Select Catering GF

Transcription

Select Catering GF

PROSPECTUS DATED 30 NOVEMBER 2004
(Registered by the Monetary Authority of Singapore on 30 November 2004)
Acceptance of applications for the New Shares 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
Option Shares. If completion of the Invitation does not occur because
the SGX-ST’s permission is not granted or for any other reasons,
moneys paid in respect of any application accepted will be returned to
you at your own risk, without interest or any share of revenue or other
benefit arising therefrom and you will not have any claim against us,
the Manager, the Placement Agent and Underwriter.
The SGX-ST assumes no responsibility for the correctness of any of
the statements made, opinions expressed or reports contained in this
Prospectus. Admission to the Official List of the SGX-SESDAQ is not
to be taken as an indication of the merits of the Invitation, our Company,
our subsidiaries, our Shares, the New Shares or the Option Shares.
A copy of this Prospectus together with copies of the Application Forms
(as defined herein) have been lodged with and registered by the Monetary
Authority of Singapore (the “Authority”). The Authority assumes no
responsibility for the contents of this Prospectus. Registration of this
Prospectus by the Authority does not imply that the Securities And
Futures Act (Chapter 289) of Singapore, or any other legal or regulatory
requirements have been complied with. The Authority has not, in any
way, considered the merits of our Shares, the New Shares or the Option
Shares, as the case may be, being offered or in respect of which an
invitation is made, for investment.
Institutional Catering
• Provide food management services to our corporate customers
• Operate and manage staff cafeterias, on a contract basis, at the premises of our
corporate customers
• Value-added services include menu planning, operation and maintenance of food service
and facilities, advice and technical support and design and layout of staff cafeterias and
kitchen
• Our customers include Agilent Technologies Singapore Pte Ltd;
Infineon Technologies Asia Pacific Pte Ltd; Maxtor Periperals (S) Pte Ltd;
Motorola Electronics Pte Ltd; STATS ChipPAC Ltd.; and STMicroelectronics Pte Ltd
Food Catering
• Provide events catering services for corporate, community or private functions
• Daily meal delivery services to workplaces and family units
Food Retail
• Operate dedicated food court stalls and public cafeterias specialising in international and
local fare
• Operating 39 dedicated food stalls (37 in Singapore and 2 in Malaysia) and 2 public
cafeterias at Caltex House and Shaw House
• Commenced the operation of our first restaurant in Singapore specialising in Thai cuisine
in March 2004.
ter
No Shares shall be allotted on the basis of this Prospectus later than
six months after the date of registration of this Prospectus. We have
not lodged or registered this Prospectus in any other jurisdiction.
Investing in our Shares involves risks which are described in the
“RISK FACTORS” section beginning on page 32 of this Prospectus.
URL : www.select.com.sg
Select Catering Services Limited
(Incorporated in the Republic of Singapore on 27 January 1995
with Company Registration Number 199500697Z)
Invitation in respect of 17,500,000 New Shares of $0.045 each comprising:(1) 1,000,000 Offer Shares at $0.235 for each Offer Share by way of
public offer; and
(2) 16,500,000 Placement Shares by way of placement, comprising:(i) 14,500,000 Placement Shares at $0.235 for each Placement
Share for applications by way of Placement Shares Application
Forms;
(ii) 500,000 Internet Placement Shares at $0.235 for each Internet
Placement Share for applications made through the IPO
website www.ePublicOffer.com ; and
(iii) 1,500,000 Reserved Shares at $0.235 for each Reserved
Share reserved for our employees, business associates and
those who have contributed to the success of our Group,
payable in full on application.
Manager
Westcomb Capital Pte Ltd
Placement Agent and Underwriter
Westcomb Securities Pte Ltd
Ca
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Email : sales@select.com.sg
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Facsimile : 6852 3335
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Re
Telephone : 6852 3333 (10 lines)
(Information contained on our website does not constitute a part of this Prospectus)
od
Business Address : 36 Senoko Cresent Singapore 758282
Our business can be categorised into the following 3 divisions:-
Fo
We are an integrated food catering and management services provider in Singapore.
ing
We have 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 of $0.045 each (the "Shares") in the capital
of Select Catering Services 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 options to be granted under the Select Employee Share
Option Scheme (the “Option Shares”). Such permission will be granted
when we have been admitted to the Official List of the SGX-ST Dealing
and Automated Quotation System (the “SGX-SESDAQ”). The dealing
in and quotation of our Shares will be in Singapore dollars.
Business Overview
al
This document is important. If you are in any doubt as to the
action you should take, you should consult your stockbroker, bank
manager, solicitor, accountant or other professional adviser.
Integrated food
catering and
management
services provider
Food Catering
corporate customers
kitchen
Food Catering
Food Retail
local fare
in March 2004.
ter
public offer; and
Forms;
Manager
Ca
Ins
l
titu
tai
tio
n
Re
od
Fo
ing
Business Overview
al
Integrated food
catering and
management
services provider
Food Catering
Our Competitive Strengths
Experienced management team
Quality of chefs
• Led by an experienced management team,
most of whom have more than 10 years of
experience in the F&B industry
• Management team is familiar with our business
and understands our customers’ needs and
requirements
Use of IT in our operations
• Integrated computer systems developed over
the years and customised specially to suit our
business requirements and operations
• System analyses sales data, and automatically
processes raw material requirements,
procurement and allocation to the different
kitchens
• Minimizes errors and food wastage
• Higher operation efficiency and better quality
of service
Ability to control costs
• Master chefs and Head Chefs have an average
of 10 years of experience in the F&B industry
• Our chefs undergo regular and continual
training to upgrade their culinary skills
Ability to provide quality service
• Focused on providing friendly and prompt
service
• In recognition of our commitment to service,
we have been granted the Singapore Service
Class award in 2004 by SPRING Singapore
Broad customer base
• One of the few and leading food catering and
management service providers in Singapore
which can provide Halal and non-Halal food
• This ability enables us to attract a broader
customer base
Our Financial Highlights
Revenue
Gross Profit
40
20.4
20.2
20
15.3
15
10
15
17.2
1.2
12.7
13.2
9.5
10
1
0.8
0.6
0.4
5
5
0.2
0
0
FY2001
FY2002
FY2003
1H2003
1H2004
1.4
1.3
1.4
S$ million
S$ million
25
S$ million
26.9
30
0.3
0.1
0.1
0
FY2001
FY2002
Increase food retail outlets in Singapore
• Increase number of dedicated food court stalls in Singapore
as and when strategic locations are available
• Establish new food court stalls at schools and hospitals other
than shopping centres
• Intend to open one new restaurant in 2005 and another 5
to 10 mid-range restaurants in Singapore in the next 3 years
Regional economic
recovery
Singapore – hub for
international exhibitions
and conventions
Develop, operate and manage the Singapore Expo
F&B Hub
Relocation of production
facilities to the PRC by
MNCs
Expand institutional catering business into the
PRC market
Outsourcing of
catering services
in other business
segments
Expand institutional catering business into other
segments
• Occupy approximately 2,600 sq m with seating capacity for
approximately 2,300 patrons
• Planning 6 restaurants, 2 fast food outlets, 3 cafeterias,
a pub and a food court
• Offers a variety of international and local cuisines and
beverages
• Established wholly-owned subsidiary, Select Suzhou in
April 2004
• Offer institutional catering services to our existing corporate
customers which have or will set up manufacturing operations
in the PRC
• Secured 7 contracts in the PRC
Our Achievements
1.6
20.9
20
The dining-out trend in
Singapore
Profit Before Tax
25
33.8
35
Our Future Plans
• Broad and varied customer base resulting
from our 3 business divisions
• Better gauge on the changing trends in
consumer tastes and preferences
• Greater opportunity for cross selling
Ability to provide Halal food
• Adopt several cost-controlling measures:- bulk purchasing
- cost control incentive scheme
i) aligns chefs’ and employees’ remuneration
with the profits of the food establishment
under their charge
ii) encourages chefs to minimize food
wastage
Our Prospects
FY2003
1H2003
1H2004
FY2001
FY2002
FY2003
1H2003
1H2004
2004
Singapore Service Class
2003
ISO 9001: 2000 (Stamford)
2002
ISO 9001: 2000 (Select)
2001
Singapore SME 500
2000 / 2001 Company
• Growing trend for private and public institutions to outsource
their non-core food and management services
• Plan to target new market segments such as hospitals,
tertiary institutions and the uniformed services
Experienced management team
Quality of chefs
• Led by an experienced management team,
most of whom have more than 10 years of
experience in the F&B industry
• Management team is familiar with our business
and understands our customers’ needs and
requirements
Use of IT in our operations
• Integrated computer systems developed over
the years and customised specially to suit our
business requirements and operations
• System analyses sales data, and automatically
processes raw material requirements,
procurement and allocation to the different
kitchens
• Minimizes errors and food wastage
• Higher operation efficiency and better quality
of service
Ability to control costs
• Master chefs and Head Chefs have an average
of 10 years of experience in the F&B industry
• Our chefs undergo regular and continual
training to upgrade their culinary skills
• Focused on providing friendly and prompt
service
• In recognition of our commitment to service,
we have been granted the Singapore Service
Class award in 2004 by SPRING Singapore
Broad customer base
• One of the few and leading food catering and
management service providers in Singapore
which can provide Halal and non-Halal food
• This ability enables us to attract a broader
customer base
Our Financial Highlights
Revenue
Gross Profit
40
20.4
20.2
20
15.3
15
10
15
17.2
1.2
12.7
13.2
9.5
10
1
0.8
0.6
0.4
5
5
0.2
0
0
FY2001
FY2002
FY2003
1H2003
1H2004
1.4
1.3
1.4
S$ million
S$ million
25
S$ million
26.9
30
0.3
0.1
0.1
0
FY2001
FY2002
Increase food retail outlets in Singapore
• Increase number of dedicated food court stalls in Singapore
as and when strategic locations are available
• Establish new food court stalls at schools and hospitals other
than shopping centres
• Intend to open one new restaurant in 2005 and another 5
to 10 mid-range restaurants in Singapore in the next 3 years
Regional economic
recovery
Singapore – hub for
international exhibitions
and conventions
Develop, operate and manage the Singapore Expo
F&B Hub
Relocation of production
facilities to the PRC by
MNCs
Expand institutional catering business into the
PRC market
Outsourcing of
catering services
in other business
segments
Expand institutional catering business into other
segments
• Occupy approximately 2,600 sq m with seating capacity for
approximately 2,300 patrons
• Planning 6 restaurants, 2 fast food outlets, 3 cafeterias,
a pub and a food court
• Offers a variety of international and local cuisines and
beverages
• Established wholly-owned subsidiary, Select Suzhou in
April 2004
• Offer institutional catering services to our existing corporate
customers which have or will set up manufacturing operations
in the PRC
• Secured 7 contracts in the PRC
Our Achievements
1.6
20.9
20
The dining-out trend in
Singapore
Profit Before Tax
25
33.8
35
Our Future Plans
• Broad and varied customer base resulting
from our 3 business divisions
• Better gauge on the changing trends in
consumer tastes and preferences
• Greater opportunity for cross selling
Ability to provide Halal food
• Adopt several cost-controlling measures:- bulk purchasing
- cost control incentive scheme
i) aligns chefs’ and employees’ remuneration
with the profits of the food establishment
under their charge
ii) encourages chefs to minimize food
wastage
Our Prospects
FY2003
1H2003
1H2004
FY2001
FY2002
FY2003
1H2003
1H2004
2004
2003
ISO 9001: 2000 (Stamford)
2002
ISO 9001: 2000 (Select)
2001
Singapore SME 500
2000 / 2001 Company
• Growing trend for private and public institutions to outsource
their non-core food and management services
• Plan to target new market segments such as hospitals,
tertiary institutions and the uniformed services
corporate customers
kitchen
Food Catering
Food Retail
local fare
in March 2004.
ter
public offer; and
Forms;
Manager
Ca
Ins
l
titu
tai
tio
n
Re
od
Fo
ing
Business Overview
al
Integrated food
catering and
management
services provider
Food Catering
TABLE OF CONTENTS
Page
CORPORATE INFORMATION ..........................................................................................................
4
DEFINITIONS ....................................................................................................................................
6
GLOSSARY OF TECHNICAL TERMS ..............................................................................................
14
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS....................................
15
SELLING RESTRICTIONS ................................................................................................................
17
DETAILS OF THE INVITATION..........................................................................................................
18
Listing On The SGX-SESDAQ ................................................................................................
18
Indicative Timetable For Listing................................................................................................
21
PROSPECTUS SUMMARY ..............................................................................................................
23
Overview Of Our Group ..........................................................................................................
23
Our Competitive Strengths ......................................................................................................
23
Our Future Plans......................................................................................................................
24
Our Ownership Structure ........................................................................................................
24
Where You Can Find Us ..........................................................................................................
24
THE INVITATION................................................................................................................................
25
DISTRIBUTION PLAN ......................................................................................................................
27
INVITATION STATISTICS ..................................................................................................................
30
RISK FACTORS ................................................................................................................................
32
USE OF PROCEEDS ........................................................................................................................
40
SELECTED GROUP FINANCIAL INFORMATION............................................................................
41
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL POSITION ....................................................
43
Overview ..................................................................................................................................
43
Breakdown Of Financial Performance By Business Divisions ................................................
49
Seasonality ..............................................................................................................................
50
Review Of Past Operating Results ..........................................................................................
51
Review Of Financial Position....................................................................................................
61
Liquidity And Capital Resources ..............................................................................................
63
Capitalisation And Indebtedness..............................................................................................
66
Credit Policy ............................................................................................................................
68
Exchange Controls ..................................................................................................................
70
DIVIDEND POLICY ............................................................................................................................
72
DILUTION ..........................................................................................................................................
73
1
TABLE OF CONTENTS
Page
GENERAL INFORMATION ON OUR GROUP ..................................................................................
74
Share Capital ..........................................................................................................................
74
Shareholders ............................................................................................................................
77
Moratorium ..............................................................................................................................
80
Group Structure........................................................................................................................
80
HISTORY AND BUSINESS................................................................................................................
82
Our History ..............................................................................................................................
82
Our Business............................................................................................................................
84
Management Of Our Kitchens And Operations ......................................................................
90
Cash Management ..................................................................................................................
93
Quality Control..........................................................................................................................
93
Staff Training ............................................................................................................................
94
Major Customers ......................................................................................................................
95
Major Suppliers ........................................................................................................................
95
Inventory Management ............................................................................................................
96
Insurance..................................................................................................................................
96
Marketing Channels ................................................................................................................
96
Awards......................................................................................................................................
97
Trademark And Patent..............................................................................................................
98
Properties And Other Fixed Assets..........................................................................................
98
Catering Capacity ....................................................................................................................
103
Cuisine and Service Development ..........................................................................................
103
Government Regulations..........................................................................................................
104
Competition ..............................................................................................................................
107
Competitive Strengths ..............................................................................................................
108
INDUSTRY OUTLOOK AND FUTURE PLANS ................................................................................
110
Industry Outlook ......................................................................................................................
110
Future Plans ............................................................................................................................
113
DIRECTORS, MANAGEMENT AND STAFF ....................................................................................
115
Our Management Structure......................................................................................................
115
Directors ..................................................................................................................................
115
Executive Officers ....................................................................................................................
117
Remuneration Of Directors And Executive Officers ................................................................
118
Employees................................................................................................................................
119
Service Agreements ................................................................................................................
121
Corporate Governance ............................................................................................................
122
Select Employee Share Option Scheme..................................................................................
123
2
TABLE OF CONTENTS
Page
INTERESTED PERSON TRANSACTIONS AND CONFLICTS OF INTERESTS ............................
131
Past Interested Person Transactions ........................................................................................
131
Present And On-Going Interested Person Transactions ..........................................................
133
Conflicts Of Interest..................................................................................................................
135
Review Procedures For Future Interested Person Transactions ..............................................
135
GENERAL AND STATUTORY INFORMATION ................................................................................
136
Information On Directors And Executive Officers ....................................................................
136
Share Capital ..........................................................................................................................
140
Bank Borrowings And Working Capital ....................................................................................
141
Material Contracts ....................................................................................................................
141
Litigation, Arbitration And Bankruptcy Proceedings ................................................................
142
Management, Underwriting And Placement Arrangements ....................................................
142
Miscellaneous ..........................................................................................................................
143
Consents ..................................................................................................................................
145
Responsibility Statement By Our Directors..............................................................................
145
Responsibility Statement By The Manager ..............................................................................
145
Documents Available For Inspection ........................................................................................
145
APPENDIX A
Taxation ....................................................................................................................................
A-1
APPENDIX B
Extract Of The Memorandum And Articles Of Association Of Our Company..........................
B-1
APPENDIX C
Description Of Ordinary Shares ..............................................................................................
C-1
APPENDIX D
Rules of Select Employee Share Option Scheme ..................................................................
D-1
APPENDIX E
Clearance And Settlement ......................................................................................................
E-1
APPENDIX F
Terms And Conditions And Procedures For Application..........................................................
F-1
APPENDIX G
Independent Auditors’ Report And Audited Consolidated Financial Statements of
Select Catering Services Limited ............................................................................................
G-1
APPENDIX H
Independent Auditors’ Review Report And Unaudited Consolidated Financial Statements
of Select Catering Services Limited ........................................................................................
3
H-1
CORPORATE INFORMATION
BOARD OF DIRECTORS
:
Tan Chor Khoon (Managing Director)
Tan Choh Peng (Executive Director)
Professor Low Teck Seng (Independent Director)
Sim Beng Chye (Independent Director)
Kwah Thiam Hock (Independent Director)
COMPANY SECRETARY
:
Tan Siok Kheng ACIS, LL.B. (Hons)(London)
REGISTERED OFFICE
AND PRINCIPAL PLACE OF BUSINESS
:
36 Senoko Crescent
Singapore 758282
Telephone : (65) 6852 3333
Facsimile : (65) 6852 3335
COMPANY REGISTRATION NUMBER
:
199500697Z
REGISTRAR AND
SHARE TRANSFER AGENT
:
Lim Associates (Pte) Ltd
10 Collyer Quay #19-08
Ocean Building
Singapore 049315
MANAGER
:
5 Shenton Way #09-07
UIC Building
Singapore 068808
PLACEMENT AGENT AND
UNDERWRITER
:
5 Shenton Way #09-08
UIC Building
Singapore 068808
AUDITORS AND REPORTING AUDITORS
:
Chio Lim & Associates
Certified Public Accountants
18 Cross Street #09-01
Marsh & McLennan Centre
Singapore 048423
SOLICITORS TO THE INVITATION
:
Hee Theng Fong & Co.
7 Temasek Boulevard #13-02
Suntec Tower One
Singapore 038987
LEGAL ADVISER TO THE COMPANY
ON PRC LAW
:
H & Y Law Firm
Suite 21 & 25 China Merchants Tower
161 Lujiazui East Road
Shanghai 200120
People’s Republic of China
LEGAL ADVISER TO THE COMPANY
ON MALAYSIAN LAW
:
Raslan Loong
Level 3A, Menara John Hancock
6 Jalan Gelenggang
Damasara Heights
50490 Kuala Lumpur
Malaysia
4
CORPORATE INFORMATION
RECEIVING BANKER
:
The Bank of East Asia, Limited
137 Market Street
BEA Building
Singapore 048943
PRINCIPAL BANKERS
:
DBS Bank Ltd
6 Shenton Way
DBS Building Tower One
Singapore 068809
Oversea-Chinese Banking Corporation Limited
65 Chulia Street #29-02/04
OCBC Centre
Singapore 049513
5
DEFINITIONS
In this Prospectus and the accompanying Application Forms and, in relation to Electronic Applications,
the instructions appearing on the screens of ATMs of the Participating Banks, the IB websites of the
relevant Participating Banks or the IPO Website of the IPO Website Operator, the following definitions
apply throughout where the context so admits:-
Group Companies
“Company” or “Select”
:
Select Catering Services Limited. The terms “we”,
“our”, “our Company” and “us” have correlative
meanings
“Group”
:
Select Catering
subsidiaries
“Lerk Thai”
:
Lerk Thai Restaurant Pte Ltd
“Select Investment”
:
Select (F&B) Investment Pte Ltd
“Select Suzhou”
:
Select F&B (Suzhou) Co., Ltd.
㚰Ф亳ક㢣Ꮂ᳝䰤݀ৌ
“Select FM (Singapore)”
:
Select Food Management Pte Ltd
“Select FM (Malaysia)”
:
Select Food Management Sdn Bhd
“Stamford”
:
Stamford Catering Services Pte Ltd
“SCS”
:
SCS Food Services Pte Ltd
Services
Limited
and
its
Other companies, organisations and agencies
“Authority”
:
The Monetary Authority of Singapore
“CDP”
:
The Central Depository (Pte) Limited
“CPF”
:
The Central Provident Fund
“HDB”
:
Housing and Development Board
“IPO Website Operator”
:
“ISO”
:
International Organization for Standardisation, a
world-wide federation of national standard bodies
“ITE”
:
Institute of Technical Education
“Manager” or “Westcomb”
:
“MEWR”
:
The Ministry of the Environment and Water
Resources
“MUIS”
:
Majlis Ugama Islam Singapura, the Islamic
Religious Council of Singapore
“NEA”
:
National Environment Agency (an agency of
MEWR)
6
DEFINITIONS
“Participating Banks”
:
DBS Bank Ltd (including POSB) (“DBS Bank”),
Oversea-Chinese Banking Corporation Limited
(“OCBC”) and United Overseas Bank Limited and
its subsidiary, Far Eastern Bank Limited (“UOB
Group”)
“Placement Agent and Underwriter”,
“Placement Agent” or “Underwriter”
:
“SCCS”
:
Securities Clearing & Computer Services (Pte) Ltd
“Select Eastern Investment”
:
Select Eastern Investment Pte Ltd
“SGX-ST” or “Singapore Exchange”
:
Singapore Exchange Securities Trading Limited
“SGX-SESDAQ”
:
SGX-ST
System
“SPRING Singapore”
:
Standards, Productivity and Innovation Board
(formerly known as “Singapore Productivity and
Standards Board” or “PSB Singapore” )
“STATS”
:
STATS ChipPAC Ltd.
“Zhangzhou Select Eastern Fast Food”
:
Zhangzhou Select Eastern Fast Food Co., Ltd.
┇Ꮂ㚰Фϰᮍᖿ令᳝䰤݀ৌ
“Application Forms”
:
The official printed application forms to be used for
the purpose of the Invitation which are issued with
and form part of this Prospectus
“Application List”
:
The list of applications for subscription of the New
Shares
“Articles”
:
The Articles of Association of our Company
Dealing
and
Automated
Quotation
General
“Associate”
(a)
In relation to a corporation, means:(i)
a director or Controlling Shareholder;
(ii)
a subsidiary or Associated Company;
or
(iii)
a subsidiary or Associated Company
of the Controlling Shareholder,
of the corporation;
7
DEFINITIONS
(b)
(c)
“Associated Company”
:
In relation to any director, chief executive
officer, Substantial Shareholder or Controlling
Shareholder of a corporation who is an
individual, means:(i)
his immediate family;
(ii)
a trustee, when acting in his capacity
as such trustee, of any trust of which
the individual or his immediate family
is a beneficiary or, in the case of a
discretionary trust, is a discretionary
object; or
(iii)
any corporation in which he and his
immediate family together (directly or
indirectly) have an interest of not less
than 30% of the aggregate of the
nominal amount of all the voting
shares; and
In relation to a Substantial Shareholder, or
Controlling Shareholder, which is a
corporation,
means,
notwithstanding
paragraph (a), any corporation which is its
related corporation or 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% but not more than 50% of
the aggregate of the nominal amount of all
the voting shares; or
(b)
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
influence materially
“ATM”
:
Automated teller machine of a Participating Bank
“ATM Electronic Application”
:
Application for the New Shares made through an
ATM
“Audit Committee”
:
The audit committee of our Company
“Board”
:
The Board of Directors of our Company
8
DEFINITIONS
“Bonus Issue”
:
The bonus issue of 1,540,598 ordinary shares of
$1.00 each credited as fully paid, in the capital of
our Company prior to the Invitation by way of
capitalising the share premium account of our
Company
“Companies Act” or “Act”
:
The Companies Act (Chapter 50) of Singapore
“Controlling Shareholder”
:
A person who:(i)
holds directly or indirectly 15% or more of
the nominal amount of all voting shares in a
company. The SGX-ST may determine that a
person who satisfies this definition is not a
Controlling Shareholder; or
(ii)
in fact exercises control over a company
“Directors”
:
The directors of our Company as at the date of
this Prospectus
“Doris Pek”
:
Pek Poh Cheng, our Executive Officer
“Electronic Applications”
:
Applications for the Offer Shares made through an
ATM Electronic Application, IB Application or
Internet Placement Application, in accordance with
and subject to the terms and conditions of this
Prospectus
“EPS”
:
Earnings per Share
“Executive Directors”
:
The executive directors of our Company as at the
date of this Prospectus
“Executive Officers”
:
The executive officers of our Company as at the
date of this Prospectus
“FY”
:
Financial year ended or, as the case may be,
ending 31 December
“IB”
:
Internet banking
“IB Application”
:
An application for the Offer Shares made through
an IB Website, in accordance with and subject to
the terms and conditions of this Prospectus
“IB Websites”
:
The IB websites of the relevant Participating Banks
“1H2003”
:
The six-month period ended 30 June 2003
“1H2004”
:
The six-month period ended 30 June 2004
“Independent Directors”
:
The independent directors of our Company as at
the date of this Prospectus
“Internet Electronic Application”
:
An application for the Offer Shares made through
an IB Application or an Internet Placement
Application
9
DEFINITIONS
“Internet Placement Application”
:
An application by a Qualifying User for the Internet
Placement Shares through the IPO Website, in
accordance with and subject to the terms and
conditions of this Prospectus
“Internet Placement Shares”
:
The 500,000 Placement Shares available for
application through the IPO Website, in
accordance with and subject to the terms and
“Invitation”
:
Our invitation to the public in Singapore to
subscribe for the New Shares at the Issue Price,
subject to and in accordance with the terms and
“IPO Website”
:
The Internet website www.ePublicOffer.com of
the IPO Website Operator
“ISO 9001”
:
An abbreviation for “International Standards
Organisation ISO-9001”. It is a certification in
respect of quality management system of specific
business activities
“Issue Price”
:
$0.235 for each New Share
“Jack Tan”
:
Tan Choh Peng, our Executive Director
“Latest Practicable Date”
:
15 October 2004, being the latest practicable date
before the lodgement of this Prospectus with the
Authority
“Listing Manual”
:
Listing Manual of the SGX-ST
“Management and Underwriting Agreement”
:
The management and underwriting agreement
dated 30 November 2004 made between our
Company, the Manager and the Underwriter for the
management of the Invitation and the underwriting
of the New Shares
“Market Day”
:
A day on which the SGX-ST is open for trading in
securities
“MRT”
:
Mass Rapid Transit
“New Shares”
:
The 17,500,000 new Shares for which our
Company invites applications to subscribe
pursuant to the Invitation, subject to and in
accordance with the terms and conditions of this
Prospectus
“NTA”
:
Net tangible assets
“Offer”
:
The offer of the Offer Shares by our Company to
the public in Singapore for subscription at the
Issue Price, subject to and in accordance with the
terms and conditions of this Prospectus
10
DEFINITIONS
“Offer Shares”
:
1,000,000 New Shares which are the subject of
the Offer
“Options”
:
The options granted or which may be granted
under the Select Employee Share Option Scheme
“Option Shares”
:
The new Shares which may be allotted and issued
upon the exercise of the options to be granted
under the Scheme
“PER”
:
Price to earnings ratio
“Placement”
:
The placement of the Placement Shares by the
Placement Agent on behalf of our Company for
subscription at the Issue Price, subject to and in
accordance with the terms and conditions of this
Prospectus
“Placement Agreement”
:
The placement agreement dated 30 November
2004 entered into between our Company, the
Manager and the Placement Agent, for the
placement of the Placement Shares
“Placement Shares”
:
16,500,000 New Shares (including the Internet
Placement Shares and Reserved Shares), which
are the subject of the Placement
“Pre-Invitation Investors”
:
Thang Him Tee, Lin Li Fang, Hoon Pang Heng
Joanna, Kork Hoe Soon and Avia Growth
Opportunities Limited
“Prospectus”
:
This Prospectus dated 30 November 2004 issued
by our Company in respect of the Invitation
“Qualifying User” or “Qualifying
Internet Applicant”
:
Any member of the public (being an individual)
in Singapore who has registered for and holds a
valid membership account with the IPO Website
Operator, subject to the terms and conditions for
the membership and use of the IPO Website
“Reserved Shares”
:
1,500,000 Placement Shares reserved for our
employees, business associates and those who
have contributed to the success of our Group
“SARS”
:
Severe Acute Respiratory Syndrome
“Securities Account”
:
The securities account maintained by a Depositor
with CDP but does not include a securities subaccount
“Securities and Futures Act” or “SFA”
:
The Securities and Futures Act (Chapter 289) of
Singapore
“Select Employee Share Option
Scheme” or “Scheme”
:
The Select Employee Share Option Scheme as
described under the section on “Select Employee
Share Option Scheme” on pages 123 to 130 of this
Prospectus and the rules of which are set out in
Appendix D of this Prospectus
11
DEFINITIONS
“Service Agreements”
:
The service agreements entered into between our
Company and our Executive Directors, as
described on page 121 of this Prospectus
“Shareholders”
:
Registered holders of Shares, 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
“Shares”
:
Ordinary shares of $0.045 each in the capital of
our Company
“Share Consolidation”
:
The consolidation of nine ordinary shares of $1.00
each in the authorised and issued and paid-up
share capital of our Company into one ordinary of
$9.00 each
“Share Split”
:
The sub-division of each ordinary share of $9.00
each in the authorised and issued and paid-up
share capital of our Company into 200 ordinary
shares of $0.045 each
“Steven Tan”
:
Tan Poey Chew, our Executive Officer
“Subscription”
:
The subscription of 184,400 new ordinary shares
of $1.00 each in the share capital of our Company
by the Pre-Invitation Investors, as described on
page 76 of this Prospectus
“Subscription Agreement”
:
The subscription agreement dated 21 May 2004
entered into between our Company and the PreInvitation Investors
“Substantial Shareholder”
:
A person who has an interest in shares the
nominal amount of which is not less than 5% of
the nominal amount of all the voting shares of a
company
“Vincent Tan”
Tan Chor Khoon, our Managing Director
Units of Measurement, Currencies and Countries
“PRC”
:
The People’s Republic of China, but for the
purposes of this Prospectus and for geographical
reference only, unless otherwise indicated,
excludes Taiwan, Macau and Hong Kong
“RM”
:
Malaysian Ringgit
“RMB”
:
PRC Renminbi
“sq ft”
:
Square feet
“sq m”
:
Square metres
“$” or “S$” and “cents”
:
Singapore dollars and cents respectively
12
DEFINITIONS
“US$” or “US dollars” and “US cents”
:
United States dollars and cents respectively
“%” or “per cent.”
:
Per centum or percentage
The expressions “Depositor”, “Depository Agent” and “Depository Register” shall have the same
meanings ascribed to them respectively in Section 130A of the Companies Act.
Any discrepancies in tables included herein between the amounts listed and the totals thereof are due to
rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of
the figures which precede them.
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 Prospectus, 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 defined under the Companies Act, the Securities and Futures Act or any statutory modification
thereof and used in this Prospectus, the Application Forms and Electronic Applications shall, where
applicable, have the meaning assigned to it under the Companies Act, the Securities and Futures Act or
any statutory modification thereof, as the case may be.
Any reference in this Prospectus, 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 Prospectus, the Application Forms and Electronic Applications shall
be a reference to Singapore time unless otherwise stated.
Any reference to “our”, “us” and “we” or other grammatical variations thereof in this Prospectus shall,
unless otherwise stated, mean our Company, our Group or any member of our Group as the context
requires.
Certain names with Chinese characters have been translated into English names. Such translations are
provided solely for the convenience of Singapore-based investors and may not have been registered with
the relevant PRC authorities and should not be construed as representation that the English names
actually represent the Chinese characters.
13
GLOSSARY OF TECHNICAL TERMS
To facilitate a better understanding of our business, the following glossary provides a description of some
of the technical terms and abbreviations commonly found in our industry and which are used in this
Prospectus. The terms and their ascribed meanings may not correspond to standard industry or common
meanings, as the case may be, or usage of these terms:“Ampang Yong Tau Fu”
:
A local delight comprising an assortment of bean
curds and vegetables packed with fish paste, and
other meat items
“Central Senoko Kitchen”
:
Our kitchen facilities at 36 Senoko Crescent
Singapore 758282
“Chinese Mixed Rice”
:
A meal comprising rice and a combination of
several food items selected by the patrons from a
menu of Chinese cuisines
“Expo F&B Hub”
:
The food and beverage hub which is to be
established at Singapore Expo, details of which
are set out in the section on “Industry Outlook and
Future Plans” on pages 110 to 114 of this
Prospectus
“F&B”
:
Food and beverage
“food establishments”
:
Staff cafeterias (for our Institutional Catering
Division), dedicated food court stalls, public
cafeterias and restaurant (for our Food Retail
Division) set up by our Group
“Head Chef”
:
Our chef who is in charge of a food establishment
“Halal”
:
Arabic for that which is legally permitted under the
Syariah school of Islamic law
“Kitchens”
:
Our Central Senoko Kitchen and Simei Eastern
Kitchen
“MNC”
:
Multi-national corporations
“Master Chefs”
:
Our chefs who are overall in charge of the different
cuisines or who is in charge of our Institutional
Catering Division
“Nasi Padang”
:
A meal comprising rice and a combination of
several food items selected by the patrons from a
menu of Malay cuisines
“staff cafeterias”
:
The staff cafeterias and canteens
institutional catering corporate customers
“Simei Eastern Kitchen”
:
Our kitchen facilities at 3017 Bedok North Street 5,
#02-33 and 34, Singapore 486121
14
of
our
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
All statements contained in this Prospectus, statements made in press releases and oral statements that
may be made by us or our officers, Directors, Executive Officers or employees acting on our behalf, that
are not statements of historical fact, constitute “forward-looking statements”. Some of these statements
can be identified by forward-looking terms such as “expect”, “believe”, “plan”, “intend”, “estimate”,
“anticipate”, “may”, “will”, “would”, “forecast”, “if”, “possible”, “probable”, “project”, “should” and “could” or
similar words and phrases. However, these words are not the exclusive means of identifying forwardlooking statements. All statements regarding the expected financial position, business strategy, plans and
prospects of our Group and future prospects of the industry that we are in are forward-looking
statements.
These forward-looking statements, including without limitation, statements as to:–
–
–
–
–
our revenue and profitability;
expected growth in demand;
prospects and business strategies;
other expected industry trends; and
other matters discussed in this Prospectus regarding matters that are not historical fact,
are only predictions. These forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause our Group’s actual future results, performance or achievements to be
materially different from any future results, performance or achievements expected, expressed or implied
by such forward-looking statements. These risk factors and uncertainties include, amongst others:–
–
–
–
–
–
–
–
changes in political, social and economic conditions and the regulatory environment of Singapore
and other countries in which we conduct business;
our anticipated growth strategies and expected internal growth;
changes in customer tastes and preferences;
changes in competitive conditions and our ability to compete under these conditions;
changes in prices we charge for our F&B items and services;
changes in our future capital needs and the availability of financing and capital to fund these
needs;
factors described under “Risk Factors” in this Prospectus; and
other factors beyond our control.
All forward-looking statements by or attributable to us, or persons acting on our behalf, contained in this
Prospectus are expressly qualified in their entirety by such factors. The risks and uncertainties that may
cause our actual future results, performance or achievements to be materially different from any future
results, performance or achievements expected, expressed or implied by the forward-looking statements
in this Prospectus apply only as at the date of this Prospectus.
Given the risks and uncertainties that may cause our Group’s actual future results, performance or
achievements to be materially different from that expected, expressed or implied by the forward-looking
statements in this Prospectus, undue reliance must not be placed on those statements. Neither our
Company, the Manager, the Placement Agent and Underwriter nor any other person represents or
warrants that our Group’s actual future results, performance or achievements will be as discussed in
those statements.
Our actual future results, performance or achievements may differ materially from those anticipated in
these forward looking statements. Our Company, the Manager, and the Placement Agent and
Underwriter disclaim any responsibility to update any of those forward-looking statements or publicly
announce any revisions to those forward-looking statements to reflect future developments, events or
circumstances. We are, however, subject to the provisions of the Securities and Futures Act and the
Listing Manual regarding corporate disclosure. In particular, pursuant to Section 241 of the Securities and
Futures Act, if after the Prospectus is registered but before the close of the Invitation, we become aware
15
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
of (a) a false or misleading statement or matter in the Prospectus, (b) an omission from the Prospectus
of any information that should have been included in it under Section 243 of the Securities and Futures
Act or (c) a new circumstance that has arisen since the Prospectus was lodged with the Authority and
would have been required by Section 243 of the Securities and Futures Act to be included in the
Prospectus, if it had arisen before the Prospectus was lodged and that is materially adverse from the
point of view of an investor, we may lodge a supplementary or replacement prospectus with the Authority.
16
SELLING RESTRICTIONS
This Prospectus does not constitute an offer, solicitation or invitation to subscribe for the New Shares in
any jurisdiction in which such an offer, solicitation or invitation is unlawful or is not authorised. This
Prospectus does not constitute an offer, solicitation or invitation to subscribe for the New Shares to any
such person to whom it is unlawful to make such an 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
authorities of, any jurisdiction, except for the filing and/or registration of this Prospectus in Singapore in
order to permit a public offering of the New Shares and the public distribution of this Prospectus in
Singapore. We have not lodged or registered this Prospectus in any other jurisdiction. The distribution of
this Prospectus 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 Prospectus are
required by our Company, the Manager, and the Placement Agent and Underwriter to inform themselves
about, and to observe and comply with, any such restrictions.
17
DETAILS OF THE INVITATION
Listing on the SGX-SESDAQ
We have applied to the SGX-ST for permission to deal in and for quotation of all our Shares already
issued as well as the New Shares and the Option Shares on the SGX-SESDAQ. Such permission will be
granted when we have been admitted to the Official List of the SGX-SESDAQ. Our acceptance of
applications for the New Shares 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 Option
Shares. Moneys paid in respect of any application accepted will, in the event such permission is not
granted, be returned to you at your own risk, without interest or any share of revenue or other benefit
arising therefrom, and you will not have any claim whatsoever against us or the Manager.
The SGX-ST assumes no responsibility for the correctness of any statements made, opinions expressed
or reports contained in this Prospectus. Admission to the Official List of the SGX-SESDAQ is not to be
taken as an indication of the merits of the Invitation, our Company, our subsidiaries, our Shares, the New
Shares or the Option Shares.
A copy of this Prospectus together with copies of the Application Forms have been lodged with and
registered by the Authority. The Authority assumes no responsibility for the contents of this Prospectus.
Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act, or
any other legal or regulatory requirements, have been complied with. The Authority has not, in any way,
considered the merits of our Shares, the New Shares or the Option Shares, as the case may be, being
offered or in respect of which an invitation is made, for investment.
We are subject to the provisions of the Securities and Futures Act and the Listing Manual regarding
corporate disclosure. In particular, if after this Prospectus is registered but before the close of the
Invitation, we become aware of:(a)
a false or misleading statement or matter in this Prospectus;
(b)
an omission from this Prospectus of any information that should have been included in it under
Sections 243 of the Securities and Futures Act; or
(c)
any new circumstances that has arisen since this Prospectus was lodged with the Authority which
would have been required by Sections 243 of the Securities and Futures Act to be included in this
Prospectus, if it had arisen before this Prospectus was lodged,
that is materially adverse from the point of view of an investor, we may lodge a supplementary or
replacement prospectus with the Authority pursuant to Section 241 of the Securities and Futures Act.
Under the Securities and Futures Act, the Authority may, in certain circumstances issue a stop order (the
“stop order”) to our Company, directing that no or no further Shares to which this Prospectus relates, be
allotted, issued or sold. Such circumstances will include a situation where this Prospectus (i) contains a
statement or matter, which in the opinion of the Authority is false or misleading, (ii) omits any information
that should be included in accordance with the Securities and Futures Act or (iii) does not, in the opinion
of the Authority, comply with the requirements of the Securities and Futures Act.
Where the Authority issues a stop order pursuant to Section 242 of the Securities and Futures Act and
applications to subscribe for the New Shares have been made prior to the stop order, and
(a)
in the case where the New Shares have not been issued to the applicants, the applications for 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
moneys the applicants have paid on account of their applications for the New Shares; or
(b)
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 moneys paid by them for the New
Shares.
18
Such moneys paid in respect of your application will be returned to you at your own risk, without interest
or any share of revenue or other benefit arising therefrom, and you will not have any claim against us or
the Manager.
No shares shall be allotted or allocated on the basis of this Prospectus later than six months after the
date of registration of this Prospectus.
This Prospectus has been seen and approved by our Directors and they individually and collectively
accept full responsibility for the accuracy of all the information given in this Prospectus and confirm,
having made all reasonable enquiries, that, to the best of their knowledge, information and belief, (i) the
facts stated and opinions expressed in this Prospectus are fair and accurate in all material respects as at
the date of this Prospectus; (ii) there are no other material facts the omission of which would make any
statement in this Prospectus misleading; (iii) this Prospectus constitutes a full and true disclosure of all
material facts about the Invitation, our Group and our Shares.
Neither our Company, our Directors, the Manager, the Placement Agent and Underwriter nor any other
parties involved in the Invitation is making any representation to any person regarding the legality of an
investment in our Shares by such person under any investment or other laws or regulations. No
information in this Prospectus 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.
The New Shares are offered for subscription solely on the basis of the information contained and the
representations made in this Prospectus.
We have not authorised any person to give any information or to make any representation not contained
in this Prospectus in connection with the Invitation and, if given or made, such information or
representation must not be relied upon as having been authorised by our Company, our Directors, the
Manager, and the Placement Agent and Underwriter. Neither the delivery of this Prospectus and the
Application Forms nor any documents relating to the Offer or the Placement, nor the Invitation shall,
under any circumstances, constitute a continuing representation or create any suggestion or implication
that there has been no change in the affairs of our Company or our subsidiaries or in the statements of
fact or information contained in this Prospectus since the Latest Practicable Date. Where such changes
occur, our Company may make an announcement of the same to the SGX-ST and/or the Authority, and if
required, lodge a supplementary or replacement prospectus pursuant to Section 241 of the Securities
and Futures Act and take immediate steps to comply with the requirements of Section 241. You should
take note of any such announcement or supplementary or replacement prospectus and, upon release of
such announcement or supplementary or replacement prospectus, shall be deemed to have notice of
such changes. Save as expressly stated in this Prospectus, nothing herein is, or may be relied upon as,
a promise or representation as to the future performance or policies of our Company or our subsidiaries.
This Prospectus has been prepared solely for the purpose of the Invitation and may only be relied upon
by you in connection with your application for the New Shares and may not be relied upon by any other
person or for any other purpose. This Prospectus does not constitute an offer of, or invitation to
subscribe for, the New Shares in any jurisdiction in which such offer or invitation is unauthorised
or unlawful nor does it constitute an offer or invitation to any person to whom it is unlawful to
make such an offer or invitation.
19
Copies of this Prospectus and the Application Forms and envelopes may be obtained on request, during
normal business hours, subject to availability, from:Westcomb Securities Pte Ltd
5 Shenton Way
#09-08 UIC Building
Singapore 068808
and from members of the Association of Banks in Singapore, members of the SGX-ST and merchant
banks in Singapore. A copy of this Prospectus is also available on the SGX-ST website
http://www.sgx.com, as well as the MAS website http://www.mas.gov.sg.
The Application List will open at 10.00 a.m. on 13 December 2004 and will remain open until 12.00
noon on the same day or for such further period or periods as our Directors may, in consultation
with the Manager, decide, subject to any limitation under all applicable laws. In the event a
supplementary or replacement prospectus is lodged with the Authority, the Application List will
remain open for at least 14 days from the date of lodgement of the supplementary or replacement
prospectus.
Where prior to the lodgement of the supplementary or replacement prospectus, applications have been
made under this Prospectus to subscribe for the New Shares and:(a)
(b)
where our Shares have not been issued to the applicants, our Company shall either:(i)
within seven days from the date of lodgement of the supplementary or replacement
prospectus, give the applicants the supplementary or replacement prospectus, as the case
may be, and provide the applicants with an option to withdraw their applications; or
(ii)
treat the applications as withdrawn and cancelled, in which case the applications shall be
deemed to have been withdrawn and cancelled, and our Company shall, within seven days
from the date of lodgement of the supplementary or replacement prospectus, return all
moneys paid in respect of any application; or
where our Shares have been issued to the applicants, our Company shall either:(i)
within seven days from the date of lodgement of the supplementary or replacement
prospectus, give the applicants the supplementary or replacement prospectus, as the case
may be, and provide the applicants with an option to return our Shares, which they do not
wish to retain title in; or
(ii)
treat the issue of our Shares as void, in which case the issue shall be deemed void and our
Company shall, within seven days from the date of lodgement of the supplementary or
replacement prospectus, return all moneys paid in respect of any application.
An applicant who wishes to exercise his option under paragraph (a)(i) to withdraw his application shall,
within 14 days from the date of lodgement of the supplementary or replacement prospectus, notify our
Company of this, whereupon our Company shall, within seven days from the receipt of such notification,
pay to him all monies paid by him on account of his application for those Shares without interest or a
share of revenue or benefit arising therefrom, at the applicant’s risk.
An applicant who wishes to exercise his option under paragraph (b)(i) to return our Shares issued to him
shall, within 14 days from the date of lodgement of the supplementary or replacement prospectus, notify
our Company of this and return all documents, if any, purporting to be evidence of title to those Shares,
to our Company, whereupon our Company shall, within seven days from the receipt of such notification
and documents, if any, pay to him all moneys paid by him for those Shares and the issue of those Shares
shall be deemed to be void.
Details of the procedures for application of the New Shares are set out in Appendix F of this Prospectus.
20
Indicative Timetable for Listing
In accordance with the SGX-ST’s News Release of 28 May 1993 on the trading of initial public offering
shares on a “when issued” basis, an indicative timetable is set out below for your reference:Indicative time/date
Event
12.00 noon on 13 December 2004
Close of Application List
14 December 2004
Balloting of applications, if necessary, or otherwise as may
be approved by the SGX-ST (in the event of oversubscription for the Offer Shares)
9.00 a.m. on 15 December 2004
Commence trading on a “when issued” basis
24 December 2004
Last day of trading on a “when issued” basis
9.00 a.m. on 27 December 2004
Commence trading on a “ready” basis
30 December 2004
Settlement date for all trades done on a “when issued” basis
and for trades done on a “ready” basis on 27 December
2004
The above timetable is only indicative as it assumes that (i) the date of closing of the Application List will
be 13 December 2004, (ii) the date of admission of our Company to the Official List of the SGX-SESDAQ
will be 15 December 2004, (iii) the SGX-ST’s shareholding spread requirement will be complied with and
(iv) the New Shares will be issued and fully paid-up prior to 15 December 2004. The actual date on
which our Shares will commence trading on a “when issued” basis will be announced when it is
confirmed by the SGX-ST.
The above timetable and procedures may be subject to such modification as the SGX-ST may, in its
absolute discretion, decide, including the decision to permit trading on a “when issued” basis and the
commencement date of such trading. The commencement of trading on a “when issued” basis will be
entirely at the discretion of the SGX-ST. All persons trading in our Shares on a “when issued” basis do
so at their own risk.
The Invitation will open from 2 December 2004 to 12.00 noon on 13 December 2004.
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:(i)
through a MASNET announcement to be posted on the Internet at the SGX-ST website
http://www.sgx.com; and
(ii)
in a major Singapore English newspaper, such as The Straits Times or The Business Times.
We will publicly announce the level of subscription for the New Shares and the basis of allotment of the
New Shares pursuant to the Invitation, as soon as it is practicable after the closure of the Application List
through the channels in (i) and (ii) above.
All persons trading in our Shares on a “when issued” basis do so at their own risk. In particular,
persons trading in our Shares before their Securities Accounts with CDP are credited with the
relevant number of Shares do so at the risk of selling Shares which neither they nor their
nominees, as the case may be, have been allotted with or are otherwise beneficially entitled to.
Such persons are exposed to the risk of having to cover their net sell positions earlier if “when
issued” trading ends sooner than the indicative date shown above. Persons who have a net sell
position traded on a “when issued” basis should close their position on or before the first day of
“ready” basis trading.
21
Investors should consult the SGX-ST announcement on “ready” trading date on the Internet (at 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.
22
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and is subject to, the more detailed information and
financial statements, including the notes thereto, appearing elsewhere in this Prospectus. Prospective
investors should carefully consider all information presented in this Prospectus, particularly the matters
set out under the section on “Risk Factors”, before making an investment decision.
Overview of our Group
Our Company was incorporated under the Companies Act on 27 January 1995 as a private limited
company under the name of Select Food & Beverage Pte Ltd. Our name was subsequently changed to
Select Catering Services Pte Ltd on 21 April 1997. On 2 November 2004, pursuant to our conversion
into a public limited company, we changed our name to Select Catering Services Limited.
We are an integrated food catering and management services provider in Singapore. Our business can
be categorised into the following three divisions:(a)
Institutional Catering – we provide food management services. We operate and manage staff
cafeterias, on a contract basis, at the premises of our corporate customers from various industries.
Our customers include leading MNCs in various industries such as Advanced Micro Devices (S)
Pte Ltd, Agilent Technologies Singapore Pte Ltd, Maxtor Peripherals (S) Pte Ltd, STATS,
STMicroelectronics Pte Ltd, Infineon Technologies Asia Pacific Pte Ltd and Motorola Electronics
Pte Ltd. As at the end of FY2001, FY2002, FY2003 and the date of this Prospectus, we managed
eight, 13, 20 and 20 staff cafeterias respectively. The daily average number of patrons served at
our staff cafeterias has increased from approximately 3,000 in FY2001 to approximately 33,700 in
1H2004.
(b)
Food Catering – we provide events catering services for corporate, community or private functions,
to commercial customers and public agencies, as well as daily meal delivery services to
workplaces and family units. For FY2001, FY2002, FY2003, we have respectively catered for
approximately 13,000, 15,000 and 14,000 events.
(c)
Food Retail – we operate dedicated food court stalls and public cafeterias specialising in
international and local fare. As at the date of this Prospectus, we operate 39 dedicated stalls in
third-party-operated food courts and two public cafeterias. We commenced the operation of our
first restaurant in Singapore specialising in Thai cuisine in March 2004.
Please refer to the section on “Our Business” on pages 84 to 89 of this Prospectus for more details.
Our Directors consider the following to be our core competitive strengths:–
We have an experienced management team, led by our Managing Director, Mr Vincent Tan. Most
of our senior management has more than ten years of experience in the F&B industry.
–
We have installed an integrated computer system which has enabled us to provide consistent
service to our customers, enhance our level of productivity and quality of service, control our costs
and increase our revenue.
–
We adopt several cost-controlling measures, such as bulk procurement of raw materials and cost
control incentives for our chefs, which have assisted in increasing our profit.
–
We have quality chefs. Our seven Master Chefs and 58 Head Chefs have an average of at least
ten years of experience in the F&B industry. Their skills, experiences and creativity are some of
the most important factors that enable us to attract and retain customers.
–
We are able to provide friendly and prompt service. We were granted the Singapore Service Class
award in 2004 by SPRING Singapore in recognition of our commitment to service.
23
PROSPECTUS SUMMARY
–
We have a broad and varied customer base from which our revenue is generated. We are also
better able to gauge the changing trends in consumer tastes and preferences and cross-sell our
products and services to our customers in the three business divisions.
–
We are able to offer both non-Halal and Halal food which enable us to attract a broader customer
base.
Please refer to the section on “Competitive Strengths” on pages 108 to 109 of this Prospectus for more
details.
Our Future Plans
Our future plans are as follows:–
To develop, operate and manage the Expo F&B Hub which will be established at the Singapore
Expo. We plan to develop the Expo F&B Hub into a prominent food and entertainment hub in the
eastern region of Singapore, which caters not only to the participants of the events held at
Singapore Expo, but also to the general public.
–
To further expand our institutional catering business into the PRC market. We plan to offer our
institutional catering services to our existing corporate customers which have or will set up
manufacturing operations in the PRC.
–
To expand our institutional catering business into other market segments such as hospitals, tertiary
institutions and the uniformed services.
–
To increase the number of our restaurants and dedicated food court stalls in Singapore as and
when strategic locations are available.
Please refer to the section on “Industry Outlook and Future Plans” on pages 110 to 114 of this
Prospectus for more details.
Our Ownership Structure
Following the Invitation, our Group will be substantially owned by our Managing Director, Mr Vincent Tan,
and our Executive Director, Mr Jack Tan, who respectively hold 34.3% and 14.0% in the capital of our
Company after the Invitation.
Where you can find us
Our registered office is located at 36 Senoko Crescent Singapore 758282. Our telephone number is (65)
6852 3333 and our facsimile number is (65) 6852 3335. Our company registration number is
199500697Z. Our website address is http://www.select.com.sg. Information contained on our website
does not constitute a part of this Prospectus.
24
THE INVITATION
Issue Size
:
17,500,000 New Shares comprising 1,000,000
Offer Shares and 16,500,000 Placement Shares
(comprising 500,000 Internet Placement Shares,
1,500,000 Reserved Shares and 14,500,000
Placement Shares by way of Placement Shares
Application Forms).
The New Shares will, upon issue and allotment,
rank pari passu in all respects with our existing
issued Shares.
Issue Price
:
$0.235 for each New Share.
The Offer
:
The Offer comprises an invitation by the Company
to the public in Singapore to subscribe for
1,000,000 Offer Shares at the Issue Price, subject
to and on the terms and conditions of this
Prospectus.
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
16,500,000 Placement Shares, including 500,000
Internet Placement Shares, 1,500,000 Reserved
Shares and 14,500,000 Placement Shares by way
of Placement Shares Application Forms.
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.
Reserved Shares
:
1,500,000 Placement Shares will be reserved for
our employees, business associates and those
who have contributed to the success of our Group.
In the event that any of the Reserved Shares are
not taken up, they will be made available to satisfy
excess applications for the Placement Shares, or
in the event of any under-subscription for the
Placement Shares, to satisfy excess applications
made by members of the public in Singapore for
the Offer Shares.
25
THE INVITATION
Purpose of the Invitation
:
Our Directors consider that the listing of our
Company and the quotation of our Shares on the
SGX-SESDAQ will enhance our public image
locally and regionally and enable us to raise funds
from the capital markets to finance our business
expansion.
The Invitation will also provide
members of the public, our employees, business
associates, as well as others who have contributed
to our success, with an opportunity to participate in
the equity of our Company.
Listing Status
:
Prior to the Invitation, there had been no public
market for our Shares. Our Shares will be quoted
in Singapore dollars on the SGX-SESDAQ, subject
to admission of our Company to the Official List of
the SGX-SESDAQ and permission to deal in and
for quotation of our Shares being granted by the
SGX-ST.
26
DISTRIBUTION PLAN
The Issue Price is determined by us, in consultation with the Manager, based on market conditions and
estimated market demand for our Shares determined through a book-building process. The Issue Price is
the same for all the New Shares and is payable in full on application.
This section should be read in conjunction with, and is qualified in its entirety by reference to, the section
on “Terms and Conditions and Procedures for Application” set out in Appendix F of this Prospectus.
Investors may apply to subscribe for any number of the New Shares in integral multiples of 1,000 Shares.
In order to ensure a reasonable spread of shareholders, we have the absolute discretion to prescribe a
limit to the number of the New Shares to be allotted to any single applicant and/or to allot New Shares
above or under such prescribed limit as we shall deem fit.
Application for the New Shares may be made by one of the following methods:1.
Offer
Pursuant to the terms and conditions contained in the Management and Underwriting Agreement
entered into between our Company, the Manager and the Underwriter, the Underwriter has agreed
to underwrite our Offer Shares.
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
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, in consultation with the Manager, and approved by the
SGX-ST.
Offer Shares
The Offer Shares are made available to the members of the public in Singapore for subscription at
the Issue Price. Investors may apply for the Offer Shares by way of Offer Shares Application Forms
or by way of IB Applications or ATM Electronic Applications.
An applicant (other than an approved nominee company) who has made an application for
the Offer Shares in his own name may not submit another separate application for the Offer
Shares whether by way of an Offer Shares Application Form or by way of an IB Application
or ATM Electronic Application, for any other person. Such separate applications shall be
deemed to be multiple applications and shall be rejected.
An applicant who has made an application for the Offer Shares by way of an Offer Shares
Application Form may not make another separate application for the Offer Shares by way of
an IB Application or ATM Electronic Application and vice versa. Such separate applications
shall be deemed to be multiple applications and shall be rejected.
An applicant who has made an application for the Offer Shares either by way of an Offer
Shares Application Form or by way of an IB Application or ATM Electronic Application shall
not make any separate application for the Placement Shares by way of a Placement Shares
Application Form or by way of an Internet Placement Application. Such separate
applications shall be deemed to be multiple applications and shall be rejected.
Additional terms and conditions of and the procedures for the application for Offer Shares are set
out in Appendix F of this Prospectus.
27
DISTRIBUTION PLAN
2.
Placement
Pursuant to the terms and conditions in the Placement Agreement signed between our Company,
the Manager and the Placement Agent, the Placement Agent has agreed to subscribe and/or
procure subscriptions for the Placement Shares (including the Internet Placement Shares and the
Reserved Shares) at the Issue Price.
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
In the event of an under-subscription for the Internet Placement Shares as at the close of the
Application List, that number of Internet Placement Shares not subscribed for shall be made
available to satisfy excess applications for the Placement Shares by way of Placement Shares
Application Forms to the extent that there is an over-subscription for the Placement Shares as at
the close of the Application List or 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.
In the event that any of the Reserved Shares are not taken up, they will be made available to
satisfy excess applications for the Placement Shares (other than Reserved Shares) to the extent
that there is an over-subscription for the Placement Shares (other than Reserved Shares) and to
satisfy excess application 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.
(a)
Placement Shares (other than Internet Placement Shares and Reserved Shares)
The Placement Shares (other than Internet Placement Shares and Reserved Shares) are
reserved for placement to members of the public and institutional investors in Singapore at
the Issue Price.
Applications for the Placement Shares (other than Internet Placement Shares and Reserved
Shares) may only be made by way of Placement Shares Application Forms.
An applicant who applies for the Placement Shares (other than Reserved Shares) by
way of a Placement Shares Application Form shall not make any separate application
for the Placement Shares (other than Reserved Shares) using another Placement
Shares Application Form or by way of an Internet Placement Application, or for the
Offer Shares (either using an Offer Shares Application Form or by way of an IB
Application or ATM Electronic Application). Such separate applications will be
deemed to be multiple applications and shall be rejected.
Additional terms and conditions and procedures for the application for Placement Shares
are described in Appendix F of this Prospectus.
(b)
Internet Placement Shares
The Internet Placement Shares are reserved for placement to Qualifying Internet Applicants.
Qualifying Internet Applicants may apply for the Internet Placement Shares through the IPO
Website.
The placement of the Internet Placement Shares through the IPO Website will be on a “firstcome-first-served” basis, and is subject to availability at the time of application.
28
DISTRIBUTION PLAN
A Qualifying Internet Applicant who has made an application for Internet Placement
Shares through the IPO Website shall not make any separate application for
Placement Shares by way of a Placement Shares Application Form or by way of
another application through the IPO Website, or for the Offer Shares (either using an
Offer Shares Application Form or by way of an IB Application or ATM Electronic
Application). Such separate applications will be deemed to be multiple applications
and shall be rejected.
A Qualifying Internet Applicant whose application for Internet Placement Shares is
rejected because of multiple applications will be levied an administrative fee
amounting to 20% of the Qualifying Internet Applicant’s application subscription
money (GST included).
Additional terms and conditions of and the procedures for the application of Internet
Placement Shares are set out in Appendix F of this Prospectus.
(c)
Reserved Shares
To recognise their contributions to our Group, we have reserved certain Placement Shares
for subscription at the Issue Price by our employees, business associates and those who
have contributed to the success of our Group.
These Reserved Shares are not subject to any moratorium and may be disposed of after the
admission of our Company to the Official List of the SGX-SESDAQ.
In the event that any of the Reserved Shares are not taken up, they will be made available
to satisfy excess applications for the Placement Shares to the extent that there is an oversubscription for the Placement Shares as at the close of the Application List or, in the event
of an under-subscription for the Placement Shares as at the close of the Application List, to
satisfy excess applications made by members of the public 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.
Application for the Reserved Shares may only be made by way of Reserved Shares
Application Forms.
Additional terms and conditions of and the procedures for the application for Reserved
Shares are set out in Appendix F of this Prospectus.
Subscribers of Placement Shares (other than Reserved Shares) may be required to pay a
brokerage of up to 1% of the Issue Price to the Placement Agent.
None of our Directors or Substantial Shareholders intends to subscribe for the New Shares in the
Invitation. To the best of our knowledge, we are not aware of any member of our Company’s
management or employees who intends to subscribe for more than 5% of the New Shares.
We are also not aware of any person who intends to subscribe for more than 5% of the New Shares.
However, through a book-building process to assess market demand for our Shares, there may be
person(s) who may indicate an interest to subscribe for our Shares amounting to more than 5% of the
New Shares. The final allocation of Shares will be in accordance with the shareholding spread and
distribution guidelines set out in Rule 210 of the Listing Manual.
Further, no Shares shall be allotted or allocated on the basis of this Prospectus later than six months
after the date of registration of this Prospectus.
29
INVITATION STATISTICS
$0.235
Issue Price for each Share
NTA
NTA per Share based on the balance sheet of our Group as at 30 June 2004:(a)
before adjusting for the estimated net proceeds from the issue of the
New Shares and based on our Company’s pre-Invitation share capital
of 75,213,400 Shares
6.90 cents
(b)
after adjusting for the estimated net proceeds from the issue of the
New Shares and based on our Company’s post-Invitation share capital
8.95 cents
Premium of Issue Price over the NTA per Share as at 30 June 2004:(a)
before adjusting for the estimated net proceeds from the issue of the
New Shares and based on our Company’s pre-Invitation share capital
240.6%
(b)
after adjusting for the estimated net proceeds from the issue of the
New Shares and based on our Company’s post-Invitation issued share
capital of 92,713,400 Shares
162.6%
EPS
Historical net EPS for FY2003 based on our Company’s pre-Invitation share capital
1.21 cents
Adjusted historical net EPS for FY2003 had the Service Agreements set out on
pages 121 to 122 of this Prospectus been in effect from the beginning of FY2003
and based on the pre-Invitation share capital of 75,213,400 Shares(1)
1.09 cents
Price Earnings Ratio
Historical PER for FY2003 based on the Issue Price and the historical net EPS and
our Company’s pre-Invitation share capital of 75,213,400 Shares
19.42 times
Adjusted historical PER for FY2003 had the Service Agreements set out on pages
121 to 122 of this Prospectus been in effect from the beginning of FY2003 and
based on the adjusted historical net EPS for FY2003 and our Company’s preInvitation share capital of 75,213,400 Shares
21.56 times
Net Operating Cash Flow(2)
Historical net operating cash flow per Share for FY2003 based on our Company’s
pre-Invitation share capital of 75,213,400 Shares
2.63 cents
Historical net operating cash flow per Share for FY2003 had the Service
Agreements set out on pages 121 to 122 of this Prospectus been in effect from the
beginning of FY2003 and based on our Company’s pre-Invitation share capital of
75,213,400 Shares(2)
2.51 cents
Price to Net Operating Cash Flow Ratio
Ratio of Issue Price to historical net operating cash flow per Share of our Group for
FY2003 based on our Company’s pre-Invitation share capital of 75,213,400 Shares
30
8.94 times
INVITATION STATISTICS
Ratio of Issue Price to historical net operating cash flow per Share of our Group for
FY2003 had the Service Agreements set out on pages 121 to 122 of this
Prospectus been in effect from the beginning of FY2003 and based on our
Company’s pre-Invitation share capital of 75,213,400 Shares
9.36 times
Market Capitalisation
Our market capitalisation based on the post-Invitation share capital of 92,713,400
Shares and the Issue Price
21.8 million
Notes:(1)
Had the Service Agreements (as described under “Directors, Management and Staff – Service Agreements” in this
Prospectus) been in effect from the beginning of FY2003, the profit after taxation would have been approximately $0.8 million
instead of $0.9 million.
(2)
Net operating cash flow is defined as net profit after taxation attributable to shareholders with provision for depreciation
added back.
31
RISK FACTORS
We are vulnerable to a number of risks applicable to the industry and the areas in which we operate.
Our business, financial condition or results of operations could be materially and adversely affected
should any of these risks materialises. To the best of our Directors’ knowledge and belief as at the date
of this Prospectus, all risks that (i) are material to investors in making an informed judgment and (ii) upon
developing into actual events would have a material adverse impact on our business, results of
operations or financial condition, are set out below.
If any of the following considerations and uncertainties developed into actual events, our business,
financial condition or results of operations and prospects could be materially and adversely affected. In
such cases, the trading price of our Shares could decline and you may lose all or part of your investment
in our Shares.
You should consider carefully, together with all other information contained elsewhere in this Prospectus,
the factors described below before deciding to invest in our Shares. Before deciding to invest in our
Shares, you should seek professional advice from the relevant advisers about your particular
circumstances.
RISKS RELATING TO OUR INDUSTRY
We will be affected by any outbreak of SARS or spread of other contagious or virulent diseases
The majority of our kitchens and food establishments are located in Singapore. A resurgence of the
SARS outbreak or the spread of any other contagious or virulent diseases in Singapore may negatively
affect consumer confidence and sentiments, leading to a reduced willingness by the public to dine at our
food establishments or engage our food catering services. Our revenue may consequently be adversely
affected. Further, if any of the employees in our facilities and/or the facilities of our suppliers and/or the
facilities of our institutional catering corporate customers is infected with SARS or other contagious or
virulent disease, we and/or our suppliers and/or our corporate customers may be required to temporarily
shut down the affected facility to prevent the spread of the disease. This will have a negative impact on
our business operations and financial performance.
We will be affected by any outbreak of food-related diseases
Any outbreak of diseases in livestock or food scares in the region and around the world (for instance, the
Avian or bird flu) may lead to a reduction in the consumption of the affected type of meat or food by
consumers. We would not be able to predict the further occurrences of such diseases, or when there will
be an outbreak of new diseases affecting not only meat, but vegetables or other ingredients used in our
food recipes. In the event of any such outbreaks resulting in severe loss of consumer confidence and
declined patronage at our food establishments, our business may be materially and adversely affected.
Further, sources of supply for the affected type of meat or food may also be reduced leading to an
increase in the prices of such meat or food. This will cause our costs of sales to increase and our profit
margin to decrease. Any such increase in cost or loss of business will adversely affect our profitability
and financial performance. In addition, a loss in consumer confidence arising from an outbreak of
disease concerning any particular raw material may force us to reduce or totally eliminate the use of that
raw material in our menu thereby affecting our ability to offer our customers a wide variety of food items.
This may lead to declined patronage at our food establishments and thus affect our business and
financial performance.
We may be affected by any adverse change in economic conditions and discretionary consumer
spending
Our business is subject to prevailing economic conditions. Any adverse change in economic conditions
may affect consumers’ disposable income and confidence. In the event of an economic downturn,
consumers tend to be more budget-conscious in the amount which they spend on food. Any such
negative change in discretionary consumer spending will have an adverse impact on our revenue and
hence our financial performance. Our institutional catering customers may also choose to reduce their
operation costs by downsizing. This will lead to reduced patronage at the staff cafeterias we operate
thereby affecting the revenue derived from our institutional catering operations. In addition, we may also
be compelled to lower the food prices offered at our food establishments which will cause our profit
margins and profitability to decrease.
32
RISK FACTORS
Our business is highly competitive and we may not be able to compete successfully in our
industry
We operate in an industry which is highly competitive and with low barriers of entry. We compete by
offering inter alia, a variety of cuisines, good food quality and taste, competitive pricing and good
customer service. We cannot assure you that our competitors, some of which may have a better name
recognition and more financial resources than we have, will not compete with us in the markets that we
operate. In the event that we are unable to compete effectively in our industry, our profitability will be
materially and adversely affected. For more information on our competitors, please refer to the section
on “Competition” on page 107 of this Prospectus.
We are susceptible to changes in raw materials costs
Our profitability depends, in part, on our ability to anticipate and react to changes in raw materials costs.
Our raw materials are mainly food products and ingredients such as meat, vegetables, dairy products,
spices and condiments. These raw materials as a percentage of our revenue for FY2003 and 1H2004
were approximately 38.0% and 37.3% respectively. The prices of these raw materials are subject to
price fluctuation due to various factors beyond our control, including but not limited to severe climatic
conditions, outbreak of diseases and governmental regulations, which may reduce supply and lead to
increase in food and supply costs. In the event that we are unable to anticipate and react to changing
food and supply costs by adjusting our purchasing practices or passing on any increase in such costs to
our customers, our business, profitability and financial performance may be materially and adversely
affected.
We are affected by regulations governing our operations and any change in such regulations
We are subject to the laws and regulations governing the F&B industry, including but not limited to those
relating to food safety, handling and storage, hygiene standards, sale of food and beverages and
sanitation, building and zoning requirements. We are required to obtain and maintain for our operations,
certain licences, permits and approvals from the relevant authorities. In respect of the operation of our
two food court stalls in Malaysia, we are required to obtain a business licence from the relevant
Malaysian authorities for the conduct of our business. We are also required to obtain the service tax
licence as the annual turnover of our subsidiary, Select FM (Malaysia), exceeds RM0.5 million. We are
currently applying for the business licence in respect of the operation of our food court stall at Petaling
Jaya. We are also applying for the service tax licence in respect of the operation of our food court stalls
at Petaling Jaya and Kuala Lumpur. We had commenced operations prior to such licences having been
obtained. Under Malaysian laws, a penalty comprising a fine not exceeding RM2,000 and/or
imprisonment not exceeding one year may be imposed where a person fails to obtain a business licence
where such a licence is legally required. A fine not exceeding RM5,000 and/or imprisonment not
exceeding two years may be imposed for failing to obtain a service tax licence where such a licence is
legally required. We are currently in the process of applying for such licenses. For the purpose of this
Prospectus, our legal adviser on Malaysian law had on 3 August 2004 advised us that the penalty that is
more likely to be imposed (if any) for such breaches is a compound or a fine. The Directors are however
unable to assure that the aforesaid breach would not affect Select FM (Malaysia)’s ability to obtain the
relevant licences, permits and approvals from the relevant authorities in respect of any future expansion
of its business in Malaysia. Further, should we be unable to continue the operation of our Malaysian food
court stalls as a result of the above, the revenue contribution from our Malaysian food court stalls, which
accounted for approximately 2% of our total revenue in 1H2004, will be affected.
Please refer to the section on “Government Regulations” in this Prospectus for more details of the
licences held by our Group.
In the event that we are unable at any time to comply with the existing regulations, such as obtaining,
maintaining or renewing the relevant licences required to operate our Kitchens, food court stalls, public
cafeterias, staff cafeterias or restaurant, or any changes in such regulations, or any new regulations
introduced by the relevant authorities, our operations may be adversely affected if we are not allowed to
operate or if our operations are substantially curtailed as a result. In addition, any change in or
introduction of new regulations which require our compliance may increase our costs of operations. All
these will have an adverse effect on our profitability.
33
RISK FACTORS
In addition, we are subject to labour and immigration laws that govern the employment of our local and
foreign employees. Our business operations are labour intensive. Staff costs (excluding Directors’
remuneration) as a percentage of total revenue for 1H2004 were approximately 32.2%. In the event of
any change in the labour laws such as an increase in foreign worker levy or CPF contributions, our total
costs of sales will increase. In such an event, our business operations and financial performance may be
adversely affected.
RISKS RELATING TO OUR GROUP
Our business will be adversely affected by complaints from customers and bad publicity
Like any operator in the F&B industry, we can be adversely affected by negative publicity concerning food
quality, illness, injury, hygiene standards, publication of government or industry findings concerning food
products served by us, or other health concerns or operating issues arising from one food establishment,
a limited number of food establishments or food processing facilities or any catering companies. At any
instance, our food establishments can be subject to negative allegations from our customers regarding
our food quality, hygiene standards and operational inefficiency, as well as complaints of illnesses and
injuries suffered at our premises or arising from the consumption of our food. We may also be the subject
of malicious or groundless rumours which may be easily transmitted through the increased use of the
internet and the increasingly popular mobile phone text messaging. Such bad publicity will materially
affect the business of our food establishments regardless of whether or not these allegations are
genuine. If there are incidences of poor hygiene with regard to food preparation or lack of cleanliness at
our food establishments and food processing facilities, the bad publicity arising from such incidences
would damage our image, reduce customers’ confidence in our products and result in reduced patronage
of our food establishments. All these occurrences will have an adverse impact on our business,
profitability and financial performance.
In addition, if complaints of our customers escalate to become lawsuits against us, resources (including
but not limited to time and legal costs) would have to be utilised to contest the lawsuits, thereby further
affecting our financial performance. We cannot assure you that no material litigation will be brought
against us in the future.
We will be affected by any failure to maintain the quality of the food we offer
It is essential in the F&B industry that the quality of food served must be consistent. Inconsistency in the
food quality would result in customers’ dissatisfaction and hence a reduction in their patronage. High staff
turnover, shortage of staff or the lack of proper supervision may affect the quality of food served at our
food establishments.
In addition to the food quality, it is important that the furniture and fixtures in our public cafeterias and
restaurant are properly maintained in order to uphold our image and branding and encourage repeat
patronage by our customers. Failure to do so would adversely affect our business and profitability and
thus affect our financial performance.
We may be adversely affected if our intellectual property rights are not protected
As at the date of this Prospectus, all except one of our trademarks and service marks have not been
registered. We have filed applications for the registration of our trademarks and service marks with the
Intellectual Property Office of Singapore. Please see the section on “Trademark and Patent” on page 98
in this Prospectus for more details. We are unable to confirm the date on which our trademarks and
service marks will be registered. Pending registration, any unauthorised use of our trademarks or service
marks may harm our reputation and consequently our business, profitability and financial performance.
We have received initial objection from the Intellectual Property Office of Singapore to the registration of
the trademarks which are still pending.
34
RISK FACTORS
There is no assurance that our application for registration of our trademarks and service marks will be
approved. In the event that any third party alleges proprietary rights over such marks, we may be
exposed to legal proceedings brought against us by such third parties in respect of our use of the
trademarks and service marks. These legal proceedings may result in monetary liability in the form of
damages and/or an account of profit and prevent us from further using our trademarks and service
marks. Our sales and profitability will be adversely affected in such an event.
We may be affected by any increase in rental or the failure to procure the renewal of our existing
leases and licences
We lease or license our premises from third parties for the operation of our food retail business. Rental
costs form a significant component of our total costs. For FY2001, FY2002, FY2003 and 1H2004, rental
expenses as a percentage of our total revenue were approximately 11.1%, 11.5%, 9.3% and 9.9%
respectively. These rental expenses included rental for our dedicated food court stalls, public cafeterias
and restaurant. An increase in rental expenses may erode our profit.
In addition, upon expiry of our existing leases and licences, the landlords and licensors have the right to
review and change the terms and conditions of the lease and licence agreements. We may not be able
to renew the leases and licences on terms and conditions which are favourable to us. The non-renewal
of these leases or licences or renewal upon less favourable terms may have a material adverse effect on
our operations and profitability.
We may not be able to renew our contracts with our institutional catering customers
The duration of our institutional catering contracts typically ranges from one to three years. Upon expiry,
these contracts are renewable for further periods at the sole option of our customers. In addition, the
contracts generally provide for termination by either party with notice as well as unilateral termination by
the customer upon our breach of the contract, insolvency or liquidation.
If we are not able to renew our contracts with our institutional catering corporate customers or our
contracts are terminated unilaterally by our customers, our revenue and overall financial performance
may be affected.
We may not be able to secure good locations for further expansion of our food retail business
The business turnover of our Food Retail Division is to a certain extent dependent on our ability to
secure additional good locations for our food court stalls, public cafeterias and restaurants. A good
location possesses characteristics such as heavy human traffic flow, reasonable rental costs, safe and
conducive environment for dining and close proximity to patrons. There is no assurance that we will be
able to continue to secure good locations to expand our food retail business, and this may affect our
business and financial performance.
We may be affected by any change in tenant mix and poor maintenance of the shopping malls in
which our food retail outlets are situated
Before we decide to set up a food court stall, public cafeteria or restaurant at a particular complex or
shopping mall, we would evaluate its viability based on the location and tenant mix. A change in the
tenant mix or anchor tenant of a complex or shopping mall in which our food court stalls, public cafeterias
or restaurant are situated may result in fewer customers visiting and patronising the complex or shopping
mall and reduces the human traffic flow to our food court stalls, public cafeterias or restaurant. In
addition, poor maintenance of the complex or shopping mall may also result in less patronage at our food
establishments. This will negatively affect our business and financial performance.
35
RISK FACTORS
Pilferage by our employees and outsiders will harm our financial performance, reputation and
branding
As most of our sales are on cash basis, our employees handle cash and food items. Although we have
cash management and control measures in place, lapses in such internal controls may occur. Should we
fail to impose or enforce strict supervision on our staff to prevent any malpractices such as pilferage of
cash and/or raw materials, our financial performance, reputation and branding will be adversely affected
if any such wrongdoings are committed at our food establishments.
We rely on our senior management staff and the inability to retain or attract staff will adversely
affect our business and financial performance
We rely on our senior management staff, in particular, our founder and Managing Director, Mr Vincent
Tan, and our Executive Director, Mr Jack Tan, to oversee our business operations, development,
strategies and expansion. Most of our senior management staff has more than ten years of experience in
the F&B industry. Please see the sections on “Directors” and “Executive Officers” on pages 115 to 118 of
this Prospectus for more details on the background and responsibilities of our Directors, Messrs Vincent
Tan and Jack Tan, and our Executive Officers.
The loss of the services of Messrs Vincent Tan and/or Jack Tan or any of our Executive Officers or that of
other key personnel without adequate and timely replacements could adversely affect our business. We
also believe that our future success will depend upon our ability to attract, retain and motivate our senior
management staff. Our inability to do so would adversely affect our business and financial performance.
Our business is largely service-oriented and our employees are important to us
In addition to our senior management staff, our continued success depends in part upon our ability to
attract, motivate and retain a sufficient number of qualified and skilled employees. Qualified individuals of
the requisite calibre are in short supply in the F&B industry. In particular, experienced and skilled chefs
are scarce and difficult to attract. Any failure to recruit skilled personnel and to retain our key staff may
adversely impact our operations and expansion plans. Any material increases in employee turnover rates
in any of our existing food establishments could have a material adverse effect on our business
operations, financial condition, operating results or cash flows. Additionally, competition for qualified
employees would require us to pay higher wages to attract and retain sufficient and capable employees
which could result in higher labour costs, thereby adversely affecting our business, profitability and
financial performance.
There are uncertainties associated with our business expansion
We intend to expand our presence in new markets, both overseas and in Singapore. We have set up our
subsidiary, Select Suzhou, to expand our institutional catering business into the PRC. Further, we have
also expanded our business into the area of F&B concession management and operation. Under our
contract with the appointed manager of Singapore Expo, we will develop, manage and operate the Expo
F&B Hub which will be established at Singapore Expo. We intend to lease out available food facilities at
the Expo F&B Hub to third party operators. These food facilities are expected to include one food court,
six restaurants, three cafeterias, two fast food outlets and one pub. Please see the section on “Industry
Outlook and Future Plans” on pages 110 to 114 of this Prospectus for more details. Our expansion plans
involve a number of risks, including but not limited to the costs of setting up our business overseas,
investment in property, plant and equipment and renovation costs, costs of working capital tied up in
inventories as well as other working capital requirements. As we have no prior experience in the
development, management and operation of food facilities of a scale equivalent to that of the Expo F&B
Hub or in operating our institutional catering business in the PRC, there is no certainty that we will be
able to manage our business expansion plans effectively and successfully. If we are unable to do so, our
financial performance will be materially and adversely affected.
36
RISK FACTORS
Economic, social and political situations in the countries in which we propose to expand our
business may affect our business adversely
At present, our businesses are substantially located in Singapore. However, we have plans to commence
our institutional catering operations in the PRC. If we expand to other countries, our business will be
further subject to the economic, social and political conditions in these countries. Our business, earnings,
asset values and prospects may be materially and adversely affected by developments with respect to
inflation, interest rates, government policies, price and wage controls, exchange control regulations,
taxation, expropriation, social instability and other political, economic or diplomatic developments in or
affecting the PRC. We have no control over such conditions and developments and can provide no
assurance that such conditions and developments will not adversely affect our operations or the price of
or market for our Shares.
We may be affected by changes in the government policies of Malaysia, including changes to the
Guidelines on the Acquisition of Interests, Mergers and Take-overs by Local and Foreign Interests
issued by the Foreign Investment Committee (“FIC”) of Malaysia
We began our operations in Malaysia in 2000. For FY2003, business from our Malaysian operations
accounted for 1.6% of our total revenue. As at the Latest Practicable Date and pursuant to the Guidelines
on the Acquisition of Interests, Mergers and Take-overs by Local and Foreign Interests issued by the FIC
(“FIC Guidelines”) which took effect on 21 May 2003, the prior approval of the FIC is required for, inter
alia,:(a)
any proposed acquisition of 15% or more of the voting right of any local companies or businesses
in Malaysia by a foreign interest; or
(b)
any proposed acquisition of an aggregate of 30% or more of the voting right in such companies or
businesses by foreign interests or by an associated group.
A foreign interest includes companies or institutions incorporated outside Malaysia and natural persons
who are not Malaysian citizens (including those who are non-Malaysian citizens but who have permanent
resident status in Malaysia).
Any proposed acquisition by foreign interests which will increase their voting right to 15% in any local
companies or business in Malaysia (or to 30% or more, where the proposed acquirors are an associated
group) will also require FIC’s approval.
Conditions which may be imposed by the FIC under the FIC Guidelines include the condition that at least
30% of the equity in the subject company to be acquired must be held by Bumiputeras (Malay
individuals or indigenous people as defined under the Federal Constitution of Malaysia), if such
requirement is not already met. It is also a requirement under the FIC Guidelines that any company to be
acquired by foreign interests must have an issued and paid up share capital of RM250,000 within the
stipulated time. Further the said subject company must also use its best endeavours to recruit and train
Malaysian citizens so as to reflect Malaysia’s population composition at every level of employment.
Although the FIC Guidelines do not have the force of law (as they are not legislation passed by
Parliament or regulations under any existing laws) and do not impose any penalty for non-compliance,
the FIC Guidelines are recognised by other governmental authorities or bodies in Malaysia (such as the
immigration department and land registries). These authorities may refuse to grant to companies which
are not in compliance with the FIC Guidelines, licences or permits that may be required under Malaysian
law relating to the operations of such companies or reject any registrations relating to dealings in land.
We have not made the relevant applications for FIC approval to hold 15% or more of the voting rights in
Select FM (Malaysia), our Malaysian subsidiary.
37
RISK FACTORS
Any future changes to existing FIC Guidelines or the introduction of new regulations governing foreign
ownership could affect our investment in Select FM (Malaysia) as we may be required by the Malaysian
authorities to restructure our equity interest in our Malaysian subsidiary. In the event that we are required
pursuant to the FIC Guidelines or other government guidelines, laws or regulations to divest part of our
interest in Select FM (Malaysia), we may not be able to retain full management or operations control over
our Malaysian subsidiary. In such an event, our Group’s operations in Malaysia may be materially and
adversely affected.
RISKS RELATING TO OWNERSHIP OF OUR SHARES
Substantial future sale of Shares could adversely affect the market price of our Shares
Immediately following the Invitation, our Company will have 92,713,400 issued and paid-up Shares. Such
Shares, except for those under moratorium, may be sold in the public market in Singapore. Any future
sale or availability of our Shares in the public market can have a downward pressure on our Share price.
The sale of a significant amount of Shares in the public market after the Invitation, or the perception that
such sale may occur, could materially and adversely affect the market price of our Shares.
Except as otherwise described under “Moratorium” on page 80 of this Prospectus, there will be no
restriction on the ability of our Substantial Shareholders to sell their Shares either on the SGX-ST or
otherwise. If our Substantial Shareholders sell substantial number of our Shares in the public market
following the expiry of the moratorium, the market price of our Shares could fall.
In addition, in the event that we sell new Shares, we will be under no obligation to offer those Shares to
our existing Shareholders at the time of sale, except in the event that we elect to conduct a rights issue.
However, in the event that we elect to conduct a rights issue or certain other equity issue, we will have
the discretion and may also be subject to certain procedures and regulations such that we may offer the
new Shares to existing Shareholders. In addition, we may not offer such rights to our existing
Shareholders having an address in jurisdictions outside Singapore.
Accordingly, certain Shareholders may be unable to participate in future equity offerings by us and may
experience dilution in their shareholdings as a result.
New investors in our Shares will face immediate and substantial dilution in the NTA per Share and
may experience future dilution
Our Issue Price of 23.5 cents is higher than our Group’s NTA per Share of approximately 8.95 cents as
at 30 June 2004, based on the post-Invitation issued share capital of 92,713,400 Shares and after
adjusting for the estimated net proceeds from the Invitation. Thus, there is an immediate and substantial
dilution in the NTA per Share for investors who purchase our Shares in the Invitation. We also intend to
grant share options to various eligible persons to acquire our Shares under the Select Employee Share
Option Scheme. To the extent that such outstanding options are exercised, there will be further dilution to
Shareholders following the Invitation. Please refer to “Dilution” on page 73 of this Prospectus for more
details.
Our Directors, Controlling Shareholders and their Associate will retain majority control over our
Group after the Invitation, which will allow them to influence the outcome of matters submitted to
Shareholders for approval
Upon completion of the Invitation, our Directors Messrs Vincent Tan and Jack Tan, and their Associate,
Madam Tay Bock Hiang, will, in aggregate, beneficially own approximately 54.6% of our enlarged share
capital after the Invitation. As a result, these persons, if they act together, will be able to exercise
significant influence over all matters requiring approval by our Shareholders, including the election of
Directors and the approval of significant corporate transactions including mergers. These persons will
also have veto power, if they act together with respect to any shareholder action or approval requiring a
majority vote except where they are required by the Rules of the Listing Manual to abstain from voting.
This concentration of ownership will place these major Shareholders in a position to affect significantly
our corporate actions such as mergers or takeover attempts (notwithstanding that the same may be
synergistic or beneficial to our Group) in a manner that could conflict with the interest of public
Shareholders.
38
RISK FACTORS
Our Share price may be volatile, which could result in substantial losses for investors purchasing
our Shares pursuant to the Invitation
The market price of our Shares may fluctuate significantly and rapidly as a result of, inter alia, the factors
mentioned below:–
differences between our actual financial and operating results and those expected by investors and
analysts;
–
announcements by us or our competitors of significant contracts, acquisitions, strategic alliances,
joint ventures or capital commitments;
–
fluctuations in stock market prices and volume;
–
changes in our operating results;
–
changes in securities analysts’ estimates of our financial performance and recommendations;
–
changes in market valuation of similar companies;
–
our involvement in litigation, arbitration or other forms of dispute resolution;
–
additions or departures of key personnel; and
–
changes in general economic and stock market conditions.
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 the SGX-SESDAQ, there is no assurance that an active
trading market for our Shares will develop, or if it develops, will be sustained. The Issue Price was
determined by negotiations between the Manager, the Placement Agent, the Underwriter and ourselves
and may not be indicative of prices that may prevail in the trading market after the completion of the
Invitation. 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 significant fluctuations due to various
external factors which are outside our control and which may be unrelated or disproportionate to our
financial results. Such events include the liquidity of our Shares in the market, difference between our
actual financial or operating results and those expected by investors and analysts, the general market
conditions and broad market fluctuations.
Negative publicity, including those relating to any of our Directors, Substantial Shareholders or
key personnel, may adversely affect our Share price
Any negative publicity or announcement relating to any of our Directors, Substantial Shareholders or key
personnel may adversely affect the stock performance of our Company, whether or not this is justifiable.
Such negative publicity or announcement may include, inter alia, involvement in insolvency proceedings
and failed attempts in takeovers and joint ventures.
39
USE OF PROCEEDS
The net proceeds attributable to us from the issue of the New Shares (after deducting the estimated
expenses in relation to the Invitation, comprising underwriting commissions, professional fees and other
expenses, of approximately $1.0 million) are estimated to be approximately $3.1 million.
We intend to utilise the net proceeds for the following purposes:(a)
approximately 70% of the net proceeds or $2.2 million for the expansion of our food catering and
food retail business (including the development of the Expo F&B Hub at the Singapore Expo and
increasing the number of restaurants and food court stalls in Singapore);
(b)
approximately 20% of the net proceeds or $0.6 million for the expansion of our institutional
catering business into the PRC;
(c)
approximately 5% of the net proceeds or $0.2 million for the expansion of our institutional catering
business into other market segments; and
(d)
the remaining as working capital for our Group.
Please refer to “Industry Outlook and Future Plans” on pages 110 to 114 of this Prospectus for further
details on our plans above.
Pending the deployment of the net proceeds from the issue of the New Shares as aforesaid, the funds
will be placed in short-term time deposits with financial institutions or invested in short-term money
market instruments and/or used as working capital, as our Directors may in their absolute discretion
deem fit.
In the reasonable opinion of our Directors, no minimum amount must be raised by the Invitation.
The estimated expenses payable by our Company in connection with the Invitation and the application for
listing, including underwriting commission, placement commission, brokerage, professional fees and
charges and miscellaneous expenses are set out as follows:-
($’000)
Listing fees
Professional fees and charges
Underwriting commission, placement commission
and brokerage
Miscellaneous expenses
11
610
103
276
Total estimated expenses
1,000
40
SELECTED GROUP FINANCIAL INFORMATION
The following financial information is prepared for illustration purposes only and should be read in
conjunction with the full text of the Prospectus, including the “Independent Auditors’ Report and Audited
Consolidated Financial Statements of Select Catering Services Limited” and the “Independent Auditors’
Review Report and Unaudited Consolidated Financial Statements of Select Catering Services Limited”
set out respectively in Appendix G on pages G-1 to G-25 and Appendix H on pages H-1 to H-24 of this
Prospectus and the related notes thereto, and the section on “Management’s Discussion and Analysis of
Results of Operations and Financial Position” on pages 43 to 71 of this Prospectus.
OPERATING RESULTS OF OUR GROUP
FY2001
Audited
FY2002
FY2003
Revenue
20,408
26,889
33,790
15,328
20,179
Cost of sales
(7,253)
(9,677)
(12,843)
(5,798)
(7,533)
Gross profit
13,155
17,212
20,947
9,530
12,646
66
22
27
5
71
(225)
(289)
(243)
(123)
(175)
Administrative expenses
(8,192)
(10,352)
(12,964)
(6,199)
(7,414)
Other operating expenses
(4,344)
(5,837)
(6,255)
(2,952)
(3,690)
Other (charges)/credits
(45)
(52)
Profit from operations
415
704
(308)
(231)
Profit before income tax for
on-going operation
107
473
Discontinued operation
(40)
(204)
67
269
(112)
(163)
(352)
(49)
(45)
106
913
9
1,080
13
47
–
–
–
(32)
153
913
9
1,080
(0.04)
0.20
1.21
0.01
1.44
$’000
Other operating income
Distribution costs
Finance costs
Profit before income tax
Income tax expenses
(Loss)/profit after income tax
Minority interests(3)
Net (loss)/profit for the year(1)
EPS (cents)(2)
Unaudited
1H2003
1H2004
33
5
1,545
266
(169)
1,376
(111)
1,265
(97)
169
(111)
58
(16)
1,422
(62)
1,360
–
1,360
(280)
Notes:(1)
Had the Service Agreements been in existence since the beginning of FY2003, our net profit after tax would have been $0.8
million instead of $0.9 million. Please refer to the section on “Service Agreements” on pages 121 to 122 of this Prospectus
for details of the Service Agreements.
(2)
For comparative purposes, the EPS for the year/period under review has been computed based on our net profit after tax
and our pre-Invitation issued share capital of 75,213,400 Shares.
(3)
Minority interests relate to profits attributable to minority shareholders of our previous subsidiaries, Select Eastern Investment
and Zhangzhou Select Eastern Fast Food.
41
SELECTED GROUP FINANCIAL INFORMATION
FINANCIAL POSITION OF OUR GROUP
Audited
As at
31 December
2003
Unaudited
As at
30 June
2004
Current assets:
Cash and cash equivalents
Trade receivables
Other receivables and prepayments
Inventories
1,674
2,120
962
118
2,214
2,753
1,023
277
Total current assets
4,874
6,267
Non-current assets:
Property, plant and equipment
7,315
8,032
Total non-current assets
7,315
8,032
12,189
14,299
Current liabilities:
Short term borrowings
Trade payables and accrued liabilities
Other payables
Income tax payable
Current portion of interest-bearing borrowings
Current portion of finance leases
883
5,304
249
118
443
69
93
5,464
157
205
446
37
Total current liabilities
7,066
6,402
Non-current liabilities:
Deferred tax liabilities
Interest-bearing borrowings
Finance lease
517
2,226
–
517
2,130
64
Total non-current liabilities
2,743
2,711
Capital and reserves:
Share capital
Reserves
1,660
720
1,844
3,342
Total equity
2,380
5,186
12,189
14,299
3.16
6.90
$’000
ASSETS
Total assets
LIABILITIES AND EQUITY
Total liabilities and equity
NTA per share (cents)(1)
Note:(1)
For comparative purposes, NTA per Share for the year/period under review have been computed based on the net tangible
assets and the pre-Invitation issued share capital of 75,213,400 Shares.
42
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
This section should be read in conjunction with the “Independent Auditors’ Report and Audited
Consolidated Financial Statements of Select Catering Services Limited” and the “Independent Auditors’
Review Report and Unaudited Consolidated Financial Statements of Select Catering Services Limited”
set out respectively in Appendix G on pages G-1 to G-25 and Appendix H on pages H-1 to H-24 of this
Prospectus and the related notes thereto and the section on “Review of Past Operating Results” and
“Review of Financial Position” as set out on pages 51 to 62 of this Prospectus.
OVERVIEW
We are an integrated food catering and management services provider in Singapore. Our business can
be categorised into the following three divisions:(a)
Institutional Catering – we provide food management services to our corporate customers. We
operate and manage staff cafeterias on a contract basis, at the premises of our corporate
customers from various industries;
(b)
Food Catering – we provide events catering services for corporate, community or private functions,
as well as meal delivery services to workplaces and family units;
(c)
international and local fare. We commenced the operation of our first restaurant in Singapore
specialising in Thai cuisine in March 2004.
Revenue
We derive our revenue from the sale of food and beverage items to the staff of our corporate customers
under contracts with durations that range from one to three years. The contracts with our corporate
customers take the following three forms:-
Profit and Loss (no-subsidy) Contracts
In profit and loss contracts, we generally receive all our revenue from, and bear all the expenses of the
provision of our services under the contracts. We derive our revenue from the sale of food and beverage
items to the staff of our corporate customers. Expenses under profit and loss contracts generally include
labour, raw materials and utilities costs. However, they may also include rental or licence fees payable to
our corporate customers for the use of their premises to operate the staff cafeterias. The amount of rental
or licence fees payable per month may be a fixed sum or a variable amount based on a percentage of
the net receipts derived from the operation of the staff cafeterias. Under such contracts, the staff of our
customers generally pay the full prices of their own purchases, as agreed under the contracts with our
corporate customers. We recognise revenue when the food and beverage items are sold and cash is
collected.
Partial-Subsidy Contracts
In such contracts, we generally charge a lower price to the staff of our corporate customers for the food
and beverages served at our staff cafeterias. Prices of food and beverage items served are agreed by
our corporate customers when the contracts are entered into, and are reviewed periodically. In return for
the lower prices charged to their staff, we receive a subsidy from our customers for our operations. The
subsidy takes the form of a waiver of rent and/or utility charges. In addition to the waiver, in some of the
contracts, we also receive a fixed monthly payment. We negotiate with our corporate customers on the
quantum of the fixed monthly payment when the contracts are entered into. The fixed monthly payment
takes into consideration our customers’ staff headcount, the requirements of their staff and the estimated
cost of operating the cafeteria.
43
We recognise revenue from sale of food and beverage items when cash is collected after the items are
sold. We recognise revenue as and when the invoices for the fixed monthly payment are issued, usually
at the end of every month.
Catering and Management (full-subsidy) Contracts
Under these contracts, we do not charge the staff of our corporate customers for the food and beverage
items they purchase at the staff cafeterias. Instead, our corporate customers bear the costs of managing
the staff cafeterias and providing meals to their staff. Our corporate customers pay us a fixed monthly
sum based either on the estimated or actual headcounts served. Some of the contracts allow for daily
variations in headcounts as the monthly payments are based on unit headcount prices. In such
contracts, we measure staff headcounts at every meal, by way of electronic cards or manual recording
cards at the cashier. We recognise revenue for full-subsidy contracts at the end of every month when we
issue invoices to our customers.
Our Institutional Catering Division contributed 8.4%, 17.2%, 35.2% and 35.2% of our total revenue in
FY2001, FY2002, FY2003 and 1H2004 respectively. The revenue contribution from our Institutional
Catering Division increased significantly for the period under review, as we increased our focus on this
division which provides a high profit before tax margin and greater future growth opportunities.
Food Catering
Our revenue from our Food Catering Division is generated from the provision of one-off catering services
for special events and functions (“Events Catering Services”) and meal delivery services to work places
and family units (“Meal Delivery Services”). Customers of our Events Catering Services comprised
individuals who require our services for private functions and corporate customers including corporations,
government bodies, institutions, hospitals and schools. Customers of our Meal Delivery Services are
mainly individuals who work in locations with no easy access to food outlets and who have very few or
no lunch options outside their offices. We also cater to family units that prefer the convenience and timesaving option of prepared meals delivered to their doorsteps. For customers of our Events Catering
Services, we recognise revenue after the food items and catering services are delivered and provided.
For individual and family customers of our Meal Delivery Services, we recognise revenue at the end of
every month for the items delivered in that month.
Our Food Catering Division contributed 44.2%, 34.3%, 25.0% and 21.8% of our total revenue in FY2001,
FY2002, FY2003 and 1H2004 respectively. The revenue contribution of our Food Catering Division has
decreased during the period under review as we increased our focus on our Institutional Catering
Division.
Food Retail
Under this division, we operate dedicated food court stalls, public cafeterias and a foreign cuisine
restaurant. As at the date of this Prospectus, we operate 37 food court stalls in Singapore and two food
court stalls in Malaysia. We also operate two public cafeterias in Singapore. Our first restaurant, Lerk
Thai Restaurant, located at Victoria Street, commenced business in March 2004. Revenue is derived
from the sale of food and beverage items in these food establishments.
All the sales made in our Food Retail Division are on cash basis. We therefore recognise revenue when
food and beverage items are served to our customers.
Our Food Retail Division contributed 47.4%, 48.5%, 39.8% and 43.0% of our total revenue in FY2001,
FY2002, FY2003 and 1H2004 respectively. The decrease in contribution made by our Food Retail
Division was a result of the significant relative increase in contribution made by our Institutional Catering
Division.
44
Our revenue is affected by, inter alia, the following key factors:(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Changes in economic conditions in Singapore, which may affect customer sentiments, their
disposable income and discretionary spending;
Our ability to compete successfully with our competitors in terms of competitive pricing, good food
quality, variety of cuisines and high standard of service;
The change in staff headcounts of our corporate customers in the Institutional Catering Division as
a result of, inter alia, retrenchment or restructuring of operations;
Our ability to secure contracts from corporate customers with large workforce;
Our ability to expand our penetration to new geographical markets by opening more food
establishments at strategic locations;
Our customers’ acceptance of and demand for the cuisines we develop and offer;
Our ability to maintain our reputation among our customers;
Our ability to secure good locations for expansion of our food retail business; and
Significant events or operational cycles at our customers’ premises such as building renovations
and school holidays.
Please refer to the section on “Risk Factors” on pages 32 to 39 of this Prospectus for more information
on other factors which may affect our business operations, revenue and overall financial performance.
Cost of Sales
Our cost of sales comprised cost of raw materials, including raw meat items, fresh vegetables and fruits,
eggs, milk, flour, seasoning ingredients and various types of packaging materials which are sourced in
Singapore. As most of these raw materials are easily sourced from various suppliers, we have not
experienced any significant price fluctuation of these raw materials for FY2001, FY2002, FY2003 and
1H2004.
Our cost of sales is affected by, inter alia, the following key factors:(a)
(b)
(c)
(d)
(e)
(f)
Price fluctuation of raw materials purchased from our suppliers;
Our ability to capitalise on increased sales volume and obtain favourable pricing from bulk
procurement of raw materials from our suppliers;
Any outbreak of diseases in livestock and food scares in the region and around the world that may
affect the supply and consequently the prices of such products;
Our ability to control our costs by reducing food wastage through cost control incentive schemes
implemented by the management;
Severe climatic conditions or any natural disasters that may affect the supply of any of our raw
materials; and
Change in governmental regulations that affect the prices of any of our raw materials imported
from overseas.
Please refer to the section on “Risk Factors” on pages 32 to 39 of this Prospectus for more information
on other factors that may affect our cost of sales.
45
Gross profit margin
Our overall gross profit margin is affected by changes in the gross profit margins and the relative revenue
contribution of our three business divisions. Generally, the gross profit margin of our Institutional
Catering Division is lower than our other divisions as the prices of the food and beverage items we
charge at the staff cafeterias are typically lower than those we charge at our other food retail outlets and
for our food catering services. The gross profit margin for our Institutional Catering Division is further
affected by partial-subsidy contracts which accounted for a substantial portion of all the contracts under
the Institutional Catering Division. For partial-subsidy contracts, we charge lower prices for the food and
beverage items we serve in exchange for waivers of rental and/or utility charges from our corporate
customers. These waivers of rental and utility charges appear as savings in other operating expenses at
the expense of our gross profit margin. As such, the gross profit margin from partial-subsidy contracts
tends to be lower as compared to the other contracts.
The overall gross profit margin of our Group is 64.5%, 64.0%, 62.0% and 62.7% in FY2001, FY2002,
FY2003 and 1H2004 respectively. The slight decrease in our overall gross profit margin was due to the
increased revenue contribution from our Institutional Catering Division. This is despite improvements in
gross profit margin from each individual division.
Our other income was mainly attributable to interest earned from banks on our cash and bank balances
and miscellaneous receipts from non-related parties. The average bank deposits interest rates for
FY2001, FY2002, FY2003 and 1H2004 ranged from 0.6% to 2.8%.
Operating expenses
Our operating expenses comprised mainly administrative expenses, other operating expenses,
distribution costs, and other charges or credits. Our operating expenses, as a percentage of our total
revenue for FY2001, FY2002, FY2003 and 1H2004, were approximately 62.7%, 61.5%, 57.5% and
56.0% respectively.
Our administrative expenses accounted for 64.0%, 62.6%, 66.7% and 65.6% of our total operating
expenses incurred in FY2001, FY2002, FY2003 and 1H2004 respectively. Our overall administrative
expenses accounted for an average of 38.4% of our total revenue for the period under review.
These expenses comprised the following:(a)
Staff costs which were the largest component of our administrative expenses. These included
wages, salaries and bonuses paid to our full-time staff, CPF contributions, incentives and
commissions paid to our part-time administrative staff and kitchen helpers, staff welfare, and
foreign worker levies which were paid for our foreign chefs and kitchen helpers. We also engaged
sub-contractors to deliver food and beverage items for our Meal Delivery Services, using their own
vehicles. Staff costs accounted for 74.9%, 80.4%, 84.8% and 87.6% of our total administrative
expenses for FY2001, FY2003, FY2003 and 1H2004 respectively.
(b)
Depreciation expenses were expenses related to property, plant and equipment, such as kitchen
equipment, office equipment, motor vehicles, electrical works and renovations at our public
cafeterias, food court stalls, restaurant, kitchens at the premises of our corporate customers,
Central Senoko Kitchen and Simei Eastern Kitchen. Depreciation expenses accounted for 11.2%,
9.4%, 8.2% and 7.5% of our total administrative expenses in FY2001, FY2002, FY2003 and
1H2004 respectively;
(c)
Directors’ remuneration, which was paid to our Directors, namely Messrs Vincent Tan and Jack
Tan. Directors’ remuneration accounted for 5.1%, 4.3%, 2.0% and 1.6% of our total administrative
expenses in FY2001, FY2003, FY2003 and 1H2004 respectively;
46
(d)
The balance being other administrative expenses which comprised property tax for our Central
Senoko Kitchen and Simei Eastern Kitchen, general office expenses such as printing and
stationery costs, telephone charges, rental expenses of office equipment, insurance expenses
such as car insurance, theft insurance and insurance for plant and equipment, and professional
expenses paid to the ISO consultant and company secretary.
The administrative expenses for our Institutional Catering, Food Catering and Food Retail Divisions
accounted for an average of 43.2%, 47.0% and 29.8% of their respective divisional revenue for the
period under review. Our Food Catering Division typically incurred higher administrative expenses as a
percentage of its revenue as this division incurred higher depreciation expenses and property tax relating
to the kitchens and its equipments. Also, more printing and stationery costs, telephone charges and
office equipment rentals were attributed to this division due to its heavy usage.
Our other operating expenses were expenses directly related to our business activities, such as rental
expenses for our food court stalls, public cafeterias and our staff cafeterias, service and maintenance
expenses on food court stalls, disposable tableware costs, gas and utilities charges, kitchen supplies,
laundry expenses, equipment maintenance expenses and upkeep of motor vehicles used for our food
delivery services.
Other operating expenses accounted for 33.9%, 35.3%, 32.2% and 32.7% of our total operating
expenses incurred in FY2001, FY2002, FY2003 and 1H2004 respectively. Our total other operating
expenses, as a percentage of our total revenue accounted for an average of 19.9% for the period under
review. Since our other operating expenses were expenses related to our business activities, they
generally changed in line with our total revenue in each division. The other operating expenses for our
Institutional Catering, Food Catering and Food Retail Divisions as a percentage of their respective
divisional revenue for the period under review, accounted for an average of 4.4%, 14.0% and 32.7% of
their respective divisional revenue for the period under review.
Our Institutional Catering Division incurred the lowest other operating expenses, mainly due to the
waivers of rental and/or utility charges mentioned in the paragraph on “Gross Profit Margin”. In addition,
our Institutional Catering Division generally did not incur any expense for upkeep of motor vehicles, which
were mainly incurred by our Food Catering Division which utilised such vehicles for food delivery.
Distribution costs
In FY2001, FY2002 and FY2003, our distribution costs were incurred mainly by our Food Catering and
Food Retail Divisions, comprising advertisement and promotional expenses in relation to radio, TV and
newspaper advertising campaigns and travelling expenses in relation to distribution of leaflets, corporate
brochures and loyalty cards. In 1H2004, distribution costs were incurred by our Institutional Catering
Division due to the increased overseas travelling in relation to the start-up of our operations in Suzhou,
PRC.
Our distribution costs accounted for 1.8%, 1.7%, 1.3% and 1.5% of our total operating expenses incurred
in FY2001, FY2002, FY2003 and 1H2004 respectively. Our total distribution costs, as a percentage of
our total revenue for FY2001, FY2003, FY2003 and 1H2004 were an average of 0.9%. Distribution costs
for our Institutional Catering, Food Catering and Food Retail Divisions accounted for an average of 0.2%,
2.2% and 0.4% of their respective divisional revenue for the period under review.
For FY2001, FY2002 and FY2003, we did not incur substantial distribution costs for our Institutional
Catering Division as we generally secured our contracts by way of public or private tenders as well as
private invitation through customer referrals. For our Food Catering Division, which accounted for the
bulk of our total distribution costs, we incurred advertisement and promotional expenses regularly to
promote our island-wide food catering services. Distribution costs incurred by our Food Catering Division
accounted for more than 70% of our total distribution costs in FY2001, FY2002, and FY2003. For our
Food Retail Division, we typically incurred distribution costs during the short period after the
commencement of our food establishments, to promote public awareness. As such, we would generally
47
expect higher distribution costs in a financial year when more food establishments are opened. Such
promotional activities typically ceased a few months after the opening of our food retail establishments.
For 1H2004, distribution costs incurred by our Food Catering Division accounted for approximately 55.8%
of our total distribution costs, mainly as a result of the increased travelling expenses incurred by our
Institutional Catering Division in relation to the establishment of our food catering facility in Suzhou, PRC.
Other (charges)/credits in the period under review relate to bad debts written off, loss from disposal of
plant and equipment, our rental deposits forfeited and waiver of an amount owed to a minority
shareholder of our previous subsidiary, Select Eastern Investment. In absolute terms, other
(charges)/credits accounted for less than 1.0% of the total revenue for the period under review.
Finance costs
Our finance costs accounted for 1.5%, 0.9%, 0.5% and 0.3% of our revenue for FY2001, FY2002,
FY2003 and 1H2004 respectively. These costs were attributable to interest on hire purchase, bank
overdrafts and long-term loans. Interest rates charged by the banks on our loans ranged from 3.3% to
6.5% per annum over the period under review. Interest rates on hire purchase ranged from 2.9% to 6.3%
per annum.
The losses were incurred by our subsidiary, Zhangzhou Select Eastern Fast Food, which carried out our
Group’s fast food business in China. We disposed of our interest in this subsidiary in February 2003, to
focus on our core activities as a provider of food catering and food management services. In accordance
with generally accepted accounting principles, the results of operations from this subsidiary were
reported in a separate line item. The loss incurred by Zhangzhou Select Eastern Fast Food in FY2001,
FY2002 and FY2003 amounted to approximately $40,000, $0.2 million and $0.1 million respectively.
Profit before income tax margin
Our overall profit before income tax margin, as well as profit before income tax margin for all our three
divisions, increased over the period under review. Our overall profit before income tax margin was 0.3%,
1.0%, 3.7% and 6.7% in FY2001, FY2002, FY2003 and 1H2004 respectively. Our profit before income
tax margin was 2.7%, 4.2%, 6.0% and 7.2% from our Institutional Catering Division, 1.7%, 1.9%, 4.0%
and 8.1% from our Food Catering Division, and 2.0%, 2.8%, 3.2% and 5.7% from our Food Retail
Division, in the same period respectively.
Despite registering the lowest gross profit margin among the three divisions, our Institutional Catering
Division enjoyed the highest profit before income tax margin for FY2001, FY2002, and FY2003. This was
mainly due to substantially lower other operating expenses and distribution costs as explained earlier. In
1H2004, our Food Catering Division recorded the highest profit before income tax margin, mainly due to
lower food cost arising from bulk procurement. This was further increased by higher distribution costs
incurred by our Institutional Catering Division as we incurred preliminary costs prior to the
commencement of our operations in Suzhou, PRC.
Income Tax Expenses
Currently, the majority of our operations are in Singapore, and as such our Company and its subsidiaries
are subject to income tax in accordance with the prevailing tax regulations in Singapore. Our tax expense
and corporate income tax rates in each of the past three financial years were as follows:-
Tax expense ($’000)
Statutory tax rate
Effective tax rate
48
FY2001
FY2002
FY2003
112
24.5%
167.2%
163
22.0%
60.6%
352
22.0%
27.8%
Our income tax expense based on the statutory rate for FY2001, FY2002 and FY2003 were $16,000,
$59,000 and $0.3 million respectively. Our total income tax expense for FY2001 was $96,000 higher
than our income tax expense based on the statutory rate. Our effective tax rate for FY2001 was
substantially higher than the prevailing statutory tax rates mainly due to non-allowable expenses and
prior year under-provision, offset by tax exemptions. Our effective tax rate for FY2002 was higher than
the prevailing statutory tax rates mainly due to non-allowable expenses, offset by prior year over
provision in FY2001.
BREAKDOWN OF FINANCIAL PERFORMANCE BY BUSINESS DIVISIONS
We set out below the breakdown of our revenue and operating profit by the three business divisions for
FY2001, FY2002, FY2003, 1H2003 and 1H2004.
Revenue
Division
FY2001
$’000
%
Food Catering
Food Retail
Total
FY2002
$’000
%
FY2003
$’000
%
1H2003
$’000
%
1H2004
$’000
%
1,719
9,017
9,672
8.4
44.2
47.4
4,632
9,218
13,039
17.2
34.3
48.5
11,905
8,437
13,448
35.2
25.0
39.8
5,350
3,935
6,043
34.9
25.7
39.4
7,099
4,398
8,682
35.2
21.8
43.0
20,408
100.0
26,889
100.0
33,790
100.0
15,328
100.0
20,179
100.0
Profit/(Loss) Before Tax
Division
FY2001
$’000
%
FY2002
$’000
%
FY2003
$’000
%
1H2003
$’000
%
Food Catering
Food Retail
47
153
194
11.9
38.8
49.3
195
177
362
26.6
24.1
49.3
714
339
432
48.1
22.8
29.1
237
(135)
154
Total
Unallocated
expenses(1)
394
100.0
734
100
1,485
100.0
256
Profit Before Tax
(327)
(465)
67
269
(220)
92.5
(52.7)
60.2
512
358
497
37.5
26.1
36.4
100.0 1,367
100.0
(198)
1,265
1H2004
$’000
%
(7)
58
1,360
Note:(1)
Unallocated expenses comprised other charges, finance costs and discontinued operation, offset by other operating income.
Profit /(Loss) Before Tax Margin
Division
Food Catering
Food Retail
Overall
FY2001
%
FY2002
%
FY2003
%
1H2003
%
1H2004
%
2.7
1.7
2.0
0.3
4.2
1.9
2.8
1.0
6.0
4.0
3.2
3.7
4.4
(3.4)
2.5
0.4
7.2
8.1
5.7
6.7
49
SEASONALITY
For FY2001, FY2002 and FY2003, we experienced seasonality. Approximately 45% of our revenue was
generated in the first half of the financial year and 55% in the second half. The revenue derived from the
first half and second half of each of the past three financial years were as follows:2001
Revenue
($’000)
2002
Revenue
($’000)
%
%
2003
Revenue
($’000)
%
Six months ended
30 June
Six months ended
31 December
8,901
43.6
12,491
46.5
15,328
45.4
11,507
56.4
14,398
53.5
18,462
54.6
Total
20,408
100.0
26,889
100.0
33,790
100.0
The seasonality trends for our three business divisions were as follows:Institutional Catering Division
Our Institutional Catering Division recorded lower revenue in January and February during the period
under review. The lower revenue was due to the reduced patronage at our customers’ staff cafeterias,
which was a result of the lower work attendance at our corporate customers’ premises during the New
Year and Chinese New Year festive seasons.
Food Catering Division
Our Food Catering Division traditionally generated more revenue in the second half of each of the past
three financial years as a result of a larger number of celebrations for events such as Christmas,
weddings, annual dinner and dance, being held in the second half of every year. In the past three
financial years, revenue generated in the second half of each year accounted for 52.9% to 54.7% of the
annual revenue from this division. We recorded the highest monthly revenue in the month of December
for each of the past three financial years.
Food Retail
The Christmas festive season from November to December has seen higher revenue in our Food Retail
Division in the past three financial years as potential patrons of our food establishments tend to do more
shopping in these months. The increased human traffic benefited our dedicated food court stalls and
public cafeterias.
50
REVIEW OF PAST OPERATING RESULTS
FY2001 vs FY2002
Revenue
Our revenue increased by approximately $6.5 million or 31.8% from $20.4 million in FY2001 to $26.9
million in FY2002. This increase in revenue was due to an increase in revenue of $2.9 million from our
Institutional Catering Division, an increase of $0.2 million from our Food Catering Division and an
increase of $3.4 million from our Food Retail Division.
Institutional Catering Division
The increase of $2.9 million or 169.5% from $1.7 million in FY2001 to $4.6 million in FY2002 from our
Institutional Catering Division was mainly due to:(a)
the maiden revenue contribution of $2.3 million from seven new corporate customers secured in
FY2002, five of which entered into long-term contracts for terms of more than one year and two of
which entered into short-term contracts expiring in the same year; and
(b)
the increase in revenue of $0.9 million from our five existing corporate customers as a result of a
full year contribution in FY2002 as compared to a partial-year contribution in FY2001.
The increase was partially offset by a decrease in contribution of $0.1 million mainly as a result of the
expiration of contract with one corporate customer in FY2002 resulting in a partial-year contribution in
FY2002 as compared to a full-year contribution in FY2001, and an absence of revenue contribution of
$0.2 million from two corporate customers, namely Honeywell Pte Ltd, and Carrier Refrigeration
Singapore Pte Ltd, whose contracts expired in FY2001.
The new corporate customers secured in FY2002 included STATS, Asahi Techno Vision (S) Pte Ltd,
STMicroelectronics Pte Ltd and Maxtor Peripherals (S) Pte Ltd (Ang Mo Kio Factory). The existing
customers (which included Takashimaya Singapore Ltd, Pepperl + Fuchs Manufacturing Pte Ltd, Agilent
Technologies Singapore Pte Ltd, the Institute of Public Administration and Management and United
Parcel Services) contributed $2.3 million in FY2002 as compared to $1.7 million in FY2001.
The increase of $0.2 million or 2.2% from $9.0 million in FY2001 to $9.2 million in FY2002 from our Food
Catering Division was mainly due to increase in orders from our corporate customers for our Events
Catering Services, the revenue of which increased by approximately $0.5 million, and offset by a
decrease of approximately $0.3 million from our Meal Delivery Services.
The increase in revenue from our corporate customers for our Events Catering Services was a result of
our marketing efforts. In FY2002, we increased our expenditure on mass media advertisements by
approximately 30.8% mainly to promote our Events Catering Services. In addition, as a result of our
efforts to provide high quality services to our existing customers, we were able to secure more new
customers and business through referral by our existing customers.
The decrease in revenue from our Meal Delivery Services was mainly due to competition from smallscale catering service providers. As we have increased our focus on our Institutional Catering Division,
we have not competed aggressively in our Meal Delivery Services.
51
Food Retail Division
The increase of $3.4 million or 34.8% from $9.7 million in FY2001 to $13.1 million in FY2002 from our
Food Retail Division was mainly due to:(a)
the maiden revenue contribution of $1.9 million from nine new food court stalls which commenced
operations in late FY2001; and
(b)
the increase in revenue contribution of $2.4 million from eight food court stalls and one public
cafeteria (namely People’s Association Headquarters), as a result of full-year contributions in
FY2002 as compared to partial-year contributions in FY2001.
The increase was partially offset by:(a)
the net decrease in revenue contribution of $0.4 million from 14 existing food court stalls and three
public cafeterias, mainly due to lower human traffic and/or increased competition in the vicinity at
locations such as Causeway Point (Chinese Mixed Rice), Novena Square, Scotts Shopping Centre
and Takashimaya Department Store; and
(b)
the absence of revenue contribution of $0.5 million due to two food court stalls, namely Admiralty
and Tampines Mall, which contracts expired in FY2001.
The location of the nine new food court stalls were at Anchor Point, Compass Point, Holland Village,
Changi General Hospital (two stalls), Power Gas Building, Smith Street, Thomson Plaza and Jalan
Todak. The locations of the eight food court stalls which showed increased revenue contributions were at
Causeway Point (Nasi Padang), Bedok Block 213, Bishan, Bugis Junction, Millennia Walk, Plaza by the
Park, Smith Street and Turf City.
Cost of sales
Our cost of sales increased by $2.4 million or 33.4% from $7.3 million in FY2001 to $9.7 million in
FY2002. This $2.4 million increase was attributable to an increase in cost of sales of $1.4 million or
169.1% from our Institutional Catering Division, approximately $41,000 or 1.3% from our Food Catering
Division, and $1.0 million or 29.4% from our Food Retail Division, which was in line with the increase in
our revenue.
Our overall gross profit margin decreased slightly from 64.5% in FY2001 to 64.0% in FY2002 mainly as a
result of a significant increase in revenue contribution from our Institutional Catering Division which
typically recorded lower gross profit margin, despite increases in the divisional gross profit margin of
each of our individual business divisions. The gross profit margins of our Institutional Catering, Food
Catering and Food Retail Divisions increased slightly from 52.0%, 66.0%, and 65.3% in FY2001 to
52.1%, 66.3% and 66.7% in FY2002 respectively. These individual improvements were due to more
favourable pricing from bulk procurement as a result of increased business volume.
Other operating income decreased by approximately $44,000 from $66,000 in FY2001 to $22,000 in
FY2002. This was mainly due to lower miscellaneous receipts from non-related parties and the absence
of a Local Enterprise Technical Assistance Scheme grant of $19,000 from PSB Singapore (now known
as SPRING Singapore) under their Corporate Image Programme.
52
Operating expenses
Our total operating expenses increased by $3.7 million or 29.1% from $12.8 million in FY2001 to $16.5
million in FY2002. This increase was mainly attributable to an increase of $2.2 million in administrative
expenses, an increase of $1.5 million in other operating expenses, an increase of $64,000 in distribution
costs and a marginal increase of $7,000 in other charges.
(a)
Our administrative expenses increased by $2.2 million or 26.4% from $8.2 million in FY2001 to
$10.4 million in FY2002.
The increase in administrative expenses was mainly due to an increase of $2.4 million in salaries
and bonus expense from $2.9 million in FY2001 to $5.3 million in FY2002, which was a result of
an increase in our staff headcount. Our staff headcount grew from 378 as at 31 December 2001
to 568 as at 31 December 2002 as we hired 84 new chefs and 106 new kitchen helpers. In line
with our strategy to increase the business activities of our Institutional Catering Division, over 60%
of the increase in staff headcount, comprising 69 chefs and 57 kitchen helpers were assigned to
work in this division. Additional five and two new kitchen helpers were assigned to our Central
Senoko Kitchen and Simei Eastern Kitchen respectively, and 15 chefs and 42 kitchen helpers were
assigned to our Food Retail Division. In FY2002, we paid higher discretionary bonuses to our staff
as a reward for their contribution towards our financial performance in FY2002.
The increase in salaries and bonus expense was offset by a total savings of approximately $0.2
million from our general office expenses.
(b)
Our other operating expenses increased by $1.5 million or 34.4% from $4.3 million in FY2001 to
$5.8 million in FY2002. As other operating expenses were directly related to our sales activities,
the increase in other operating expenses was in line with the increase in our total revenue in
FY2002.
The increase in rental expenses, which was approximately $0.8 million or 35.9%, accounted for
approximately half of the increase in other operating expenses as we commenced the operations
of more food establishments. Our service and maintenance expenses on food court stalls
increased by approximately $0.2 million. The expenses for disposable tableware increased by
approximately $0.1 million or 30.0%. Our utility charges expenses also increased by approximately
$0.2 million or 30.0%. These increases were in line with the increase in our total revenue of
approximately 31.8%.
(c)
Distribution costs
Our distribution costs increased by approximately $64,000 or 28.4% from $0.2 million in FY2001 to
$0.3 million in FY2002. This increase was mainly attributable to the increase in advertisement
expenses in relation to the mass media advertisement campaigns run to promote and maintain
public awareness of our Events Catering Services, as a result of intensive competition in the food
catering business.
(d)
Other charges
Our other charges increased marginally by $7,000 from $45,000 in FY2001 to $52,000 in FY2002.
Finance costs
Our finance costs decreased by approximately $77,000 from $0.3 million in FY2001 to $0.2 million in
FY2002. This was mainly due to the repayment of hire purchase and short-term loans. In addition, we
refinanced part of our long-term loans and lower interests were charged.
53
Our previous subsidiary, Zhangzhou Select Eastern Fast Food, incurred $0.2 million loss in FY2002, as
compared to a loss of approximately $40,000 incurred in FY2001.
Our profit before income tax increased by approximately $0.2 million from $67,000 in FY2001 to
approximately $0.3 million in FY2002. This was a result of higher gross profit in FY2002, which was
partially offset by the increase in operating expenses.
Profit before tax margin increased from 0.3% of our total revenue in FY2001 to 1.0% in FY2002. This
was a result of lower administrative expenses in terms of our total revenue, partially offset by marginally
higher other operating expenses. In FY2001, our administrative expenses amounted to 40.1% of our
total revenue. In FY2002, we were able to control our administrative expenses, which accounted for
38.5% of our revenue in FY2002.
By business division, our profit before income tax margin for our Institutional Catering, Food Catering and
Food Retail Divisions increased from 2.7%, 1.7%, and 2.0% to 4.2%, 1.9% and 2.8% respectively.
FY2002 vs FY2003
Revenue
Our revenue increased by $6.9 million or 25.7% from $26.9 million in FY2002 to $33.8 million in FY2003.
This increase in revenue was attributable to an increase of $7.3 million from our Institutional Catering
Division and an increase of $0.4 million from our Food Retail Division, offset by a decrease of $0.8
million from our Food Catering Division
The increase of $7.3 million or 157.0% from our Institutional Catering Division was mainly due to:(a)
the revenue contribution of $3.9 million from 11 new corporate customers secured in FY2003, nine
of which entered into long-term contracts and two of which entered into short-term contracts with
us;
(b)
the increase in revenue of $3.5 million from our three existing corporate customers as a result of a
full-year contribution in FY2003 as compared to a partial-year contribution in FY2002; and
(c)
the increase in revenue of $0.2 million from our existing corporate customers with full-year
contributions in both FY2002 and FY2003, mainly due to the increased revenue of $0.2 million as
a result of increased patrons in one of our staff cafeterias. The corporate customer restructured its
operations and consolidated its island-wide workforce in one location.
The increase was partially offset by an absence of revenue contribution of $0.3 million from three
customers which contracts expired in FY2002.
The new corporate customers secured in FY2003 include Maxtor Peripherals (S) Pte Ltd (Yishun
factory), Outward Bound School, Tyco Electronics Singapore Pte Ltd and NCS Pte Ltd. The existing
customers (which included Maxtor Peripherals (S) Pte Ltd (Ang Mo Kio factory), STATS, Asahi Techno
Vision (S) Pte Ltd and Agilent Technologies Singapore Pte Ltd), contributed $8.0 million in FY2003 as
compared to $4.6 million in FY2002.
54
The decrease of $0.8 million or 8.5% from our Food Catering Division was mainly due to decreases in
revenue from our Events Catering Services of $0.5 million and our Meal Delivery Services of $0.3 million.
As a result of intensive competition from small-scale catering service providers, we had not competed
aggressively in this segment of our business but instead focused our efforts on our Institutional Catering
Division.
The increase of $0.4 million or 3.1% from our Food Retail Division was mainly attributable to:(a)
the maiden revenue contribution of $1.2 million from eight new food court stalls which started
operations in FY2003; and
(b)
the increase in revenue contribution of $0.7 million from three food court stalls, mainly due to their
full-year contributions in FY2003 as compared to partial-year contributions in FY2002.
the net decrease in revenue of $0.7 million from 21 existing food court stalls and four public
cafeterias, mainly due to the outbreak of SARS which led to reduced public confidence in dining at
our food establishments;
(b)
the decrease in revenue of $0.7 million from four food court stalls, mainly due to shorter periods of
operation in FY2003 as compared to FY2002. The contracts of these food court stalls expired in
FY2003; and
(c)
the absence of $0.1 million in revenue due to expiration of contracts of three food court stalls in
FY2002.
The new food court stalls were located at Scotts Shopping Centre (Thai cuisine), Jalan Besar Stadium,
Tampines Mart, National University Hospital, Bukit Panjang Ring Road, Hougang Festival Market,
Harbour Front Office Tower and Ikano Power Centre at Petaling Jaya, Malaysia. The food court stalls
which increased revenue contribution were Holland Village, Compass Point and Smith Street.
Cost of sales
Our cost of sales increased by $3.1 million or 32.7% from $9.7 million in FY2002 to $12.8 million in
FY2003. This increase was attributable to an increase of $3.2 million or 146.7% from our Institutional
Catering Division and a small increase of $0.2 million or 3.7% from our Food Retail Division, offset by a
decrease of $0.3 million or 8.2% from our Food Catering Division.
Our overall gross profit margin decreased slightly from 64.0% in FY2002 to 62.0% in FY2003. Gross
profit margin of our Institutional Catering Division increased slightly from 52.1% to 54.0%, and decreased
from 66.3% and 66.7% to 66.1% and 66.5% in our Food Catering Division and Food Retail Division
respectively. Revenue contributed by our Institutional Catering Division, which generally registers the
lowest gross profit margin, increased from 17.2% to 35.2%. As such, our overall gross profit margin
decreased slightly.
55
Our other income increased slightly by $5,000 from approximately $22,000 in FY2002 to $27,000 in
FY2003. This was mainly due to a Local Enterprise Technical Assistance Scheme grant of approximately
$10,000 from PSB Singapore (now known as SPRING Singapore) for our ISO 9001 certification and
miscellaneous receipts from non-related parties, which was partially offset by lower interest received.
Operating expenses
Our total operating expenses increased by $2.9 million or 17.5% from $16.5 million in FY2002 to $19.4
million in FY2003, due to an increase of $2.6 million in administrative costs and $0.4 million in other
operating expenses, offset by $46,000 decrease in distribution costs and increase in other credits of
approximately $85,000.
(a)
Our administrative expenses accounted for 66.7% of our total operating expenses in FY2003. Our
administrative expenses increased by $2.6 million or 25.2% from $10.4 million in FY2002 to $13.0
million in FY2003.
The increase in administrative costs was mainly due to an increase in salaries, bonus expenses
and CPF contributions of $2.8 million. This was mainly a result of the increase in our staff
headcount in FY2003 as we hired 43 new chefs and 79 new kitchen helpers, more than half of
whom were for our Institutional Catering Division. Despite the lower increase in headcounts from
568 as at 31 December 2002 to 690 as at 31 December 2003, our salaries, bonus expenses and
CPF contributions increased by a larger amount as compared to FY2002 mainly because of fullyear salaries paid to our staff operating the staff cafeterias of Maxtor Peripherals (S) Pte Ltd (Ang
Mo Kio factory) and STATS in FY2003 as compared to partial year payments in FY2002.
(b)
Other operating expenses, which accounted for 32.2% of our total operating expenses in FY2003,
increased by $0.4 million or 7.2% from $5.9 million in FY2002 to $6.3 million in FY2003. As other
operating expenses included expenses that were directly related to our business activities, the
increase in other operating expenses was in line with the increase in our revenue. Our utility
charges expenses and rental expenses increased by an aggregate of approximately $0.2 million.
The balance increase in other operating expenses came from the increase in other expenses such
as disposable tableware, laundry and kitchen supplies expenses.
(c)
Distribution costs
Our distribution cost decreased by approximately $46,000 or 15.9% from $0.3 million in FY2002 to
$0.2 million in FY2003. The decrease was mainly due to the cost-control strategy adopted by our
Food Catering Division as we expected revenue from this division to be adversely affected by the
outbreak of SARS in FY2003.
(d)
Other credit
We generated net other credits of approximately $33,000 in FY2003. This was due to the waiver
by a minority shareholder of our previous subsidiary, Select Eastern Investment, of the amount
owed by us.
Finance costs
Our finance costs decreased by approximately $62,000 or 26.8%, due mainly to repayments made to
reduce our hire purchase and bank loans.
56
Our previous subsidiary, Zhangzhou Select Eastern Fast Food, incurred a loss of approximately $0.1
million in FY2003, as compared to $0.2 million in FY2002.
Our profit before income tax increased by approximately $1.0 million from $0.3 million in FY2002 to $1.3
million in FY2003. This was a result of the increase in gross profit and lower distribution costs, which
was partially offset by the increase in administrative expenses and other operating expenses.
Profit before tax margin increased from 1.0% in FY2002 to 3.7% in FY2003. The improvement in our
profit before tax margin was the result of lower other operating expenses and distribution costs, as a
percentage of our total revenue. In FY2003, our other operating expenses and distribution costs
accounted for 18.5% and 0.7% of our total revenue respectively, as compared to 21.7% and 1.1% in
FY2002. The improvement in our overall other operating expenses and distribution costs was a result of
larger revenue contribution made by our Institutional Catering Division, which generally incurred lower
other operating expenses and distribution costs than our other two divisions.
By business division, our profit before income tax margin for our Institutional Catering, Food Catering and
Food Retail Divisions increased from 4.2%, 1.9% and 2.8% in FY2002 to 6.0%, 4.0% and 3.2% in
FY2003, respectively.
1H2003 vs 1H2004
Revenue
Our revenue increased by approximately $4.9 million or 31.6% from $15.3 million in 1H2003 to $20.2
million in 1H2004.
The increase in revenue was due to an increase in revenue of $1.7 million from our Institutional Catering
Division, an increase of $0.5 million from our Food Catering Division and an increase of $2.7 million from
our Food Retail Division.
The increase of $1.7 million or 32.7% from $5.4 million in 1H2003 to $7.1 million in 1H2004 from our
Institutional Catering Division was mainly due to:(a)
the revenue contribution of $1.7 million from nine corporate customers secured after June 2003,
which include Motorola Electronics Pte Ltd, Philips Electronics Singapore Pte Ltd and General
Electronics Aviation Service Operation Pte Ltd;
(b)
the increase in revenue of $0.6 million from five customers with revenue contribution for the entire
six months in 1H2004 as compared to revenue contribution for less than six months in 1H2003 as
these customers were secured during 1H2003; and
(c)
a net increase in revenue of $0.1 million from nine customers with revenue contribution for the
entire six months in both 1H2003 and 1H2004, due mainly to increased staff headcounts of our
customers. Our customers increased their workforce in anticipation of better business outlook in
1H2004.
57
the decrease in revenue of $0.5 million from three customers, which contracts expired during
1H2004, due to the revenue contribution for the entire six months in 1H2003 as compared to
revenue contribution for less than six months in 1H2004; and
(b)
the absence of revenue contribution of $0.2 million from three customers which contracts expired
before January 2004, therefore making no revenue contribution in 1H2004.
The increase of $0.5 million or 11.8% from $3.9 million in 1H2003 to $4.4 million in 1H2004 from our
Food Catering Division was mainly due to increased revenue of $0.5 million from our Events Catering
Services as a result of our established track record with our existing corporate customers which
subsequently referred new customers to us. There was an additional increase in revenue of $0.2 million
from food fairs held in 1H2004 as a result of improved consumer confidence following the recovery of the
general economy from the SARS outbreak in 1H2003. The increase was offset by decreased revenue of
$0.2 million from our Events Catering Services in relation to private functions and our Meal Delivery
Services to family units, as a result of increased competition from small-scale catering service providers.
Revenue from our Food Retail Division increased by $2.7 million or 43.7% from $6.0 million in 1H2003 to
$8.7 million in 1H2004. The SARS outbreak in 1H2003, which had discouraged patronage to crowded
food establishments, had a direct impact on our Food Retail Division. As the general economy recovered
from the SARS outbreak, this division experienced growth in 1H2004. The increase was attributable to:(a)
the maiden revenue contribution of $2.1 million from nine new food court stalls which started
operations after June 2003;
(b)
the maiden revenue contribution of $0.3 million from our Lerk Thai Restaurant located at Victoria
Street and our food court stall, specialising in Thai cuisine, located at Takashima Department
Store, which commenced operations in March and June 2004 respectively;
(c)
the increase in revenue contribution of $0.2 million from two food court stalls, mainly due to
revenue contributions for the entire 6 months in 1H2004 as compared to revenue contributions for
less than 6 months in 1H2003. The locations of these food court stalls were at Bishan and Harbour
Front Office Tower; and
(d)
the increase in revenue contribution of $0.7 million from our existing food court stalls as a result of
improved general economy and consumer confidence after the recovery of the SARS outbreak in
1H2003.
the decrease in revenue of $0.2 million from one food court stall and one public cafeteria as a
result of revenue contributions for less than six months in 1H2004 as compared to revenue
contributions for the entire six months in 1H2003, as the contracts for the food court stall and
public cafeteria expired during 1H2004; and
(b)
the absence of revenue contribution of $0.4 million due to the expiration of contracts for five food
court stalls in FY2003.
The location of the new food court stalls were at Scotts Shopping Centre, Jalan Besar, Tampines Mart,
National University Hospital, Bukit Panjang Ring Road, Hougang Festival Market, Ikano Power Centre at
Petaling Jaya, Malaysia, Suntec City, and Tiong Bahru Plaza.
58
Cost of sales
Our cost of sales increased by $1.7 million or 29.9% from $5.8 million in 1H2003 to $7.5 million in
1H2004. This increase was attributable to increases of $0.7 million or 29.3% from our Institutional
Catering Division, $32,000 or 2.3% from our Food Catering Division and $1.0 million or 49.7% from our
Food Retail Division.
Our overall gross profit margin increased marginally from 62.2% in 1H2003 to 62.7% in 1H2004. The
gross profit margin for our Institutional Catering Division and Food Catering Division increased from
53.4% to 54.6% and from 65.7% to 68.6% respectively. The gross profit margin for our Food Retail
Division decreased from 67.6% to 66.3% from 1H2003 to 1H2004. The marginal change in our overall
gross profit margin was a result of steady revenue contribution by our three business divisions in 1H2003
and 1H2004. Our Institutional Catering, Food Catering and Food Retail divisions accounted for 34.9%,
25.7% and 39.4% of our total revenue in 1H2003 and 35.2%, 21.8% and 43.0% of our total revenue in
1H2004.
Our other operating income increased by $66,000 from $5,000 in 1H2003 to $71,000 in 1H2004. This
increase was mainly due to a rebate from HDB in relation to the relocation of our operations at Aljunied
to Simei Eastern Kitchen as a result of the redevelopment of the Aljunied area by the government
authorities.
Operating expenses
Our total operating expenses increased by $2.0 million from $9.3 million in 1H2003 to $11.3 million in
1H2004, comprising an increase of $1.2 million in administrative expenses, $0.7 million in other operating
expenses and $52,000 in distribution costs.
(a)
Our administrative expenses accounted for 66.9% and 65.6% of our total operating expenses in
1H2003 and 1H2004 respectively. Administrative expenses increased by $1.2 million or 19.6%
from $6.2 million in 1H2003 to $7.4 million in 1H2004.
The increase in administrative expenses was mainly due to an increase in salaries, bonuses and
CPF contributions of a total amount of $1.1 million, such increase being attributable to the increase
in our staff headcounts in line with the growth of our business activities. Our staff headcount grew
from 610 as at 30 June 2003 to 738 as at 30 June 2004. The increase was partially offset by
savings in our general office expenses as a result of our cost-control measures.
(b)
Our other operating expenses accounted for 31.9% and 32.9% of our total operating expenses in
1H2003 and 1H2004 respectively. Other operating expenses increased by $0.7 million or 25%
from $3.0 million in 1H2003 to $3.7 million in 1H2004.
The increase in other operating expenses was mainly due to the increase in rental, gas and
disposable tableware expenses, which accounted for increases of $0.5 million, $0.2 million and
$0.1 million respectively in 1H2004. As these expenses were directly related to our business
activities, they increased in line with our increase in revenue from 1H2003 to 1H2004. As our
Food Retail Division incurred the bulk of the rental expenses, the high growth of this division in
1H2004 led to the increase in rental expenses. Disposable tableware and gas expenses increased
as our food preparation activities increased and more catering services were provided to our
customers.
59
(c)
Distribution costs
Our distribution costs accounted for 1.3% and 1.5% of our total operating expenses incurred in
1H2003 and 1H2004 respectively. Our distribution costs increased by $52,000 or 42.3% from $0.1
million in 1H2003 to $0.2 million in 1H2004. This was a result of increased overseas travelling in
connection with the start-up of our operations in Suzhou, PRC.
(d)
Other charges
We incurred other charges of $16,000 in 1H2004, as compared to other credits of $5,000 in
1H2003. Other charges incurred in 1H2004 were due to the loss arising from the disposal of plant
and equipment.
Finance costs
Our finance costs decreased marginally by $35,000 from $97,000 in 1H2003 to $62,000 in 1H2004, as
we reduced our hire purchase and long-term loans and bank overdrafts.
Our profit before income tax increased by approximately 22 times from $58,000 in 1H2003 to $1.4 million
in 1H2004. This was a result of higher gross profit in 1H2004, higher other income and lower finance
costs, which was partially offset by an increase in operation expenses.
Profit before tax margin increased from 0.4% in 1H2003 to 6.7% in 1H2004. This was a result of higher
gross profit margin, lower administrative expenses, other operating expenses, finance costs and higher
other income, in terms of our total revenue. In 1H2004, the administrative expenses and other operating
expenses accounted for 36.7% and 18.3% of our total revenue respectively, as compared to 40.4% and
19.3% in 1H2003. This decrease was mainly due to the significant increase in our revenue in 1H2004 as
compared to our revenue in 1H2003 which was affected by the SARS outbreak.
By business division, our profit/(loss) before income tax margin improved from 4.4%, (3.4%), and 2.5% in
1H2003 to 7.2%, 8.1%, and 5.7% in 1H2004 in our Institutional Catering, Food Catering and Food Retail
Divisions respectively.
60
REVIEW OF FINANCIAL POSITION
Current Assets
Our current assets comprised mainly cash and cash equivalents, trade receivables, other receivables and
prepayment and inventories.
As at 31 December 2003, our current assets amount of $4.9 million accounted for 40.0% of our total
assets. Cash and cash equivalents accounted for $1.7 million or 34.3% of our current assets. Trade
receivables due to credit sales to our corporate customers in the Institutional Catering and Food Catering
Divisions, formed the largest component of our current assets, accounting for $2.1 million or 43.5% of
our current assets. We had inventories of $0.1 million or 2.4% of our current assets. Inventories
comprised mainly raw materials including food items such as raw meat and dry items such as disposable
food containers. Other receivables and prepaid expenses accounted for $1.0 million or 19.7% of our
current assets. These include security and rental deposits amounting to approximately $0.7 million and
non-trade receivables amounting to $0.1 million.
As at 30 June 2004, our current assets increased by $1.4 million to $6.3 million, accounting for 43.8% of
our total assets. Cash and cash equivalents increased by $0.5 million to $2.2 million or 35.3% of our
current assets. Trade receivables increased by $0.7 million to $2.8 or 43.9% of our current assets. Our
other receivables and prepayments remained unchanged. We had inventories of $0.3 million or 4.4% of
our current assets.
Non-Current Assets
Non-current assets are assets relating to property, plant and equipment.
As at 31 December 2003, the net book value of our property, plant and equipment amounted to $7.3
million, accounting for 60.0% of our total assets.
As at 30 June 2004, the net book value of our property, plant and equipment amounted to $8.0 million,
accounting for 56.2% of our total assets.
Current Liabilities
Our current liabilities comprised trade payables and accrued liabilities, short-term borrowings, other
payables, income tax payable, current portion of interest-bearing borrowings and current portion of
finance leases.
As at 31 December 2003, our current liabilities amounted to $7.1 million or 72.0% of our total liabilities.
Trade payables and accrued liabilities of $5.3 million or 75.1% of our current liabilities, formed the largest
component of our current liabilities. They relate mainly to purchase of raw materials from local suppliers.
Short-term borrowings of $0.9 million accounted for 12.5% of our current liabilities. Current portion of
interest-bearing borrowings, amounting to $0.4 million, formed the portion of long-term interest-bearing
borrowings from banks that was due within the next financial year. Income tax payable amounted to $0.1
million. Current portion of finance leases of $69,000 relate mainly to hire purchase. Other payables
amounted to $0.2 million.
As at 30 June 2004, our current liabilities declined by $0.7 million to $6.4 million or 70.3% of our total
liabilities. This decline was mainly due to the decrease in short-term borrowings as a result of the
repayment of our short-term borrowings. Trade payables and accrued liabilities amounted to $5.5 million
or 85.3% of our current liabilities. Short-term borrowings declined from $0.9 million to $0.1 million.
61
Non-current liabilities and other items
Non-current liabilities comprised interest-bearing borrowings, deferred tax liabilities and finance leases.
As at 31 December 2003, non-current liabilities accounted for $2.7 million or 28.0% of our total liabilities.
Interest-bearing borrowings amounted to $2.2 million. Deferred tax liabilities amounted to $0.5 million.
As at 30 June 2004, non-current liabilities remained at $2.7 million, which comprised interest-bearing
borrowings of $2.1 million, deferred tax liabilities of $0.5 million and finance lease of $64,000.
Shareholders’ Equity
As at 31 December 2003, our shareholders’ equity amounted to $2.4 million. This comprised issued
share capital of $1.7 million and reserves of $0.7 million.
As at 30 June 2004, our shareholders’ equity amounted to $5.2 million. This comprised issued share
capital of $1.8 million and reserves of $3.4 million. The increase in our shareholders’ equity of $2.8
million was due primarily to a capital injection of $1.7 million from the Pre-Invitation Investors. The
balance of $1.1 million was attributed to earnings generated in 1H2004.
62
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
We set out below a summary of our Group’s cash flow for FY2002, FY2003, and 1H2004:$’000
Net cash generated from operating activities
FY2002
FY2003
1,799
2,294
Net cash used in investing activities
(483)
(1,694)
Net cash (used in)/generated from financing activities
(811)
(119)
Net effect of exchange rate changes in consolidating
subsidiaries
(8)
1H2004
958
(1,188)
1,559
1
1
497
482
1,330
Cash and cash equivalents at the beginning of period
(850)
(353)
Cash and cash equivalents at end of period
(353)
129
Net increase in cash and cash equivalents
129
1,459
FY2002
We recorded a net inflow from operating activities of $1.8 million. This comprised cash generated from
operating activities before changes in working capital of $1.5 million, interest receipt of $16,000 and net
working capital inflow of $0.6 million, offset by interest paid of $0.2 million and income tax paid of
$52,000.
Net working capital inflow was mainly due to a decrease in other receivables and prepayments of $0.3
million, and a net increase of $0.5 million in trade payables, accrued liabilities and other payables. This
was partially offset by the increase in trade receivables of $0.2 million.
We recorded a net cash outflow from investment activities of $0.5 million, which was mainly due to an
outflow of $0.5 million for the purchase of plant and equipment.
Net cash outflow for financing activities amounted to $0.8 million. This was mainly due to a decrease in
borrowings of $0.5 million and a decrease in finance lease of $0.3 million.
We recorded a net effect of exchange rate changes of $8,000 in consolidating our subsidiaries.
FY2003
We recorded a net inflow from operating activities of $2.3 million. This comprised mainly cash generated
from operating activities before changes in working capital of $2.6 million, which was offset by interest
paid, income tax paid and changes in working capital in the aggregate amount of $0.3 million.
The change in working capital was mainly due to an increase in cash of $0.1 million with maturity over
three months, an increase in trade and other receivables and prepayments of $0.4 million, and a
decrease in other payables of $0.3 million. This was partially offset by a cash inflow from an increase in
trade payables and accrued liabilities of $0.7 million.
We recorded a net cash outflow from investment activities of $1.7 million, which was due to the purchase
of plant and equipment.
63
Net cash outflow for financing activities amounted to $0.1 million. This was due to a reduction in the
amount of finance leases of $0.2 million, which was partially offset by a cash inflow of $0.1 from term
loan borrowings to partially fund our fixed assets acquisition.
1H2004
We recorded a net inflow from operating activities of $1.0 million. This comprised mainly cash generated
from operating activities before changes in working capital of $2.0 million, which was offset by interest
paid and income tax paid of $0.2 million and changes in working capital of $0.8 million.
Our change in working capital of $0.8 million was mainly due to an increase in trade and other
receivables of $0.7 million, increases in inventory of $0.2 million, and a decrease in other payables of
$0.1 million. This was partially offset by a cash inflow from an increase in trade payables and accrued
liabilities of $0.2 million.
We recorded a net cash outflow from investment activities of $1.2 million, which was due to the purchase
of plant and equipment.
Net cash inflow from financing activities amounted to $1.6 million. This was due to net proceeds of $1.7
million pursuant to the Subscription Agreement, which was partially offset by decreases in borrowings
and finance leases of $0.1 million.
Capital Resources
Our sources of cash include cash generated from operations and capital provided by our Shareholders,
and the utilisation of bank borrowings. Cash generated from operations are derived from our Institutional
Catering, Food Catering and Food Retail Divisions. Our main uses of cash for operations have been for
the acquisition of raw materials and the payment of staff salaries and other operating expenses such as
general office expenses, rental for food retail outlets and purchase of kitchen supplies.
As at 31 December 2003, our cash and cash equivalent was $0.1 million, comprising cash on hand and
bank balances of $1.0 million with no restriction on the use, net of overdraft of $0.9 million. In addition,
we have fixed deposit of approximately $0.7 million.
As at the Latest Practicable Date, our cash and cash equivalent was $0.4 million overdrawn, comprising
cash on hand and bank balances of $0.2 million with no restriction on its use, net of overdraft of $0.6
million. In addition, we have fixed deposit of approximately $0.7 million.
Our Directors are of the opinion that, after taking into account amounts available under existing bank
facilities, our Group has adequate working capital to meet its present requirements. Please refer to
“Capitalisation and Indebtedness” on pages 66 to 67 of this Prospectus for further details.
64
Material Capital Expenditure and Divestment of Capital Investment
The material capital expenditure on and divestment of capital investment of our Group for FY2001,
FY2002, FY2003 and the period from 1 January 2004 up to the Latest Practicable Date, were as follows:-
FY2001
($’000)
FY2002
($’000)
FY2003
($’000)
From 1 January
2004 to the Latest
Practicable Date
($’000)
Leasehold Properties
Plant and Equipment
Construction-in-progress
353
2,131
–
–
521
–
909
791
–
406
1,155
1,389
Total
2,484
521
1,700
2,950
Leasehold Properties
Plant and Equipment
–
81
–
66
–
100
–
362
Total
81
66
100
362
Description
Acquisition (1)
Divestment (2)
Notes:(1)
This relates to the cost of property, plant and equipment acquired during the respective financial years.
(2)
This relates to the cost of property, plant and equipment disposed during the respective financial years.
In FY2001, we acquired a food court stall used by our Food Retail Division, for an amount of $0.4 million.
In FY2003, we acquired the premises where our Simei Eastern Kitchen is currently situated for an
amount of approximately $0.9 million. We incurred $2.1 million, $0.5 million and $0.8 million in FY2001,
FY2002 and FY2003 respectively for the acquisition of kitchen and office equipment, furniture, renovation
and motor vehicles.
In 1H2004, we incurred an amount of $0.8 million for the renovation of the kitchen and installation of
kitchen facilities at our food catering facility in Suzhou, PRC. We expect to incur an estimated amount of
$1.6 million in setting up our Suzhou food catering facility for the purpose of expanding our institutional
catering business into the PRC. The capital expenditure will be funded from both bank borrowings and
internal sources of funds. We commenced renovations in the second quarter of 2004 and have
completed the renovations in August 2004. Further expansion of our Suzhou food catering facility as set
out in the section on “Industry Outlook and Future Plans” on page 113 of this Prospectus is expected to
be partially funded by the net proceeds from the Invitation.
In 1H2004, we were awarded the tender to develop, operate and manage the Expo F&B Hub. The total
development cost (including advertising and promotional expenses) is estimated to be $2.8 million. We
have commenced renovations of the Expo F&B Hub in the third quarter of 2004 and renovations are
expected to be completed by the first quarter of 2005. The capital expenditure will be funded partly from
internal sources of funds and partly from the net proceeds of the Invitation. Please see the section on
“Industry Outlook and Future Plans” on page 113 of this Prospectus for more details.
65
CAPITALISATION AND INDEBTEDNESS
The following table shows our cash and cash equivalents and capitalisation: (i)
based on our unaudited consolidated balance sheet as at 30 September 2004 as adjusted for the
Bonus Issue, Share Consolidation and Share Split but before adjusting for the net proceeds of the
Invitation; and
(ii)
after the issue of New Shares pursuant to the Invitation and the application of net proceeds.
As at 30 September 2004
on an actual basis
as adjusted for the
Bonus Issue, Share
Consolidation and
Share Split but
before adjusting for
the net proceeds of
the Invitation
After adjusting for the
issuance of New Shares
pursuant to the
Invitation and the
application of net
proceeds
1,542
4,655
Indebtedness
Short-term debt (secured and guaranteed)
Short-term debt (unsecured)
1,120
–
1,120
–
1,120
1,120
2,077
–
2,077
–
2,077
2,077
Total Indebtedness
3,197
3,197
Shareholders’ equity
Issued and paid-up capital
Share premium
Reserves
Total Shareholder’s Equity
3,385
–
1,916
4,172
2,325
1,916
5,301
8,413
8,498
11,610
$’000
Long term debt (secured and guaranteed)
Long term debt (unsecured)
Total Capitalisation and Indebtedness
66
As at the Latest Practicable Date, our Group had access to banking facilities from DBS Bank Ltd (“DBS”),
Oversea-Chinese Banking Corporation Limited (“OCBC”) and RHB Bank (“RHB”) amounting to
approximately $5.3 million as follows:-
Nature of facilities
Purpose
Total amount
available
$’000
Utilized
$’000
Unutilized
$’000
Maturity
Profile
Interest
rates
(% per
annum)
Term loans
- Term loan 1
Purchase of
287
287
–
February 2008
5.00
- Term loan 2
property, plant
81
81
–
August 2008
5.00
- Term loan 3
and equipment
1,357
1,357
–
December 2011
3.50
- Term loan 4
and working
556
556
–
November 2013
3.25
- Term loan 5
capital
6
6
–
October 2004
6.25
- Term loan 6
80
80
–
April 2006
4.25
- Term loan 7
380
367
12
February to
March 2005
5.54
- Non-Revolving
300
83
200(1)
April 2006
4.25
2
2
–
January 2005
2.90
May 2007
3.10
credit line
Hire purchase
- Hire Purchase 1
Purchase of plant
- Hire Purchase 2
and equipment
86
86
–
Overdraft
Working capital
1,630
580
1,050
N.A
5.25
to 7.38
Performance
guarantee
Operation
500
427
73
N.A
N.A.
5,265
3,912
1,335
Total
–
–
Note:(1)
Maximum available facility is $200,000.
As at the date of this Prospectus, none of our short term or long-term borrowings has been recalled by
our bankers. We are able to service our borrowings and repay our debts as and when they fall due.
The facilities were secured by our fixed deposits, legal mortgage of our leasehold properties, personal
guarantees by our Directors Messrs, Vincent Tan and Jack Tan, and the corporate guarantees by our
subsidiaries, namely Stamford and Select FM (Singapore).
Contingent Liabilities
We have provided guarantees for our subsidiaries’ bank loans. The balance outstanding of these loans
amounted to $0.1 million and $0.5 million as at 31 December 2003 and the Latest Practicable Date
respectively. In FY2003, our subsidiaries provided guarantees for our bank loans. The balance
outstanding of these loans amounted to $0.6 million and $0.9 million as at 31 December 2003 and the
Latest Practicable Date respectively. As at 31 December 2003 and the Latest Practicable Date, we had
an unsecured bank letter of guarantee of $69,640 and $0.4 million respectively.
As at 31 December 2003 and the Latest Practicable Date, we had insurance or performance guarantees
for certain of our food court stalls or kitchen premises amounting to $68,589 and nil respectively. These
insurance or performance guarantees are counter-indemnified by our Directors and their Associates.
67
Capital Commitment
As at 31 December 2003, we did not have any material commitment for capital expenditure.
As at the Latest Practicable Date, our Group had material commitments for capital expenditure
amounting to $2.3 million, out of which $166,000 is in respect of our Suzhou food catering facility and the
balance $2.1 million is for our Expo F&B Hub development. Both commitments are expected to be
funded from our internal sources of funds and bank borrowings.
Operating Lease Commitments
As at 31 December 2003, we had operating lease commitments to make rental payments totalling
approximately $6.1 million, of which $3.0 million is due no later than one financial year, $2.1 million is
due between two to five financial years, with the remaining $1.0 million being payable after five financial
years. These lease payments represent rentals payable by us for our leasehold property, staff cafeterias,
restaurant and food court stalls.
As at the Latest Practicable Date, we had operating lease commitments to make rental payments
totalling approximately $11.6 million, of which $4.1 million is due no later than one financial year, $5.8
million is due between two to five financial years, with the remaining $1.7 million being payable after five
financial years. These lease payments represent rentals payable by us for our leasehold property, staff
cafeterias, restaurant, food court stalls, Expo F&B Hub and our food catering facility in Suzhou, PRC.
CREDIT POLICY
More than 98% of our sales are denominated in Singapore Dollars.
The staff of our corporate customers in our Institutional Catering Division makes payment in cash when
food and beverage items are purchased at our staff cafeterias. We extend credit terms of up to 30 days
to our corporate customers of partial-subsidy contracts and full-subsidy contracts. Such customers are
usually invoiced at the end of every month, depending on their creditworthiness.
In our Food Catering Division, payments are made by way of cash on delivery by our individual
customers and family units of our Events Catering Services. Our Events Catering Services corporate
customers are usually invoiced after the services have been provided. Credit terms of up to 60 days,
based on their payment track record, are usually granted to such corporate customers. Our Meal
Delivery Services customers are normally invoiced upfront at the beginning of the month or at the
commencement of our services.
All of our food and beverage items are sold on cash basis by our Food Retail Division.
68
Our management, specifically our Managing Director Mr Vincent Tan, closely monitors all outstanding
payments and reviews debtor balances on a monthly basis to ensure that steps are taken to collect any
long outstanding trade debts. We periodically review the credit terms, our customers’ financial condition,
the volume of their order and previous payment track record. We may amend the credit terms granted to
our customers if necessary. We will make specific provision for doubtful trade receivables when the
management is of the view that the debts are deemed uncollectible. Our specific provision for doubtful
trade receivables for FY2001, FY2002, FY2003 and 1H2004 is as follows:FY2001
FY2002
FY2003
1H2004
16
22
–
25
6
22
–
22
Bad trade debt written off during the year ($’000)
Trade Receivables Turnover (Days)(1)
Note:(1)
The trade receivables turnover days = (average trade receivables/revenue) x 365 days (or 180 days for 1H2004).
69
EXCHANGE CONTROLS
Singapore
There are no Singapore governmental laws, decrees, regulations or 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
(b)
the remittance of dividends, interest or other payments to non-resident holders of our Company’s
securities.
Malaysia
Foreign exchange controls in Malaysia are governed by the Exchange Control Act 1953 (“ECA”) and the
Exchange Control of Malaysia Notices (“ECM Notices”) issued pursuant thereto. The principal authority
responsible for exchange control matters is the Controller of Foreign Exchange, Bank Negara Malaysia
(“Controller”).
In relation to foreign direct investment, there is no restriction on repatriation of capital, profits, dividends,
interest and rental income by foreign direct investors. “Foreign direct investment” includes an investment
made by a non-resident in a company where the non-resident is entitled to exercise or control the
exercise of not less than 10% of the votes attached to the voting shares of the company.
Generally, the Controller 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 RM10,000 to a non-resident. However remittances, if made for purposes of investment
abroad in any form or for payment under a guarantee for non-trade purposes will also require the prior
permission of the Controller.
Further, if Select FM (Malaysia) as a non-resident controlled company (“NRCC”) were to obtain from a
resident the following:(a)
any credit facilities for short-term trade financing in RM or any foreign currency where the tenure of
the credit exceeds 12 months; and/or
(b)
any other credit facility in RM or any foreign currency which exceeds RM50 million,
the said resident will be required to obtain the prior written permission of the Controller to extend such
facilities. The NRCC has to comply with the 3:1 gearing ratio requirement between its domestic debt and
eligible capital funds only for amounts that exceed RM50 million. Higher gearing may be allowed on a
case-by-case basis.
Select FM (Malaysia) is permitted to operate one or more inter-company accounts in foreign currency
with its associated companies, branches or other companies which is incorporated or registered outside
Malaysia (but not in certain specified countries) provided monthly returns as specified by the Controller
are submitted to the Controller.
Notes:For the purposes of the ECA and ECM Notices:1.
A “resident” means:a citizen of Malaysia, excluding a person who has obtained permanent resident status in a territory outside Malaysia
and is residing outside Malaysia;
a non-citizen of Malaysia who has obtained permanent resident status in Malaysia and is residing permanently in
Malaysia; or
person, whether body corporate or unincorporated, whether head office or branch, incorporated or registered with, or
approved by any authority in Malaysia.
2.
An NRCC includes a company in Malaysia where more than 50% of its shareholding is held by non-residents and/or NRCCs.
70
The PRC
Foreign exchange receipts and payments in the PRC are distinguished and categorised as “current
account” items and “capital account” items, respectively. The deposit, sale and purchase of foreign
exchange and other related matters is administered in accordance with this categorisation as well as the
nature of the item for which the foreign exchange is required.
“Current account items” refer to transactions entered into in the normal day-to-day business of a
company, such as payment and receipt in the normal course of trade and provision of services. Most
foreign exchange revenue derived from current account items must be sold to or, subject to approval,
deposited in a foreign exchange account in a designated foreign exchange bank. Foreign investment
enterprises however may retain, up to a designated level, foreign exchange from current transactions, in
their foreign currency accounts. The designated level is determined with reference to the investment
amount, the ability to create foreign exchange and foreign currency working requirements of the foreign
investment enterprise. RMB is fully convertible for current account items. Enterprises registered in the
PRC which require foreign exchange for current account items may purchase that foreign exchange from
a designated foreign exchange bank. However, in order to do so, they will be required to furnish to the
bank relevant supporting documents with respect to the current account item for which foreign exchange
is required.
“Capital account items” refer to transactions which serve to either increase or decrease the debt or equity
of an enterprise through the inflow or outflow of capital, including investments and loans. All enterprises
in the PRC must repatriate their foreign exchange revenue derived from capital account items to PRC
and sell them to a designated foreign exchange bank unless permitted otherwise by the State
Administration of Foreign Exchange (“SAFE”). The approval of the SAFE and other relevant government
bodies is required for the conversion of RMB for capital transactions.
A foreign investment enterprise may remit out of PRC, profits and dividends distributed in proportion to
the registered capital actually paid in. The foreign party in a foreign investment enterprise must submit
the prescribed documents to a designated foreign exchange bank in order to make such a remittance.
These include, inter alia, documents verifying the tax payment and tax returns, an auditors’ report issued
by an accounting firm on the profit, dividends or bonuses, the resolution of the board of directors on the
distribution of the profits and dividends, the foreign exchange registration certification of a foreign
investment enterprise, the capital verification report provided by an accounting firm. The foreign
investment enterprise must also appoint an accounting firm to conduct an audit of their funds for the year
in which the profits or dividends were generated and submit the auditors’ report to a designated foreign
exchange bank. Subject to the necessary supporting documents being furnished, all foreign exchange
required for the purpose of payment of profits and dividends to foreign investors may be withdrawn from
the foreign exchange account of a foreign investment enterprise maintained with a designated foreign
exchange bank and if there are insufficient funds, purchased from a designated bank.
Upon the termination of the operations of a foreign investment enterprise, it may convert any balance
RMB owned by it into foreign exchange at a designated foreign exchange bank after undergoing the
necessary liquidation proceedings in the PRC and meeting all its tax obligations in the PRC. Upon
furnishing the relevant documents, the converted foreign exchange may be remitted out of the PRC to its
foreign investors.
71
DIVIDEND POLICY
We currently do not have a dividend policy. The form, frequency and amount of future dividends on our
Shares will depend on our earnings and financial position, our results of operations, our capital needs,
our plans for expansion and other factors as our Directors may deem appropriate.
For FY2001, we declared a dividend of an aggregate amount of $0.5 million net of income tax of 24.5%.
Save as disclosed, we have not distributed any dividends on our ordinary shares in the past three
financial years.
We may declare dividends by ordinary resolution of our Shareholders at a general meeting, but may not
pay dividends in excess of the amount recommended by our Board. We must pay all dividends out of the
profits or pursuant to Section 69 of the Companies Act which permits us to apply accumulated profits to
pay dividends in the form of Shares. Our Directors may also declare an interim dividend without seeking
Shareholders’ approval. Further dividends will be paid by us as and when approved by our Shareholders
and Directors.
There is no assurance that dividends will be paid in the future. Neither is there any assurance regarding
the amount or timing of any dividends that will be paid in the future.
Information relating to taxes payable on dividends are set out on pages A-2 to A-3 of Appendix A of this
Prospectus.
72
DILUTION
Dilution is the amount by which the Issue Price paid by the applicants for our New Shares in the
Invitation (“New Investors”) exceeds the NTA per Share after the Invitation. Our unaudited NTA per Share
as at 30 June 2004, based on the consolidated balance sheet of our Group after adjusting for the
Subscription, Bonus Issue, Share Consolidation and Share Split but before adjusting for the net proceeds
of the Invitation and based on the pre-Invitation issued share capital of 75,213,400 Shares, was 6.90
cents per Share.
Based on the issue of 17,500,000 New Shares pursuant to the Invitation at the Issue Price and after
adjusting for the estimated proceeds from the Invitation, the adjusted NTA of our Group as at 30 June
2004 would have been 8.95 cents per Share based on the post-Invitation issued and paid-up share
capital of 92,713,400 Shares. This represents an immediate increase in NTA of 2.05 cents per Share to
our existing Shareholders and an immediate dilution in NTA of 14.55 cents per Share or approximately
61.9% to the New Investors.
The following table illustrates the dilution on a per Share basis:Per Share
(cents)
Issue Price per Share
23.5
Adjusted NTA per Share as at 30 June 2004 based on the pre-Invitation share
capital of 75,213,400 Shares
6.90
Increase in NTA per Share attributable to our existing Shareholders
2.05
NTA per Share after the Invitation
8.95
Dilution in NTA per Share to New Investors
14.55
Dilution in NTA per Share to New Investors as a percentage of Issue Price
61.9%
The following table summarises the total number of Shares issued by us to our Directors and Substantial
Shareholders, the total consideration paid to us and the average price per Share paid by them (after
adjusting for the Bonus Issue, Share Consolidation and Share Split) and the effective cash cost to the
New Investors:-
Amount
Average
Price per
Share
Number
%
$
cents
31,815,400
12,996,800
34.3
14.0
1,431,693
584,856
4.5
4.5
5,753,800
4,400,000
6.2
4.8
258,921
198,000
4.5
4.5
17,500,000
18.9
4,112,500
23.5
Shares
Directors
Vincent Tan(1)
Jack Tan(1)
Substantial Shareholders
Tay Bock Hiang
Tan Sok Huang
New public investors
Note:(1)
These do not include the 7,521,400 ordinary shares of $0.045 each in the capital of our Company (“Pre-Invitation Investors
Shares”) which Messrs Vincent Tan and Jack Tan, our Directors, have the right to acquire from the Pre-Invitation Investors
under the Subscription Agreement if our Company is not admitted to the Official List of SGX-SESDAQ within 18 months from
the date of the Subscription Agreement. Please see the section on “Shareholders” on page 77 of this Prospectus for more
details.
Please see “Invitation Statistics” on pages 30 and 31 of this Prospectus for more details on the dilution of
the New Shares.
73
GENERAL INFORMATION ON OUR GROUP
SHARE CAPITAL
Our Company was incorporated in the Republic of Singapore on 27 January 1995 under the Companies
Act as a private company with limited liability under the name of Select Food & Beverage Pte Ltd. We
changed our name to Select Catering Services Pte Ltd on 21 April 1997. On 2 November 2004, we were
converted into a public company with limited liability and assumed our present name, Select Catering
Services Limited.
At an extraordinary general meeting held on 30 June 2004, our Shareholders approved the allotment and
issue of an aggregate of 184,400 new ordinary shares of $1.00 each in the capital of our Company to the
Pre-Invitation Investors pursuant to the Subscription Agreement for an aggregate consideration of
$1,725,000 (“Subscription”).
Following the Subscription, the authorised share capital of our Company as at 30 June 2004 was
$2,000,000 comprising 2,000,000 ordinary shares of $1.00 each and our issued and paid-up share
capital was $1,844,005 comprising 1,844,005 ordinary shares of $1.00 each.
At an extraordinary general meeting held on 28 October 2004, our Shareholders approved, inter alia, the
following:(1)
the increase in our authorised share capital from $2,000,000 divided into 2,000,000 ordinary
shares of $1.00 each to $10,350,000 divided into 10,350,000 ordinary shares of $1.00 each;
(2)
a bonus issue of 1,540,598 new ordinary shares of $1.00 each, credited as fully paid upon the
capitalisation of $1,540,598 out of the share premium account of the Company (“Bonus Issue”);
(3)
the consolidation of nine ordinary shares of $1.00 each in the authorised and issued and paid-up
share capital of our Company into one ordinary share of $9.00 each (“Share Consolidation”);
(4)
the sub-division of each ordinary share of $9.00 each in the capital of our Company into 200
ordinary shares of $0.045 each such that our authorised share capital is $10,350,000 divided into
230,000,000 shares of $0.045 each of which 75,213,400 ordinary shares of $0.045 each are
issued and fully paid-up (“Share Split”);
(5)
the conversion of our Company into a public limited company and the consequential change of our
name to Select Catering Services Limited;
(6)
the adoption of a new set of Articles of our Company;
(7)
the issue of 17,500,000 New Shares which is 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 Shares;
(8)
the listing and quotation of the issued ordinary shares of our Company (including the 17,500,000
New Shares to be issued pursuant to Resolution (7) above) on the Official List of SGX-SESDAQ;
(9)
the authorisation of our Directors, pursuant to Section 161 of the Companies Act, to allot and
issue, whether by way of rights, bonus or otherwise (including but not limited to the allotment and
issue of Shares at any time, whether during the continuance of such authority or thereafter,
pursuant to offers, agreements or options made or granted by our Company while this authority
remains in force), or otherwise dispose of Shares (including making and granting offers,
agreements and options which would or which might require Shares to be issued, allotted or
otherwise disposed of, whether during the continuance of such authority or thereafter) at any time
to such persons (whether or not such persons are Shareholders), upon such terms and conditions
and for such purposes as our Directors may in their absolute discretion deem fit PROVIDED
THAT:(i)
the aggregate number of Shares to be issued pursuant to the resolution shall not exceed
50% of the issued share capital of our Company; and
74
(ii)
where Shareholders with registered addresses in Singapore are not given the opportunity to
participate in the same on a pro rata basis, then the Shares to be issued under such
circumstances shall not exceed 20% of the issued share capital of our Company,
and for the purpose of this resolution and pursuant to Rules 806(3) and 806(4) of the Listing
Manual, the percentage of the issued share capital shall be based on the issued share capital at
the time the resolution is passed, calculated on the post-Invitation share capital of our Company
and taking into account the issue of new Shares arising from the conversion of or exercise of any
convertible securities and employee share options on issue at the time the resolution is passed,
which were issued pursuant to any previous shareholders’ approval, and adjusting for any
subsequent consolidation or sub-division of our Shares. Unless revoked or varied by our Company
in general meeting, such authority shall continue in full force until the conclusion of the next
general meeting of our Company or the date by which the next annual general meeting of our
Company is required by law to be held, whichever is earlier; and
(10)
the adoption of the Select Employee Share Option Scheme and that the Directors of our Company
be authorised to allot and issue Option Shares upon the exercise of Options granted under the
Scheme.
As at the Latest Practicable Date, there is only one class of shares in the capital of our Company, being
ordinary shares of $0.045 each. There is no founder, management or deferred shares reserved for
issuance for any purpose. The rights and privileges attached to our Shares are stated in the Articles of
our Company.
The authorised share capital of our Company as at the date of lodgement of this Prospectus was
$10,350,000 comprising 230,000,000 ordinary shares of $0.045 each and our issued and paid-up share
capital was $3,384,603 comprising 75,213,400 ordinary shares of $0.045 each.
Details of the changes in the issued and paid-up share capital of our Company since incorporation and
the resultant issued and paid-up share capital immediately after the Invitation are as follows:-
Par value
($)
Number
of Shares
Issue price/
consideration
($)
Resultant
issued and
paid-up
share capital
($)
Issued and fully paid-up ordinary shares of
nominal value $1.00 each as at
incorporation on 27 January 1995
1.00
4
4.00
4.00
Allotment and issue of ordinary shares of
$1.00 each on 12 September 1996 for
working capital
1.00
49,996
49,996.00
50,000.00
$1.00 each on 21 September 1998 for
working capital
1.00
50,000
50,000.00
100,000.00
$1.00 each on 16 July 1999 for working
capital
1.00
400,000
400,000.00
500,000.00
$1.00 each on 3 April 2001 for working
capital
1.00
500,000
500,000.00
1,000,000.00
$1.00 each on 18 October 2001 as
consideration for the Company’s purchase
of shares in Select FM (Singapore)(1)
1.00
659,605
659,605.00
1,659,605.00
75
Par value
($)
Number
of Shares
Issue price/
consideration
($)
Resultant
issued and
paid-up
share capital
($)
Issued and paid-up share capital of nominal
value $1.00 each to Pre-Invitation Investors(2)
1.00
184,400
184,400.00
1,844,005.00
Bonus Issue to existing Shareholders
1.00
1,540,598
1,540,598.00
3,384,603.00
Share Consolidation
9.00
376,067
–
3,384,603.00
Share Split
0.045
75,213,400
–
3,384,603.00
New Shares to be issued pursuant to the
Invitation
0.045
17,500,000
0.235
4,172,103.00
Issued and paid-up Shares of nominal
value $0.045 each after the Invitation
0.045
92,713,400
0.235
4,172,103.00
Notes:(1)
The allotment and issue of 659,605 ordinary shares of $1.00 each in the capital of our Company, which was made for noncash consideration, constitutes 19.5% of the share capital of our Company as at the date of lodgement of this Prospectus.
Please refer to the section on “Interested Persons Transactions and Conflicts of Interest” on page 131 of this Prospectus for
more details.
(2)
Under the Subscription Agreement, the Pre-Invitation Investors have granted Messrs Vincent Tan and Jack Tan, our Directors,
a call option and Messrs Vincent Tan and Jack Tan have granted the Pre-Invitation Investors a put option pursuant to which if
our Company is not admitted to the Official List of SGX-SESDAQ within 18 months from the date of the Subscription
Agreement (that is, by 20 November 2005), our said Directors can, under the call option require the Pre-Invitation Investors
to sell to them and the Pre-Invitation Investors can, under the put option require our said Directors to purchase from them the
entire 184,400 ordinary shares of $1.00 each in the capital of our Company acquired by the Pre-Invitation Investors pursuant
to the Subscription at the price of $1,725,000 plus accrued interest at the rate of 5% per annum. The call option and put
option are valid for a period of three months from 20 November 2005 and will lapse immediately upon our Company’s
admission to the Official List of the SGX-SESDAQ.
76
SHAREHOLDERS
Our Shareholders and their respective shareholdings in our Company immediately before (as at the
Latest Practicable Date) and after the Invitation are set out below:Before Invitation
Direct Interest
Deemed Interest
After Invitation
Direct Interest
Deemed Interest
No of
Shares
(’000)
Directors
Vincent Tan
Jack Tan
%
No of
Shares
(’000)
%
No of
Shares
(’000)
31,815,400
42.3
–
–
12,996,800
17.3
–
5,753,800
4,400,000
7.6
5.9
Other Shareholders(1)
(each holding less than 5%)
12,726,000
Pre-Invitation Investors(2)
(each holding less than 5%)
7,521,400
Substantial Shareholders
Tay Bock Hiang
Tan Sok Huang
Public (including
shareholders for Reserved
Shares)
Total
–
%
No of
Shares
(’000)
%
31,815,400
34.3
–
–
–
12,996,800
14.0
–
–
–
–
–
–
5,753,800
4,400,000
6.2
4.8
–
–
–
–
16.9
–
–
12,726,000
13.7
–
–
10.0
–
–
7,521,400
8.1
–
–
–
–
–
17,500,000
18.9
–
–
75,213,400 100.0
92,713,400 100.0
Notes:(1)
Refers to eight individuals and one corporation. The individuals are Messrs Pek Poh Kwee, Pek Poh Sien, Toh Peng Seng,
Ng Tee Khiang, Steven Tan (our Executive Officer), Kork Hoe Soon, Tay Soo Teck and Madam Ang Poon Hong. The
corporation is Wing Huat Loong (Pte) Ltd. The shareholders of Wing Huat Loong (Pte) Ltd. comprise nine individuals who
are not related to any of our Directors or Substantial Shareholders.
(2)
Refers to four individuals and one corporation. The individuals are Mr Thang Him Tee, Mesdames Lin Li Fang and Hoon
Pang Heng, Joanna and Mr Kork Hoe Soon. Mr Kork Hoe Soon is one of our existing Shareholders before the Subscription.
The corporation is Avia Growth Opportunities Limited.
Avia Growth Opportunities Limited
Avia Growth Opportunities Limited is a fund managed by Avia Capital Partners Limited (“Avia Capital”)
which is incorporated in the British Virgin Islands. As at the Latest Practicable Date, the shareholders of
Avia Capital are BroadVen Limited (as to 60%) and Westcomb Financial Group Limited (as to 40%).
BroadVen Limited is a holding company owned as at the Latest Practicable Date by Ng Tee Khiang,
David Su Tiong Seng and Low Kiam Cheow. Westcomb Capital Pte Ltd, the Manager, is a wholly-owned
subsidiary of Westcomb Financial Group Limited. Westcomb Securities Pte Ltd, the Placement Agent and
Underwriter is a subsidiary of Westcomb Financial Group Limited. The subscribers of Avia Growth
Opportunities Limited comprise, as at the Latest Practicable Date, the three shareholders of BroadVen
and various high net worth individuals.
Messrs Vincent Tan and Jack Tan, our Directors, are brothers. Madam Tay Bock Hiang, our Substantial
Shareholder, is the mother of Messrs Vincent Tan and Jack Tan. Madam Tan Sok Huang, our Substantial
Shareholder, is the aunt of Messrs Vincent Tan and Jack Tan. Ms Doris Pek, our Executive Officer, is the
spouse of Mr Vincent Tan. Messrs Pek Poh Kwee and Pek Poh Sien, two of our Shareholders, are the
brothers of Ms Doris Pek and the brothers-in-law of Mr Vincent Tan. Madam Ang Poon Hong is the
mother of Messrs Pek Poh Kwee and Pek Poh Sien and Ms Doris Pek and the mother-in-law of Mr
Vincent Tan.
Save as disclosed above, there is no family relationship between our Directors and Shareholders.
77
Our Company is not directly or indirectly owned or controlled by another corporation, or any government
or other natural or legal persons, whether jointly or severally.
The Shares owned by our Directors and Substantial Shareholders do not carry any different voting or
other rights from the New Shares which are the subject of the Invitation.
There is no arrangement known to our Directors 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 which has occurred during the last and current
financial year.
78
79
100.0
12.0
1,659,605
187,535
–
141,067
107,874
862,995
360,134
100.0
11.30
–
8.50
6.50
52.00
21.70
1,659,605
270,515
–
141,067
107,874
796,611
343,538
100.0
16.3
–
8.5
6.5
48.0
20.7
%
1,659,605
312,005
–
141,067
107,874
780,015
318,644
Ordinary
shares
of $1.00
each
100.0
18.8
–
8.5
6.5
47.0
19.2
%
As at 30 June
2004 (but before
Subscription)(3)
1,844,005
312,005
184,400
141,067
107,874
780,015
318,644
Ordinary
shares
of $1.00
each
100.0
16.9
10.0
7.6
5.9
42.3
17.3
%
Subscription(4)
3,384,603
572,670
338,463
258,921
198,000
1,431,693
584,856
Ordinary
shares
of $1.00
each
100.0
16.9
10.0
7.6
5.9
42.3
17.3
%
Bonus Issue(5)
376,067
63,630
37,607
28,769
22,000
159,077
64,984
Ordinary
shares
of $9.00
each
100.0
16.9
10.0
7.6
5.9
42.3
17.3
%
Share
Consolidation(5)
75,213,400
12,726,000
7,521,400
5,753,800
4,400,000
31,815,400
12,996,800
Ordinary
shares
of $0.045
each
100.0
16.9
10.0
7.6
5.9
42.3
17.3
%
As at the Latest
Practicable Date
after Share Split(5)
On 12 March 2004, Mr Vincent Tan transferred 16,596 ordinary shares of $1.00 each in our Company to Mr Steven Tan. On the same day, Mr Jack Tan transferred 16,596 and 8,298 ordinary shares in our Company
to Mr Toh Peng Seng and Mr Kork Hoe Soon respectively.
On 30 June 2004, the Company allotted and issued 184,400 ordinary shares of $1.00 each to the Pre-Invitation Investors pursuant to the Subscription.
At an extraordinary general meeting held on 28 October 2004, our Shareholders approved, inter alia, (i) a Bonus Issue of 1,540,598 new ordinary shares of $1.00 each; (ii) consolidation of nine ordinary shares of
$1.00 each in the authorised and issued and paid-up share capital of our Company into one ordinary share of $9.00 each and (iii) the Share Split of each ordinary share of $9.00 each in the capital of our Company
into 200 ordinary shares of $0.045 each.
One of our existing Shareholders, Mr Pek Poh Kwee, transferred by way of sale an aggregate of 165,960 ordinary shares of $1.00 each in the capital of our Company on 28 July 2004 to Messrs Toh Peng Seng and
Pek Poh Sien and Madam Ang Poon Hong. His shareholdings before and after the said transfer were 10.2% and 1.2% respectively. If our Company is not admitted to the Official List of SGX-SESDAQ on or before 31
(3)
(4)
(5)
(6)
December 2005, the said shares will be sold back to Mr Pek Poh Kwee.
On 10 October 2002, Mr Vincent Tan transferred 58,086 and 8,298 ordinary shares of $1.00 each in our Company to Wing Huat Loong (Pte) Ltd. and Mr Tay Soo Teck respectively. On the same day, Mr Jack Tan
transferred 16,596 ordinary shares in our Company to Mr Ng Tee Khiang.
On 18 October 2001, our Company allotted and issued 441, 935 and 151,709 ordinary shares of $1.00 each to Mr Vincent Tan and Mr Jack Tan, respectively as consideration for the acquisition from them of 335,000
and 115,000 ordinary shares of $1.00 each in the share capital of Select FM (Singapore) respectively. On the same day, Mr Vincent Tan transferred 58,425 and 515 ordinary shares in our Company to Mr Jack Tan
and Mr Pek Poh Kwee respectively. At the same time, Madam Tay Bock Hiang transferred 1,059 ordinary shares and 7,874 ordinary shares in our Company to Mr Pek Poh Kwee and Madam Tan Sok Huang
respectively.
On 3 April 2001, our Company allotted and issued 240,000, 75,000, 75,000 and 50,000 ordinary shares of $1.00 each at par to Mr Vincent Tan, Mr Jack Tan, Madam Tay Bock Hiang and Madam Tan Sok Huang
respectively.
500,000
60,000
15.0
10.0
48.0
15.0
Ordinary
shares
of $1.00
each
As at
1 January 2003(2)
(2)
(1)
Notes:-
TOTAL
Others
–
Pre-Invitation
Investors
(6)
75,000
50,000
240,000
75,000
Tay Bock Hiang
Tan Sok Huang
Substantial
Shareholders
Vincent Tan
Jack Tan
Directors:-
%
Ordinary
shares
of $1.00
each
Ordinary
shares
of $1.00
each
%
As at
1 January 2002(1)
As at
1 January 2001
Save as disclosed below, there has been no significant change in the percentage of ownership of shares in our Company held by our Directors and Substantial Shareholders
during the last three years and up to the Latest Practicable Date:-
Significant Changes to Shareholdings
MORATORIUM
To demonstrate their commitment to our Group, our Directors and Shareholders Messrs Vincent Tan,
Jack Tan, Pek Poh Kwee and Pek Poh Sien and Mesdames Tay Bock Hiang, Tan Sok Huang and Ang
Poon Hong, who in aggregate hold 58,553,600 Shares representing 63.2% of our Company’s issued and
paid-up share capital after the Invitation, have each undertaken not to sell, transfer or otherwise dispose
of any part of their respective interests in our Company for a period of six months commencing from the
date of admission of our Company to the Official List of the SGX-SESDAQ and in the six months
thereafter not to sell, transfer or otherwise dispose of more than 50% of their respective interests in our
Company immediately after the Invitation.
Avia Growth Opportunities Limited, which holds 2,632,600 Shares representing approximately 2.8% of
our Company’s issued and paid-up share capital after the Invitation, has undertaken not to sell, transfer
or otherwise dispose 56,014 Shares, as calculated based on the formula provided in Rule 229(3) of the
Listing Manual for a period of six months commencing from the date of admission of our Company to the
Official List of the SGX-SESDAQ and in the six months thereafter not to sell, transfer or otherwise
dispose of more than 28,007 Shares.
GROUP STRUCTURE
Our corporate structure as at the Latest Practicable Date is set out below:Select Catering Services
Select Catering Services
Limited
Limited
100%
Select FM
(Singapore)
100%
100%
Stamford
100%
Select
Investment
Lerk Thai
100%
100%
SCS
100%
Select FM
(Malaysia)
Select
Suzhou
The details of our subsidiaries as at the Latest Practicable Date are as follows:-
Name of company
Date of incorporation /
country of incorporation
and principal place
of business
Principal businesses
Issued and
paid-up capital
Effective
percentage
owned
by our
Company
(%)
Select Food
Management Pte Ltd
3 May 1999
Singapore
36 Senoko Crescent
Singapore 758282
Operator of food court
stalls
$500,000
100
Stamford Catering
Services Pte Ltd
11 January 2000
Singapore
36 Senoko Crescent
Singapore 758282
stalls, catering services
and staff cafeterias
$250,005
100
Select Food
Management
Sdn. Bhd.
19 December 2000
Malaysia
104-A Jalan Harimau
Tarum, Taman Century
80250 Johor Bahru
Johor Malaysia
stalls
RM100,000
100
80
Name of company
Date of incorporation /
country of incorporation
and principal place
of business
Principal businesses
Issued and
paid-up capital
Effective
percentage
owned
by our
Company
(%)
Lerk Thai Restaurant
Pte Ltd
28 November 2003
Singapore
249 Victoria Street
Singapore 188034
Operator of restaurants
and food court stalls
$200,000
100
Select (F&B)
Investment Pte Ltd
17 March 2004
Singapore
36 Senoko Crescent
Singapore 758282
Investment holding
$100,000
100
Select F&B
(Suzhou) Co., Ltd.
㚰Ф亳ક㢣Ꮂ
᳝䰤݀ৌ(2)
2 April 2004
PRC
Dun Huang Road,
East Lou Feng District
Suzhou Industrial park
PRC
㢣ᎲᎹϮುऎ
࿘㨥ϰऎᬺ✠䏃
Processing of fast
food, catering services
and staff cafeterias
SCS Food Services
Pte Ltd
2 July 2004
Singapore
36 Senoko Crescent
Singapore 758282
Operator of catering
services and
restaurants, cafes,
snack bars, creameries,
fast food outlets and
food courts
US$3,500,000
(1)
$100,000
100
100
Notes:(1)
The registered capital is US$3,500,000. As at the date of this Prospectus, US$600,000 has been paid-up. The balance
amount of the registered capital is payable by 2 April 2007 and will be funded from our internal sources of funds and/or bank
borrowings.
(2)
The term of operation for Select Suzhou is 50 years commencing from 2 April 2004 and expiring on 1 April 2054.
None of the above companies is listed on any stock exchange. We do not have any associated company.
81
HISTORY AND BUSINESS
OUR HISTORY
Our Company was incorporated in Singapore under the Companies Act on 27 January 1995 as a private
limited company under the name of Select Food & Beverage Pte Ltd. Our name was subsequently
changed to Select Catering Services Pte Ltd on 21 April 1997. On 2 November 2004, pursuant to our
conversion into a public limited company, we changed our name to Select Catering Services Limited.
Our business can trace its origins back to August 1991 when Select Cafeteria & Catering Services was
founded by our Managing Director, Mr Vincent Tan, to provide catering services to household parties and
lunch box delivery services. We first started our operations from a 56 sq m rented kitchen, supported by
three vehicles and approximately ten staff members. In 1992, to meet the rising demand for our
services, we set up our first commercial kitchen in Siglap and increased our vehicles to ten and
supporting staff members to 20. We established another kitchen in Hougang in 1993 to cope with our
business expansion as our Siglap kitchen neared its full capacity. In order to better serve our customers
and reduce our operating costs, our Siglap kitchen served mainly customers in the eastern part of
Singapore while our Hougang kitchen served mainly customers in the northern part.
In 1995, our Company was formed to take over and operate our business. In the same year, we opened
a third kitchen in Aljunied as demand for our services exceeded the capacity of both our Siglap and
Hougang kitchens. Our Aljunied kitchen concentrated on customers in the western part of Singapore. It
occupied an area of approximately 335 sq m. Our supporting staff strength then grew to approximately
80. Encouraged by the popularity and success of our food catering services for private functions, we
expanded our food catering services to corporate and community functions. Our customer base
broadened to include companies, government ministries, statutory boards, hospitals and schools.
In 1997, our Managing Director, Mr Vincent Tan, saw the market potential in the food retail business,
particularly with the growth in the number of food courts in locations such as shopping malls and
neighbourhood centres and office buildings which have relatively high concentration of shopping and
working crowds. We expanded our business to food retail by operating dedicated food court stalls and
public cafeterias. Our food retail outlets increased from an initial three in 1997 to 39, which include two
food court stalls in Malaysia, as at the Latest Practicable Date.
In 1999, in order to rationalize our operations and cater for our future business expansion, we
commenced the development of our integrated computer system which was completed in 2000. Please
see “Integrated Computer System” on page 91 of this Prospectus for more details. At the same time, we
acquired a property of approximately 4,600 sq m in Senoko for use as our Central Kitchen. Our Senoko
Central Kitchen had a kitchen area of approximately 1,900 sq m. The operations at our Siglap and
Hougang kitchens were ceased and relocated to our Senoko Central Kitchen so as to rationalise our
operations. Our staff strength in our Central Senoko Kitchen was increased to over 200. In order to
better serve our customers, we set up a Halal sub-kitchen at our Senoko Central Kitchen and obtained
the Halal certification from MUIS in 2000. Our Senoko Central Kitchen was awarded “A” grading in
hygiene and cleanliness by MEWR.
In 2000, we commenced our institutional catering business and secured our first three corporate
customers which had in aggregate approximately 834 employees. Since then, owing to the quality of our
services, our institutional catering business has seen a steady growth. As at the Latest Practicable Date,
we have 20 subsisting contracts from large corporations and MNCs operating in Singapore.
In 2000, we were ranked as one of the top 500 small medium enterprises by DP Information Network Pte
Ltd and were awarded the “Singapore SME 500 2000/2001 Company” recognition.
In December 2000, we formed Select Eastern Investment as a joint venture with a third party to operate
a fast food restaurant business in Zhangzhou, Fujian province, PRC. Zhangzhou Select Eastern Fast
Food was established in July 2001 as a wholly owned subsidiary of Select Eastern Investment to operate
the fast food restaurant business, offering Singaporean cuisines. However, due to unfavourable business
conditions and consistent with our Group’s long-term strategy to focus our activities on food catering and
food retail, we disposed of our interests in Zhangzhou Select Eastern Fast Food in 2003. Select Eastern
Investment, the joint venture vehicle, was struck off on 17 September 2004.
82
As part of our continuing efforts to promote and maintain the quality of our services and standard of
cuisines, we conducted training courses for our staff in the various areas of food service and preparation.
In 2002, we were granted the “Approved Training Centre” status by the ITE. Our training courses, such
as “Certificate of Competency in Food Preparation”, are offered to both our own staff as well as the
public.
In December 2003, we vacated our Aljunied kitchen due to redevelopment of the area by government
authorities. We moved its operations to our present Simei Eastern Kitchen in Bedok. Our Simei Eastern
Kitchen occupies an area of approximately 342 sq m and was acquired by us at a consideration of
approximately $0.9 million. The acquisition was funded by our own internal sources of funds as well as
bank borrowing.
In March 2004, we started our first restaurant, Lerk Thai Restaurant, located at Victoria Street,
specialising in Thai cuisines.
To meet the needs of MNCs which have established their manufacturing facilities in Suzhou, PRC, we
expanded our institutional catering business to the PRC in 2004. We rented a premises in the SuzhouSingapore Industrial Park for the purpose of setting up a food catering facility. Our primary objective is to
provide institutional catering services to the MNCs in Suzhou. We commenced operation of our
institutional catering business in the PRC in September 2004. Please see “Industry Outlook” and “Future
Plans” on pages 111 and 113 of this Prospectus for more details.
In June 2004, we successfully tendered for the development, operation and management of the food and
beverage hub to be established at Singapore Expo. The Expo F&B Hub is estimated to occupy an area of
about 2,628 sq m with approximately 13 different food outlets and establishments, ranging from food
court stalls to mid-range restaurants as well as a Chinese banquet hall. We plan to develop the Expo
F&B Hub to be a place of interest that meets not only the needs of the visitors to the conventions,
seminars and events held at Singapore Expo but also the general public. Please see “Industry Outlook”
and “Future Plans” on pages 111 and 113 of this Prospectus for more details.
83
OUR BUSINESS
be categorised into the following three divisions:-
Our business can
(a)
Institutional Catering – we provide food management services to our corporate customers. We
operate and manage staff cafeterias, on a contract basis, at the premises of our corporate
customers from various industries;
(b)
Food Catering – we provide events catering services for corporate, community or private functions
as well as daily meal delivery services to workplaces and family units; and
(c)
international and local fare. We commenced the operation of our first restaurant in Singapore
specialising in Thai cuisine in March 2004.
To support our island-wide catering and food retail operations, we established our Central Senoko
Kitchen, with a land area of approximately 4,600 sq m, as our main kitchen and our Simei Eastern
Kitchen, with a land area of approximately 342 sq m, as our supporting kitchen. In order to serve the
Muslim community in Singapore, our subsidiary, Stamford, obtained the Halal certification issued by
MUIS which allows us to provide food catering and retail services to our Muslim customers.
With 13 years of operating history, we believe we have established recognition in the F&B industry
through our efforts in serving quality cuisines at affordable prices and providing customers with efficient
and friendly services. The key elements of our management focus include:-
Quality cuisines – We provide a wide range of cuisines to meet the varied tastes and preferences of our
customers. Our chefs are highly experienced and well-trained and their culinary skills ensure the high
standards of our food.
Affordability and convenience – We seek to offer value-for-money catering services to all our customers
by catering to their budget and specific requirements.
Efficient and friendly service – Our staff are well-trained, efficient and friendly. We continuously strive to
develop and maintain customer satisfaction through our efficiency and dependability.
Hygienic environment – We emphasize on cleanliness and good hygiene practices in all areas of our
operations. Further, we seek to maintain and enhance the level of trust which our customers have in us
through regular maintenance and inspections.
We operate and manage the staff cafeterias at the premises of our corporate customers from various
industries in Singapore. Our customers include leading MNCs in the electronics and semi-conductor
industries such as Advanced Micro Devices (S) Pte Ltd, Agilent Technologies Singapore Pte Ltd, Maxtor
Peripherals (S) Pte Ltd, STATS, STMicroelectronics Pte Ltd, Infineon Technologies Asia Pacific Pte Ltd
and Motorola Electronics Pte Ltd. As at the end of FY2001, FY2002, FY2003 and the date of this
Prospectus, we managed eight,13, 20 and 20 staff cafeterias respectively. The daily average number of
patrons served at our staff cafeterias has increased from approximately 3,000 in FY2001 to
approximately 33,700 in 1H2004.
Our services comprise the whole supply chain of food and beverage procurement, menu planning and
preparation, as well as the operation and maintenance of food service and facilities at our customers’
premises. Our services include provision of on-site meal service to our customers’ employees and
general maintenance and cleaning of the staff cafeterias. Occasionally, we provide advice and technical
support to our customers with respect to the installation of kitchen facilities and the design and layout of
their staff cafeteria and kitchen.
84
The number of food stalls at our staff cafeterias ranges from one to ten, offering different types of
cuisines to suit the varied tastes of our customers’ staff. We aim to serve healthy, appetising and varied
dishes at our customers’ staff cafeterias. The cuisines comprise international and local fare. In most
cases, food is prepared on-site by our chefs at the staff cafeterias on the day of expected consumption to
ensure freshness. We aim to achieve central quality control at our staff cafeterias without compromising
on the need for continual variety in our menus. Towards this end, half of the selection from the daily
menu at our staff cafeterias is derived from a prescribed menu prepared by our Central Senoko Kitchen
while the remaining half is decided by our staff cafeteria manager from our approved list of optional
menus. Our staff cafeteria manager takes into account the tastes, preferences and budgetary
considerations of the patrons at each cafeteria in planning the menu. In addition, to add variety to the
menus, our Central Senoko Kitchen supplies on a daily basis certain selection of cooked food not
prepared by our staff cafeteria chefs to the various staff cafeterias operated by us. In a small number of
contracts where there are no on-site kitchen facilities at our customers’ premises, food is prepared and
delivered by our Central Senoko Kitchen.
Raw materials, comprising mainly food ingredients required by our staff cafeterias are substantially
procured directly by them from our approved suppliers. Most of the staff cafeterias we operate are
equipped with kitchen facilities such as cold rooms and freezers for the storage of food ingredients.
As part of our value-added services, we also provide customised events catering services to our
institutional catering corporate customers. These events include training seminars, conventions and
meetings conducted by our customers, family-day functions and food fairs which are usually held at the
premises of our customers.
The contracts in our Institutional Catering Division can be broadly categorised into the following three
types:-
(a)
Profit and Loss (no-subsidy) Contracts
In profit and loss contracts, we generally receive all our revenue from, and bear all the expenses
of, the provision of our services under the contracts. Expenses under profit and loss contracts
generally include labour, raw materials and utilities. However, they may also include rental or
licence fees payable to our corporate customers for the use of their premises to operate the staff
cafeterias. The amount of rental or licence fees payable per month may be a fixed sum or a
variable amount based on a percentage of the net receipts derived from the operation of the staff
cafeterias. Under such contracts, the staff of our customers generally pays the full prices of their
own purchases.
(b)
Partial-Subsidy Contracts
In partial subsidy contracts, we receive subsidies from our customers for our operations. The
subsidy takes the form of a waiver from the payment of rent and/or utility charges to our
customers. In addition, in some of the contracts, we may also receive payment of a fixed monthly
sum. The quantum of the fixed amount, which is determined after we have considered our
operation cost, is agreed by our corporate customers when the contracts are formed. Generally, in
view of the subsidy given to us, our customers will require us to reduce the selling prices of our
food and beverages served at the staff cafeterias. The staff of our customers bears the costs of
their own purchases. Under such contracts, our profit potential and risk of loss are reduced as
compared to profit and loss contracts.
(c)
Catering and Management (full-subsidy) Contracts
Under catering and management contracts, our corporate customers bear the costs of managing
their staff cafeterias and providing meals to their staff. In such cases, our customers either pay us
a lump sum per month for the provision of meals or an amount calculated based on the
headcounts that we serve in that month, which is usually a fixed amount for each headcount. In
most cases, we do not pay rent or utility charges for our operations. Under such contracts, our
profit potential and risk of loss are reduced compared to profit and loss contracts.
85
Generally, the prices of food and beverages that we sell at the staff cafeterias are agreed and fixed under
the contracts. The agreed prices take into account, amongst others, factors such as industry of our
customers and the amount of management fee or subsidy paid to us. The contracts generally also
require us to obtain the approval of our customers before we may increase the prices of the food and
beverages that we serve.
The duration of each contracts varies, ranging from one to three years, with most of the contracts being
renewable for further periods at the sole option of our customers. The contracts generally provide for
termination by either party with notice as well as unilateral termination by the customer upon our breach
of the contract, insolvency or liquidation.
We commenced operations of our institutional catering business in Suzhou, PRC in September 2004. As
at the date of this Prospectus, we have secured six institutional catering contracts in Suzhou. Food is
prepared by us at our kitchen facility in Suzhou and delivered to the premises of our corporate
customers. In addition, we have secured a contract to provide catering services for functions, exhibitions
and events held at an exposition hall in Suzhou.
We provide one-off catering services for special events and functions (“Events Catering Services”), as
well as daily meal delivery services (“Meal Delivery Services”) to workplaces and family units.
Our Events Catering Services offer catering services for a wide variety of private, corporate and
community events and functions. Our customers include individuals who require our services for private
functions such as weddings, indoor and outdoor parties, housewarming parties, anniversaries and
birthday celebrations. Our corporate customers include corporations, government bodies, institutions,
hospitals and schools such as DBS Bank, SingTel, IBM, Singapore Armed Forces, Singapore Police
Force, CPF Board, Singapore General Hospital, Changi General Hospital, National University Hospital,
National University of Singapore and Nanyang Technological University. We are engaged for events such
as conventions, seminars, opening ceremonies and product launches.
We offer our customers a wide selection of buffet menus that range from International, Chinese, Malay,
Japanese and Northern Indian cuisines to local fare which are tailored according to our customers’ tastes
and budgets. These menus are designed for lunch, dinner, high-tea or barbecue or customised for
specific functions or theme parties. Our customised buffet packages come with complimentary services
such as full table setting, dish warmers, disposable table wares, serviettes, condiments and garbage
bags. We also provide set-up and clearing services. In addition, we are able to offer our customers other
value-added services such as provision of service staff to serve at our customers’ functions, chefs to
carry out on-site cooking or meal preparation and wedding or event consultancy and services.
For FY2001, FY2002, FY2003, we have catered for approximately 13,000, 15,000 and 14,000 events
respectively.
Our Meal Delivery Services cater mainly to customers who work in locations with no easy access to food
outlets and who have very few or no lunch-out options. We also cater to family units which prefer the
convenience and time-saving option of prepared meals delivered to their doorsteps. We aim to provide
complete and good quality meals at affordable prices which are delivered to our customers in reusable
hygienic containers, colloquially known as “lunch boxes” or “tingkats”. These containers are collected
when we make our next delivery. Besides lunch, we also cater for dinner. Contracts for our Meal Delivery
Services are generally for a specified period of not less than one month.
We serve Chinese, Japanese, Western and vegetarian cuisines for our Meal Delivery Services. We
provide a different menu for each day of the week to offer variety and cater to specific tastes or
preferences of our customers. Our Directors believe that our prompt and efficient services and high food
quality have enhanced our customer base and increased orders from our customers. This has
contributed to the growth of our Meal Delivery Services over the years.
86
The business of our Food Retail Division comprises the operation of (a) dedicated food court stalls (b)
public cafeterias and (c) a foreign cuisine restaurant.
As at the date of this Prospectus, we operate 39 dedicated stalls in third-party-operated food courts (37
in Singapore and two in, Malaysia), two public cafeterias and one mid-range Thai cuisine restaurant. The
following map illustrates the geographical coverage of our food retail outlets in Singapore:-
(a)
Operation of dedicated food court stalls
We cater mainly to the general public which prefers to have a fast meal during their meal breaks or
while carrying out their daily activities, at affordable prices. We specialise in common but popular
local fare such as Chinese Mixed Rice, Ampang Yong Tau Fu, and Nasi Padang. Since the
commencement of our food retail business in 1997, we have evolved from a small food court stall
operator to become one of the leading food court stall operators in Singapore.
Our dedicated food court stalls are located mainly in the food courts of shopping malls, hospitals
and neighbourhood centres with a relatively high concentration of shopping and working crowd.
They are generally easily accessible by public transport and/or within the proximity of shopping
malls and workplaces. Most of our stalls were procured through invitation by food court operators.
In certain cases, we procured our dedicated food court stalls through advertisements placed by
food court operators. Generally, we are selective in our choice of locations. Factors that we will
take into consideration in evaluating the viability of a new food court stall include the following:-
Geographical location
Location of the food court is a major factor in our decision on whether to open a new outlet at the
food court. The expected customer traffic flow is critical to the success of a food court. The total
gross building area, the number of floors and the gross floor area of the building in which the food
court is located have an impact on the potential patronage of the shopping mall, which in turn will
affect the number of customers visiting the food court and our dedicated food court stalls. The
presence of departmental stores, cinemas, amusement centres and supermarkets are among the
positive factors that may help to attract more customers to the location.
87
Convenience
Easy accessibility or close proximity to public transport systems including bus terminals, the MRT
stations and the Light Rapid Transit stations, is an important factor that will affect the potential
patronage of the food court. The number of parking lots in the building and the availability of the
car park space in the vicinity of the building are also taken into consideration by us in our
evaluation.
Management of the food court
Good management of a food court is an important criterion to the success of the food court. As
such, the experience, reputation and management style of the food court operators are important
factors that we take into consideration in our evaluation.
Competition
We would take into account the food stalls mix in the food court and other restaurants or food
establishments in the building in our consideration. Potential competition arising from same or
similar cuisines being offered by nearby food establishments may affect the patronage of our food
court stalls.
Our contracts with the food court operators generally require us to pay a monthly rent or licence
fee to the food court operators. Subject to a minimum fixed amount to be paid, such rent or licence
fee takes the form of either a fixed amount per month or an amount calculated based on a fixed
percentage of our sales revenue or proceeds. In addition, we also pay a fixed amount of service or
cleaning charges every month to the food court operators which are responsible for the cleaning
and general maintenance of the food courts. All utility charges are borne by us based on our
actual usage and reimbursed to the food court operators. In some of our contracts, we are required
to contribute towards the advertising and promotional expenses and/or a one-off renovation or
design fee incurred by the food court operators.
Our dedicated food court stalls are each managed by a head chef who is assisted typically by an
average of four kitchen and stall helpers. Food is cooked at the kitchens of our food court stalls by
our chefs although a substantial part of the food preparation, such as cutting, slicing and
seasoning of meats, is done by our Central Senoko Kitchen and delivered to our various food court
stalls for cooking. This is to improve the efficiency of our food court stalls as our chefs are
generally constrained by the space and facilities available in the respective food court stall kitchens
to carry out preparation of food items, particularly meat. The preparation and cooking of vegetables
and food ingredients are however carried out by our food court stalls directly as the preparation
work involved in such dishes is generally less. This is also to ensure the freshness and quality of
the food prepared as non-meat raw materials, such as vegetables and other ingredients, are
procured by and delivered to our food court stalls directly.
Procurement of raw meat is made by our Central Senoko Kitchen, which has cold storage facilities
to keep the raw meat fresh. Our food court stalls will place orders for their requirements of raw
materials, such as meat, with our Central Senoko Kitchen one day before the expected
consumption. Our Central Senoko Kitchen will procure, semi-process and deliver such food items
to our food court stalls in time for preparation and cooking. Other raw materials such as produce
and dried stocks are procured by the food court stalls directly from an approved list of suppliers
and delivered to the food court stalls on the day of expected consumption.
The chef at each food court stall plans the daily menu from a prescribed menu prepared by our
Central Senoko Kitchen with the flexibility to incorporate a certain proportion of the selection with
optional menus approved by our Central Senoko Kitchen. This flexibility is to allow our chefs to add
variety to the food selection based on customers’ preferences, which vary among the food court
stalls that we operate.
88
(b)
Operation of public cafeterias
As at the date of this Prospectus, we operate two public cafeterias at the following locations in
Singapore and they are established on the dates shown below:Buildings
Location
Date of establishment
Caltex House
Raffles Place
1 July 1999
Shaw House
Orchard Road
16 July 2000
Each of our public cafeterias occupies an area of between 14 sq m and 270 sq m. Our two public
cafeterias have shared seating with other adjourning cafeterias. Customers of our public cafeterias
are mainly the general public who prefer to savour their meals at a more leisurely pace in a café
ambience. We serve local fare as well as budget Western food at our public cafeterias.
We procured our public cafeterias through invitations by owners of the buildings under a fixed
rental arrangement. Our public cafeterias are operated substantially in the same manner as our
food court stalls.
(c)
Operation of foreign cuisine restaurant
We commenced operations of a mid-range Thai cuisine restaurant named Lerk Thai Restaurant,
located at 249 Victoria Street, in March 2004. Our restaurant has an area of approximately 115 sq
m with a seating capacity for about 70 customers. Our head chef at the restaurant has
approximately 20 years of experience in preparing Thai cuisines. The restaurant appeals to
customers who seek authentic Thai cuisines at budget to middle-range prices, coupled with a
unique, hassle-free dining experience. Although the restaurant is distinctly different from our other
food establishments in the cuisine it serves, it shares certain common traits such as quality food,
prompt and efficient service, as well as clean and friendly environment. Over and above that, we
strive to differentiate this restaurant from our public cafeterias by providing attractive interior
decorations and uniformed service staff to complement the ambience. All our service staff is
trained with the necessary skills and menu knowledge to provide a consistent level of customer
service and to assist our customers in food selection. We also offer attractive set menus at
affordable prices to cater to the working public.
We adopt a self-service ordering system at the restaurant. Our customers will place and pay for
their orders at the service counter and food will be served at the customers’ tables by our service
staff. Our service staff is also available to assist our customers with their selection from the menu.
This system reduces our operating costs and assists in orderly and speedy food preparation and
service, hence promoting good customer turnover during peak periods.
89
MANAGEMENT OF OUR KITCHENS AND OPERATIONS
As at 30 June 2004, we employ an aggregate of 738 employees and operate 58 food establishments in
Singapore and Malaysia, comprising both food retail outlets and institutional catering staff cafeterias. In
addition, our food catering business is able to serve up to an average maximum capacity of 2.92 million
headcounts a year. Such large scale operations require us to be able to manage our operations
efficiently and effectively so as to remain profitable and further expand our business. Our management
capabilities can be seen from the manner in which we manage our operations, details of which are set
out below.
Our Kitchens
Central Senoko Kitchen
Our Central Senoko Kitchen houses three sub-kitchens, namely Stamford Kitchen, Select Catering
Kitchen and Select Food Management Kitchen. As at 30 June 2004, it was operated by 83 employees,
comprising two operations personnel, four Master Chefs, 17 chefs, 30 kitchen helpers and 30 delivery
personnel. Our Central Senoko Kitchen serves customers island-wide.
Our Central Senoko Kitchen is equipped with all the necessary kitchen facilities, including cold rooms
and freezers for the storage of perishable raw materials.
Stamford Kitchen
Our Stamford Kitchen meets the certification requirements of MUIS for the preparation of Halal
food. All Halal food items are prepared, cooked and packed by a separate staff group. Our
Stamford Kitchen supports our Food Catering Division and Institutional Catering Division by
preparing Halal meals for our customers.
In addition, our Stamford Kitchen also prepares and delivers semi-processed Halal food items,
which are raw food that has undergone preparation such as cutting, slicing and seasoning, to our
dedicated food court stalls and public cafeterias under our Food Retail Division.
Select Catering Kitchen
Our Select Catering Kitchen prepares non-Halal cooked food that serves our Food Catering
Division. In addition, it also prepares and supplies a small quantity of cooked food for our
institutional catering customers.
Select Food Management Kitchen
Our Select Food Management Kitchen was established to serve our Food Retail Division. It
essentially prepares semi-processed food items for distribution to our various food court stalls and
public cafeterias under our Food Retail Division. Due to space constraints and lack of kitchen
facilities in many of our food retail outlets, the preparation of raw food such as slicing, cutting and
seasoning of meat is carried out by our Select Food Management Kitchen. The semi-processed
food is delivered to the various food retail outlets and is ready to be cooked at any time when
required. In this manner, we are also able to leverage on the benefits of economy of scale derived
from bulk preparation of semi-processed food at our Central Senoko Kitchen.
Simei Eastern Kitchen
As at 30 June 2004, our Simei Eastern Kitchen is operated by 26 employees, comprising one operations
manager, four chefs, eight kitchen helpers and 13 delivery personnel. Located in Bedok, our Simei
Eastern Kitchen provides non-Halal food services to our Food Catering Division customers in the eastern
region of Singapore. Our close proximity to our customers enables us to provide prompt and efficient
services, reduces operating costs and delivery time and maximize our resources.
Our Simei Eastern Kitchen is managed by an operations manager. It procures all raw materials, including
meat and perishable items, from our approved suppliers and has cold room facilities for the storage of
such raw materials.
90
Although our Central Senoko Kitchen and Simei Eastern Kitchen operate independently of each other,
they each serve as a secondary source of food supply to the other when demand exceeds the capacity
of the other kitchen.
The production flow chart at our Central Senoko Kitchen can be illustrated as follows:-
Sales
Receipt of orders from
food catering customers
and food retail outlets
Purchasing
Procurement of raw
materials
Production control
Allocation of raw materials
to different kitchens
Stamford Kitchen
(Halal)
Select Catering Kitchen
(Non-Halal)
Institutional
Catering
Division
Preparation and
processing of
cooked food
Food Retail
Division
Preparation and
processing of
semi-processed
food
Food Catering
Division
Preparation and
processing of
cooked food
Food Catering
Division
Preparation and
processing of
cooked food
Institutional
catering staff
cafeterias
Food court stalls
and public
cafeterias
End customers
End customers
Select Food Management
Kitchen (Non-Halal)
Institutional
Catering
Division
Preparation and
processing of
cooked food
Food Retail
Preparation and
processing of
semi -processed
food
Institutional
catering staff
cafeterias
Food court stalls
and public
cafeterias
Integrated Computer System
We have installed a computer system which integrates all departments and functions in our Group, other
than our human resource, into a single computer system. It consists of software modules for business
areas such as marketing and sales, raw material costs, profit margins, production and inventory control,
procurement, distribution, cuisine and service development, finance and accounting. Our computer
system has been developed by our Group and is customised to meet our specific business needs.
The integrated computer system also contains all essential data relating to our cuisines and menus, such
as the ingredients and portions required in any food item. This assists us in controlling our costs and
monitoring our gross profit margins. The integrated computer system is able to process our raw materials
requirements and allocate them to our various kitchens for preparation and distribution.
Upon receipt of sales orders from, for example, our food catering customers, our sales department will
key in the selected information such as the menu, quantity required (in terms of headcount), delivery
location and time into our integrated computer system. Our computer system will, based on such
information, process the purchase orders for raw materials required and the ingredients list. The initial
data (comprising delivery location, time, selected menu, and quantity required) and the required
ingredients list and quantity are then forwarded to the respective kitchens for preparation. Our production
department will, based on information processed by the computer system, allocate the necessary raw
materials required by the different kitchens for the preparation of the sales orders.
91
Our integrated computer system has enabled us to achieve short turnaround time and prompt customer
service notwithstanding the large scale of our operations. It reduces the amount of time required for
operations planning and assists us in managing our operations efficiently. This raises our productivity
level and increases the quality of our services. In addition, our integrated computer system assists to
standardise the use of raw materials and ingredients in each particular food item. This ensures that we
serve our customers with food items of consistent quality.
Bulk Procurement
We source our raw materials requirements, comprising raw food such as meat, vegetables and fruits,
locally. We negotiate the pricing and other terms for the majority of our purchases directly with our
suppliers. We ensure the quality of our raw materials by having a list of approved suppliers which are
assessed on factors such as the quality of their products, pricing and service level and their ability to
meet delivery schedules.
Generally, raw food such as meat is procured in bulk by us and stored in the cold rooms at our Central
Senoko Kitchen. By procuring in bulk, we are able to enjoy better pricing offered by our suppliers.
Although our dedicated food court stalls, public cafeterias and staff cafeterias source for some of their
raw material requirements directly, such purchases are procured from our approved suppliers. We are
therefore still able to enjoy better pricing as prices of raw materials are generally negotiated by us on a
Group basis.
Cost Control Incentives
We monitor the cost of our raw materials closely. Our senior management collates periodic data such as
revenue and gross profit margins from each kitchen and food establishment, to (i) assess the justification
for, and reasonableness of, raw materials request; (ii) ensure minimum wastage on raw materials; and
(iii) detect possible pilferage by employees. Immediate investigation will be conducted at the kitchen or
food establishment involved if material deviations are detected.
In 2002, we implemented an incentive scheme which has enabled us to minimise wastage of raw
materials and cooked food, thus reducing our food costs and increasing our net profits. Essentially, the
scheme involves rewarding our chefs and employees with a commission based on a certain percentage
of the net profit derived from the operations of the food retail outlet or kitchen under their charge. This
serves as an incentive to our chefs and employees to control the food costs in order to minimize wastage
of raw materials and cooked food, so as to maximize the profits earned.
Delivery and Distribution
As at 30 June 2004, our experienced delivery team comprises 15 full-time drivers, 28 sub-contract
drivers and four operations personnel who oversee the operation of our delivery team. Our operations
personnel from time to time serve as delivery drivers when the situation requires. We have a fleet of 47
vehicles to support our operations, out of which 19 are owned by us and the remaining 28 are owned by
our sub-contract drivers engaged to assist us in our delivery.
After examination which is done in accordance with our quality assurance procedures, the cooked food is
packed and delivered to our customers. We provide prompt and on-time delivery to all locations in
Singapore. Depending on traffic conditions, we are generally able to deliver to our desired destinations
within 45 minutes after leaving the kitchen. For the past three years, we have not had any significant
complaints relating to delays in our delivery.
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CASH MANAGEMENT
It is our policy to have all cash collected by our delivery staff from customers of our Food Catering
Division to be delivered to our accounts department, which will deposit the cash with the bank on the
next available working day. Cash collected at our various food retail outlets and staff cafeterias are
deposited by our stall operators, cafeteria and restaurant managers and operations executives into the
bank accounts designated by our accounts department on the next available working day. Under some of
our contracts, cash collected daily from our dedicated food court stalls are deposited with the food court
operators and returned to us usually at the end of the month after deducting the amounts due to them
pursuant to the contract.
In order to prevent pilferage of cash by our staff, we have installed close-circuit television (“CCTV”)
systems at each cashier location of the staff cafeterias under our Institutional Catering Division. CCTV
systems at our dedicated food court stalls are installed and monitored by the respective food court
operators. We have also installed CCTV systems at the cashier locations of our public cafeterias and
restaurant. Our senior management performs regular cash float checks on our food establishments.
We maintain insurance against loss of cash from money-in-transit, money kept in locked safe and cash
registers during and after office hours.
QUALITY CONTROL
We believe in the importance of the quality of our food and service, as well as the maintenance of
cleanliness and hygiene at all our kitchens and food establishments in accordance with standards set by
the relevant government authorities.
Our Company and Stamford were awarded the ISO 9001 certification by IQNet and SPRING Singapore,
which are quality standards accreditation bodies, in recognition of our commitment and efforts in
implementing and maintaining a quality management system in respect of the provision of food catering
services.
Quality of food
Raw materials purchased by us from suppliers are checked upon their delivery to our kitchens and food
establishments. Where the raw materials are not of an acceptable quality, they will be rejected and
returned to the suppliers. If accepted, they will be properly stored by our kitchens. To ensure that we
use fresh ingredients, we have put in place, as part of our quality control procedures, the maximum
storage time permitted for each type of ingredients. Generally, perishables such as fruits and vegetables
are stored for up to one day, while frozen meat and other dry stocks are stored for a period of up to one
week. In addition to checking through our computerised database, physical stock takes are conducted
weekly at the kitchens by our store keepers. All outgoing prepared food (both cooked and semiprocessed) undergo random quality inspection by our quality control officer before they are allowed to
leave our premises.
We implement standardisation processes to ensure consistency in the quality of our cuisines. Our
integrated computer system standardizes the portion of each ingredient for a particular food item. We
have also prepared and compiled a manual on “Standardised Food Preparation and Portioning” to ensure
that our kitchens and food establishments prepare, portion and season all ingredients in a standardized
manner. This will ensure consistency in the flavours and tastes of our cuisines. In addition, to enhance
the cooking standards of our experienced chefs, we also compiled a manual on “Standardised Recipes”
and our chefs undergo both on-the-job training by our Master Chefs as well as internal and external
courses conducted on cuisine preparation.
We place emphasis on the freshness of the food items we deliver to our customers. It is our policy to
prepare and cook the food no more than two hours before the required delivery time. We also assure our
customers that our delivery will be done promptly. We guarantee full refund to our customers if the food is
delivered more than 90 minutes later than the required delivery time.
93
Feedback forms are circulated to our customers when the food is delivered. We believe that the feedback
forms give us first-hand information with regard to our customers’ preferences and concerns. We
constantly modify our operating procedures in accordance with the requirements under the ISO 9001
certification as well as to improve the level of our service.
Hygiene control in our kitchens
We have implemented strict personal hygiene guidelines including requiring staff to:(a)
(b)
(c)
(d)
(e)
(f)
wear disposable gloves or use utensils and avoid handling cooked food with bare hands,
wear uniforms and footwear provided by us during production hours,
wash their hands with detergent before each production shift, after handling raw food, after meals,
after visiting the washrooms, after touching their hair or face, or after touching or handling nonfood contact surfaces or equipment,
not smoke in the kitchens and when handling food,
wear face masks when handling cooked food, and
wear covered shoes in the kitchens.
Our quality assurance officer is responsible for conducting random checks on the cleanliness and
hygiene practices at all our kitchens, including those at our food establishments.
All our food establishments and kitchen facilities have either an “A” (representing “excellent”) or a “B”
(representing “good”) grading by MEWR based on housekeeping, food hygiene and personal hygiene.
Other factors such as quality control, food transportation and training of food handlers are also taken into
consideration in the grading.
STAFF TRAINING
We place strong emphasis on the training of our staff to ensure and enhance the quality of our service.
We believe in providing attentive, friendly, prompt and efficient service to our customers. Our staff
training aims to provide our employees with relevant skills and knowledge.
Our training essentially comprises the following two types:(a)
(b)
On-the-job training; and
Instructional courses conducted internally and externally
On-the-job training
New employees are stationed at our food establishments to receive on-the-job training for one to two
weeks by our chefs and other supporting staff before commencement of work. Continuous training is
provided on the job.
All employees who handle food are required to undergo the “Basic Food Hygiene Training” course
conducted by either the Society of Environmental Health or the Restaurant Association of Singapore.
Some employees are selected by us to undergo training conducted at our ITE-certified training centre,
which is approved by the ITE to conduct training and assessment leading to “Certificate of Competency
in Food Preparation”.
In addition, from time to time, we sponsor our employees to attend courses and seminars such as those
relating to customer service and communication skills. The courses that our staff members have attended
include:–
–
–
–
–
–
“Food Hygiene Officer Courses” conducted by the Singapore Environmental Institute;
“Chinese Cuisine Courses” conducted by the Restaurant Association of Singapore;
“HACCP Concept and Implementation” courses conducted by the Society of Environmental Health;
“National Certificate in Supervisory Skills” courses conducted by SPRING Singapore;
“Professional Sales Negotiation and Techniques” courses conducted by Greshirl Consulting; and
“Train the Trainer” courses conducted by Institute of Technical Education.
94
In the past three years, expenses we incurred with respect to staff training were insignificant.
MAJOR CUSTOMERS
Our Institutional Catering Division customers include local and multinational corporations with production
facilities in Singapore. Customers of our Food Retail Division and Food Catering Division comprise the
general public, family units, as well as corporations, government bodies, hospitals and schools.
The following customers accounted for 5% or more of our Group’s total revenue in the last three financial
years and 1H2004:Services Provided
Percentage of total revenue (%)
FY2001
FY2002
FY2003
1H2004
Maxtor Peripherals (S) Pte Ltd(1)
–
0.9
9.5
7.9
STATS(1)
–
0.5
5.5
5.1
Note:(1)
As our contracts with Maxtor Peripherals (S) Pte Ltd and STATS commenced only in November 2002 and December 2002
respectively, revenue derived in FY2002 from these contracts contributed to less than 5% of our total revenue in FY2002.
Save as disclosed above, none of our customers accounted for 5% or more of our Group’s total revenue
for the past three financial years and 1H2004
None of our Directors or Executive Officers or any of their Associates has any interest, direct or indirect,
in any of the above major customers.
MAJOR SUPPLIERS
We purchase our raw materials, such as meat, vegetables, fruits, dairy products and dry stocks from
suppliers who are able to offer us the most competitive terms and quality ingredients. To mitigate any
possible effect from dependence on major suppliers, it is our policy to procure from at least two suppliers
for each raw material.
The following suppliers accounted for 5% or more of our Group’s total purchases of raw materials in the
last three financial years and first half of FY2004:Product supplied
Percentage of total purchases (%)
FY2001
FY2002
FY2003
1H2004
Angliss Singapore Pte Ltd
Frozen poultry
21.0
13.1
23.3
19.4
Aw Guan Hong Vegetable
Wholesaler
Vegetable
–
6.7
4.5
6.8
Song Heng Kern Kee
Vegetable
–
–
7.1
–
Rice
5.3
5.3
6.7
5.4
Seafood
6.4
13.9
5.9
3.6
Yit Seng Trading Company
Dry goods
5.0
7.1
6.2
4.4
Lim Thiam Chwee
Vegetable
–
–
–
6.1
Chip Seng Impex (S) Pte Ltd
Han Tat Seafood & Cold Storage
We select our suppliers based on factors such as price, quality of products, delivery lead time and credit
terms granted to us.
None of our Directors or Executive Officers or any of their Associates has any interest, direct or indirect,
in any of the above major suppliers.
95
INVENTORY MANAGEMENT
Our Company’s inventory comprises raw materials such as frozen meats, fresh fruits, vegetables, dairy
products, eggs, and dry stocks.
We do not keep a high inventory of raw materials required for our production as they are readily available
from the market and can be purchased at any time. Our policy is to store perishables such as fresh fruits
and vegetables for up to one day, and frozen meats and other dry stocks for a period of up to one week.
Our integrated computer system enables us to monitor the level of inventory and our inventory
requirements at any one time. In addition, we carry out physical stock takes weekly at our kitchens.
Our inventories are managed on a “first-in-first-out” basis whereby supplies first received will be the first
to be used for our production process.
In the past three financial years and 1H2004, we did not write off any inventories due to obsolescence.
Our average inventory turnover based on the level of inventory carried by our Group for each of the last
three financial years and first half of FY2004 are as follows:-
Number of days(1)
FY2001
FY2002
FY2003
1H2004
5
5
3
5
Note:(1)
Average inventory turnover = (Average inventory/Cost of Sales) x 365 or 180 for 1H2004
INSURANCE
We have insurance policies covering losses due to fire and extraneous perils, theft, loss of money, as
well as public liability insurance (which cover accidental injury directly caused by or arising from anything
harmful or defective in food and drink supplied or from poisoning of any kind caused by food and drink
sold or supplied by our Group). We have also insured our staff for workmen’s compensation insurance
and our management staff with group hospitalisation and surgery insurance.
We also maintain Keyman and Personal Accident Insurance for our Managing Director, Mr Vincent Tan.
Our Directors believe that these insurance policies are adequate for the operations of our Group.
MARKETING CHANNELS
Our General Manager (Institutional Catering), Mr Steven Tan, is responsible for promoting the business of
our Institutional Catering Division. Leveraging on our experience and network in the industry, we closely
monitor the market for business opportunities and present our proposals and quotations to the
management of potential corporate customers which require or will, by virtue of the impending expiration
of their existing contracts, require our services. We also source for projects through public channels such
as newspapers advertisements, websites, GeBiz (a government website), as well as private invitations.
Our corporate customers which have used the services provided by our Food Catering Division also
present a good potential source of business for us. After conducting our feasibility study and assessing
the viability of any particular project, Mr Steven Tan actively pursues the procurement of the project.
96
Food Catering
As at 30 June 2004, the marketing activities of our Food Catering Division are undertaken by an
experienced marketing team of 10 sales executives and customer service officers led by our sales and
marketing manager, Ms Wenna Kan. All our marketing personnel are equipped with detailed knowledge
of our services and products. The marketing team is responsible for market penetration and market
development.
Our marketing personnel meet frequently with our potential customers to discuss the
services that we can offer.
We utilise marketing channels such as newspaper advertisements, corporate leaflets, TV and radio
commercials, food exhibitions and wedding workshops to promote our services. We also conduct mass
mailing to family units to promote our catering services.
We have a loyalty card programme for our repeat family unit customers under which they enjoy certain
special offers and promotions, such as 5% to 15% discounts for catering services or welcome vouchers.
As at 30 June 2004, we have approximately 345 customers who have signed up and received our loyalty
cards.
We value the opportunities of providing catering services and one-off events to our corporate customers,
where we strive to enhance awareness of our products and services, and image of our Group.
Our Executive Director, Mr Jack Tan, is responsible for promoting the business of our Food Retail
Division and securing new food retail outlets. We monitor closely the development of new shopping malls
or other commercial buildings which are at strategic locations. We generally carry out an internal
feasibility study of any potential new food retail outlet at existing or new shopping malls or other
commercial buildings. We may also occasionally engage part-time personnel to carry out a market
survey to collect relevant data, such as human traffic flow and type of crowd that are likely to patronize
the building. Upon deciding on a new location for our food retail outlet, Mr Jack Tan will present our
proposal or tender documents to the developer or food court operator.
AWARDS
The following awards and certificates have been granted to our Group:Award/Certificate
Issuing Organisation
Awarded/Granted for
Date of Grant/Validity
1.
Singapore SME 500
2000/2001 Company
DP Information Network
Pte Ltd
Awarded to our Company
for being ranked among
the top 500 SMEs in
Singapore
Granted in 2001
2.
ISO 9001:2000
IQNet and SPRING
Singapore
Granted to our Company
for having a Quality
Management System in
the provision of food
catering services
Granted on 30 September
2002 and valid till 30
September 2005
3.
ISO 9001:2000
IQNet and SPRING
Singapore
Granted to Stamford
for having a Quality
Management System in
the provision of food
catering services
Granted on 18 July 2003
and valid till 30 September
2005
4.
SPRING Singapore
Awarded to our Company
for service excellence
Granted on 28 June 2004
97
TRADEMARK AND PATENT
As at the date of this Prospectus, our Group has applied for registration of the following trade marks and
service marks with the Intellectual Property Office of Singapore, the status of which is as follows:Trademark
Application Number
Place of
Application
Class
Application
Date
T0406648E
Singapore
43
28 April 2004
Application
pending
T0407608A
Singapore
43
13 May 2004
Application
pending
T0406651E
Singapore
43
28 April 2004
Application
pending
T0407599I
Singapore
43
13 May 2004
Registered
T0415549F
Singapore
43
16 September 2004
Application
pending
T0415547Z
Singapore
43
16 September 2004
Application
pending
Representation
Status
The registration of the above trade marks and service marks have been applied for under Class 43 of the
International Trade Mark Classification of Goods and Services, covering the specifications of, inter alia,
food and drink catering, canteens, cafes and cafeteria. We have received initial objection from the
Intellectual Property Office of Singapore to the registration of the trademarks which are still pending. We
have or are in the process of responding to the objection. We cannot assure that we will be successful in
obtaining approval for the registration of the trademarks.
PROPERTIES AND OTHER FIXED ASSETS
Real Properties
As at the date of this Prospectus, our Group owns the following properties:-
Description
Tenure
Net book
value as at
31 December 2003
Area
(sq m)(1)
Use of
property
Encumbrance
Headquarters
and kitchen
Mortgaged to
OCBC
$2,136,533.00
36 Senoko Crescent
Singapore 758282
30 year lease
expiring on 15
March 2020
4,638
3017 Bedok North
Street 5 #02-33
Singapore 486121
30 year lease
expiring on 31
October 2033
171
kitchen
Mortgaged to
DBS Bank
$439,432.00
3017 Bedok North
Street 5 #02-34
Singapore 486121
30 year lease
expiring on 31
October 2033
171
kitchen
Mortgaged to
DBS Bank
$439,432.00
51 Telok Ayer Street,
#B1-06 China
Square Food Centre,
Singapore 048441(1)
10 year lease
expiring on 27
March 2008
14
Dedicated
Food Stalls
Mortgaged to
DBS Bank
$171,702.00
Note:(1)
Property is currently held by our Managing Director, Mr Vincent Tan, on trust for our subsidiary, Select FM (Singapore). Steps
are currently taken to transfer the legal title of the property to our subsidiary, Select FM (Singapore).
98
As at the date of this Prospectus, our Group leases or rents or occupies under lease or licences the
following properties/premises:Description
Approx. area
(sq m)(1)
Use of property
3,700
Office and kitchen
9 years
commencing
11 August 2004
Yin He Construction
Materials Co, Ltd.
Dun Huang Road, East Lou
Feng District, Suzhou
Industrial Park, PRC
Term of lease/
Licence
Lessor/licensor
6 Scotts Road
#B1-04 Scotts Shopping Centre
Singapore 228209
25
Food stall
(Chinese Mixed
Rice)
2 years
commencing
16 January 2004
The Ascott Group
Limited
6 Scotts Road
#B1-23 Scotts Shopping Centre
Singapore 228209
34
Food stall
(Thai/Viet Food)
3 years
commencing
29 August 2003
The Ascott Group
Limited
238 Thomson Road
#01-43/53 Stall No. 4
Novena Square
Singapore 307683
25
Food stall
(Chinese Mixed
Rice)
7 December 2003
to 30 June 2005
Food Junction
Management Pte Ltd
230 Victoria Street
#B1-01 Stall No. 2
Bugis Junction
Singapore 188024
17
Food stall
(Chinese Mixed
Rice)
1 year
commencing
1 August 2004
Food Junction
Management Pte Ltd
9 Raffles Boulevard
#02-02/22 Stall No. 5
Millenia Walk
Singapore 039596
15
Food stall
(Ampang Yong
Tau Fu)
1 year
commencing
1 November 2004
Food Junction
Management Pte Ltd
1 Maritime Square
#03-01 to #03-14 Stall No. 7
World Trade Centre
Singapore 099253
29
Food stall
(Thai/Viet Food)
2 years
commencing
17 February 2003
Food Junction
Management Pte Ltd
9 Bishan Place
#04-01 Stall No. 12
Junction 8 Shopping Centre
Singapore 579837
13
Food stall
(Nasi Padang)
1 year commencing Food Junction
1 December 2004 Management Pte Ltd
21 Choa Chu Kang
Avenue 4 #B1-05
Stall No. 14 Lot 1
Shopper’s Mall
Singapore 689812
14
Food stall
(Chinese Mixed
Rice)
2 years
commencing from
1 May 2003
Food Junction
Management Pte Ltd
68 Orchard Road
#06-15/16/17 Stall 15
Plaza Singapura
Singapore 238839
19
Food stall
(Chinese Mixed
Rice)
1 March 2003 to
3 December 2005
Kopitiam Investment
Pte Ltd
51 Bras Basah Road
#01-03 Stall No. 11
Plaza By The Park
Singapore 189554
14
Food stall
(Chinese Mixed
Rice)
7 November 2002
to 31 March 2005
Kopitiam Investment
Pte Ltd
1 Sengkang Square
#04-14 to #04-19
Stall No. 18D Compass Point
Singapore 545078
25
Food stall
(Chinese Mixed
Rice)
7 August 2002 to
28 August 2005
Kopitiam Investment
Pte Ltd
99
Description
Approx. area
(sq m)(1)
Use of property
Term of lease/
Licence
Lessor/licensor
5 Lower Kent Ridge Road
National University Hospital
Main Building Stall No. 7
Singapore 119074
14
Food stall
(Nasi Padang)
3 years
commencing
1 September 2003
Kopitiam Investment
Pte Ltd
1 Hougang Street 91
#01-40 Stall No. #01-38
Hougang Festival Market
Singapore 538692
29
Food stall
(Chinese Mixed
Rice)
10 October 2003
to 29 September
2006
Kopitiam Investment
Pte Ltd
1 Jelebu Road
#03-08/09 Stall No. 2
Bukit Panjang Plaza
Singapore 677743
26
Food stall
(Chinese Mixed
Rice)
1 May 2004 to
31 March 2007
Kopitiam Investment
Pte Ltd
1 Jurong West Central 2
#03-42 Stall No. 20
Jurong Point Shopping Centre
Singapore 648886
17
Food stall
(Chinese Mixed
Rice)
1 November 2003
to 20 December
2005
Kopitiam Investment
Pte Ltd
1 Woodlands Square
#05-11 Stall No. 9
Causeway Point
Singapore 738099
23
Food stall
(Nasi Padang)
3 years
commencing
1 November 2003
Horizon Foodmalls
(Causeway) Pte Ltd
1 Woodlands Square
#05-11 Stall No. 27
Causeway Point
Singapore 738099
20
Food stall
(Chinese Mixed
Rice)
3 years
commencing
1 November 2003
Horizon Foodmalls
(Causeway) Pte Ltd
51 Cuppage Road
#02-01 Stall No. 02-13
Starhub Centre
Singapore 229469
19
Food stall
(Chinese Mixed
Rice)
3 years
commencing 15
September 2004
Foods First Pte Ltd
11 Rivervale Crescent
#02-01 Stall No.11
Rivervale Mall
Singapore 545082
36
Food stall
(Chinese Mixed
Rice)
2 years
commencing
1 December 2002
NTUC Foodfare
Co-operative Limited
301 Upper Thomson Road
#01-113 Stall No. 11
Thomson Plaza
Singapore 574408
22
Food stall
(Nasi Padang)
7 January 2004 to
14 January 2006
ISR Singapore Pte Ltd
2 Simei Street 3
#01-20-00 Stall No. 1
Changi General Hospital
Singapore 529889
16
Food stall
(Chinese Mixed
Rice)
3 years
commencing
16 January 2002
Forward Food
Management Pte Ltd
2 Simei Street 3
#01-20-00 Stall No. 4
Changi General Hospital
Singapore 529889
16
Food stall
(Nasi Padang)
3 years
commencing
1 February 2002
Forward Food
Management Pte Ltd
9 Lorong Liput
#01-05 Stall No. 4
The Windmill
Singapore 277728
14
Food stall
(Nasi Padang)
1 year
commencing
1 September 2004
Holland Valley Pte Ltd
100
Description
Approx. area
(sq m)(1)
Use of property
Term of lease/
Licence
Lessor/licensor
13 & 29 Smith Street
Stall No. 9
Singapore 058927
8
Drinks stall
Monthly basis
commencing
1 October 2004
Chinatown Business
Association
13 & 29 Smith Street
Stall No. 19
Singapore 058927
8
Fruits stall
Monthly basis
commencing
1 October 2004
Chinatown Business
Association
9 Tampines Street 32
#01-01 Stall Nos. 13 & 14
Singapore 529286
29
Food stall
(Nasi Padang)
20 September
2003 to 15
February 2005
Aik Hua Pte Ltd
3 Temasek Boulevard
#B1-025/045 Stall No. 4
Fountain Food Terrace,
Suntec City Mall
Singapore 038983
20
Food stall
(Nasi Padang)
2 years
commencing
9 January 2004
Suntec Food &
Leisure Pte Ltd
391A Orchard Road
#B210-5-1 Takashimaya
Department Store
Ngee Ann City
Singapore 238873
20
Food stall
(Chinese Mixed
Rice)
1 year
commencing
4 July 2004
Takashimaya
Singapore Ltd
391A Orchard Road
#B210-5-5 Takashimaya
Department Store
Ngee Ann City
Singapore 238873
19
Food stall
(Thai/Viet Food)
3 years
commencing
18 June 2004
Takashimaya
Singapore Ltd
302 Tiong Bahru Road
#03-01/02/31-55
Stall No. 13
Tiong Bahru Plaza
Singapore 168732
19
Food stall
(Chinese Mixed
Rice)
3 years
commencing
1 February 2004
Kopisi Pte Ltd
Stall No. 2, Unit S3,
2nd Floor, Ikano Power Centre,
Jalan PJU 7/2,
Mutiara Damansara,
47500 Petaling Jaya,
Selangor Darul Ehsan
Malaysia
23
Food stall
(Chinese Mixed
Rice)
3 years
commencing 23
December 2003
Horizon Foodmalls
(Malaysia) Sdn Bhd
Stall No. 19, Food Junction
3rd Floor,
Mid Valley Megamall,
Mid Valley Centre,
Lingkaran Syed Putra
59200 Kuala Lumpur
Malaysia
20
Food stall
(Chinese Mixed
Rice)
1 year
commencing 13
December 2004
T&W Food Junction
Sdn Bhd
30 Raffles Place
#B1-05A Caltex House
Singapore 048622
34
Cafeteria
3 years
commencing
1 July 2002
Savu Properties Ltd
101
Description
Approx. area
(sq m)(1)
Use of property
Term of lease/
Licence
Lessor/licensor
350 Orchard Road
#05-06 Lido Cineplex Foyer
Shaw House
Singapore 238868
14
Cafeteria
1 year
commencing
16 July 2004
Shaw House Pte Ltd
249 Victoria Street
Bugis Village
Singapore 188034
115
Restaurant
3 years
commencing
9 March 2004
Rochor Square
Private Limited
2 Jurong East Street 21
#02-111 Stall No. 2
IMM Building
Singapore 609601
33
Food Stall
(Chinese Mixed
Rice)
1 October 2004
to 31 August 2007
Kopitiam
Investment
Pte Ltd
18 Raffles Quay
Stall Nos. 10 & 11
Lau Pa Sat Festival Market
Singapore 048582
24
Food Stall
(Chinese Mixed
Rice)
2 years
commencing
4 October 2004
Renaissance
Properties
Pte Ltd
2,628
Expo F&B Hub
14 June 2004 to
28 February 2009
Singex Venues Pte Ltd
20
Food Stall
(Chinese Mixed
Rice)
3 years
commencing
9 November 2004
Marina Food Court Pte Ltd
1 Expo Drive
Singapore 486150
6 Raffles Boulevard
#04-101 Stall No. 13A
Marina Square
Singapore 039594
Note:(1)
Some of the areas are derived from physical measurements.
The leases and licences listed above do not include premises occupied under our institutional catering
contracts.
The aggregate annual rental expenses for FY2001, FY2002, FY2003 and 1H2004 were approximately
$2.3 million, $3.1 million, $3.2 million and $2.0 million respectively.
Fixed assets
The fixed assets of our Group as at the end of FY2003 and 1H2004 were as follows:-
Fixed assets
Accumulated
depreciation
($’000)
Cost
($’000)
As at end
FY2003
As at end
1H2004
As at end
FY2003
Net book value
($’000)
As at end
1H2004
As at end
FY2003
As at end
1H2004
Leasehold properties
3,957
3,957
769
870
3,188
3,087
Plant and machinery
7,413
7,698
3,286
3,541
4,127
4,157
–
788
–
–
–
788
11,370
12,443
4,055
4,411
7,315
8,032
Construction-in-progress
Total
No valuation has been made on the fixed assets of our Group for the purpose of inclusion in this
Prospectus. There are no environmental regulations that would affect our utilisation of our fixed assets.
102
CATERING CAPACITY
Taking into consideration the size of our kitchens, current kitchen facilities, number of vehicles used to
support our operations and current staff strength, we estimate that we have the capacity to cater to a
daily average of 8,000 headcounts. The actual headcount and utilisation rates for our Food Catering
Division in each of the last three financial years were as follows:FY2001
FY2002
FY2003
Annual Capacity (million)(1) (2)
2.92
2.92
2.92
Actual Headcount (million)
1.80
1.84
1.6
Average Utilisation Rate (%)(3)
61.6
63.0
54.8
Headcounts
Notes:(1)
The annual capacity is computed as follows:Annual Capacity = Average Daily Capacity X 365 days
(2)
The maximum daily capacity is 12,000 (headcount), which may occur during festive seasons such as Christmas and New
Year. Our Directors estimate the maximum Average Daily Capacity on a long-term basis to be 8,000 (headcount) as our
Kitchens are unable to operate at full maximum capacity on a daily basis.
(3)
The utilisation rates are computed as follows:Utilisation Rate (%) = Actual Headcount Served / Annual Capacity
As the preparation of food under our institutional catering contracts takes place largely at the premises of
our customers, our capacity is therefore not limited by the capacity and facilities of our kitchens. We are
able, as and when required, to increase our staff strength to operate the institutional catering staff
cafeterias.
Our Directors are therefore of the view that it is not meaningful to estimate the capacity level in relation to
our institutional catering business as our capacity is determined principally by the terms of the contracts
which were negotiated and entered into with our institutional catering corporate customers.
The capacity level of our business under the Food Retail Division cannot be determined to a level of
satisfactory accuracy due to the number of variable factors that affect the capacity of our food retail
outlets. Such factors include different tenant mix, seating capacities at the various food courts and
customers having the choice to request take-away instead of dining in. Furthermore, excess demand at
our food retail outlets can always be met by our Central Senoko Kitchen which prepares and delivers
semi-processed food to such outlets.
CUISINE AND SERVICE DEVELOPMENT
Our ability to attract and retain customers depends not only on the cost, quality and efficiency of our
service, but also on our ability to gauge and cater to consumer preferences. Consequently, we see the
design, customisation and innovation of our menu options as a key aspect of the services we provide.
Our cuisine and service development team comprises seven Master Chefs which is led by our Managing
Director, Mr Vincent Tan, and our General Manager (Institutional Catering), Mr Steven Tan. The purpose
of our cuisine and service development activities is to monitor the quality of the cuisines developed by
our chefs and encourage creation of novel recipes for our menus.
103
Our seven Master Chefs are highly trained and experienced and each has been in the F&B industry for
at least 10 years. Four of our seven Master Chefs are respectively in charge of Pastry, Chinese, Western
and Malay cuisines and they operate from our Central Senoko Kitchen under the direction of our
Managing Director, Mr Vincent Tan. Our other Master Chef is overall in charge of the cuisines of our
Institutional Catering Division under the direction of our General Manager (Institutional Catering), Mr
Steven Tan.
On a monthly basis, our cuisine and service development team meets at our kitchens to discuss, taste
and improve on new recipes that are developed by them. Approximately five to 10 new recipes are
created monthly. All approved recipes are documented and shared among all our other food
establishments. Our Master Chefs conduct training for our chefs on the new recipes to ensure quality.
In respect of our Lerk Thai restaurant, since the commencement of its business, our Executive Director,
Mr Jack Tan, and our senior management have been meeting with the Head Chef of the restaurant on a
monthly basis to discuss customers’ preferences and create new cuisines that may interest our
customers. Due to their efforts, we have been able to introduce approximately five new recipes every
month.
In addition, as part of our cuisine development, we strive to meet the specific needs of our customers by
varying the food items and portions, or creating menus which address the special needs of our
customers. For instance, in developing the menus for certain institutional catering corporate customers
such as schools, we have incorporated food items with better nutritional value suitable for children.
As our cuisine development activities involve mainly the creation of new ideas and concepts while
utilising existing supplies and resources, as opposed to requiring additional resources and facilities which
may be capital intensive, the expenditure incurred by us in our cuisine development activities for the past
three financial years, as a percentage of our Company’s total revenue, has been insignificant.
GOVERNMENT REGULATIONS
The following is a description of the licences required for the operation of our businesses in Singapore
and overseas (apart from those pertaining to general business requirements):TYPE OF LICENCE
LICENSING BODY
DESCRIPTION
Environmental Health
Department (“EHD”)
(a department under
NEA)
The Environmental Public Health Act (Chapter
95) of Singapore (“EPHA”) requires that a
licence be obtained from the Director-General
of Public Health for the purposes of carrying on
the business of a retail food or catering
establishment.
Singapore
Foodshop Licence
The licence is usually granted for a period of
one year and is renewable at the discretion of
the Director-General and subject to such
restrictions and conditions as the DirectorGeneral may think fit. The licence may also be
suspended or cancelled if there is a breach of
any of the provisions of the EPHA.
104
TYPE OF LICENCE
LICENSING BODY
DESCRIPTION
Grading Scheme for
Food Establishments
NEA
In 1997, MEWR introduced a grading
scheme to grade food establishments based on
their standard of cleanliness and food hygiene.
The four grades for assessment of food outlets
are: Grade A (Excellent), Grade B (Good),
Grade C (Average) and Grade D (Below
Average).
Liquor Licence
Liquor Licensing Board of The Customs Act (Chapter 70) of Singapore
the Singapore Police Force requires that a liquor licence be obtained from
the Liquor Licensing Board for the retail sale of
intoxicating liquor on premises.
The liquor licence is valid for a one-year period.
The grant and renewal of the liquor licence is at
the discretion of the Liquor Licensing Board,
which also has the discretion to suspend or
cancel the liquor licence.
Signboard Licence
Building and Construction
Authority
The Building Control Act (Chapter 29) of
Singapore requires that a licence be obtained
from the Commissioner of Building for the
purposes of displaying outdoors any signboard
of certain descriptions.
The licence is typically granted for a period of
one to three years and is renewable at the
discretion of the Commissioner. It may be
granted or renewed subject to such conditions
and restrictions as the Commissioner may think
fit. The Commissioner may by notice in writing
amend, suspend or revoke any licence.
Electrical Installation
Licence
Energy Market Authority
(“EMA”)
The Electricity Act (Chapter 89A) of Singapore
(“EA”) requires that a licence be obtained from
EMA for the use or operation of an electrical
installation.
The licence is valid for a one-year period, and
EMA may in its discretion reject the application
or renewal of such licence. The licence may be
suspended or revoked by EMA on breach of
any of the licensing conditions or the provisions
of the EA.
Written Approval to
Discharge Trade Effluent
Public Utilities
Board of MEWR
The Sewerage and Drainage Act (Chapter
293A) of Singapore requires a written approval
to be obtained from MEWR for the purposes of
discharging any trade effluent into any public
sewer. MEWR may, in granting approval,
impose such conditions as it thinks fit.
105
TYPE OF LICENCE
LICENSING BODY
DESCRIPTION
Local Health Department
(“LHD”) (a department
under the Ministry of
Health of the PRC)
The Law of Food Hygiene of the PRC (“Law of
Food Hygiene”) requires that a licence be
obtained from LHD for the purposes of
carrying on the business of food production in
the PRC.
PRC
Sanitation Licence
The licence is usually granted for a period of
one year and is renewable after the applicant
has passed the annual inspections carried out
by LHD. The licence may also be suspended or
cancelled if there is a serious breach of the
provisions of the Law of Food Hygiene or if the
rectification requested is not complied with.
Malaysia
Business licence
(1)
Relevant municipal or
district councils or
city halls
This licence is required for the conduct of
business in the two areas where Select FM
(Malaysia) conducts its business, namely in
Petaling Jaya and in Kuala Lumpur, Malaysia.
The licence is issued pursuant to the Local
Government Act 1976 and usually granted for a
period of one year and is renewable by
payment of a stipulated fee.
Signage licence
Relevant municipal or
district or councils or
city halls
This licence is required for a company to have
a signage placed outside its premises and is
issued pursuant to the Local Government Act
1976.
Service tax licence(1)
Director General of
Customs and Excise
This licence is issued pursuant to Section 8 of
the Service Tax Act 1975 and is required in the
event Select FM (Malaysia)’s annual turnover is
RM500,000 or more.
The said Section 8 provides that no taxable
person shall carry on a business of providing
taxable service unless it is in possession of a
service tax licence. According to Schedule 2 of
the Service Tax Act, a taxable person includes
a person who operates one or more places
which provide food or drinks with a total annual
sales turnover of more than RM500,000.
Taxable services are defined to include the
provision or sale of food or drinks.
Note:(1)
We are currently applying for the business licence for the operation of the food court stall at Petaling Jaya and the service tax
licence for the food court stalls at Petaling Jaya and Kuala Lumpur.
106
Pursuant to the Grading Scheme for food establishments, regular inspections and grading exercises
based on the facilities’ standard of cleanliness, housekeeping and hygiene are carried out by the NEA
officers. As at the Latest Practicable Date, all of our facilities have either an “A” or a “B” grading.
As at the Latest Practicable Date, none of the aforesaid licences, permits or approvals have been
suspended or revoked and to the best of our knowledge and belief, there are at present no facts or
circumstances which would cause such licences, permits or approvals to be suspended or revoked or for
any applications for, or for the renewal of, any of these licences to be rejected by the relevant authorities.
As at the Latest Practicable Date, we have not obtained and are applying for the business licence for the
operation of the food court stall at Petaling Jaya and the service tax licence for the food court stalls at
Petaling Jaya and Kuala Lumpur. Please refer to page 33 of the Prospectus for further information on the
risk factor in relation to these licences.
Save as disclosed above, we do not require any other governmental licences, permits or approvals in
respect of our operations apart from those pertaining to general business registration requirements.
COMPETITION
We operate in a highly competitive market with low barriers to entry. We are subject to competition from
existing competitors as well as new and future market entrants. There are a number of small operators in
the catering and food retail businesses. Our Directors believe that competition is based on, inter alia,
quality and breath of services and management talent, pricing, variety of cuisines offered, location,
service innovation, hygiene, reputation within the industry and financial strength and stability.
To the best of our knowledge, we consider the following companies, which are in the F&B industry, to be
our closest competitors:Institutional Catering Division
–
–
–
Stamfles Food Management Pte Ltd
Sodexho Singapore Pte Ltd
Singapore Food Industries Limited
–
–
Kriston Food & Beverage Pte Ltd
Continental Delight Catering Service Pte Ltd
In general, we consider all food establishments operating within the proximity of our food court stalls or
public cafeterias as our competitors.
To the best of our knowledge, we are not aware of any published statistics regarding our market share in
the F&B industry on a national level.
107
COMPETITIVE STRENGTHS
Our Directors believe the following are our competitive strengths:(a)
Experienced Management Team
Our Group is led by our Managing Director, Mr Vincent Tan, who has 13 years of experience in the
F&B industry. He is assisted by our senior management, most of whom have more than ten years
of experience in the F&B industry. Under their management, our business has grown over the
years and we have become a well-known local name in the industry. Our management team is
familiar with our business and understands our customers’ needs and requirements. They are
committed to the development of our business and will continue to spearhead our Group’s
business operations and future plans so as to ensure the continuing success of our Group. For
more information on our Directors and our Executive Officers and their experience, please refer to
pages 115 to 118 of this Prospectus.
(b)
Use of Information Technology in our Operations
We have installed an integrated computer system, which is customised specifically and developed
over the years to suit our business requirements and assist us in our operations. The use of the
computer system minimizes errors and food wastage. It also reduces time in our operations. The
system has enabled us to provide consistent service to our customers, enhance our level of
productivity and quality of service, control our costs and increase our revenue.
(c)
Ability to Control Costs
The ability to control costs incurred in our operations is essential to ensure our profitability. We
adopt several cost-controlling measures which have assisted in increasing our profit. Such
measures include the following:-
Cost control measures in the procurement of raw materials
We procure our raw materials requirements in bulk and negotiate the prices for our raw materials
on a Group basis. As such, we have been able to enjoy better pricing from our suppliers arising
from such bulk purchases. Please refer to “Bulk Procurement” on page 92 of this Prospectus for
more details.
Cost control incentive
We have implemented a cost control incentive scheme, which aligns the chefs’ remuneration with
the profits of the food establishment under his charge. This is to encourage our chefs to minimize
food wastage so as to minimise our costs and increase our net profits. Please refer to “Cost
Control Incentives” on page 92 of this Prospectus for more details.
(d)
Quality of Chefs
As at the Latest Practicable Date, we employed a total of seven Master Chefs and 58 Head Chefs.
They have an average of at least ten years of experience in the F&B industry. Their skills,
experiences and creativity are some of the most important factors that enable us to attract and
retain customers.
Our chefs undergo regular and continual training to upgrade their culinary skills. Please see “Staff
Training” on page 94 of this Prospectus for more details. Our continuing training of our chefs
ensure that we constantly deliver quality cuisines to our customers.
(e)
Our business is service-oriented, and providing friendly and prompt service has been the focus in
all our three business divisions. As a testimony to our efforts to become a customer-focused
organisation, we were granted the Singapore Service Class award in 2004 by SPRING Singapore,
in recognition of our commitment to service.
108
(f)
Broad Customer Base
We have a broad and varied customer base arising from our three business divisions from which
our revenue is generated. We are also better able to gauge the changing trends in consumer
tastes and preferences as we reach out to more customers. In addition, we are able to cross sell
our products and services to our customers in the three business divisions.
(g)
Ability to provide both non-Halal and Halal food
We are one of the few and leading food catering and management service providers in Singapore
which can offer and serve both non-Halal and Halal food. We believe that has enabled us to
attract a broader customer base.
109
INDUSTRY OUTLOOK AND FUTURE PLANS
INDUSTRY OUTLOOK
(a)
The dining-out trend in Singapore
Singapore is popularly known as a food paradise offering a great variety of cuisines in different
types of eating or dining environment, from hawker centres, food courts to mid or high range
restaurants. The general lifestyle in Singapore is characterised by time pressure and consequently
Singaporeans’ emphasis on convenience. This, coupled with the availability of a wide variety of
cooked food offered at convenient locations, makes eating or dining out a common lifestyle among
the general population in Singapore.
Hawker centres and food courts are popular eating places for the general public, in particular the
working population, as these places offer fast meals with a wide variety of cuisines at affordable
prices. Since the early 1990s, there has been a steady growth in the number of food courts along
with the development of suburban shopping malls in major HDB town centres and along MRT
routes and office developments. Our Directors believe that food courts are increasing in popularity
due to their comfortable air-conditioned environment in a modern indoor setting and the
convenience of being located within a shopping mall or office development. There has been a
steady increase in the number of food courts since the early 1990s, indicating the growing
acceptance and popularity of eating out at food courts in Singapore.
We have over the last nine years established our reputation as one of the leading food court stalls
operators in Singapore. Our Directors believe that we are well-positioned to take advantage of the
growing popularity of food courts as one of the affordable choice eating or dining out places in
Singapore.
(b)
Regional economic recovery
The F&B industry is vulnerable to economic conditions. The outbreak of SARS and Iraq war in
2003 had affected the economies in the region, including Singapore. Notwithstanding this, the
Singapore economy saw stronger growth of 12.5% in the second quarter of 2004, up from 7.5% in
the first three months of 2004.1 Visitor arrivals improved by 186.4% from 698,000 visitors in the
second quarter of 2003 to 1,999,000 visitors in the second quarter of 2004.2 With a better
economic outlook, we believe that people are less budget-conscious and more willing to spend on
food and beverages, including eating out more often. Our Directors believe that the improved
economy will have a positive impact on our business and financial performance.
The SARS outbreak that occurred in 2003 had resulted in the general public taking various
precautionary measures against the infectious disease such as avoiding the visit of public places
including our food establishments. Social contact among people was also substantially reduced as
an added precautionary measure against the disease. This had led to a reduction in demand for
our food catering services as the number of private and public functions declined. Consequently,
our financial performance in FY2003 was adversely affected. With the recovery from SARS, our
Directors believe that our revenue in FY2004 should improve compared to FY2003 as the general
population resumes its normal routine.
1
Statistics on general economic conditions are obtained from Chapter 2 of “Economic Survey of Singapore Second
Quarter 2004” published by the Ministry of Trade and Industry (“MTI”), which attributed the source of the figures to the
Singapore Department of Statistics. The report appears on the internet website of the MTI
(http://www.mti.gov.sg/public/PDF/CMT/EDA_2004Q2_ch2.pdf?sid=44&cid=2071)*.
2
Statistics are obtained from “Main Indicators of the Singapore Economy Quarterly” published by the Ministry of Trade
and Industry (“MTI”), which attributed the source of the figures to the Singapore Tourism Board. The report appears on
the internet website of MTI (http://www.mti.gov.sg/public/PDF/CMT/EDA_2004Q2_Quarter.pdf?sid=43&cid=117)*.
*
The Ministry of Trade and Industry, the Singapore Tourism Board and the Singapore Department of Statistics have not
provided their respective consents to the inclusion of the relevant information extracted from the relevant reports and
disclaim any responsibility in relation to reliance on these statistics. While reasonable actions have been taken by our
Directors to ensure that the relevant statements from the relevants reports are reproduced in their proper form and
context, and that the information is extracted accurately and fairly from the relevant reports, all other parties and
ourselves have not conducted an independent review of the information contained in the relevant reports and have not
verified the accuracy of the contents of the relevant statements.
110
(c)
Singapore as a hub for international exhibitions and conventions
Singapore has become an important hub for international conventions and exhibitions. Based on
our Directors’ knowledge, in 2003, Singapore hosted more than 500 conventions which generated
an estimated $615 million in economic spin-offs. Singapore was ranked by a prominent trade
organisation in the global conventions arena as the world’s third top convention city, making it the
third preferred city among international associations for the hosting of conventions in 2003.
Singapore Expo, an international exhibitions and conventions centre in Singapore, offers 60, 000
sq m of indoor exhibition space and another 25,000 sq m of outdoor exhibition space with 19
conference halls and meeting rooms and other support services. It is easily accessible from the
city and the Changi Airport via the Expo MRT station and the three major highways, namely the
East Coast Parkway (ECP), the Pan Island Expressway (PIE) and the Tampines Expressway
(TPE). All these amenities, including its 2,200 dedicated car park lots make Singapore Expo a
good and convenient venue for mega conferences and exhibitions, regional corporate product
launchings, large scale entertainment and civic events.
Singapore Expo has, since its opening in March 1999, become an important venue for
international exhibitions and conventions held in Singapore. Based on our Directors’ knowledge, in
2003, 77 exhibitions were held at Singapore Expo, hosting 3.4 million visitors. This was an
increase from the 2.8 million visitors hosted by it (generated from the 80 exhibitions held thereat)
in 2002.
Plans are presently underway to enhance the existing infrastructures at Singapore Expo, including
adding four new halls to the existing six and expanding its total exhibition space from 60,000 sq m
to 100,000 sq m. With the increased facilities, Singapore Expo is expected to be able to host more
events and receive more visitors than its current capacity. The existing dining facilities at Singapore
Expo include one food court, two fast food outlets and two permanent and six ad-hoc cafeterias.
Singapore Expo has planned to expand the food facilities within its premises to meet the needs of
the visitors to Singapore Expo. We have been awarded the contract to operate, manage and
develop the Expo F&B Hub to be established at Singapore Expo of a total area of approximately
2,628 sq m. The Expo F&B Hub will comprise food stalls and mid-range restaurants offering local
fare and international cuisines and a high-end banquet restaurant serving premier Chinese
cuisines. In addition to meeting the dining requirements of visitors at Singapore Expo, the new
Expo F&B Hub is also planned to be a place of interest that attracts tourists and the general
public.
Please see “Future Plans” on page 113 of this Prospectus for more details. With the potentially
large pool of visitors, both local and international, to Singapore Expo, our Directors are optimistic
about the prospects of our plans in managing and operating the Expo F&B Hub at Singapore
Expo.
(d)
Relocation of production facilities to the PRC by MNCs
Over the last decade, an increasing number of MNCs have moved their manufacturing operations
to the PRC to take advantage of the relatively low operating costs and the potential consumer
market in the PRC. In particular, there has been substantial foreign direct investment in Suzhou
city, Jiangsu province. Suzhou’s close proximity to Shanghai, the PRC’s economic and financial
centre, further enhances Suzhou’s position as an industrial centre. Consequently, Suzhou, with its
five industrial parks, namely Suzhou Industrial Park, Suzhou Hi-tech Industrial Park, Kunshan
Industrial Park, Japanese Industrial Park and American Industrial Park, has become a major
destination for leading MNCs from the United States, Japan, Taiwan, South Korea and Europe.
111
Our Directors believe that it is a common trend for MNCs to outsource, instead of self-operate, the
management of their staff cafeterias to professional operators in the F&B industry like us. Due to
the large number of MNCs in Suzhou, our Directors believe that there will be a demand for food
and management services providers of international standard to serve the catering needs of these
MNCs. MNCs generally prefer operators with an established track record and ISO certification to
meet their food and management services needs. As these companies place emphasis on the
welfare of their staff, they are likely to spend more on staff cafeterias. This trend has provided us
with growth potential at the international stage. With our expertise and established track record in
institutional catering in Singapore and the quality of our services as evidenced by the SPRING
Singapore Service Class award and ISO 9001 certification awarded to us, our Directors are
confident that we will be able to compete effectively in the PRC market in our plans to expand our
institutional catering business to Suzhou. Please see “Future Plans” on page 113 of this
Prospectus for more details.
(e)
Outsourcing of food and management services in other market segments
Our Directors believe that there is a steady increase in the outsourcing of food and management
services over the past years by different market segments, such as the education, healthcare and
public sectors. Private and public institutions increasingly make strategic decisions to focus on their
core activities and seek cost efficiencies by outsourcing non-core functions, including food and
management services. Our Directors believe that this trend will be reinforced by the growing
advantages of outsourcing peripheral activities in favour of large, experienced contractors capable
of providing higher quality services at a lower cost. Specifically, outsourcing allows enterprises to
improve the quality and consistency of support services through professional management, benefit
from the current, innovative trends in procurement and delivery of these services and improve cost
effectiveness through the economies of scale and operational synergies that a specialised provider
can achieve.
In addition to the market potential, our Directors are optimistic about the prospects of this business
because of low capital requirements, as operations are generally conducted at customers’ sites,
low fixed costs and predictable cash flow from the customer payments, which reduces working
capital needs.
Order Book
As at the date of this Prospectus, we have secured 20 contracts for the management and operation of
the staff cafeterias of our institutional catering customers in Singapore, two of which expire on 30
November 2004 and 18 of which will expire between February 2005 and June 2007. We have secured six
institutional catering contracts and one event catering contract in Suzhou which will expire between
August 2005 and November 2005. A substantial part of the revenue from our institutional catering
contracts is not fixed but depends on the patronage of our customers’ employees. Please see the section
on “Our Business – Institutional Catering Division” on page 84 of this Prospectus for more details of the
nature of our institutional catering contracts.
Although we have already entered into these contracts with our customers, they may be subject to
cancellation or deferral. Hence, our order book as of any particular date may not be indicative of our
revenue for the succeeding period due to the possibility of cancellation by our customers or delay in
commencement of services provided by us.
We do not keep any order books for our food catering and food retail businesses due to their retail
nature.
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FUTURE PLANS
Our future plans for our business are as follows:(a)
Developing, operating and managing the Expo F&B Hub
In June 2004, our Group successfully tendered for the contract to develop, operate and manage
the Expo F&B Hub which will be established at Singapore Expo. The term of the contract is
approximately four and a half years. To cater to the potentially large pool of visitors to Singapore
Expo and the cosmopolitan crowd there, the Expo F&B Hub will occupy approximately 2,628 sq m
with an estimated seating capacity for approximately 2,300 patrons. It is planned to house six
restaurants, two fast food outlets, three cafeterias, one pub and one food court, offering a variety
of international and local cuisines and beverages. The Expo F&B Hub will provide quality catering
and banqueting services for all exhibitions, conferences, events, functions, concerts, dinners,
carnivals and any other events held at Singapore Expo.
We have plans to develop the Expo F&B Hub into a prominent food and entertainment hub in the
eastern region of Singapore, which caters not only to the participants of the events held at
Singapore Expo, but also to the general public. We intend to introduce a branding concept to the
Expo F&B Hub. The restaurants will come from both local home grown and international brand
names offering specialised international cuisines such as Japanese, Thai, American, Italian,
Chinese and seafood buffet. To leverage on our experiences in food catering, the exhibition halls
are also slated for hosting both private and corporate functions such as wedding banquets and
annual dinner-and-dance parties. We intend to operate and manage the food court which will
comprise nine stalls offering local fare. We intend to operate three of the food court stalls and
lease out the remaining stalls to third party food court stalls operators. We intend to retain the
existing two fast food outlets at Singapore Expo to complement the whole Expo F&B Hub and to
cater to the student population in the vicinity. To increase our revenue, we intend also to operate
mobile kiosks or carts that can be positioned at high traffic areas during event days where
mechanical and electrical facilities are not readily available.
We have taken over the operation and management of the existing food facilities at Singapore
Expo in the third quarter of 2004. At the same time, we plan to commence the renovation of the
infrastructure for the Expo F&B Hub sometime in the fourth quarter of 2004. The first phase of the
Expo F&B Hub, comprising the food court and one restaurant, will be operational by the end of
November 2004. We expect the Expo F&B Hub to be fully operational by the end of the first
quarter of 2005. We intend to use part of the net proceeds from the Invitation to partially fund the
development of the Expo F&B Hub, which includes renovations and marketing and promotional
expenses.
(b)
Further expansion of our institutional catering business into the PRC market
On 2 April 2004, we established our wholly-owned subsidiary, Select Suzhou, to expand our
institutional catering business into the PRC. We plan to offer our institutional catering services to
our existing corporate customers which have or will set up manufacturing operations in the PRC.
We seek to be in close proximity of our customers, thereby allowing us to anticipate and satisfy
their needs promptly with service solutions tailored to their specific situations. Our services include
operating and managing our customers’ staff cafeterias and/or providing catering services to their
employees.
We have entered into a nine-year operating lease of a premise of approximately 3,700 sq m in
Suzhou to be used as our kitchen. We commenced operations of our Suzhou kitchen in September
2004.
As at the date of this Prospectus, we have secured six institutional catering contracts and one
events catering contract in Suzhou, PRC.
We have plans to further expand our Suzhou operations and use part of the net proceeds to
acquire additional kitchen equipment to increase our capacity so as to expand our business.
113
(c)
Expansion of our institutional catering business into other market segments
Currently, our institutional catering services are offered mainly to MNCs. Our Directors believe that
there is potential for such services in other market segments due to the increasing outsourcing
trend. As consumers’ needs become more sophisticated, there is a continuous need for
institutions, both private and public, to seek service contractors who are able to provide solutions
for all their non-core food and management services on a quality, efficient and cost-effective basis.
We plan to target new market segments such as hospitals, tertiary institutions and the uniformed
services for our institutional catering business.
We intend to use part of the net proceeds from the Invitation to expand our institutional catering
business.
(d)
Increase our food retail outlets in Singapore
We plan to increase our dedicated food court stalls in Singapore as and when strategic locations
are available. Our expansion plans in this respect will depend on the availability of our cash flow
and human resources. Other than shopping malls, we intend to establish new food court stalls at
schools and hospitals to increase our market penetration and extend our reach into new markets.
We expect to open a few more new food court stalls in Singapore in the next two years.
In addition, we intend to increase the number of restaurants in different parts of Singapore. The
increase will help to diversify our earnings base and reduce our operational costs. We intend to
open one new restaurant in 2005 and another five to 10 mid-range restaurants in Singapore in the
next three years.
We intend to use part of the net proceeds from the Invitation for the above expansion plans.
114
DIRECTORS, MANAGEMENT AND STAFF
OUR MANAGEMENT STRUCTURE
Our management reporting structure is set out below:BOARD OF
DIRECTORS
Managing Director
Vincent Tan
General Manager
(Group Administration)
Doris Pek
Financial Controller
Jordan Aw Yong
Kwok Kong
Executive Director
Jack Tan
General Manager
(Institutional Catering)
Steven Tan
DIRECTORS
Our Directors are entrusted with the responsibility for the overall management of our Group. The
particulars of our Directors are set out below:Name
Age
Address
Principal Occupation
Vincent Tan
40
65 Shelford Road
#04-02
Singapore 288455
Managing Director
Jack Tan
35
1 Tanah Merah Kechil Road #11-02
Singapore 466663
Executive Director
Low Teck Seng
49
6 Hacienda Grove #02-05
Singapore 457912
Principal and Chief
Executive Officer,
Republic Polytechnic
Sim Beng Chye
48
58 Jalan Kechubong
Singapore 799413
Company Director
Kwah Thiam Hock
58
11 Wimborne Road
Singapore 436640
Chief Executive Officer and
Principal Officer, ECICS Limited
Information on the business and working experience of our Directors is set out below:Mr Vincent Tan has been our Director since 27 January 1995. He is the founder and Managing Director
of our Company. Mr Vincent Tan is responsible for the overall management, strategic planning and
business development of our Group in Singapore and regionally. Mr Vincent Tan has 13 years of
experience in the F&B industry and was instrumental in the establishment, development and expansion
of our Group’s business. Mr Vincent Tan started his career in the furniture industry in 1988 as an
assistant to the superintendent of a subsidiary of an MNC. In 1990, he left the company and joined
another furniture manufacturing company in Surabaya, Indonesia as an assistant to the operations
manager. In 1991, he left Indonesia and established our business. Mr Vincent Tan obtained a diploma in
civil engineering from the Singapore Polytechnic in 1985.
115
Mr Jack Tan has been our Director since 27 January 1995. Mr Jack Tan is a co-founder of our Group.
He has 13 years of experience in the F&B industry and was instrumental in the development of our Food
Retail Division and expansion into Malaysia. Under his leadership, we have established 39 food retail
establishments in Singapore and Malaysia as at the Latest Practicable Date. Mr Jack Tan is responsible
for overseeing the business and sales development strategies of our Food Retail Division. Mr Jack Tan
obtained a National Trade Certificate (NTC2) in “Electronics Engineering” from the Institute of Technical
Education in 1989.
Professor Low Teck Seng was appointed our Independent Director on 26 October 2004. Professor Low
is the chairman of our Nominating Committee. Professor Low is currently a professor of electrical
engineering at the National University of Singapore and the Principal and Chief Executive Officer of
Republic Polytechnic. He was the Director of Data Storage Institute, Singapore from 1992 to 1998. From
1998 to 2000, he was the Dean of the Faculty of Engineering of the National University of Singapore.
Professor Low has been the associate editor of the journal “IEEE Transactions on Industrial Electronics”
since 1995 and sits on the editorial committees of various international journals such as “COMPEL – The
International Journal for Computation and Mathematics in Electrical Engineering”, “Journal on Information
Storage and Processing Systems” and “SIM Management Review”. Professor Low obtained a Bachelor of
Science degree with first class honours from the University of Southampton in 1978 and a Doctor in
Philosophy from the same university in 1982. He is a Chartered Engineer, UK and a Fellow of the
Institute of Electrical and Electronics Engineers. Professor Low is currently a board member of the Health
Sciences Authority in Singapore.
Mr Sim Beng Chye was appointed our Independent Director on 26 October 2004. He is the chairman of
our Remuneration Committee. Mr Sim was a founding member of Omni Industries Limited, an
electronics manufacturing service provider. Omni Industries Limited began as Omni Plastics Pte Ltd in
1991, and by 1994, Mr Sim had expanded its plastics business to four manufacturing plants, including a
mould manufacturing unit in Singapore. He spearheaded the regional expansion of the plastics business
which began in 1995 into Malaysia and continued in 1996 to Shanghai, PRC. The Omni business units,
including the plastics business, were merged to form Omni Industries Limited, which was listed on the
Singapore Stock Exchange in 1997. Mr Sim was appointed an Executive Director of Omni Industries
Limited. He continued to grow the plastics business of Omni aggressively, and by 2001, Omni Industries
Limited had a manufacturing presence in the PRC, Malaysia, Thailand, Indonesia, the United States of
America and Mexico. In October 2001, Omni Industries Limited merged into Celestica Inc (“Celestica”),
and Mr Sim was appointed Vice President of Celestica’s Global Plastics Operations. Since June 2002,
Mr Sim has been self-employed and making his own private investments. He has a wealth of experience
in doing business in a global environment as well as an in-depth understanding of the complexities of the
components industry and contract manufacturing. Prior to his entrepreneurial career, Mr Sim was
employed by Hewlett Packard Singapore (“HP”) from 1979 to 1991, during which he progressed from an
Engineer to a Senior Manager and Engineering Manager of HP’s Plastics Technology Centre. Mr Sim
graduated with a Diploma in Chemical Process Technology and has a Certificate in Industrial
Management from the Singapore Institute of Management. Mr Sim also holds a Graduate Diploma in
Business Administration from the Singapore Institute of Management. Mr Sim is presently a nonexecutive director of Nylect Technology Limited and an independent director of Spindex Industries Ltd
and First Engineering Limited.
Mr Kwah Thiam Hock was appointed our Independent Director on 26 October 2004. He is the chairman
of our Audit Committee. Mr Kwah is currently the Chief Executive Officer and Principal Officer of ECICS
Limited. Mr Kwah started his career in 1964 with the Port of Singapore Authority. From 1969 to 1970, he
was an assistant accountant with the Singapore Textile Industries Limited. Subsequently, he served as
secretary and assistant accountant in Singapore Spinners Private Limited from 1970 to 1973. In 1974, he
became the Regional Accountant and Deputy Manager of IMC (Singapore). Mr Kwah left to join ECICS
Holdings Ltd in 1976 and rose to become its President and Chief Executive Officer. He stepped down
from ECICS Holdings Ltd in May 2003 to assume his current position in ECICS Limited. Mr Kwah
graduated with a Bachelor of Accountancy from the University of Singapore in 1973. He is a Fellow of the
CPA Australia and a Certified Public Accountant of the Institute of Certified Public Accountants of
Singapore.
116
We have not entered into any agreement, arrangement or understanding with our Substantial
Shareholders, customers, suppliers or any other person pursuant to which we will appoint any of our
Directors or any person nominated by any of them as a director of our Company.
The list of present and past directorships of each of our Directors, other than directorship in our Group,
as at the date of this Prospectus and over the past five years preceding the date of this Prospectus is set
out under “General and Statutory Information” on pages 136 to 137 of this Prospectus.
EXECUTIVE OFFICERS
The day-to-day operations of our Group are assisted by our Executive Officers. The particulars of our
Executive Officers are set out below:Name
Age
Address
Current Occupation
Doris Pek
38
65 Shelford Road #04-02
Singapore 288455
General Manager
(Group Administration)
Steven Tan
41
Blk 467B Admiralty Drive #12-147
Singapore 752467
General Manager
(Institutional Catering)
Jordan Aw Yong
Kwok Kong
34
Blk 6 Holland Close #14-34
Singapore 271006
Financial Controller
Information on the business and working experience of our Executive Officers is set out below:Ms Doris Pek is our General Manager (Group Administration). She joined our Group in 1991. She is
responsible for the overall management of our administration, treasury, information technology, training
and human resource functions. Ms Pek spearheaded the implementation of our integrated computer
system, human resource/payroll system as well as accounting and full operational processes. She also
plays a vital role in the strategic positioning of our Group. From 1991 to 2000, she was overall in charge
of the full spectrum of our office administration, including sales and marketing. Ms Pek was responsible
for our Group’s financial reporting, internal control and accounting processes till May 2004. Prior to
joining our Group, Ms Pek worked in various companies between 1987 and 1991 carrying out secretarial,
administrative, human resource and accounts duties. Ms Pek completed her secondary education (GCE
“O” Levels) in 1984.
Mr Steven Tan has been our General Manager (Institutional Catering) since July 2001. Mr Tan is
responsible for overseeing and developing our institutional catering business in Singapore and the PRC.
He has more than 21 years of working experience in the F&B industry. Mr Tan started his career in 1983
as a trainee baker with Marie Chantale (S) Pte Ltd, a confectionary, and later rose to the post of head of
confectionary. In 1988, he joined Cooking Art, a cooking school, as vice principal cum lecturer. From
1989 to 1990, he was the restaurant manager of a Thai restaurant operated by Asian Food Services Pte
Ltd. In 1990, Mr Tan joined Sunshine Bakeries, a company engaged in the business of bread and
cooked food manufacturing, as an operations manager in charge of production. Mr Tan left Sunshine
Bakeries in 1997. Between April and December 1997, Mr Tan was the general manager of Dragon
Shokuhim Pte Ltd, a food company engaged in the manufacturing of cooked food and was in charge of
overseeing its operations. Mr Tan served as the deputy general manager of FoodFare Catering Pte Ltd
between January 1998 and June 2001 before he joined our Company. Mr Tan completed his secondary
education (GCE “O” Levels) in 1979.
117
Mr Jordan Aw Yong Kwok Kong was appointed our Financial Controller in May 2004. He is responsible
for the financial matters of our Group. Prior to joining our Group, Mr Aw Yong was with the Delifrance
group from March 2001 to May 2004. He first joined Delifrance group as its finance manager and was
subsequently deployed to the CEO department as a planning and analysis manager. From December
1999 to February 2001, Mr Aw Yong was a senior consultant with Arthur Andersen, Singapore in charge
of financial accounting services. From October 1996 to November 1999, he was a business analyst with
United Overseas Land group where his duties included business analysis and financial accounting. From
July 1994 to October 1996, Mr Aw Yong was an auditor with Ernst & Young, Singapore. Mr Aw Yong
graduated with a Bachelor of Accountancy degree from the Nanyang Technological University in 1994
and a Master in Business Administration from the University of London in 2001. He is a certified public
accountant and a member of the Institute of Certified Public Accountants in Singapore.
We have not entered into any agreement, arrangement or understanding with our Substantial
Shareholders, customers, suppliers or any other person pursuant to which we will appoint any of our
Executive Officers or any person nominated by any of them as an executive officer of our Company.
The list of present and past directorships of each of our Executive Officers, as at the date of this
Prospectus and for the past five years preceding the date of this Prospectus is set out under “General
and Statutory Information” on page 138 of this Prospectus.
Our Managing Director, Mr Vincent Tan, and our Executive Director, Mr Jack Tan, are siblings. Our
General Manager (Group Administration), Ms Doris Pek, is the spouse of Mr Vincent Tan.
Save as disclosed above and on page 77 of this Prospectus under the section “Shareholders”, none of
our Directors, Executive Officers and Substantial Shareholders is related by blood or marriage to one
another.
Madam Tay Bock Hiang, our Substantial Shareholder and mother of our Directors Messrs Vincent Tan
and Jack Tan, is one of our Head Chefs. Mr Pek Poh Kwee, the brother-in-law of Mr Vincent Tan, is our
operations manager. Madam Ang Poon Hong, the mother-in-law of Mr Vincent Tan, is an outlet
supervisor.
As at the date of this Prospectus, no relative of our Directors or Substantial Shareholders has been
appointed to a managerial position or above in our Group.
REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS
The remuneration (including benefits in kind) paid or payable to each of our Directors and our Executive
Officers for services rendered to us in all capacities in remuneration bands during FY2002, FY2003 and
FY2004 (estimated) were or are as follows:Names
Directors
FY2002
FY2003
FY2004 (estimated)(1)
Band B
Band A
Nil
Nil
Nil
Band A
Band A
Nil
Nil
Nil
Band
Band
Band
Band
Band
Band A
Band A
Nil
Band A
Band A
Nil
Band A
Band A
Band A
(2), (3)
Vincent Tan
Jack Tan
Professor Low Teck Seng
Sim Beng Chye
Kwah Thiam Hock
A
A
A
A
A
Executive Officers
Doris Pek
Steven Tan
Jordan Aw Yong Kwok Kong
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Notes:(1)
(2)
(3)
The estimated remuneration for FY2004 does not include any bonuses and annual profit sharing. All our Independent
Directors will be paid with effect from FY2004.
Band A means up to $249,999.
Band B means between $250,000 and $499,999.
No compensation was paid or is to be paid to any of our Directors or Executive Officers in FY2002 and
FY2003 pursuant to any bonus or profit-sharing plan or any other profit-linked agreement or
arrangement.
In FY2003, our Executive Officers received from our Group an aggregate amount of approximately $0.2
million as compensation comprising salaries, bonuses, CPF contributions and benefits-in-kind.
No compensation was paid or is to be paid in FY2002 and FY2003 in the form of stock options to any of
our Directors or Executive Officers.
No amount has been set aside or accrued by our Company or subsidiaries to provide for any pension,
retirement or similar benefits for any of our Directors, Executive Officers or staff.
EMPLOYEES
The number of full-time employees in our Group as at the end of each of the last three financial years
were as follows:Function
FY2001
Management, Administration and Sales
Number of Employees
FY2002
FY2003
1H2004
33
87
81
88
Operations
345
481
609
650
Total
378
568
690
738
The geographical distribution of our employees as at the end of each of the last three financial years
were as follows:-
FY2001
Singapore
PRC(1)
Malaysia
Total
Number of Employees
FY2002
FY2003
1H2004
350
542
679
725
20
20
–
–
8
6
11
13
378
568
690
738
Note:(1)
Employees in the PRC were engaged for the operations of Zhangzhou Select Eastern Fast Food which was formerly a
subsidiary of our Company.
119
We do not experience any significant staff turnover for the last three financial years.
We do not employ a significant number of temporary employees.
Our employees are not unionised. The relationship and cooperation between our management and
employees has been good and is expected to continue in the future. There has not been any incidence of
work stoppages or labour disputes with our employees which affected our operations.
120
SERVICE AGREEMENTS
Directors
On 3 August 2004, we entered into separate service agreements (“Service Agreements”) with our
Managing Director, Mr Vincent Tan, and our Executive Director, Mr Jack Tan (collectively, the
“Appointees” and individually, an “Appointee”). The Service Agreements are each for a term of 3 years
commencing from the date of our listing and renewable automatically thereafter unless otherwise
terminated by three months’ written notice given by either party to the other. Instead of giving notice, we
may choose to pay an Appointee the equivalent of his salary payable in respect of the notice period
required for termination. Except for such payment in lieu of notice as provided for under the Service
Agreements and any payment required to be made pursuant to the laws of Singapore, no compensation
or damages is payable by us to an Appointee in respect of his termination in accordance with the terms
of the Service Agreements. The Service Agreements may also be terminated by us at any time without
notice or payment upon the occurrence of events such as default by or misconduct of an Appointee in
connection with or affecting the business of the company, wilful neglect by an Appointee in the discharge
of his duties, commission of a serious breach of the Service Agreement by an Appointee or
disqualification of an Appointee from acting as a director for any reason.
The Service Agreements cover the terms of employment, specifically salaries and the duties and
obligations of the Appointee.
Under the Service Agreements, Messrs Vincent Tan and Jack Tan are paid an annual salary of $180,000
and $96,000 respectively. Their salaries are subject to annual review by our Board. They are entitled to
an annual bonus of not less than one month’s salary or such other higher amount as the Company may
in its absolute discretion decide. Messrs Vincent Tan and Jack Tan are also each entitled to a monthly
car allowance of $1,500. Under his Service Agreement, Mr Vincent Tan is entitled to a club membership.
The monthly subscription fees of and expenses incurred at the club shall be borne by the Company. The
club membership shall be held in trust for the Company provided that it shall belong to Mr Vincent Tan
after a period of five years of continuous service from the effective date of commencement of
employment.
In the event that our Group’s audited consolidated profit before tax before payment of the performance
bonus and excluding any gains earned from extraordinary and exceptional items (“Consolidated PBT”) is
$5.0 million or less, Messrs Vincent Tan and Jack Tan shall be paid a performance bonus equivalent to
3.0% and 0.5% of the Consolidated PBT respectively. In the event that the Consolidated PBT exceed
$5.0 million, (i) Mr Vincent Tan shall be paid a performance bonus equivalent to 3.0% of the Consolidated
PBT up to $5.0 million and 4.0% of any amount of Consolidated PBT in excess of $5.0 million, and (ii) Mr
Jack Tan shall be paid a performance bonus equivalent to 0.5% of the Consolidated PBT up to $5.0
million and 0.75% of any amount of Consolidated PBT in excess of $5.0 million.
There are non-competition covenants under the Service Agreements which are effective during the term
of the Service Agreements and for a period of six months following the termination of employment. In
addition, there are confidentiality obligations under the Service Agreement which are effective during and
after the termination of the Service Agreements.
Save as disclosed above, there are no other existing or proposed service agreements between us and
our Directors which provide for benefits upon termination of employment.
Had the Service Agreements been in place since the beginning of January 2003, the aggregate
remuneration (including CPF contributions thereon and benefits-in-kind) payable to our Managing
Director and Executive Director in FY2003 would have been approximately $0.3 million instead of $0.2
million and profit before income tax of our Group for FY2003 would have been approximately $0.8 million
instead of $0.9 million.
121
Executive Officers
We have also entered into various employment contracts with our Executive Officers. Such contracts
typically provide for the salary payable to our Executive Officers, their working hours, annual leave,
medical benefits and grounds of termination.
CORPORATE GOVERNANCE
Our Directors recognise the importance of good corporate governance and the offering of high standards
of accountability to our Shareholders. To this end, our Board of Directors has established the following
three committees: (i) the Audit Committee; (ii) the Remuneration Committee; and (iii) the Nominating
Committee.
In addition, Messrs Low Teck Seng, Sim Beng Chye and Kwah Thiam Hock have been appointed as our
Independent Directors. Our Directors consider them to be independent as they do not have any existing
business or professional relationship with our Group, our Directors or Substantial Shareholders. They are
also not related to any of our Directors or Substantial Shareholders.
Audit Committee
Our Audit Committee comprises Messrs Low Teck Seng, Sim Beng Chye and Kwah Thiam Hock. The
Chairman of our Audit Committee is Mr Kwah Thiam Hock. Our Audit Committee will meet periodically to
perform, inter alia, the following functions:(a)
review the audit plans of our external auditors;
(b)
review the external auditors’ reports;
(c)
review the co-operation given by our Company’s officers to the external auditors;
(d)
review the financial statements of our Company and our Group before their submission to our
Board;
(e)
review the independence and objectivity of the external auditors and nominate external auditors for
re-appointment;
(f)
review and rectify all interested person transactions, if any, to ensure that they comply with the
approved internal control procedures and have been conducted on an arms’ length basis; and
(g)
generally, perform such other functions and duties as may be required by the relevant laws or
provisions of the Listing Manual (as may be amended from time to time).
Apart from the above functions, our Audit Committee will commission and review the findings of internal
investigations into matters where there is suspicion of fraud or irregularity, or failure of internal controls or
infringement of any Singapore law, rule or regulation, which has or is likely to have a material impact on
our operating results and/or financial 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 that
particular transaction or voting on that particular resolution.
Remuneration Committee
Our Remuneration Committee comprises Messrs Low Teck Seng, Sim Beng Chye and Vincent Tan. The
Chairman of our Remuneration Committee is Mr Sim Beng Chye. Our Remuneration Committee
oversees executive remuneration and development in our Company with the goal of building capable and
committed management teams.
122
Our Remuneration Committee will review annually the remuneration of each of our Directors and
Executive Officers and make recommendations to our Board. Our Remuneration Committee will
recommend to our Board a framework of remuneration for our Directors and Executive Officers, and
determine specific remuneration packages for each Director. The recommendations of our Remuneration
Committee will be submitted for endorsement by our entire Board. All aspects of remuneration, including
but not limited to Directors’ fees, salaries, allowances, bonuses, options and benefits-in-kind shall be
reviewed by our Remuneration Committee. Each member of our Remuneration Committee will abstain
from reviewing and approving his own remuneration and the remuneration packages of persons related
to him. Our Company will disclose in our annual report the total remuneration paid to our Directors.
Nominating Committee
Our Nominating Committee comprises Messrs Low Teck Seng, Kwah Thiam Hock and Vincent Tan. The
Chairman of our Nominating Committee is Professor Low Teck Seng.
Our Nominating Committee will be responsible for:(i)
re-nomination of our Directors, having regard to each Director’s contribution and performance;
(ii)
determining annually whether or not a Director is independent; and
(iii)
deciding whether or not a Director is able to and has been adequately carrying out his duties as a
Director.
Our Nominating Committee will decide how our Board’s performance is to be evaluated and propose
objective performance criteria, subject to the approval of our Board, which address how our Board has
enhanced long-term shareholders’ value. Our Board will also implement a process to be carried out by
our Nominating Committee for assessing the effectiveness of our Board as a whole and for assessing the
contribution of each individual Director to the effectiveness of our Board. Our Nominating Committee is
also charged with the responsibility of determining annually whether a Director is independent. Each
member of our Nominating Committee shall abstain from voting on any resolution in respect of the
assessment of his performance or re-nomination as Director.
Board Practices
Our Articles provide that our Board of Directors will consist of not less than two Directors. None of our
Directors is appointed for any fixed term, but under our Articles, at least one third, or if their number is
not a multiple of three, the number nearest to but not lesser than one-third of our Directors, shall retire
from office by rotation once in every three years. A retiring Director is eligible for re-election at the
meeting at which he retires.
SELECT EMPLOYEE SHARE OPTION SCHEME
On 28 October 2004, our Shareholders approved a share option scheme known as the Select Employee
Share Option Scheme, the rules of which are set out in Appendix D of this Prospectus. The Scheme
complies with the relevant rules of Chapter 8 of the Listing Manual. The Scheme will provide eligible
participants with an opportunity to participate in the equity of our Company as well as to motivate them
to perform better through increased loyalty and dedication to our Company. The Scheme, which forms an
integral and important component of a remuneration and compensation plan, is designed to primarily
reward and retain Executive Directors and employees whose services are crucial to our Group’s wellbeing, development and success.
As at the Latest Practicable Date, no Options have been granted under the Scheme.
123
A summary of the Rules of the Scheme is set out as follows:1.
Objectives
The objectives of the Scheme are as follows:-
2.
(a)
to motivate each participant to optimise his performance standards and efficiency and to
maintain a high level of contribution to our Group;
(b)
to retain key employees and Directors whose contributions are essential to the long-term
growth and profitability of our Group;
(c)
to instil loyalty to, and a stronger identification by the participants with the long-term
prosperity of, our Group;
(d)
to attract potential employees with relevant skills to contribute to our Group and to create
value for our Shareholders; and
(e)
to align the interests of the participants with the interests of our Shareholders.
Participants
Under the Rules of the Scheme, Executive, Non-executive and Independent Directors and full-time
employees of our Group are eligible to participate in the Scheme. Directors who are Controlling
Shareholders of our Company and their Associates are not eligible to participate in the Scheme.
To be eligible to participate in the Scheme, a participant (“Participant”) must:-
3.
(i)
be confirmed in his/her employment with our Company or any of our subsidiaries and not be
on probation and have been in the full time service of our Company or any of our
subsidiaries for at least six months on or prior to the date of the grant of the Option (the
“Date of Grant”);
(ii)
have attained the age of 21 years on or before the Date of Grant; and
(iIi)
not be an undischarged bankrupt and must not have entered into a composition with his
creditors.
Scheme administration
The Scheme shall be administered by a committee comprising Directors (including Directors who
may be participants of the Scheme) (“Committee”), with powers to determine, inter alia, the
following:(a)
persons to be granted Options;
(b)
number of Options to be offered; and
(c)
recommendations for modifications to the Scheme.
The Committee comprises members of the Remuneration Committee. A member of the Committee
who is also a Participant of the Scheme must not be involved in its deliberation in respect of
Options granted or to be granted to him.
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4.
Size of the Scheme
The nominal amount of the aggregate number of Shares over which the Committee may grant
Options on any date, when aggregated with the nominal amount of the number of Shares issued
and issuable in respect all Options granted under the Scheme and any other share option
schemes of our Company, shall not exceed 15% of the issued share capital of our Company on
the day preceding the date of the relevant grant.
Our Company believes that this 15% limit set by the SGX-ST gives our Company sufficient
flexibility to decide upon the number of Option Shares to offer to our existing and new employees.
15% of our post-Invitation issued share capital constitutes approximately 13,907,010 Shares. As it
is intended that the Scheme shall last for 10 years, assuming that there is no change in the total
issued share capital of the Company, the number of Options that may be granted in a year will
average approximately 1,390,701. The number of eligible participants is expected to grow over the
years. Our Company, in line with its goals of ensuring sustainable growth, is constantly reviewing
our position and considering the expansion of our talent pool which may involve employing new
employees. The employee base, and therefore the number of eligible participants will increase as a
consequence. If the number of Options available under the Scheme is limited, we may only be able
to grant a small number of Options to each eligible participant which may not be a sufficiently
attractive incentive. Our Company is of the opinion that it should have sufficient number of Options
to offer to new employees as well as to existing employees. The number of Options offered must
also be significant enough to constitute a meaningful reward for contribution to our Group.
However, this does not mean that the Committee will issue Option Shares up to the prescribed
limit. The Committee shall exercise its discretion in deciding the number of Option Shares to be
granted to each employee, which will depend on, inter alia, the employee’s performance and value
to our Group.
5.
Entitlement
Subject to such adjustments as may be made under the Rules, the number of Options to be
offered to a Participant of the Scheme shall be determined at the absolute discretion of the
Committee, who shall take into account criteria such as the rank, performance, years of service
and potential for future development of that Participant.
6.
Participants in other schemes
Participants who participate in the Scheme are eligible to participate in other schemes
implemented by other companies, if approved by the Committee.
7.
Grant of Options
Subject to the Rules, the Committee may make offers of grant of Options (“Offers”) to such eligible
Participants as it may in its sole and absolute discretion select at any time during the period when
the Scheme is in force, except that no Offers shall be made during the period of 30 days
immediately preceding the date our Company announces its interim and/or final results (whichever
the case may be). In the event of our Company announcing any matter of an exceptional nature
involving unpublished price sensitive information (“Exceptional Announcements”), Offers may only
be made on or after the third Market Day on which such Exceptional Announcement is released.
8.
Acceptance of Offer
The Offer to a Participant, if not accepted by the Participant before 5.00 p.m. on the 30th day from
the date of such Offer, will lapse. Upon acceptance of the Offer, the Participant to whom the Option
is granted will pay to our Company a consideration of $1.00 or such other amount and deliver such
other documentation as the Committee may require.
125
9.
Exercise price and exercise period
9.1
10.
Subject to any adjustment to be made pursuant to the Rules, the exercise price for each
Share in respect of which an Option is exercisable shall be determined by the Committee at
its absolute discretion and fixed by the Committee at:(a)
a price equal to the average of the last dealt prices for a Share on the SGX SESDAQ
for the period of five consecutive Market Days immediately prior to the relevant Date
of Grant (“Market Price”) but in no event shall the exercise price per Share be less
than its par value (“Market Price Options”); or
(b)
a price which is set at a discount to the Market Price, provided that the maximum
discount shall not exceed 20% of the Market Price but in no event shall the exercise
price per Share be less than its par value (“Incentive Options”).
9.2
Each eligible Participant who has been granted Market Price Options shall be entitled to
exercise at any time after the first anniversary of the Date of Grant of that Option, Provided
always that the Options granted to employees shall be exercised before the tenth
anniversary of the relevant Date of Grant and Options granted to non-executive Directors
and Independent Directors shall be exercised before the fifth anniversary of the relevant
Date of Grant, or such earlier date as may be determined by the Committee, failing which all
unexercised Options shall immediately lapse and become null and void and a Participant
shall have no claims against the Company.
9.3
Each eligible Participant who has been granted Incentive Options shall be entitled to
exercise at any time after the second anniversary of the Date of Grant of that Option,
Provided always that the Options granted to employees shall be exercised before the tenth
anniversary of the relevant Date of Grant and Options granted to non-executive Directors
and Independent Directors shall be exercised before the fifth anniversary of the relevant
unexercised Options shall immediately lapse and become null and void and a Participant
shall have no claims against the Company.
Variation of share capital
If a variation in our issued share capital occurs (whether by way of capitalisation or rights issue,
reduction of capital, sub-division or consolidation of Shares or distribution), the exercise price, the
nominal value, class and/or number of Shares comprised in an Option or over which Options may
be granted will be adjusted in such manner as the Committee may determine to be appropriate
and upon the written confirmation of our auditors (acting only as experts and not as arbitrators)
that in their opinion, such adjustment is fair and reasonable. The issue of Shares as consideration
for an acquisition by us or a private placement of Shares will not be regarded as a circumstance
requiring adjustment. An increase in the number of issued Shares as a consequence of the
exercise of Options or other convertibles issued by us will also not be a circumstance requiring
adjustment.
11.
Exercise of Options
Options which are accepted by the Participants may be exercised during the periods and at the
relevant exercise prices. All Options must be exercised before the expiry of 10 years from the Date
of Grant in the case of employees and before the expiry of five years in the case of non-executive
Directors and Independent Directors, or such earlier date as may be determined by the
Committee, failing which the Options shall be deemed to have expired and shall cease to be valid.
126
Special provisions dealing with the lapsing or permitting the earlier exercise of Options under
certain circumstances include:-
12.
(a)
the termination of the Participant’s employment or appointment in our Group, as the case
may be;
(b)
the bankruptcy of the Participant;
(c)
the death of the Participant;
(d)
a take-over of our Company; and
(e)
the winding-up of our Company (voluntary or otherwise).
Shares issued under the Scheme
Shares arising from the exercise of the Options shall be subject to the provisions of the
Memorandum and Articles of our Company. The Shares so allotted will upon issue rank pari
passu in all respects with the then existing issued Shares for any dividends, rights, allotments or
distributions the record date (“Record Date”) of which falls after the relevant date of exercise of the
Option. “Record Date” means the date fixed by our Company for the purposes of determining
entitlements of Shareholders to dividends, rights, allotments or other distributions.
13.
Changes in the Scheme
Subject to the prior approval of the SGX-ST or any other stock exchange on which the Shares are
listed or quoted and other regulatory authorities as may be necessary, the Scheme may be altered
from time to time by a resolution of the Committee. However, no alteration shall be made which
would adversely affect the rights attached to Options granted prior to such alteration except with
the prior consent in writing of such number of Participants who, if they exercised their Options in
full, would thereby become entitled to not less than three-quarters in nominal amount of all Shares
which would fall to be allotted and issued upon exercise in full of all outstanding Options. Also, no
alteration shall be made to certain rules of the Scheme to the advantage of Participants except
with the prior approval of our Shareholders in general meeting.
14.
Duration of the scheme
The Scheme shall continue in operation for a maximum period of ten years commencing on the
Adoption Date. “Adoption Date” means the date upon which the Scheme is adopted by our
Company in general meeting which is 28 October 2004. The Scheme may be continued for any
further period thereafter with the approval of our Shareholders in general meeting and of any
relevant authorities which may then be required.
Grant of Options at Discounted Exercise Price
The Scheme which forms an integral component of our remuneration and compensation plan, is
designed to reward and retain eligible Participants whose services are crucial to our well-being and
success. The ability to grant Options with exercise prices set at a discount to the prevailing Market Prices
of our Shares, is intended, inter alia, to operate as a means to recognise Participants for their
outstanding performance as well as to motivate them to continue to excel while encouraging them to
focus more on improving our profitability and return above a certain level which will benefit all
Shareholders when these are eventually reflected through share price appreciation. The flexibility in
determining the quantum of discount would enable the Committee to tailor the incentives in the grant of
Options to commensurate with the performance and contribution of each individual Participant.
The flexibility of granting Options with discounted prices is also intended to cater for situations where the
market conditions are bullish and the market price of our Shares are traded at high premiums. In such
events, we may grant Options to our employees at a discount to the Market Price.
127
In deciding whether to give a discount and the quantum of such discount, the Committee shall be at
liberty to take into consideration factors including performance of our Company, the years of service and
individual performance of the Participant concerned, the contribution of the Participant to our success
and development, and the prevailing market conditions. All Participants, regardless of their rank, shall be
eligible to a discount of up to 20%.
It is envisaged that we may consider granting the Options with Exercise Prices set at a discount to the
Market Price of our Shares prevailing at the time of grant under circumstances including (but not limited
to) to the following:(a)
where, due to speculative forces in the stock market resulting in an overrun of the market, the
market price of our Shares at the time of the grant of Options is not a true reflection of our
financial performance;
(b)
to enable us to offer competitive remuneration packages in the event that the practice of granting
Options with exercise prices that have a discount element becomes a general market norm. As
share options become more significant components of executive remuneration packages, a
discretion to grant Options with discounted prices will provide us with a means to maintain the
competitiveness of our remuneration and compensation strategy; and/or
(c)
where we need to provide more compelling motivation for specific business units to improve their
performance, grants of share options with discounted exercise prices will help to align the interests
of employees to those of our Shareholders by encouraging them to focus more on improving our
profitability and returns above a certain level which will benefit all Shareholders when these are
eventually reflected through share price appreciation. Options granted at a discount are perceived
more positively by the employees who receive such Options.
The Committee will determine on a case-by-case basis whether a discount will be given, and if so,
quantum of the discount, taking into account the objective that is desired to be achieved by us and
prevailing market conditions. As the actual discount given will depend on the relevant circumstances,
extent of the discount may vary from one case to another, subject to a maximum discount of 20% of
Market Price of the Share, as described above.
the
the
the
the
The discretion to grant Options to subscribe for Shares at an exercise price set at a discount to the
Market Price will, however, be used judiciously. The amount of the discount may vary from one offer to
another, and from time to time, subject to a limit of 20% on the quantum of discount in respect of Options
granted under the Scheme.
In respect of our Independent Directors, we have presently not made any decision on the terms of the
grant of Options and on whether Options will be granted at a discount to the Market Price. However,
should we decide in the future to grant Options to them at a discount, such decision will be based on
factors such as the individual performance of the Participant and the contribution of the Participant to our
success and development.
We may also grant Options without any discount to the Market Price. Additionally, we may, if we deem fit,
impose conditions on the exercise of the Options (whether such Options are granted at the Market Price
or at a discount to the Market Price), such as restricting the number of Shares for which the Option may
be exercised during the initial years following its vesting.
128
Participants in the Scheme
Participation of our Group Employees
The extension of the Scheme to Group employees allows us to have a fair and equitable system to
reward Directors and employees who have made and who continue to make significant contributions to
our Group’s long-term growth.
We believe the Scheme will enable us to attract, retain and provide incentives to its Participants to
produce higher standards of performance as well as encourage greater dedication and loyalty by
enabling us to give recognition to past contributions and services as well as motivating Participants
generally to contribute towards our long-term growth.
Participation of our non-executive Directors (if any) and Independent Directors
We do not have any non-executive Directors as at the Latest Practicable Date. However, the Scheme
contemplates the participation by any future persons who may become our non-executive Directors. Our
non-executive Directors (if any) and Independent Directors, although not involved in the day-to-day
running of our operations, play an invaluable role in furthering the business interests of our Group by
contributing their experience and expertise. We believe that by allowing our non-executive Directors (if
any) and Independent Directors to participate in the Scheme, we will be able to provide them with an
opportunity to participate in our equity. Our non-executive Directors (if any) and Independent Directors
are closely associated with our business operations even though they do not hold office in an executive
capacity. To allow them to participate in the Scheme will instil in them a greater sense of involvement and
belonging in our Group, thereby enhancing our working relationship with them.
In addition, our Independent Directors are also members of our Audit Committee. They therefore
undertake a major role in our corporate governance. It is therefore in our long-term interest that we
acknowledge the services of these Directors who are members of our Audit Committee by allowing them
to participate in the Scheme. Their participation in the Scheme will also attract future suitable and more
qualified persons to sit on our Audit Committee. This will help to ensure the continuity of good corporate
governance in our Company in the long term.
To reflect our recognition of the valuable contributions and efforts of our non-executive Directors (if any)
and Independent Directors, the Scheme will allow us flexibility in providing reward to these Directors in a
combination of director’s fees and Options as it may not always be possible to compensate them fully or
appropriately by increasing the directors’ fees or other forms of cash payment. We also hope that by
being able to offer share options, it will be able to attract more well-qualified persons to act as nonexecutive Directors and Independent Directors of our Company.
We believe that the grant of Options to our Independent Directors will not give rise to any conflict of
interests. In any event, to minimise any potential conflict of interests and not to compromise the
independence of our Independent Directors, we intend to grant only a nominal number of Options under
the Scheme to such Independent Directors. In addition, in the event that any conflict of interests arises in
any matter to be decided by our Board, we shall procure that the relevant Independent Director abstain
from voting on such matter at our Board meeting.
As at the date of this Prospectus, our Independent Directors Messrs Low Teck Seng, Sim Beng Chye and
Kwah Thiam Hock will be eligible to participate in the Scheme.
Disclosures in Annual Reports
Details of the number of Options granted, the number of Options exercised and the subscription price (as
well as the discounts involved, if any) will be disclosed in our annual report.
129
The Cost To Us For Granting Options Under The Scheme
Any Options granted for Shares (whether or not the exercise price is set at a discount to the prevailing
market price of our Shares) have a fair market value. Where such Options are granted at a consideration
which is less than their fair value, there will be a cost to us, the amount of which will depend on whether
the Options are granted at market price or at a discount. The greater the discount granted and the longer
the option period, the greater the cost to us.
Our cost of granting Options, with or without a discounted exercise price under the Scheme, would be as
follows:(a)
The effect of the issue of new Shares upon the exercise of Options on our NTA per Share is
accretive if the exercise price is above the NTA per Share, but dilutive otherwise;
(b)
If the Options are granted with a discounted exercise price, the exercise price of an Option at a
discounted exercise price would translate to a reduction of the proceeds from the exercise of such
an Option, as compared to the proceeds that we would have received from such exercise had the
exercise been made at the prevailing market price of our Shares. Such reduction of the exercise
proceeds would represent the monetary cost to us of granting Options with a discounted exercise
price;
(c)
As the monetary cost of granting Options with a discounted exercise price is borne by us, our
earnings would effectively be reduced by an amount corresponding to the reduced interest
earnings that we would have received from the difference in proceeds from exercise price with no
discount versus the discounted price. Such reduction would, accordingly, result in the dilution of
our earnings per Share; and
(d)
The grant of Options under the Scheme will not have an impact on our Company’s reported profit
under current accounting rules set out in Singapore Financial Reporting Standards (FRS).
However, a new accounting standard FRS 102 will require the recognition of an expense in respect
of Options granted under the Scheme. The expense will be based on the fair value of the Options
at the date of grant (as determined by an option-pricing model) and will be recognised over the
vesting period. The requirement to recognise an expense in respect of options granted to
employees is set out in FRS 102, Share-based Payment. FRS 102 is effective for financial periods
beginning on or after 1 January 2005.
It should be noted that the financial effects discussed in (a), (b) and (c) above would materialise only
upon the exercise of the relevant Options. The cost of granting options discussed in (d) above would be
recognised in the financial statements even if the options are not exercised in (d). Measured against
these costs would be the desirable effect of the Scheme to attract, recruit, retain and motivate Directors
and employees which could, in the long term, yield greater returns for us and our Shareholders.
We have made an application to the SGX-ST for permission to deal in, and for quotation of, our Shares
which may be issued upon the exercise of the Options to be granted under the Scheme. The approval of
the SGX-ST is not to be taken as an indication of the merits of our Company, our subsidiaries, our
Shares, the New Shares or the Option Shares.
130
INTERESTED PERSON TRANSACTIONS AND CONFLICTS OF INTERESTS
In general, transactions entered into between our Group and any of its interested persons (namely, the
Directors or Controlling Shareholders of our Company or the Associates of such Directors or Controlling
Shareholders) are known as interested person transactions. Save as disclosed below, none of our
Directors, Controlling Shareholders or their respective Associates was or is interested in any material
transaction undertaken by our Group within the last three financial years ended 31 December 2003 and
up to the Latest Practicable Date (the “Relevant Period”).
PAST INTERESTED PERSON TRANSACTIONS
1.
Loans advanced by our Company to our Executive Director
We have made separate loan advances of $141,074 and $60,000 to our Executive Director, Mr
Jack Tan, in FY2001. The loan of $141,074 was interest-free, unsecured and with no fixed term of
repayment. The loan of $60,000 was subject to interest at the rate of 6% per annum. It was
unsecured and repayable within a period of 24 months. These amounts were the largest sums of
loan advances made to Mr Jack Tan during the Relevant Period. The said loans were fully repaid
as at 31 December 2002. As at the Latest Practicable Date, no amount under the said loans is
outstanding.
We do not intend to extend such loans to any of our Directors in the future.
2.
Loan advanced by our Managing Director to our Company
Our Managing Director, Mr Vincent Tan, extended a loan of $200,000 to our Company for working
capital purposes in FY2001. The loan was drawn down from an overdraft facility extended to Mr
Vincent Tan by a bank in Singapore.
The said loan of $200,000 was unsecured with no fixed term of repayment. Our Company
reimbursed the interest paid by Mr Vincent Tan to the bank on the amount of the overdraft facility
drawn for the purpose of the loan advance to our Company. The interest was paid at the rate of
1.5% above the then prevailing prime rate of Keppel TatLee Bank.
The sum of $200,000 was the largest loan made by Mr Vincent Tan during the Relevant Period.
The loan was fully paid to Mr Vincent Tan by April 2004. As at the Latest Practicable Date, no
amount is outstanding under the said loan.
We do not intend to obtain any further loans from our Directors in the future.
3.
Share swap with our Directors
On 18 October 2001, our Directors, Messrs Vincent Tan and Jack Tan, respectively transferred
335,000 and 115,000 ordinary shares of par value $1.00 each in the share capital of Select FM
(Singapore) to our Company. In consideration for such transfer, our Company allotted and issued
441,935 and 151,709 ordinary shares of par value $1.00 each in the share capital of our Company
to Messrs Vincent Tan and Jack Tan respectively.
The share swap was on a willing-buyer willing-seller basis and the consideration was derived at
taking into account the financial performance of Select FM (Singapore), Stamford and our
Company. Our Directors believe that the transaction was carried out on an arm’s length basis.
131
4.
Guarantees for Finance Leases
Our Directors had provided personal guarantees as securities for finance leases granted to our
Group. Particulars of the personal guarantees are as follows:-
5.
Financial institution
Facility
Guaranteed by
Discharged by
DBS Finance Ltd
Hire purchase facilities
of up to $890,527
Vincent Tan
Jack Tan
April 2003
Hitachi Leasing (Singapore)
Pte. Ltd.
Hire purchase facility
of $40,120
Vincent Tan
June 2004
Counter-indemnity
Our Directors, Messrs Vincent Tan and Jack Tan, and their respective Associates, Ms Doris Pek
and Madam Tay Bock Hiang, had provided the following counter-indemnities in respect of the
obligations of our Group:Counterindemnity given
to
Counterindemnity given
by
$27,000
NTUC Income
Insurance Cooperative Limited
(“NTUC Income”)
Vincent Tan
Jack Tan
Doris Pek
Tay Bock Hiang
In respect of a
guarantee provided
by NTUC Income
to NTUC Foodfare
Co-operative Limited
as security for our
obligations under a
licence agreement for
one of our food court
stalls
November
2002
$12,600
Asia Insurance Co
Ltd
Vincent Tan
Jack Tan
Tay Bock Hiang
In respect of an
insurance
performance bond
provided by Asia
Insurance Co Ltd to
Health Promotion Board,
Ministry of Health,
as security for our
obligations under a
lease agreement
for one of our cafeterias
May 2004
$18,000
NTUC Income
Vincent Tan
Jack Tan
Doris Pek
Tay Bock Hiang
In respect of a guarantee
provided by NTUC
Income to LPS Kopitiam
(TOO) Pte Ltd as
security for our
obligations under a
stalls
January 2003
$19,989
Yasuda Fire &
Marine Insurance
Co (Asia) Pte Ltd
Vincent Tan
Tay Bock Hiang
In respect of an insurance
guarantee provided by
Yasuda Fire & Marine
Insurance Co (Asia) Pte
Ltd to HDB in lieu of
rental and reinstatement
deposits for our kitchen
premises at Aljunied
February
2004
Year
provided
Amount
FY2000
FY2001
132
Purpose
Discharged
by
Year
provided
FY2002
Amount
to
by
$18,000
NTUC Income
Vincent Tan
Jack Tan
Doris Pek
Tay Bock Hiang
Discharged
by
Purpose
In respect of a guarantee
provided by NTUC
Income to Kopitiam
Investment Pte Ltd
as security for our
obligations under a
stalls
December
2003
PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS
1.
Guarantees for Banking Facilities
Our Directors, Messrs Vincent Tan and Jack Tan and their Associate, Madam Tan Bock Hiang,
have provided personal guarantees as securities for banking facilities granted to our Group.
Particulars of the personal guarantees are as follows:-
2.
Bank
Facility
Guaranteed by
DBS Bank Ltd
Overdrafts, term loans, guarantee and
other facilities of up to $2,513,738
Vincent Tan
Jack Tan
Oversea-Chinese Banking
Corporation Limited
Overdrafts, term loans and guarantee
facilities of up to $3,048,018
Vincent Tan
Jack Tan
Tay Bock Hiang
Oversea-Chinese Banking
Corporation Limited
Overdraft of $100,000
Vincent Tan
Jack Tan
RHB Bank Berhad
Overdraft of $500,000
Vincent Tan
Jack Tan
Guarantees for Operating Leases
Under some of our leases and licences, the lessors and licensors require our Directors to provide
guarantees to secure our obligations under the relevant leases and licences. As at the Latest
Practicable Date, guarantees provided by Directors Messrs Vincent Tan and Jack Tan to secure our
obligations under the leases and licences were as follows:Location
Lessor/Licensor
Lessee/Licensee
Guaranteed by
302 Tiong Bahru Road
#03-01/02/31-55 Stall No. 13
Tiong Bahru Plaza
Singapore 168732
Kopisi Pte Ltd
Select FM
(Singapore)
Vincent Tan
Jack Tan
9 Tampines Street 32
#01-01 Stalls Nos. 13 & 14
Singapore 529286
Aik Hua Pte Ltd
Select FM
(Singapore)
Vincent Tan
Jack Tan
68 Orchard Road
#06-15/16/17 Stall 15
Plaza Singapura
Singapore 238839
Kopitiam Investment
Pte Ltd
Select FM
(Singapore)
Vincent Tan
133
3.
Location
Lessor/Licensor
Lessee/Licensee
Guaranteed by
51 Bras Basah Road
#01-03 Stall No. 11
Plaza By The Park
Singapore 189554
Kopitiam Investment
Pte Ltd
Select FM
(Singapore)
Vincent Tan
Jack Tan
5 Lower Kent Ridge Road
National University Hospital
Main Building Stall No. 7
Singapore 119074
Kopitiam Investment
Pte Ltd
Stamford
Vincent Tan
Jack Tan
1 Jurong West Central 2
#03-42 Stall No. 20
Jurong Point Shopping Centre
Singapore 648886
Kopitiam Investment
Pte Ltd
Select FM
(Singapore)
Vincent Tan
Jack Tan
1 Sengkang Square
#04-14 to #04-19
Compass Point Stall No. 18D
Singapore 545078
Kopitiam Investment
Pte Ltd
Select FM
(Singapore)
Vincent Tan
Jack Tan
1 Hougang Street 91
#01-40 Stall No. #01-38
Hougang Festival Market
Singapore 538692
Kopitiam Investment
Pte Ltd
Select FM
(Singapore)
Vincent Tan
Jack Tan
1 Jelebu Road
#03-08/09 Stall No. 2
Bukit Panjang Plaza
Singapore 677743
Kopitiam Investment
Pte Ltd
Select FM
(Singapore)
Vincent Tan
Jack Tan
Guarantees for Finance Leases
Our Directors, Messrs Vincent Tan and Jack Tan have provided guarantees as securities for
finance leases granted to our Group. Particulars of the personal guarantees provided as at the
Latest Practicable Date, are as follows:-
4.
Financial institution
Facility
Guaranteed by
DBS Finance Ltd
Local Enterprise Finance Scheme
hire purchase facility of $558,900
Vincent Tan
Jack Tan
DBS Bank Ltd
Hire purchase facilities of up to $105,190
Vincent Tan
Counter-indemnity
On 21 April 2003, our Directors, Messrs Vincent Tan and Jack Tan, and their respective
Associates, Ms Doris Pek and Madam Tay Bock Hiang provided a counter-indemnity for the sum of
$27,000 in favour of NTUC Income. The counter-indemnity was in relation to a guarantee provided
by NTUC Income to NTUC Foodfare Co-operative Limited to secure our obligations under a
licence agreement for one of our food court stalls.
Upon the listing and quotation of our Shares on SGX-SESDAQ, we intend to procure the discharge of the
abovementioned personal guarantees and counter-indemnity from the respective lessors, licensors,
financial institutions and NTUC Income, as the case may be, by providing our corporate guarantees. In
the event that the lessors, licensors, financial institutions and/or NTUC Income do not agree to the
discharge of the said personal guarantees and/or counter-indemnify, our said Directors and their
respective Associates, as the case may be, will continue to provide such personal guarantees and/or
counter-indemnity in respect of such obligations.
134
CONFLICTS OF INTEREST
Save as disclosed under the section on “Interested Person Transactions”, none of our Directors,
Controlling Shareholders or their Associates has any material interest, direct or indirect, in:(a)
any company carrying on the same business;
(b)
any enterprise or company that is our Group’s customer or supplier of goods or services; and
(c)
any transaction to which we are a party.
REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS
All future transactions with interested persons shall comply with the requirements of the Listing Manual.
In compliance with Rule 210(7) of the Listing Manual, our Articles require a Director to abstain from
voting in any contract or arrangement in which he has a personal material interest.
All future interested person transactions will be properly documented and submitted to our Audit
Committee for periodic review to ensure that they are conducted at arm’s length basis, on normal
commercial terms and in accordance with the review procedures outlined below and that the transactions
are not prejudicial to the interest of our Shareholders. Our Company will prepare the relevant information
to assist our Audit Committee in its review.
Review Procedures
In respect of all interested person transactions, our Directors will ensure that all such dealings will be
conducted on an arm’s length basis by undertaking the following procedures:(a)
market rates will be used as benchmarks for interested person transactions;
(b)
should any future business dealings between our Group and our interested persons be on terms
less favourable than to our Group as compared to what may be procured from independent third
parties, prior approval from our Board will be obtained; and
(c)
in determining the most competitive purchase price, the suitability, quality and the cost of the
product, and the experience and expertise of the supplier will be taken into consideration.
Furthermore, if during periodic reviews, the Audit Committee believes that the guidelines and procedures
as stated above are not sufficient to ensure that interests of minority Shareholders are not prejudiced, we
will adopt new guidelines and procedures. In the event that a member of our Audit Committee is
interested in any interested person transaction, he will abstain from reviewing that particular transaction.
Our Audit Committee will also review the internal controls relating to future interested person transactions
of our Group and will include such review as part of the standard procedures during the Audit
Committee’s examination of the adequacy of the Company’s internal controls. Our Directors and the Audit
Committee will ensure that all disclosure requirements in respect of interested person transactions,
including those required by prevailing legislation, Chapter 9 of the Listing Manual and applicable
accounting standards, are complied with. In addition, such transactions will also be subject to
Shareholders’ approval, if required under Chapter 9 of the Listing Manual.
Currently, we have not sought and we do not intend to seek a Shareholders mandate for interested
person transactions as we will comply with the provisions of Chapter 9 of the Listing Manual.
135
GENERAL AND STATUTORY INFORMATION
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS
1.
The name, age, address, principal occupation and business and working experience of each of our
Directors and Executive Officers are set out on pages 115 to 118 respectively of this Prospectus.
2.
The present and past directorships (held in the five years preceding the date of this Prospectus) of
each of our Directors in companies other than our Company are as follows:Name of Director Other Directorships
Vincent Tan
Jack Tan
Low Teck Seng
Past Directorships
Group Companies
– Select Food Management Pte Ltd
– Select Food Management Sdn. Bhd
– Select (F&B) Investment Pte Ltd
– Select F&B (Suzhou) Co. Ltd
– Stamford Catering Services Pte Ltd
– Lerk Thai Restaurant Pte Ltd
– SCS Food Services Pte. Ltd.
Other companies
– Select Eastern Investment Pte Ltd
(struck off)
Other companies
– Zhangzhou Select Eastern
Fast Food Co., Ltd
– LTL Timber World Pte Ltd
(struck off)
Group Companies
– Select Food Management Pte Ltd
– Select Food Management Sdn. Bhd
– Select (F&B) Investment Pte Ltd
– Select F&B (Suzhou) Co. Ltd
– Stamford Catering Services Pte Ltd
– Lerk Thai Restaurant Pte Ltd
– SCS Food Services Pte. Ltd.
Group Companies
None
Other companies
– Select Eastern Investment Pte Ltd
(struck off)
Other companies
– Zhangzhou Select Eastern
Fast Food Co., Ltd
Group Companies
Group Companies
None
Other companies
– Semicaps Corporation Pte Ltd
– Electrotech Investments Ltd
– Magnecomp International Limited
– Precico Singapore Pte Ltd
– DSI Holdings (Pte) Ltd (to be
dissolved)
– Collibro Technologies (S) Pte Ltd
(to be dissolved)
136
Other companies
– Data Storage Institute
– Parkway Laboratory Services Ltd
– IEEE Inc (USA)
– Flextech Holdings Limited
– Stormwater (Asia) Pte Ltd
– Institute of Microelectronics
Name of Director Other Directorships
Past Directorships
Sim Beng Chye
Group Companies
Group Companies
None
Other companies
– Spindex Industries Limited
– Nylect Technology Limited
– First Engineering Limited
– Nico Steel Holdings Pte Ltd
Other companies
– Celestica Singapore Pte Ltd
(formerly known as Omni
Industries Limited)
– Omni Plastics Pte Ltd
– Omni Plastics (China) Pte Ltd
(gazetted to be struck off)
– Omni Plastics Shanghai Co Ltd
– Omni Plastics Technology
Shanghai Co Ltd
– Omni Plastics Xiamen Co Ltd
– Omni Precision Pte Ltd
– Omni Engineering Shanghai Co Ltd
– Omni Manufacturing Services
– Omni Plastics Suzhou Co Ltd
– PT Omni Precision Batam
– Amnitek Limited
– Fowseng Plastics Industries Pte Ltd
(in members' voluntary winding up)
– I.C. Equipment Pte Ltd
– Jin Li Mould Manufacturing Pte Ltd
– Kojin Mould Manufacturing Pte Ltd
Group Companies
None
Group Companies
Kwah Thiam Hock
Other companies
– ECICS Limited
– EHGroup Ltd
– ECIL Ltd
– ECGC Ltd
– EPL Ltd
– ECICS Ventures 2 Ltd
– Credinet (Singapore) Pte Ltd
– International Factors (Singapore) Ltd
– International Factors Leasing Pte Ltd
– China Walden Venture Investment Ltd
– China Walden Management Ltd
– PB International Sdn Bhd
– Ayudhya International Factors Co Ltd
– Red Sea Maritime Pte Ltd
(to be dissolved)
– Maritime Holdings Ltd (in members'
voluntary winding up)
– Maritime Shipping (1988) Pte Ltd
(to be dissolved)
– Maritime (Private) Limited (in
members' voluntary winding up)
– Beppeb Capital Pte Ltd (in members'
voluntary winding up)
137
Other companies
– EPL - Cornwall Pte Ltd
– ECICS Management Pte Ltd
– ECICS Ventures Pte Ltd
– Intraco Limited
– Far East Bunkering Services
Pte Ltd
– Parkstone Real Estate Pte Ltd
– New Venture Pte Ltd
– Teledata Singapore Limited
– Coface Infoasia Pte Ltd
3.
The present and past directorships (held in the five years preceding the date of this Prospectus) of each of
our Executive Officers in companies other than our Company are as follows:Name of
Executive Officer
Present Directorship
Past Directorship
Doris Pek
Group Companies
None
Group Companies
None
Other companies
None
Other companies
None
Group Companies
Select F&B (Suzhou) Co. Ltd
Group Companies
None
Other companies
None
Other companies
None
Group Companies
None
Group Companies
None
Other companies
None
Other companies
None
Steven Tan
Jordan Aw Yong Kwok Kong
4.
Save as disclosed below, none our Directors, Executive Officers or Controlling Shareholders has:(i)
at any time during the last ten years, had a petition under any bankruptcy laws of any
jurisdiction filed against him or against a partnership of which he was a partner;
(ii)
at any time during the last ten years, had a petition under any laws of any jurisdiction filed
against a corporation of which he was a director or key executive for the winding-up of that
corporation on the ground of insolvency;
(iii)
any unsatisfied judgments against him;
(iv)
ever been convicted of any offence, in Singapore or elsewhere, involving fraud or dishonesty
which is punishable with imprisonment for three months or more, or has been the subject of
any criminal proceedings (including any pending criminal proceedings which he is aware of)
for such purpose;
(v)
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 which he is aware of) for such breach;
(vi)
at any time during the last ten years, had judgment 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
finding of fraud, misrepresentation or dishonesty on his part, or has been the subject of any
civil proceedings (including any pending civil proceedings which he is aware of) involving an
allegation of fraud, misrepresentation or dishonesty on his part;
(vii)
ever been convicted in Singapore or elsewhere of any offence in connection with the
formation or management of any corporation;
(viii)
ever been disqualified from acting as a director of any corporation, or from taking part
directly or indirectly in the management of any corporation;
138
(ix)
ever been the subject of any order, judgment or ruling of any court, tribunal or governmental
body permanently or temporarily enjoining him from engaging in any type of business
practice or activity; and
(x)
ever to his knowledge, been concerned with the management or conduct, in Singapore or
elsewhere, of the affairs of:(a)
any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere; or
(b)
any corporation or partnership 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,
in connection with any matter occurring or arising during the period when he was so
concerned with the corporation or partnership.
Jack Tan
On one occasion some time three to five years ago, Mr Jack Tan was arrested for a gambling
related offence that took place at the residence of a friend during a birthday party which he
attended. He was subsequently charged and convicted in the Subordinate Courts of Singapore. Mr
Jack Tan paid a fine of approximately $2,000.
Steven Tan
A bankruptcy petition was filed against Mr Steven Tan in 1999 by NTUC Income Insurance Cooperative Limited (“NTUC Income”) but was subsequently withdrawn in the same year after he
entered into a settlement with NTUC Income. The bankruptcy petition was in respect of the liability
of Mr Steven Tan as a guarantor under a personal guarantee which he provided to NTUC Income
whilst he was in the employ of Dragon Shokuhim (S) Pte Ltd (“Dragon”). Mr Steven Tan was one of
the four personal guarantors in respect of a guarantee issued by NTUC Income for a sum of rental
deposit payable to the landlord of a subsidiary of Dragon. NTUC Income enforced the personal
guarantee when the subsidiary of Dragon became insolvent.
5.
The aggregate emoluments (including salaries, bonuses, fees, CPF contributions and other
allowances) paid or distributed by our Group to our Directors for their services rendered in all
capacities to our Company and our subsidiaries for FY2002 and FY2003 amounted to
approximately $0.4 million and $0.2 million respectively. For the current FY2004, the estimated
aggregate emoluments payable to our Directors under the arrangements in force at the date of this
Prospectus, including the Service Agreements (excluding any incentive bonus or profit-sharing
scheme payable under the Service Agreements with certain of our Directors referred to on pages
121 to 122 of this Prospectus) is estimated to be approximately $0.3 million.
6.
Save as described under “Service Agreements” on pages 121 to 122 of this Prospectus, there are
no existing or proposed service contracts between any of our Directors or Executive Officers and
our Company or any of our subsidiaries.
7.
There is no shareholding qualification for Directors in the Articles of our Company.
8.
No option to subscribe for shares in or debentures of our Company or any of our subsidiaries has
been granted to, or was exercised by, any of our Directors or Executive Officers within the two
years preceding the date of this Prospectus.
139
9.
Save as disclosed on pages 131 to 135 of this Prospectus under “Interested Person Transactions
and Conflicts of Interests”, none of our Directors or Substantial Shareholders 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 Prospectus, been acquired by 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.
10.
Save as disclosed on page 135 of this Prospectus under “Interested Person Transactions and
Conflicts of Interests”, none of our Directors, Executive Officers or Substantial Shareholders has
any substantial interest, direct or indirect, in any company carrying on similar trade as our
Company or any of our subsidiaries.
11.
Save as disclosed on pages 77 and 118 of this Prospectus, none of our Directors and Executive
Officers is related by blood or marriage to one another nor are they so related to any of our
Substantial Shareholders.
12.
The interests of our Directors and Substantial Shareholders in our Shares as at the Latest
Practicable Date are set out under “Shareholders” on page 77 of this Prospectus.
13.
No sum or benefit has been paid or is agreed to be paid to any Director or expert, or to any firm in
which such Director or expert is a partner or any corporation in which such Director or expert
holds shares or debentures, in cash or shares or otherwise, by any person to induce him to
become, or to qualify him as, a Director, or otherwise for services rendered by him or by such firm
or corporation in connection with the promotion or formation of our Company.
14.
None of our Directors has any interest in any existing contract or arrangement which is significant
in relation to the business of our Company and our subsidiaries, taken as a whole.
SHARE CAPITAL
15.
The changes in the issued and paid-up share capital of our subsidiaries since the date of their
respective incorporation are set out below:Date of issue
Number of
Shares
Issued
Par Value/
Issue Price
Resultant Issued
Share Capital
Purpose of Issue
3
499,997
$1
$1
$3
$500,000
Incorporation
Working capital
5
250,000
$1
$1
$5
$250,005
Incorporation
Working capital
2
99,998
RM1
RM1
RM2
RM100,000
Incorporation
Working capital
2
199,998
$1
$1
$2
$200,000
Incorporation
Working capital
2
99,998
$1
$1
$2
$100,000
Incorporation
Working capital
3 May 1999
23 June 2000
11 January 2000
7 August 2001
Select Food Management Sdn. Bhd.
19 December 2000
1 May 2001
28 November 2003
5 January 2004
Select (F&B) Investment Pte. Ltd.
17 March 2004
2 July 2004
140
Select F&B (Suzhou) Co. Ltd
15 May 2004
N.A.
N.A.
US$300,000
6 July 2004
N.A.
N.A.
US$300,000
2
99,998
$1
$1
$2
$100,000
Registered capital
contribution
Registered capital
contribution
SCS Food Services Pte. Ltd.
2 July 2004
23 September 2004
16.
Incorporation
Working capital
Save as disclosed in the section on “Share Capital” on pages 74 to 76 of this Prospectus, 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-up for cash, or for a consideration other than cash,
within the three years preceding the date of lodgement of this Prospectus.
BANK BORROWINGS AND WORKING CAPITAL
17.
Save as disclosed in “Capitalisation and Indebtedness” on pages 66 to 68 of this Prospectus and
in the Independent Auditors’ Report, our Group has no other bank borrowings or indebtedness in
the nature of borrowings including bank overdrafts and liabilities under acceptances (other than
normal trading bills) or acceptance credits, mortgages, charges, hire purchase commitments,
guarantees or other material contingent liabilities as at 30 June 2004.
18.
In the opinion of our Directors, there is no minimum amount which must be raised by the issue of
the New Shares in order to provide for the following:(i)
the purchase price of any property purchased or to be purchased which is to be defrayed in
whole or in part out of the proceeds of the issue of the New Shares;
(ii)
estimated expenses (including underwriting and placement commission and brokerage) for
the Invitation payable by our Company;
(iii)
the repayment of any money borrowed by our Company in respect of any of the foregoing
matters; and
(iv)
working capital.
Although no minimum amount must be raised by the Invitation in order to provide for the items set
out above, the estimated amount to be provided for the item set out in (ii) above is approximately
$1.0 million. Such amount is proposed to be provided out of the proceeds of the Invitation or, in
the event the Invitation is cancelled, out of the existing banking facilities or internal funds.
19.
Our Directors are of the opinion that, after taking into account the present banking facilities, and
the net proceeds from the issue of the New Shares by our Company, our Group will have adequate
working capital for our present requirements.
MATERIAL CONTRACTS
20.
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 Prospectus and are or may be material:(a)
the Depository Agreement dated 30 November 2004 entered into between our Company
and CDP pursuant to which CDP will act as central depository for our Group’s securities for
trades in the securities of our Group through the SGX-ST;
141
(b)
the Management and Underwriting Agreement dated 30 November 2004 made between our
Company, the Manager and the Underwriters for the management of the Invitation and the
underwriting of the Offer Shares referred to in paragraphs 22 and 23 below;
(c)
the Placement Agreement dated 30 November 2004 made between our Company and the
Placement Agent for the placement of the Placement Shares referred to in paragraph 24
below; and
(d)
the Subscription Agreement dated 21 May 2004 made between our Company and the PreInvitation Investors in relation to the subscription of 184,400 ordinary shares of $1.00 each
in the share capital of our Company by the Pre-Invitation Investors for an aggregate
consideration of $1.725 million.
LITIGATION, ARBITRATION AND BANKRUPTCY PROCEEDINGS
21.
Neither our Company nor any of our subsidiaries is engaged in any legal or arbitration proceedings
in the last 12 months before the date of the lodgement of this Prospectus, as plaintiff or defendant
in respect of any claims or amounts which are material in the context of the Invitation and our
Directors have no knowledge of any proceedings pending or threatened against our Company or
any of our subsidiaries or any facts likely to give rise to any litigation, claims or proceedings which
might materially affect the financial position or profitability of our Company or any of our
subsidiaries.
MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS
22.
Pursuant to the Management and Underwriting Agreement, our Company appointed Westcomb
Capital Pte Ltd to manage the Invitation and Westcomb Securities Pte Ltd as the Underwriter to
underwrite the Offer Shares. The Manager will receive a management fee from our Company for its
services rendered in connection with the Invitation.
23.
Pursuant to the Management and Underwriting Agreement, the Underwriter agreed to underwrite
the Offer Shares for a commission of 2.25% of the aggregate Issue Price for the total number of
Offer Shares, payable by our Company, for subscribing and/or procuring subscription for any Offer
Shares not subscribed for pursuant to the Invitation and will pay or procure payment to our
Company for such Offer Shares. The Underwriters may, at its absolute discretion appoint one or
more sub-underwriters to sub-underwrite the Offer Shares.
24.
Pursuant to the Placement Agreement, the Placement Agent agreed to subscribe for and/or
procure subscribers for the Placement Shares for a placement commission of 2.5% of the Issue
Price for the total number of Placement Shares, payable by our Company, for subscribing and/or
procuring subscription for any Placement Shares not subscribed for pursuant to the Invitation and
will pay or procure payment to our Company for such Placement Shares.
Subscribers of Placement Shares may be required to pay a brokerage of up to 1.0% of the Issue
Price to the Placement Agent or sub-placement agents.
25.
Brokerage will be paid by our Company on the New Shares at the rate of 0.25% of the Issue Price
for each Offer Share. The brokerage will be paid to the Underwriter, members of the SGX-ST,
merchant banks and members of the Association of Banks in Singapore in respect of accepted
applications made on Application Forms bearing their respective stamps, or to the Participating
Banks in respect of successful applications made through Electronic Applications at their
respective ATMs.
Save as aforesaid, no commission, discount or brokerage has been paid or other special terms
granted within the two years preceding the date of this Prospectus or is payable to any Directors,
promoter, expert, proposed Director or any other person for subscribing or agreeing to subscribe,
or procuring or agreeing to procure subscription for any shares in, or debentures of, our Company
or any of our subsidiaries.
142
26.
The Management and Underwriting Agreement may be terminated by the Manager at any time on
or before the close of the Application List on the occurrence of certain events. These events
include:(a)
any change or development involving a prospective change or any crisis in local, national or
international, financial (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; or
(b)
the issue of a stop order by the Authority in accordance with Section 242 of the Securities
and Futures Act; or
(c)
the occurrence of event or events which shall in the opinion of the Manager (exercised in
good faith) (1) result or be likely to result in a material adverse fluctuation or adverse
conditions in the stock market in Singapore or elsewhere or (2) be likely to prejudice the
success of the offer, subscription 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 and Underwriting 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) be such that no reasonable underwriter would have entered into the
Management and Underwriting Agreement or (6) make it uncommercial or otherwise
contrary to or outside the usual commercial practices of underwriting in Singapore for the
Underwriter to observe or perform or be obliged to observe or perform the terms of the
Management and Underwriting Agreement.
27.
The Placement Agreement is conditional upon the Management and Underwriting Agreement not
having been terminated or rescinded pursuant to the provisions of the Management and
Underwriting Agreement and may be terminated on the occurrence of certain events, including
those specified in paragraph 26 above. In the event that the Management and Underwriting
Agreement is terminated, our Company reserves the right, at the absolute discretion of our
Directors, to cancel the Invitation.
28.
Our public relations consultant, Quattro Media Pte Ltd, is an associated company of the Manager
and an associated company of Westcomb Securities Pte Ltd, our Placement Agent and
Underwriter. Save as disclosed in paragraphs 22 to 28 and under the section “Shareholders” on
page 77, we do not have any material relationship with the Manager, Underwriter and Placement
Agent.
MISCELLANEOUS
29.
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 Prospectus.
30.
No amount of cash or securities or benefit has been paid or given to any promoter within the two
years preceding the Latest Practicable Date or is proposed or intended to be paid or given to any
promoter at any time.
31.
Save as disclosed on pages 142 to 143 under “Management, Underwriting and Placement
Arrangements”, 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 Group or
any of our subsidiaries.
143
32.
Save as disclosed in this Prospectus, no expert is interested, directly or indirectly, in the promotion
of, or in any property or assets which have, within 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.
33.
Application moneys 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 the Bank of East Asia, Limited (“Receiving Banker”). In the ordinary course of
business, the Receiving Banker will deploy these moneys in the interbank money market. All profits
derived from the deployment of such moneys will accrue to the Receiving Banker. Any refund of all
or part of the application moneys to unsuccessful or partially successful applicants will be made
without any interest or any share of revenue or any other benefit arising therefrom.
34.
Save as disclosed in this Prospectus, our Directors are not aware of any relevant material
information including trading factors or risks which are unlikely to be known or anticipated by the
general public and which could materially affect the profits of our Company and our subsidiaries.
35.
Save as disclosed in this Prospectus, the financial condition and operations of our Group are not
likely to be affected by any of the following:(i)
known trends or demands, commitments, events or uncertainties that will result in or are
reasonably likely to result in our Group’s liquidity increasing or decreasing in any material
way;
(ii)
material commitments for capital expenditure;
(iii)
unusual or infrequent events or transactions or any significant economic changes that will
materially affect the amount of reported income from operations; and
(iv)
known trends or uncertainties that have had or that our Group reasonably expects will have
a material favourable or unfavourable impact on revenue or operating income.
36.
We currently have no intention of changing our auditors after the listing of our Company on the
Official List of the SGX-SESDAQ.
37.
No property has been purchased or acquired or proposed to be purchased or acquired by our
Group which is to be paid for, wholly or partly, out of the proceeds of the Invitation or the purchase
or acquisition of which has not been completed at the date of this Prospectus, other than property
the contract for the purchase or acquisition whereof was entered into in the ordinary course of
business of our Company or our subsidiaries, such contract not being made in contemplation of
the Invitation nor the Invitation in consequence of the contract.
38.
The Directors are not aware of any event which has occurred since 30 June 2004 and up to the
Latest Practicable Date which may have a material effect on the financial position or results of our
Group.
39.
No expert is employed on a contingent basis by our Company or any of our subsidiaries, 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.
144
CONSENTS
40.
Chio Lim & Associates, the Auditors and Reporting Auditors, have given and have not withdrawn
their written consent to the issue of this Prospectus with the inclusion herein of their Independent
Auditors’ Report and Audited Consolidated Financial Statements of Select Catering Services
Limited and the Independent Auditors’ Review Report and Unaudited Consolidated Financial
Statements of Select Catering Services Limited and their name, address and professional
qualification and references thereto in the form and context in which they appear in this Prospectus
and to act in such capacities in relation to this Prospectus. Raslan Loong has given and has not
withdrawn its written consent to the issue of this Prospectus with the inclusion herein of its opinion
in the form and context in which it appears in this Prospectus and references to its name in the
form and context in which it appears in this Prospectus and to act in such capacity in relation to
this Prospectus.
41.
Each of the Solicitors to the Invitation, the Share Registrar, the Receiving Bank and the Principal
Bankers do not make, or purport to make, any statement in this Prospectus or any statement upon
which a statement in this Prospectus is based and, to the maximum extent permitted by law,
expressly disclaim and take no responsibility for any liability to any person which is based on, or
arises out of, the statements, information or opinions in this Prospectus.
RESPONSIBILITY STATEMENT BY OUR DIRECTORS
42.
This Prospectus 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 Prospectus
and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief,
the facts stated and the opinions expressed in this Prospectus are fair and accurate in all material
respects as at the date of this Prospectus and that there are no other material facts the omission
of which would make any statements in this Prospectus misleading, and that this Prospectus
constitutes full and true disclosure of all material facts about the Invitation, our Company and our
subsidiaries.
RESPONSIBILITY STATEMENT BY THE MANAGER
43.
The Manager acknowledges that, having made due and careful enquiry and to the best of its
knowledge and belief, based on information furnished to it by our Group, this Prospectus
constitutes full and true disclosures of all the material facts about the Invitation and the Company
and its subsidiaries and it is not aware of any other facts the omission of which would make any
statements herein misleading.
DOCUMENTS AVAILABLE FOR INSPECTION
44.
Copies of the following documents may be inspected at the registered office of our Company at 36
Senoko Crescent, Singapore 758282 during normal business hours for a period of six months from
the date of registration of this Prospectus by the Authority:(a)
the Memorandum and Articles of Association of our Company;
(b)
the material contracts referred to in paragraph 20 on pages 141 and 142 of this Prospectus;
(c)
the letters of consent referred to in paragraph 40 and 41 on page 145 of this Prospectus;
(d)
the Service Agreements referred to on pages 121 and 122 of this Prospectus;
145
(e)
the Independent Auditors’ Report and Audited Consolidated Financial Statements of Select
Catering Services Limited as set out in Appendix G of this Prospectus; and
(f)
the Independent Auditors’ Review Report and Unaudited Consolidated Financial Statements
of Select Catering Services Limited as set out on in Appendix H of this Prospectus.
146
APPENDIX A – TAXATION
The following is a discussion of certain tax matters arising under the current tax laws in Singapore and is
not intended to be and does not constitute legal or tax advice. While this discussion is considered to be
a correct interpretation of existing laws in force as at the date of this Prospectus, no assurance can be
given that courts or fiscal authorities responsible for the administration of such laws will agree with this
interpretation or that changes in such laws will not occur. The discussion is limited to a general
description of certain tax consequences in Singapore with respect to 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. Prospective investors
should consult their tax advisors regarding Singapore tax and other tax consequences of owning
and disposing our Shares. It is emphasised that neither our Company, our Directors nor any
other persons involved in the Invitation accepts responsibility for any tax effects or liabilities
resulting from the subscription for, purchase, holding or disposal of our Shares. Dividends
declared by our Company will be paid out in Singapore dollars to our Shareholders.
General
Singapore tax residents, which include individuals who are residing in Singapore and companies which
are controlled or managed in Singapore, are subject to Singapore income tax on income that is accrued
in or derived from Singapore and on foreign income received or deemed to be received in Singapore
subject to certain exceptions.
In the 2003 Budget Statement, the Minister for Finance has announced that with effect from 1 June 2003,
all foreign sourced income in the form of dividends, branch profits and services income (derived from
jurisdictions that have headline tax rates of at least 15%) received in Singapore will be exempt from tax,
subject to certain conditions.
In the 2004 Budget Statement, the Minister for Finance has announced that all foreign-sourced personal
income remitted or deemed remitted by Singapore resident individuals shall be exempt from tax with
effect from year of assessment 2005. In addition, certain proposed Singapore sourced investment
income derived by individuals on or after 1 January 2004 will also be exempt from tax.
A company is tax resident in Singapore if the control and management of its business is exercised in
Singapore. A company will usually be regarded as being tax resident in Singapore if the company’s
board of directors meets in Singapore to discuss overall management policy and high-level business
matters in relation to the business of the company. An individual is tax resident in Singapore in a year of
assessment if, in the preceding year, he resides in Singapore (except for temporary absences from
Singapore) or if 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.
Non-resident corporate taxpayers are subject to income tax on income that is accrued in or derived from
Singapore, and on foreign income received in Singapore, subject to certain exceptions. Non-resident
individuals, subject to certain exceptions, are subject to income tax on the income accrued in or derived
from Singapore.
The corporate tax rate in Singapore is 22% for the years of assessment 2003 (i.e. financial year ended
2002) and 2004 (i.e. financial year ended 2003) and 20% with effect from the year of assessment 2005
(.e. financial year ended 2004). Three quarters of up to the first $10,000 of a company’s normal
chargeable income and one half of up to the next $90,000 will be exempt from tax. The remaining
chargeable income (after tax exemption) will be taxed at 22% (for financial years ended 2002 and 2003)
or 20% (for financial year ended 2004 onwards). The above tax exemption will not apply to Singapore
dividends received by companies.
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For a Singapore tax resident individual, the rate of tax will vary according to the individual’s
circumstances but is subject to a maximum rate of 22% with effect from the year of assessment 2003 i.e.
calendar year 2002. In the Budget Statement 2003 announced on 28 February 2003, the Finance
Minister also reaffirmed the Government’s intention to reduce the top individual tax rate to 20% by the
year of assessment 2005 (financial year ended in 2004). However, the Minister has announced in the
Budget Statement 2004 that the reduction in the top tax rate will be deferred to a future year of
assessement.
Subject to any applicable tax treaty, non-Singapore resident taxpayers are subject to a withholding tax of
the prevailing corporate tax rate in respect of income derived from technical or management services
provided in Singapore, or generally 15% in the case of interest, royalty and rental of movable property if
such interest, royalty or rental is not derived by the non-resident from any trade or business carried on in
Singapore and is not effectively connected with any permanent establishment in Singapore of the nonresident person. In respect of royalty payment due payable on or after 1 January 2005 which is not
derived by the non-resident from any trade or business carried on in Singapore and is not effectively
connected with any permanent establishment in Singapore of the non-resident person, the Finance
Minister has proposed in the 2004 Budget Statement to reduce the withholding tax rate to 10%.
Dividend Distributions
Dividend Distributions – Imputation Tax System
Singapore adopted the imputation tax system up to 31 December 2002. Under the imputation tax
system, the tax we pay at the prevailing corporate tax rate is deemed to be paid by our Shareholders.
Our Shareholders receive dividends net of such tax. Our Shareholders are taxed on the gross amount of
dividends (that is, on the amount of net dividends plus an amount equal to the amount of gross dividends
multiplied by the prevailing corporate tax rate). The tax we pay effectively becomes available to our
Shareholders as a tax credit to offset their Singapore income tax liability on the gross amount of
dividends paid by us.
Dividends on our Shares received by a Singapore resident individual will be liable to tax in Singapore.
The rate of tax will vary according to the individual’s circumstances. The tax we pay can be set off as a
tax credit against the individual’s income tax liabilities where the individual’s income tax liabilities on the
dividends are lower (or, as the case may be, higher) than the tax credit, such individual may receive a
refund from (or, as the case may be, have to pay further tax to) the Inland Revenue Authority of
Singapore.
Dividends on our Shares received by a Singapore resident company will be liable to tax in Singapore at
the corporate income tax rate. In the absence of any expenses which may be deductible against the
dividends, the Singapore resident company will not receive any tax refund from the Inland Revenue
Authority of Singapore, nor be required to pay a further tax, since tax has been deducted at the
prevailing corporate tax rate.
A non-resident Shareholder is effectively taxed on dividends on our Shares at the corporate income tax
rate. Thus, no further Singapore income tax will be imposed on the net dividends received by a nonresident holder of our Shares. Further, the non-resident Shareholder which does not have a permanent
establishment in Singapore and deductible expenses attributable to such dividend income will normally
not receive any tax refund from the Inland Revenue Authority of Singapore.
Dividend Distributions – One-Tier Corporate Tax System
Singapore adopted the “one-tier” corporate tax system with effect from 1 January 2003. Under this new
system, the tax collected from corporate profits is final and Singapore dividends are tax exempt in the
hands of the shareholder, regardless of whether this is a corporate or individual shareholder and whether
the shareholder is a Singapore tax resident. To enable companies to make use of the unutilised dividend
franking credits as at 31 December 2002, a five-year transition period from 1 January 2003 to 31
December 2007 has been introduced for such companies to pay franked dividends out of its unutilised
dividend franking credits. During this period, the shareholders will continue to receive these dividends
with credits attached as mentioned above under the current tax system.
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As we intend to make use of our unutilised dividend franking credits, we have not elected to adopt the
one-tier corporate tax system which was introduced since 1 January 2003. As such, our Shareholders
will continue to receive dividends with credits attached until the dividend franking credits are utilised or 31
December 2007, whichever is the earlier. Foreign Shareholders are advised to consult their own tax
advisors in respect of the tax laws of their respective countries of residence and the applicability of any
double taxation agreement that their country may have with Singapore.
Where our Company receives foreign dividends for which a tax credit has been allowed, the dividend
payments from these foreign dividends to the holders of our Shares will be exempt from tax. The tax
credit could be obtained pursuant to a double taxation treaty with one of Singapore’s treaty partners or it
could be unilaterally granted under the Income Tax Act. Where the credit is available under any of the
options above, a special account is to be created for the purposes of ensuring that the payment of
exempt dividends is restricted to the amount of the dividends for which foreign tax credit has been
allowed.
Gains on Disposal of our Shares
Currently, Singapore does not impose tax on capital gains. Thus any gains derived from the disposal of
our Shares acquired for long term investments will not be taxable in Singapore. However, capital gains
may be construed to be of an income nature (rather than capital gains) and subject to tax especially if
they arise from activities which the Inland Revenue Authority of Singapore regards as the carrying on of
a trade in Singapore i.e. a company carrying on a trade or business of dealing in shares in Singapore.
Any profits from the disposal of our Shares are not taxable in Singapore unless the seller is regarded as
having derived gains of an income nature, in which case, the disposal profits would be taxable.
Stamp Duty
There is no stamp duty payable on the subscription and issuance of our Shares.
Where existing Shares evidenced in certificated form are acquired in Singapore, stamp duty is payable
on the instrument of transfer of our Shares at the rate of $2.00 for every $1,000 market value of our
Shares registered in Singapore.
The purchaser is liable for stamp duty, unless there is an agreement to the contrary. No stamp duty is
payable if no instrument of transfer is executed (such as in the case of scripless shares, the transfer of
which does not require instrument of transfers to be executed) or the instrument of transfer is executed
outside Singapore. However, stamp duty may be payable if the instrument of transfer which is executed
outside Singapore is received in Singapore.
The above stamp duty is not applicable to electronic transfers of our Shares through the CDP.
Estate Duty
Singapore estate duty is imposed on the value of immovable property situated in Singapore owned by
individuals who are not domiciled in Singapore, subject to specific exemption limits. Movable assets of
non-domiciles will be exempt from estate duty with respect to deaths occurring on or after 1 January
2002. Singapore estate duty is imposed on the value of most immovable property situated in Singapore
and on most movable property, wherever it may be, owned by individuals who are domiciled in
Singapore, subject to specific exemption limits. Our Shares are considered to be movable property
situated in Singapore as we are a company incorporated in Singapore.
Accordingly, our Shares held by an individual domiciled in Singapore are subject to Singapore estate
duty upon such individual’s death. Singapore estate duty is payable to the extent that the value of our
Shares aggregated with any other assets subject to Singapore estate duty exceeds $600,000. Unless
other exemptions apply to the other assets, for example, the separate exemption limit for residential
properties, any excess beyond $600,000 will be taxed at 5% on the first $12,000,000 of the individual’s
Singapore chargeable assets and thereafter at 10%. Individuals should consult their own tax advisors
regarding the Singapore estate duty consequences of their ownership of our Shares.
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Goods and Services Tax (“GST”)
The sale of shares by an investor belonging in Singapore through an SGX-ST member or to another
person belonging in Singapore is an exempt sale not subject to GST.
Where the Shares are sold by the investor to a person belonging outside Singapore, the sales is
generally a taxable sale subject to GST at zero-rate. Any GST incurred by a GST registered investor in
the making of this supply in the course or furtherance of a business may be recovered from the
Comptroller of GST.
Services such as brokerage, handling and clearing charges rendered by a GST registered person to an
investor belonging in Singapore in connection with the investor purchase, sale, holding of shares will be
subject to GST at the current rate of 5%. Similar services rendered to an investor belonging outside
Singapore will be zero-rated.
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APPENDIX B – EXTRACT OF THE MEMORANDUM AND ARTICLES
OF ASSOCIATION OF OUR COMPANY
Place of Incorporation
We are incorporated in Singapore with the Registrar of Companies and Businesses. Our Company
registration number is 199500697Z.
Our objects
One of our principal objects as set out in our Memorandum of Association is to carry on the business of
an investment holding company.
The objects of our Company are set out in full in Clause 3 of our Memorandum of Association which is
available for inspection at our registered office as stated in “Documents for Inspection” on page 145 of
this Prospectus.
Selected Extracts of our Articles of Association
1.
The following provisions in the Articles of our Company relate to Directors’ voting rights on
proposals, arrangements or contracts in which Directors are interested:-
Article 95
A Director may be or become a director or other officer of, or otherwise interested in, any company
promoted by the Company or in which the Company may be interested as a shareholder or
otherwise, and unless otherwise agreed shall not be accountable for any remuneration or other
benefits received by him as a director or officer of, or by virtue of his interest in, such other
company unless the Company otherwise directs at the time of his appointment. The Directors may
exercise the voting power conferred by the shares or other interest in any such other corporation
held or owned by the Company, or exercisable by them as directors of such other corporation in
such manner and in all respects as they think fit (including the exercise thereof in favour of any
resolution appointing themselves or any of the directors or other officers of such corporation), and
any Director may vote in favour of the exercise of such voting rights in the manner aforesaid,
notwithstanding that he may be, or is about to be appointed a director or other officer of such
corporation and as such is or may become interested in the exercise of such voting rights in the
manner aforesaid.
Article 96
A Director may contract with and be interested in any contract or proposed contract with the
Company and shall not (unless otherwise agreed) be liable to account for any profit made by him
by reason of any such contract Provided always that the nature of the interest of the Director in
any such contract be declared at a meeting of the Directors as required by the Act. A Director
shall not vote in respect of any contract or proposed contract or arrangement or any other proposal
whatsoever in which he has any personal material interest, directly or indirectly. A Director shall not
be counted in the quorum at a meeting in relation to any resolution on which he is debarred from
voting.
2.
The following provisions in the Articles of our Company relate to the remuneration of Directors:-
Article 92
(1)
The Directors shall be entitled to receive by way of fees for their services as Directors in
each year such sum as shall from time to time, be determined by the Company by resolution
passed at a General Meeting in accordance with the Act, the notice of which shall specify
the proposals concerning the same. Such remuneration shall be divided amongst the
Directors as they shall determine or failing agreement equally.
(2)
The fees payable to the Directors shall not be increased except pursuant to a resolution
passed at a General Meeting, where notice of the proposed increase has been given in the
notice convening the Meeting.
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(3)
The remuneration of a non-executive Director shall be by a fixed sum and not be by
commission on or percentage of profits or turnover.
(4)
The provisions of this Article are without prejudice to the power of the Directors to appoint
any of their number to be employee or agent of the Company at such remuneration and
upon such terms as they think fit without the approval of the Members in General Meeting
Provided that such remuneration may include a commission on or percentage of profits but
not a commission on or percentage of turnover.
Article 93
If any Director, being willing and having been called upon to do so, shall hold an executive office in
the Company, shall render or perform extra or special services of any kind, including services on
any committee established by the Directors, or shall travel or reside abroad for any business or
purposes of the Company, he shall be entitled to receive such sum as the Directors may
think fit for expenses, and also such remuneration as the Directors may think fit (but not by way
of commission on or percentage of turnover) and such remuneration may, as the Directors shall
determine, be either in addition to or in substitution for any other remuneration he may be entitled
to receive.
Article 94
The Directors may be paid all travelling, hotel and other expenses properly incurred by them in
attending and returning from meetings of the Directors or any committee of the Directors or
General Meetings of the Company or in connection with the business of the Company.
Article 95
A Director may be or become a director or other officer of, or otherwise interested in, any company
promoted by the Company or in which the Company may be interested as a shareholder or
otherwise, and unless otherwise agreed shall not be accountable for any remuneration or other
benefits received by him as a director or officer of, or by virtue of his interest in, such other
company unless the Company otherwise directs at the time of his appointment. The Directors may
exercise the voting power conferred by the shares or other interest in any such other corporation
held or owned by the Company, or exercisable by them as directors of such other corporation in
such manner and in all respects as they think fit (including the exercise thereof in favour of any
resolution appointing themselves or any of the directors or other officers of such corporation), and
any Director may vote in favour of the exercise of such voting rights in the manner aforesaid,
notwithstanding that he may be, or is about to be appointed a director or other officer of such
corporation and as such is or may become interested in the exercise of such voting rights in the
manner aforesaid.
Article 101
The Directors may from time to time appoint one or more of their body to be Managing Director(s)
(or any equivalent appointment(s) howsoever described) of the Company and may from time to
time (subject to the provisions of any contract between him or them and the Company) remove or
dismiss him or them from office and appoint another or others in his or their places. Where an
appointment is for a fixed term, such term shall not exceed five years. The Directors may vest in
such Managing Director(s) such of the powers hereby vested in the Directors generally as they
may think fit, and such powers may be made exercisable for such period or periods, and upon
such conditions and subject to such restrictions, and generally upon such terms as to
remuneration and otherwise as they may determine. The remuneration of a Managing Director (or
any Director holding an equivalent appointment) may subject to these Articles be by way of salary
or commission or participation in profits, or by any or all of these modes or otherwise as may be
thought expedient but shall not under any circumstances be by way of commission on or a
percentage of the turnover of the Company.
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Article 104(4)
An alternate Director may be reimbursed by the Company such expenses as might properly be
reimbursed to him if he were a Director and he shall be entitled to receive from the Company such
proportion (if any) of the remuneration otherwise payable to his appointer as such appointer 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. A person
shall not act as an alternate Director to more than one Director at the same time.
Article 116
The Directors shall have the power to pay and agree to pay pensions or other retirement,
superannuation, death or disability benefits to or to any person in respect of any Director or exDirector who may hold or have held any executive office or any office of profit under the Company
or any subsidiary company and for the purpose of providing any such pensions or other benefits to
contribute to any scheme or fund or to pay premiums.
Article 127
Any Director may act by himself or his firm in a professional capacity for the Company, and he or
his firm shall be entitled to remuneration for professional services as if he were not a Director,
provided that nothing herein contained shall authorise a Director or his firm to act as Auditor of the
Company.
3.
The following provisions in the Articles of our Company relate to the borrowing powers of
Directors:-
Article 55
The Directors may from time to time at their discretion raise or borrow for the purposes of the
Company, such sums of money as they think proper.
Article 56
Subject as provided in the Articles of Association and to the provisions of the Act, the Directors
may exercise all the powers of the Company to mortgage or charge its undertaking, property and
uncalled capital and to issue debentures, debenture stock, bonds and other securities, whether
outright or as collateral security for any debt, liability or obligation of the Company or of any third
party.
Article 57
Debentures, debenture stock or other securities may be made assignable free from any equities
between the Company and the person to whom the same may be issued.
Article 58
Any debentures, debenture stock, bonds or other securities may be issued at a discount, premium
or otherwise, and with any special privileges as to redemption, surrender, drawings, allotment of
shares, attending and voting at General Meetings of the Company, appointment of Directors and
otherwise.
4.
We do not have any provision in the Articles of our Company relating to the retirement or nonretirement of a director under an age limit requirement. It is however provided in section 153(1) of
the Companies Act that no person of or over the age of 70 years shall be appointed or act as a
director of a public company or of a subsidiary of a public company.
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5.
The following provisions in the Articles of our Company relate to the number of shares required for
Directors’ qualification:-
Article 91
A Director shall not be required to hold any shares in the capital of the Company to qualify to be a
Director. A Director who is not a Member shall be entitled to attend and speak at any General
Meeting.
6.
At present, there is only one class of shares in our Company, namely, ordinary shares.
The following provisions in the Articles of our Company relate to the dividend rights of
Shareholders and rights to share in our Company’s profits:-
Article 130
The Company may by ordinary resolution declare dividends but (without prejudice to the powers of
the Company to pay interest on share capital as hereinbefore provided) no dividend shall be
payable except out of the profits of the Company, or in excess of the amount recommended by the
Directors. The Directors may, if they think fit, from time to time declare and pay to the Members
such interim dividends as appear to them to be justified by the position of the Company.
Article 131
Subject to the provisions hereinafter contained and to the preferential or other special rights for the
time being attached to any preference shares or any other special class of shares, the profits of
the Company which it shall from time to time determine by ordinary resolution to distribute by way
of dividend shall be applied in payment of dividends upon the shares of the Company in proportion
to the amounts paid up or credited as paid up thereon respectively, provided that where capital is
paid up on any shares in advance of calls such capital shall not whilst carrying interest confer a
right to participate in profits.
Article 132
The Company may, upon the recommendation of the Directors, by ordinary resolution direct
payment of a dividend either wholly or in part by the distribution of specific assets and in particular
of paid-up shares or debentures of any other company in any one or more of such ways and the
Directors shall give effect to such resolution. Where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient, and in particular may issue
fractional certificates and fix the value for distribution of such specific assets or any part thereof
and may determine that cash payments shall be made to any Members upon the footing of the
value so fixed, in order to adjust the rights of all Members, and may vest any such specific assets
in trustees upon trust for the Members entitled to the dividend as may seem expedient to the
Directors.
Article 134
No dividend or other moneys payable on or in respect of a share shall bear interest against the
Company.
Article 135
The Directors may deduct from any dividend or other moneys including interests and expenses
payable to any Member on or in respect of a share all sums of money (if any) presently payable by
him to the Company on account of calls or in connection therewith whether such call shall have
been made before or after the declaration of the dividend in question.
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Article 136
The Directors may retain the dividends payable on shares in respect of which any person is under
the provisions as to the transmission of shares hereinbefore contained entitled to become a
Member, or which any person under those provisions is entitled to transfer, until such person shall
become a Member in respect of such shares or shall duly transfer the same.
Article 137
The payment by the Directors of any unclaimed dividend 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
and any dividend unclaimed after a period of six 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.
Article 138
Any dividend, interest or other moneys payable in respect of shares may be paid by cheque or
warrant sent through the post to the registered address appearing in the Register of Members or
(as the case may be) the Depository Register of the member or person entitled thereto, or, if two
or more persons are registered in the Register of Members or (as the case may be) the Depository
Register as joint holders of the shares or are entitled thereto in consequence of the death or
bankruptcy of the holder, to any one of such persons or to such person and such address as such
person or persons may be in writing direct. Every such cheque or warrant shall be made payable
to the order of the person to whom it is sent or to such person as the holder or joint holders or
person or persons entitled to the share in consequence of the death or bankruptcy of the holder
may direct and payment of the cheque shall be a good discharge to the Company. Every such
cheque or warrant shall be sent at the risk of the person entitled to the money represented
thereby. Notwithstanding the provisions of this Article, the payment by the Company to the
Depository of any dividend payable to a Depositor shall, to the extent of the payment made to the
Depository, discharge the Company from any liability to the Depositor in respect of such payment.
Article 139
If two or more persons are registered in the Register of Members or (as the case may be) the
Depository Register as joint holders of any share, or are entitled jointly to a share in consequence
of the death or bankruptcy of the holder, any of them may give effectual receipts for any dividend
or other moneys payable or in respect of the share.
7.
The following provisions in the Articles of our Company relate the voting rights of Shareholders:-
Article 76
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, each Member entitled to vote may vote in person or by proxy or by attorney or in the
case of a corporation by a representative and on a show of hands, shall have one vote and upon a
poll shall have one vote for every share which he holds or represents.
Article 77
Any Member of unsound mind or in respect of whom an order has been made at any court having
jurisdiction in lunacy may vote whether on a show of hands or by poll by his committee, receiver,
curator bonis or other legal curator, and such last mentioned persons may give their votes either
personally, 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 Office not less than fortyeight hours before the time appointed for holding the meeting.
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Article 78
No objection shall be raised as to the qualification of any voter except at the meeting or adjourned
meeting at which the vote objected to is given or tendered, and every vote not disallowed at such
meeting shall be valid for all purposes. Any such objection made in due time shall be referred to
the Chairman of the meeting whose decision shall be final and conclusive.
Article 79
No Member shall be entitled to vote at any General Meeting unless all calls or other sums
presently payable by him in respect of shares in the Company have been paid.
Article 80
On a poll votes may be given either personally or by proxy or by attorney or in the case of a
corporation by its representative, and a person entitled to more than one vote need not use all his
votes or cast all the votes he used in the same way.
Article 81
A proxy, attorney or representative need not be a Member.
Article 82
In the case of joint holders of shares, any one 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, and if more than one of such persons be
present at a meeting, the person whose name stands first on the Register of Members or (as the
case may be) the Depository Register shall alone be entitled to vote. Several executors or
administrators of a deceased Member in whose name any share stands shall for the purposes of
this Article be deemed joint holders thereof.
Article 83
(1)
An instrument appointing a proxy shall be in writing in any usual or common form or in any
other form which the Directors may approve and:(a)
in the case of an individual, shall be signed by the appointor or his attorney; and
(b)
in the case of a corporation, shall be either given under common seal or signed on its
behalf by an attorney or a duly authorised officer of the corporation.
(2)
The signature on such instrument need not be witnessed. Where an instrument appointing
a proxy is signed on behalf of the appointor, (which shall, for purposes of this Article 83(2),
include a Depositor) by an attorney, the letter or power of attorney or a duly certified copy
thereof must (failing previous registration with the Company) be lodged with the instrument
of proxy pursuant to Article 85, failing which the instrument may be treated as invalid.
(3)
The Company shall be entitled and bound, in determining rights to vote and other matters in
respect of a completed instrument of proxy submitted to it, to have regard to the instructions,
(if any), given by and the notes (if any) set out in the instrument of proxy.
Article 84
(1)
A Member may appoint not more than two proxies to attend and vote at the same General
Meeting Provided that if a Member shall nominate two proxies, then the Member shall
specify the proportion of his shares to be represented by each such proxy, failing which the
first named proxy shall be treated as representing 100% of the shareholding and any
second named proxy as an alternate to the first named.
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(2)
A proxy shall be entitled to vote on a show of hands on any matter at a General Meeting.
(3)
An instrument appointing a proxy shall be deemed to confer authority to demand or join in
demanding a poll, to move any resolution or amendment thereto and to speak at a Meeting
and shall, unless the contrary is stated thereon, be valid as well for any adjournment of the
Meeting as for the Meeting to which it relates.
Article 85
An instrument appointing a proxy and, where the instrument of proxy is signed on behalf of the
appointor (which shall, for the purposes of this Article, include a Depositor) by an attorney, the
power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of
that power of authority (failing previous registration with the Company), shall be deposited at the
Office or such other place (if any) as is specified for the purpose in the notice convening the
Meeting not less than forty-eight hours before the time appointed for the time of holding the
Meeting or adjourned Meeting (or in the case of a poll before the time appointed for the taking of
the poll) at which it is to be used and in default shall not be treated as valid.
Article 86
(1)
A Depositor shall only be entitled to attend any General Meeting and to speak and vote
thereat if his name appears on the Depository Register forty-eight hours before the General
Meeting as a Depositor (the “Relevant Time”). The Company shall then be entitled to deem
each such Depositor as holding such number of shares as is entered against such
Depositor’s name in the Depository Register as at the Relevant Time, according to the
records of the Depository as supplied by the Depository to the Company.
(2)
Where the Depositor has appointed a proxy, the Company shall be entitled to deem each
proxy of a Depositor who is to represent the entire shareholding of the Depositor as
representing such number of shares as is entered against such Depositor’s name in the
Depository Register as at the Relevant Time, according to the records of the Depository as
supplied by the Depository to the Company.
(3)
Where the Depositor has appointed two proxies and specified the proportion of his shares
which each proxy is to represent, the Company shall be entitled to apportion such number
of shares as is entered against such Depositor’s name in the Depository Register as at the
Relevant Time, according to the records of the Depository as supplied by the Depository to
the Company, between the two proxies in the same proportion as specified by the Depositor
in appointing the proxies.
(4)
No instrument appointing a proxy of a Depositor shall be rendered invalid merely by reason
of any discrepancy between the Depositor’s shareholding as specified in the instrument of
proxy, or, where the same has been apportioned between two proxies, the aggregate of the
proportions of the Depositor’s shareholding which they are specified to represent, and the
shareholding of a Depositor as appears on the Depository Register forty-eight hours before
the General Meeting.
(5)
The Company shall be entitled to reject an instrument of proxy lodged by any Depositor
whose name does not appear on the Depository Register as at forty-eight hours before the
General Meeting at which the proxy is to act as certified by the Depository to the Company.
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Article 87
A vote given in accordance with the terms of an instrument of proxy (which for the purposes of
these Articles shall also include a Power of Attorney) shall be valid, notwithstanding the previous
death or unsoundness of mind of the principal or revocation of the proxy, or the authority under
which the proxy was executed, or the transfer of the share in respect of which the proxy was
executed, or the transfer of the share in respect of which the proxy is given Provided that no
intimation in writing of such death, insanity, revocation or transfer shall have been received by the
Company at the Office (or at such other place as may be specified for the deposit of instruments
appointing proxies) before the commencement of the meeting or adjourned meeting (or in the case
of a poll before the time appointed for the taking of the poll) at which the proxy is used.
Article 88
Any corporation which is a Member may by resolution of its Directors or other governing body
authorise such person as it thinks fit to act as its representative at any meeting of the Company or
of any class of Members of the Company, and the person so authorised shall be entitled to
exercise the same powers on behalf of such corporation as the corporation could exercise if it
were an individual Member of the Company.
8.
The following provisions in the Articles of our Company relate to the rights of Shareholders to
share in any surplus in the event of liquidation:-
Article 155
(1)
If the Company shall be wound up and the assets available for distribution among the
Members as such shall be insufficient to repay the whole of the paid up capital, such assets
shall be distributed so that as nearly as may be, the losses shall be borne by the Members
in proportion to the capital paid up, or which ought to have been paid up at the
commencement of the winding-up on the share held by them respectively. And if in a
winding-up, the assets available for distribution among the Members shall be more than
sufficient to repay the whole of the capital paid up at the commencement of the winding-up,
the excess shall be distributed among the Members in proportion of the capital, at the
commencement of the winding-up, paid up or which ought to have been paid up on the
shares held by them respectively. But this Article is to be without prejudice to the rights of
the holders of shares issued upon special terms and conditions.
(2)
If the Company shall be wound up (whether the liquidation is voluntary, under supervision,
or by the court) the Liquidator may, with the sanction of a special resolution of the Company
and any other sanction required by the Act, divide among the Members in specie or kind the
whole or any part of the assets of the Company and whether or not the asset shall consist
of property of one kind or shall consist of properties of different kinds, and may for such
purpose set such value as he deems fair upon any one or more class or classes of property
to be divided aforesaid and may determine how such division shall be carried out as
between the Members or different classes of Members. The Liquidator may, with the like
sanction vest any part of the assets in trustees upon such trusts for the benefit of Members
as the Liquidator shall think fit, and the liquidation of the Company may be closed and the
Company dissolved, but so that no contributory shall be compelled to accept any shares in
respect of which there is a liability.
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9.
The following provisions in the Articles of our Company relate to the rights of holders of preference
shares:-
Article 4
(1)
(2)
10.
The rights attached to shares issued upon special conditions shall be clearly defined in the
Memorandum of Association or these Articles. In the event of preference shares being
issued, the total nominal value of issued preference shares shall not at any time exceed the
total nominal value of the issued ordinary shares and 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
must also have the right to attend and vote at any meeting of the Company convened for the
following purposes:(a)
the reduction of capital of the Company; or
(b)
the winding-up of the Company; or
(c)
sanctioning a sale of the undertaking of the Company; or
(d)
any resolution which directly affects any of the rights attaching to the preference
shares; or
(e)
where the dividend on the preference shares is more than six months in arrears.
Subject to Section 70 of the Act, any preference shares may be issued on the terms that
they are, or at the option of the Company are liable, to be redeemed. The Company shall
also have the power to issue further preference shares ranking equally with, or in priority to,
any preference shares already issued.
The following provisions in the Articles of our Company relate to the redemptive provision of
preference shares and the right of our Company to repurchase our own Shares:-
Article 10
Subject to and in accordance with the provisions of the Act and to any other applicable rules,
regulations or legislation, the Company may purchase or otherwise acquire shares issued
(including ordinary or preference shares) in the issued share capital of the Company on such
terms as the Company may think fit and in the manner prescribed by the Act. If required by the
Act, any share which is so purchased or acquired by the Company shall be deemed to be
cancelled immediately on purchase or acquisition by the Company. 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 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 Act or any applicable rules
prescribed by the SGX-ST.
11.
The following provision in the Articles of our Company relates to the procedures required to
change the rights of Shareholders:-
Article 5
(1)
If at any time the share capital of the Company by reason of the issue of preference shares
or otherwise is divided into different classes of shares, the repayment of such preference
capital other than redeemable preference capital, or all or any of the rights and privileges
attached to each class may, subject to the provisions of the Act, be varied modified
commuted abrogated affected or dealt with, either with the consent in writing of the holders
of three-quarters in nominal value of the issued shares of the class or with the sanction of a
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Special Resolution passed at a separate General Meeting of the holders of that class of
shares but not otherwise and may be so repaid varied modified commuted abrogated
affected or dealt with either whilst the Company is a going concern or during or in
contemplation of a winding up. To every such separate General Meeting, the provisions of
these Articles relating to General Meetings of the Company and to proceedings thereat shall
mutatis mutandis apply, but so that the necessary quorum shall be two persons at least
holding or representing by proxy one-third in nominal amount of the issued shares of the
class (but so that if at any adjourned meeting a quorum as above defined is not present, any
two holders of shares of the class present in person or by proxy shall be a quorum) and that
any holder of shares of the class present in person or by proxy may demand a poll, and that
every such holder shall on a poll have one vote for every share of the class held by him.
Provided however that in the event of the necessary majority for such a Special Resolution
not having been obtained in the General Meeting in the manner aforesaid, consent in writing
may be obtained from Members holding at least three-fourths of the issued shares of the
class and such consent, if obtained within two months from the date of the separate General
Meeting, shall have the force and validity of a Special Resolution duly carried by a vote in
person or by proxy. The foregoing provisions of this Article shall apply to the variation or
abrogation of the special rights attached to some only of the shares of any class as if each
group of shares of the class differently treated formed a separate class the special rights of
which are to be varied.
(2)
12.
The rights conferred upon the holders of the shares of any class issued with preferred or
other rights shall not, unless otherwise expressly provided by the terms of issue of that class
of shares be deemed to be varied by the creation or issue of further shares ranking as
regards participation in the profits or assets of the Company in some or all respects pari
passu therewith but in no respect in priority thereto.
The following provisions in the Articles of our Company relate to restrictions on the transferability
of Shares:-
Article 26
Subject to the provisions of these Articles, the Company shall accept for registration all transfers of
legal title in shares effected by written instrument of transfer in the form approved by the SGX-ST.
Article 27
The instrument of transfer of the legal title in any share shall be signed by or on behalf of both the
transferor and the transferee, and be witnessed Provided that an instrument of transfer in respect
of which the transferee is the Depository shall be effective although not signed or witnessed by or
on behalf of the Depository. Notwithstanding the foregoing, the Directors may waive the signing of
an instrument of transfer by the transferee in the case of fully paid shares if in their discretion they
think proper to do so. The transferor shall remain the holder of the share concerned until the name
of the transferee is entered in the Register of Members or, as the case may be, the Depository
Register in respect thereof.
Article 28
The legal title in shares shall not in any circumstances be transferred to any infant, bankrupt or
person of unsound mind.
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Article 29
(1)
There shall be no restriction on the transfer of fully paid shares (except where required by
law or by the rules, bye-laws or listing rules of the SGX-ST) but the Directors may decline to
register the transfer of any share (not being a fully paid share) to a person whom they shall
not approve, and they may also decline to register the transfer of a share on which the
Company has a lien Provided always that in the event of the Directors refusing to register a
transfer of shares, they shall within one month beginning with the day on which the
application for a transfer of shares was made, serve a notice in writing to the transferor, the
transferee and the lodging party, stating the precise reasons and the facts which are
considered to justify the refusal as required by the Act.
(2)
The Directors may also decline to register any instrument of transfer, unless:(a)
the instrument of transfer is duly stamped and such fee, not exceeding Singapore
Dollars two ($2.00) (or such other fee as the Directors may determine having regards
to any limitation thereof as may be prescribed by the SGX-ST) as the Directors may
from time to time require, per transfer is paid to the Company in respect thereof; and
(b)
the instrument of transfer is deposited at the Office or at such other place (if any) as
the Directors may appoint accompanied by the certificates of the shares to which it
relates and such other evidence as the Directors may reasonably require to show the
right of the transferor to make the transfer and if the instrument of transfer is executed
by some other person on his behalf, the authority of the person to so do; and
(c)
the instrument of transfer is in respect of only one class of shares.
(3)
All instruments of transfer which are registered may be retained by the Company, but any
instrument of transfer which the Directors may decline to register shall (except in the case of
fraud) be returned to the person depositing the same.
(4)
The Company shall be entitled to destroy:-
(5)
(a)
all instruments of transfer which have been registered at any time after the expiration
of seven years from the date of registration thereof;
(b)
all dividend mandates and notifications of change of address at any time after the
expiration of seven years from the date of recording thereof; and
(c)
all share certificates which have been cancelled at any time after the expiration of
seven years from the date of the cancellation thereof.
It shall conclusively be presumed in favour of the Company that every entry in the Register
of Members purporting to have been made on the basis of an instrument of transfer or other
document so destroyed was duly and properly made and every instrument of transfer so
destroyed was a valid and effective instrument duly and properly registered and every share
certificate so destroyed was a valid and effective certificate duly and properly cancelled and
every other document hereinbefore mentioned so destroyed was a valid and effective
document in accordance with the recorded particulars thereof in the books or records of the
Company Provided always that:(a)
the provisions aforesaid shall apply only to the destruction of a document in good faith
and without notice of any claim (regardless of the parties thereto) to which the
document might be relevant;
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13.
(b)
nothing herein contained shall be construed as imposing upon the Company any
liability in respect of the destruction of any such document earlier than as aforesaid or
in any other circumstances which would not attach to the Company in the absence of
this Article; and
(c)
references herein to the destruction of any document include references to the
disposal thereof in any manner.
The following provisions in the Articles of our Company relate to limitations on the rights to own
securities:-
Article 3
Subject to the Act and the Articles of Association, no shares may be issued by the Directors
without the prior approval of an Ordinary Resolution of the Company in General Meeting but
subject thereto, and to Articles 52 and 53, and to any special rights attached to any shares for the
time being issued, the Directors may allot (with or without conferring a right of renunciation) or
grant options over or otherwise dispose of the same to such persons on such terms and conditions
and for such consideration and at such time and whether or not subject to the payment of any part
of the amount thereof in cash or otherwise as the Directors may think fit and with full power to give
any person the call of any shares either at par or at premium as the Directors may determine, and
any shares maybe issued with such preferential, deferred, qualified or special rights, privileges,
conditions or restrictions, whether as regards dividend, return of capital, participation in surplus,
voting, conversion or otherwise, as the Directors may think fit, 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 in accordance with the Act Provided
always that no shares shall be issued at a discount or options granted over unissued shares
except in accordance with the Act.
Article 9
(1)
Except as required by law, no person other than the Depository shall be recognised by the
Company as holding any share upon any trust, and the Company shall not be bound by or
be compelled in any way to recognise (even when having notice thereof) any equitable,
contingent, future or partial interest in any share or unit of share or (except only as by these
Articles or by law otherwise provided) any right whatsoever in respect of any share other
than an absolute right to the entirety thereof in the person whose name is entered in the
Register of Members or (as the case may be) the Depository Register.
(2)
No person shall be recognised by the Company as having title to a fractional part of a share
otherwise than as a sole or joint holder of the entirety of such share.
(3)
Subject to the terms and conditions of any application for shares, the Directors shall allot
shares applied for within ten market days of the closing date (or such other period as may
be approved by the SGX-ST) of any such application. The Directors may, at any time after
the allotment of any share but before any person has been entered in the Register of
Members as the holder or (as the case may be) before that share is entered against the
name of a Depositor in the Depository Register, recognise a renunciation thereof by the
allottee in favour of some other person and may accord to any allottee of a share a right to
effect such renunciation upon and subject to such terms and conditions as the Directors
may think fit to impose.
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14.
The following provisions in the Articles of our Company relate to the conditions governing the
changes in the capital:-
Article 50
The Company may in General Meeting alter the conditions of its Memorandum of Association by
Ordinary Resolution:(a)
to consolidate and divide its share capital into shares of larger amount than its existing
shares; or
(b)
to cancel any share or shares which, at the date of passing of the resolution, has or have
not been taken or agreed to be taken by any person and diminish the amount of its capital
by the amount of shares so cancelled; or
(c)
to divide its share capital or any part thereof into shares of smaller amount than is fixed by
its Memorandum of Association by sub-division of its existing shares or any of them, subject
nevertheless to the provisions of the Act, and so that as between the resulting shares, one
or more of such shares may by the resolution by which such sub-division is effected be
given any preference or advantage as regards dividends, capital, voting or otherwise over
the shares or any other of such shares; and
(d)
subject to the provisions of these Articles and the Act, convert any class of shares into any
other class of shares.
Article 51
The Company may by Special Resolution reduce its capital, any capital redemption reserve fund
or any share premium account in any manner authorised and subject to any conditions required by
law.
Article 52
(1)
The Company in General Meeting may from time to time, whether all the shares for the time
being authorised shall have been issued or all the shares for the time being issued shall
have been fully called up or not, increase its share capital by the creation of new shares,
such new capital to be of such amount and to be divided into shares of such respective
amounts as the General Meeting resolving upon such increase directs.
(2)
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 qualified right to dividends and in the
distribution of assets of the Company or otherwise.
Article 53
(1)
Unless otherwise determined by the Company in General Meeting or except as permitted
under the listing rules of the SGX-ST, all new shares shall, before they are issued, be
offered to Members who as at the date of such offer are entitled to receive notices from the
Company of General Meetings in proportion, as far as the circumstances admit, to the
amount of the existing shares to which they are entitled. 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 such time or on the
receipt of an intimation from the person to whom the offer is made that he declines to accept
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the shares offered, the Directors may, subject to these Articles, dispose of the same in such
manner as they think most beneficial to the Company. The Directors may, in like manner
dispose of any new shares which (by reason of the ratio to which the new shares bear to the
shares held by such Members or by reason of any other difficulty in apportioning the same),
cannot in the opinion of the Directors be conveniently offered in the manner hereinbefore
provided.
(2)
Notwithstanding Article 53(1), 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 specified in the Ordinary Resolution to:(a)
(b)
(i)
issue shares in the capital of the Company (“shares”) whether by way of rights,
bonus or otherwise; and/or
(ii)
make or grant Instruments; and
(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,
provided that:(I)
the aggregate number of shares 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) does not exceed 50% (or such other limit as may be
prescribed by the SGX-ST) of the issued share capital of the Company (as calculated
in accordance with sub-paragraph (II) below), of which the aggregate number of
shares issued other than on a pro rata basis to shareholders of the Company
(including shares to be issued pursuance of Instruments made or granted pursuant to
the Ordinary Resolution) does not exceed 20% (or such other limit as may be
prescribed by the SGX-ST) of the issued share capital of the Company (as calculated
in accordance with sub-paragraph (II) below);
(II)
(subject to such manner of calculation as may be prescribed by the SGX-ST) for the
purpose of determining the aggregate number of shares that may be issued under
sub-paragraph (I) above, the percentage of issued share capital shall be based on the
issued share capital of the Company at the time the Ordinary Resolution is passed
after adjusting for:(a)
new shares arising upon the conversion or exercise of any convertible
securities or share options or vesting of share awards which are outstanding or
subsisting at the time that the Ordinary Resolution is passed, provided the
options or awards were granted in compliance with Part VIII of Chapter 8 of the
Listing Manual of the SGX-ST; and
(b)
any subsequent consolidation or subdivision of shares;
(III)
in exercising the authority conferred by the Ordinary Resolution, the Company shall
comply with the provisions of the Listing Manual of the SGX-ST for the time being in
force (unless such compliance is waived by the SGX-ST) and these Articles; and
(IV)
(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 of the Company next following the passing of the Ordinary
Resolution, or the date by which such Annual General Meeting of the Company is
required by law to be held, or the expiration of such other period as may be
prescribed by the Act (whichever is the earliest).
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15.
The following provisions in the Articles of our Company relate to the right of our Shareholders to
receive notices from our Group:-
Article 149
A notice or any other document may be served by the Company upon any Member either
personally or by sending it through the post in a prepaid letter addressed to such Member at his
registered address as appearing in the Register of Members or (as the case may be) the
Depository Register.
Article 150
All notices directed to be given to the Members shall, with respect to any share to which persons
are jointly entitled, be given to whichever of such persons is named first in the Register of
Members or (as the case may be) the Depository Register with a registered address within
Singapore, and any notice so given shall be sufficient notice to all the joint holders of such share.
For such purposes, a joint holder having no registered address and not having supplied an
address within the Republic of Singapore for the service of notices shall be disregarded.
Article 151
Any Member described in the Register of Members or (as the case may be) the Depository
Register by an address not within the Republic of Singapore who shall from time to time give the
Company an address within the Republic of Singapore at which notices may be served upon him,
shall be entitled to have served upon at such address any notice to which he is entitled under
these Articles.
Article 152
Notwithstanding Article 151, a Member who (having no registered address within Singapore) has
not supplied to the Company or (as the case may be) the Depository an address within Singapore
for the service of notices shall not be entitled to receive notices from the Company.
Article 153
A person entitled to a share in consequence of the death or bankruptcy of a member, upon
supplying to the Company such evidence as the Directors may think necessary to show his title to
the share and upon supplying also to the Company or (as the case may be) the Depository an
address within Singapore for the service of notices, shall be entitled to be served upon him at such
address any notice or document to which the Member but for his death or bankruptcy would be
entitled, and such service shall for all purposes be deemed a sufficient service of such notice or
document on all persons interested (whether jointly with or as claiming through or under him) in
the share. Save as aforesaid, any notice or document delivered or sent by post to or left at the
registered address of any Member in pursuance of these Articles shall, notwithstanding that such
Member be then dead or bankrupt, and whether or not the Company has notice of his death or
bankruptcy, be deemed to have been duly served in respect of any share registered in the
name of such Member in the Register of Members or where such Member is a Depositor, entered
against his name in the Depository Register as sole or joint holder.
16.
There is no limitation on the right to own shares or vote on shares imposed by Singapore law or in
the Articles of our Company on any potential shareholders who are regarded as foreigners or nonresidents of Singapore.
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APPENDIX C – DESCRIPTION OF ORDINARY SHARES
DESCRIPTION OF SINGAPORE COMPANY LAW RELATING TO SHARES
The following statements are brief summaries of our capital structure and of the more important rights
and privileges of our Shareholders as conferred by the laws of Singapore and the Articles of our
Company. These statements summarise the material provisions of our Articles but are qualified in
entirety by reference to our Articles, a copy of which will be available for inspection at our office during
normal business hours for a period of six months from the date of registration of this Prospectus.
Shares
There is no founder, 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. As at the date of this Prospectus, 75,213,400 Shares have been issued
and are fully paid. All of our Shares are in registered form. Fully-paid Shares are not subject to any
further capital calls by our Company. We may, subject to the provisions of the Companies Act and the
rules of the SGX-ST, purchase our own Shares. However, we may not, except in circumstances
permitted by the Companies Act, grant any financial assistance for the acquisition or proposed
acquisition of our own Shares.
The rights and privileges of our Shares are stated in our Articles.
New Shares
New Shares may only be issued with the prior approval of our Shareholders in a general meeting. The
aggregate number of Shares to be issued pursuant to such approval may not exceed 50% (or such other
limit as may be prescribed by the SGX-ST) of our issued share capital, of which the aggregate number of
Shares to be issued other than on a pro-rata basis to our Shareholders may not exceed 20% (or such
other limit as may be prescribed by the SGX-ST) of our issued share capital. The approval, if granted,
shall remain in force until (a) the conclusion of the first annual general meeting following the passing of
the resolution at which time it shall lapse unless, by ordinary resolution passed at that meeting, that
mandate is renewed, either unconditionally or subject to conditions or (b) it is revoked or varied by
ordinary resolution of our Shareholders in general meeting, whichever occurs first.
Our Articles provide that we may issue shares of a different class with preferential, deferred, qualified or
special rights, privileges, conditions or restrictions as our Board may think fit and may issue preference
shares which are, or at our option are, redeemable, the terms and manner of redemption being
determined by our Directors in accordance with the Act. Our Board may issue Shares at a premium. If
Shares are issued at a premium, a sum equal to the aggregate amount or value of the premium will,
subject to certain exceptions, be transferred to a share premium account.
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 fit.
Shareholders
Only persons who are registered in our Register of Shareholders 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
our Shares, are recognised as our Shareholders.
We will not, except as required by the 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. We may
close our register of Shareholders for any time or times if we provide the Accounting and Corporate
Regulatory Authority at least 14 days’ notice and the SGX-ST at least ten clear market days’ notice.
However, the register may not be closed for more than 30 days in aggregate in any calendar year. We
typically close the register to determine our Shareholders’ entitlement to receive dividends and other
distributions.
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Transfer of Shares
There is no restriction on the transfer of fully-paid Shares except where required by law or the listing
rules or the rules or by-laws of SGX-ST. Our Board may decline to register any transfer of Shares which
are not fully-paid to a person whom they shall not approve, and they may also decline to register the
transfer of a Share on which we have a lien. Shares may be transferred by a duly signed instrument of
transfer in a form approved by SGX-ST. 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 certificate and such other evidence of title as they may reasonably require. We will
replace lost or destroyed certificates for Shares on such evidence being produced and a letter of
indemnity (if required) being given by the shareholder, transferee, person entitled or purchaser and the
applicant pays a fee which will not exceed $2 for each share certificate.
General Meetings of Shareholders
We are required to hold an annual general meeting every year. Our Board may convene an
extraordinary general meeting whenever it thinks fit and must do so if our Shareholders representing not
less than 10% of the total voting rights of all our Shareholders request in writing that such a meeting be
held. In addition, two or more of our Shareholders holding not less than 10% of our issued share capital
may call for an extraordinary general meeting. Unless otherwise required by law or by our Articles, voting
at general meetings is by ordinary resolution, requiring an affirmative vote of a simple majority of the
votes cast at that meeting. An ordinary resolution suffices, for example, for the appointment of Directors.
A special resolution, requiring the affirmative 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 our
Memorandum of Association and Articles, a change of our corporate name and a reduction in our share
capital, share premium account or capital redemption reserve fund. We 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
each of our Shareholders who are entitled to receive notices from the Company and at least 14 days
notice of such meeting shall be given by advertisement in the daily press and in writing to the SGX-ST.
Every notice of calling a General Meeting must specify 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 holder of Shares is entitled to attend, speak and vote at any general meeting, in person or by proxy. A
proxy need not be a Shareholder. A person who holds 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. Two or more
Shareholders must be present in person or by proxy to constitute a quorum for any business to be
transacted at any general meeting. Under our Articles, a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is demanded. Every Shareholder present in person or by proxy
shall have one vote on a show of hands and on a poll, shall be entitled to one vote for every Share which
he or she holds or represents. A poll may be demanded in certain circumstances, for example, by the
Chairman of the meeting or by any Shareholder present in person or by proxy and representing not less
than one tenth of the total voting rights of all Shareholders having the rights to attend and vote at the
meeting or by any two or more Shareholders present in person or by proxy and entitled to vote.
Dividends
We may, by ordinary resolution of our Shareholders, declare dividends at a general meeting, but we may
not pay dividends in excess of the amount recommended by our Board. We must pay all dividends out of
our profits; however, we may capitalise our share premium account and / or our capital redemption
reserve fund to be appropriated in pro-rata to our Shareholders in the form of fully paid up Shares. See
“Bonus and Rights Issue” below. Our Board may also declare interim dividends without the approval of
our Shareholders. All dividends are paid pro-rata amongst our Shareholders in proportion to the amount
paid-up on each Shareholder’s Shares, unless the rights attached to an issue of any Shares provide
otherwise. Unless otherwise directed, dividends are paid by cheque or warrant sent through the post to
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each Shareholder at his registered address appearing in the Register of Members or (as the case may
be) the depository register. Notwithstanding the foregoing, the payment by us 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 us from any liability to that Shareholder in respect of that payment.
Bonus and Rights Issue
Our Board may, with the approval of our Shareholders at a general meeting, capitalise any reserves or
profits (including profits or moneys carried and standing to any capital redemption reserve or to the share
premium account) 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 the
Shareholders in proportion to their shareholdings. Such rights are subject to any conditions attached to
such issue and the rules and regulations of the SGX-ST.
Variation of Rights
Under our Articles, the rights attached to any class of shares may, subject to the provisions of the
Companies Act, be varied or abrogated or with the sanction of a special resolution passed at a separate
general meeting of the holders of the shares of that class but not otherwise. The quorum for such
separate general meeting is two persons at least holding or representing by proxy one-third in nominal
value of the issued shares of that class. Any holder of shares of that class may demand a poll and every
such holder shall on a poll have one vote for every share of that class held by him. Where the necessary
majority for a special resolution is not obtained at such general meeting, consent in writing from the
holders of three quarters in nominal value of the issued shares of that class obtained within two months
of such general meeting shall be as valid and effectual as a special resolution carried at such general
meeting.
Takeovers
From 1 January 2002, a revised Singapore Code on Take-overs and Mergers (“Revised Take-over Code”)
issued by the Monetary Authority of Singapore pursuant to Section 321 of the Securities and Futures Act
has come into effect. The Securities and Future Act and the Revised Take-over Code regulate the
acquisition of ordinary shares of public companies and contain certain provisions that may delay, deter or
prevent a future takeover or change in control of our Company. Under the Revised Take-over Code, any
person acquiring an interest, either on his own or together with persons acting in concert with him, in
30% or more of our voting Shares must extend a takeover offer for the remaining voting Shares in
accordance with the provisions of the Revised Take-over Code. In addition, a mandatory takeover offer is
also required to be made if a person holding, either on his own or together with persons acting in concert
with him, between 30% and 50% of the voting Shares acquires, either on his own and/or together with
persons acting in concert with him, additional voting Shares representing more than 1% of the voting
shares in any six month period. Under the Revised 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)
a company;
(ii)
the parent company of (i);
(iii)
the subsidiaries of (i);
(iv)
the fellow subsidiaries of (i);
(v)
the associated companies of any of (i), (ii), (iii) or (iv); and
(vi)
companies whose associated companies include any of (i), (ii) (iii), (iv) or (v);
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(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);
(c)
a company with any of its pension funds and employee share schemes;
(d)
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;
(e)
a financial 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
(ii)
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 customer’s
equity share capital;
(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 fide offer for their company may be imminent;
(g)
partners; and
(h)
the following persons and entities:(i)
an individual;
(ii)
the close relatives of (i);
(iii)
the related trusts of (i);
(iv)
any person who is accustomed to act in accordance with the instructions of (i); and
(v)
companies controlled by any of (i), (ii), (iii), or (iv).
Under the Revised 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 with the offeror within the preceding six months.
Liquidation or Other Return of Capital
If we liquidate or in the event of any other return of capital, holders of our 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
officers shall be entitled to be indemnified by us 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
officer, Director or employee and in which judgement 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. We may not indemnify our Directors and officers 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 us.
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Limitations on Rights to Hold or Vote on our Shares
Except as described in “Voting Rights” and “Takeovers” above, there are no limitations imposed by
Singapore law or by our Articles on the rights of non-resident Shareholders to hold or vote on 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 of our Shareholders, as they think fit 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, including the
applicant; or
(b)
an action is taken, or threaten to be taken by us, or our Shareholders’ resolution is passed, or
propose to be passed, which unfairly discriminates against, or is otherwise prejudicial to, one or
more of our Shareholders, including the applicant.
Singapore courts have a wide discretion as to the remedies and relieves they may grant and those
relieves are not limited to those listed in the Companies Act. For example, Singapore courts may grant
order(s) that:(i)
direct or prohibit any act or cancel or vary any transaction or resolution;
(ii)
regulate the conduct or our affairs in the future;
(iii)
authorise civil proceedings to be brought in our name, or on our behalf, by a person or persons
and on such terms as the court may direct;
(iv)
provide for the purchase of minority Shareholder’s Shares by our other Shareholders or by us and
in the case of a purchase of Shares by our Company, provide for a reduction accordingly of our
Company’s capital;
(vi)
alter or add to any of our Memorandum of Association or Articles of Association; or
(vii)
provide that our Company be wound up.
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APPENDIX D – RULES OF SELECT EMPLOYEE SHARE OPTION SCHEME
1.
NAME OF THIS SCHEME
This Scheme shall be called the “Select Employee Share Option Scheme”.
2.
DEFINITIONS
2.1
In this Scheme, unless the context otherwise requires, the following words and expressions shall
have the following meanings:“Act”
:
The Companies Act (Chapter 50) of Singapore, as
amended, modified or supplemented from time to time.
“Adoption Date”
:
The date on which this Scheme is adopted by the Company
in general meeting.
“Aggregate Subscription Cost”
:
The total amount payable for Shares which may be
acquired on the exercise of an Option.
“Associate”
:
Shall bear the meaning ascribed to it by the Listing Manual
of the SGX-ST (as amended, modified or supplemented
from time to time).
“Auditors”
:
The auditors of the Company for the time being.
“Board”
:
The board of Directors of the Company.
“CDP”
:
The Central Depository (Pte) Limited.
“Committee”
:
A committee comprising Directors of the Company duly
authorised and appointed by the Board pursuant to the
Rules to administer this Scheme.
“Company” or “Select Catering”
:
Select Catering Services Limited, a company incorporated
in the Republic of Singapore.
“control”
:
The capacity to dominate decision-making, directly or
indirectly, in relation to the financial and operating policies
of the Company.
“Controlling Shareholder”
:
A shareholder who:(a)
holds directly or indirectly 15% or more of the issued
share capital of the Company; or
(b)
in fact exercises control over the Company.
“CPF”
:
Central Provident Fund.
“Date of Grant”
:
In relation to an Option, the date on which the Option is
granted pursuant to Rule 6.
“Director”
:
A person holding office as a director for the time being of
the Company and/or its Subsidiaries, as the case may be.
“Employee”
:
An employee of the Group (including any Group Executive
Director and any employee holding a non-managerial
position), selected by the Committee to participate in this
Scheme in accordance with Rule 4.1.
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“Exercise Period”
:
Subject as provided in Rules 8 and 9, the period for the
exercise of an Option, being a period commencing:(1)
in the case of a Market Price Option granted to an
Employee, a period commencing after the first
anniversary of the Date of Grant and expiring on the
tenth anniversary of such Date of Grant, or such
other period determined by the Committee; and
(2)
in the case of a Market Price Option granted to a
Non-executive Director or an Independent Director, a
period commencing after the first anniversary of the
Date of Grant and expiring on the fifth anniversary of
such Date of Grant, or such other period determined
by the Committee,
Provided that in the case of an Incentive Option, such
Option may not be exercised before the second anniversary
of the Date of Grant.
“Exercise Price”
:
The price at which a Participant shall subscribe for each
Share upon the exercise of an Option which shall be the
price as determined in accordance with Rule 7.1, as
adjusted in accordance with Rule 11.
“Grantee”
:
The person to whom an offer of an Option is made.
“Group”
:
The Company and its Subsidiaries for the time being.
“Group Executive Director”
:
A Director who performs an executive function within the
Group.
“Incentive Options”
:
An Option granted with the Exercise Price set at a discount
to the Market Price.
“Independent Director”
:
An independent Director for the time being of the Company
and/or its Subsidiaries, as the case may be.
“Market Day”
:
A day on which the Stock Exchange is open for trading in
securities.
“Market Price”
:
A price equal to the average of the last dealt prices for the
Shares on the Stock Exchange over the five consecutive
Trading Days immediately preceding the Date of Grant of
that Option, as determined by the Committee by reference
to the daily official list or any other publication published by
the Stock Exchange, rounded to the nearest whole cent in
the event of fractional prices.
“Market Price Option”
:
An Option granted with the Exercise Price set at the Market
Price.
“Non-executive Director”
:
A Director of the Company and/or its Subsidiaries, as the
case may be, but not a Group Executive Director or an
Independent Director.
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“Offer”
:
The Company’s offer to a Selected Employee, a Nonexecutive Director or an Independent Director of an Option
to subscribe for Shares under this Scheme.
“Option”
:
The right to subscribe for Shares granted or to be granted
to a Selected Employee, a Non-executive Director or an
Independent Director pursuant to this Scheme and for the
time being subsisting.
“Participant”
:
The holder of an Option.
“Record Date”
:
The date fixed by the Company for the purposes of
determining entitlements to dividends, rights, allotments or
other distributions to or rights of holders of Shares.
“Rules”
:
The rules of the Select Employee Share Option Scheme
and any reference to a particular Rule shall be construed
accordingly.
“Scheme”
:
The Select Employee Share Option Scheme, as the same
may be modified or altered from time to time pursuant to
the terms and conditions set out herein.
“Securities Account”
:
The securities account maintained by a Depositor with CDP.
“Selected Employee”
:
An Employee eligible under Rule 4 and who has been
selected by the Committee for the purposes of making an
Offer.
“Shareholders”
:
The registered holders of Shares, 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.
“Shares”
:
Fully-paid ordinary shares of par value $0.045 (or such
other par value) each in the capital of the Company.
“Stock Exchange” or “SGX-ST”
:
The Singapore Exchange Securities Trading Limited.
“Subsidiaries”
:
The subsidiaries of a company (as defined in Section 5 of
the Act) and “Subsidiary” shall be construed accordingly.
“Trading Day”
:
A day on which the Shares are traded on the Stock
Exchange.
“%” or “per cent.”
:
Percentage or per centum.
“S$”, “$” and “cents”
:
Singapore dollars and cents respectively.
The terms “Depositor” and “Depository Agent” shall have the meanings ascribed to them
respectively by Section 130A of the Act.
Words importing the singular number shall, where applicable, include the plural number and vice
versa. Words importing the masculine gender shall, where applicable, include the feminine and
neuter genders.
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2.4
Any reference to a time of a day in this Scheme is a reference to Singapore time.
2.5
Any reference in this Scheme to any enactment is a reference to that enactment as for the time
being amended or re-enacted. Any word defined under the Act or any statutory modification
thereof and used in this Scheme shall have the meaning assigned to it under the Act.
3.
OBJECTIVES OF THIS SCHEME
This Scheme is a share incentive plan. This Scheme is proposed on the basis that it is important
to retain staff whose contributions are essential to the well-being and prosperity of the Group and
to give recognition to outstanding Employees, Non-executive Directors and Independent Directors
who have contributed to the growth of the Group. This Scheme will give Participants an
opportunity to have a personal equity interest in the Company and will help to achieve the
following positive objectives:(a)
the motivation of each Participant to optimise his performance standards and efficiency and
to maintain a high level of contribution to the Group;
(b)
the retention of key Employees and Directors whose contributions are essential to the longterm growth and profitability of the Group;
(c)
to instil loyalty to, and a stronger identification by the Participants with the long-term
prosperity of the Group;
(d)
to attract potential employees with relevant skills to contribute to the Group and to create
value for the Shareholders; and
(f)
to align the interests of the Participants with the interests of Shareholders.
4.
ELIGIBILITY OF PARTICIPANTS
4.1
An Employee’s eligibility to participate in this Scheme shall be at the absolute discretion of the
Committee, which would be exercised judiciously, and in addition, such person must:(i)
be confirmed in his/her employment with the Company or any Subsidiary and not be on
probation and have been in the full time service of the Company or any Subsidiary for at
least 6 months on or prior to the Date of Grant;
(ii)
have attained the age of 21 years on or before the Date of Grant; and
(iii)
not be an undischarged bankrupt and must not have entered into a composition with his
creditors.
4.2
Non-executive Directors and Independent Directors who satisfy the eligibility requirements in Rule
4.1(ii) and (iii) and who have been a director of the Company or any Subsidiary for at least 12
months on or prior to the Date of Grant shall also be eligible to participate in this Scheme.
4.3
Persons who are Controlling Shareholders or their Associates shall, notwithstanding that they
meet the requirements in Rule 4.1 (i), (ii) and (iii), not be entitled to participate in this Scheme.
4.4
Participants of this Scheme shall be eligible to participate in other share option schemes
implemented by any other company if approved by the Committee.
4.5
Subject to the Act and any requirement of the Stock Exchange, the terms of eligibility for
participation in this Scheme may be amended from time to time at the absolute discretion of the
Committee, which would be exercised judiciously.
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5.
LIMITATION ON THE SIZE OF THIS SCHEME
5.1
The aggregate nominal amount of new Shares in respect of which Options may be granted by the
Committee, on any date, when added to the number of Shares issued and issuable in respect of
(a) all Options granted under this Scheme, and (b) all awards granted under any other share
option, share incentive, performance share or restricted share plan implemented by the Company
and for the time being in force, shall not exceed 15% of the issued share capital of the Company
on the day preceding that date. The Options which have already been granted shall not be
invalidated in the event that a reduction of the Company’s capital or a buy back of its Shares
results in the Shares issuable under outstanding Options exceeding 15% of the Company’s issued
share capital.
5.2
Subject to Rule 5.1, the aggregate number of Shares in respect of which Options may be offered
to a Grantee for subscription in accordance with this Scheme shall be determined at the discretion
of the Committee, which would be exercised judiciously, who shall take into account criteria such
as the rank and responsibilities within the Group, performance, years of service/appointment and
potential for future development of the Grantee and the performance of the Group.
6.
GRANT AND ACCEPTANCE OF OPTIONS
6.1
Subject to Rule 11, the Committee may grant Options at any time during the period when this
Scheme is in force, except that no Offers shall be made during the period of 30 days immediately
preceding the date the Company announces its interim and/or final results (whichever the case
may be) provided that in the event of the Company announcing any matter of an exceptional
nature involving unpublished price sensitive information (“Exceptional Announcements”), Offers
may only be made on or after the third Market Day on which such Exceptional Announcement is
released.
6.2
The Letter of Offer to grant an Option shall be in, or substantially in, the form set out in Schedule
A, subject to such modification as the Committee may from time to time determine.
6.3
An Option shall be personal to the Participant to whom it is granted and shall not be transferred
(other than to a Participant’s personal representative on the death of that Participant), charged,
assigned, pledged or otherwise disposed of, in whole or in part, except with the prior approval of
the Committee.
6.4
An Option granted to a Grantee by the Committee under this Rule 6 shall be accepted by the
Grantee within 30 days from the Date of Grant of that Option and, in any event, not later than 5.00
p.m. on the 30th day from such Date of Grant by completing, signing and returning the Acceptance
Form in or substantially in the form set out in Schedule B, subject to such modification as the
Committee may from time to time determine, accompanied by the payment of S$1.00 as
consideration. The Grantee must accept or refuse the whole or any part of the Offer. The
Committee shall within 15 Market Days of receipt of the Acceptance Form and consideration
thereof, acknowledge receipt of the same.
6.5
Offers shall automatically cease and lapse forthwith and become null and void and of no effect
and shall no longer be available for acceptance in the following events:(i)
the Offer is not accepted within the time stated therein;
(ii)
the death of the Grantee prior to his acceptance of the Offer;
(iii)
the Grantee ceases to be in the employment of the Group or to be a Director, in each case,
for any reason whatsoever prior to his acceptance of the Offer;
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(iv)
the Grantee is adjudicated a bankrupt or enters into composition with his creditors prior to
his acceptance of the Offer; or
(v)
the liquidation or winding-up of the Company prior to the Grantee’s acceptance of the
Option.
6.6
Failure by the Grantee to complete the Company’s prescribed Acceptance Form in accordance
with its requirements may render invalid the Grantee’s acceptance of an Offer. Any Acceptance
Form received after the closing date shall not be valid. The Offer is deemed not accepted until
actual receipt by the Company of the Acceptance Form.
6.7
The Company shall be entitled to reject any purported acceptance of a grant of an Option made
pursuant to this Rule 6 which does not comply strictly with the terms of this Scheme.
6.8
In the event that a grant of an Option results in a contravention of any applicable law or regulation,
such grant shall be null and void and of no effect and the relevant Participant shall have no claim
whatsoever against the Company.
7.
EXERCISE PRICE
7.1
Subject to any adjustment pursuant to Rule 11, the Exercise Price for each Share in respect of
which an Option is exercisable shall be determined by the Committee, in its absolute discretion,
on the Date of Grant, at:(a)
a price equal to the Market Price; or
(b)
a price which is set at a discount to the Market Price, provided that:(i)
the maximum discount shall not exceed 20% of the Market Price (or such other
percentage or amount as may be determined by the Committee and permitted by the
Stock Exchange);
(ii)
the Shareholders in general meeting shall be authorised in a separate resolution, to
make offers and grants of Options under this Scheme at a discount not exceeding
the maximum discount as aforesaid;
(iii)
the Committee shall exercise any decision to offer Options with an Exercise Price set
at a discount in good faith and only when circumstances require; and
(iv)
if and only if the Committee verily believes that the discount and the quantum thereof
would be in furtherance of the core objectives of this Scheme and would be in the
best interests of the Company and the prevailing market conditions. In making any
determination as to the actual discount applicable to any Option, the Committee shall
take into account such criteria as the Committee may, in its absolute discretion, deem
appropriate, including but not limited to:(aa)
the performance of the Company and its Subsidiaries, on the basis of the
Group’s sales, turnover, profit and/or any other financial parameters as the
Committee may, in its absolute discretion, deem appropriate;
(bb)
the years of service and individual performance of the Participant, his
effectiveness and contribution to the success and development of the Group;
(cc)
the potential for future development of the Participant and his potential
contribution to the success and development of the Group in the future; and/or
(dd)
the prevailing market conditions.
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7.2
The Exercise Price shall in no event be less than the nominal value of a Share.
8.
RIGHTS TO EXERCISE OPTIONS
8.1
Options granted with the Exercise Price set at Market Price shall only be exercisable, in whole or
in part (provided that an Option may be exercised in part only in respect of 1,000 Shares or any
multiple thereof), by a Participant after the first anniversary of the Date of Grant of that Option,
Provided always that the Options granted to Employees shall be exercised before the tenth
anniversary of the relevant Date of Grant and Options granted to Non-executive Directors and
Independent Directors shall be exercised before the fifth anniversary of the relevant Date of Grant,
or such earlier date as may be determined by the Committee, failing which all unexercised
Options shall immediately lapse and become null and void and a Participant shall have no claims
against the Company.
8.2
Options granted with the Exercise Price set at a discount to Market Price shall only be
exercisable, in whole or in part (provided that an Option may be exercised in part only in respect
of 1,000 Shares or any multiple thereof), by a Participant after the second anniversary of the Date
of Grant of that Option, Provided always that the Options granted to Employees shall be exercised
before the tenth anniversary of the relevant Date of Grant and Options granted to Non-executive
Directors and Independent Directors shall be exercised before the fifth anniversary of the relevant
unexercised Options shall immediately lapse and become null and void and a Participant shall
have no claims against the Company.
8.3
An Option shall, to the extent unexercised, immediately lapse without any claim whatsoever
against the Company:(a)
upon the expiry of the Exercise Period;
(b)
in the event of misconduct on the part of the Participant as determined by the Committee in
its absolute discretion or any breach of any regulation of the Company or the Group, such
breach being regarded as serious by the Committee in its absolute discretion;
(c)
subject to Rule 8.4, upon the Participant ceasing at any time to be in the employment of
any member of the Group, for any reason whatsoever;
(d)
upon the bankruptcy of the Participant or the happening of any other event which results in
his being deprived of the legal or beneficial ownership of an Option; or
(e)
upon the company by which he is employed ceasing to be a company within the Group, or
the undertaking or part of the undertaking of such company being transferred otherwise
than to another company within the Group.
For the purpose of Rule 8.3(c), the Participant shall be deemed to have ceased to be so
employed as of the last day of his employment.
For avoidance of doubt, no Option shall lapse pursuant to Rule 8.3(c) in the event of any transfer
of employment of a Participant between the Group.
8.4
In any of the following events, namely:(a)
where the Participant ceases at any time to be in the employment of any member of the
Group by reason of:(i)
ill health, injury or disability (in each case, evidenced to the satisfaction of the
Committee);
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(b)
(ii)
redundancy;
(iii)
retirement at or after the legal retirement age;
(iv)
retirement before the legal retirement age with the consent of the Committee; or
any other event approved in writing by the Committee,
the Participant may exercise any Option during the periods specified in Rule 8.5.
8.5
8.6
In respect of Rule 8.4, the Options may be exercised:(a)
in the case where the cessation of employment or cessation to be a Director, as the case
may be, occurs after the first day of the Exercise Period in respect of such Option, within
the period of 18 months after the date of such cessation of employment or such cessation
to be a Director, as the case may be, or before the expiry of the Exercise Period in respect
of that Option, whichever is earlier, and upon expiry of such period, the Option shall lapse;
and
(b)
in the case where the cessation of employment or cessation to be a Director, as the case
may be, occurs before the first day of the Exercise Period in respect of such Option, within
the period of 18 months after the first day of the Exercise Period in respect of that Option,
and upon expiry of such period, the Option shall lapse.
If a Participant dies, whether or not while still in the employment of any of the Group and at the
date of his death holds any unexercised Option, such Option shall continue to be exercisable by
the duly appointed personal representatives of the Participant:(a)
in the case where death occurs after the first day of the Exercise Period in respect of such
Option, within the period of 18 months after the date of such death or before the expiry of
the Exercise Period in respect of that Option, whichever is earlier, and upon expiry of such
period, the Option shall lapse; and
(b)
in the case where the death occurs before the first day of the Exercise Period in respect of
such Option, within the period of 18 months after the first day of the Exercise Period in
respect of that Option, and upon expiry of such period, the Option shall lapse.
9.
TAKE-OVER AND WINDING-UP OF THE COMPANY
9.1
Notwithstanding Rule 8 but subject to Rule 9.5, in the event of a take-over being made for the
Shares, a Participant shall be entitled to exercise any Option held by him and as yet unexercised,
in respect of such number of Shares comprised in that Option as may be determined by the
Committee in its absolute discretion, in the period commencing on the date on which such offer 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 six months thereafter, unless prior to the expiry of such six-month period, at
the recommendation of the offeror and with the approvals of the Committee and the Stock
Exchange, such expiry date is extended to a later date (in either case, being a date falling
not later than the expiry of the Exercise Period relating thereto); or
(b)
the date of expiry of the Exercise Period relating thereto,
whereupon the Option then remaining unexercised shall lapse.
D-8
Provided that if during such period, the offeror becomes entitled or bound to exercise rights of
compulsory acquisition under the provisions of the Act and, being entitled to do so, gives notice to
the Participants that it intends to exercise such rights on a specified date, the Option shall remain
exercisable by the Participant until the expiry of such specified date or the expiry of the Exercise
Period relating thereto, whichever is earlier. Any Option not so exercised shall lapse provided that
the rights of acquisition or obligations to acquire shall have been exercised or performed, as the
case may be. If such rights or obligations have not been exercised or performed, the Option shall,
notwithstanding Rule 8, remain exercisable until the expiry of the Exercise Period relating thereto.
For the avoidance of doubt, the provisions of Rule 9.1 shall not come into operation in the event
that a take-over offer which is conditional does not become or is not declared to be unconditional.
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 shall be entitled,
notwithstanding Rule 8 but subject to Rule 9.5, to exercise any Option then held by him, in respect
of such number of Shares comprised in that Option as may be determined by the Committee in its
absolute discretion, 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 (but
not after the expiry of the Exercise Period relating thereto), whereupon the Option shall lapse and
become null and void.
9.3
If an order is made for the winding-up of the Company on the basis of its insolvency, all Options,
to the extent unexercised, shall lapse and become null and void.
9.4
In the event a notice is given by the Company to its members to convene a general meeting for
the purposes of considering and, if thought it, approving a resolution to voluntarily wind-up the
Company, the Company shall on the same date as or soon after it despatches such notice to
each member of the Company give notice thereof to all Participants (together with a notice of the
existence of the provision of this Rule 9.4) and thereupon, each Participant (or his personal
representative) shall be entitled to exercise all or any of his Options at any time not later than two
business days prior to the proposed general meeting of the Company by giving notice in writing to
the Company, accompanied by a remittance for the Aggregate Subscription Cost whereupon the
Company shall as soon as possible and in any event, no later than the business day immediately
prior to the date of the proposed general meeting referred to above, allot the relevant Shares to
the Participant credited as fully-paid.
9.5
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
confirmed 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 continuation of their Options or
the payment of cash or the grant of other options or otherwise, a Participant holding an Option, as
yet not exercised, may not, at the discretion of the Committee, be permitted to exercise that
Option as provided for in this Rule 9.
9.6
To the extent that an Option is not exercised within the periods referred to in this Rule 9, it shall
lapse and become null and void.
D-9
10.
EXERCISE OF OPTIONS, ALLOTMENT AND LISTING OF SHARES AND NON-EXERCISE OF
OPTIONS IN CERTAIN SITUATIONS
(A)
Exercise of Options, Allotment and Listing of Shares
10.1
Subject to Rules 8.1 and 8.2, an Option may be exercised, in whole or in part, by a Participant
giving notice in writing to the Company in or substantially in the form set out in Schedule C,
subject to such modification as the Committee may make from time to time determine. Such
notice must be accompanied by payment for the Aggregate Subscription Cost in respect of the
Shares for which that Option is exercised, the relevant Depository Charges (as defined in Rule
18.1) and such other documentation as the Committee may require. An Option shall be deemed to
be exercised upon receipt by the Company of the said notice, duly completed, and the Aggregate
Subscription Cost, the relevant Depository Charges and such other documentation as the
Committee may require. All payments pursuant to this Rule shall be made by cheque, cashier’s
order, banker’s draft or postal order made out in favour of the Company or such other mode of
payment as may be acceptable to the Company.
10.2
Subject to such consents or other required action of any competent authority under any
regulations or enactment for the time being in force as may be necessary and subject to the
compliance with the terms of this Scheme and the Memorandum and Articles of the Company, the
Company shall, within ten Market Days after the exercise of an Option, allot and issue the relevant
Shares and within five Market Days after the date of such allotment and issue, despatch to CDP
the relevant share certificates by ordinary post or such other mode as the Committee may deem
fit.
The Company shall, as soon as practicable after such allotment and issue, apply to the Stock
Exchange for the permission to deal in, and for quotation of, such Shares, if necessary.
10.3
Shares which are allotted on the exercise of an Option by a Participant shall be issued in the
name of CDP to the credit of 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.
10.4
Shares allotted and issued on the exercise of an Option shall:(a)
be subject to all the provisions of the Memorandum and Articles of the Company; and
(b)
rank in full for all entitlements, including dividends or other distributions declared or
recommended in respect of the then existing Shares, the Record Date of which is on or
after the date of exercise of the Option, and shall in all other respects rank pari passu with
other existing Shares then in issue.
10.5
The Company shall keep available sufficient unissued Shares to satisfy the full exercise of all
Options for the time being remaining capable of being exercised.
(B)
Non-exercise of Options
10.6
Upon the expiry of any Option or Options to which a Participant is entitled (which Option has not
been exercised or fully exercised), or upon receipt of an irrevocable notice in writing from a
Participant to the effect that he does not wish to exercise his entitlement or balance of his
entitlement to any Option or Options granted to or accepted by him, the Company shall forthwith
cancel the relevant Option or Options but all moneys paid by the Participant under Rule 6.4 shall
be forfeited to the Company.
D-10
11.
ADJUSTMENT EVENTS
11.1
If a variation in the issued ordinary share capital of the Company (whether by way of a
capitalisation of profits or reserves or rights issue, capital reduction, sub-division or consolidation
of Shares, distribution or otherwise) shall take place or if there is an offer or invitation made by the
Company to Shareholders whereunder they may acquire rights to acquire or subscribe for Shares,
then:(a)
the Exercise Price;
(b)
the nominal amount, class and/or number of Shares comprised in an Option to the extent
unexercised; and/or
(c)
the nominal amount, class and/or number of Shares over which Options may be granted
under this Scheme,
shall be adjusted in such manner as the Committee may determine to be appropriate, except in
relation to a capitalisation issue, upon the written confirmation of the Auditors (acting only as
experts and not as arbitrators) that in their opinion, such adjustment is fair and reasonable. All
adjustments (if any) shall give the Grantee the same proportion of the equity capital as that to
which he was previously entitled.
11.2
11.3
Unless the Committee considers an adjustment to be appropriate, the following (whether singly or
in combination) shall not be regarded as events requiring adjustment:(a)
any issue of securities as consideration for an acquisition or a private placement of
securities or pursuant to any initial public offering of the Shares on the Stock Exchange;
(b)
any increase in the number of issued Shares as a consequence of the exercise of options
or other convertibles issued from time to time by the Company entitling the holders thereof
to acquire new Shares in the capital of the Company (including the exercise of any Options
granted pursuant to the Scheme and any previous or future employee share option
scheme(s));
(c)
any issue of Shares pursuant to any scrip dividend scheme for the time being of the
Company; and
(d)
any reduction in the number of issued Shares as a result of the cancellation of issued
Shares purchased by the Company by way of market purchase(s) effected on the Stock
Exchange on which the Company is listed pursuant to a share purchase mandate (or any
renewal thereof) given by the shareholders of the Company in general meeting and for the
time being in force.
Notwithstanding the provisions of Rule 11.1:(a)
(b)
no such adjustment shall be made if as a result:(i)
the Exercise Price shall fall below the nominal amount of a Share and if such
adjustment would, but for this paragraph (a), result in the Exercise Price being less
than the nominal amount of a Share, the Exercise Price payable shall be the nominal
amount of a Share; or
(ii)
the Participant receives a benefit that a Shareholder does not receive; and
any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by
the Auditors (acting only as experts and not as arbitrators) to be in their opinion, fair and
reasonable.
D-11
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 Exercise Price thereafter in effect and the nominal value, class and/or number of Shares
thereafter to be issued on the exercise of the Option. Any adjustment shall take effect upon such
written notification being given.
12.
ADMINISTRATION OF THIS SCHEME
12.1
This Scheme shall be administered by the Committee in its absolution discretion with such powers
and duties as are conferred on it by the Board from time to time, including but not limited to the
following powers:(a)
to determine the number of Shares to be offered by way of Options to Participants within
the maximum limits set out in this Scheme;
(b)
to determine the Exercise Price and any adjustments thereto in accordance with the terms
of this Scheme;
(c)
to decide whether Offers made or Options granted shall be terminated or allowed to
continue in the event of death or cessation of employment or appointment (as the case may
be); and
(d)
to recommend to the Board modifications to this Scheme, where necessary.
12.2
The Committee shall have the power, from time to time, to make and vary such regulations (not
being inconsistent with this Scheme) for the implementation and administration of this Scheme as
they think fit.
12.3
Neither this Scheme nor the grant of Options under this Scheme shall impose on the Company or
the Committee any liability whatsoever in connection with:(a)
the lapsing or early expiry of any Options pursuant to any provision of this Scheme;
(b)
the failure or refusal by the Committee to exercise, or the exercise by the Committee of any
discretion under this Scheme; and/or
(c)
any decision or determination of the Committee made pursuant to any provision of this
Scheme.
12.4
Any decision or determination of the Committee made pursuant to any provision of this Scheme
(other than a matter to be certified by the Auditors) shall be final, binding and conclusive including
any matter pertaining or pursuant to this Scheme and any dispute and uncertainty as to the
interpretation of this Scheme, any rule, regulation or procedure thereunder or any rights under this
Scheme.
12.5
The Committee shall consist of Directors of the Company (including Directors who may be
participants of this Scheme). Any member of the Committee who is a Participant shall abstain
from deliberating on the Options to be granted to him.
12.6
The Options may, at the discretion of the Committee, be vested partially over a number of years.
The periods over which the Options will vest may exceed any minimum vesting periods prescribed
by any laws, regulations or rules to which this Scheme may be subject, including the regulations
of any stock exchange on which the Shares may be listed and quoted. Further, the Shares to be
issued and allotted to a Participant pursuant to the exercise of any Option under this Scheme may
or may not, at the discretion of the Committee, be subject to any retention period.
D-12
13.
NOTICES
13.1
Any notice required to be given by a Participant to the Company shall be sent or made to the
principal place of business of the Company or such other addresses (including electronic mail
addresses) or facsimile number, and marked for the attention of the Committee, as may be
notified 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, electronic mail address or facsimile number
according to the records of the Company or the last known address, electronic mail address or
facsimile number of the Participant.
13.3
Any notice or other communication from a Participant to the Company shall be irrevocable, and
shall not be effective until received by the Company. Any notice or other communication from the
Company to a Participant shall be deemed to be received by that Participant, when left at the
address specified in Rule 13.2 or, if sent by post, on the day following the date of posting or, if
sent by electronic mail or facsimile transmission, on the day of despatch.
14.
MODIFICATIONS TO THIS SCHEME
14.1
Any or all the provisions of this Scheme may be modified and/or altered at any time and from time
to time by resolution of the Committee, except that:(a)
no modification or alteration shall alter adversely the rights attaching to any Option granted
prior to such modification or alteration except with the consent in writing of such number of
Participants who, if they exercised their Options in full, would thereby become entitled to not
less than three-quarters in nominal amount of all the Shares which would fall to be allotted
upon exercise in full of all outstanding Options;
(b)
any modification or alteration which would be to the advantage of Participants under this
Scheme shall be subject to the prior approval of the Shareholders in general meeting; and
(c)
no modification or alteration shall be made without the prior approval of the Stock Exchange
and such other regulatory authorities as may be necessary.
14.2
Notwithstanding anything to the contrary contained in Rule 14.1, the Committee may at any time
by resolution (and without other formality, save for the prior approval of the Stock Exchange)
amend or alter this Scheme in any way to the extent necessary to cause this Scheme to comply
with any statutory provision or the provision or the regulations of any regulatory or other relevant
authority or body (including the Stock Exchange).
14.3
Written notice of any modification or alteration made in accordance with this Rule 14 shall be
given to all Participants.
15.
TERMS OF EMPLOYMENT UNAFFECTED
15.1
This Scheme or any Option shall not form part of any contract of employment between the
Company or any Subsidiaries and any Participant or Grantee and the rights and obligations of any
individual under the terms of the office or employment with such company shall not be affected by
his participation in this Scheme or any right which he may have to participate in it or any Option
which he may hold. Neither this Scheme nor any Option shall afford such an individual any
additional rights to compensation or damages in consequence of the termination of such office or
employment for any reason whatsoever.
D-13
15.2
This Scheme shall not confer on any person any legal or equitable rights (other than those
constituting the Options themselves) against the Company directly or indirectly or give rise to any
cause of action at law or in equity against the Company and/or any of its Subsidiaries.
16.
DURATION OF THIS SCHEME
16.1
This Scheme 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 this
Scheme may continue beyond the above stipulated period with the approval of the Shareholders
by ordinary resolution in general meeting and of any relevant authorities which may then be
required.
16.2
This Scheme may be terminated at any time by the Committee or, by ordinary resolution of the
Company in general meeting, subject to all relevant approvals which may be required and if this
Scheme is so terminated, no further Options shall be offered by the Company hereunder.
16.3
The termination or discontinuance or expiry of this Scheme for any reason, shall not affect
Options which have been granted and accepted as provided in Rule 6.4, whether such Options
have been exercised (whether fully or partially) or not.
17.
TAXES
All taxes (including income tax) arising from the exercise of any Option granted to any Participant
under this Scheme shall be borne by that Participant.
18.
COSTS AND EXPENSES OF THIS SCHEME
18.1
Each Participant shall be responsible for all fees of CDP relating to or in connection with the issue
and allotment of any Shares pursuant to the exercise of any Option in CDP’s name, the deposit of
share certificate(s) with CDP, the Participant’s securities account with CDP, or the Participant’s
securities sub-account with a Depository Agent or CPF investment account with a CPF agent
bank (collectively, the “Depository Charges”).
18.2
Save for the taxes referred to in Rule 18 and such other costs and expenses expressly provided in
this Scheme to be payable by the Participants, all fees, costs and expenses incurred by the
Company in relation to this Scheme including but not limited to the fees, costs and expenses
relating to the allotment and issue of Shares pursuant to the exercise of any Option, shall be
borne by the Company.
19.
DISCLAIMER OF LIABILITY
Notwithstanding any provisions contained herein, the Board, the Committee and the Company
shall not be held liable under any circumstances to any Participant, Grantee or any person
whomsoever for any costs, losses, expenses and damages whatsoever and howsoever arising in
connection with this Scheme or the administration thereof including but not limited to the
Company’s delay in issuing the Shares and/or in procuring listing of and quotation for the Shares
on the Stock Exchange (and any other stock exchange on which the Shares may be listed or
quoted).
20.
DISCLOSURE IN ANNUAL REPORT
The following disclosures (as applicable) will be made by the Company in its annual report for so
long as this Scheme continues in operation:(a)
The names of the members of the Committee administering this Scheme;
D-14
(b)
The information in respect of Options granted to the following Participants in the table set
out below:(i)
Directors; and
(ii)
Participants, other than those in (i) above, who receive 5% or more of the total
number of Options available under this Scheme.
Name of
Participant
(c)
Options granted
during financial
year under review
(including terms)
Options granted
since
commencement
of Scheme to
end of financial
year under review
Aggregate
Aggregate
number of Options number of Options
exercised since
outstanding as at
commencement
end of financial
of Scheme to
year under review
end of financial
year under review
The number and proportion of Incentive Options during the financial year under review in
the following bands:Discount to the Market
Price %
Aggregate number of
Incentive Options granted
during the financial year
under review
Proportion of Incentive Options
to total number of Options
granted during the financial
year under review
0-10
11-20
21.
ABSTENTION FROM VOTING
21.1
Shareholders who are eligible to participate in this Scheme must abstain from voting on any
resolution relating to this Scheme.
21.2
Directors and Employees of the Subsidiaries of the Company, who are also Shareholders and are
eligible to participate in this Scheme must abstain from voting on any resolution relating to the
participation of, or grant of Options to, Directors and Employees of the Subsidiaries of the
Company.
22.
DISPUTES
Any dispute or difference of any nature in connection with this Scheme (including the
interpretation or administration thereof) shall be referred to the Committee whose decision shall
be final and binding in all respects.
23.
CONDITION OF OPTION
Every Option shall be subject to the conditions that no Shares shall be issued pursuant to the
exercise of an Option if such issue 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 the
jurisdiction of Singapore or any other relevant country.
D-15
24.
GOVERNING LAW
This Scheme shall be governed by, and construed in accordance with the laws of the Republic of
Singapore. The Participants, by accepting Options in accordance with this Scheme, and the
Company irrevocably submit to the exclusive jurisdiction of the courts of the Republic of
Singapore.
D-16
Schedule A
LETTER OF OFFER
PRIVATE AND CONFIDENTIAL
Serial No.
:
Date
:
To
:
[Name]
[Designation]
[Address]
Dear Sir/Madam,
1.
We have the pleasure of informing you that, pursuant to the Select Employee Share Option
Scheme (“Scheme”), you have been nominated to participate in the Scheme by the Committee
(“Committee”) appointed by the Board of Directors of Select Catering Services Limited
(“Company”) to administer the Scheme. Terms as defined in the Scheme shall have the same
meanings when used in this letter.
2.
Accordingly, in consideration of the payment of a sum of S$1.00, an offer is hereby made to grant
Shares at the price of
you an option (“Option”), to subscribe for and be allotted
S$
for each Share.
3.
The Option is personal to you and shall not be transferred, charged, pledged, assigned or
otherwise disposed of by you, in whole or in part, save as provided in the Scheme.
4.
The Option shall be subject to the terms of this Letter of Offer and the Rules of the Scheme (as
the same may be amended from time to time pursuant to the terms and conditions of the
Scheme). A copy of the Rules of the Scheme is attached hereto.
5.
If you wish to accept the offer of the Option on the terms of this letter, please sign and return the
enclosed Acceptance Form with a sum of S$1.00 not later than 5.00 p.m. on
,
failing which this offer will lapse.
Yours faithfully,
The Committee
Select Employee Share Option Scheme
Name :
Designation :
D-17
Schedule B
ACCEPTANCE FORM
Serial No.
:
Date
:
To
:
The Company Secretary
Closing Date and Time for Acceptance of Offer
:
Number of Shares Offered
:
Exercise Price for each Share
:
S$
Total Amount Payable for the Shares
(exclusive of the relevant Depository Charges)
:
S$
I have read your Letter of Offer dated
and agree to be bound by the terms of the
Letter of Offer and the Scheme referred to therein. Terms defined in your Letter of Offer shall have the
same meanings when used in this Acceptance Form.
I hereby accept the Option to subscribe for
Shares at S$
enclose cash for S$1.00 in payment for the purchase of the Option.
for each Share. I
I understand that I am not obliged to exercise the Option.
I acknowledge and confirm that I shall be responsible for the payment (if any) of all fees of the CDP
relating to or in connection with the allotment and issue of any Shares in the CDP’s name, the deposit of
share certificate(s) with the CDP, my securities account with the CDP or my securities sub-account with a
Depository Agent (as the case may be) (collectively, the “Depository Charges”).
I confirm that as at the date hereof:(a)
I am not less than 21 years old nor an undischarged bankrupt nor have I entered into a
composition with any of my creditors;
(b)
I satisfy the eligibility requirements to participate in the Scheme as set out in Rule 4 therein; and
(c)
I satisfy the other requirements to participate in the Scheme as set out in the Rules of the
Scheme.
I further confirm that my acceptance of the Option will not result in the contravention of any applicable
law or regulation in relation to the ownership of shares in the Company or options to subscribe for such
shares.
D-18
I further acknowledge that you have not made any representation to induce me to accept the offer and
that the terms of the Letter of Offer and this Acceptance Form constitutes the entire agreement between
us relating to the offer.
I agree to keep all information pertaining to the grant of the Option to me confidential.
Please print in block letters
Name in full
:
Designation
:
Address
:
Nationality
:
*NRIC/Passport No.
:
Signature
:
Date
:
Notes:1.
Options must be accepted in full or in multiples of 1,000.
2.
The Acceptance Form must be forwarded to the Company Secretary in an envelope marked “Private and Confidential”.
3.
The Participant shall be informed by the Company of the relevant Depository Charges payable at the time of the exercise of
an option, if any.
*Delete accordingly
D-19
Schedule C
FORM OF EXERCISE OF OPTION
Total number of ordinary shares of S$
each
] for each Share (“Exercise
(“Share”) offer at S$
Price”) under Option dated
(Date of Grant)
:
Number of Shares previously allotted under the Option
:
Outstanding balance of Shares to be allotted under the Option
:
Number of Shares now to be subscribed
:
To :
The Company Secretary
1.
Pursuant to your Letter of Offer dated
thereof, I hereby exercise the Option to subscribe for
Catering Services Limited (“Company”) at S$
2.
I request the Company to allot and issue the Shares in the name of The Central Depository (Pte)
Limited (“CDP”) to be credited direct to *Securities Account with CDP/Sub-Account with the
Depository Agent with my Agent Bank specified below and to deliver the share certificates thereto
to the CDP at my own risk. I hereby agree to bear such fees or other charges as may be imposed
by CDP (“Depository Charges”) in respect thereof.
3.
I enclose a *cheque/cashier’s order/banker’s draft/postal order no.
S$
in payment for the following:Exercise Price of S$
Depository Charges of S$
(Date of Grant) and my acceptance
Shares in the capital of Select
for each Share.
for
for the total number of said Shares; and
.
4.
I agree to subscribe for the said Shares subject to the terms of the Letter of Offer, the Select
Employee Share Option Scheme and the Memorandum and Articles of the Company.
5.
I declare that I am subscribing for the said Shares for myself and not as a nominee for any other
person.
D-20
Please print in block letters
Name in full
:
Designation
:
Address
:
Nationality
:
*NRIC/Passport No.
:
*Direct Securities Account No.
:
OR
*Sub-account No.
:
Name of Depository Agent
:
Notes:1.
2.
An Option may be exercised, in whole or in part, provided that an Option may be exercised in part only in respect of 1,000
Shares or any multiple thereof.
The Exercise of Option to Subscribe must be forwarded to the Company Secretary in an envelope marked “Private and
Confidential”.
*Delete accordingly
D-21
APPENDIX E – CLEARANCE AND SETTLEMENT
Upon listing and quotation on the SGX-SESDAQ, our Shares will be traded under the book-entry
settlement system of the CDP, and all dealings in and transactions of our Shares through the SGXSESDAQ will be effected in accordance with the terms and conditions for the operation of Securities
Accounts with the 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 the CDP, rather than CDP itself, will be treated, under our Articles 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 Account with CDP may withdraw the number of Shares they
own from the book-entry settlement system in the form of physical share certificates. Such share
certificates will, however, not be valid for delivery pursuant to trades transacted on the SGX-SESDAQ,
although they will be prima facie evidence of title and may be transferred in accordance with our Articles.
A fee of $10.00 for each withdrawal of 1,000 Shares or less and a fee of $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 certificates. In addition, a fee of $2.00 or such other amount as our
Directors may decide, is payable to the share registrar for each share certificate issued and a stamp duty
of $10.00 is also payable where our Shares are withdrawn in the name of the person withdrawing our
Shares or $0.20 per $100.00 or part thereof of the last-transacted price where it is withdrawn in the
name of a third party. Persons holding physical share certificates who wish to trade on the SGXSESDAQ must deposit with CDP their share certificates 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 $20.00 is payable upon
the deposit of each instrument of transfer with CDP.
Transactions in our Shares under the book-entry settlement system will be reflected by the seller’s
Securities Account being debited with the number of Shares sold and the buyer’s 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 the SGX-ST is payable at the rate of 0.05% of the
transaction value subject to a maximum of $200 per transaction. The clearing fee, instrument of transfer
deposit fee and share withdrawal fee may be subject to Singapore Goods and Services Tax of 5%.
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 the SGX-ST generally takes
place on the third business 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.
E-1
APPENDIX F – TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION
You are invited to apply and subscribe for the 17,500,000 New Shares at the Invitation 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 AND HIGHER
INTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF
NEW SHARES WILL BE REJECTED.
2.
Your application for Offer Shares may be made by way of printed Offer Shares Application Forms
or by way of Electronic Applications through ATMs of the Participating Banks (“ATM Electronic
Applications”) or through the Internet Banking (“IB”) websites of the relevant Participating Banks
(“IB Applications”).
Your application for Internet Placement Shares (“Internet Placement Application”) may only be
made by way of an application through the IPO Website at “ www.ePublicOffer.com ” if you have a
valid membership account with the IPO Website Operator. IB Applications and Internet Placement
Applications (collectively, the “Internet Electronic Applications”), together with ATM Electronics
Applications, shall be referred to as “Electronic Applications”.
Your application for the Placement Shares (other than the Internet Placement Shares and the
Reserved Shares) may only be made by way of Placement Shares Application Forms. YOU MAY
NOT USE CPF FUNDS TO APPLY FOR THE NEW SHARES.
3.
You (being other than an approved nominee company) are allowed to submit ONLY one
application in your own name for:(a)
the Offer Shares by any one of the following:(i)
Offer Shares Application Form;
(ii)
ATM Electronic Application; or
(iii)
IB Application,
OR
(b)
the Placement Shares by any one of the following:(i)
Placement Shares Application Form;
(ii)
Internet Placement Application; or
(iii)
Reserved Shares Application Form.
If more than one application is submitted for either the Offer Shares or the Placement
Shares (other than the Reserved Shares), such separate applications shall be deemed to be
multiple applications and shall be rejected.
If you have made an application for Placement Shares, you should not make any application
for Offer Shares and vice versa. Such separate applications shall be deemed to be multiple
applications and shall be rejected.
JOINT OR MULTIPLE APPLICATIONS 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 Securities and Futures Act
(Chapter 289) of Singapore, 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 will be liable to be rejected at our discretion.
F-1
A Qualifying Internet Applicant whose application for Internet Placement Shares is rejected
because of multiple applications will be levied an administrative fee amounting to 20.0% of
the Qualifying Internet Applicant’s application subscription money (GST included).
If you have make an application for the Reserved Shares, you may submit ONE separate
application for the Offer Shares in your name, either by way of an Offer Shares Application Form or
by way of an Electronic Application; OR submit ONE separate application for Placement Shares in
your own name by way of a Placement Shares Application Form or Internet Placement Application,
provided you adhere to the terms and conditions of this Prospectus. Such separate applications
will not be treated as multiple applications.
4.
We will not accept applications from any person under the age of 21 years, undischarged
bankrupts, sole-proprietorships, partnerships, chops or non-corporate bodies, joint Securities
Account holders of CDP and from applicants whose addresses (furnished in their Application
Forms or, in the case of Electronic Applications, contained in the records of the relevant
Participating Banks or the IPO Website Operator, as the case may be) bear post office box
numbers.
In addition, applicants who wish to subscribe for the Placement Shares through the IPO Website
(a) must not be corporations, sole proprietorships, partnerships or any other business entities; (b)
must be over the age of 21 years; (c) must not be undischarged bankrupts; (d) must apply for the
Placement Shares in Singapore; (e) must have a mailing address in Singapore; and (f) must be
customers who maintain valid membership accounts with the IPO Website Operator.
5.
We will not recognise the existence of a trust. Any application by a trustee or trustees must be
made in his/their own name(s) and without qualification or, where the application is made by way
of an Application Form, in the name(s) of an approved nominee company or approved nominee
companies after complying with paragraph 6 below.
6.
WE WILL NOT ACCEPT APPLICATIONS FROM NOMINEES EXCEPT THOSE MADE BY
APPROVED NOMINEE COMPANIES ONLY. Approved nominee companies are defined as banks,
merchant banks, finance 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.
7.
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 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 records of the relevant Participating Bank or the IPO Website Operator 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.
8.
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 or the IPO Website
Operator, 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 notification letter on
successful allotment will be sent to your address last registered with CDP.
F-2
9.
We reserve the right to reject any application which does not conform strictly to the
instructions set out in the Application Form or the instruction for Electronic Applications
and in this Prospectus or with the terms and conditions of this Prospectus, which is
illegible, incomplete, incorrectly completed or which is accompanied by an improperly
drawn up or improper form of remittance. We further reserve 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 Prospectus, 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.
10.
We reserve 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 we will not entertain any enquiry and/or
correspondence on our decision. This right applies to applications made by way of Application
Forms and by way of Electronic Applications. In deciding the basis of allotment, we will give due
consideration 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.
11.
Share certificates will be registered in the name of CDP 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. This will be the only acknowledgement of application
moneys received and is not an acknowledgement by us. 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.
12.
In the event of an under-subscription for the Offer Shares as at the close of the Application List, we
will make available that number of Offer Shares not subscribed for to satisfy excess applications
for 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 the Placement Shares as at the close of the Application
List, we will make available that number of Placement Shares not subscribed for to satisfy excess
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 under-subscription for the Internet Placement Shares to be applied for through
the IPO Website as at the close of the Application List, we will make available that number of
Internet Placement Shares not subscribed for to satisfy excess applications for Placement Shares
by way of Placement Shares Application Forms to the extent that there is an over-subscription for
such Placement Shares (not including the Internet Placement Shares) as at the close of the
Application List or 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.
In the event of an under-subscription for the Reserved Shares at the close of the Application List,
we will make available that number of Reserved Shares not subscribed for and/or purchased for to
satisfy excess applications for Placement Shares by way of Placement Shares Application Forms
to the extent that there is an over-subscription for such Placement Shares (not including the
Internet Placement Shares) as at the close of the Application List or 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.
In the event of an over-subscription for Offer Shares and/or Placement Shares (including the
Internet Placement Shares) 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 and
approved by the SGX-ST.
F-3
In all of the above instances, the basis of allotment of the New Shares as may be decided upon by
our Company in ensuring a reasonable spread of shareholders of our Company, shall be made
public, as soon as is practicable, via an announcement through the SGX-ST and through a paid
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 our Company, the Manager, the
Placement Agent, the Underwriter and any other parties so authorised as the foregoing persons.
14.
Any reference to the “you” in this section shall include an individual, a corporation, an approved
nominee and trustee applying for the Offer Shares by way of an Offer Share Application Form, an
ATM Electronic Application or an IB Application; an individual, a corporation, an approved nominee
and trustee applying for the Placement Shares through the Placement Agent by way of a
Placement Shares Application Form or the Internet Placement Shares by way of an Internet
Placement Application through the IPO Website or the Reserved Shares by way of a Reserved
Share Application Form.
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
“Confirm” or “Yes” 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 “Confirm” on the IB website screen (as the
case may be) in accordance with the provisions of this Prospectus, you:-
16.
(a)
irrevocably offer to subscribe for the number of New Shares specified in your application (or
such smaller number for which the application is accepted) at the Invitation Price and agree
that you will accept such New Shares as may be allotted to you, in each case on the terms
of this Prospectus and on the terms of the conditions set out in, this Prospectus and the
Memorandum and Articles of Association of our Company; and
(b)
agree that in the event of any inconsistency between the terms and conditions for
application set out in this Prospectus and those set out in the IPO Website, or the IB
websites or ATMs of the Participating Banks, the terms and conditions set out in this
Prospectus shall prevail;
(c)
agree that the aggregate Invitation Price for the New Shares applied for is due and payable
to our Company forthwith;
(d)
warrant the truth and accuracy of the information contained, and representations and
declarations made, provided 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
(e)
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
Manager, the Placement Agent and/or the Underwriter will infringe any such laws as a result
of the acceptance of your application.
Our acceptance of applications will be conditional upon, inter alia, we being satisfied 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 the SGX-SESDAQ;
(b)
the Management and Underwriting Agreement and the Placement Agreement referred to on
page 142 of this Prospectus have become unconditional and have not been terminated or
cancelled prior to such date as our Company may determine; and
(c)
the Authority has not served a stop order which directs that no further shares to which this
Prospectus relates be allotted.
F-4
17.
We will not hold any applications in reserve.
18.
We will not allot Shares on the basis of this Prospectus later than six months after the date of
registration of this Prospectus.
19.
Additional terms and conditions for applications by way of printed Application Forms are set out on
pages F-5 to F-8 of Appendix F of this Prospectus.
20.
Additional terms and conditions for applications by way of Electronic Applications are set out on
pages F-8 to F-16 of Appendix F of this Prospectus.
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATION
FORMS
You shall make an application by way of Application Forms made on and subject to the terms and
conditions of this Prospectus including but not limited to the terms and conditions appearing below as
well as those set out under the section on “TERMS AND CONDITIONS AND PROCEDURES FOR
APPLICATION” on pages F-1 to F-5 of Appendix F of this Prospectus, as well as the Memorandum and
Articles of Association of our Company.
1.
Your application must be made using the WHITE Application Forms for Offer Shares and the
BLUE Application Forms for Placement Shares and the PINK Application Forms for Reserved
Shares accompanying and forming part of this Prospectus. We draw your attention to the detailed
instructions contained in the respective Application Forms and this Prospectus for the completion
of the Application Forms which must be carefully followed. We reserve the right to reject
applications which do not conform strictly to the instructions set out in the Application
Forms and this Prospectus or to the terms and conditions of this Prospectus or which are
illegible, incomplete, incorrectly completed or which are accompanied by improperly drawn
remittances or improper form of remittances.
2.
Your Application Forms must be completed in English. Please type or write clearly in ink using
BLOCK LETTERS.
3.
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.
4.
Individuals, corporations, approved nominee companies and trustees must give their names in full.
You must make your application, in the case of individuals, in your full names appearing in your
identity cards (if applicants have such identification documents) or in your passports and, in the
case of corporations, in your full names as registered with a competent authority. If you are a nonindividual completing the Application Form under the hand of an official, you must state the name
and capacity in which that official signs. If you are a corporation completing the Application Form,
you are required to affix your Common Seal (if any) in accordance with your Memorandum and
Articles of Association or equivalent constitutive documents. 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 the Share Registrar and Share Transfer
office. We reserve the right to require you to produce documentary proof of identification for
verification purposes.
5.
(a)
You must complete Sections A and B and sign page 1 of the Application Form.
(b)
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 beneficial owner(s).
(c)
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.
F-5
6.
You (whether you are an individual and 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 have an
interest in the aggregate of more than 50 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 beneficial owner of the New 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 per cent. of the issued share capital of or interests in
such corporation.
7.
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 BANKER’S DRAFT
or CASHIER’S ORDER drawn on a bank in Singapore, made out in favour of “SELECT SHARE
ISSUE ACCOUNT” crossed “A/C PAYEE ONLY’”, with your name and address written clearly on
the reverse side. We will not accept applications accompanied by ANY OTHER FORM OF
PAYMENT.
We will reject remittances bearing “NOT TRANSFERABLE” or “NON
TRANSFERABLE” crossings. No acknowledgement or receipt will be issued by us, the
Manager, the Placement Agent or the Underwriter for applications and application moneys
received.
8.
Unsuccessful applications are expected to be returned (without interest or any share of revenue or
other benefit arising therefrom) to you by ordinary post within 24 hours of the balloting after the
close of the Application List at your own risk. Where your application is accepted in part only, the
balance of the application moneys will be refunded (without interest or any share of revenue or
other benefit arising therefrom) to you by ordinary post at your own risk in the shortest possible
time.
9.
Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the
meanings assigned to them in this Prospectus.
10.
By completing and delivering the Application Form in accordance with the provisions of this
Prospectus, you agree that:(a)
in consideration of us having distributed the Application Form to you and agreeing to close
the Application List at 12.00 noon on 13 December 2004 or such other time or date as
we may, in consultation with the Manager, decide, subject to any limitation under all
applicable laws and by completing and delivering the Application Form, you agree that:(i)
your application is irrevocable; and
(ii)
your remittance will be honoured on first presentation and that any moneys returnable
may be held pending clearance of your payment without interest or any share of
revenue or other benefit arising therefrom;
(b)
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;
(c)
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 notification and not otherwise,
notwithstanding any remittance being presented for payment by or on behalf of our
Company;
(d)
you will not be entitled to exercise any remedy of rescission for misrepresentation at any
time after acceptance of your application; and
F-6
(e)
in making your application, reliance is placed solely on the information contained in this
Prospectus and none of our Company, the Manager, the Placement Agent, the Underwriter
or any other person involved in the Invitation shall have any liability for any information not
so contained.
Applications for Offer Shares
1.
Your applications for Offer Shares MUST be made using the WHITE Offer Shares Application
Forms and WHITE official envelopes “A” and “B”. ONLY ONE APPLICATION should be enclosed
in each envelope.
2.
You must:-
3.
(a)
enclose the WHITE Offer Shares Application Form, duly completed and signed, together
with your remittance in the WHITE envelope “A” provided;
(b)
in the appropriate spaces on WHITE envelope “A”:(i)
write your name and address;
(ii)
state the number of Offer Shares applied for; and
(iii)
affix adequate Singapore postage;
(c)
seal WHITE envelope “A”; and
(d)
write, in the appropriate box provided on the larger WHITE envelope “B” addressed to LIM
ASSOCIATES (PTE) LTD, 10 Collyer Quay #19-08 Ocean Building Singapore 049315,
the number of Offer Shares you have applied for; and insert WHITE envelope “A” into
WHITE envelope “B”, seal WHITE envelope “B” and thereafter DESPATCH BY ORDINARY
POST OR DELIVER BY HAND at your own risk to LIM ASSOCIATES (PTE) LTD, 10
Collyer Quay #19-08 Ocean Building Singapore 049315, so as to arrive by 12.00 noon
on 13 December 2004 or such other time or date as we may, in consultation with the
Manager, decide, subject to any limitation under all applicable laws. Local Urgent
Mail or Registered Post must NOT be used. No acknowledgement of receipt will be
issued for any application or remittance received.
Applications that are illegible, incomplete or incorrectly completed or accompanied by improperly
drawn remittances 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.
2.
The completed and signed BLUE Placement Shares Application Form and your remittance, in
accordance with the terms and conditions of this Prospectus, for the full amount payable in respect
of the number of Placement Shares applied for, 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 affix
adequate Singapore postage on the envelope (if despatching by ordinary post) and thereafter the
sealed envelope must be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at
your own risk to LIM ASSOCIATES (PTE) LTD, 10 Collyer Quay #19-08 Ocean Building
Singapore 049315, to arrive by 12.00 noon on 13 December 2004 or such other time or date
as we may, in consultation with the Manager, decide, subject to any limitation under all
applicable laws. Local Urgent Mail or Registered Post must NOT be used. No
acknowledgement of receipt will be issued for any application or remittance received.
F-7
3.
Alternatively, you may remit your application moneys by electronic transfer to the account of The
Bank of East Asia, Limited, account number 90087878, in favour of “SELECT SHARE ISSUE
ACCOUNT” for the number of Placement Shares applied for by 12.00 noon on 13 December
2004 or such other time or date as we may, in consultation with the Manager, decide,
subject to any limitation under all applicable laws. If you remit your application moneys via
electronic transfer, you should fax and send a copy of the remittance advice to Westcomb Capital
Pte Ltd at fax number 6227 3936 to arrive by 12.00 noon on 13 December 2004 or such other
time or date as we may, in consultation with the Manager, decide, subject to any limitation
under all applicable laws.
Applications for Reserved Shares
1.
Your applications for Reserved Shares MUST be made using the PINK Reserved Shares
Application Forms.
2.
The completed PINK Reserved Shares Application Forms and your remittance, in accordance with
the terms and conditions of this Prospectus, for the full amount payable in respect of the number of
Reserved Shares applied for, 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 affix adequate Singapore
postage on the envelope (if despatching by ordinary post) and thereafter the sealed envelope must
be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at your own risk to LIM
ASSOCIATES (PTE) LTD, 10 Collyer Quay #19-08 Ocean Building Singapore 049315, to arrive
by 12.00 noon on 13 December 2004 or such other time or date as we may, in consultation
with the Manager, decide, subject to any limitation under all applicable laws. Local Urgent
Mail or Registered Post must NOT be used. No acknowledgement of receipt will be issued for
any application or remittance received.
3.
ONLY ONE APPLICATION should be enclosed in each envelope.
ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS
The procedures for Electronic Applications at ATMs are set out on the ATM screens (in the case of ATM
Electronic Applications), the IB website screens (in the case of IB Applications) of the relevant
Participating Banks and the IPO Website (in the case of Internet Placement Applications).
Currently, DBS and the UOB group are the only Participating Banks through which an IB Application can
be made on the respective IB websites of DBS and the UOB group.
Internet Placement Applications may be made through the IPO Website.
For illustration purposes, the procedures for Electronic Applications through ATMs, the IB website of DBS
and the IPO Website are set out respectively in the “Steps for Electronic Applications for Offer Shares
through ATMs of DBS Bank”, “Steps for Applications for Offer Shares through the IB website of DBS
Bank” and the “Steps for Applications for Internet Placement Shares through the IPO Website”
(collectively the “Steps”) appearing on page F-16 of this Prospectus.
The Steps set out the actions that you must take at an ATM, the IB website of DBS or the IPO Website to
complete an Electronic Application. Please read carefully the terms of this Prospectus, the Steps and the
terms and conditions for Electronic Applications set out below before making an Electronic Application.
Any reference to “you” in the additional terms and conditions for Electronic Applications and the Steps
shall refer to you making an application for:
(a)
Offer Shares through an ATM or the IB website of a relevant Participating Bank; and
(b)
Internet Placement Shares through the IPO Website.
F-8
To make an ATM Electronic Application:(a)
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. Upon the completion of your ATM Electronic Application transaction, you will
receive an ATM transaction slip (“Transaction Record”), confirming the details of your ATM
Electronic Application. The Transaction Record is for your retention and should not be submitted
with any Application Form.
(b)
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 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 Electronic Application liable to
be rejected.
To make an IB Application, you must have an existing bank account with and an IB user Identification
(“User ID”) and a Personal Identification Number/Password given by the relevant Participating Bank.
Upon completion of your IB Application, there will be an on-screen confirmation (“Confirmation Screen”)
of the application which you can print out for your record. This printed record of the confirmation screen
is for your retention and should not be submitted with any Application Form.
To make an Internet Placement Application, you must be registered as a User of the IPO Website and
have a User Name (“User Name”) and a Password. Upon completion of your Internet Placement
Application, there will be an on-screen confirmation of the application (“Submission of Application for IPO
Shares”) and you will receive an electronic mail (email) confirmation to advise you of the status of your
application. The email confirmation that your application has been successful, is to accompany your
payment for the Internet Placement Shares, and should not be submitted with any Application Form.
Further, you must ensure, when making an IB Application or Internet Placement Application that :
(a)
you are currently in Singapore at the time of making of such application;
(b)
your mailing address for IB with the relevant Participating Bank and the IPO Website Operator is in
Singapore;
(c)
you are not a US person(1) (as such term is defined in Regulation S under the United States
Securities Act of 1933, as amended from time to time),
and you will be asked to declare the above accordingly. Otherwise, your application is liable to be
rejected.
Note:(1)
For details, please refer to definition of “US person” on the IB websites or the IPO Website
Your Electronic Application shall be made on the terms and subject to the conditions of this Prospectus
including but not limited to the terms and conditions appearing below and those set out under the section
on “TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION” on pages F-1 to F-5 of this
Prospectus as well as the Memorandum and Articles of Association of our Company.
1.
In connection with your Electronic Application for New Shares, you may be required to confirm
statements to the following effect in the course of activating the Electronic Application:(a)
that you have received a copy of this Prospectus and has read, understood and
agreed to all the terms and conditions of application for New Shares and this
Prospectus prior to effecting the Electronic Application and agrees to be bound by
the same;
F-9
(b)
that you consent to the disclosure of your name, NRIC/passport number, address,
nationality, permanent resident status, CDP Securities Account number, and share
application amount (the “Relevant Particulars”) from your account with that
Participating Bank to the Share Registrar, CDP, SCCS, our Company, the Manager, the
Placement Agent and the Underwriter (the “Relevant Parties”); and
(c)
that this is your only application and it is made in your own name and at your own
risk.
Your application will not be successfully completed and cannot be recorded as a completed
transaction in the ATM unless you press the “Enter” or “OK” or “Confirm” or “Yes” key. By doing so,
you shall be treated as signifying your confirmation of each of the above three statements. In
respect of statement 1(b) above, your confirmation, by pressing the “Enter” or “OK” or “Confirm” or
“Yes” key, 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 that Participating Bank of your Relevant Particulars to the Relevant
Parties.
2.
BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOT APPLYING
FOR NEW SHARES AS NOMINEE OF ANY OTHER PERSON AND THAT ANY ELECTRONIC
APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE BY YOU AS BENEFICIAL
OWNER.
3.
For an ATM Electronic Application or IB Application, you must have sufficient funds in your bank
account with your Participating Bank at the time you make your ATM Electronic Application or IB
Application, failing which your ATM Electronic Application or IB Application will not be completed.
Any ATM Electronic Application or IB Application which does not conform strictly to the
instructions set out on the screens of the ATM or IB website through which your ATM
Electronic Application or IB Application is being made shall be rejected.
An applicant who makes an application for New Shares through the IPO Website will be advised
through the IPO Website on the amount payable and the method(s) of payment.
4.
You irrevocably agree and undertake to subscribe for and to accept the number of New Shares
applied for as stated on the Transaction Record or Confirmation Screen. You also irrevocably
agree and undertake to subscribe for and to accept any lesser number of New Shares that may be
allotted to you in respect of your Electronic Application. In the event that we decide to allot any
lesser number of such New Shares or not to allot any New Shares to you, you agree to accept
such decision as final.
If your Electronic Application is successful, your confirmation (by your action of pressing the
“Enter” or “OK” or “Confirm” or “Yes” key on the ATM, clicking “Confirm” or “OK” on the IB website
screen or “Confirm” on the IPO Website screen) of the number of New Shares applied for shall
signify and shall be treated as your acceptance of the number of New Shares that may be allotted
to you and your agreement to be bound by the Memorandum and Articles of Association of our
Company.
5.
Our Company will not keep any applications in reserve. Where your Electronic Application is
unsuccessful, the full amount of the application moneys will be refunded (without interest or any
share of revenue or other benefit arising therefrom) to you by being automatically credited to your
account with your Participating Bank within 24 hours after the close of the Application List. Trading
on a “WHEN ISSUED” basis, if applicable, is expected to commence after such refund has
been made.
F-10
Where your Electronic Application is rejected or accepted in part only, the full amount or the
balance of the application moneys, as the case may be, will be refunded (without interest or any
share of revenue or other benefit arising therefrom) to you by being automatically credited to your
account with your Participating Bank or if you have applied for the Internet Placement Shares
through the IPO Website, by ordinary post or such other means as the IPO Website Operator may
agree with you, at your own risk, within 14 Market 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 has been honoured and the application moneys received in the designated
share issue account.
Responsibility for timely refund of application moneys arising from unsuccessful or partially
successful Electronic Applications lies solely with the respective Participating Banks or the IPO
Website Operator. Therefore, you are strongly advised to consult your Participating Bank or the
IPO Website Operator as to the status of your Electronic Application and/or the refund of any
moneys to you from unsuccessful or partially successful Electronic Application, to determine the
exact number of New Shares allotted to you before trading the New Shares on the SGX-ST.
Neither the SGX-ST, the CDP, the SCCS, the Participating Banks, the IPO Website Operator, our
Company, the Manager, the Placement Agent or the Underwriter 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 ATM Electronic Application is made through the ATMs of DBS (including POSBank), OCBC,
or the UOB Group, and is unsuccessful, no notification will be sent by such Participating Bank.
If your IB Application made through the IB website of DBS or UOB Group is unsuccessful, no
notification will be sent by such Participating Bank.
Any Internet Placement Application made through the IPO Website is on a first-come-first-served
basis, and is subject to availability at the point of application. If your Internet Placement Application
is unsuccessful, an email notification will be sent to the applicant’s registered address with the IPO
Website Operator.
If you make ATM Electronic Applications through the ATMs of the following Participating Banks,
you may check the results of your ATM Electronic Applications as follows:Bank
Telephone
Available at
Operating Hours
Service expected
from
DBS
Bank
1800 339 6666
(for POSB account
holders)
Internet Banking
24 hours a day
Evening of the
balloting day
www.dbs.com
1800 111 1111
(for DBS account holders)
OCBC
1800 363 3333
ATM
ATM / Phone Banking
24 hours a day
Evening of the
balloting day
UOB
Group
1800 222 2121
ATM (Other
Transactions – “IPO
Enquiry”)
ATM* / Phone Banking
24 hours a day
Evening of the
balloting day
Internet Banking
24 hours a day
Evening of the
balloting day
www.uobgroup.com *
*
You may also check the results of your application through UOB Personal Internet Banking, UOB Group ATMs or UOB
PhoneBanking Services.
F-11
If you make your Electronic Application through the IPO Website, you can check the result of
your application through the IPO Website. If your application is successful, you will be notified
of the results of your application via an email sent to the email address registered with the IPO
Website Operator.
7.
Electronic Applications shall close at 12.00 noon on 13 December 2004 or such other time as our
Company may, in consultation with the Manager, decide, subject to any limitation under all
applicable laws.
8.
You are deemed to have requested and authorised us to:(a)
register the New Shares allotted to you in the name of CDP for deposit into your Securities
Account;
(b)
send the relevant Share certificate(s) to CDP;
(c)
(for ATM Electronic Applications or IB Applications) return or refund (without interest or any
share of revenue earned or other benefit arising therefrom) the application moneys, should
your ATM Electronic Applications or IB Applications be rejected, by automatically crediting
your bank account with your Participating Bank with the relevant amount within 24 hours
after the close of the Application List;
(d)
(for ATM Electronic Applications or IB Applications) return or refund (without interest or any
share of revenue or other benefit arising therefrom) the balance of the application moneys,
should your ATM Electronic Applications or IB Applications be accepted in part only, by
automatically crediting your bank account with your Participating Bank with the relevant
amount within the shortest possible time after the close of the Application List; and
(e)
(for Internet Placement Applications) return or refund (without interest or any share of
revenue or other benefit arising therefrom) of the full application moneys, should your
Internet Placement Application be rejected, is expected to be effected to you by ordinary
post at your own risk within 14 days after the close of the Application List).
9.
You irrevocably agree and acknowledge that your Electronic Application is subject to risks of
electrical, electronic, technical and computer-related faults and breakdowns, fires, acts of God and
other events beyond the control of the Participating Banks or the IPO Website Operator and if, in
any such event, our Company, the Manager, the Placement Agent, the Underwriter and/or the
relevant Participating Bank or the IPO Website Operator do not receive your Electronic Application,
or data relating to your Electronic Application 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 you shall have no claim whatsoever against our Company, the Manager,
the Placement Agent, the Underwriter and/or the relevant Participating Bank or the IPO Website
Operator for New Shares applied for or for any compensation, loss or damage.
10.
Our Company does not recognise the existence of a trust. Any Electronic Application by a trustee
must be made in your own name and without qualification. Our Company will reject any application
by any person acting as nominee.
11.
All your particulars in the records of your Participating Bank or the IPO Website Operator at the
time you make your Electronic Application shall be deemed to be true and correct and your
Participating Bank or the IPO Website Operator and the Relevant Parties shall be entitled to rely
on the accuracy thereof. If there has been any change in your particulars after making your
Electronic Application, you shall promptly notify your Participating Bank or the IPO Website
Operator.
F-12
12.
You should ensure that your personal particulars as recorded by both CDP, the relevant
Participating Bank or the IPO Website Operator 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 notification letter on successful allotment will be sent to your address
last registered with CDP.
13.
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 or the IPO Website Operator acting as agents of our Company, at
the ATMs, the IB websites and the IPO Website:(i)
your Electronic Application is irrevocable; and
(ii)
your Electronic Application, the acceptance of our Company 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;
(b)
none of our Company, the Manager, the Placement Agent, the Underwriter, the Participating
Banks or the IPO Website Operator 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 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;
(c)
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 notification by or on behalf of our Company and not otherwise, notwithstanding
any payment received by or on our behalf;
(d)
you will not be entitled to exercise any remedy of rescission for misrepresentation at any
time after acceptance of your application; and
(e)
reliance is placed solely on information contained in this Prospectus and that none of our
Company, the Manager, the Placement Agent and Underwriter nor any other person
involved in the Invitation shall have any liability for any information not so contained.
STEPS FOR APPLICATIONS FOR OFFER SHARES THROUGH ATMS OF DBS Bank
Instructions for ATM Electronic Applications will appear on the ATM screens of the Participating Bank. For
illustration purposes, the steps for making an ATM Electronic Application through a DBS ATM are shown
below. Certain words appearing on the screen are in abbreviated form (“A/c”, “amt”, “appln”, “&”, “I/C”,
“SGX”, “No.” and “Max” refer to “Account”, “amount”, “application”, “and”, “NRIC”, “SGX-ST”, “Number”
and “Maximum”, respectively. Instructions for ATM Electronic Applications on the ATM screens of
Participating Banks (other than DBS) may differ slightly from those represented below.
Step 1
:
Insert your personal DBS Bank or POSB ATM Card.
2
:
Enter your Personal Identification Number.
3
:
Select “CASHCARD & MORE SERVICES”.
4
:
Select “ESA-IPO SHARE/INVESTMENTS”.
5
:
Select “ELECTRONIC SECURITY APPLN (IPOS/BONDS/ST-NOTES)” to “SELECT”.
F-13
6
:
Read and understand the following statements which will appear on the screen:
THE OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE IN, OR
ACCOMPANIED BY, A COPY OF THE PROSPECTUS/DOCUMENT OR PROFILE
STATEMENT (AND IF APPLICABLE, A COPY OF THE REPLACEMENT OR
SUPPLEMENTARY PROSPECTUS/DOCUMENT OR PROFILE STATEMENT) WHICH
CAN BE OBTAINED FROM ANY DBS/POSB BRANCH IN SINGAPORE AND, WHERE
APPLICABLE, THE VARIOUS PARTICIPATING BANKS DURING BANKING HOURS,
SUBJECT TO AVAILABILITY.
ANYONE WISHING TO ACQUIRE THESE SECURITIES (OR UNITS OF SECURITIES)
SHOULD READ THE PROSPECTUS/DOCUMENT OR PROFILE STATEMENT (AS
SUPPLEMENTED OR REPLACED, IF APPLICABLE) BEFORE SUBMITTING HIS
APPLICATION WHICH WILL NEED TO BE MADE IN THE MANNER SET OUT IN THE
PROSPECTUS/DOCUMENT OR PROFILE STATEMENT (AS SUPPLEMENTED OR
REPLACED, IF APPLICABLE). A COPY OF THE PROSPECTUS/DOCUMENT OR
PROFILE STATEMENT, AND IF APPLICABLE. A COPY OF THE REPLACEMENT OR
SUPPLEMENTARY PROSPECTUS/DOCUMENT OR PROFILE STATEMENT HAS BEEN
LODGED WITH AND REGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE
WHO ASSUMES NO RESPONSIBILITY FOR ITS OR THEIR CONTENTS.
Press the “Enter” key to confirm that you have read and understood.
7
:
Press the “ENTER” key to acknowledge:You have read, understood and agreed to all terms of the application and
Prospectus/Document or Profile Statement, and if applicable, the Replacement or
Supplementary Prospectus/Document or Profile Statement.
You consent to disclose your name, NRIC/Passport No., address, nationality, CDP
Securities A/c No., CPF Investment A/c No. and securities application amount from
your Bank Account(s) to share registrars, SGX, SCCS, CDP, CPF and the
issuer/vendor(s).
For FIXED and MAX price security application, this is your only application and it is
made in your own name and at your own risk.
The maximum price for each Share is payable in full on application and subject to
refund if the final price is lower.
For TENDER securities applications, this is your only application at the selected
tender price and it is made in your own name and at your own risk.
You are not a US Person as referred to in the Prospectus/Document
or Profile Statement and if applicable, the Replacement or Supplementary
Prospectus/Document or Profile Statement.
8
:
Select your nationality.
9
:
Select the DBS Bank account (Autosave/Current/Savings/Savings Plus) or the POSB
account (current/savings) from which to debit your application moneys.
10
:
Enter the number of securities you wish to apply for using cash.
11
:
Enter your own 12-digit CDP Securities Account number. (Note: This step will be omitted
automatically if your CDP Securities Account number has already been stored in DBS
Bank’s records).
F-14
12
:
Check the details of your securities application, your NRIC or passport number and CDP
Securities Account number and number of securities on the screen and press the
“ENTER” key to confirm your application.
13
:
Remove the Transaction Record for your reference and retention only.
STEPS FOR APPLICATION FOR OFFER SHARES THROUGH THE IB WEBSITE OF DBS Bank
For illustrative purposes, the steps for making an Internet Electric Application through the DBS Bank IB
website are shown below. Certain words appearing on the screen are in abbreviated form (“A/C”, “amt”,
“&”, “I/C”, “SGX” and “No.” refer to “Account”, “Amount”, “and”, “NRIC”, “SGX-ST”, and “Number”
respectively).
Step 1
:
Click on to DBS Bank website (www.dbs.com).
2
:
Login to Internet Banking.
3
:
Enter your User ID and PIN.
4
:
Select “Electronic Security Application (ESA)”.
5
:
Click “Yes” to proceed and to warrant that you have observed and complied with all
applicable laws and regulations.
6
:
Select your country of residence.
7
:
Click on “SELECT” and click the “Submit” button.
8
:
Click “Confirm” to confirm:(a)
You have read, understood and agreed to all terms of application and the
Prospectus or Profile Statement and if applicable, the Supplementary or
Replacement Prospectus/Document or Profile Statement.
(b)
You consent to disclose your name, I/C or Passport No., address, nationality,
CDP Securities Account number, CPF Investment Account number (if
applicable) and securities application amount from your DBS/POSBank
Account(s) to registrars of securities, SGX, SCCS, CDP, CPF Board and
issuer/vendor(s).
(c)
You are not a US Person (as such term is defined in Regulation S under the
United States Securities Act of 1993, as amended).
(d)
This application is made in your name and at your own risk.
(e)
For FIXED/MAX price securities application, this is your only application. For
TENDER price securities application, this is your only application at the
selected tender price.
9
:
Fill in details for share application and click “Submit”.
10
:
Check the details of your share application, your NRIC or passport number and click “OK”
to confirm your application.
11
:
Print Confirmation Screen (optional) for your reference & retention only.
F-15
STEPS FOR APPLICATIONS FOR INTERNET PLACEMENT SHARES THROUGH THE IPO WEBSITE
For illustrative purposes, the steps for making an Internet Placement Application through the IPO
Website is shown below. Certain words appearing on the screen are in abbreviated form (“A/C”, “&”, “I/C”
and “No.” refer to “Account”, “NRIC” and “Number” respectively).
Step 1
:
Click on to the IPO Website ( www.ePublicOffer.com )
2
:
Login to the IPO Website by entering your User Name and Password
3
:
Select the counter “SELECT” from the list of current counters offered by clicking “APPLY
NOW”.
4
:
Click “I Agree” to proceed and to warrant that you have observed and complied with all
applicable laws and regulations and agree to the terms and conditions stated on the IPO
Website
5
:
View and/or download a copy of the Prospectus
6
:
Click the check box provided next to the following statements to confirm your declaration:(1)
I have read, understood & agreed to these terms and conditions, and the
Prospectus/Document or Profile Statement and if applicable, the Replacement
or Supplementary Prospectus/Document or Profile Statement in relation to the
New Shares;
(2)
I consent to the disclosure of my name, I/C or passport number, address,
nationality, CDP Securities Account number, and securities application
amount to share registrars of the securities, the SGX-ST, SCCS, CDP, the
issuer/vendor(s) of the IPO Shares;
(3)
I am currently resident in Singapore;
(4)
I am not a US person (as such term is defined in Regulation S under the
United States Securities Act of 1933, as amended) and not currently resident
in the United States;
(5)
I understand that the IPO Shares have not been and will not be registered
under the United Stated securities laws and, subject to certain exceptions,
may not be offered or sold within the United States, that there will be no
public offer of the IPO Shares in the United States, and any failure to comply
with this restriction may constitute a violation of United States securities
laws;
(6)
This application for the IPO Shares is made in my own name and at my own
risk; and
(7)
I am not an associate (as defined in the Listing Manual of the SGX-ST) or a
director or substantial shareholder (as defined in the Companies Act (Chapter
50) of Singapore) of the Issuer.
7
:
Press “Confirm” when you have completed the above steps.
8
:
Check details of your application, (including information on your name, your CDP number,
your NRIC number, your email address and the amount payable) on the screen and click
“CONFIRM” to confirm your application
9
:
Print email confirmation and proceed to make payment as described in the email
confirmation.
F-16
APPENDIX G – INDEPENDENT AUDITORS’ REPORT AND AUDITED CONSOLIDATED
FINANCIAL STATEMENTS OF SELECT CATERING SERVICES LIMITED
30 November 2004
The Board of Directors
36 Senoko Crescent
Singapore 758282
Dear Sirs,
We have audited the accompanying consolidated financial statements of Select Catering Services
Limited (the “Company”) and its subsidiaries (collectively the “Group”), as set out on pages G-2 to G-25,
comprising the consolidated balance sheets as at 31 December 2001, 2002 and 2003, and the related
consolidated statements of income, changes in equity and cash flows for each of the financial years
ended 31 December 2001, 2002 and 2003 and the notes thereon. These consolidated financial
statements of the Group are the responsibility of the Company’s directors. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit. The consolidated financial
statements for the financial year ended 31 December 2001 were audited by other auditors. The other
auditors’ report dated 10 June 2002 was an unqualified opinion. Chio Lim & Associates were appointed
as statutory auditors of the Company from financial year ended 31 December 2002.
In connection to the Company’s application to the Singapore Exchange Securities Trading Limited (“SGXST”) for a listing on the SGX-ST Dealing & Automated Quotation System (“SGX-SESDAQ”), we were
engaged as auditors to re-audit the consolidated financial statements for the year ended 31 December
2001.
We conducted our audits in accordance with Singapore Standards on Auditing. Those Standards require
that we plan and perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by the directors, as
well as evaluating the overall consolidated financial statements presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the accompanying consolidated financial statements of the Group are properly drawn up
in accordance with Singapore Financial Reporting Standards and so as to present fairly, in all material
respects, the state of affairs of the Group as at 31 December 2001, 2002 and 2003 and the Group’s
consolidated results of operations, consolidated changes in equity and cash flows for each of the
financial years ended 31 December 2001, 2002 and 2003.
This report has been prepared in accordance with the Singapore Securities and Futures (Offers of
Investments) (Shares and Debentures) Regulations 2002 for the purpose of incorporation in the
Prospectus of the Company dated 30 November 2004 for the invitation of 17,500,000 ordinary shares of
$0.045 each in the Company.
Yours faithfully
Singapore
Paul Lee Seng Meng
Partner-in-charge
A member of the Institute of Certified Public Accountants of Singapore
G-1
SELECT CATERING SERVICES LIMITED
CONSOLIDATED BALANCE SHEETS
Notes
ASSETS
Current assets:
Trade receivables
Inventories
4
5
6
7
Non-current assets:
8
Total assets
Other payables
Income tax payable
9
10
11
12
13
Finance leases
22
12
13
Minority interests
Issued capital
Reserves
14
Total equity
NTA per share (cents)
32
2001
$’000
(restated)
1,190
1,703
1,193
123
1,176
1,910
898
124
1,674
2,120
962
118
4,209
4,108
4,874
7,262
6,753
7,315
7,262
6,753
7,315
11,471
10,861
12,189
1,513
4,138
507
52
473
335
990
4,601
564
4
432
247
883
5,304
249
118
443
69
7,018
6,838
7,066
217
2,550
310
376
2,097
81
517
2,226
–
3,077
2,554
2,743
47
–
–
1,660
(331)
1,660
(191)
1,660
720
1,329
1,469
2,380
11,471
10,861
12,189
1.77
1.95
3.16
The notes on pages G-6 to G-25 form an integral part of these financial statements.
G-2
As at 31 December
2002
2003
$’000
$’000
CONSOLIDATED INCOME STATEMENTS
Notes
Revenue
15
Financial year ended 31 December
2001
2002
2003
$’000
$’000
$’000
(restated)
20,408
26,889
33,790
Cost of sales
(7,253)
(9,677)
(12,843)
Gross profit
13,155
17,212
20,947
66
22
27
(225)
(289)
(243)
(8,192)
(10,352)
(12,964)
(4,344)
(5,837)
(6,255)
(45)
(52)
415
704
16
Distribution costs
17
33
1,545
Finance costs
18
(308)
(231)
Profit before income tax for on-going operation
19
107
473
28
(40)
(204)
67
269
(112)
(163)
(352)
(45)
106
913
13
47
–
(32)
153
913
(0.04)
0.20
1.21
Income tax expenses
22
(Loss)/profit after income tax
Minority interests
Net (loss)/profit for the year
EPS (cents)
32
G-3
(169)
1,376
(111)
1,265
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FINANCIAL YEAR ENDED 31 DECEMBER 2001, 2002 AND 2003
Issued
capital
$’000
Balance at 1 January 2001 – as previously
reported
Foreign
currency
translation
reserve (a)
$’000
Accumulated
profits/(losses)
$’000
Total
$’000
1,075
500
–
575
–
–
(363)
(363)
500
–
212
712
1,160
–
–
1,160
Interim dividends paid (Note 24)
–
–
Foreign currency translation difference – as previously
reported
–
1
–
1
Prior year adjustments (Note 23)
–
(11)
–
(11)
Restated balance
–
(10)
–
(10)
Net profit for the year – as stated
–
–
13
13
–
–
(45)
(45)
Restated balance
–
–
(32)
(32)
1,660
(10)
(321)
Foreign currency translation differences
–
(13)
Net profit for the year
–
–
153
1,660
(23)
(168)
–
(2)
–
–
913
913
(25)
745
2,380
Restated balance
Issue of shares (Note 14)
Balance as at 31 December 2001
1,660
Note:(a) Movements not recognised in the income statement.
G-4
(501)
–
–
(501)
1,329
(13)
153
1,469
(2)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Financial year ended 31 December
2002
2003
2001
$’000
$’000
$’000
Cash flows from operating activities:
Adjustments for:
Depreciation expense
Interest expense
Interest income
Loss on disposal of subsidiary (Note 27)
Loss on disposal of plant and equipment
67
269
1,265
916
308
(13)
–
29
969
231
(16)
–
18
1,064
169
(8)
111
6
Operating profit before working capital changes
Cash with maturity over 3 months
Trade receivables
Inventories
Other payables
1,307
(112)
(553)
(95)
(52)
1,000
(277)
1,471
(12)
(207)
295
(1)
463
57
2,607
(123)
(211)
(146)
6
723
(304)
Net cash generated from operations
Interest paid
Interest received
Income tax paid
Dividends paid (Note 24)
1,218
(308)
13
(123)
(501)
2,066
(231)
16
(52)
–
2,552
(169)
8
(97)
–
299
1,799
2,294
Cash flows from investing activities:
Acquisition of subsidiaries net of cash acquired (Note 26)
Disposal of plant and equipment
Purchase of plant and equipment
163
30
(1,494)
–
38
(521)
–
6
(1,700)
(1,301)
(483)
(1,694)
209
(245)
60
500
(494)
(317)
–
–
140
(259)
–
–
Net cash generated from/(used in) financing activities
524
(811)
(119)
Net effect of exchange rate changes in
consolidating subsidiaries
(10)
(8)
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
(488)
(362)
497
(850)
482
(353)
Cash and cash equivalents at end of year (Note 25)
(850)
(353)
129
Cash flows from financing activities:
Increase/(decrease) in borrowings
Decrease in finance leases
Minority contribution to share capital
Proceeds from issuing shares (Note 14)
G-5
1
1.
GENERAL
The Company is incorporated in Singapore. The consolidated financial statements are expressed
in Singapore dollars. They are drawn up in accordance with the Singapore Financial Reporting
Standards.
The principal activities of the Company are to carry on the business as caterers of food and
beverage. The principal activities of the subsidiaries are disclosed below. There have been no
significant changes in the nature of these activities during each of the years ended 31 December
2001, 2002 and 2003.
The registered office address is: 36 Senoko Crescent, Singapore 758282. The Company is
domiciled in Singapore.
Details of subsidiaries at the balance sheet dates are as follows:
Name of subsidiaries, country of
incorporation, place of operations
and principal activities
Effective
percentage of
equity held by Group
Costs in books
of Company
2001
$’000
2002
$’000
2003
$’000
2001
%
2002
%
2003
%
Stamford Catering Services Pte Ltd (c)
Singapore
Operator of food court stalls, catering
services and staff cafeterias
250
250
250
100
100
100
Singapore
Operator of food court stalls
660
660
660
100
100
100
140
140
–
70
70
70
–
–
200
–
–
100
1,050
1,050
1,110
47
47
47
100
100
100
379
379
–
70
70
–
(c)
Select Eastern Investment Pte Ltd (d) (g)
Singapore
Investment in fast food restaurants and carry
on business as caterers
Lerk Thai Restaurant Pte Ltd (f)
Singapore
Operators of restaurants and food court stalls
Held by subsidiaries:
Select Food Management Sdn. Bhd. (b) (e)
Malaysia
Zhangzhou Select Eastern Fast Food Co.
Ltd (a) (f)
Fast food caterers
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Held by Select Eastern Investment Pte Ltd. The subsidiary was disposed in 2003.
Held by Select Food Management Pte Ltd.
Audited by Chio Lim and Associates.
Audited by Y.H. Yip & Co., Singapore, a firm other than member firms of Howarth International of which Chio Lim &
Associates, Singapore is a member.
Audited by Horwath Wong & Co., Malaysia, a member firm of Horwath International of which Chio Lim & Associates,
Singapore is a member.
Not audited as it is immaterial. Consolidated based on unaudited management accounts.
The subsidiary was stuck off on 17 September 2004.
G-6
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING CONVENTION – The financial statements are prepared in accordance with the
historical cost convention.
BASIS OF PRESENTATION – The consolidation accounting method is used for the consolidated
financial statements which include the financial statements made up to 31 December each year of
the Company and of those companies in which it holds, directly or indirectly through subsidiaries,
over 50 percent of the shares and voting rights. All significant intercompany balances and
transactions have been eliminated on consolidation. The results of the investees acquired or
disposed of during the financial year are consolidated from the respective dates of acquisition or
up to the dates of disposal. On disposal the attributable amount of unamortised goodwill is
included in the determination of the gain or loss on disposal.
GOODWILL – Goodwill or negative goodwill arising on acquisition is based on the purchase
method. Goodwill arising on consolidation represents the excess of the cost of acquisition over the
acquirer’s interest in the fair value of the identifiable assets and liabilities of the subsidiary,
acquired as at the date of acquisition. Goodwill is carried at cost less any accumulated
amortisation and any accumulated impairment losses. It is amortised on the straight-line method
over its useful life to reflect the best estimate of the period during which future economic benefits
are expected to flow to the acquirer.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the closing rate.
MINORITY INTERESTS – Minority interests are stated at the appropriate proportion of the postacquisition values of the identifiable assets and liabilities of the subsidiaries.
REVENUE RECOGNITION – Revenue from sale of goods is recognised when significant risks and
rewards of ownership are transferred to the buyer and the amount of revenue and the costs of the
transaction (including future costs) can be measured reliably. Revenue from rendering of services
that are of short duration is recognised when the services are completed. Interest revenue is
recognised on a time-proportion basis using the effective interest rate.
INVENTORIES – Inventories are measured at the lower of cost (first in first out method) and net
realisable value.
PROPERTY, PLANT AND EQUIPMENT – Property, plant and equipment are carried at cost less
any accumulated depreciation and any accumulated impairment losses. Depreciation is provided
on gross carrying amounts in equal annual instalments over the estimated useful lives of the
assets. The annual rates of depreciation are as follows:
Plant and equipment
–
–
over the remaining lease terms
10% to 20%
Depreciation is not provided for construction-in-progress.
Fully depreciated assets still in use are retained in the financial statements.
The useful life of an item of property, plant and equipment is reviewed periodically and, if
expectations are significantly different from previous estimates, the depreciation charge for the
current and future periods are adjusted.
G-7
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
NON-CURRENT ASSETS – Non-current assets, such as property, plant and equipment are
reviewed for impairment whenever events or changes in circumstances indicate that the net book
value of these assets may not be recoverable. Impairment losses are determined based on the
difference between fair value, which would generally approximate estimated future cash flows
discounted at the Group’s cost of capital or where appropriate the sale value, and net book value.
FOREIGN CURRENCY TRANSACTIONS – The functional currency is the Singapore dollar as it
reflects the economic substance of the underlying events and circumstances of the entity.
Transactions in foreign currencies are recorded in Singapore dollars at the rates ruling at the dates
of the transactions. At each balance sheet date, recorded monetary balances and balances carried
at fair value that are denominated in foreign currencies are reported at the rates ruling at the
balance sheet date. All realised and unrealised exchange adjustment gains and losses are dealt
with in the income statement.
FOREIGN CURRENCY FINANCIAL STATEMENTS – In translating the financial statements of a
foreign entity for incorporation in the consolidated financial statements, the assets and liabilities of
self-sustaining operations denominated in currencies other than Singapore dollars are translated at
year end rates of exchange and the income and expense items are translated at average rates of
exchange for the year.The resulting translation adjustments are accumulated in a separate
component of shareholders’ equity until the disposal of the entity. Other currency gains or losses
are included in the income statement. The financial statements of foreign operations are restated
in terms of the functional currency unit current at the balance sheet date before they are translated
into the presentation currency.
INCOME TAX – The income taxes are accounted using the asset and liability method which
requires the recognition of taxes payable or refundable for the current year and deferred tax
liabilities and assets for the future tax consequence of events that have been recognised in the
financial statement or tax returns. The measurements of current and deferred tax liabilities and
assets are based on provisions of the enacted tax laws; the effects of future changes in tax laws or
rates are not anticipated. The measurement of deferred tax assets is reduced, if necessary, by the
amount of any tax benefits that, based on available evidence, are not expected to be realised. A
deferred tax liability is recognised for all taxable temporary differences, unless the deferred tax
liability arises from (a) goodwill for which amortisation is not deductible for tax purposes; or (b) the
initial recognition of an asset or liability in a transaction which (i) is not a business combination;
and (ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
RETIREMENT BENEFITS COSTS – Contributions to defined contribution retirement benefit plans
are recorded as an expense as they fall due. Contributions made to government managed
retirement benefit plans such as the Central Provident Fund which specifies the employer’s
obligations are dealt with as defined contribution retirement benefit plans.
ACCOUNTING ESTIMATES – The preparation of financial statements in conformity with generally
accepted accounting principles requires the directors to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
LIABILITIES AND PROVISIONS – A liability and provision is recognised when there is a present
obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. It is measured at the amount payable.
G-8
2.
CASH – Cash for the cash flow statement includes cash and cash equivalents less bank
overdrafts.
FAIR VALUE OF FINANCIAL INSTRUMENTS – The carrying values of cash, accounts receivable,
other current financial assets, accounts payable and other current financial liabilities approximate
their fair market values due to the short-term maturity of these instruments. The fair value of longterm debt was not determined because the book values approximate the fair value. Those financial
assets that have a fixed maturity are measured at amortised cost using the effective interest rate
method. Those that do not have a fixed maturity are measured at cost. All financial assets are
subject to review for impairment.
RISK MANAGEMENT POLICIES FOR FINANCIAL INSTRUMENTS
CREDIT RISK ON FINANCIAL ASSETS – Financial assets that potentially subject the Group to
concentrations of credit risk consist principally of cash, cash equivalent and trade and other
accounts receivable. The directors believe that the financial risks associated with these financial
instruments are minimal. The Group places its cash and cash equivalents with high credit quality
institutions. The Group performs ongoing credit evaluation of its customers’ financial condition and
maintains a provision for doubtful accounts receivable based upon the expected collectibility of all
receivables. There is no significant concentration of credit risk, as the exposure is spread over a
large number of counterparties and customers.
OTHER RISKS ON FINANCIAL INSTRUMENTS – The Group monitors its interest, foreign
exchange risks, and changes in fair values from time to time and any gains and losses are
included in the income statement. The Group is exposed to interest rate price risk for financial
instruments with a fixed interest rate and to interest rate or cash flow risk for financial instruments
with a floating interest rate that is reset as market rates change. The Group is also exposed to
changes in foreign exchange rates and liquidity of businesses. The Group does not utilise forward
contracts or other arrangements to minimise these risks.
3.
RELATED PARTY TRANSACTIONS
Related parties are entities with common director or indirect shareholders or management. Parties
are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operating decisions.
The balances are without fixed repayment terms and interest unless stated otherwise.
G-9
4.
CASH AND CASH EQUIVALENTS
Not restricted in use
Restricted (a)
(a)
5.
2001
$’000
2002
$’000
2003
$’000
663
527
637
539
1,012
662
1,190
1,176
1,674
This is for fixed deposits held by bankers to cover the bank facilities granted to the Group.
TRADE RECEIVABLES
Outside parties
2001
$’000
2002
$’000
2003
$’000
1,703
1,910
2,120
The average credit period taken by customers is about 22 days, 25 days and 22 days for 2001,
2002 and 2003 respectively. The directors consider that the carrying amount of trade receivables
approximates to their fair value. Short-duration receivables with no stated interest rate are normally
measured at original invoice amount unless the effect of imputing interest would be significant.
6.
OTHER RECEIVABLES AND PREPAYMENTS
Directors (Note 3)
Outside parties
Deposits to secure services
Prepayments
7.
2001
$’000
2002
$’000
2003
$’000
201
141
587
264
–
90
577
231
–
138
739
85
1,193
898
962
2001
$’000
2002
$’000
2003
$’000
123
124
118
INVENTORIES
Consumables and supplies at cost
G-10
8.
PROPERTY, PLANT AND EQUIPMENT
Leasehold
properties
$’000
Plant &
equipment
$’000
Cost:
At 31 December 2000
Acquisition of subsidiary
Additions
Disposals
2,695
353
–
–
4,225
637
1,494
(81)
6,920
990
1,494
(81)
At 31 December 2001
Foreign exchange adjustments
Additions
Disposals
3,048
–
–
–
6,275
(5)
521
(66)
9,323
(5)
521
(66)
At 31 December 2002
Additions
Disposal of subsidiary
Disposals
3,048
–
909
–
–
6,725
(3)
791
(75)
(25)
9,773
(3)
1,700
(75)
(25)
At 31 December 2003
3,957
7,413
Total
$’000
11,370
Accumulated depreciation:
At 31 December 2000
Acquisition of subsidiary
Additions
Disposals
154
68
177
–
781
164
739
(22)
935
232
916
(22)
At 31 December 2001
Additions
Disposals
399
170
–
1,662
799
(10)
2,061
969
(10)
At 31 December 2002
Additions
Disposals
569
–
200
–
–
2,451
(1)
864
(15)
(13)
3,020
(1)
1,064
(15)
(13)
At 31 December 2003
769
3,286
4,055
Net book value:
At 31 December 2001
2,649
4,613
7,262
At 31 December 2002
2,479
4,274
6,753
At 31 December 2003
3,188
4,127
7,315
Certain plant and equipment are under finance lease agreements (Note 13) and mortgaged to
banks (Note 9).
A leasehold property is held in trust by a Director.
G-11
9.
SHORT-TERM BORROWINGS
Bank overdrafts (secured)
2001
$’000
2002
$’000
2003
$’000
1,513
990
883
The bank overdrafts and other banking facilities of the Group are secured by:(a)
pledge of fixed deposits (Note 4);
(b)
legal mortgage of the leasehold properties (Note 8);
(c)
joint personal guarantees by certain Directors and ex-Directors; and
(d)
corporate guarantees by certain subsidiaries.
The overdraft interest rates for the Group varied from 5.5% to 6.125%, 5.5% to 6.125%, and
5.25% to 5.95% per annum for 2001, 2002 and 2003 respectively.
10.
TRADE PAYABLES AND ACCRUED LIABILITIES
Outside parties
Accrued liabilities
2001
$’000
2002
$’000
2003
$’000
2,471
1,667
3,054
1,547
3,753
1,551
4,138
4,601
5,304
The average credit period taken by the Group to settle payables is about 91 days, 104 days and 97
days for 2001, 2002 and 2003 respectively.
11.
OTHER PAYABLES
Outside parties
Shareholders (Note 3)
Directors (Note 3)
G-12
2001
$’000
2002
$’000
2003
$’000
265
30
212
149
62
353
169
–
80
507
564
249
12.
INTEREST-BEARING BORROWINGS
Bank loans (secured) (Note 9)
2001
$’000
2002
$’000
2003
$’000
3,023
2,529
2,669
The borrowings are repayable as follows:
Amounts due within a year:
Bank loans (secured)
(473)
(432)
(443)
Total current portion
(473)
(432)
(443)
Non-current portion
2,550
2,097
2,226
The non-current portion is repayable as follows:
Due within 2 to 5 years
After 5 years
1,206
1,344
1,001
1,096
1,306
920
Non-current portion
2,550
2,097
2,226
The Group’s bank loans repayment schedules are as follows:
1.
A $597,985 loan facility is repayable in 96 instalments commencing from March 2000;
2.
A $150,000 loan facility is repayable in 96 instalments commencing from September 2000;
3.
A $70,000 loan facility is repayable in 36 instalments commencing from July 2001;
4.
A $1,786,000 loan facility is repayable in 120 instalments commencing from January 2002;
5.
A $611,650 loan facility is repayable in 120 instalments commencing from December 2003;
6.
A $226,000 machinery loan facility is repayable in 36 instalments commencing from
November 2001;
7.
8.
A $120,000 loan facility is repayable in 24 instalments commencing from July 2001, was
fully repaid in 2003; and
9.
A $160,000 loan facility is repayable in 24 instalments commencing from October 2001, was
fully repaid in 2003.
The interest rates for the bank loans varied from 4.75% to 6.5%, 3.5% to 6.5%, 3.25% to 6.5% per
annum for 2001, 2002 and 2003 respectively.
G-13
13.
OBLIGATIONS UNDER FINANCE LEASES
Minimum
payments
$’000
Finance
charges
$’000
Present
Value
$’000
2003
Minimum lease payments payable:
Due within one year
71
–
(2)
–
69
–
Total
71
(2)
69
Net book value of plant and equipment under finance leases
880
2002
Due within one year
264
83
(17)
(2)
247
81
Total
347
(19)
328
1,029
2001
Due within one year
367
328
(32)
(18)
335
310
Total
695
(50)
645
1,177
It is the Group’s policy to lease certain of its plant and equipment under finance leases. The
average lease terms are 3 to 5 years. The rates of interest for finance lease are varied from 2.9%
to 6.25% per year in 2001, 2002 and 2003. Interest rates are fixed at the contract date. All leases
are on a fixed repayment basis and no arrangements have been entered into for contingent rental
payments. All lease obligations are denominated in S$. The fair value of the lease obligations
approximates to their carrying amount. The obligations under finance lease are secured by the
lessor’s charge over the leased assets and covered by personal guarantees by certain of the
Directors.
G-14
14.
ISSUED CAPITAL
2001
$’000
2002
$’000
2003
$’000
Authorised:
2,000,000 ordinary shares of $1 each
2,000
2,000
2,000
Issued and fully paid:
1,660
1,660
1,660
In 2001, the authorised share capital of the Company was increased from $500,000 to $2,000,000
by the creation of 1,500,000 shares of $1 each. In 2001, 500,000 shares of $1 each were issued
for cash. The proceeds were used as working capital. In addition, 659,605 ordinary shares of $1
each were issued at par to acquire a subsidiary (Note 26).
15.
REVENUE
Sales of food and beverage
16.
2003
$’000
20,408
26,889
33,790
2001
$’000
2002
$’000
2003
$’000
10
3
53
16
–
6
8
–
19
66
22
27
2001
$’000
2002
$’000
2003
$’000
(16)
–
–
(29)
–
–
–
(34)
–
(18)
–
–
(6)
–
(2)
(6)
61
(14)
(45)
(52)
33
2001
$’000
2002
$’000
2003
$’000
308
231
169
OTHER (CHARGES)/CREDITS
Bad debts written off – trade (outside parties)
– non trade (outside parties)
Foreign exchange adjustment loss
Waiver by minority shareholders of subsidiary – non trade
Rental deposits forfeited
18.
2002
$’000
OTHER OPERATING INCOME
Interest income from non-related companies
Interest income from a Director
Others
17.
2001
$’000
FINANCE COSTS
Interest expense to non-related companies
G-15
19.
PROFIT BEFORE INCOME TAX FOR ON-GOING OPERATION
In addition to the charges and credits disclosed elsewhere in the notes, this item includes the
following charges/(credits):
2001
$’000
2002
$’000
2003
$’000
18
2
(52)
7,305
23
2
(1)
9,678
23
2
6
12,837
224
205
–
198
237
254
2001
$’000
2002
$’000
2003
$’000
Staff costs excluding directors
Contributions to defined contribution plan
5,858
277
7,725
594
10,163
833
Total staff costs
6,135
8,319
10,996
2001
2002
2003
378
568
690
2001
$’000
2002
$’000
2003
$’000
Current
Deferred
(4)
116
4
159
211
141
Total income tax expense
112
163
352
Auditors’ remuneration:
– Auditors of Company
– Other auditors
Changes in inventories (increase)
Purchases
Directors’ fees:
– Directors of Company
Directors’ remuneration:
– Directors of Company
20.
21.
STAFF COSTS
NUMBER OF EMPLOYEES
Number of employees at end of year excluding directors
22.
INCOME TAX
The income tax expense varied from the amount of income tax expense determined by applying
the Singapore income tax rate of 24.5%, 22% and 22% to profit before income tax for 2001, 2002
and 2003 respectively as a result of the following differences:
2001
$’000
2002
$’000
2003
$’000
Income tax expense at the statutory rate
Non-allowable items
Under/(over) provision in prior year
Tax exemptions
Change in tax rate
16
97
12
(13)
–
59
148
(44)
–
–
278
81
80
(35)
(52)
Total income tax expenses
112
163
352
G-16
22.
INCOME TAX (Cont’d)
The net deferred tax amount in the balance sheet is as follows:
23.
2001
$’000
2002
$’000
2003
$’000
Deferred tax liabilities:
Excess of net book value of plant and equipment
(350)
(409)
(517)
Total deferred tax liabilities
(350)
(409)
(517)
Deferred tax assets:
Capital allowances carryforwards
133
33
–
Total deferred tax assets
133
33
–
Net deferred tax liabilities
(217)
(376)
(517)
PRIOR YEAR ADJUSTMENTS
The comparative financial statements for the Group for 2001 have been restated for the correction
of errors listed below:(i)
(ii)
Accumulated profits brought forward as at 31 December 2000 have been decreased by
$363,000 due to the following:
(a)
Amortisation of premium paid for the rental agreement of $129,000 in respect of prior
years.
(b)
Equipment of $234,000 that is fully written off.
Net profit for the year and foreign currency translation reserve for the Group for 2001 have
been decreased by $11,000 and $45,000 respectively. This is due to the consolidation of a
subsidiary that was not previously consolidated.
Items (a) and (b) above were classified as intangible assets amounting to $363,000 in the balance
sheet as at 31 December 2001.
24.
DIVIDENDS
In 2001, an interim dividend of $1.326 less income tax of 24.5% per share was paid to
shareholders.
25.
CASH AND CASH EQUIVALENTS IN THE CONSOLIDATED CASH FLOW STATEMENTS
Cash and bank balances (Note 4)
Bank overdrafts (secured) (Note 9)
Cash and cash equivalents at end of year
2001
$’000
2002
$’000
2003
$’000
663
(1,513)
637
(990)
1,012
(883)
(850)
(353)
129
NON CASH TRANSACTIONS – In 2001, 659,605 ordinary shares of $1 each were issued at par
to acquire a subsidiary (Note 14).
G-17
26.
ACQUISITION OF SUBSIDIARY
The group acquired 100% of Select Food Management Pte Ltd on 1 January 2001. The
transaction was accounted for by the purchase method of accounting.
The fair values of net assets acquired are as follows:
2001
$’000
Cash
Trade receivables
Other receivables and prepaid expenses
Trade payables
Income tax payable
Other payables
Term loan
164
398
806
758
(1,068)
(87)
(98)
(212)
Consideration
Less: cash taken over
Less: issue of ordinary share (Note 14)
661
(164)
(660)
Net cash inflow on acquisition
(163)
The contributions from the subsidiary for the period between the date of acquisition on 1 January
2001 and the balance sheet date as at 31 December 2001 were as follows:
2001
$’000
Revenue
27.
5,718
147
DISPOSAL OF SUBSIDIARY
The Group disposed its subsidiary, Zhangzhou Select Eastern Fast Food Co. Ltd which carried out
the Group’s fast food business in China in February 2003.
The net assets of the subsidiary at the date of disposal was as follows:
2003
$’000
Trade payables
Other payable
82
60
(20)
(11)
111
(111)
Loss on disposal
Total consideration
–
Net cash outflow on disposal:
Cash consideration
–
Net cash outflow
–
G-18
27.
DISPOSAL OF SUBSIDIARY (Cont’d)
The effect of the disposal of subsidiary on the financial position is shown above. The results at the
reporting date and on the corresponding amounts for the preceding period is disclosed in Note 28.
28.
DISCONTINUED OPERATION
The Group disposed its subsidiary, Zhangzhou Select Eastern Fast Food Co. Ltd, which carried
out the Group’s fast food business in China in February 2003. The disposal is consistent with the
Group’s long-term strategy to focus its activities as caterers of food and beverage and operator of
stalls at food courts, and to divest unrelated activities.
The results of the fast food business which have been included in the consolidated financial
statements, were as follows:
2001
$’000
2002
$’000
2003
$’000
Revenue
Cost of goods sold
Distribution costs
Operating expenses
Other charges
20
(18)
(29)
(13)
–
–
103
(64)
–
(196)
(47)
–
–
–
–
–
–
(111)
Loss before income tax
Income tax expense
(40)
–
(204)
–
(111)
–
Loss from ordinary activities after income tax
(40)
(204)
(111)
The subsidiary contributed $140,796, $137,215, and $740 to the Group’s net operating cash
outflows, paid $60,942, $20,758 and Nil in respect of investing activities and contributed $269,983,
$102,304 and Nil in respect of financing activities respectively.
29.
CONTINGENT LIABILITIES
The Company has guaranteed its subsidiaries’ bank loans (Notes 9 and 12). The balance
outstanding of these loans amounted to $569,770, $329,821 and $133,651 as at balance sheet
date respectively.
In 2003, the subsidiaries have guaranteed the Company’s bank loans (Notes 9 and 12). The
balance outstanding of these loans amounted to $603,962 as at balance sheet date.
The Group has an unsecured bank letter of guarantee of $40,000, $40,000 and $69,640 as at 31
December 2001, 2002 and 2003 respectively.
The Group has insurance or performance guarantees for certain of its food court stalls or kitchen
premises amounting to $77,589, $95,589 and $68,589 as at 31 December 2001, 2002 and 2003
respectively. These insurance or performance guarantees are counter indemnified by certain of the
Directors and certain related parties.
G-19
30.
CAPITAL EXPENDITURE COMMITMENTS
Estimated amounts committed for future capital expenditure
but not provided for in the financial statements
31.
2001
$’000
2002
$’000
2003
$’000
883
883
–
OPERATING LEASE COMMITMENTS
At the balance sheet date the commitment in respect of operating leases with a term of more than
one year were as follows:
2001
$’000
2002
$’000
2003
$’000
Within one year
Within 2 to 5 years
After 5 years
2,434
1,924
1,105
2,621
1,376
1,057
2,980
2,069
1,001
Rental expense for the year
2,272
3,087
3,157
Operating lease payments represent rentals payable by the Group for its leasehold property, staff
cafeterias, canteens and food court stalls. The leases from Jurong Town Council are ranged from
22 to 30 years from January 1999 and November 2003 respectively. The lease rental terms for the
canteens and food stalls are negotiated for an average term of three years and certain rental are
subject to an escalation clause. Such increases are not included in the above amounts. In addition,
certain of the leases are covered by personal guarantees of certain of the Directors.
32.
EARNINGS PER SHARE AND NET TANGIBLE ASSETS PER SHARE
Earnings per share for the financial years ended 31 December 2001, 2002 and 2003 have been
calculated by dividing the Group’s net profit for the year and on the basis that at the end of each
financial year, the issued share capital of the Group comprised of 75,213,400 shares of $0.045
each which represents the pre-Invitation share capital of the Company.
Net tangible assets per share as at 31 December 2001, 2002 and 2003 have been calculated by
dividing the Group’s net tangible assets and on the basis that as at these dates, the issued share
capital of the Group comprised of 75,213,400 shares of $0.045 each which represents the preInvitation share capital of the Company.
G-20
33.
SEGMENTAL INFORMATION
For management purposes, the Group’s operating businesses are organised according to their
nature of activities. These are grouped into the following three market segments and form the basis
on which the Group reports its primary segment:(a)
Institutional Catering (“IC”) segment – This segment provides food management services to
the corporate customers. They operate and manage staff cafeterias, on a contract basis, at
the premises of its corporate customers from various industries;
(b)
Food Catering (“FC”) segment – This segment provides events catering services for
corporate, community or private functions as well as daily meal delivery services to
workplaces and family units; and
(c)
Food Retail (“FR”) – This segment comprises of operation of dedicated food court stalls and
public cafeterias specialising in international and local fare. It includes the operation of its
Segment results includes items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Where costs cannot be directly attributable to a market segment,
they were allocated based on revenue to each market segment.
Segment assets consist principally of trade receivables that are directly attributable to a segment.
Unallocated items comprise cash and cash equivalents, other receivables and prepayments,
inventories, property, plant and equipment, short-term borrowings, trade payables and accrued
liabilities, other payables, income tax payable, interest-bearing borrowings, finance leases, deferred
tax liabilities, minority interests, other operating income, other (charges)/credits, and finance costs
and discontinued operations.
G-21
G-22
33.
Depreciation
77
404
435
916
1,494
10,095
Segment liabilities – unallocated
Capital expenditures – unallocated
11,471
1,703
9,768
(32)
Consolidated total assets
OTHER INFORMATION
Segment assets
Segment assets – unallocated
Net (loss)/profit for the year
67
(112)
13
Income tax expense
Minority interests
394
20,408
Total
$’000
107
(40)
756
194
9,672
FR
$’000
687
153
9,017
FC
$’000
66
(45)
(308)
260
47
1,719
IC
$’000
2001
Finance costs
Segment results
RESULTS
External Sales
REVENUE
Market segments
165
376
195
4,632
IC
$’000
The following tables present the segment for the three years covered under this report:-
SEGMENTAL INFORMATION (Cont’d)
327
912
177
9,218
FC
$’000
477
622
362
13,039
FR
$’000
2002
969
521
9,392
10,861
1,910
8,951
153
269
(163)
47
473
(204)
22
(52)
(231)
734
26,889
Total
$’000
375
708
714
11,905
IC
$’000
266
752
339
8,437
FC
$’000
423
660
432
13,448
FR
$’000
2003
1,064
1,700
9,809
12,189
2,120
10,069
913
1,265
(352)
–
1,376
(111)
27
33
(169)
1,485
33,790
Total
$’000
APPENDIX G – INDEPENDENT AUDITORS’ REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF SELECT
CATERING SERVICES LIMITED
33.
Geographical segments
The following table provides an analysis of the Group revenue by geographical market which is
analysed based on the country of domicile of the customers:Sales revenue
Singapore
Malaysia
2001
$’000
2002
$’000
2003
$’000
20,016
392
26,401
488
33,256
534
20,408
26,889
33,790
The following is an analysis of the carrying amount of segment assets and additions to property,
plant and equipment analysed by the geographical area in which the assets are located:Carrying amount of segment assets
Singapore
Malaysia
China
2001
$’000
2002
$’000
2003
$’000
11,114
123
234
10,551
163
147
11,980
209
–
11,471
10,861
12,189
Additions to property, plant and equipment
Singapore
Malaysia
China
34.
2001
$’000
2002
$’000
2003
$’000
1,389
44
61
485
15
21
1,673
27
–
1,494
521
1,700
SUBSEQUENT EVENTS
The following significant events took place subsequent to the year ended 31 December 2003:
(a)
the Company incorporated a new wholly-owned subsidiary, Select (F&B) Investment Pte.
Ltd, with an issued share capital of $2 on 17 March 2004. The issued share capital was
increased to $100,000 on 2 July 2004;
(b)
the Company incorporated a new wholly-owned subsidiary, Select F&B (Suzhou) Co., Ltd.,
with a registered share capital of US$3,500,000 on 2 April 2004. As of the date of this
report, US$600,000 has been paid up. The balance of the registered capital is payable by 2
April 2007;
G-23
34.
SUBSEQUENT EVENTS (Cont’d)
(c)
the Company incorporated a new wholly-owned subsidiary, SCS Food Services Pte Ltd, with
an issued share capital of $2 on 2 July 2004. The issued share capital was increased to
$100,000 on 23 September 2004.
(d)
At an extraordinary general meeting held on 30 June 2004, the shareholders of the
Company approved the allotment and issue of an aggregate of 184,400 new ordinary shares
of $1.00 each in the capital of the Company for an aggregate consideration of $1,725,000.
(e)
At an extraordinary general meeting held on 28 October 2004, the shareholders of the
Company approved, inter alia, the following:(1)
the increase in the authorised share capital from $2,000,000 divided into 2,000,000
ordinary shares of $1.00 each to $10,350,000 divided into 10,350,000 ordinary shares
of $1.00 each;
(2)
a bonus issue of 1,540,598 new ordinary shares of $1.00 each, credited as fully paid
upon the capitalisation of $1,540,598 out of the share premium account of the
Company (the “Bonus Issue”);
(3)
the consolidation of nine ordinary shares of $1.00 each in the authorised and issued
and paid-up share capital of the Company into one ordinary share of $9.00 each
(“Share Consolidation”);
(4)
the sub-division of each ordinary share of $9.00 each in the capital of the Company
into 200 ordinary shares of $0.045 each such that the authorised share capital is
$10,350,000 divided into 230,000,000 shares of $0.045 each of which 75,213,400
ordinary shares of $0.045 each are issued and fully paid-up (“Share Split”);
(5)
the conversion of the Company into a public limited company and the consequential
change of the name to Select Catering Services Limited;
(6)
the adoption of a new set of Articles of the Company;
(7)
the issue of 17,500,000 New Shares which is 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 Shares;
(8)
the listing and quotation of the issued ordinary shares of the Company (including the
17,500,000 New Shares to be issued pursuant to Resolution (7) above) on the Official
List of SGX-SESDAQ;
G-24
34.
(9)
the authorisation of the Directors, pursuant to Section 161 of the Companies Act, to
allot and issue, whether by way of rights, bonus or otherwise (including but not limited
to the allotment and issue of Shares at any time, whether during the continuance of
such authority or thereafter, pursuant to offers, agreements or options made or
granted by the Company while this authority remains in force), or otherwise dispose of
Shares (including making and granting offers, agreements and options which would or
which might require Shares to be issued, allotted or otherwise disposed of, whether
during the continuance of such authority or thereafter) at any time to such persons
(whether or not such persons are Shareholders), upon such terms and conditions and
for such purposes as the Directors may in their absolute discretion deem fit provided
that:(i)
the aggregate number of Shares to be issued pursuant to this resolution shall
not exceed 50% of the issued share capital of the Company; and
(ii)
where Shareholders with registered addresses in Singapore are not given the
opportunity to participate in the same on a pro rata basis, then the Shares to
be issued under such circumstances shall not exceed 20% of the issued share
capital of the Company,
and for the purpose of this resolution and pursuant to Rules 806(3) and 806(4) of the
Listing Manual, the percentage of the issued share capital shall be based on the
issued share capital at the time this resolution is passed, calculated on the postInvitation share capital of the Company and taking into account the issue of new
Shares arising from the conversion of or exercise of any convertible securities and
employee share options on issue at the time this resolution is passed, which were
issued pursuant to any previous shareholders’ approval, and adjusting for any
subsequent consolidation or sub-division of the Shares. Unless revoked or varied by
the Company in general meeting, such authority to continue in full force until the
conclusion of the next general meeting of the Company or the date by which the next
annual general meeting of the Company is required by law to be held, whichever is
earlier; and
(10)
35.
the adoption of the Select Employee Share Option Scheme and that the Directors of
the Company be authorised to allot and issue Option Shares upon the exercise of
Options granted under the Scheme.
CHANGES AND ADOPTION OF ACCOUNTING STANDARDS
The accounting standards were previously known as Statements of Accounting Standards in
Singapore. These have been replaced by the Singapore Financial Reporting Standards from 1
January 2003 which were issued following legislative changes to make compliance with accounting
standards a legal requirement. The new standards did not require any material modification of the
presentation in the financial statements.
36.
APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved and authorised for issue by the board of directors on 30
November 2004.
G-25
APPENDIX H – INDEPENDENT AUDITORS’ REVIEW REPORT AND UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS OF
30 November 2004
The Board of Directors
36 Senoko Crescent
Singapore 758282
Dear Sirs
We have reviewed the accompanying unaudited consolidated balance sheet of Select Catering Services
Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) as at 30 June 2004,
and the income statement and cash flows for the six-month period ended 30 June 2004 as set out on
pages H-2 to H-24. These unaudited consolidated financial statements are the responsibility of the
Company’s directors. Our responsibility is to issue a report on these unaudited consolidated financial
statements based on our review.
We conducted our review in accordance with Singapore Standard on Auditing applicable to review
engagements. This Standard requires that we plan and perform the review to obtain moderate assurance
as to whether the unaudited consolidated financial statements are free of material misstatement. A
review is limited primarily to inquiries of Company personnel and analytical procedures applied to
financial data and thus provides less assurance than an audit. We have not performed an audit and,
accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying
unaudited consolidated financial statements are not presented fairly, in all material respects, in
accordance with the Singapore Financial Reporting Standards.
The comparative figures for the corresponding six-month period ended 30 June 2003 were extracted
from the unaudited management financial information and we have not carried out a review of those
financial statements. The unaudited consolidated financial information is the responsibility of the Directors
of the Company.
This report has been prepared in accordance with the Singapore Securities and Futures (Offers of
Investments) (Shares and Debentures) Regulations 2002 for the purpose of incorporation in the
Prospectus of the Company dated 30 November 2004 for the invitation of 17,500,000 ordinary shares of
$0.045 each in the Company.
Yours faithfully
Singapore
Paul Lee Seng Meng
Partner-in-charge
A member of the Institute of Certified Public Accountants of Singapore
H-1
CONSOLIDATED BALANCE SHEETS
Notes
ASSETS
Current assets:
Trade receivables
Inventories
4
5
6
7
Non-current assets:
8
Total assets
Other payables
Income tax payable
9
10
11
12
13
Finance leases
22
12
13
Issued capital
Reserves
14
Total equity
NTA per share (cents)
29
The notes on pages H-6 to H-24 form an integral part of these financial statements.
H-2
As at
31 December
2003
$’000
(Audited)
As at
30 June
2004
$’000
(Unaudited)
1,674
2,120
962
118
2,214
2,753
1,023
277
4,874
6,267
7,315
8,032
7,315
8,032
12,189
14,299
883
5,304
249
118
443
69
93
5,464
157
205
446
37
7,066
6,402
517
2,226
–
517
2,130
64
2,743
2,711
1,660
720
1,844
3,342
2,380
5,186
12,189
14,299
3.16
6.90
UNAUDITED CONSOLIDATED INCOME STATEMENTS
Notes
Revenue
15
Cost of sales
Gross profit
16
Distribution costs
Six-month period
ended 30 June
2004
2003
$’000
$’000
(Unaudited) (Unaudited)
15,328
20,179
(5,798)
(7,533)
9,530
12,646
5
71
(123)
(175)
(6,199)
(7,414)
(2,952)
(3,690)
Other credits/(charges)
17
5
266
Finance costs
18
(97)
19
169
25
(111)
58
Income tax expenses
22
Net profit for the period
EPS (cents)
29
H-3
(49)
(16)
1,422
(62)
1,360
–
1,360
(280)
9
1,080
0.01
1.44
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Issued
Capital
$
Share
Premium
$
1,660
–
(23)
–
–
(4)
–
(4)
–
–
–
9
9
Balance as at 30 June 2003
1,660
–
(27)
(159)
1,474
1,660
–
(25)
745
2,380
184
1,541
–
–
1,725
–
–
1
–
1
–
–
–
1,080
1,080
1,844
1,541
(24)
1,825
5,186
Issue of share capital (Note 14)
Balance as at 30 June 2004
(b)
Translation
Reserve (a)
$
Note:
(a)
Movements not recognised in the income statement.
(b)
Not available for distribution.
H-4
Accumulated
Profits/(Losses)
$
(168)
Total
$
1,469
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six-month period
ended 30 June
2004
2003
$’000
$’000
(Unaudited) (Unaudited)
Cash flows from operating activities:
Adjustments for:
Depreciation expense
Interest expense
Interest income
Loss on disposal of subsidiary (Note 24)
58
1,360
492
97
(1)
111
6
559
62
(1)
–
17
763
(19)
588
(163)
29
(221)
(53)
1,997
–
(633)
(61)
(159)
160
(92)
Net cash generated from operations
Interest paid
Interest received
Income tax paid
924
(97)
1
(64)
1,212
(62)
1
(193)
764
958
Operating profit before working capital changes
Cash with maturity over 3 months
Trade receivables
Inventories
Other payables
Cash flows from investing activities:
Disposal of plant and equipment
Purchase of plant and equipment
–
(155)
70
(1,258)
(155)
(1,188)
Cash flows from financing activities:
Decrease in borrowings
Decrease in finance leases
Proceeds from issuing shares
(255)
(153)
–
(93)
(73)
1,725
Net cash (used in)/ generated from financing activities
(408)
1,559
(4)
1
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
197
(353)
1,330
129
Cash and cash equivalents at end of period (Note 23)
(156)
1,459
Net effect of exchange rate changes in consolidating subsidiaries
H-5
1.
GENERAL
The Company is incorporated in Singapore. The consolidated financial statements are expressed
in Singapore dollars. They are drawn up in accordance with the Singapore Financial Reporting
Standards.
The principal activities of the Company are to carry on the business as caterers of food and
beverage. The principal activities of the subsidiaries are disclosed below. There have been no
significant changes in the nature of these activities during each of the periods ended 30 June 2003
and 2004.
The registered office address is: 36 Senoko Crescent, Singapore 758282. The Company is
domiciled in Singapore.
Details of subsidiaries at the balance sheet dates are as follows
Name of subsidiaries, country of incorporation,
place of operations and principal activities
Costs in books
of company
Effective percentage
of equity held by group
2003
$’000
2004
$’000
2003
%
2004
%
Singapore
Operator of food court stalls, catering services and
staff cafeterias
250
250
100
100
Singapore
660
660
100
100
Singapore
Operators of restaurants and food court stalls
200
200
100
100
–
–
–
100
1,110
1,110
47
47
100
100
–
514
–
100
Select (F&B) Investment Pte Ltd
Singapore
Investment holding
(c)
Held by subsidiaries:
Select Food Management Sdn Bhd
Malaysia
(a)
Select F&B (Suzhou) Co Ltd (b) (d)
Processing of fast food, catering services and staff
cafeterias
(a)
(b)
(c)
(d)
Held by Select Food Management Pte Ltd.
Held by Select (F&B) Investment Pte Ltd.
Incorporated on 17 March 2004 with an issued and paid up capital of $2. The issued and paid up capital was
increased to $100,000 on 2 July 2004.
Incorporated on 2 April 2004 with a registered capital of US$3,500,000. As at the date of this report, US$600,000
has been paid up. The balance amount of the registered capital is payable by 2 April 2007.
H-6
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING CONVENTION – The financial statements are prepared in accordance with the
historical cost convention.
BASIS OF PRESENTATION – The consolidation accounting method is used for the consolidated
financial statements which include the financial statements made up to 31 December each year of
the Company and of those companies in which it holds, directly or indirectly through subsidiaries,
over 50 percent of the shares and voting rights. All significant intercompany balances and
transactions have been eliminated on consolidation. The results of the investees acquired or
disposed of during the financial year are consolidated from the respective dates of acquisition or
up to the dates of disposal. On disposal the attributable amount of unamortised goodwill is
included in the determination of the gain or loss on disposal.
GOODWILL – Goodwill or negative goodwill arising on acquisition is based on the purchase
method. Goodwill arising on consolidation represents the excess of the cost of acquisition over the
acquirer’s interest in the fair value of the identifiable assets and liabilities of the subsidiary,
acquired as at the date of acquisition. Goodwill is carried at cost less any accumulated
amortisation and any accumulated impairment losses. It is amortised on the straight-line method
over its useful life to reflect the best estimate of the period during which future economic benefits
are expected to flow to the acquirer.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the closing rate.
REVENUE RECOGNITION – Revenue from sale of goods is recognised when significant risks and
rewards of ownership are transferred to the buyer and the amount of revenue and the costs of the
transaction (including future costs) can be measured reliably. Revenue from rendering of services
that are of short duration is recognised when the services are completed. Interest revenue is
recognised on a time-proportion basis using the effective interest rate.
INVENTORIES – Inventories are measured at the lower of cost (first in first out method) and net
realisable value.
PROPERTY, PLANT AND EQUIPMENT – Property, plant and equipment are carried at cost less
any accumulated depreciation and any accumulated impairment losses. Depreciation is provided
on gross carrying amounts in equal annual instalments over the estimated useful lives of the
assets. The annual rates of depreciation are as follows:
Plant and equipment
–
–
over the remaining lease terms
10% to 20%
Depreciation is not provided for construction-in-progress.
Fully depreciated assets still in use are retained in the financial statements.
The useful life of an item of property, plant and equipment is reviewed periodically and, if
expectations are significantly different from previous estimates, the depreciation charge for the
current and future periods are adjusted.
NON-CURRENT ASSETS – Non-current assets, such as property, plant and equipment are
reviewed for impairment whenever events or changes in circumstances indicate that the net book
value of these assets may not be recoverable. Impairment losses are determined based on the
difference between fair value, which would generally approximate estimated future cash flows
discounted at the Group’s cost of capital or where appropriate the sale value, and net book value.
H-7
2.
FOREIGN CURRENCY TRANSACTIONS – The functional currency is the Singapore dollar as it
reflects the economic substance of the underlying events and circumstances of the entity.
Transactions in foreign currencies are recorded in Singapore dollars at the rates ruling at the dates
of the transactions. At each balance sheet date, recorded monetary balances and balances carried
at fair value that are denominated in foreign currencies are reported at the rates ruling at the
balance sheet date. All realised and unrealised exchange adjustment gains and losses are dealt
with in the income statement.
FOREIGN CURRENCY FINANCIAL STATEMENTS – In translating the financial statements of a
foreign entity for incorporation in the consolidated financial statements, the assets and liabilities of
self-sustaining operations denominated in currencies other than Singapore dollars are translated at
year end rates of exchange and the income and expense items are translated at average rates of
exchange for the year. The resulting translation adjustments are accumulated in a separate
component of shareholders’ equity until the disposal of the entity. Other currency gains or losses
are included in the income statement. The financial statements of foreign operations are restated
in terms of the functional currency unit current at the balance sheet date before they are translated
into the presentation currency.
INCOME TAX – The income taxes are accounted using the asset and liability method which
requires the recognition of taxes payable or refundable for the current year and deferred tax
liabilities and assets for the future tax consequence of events that have been recognised in the
financial statement or tax returns. The measurements of current and deferred tax liabilities and
assets are based on provisions of the enacted tax laws; the effects of future changes in tax laws or
rates are not anticipated. The measurement of deferred tax assets is reduced, if necessary, by the
amount of any tax benefits that, based on available evidence, are not expected to be realised. A
deferred tax liability is recognised for all taxable temporary differences, unless the deferred tax
liability arises from (a) goodwill for which amortisation is not deductible for tax purposes; or (b) the
initial recognition of an asset or liability in a transaction which (i) is not a business combination;
and (ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
RETIREMENT BENEFITS COSTS – Contributions to defined contribution retirement benefit plans
are recorded as an expense as they fall due. Contributions made to government managed
retirement benefit plans such as the Central Provident Fund which specifies the employer’s
obligations are dealt with as defined contribution retirement benefit plans.
LEASES – A finance lease is recognised as an asset and as liability in the balance sheet at
amounts equal at the inception of the lease to the fair value of the leased assets or, if lower, at the
present value of the lease payments based on the interest rate implicit in the lease. The excess of
the lease payments over the recorded lease obligations are treated as finance charges which are
allocated to each lease term so as to produce a constant rate of charge on the remaining balance
of the obligations. The assets are depreciated as owned depreciable assets. Leases where the
lessor effectively retains substantially all the risks and benefits of ownership of the leased assets
are classified as operating leases. For operating leases, lease payments are recognised as an
expense in the income statement on a straight line basis unless another systematic basis is
representative of the time pattern of the user’s benefit, even if the payments are not on that basis.
ACCOUNTING ESTIMATES – The preparation of financial statements in conformity with generally
accepted accounting principles requires the directors to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
H-8
2.
LIABILITIES AND PROVISIONS – A liability and provision is recognised when there is a present
obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. It is measured at the amount payable.
CASH – Cash for the cash flow statement includes cash and cash equivalents less bank
overdrafts.
FAIR VALUE OF FINANCIAL INSTRUMENTS – The carrying values of cash, accounts receivable,
other current financial assets, accounts payable and other current financial liabilities approximate
their fair market values due to the short-term maturity of these instruments. The fair value of longterm debt was not determined because the book values approximate the fair value. Those financial
assets that have a fixed maturity are measured at amortised cost using the effective interest rate
method. Those that do not have a fixed maturity are measured at cost. All financial assets are
subject to review for impairment.
RISK MANAGEMENT POLICIES FOR FINANCIAL INSTRUMENTS
CREDIT RISK ON FINANCIAL ASSETS – Financial assets that potentially subject the Group to
concentrations of credit risk consist principally of cash, cash equivalent and trade and other
accounts receivable. The directors believe that the financial risks associated with these financial
instruments are minimal. The Group places its cash and cash equivalents with high credit quality
institutions. The Group performs ongoing credit evaluation of its customers’ financial condition and
maintains a provision for doubtful accounts receivable based upon the expected collectibility of all
receivables. There is no significant concentration of credit risk, as the exposure is spread over a
large number of counterparties and customers.
OTHER RISKS ON FINANCIAL INSTRUMENTS – The Group monitors its interest, foreign
exchange risks, and changes in fair values from time to time and any gains and losses are
included in the income statement. The Group is exposed to interest rate price risk for financial
instruments with a fixed interest rate and to interest rate or cash flow risk for financial instruments
with a floating interest rate that is reset as market rates change. The Group is also exposed to
changes in foreign exchange rates and liquidity of businesses. The Group does not utilise forward
contracts or other arrangements to minimise these risks.
3.
RELATED PARTY TRANSACTIONS
Related parties are entities with common director or indirect shareholders or management. Parties
are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operating decisions.
The balances are without fixed repayment terms and interest unless stated otherwise.
H-9
4.
CASH AND CASH EQUIVALENTS
Not restricted in use
Restricted (a)
(a)
5.
31 December
2003
$’000
30 June
2004
$’000
1,012
662
1,552
662
1,674
2,214
This is for fixed deposits held by bankers to cover the bank facilities granted to the Group.
TRADE RECEIVABLES
Outside parties
31 December
2003
$’000
30 June
2004
$’000
2,120
2,753
The average credit periods taken by customers are about 22 days and 22 days for 2003 and 2004
respectively. The directors consider that the carrying amount of trade receivables approximates to
their fair value. Short-duration receivables with no stated interest rate are normally measured at
original invoice amount unless the effect of imputing interest would be significant.
6.
OTHER RECEIVABLES AND PREPAYMENTS
31 December
2003
$’000
Outside parties
Deposits to secure services
Prepayments
Deferred expenditure relating to IPO exercise
7.
30 June
2004
$’000
138
739
85
–
118
744
101
60
962
1,023
INVENTORIES
31 December
2003
$’000
Consumables and supplies at cost
118
H-10
30 June
2004
$’000
277
8.
PROPERTY, PLANT AND EQUIPMENT
Leasehold
properties
$’000
Plant &
Equipment
$’000
Construction
in-progress
$’000
Cost:
At 31 December 2002
Additions
Disposals
3,048
–
909
–
–
6,725
(3)
791
(75)
(25)
–
–
–
–
–
9,773
(3)
1,700
(75)
(25)
At 31 December 2003
Additions
Disposals
3,957
–
–
7,413
575
(290)
–
788
–
11,370
1,363
(290)
At 30 June 2004
3,957
7,698
788
12,443
Total
$’000
Accumulated depreciation:
At 31 December 2002
Additions
Disposals
569
–
200
–
–
2,451
(1)
864
(15)
(13)
–
–
–
–
–
3,020
(1)
1,064
(15)
(13)
At 31 December 2003
Additions
Disposals
769
101
–
3,286
458
(203)
–
–
–
4,055
559
(203)
At 30 June 2004
870
3,541
–
4,411
Net book value:
At 31 December 2003
3,188
4,127
–
7,315
At 30 June 2004
3,087
4,157
788
8,032
Certain plant and equipment are under finance lease arrangements (Note 13) and mortgaged to
banks (Note 9).
A leasehold property is held in trust by a Director.
Construction-in-progress relates to renovation and fabrication work-in-progress for a food catering
facility in Suzhou, PRC.
H-11
9.
SHORT-TERM BORROWINGS
31 December
2003
$’000
Bank overdrafts (secured)
883
30 June
2004
$’000
93
The bank overdrafts and other banking facilities of the Group are secured by: (a)
pledge of fixed deposits (Note 4);
(b)
legal mortgage of the leasehold properties (Note 8);
(c)
joint personal guarantees by certain Directors and ex-Directors; and
(d)
corporate guarantees by certain subsidiaries.
The overdraft interest rates for the Group varied from 5.25% to 5.95% per annum and 5.95% per
annum for 2003 and 2004 respectively.
10.
TRADE PAYABLES AND ACCRUED LIABILITIES
Outside parties
Accrued liabilities
31 December
2003
$’000
30 June
2004
$’000
3,753
1,551
3,878
1,586
5,304
5,464
The average credit period taken by the Group to settle payables is about 97 days and 92 days for
2003 and 2004 respectively.
11.
OTHER PAYABLES
31 December
2003
$’000
Outside parties
Directors (Note 3)
H-12
30 June
2004
$’000
169
80
157
–
249
157
12.
INTEREST-BEARING BORROWINGS
31 December
2003
$’000
30 June
2004
$’000
Bank loans (secured) (Note 9)
2,669
2,576
The borrowings are repayable as follows:
Amounts due within a year:
Bank loans (secured)
(443)
(446)
Total current portion
(443)
(446)
Non-current portion
2,226
2,130
The non-current portion is repayable as follows:
After 5 years
1,306
920
1,289
841
Non-current portion
2,226
2,130
The Group’s bank loans repayment schedules are as follows:
1.
A $597,985 loan facility is repayable in 96 instalments commencing from March 2000;
2.
3.
A $70,000 loan facility is repayable in 36 instalments commencing from July 2001, was fully
repaid in 2004;
4.
A $1,786,000 loan facility is repayable in 120 instalments commencing from January 2002;
5.
A $611,650 loan facility is repayable in 120 instalments commencing from December 2003;
6.
A $100,000 loan facility is repayable in 24 instalments commencing from May 2004;
7.
A $300,000 non-revolving credit loan facility is repayable in 24 instalments commencing from
June 2004;
8.
A $226,000 machinery loan facility is repayable in 36 instalments commencing from
November 2001;
9.
A $151,098 loan facility is repayable in 50 instalments commencing from September 2001,
was fully repaid in 2004;
10.
A $120,000 loan facility is repayable in 24 instalments commencing from July 2001, was
fully repaid in 2003; and
11.
A $160,000 loan facility is repayable in 24 instalments commencing from October 2001, was
fully repaid in 2003.
The interest rates for the bank loans varied from 3.25% to 6.5% per annum and 3.25% to 7.25%
per annum for 2003 and 2004 respectively.
H-13
13.
OBLIGATIONS UNDER FINANCE LEASES
Minimum
payments
$’000
Finance
charges
$’000
Present
Value
$’000
31 December 2003
Due within one year
71
–
(2)
–
69
–
Total
71
(2)
69
30 June 2004
Due within one year
Total
880
41
70
(4)
(6)
37
64
111
(10)
101
164
It is the Group’s policy to lease certain of its plant and equipment under finance leases. The
average lease terms are 3 to 5 years. The rates of interest for finance lease are varied from 2.9%
to 3.1% per annum and 2.9% to 6.25% per annum for 2003 and 2004 respectively. Interest rates
are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements
have been entered into for contingent rental payments. All lease obligations are denominated in
S$. The fair value of the lease obligations approximates to their carrying amount. The obligations
under finance lease are secured by the lessor’s charge over the leased assets and covered by
personal guarantee by certain of the Directors.
14.
ISSUED CAPITAL
31 December
2003
$’000
30 June
2004
$’000
Authorised:
2,000
2,000
Issued and fully paid:
1,844,005 (2003 : 1,659,605) ordinary shares of $1 each
1,660
1,844
On 30 June 2004, 184,400 ordinary shares of $1 each were issued for cash at a premium of
$8.3546 each. The proceeds were used as working capital and for purchasing plant and
equipment respectively.
H-14
15.
REVENUE
Six-month period
Ended 30 June
2004
2003
$’000
$’000
Sales of food and beverage
16.
15,328
20,179
OTHER OPERATING INCOME
Six-month period
Ended 30 June
2003
2004
$’000
$’000
Interest income from non-related companies
Others
17.
1
4
1
70
5
71
OTHER CREDITS/(CHARGES)
Six-month period
Ended 30 June
2004
2003
$’000
$’000
Foreign exchange adjustment gain
18.
11
(6)
1
(17)
5
(16)
FINANCE COSTS
Six-month period
Ended 30 June
2004
2003
$’000
$’000
Interest expense to non-related companies
97
H-15
62
19.
PROFIT BEFORE INCOME TAX FOR ON-GOING OPERATION
In addition to the charges and credits disclosed elsewhere in the notes, this item includes the
following charges/(credits):
Six-month period
Ended 30 June
2004
2003
$’000
$’000
Auditors’ remuneration:
- Auditors of Company
- Other auditors
Changes in inventories (increase)
Purchases
Directors’ fees:
- Directors of Company
Directors’ remuneration:
- Directors of Company
20.
12
1
29
5,769
8
–
(159)
7,692
–
–
114
117
STAFF COSTS
Six-month period
Ended 30 June
2004
2003
$’000
$’000
21.
Staff costs excluding directors
Contributions to defined contribution plan
4,936
402
6,085
410
Total staff costs
5,338
6,495
NUMBER OF EMPLOYEES
Six-month period
Ended 30 June
2004
2003
Number of employees at end of year excluding directors
22.
610
738
INCOME TAX
Six-month period
Ended 30 June
2003
2004
$’000
$’000
Current
Deferred
49
–
280
–
Total income tax expense
49
280
H-16
22.
INCOME TAX (Cont’d)
The income tax expense varied from the amount of income tax expense determined by applying
the Singapore income tax rate of 22% and 20% to profit before income tax for 2003 and 2004
respectively as a result of the following differences:
Six-month period
Ended 30 June
2003
2004
$’000
$’000
Income tax expense at the statutory rate
Non-allowable items
Tax exemptions
Total income tax expenses
13
71
(35)
272
40
(32)
49
280
The net deferred tax amount in the balance sheet is as follows:
31 December
2003
$’000
23.
30 June
2004
$’000
Deferred tax liabilities:
Excess of net book value of plant and equipment
(517)
(517)
Total deferred tax liabilities
(517)
(517)
CASH AND CASH EQUIVALENTS IN THE CONSOLIDATED CASH FLOW STATEMENTS
As at 30 June
2003
2004
$’000
$’000
Cash and bank balances
Bank overdrafts (secured) (Note 9)
Cash and cash equivalents at end of period
899
(1,055)
1,552
(93)
( 156)
1,459
NON CASH TRANSACTIONS - Additions to plant and equipment in 2004 amounting to $105,000
were financed by new finance leases.
H-17
24.
DISPOSAL OF SUBSIDIARY
The Group disposed its subsidiary, Zhangzhou Select Eastern Fast Food Co Ltd which carried out
the Group’s fast food business in China in February 2003.
The net assets of the subsidiary at the date of disposal was as follows:
2003
$’000
Trade payables
Other payable
82
60
(20)
(11)
111
(111)
Loss on disposal
Total consideration
–
Net cash outflow on disposal:
Cash consideration
–
Net cash outflow
–
The effect of the disposal of subsidiary on the financial position is shown above. The results at the
reporting date and on the corresponding amounts for the preceding period are disclosed in Note
25.
25.
DISCONTINUED OPERATION
The Group disposed its subsidiary, Zhangzhou Select Eastern Fast Food Co Ltd, which carried out
the Group’s fast food business in China in February 2003. The disposal is consistent with the
group’s long-term strategy to focus its activities as caterers of food and beverage and operator of
stalls at food courts, and to divest unrelated activities.
The results of the fast food business which have been included in the consolidated financial
statements, were as follows:
30 June
2003
$’000
30 June
2004
$’000
Revenue
Cost of goods sold
Distribution costs
Operating expenses
Other charges
–
–
–
–
–
(111)
–
–
–
–
–
–
Loss before income tax
Income tax expense
(111)
–
–
–
Loss from ordinary activities after income tax
(111)
–
The subsidiary contributed $740 to the Group’s net operating cash outflows, paid nil in respect of
investing activities and contributed nil in respect of financing activities.
H-18
26.
CONTINGENT LIABILITIES
The Company has guaranteed its subsidiaries’ bank loans (Notes 9 and 12). The balance
outstanding of these loans amounted to $133,651 and $80,793 as at 31 December 2003 and 30
June 2004 respectively.
The subsidiaries have guaranteed the Company’s bank loans (Notes 9 and 12). The balance
outstanding of these loans amounted to $603,962 and $759,769 as at 31 December 2003 and 30
June 2004 respectively.
The Group has an unsecured bank letter of guarantee of $69,640 and $266,640 as at 31
December 2003 and 30 June 2004 respectively.
The Group has insurance or performance guarantees for certain of its food court stalls or kitchen
premises amounting to $68,589 and nil as at 31 December 2003 and 30 June 2004 respectively.
These insurance or performance guarantees are counter indemnified by certain of the Directors
and certain related parties.
27.
CAPITAL EXPENDITURE COMMITMENTS
31 December
2003
$’000
Estimated amounts committed for future capital expenditure but not
provided for in the financial statements
28.
–
30 June
2004
$’000
2,015
OPERATING LEASE COMMITMENTS
At the balance sheet date the commitment in respect of operating leases with a term of more than
one year were as follows:
31 December
2003
$’000
30 June
2004
$’000
Within one year
Within 2 to 5 years
After 5 years
2,980
2,069
1,001
3,123
5,069
1,699
Rental expense for the year/period
3,157
1,996
Operating lease payments represent rentals payable by the Group for its leasehold property, staff
cafeterias, restaurant, food court stalls, The Expo F&B Hub, and food catering facility in Suzhou,
PRC. The leases for the leasehold property from Jurong Town Council ranged from 22 to 30 years
from January 1999 and November 2003 respectively. The lease rental terms for the canteens and
food stalls are negotiated for an average term of three years and certain rental are subject to an
escalation clause. Such increases are not included in the above amounts. In addition, certain of
the leases are covered by personal guarantees of certain of the Directors.
H-19
29.
EARNINGS PER SHARE AND NET TANGIBLE ASSETS PER SHARE
Earnings per share for the financial periods ended 30 June 2003 and 2004 have been calculated
by dividing the Group’s net profit for the period and on the basis that at the end of each financial
period, the issued share capital of the Group comprised of 75,213,400 shares of $0.045 each
which represents the pre-Invitation share capital of the Company.
Net tangible assets per share as at 31 December 2003 and 30 June 2004 have been calculated by
dividing the Group’s net tangible assets and on the basis that as at these dates, the issued share
capital of the Group comprised of 75,213,400 shares of $0.045 each which represents the preInvitation share capital of the Company.
30.
SEGMENTAL INFORMATION
For management purposes, the Group’s operating businesses are organised according to their
nature of activities. These are grouped into the following three market segments and form the basis
on which the Group reports its primary segment:a)
Institutional Catering (“IC”) segment – This segment provides food management services to
the corporate customers. They operate and manage staff cafeterias, on a contract basis, at
the premises of its corporate customers from various industries;
b)
Food Catering (“FC”) segment – This segment, provides events catering services for
corporate, community or private functions as well as daily meal delivery services to
workplaces and family units; and
c)
Food Retail (“FR”) – This segment comprises of operation of dedicated food court stalls and
public cafeterias specialising in international and local fare. It includes the operation of its
Segment results includes items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Where costs cannot be directly attributable to a market segment,
they were allocated based on revenue to each market segment.
Segment assets consist principally of trade receivables that are directly attributable to a segment.
Unallocated items comprise cash and cash equivalents, other receivables and prepayments,
inventories, property, plant and equipment, short-term borrowings, trade payables and accrued
liabilities, other payables, income tax payable, interest-bearing borrowings, finance leases, deferred
tax liabilities, minority interests, other operating income, other (charges)/credits, and finance costs
and discontinued operations.
H-20
H-21
30.
237
REVENUE
External Sales
RESULTS
Segment results
12,189
2,120
10,069
1,700
660
Capital expenditures – unallocated
752
492
9
58
(49)
169
(111)
5
5
(97)
256
15,328
Total
$’000
9,809
708
194
154
6,043
31 December 2003
126
(135)
3,935
30 June 2003
FC
FR
$’000
$’000
Segment liabilities – unallocated
Consolidated total assets
OTHER INFORMATION
Segment assets
Segment assets – unallocated
OTHER INFORMATION
Depreciation
Income tax expense
172
5,350
Market segments
Finance costs
IC
$’000
The following tables present the segment for the two periods covered under this report:-
967
196
512
7,099
IC
$’000
756
1,030
240
497
8,682
30 June 2004
123
358
4,398
30 June 2004
FC
FR
$’000
$’000
1,363
9,113
14,299
2,753
11,546
559
1,080
1,360
(280)
1,360
–
71
(16)
(62)
1,367
20,179
Total
$’000
APPENDIX H – INDEPENDENT AUDITORS’ REVIEW REPORT AND UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
OF SELECT CATERING SERVICES LIMITED
30.
Geographical segments
The following table provides an analysis of the Group revenue by geographical market which is
analysed based on the country of domicile of the customers:Six-month period
Ended 30 June
2004
2003
$’000
$’000
Singapore
Malaysia
15,092
236
19,802
377
15,328
20,179
The following is an analysis of the carrying amount of segment assets and additions to property,
plant and equipment analysed by the geographical area in which the assets are located:Carrying amount of
Segment assets
31 December
30 June
2004
2003
$’000
$’000
Singapore
Malaysia
China
11,980
209
–
13,230
220
849
12,189
14,299
Additions to property,
Plant and equipment
31 December
30 June
2004
2003
$’000
$’000
Singapore
Malaysia
China
H-22
1,673
27
–
564
11
788
1,700
1,363
31.
SUBSEQUENT EVENTS
The following significant events took place subsequent to the period ended 30 June 2004:
(a)
the Company incorporated a new subsidiary, SCS Food Services Pte Ltd, with an issued
share capital of $2 on 2 July 2004. The issued share capital was increased to $100,000 on
23 September 2004.
(b)
At an extraordinary general meeting held on 28 October 2004, the Shareholders of the
Company approved, inter alia, the following:(1)
the increase in the authorised share capital from $2,000,000 divided into 2,000,000
ordinary shares of $1.00 each to $10,350,000 divided into 10,350,000 ordinary shares
of $1.00 each;
(2)
a bonus issue of 1,540,598 new ordinary shares of $1.00 each, credited as fully paid
upon the capitalisation of $1,540,598 out of the share premium account of the
Company (the “Bonus Issue”);
(3)
the consolidation of nine ordinary shares of $1.00 each in the authorised and issued
and paid-up share capital of the Company into one ordinary share of $9.00 each
(“Share Consolidation”);
(4)
the sub-division of each ordinary share of $9.00 each in the capital of the Company
into 200 ordinary shares of $0.045 each such that the authorised share capital is
$10,350,000 divided into 230,000,000 shares of $0.045 each of which 75,213,400
ordinary shares of $0.045 each are issued and fully paid-up (“Share Split”);
(5)
the conversion of the Company into a public limited company and the consequential
change of the name to Select Catering Services Limited;
(6)
the adoption of a new set of Articles of the Company;
(7)
the issue of 17,500,000 New Shares which is 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 Shares;
(8)
the listing and quotation of the issued ordinary shares of the Company (including the
17,500,000 New Shares to be issued pursuant to Resolution (7) above) on the Official
List of SGX-SESDAQ;
H-23
31.
(9)
the authorisation of the Directors, pursuant to Section 161 of the Companies Act, to
allot and issue, whether by way of rights, bonus or otherwise (including but not limited
to the allotment and issue of Shares at any time, whether during the continuance of
such authority or thereafter, pursuant to offers, agreements or options made or
granted by our Company while this authority remains in force), or otherwise dispose
of Shares (including making and granting offers, agreements and options which would
or which might require Shares to be issued, allotted or otherwise disposed of, whether
during the continuance of such authority or thereafter) at any time to such persons
(whether or not such persons are Shareholders), upon such terms and conditions and
for such purposes as the Directors may in their absolute discretion deem fit provided
that:(i)
the aggregate number of Shares to be issued pursuant to this resolution shall
not exceed 50% of the issued share capital of the Company; and
(ii)
where Shareholders with registered addresses in Singapore are not given the
opportunity to participate in the same on a pro rata basis, then the Shares to
be issued under such circumstances shall not exceed 20% of the issued share
capital of the Company,
and for the purpose of this resolution and pursuant to Rules 806(3) and 806(4) of the
Listing Manual, the percentage of the issued share capital shall be based on the
issued share capital at the time this resolution is passed, calculated on the postInvitation share capital of the Company and taking into account the issue of new
Shares arising from the conversion of or exercise of any convertible securities and
employee share options on issue at the time this resolution is passed, which were
issued pursuant to any previous shareholders’ approval, and adjusting for any
subsequent consolidation or sub-division of the Shares. Unless revoked or varied by
the Company in general meeting, such authority to continue in full force until the
conclusion of the next general meeting of the Company or the date by which the next
annual general meeting of the Company is required by law to be held, whichever is
earlier; and
(10)
32.
the adoption of the Select Employee Share Option Scheme and that the Directors of
the Company be authorised to allot and issue Option Shares upon the exercise of
Options granted under the Scheme.
COMPARATIVE FIGURES
The financial information for the corresponding six-month period ended 30 June 2003 were
included for comparative purposes. These financial information were extracted from the unaudited
management financial statements and have not been reviewed or audited.
33.
APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved and authorised for issue by the board of directors on 30
November 2004.
H-24

Select Catering GF

Transcription

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