placement Shares, you may be deemed to have committed an offence under the Penal<br />
Code, Chapter 224 of Singapore and the Securities and Futures Act (Act 42 of 2001),<br />
Chapter 289 of Singapore, and your applications may be referred to the relevant authorities<br />
for investigation. Multiple applications or those appearing to be or suspected of being<br />
multiple applications will be liable to be rejected at our discretion.<br />
4. We will not accept applications from any person under the age of 21 years, undischarged<br />
bankrupts, sole-proprietorships, partnerships, chops or non-corporate bodies, joint Securities<br />
Account holders of CDP and from applicants whose addresses (furnished in their Application<br />
Forms or, in the case of Electronic Applications, contained in the records of the relevant<br />
Participating Banks) bear post office box numbers.<br />
A - 1
5. We will not recognise the existence of a trust. Any application by a trustee or trustees must be<br />
made in his/their own name(s) and without qualification or, where the application is made by way<br />
of an Application Form, in the name(s) of an approved nominee company or approved nominee<br />
companies after complying with paragraph 6 below.<br />
6. WE WILL NOT ACCEPT APPLICATIONS FROM NOMINEES EXCEPT THOSE MADE BY<br />
APPROVED NOMINEE COMPANIES ONLY. Approved nominee companies are defined as banks,<br />
merchant banks, finance companies, insurance companies, licensed securities dealers in<br />
Singapore and nominee companies controlled by them. Applications made by persons acting as<br />
nominees other than approved nominee companies shall be rejected.<br />
7. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIES<br />
ACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you do<br />
not have an existing Securities Account with CDP in your own name at the time of your<br />
application, your application will be rejected (if you apply by way of an Application form), or you will<br />
not be able to complete your Electronic Application (if you apply by way of an Electronic<br />
Application). If you have an existing Securities Account but fail to provide your Securities Account<br />
number or provide an incorrect Securities Account number in Section B of the Application Form or<br />
in your Electronic Application, as the case may be, your application is liable to be rejected.<br />
Subject to paragraph 8 below, your application shall be rejected if your particulars, such as name,<br />
NRIC/passport number, nationality and permanent residence status provided in your Application<br />
Form or in the records of the relevant Participating Bank at the time of your Electronic Application,<br />
as the case may be, differ from those particulars in your Securities Account as maintained with<br />
CDP. If you possess more than one individual direct Securities Account with CDP, your application<br />
shall be rejected.<br />
8. If your address as stated in the Application Form or, in the case of an Electronic<br />
Application, contained in the records of the relevant Participating Bank, as the case may be,<br />
is different from the address registered with CDP, you must inform CDP of your updated<br />
address promptly, failing which the notification letter on successful allotment and<br />
or/allocation will be sent to your address last registered with CDP.<br />
9. We reserve the right to reject any application which does not conform strictly to the<br />
instructions set out in the Application Form and in this Prospectus or with the terms and<br />
conditions of this Prospectus, which is illegible, incomplete, incorrectly completed or which<br />
is accompanied by an improperly drawn up or improper form of remittance. We further<br />
reserves the right to treat as valid any applications not completed or submitted or effected<br />
in all respects in accordance with the instructions set out in the Application Forms or the<br />
instructions for Electronic Applications or the terms and conditions of this Prospectus, and<br />
also to present for payment or other processes all remittances at any time after receipt and<br />
to have full access to all information relating to, or deriving from, such remittances or the<br />
processing thereof.<br />
10. We reserve the right to reject or to accept, in whole or in part, or to scale down or to ballot any<br />
application, without assigning any reason therefor, and we will not entertain any enquiry and/or<br />
correspondence on our decision. This right applies to applications made by way of Application<br />
Forms and by way of Electronic Applications. In deciding the basis of allotment and or/allocation,<br />
we will give due consideration to the desirability of allotting and or/allocating the New Shares to a<br />
reasonable number of applicants with a view to establishing an adequate market for the Shares.<br />
11. Share certificates will be registered in the name of CDP and will be forwarded only to CDP. It is<br />
expected that CDP will send to you, at your own risk, within 15 Market Days after the close of the<br />
Application List, a statement of account stating that your Securities Account has been credited with<br />
the number of New Shares allotted to you. This will be the only acknowledgement of application<br />
moneys received and is not an acknowledgement by us. You irrevocably authorise CDP to<br />
complete and sign on your behalf as transferee or renouncee any instrument of transfer and/or<br />
other documents required for the issue or transfer of the New Shares allotted to you. This<br />
authorisation applies to applications made by way of Application Forms and by way of Electronic<br />
Applications.<br />
A - 2
12. In the event of an under-subscription for Offer Shares as at the close of the Application List, we will<br />
made available that number of Offer Shares under-subscribed to satisfy applications for Placement<br />
Shares to the extent that there is an over-subscription for Placement Shares as at the close of the<br />
Application List.<br />
In the event of an under-subscription for Placement Shares as at the close of the Application List,<br />
we will make available that number of Placement Shares under-subscribed to satisfy applications<br />
for Offer Shares to the extent that there is an over-subscription for Offer Shares as at the close of<br />
the Application List.<br />
In the event of an over-subscription for Offer Shares as at the close of the Application List and<br />
Placement Shares are fully subscribed or over-subscribed as at the close of the Application List,<br />
the successful applications for Offer Shares will be determined by ballot or otherwise as<br />
determined by our Directors and approved by the SGX-ST.<br />
13. You irrevocably authorise CDP to disclose the outcome of your application, including the number of<br />
New Shares allotted to you pursuant to your application, to authorised operators.<br />
14. Any reference to the “you” in this section shall include an individual, a corporation, an approved<br />
nominee and trustee applying for the Offer Shares by way of an Application Form or by way of an<br />
Electronic Application and a person applying for the Placement Shares through the Joint Lead<br />
Placement Agents by way of a Placement Shares Application Form.<br />
15. By completing and delivering an Application Form or by making and completing an Electronic<br />
Application by (in the case of an ATM Electronic Application) pressing the “Enter” or “OK” or<br />
“Confirm” or “Yes” key on the ATM (as the case may be) or by (in the case of an Internet Electronic<br />
Application) clicking “Submit” or “Continue” or “Yes” or “Confirm” on the IB website screen (as the<br />
case may be) in accordance with the provisions of this Prospectus, you:-<br />
(a) irrevocably offer to subscribe for the number of Offer Shares specified in your application (or<br />
such smaller number for which the application is accepted) at the Issue Price and agree that<br />
you will accept such Offer Shares as may be allotted to you, in each case on the terms of<br />
this Prospectus and on the terms and subject to the conditions set out in this Prospectus<br />
and the Memorandum of Association and Bye-laws of our Company; and<br />
(b) warrant the truth and accuracy of the information provided in your application.<br />
16. Our acceptance of applications will be conditional upon, inter alia, we being satisfied that:-<br />
(a) permission has been granted by the SGX-ST to deal in and for quotation for all our existing<br />
Shares and the New Shares on a “when issued” basis on the SGX-ST; and<br />
(b) the Management and Underwriting Agreement and the Placement Agreement referred to on<br />
page 139 of this Prospectus have become unconditional and have not been terminated or<br />
cancelled prior to such date as our Company may determine.<br />
17. The Issue Price for each Offer and Placement Share is S$0.23 and S$0.21 for each Reserved<br />
Share.<br />
18. We will not hold any applications in reserve.<br />
19. We will not allot and/or allocate Shares on the basis of this Prospectus later than six months after<br />
the date of this Prospectus.<br />
20. Additional terms and conditions for applications by way of Application Forms are set out on pages<br />
A-4 to A-7 of this Prospectus.<br />
21. Additional terms and conditions for applications by way of Electronic Applications are set out on<br />
pages A-7 to A-13 of this Prospectus.<br />
A - 3
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATION<br />
FORMS<br />
You shall make an application by way of Application Forms made on and subject to the terms and<br />
conditions of this Prospectus including but not limited to the terms and conditions appearing below as<br />
well as those set out under the section on “TERMS AND CONDITIONS AND PROCEDURES FOR<br />
APPLICATION” on pages A-1 to A-3 of this Prospectus, as well as the Memorandum of Association and<br />
Bye-laws of our Company.<br />
1. Your application must be made using the WHITE Application Forms for Offer Shares and the<br />
BLUE Application Forms for Placement Shares accompanying and forming part of this Prospectus.<br />
We draw your attention to the detailed instructions contained in the respective Application Forms<br />
and this Prospectus for the completion of the Application Forms which must be carefully followed.<br />
We reserve the right to reject applications which do not conform strictly to the instructions<br />
set out in the Application Forms and this Prospectus or to the terms and conditions of this<br />
Prospectus or which are illegible, incomplete, incorrectly completed or which are<br />
accompanied by improperly drawn remittances or improper form of remittances.<br />
2. Your Application Forms must be completed in English. Please type or write clearly in ink using<br />
BLOCK LETTERS.<br />
3. All spaces in the Application Forms except those under the heading “FOR OFFICIAL USE ONLY”<br />
must be completed and the words “NOT APPLICABLE” or “N.A.” should be written in any space<br />
that is not applicable.<br />
4. Individuals, corporations, approved nominee companies and trustees must give their names in full.<br />
You must make your application, in the case of individuals, in your full names appearing in your<br />
identity cards (if applicants have such identification documents) or in your passports and, in the<br />
case of corporations, in your full names as registered with a competent authority. If you are a nonindividual<br />
completing the Application Form under the hand of an official, you must state the name<br />
and capacity in which that official signs. If you are a corporation completing the Application Form,<br />
you are required to affix your Common Seal (if any) in accordance with your Memorandum of<br />
Association and Bye-laws or equivalent constitutive documents. If you are a corporate applicant<br />
and your application is successful, a copy of your Memorandum of Association and Bye-laws or<br />
equivalent constitutive documents. If you are a corporate applicant and your application is<br />
successful, a copy of your Memorandum of Association and Bye-laws or equivalent constitutive<br />
documents must be lodged with the Share Registrar and Share Transfer office. We reserve the<br />
right to require you to produce documentary proof of identification for verification purposes.<br />
5. (a) You must complete Sections A and B and sign page 1 of the Application Form.<br />
(b) You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Form.<br />
Where paragraph 7(a) is deleted, you must also complete Section C of the Application Form<br />
with particulars of the beneficial owner(s).<br />
(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, on<br />
page 1 of the Application Form, your application is liable to be rejected.<br />
6. You (whether you are an individual and corporate applicant, whether incorporated or<br />
unincorporated and wherever incorporated or constituted), will be required to declare whether you<br />
are a citizen or permanent resident of Singapore or a corporation in which citizens or permanent<br />
residents of Singapore or any body corporate constituted under any statute of Singapore have an<br />
interest in the aggregate of more than 50 per cent. of the issued share capital of or interests in<br />
such corporations. If you are an approved nominee company, you are required to declare whether<br />
the beneficial owner of the New Shares is a citizen or permanent resident of Singapore or a<br />
corporation, whether incorporated or unincorporated and wherever incorporated or constituted, in<br />
which citizens or permanent residents of Singapore or any body corporate whether incorporated or<br />
unincorporated and wherever incorporated or constituted under any statute of Singapore have an<br />
interest in the aggregate of more than 50 per cent. of the issued share capital of or interests in<br />
such corporation.<br />
A - 4
7. Your application must be accompanied by a remittance in Singapore currency for the full amount<br />
payable, in respect of the number of New Shares applied for, in the form of a BANKER’S DRAFT<br />
or CASHIER’S ORDER drawn on a bank in Singapore, made out in favour of “OCEAN SKY<br />
SHARE ISSUE ACCOUNT” crossed “A/C PAYEE ONLY’”, with your name and address written<br />
clearly on the reverse side.<br />
We will not accept applications accompanied by ANY OTHER FORM OF PAYMENT. We will reject<br />
remittances bearing “NOT TRANSFERABLE” or “NON TRANSFERABLE” crossings. No<br />
acknowledgement or receipt will be issued by us or the Manager for applications and application<br />
moneys received.<br />
8. Unsuccessful applications are expected to be returned (without interest or any share of revenue or<br />
other benefit arising therefrom) to you by ordinary post within 24 hours of the balloting at your own<br />
risk. Where your application is rejected or accepted in part only, the full amount or the balance of<br />
the application moneys, as the case may be, will be refunded (without interest or any share of<br />
revenue or other benefit arising therefrom) to you by ordinary post at your own risk in the shortest<br />
possible time.<br />
9. Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the<br />
meanings assigned to them in this Prospectus.<br />
10. By completing and delivering the Application Form in accordance with the provisions of this<br />
Prospectus, you agree that:-<br />
(a) in consideration of us having distributed the Application Form to you and agreeing to close<br />
the Application List at 12.00 noon on 20 March 2003 or such other time or date as our<br />
Directors may, in consultation with the Manager, decide and by completing and delivering<br />
the Application Form, you agree that:-<br />
(i) your application is irrevocable; and<br />
(ii) your remittance will be honoured on first presentation and that any moneys returnable<br />
may be held pending clearance of your payment without interest or any share of<br />
revenue or other benefit arising therefrom;<br />
(b) all applications, acceptances and contracts resulting therefrom under the Invitation shall be<br />
governed by and construed in accordance with the laws of Singapore and that you<br />
irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;<br />
(c) in respect of the New Shares for which your application has been received and not rejected,<br />
acceptance of your application shall be constituted by written notification and not otherwise,<br />
notwithstanding any remittance being presented for payment by or on our behalf;<br />
(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at any<br />
time after acceptance of your application; and<br />
(e) in making your application, reliance is placed solely on the information contained in this<br />
Prospectus and none of our Company, the Manager, the Underwriters for the Public Offer,<br />
our Joint Lead Placement Agents or any other person involved in the Invitation shall have<br />
any liability for any information not so contained.<br />
A - 5
Applications for Offer Shares<br />
1. Your applications for Offer Shares MUST be made using the WHITE Offer Shares Application<br />
Forms and BROWN official envelopes “A” and “B”. ONLY ONE APPLICATION should be enclosed<br />
in each envelope.<br />
2. You must:-<br />
(a) enclose the WHITE Offer Shares Application Form, duly completed and signed, together<br />
with your remittance in the BROWN envelope “A” provided;<br />
(b) in the appropriate spaces on BROWN envelope “A”:-<br />
(i) write your name and address;<br />
(ii) state the number of Offer Shares applied for;<br />
(iii) tick the relevant box to indicate the form of payment; and<br />
(iv) affix adequate Singapore postage;<br />
(c) SEAL BROWN ENVELOPE “A”; and<br />
(d) write, in the appropriate box provided on the larger BROWN envelope “B” addressed to Lim<br />
Associates (Pte) <strong>Ltd</strong>, 10 Collyer Quay #19-08 <strong>Ocean</strong> Building, Singapore 049315, the<br />
number of Offer Shares you have applied for; and insert BROWN envelope “A” into BROWN<br />
envelope “B”, seal BROWN envelope “B” and thereafter DESPATCH BY ORDINARY POST<br />
OR DELIVER BY HAND at your own risk to Lim Associates (Pte) <strong>Ltd</strong>, 10 Collyer Quay<br />
#19-08 <strong>Ocean</strong> Building, Singapore 049315, so as to arrive by 12.00 noon on 20 March<br />
2003 or such other time as we may, in consultation with the Manager, decide. Local<br />
Urgent Mail or Registered Post must NOT be used. No acknowledgement of receipt will<br />
be issued for any application or remittance received.<br />
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperly<br />
drawn remittances are liable to be rejected.<br />
Applications for Placement Shares (Other than for Reserved Shares)<br />
1. Your application for Placement Shares MUST be made using the BLUE Placement Shares<br />
Application Forms. ONLY ONE APPLICATION should be enclosed in each envelope.<br />
2. The completed and signed BLUE Placement Shares Application Form and your remittance, in<br />
accordance with the terms and conditions of this Prospectus, for the full amount payable in respect<br />
of the number of Placement Shares applied for, with your name and address written clearly on the<br />
reverse side, must be enclosed and sealed in an envelope to be provided by you. You must affix<br />
adequate Singapore postage on the envelope (if despatching by ordinary post) and thereafter the<br />
sealed envelope must be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at<br />
your own risk to Lim Associates (Pte) <strong>Ltd</strong>, 10 Collyer Quay #19-08 <strong>Ocean</strong> Building, Singapore<br />
049315, to arrive by 12.00 noon on 20 March 2003 or such other time as we may, in<br />
consultation with the Manager, decide. Local Urgent Mail or Registered Post must NOT be<br />
used. No acknowledgement of receipt will be issued for any application or remittance received.<br />
3. Alternatively, you may remit your application moneys by electronic transfer to the account of United<br />
Overseas Bank, North Bridge Branch, account number 311-300-186-9, in favour of “OCEAN SKY<br />
SHARE ISSUE ACCOUNT” for the number of Placement Shares applied for by 12.00 noon on 20<br />
March 2003 or such other time as we may, in consultation with the Manager, decide. If you<br />
remit your application moneys via electronic transfer, you should fax and send a copy of the<br />
remittance advice to SBI E2-Capital Pte <strong>Ltd</strong> at fax number 6227 3936 to arrive by 12.00 noon on<br />
19 March 2003 or such other time as we may, in consultation with the Manager, decide.<br />
A - 6
Applications for Reserved Shares<br />
1. Your application for Reserved Shares MUST be made using the PINK Reserved Shares<br />
Application Forms. ONLY ONE APPLICATION should be enclosed in each envelope.<br />
2. The completed and signed PINK Reserved Shares Application Form and your remittance, in<br />
accordance with the terms and conditions of this Prospectus, for the full amount payable in respect<br />
of the number of Reserved Shares applied for, with your name and address written clearly on the<br />
reverse side, must be enclosed and sealed in an envelope to be provided by you. You must affix<br />
adequate Singapore postage on the envelope (if despatching by ordinary post) and thereafter the<br />
sealed envelope must be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at<br />
your own risk to Lim Associates (Pte) <strong>Ltd</strong>, 10 Collyer Quay #19-08 <strong>Ocean</strong> Building, Singapore<br />
049315, to arrive by 12.00 noon on 20 March 2003 or such other time as we may, in<br />
consultation with the Manager, decide. Local Urgent Mail or Registered Post must NOT be<br />
used. No acknowledgement of receipt will be issued for any application or remittance received.<br />
ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS<br />
The procedures for Electronic Applications at ATMs are set out on the ATM screens (in the case on ATM<br />
Electronic Applications) and the IB website screens (in the case of Internet Electronic Applications) of the<br />
relevant Participating Banks. Currently, DBS Bank and the UOB group are the only Participating Banks<br />
through which Internet Electronic Applications can be made. For illustration purposes, the procedures for<br />
Electronic Applications through ATMs of DBS Bank and the IB website of DBS Bank are set out<br />
respectively in the “Steps for Electronic Applications for Offer Shares through ATMs of DBS Bank<br />
(including its POSBank Services Division)” and the “Steps for Internet Electronic Applications through the<br />
IB website of DBS Bank” (the “Steps”) appearing on pages A-11 to A-12 of this Prospectus.<br />
The Steps set out the actions that you must take at an ATM of DBS Bank or the IB website of DBS Bank<br />
to complete an Electronic Application. Please read carefully the terms of this Prospectus, the Steps and<br />
the terms and conditions for Electronic Applications set out below before making an Electronic<br />
Application. Any reference to “you” in the additional terms and conditions for Electronic Applications and<br />
the Steps shall refer to you making an application for Offer Shares through an ATM or the IB website of a<br />
relevant Participating Bank.<br />
You must have an existing bank account with and be an ATM cardholder of one of the Participating<br />
Banks before you can make an Electronic Application at the ATMs. An ATM card issued by one<br />
Participating Bank cannot be used to apply for Offer Shares at an ATM belonging to other Participating<br />
Banks. For an Internet Electronic Application, you must have an existing bank account with and an IB<br />
User Identification (“User ID”) and a Personal Identification Number/Password given by a relevant<br />
Participating Bank. The Steps set out the actions that you must take at ATMs of DBS Bank or the IB<br />
website of DBS Bank to complete an Electronic Application. The actions that you must take at ATMs or<br />
the IB websites of other Participating Banks are set out on the ATM screens or the IB website screens of<br />
the relevant Participating Banks. Upon the completion of your Electronic Application transaction, you will<br />
receive an ATM transaction slip (“Transaction Record”), confirming the details of your Electronic<br />
Application. Upon completion of your Internet Electronic Application, there will be an on-screen<br />
confirmation (“Confirmation Screen”) of the application which you can print out for your record. The<br />
Transaction Record or your printed record of the Confirmation Screen is for your retention and should not<br />
be submitted with any Application Form.<br />
You must ensure that you enter your own Securities Account number when using the ATM card<br />
issued to you in your own name. If you operate a joint bank account with any of the Participating<br />
Banks, you must ensure that you enter your own Securities Account number when using the ATM<br />
card issued to you in your own name. Using your own Securities Account number with an ATM<br />
card which is not issued to you in your own name will render your Electronic Application liable to<br />
be rejected.<br />
A - 7
You must ensure, when making an Internet Electronic Application, that your mailing address is in<br />
Singapore and the application is being made in Singapore and you will be asked to declare accordingly.<br />
Otherwise, your application is liable to be rejected. You shall make an Electronic Application on the terms<br />
and subject to the conditions of this Prospectus including but not limited to the terms and conditions<br />
appearing below and those set out under the section on “TERMS AND CONDITIONS AND<br />
PROCEDURES FOR APPLICATION” on pages A-1 to A-3 of this Prospectus as well as the<br />
Memorandum of Association and Bye-laws of our Company.<br />
1. In connection with your Electronic Application for Offer Shares, you are required to confirm<br />
statements to the following effect in the course of activating the ATM for your Electronic<br />
Application:-<br />
(a) that you have received a copy of this Prospectus and have read, understood and<br />
agreed to all the terms and conditions of application for Offer Shares and this<br />
Prospectus prior to effecting the Electronic Application and agree to be bound by the<br />
same;<br />
(b) that you consent to the disclosure of your name, NRIC/passport number, address,<br />
nationality, permanent resident status, CDP Securities Account number, and share<br />
application amount (the “Relevant Particulars”) from your account with that<br />
Participating Bank to the Share Registrar, CDP, SCCS, our Company and the Manager<br />
(the “Relevant Parties”); and<br />
(c) that this is your only application and it is made in your own name and at your own<br />
risk.<br />
Your application will not be successfully completed and cannot be recorded as a completed<br />
transaction in the ATM unless you press the “Enter” or “OK” or “Confirm” or “Yes” key. By doing so,<br />
you shall be treated as signifying your confirmation of each of the above three statements. In<br />
respect of statement 1(b) above, your confirmation, by pressing the “Enter” or “OK” or “Confirm” or<br />
“Yes” key, shall signify and shall be treated as your written permission, given in accordance with<br />
the relevant laws of Singapore including Section 47(4) of the Banking Act (Chapter 19) of<br />
Singapore to the disclosure by that Participating Bank of the Relevant Particulars to the Relevant<br />
Parties.<br />
2. BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOT APPLYING<br />
FOR OFFER SHARES AS NOMINEE OF ANY OTHER PERSON AND THAT ANY ELECTRONIC<br />
APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE BY YOU AS BENEFICIAL<br />
OWNER.<br />
YOU SHOULD MAKE ONLY ONE ELECTRONIC APPLICATION FOR OFFER SHARES AND<br />
SHOULD NOT MAKE ANY OTHER APPLICATION FOR OFFER SHARES, WHETHER AT THE<br />
ATM OR THE IB WEBSITES OF ANY PARTICIPATING BANK OR ON THE APPLICATION<br />
FORMS. IF YOU HAVE MADE AN APPLICATION FOR OFFER SHARES ON AN APPLICATION<br />
FORM, YOU SHALL NOT MAKE AN ELECTRONIC APPLICATION FOR OFFER SHARES AND<br />
VICE VERSA.<br />
3. You must have sufficient funds in your bank account with your Participating Bank at the time you<br />
make your Electronic Application, failing which your Electronic Application will not be completed.<br />
Any Electronic Application which does not conform strictly to the instructions set out on<br />
the screens of the ATM or IB website through which your Electronic Application is being<br />
made shall be rejected.<br />
You may make an ATM Electronic Application at the ATM of any Participating Bank or an<br />
Internet Electronic Application at the IB websites of the relevant Participating Banks for<br />
Offer Shares, using only cash by authorising such Participating Bank to deduct the full<br />
amount payable from your account with such Participating Bank.<br />
A - 8
4. You irrevocably agree and undertake to subscribe for and to accept the number of Offer Shares<br />
applied for as stated on the Transaction Record or any lesser number of Offer Shares that may be<br />
allotted to you in respect of your Electronic Application. In the event that we decide to allot and/or<br />
allocate any lesser number of such Offer Shares or not to allot and or/allocate any Offer Shares to<br />
you, you agree to accept such decision as final. If your Electronic Application is successful, your<br />
confirmation (by your action of pressing the “Enter” or “OK” or “Confirm” or “Yes” key on the ATM<br />
or clicking “Confirm” or “OK” on the IB website screen) of the number of Offer Shares applied for<br />
shall signify and shall be treated as your acceptance of the number of Offer Shares that may be<br />
allotted to you and your agreement to be bound by the Memorandum of Association and Bye-laws<br />
of our Company.<br />
5. We will not keep any applications in reserve. Where your Electronic Application is unsuccessful,<br />
the full amount of the application moneys will be refunded (without interest or any share of revenue<br />
or other benefit arising therefrom) to you by being automatically credited to your account with your<br />
Participating Bank within 24 hours of the balloting. Trading on a “WHEN ISSUED” basis, if<br />
applicable, is expected to commence after such refund has been made.<br />
Where your Electronic Application is rejected or accepted in part only, the full amount or<br />
the balance of the application moneys, as the case may be, will be refunded (without<br />
interest or any share of revenue or other benefit arising therefrom) to you by being<br />
automatically credited to your account with your Participating Bank within the shortest<br />
possible time.<br />
Responsibility for timely refund of application moneys arising from unsuccessful or partially<br />
successful Electronic Applications lies solely with the respective Participating Banks. Therefore,<br />
you are strongly advised to consult your Participating Bank as to the status of your Electronic<br />
Application and/or the refund of any moneys to you from unsuccessful or partially successful<br />
Electronic Application, to determine the exact number of Offer Shares allotted to you before trading<br />
the Offer Shares on the SGX ST. Neither the SGX-ST, the CDP, the SCCS, the Participating<br />
Banks, ourselves or the Manager assume any responsibility for any loss that may be incurred as a<br />
result of you having to cover any net sell positions or from buy-in procedures activated by the<br />
SGX-ST.<br />
6. If your Electronic Application made through the ATMs is unsuccessful, no notification will<br />
be sent by the relevant Participating Bank.<br />
If your Internet Electronic Application made through the IB website is unsuccessful, no notification<br />
will be sent by such Participating Bank.<br />
A - 9
If you make Electronic Applications through the ATMs of the following banks, you may check the<br />
provisional results of your Electronic Applications as follows:-<br />
Bank Telephone Available at Operating Hours Service expected from<br />
DBS Bank 1800 339 6666 Internet Banking 24 hours a day 7p.m. of the balloting<br />
(for POSB or Internet Kiosk day<br />
account holders)<br />
www.dbs.com (1)<br />
1800 111 1111<br />
(for DBS<br />
account holders)<br />
OCBC 1800 363 3333 ATM ATM/Phone Banking Evening of the balloting<br />
Group – 24 hours a day day<br />
UOB 1800 222 2121 ATM (Other ATM/Phone Banking 6 p.m. on the balloting<br />
Group Transactions – – 24 hours a day day<br />
“IPO Enquiry”) (2)<br />
Internet Banking Evening of the balloting<br />
http://www.uob – 24 hours a day day<br />
group.com (1)(2)<br />
Notes :-<br />
(1) If you make your Internet Electronic Applications through the IB website of DBS Bank or UOB Group, you may check<br />
the result through the same channels listed in the table above in relation to ATM Electronic Applications made at<br />
ATMs of DBS Bank or UOB Group.<br />
(2) If you make your Electronic Application through the ATMs or IB website of UOB Group, you may check the results of<br />
your application through UOB Personal UniBanking, UOB Group ATMs or UOB PhoneBanking Services.<br />
7. Electronic Applications shall close at 12.00 noon on 20 March 2003 or such other time as<br />
we may, in consultation with the Manager, decide. All Internet Electronic Applications must<br />
be received by 12:00 noon on 20 March 2003 Subject to the paragraph 9 below, an Internet<br />
Electronic Application is deemed to be received when it enters the designated information system<br />
of the relevant Participating Bank.<br />
8. You are deemed to have requested and authorised us to:-<br />
(a) register the Offer Shares allotted to you in the name of CDP for deposit into your Securities<br />
Account;<br />
(b) send the relevant Share certificate(s) to CDP;<br />
(c) return or refund (without interest or any share of revenue earned or other benefit arising<br />
therefrom) the application moneys, should your Electronic Application be rejected, by<br />
automatically crediting your bank account with your Participating Bank with the relevant<br />
amount within three Market Days after the close of the Application List; and<br />
(d) return or refund (without interest or any share of revenue or other benefit arising therefrom)<br />
the balance of the application moneys, should your Electronic Application be accepted in<br />
part only, by automatically crediting your bank account with your Participating Bank with the<br />
relevant amount within 14 days after the close of the Application List.<br />
9. You irrevocably agree and acknowledge that your Electronic Application is subject to risks of<br />
electrical, electronic, technical and computer-related faults and breakdowns, fires, acts of God and<br />
other events beyond the control of the Participating Banks and if, in any such event, we, the<br />
Manager and/or the relevant Participating Bank do not receive your Electronic Application, or data<br />
relating to your Electronic Application is lost, corrupted or not otherwise accessible, whether wholly<br />
or partially for whatever reason, you shall be deemed not to have made an Electronic Application<br />
and you shall have no claim whatsoever against us, the Manager and/or the relevant Participating<br />
Bank for Offer Shares applied for or for any compensation, loss or damage.<br />
A - 10
10. We do not recognise the existence of a trust. Any Electronic Application by a trustee must be<br />
made in your own name and without qualification. We will reject any application by any person<br />
acting as nominee.<br />
11. All your particulars in the records of your Participating Bank at the time you make your Electronic<br />
Application shall be deemed to be true and correct and your Participating Bank and the Relevant<br />
Parties shall be entitled to rely on the accuracy thereof. If there has been any change in your<br />
particulars after making your Electronic Application, you shall promptly notify your Participating<br />
Bank.<br />
12. You should ensure that your personal particulars as recorded by both CDP and the relevant<br />
Participating Bank are correct and identical, otherwise, your Electronic Application is liable to be<br />
rejected. You should promptly inform CDP of any change in address, failing which the notification<br />
letter on successful allotment and or/ allocation will be sent to your address last registered with<br />
CDP.<br />
13. By making and completing an Electronic Application, you agreed that:-<br />
(a) in consideration of us making available the Electronic Application facility, through the<br />
Participating Banks acting as our agents, at the ATMs and the IB websites (if any):-<br />
(i) your Electronic Application is irrevocable; and<br />
(ii) your Electronic Application, our acceptance and the contract resulting therefrom under<br />
the Invitation shall be governed by and construed in accordance with the laws of<br />
Singapore and you irrevocably submit to the non-exclusive jurisdiction of the<br />
Singapore courts;<br />
(b) none of us, the Manager or the Participating Banks shall be liable for any delays, failures or<br />
inaccuracies in the recording, storage or in the transmission or delivery of data relating to<br />
your Electronic Application to us or CDP due to breakdowns or failure of transmission,<br />
delivery or communication facilities or any risks referred to in paragraph 9 above or to any<br />
cause beyond their respective controls;<br />
(c) in respect of Offer Shares for which your Electronic Application has been successfully<br />
completed and not rejected, acceptance of your Electronic Application shall be constituted<br />
by written notification by or on our behalf and not otherwise, notwithstanding any payment<br />
received by or on our behalf;<br />
(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at any<br />
time after acceptance of your application; and<br />
(e) reliance is placed solely on information contained in this Prospectus and that none of our<br />
Company, the Manager, the Underwriters for the Public Offer, the Joint Lead Placement<br />
Agents nor any other person involved in the Invitation shall have any liability for any<br />
information not so contained.<br />
The instructions for Electronic Applications will appear on the ATM screens and the IB website screens.<br />
For illustration purposes, the steps for making an Electronic Application through an ATM belonging to<br />
DBS Bank or through the IB website of DBS Bank are shown below. Instructions for Electronic<br />
Applications on the ATM screens and the IB websites screens (if any) of the Participating Banks, other<br />
than DBS Bank, may differ from those represented below.<br />
A - 11
Steps for Electronic Applications for Offer Shares through ATMs of DBS Bank (including its<br />
POSBank Services Division)<br />
Instructions for ATM Electronic Applications will appear on the ATM screens of the Participating Bank.<br />
For illustration purposes, the steps for making an ATM Electronic Application through a DBS Bank or<br />
POSBank ATM are shown below. Certain words appearing on the screen are in abbreviated form (“A/c”,<br />
“amt”, “appln”, “&”, “I/C” and “No.” refer to “Account”, “amount”, “application”, “and”, “NRIC” and “Number”<br />
respectively. Instructions for ATM Electronic Applications on the ATM screens of Participating Banks<br />
(other than DBS Bank (including its POSBank Services Division)), may differ slightly from those<br />
represented below.<br />
Step 1: Insert your personal DBS or POSBank ATM Card<br />
2: Enter your Personal Identification Number<br />
3: Select “CASHCARD & MORE SERVICES”<br />
4: Select “ESA-IPO SHARE/BOND/RIGHTS”<br />
5: Select “ELECTRONIC SECURITY APPLICATION (IPO-SHARE/BOND)” to “OCEAN SKY”<br />
6: Press the “ENTER” key to acknowledge :-<br />
you have read, understood and agreed to all terms of the application & the<br />
Prospectus.<br />
you consent to disclose your name, I/C/Passport No., address, nationality, CDP<br />
Securities A/c No., and share application amount from your Bank Account(s) to<br />
share registrars, SCCS, CDP, issuer.<br />
For FIXED price share application, this is your only application and it is made in<br />
your own name and at your own risk.<br />
You are not a US Person as referred to in the Prospectus/Document, where<br />
applicable.<br />
7: Select your nationality<br />
8: Select the DBS Bank account (Autosave/Current/Savings/Savings Plus) or the POSBank<br />
account (current/savings) from which to debit your application moneys<br />
9: Enter the number of securities you wish to apply for using cash<br />
10: Enter your own 12-digit CDP Securities Account number. (Note: This step will be omitted<br />
automatically if your CDP Securities Account Number has already been stored in the Bank’s<br />
records)<br />
11: Check the details of your share application, your I/C/Passport number and CDP Securities<br />
Account number and number of securities on the screen and press the “ENTER” key to<br />
confirm application<br />
12: Remove the Transaction Record for your reference and retention only<br />
Steps for an Internet Electronic Application through the IB website of DBS Bank<br />
For illustrative purposes, the steps for making an Internet Electronic Application through the DBS Bank<br />
IB website is shown below. Certain words appearing on the screen are in abbreviated form (“A/C”, “&”,<br />
“I/C” and “No.” refer to “Account”, “NRIC” and “Number” respectively).<br />
A - 12
Step 1: Click on to DBS Bank website (www.dbs.com)<br />
Step 2: Login to Internet Banking<br />
Step 3: Enter your User ID and PIN<br />
Step 4: Select “Electronic Security Application”<br />
Step 5: Click “Yes” to proceed and to warrant that you have observed and complied with all<br />
applicable laws and regulations<br />
Step 6: Click on “OCEAN SKY” and click the “Submit” button<br />
Step 7: Click “Confirm” to confirm<br />
(1) You have read, understood & agreed to all terms of application and the Prospectus<br />
(2) You consent to disclose your name, I/C/passport No., address, nationality, CDP<br />
Securities A/C No., CPF Investment A/C No. and share application amount from your<br />
DBS/POSBank Accounts(s) to share registrars, SCCS, CDP, CPF Board and issuer(s)<br />
(3) This application is made in your name and at your own risk<br />
(4) For FIXED price share application, this is your only application. For TENDER price<br />
securities application, this is your only application at the selected tender price<br />
(5) You are not a US person as referred to in the Prospectus/Document, where applicable<br />
Step 8: Fill in details for share application and click “Submit”<br />
Step 9: Check details of your share application, your IC/passport No. and no. of shares on the<br />
screen and click “OK” to confirm your application<br />
Step 10: Print Confirmation Screen (optional) for your reference & retention only<br />
A - 13
APPENDIX B - DESCRIPTION OF SINGAPORE COMPANY LAW<br />
RELATING TO SHARES<br />
The following statements are brief summaries of the rights and privileges of shareholders conferred by<br />
the laws of Singapore and the Articles of Association (the “Articles”) of our Company.<br />
These statements summarise the material provisions of the Articles but are qualified in entirety by<br />
reference to the Articles.<br />
Ordinary Shares<br />
All of the ordinary shares are in registered form. The Company may, subject to the provisions of the<br />
Singapore Companies Act and the rules of the Singapore Exchange Securities Trading <strong>Limited</strong>, purchase<br />
its own ordinary shares. However, it may not, except in circumstances permitted by the Singapore<br />
Companies Act, grant any financial assistance for the acquisition or proposed acquisition of its own<br />
ordinary shares.<br />
New Ordinary Shares<br />
New ordinary shares may only be issued with the prior approval in a general meeting of the<br />
Shareholders of the Company. The aggregate number of shares to be issued pursuant to such approval<br />
may not exceed 50% (or such other limit as may be prescribed by the Singapore Exchange Securities<br />
Trading <strong>Limited</strong>) of its issued share capital for the time being, of which the aggregate number of shares<br />
to be issued other than on a pro-rata basis to its Shareholders may not exceed 20% (or such other limit<br />
as may be prescribed by the Singapore Exchange Securities Trading <strong>Limited</strong>) of its issued share capital<br />
for the time being. The approval, if granted, will lapse at the conclusion of the annual general meeting<br />
following the date on which the approval was granted. Subject to the foregoing, the provisions of the<br />
Singapore Companies Act and any special rights attached to any class of shares currently issued, all<br />
new ordinary shares are under the control of the Board of Directors who may allot and issue the same<br />
with such rights and restrictions as it may think fit.<br />
Shareholders<br />
Only persons who are registered in the register of shareholders of the Company and, in cases in which<br />
the person so registered is CDP, the persons named as the depositors in the depository register<br />
maintained by CDP for the ordinary shares, are recognised as shareholders of the Company. The<br />
Company will not, except as required by law, recognise any equitable, contingent, future or partial<br />
interest in any ordinary share or other rights for any ordinary share other than the absolute right thereto<br />
of the registered holder of that ordinary share or of the person whose name is entered in the depository<br />
register for that ordinary share. The Company may close the register of shareholders for any time or<br />
times if it provides the Singapore Registry of Companies and Businesses at least 14 days’ notice and the<br />
Singapore Exchange Securities Trading <strong>Limited</strong> at least 10 clear market days’ notice. However, the<br />
register may not be closed for more than 30 days in aggregate in any calendar year. The Company<br />
typically closes the register to determine shareholders’ entitlement to receive dividends and other<br />
distributions.<br />
Transfer of Ordinary Shares<br />
There is no restriction on the transfer of fully paid ordinary shares except where required by law or the<br />
listing rules or the rules or by-laws of any stock exchange on which the Company is listed. The Board of<br />
Directors may decline to register any transfer of ordinary shares which are not fully paid shares or<br />
ordinary shares on which the Company has a lien. Ordinary shares may be transferred by a duly signed<br />
instrument of transfer in a form approved by any stock exchange on which the Company is listed. The<br />
Board of Directors may also decline to register any instrument of transfer unless, among other things, it<br />
has been duly stamped and is presented for registration together with the share certificate and such<br />
other evidence of title as they may require. The Company will replace lost or destroyed certificates for<br />
ordinary shares if it is properly notified and if the applicant pays a fee which will not exceed S$2 and<br />
furnishes any evidence and indemnity that the Board of Directors may require.<br />
B - 1
General Meetings of Shareholders<br />
The Company is required to hold an annual general meeting every year. The Board of Directors may<br />
convene an Extraordinary General Meeting whenever it thinks fit and must do so if Shareholders<br />
representing not less than 10% of the total voting rights of all shareholders request in writing that such a<br />
meeting be held. In addition, two or more shareholders holding not less than 10% of the issued share<br />
capital of the Company may call a meeting. Unless otherwise required by law or by the Articles, voting at<br />
general meetings is by ordinary resolution, requiring an affirmative vote of a simple majority of the votes<br />
cast at that meeting. An ordinary resolution suffices, for example, for the appointment of directors. A<br />
special resolution, requiring the affirmative vote of at least 75% of the votes cast at the meeting, is<br />
necessary for certain matters under Singapore law, including voluntary winding up, amendments to the<br />
Memorandum of Association and the Articles, a change of the corporate name and a reduction in the<br />
share capital, share premium account or capital redemption reserve fund. The company must give at<br />
least 21 days” notice in writing for every general meeting convened for the purpose of passing a special<br />
resolution. Ordinary resolutions generally require at least 14 days’ notice in writing. The notice must be<br />
given to every shareholder who has supplied the Company with an address in Singapore for the giving of<br />
notices and must set forth the place, the day and the hour of the meeting and, in the case of special<br />
business, the general nature of that business.<br />
Voting Rights<br />
A shareholder is entitled to attend, speak and vote at any general meeting, in person or by proxy. Proxies<br />
need not be a shareholder. A person who holds ordinary shares through the Singapore Exchange<br />
Securities Trading <strong>Limited</strong> book-entry settlement system will only be entitled to vote at a general meeting<br />
as a shareholder if his name appears on the depository register maintained by CDP 48 hours before the<br />
general meeting. Except as otherwise provided in the Articles, two or more shareholders must be present<br />
in person or by proxy to constitute a quorum at any general meeting. Under the Articles, on a show of<br />
hands, every shareholder present in person and by proxy shall have one vote (provided that in the case<br />
of a shareholder who is represented by two proxies, only one of the two proxies as determined by that<br />
shareholder or, failing such determination, by the Chairman of the meeting in his sole discretion shall be<br />
entitled to vote on a show of hands), and on a poll, every shareholder present in person or by proxy shall<br />
have one vote for each ordinary share which he holds or represents. A poll may be demanded in certain<br />
circumstances, including by the chairman of the meeting or by any shareholder present in person or by<br />
proxy and representing not less than 10% of the total voting rights of all shareholders having the right to<br />
attend and vote at the meeting or by any two shareholders present in person or by proxy and entitled to<br />
vote. In the case of a tie vote, whether on a show of hands or a poll, the chairman of the meeting shall<br />
be entitled to a casting vote.<br />
Dividends<br />
The Company may, by ordinary resolution of its shareholders, declare dividends at a general meeting,<br />
but it may not pay dividends in excess of the amount recommended by the Board of Directors. The<br />
Company must pay all dividends out of its profits; however, the Company may capitalise its share<br />
premium account and apply it to pay dividends, if such dividends are satisfied by the issue of shares to<br />
shareholders of the Company. See “Bonus and Rights Issue”. The Board of Directors may also declare<br />
an interim dividend without the approval of its shareholders. All dividends are paid pro rata among the<br />
shareholders in proportion to the amount paid up on each shareholder’s ordinary shares, unless the<br />
rights attaching to an issue of any ordinary share provides otherwise. Unless otherwise directed,<br />
dividends are paid by cheque or warrant sent through the post to each shareholder at his registered<br />
address. Notwithstanding the foregoing, the payment by the Company to CDP of any dividend payable to<br />
a shareholder whose name is entered in the depository register shall, to the extent of payment made to<br />
CDP, discharge the Company from any liability to that shareholder in respect of that payment.<br />
Bonus and Rights Issues<br />
The Board of Directors may, with approval by the shareholders at a general meeting, capitalise any<br />
reserves or profits (including profit or moneys carried and standing to any reserve or to the share<br />
premium account) and distribute the same as bonus shares credited as paid-up to the shareholders in<br />
proportion to their shareholdings. The Board of Directors may also issue rights to take up additional<br />
ordinary shares to shareholders in proportion to their shareholdings. Such rights are subject to any<br />
conditions attached to such issue and the regulations of any stock exchange on which the Company is<br />
listed.<br />
B - 2
Takeovers<br />
The Singapore Companies Act and the Singapore Code on Takeovers and Mergers regulate the<br />
acquisition of ordinary shares of public companies and contain certain provisions that may delay, deter or<br />
prevent a future takeover or change in control of the Company. Any person acquiring an interest, either<br />
on his own or together with parties acting in concert with him, in 30% or more of the voting shares in the<br />
Company must extend a takeover offer for the remaining voting shares in accordance with the provisions<br />
of the Singapore Code on Takeovers and Mergers. “Parties acting in concert” include a company and its<br />
related and associated companies, a company and its directors (including their close relatives), a<br />
company and its pension funds and employee share schemes, a person and any investment company,<br />
unit trust or other fund whose investment such person manages on a discretionary basis, and a financial<br />
advisor and its client in respect of shares held by the financial advisor and shares in the client held by<br />
funds managed by the financial advisor on a discretionary basis. An offer for consideration other than<br />
cash must be accompanied by a cash alternative at not less than the highest price paid by the offeror or<br />
parties acting in concert with the offeror within the preceding six months. A mandatory takeover offer is<br />
also required to be made if a person who, together with persons acting in concert with him, holds not<br />
less than 30% but not more than 50% of the voting rights and such person, or any person acting in<br />
concert with him, acquires in any period of six months additional shares carrying more than 1% of the<br />
voting rights.<br />
Liquidation or Other Return of Capital<br />
If the Company liquidates or in the event of any other return of capital, holders of ordinary shares will be<br />
entitled to participate in any surplus assets in proportion to their shareholdings, subject to any special<br />
rights attaching to any other class of shares.<br />
Indemnity<br />
As permitted by Singapore law, the Articles provide that, subject to the Singapore Companies Act, the<br />
Board of Directors and officers shall be entitled to be indemnified by the Company against any liability<br />
incurred in defending any proceedings, whether civil or criminal, which relate to anything done or omitted<br />
to have been done as an officer, director or employee and in which judgment is given in their favour or in<br />
which they are acquitted or in connection with any application under any statute for relief from liability in<br />
respect thereof in which relief is granted by the court. The Company may not indemnify directors and<br />
officers against any liability which by law would otherwise attach to them in respect of any negligence,<br />
default, breach of duty or breach of trust of which they may be guilty in relation to the Company.<br />
Limitations on Rights to Hold or Vote Shares<br />
Except as described in “Voting Rights” and “Takeovers” above, there are no limitations imposed by<br />
Singapore law or by the Articles on the rights of non-resident shareholders to hold or vote ordinary<br />
shares.<br />
Minority Rights<br />
The rights of minority shareholders of Singapore-incorporated companies are protected under Section<br />
216 of the Singapore Companies Act, which gives the Singapore courts a general power to make any<br />
order, upon application by any shareholder of the Company, as they think fit to remedy any of the<br />
following situations:<br />
(a) the affairs of the Company are being conducted or the powers of the Board of Directors are being<br />
exercised in a manner oppressive to, or in disregard of the interests of, one or more of the<br />
shareholders; or<br />
(b) the Company takes an action, or threatens to take an action, or the shareholders pass a<br />
resolution, or propose to pass a resolution, which unfairly discriminates against, or is otherwise<br />
prejudicial to, one or more of the shareholders, including the applicant.<br />
B - 3
Singapore courts have wide discretion as to the reliefs they may grant and those reliefs are in no way<br />
limited to those listed in the Singapore Companies Act itself. Without prejudice to the foregoing,<br />
Singapore courts may:<br />
(a) direct or prohibit any act or cancel or vary any transaction or resolution;<br />
(b) regulate the conduct of the affairs of the Company in the future;<br />
(c) authorise civil proceedings to be brought in the name of, or on behalf of, the Company by a person<br />
or persons and on such terms as the court may direct;<br />
(d) provide for the purchase of a minority shareholder’s shares by the other shareholders or by the<br />
Company and, in the case of a purchase of shares by the Company, a corresponding reduction of<br />
its share capital;<br />
(e) provide that the Memorandum of Association or the Articles be amended; or<br />
(f) provide that the Company be wound up.<br />
B - 4
APPENDIX C - DESCRIPTION OF SINGAPORE LAW RELATING TO TAXATION<br />
The discussion below is not intended to constitute a complete analysis of all tax consequences relating<br />
to ownership of our ordinary shares. Prospective purchasers of our ordinary shares should consult their<br />
own tax advisors concerning the tax consequences of their particular situations. This description is based<br />
on laws, regulations and interpretations now in effect and available as of the date of this Prospectus. The<br />
laws, regulations and interpretations, however, may change at any time, and any change could be<br />
retroactive to the date of issuance of our ordinary shares. These laws and regulations are also subject to<br />
various interpretations and the relevant tax authorities or the courts could later disagree with the<br />
explanations or conclusions set out below.<br />
Singapore Taxation<br />
The following discussion describes the material Singapore income tax, stamp duty and estate duty<br />
consequences of the purchase, ownership and disposal of our ordinary shares.<br />
Income Tax<br />
General<br />
Singapore resident taxpayers, which include individuals who are residing in Singapore and companies<br />
which are controlled or managed in Singapore, are subject to Singapore income tax on:<br />
(i) income accruing in or derived from Singapore; and<br />
(ii) foreign income received in Singapore.<br />
A company will be regarded as being resident in Singapore if the control and management of its<br />
business is exercised in Singapore (for example, if the company’s board of directors meets and conducts<br />
the business of the company in Singapore). An individual will be regarded as being resident in Singapore<br />
in a year of assessment if, in the preceding year, he was physically present in Singapore or exercised<br />
employment in Singapore (other than as a director of a company) for 183 days or more, or if he resides<br />
in Singapore.<br />
Non-Singapore resident corporate taxpayers, subject to certain exceptions, are subject to Singapore<br />
income tax on:<br />
(i) income that is accrued in or derived from Singapore; and<br />
(ii) foreign income received in Singapore.<br />
Non-Singapore resident individuals, subject to certain exceptions, are subject to Singapore income tax<br />
only on income accruing in or derived from Singapore.<br />
The corporate tax rate in Singapore is 22% with effect from the year of assessment 2003. In addition,<br />
three-quarters of up to the first S$10,000 of a company’s chargeable income, and one-half of up to the<br />
next S$90,000 will be exempt from corporate tax for the year of assessment 2003. The remaining<br />
chargeable income will be taxed at 22%.<br />
Subject to the provisions of any applicable tax treaty, non-Singapore resident taxpayers who derive<br />
certain types of income from Singapore are subject to a withholding tax currently at 22% or generally<br />
15% in the case of interest, royalty and rental of movable equipment income.<br />
Dividend Distributions<br />
Under Singapore’s imputation corporate tax system, the tax paid by our Company at the prevailing<br />
corporate tax rate is in effect imputed to, and deemed to be paid on behalf of its shareholders.<br />
Shareholders receive dividends net of such tax. Shareholders are taxed on the gross amount of<br />
dividends (that is, on the amount of net dividends plus an amount equal to the gross dividends multiplied<br />
by the prevailing corporate tax rate). The tax paid by our Company effectively becomes available to its<br />
shareholders as a tax credit to offset their Singapore income tax liability on the gross amount of<br />
dividends paid by the Company.<br />
C - 1
Singapore does not impose withholding tax on dividends paid to non-Singapore resident shareholders.<br />
As the tax paid by our Company at the prevailing corporate tax rate is deemed to be paid by its<br />
shareholders, no further Singapore income tax liability is imposed on dividends received by such nonresident<br />
shareholders. Conversely, such non-resident shareholders who do not have deductible expenses<br />
which are accepted by the Inland Revenue Authority of Singapore (IRAS) as attributable to such dividend<br />
income will normally not receive any refund from the IRAS. Singapore taxpayers are taxed on dividends<br />
received from our Company at the income tax rates applicable to each taxpayer. Where their income tax<br />
liabilities on the dividends are lower (or, as the case may be, higher) than the tax deducted at source<br />
from such dividends at the prevailing corporate rate, such resident shareholders may receive a refund<br />
from (or, as the case may be, have to pay further tax to) the IRAS.<br />
With effect from 1 January 2003, a one-tier corporate taxation system has been introduced to replace the<br />
imputation corporate tax system. Under the one-tier system, the corporate tax paid is final and the after<br />
tax profits of the Company can be distributed to shareholders as exempt (one-tier) dividends, which will<br />
be exempt from tax. This exemption will also apply to non-resident shareholders as withholding tax on<br />
dividend is not applicable in Singapore. To enable companies to make use of the unutilised dividend<br />
franking credits as at 31 December 2002, the Minister for Finance introduced a five-year transition period<br />
from 1 January 2003 to 31 December 2007 for companies to pay franked dividends out of its unutilised<br />
dividend franking credits. During this period, shareholders will continue to receive these dividends with<br />
credits attached as mentioned above under the imputation corporate tax system.<br />
Gains on Disposal of Ordinary Shares<br />
Singapore does not impose tax on capital gains. However, gains may be construed to be of an income<br />
nature and subject to tax if:<br />
(i) they arise from activities which the IRAS regards as the carrying on of a trade in Singapore; or<br />
(ii) they are short-term gains from the sale of real property and shares in unlisted companies with<br />
substantial real property or real property related assets in Singapore.<br />
Any profits from the disposal of ordinary shares are not taxable in Singapore unless the seller is<br />
regarded as having derived gains of an income nature, in which case, the disposal profits would be<br />
taxable.<br />
Stamp Duties<br />
No stamp duty is payable on the issue of new ordinary shares of the Company.<br />
Stamp duty is payable on the instrument of transfer of ordinary shares of the Company at the rate of<br />
S$2.00 for every S$1,000 market value of such ordinary shares. The purchaser is liable for stamp duty,<br />
unless otherwise agreed. No stamp duty is payable if no instrument of transfer is executed or if the<br />
instrument of transfer is executed outside Singapore. However, stamp duty may be payable if the<br />
instrument of transfer which is executed outside Singapore is received in Singapore. The above stamp<br />
duty is not applicable to scripless transfers of the ordinary shares through CDP system.<br />
Estate Duties<br />
Singapore estate duty is imposed on the value of most immovable property situated in Singapore owned<br />
by individuals who are not domiciled in Singapore, subject to specific exemption limits. Singapore estate<br />
duty is imposed on the value of most immovable property situated in Singapore and on most movable<br />
property, wherever it may be, owned by individuals who are domiciled in Singapore, subject to specific<br />
exemption limits. The Company’s ordinary shares are considered to be movable property situated in<br />
Singapore as the Company is a company incorporated in Singapore and the share register is maintained<br />
in Singapore.<br />
C - 2
Accordingly, the Company’s ordinary shares held by an individual are subject to Singapore estate duty<br />
upon such individual’s death, where such individual is domiciled in Singapore. Singapore estate duty is<br />
payable to the extent that the value of the ordinary shares aggregated with any other assets subject to<br />
Singapore estate duty exceeds S$600,000. Unless other exemptions apply to other assets, for example,<br />
the separate exemption limit for residential properties, any excess beyond S$600,000 will be taxed at 5%<br />
on the first S$12,000,000 of the individual’s Singapore chargeable assets and thereafter at 10%.<br />
Individuals should consult their own tax advisors regarding the Singapore estate duty consequences of<br />
their ownership of the Company’s ordinary shares.<br />
C - 3
APPENDIX D - RULES OF THE OCEAN SKY SHARE OPTION SCHEME<br />
1. Name of the ESOS<br />
The ESOS shall be called the “<strong>Ocean</strong> <strong>Sky</strong> Share Option Scheme”.<br />
2. Definitions<br />
2.1 Unless the context otherwise requires, the following words and expressions shall have the<br />
following meanings:-<br />
“Acceptance Period” The period within which an Option may be accepted, as<br />
described in Rule 7<br />
“Act” The Companies Act, Chapter 50 of Singapore as amended or<br />
modified from time to time<br />
“Adoption Date” The date on which the ESOS is adopted by the Company in<br />
an extraordinary general meeting<br />
“Aggregate Subscription Cost” The total amount payable for the Shares to be subscribed for<br />
on the exercise of an Option<br />
“Associated Company” A company in which at least 20% but not more than 50% of<br />
its shares are held by the Company or our Group and over<br />
which the Company has control<br />
“Associated Company Employee” An executive or non-executive director of an Associated<br />
Company or a full time employee of an Associated Company<br />
selected by the Committee to participate in the ESOS in<br />
accordance with Rule 4<br />
“Auditors” The auditors for the time being of the Company<br />
“Board” The board of directors for the time being of the Company<br />
“CDP” The Central Depository (Pte) <strong>Limited</strong><br />
“CPF” Central Provident Fund<br />
“Committee” A committee comprising directors of the Company, duly<br />
authorised and appointed by the Board to administer the<br />
ESOS<br />
“Company” <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong>, a company incorporated in<br />
Singapore<br />
“Controlling Shareholder” A group Employee or an Associated Company Employee<br />
who, in Relation to the Company, has control of the<br />
Company’s affairs<br />
“Depository Agent” An entity registered as a depository agent with the CDP for<br />
the purpose of maintaining securities sub-accounts for its own<br />
account and for the account of others<br />
“Executive Director” A director who is a full-time employee of the Company and<br />
who performs an executive function<br />
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“Exercise Price” The price at which a Participant shall subscribe for each<br />
Share upon the exercise of an Option, as determined in<br />
accordance with Rule 8.1(a), or such adjusted price as may<br />
be applicable pursuant to Rule 8.1(b).<br />
“Employee” An executive or non-executive director of any member of our<br />
Group or Associated Company, or a full-time employee of any<br />
member of our Group or Associated Company, who is<br />
selected by the Committee to participate in the ESOS in<br />
accordance with Rule 4<br />
“Grantee” A person to whom an offer of an Option is made<br />
“Group” The Company and its subsidiaries<br />
“Incentive Option” The right to subscribe for Shares granted or to be granted<br />
Pursuant to the ESOS and for the time being subsisting, and<br />
in respect of which the Exercise Price is determined in<br />
accordance with Rule 8.1(b)<br />
“Market Day” A day on which the SGX-ST is open for trading in securities<br />
“Market Price Option” The right to subscribe for Shares granted or to be granted<br />
Pursuant to the ESOS and for the time being subsisting, and<br />
in respect of which the Exercise Price is determined in<br />
accordance with Rule 8.1(a)<br />
“Offering Date” The date on which an Option is granted pursuant to Rule 6<br />
“Option” The right to subscribe for Shares granted or to be granted<br />
Pursuant to the ESOS and for the time being subsisting, and<br />
in respect of which the Exercise Price is determined in<br />
accordance with Rule 8<br />
“Option Period” The period for the exercise of an Option<br />
“Participant” The holder of an Option<br />
(i) in relation to a Market Price Option, the period<br />
commencing on (and including) the first anniversary of<br />
the Offering Date and expiring on (and including) the<br />
day immediately preceding the tenth anniversary of the<br />
Offering Date or such other period determined by the<br />
Committee or prescribed under any relevant law,<br />
regulation or rule of the SGX-ST from time to time;<br />
(ii) in relation to an Incentive Option, the period<br />
commencing on (and including) the second anniversary<br />
of the relevant Offering Date and expiring on (and<br />
including) the day immediately preceding the tenth<br />
anniversary of the Offering Date or such other period<br />
determined by the Committee or prescribed under any<br />
relevant law, regulation or rule of the SGX-ST from time<br />
to time;<br />
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“Rules” The rules of the ESOS, as the same may be amended from<br />
time to time<br />
“Scheme” or “ESOS” The <strong>Ocean</strong> <strong>Sky</strong> Share Option Scheme, as modified or altered<br />
from time to time<br />
“SGX-ST” The Singapore Exchange Securities Trading <strong>Limited</strong><br />
“Shareholders” The registered holders of the Shares or in the case of<br />
Depositors, Depositors who have Shares entered against<br />
their names in the Depository Register<br />
“Shares” Fully-paid ordinary shares of S$0.05 each in the capital of the<br />
Company<br />
“Exercise Price” The price at which a participant shall subscribe for each<br />
Share upon the exercise of an Option as determined in<br />
accordance with Rule 8.1(a) in relation to a Market Price<br />
Option, and Rule 8.1(b) in relation to an Incentive Option<br />
“$” Singapore dollars<br />
“%” Per centum<br />
2.2 For the purposes of the ESOS:-<br />
(a) in relation to a company (including, where the context requires, the Company), “control”<br />
means the capacity to dominate decision-making directly or indirectly, in relation to the<br />
financial and operating policies of that company;<br />
(b) unless rebutted, a person who holds directly or indirectly, a shareholding of 15% or more of<br />
the Company’s issued share capital shall be presumed to be a Controlling Shareholder; and<br />
(c) in relation to a Controlling Shareholder, its “associate” has the meaning assigned to it in the<br />
Listing Manual.<br />
2.3 Any reference in the ESOS to any enactment is a reference to that enactment as for the time being<br />
amended or re-enacted. Any word defined under the Act and used in these Rules shall have the<br />
meaning assigned to it under the Act.<br />
2.4 Words importing the singular number shall include the plural number where the context admits and<br />
vice versa. Words importing the masculine gender shall include the feminine gender where the<br />
context admits.<br />
2.5 Any reference to a time of day shall be a reference to Singapore time.<br />
D - 3
3. Objectives<br />
The ESOS is a share incentive scheme. The purpose of the ESOS is to provide an opportunity for<br />
executive directors and employees of our Group to participate in the equity of the Company so as<br />
to motivate them to greater dedication, loyalty and higher standards of performance, and to give<br />
recognition to non-executive directors of our Group and Associated Company Employees who<br />
have contributed to the success and development of the Company and/or Group. The ESOS is<br />
proposed on the basis that it is important to acknowledge the contribution, which is essential to the<br />
well-being and prosperity of our Group, made respectively by these categories of persons. The<br />
Company, by adopting the ESOS, will give these categories of persons a real and meaningful<br />
stake in the Company at no direct cost to its profitability and will help to achieve the following<br />
objectives:-<br />
(a) the motivation of Participants to optimise performance standards and efficiency and to<br />
maintain a high level of contribution;<br />
(b) the retention of key employees whose contributions are important to the long term growth<br />
and prosperity of our Group;<br />
(c) the attainment of harmonious employer/staff relations, as well as the strengthening of<br />
working relationships with our Group’s close business associates; and<br />
(d) the development of a participatory style of management which promotes greater<br />
commitment and dedication amongst the employees and instils loyalty and a stronger sense<br />
of identification with the long term prosperity of our Group.<br />
4 Eligibility<br />
4.1 The following persons (provided that such persons are not undischarged bankrupts at the relevant<br />
time) shall be eligible to participate in the ESOS at the absolute discretion of the Committee:-<br />
(a) Group Employees<br />
(i) confirmed full-time employees of the Company and/or its subsidiaries who have<br />
attained the age of 21 years on or before the Offering Date;<br />
(ii) directors of the Company and/or its subsidiaries who perform an executive function;<br />
(iii) non-executive directors of the Company; and<br />
(iv) employees who qualify under sub-paragraph (i) above and are seconded to an<br />
Associated Company or any other company outside our Group in which the Company<br />
and/or Group has an equity interest, and who, in the absolute discretion of the<br />
Committee is selected to participate in the ESOS.<br />
(b) Associated Company Employees<br />
(i) confirmed full-time employees of an Associated Company who have attained the age<br />
of 21 years and above on or before the Offering Date;<br />
(ii) directors of an Associated Company who perform an executive function; and<br />
(iii) non-executive directors of an Associated Company.<br />
For the purposes of paragraph (a)(i) above, the secondment of an employee to another company<br />
shall not be regarded as a break in his employment or his having ceased employment as a fulltime<br />
employee of our Group by reason only of such secondment.<br />
D - 4
4.2 Employees who are either Controlling Shareholders or their associates are eligible to participate in<br />
the Scheme provided that such participation by each of such Controlling Shareholder or its<br />
associate, and each grant of Options to any one of them, shall be effected only with the specific<br />
prior approval of independent Shareholders by way of separate resolutions for each Controlling<br />
Shareholder and its associate at a general meeting. The Company will at such time provide the<br />
rationale and justification for any proposal to grant any Options to an Employee who is a<br />
Controlling Shareholder or its associate.<br />
4.3 There shall be no restriction on the eligibility of any Participant to participate in any other share<br />
option or share incentive schemes implemented by any other companies within our Group, or by<br />
any Associated Company or otherwise.<br />
4.4 Subject to the Act and any requirement of the SGX-ST or any other stock exchange on which the<br />
Shares may be listed or quoted, the terms of eligibility for participation in the ESOS may be<br />
amended from time to time at the absolute discretion of the Committee.<br />
5. Limitations under the ESOS<br />
5.1 The aggregate number of Shares over which the Committee may grant Options on any date, when<br />
added to the number of Shares issued and issuable in respect of all Options granted under the<br />
ESOS, shall not exceed 15% of the issued Shares of the Company on the day preceding that date.<br />
5.2 The number of Shares comprised in the Market Price Option or, as the case may be, in the<br />
Incentive Option, to be offered to any Group Employee or Associated Company Employee in<br />
accordance with the ESOS shall be determined at the absolute discretion of the Committee, who<br />
shall take into account, in respect of a Group Employee, criteria such as rank, past performance,<br />
years of service and potential for future development of that employee and, in respect of an<br />
Associated Group Employee, his contribution to the success and development of our Group.<br />
5.3 Subject to Rule 4, the aggregate number of Shares in respect of which Options may be offered to<br />
an Employee for subscription in accordance with the Scheme shall be determined at the discretion<br />
of the Committee who shall take into account criteria such as the rank and responsibilities within<br />
our Group, performance, years of service and potential for future development of the Employee,<br />
and the general performance of our Group provided that:-<br />
(i) the aggregate number of Shares in respect of which Options may be offered to the<br />
Controlling Shareholder and their associates must not exceed 25% of the Shares available<br />
under the Scheme;<br />
(ii) the number of Shares in respect of which Options may be offered to each Controlling<br />
Shareholder or his associate must not exceed 10% of the Shares available under the<br />
Scheme; and<br />
(iii) any grant of Options to any one Employee together with Options already granted to such<br />
Employee under the Scheme, represents 5% or more of the total number of Options<br />
available to the Employees must be approved by independent Shareholders. A separate<br />
resolution must be passed for each such Employee and to approve the aggregate number of<br />
Options to be made available for grant to all Employees.<br />
6. Date of Grant<br />
6.1 The Committee may, subject as provided in Rule 12, grant Options at any time, provided that in the<br />
event that an announcement on any matter of an exceptional nature involving unpublished price<br />
sensitive information is imminent, Options may only be granted on or after the second Market Day<br />
from the date on which the aforesaid announcement is released.<br />
6.2 The Letter of Offer to grant the Option shall be in, or substantially be in, the form set out in<br />
Schedule D-1, subject to such modification including but not limited to, imposing restrictions on the<br />
number of Options that may be exercised within particular sections of the relevant Option Period<br />
as set out in Rule 9.1, or as the Committee may from time to time determine.<br />
D - 5
7. Acceptance of Options<br />
7.1 An Option shall be personal to the Participant to whom it is granted and shall not be transferred,<br />
assigned (other than to a Participant’s personal representative on the death of that Participant),<br />
charged, pledged or otherwise disposed of, in whole or in part, unless with the prior approval of<br />
the Committee.<br />
7.2 The closing date for the acceptance for the grant of any Option under this Rule 7 shall be within<br />
thirty (30) days from the Offering Date of that Option, and not later than 5pm on the thirtieth (30th)<br />
day of the Offering Date. The grant of an Option must be accepted by completing, signing and<br />
returning the Acceptance Form in, or substantially in, the form set out in Schedule D-2 and<br />
accompanied by payment of S$1.00 as consideration, subject to such modification as the<br />
Committee may from time to time determine.<br />
7.3 If a grant of an Option is not accepted in the manner as provided in Rule 7.2, such offer shall,<br />
upon the expiry of the Acceptance Period, automatically lapse and become null and void and of no<br />
effect.<br />
8. Exercise Price<br />
8.1 Subject to any adjustment pursuant to Rule 12, the Exercise Price for each Share in respect of<br />
which an Option is exercisable shall be determined by the Committee at its absolute discretion,<br />
and fixed by the Committee as follows:-<br />
(a) a price equal to the average of the last dealt price(s) for a Share, as determined by<br />
reference to the Financial News published by the SGX-ST, for the last Market Day<br />
immediately preceding the Offering Date of that Option (the “Market Price Option)”;<br />
(b) in respect of a Grantee whose performance has been consistently sterling or whose future<br />
contributions and value-add to our Group would be invaluable in the opinion of the<br />
Committee, a price which is set at a discount to the Market Price, provided that the<br />
maximum discount shall not exceed 20% of the Market Price (or such other percentage or<br />
amount as may be prescribed or permitted for the time being by the SGX-ST) (the “Incentive<br />
Option”). In determining the quantum of such discount, the Committee shall take into<br />
consideration such criteria as the Committee may, in its absolute discretion, deem<br />
appropriate including but not limited to:-<br />
(i) the performance of the Company and our Group;<br />
(ii) the individual performance of the Participant;<br />
(iii) the contribution of the Participant to the success and development of the Company<br />
and/or our Group; and<br />
(iv) the benefits received by such employee under any other employee remuneration<br />
plans or scheme of our Group, including the Profit Sharing Plan.<br />
Prior approval of the Shareholders of the Company in general meeting shall have been<br />
obtained for the making of offers and grants of Options under the ESOS at a discount not<br />
exceeding the maximum discount as aforesaid.<br />
8.2 In no event shall the Exercise Price be less than the nominal value of a Share. Where the Exercise<br />
Price (as determined under Rule 8.1) is less than the nominal value of a Share, the Exercise Price<br />
shall then be the nominal value, whichever the higher.<br />
D - 6
9. Rights to Exercise Options<br />
9.1 Subject as provided in this Rule 9 and Rule 10 and any other conditions as may be introduced by<br />
the Committee from time to time, each Option shall be exercisable, in whole or in part, during the<br />
relevant option period as follows:-<br />
(a) in the case of a Market Price Option, a period commencing on (and including) the first<br />
anniversary of the Offering Date and expiring on (and including) the day immediately<br />
preceding the tenth anniversary of the Offering Date, or such other period determined by the<br />
Committee or prescribed under any relevant law, regulation or rule of the Stock Exchange<br />
from time to time; and<br />
(b) in the case of an Incentive Option, a period commencing on (and including) the second<br />
anniversary of the Offering Date and expiring on (and including) the day immediately<br />
preceding the tenth anniversary of the Offering Date, or such other period determined by the<br />
Committee or prescribed under any relevant law, regulation or rule of the Stock Exchange<br />
from time to time.<br />
9.2 In the event of an Option being exercised in part only, the balance of the Option not thereby<br />
exercised shall continue to be exercisable in accordance with the ESOS until such time as it shall<br />
lapse in accordance with the ESOS.<br />
9.3 An Option shall, to the extent unexercised, immediately lapse without any claim against the<br />
Company:-<br />
(a) subject to Rules 9.4 and 9.5, upon the Participant ceasing to be in the full-time employment<br />
of the Group or an Associated Company, as the case may be, for any reason whatsoever; or<br />
(b) upon the bankruptcy of the Participant or the happening of any other event which results in<br />
his being deprived of the legal or beneficial ownership of such Option; or<br />
(c) in the event of any misconduct on the part of the Participant as determined in the<br />
Committee’s discretion; or<br />
(d) in the event that the Committee shall, at its discretion, deem it appropriate that such Option<br />
granted to a Participant shall so lapse on the grounds that any of the objectives of the<br />
ESOS (as set out in Rule 3) have not been met.<br />
For the purpose of Rule 9.3(a), the Participant shall be deemed to have ceased to be so employed<br />
as of the date of his notice of resignation of employment or the cessation of his<br />
employment/appointment, whichever is earlier, with our Group or an Associated Company as the<br />
case may be.<br />
9.4 If a Participant ceases to be employed by our Group or, as the case may be, an Associated<br />
Company, by reason of his:-<br />
(a) ill health, injury or disability (in each case, evidenced to the satisfaction of the Committee);<br />
(b) redundancy;<br />
(c) retirement before the legal retirement age with the consent of the Committee;<br />
(d) retirement before the legal retirement age with the consent of the Committee, or any other<br />
reason approved in writing by the Committee;<br />
he may exercise any unexercised Options within the relevant Option Period.<br />
D - 7
9.5 If a Participant dies and at the date of his death holds any unexercised Option, such Option may,<br />
at the discretion of the Committee, be exercised by the duly appointed personal representatives of<br />
the Participant within such period after his death as may be determined by the Committee in its<br />
absolute discretion (but before the expiration of the Option Period in respect of that Option), and<br />
upon the expiration of such period, the Option shall lapse. Such exercise shall, at the discretion of<br />
the Committee, either be in full or only in respect of such Shares comprised in that Option for<br />
which the Participant would have been entitled to exercise. The Committee may, in exercising such<br />
discretion, allow the Option to be exercised at any time, notwithstanding that the date of exercise<br />
of such Option falls on a date prior to the first day of the Option Period in respect of such Option.<br />
9.6 If for any reason whatsoever, a Participant, being a Group Employee or an Associated Company<br />
Employee by virtue of his being a non-executive director of our Group or, as the case may be, the<br />
Associated Company, ceases to be a director of our Group or, as the case may be, the Associated<br />
Company, on the Offering Date, any Option then held by him shall, to the extent unexercised,<br />
immediately lapse without any claim against the Company.<br />
10. Take-over and Winding Up of the Company<br />
10.1 Notwithstanding Rule 9 but subject to Rule 10.5, in the event of a take-over being made for the<br />
Shares, a Participant as and/or including those set out under Rule 9.1, shall be entitled to exercise<br />
in full or in part any Option held by him and as yet unexercised, in the period commencing on the<br />
date on which such offer is made or, if such offer is conditional, the date on which such offer<br />
becomes or is declared unconditional, as the case may be, and ending on the earlier of:-<br />
(a) the expiry of six months thereafter, unless prior to the expiry of such six-month period, at the<br />
recommendation of the offeror and with the approvals of the Committee and the SGX-ST,<br />
such expiry date is extended to a later date (in either case, being a date falling not later than<br />
the expiry of the Option Period relating thereto); or<br />
(b) the date of expiry of the Option Period relating thereto,<br />
whereupon the Option then remaining unexercised shall lapse and become null and void.<br />
Provided that if during such period, the offeror becomes entitled or bound to exercise rights of<br />
compulsory acquisition under the provisions of the Act and, being entitled to do so, gives notice to<br />
the Participants that it intends to exercise such rights on a specified date, the Option shall remain<br />
exercisable by the Participant until the expiry of such specified date or the expiry of the Option<br />
Period relating thereto, whichever is earlier. Any Option not so exercised shall lapse provided that<br />
the rights of acquisition or obligations to acquire shall have been exercised or performed, as the<br />
case may be. If such rights or obligations have not been exercised or performed, the Option shall,<br />
notwithstanding Rule 9, remain exercisable until the expiry of the Option Period relating thereto.<br />
10.2 If under the Act, the court sanctions a compromise or arrangement proposed for the purposes of,<br />
or in connection with, a scheme for the reconstruction of the Company or its amalgamation with<br />
another company or companies, each Participant (including Participants holding Options which are<br />
not yet exercisable pursuant to provisions under Rule 9.1) shall be entitled, notwithstanding Rule 9<br />
but subject to Rule 10.5, to exercise any Option then held by him during the period commencing<br />
on the date upon which the compromise or arrangement is sanctioned by the court and ending<br />
either on the expiry of sixty (60) days thereafter or the date upon which the compromise or<br />
arrangement becomes effective, whichever is later (but not after the expiry of the Option Period<br />
relating thereto), whereupon the Option shall lapse and become null and void.<br />
10.3 If an order is made for the winding-up of the Company on the basis of its insolvency, all Options, to<br />
the extent unexercised, shall lapse and become null and void.<br />
10.4 In the event of a members’ voluntary winding-up (other than for amalgamation or reconstruction),<br />
the Participants (including Participants holding Options which are not yet exercisable pursuant to<br />
provisions under Rule 9.1) shall be entitled, within thirty (30) days of the passing of the resolution<br />
of such winding-up (but not after the expiry of the Option Period relating thereto), to exercise any<br />
unexercised Option, after which such unexercised Option shall lapse and become null and void.<br />
D - 8
10.5 If in connection with the making of a general offer referred to in Rule 10.1 or the scheme referred<br />
to in Rule 10.2 or the winding-up referred to in Rule 10.4, arrangements are made (which are<br />
confirmed in writing by the Auditors, acting only as experts and not as arbitrators, in assessment of<br />
what is fair and reasonable) for the compensation of Participants, whether by the continuation of<br />
their Options or the payment of cash or the grant of other options or otherwise, a Participant<br />
holding an Option, as yet not exercised, may not, at the discretion of the Committee, be permitted<br />
to exercise that Option as provided for in this Rule 10.<br />
10.6 To the extent that an Option is not exercised within the periods referred to in this Rule 10, it shall<br />
lapse and become null and void.<br />
11. Exercise of Options<br />
11.1 An Option may be exercised, in whole or in part, by a Participant giving notice in writing to the<br />
Company in, or substantially in, the form set out in Schedule D-3, subject in each case to such<br />
modification as the Committee may from time to time determine. Such notice must be<br />
accompanied by a remittance for the Aggregate Subscription Cost in respect of the Shares for<br />
which that Option is exercised and any other documentation the Committee may require. An<br />
Option shall be deemed to be exercised upon receipt by the Company of the said notice, duly<br />
completed, the relevant documentation required by the Committee and the Aggregate Subscription<br />
Cost.<br />
11.2 All payments made shall be made by cheque, cashiers’ order, banker’s draft or postal order made<br />
out in favour of the Company or such other mode of payment as may be acceptable to the<br />
Company.<br />
11.3 Subject to such consents or other required action of any competent authority under any<br />
regulations or enactments for the time being in force as may be necessary and subject to the<br />
compliance with the terms of the ESOS and the Memorandum and Articles of Association of the<br />
Company, the Company shall, within ten (10) Market Days after the exercise of an Option, allot the<br />
relevant Shares and within five (5) Market Days from the date of the allotment of the relevant<br />
Shares, despatch to CDP the relevant share certificates by ordinary post or such other mode as<br />
the Committee may deem fit.<br />
11.4 The Company shall, as soon as practicable after such allotment, apply to the SGX-ST (and any<br />
other stock exchange on which the Shares are quoted or listed) for permission to deal in and for<br />
quotation of such Shares.<br />
11.5 Shares which are allotted on the exercise of an Option by a Participant shall be issued in the name<br />
of CDP to the credit of the securities account of that particular Participant which is maintained with<br />
CDP, the securities sub-account maintained with a Depository Agent or the CPF investment<br />
account maintained with a CPF agent bank accordingly.<br />
11.6 Shares allotted and issued on exercise of an Option shall be subject to all the provisions of the<br />
Memorandum and Articles of Association of the Company, and shall rank in full for all entitlements,<br />
excluding dividends or other distributions declared or recommended in respect of the then existing<br />
Shares, on the Record Date for which falls on or before the relevant exercise date of the Option,<br />
and shall in all other respects rank in pari passu with other existing Shares then in issue. “Record<br />
Date” means the date fixed by the Company for purposes of determining entitlements to dividends<br />
or other distributions to or rights of holders of Shares.<br />
11.7 The Company shall keep available sufficient unissued Shares to satisfy the full exercise of all<br />
Options for the time being remaining capable of being exercised.<br />
D - 9
12. Variation of Capital<br />
12.1 If a variation in the issued ordinary share capital of the Company (whether by way of a<br />
capitalisation of profits or reserves or rights issue, reduction, subdivision, consolidation or<br />
distribution) shall take place :-<br />
(a) the Exercise Price for the Shares, the nominal amount, class and/or number of Shares<br />
comprised in an Option to the extent unexercised; and/or<br />
(b) the nominal amount, class and/or number of Shares over which Options may be granted<br />
under the ESOS, shall be adjusted by the Committee to give each Participant the same<br />
proportion of the equity capital of the Company as that to which he was previously entitled<br />
and, in doing so, the Committee shall determine at its own discretion the manner in which<br />
such adjustment shall be made.<br />
12.2 Unless the Committee considers an adjustment to be appropriate:-<br />
(a) the issue of securities as consideration for an acquisition or a private placement of<br />
securities; or<br />
(b) the cancellation of issued Shares purchased or acquired by the Company by way of a<br />
market purchase of such Shares undertaken by the Company on the SGX-ST during the<br />
period when a share purchase mandate granted by Shareholders of the Company (including<br />
any renewal of such mandate) is in force, shall not normally be regarded as a circumstance<br />
requiring adjustment.<br />
12.3 Notwithstanding the provisions of Rule 12.1:-<br />
(a) no such adjustment shall be made if as a result, the Exercise Price shall fall below the<br />
nominal amount of a Share and if such adjustment would, but for this paragraph (a), result in<br />
the Exercise Price being less than the nominal amount of a Share, the Exercise Price<br />
payable shall be the nominal amount of a Share;<br />
(b) the adjustment must be made in such a way that a Participant will not receive a benefit that<br />
a Shareholder does not receive; and<br />
(c) any determination by the Committee as to whether to make any adjustment and if so, the<br />
manner in which such adjustment should be made, must (except in relation to a<br />
capitalisation issue) be confirmed in writing by the Auditors (acting only as experts and not<br />
as arbitrators) to be in their opinion, fair and reasonable.<br />
12.4 Upon any adjustment required to be made pursuant to this Rule 12, the Company shall notify the<br />
Participant (or his duly appointed personal representatives where applicable) in writing and deliver<br />
to him (or his duly appointed personal representatives where applicable) a statement setting forth<br />
the Exercise Price thereafter in effect and the nominal value, class and/or number of Shares<br />
thereafter to be issued on the exercise of the Option. Any adjustment shall take effect upon such<br />
written notification being given.<br />
13. Administration of the ESOS<br />
13.1 The ESOS shall be administered by the Committee in its absolute discretion with such powers and<br />
duties as are conferred on it by the Board, provided that no member of the Committee shall<br />
participate in any deliberation or decision in respect of Options granted or to be granted to him.<br />
13.2 The Committee shall have the power, from time to time, to make and vary such regulations (not<br />
being inconsistent with the ESOS) for the implementation and administration of the ESOS as they<br />
think fit, including but not limited to imposing restrictions on the number of Options that may be<br />
exercised within particular sections of the relevant Option Period as set out in provisions under<br />
Rule 9.1.<br />
D - 10
13.3 Any decision of the Committee made pursuant to any provision of the ESOS (other than a matter<br />
to be certified by the Auditors) shall be final and binding (including any decisions pertaining to the<br />
quantum of discount applicable to an Option pursuant to Rule 8.2 or to disputes as to the<br />
interpretation of the ESOS or any rule, regulation, procedure thereunder or as to any rights under<br />
the ESOS).<br />
14. Notices and Annual Report<br />
14.1 Any notice required to be given by a Participant to the Company shall be sent or made to the<br />
registered office of the Company or such other addresses as may be notified by the Company to<br />
him in writing.<br />
14.2 Any notices or documents required to be given to a Participant or any correspondence to be made<br />
between the Company and the Participant shall be given or made by the Committee (or such<br />
person(s) as it may from time to time direct) on behalf of the Company and shall be delivered to<br />
him by hand or sent to him at his home address according to the records of the Company or the<br />
last known address of the Participant and if sent by post, shall be deemed to have been given on<br />
the day following the date of posting.<br />
14.3 The company shall disclose the following in its annual report:-<br />
(a) the names of the members of the Committee administering the scheme; and<br />
(b) the information required in the table below for the following participants:-<br />
(i) Directors of the Company;<br />
(ii) Participants who are Controlling Shareholders of the Company and their associates;<br />
and<br />
(iii) Participants, other than those in (i) and (ii) above, who receive 5% or more of the total<br />
number of options available under the ESOS:-<br />
Name of No. of Aggregate Aggregate Aggregate<br />
Participant Options Options Options Options<br />
granted during granted since exercised since outstanding<br />
financial year commencement commencement as at the end of<br />
under review of the ESOS to of the ESOS to the financial<br />
(include Exercise the end of the the end of the year under review<br />
Price) financial year financial year<br />
under review under review<br />
(iv) the number and proportion of options granted at a discount during the financial year<br />
under review, such information to be disclosed in respect of every 10% discount<br />
range, up to 20%.<br />
(c) (i) the names of and number and terms of Options granted to each Employee who<br />
receives 5% of more of the total number of Options available to Employees under the<br />
Scheme, during the financial year under review; and<br />
(ii) the aggregate number of Options granted to the Employees for the financial year<br />
under review, and since the commencement of the Scheme to the end of the financial<br />
year under review.<br />
(d) an appropriate negative statement that the directors or employees of the parent company<br />
and its subsidiaries are not eligible to participate in the Scheme and that all the Options<br />
granted are not at a discount.<br />
D - 11
15. Modifications to the ESOS<br />
15.1 Any or all the provisions of the ESOS may be modified and/or altered at any time and from time to<br />
time by resolution of the Committee, except that:-<br />
(a) no modification or alteration shall alter adversely the rights attaching to any Option granted<br />
prior to such modification or alteration except with the consent in writing of such number of<br />
Participants who, if they exercised their Options in full, would thereby become entitled to not<br />
less than three quarters in nominal amount of all the Shares which would fall to be allotted<br />
upon exercise in full of all outstanding Options; and<br />
(b) the definitions of “Group”, “Group Employee”, “Associated Company”, “Associated Company<br />
Employee”, “Controlling Shareholder”, “Participant”, “Committee”, “Option Period” and<br />
“Exercise Price” and the provisions of Rules 4, 5, 6, 7, 8, 10, 11.1, 11.6, 12, 13 and this<br />
Rule 15 shall not be altered to the advantage of Participants except with the prior approval<br />
of the Company’s Shareholders in general meeting; and<br />
(c) no listing or quotation of new shares issued pursuant to any modification or alteration shall<br />
be made without the prior approval of the SGX-ST, or any other stock exchange on which<br />
the Shares are quoted or listed, and such other regulatory authorities as may be necessary.<br />
15.2 Notwithstanding anything to the contrary contained in Rule 15.1, the Committee may at any time<br />
by resolution (and without other formality) amend or alter the ESOS in any way to the extent<br />
necessary to cause the ESOS to comply with any statutory provision or the provision or the<br />
regulations of any regulatory or other relevant authority or body (including the SGX-ST).<br />
15.3 Written notice of any modification or alteration made in accordance with this Rule 15 shall be given<br />
to all Participants.<br />
15.4 Shareholders who are eligible to participate in the Scheme must abstain from voting on any<br />
resolution relating to the Scheme (other than a resolution relating to the participation of, or grant<br />
of, Options to the Employees).<br />
15.5 Employees who are also Shareholders and are eligible to participate in the Scheme must abstain<br />
from voting on any resolution relating to the participation of, or grant of Options to the Employees.<br />
16. Terms of Employment Unaffected<br />
The terms of employment of a Participant (who is a Group Employee) shall not be affected by his<br />
participation in the ESOS, which shall neither form part of such terms nor entitle him to take into<br />
account such participation in calculating any compensation or damages on the termination of his<br />
employment for any reason.<br />
17. Duration of the ESOS<br />
17.1 The ESOS shall continue to be in force at the discretion of the Committee, subject to a maximum<br />
period of ten (10) years commencing on the Adoption Date, provided always that the ESOS may<br />
continue beyond the above stipulated period with the approval of the Company’s Shareholders by<br />
ordinary resolution in general meeting and of any relevant authorities which may then be required.<br />
17.2 The ESOS may be terminated at any time by the Committee or by resolution of the Company in<br />
general meeting subject to all relevant approvals which may be required and if the ESOS is so<br />
terminated, no further Options shall be offered by the Company hereunder.<br />
17.3 The termination of the ESOS shall not affect Options which have been granted and ESOS<br />
accepted as provided in Rule 7.2, whether such Options have been exercised (whether fully or<br />
partially) or not.<br />
D - 12
18. Taxes<br />
All taxes (including income tax) arising from the exercise of any Option granted to any Participant<br />
under the ESOS shall be borne by that Participant.<br />
19. Costs and Expenses<br />
19.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issue<br />
and allotment of any Shares pursuant to the exercise of any Option in CDP’s name, the deposit of<br />
share certificate(s) with CDP, the Participant’s securities account with CDP, or the Participant’s<br />
securities sub-account with a CDP Depository Agent, or CPF investment account with a CPF<br />
agent bank (collectively, the “CDP Charges”).<br />
19.2 Save for the taxes referred to in Rule 18 and such other costs and expenses expressly provided in<br />
the ESOS to be payable by the Participants, all fees, costs and expenses incurred by the<br />
Company in relation to the ESOS including but not limited to the fees, costs and expenses relating<br />
to the allotment and issue of Shares pursuant to the exercise of any Option shall be borne by the<br />
Company.<br />
20. Disclaimer of Liability<br />
Notwithstanding any provisions herein contained, the Board, the Committee and the Company<br />
shall not under any circumstances be held liable for any costs, losses, expenses and damages<br />
whatsoever and howsoever arising in any event, including but not limited to the Company’s delay in<br />
issuing the Shares or applying for or procuring the listing of the Shares on the SGX-ST in<br />
accordance with Rule 11.4 (and any other stock exchange on which the Shares are quoted or<br />
listed).<br />
21. Disputes<br />
Any disputes or differences of any nature arising hereunder shall be referred to the Committee and<br />
its decision shall be final and binding in all respects.<br />
22. Condition of Option<br />
Every Option shall be subject to the condition that no Shares shall be issued pursuant to the<br />
exercise of an Option if such issue would be contrary to any law or enactment, or any rules or<br />
regulations of any legislative or non-legislative governing body for the time being in force in<br />
Singapore or any other relevant country having jurisdiction in relation to the issue of Shares<br />
hereto.<br />
23. Governing Law<br />
The ESOS shall be governed by, and construed in accordance with, the laws of the Republic of<br />
Singapore. The Participants, by accepting Options in accordance with the ESOS, and the<br />
Company submit to the exclusive jurisdiction of the courts of the Republic of Singapore.<br />
D - 13
OCEAN SKY SHARE OPTION SCHEME<br />
LETTER OF OFFER<br />
Date: Serial No:<br />
To: Name<br />
Designation<br />
Address<br />
Dear Sir/Madam<br />
SCHEDULE D-1<br />
PRIVATE AND CONFIDENTIAL<br />
We are pleased to inform you that you have been nominated by the Committee of the Board of Directors<br />
of <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong> (the “Company”) to participate in the <strong>Ocean</strong> <strong>Sky</strong> Share Option<br />
Scheme (the “ESOS”).<br />
Accordingly, an offer is hereby made to grant you an Option (as defined in the ESOS), in consideration of<br />
the payment of a sum of S$ , to subscribe for and be allotted ordinary shares of S$0.05<br />
each in the capital of the Company at the price of S$ per ordinary share. The Option shall<br />
be subject to the terms of this Letter of Offer and the ESOS (as the same may be amended from time to<br />
time pursuant to the terms and conditions of the ESOS), a copy of which is enclosed herewith.<br />
The Option is personal to you and may not be sold, mortgaged, transferred, charged, assigned, pledged<br />
or otherwise disposed of or encumbered in whole or in part or in any way whatsoever.<br />
If you wish to accept the offer, please sign and return the enclosed Acceptance Form with a sum of<br />
S$ not later than 5 p.m. on the day of failing which this<br />
offer will forthwith lapse.<br />
Yours faithfully<br />
For and on behalf of<br />
<strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong><br />
D - 14
Serial No:<br />
To: The Committee<br />
<strong>Ocean</strong> <strong>Sky</strong> Share Option Scheme,<br />
<strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong><br />
22 Tampines Street 92,<br />
Singapore 528876<br />
Closing Time and Date for Acceptance of Option :<br />
No. of Shares in respect of which Option is offered :<br />
Exercise Price per Share : S$<br />
Total Amount Payable on Acceptance of Option : S$<br />
(exclusive of the relevant CDP charges)<br />
OCEAN SKY SHARE OPTION SCHEME<br />
ACCEPTANCE FORM<br />
SCHEDULE D-2<br />
I have read your Letter of Offer dated (“Offer Date”) and agree to be bound by<br />
the terms thereof and of the <strong>Ocean</strong> <strong>Sky</strong> Share Option Scheme stated therein.<br />
I hereby accept the Option to subscribe for ordinary shares of S$0.05 each in<br />
the capital of <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong> (the “Shares”) at S$ per Share and enclose<br />
*cash/banker’s draft/cashiers’/postal order for S$ being payment for the purchase of the<br />
Option.<br />
I understand that I am not obliged to exercise the Option.<br />
I also understand that I shall be responsible for all the fees of CDP relating to or in connection with the<br />
issue and allotment of any Shares in CDP’s name, the deposit of share certificates with CDP, my<br />
securities account with CDP or my securities sub-account with a CDP Depository Agent (as the case<br />
may be) (collectively, the “CDP charges”).<br />
I hereby acknowledge that you have not made any representation or warranty or given me any<br />
expectation of employment or continued employment to induce me to accept the offer and that the terms<br />
of the Letter of Offer and this Acceptance Form constitute the entire agreement between us relating to<br />
the offer.<br />
D - 15
PLEASE PRINT IN BLOCK LETTER<br />
Name in full :<br />
Designation :<br />
Address :<br />
Nationality :<br />
*NRIC/Passport No.<br />
Signature :<br />
Date :<br />
* Delete as appropriate<br />
Notes :-<br />
1. Option must be accepted in full or in multiples of 1,000 Shares.<br />
2. The Acceptance Form must be forwarded to the Committee in an envelope marked “Private and Confidential”.<br />
3. The Participant shall be informed by the Committee of the relevant CDP charges payable at the time of the exercise of an<br />
Option.<br />
D - 16
To: The Committee<br />
<strong>Ocean</strong> <strong>Sky</strong> Share Option Scheme,<br />
<strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong><br />
22 Tampines Street 92,<br />
Singapore 528876<br />
OCEAN SKY SHARE OPTION SCHEME<br />
EXERCISE NOTICE<br />
Total number of ordinary Shares of S$0.05 each<br />
(the “Share”) at S$ per Share under an Option<br />
granted on (the “Offer Date”) :<br />
Number of Shares previously allotted and issued thereunder :<br />
Outstanding balance of Shares which may be allotted :<br />
and issued thereunder<br />
Number of Shares now to be subscribed :<br />
SCHEDULE D-3<br />
1. Pursuant to your Letter of Offer dated (the “Offer Date”) and my acceptance thereof, I hereby<br />
exercise the Option to subscribe for Shares in <strong>Ocean</strong> <strong>Sky</strong> <strong>International</strong> <strong>Limited</strong> (the “Company”) at<br />
S$ per Share.<br />
2. I hereby request the Company to allot and issue to me the number of Shares specified in<br />
paragraph 1 in the name of The Central Depository (Pte) <strong>Limited</strong> (“CDP”) to the credit of my<br />
*Securities Account with CDP/* Securities Sub-Account with a CDP Depository Agent specified<br />
below and to deliver the share certificates relating thereto to CDP at my own risk. I further agree to<br />
bear such fees or other charges as may be imposed by CDP (the “CDP charges”) in respect<br />
thereof:-<br />
*(a) Direct Securities Account Number :<br />
*(b) Securities Sub-Account Number:<br />
Name of CDP Depository Agent :<br />
I enclose a *cheque/cashier’s order/bank draft/postal order no. for S$<br />
in payment for the subscription of S$ for the total<br />
number of the said Shares and the CDP charges of S$ .<br />
I agree to subscribe for the Shares subject to the terms of the Letter of Offer, the <strong>Ocean</strong> <strong>Sky</strong><br />
Share Option Scheme and the Memorandum and Articles of Association of the Company.<br />
3. I declare that I am subscribing for the Shares for myself and not as a nominee for any other<br />
person.<br />
D - 17
PLEASE PRINT IN BLOCK LETTER<br />
Name in full :<br />
Designation :<br />
Address :<br />
Nationality :<br />
*NRIC/Passport No.<br />
Signature :<br />
Date :<br />
* Delete as appropriate<br />
Notes :-<br />
1. An Option may be exercised in whole or in part provided that an Option may be exercised in part only in respect of 1,000<br />
Shares or any multiple thereof.<br />
2. The form entitled “Exercise Notice” must be forwarded to the Committee in an envelope marked “Private and Confidential”.<br />
D-18
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