(02a) +SKE+Offer+Document Clean

OFFER DOCUMENT DATED 12 JULY 2013 (registered by the Singapore Exchange Securities Trading Limited acting on behalf of the
Monetary Authority of Singapore on 12 July 2013) This document is important. If you are in any doubts as to the action you should take, you should consult your legal, financial, tax or other professional adviser(s). CIMB Bank Berhad, Singapore Branch (the "Sponsor") has made an application to the Singapore Exchange Securities Trading Limited (the "SGX-ST") for permission to deal in, and for quotation of, all the ordinary shares (the "Shares") in the capital of Singapore Kitchen Equipment Limited (the "Company") already issued, the new shares (the "New Shares") which are the subject of the Invitation (as defined herein) and the new Shares which may be issued upon the exercise of the awards which may be granted under the Singapore Kitchen Equipment Performance Share Plan (the "Performance Shares") on Catalist (as defined herein). Acceptance of applications will be conditional upon issue of the New Shares and the listing and quotation of all our existing issued Shares, the New Shares and the Performance Shares. Monies paid in respect of any application accepted will be returned if the admission and listing do not proceed. The dealing in and quotation of the Shares will be in Singapore dollars. Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the Main Board of the SGX-ST. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s). This offer of New Shares is made in or accompanied by an offer document that has been registered by the SGX-ST acting as agent on behalf of the Monetary Authority of Singapore (the "Authority"). Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor confirming that the Company is suitable to be listed and complies with the Listing Manual (as defined herein). Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares being offered for investment. The registration of this Offer Document by the SGX-ST does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, or requirements under the SGX-ST's listing rules, have been complied with. We have not lodged this Offer Document in any other jurisdiction. Investing in our Shares involves risks which are described in the section entitled "RISK FACTORS" of this Offer Document. After the expiration of six months from the date of registration of this Offer Document, no person shall make an offer of our Shares, or allot, issue or sell any of our Shares, on the basis of this Offer Document; and no officer or equivalent person or promoter of our Company will authorise or permit the offer of any of our Shares or the allotment, issue or sale of any of our Shares, on the basis of this Offer Document.
SINGAPORE KITCHEN EQUIPMENT LIMITED

(Company Registration No.: 201312671M) (Incorporated in the Republic of Singapore on 9 May 2013)
Invitation in respect of 23,000,000 New Shares, comprising: (i) 2,250,000 Offer Shares at S$0.20 each by way of public offer; and (ii) 20,750,000 Placement Shares at S$0.20 each by way of placement, payable in full on application.
Sponsor Underwriter and Placement Agent
CIMB Bank Berhad (13491-P) Singapore Branch (Incorporated in Malaysia)
CIMB Securities (Singapore) Pte. Ltd. (Company Registration No.: 198701621D) (Incorporated in the Republic of Singapore)
Applications should be received by 12 noon on 18 July 2013 or such other date and time as our Company may, in consultation with the Sponsor, Underwriter and Placement Agent, decide subject to any limitations under all applicable laws.
Group Overview
We are one of the leading Singapore-based commercial and industrial kitchen solutions providers for the F&B and hospitality services industries with an established reputation and track record for our service quality, efficiency, reliability and competitive pricing. We also provide customised industrial-style kitchen solutions for residential households. FY2012 Revenue Proportions
35.1%
We design, fabricate, customise, install, service and maintain commercial and industrial kitchen equipment. We also sell and distribute third party kitchen equipment imported from manufacturers from Canada, Europe, Japan and the USA. Business was founded by current management in September 1996 One of the leading Singapore-based commercial and industrial kitchen solutions providers under our Qson brand. One-stop solutions provider for commercial and industrial kitchens operating in the Fabrication and Distribution, and Maintenance and Servicing business segments Targets growing F&B and hospitality service providers and establishments of various sizes
64.9%
Fabrication and Distribution Maintenance and Servicing
FABRICATION AND DISTRIBUTION Provides design, consultancy and installation of kitchen equipment and systems Manufactures under our InnoFlame brand and uses OEM to produce under our Qoolux brand Has established distributorship arrangements with established overseas kitchen equipment brands.
MAINTENANCE AND SERVICING One of the leading maintenance and servicing providers for kitchen equipment in Singapore Staffed by a team of more than 50 service technicians and operates a fleet of 17 vehicles Capabilities to carry out urgent repairs, cleaning and degreasing of kitchen equipment In-house licensed gas service workers to construct and repair gas pipes and fittings
Competitive Strengths
Ability to provide an efficient one-stop service for installation and maintenance of commercial and industrial kitchens
Our competitive strengths are built with more than 15 years of experience in this business through our "Q'son" brand. We are also associated with some of the major players in the F&B industry in Singapore including Jumbo group of restaurants, Ah Yat group of restaurants, Soup Restaurants, Pu Tien group of restaurants and Hard Rock Caf. Some of our notable projects include Royal Plaza, Level 33 at Marina Bay Financial Centre and the Hilton Hotel at Orchard Road. We believe that the association of our "Q'son" brand with some of the major players in the F&B and hospitality services industries as mentioned above has enabled us to become one of the leading kitchen equipment players in Singapore. Since the commencement of our operations in 1996, we have also built a credible track record of timely delivery and a history of quality workmanship within the industry.
Established reputation with more than 15 years track record in the business
Extensive product range across r ra ang nge e ac acro ros ss multiple brands m mu ult ltip iple ple eb rand ra nd ds
Experienced and Ex xperi rien nce ced da nd d committed team senior commit tt te ed te eam m of f se sen nior management and key mana ag ge emen nt an nd k ey y employees e mploy yee ees s
Financial Highlights
Revenue
15,185
5,324
16,415
6,143
16,629
Gross Profit and Gross Profit Margin
Average Cost of Sales for past 3 financial years

5.2%
5,835
37.3% 31.5%
39.3%
23.2%
10,273
10,793
9,861
6,118
4,784
6,528
71.6%
FY2010
FY2011
FY2012
Maintenance & Servicing
FY2010
Gross Profit
FY2011
Gross Profit Margin
FY2012
Cost of Inventories Production Cost Labour Cost
Fabrication & Distribution
Expenses and Other Income

233 (5.8%) 2,281 (57.0%) 1,484 (37.1%) 110 211 (5.2%) 2,407 (59.8%) 1,409 (35.0%) 538 155 (3.8%) 2,611 (63.6%) 1,337 (32.6%) 1,837
Net Profit, Net Profit Margin and One-off Gains

14.0% 5.0% 2,304 755
417 6 749 1,887 2,237
23.3% 3,879
1,642
FY2010
FY2011
Distribution Cost Finance Cost Other Income
FY2012
Adminstrative Expenses
FY2010
Adjusted Net Profit
FY2011
One-off gains Net Profit Margin
FY2012
Cash Flow
3,191 2,588 1,925 660 995 1,039 1,661
5,539
-348 -955 -1,655 -1,900
FY2010
Net cash from operating activities Net cash (used in) / from investing activities
FY2011
Net cash from / (used in) financing activities
FY2012
Cash and cash equicalents at the end of the financial year
Combined Statements of Financial Position Highlights

Total equity (000) Inventory turnover days Trade receivable turnover days Trade payable turnover days Cash conversion cycle Borrowings (000) Gearing ratio Cash and cash equivalent (000) FY2010 S$3,613 44 149 94 99 S$3,554 63.4% S$1,179 FY2011 S$5,913 54 141 78 117 S$3,258 47.7% S$1,945 FY2012 S$9,628 53 154 137 70 S$2,132 N.M. S$6,201
N.M: Not meaningful as the cash and cash equivalents is higher than total liabilities
HEALTHY CASH AND IMPROVING CASH CYCLE BETTER INVENTORY MANAGEMENT REDUCING DEBT AND IMPROVING CASH POSITION
Business Outlook
We believe that the general economic outlook and the pace of development of the F&B and hospitality services industries of the countries which we operate in, particularly Singapore, and the countries to which we intend to expand our operations are the key factors affecting the growth of our business. Outlook for Singapores economy remains cautiously positive Growing F&B and hospitality services industries (including resorts, hotels, food manufacturers and restaurants) in Singapore
General economic outlook in Singapore and Southeast Asia In the first quarter of 2013, the economy grew by 0.2 per cent. On a quarter by quarter seasonally-adjusted annualised basis the economy grew by 1.8 per cent. The accomodation and food services sector grew by 2.1 per cent1.
2012 Quarterly Growth Rates (Year-On-Year)

4.2% 2.7% 2.3% 1.5% 0.0% 2.2%
2012 Quarterly Growth Rates (Quarter-On-Quarter)

7.1% 7.8% 2.1% 1.5% 0.1% -0.7% 0.8% 3.3%
2.1%
-4.6%
1Q2012
2Q2012
3Q2012
4Q2012
Singapore Growth Rates
1Q2012
2Q2012
3Q2012
4Q2012
Accomodation & Food Services Growth Rates
Accomodation & Food Services Growth Rates
Singapore Growth Rates
Source: Ministry of Trade and Industry Singapore
Source: Ministry of Trade and Industry Singapore
Against this macroeconomic backdrop, the outlook for the Singapore economy remains cautiously positive. The Ministry of Trade and Industry has maintained its 2013 economic growth forecast at 1.0 to 3.0 per cent. Year-on-year growth in developing economies in ASEAN, namely, Indonesia, Malaysia, the Philippines, Thailand and Vietnam, was 6.1 per cent in 2012, an increase from year-on-year growth of 4.5 per cent in 2011. The IMF has projected the year-on-year growth for these countries as a whole to be 5.6 per cent in 2013, and 5.7 per cent in 20142. As we intend to expand our operations to some of these countries, we believe that this will have a positive impact on our business as continued growth will generally translate into an increase in the purchasing power of consumers, particularly those in the middle and upper-income groups. This will in turn generate positive growth in the F&B and hospitality services industries, and correspondingly higher demand for our products and services.
Reference 1 2 This information was extracted from the press release titled 2013 GDP Growth Forecast Maintained at 1.0 to 3.0 Per Cent from the Ministry of Trade and Industry Singapore website at http://www.mti.gov.sg/ResearchRoom/SiteAssets/Pages/Economic-Survey-of-Singapore-First-Quarter-2013/PR_1Q13.pdf, which was accessed on 8 July 2013. This information was extracted from the International Monetary Fund website at http://www.imf.org/external/pubs/ft/weo/2013/update/02/pdf/0713.pdf, which was accessed on 10 July 2013.
Growth of the F&B and hospitality services industries (including resorts, hotels, food manufacturers and restaurants) in Singapore We are of the view that further growth in the F&B and hospitality services industries will provide more opportunities for us to market our products and services. With our established reputation and strong track record, we are well-positioned to secure new contracts for the provision of kitchen solutions and contracts in maintenance servicing and technical servicing of kitchen equipment that may arise from the growth in the F&B and hospitality services industries in Singapore.
PO PU L TO & ATI ON UR IS M
Population (million) 6.5 million
Singapore Tourist Arrivals, Receipts and F&B Spending (billion)

13.2 13.5
5.3 million
11.6 2.2 1.9 3.5 22.3 18.9 1.5 23.0 1.8 1.7 -2.3 -2.2 0.6 -1 2.3
SI NG A EQ PO UI RE PM KI EN TCH T EN
Percentage Change of F&B Services Index Mar 13
F&
Apr 13
2012
2030
2010
Tourism Receipts
2011
2012
MOM
YOY
MOM
Constant Prices (YOY)
YOY
Tourist F&B Spending
Current Prices (MOM) Current Prices (YOY)
Constant Prices (MOM)
Visitor Arivals (In millions)
Source: Singapore Tourism Board
Source: Department of Statistic Singapore MOM refers to month-to-month YOY refers to year-to-year
Future Plan
Expanding our business and establishing a regional presence Widening our product range and expanding our service team Acquisition of additional fabrication equipment and machinery
IPO Timetable
Opening date of public offer Closing date and time of public offer Commencement of trading on SGX-ST
12 July 2013 18 July 2013 12.00noon 22 July 2013 9.00am
CONTENTS
Page
CORPORATE INFORMATION ............................................................................................................. DEFINITIONS ....................................................................................................................................... GLOSSORY OF TECHNICAL TERM ................................................................................................... CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS ...................................................... SELLING RESTRICTIONS .................................................................................................................. DETAILS OF THE INVITATION............................................................................................................ INDICATIVE TIMETABLE FOR LISTING ............................................................................................ PLAN OF DISTRIBUTION ................................................................................................................... OFFER DOCUMENT SUMMARY ........................................................................................................ THE INVITATION.................................................................................................................................. RISK FACTORS ................................................................................................................................... RISKS RELATING TO OUR BUSINESS .............................................................................................. RISKS RELATING TO OUR OVERSEAS OPERATIONS .................................................................... RISKS RELATING TO OWNERSHIP OF OUR SHARES .................................................................... ISSUE STATISTICS ............................................................................................................................. USE OF PROCEEDS AND LISTING EXPENSES .............................................................................. DIVIDEND POLICY .............................................................................................................................. SHARE CAPITAL................................................................................................................................. SHAREHOLDERS ............................................................................................................................... OWNERSHIP STRUCTURE ................................................................................................................ MORATORIUM ..................................................................................................................................... CAPITALISATION AND INDEBTEDNESS .......................................................................................... DILUTION............................................................................................................................................. RESTRUCTURING EXERCISE ........................................................................................................... GROUP STRUCTURE ......................................................................................................................... SELECTED COMBINED FINANCIAL INFORMATION .......................................................................
4 6 12 13 15 16 20 21 23 27 28 28 35 38 42 44 46 47 49 49 50 51 52 53 54 55
CONTENTS
Page
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS ................................................................................................................................ OVERVIEW........................................................................................................................................... SEASONALITY..................................................................................................................................... INFLATION ........................................................................................................................................... REVIEW OF RESULTS OF OPERATIONS.......................................................................................... REVIEW OF FINANCIAL POSITION ................................................................................................... LIQUIDITY AND CAPITAL RESOURCES ............................................................................................ MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS ............................................................ FOREIGN EXCHANGE EXPOSURE ................................................................................................... CHANGES IN ACCOUNTING POLICIES ............................................................................................ GENERAL INFORMATION ON OUR GROUP .................................................................................... HISTORY .............................................................................................................................................. BUSINESS OVERVIEW ....................................................................................................................... PRODUCTS THAT WE SELL AND DISTRIBUTE ................................................................................ BUSINESS PROCESS ......................................................................................................................... MARKETING ........................................................................................................................................ QUALITY CONTROL ............................................................................................................................ STAFF TRAINING ................................................................................................................................ AWARDS AND CERTIFICATIONS ....................................................................................................... INSURANCE ........................................................................................................................................ PRODUCTION CAPACITY AND FACILITY .......................................................................................... PROPERTIES AND FIXED ASSETS ................................................................................................... CORPORATE SOCIAL RESPONSIBILITY .......................................................................................... RESEARCH AND DEVELOPMENT..................................................................................................... INTELLECTUAL PROPERTY............................................................................................................... GOVERNMENT REGULATIONS ......................................................................................................... MAJOR CUSTOMERS ......................................................................................................................... MAJOR SUPPLIERS ............................................................................................................................ INVENTORY MANAGEMENT .............................................................................................................. COMPETITION..................................................................................................................................... COMPETITIVE STRENGTHS .............................................................................................................. PROSPECTS ....................................................................................................................................... TREND INFORMATION ....................................................................................................................... ORDER BOOKS ................................................................................................................................... BUSINESS STRATEGIES AND FUTURE PLANS ...............................................................................
57 57 62 62 62 65 66 69 70 70 71 71 74 76 78 82 82 83 83 83 84 85 86 86 86 88 98 100 101 102 102 104 106 107 107
CONTENTS
Page
INTERESTED PERSON TRANSACTIONS ......................................................................................... OVERVIEW........................................................................................................................................... PAST INTERESTED PERSON TRANSACTIONS ............................................................................... PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS ........................................... GUIDELINES AND REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS ................................................................................................................................. POTENTIAL CONFLICTS OF INTERESTS ......................................................................................... DIRECTORS, MANAGEMENT AND STAFF ....................................................................................... DIRECTORS ........................................................................................................................................ EXECUTIVE OFFICERS ...................................................................................................................... MANAGEMENT REPORTING STRUCTURE ...................................................................................... DIRECTORS AND EXECUTIVE OFFICERS REMUNERATION ........................................................ EMPLOYEES........................................................................................................................................ SERVICE AGREEMENTS .................................................................................................................... SINGAPORE KITCHEN EQUIPMENT PERFORMANCE SHARE PLAN........................................... CORPORATE GOVERNANCE ............................................................................................................ EXCHANGE CONTROLS .................................................................................................................... CLEARANCE AND SETTLEMENT ..................................................................................................... GENERAL AND STATUTORY INFORMATION ................................................................................... APPENDIX A AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2010, 2011 AND 2012 ..................................... APPENDIX B DESCRIPTION OF ORDINARY SHARES ............................................................ APPENDIX C SUMMARY OF SELECTED ARTICLES OF ASSOCIATION OF OUR COMPANY ............................................................................................................. APPENDIX D TAXATION ............................................................................................................. APPENDIX E RULES OF THE SINGAPORE KITCHEN EQUIPMENT PERFORMANCE SHARE PLAN ....................................................................................................... TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE ......................................................................................................
109 109 109 112 115 116 119 119 123 125 126 127 128 130 138 142 143 144
A-1 B-1
C-1 D-1
E-1
APPENDIX F
F-1
CORPORATE INFORMATION
BOARD OF DIRECTORS : Tan Lye Huat (Independent Non-Executive Chairman) Sally Chua (Managing Director) Frankie Cheng (Executive Director) Alan Lee (Executive Director) Wong Hin Sun Eugene (Non-Executive Director) Eileen Tay-Tan Bee Kiew (Independent Director) : Wong Yoen Har (ACIS) : 115A Commonwealth Drive #01-27/28 Tanglin Halt Industrial Estate Singapore 149596 : Boardroom Corporate & Advisory Services Pte. Ltd. 50 Rafes Place #32-01 Singapore Land Tower Singapore 048623 : CIMB Bank Berhad, Singapore Branch 50 Rafes Place #09-01 Singapore Land Tower Singapore 048623 : CIMB Securities (Singapore) Pte. Ltd. 50 Rafes Place #19-00 Singapore Land Tower Singapore 048623 : BDO LLP Public Accountants and Chartered Accountants 21 Merchant Road #05-01 Singapore 058267 Partner-in-charge: Leong Hon Mun Peter (a member of the Institute of Singapore Chartered Accountants)
COMPANY SECRETARY REGISTERED OFFICE
SHARE REGISTRAR AND SHARE TRANSFER OFFICE
SPONSOR
UNDERWRITER AND PLACEMENT AGENT
INDEPENDENT AUDITORS AND REPORTING ACCOUNTANTS
SOLICITORS TO THE INVITATION AND LEGAL ADVISER TO OUR COMPANY ON SINGAPORE LAW
: Drew & Napier LLC 10 Collyer Quay #10-01 Ocean Financial Centre Singapore 049315 : Christopher & Lee Ong D2-3-1 Solaris Dutamas No.1 Jalan Dutamas 1 50480 Kuala Lumpur Malaysia : KhattarWong Vietnam Saigon Trade Center, #20-01 37 Ton Duc Thang, Dist.1 Ho Chi Minh City, Vietnam
LEGAL ADVISER TO OUR COMPANY ON MALAYSIAN LAW
LEGAL ADVISER TO OUR COMPANY ON VIETNAMESE LAW
CORPORATE INFORMATION
PRINCIPAL BANKERS : DBS Bank Ltd 12 Marina Boulevard Marina Bay Financial Centre Tower 3 Singapore 018982 United Overseas Bank Limited 80 Rafes Place, UOB Plaza Singapore 048624 Standard Chartered Bank 6 Battery Road #03-01 Singapore 049909 RECEIVING BANKER : CIMB Bank Berhad, Singapore Branch 50 Rafes Place #09-01 Singapore Land Tower Singapore 048623
DEFINITIONS
In this Offer Document and the accompanying Application Forms, the following denitions apply where the context so admits: Group Companies Company or Singapore Kitchen Equipment Group or Proforma Group or Group Companies Qson Industries Malaysia Qson International Qson Kitchen Equipment Qson KitchenHub Qson Kuechen Kultur : Singapore Kitchen Equipment Limited. The terms we, our, our Company or us have correlative meanings Our Company and our subsidiaries, following the completion of the Restructuring Exercise Qson Industries (M) Sdn. Bhd. Qson International Pte. Ltd. Qson Kitchen Equipment Pte Ltd Qson KitchenHub Sdn. Bhd. Qson Kuechen Kultur Co., Ltd
: : : : :
Other Corporations and Agencies Authority CDP CIMB or Sponsor CPF Independent Auditors and Reporting Accountants ISO MOM Participating Banks : : : : : The Monetary Authority of Singapore The Central Depository (Pte) Limited CIMB Bank Berhad, Singapore Branch The Central Provident Fund BDO LLP
: : :
International Organisation for Standardisation Ministry of Manpower of Singapore United Overseas Bank Limited (UOB) and its subsidiary, Far Eastern Bank Limited (collectively, the UOB Group), DBS Bank Ltd (including POSB) (DBS Bank) and Oversea-Chinese Banking Corporation Limited (OCBC) CIMB Securities (Singapore) Pte. Ltd.
Placement Agent or Underwriter or CIMB Securities QKE Holdings Receiving Bank SCCS SGX-ST Share Registrar SF Co. Ltd.
: : : : : :
QKE Holdings Pte. Ltd. (formerly known as SAF Holdings Pte. Ltd.) CIMB Bank Berhad, Singapore Branch Securities Clearing & Computer Services (Pte) Ltd Singapore Exchange Securities Trading Limited Boardroom Corporate & Advisory Services Pte. Ltd. Shanghai Yibai International Trading Co. Ltd.
DEFINITIONS
Sirius Venture : Sirius Venture Capital Pte. Ltd. (formerly known as Sirius Venture Consulting Pte. Ltd.) Drew & Napier LLC
Solicitors to the Invitation General Alan Lee Application Forms
: :
Lee Chong Hoe The printed application forms to be used for the purpose of the Invitation and which form part of this Offer Document The list of applications for subscription of the New Shares The articles of association of our Company
Application List Articles or Articles of Association Associate
: :
(a)
in relation to any director, chief executive ofcer, substantial shareholder or controlling shareholder (being an individual) means: (i) (ii) his immediate family; the trustees of any trust of which he or his immediate family is a beneciary or, in the case of a discretionary trust, is a discretionary object; or any company in which he and his immediate family together (directly or indirectly) have an interest of 30.0% or more;
(iii)
(b)
in relation to a substantial shareholder or a controlling shareholder (being a company) means any other company which is its subsidiary or holding company or is a subsidiary of such holding company or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30.0% or more
Associated Company
In relation to a corporation, means: (a) any corporation in which the corporation or its subsidiary has, or the corporation and its subsidiary together have, a direct interest of not less than 20.0% but not more than 50.0% of the aggregate of the nominal amount of all the voting shares; or any corporation, other than a subsidiary of the corporation or a corporation which is an associated company by virtue of paragraph (a), the policies of which the corporation or its subsidiary, or the corporation together with its subsidiary, is able to control or inuence materially
(b)
ATM Audit Committee
: :
Automated teller machine of a Participating Bank The audit committee of our Company as at the date of this Offer Document, unless otherwise stated An award of Shares granted under the PSP
Award
DEFINITIONS
Board or Board of Directors : The board of Directors of our Company as at the date of this Offer Document, unless otherwise stated Lee Suk Fern The sponsor-supervised listing platform of the SGX-ST Any or all of the rules in Section B of the Listing Manual, as the case may be Koh Sai Eng The Companies Act (Chapter 50) of Singapore, as amended, modied or supplemented from time to time In relation to a corporation, (a) a person who has an interest in the voting shares of a corporation and who exercises control over the corporation; or a person who has an interest of 15% or more of the aggregate of the nominal amount of all the voting shares in a corporation, unless he does not exercise control over the corporation
Carol Lee Catalist Catalist Rules
: : :
Charlene Koh Companies Act
: :
Controlling Shareholder
(b)
Directors
The directors of our Company as at the date of this Offer Document, unless otherwise stated Tan Bee Kiew Applications for the Offer Shares made through an ATM or through the IB website of one of the Participating Banks in accordance with the terms and conditions of this Offer Document Earnings per Share The executive directors of our Company as at the date of this Offer Document, unless otherwise stated The executive ofcers of our Group as at the date of this Offer Document, unless otherwise stated Cheng Chun Choi Food and beverage Financial year ended or, as the case may be, ending 31 December Goods and services tax Internet Banking The independent directors of our Company as at the date of this Offer Document, unless otherwise stated Audited combined nancial statements for the nancial years ended 31 December 2010, 2011 and 2012 as set out in Appendix A of this Offer Document
Eileen Tay-Tan Bee Kiew Electronic Applications
: :
EPS Executive Directors
: :
Executive Ofcers
Frankie Cheng F&B FY GST IB Independent Directors
: : : : : :
Independent Auditors Report :
DEFINITIONS
Invitation : The invitation by our Company to the public in Singapore to subscribe for the New Shares at the Issue Price, subject to and on the terms and conditions of this Offer Document S$0.20 for each New Share 14 June 2013, being the latest practicable date for the purposes of lodgement of this Offer Document with the SGX-ST The Listing Manual of the SGX-ST, as amended, modified or supplemented from time to time. The management and sponsorship agreement dated 12 July 2013 entered into between our Company and CIMB pursuant to which CIMB agreed to manage and sponsor the Invitation, as described in the section entitled General and Statutory Information - Management, Underwriting and Placement Arrangements of this Offer Document The managing director of our Company A day on which the SGX-ST is open for trading in securities Net asset value The 23,000,000 new Shares which are the subject of this Invitation The nominating committee of our Company as at the date of this Offer Document, unless otherwise stated The non-executive directors of our Company (including Independent Directors) as at the date of this Offer Document, unless otherwise stated Net tangible assets The offer by our Company of the Offer Shares to the public in Singapore for subscription at the Issue Price, subject to and on the terms and conditions of this Offer Document This offer document dated 12 July 2013 issued by our Company in respect of the Invitation The 2,250,000 New Shares which are the subject of the Offer A person who is selected by the Remuneration Committee, or such other committee comprising directors of the Company duly authorised and appointed by the Board to administer the PSP, to participate in the PSP in accordance with the provisions of the PSP Price earnings ratio The new Shares which may be issued from time to time pursuant to the vesting of Awards granted under the PSP The period which comprises FY2010, FY2011 and FY2012
Issue Price Latest Practicable Date
: :
Listing Manual
Management Agreement
Managing Director Market Day NAV New Shares Nominating Committee
: : : : :
Non-Executive Directors
NTA Offer
: :
Offer Document
Offer Shares Participant
: :
PER Performance Shares
: :
period under review
DEFINITIONS
Placement : The placement of the Placement Shares by the placement agent(s) on behalf of our Company for subscription at the Issue Price, subject to and on the terms and conditions of this Offer Document The 20,750,000 New Shares which are the subject of the Placement The Singapore Kitchen Equipment Performance Share Plan, adopted by our Company on 25 June 2013, the terms of which are set out in Appendix E of this Offer Document The remuneration committee of our Company as at the date of this Offer Document, unless otherwise stated The corporate restructuring exercise undertaken in connection with the Invitation as described in the section entitled Restructuring Exercise of this Offer Document Chua Chwee Choo The securities account maintained by a Depositor with CDP but does not include a securities sub-account The service agreements entered into between our Company and each of Sally Chua, Alan Lee and Frankie Cheng, as set out in the section entitled Directors, Management and Staff - Service Agreements of this Offer Document The Securities and Futures Act (Chapter 289) of Singapore, as amended or modied from time to time Ordinary share(s) in the capital of our Company Registered holder(s) of Share(s), except where the registered holder is CDP, the term Shareholders shall, in relation to such Shares, mean the Depositors whose Securities Accounts are credited with Shares The sub-division of each Share into 12,700 Shares Person(s) who has or have an interest in the Share(s), the nominal amount of which is not less than 5% of the aggregate of the nominal amount of all the voting shares of our Company The underwriting and placement agreement dated 12 July 2013 entered into between our Company and CIMB Securities pursuant to which CIMB Securities agreed to (i) underwrite our offer of the Offer Shares; and (ii) subscribe and/or procure subscribers for the Placement Shares, as described in the section entitled General and Statutory Information - Management, Underwriting and Placement Arrangements of this Offer Document
Placement Shares Singapore Kitchen Equipment Performance Share Plan or PSP Remuneration Committee
: :
Restructuring Exercise
Sally Chua Securities Account
: :
Service Agreements
SFA
Share(s) Shareholder(s)
: :
Share Split Substantial Shareholder(s)
: :
Underwriting and Placement Agreement
Currencies, Units and Others S$ or $ and cents % or per cent. m : : : Singapore dollars and cents respectively Per centum Metre
10
DEFINITIONS
sq ft sq m USA EUR US$ or USD MYR or RM RMB VND : : : : : : : : Square feet Square metre United States of America Euro United States dollars Malaysian ringgit Chinese Yuan Renminbi Vietnamese dong
The expressions Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall include corporations. Any reference in this Offer Document, the Application Forms and Electronic Applications to any statute or enactment is a reference to that statute or enactment as for the time being amended or re-enacted. Any word dened under the Companies Act, the SFA or any statutory modication thereof and used in this Offer Document, the Application Forms and Electronic Applications shall, where applicable, have the meaning assigned to it under the Companies Act, the SFA or any statutory modication thereof, as the case may be. Any reference in this Offer Document, the Application Forms and Electronic Applications to Shares being allotted to an applicant includes allotment to CDP for the account of that Applicant. Any reference to a time of day in this Offer Document, the Application Forms and Electronic Applications shall be a reference to Singapore time unless otherwise stated. References in this Offer Document to our Group, we, our, and us or any other grammatical variations thereof shall unless otherwise stated, mean our Company, our Group or any member of our Group as the context requires. Any discrepancies in the tables included herein between the listed amounts and the totals thereof are due to rounding. Accordingly, gures shown as totals in certain tables may not be an arithmetic aggregation of the gures that precede them.
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GLOSSORY OF TECHNICAL TERM

The glossary contains explanations of certain technical terms and abbreviations used in this Offer Document in connection with our Group and our business. The terms and abbreviations and the assigned meanings may not correspond to standard industry meanings or common meanings and usage of these terms. CADCAM ISO 9001 : : Computer-aided design and computer-aided manufacturing software A version of ISO 9000 for organisations that engage in research and development activities as well as production activities. This standard is used when conformance with specic requirements is to be assured by the supplier during several product stages including design and development, production, testing, inspection and servicing Original equipment manufacturer Preventive maintenance servicing of kitchen equipment Repair works and parts replacement servicing of kitchen equipment
OEM maintenance service technical service
: : :
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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

All statements contained in this Offer Document, statements made in press releases and oral statements that may be made by us or our Directors, Executive Ofcers or employees acting on our behalf, that are not statements of historical fact, constitute forward-looking statements. You can identify some of these forward-looking statements by terms such as expects, believes, plans, intends, estimates, anticipates, may, will, would and could or similar words. However, you should note that these words are not the exclusive means of identifying forward-looking statements. All statements regarding our expected nancial position, trend information, business strategies, plans and prospects are forwardlooking statements. These forward-looking statements, including without limitation, statements as to: (a) (b) (c) (d) (e) our revenue and protability; expected growth in demand; expected industry trends and development; anticipated expansion plans; and other matters discussed in this Offer Document regarding matters that are not historical facts,
are only predictions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expected, expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include, among others: (a) changes in political, social and economic conditions and the regulatory environment in Singapore and other countries in which we conduct business or expect to conduct business; changes in currency exchange rates; our inability to implement our business strategies and future plans; our inability to realise our anticipated growth strategies and expected internal growth; changes in the availability and prices of raw materials and goods which we require to operate our business; changes in customer preferences; changes in competitive conditions and our ability to compete under such conditions; changes in our future capital needs and the availability of nancing and capital to fund such needs; other factors beyond our control; and the factors described in the section entitled Risk Factors of this Offer Document.
(b) (c) (d) (e)
(f) (g) (h) (i) (j)
Some of these risk factors are discussed in more detail in this Offer Document, in particular, the discussions under the sections entitled Risk Factors, Managements Discussion and Analysis of Financial Position and Results of Operations and Trend Information of this Offer Document. These forward-looking statements are applicable only as at the date of this Offer Document.
13
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

Given the risks and uncertainties that may cause our actual future results, performance or achievements to be materially different from that expected, expressed or implied by the forward-looking statements in this Offer Document, undue reliance must not be placed on these statements which apply only as at the date of this Offer Document. Neither our Company, the Sponsor, the Underwriter, the Placement Agent nor any other person represents or warrants that our Groups actual future results, performance or achievements will be as discussed in those statements. All forward-looking statements by or attributable to us, or persons acting on our behalf, contained in this Offer Document are expressly qualied in their entirety by such factors. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of the risks faced by us. We, the Sponsor, the Underwriter and the Placement Agent disclaim any responsibility to update any of those forward-looking statements or publicly announce any revisions to those forward-looking statements to reect future developments, events or circumstances for any reason, even if new information becomes available or other events occur in the future. We are, however, subject to the provisions of the SFA and the Catalist Rules regarding corporate disclosure. In particular, pursuant to Section 241 of the SFA, if after the registration of the Offer Document but before the close of the Invitation, our Company becomes aware of (a) a false or misleading statement or matter in the Offer Document; (b) an omission from the Offer Document of any information that should have been included in it under Section 243 of the SFA; or (c) a new circumstance that has arisen since the Offer Document was lodged which would have been required by Section 243 of the SFA to be included in the Offer Document if it had arisen before the Offer Document was lodged with the SGX-ST acting as agent on behalf of the Authority and that is materially adverse from the point of view of an investor, our Company may in consultation with the Sponsor, the Underwriter and the Placement Agent, lodge a supplementary or replacement offer document with the SGX-ST acting as agent on behalf of the Authority.
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SELLING RESTRICTIONS
Singapore This Offer Document does not constitute an offer, solicitation or invitation to subscribe for the New Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. No action has been or will be taken under the requirements of the legislation or regulations of, or of the legal or regulatory requirements of any jurisdiction, except for the ling and/or lodgement of this Offer Document in Singapore in order to permit a public offering of the New Shares and the public distribution of this Offer Document in Singapore. The distribution of this Offer Document and the offering of the New Shares in certain jurisdictions may be restricted by the relevant laws in such jurisdictions. Persons who may come into possession of this Offer Document are required by our Company, the Sponsor, the Underwriter and the Placement Agent to inform themselves about, and to observe and comply with, any such restrictions at their own expense and without liability to our Company, the Sponsor, the Underwriter and the Placement Agent. Persons to whom a copy of this Offer Document has been issued shall not circulate to any other person, reproduce or otherwise distribute this Offer Document or any information herein for any purpose whatsoever nor permit or cause the same to occur.
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DETAILS OF THE INVITATION

LISTING ON CATALIST We have applied to the SGX-ST for permission to deal in, and for quotation of, all our Shares already issued, the New Shares and the Performance Shares on Catalist. Such permission will be granted when our Company has been admitted to Catalist. Our acceptance of applications will be conditional upon, inter alia, permission being granted by the SGX-ST to deal in, and for quotation of, all our existing issued Shares, the New Shares and the Performance Shares on Catalist. Monies paid in respect of any application accepted will be returned to you, without interest or any share of revenue or other benet arising therefrom and at your own risk, if the said permission is not granted and you will not have any claims whatsoever against us, the Sponsor, the Underwriter and the Placement Agent. Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the SGX-ST Main Board. In particular, companies may list on Catalist without a track record of protability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s). A copy of this Offer Document has been lodged with the SGX-ST acting as agent on behalf of the Authority. The registration of this Offer document by the SGX-ST acting as agent on behalf of the Authority does not imply that the SFA, or any other legal or regulatory requirements, have been complied with. Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor conrming that our Company is suitable to be listed and complies with the Listing Manual. Admission to Catalist is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries, our existing issued Shares, the New Shares or the Performance Shares. The SGX-ST has not, in any way, considered the merits of our existing issued Shares, the New Shares or the Performance Shares, as the case may be, being offered or in respect of which an invitation is made, for investment. We have not lodged or registered this Offer Document in any other jurisdiction. We are subject to the provisions of the SFA and the Listing Manual regarding corporate disclosure. In particular, if after the registration of this Offer Document but before the close of the Invitation, we become aware of: (a) (b) a false or misleading statement or matter in the Offer Document; an omission from the Offer Document of any information that should have been included in it under Section 243 of the SFA; or a new circumstance that has arisen since the Offer Document was lodged with the SGX-ST would have been required by Section 243 of the SFA to be included in the Offer Document if it had arisen before this Offer Document was lodged,
(c)
that is materially adverse from the point of view of an investor, we may lodge a supplementary or replacement offer document with the SGX-ST acting as agent on behalf of the Authority pursuant to Section 241 of the SFA.
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Where prior to the lodgement of the supplementary or replacement offer document, applications have been made under this Offer Document to subscribe for the New Shares and: (a) where the New Shares have not been issued to the applicants, we shall either: (i) within two days (excluding any Saturday, Sunday or public holiday) from the date of lodgement of the supplementary or replacement offer document, give the applicants notice in writing of how to obtain, or arrange to receive, a copy of the same and provide the applicants with an option to withdraw their applications, and take all reasonable steps to make available within a reasonable period the supplementary or replacement offer document to the applicants who have indicated they wish to obtain, or who have arranged to receive, a copy of the supplementary or replacement offer document; within seven days from the date of lodgement of the supplementary or replacement offer document, give the applicants the supplementary or replacement offer document, as the case may be, and provide the applicants with an option to withdraw their applications; or treat the applications as withdrawn and cancelled, in which case the applications shall be deemed to have been withdrawn and cancelled, and we shall, within seven days from the date of lodgement of the supplementary or replacement offer document, pay the applicants all monies the applicants have paid on account of their applications for the New Shares; or
(ii)
(iii)
(b)
where the New Shares have been issued to the applicants, we shall either: (i) within two days (excluding any Saturday, Sunday or public holiday) from the date of lodgement of the supplementary or replacement offer document, give the applicants notice in writing of how to obtain, or arrange to receive, a copy of the same and provide the applicants with an option to return to us the New Shares which they do not wish to retain title in, and take all reasonable steps to make available within a reasonable period the supplementary or replacement offer document to the applicants who have indicated they wish to obtain, or who have arranged to receive, a copy of the supplementary or replacement offer document; within seven days from the date of lodgement of the supplementary or replacement offer document, give the applicants the supplementary or replacement offer document, as the case may be, and provide the applicants with an option to return to us the New Shares which they do not wish to retain title in; or treat the issue of the New Shares as void, in which case the issue shall be deemed void and we shall within seven days from the date of lodgement of the supplementary or replacement offer document, pay the applicants all monies the applicants have paid on account of their applications for the New Shares.
(ii)
(iii)
An applicant who wishes to exercise his option under paragraph (a)(i) or (ii) to withdraw his application shall, within 14 days from the date of lodgement of the supplementary or replacement offer document, notify us of this, whereupon we shall, within seven days from the receipt of such notication, pay to him all monies paid by him on account of his application for the New Shares. An applicant who wishes to exercise his option under paragraph (b)(i) or (ii) to return the New Shares issued to him shall, within 14 days from the date of lodgement of the supplementary or replacement offer document, notify us of this and return all documents, if any, purporting to be evidence of title to those New Shares, to us, whereupon we shall, within seven days from the receipt of such notication and documents, if any, pay to him all monies paid by him for those New Shares, and the issue of those New Shares shall be deemed to be void.
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Where the Authority, the SGX-ST (acting as agent on behalf of the Authority) or other competent authority issues a stop order (Stop Order) which directs that no or no further shares to which this Offer Document relates be allotted, and: (a) in the case where the New Shares have not been issued to the applicants, the applications of the New Shares pursuant to the Invitation shall be deemed to have been withdrawn and cancelled and our Company shall, within 14 days from the date of the Stop Order, pay to the applicants all monies the applicants have paid on account of their applications for the New Shares; or in the case where the New Shares have been issued to the applicants, the issue of the New Shares pursuant to the Invitation shall be deemed to be void and our Company shall, within 14 days from the date of the Stop Order pay to the applicants all monies paid by them for the New Shares.
(b)
Such monies paid in respect of your application will be returned to you at your own risk, without interest or any share or revenue or other benet arising therefrom, and you will not have any claim against us, the Sponsor, the Underwriter and the Placement Agent. This Offer Document has been seen and approved by our Directors and they collectively and individually accept full responsibility for the accuracy of the information given in this Offer Document and conrm after making all reasonable enquiries, that to the best of their knowledge and belief, this Offer Document constitutes full and true disclosure of all material facts about the Invitation, our Company and our subsidiaries, and our Directors are not aware of any facts the omission of which would make any statement in this Offer Document misleading. Where information in this Offer Document has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of our Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Offer Document in its proper form and context. Neither our Company, the Sponsor, the Underwriter and the Placement Agent, nor any other parties involved in the Invitation is making any representation to any person regarding the legality of an investment by such person under any investment or other laws or regulations. No information in this Offer Document should be considered as being business, legal or tax advice regarding an investment in our Shares. Each prospective investor should consult his own professional or other advisers for business, legal or tax advice regarding an investment in our Shares. No person has been or is authorised to give any information or to make any representation not contained in this Offer Document in connection with the Invitation and, if given or made, such information or representation must not be relied upon as having been authorised by us, the Sponsor, the Underwriter and the Placement Agent. Neither the delivery of this Offer Document and the Application Forms nor any documents relating to the Invitation, nor the Invitation shall, under any circumstances, constitute a continuing representation or create any suggestion or implication that there has been no change in our affairs or in the statements of fact or information contained in this Offer Document since the date of this Offer Document. Where such changes occur and are material or required to be disclosed by law, the SGX-ST and/or any other regulatory or supervisory body or agency, we may make an announcement of the same to the SGX-ST and will comply with the requirements of the SFA and/or any other requirements of the SGX-ST and/or the Authority. All applicants should take note of any such announcements and, upon the release of such an announcement, shall be deemed to have notice of such changes. Save as expressly stated in this Offer Document, nothing herein is, or may be relied upon as, a promise or representation as to our future performance or policies. This Offer Document has been prepared solely for the purpose of the Invitation and may not be relied upon by any persons other than the applicants in connection with their application for the New Shares or for any other purpose. This Offer Document does not constitute an offer, solicitation or invitation to subscribe for the New Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or unauthorised nor does it constitute an offer, solicitation or invitation to any person to whom it is unlawful to make such offer, solicitation or invitation.
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Copies of this Offer Document and the Application Forms may be obtained on request, subject to availability during ofce hours, from: CIMB Securities (Singapore) Pte. Ltd. CIMB Investment Centre 50 Rafes Place #01-01 Singapore Land Tower Singapore 048623 The Application List will open immediately upon the registration of the Offer Document by the SGX-ST acting as agent on behalf of the Authority and will remain open until 12.00 noon on 18 July 2013 or for such further period or periods as our Directors may, in consultation with the Sponsor, the Underwriter and the Placement Agent, in their absolute discretion decide, subject to any limitation under all applicable laws. In the event a supplementary offer document or replacement offer document is lodged with the SGX-ST acting as agent on behalf of the Authority, the Application List will remain open for at least 14 days after the lodgement of the supplementary or replacement offer document. Details of the procedures for application of the New Shares are set out in Appendix F of this Offer Document.
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INDICATIVE TIMETABLE FOR LISTING

An indicative timetable is set out below for the reference of applicants: Indicative date / time 18 July 2013 at 12.00 noon 19 July 2013 Event Close of Application List Balloting of applications or otherwise as may be approved by the SGX-ST, if necessary (in the event of over-subscription for the Offer Shares) Commence trading on a ready basis Settlement date for all trades done on a ready basis
22 July 2013 at 9.00 a.m. 25 July 2013
The above timetable is only indicative as it assumes that the date of closing of the Application List is 18 July 2013, the date of admission of our Company to Catalist is 22 July 2013, the SGX-STs shareholding spread requirement will be complied with and the New Shares will be issued and fully paidup prior to 22 July 2013. The above timetable and procedures may be subject to such modication as the SGX-ST may, in its absolute discretion, decide, including the decision to permit commencement of trading on a ready basis and the commencement date of such trading. In the event of any changes in the closure of the Application List or the time period during which the Invitation is open, we will publicly announce the same: (a) through an SGXNET announcement to be posted on the internet at the SGX-ST website http://www.sgx.com; and in local English newspapers.
(b)
We will publicly announce the level of subscription for the New Shares as soon as it is practicable after the close of the Application List through the channels described in (a) and (b) above. Investors should consult the SGX-STs announcement of the ready trading date on the internet (at the SGX-ST website http://www.sgx.com), or the newspapers or check with their brokers on the date on which trading on a ready basis will commence.
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PLAN OF DISTRIBUTION
The Invitation The Invitation is for 23,000,000 New Shares offered in Singapore by way of public offer and placement comprising 2,250,000 Offer Shares and 20,750,000 Placement Shares managed by CIMB and underwritten by CIMB Securities. Prior to the Invitation, there has been no public market for our Shares. The Issue Price is determined by our Company in consultation with the Sponsor, the Underwriter and the Placement Agent, taking into consideration, inter alia, the prevailing market conditions and estimated market demand for our Shares. The Issue Price is the same for each New Share and is payable in full on application. Pursuant to the Management Agreement, we have appointed CIMB and CIMB has agreed to manage and sponsor the Invitation. Offer Shares The Offer Shares are made available to the members of the public in Singapore for subscription at the Issue Price. The terms, conditions and procedures for application and acceptance are set out in Appendix F of this Offer Document entitled Terms, Conditions and Procedures for Application and Acceptance. An applicant who has made an application for Offer Shares by way of an Application Form may not make another separate application for Offer Shares by way of an Electronic Application and vice versa. Such separate applications shall be deemed to be multiple applications and shall be rejected. Pursuant to the Underwriting and Placement Agreement, CIMB Securities has agreed to underwrite our offer of the Offer Shares for a commission of 3.0% of the Issue Price for each Offer Share (Underwriting Commission), payable by our Company pursuant to the Invitation. CIMB Securities shall be at liberty at its own expense to make sub-underwriting arrangements for the Offer Shares. Brokerage will be paid by our Company to members of the SGX-ST, merchant banks and members of the Association of Banks in Singapore in respect of successful applications made on Application Forms bearing their respective stamps, or to Participating Banks in respect of successful applications made through Electronic Applications at their respective ATMs or IB websites at the rate of 0.25% of the Issue Price for each Offer Share or in the case of DBS Bank, 0.50% of the Issue Price for each Offer Share. DBS Bank will levy a minimum brokerage of S$10,000. In the event of an under-subscription for the Offer Shares as at the close of the Application List, that number of Offer Shares not subscribed for shall be made available to satisfy excess applications for the Placement Shares to the extent there is an over-subscription for the Placement Shares as at the close of the Application List. In the event of an over-subscription for the Offer Shares as at the close of the Application List and/or the Placement Shares are fully subscribed or over-subscribed as at the close of the Application List, the successful applications for the Offer Shares will be determined by ballot or otherwise as determined by our Directors after consultation with the Sponsor and the Placement Agent and approved by the SGX-ST. Placement Shares The Placement Shares are made available to members of the public and institutional investors in Singapore. Application for the Placement Shares may only be made by way of the Application Forms. The terms, conditions and procedures for application and acceptance are set out in Appendix F of this Offer Document entitled Terms, Conditions and Procedures for Application and Acceptance. Pursuant to the Underwriting and Placement Agreement, CIMB Securities has agreed to subscribe and/or procure subscribers for the Placement Shares for a placement commission of 3.0% of the Issue Price for each Placement Share, payable by our Company. CIMB Securities shall be at liberty at its own expense to make sub-placement arrangements for the Placement Shares.
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PLAN OF DISTRIBUTION
Subscribers of the Placement Shares may be required to pay a brokerage of up to 1.0% of the Issue Price to the Placement Agent (and the prevailing GST thereon, if applicable). The Underwriting and Placement Agreement is conditional upon, among other things, the Management Agreement not having been terminated or rescinded pursuant to the provisions of the Management Agreement. In the event of an under-subscription for the Placement Shares as at the close of the Application List, that number of Placement Shares not subscribed for shall be made available to satisfy excess applications for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at the close of the Application List. Subscription for New Shares To the best of our knowledge and belief, none of our Directors or Substantial Shareholders intends to subscribe for the New Shares in the Invitation. If such person(s) were to make an application for Shares and are subsequently allotted such number of Shares, we will make the necessary announcements at an appropriate time. To the best of our knowledge and belief, none of our Independent Directors, members of our management or employees intends to subscribe for more than 5% of the New Shares in the Invitation. To the best of our knowledge and belief, as at the date of this Offer Document, we are not aware of any person who intends to subscribe for more than 5% of the New Shares. However, in assessing the market demand for our Shares, there may be persons who may indicate an interest to subscribe for Shares amounting to more than 5% of the New Shares. If such person(s) were to make an application for Shares amounting to more than 5% of the New Shares and are subsequently allotted such number of Shares, we will make the necessary announcements at an appropriate time. The nal allotment of Shares will be made in accordance with the shareholding spread and distribution guidelines as set out in the Catalist Rules. No Shares shall be allotted on the basis of this Offer Document later than six months after the date of registration of this Offer Document.
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OFFER DOCUMENT SUMMARY

The following summary highlights certain information found in greater detail elsewhere in this Offer Document. As this is a summary, it does not contain all the information that prospective investors should consider before investing in our Shares. Terms dened elsewhere in this Offer Document have the same meaning when used herein. In addition to this summary, we urge you to read the entire Offer Document carefully, especially the section entitled Risk Factors of this Offer Document and our nancial statements and related notes of this Offer Document, before deciding to invest in our Shares. OVERVIEW OF OUR GROUP Our Business Our Directors believe that we are one of the leading Singapore-based commercial and industrial kitchen solutions providers for the F&B and hospitality services industries with an established reputation and track record for our service quality, efciency, reliability and competitive pricing. We also provide customised industrial-style kitchen solutions for residential households. As a one-stop kitchen solutions provider, we specialise in the provision of design and consultancy services for the setting up and maintenance of commercial and industrial kitchens, fabrication, installation and sale of a wide range of kitchen systems as well as kitchen equipment. We also specialise in the maintenance and servicing works of kitchen equipment to support the F&B and hospitality services industries in Singapore. Our major customers include central kitchens, integrated resorts, hotels, government agencies and restaurants. We operate in the following two key business segments: Fabrication and Distribution Segment Our Group carries out business activities in fabrication and distribution of equipment under our Fabrication and Distribution Segment. We manufacture standard and customised kitchen systems as well as kitchen equipment including kwali range (with blower), boiling pan, gas convection oven, char broiler, steamer (with blower), duck roaster, pig roaster, noodle boiler, steamer cabinet, salamander, fryer, stock pot stove, portable gas range, bainmarie and electric convection oven under our InnoFlame brand, and engage an OEM to manufacture air cooling under counter refrigeration, two-door upright air cooling refrigeration, four-door upright air cooling refrigeration, six-door upright air cooling refrigeration, pizza air piping worktable refrigeration, air piping drawer worktable refrigeration, salad air piping refrigeration bench, air piping sliding glass door showcase, and chocolate and red wine showcase under our Qoolux brand. We also customise certain kitchen equipment on an ad hoc basis according to our customers requests, such as marble and wood-clad display tops for showcasing food items. In addition, we also provide design, consultancy and installation services to our customers, designing and installing stainless steel kitchen systems in accordance with their specications and requirements. To ensure that the design and layout of the kitchen meets our customers requirements, we conduct site visits and work closely with our customers to better understand their needs before providing customised kitchen systems and/or kitchen equipment. With our capabilities and experience, we are able to provide value-added advice and solutions to our customers in respect of setting up and maintaining commercial and industrial kitchens. For FY2010, FY2011 and FY2012, our Fabrication and Distribution Segment contributed approximately 64.9%, 62.6% and 64.9% of our Groups revenue respectively. For our projects, we supply products under our Qoolux and InnoFlame brands as well as third party kitchen equipment. Maintenance and Servicing Segment Our Group carries out business activities in maintenance servicing and technical servicing of kitchen equipment under our Maintenance and Servicing Segment. We undertake preventive maintenance works and repairs on kitchen equipment to ensure that they are in good working condition and functioning properly under the preventive annual maintenance agreements which we enter into with our customers. We have also developed capabilities to carry out urgent repairs, cleaning and degreasing of kitchen equipment, including exhaust hoods, ducts, and exhaust motors. In addition, with our in-house licensed gas service workers, we are able to undertake the construction and repair of gas pipes and ttings, as well as the installation, repair and testing of gas appliances and gas meters. 23

As at the Latest Practicable Date, we operate a eet of 17 vehicles and a team of more than 50 service technicians to conduct servicing of kitchen equipment throughout Singapore for our existing customers which include central kitchens, integrated resorts, hotels, government agencies and restaurants, and for our potential customers. Based on our industry knowledge, the Directors believe that we are the largest servicing team in Singapore providing such services. For FY2010, FY2011 and FY2012, our Maintenance and Servicing Segment contributed approximately 35.1%, 37.4% and 35.1% of our Groups revenue respectively. Please refer to section entitled Business Overview of this Offer Document for further details. Our Financial Results and Financial Position Our nancial performance for FY2010, FY2011 and FY2012 is summarised below. Please refer to the section entitled Managements Discussion and Analysis of Financial Position and Results of Operations of this Offer Document and the Independent Auditors Report as set out in Appendix A of this Offer Document for further details. Operating Results of our Group
(S$000) Revenue Prot before income tax Prot attributable to owners of the parent Financial years ended 31 December 2010 2011 2012 15,185 897 737 16,415 2,630 2,255 16,629 4,262 3,829
Financial Position of our Group

Audited as at 31 December 2012 1,569 14,722 5,433 1,230 9,628
(S$000) Non-current assets Current assets Current liabilities Non-current liabilities Total equity
Our Competitive Strengths Our Directors believe that our competitive strengths are as follows: We are able to provide an efcient one-stop service which includes design and consultancy of kitchen systems, fabrication, sale, maintenance and servicing of kitchen equipment We are able to provide an efcient one-stop service which includes the provision of design and consultancy services for the setting up and maintenance of commercial and industrial kitchens, fabrication and sale of a wide range of kitchen systems as well as kitchen equipment. We offer our customers design and consultancy support to ensure the effectiveness and workability of the entire kitchen facility. We also take an active part in providing feedback and suggestions to customers at the design and consultancy stage to ensure that our customers requirements are taken into consideration. With our own in-house fabrication capability and facilities, we are able to provide customers with custombuilt kitchen ranges to suit their specic requirements. Our ability to fabricate and install also allows us to take on projects with shorter deadlines without the need to wait for carriage time as well as to lower our cost so that we can remain price competitive. These abilities, coupled with our capabilities to carry out maintenance and servicing of kitchen equipment, enable us to deliver a full range of specialised services to our customers. With the integration of design and consultancy, fabrication and sale, installation and commissioning and maintenance and servicing, we are well-positioned to be one of the leading kitchen equipment providers in Singapore.
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We have an established reputation in our business With more than 15 years of experience in this business, we have established ourselves as a major player in the commercial and industrial kitchen equipment industry. We carry major brands in kitchen systems, kitchen equipment, and accessories. We believe that we have built a strong brand identity through our Qson brand name, which has come to be associated with high quality kitchen equipment, reliable turnaround time and our consistent ability to meet our customers needs. We are also associated with some of the major players in the F&B industry in Singapore including Jumbo group of restaurants, Ah Yat group of restaurants, Soup Restaurants, Pu Tien group of restaurants and Hard Rock Caf. Some of our notable projects include Royal Plaza, Level 33 at Marina Bay Financial Centre and the Hilton Hotel at Orchard Road. We believe that the association of our Qson brand with some of the major players in the F&B and hospitality services industries as mentioned above has enabled us to become one of the leading kitchen equipment players in Singapore. Please refer to the section entitled General information on Our Group Our Signicant Projects of the Offer Document for more information. Since the commencement of our operations in 1996, we have built a credible track record of timely delivery and a history of quality workmanship within the industry. We have an extensive product range across multiple brands Since our inception in 1996, in addition to the brands that we self-fabricate, we have established more than 15 partner brands in the kitchen equipment industry. This has placed our Group in a unique position as a local player with a multi-brand and multi-product portfolio serving Singapore and Southeast Asia. We have leveraged on this positioning to sell and distribute our products through projects (tender and consultancy) and distribution. Our extensive product range allows us to meet the requirements of the F&B and hospitality services industries. Our multi-brand portfolio has also enabled us to be a one-stop solution for our customers for kitchen systems, kitchen appliances and accessories. We have a strong track record in maintenance and servicing of kitchen equipment We believe that we have a strong track record in providing maintenance and servicing of kitchen equipment and, in particular, preventive maintenance works and repairs carried out under the preventive annual maintenance agreements which we entered into with our customers. Our strong track record in servicing and maintenance serves as a competitive advantage for us to secure new projects where customers can be assured of the quality of equipment purchased from us as well as our ability to respond to any equipment downtime. We have an experienced and committed team of senior management and key employees Our Group is led by an experienced management team in the kitchen equipment industry. Our Managing Director, Sally Chua, has been instrumental in the formulation of our strategic directions and expansion plans. Our Executive Directors, Frankie Cheng and Alan Lee, have extensive knowledge in kitchen equipment fabrication, and technical services and maintenance services, respectively, which provides us with our competitive strength in these areas. Together with the support from a team of managers, they have successfully and progressively expanded our portfolio of projects and business over the years. We believe that the knowledge and experience of our people has helped our Group to successfully position itself as one of the leaders in the kitchen equipment industry in Singapore. Please refer to the section entitled General Information on our Group - Competitive Strengths of this Offer Document for further details. Our Business Strategies and Future Plans Our business strategies and future plans are as follows: Expanding our business and establishing a regional presence As at the Latest Practicable Date, we fabricate and sell predominantly in Singapore and Malaysia. Our Directors believe that there is potential for our products in new markets such as Vietnam, Myanmar and Cambodia. We believe that our history and reputation as well as our competitive strengths will enable us to develop and expand our business in these new markets in Southeast Asia.
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As we have an existing distribution presence in Malaysia and Vietnam, we intend to further expand into these two markets to capture a bigger share of the kitchen equipment industry. Subject to market conditions, we also plan to embark on expanding our geographical coverage by setting up subsidiaries or representative ofces in new markets such as Myanmar and Cambodia. If the opportunities arise, our Group may also expand our businesses through acquisitions, joint ventures or strategic alliances with parties who can create synergistic values with our existing business. In evaluating our acquisitions and joint ventures, we will target parties with strong track records and capabilities. Through such acquisitions, joint ventures or strategic alliances, we will look to strengthen our market position, expand our network, as well as expand into new businesses complementary to our current business. We believe that our status as a listed company will allow us to be better placed for expansion. We intend to utilise approximately S$1.6 million of our net proceeds from the New Shares to expand our business and establish a regional presence. In the event that we are unable to utilise the proceeds (whether in part or in full) for this purpose, we intend to utilise such proceeds for working capital and general corporate purpose. Widening our product range and expanding our service team To attract new customers, we intend to widen the range of our existing products which are complementary to our existing business. As at the Latest Practicable Date, we intend to provide cook chill process systems for central kitchens and restaurants, and food warmers which we plan to sell to hospitals and nursing homes in our range of products by entering into distribution arrangements with third party suppliers which can provide us with good quality cook chill equipment and food warmers from reputable brands. A cook chill process system is a controlled system of food preparation designed to provide more exibility in food service and is used to maintain the freshness, nutrients, taste and appearance of pre-cooked food for delayed consumption. Food warmers are used to keep cooked food at serving temperature for a prolonged period of time with limited change in temperature and are suitable for hospital usage. Both the cook chill process system and food warmers are commonly used in establishments of various types and sizes, including hospitals, restaurants, hotels, airplanes and ships. We believe that given our history and existing knowledge in the kitchen equipment industry, we are able to widen our offerings to other product ranges and increase our capabilities in the refurbishment of kitchen equipment. As such, our Group intends to leverage on our existing competitive strengths by extending our product offering and services. This will serve to create an additional revenue stream whilst leveraging on our existing sales and distribution networks. Due to the increase in F&B establishments in Singapore as well as the increase in business of existing F&B and hospitality services operators in line with the growing population, we intend to expand our service team to meet such demands. Acquisition of additional fabrication equipment and machinery We intend to acquire additional fabrication equipment and machinery, including laser cutting machines which are able to operate from designs and specications directly encoded into the machine or imported from drawings generated from the CADCAM systems. Such laser cutting machines can perform shearing, punching and other functions using user-friendly computer interfaces monitored by the machine operator. Such laser cutting machines will increase the accuracy of our fabrication process and will enhance the efciency of our production. We intend to utilise approximately S$0.7 million of our net proceeds from the New Shares towards the acquisition of the additional fabrication equipment and machinery. Please refer to the section entitled General Information on our Group - Business Strategies and Future Plans of this Offer Document for further details. Where you can nd us Our principal and registered ofce is located at Blk 115A Commonwealth Drive, #01-27/28 Tanglin Halt Industrial Estate, Singapore 149596. Our telephone number is (65) 6472 7337 and our facsimile number is (65) 6472 6497. Our internet address is http://www.qson.com.sg. Information contained in our website does not constitute part of this Offer Document. 26
THE INVITATION
Issue size : Invitation in respect of 23,000,000 New Shares, comprising 2,250,000 Offer Shares and 20,750,000 Placement Shares. The New Shares, upon issue and allotment, will rank pari passu in all respects with the existing issued Shares. Issue Price The Offer : : S$0.20 for each New Share, payable in full on application. The Offer comprises an invitation by our Company to the public in Singapore to subscribe for the 2,250,000 Offer Shares at the Issue Price, subject to and on the terms and conditions of this Offer Document. In the event of an under-subscription for the Offer Shares, that number of Offer Shares not subscribed for shall be used to satisfy excess applications for the Placement Shares to the extent that there is an over-subscription for the Placement Shares as at the close of the Application List. The Placement : The Placement comprises a placement of 20,750,000 Placement Shares at the Issue Price, subject to and on the terms and conditions of this Offer Document. In the event of an under-subscription for the Placement Shares, that number of Placement Shares not subscribed for shall be used to satisfy excess applications for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at the close of the Application List. Purpose of the Invitation : The purpose of the Invitation is to secure admission of our Company to Catalist. Our Directors believe that the listing of our Company and the quotation of our Shares on Catalist will enhance the public image of our Group locally and overseas and enable us to tap the capital markets for the expansion of our operations. The Invitation will also provide members of the public with an opportunity to participate in the equity of our Company. Prior to the Invitation, there has been no public market for our Shares. Our Shares will be quoted on Catalist, subject to the admission of our Company to Catalist and permission for dealing in, and for quotation of, our Shares being granted by the SGX-ST.
Listing status
27
RISK FACTORS
An investment in our Shares involves risks. Prospective investors should consider carefully the following risk factors and all other information contained in this Offer Document, before deciding to invest in our Shares. Some of the following risk factors relate principally to the industry in which we operate and our business in general. Other considerations relate principally to general economic and political condition, the securities market and ownership of our Shares. The following describes some of the signicant risks known to us now that could directly or indirectly affect us and the value or trading price of our Shares. The following does not state risks unknown to us now but which could occur in future, and risks which we currently believe to be immaterial, could turn out to be material. Should these risks occur or turn out to be material, they could materially and adversely affect our business, nancial condition, results of operations and prospects. If any of the following risks occurs, our business, nancial condition, results of operations and prospects could be materially and adversely affected, the trading price of our Shares could decline and you could lose all or part of your investment. You should also consider the information provided below in connection with the forward looking statements in this and the warning regarding forward-looking statements at the beginning of this Offer Document. This Offer Document also contains forward-looking statements having direct and/or indirect implications on our future performance. Our actual results may differ materially from those anticipated by those forward-looking statements due to certain factors including the risks and uncertainties faced by us, as described below and elsewhere in this Offer Document. RISKS RELATING TO OUR BUSINESS We are dependent on the F&B and hospitality services industries We are dependent on the F&B and hospitality services industries in Singapore and other countries to which we may expand our business and operations. Greater activity in these industries will result in increased demand for our products and services, particularly for our Fabrication and Distribution Segment. For example, a growth in the number of F&B outlets and hotels will result in more projects for the designing and setting up of new kitchens becoming available for tender. Greater numbers of people eating at F&B outlets and hotels may result in more projects for the re-designing of kitchens to enable them to operate more efciently becoming available for tender, and may also result higher demand for our services under our Maintenance and Servicing Business. The level of activity in the F&B and hospitality services industries is in turn dependent on the state of the countrys economy generally, including discretionary consumer spending habits, unemployment rates, taxation and ination. In addition, the strength of the economy generally may affect the rates of expansion, consolidation, renovation and equipment replacement within the F&B and hospitality services industries, which may affect the performance of our Fabrication and Distribution Segment. A signicant downturn in these industries will have a material adverse effect on our business and nancial performance. Our sales depend in part upon our customers replacement or repair cycles. Adverse economic conditions may cause customers to forego or postpone new purchases in favor of repairing existing machinery. We face risk of incorrect estimation of our project costs, cost overruns and delays in project implementation A substantial portion of our revenue is derived from our Fabrication and Distribution Segment, which accounted for 64.9%, 62.6% and 64.9% of our revenue in FY2010, FY2011 and FY2012 respectively. We are therefore susceptible to cost overruns and incorrect estimations of costs made during the tender stage (that is, failure to factor all the relevant costs in the contract value), which will affect our prot margin and protability for the relevant project. In addition, unforeseen circumstances such as delays in the delivery of products by our suppliers may affect our ability to implement our projects in a timely manner, which will in turn affect our reputation and standing with our customers. Our customers may also claim against us for any losses suffered by them as a result of such delays, or for liquidated damages, if our contracts with them contain provisions for liquidated damages. Depending on the terms of our contracts, such liquidated damages are typically calculated based on the period of delay. In the event that delays occur and such claims are made against us, there will be a material adverse effect on our business and nancial performance. 28
RISK FACTORS
Our nancial performance is dependent on our continued ability to secure new projects and the non-cancellation of secured projects As a substantial portion of our business is derived from projects and such projects may be non-recurring, our revenue may therefore uctuate from year to year. It is critical that we are able to continually and consistently secure new projects. There is no assurance that we will be able to do so. In the event that we are not able to continually and consistently secure new projects of similar or higher value, size and margins, this would have an adverse impact on our nancial performance. In addition, there may be a lapse of time between the completion of our projects and the commencement of subsequent projects. As such, our results of operations and nancial performance during such periods may be adversely affected. Cancellation of secured projects due to factors such as lack of funds on the part of our customers or project owners and poor market conditions will adversely affect our business and protability. Any cancellation of projects could lead to our Groups inability to recover costs associated with the purchase of materials, idle or excess capacity, and may adversely affect our business and nancial position. Potential investors should therefore inform themselves that the historical nancial performance and nancial position of our Group are not to be taken as an indication of the future nancial performance and nancial position of our Group. We are dependent on key personnel for our continued growth Our success depends on the continued efforts of our management team, in particular, our Managing Director, Sally Chua and our Executive Directors, Frankie Cheng and Alan Lee. They have been instrumental to our development and growth, and are expected to continue to play important roles in the future development and growth of our Group. Accordingly, the termination of the employment or the loss of the services of our Managing Director, Sally Chua, or our Executive Directors, Frankie Cheng and Alan Lee, or of any of our key personnel without suitable and timely replacement or the inability to attract and retain qualied personnel will adversely affect our operations and hence, our revenue and prots. Please refer to the section entitled Directors, Management and Staff of this Offer Document for further details of our Directors and key personnel. We operate in a highly competitive environment and face competition from existing competitors and new market entrants We operate in a highly competitive environment. We generally compete with our competitors based on, among other things, product design, competitive pricing, quality of our products, product performance, responsiveness of product support services and maintenance costs. We may face more intense competition in the future from existing competitors and new market entrants. Our competitors or potential competitors, some of whom may have longer operating histories, larger customer base, wider range of products and/or services, more advanced technology or greater nancial, marketing, manufacturing and distribution resources than we do, may be in a better position to expand their market share. Increased competition may result in lower prot margins and loss of market share. There is no assurance that our products and services will continue to compete successfully with those of our competitors or that we will be able to retain our customer base or improve or maintain our prot margins on sales to our customers, all of which could materially and adversely affect our nancial condition, results of operations and cash ows. Stiff competition may lead to an overall decline in demand resulting in a downward pressure on our prices and the erosion of our prot margins. If our competitors are able to offer, for example, better quality products and services at lower prices and if we fail to compete effectively, and to maintain or grow our market share, our nancial performance and prospects will be adversely affected. Please refer to the section entitled General Information on our Group Competition of this Offer Document for more information.
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RISK FACTORS
We face the risk of defective products from our third party OEM partners affecting our reputation We use third party OEM partners to manufacture air cooling under counter refrigeration, two-door upright air cooling refrigeration and four-door refrigeration products under our Qoolux brand which also includes upright air cooling refrigeration, six-door upright air cooling refrigeration, pizza air piping worktable refrigeration, air piping drawer worktable refrigeration, salad air piping refrigeration bench, air piping sliding glass door showcase, and chocolate and red wine showcase. In the event our third party OEM partners default on their contractual obligations or work specications, we may not be able to deliver our products to our customers in accordance with agreed timing, quality and/or specications. In addition, the third party OEM may use poor quality or defective components or less skilled workers. They may also not report safety concerns to us. In such circumstances, if we are unable to nd alternative manufacturers or suppliers on commercially favourable terms, our ability to perform our obligations to our customers and our relationships with our customers may be adversely affected, thereby affecting our business and results of operations. Furthermore, poor quality or other defects in the manufactured products under our brand of Qoolux may generate negative publicity concerning the quality, reliability and safety of our products, reducing customers condence in our products, tarnishing our reputation and reducing our sales. Consequently, our business, protability and nancial performance may be adversely affected and we may also have to incur additional costs in placating customers and/or restoring our reputation. In addition, if complaints from our customers escalate into legal claims, we will have to utilise and incur resources such as time and legal costs to address such claims, thereby further affecting our business and nancial performance. There is no absolute assurance that material litigation will not be brought against us in the future. Furthermore, in the event that our insurance coverage is inadequate, we may be required to compensate our customers for any injuries suffered, or damage to personal property if we are found to be at fault. Our liabilities in respect of such claims could adversely affect our nancial position and results of operations. We are dependent on distributorships granted by third party suppliers for the sale and distribution of products under third party brands We currently have over 15 suppliers who provide us with kitchen systems and kitchen equipment under various third party brands for re-sale predominantly in Singapore. Please refer to the section entitled General Information on our Group Business Overview Products That We Sell and Distribute of this Offer Document for more information. In the event that the suppliers are unable to supply the kitchen equipment on time and we are not able to nd suitable or timely replacements on commercially favourable terms, our business and nancial performance may be affected. We do not have written contracts with our suppliers for products under third party brands We generally work with reputable suppliers from overseas and constantly source for and select brands according to the needs of our customers. Hence, we do not have written contracts with our suppliers. Our rights to sell products under these third party brands are granted by third party suppliers under the respective distributorship arrangements which are not formalised in writing. In the event that the suppliers terminate the distributorship arrangements for any third party brands, we may not be able to meet our customers orders. As a result, our business operations and consequently, our revenue and protability would be materially and adversely affected. We are dependent on obtaining adequate nancing to fund our operations The contract sums from our projects in the Fabrication and Distribution Segment are payable by our customers to us progressively, according to the percentage of completion of the relevant project, or after the full installation and at the end of the commissioning phase depending on the terms of the contract. To perform a contract, we will require adequate funding either from internal resources or borrowings to fund the working capital of the project.
30
RISK FACTORS
In addition, we may be required to obtain the requisite bankers guarantees from nancial institutions to secure our performance under the relevant contract. There can be no assurance that we will be able to secure adequate nancing. In the event that we are unable to secure adequate nancing, our business and growth will be adversely affected. We are dependent on foreign labour Our business is labour-intensive. As we rely largely on foreign workers (including skilled workers) mainly from China, Malaysia and Vietnam to meet our labour needs, we are vulnerable to changes in the availability and costs of employing foreign workers. Any changes in the labour policies of these countries of origin may affect the supply and/or cost of foreign workers and cause disruptions to our operations. As at 31 December 2012, foreign workers accounted for approximately 55.1% of our workforce in Singapore. With the increasing demand for foreign workers worldwide, there is no assurance that we will be able to continue attracting foreign workers at the current level of wages or that our current foreign workers will continue to be employed by us. Any increase in competition for foreign workers, especially skilled workers from outside Singapore, will increase our labour wages. Consequently, if we are not able to pass on the increase in labour costs to our customers, our nancial performance will be adversely affected. The supply of foreign workers is also subject to the policies (including those governing levies on employment of foreign workers) imposed by the MOM. Any increase in levies or security bond payments imposed will affect our protability. In the event that there are shortages in foreign labour, unfavourable policy changes or disciplinary proceedings undertaken by the regulatory authorities in Singapore or elsewhere relating to our use of foreign labour, and if there are no suitable and timely replacements obtainable, our operations will be adversely affected. We are exposed to the risk of signicant increase in prices of materials and delays in delivery by suppliers For the manufacture of our products, we use large amounts of steel and stainless steel, for example, stainless steel plates/pipes, mild steel plates/pipes, cold rolled steel, electro-galvanised steel and hotdipped galvanised steel. The prices of these materials are subject to price uctuations due to various factors beyond our control, including an increase in activity in other industries which utilise stainless steel as a raw material and governmental regulations, which might reduce supply, leading to increases in supply costs. There is no assurance that steel prices will not uctuate materially in the future. Should there be any signicant uctuations in these prices, and if we are unable to reduce the product cost in other areas or if we are unable to pass on any increase in costs to our customers, our prot margin and operating results may be adversely affected. In addition, because we maintain limited raw material and component inventories, even brief unanticipated delays in delivery by suppliers, including those due to capacity constraints, labour disputes, impaired nancial condition of suppliers, weather emergencies or other natural disasters may impair our ability to satisfy our customers and could adversely affect our nancial performance. We are exposed to credit risk and defaults in payments by our customers Our nancial position and protability are dependent, to a certain extent, on the creditworthiness of our customers. Any material default by our customers will affect our nancial position, protability and cash ow. There was no allowance for impairment loss on third parties trade receivables for FY2010. In FY2011 and FY2012, the aggregate of allowance for impairment loss on third parties trade receivables amounted to approximately S$54,279 and S$126,919 respectively and bad third parties trade receivables written off in FY2010, FY2011 and FY2012 amounted to approximately S$1,078, S$190,875 and S$19,815 respectively. In aggregate, allowance for impairment loss on third parties trade receivables and bad third parties trade receivables written off constituted approximately 0.01%, 1.49% and 0.88% of our aggregate sales for FY2010, FY2011 and FY2012 respectively. As at 31 December 2012, our trade receivables (net of allowance for impairment loss on receivables) amounted to approximately S$6.8 million and gross trade receivables turnover in FY2012 was 154 days. In the event that our customers default in their payments, bad third parties trade receivables written off will increase, and this will in turn have an adverse impact on our nancial performance and position. 31
RISK FACTORS
We may face claims by our customers for defects in our products or delays in the delivery of our products The products which we supply to our customers must meet the stringent quality standards stipulated by them. Although we have implemented strict quality assurance procedures as described under the section entitled General Information on our Group Quality Control of this Offer Document, our customers requirements and product specications may change and there is no assurance that our products will always be able to satisfy our customers quality standards and/or product specications. If there are any quality defects in the products designed and/or manufactured by us or late deliveries of our products to our customers, we may face claims from our customers for damages or losses suffered by our customers arising from such defects or late deliveries. In addition, for products supplied by our third party suppliers and manufacturers, notwithstanding that we can obtain replacement products from these third party suppliers and manufacturers where the defects in the products are due to them, our customers may still claim against us for any losses suffered by them as a result of any delays in the delivery of the replacement products, or for contracted liquidated damages. In the event that we are required to pay damages to our customers in respect of such claims, it may adversely affect our protability and would also have an adverse impact on our business, reputation and results of operations. We may experience industrial-related accidents that may expose us to liability claims Due to the nature of our operations, we are also subject to the risk of our employees or third parties being involved in accidents at our premises, or our customers premises. Accidents resulting in disruptions to our business operations will have a material adverse impact on our corporate image and nancial performance. In the event of accidents which are not covered by our insurance or workmens compensation policies taken by our Group, or if claims arising from such accidents are in excess of our insurance coverage and/or any of our insurance claims is contested by the insurance companies, we will be required to pay such compensation and the nancial performance of our Group may be materially and adversely affected. In addition, the payment by our insurers on such insurance claims may result in increases in our insurance premiums. This may also have an adverse effect on the nancial performance of our Group. Our business, nancial performance and nancial position may also be affected if we have to spend a signicant amount of resources in legal costs in the event that we are involved in legal proceedings, even if we are not found to be liable for any claims as a result of such proceedings. In addition, our reputation may suffer irreversible damage as a result of such proceedings. Although no material claims were instituted against us in the past, there is no assurance that such claims will not be made against us in the future. We may be involved in legal and other proceedings arising from our operations from time to time We may be involved from time to time in disputes with various parties involved in the projects that we undertake. These disputes may lead to legal and other proceedings. In the event that such legal proceedings are not concluded in our favour and we are made liable for damages and incur legal costs, or we accept settlement terms that are unfavourable to us, our nancial performance and nancial position will be adversely affected. We are subject to various laws and regulations governing our operations and any changes in such laws and regulations We are subject to various laws and regulations in Singapore, Malaysia and other countries in which we operate or to which we may expand our business and operations. Details of material laws and regulations are described in the section entitled General Information on our Group - Government Regulations of this Offer Document. Any failure by us to comply with the various laws and regulations could result in penalties such as nes, administrative proceedings and unfavourable decrees that may cause delays to our projects, or that may cause us to be unable to continue or expand our business. In such event, our nancial performance will be adversely affected. Judgements and decrees awarded that are unfavourable to us would also have a negative effect on our reputation. 32
RISK FACTORS
For example, our subsidiary, Qson Kitchen Equipment, may have breached the overtime work limits as prescribed under the Employment Act (Chapter 91) (EA) as one of the employees performed more than 72 hours of overtime work in the month of December 2012 without obtaining prior exemption from the Commissioner for Labour. Our Directors conrm that, to the best of their knowledge and belief, as at the Latest Practicable Date, we have not received any notications from any relevant government authorities, including the Ministry of Manpower, in relation to the above. However, there is no assurance that the Ministry of Manpower will not impose a penalty on us for the above, being a ne not exceeding S$5,000 for a rst offence. Further, our subsidiary, Qson Industries Malaysia, may have breached the overtime work limits as prescribed under the Employment Act 1955 (Act 265) (Malaysia EA) for the months of October, November and December 2012, during which three, 10 and 16 employees performed more than 104 hours of overtime work without obtaining the prior approval of the Director General of Labour respectively. Our Directors conrm that to the best of their knowledge and belief, as at the Latest Practicable Date, we have not received any notications from any relevant government authorities, including the Ministry of Human Resources, in relation to the above. However, there is no assurance that the Ministry of Human Resources will not impose penalty on us for the above, being a ne not exceeding RM290,000. In addition, any changes in or introduction of new regulations that require our compliance may increase our cost of operations. Such changes may also require us to obtain additional licences and approvals. Any difculties or failure in obtaining such licences and approvals could adversely affect our business operations and nancial performance. We require various licences and permits to operate our business We are required to obtain various licences, permits, approvals and certicates to operate our business in Singapore and Malaysia. The licences and permits are generally subject to conditions stipulated in the licences and permits and/or relevant laws or regulations under which such licences and permits are issued. Failure to comply with such conditions could result in the revocation or non-renewal of the relevant licence or permit. As such, we have to constantly monitor and ensure our compliance with such conditions. Should there be any failure to comply with such conditions resulting in the revocation of any of the licences and permits, we will not be able to carry out our operations. In addition, any change in or introduction of new regulations that require our compliance may increase our cost of operations. All of these will have an adverse effect on our business and nancial performance. For example, as Qson Industries Malaysia manufactures taxable goods in the course of its business, it is required to obtain a sales tax licence under the Sales Tax Act 1972 (Malaysia STA). In the case of locally manufactured goods, sales tax is charged and levied when such goods are sold or disposed of by the manufacturers. Failure to obtain such licence constitutes an offence under section 43 of the Malaysia STA and may, on conviction, expose us to a ne not exceeding RM5,000 or imprisonment for a term not exceeding twelve months or both. Qson Industries Malaysia has been issued with the sales tax licence under the Malaysia STA, which is effective from 13 May 2013. Notwithstanding the issue of the sales tax licence, the Royal Customs and Excise Malaysia may at its discretion demand payment of unpaid sales tax and penalties by Qson Industries Malaysia by making a demand within three years from the date on which the sales tax, penalty or other moneys were payable by Qson Industries Malaysia. Such unpaid sales tax and penalties are estimated at RM5,000. Our business is dependent on the goodwill associated with our brands Our business is dependent on the goodwill associated with our brands, including the Qson, Qoolux and InnoFlame brands. Details of our trademarks are set out in the section entitled General Information on our Group - Intellectual Property of this Offer Document. Our reputation for manufacturing and distributing quality products and providing reliable and timely service is one of our competitive strengths and is important for us to maintain our existing customer base and attract new customers. Any negative publicity and/or any failure to develop and maintain our reputation and the goodwill associated with our brands may result in us being unable to maintain our existing customers or to attract new customers. This may materially and adversely affect our business and our nancial performance.
33
RISK FACTORS
In addition, it is possible that our competitors may distribute products or adopt trade names in Singapore or overseas that are similar to ours notwithstanding that our trade marks have been registered in Singapore, and we may not be able to completely prevent an infringement of our intellectual property rights. In such event, the goodwill associated with our brands may be eroded and our business will be adversely affected. There can be no assurance that third parties will not initiate litigation against our Group alleging infringement of their proprietary rights. Any claim or litigation against us in respect of infringement of intellectual property rights of third parties, whether with or without merit, could result in a diversion of our resources and our Groups nancial results or operations may be adversely affected. We may face uncertainties associated with the growth and expansion of our business In order to grow our business, we intend to expand our existing business operations in Singapore and Malaysia, and to further expand into the nearby countries in the region, including Vietnam, Myanmar and Cambodia. The expansion of our existing business into overseas markets involves numerous risks, such as political, economic, regulatory and social conditions as well as the costs of setting up overseas operations. There can be no assurance that our overseas operations will achieve a sufcient level of revenue which will cover our operational costs. In addition, we intend to explore strategic alliances, acquisitions or investment opportunities in businesses that are complementary to our businesses. Participation in strategic alliances, acquisitions or investments similarly involves numerous risks, including but not limited to difculties in the assimilation of the management, operations, services, products and personnel and the possible diversion of management attention from other business concerns. The successful implementation of our growth strategies depends on our ability to identify suitable partners and the successful integration of their operations with ours. There can be no assurance that we will be able to execute such growth strategies successfully and as such, the performance of any strategic alliances, acquisitions or investments could fall short of expectations, and our nancial performance may be adversely affected. We may require additional funding for our future growth Although we have identied our future growth plans as set out in the section entitled General Information on our Group - Business Strategies and Future Plans of this Offer Document, the issue proceeds from this Invitation will not be sufcient to fully cover the estimated costs of implementing all these plans. We may also nd future opportunities to grow through acquisitions which we have yet to identify at this juncture. Under such circumstances, we may need to obtain debt or equity nancing to implement these growth opportunities. Additional equity and/or debt nancing may result in dilution to our Shareholders. If such nancing does not generate a commensurate increase in earnings, our EPS will be diluted, and this could lead to a decline in our Share price. Additional debt nancing may, apart from increasing interest expense and gearing, result in all or any of the following:

limit our ability to pay dividends; increase our vulnerability to general adverse economic and industry conditions; require us to dedicate a substantial portion of our cash ows from operations to payments on our debt, thereby reducing the availability of our cash ows to fund capital expenditure, working capital and other requirements; and/or limit our exibility in planning for, or reacting to, changes in our business and our industry.
There is no assurance that we will be able to obtain the additional equity and/or debt nancing on terms that are acceptable to us or at all. Any inability to secure additional equity and/or debt nancing may materially and adversely affect our business, implementation of our business strategies and future plans and results of operations. 34
RISK FACTORS
Our insurance coverage may not be adequate We have taken up insurance policies for risks such as re, burglary, public liability and work injury compensation and group personal assurance that may occur in connection with our business and operations. However, in the event that any claims arise which are not covered by such insurance policies or if our insurance coverage is insufcient, we may be exposed to losses which may adversely affect our protability. We are not insured against loss of key personnel and business interruption. If such events occur, and if our insurance policies are not sufcient to cover all potential losses, our business operations and nancial position will be adversely affected. An outbreak of communicable diseases, severe weather conditions, natural disasters or other incidents may affect our business and nancial performance An outbreak of various communicable diseases, such as severe acute respiratory syndrome, the avian inuenza A(H7N9) virus and the inuenza A(H1N1) virus (also known as swine u), could materially and adversely affect our business. In the event that any of our employees or those of our customers or suppliers are infected or suspected of being infected with any communicable disease, we may be required by health authorities to temporarily shut down our premises or our customers operations or the affected project sites and quarantine workers to prevent the spread of the disease. This will result in delays in delivering our products and services, affect our servicing business and have an adverse impact on our business and nancial performance. Severe weather conditions, natural disasters such as earthquakes and other incidents such as outbreak of re, oods and other emergency risks could cause damage to or a temporary shutdown of our suppliers or our own fabrication facilities. For instance, a re breakout may damage or destroy our fabrication equipment and machinery whilst prolonged oods may disrupt our business operations. In the event that our fabrication facilities are disrupted by re or ood, we believe that we can still source fabricated kitchen equipment from external parties. This is subject to these external parties fabrication facilities not being disrupted by re or ood. The disruption in our fabrication facilities and supply of fabricated kitchen equipment from external parties may result in lower prot margins for our Group. We cannot guarantee that such events will not cause a disruption or cessation in our operations, which in turn may result in an adverse and material impact on our business operations and nancial performance Increased or unexpected product warranty claims could adversely affect us For products under our proprietary equipment brands and depending on the circumstances, we provide our customers with warranty covering workmanship and materials. Our warranty period generally ranges from 12 to 18 months. If a product fails to comply with the warranted workmanship or materials, we may be obligated to correct any defect by repairing or replacing the defective product at our expense. Though the warranty claims for products that we manufactured were insignicant for FY2010, FY2011 and FY2012, there can be no assurance that our warranty claims will not increase in the future. An increase in the rate of warranty claims or the occurrence of warranty claims could materially and adversely affect our nancial performance, results of operations and cash ows. RISKS RELATING TO OUR OVERSEAS OPERATIONS General Risks We may face general risks associated with doing business outside Singapore As at the Latest Practicable Date, we carry out business operations in Singapore and Malaysia. We intend to further expand our business operations in these countries, as well as to other countries in Southeast Asia, such as Vietnam, Myanmar and Cambodia. As such, we are subject to the risks associated with our business activities in these countries.
35
RISK FACTORS
Our business and future growth, our nancial condition, results of operations and prospects may be materially and adversely affected by a variety of conditions and developments in these countries including ination, interest rates and general economic conditions, civil unrest, military conict, terrorism, change in political climate and general security concerns, changes in legal and regulatory conditions, charges in duties payable and taxation rates, natural disasters, imposition of restrictions on foreign currency conversion or the transfer of funds, or expropriation or nationalisation of private enterprise or conscation of private property or assets. Should any of the aforesaid risks materialise and if we are unable to adapt our business operations or strategies accordingly, our business, nancial condition, results of operations and prospects may be materially and adversely affected. We may face foreign exchange transaction risks Our revenue is predominantly denominated in S$ with other revenue denominated in EUR, MYR, USD and VND which constituted approximately 0.04%, 4.05%, 1.87% and 0.50% respectively of our revenue over the period under review. Our purchases are predominantly denominated in S$ with other purchases denominated in MYR, USD, EUR and HKD which constituted approximately 9.89%, 8.44%, 16.32% and 3.12% respectively of our purchases over the period under review. Foreign exchange risks arise mainly from a mismatch between the currency of our sales and the currency of our purchases. We may suffer foreign currency losses if there are signicant adverse uctuations in currency exchange rates between the time of our purchases and payments in foreign currencies and the time of our sales and receipts. This may adversely affect our nancial results. In addition, as our reporting currency is in S$, the nancial statements of our subsidiary in Malaysia and Vietnam will need to be translated to S$ for consolidation purposes. As such, any material uctuations in foreign exchange rates will result in translation gains or losses on consolidation. Any such translation gains or losses will be recorded as translation reserves or decits as part of our Shareholders equity. We do not currently have any formal policy for hedging against foreign exchange exposure. We will continue to monitor our foreign exchange exposure and may employ forward currency contracts to manage our foreign exchange exposure should the need arise. Prior to implementing any formal hedging policies, we will seek the approval of our Board on the policy and put in place adequate procedures which shall be reviewed and approved by our Audit Committee. Thereafter, all hedging transactions entered into by our Group will be in accordance with set policies and procedures. Malaysia We are subject to the guidelines in Malaysia relating to foreign ownership of equity interest Both the Guidelines on the Acquisition of Interests, Mergers and Take-overs by Local and Foreign Interests and the Guideline on the Acquisition of Properties by Local and Foreign Interests issued by the Foreign Investment Committee (FIC) (FIC Guidelines) have been repealed as of 30 June 2009. In place of the Guideline on the Acquisition of Properties by Local and Foreign Interests, the Economic Planning Unit of the Prime Ministers Department (EPU) has issued the Guideline on the Acquisition of Properties (Property Guidelines) which signicantly reduces the categories of property acquisitions which require the approval of the EPU in line with the latters determination to promote increased economic activity. However, the repeal of the FIC Guidelines does not eliminate all local equity requirements imposed by specic sector regulators in Malaysia. Industries of national and strategic interest will continue to be subject to local equity conditions imposed by specic sector regulators. Therefore, for sectors under the purview of the Malaysian Industrial Development Authority (MIDA) and Ministry of International Trade and Industry (MITI) whereby equity conditions have been imposed pursuant to licenses issued by MITI previously, such conditions will continue to apply to the respective companies unless such companies have applied for and successfully obtained a waiver from MITI.
36
RISK FACTORS
Qson Industries Malaysia is presently not required under the Industrial Co-ordination Act 1975 to apply for a manufacturing license for approval by MITI (Manufacturing License). Hence, MITI has not imposed equity conditions on Qson Industries Malaysia. In the event that we are in the future compelled by policy, law or regulations to apply for a Manufacturing License and are imposed with equity conditions and/or are required to dilute our shareholding in Qson Industries Malaysia or divest any requisite percentages, our nancial performance may be adversely affected. We are subject to foreign exchange controls in Malaysia Malaysia has liberalised much of its foreign exchange rules with the notable exception being the continuing prohibition on the use of the RM in international trade. The RM is still not freely convertible into foreign currencies outside Malaysia. Companies in Malaysia, including non-resident controlled companies, are freely permitted to repatriate capital, prots, dividends, rental, fees and interest arising from investments in Malaysia. The repatriation must however be made in a foreign currency other than that of the currency of Israel. If the Malaysian government were to change or otherwise tighten exchange control regulations in Malaysia, these new rules may materially and adversely affect our future operations in Malaysia including our ability to repatriate prots from Qson Industries Malaysia. We are subject to foreign workers policies As at 31 December 2012, approximately 31% of our staff in Malaysia was foreign workers. We have to comply with the conditions imposed by the Department of Immigration, Malaysia with regards to the employment of these foreign workers. Any future changes to the foreign worker employment policies of the Department of Immigration, Malaysia, may adversely affect our ability to employ foreign workers. In such event, if we are unable to nd suitable replacements, our production activities and hence our revenue and prots would be adversely affected. Vietnam We are subject to the foreign exchange legislation and regulations in Vietnam Vietnam has historically imposed exchange control mechanisms designed to limit foreign currency outows, generally requiring the use of the VND in domestic transactions and attempting to channel foreign currencies into its banking system. Vietnams exchange control policy is administered primarily by the State Bank of Vietnam. In 2005, Vietnam introduced an ordinance governing foreign exchange intended to stimulate the foreign exchange market by liberalising current transactions control and gradually reducing capital transactions control. Under the current Vietnamese foreign exchange control regulations, foreign investors are allowed to purchase foreign currency for purposes dened in the foreign exchange control regulations, which include, amongst others, repayment of offshore loans and remittance of prot or dividends overseas. Hence, foreign currencies may be freely exchanged into VND at the exchange rates quoted by accredited credit institutions. Foreign investors are required to register an investment account at a licensed credit institution in Vietnam when carrying out investment in the country. Dividends and capital gains from the transfer of shares in Vietnam can be remitted overseas through this registered account after payment of applicable Vietnam taxes. All transactions in Vietnam must be carried out in VND. Thus, we are prohibited from selling, buying or lending foreign currency as well as making payment or quoting in foreign currency for transactions which take place in Vietnam. Failure to comply with these provisions may subject us to administrative nes and additional sanctions. If the Vietnamese government were to change or otherwise tighten exchange control regulations in Vietnam, these new rules may materially and adversely affect our future operations in Vietnam including our ability to repatriate prots from Qson Kuechen Kultur.
37
RISK FACTORS
RISKS RELATING TO OWNERSHIP OF OUR SHARES Investments in securities quoted on Catalist involve a higher degree of risk and can be less liquid than shares quoted on the Main Board of the SGX-ST We have made an application for our Shares to be admitted to Catalist, a listing platform primarily designed for fast growing and emerging or smaller companies to which a higher investment risk tends to be attached as compared to larger or more established companies listed on the Main Board of the SGX-ST. An investment in shares quoted on Catalist may carry a higher risk than an investment in shares quoted on the Main Board of the SGX-ST and the future success and liquidity in the market of our Shares cannot be guaranteed. Pursuant to the Catalist Rules, we are required to, inter alia, retain a sponsor at all times after our admission to Catalist. In particular, unless approved by the SGX-ST, the Sponsor must act as our continuing sponsor for at least three years after the admission of our Company to Catalist. In addition, we may be delisted in the event that we do not have a sponsor for more than three continuous months. There is no guarantee that following the expiration of the three-year period, the Sponsor will continue to act as our sponsor or that we are able to nd a replacement sponsor within the three-month period. Should such risks materialise, we may be delisted. Control by QKE Holdings may limit your ability to inuence the outcome of decisions requiring the approval of Shareholders Upon completion of the Invitation, QKE Holdings will own approximately 81.66% of our post-Invitation share capital. Therefore, they will be able to exercise signicant inuence over all matters requiring Shareholders approval, including the election of directors and the approval of signicant corporate transactions. Such concentration of ownership also may have the effect of delaying, preventing or deterring a change in control of our Group even if such change may be benecial to our minority Shareholders. Investors in our Shares will face immediate and substantial dilution in our NAV per Share and may experience future dilution Our Issue Price of S$0.20 per Share is substantially higher than our NAV per Share after adjusting for the estimated net proceeds due to our Company from the Invitation. Details of the immediate dilution of our Shares incurred by new investors are described under the section entitled Dilution of this Offer Document. Future sales or issuance of our Shares could materially and adversely affect our Share price Any future sale or issuance or availability of a large number of our Shares in the public market or perception thereof may have a downward pressure on our Share price. These factors also affect our ability to sell additional equity securities in the future, at a time and price we deem appropriate. Save as disclosed under the section entitled Shareholders - Moratorium of this Offer Document, there will be no restriction on the ability of our Shareholders to sell their Shares either on Catalist or otherwise. In addition, our Share price may be under downward pressure if certain of our Shareholders sell their Shares upon the expiry of their moratorium periods. There has been no prior market for our Shares and the Invitation may not result in an active or liquid market and there is a possibility that our Share price may be volatile Prior to the Invitation, there has been no public market for our Shares. Although we have made an application to the SGX-ST to list our Shares on Catalist, there is no assurance that an active trading market for our Shares will develop, or if it develops, be sustained. Active or liquid markets generally result in lower price volatility and more efcient execution of buy and sell orders for investors. Liquidity in the market for a particular security is often a function of the volume of the underlying shares that are publicly held by unrelated parties. Upon completion of the Invitation, we will have at least 15% of the total issued Shares publicly held by unrelated parties.
38
RISK FACTORS
There is also no assurance that the market price for our Shares will not decline below the Issue Price. The market price of our Shares could be subject to signicant uctuations due to various external factors and events including the liquidity of our Shares in the market, difference between our actual nancial or operating results and those expected by investors and analysts, the general market conditions and broad market uctuations. Our Share price may be volatile in future which could result in substantial losses for investors purchasing Shares pursuant to the Invitation The trading price of our Shares may uctuate signicantly and rapidly after the Invitation as a result of, among others, the following factors, some of which are beyond our control:

variations of our operating results; changes in analysts recommendations, perceptions or estimates of our nancial performance; changes in market valuations and share prices of companies with business similar to that of our Company; announcements by our competitors or ourselves of signicant acquisitions, strategic alliances or joint ventures or capital commitments; uctuations in stock market prices and volume; our involvement in material litigation; additions or departures of our key management personnel; material changes or uncertainty in the political, economic and regulatory environment in the markets that we operate or have business relationships with; success or failure of our efforts in implementing business and growth strategies; and changes in conditions affecting the industry, the general economic conditions or stock market sentiments or other events or factors.
Singapore laws contain provisions that could discourage a take-over of our Company We are subject to the Singapore Code on Take-Overs and Mergers (the Singapore Take-Over Code). The Singapore Take-Over Code contains provisions that may delay, deter or prevent a future take-over or change in control of us. Under the Singapore Take-Over Code, any person acquiring an interest, either individually or together with parties acting in concert, in 30% or more of our voting shares may be required to extend a take-over offer for our remaining voting shares in accordance with the Singapore Take-Over Code. A take-over offer is also required to be made if a person holding between 30% and 50% (both inclusive) of the voting rights in us, either individually or in concert, acquires more than 1% of our voting shares in any six month period. Whilst the Singapore Take-Over Code seeks to ensure an equality of treatment among Shareholders, its provisions may discourage or prevent transactions involving an actual or threatened change of control of our Company from taking place at all. This could substantially impede the ability of our Shareholders to benet from a change of control and as a result, may adversely affect the market price of our Shares and the ability to realise any benet from a potential change of control. Negative publicity including those relating to any of our Directors, Executive Officers or Substantial Shareholders may materially and adversely affect our Share price Negative publicity or announcements relating to any of our Directors, Executive Ofcers or Substantial Shareholders may materially and adversely affect the market perception or the Share performance of our Company, whether or not this is justied. Examples of these include unsuccessful attempts in joint ventures, acquisitions or takeovers, or involvement in insolvency proceedings.
39
RISK FACTORS
Foreign Shareholders may not be permitted to participate in future rights issues or certain other equity issues by our Company The Articles of Association provide that in relation to any rights issue of Shares, we may, in our absolute discretion, elect not to extend an offer of the Shares under a rights issue to those Shareholders whose addresses, as registered with CDP, are outside Singapore. For example, we will not offer such rights to Shareholders who have a registered address in the United States unless:
a registration statement is in effect, if a registration statement under the U.S. Securities Act is required in order for our Company to offer such rights to Shareholders and sell the securities represented by such rights; or the offering and sale of such rights or the underlying securities to such Shareholders are exempt from registration under the provisions of the U.S. Securities Act.
We are not obliged to, nor do we have any intention to prepare or le any registration statement under the U.S. Securities Act. Accordingly, Shareholders who have a registered address in the United States may be unable to participate in rights offerings and may experience a dilution in their shareholdings as a result. The rights or entitlements to the Shares to which such Shareholders would have been entitled will be offered for sale and sold in such manner, at such price and on such other terms and conditions as we may determine, subject to such other terms and conditions as we may impose. The proceeds of any such sale, if successful, will be paid to the Shareholders whose rights or entitlements have been so sold, provided that where such proceeds payable to the relevant Shareholders are less than S$10 (or such other amount which we may from time to time determine in accordance with the applicable laws), we are entitled to retain and apply such proceeds as we may in our absolute discretion decide. The shareholding of the relevant Shareholders may be diluted as a result of such sale. We may not be able to pay dividends or the level of dividends may fall The income which we generate depends on, among other factors, the amount of sales and service charges received, and the level of operating expenses incurred. If insufcient income is generated, our cash ow and ability to pay dividends will be adversely affected. In addition, the bank borrowings and nancing agreements entered into by our Group may contain certain restrictive covenants that restrict or limit the payment of dividends. No assurance can be given as to our ability to pay dividends. We are a holding company and depend upon the receipt of dividends and other distributions from our subsidiaries to pay the dividends on the Shares. The ability of our subsidiaries to declare and pay dividends or other distributions will be dependent on cash available and may be restricted by applicable law or regulation. There is also no assurance that the level of dividends will be maintained or will increase over time, or that the receipt of revenue in connection with our business expansion will increase our Companys income available for distribution to Shareholders. Additional funds raised through issuance of new Shares for our future growth will dilute Shareholders equity interest We may, in the future, expand our capabilities and business through acquisitions, joint ventures and strategic partnerships with parties who can add value to our business. We may require additional equity funding after the Invitation and the Shareholders will face dilution of their shareholdings should we issue new Shares to nance future expansion, acquisitions, joint ventures and strategic partnerships. New Shares may be issued at a subscription price at or below the then current net asset value per Share. Where new Shares are issued at less than the net asset value per Share, the net asset value of each existing Share will be diluted.
40
RISK FACTORS
In addition, we may from time to time issue new Shares to our Directors (excluding Controlling Shareholders) and employees of our Group under the Singapore Kitchen Equipment Performance Share Plan. If and when such Shares are issued, there may be a dilution to the Shareholders and investors in the Invitation. Please refer to Appendix E of this Offer Document entitled Singapore Kitchen Equipment Performance Share Plan for more information.
41
ISSUE STATISTICS
Issue Price NAV NAV per Share based on the audited combined nancial position of our Group as at 31 December 2012: (a) before adjusting for the estimated net proceeds from the Invitation and based on our Companys pre-Invitation share capital of 127,000,000 Shares after adjusting for the estimated net proceeds from the Invitation and based on our Companys post-Invitation share capital of 150,000,000 Shares 7.58 cents S$0.20
(b)
8.60 cents
Premium of Issue Price over the NAV per Share based on the audited combined nancial position of our Group as at 31 December 2012: (a) before adjusting for the estimated net proceeds from the Invitation and based on our Companys pre-Invitation share capital of 127,000,000 Shares after adjusting for the estimated net proceeds from the Invitation and based on our Companys post-Invitation share capital of 150,000,000 Shares 163.8%
(b)
132.5%
Earnings Historical EPS based on the audited combined nancial results of our Group for FY2012 and our Companys pre-Invitation share capital of 127,000,000 Shares Historical EPS based on the audited combined nancial results of our Group for FY2012 and our Companys pre-Invitation share capital of 127,000,000 Shares, assuming that the Service Agreements had been in place from the beginning of FY2012 PER Historical PER based on the Issue Price and the historical EPS for FY2012 Historical PER based on the Issue Price and the historical EPS for FY2012, assuming that the Service Agreements had been in place from the beginning of FY2012 Net operating cash ow(1) Historical net operating cash ow per Share based on the audited combined nancial results of our Group for FY2012 and our Companys pre-Invitation share capital of 127,000,000 Shares Historical net operating cash ow per Share based on the audited combined nancial results of our Group for FY2012 and our Companys pre-Invitation share capital of 127,000,000 Shares, assuming that the Service Agreements had been in place from the beginning of FY2012 Price to net operating cash ow ratio Issue Price to historical net operating cash ow per Share for FY2012 Issue Price to historical net operating cash ow per Share for FY2012, assuming that the Service Agreements had been in place from the beginning of FY2012 6.30 times 6.92 times 3.18 cents 6.63 times 7.33 times 3.01 cents
2.73 cents
2.89 cents
42
ISSUE STATISTICS
Market capitalisation Our market capitalisation based on the Issue Price and our Companys postInvitation share capital of 150,000,000 Shares
Note: (1) Net operating cash ow is dened as prot attributable to owners of the parent with depreciation added back for FY2012 in the Independent Auditors Report as set out in Appendix A of this Offer Document.
S$30.00 million
43
USE OF PROCEEDS AND LISTING EXPENSES

USE OF PROCEEDS The estimated net proceeds from the Invitation (after deducting the estimated expenses incurred in connection with the Invitation) is approximately S$3,275,000. Each principal intended use of proceeds from the Invitation and major expenses is set out below.
Estimated amount allocated for each dollar of the proceeds raised from the Invitation (as a % of gross proceeds) 15.2 34.8 21.2 71.2
Use of proceeds from the Invitation Acquisition of additional fabrication equipment and machinery(1) Funding our expansion, including by way of acquisitions, joint ventures and/or strategic alliances For general working capital purposes of our Group
Amount in aggregate (S$000) 700 1,600 975 3,275
Expenses Professional fees(2) Underwriting and placement commission and brokerage Miscellaneous expenses (including listing fees) Total proceeds
Notes: (1) (2) (3) Please refer to the section entitled General Information on our Group Business Strategies and Future Plans of this Offer Document for further information. This includes (i) the management fees payable to the Sponsor; and (ii) the fees payable to the Solicitors to the Invitation and the Independent Auditors and Reporting Accountants. Pursuant to the Underwriting and Placement Agreement, the Underwriter has agreed to underwrite our offer of the Offer Shares for a commission of 3.00% of the Issue Price (Underwriting Commission) for each Offer Share. Pursuant to the Underwriting and Placement Agreement, the Placement Agent has agreed to subscribe and/or procure subscribers for a placement commission of 3.00% of the Issue Price for each Placement Share. Brokerage will be paid by our Company to members of the SGX-ST, merchant banks and members of the Association of Banks in Singapore in respect of successful applications made on Application Forms bearing their respective stamps, or to Participating Banks in respect of successful applications made through Electronic Applications at the rate of 0.25% of the Issue Price for each Offer Share, or in the case of DBS Bank, 0.50% of the Issue Price for each Offer Share. DBS Bank will levy a minimum brokerage of S$10,000. Subscribers of the Placement Shares may be required to pay a brokerage of up to 1.0% of the Issue Price to the Placement Agent (and the prevailing GST, if applicable). Should the net proceeds from the Invitation exceed the amount estimated in this section, the excess will be applied towards our Groups working capital.
(3)
939 138 248 4,600
20.4 3.0 5.4 100.0
(4)
In the reasonable opinion of our Directors, there is no minimum amount which must be raised by the Invitation. Currently, we are not engaged in any formal discussion with any parties for acquisitions, joint ventures or the formation of strategic alliances. Pending the deployment of the net proceeds from the Invitation, the funds will be placed in deposits with banks and nancial institutions or invested in money market instruments or used for our working capital requirements as our Directors may deem t at their absolute discretion.
44
USE OF PROCEEDS AND LISTING EXPENSES

The discussion above represents our Companys reasonable estimate of its allocation of the net proceeds of the Invitation based upon its current plans for our Group and reasonable estimates regarding its anticipated expenditures. Actual expenditures may vary from these estimates and our Company may nd it necessary or advisable to reallocate the net proceeds within the categories described above or to use portions of the net proceeds for other purposes. In the event that our Company decides to reallocate the net proceeds of the Invitation for other purposes, our Company will publicly announce its intention to do so through an SGXNET announcement to be posted on the internet at the SGX-ST website http://www. sgx.com. Please refer to the section entitled General Information on our Group - Business Strategies and Future Plans of this Offer Document for further details. Expenses incurred in connection with the Invitation In accordance with the Singapore Financial Reporting Standards, a portion of the listing expenses incurred in connection with the Invitation amounting to approximately S$777,000 will be treated as a charge in our nancial statements, which will affect our nancial results in FY2013.
45
DIVIDEND POLICY
Our Company was incorporated on 9 May 2013 and has not distributed any dividend on our Shares since incorporation. None of our subsidiaries has declared or paid dividends in the last three nancial years ended 31 December 2012 and for the period from 1 January 2013 to the Latest Practicable Date. We currently do not have a xed dividend policy. The form, frequency and amount of future dividends on our Shares that our Directors may recommend or declare in respect of any particular nancial year or period will be subject to the factors outlined below as well as any other factors deemed relevant by our Directors: (a) (b) (c) (d) (e) the level of our cash and retained earnings; our actual and projected nancial performance; our projected levels of capital expenditure and expansion plans; our working capital requirements and general nancing condition; and restrictions on payment of dividends imposed on us by our nancing arrangements (if any).
We may declare dividends by way of an ordinary resolution of our Shareholders at a general meeting, but may not pay dividends in excess of the amount recommended by our Board of Directors. The declaration and payment of dividends will be determined at the sole discretion of our Directors, subject to the approval of our Shareholders. Our Directors may also declare an interim dividend without the approval of our Shareholders. Future dividends will be paid by us as and when approved by our Shareholders (if necessary) and our Directors. Subject to the above, our Directors intend to recommend and distribute dividends of not less than 40% of our net prots attributable to our Shareholders in each of FY2013, FY2014 and FY2015 (the Proposed Dividend). However, investors should note that all the foregoing statements, including the statements on the Proposed Dividends, are merely statements of our present intention and shall not constitute legally binding statements in respect of our future dividends which may be subject to modication (including reduction or non-declaration thereof) at our Directors sole and absolute discretion. The amount of dividends declared and paid by us in the past should not be taken as an indication of the dividends payable in the future. Investors should not make any inference from the foregoing statements as to our actual future protability or our ability to pay any future dividends. For information relating to taxes payable on dividends, please refer to Appendix D of this Offer Document entitled Taxation.
46
SHARE CAPITAL
Our Company was incorporated in Singapore on 9 May 2013 under the name Singapore Kitchen Equipment Pte. Ltd. as a private limited company under the Companies Act. As at the date of incorporation, our issued and paid-up share capital was S$10,000.00 comprising 10,000 Shares, and the shareholders of our Company were QKE Holdings and Sirius Venture which owned 96.45% and 3.55% of our Companys then issued share capital respectively. On 26 June 2013, our Company was converted into a public company limited by shares and our name was changed to "Singapore Kitchen Equipment Limited". At an extraordinary general meeting held on 25 June 2013, our Shareholders approved, inter alia, the following: (a) (b) the Share Split; the conversion of our Company into a public company limited by shares and the consequential change of our name to Singapore Kitchen Equipment Limited; the adoption of a new set of Articles; the listing and quotation of all the issued Shares (including the New Shares to be allotted and issued as part of the Invitation) and the Performance Shares to be issued (if any) on Catalist; the allotment and issue of the New Shares which are the subject of the Invitation, on the basis that the New Shares, when allotted, issued and fully paid-up, will rank pari passu in all respects with the existing issued and fully paid-up Shares; the authorisation of our Directors, pursuant to Section 161 of the Companies Act, to (i) allot and issue Shares in our Company; and (ii) issue convertible securities and any Shares in our Company pursuant to the convertible securities, whether by way of rights, bonus or otherwise, at any time and upon such terms and conditions, whether for cash or otherwise and for such purposes and to such persons as our Directors shall in their absolute discretion deem t, provided that the aggregate number of Shares to be issued pursuant to such authority shall not exceed 100% of the issued share capital of our Company immediately after the Invitation excluding treasury shares and that the aggregate number of Shares to be issued other than on a pro-rata basis to the then existing Shareholders of our Company shall not exceed 50% of the issued share capital of our Company immediately after the Invitation excluding treasury shares. Unless revoked or varied by our Company in general meeting, such authority shall continue in full force until the conclusion of the next annual general meeting of our Company or the date by which the next annual general meeting is required by law or by our Articles to be held, whichever is earlier, except that our Directors shall be authorised to allot and issue new Shares pursuant to the convertible securities notwithstanding that such authority has ceased. For the purposes of this resolution and pursuant to Rules 806(3) and 806(4) of the Catalist Rules, issued share capital of our Company immediately after the Invitation excluding treasury shares shall mean the enlarged issued and paid-up share capital of our Company after the Invitation excluding treasury shares after adjusting for (i) new Shares arising from the conversion or exercise of any convertible securities; (ii) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time such authority is given, provided that the options or awards were granted in compliance with the Catalist Rules; and (iii) any subsequent consolidation or sub-division of shares; and (g) the adoption of the PSP, the rules of which are set out in Appendix E of this Offer Document entitled Rules of the Singapore Kitchen Equipment Performance Share Plan.
(c) (d)
(e)
(f)
47
SHARE CAPITAL
As at the Latest Practicable Date, there is only one class of shares in the capital of our Company, being ordinary shares. A summary of the Articles of Association of our Company relating to, among others, the voting rights of our Shareholders is set out in Appendix C of this Offer Document entitled Summary of Selected Articles of Association of our Company. There are no founder, management, deferred or unissued Shares reserved for issuance for any purpose. Except in respect of the PSP, no person has been, or is entitled to be, given an option to subscribe for or purchase any securities of our Company or any of our subsidiaries. As at the date of this Offer Document, the issued and paid-up share capital of our Company is S$10,000 divided into 127,000,000 Shares. Upon the allotment and issue of the New Shares which are the subject of the Invitation, the resultant issued and paid-up share capital of our Company will be increased to S$4,062,000 comprising 150,000,000 Shares. Details of changes in the issued and paid-up share capital of our Company since our incorporation and immediately after the Invitation are as follows:
Issued and paid-up share capital S$10,000 S$10,000 S$10,000 S$4,052,000(2) S$4,062,000
Number of Shares Issued and fully paid Shares as at our incorporation(1) Issue of Shares pursuant to the Restructuring Exercise Issued and fully paid Shares immediately after the Restructuring Exercise Issued and fully paid Shares pursuant to the Share Split New Shares issued pursuant to the Invitation Issued and fully paid Shares immediately after the Invitation
Notes: (1) (2)
10,000 10,000 127,000,000 23,000,000 150,000,000
Save as disclosed in this section, there are no changes in the issued and paid-up share capital of our Company within the last three years preceding the Latest Practicable Date. This takes into account set-off of estimated issue expenses of approximately S$548,000, which excludes estimated issue expenses of approximately S$777,000 to be charged directly to the prot or loss.
The shareholders funds of our Company as at the date of incorporation, after adjustments to reect the Restructuring Exercise and the Share Split, and assuming the allotment and issue of the New Shares pursuant to the Invitation are set out below:
After adjustment to reect the Restructuring Exercise and Share Split (S$) 10,000 10,000
Shareholders funds
As at the date of incorporation (S$)
Assuming the allotment and issue of the New Shares (S$) 4,062,000(1) 4,062,000
Issued and paid-up share capital Retained earnings
10,000 10,000
Note: (1) This takes into account set-off of estimated issue expenses of approximately S$548,000, which excludes estimated issue expenses of approximately S$777,000 to be charged directly to the prot or loss.
48
SHAREHOLDERS
OWNERSHIP STRUCTURE Our Directors and shareholders of our Company and their respective shareholdings in our Company immediately before and after the Invitation are set out below:
Before the Invitation Direct interest Number of Shares Directors Sally Chua(1)(2) Alan Lee(1)(2) Frankie Cheng(1) Wong Hin Sun Eugene Tan Lye Huat Eileen Tay-Tan Bee Kiew Shareholders (other than Directors) QKE Holdings(1) Sirius Venture Public Total
Notes: (1) Sally Chua (our Managing Director), Alan Lee (our Executive Director) and Frankie Cheng (our Executive Director) each holds approximately 33.3% of the issued share capital of QKE Holdings. As they each hold not less than 20.0% of the issued share capital in QKE Holdings, each of them is therefore deemed to have an interest in the Shares held by QKE Holdings pursuant to section 7 of the Companies Act. QKE Holdings is an investment holding company incorporated in Singapore on 5 March 2013. (2) (3) Sally Chua is the spouse of Alan Lee. Wong Hin Sun Eugene (our Non-Executive Director) is the managing director and shareholder of Sirius Venture. As at the Latest Practicable Date, Wong Hin Sun Eugene holds 100% of the issued share capital of Sirius Venture. Wong Hin Sun Eugene is accordingly deemed to have an interest in the Shares held by Sirius Venture. Sirius Venture is a company incorporated in Singapore on 12 September 2002 and is principally engaged in investment activities and the provision of business consultancy services. Our Group has engaged the services of Sirius Venture for the purposes of, among other things, listing on Catalist. Please refer to the section entitled Interested Person Transactions Past Interested Person Transactions of this Offer Document for further details.
(3) (3)
After the Invitation Direct interest Number of Shares % Deemed interest Number of Shares %
Deemed interest Number of Shares %
122,491,500 122,491,500 122,491,500 4,508,500
96.5 96.5 96.5 3.6
122,491,500 122,491,500 122,491,500 4,508,500
81.7 81.7 81.7 3.0
122,491,500 4,508,500 127,000,000
96.5 3.6 100.0
122,491,500 4,508,500 23,000,000 150,000,000
81.7 3.0 15.3 100.0
The Shares held by our Directors and Substantial Shareholders do not carry different voting rights from the New Shares which are the subject of the Invitation. Save as disclosed above, our Company is not, whether directly or indirectly, owned or controlled by another corporation, any government or other natural or legal person whether severally or jointly. Our Directors are not aware of any arrangement the operation of which may, at a subsequent date, result in a change in control of our Company. There has not been any public take-over offer by a third party in respect of our Shares or by our Company in respect of the shares of another corporation or units of a business trust which has occurred between 1 January 2012 and the Latest Practicable Date. Signicant Changes in Percentage of Ownership Save as disclosed above and under the section entitled Restructuring Exercise of this Offer Document, there were no signicant changes in the percentages of ownership of our Directors and Substantial Shareholders in our Company from its incorporation until the Latest Practicable Date.
49
SHAREHOLDERS
MORATORIUM To demonstrate their commitment to our Group, all our existing Shareholders, namely QKE Holdings and Sirius Venture, who hold an aggregate of 127,000,000 Shares (representing approximately 84.7% of our Companys post-Invitation share capital), have each undertaken not to, directly or indirectly, sell, contract to sell, offer, realise, transfer, assign, pledge, grant any option to purchase, grant any security over, encumber or otherwise dispose of, any part of their following respective shareholdings in the share capital of our Company immediately after the Invitation (adjusted for any bonus issue or sub-division of Shares) for a period of one year from the date of our Companys admission to Catalist (the Moratorium Period). In addition, all the shareholders of QKE Holdings, namely, Sally Chua, Alan Lee and Frankie Cheng, have each undertaken: (a) not to, directly or indirectly, sell, contract to sell, offer, realise, transfer, assign, pledge, grant any option to purchase, grant any security over, encumber or otherwise dispose of, any part of his or her direct interests in QKE Holdings, and (b) to procure QKE Holdings not to, directly or indirectly, sell, contract to sell, offer, realise, transfer, assign, pledge, grant any option to purchase, grant any security over, encumber or otherwise dispose of, any part of its direct interests in our Company, for the Moratorium Period. In addition, Wong Hin Sun Eugene, who owns 100% of the issued share capital of Sirius Venture, has undertaken: (a) not to, directly or indirectly, sell, contract to sell, offer, realise, transfer, assign, pledge, grant any option to purchase, grant any security over, encumber or otherwise dispose of, any part of his shareholdings in the share capital of Sirius Venture, and (b) to procure Sirius Venture not to, directly or indirectly, sell, contract to sell, offer, realise, transfer, assign, pledge, grant any option to purchase, grant any security over, encumber or otherwise dispose of, any part of its direct interests in our Company, for the Moratorium Period.
50
CAPITALISATION AND INDEBTEDNESS

You should read the following information in conjunction with the full text of the Offer Document, including the Independent Auditors Report as set out in Appendix A of this Offer Document. The following table shows our capitalisation and indebtedness as at 30 April 2013: (i) (ii) based on the unaudited combined statement of nancial position of our Group; and as adjusted for the net proceeds from the issue of the New Shares.
As adjusted for the net proceeds from As at 30 April the issuance of 2013 New Shares S$000 Cash and bank balances Indebtedness Short term - Borrowings (unsecured) - Borrowings (secured) - Finance leases (secured) Long term - Borrowings (secured) - Finance leases (secured) Total Indebtedness Shareholders Funds TOTAL CAPITALISATION AND INDEBTEDNESS
Note: (1) All our secured short term and long term indebtedness are guaranteed by personal guarantees.
S$000 9,189
5,914
1,754 52 93
1,754 52 93
860 307 3,066 10,088 13,154
860 307 3,066 13,363 16,429
As at 30 April 2013, our cash and cash equivalents amounted to approximately S$5.9 million, comprising S$5.1 million of cash at bank and on hand, and S$0.8 million xed deposit pledged as security for bank facilities granted to our Group by nancial institutions. As at 30 April 2013, we had total indebtedness of approximately S$3.1 million, comprising bank borrowings of S$2.7 million and nance lease of S$0.4 million. All of our borrowings are at a xed rate. From 30 April 2013 to the Latest Practicable Date, there were no material changes in our capitalisation and indebtedness as disclosed above, save for changes in our retained earnings arising from day-to-day operations in the ordinary course of business. To the best of our Directors knowledge and belief, we are not in breach of any of the terms and conditions or covenants associated with any credit arrangement or bank loan which could materially affect our nancial position or nancial results or business operations. Save as disclosed above, we have no other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptances (other than normal trading credits) or acceptance credits, mortgages, charges, nance lease commitments, guarantees or other material contingent liabilities as at 30 April 2013.
51
DILUTION
Dilution is the amount by which the Issue Price paid by the subscribers of our New Shares (New Investors) exceeds our NAV per Share immediately after the Invitation. Our audited NAV per Share as at 31 December 2012, before adjusting for the estimated net proceeds from the Invitation and based on our Companys pre-Invitation share capital of 127,000,000 Shares, was 7.58 cents per Share. Taking into account the issue of 23,000,000 New Shares at the Issue Price in connection with the Invitation and after deducting the estimated issue expenses, our NAV per Share as at 31 December 2012 after adjusting for the estimated net proceeds from the Invitation and based on our Companys post-Invitation share capital of 150,000,000 Shares, would have been 8.60 cents. This represents an immediate increase in the NAV per Share of 1.02 cents to our existing Shareholders and an immediate dilution in NAV per Share of 11.40 cents or approximately 57.0% to our New Investors. The following table illustrates such dilution on a per Share basis as at 31 December 2012:
Cents Issue Price per Share NAV per Share as at 31 December 2012 based on our Companys pre-Invitation share capital and before adjusting for the Invitation Increase in NAV per Share attributable to Invitation NAV per Share after the Invitation(1) Dilution in NAV per Share to New Investors Dilution in NAV per Share to New Investors as a percentage of Issue Price
Note: (1) The computed NAV per Share does not take into account our actual nancial performance from 1 January 2013 up to the Latest Practicable Date. Depending on our actual results, our NAV per Share after the Invitation may be higher or lower than the computed NAV per Share.
20.00 7.58 1.02 8.60 11.40 57.0%
The following table shows the average effective cost per Share paid by our existing Shareholders for Shares acquired by them during the period of three years prior to the date of lodgement of this Offer Document and the price per Share to be paid by our New Investors pursuant to the Invitation:
Number of Shares acquired Existing Shareholders QKE Holdings(1) Sirius Venture

(2)
Total consideration (S$)
Average effective cost per Share (cents) 0.008 0.008 20.00
122,491,500 4,508,500 23,000,000
9,645 355 4,600,000
New Investors pursuant to the Invitation

Notes: (1)
On the incorporation of our Company, 9,645 Shares were issued to QKE Holdings for a total cash consideration of S$9,645. Sally Chua (our Managing Director), Alan Lee (our Executive Director) and Frankie Cheng (our Executive Director) each holds approximately 33.3% of the issued share capital of QKE Holdings. As they each hold not less than 20.0% of the issued share capital in QKE Holdings, each of them is therefore deemed to have an interest in the Shares held by QKE Holdings pursuant to section 7 of the Companies Act.
(2)
On the incorporation of our Company, 355 Shares were issued to Sirius Venture for a total cash consideration of S$355. Wong Hin Sun Eugene (our Non-Executive Director) is the managing director and shareholder of Sirius Venture. As at the Latest Practicable Date, Wong Hin Sun Eugene holds 100% of the issued share capital of Sirius Venture. Wong Hin Sun Eugene is accordingly deemed to have an interest in the Shares held by Sirius Venture.
Save as disclosed above, none of our Directors or the Substantial Shareholders of our Company or their respective Associates have acquired any Shares during the period of three years prior to the date of lodgement of this Offer Document.
52
RESTRUCTURING EXERCISE
Our Company was incorporated in Singapore on 9 May 2013 under the name Singapore Kitchen Equipment Pte. Ltd. as a private limited company under the Companies Act. As at the date of incorporation, our issued and paid-up share capital was S$10,000.00 comprising 10,000 Shares, and the shareholders of our Company were QKE Holdings and Sirius Venture which owned 96.45% and 3.55% of our Companys then issued share capital respectively. To streamline and rationalise our corporate structure and shareholding structure in preparation for the listing of our Company on Catalist, we implemented the following the Restructuring Exercise prior to the Invitation: 1. Acquisition of non-controlling interests On 27 February 2013, Sally Chua, Alan Lee and Frankie Cheng acquired additional 1.4% of equity interest in Qson Kitchen Equipment Pte Ltd from its non-controlling interests for a total cash consideration of S$22,185. As a result of this acquisition, Sally Chua, Alan Lee and Frankie Cheng owned an aggregate of 99.1% of equity interest in Qson Kitchen Equipment Pte Ltd. On 1 April 2013, Sally Chua, Alan Lee and Frankie Cheng acquired additional 0.9% of equity interest in Qson Kitchen Equipment Pte Ltd from its non-controlling interests for a total cash consideration of S$15,000. As a result of this acquisition, Qson Kitchen Equipment Pte Ltd was wholly owned by Sally Chua, Alan Lee and Frankie Cheng. 2. Acquisition of Qson International Pte. Ltd. Pursuant to a sale and purchase agreement dated 16 May 2013 between our Company (as purchaser) and Sally Chua, Alan Lee and Frankie Cheng (as vendors), our Company acquired the entire issued and fully paid-up share capital of Qson International Pte. Ltd., comprising 90,003 ordinary shares, for an aggregate consideration of S$1,935, being a sum arrived at based on a discount of approximately 99.90% to the audited NAV of Qson International as at 31 December 2012 of approximately S$1,861,788, which was satised in cash. 3. Acquisition of Qson Kitchen Equipment Pte Ltd Pursuant to a sale and purchase agreement dated 16 May 2013 between our Company (as purchaser) and Sally Chua, Alan Lee and Frankie Cheng (as vendors), our Company acquired the entire issued and fully paid-up share capital of Qson Kitchen Equipment Pte Ltd, comprising 1,000,000 ordinary shares, for an aggregate consideration of approximately S$8,065, being a sum arrived at based on a discount of approximately 99.90% to the audited combined group NAV of Qson Kitchen Equipment and its subsidiaries (Qson Industries Malaysia, Qson KitchenHub and Qson Kuechen Kultur) as at 31 December 2012 of approximately S$7,766,450, which was satised in cash. 4. Conversion of the Company On 26 June 2013, our Company was converted into a public company and changed its name to Singapore Kitchen Equipment Limited. Please refer to the section entitled Group Structure of this Offer Document for details of our group structure upon completion of the Restructuring Exercise.
53
GROUP STRUCTURE
Our Group structure after the Restructuring Exercise is as follows:
Singapore Kitchen Equipment Limited 100% 100%
Qson International Pte. Ltd.
Qson Kitchen Equipment Pte Ltd
100%
100%
100%
Qson Industries (M) Sdn. Bhd.
Qson KitchenHub Sdn. Bhd.
Qson Kuechen Kultur Co., Ltd
The details of each subsidiary of our Company as at the date of this Offer Document are as follows:
Effective Issued and equity interest paid-up share held by our capital Group S$90,003 100%
Name Qson International Pte. Ltd.
Date and country of incorporation 13 April 2007 / Singapore
Principal place of business Singapore
Principal activities Investment holding
Qson Kitchen 30 September 1996 / Equipment Pte Ltd Singapore
Singapore
Designing, fabricating, installation, repair, maintenance and servicing of kitchen equipment Manufacture and distribution of kitchen equipment Investment holding
S$1,005,000
100%
Qson Industries (M) Sdn. Bhd.
23 June 2006 / Malaysia
Malaysia
RM1,600,000
100%
Qson KitchenHub Sdn. Bhd. Qson Kuechen Kultur Co., Ltd
22 February 2007 / Malaysia 12 April 2012 / Vietnam
Malaysia
RM500,000
100%
Vietnam
Import, wholesale and retail of kitchen equipment
US$200,000(1)
100%
Note: (1) Qson Kuechen Kultur Co., Ltd is a member limited liability company which is not allowed to issue shares under the laws of Vietnam. The equity interest in Qson Kuechen Kultur Co., Ltd indicates the percentage of ownership in its charter capital. Based on the investment certicate (as issued by the company registrar) of Qson Kuechen Kultur Co., Ltd, Qson Kitchen Equipment Pte Ltd owns 100% of the equity interest in Qson Kuechen Kultur Co., Ltd.
None of our subsidiaries is listed on any stock exchange. We do not have any associated companies. None of our Independent Directors sits on the board of any of our subsidiaries.
54
SELECTED COMBINED FINANCIAL INFORMATION

The following selected combined nancial information should be read in conjunction with the full text of this Offer Document, including the Independent Auditors Report as set out in Appendix A of this Offer Document and the section entitled Managements Discussion and Analysis of Financial Position and Results of Operations of this Offer Document. Combined Statements of Comprehensive Income(1)
(S$000) Revenue Cost of sales Gross prot Other items of income Gain on disposal of property, plant and equipment Gain on disposal of property held for sale Other income Other items of expense Distribution costs Administration expenses Finance costs Prot before income tax Income tax expense Prot for the nancial year Other comprehensive income: Exchange differences arising from translation of foreign operations Total comprehensive income for the year: Prot attributable to: Owners of the parent Non-controlling interests 737 18 755 Total comprehensive income attributable to: Owners of the parent Non-controlling interests 673 18 691 EPS - Basic EPS (cents)
(2), (4) (3)
FY2010 15,185 (10,400) 4,784
FY2011 16,415 (10,298) 6,118
FY2012 16,629 (10,101) 6,528
6 105
417 122
972 669 196
(1,484) (2,281) (233) 897 (142) 755
(1,409) (2,407) (211) 2,630 (326) 2,304
(1,337) (2,611) (155) 4,262 (382) 3,879
(64) 691
(4) 2,300
(6) 3,873
2,255 49 2,304
3,829 50 3,879
2,251 49 2,300
3,823 50 3,873
0.58 0.49
1.78 1.50
3.01 2.55
- Adjusted EPS (cents)

Notes: (1) (2) (3) (4)
Our combined nancial statements of our Group for the period under review have been prepared on the basis as set out in note 2 to the Independent Auditors Report. For comparative purposes, EPS for the periods under review have been computed based on the prot attributable to owners of the parent and our pre-Invitation share capital of 127,000,000 Shares. For comparative purposes, adjusted EPS for the periods under review have been computed based on the prot attributable to owners of the parent and our post-Invitation share capital of 150,000,000 Shares. Had the Service Agreements been in place for FY2012, our prot after income tax attributable to owners of the parent would have been approximately S$3,465,740 and the EPS and adjusted EPS would be 2.73 cents and 2.31 cents, respectively.
55
SELECTED COMBINED FINANCIAL INFORMATION

Combined Statement of Financial Position Audited as at 31 December 2012
(S$000) Non-current assets Property, plant and equipment Investment properties Deferred tax assets
1,009 555 6 1,569
Current assets Inventories Trade and other receivables Prepayments Current income tax recoverable Cash and cash equivalents
1,296 7,143 62 20 6,201 14,722
Less: Current liabilities Trade and other payables Borrowings Finance lease payables Current income tax payables Net current assets Less: Non-current liabilities Borrowings Finance lease payables Deferred tax liabilities
3,534 1,264 80 556 5,433 9,288
868 349 13 1,230 9,628
Capital and reserves Share capital Other reserves Retained earnings Equity attributable to owners of the parent Non-controlling interests Total equity NAV per Share (cents)(2)
Notes: (1) (2)
1,072 42 8,339 9,453 175 9,628 7.58
Our combined statement of nancial position as at 31 December 2012 has been prepared on the basis as set out in note 2 to the Independent Auditors Report. The NAV per Share as at 31 December 2012 has been computed based on our pre-Invitation share capital of 127,000,000 Shares.
56
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

The following discussion of our Groups results of operations and nancial position for the period under review should be read in conjunction with the Independent Auditors Report as set out in Appendix A of this Offer Document. This discussion contains forward-looking statements that involve risks and uncertainties. Our Groups actual results may differ signicantly from those projected in the forward looking-statements. Factors that may cause future results to differ signicantly from those projected in the forward-looking statements include, but are not limited to, those discussed below and elsewhere in this Offer Document, particularly in the section entitled Risk Factors of this Offer Document. Under no circumstances should the inclusion of such forward-looking statements herein be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions by our Company, the Sponsor and Placement Agent or any other person. Investors are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Please refer to the section entitled Cautionary Note on Forward-Looking Statements of this Offer Document. OVERVIEW Our Directors believe that we are one of the leading Singapore-based commercial and industrial kitchen solutions providers for the F&B and hospitality services industries with an established reputation and track record for our service quality, efciency, reliability and competitive pricing. We also provide customised industrial-style kitchen solutions for residential households. As a one-stop kitchen solutions provider, we specialise in the provision of design and consultancy services for the setting up and maintenance of commercial and industrial kitchens, fabrication, installation and sale of a wide range of kitchen systems as well as kitchen equipment. We also specialise in the maintenance and servicing of kitchen equipment to support the F&B and hospitality services industries in Singapore. Our major customers include integrated resorts, hotels, government agencies and restaurants. We manufacture standard and customised kitchen systems as well as kitchen equipment under our InnoFlame brand, and engage an OEM to manufacture kitchen equipment under our Qoolux brand. We sell and distribute imported kitchen systems, kitchen equipment and accessories which are manufactured overseas under several established brands from Canada, Europe, Japan and the USA, and imported for sale and distribution by us in Singapore. Depending on the distribution arrangements, we can sell the brands outside of Singapore as well. Our Group also offers quality stainless steel work stations that complement the premium kitchen equipment that we carry. We have a strong team of experienced design consultants and sales specialists to provide design, consultancy and installation services to our customers, designing and installing stainless steel kitchen systems in accordance with their specications and requirements. To ensure that the design and layout of the kitchen meets our customers requirements, we conduct site visits and work closely with our customers to better understand their needs before providing and/or designing customised kitchen systems and/or kitchen equipment to t into the layout and design as approved by our customers. Our customised solutions emphasise functional kitchen design layout and space optimisation in order to give our customers the best value for their money. Our Group carries out business activities in maintenance and servicing of kitchen equipment under our Maintenance and Servicing Segment. We undertake preventive maintenance works and repairs on kitchen equipment to ensure that they are in good working condition and functioning properly under the preventive annual maintenance agreements which we enter into with our customers. We have also developed capabilities to carry out urgent repairs, cleaning and degreasing of kitchen equipment, including exhaust hoods, ducts, and exhaust motors. Over the years, we have built a strong customer base of more than 800 clients including integrated resorts, hotels, government agencies and restaurants. Please refer to the section entitled General Information on Our Group Business Overview of this Offer Document for further details of our business activities.
57

Revenue We are principally engaged in the design, consultancy, fabrication, distribution, maintenance and servicing of stainless steel kitchen systems and kitchen equipment. Our revenue source can be categorised into two operating segments: (i) (ii) Fabrication and Distribution Segment; and Maintenance and Servicing Segment.
Revenue from our Fabrication and Distribution Segment accounted for 64.9%, 62.6% and 64.9% of our revenue in FY2010, FY2011 and FY2012 respectively. The balance of our revenue is derived from our maintenance and servicing segment. Historically, the majority of our revenue was derived from customers based in Singapore. Fabrication and distribution of kitchen equipment can be broadly classied into two groups; (i) selling individual kitchen equipment to our customers; and (ii) providing specialty in designing, consulting, fabricating and installing kitchen systems to our customers. Revenue from individual sales of kitchen equipment is recognised upon delivery of our products and when signicant risks, rewards of ownership and control have been transferred to customers. Our sales of kitchen equipment from customer orders are based on delivery of goods and we do not typically enter into long-term contracts with them. Hence, the lead-time to fulll an order is generally up to 3 months for kitchen systems and equipment, upon nal conrmation from our customers. Generally, our projects are awarded either (i) directly by customers or (ii) through invitation to tender from F&B operators, developers, main contractors or project consultants. Our customers enter into contracts (which specically indicate delivery schedule, quantity and pricing) with us for us to design, consult, supply and deliver our products for specic projects, which typically take between three to six months to complete. Our products are then delivered and installed in stages based on the state of completion of the projects. Typically revenue recognition would happen after installation at the end of the commissioning phase. Revenue from our Maintenance and Servicing Segment is recognised when the services have been performed and accepted by the customers in accordance with the relevant terms and conditions of the contract. We provide two kinds of services under our Maintenance and Servicing Segment, one being regular maintenance contracts which is done on a periodic basis for a term of between one to two years, and the second being urgent repairs, cleaning and degreasing kitchen equipment, which is typically on an ad-hoc basis. We operate a eet of 17 vehicles and a team of more than 50 service technicians to conduct service for our customers throughout Singapore. Factors affecting revenue The main factors affecting our revenue include, inter alia: (a) Growth and development of the industries in which our customers operate The growth in our revenue in FY2010, FY2011 and FY2012 was mainly derived from the growing demand from the hospitality services industry and food & beverage (F&B) establishments. The demand for our products are therefore dependent on the growth of these industries which may uctuate in accordance with factors such as changing economic conditions and government regulations. Thus, the level of activity in the hospitality services industry in terms of F&B outlets growth, new hotels and resort development as well as the dining trend of the population in Singapore will have a direct impact on our business.
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(b) General demand for our products and services and our ability to secure new orders Our projects are generally non-recurring in nature and therefore, we have to continuously and consistently secure new projects to generate revenue. Although we have repeat customers from our existing customer base, we do not have any long-term written contracts with our existing customers and a decline in the demand for our products, and oversupply in the products that we produce, or our inability to nd new customers could adversely affect our selling price and revenue. Revenue from our Maintenance and Servicing Segment is generally recurring in nature and based on written contracts with customers in this segment of between one to two years. The customers in our Maintenance and Servicing Segment are largely based on our completed projects and thus our ability to nd new projects directly impacts our revenue in the Maintenance and Servicing Segment. (c) Our ability to remain competitive Notwithstanding our historical growth track record, we operate in a competitive environment and face continuous competition from existing competitors as well as new market entrants. Our revenue growth is therefore dependent on our ability to secure new projects and maintenance contracts as well as our ability to maintain existing contracts with our customers through effective cost control, superior customer service and our ability to provide products of consistent quality at competitive prices. Our selling prices may be affected if our competitors adopt aggressive pricing strategies in order to gain market share or if new players enter the market. (d) Our ability to maintain relationships with our existing customers The relationships that we have established with our customers over the years have resulted in recurring sales orders. Factors affecting such relationships include, inter alia, our ability to accommodate their requests and feedback, our effectiveness in solving problems encountered in design and planning, production processes, site monitoring, and our ability to offer cost reduction solutions without compromising quality and safety. Our inability to maintain these relationships with our existing customers could adversely affect our revenue. (e) Timing of project completion As described above, the contract process from tender submission and negotiation to being awarded by the customers would typically take between one to two months while the entire project life would range from three to six months, Therefore, the timing of completion of our projects will have an effect on our revenues as revenue recognition would only happen at the end of commissioning phase. Cost of sales Our cost of sales comprise mainly cost of materials (such as kitchen equipment, spare parts and raw materials), direct and indirect labour costs, and production overheads (such as depreciation of plant and machinery, fuel and gas, utilities, sub-contract charges, upkeep of plant and machinery and insurance). Our cost of sales accounted for approximately 68.5%, 62.7% and 60.7% of our revenue in FY2010, FY2011 and FY2012 respectively. The breakdown of our cost of sales for FY2010, FY2011 and FY2012 are as follows:
FY2010 S$000 Cost of materials Labour costs Production overheads Total 7,562 2,263 575 10,400 % 72.7 21.8 5.5 100.0 FY2011 S$000 7,287 2,438 573 10,298 % 70.8 23.7 5.5 100.0 FY2012 S$000 7,214 2,429 457 10,100 % 71.4 24.1 4.5 100.0
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Factors affecting cost of sales (a) Changes in supply of raw materials and prices The main raw materials that we use in our business include stainless steel plates/pipes, mild steel plates/pipes, cold rolled steel, electro-galvanised steel and hot-dipped galvanised steel. Material costs are determined by the overall market demand and supply of the underlying commodities over which we have no control. In the event that our suppliers are unable to provide us with sufcient raw materials, or we are unable to obtain raw materials from our suppliers at acceptable prices and are unable to seek alternative sources of supply at comparable or competitive prices and in a timely manner, this would result in an increase in our cost of sales and would adversely affect our prot margins and protability. (b) Ability to manage and control production overheads Unforeseen circumstances such as logistic disruptions or unanticipated production costs may arise during the course of production and our actual costs incurred for production may exceed the estimated costs, due to under-estimation of costs, wastage, inefciency, damage or additional costs incurred during the course of the contract. Any under-estimation of costs, delays or other circumstances resulting in higher costs to undertake a contract may adversely affect our protability. (c) Changes in labour costs Our business is highly dependent on skilled personnel, in particular, service technicians, machine operators, designers and draughtsman. If we are unable to train, motivate and retain the relevant skilled employees or to attract suitable and timely replacements, our operations and competitiveness could be adversely affected. The supply of skilled workers is subject to demand and supply conditions in the labour market as well as labour regulations of local and foreign governments. Any disruption or inability in hiring the required number of skilled foreign workers at competitive salaries will adversely affect our business operations and nancial performance. In addition, any change in government regulations, including foreign workers levy, may increase our operating cost and adversely affect our protability. (d) Fluctuations in exchange rates Fluctuations in the relevant exchange rates between MYR, EUR, USD and HKD versus S$ may affect our cost as our third party equipment imports are denominated in MYR, EUR, USD and HKD. Any appreciation/depreciation in MYR, EUR, USD and HKD against the S$ will result in an increase/decrease in our recorded cost of sales. Gross prot and gross prot margin Gross prot margin is an indication of our ability to control our pricing and our cost of sales. In our Fabrication and Distribution Segment, the distribution of international brand kitchen equipment commands a lower gross prot margin when compared to our in-house products and project works for customised kitchen systems and equipment. The latter yields higher gross prot margins due to higher customisation specications and would normally involve integration of multiple engineering disciplines and mobilisation of a large pool of skilled labour using precision machinery. Our overall gross prot margin was approximately 31.5%, 37.3% and 39.3% for FY2010, FY2011 and FY2012 respectively. We recorded gross prot margins of approximately 31.2%, 42.5% and 42.3% for our Fabrication and Distribution Segment in FY2010, FY2011 and FY2012 respectively. For our Maintenance and Servicing Segment, we recorded gross prot margins of approximately 32.1%, 28.6% and 33.7% in FY2010, FY2011 and FY2012 respectively.
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Other income Other income comprises mainly rental income, gain on disposal of property, plant and equipment, allowance for impairment loss on third parties trade receivables written back and others. Total other income for FY2010, FY2011 and FY2012 represents approximately 0.7%, 3.3% and 11.0% of our total revenue for FY2010, FY2011 and FY2012 respectively. Rental income comprises (i) rent from the lease of our property at One Commonwealth Lane #03-06 Singapore 149544; and (ii) rent from the lease of our property at 1 Bukit Batok Crescent #08-56 WCEGA Plaza, Singapore 658064. We recorded a gain on disposal of property, plant and equipment of approximately S$0.4 million in FY2011 which is attributable to the gain on disposal of our property at 1 Bukit Batok Crescent #08-56 WCEGA Plaza, Singapore 658064 of approximately S$0.3 million and gain on disposal of motor vehicle of approximately S$0.1 million. We recorded a gain on disposal of property, plant and equipment and property held for sale totalling approximately S$1.6 million in FY2012 namely 31 Bukit Batok Crescent #01-31 The Splendour Singapore 658070 of approximately S$1.0 million and 31 Bukit Batok Crescent #01-32 The Splendour Singapore 658070 of approximately S$0.6 million respectively. Please refer to the section entitled Managements Discussion and Analysis of Financial Conditions and Results of Operation Capital Expenditures and Divestments of this Offer Document for details of the aforementioned disposal of properties. Others comprise mainly insurance claimed, redemption and reimbursement, grant received, other services provided combined with allowance for impairment loss on third parties trade receivables represented approximately 0.7%, 0.7% and 1.2% of total in FY2010, FY2011 and FY2012 respectively. Distribution costs Distribution costs comprise mainly salary-related expenses of sales, marketing, commissions, entertainment, transportation, travelling and accommodation, upkeep of motor vehicle expenses, allowance for impairment loss on third parties trade receivables and bad third parties trade receivables written off. The distribution costs accounted for approximately 9.8%, 8.6% and 8.0% of our total revenue for FY2010, FY2011 and FY2012 respectively. Administrative expenses Administrative expenses comprise mainly staff costs, depreciation charges for property, plant and equipment and investment properties, operating lease expenses and utilities for ofces, other operating lease expenses, printing and stationery, postage and courier, general repair and maintenance expenses, insurance premiums, legal and professional fees and other miscellaneous expenses. The largest component is staff and related costs which represent 44.9%, 47.6% and 51.1% of our total administrative expenses for FY2010, FY2011 and FY2012 respectively. It accounted for approximately 15.0%, 14.7% and 15.7% of our total revenue for FY2010, FY2011 and FY2012 respectively. Finance costs Our nance costs comprise mainly charges and interests incurred on bank borrowings and nance leases. Effective interest rate was 2.40% to 9.24%, 2.47% to 9.24% and 2.47% to 9.24% per annum in FY2010, FY2011 and FY2012 respectively. Income tax We were subjected to the Singapore corporate income tax rates of 17.0% for FY2010, FY2011 and FY2012 and Malaysian corporate income tax rates of 25.0% for FY2010, FY2011 and FY2012. Income tax expense comprises mainly of tax charges incurred in respect of the assessable prots from our subsidiaries. Our effective income tax rate was approximately 15.8%, 12.4% and 9.0% in FY2010, FY2011 and FY2012 respectively. 61

Deferred income tax is provided on all timing differences arising from the tax bases of assets and liabilities and their carrying amounts in the nancial statements. The effective tax rates for the period under review were different from the statutory tax rates mainly due to tax effect of income not subject to income tax, tax effect of non-deductible expenses for income tax purpose, tax effect of tax exempt income. SEASONALITY Our sales in the second half of our nancial year are generally higher compared to the rst half of our nancial year. This is due to our customers wanting to have their kitchen equipment ready for the yearend festive season, which is a peak season for our customers, who are mainly F&B and hospitality services establishments. The completion of new kitchens or re-designing of existing kitchens enables our customers to expand or operate more efciently and is usually timed to capture their peak seasons. In the rst half of our nancial year, in end-January to early February, most F&B establishments experience a lull period in their business due to the Chinese New Year festive period. Accordingly, our kitchen equipment will tend to have lower sales as well, as F&B establishments anticipate this lull period. The second half of our nancial year coincides with generally higher activity in the F&B and hospitality services industries, as Singapore has more festivals and major tourist attraction events in the second half of the year, such as the Great Singapore Sale from end May to end July, the Singapore Formula One Grand Prix in September and Christmas in December. In addition, historically, more wedding dinners, high tea celebrations and company annual dinners are held in the second half of the year. With this in mind, our customers are incentivised to complete or re-design their F&B and hospitality services projects and outlets to cater for the anticipated higher business volume in the second half of the year. Greater activity in these industries will result in increased demand for our products and services, particularly in our Fabrication and Distribution Segment. INFLATION During the period under review, ination did not have a material impact on our performance. REVIEW OF RESULTS OF OPERATIONS The following tables set forth a breakdown of our revenue and gross prot by business segments for the periods indicated: Revenue by Product Category
FY2010 Business Segments Fabrication and Distribution Maintenance and Servicing Total S$000 9,861 5,324 15,185 % 64.9 35.1 100.0 FY2011 S$000 10,273 6,142 16,415 % 62.6 37.4 100.0 FY2012 S$000 10,794 5,835 16,629 % 64.9 35.1 100.0
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Gross Prot and Gross Prot Margin by Product Category
FY2010 Business Segments Gross Prot Gross Margin (%) 31.2 32.1 FY2011 Gross Prot Gross Margin (%) 42.5 28.6 FY2012 Gross Prot Gross Margin (%) 42.3 33.7
Fabrication and Distribution Maintenance and Servicing Total
3,075 1,709 4,784
4,364 1,754 6,118
4,562 1,966 6,528
For comparative reasons, the following review was prepared based on the relevant comparative nancial information as extracted from the Audited Combined Financial Statements for FY2010, FY2011 and FY2012 respectively. FY2011 vs. FY2010 Revenue Our revenue increased by 8.1% from approximately S$15.2 million in FY2010 to approximately S$16.4 million in FY2011, attributable mainly to improving sales in both the business segments. Revenue from our Fabrication and Distribution Segment increased by 4.2% from approximately S$9.9 million in FY2010 to approximately S$10.3 million in FY2011 due to an increase in demand for our in-house kitchen equipment. Revenue from our Maintenance and Servicing Segment increased by 15.4% from approximately S$5.3 million in FY2010 to approximately S$6.1 million in FY2011 as we secured a new one-year servicing contract of approximately S$0.7 million. Cost of sales Our cost of sales decreased by 1.0% from approximately S$10.4 million in FY2010 to approximately S$10.3 million in FY2011 mainly due to the S$0.9 million decline in cost of sales for the Fabrication and Distribution Segment (from S$6.8 million to S$5.9 million) more than offset the S$0.8 million (from S$3.6 million to S$4.4 million) increase recorded by our Maintenance and Servicing Segment. This was mainly attributable to the lower cost of third party equipment resulting from direct purchase, cheaper OEM source and favourable movements in exchange rate. On the other hand, labour costs increased by 7.7% from approximately S$2.3 million to approximately S$2.4 million in line with the 15.4% increase in Maintenance and Servicing Segment revenue. Gross prot and gross prot margin Gross prot increased by 27.9% from approximately S$4.8 million in FY2010 to approximately S$6.1 million in FY2011. Gross prot margin improved from 31.5% in FY2010 to 37.3% in FY2011. The increase in gross prot margin was mainly due to the increase in gross prot margin of the Fabrication and Distribution Segment from 31.2% in FY2010 to 42.5% in FY2011, slightly offset by the decrease in gross prot margin of the Maintenance and Servicing Segment from 32.1% in FY2010 to 28.6% in FY2011. Other income Other income increased by 386.5%, from approximately S$0.1 million in FY2010 to approximately S$0.5 million in FY2011 mainly due to a one-off gain on disposal of property at Bukit Batok of approximately S$0.3 million and gain on disposal of motor vehicles of approximately S$0.1 million. Distribution costs Distribution costs decreased by 5.1% from approximately S$1.5 million in FY2010 to approximately S$1.4 million in FY2011, which was mainly due to the reduction in overseas marketing cost of approximately S$0.3 million, and partially offset by an increase in allowance for impairment loss on third parties trade receivables and bad third parties trade receivables written off of approximately S$0.2 million. 63

Administrative expenses Administrative expenses increased by 5.5%, from approximately S$2.3 million in FY2010 to approximately S$2.4 million in FY2011 due to higher depreciation charges and a general increase in staff costs. Finance costs Finance costs decreased by 9.7%, from approximately S$0.23 million in FY2010 to approximately S$0.21 million in FY2011 mainly due to settlement of term loan and as stated in Appendix A, upon the disposal of such leasehold property to a third party. Income tax Income tax expense increased by 129.8%, from approximately S$0.1 million in FY2010 to approximately S$0.3 million in FY2011, and is in line with the higher prots. Prot after income tax As a result of the above, we achieved a prot after tax of approximately S$2.3 million in FY2011 compared to S$0.7 million in FY2010. The improvement was in tandem with the increase in revenue, better gross margin achieved and one-off gain on disposal of property of approximately S$0.3 million and gain on disposal of motor vehicles of approximately S$0.1 million. FY2012 vs. FY2011 Revenue Our revenue increased by 1.3% from approximately S$16.4 million in FY2011 to approximately S$16.6 million in FY2012, attributable mainly to sales increase in our Fabrication and Distribution Segment. Revenue from our fabrication and distribution of kitchen equipment improved by 5.1% from approximately S$10.3 million in FY2011 to approximately S$10.8 million in FY2012 due to an increase in demand for our in-house kitchen equipment. It was offset by the decrease of 5.0% in revenue from our Maintenance and Servicing Segment from approximately S$6.1 million in FY2011 to approximately S$5.8 million in FY2012 due to the expiry of the one-year servicing contract of approximately S$0.7 million. Cost of sales Our cost of sales decreased by 1.9% from approximately S$10.3 million in FY2011 to approximately S$10.1 million in FY2012 mainly due to the S$0.5 million decline in cost of sales for the Maintenance and Servicing Segment (from S$4.4 million to S$3.9 million) more than offset the S$0.3 million (from S$5.9 million to S$6.2 million) increase recorded by our Fabrication and Distribution Segment. This was mainly attributable to the lower labour costs upon the expiry of the one-year servicing contract as explained in the revenue section in the above paragraph. Gross prot and gross prot margin Gross prot increased by 6.7% from approximately S$6.1 million in FY2012 to approximately S$6.5 million in FY2012. Gross prot margin improved from 37.3% in FY2011 to 39.3% in FY2012. The increase in gross prot margin was mainly due to the increase in gross prot margin of our Maintenance and Servicing Segment from 28.6% in FY2011 to 33.7% in FY2012. Other income Other income increased by 241.1%, from approximately S$0.5 million in FY2011 to approximately S$1.8 million in FY2012 mainly due to a one-off gain on disposal of property, plant and equipment and property held for sale totalling approximately S$1.6 million in FY2012 namely 31 Bukit Batok Crescent #01-31 The Splendour Singapore 658070 for approximately S$1.0 million and 31 Bukit Batok Crescent #01-32 The Splendour Singapore 658070 for approximately S$0.6 million respectively.
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Distribution costs Distribution costs decreased by 5.1% from approximately S$1.4 million in FY2011 to approximately S$1.3 million in FY2012, which was mainly due to the net decrease in allowance for impairment loss on third party trade receivables and bad third parties trade receivables written off of approximately S$0.1 million. Administrative expenses Administrative expenses increased by 8.5%, from approximately S$2.4 million in FY2011 to approximately S$2.6 million in FY2012 due to higher operating lease expenses and a general increase in staff costs. Finance costs Finance costs decreased by 26.2%, from approximately S$0.21 million in FY2011 to approximately S$0.16 million in FY2012 mainly due to settlement of term loan VIII and term loan IX as stated in Appendix A, upon disposal of such leasehold properties to third parties. Income tax Income tax expense increased by 17.4%, from approximately S$0.33 million in FY2011 to approximately S$0.38 million in FY2012, and is in line with the higher prots. Prot after income tax As a result of the above, we achieved a prot after tax of approximately S$3.9 million in FY2012 compared to S$2.3 million in FY2011. The improvement was mainly due to the increase in revenue, better gross margin achieved and the one-off gain on disposal of property, plant and equipment and property held for sale as explained above. REVIEW OF FINANCIAL POSITION A review of the nancial position of the Group as at 31 December 2012 is set out below: Non-current assets Our non-current assets comprise freehold land and building, leasehold properties, motor vehicles, plant and machinery, computers and ofce equipment, furniture and ttings, renovation and investment property. As at 31 December 2012, the total non-current assets amounted to approximately S$1.6 million or 9.6% of our total assets. It decreased by approximately S$1.0 million (or 39.2%) from approximately S$2.6 million as at 31 December 2011 due to the disposal of the property at 31 Bukit Batok Crescent #01-31 The Splendour Singapore 658070 with a carrying amount of approximately S$1.8 million, partially offset by the increase in construction-in-progress of approximately S$0.9 million. Current Assets Current assets comprise inventories, property held for sale, trade and other receivables and cash and cash equivalents. As at 31 December 2012, current assets amounted to approximately S$14.7 million or 90.4% of our total assets. This was an increase of approximately S$3.7 million (or 33.8%) over the approximately S$11.0 million as at 31 December 2011. The increase came mainly from cash proceeds from the disposal of the two properties namely Bukit Batok properties of approximately S$4.2 million, which was offset by the disposal of property held for sale at Bukit Batok Crescent #01-32 The Splendour Singapore 658070 with a carrying amount of approximately S$0.7 million.
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Current liabilities Current liabilities comprise mainly trade payables and other payables, borrowings, nance lease payables and income tax payables. As at 31 December 2012, current liabilities amounted to approximately S$5.4 million or 81.5% of our total liabilities of approximately S$6.7 million. Trade and other payables of approximately S$3.5 million were the biggest component of our current liabilities, accounting for 65.0%. Trade payables of S$2.6 million increased by S$0.9 million (or 56.7%) from approximately S$1.6 million as at 31 December 2011 to support the increase in trade receivables. Other payables and accruals of S$1.0 million were accrued directors fees and accrued operating expenses. Borrowings mainly comprise trust receipts of S$1.2 million. There was a tax payable of S$0.5 million compared to the S$0.3 million for FY2011 mainly due to higher chargeable income in FY2012. Non-current liabilities Non-current liabilities comprise borrowings, nance lease payables and deferred tax liability. As at 31 December 2012, our non-current liabilities amounted to approximately S$1.2 million or 18.5% of our total liabilities which accounted for mainly by borrowings of approximately S$0.9 million, nance lease payables of approximately S$0.3 million and deferred tax liability of approximately S$0.01 million. This was a decline of approximately S$1.0 million over the approximately S$2.2 million as at 31 December 2011 which was mainly due to settlement of term loans VII and IX upon the disposal of such leasehold properties to third parties. Finance lease payables relates to hire purchase nancing for the eet of vehicles. Capital and Reserves Our capital and reserves comprise share capital, other reserves and retained earnings. Our capital and reserves as at 31 December 2012 and 31 December 2011 were approximately S$9.6 million and S$5.9 million respectively. LIQUIDITY AND CAPITAL RESOURCES Our operations have been funded through a combination of Shareholders equity (including retained prots), net cash generated from operating activities, advances from Directors, and borrowings from nancial institutions. All advances from Directors have since been repaid. The principal uses of these funds are for working capital requirements and for our capital expenditure. As at 30 April 2013, our unused sources of liquidity comprised S$5.9 million in net cash surplus and S$3.9 million in banking credit facilities. Please refer to the section entitled Capitalisation and Indebtedness of this Offer Document for more details of our banking facilities. Our Directors are of the reasonable opinion that, as at the date of lodgement of this Offer Document, after taking into consideration our present cash position and cash generated from our operations, the working capital available to us as at the date of lodgement of this Offer Document is sufcient for present requirements and for at least 12 months after the listing of our Company on Catalist. The Sponsor is of the reasonable opinion, that after having made due and careful enquiry and after taking into account the cash ows generated from our Groups operations and existing cash and cash equivalents, the working capital available to our Group as at the date of lodgement of this Offer Document is sufcient for present requirements and for at least 12 months after the listing of our Company on Catalist.
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We set out below a summary of our Groups net cash ows for FY2010, FY2011 and FY2012:
FY2010 Cash Flows Prot before income tax Adjustment for working capital changes, depreciation, interest, income tax paid, and gain on disposal from investing activities Net cash from operating activities Net cash (used in) / from investing activities Net cash from / (used in) nancing activities Net (decrease) / increase in cash and cash equivalent Cash and cash equivalent at the beginning of the year Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalent at the end of the year S$000 897 FY2011 S$000 2,630 FY2012 S$000 4,262
(237) 660 (1,655) 955 (40) 1,077 2 1,039
(704) 1,926 (348) (955) 623 1,039 (1) 1,661
(1,674) 2,588 3,191 (1,900) 3,879 1,661 (1) 5,539
FY2010 Net cash from operating activities In FY2010, we generated approximately S$1.4 million net cash from operating activities before changes in working capital. Net cash used in working capital amounted to approximately S$0.4 million. This was due mainly to increase in inventories and receivables by approximately S$0.3 million and S$1.3 million respectively, partly offset by an increase in payables and decrease in prepayments by approximately S$1.2 million and S$0.02 million respectively. In FY2010, we paid income tax of approximately S$0.4 million. The net cash generated from operating activities amounted to approximately S$0.7 million. Net cash used in investing activities Net cash used in investing activities of approximately S$1.7 million mainly arose from (i) the issuance of new shares in a subsidiary amounting to approximately S$0.6 million, (ii) purchase of property, plant and equipment amounting to approximately S$0.8 million and (iii) purchase of investment properties of approximately S$0.3 million, partly offset by proceeds from the disposal of plant and equipment amounting to approximately S$0.03 million. Net cash from nancing activities Net cash generated from nancing activities of S$1.0 million was due mainly to the drawdown of a term loan of approximately S$1.0 million and net proceeds from trust receipts of approximately S$0.5 million, partly offset by the repayment of bank term loans of approximately S$0.3 million and nance lease of approximately S$0.1 million. As a result of the above, our cash and cash equivalents were maintained at approximately S$1.0 million as at 1 January 2010 and as at 31 December 2010.
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FY2011 Net cash from operating activities In FY2011, we generated net cash from operating activities before changes in working capital of approximately S$3.0 million. Net cash used in working capital amounted to approximately S$1.0 million. This was due mainly to an increase in inventories and receivables by approximately S$0.3 million and S$0.8 million respectively, partly offset by an increase in payables by approximately S$0.1 million. In FY2011, we paid income tax of approximately S$0.1 million. The net cash generated from operating activities amounted to approximately S$1.9 million. Net cash used in investing activities Net cash used in investing activities of approximately S$0.3 million was mainly due to the purchase of property, plant and equipment of approximately S$0.5 million and property held for sale of approximately S$0.7 million which were offset by the proceeds from disposal of property, plant and equipment of approximately S$0.9 million. Net cash used in nancing activities Net cash used in nancing activities of approximately S$1.0 million was mainly due to the xed deposits pledged with nancial institution of approximately S$0.1 million, net repayments of trust receipts and nance lease payables of approximately S$0.4 million and S$0.3 million respectively and interest paid which amounted to approximately S$0.2 million partly offset by the net drawdown of loan of approximately S$0.1 million. As a result of the above, there was a net increase of approximately S$0.6 million in our cash and cash equivalents, from approximately S$1.0 million as at 1 January 2011 to approximately S$1.7 million as at 31 December 2011. FY2012 Net cash from operating activities In FY2012, we generated net cash from operating activities before changes in working capital of approximately S$3.1 million. Net cash used in working capital amounted to approximately S$0.4 million. This was mainly due to increase in trade and other receivables of approximately S$0.6 million and increase in prepayments and decrease in payables of approximately S$0.05 million and S$0.03 million respectively, partly offset by decrease in inventories by approximately S$0.3 million. In FY2012, we paid income tax of approximately S$0.2 million. The net cash generated from operating activities amounted to approximately S$2.6 million. Net cash from investing activities Net cash generated from investing activities of approximately S$3.2 million was mainly due to the proceeds from disposal of property, plant and equipment of approximately S$2.8 million and disposal of property held for sale of approximately S$1.4 million, partly offset by the purchase of plant and equipment of approximately S$1.0 million. Net cash used in nancing activities Net cash used in nancing activities of approximately S$1.9 million was mainly due to net repayments of terms loans and nance lease payables and the increase in xed deposits pledged with nancial institution of approximately S$1.2 million, S$0.1 million and S$0.4 million respectively, partly offset by increase in the net proceeds from trust receipts of approximately S$0.1 million. As a result of the above, there was a net increase of approximately S$3.9 million in our cash and cash equivalents, from approximately S$1.7 million as at 1 January 2012 to approximately S$5.5 million as at 31 December 2012.
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MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS The capital expenditures and divestments made by our Group in FY2010, FY2011 and FY2012 and from 1 January 2013 up to the Latest Practicable Date were as follows:
1 January 2013 to Latest Practicable Date 37 10 47 1 January 2013 to Latest Practicable Date
Capital expenditure (S$000) Leasehold properties and construction-in-progress Motor vehicles Furniture and ttings Plant and machinery and computer and ofce equipment Renovation Investment properties Property held for sale Intellectual property Total
FY2010 739 58 10 16 24 303 1,150
FY2011 480 388 39 739 1,646
FY2012 864 29 12 91 996
Capital divestment (S$000) Leasehold properties and construction-in-progress Motor vehicles Furniture and ttings Plant and machinery and computer and ofce equipment Property held for sale Total
FY2010 22 16 7 45
FY2011 430 311 741
FY2012 1,780 739 2,519
The above capital expenditure in FY2010, FY2011 and FY2012 of approximately S$0.8 million, S$0.9 million and S$1.0 million respectively was nanced through a combination of shareholders funds, internal generated funds, advances from Shareholders, borrowings and nance lease. From 1 January 2013 to the Latest Practicable Date, our capital expenditure of approximately S$47,228 pertained to intellectual property, computer equipment and plant machinery. Capital commitment As at the Latest Practicable Date, the Group has no capital commitments. Operating lease commitments As at the Latest Practicable Date, the Group has the following operating lease commitments:
Latest Practicable Date 301,510 293,534 595,044
(S$) Within one nancial year After one nancial year but within ve nancial years
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FOREIGN EXCHANGE EXPOSURE Our reporting currency is in S$ and our operations are primarily carried out in Singapore and Malaysia. Other than the respective functional currencies of our subsidiaries (being S$ and RM), we also transact in MYR, EUR, USD and HKD. Our net foreign exchange gain/(loss) for FY 2010, FY2011 and FY2012 are as follow:
FY2010 Net foreign exchange gain/(loss) (S$000) As a percentage of revenue (%) As a percentage of prot before income tax (%) (65) 0.4 7.3 FY2011 (14) 0.1 0.5 FY2012 (5) 0.03 0.1
To the extent that (i) our revenue, purchases and expenses are not naturally matched in the same currency; and (ii) there are timing differences between invoicing and collection/payment, we will be exposed to adverse uctuations of the various currencies against the Singapore dollar, which would adversely affect our protability. Currently, we do not have any hedging policy with respect to foreign exchange exposure. In the event that we are exposed to any foreign currency risks in future, we will monitor closely and will consider hedging any material foreign exposure should the need arises. Should the need arise, we may hedge our material foreign exchange transactions in the future after considering the foreign exchange exposure, the exposure period and the hedging costs. Prior to engaging in any foreign exchange hedging transaction or foreign exchange trading, our Group shall adopt the following measures: (a) (b) seek our Boards approval on the policy for entering into any such hedging transactions; put in place adequate procedures which must be reviewed and approved by the Audit Committee; and the Audit Committee shall monitor the implementation of the policy, including reviewing the instruments, processes and practices in accordance with the policy approved by the Board.
(c)
CHANGES IN ACCOUNTING POLICIES There has been no signicant change in the accounting policies of our Group from FY2010 to FY2012. Please refer to the Independent Auditors Report as set out in Appendix A of this Offer Document for details of our Groups accounting policies.
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GENERAL INFORMATION ON OUR GROUP

HISTORY Our Company was incorporated in Singapore on 9 May 2013 under the name Singapore Kitchen Equipment Pte. Ltd. as a private limited company under the Companies Act. As at the date of incorporation, our issued and paid-up share capital was S$10,000.00 comprising 10,000 Shares, and the shareholders of our Company were QKE Holdings and Sirius Venture which owned 96.45% and 3.55% of our Companys then issued share capital respectively. In conjunction with the listing of our Company on Catalist, the Restructuring Exercise was undertaken by our Company. Pursuant to the Restructuring Exercise, our Company became the ultimate holding company of our subsidiaries, Qson International Pte. Ltd., Qson Kitchen Equipment Pte Ltd, Qson Industries (M) Sdn. Bhd., Qson KitchenHub Sdn. Bhd. and Qson Kuechen Kultur Co., Ltd. On 26 June 2013, our Company was converted into a public company limited by shares and our name was changed to Singapore Kitchen Equipment Limited. Our history can be traced back to September 1996 when our three Directors, Sally Chua, Frankie Cheng and Alan Lee, founded the business to specialise in the fabrication and supplying of kitchen equipment within Singapore under the name of Qson Kitchen Equipment Pte Ltd. Qson Kitchen Equipment was set up as a private company limited by shares under the Companies Act. In December 1996, by leveraging on the collective experience of our Directors, Q'son Kitchen Equipment commenced the fabrication, installation and commissioning of our kwali ranges which were supplied primarily to Chinese restaurants. Our rst fabrication facility was set up at 1160 Depot Road 02-01 Singapore 109674 with a oor area of approximately 300 square feet and six employees. However, our fabrication capabilities at that time were limited to the interior cast iron structure of our kwali ranges and hence, we engaged third party fabricators to produce the exterior stainless steel body. Following the successful installation and commissioning of kitchen equipment at their premises, our Group began to provide maintenance and repair services to our customers as part of our after-sales initiatives. In January 1998, to accommodate the expansion in the size of our business and the increase in our staff strength to approximately ten employees, we re-located our head ofce, corporate showroom, workshop and warehouse facility to Block 115A, Commonwealth Drive #01-27/28, Singapore 149596 with a total built-in area of approximately 183.40 square metres. Service Department In July 1998, to complement a simultaneous increase in the demand for our fabrication, installation and commissioning works and to widen the scope of services provided to our existing customers, we set up our Service Department to increase our focus on the provision of after-sales service and support to our customers. Whilst our after-sales service and support to our customers had proven to be very well received, our Directors noticed a strong business opportunity in servicing third party kitchen equipment. This was due in part to the reluctance of kitchen equipment suppliers to provide extended servicing after expiry of the warranty period. Also, our technicians who had a broad-based technical skill were able to service a wide variety, model and brand of a gamut of kitchen equipment. After taking these factors into consideration, our Directors were of the opinion that that there was a huge potential for growth in maintenance and servicing of kitchen equipment services. In 1999, we expanded the scope of our services our Service Department to include the servicing of kitchen equipment manufactured and installed by third parties. By carving out our niche in the maintenance and servicing of kitchen equipment, this enabled us to attain another level of skill expertise, to obtain more corporate exposure and to gain a strong foothold in the kitchen equipment industry.
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In 2000, we expanded our scope of services to include the servicing of refrigeration equipment, resulting in an increase of our technical staff strength. As at December 2012, our technical team comprised more than 50 service technicians. In addition, we invested in the upgrading of both technical and diagnostic skills of the service team through factory-based training and in-house training by engineers of our suppliers. We outsourced the training of other enrichment and life skills like effective communication, customer service and leadership to training schools and establishments. From 2000 to this date, we believe that we are one of the leading Singapore-based commercial and industrial kitchen solutions providers for the F&B and hospitality services industries with an established reputation and track record for our service quality, efciency, reliability and competitive pricing. Since the setting up of our Service Department, we have expanded our customer base to cover different segments, including the F&B outlets, hotels, restaurants, central kitchens, factories and eateries which are mid-sized or larger, and on an ad-hoc basis, docked ship vessels. Fabrication and Production Department In order to have a better control over the quality of our stainless steel kitchen equipment and to ensure the timely supply of such equipment to meet the requirements of our projects, we had, in 2003, branched into the manufacturing of stainless steel products and kitchen equipment by acquiring a bending machine and a shearing machine. This increased our capability and capacity for the fabrication of kitchen equipment. As such, we established our Fabrication and Production Department to focus on the production of stainless steel products, such as stainless steel cabinets, tables and other equipment. We also started to fabricate food warmers, bainmaries, shelvings, cabinets, wall claddings, gratings and our own exterior stainless steel body for our kwali range and steamers, effectively practically all kitchen products that are stainless steel. In that year, we increased the total number of our employees to approximately 30. In May 2005, to meet soaring sales volumes of fabricated stainless steel kitchen equipment, we acquired one computer numerical control (CNC) punching machine for use in the fabrication of our high quality stainless steel products. The CNC machine uses computer programs to automatically execute a series of machining operations, thereby giving rise to higher accuracy in manufacturing, shorter production time, greater manufacturing exibility and a reduction in defects caused by human error. In September 2006, we set up new fabrication facilities in our factory erected on a parcel of industrial land located at No. 11 Jalan Bakti, Larkin, Taman Perindustrian 80350 Johor Bahru, Malaysia. With a total oor area measuring approximately 10,000 square feet, the factory could accommodate additional equipment and CNC machines, enabling us to meet increasing customers orders for our fabricated stainless steel products and for our kwali range of products. Project Sales Department In 2006, with the increase in our sales and fabrication capabilities and capacities, we established new departments, namely the Project Sales Department and the Purchasing Department. This was in line with our strategy to increase revenue and margins as the value of a fabrication project is relatively higher than a service contract. In addition, revenue derived from project sales which normally include consultancy, design and workow process is invariably higher and results in attractive margin as project sales will encompass more professional and technical know-how aside from customisation of equipment. Our Project Sales Department secured its maiden hotel project in Royal Plaza on Scotts in 2006 to fabricate, install and commission its kitchen system. The Purchasing Department supports the Project Sales Department and the Technical and Maintenance Service Departments. Around the same time, we also expanded our Service Department into a Service and Maintenance Department. We secured several preventive maintenance contracts to service hotels and restaurants which provided our Group with recurring revenue as well as increased business opportunities for the sale of our kitchen equipment. Preventive maintenance contracts are contracts to maintain the lifespan and value of the kitchen equipment through scheduled inspections, cleanings and repairs before the breakdown of the kitchen equipment.
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Throughout 2006, our Project Sales Department established distributorship arrangements with several established kitchen equipment brands from Canada, Europe, Japan and the USA, including the HansDampf, Winterhalter, Hoshizaki Ice Maker, Sirman Food Processing, Lincat, Alto-shaam, Carter-Hoffman, Crown and Irinox brands, to diversify and to enhance our brand offerings. 2007 to the Latest Practicable Date In March 2007, we also registered our trademarks for our range of industrial refrigeration products under our Qoolux brand, and for our Chinese cooking range under our InnoFlame brand. Our Group recognised the potential for growth in the F&B market in Vietnam. In July 2007, with the assistance of International Enterprise Singapore (IE), we set up a representative ofce in Ho Chi Minh, Vietnam, to market our commercial kitchen products and engaged sales personnel to secure projects. We participated in an IE programme to expand our business in Vietnam, resulting in our rst project at the New World Hotel Saigon in March 2008. In January 2007, our Group obtained the ISO 9001:2000 Certication in Singapore for the trading of kitchen equipment as a testament to our production capabilities and our commitment to quality. In early 2009, we relocated our fabrication facility to No. 4 Jalan Sri Plentong 10 Taman Perindustrian Sri Plentong 81750 Masai, Johor Bahru, Johor, Malaysia, with a land area of approximately 20,278 square feet, which we acquired to accommodate the expansion of our business operations. As part of our continuous efforts to widen our capabilities, we further expanded the scope of services provided by our Service Department in mid-2010 to include exhaust maintenance and the cleaning of cooker hoods, which were previously outsourced. After commencing business in Vietnam for ve years, we decided to establish a corporate presence in Vietnam in 2012. We incorporated Qson Kuechen Kultur Co., Ltd. as a wholly-owned foreign enterprise under the laws of Vietnam in April 2012. By doing so, we aim to further expand into the Vietnamese market by hiring more employees and expanding our partnership network there. In early 2013, we designed and built a training kitchen and central production kitchen for Nanyang Polytechnic. Throughout the years, we have forged strong and stable business relationships with renowned F&B and hospitality services players operating in Singapore and Southeast Asia. Our Signicant Projects Some of the signicant projects that we have been involved in are set out below: Fabrication and Distribution Segment
Commencement Date of Business Relationship 2010
Description of Project (a) Fabrication, installation and commissioning of kitchen systems at Level 33 at Marina Bay Financial Center Fabrication, installation and commissioning of kitchen systems at Tanglin Club at Tanglin Road Fabrication, installation and commissioning of kitchen systems at Hilton Hotel at Orchard Road
Customer Name Level 33 Pte. Ltd.
(b)
SLA Design Consultants (S) Pte Ltd Hotel Properties Limited
2010
(c)
2010
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Description of Project (d) Fabrication, installation and commissioning of kitchen systems at the various restaurants under the Soup Restaurant group of restaurants Fabrication, installation and commissioning of kitchen systems at the various restaurants under the Pu Tien group of restaurants To supply kitchen equipment to Singapore Armed Forces camps (fabricated standard and electric-operated kitchen equipment) Fabrication, installation and commissioning of kitchen systems at Foodaxis Fabrication, installation and commissioning of kitchen systems at Days Hotel and Ramada Hotel
Customer Name Soup Restaurant group of companies
(e)
Pu Tien Restaurant group of companies
2000
(f)
Defence Science and Technology Agency
2010
(g)
Chef Peters Kitchen Pte Ltd Westbuild Construction Pte Ltd
2011
(h)
2012
From time to time, we also supply fabricated kitchen equipment outside of Singapore, including to various hotels and restaurants located in Dubai and Indonesia. Maintenance and Servicing Segment
Description of Contract (a) To provide servicing and repair services for kitchen equipment at all their outlets on a non-exclusive basis and in particular, to provide servicing for their walk-in cold rooms and their exhaust systems To provide maintenance services for restaurant kitchens
Customer Name Burger King Singapore Pte. Ltd.
(b)
Resorts World at Sentosa Pte Ltd SFI Manufacturing Pte Ltd (a member of the SATS Ltd. group of companies)
2011
(c)
To provide maintenance for gas kitchen equipment and refrigerators, ice-makers and dishwashers and other additional service and repairs
2006
BUSINESS OVERVIEW Our Directors believe that we are one of the leading Singapore-based commercial and industrial kitchen solutions providers for the F&B and hospitality services industries with an established reputation and track record for our service quality, efciency, reliability and competitive pricing. We also provide customised industrial-style kitchen solutions for residential households. As a one-stop kitchen solutions provider, we specialise in the provision of design and consultancy services for the setting up and maintenance of commercial and industrial kitchens, fabrication, installation and sale of a wide range of kitchen systems as well as kitchen equipment. We also specialise in the maintenance and servicing of kitchen equipment to support the F&B and hospitality services industries in Singapore. Our major customers include central kitchens, integrated resorts, hotels, government agencies and restaurants.
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We operate in the following two key business segments: Fabrication and Distribution Segment Our Group carries out business activities in fabrication and distribution of equipment under our Fabrication and Distribution Segment. We manufacture standard and customised kitchen systems as well as kitchen equipment including kwali range (with blower), boiling pan, gas convection oven, char broiler, steamer (with blower), duck roaster, pig roaster, noodle boiler, steamer cabinet, salamander, fryer, stock pot stove, portable gas range, bainmarie and electric convection oven under our InnoFlame brand, and engage an OEM to manufacture air cooling under counter refrigeration, two-door upright air cooling refrigeration, four-door upright air cooling refrigeration, six-door upright air cooling refrigeration, pizza air piping worktable refrigeration, air piping drawer worktable refrigeration, salad air piping refrigeration bench, air piping sliding glass door showcase, and chocolate and red wine showcase under our Qoolux brand. We also customise certain kitchen equipment on an ad hoc basis according to our customers requests, such as marble and wood-clad display tops for showcasing food items. We sell and distribute third party imported kitchen systems, kitchen equipment and accessories in Singapore which are manufactured overseas under several established brands from Canada, Europe, Japan and the USA. Depending on the distribution arrangements, we can sell the brands outside of Singapore. Please refer to the section entitled General Information on Our Group Products That We Sell and Distribute Products under third party equipment brands of this Offer Document for more information. In addition, we also provide design, consultancy and installation services to our customers, designing and installing stainless steel kitchen systems in accordance with their specications and requirements. To ensure that the design and layout of the kitchen meets our customers requirements, we conduct site visits and work closely with our customers to better understand their needs before providing customised kitchen systems and/or kitchen equipment. With our capabilities and experience, we are able to provide value-added advice and solutions to our customers in respect of setting up and maintaining commercial and industrial kitchens. For our projects, we supply products under our InnoFlame and Qoolux brands as well as third party kitchen equipment. We also sell these kitchen equipment individually to our customers. Generally, our projects are awarded either (i) directly by customers; or (ii) through a tender process. Our customers enter into contracts (which specically indicate delivery schedule, quantity and pricing) with us for us to design, consult, supply and deliver our products for specic projects, which typically take between three to six months to complete. For FY2010, FY2011 and FY2012, our Fabrication and Distribution Segment contributed approximately 64.9%, 62.6% and 64.9% of our Groups revenue respectively. Maintenance and Servicing Segment Our Group carries out business activities in maintenance servicing and technical servicing of kitchen equipment under our Maintenance and Servicing Segment. We undertake preventive maintenance works and repairs on kitchen equipment to ensure that they are in good working condition and functioning properly under the preventive annual maintenance agreements which we enter into with our customers. We have also developed capabilities to carry out urgent repairs, cleaning and degreasing of kitchen equipment, including exhaust hoods, ducts, and exhaust motors. In addition, with our in-house licensed gas service workers, we are able to undertake the construction and repair of gas pipes and ttings, as well as the installation, repair and testing of gas appliances and gas meters. As at the Latest Practicable Date, we operate a eet of 17 vehicles and a team of more than 50 service technicians to conduct servicing of kitchen equipment throughout Singapore for our existing customers, which include central kitchens, integrated resorts, hotels, government agencies and restaurants, and for our potential customers. Based on our industry knowledge, the Directors believe that we are the largest servicing team in Singapore providing such services. 75

For products under our proprietary equipment brands and depending on the circumstances, we provide our customers with technical services for the duration of their warranty periods, which generally range from 12 to 18 months. For products under third party equipment brands and depending on our arrangement with the relevant supplier, we provide technical services for the duration of their warranty periods, which are typically 12 months from the date of delivery or installation of the products. For FY2010, FY2011 and FY2012, our Maintenance and Servicing Segment contributed approximately 35.1%, 37.4% and 35.1% of our Groups revenue respectively. PRODUCTS THAT WE SELL AND DISTRIBUTE Products under our proprietary equipment brands We supply kitchen systems and kitchen equipment under our proprietary brands, Qoolux and InnoFlame. Products sold under our proprietary brands are largely to cater to the demand of restaurants and hotels which require well-designed, quality, customised products to meet the specications of their restaurant concepts. Under Qoolux, our products include air cooling under counter refrigeration, two-door upright air cooling refrigeration, four-door upright air cooling refrigeration, six-door upright air cooling refrigeration, pizza air piping worktable refrigeration, air piping drawer worktable refrigeration, salad air piping refrigeration bench, air piping sliding glass door showcase, and chocolate and red wine showcase. Under InnoFlame, our products include kwali range (with blower), boiling pan, gas convection oven, char broiler, steamer (with blower), duck roaster, pig roaster, noodle boiler, steamer cabinet, salamander, fryer, stock pot stove, portable gas range, bainmarie and electric convection oven. We commenced manufacturing products under our proprietary brands in 2006, and registered trademarks and commenced sales in 2007. As at the Latest Practicable Date, we manufacture the products sold under our brand, InnoFlame, primarily in our fabrication facilities located at No. 4 Jalan Sri Plentong 10 Taman Perindustrian Sri Plentong 81750 Masai, Johor Bahru, Johor, Malaysia, with support from our workshop at Blk 115A Commonwealth Drive #01-27/28, Singapore 149596. Products sold under our Qoolux house brand are manufactured by an OEM based in China. Products under third party equipment brands In addition to selling our proprietary brands, we are also a distributor for a wide range of kitchen systems, kitchen equipment, and accessories under third party brands which are manufactured by manufacturers from Canada, Europe, Japan and the USA. We set out below some of the third party brands which we distribute:
Country of Manufacturer Germany Germany Germany Commencement of Relationship 2006 2006 2006
Brands OptimaMeister HansDampf Winterhalter
Manufacturer MKN GmbH & Co MKN GmbH & Co Winterhalter Gastronom GmbH Hoshizaki Electric Co. Ltd Bertos S.p.A.
Key Products Cooking ranges Combi steamers Dishwashing machines
Hoshizaki
Japan
Ice machines and refrigerators Cooking ranges
2006
Bertos
Italy
2009
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Country of Manufacturer Italy Commencement of Relationship 2006
Brands Sirman
Manufacturer Sirman S.p.A.
Key Products Food preparation machines, blast chillers and shock freezers Catering equipment and display showcases Holding cabinets, food transportation and delivery carts, refrigeration cabinets Tilting kettles and skillets
Lincat
Lincat Ltd
UK
2006
Carter-Hoffmann
Carter-Hoffmann LLC
USA
2006
Crown
Crown Food Service Equipment Ltd Williams Refrigeration Hong Kong Ltd Irinox S.p.A. Kolb Group Eurotec SRL Coreco S.A. Imperial Commercial Cooking Equipment Inc
Canada
2006
Williams Refrigeration Irinox Kolb Colged Coreco Imperial
UK
Refrigeration and blast freezer chillers Blast freezer chillers Baking ovens Dishwashing machines Chiller showcases Cooking ranges and ovens
2006
Italy China Italy Spain USA
2006 2012 2008 2010 2006
With our strong track record and good reputation, we have been able to establish distributorship arrangements with the suppliers of various international third party brands of kitchen systems, kitchen equipment, and accessories over the years. This, coupled with the good working relationship between us and our suppliers, has resulted in the continuation of our distributorship arrangements with our suppliers over the years. We generally work with reputable suppliers from overseas and constantly source for and select products from third party brands to distribute according to the needs and requirements of our customers. Hence, we do not have written contracts with our suppliers. Nonetheless, we have worked with our suppliers for a long time and have established good working relationships with them. Our rights to sell products under these third party brands are granted by third party suppliers under the respective distributorship arrangements which are not formalised in writing. However, in the event that a supplier terminates our distributorship arrangement for any third party brands, we believe that we can still source for replacement kitchen systems, kitchen equipment, and accessories from other suppliers by leveraging on our strong reputation and established pool of suppliers. We currently sell and distribute the imported kitchen systems and kitchen equipment to end-users only. With the wide variety of products under different brands, we believe that we have become one of the leading kitchen solutions providers for the F&B and hospitality services industries in Singapore. Moving forward, we will continue to source for new international brands to increase our product offerings in order to keep abreast with the market trends and consumer demands. For FY2010, FY2011 and FY2012, the sale of products that we sell and distribute constituted approximately 13.8%, 12.0% and 9.5% of our Groups revenue respectively.
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BUSINESS PROCESS Fabrication and Distribution Segment The diagrammatic illustration of the business process for our fabrication projects is as follows: Tender and Tender Preparation
Contract Review and Administration
Award of Tender
Project Planning
Project Execution
Project Handover
Tender, Tender Preparation and Award of Tender Tender Generally, we source for projects mainly through the following avenues: (a) public tender based on media notices, for example, newspapers, trade magazines, government websites and other mass media publications; invitations from consultants including architects, quantity surveyors, foodservice equipment consultants and interior design consultants, to participate in open tenders; participation in undertaking kitchen design consultancy works direct from owners; tenders including government electronic business tenders and government agency electronic tenders from public institutions and government agencies; and marketing calls to the relevant customers in the F&B, catering and food production industries.
(b)
(c) (d)
(e)
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In addition, we also obtain repeated orders from existing customers and referrals of new customers from customers from existing and past projects. Our sources for projects can be broadly classied into the following categories: (i) Open tender projects Upon invitation by our customers to participate in the tender for their kitchen equipment projects, we may attend the site visits conducted by our customers to better understand and be briefed on any specic requirements of the project. Thereafter, we may then prepare and submit our tender cheque deposit for purpose of collecting the tender documents. (ii) Design consultancy projects Upon invitation by our customers to propose our kitchen equipment design and provide consultancy services, we will prepare and submit our proposal together with our quotation and the indicative scope of works for customers evaluation. If our proposal is selected by our customer and the customer wishes to appoint us as the kitchen equipment consultant, the purchase order that we receive will reect our appointment as kitchen equipment consultant. Depending on the terms of our letter of appointment and letter for consultancy, we may request the customer to place a deposit with us prior to us joining their panel of consultants to commence the development of the kitchen equipment design. After completing the design works, we may then proceed to edit kitchen equipment specications for tender and produce the complete set of necessary tender documents for the customer to call for an open tender for bidding quotations. (iii) Design and quote fast pace projects A signicant portion of our projects sales are awarded to us by our existing customers that are expanding and setting up new branch restaurants in new commercial shopping malls. At the initial stage of setting up a restaurant, the customer will request that we volunteer and assist them in designing their kitchen system, as well as to furnish them with a proposal for the delivery and installation of the kitchen system based on the proposed design. To come up with the design for the kitchen system, we will request that the customers provide us with their restaurant space plan for the particular project and will conduct in-depth discussions with their executive chef and/or operations manager to determine their specic requirements for their new kitchen facilities. Upon nalising the operational kitchen design planning, we will proceed to compile a complete set of quotations for the customers evaluation. Tender Preparation After we have familiarised ourselves with the specic requirements of a particular tender or project, we will contact third party kitchen equipment manufacturers overseas to obtain their quotations for the supply of kitchen equipment which they own proprietary rights to. Simultaneously, we will also obtain quotations from our local sub-contractors which have expertise in specic areas to provide the required works as stipulated in the tender documents, such as works in relation to walk-in cold rooms, re suppression safety system and exhaust mechanical ventilation systems, and works involving electrical supply services, plumbing supply services and gas supply services. Our tender team will derive at a reasonable tender quotation price which factors in a reasonable prot margin after taking into consideration the relevant pricing and costing, the complexity and risks associated with the project. The tender bid is reviewed and approved by our Executive Directors before the submission.
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After our Executive Directors have approved the tender bid, our tender team will compile the relevant supporting documents into a complete set of tender documents for submission to the customer. As a measure to keep track of all our tenders, we will update our tracking list with the new tender for follow up actions at a later date. Contract Review and Administration For our open tender projects and design consultancy projects, if our submitted tender price is amongst the most competitive, we may then be required to attend tender interviews with our customers and their consultants to clarify issues such as pricing and equipment offered, and to respond to any other queries relating to the tender. For all our projects, there may be intense negotiations to nalise the terms of the contract and we may be required to submit a nal revised offer. Following our successful negotiations and the customers decision to award us with the project, we will request that the customer issue us with a formal letter of award (for open tender projects and design consultancy projects), a quotation or a purchase order (for design and quote fast pace projects) as an indication of the acceptance of our quotation. Award of Tender After we have received a letter of award, quotation or purchase order from the customer, we will review and ensure that the project specication and scope of work to be performed by us are set out clearly in these documents, and the contract terms are consistent with the submitted tender documents. Thereafter, our Sales Administration Department will record the conrmation from our customer, and issue the conrmed sales order to our customer and to the relevant key departments. Depending on our working relationship with a particular customer, its past payment record and our assessment of the customers nancial standing, we may also request the customer to place a deposit of between 10% to 40% of the contract value with us upon its conrmation to award us with the project. For our open tender projects, the entire process takes approximately two to six months, depending on the customers requirements and decision making process. For our design and quote fast pace projects and design consultancy projects, the entire process for such projects which do not involve the construction of a new building will take approximately three to four months. Project Planning Prior to the commencement of a project, we will hold an internal kick-off meeting involving our project executive or co-ordinator, our project supervisor, our drafting executive and our purchasing manager (Project Team) to brief them on the designs of the kitchen system, customer requirement, our scope of work, completion timeline and the appointed sub-contractors for specialist works to ensure that the project can be executed in accordance with the contractual requirements and fulls the objectives of completing the project to meet high quality standards under safe and environmentally-friendly conditions within the stipulated time and budget. Project Execution Before executing the project, our project co-ordinator will submit the design layout, mechanical and engineering (M&E) drawings and fabrication shop drawings to our customers or the kitchen equipment consultant for verication and their nal approval. During the course of performance of our project, our project co-ordinator will attend regular site meetings conducted by our customers project manager, monitor the builder work progress on a regular basis and conduct accurate site measurement to verify that the actual allowable dimension of the individual kitchen equipment is in conjunction with the overall design layout plan.
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Our project co-ordinator will work closely with our customers and their specialist sub-contractors to conduct site markings and to co-ordinate M&E provisions for our works. The project co-ordinator will check and send shop drawings for individual fabrication equipment to our factory and/or overseas suppliers and conduct regular internal briengs with the other team members in the Project team whenever necessary to ensure the accuracy of works. Thereafter, our project co-ordinator will closely monitor fabrications, arrival of imported equipment and commencement of specialist works (these include cold rooms, exhaust hoods and re suppression system) to minimise any delay or disruption of the delivery schedule. Our project co-ordinator will also conduct regular site checking and work closely with our customers and liaise with our customers or the kitchen equipment consultant to rectify and resolve any disruptive issues, to update our customers or the kitchen equipment consultant on latest site variation, if any, and to provide them with solution for such variation. To ensure that we are able to meet our customers requirements and if required, our Project Team may liaise with our customers or kitchen equipment consultant to conduct quality inspection in our factory prior to site delivery. Project Handover Prior to the delivery and installation of the kitchen equipment, our project executive will co-ordinate the logistical schedule for consolidation and delivery or shipment of the kitchen equipment from our factory to our customers site. Our project supervisor will carry out nal connection installation for the kitchen equipment and arrange for skilled technicians and our sub-contractors to conduct testing and commissioning of the kitchen equipment. Upon the commissioning of the kitchen equipment, the handing over of the project to the customer will be formally documented. Thereafter, we will liaise with the skilled technicians and our sub-contractors to conduct training for the customers operational end-users on how to operate the kitchen equipment. This is also supported by a compilation of equipment operation, maintenance and spare parts manual which we will furnish to our customers facility manager. In addition, depending on the terms and conditions of our fabrication projects negotiated with our customers, we will provide complementary maintenance and services works for a period of one year after completion of the kitchen systems and equipment. Distribution Generally, our customers are required to make deposits of at least 20% of their contract value. For our long-term customers, we will invoice them upon the delivery or installation of our kitchen equipment, and grant them a credit period of 30 days from such date. For our new customers, they are typically required to make full payment upon delivery or installation and commissioning of our kitchen equipment. For our retail customers, we will collect payment upon delivery or collection of our kitchen equipment. Maintenance and Servicing Segment Our maintenance and servicing contracts are generally xed for a period of one year. The majority of our customers in the Maintenance and Servicing Segment will automatically renew our maintenance contracts with them to provide maintenance services on an annual basis. For the remaining customers, they will request us to submit our quotation for the maintenance service as part of their standard procedure. During the tenure of our maintenance and service contact, our service administrator will plan the maintenance works based on the periodic schedule provided by our customers. Generally, the older kitchen systems and/or equipment will require more frequent maintenance services as compared to the newer kitchen systems and/or kitchen equipment. The maintenance site supervisor will estimate the manpower required and form a team comprising maintenance personnel and a co-ordinator in charge of quality assurance to carry out the maintenance work. Upon completing each stage of the work according to the periodic schedule given by our customers, we will execute and return our customers a form to acknowledge the completion and delivery of our maintenance services. 81

MARKETING Our sales and marketing activities are spearheaded by our Managing Director, Sally Chua. She is assisted by our Executive Directors, Alan Lee and Frankie Cheng, and our Project Sales Department. Together, the directors and sales personnel formulate marketing strategies, secure new customers and maintain customer relationships. We market our products and services to our customers through direct marketing, mailers, electronic mailers, advertisements, publications and our corporate website. With our presence in the kitchen equipment industry since 1996, our Directors believe that we have established ourselves in the kitchen equipment industry as a leading kitchen equipment supplier and service provider in Singapore. We maintain regular contact with our customers to better understand their requirements and attend to their enquiries promptly, and our good relationships with our customers also result in referrals for our products and services. To enhance public awareness of our products and to reach potential new customers in both the local and overseas markets, we advertise in newspapers, magazines, directories and trade publications with circulation in Singapore. In addition, we regularly organise cooking demonstrations at our head ofce/ showroom to demonstrate the capabilities of our equipment. We showcase our products at trade fairs such as Food & Hotel Asia held in Singapore and Vietnam. In addition, we attend international trade fairs, held mainly in Italy, to source for new brands and products, understand changes in trends and foster relationships with existing and potential suppliers and customers. Since the commencement of our business, we have established sales and marketing networks in various countries including Singapore, Malaysia and Vietnam. QUALITY CONTROL We consider quality assurance as one of our key strengths. As the quality of our products and services is vital to our success, we place great emphasis on having stringent quality control measures at different stages of our business process. Our Group ensures high quality of our products and services by implementing quality control processes commencing from the time we receive raw materials from our suppliers to each stage of the fabrication process. We visually inspect the raw materials received by us and do further inspections on random samples of the raw materials. Raw materials that do not pass our quality control inspections are returned to our suppliers for replacement. We also maintain our equipment and machinery regularly to ensure that our products consistently meet the requirements of our customers in terms of quality and specications. For products which we sell under our Qoolux house brand, our OEM manufacturer conducts its own quality control checks on the products at its factory in China. Upon receiving the products in Singapore, we conduct inspections on random samples prior to delivery to our customers. In the event that the products have major defects and cannot be repaired, we will return them to our OEM manufacturer for a one-to-one replacement. We adhere closely to the ISO guidelines (from sourcing and procurement to the delivery of our products), to ensure that the quality of our products and services meet our customers expectations. Our commitment to quality is evidenced by the following certications which we have obtained:
Name of Subsidiary Qson Kitchen Equipment Pte Ltd Certication ISO 9001:2008 Scope Trading of kitchen equipment Issuer Q.A. International Certication Limited Expiry Date 4 January 2014
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For kitchen systems, kitchen equipment and accessories which we distribute under third party brands, we source and procure our products from suppliers of international brands who have a set of stringent in-house checks in place to ensure their products are manufactured in accordance to their standards and guidelines. Our Managing Director, Sally Chua, oversees the management of the portfolio of brands that we distribute to ensure consistency in quality. When we receive the third party brand products from our suppliers, our logistics supervisor will conduct review and inspection of the incoming products for quantity, specications and defects in accordance to the requirements stated in the purchase contracts. Depending on the circumstances, we may conduct inspections on random samples of the products. Any product that fails our incoming inspection will be rejected and returned to our suppliers for replacement. Prior to delivery of the products to our customers, our logistics supervisor will perform outgoing inspections to ensure that products with the required specications and quantities are packed and delivered to our customers. STAFF TRAINING We believe that our employees are one of our key assets, and have been instrumental to the continued success and development of our Group. Our training policies are geared toward ensuring that our employees acquire relevant knowledge and skills in their domain in order to meet their job requirements. We provide on-the-job training for newly recruited staff and technicians and carry out periodic in-house training carried out by our senior supervisors or external trainers for existing staff. Our operation staff also attend occupational safety training to be educated on occupational safety at our facilities and project sites and to be trained on the safety precautions which they are expected to adopt in the course of their work. We also enrol our employees in external training courses relevant to their domain, such as licensed gas worker certication and refresher courses, on a regular basis. From time to time, our sales, marketing and operations staff undergo product training conducted by our suppliers and manufacturers. This training may be conducted overseas or locally. As most of our training was conducted internally, the amount incurred in relation to staff training over the past three nancial years has not been signicant. During the Periods Under Review, our expenses incurred in relation to staff training were not signicant, at approximately 1.0% of payroll expenses. AWARDS AND CERTIFICATIONS As a testament to our commitment to quality, our Group has received several awards and certications over the years, some of which are set out below. Year 2007 Award / Certication ISO 9001:2008 (Certificate of Registration) for trading of kitchen equipment in accordance with this quality management system BizSafe Level 3 Certicate
2012 INSURANCE
We have taken up insurance policies for risks such as the following: (a) (b) (c) (d) loss or damage to our properties by re and/or lightning and/or extra perils; loss due to burglary; public liability within our premises; workmen injury compensation for our employees;
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(e) (f) (g) (h) (i) (j) group insurance for accidental death and dismemberment of our employees; business travel insurance for our employees; foreign workers and group medical plan; goods-in-transit; all risks; and directors and ofcers liability.
The above insurance policies are reviewed annually to ensure that they adequately satisfy both regulatory and business requirements. We may increase the coverage if we deem it necessary and appropriate. We have not experienced any difculties obtaining or renewing our insurance policies, or on realising claims under any of our insurance policies. As at the Latest Practicable Date, our Directors believe that the policy specications and insured limits of these insurances are in line with normal commercial practice. Save as disclosed under the section entitled Risk Factors of this Offer Document, our Directors believe that the coverage from these insurance policies is adequate for our present operations. However, signicant damage to our operations or to any of our properties, whether as a result of re and/or other causes, may still have a material adverse impact on our results of operations or nancial condition. PRODUCTION CAPACITY AND FACILITY We have one manufacturing facility located in Malaysia supported by a workshop located in Singapore as at the Latest Practicable Date. The table below indicates the respective capacity and utilisation rates for each of FY2010, FY2011 and FY2012: Equipment and Stainless Steel
FY2010 Annual Productive Capacity (units) Actual Annual Production (units) Average Utilisation Rate
Notes: (1) Maximum production capacity for Stainless Steel and Equipment = Average number of production worker x 12 outputs x 12 months (FY2010: 6 output per worker per month, FY2011: 9 output per worker per month, FY2012: 12 output per worker per month) The average utilisation rate = Actual production output / Annual Productive Capacity Actual Annual Production = Total production quantity based on Delivery Orders for the FY
FY2011 3,005 2,362 78.6%
FY2012 3,024 2,022 66.9%
2,800 997 35.6%
(2) (3)
Spare Parts
FY2010 Annual Productive Capacity (units) Actual Annual Production (units) Average Utilisation Rate
Notes: (1) (2) (3) Maximum production capacity for Spare Parts = Average number of production worker x 10 outputs x 12 months The average utilisation rate = Actual Annual Production / Annual Productive Capacity Actual Annual Production = Total production quantity based on Delivery Orders for the FY
FY2011 3,340 2,160 64.7%
FY2012 2,500 1,688 67.5%
4,670 1,389 29.7%
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PROPERTIES AND FIXED ASSETS As at 31 December 2012, the properties owned by our Group are set out below:
Approximate area (sq ft, unless otherwise stated) 1,421
Owner Qson International
Location 1 Commonwealth Lane #03-06, One Commonwealth, Singapore 149544
Tenure Leasehold 30 years commencing from 01 March 2008 Freehold
Use of property Leased to Actlink Container Lines Pte Ltd
Encumbrances Mortgaged to DBS Bank
Qson KitchenHub
No. 4 Jalan Sri Plentong 10, Taman Perindustrian Sri Plentong, 81750 Masai, Johor, Malaysia
20,278
Leased to Qson Industries Malaysia for fabrication activities
Mortgaged to United Overseas Bank (Malaysia) Bhd
As at 31 December 2012, the properties leased by our Group are set out below:
Floor area (sq m, unless otherwise stated) 278
Tenant Qson Kitchen Equipment
Location 115A Commonwealth Drive, #01-24/25/26 Singapore 149596 115A Commonwealth Drive, #01-27/28, Singapore 149596 115A Commonwealth Drive, #02-28/29, Singapore 149596 115A Commonwealth Drive, #02-30/31/32 Singapore 149596 115A Commonwealth Drive, #05-18/19 Singapore 149596
Use of property(1) Warehouse
Lease period From 1 February 2013 to 25 July 2015 From 16 January 2013 to 25 July 2015 From 16 April 2012 to 15 April 2015 From 26 July 2012 to 25 July 2015 From 1 May 2013 to 25 July 2015
Lessor DBS Trustee Limited (trustee of Mapletree Industrial Trust) DBS Trustee Limited (trustee of Mapletree Industrial Trust) DBS Trustee Limited (trustee of Mapletree Industrial Trust) DBS Trustee Limited (trustee of Mapletree Industrial Trust) DBS Trustee Limited (trustee of Mapletree Industrial Trust)
Qson Kitchen Equipment
183.40
Factory
183.40
Ofce
278
Warehouse
137.60
Warehouse
Note: (1) This refers to the actual use of the properties in the light industrial building by our Group. The lease agreement for each property provides that the leased premises shall be used as a factory for the purpose of manufacturing table, kitchen and other cutlery in accordance with the guidelines of the Urban Redevelopment Authority (URA) and other applicable authorities and in connection with the Tenants business. Under the URA guidelines for light industrial buildings, developments zoned as industrial must have a predominantly (of at least 60%) industrial use. Such use can include manufacturing/assembly, servicing/repair/workshop and warehouse. The remaining area (of up to a maximum of 40%) can be used for ancillary uses, which can include ofce use.
As at the Latest Practicable Date, our Directors are not aware of any breach of any obligations under the abovementioned lease agreements that would result in their termination by the lessor or non-renewal, if required, when they expire.
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As at 31 December 2012: (a) (b) our leasehold and freehold properties had a carrying amount of approximately S$507,045; and the remaining items in plant and equipment (comprising motor vehicle, furniture and ttings, plant and machinery, computer and ofce equipment, renovation) had an aggregate carrying amount of approximately S$502,061.
Save as disclosed in this section and save for 1 Commonwealth Lane #03-06, One Commonwealth, Singapore 149544 and No. 4 Jalan Sri Plentong 10, Taman Perindustrian Sri Plentong, 81750 Masai, Johor, Malaysia, as at the Latest Practicable Date, none of our xed assets is subject to any mortgage, pledge or any other encumbrances or otherwise used as security for any bank borrowings. To the best of our Directors knowledge, save as disclosed in the section entitled Government Regulations of this Offer Document, there are no regulatory requirements or environmental issues that may materially affect our utilisation of our xed assets as at the Latest Practicable Date. CORPORATE SOCIAL RESPONSIBILITY Our Group is strongly committed to our corporate social responsibility initiatives and is constantly searching for schemes and means to contribute to the community. For example, our Group has proposed to set up the entire kitchen system in the new premises of Willing Hearts, a non-prot organisation which prepares, cooks and distributes meals to the needy at various locations in Singapore. Besides caring for the community through cash donations, we also contribute to the community by spending time with orphans and underprivileged children. Our management and employees regularly organise events for the Singapore Childrens Society, including outings for the children to Johor Bahru and Batam. As a testament to our commitment to make a difference to the lives of those who are less privileged, some of us travelled to Cambodia in 2012 for a volunteer building project involving the painting and renovating of an orphanage. RESEARCH AND DEVELOPMENT Generally, the nature of our business does not require us to carry out any major research and development activities. However, our fabrication and design team is typically able to customise functions according to the demands of the customers or developments of our industry. INTELLECTUAL PROPERTY As at the Latest Practicable Date, we have registered the following trademarks:
Registration Date/ Effective Date 19 March 2007
Registered owner Qson Kitchen Equipment Pte Ltd
Trademark
Class 37(1)
Country of registration Singapore
Registration number T0705762B
Expiry date 19 March 2017
Qson Kitchen Equipment Pte Ltd
35(2)
Singapore
T0705763J
19 March 2007
19 March 2017
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Registration Date/ Effective Date 12 March 2007
Registered owner Qson Kitchen Equipment Pte Ltd
Trademark
Class 11(3)
Country of registration Singapore
Registration number T0705318Z
Expiry date 12 March 2017
Qson Kitchen Equipment Pte Ltd Qson Kitchen Equipment Pte Ltd Qson Kitchen Equipment Pte Ltd
Notes: (1)
11(4) 11(5)
Singapore Singapore
T0705284A T0705289B
12 March 2007 12 March 2007
12 March 2017 12 March 2017
11(5)
Singapore
T07/05288D
12 March 2007
12 March 2017
Class 37 refers to the specication of services under the International Classication of Goods and Services by the World Intellectual Property Organisation. The services classied under Class 37 that are relevant to this trademark are the fabrication [construction], installation, repair and maintenance of kitchen equipment. Class 35 refers to the specication of services under the International Classication of Goods and Services by the World Intellectual Property Organisation. The services classied under Class 35 that are relevant to this trademark are the import and export agency in relation to kitchen equipment. Class 11 refers to the specication of goods under the International Classication of Goods and Services by the World Intellectual Property Organisation. The goods classied under Class 11 that are relevant to this trademark are apparatus for cooking; apparatus for freezing foodstuffs; bakers ovens, baking ovens; commercial catering fryers; commercial cooking apparatus; commercial ovens for baking food; commercial refrigeration units; cookers; cookers having vitreous enameled surfaces; cookers incorporating grills; cooking apparatus and installations; cooking appliances; cooking appliances (nonelectric); cooking grills; cooking hobs; cooking installations; cooking machines; cooking ovens; cooking ranges; cooking stoves; cooking units; cooking utensils, electric; domestic cooking apparatus; domestic cooking appliances [electric]; domestic deep fryers [electric]; domestic drying apparatus [electric]; domestic frying pans [electric]; domestic gas cookers; domestic grill apparatus; domestic heating apparatus; domestic heating appliances; domestic heating utensils; domestic hot plates; domestic machines (electric-) for making pancakes; domestic machines for making ice; domestic ovens; domestic plate warmers; domestic pressure cookers [electric]; domestic refrigerators; domestic stoves; steam cookers; steel degassing heating rods; refrigerators for food stuffs; overlying bed ovens for bakeries; ovens (microwave-) for industrial purposes; ovens (shaped ttings for-); machinese for use in the preparation of food [cooking]; machines for use in the processing of foodstuffs [cooking or refrigerating]; microwave devices for cooking; microwave ovens [cooking apparatus]; microwave ovens for domestic use; microwave ovens for industrial purposes; kitchen machines (electric-) for cooking; installations for cooking ; installations for cooking consisting of halogen heating devices; installations for cooking incorporating halogen heating devices; installations for heating foodstuffs; heating apparatus for foodstuffs; gas cookers; gas cooking apparatus incorporating cooking grills; gas cooking appliances; gas operated apparatus for cooking; gas operated apparatus for heating; gas ovens; grilling [cooking] apparatus; grills; grills [cooking appliances]; grills for barbecuing; electric cookers; electric cooking apparatus; electric cooking pots; electric cooking stoves; electric cooking utensils; electric grilling apparatus; electric grills. Class 11 refers to the specication of goods under the International Classication of Goods and Services by the World Intellectual Property Organisation. The goods classied under Class 11 that are relevant to this trademark are refrigerating apparatus. Class 11 refers to the specication of goods under the International Classication of Goods and Services by the World Intellectual Property Organisation. The goods classied under Class 11 that are relevant to this trademark are cooking equipment.
(2)
(3)
(4)
(5)
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As at the Latest Practicable Date, we have applied for registration of the following trademarks:
Country of Application Singapore
Trademark
Class 35 and 37(1)
Date of Application 20 February 2013
Status Pending
Singapore Singapore
35(2) 35(3)
20 February 2013 20 February 2013
Pending Pending
Singapore
11 and 35(4)
14 June 2013
Pending
Notes: (1) Class 35 and Class 37 refers to the specication of services under the International Classication of Goods and Services by the World Intellectual Property Organisation. The services classied under Class 35 that are relevant to this trademark are the retail of kitchen equipment. The services classied under Class 37 that are relevant to this trademark are the fabrication, installation service and maintenance of kitchen equipment. Class 35 refers to the specication of services under the International Classication of Goods and Services by the World Intellectual Property Organisation. The services classied under Class 35 that are relevant to this trademark are the retail of industrial refrigeration. Class 35 refers to the specication of services under the International Classication of Goods and Services by the World Intellectual Property Organisation. The services classied under Class 35 that are relevant to this trademark are the retail of kitchen equipment. Class 11 and Class 35 refers to the specication of services under the International Classication of Goods and Services by the World Intellectual Property Organisation. The services classied under Class 11 that are relevant to this trademark are apparatus for heating, steam generating & cooking. The services classied under Class 35 that are relevant to this trademark are the retail of kitchen equipment.
(2)
(3)
(4)
Save as disclosed above, we do not own or use any other patents, trademarks or intellectual property which our business or protability is materially dependent on. We have not paid or received any royalties for any licence or use of any intellectual property. GOVERNMENT REGULATIONS Singapore We have identied the main laws and regulations that materially affect our operations and the relevant regulatory bodies in Singapore (apart from those pertaining to general business requirements) as follows: (a) Regulation of Imports and Exports Act and Regulation of Imports and Exports Regulations The Regulation of Imports and Exports Act (Chapter 272A) (RIEA) is administered by the Director-General of Customs appointed under section 4(1) of the Customs Act (Chapter 70), and provides for the regulation, registration and control of imports and exports. The relevant regulatory body is the Singapore Customs. The Regulation of Imports and Exports Regulations (RIER) was prescribed in 1999 to control the import, export or transhipment of goods through requirements of permits. As we import fabricated kitchen systems and equipment from Malaysia and a wide range of kitchen systems, kitchen appliances, and accessories under third party brands from Canada, Europe, Japan and the USA and may also export kitchen systems and equipment, we are subject to the RIER. 88

Any importer, exporter, shipping agent, air cargo agent, freight forwarder, common carrier or other person who desires to obtain a permit, certicate or any other document or form of approval for any purposes of the RIEA or any regulations made thereunder, the application for which involves a declaration being made, is a declaring entity. Under Regulation 35B of the RIER, unless the Director-General of Customs allows in any particular case, no declaration may be made for any purposes of the RIEA or any regulations made thereunder unless the declaring entity, among others, is registered by the Director-General of Customs prior to the making of the declaration. An entity which is registered under the former Regulation 37(1) of the RIER in force immediately before 2 April 2013 shall be deemed to have been so registered. Our subsidiary, Qson Kitchen Equipment, was registered with the Singapore Customs as an importer and exporter under the former Regulation 37(1) of the RIER immediately before 2 April 2013, and is therefore a registered declaring entity for the purposes of Regulation 35B of the RIER. To the best of their knowledge, our Directors are not aware of any facts or circumstances that could cause our registration as a registered declaring entity for the purposes of Regulation 35B of the RIER to be withdrawn. (b) Workplace Safety and Health Act The Workplace Safety and Health Act (Chapter 354A) (the WSHA) provides that every employer has the duty to take, so far as is reasonably practicable, such measures as are necessary to ensure the safety and health of his employees at work. These measures include providing and maintaining for the employees a work environment which is safe, without risk to health, and adequate as regards facilities and arrangements for their welfare at work, ensuring that adequate safety measures are taken in respect of any machinery, equipment, plant, article or process used by the employees, ensuring that the employees are not exposed to hazards arising out of the arrangement, disposal, manipulation, organisation, processing, storage, transport, working or use of things in their workplace or near their workplace and under the control of the employer, developing and implementing procedures for dealing with emergencies that may arise while those persons are at work and ensuring that the person at work has adequate instruction, information, training and supervision as is necessary for that person to perform his work. The relevant regulatory body is the Ministry of Manpower (MOM). Any person who breaches his duty shall be guilty of an offence and shall be liable on conviction, in the case of a body corporate, to a ne not exceeding S$500,000 and if the contravention continues after the conviction, the body corporate shall be guilty of a further offence and shall be liable to a ne not exceeding S$5,000 for every day or part thereof during which the offence continues after conviction. For repeat offenders, where a person has on at least one previous occasion been convicted of an offence under the WSHA that causes the death of any person and is subsequently convicted of the same offence that causes the death of another person, the court may, in addition to any imprisonment if prescribed, punish the person, in the case of a body corporate, with a ne not exceeding S$1 million and, in the case of a continuing offence, with a further ne not exceeding S$5,000 for every day or part thereof during which the offence continues after conviction. Under the WSHA, the Commissioner for Workplace Safety and Health (the CWSH) may serve a remedial order or a stop-work order in respect of a workplace if he is satised that (i) the workplace is in such condition, or is so located, or any part of the machinery, equipment, plant or article in the workplace is so used, that any process or work carried on in the workplace cannot be carried on with due regard to the safety, health and welfare of the persons at work; (ii) any person has contravened any duty imposed by the WSHA; or (iii) any person has done any act, or has refrained from doing any act which, in the opinion of the CWSH, poses or is likely to pose a risk to the safety, health and welfare of persons at work. The remedial order shall direct the person served with the order to take such measures, to the satisfaction of the CWSH, to, amongst others, remedy any danger so as to enable the work or process in the workplace to be carried on with due regard to the safety, health and welfare of the persons at work, whilst the stop-work order shall direct the person served with the order to immediately cease to carry on any work indenitely or until such measures as are required by the CWSH have been taken to remedy any danger so as to enable the work in the workplace to be carried on with due regard to the safety, health and welfare of the persons at work. 89

The Workplace Health and Safety Council has approved codes of practices for the purpose of providing practical guidance with respect to the requirements of the WSHA relating to safety, health and welfare at work. (c) Workplace Safety and Health (Registration of Factories) Regulations 2008 Under the Workplace Safety and Health (Registration of Factories) Regulations 2008 (the 2008 WSH Factories Regulations), any person who desires to occupy or use any premises as a factory not falling within any of the classes of factories described in Part I or II of the First Schedule of the 2008 WSH Factories Regulations shall, before the commencement of operation of the factory, submit a notication to the CWSH informing the CWSH of his intention to occupy or use those premises as such a factory. The notication is not subject to any renewal requirements. Any person who contravenes this requirement shall be guilty of an offence and shall be liable on conviction to a ne not exceeding S$5,000. However, in the event that the CWSH is of the view that the factory in respect of which a notication has been submitted is in such a condition, or any process or work is being carried out in the factory in such a manner, as to pose or be likely to pose a risk to the safety, health and welfare of persons at work in the factory, the CWSH may, by notice in writing (i) specify the date from which the notication shall cease to be valid; and (ii) direct the occupier of the factory to register the factory notwithstanding that the factory does not fall within any of the classes of the factories described in the Part I or II of the First Schedule. As our premises at 115A Commonwealth Drive #01-27/28, Singapore 149596 does not fall within any of the classes of the factories described in the First Schedule of the 2008 WSH Factories Regulations, a notication to the CWSH will sufce. We have duly notied the CWSH. (d) Workplace Safety and Health (Scaffolds) Regulations 2011 Pursuant to Regulation 5 of the Workplace Safety and Health (Scaffolds) Regulations 2011, an employer is under the duty to ensure that no person is involved in the construction, erection, installation and repositioning of a scaffold in a workplace unless he has successfully completed a Metal Scaffold Erection Course conducted by a training provider approved by the CWSH to equip him with the skills and knowledge required to perform the work of a scaffold erector. The Metal Scaffold Erection Course provides training in the fundamental knowledge and skills required in the proper and safe procedures of erecting and dismantling of metal scaffolds. A participant who has attended and passed the course assessments will be awarded a Certicate of Successful Completion. The employer is also under the duty to provide every scaffold erector with specied personal protection equipment. A failure to provide such personal protection equipment is an offence and the employer shall be liable on conviction to a ne not exceeding S$1,000 and in the case of a second or subsequent conviction, to a ne not exceeding S$2,000. In the course of setting up kitchen equipment for our Fabrication and Distribution Segment, we may require some scaffolds to be erected. As such, we have employed a worker who is certied by the MOM as a trained scaffold erector to carry out such scaffolding work. We have also provided the worker with the required personal protection equipment. (e) Work Injury Compensation Act The Work Injury Compensation Act (Chapter 354) (WICA), regulated by the MOM, applies to all employees (with the exception of those set out in the Fourth Schedule of the WICA) who have entered into or works under a contract of service or apprenticeship with an employer, in respect of injury suffered by them arising out of and in the course of their employment and sets out, inter alia, the amount of compensation that they are entitled to and the method(s) of calculating such compensation.
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The WICA provides that if in any employment, personal injury by accident arising out of and in the course of the employment is caused to an employee, his employer shall be liable to pay compensation in accordance with the provisions of the WICA. The amount of compensation shall be computed in accordance with a xed formula as set out in the Third Schedule, subject to a maximum and minimum limit. (f) Employment of Foreign Manpower The employment of foreign employees in Singapore is governed by the Employment of Foreign Manpower Act (Chapter 91A) (the EFMA) and regulated by MOM. In Singapore, under section 5(1) of the EFMA, no person shall employ a foreign employee unless he has obtained in respect of the foreign employee a valid work pass from the MOM, which allows the foreign employee to work for him. Any person who fails to comply with or contravenes section 5(1) of the EFMA shall be guilty of an offence and shall: (a) be liable on conviction to a ne of not less than S$5,000 and not more than S$30,000 or to imprisonment for a term not exceeding 12 months or to both; and on a second or subsequent conviction: (i) in the case of an individual, with a ne of not less than S$10,000 and not more than S$30,000 and with imprisonment for a term of not less than one month and not more than 12 months; or in any other case, be punished with a ne of not less than S$20,000 and not more than S$60,000.
(b)
(ii)
As one of our subsidiaries, Qson Kitchen Equipment, employs foreign employees from Bangladesh, Malaysia, Myanmar, the Philippines and China, we are subject to the EFMA. We have applied for the relevant work passes from the MOM for all of our foreign employees. To the best of our Directors knowledge, we have complied with the requirements of the EFMA and the conditions of such work passes. The availability of the foreign workers for manufacturing companies is also regulated by the MOM through the following policy instruments: (a) (b) (c) (d) approved source countries; the imposition of security bonds and levies; dependency ceilings based on the ratio of local to foreign workers; and quotas based on the man year entitlements (MYE) in respect of workers from NonTraditional Sources (NTS) and the PRC.
An employer of foreign workers is also subject to, amongst others, the provisions set out in the Employment Act (Chapter 91) of Singapore, the EFMA, the Immigration Act (Chapter 133) of Singapore and the regulations issued pursuant to the Immigration Act. (g) Contractors Registry The Building and Construction Authority of Singapore (BCA) maintains a Contractors Registry. Registration with the Contractors Registry is a pre-requisite to tendering for certain projects in the public sector. Presently, there are seven major categories of registration, which are further subdivided into two or more sub-categories, and registered contractors are assigned grades under their relevant sub-category. The registration of a contractor with the BCA and the grade assigned to it is dependent on the contractor fullling certain requirements such as having the necessary personnel resources, the value of previously completed projects relevant to the particular workhead and its nancial capacity. 91

Qson Kitchen Equipment is currently registered with the BCA under the following workheads:
Certication ME11 Mechanical Engineering (Grade L2 status) Description To certify that the Company may tender for public sector projects to carry out installation, commissioning, maintenance and repair of mechanical plant, machinery and systems, including the installation and maintenance of power generation and turbine systems up to a limit of S$1,300,000.00. To certify that the Company may tender for public sector projects to supply, maintain and back up mechanical plants and equipment including generators, air compressors, pumps, boilers and turbines up to a limit of S$4,000,000.00. Issuing body BCA Expiry date 1 November 2015
SY08 Mechanical Equipment, Plant & Machinery (Grade L3 status)
BCA
1 November 2015
The scope of work that Qson Kitchen Equipment may carry out under each category is as follows: (a) under the Mechanical Engineering (ME11) category, the installation, commissioning, maintenance and repair of mechanical plant, machinery and systems. It includes the installation and maintenance of power generation and turbine systems. under the Mechanical Equipment, Plant & Machinery (SY08) category, the supply of mechanical plants and equipment including generators, vehicles, air compressors, pumps, lathes, boilers, bulldozers, cement mixers, cranes and turbines.
(b)
To maintain the existing BCA gradings of Qson Kitchen Equipment, there are certain requirements to be complied with, including but not limited to the following:
Type of certication ME11 Mechanical Engineering (Grade L2 status) Requirements
To have a minimum paid-up share capital and a minimum net worth of S$50,000. To employ at least one technical personnel with three years of relevant experience. Technical personnel qualifications refer to a recognised diploma in electrical/electronics or mechanical engineering or equivalent. To secure, over a three-year period, projects with an aggregate contract value of S$1.0m. To have a minimum paid-up share capital and a minimum net worth of S$150,000. To employ at least one technical personnel with Basic Concept in Construction Productivity Enhancement (Certicate of Attendance) conducted by BCA. Technical personnel qualications refer to a recognised diploma in mechanical/ electrical/electronics engineering or equivalent. To secure, over a three-year period, projects with an aggregate contract value of S$1.5m.
SY08 Mechanical Equipment, Plant & Machinery (Grade L3 status)
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(h) Gas Act The Gas Act (GA) (Chapter 116A) as governed by the EMA requires a gas service worker carrying out on any gas installation or gas appliance, in whole or in part, including any installation, repair or maintenance work, to hold a valid gas service worker licence. In addition, any person who employs or instructs any person who is not a licensed gas service worker to carry out or caused to be carried out any gas service work shall be guilty of an offence. Any contravention of these prohibitions shall be an offence and the person in contravention shall be liable on conviction to a ne not exceeding S$10,000 or to imprisonment for a term not exceeding 12 months or to both and, in the case of a continuing offence, to a further ne not exceeding S$250 for every day or part thereof during which the offence continues after conviction. The Gas (Supply) Regulations (G(S)R) regulates the licensing of gas service worker licenses. Pursuant to section 26(1) of the G(S)R, the EMA shall maintain a register of licensed gas service workers. As part of our Maintenance and Servicing Segment, we provide installation, repair and maintenance work for gas equipment. To the best of our Directors knowledge, we have complied with the requirements of the GA and the G(S)R. (i) Employment Act The Employment Act (Chapter 91) (EA) is administered by the Ministry of Manpower and sets out the basic terms and conditions of employment and the rights and responsibilities of employers as well as employees who are covered under the EA. In particular, Part IV of the EA sets out requirements for rest days, hours of work and other conditions of service for workmen who receive salaries not exceeding S$4,500 a month and employees (other than workmen) who receive salaries not exceeding S$2,000 a month. Section 38(8) of the EA provides that an employee is not allowed to work for more than 12 hours in any one day except in specied circumstances, such as where the work is essential to the life of the community, defence or security. In addition, Section 38(5) limits the extent of overtime work that an employee can perform to 72 hours a month. Employers must seek the prior approval of the Commissioner for Labour (the CL) for exemption if they require an employee or class of employees to work for more than 12 hours a day or more than 72 hours a month. The CL may, after considering the operational needs of the employer and the health and safety of the employee or class of employees, by order in writing exempt such employees from the overtime limits subject to such conditions as the CL thinks t. Where such exemptions have been granted, the employer shall display the order or a copy thereof conspicuously in the place where such employees are employed. An employer who breaches the above provisions shall be guilty of an offence and shall be liable on conviction to a ne not exceeding S$5,000, and for a second or subsequent offence to a ne not exceeding S$10,000 or to imprisonment for a term not exceeding 12 months or to both. Certain of our employees are covered under Part IV of the EA. As at the Latest Practicable Date, our subsidiary, Qson Kitchen Equipment, may have breached the above provisions as one of our employees performed more than 72 hours of overtime work in a month in December 2012 without obtaining the prior approval of the CL. We may be subject, on conviction, to a ne in respect of the above, which is estimated at S$5,000. Since then, we have assigned personnel to monitor the number of hours worked by each employee and to prevent them from working more than the allowable overtime limits, and to re-assign work to other employees if necessary. We have also prospectively applied to the CL for exemption from the above regulations for the period from July 2013 to May 2015. To the best of our Directors knowledge, save as disclosed above, we have complied with the requirements of the EA.
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Malaysia We have identied the main laws and regulations that materially affect our operations and the relevant regulatory bodies in Malaysia (apart from those pertaining to general business requirements) as follows: (a) Environmental Quality Act 1974 Environmental regulations administered by the Department of Environment are in place which specify the acceptable conditions for the emission, discharge or deposit of environmentally hazardous substances, pollutants or wastes or the emission of noise into any area. A person needs to be licensed under the Environmental Quality Act 1974 before it is allowed to contravene any of those acceptable conditions. Any disposal of waste materials and sludge resulting from manufacturing processes is regulated by the Environmental Quality (Scheduled Wastes) Regulations, 2005. We believe that our existing manufacturing operations do not contravene any of the acceptable conditions for the emission, discharge or deposit of environmentally hazardous substances, pollutants or wastes or the emission of noise into any area, imposed by the various regulations under the Environmental Quality Act 1974. Further, we believe that our current manufacturing processes do not produce any wastes or sludges which fall under the category of scheduled wastes in the Environmental Quality (Scheduled Wastes) Regulations, 2005. (b) Factories and Machinery Act 1967 Section 36(1) of the Factories and Machinery Act 1967 (FMA), which is administered by the Department of Occupational Safety and Health of Malaysia, provides that no person shall install or caused to be installed any machinery in any factory or any machinery in respect of which a certicate of tness is prescribed except with the prior approval of the Inspector of Factories and Machinery. Qson Industries Malaysia has obtained approvals for the installation of machinery, in compliance with section 36(1) of the FMA. Under Section 19 of the FMA, no person shall operate or permit to be operated any machinery in respect of which a certicate of tness is prescribed under the FMA, unless there is in force in relation to the operation of such machinery a valid certicate of tness issued under the FMA. Any person who contravenes the above provisions shall be guilty of an offence and shall, on conviction, be liable to a ne not exceeding RM150,000 or to imprisonment for a term not exceeding three years or to both. Qson Industries Malaysia has obtained certicates of tness for its two machines requiring certicates of tness under section 19 of the FMA, one of which previously expired. As at the Latest Practicable Date, to the best of our Directors knowledge and save as disclosed above, we are in compliance with all applicable laws and regulations in Malaysia which are material to our business operations and we have all the necessary business licences and permits for our business operations in Malaysia. (c) Foreign Investment Committee (FIC) The FIC is a committee of the Economic Planning Unit of the Malaysian Prime Ministers Department. Up until recently, it regulated and prescribed guidelines (FIC Guidelines) in connection with matters such as acquisition of interests, mergers and take-overs of companies and businesses in Malaysia to ensure Malaysian participation in ownership and control.
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Amongst others, the guidelines under the FIC provided that, the approval of the FIC is required, inter alia, where there is an acquisition by: (a) Any one foreign interests of 15% or more of the voting rights of a local company or business in Malaysia; or Any associated or non-associated group or foreign interests in the aggregate of 30% or more of the voting rights of a local company or business in Malaysia.
(b)
On 30 June 2009, the Prime Minister of Malaysia announced a rationalisation of the investment guidelines administered by the FIC, which included the repeal of the FIC guidelines on the acquisition of interests, mergers and takeovers. Following this announcement, foreign companies are no longer required to obtain FIC approval for their interests or shareholding in Malaysian companies and businesses. Our Malaysian business will therefore be exempted from FIC compliance so long as this liberalisation is in place. (d) Occupational Safety and Health Act, 1994 (OSHA) The OSHA contains provisions for securing the safety, health and welfare of persons at work, for protecting others against risks to safety or health in connection with the activities of persons at work, to establish the National Council for Occupational Safety and Health, which together with the Department of Occupational Safety and Health administers the OSHA, and for matters connected therewith. Under the OSHA, various regulations such as the Occupational Safety And Health (Safety and Health Committee) Regulations 1996 and the Occupational Safety And Health (Notication of Accident, Dangerous Occurrence, Occupational Poisoning and Occupational Disease) Regulations 2004 have been passed. The OSHA applies to various industries which includes manufacturing and wholesale and retail trades and sets out amongst others, the general duties of employers and self-employed person to their employees, general duties of designers, manufacturers and suppliers, general duties of employees and prohibition against use of plant or substance. Under Section 16 of the OSHA, it is provided that, except in such cases as may be prescribed, it shall be the duty of every employer and every self-employed person to prepare and as often as may be appropriate revise a written statement of his general policy with respect to the safety and health at work of his employees and the organisation and arrangements for the time being in force for carrying out that policy, and to bring the statement and any revision of it to the notice of all his employees. As at the Latest Practicable Date and to the best of our Directors knowledge, we are in compliance with rules and regulations under the OSHA. (e) Employment Act 1955 The Employment Act 1955 (Act 265) (Malaysia EA) is administered by the Ministry of Human Resources and sets out the basic terms and conditions of employment and the rights and responsibilities of employers as well as employees who are covered under the Malaysia EA. In particular, Part XII of the Malaysia EA sets out requirements for rest days, hours of work and other conditions of service for employees who receive wages not exceeding RM2,000 a month and employees doing manual labour irrespective of the amount of wages earned in a month. Section 60A(1) of the Malaysia EA provides, amongst others, that an employee shall not be required under his contract of service to work for more than 8 hours in any one day or more than 48 hours in one week except in specied circumstances, stated in Section 60A(2), such as where work is essential to the life of the community or essential for the defence or security of Malaysia. In addition, the Employment (Limitation of Overtime Work) Regulation 1980 limits the extent of overtime work that an employee can perform to 104 hours a month.
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Employers must seek the prior approval of the Director General of Labour (the DL) for exemption if they require an employee or class of employees to work for more than the hours of work specied in section 60A of the Malaysia EA. The DL may, permit any particular employee, or any group, class, category or description of employees in any particular industry, undertaking or establishment to work overtime in excess of the limit of hours so prescribed, subject to such conditions as the DL thinks t. An employer who breaches the above provisions shall be guilty of an offence and shall be liable on conviction to a ne not exceeding RM10,000. Certain of our employees are covered under Part XII of the Malaysia EA. As at the Latest Practicable Date, our subsidiary, Qson Industries Malaysia, may have breached of section 60A of the Malaysia EA for the months of October, November and December 2012, during which three, 10 and 16 employees performed more than 104 hours of overtime work without obtaining the prior approval of the DL respectively. We may be subject, on conviction, to a ne not exceeding RM290,000 in respect of the above. Since then, we have assigned personnel to monitor the number of hours worked by each employee and to prevent them from working more than the allowable overtime limits, and to re-assign work to other employees if necessary. We have also increased and intend to further increase the number of our employees. As such, we do not expect to breach Part XII of the Malaysia EA in future. To the best of our Directors knowledge, save as disclosed above, we have complied with the requirements of the Malaysia EA. (f) Sales Tax Act 1972 The Sales Tax Act 1972 (Act 64) (Malaysia STA) is administered by the Royal Customs and Excise Malaysia (Customs) and sets out the provisions for charging, levying and collecting of sales tax. Section 12 of the Malaysia STA states inter alia that subject to the Malaysia STA, sales tax shall be computed and paid by any taxable person who carries on a business in Malaysia, whether for prot or otherwise, in respect of taxable goods manufactured by him in the course of such business. Further, pursuant to section 13 of the Malaysia STA, every person who manufactures taxable goods shall apply to the senior ofcer of sales tax to be licensed as a licensed manufacturer (Licence) and subject to exemptions under the Malaysia STA, shall not manufacture taxable goods in the course of business unless such person is in possession of a licence. Any person who fails or refuses to comply with section 12 and 13 of the Malaysia STA shall be guilty of an offence and shall be liable to imprisonment for a term not exceeding 12 months or to a ne not exceeding RM5,000 or to both. Our subsidiary, Qson Industries Malaysia, is required to apply for the Licence. Qson Industries Malaysia has been issued the Licence from the Customs, which is effective from 13 May 2013. Notwithstanding the issue of the Licence, the Customs may at its discretion demand payment of unpaid sales tax and penalties by Qson Industries Malaysia by making a demand within three years from the date on which the sales tax, penalty or other moneys were payable by Qson Industries Malaysia. To the best of our Directors knowledge, save as disclosed above, we have complied with the requirements of the Malaysia STA.
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Vietnam We have identied the main laws and regulations that materially affect our operations and the relevant regulatory bodies in Vietnam (apart from those pertaining to general business requirements) as follows: (a) Foreign ownership percentage As from 1 January 2009, Vietnam allows foreign investors from a WTO country member to establish subsidiaries in Vietnam, either in the form of a wholly-owned foreign enterprise or a joint venture company with a local partner in Vietnam to engage in the wholesale and retail business in Vietnam. However, pursuant to Decision No 55/2009/QD-TTg promulgated by the Prime Minister on 15 April 2009, which is administered by the Ministry of Finance, foreign investors are only allowed to hold up to 49% of ownership in a public company. Thus, if a company with foreign ownership converts into a public company, the foreign shareholding in the company shall be capped at 49% and the remaining 51% of shares capital shall be assigned to a local investor(s). Our Vietnamese subsidiary, Qson Kuechen Kultur, is a wholly-owned foreign enterprise. The restriction on ownership by foreign investors of up to 49% in a public company does not extend to Qson Kuechen Kultur. (b) Trading rights of foreign investors In Vietnam, foreign investors shall be permitted to import and distribute the lines of goods provided in the Schedule 4 under Decision 10/2007/QD-BTM of the Ministry of Industry and Trade, dated 21 May 2007. In addition, companies with foreign ownership engaging in the distribution business shall be permitted to import and distribute only particular products dened in their Investment Certicate (IC). Under this regime, if a company with foreign ownership intends to change or add the category of products it must obtain relevant approval for the distribution of those products from the local Peoples Committee and the Ministry of Industry and Trade. These authorities shall have discretion in approving or disapproving the application. Our Vietnamese subsidiary, Qson Kuechen Kultur, has a valid IC to import and distribute kitchen equipment with HS codes of 7321, 8419, 8422, 8435, 8438, 8509 and 8516 for customers being traders, business units, organisations who have the right to distribute or use those products in accordance with the laws of Vietnam. (c) Limitation on establishing retail outlets for distribution in Vietnam The right to distribute of foreign investors in Vietnam is associated with the right to set up the rst retail establishment. The location of a retail store shall be consistent with a master plan as approved by the local authority where the store is located. The Circular No. 09/2007/TT-BTM promulgated by Ministry of Trade on 17 July 2007 restricts the establishment of the second retail outlet in Vietnam by foreign investors. Amongst other things, it provides that the setting up of additional retail outlets (beyond the rst retail establishment) shall be considered on a case by case basis and shall subject to the Economic Needs Test (ENT), which is based on the assessment of the number of retail sales outlets, market stability, population density in the province or city where the retail sales outlet is to be set up, and consistency of the investment project with the master plan of such province or city. (d) Offshore remittance of prots In Vietnam, foreign investors are allowed to remit abroad prots on the annual basis or upon termination of investment activities in Vietnam provided that a company has fullled its nancial obligations (such as taxes and fees) under Vietnamese laws.
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However, under Circular No. 86/2010/TT-BTC promulgated by Ministry of Finance on 18 November 2010, foreign investors may not remit abroad prots which they have a share of or which they earn from their direct investment in Vietnam even in a protable nancial year if that years nancial statements of the relevant company in which they have invested still contain accumulative losses after such losses are carried forward. MAJOR CUSTOMERS In FY2010, FY2011 and FY2012, based on the total number of customers in each nancial year, we have 806, 869 and 865 customers respectively. Our customers include service providers who operate primarily in the F&B and hospitality services industries, such as central kitchens, restaurants, integrated resorts, membership clubs and hotels, as well as government agencies, developers and owners of residential properties. The table below sets forth our customers which accounted for 5.0% or more of our revenue during the periods under review:
Customer FY2010 (%) 6.01 FY2011 (%) 1.59 3.38 FY2012 (%) 7.47 6.46 5.81
Chef Peters Kitchen Pte Ltd Westbuild Construction Pte Ltd SFI Manufacturing Pte Ltd
We do not typically enter into long-term agreements with our customers. Our sales to our major customers comprise both project-based assignments as well as the provision of maintenance services and technical services. We have received repeat sales orders from our major customers, and believe that this is due to our established service track record as well as the quality of our products. Our Directors are of the opinion that our Group does not depend on any of our major customers. To the best of their knowledge, our Directors are not aware of any information or arrangement which would lead to a cessation or termination of our current relationship with any of our major customers. As at the date of this Offer Document, none of our Directors, Substantial Shareholders or their Associates has any interest, direct or indirect, in any of our major customers listed above. Payment Terms Credit terms for our customers vary from customer to customer. Our Managing Director together with our nance department manage and administer our credit policies as well as monitor payments made to our Group on a regular basis. For our Fabrication and Distribution Segment, we will usually progressively invoice our customers based on the stage of completion of the projects and grant them credit terms ranging from 30 to 60 days from the date of our invoice, based on the credit worthiness, reputation, size of orders, frequency of purchase, payment history and length of relationship with the customer, or as specied by the contractual terms of the individual projects. The balance of a sum ranging from 5.0% up to 10.0% of the contract value known as retention sum is usually payable at the end of the product warranty period of 12 months from the completion and handover of a project. Our non-project equipment sales are typically made on cash-on-delivery terms, however, for larger sums of purchases, we may grant them credit terms of 30 days. When an order is signicantly large, a deposit of 40% is usually required upon conrmation of the order with the balance payable within 30 days of delivery. For our Maintenance and Servicing Segment, we will typically grant customers such as restaurants, membership clubs and hotels credit terms of 60 days from the date of our invoice. For other customers, we will require cash-on-delivery, or, if the customer is an existing customer and has requested credit terms from us, we will grant them credit terms of 30 days from the date of our invoice. 98

We accept various modes of payment, namely cash (including electronic payments and telegraphic transfers), cheques and credit cards. Outstanding payments will be closely monitored by our nance personnel. Our policy of making allowance for impairment loss on third parties trade receivables is based on the age and our assessment on the recoverability of the outstanding debts. Bad third parties trade receivables written off may be made if we fail to collect payment despite repeated efforts and follow-ups with the customers on overdue payments or when we are certain that our customers are unable to meet their nancial obligations and we consider the amounts to be non-recoverable. In practice, we liaise with customers for outstanding receivables to understand their situation and propose various options that may facilitate the payments. If the outstanding receivables cannot be resolved amicably, we may then take legal action to collect the outstanding receivables. The amounts of allowance for impairment loss on third parties trade receivables recognised in the combined statement of comprehensive income of our Group during the period under review are as follows:
(S$000) Allowance for impairment loss on third parties trade receivables FY2010 FY2011 54 FY2012 127
Our gross trade receivables turnover days for the period under review were as follows:
(S$000) Gross trade receivables turnover days(1) As a percentage of revenue (%) As a percentage of prot before income tax (%)
Note: (1) Gross trade receivables turnover days is computed by dividing 365 days by the gross trade receivables turnover ratio. The gross trade receivables turnover ratio is calculated by dividing annual sales by gross trade receivables.
FY2010 149 40.9 692.2
FY2011 141 38.8 241.9
FY2012 154 42.1 164.4
Our trade receivables (net of allowance for impairment loss on third parties trade receivables) as at 31 December 2012 amounted to S$6,766,774 and their ageing schedules were as follows:
Percentage of total trade receivables as at 31 December 2012 (%) Not past due Past due 0 to 1 month Past due 1 month to 2 months Past due 2 month to 3 months Past due over 3 months 58.2 16.8 0.6 11.0 13.4 100.0
Age of trade receivables
We perform ongoing credit evaluation of our debtors nancial condition and make specic allowance for impairment loss on third parties trade receivables based on the expected collectability of our receivables and when the ability to collect an outstanding debt is in doubt. We may also write off an outstanding debt when we are certain that the customer is not able to meet its nancial obligations to us, this being after we have exhausted all reasonable efforts on the recovery of such debt (including but not limited to initiating legal proceedings).
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MAJOR SUPPLIERS Our purchases comprise mainly kitchen systems, kitchen equipment, accessories and other raw materials such as stainless steel from suppliers in Canada, Europe, Japan and USA. We generally do not enter into long-term or exclusive arrangements with our suppliers as we may need to mix and match equipment from different suppliers to full the requirements of a kitchen project. We select our suppliers based on their reputation, reliability, pricing, purchase terms, timelines of delivery, quality and specications of their products and services. The table below sets forth our suppliers which accounted for 5% or more of our total purchases in FY2010, FY2011 and FY2012:
As a percentage of total purchases (%) Supplier MKN GmbH & Co Hoshizaki Singapore Pte Ltd Fridge Maker (S) Pte Ltd SF Co. Ltd. Hyuns Metal Industries Pte Ltd Products supplied Cooking ranges, combi steamers Ice machines and refrigerators Refrigerators Refrigerators Exhaust system FY2010 7.55 6.21 7.55 2.97 FY2011 9.38 7.20 2.48 4.54 FY2012 3.33 4.44 0.27 6.40 5.97
In FY2011, we increased our purchase from MKN GmbH & Co to meet our increased orders for the supply to a chain of outlets and to take advantage of the rebate with bulk purchases. In FY2012, our purchases decreased as the Group sold such purchases acquired in FY2011. Generally, we purchased less from Hoshizaki Singapore Pte Ltd and Fridge Maker (S) Pte Ltd as we increased our purchases from SF Co. Ltd. The uctuations in our purchases from our major suppliers were a result of our varying requirements for different projects. The increase in purchase from Hyuns Metal Industries Pte Ltd is due to the increase in the number of projects. Our Directors are of the opinion that our Group is not dependent on any of our major suppliers and the products supplied by the above major suppliers can be sourced from other alternative suppliers in the market without signicant difculties. To the best of their knowledge, our Directors are not aware of any information or arrangement which would lead to a cessation or non-renewal of our current relationship with any of our major suppliers. None of our Directors or Substantial Shareholders or their respective Associates has any interest, direct or indirect, in any of our major suppliers listed above. Payment Terms The payment terms granted by our suppliers are generally 30 to 120 days upon delivery of their products, varying from supplier to supplier and are also dependent on, inter alia, our relationship with the suppliers and the size of the transactions. For smaller value transactions, the credit terms provided are typically 30 days. The credit terms granted by the banks for the letter of credit facility are up to 120 days. Our trade payables turnover days for each of FY2010, FY2011 and FY2012 are as follows:
FY2010 Trade payables turnover days(1)
Note: (1) Trade payables turnover days is computed by dividing 365 days by the trade payables turnover ratio. The trade payables turnover ratio is calculated by dividing annual purchases by trade payables.
FY2011 78
FY2012 137
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In general, our cash collections from our customers have been able to meet our payment obligations to our suppliers as well as to cover our labour costs and other operating costs. We are in a healthy nancial position. INVENTORY MANAGEMENT Our inventories comprise mainly imported kitchen systems, kitchen equipment, accessories and other raw materials such as stainless steel plates/pipes, mild steel plates/pipes, cold rolled steel, electrogalvanised steel and hot-dipped galvanised steel. Generally, we stock certain products in our inventory based on the recent sales trends, repeat orders and project requirements for our third party kitchen equipment distribution business. At times, we make purchases in anticipation of orders. We monitor closely the developments in our main markets especially the F&B and hospitality services industries in Singapore. Through regular feedback and communication with our sales and marketing staff and regular customers, we are able to understand our customers requirements, preferences and trends, which allows us to make better procurement decisions and hence, improve our inventory management. In addition to merchandise, our inventory also comprises of (i) raw materials, (ii) work-in-progress, (iii) nished goods and (iv) spare parts. We typically maintain a minimum quantity level of our raw materials based on secured orders from customers, sales forecasts and our managements outlook on price trends. We also ensure that our inventory is sufcient to meet our existing orders. All orders with suppliers are subject to approval from our Managing Director and Executive Directors. For our spare parts, we adopt the weighted average basis of inventory management and costing. For our other inventory, we adopt a rst in-rst out (FIFO) method of inventory management. We have implemented a customised barcoding system to manage our spare parts inventory and have also implemented SAP Business One, an enterprise resource planning system, in December 2012. The SAP Business One application integrates all core business functions including nancials, sales, customer relationship management, inventory and operations in our Company. Our nance department performs sample inventory counts on a regular basis, while a full inventory count is carried out on an annual basis. The management conducts sample inventory checks to assess the status of various inventory levels and to identify slow moving inventories in order to better plan for inventory replenishment and manage product obsolescence. Our average inventory turnover days during the period under review were as follows:
FY2010 Average inventory turnover days(1)
Note: (1) The average inventory turnover days is calculated based on the average inventory balance divided by cost of inventories for the nancial year.
FY2011 54
FY2012 53
44
To the best of our Directors knowledge, our average inventory turnover is in line with the industry norm. We currently do not provide general allowances for inventory obsolescence. Due to the nature of our products, our Directors are of the view that the risk of inventory obsolescence is low as our inventories are durable and not perishable. Inventories written off are made on a case-by-case basis as identied by our Executive Directors based on their experience and knowledge of the market demand trends. As at 31 December 2012, our inventories amounted to S$1.3 million.
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COMPETITION We operate in a competitive environment as there are various players in the kitchen equipment industry. To the best of our Directors knowledge, there are numerous competitors who supply kitchen systems, kitchen equipment and accessories in Singapore. Based on our customers proles and to the best of our Directors knowledge, our Directors consider the following companies to be our main competitors: Name of Competitors Continental Equipment Pte Ltd Fabristeel Pte Ltd Somerville (Singapore) Pte Ltd To the best of their knowledge, our Directors are not aware of any published statistics or ofcial sources of information with respect to industry statistics and the market share of our Group and our competitors. None of our Directors or Substantial Shareholders or their respective Associates has any interest, direct or indirect, in any of our competitors listed above. COMPETITIVE STRENGTHS We believe that our competitive strengths are as follows: We are able to provide an efcient one-stop service which includes design and consultancy of kitchen systems, fabrication, sale, maintenance and servicing of kitchen equipment We are able to provide an efcient one-stop service which includes the provision of design and consultancy services for the setting up and maintenance of commercial and industrial kitchens, fabrication and sale of a wide range of kitchen systems as well as kitchen equipment. We offer our customers design and consultancy support to ensure the effectiveness and workability of the entire kitchen facility. We also take an active part in providing feedback and suggestions to customers at the design and consultancy stage to ensure that our customers requirements are taken into consideration. With our own in-house fabrication capability and facilities, we are able to provide customers with custombuilt kitchen ranges to suit their specic requirements. Our ability to fabricate and install also allows us to take on projects with shorter deadlines without the need to wait for carriage time as well as to lower our cost so that we can remain price competitive. These abilities, coupled with our capabilities to carry out maintenance and servicing of kitchen equipment, enable us to deliver a full range of specialised services to our customers. With the integration of design and consultancy, fabrication and sale, installation and commissioning, and maintenance and servicing, we are well-positioned to be one of the leading kitchen equipment providers in Singapore. We have an established reputation in our business With more than 15 years of experience in this business, we have established ourselves as a major player in the commercial and industrial kitchen equipment industry. We carry major brands in kitchen systems, kitchen equipment, and accessories. We believe that we have built a strong brand identity through our Qson brand name, which has come to be associated with high quality kitchen equipment, reliable turnaround time and our consistent ability to meet our customers needs. We are also associated with some of the major players in the F&B industry in Singapore including Jumbo group of restaurants, Ah Yat group of restaurants, Soup Restaurants, Pu Tien group of restaurants and Hard Rock Caf. Some of our notable projects include Royal Plaza, Level 33 at Marina Bay Financial Centre and the Hilton Hotel at Orchard Road. We believe that the association of our Qson brand with some of the major players in the F&B and hospitality services industries as mentioned above has enabled us to become one of the leading kitchen equipment players in Singapore. Please refer to the section entitled General information on Our Group Our Signicant Projects of the Offer Document for more information.
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Since the commencement of our operations in 1996, we have built a credible track record of timely delivery and a history of quality workmanship within the industry. We have an extensive product range across multiple brands Since our inception in 1996, in addition to the brands that we self-fabricate, we have established more than 15 partner brands in the kitchen equipment industry. This has placed our Group in a unique position as a local player with a multi-brand and multi-product portfolio serving Singapore and Southeast Asia. We have leveraged on this positioning to sell and distribute our products through projects (tender and consultancy) and distribution. Our extensive product range allows us to meet the requirements of the F&B and hospitality services industries. Our multi-brand portfolio has also enabled us to be a one-stop solution for our customers for kitchen systems, kitchen appliances and accessories. We foster close working relationships with our suppliers, which is evident from the number of brands of imported kitchen systems, kitchen equipment, and accessories which we have represented over the past years. We have been able to accumulate such a wide range of product representation due to the experience of our people who are equipped with the technical and business knowledge of market trends prevailing in our industry. This has also enabled us and will continue to enable us to identify and secure prospective brands in the future. We have a strong track record in maintenance and servicing of kitchen equipment We believe that we have a strong track record in providing maintenance and servicing of kitchen equipment and, in particular, preventive maintenance works and repairs carried out under the preventive annual maintenance agreements which we entered into with our customers. We have more than 50 service technicians that are capable in servicing and maintaining a variety of kitchen equipment and brands on an expedient basis. We believe that equipment downtime is detrimental for our customers business, therefore, providing a timely servicing response is crucial for our customers. Our strong track record in servicing and maintenance serves as a competitive advantage for us to secure new projects where customers can be assured of the quality of equipment purchased from us as well as our ability to respond to any equipment downtime. We have an experienced and committed team of senior management and key employees Our Group is led by an experienced management team in the kitchen equipment industry. Our Managing Director, Sally Chua, has been instrumental in the formulation of our strategic directions and expansion plans. Our Executive Directors, Frankie Cheng and Alan Lee, have extensive knowledge in kitchen equipment fabrication and technical services and maintenance services, respectively, which provides us with our competitive strength in these areas. Together with the support from a team of managers, they have successfully and progressively expanded our portfolio of projects and business over the years. We believe that the knowledge and experience of our people has helped our Group to successfully position itself as one of the leaders in the kitchen equipment industry in Singapore.
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PROSPECTS Our Directors believe that the general economic outlook and the pace of development of the F&B and hospitality services industries of the countries which we operate in, particularly Singapore, and the countries to which we intend to expand our operations are the key factors affecting the growth of our business. General economic outlook in Singapore and Southeast Asia In the rst quarter of 2013, the economy grew by 0.2 per cent. On a quarter-by-quarter seasonallyadjusted annualised basis, the economy grew by 1.8 per cent. Growth was largely supported by the healthy expansion of the construction, nance and insurance as well as business services sectors. The accommodation and food services sector grew by 2.1 per cent, which was consistent with gains in the preceding three quarters. On a quarter-on-quarter basis, the accommodation and food services sector grew by annualised rates of 6.2 per cent. However, Singapores overall growth momentum was slightly hampered by continuing weaknesses in the externally-oriented sectors such as manufacturing and wholesale trade.(1) External macroeconomic conditions have stabilised since late last year, and global economic growth is expected to improve gradually this year. In the US, the economy is expected to grow modestly, with resilient private demand helping to cushion the impact of scal cutbacks. The Eurozone is expected to remain in recession, amidst high unemployment and weak domestic demand. In Asia, growth is likely to be moderate, supported by healthy domestic demand.(1) Against this macroeconomic backdrop, the outlook for the Singapore economy remains cautiously positive. Singapores economic growth is expected to improve gradually over the course of the year. Externally-oriented sectors are expected to pick up in tandem with the gradual recovery in external demand, while construction and key services sectors such as nance and insurance, and business services will continue to provide support to growth. The Ministry of Trade and Industry has maintained its 2013 economic growth forecast at 1.0 to 3.0 per cent.(1) Nonetheless, risks to the global growth outlook remain. Fiscal uncertainties in the US remain with the failure of Congress to raise the debt ceiling, while the Eurozone is prone to a potential are-up of the sovereign debt crisis. Other uncertainties include the risk of an escalation in regional geopolitical tensions, and a possible global outbreak of respiratory viruses.(2) Should any of these risks materialise, Singapores economic growth could come in lower than expected. Year-on-year growth in developing economies in ASEAN, namely, Indonesia, Malaysia, the Philippines, Thailand and Vietnam, was 6.1 per cent in 2012, an increase from year-on-year growth of 4.5 per cent in 2011. The IMF has projected the year-on-year growth for these countries as a whole to be 5.6 per cent in 2013, and 5.7 per cent in 2014(3). As we intend to expand our operations to some of these countries, we believe that this will have a positive impact on our business as continued growth will generally translate into an increase in the purchasing power of consumers, particularly those in the middle and upper-income groups. This will in turn generate positive growth in the F&B and hospitality services industries, and correspondingly higher demand for our products and services.
This infor mation was extracted from the press release titled 2013 GDP Growth Forecast Maintained at 1.0 to 3.0 Per Cent from the Ministry of Trade and Industry Singapore website at http://www.mti.gov.sg/ResearchRoom/SiteAssets/Pages/Economic-Survey-of-Singapore-First-Quarter-2013/PR_1Q13.pdf, which was accessed on 8 July 2013. This information was extracted from the Economic Sur vey of Singapore First Quar ter 2013 from the Ministry of Tr a d e and Industry Singapore website at http://www.mti.gov.sg/ResearchRoom/SiteAssets/Pages/Economic-Survey-of-Singapore-First-Quarter-2013/FullReport_1Q13.pdf, which was accessed on 8 July 2013. This infor mation was extracted from the International Monetary Fund http://www.imf.org/external/pubs/ft/weo/2013/update/02/pdf/0713.pdf, which was accessed on 10 July 2013. website at
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Growth of the F&B and hospitality services industries (including resorts, hotels, food manufacturers and restaurants) in Singapore The number of F&B establishments in Singapore has increased from 5,969 in 2009 to 6,453 in 2011. Total operating receipts generated by the F&B industry was S$7,109 million in 2011, a rise of 12.1 per cent over the previous year. On a per establishment basis, operating receipts also increased 7.3 per cent to S$1.1 million in 2011.(4) Compared to April 2012, sales of F&B services increased 0.6 per cent in April 2013, although sales of F&B services (seasonally adjusted) decreased 2.3 per cent in April 2013 compared to the previous month. After seasonal adjustment, all major segments of the F&B industry reported lower turnover in April 2013 over March 2013. The turnover of food caterers and restaurants went down 4.6 per cent and 3.3 per cent respectively. However, compared to April 2012, the turnover of other eating places (such as cafes and canteens) and restaurants grew by 1.3% and 1.2% respectively in April 2013.(5) We expect the F&B industry to continue its robust growth due to Singapores continued population growth. Singapore had a population of approximately 5.3 million in 2012(6), and the government has been reported as planning for a population of 6.5 million(7). Singapores hospitality industry has also seen strong growth in recent years with the rejuvenation of the Marina Bay area and the opening of the integrated resorts. In 2011, visitor arrivals reached 13.2 million, a 13.1 per cent year-on-year increase, and tourism receipts hit S$22.3 billion, a 17.7 per cent year-onyear increase.(8) In 2012, the Singapore Tourism Board (STB) reported tourism receipts of S$23.0 billion, of which S$2.3 billion was spent on food and beverage, and 14.4 million international visitor arrivals in Singapore.(9) In the period from January to March 2013, there have already been 3.8 million international visitor arrivals in Singapore, a 6.4 per cent increase from the same period in 2012.(10) We believe that the hospitality industry will continue its trend of growth. The STB has forecast tourism receipts of S$23.5 to S$24.5 billion and 14.8 million to 15.5 million visitor arrivals in Singapore for 2013.(9) Our Directors are of the view that further growth in the F&B and hospitality services industries will provide more opportunities for us to market our products and services. With our established reputation and strong track record, we are well-positioned to secure new contracts for the provision of kitchen solutions and contracts in maintenance servicing and technical servicing of kitchen equipment that may arise from the growth in the F&B and hospitality services industries in Singapore.
4
This information was extracted from Economic Surveys Series Reference Year 2011 Food & Beverage Services from the Department of Statistics Singapore website at http://www.singstat.gov.sg/statistics/browse_by_theme/economy/ndings/fnb.pdf, which was accessed on 8 July 2013. This information was extracted from the press release Retail Sales Index Food & Beverage Services Index April 2013 from the Department of Statistics Singapore website at http://www.singstat.gov.sg/news/press_releases/mrsapr2013.pdf, which was accessed on 8 July 2013. This i n fo r m a t i o n wa s ex t ra c t e d from the Depar tment of Statistics http://www.singstat.gov.sg/statistics/latest_data.html#12, which was accessed on 8 July 2013. Singapore we b s i t e at
This information was extracted from the article Spore can accommodate up to 6m people, says PM Lee from the Asiaone website at http://www.asiaone.com/News/Latest%2BNews/Singapore/Story/A1Story20120924-373390.html, which was accessed on 8 July 2013. This information was extracted from the Annual Report on Tourism Statistics 2010/2011 from the Singapore Tourism Board website at https://www.stbtrc.com.sg/images/links/X1Annual_Report_on_Tourism_Statistics_2010_2011.pdf, which was accessed on 10 July 2013. This information was extracted from the presentation Singapores Tourism Sector Performance for 2012 from the Singapore Tourism Board website at https://app.stb.gov.sg/ Data/news/3/6aa3f7e91ef087b5e9f647e25241745f/tourism%202012%20roundup%20 presentation%20%2827%20mar%29_2.pdf, which was accessed on 8 July 2013. This information was extracted from the Visitor Arrivals Statistics from the Singapore Tourism Board website at https://app.stb.gov.sg/Data/tou/typea/type1/2013/16/2013_vas_preliminary.pdf, which was accessed on 8 July 2013. We have not sought the consent of the Ministry of Trade and Industry Singapore, the International Monetary Fund, the Department of Statistics Singapore, Asiaone or the Singapore Tourism Board nor have the foregoing persons provided their consent to the inclusion of the relevant information extracted from the relevant website or publication and disclaim any responsibility in relation to reliance on these statistics and information. As they have not consented to the inclusion of the above information in this Offer Document for the purposes of section 249 of the SFA, they are therefore not liable for the relevant information under sections 253 and 254 of the SFA. While reasonable actions have been taken by our Directors to ensure that the relevant statements form the relevant information are reproduced in their proper form and context, and that the information is extracted accurately and fairly from the relevant website or publication, all other parties and ourselves have not conducted an independent review of the information contained in the relevant website or publication and have not veried the accuracy of the contents of the relevant statements.
10
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TREND INFORMATION Our Directors have made the following observations for the current nancial year ending 31 December 2013, based on current trends as at the Latest Practicable Date: (a) As with other businesses in Singapore, we are experiencing inationary pressure and a general increasing trend in the cost of our raw materials, production overheads, utilities and sub-contract charges. We may review the selling prices of our products and, subject to competition and other factors, we may have to adjust our prices from time to time in order to maintain our prot margin; Fluctuations in the exchange rates between the S$ and other foreign currencies in which our costs are incurred will also affect the cost of our products. Depending on the extent of the uctuation in exchange rates and costs, our gross margin may vary signicantly from past trends; We expect the prices for our raw materials, namely stainless steel, to remain stable in FY2013; We also expect to incur higher operating expenses mainly due to: (i) the increase in staff costs as a result of higher headcounts and increments in salaries as we expand our business and increase our marketing efforts in line with the expansion of our operations; compliance costs as a listed company; the impact from the increase in the management team resulting in higher salaries and salary related expenses, such as bonus and reward schemes (such as a performance share plan). Please refer to the sections entitled Directors, Management and Staff - Service Agreements and Singapore Kitchen Equipment Performance Share Plan of this Offer Document for further details; and the additional expenses incurred for our expansion overseas;
(b)
(c) (d)
(ii) (iii)
(iv) (e)
In FY2012, we recognised a gain on disposal of property and property held for sale of approximately S$1.6 million, which we do not expect to recur in FY2013. For further details on the gain on sale of property for FY2012, please refer to the section entitled Managements Discussion and Analysis of Financial Position and Results of Operations of this Offer Document; A portion of our listing expenses incurred in connection with the Invitation of approximately S$777,000 will be treated as a charge in our nancial statements, which will affect our nancial results in FY2013. Please refer to the section entitled Use of Proceeds and Listing Expenses of this Offer Document for further details; and Our nancial results for the 1HY2013 may be lower than for the 1HY2012 due mainly to the reasons set out in paragraphs (e) and (f) above.
(f)
(g)
We believe that there are good prospects to expand our customer base in our key markets and to expand into new markets, where we expect to leverage on our competitive strengths. There is no assurance that our nancial performance for FY2013 and future years will match or exceed our historical nancial performance. Save as disclosed above, and barring any unforeseen circumstances, our Directors do not expect any signicant recent trends or any other known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our revenue, protability, liquidity or capital resources or that would cause the nancial information disclosed in this Offer Document to be not necessarily indicative of our future operating results or nancial condition.
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ORDER BOOKS For our Fabrication and Distribution Segment, the duration of our tender projects ranges from three to four months, and the duration of our consultancy projects ranges from four to six months. For our Maintenance and Servicing Segment, our contracts, if any, are typically for a period of one year. Accordingly, the concept of an order book is not meaningful to us. BUSINESS STRATEGIES AND FUTURE PLANS Our business strategies and future plans are as follows: Expanding our business and establishing a regional presence As at the Latest Practicable Date, we fabricate and sell predominantly in Singapore and Malaysia. Our Directors believe that there is potential for our products in new markets such as Vietnam, Myanmar and Cambodia. We believe that our history and reputation as well as our competitive strengths will enable us to develop and expand our business in these new markets in Southeast Asia. As we have an existing distribution presence in Malaysia and Vietnam, we intend to further expand into these two markets to capture a bigger share of the kitchen equipment industry. Subject to market conditions, we also plan to embark on expanding our geographical coverage by setting up subsidiaries or representative ofces in new markets such as Myanmar and Cambodia. If the opportunities arise, our Group may also expand our businesses through acquisitions, joint ventures or strategic alliances with parties who can create synergistic values with our existing business. In evaluating our acquisitions and joint ventures, we will target parties with strong track records and capabilities. Through such acquisitions, joint ventures or strategic alliances, we will look to strengthen our market position, expand our network, as well as expand into new businesses complementary to our current business. We believe that our status as a listed company will allow us to be better placed for expansion. We intend to utilise approximately S$1.6 million of our net proceeds from the New Shares to expand our business and establish a regional presence. In the event that we are unable to utilise the proceeds (whether in part or in full) for this purpose, we intend to utilise such proceeds for working capital and general corporate purpose. Widening our product range and expanding our service team To attract new customers, we intend to widen the range of our existing products which are complementary to our existing business. As at the Latest Practicable Date, we intend to provide cook chill process systems for central kitchens and restaurants, and food warmers which we plan to sell to hospitals and nursing homes in our range of products by entering into distribution arrangements with third party suppliers which can provide us with good quality cook chill equipment and food warmers from reputable brands. A cook chill process system is a controlled system of food preparation designed to provide more exibility in food service and is used to maintain the freshness, nutrients, taste and appearance of precooked food for delayed consumption. The cook chill method involves the full cooking of food, followed by rapid chilling and storage at controlled temperatures. When required, the food will be reheated thoroughly before serving. Food warmers are used to keep cooked food at serving temperature for a prolonged period of time with limited change in temperature and is suitable for hospital usage. It maintains the original quality of food, without overcooking or drying out the food. Both the cook chill process system and food warmers are commonly used in establishments of various types and sizes, including hospitals, restaurants, hotels, airplanes and ships. We believe that given our history and existing knowledge in the kitchen equipment industry, we are able to widen our offerings to other product ranges and increase our capabilities in the refurbishment of kitchen equipment. As such, our Group intends to leverage on our existing competitive strengths by extending our product offering and services. This will serve to create an additional revenue stream whilst leveraging on our existing sales and distribution networks.
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Due to the increase in F&B establishments in Singapore as well as the increase in business of existing F&B and hospitality services operators in line with the growing population, we intend to expand our service team to meet such demands. Acquisition of additional fabrication equipment and machinery We intend to acquire additional fabrication equipment and machinery, including laser cutting machines which are able to operate from designs and specications directly encoded into the machine or imported from drawings generated from the CADCAM systems. Such laser cutting machines can perform shearing, punching and other functions using user-friendly computer interfaces monitored by the machine operator. Such laser cutting machines will increase the accuracy of our fabrication process and will enhance the efciency of our production. We intend to utilise approximately S$0.7 million of our net proceeds from the New Shares towards the acquisition of the additional fabrication equipment and machinery.
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INTERESTED PERSON TRANSACTIONS

In general, transactions between our Group and any of its interested persons (namely, our Directors, Managing Director or Controlling Shareholders of our Company or the Associates of such Directors, Managing Director or Controlling Shareholders) would constitute interested person transactions for the purpose of Chapter 9 of the Catalist Rules. This section sets out details of interested person transactions for the last three nancial years ended FY2012 and for the period commencing from 1 January 2013 up to the Latest Practicable Date (the Relevant Period). Save as disclosed below and in the sections entitled Restructuring Exercise and General Information on our Group - History of this Offer Document, our Group does not have any other material transactions with any of its interested persons during the Relevant Period. PAST INTERESTED PERSON TRANSACTIONS 1. Provision of guarantees by interested persons During the Relevant Period, the relevant persons listed below have provided guarantees to secure our Groups obligations under certain credit facilities, details of which were set out below:
Bank/ Financial Institutions ABN AMRO Bank N.V. Facilities granted Interested Person(s) who provided the guarantee Sally Chua, Alan Lee and Frankie Cheng
Facilities comprising: (1) Letters of credit, trust receipt nancing, trade bills nancing, import open account trade nancing, shipping guarantees for up to S$500,000 Foreign exchange transactions for spot and forward contracts up to a maximum tenor of six months
(2)
Australia and New Zealand Banking Group Limited The Bank of East Asia, Limited
Term loan of S$100,000
Sally Chua, Alan Lee and Frankie Cheng
Facilities comprising letters of credit, trust receipts, invoice nancing (up to S$375,000) and overdraft (up to S$200,000), up to an aggregate amount of S$1,000,000 Facilities comprising short term facilities, letters of credit, trust receipts, invoice financing, shipping guarantees and bankers guarantees (up to S$100,000) of up to an aggregate amount of S$500,000 Term loans of an maximum aggregate amount of S$3,105,000 Facilities comprising: (1) Inventory/stock nancing facility Trade facilities comprising sight/usance/ local letters of credit, trust receipts, import/local bills receivable purchase, shipping guarantees and air waybill guarantees of up to S$1,000,000 (2) Foreign exchange spot and forward up to a maximum tenor of 12 months of up to S$500,000
Citibank, N.A., Singapore Branch
DBS Bank
Sally Chua, Alan Lee and Frankie Cheng Sally Chua, Alan Lee and Frankie Cheng
DBS Bank
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Bank/ Financial Institutions Oversea-Chinese Banking Corporation Limited Facilities granted Interested Person(s) who provided the guarantee Sally Chua, Alan Lee and Frankie Cheng
Facilities comprising: (1) Letter of credit, trust receipts, draft loans, export bills purchased, shipping guarantee/airway bills of up to S$1,000,000 Foreign exchange of up to S$1,000,000
(2) UOB Bank
Facilities comprising: (1) (2) Overdraft of up to S$170,000 Credit limit for credit card S$30,000
Oversea-Chinese Banking Corporation Limited ORIX Leasing Singapore Limited Malayan Banking Berhad
Term loans of an aggregate amount of S$235,000
Sally Chua, Alan Lee and Frankie Cheng Sally Chua
Hire purchase facilities of an aggregate amount of S$123,442.50 Hire purchase facilities of an aggregate amount of S$144,300 Hire purchase facilities of an aggregate amount of S$144,112.50 Hire purchase facilities of S$255,800 Hire purchase facilities of an aggregate amount of S$67,200
OCL Limited
Sally Chua, Alan Lee and Frankie Cheng Sally Chua, Alan Lee and Frankie Cheng Sally Chua Sally Chua
ORIX Capital Ltd.
UOB Bank Hong Leong Finance Limited
The largest aggregate outstanding amount guaranteed by the above interested persons during the Relevant Period, based on amounts as at the end of each calendar month, was approximately S$10,374,855. The interest rates applicable to the above credit facilities range from 2.64% to 4.75% per annum. As the interested persons did not receive any consideration (monetary or otherwise) for the provision of the above guarantees, the above arrangements were not carried out on an arms length basis but were benecial to our Group.
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2. Lease of kitchen equipment to Qson Eating House During the Relevant Period, our Group had from time to time provided (i) the lease of certain kitchen equipment, including dishwasher and refrigerator, and (ii) maintenance and servicing works of their kitchen equipment (including kitchen equipment supplied by parties other than our Group) to Qson Eating House. Qson Eating House which was owned and operated by Chua Swee Soon, the brother of Sally Chua, had ceased business on 6 October 2010. The aggregate consideration for such lease, maintenance and servicing works paid to our Group during the Relevant Period are as follows:
As at 31 December 2010 Amount paid to our Group S$3,087 2011 S$4,697 2012 1 January 2013 to the Latest Practicable Date
The parties to the above arrangement have acknowledged and our Directors are also of the view that the above arrangement were entered into on an arms length basis and based on normal commercial terms. As at the Latest Practicable Date, Qson Eating House had ceased business. We will not enter into transactions of the above nature with Qson Eating House in the future. 3. Provision of consultancy services by Sirius Venture On 1 August 2012, in connection with the listing of our Company on Catalist, we entered into a consultancy agreement (Consultancy Agreement) pursuant to which Sirius Venture agreed to provide our Group with consultancy services relating to, inter alia, the listing of our Company on Catalist for a period commencing 1 August 2012 to 1 August 2015. The aggregate amount paid by our Group to Sirius Venture pursuant to the Consultancy Agreement during the Relevant Period is as follows:
1 January 2013 to the Latest Practicable Date (S$000)
FY2010 (S$000) Amount paid to Sirius Venture
FY2011 (S$000)
FY2012 (S$000) 12.5
As at the date of this Offer Document, the following remains payable to Sirius Venture: (i) S$12,500 to be payable at the end of the 12 month period commencing from the date of signing the Consultancy Agreement; and S$138,000, equivalent to three per cent. (3%) of fresh funds invested by new investors before or at the listing of our Company, payable upon receipt of such fresh funds.
(ii)
The above amounts due from our Group to Sirius Venture will be fully settled following the successful admission of our Company to Catalist. The Consultancy Agreement will be terminated following the successful admission of our Company to Catalist. At the time when the Consultancy Agreement was entered into, Sirius Venture was not an interested person of our Group as Wong Hin Sun Eugene was only appointed to our Board on 25 June 2013. Our Directors are of the view that the Consultancy Agreement was negotiated on an arm's length basis and based on normal commercial terms and market prices which Sirius Venture charges to its other customers for similar scope of services.
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We do not expect to engage the services of Sirius Venture following the admission of our Company to Catalist. However, in the event that we do engage the services of Sirius Venture in the future, we will comply with the review procedures as set out in the section entitled Interested Person Transactions - Guidelines and Review Procedures for Future Interested Person Transactions of this Offer Document and be subject to the relevant provisions of Chapter 9 of the Catalist Rules and/or other applicable provisions of the Catalist Rules. PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS 1. Guarantees provided by Interested Persons The relevant interested persons listed below have provided guarantees to secure the use of facilities by our Group, as follows:
Bank/ Financial Institutions UOB Bank Facilities granted Interested Person(s) who provided the guarantees Sally Chua, Alan Lee and Frankie Cheng
Facilities comprising: (1) (2) Overdraft of up to S$170,000 Irrevocable sight and/or letters of credit (up to 120 days) of up to S$1,000,000 Trust receipts (up to 120 days) of up to S$1,000,000 Term Bills (up to 120 days) of up to S$1,000,000 (3) (4) Credit limit for credit card of up to S$60,000 Foreign exchange transactions or contracts up to a maximum tenor of 6 months of up to S$500,000
DBS Bank
Facilities comprising: (1) (2) Guarantee facility of up to S$430,000 Trade Facilities I comprising Sight/Usance/ Local Letters of Credit, Trust Receipts, Import/Local Bills Receivable Purchase, Shipping Guarantees and Air Waybill Guarantees of up to S$1,000,000 Foreign exchange spot and forward of up to S$500,000
(3)
Standard Chartered Bank
Facilities comprising: (1) Letters of credit of up to S$1,600,000 Acceptance against trust receipts of up to S$1,600,000 Loans against trust receipts of up to S$1,600,000 Import loans of up to S$1,600,000 Import Invoice Financing of up to S$1,600,000 Shipping guarantees of up to S$1,600,000 (2) Bankers guarantees of up to S$349,000
Standard Chartered Bank
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Bank/ Financial Institutions DBS Bank Facilities granted Interested Person(s) who provided the guarantees Sally Chua, Alan Lee and Frankie Cheng Sally Chua, Alan Lee and Frankie Cheng Alan Lee
United Overseas Bank (Malaysia) Bhd Hitachi Capital Singapore Pte. Ltd. OCL Limited
Term loan of RM1,151,930
Hire purchase facilities of S$26,000
Hire purchase facilities of an aggregate amount of S$35,000 Hire purchase facilities of S$58,000
Sally Chua, Alan Lee and Frankie Cheng Sally Chua
UMF (Singapore) Limited (now known as Mercedes-Benz Financial Services Singapore Ltd) Malayan Banking Berhad
Hire purchase facilities of S$50,000
Sally Chua
Malayan Banking Berhad Think One Credit Pte. Ltd. BMW Financial Services Singapore Pte Ltd
Hire purchase facilities of S$37,000 Hire purchase facilities of an aggregate amount of S$44,000 Hire purchase facilities of S$387,800
Alan Lee Alan Lee
Sally Chua
The largest aggregate outstanding amount guaranteed by the above interested persons during the Relevant Period, based on amounts as at the end of each calendar month, was approximately S$7,144,871. As at the Latest Practicable Date, the aggregate outstanding amount guaranteed by the above interested persons was approximately S$7,143,258. The interest rates applicable to the above credit facilities range from 2.65% to 5.75% per annum. As the interested persons did not receive any consideration (monetary or otherwise) for the provision of the above guarantees, the above transactions were not carried out on an arms length basis but were benecial to our Group. Subsequent to the Invitation, we intend to obtain a release and discharge of the above guarantees provided by the interested persons from the respective banks and financial institutions by substituting the same with other securities to be provided by our Group which may be acceptable to the banks and nancial institutions (as the case may be), subject to their consent. Following such replacement of the guarantees, we do not expect any material changes to the other terms and conditions of the banking facilities. In the event that the banks or nancial institutions do not accept the substitution of the guarantees and we are unable to secure alternative credit facilities on similar terms, the above-named interested persons have undertaken to continue providing such guarantees until such time we are able to secure alternative facilities from other nancial institutions. The above interested persons have also conrmed that they will not receive any consideration (monetary or otherwise) for the provision of the above guarantees in the future.
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2. Lease of kitchen equipment to Qson 21 During the Relevant Period, our Group had from time to time provided (i) the lease of certain kitchen equipment, including dishwasher and refrigerator, and (ii) the provision of maintenance services and technical services for their kitchen equipment (including kitchen equipment supplied by parties other than our Group) to Qson 21. As at the Latest Practicable Date, Qson 21 is a business which is owned and operated by Chua Swee Soon, the brother of Sally Chua. The aggregate consideration for such lease, maintenance services and technical services paid to our Group during the Relevant Period are as follows:
As at 31 December 2010 Amount paid to our Group 2011 2012 S$7,629 1 January 2013 to the Latest Practicable Date S$1,873
The parties to the above arrangement have acknowledged and our Directors are also of the view that the above arrangements were entered into on an arms length basis and based on normal commercial terms. Following our admission to Catalist, any transaction between our Group and Qson 21 will be subject to the review procedures for future interested person transactions as set out in the section entitled Interested Person Transactions - Guidelines and Review Procedures for Future Interested Person Transactions of this Offer Document and Chapter 9 of the Listing Manual, so as to ensure that it is carried out on normal commercial terms and is not prejudicial to the interests of our Company and our minority Shareholders. 3. Supply of gas valves by Qson Precision Engineering Pte Ltd to our Group During the Relevant Period, Qson Precision Engineering Pte Ltd supplied our Group with fabricated gas valves and other minor spare parts from time to time. Chua Chwee Lee, the brother of Sally Chua, is a director of Qson Precision Engineering Pte Ltd and directly owns 65.98% interest in Qson Precision Engineering Pte Ltd. The aggregate consideration for such supply paid by our Group during the Relevant Period is as follows:
As at 31 December 2010 Amount paid by our Group S$111,490 2011 S$43,271 2012 S$24,802 1 January 2013 to the Latest Practicable Date S$10,914
The parties to the above arrangement have acknowledged and our Directors are also of the view that the above arrangement were entered into on an arms length basis and based on normal commercial terms. Following our admission to Catalist, any transaction between our Group and Qson Precision Engineering Pte Ltd will be subject to the review procedures for future interested person transactions as set out in the section entitled Interested Person Transactions - Guidelines and Review Procedures for Future Interested Person Transactions of this Offer Document and Chapter 9 of the Listing Manual, so as to ensure that it is carried out on normal commercial terms and is not prejudicial to the interests of our Company and our minority Shareholders.
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GUIDELINES AND REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS In respect of all interested person transactions, we will implement the following review procedures: (a) In relation to any purchase of products or procurement of services from interested persons, quotes from at least two unrelated third parties in respect of the same or substantially the same type of transactions will be used as comparison wherever possible. The purchase price or procurement price shall not be higher than the most competitive price of the two comparative prices from the two unrelated third parties. In relation to any sale of products or provision of services to interested persons, the price and terms of two other completed transactions of the same or substantially the same type of transactions to unrelated third parties are to be used as comparison wherever possible. The interested persons shall not be charged at rates lower than that charged to the unrelated third parties. When renting from or to interested persons, our Directors shall take appropriate steps to ensure that such rent is commensurate with the prevailing market rates, including adopting measures such as making relevant enquiries with landlords of properties of similar location and size, or obtaining necessary reports or reviews published by property agents (including an independent valuation report by a property valuer, where appropriate). The rent payable shall be based on the most competitive market rental rate of similar properties in terms of size and location, based on the results of the relevant enquiries. Where it is not possible to compare against the terms of other transactions with unrelated third parties and given that the products or services may be purchased only from an interested person, the interested person transaction will be approved by our Audit Committee, who has no interest in the transaction, in accordance with our usual business practices and policies. In determining the transaction price payable to the interested person for such products and/or services, factors such as, but not limited to, quantity, requirements and specications will be taken into account.
(b)
(c)
(d)
In addition, we shall monitor all interested person transactions entered into by us by categorising the transactions as follows: (a) a category one interested person transaction is one where the value thereof is in excess of 3% of the NTA of our Group; and a category two interested person transaction is one where the value thereof is below or equal to 3% of the NTA of our Group.
(b)
Category one interested person transactions must be reviewed and approved by our Audit Committee prior to entry. Category two interested person transactions must be approved by a Director and our Chief Financial Ofcer who shall not be an interested person in respect of the particular transaction prior to entry and must be reviewed on a half-yearly basis by our Audit Committee. In its review, our Audit Committee will ensure that all future interested person transactions are conducted on normal commercial terms and are not prejudicial to the interests of our Company and its minority Shareholders. In respect of all interested person transactions, we shall adopt the following policies: (a) In the event that a member of our Audit Committee is interested in any interested person transaction, he will abstain from deliberating, reviewing and/or approving that particular transaction. We shall maintain a register to record all interested person transactions which are entered into by our Group, including any quotations obtained from unrelated parties to support the terms of the interested person transactions.
(b)
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(c) We shall incorporate into our internal audit plan a review of all interested person transactions entered into by our Group. Our Audit Committee shall review the internal audit reports at least annually to ensure that all interested person transactions are carried out on an arms length basis and in accordance with the procedures outlined above. Furthermore, if during these periodic reviews, our Audit Committee believes that the guidelines and procedures as stated above are not sufcient to ensure that the interests of minority Shareholders are not prejudiced, we will adopt new guidelines and procedures. The Audit Committee may request for an independent nancial advisers opinion as it deems t.
(d)
We shall ensure that all interested person transactions comply with the provisions in Chapter 9 of the Catalist Rules, and if required, we will seek independent Shareholders approval for such transactions. In accordance with Rule 919 of the Catalist Rules, interested persons and their Associates shall abstain from voting on resolutions approving interested person transactions involving themselves and our Group. In addition, such interested persons shall not act as proxies in relation to such resolutions unless voting instructions have been given by the Shareholder(s). Our Board of Directors will ensure that all disclosure, approval and other requirements on interested person transactions, including those required by prevailing legislation, the Catalist Rules and relevant accounting standards, are complied with. We will disclose in our annual report the aggregate value of interested person transactions during the nancial year. POTENTIAL CONFLICTS OF INTERESTS All our Directors have a duty to disclose their interests in respect of any transaction in which they have any personal material interest or any actual or potential conicts of interest (including a conict that arises from their directorship or employment or personal investment in any corporation). Upon such disclosure, such Directors will not participate in any proceedings of the Board and shall abstain from voting in respect if any transaction where the conict arises. Save as disclosed below and in the sections entitled Interested Person Transactions, General Information on our Group - History and Restructuring Exercise of this Offer Document, none of our Directors, Executive Ofcers, Substantial Shareholders or any of their Associates has any interest, direct or indirect, in: (a) (b) any transaction to which we were or are to be a party; any company carrying on the same business or a similar trade which competes materially and directly with the existing business of our Group; and any company that is our customer or supplier of goods and services.
(c)
We set out below the potential conicts of interests which may arise from the interests of our Directors and/or their Associates. Qson Precision Engineering Pte Ltd Background Qson Precision Engineering Pte Ltd is a private company limited by shares incorporated in Singapore. The principal business activities of Qson Precision Engineering Pte Ltd are in the provision of precision engineering and machining solutions, including precision machining, sheet metal fabrication, welding services and contract assembly, to companies in the hard drive disk, semi-conductor, oil and gas, automation and aerospace industries. Chua Chwee Lee, the brother of Sally Chua, is a director of Qson Precision Engineering Pte Ltd and directly owns 65.98% interest in Qson Precision Engineering Pte Ltd.
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We currently engage Qson Precision Engineering Pte Ltd to fabricate and supply us with gas valves and other minor spare parts for our Group from time to time. Subsequent to the Invitation, all the future transactions between Qson Precision Engineering Pte Ltd and our Group shall be subject to the relevant provisions under Chapter 9 of the Catalist Rules if these constitute interested person transactions by virtue of Qson Precision Engineering Pte Ltd being an Associate of Sally Chua. Notwithstanding the above, our Directors are of the view that there are no potential conicts of interests for the following reasons: (a) Qson Precision Engineering Pte Ltd is not in the business of fabricating and sale of kitchen systems and kitchen equipment; Sally Chua does not have any executive role in the management of Qson Precision Engineering Pte Ltd; Qson Precision Engineering Pte Ltd has a different customer base compared to our Group; and Qson Precision Engineering Pte Ltd has on 22 May 2013 undertaken to change its name within three months from the date of such undertaking, and to no longer utilise the Qson name or brand as well as to no longer state that Qson Precision Engineering Pte Ltd is part of the Qson group of companies.
(b)
(c) (d)
Qson 21 Background Qson 21 is the operator of a coffee shop located at 5 Changi Village Road, #01-2021, Singapore 500005. As at the Latest Practicable Date, Chua Swee Soon, the brother of Sally Chua, is an owner of Qson 21, a sole proprietorship. We currently provide Qson 21 with (i) the lease of certain kitchen equipment, including dishwasher and refrigerator, and (ii) maintenance and servicing of their kitchen equipment (including kitchen equipment supplied by parties other than our Group), for purpose of conducting its business. Subsequent to the Invitation, all future transactions between Qson 21 and our Group shall be subject to the relevant provisions under Chapter 9 of the Catalist Rules if these constitute interested person transactions by virtue of Qson 21 being an Associate of Sally Chua. Notwithstanding the above, our Directors are of the view that there are no potential conicts of interest for the following reasons: (a) Qson 21 is not in the business of fabricating and sale of kitchen systems and kitchen equipment; and Sally Chua does not have any role in the management of Qson 21.
(b)
Interests of Experts No expert is interested, directly or indirectly, in the promotion of, or in any property or assets which have, within the two years preceding the date of this Offer Document, been acquired or disposed of by or leased to our Company or any of its subsidiaries or are proposed to be acquired or disposed of by or leased to our Company or any of its subsidiaries. No expert is employed on a contingent basis by our Company or any of our subsidiaries; or has a material interest, whether direct or indirect, in our Shares or the shares of our subsidiaries; or has a material economic interest, whether direct or indirect, in our Company, including an interest in the success of the Invitation.
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Interests of Sponsor, Placement Agent and Underwriter In the reasonable opinion of our Directors, save as disclosed below and in the section entitled General and Statutory Information - Management, Underwriting and Placement Arrangements of this Offer Document, our Company does not have any material relationship with the Sponsor, the Underwriter and Placement Agent or any other nancial adviser in relation to the Invitation: (a) (b) (c) (d) CIMB is the Sponsor of the Invitation; CIMB Securities is the Underwriter and the Placement Agent of the Invitation; CIMB is the Receiving Banker of the Invitation; and CIMB will be the continuing Sponsor of our Company for an initial period of three years from the date our Company is admitted to and listed on Catalist.
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DIRECTORS, MANAGEMENT AND STAFF

DIRECTORS Our board of Directors is entrusted with the responsibility for the overall management of our Group. The particulars of our Directors are set out below:
Country of principal residence Singapore
Name Sally Chua
Age 45
Address 17 Westridge Walk, Singapore 117846 17 Westridge Walk, Singapore 117846 Blk 80, Corporation Road #01-02 Singapore 649819 10A First Avenue Singapore 268746
Principal occupation Managing Director
Alan Lee
52
Executive Director (Technical and Maintenance Service) Executive Director (Production)
Singapore
Frankie Cheng
46
Singapore
Wong Hin Sun Eugene
45
Founder and Managing Director of Sirius Venture
Singapore
Tan Lye Huat
64
10F Braddell Hill, Independent Director #24-24 Singapore 579725 7 St. Heliers Avenue Singapore 555803 Independent Director
Singapore
Eileen Tay-Tan Bee Kiew
60
Singapore
Our Directors career and academic history, business experience and general areas of responsibility within our Group are set out below: Sally Chua is our co-founder and Managing Director and was appointed to our Board on 9 May 2013. She is responsible for all day-to-day management decisions, implementation of short and long-term plans, management and monitoring of principal risks of our Group and the overall strategic and expansion plans of our Group. Sally Chua started her career as an Administrative Executive with InterMega Trading Pte Ltd, from 1986 to 1990. Prior to joining our Group, she was working as a secretary at Sanhin Industries Pte Ltd, which was in the Chinese kitchen equipment manufacturing industry, from 1990 to 1996. Sally Chua attained her GCE O Level certicate in 1984. Alan Lee is our co-founder and Executive Director (Technical and Maintenance Service) and was appointed to our Board on 9 May 2013. He is currently responsible for overseeing the Technical and Maintenance Service division of our Group, where he manages the technical training of the team, and oversees and plans the portfolio of services of our Group. Under the servicing division, he oversees a team of more than 50 service technicians. Alan Lee started his career as a Technician with Lee Airconditioning, Electrical and Plumbing Services, from 1981 to 1988. Thereafter, he operated his sole proprietorship, AL Electrical, Air-conditioning and Plumbing Services from 1989 to 1996. Frankie Cheng is our co-founder and Executive Director (Production) and was appointed to our Board on 9 May 2013. He is currently responsible for overseeing the research and development, manufacturing and production of kitchen equipment under our house brands, Qoolux and InnoFlame. Frankie Cheng is also responsible for the overall management of the fabrication division. Prior to joining our Group in 1996, Frankie Cheng started his career as a Production & Sales Executive with Sanhin Industries Pte Ltd, which was in the Chinese kitchen equipment manufacturing industry, from 1992 to 1996.
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Wong Hin Sun Eugene is our Non-Executive Director and was appointed to our Board on 25 June 2013. He founded Sirius Venture, a venture capital investment company, in September 2002. He is currently the managing director of Sirius Venture and its group of companies. Previously, from 1992 to 1998, he was with the Republic of Singapore Navy, where his last appointment was Head of Naval Recruitment. He joined Crimson Asia Capital Singapore Pte Ltd as an associate from 1998 to 2000. From March 2000 to August 2000, he was a Vice President, Corporate Development and Ventures, with Aretae Pte Ltd. Between September 2000 and September 2002, he was the Executive Director and Principal of Crimson Asia Capital Singapore Pte Ltd, where his duties involved overseeing the Singapore ofce. Between January 2008 and June 2012, he was also a senior adjunct lecturer and subsequently, an adjunct associate professor with the National University of Singapore teaching private equity and entrepreneur nance. He currently serves as a non-executive director of Ajisen (China) Holdings Limited, a company listed on the Hong Kong Stock Exchange, a non-executive director of Japan Foods Holding Ltd., Neo Group Limited, TMC Education Corporation Ltd and Jason Marine Group Limited, all of which are listed on Catalist. He currently serves on the board of the Agri-Food & Veterinary Authority of Singapore and International Enterprise Singapore (IE Singapore) and is the chairman of CrimsonLogic Pte Ltd, a subsidiary of IE Singapore. Wong Hin Sun Eugene graduated from the National University of Singapore with a Bachelor of Business Administration (First Class Honours) in 1992 and obtained a Master of Business Administration from the Imperial College of Science, Technology and Medicine, University of London in 1998. He also completed the Owner President Management Program from Harvard Business School in 2011. He qualied as a chartered nancial analyst in 2001 and is a member of the Institute of Directors in Singapore and the United Kingdom, as well as the Australian Institute of Company Directors. Tan Lye Huat was appointed as the Independent Non-Executive Chairman of our Company on 25 June 2013. He has senior professional and management experience and and sits on the board of a number of other public listed companies. He is the founder of HIM Governance Pte. Ltd., a governance services and solution provider, which was founded in 2002. Tan Lye Huat has been a fellow of the Association of Chartered Certied Accountants since 1980 and a member of the Institute of Singapore Chartered Accountants (formerly the Institute of Certied Public Accountants of Singapore) since 1989. He is a Chartered Director of the Institute of Directors (United Kingdom) and a member of the Australian Institute of Company Directors. Eileen Tay-Tan Bee Kiew is our Independent Director and was appointed to our Board on 25 June 2013. She has more than 39 years of experience in the areas of accounting, auditing, taxation, public listing, due diligence, mergers & acquisitions and business advisory. She began her career in 1974 as an audit assistant with Turquand Young (now known as Ernst & Young), and had been promoted to an audit manager when she left in 1984. She subsequently worked at Foo Kon & Tan (now known as Foo Kon & Tan Grant Thornton) from 1984 to 1989. In 1990, she was the sole proprietor of Eileen Tay & Associates, which provided audit and taxation services. From 1991 to 2002, she was a partner of KPMG. From 2002 to 2006, she was a director of several companies, both private and public listed, in Singapore and Australia. From 2007 to 2008, she was the chief nancial ofcer of Sunningdale Tech Ltd, a company listed on the Mainboard of the SGX-ST. She is currently an independent director and the chairman of the audit committee of Jason Marine Group Limited, a company listed on Catalist of the SGX-ST. She is also a member of the SPRING SEEDS Investment Panel. Eileen Tay-Tan Bee Kiew graduated from the University of Singapore in 1974 with a Bachelor of Accountancy (Hons). She is a fellow member of the Institute of Singapore Chartered Accountants (formerly the Institute of Certified Public Accountants of Singapore), the Chartered Institute of Management Accountants, the United Kingdom and the CPA Australia. Our Directors have the appropriate expertise to act as directors of our Company, as evidenced by their business and working experience set out above. Wong Hin Sun Eugene, Tan Lye Huat and Eileen Tay-Tan Bee Kiew have prior experience as directors of public listed companies in Singapore and are therefore familiar with the roles and responsibilities of a director of a public listed company in Singapore.
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Sally Chua, Alan Lee and Frankie Cheng have attended the Listed Company Director Essentials Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know course conducted by the Singapore Institute of Directors and are aware of the roles and responsibilities of a director of a public listed company in Singapore. Save as disclosed below, none of our Directors, Executive Ofcers and Substantial Shareholders is related to one another by blood or marriage:
Name Sally Chua Alan Lee Relationship Spouse of Alan Lee Spouse of Sally Chua Designation Managing Director Executive Director (Technical and Maintenance Service)
The list of present and past directorships of each Director over the last ve years up to the Latest Practicable Date and excluding those held in our Company, is set out below:
Name Sally Chua Present directorships Group corporations Qson Industries (M) Sdn. Bhd. Qson International Pte. Ltd. Qson Kitchen Equipment Pte Ltd Qson KitchenHub Sdn. Bhd. Qson Kuechen Kultur Co., Ltd Other corporations QKE Holdings Other corporations Food Concepts System Private Limited Kitchenman Private Limited Alan Lee Group corporations Qson Industries (M) Sdn. Bhd. Qson International Pte. Ltd. Qson Kitchen Equipment Pte Ltd Qson KitchenHub Sdn. Bhd. Other corporations QKE Holdings Other corporations Food Concepts System Private Limited Kitchenman Private Limited Frankie Cheng Group corporations Qson Industries (M) Sdn. Bhd. Qson International Pte. Ltd. Qson Kitchen Equipment Pte Ltd Qson KitchenHub Sdn. Bhd. Other corporations QKE Holdings Other corporations Food Concepts System Private Limited Kitchenman Private Limited Group corporations Nil Group corporations Nil Past directorships Group corporations Nil
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Name Wong Hin Sun Eugene Present directorships Group corporations Nil Other corporations Ajisen (China) Holdings Limited Agri-Food & Veterinary Authority of Singapore CrimsonLogic Pte Ltd International Enterprise Singapore Japan Foods Holding Ltd. Jason Marine Group Limited Neo Group Limited Sirius Angel Fund Pte. Ltd. Sirius Capital Management Pte. Ltd. (in liquidation members voluntary winding up) Sirius Growth Capital Pte. Ltd. Sirius Growth Partners I Pte. Ltd. Sirius Investment Inc Sirius SME Growth Partners I Limited Sirius Venture Superdog Pte. Ltd. (in liquidation creditors voluntary winding up) TMC Education Corporation Ltd Past directorships Group corporations Nil Other corporations Acumen Communications Limited (struck off) Aeriel Beauty Co., Ltd Axial Education Pte. Ltd. (formerly known as Sirius Venture Group Pte. Ltd.) Business Angel Network (South East Asia) Ltd China Video Surveillance Limited (formerly known as Yaan Security Technology Limited) (dissolved members voluntary winding up) Efusion Solutions Pte. Ltd. Grand Team Technologies Limited Haike Chemical Group Limited Kingsley Capital International Pte. Ltd. OJJ Holdings Pte. Ltd. (alternate director) Paradise Group Holdings Pte. Ltd. Q & M Dental Group (Singapore) Limited SD E-Hub Pte. Ltd. (struck off) SD Vivo Pte. Ltd. (struck off) SD White Sands Pte. Ltd. (struck off) S.E. Asia Emerging Market Co. Ltd. Sirius Capital Holdings Pte. Ltd. (dissolved members voluntary winding up) Sirius Capital Management Limited (in liquidation - members voluntary winding up) Sirius Japan Co., Ltd Sirius Management Services Pte. Ltd. (struck off) Sirius Ventures Company Ltd Sirius Ventures Sdn Bhd Southeast Asia Acquisition Corp. STEI Institute Pte. Ltd. (formerly known as Sirius Training & Education Institute Pte. Ltd.) Tecbiz Frisman Holdings Private Limited (struck off) Tecbiz Frisman Pte Ltd Transmex Systems International Pte. Ltd. Group corporations Nil Other corporations S i2i Limited Group corporations Nil Other corporations Agis Pte Ltd China Video Surveillance Limited (formerly known as YAAN Security Technology Pte Ltd and YAAN Security Technology Limited) (dissolved members voluntary winding up) Kian Ho Bearings Ltd
Eileen Tay-Tan Bee Kiew
Group corporations Nil Other corporations Jason Marine Group Limited
Tan Lye Huat
Group corporations Nil Other corporations Dynamic Colours Limited HIM Governance Private Limited Japan Foods Holding Ltd. Neo Group Limited Nera Telecommunications Ltd S P Corporation Limited
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EXECUTIVE OFFICERS The day-to-day operations of our Group are entrusted to our Executive Directors who are assisted by an experienced and qualied team of Executive Ofcers. The particulars of our Executive Ofcers are set out below:
Name Wong Tat Yang Age 55 Address 23 West Coast Crescent #10-11, Tower B Singapore 128046 Block 715 Hougang Avenue 2 #06-355 Singapore 530715 Block 92 Commonwealth Drive #07-722, Singapore 140092 Principal occupation Chief Financial Ofcer
Charlene Koh
55
Senior Manager
Carol Lee
31
Finance Manager
Our Executive Ofcers career and academic history, business experience and areas of responsibility within our Group are set out below: Wong Tat Yang is our Chief Financial Ofcer. He joined our Group in January 2013 and is responsible for the overall nancial and accounting functions of our Group. Prior to joining us, he was the chief nancial ofcer and company secretary of Matex International Limited for ten years from 2002 to 2012 and HupSteel Limited for ve years from 1997 to 2002. Both Matex International Limited and HupSteel Limited are listed on the Mainboard of the SGX-ST. From 1988 to 1997, he was an accountant with the Singapore Totalisator Board and, from 1991 to 1997, the Singapore Turf Club as well. From 1986 to 1988, he was an accountant with the Housing & Development Board (HDB) and from 1982 to 1986, he was an auditor, tax associate and audit supervisor with KPMG, Arthur Young & Co and JK Medora & Company respectively, all of which are public accounting rms. Wong Tat Yang holds a Bachelor of Accountancy from the National University of Singapore. He is a fellow of the Institute of Singapore Chartered Accountants (formerly the Institute of Certied Public Accountants of Singapore) and the Association of Chartered Certied Accountants Singapore. He is also a member of the Singapore Institute of Directors. Charlene Koh is our Senior Manager. She joined our Group in May 2007 as a Service Co-ordinator and is currently a Senior Manager responsible for the general administration of our Group. Charlene Koh worked as a secretary with Macroserve Pte Ltd, from 1979 to 1985. Thereafter, she joined Systems Technology Pte Ltd as a marketing and promotions executive from 1986 to 1989. Prior to joining our Group, she worked as a secretary with Total Peripherals Pty Ltd from 1990 to 1999 and in its related company, JJW Pte Ltd, from 1999 to 2007 as an administrative manager. Charlene Koh attained her GCE A Level certicate in 1975. Carol Lee is our Finance Manager. She joined our Group in August 2006 and reports directly to our Chief Financial Ofcer. She is responsible for assisting our Chief Financial Ofcer in overseeing accounting, nancial and corporate secretarial matters of our Group. Prior to joining our Group, she worked as an Accounts Assistant with Aeromac Engineering Pte Ltd from 2001 to 2002. From 2003 to 2004, she was an Accounts Assistant with Citiway Trading. Ms Lee joined Zhang Hui Industries Sdn Bhd as an Accounts Assistant from February 2004 to August 2004. Thereafter, she joined Power Laser Engineering Sdn Bhd as an Assistant Finance Manager from 2004 to 2006. Carol Lee holds a Bachelor of Science in Applied Accounting (Upper Second Class Honours) from Oxford Brookes University. She is a member of the Institute of Singapore Chartered Accountants (formerly the Institute of Certied Public Accountants of Singapore) and the Association of Chartered Certied Accountants Singapore.
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The list of present and past directorships of each Executive Ofcers over the last ve years up to the Latest Practicable Date and excluding those held in our Company, is set out below:
Name Wong Tat Yang Present directorships Group corporations Nil Other corporations Nil Charlene Koh Group corporations Nil Other corporations Nil Carol Lee Group corporations Nil Other corporations Nil Past directorships Group corporations Nil Other corporations Nil Group corporations Nil Other corporations Nil Group corporations Nil Other corporations SAF Innovation Sdn. Bhd.
To the best of our knowledge and belief, there is no arrangement or understanding with a Substantial Shareholder, customer or supplier of our Company or other person, pursuant to which any of our Directors or Executive Ofcers was selected as a Director or an Executive Ofcer of our Company.
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MANAGEMENT REPORTING STRUCTURE The following chart shows our management reporting structure as at the Latest Practicable Date.
Board of Directors
Executive Director (Technical and Maintenance Service)

Alan Lee
Managing Director
Sally Chua
Executive Director (Production)

Frankie Cheng
Technical and Maintenance Service
Fabrication and Production
Finance
Wong Tat Yang (Chief Financial Officer) Carol Lee (Finance Manager)
Sales
Administration Human Resource Purchasing

Charlene Koh
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DIRECTORS AND EXECUTIVE OFFICERS REMUNERATION The remuneration (including salary, bonus, contributions to CPF, directors fees, allowances and benetsin-kind) paid during FY2011 and FY2012 and the estimated remuneration to be paid for the current FY2013 to our Directors and Executive Ofcers for services rendered to our Group are set out in the following remuneration bands(1):
FY2013 (estimated)
FY2011 Directors Sally Chua Alan Lee Frankie Cheng Wong Hin Sun Eugene Tan Lye Huat Eileen Tay-Tan Bee Kiew Executive Ofcers Wong Tat Yang Charlene Koh Carol Lee
Notes: (1) Remuneration bands: Band A refers to remuneration of up to S$250,000. Band B refers to remuneration between S$250,001 and S$500,000. Band C refers to remuneration between S$500,001 and S$750,000. Band D refers to remuneration between S$750,001 and S$1,000,000. (2)
FY2012
Band B Band B Band B N.A. N.A. N.A.
Band B Band B Band B N.A. N.A. N.A.
Band B(2) Band B(2) Band B(2) Band A Band A Band A
N.A. Band A Band A
N.A. Band A Band A
Band A Band A Band A
The estimated remuneration for FY2013 does not include any annual variable bonus payable and one-off benets-in-kinds under the Service Agreements of our Executive Directors, details of which are set out in the section entitled Directors, Management and Staff - Service Agreements of this Offer Document.
Related Employees Other than our Directors and Executive Officers whose relationship with one another and their remuneration are disclosed in this section and in the sections entitled Shareholders, Directors, Management and Staff - Directors and Directors, Management and Staff - Executive Ofcers of this Offer Document, the following former employees are also related to our Directors and Substantial Shareholders:
Name Lee Heng Ngoh Chua Hong Kim Chong Siew Git Lee Chong Heng Relationship Mother of Sally Chua Father of Sally Chua Wife of Frankie Cheng Brother of Alan Lee Designation General staff Driver Administrative ofcer Service technician
In FY2010, FY2011 and FY2012, the aggregate remuneration paid to the related employees (including salary, bonus, contributions to CPF, directors fees, allowances and benefits-in-kind) amounted to approximately S$31,449, S$43,578 and S$31,000 respectively. The basis of determining the remuneration of these related employees is the same as the basis of determining the remuneration of other unrelated employees. All of the above related employees have left the Company since 2012.
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The remuneration of any employees who are related to our Directors and Substantial Shareholders will be reviewed annually by our Remuneration Committee to ensure that their remuneration packages are in line with our staff remuneration guidelines and commensurate with their respective job scopes and level of responsibilities. Any bonuses, pay increment and/or promotions for these related employees will also be subject to the review and approval of our Remuneration Committee. In addition, any new employment of related employees and the proposed terms of their employment will also be subject to the review and approval of our Nominating Committee. In the event that a member of our Remuneration Committee or Nominating Committee is related to the employee under review, he will abstain from the review. Save as disclosed in this Offer Document, none of our Directors and Executive Ofcers is related to each other and/or our Substantial Shareholders. EMPLOYEES As at the Latest Practicable Date, we have 124 full-time employees. A breakdown of our full-time employees by function is as follows:
As at 31 December Function Management Technical and Maintenance Service Sales and Projects Production Finance and Administrative Total 2010 3 38 23 39 19 122 2011 3 52 15 18 18 106 2012 3 47 17 32 22 121 As at the Latest Practicable Date 3 50 18 27 26 124
The increase in the number of our Technical and Maintenance Service employees and the uctuation in the number of our Production employees is in line with changes in our business volume. The decrease in our Sales and Projects employees is due to the departure of junior sales personnel resulting from intense competition for labour in the industry. The geographical breakdown of our full-time employees is as follows:
As at 31 December 2010 Singapore Malaysia Vietnam Total 104 18 0 122 2011 99 7 0 106 2012 98 22 1 121 As at the Latest Practicable Date 100 23 1 124
We do not experience any signicant seasonal uctuations in our number of employees. We do not employ a signicant number of temporary employees. Our employees are not organised into any form of labour unions as a collective bargaining entity. The relationship and co-operation between our management and staff is good and this is expected to remain so in the future. There has not been any incidence of work stoppages or labour disputes which has affected our operations.
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Pension or retirement benets As at the Latest Practicable Date, other than amounts set aside or accrued in respect of the relevant laws and regulations, we have not set aside or accrued any amounts for any of our employees to provide for pension, retirement or similar benets to our employees. SERVICE AGREEMENTS On 1 June 2013, our Company entered into a service agreement with our Managing Director, Sally Chua, and each of our Executive Directors, Alan Lee and Frankie Cheng (each an Appointee). The Service Agreements will take effect on the date of admission of our Company to Catalist for an initial period of three years (Initial Term) and shall be renewed automatically on a yearly basis thereafter. During the Initial Term, our Company may terminate the Service Agreement by giving three months written notice to Appointee upon the occurrence of certain specied events, such as the bankruptcy of or serious misconduct by Appointee. The Service Agreement may also be terminated at any time after the Initial Term by either party giving the other party three months prior written notice of such termination. In the event that the respective Service Agreements is terminated before the expiry of the Initial Term, each Appointee or our Company (as the case may be) shall be entitled to: (i) in respect of termination pursuant to occurrence of specied events including bankruptcy, mental disorder, misconduct which may prejudice the business of our Group, persistent failure of duty or failure to comply with the instructions of the board of directors of our Company, payment in lieu of the three-month notice period if such notice period has not been fully served; or in respect of termination for reasons which do not fall within the specied circumstances in (i) above, payment in lieu of the balance of the Initial Term which has not been fully served, such payment shall be in a cash lump sum determined based on the last drawn monthly basic salary of the Appointee multiply by (i) the three-month notice period or any balance of such notice period thereof or (ii) any balance of the Initial Term (whichever is shorter), pro-rated in respect of any period less than a month.
(ii)
Under the Service Agreement, the Appointee shall, during his appointment and for a period of three years after the termination of the Service Agreement, be subject to non-competition obligations. The Service Agreements provide for, inter alia, the salary payable to the Appointees, annual leave, medical benets, grounds of termination and certain restrictive covenants (including non-compete obligation). Under the terms of the respective Service Agreements, the Appointees are entitled to receive the following annual salary and xed bonus:
Name Sally Chua Alan Lee Frankie Cheng Annual salary S$300,000 S$240,000 S$240,000 Annual Fixed Bonus S$25,000 S$20,000 S$20,000
Our Company will provide each of the Appointees with a living allowance of S$3,000 per month and a car allowance of S$3,000 per month. Sally Chua will also be provided with the use of a car of her choice, and we shall pay, or arrange for another company in our Group to pay, the purchase price and all other expenses relating to the acquisition of such car, if any, up to an aggregate maximum of S$500,000. In addition, each of Sally Chua, Alan Lee and Frankie Cheng may be entitled to receive an annual variable bonus based on the performance of the Appointee and the Company. The annual variable bonus will be proposed by our Managing Director, reviewed and agreed annually by our Remuneration Committee and approved by our Board.
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Subject to the approvals of the Shareholders of our Company, the SGX-ST and other regulatory authorities, where necessary, and subject to the eligibility criteria set out in the relevant employee share scheme or plan, each Appointee shall be eligible to participate in any employee scheme or plan implemented by our Company on such terms as may be determined by our Remuneration Committee at its sole and absolute discretion. The Appointees salary is subject to review annually by the Remuneration Committee and approved by the Board. All reasonable travelling, hotel, entertainment and such other out-of-pocket expenses incurred by the Appointees in the discharge of their duties will be borne by our Company. The Service Agreements will automatically cease if each Appointee dies during the term of the Service Agreement or if the Appointee ceases from any cause to be a director of our Company. Had the Service Agreements been in place for FY2012, the aggregate remuneration (including contributions to the CPF and other benets if any) paid or provided to our Executive Directors would have been approximately S$1.0 million instead of S$0.7 million and the combined prot before income tax of our Group would be approximately S$3.9 million instead of S$4.2 million. Save as disclosed above, there are no other existing or proposed service contracts entered into or to be entered into between our Company and our subsidiaries with any of our Directors or Executive Ofcers. There are no bonus or prot-sharing plans or any other prot-linked agreements or arrangements between our Company and any of our Directors, Executive Ofcers or employees.
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SINGAPORE KITCHEN EQUIPMENT PERFORMANCE SHARE PLAN

In conjunction with our listing on the SGX-ST, we have adopted a performance share plan known as the Singapore Kitchen Equipment Performance Share Plan, which was approved by our Shareholders on 25 June 2013. The rules of our PSP are set out in Appendix E of this Offer Document. The PSP will provide eligible participants with an opportunity to participate in the equity of our Company and to motivate them towards better performance through increased dedication and loyalty. The PSP forms an integral and important component of our compensation plan and is designed primarily to reward and retain directors and employees whose services are vital to the growth and performance of our Company and/or our Group. As at the Latest Practicable Date, no Awards have been granted under the PSP. Objectives of the PSP The main objectives of the PSP are as follows: (a) to attract potential employees with relevant skills to contribute to our Company and to create value for Shareholders; to instil loyalty to, and a stronger identication by the Participants with the long-term prosperity of our Company; to motivate the Participants to optimise their performance standards and efciency and to maintain a high level of contribution to our Company; to give recognition to the contributions made by the Participants to the success of our Company; and to retain key employees of the Company whose contributions are essential to the long-term prosperity of the Company.
(b)
(c)
(d)
(e)
Summary of the PSP The following is a summary of the rules of the PSP. Capitalised terms as used throughout this section, unless otherwise dened, shall bear the meanings as dened in Appendix E of this Offer Document. (1) Eligibility The PSP allows for participation by Group Employees (including Group Executive Directors) and Non-Executive Directors (including Independent Directors) who have attained the age of 21 years on or before the relevant date of Award provided that none shall be an undischarged bankrupt at the relevant time, and who, at the absolute discretion of the Remuneration Committee, will be eligible to participate in the PSP. Controlling Shareholders are not eligible to participate in the PSP. However, Associates of a Controlling Shareholder who meet the above eligibility criteria are eligible to participate in the PSP provided that (a) the participation of, and (b) the terms of each grant and the actual number of Awards granted under the PSP to, a Participant who is an Associate of a Controlling Shareholder shall be approved by our independent Shareholders in separate resolutions for each such person. There shall be no restriction on the eligibility of any Participant to participate in any other share incentive schemes or share plans implemented or to be implemented by our Company or any other company within our Group. Subject to the Companies Act and any requirement of the SGX-ST, the terms of eligibility for participation in the PSP may be amended from time to time at the absolute discretion of the Remuneration Committee.
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(2) Awards Awards represent the right of a Participant to receive fully paid Shares free of charge, upon the Participant achieving prescribed performance targets. The selection of the Participants and the number of Shares which are the subject of each Award to be granted to a Participant in accordance with the PSP shall be determined at the absolute discretion of the Remuneration Committee, which shall take into account criteria such as, inter alia, the rank, scope of responsibilities, performance, years of service and potential for future development and contribution to the success of our Group. In the case of a performance-related Award, the performance targets will be set by the Remuneration Committee depending on each individual Participants job scope and responsibilities. The performance targets to be set shall take into account both the medium and long-term corporate objectives of our Group and the individual performance of the Participant and will be aimed at sustaining long-term growth. The corporate objectives shall cover market competitiveness, business growth and productivity growth. The performance targets could be based on criteria such as sales growth, growth in earnings and return on investment. In addition, the Participants length of service with our Group, achievement of past performance targets, value-add to our Groups performance and development and overall enhancement to Shareholder value, amongst others, will be taken into account. Awards may be granted at any time in the course of a nancial year, provided that in the event that an announcement on any matter of an exceptional nature involving unpublished price sensitive information is imminent, Awards may only be vested and hence any Shares comprised in such Awards may only be delivered on or after the second Market Day from the date on which the aforesaid announcement is made. An Award letter conrming the Award will be sent to each Participant as soon as reasonably practicable after the Award is nalised, specifying, inter alia, in relation to the Award: (i) in relation to a performance-related Award, the performance targets and the performance period during which the prescribed performance targets are to be met; the number of Shares to be vested on the Participant; and the date by which the Award shall be vested.
(ii) (iii)
The Remuneration Committee will take into account various factors when determining the method to arrive at the exact number of Shares comprised in an Award. Such factors include, but are not limited to, the current price of the Shares, the total issued share capital of our Company and the pre-determined dollar amount which the Remuneration Committee decides that a Participant deserves for meeting his performance targets. For example, Shares may be awarded based on predetermined dollar amounts such that the quantum of Shares comprised in Awards is dependent on the closing price of Shares transacted on the Market Day that the Award is vested. Alternatively, the Remuneration Committee may decide absolute numbers of Shares to be awarded to Participants irrespective of the price of the Shares. The Remuneration Committee shall monitor the grant of Awards carefully to ensure that the size of the PSP will comply with the relevant rules of the Catalist Rules. (3) Size and duration of the PSP The total number of Shares which may be delivered pursuant to the vesting of Awards on any date, when added to the aggregate number of Shares issued and/or issuable in respect of (a) all Awards granted under the PSP; and (b) all other Shares issued and/or issuable under any other sharebased incentive schemes or share plans of the Company, shall not exceed 15% of the total number of issued Shares (excluding treasury shares) of the Company from time to time.
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The Directors believe that the size of the PSP will give our Company sufcient exibility to decide the number of Shares to be offered under the PSP. However, it does not indicate that the Remuneration Committee will denitely issue Shares up to the prescribed limit. The Remuneration Committee will exercise its discretion in deciding the number of Shares to be granted to each Participant under the PSP. This, in turn, will depend on and be commensurate with the performance and value of the Participant to our Group. The aggregate number of Shares that are available to the Associates of our Controlling Shareholders under the PSP shall not exceed 25% of the total number of Shares available under the PSP. The number of Shares that are available to each Associate of our Controlling Shareholder under the PSP shall not exceed 10% of the Shares available under the PSP. The PSP shall continue in force at the discretion of the Remuneration Committee, subject to a maximum period of 10 years commencing on the date on which the PSP is adopted by our Company in general meeting, provided always that the PSP may continue beyond the above stipulated period with the approval of Shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be required. Notwithstanding the expiry or termination of the PSP, any Awards made to Participants prior to such expiry or termination will continue to remain valid. (4) Operation of the PSP The Remuneration Committee shall have the discretion to determine whether performance targets have been met (whether fully or partially) or exceeded and/or whether the Participants performance and/or contribution to our Company and/or any of our subsidiaries justies the vesting of an Award. In making any such determination, the Remuneration Committee shall have the right to make reference to the audited results of our Company or our Group, as the case may be, to take into account such factors as the Remuneration Committee may determine to be relevant, such as changes in accounting methods, taxes and extraordinary events, and further, the right to amend the performance targets if the Remuneration Committee decides that a changed performance targets would be a fairer measure of performance. Awards may only be vested and consequently any Shares comprised in such Awards shall only be delivered upon the Remuneration Committee being satised that the Participant has achieved the performance targets. Subject to the prevailing legislation and the provisions of the Catalist Rules, our Company will be delivering Shares to Participants upon vesting of their Awards by way of an issue of New Shares or the transfer of existing Shares held as treasury shares to the Participants. In determining whether to issue New Shares or to purchase existing Shares for delivery to Participants upon the vesting of their Awards, our Company will take into account factors such as the number of Shares to be delivered, the prevailing market price of the Shares and the nancial effect on our Company of either issuing New Shares or purchasing existing Shares. New Shares allotted and issued on the release of an Award shall rank in full for all entitlements, including dividends or other distributions declared or recommended in respect of the then existing Shares, the record date for which is on or after the date of issue of the New Shares or the date of transfer of treasury shares pursuant to the vesting of the Award, and shall in all other respects rank pari passu with other existing Shares then in issue.
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(5) Adjustments and alterations under the PSP (a) Variation of Capital If a variation in the issued ordinary share capital of our Company (whether by way of a capitalisation of prots or reserves or rights issue, capital reduction, subdivision, consolidation, distribution or otherwise) shall take place, then: (i) the class and/or number of Shares which are the subject of an Award to the extent not yet vested; and/or the class and/or number of Shares over which future Awards may be granted under the PSP,
(ii)
shall be adjusted by the Remuneration Committee to give each Participant the same proportion of the equity capital of our Company as that to which he was previously entitled and, in doing so, the Remuneration Committee shall determine at its own discretion the manner in which such adjustment shall be made. Unless the Remuneration Committee considers an adjustment to be appropriate, the following events shall not normally be regarded as a circumstance requiring adjustment: (i) the issue of securities as consideration for an acquisition or a private placement of securities; the cancellation of issued Shares purchased or acquired by our Company by way of a market purchase of such Shares undertaken by our Company on Catalist during the period when a share purchase mandate granted by Shareholders (including any renewal of such mandate) is in force; the issue of Shares or other securities convertible into or with rights to acquire or subscribe for Shares to its employees pursuant to share option scheme or share plan approved by Shareholders in general meeting, including the PSP; and any issue of Shares arising from the exercise of any warrants or the conversion of any convertible securities issued by our Company.
(ii)
(iii)
(iv)
Notwithstanding the provisions of the rules of the PSP: (i) the adjustment must be made in such a way that a Participant will not receive a benet that a Shareholder does not receive; and any adjustment (except in relation to a capitalisation issue) must be conrmed in writing by the Auditors (acting only as experts and not as arbitrators) to be in their opinion, fair and reasonable.
(ii)
(b)
Modications to the PSP Any or all the provisions of the PSP may be modied and/or altered at any time and from time to time by resolution of the Remuneration Committee, provided that: (i) any modication or alteration which would be to the advantage of Participants under the PSP shall be subject to the prior approval of Shareholders in a general meeting; and no modication or alteration shall be made without due compliance with the Catalist Rules and such other regulatory authorities as may be necessary.
(ii)
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(6) Reporting requirements Under the Catalist Rules, an immediate announcement must be made on the date of grant of an Award and provide details of the grant, including the following: (a) (b) (c) (d) (e) date of grant; market price of the Shares on the date of grant of the Award; number of Shares granted under the Award; number of Shares granted to Directors under the Award, if any; and the vesting period in relation to the Award.
The following disclosures (as applicable) will be made by our Company in our annual report for so long as the PSP continues in operation: (a) (b) the names of the members of the Remuneration Committee administering the PSP; in respect of the following Participants: (i) (ii) Directors of our Company; and Participants (other than those in paragraph (b)(i) above) who have received Shares pursuant to the vesting of Awards granted under the PSP which, in aggregate, represent ve per cent. (5)% or more of the total number of Shares available under the PSP, the following information: (aa) (bb) the name of the Participant; the aggregate number of Shares comprised in Awards which have been granted to such Participant during the nancial year under review; the aggregate number of Shares comprised in Awards which have been granted to such Participant since the commencement of the PSP to the end of the nancial year under review; the aggregate number of Shares comprised in Awards which have been issued and/or transferred to such Participant pursuant to the vesting of Awards under the PSP since the commencement of the PSP to the end of the nancial year under review; the aggregate number of Shares comprised in Awards which have not been vested as at the end of the nancial year under review; and
(cc)
(dd)
(ee)
(iii)
such other information as may be required by the Catalist Rules or the Companies Act.
(7)
Role and composition of the Remuneration Committee The Remuneration Committee shall be responsible for the administration of the PSP and shall consist of the Directors. As at the date of this Offer Document, the Remuneration Committee comprises Tan Lye Huat, Wong Hin Sun Eugene and Eileen Tay-Tan Bee Kiew.
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The Remuneration Committee shall have the power, from time to time, to make and vary such rules (not being inconsistent with the PSP) for the implementation and administration of the PSP as they think t including, but not limited to: (a) imposing restrictions on the number of Awards that may be vested within each nancial year; and amending performance targets if by so doing, it would be a fairer measure of performance for a Participant or for the PSP as a whole.
(b)
In compliance with the requirements of the Catalist Rules, any Participant of the PSP who is a member of the Remuneration Committee shall not be involved in its deliberations in respect of Awards to be granted to or held by him or his Associate. Rationale for participation by the Associates of our Controlling Shareholders in the PSP Our Company acknowledges that the services and contributions of employees who are Associates of our Controlling Shareholders are important to the development and success of our Group. The extension of the PSP to conrmed full-time employees who are Associates of our Controlling Shareholders allows our Group to have a fair and equitable system to reward employees who have actively contributed to the progress and success of our Group. The participation of the Associates of the Controlling Shareholders in the PSP will serve both as a reward to them for their dedicated services to our Group and a motivation for them to take a long-term view of our Group. Although Participants who are Associates of our Controlling Shareholders may already have shareholding interests in our Company, the extension of the PSP to include them ensures that they are equally entitled, with the other employees of our Group who are not Associates of our Controlling Shareholders, to take part in and benet from this system of remuneration. We are of the view that a person who would otherwise be eligible should not be excluded from participating in the PSP solely because he/she is an Associate of our Controlling Shareholder(s). The specic approval of our independent Shareholders is required for the participation of such persons as well as the actual number of and terms of such Awards. A separate resolution must be passed for each such participant. In seeking such approval from our independent Shareholders, clear justication as to the participation of Associates of our Controlling Shareholders, the number of and terms of the Awards to be granted to the Associates of our Controlling Shareholders shall be provided. Accordingly, we are of the view that there are sufcient safeguards against any abuse of the PSP resulting from the participation of employees who are Associates of our Controlling Shareholders. Rationale for participation by Non-Executive Directors (including Independent Directors) While the PSP caters principally to Group Employees, it is recognised that there are other persons who make signicant contributions to our Group through their close working relationships with our Group, even though they are not employed within our Group. Such persons include the Non-Executive Directors. The Non-Executive Directors are persons from different professions and working backgrounds, bringing to our Group their wealth of knowledge, business expertise and contacts in the business community. They play an important role in helping our Group shape its business strategy by allowing our Group to draw on their diverse backgrounds and working experience. It is crucial for our Group to attract, retain and incentivise the Non-Executive Directors. By aligning the interests of the Non-Executive Directors with the interests of Shareholders, our Company aims to inculcate a sense of commitment on the part of the NonExecutive Directors towards serving the short and long-term objectives of our Group. The Directors are of the view that including the Non-Executive Directors in the PSP will show our Companys appreciation for, and further motivate them in their contribution towards the success of our Group. However, as their services and contributions cannot be measured in the same way as the fulltime employees of our Group, while it is desired that participation in the PSP be made open to the NonExecutive Directors, any Awards that may be granted to any such Non-Executive Director would be intended only as a token of our Companys appreciation.
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For the purpose of assessing the contributions of the Non-Executive Directors, the Remuneration Committee will propose a performance framework comprising mainly non-financial performance measurement criteria such as the extent of involvement and responsibilities shouldered by the NonExecutive Directors. In addition, the Remuneration Committee will also consider the scope of advice given, the number of contacts and size of deals which our Group is able to procure from the contacts and recommendations of the Non-Executive Directors. The Remuneration Committee may also decide that no Awards shall be made in any nancial year or no grant and/or Award may be made at all. It is envisaged that the vesting of Awards, and hence the number of Shares to be delivered to the NonExecutive Directors based on the criteria set out above will be relatively small, in terms of frequency and numbers. Based on this, the Directors are of the view that the participation by the Non-Executive Directors in the PSP will not compromise the independent status of those who are Independent Directors. Financial effects of the PSP Cost of Awards Singapore Financial Reporting Standard 102 (FRS 102) relating to share-based payment takes effect for all listed companies beginning 1 January 2005. Participants will receive Shares and the Awards would be accounted for as equity-settled share-based transactions, as described in the following paragraphs. The fair value of employee services received in exchange for the grant of the Awards will be recognised as a charge to prot or loss over the period between the grant date and the vesting date of an Award. The total amount of the charge over the vesting period is determined by reference to the fair value of each Award granted at the grant date and the number of Shares vested at the vesting date, with a corresponding credit to reserve account. Before the end of the vesting period, at each accounting year end, the estimate of the number of Awards that are expected to vest by the vesting date is subject to revision, and the impact of the revised estimate will be recognised in prot or loss with a corresponding adjustment to the reserve account. After the vesting date, no adjustment to the charge to prot or loss is made. This accounting treatment has been referred to as the modied grant date method because the number of Shares included in the determination of the expense relating to employee services is adjusted to reect the actual number of Shares that eventually vest but no adjustment is made to changes in the fair value of the Shares since the grant date. The amount charged to prot or loss would be the same whether our Company settles the Awards by issuing New Shares or by purchasing existing Shares. The amount of the charge to prot or loss also depends on whether or not the performance target attached to an Award is measured by reference to the market price of the Shares. This is known as a market condition. If the performance target is a market condition, the probability of the performance target being met is taken into account in estimating the fair value of the Award granted at the grant date, and no adjustments to amounts charged to prot or loss are made if the market condition is not met. However, if the performance target is not a market condition, the fair value per Share of the Awards granted at the grant date is used to compute the amount to be charged to prot or loss at each accounting date, based on an assessment at that date of whether the non-market conditions would be met to enable the Awards to vest. Thus, where the vesting conditions do not include a market condition, there would be no charge to prot or loss if the Awards do not ultimately vest. In the event that the Participants receive cash, our Company shall measure the fair value of the liability at grant date. Until the liability is settled, our Company shall re-measure the fair value of the liability at each accounting date and at the date of settlement, with changes in the fair value recognised in prot or loss. Share capital The PSP will result in an increase in our Companys issued share capital where new Shares are issued to Participants. The number of New Shares issued will depend on, among others, the size of the Awards granted under the PSP. In any case, the PSP provides that the number of shares to be issued under the said PSP will be subject to a maximum limit of 15% of our total issued Shares. The aggregate number of Shares available under the PSP shall not exceed 15% of the total issued share capital of our Company post-Invitation and from time to time. If instead of issuing New Shares to the Participants, treasury shares are transferred to Participants or our Company pays the equivalent cash value, the PSP would have no impact on our Companys total number of issued Shares. 136

NTA The PSP will result in a charge to our Companys prot or loss over the period from the grant date to the vesting date of the Awards. The amount of the charge will be computed in accordance with FRS 102. When new Shares are issued under the PSP, there would be no effect on the NTA. However, if instead of issuing New Shares to Participants, existing Shares are purchased for delivery to Participants, or our Company pays the equivalent cash value, the NTA would be impacted by the cost of the Shares purchased or the cash payment, respectively. EPS The PSP will result in a charge to earnings equivalent over the period from the grant date to the vesting date, computed in accordance with FRS 102. It should again be noted that the delivery of Shares to Participants of the PSP will generally be contingent upon the Participants meeting the prescribed performance targets and conditions.
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CORPORATE GOVERNANCE
Our Directors recognise the importance of corporate governance and the offering of high standards of accountability to our Shareholders, and will use best efforts to implement the good practices recommended in the Code of Corporate Governance 2012 (Code). We have appointed Tan Lye Huat as the Independent Non-Executive Chairman of our Board of Directors. Our Board of Directors has formed three committees: (i) the Audit Committee, comprising Eileen TayTan Bee Kiew, Wong Hin Sun Eugene and Tan Lye Huat; (ii) the Remuneration Committee, comprising Tan Lye Huat, Wong Hin Sun Eugene and Eileen Tay-Tan Bee Kiew; and (iii) the Nominating Committee comprising Tan Lye Huat, Wong Hin Sun Eugene and Eileen Tay-Tan Bee Kiew. Our Directors are of the view that given the current board composition and based on the above, there are sufcient safeguards and checks to ensure that the process of decision-making by our Board is independent and based on collective decision-making without our Managing Director being able to exercise considerable power and inuence. BOARD PRACTICES Our Directors are appointed by our Shareholders at a general meeting, and an election of Directors takes place annually. One third (or the number nearest one third) of our Directors, are required to retire from ofce at each annual general meeting. Further, all our Directors are required to retire from ofce at least once in every three years. However, a retiring Director is eligible for re-election at the meeting at which he retires. Further details on the appointment and retirement of Directors can be found in Appendix C of this Offer Document entitled Summary of Selected Articles of Association of our Company. Nominating Committee Our Nominating Committee comprises Tan Lye Huat, Wong Hin Sun Eugene and Eileen Tay-Tan Bee Kiew. The Chairman of the Nominating Committee is Tan Lye Huat. Our Nominating Committee will be responsible for: (a) developing and maintaining a formal and transparent process for the appointment and reappointment of our Directors to the Board, having regard to their contribution and performance (including alternate directors, if applicable); determining a suitable size of the Board which facilitates effective decision-making, after taking into consideration the scope and nature of the operations of the Company; reviewing the succession plans for Directors and key executives, in particular, our Chairman and our Managing Director; implementing a process to be carried out for assessing the effectiveness of our Board as a whole and its committees, and for assessing the contribution by the Chairman and each individual Director to the effectiveness of the Board; reviewing the Directors mix of skills, experience, gender, core competencies and knowledge of the Company that the Board requires to function competently and efciently; reviewing training and professional development programs for our Board; determining annually, and as and when circumstances require, if a Director is independent; deciding if a Director is able to and has been adequately carrying out his duties as a director, taking into consideration his competing time commitments outside our Group; determining and recommending to the Board the maximum number of listed company board representations which any Director may hold and disclosing this in the Companys annual report; re-nominating a Director retiring by rotation for re-election after having regard to the Directors contribution and performance and how this Director will t into the overall competency matrix of the Board; 138
(b)
(c)
(d)
(e)
(f) (g) (h)
(i)
(j)
(k) reviewing and concluding, if a person is proposed to be appointed as an alternate director to an independent Director, that the person would similarly qualify as an independent Director; describing the process for the selection, appointment and re-appointment of Directors to the Board in the Companys annual report; reviewing and approving any new employment of related persons and the proposed terms of their employment; and reviewing the appropriateness and transparency of remuneration matters disclosed to shareholders.
(l)
(m)
(n)
Our Nominating Committee will decide how the Boards performance is to be evaluated and will propose objective performance criteria, subject to the approval of the Board, which address how the Board has enhanced long-term Shareholders value. Each member of our Nominating Committee will not take part in determining his own re-nomination or independence and shall abstain from voting any resolutions in respect of the assessment of his performance or re-nomination as a Director. Our Nominating Committee (save for Tan Lye Huat), has reviewed the appointment of Tan Lye Huat as our Independent Non-Executive Chairman, the Chairman of our Nominating Committee and Remuneration Committee and a member of our Audit Committee. Having taken into consideration the following: (a) (b) Tan Lye Huat does not currently hold any executive positions in a company or business; Two of the listed companies that Tan Lye Huat is currently an independent director of have nancial year ends which do not coincide with our Companys nancial year end; and Tan Lye Huat has been sitting on the board of S P Corporation Limited since 1999 and Japan Foods Holding Ltd. since 2008,
(c)
is of the view that Tan Lye Huat is suitable to act as an independent director of our Company. Tan Lye Huat has conrmed that, notwithstanding that he currently holds ve independent directorships in listed companies, he will have sufcient time to serve as an independent director of our Company. Remuneration Committee Our Remuneration Committee comprises Tan Lye Huat, Wong Hin Sun Eugene and Eileen Tay-Tan Bee Kiew. The Chairman of the Remuneration Committee is Tan Lye Huat. Our Remuneration Committee will be responsible for: (a) offering an independent perspective by assisting the Board to ensure a formal procedure for developing policy on executive remuneration and for xing the remuneration packages of individual directors; establishing and recommending to our Board an appropriate general framework of remuneration to motivate and retain our Directors and key executive ofcers; developing and recommending remuneration policy and specic remuneration packages for each Director and key executive ofcer, structuring it to link rewards to corporate and individual performance. The recommendations of our Remuneration Committee should be submitted for endorsement by the entire Board. All aspects of remuneration, including but not limited to directors fees, salaries, allowances, bonuses, options, the Awards to be granted under the PSP and other benets-in-kind shall be covered by our Remuneration Committee;
(b)
(c)
139
(d) reviewing our Groups obligations arising in the event of termination of our Executive Directors and key executive ofcers contracts of service, to ensure that such contracts of service contain fair and reasonable termination clauses; reviewing and approving annually the remuneration of employees related to our Directors and/or Substantial Shareholders to ensure that their remuneration packages, including any bonuses, pay increases and/or promotions, are in line with our staff remuneration guidelines and commensurate with their respective job scopes and level of responsibilities; and reviewing the appropriateness and transparency of remuneration matters disclosed to shareholders.
(e)
(f)
Each member of our Remuneration Committee shall abstain from voting on any resolutions in respect of his remuneration package or that of employees related to him. Audit Committee Our Audit Committee comprises Eileen Tay-Tan Bee Kiew, Wong Hin Sun Eugene and Tan Lye Huat. The Chairman of the Audit Committee is Eileen Tay-Tan Bee Kiew. Our Audit Committee will meet periodically to perform the following functions: (a) review the signicant nancial reporting issues and judgements so as to ensure the integrity of the nancial statements of our Group and any announcements relating to our Groups nancial performance; review the adequacy and effectiveness of our Groups system of internal controls, including nancial, operational, compliance and information technology controls, and management of nancial risks with our internal and external auditors; review the audit plans of our external auditors and our internal auditors, where applicable; review the co-operation given by our management to our external auditors and our internal auditors, where applicable; review the adequacy and effectiveness of the internal audit function; review our Groups compliance with such functions and duties as may be required under the relevant statutes or the Catalist Rules, including such amendments made thereto from time to time; review and approve interested person transactions and review procedures thereof; review potential conicts of interest (if any) and set out a framework to resolve or mitigate any potential conicts of interests; review the relevance and consistency of the accounting standards, signicant nancial reporting issues and recommendations made by the external auditors so as to ensure the integrity of the nancial statements of our Group and any formal announcements relating to the Companys nancial performance before submission to our Board for approval; review our risk management framework, with a view to providing an independent oversight on our Groups nancial reporting, the outcome of such review to be disclosed in the annual reports or, where the ndings are material, announced immediately via SGXNET; review the scope and results of the external audit, the independence of the external auditors and recommend their appointment, re-appointment or removal, and terms of engagement; investigate any matters within its terms of reference;
(b)
(c) (d)
(e) (f)
(g) (h)
(i)
(j)
(k)
(l)
140
(m) review arrangements by which our staff may, in condence, raise concerns about possible improprieties in matters of nancial reporting and to ensure that arrangements are in place for the independent investigations of such matter and for appropriate follow-up; approve the hiring, removal, evaluation and compensation of the head of the internal audit function, or the accounting / auditing rm or corporation to which the internal audit function is outsourced; and undertake such other functions and duties as may be required by statute or the Catalist Rules, and by such amendments made thereto from time to time.
(n)
(o)
Apart from the duties listed above, our Audit Committee shall commission and review the ndings of internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal controls or suspected infringement of any Singapore law, rule or regulation which has or is likely to have a material impact on our Groups operating results and/or nancial position. In the event that a member of our Audit Committee is interested in any matter being considered by our Audit Committee, he will abstain from reviewing and deliberating on that particular transaction or voting on that particular resolution. Our Audit Committee shall also commission an annual internal control audit until such time as our Audit Committee is satised that our Groups internal controls are robust and effective enough to mitigate our Groups internal control weaknesses (if any). Prior to the decommissioning of such an annual audit, our Board is required to report to the SGX-ST and the Sponsor on how the key internal control weaknesses have been rectied, and the basis for the decision to decommission the annual internal control audit. Thereafter, such audits may be initiated by our Audit Committee as and when it deems t to satisfy itself that our Groups internal controls remain robust and effective. Upon completion of the internal control audit, appropriate disclosure will be made via SGXNET of any material, price-sensitive internal control weaknesses and any follow-up actions to be taken by our Board. Currently, based on the internal controls established and maintained by our Group, work performed by the internal and external auditors, and reviews performed by our management and our Board, our Board (with the concurrence of our Audit Committee) is of the view that our internal control procedures are adequate to address nancial, operational and compliance risks. Our Audit Committee, after having conducted an interview with Wong Tat Yang and after having considered: (a) the qualications and past working experiences of Wong Tat Yang (as described in the section entitled Directors, Management and Staff Executive Ofcers of this Offer Document) which are compatible with his position as Chief Financial Ofcer of our Group; Wong Tat Yangs past audit, nancial and accounting related experiences; Wong Tat Yangs demonstration of the requisite competency in nance-related matters of our Group in connection with the preparation for the listing of our Company; the absence of negative feedback on Wong Tat Yang from the representatives of our Groups Independent Auditors and Reporting Accountants, BDO LLP; and the absence of internal control weaknesses attributable to Wong Tat Yang identied during the internal control review conducted,
(b) (c)
(d)
(e)
is of the view that Wong Tat Yang is suitable for the position of Chief Financial Ofcer of our Group. Further, after making all reasonable enquiries, and to the best of their knowledge and belief, nothing has come to the attention of our Audit Committee members to cause them to believe that Wong Tat Yang does not have the competence, character and integrity expected of a Chief Financial Ofcer of a listed issuer. In addition, Wong Tat Yang shall be subject to performance appraisal by our Audit Committee on an annual basis to ensure satisfactory performance. 141
EXCHANGE CONTROLS
Singapore Currently, there are no Singapore governmental laws, decrees, regulations and other legislation that may affect the following: (a) the import or export of capital, including the availability of cash and cash equivalents for use by our Group; and the remittance of dividends, interest or other payments to non-resident holders of our Companys securities.
(b)
Malaysia Malaysia has liberalised much of its foreign exchange rules with the notable exception being the continuing prohibition on the use of RM in international trade. The RM is still not freely convertible into foreign currencies outside Malaysia. Companies in Malaysia, including non-resident controlled companies, are freely permitted to repatriate capital, prots, dividends, rental, fees and interest arising from investments in Malaysia. The repatriation must however be made in a foreign currency other than that of the currency of Israel and requires the completion of a prescribed form and documentary evidence to be furnished to the remitting banks for any remittance or payment in foreign currency exceeding the equivalent of RM200,000 to a non-resident. In relation to offshore borrowings, a non-resident controlled company such as Qson Industries Malaysia and Qson KitchenHub are free to borrow any amount in foreign currencies from a non-resident parent company. If Qson Industries Malaysia and Qson KitchenHub choose to borrow from a non-resident bank, the prescribed limit is the equivalent of RM100 million in foreign currencies in aggregate on a corporate group basis. Qson Industries Malaysia and Qson KitchenHub are also free to obtain domestic RM borrowings from licensed banks in Malaysia in the same manner as resident controlled companies. Borrowings in RM from offshore banks is still prohibited but Qson Industries Malaysia and Qson KitchenHub are permitted to borrow in RM from a non-resident parent company without any prescribed limit. If the lender is not the parent company and is a non-resident non-bank company, there is a prescribed limit of RM1 million for RM borrowings.
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CLEARANCE AND SETTLEMENT

Upon listing and quotation on Catalist, our Shares will be traded under the book-entry settlement system of CDP, and all dealings in and transactions of our Shares through Catalist will be effected in accordance with the terms and conditions for the operation of Securities Accounts with CDP, as amended from time to time. Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalf of persons who maintain, either directly or through Depository Agents, Securities Accounts with CDP. Persons named as direct Securities Account holders and Depository Agents in the Depository Register maintained by CDP, rather than CDP itself, will be treated, under our Articles of Association and the Companies Act, as members of our Company in respect of the number of Shares credited to their respective Securities Accounts. Persons holding our Shares in Securities Accounts with CDP may withdraw the number of Shares they own from the book-entry settlement system in the form of physical share certicates. Such share certicates will, however, not be valid for delivery pursuant to trades transacted on Catalist although they will be prima facie evidence of title and may be transferred in accordance with our Articles. A fee of S$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for each withdrawal of more than 1,000 Shares is payable upon withdrawing our Shares from the book-entry settlement system and obtaining physical share certicates. In addition, a fee of S$2.00 or such other amount as our Directors may decide is payable to the share registrar for each share certicate issued and a stamp duty of S$0.20 per S$100.00 or part thereof of the last transacted price is payable where our Shares are withdrawn in the name of a third party. Persons holding physical share certicates who wish to trade on Catalist must deposit with CDP their share certicates together with the duly executed and stamped instruments of transfer in favour of CDP, and have their respective Securities Accounts credited with the number of Shares deposited before they can effect the desired trades. A fee of S$10.00 is payable upon the deposit of each instrument of transfer with CDP. The above fees may be subject to such charges as may be in accordance with CDPs prevailing policies or the current tax policies that may be in force in Singapore from time to time. Transactions in our Shares under the book-entry settlement system will be reected by the sellers Securities Account being debited with the number of Shares sold and the buyers Securities Account being credited with the number of Shares acquired. No transfer of stamp duty is currently payable for our Shares that are settled on a book-entry basis. A Singapore clearing fee for trades in our Shares on Catalist is payable at the rate of 0.04% of the transaction value subject to a maximum of S$600.00 per transaction. The clearing fee, instrument of transfer deposit fee and share withdrawal fee may be subject to Singapore GST at the prevailing rate of 7.0% (or such other rate prevailing from time to time). Dealings of our Shares will be carried out in Singapore dollars and will be effected for settlement on CDP on a scripless basis. Settlement of trades on a normal ready basis on Catalist generally takes place on the third Market Day following the transaction date, and payment for the securities is generally settled on the following business day. CDP holds securities on behalf of investors in Securities Accounts. An investor may open a direct account with CDP or a sub-account with a CDP Depository Agent. The CDP Depository Agent may be a member company of the SGX-ST, bank, merchant bank or trust company.
143
GENERAL AND STATUTORY INFORMATION

INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS 1. Save as disclosed below, none of our Directors, Executive Ofcers and Controlling Shareholder: (a) has, at any time during the last ten years, had an application or a petition under any bankruptcy laws of any jurisdiction led against him or against a partnership of which he was a partner at the time when he was a partner or at any time within two years from the date he ceased to be a partner; has, at any time during the last ten years, had an application or a petition under any law of any jurisdiction led against an entity (not being a partnership) of which he was a director or an equivalent person or a key executive, at the time when he was a director or an equivalent person or a key executive of that entity or at any time within two years from the date he ceased to be a director or an equivalent person or a key executive of that entity, for the winding up or dissolution of that entity or, where that entity is the trustee of a business trust, that business trust, on the ground of insolvency; has any unsatised judgement against him; has ever been convicted of any offence, in Singapore or elsewhere, involving fraud or dishonesty which is punishable with imprisonment, or has been the subject of any criminal proceedings (including any pending criminal proceedings of which he is aware) for such purpose; has ever been convicted of any offence, in Singapore or elsewhere, involving a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere, or has been the subject of any criminal proceedings (including any pending criminal proceedings of which he is aware) for such breach; has, at any time during the last ten years, had judgement entered against him in any civil proceedings in Singapore or elsewhere involving a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere, or a nding of fraud, misrepresentation or dishonesty on his part, nor has he been the subject of any civil proceedings (including any pending civil proceedings of which he is aware) involving an allegation of fraud, misrepresentation or dishonesty on his part; has ever been convicted in Singapore or elsewhere of any offence in connection with the formation or management of any entity or business trust; has ever been disqualied from acting as a director or an equivalent person of any entity (including the trustee of a business trust), or from taking part directly or indirectly in the management of any entity or business trust; has ever been the subject of any order, judgement or ruling of any court, tribunal or governmental body permanently or temporarily enjoining him from engaging in any type of business practice or activity; has ever, to his knowledge, been concerned with the management or conduct, in Singapore or elsewhere, of affairs of: (i) any corporation which has been investigated for a breach of any law or regulatory requirement governing corporations in Singapore or elsewhere; any entity (not being a corporation) which has been investigated for a breach of any law or regulatory requirement governing such entities in Singapore or elsewhere;
(b)
(c) (d)
(e)
(f)
(g)
(h)
(i)
(j)
(ii)
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(iii) any business trust which has been investigated for a breach of any law or regulatory requirement governing business trusts in Singapore or elsewhere; or any entity or business trust which has been investigated for a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere,
(iv)
in connection with any matter occurring or arising during the period when he was so concerned with the entity or business trust; or (k) has been the subject of any current or past investigation or disciplinary proceedings, or has been reprimanded or issued any warning, by the Authority or any other regulatory authority, exchange, professional body or governmental agency, whether in Singapore or elsewhere. A. Disclosures relating to Wong Hin Sun Eugene Wong Hin Sun Eugene was involved in the following companies: (i) Finesse Alliance International Pte Ltd (Finesse Alliance) Wong Hin Sun Eugene was appointed as an alternate director on 1 September 2000 of Finesse Alliance, a company that provides computer consultancy services and advice on IT to banking and nance companies. Wong Hin Sun Eugene was appointed by Crimson Asia Capital Singapore Pte Ltd as their representative director in Finesse Alliance, a company which Crimson Asia Capital Ltd., L.P. and Crimson Investments, Ltd. had injected venture capital investment into. He resigned from the board of Finesse Alliance on 6 March 2002 at the direction of Crimson Asia Capital Singapore Pte Ltd. Finesse Alliance was subsequently wound up on 23 April 2002 as a result of creditors voluntary winding up. There was no claim against Wong Hin Sun Eugene in relation to the winding up proceeding. (ii) Superdog Pte. Ltd. (Superdog) Wong Hin Sun Eugene is a director of Superdog. As at the Latest Practicable Date, Sirius Venture has a 99.0% shareholding interest in Superdog. Wong Hin Sun Eugene is the managing director of Sirius Venture and owns 100% of the issued share capital of Sirius Venture as at the Latest Practicable Date. An application for winding up was led by United Overseas Bank Limited (as creditor) against Superdog on 2 December 2011 but was subsequently withdrawn as the parties had reached an agreement on the repayment schedule. Superdog is currently undergoing creditors voluntary winding up. B. Disclosures relating to Tan Lye Huat Tan Lye Huat was involved in the following companies: (i) CAM International Holdings Limited (CAM International) The former managing director and majority shareholder of CAM International, was involved in accounting fraud and triggered a collapse of the group that resulted in the authorities having to carry out a special investigation. The Commercial Affairs Department and the Corrupt Practices Investigation Bureau were involved.
145

Resulting from the aforesaid, several independent directors resigned and a new management and board of directors was appointed. Tan Lye Huat was recommended by the management of one of CAM Internationals creditor banks to join the board of directors as an independent director in 1998 to restructure the company and to assist in nding a potential investor for the company. Tan Lye Huat resigned from the company in 1999 after the majority shareholder vetoed a potential investment opportunity. (ii) Kian Ho Bearings Ltd (Kian Ho) Tan Lye Huat was appointed as an independent director in 1999 to balance the composition of the board of Kian Ho so as to reassure authorities, shareholders and other stakeholders that Kian Ho would be properly managed following the sudden resignation of its managing director. The former managing director was involved in fraudulent business activities involving approximately S$10 million. Tan Lye Huat played a key role as the facilitator between the board of Kian Ho and the numerous creditor bankers of the company. Approximately six months was needed to secure a deal with the outgoing foreign creditor banks and to persuade some of the local creditor banks not only to stay but put in more money. The implementation of the deal took a further six months and Tan Lye Huats aforesaid role as the facilitator ended soon thereafter. Tan Lye Huat continued to be an active independent director of Kian Ho until 2009. C. Disclosures relating to Eileen Tay-Tan Bee Kiew In or around September 2006, the Monetary Authority of Singapore issued a supervisory warning to Eileen Tay-Tan Bee Kiew as a result of a ten days delay by the then-company secretary of Asia Growth Capital Advisory Pte. Ltd. (Asia Growth Capital) in submitting notice of her cessation to act as a representative of Asia Growth Capital. The delay occurred despite her reminder to the then-company secretary of Asia Growth Capital to ensure timely submission of such notice. No further action has been taken and Eileen Tay-Tan Bee Kiew has not thereafter been contacted by the MAS on this matter. SHARE CAPITAL 2. As at the Latest Practicable Date, there is only one class of shares in the capital of our Company. There are no founder, management or deferred shares. The rights and privileges attached to our Shares are stated in our Articles. Save as disclosed below and in the sections entitled General Information on Our Group - Share Capital and Restructuring Exercise of this Offer Document, there are no changes in the issued and paid-up share capital of our Company and our subsidiaries within the last three years preceding the Latest Practicable Date.
3.
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Resultant issued share capital
Number of Issue price per shares issued share Our Company QKE Holdings Sirius Venture Qson Kuechen Kultur Qson Kitchen Equipment
Note: (1)
Purpose of issue
9,645 355
S$1.00 S$1.00
Incorporation Incorporation
S$9,645 S$10,000
N.A.(1)
N.A.(1)
Incorporation
US$200,000
There has been no issue of any shares, convertible securities or options by Qson Kuechen Kultur because according to the laws of Vietnam, Qson Kuechen Kultur, being a limited liability company, is not allowed to issue shares.
4.
Save as disclosed above and under the section entitled Restructuring Exercise of this Offer Document, no shares in, or debentures of, our Company or any of our subsidiaries have been issued, or are proposed to be issued, as fully or partly paid for cash or for a consideration other than cash, during the last three years preceding the date of lodgement of this Offer Document. No person has been, or is entitled to be, given an option to subscribe for any shares in or debentures of our Company or any of our subsidiaries. Save for the PSP, our Company does not have any arrangement that involves the issue or grant of options or shares to the employees of our Group.
5.
6.
MATERIAL CONTRACTS 7. The following contracts, not being contracts entered into in the ordinary course of business, have been entered into by our Company and our subsidiaries within the two years preceding the date of lodgement of this Offer Document and are or may be material: (a) a consultancy agreement entered into between our Company and Sirius Venture on 1 August 2012 pursuant to which Sirius Venture agreed to provide our Group with consultancy services relating to, inter alia, the listing of our Company on Catalist for a period commencing 1 August 2012 to 1 August 2015; sale and purchase agreement dated 16 May 2013 between our Company (as the purchaser) and Sally Chua, Alan Lee and Frankie Cheng (as the vendors) in respect of the sale and purchase of the entire issued and fully paid-up share capital of Qson International Pte. Ltd., comprising 90,003 ordinary shares, at an aggregate consideration of S$1,935; and sale and purchase agreement dated 16 May 2013 between our Company (as purchaser) and Sally Chua, Alan Lee and Frankie Cheng (as vendors) in respect of the sale and purchase of the entire issued and fully paid-up share capital of Qson Kitchen Equipment Pte Ltd, comprising 1,000,000 ordinary shares, at an aggregate consideration of S$8,064.99.
(b)
(c)
LITIGATION 8. As at the Latest Practicable Date, neither our Company nor any member of our Group is engaged in any legal or arbitration proceedings, including those which are pending or known to be contemplated, which may have or have had in the last 12 months before the date of lodgement of this Offer Document, a material effect on our Groups nancial position or protability.
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MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS 9. Pursuant to the Management Agreement, our Company appointed CIMB to sponsor and manage the Invitation. CIMB will receive a management fee from our Company for such services rendered. Pursuant to the Underwriting and Placement Agreement, our Company appointed CIMB Securities as the Underwriter to underwrite our offer of the Offer Shares for a commission of 3.0% of the Issue Price for each Offer Share (Underwriting Commission), payable by our Company pursuant to the Invitation. CIMB Securities shall be at liberty at its own expense to make sub-underwriting arrangements for the Offer Shares. Pursuant to the Underwriting and Placement Agreement, our Company appointed CIMB Securities as the Placement Agent to subscribe and/or procure subscribers for the Placement Shares for a placement commission of 3.0% of the Issue Price for each Placement Share, to be paid by our Company. CIMB Securities shall be at liberty at its own expense to make sub-placement arrangements for the Placement Shares. Brokerage will be paid by our Company to members of the SGX-ST, merchant banks and members of the Association of Banks in Singapore in respect of successful applications made on Application Forms bearing their respective stamps, or to Participating Banks in respect of successful applications made through Electronic Applications at their respective ATMs or their IB websites at the rate of 0.25% of the Issue Price for each Offer Share or in the case of DBS Bank, 0.50% of the Issue Price for each Offer Share. DBS Bank will levy a minimum brokerage of S$10,000. Subscribers of the Placement Shares may be required to pay a brokerage fee of up to 1.0% of the Issue Price to the Placement Agent (and the prevailing GST, if applicable). The Management Agreement may, subject to the terms and conditions thereof, be terminated by CIMB at any time prior to or on the date of commencement of trading of our Shares on Catalist, on the occurrence of certain events, including, among other things: (a) the issue of a Stop Order by the SGX-ST, acting as agent on behalf of the Authority, or other competent authority in accordance with Section 242 of the SFA (notwithstanding that a supplementary or replacement offer document is subsequently registered with the SGX-ST pursuant to Section 241 of the SFA); there shall come to the knowledge of CIMB any breach of certain specied warranties or undertakings in the Management Agreement or that any of certain specied warranties or undertakings in the Management Agreement is untrue, incorrect or misleading; the occurrence of certain specied events (described in the Management Agreement) which comes to the knowledge of CIMB; there shall have been, in the opinion of the Sponsor, since the date of the Management Agreement: (i) any adverse change, or any development or event involving a prospective adverse change, in the condition (nancial or otherwise), performance or general affairs of our Company or any Group Companies or of our Group as a whole; or any introduction or prospective introduction of or any change or prospective change in any legislation, regulation, order, notice, policy, rule, guideline or directive (whether or not having the force of law and including, without limitation, any directive, notice or request issued by the Authority, the Securities Industry Council of Singapore, the SGX-ST or any other relevant authorities) in Singapore or elsewhere or in the interpretation or application thereof by any court, government body, regulatory authority or other competent authority in Singapore or elsewhere; or
10.
11.
12.
13.
(b)
(c)
(d)
(ii)
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(iii) any change, or any development involving a prospective change or any crisis in local, national, regional or international nancial (including stock market, foreign exchange market, inter-bank market or interest rates or money market), political, industrial, economic, legal or monetary conditions, taxation or exchange controls (including, without limitation, the imposition of any moratorium, suspension or material restriction on trading in securities generally on the SGX-ST (including Catalist) due to exceptional nancial circumstances or otherwise); or any imminent threat or occurrence of any local, national, regional or international outbreak or escalation of hostilities whether war has been declared or not, or insurrection or armed conict (whether or not involving nancial markets); or any regional or local outbreak of disease that may have an adverse effect on the nancial markets; or any other occurrence of any nature whatsoever, which event or events shall in the reasonable opinion of CIMB (1) result or be likely to result in an adverse uctuation or adverse conditions in the stock market in Singapore or elsewhere; or (2) be likely to materially prejudice the success of the offer, subscription or placement of the New Shares (whether in the primary market or in respect of dealings in the secondary market); or (3) make it impracticable, inadvisable, inexpedient or uncommercial to proceed with any of the transactions contemplated in the Management Agreement; or (4) be likely to have an adverse effect on the business, trading position, operations or prospects of our Company or of our Group as a whole; or (5) result or be likely to result in the issue of a Stop Order by the SGX-ST, acting as agent on behalf of the Authority, or other competent authority pursuant to the SFA; or
(iv)
(v)
(vi)
(e)
without limiting the generality of the foregoing, if it comes to the notice of CIMB (1) any statement contained in this Offer Document or the Application Forms which in the reasonable opinion of CIMB has become untrue, incorrect or misleading in any material respect or (2) circumstances or matters have arisen or have been discovered, which would, if this Offer Document was to be issued at that time, constitute in the reasonable opinion of CIMB, a material omission of material information, and our Company fails to lodge a supplementary or replacement offer document within a reasonable time after being notied of such material misrepresentation or omission or fails to promptly take such steps as CIMB may reasonably require to inform investors of the lodgement of such supplementary offer document or document. In such event, CIMB reserves the right, at its absolute discretion to inform the SGX-ST and to cancel the Invitation and (if applicable) subject to the terms and conditions of the Offer Document, any application monies received in connection with the Invitation will be refunded (without interest or any share of revenue or other benet arising therefrom) to the applicants for the New Shares by ordinary post, telegraphic transfer or such other means as CIMB may deem appropriate at the applicants own risk within 14 days of the termination of the Invitation; or The Underwriting and Placement Agreement is terminated pursuant to its provisions.
(f)
In the event that the Management Agreement is terminated, our Company reserves the right, at the absolute discretion of our Directors, to cancel the Invitation. 14. The Underwriting and Placement Agreement is conditional upon, among other things, the Management Agreement not having been terminated or rescinded pursuant to the provisions of the Management Agreement.
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MISCELLANEOUS 15. There has been no previous issue of Shares by our Company or offer for sale of our Shares to the public within the two years preceding the date of this Offer Document. There has not been any public take-over offer by a third party in respect of our Companys Shares or by our Company in respect of shares of another corporation or units of a business trust which has occurred between 1 January 2012 and the Latest Practicable Date. Save as disclosed in the sub-section entitled Management, Underwriting and Placement Arrangements under this section of this Offer Document, no commission, discount or brokerage has been paid or other special terms granted within the two years preceding the Latest Practicable Date or is payable to any Director, promoter, expert, proposed director or any other person for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions for any shares in, or debentures of, our Company or any of our subsidiaries. No expert is employed on a contingent basis by our Group or has an interest, directly or indirectly, in the promotion of, or in any property or assets which have, within the two years preceding the Latest Practicable Date, been acquired or disposed of by or leased to our Company or any of our subsidiaries or are proposed to be acquired or disposed of by or leased to our Company or any of our subsidiaries. Application monies received by our Company in respect of successful applications (including successful applications which are subsequently rejected) will be placed in a separate non-interest bearing account with CIMB (the Receiving Bank). Any refund of all or part of the application monies to unsuccessful or partially successful applicants will be made without any interest or any share of revenue or any other benet arising therefrom. Save as disclosed in this Offer Document, our Directors are not aware of any event which has occurred between the end of FY2012 and the Latest Practicable Date which may have a material effect on the nancial position and results of our Group or the nancial information provided in this Offer Document. Save as disclosed in this Offer Document, the nancial condition and operations of our Group are not likely to be affected by any of the following: (a) known trends or demands, commitments, events or uncertainties that will result in or are reasonably likely to result in our Groups liquidity increasing or decreasing in any material way; material commitments for capital expenditure; unusual or infrequent events or transactions or any signicant economic changes that may materially affect the amount of reported income from operations; and the business and nancial prospects and any signicant recent trends in production, sales and inventory, and in the costs and selling prices of products and services and known trends or uncertainties that have had or that we reasonably expect will have a material favourable or unfavourable impact on revenues, protability, liquidity, capital resources or operating income or that would cause nancial information disclosed to be not necessary indicative of the future operating results or nancial condition of our Company.
16.
17.
18.
19.
20.
21.
(b) (c)
(d)
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22. Details, including the name, address and professional qualications including membership in a professional body of the auditors of our Company since the incorporation of our Company are as follows:
Partner-in-charge/ Professional qualication
Period From 27 May 2013
Name, professional qualication and address BDO LLP Public Accountants and Chartered Accountants 21 Merchant Road #05-01 Singapore 058267
Professional body
Institute of Singapore Leong Hon Mun Peter (a Chartered Accountants member of the Institute (ISCA) of Singapore Chartered Accountants)
We currently have no intention of changing our auditors after the listing of our Company on Catalist. CONSENTS 23. BDO LLP, the Independent Auditors and Reporting Accountants, has given and has not withdrawn its written consent to the issue of this Offer Document with the inclusion herein of the Independent Auditors Report as set out in Appendix A of this Offer Document in the form and context in which they are respectively included and references to its name in the form and context in which it appears in this Offer Document and to act in such capacity in relation to this Offer Document. The Sponsor, the Underwriter and Placement Agent, the Solicitors to the Invitation, the Legal Adviser to our Company on Malaysian Law, Legal Adviser to our Company on Vietnamese law, the Share Registrar and Share Transfer Ofce, the Principal Bankers and the Receiving Banker, have each given and have not withdrawn their written consents to the issue of this Offer Document with the inclusion herein of their names and references thereto in the form and context in which they respectively appear in this Offer Document and to act in such respective capacities in relation to this Offer Document. Each of the Solicitors to the Invitation, the Share Registrar and Share Transfer Ofce, the Principal Bankers and the Receiving Banker do not make, or purport to make, any statement in this Offer Document or any statement upon which a statement in this Offer Document is based and, to the maximum extent permitted by law, expressly disclaim and take no responsibility for any liability to any persons which is based on, or arises out of, the statements, information or opinions in this Offer Document.
24.
25.
RESPONSIBILITY STATEMENT BY OUR DIRECTORS 26. This Offer Document has been seen and approved by our Directors and they collectively and individually accept full responsibility for the accuracy of the information given in this Offer Document and conrm after making all reasonable enquiries, that to the best of their knowledge and belief, this Offer Document constitutes full and true disclosure of all material facts about the Invitation, our Company and our subsidiaries, and our Directors are not aware of any facts the omission of which would make any statement in this Offer Document misleading. Where information in this Offer Document has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of our Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Offer Document in its proper form and context.
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DOCUMENTS AVAILABLE FOR INSPECTION 27. The following documents or copies thereof may be inspected at our registered ofce at 115A Commonwealth Drive, #01-27/28 Tanglin Halt Industrial Estate, Singapore 149596 during normal business hours for a period of six months from the date of registration of this Offer Document: (a) (b) (c) the Memorandum and Articles of Association of our Company; the Independent Auditors Report set out in Appendix A of this Offer Document; the audited nancial statements of each of our subsidiaries for FY2010, FY2011 and FY2012; the material contracts referred to in this Offer Document; the letters of consent referred to in this Offer Document; and the Service Agreements referred to in this Offer Document.
(d) (e) (f)
152
APPENDIX A - AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2010, 2011 AND 2012
SINGAPORE KITCHEN EQUIPMENT LIMITED and its subsidiaries

Audited Combined Financial Statements For the nancial years ended 31 December 2010, 2011 and 2012
A-1
AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2010, 2011 AND 2012 STATEMENT BY DIRECTORS
We, Cheng Chun Choi and Lee Chong Hoe, being the Directors of Singapore Kitchen Equipment Limited (the Company), do hereby state that, in the opinion of the Board of Directors, (i) the accompanying combined nancial statements as set out on pages A-5 to A-60 together with notes thereto are properly drawn up in accordance with Singapore Financial Reporting Standards so as to present fairly, in all material respects, the state of affairs of the Company and its subsidiaries (collectively the Group) as at 31 December 2010, 2011 and 2012 and of the results, changes in equity and cash ows of the Group for the nancial years ended on those dates, and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
(ii)
On behalf of the Board of Directors
Cheng Chun Choi Director
Lee Chong Hoe Director
Singapore 12 July 2013
A-2
INDEPENDENT AUDITORS REPORT ON AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2010, 2011 AND 2012
12 July 2013 The Board of Directors Singapore Kitchen Equipment Limited Blk 115A Commonwealth Drive #01-27/28 Tanglin Halt Industrial Estate Singapore 149596
Dear Sirs, Report on the Combined Financial Statements We have audited the accompanying combined nancial statements of Singapore Kitchen Equipment Limited (the Company) and its subsidiaries (collectively the Group) as set out on pages A-5 to A-60 which comprise the combined statements of nancial position as at 31 December 2010, 2011 and 2012, the combined statements of comprehensive income, combined statements of changes in equity and combined statements of cash ows for the nancial years then ended and a summary of signicant accounting policies and other explanatory information. Managements Responsibility for the Combined Financial Statements Management is responsible for the preparation of combined nancial statements that give a true and fair view in accordance with Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufcient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair prot and loss accounts and balance sheets and to maintain accountability of assets. Auditors Responsibility Our responsibility is to express an opinion on these combined nancial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the combined nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined nancial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the combined nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation of combined nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the combined nancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.
A-3
INDEPENDENT AUDITORS REPORT ON AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2010, 2011 AND 2012 (CONTINUED)
Report on the Combined Financial Statements (Continued) Opinion In our opinion, the accompanying combined nancial statements are properly drawn up in accordance with Singapore Financial Reporting Standards to present fairly, in all material respects, the state of affairs of the Group as at 31 December 2010, 2011 and 2012 and of the results, changes in equity and cash ows of the Group for the nancial years ended on those dates. Other Matters This report has been prepared solely for inclusion in the Offer Document of the Company in connection with the initial public offering of ordinary shares of the Company on Catalist, the sponsor-supervised listing platform of the Singapore Exchange Securities Trading Limited.
Yours faithfully
BDO LLP Public Accountants and Chartered Accountants Singapore
Leong Hon Mun Peter Partner-in-charge
A-4
COMBINED STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2010, 2011 AND 2012
Note
2010 $
2011 $
2012 $
Non-current assets Property, plant and equipment Investment properties Deferred tax assets 5 6 7 1,939,017 507,515 2,446,532 Current assets Inventories Property held for sale Trade and other receivables Prepayments Current income tax recoverable Cash and cash equivalents 11 8 9 10 1,375,632 6,149,114 3,570 1,178,591 8,706,907 Less: Current liabilities Trade and other payables Borrowings Finance lease payables Current income tax payable Net current assets Less: Non-current liabilities Borrowings Finance lease payables Deferred tax liabilities 13 14 7 1,225,569 298,292 12,678 1,536,539 3,613,102 Capital and reserves Share capital Other reserves Retained earnings Equity attributable to owners of the parent Non-controlling interests Total equity 15 16 1,070,334 199,917 2,254,475 3,524,726 88,376 3,613,102 1,070,334 195,407 4,509,690 5,775,431 137,533 5,912,964 1,072,473 41,732 8,338,542 9,452,747 175,491 9,628,238 1,761,633 400,011 19,139 2,180,783 5,912,964 867,819 349,158 12,678 1,229,655 9,628,238 12 13 14 3,456,967 2,328,518 123,711 94,602 6,003,798 2,703,109 3,575,993 1,496,858 96,707 323,640 5,493,198 5,513,400 3,533,568 1,264,136 80,139 555,545 5,433,388 9,288,403 1,653,603 738,604 6,662,514 6,548 1,945,329 11,006,598 1,296,029 7,142,673 61,508 20,459 6,201,122 14,721,791 2,580,347 2,580,347 1,009,106 554,723 5,661 1,569,490
A-5
COMBINED STATEMENTS OF COMPREHENSIVE INCOME AS AT 31 DECEMBER 2010, 2011 AND 2012
Note
2010 $
2011 $ 16,415,374 (10,297,572) 6,117,802
2012 $ 16,628,516 (10,100,923) 6,527,593
Revenue Cost of sales Gross prot Other items of income Interest income Gain on disposal of property, plant and equipment Gain on disposal of property held for sale Other income Other items of expense Distribution costs Administrative expenses Finance costs Prot before income tax Income tax expense Prot for the nancial year Other comprehensive income: Exchange differences arising from translation of foreign operations Income tax relating to components of other comprehensive income Other comprehensive income for the nancial year, net of tax Total comprehensive income for the nancial year Prot attributable to: Owners of the parent Non-controlling interests
17
15,184,616 (10,400,205) 4,784,411
222 5,889 18 104,626
416,708 121,982
972,135 669,490 195,733
(1,484,300) (2,281,110) 19 20 21 (233,053) 896,685 (141,695) 754,990
(1,409,094) (2,406,820) (210,553) 2,630,025 (325,653) 2,304,372
(1,337,107) (2,610,944) (155,365) 4,261,535 (382,410) 3,879,125
(64,472) (64,472) 690,518
(4,510) (4,510) 2,299,862
(5,754) (5,754) 3,873,371
737,016 17,974 754,990
2,255,215 49,157 2,304,372
3,828,852 50,273 3,879,125
Total comprehensive income attributable to: Owners of the parent Non-controlling interests 672,544 17,974 690,518 Earnings per share - Basic and diluted (in cents) 22 0.58 1.78 3.01 2,250,705 49,157 2,299,862 3,823,098 50,273 3,873,371
A-6
COMBINED STATEMENTS OF CHANGES IN EQUITY AS AT 31 DECEMBER 2010, 2011 AND 2012
Share capital $ Balance at 1 January 2010 Prot for the nancial year Other comprehensive income: Exchange differences arising from translation of foreign operations Total comprehensive income for the nancial year Contribution by owners of the parent Issuance of new share capital in Qson Industries (M) Sdn. Bhd. Total transactions with owners of the parent Transactions with noncontrolling interests Acquisition of noncontrolling interests in Qson Industries (M) Sdn. Bhd. Acquisition of noncontrolling interests in Qson Kitchen Equipment Pte Ltd Total transactions with non-controlling interests Balance at 31 December 2010
Merger reserve $
Foreign currency translation account $
Retained earnings $
Total equity attributable to Nonowners of controlling the parent interests $ $
Total equity $
1,036,110
48,341
15,451
1,517,459
2,617,361
178,011
2,795,372
737,016
737,016
17,974
754,990
(64,472)
(64,472)
(64,472)
(64,472)
737,016
672,544
17,974
690,518
140,256 140,256
140,256 140,256
140,256 140,256
(3,760)
(3,760)
(9,284)
(13,044)
34,224
64,101
98,325
(98,325)
34,224
60,341
94,565
(107,609)
(13,044)
1,070,334
248,938
(49,021)
2,254,475
3,524,726
88,376
3,613,102
A-7
COMBINED STATEMENTS OF CHANGES IN EQUITY AS AT 31 DECEMBER 2010, 2011 AND 2012 (CONTINUED)
Share capital $ Balance at 1 January 2011 Prot for the nancial year Other comprehensive income: Exchange differences arising from translation of foreign operations Total comprehensive income for the nancial year Balance at 31 December 2011
Merger reserve $
Retained earnings $
Total equity $
1,070,334
248,938
(49,021)
2,254,475
3,524,726
88,376
3,613,102
2,255,215
2,255,215
49,157
2,304,372
(4,510)
(4,510)
(4,510)
(4,510)
2,255,215
2,250,705
49,157
2,299,862
1,070,334
248,938
(53,531)
4,509,690
5,775,431
137,533
5,912,964
A-8
COMBINED STATEMENTS OF CHANGES IN EQUITY AS AT 31 DECEMBER 2010, 2011 AND 2012 (CONTINUED)
Share capital $ Balance at 1 January 2012 Prot for the nancial year Other comprehensive income: Exchange differences arising from translation of foreign operations Total comprehensive income for the nancial year Transaction with owners of the parent Difference between consideration and share capital acquired of: - Qson Industries (M) Sdn. Bhd. - Qson Kitchenhub Sdn. Bhd. Total transactions with owners of the parent Transactions with noncontrolling interests Acquisition of noncontrolling interests in Qson Kitchen Equipment Pte Ltd Total transactions with non-controlling interests Balance at 31 December 2012
Merger reserve $
Retained earnings $
Total equity $
1,070,334
248,938
(53,531)
4,509,690
5,775,431
137,533
5,912,964
3,828,852
3,828,852
50,273
3,879,125
(5,754)
(5,754)
(5,754)
(5,754)
3,828,852
3,823,098
50,273
3,873,371
(174,754) (10,083) (184,837)
28,636 (1,896) 26,740
(146,118) (11,979) (158,097)
(146,118) (11,979) (158,097)
2,139
10,176
12,315
(12,315)
2,139
10,176
12,315
(12,315)
1,072,473
74,277
(32,545)
8,338,542
9,452,747
175,491
9,628,238
A-9
COMBINED STATEMENTS OF CASH FLOWS AS AT 31 DECEMBER 2010, 2011 AND 2012
Note
2010 $
2011 $
2012 $
Operating activities Prot before income tax Adjustments for: Plant and equipment written off Gain on disposal of property, plant and equipment Gain on disposal of property held for sale Depreciation of property, plant and equipment Depreciation of investment properties Inventories written down Allowance for impairment loss on third parties trade receivables Allowance for impairment loss on third parties trade receivables written back Bad third parties trade receivables written off Interest income Interest expenses Operating cash ows before working capital changes Working capital changes: Inventories Trade and other receivables Prepayments Trade and other payables Cash generated from operations Income tax paid Net cash from operating activities Investing activities Issuance of new shares in a subsidiary Acquisition of non-controlling interest Proceeds from disposal of property, plant and equipment Proceeds from disposal of property held for sale Purchase of property, plant and equipment Purchase of investment properties Purchase of property held for sale Interest received Net cash (used in)/from investing activities (562,002) (13,044) 25,955 (803,341) (302,576) 222 (1,654,786) 909,197 (518,573) (738,604) (347,980) 2,752,346 1,408,094 (969,625) 3,190,815 (267,107) (1,299,828) 19,192 1,189,249 1,034,935 (374,771) 660,164 (328,184) (758,787) (2,978) 129,573 2,015,398 (90,154) 1,925,244 333,657 (613,943) (54,984) (29,613) 2,771,006 (183,091) 2,587,915 10,333 (5,889) 285,304 8,087 (35,000) 1,078 (222) 233,053 1,393,429 3,134 (416,708) 258,239 3,358 48,019 54,279 (6,000) 190,875 210,553 2,975,774 (972,135) (669,490) 204,639 12,608 22,281 126,919 (25,648) 19,815 155,365 3,135,889 896,685 2,630,025 4,261,535
A-10
COMBINED STATEMENTS OF CASH FLOWS AS AT 31 DECEMBER 2010, 2011 AND 2012 (CONTINUED)
Note
2010 $
2011 $
2012 $
Financing activities Contribution by owners Transactions with owners Fixed deposits pledged with banks Drawdown of term loans Repayment of term loans Proceeds from trust receipts Repayment of trust receipts Repayment of obligations under nance leases Interest paid Net cash from/(used in) nancing activities Net change in cash and cash equivalents Cash and cash equivalents at beginning of nancial year Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of nancial year 11 140,256 (7,307) 1,011,764 (281,574) 3,795,395 (3,326,212) (144,092) (233,053) 955,177 (39,445) 1,077,209 1,695 1,039,459 (126,054) 867,500 (744,188) 3,800,036 (4,228,667) (313,085) (210,553) (955,011) 622,253 1,039,459 (1,101) 1,660,611 (158,097) (409,444) 864,000 (2,019,270) 3,467,691 (3,395,790) (93,421) (155,365) (1,899,696) 3,879,034 1,660,611 (881) 5,538,764
A-11
NOTES TO THE COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2010, 2011 AND 2012
These notes form an integral part and should be read in conjunction with the combined nancial statements. These combined nancial statements have been prepared for inclusion in the Offer Document of Singapore Kitchen Equipment Limited (the Company) and its subsidiaries (collectively the Group) and were authorised for issue by the Directors of the Company on 27 June 2013. 1. Corporate information 1.1 Domicile and activities The Company was incorporated in the Republic of Singapore on 9 May 2013 under the Singapore Companies Act, Chapter 50 (the Act) as a private limited liability company under the name of Singapore Kitchen Equipment Pte. Ltd.. The address of the Companys registered ofce and principal place of business is Blk 115A Commonwealth Drive, #01-27/28 Tanglin Halt Industrial Estate Singapore 149596. The Companys registration number is 201312671M. The Companys immediate and ultimate holding company is QKE Holdings Pte. Ltd., a company incorporated in Singapore. The principal activity of the Company is that of an investment holding company. The principal activities of the subsidiaries are set out in Note 1.3 to the combined nancial statements. 1.2 Restructuring exercise Prior to the Invitation, a restructuring exercise was carried out which resulted in the Company becoming the holding company of the Group (the Restructuring Exercise). The following steps were taken in the Restructuring Exercise: (i) Acquisition of non-controlling interests On 27 February 2013, Chua Chwee Choo (Sally Chua), Lee Chong Hoe (Alan Lee) and Cheng Chun Choi (Frankie Cheng) acquired additional 1.4% of equity interest in Qson Kitchen Equipment Pte Ltd from its non-controlling interests for a total cash consideration of $22,185. As a result of this acquisition, Sally Chua, Alan Lee and Frankie Cheng owned an aggregated of 99.1% of equity interest in Qson Kitchen Equipment Pte Ltd. On 1 April 2013, Sally Chua, Alan Lee and Frankie Cheng acquired additional 0.9% of equity interest in Qson Kitchen Equipment Pte Ltd from its non-controlling interests for a total cash consideration of $15,000. As a result of this acquisition, Qson Kitchen Equipment Pte Ltd was wholly owned by Sally Chua, Alan Lee and Frankie Cheng. (ii) Acquisition of Qson International Pte. Ltd. Pursuant to a sale and purchase agreement dated 16 May 2013 between the Company (as purchaser) and Sally Chua, Alan Lee and Frankie Cheng (as vendors), the Company acquired the entire issued and fully paid-up share capital of Qson International Pte. Ltd., comprising 90,003 ordinary shares, for an aggregate consideration of $1,935, being a sum arrived at based on a discount of approximately 99.9% to the audited NAV of Qson International Pte. Ltd. as at 31 December 2012 of approximately $1,861,788, which was satised in cash.
A-12
NOTES TO THE COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2010, 2011 AND 2012 (CONTINUED)
1.
Corporate information (Continued) 1.2 Restructuring exercise (Continued) (iii) Acquisition of Qson Kitchen Equipment Pte Ltd Pursuant to a sale and purchase agreement dated 16 May 2013 between the Company (as purchaser) and Sally Chua, Alan Lee and Frankie Cheng (as vendors), the Company acquired the entire issued and fully paid-up share capital of Qson Kitchen Equipment Pte Ltd, comprising 1,000,000 ordinary shares, for an aggregate consideration of $8,065, being a sum arrived at based on a discount of approximately 99.9% to the audited combined group NAV of Qson Kitchen Equipment and its subsidiaries (Qson Industries (M) Sdn. Bhd., Qson KitchenHub Sdn. Bhd. and Qson Kuechen Kultur Co., Ltd) as at 31 December 2012 of approximately $7,766,450, which was satised in cash. (iv) Conversion of the Company On 26 June 2013, the Company was converted into a public company and changed its name to Singapore Kitchen Equipment Limited. 1.3 Details of subsidiaries As at the date of this report after the Restructuring Exercise, the Group has the following subsidiaries:
Date and country of incorporation Registered and paid-up capital Effective equity interest
Name of company Held by the Company: Qson Kitchen Equipment Pte Ltd
Principal activities
30 September 1996 Singapore
S$1,005,000
Designing, fabricating and installation of stainless steel kitchenware and commercial kitchens Investment holding
100%
Qson International Pte. Ltd. Held by the Qson Kitchen Equipment Pte Ltd: Qson Industries (M) Sdn. Bhd.
13 April 2007 Singapore
S$90,003
100%
23 June 2006 Malaysia
RM1,600,000
Manufacture and distribution of kitchen equipment Investment holding
100%
Qson Kitchenhub Sdn. Bhd.
22 February 2007 Malaysia 12 April 2012 Vietnam
RM500,000
100%
Qson Kuechen Kultur Co., Ltd
USD200,000
Import, wholesale and retail of kitchen equipment
100%
A-13
2.
Basis of preparation of combined nancial statements The Restructuring Exercise involved companies which are under common control. The combined nancial statements of the Group for the nancial years ended 31 December 2010, 2011 and 2012 have been prepared in a manner similar to the pooling-of-interest method. Such manner of presentation reects the economic substance of the combining companies as a single economic enterprise, although the legal parent-subsidiary relationship was not established until after the end of the reporting periods. These combined nancial statements of the Group are a combination or aggregation of the nancial statements of the Company and its subsidiaries after the Restructuring Exercise. The audited combined financial statements of the Group for the financial years ended 31 December 2010, 2011 and 2012 are prepared in accordance with Singapore Financial Reporting Standards (FRS). The statutory audited nancial statements of certain companies within the Group for the nancial years ended 31 December 2010, 2011 and 2012 covered by this report were audited by the following rms of Certied Public Accountants who issued unqualied audit opinions in their reports as follows:
Name of company Qson Kitchen Equipment Pte Ltd Auditors UHY Diong, Singapore BDO LLP, Singapore Qson Industries (M) Sdn. Bhd. UHY, Malaysia Financial year Financial years ended 31 December 2010 and 2011 Financial year ended 31 December 2012
Financial years ended 31 December 2010 and 2011 Financial year ended 31 December 2012 Financial years ended 31 December 2010 and 2011 Financial year ended 31 December 2012 Financial period from 12 April 2012 to 31 December 2012
BDO, Malaysia Qson Kitchenhub Sdn. Bhd. UHY, Malaysia
BDO, Malaysia Qson Kuechen Kultur Co., Ltd. BDO Audit Services Company Limited, Vietnam BDO LLP, Singapore
Qson International Pte. Ltd.
Financial years ended 31 December 2011 and 2012
For the purpose of inclusion in the combined nancial statements, BDO LLP, Singapore audited the nancial statements of Qson International Pte. Ltd. for the nancial year ended 31 December 2010 which were previously exempt under the Singapore Companies Act.
A-14
2.
Basis of preparation of combined nancial statements (Continued) The preparation of combined nancial statements in conformity with FRS requires the management to exercise judgement in the process of applying the Groups accounting policies and requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the end of the reporting periods, and the reported amounts of revenue and expenses throughout the nancial years. Although these estimates are based on managements best knowledge of historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, actual results may ultimately differ from those estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the nancial year in which the estimate is revised if the revision affects only that nancial year or in the nancial year of the revision and future nancial years if the revision affects both current and future nancial years. Critical accounting judgements and key sources of estimation uncertainty used that are signicant to the combined nancial statements are disclosed in Note 4 to the combined nancial statements.
3.
Summary of signicant accounting policies 3.1 Changes in accounting policies During the nancial years ended 31 December 2010, 2011 and 2012, the Group adopted the new or revised Singapore Financial Reporting Standards and Interpretations of FRS (INT FRS) that are relevant to its operations and effective for each annual period respectively. Changes to the Groups accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective FRS and INT FRS. The adoption of the new or revised FRS and INT FRS did not result in any substantial changes to the Groups accounting policies and has no material effect on the amounts reported for the current and prior nancial years. FRS and INT FRS issued but not yet effective As at the date of authorisation of these combined nancial statements, the Group has not adopted the following FRS and INT FRS that have been issued but not yet effective:
Effective date (Annual periods beginning on or after) FRS 1 FRS 19 FRS 27 : Amendments to FRS 1 - Presentation of Items of Other Comprehensive Income : Employee Benets (Revised) : Separate Financial Statements : Amendments to FRS 27 - Investment Entities FRS 28 FRS 32 FRS 101 FRS 107 : Investments in Associates and Joint Ventures : Amendments to FRS 32 - Offsetting Financial Assets and Financial Liabilities : Amendments to FRS 101 - Government Loans : Amendments to FRS 107 Disclosures - Offsetting Financial Assets and Financial Liabilities 1 July 2012 1 January 2013 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2013 1 January 2013
A-15
3.
Summary of signicant accounting policies (Continued) 3.1 Changes in accounting policies (Continued) FRS and INT FRS issued but not yet effective (Continued)
Effective date (Annual periods beginning on or after) FRS 110 : Consolidated Financial Statements : Amendments to FRS 110 - Investment Entities FRS 111 FRS 112 : Joint Arrangements : Disclosure of Interests in Other Entities : Amendments to FRS 112 - Investment Entities FRS 113 INT FRS 120 : Fair Value Measurement : Stripping Costs in the Production Phase of a Surface Mine 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2013 1 January 2013 1 January 2013
Improvements to FRSs 2012
Consequential amendments were also made to various standards as a result of these new or revised standards. The Group expects that the adoption of the above FRS and INT FRS, if applicable, will have no material impact on the combined nancial statements in the period of initial adoption. Amendments to FRS 1 - Presentation of Items of Other Comprehensive Income The amendments to FRS 1 changes the grouping of items presented in other comprehensive income. Items that could be reclassied to prot or loss at a future point in time would be presented separately from items which will never be reclassied. As the amendments only affect the presentation of items that are already recognised in other comprehensive income, the Group does not expect any impact on its nancial position or performance upon adoption of this standard from the nancial year beginning 1 January 2013. FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements FRS 110 replaces the control assessment criteria and consolidation requirements currently in FRS 27 and INT FRS 12 Consolidation - Special Purpose Entities. FRS 110 denes the principle of control and establishes control as the basis for determining which entities are consolidated in the consolidated nancial statements. It also provides more extensive application guidance on assessing control based on voting rights or other contractual rights. Under FRS 110, control assessment will be based on whether an investor has (i) power over the investee; (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect the amount of the returns. FRS 27 remains as a standard applicable only to separate nancial statements. FRS 110 will take effect from the nancial year beginning 1 January 2014, with full retrospective application. When the Group adopts FRS 110, entities it currently consolidates may not qualify for consolidation, and entities it currently does not consolidate may qualify for consolidation. The Group is currently estimating the effects of FRS 110 on its investments in the period of initial adoption.
A-16
3.
Summary of signicant accounting policies (Continued) 3.1 Changes in accounting policies (Continued) FRS and INT FRS issued but not yet effective (Continued) FRS 112 Disclosure of Interests in Other Entities FRS 112 is a new and comprehensive standard on disclosure requirements for all forms of interest in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. FRS 112 requires an entity to disclose information that helps users of its nancial statements to evaluate the nature and risks associated with its interests in other entities and the effects of those interests on its nancial statements. The Group is currently determining the impact of the disclosure requirements. As this is a disclosure standard, it will have no impact to the nancial position and nancial performance of the Group when implemented from the nancial year beginning 1 January 2014. FRS 113 Fair Value Measurement FRS 113 provides guidance on how to measure fair values including those for both nancial and non-nancial items and introduces signicantly enhanced disclosure about fair values. It does not address or change the requirements on when fair values should be used. When measuring fair value, an entity is required to use valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. It establishes a fair value hierarchy for doing this. This FRS is to be applied from the nancial year beginning 1 January 2013. The Group will determine the impact of this standard when it becomes effective. 3.2 Basis of combination The combined nancial statements comprise the nancial statements of the Company and its subsidiaries made up to the end of the nancial years ended 31 December 2010, 2011 and 2012. Accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group to ensure consistency. Acquisition under common control Business combination arising from transfers of interest in entities that are under common control are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established. For this purpose, comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Groups controlling shareholders nancial statements. The components of equity of the acquired entities are added to the same components within the Group equity. Any difference between the cash paid for the acquisition and share capital of entities acquired is recognised directly to equity. Transactions eliminated on combination Intra-group balances and any unrealised income or expenses arising from intra-group transactions are eliminated in preparing the combined nancial statements. 3.3 Property, plant and equipment Property, plant and equipment are initially recorded at cost. Subsequent to initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any.
A-17
3.
Summary of signicant accounting policies (Continued) 3.3 Property, plant and equipment (Continued) The cost of property, plant and equipment includes expenditure that is directly attributable to the acquisition of the items. Dismantlement, removal or restoration costs are included as part of the cost of property, plant and equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the property, plant and equipment. Subsequent expenditure relating to the property, plant and equipment that has already been recognised is added to the carrying amount of the asset when it is probable that the future economic benets, in excess of the standard of performance of the asset before the expenditure was made, will ow to the Group, and the cost can be reliably measured. Other subsequent expenditure is recognised as an expense during the nancial year in which it is incurred. An item of property, plant and equipment is derecognised upon disposal or when no future economic benets are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in prot or loss in the nancial year the asset is derecognised. Depreciation is calculated using the straight-line method to allocate the depreciable amounts of the property, plant and equipment over their estimated useful lives as follows:
Years Freehold building Leasehold properties Motor vehicles Furniture and ttings Plant and machinery Computer and ofce equipment Renovation 50 Over lease term from 28 to 48 5 5 5 3 to 5 5
Freehold land has indenite useful life and is not depreciated. Construction-in-progress represents items of property, plant and equipment under construction, which is stated at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs of construction during the period of construction. Construction-inprogress is reclassied to the appropriate category of property, plant and equipment when it is completed and ready for use. The residual values, estimated useful lives and depreciation method are reviewed at each nancial year-end to ensure that the residual values, period of depreciation and depreciation method are consistent with previous estimates and expected pattern of consumption of the future economic benets embodied in the items of property, plant and equipment. 3.4 Investment properties Investment properties comprise those portions of buildings that are held for long-term rental yields and/or capital appreciation. Investment properties are subject to renovations or improvements at regular intervals. The cost of major renovations and improvements is capitalised as addition and the carrying amounts of the replaced components are written off to prot or loss. The cost of maintenance, repairs and minor improvements is charged to prot or loss when incurred. A-18
3.
Summary of signicant accounting policies (Continued) 3.4 Investment properties (Continued) Investment properties are initially recorded at cost. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment as set out in Note 3.3 up to the date of change in use. Investment properties are derecognised when either it has been disposed of or when the investment property is permanently withdrawn from use and no future economic benet is expected from its disposal. Any gains or losses on the retirement or disposal of investment properties are recognised in prot or loss in the nancial year of retirement or disposal. Depreciation is calculated using the straight-line method to allocate the depreciable amount of the investment properties over their estimated useful lives of 28 to 48 years. The residual values, useful lives and depreciation method of investment properties are reviewed at each nancial year-end to ensure that the residual values, period of depreciation and depreciation method are consistent with previous estimates and expected pattern of consumption of the future economic benets embodied in the items of investment properties. 3.5 Property held for sale Property classied as held for sale is measured at the lower of carrying amount and fair value less costs to sell. Property is classied as held for sale if the carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the property is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classication. Property once classied as held for sale is not depreciated. 3.6 Subsidiaries Subsidiaries are entities over which the Group has power to govern the nancial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. 3.7 Impairment of non-nancial assets The carrying amounts of non-nancial assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment loss and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If any such indication exists, or when annual impairment testing for an asset is required, the assets recoverable amount is estimated.
A-19
3.
Summary of signicant accounting policies (Continued) 3.7 Impairment of non-nancial assets (Continued) An impairment loss is recognised whenever the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount. A cash-generating unit is the smallest identiable asset group that generates cash ows that largely are independent from other assets and groups of assets. Impairment loss is recognised in prot or loss unless it reverses a previous revaluation credited to other comprehensive income, in which case it is charged to other comprehensive income up to the amount of any previous revaluation. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use. Recoverable amount is determined for individual asset, unless the asset does not generate cash inows that are largely independent of those from other assets or groups of assets. If this is the case, the recoverable amount is determined for the cash-generating unit to which the assets belong. The fair value less costs to sell is the amount obtainable from the sale of an asset or cash-generating unit in an arms length transaction between knowledgeable willing parties less costs of disposal. Value in use is the present value of estimated future cash ows expected to be derived from the continuing use of an asset and from its disposal at the end of its useful life, discounted at pre-tax rate that reects current market assessment of the time value of money and the risks specic to the asset or cash-generating unit for which the future cash ow estimates have not been adjusted. An assessment is made at the end of each reporting period as to whether there is any indication that an impairment loss recognised in prior periods for an asset may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. An impairment loss recognised in prior periods is reversed only if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised. Reversals of impairment loss are recognised in prot or loss unless the asset is carried at revalued amount, in which case the reversal in excess of impairment losses recognised in prot or loss in prior periods is treated as a revaluation increase. After such a reversal, the depreciation is adjusted in future periods to allocate the assets revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. 3.8 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on a rst-in, rst-out basis and includes all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured goods, costs include cost of material, direct labour and an appropriate portion of manufacturing overheads. Work-in-progress is stated at cost which comprises direct material, direct labour and other directly attributable expenses. Allowance is made for anticipated losses, if any, on work-inprogress when the possibility is ascertained. Net realisable value is the estimated selling price at which the inventories can be realised in the ordinary course of business less costs incurred in marketing and distribution. Where necessary, allowance is made for obsolete, slow-moving and defective inventories to adjust the carrying amount of those inventories to the lower of cost and net realisable value.
A-20
3.
Summary of signicant accounting policies (Continued) 3.9 Financial assets The Group classies its nancial assets as loans and receivables. The classication depends on the purpose of which the assets were acquired. The management determines the classication of the nancial assets at initial recognition and re-evaluates this designation at the end of the reporting period, where allowed and appropriate. (i) Loans and receivables Loans and receivables are non-derivative nancial assets with xed or determinable payments that are not quoted in an active market. Loans and receivables are classied within trade and other receivables and cash and cash equivalents on the combined statements of nancial position. Recognition and derecognition Financial assets are recognised on the combined statements of nancial position when, and only when, the Group becomes a party to contractual provisions of the nancial instruments. Regular way purchases and sales of nancial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash ows from the nancial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On derecognition of a nancial asset, the difference between the carrying amount and the net sale proceeds is recognised in prot or loss. Initial and subsequent measurement Financial assets are initially recognised at fair value plus in the case of nancial assets not at fair value through prot or loss, directly attributable transaction costs. After initial recognition, loans and receivables are carried at amortised cost using the effective interest method, less impairment loss, if any. The effective interest method is a method of calculating the amortised cost of a nancial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction cost and other premiums or discounts) through the expected life of the nancial instrument, or where appropriate, a shorter period, to the net carrying amount of the nancial instrument Income and expense are recognised on an effective interest basis for debt instruments. Impairment The Group assesses at the end of each reporting period whether there is objective evidence that a nancial asset or a group of nancial assets is impaired.
A-21
3.
Summary of signicant accounting policies (Continued) 3.9 Financial assets (Continued) Impairment (Continued) (i) Loans and receivables An allowance for impairment loss of loans and receivables is recognised when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of allowance is the difference between the assets carrying amount and the present value of estimated future cash ows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in prot or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed either directly or by adjusting an allowance account. Any subsequent reversal of an impairment loss is recognised in prot or loss, to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. 3.10 Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash and deposits with banks. Cash and cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignicant risk of change in value. For the purpose of combined statements of cash ows, cash and cash equivalents comprise cash on hand and cash at bank net of bank overdrafts and xed deposits pledged with banks. 3.11 Financial liabilities Financial liabilities are classied as either nancial liabilities at fair value through prot or loss or other nancial liabilities. Financial liabilities are classied as at fair value through prot or loss if the nancial liability is either held for trading or it is designated as such upon initial recognition. The accounting policies adopted for other nancial liabilities are set out below: (i) Trade and other payables Trade and other payables are recognised initially at cost which represents the fair value of the consideration to be paid in the future, less transaction cost, for goods received or services rendered, whether or not billed to the Group, and are subsequently measured at amortised cost using the effective interest method. (ii) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is taken to prot or loss over the period of the borrowings using the effective interest method.
A-22
3.
Summary of signicant accounting policies (Continued) 3.11 Financial liabilities (Continued) (ii) Borrowings (Continued)) Borrowings which are due to be settled within 12 months after the end of the reporting period are presented as current borrowings even though the original terms were for a period longer than 12 months and an agreement to renance, or to reschedule payments, on a long-term basis is completed after the end of the reporting period and before the combined nancial statements are authorised for issue. Other borrowings due to be settled more than 12 months after the end of the reporting period are presented as non-current borrowings in the combined statements of nancial position. Recognition and derecognition Financial liabilities are recognised on the combined statements of nancial position when, and only when, the Group becomes a party to the contractual provisions of the nancial instruments. Financial liabilities are derecognised when the contractual obligation has been discharged or cancelled or expired. On derecognition of a nancial liability, the difference between the carrying amount and the consideration paid is recognised in prot or loss. When an existing liability is replaced by another form from the same lender on substantially different terms, or the terms of an existing liability are substantially modied, such exchange or modication is treated as derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in prot or loss. 3.12 Leases When the Group is the lessee of operating leases Leases of assets in which a signicant portion of the risks and rewards of ownership are retained by the lessor are classied as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are recognised in prot or loss on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the nancial year in which termination takes place. When the Group is the lessor of operating leases Leases where the Group retains substantially all risks and rewards incidental to the ownership are classied as operating leases. Rental income from operating leases (net of any incentives given to lessees) is recognised in prot or loss on a straight-line basis over the lease term. When the Group as lessee of nance leases Leases in which the Group assumes substantially the risks and rewards of ownership are classied as nance lease. Upon initial recognition, plant and equipment acquired through nance leases are capitalised at the lower of their fair value and the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised.
A-23
3.
Summary of signicant accounting policies (Continued) 3.12 Leases (Continued) When the Group as lessee of nance leases (Continued) Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Lease payments are apportioned between nance charge and reduction of the lease liability. The nance charge is allocated to each period during the lease term liability. Finance charge is recognised in prot or loss. 3.13 Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Ordinary shares are classied as equity and recognised at the fair value of the consideration received. Incremental costs directly attributable to the issuance of new equity instruments are shown in the equity as a deduction from the proceeds. 3.14 Revenue recognition Revenue is measured at fair value of the consideration received or receivable for the sale of goods and services rendered in the ordinary course of business. Revenue is recognised to the extent that it is probable that the economic benets will ow to the entity and the revenue can be reliably measured. Revenue is presented, net of rebates, discounts and sales related taxes. Revenue from fabrication and distribution of goods is recognised when goods are delivered to the customer and the signicant risks and rewards of ownership has been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably. Revenue from maintenance and services income is recognised when the services have been performed and accepted by the customers in accordance with the relevant terms and conditions of the contract. Interest income is recognised on a time-apportionment basis using the effective interest method. Rental income under operating leases is recognised on a straight-line basis over the term of the lease. 3.15 Employee benets Dened contribution plan Contributions to dened contribution plans are recognised as expenses in prot or loss in the same nancial year as the employment that gives rise to the contributions. Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is made for estimated liability for unutilised annual leave as a result of services rendered by employees up to the end of the reporting period.
A-24
3.
Summary of signicant accounting policies (Continued) 3.16 Borrowing costs Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised as expenses in prot or loss in the nancial year in which they are incurred. Borrowing costs are recognised on a time-proportion basis in prot or loss using the effective interest method. 3.17 Income tax Income tax expense comprises current and deferred taxes. Income tax expense is recognised in prot or loss except to the extent that it relates to a business combination or items recognised directly in equity, or in other comprehensive income. Current income tax expense is the expected tax payable on the taxable income for the three nancial years, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to income tax payable in respect of previous nancial years. Deferred tax is provided, using the liability method, for temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for nancial reporting purposes. Deferred tax is measured using the tax rates expected to be applied to the temporary differences when they are realised or settled, based on tax rates enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognised only to the extent that it is probable that future taxable prots will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benet will be realised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable prots will be available against which the temporary differences can be utilised. Deferred tax relating to items recognised outside prot or loss is recognised outside prot or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same tax authority and where there is intention to settle the current tax assets and liabilities on a net basis. Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiaries, except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. 3.18 Foreign currencies Items included in the individual nancial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (functional currency).
A-25
3.
Summary of signicant accounting policies (Continued) 3.18 Foreign currencies (Continued) The combined nancial statements are presented in Singapore dollar, which is the functional currency of the Company and the presentation currency for the combined financial statements. In preparing the combined nancial statements, transactions in currencies other than the entitys functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the date of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are re-translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated. Exchange differences arising on the settlement of monetary items and on re-translating of monetary items are recognised in prot or loss for the nancial year. Exchange differences arising on the re-translation of non-monetary items carried at fair value are recognised in prot or loss for the nancial year except for differences arising on the re-translation of nonmonetary items in respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income. For the purposes of presenting combined financial statements, the results, financial positions, changes in equity and cash ows of the Groups entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) assets and liabilities are translated at the closing exchange rate at the end of the reporting period; income and expenses are translated at average exchange rate for the nancial year (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and all resulting foreign currency exchange differences are recognised in other comprehensive income and presented in the foreign currency translation account in equity. Such translation differences are recognised in prot or loss in the period in which the foreign operation is disposed of.
(ii)
(iii)
3.19 Segment reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group) and whose operating results are regularly reviewed by the Groups chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance.
A-26
4.
Critical accounting judgements and key sources of estimation uncertainty 4.1 Critical judgements made in applying the accounting policies In the process of applying the Groups accounting policies, the management is of the opinion that there are no critical judgements involved that have a signicant effect on the amounts recognised in the combined nancial statements except as discussed below. (i) Impairment of investments or nancial assets The Group follows the guidance of FRS 36 and FRS 39 on determining when an investment or a nancial asset is impaired. This determination requires signicant judgement. The Group evaluates, among other factors, the duration and extent to which the fair value of an investment or a nancial asset is less than its cost and the nancial health of the near-term business outlook for an investment or a nancial asset, including factors such as industry and sector performance, changes in technology and operational and nancing cash ows. 4.2 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that have a signicant risk of causing a material adjustment to the carrying amounts of assets and liabilities and the reported amounts of revenue and expenses within the next nancial year are discussed below. (i) Depreciation of property, plant and equipment and investment properties The property, plant and equipment and investment properties are depreciated on a straight-line method over their estimated useful lives. The management estimates the useful lives of property, plant and equipment to be within 3 to 50 years and useful lives of investment properties to be within 28 to 48 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation could be revised. The carrying amounts of property, plant and equipment as at 31 December 2010, 2011 and 2012 were $1,939,017, $2,580,347 and $1,009,106 respectively. The carrying amounts of investment properties as at 31 December 2010, 2011 and 2012 were $507,515, $Nil and $554,723 respectively. (ii) Allowance for inventory obsolescence Inventories are stated at the lower of cost and net realisable value. The management primarily determines cost of inventories using the first-in, first-out basis. The management estimates the net realisable value of inventories based on assessment of receipt of committed sales prices and provides for excess inventories based on historical usage and estimated future demand and related pricing. In determining excess quantities, the management considers recent sales activities, related margin and market positioning of its products. However, factors beyond its control, such as demand levels, technological advances and pricing competition, could change from period to period. Such factors may require the Group to reduce the value of its inventories. The carrying amounts of inventories as at 31 December 2010, 2011 and 2012 were $1,375,632, $1,653,603 and $1,296,029 respectively.
A-27
4.
Critical accounting judgements and key sources of estimation uncertainty (Continued) 4.2 Key sources of estimation uncertainty (Continued) (iii) Allowance for impairment loss on receivables The management establishes allowance for impairment loss on receivables on a case-by-case basis when they believe that payment of amounts owed is unlikely to occur. In establishing these allowances, the management considers its historical experience and changes to its customers nancial position. If the nancial conditions of receivables were to deteriorate, resulting in impairment of their abilities to make the required payments, additional allowances may be required. The carrying amounts of trade and other receivables as at 31 December 2010, 2011 and 2012 were $6,149,114, $6,662,514 and $7,142,673 respectively. (iv) Income taxes The Group has exposure to income taxes in numerous jurisdictions. Signicant judgement is involved in determining the Groups provision for income taxes. The Group recognises expected assets and liabilities for tax based on an estimation of the likely taxes due, which requires signicant judgement as to the ultimate tax determination of certain items. Where the actual liability arising from these issues differs from these estimates, such differences will have an impact on income tax and deferred tax provisions in the nancial year when such determination is made. The carrying amounts of deferred tax assets as at 31 December 2010, 2011 and 2012 were $Nil, $Nil, and $5,661 respectively. The carrying amounts of current income tax recoverable as at 31 December 2010, 2011 and 2012 were $Nil, $Nil and $20,459 respectively. The carrying amounts of current income tax payable as at 31 December 2010, 2011 and 2012 were $94,602, $323,640 and $555,545 respectively. The carrying amounts of deferred tax liabilities as at 31 December 2010, 2011 and 2012 were $12,678, $19,139, and $12,678 respectively.
A-28
5.
Freehold building $ Renovation $ Leasehold properties $ Motor vehicles $ Furniture and ttings $ Plant and machinery $ Computer and ofce equipment $ Constructionin-progress $
Property, plant and equipment
Freehold land $
Total $
2010 453,948 8,642 462,590 517,824 901,966 86,710 562,043 86 1,216 11,166 270 119,742 (3,455) (391) (1,925) (21,494) (16,000) (1,476) (5,681) 302,576 58,198 9,976 2,187 14,259 215,248 865,176 94,973 550,557 112,819 109,094 23,934 (13,491) 1,065 120,602 436,211 436,211 2,513,253 847,341 (44,651) (19,262) 24,567 3,321,248
Cost
Balance at 1.1.2010
111,438
Additions
Disposals
Written off
Currency re-alignment
2,122
Balance at 31.12.2010
113,560
Accumulated depreciation 18,158 9,263 334 27,755 10,309 663,912 26 332 42,603 (1,290) (3,045) (14,487) 8,086 138,952 14,407 2,223 527,979 43,641 389,726 84,510 (1,372) (208) 5,970 478,626 94,596 9,682 (5,681) (1,925) 244 96,916 47,085 20,404 (5,506) 127 62,110 1,123,408 285,304 (24,585) (8,929) 7,033 1,382,231
Balance at 1.1.2010
Depreciation for the nancial year
Disposals
Written off
Carrying amount 434,835 507,515 238,054 44,107 83,417 22,826 58,492 436,211 1,939,017
113,560
A-29
5.
Property, plant and equipment (Continued)
Freehold land $
Total $
2011 Cost Balance at 1.1.2011 Additions Disposals Written off Transferred from investment properties Currency re-alignment Balance at 31.12.2011 462,590 (8,975) 453,615 517,824 605,153 (60) 975,891 (997) 69,213 (11,603) 491,690 (125) 79,440 517,824 (430,495) 901,966 387,800 (310,681) (3,134) 86,710 (16,500) 562,043 (58,750) 119,742 38,573 (78,750) 120,602 (52,517) (1,321) 66,764
113,560
436,211 480,000 916,211
3,321,248 906,373 (741,176) (209,651) 517,824 (25,284) 3,769,334
(2,203) 111,357
9,079 (545) 36,289 13,667 28,817 567,232 (259) 38,630 25,728 (20,887) 131,120 (227,800) 12,786 (16,500)
27,755
10,309
663,912
42,603
478,626 45,966 (58,750) (8,728) 457,114
96,916 14,580 (78,750) (109) 32,637
62,110 18,980 (52,517) (305) 28,268
1,382,231 258,239 (248,687) (206,517) 13,667 (9,946) 1,188,987
Accumulated depreciation Balance at 1.1.2011 Depreciation for the nancial year Disposals Written off Transferred from investment properties Currency re-alignment Balance at 31.12.2011
Carrying amount Balance at 31.12.2011 417,326 576,336
111,357
408,659
30,583
34,576
46,803
38,496
916,211
2,580,347
A-30
5.
Property, plant and equipment (Continued)
Freehold land $
Total $
2012 453,615 (10,969) 442,646 1,004,923 79,676 480,323 (1,247) (14,216) (605,153) (151) 167,323 29,032 11,710 2,849 88,034 605,153 975,891 69,213 491,690 79,440 66,764 (1,615) 65,149 916,211 864,000 (1,780,211) 3,769,334 995,625 (1,780,211) (605,153) (30,891) 2,348,704
Cost
Balance at 1.1.2012
111,357
Additions
Disposals
Transferred to investment properties
(2,693)
108,664
Accumulated depreciation 36,289 8,967 (991) 44,265 686,436 (37,822) (660) 49,375 9,005 119,204 11,405 28,817 567,232 38,630 457,114 13,555 (13,557) 457,112 32,637 29,306 (147) 61,796 28,268 13,197 (851) 40,614 1,188,987 204,639 (37,822) (16,206) 1,339,598
Balance at 1.1.2012
Depreciation for the nancial year
Transferred to investment properties
Carrying amount 398,381 318,487 30,301 23,211 105,527 24,535 1,009,106
108,664
A-31
5.
Property, plant and equipment (Continued) As at the end of the reporting period, the carrying amounts of the Groups property, plant and equipment which have been pledged for the banking facilities as set out in Note 13 to the combined nancial statements were as follows:
2010 $ Freehold land and building Leasehold properties Construction-in-progress 548,395 507,515 2011 $ 528,683 576,336 916,211 2012 $ 507,045
As at 31 December 2010, 2011 and 2012, the carrying amounts of the Groups motor vehicles which were acquired under nance lease agreements were $191,853, $383,997, and $316,361 respectively. Finance lease assets are pledged as securities for the related nance lease payables (Note 14). For the purpose of combined statements of cash ows, the Groups additions to property, plant and equipment were nanced as follow:
2010 $ Additions of property, plant and equipment Acquired under nance lease arrangements Cash payments to acquire property, plant and equipment 847,341 (44,000) 803,341 2011 $ 906,373 (387,800) 518,573 2012 $ 995,625 (26,000) 969,625
6.
Investment properties
2010 $ Cost Balance at beginning of nancial year Additions Transferred (to)/from property, plant and equipment Balance at end of nancial year Accumulated depreciation Balance at beginning of nancial year Depreciation for the nancial year Transferred (to)/from property, plant and equipment Balance at end of nancial year Carrying amount Balance at end of nancial year 507,515 554,723 2,222 8,087 10,309 10,309 3,358 (13,667) 12,608 37,822 50,430 215,248 302,576 517,824 517,824 (517,824) 605,153 605,153 2011 $ 2012 $
A-32
6.
Investment properties (Continued) The fair value of investment properties as at 31 December 2010, 2011 and 2012 amounted to approximately $570,000, $Nil and $760,000 respectively. The fair values of the investment properties as at 31 December 2010 had been determined based on the managements estimation by reference to the recent market evidences of transaction prices for similar properties. The fair value of investment property as at 31 December 2012 has been determined on the basis of valuation carried out by independent valuers having the appropriate recognised professional qualication and recent experience in the location and category of the property being valued. The valuations were arrived at by reference to market evidences of transaction prices for similar properties, and were performed in accordance with International Valuation Standards. The Groups investment properties are held under leasehold interest. The following amounts are recognised in prot or loss:
2010 $ Rental income Property taxes and other direct operating expenses arising from investment property - rental income-generating 17,395 30,315 11,790 33,365 2011 $ 12,327 2012 $ 23,553
The investment properties with carrying amount of $507,515, $Nil and $554,723 as at 31 December 2010, 2011 and 2012 respectively was mortgaged as security for the banking facilities as set out in Note 13 to the combined nancial statements. As at 31 December 2012, the Groups investment property is as follows:
Approximate site area (sq m) 132.0
Location No 1 Commonwealth Lane #03-06, Singapore 149544
Description Warehouse
Tenure 28 years leasehold from 1 March 2008
7.
Deferred tax assets/liabilities Deferred tax assets

2010 $ Balance at beginning of nancial year Credited to prot or loss Currency re-alignment Balance at the end of nancial year 2011 $ 2012 $ 5,658 3 5,661
A-33
7.
Deferred tax assets/liabilities (Continued) Deferred tax assets (Continued) Deferred tax assets arise as a result of the following temporary differences computed at the respective countries statutory tax rate in which the Group operates:
2010 $ Accelerated tax depreciation Others 2011 $ 2012 $ 465 5,196 5,661
Deferred tax liabilities

2010 $ Balance at beginning of nancial year Charged/(Credited) to prot or loss Currency re-alignment Balance at the end of nancial year 12,678 12,678 2011 $ 12,678 6,465 (4) 19,139 2012 $ 19,139 (6,461) 12,678
Deferred tax liabilities arise as a result of the following temporary differences computed at the respective countries statutory tax rate in which the Group operates:
2010 $ Accelerated tax depreciation Others 12,678 12,678 2011 $ 21,678 (2,539) 19,139 2012 $ 12,678 12,678
8.
Inventories
2010 $ Raw materials Work-in-progress Finished goods 37,615 24,696 1,313,321 1,375,632 2011 $ 29,021 18,256 1,606,326 1,653,603 2012 $ 64,821 7,019 1,224,189 1,296,029
The cost of inventories recognised as an expense and included in cost of sales in the Groups prot or loss for the nancial years ended 31 December 2010, 2011 and 2012 amounted to $10,400,205, $10,249,553, and $10,078,642 respectively. As at 31 December 2010, 2011 and 2012, the Group carried out a review of realisable values of its inventories and the review led to a write down of inventories to net realisable value of $Nil, $48,019 and $22,281 respectively as an expense and included in cost of sales in the Groups prot or loss.
A-34
9.
Property held for sale

2010 $ Balance at beginning of nancial year Addition during the nancial year Disposal during the nancial year Balance at end of nancial year 2011 $ 738,604 738,604 2012 $ 738,604 (738,604)
As at 31 December 2011, the fair value of property held for sale was $1,408,094 representing the net proceed of total consideration offered by a third party to acquire such property. In March 2012, the Group disposed the property held for sales and recognised a gain on disposal of property held for sale amounted to $669,490 which included in the Groups prot or loss during nancial year ended 31 December 2012. 10. Trade and other receivables
2010 $ Trade receivables - third parties - related parties Less: Allowance for impairment loss on third parties trade receivables Non-trade receivables - third parties - related parties - directors of the Company Utilities and rental deposits 84,637 17,276 101,913 115,536 6,149,114 36,137 280,858 24,470 341,465 95,760 6,662,514 60,468 198,772 259,240 116,659 7,142,673 5,991,098 216,039 6,207,137 (275,472) 5,931,665 6,362,410 6,362,410 (137,121) 6,225,289 7,005,166 7,005,166 (238,392) 6,766,774 2011 $ 2012 $
Trade receivables are unsecured, non-interest bearing and generally on 30 to 60 days credit terms. The non-trade amounts due from related parties and director of the Company are unsecured, noninterest bearing and repayable on demand. Movements in allowance for impairment loss on third parties trade receivables were as follows:
2010 $ Balance at beginning of nancial year Allowance made during the nancial year Allowance written back during the nancial year Amount written off Balance at end of nancial year 310,472 (35,000) 275,472 2011 $ 275,472 54,279 (6,000) (186,630) 137,121 2012 $ 137,121 126,919 (25,648) 238,392
A-35
10.
Trade and other receivables (Continued) The allowance for impairment loss on third parties trade receivables amounting to $Nil, $54,279, and $126,919 were recognised in the Groups prot or loss subsequent to the debt recovery assessment performed on trade receivables by management as at 31 December 2010, 2011 and 2012 respectively. As at 31 December 2010, 2011 and 2012, when the related trade receivables were recovered, allowance written back of $35,000, $6,000, and $25,648 respectively were recognised in the Groups prot or loss. As at 31 December 2010, 2011 and 2012, retention sum amounting to $58,309, $115,593, and $24,880 respectively were included in the third parties trade receivables. Trade and other receivables are denominated in the following currencies:
2010 $ Singapore dollar Ringgit Malaysia United States dollar Euro Hong Kong dollar Others 5,428,045 207,242 265,754 248,073 6,149,114 2011 $ 6,127,970 459,347 75,197 6,662,514 2012 $ 6,519,776 582,743 15,284 2,193 15,857 6,820 7,142,673
11.
Cash and cash equivalents

2010 $ Fixed deposits with banks Cash and bank balances Cash and cash equivalents as per combined statements of nancial position Less: Bank overdrafts Fixed deposits pledged Cash and cash equivalents as per combined statements of cash ows 126,713 1,051,878 1,178,591 (12,419) (126,713) 1,039,459 2011 $ 252,767 1,692,562 1,945,329 (31,951) (252,767) 1,660,611 2012 $ 808,115 5,393,007 6,201,122 (147) (662,211) 5,538,764
Fixed deposits are placed for a period of 12 months and bear effective interest rates of 0.10% to 0.35% per annum for the nancial years ended 31 December 2010, 2011 and 2012. As at 31 December 2010, 2011 and 2012, xed deposit of the Group amounting to $126,713, $252,767 and $808,115 respectively were pledged to a bank to secure bankers guarantee facility amounting to $126,713, $252,767 and $808,115 respectively.
A-36
11.
Cash and cash equivalents (Continued) Cash and cash equivalents included in the combined statements of financial position are denominated in the following currencies:
2010 $ Singapore dollar Ringgit Malaysia United States dollar Euro 1,037,598 57,433 83,193 367 1,178,591 2011 $ 1,776,021 41,945 126,996 367 1,945,329 2012 $ 6,003,897 30,748 166,477 6,201,122
12.
Trade and other payables

2010 $ Trade payables - third parties - related parties Non-trade payables - third parties - directors of the Company Accrued directors fees Accrued operating expenses 88,402 802,149 890,551 459,811 84,182 3,456,967 76,786 536,137 612,923 1,050,000 283,585 3,575,993 29,655 29,655 450,000 500,021 3,533,568 1,990,689 31,734 2,022,423 1,629,485 1,629,485 2,479,967 73,925 2,553,892 2011 $ 2012 $
Trade payables are unsecured, non-interest bearing and are normally settled between 30 to 90 days terms. The non-trade amount due to directors of the Company are unsecured, non-interest bearing and repayable on demand. Trade and others payables are denominated in the following currencies:
2010 $ Singapore dollar Ringgit Malaysia United States dollar Euro Chinese renminbi Hong Kong dollar Others 3,203,255 195,744 32,577 3,518 3,630 18,166 77 3,456,967 2011 $ 3,363,459 86,536 2,640 102,763 20,065 524 6 3,575,993 2012 $ 2,954,084 263,136 56,828 253,995 5,525 3,533,568
A-37
13.
Borrowings
2010 $ Current liabilities Unsecured Bank overdrafts Trust receipts Term loan I Term loan II Term loan III Term loan IV Secured Term loan V Term loan VI Term loan VII Term loan VIII Term loan IX 15,617 12,999 25,781 2,328,518 Non-current liabilities Secured Term loan V Term loan VI Term loan VII Term loan VIII Term loan IX Total borrowings 490,613 294,578 440,378 1,225,569 3,554,087 460,520 470,689 460,549 369,875 1,761,633 3,258,491 434,497 433,322 867,819 2,131,955 16,462 23,838 16,084 14,278 1,496,858 17,550 34,479 1,264,136 (i) (ii) (i) (ii) (i) (ii) (i) (ii) 12,419 1,507,738 80,277 132,490 61,421 20,219 22,225 37,022 270,119 130,191 31,951 1,079,108 84,419 54,333 24,841 151,544 147 1,151,009 60,951 2011 $ 2012 $
(i)
Portion of term loan due for repayment within one nancial year which are subject to a repayment on demand clause. Portion of term loan due for repayment after one nancial year which are subject to a repayment on demand clause.
(ii)
A-38
13.
Borrowings (Continued) Non-current borrowings are repayable as follows:

2010 $ In the second nancial year In the third nancial year In the fourth nancial year In the fth nancial year After ve nancial years 53,047 52,790 54,746 57,539 1,007,447 1,225,569 2011 $ 82,358 80,626 83,053 87,403 1,428,193 1,761,633 2012 $ 55,241 57,062 58,958 60,930 635,628 867,819
During the nancial years ended 31 December 2010, 2011 and 2012, the average effective interest rates per annum of the borrowings were as follows:
2010 % Bank overdrafts Trust receipts Term loan I Term loan II Term loan III Term loan IV Term loan V Term loan VI Term loan VII Term loan VIII Term loan IX 2.94 4.83 2.66 2.63 4.62 2.91 3.06 2.66 2.40 2011 % 3.00 4.99 2.66 2.63 2.91 3.06 2.47 2.58 2.57 2012 % 3.00 4.43 2.66 3.06 2.47
Borrowings are arranged at oating rates, thus exposing the Group to cash ow interest rate risk (Note 27.2). As at 31 December 2010, 2011 and 2012, the fair values of the non-current borrowings were approximately $1,140,000, $1,559,000 and $779,000 respectively. Bank overdrafts are repayable on demand and trust receipts have maturities of between 75 days to 120 days. Term loan I from a bank was repayable over a period of 4 years by monthly instalments commencing from October 2009. As at 31 December 2010, 2011 and 2012, term loan I is supported by joint and several guarantees of certain directors of the Company. Term loan II from a bank was repayable over a period of 3 years by monthly instalments commencing from June 2009. As at 31 December 2010 and 2011, term loan II is supported by joint and several guarantees of certain directors of the Company. Term loan II was fully settled during the nancial year ended 31 December 2012. Term loan III from a bank was repayable over a period of 5 years by monthly instalments, commencing from September 2008. As at 31 December 2010, term loan III is supported by joint and several guarantees of certain directors of the Company. Term loan III was fully settled during the nancial year ended 31 December 2011. A-39
13.
Borrowings (Continued) Term loan IV from a nancial institution was repayable over a period of 2 years by monthly instalments commencing from August 2010. As at 31 December 2010 and 2011, term loan IV is supported by joint and several guarantees of certain directors of the Company. Term loan IV was fully settled during the nancial year ended 31 December 2012. Term loan V from a bank was repayable over a period of 20 years by monthly instalments commencing from July 2008. As at 31 December 2010, 2011 and 2012, term loan V is secured by legal mortgage on freehold land and building with a carrying amount of $548,395, $528,683 and $507,045 respectively and personal guarantee from a director of a subsidiary amounting to $647,038, $632,987, $Nil respectively, and supported by joint and several guarantees of certain directors of the subsidiaries. In May 2012, the personal guarantee from a director of a subsidiary was released by the bank. Term loan VI from a bank was repayable over a period of 18 years by monthly instalments commencing from June 2009. As at 31 December 2010, term loan VI is secured by legal mortgage on leasehold property with a carrying amount of $208,541 and investment properties with a carrying amount of $208,541 and supported by joint and several guarantees of certain directors of the Company. In October 2011, term loan VI was fully settled upon the disposal of such leasehold property to a third party. Term loan VII from a bank was repayable over a period of 18 years by monthly instalments commencing from May 2010. As at 31 December 2010, 2011 and 2012, term loan VII is secured by legal mortgage on leasehold property with a carrying amount of $298,974, $576,336 and $Nil respectively and investment property with a carrying amount of $298,974, $Nil and $554,723 respectively and supported by joint and several guarantees of certain directors of the Company. Term loan VIII from a bank was repayable over a period of 17 years by monthly instalments commencing from June 2011. As at 31 December 2011, term loan VIII is secured by legal mortgage on construction-in-progress with a carrying amount of $916,211 and supported by joint and several guarantees of certain directors of the Company. In September 2012, term loan VIII was fully settled upon the disposal of such construction-in-progress to a third party. Term loan IX from a bank was repayable over a period of 17 years by monthly instalments commencing from May 2011. As at 31 December 2011, term loan IX is secured by legal mortgage on property held for sale with a carrying amount of $738,604 and supported by joint and several guarantees of certain directors of the Company. In March 2012, term loan IX was fully settled upon the disposal of such property held for sale to a third party. As at 31 December 2010, 2011 and 2012 current borrowings in respect of the term loan I, II, III and IV, were not scheduled for repayment within twelve months from the end of the respective nancial years but were classied as current liabilities as the Group did not have the unconditional right at the end of the respective nancial years to defer settlement for at least twelve months after the end of the respective nancial years and the loan can be recalled by the bank or nancial institution lenders at any times even there is no default. The Group is up to date with the scheduled repayments of the term loans and do not consider it probable that the bank or nancial institution will exercise its discretion to demand repayment for so long as the Group continue to meet the scheduled repayments. Further details of the management of liquidity risk are set out in Note 27.3 to the combined nancial statements.
A-40
13.
Borrowings (Continued) As at the end of the respective reporting periods, the Group had facilities as follows:
2010 $ Facilities granted Facilities utilised 8,102,918 3,680,800 2011 $ 8,314,110 3,511,257 2012 $ 6,490,799 2,458,330
As at 31 December 2010, 2011 and 2012, the facilities amounting to $8,102,918, $8,314,110, and $6,490,799 granted to the Group are supported by joint and several guarantees of certain directors of the Company. Borrowings are denominated in the following currencies:
2010 $ Singapore dollar Ringgit Malaysia United States dollar Euro Hong Kong dollar 2,315,246 506,372 271,972 397,622 62,875 3,554,087 2011 $ 2,387,457 476,982 83,436 244,330 66,286 3,258,491 2012 $ 1,085,754 452,047 313,992 249,264 30,898 2,131,955
14.
Finance lease payables

Minimum lease payments $ 2010 Within one nancial year After one nancial year but within ve nancial years After ve nancial years Total non-current nance lease payables 149,440 313,001 28,750 341,751 491,191 2011 Within one nancial year After one nancial year but within ve nancial years After ve nancial years Total non-current nance lease payables 124,150 265,601 216,403 482,004 606,154 2012 Within one nancial year After one nancial year but within ve nancial years After ve nancial years Total non-current nance lease payables 101,802 248,892 166,443 415,335 517,137 (21,663) (52,160) (14,017) (66,177) (87,840) 80,139 196,732 152,426 349,158 429,297 (27,443) (58,784) (23,209) (81,993) (109,436) 96,707 206,817 193,194 400,011 496,718 (25,729) (42,676) (783) (43,459) (69,188) 123,711 270,325 27,967 298,292 422,003 Future nance lease charges $ Present value of minimum lease payment $
A-41
14.
Finance lease payables (Continued) The nance lease term range from 4 to 10 years. The effective interest rates for the nance lease obligations range from between 4.17% to 9.24%, 5.26% to 9.24% and 6.1% to 9.24% per annum respectively for the nancial years ended 31 December 2010, 2011 and 2012. As at the end of the respective reporting periods, the fair values of nance lease payables approximate their carrying amounts. All leases are on xed payment basis and no arrangements have been entered into for contingent rental payments. The Groups obligations under nance leases are secured by the lessors title to the leased assets, which will revert to the lessors in the event of default by the Group. Finance lease payables are denominated in Singapore dollar.
15.
Share capital As the Company was incorporated only on 9 May 2013, for the purpose of these combined nancial statements, the share capital as at 31 December 2010, 2011 and 2012 represents the aggregation of the Groups share in the paid-up capital of Qson International Pte. Ltd. and Qson Kitchen Equipment Pte Ltd. The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares have no par value and carry one vote per share without restriction.
16.
Other reserves
2010 $ Merger reserve Foreign currency translation account 248,938 (49,021) 199,917 2011 $ 248,938 (53,531) 195,407 2012 $ 74,277 (32,545) 41,732
Merger reserve Merger reserve represents the difference between the consideration paid and the share capital of subsidiaries acquired. Foreign currency translation account The foreign currency translation account comprises all foreign exchange differences arising from the translation of the nancial statements of foreign operations whose functional currencies are different from that of the Groups presentation currency and is non-distributable.
A-42
17.
Revenue
2010 $ Fabrication and distribution of goods Maintenance and services income 9,860,967 5,323,649 15,184,616 2011 $ 10,272,842 6,142,532 16,415,374 2012 $ 10,793,388 5,835,128 16,628,516
18.
Other income
2010 $ Government grants Allowance for impairment loss on third parties trade receivables written back Net surplus from Vietnam project Rental income Recharge of utilities Scrap sales Others 35,000 33,365 25,080 11,181 104,626 2011 $ 2,353 6,000 57,698 12,327 24,582 19,022 121,982 2012 $ 33,228 25,648 23,553 64,278 20,111 28,915 195,733
19.
Finance costs
2010 $ Interest expenses - bank overdrafts - trust receipts - term loans - nance leases - others 4,509 76,938 86,246 32,879 32,481 233,053 4,607 62,813 71,861 41,394 29,878 210,553 233 48,788 62,154 25,753 18,437 155,365 2011 $ 2012 $
A-43
20.
Prot before income tax In addition to the charges and credits disclosed elsewhere in the notes to the combined nancial statements, the above includes the following charges:
2010 $ Cost of sales Depreciation of property, plant and equipment Cost of materials Inventories written down Operating lease expenses Employee benet expenses - salaries, bonus and other benets - dened contribution plans Distribution costs Depreciation of property, plant and equipment Allowance for impairment loss on third parties trade receivables Bad third parties trade receivables written off Carriage outwards Commission Transportation Employee benet expenses - salaries, bonus and other benets - dened contribution plans Administrative expenses Depreciation of property, plant and equipment Depreciation of investment properties Plant and equipment written off Foreign exchange loss, net Operating lease expenses Directors fees Employee benet expenses - salaries, bonus and other benets - dened contribution plans 919,946 104,698 1,062,697 81,792 1,243,251 89,788 61,842 8,087 10,333 65,083 61,938 472,363 81,153 3,358 3,134 14,412 52,742 600,000 71,880 12,608 5,256 68,641 463,352 416,528 35,182 418,111 40,688 436,322 42,222 138,952 1,078 142,847 59,622 164,184 131,120 54,279 190,875 120,401 148,987 173,247 119,204 126,919 19,815 76,724 117,797 108,157 2,194,675 68,297 2,228,855 209,302 2,193,638 235,747 84,510 7,562,447 220,518 45,966 7,286,952 48,019 228,404 13,555 7,214,279 22,281 169,506 2011 $ 2012 $
Depreciation of property, plant and equipment are recognised in the following line items of the Groups prot or loss:
2010 $ Cost of sales Distribution costs Administrative expenses 84,510 138,952 61,842 285,304 2011 $ 45,966 131,120 81,153 258,239 2012 $ 13,555 119,204 71,880 204,639
A-44
20.
Prot before income tax (Continued) Employee benet expenses are recognised in the following line items of the Groups prot or loss:
2010 $ Cost of sales Distribution costs Administrative expenses 2,262,972 451,710 1,024,644 3,739,326 2011 $ 2,438,157 458,799 1,144,489 4,041,445 2012 $ 2,429,385 478,544 1,333,039 4,240,968
Employee benet expenses include the remuneration of Directors and other key management personnel as disclosed in Note 23 to the combined nancial statements. 21. Income tax expense
2010 $ Current income tax - current nancial year - under-provision in prior nancial years Deferred tax - current nancial year - over-provision in prior nancial years Total income tax expense recognised in prot or loss 141,695 6,465 6,465 325,653 (8,743) (3,376) (12,119) 382,410 141,695 141,695 319,188 319,188 389,859 4,670 394,529 2011 $ 2012 $
Reconciliation of effective income tax rate

2010 $ Prot before income tax Income tax calculated at Singapores statutory tax rate of 17% Effect of different tax rate in other countries Tax effect of income not subject to income tax Tax effect of non-deductible expenses for income tax purposes Tax effect of tax exempt income Deferred tax assets not recognised Utilisation of deferred tax assets not recognised previously Under-provision of current income tax in prior nancial years Over-provision of deferred tax in prior nancial years Corporate tax rebate Others 896,685 2011 $ 2,630,025 2012 $ 4,261,535
152,436 (6,258) (38,057) 51,138 (30,847) 31,192 (10,000) (7,909) 141,695
447,104 861 (119,378) 31,285 (29,232) (19,693) (5,000) 19,706 325,653
724,461 1,342 (348,344) 41,319 (26,702) (1,706) 4,670 (3,376) (5,000) (4,254) 382,410
A-45
21.
Income tax expense (Continued) Unrecognised deferred tax assets

2010 $ Balance at beginning of nancial year Amount not recognised during nancial year Utilisation of deferred tax assets not recognised previously Currency re-alignment Balance at end of nancial year 78,200 31,192 1,452 110,844 2011 $ 110,844 (19,693) (2,136) 89,015 2012 $ 89,015 (1,706) (2,131) 85,178
Unrecognised deferred tax assets are attributable to the following temporary differences:
2010 $ Unutilised tax losses Unabsorbed capital allowances Accelerated tax depreciation 100,073 31,653 (20,882) 110,844 2011 $ 75,516 13,499 89,015 2012 $ 73,690 11,488 85,178
As at 31 December 2010, 2011 and 2012, the Group has unutilised tax losses of approximately $400,000, $302,000 and $295,000 and unabsorbed capital allowances of $127,000, $54,000, and $46,000 respectively available for offset against future taxable prots subject to the agreement by the tax authorities and provisions of the tax legislations of the respective countries in which the Group operates. These deferred tax assets have not been recognised as there is not certain whether future taxable prots will be available against which the Group can utilise these benets. Accordingly, these deferred tax assets have not been recognised in the combined nancial statements in accordance with the accounting policy in Note 3.17 to the combined nancial statements. 22. Earnings per share The basic earnings per share is calculated based on the prot attributable to owners of the Company for each of the nancial year and pre-invitation share capital of 127,000,000 shares. The Company has not granted any options over its shares and consequently there is no dilution of earnings per share. 23. Signicant related party transactions For the purpose of these combined nancial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise signicant inuence over the party in making nancial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common signicant inuence. Related parties may be individuals or other entities.
A-46
23.
Signicant related party transactions (Continued) In addition to the information disclosed elsewhere in the combined nancial statements, the following were signicant related party transactions at rates and terms agreed between the Group with its related parties during the nancial years ended 31 December 2010, 2011 and 2012:
2010 $ With related parties Sales of goods Purchase of goods Rental income Recharge of utilities Advances to With certain directors Directors fees 555,144 1,063,352 114,499 557,956 33,365 25,080 417,310 632,013 599,289 12,327 24,582 840,691 201,663 64,278 2011 $ 2012 $
Compensation of key management personnel Key management personnel are directors of the Company and subsidiaries and those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly, or indirectly. The remuneration of directors of the Company and subsidiaries and key management personnel of the Group during the nancial years ended 31 December 2010, 2011 and 2012 were as follows:
2010 $ Directors of the Company - Short-term employee benets - Post-employment benets - Directors fees Directors of subsidiaries - Directors fees Other key management personnel - Short-term employee benets - Post-employment benets 92,300 10,813 991,123 114,000 15,527 1,207,199 114,000 15,527 1,253,366 22,363 13,352 390,135 25,512 450,000 454,327 23,345 600,000 633,687 26,800 450,000 2011 $ 2012 $
A-47
24.
Operating lease commitments The Group as lessor The Group leased out ofce spaces under non-cancellable operating leases. The leases are contracted for an average of 2 years. The future minimum lease receivables under non-cancellable operating leases contracted for at the end of the reporting period but not recognised as receivables are as follows:
2010 $ Within one nancial year After one nancial year but within ve nancial years 2011 $ 2012 $ 93,600 64,800 158,400
The Group as lessee The Group leases office spaces, warehouses and office equipment under non-cancellable operating leases. The operating lease commitments are based on existing rental rates. The leases have lease term range from 2 to 3 years and rentals are xed during the lease term. As at the end of the reporting period, the future minimum lease payable under non-cancellable operating leases contracted for but not recognised as liabilities were as follows:
2010 $ Within one nancial year After one nancial year but within ve nancial years 207,964 161,641 369,605 2011 $ 151,212 9,990 161,202 2012 $ 173,674 243,138 416,812
25.
Capital commitments As at 31 December 2010, 2011 and 2012, the Group has capital commitments on the constructionin-progress and property held for sale amounting to $1,536,000, $1,909,000 and $Nil respectively.
26.
Segment information Management has determined the operating segment based on the reports reviewed by the chief operating decision maker. For management purposes, the Group is organised into business units based on its services, and has two reportable operating segments as follows: a) b) Fabrication and distribution business Maintenance and servicing business
Fabrication and distribution business sell and manufacture standard and customised kitchen systems as well as kitchen equipment to food and beverage and hospitality services industries. Maintenance and servicing business segment provide preventive maintenance works and repairs on kitchen equipment to ensure that they are in good working condition and functioning properly. Management monitors the operating results of the segment separately for the purposes of making decisions about resources to be allocated and of assessing performance. Segment performance is evaluated based on operating prot or loss which is similar to the accounting prot or loss. A-48
26.
Segment information (Continued) The accounting policies of the operating segments are the same of those described in the summary of signicant accounting policies. There is no asymmetrical allocation to reportable segments. Management evaluates performance on the basis of prot or loss from operation before tax expense not including non-recurring gains and losses. There is no change from prior periods in the measurement methods used to determine reported segment prot or loss. The Group does not have intersegment sales or transfers. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise corporate assets, liabilities and expenses. Segment assets comprise primarily of property, plant and equipment, investment properties, inventories, operating receivables, cash and cash equivalents and exclude tax recoverable. Segment liabilities comprise operating liabilities and exclude tax liabilities. Segment capital expenditure is the total cost incurred during the nancial year to acquire segment assets that are expected to be used for more than one nancial year.
Fabrication and distribution business $ 2010 Revenue External revenue Results Segment results Interest income Finance costs Prot before income tax Income tax expense Prot for the nancial year Non-cash items Plant and equipment written off Gain on disposal of property, plant and equipment Depreciation of property, plant and equipment Depreciation of investment properties Allowance for impairment loss on third parties trade receivables written back Bad third parties trade receivables written off (183) 1,386 (99,941) (1,078) (2,650) (83,492) (10,150) 7,153 (101,871) (8,087) 35,000 (10,333) 5,889 (285,304) (8,087) 35,000 (1,078) 1,853,032 (80,124) 1,772,908 1,385,779 (15,921) 1,369,858 (2,109,295) 222 (137,008) (2,246,081) 1,129,516 222 (233,053) 896,685 (141,695) 754,990 9,860,967 5,323,649 15,184,616
Business Segment
Maintenance and servicing business $
Unallocated $
Total $
A-49
26.
Segment information (Continued)

Fabrication and distribution business $ Maintenance and servicing business $
Business Segment
Unallocated $
Total $
2010 Capital expenditure Property, plant and equipment Investment properties
29,319 29,319
55,000 55,000
763,022 302,576 1,065,598
847,341 302,576 1,149,917
Assets and liabilities Segment assets Liabilities Segment liabilities - Current income tax payable - Deferred tax liabilities
11,153,439
11,153,439
7,433,057 94,602 12,678 7,540,337
7,433,057 94,602 12,678 7,540,337
2011 Revenue External revenue Results Segment results Finance costs Prot before income tax Income tax expense Prot for the nancial year Non-cash items Plant and equipment written off Gain on disposal of property, plant and equipment Depreciation of property, plant and equipment Depreciation of investment properties Inventories written down Allowance for impairment loss on third parties trade receivables Allowance for impairment loss on third parties trade receivables written back Bad third parties trade receivables written off
10,272,842
6,142,532
16,415,374
3,260,517 (64,855) 3,195,662
1,368,280 (26,218) 1,342,062
(1,788,219) (119,480) (1,907,699)
2,840,578 (210,553) 2,630,025 (325,653) 2,304,372
(3,134) (59,216) (48,019) (34,035) (169,774)
(66,735) (20,244) (20,244)
416,708 (132,288) (3,358) 6,000
(3,134) 416,708 (258,239) (3,358) (48,019) (54,279) 6,000 (190,874)
A-50
26.

Business Segment
Unallocated $
Total $
2011 Capital expenditure Property, plant and equipment Property held for sale
387,800 387,800
518,573 738,604 1,257,177
906,373 738,604 1,644,977
Assets and liabilities Segment assets Segment liabilities - Current income tax payable - Deferred tax liabilities
13,586,945 7,331,202 323,640 19,139 7,673,981
13,586,945 7,331,202 323,640 19,139 7,673,981
2012 Revenue External revenue Results Segment results Finance costs Prot before income tax Income tax expense Prot for the nancial year Non-cash items Gain on disposal of property, plant and equipment Gain on disposal of property held for sale Depreciation of property, plant and equipment Depreciation of investment properties Inventories written down Allowance for impairment loss on third parties trade receivables Allowance for impairment loss on third parties trade receivables written back Bad third parties trade receivables written off 10,793,388 5,835,128 16,628,516
3,562,184 3,562,184
1,629,864 (7,150) 1,622,714
(775,148) (148,215) (923,363)
4,416,900 (155,365) 4,261,535 (382,410) 3,879,125
(26,752) (22,281) (61,787) (19,815)
(41,644) (65,132)
972,135 669,490 (136,243) (12,608) 25,648
972,135 669,490 (204,639) (12,608) (22,281) (126,919) 25,648 (19,815)
A-51
26.

Business Segment
Unallocated $
Total $
2012 Capital expenditure Property, plant and equipment Assets and liabilities Segment assets - Current income tax recoverable - Deferred tax assets Segment liabilities - Current income tax payable - Deferred tax liabilities 16,265,161 20,459 5,661 16,291,281 6,094,820 555,545 12,678 6,663,043 16,265,161 20,459 5,661 16,291,281 6,094,820 555,545 12,678 6,663,043 2,849 29,032 963,744 995,625
Geographical information Revenue is based on the country in which the customer is located. Non-current assets comprise primarily of property, plant and equipment and investment properties. Non-current assets are shown by the geographical area in which the assets are located.
Singapore $ 2010 Total revenue from external customers Non-current assets 2011 Total revenue from external customers Non-current assets 2012 Total revenue from external customers Non-current assets 15,038,355 990,013 567,649 573,816 379,917 642,595 16,628,516 1,563,829 14,636,725 1,952,428 876,693 627,919 452,273 422,800 26,883 16,415,374 2,580,347 14,462,708 1,888,985 496,930 557,547 154,552 40,690 29,736 15,184,616 2,446,532 Malaysia $ Vietnam $ Indonesia $ Others $ Total $
A-52
27.
Financial instruments, nancial risks and capital management The Groups activities expose it to credit risks, market risks (including foreign currency risks and interest rates risks) and liquidity risks arising in the ordinary course of business. The Groups overall risk management strategy seeks to minimise adverse effects from the volatility of nancial markets on the Groups nancial performance. The Board of Directors is responsible for setting the objectives and underlying principles of nancial risk management for the Group. The management then establishes the detailed policies such as risk identication and measurement, exposure limits and hedging strategies, in accordance with the objectives and underlying principles approved by the Board of Directors. The Group does not hold or issue derivative nancial instruments for trading purposes or to hedge against uctuations, if any, in interest rate and foreign exchange rate. There has been no change to the Groups exposure to these nancial risks or the manner in which it manages and measures the risk. If necessary, market risk exposures are measured using sensitivity analysis indicated below. 27.1 Credit risks Credit risks refer to the risk that counterparty will default on its contractual obligations resulting in a loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of nancial loss from defaults. The Group performs ongoing credit evaluation of its counterparties nancial condition and generally do not require collaterals. The Group does not have any signicant credit exposure to any single counterparty or any group of counterparties having similar characteristics. The carrying amounts of nancial assets recorded in the combined nancial statements, grossed up for any allowances for impairment losses, represents the Groups maximum exposure to credit risks. The Group does not hold any collateral. The Groups major classes of nancial assets are trade and other receivables and cash and cash equivalents. Trade receivables that are neither past due nor impaired are substantially companies with good collection track record with the Group. Bank deposits are mainly deposits with reputable banks with minimum risk of default. As at the end of the respective reporting periods, the age analysis of trade receivables past due but not impaired is as follows:
2010 2011 $ Past due less than 1 month Past due 1 to 2 months Past due 2 to 3 months Past due over 3 months 1,736,913 1,245,012 382,309 1,576,136 4,940,370 1,102,722 511,389 705,274 1,837,204 4,156,589 2012 $ 1,135,140 42,199 741,255 909,184 2,827,778
A-53
27.
Financial instruments, nancial risks and capital management (Continued) 27.2 Market risks Foreign currency risks The Group incurs foreign currency risk on transactions and balances that are denominated in currencies other than the functional currency of entities within the Group. The Group transacts business in various foreign currencies and therefore is exposed to foreign exchange risk mainly from Ringgit Malaysia, United States dollar, Euro, Chinese renminbi, and Hong Kong dollar transactions. As at the end of the respective reporting periods, the carrying amounts of monetary assets and monetary liabilities denominated in currencies other than the respective functional currency of entities within the Group are as follows:
2010 $ Assets Ringgit Malaysia United States dollar Euro Hong Kong dollar Liabilities Ringgit Malaysia United States dollar Euro Chinese renminbi Hong Kong dollar 304,549 401,140 3,630 81,041 20,462 86,076 347,093 20,065 66,810 109,728 370,820 503,259 30,898 49,284 348,947 248,440 228,369 202,193 367 93,767 181,761 2,196 15,857 2011 $ 2012 $
The Group has investments in foreign subsidiaries, whose net assets are exposed to currency translation risk. The Group does not currently designate its foreign currency denominated debt as a hedging instrument for the purpose of hedging the translation of its foreign operations. Exposure to foreign currency risk is monitored on an ongoing basis in accordance with the Groups risk management policies to ensure that the net exposure is at an acceptable level. Foreign currency sensitivity analysis The following table details the sensitivity to a 5% increase and decrease in the relevant foreign currencies against the functional currency of entities within the Group. The sensitivity rate of 5% is used when reporting foreign currency risk internally to key management personnel and represents the managements assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the end of the respective reporting periods for a 5% change in foreign currency rates.
A-54
27.
Financial instruments, nancial risks and capital management (Continued) 27.2 Market risks (Continued) Foreign currency sensitivity analysis (Continued) The following table details the Groups sensitivity to a 5% change in Singapore dollar against the respective functional currency of the entities within the Group. The sensitivity analysis assumes an instantaneous 5% change in the foreign currency exchange rates from the end of the respective reporting periods, with all other variables held constant. The results of the model are also constrained by the fact that only monetary items, which are denominated in Singapore dollar, are included in the analysis. Consequentially, reported changes in the values of some of the nancial instruments impacting the results of the sensitivity analysis are not matched with the offsetting changes in the values of certain excluded items that those instruments are designed to nance or hedge.
Prot or loss 2011 $
2010 $ Ringgit Malaysia Strengthens against Singapore dollar Weakens against Singapore dollar United States dollar Strengthens against Singapore dollar Weakens against Singapore dollar Euro Strengthens against Singapore dollar Weakens against Singapore dollar Chinese renminbi Strengthens against Singapore dollar Weakens against Singapore dollar Hong Kong dollar Strengthens against Singapore dollar Weakens against Singapore dollar
2012 $
2,464 (2,464)
10,395 (10,395)
(798) 798
2,220 (2,220)
5,806 (5,806)
(9,453) 9,453
(7,635) 7,635
(17,336) 17,336
(25,053) 25,053
(182) 182
(1,003) 1,003
(4,052) 4,052
(3,341) 3,341
(752) 752
Interest rate risks The Groups exposure to market risks for changes in interest rates relates primarily to interest-bearing borrowings as shown in Note 13 to the combined nancial statements. The Groups results are affected by changes in interest rates due to the impact of such changes on interest income and expenses from time deposit and interest-bearing borrowings which are oating interest rates. It is the Groups policy to obtain quotes from reputable banks to ensure that the most favourable rates are made available to the Group. Interest rate sensitivity analysis The sensitivity analysis below has been determined based on the exposure to interest rate risks for nancial liabilities at the end of the respective reporting periods. For oating liabilities, the analysis is prepared assuming the amount of liability outstanding at the end of the respective reporting periods was outstanding for the whole year. The sensitivity analysis assumes an instantaneous 0.5% change in the interest rates from the end of the respective reporting periods, with all variables held constant.
A-55
27.
Financial instruments, nancial risks and capital management (Continued) 27.2 Market risks (Continued) Interest rate sensitivity analysis (Continued) If the interest rate increases or decreases by 0.5%, the Groups prot before income tax will decrease or increase by:
2010 $ Borrowings 17,770 2011 $ 16,292 2012 $ 10,660
27.3 Liquidity risks Liquidity risks refer to the risks in which the Group encounters difculties in meeting its short-term obligations. Liquidity risks are managed by matching the payment and receipt cycle. The Group actively manages its operating cash ows so as to ensure that all payment needs are met. As part of its overall prudent liquidity management, the Group minimises liquidity risk by ensuring the availability of funding through an adequate amount of committed credit facilities from nancial institutions and maintain sufcient levels of cash to meet its working capital requirements. The following tables detail the Groups remaining contractual maturity for its non-derivative nancial instruments. The tables have been drawn up based on undiscounted cash ows of nancial instruments based on the earlier of the contractual date or when the Group is expected to receive or pay. Contractual maturity analysis
After one nancial year but within ve nancial years $
Within one nancial year $ 2010 Financial assets Loan and receivables - Trade and other receivables - Cash and cash equivalents Total loan and receivables Financial liabilities Other nancial liabilities - Trade and other payables - Borrowings - Finance lease payables Total other nancial liabilities 3,456,967 2,498,822 149,440 6,105,229 6,149,114 1,178,781 7,327,895
After ve nancial years $
Total $
6,149,114 1,178,781 7,327,895
430,470 313,001 743,471
1,349,829 28,750 1,378,579
3,456,967 4,279,121 491,191 8,227,279
A-56
27.
Financial instruments, nancial risks and capital management (Continued) 27.3 Liquidity risks (Continued) Contractual maturity analysis (Continued)
Within one nancial year $ 2011 Financial assets Loan and receivables - Trade and other receivables - Cash and cash equivalents Total loan and receivables Financial liabilities Other nancial liabilities - Trade and other payables - Borrowings - Finance lease payables Total other nancial liabilities 2012 Financial assets Loan and receivables - Trade and other receivables - Cash and cash equivalents Total loan and receivables Financial liabilities Other nancial liabilities - Trade and other payables - Borrowings - Finance lease payables Total other nancial liabilities 3,533,568 1,350,455 101,802 4,985,825 7,142,673 6,202,227 13,344,900 3,575,993 1,616,081 124,150 5,316,224 6,662,514 1,945,708 8,608,222
Total $
6,662,514 1,945,708 8,608,222
632,650 265,601 898,251
1,902,272 216,403 2,118,675
3,575,993 4,151,003 606,154 8,333,150
7,142,673 6,202,227 13,344,900
352,642 248,892 601,534
784,502 166,443 950,945
3,533,568 2,487,599 517,137 6,538,304
A-57
27.
Financial instruments, nancial risks and capital management (Continued) 27.3 Liquidity risks (Continued) Contractual maturity analysis (Continued) As at 31 December 2010, 2011 and 2012, included in the borrowings within one nancial year were callable loans as disclosed in Note 13 to the combined nancial statements which have repayment schedules as follows:
Within one nancial year $ 2010 Borrowings 2011 Borrowings 2012 Borrowings 76,058 586,075
Total $
365,683
951,758
69,262
145,320
The repayment terms of the borrowings are disclosed in Note 13 to the combined nancial statements. 27.4 Capital management policies and objectives The Group manages capital to ensure that the Group is able to continue as a going concern and maintain an optimal capital structure so as to maximise shareholders value. The Group is in compliance with all externally imposed capital requirements for the nancial years ended 31 December 2010, 2011 and 2012. The management reviews the capital structure to ensure that the Group is able to service any debt obligations (including principal repayment and interest) based on its operating cash ows. Upon review, the Group will balance its overall capital structure through new share issues and the issue of new debt or the redemption of existing debt, if necessary. The Groups overall strategy remains unchanged during the nancial years ended 31 December 2010, 2011 and 2012. The Group monitors capital based on a gearing ratio, which is net debt divided by total equity plus net debt. The Group includes within net debt, trade and other payables, borrowings and finance lease payables less cash and cash equivalents. Total equity comprises of share capital plus reserves.
A-58
27.
Financial instruments, nancial risks and capital management (Continued) 27.4 Capital management policies and objectives (Continued)
2010 $ Trade and other payables Borrowings Finance lease payables Less: Cash and cash equivalents Net debt/(cash) Total equity Total capital Gearing ratio 3,456,967 3,554,087 422,003 (1,178,591) 6,254,466 3,613,102 9,867,568 63.4% 2011 $ 3,575,993 3,258,491 496,718 (1,945,329) 5,385,873 5,912,964 11,298,837 47.7% 2012 $ 3,533,568 2,131,955 429,297 (6,201,122) (106,302) 9,628,238 9,521,936 n.m.
n.m. - not meaningful as the cash and cash equivalents is higher than all of the liabilities.
27.5 Fair value of nancial assets and nancial liabilities The carrying amounts of current nancial assets and nancial liabilities approximate their respective fair values due to the relatively short-term maturity of these nancial instruments. The fair values of non-current liabilities in relation to borrowings and nancial lease payables are disclosed in Notes 13 and 14 respectively to the combined nancial statements. The fair value of nancial assets and nancial liabilities are determined in accordance with generally accepted pricing models based on discounted cash ow analysis. 28. Events subsequent to the reporting period Subsequent to 31 December 2012, the following events have taken place: 28.1 On 16 May 2013, the Restructuring Exercise was carried out as set out in Note 1.2 to the audited combined nancial statements. 28.2 At an extraordinary general meeting held on 25 June 2013, the shareholders of the Company approved, inter alia, the following: (a) the sub-division of each ordinary share of the Company into 127,000,000 ordinary shares; the conversion of the Company into a public company limited by shares and the consequential change of the name to Singapore Kitchen Equipment Limited; the adoption of a new set of Articles; the listing and quotation of all the issued ordinary shares of the Company (including the new ordinary shares of the Company to be allotted and issued as part of the Invitation) and the performance shares pursuant to the Singapore Kitchen Equipment Performance Share Plan (PSP) to be issued (if any) on Catalist;
(b)
(c) (d)
A-59
28.
Events subsequent to the reporting period (Continued) 28.2 (e) the allotment and issue of the new ordinary shares of the Company which are the subject of the Invitation, on the basis that the new ordinary shares of the Company, when allotted, issued and fully paid-up, will rank pari passu in all respects with the existing issued and fully paid-up ordinary shares of the Company; the authorisation of the Directors, pursuant to Section 161 of the Act, to (i) allot and issue ordinary shares in the Company; and (ii) issue convertible securities and any ordinary shares in the Company pursuant to the convertible securities, whether by way of rights, bonus or otherwise, at any time and upon such terms and conditions, whether for cash or otherwise and for such purposes and to such persons as the Directors shall in their absolute discretion deem t, provided that the aggregate number of ordinary shares to be issued pursuant to such authority shall not exceed 100% of the issued share capital of the Company immediately after the Invitation excluding treasury shares and that the aggregate number of ordinary shares to be issued other than on a pro-rata basis to the then existing shareholders of the Company shall not exceed 50% of the issued share capital of the Company immediately after the Invitation excluding treasury shares. Unless revoked or varied by the Company in general meeting, such authority shall continue in full force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting is required by law or by the Articles to be held, whichever is earlier, except that the Directors shall be authorised to allot and issue new ordinary shares pursuant to the convertible securities notwithstanding that such authority has ceased. For the purposes of this resolution and pursuant to Rules 806(3) and 806(4) of the Catalist Rules, issued share capital of the Company immediately after the Invitation excluding treasury shares shall mean the enlarged issued and paid-up share capital of the Company after the Invitation excluding treasury shares after adjusting for (i) new ordinary shares arising from the conversion or exercise of any convertible securities; (ii) new ordinary shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time such authority is given, provided that the options or awards were granted in compliance with the Catalist Rules; and (iii) any subsequent consolidation or sub-division of shares; and (g) the adoption of the PSP, the rules of which are set out in Rules of the Singapore Kitchen Equipment Performance Share Plan.
(f)
A-60
APPENDIX B DESCRIPTION OF ORDINARY SHARES

The following statements are brief summaries of the rights and privileges of Shareholders conferred by the laws of Singapore and the Articles of our Company. These statements summarise the material provisions of the Articles but are qualied in entirety by reference to the Articles. Ordinary Shares There are no founders, management, deferred or unissued shares reserved for issue for any purpose. We have only one class of shares, namely, our ordinary shares which have identical rights in all respects and rank equally with one another. All of the ordinary shares are in registered form. Our Company may, subject to the provisions of the Companies Act and the rules of the SGX-ST, purchase its Shares. However, it may not, except in circumstances permitted by the Companies Act, grant any nancial assistance for the acquisition or proposed acquisition of its own Shares. New Shares New Shares may only be issued with the prior approval in a general meeting of our Shareholders. The aggregate number of Shares to be issued pursuant to such approval may not exceed 100% (or such other limit as may be prescribed by the SGX-ST) of our issued share capital for the time being, of which the aggregate number of shares to be issued other than on a pro-rata basis to our Shareholders shall not exceed 50% (or such other limit as may be prescribed by the SGX-ST) of our issued share capital for the time being (the percentage of issued share capital being based on our issued Shares at the time such authority is given after adjusting for new Shares arising from the conversion of convertible securities or employee share options on issue at the time such authority is given and any subsequent consolidation or sub-division of Shares). The approval, if granted, will lapse at the conclusion of the annual general meeting following the date on which the approval was granted or the date by which the annual general meeting is required by law to be held, whichever is the earlier but any approval may be previously revoked or varied by our Company in general meeting. Subject to the foregoing, the provisions of the Companies Act and any special rights attached to any class of shares currently issued, all new Shares are under the control of our Board who may allot and issue the same with such rights and restrictions as it may think t. Shareholders Only persons who are registered in the register of Shareholders of our Company and, in cases in which the person so registered is CDP, the persons named as the Depositors in the Depository Register maintained by CDP for the Shares, are recognised as our Shareholders. Our Company will not, except as required by law, recognise any equitable, contingent, future or partial interest in any Share or other rights for any Share other than the absolute right thereto of the registered holder of that Share or of the person whose name is entered in the Depository Register for that Share. Our Company may close the register of Shareholders for any time or times if it provides the SGX-ST at least 10 clear market days notice. However, the register of Shareholders may not be closed for more than 30 days in aggregate in any calendar year. Our Company typically closes the register of Shareholders to determine Shareholders entitlement to receive dividends and other distributions. Transfer of Shares There is no restriction on the transfer of fully paid Shares except where required by law or the Catalist Rules or the rules or by-laws of any stock exchange on which our Company is listed. Our Board may decline to register any transfer of Shares which are not fully paid Shares, or Shares on which our Company has a lien. Our Shares may be transferred by a duly signed instrument of transfer in a form approved by the SGX-ST or any stock exchange on which our Company is listed. Our Board may also decline to register any instrument of transfer unless, among other things, it has been duly stamped and is presented for registration together with the share certicate and such other evidence of title as it may require. Our Company will replace lost or destroyed certicates for Shares if it is properly notied and if the applicant pays a fee which will not exceed S$2 and furnishes any evidence and indemnity that our Board may require.
B-1

General Meetings of Shareholders Our Company is required to hold an annual general meeting every year. Our Board may convene an extraordinary general meeting whenever it thinks t and must do so if Shareholders representing not less than 10% of the total voting rights of all Shareholders request in writing that such a meeting be held. In addition, two or more Shareholders holding not less than 10% of the issued share capital of our Company (excluding treasury shares) may call a meeting. Unless otherwise required by law or by our Articles, voting at general meetings is by ordinary resolution, requiring an afrmative vote of a simple majority of the votes cast at that meeting. An ordinary resolution sufces, for example, for the appointment of directors. A special resolution, requiring the afrmative vote of at least 75% of the votes cast at the meeting, is necessary for certain matters under Singapore law, including voluntary winding up, amendments to the Memorandum of Association and our Articles, a change of the corporate name and a reduction in the share capital. Our Company must give at least 21 days notice in writing for every general meeting convened for the purpose of passing a special resolution. Ordinary resolutions generally require at least 14 days notice in writing. The notice must be given to every Shareholder who has supplied our Company with an address in Singapore for the giving of notices and must set forth the place, the day and the hour of the meeting and, in the case of special business, the general nature of that business. Voting Rights A Shareholder is entitled to attend, speak and vote at any general meeting, in person or by proxy. Proxies need not be a Shareholder. A person who holds ordinary shares through the SGX-ST book-entry settlement system will only be entitled to vote at a general meeting as a Shareholder if his name appears on the Depository Register maintained by CDP 48 hours before the general meeting. Except as otherwise provided in our Articles, two or more Shareholders must be present in person or by proxy to constitute a quorum at any general meeting. Under the Articles, on a show of hands, every Shareholder present in person and by proxy shall have one vote (provided that in the case of a Shareholder who is represented by more than one (1) proxy (subject to the provisions of the Companies Act), only one of the proxies as determined by that Shareholder or, failing such determination, by the Chairman of the meeting in his sole discretion shall be entitled to vote on a show of hands), and on a poll, every Shareholder present in person or by proxy shall have one vote for each Share which he holds or represents. A poll may be demanded in certain circumstances, including by the chairman of the meeting or by any Shareholder or Shareholders present in person or by proxy and representing not less than 10% of the total voting rights of all Shareholders having the right to attend and vote at the meeting or by not less than two Shareholders present in person or by proxy and entitled to vote. In the case of an equality of vote, whether on a show of hands or a poll, the chairman of the meeting shall be entitled to a casting vote. Dividends Our Company may, by ordinary resolution of our Shareholders, declare dividends at a general meeting, but it may not pay dividends in excess of the amount recommended by our Board. Our Company must pay all dividends out of its prots. Our Board may also declare an interim dividend without the approval of our Shareholders. All dividends are paid pro-rata among our Shareholders in proportion to the amount paid up on each Share, unless the rights attaching to an issue of any Share provide otherwise. Unless otherwise directed, dividends are paid by cheque or warrant sent through the post to each Shareholder at his registered address. Notwithstanding the foregoing, the payment by our Company to CDP of any dividend payable to a Shareholder whose name is entered in the Depository Register shall, to the extent of payment made to CDP, discharge our Company from any liability to that Shareholder in respect of that payment. Bonus and Rights Issues Our Board may, with approval by our Shareholders at a general meeting, capitalise any reserves or prots and distribute the same as bonus Shares credited as paid-up to our Shareholders in proportion to their shareholdings. Our Board may also issue rights to take up additional Shares to Shareholders in proportion to their shareholdings. Such rights are subject to any conditions attached to such issue and the regulations of any stock exchange on which our Company is listed.
B-2

Take-overs Under the Singapore Code on Take-overs and Mergers (Singapore Take-over Code), issued by the Authority pursuant to section 321 of the SFA, any person acquiring an interest, either on his own or together with parties acting in concert with him, in 30% or more of the voting Shares must extend a takeover offer for the remaining voting Shares in accordance with the provisions of the Singapore Takeover Code. In addition, a mandatory takeover offer is also required to be made if a person holding, either on his own or together with parties acting in concert with him, between 30% and 50% of the voting rights acquires additional voting shares representing more than 1% of the voting shares in any six month period. Under the Singapore Take-over Code, the following individuals and companies will be presumed to be persons acting in concert with each other unless the contrary is established: (a) the following companies: (i) (ii) (iii) (iv) (v) (vi) (vii) a company; the parent company of (i); the subsidiaries of (i); the fellow subsidiaries of (i); the associated companies of (i), (ii), (iii) or (iv); companies whose associated companies include any of (i), (ii), (iii), (iv) or (v); and any person who has provided nancial assistance (other than a bank in the ordinary course of business) to any of the above for the purchase of voting rights;
(b)
a company with any of its directors (together with their close relatives, related trusts as well as companies controlled by any of the directors, their close relatives and related trusts); a company with any of its pension funds and employee share schemes; a person with any investment company, unit trust or other fund whose investment such person manages on a discretionary basis, but only in respect of the investment account which such person manages; a nancial or other professional adviser, including a stockbroker, with its customer in respect of the shareholdings of: (i) the adviser and persons controlling, controlled by or under the same control as the adviser; and all the funds which the adviser manages on a discretionary basis, where the shareholdings of the adviser and any of those funds in the customer total 10% or more of the customers equity share capital;
(c) (d)
(e)
(ii)
(f)
directors of a company (together with their close relatives, related trusts and companies controlled by any of such directors, their close relatives and related trusts) which is subject to an offer or where the directors have reason to believe a bona de offer for their company may be imminent; partners; and
(g)
B-3

(h) the following persons and entities: (i) (ii) (iii) (iv) (v) (vi) an individual; the close relatives of (i); the related trusts of (i); any person who is accustomed to act in accordance with the instructions of (i); companies controlled by any of (i), (ii), (iii) or (iv); and any person who has provided nancial assistance (other than a bank in the ordinary course of business) to any of the above for the purchase of voting rights.
Under the Singapore Take-over Code, a mandatory offer made with consideration other than cash must be accompanied by a cash alternative at not less than the highest price paid by the offeror or any person acting in concert within the preceding six months. Liquidation or Other Return of Capital If our Company is liquidated or in the event of any other return of capital, holders of Shares will be entitled to participate in any surplus assets in proportion to their shareholdings, subject to any special rights attaching to any other class of shares. Indemnity As permitted by Singapore law, our Articles provide that, subject to the Companies Act, our Board and ofcers shall be entitled to be indemnied by our Company against any liability incurred in defending any proceedings, whether civil or criminal, which relate to anything done or omitted to have been done as an ofcer, director or employee and in which judgment is given in their favour or in which they are acquitted or in connection with any application under any statute for relief from liability in respect thereof in which relief is granted by the court. Our Company may not indemnify our Directors and ofcers against any liability which by law would otherwise attach to them in respect of any negligence, default, breach of duty or breach of trust of which they may be guilty in relation to our Company. Limitations on Rights to Hold or Vote Shares Except as described in Voting Rights and Take-overs above, there are no limitations imposed by Singapore law or by our Articles on the rights of non-resident Shareholders to hold or vote in respect of our Shares. Minority Rights The rights of minority Shareholders of Singapore-incorporated companies are protected under Section 216 of the Companies Act, which gives the Singapore courts a general power to make any order, upon application by any Shareholder of our Company, as they think t to remedy any of the following situations: (a) our affairs are being conducted or the powers of our Board are being exercised in a manner oppressive to, or in disregard of the interests of, one or more of our Shareholders; or we take an action, or threaten to take an action, or our Shareholders pass a resolution, or propose to pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more of our Shareholders, including the applicant.
(b)
B-4

Singapore courts have wide discretion as to the reliefs they may grant and those reliefs are in no way limited to those listed in the Companies Act itself. Without prejudice to the foregoing, Singapore courts may: (a) (b) (c) direct or prohibit any act or cancel or vary any transaction or resolution; regulate the conduct of our affairs in the future; authorise civil proceedings to be brought in the name of, or on behalf of, our Company by a person or persons and on such terms as the court may direct; provide for the purchase of a minority Shareholders shares by our other Shareholders or by us and, in the case of a purchase of Shares by us, a corresponding reduction of our share capital; provide that our Memorandum of Association or our Articles be amended; or provide that we be wound up.
(d)
(e) (f)
B-5
APPENDIX C SUMMARY OF SELECTED ARTICLES OF ASSOCIATION OF OUR COMPANY

The discussion below provides information about certain provisions of our Articles of Association. This description is only a summary and is qualied by reference to our Articles of Association, a copy of which will be displayed at our registered ofce at 115A Commonwealth Drive #01-27/28 Tanglin Halt Industrial Estate, Singapore 149596. The following are extracts of the provisions in our Articles relating to: (a) A directors power to vote on a proposal, arrangement or contract in which he is interested Article 90(1) Powers of Directors to contract with Company No Director or intending Director shall be disqualied by his ofce from contracting or entering into any arrangement with the Company either as vendor, purchaser or otherwise nor shall such contract or arrangement or any contract or arrangement entered into by or on behalf of the Company in which any Director shall be in any way interested be avoided nor shall any Director so contracting or being so interested be liable to account to the Company for any prot realised by any such contract or arrangement by reason only of such Director holding that ofce or of the duciary relation thereby established but every Director shall observe the provisions of Section 156 of the Companies Act relating to the disclosure of the interests of the Directors in transactions or proposed transactions with the Company or of any ofce or property held by a Director which might create duties or interests in conict with his duties or interests as a Director and any transactions to be entered into by or on behalf of the Company in which any Director shall be in any way interested shall be subject to any requirements that may be imposed by the Exchange. No Director shall vote in respect of any contract, arrangement or transaction in which he has directly or indirectly a personal material interest as aforesaid or in respect of any allotment of shares in or debentures of the Company to him and if he does so vote his vote shall not be counted. Article 90(2) Relaxation of restriction on voting A Director, notwithstanding his interest, may be counted in the quorum present at any meeting where he or any other Director is appointed to hold any ofce or place of prot under the Company, or where the Directors resolve to exercise any of the rights of the Company (whether by the exercise of voting rights or otherwise) to appoint or concur in the appointment of a Director to hold any ofce or place of prot under any other company, or where the Directors resolve to enter into or make any arrangements with him or on his behalf pursuant to these Articles or where the terms of any such appointment or arrangements as hereinbefore mentioned are considered, and he may vote on any such matter other than in respect of the appointment of or arrangements with himself or the xing of the terms thereof. Article 91(3) Exercise of voting power The Directors may exercise the voting power conferred by the shares in any company held or owned by the Company in such manner and in all respects as the Directors think t in the interests of the Company (including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors of such company or voting or providing for the payment of remuneration to the directors of such company) and any such Director of the Company may vote in favour of the exercise of such voting powers in the manner aforesaid notwithstanding that he may be or be about to be appointed a director of such other company. (b) A directors power to vote on remuneration (including pension or other benets) for himself or for any other director and whether the quorum at a meeting of the board of directors to vote on directors remuneration may include the director whose remuneration is the subject of the vote Article 86(1) - Fees The fees of the Directors shall be determined from time to time by the Company in general meetings and such fees shall not be increased except pursuant to an ordinary resolution passed at a general meeting where notice of the proposed increase shall have been given in the notice convening the meeting. Such fees shall be divided among the Directors in such proportions and manner as they may agree and in default of agreement equally, except that in the latter event any Director who shall hold ofce for part only of the period in respect of which such fee is payable shall be entitled only to rank in such division for the proportion of fee related to the period during which he has held ofce. C-1

Article 86(2) Extra remuneration Any Director who is appointed to any executive ofce or serves on any committee or who otherwise performs or renders services, which, in the opinion of the Directors, are outside his ordinary duties as a Director, may be paid such extra remuneration as the Directors may determine, subject however as is hereinafter provided in this Article. Article 86(3) Remuneration of director The fees (including any remuneration under Article 86(2) above) in the case of a Director other than an Executive Director shall be payable by a xed sum and shall not at any time be by commission on or percentage of the prots or turnover, and no Director whether an Executive Director or otherwise shall be remunerated by a commission on or percentage of turnover. Article 87 Expenses The Directors shall be entitled to be repaid all travelling or such reasonable expenses as may be incurred in attending and returning from meetings of the Directors or of any committee of the Directors or general meetings or otherwise howsoever in or about the business of the Company in the course of the performance of their duties as Directors. Article 88 Pensions to directors and dependents Subject to the Companies Act, the Directors on behalf of the Company may pay a gratuity or other retirement, superannuation, death or disability benets to any Director or former Director who had held any other salaried ofce or place of prot with the Company or to his widow or dependants or relations or connections or to any persons in respect of and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance. Article 89 Benets for employees The Directors may procure the establishment and maintenance of or participate in or contribute to any non-contributory or contributory pension or superannuation fund or life assurance scheme or any other scheme whatsoever for the benet of and pay, provide for or procure the grant of donations, gratuities, pensions, allowances, benets or emoluments to any persons (including Directors and other ofcers) who are or shall have been at any time in the employment or service of the Company or of the predecessors in business of the Company or of any subsidiary company, and the wives, widows, families or dependants of any such persons. The Directors may also procure the establishment and subsidy of or subscription and support to any institutions, associations, clubs, funds or trusts calculated to be for the benet of any such persons as aforesaid or otherwise to advance the interests and well-being of the Company or of any such other company as aforesaid or of its Members and payment for or towards the insurance of any such persons as aforesaid, and subscriptions or guarantees of money for charitable or benevolent objects or for any exhibition or for any public, general or useful object. Article 94 Remuneration of Chief Executive Ofcer/Managing Director The remuneration of a Chief Executive Ofcer/Managing Director (or any Director holding an equivalent appointment) shall from time to time be xed by the Directors and may subject to these Articles be by way of salary or commission or participating in prots or by any or all of these modes but he shall not under any circumstances be remunerated by a commission on or a percentage of turnover.
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Article 103(1) Alternate Directors Any Director of the Company may at any time appoint any person who is not a Director or alternate Director and who is approved by a majority of his co-Directors to be his alternate Director for such period as he thinks t and may at any time remove any such alternate Director from ofce. An alternate Director so appointed shall be entitled to receive from the Company such proportion (if any) of the remuneration otherwise payable to his appointor as such appointor may by notice in writing to the Company from time to time direct, but save as aforesaid he shall not in respect of such appointment be entitled to receive any remuneration from the Company. Any fee paid to an alternate Director shall be deducted from the remuneration otherwise payable to his appointor. (c) The borrowing powers exercisable by the directors and how such borrowing powers may be varied Article 118 Directors borrowing powers The Directors may at their discretion exercise all the powers of the Company to borrow or otherwise raise money, to mortgage, charge or hypothecate all or any property or business of the Company including any uncalled or called but unpaid capital and to issue debentures or give any other security for any debt or obligation of the Company or of any third party. (d) The retirement or non-retirement of a director under an age limit requirement Article 93 Chief Executive Ofcer/Managing Director to be subject to retirement by rotation Any Director who is appointed as a Chief Executive Ofcer/Managing Director (or an equivalent appointment) shall be subject to the same provisions as to retirement by rotation, resignation and removal as the other Directors of the Company. The appointment of any Director to the ofce of Managing Director (or any Director holding an equivalent appointment) shall be automatically determined if he ceases from any cause to be a Director. Article 96(1)(viii) Vacation of ofce of director Subject as herein otherwise provided or to the terms of any subsisting agreement, the ofce of a Director shall be vacated subject to the provisions of the Companies Act, at the conclusion of the Annual General Meeting commencing next after he attains the age of seventy (70) years. Article 98 Retirement of directors by rotation Subject to these Articles and to the Companies Act, at each Annual General Meeting at least one-third of the Directors for the time being (or, if their number is not a multiple of three (3), the number nearest to but not less than one-third) shall retire from ofce by rotation. For the avoidance of doubt, each Director (including a Managing Director) shall retire from ofce at least once every three (3) years. Article 99 Selection of directors to retire The Directors to retire by rotation shall include (so far as necessary to obtain the number required) any Director who is due to retire at the meeting by reason of age or who wishes to retire and not to offer himself for re-election. Any further Directors so to retire shall be those of the other Directors subject to retirement by rotation who have been longest in ofce since their last re-election or appointment or have been in ofce for the three (3) years since their last election. However as between persons who became or were last re-elected Directors on the same day, those to retire shall (unless they otherwise agree among themselves) be determined by lot. A retiring Director shall be eligible for re-election.
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Article 100 Deemed re-elected The Company at the meeting at which a Director retires under any provision of these Articles may by ordinary resolution ll up the vacated ofce by electing a person thereto. In default the retiring Director shall be deemed to have been re-elected, unless: (i) at such meeting it is expressly resolved not to ll up such vacated ofce or a resolution for the re-election of such Director is put to the meeting and lost; or such Director is disqualied under the Companies Act from holding ofce as a Director or has given notice in writing to the Company that he is unwilling to be re-elected; such Director is disqualied from acting as a director in any jurisdiction for reasons other than on technical grounds; or such Director has attained any retiring age applicable to him as a Director.
(ii)
(iii)
(iv) (e)
The number of shares, if any, required for the qualication of a director Article 85 - Qualications A Director need not be a Member and shall not be required to hold any share qualication in the Company and shall be entitled to attend and speak at general meetings but subject to the provisions of the Companies Act he shall not be of or over the age of seventy (70) years at the date of his appointment.
(f)
The rights, preferences and restrictions attaching to each class of shares Article 4 Issue of new shares Subject to the Companies Act and these Articles, no shares may be issued by the Directors without the prior sanction of an ordinary resolution of the Company in general meeting but subject thereto and to Article 47, and to any special rights attached to any shares for the time being issued, the Directors may issue, allot or grant options over or otherwise deal with or dispose of the same to such persons on such terms and conditions and for such consideration and at such time and subject or not to the payment of any part of the amount thereof in cash as the Directors may think t, and any shares may be issued in such denominations or with such preferential, deferred, qualied or special rights, privileges or conditions as the Directors may think t, and preference shares may be issued which are or at the option of the Company are liable to be redeemed, the terms and manner of redemption being determined by the Directors. Article 5(1) Rights attached to certain shares Preference shares may be issued subject to such limitations thereof as may be prescribed by any stock exchange upon which shares in the Company may be listed and the rights attaching to shares other than ordinary shares shall be expressed in the Memorandum of Association or these Articles. The total number of issued preference shares shall not exceed the total number of issued ordinary shares at any time. Preference shareholders shall have the same rights as ordinary shareholders as regards receiving of notices, reports and balance sheets and attending general meetings of the Company. Preference shareholders shall also have the right to vote at any meeting convened for the purpose of reducing the capital or winding up or sanctioning a sale of the undertaking of the Company or where the proposal to be submitted to the meeting directly affects their rights and privileges or when the dividend on the preference shares is more than six (6) months in arrears. Article 5(2) The Company has power to issue further preference capital ranking equally with, or in priority to, preference shares from time to time already issued or about to be issued.
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Article 7(2) Rights of preference shareholders The repayment of preference capital other than redeemable preference or any other alteration of preference shareholder rights may only be made pursuant to a special resolution of the preference shareholders concerned. Provided always that where the necessary majority for such a special resolution is not obtained at the general meeting, consent in writing if obtained from the holders of three-fourths of the preference shares concerned within two (2) months of the general meeting, shall be as valid and effectual as a special resolution carried at the general meeting. Article 16(1) Entitlement to certicate Shares must be allotted and certicates despatched within ten (10) market days of the nal closing date for an issue of shares unless the Exchange shall agree to an extension of time in respect of that particular issue. The Depository must despatch statements to successful investor applicants conrming the number of shares held under their Securities Accounts. Persons entered in the Register of Members as registered holders of shares shall be entitled to certicates within ten (10) market days after lodgement of any transfer. Every registered shareholder shall be entitled to receive share certicates in reasonable denominations for his holding and where a charge is made for certicates, such charge shall not exceed S$2 (or such other fee as the Directors may determine having regard to any limitation thereof as may be prescribed by any stock exchange upon which the shares of the Company may be listed). Where a registered shareholder transfers part only of the shares comprised in a certicate or where a registered shareholder requires the Company to cancel any certicate or certicates and issue new certicates for the purpose of subdividing his holding in a different manner the old certicate or certicates shall be cancelled and a new certicate or certicates for the balance of such shares issued in lieu thereof and the registered shareholder shall pay a fee not exceeding S$2 (or such other fee as the Directors may determine having regard to any limitation thereof as may be prescribed by any stock exchange upon which the shares of the Company may be listed) for each such new certicate as the Directors may determine. Where the member is a Depositor the delivery by the Company to the Depository of provisional allotments or share certicates in respect of the aggregate entitlements of Depositors to new shares offered by way of rights issue or other preferential offering or bonus issue shall to the extent of the delivery discharge the Company from any further liability to each such Depositor in respect of his individual entitlement. Article 21(1) Directors power to decline to register Subject to these Articles, there shall be no restriction on the transfer of fully paid up shares except where required by law or by the rules, bye-laws or listing rules of the Exchange but the Directors may in their discretion decline to register any transfer of shares upon which the Company has a lien and in the case of shares not fully paid up may refuse to register a transfer to a transferee of whom they do not approve. If the Directors shall decline to register any such transfer of shares, they shall give to both the transferor and the transferee written notice of their refusal to register as required by the Companies Act and the listing rules of the Exchange. Article 47 Rights and privileges of new shares Subject to any special rights for the time being attached to any existing class of shares, the new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the general meeting resolving upon the creation thereof shall direct and if no direction be given as the Directors shall determine; subject to the provisions of these Articles and in particular (but without prejudice to the generality of the foregoing) such shares may be issued with a preferential or qualied right to dividends and in the distribution of assets of the Company or otherwise.
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Article 71(1) Voting rights of Members Subject and without prejudice to any special privileges or restrictions as to voting for the time being attached to any special class of shares for the time being forming part of the capital of the Company and to Article 6, each Member entitled to vote may vote in person or by proxy or attorney, and (in the case of a corporation) by a representative. A person entitled to more than one (1) vote need not use all his votes or cast all the votes he uses in the same way. Article 71(3) Notwithstanding anything contained in these Articles, a Depositor shall not be entitled to attend any general meeting and to speak and vote thereat unless his name is certied by the Depository to the Company as appearing on the Depository Register not later than forty-eight (48) hours before the time of the relevant general meeting (the cut-off time) as a Depositor on whose behalf the Depository holds shares in the Company. For the purpose of determining the number of votes which a Depositor or his proxy may cast on a poll, the Depositor or his proxy shall be deemed to hold or represent that number of shares entered in the Depositors Securities Account at the cutoff time as certied by the Depository to the Company, or where a Depositor has apportioned the balance standing to his Securities Account as at the cut-off time between more than one (1) proxy, to apportion the said number of shares between the proxies in the same proportion as specied by the Depositor in appointing the proxies; and accordingly no instrument appointing a proxy of a Depositor shall be rendered invalid merely by reason of any discrepancy between the number of shares standing to the credit of that Depositors Securities Account as at the cut-off time, and the true balance standing to the Securities Account of a Depositor as at the time of the relevant general meeting, if the instrument is dealt with in such manner as aforesaid. Article 72 Voting rights of joint holders Where there are joint holders of any share any one (1) of such persons may vote and be reckoned in a quorum at any meeting either personally or by proxy or by attorney or in the case of a corporation by a representative as if he were solely entitled thereto but if more than one (1) of such joint holders is so present at any meeting then the person present whose name stands rst in the Register of Members or the Depository Register (as the case may be) in respect of such share shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased Member in whose name any share stands shall for the purpose of this Article be deemed joint holders thereof. Article 73 Voting rights of members of unsound mind If a Member be a lunatic, idiot or non-compos mentis, he may vote whether on a show of hands or on a poll by his committee, curator bonis or such other person as properly has the management of his estate and any such committee, curator bonis or other person may vote by proxy or attorney, provided that such evidence as the Directors may require of the authority of the person claiming to vote shall have been deposited at the Ofce not less than forty-eight (48) hours before the time appointed for holding the meeting. Article 74 Right to vote Subject to the provisions of these Articles, every Member either personally or by proxy or by attorney or in the case of a corporation by a representative shall be entitled to be present and to vote at any general meeting and to be reckoned in the quorum thereat in respect of shares fully paid and in respect of partly paid shares where calls are not due and unpaid. In the event a member has appointed more than one (1) proxy, only one (1) proxy is counted in determining the quorum.
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(g) Any change in capital Article 50(1) Power to consolidate, cancel and subdivide shares The Company may by ordinary resolution alter its share capital in the manner permitted under the Companies Act including without limitation: (i) (ii) consolidate and divide all or any of its shares; cancel the number of shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person or which have been forfeited and diminish its share capital in accordance with the Companies Act; subdivide its shares or any of them (subject to the provisions of the Companies Act), provided always that in such subdivision the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; and subject to the provisions of these Articles and the Companies Act, convert any class of shares into any other class of shares.
(iii)
(iv)
Article 50(2) Repurchase of Companys shares The Company may purchase or otherwise acquire its issued shares subject to and in accordance with the provisions of the Companies Act and any other relevant rule, law or regulation enacted or promulgated by any relevant competent authority from time to time (collectively, the Relevant Laws), on such terms and subject to such conditions as the Company may in general meeting prescribe in accordance with the Relevant Laws. Any shares purchased or acquired by the Company as aforesaid may be cancelled or held as treasury shares and dealt with in accordance with the Relevant Laws. On the cancellation of any share as aforesaid, the rights and privileges attached to that share shall expire. In any other instance, the Company may hold or deal with any such share which is so purchased or acquired by it in such manner as may be permitted by, and in accordance with, the Companies Act. Article 51 Power to reduce capital The Company may by special resolution reduce its share capital or any other undistributable reserve in any manner subject to any requirements and consents required by law. Without prejudice to the generality of the foregoing, upon cancellation of any share purchased or otherwise acquired by the Company pursuant to these presents and the Companies Act, the number of issued shares of the Company shall be diminished by the number of shares so cancelled, and where any such cancelled shares were purchased or acquired out of the capital of the Company, the amount of the share capital of the Company shall be reduced accordingly. (h) Any change in the respective rights of the various classes of shares including the action necessary to change the rights, indicating where the conditions are different from those required by the applicable law Article 7(1) Variation of rights If at any time the share capital is divided into different classes, the repayment of preference capital other than redeemable preference capital and the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of the Companies Act, whether or not the Company is being wound up, only be made, varied or abrogated with the sanction of a special resolution passed at a separate general meeting of the holders of shares of the class and to every such special resolution, the provisions of Section 184 of the Companies Act shall, with such adaptations as are necessary, apply. To every such separate general meeting, the provisions of these Articles relating to general meetings shall mutatis mutandis apply; but so that the necessary quorum shall be two (2) persons at least holding
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or representing by proxy or by attorney one-third of the issued shares of the class and that any holder of shares of the class present in person or by proxy or by attorney may demand a poll. Provided always that where the necessary majority for such a special resolution is not obtained at the general meeting, consent in writing if obtained from the holders of three-fourths of the issued shares of the class concerned within two (2) months of the general meeting shall be as valid and effectual as a special resolution carried at the general meeting. Article 8 Creation or issue of further shares with special rights The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall, unless otherwise expressly provided by the terms of issue of the shares of that class or by these Articles, be deemed to be varied by the creation or issue of further shares ranking equally therewith. (i) Any time limit after which a dividend entitlement will lapse and an indication of the party in whose favour this entitlement operates Article 130(1) Unclaimed dividends The payment by the Directors of any unclaimed dividends or other moneys payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof. All dividends unclaimed after being declared may be invested or otherwise made use of by the Directors for the benet of the Company and any dividend unclaimed after a period of six (6) years from the date of declaration of such dividend may be forfeited and if so shall revert to the Company but the Directors may at any time thereafter at their absolute discretion annul any such forfeiture and pay the dividend so forfeited to the person entitled thereto prior to the forfeiture. For the avoidance of doubt no Member shall be entitled to any interest, share of revenue or other benet arising from any unclaimed dividends, howsoever and whatsoever. If the Depositor returns any such dividend or money to the Company, the relevant Depositor shall not have any right or claim in respect of such dividend or money against the Company if a period of six (6) years has elapsed from the date of the declaration of such dividend or the date on which such other money was rst payable. (j) Any limitation on the right to own shares including limitations on the right of non-resident or foreign shareholders to hold or exercise voting rights on the shares Article 11 No trust recognised Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these Articles or by law otherwise provided) any other rights in respect of any share, except an absolute right to the entirety thereof in the person (other than the Depository) entered in the Register of Members as the registered holder thereof or (where the person entered in the Register of Members as the registered holder of a share is the Depository) the person whose name is entered in the Depository Register in respect of that share. Article 20 Person under disability No share shall in any circumstances be transferred to any infant, bankrupt or person of unsound mind but nothing herein contained shall be construed as imposing on the company any liability in respect of the registration of such transfer if the company has no actual knowledge of the same.
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Article 48(1) Issue of new shares to Members Subject to any direction to the contrary that may be given by the Company in general meeting, or except as permitted under the Exchanges listing rules, all new shares shall before issue be offered to the Members in proportion, as nearly as the circumstances admit, to the number of the existing shares to which they are entitled or hold. The offer shall be made by notice specifying the number of shares offered, and limiting a time within which the offer, if not accepted, will be deemed to be declined, and, after the expiration of that time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the Directors may dispose of those shares in such manner as they think most benecial to the Company. The Directors may likewise so dispose of any new shares which (by reason of the ratio which the new shares bear to shares held by persons entitled to an offer of new shares) cannot, in the opinion of the Directors, be conveniently offered under this Article. Article 48(2) Notwithstanding Article 48(1) above but subject to the Companies Act and the byelaws and listing rules of the Exchange, the Company may by ordinary resolution in general meeting give to the Directors a general authority, either unconditionally or subject to such conditions as may be specied in the ordinary resolution to: (i) issue shares in the capital of the Company (whether by way of rights, bonus or otherwise); and/or make or grant Instruments; and/or (notwithstanding the authority conferred by the ordinary resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while the ordinary resolution was in force;
(ii) (iii)
provided that: (a) the aggregate number of shares or Instruments to be issued pursuant to the ordinary resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to the ordinary resolution but excluding shares which may be issued pursuant to any adjustments effected under any relevant Instrument) does not exceed any applicable limits prescribed by the Exchange; in exercising the authority conferred by the ordinary resolution, the Company shall comply with the listing rules for the time being in force (unless such compliance is waived by the Exchange) and the Articles; and (unless revoked or varied by the Company in general meeting) the authority conferred by the ordinary resolution shall not continue in force beyond the conclusion of the Annual General Meeting next following the passing of the ordinary resolution, or the date by which such Annual General Meeting is required by law to be held, or the expiration of such other period as may be prescribed by the Companies Act (whichever is the earliest).
(b)
(c)
Article 48(3) Notwithstanding Article 48(1) above but subject to the Companies Act, the Directors shall not be required to offer any new shares to members to whom by reason of foreign securities laws such offers may not be made without registration of the shares or a prospectus or other document, but may sell the entitlements to the new shares on behalf of such Members in such manner as they think most benecial to the Company.
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APPENDIX D TAXATION
The following is a discussion on certain aspects of the Singapore income tax, capital gains tax, stamp duty, estate duty and Goods and Services Tax (GST) implications pertaining to the acquisition, ownership and disposal of our Shares. The discussion herein is limited to a general description of certain tax implications in Singapore with respect to the ownership of our Shares by Singapore investors, and does not purport to be a comprehensive nor exhaustive description of all of the tax considerations that may be relevant to a decision to purchase our Shares. It also does not purport to deal with the tax consequences applicable to all categories of investors some of which (such as dealers in securities) may be subject to special rules. Whilst the discussion is based on current tax laws, regulations and administrative guidelines issued by the relevant authorities in Singapore as at the date of this Admission Document, however the aforementioned is subject to change at any time, and any change could be retroactive to the date of this Admission Document. These laws and regulations are also subject to various interpretations and therefore, no assurance can be given that the relevant tax authorities or the courts of Singapore will agree with the interpretation or conclusions set out below. The discussion below is not intended to and does not constitute as legal or tax advice to any of our Shareholders or to any person intending to acquire, sell or otherwise deal in our Shares. Prospective investors are advised to consult their own tax advisers regarding the Singapore tax and other tax implications arising from the acquisition, ownership or disposal of our Shares. It is emphasised that neither our Company, our Directors nor any other persons involved in the Offering accepts responsibility for any tax effects or liabilities resulting from the subscription for, purchase, holding or disposal of our Shares. SINGAPORE INCOME TAX Individual income tax An individual is a tax resident in Singapore in a given year of assessment (YA) if in the preceding year he was physically present in Singapore or exercised an employment in Singapore (other than as a director of a company) for 183 days or more, or if he ordinarily resides in Singapore. Individual taxpayers who are Singapore tax residents are subject to Singapore income tax on income accruing in or derived from Singapore. All foreign-sourced income received in Singapore on or after 1 January 2004 and certain Singapore sourced investment income from nancial instruments derived by a Singapore tax resident individual (except for income received through a partnership in Singapore or derived from the carrying on of a trade or business in Singapore) is exempt from Singapore income tax if the Comptroller of Income Tax (the Comptroller) is satised that the exemption would be benecial to the individual. Non-Singapore tax resident individuals are also subject to Singapore income tax on income accruing in or derived from Singapore. Non-Singapore tax resident individuals are not subject to tax on foreign sourced income received in Singapore and certain Singapore sourced investment income from nancial instruments. Singapore tax resident individuals are taxed at progressive rates ranging from 0% to 20%. Non-Singapore tax resident individuals, subject to certain exceptions and conditions, are typically subjected to Singapore income tax at the tax rate of 20%. Singapore employment income derived by non-Singapore tax resident individuals are taxed at a at rate of 15% or at tax resident rates, whichever yields a higher tax. In the recent 2013 Budget that was tabled, it was announced that Singapore tax resident individuals will enjoy a once-off personal income tax rebate for the YA 2013 as follows: i) ii) 30% rebate granted to those who are less than 60 years old as at 31 December 2012; and 50% rebate granted to those aged 60 years old and above as at 31 December 2012.
The rebate above will be capped at S$1,500 per taxpayer for the YA 2013.
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APPENDIX D TAXATION
Corporate income tax A company is tax resident in Singapore if the control and management of its trade or business is exercised in Singapore. Singapore resident companies are subject to Singapore income tax on income accruing in or derived from Singapore and, subject to certain exceptions, on foreign-sourced income received or deemed to be received in Singapore. Foreign-sourced income in the form of dividends, branch prots and services income received or deemed to be received in Singapore by Singapore resident companies on or after 1 June 2003 are exempt from Singapore income tax if the following prescribed conditions are all met: i) Such income is subject to tax of a similar character to income tax under the law of the jurisdiction from which such income is received; At the time the income is received in Singapore, the highest rate of tax of a similar character to income tax (by whatever name called) levied under the law of the territory from which the income is received is at least 15%; and The Comptroller is satised that the tax exemption would be benecial to the recipient of the foreign income.
ii)
iii)
Non-resident companies are subject to income tax on income accruing in or derived from Singapore, and on foreign-sourced income received or deemed to be received in Singapore. The corporate tax rate in Singapore for both resident and non-resident companies is currently at 17%. However, corporate tax exemption is available on the rst S$300,000 of the companys normal chargeable income as follows: i) ii) 75% of up to the rst S$10,000 of chargeable income; and 50% of up to the next S$290,000 of chargeable income.
For qualifying newly incorporated Singapore companies, the start-up tax exemption scheme (SUTE) is available on the rst S$300,000 of the companys normal chargeable income as follows: i) ii) 100% of up to the rst S$100,000 of chargeable income; and 50% of up to the next S$200,000 of chargeable income.
The remaining chargeable income (after the corporate tax exemption above) will be taxed at the prevailing corporate tax rate of 17%. In the recent 2013 Budget announcement, SUTE will no longer be available to the following companies incorporated after 25 February 2013:

A company whose principal activity is that of investment holding; and A company whose principal activity is that of developing properties (i.e. a company that buys or leases land and arranges for a building to be built on the land in order to lease, manage or sell the building).
Additionally, it was also announced in the Budget 2013 that both resident and non-resident companies will enjoy a corporate income tax rebate of 30% of the companys tax payable, capped at S$30,000 per YA, commencing from the YA 2013 up to YA 2015.
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APPENDIX D TAXATION
Dividend distributions Singapore adopts the One-Tier Corporate Tax System (One-Tier System). Under the One-Tier System, the tax paid by a Singapore tax resident company is a nal tax and the after-tax prots of the company can be distributed to its shareholders as tax exempt (one-tier) dividends. Dividends paid by our Company would be tax exempt from Singapore income tax in the hands of our Shareholders, regardless of the tax residence status or the legal form of the shareholders. There is no Singapore withholding tax on dividends paid to both Singapore resident shareholders as well as non-Singapore resident shareholders. However, foreign shareholders are advised to consult their own tax advisers to take into account the tax laws of their respective countries of residence and the existence of any double taxation agreement which their country of residence may have with Singapore. Gain on disposal of shares Singapore does not impose tax on capital gains. However, gains may be construed to be of an income nature and subject to Singapore income tax if they arise from activities which are regarded as the carrying on of a trade or business in Singapore. Such gains may also be considered income in nature, even if they do not arise from an activity in the ordinary course of trade or business, or an ordinary incident of some other business activity, if the intention of the investor was not to hold our Shares as long term investments. Any prots from the disposal of our Shares would generally not be taxable in Singapore unless the seller is regarded as having derived gains of an income nature in Singapore, in which case, the gains on disposal would be taxable as trading income and not treated as non-taxable capital gains. Pursuant to Section 13Z of the Singapore Income Tax Act (SITA) and based on the IRAS e-Tax Guide on Income Tax: Certainty of Non-taxation of Companies Gains on Disposal of Equity Investments dated 30 May 2012, the gains derived by a company (divesting company) from the disposal of ordinary shares in another company (investee company) during the period 1 June 2012 to 31 May 2017 (both dates inclusive) are not taxable if immediately prior to the date of the share disposal, the divesting company has held at least 20% of the ordinary shares in the investee company for a continuous period of at least 24 months. Section 13Z of the SITA shall not apply to: i) A divesting company which is in a business of insurance whose gains or prots from the disposal of shares are included as part of its income based on the provisions of Section 26 of the SITA; Disposal of shares in an unlisted investee company that is in the business of trading or holding Singapore immoveable properties (excluding property development); or Disposal of shares by a partnership, limited partnership or limited liability partnership where one or more of the partners is a company or are companies.
ii)
iii)
In addition, Shareholders who adopt the tax treatment to be aligned with the Singapore Financial Reporting Standard 39 Financial Instruments: Recognition and Measurement may be taxed on gains (not being gains in the nature of capital) even though no sale or disposal of our Shares is made. Shareholders who may be subject to such tax treatment should consult their own accounting and tax advisers regarding the Singapore income tax implications of their subscription, acquisition, holding and disposal of our Shares. STAMP DUTY No stamp duty is payable if an instrument of transfer is not executed or the instrument of transfer is executed outside Singapore and not brought into Singapore. However, stamp duty may be payable if the instrument of transfer which is executed outside Singapore is received in Singapore. There is no stamp duty payable on the subscription for, allotment or holding of our Shares.
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APPENDIX D TAXATION
Where our Shares evidenced in certicated form are acquired in Singapore, stamp duty is payable on the instrument of transfer of shares at the rate of S$0.20 for every S$100 or part thereof, computed on the consideration paid or market value of our Shares, whichever is higher. The purchaser is liable for stamp duty unless there is an agreement to the contrary. Stamp duty is not applicable to electronic transfers of our Shares through the scripless trading system given that that the transfer does not require instruments of transfer to be executed. ESTATE DUTY Singapore estate duty has been abolished with effect from 15 February 2008. GOODS AND SERVICES TAX (GST) The issue, sale or transfer of ownership of shares is considered a supply of exempt services for Singapore GST purposes. Hence, the sale of our Shares by a GST-registered investor belonging in Singapore through an SGX-ST member or to another person belonging in Singapore is an exempt supply and would not be subject to GST. Any input GST incurred by a GST-registered investor in making such exempt supplies may generally not be recovered from the Singapore Comptroller of GST. If our Shares are sold by a GST-registered person who is a member of the Association of Banks in Singapore, the input tax is recoverable subject to meeting certain conditions stipulated by the Comptroller of GST. Where our Shares are supplied by a GST-registered investor to a person belonging outside Singapore and who is outside Singapore at the time the sale is executed, the sale is generally a taxable sale subject to GST at zero-rate. Any GST incurred by a GST-registered investor in making of this taxable supply in the course of furtherance of a business carried on by him may generally be recovered from the Comptroller of GST, subject to conditions governing input tax claims. Services consisting of arranging, broking, underwriting or advising on the issue, allotment or transfer of ownership of our Shares rendered by a GST-registered person to an investor belonging in Singapore for GST purposes in connection with the investors purchase, sale or holding of our Shares will be subject to GST at the standard rate, currently at 7%. Similar services rendered to an investor belonging outside Singapore are subject to GST at zero-rate, provided that the investor belongs outside Singapore when the services are performed and the services provided do not directly benet any Singapore persons.
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APPENDIX E RULES OF THE SINGAPORE KITCHEN EQUIPMENT PERFORMANCE SHARE PLAN

1. NAME OF THE PSP The PSP shall be called the Singapore Kitchen Equipment Performance Share Plan. 2. 2.1 DEFINITIONS In this PSP, unless the context otherwise requires, the following words and expressions shall have the following meanings: Adoption Date : The date on which the PSP is adopted by the Company in general meeting The auditors for the time being of the Company An award of Shares granted under the PSP The board of Directors of the Company for the time being The SGX-ST Listing Manual Section B: Rules of Catalist The Central Depository (Pte) Limited The date for the commencement of the PSP The remuneration committee of the Company, or such other committee comprising directors of the Company duly authorised and appointed by the Board to administer this PSP The Companies Act, Chapter 50 of Singapore Singapore Kitchen Equipment Limited A Shareholder who, in relation to the Company, has control, as further dened in Rule 2.2 A director of the Company for the time being The Company and its subsidiaries Any conrmed employee of the Group (including any Group Executive Director) selected by the Committee to participate in the PSP in accordance with the provisions thereof A director of the Company and/or any of its subsidiaries, as the case may be, who performs an executive function The Singapore Kitchen Equipment Performance Share Plan, as modied or supplemented from time to time
Auditors Award Board Catalist Rules CDP Commencement Date Committee
: : : : : : :
Companies Act Company Controlling Shareholder
: : :
Director Group Group Employee
: : :
Group Executive Director :
Singapore Kitchen Equipment Performance Share Plan or PSP Market Day New Shares
: :
A day on which the SGX-ST is open for trading in securities The new Shares which may be issued from time to time pursuant to the vesting of Awards granted under the PSP A director of the Company and/or any of its subsidiaries, as the case may be, other than a Group Executive Director
Non-Executive Director
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Participant : A person who is selected by the Committee to participate in the PSP in accordance with the provisions of the PSP The performance targets prescribed by the Committee to be fullled by a Participant for any particular period under the PSP The rules of the PSP, as the same may be amended or supplemented from time to time Singapore Exchange Securities Trading Limited Registered holders of Shares except that where the registered holder is CDP, the term Shareholders shall, in relation to such Shares, mean the persons to whose securities accounts maintained with CDP are credited with the Shares Ordinary shares in the capital of the Company Issued Shares of the Company which were (or are treated as having been) purchased by the Company in circumstances which Section 76H of the Companies Act applies and have since purchase been continuously held by the Company In relation to Shares which are the subject of an Award which has been released in accordance with Rule 10, the date (as determined by the Committee and notified to the relevant Participant) on which those Shares will vest pursuant to Rule 10 Singapore dollars and cents respectively Percentage or per centum
Performance Targets
Rules
SGX-ST Shareholders
: :
Shares treasury shares
: :
Vesting Date
$ and cents % or per cent. 2.2
: :
For the purposes of the PSP: (a) in relation to a Shareholder (including, where the context requires, the Company), control means the capacity to dominate decision-making, directly or indirectly, in relation to the nancial and operating policies of that company; unless rebutted, a person who holds directly or indirectly, a shareholding of 15% or more of the Companys total number of issued shares excluding treasury shares shall be presumed to be a Controlling Shareholder; and in relation to a Controlling Shareholder, his associate shall have the meaning ascribed to it by the Catalist Rules or any other publication prescribing rules or regulations for corporations admitted to the Ofcial List of Catalist (as modied, supplemented or amended from time to time).
(b)
(c)
2.3
The terms Depositor and Depository Agent shall have the meanings ascribed to them respectively by Section 130A of the Companies Act. Any reference in the PSP or the Rules to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word dened under the Companies Act or any statutory modication thereof and used in the PSP and the Rules shall have the meaning assigned to it under the Companies Act.
2.4
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2.5 Words importing the singular number shall include the plural number where the context admits and vice versa. Words importing the masculine gender shall include the feminine gender where the context admits. Any reference to a time of day shall be a reference to Singapore time. OBJECTIVES The main objectives of the PSP are as follows: (a) to attract potential employees with relevant skills to contribute to the Company and to create value for Shareholders; to instil loyalty to, and a stronger identication by the Participants with the long-term prosperity of the Company; to motivate the Participants to optimise their performance standards and efciency and to maintain a high level of contribution to the Company; to give recognition to the contributions made by the Participants to the success of the Company; and to retain key employees of the Company whose contributions are essential to the long-term prosperity of the Company.
2.6 3. 3.1
(b)
(c)
(d)
(e)
4. 4.1
ELIGIBILITY The following persons (provided that such persons are not undischarged bankrupts at the relevant time) shall be eligible to participate in the PSP at the absolute discretion of the Committee: (a) Group Employees (including Group Executive Directors) who have attained the age of 21 years on or before the date of grant of the Award; and Non-Executive Directors (including independent Directors) who have attained the age of 21 years on or before the date of grant of the Award.
(b)
4.2
Controlling Shareholders shall not be eligible to participate in the PSP. However, the Associates of the Controlling Shareholders who meet the eligibility criteria in Rule 4.1 shall be eligible to participate in the PSP provided that (a) the participation of, and (b) the terms of each grant and the actual number of Awards granted under the PSP, to a Participant who is an Associate of a Controlling Shareholder shall be approved by the independent Shareholders in separate resolutions for each such person. Participants who are also Shareholders and are eligible to participate in this Plan must abstain from voting on any resolution relating to the participation of, or grant of Awards to the Participants. Controlling Shareholder and his Associate shall abstain from voting on the resolution in relation to his participation in this Plan and grant of Awards to him. For the purposes of determining eligibility to participate in the PSP, the secondment of a Group Employee to another company within the Group shall not be regarded as a break in his employment or his having ceased by reason only of such secondment to be a full-time employee of the Group. There shall be no restriction on the eligibility of any Participant to participate in any other share incentive schemes or share plans implemented or to be implemented by the Company or any other company within the Group.
4.3
4.4
4.5
4.6
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4.7 Subject to the Companies Act and any requirement of the SGX-ST, the terms of eligibility for participation in the PSP may be amended from time to time at the absolute discretion of the Committee. LIMITATIONS UNDER THE PSP The total number of Shares which may be delivered pursuant to the vesting of Awards on any date, when added to the aggregate number of Shares issued and/or issuable in respect of (a) all Awards granted under the PSP; and (b) all other Shares issued and/or issuable under any other sharebased incentive schemes or share plans of the Company, shall not exceed 15% of the total number of issued Shares (excluding treasury shares) of the Company from time to time. Shares which are the subject of Awards which have lapsed for any reason whatsoever may be the subject of further Awards granted by the Committee under the PSP. The aggregate number of Shares available to the Associates of the Controlling Shareholders (including adjustments made in accordance with Rule 11) shall not exceed 25% of the Shares available under the PSP. The number of Shares available to each associate of the Controlling Shareholder (including adjustments made in accordance with Rule 11) shall also not exceed 10% of the Shares available under the PSP. DATE OF GRANT The Committee may grant Awards at any time in the course of a nancial year, provided that in the event that an announcement on any matter of an exceptional nature involving unpublished price sensitive information is imminent, Awards may only be vested and hence any Shares comprised in such Awards may only be delivered on or after the second Market Day from the date on which the aforesaid announcement is made. 7. 7.1 AWARDS The selection of the Participants and number of Shares which are the subject of each Award to be granted to a Participant in accordance with the PSP shall be determined at the absolute discretion of the Committee, which shall take into account criteria such as, inter alia, the rank, scope of responsibilities, performance, years of service and potential for future development and contribution to the success of the Group. In the case of a performance-related Award, the Performance Targets will be set by the Committee depending on each individual Participants job scope and responsibilities. The Performance Targets to be set shall take into account both the medium and long-term corporate objectives of the Group and the individual performance of the Participant and will be aimed at sustaining long-term growth. The corporate objectives shall cover market competitiveness, business growth and productivity growth. The Performance Targets could be based on criteria such as sales growth, growth in earnings and return on investment. In addition, the Participants length of service with the Group, achievement of past Performance Targets, value-add to the Groups performance and development and overall enhancement to shareholder value, amongst others, will be taken into account. As soon as reasonably practicable after an Award is nalised by the Committee, the Committee shall send an Award letter to the Participant conrming the said Award. The said Award letter shall specify, inter alia, the following: (a) in relation to a performance-related Award, the Performance Targets for the Participant and the period during which the Performance Targets shall be met; the number of Shares to be vested on the Participant; and
5. 5.1
5.2
5.3
5.4
6.
7.2
7.3
(b)
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(c) 7.4 the date by which the Award shall be vested.
The Committee shall take into account various factors when determining the method to arrive at the exact number of Shares comprised in an Award. Such factors include, but are not limited to, the current price of the Shares, the total issued share capital of the Company and the predetermined dollar amount which the Committee decides that a Participant deserves for meeting his Performance Targets. For example, Shares may be awarded based on predetermined dollar amounts such that the quantum of Shares comprised in Awards is dependent on the closing price of Shares transacted on the Market Day the Award is vested. Alternatively, the Committee may decide absolute numbers of Shares to be awarded to Participants irrespective of the price of the Shares. The Committee shall monitor the grant of Awards carefully to ensure that the size of the PSP will comply with the relevant rules of the Catalist Rules. Awards are personal to the Participant to whom it is given and shall not be transferred (other than to a Participants personal representative on the death of that Participant), charged, assigned, pledged or otherwise disposed of, in whole or in part, unless with the prior approval of the Committee. VESTING OF THE AWARDS Notwithstanding that a Participant may have met his Performance Targets, no Awards shall be vested: (a) upon the bankruptcy of the Participant or the happening of any other event which results in his being deprived of the legal or benecial ownership of such Award; in the event of any misconduct on the part of the Participant as determined by the Committee in its discretion; subject to Rule 8.2, upon the Participant ceasing to be in the employment of the Group for any reason whatsoever; or in the event that the Committee shall, at its discretion, deem it appropriate that such Award to be given to a Participant shall so lapse on the grounds that any of the objectives of the PSP (as set out in Rule 3) have not been met.
7.5
8. 8.1
(b)
(c)
(d)
8.2
A Participant shall be entitled to an Award so long as he has met the Performance Targets notwithstanding that he may have ceased to be employed by the Group after the fullment of such Performance Targets. For the purpose of this Rule 8.2, the Participant may cease to be so employed in any of the following events, namely: (a) through ill health, injury or disability (in each case, evidenced to the satisfaction of the Committee); redundancy; death; retirement at or after the legal retirement age; retirement before the legal retirement age with the consent of the Committee; or any other event approved by the Committee.
(b) (c) (d) (e) (f)
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9. 9.1 TAKE-OVER AND WINDING UP OF THE COMPANY Notwithstanding Rule 8 but subject to Rule 9.5, in the event of a take-over being made for the Shares, a Participant shall (notwithstanding that the vesting period for the Award has not expired) be entitled to the Shares under the Awards if he has met the Performance Targets which fall within the period commencing on the date on which such offer for a take-over of the Company is made or, if such offer is conditional, the date on which such offer becomes or is declared unconditional, as the case may be, and ending on the earlier of: (a) the expiry of 6 months thereafter, unless prior to the expiry of such 6-month period, at the recommendation of the offeror and with the approvals of the Committee and the SGX-ST, such expiry date is extended to a later date (in either case, being a date falling not later than the last date on which the Performance Targets are to be met); or the date of expiry of the period for which the Performance Targets are to be met,
(b)
provided that if during such period, the offeror becomes entitled or bound to exercise rights of compulsory acquisition under the provisions of the Companies Act and, being entitled to do so, gives notice to the Participants that it intends to exercise such rights on a specied date, the Participant shall be obliged to fulll such Performance Targets until the expiry of such specied date or the expiry date of the Performance Targets relating thereto, whichever is earlier, before an Award can be vested. 9.2 If under any applicable laws, the court sanctions a compromise or arrangement proposed for the purposes of, or in connection with, a scheme for the reconstruction of the Company or its amalgamation with another company or companies, each Participant who has fullled his Performance Target shall be entitled, notwithstanding the provisions herein and the fact that the vesting period for such Award has not expired but subject to Rule 9.5, to any Shares under the Awards so determined by the Committee to be released to him during the period commencing on the date upon which the compromise or arrangement is sanctioned by the court and ending either on the expiry of 60 days thereafter or the date upon which the compromise or arrangement becomes effective, whichever is later. If an order or an effective resolution is made for the winding-up of the Company on the basis of its insolvency, all Awards, notwithstanding that they may have been so vested shall be deemed or become null and void. In the event of a members voluntary winding-up (other than for amalgamation or reconstruction), the Awards shall so vest in the Participant for so long as, in the absolute determination by the Committee, the Participant has met the Performance Targets prior to the date that the members voluntary winding-up shall be deemed to have been commenced or effective in law. If in connection with the making of a general offer referred to in Rule 9.1 or the scheme referred to in Rule 9.2 or the winding-up referred to in Rule 9.4, arrangements are made (which are conrmed in writing by the Auditors, acting only as experts and not as arbitrators, to be fair and reasonable) for the compensation of Participants, whether by the payment of cash or by any other form of benet, no release of Shares under the Award shall be made in such circumstances. RELEASE OF AWARDS
9.3
9.4
9.5
10.
10.1 As soon as reasonably practicable after the end of each performance period, the Committee shall review the Performance Targets specied in respect of that Award and determine whether they have been satised and, if so, the extent to which they have been satised (whether fully or partially) and the number of Shares to be released.
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10.2 The Committee shall have the discretion to determine whether Performance Targets have been met (whether fully or partially) or exceeded and/or whether the Participants performance and/ or contribution to the Company and/or any of its subsidiaries justies the vesting of an Award. In making any such determination, the Committee shall have the right to make reference to the audited results of the Company or the Group, as the case may be, to take into account such factors as the Committee may determine to be relevant, such as changes in accounting methods, taxes and extraordinary events, and further, the right to amend the Performance Targets if the Committee decides that a changed Performance Targets would be a fairer measure of performance. 10.3 Awards may only be vested and consequently any Shares comprised in such Awards shall only be delivered upon the Committee being satised that the Participant has achieved the Performance Targets. 10.4 Subject to the prevailing legislation and the provisions of the Catalist Rules, the Company will deliver Shares to Participants upon vesting of their Awards by way of an issue of New Shares or the transfer of existing Shares held as treasury shares to the Participants. 10.5 In determining whether to issue New Shares or to purchase existing Shares for delivery to Participants upon the vesting of their Awards, the Company will take into account factors such as the number of Shares to be delivered, the prevailing market price of the Shares and the nancial effect on the Company of either issuing New Shares or purchasing existing Shares. 10.6 The Committee will procure, upon approval of the Board, the allotment or transfer to each Participant of the number of Shares which are to be released to that Participant pursuant to an Award under Rule 7. Any proposed issue of New Shares will be subject to there being in force at the relevant time the requisite Shareholders approval under the Companies for the issue of Shares. Any allotment of New Shares pursuant to an Award will take into account the rounding of odd lots. 10.7 Where New Shares are to be allotted or any Shares are to be transferred to a Participant pursuant to the release of any Award, the Vesting Date will be a trading day falling as soon as practicable after the review of the Committee referred to in Rule 10.1. On the Vesting Date, the Committee will procure the allotment or transfer of each Participant of the number of Shares so determined. 10.8 Where New Shares are to be allotted upon the vesting of any Award, the Company shall, as soon as practicable after allotment, where necessary, apply to the SGX-ST for the permission to deal in and for quotation of such Shares on Catalist of the SGX-ST. 10.9 Shares which are allotted or transferred on the release of an Award to a Participant shall be issued in the name of, or transferred to, CDP to the credit of either: (a) (b) (c) the securities account of that Participant maintained with CDP; the securities sub-account of that Participant maintained with a Depository Agent; or the CPF investment account maintained with a CPF agent bank,
in each case, as designated by that Participant. Until such issue or transfer of such Shares has been effected, that Participant shall have no voting rights nor any entitlements to dividends or other distributions declared or recommended in respect of any Shares which are the subject of the Award granted to him.
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10.10 New Shares allotted and issued, and existing Shares held in treasury procured by the Company for transfer, on the release of an Award, shall be subject to all the provisions of the Memorandum and Articles of Association of the Company and the Companies Act, and shall rank in full for all entitlements, including dividends or other distributions declared or recommended in respect of the then existing Shares, the Record Date for which is on or after the date of issue of the New Shares or the date of transfer of treasury shares pursuant to the vesting of the Award, and shall in all other respects rank pari passu with other existing Shares then in issue. Record Date means the date xed by the Company for the purposes of determining entitlements to dividends or other distributions to or rights of holders of Shares. 10.11 Shares which are allotted, and/or treasury shares which are transferred, on the vesting of an Award to a Participant, may be subject to such moratorium as may be imposed by the Committee. 11. VARIATION OF CAPITAL
11.1 If a variation in the issued ordinary share capital of the Company (whether by way of a capitalisation of prots or reserves or rights issue, capital reduction, subdivision, consolidation, distribution or otherwise) shall take place, then: (a) the class and/or number of Shares which are the subject of an Award to the extent not yet vested; and/or the class and/or number of Shares over which future Awards may be granted under the PSP,
(b)
shall be adjusted by the Committee to give each Participant the same proportion of the equity capital of the Company as that to which he was previously entitled and, in doing so, the Committee shall determine at its own discretion the manner in which such adjustment shall be made. 11.2 Unless the Committee considers an adjustment to be appropriate, the following events shall not normally be regarded as a circumstance requiring adjustment: (a) (b) the issue of securities as consideration for an acquisition or a private placement of securities; the cancellation of issued Shares purchased or acquired by the Company by way of a market purchase of such Shares undertaken by the Company on Catalist of the SGX-ST during the period when a share purchase mandate granted by Shareholders (including any renewal of such mandate) is in force; the issue of Shares or other securities convertible into or with rights to acquire or subscribe for Shares to its employees pursuant to share option scheme or share plan approved by Shareholders in general meeting, including the PSP; and any issue of Shares arising from the exercise of any warrants or the conversion of any convertible securities issued by the Company.
(c)
(d)
11.3 Notwithstanding the provisions of Rule 11.1: (a) the adjustment must be made in such a way that a Participant will not receive a benet that a Shareholder does not receive; and any adjustment (except in relation to a capitalisation issue) must be conrmed in writing by the Auditors (acting only as experts and not as arbitrators) to be in their opinion, fair and reasonable.
(b)
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11.4 Upon any adjustment required to be made pursuant to this Rule 11, the Company shall notify the Participant (or his duly appointed personal representatives where applicable) in writing and deliver to him (or his duly appointed personal representatives where applicable) a statement setting forth the class and/or number of Shares thereafter to be issued or transferred on the vesting of an Award. Any adjustment shall take effect upon such written notication being given. 12. ADMINISTRATION OF THE PSP
12.1 The Plan shall be administered by the Committee in its absolute discretion with such powers and duties as are conferred on it by the Board, provided that no member of the Committee shall participate in any deliberation or decision in respect of Awards granted or to be granted to him. 12.2 The Committee shall have the power, from time to time, to make and vary such rules (not being inconsistent with the PSP) for the implementation and administration of the PSP as they think t including, but not limited to: (a) imposing restrictions on the number of Awards that may be vested within each nancial year; and amending Performance Targets if by so doing, it would be a fairer measure of performance for a Participant or for the PSP as a whole.
(b)
12.3 Any decision of the Committee made pursuant to any provision of the PSP (other than a matter to be certied by the Auditors) shall be nal and binding (including any decisions pertaining to the number of Shares to be vested) or to disputes as to the interpretation of the PSP or any rule, regulation, procedure thereunder or as to any rights under the PSP. 13. NOTICES AND ANNUAL REPORT
13.1 Any notice required to be given by a Participant to the Company shall be sent or made to the registered ofce of the Company or such other addresses as may be notied by the Company to him in writing. 13.2 Any notices or documents required to be given to a Participant or any correspondence to be made between the Company and the Participant shall be given or made by the Committee (or such person(s) as it may from time to time direct) on behalf of the Company and shall be delivered to him by hand or sent to him at his home address according to the records of the Company or at the last known address of the Participant and if sent by post, shall be deemed to have been given on the day following the date of posting. 13.3 The following disclosures (as applicable) will be made by the Company in its annual report for so long as the PSP continues in operation: (a) (b) the names of the members of the Committee administering the PSP; in respect of the following Participants: (i) (ii) Directors of the Company; and Participants (other than those in paragraph (b)(i) above) who have received Shares pursuant to the vesting of the Awards granted under the PSP which, in aggregate, represent ve per cent. (5%) or more of the total number of Shares available under the PSP, the following information: (aa) the name of the Participant;
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(bb) the aggregate number of Shares comprised in Awards which have been granted to such Participant during the nancial year under review; the aggregate number of Shares comprised in Awards which have been granted to such Participant since the commencement of the PSP to the end of the nancial year under review; the aggregate number of Shares comprised in Awards which have been issued and/or transferred to such Participant pursuant to the vesting of Awards under the PSP since the commencement of the PSP to the end of the nancial year under review; the aggregate number of Shares comprised in Awards which have not been vested as at the end of the nancial year under review; and
(cc)
(dd)
(ee)
(iii)
such other information as may be required by the Catalist Rules or the Companies Act.
If any of the above is not applicable, an appropriate negative statement shall be included. 14. MODIFICATIONS TO THE PSP
14.1 Any or all the provisions of the PSP may be modied and/or altered at any time and from time to time by resolution of the Committee, provided that: (a) any modication or alteration which would be to the advantage of Participants under the PSP shall be subject to the prior approval of Shareholders in a general meeting; and no modication or alteration shall be made without due compliance with the Catalist Rules and such other regulatory authorities as may be necessary.
(b)
14.2 Written notice of any modication or alteration made in accordance with this Rule 14 shall be given to all Participants. 15. TERMS OF EMPLOYMENT UNAFFECTED The terms of employment of a Participant (who is a Group Employee) shall not be affected by his participation in the PSP, which shall neither form part of such terms nor entitle him to take into account such participation in calculating any compensation or damages on the termination of his employment for any reason. 16. DURATION OF THE PSP
16.1 The PSP shall continue to be in force at the discretion of the Committee, subject to a maximum period of 10 years commencing on the Adoption Date, provided always that the PSP may continue beyond the above stipulated period with the approval of the Companys shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be required. 16.2 The PSP may be terminated at any time at the discretion of the Committee or by an ordinary resolution of the Company in general meeting subject to all other relevant approvals which may be required and if the PSP is so terminated, no further Awards shall be offered by the Company thereunder. 16.3 Notwithstanding the expiry or termination of the PSP, any Awards made to Participants prior to such expiry or termination will continue to remain valid.
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17. TAXES All taxes (including income tax) arising from the grant and/or disposal of Shares pursuant to the Awards granted to any Participant under the PSP shall be borne by that Participant. 18. COSTS AND EXPENSES
18.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issue and allotment or transfer of any Shares pursuant to the Awards in CDPs name, the deposit of share certicate(s) with CDP, the Participants securities account with CDP, or the Participants securities sub-account with a CDP Depository Agent. 18.2 Save for the taxes referred to in Rule 17 and such other costs and expenses expressly provided in the PSP to be payable by the Participants, all fees, costs and expenses incurred by the Company in relation to the PSP including but not limited to the fees, costs and expenses relating to the allotment, issue and/or delivery of Shares pursuant to the Awards shall be borne by the Company. 19. DISCLAIMER OF LIABILITY Notwithstanding any provisions herein contained, the Board, the Committee and the Company shall not under any circumstances be held liable for any costs, losses, expenses and damages whatsoever and howsoever arising in any event, including but not limited to the Companys delay in issuing or transferring the Shares or applying for or procuring the listing of the Shares on Catalist of the SGX-ST. 20. DISPUTES Any disputes or differences of any nature arising hereunder shall be referred to the Committee and its decision shall be nal and binding in all respects. 21. CONDITION OF AWARDS Every Award shall be subject to the condition that no Shares would be issued or transferred pursuant to the vesting of any Award if such issue or transfer would be contrary to any law or enactment, or any rules or regulations of any legislative or non-legislative governing body for the time being in force in Singapore or any other relevant country having jurisdiction in relation to the issue or transfer of Shares hereto. 22. GOVERNING LAW The PSP shall be governed by, and construed in accordance with, the laws of the Republic of Singapore. The Participants, by accepting Awards in accordance with the PSP, and the Company irrevocably submit to the exclusive jurisdiction of the courts of the Republic of Singapore.
E-11
APPENDIX F TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE

You are invited to apply and subscribe for the New Shares at the Issue Price for each New Share subject to the following terms and conditions: 1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 NEW SHARES OR INTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF SHARES WILL BE REJECTED. Your application for Offer Shares may be made by way of printed Offer Shares Application Forms or by way of Electronic Applications through ATMs belonging to the Participating Banks (ATM Electronic Applications) or through Internet Banking (IB) websites of the relevant Participating Banks (Internet Electronic Applications, which together with ATM Electronic Applications, shall be referred to as Electronic Applications). Your application for the Placement Shares may only be made by way of printed Placement Shares Application Forms. YOU MAY NOT USE CPF FUNDS TO APPLY FOR THE NEW SHARES. 3. You (not being an approved nominee company) are allowed to submit only one application in your own name for the Offer Shares or the Placement Shares. If you submit an application for Offer Shares by way of an Application Form, you MAY NOT submit another application for Offer Shares by way of an Electronic Application and vice versa. Such separate applications shall be deemed to be multiple applications and may be rejected at the discretion of our Company, the Sponsor, the Underwriter and the Placement Agent. If you submit an application for Offer Shares by way of an ATM Electronic Application, you MAY NOT submit another application for Offer Shares by way of an Electronic Application and vice versa. Such separate applications shall be deemed to be multiple applications and may be rejected at the discretion of our Company, the Sponsor, the Underwriter and the Placement Agent. If you, being other than an approved nominee company, have submitted an application for Offer Shares in your own name, you should not submit any other application for Offer Shares, whether by way of an Application Form or by way of an Electronic Application, for any other person. Such separate applications shall be deemed to be multiple applications and may be rejected at the discretion of our Company, the Sponsor, the Underwriter and the Placement Agent. If you have made an application for Placement Shares by way of an Application Form, you should not make any application for Offer Shares either by way of an Application Form or by way of an Electronic Application and vice versa. Such separate applications shall be deemed to be multiple applications and may be rejected at the discretion of our Company, the Sponsor, the Underwriter and the Placement Agent. Conversely, if you have made an application for Offer Shares either by way of an Electronic Application or by way of an Application Form, you may not make any application for Placement Shares. Such separate applications shall be deemed to be a multiple applications and may be rejected at the discretion of our Company, the Sponsor and the Underwriter and the Placement Agent. Joint and multiple applications for the New Shares shall be rejected. If you submit or procure submissions of multiple share applications for Offer Shares, Placement Shares or both Offer Shares and Placement Shares, you may be deemed to have committed an offence under the Penal Code, Chapter 224 of Singapore and the SFA, and your applications may be referred to the relevant authorities for investigation. Multiple applications or those appearing to be or suspected of being multiple applications may be rejected at the discretion of our Company, the Sponsor and the Underwriter and the Placement Agent. F-1
2.

4. We will not accept applications from any person under the age of 18 years, undischarged bankrupts, sole-proprietorships, partnerships, or non-corporate bodies, joint Securities Account holders of CDP and from applicants whose addresses (as furnished in their Application Forms or, in the case of Electronic Applications, contained in the records of the relevant Participating Banks, as the case may be) bear post ofce box numbers. No person acting or purporting to act on behalf of a deceased person is allowed to apply under the Securities Account with CDP in the deceaseds name at the time of application. We will not recognise the existence of a trust. Any application by a trustee or trustees must therefore be made in his/her/their own name(s) and without qualication or, where the application is made by way of an Application Form by a nominee, in the name(s) of an approved nominee company or companies after complying with paragraph 6 below. WE WILL NOT ACCEPT APPLICATIONS FROM NOMINEES EXCEPT THOSE MADE BY APPROVED NOMINEE COMPANIES ONLY. Approved nominee companies are defined as banks, merchant banks, nance companies, insurance companies, licensed securities dealers in Singapore and nominee companies controlled by them. Applications made by persons acting as nominees other than approved nominee companies shall be rejected. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIES ACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you do not have an existing Securities Account with CDP in your own name at the time of your application, your application will be rejected (if you apply by way of an Application Form), or you will not be able to complete your Electronic Application (if you apply by way of an Electronic Application). If you have an existing Securities Account with CDP but fail to provide your Securities Account number or provide an incorrect Securities Account number in Section B of the Application Form or in your Electronic Application, as the case may be, your application is liable to be rejected. Subject to paragraph 8 below, your application shall be rejected if your particulars such as name, NRIC/passport number, nationality and permanent residence status provided in your Application Form or in the case of an Electronic Application, contained in records of the relevant Participating Bank at the time of your Electronic Application, as the case may be, differ from those particulars in your Securities Account as maintained with CDP. If you possess more than one individual direct Securities Account with CDP, your application shall be rejected. If your address as stated in the Application Form or, in the case of an Electronic Application, contained in the records of the relevant Participating Bank, as the case may be, is different from the address registered with CDP, you must inform CDP of your updated address promptly, failing which the notication letter on successful allotment and other correspondence from CDP will be sent to your address last registered with CDP. Our Company reserves the right to reject any application which does not conform strictly to the instructions set out in the Application Form and in this Offer Document or which does not comply with the instructions for Electronic Applications or with the terms and conditions of this Offer Document or, in the case of an application by way of an Application Form, which is illegible, incomplete, incorrectly completed or which is accompanied by an improperly drawn remittance or improper form of remittance. Our Company further reserves the right to treat as valid any applications not completed or submitted or effected in all respects in accordance with the instructions set out in the Application Forms or the instructions for Electronic Applications or the terms and conditions of this Offer Document, and also to present for payment or other processes all remittances at any time after receipt and to have full access to all information relating to, or deriving from, such remittances or the processing thereof.
5.
6.
7.
8.
9.
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10. Our Company reserves the right to reject or to accept, in whole or in part, or to scale down or to ballot any application, without assigning any reason therefor, and no enquiry and/or correspondence on the decision of our Company with regards hereto will be entertained. This right applies to applications made by way of Application Forms and by way of Electronic Applications. In deciding the basis of allotment, which shall be at our discretion, due consideration will be given to the desirability of allotting the New Shares to a reasonable number of applicants with a view to establishing an adequate market for the Shares. Share certicates will be registered in the name of CDP or its nominee and will be forwarded only to CDP. It is expected that CDP will send to you, at your own risk, within 15 Market Days after the close of the Application List, a statement of account stating that your Securities Account has been credited with the number of New Shares allotted to you, if your application is successful. This will be the only acknowledgement of application monies received and is not an acknowledgement by our Company. You irrevocably authorise CDP to complete and sign on your behalf, as transferee or renouncee, any instrument of transfer and/or other documents required for the issue or transfer of the New Shares allotted to you. This authorisation applies to applications made by way of Application Forms and by way of Electronic Applications. You hereby consent to the disclosure of your name, NRIC/passport number, address, nationality, permanent residency status, CDP Securities Account number, CPF Investment Account number (if applicable) and shares application amount from your account with the relevant Participating Bank to the Share Registrar, SCCS, SGX-ST, CDP, CPF, our Company, the Sponsor, the Underwriter and the Placement Agent. 12. In the event of an under-subscription for Offer Shares as at the close of the Application List, that number of Offer Shares under-subscribed shall be made available to satisfy applications for the Placement Shares to the extent that there is an over-subscription for Placement Shares as at the close of the Application List. In the event of an under-subscription for Placement Shares as at the close of the Application List, that number of Placement Shares under-subscribed shall be made available to satisfy applications for Offer Shares to the extent that there is an over-subscription for Offer Shares as at the close of the Application List. In the event of an over-subscription for Offer Shares as at the close of the Application List and Placement Shares are fully subscribed or over-subscribed as at the close of the Application List, the successful applications for Offer Shares will be determined by ballot or otherwise as determined by our Directors after consultation with the Sponsor and the Underwriter and the Placement Agent and approved by the SGX-ST. In all the above instances, the basis of allotment of the New Shares as may be decided by our Directors in ensuring a reasonable spread of shareholders of our Company, shall be made public as soon as practicable via an announcement through the SGX-ST and through an advertisement in a local newspaper. 13. You irrevocably authorise CDP to disclose the outcome of your application, including the number of New Shares allotted to you pursuant to your application, to us, the Sponsor, the Underwriter and the Placement Agent and any other parties so authorised by the foregoing persons. Any reference to you or the applicant in this section shall include an individual, a corporation, an approved nominee and trustee applying for the Offer Shares by way of an Application Form or by way of an Electronic Application and a person applying for the Placement Shares through the Placement Agent.
11.
14.
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15. By completing and delivering an Application Form or by making and completing an Electronic Application by (in the case of an ATM Electronic Application) pressing the Enter or OK or Conrm or Yes or any other relevant key on the ATM (as the case may be) or by (in the case of an Internet Electronic Application) clicking Submit or Continue or Yes or Conrm or any other relevant button on the IB website screen of the relevant Participating Banks (as the case may be) in accordance with the provisions of this Offer Document, you: (a) irrevocably offer, agree and undertake to subscribe for the number of New Shares specied in your application (or such smaller number for which the application is accepted) at the Issue Price for each New Share and agree that you will accept such New Shares as may be allotted to you, in each case on the terms of, and subject to the conditions set out in this Offer Document and the Memorandum and Articles of Association of our Company for application; agree that, in the event of any inconsistency between the terms and conditions for application set out in this Offer Document and those set out in the IB websites or ATMs of the relevant Participating Banks, the terms and conditions set out in this Offer Document shall prevail; agree that the aggregate Issue Price for the New Shares applied for is due and payable to the Company upon application; warrant the truth and accuracy of the information contained, and representations and declarations made, in your application, and acknowledge and agree that such information, representations and declarations will be relied on by our Company in determining whether to accept your application and/or whether to allot any New Shares to you; and agree and warrant that, if the laws of any jurisdictions outside Singapore are applicable to your application, you have complied with all such laws and none of our Company, the Sponsor, the Underwriter and the Placement Agent will infringe any such laws as a result of the acceptance of your application.
(b)
(c)
(d)
(e)
16.
Our acceptance of applications will be conditional upon, inter alia, our Company being satised that: (a) permission has been granted by the SGX-ST to deal in and for quotation for all our existing Shares and the New Shares on a when-issued basis on Catalist; the Management Agreement and the Underwriting and Placement Agreement referred to in the section entitled General and Statutory Information - Management, Underwriting and Placement Arrangements of this Offer Document have become unconditional and have not been terminated or cancelled prior to such date as our Company may determine; and the SGX-ST, acting as an agent on behalf of the Authority, has not served a stop order (Stop Order) which directs that no or no further shares to which this Offer Document relates be allotted.
(b)
(c)
17.
In the event that a Stop Order in respect of the New Shares is served by the SGX-ST, acting as an agent on behalf of the Authority, and (a) in the case where the New Shares have not been issued, all applications shall be deemed to have been withdrawn and cancelled and our Company shall refund (at your own risk) all monies paid on account of your application of the New Shares (without interest or any share of revenue or other benet arising therefrom) to you within 14 days of the date of the Stop Order; or
F-4

(b) in the case where the New Shares have already been issued, the issue of the New Shares shall be deemed to be void and our Company shall, within 14 days from the date of the Stop Order, refund (at your own risk) all monies paid on account of your application for the New Shares (without interest or any share of revenue or other benet arising therefrom).
This shall not apply where only an interim Stop Order has been served. 18. In the event that an interim Stop Order in respect of the New Shares is served by the SGX-ST, acting as an agent on behalf of the Authority, or other competent authority, no New Shares shall be issued to you during the time when the interim Stop Order is in force. The SGX-ST, acting as an agent on behalf of the Authority, is not able to serve a Stop Order in respect of the New Shares if the New Shares have been issued, listed for quotation on a securities exchange and trading in the New Shares has commenced. We will not hold any application in reserve. We will not allot Shares on the basis of this Offer Document later than six months after the date of registration of this Offer Document by the SGX-ST. Additional terms and conditions for applications by way of Application Forms are set out on pages F-6 to F-9 of this Offer Document. Additional terms and conditions for applications by way of Electronic Applications are set out on pages F-10 to F-17 of this Offer Document.
19.
20. 21.
22.
23.
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING APPLICATION FORMS Applications by way of an Application Form shall be made on, and subject to, the terms and conditions of this Offer Document including but not limited to the terms and conditions appearing below as well as those set out under the section entitled Terms, Conditions and Procedures for Application and Acceptance of this Offer Document, as well as the Memorandum and Articles of Association of our Company. 1. Your application for the Offer Shares must be made using the WHITE Application Forms and WHITE ofcial envelopes A and B for Offer Shares, the BLUE Application Forms and BLUE ofcial envelopes for Placement Shares, accompanying and forming part of this Offer Document. We draw your attention to the detailed instructions contained in the respective Application Forms and this Offer Document for the completion of the Application Forms which must be carefully followed. Our Company reserves the right to reject applications which do not conform strictly to the instructions set out in the Application Forms and this Offer Document or to the terms and conditions of this Offer Document or which are illegible, incomplete, incorrectly completed or which are accompanied by improperly drawn remittances or improper form of remittance. 2. Your Application Forms must be completed in English. Please type or write clearly in ink using BLOCK LETTERS. All spaces in the Application Forms except those under the heading FOR OFFICIAL USE ONLY must be completed and the words NOT APPLICABLE or N.A. should be written in any space that is not applicable.
3.
F-5

4. Individuals, corporations, approved nominee companies and trustees must give their names in full. If you are an individual, you must make your application using your full names as it appears in your identity cards (if you have such an identication document) or in your passports and, in the case of a corporation, in your full name as registered with a competent authority. If you are a nonindividual, you must complete the Application Form under the hand of an ofcial who must state the name and capacity in which he signs the Application Form. If you are a corporation completing the Application Form, you are required to afx your Common Seal (if any) in accordance with your Memorandum and Articles of Association or equivalent constitutive documents of the corporation. If you are a corporate applicant and your application is successful, a copy of your Memorandum and Articles of Association or equivalent constitutive documents must be lodged with our Companys Share Registrar and Share Transfer Ofce. Our Company reserves the right to require you to produce documentary proof of identication for verication purposes. (a) (b) You must complete Sections A and B and sign on page 1 of the Application Form. You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Form. Where paragraph 7(a) is deleted, you must also complete Section C of the Application Form with particulars of the benecial owner(s). If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, on page 1 of the Application Form, your application is liable to be rejected.
5.
(c)
You (whether you are an individual or corporate applicant, whether incorporated or unincorporated and wherever incorporated or constituted) will be required to declare whether you are a citizen or permanent resident of Singapore or a corporation in which citizens or permanent residents of Singapore or any body corporate constituted under any statute of Singapore having an interest in the aggregate of more than 50.0 per cent. of the issued share capital of or interests in such corporations. If you are an approved nominee company, you are required to declare whether the benecial owner of the Shares is a citizen or permanent resident of Singapore or a corporation, whether incorporated or unincorporated and wherever incorporated or constituted, in which citizens or permanent residents of Singapore or any body corporate whether incorporated or unincorporated and wherever incorporated or constituted under any statute of Singapore have an interest in the aggregate of more than 50.0 per cent. of the issued share capital of or interests in such corporation. 6. Your application must be accompanied by a remittance in Singapore currency for the full amount payable, in respect of the number of New Shares applied for, in the form of a BANKERS DRAFT or CASHIERS ORDER drawn on a bank in Singapore, made out in favour of SINGAPORE KITCHEN EQUIPMENT SHARE ISSUE ACCOUNT crossed A/C PAYEE ONLY, and with your name and address written clearly on the reverse side. Applications not accompanied by any payment or accompanied by any other form of payment will not be accepted. We will reject remittances bearing NOT TRANSFERABLE or NON TRANSFERABLE crossings. No acknowledgement or receipt will be issued by our Company, or the Sponsor for applications and application monies received. Monies paid in respect of unsuccessful applications are expected to be returned (without interest or any share of revenue or other benet arising therefrom) to you by ordinary post within 24 hours of balloting of applications at your own risk. Where your application is rejected or accepted in part only, the full amount or the balance of the application monies, as the case may be, will be refunded (without interest or any share of revenue or other benet arising therefrom) to you by ordinary post at your own risk within 14 days after the close of the Application List, provided that the remittance accompanying such application which has been presented for payment or other processes has been honoured and application monies have been received in the designated share issue account. In the event that the Invitation is cancelled by us following the termination of the Management
7.
F-6

Agreement and the Underwriting and Placement Agreement, the application monies received will be refunded (without interest or any share of revenue or other benet arising therefrom) to you by ordinary post at your own risk within ve Market Days of the termination of the Invitation. In the event that the Invitation is cancelled by us following the issuance of a Stop Order by the SGX-ST, acting as an agent on behalf of the Authority, the application monies received will be refunded (without interest or any share of revenue or other benet arising therefrom) to you by ordinary post at your own risk within 14 days from the date of the Stop Order. 8. Capitalised terms used in the Application Forms and dened in this Offer Document shall bear the meanings assigned to them in this Offer Document. You irrevocably agree and acknowledge that your application is subject to risks of res, acts of God and other events beyond the control of our Company, our Directors, the Sponsor and/or any other party involved in the Invitation, and if, in any such event, our Company and/or the Sponsor does not receive your Application Form, you shall have no claim whatsoever against our Company, the Sponsor, the Underwriter and the Placement Agent and/or any other party involved in the Invitation for the New Shares applied for or for any compensation, loss or damage. By completing and delivering the Application Form, you agree that: (a) in consideration of our Company having distributed the Application Form to you and agreeing to close the Application List at 12.00 noon on 18 July 2013 or such other time or date as our Company may, in consultation with the Sponsor, decide: (i) (ii) your application is irrevocable; and your remittance will be honoured on rst presentation and that any monies returnable may be held pending clearance of your payment without interest or any share of revenue or other benet arising therefrom;
9.
10.
(b)
neither our Company, the Sponsor, the Underwriter, the Placement Agent nor any other party involved in the Invitation shall be liable for any delays, failures or inaccuracies in the recording, storage or in the transmission or delivery of data relating to your application to us or CDP due to breakdowns or failure of transmission, delivery or communication facilities or any risks referred to in paragraph 9 above or to any cause beyond their respective controls; all applications, acceptances and contracts resulting therefrom under the Invitation shall be governed by and construed in accordance with the laws of Singapore and that you irrevocably submit to the non-exclusive jurisdiction of the Singapore courts; in respect of the New Shares for which your application has been received and not rejected, acceptance of your application shall be constituted by written notication and not otherwise, notwithstanding any remittance being presented for payment by or on behalf of our Company; you will not be entitled to exercise any remedy of rescission for misrepresentation at any time after acceptance of your application; in making your application, reliance is placed solely on the information contained in this Offer Document and that none of our Company, the Sponsor, the Underwriter, the Placement Agent or any other person involved in the Invitation shall have any liability for any information not so contained; you consent to the disclosure of your name, NRIC/passport number, address, nationality, permanent resident status, CDP Securities Account number, and share application amount to our Share Registrar, CDP, SCCS, SGX-ST, our Company, the Sponsor, the Underwriter, the Placement Agent or other authorised operators; and F-7
(c)
(d)
(e)
(f)
(g)

(h) you irrevocably agree and undertake to subscribe for the number of New Shares applied for as stated in the Application Form or any smaller number of such New Shares that may be allotted to you in respect of your application. In the event that our Company decides to allot and/or allocate a smaller number of New Shares or not to allot and/or allocate any New Shares to you, you agree to accept such decision as nal.
Applications for Offer Shares 1. Your application for Offer Shares MUST be made using the WHITE Offer Shares Application Forms and WHITE ofcial envelopes A and B. ONLY ONE APPLICATION should be enclosed in each envelope. You must: (a) enclose the WHITE Offer Shares Application Form, duly completed and signed, together with the correct remittance in accordance with the terms and conditions of this Offer Document in the WHITE ofcial envelope A provided; in the appropriate spaces on WHITE ofcial envelope A: (i) (ii) (iii) (iv) (c) (d) write your name and address; state the number of Offer Shares applied for; tick the relevant box to indicate the form of payment; and afx adequate Singapore postage;
2.
(b)
Seal the WHITE ofcial envelope A; write, in the special box provided on the larger WHITE ofcial envelope B addressed to Boardroom Corporate & Advisory Services Pte. Ltd., the number of Offer Shares for which the application is made; and insert WHITE ofcial envelope A into WHITE ofcial envelope B, seal WHITE ofcial envelope B, affix adequate Singapore postage on WHITE official envelope B (if despatched by ordinary post) and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY HAND, the documents at your own risk to Boardroom Corporate & Advisory Services Pte. Ltd., 50 Rafes Place #32-01 Singapore Land Tower, Singapore 048623, to arrive by 12.00 noon on 18 July 2013 or such other time as our Company may, in consultation with the Sponsor, decide. Local Urgent Mail or Registered Post must NOT be used. No acknowledgement of receipt will be issued for any application or remittance received.
(e)
3.
Applications that are illegible, incomplete or incorrectly completed or accompanied by improperly drawn remittances or improper form of remittance or which are not honoured upon their rst presentation are liable to be rejected.
Applications for Placement Shares 1. Your application for Placement Shares MUST be made using the BLUE Placement Shares Application Forms. ONLY ONE APPLICATION should be enclosed in each envelope. The completed and signed BLUE Placement Shares Application Form and the correct remittance in full in respect of the number of Placement Shares applied for (in accordance with the terms and conditions of this Offer Document) with your name and address written clearly on the reverse side, must be enclosed and sealed in an envelope to be provided by you. You must afx adequate Singapore postage on the envelope (if despatching by ordinary post) and thereafter the sealed
2.
F-8

envelope must be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at your own risk to Boardroom Corporate & Advisory Services Pte. Ltd., 50 Rafes Place #32-01 Singapore Land Tower, Singapore 048623, to arrive by 12.00 noon on 18 July 2013 or such other time as our Company may, in consultation with the Sponsor, decide. Local Urgent Mail or Registered Post must NOT be used. No acknowledgement of receipt will be issued for any application or remittance received. 3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperly drawn remittances or improper form of remittance or which are not honoured upon their rst presentation are liable to be rejected.
ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS The procedures for Electronic Applications are set out on the ATM screens (in the case of ATM Electronic Applications) and the IB website screens (in the case of Internet Electronic Applications) of the relevant Participating Banks. Currently, the UOB Group and DBS Bank, are the only Participating Banks through which Internet Electronic Applications can be made. For illustration purposes, the procedures for Electronic Applications through ATMs and the IB website of the UOB Group are set out respectively in the Steps for an ATM Electronic Application through ATMs of the UOB Group and the Steps for an Internet Electronic Application through the IB website of the UOB Group (collectively, the Steps) appearing on pages F-14 to F-18 of this Offer Document. The Steps set out the actions that you must take at an ATM or the IB website of the UOB Group to complete an Electronic Application. Please read carefully the terms of this Offer Document, the Steps and the terms and conditions for Electronic Applications set out below before making an Electronic Application. Any reference to you or the applicant in this section Additional Terms and Conditions for Electronic Applications and the Steps shall refer to you making an application for Offer Shares through an ATM or the IB website of a relevant Participating Bank. You must have an existing bank account with and be an ATM cardholder of one of the Participating Banks before you can make an Electronic Application at the ATMs. An ATM card issued by one Participating Bank cannot be used to apply for Offer Shares at an ATM belonging to other Participating Banks. For an Internet Electronic Application, you must have an existing bank account with an IB User Identication (User ID) and a Personal Identication Number/Password (PIN) given by the relevant Participating Bank. The Steps set out the actions that you must take at ATMs or the IB website of the UOB Group to complete an Electronic Application. The actions that you must take at ATMs or the IB websites of other Participating Banks are set out on the ATM screens or the IB website screens of the relevant Participating Banks. Upon the completion of your ATM Electronic Application transaction, you will receive an ATM transaction slip (Transaction Record), conrming the details of your Electronic Application. Upon completion of your Internet Electronic Application, there will be an on-screen conrmation (Conrmation Screen) of the application which can be printed for your record. The Transaction Record or your printed record of the Conrmation Screen is for your retention and should not be submitted with any Application Form. You must ensure that you enter your own Securities Account number when using the ATM card issued to you in your own name. If you fail to use your own ATM card or if you do not key in your own Securities Account number, your application will be rejected. If you operate a joint bank account with any of the Participating Banks, you must ensure that you enter your own Securities Account number when using the ATM card issued to you in your own name. Using your own Securities Account number with an ATM card which is not issued to you in your own name will render your ATM Electronic Application liable to be rejected. You must ensure, when making an Internet Electronic Application, that (a) you are currently in Singapore at the time of making such application;
F-9

(b) (c) your mailing address for IB with the relevant Participating Bank is in Singapore; you are not a US person(1) (as such term is dened in Regulation S under the United States Securities Act of 1933, as amended from time to time);
and you will be asked to declare accordingly. Otherwise, your application is liable to be rejected.
Note: (1) For details, please refer to the denition of US person on the IB websites.
You shall make an Electronic Application in accordance with and subject to the terms and conditions of this Offer Document including but not limited to the terms and conditions appearing below and those set out under the section entitled Terms, Conditions and Procedures for Application and Acceptance of this Offer Document as well as the Memorandum and Articles of Association of our Company. 1. In connection with your Electronic Application for Offer Shares, you are required to conrm statements to the following effect in the course of activating your Electronic Application: (a) that you have received a copy of this Offer Document (in the case of ATM Electronic Applications only) and have read, understood and agreed to all the terms and conditions of application for Offer Shares and this Offer Document prior to effecting the Electronic Application and agree to be bound by the same; that you consent to the disclosure of your name, NRIC/passport number, address, nationality, permanent residence status, share application amount, CPF Investment Account number (if applicable) and CDP Securities Account number and application details (the Relevant Particulars) with the relevant Participating Bank to the CDP, CPF, SCCS, SGX-ST, Share Registrar, our Company, the Sponsor, the Underwriter and the Placement Agent or other authorised operators (the Relevant Parties); and that this is your only application for Offer Shares and it is made in your own name and at your own risk.
(b)
(c)
Your application will not be successfully completed and cannot be recorded as a completed transaction in the ATM or on the IB website unless you press the Enter or Conrm or Yes or OK or any other relevant key in the ATM or click Conrm or OK or Submit or Continue or Yes or any other relevant button on the IB website screen. By doing so, you shall be treated as signifying your conrmation of each of the above three statements. In respect of statement 1(b) above, such conrmation, shall signify and shall be treated as your written permission, given in accordance with the relevant laws of Singapore including Section 47(2) of the Banking Act (Chapter 19) of Singapore to the disclosure by the relevant Participating Bank of the Relevant Particulars to the Relevant Parties. 2. BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOT APPLYING FOR OFFER SHARES AS A NOMINEE OF ANY OTHER PERSON AND THAT ANY ELECTRONIC APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE BY YOU AS THE BENEFICIAL OWNER. YOU SHOULD MAKE ONLY ONE ELECTRONIC APPLICATION FOR OFFER SHARES AND SHOULD NOT MAKE ANY OTHER APPLICATION FOR OFFER SHARES OR PLACEMENT SHARES, WHETHER AT THE ATMS OR THE IB WEBSITES (IF ANY) OF ANY PARTICIPATING BANK OR ON THE APPLICATION FORMS. IF YOU HAVE MADE AN APPLICATION FOR OFFER SHARES OR PLACEMENT SHARES ON AN APPLICATION FORM, YOU SHALL NOT MAKE AN ELECTRONIC APPLICATION FOR OFFER SHARES AND VICE VERSA.
F-10

3. You must have sufcient funds in your bank account with your Participating Bank at the time you make your Electronic Application, failing which your Electronic Application will not be completed or accepted. Any Electronic Application which does not conform strictly to the instructions set out in this Offer Document or on the screens of the ATM or the IB website of the relevant Participating Bank through which your Electronic Application is being made shall be rejected. You may make an ATM Electronic Application at the ATM of any Participating Bank or an Internet Electronic Application at the IB website of the relevant Participating Bank for the Offer Shares using only cash by authorising such Participating Bank to deduct the full amount payable from your account with such Participating Bank. 4. You irrevocably agree and undertake to subscribe for and/or to accept the number of Offer Shares applied for as stated on the Transaction Record or the Conrmation Screen or any lesser number of Offer Shares that may be allotted to you in respect of your Electronic Application. In the event that our Company decides to allot any lesser number of such Offer Shares or not to allot any Offer Shares to you, you agree to accept such decision as nal. If your Electronic Application is successful, your conrmation (by your action of pressing the Enter or Conrm or Yes or OK or any other relevant key on the ATM or clicking Conrm or OK or Submit or Continue or Yes or any other relevant button on the IB website screen) of the number of Offer Shares applied for shall signify and shall be treated as your acceptance of the number of Offer Shares that may be allotted to you and your agreement to be bound by the Memorandum and Articles of Association of our Company. We will not keep any applications in reserve. Where your Electronic Application is unsuccessful, the full amount of the application monies will be refunded in Singapore currency (without interest or any share of revenue or other benet arising therefrom) to you by being automatically credited to your account with your Participating Bank within 24 hours of balloting of the applications provided that the remittance in respect of such application which has been presented for payment or other processes have been honoured and the application monies have been received in the designated share issue account. Trading on a WHEN ISSUED basis, if applicable, is expected to commence after such refund has been made. 5. Where your Electronic Application is rejected or accepted in part only, the full amount or the balance of the application monies, as the case may be, will be refunded in Singapore currency (without interest or any share of revenue or other benet arising therefrom) to you by being automatically credited to your account with your Participating Bank within 14 days after the close of the Application List provided that the remittance in respect of such application which has been presented for payment or other processes have been honoured and the application monies have been received in the designated share issue account. In the event that the Invitation is cancelled by us following the termination of the Management Agreement and the Underwriting and Placement Agreement pursuant to the Management Agreement and the Underwriting and Placement Agreement, on and subject to the terms and conditions of this Offer Document, the application monies received will be refunded (without interest or any share of revenue or any other benet arising therefrom) to you by being automatically credited to you in Singapore currency within 14 days of the termination of the Invitation. In the event that the Invitation is cancelled following the issuance of a Stop Order by the SGX-ST, acting as agent on behalf of the Authority, the application monies received will be refunded (without interest or any share of revenue or other benet arising therefrom) to you by being automatically credited to you in Singapore currency within 14 days from the date of the Stop Order.
F-11

Responsibility for timely refund of application monies from unsuccessful or partially successful Electronic Applications lies solely with the respective Participating Banks. Therefore, you are strongly advised to consult your Participating Bank as to the status of your Electronic Application and/or the refund of any monies to you from unsuccessful or partially successful Electronic Application, to determine the exact number of Offer Shares allotted to you before trading the Offer Shares on Catalist. You may also call CDP Phone at 6535 7511 to check the provisional results of your application by using your T-pin (issued by CDP upon your application for the service) and keying in the stock code (that will be made available together with the results of the allotment via an announcement through the SGXST and by advertisement in a generally circulating daily press). To sign up for the service, you may contact CDP customer service ofcers. Neither the SGX-ST, the CDP, the SCCS, the Participating Banks, our Company, the Sponsor, the Underwriter nor the Placement Agent assume any responsibility for any loss that may be incurred as a result of you having to cover any net sell positions or from buy-in procedures activated by the SGX-ST. 6. If your Electronic Application is unsuccessful, no notification will be sent by the relevant Participating Banks. If you make Electronic Applications through the ATMs or the IB websites of the following Participating Banks, you may check the provisional results of your Electronic Applications as follows:
Operating Hours 24 hours a day Service Expected From Evening of the balloting day
Bank UOB Group
Telephone 1 800 222 2121
Available at ATM/Internet ATM (Other Transactions IPO Enquiry) / Internet Banking / Phone Banking http://www.uobgroup.com (1) Internet Banking http://www.dbs.com (2)
DBS Bank
1 800 339 6666 (for POSB account holders) 1 800 111 1111 (for DBS account holders)
24 hours a day
Evening of the balloting day
OCBC
1 800 363 3333
ATM / Internet Banking . Phone Banking http://www.ocbc.com (3)
24 hours a day
Evening of the balloting day
Notes: (1) If you have made your Electronic Application through the ATMs or IB website of the UOB Group, you may check the results of your application through UOB Personal Internet Banking, ATMs of the UOB Group or UOB Phone Banking Services. If you have made your Electronic Application through the ATMs or IB website of DBS Bank, you may check the results of your application through the channel listed above. If you have made your Electronic Application through the ATMs of OCBC, you may check your results through OCBC Personal Internet Banking, OCBC ATMs or OCBC Phone Banking Services.
(2) (3)
7.
You irrevocably agree and acknowledge that your Electronic Application is subject to risks of electrical, electronic, technical and computer-related faults and breakdowns, res, acts of God and other events beyond the control of the Participating Banks, our Company and the Sponsor and if, in any such event, our Company, the Sponsor and/or the relevant Participating Bank do not receive your Electronic Application, or data relating to your Electronic Application or the tape or any other devices containing such data is lost, corrupted or not otherwise accessible, whether wholly or partially for whatever reason, you shall be deemed not to have made an Electronic Application and
F-12

you shall have no claim whatsoever against our Company, our Directors, the Sponsor and/or the relevant Participating Bank for Offer Shares applied for or for any compensation, loss or damage. CDP shall not be liable for any delays, failures or inaccuracies in the recording, storage or in the transmission or delivery of data relating to the electronic application. 8. Electronic Applications shall close at 12.00 noon on 18 July 2013 or such other time as our Company may, in consultation with the Sponsor, decide. Subject to the paragraph above, an Internet Electronic Application is deemed to be received when it enters the designated information system of the relevant Participating Bank. You are deemed to have irrevocably requested and authorised our Company to: (a) register the Offer Shares allotted to you in the name of CDP for deposit into your Securities Account; send the relevant Share certicate(s) to CDP; return or refund (without interest or any share of revenue earned or other benet arising therefrom) of the application monies in Singapore currency, should your Electronic Application be unsuccessful, by automatically crediting your bank account with your Participating Bank with the relevant amount within 24 hours of the balloting of applications; and return or refund (without interest or any share of revenue or other benet arising therefrom) the balance of the application monies in Singapore currency, should your Electronic Application be accepted in part only, by automatically crediting your bank account with your Participating Bank with the relevant amount within 14 days after the close of the Application List.
9.
(b) (c)
(d)
10.
We do not recognise the existence of a trust. Any Electronic Application by a trustee must be made in your own name and without qualication. Our Company will reject any application by any person acting as nominee except those made by approved nominee companies only. All your particulars in the records of your relevant Participating Bank at the time you make your Electronic Application shall be deemed to be true and correct and your relevant Participating Bank and the Relevant Parties shall be entitled to rely on the accuracy thereof. If there has been any change in your particulars after the time of the making of your Electronic Application, you shall promptly notify your relevant Participating Bank. You should ensure that your personal particulars as recorded by both CDP and the relevant Participating Bank are correct and identical, otherwise, your Electronic Application is liable to be rejected. You should promptly inform CDP of any change in address, failing which the notication letter on successful allotment and other correspondence from the CDP will be sent to your address last registered with CDP. By making and completing an Electronic Application, you are deemed to have agreed that: (a) in consideration of our Company making available the Electronic Application facility, through the Participating Banks as the agents of our Company, at the ATMs and IB websites (if any): (i) (ii) your Electronic Application is irrevocable; and your Electronic Application, our acceptance and the contract resulting therefrom under the Invitation shall be governed by and construed in accordance with the laws of Singapore and you irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
11.
12.
13.
F-13

(b) neither our Company, the Sponsor, the Underwriter, the Placement Agent, the Participating Banks nor CDP shall be liable for any delays, failures or inaccuracies in the recording, storage or in the transmission or delivery of data relating to your Electronic Application to our Company or CDP due to breakdowns or failure of transmission, delivery or communication facilities or any risks referred to in paragraph 7 above or to any cause beyond our respective controls; in respect of Offer Shares for which your Electronic Application has been successfully completed and not rejected, acceptance of your Electronic Application shall be constituted by written notication by or on behalf of our Company and not otherwise, notwithstanding any payment received by or on behalf of our Company; you will not be entitled to exercise any remedy of rescission or misrepresentation at any time after acceptance of your application; and in making your application, reliance is placed solely on the information contained in this Offer Document and that none of our Company, the Sponsor, the Underwriter, the Placement Agent or any other person involved in the Invitation shall have any liability for any information not so contained.
(c)
(d)
(e)
Steps for Electronic Applications through the ATMs and the IB website of the UOB Group The instructions for Electronic Applications will appear on the ATM screens and the IB website screens of the respective Participating Banks. For illustrative purposes, the steps for making an Electronic Application through ATMs or through the IB website of the UOB Group are shown below. Instructions for Electronic Applications appearing on the ATM screens and the IB website screens (if any) of the relevant Participating Banks (other than the UOB Group) may differ from that represented below. Steps for an ATM Electronic Application through ATMs of the UOB Group Owing to space constraints on the UOB Groups ATM screens, the following terms will appear in abbreviated form: & A/C and A/CS ADDR AMT APPLN CDP CPF CPFINVT A/C ESA IC/PSSPT NO or NO. PERSONAL NO REGISTRARS : : : : : : : : : : : : : and ACCOUNT AND ACCOUNTS, respectively ADDRESS AMOUNT APPLICATION THE CENTRAL DEPOSITORY (PTE) LIMITED THE CENTRAL PROVIDENT FUND CPF INVESTMENT ACCOUNT ELECTRONIC SHARE APPLICATION NRIC or PASSPORT NUMBER NUMBER PERSONAL IDENTIFICATION NUMBER SHARE REGISTRARS
F-14

SCCS YR Step 1 : : : SECURITIES CLEARING & COMPUTER SERVICES (PTE) LTD YOUR
Insert your personal Unicard, Uniplus card or UOB VISA/MASTER card and key in your personal identication number. Select CASHCARD/OTHER TRANSACTIONS. Select SECURITIES APPLICATION. Select the share counter which you wish to apply for. Read and understand the following statements which will appear on the screen: THIS OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE IN, OR ACCOMPANIED BY, A COPY OF THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY DOCUMENTS. ANYONE WISHING TO ACQUIRE THESE SECURITIES (OR UNITS OF SECURITIES) WILL NEED TO MAKE AN APPLICATION IN THE MANNER SET OUT IN THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY DOCUMENTS
2 : 3 : 4 : 5 :
(Press ENTER to continue) PLEASE CALL 1800-22-22-121 IF YOU WOULD LIKE TO FIND OUT WHERE YOU CAN OBTAIN A COPY OF THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY DOCUMENT WHERE APPLICABLE, A COPY OF THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY DOCUMENT HAS BEEN LODGED WITH AND REGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE WHO ASSUMES NO RESPONSIBILITY FOR THE CONTENTS OF THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY DOCUMENT
(Press ENTER key to conrm that you have read and understood the above statements) 6 : Read and understand the following terms which will appear on the screen: YOU HAVE READ, UNDERSTOOD & AGREED TO ALL TERMS OF THE PROSPECTUS/DOCUMENT/SUPPLEMENTARY DOCUMENT & THIS ELECTRONIC APPLICATION YOU CONSENT TO DISCLOSE YR NAME, IC/PSSPT, NATIONALITY, ADDR, APPLN AMT, CPFINVT A/C NO & CDP A/C NO FROM YR A/CS TO CDP, CPF, SCCS, REGISTRARS, SGX-ST & ISSUER/VENDOR(S) THIS IS YR ONLY FIXED PRICE APPLN & IS IN YR NAME & AT YR RISK
(Press ENTER to continue) 7 : Screen will display: NRIC/Passport No. XXXXXXXXXXXX IF YOUR NRIC NO. / PASSPORT NO. IS INCORRECT, PLEASE CANCEL THE TRANSACTION AND NOTIFY THE BRANCH PERSONALLY. (Press CANCEL or CONFIRM) F-15

8 : Select mode of payment i.e. CASH ONLY. You will be prompted to select Cash Account type to debit (i.e., CURRENT ACCOUNT / I-ACCOUNT, CAMPUS OR SAVINGS ACCOUNT / TX ACCOUNT). Should you have a few accounts linked to your ATM card, a list of linked account numbers will be displayed for you to select. After you have selected the account, your CDP Securities Account number will be displayed for you to conrm or change (This screen with your CDP Securities Account number will be shown if your CDP Securities Account number is already stored in the ATM system of the UOB Group). If this is the rst time you are using the UOB Groups ATM to apply for Shares, your CDP Securities Account number will not be stored in the ATM system of the UOB Group, and the following screen will be displayed for your input of your CDP Securities Account number. Read and understand the following terms which will appear on the screen: PLEASE DO NOT APPLY FOR YOUR JOINT A/C HOLDER OR OTHER THIRD PARTIES PLEASE USE YOUR OWN ATM CARD DO NOT KEY IN THE CDP A/C NO. OF YOUR JOINT A/C HOLDER OR OTHER THIRD PARTIES KEY IN YOUR CDP A/C NO. (12 DIGITS) 1681-XXXX-XXXX PRESS ENTER KEY
9 :
10 :
11 : 12 : 13 : 14 :
Key in your CDP Securities Account number (12 digits) and press the ENTER key. Select your nationality status. Key in the number of Shares you wish to apply for and press the ENTER key. Check the details of your Electronic Application on the screen and press ENTER key to conrm your Electronic Application. Select NO if you do not wish to make any further transactions and remove the Transaction Record. You should keep the Transaction Record for your own reference only.
15 :
Steps for an Internet Electronic Application through the IB website of the UOB Group Owing to space constraints on the UOB Groups IB website screens, the following terms will appear in abbreviated form: CDP CPF NRIC or I/C PR SGD or $ SCCS SGX : : : : : : : The Central Depository (Pte) Limited The Central Provident Fund National Registration Identity Card Permanent Resident Singapore Dollars Securities Clearing & Computer Services (Pte) Ltd Singapore Exchange Securities Trading Limited
F-16

Step 1 : 2 : 3 : 4 : 5 : Connect to the UOB Group website at http://www.uobgroup.com. Locate the Login icon on the left hand side next to Internet Banking. Click on Login and at drop list select UOB Personal Internet Banking. Enter your Username and Password and click Submit. Select Investment Services (IPO should be the default transaction that appears, select Application). Read the IMPORTANT notice and complete the declarations found on the bottom of the page by answering Yes/No to the questions. Click Continue. Select your country of residence (you must be residing in Singapore to apply), and click Continue. Select the IPO counter from the drop list (if there are concurrent IPOs) and click Continue. Check the share counter, select the mode of payment and account number to debit and click on Continue. Read the important instructions and click on Continue to conrm that: 1. You have read, understood and agreed to all terms and conditions of the application and Prospectus/Document or Supplementary Document. You consent to disclose your name, I/C or passport number, address, nationality, CDP Securities Account number, CPF Investment Account number (if applicable), and application details to the share registrars, SGX, SCCS, CDP, CPF Board and issuer/vendor(s). This application is made in your own name, for your own account and at your own risk. For FIXED/MAX price shares application, this is your only application. For TENDER price shares application, this is your only application at the selected tender price. For FOREIGN CURRENCY securities, subject to the terms of the issue, please note the following: The application monies will be debited from your bank account in S$, based on the Banks prevailing board rates at the time of applications. The different prevailing board rates at the time of the application and at the time of refund of applications monies may result in either a foreign exchange prot or loss, or application monies may be debited and refunds credited in S$ at the same exchange rate. For 1ST-COME-1ST-SERVE securities, the number of securities applied for may be reduced, subject to the availability at the point of application.
6 :
7 : 8 :
9 : 10 :
11 :
2.
3.
4.
5.
6.
F-17

12 : Check your personal details, details of the share counter you wish to apply for and account to debit. Select Enter (a) (b) (c) 13 : Nationality; your CDP securities account number; and the number of shares applied for.
Check your personal particulars (name, NRIC/Passport number and nationality), details of the share counter you wish to apply for, CDP securities account number, account to debit and number of shares applied for. Click Submit, Clear or Cancel. Print the Conrmation Screen (optional) for your own reference and retention only.
14 : 15 :
F-18
SINGAPORE KITCHEN EQUIPMENT LIMITED

(Company Registration No.: 201312671M)
Blk 115A Commonwealth Drive #01-27/28 Tanglin Halt Industrial Estate Singapore 149596 Tel : 6472 7337 Fax : 6472 6497

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OFFER DOCUMENT DATED 12 JULY 2013 (registered by the Singapore Exchange Securities Trading Limited acting on behalf of the

SINGAPORE KITCHEN EQUIPMENT LIMITED

CIMB Bank Berhad (13491-P) Singapore Branch (Incorporated in Malaysia)

Gross Profit and Gross Profit Margin

Average Cost of Sales for past 3 financial years

Fabrication & Distribution

Expenses and Other Income

Net Profit, Net Profit Margin and One-off Gains

-348 -955 -1,655 -1,900

Combined Statements of Financial Position Highlights

2012 Quarterly Growth Rates (Year-On-Year)

2012 Quarterly Growth Rates (Quarter-On-Quarter)

Accomodation & Food Services Growth Rates

Accomodation & Food Services Growth Rates

Singapore Growth Rates

Source: Ministry of Trade and Industry Singapore

Source: Ministry of Trade and Industry Singapore

Population (million) 6.5 million

Singapore Tourist Arrivals, Receipts and F&B Spending (billion)

Tourist F&B Spending

Current Prices (MOM) Current Prices (YOY)

Constant Prices (MOM)

Visitor Arivals (In millions)

Source: Singapore Tourism Board

12 July 2013 18 July 2013 12.00noon 22 July 2013 9.00am

57 57 62 62 62 65 66 69 70 70 71 71 74 76 78 82 82 83 83 83 84 85 86 86 86 88 98 100 101 102 102 104 106 107 107

COMPANY SECRETARY REGISTERED OFFICE

SHARE REGISTRAR AND SHARE TRANSFER OFFICE

UNDERWRITER AND PLACEMENT AGENT

INDEPENDENT AUDITORS AND REPORTING ACCOUNTANTS

LEGAL ADVISER TO OUR COMPANY ON MALAYSIAN LAW

LEGAL ADVISER TO OUR COMPANY ON VIETNAMESE LAW

Solicitors to the Invitation General Alan Lee Application Forms

Application List Articles or Articles of Association Associate

ATM Audit Committee

Carol Lee Catalist Catalist Rules

Charlene Koh Companies Act

Eileen Tay-Tan Bee Kiew Electronic Applications

EPS Executive Directors

Frankie Cheng F&B FY GST IB Independent Directors

Independent Auditors Report :

Issue Price Latest Practicable Date

Managing Director Market Day NAV New Shares Nominating Committee

Offer Shares Participant

PER Performance Shares

period under review

Sally Chua Securities Account

Share Split Substantial Shareholder(s)

Underwriting and Placement Agreement

GLOSSORY OF TECHNICAL TERM

OEM maintenance service technical service

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

(b) (c) (d) (e)

(f) (g) (h) (i) (j)

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

DETAILS OF THE INVITATION

DETAILS OF THE INVITATION

DETAILS OF THE INVITATION

DETAILS OF THE INVITATION

INDICATIVE TIMETABLE FOR LISTING

22 July 2013 at 9.00 a.m. 25 July 2013

OFFER DOCUMENT SUMMARY