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HVAC EQUIPMENT
PRESSURE RELIEF DAMPER Used to maintain the positive internal pressure of clean rooms and bio-clean rooms to prevent the intrusion of contaminated air
FIRE SMOKE DAMPER Used in ventilation systems to prevent the spread of toxic gases between divisions
Reliable in emergency situations and able to withstand temperatures of up to 400 degrees Celsius without deformation
MARINE DECK FIRE DAMPER (CLASS H) Used in the ventilation systems of oil rigs and in the offshore oil and gas (“O&G”) industry to prevent the spread of fire, smoke and gas between fire zones
GRILLES AND DIFFUSERS Used mainly in commercial and industrial buildings to ensure even distribution of air within a confined space
BALL JET DIFFUSER Aesthetically appealing and used in large open areas, such as concert halls, airports, theatres and museums for spot cooling or heating
Placement of 35,800,000 Placement Shares at S$0.21 for each Placement Share, payable in full on application. OFFER DOCUMENT DATED 6 JANUARY 2016
(Registered by the Singapore Exchange Securities Trading Limited (the “SGX-ST” or “Exchange”) acting as agent on behalf of the Monetary Authority of Singapore (the “Authority”) on 6 January 2016)
This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax or other professional adviser(s).
UOB Kay Hian Private Limited (the “Issue Manager, Sponsor and Placement Agent”, “Sponsor” or “UOBKH”) has on behalf of Eindec Corporation Limited (the “Company”), made an application to the SGX-ST for permission to deal in, and for quotation of, all the ordinary shares (the “Shares”) in the capital of the Company already issued, the Placement Shares (as defined herein) and the new Shares which may be issued pursuant to the Awards to be granted under the Eindec Performance Share Plan 2015 (the “Performance Shares”), on Catalist (as defined herein).
Acceptance of applications will be conditional upon, inter alia, the issue of the Placement Shares and permission being granted by the SGX-ST for the listing and quotation of all our existing issued Shares, the Placement Shares and the Performance Shares on Catalist. Monies 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 and the Sponsor if the admission and listing does not proceed. The dealing in and quotation of the Shares will be in Singapore Dollars.
Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the Main Board of the SGX-ST. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing
in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s).
A copy of this Offer Document has been lodged with and registered by the SGX-ST, acting as agent on behalf of the Authority, on 11 December 2015 and 6 January 2016 respectively. Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor confirming that our Company is suitable to be listed and complies with the Catalist Rules (as defined herein). Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares, the Placement Shares or the Performance Shares, as the case may be, being offered for investment. The registration of this Offer Document by the SGX-ST, acting as agent on behalf of the Authority, does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, or requirements under the SGX-ST’s listing rules, have been complied with.
We have not lodged this Offer Document in any other jurisdiction.
Investing in our Shares involves risks which are described in the section entitled “Risk Factors” of this Offer Document.
After the expiration of six (6) months from the date of registration of this Offer Document, no person shall make an offer of our Shares, or allot, issue or sell any of our Shares, on the basis of this Offer Document; and no officer or equivalent person or promoter of our Company will authorise or permit the offer of any of our Shares or the allotment, issue or sale of any of our Shares, on the basis of this Offer Document.
Issue Manager, Sponsor and Placement Agent
UOB KAY HIAN PRIVATE LIMITED(Incorporated in the Republic of Singapore)
(Company Registration Number: 197000447W)
EIN
DE
C C
OR
PO
RA
TIO
N L
IMIT
ED
CORPORATE PROFILE
We are a regional clean air environmental and technological solutions group with diversified product lines spanning the commercial, industrial and consumer market segments.
With an operating history since 1984, we have an established track record in the design, manufacture and distribution of clean room and heating, ventilation and air-conditioning (“HVAC”) equipment across a diversified customer base.
Leveraging on our technological expertise in clean room equipment, we have ventured into the consumer air purifier market with our own brand of smart air purifiers. We have completed the design and prototype of a new line of AJB air purifiers for distribution to the consumer market in the PRC.
We operate two manufacturing facilities in Singapore and Malaysia, with our facility in Singapore serving as our headquarters and research and development (“R&D”) centre. We have also established offices in Malaysia, Singapore and the PRC.
EINDEC CORPORATION LIMITED(Company Registration No.: 201508913H)
(Incorporated in the Republic of Singapore on 2 April 2015)
8 Pandan Crescent#01-06
Singapore 128464
EINDEC CORPORATION LIMITED(Company Registration No.: 201508913H)
(Incorporated in the Republic of Singapore on 2 April 2015)
A REGIONAL CLEAN AIR ENVIRONMENTAL AND TECHNOLOGICAL SOLUTIONS PROVIDER
DIVERSIFIED RANGE OF PRODUCTSENVIRONMENTAL AND TECHNOLOGICAL SOLUTIONS PRODUCTS
SMART AIR PURIFIERCertified to filter PM2.5 pollutants, formaldehyde and benzene
Dual ability to provide both fresh air intake ventilation and air purification through filters
Compact size suitable for residential homes and offices
Energy saving efficiency
Automatic temperature control system
Allows remote control through smartphones
* commercial office floor plan
CLEAN ROOM EQUIPMENT
FAN FILTER UNIT Self-contained ceiling unit used in clean room applications in the semiconductor, electronics, optical, biological, pharmaceutical and food industries, and in laboratory environments
AIR SHOWER Prevents clean room contamination by using air jets to blow at and remove fine particles attached to clothing, footwear and other materials
Easy integration with any clean room design, can be custom-built to specific requirements and offers high degree of flexibility
HVAC EQUIPMENT
PRESSURE RELIEF DAMPER Used to maintain the positive internal pressure of clean rooms and bio-clean rooms to prevent the intrusion of contaminated air
FIRE SMOKE DAMPER Used in ventilation systems to prevent the spread of toxic gases between divisions
Reliable in emergency situations and able to withstand temperatures of up to 400 degrees Celsius without deformation
MARINE DECK FIRE DAMPER (CLASS H) Used in the ventilation systems of oil rigs and in the offshore oil and gas (“O&G”) industry to prevent the spread of fire, smoke and gas between fire zones
GRILLES AND DIFFUSERS Used mainly in commercial and industrial buildings to ensure even distribution of air within a confined space
BALL JET DIFFUSER Aesthetically appealing and used in large open areas, such as concert halls, airports, theatres and museums for spot cooling or heating
Placement of 35,800,000 Placement Shares at S$0.21 for each Placement Share, payable in full on application. OFFER DOCUMENT DATED 6 JANUARY 2016
(Registered by the Singapore Exchange Securities Trading Limited (the “SGX-ST” or “Exchange”) acting as agent on behalf of the Monetary Authority of Singapore (the “Authority”) on 6 January 2016)
This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax or other professional adviser(s).
UOB Kay Hian Private Limited (the “Issue Manager, Sponsor and Placement Agent”, “Sponsor” or “UOBKH”) has on behalf of Eindec Corporation Limited (the “Company”), made an application to the SGX-ST for permission to deal in, and for quotation of, all the ordinary shares (the “Shares”) in the capital of the Company already issued, the Placement Shares (as defined herein) and the new Shares which may be issued pursuant to the Awards to be granted under the Eindec Performance Share Plan 2015 (the “Performance Shares”), on Catalist (as defined herein).
Acceptance of applications will be conditional upon, inter alia, the issue of the Placement Shares and permission being granted by the SGX-ST for the listing and quotation of all our existing issued Shares, the Placement Shares and the Performance Shares on Catalist. Monies 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 and the Sponsor if the admission and listing does not proceed. The dealing in and quotation of the Shares will be in Singapore Dollars.
Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the Main Board of the SGX-ST. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing
in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s).
A copy of this Offer Document has been lodged with and registered by the SGX-ST, acting as agent on behalf of the Authority, on 11 December 2015 and 6 January 2016 respectively. Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor confirming that our Company is suitable to be listed and complies with the Catalist Rules (as defined herein). Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares, the Placement Shares or the Performance Shares, as the case may be, being offered for investment. The registration of this Offer Document by the SGX-ST, acting as agent on behalf of the Authority, does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, or requirements under the SGX-ST’s listing rules, have been complied with.
We have not lodged this Offer Document in any other jurisdiction.
Investing in our Shares involves risks which are described in the section entitled “Risk Factors” of this Offer Document.
After the expiration of six (6) months from the date of registration of this Offer Document, no person shall make an offer of our Shares, or allot, issue or sell any of our Shares, on the basis of this Offer Document; and no officer or equivalent person or promoter of our Company will authorise or permit the offer of any of our Shares or the allotment, issue or sale of any of our Shares, on the basis of this Offer Document.
Issue Manager, Sponsor and Placement Agent
UOB KAY HIAN PRIVATE LIMITED(Incorporated in the Republic of Singapore)
(Company Registration Number: 197000447W)
EIN
DE
C C
OR
PO
RA
TIO
N L
IMIT
ED
CORPORATE PROFILE
We are a regional clean air environmental and technological solutions group with diversified product lines spanning the commercial, industrial and consumer market segments.
With an operating history since 1984, we have an established track record in the design, manufacture and distribution of clean room and heating, ventilation and air-conditioning (“HVAC”) equipment across a diversified customer base.
Leveraging on our technological expertise in clean room equipment, we have ventured into the consumer air purifier market with our own brand of smart air purifiers. We have completed the design and prototype of a new line of AJB air purifiers for distribution to the consumer market in the PRC.
We operate two manufacturing facilities in Singapore and Malaysia, with our facility in Singapore serving as our headquarters and research and development (“R&D”) centre. We have also established offices in Malaysia, Singapore and the PRC.
EINDEC CORPORATION LIMITED(Company Registration No.: 201508913H)
(Incorporated in the Republic of Singapore on 2 April 2015)
8 Pandan Crescent#01-06
Singapore 128464
EINDEC CORPORATION LIMITED(Company Registration No.: 201508913H)
(Incorporated in the Republic of Singapore on 2 April 2015)
A REGIONAL CLEAN AIR ENVIRONMENTAL AND TECHNOLOGICAL SOLUTIONS PROVIDER
DIVERSIFIED RANGE OF PRODUCTSENVIRONMENTAL AND TECHNOLOGICAL SOLUTIONS PRODUCTS
SMART AIR PURIFIERCertified to filter PM2.5 pollutants, formaldehyde and benzene
Dual ability to provide both fresh air intake ventilation and air purification through filters
Compact size suitable for residential homes and offices
Energy saving efficiency
Automatic temperature control system
Allows remote control through smartphones
* commercial office floor plan
CLEAN ROOM EQUIPMENT
FAN FILTER UNIT Self-contained ceiling unit used in clean room applications in the semiconductor, electronics, optical, biological, pharmaceutical and food industries, and in laboratory environments
AIR SHOWER Prevents clean room contamination by using air jets to blow at and remove fine particles attached to clothing, footwear and other materials
Easy integration with any clean room design, can be custom-built to specific requirements and offers high degree of flexibility
Provide wide range of customised air-cleaning technology products and value-added services to various sectors• Including 11 clean room equipment and 20 HVAC equipment
product lines, which complement one another• Cater to customers in various industries – building, clean
room, offshore O&G industries• Completed design and prototype of our own brand of air
purifiers that has been launched in the PRC• Able to customise and adapt existing products and provide
value added services
Specialised engineering and design capabilities• Able to design and manufacture customised products to
meet customers’ requirements and offer new products with innovative or enhanced features
• Leveraged on engineering and design capabilities to complete design and prototype of our own brand of air purifiers
Establishment of a new business for environmental and technological products in the PRC• Commercialisation of our own brand of air purifiers by our
marketing and sales team in the PRC under, amongst others, the AJB brand
• Tap on application programming interface to monitor the need for maintenance or replacement of components so as to increase revenue from existing customers
• Expand product range to other environmental and technological solutions, such as water filters
Experienced and dedicated management team• Key management and operations personnel have extensive
knowledge and experience in the manufacture and sale of clean room and HVAC equipment
• Our Executive Director and CEO is assisted by two Vice Presidents in engineering, R&D and business development both in the Southeast Asian and PRC markets
Established customer network and track record• Established customer base and significant presence
internationally• Significant proportion of repeat customers is an endorsement
of the quality of our products and services and reflects customers’ confidence in us
COMPETITIVE
STRENGTHSBUSINESS STRATEGIES AND
FUTURE PLANS
• Secured signed purchase orders for our clean room and HVAC equipment business of S$1.41 million to be fulfilled in FY2015• Entered into a sale and purchase contract in relation to our air purifier business for a total value of RMB25.0 million of which a
deposit of RMB10.0 million has been received
ORDER
BOOK
Investment in R&D of new and existing products• Invest in engineering capabilities and R&D as well as employ
more engineers • Develop new products and enhance existing products, in
particular, fire and smoke dampers, fan-filter units and air purifiers
Establishment and enhancement of manufacturing capabilities• Expand existing manufacturing facilities in Singapore and
Malaysia • Establish manufacturing capabilities in the PRC, in particular, to
manufacture our air purifier products
1 Information is extracted from a news release by the Building and Construction Authority dated 8 January 2015 (http://www.bca.gov.sg/Newsroom/pr08012015_BCA.html)2 Information is extracted from the Singapore Clean Room Equipment Industry Report as set out in Appendix I of this Offer Document3 Information is extracted from the PRC Consumer Air Purifier Industry Report as set out in Appendix J of this Offer Document
Increasing demand for clean room and HVAC equipment in Singapore and emerging markets• Majority of our revenue is from our clean room and HVAC equipment business generated from the building and electronics industry in
Singapore• Average construction demand in Singapore is expected to be sustained between S$27.0 billion and S$37.0 billion in 2016 and 2017,
and S$26.0 billion to S$37.0 billion in 2018 and 2019 per annum1 • Growth of domestic industries in emerging markets which require clean room and HVAC equipment
Increasing need to upgrade or restructure sophisticated manufacturing facilities and to equip production plants in various industries• Increasing demand for clean room equipment in the food, chemical and pharmaceutical manufacturing industries• Increasing requirement for production plants to be equipped with clean room equipment in the electronics and semiconductor industries• Clean room equipment industry in Singapore is projected to grow at an average annual pace of up to 3.0% in the next 5 years2
Increasing demand for air purifiers in the PRC• Driven by increasingly affluent middle class and increased public awareness on worsening air pollution• Demand growth for consumer air purifiers in the PRC is expected to grow at a compounded annual growth rate of 30.2% from 2014
to 20173
Increasing demand for fire and smoke dampers in the offshore O&G sector• In line with growth of the offshore O&G sector in Singapore and the PRC
PROSPECTS
FY: Financial year ended 31 December 1H: Half year ended 30 June
FINANCIAL
HIGHLIGHTSAudited Unaudited
S$’000 FY2012 FY2013 FY2014 1H2014 1H2015
Revenue 17,895 14,375 14,270 6,618 6,600
Gross Profit 6,859 5,573 4,959 2,528 2,303
Gross Profit Margin (%) 38.3 38.8 34.8 38.2 34.9
Net Profit 3,032 1,732 1,366 738 358
Provide wide range of customised air-cleaning technology products and value-added services to various sectors• Including 11 clean room equipment and 20 HVAC equipment
product lines, which complement one another• Cater to customers in various industries – building, clean
room, offshore O&G industries• Completed design and prototype of our own brand of air
purifiers that has been launched in the PRC• Able to customise and adapt existing products and provide
value added services
Specialised engineering and design capabilities• Able to design and manufacture customised products to
meet customers’ requirements and offer new products with innovative or enhanced features
• Leveraged on engineering and design capabilities to complete design and prototype of our own brand of air purifiers
Establishment of a new business for environmental and technological products in the PRC• Commercialisation of our own brand of air purifiers by our
marketing and sales team in the PRC under, amongst others, the AJB brand
• Tap on application programming interface to monitor the need for maintenance or replacement of components so as to increase revenue from existing customers
• Expand product range to other environmental and technological solutions, such as water filters
Experienced and dedicated management team• Key management and operations personnel have extensive
knowledge and experience in the manufacture and sale of clean room and HVAC equipment
• Our Executive Director and CEO is assisted by two Vice Presidents in engineering, R&D and business development both in the Southeast Asian and PRC markets
Established customer network and track record• Established customer base and significant presence
internationally• Significant proportion of repeat customers is an endorsement
of the quality of our products and services and reflects customers’ confidence in us
COMPETITIVE
STRENGTHSBUSINESS STRATEGIES AND
FUTURE PLANS
• Secured signed purchase orders for our clean room and HVAC equipment business of S$1.41 million to be fulfilled in FY2015• Entered into a sale and purchase contract in relation to our air purifier business for a total value of RMB25.0 million of which a
deposit of RMB10.0 million has been received
ORDER
BOOK
Investment in R&D of new and existing products• Invest in engineering capabilities and R&D as well as employ
more engineers • Develop new products and enhance existing products, in
particular, fire and smoke dampers, fan-filter units and air purifiers
Establishment and enhancement of manufacturing capabilities• Expand existing manufacturing facilities in Singapore and
Malaysia • Establish manufacturing capabilities in the PRC, in particular, to
manufacture our air purifier products
1 Information is extracted from a news release by the Building and Construction Authority dated 8 January 2015 (http://www.bca.gov.sg/Newsroom/pr08012015_BCA.html)2 Information is extracted from the Singapore Clean Room Equipment Industry Report as set out in Appendix I of this Offer Document3 Information is extracted from the PRC Consumer Air Purifier Industry Report as set out in Appendix J of this Offer Document
Increasing demand for clean room and HVAC equipment in Singapore and emerging markets• Majority of our revenue is from our clean room and HVAC equipment business generated from the building and electronics industry in
Singapore• Average construction demand in Singapore is expected to be sustained between S$27.0 billion and S$37.0 billion in 2016 and 2017,
and S$26.0 billion to S$37.0 billion in 2018 and 2019 per annum1 • Growth of domestic industries in emerging markets which require clean room and HVAC equipment
Increasing need to upgrade or restructure sophisticated manufacturing facilities and to equip production plants in various industries• Increasing demand for clean room equipment in the food, chemical and pharmaceutical manufacturing industries• Increasing requirement for production plants to be equipped with clean room equipment in the electronics and semiconductor industries• Clean room equipment industry in Singapore is projected to grow at an average annual pace of up to 3.0% in the next 5 years2
Increasing demand for air purifiers in the PRC• Driven by increasingly affluent middle class and increased public awareness on worsening air pollution• Demand growth for consumer air purifiers in the PRC is expected to grow at a compounded annual growth rate of 30.2% from 2014
to 20173
Increasing demand for fire and smoke dampers in the offshore O&G sector• In line with growth of the offshore O&G sector in Singapore and the PRC
PROSPECTS
FY: Financial year ended 31 December 1H: Half year ended 30 June
FINANCIAL
HIGHLIGHTSAudited Unaudited
S$’000 FY2012 FY2013 FY2014 1H2014 1H2015
Revenue 17,895 14,375 14,270 6,618 6,600
Gross Profit 6,859 5,573 4,959 2,528 2,303
Gross Profit Margin (%) 38.3 38.8 34.8 38.2 34.9
Net Profit 3,032 1,732 1,366 738 358
Page
CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
GLOSSARY OF TECHNICAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS . . . . . . . . . . . 17
SELLING RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
DETAILS OF THE PLACEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
LISTING ON CATALIST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
INDICATIVE TIMETABLE FOR LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
OFFER DOCUMENT SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
OVERVIEW OF OUR GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
THE PLACEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
RISKS RELATING TO OUR BUSINESS OR THE INDUSTRY. . . . . . . . . . . . . . . . . . . . . . 33
GENERAL RISKS AND RISKS RELATING TO OUR OVERSEAS OPERATIONS . . . . . . . 40
RISKS RELATING TO INVESTMENT IN OUR SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 46
USE OF PROCEEDS AND EXPENSES OF THE PLACEMENT . . . . . . . . . . . . . . . . . . . . 50
PLACEMENT STATISTICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
OWNERSHIP STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP . . . . . . . . . . . . . . . . . . . . 59
MORATORIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
RESTRUCTURING EXERCISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
GROUP STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SUMMARY OF OUR FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
CONTENTS
1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
REVIEW OF PAST PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
REVIEW OF PAST FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
LIQUIDITY AND CAPITAL RESOURCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS . . . . . . . . . . . . . . . . . . . . . . 86
CAPITAL COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
OPERATING LEASE COMMITMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
FOREIGN EXCHANGE MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SEASONALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
INFLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
CONTINGENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
CHANGES IN ACCOUNTING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
GENERAL INFORMATION ON OUR GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
OUR HISTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
BUSINESS OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
OUR PRODUCTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
FABRICATION AND INSTALLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
DESIGN, FABRICATION AND INSTALLATION FACILITIES . . . . . . . . . . . . . . . . . . . . . . . 103
QUALITY ASSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
MARKETING AND SALES ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
DISTRIBUTORSHIP AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
RESEARCH AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
PROPERTIES AND FIXED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
LICENCES, PERMITS, REGISTRATIONS AND APPROVALS . . . . . . . . . . . . . . . . . . . . . . 113
INVENTORY MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
CREDIT MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
STAFF TRAINING AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
GOVERNMENT REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
MAJOR CUSTOMERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
MAJOR SUPPLIERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
COMPETITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
COMPETITIVE STRENGTHS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
SINGAPORE CLEAN ROOM EQUIPMENT INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . 122
PRC CONSUMER AIR PURIFIER INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . 123
CONTENTS
2
PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS . . . . . . . . . . . . . . . . . . . 125
PROSPECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
BUSINESS STRATEGIES AND FUTURE PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
ORDER BOOK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
TREND INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
INTERESTED PERSON TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
PAST INTERESTED PERSON TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
OTHER TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS . . . . . . . . . . . . . . 133
GUIDELINES AND REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON
TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
POTENTIAL CONFLICTS OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
INTERESTS OF EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
INTERESTS OF THE ISSUE MANAGER, SPONSOR AND PLACEMENT AGENT . . . . . . 137
DIRECTORS, MANAGEMENT AND STAFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
MANAGEMENT REPORTING STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED
EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
SERVICE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
THE EINDEC PERFORMANCE SHARE PLAN 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
EXCHANGE CONTROLS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
GENERAL AND STATUTORY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . 163
SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
MEMORANDUM AND ARTICLES OF ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
MANAGEMENT, SPONSORSHIP AND PLACEMENT ARRANGEMENTS . . . . . . . . . . . . . 166
LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
RESPONSIBILITY STATEMENT BY OUR DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 171
DOCUMENTS AVAILABLE FOR INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
CONTENTS
3
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OF EINDEC
CORPORATION LIMITED AND ITS SUBSIDIARIES FOR THE FINANCIAL YEARS
ENDED 31 DECEMBER 2012, 2013 AND 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIAL STATEMENTS OF
EINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR THE SIX-MONTH
PERIOD ENDED 30 JUNE 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C – GOVERNMENT REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
APPENDIX D – DESCRIPTION OF ORDINARY SHARES . . . . . . . . . . . . . . . . . . . . . . . . D-1
APPENDIX E – SUMMARY OF SELECTED ARTICLES OF ASSOCIATION OF OUR
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015 . . . . . . F-1
APPENDIX G – TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
APPENDIX H – TERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1
APPENDIX I – SINGAPORE CLEAN ROOM EQUIPMENT INDUSTRY REPORT . . . . . . I-1
APPENDIX J – PRC CONSUMER AIR PURIFIER INDUSTRY REPORT . . . . . . . . . . . . . J-1
CONTENTS
4
BOARD OF DIRECTORS : Zhang Wei (Non-Executive Chairman)
Paul Chia (Executive Director and CEO)
See Yen Tarn (Independent Director)
Lawrence Wong (Independent Director)
Jeffrey Ong (Independent Director)
COMPANY SECRETARY : Shirley Tan Sey Liy (ACIS)
REGISTERED OFFICE : 8 Pandan Crescent, #01-06
Singapore 128464
PRINCIPAL PLACES OF BUSINESS : Singapore
8 Pandan Crescent, #01-06
Singapore 128464
Malaysia
Lot 854, Jalan Sengkang
81000 Kulai, Johor
Malaysia
People’s Republic of China
Room 2502, 25th Floor, Tongmao Building
No. 357 Songlin Road
Pudong New Area Shanghai, PRC
Floor 13, No. 2 Office Building
Longhua Agency
Shenzhen Broadcast Film Television Group
Culture Originality Industrial Park
Longhua New District, Shenzhen Municipality,
PRC
ISSUE MANAGER, SPONSOR AND
PLACEMENT AGENT
: UOB Kay Hian Private Limited
8 Anthony Road, #01-01
Singapore 229957
SHARE REGISTRAR : RHT Corporate Advisory Pte. Ltd.
6 Battery Road, #10-01
Singapore 049909
SOLICITORS TO THE PLACEMENT
AND LEGAL ADVISER TO OUR
COMPANY ON SINGAPORE LAW
: Bird & Bird ATMD LLP
2 Shenton Way
#18-01 SGX Centre 1
Singapore 068804
SOLICITORS TO THE ISSUE
MANAGER, SPONSOR AND
PLACEMENT AGENT
: Colin Ng & Partners LLP
36 Carpenter Street
Singapore 059915
CORPORATE INFORMATION
5
LEGAL ADVISER TO OUR
COMPANY ON MALAYSIAN LAW
: Tay & Partners
6th Floor, Plaza See Hoy Chan
Jalan Raja Chulan
50200 Kuala Lumpur
Malaysia
LEGAL ADVISER TO OUR
COMPANY ON PRC LAW
: Grandall Law Firm (Shanghai)
23-25/F Garden Square
968 West Beijing Road
Shanghai 200041, PRC
AUDITORS AND REPORTING
ACCOUNTANTS
: KPMG LLP
16 Raffles Quay
#22-00 Hong Leong Building
Singapore 048581
Partner-in-charge: Tay Puay Cheng
(a practising member of the Institute of Singapore
Chartered Accountants)
INDEPENDENT MARKET
RESEARCHER
: Converging Knowledge Private Limited
43 B&C Tras Street
Singapore 078982
PRINCIPAL BANKER : United Overseas Bank Limited
80 Raffles Place
UOB Plaza
Singapore 048624
RECEIVING BANKER : The Bank of East Asia, Limited
Singapore Branch
60 Robinson Road
BEA Building
Singapore 068892
CORPORATE INFORMATION
6
In this Offer Document and the accompanying Application Forms, the following definitions apply
where the context so admits:
Companies within our Group
“Company” : Eindec Corporation Limited
“Eindec Holdings” : Eindec Holdings Pte. Ltd.
“Eindec Malaysia” : Eindec Technology (Malaysia) Sdn. Bhd. (formerly known as
Kyodo-Allied (Malaysia) Sdn. Bhd.)
“Eindec Shanghai” : Eindec (Shanghai) Co. Ltd. (優多商貿(上海)有限公司)
“Eindec Shenzhen” : Eindec (Shenzhen) Environmental Technology Co., Ltd. (英德(深圳)環保科技有限公司)
“Eindec Singapore” : Eindec Singapore Pte. Ltd.
“Group” : Our Company and our subsidiaries, following the completion
of the Restructuring Exercise, treated for the purpose of this
Offer Document as if the group structure had been in
existence since 1 January 2012
“Kyodo-Allied (Thailand)” : Kyodo-Allied (Thailand) Co. Ltd.
Other corporations, agencies and entities
“Authority” : The Monetary Authority of Singapore
“CDP” : The Central Depository (Pte) Limited
“CPF” : The Central Provident Fund
“IRAS” : Inland Revenue Authority of Singapore
“ISO” : International Organisation for Standardisation
“Kyodo-Allied Industries” : Kyodo-Allied Industries Pte. Ltd. or Kyodo-Allied Industries
Ltd., as the case may be, now known as “Weiye Holdings
Limited” following the completion of the Reverse Takeover
“Liang Chi” : Liang Chi Industry Co., Ltd.
“SAFE” : State Administration of Foreign Exchange
“SGX-ST” or “Exchange” : Singapore Exchange Securities Trading Limited
DEFINITIONS
7
“UOBKH” or “Issue
Manager, Sponsor and
Placement Agent” or
“Sponsor”
: UOB Kay Hian Private Limited
“Weiye” : Weiye Holdings Limited, a company listed on the Main Board
of the SGX-ST
“Xie Tong International” : Xie Tong International Pte. Ltd. (formerly known as Kyodo
Allied International Pte. Ltd.)
“Xie Tong Technology” : Xie Tong Technology Pte. Ltd. (formerly known as Kyodo-
Allied Technology Pte Ltd)
General
“1H” : The six (6)-month financial period ended 30 June
“AJB” : Aijiabao (愛家寶), being one of the brand names under which
our Company’s air purifiers are intended to be marketed
“Application Forms” : The printed application forms to be used for the purpose of the
Placement and which form part of this Offer Document
“Application List” : The list of applications for subscription for the Placement
Shares
“Articles” or
“Articles of Association”
: The articles of association of our Company, as amended or
modified from time to time
“ASEAN” : Association of Southeast Asian Nations, which includes
Indonesia, Malaysia, the Philippines, Singapore, Thailand,
Brunei, Cambodia, Laos, Myanmar and Vietnam
“Associate” : (a) in relation to any director, chief executive officer,
substantial shareholder or controlling shareholder (being
an individual) means:
(i) his immediate family;
(ii) the trustees of any trust of which he or his
immediate family is a beneficiary or, in the case of
a discretionary trust, is a discretionary object; or
(iii) any company in which he and his immediate family
together (directly or indirectly) have an interest of
30.0% or more;
DEFINITIONS
8
(b) in relation to a substantial shareholder or a controlling
shareholder (being a company) means any other
company which is its subsidiary or holding company or is
a subsidiary of such holding company or one in the
equity of which it and/or such other company or
companies taken together (directly or indirectly) have an
interest of 30.0% or more
“associated company” : In relation to a corporation, means:
(a) any corporation in which the corporation or its subsidiary
has, or the corporation and its subsidiary together have,
a direct interest of not less than 20.0% but not more than
50.0% of the aggregate of the nominal amount of all the
voting shares; or
(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
“Audit Committee” : The audit committee of our Company as at the date of this
Offer Document, unless otherwise stated
“Award” : A contingent award of Shares granted pursuant to the rules of
the Eindec Performance Share Plan 2015
“Board” or “Board of
Directors”
: The board of Directors of our Company as at the date of this
Offer Document, unless otherwise stated
“Catalist” : The sponsor-supervised listing platform of the SGX-ST
“Catalist Rules” : Section B of the Listing Manual of the SGX-ST: Rules of
Catalist, as amended, modified or supplemented from time to
time
“CEO” : Chief Executive Officer
“Clean Room and HVAC
Equipment Business”
: The business of design, manufacture and distribution of clean
room and HVAC equipment
“Companies Act” : The Companies Act (Chapter 50) of Singapore, as amended,
modified or supplemented from time to time
DEFINITIONS
9
“Controlling Shareholder” : As defined in the Catalist Rules:
(a) a person who has an interest of 15.0% or more of the
aggregate of the nominal amount of all the voting shares
in our Company (unless otherwise determined by the
SGX-ST); or
(b) a person who in fact exercises control over our Company
“Directors” : The directors of our Company as at the date of this Offer
Document, unless otherwise stated
“Eindec Performance Share
Plan 2015” or “Plan”
: The Eindec Performance Share Plan 2015, adopted by our
Company on 8 December 2015, the terms of which are set out
in Appendix F of this Offer Document
“Entity at Risk” : (a) Our Company;
(b) a subsidiary of our Company that is not listed on the
SGX-ST or an approved exchange; or
(c) an associated company of our Company that is not listed
on the SGX-ST or an approved exchange, provided that
our Group, or our Group and our Interested Person(s),
has control over the associated company
“EPS” : Earnings per Share
“Executive Director” : The executive director of our Company as at the date of this
Offer Document, unless otherwise stated
“Executive Officers” : The executive officers of our Group as at the date of this Offer
Document, unless otherwise stated
“Existing Shareholder” : The existing shareholder of our Company following the
Restructuring Exercise and immediately prior to the
Placement
“Facilities” : Our design, fabrication and installation facilities, as set out in
the section entitled “General Information on Our Group –
Design, Fabrication and Installation Facilities” of this Offer
Document
“FY” : Financial year ended or ending 31 December, as the case
may be
“GST” : Goods and Services Tax
DEFINITIONS
10
“Independent Directors” : The independent directors of our Company as at the date of
this Offer Document, unless otherwise stated
“Interested Person” : (a) A Director, CEO or Controlling Shareholder of our
Company; or
(b) an Associate of any such Director, CEO or Controlling
Shareholder
“Interested Person
Transaction”
: A transaction between an Entity at Risk and an Interested
Person
“Latest Practicable Date” : 30 November 2015, being the latest practicable date prior to
the lodgement of this Offer Document with the SGX-ST, acting
as agent on behalf of the Authority
“Listing” : The proposed listing of our Company and the quotation of all
our Shares on Catalist
“LONWORKS® ” : A registered trademark of Echelon Corporation
“Management Agreement” : The management and full sponsorship agreement dated 6
January 2016 entered into between our Company and
UOBKH pursuant to which UOBKH agreed to manage and
sponsor the Listing, as described in the section entitled
“General and Statutory Information – Management,
Sponsorship and Placement Arrangements” of this Offer
Document
“Market Day” : A day on which the SGX-ST is open for trading in securities
“Master Reorganisation” : The transfer of the assets and liabilities in connection with
Weiye’s manufacturing business to Xie Tong Technology, as
defined in the section entitled “Interested Person Transactions
– Past Interested Person Transactions” of this Offer
Document
“Memorandum” or
“Memorandum of
Association”
: The memorandum of association of our Company, as
amended or modified from time to time
“NAV” : Net asset value
“Nominating Committee” : The nominating committee of our Company as at the date of
this Offer Document, unless otherwise stated
“NTA” : Net tangible assets
DEFINITIONS
11
“Offer Document” : This Offer Document dated 6 January 2016 issued by our
Company in respect of the Placement
“PER” : Price earnings ratio
“Performance Shares” : The new Shares which may be allotted and issued from time
to time pursuant to the vesting of Awards granted under the
Plan
“Period Under Review” : The period comprising FY2012, FY2013, FY2014 and 1H2015
“Placement” : The placement of the Placement Shares by the Issue
Manager, Sponsor and Placement Agent on behalf of our
Company for subscription at the Placement Price, subject to
and on the terms and conditions of this Offer Document
“Placement Agreement” : The placement agreement dated 6 January 2016 entered into
between our Company and UOBKH pursuant to which UOBKH
agreed to subscribe for and/or procure subscribers for the
Placement Shares at the Placement Price, as described in the
section entitled “General and Statutory Information –
Management, Sponsorship and Placement Arrangements” of
this Offer Document
“Placement Price” : S$0.21 for each Placement Share
“Placement Shares” : The 35,800,000 new Shares which are the subject of the
Placement
“PRC” : The People’s Republic of China
“PRC Consumer Air Purifier
Industry Report”
: The industry report dated 10 September 2015 for the
consumer air purifier industry in the PRC as set out in
Appendix J of this Offer Document
“Register of Members” : The register of members of our Company
“Remuneration Committee” : The remuneration committee of our Company as at the date of
this Offer Document, unless otherwise stated
“Restructuring Exercise” : The corporate restructuring exercise undertaken in
connection with the Placement, as described in the section
entitled “Restructuring Exercise” of this Offer Document
“Reverse Takeover” : The reverse takeover of Kyodo-Allied Industries by Weiye in
2011, pursuant to which, inter alia, Kyodo-Allied Industries
became known as Weiye
“R&D” : Research and development
DEFINITIONS
12
“Securities Account” : The securities account maintained by a depositor with CDP
but does not include a securities sub-account
“Service Agreement” : The service agreement entered into between our Company
and our Executive Director and CEO, Paul Chia, as described
in the section entitled “Directors, Management and Staff –
Service Agreement” of this Offer Document
“SFA” or “Securities &
Futures Act”
: The Securities and Futures Act (Chapter 289) of Singapore,
as amended, modified or supplemented from time to time
“SFR” : Securities and Futures (Offers of Investments) (Share and
Debentures) Regulations 2005 of Singapore as amended,
modified or supplemented from time to time
“SGXNET” : Singapore Exchange Network, the corporate announcement
system maintained by the SGX-ST for the submission of
announcements by listed companies
“SGX-Sesdaq” : Stock Exchange of Singapore Dealing and Automated
Quotation System, the predecessor of Catalist
“Shares” : Ordinary shares in the capital of our Company
“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
“Singapore” : The Republic of Singapore
“Singapore Clean Room
Equipment Industry Report”
: The industry report dated 10 September 2015 for the clean
room equipment industry in Singapore as set out in Appendix
I of this Offer Document
“Substantial
Shareholder(s)”
: A person who has an interest in our Shares, the total votes
attached to which is not less than 5.0% of the total votes
attached to all the voting shares of our Company
“Thailand” : The Kingdom of Thailand
“USA” : United States of America
“Vice President” : A vice president of our Company as at the date of this Offer
Document, unless otherwise stated
“Weiye Group” : Has the meaning ascribed to it in the section entitled
“Interested Person Transactions” of this Offer Document
DEFINITIONS
13
“Xie Tong Business” : All the businesses and assets of Xie Tong Technology as at 30
June 2015, save for a term loan from Bank of China Limited,
Singapore Branch, and all taxation, as defined in the section
entitled “Restructuring Exercise” of this Offer Document
Currencies, Units and Others
“RM” : Malaysian Ringgit, the lawful currency of Malaysia
“RMB” : PRC Renminbi, the lawful currency of the PRC
“S$” and “cents” : Singapore dollars and cents respectively, the lawful currency
of Singapore
“sqm” : Square metre
“THB” : Thai baht, the lawful currency of Thailand
“%” : Per centum or percentage
Names used in this
Offer Document Names in National Registration Identity Card
“Andy Tan” : Tan Kian Kok (Chen Jianguo)
“Eddie Tan” : Eddie Tan Meng Seah
“Jeffrey Ong” : Ong Shen Chieh (Wang Shengjie)
“Lawrence Wong” : Wong Chee Meng, Lawrence
“Paul Chia” : Chia Wei Ho
The expressions “Depositor”, “Depository Agent” and “Depository Register” shall have the
meanings ascribed to them respectively in Section 130A of the Companies Act.
The terms “related corporation”, “related entity”, “subsidiary entity” and “substantial
interest-holder” shall have the same meaning ascribed to them respectively in the Companies Act,
SFA, SFR and/or the Catalist Rules, as the case may be.
Any word defined under the Companies Act, the SFA or any statutory modification thereof and
used in this Offer Document and the Application Form shall, where applicable, have the meaning
assigned to it under the Companies Act, the SFA or any statutory modification thereof, as the case
may be.
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.
DEFINITIONS
14
Any reference in this Offer Document and/or the Application Forms to any statute or enactment is
a reference to that statute or enactment as for the time being amended or re-enacted.
Any reference in this Offer Document and/or the Application Forms to Shares being allotted to an
applicant includes allotment to CDP for the account of that Applicant.
Any reference to a time of day in this Offer Document and/or the Application Forms shall be a
reference to Singapore time, unless otherwise stated.
References in this Offer Document to “our Group”, “we”, “our”, “us”, or other grammatical
variations thereof refer to our Company, our Group or any member of our Group, as the context
requires. For purposes of the section entitled “General Information on Our Group – Our History”
of this Offer Document, reference to “our Group”, “we”, “our”, and “us” includes our Group and the
businesses acquired pursuant to the acquisition of the Xie Tong Business, as described in the
section entitled “Restructuring Exercise” of this Offer Document.
Any discrepancies in tables, graphs and/or charts included herein between the listed amounts 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 that precede them. Where applicable, figures and
percentages are rounded off.
If there is any inconsistency between the Chinese name of the PRC laws and regulations or PRC
entities mentioned in this Offer Document and their English translation, the Chinese version shall
prevail.
Translated English names of Chinese natural persons, legal persons, governmental authorities,
institutions or other entities for which no official English translation exists are unofficial
translations for reference only.
Amounts stated in this Offer Document, where converted into other currencies, are used for
illustration purposes only and, save as otherwise stated, should not be construed as a
representation that the relevant numbers have been or could be converted at such rates or at any
other rate.
DEFINITIONS
15
To facilitate a better understanding of the business of our Group, the following glossary provides
an explanation and description of certain terms and abbreviations used in this Offer Document in
connection with our Group. The terms and abbreviations and their assigned meanings may not
correspond to standard industry or common meanings, as the case may be, or usage of these
terms and abbreviations.
“clean room” : A confined area in which the humidity, temperature and
particles in the air are precisely controlled within specified
units
“cooling tower” : A structure used to dissipate heat by cooling water. Water is
pumped to the top of a tower, sprayed out into the centre, and
is cooled by evaporation as it falls through air blowing through
it, and then is either re-cycled within the plant or discharged
“damper” : An air ventilation device used to regulate the amount of air
entering and leaving a room or confined space
“FFU” : Fan Filter Unit. This refers to a motorised device used to
continuously extract and filter off micro-size air particles from
a clean room to maintain a high level of air cleanliness
“FFU system” : A centralised computer system used to control a network of
FFUs
“HVAC” : Heating, ventilation and air-conditioning
“M&E” : Mechanical and electrical
GLOSSARY OF TECHNICAL TERMS
16
All statements contained in this Offer Document, statements made in press releases and oral
statements that may be made by us or our Directors, Executive Officers or employees acting on
our behalf, that are not statements of historical fact, constitute “forward-looking statements”. You
can identify some of these forward-looking statements by terms such as “expect”, “believe”, “plan”,
“intend”, “estimate”, “anticipate”, “may”, “will”, “would” and “could” or similar words. However, you
should note that these words are not the exclusive means of identifying forward-looking
statements. All statements regarding our expected financial position, business strategies, plans
and prospects are forward-looking statements.
These forward-looking statements, including, without limitation, statements as to our revenue and
profitability, cost measures, planned strategy and anticipated expansion plans, expected growth,
expected industry trends and any other matters discussed in this Offer Document 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 actual results, performance or achievements to be materially different
from any future results, performance or achievements expected, expressed or implied by these
forward-looking statements. These risks, uncertainties and other factors include, among others:
(a) changes in political, social and economic conditions, the regulatory environment, laws and
regulations and interpretation thereof in the jurisdictions where we conduct business or
expect to conduct business;
(b) the risk that we may be unable to realise our anticipated growth strategies and expected
internal growth;
(c) changes in currency exchange rates;
(d) changes in the availability and prices of materials, technical parts and equipment which we
require to operate our business;
(e) changes in customers’ preferences and needs;
(f) changes in competitive conditions and our ability to compete under such conditions, locally
and internationally;
(g) changes in our future capital needs and the availability of financing and capital to fund these
needs;
(h) changes in technology;
(i) other factors beyond our control; and
(j) the factors described in the section entitled “Risk Factors” of this Offer Document.
Some of these risk factors are discussed in greater detail in this Offer Document, in particular, the
discussions under the sections entitled “Risk Factors” and “Management’s Discussion and
Analysis of Results of Operations and Financial Position” of this Offer Document. All forward-
looking statements made by or attributable to us, our Directors or persons acting on our behalf
contained in this Offer Document are expressly qualified in their entirety by such factors. These
forward-looking statements are applicable only as of the date of this Offer Document.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
17
Given the risks and uncertainties that may cause our actual future results, performance or
achievements to be materially different from that expected, expressed or implied by the
forward-looking statements in this Offer Document, undue reliance must not be placed on these
statements. None of our Company, the Issue Manager, Sponsor and Placement Agent, our
advisers or any other person represents or warrants that our actual future results, performance or
achievements will be as discussed in those statements.
Our actual future results may differ materially from those anticipated in these forward-looking
statements as a result of the risks faced by us. Further, each of our Company, the Issue Manager,
Sponsor and Placement Agent and our advisers disclaims 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 for any reason, even if new
information becomes available or other events occur in future.
We are, however, subject to the provisions of the SFA and the Catalist Rules regarding corporate
disclosure. In particular, pursuant to Section 241 of the SFA, if after the registration of this Offer
Document but before the close of the Placement, our Company becomes aware of:
(a) a false or misleading statement in this Offer Document;
(b) an omission from this Offer Document of any information that should have been included in
it under Section 243 of the SFA or under the Catalist Rules; or
(c) a new circumstance that has arisen since this Offer Document was lodged with the SGX-ST,
acting as agent on behalf of the Authority which would have been required by Section 243
of the SFA or under the Catalist Rules to be included in this Offer Document, if it had arisen
before this Offer Document was lodged,
and that is materially adverse from the point of view of an investor, our Company may, in
consultation with the Issue Manager, Sponsor and Placement Agent, lodge a supplementary or
replacement offer document with the SGX-ST, acting as agent on behalf of the Authority.
We are also subject to the provisions of the Catalist Rules regarding corporate disclosure upon
our admission to Catalist.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
18
Singapore
This Offer Document does not constitute an offer, solicitation or invitation to subscribe for the
Placement Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is
not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation.
No action has been or will be taken under the requirements of the legislation or regulations of, or
of the legal or regulatory requirements of any jurisdiction, except for the lodgement and/or
registration of this Offer Document in Singapore in order to permit a public offering of the
Placement Shares and the public distribution of this Offer Document in Singapore. The distribution
of this Offer Document and the offering of the Placement Shares in certain jurisdictions may be
restricted by the relevant laws in such jurisdictions. Persons who may come into possession of this
Offer Document are required by our Company and the Issue Manager, Sponsor and Placement
Agent to inform themselves about, and to observe and comply with, any such restrictions at their
own expense and without liability to our Company and the Issue Manager, Sponsor and Placement
Agent.
Persons to whom a copy of this Offer Document has been issued shall not circulate to any other
person, reproduce or otherwise distribute this Offer Document or any information herein for any
purpose whatsoever nor permit or cause the same to occur.
SELLING RESTRICTIONS
19
LISTING ON CATALIST
The Sponsor has, on our behalf, made an application to the SGX-ST for permission to deal in, and
for the listing and quotation of, all our Shares already issued, the Placement Shares which are the
subject of the Placement, and the Performance Shares on Catalist. Such permission will be
granted when our Company has been admitted to Catalist. The dealing in, and quotation of, our
Shares, the Placement Shares and the Performance Shares will be in Singapore dollars.
Companies listed on Catalist may carry higher investment risk when compared with larger or more
established companies listed on the Main Board of the SGX-ST. In particular, companies may list
on Catalist without a track record of profitability and there is no assurance that there will be a liquid
market in the shares or units of shares traded on Catalist. You should be aware of the risks of
investing in such companies and should make the decision to invest only after careful
consideration and, if appropriate, consultation with your professional adviser(s).
The Placement is made in or accompanied by this Offer Document that has been registered by the
Exchange acting as agent on behalf of the Authority. We have not lodged or registered this Offer
Document in any other jurisdiction.
Neither the Authority nor the Exchange has examined or approved the contents of this Offer
Document. Neither the Authority nor the Exchange assumes any responsibility for the contents of
this Offer Document, including the correctness of any of the statements or opinions made or
reports contained in this Offer Document. The Exchange does not normally review the application
for admission but relies on the Sponsor confirming that our Company is suitable to be listed and
complies with the Catalist Rules. Neither the Authority nor the Exchange has in any way
considered the merits of our existing issued Shares, the Placement Shares or the Performance
Shares, as the case may be, being offered or in respect of which the Placement is made, for
investment.
Admission to Catalist is not to be taken as an indication of the merits of the Placement, our
Company, our Subsidiaries, our existing issued Shares, the Placement Shares which are the
subject of the Placement, and the Performance Shares.
A copy of this Offer Document has been lodged with and registered by the Exchange, acting as
agent on behalf of the Authority. The registration of this Offer Document by the Exchange, acting
as agent on behalf of the Authority, does not imply that the SFA, the Catalist Rules or any other
legal or regulatory requirements, or requirements under the Exchange’s listing rules, have been
complied with.
Acceptance of applications will be conditional upon, inter alia, the allotment and issuance of this
Placement Shares and upon permission being granted by the Exchange for the listing and
quotation of all our existing issued Shares, the Placement Shares and the Performance Shares on
Catalist. If the admission, listing and trading of our Shares do not occur or the said permission is
not granted for any reason, monies paid in respect of any application accepted will be returned to
the applicant at the applicant’s own risk, without interest or any share of revenue or other benefit
arising therefrom, and the applicant will not have any claims against us, our Directors or the Issue
Manager, Sponsor and Placement Agent.
After the expiration of six (6) months from the date of registration of this Offer Document, no
person shall make an offer of securities, or allot, issue or sell any of our Shares, on the basis of
this Offer Document; and no officer or equivalent person or promoter of our Company will
authorise or permit the offer of any of our Shares or the allotment, issue or sale of any of our
Shares, on the basis of this Offer Document.
DETAILS OF THE PLACEMENT
20
We are subject to the provisions of the SFA and the Catalist Rules regarding corporate disclosure.
In particular, pursuant to Section 241 of the SFA, if after this Offer Document is registered but
before the close of the Placement, we become aware of:
(a) a false or misleading statement in this Offer Document;
(b) an omission from this Offer Document of any information that should have been included in
it under Section 243 of the SFA or under the Catalist Rules; or
(c) a new circumstance that has arisen since this Offer Document was lodged with the
Exchange, acting as agent on behalf of the Authority, which would have been required by
Section 243 of the SFA or under the Catalist Rules to be included in this Offer Document, if
it had arisen before this Offer Document was lodged,
and that is materially adverse from the point of view of an investor, we may, in consultation with
the Issue Manager, Sponsor and Placement Agent, lodge a supplementary or replacement offer
document pursuant to Section 241 of the SFA with the Exchange, acting as agent on behalf of the
Authority.
In the event that a supplementary or replacement offer document is lodged with the SGX-ST,
acting as agent on behalf of the Authority, the Placement shall be kept open for at least 14 days
after the lodgement of such supplementary or replacement offer document.
Where prior to the lodgement of the supplementary or replacement offer document, applications
have been made under this Offer Document to subscribe for the Placement Shares and:
(a) where the Placement Shares have not been issued to the applicants, we shall either:
(i) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date of
lodgement of the supplementary or replacement offer document, give the applicants
notice in writing of how to obtain, or arrange to receive, a copy of the same and provide
the applicants with an option to withdraw their applications; and take all reasonable
steps to make available within a reasonable period the supplementary or replacement
offer document, as the case may be, to the applicants who have indicated they wish to
obtain, or who have arranged to receive, a copy of the supplementary or replacement
offer document;
(ii) within seven (7) days from the date of lodgement of the supplementary or replacement
offer document, give the applicants the supplementary or replacement offer document,
as the case may be, and provide the applicants with an option to withdraw their
applications; or
(iii) treat the applications as withdrawn and cancelled, in which case the applications shall
be deemed to have been withdrawn and cancelled; and we shall, within seven (7) days
from the date of lodgement of the supplementary or replacement offer document, return
to the applicants all monies the applicants have paid on account of their applications for
the Placement Shares, without interest or any share of revenue or other benefit arising
therefrom, and at the applicants’ own risk and the applicants shall not have any claim
whatsoever against our Company, or the Issue Manager, Sponsor and Placement
Agent; or
DETAILS OF THE PLACEMENT
21
(b) where the Placement Shares have been issued to the applicants, but trading has not
commenced we shall either:
(i) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date of
lodgement of the supplementary or replacement offer document, give the applicants
notice in writing of how to obtain, or arrange to receive, a copy of the same and provide
the applicants with an option to return to us the Placement Shares which they do not
wish to retain title in; and take all reasonable steps to make available within a
reasonable period the supplementary or replacement offer document, as the case may
be, to the applicants who have indicated they wish to obtain, or who have arranged to
receive, a copy of the supplementary or replacement offer document;
(ii) within seven (7) days from the date of lodgement of the supplementary or replacement
offer document, give the applicants the supplementary or replacement offer document,
as the case may be, and provide the applicants with an option to return to us the
Placement Shares which they do not wish to retain title in; or
(iii) treat the issue of the Placement Shares as void, in which case the issue shall be
deemed void and we shall within seven (7) days from the date of lodgement of the
supplementary or replacement offer document, pay the applicants all monies the
applicants have paid on account of their applications for the Placement Shares, without
interest or any share of revenue or other benefit arising therefrom and at the applicants’
own risk.
An applicant who wishes to exercise his option under paragraph (a)(i) or (a)(ii) to withdraw his
application shall, within 14 days from the date of lodgement of the supplementary or replacement
offer document, notify us of this, whereupon we shall, within seven (7) days from the receipt of
such notification, return to him all monies paid by him on account of his application for the
Placement Shares without interest or any share of revenue or other benefit arising therefrom and
at his own risk, and he will not have any claim against our Company and the Issue Manager,
Sponsor and Placement Agent.
An applicant who wishes to exercise his option under paragraph (b)(i) or (b)(ii) to return the
Placement Shares issued to him shall, within 14 days from the date of lodgement of the
supplementary or replacement offer document, notify us of this and return all documents, if any,
purporting to be evidence of title to those Placement Shares, to us, whereupon we shall within
seven (7) days from the receipt of such notification and documents, if any, return to him all monies
paid by him for those Placement Shares, without interest or any share of revenue or other benefit
arising therefrom and at his own risk, and he will not have any claim against our Company and the
Issue Manager, Sponsor and Placement Agent, provided, however, that such monies shall be
returned to the applicant subject to and against the return or transfer of the Placement Shares
within such 14-day period free from and clear of any lieus, pledges, encumbrances or other
third-party rights to our Company or in accordance with the instructions set out in the notice (as
referred to in paragraph (b)(i)), or the supplementary or replacement offer document (as the case
may be), and our Company shall, at our discretion, act with respect to and dispose of the
Placement Shares, in such manner as may be permitted by the applicable laws.
Pursuant to Section 242 of the SFA, the Authority may, in certain circumstances issue a stop order
(the “Stop Order”) to our Company, directing that no Shares or no further Shares to which this
Offer Document relates, be allotted or issued. Such circumstances will include a situation where
(i) this Offer Document contains any statement or matter which, in the Authority’s opinion, is false
or misleading, (ii) this Offer Document omits any information that should have been included in it
DETAILS OF THE PLACEMENT
22
under the SFA, (iii) this Offer Document does not, in the Authority’s opinion, comply with the
requirements of the SFA, or (iv) the Authority is of the opinion that it is in the public interest to do
so.
In the event that the Authority issues a Stop Order and applications to subscribe for the Placement
Shares have been made prior to the Stop Order, then:
(a) where the Placement Shares have not been issued to the applicants, the applications for the
Placement Shares shall be deemed to have been withdrawn and cancelled and we shall,
within 14 days from the date of the Stop Order, return to the applicants all monies the
applicants have paid on account of their applications for the Placement Shares; or
(b) where the Placement Shares have been issued to the applicants, the issue of the Placement
Shares shall be deemed to be void and we shall:
(i) if no documents purporting to evidence title to those Placement Shares have been
issued to the applicants, within 14 days from the date of the Stop Order, return to the
applicants all monies paid by them for the Placement Shares; or
(ii) if documents purporting to evidence title to those Placement Shares have been issued
to the applicants, within 14 days from the date of the Stop Order, inform the applicants
to return such documents to us within 14 days from that date and within 14 days from
the receipt of such documents or the date of the Stop Order, whichever is later, return
to the applicants all monies paid by them for the Placement Shares.
Where monies are to be returned to applicants for the Placement Shares, they shall be paid to the
applicants without any interest or share of revenue or benefit arising therefrom and at the
applicants’ own risk, and the applicants will not have any claim against our Company and the
Issue Manager, Sponsor and Placement Agent.
This Offer Document has been seen and approved by our Directors and they collectively and
individually accept full responsibility for the accuracy of the information given in this Offer
Document and confirm, after making all reasonable enquiries, that to the best of their knowledge
and belief, this Offer Document constitutes a full and true disclosure of all material facts about the
Listing, the Placement and our Group, and our Directors are not aware of any facts the omission
of which would make any statement in this Offer Document misleading. Where information in this
Offer Document has been extracted from published or otherwise publicly available sources or
obtained from a named source, the sole responsibility of our Directors has been to ensure that
such information has been accurately and correctly extracted from those sources and/or
reproduced in this Offer Document in its proper form and context.
Neither our Company, the Issue Manager, Sponsor and Placement Agent nor any other parties
involved in the Placement 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 Offer Document should be considered as being business, legal or tax advice
regarding an investment in our Shares. Each prospective investor should consult his own legal,
financial, tax or other professional adviser regarding an investment in our Shares.
The Placement Shares are offered for subscription solely on the basis of the information contained
and the representations made in this Offer Document.
No person has been or is authorised to give any information or to make any representation not
contained in this Offer Document in connection with the Placement and, if given or made, such
information or representation must not be relied upon as having been authorised by us or the
DETAILS OF THE PLACEMENT
23
Issue Manager, Sponsor and Placement Agent. Neither the delivery of this Offer Document, the
Application Forms nor any document relating to the Placement shall, under any circumstances,
constitute a continuing representation or create any suggestion or implication that there has been
no change or development reasonably likely to create any change in the affairs of our Company
or our subsidiaries or in any statement of fact or information contained in this Offer Document
since the date of this Offer Document. Where such changes occur and are material or are required
to be disclosed by law, we will promptly make an announcement of the same to the Exchange and
if required under the SFA, a supplementary or replacement offer document will be issued and
made available to the public after a copy thereof has been lodged with the Exchange, acting as
agent on behalf of the Authority, in compliance with the requirements of the SFA. All applicants
should take note of any such announcement and/or supplementary or replacement offer document
and, upon the release of such an announcement and/or supplementary or replacement offer
document, shall be deemed to have notice of such changes.
Save as expressly stated in this Offer Document, nothing herein is, or may be relied upon as, a
promise or representation as to the future performance or policies of our Company or our
subsidiaries.
This Offer Document has been prepared solely for the purpose of the Placement and may not be
relied upon by any persons other than the applicants in connection with their application for the
Placement Shares or for any other purpose.
This Offer Document does not constitute an offer, solicitation or invitation to subscribe for
the Placement Shares in any jurisdiction in which such offer, solicitation or invitation is
unlawful or is not authorised or to any person to whom it is unlawful to make such offer,
solicitation or invitation.
Copies of this Offer Document and the Application Forms may be obtained on request, subject to
availability, during office hours from:
UOB Kay Hian Private Limited
8 Anthony Road
#01-01
Singapore 229957
An electronic copy of this Offer Document is also available on the SGX-ST website at
http://www.sgx.com.
The Placement will be open from 6 January 2016 (immediately upon the registration of this
Offer Document by the SGX-ST, acting as agent on behalf of the Authority) to 13 January
2016.
The Application List will open immediately upon the registration of this Offer Document by
the Exchange, acting as agent on behalf of the Authority, and will remain open until 12.00
noon on 13 January 2016 or for such further period or periods as our Directors may, in
consultation with the Issue Manager, Sponsor and Placement Agent, in their absolute
discretion decide, subject to any limitation under all applicable laws and regulations. In the
event a supplementary or replacement offer document is lodged with the SGX-ST, acting as
agent on behalf of the Authority, the Application List will remain open for at least 14 days
after the lodgement of the supplementary or replacement Offer Document.
Details of the procedures for applications to subscribe for the Placement Shares are set out
in Appendix H of this Offer Document.
DETAILS OF THE PLACEMENT
24
An indicative timetable for the Placement and trading in our Shares is set out below:
Indicative date and time Event
6 January 2016 (immediately upon
registration of this Offer Document)
Commencement of the Placement
13 January 2016 at 12.00 noon Close of Application List
15 January 2016 at 9.00 a.m. Commence trading on a “ready” basis
20 January 2016 Settlement date for all trades done on a
“ready” basis
The above timetable is indicative only as it assumes that the date of closing of the Application List
will be 13 January 2016, the date of admission of our Company to the Catalist is 15 January 2016,
the shareholding spread requirement will be complied with and the Placement Shares will be
issued and fully paid-up prior to 15 January 2016. The actual date on which our Shares will
commence trading on a “ready” basis will be announced when it is confirmed by the SGX-ST.
The above timetable and procedures may be subject to such modifications as the SGX-ST may,
in its absolute discretion, decide, including the commencement of trading on a “ready” basis and
the commencement date of such trading.
Investors should consult the SGX-ST’s announcement of the “ready” trading date on the
internet (on the SGX-ST’s website http://www.sgx.com), or the local newspapers or check
with their brokers on the date on which trading on a “ready” basis will commence.
In the event of any changes in the closure of the Application List or the time period during which
the Placement is open, we will publicly announce the same:
(a) through an SGXNET announcement to be posted on the internet at the SGX-ST website
http://www.sgx.com; and
(b) in a local English language newspaper.
We will provide details of the results of the Placement (including the level of subscription and the
results of the distribution of the Placement Shares) as soon as practicable after the closure of the
Application List through the channels described in (a) and (b) above.
INDICATIVE TIMETABLE FOR LISTING
25
The Placement
The Placement is for 35,800,000 Placement Shares offered in Singapore and the Listing is
managed and sponsored by UOBKH.
Prior to the Placement, there has been no public market for our Shares. The Placement Price is
determined by us in consultation with the Issue Manager, Sponsor and Placement Agent, after
taking into consideration, inter alia, the prevailing market conditions and estimated market
demand for the Placement Shares. The Placement Price is the same for all Placement Shares and
is payable in full on application.
The Placement Shares are made available to retail and institutional investors who may apply
through their brokers or financial institutions by way of the relevant Application Forms.
Application for the Placement Shares may be made only by way of printed Application Forms. The
terms and conditions and procedures for application and acceptance are set out in Appendix H of
this Offer Document.
Pursuant to the Placement Agreement entered into between us and UOBKH as set out in the
section entitled “General and Statutory Information – Management, Sponsorship and Placement
Arrangements” of this Offer Document, UOBKH has agreed to subscribe for and/or procure
subscribers for the 35,800,000 Placement Shares for a placement commission of 3.25% of the
aggregate Placement Price for the total number of Placement Shares successfully subscribed, to
be paid by our Company. UOBKH may, at its absolute discretion, appoint one or more
sub-placement agent(s) for the Placement Shares.
Subscribers of the Placement Shares may be required to pay brokerage or selling commission of
up to 1.0% of the Placement Price for each Placement Share (and the prevailing GST thereon, if
applicable) to UOBKH or any sub-placement agent(s) that may be appointed by UOBKH.
Subscription for the Placement Shares
None of our Directors or Substantial Shareholders intends to subscribe for Placement Shares
pursuant to the Placement. As far as we are aware, none of our Independent Directors, the
members of our Company’s management or employees intends to subscribe for more than five
percent (5.0%) of the Placement Shares pursuant to the Placement.
To the best of our knowledge and belief, as at the date of this Offer Document, we are not aware
of any person who intends to subscribe for more than five percent (5.0%) of the Placement
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 Shares amounting to more
than five percent (5.0%) of the Placement Shares. If such person(s) were to make an application
for Shares amounting to more than five percent (5.0%) of the Placement Shares and are
subsequently allotted such number of Shares, we will make the necessary announcements at an
appropriate time. The final allotment of Shares will be in accordance with the shareholding spread
and distribution guidelines as set out in Rule 406 of the Catalist Rules.
No Shares shall be allotted or allocated on the basis of this Offer Document later than six (6)
months after the date of registration of this Offer Document by the SGX-ST, acting as agent on
behalf of the Authority.
PLAN OF DISTRIBUTION
26
Interests of the Issue Manager, Sponsor and Placement Agent
In the reasonable opinion of our Directors, UOBKH does not have a material relationship with our
Company save as disclosed below and in the section entitled “General and Statutory Information
– Management, Sponsorship and Placement Arrangements” of this Offer Document:
(a) UOBKH is the Issue Manager, Sponsor and Placement Agent of the Listing and the
Placement; and
(b) UOBKH will be the continuing Sponsor of our Company for a period of three (3) years from
the date our Company is admitted and listed on Catalist.
PLAN OF DISTRIBUTION
27
The following summary highlights certain information found in greater detail elsewhere in this
Offer Document. Terms defined elsewhere in this Offer Document have the same meaning when
used herein. In addition to this summary, we urge you to read the entire Offer Document carefully,
especially the section entitled “Risk Factors” of this Offer Document, before deciding to invest in
our Shares.
OVERVIEW OF OUR GROUP
Our Company
Our Company was incorporated in Singapore on 2 April 2015 under the Companies Act as a
private limited company, under the name of “Eindec Corporation Pte. Ltd.”. Our Company’s
registration number is 201508913H. Our Company was converted into a public limited company
and renamed as “Eindec Corporation Limited” in connection therewith on 10 December 2015. Our
Company became the holding company of our Group following the completion of the Restructuring
Exercise on 10 December 2015. For more information, please refer to the section entitled
“Restructuring Exercise” of this Offer Document.
Our Group’s business can be traced back to August 1984 when Kyodo-Allied Industries was
incorporated, and subsequently listed on SGX-Sesdaq in 2002. Pursuant to the Reverse
Takeover, it is now known as “Weiye Holdings Limited”.
Our Business
We are a regional clean air environmental and technological solutions group.
We design, manufacture and distribute a wide range of clean room equipment such as FFUs, air
showers, clean benches, clean booths, clean hand dryers, clean supply units and pass boxes.
These clean room equipment are used to create a clean room environment which is essential in
the manufacture and production processes of industries such as the electronics, pharmaceutical
and food processing industries. Most of our clean room equipment are customised and tailored to
cater to the unique specifications of each of our customers.
We also design, manufacture and distribute a wide range of HVAC equipment such as grilles,
diffusers, fire dampers and marine dampers. These HVAC equipment consist of deflection grilles
and air diffusers installed in commercial and industrial buildings which serve to channel and
regulate airflow in the environment within a building to ensure even air distribution. Our business
also includes the design, manufacture and distribution of fire dampers and marine dampers, as
well as the distribution and installation of cooling towers which are an integral and essential
feature of any water-chilled centralised air conditioning system.
In addition to the above, we have also ventured into the consumer air purifier market by leveraging
on our technological expertise in clean room equipment. In particular, we completed the design
and prototype of our own brand of air purifiers for distribution to the consumer market in the PRC,
which has been launched in the PRC. We plan to sell our brand of air purifier products to
customers such as appointed local distributors, property developers and corporations for
installation in homes and offices for consumer end users, as well as through e-commerce
platforms. Once we have established a presence in the consumer market, we also intend to
expand our air purifier product range for the commercial and industrial markets.
OFFER DOCUMENT SUMMARY
28
We have Facilities in Malaysia and Singapore, with our Facility in Singapore serving as our
corporate headquarters and R&D centre. We distribute and supply our products to countries in the
Asia-Pacific and Middle East regions and have established offices in Malaysia, Singapore and the
PRC. We have been awarded the ISO 9002 certification since 1996.
Please refer to the sections entitled “General Information on Our Group – Our History” and
“General Information on Our Group – Business Overview” of this Offer Document for further
details.
Our Competitive Strengths
Our Directors believe our competitive strengths are as follows:
• We are a regional clean air environmental and technological solutions group providing a wide
range of customised air-cleaning technology products and value-added services to various
sectors
• We have specialised engineering and design capabilities
• We have an experienced and dedicated management team
• We have an established customer network and track record
Please refer to the section entitled “General Information on Our Group – Competitive Strengths”
of this Offer Document for further details.
Prospects
Barring unforeseen circumstances, our Directors believe that the outlook for our business is
positive due to the following factors:
• Increasing demand from emerging markets for clean room equipment and HVAC equipment
arising from domestic growth of industries
• Increasing need to upgrade or restructure sophisticated manufacturing facilities and to equip
production plants in various industries
• Increasing demand for air-cleaning technology products in the PRC
• Increasing demand for fire and smoke dampers in the offshore oil and gas sector in
Singapore and the PRC
Our Business Strategies and Future Plans
Our business strategies and future plans are as follows:
• Establishment of a new business for environmental and technological solutions products in
the PRC
• Investment in the research and development of new and existing products
• Establishment and enhancement of manufacturing capabilities
OFFER DOCUMENT SUMMARY
29
Please refer to the section entitled “Prospects, Business Strategies and Future Plans – Business
Strategies and Future Plans” of this Offer Document for further details.
Where you can find us
Our principal office and registered office is located at 8 Pandan Crescent, #01-06, Singapore
128464. Our telephone and facsimile numbers are +65 6265 1311 and +65 6265 8100,
respectively. Our Company registration number is 201508913H. Our internet address is
http://www.kyodo.com.sg. Information contained on our website does not constitute part of
this Offer Document.
FINANCIAL HIGHLIGHTS
The following summary financial information should be read in conjunction with the full text of this
Offer Document, including the “Audited Combined Financial Statements of Eindec Corporation
Limited and its Subsidiaries for the Financial Years Ended 31 December 2012, 2013 and 2014”
and the “Unaudited Interim Combined Financial Statements of Eindec Corporation Limited and its
Subsidiaries for the Six-Month Period Ended 30 June 2015” as set out in Appendices A and B
respectively of this Offer Document, as well as the section entitled “Management’s Discussion and
Analysis of Results of Operations and Financial Position” of this Offer Document.
Selected items from the combined statements of comprehensive income of our Group(1)
Audited Unaudited
S$’000 FY2012 FY2013 FY2014 1H2015
Revenue 17,895 14,375 14,270 6,600
Gross profit 6,859 5,573 4,959 2,303
Profit before income tax 2,845 2,005 1,627 415
Profit for the year/period 3,032 1,732 1,366 358
Pre-Placement EPS (cents)(2) 4.22 2.41 1.90 0.50
Post-Placement EPS (cents)(3) 2.82 1.61 1.27 0.33
Selected items from the combined statements of financial position of our Group(4)
Audited Unaudited
S$’000
As at
31 December
2012
As at
31 December
2013
As at
31 December
2014
As at
30 June
2015
Non-current assets 6,072 5,548 5,424 5,443
Current assets 10,938 10,938 11,067 12,442
Total assets 17,010 16,486 16,491 17,885
Non-current liabilities 1,211 992 703 609
Current liabilities 9,656 7,760 6,780 8,043
Total liabilities 10,867 8,752 7,483 8,652
Total equity 6,143 7,734 9,008 9,233
NAV 6,143 7,734 9,008 9,233
NAV per Share (cents)(5) 8.54 10.76 12.53 12.84
OFFER DOCUMENT SUMMARY
30
Notes:
(1) Our combined statements of comprehensive income for the Period Under Review have been prepared on the basis
that our Group had been in existence throughout the Period Under Review.
(2) For comparative purposes, pre-Placement EPS for the Period Under Review has been computed based on the profit
for the year/period and our pre-Placement share capital of 71,900,000 Shares.
(3) For comparative purposes, post-Placement EPS for the Period Under Review has been computed based on the profit for
the year/period and our post-Placement share capital of 107,700,000 Shares.
(4) Our combined statements of financial position as at 31 December 2012, 31 December 2013, 31 December 2014 and
30 June 2015 have been prepared on the basis that our Group had been in existence on these dates.
(5) The NAV per Share as at 31 December 2012, 31 December 2013, 31 December 2014 and 30 June 2015 have been
computed based on our pre-Placement share capital of 71,900,000 Shares.
OFFER DOCUMENT SUMMARY
31
Placement Size : 35,800,000 Placement Shares offered in Singapore.
The Placement Shares will, upon allotment and issuance,
rank pari passu in all respects with the existing issued Shares.
Placement Price : S$0.21 for each Placement Share, payable in full on
application.
The Placement : The Placement comprises a placement of 35,800,000
Placement Shares at the Placement Price, subject to and on
the terms and conditions of this Offer Document.
Purpose of the Placement : Our Directors believe that the listing of our Company and the
quotation of our Shares on Catalist will enhance our public
image locally and overseas and enable us to tap the capital
markets to fund our business growth.
The Placement will also provide members of the public, our
employees, our business associates and others who have
contributed to the success of our Group with an opportunity to
participate in the equity of our Company.
Additionally, the Placement will enlarge our capital base for
continued expansion of our business.
Listing Status : Prior to the Listing, there had been no public market for our
Shares. Our Shares will be quoted on Catalist in Singapore
dollars, subject to admission of our Company to Catalist and
permission for dealing in, and for quotation of, our Shares
being granted by the SGX-ST and the Authority not issuing a
Stop Order.
Risk Factors : Investing in our Shares involves risks which are described in
the section entitled “Risk Factors” of this Offer Document.
Use of Proceeds : Please refer to the section entitled “Use of Proceeds and
Expenses of the Placement” of this Offer Document for more
details.
THE PLACEMENT
32
We are exposed to a number of possible risks that may arise from economic, business, market and
financial factors and developments that may have an adverse impact on our future performance.
Investors should carefully consider and evaluate each of the following considerations and all other
information contained in this Offer Document before deciding to invest in our Shares. To the best
of our Directors’ knowledge and belief, all risk factors which are material to investors in making an
informed judgement of our Group have been set out below. If any of the following considerations,
uncertainties or risks develops into actual events, our business, financial condition and/or results
of operations could be materially and adversely affected. In such cases, the trading price of our
Shares could decline due to any of these considerations, uncertainties or material risks, and
investors may lose all or part of their investment in our Shares. Additional risks not presently
known to us or that we currently deem immaterial may also impair our business operations.
This Offer Document also contains forward-looking statements having direct and/or indirect
implications on our future performance. Our actual results may differ materially from those
anticipated by these forward-looking statements due to certain factors, including the risks and
uncertainties faced by us, as described below and elsewhere in this Offer Document.
RISKS RELATING TO OUR BUSINESS OR THE INDUSTRY
(a) Risks relating to our Business
We are dependent on the electronics and building industries
We design and manufacture clean room equipment for the electronics industry, and HVAC
equipment mainly for the electronics and building industries. Aggregate sales of our clean
room and HVAC equipment to the electronics and building industries accounted for
approximately 98.5%, 97.0%, 96.7%, and 94.1% of our Group’s total revenue in each of
FY2012, FY2013, FY2014 and 1H2015, respectively. Consequently, our revenue will be
adversely affected should there be any slowdown in the electronics and building industries
and if we are not able to successfully offer our products in other industries. Accordingly, we
are dependent on the growth of the electronics and building industries in Singapore, and any
change or slowdown in growth of these industries in Singapore may have an adverse impact
on our business, financial condition, results of operations and prospects.
We may not be able to increase sales to our existing customers and attract new
customers
Our growth depends on our ability to continue to expand our products offered to existing
customers and attract new customers. Our growth may be affected for a number of reasons,
including the possibility of a reduction in the demand for our products due to economic
recession, our customers being unable to differentiate our products from those of our
competitors or we being unable to effectively communicate such distinctions, or if we are
unable to expand our sales to existing customers.
A substantial amount of our past revenues was derived from sales to existing customers. Our
costs associated with generating revenues from new customers are generally higher than
costs associated with increasing revenues from existing customers. Therefore, slowing
revenue growth or declining revenues from our existing customers, even if offset by an
increase in revenues from new customers, could reduce our operating margins. Any failure
RISK FACTORS
33
for a prolonged period of time to continue attracting new customers or to grow our revenues
from existing customers could have a material adverse effect on our business, financial
condition, results of operations and prospects.
We may face challenges and uncertainty in the commercialisation of our new air
purifier business
We have completed the design and prototype of our own brand of air purifiers, and have
launched our air purifiers in the PRC. We intend to subsequently expand the marketing of our
air purifiers to regional countries. We incorporated Eindec Shenzhen to undertake the sales
and marketing of our air purifiers in the PRC. However, we may face challenges and
uncertainty in the commercialisation of our new air purifier business as such products may
not enjoy commercial acceptance or success, which would adversely affect our business,
financial condition, results of operations and prospects. Several factors could limit the
successful commercialisation of our new air purifiers, including:
– limited market acceptance or familiarity among distributors and third-party purchasers;
– our inability to develop a sales force or network of distributors capable of effectively
marketing our products;
– our limitations in responding promptly to any unanticipated market demand for our
products;
– our inability to target the correct market segment and price our product appropriately;
and
– our inability to compete with competitors who have an established market presence and
strong financial and technological resources.
We may not be able to compete effectively against our competitors
We operate in a competitive industry and we expect to face more intense competition from
existing competitors and new market entrants in the future. Some of these competitors may
have larger business operations and greater financial resources than our Group. Competitive
factors include technical expertise, customer service, pricing and geographical presence. To
compete successfully, we need to continually develop innovative solutions and adopt
competitive pricing in order to attract buyers for our products. There is no assurance that we
will be able to remain competitive. Should we be unable to compete successfully against our
competitors, this will have an adverse impact on our business, financial condition, results of
operations and prospects. Please refer to the section entitled “General Information on Our
Group – Competitors” of this Offer Document for more details on our competitors.
We are exposed to the credit risks of our customers
We may extend credit terms to our customers ranging from 30 days to 60 days on a
case-by-case basis depending on, amongst others, their creditworthiness and the length of
the customer relationship. Our average trade receivables’ turnover days for each of FY2012,
FY2013, FY2014 and 1H2015 were 70 days, 74 days, 81 days and 105 days, respectively.
We have also experienced write-offs and doubtful debts. The impairment losses on trade
receivables written off in each of FY2013 and FY2014 were S$391,000 and S$28,000,
RISK FACTORS
34
respectively. There were no impairment losses on trade receivables written off in FY2012 or
1H2015. Please refer to the section entitled “General Information on Our Group – Credit
Management” of this Offer Document for further details.
Our customers may be unable to meet their contractual payment obligations to us, whether
in a timely manner or at all. In addition, our customers may cancel their orders. The reasons
for payment delays, cancellations or defaults by our customers may include, amongst others,
insolvency, bankruptcy, or insufficient financing or working capital due to late payments by
their respective end customers. We may not be able to enforce our contractual rights to
receive payment through legal proceedings. In the event that we are not able to collect
payments from our customers, our business, financial condition, results of operations and
prospects may be adversely affected.
We are subject to technological changes
We are in a business which is subject to technological change and constantly evolving
industry standards. In particular, new standards of air purity are evolving in connection with
the manufacture of increasingly sensitive equipment and new demands are placed on the
development of equipment that may facilitate new manufacturing methods or processes. We
need to continually invest our resources in R&D to develop new technology and to improve
our existing products or to develop new products in order to compete with other clean room
equipment and HVAC equipment manufacturers. There is however no assurance that
resources committed to our R&D efforts will translate into the successful improvisation of
existing products or the development of new and enhanced products. In addition, the failure
to keep up with technological changes will affect our ability to introduce new or enhanced
products and will have an adverse impact on our Group’s competitiveness and affect our
business, financial condition, results of operations and prospects. Please refer to the section
entitled “General Information on Our Group – Research and Development” of this Offer
Document for more details on our R&D activities.
We may face disputes and claims
We may face disputes with and claims by our customers, suppliers and/or other parties in the
course of our business, due to various reasons such as delays or non-payment of monies
owing, delays in delivery, defective products, poor services rendered and non-compliance
with other contractual terms and conditions. In addition, as we also design and manufacture
customised equipment according to the specifications of our customers, failure to implement
projects which fully satisfy the requirements and expectations of our customers may lead to
delays and increased costs if reproduction or rectification of the products is required. This
may also lead to claims against us which will adversely affect our profits and reputation. To
the best of our knowledge, there have been no customer claims or disputes since our
inception. However, there is no assurance that such claims and disputes will not arise in the
future.
Such disputes may lead to legal or other proceedings and may result in substantial costs
being incurred and the diversion of our management’s resources and attention from our
business. If such legal or other proceedings are not concluded in our favour and we are found
liable in such disputes for any claims and/or damages and incur legal and other costs, or if
we accept settlement terms that are unfavourable to us, our business, financial condition,
results of operations and prospects, as well as our reputation, may be adversely affected.
RISK FACTORS
35
We are exposed to risks of intellectual property infringement
Pursuant to the Restructuring Exercise, we acquired the Xie Tong Business, including the
intellectual property owned by Xie Tong Technology. This intellectual property comprises
trademarks in respect of our clean room equipment and HVAC equipment in the countries
where we conduct business or sell our products and where registration is available and
deemed necessary and appropriate, and patents relating to the manufacture of our clean
room equipment. We have entered into assignment agreements to transfer the ownership of
the trademarks and patents owned by Xie Tong Technology to Eindec Singapore, pursuant
to which Eindec Singapore has the right to use such trademarks and patents. Please refer
to the section entitled “General Information on Our Group – Intellectual Property” of this Offer
Document for more details on our intellectual property. To some extent, the success of our
business is dependent on the effective protection of our trademarks and patents, as the
inability to do so may compromise the growth of our business or gross margins. There is no
assurance that we will obtain adequate protection and remedies if our intellectual property
rights are infringed upon.
To date, we are not aware of any infringement by us of third-party intellectual property rights
and we have not been involved in any infringement claims against third parties. There is no
assurance that such claims would not arise in the future. Further, in the event that any third
party makes a claim against us, whether with or without merit, we will be required to incur
expenses in defending the claim against us and failing which, we will have to discontinue the
use of certain process technologies and/or pay substantial monetary damages. This will
adversely impact our business, financial condition, results of operations and prospects.
We are subject to the availability and price fluctuations of raw materials, blowers and
electrical equipment
The primary raw materials used in our manufacturing facilities (namely, steel sheets and
aluminium), as well as blowers and electrical equipment, in aggregate accounted for
approximately 73.4%, 69.3%, 72.2% and 67.5% of our total cost of sales in each of FY2012,
FY2013, FY2014 and 1H2015, respectively. We purchase our raw materials mainly from
suppliers in Malaysia, the PRC and Europe. Our blowers and electrical equipment are
purchased mainly from suppliers in Europe. The market prices of steel sheets and aluminium
may fluctuate due to, amongst others, changes in global supply and demand conditions. We
may only be able to increase our selling price and pass on the increased costs to our
customers if we are able to maintain our competitiveness in the market.
As we do not have any significant long-term supply agreements with our suppliers, there is
no assurance that we will not face shortages of raw materials, blowers and electrical
equipment to meet our manufacturing requirements in the future. Although we have not
encountered any such shortage in the past, any sudden shortage of supply or reduction of
allocation of raw materials, blowers and electrical equipment to us by our suppliers which
could be caused by, amongst others, erratic unfavourable weather conditions or demand and
supply conditions, may result in us having to pay higher prices for these raw materials,
blowers and electrical equipment, thereby adversely affecting our business and results of
operations. In the event that we are unable to find a comparable source of supply at
competitive prices or to pass on any such increases in the costs of such raw materials,
blowers and electrical equipment to our customers on a timely basis, the profit margins for
our products may be adversely affected. Accordingly, our business, financial condition,
results of operations and prospects may be adversely affected.
RISK FACTORS
36
In addition, we also purchase and maintain an inventory of raw materials, blowers and
electrical equipment ahead of receipt of orders from our customers. Should there be any
increases in the prices of steel sheets and aluminium, or blowers and electrical equipment,
which result in an increase in our costs of sales, and we are unable to pass these cost
increases on to our customers, our profitability and the financial performance of our Group
may be adversely affected.
We are dependent on the credit terms given by our suppliers
Our suppliers typically grant us credit terms of between 30 days and 60 days. Our average
trade payables’ turnover days for each of FY2012, FY2013, FY2014 and 1H2015 were 46
days, 34 days, 43 days and 59 days, respectively. Please refer to the section entitled
“General Information on Our Group – Credit Management” of this Offer Document for further
details. In the event that our suppliers terminate or shorten the credit terms granted to us due
to, amongst others, poor economic conditions, and we are unable to seek alternative sources
in a timely manner and/or at competitive costs, our business, financial condition, results of
operations and prospects may be adversely affected.
We require various permits, business licences and approvals for our operations
Our business operations are subject to various local regulatory and licensing requirements.
We are required to obtain certain permits, licences and certificates from various
governmental authorities for our business operations. Details of our permits, licences and
approvals are set out in the section entitled “General Information on Our Group – Licences,
Permits, Registrations and Approvals” of this Offer Document.
Some of these permits and business licences are subject to periodic renewal and
reassessment by the relevant government authorities, and the standards of compliance
required in relation thereto may from time to time be subject to changes. Non-renewal of our
permits, licences and approvals will have a material adverse effect on our operations and we
may not be able to carry on our business without such permits, licences and approvals being
granted or renewed.
In addition, any changes in, or to the interpretation and application of, the laws, regulations,
rules, codes, guidelines, directives, policies or other requirements applicable to us may lead
to an increase in our cost of operations or result in unforeseen capital expenditure in order
to ensure our Group’s compliance with such changes.
Some of the licences, permits and approvals may also be subject to the conditions stipulated
therein and we have to constantly monitor and ensure our compliance with such conditions.
Any failure by us to obtain, renew or maintain the required licences, registrations, approvals
and permits, or the cancellation, suspension or revocation of any of our licences,
registrations, approvals and permits may result in the disruption of our business and
operations and the imposition of a statutory penalty which may adversely affect our business,
financial condition, results of operations and prospects.
Our insurance coverage may be inadequate to indemnify us against all possible
liabilities
Our Group maintains various insurance policies including fire and machinery insurance, public
liability insurance, accident insurance for our employees, property insurance, work injury
compensation insurance and equipment all risks insurance. There is however no assurance that
such insurance policies will be sufficient to cover all of our potential losses. In the event that our
RISK FACTORS
37
insurance coverage is insufficient to indemnify us against all possible liabilities or losses arising
from our business operations, our business, financial condition, results of operations and
prospects may be adversely affected. In addition, we do not currently have product liability
insurance coverage. A successful product liability claim or series of claims brought against us
could result in judgments, fines, damages and liabilities that could have a material adverse effect
on our business, financial condition, results of operations and prospects. We may incur
significant expense investigating and defending these claims, even if they do not result in liability.
Moreover, even if no judgments, fines, damages or liabilities are imposed on us, our reputation
could suffer, which could in turn have a material adverse effect on our business, financial
condition, results of operations and prospects. Please refer to the section entitled “General
Information on Our Group – Insurance” of this Offer Document for more details on our insurance
coverage.
We may face disruptions at our Facilities
Our Group may face disruptions to our manufacturing operations at our Facilities due to
unforeseen external factors such as natural disasters, acts of God, fire, flooding, civil
commotion, and other calamities or events beyond our control. This could result in longer
lead-times being required for manufacturing and delayed delivery to our customers.
Notwithstanding the measures and steps that we have taken, there is no assurance that
emergency crises would not cause disruptions in our operations. As a result of such
disruptions, failure to meet our customers’ expectations and make deliveries as required by
our agreements with customers could damage our reputation and/or expose us to legal
claims and may, as a result, lead to loss of business and affect our ability to attract new
business. In such events, our business, financial condition, results of operations and
prospects will be adversely affected.
There is no assurance that our rebranding exercise will be successful
In July 2015, we carried out our rebranding exercise and changed our corporate identity to
“Eindec” to better reflect our Group’s business direction and future growth. We currently use
the “Kyodo” brand for most of our existing products and we are evaluating the rebranding of
our products under the “Eindec” brand. There is no assurance that any such rebranding
exercise undertaken will be successful. In the event our customers are unable to identify with
our “Eindec” brand or in the event our customers and suppliers are not able to relate the
“Eindec” brand to our Group, we may lose the goodwill accumulated in connection with our
“Kyodo” brand, and our business, financial condition, results of operations and prospects
may be adversely affected.
(b) General Risks
We may not be able to successfully implement our business strategies and future
plans
In determining our business strategies and future plans, we have made certain assumptions
about the future economic performance of the countries and industries in which we currently
operate and/or intend to expand into.
The successful implementation of our strategies will entail, amongst others, actively
managing our business, identifying suitable acquisition opportunities and making such
acquisitions, undertaking development or asset enhancement initiatives, retaining and
securing customers and raising funds in the capital or credit markets. Our ability to
RISK FACTORS
38
successfully implement our strategies is also dependent on various other factors, including
but not limited to, the competition we face in our business, which may affect our ability to
secure customers on terms acceptable to us, and our ability to retain our key employees.
Our ability to expand into new markets is dependent on our ability to adapt our experience
and expertise and to understand and navigate the new environment. There is no assurance
that we will be able to implement all or some of our business strategies, and the failure to do
so may materially adversely affect our business, financial condition, results of operations and
prospects.
We are dependent on our ability to retain the services of our Directors and key
personnel
We believe our success to date has been largely attributed to the contributions and expertise
of our Executive Director and CEO, Paul Chia, as well as our Executive Officers, who have
extensive experience in our Group’s businesses or relevant industries. Our continued
success will depend on our ability to retain the services of our Executive Director and CEO
and our Executive Officers. The loss of the services of our Executive Director and CEO or
any of our Executive Officers without suitable and timely replacement, or the inability to
attract and retain qualified personnel, may adversely affect our business, financial condition,
results of operations and prospects.
Please refer to the sections entitled “Directors, Management and Staff – Directors” and
“Directors, Management and Staff – Executive Officers” of this Offer Document for further
details on our Executive Director and our Executive Officers.
We are dependent on our ability to attract and retain skilled personnel
Our business requires highly skilled personnel such as project engineers and site
technicians. Skilled personnel with the appropriate experience in our industries are limited
and competition for the employment of such personnel is intense. There is no assurance that
we will be able to attract the necessary skilled personnel to work for us, that we will be able
to retain the skilled personnel whom we have trained at our own cost, or that suitable and
timely replacements can be found for skilled personnel who leave us. If we are unable to
continue to attract and retain skilled employees, this would adversely affect our business,
financial condition, results of operations and prospects.
Our financing costs may be adversely impacted by increases in interest rates
We may be subject to risks normally associated with debt financing, including exposure to
fluctuations in interest rates and the inability to meet payments of the principal amount and
interest. This is because a significant increase in interest rates would increase our Group’s
borrowing and financing costs, which would in turn weaken our Group’s financial standing
when seeking future financing. This may adversely affect our business, financial condition,
results of operations and prospects.
Our Group is exposed to risks associated with acquisitions, joint ventures or strategic
alliances
Depending on available opportunities, feasibility and market conditions, we may engage in
acquisitions, joint ventures or strategic alliances with third parties in Singapore as well as in
overseas markets, including but not limited to, Malaysia and the PRC.
RISK FACTORS
39
Participation in joint ventures, strategic alliances, acquisitions or other investment
opportunities involves numerous risks, including the possible diversion of our management’s
attention from existing business operations and the loss of capital or other investments
deployed in such joint ventures, strategic alliances, acquisitions or opportunities. In such
events, our Group’s financial performance may be adversely affected.
If there are disagreements between us and our joint venture partners (if any) regarding the
business and operations of such joint ventures, there is no assurance that we will be able to
resolve them in a manner that will be favourable to us. In addition, such joint venture partners
may (i) have economic or business interests or goals that are inconsistent with ours; (ii) take
actions contrary to our instructions, requests, policies or objectives; (iii) be unable or
unwilling to fulfil their obligations; (iv) have financial difficulties; or (v) have disputes with us
as to the scope of their responsibilities and obligations. Any of these and other factors may
adversely affect the performance of our joint ventures, which may in turn adversely affect our
business, financial condition, results of operations and prospects.
We may be affected by conflicts, terrorist attacks, natural disasters, an outbreak of
communicable diseases or other events beyond our control
Any fresh occurrence of terrorist attacks and conflicts, natural disasters, riots,
demonstrations, social unrests, international sanctions such as those on Russia by the
United States of America and the European Union and other events beyond our control, in
particular, in the countries where we, our customers or our suppliers are located, may disrupt
our business operations or cause unexpected destruction, or lead to economic and social
uncertainties and may result in an economic downturn. This may in turn adversely affect our
business, financial condition, results of operations and prospects.
Furthermore, an outbreak of Severe Acute Respiratory Syndrome, Middle East Respiratory
Syndrome Coronavirus, Ebola virus disease, avian influenza, Influenza A or any other
communicable diseases in the future in the countries in which we, our customers or our
suppliers operate may potentially affect us. In particular, our operations and/or the
operations of our customers or our suppliers may be disrupted and business sentiments,
activities and spending could be adversely affected. This may in turn adversely affect our
business, financial condition, results of operations and prospects.
GENERAL RISKS AND RISKS RELATING TO OUR OVERSEAS OPERATIONS
(a) General risks relating to our overseas operations
We are exposed to foreign exchange risks
Our revenue is predominantly denominated in S$, which constituted 89.3%, 86.2%, 86.2%
and 99.2% of our Group’s revenue in each of FY2012, FY2013, FY2014 and 1H2015,
respectively. Our purchases are predominantly denominated in S$, which constituted
approximately 80.0%, 78.9%, 66.7% and 56.8% of our Group’s total purchases in each of
FY2012, FY2013, FY2014 and 1H2015, respectively.
To the extent that our revenue stream and our purchases are not naturally matched in the
same currency, we will have a net foreign exchange exposure and will be exposed to any
adverse fluctuation of foreign currencies against the S$. Overall net foreign exchange gain
or loss will be determined by the extent of the impact on our revenue and total purchases as
well as translations of foreign currency monetary assets and liabilities as at the end of the
RISK FACTORS
40
reporting period arising from the fluctuation of foreign currencies against the S$. In addition,
any significant depreciation of foreign currencies against the S$ arising from timing
differences between revenue recognised and actual receipt of such foreign currencies from
our customers would result in us incurring foreign exchange losses. Conversely, any
significant appreciation of foreign currencies against the S$ arising from the timing
differences between costs recognised and actual payment to our suppliers of services will
result in us incurring foreign exchange losses. Please refer to the section entitled
“Management’s Discussion and Analysis of Results of Operations and Financial Position –
Foreign Exchange Management” of this Offer Document for further details.
Given that the reporting currency of our Group’s financial statements is S$, in order to
prepare our financial statements, we translate the financial statements of our Malaysian and
PRC subsidiaries, from RM and RMB, respectively, to S$ based on the average exchange
rates prevailing over the relevant period of the profit and loss account and based on the
closing exchange rates for the balance sheet. Fluctuations in exchange rates may adversely
affect our financial performance and financial condition.
We do not currently have any formal policy for hedging against foreign exchange exposure.
We will continue to monitor our foreign exchange exposure and may employ forward
currency contracts to manage our foreign exchange exposure should the need arise. Prior to
implementing any formal hedging policies, we will seek the approval of our Board on the
policy and put in place adequate procedures which shall be reviewed and approved by our
Audit Committee. Thereafter, all hedging transactions entered into by our Group will be in
accordance with the approved policies and procedures.
We are exposed to general risks associated with doing business outside Singapore
and in emerging and developing markets
There are risks which are inherent in doing business overseas, such as unexpected changes
in legislation, regulatory requirements and government policies, economic downturns,
difficulties in staffing and managing foreign operations, social and political instability,
controls and fluctuations in currency exchange and interest rates, potentially adverse tax
consequences, legal uncertainty regarding liability, tariffs and other trade barriers,
investment restrictions, variable and unexpected changes in local laws and barriers to the
repatriation of capital or profits, any of which could affect our overseas operations and,
consequently, our business, financial condition, results of operations and prospects.
The disruptions experienced in the international and domestic capital markets have led to
reduced liquidity and increased credit risk premiums for certain market participants and have
resulted in a reduction of available financing. Companies located in countries with emerging
markets, such as those in Southeast Asia where we operate, may be particularly susceptible
to these disruptions and reductions in the availability of credit or increases in financing costs,
which could result in them experiencing financial difficulty. In addition, the availability of
credit to entities operating within the emerging and developing markets is significantly
influenced by levels of investor confidence in such markets as a whole and hence any factors
that impact market confidence, including a downgrade in credit ratings, state or central bank
intervention in a market or terrorist activity and conflict, could affect the price or availability
of funding for entities within any of these markets.
Since the onset of the global economic crisis in 2008, certain emerging market economies
have been, and may continue to be, adversely affected by market downturns and economic
slowdowns elsewhere in the world. As has happened in the past, financial problems in
RISK FACTORS
41
countries with emerging or developing economies, or the perceived increase in risks
associated with investing in such economies could dampen foreign investment in and
adversely affect the economies of these countries.
Currently, besides Singapore, we have an overseas business presence in Malaysia and the
PRC. We may also expand into other countries in which we presently do not have a business
presence. Our business and future growth in these countries are dependent on the
economic, political, legal, regulatory, social and other conditions in these countries. We have
no control over and can provide no assurance of such conditions and developments and any
such changes that are detrimental to our business could adversely affect our business,
financial condition, results of operations, prospects and future growth in these countries.
(b) Risks relating to our operations in Malaysia
We are affected by foreign exchange controls in Malaysia
There are foreign exchange policies in Malaysia which support the monitoring of capital flows
into and out of the country in order to preserve its financial and economic stability. The
foreign exchange policies are administered by the Foreign Exchange Administration, an arm
of Bank Negara Malaysia which is the central bank of Malaysia. The foreign exchange
policies monitor and regulate both residents and non-residents. Under the current notices
issued pursuant to powers conferred by subsections 214(2), (5), (6) and section 261 of the
Financial Services Act 2013 and subsections 225(2), (5), (6) and section 272 of the Islamic
Financial Services Act 2013) (“Notices”) and Foreign Exchange Administration Policies
issued by Bank Negara Malaysia, non-residents are free to repatriate any amount of funds
in Malaysia at any time, including capital, divestment proceeds, profits, dividends, rental,
fees and interest arising from investment in Malaysia, subject to the applicable reporting
requirements, and any withholding tax, provided that the repatriation must be made in foreign
currency other than the currency of Israel. In the event Bank Negara Malaysia introduces any
restrictions in the future, we may be affected in our ability to distribute dividends from our
Malaysian subsidiary and our Company.
Changes in regulations in Malaysia governing foreign workers may have an adverse
impact on our performance
Due to the nature of our business, we require substantial manual labour, and due to the
shortage of labour, we are expected to continue to rely on foreign workers for our operations
in Malaysia. As at the Latest Practicable Date, 88 manufacturing workers were employed in
our Malaysian Facility, of which 49 of these workers were foreign workers. Such foreign
workers are regulated by the Malaysian government authorities which set a limit to the
number of foreign workers which we may hire and also impose levies on each and every
foreign worker hired by our Group. Hence, any changes in governmental policies to lower the
limit of the number of foreign workers permissible to be employed by our Group or an
increase in levy may adversely affect our operations and profitability. Additionally, any
changes in the policies of foreign workers’ countries of origin may affect the supply of foreign
labour and cause disruptions to our business operations. Any increase in competition for
foreign workers may also increase labour costs. In the event that the number of foreign
workers that we can employ is reduced and/or we have to turn to a more costly source of
labour, our financial performance may be adversely affected.
RISK FACTORS
42
Our revenue and profitability may be adversely affected if our Malaysian subsidiary
loses its existing manufacturing licence issued by the Ministry of International Trade
and Industry, or if there are changes to the regulations or requirements in relation to
foreign ownership in Malaysian companies
Our Malaysian subsidiary, Eindec Malaysia, has been issued a manufacturing licence by the
Ministry of International Trade and Industry (“MITI”).
However, there is a possibility that any future changes to existing guidelines issued by
Malaysian International Development Authority (“MIDA”) of MITI, Foreign Investment
Committee guidelines or the introduction of new regulations or requirements governing
foreign ownership may affect our investment in Eindec Malaysia and consequently, we may
be required to review the equity structure of Eindec Malaysia. Currently, Eindec Malaysia is
our wholly-owned subsidiary. If the rules or requirements on foreign ownership are revised,
MITI (or the relevant authority) may require us to reduce our shareholding in Eindec
Malaysia. This may result in the loss of management and operations control and
consequently affect the operations and profitability of our Group.
Our operations are affected by the changes in existing, and the adoption of new,
Malaysian laws and regulations and/or the changes in interpretation of the Malaysian
laws and regulations as well as possible inconsistencies between the various
Malaysian laws and regulations and/or the corresponding interpretation
Our operations in Malaysia are regulated by the laws and regulations of Malaysia, including
those relating to the corporate, investment, marketing, labour, environmental, safety and
taxation matters. The legal and regulatory regimes in Malaysia may be uncertain and subject
to unforeseen changes. At times, the interpretation or application of laws and regulations in
Malaysia may be unclear. Government policies, regulations and guidelines issued and
imposed by the relevant authorities may change from time to time.
Our operations may be adversely affected by the adoption of new laws and regulations
and/or changes to, or changes in the interpretation or implementation of, existing laws and
regulations. In addition, the adoption of new laws and regulations or any modification to the
existing laws and regulations may result in our Group having to incur additional expenses to
comply with the new laws. We have no control over such conditions and developments and
cannot provide any assurance that such conditions and developments will not have a
material adverse effect on our business, financial condition, results of operations and
prospects.
Examples of new laws introduced include the Goods and Services Tax Act 2014, which came
into force on 1 April 2015. There is no assurance that the implementation of the goods and
services tax in Malaysia will not have a material adverse effect on our business, financial
condition, results of operations and prospects.
In addition, the Companies Bill is expected to be tabled to the House of Representatives
which will replace the current Companies Act 1965 of Malaysia. While we have compliance
procedures in place to ensure compliance with new legislations and every effort is taken to
ensure the requirements of new legislations are met, there is no certainty on the approach
which will be taken by our regulators, and we may incur additional compliance costs with the
introduction of new or amended regulations.
RISK FACTORS
43
Non-enforceability of non-Malaysian judgements may limit Shareholders’ ability to
recover damages from us
Eindec Malaysia is incorporated in Malaysia and a significant part of our assets is located in
Malaysia. As a result, it could be difficult for our Shareholders to commence an action against
our Malaysian subsidiary as service of process will have to be effected outside of Singapore,
or to enforce a judgment obtained in the Singapore courts against our Malaysian subsidiary.
Any monetary judgment obtained in a foreign court will be enforceable in the courts of
Malaysia in accordance with the Reciprocal Enforcement of Judgments Act 1958 (“REJA”).
Subject to the provisions of REJA, only a monetary judgment obtained in a superior court of
the reciprocating countries listed in the First Schedule of REJA (such as United Kingdom,
Hong Kong, Singapore, New Zealand, Republic of Sri Lanka, India and Brunei) shall, upon
registration with the courts of Malaysia within six (6) years after the date of judgment or,
where there have been proceedings by way of appeal against the judgment, after the date
of the last judgment, have the same force and effect as if it had been a judgment originally
entered or obtained, as of the date of registration, in the registering court. Nevertheless, the
registered judgments may also be set aside by applications made by the party against whom
a registered judgment may be enforced if the registering court is satisfied that the provisions
under REJA are satisfied.
In order to pursue a claim in Malaysia against us or any of our officers or directors,
Shareholders will have to bring a separate action or claim in Malaysia. While a non-
Malaysian judgment could be introduced as evidence in a court proceeding in Malaysia, a
Malaysian court would be free to examine new issues arising in the case. Thus, to the extent
that Shareholders may succeed in bringing legal actions against us outside Malaysia,
Shareholders’ available remedies and any recovery in any Malaysian proceeding may be
limited.
Compliance with environmental laws and regulations could result in substantial costs
to us
A substantial part of our manufacturing operations is located in Malaysia and we are subject
to the relevant environmental laws and regulations. Failure by us to comply with such laws
and regulations will result in us being subject to penalties and fines or being required to pay
damages. Further, any change in such laws and regulations may require us to incur
additional capital expenditure or compliance costs and may have a material adverse effect
on our business, financial condition, results of operations and prospects.
(c) Risks relating to our operations in the PRC
Interpretation and application of PRC laws and regulations involve uncertainty
The legal system in the PRC is based on the Constitution of the PRC and is made up of
written laws, regulations, circulars and directives. As the PRC economy is undergoing
development generally at a faster pace than its legal system, some degree of uncertainty
exists in connection with whether and how existing laws and regulations will apply to certain
events or circumstances.
Some of the laws and regulations, and the interpretation, implementation and enforcement
thereof, are still being developed and refined and are, therefore, subject to policy changes.
There is no assurance that the introduction of new laws, changes to existing laws and the
RISK FACTORS
44
interpretation or application thereof or the delays in obtaining approvals from the relevant
authorities will not have an adverse impact on the business, financial condition, results of
operations and prospects of our PRC subsidiaries.
Further, precedents on the interpretation, implementation and enforcement of the PRC laws
and regulations are limited, and decisions on precedent cases are not binding on lower
courts. Accordingly, the outcome of dispute resolutions may not be consistent or predictable.
In addition, it may be difficult to obtain swift and equitable enforcement of laws in the PRC,
or to obtain enforcement of judgment by a court of another jurisdiction.
PRC foreign exchange control may affect our Group’s ability to receive dividends and
other payments from our PRC subsidiaries
Our PRC subsidiaries are subject to the rules and regulations imposed by the PRC
government on currency conversion and remittance. In the PRC, the State Administration of
Foreign Exchange (“SAFE”) regulates the conversion of RMB into foreign currencies and
vice versa and, in certain cases, the remittance of currency out of the PRC.
Currently, Foreign Investment Enterprises (the “FIEs”) are required to apply to SAFE for a
Foreign Exchange Registration Certificate (the “FIE Certificate”). Such registration
certificates are renewable annually and allow FIEs to open foreign currency accounts for the
payment of:
(a) recurring items, including the distribution of dividends and profits after tax to foreign
investors of FIEs upon presentation of board resolutions which authorise the
distribution of profits or dividends (“Current Account”); and
(b) capital items, such as repatriation of capital, repayment of loans and for securities
investment (“Capital Account”).
Under existing PRC foreign exchange regulations, currency transactions within the scope of
the “Current Account”, including profit distributions, interest payments and expenditures from
trade-related transactions, can be effected without requiring the approval of SAFE, while the
conversion of currency in the “Capital Account” still requires the approval of SAFE. At
present, our PRC subsidiaries hold the relevant FIE Certificate. With the FIE Certificate, our
PRC subsidiaries are able to convert RMB revenue into foreign currency and repatriate
dividends and profits to our Group.
Furthermore, applicable PRC laws, rules and regulations permit payment of dividends by our
PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with
PRC accounting standards. Our PRC subsidiaries are required to set aside a certain
percentage of their after-tax profit based on PRC accounting standards each year to their
reserve funds in accordance with the requirements of the relevant laws and provisions in
their articles of association. As a result, our PRC subsidiaries are restricted in their ability to
transfer a portion of their profits to their shareholders in the form of dividends. Any restriction
on the ability of our PRC subsidiaries to pay dividends to our Group could materially and
adversely limit our ability to grow, or make investments or acquisitions that could be
beneficial to our businesses.
Distributions by our PRC subsidiaries to our Group in forms other than dividends may be
subject to government approval and taxes. Any transfer of funds from our Group to our PRC
subsidiaries, either as a shareholder loan or as an increase in registered capital, is subject
RISK FACTORS
45
to registration with, or approval of, the relevant PRC government authorities. These
limitations on the flow of funds within our Group could restrict our ability to respond to
changing market conditions or appropriately allocate funds to our PRC subsidiaries in a
timely manner.
In the event the PRC government imposes further restrictions or requirements on the
conversion of RMB for repatriation as dividends overseas, our ability to repatriate dividends
or distributions from our PRC subsidiaries may be affected.
RISKS RELATING TO INVESTMENT IN OUR SHARES
Investment in shares quoted on Catalist involves a higher degree of risk and can be less
liquid than shares quoted on the Main Board of the SGX-ST
An application has been made for our Shares to be listed for quotation on Catalist, a listing
platform designed primarily for fast-growing and emerging or smaller companies to which a higher
investment risk tends to be attached as compared with larger or more established companies
listed on the Main Board of the SGX-ST. An investment in shares quoted on Catalist may carry a
higher risk than an investment in shares quoted on the Main Board of the SGX-ST and the future
success and liquidity in the market of our Shares cannot be guaranteed.
Control by our Controlling Shareholder, Weiye, may limit your ability to influence the
outcome of decisions requiring Shareholders’ approval
Upon the completion of the Placement, our Controlling Shareholder, Weiye, will own in aggregate
approximately 66.8% of our post-Placement share capital. As a result, Weiye will be able to
exercise significant influence over matters requiring Shareholders’ approval, including the election
of directors and the approval of significant corporate transactions. Weiye will also have veto power
with respect to any shareholders’ action or approval requiring a majority vote except where it is
required by the Catalist Rules or other applicable regulations to abstain from voting. Such
concentration of ownership may also have the effect of delaying, preventing or deterring a change
in control of our Group which may benefit Shareholders.
Investors in our Shares will face immediate dilution and may experience further dilution
Our Placement Price of 21.0 cents per Share is substantially higher than our NAV per Share of
12.59 cents (based on the NAV as referred to in the section entitled “Dilution” of this Offer
Document and as adjusted for the net proceeds from the issue of Placement Shares). If we were
liquidated immediately following the Placement, each investor subscribing for the Placement
Shares would receive less than the price such investor paid for the Shares. Please refer to the
section entitled “Dilution” of this Offer Document for further details.
Future sales or issuance of our Shares could materially and adversely affect our
Share price
Any future sale, issuance or availability of a large number of our Shares in the public market or
perception thereof may have a downward pressure on our Share price. These events may also
affect our ability to sell additional equity securities in the future, at a time and price we deem
appropriate. Save as disclosed under the section entitled “Shareholders – Moratorium” of this
Offer Document, there will be no restriction on the ability of our Shareholders to sell their Shares
either on the SGX-ST or otherwise.
RISK FACTORS
46
In addition, our Share price may be under downward pressure if our Controlling Shareholder,
Weiye, sells its Shares upon the expiry of its moratorium period.
Investors may not be able to participate in future rights issues or certain other equity
issues of our Shares
In the event that we issue new Shares, we will be under no obligation to offer those Shares to our
existing Shareholders at the time of issue, except where we elect to conduct a rights issue.
However, in electing to conduct a rights issue or certain other equity issues, we will have the
discretion and may also be subject to certain regulations as to the procedures to be followed in
making such rights available to Shareholders or in disposing of such rights for the benefit of such
Shareholders and making the net proceeds available to them. In addition, we may not offer such
rights to our existing Shareholders having an address in jurisdictions outside of 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.
There has been no prior market for our Shares and the Placement may not result in an
active or liquid market and there is a possibility that our Share price may be volatile
Prior to the Placement, there has been no public market for our Shares. Although we have made
an application to the SGX-ST to list our Shares on Catalist, there is no assurance that an active
trading market for our Shares will develop or, if it develops, be sustained. There is also no
assurance that the market price for our Shares will not decline below the Placement Price. The
market price of our Shares could be subject to significant fluctuations due to various external
factors and events including the liquidity of our Shares in the market, differences between our
actual financial or operating results and those expected by investors and analysts, the general
market conditions and broad market fluctuations.
Our Share price may be volatile in future which could result in substantial losses for
investors purchasing Shares pursuant to the Placement
The trading price of our Shares may fluctuate significantly and rapidly after the Placement as a
result of, amongst others, the following factors, some of which are beyond our control:
• variations of our operating results;
• changes in securities analysts’ estimates of our financial performance;
• additions to or departures of our key management personnel;
• material changes or uncertainty in the political, economic and regulatory environment in the
markets in which we operate;
• fluctuations in stock prices and traded volumes;
• announcements by us of significant acquisitions, strategic alliances or joint ventures;
• successes or failures of our efforts in implementing business and growth strategies;
• involvement in litigations; and
• general economic and stock market conditions.
RISK FACTORS
47
The actual performance of our Company may differ materially from the forward-looking
statements in this Offer Document
This Offer Document contains forward-looking statements, which are based on a number of
assumptions that are subject to significant uncertainties and contingencies, many of which are
outside our control. Furthermore, our revenue and financial performance are dependent on a
number of external factors, including demand for our services which may decrease for various
reasons, such as increased competition within the industry or changes in applicable laws and
regulations. We cannot assure you that these assumptions will be realised and our actual
performance will be as projected.
Negative publicity which includes those involving our Group, any of our Directors,
Executive Officers or Controlling Shareholders may materially and adversely affect our
Share price
Negative publicity or announcements involving our Group, any of our Directors, Executive Officers
or Controlling Shareholders may materially and adversely affect the market perception or the
performance of our Shares, whether or not justifiable. Examples of these include unsuccessful
attempts in joint ventures, acquisitions or takeovers, or involvement in insolvency proceedings.
Our Group’s business and expansion plans are subject to our ability to raise additional
funding in the form of equity or debt for our future growth which may cause dilution in
Shareholders’ equity interest and/or restrict our business operations
In the event that the costs of implementing our growth plans as set out in the section entitled
“Prospects, Business Strategies and Future Plans – Business Strategies and Future Plans” of this
Offer Document significantly exceed our current estimates of such costs, or if we come across
opportunities to grow through joint ventures, strategic alliances, acquisitions or investment
opportunities, which cannot be predicted at this juncture, and our funds generated from our
business operations prove insufficient for such purposes, we may need to raise additional funds
to meet these funding requirements. These additional funds may be raised by issuing equity or
debt securities or by borrowing from banks or other resources. We cannot ensure that we will be
able to obtain any additional financing on terms that are acceptable to us, or at all. If we are unable
to do so, our future plans and growth may be materially and adversely affected.
Such financing, even if obtained, may be accompanied by conditions that limit our ability to pay
dividends or require us to seek lenders’ consent for payment of dividends, or restrict our freedom
to operate our business by requiring lenders’ consent for certain corporate actions. Any additional
debt financing may, apart from increasing interest expense and gearing, contain restrictive
covenants with respect to dividends, future fund raising exercises and other financial and
operational matters. If we are unable to procure the additional funding that may be required on
acceptable terms or at all or if we are unable to service our potential new debt financing, our
financial position and results, business operations, future growth and prospects will be materially
and adversely affected.
An issue of Shares or other securities to raise funds will dilute Shareholders’ equity interests and
may, in the case of a rights issue, require additional investments by Shareholders. Further, an
issue of Shares below the then prevailing market price will also affect the value of Shares then
held by investors.
RISK FACTORS
48
Dilution in Shareholders’ equity interests may occur even if the issue of shares is at a premium to
the market price. In addition, any additional debt funding may restrict our freedom to operate our
business as it may have conditions that (a) limit our ability to pay dividends or require us to seek
consents for the payment of dividends; (b) increase our vulnerability to general adverse economic
and industry conditions; (c) require us to dedicate a portion of our cash flow from business
operations to repayments of our debt, thereby reducing the availability of our cash flow for capital
expenditures, working capital and other general corporate purposes; and/or (d) limit our flexibility
in planning for, or reacting to, changes in our business and our industry.
The current disruptions, volatility or uncertainty of the credit markets could limit our ability to
borrow funds or cause our borrowings to be more expensive. Consequently, we may be forced to
pay unattractive interest rates, thereby increasing our interest expense, decreasing our
profitability and reducing our financial flexibility if we take on additional debt financing.
We may not be able to pay dividends in the future
Our ability to declare dividends to our Shareholders will depend on our future financial
performance and distributable reserves of our Company, which, in turn, depends on us
successfully implementing our strategies and on financial, competitive, regulatory, technical and
other factors, general economic conditions, demand for and selling prices of our products and
services and other factors specific to our industry, many of which are beyond our control. Hence,
there is no assurance that our Company will be able to pay dividends to our Shareholders after
the completion of the Placement. In the event that our Company enters into any loan agreements
in the future, covenants therein may also limit when and how much dividends we can declare and
pay.
RISK FACTORS
49
The estimated net proceeds to be raised by our Company from the issue of the Placement Shares
(after deducting estimated expenses incurred in connection with the Placement of approximately
S$2.97 million) is approximately S$4.55 million.
The allocation of each principal intended use of proceeds from the issue of the Placement Shares
and the estimated listing expenses is set out below:
Use of proceeds
Amount
(S$’000)
As a percentage of
gross proceeds from
the Placement (%)
Establishment of a new business for environmental and
technological solutions products in the PRC
3,300 43.9
Investment in the research and development of new
and existing products and establishment and
enhancement of manufacturing capabilities
500 6.6
Working capital 750 10.0
Estimated listing expenses(1) 2,968 39.5
Total 7,518 100.0
Note:
(1) Of the total estimated listing expenses to be borne by our Company, approximately S$1.90 million will be recognised
in equity and the balance of the estimated listing expenses will be recognised in profit or loss.
Please refer to the section entitled “Prospects, Business Strategies and Future Plans – Business
Strategies and Future Plans” of this Offer Document for further details on our future plans. In
particular, our future plans may be funded apart from the proceeds from the Placement, through
internally generated funds and/or external borrowings.
In the reasonable opinion of our Directors, there is no minimum amount which must be raised from
the Placement. In the event the Placement does not proceed, such amounts proposed to be
provided for the items above will be financed by borrowings and/or internal resources. None of the
proceeds of the Placement will be used to discharge, reduce or retire any indebtedness of our
Group.
The foregoing discussion represents our best estimate of our allocation of the proceeds of the
Placement based on our current plans and estimates regarding our anticipated expenditures. Our
Audit Committee will monitor the allocation and use of the proceeds. Actual expenditures may vary
from these estimates and we may find it necessary or advisable to reallocate the net proceeds
within the categories described above or to use portions of the net proceeds for other purposes.
In the event that any part of our proposed uses of the net proceeds from the issue of the
Placement Shares does not materialise or proceed as planned, our Directors will carefully
evaluate the situation and may reallocate the intended funding to other purposes and/or hold such
funds on short-term deposits for so long as our Directors deem it to be in the interests of our
Company and our Shareholders, taken as a whole. Any change in the use of the net proceeds will
be subject to the Catalist Rules and appropriate announcements will be made by our Company on
SGXNET at the SGX-ST’s website, http://www.sgx.com. In addition, our Company will make
USE OF PROCEEDS AND EXPENSES OF THE PLACEMENT
50
periodic announcements on the use of the proceeds from the Placement as and when the
proceeds from the Placement are materially disbursed, and provide a status report on the use of
the proceeds attributable to our Company from the Placement in our annual reports.
Pending the deployment of the net proceeds from the issue of the Placement Shares as aforesaid,
the funds will be placed in short-term deposits with financial institutions, used to invest in
short-term money market instruments and/or used for our working capital requirements as our
Directors may deem appropriate in their absolute discretion.
In the event that the amount set aside to meet the estimated expenses in relation to the Placement
is in excess of actual expenses incurred, such amount will be made available for our working
capital purposes.
LISTING EXPENSES
The estimated amount of expenses payable by the Company in connection with the Placement
and the application for listing, including management fees, placement commission, audit and legal
fees, advertising and printing expenses, fees payable to the SGX-ST and all other incidental
expenses in relation to the Placement is approximately S$2.97 million.
A breakdown of these estimated expenses to be borne by us in relation to the Placement is as
follows:
Expenses(1)
Amount in
aggregate
(S$’000)
Estimated amount allocated
for each dollar raised by our
Company (as a percentage
of gross proceeds from the
Placement)
(%)
Professional fees 2,644 35.2
Placement commission(2) 244 3.2
Miscellaneous expenses
(including listing and application fees)
80 1.1
Total 2,968 39.5
Notes:
(1) Approximately S$1.90 million of the total estimated listing expenses of approximately S$2.97 million will be
recognised in equity and the remaining listing expenses will be charged to the profit and loss of our Company.
(2) Pursuant to the Placement Agreement, UOBKH has agreed to subscribe for and/or procure subscribers for the
Placement Shares for a placement commission of 3.25% of the Placement Price for each Placement Share, payable
by our Company pursuant to the Placement.
USE OF PROCEEDS AND EXPENSES OF THE PLACEMENT
51
PLACEMENT PRICE 21.00 cents
NAV
NAV per Share based on the audited combined statement of financial position
of our Group as at 31 December 2014:
(a) before adjusting for the estimated net proceeds from the Placement and
based on our Company’s pre-Placement share capital of 71,900,000
Shares
12.53 cents
(b) after adjusting for the estimated net proceeds from the Placement and
based on our Company’s post-Placement share capital of 107,700,000
Shares
12.59 cents
Premium of Placement Price over the NAV per Share based on the audited
combined statement of financial position of our Group as at 31 December
2014:
(a) before adjusting for the estimated net proceeds from the Placement and
based on our Company’s pre-Placement share capital of 71,900,000
Shares
67.6%
(b) after adjusting for the estimated net proceeds from the Placement and
based on our Company’s post-Placement share capital of 107,700,000
Shares
66.8%
NTA
NTA per Share based on the audited combined statement of financial position
of our Group as at 31 December 2014:
(a) before adjusting for the estimated net proceeds from the Placement and
based on our Company’s pre-Placement share capital of 71,900,000
Shares
12.26 cents
(b) after adjusting for the estimated net proceeds from the Placement and
based on our Company’s post-Placement share capital of 107,700,000
Shares
12.41 cents
Premium of Placement Price over the NTA per Share based on the audited
combined statement of financial position of our Group as at 31 December
2014:
(a) before adjusting for the estimated net proceeds from the Placement and
based on our Company’s pre-Placement share capital of 71,900,000
Shares
71.3%
(b) after adjusting for the estimated net proceeds from the Placement and
based on our Company’s post-Placement share capital of 107,700,000
Shares
69.3%
PLACEMENT STATISTICS
52
Earnings
Historical EPS based on the audited combined financial results of our Group
for FY2014 and our Company’s pre-Placement share capital of 71,900,000
Shares
1.90 cents
Historical EPS based on the audited combined financial results of our Group
for FY2014 and our Company’s pre-Placement share capital of 71,900,000
Shares, assuming that the Service Agreement had been in place from the
beginning of FY2014
1.81 cents
PER
Historical PER based on the Placement Price and the historical EPS for
FY2014
11.1 times
Historical PER based on the Placement Price and the historical EPS for
FY2014 assuming that the Service Agreement had been in place since the
beginning of FY2014
11.6 times
Net operating cash flow(1)
Historical net operating cash flow per Share for FY2014 based on our
Company’s pre-Placement share capital of 71,900,000 Shares
2.34 cents
Historical net operating cash flow per Share for FY2014 based on our
Company’s pre-Placement share capital of 71,900,000 Shares, assuming
that the Service Agreements had been in place since the beginning of
FY2014
2.25 cents
Price to net operating cash flow
Ratio of Placement Price to historical net operating cash flow per Share for
FY2014
8.97 times
Ratio of Placement Price to historical net operating cash flow per Share for
FY2014, assuming that the Service Agreement had been in place since the
beginning of FY2014
9.33 times
Market Capitalisation
Our market capitalisation based on the Placement Price and our Company’s
post-Placement share capital of 107,700,000 Shares
S$22.6 million
Note:
(1) Net operating cash flow is defined as net profit after tax with depreciation expense added back.
PLACEMENT STATISTICS
53
Our Company has not distributed any dividends since its incorporation on 2 April 2015. None of
our subsidiaries has declared or paid dividends for the Period Under Review.
We currently do not have a formal dividend policy.
The form, frequency and amount of declaration and payment of future dividends on our Shares
that our Directors may recommend or declare in respect of any particular financial year or period
will be subject to the factors outlined below as well as other factors deemed relevant by our
Directors:
(a) the level of our cash and retained earnings;
(b) our actual and projected financial performance;
(c) our projected levels of capital expenditure and expansion plans;
(d) our working capital requirements and general financing condition; and
(e) restrictions on payment of dividends imposed on us (if any).
We may declare dividends by way of an ordinary resolution of our Shareholders at a general
meeting, but may not pay dividends in excess of the amount recommended by our Board of
Directors. The declaration and payment of dividends will be determined at the sole discretion of
our Directors, subject to the approval of our Shareholders. There can be no assurance that
dividends will be paid in the future and the amount of dividends declared and paid by us in the past
should not be taken as an indication of the dividends payable in the future.
Subject to our Articles of Association and in accordance with the Companies Act, our Directors
may also declare an interim dividend without the approval of our Shareholders. In making their
recommendations, our Directors will consider, inter alia, our retained earnings and expected
future earnings, operations, cash flow, capital requirements and general financing condition, as
well as general business conditions and other factors which our Directors may deem appropriate.
Payment of cash dividend and distributions, if any, will be made in Singapore dollars to CDP on
behalf of Shareholders who maintain, either directly or through Depository Agents, Securities
Accounts with CDP. Such payment shall discharge our Company from any liability to the relevant
Shareholder in respect of that payment.
For information relating to taxes payable on dividends, please refer to Appendix G of this Offer
Document.
DIVIDEND POLICY
54
Our Company (Company registration number 201508913H) was incorporated in Singapore on 2
April 2015 under the Companies Act as a private limited company under the name of “Eindec
Corporation Pte. Ltd.”.
As at the date of incorporation, our issued and paid-up share capital was S$1.00 comprising one
(1) Share.
Pursuant to the completion of the Restructuring Exercise, the issued and paid-up share capital of
our Company was increased to S$9,300,001.00 comprising 2,000,001 Shares.
Pursuant to the written resolutions passed by our Existing Shareholder on 8 December 2015 and
28 December 2015, our Shareholder approved, inter alia, the following:
(a) the sub-division of the issued share capital of our Company into 71,900,000 Shares (the
“Sub-Division”);
(b) the conversion of our Company into a public limited company and the consequential change
of our name to “Eindec Corporation Limited”;
(c) the listing and quotation of all the issued Shares (including the Placement Shares to be
allotted and issued as part of the Placement) and the Performance Shares to be issued (if
any) on Catalist to be approved;
(d) the adoption of a new set of Articles of Association;
(e) the allotment and issuance of the Placement Shares pursuant to the Placement, which when
allotted, issued and fully paid-up, will rank pari passu in all respects with the existing issued
and fully paid-up Shares;
(f) the adoption of the Eindec Performance Share Plan 2015 (details of which are set in the
section entitled “The Eindec Performance Share Plan 2015” and Appendix F of this Offer
Document) and the authorisation of our Directors, pursuant to Section 161 of the Companies
Act, to allot and issue Performance Shares pursuant to the grant of Awards under the Eindec
Performance Share Plan 2015; and
(g) the authorisation of our Directors, pursuant to Section 161 of the Companies Act, to (i) allot
and issue Shares in our Company; and (ii) issue convertible securities and any Shares in our
Company pursuant to the convertible securities, whether by way of rights issue, bonus issue
or otherwise, at any time and upon such terms and conditions, whether for cash or otherwise
and for such purposes and to such persons as our Directors shall in their absolute discretion
deem fit, provided that the aggregate number of Shares to be issued pursuant to such
authority shall not exceed 100.0% of the issued share capital of our Company immediately
after the Placement excluding treasury shares and that the aggregate number of Shares to
be issued other than on a pro-rata basis to the then existing Shareholders of our Company
shall not exceed 50.0% of the issued share capital of our Company immediately after the
Placement excluding treasury shares. Unless revoked or varied by our Company in general
meeting, such authority shall continue in full force until the conclusion of the next annual
general meeting of our Company or the date by which the next annual general meeting is
required by law or by our Articles to be held, whichever is earlier, except that our Directors
shall be authorised to allot and issue new Shares pursuant to the convertible securities
notwithstanding that such authority has ceased.
SHARE CAPITAL
55
For the purposes of this resolution and pursuant to Rules 806(3) and 806(4) of the Catalist
Rules, “issued share capital of our Company immediately after the Placement excluding
treasury shares” shall mean the enlarged issued and paid-up share capital of our Company
after the Placement excluding treasury shares after adjusting for (i) new Shares arising from
the conversion or exercise of any convertible securities; (ii) new Shares arising from
exercising share options or vesting of share awards outstanding or subsisting at the time
such authority is given, provided that the options or awards were granted in compliance with
the Catalist Rules; and (iii) any subsequent bonus issue, consolidation or subdivision of
Shares.
On 10 December 2015, our Company converted into a public limited company and changed our
name to “Eindec Corporation Limited”.
As at the date of this Offer Document, our Company has only one (1) class of Shares, being
ordinary shares. A summary of the Articles of Association of our Company relating to, among
others, the voting rights of our Shareholders is set out in Appendix E of this Offer Document. There
are no founder, management or deferred shares.
No person has been, or is permitted to be, given an option to subscribe for or purchase any
securities of our Company or any of our subsidiaries. As at the Latest Practicable Date, no option
to subscribe for Shares in our Company has been granted to, or was exercised by, any of our
Directors or Executive Officers.
As at the date of this Offer Document, the issued and paid-up share capital of our Company is
S$9,300,001.00 comprising 71,900,000 Shares. Upon the allotment and issue of the Placement
Shares which are the subject of the Placement, the resultant issued and paid-up share capital of
our Company will be increased to S$14,917,262.00 comprising 107,700,000 Shares.
Details of changes in our issued and paid-up capital since our incorporation and our issued and
paid-up share capital immediately after the Placement are as follows:
Number of Shares
Resultant issued and
paid-up share capital
(S$)
Issued and paid-up Shares as at our
incorporation(1)
1 1
Issue of new Shares pursuant to the
Restructuring Exercise(2)
2,000,000 9,300,000
Issued and fully paid Shares immediately
after the Restructuring Exercise
2,000,001 9,300,001
Sub-Division of Shares 71,900,000 9,300,001
Pre-Placement issued and paid-up
share capital
71,900,000 9,300,001
Issue of Placement Shares pursuant to the
Placement
35,800,000 5,617,261(3)
Post-Placement issued and paid-up
share capital
107,700,000 14,917,262
SHARE CAPITAL
56
Notes:
(1) Save as disclosed in this section and in the section entitled “Restructuring Exercise” of this Offer Document, there
were no changes in the issued and paid-up share capital of our Company within the last three (3) years preceding
the Latest Practicable Date.
(2) Please refer to the section entitled “Restructuring Exercise” of this Offer Document for further details.
(3) This takes into account the capitalisation of the estimated expenses of approximately S$1.90 million incurred in
connection with the Placement.
The shareholders’ equity of our Company as at the date of incorporation, as adjusted for the
Restructuring Exercise and after the Placement is set out below:
Shareholders’ equity
As at
the date of
incorporation
After adjusting for
the Restructuring
Exercise
After the
Placement
Issued and paid-up Shares (number of
Shares)
1 71,900,000 107,700,000
Issued and paid-up share capital (S$) 1 9,300,001 14,917,262(1)
Reserves (S$) 0 (3,052) (1,070,313)(2)
Shareholders’ equity (S$) 1 9,296,949 13,846,949
Notes:
(1) This takes into account the capitalisation of the estimated expenses of approximately S$1.90 million incurred in
connection with the Placement.
(2) This includes listing expenses of approximately S$1.07 million arising from the Placement which will be expensed
off.
SHARE CAPITAL
57
OWNERSHIP STRUCTURE
Our Directors and Shareholders and their respective shareholdings in our Company immediately
before and after the Placement are set out below:
Before the Placement After the Placement
Direct Interest Deemed Interest Direct Interest Deemed Interest
Directors
Number of
Shares %
Number of
Shares %
Number of
Shares %
Number of
Shares %
Zhang Wei(1)(2) – – 71,900,000 100.0 – – 71,900,000 66.8
Paul Chia – – – – – – – –
See Yen Tarn – – – – – – – –
Lawrence Wong – – – – – – – –
Jeffrey Ong – – – – – – – –
Substantial
Shareholders
(other than
Directors)
Weiye 71,900,000 100.0 – – 71,900,000 66.8 – –
Chen Zhiyong(2)(3) – – 71,900,000 100.0 – – 71,900,000 66.8
Public – – – – 35,800,000 33.2 – –
Total 71,900,000 100.0 107,700,000 100.0
Notes:
(1) Zhang Wei is deemed to have an interest in the Shares held by Weiye by virtue of his 46.4% shareholding in Weiye
as at the Latest Practicable Date by virtue of Section 7 of the Companies Act.
(2) Our Non-Executive Chairman, Zhang Wei, is the brother-in-law of Chen Zhiyong.
(3) Chen Zhiyong is deemed to have an interest in the Shares held by Weiye by virtue of his 20.5% shareholding in
Weiye as at the Latest Practicable Date by virtue of Section 7 of the Companies Act.
Save as disclosed above and in the section entitled “Directors, Management and Staff” of this
Offer Document, there are no other relationships between our Directors and Substantial
Shareholders. Save as disclosed above, our Company is not directly or indirectly owned or
controlled, whether severally or jointly, by any other corporation, any government or other natural
or legal person.
The Shares held by our Directors and Substantial Shareholders do not carry different voting rights
from the Placement Shares which are the subject of the Placement. Our Directors are not aware
of any arrangement the operation of which may, at a subsequent date, result in a change in control
of our Company.
There has not been any public take-over offer by a third party in respect of our Shares or by our
Company in respect of the shares of another corporation which has occurred since the
incorporation of our Company.
SHAREHOLDERS
58
SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP
Save as disclosed above and in the sections entitled “Restructuring Exercise”, “Dilution” and
“General and Statutory Information” of this Offer Document, there were no significant changes in
the percentages of ownership of our Directors and Substantial Shareholders in our Company from
its incorporation until the Latest Practicable Date.
MORATORIUM
As a demonstration of its commitment to our Group, our Controlling Shareholder, Weiye, which
holds an aggregate of 71,900,000 Shares (representing approximately 66.8% of our Company’s
issued share capital after the Placement), has undertaken not to, directly or indirectly, sell,
contract to sell, offer, realise, transfer, assign, pledge, grant any option to purchase, grant any
security over, encumber or otherwise dispose of, any part of its interests in the share capital of our
Company immediately after the Placement (adjusted for any bonus issue or subdivision of Shares)
for a period of six (6) months commencing from the date of admission of our Company to Catalist,
and for a period of six (6) months thereafter, not to, reduce its interests in our Company to below
50.0% of its original shareholdings in our Company.
SHAREHOLDERS
59
Dilution is the amount by which the Placement Price to be paid by investors for the Placement
Shares in the Placement (“New Investors”) exceeds the NAV per Share as at 31 December 2014,
after adjusting for the effects of the Placement. Our NAV per Share as at 31 December 2014,
before adjusting for the estimated net proceeds from the Placement and based on our Company’s
pre-Placement share capital of 71,900,000 Shares, was 12.53 cents.
Pursuant to the Placement in respect of 35,800,000 Placement Shares at the Placement Price, our
NAV per Share, after adjusting for the estimated net proceeds from the Placement and based on
our Company’s post-Placement share capital of 107,700,000 Shares, would be 12.59 cents. This
represents an immediate increase in the NAV per Share of 0.06 cents to our Existing Shareholder
and an immediate dilution in the NAV per Share of 8.41 cents to our New Investors.
The following table illustrates such dilution per Share as at 31 December 2014:
Cents
Placement Price 21.00
NAV per Share as at 31 December 2014 based on our Company’s
pre-Placement number of Shares of 71,900,000 Shares
12.53
Increase in NAV per Share attributable to our Existing Shareholder based on
our Company’s post-Placement number of Shares of 107,700,000 Shares
0.06
NAV per Share after the Placement(1) 12.59
Dilution in NAV per Share to New Investors post-Placement 8.41
Note:
(1) The computed NAV per Share does not take into account our actual financial performance from 1 January 2015 up
to the Latest Practicable Date. Depending on our actual financial results, our NAV per Share after the Placement
may be higher or lower than the above computed NAV.
The following table shows the average effective cost per Share paid by our Existing Shareholder
for Shares acquired by it during the period of three (3) years prior to the date of lodgement of this
Offer Document and the price per Share to be paid by our New Investors pursuant to the
Placement:
Number of
Shares acquired
Total
consideration
Average
effective cost
per Share
(S$) (cents)
Existing Shareholder
Weiye 71,900,000 9,300,001 12.93
New Investors 35,800,000 7,518,000 21.00
Save as disclosed above and in the sections entitled “Restructuring Exercise” and “General and
Statutory Information” of this Offer Document, none of our Directors or the Substantial
Shareholders of our Company or their respective associates have acquired any Shares during the
period of three (3) years prior to the date of lodgement of this Offer Document.
DILUTION
60
In anticipation of the Placement, our Group undertook the Restructuring Exercise to rationalise
and streamline our Group’s corporate structure, pursuant to which our Company became the
holding company of all our subsidiaries. Our Restructuring Exercise was completed on 10
December 2015.
The details of our Restructuring Exercise are as follows:
1. Incorporation of our Company
Our Company was incorporated in Singapore on 2 April 2015 under the Companies Act to
serve as the parent company of our Group. On 10 December 2015, our Company was
converted into a public limited company and our name was changed to Eindec Corporation
Limited.
2. Incorporation of Eindec Holdings
On 13 May 2015, we incorporated Eindec Holdings as a private limited company under the
Companies Act to serve as the intermediate holding company of our Group. The principal
activity of Eindec Holdings is investment holding. At the time of incorporation, Eindec
Holdings had an issued and paid-up share capital of S$1.00 comprising one (1) share.
Eindec Holdings is a wholly-owned subsidiary of our Company.
3. Incorporation of Eindec Singapore
On 19 May 2015, we incorporated Eindec Singapore as a private limited company under the
Companies Act. At the time of incorporation, Eindec Singapore had an issued and paid-up
share capital of S$1.00 comprising one (1) share. Eindec Singapore is a wholly-owned
subsidiary of Eindec Holdings.
4. Acquisition of 100.0% of the issued and paid-up share capital of Eindec Malaysia,
Eindec Shanghai and 49.0% of the issued and paid-up share capital of Kyodo-Allied
(Thailand)
Eindec Malaysia and Eindec Shanghai were wholly-owned subsidiaries of Xie Tong
International. Kyodo-Allied (Thailand) was 51.0% held collectively by Eak Lowakij, Orapin
Kidsanakaraket and Oranuch Wang, who are all Thai nationals in accordance with Thai laws
on foreign ownership, and 49.0% held by Xie Tong International.
Our Company entered into a share sale and purchase agreement (“Share SPA”) dated 1 July
2015 with Xie Tong International to acquire the entire issued and paid-up share capital of
Eindec Malaysia and Eindec Shanghai, and 49.0% of the issued and paid-up share capital
of Kyodo-Allied (Thailand) (collectively, the “Sale Shares”) for an aggregate purchase
consideration of S$6,370,000.00.
Subsequent to the Share SPA, our Company and Xie Tong International entered into a
supplemental agreement on 15 July 2015 (“Share Supplemental SPA”) to provide that the
purchase consideration shall be satisfied by the allotment and issuance of 1,000,000 Shares
at the issue price of S$6.37 per Share credited as fully paid in the capital of our Company
(“Share SPA Consideration Shares”) to Xie Tong International. The purchase consideration
of S$6,370,000.00 was based on the unaudited net asset value of each of Eindec Malaysia,
Eindec Shanghai and Kyodo-Allied (Thailand) as at 30 June 2015.
RESTRUCTURING EXERCISE
61
Pursuant to the Share SPA, Xie Tong International subsequently renounced the Share SPA
Consideration Shares in favour of Weiye and our Company nominated Eindec Holdings to
hold the Sale Shares. The Share SPA was completed on 5 November 2015.
Kyodo-Allied (Thailand) was acquired pursuant to the Share SPA as it was intended that our
Group, rather than Xie Tong International, manage and take responsibility for the liquidation
of Kyodo-Allied (Thailand). Please refer to sub-paragraph 8 below for details on the
liquidation of Kyodo-Allied (Thailand).
5. Acquisition of business by Eindec Singapore
On 1 July 2015, our Company entered into an asset sale and purchase agreement (“Asset
SPA”) with Xie Tong Technology to acquire all the businesses and assets of Xie Tong
Technology as at 30 June 2015 (“Cut-Off Date”), save for a term loan from Bank of China
Limited, Singapore Branch (“BOC Term Loan”), and all taxation (“Xie Tong Business”).
Subsequent to the Asset SPA, our Company and Xie Tong Technology entered into a
supplemental agreement on 15 July 2015 (“Asset Supplemental SPA”) to provide that all
taxation shall also be transferred to our Company, effective as of 15 July 2015. Pursuant to
the Asset Supplemental SPA, the Xie Tong Business transferred to our Company included all
taxation.
The acquisition of the Xie Tong Business allows for the track record of the Xie Tong Business
to be taken into account by our Company after the Restructuring Exercise. Pursuant to the
Asset SPA and the Asset Supplemental SPA, the purchase consideration was
S$2,930,000.00 being equivalent to the unaudited net asset value of the Xie Tong Business
as at 30 June 2015. The purchase consideration was satisfied by the allotment and issuance
of 1,000,000 Shares at the issue price of S$2.93 per Share credited as fully paid in the capital
of our Company (“Asset SPA Consideration Shares”) to Xie Tong Technology, and the
assumption of responsibility by Eindec Singapore for the satisfaction of all the liabilities owed
by Xie Tong Technology existing at the date of completion of the Asset SPA, being 1 July
2015 (save for the taxation which was transferred on 15 July 2015). There was no change
to the purchase consideration for the transfer of the Xie Tong Business pursuant to the Asset
SPA and the Asset Supplemental SPA after the transfer of taxation to our Company, as no
purchase consideration or taxation was quantified before such transfer of taxation. The
transfer of taxation pursuant to the Asset Supplemental SPA did not have any impact on the
unaudited net asset value of the Xie Tong Business as at 30 June 2015.
Pursuant to the Asset SPA, Xie Tong Technology subsequently renounced the Asset SPA
Consideration Shares in favour of Weiye and our Company nominated Eindec Singapore to
take over the Xie Tong Business.
In connection with the Asset SPA, Xie Tong Technology also entered into a transitional
services agreement with Eindec Singapore for the provision of certain transitional services
in connection with the Asset SPA.
In connection with the Asset SPA, Weiye has also entered into a deed of indemnity to
indemnify and hold harmless our Group in full from any claims, demands, proceedings,
actions, damages, losses, costs, expenses, liabilities or penalties that may be brought
against or suffered by any member of our Group as a result of, in connection with, incidental
to or in consequence of, (a) any breach of the terms in the BOC Term Loan, through no
default or failure on the part of our Company and/or our subsidiaries; (b) any delay by Xie
Tong Technology in compliance or non-compliance with, or default or failure on the part of Xie
RESTRUCTURING EXERCISE
62
Tong Technology to discharge and fulfil its obligations in accordance with, the terms of the
BOC Term Loan, whether arising before or after the date of the deed of indemnity; and (c)
any default or failure on the part of Xie Tong Technology to discharge and fulfil its obligations,
or breach of any terms, under any of the arrangements, contracts, agreements or otherwise
(other than the BOC Term Loan) occurring prior to the Cut-Off Date.
6. Renaming of Kyodo Allied International Pte. Ltd. and Kyodo-Allied Technology Pte Ltd
On 1 July 2015, concurrent with the entry into the Share SPA and the Asset SPA, each of
Kyodo Allied International Pte. Ltd. and Kyodo-Allied Technology Pte Ltd changed their
names to “Xie Tong International Pte. Ltd.” and “Xie Tong Technology Pte. Ltd.” respectively.
7. Incorporation of Eindec Shenzhen
On 9 July 2015, Eindec Holdings incorporated Eindec Shenzhen in Shenzhen, PRC. At the
time of incorporation, the registered capital of Eindec Shenzhen was RMB20.0 million.
8. Liquidation of Kyodo-Allied (Thailand)
On 3 September 2015, the meeting of the shareholders of Kyodo-Allied (Thailand) resolved
to approve, inter alia, the dissolution and liquidation of Kyodo-Allied (Thailand) and the
appointment of its liquidators in order to assist in the liquidation process. On the same date,
such resolution was registered with the Ministry of Commerce of Thailand. Upon such
registration, the liquidation process cannot be revoked, terminated or cancelled for any
reason. On 2 November 2015, Kyodo-Allied (Thailand) entered into an agreement for the
sale of the land owned by Kyodo-Allied (Thailand) and the office building located thereon, for
a purchase consideration of THB 13.0 million (equivalent to approximately S$0.52 million).
9. Renaming of Kyodo-Allied (Malaysia)
On 13 September 2015, Kyodo-Allied (Malaysia) Sdn. Bhd. was renamed as “Eindec
Technology (Malaysia) Sdn. Bhd.” as part of our Group’s renaming exercise.
Upon completion of the Restructuring Exercise, our Company’s issued and paid-up share
capital increased to S$9,300,001.00 comprising 2,000,001 Shares.
RESTRUCTURING EXERCISE
63
Our Group structure as at the date of this Offer Document is as follows:
Eindec
Corporation
Limited
Eindec Holdings
100.0%
Eindec
Shenzhen
Eindec
Singapore
Eindec
Shanghai
Eindec
Malaysia
100.0% 100.0%100.0%100.0%
Kyodo-Allied (Thailand) is in the process of being liquidated. Please refer to the section entitled
“Restructuring Exercise” of this Offer Document for further details on the dissolution and
liquidation of Kyodo-Allied (Thailand).
GROUP STRUCTURE
64
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65
The following selected financial information should be read in conjunction with the full text of this
Offer Document, including the “Audited Combined Financial Statements of Eindec Corporation
Limited and its Subsidiaries for the Financial Years Ended 31 December 2012, 2013 and 2014”
and the “Unaudited Interim Combined Financial Statements of Eindec Corporation Limited and its
Subsidiaries for the Six-Month Period Ended 30 June 2015” as set out in Appendices A and B
respectively and the section entitled “Management’s Discussion and Analysis of Results of
Operations and Financial Position” of this Offer Document.
BASIS OF PREPARATION OF OUR GROUP’S COMBINED FINANCIAL STATEMENTS
For the purposes of the combined financial statements, the entities of our Group consist of
companies under common control during the financial years ended 31 December 2012, 2013 and
2014 (the “relevant period”), and continue to be under common control after 31 December 2014.
Entities under common control are entities which are ultimately controlled by the same parties and
that control is not transitory. Control exists when our Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. The financial statements of common controlled entities are included in the
combined financial statements from the date that control commences until the date that control
ceases.
The combined financial statements of our Group for the relevant period were prepared in a manner
similar to the “pooling-of-interest” method, as if the entities within our Group were operating as a
single economic enterprise from the beginning of the earliest comparative period covered by the
relevant period within our Group. Such manner of presentation reflects the economic substance
of the combining companies, which were under common control throughout the relevant period.
The identifiable assets and liabilities of all common controlled entities are accounted for at their
historical costs. The accounting policies of common controlled entities have been changed where
necessary to align them with the policies adopted by our Group.
SUMMARY OF OUR FINANCIAL INFORMATION
66
OPERATING RESULTS OF OUR GROUP
Audited Unaudited
S$’000 FY2012 FY2013 FY2014 1H2014 1H2015
Revenue 17,895 14,375 14,270 6,618 6,600
Cost of sales (11,036) (8,802) (9,311) (4,090) (4,297)
Gross profit 6,859 5,573 4,959 2,528 2,303
Other operating income 107 90 76 24 47
Other operating expenses (3,915) (3,515) (3,348) (1,710) (1,917)
Results from operating activities 3,051 2,148 1,687 842 433
Finance costs (206) (143) (60) (52) (18)
Profit before income tax 2,845 2,005 1,627 790 415
Income tax credit/(expense) 187 (273) (261) (52) (57)
Profit for the year/period 3,032 1,732 1,366 738 358
Other comprehensive (loss)/income
Items that may be reclassified to profit
or loss:
Foreign currency translation differences
from foreign operations
(125) (141) (92) 9 (133)
Total other comprehensive (loss)/
income for the year/period, net of
income tax
(125) (141) (92) 9 (133)
Total comprehensive income for the
year/period
2,907 1,591 1,274 747 225
EPS (based on pre-Placement share
capital)(1)4.22 2.41 1.90 1.03 0.50
EPS (based on post-Placement share
capital)(2)2.82 1.61 1.27 0.69 0.33
Notes:
(1) For comparative purposes, EPS (based on the pre-Placement share capital) for the Period Under Review is
computed based on the profit for the year/period and the pre-Placement share capital of 71,900,000 Shares.
(2) For comparative purposes, EPS (based on the post-Placement share capital) for the Period Under Review is
computed based on the profit for the year/period and the post-Placement share capital of 107,700,000 Shares.
SUMMARY OF OUR FINANCIAL INFORMATION
67
FINANCIAL POSITION OF OUR GROUP
Audited Unaudited
S$’000
31
December
2012
31
December
2013
31
December
2014
30 June
2015
Assets
Non-current assets
Property, plant and equipment 6,072 5,548 5,228 5,181
Intangible assets – – 196 262
6,072 5,548 5,424 5,443
Current assets
Inventories 2,992 3,195 2,672 2,686
Trade and other receivables 3,181 3,137 5,243 7,266
Income tax recoverable – 1 57 76
Cash and cash equivalents 4,765 4,605 3,095 2,414
10,938 10,938 11,067 12,442
Total assets 17,010 16,486 16,491 17,885
Equity attributable to owners of the
Company
Share capital – – – –(1)
Foreign currency translation reserve (379) (520) (612) (745)
Accumulated profits 6,522 8,254 9,620 9,978
Total equity 6,143 7,734 9,008 9,233
Liabilities
Non-current liabilities
Loans and borrowings 1,014 750 473 379
Deferred tax liabilities 197 242 230 230
1,211 992 703 609
Current liabilities
Loans and borrowings 1,801 1,036 245 561
Trade and other payables 7,819 6,661 6,368 7,321
Current tax payable 36 63 167 161
9,656 7,760 6,780 8,043
Total liabilities 10,867 8,752 7,483 8,652
Total equity and liabilities 17,010 16,486 16,491 17,885
NAV 6,143 7,734 9,008 9,233
NAV per Share (cents)(2) 8.54 10.76 12.53 12.84
Notes:
(1) Less than S$1,000.
(2) The NAV per Share as at 31 December 2012, 31 December 2013, 31 December 2014 and 30 June 2015 have been
computed based on our pre-Placement share capital of 71,900,000 Shares.
SUMMARY OF OUR FINANCIAL INFORMATION
68
OVERVIEW
We are a regional clean air technology and solutions group engaged in the following activities:
(i) design, manufacture and distribution of clean room equipment;
(ii) design, manufacture and distribution of HVAC equipment; and
(iii) distribution and installation of cooling towers.
Please refer to the section entitled “General Information on Our Group” of this Offer Document for
more details on our Group.
Revenue
We derive our revenue primarily from three major business segments, namely, (i) clean room
equipment, (ii) HVAC equipment and (iii) others.
Revenue by business segments
The following table sets out a breakdown of our revenue from each of these business segments
over the Period Under Review:
Revenue by
business segments
Audited Unaudited
FY2012 FY2013 FY2014 1H2014 1H2015
S$’000 % S$’000 % S$’000 % S$’000 % S$’000 %
Clean room
equipment
8,619 48.2 7,217 50.2 7,426 52.0 3,067 46.4 2,602 39.4
HVAC equipment 9,005 50.3 6,722 46.8 6,375 44.7 3,337 50.4 3,611 54.7
Others 271 1.5 436 3.0 469 3.3 214 3.2 387 5.9
Total 17,895 100.0 14,375 100.0 14,270 100.0 6,618 100.0 6,600 100.0
Our clean room equipment include FFUs, air showers, clean booths, pass boxes, clean hand
dryers and clean benches, amongst others. These are typically sold to contractors that specialise
in the construction and installation of clean room facilities within industrial factories (such as the
building of a wafer fabrication plant which houses a clean room environment for the manufacture
of highly dust-sensitive silicon chips). Our Group also provides value-added design services and
clean room equipment customised according to our customers’ specifications. At present, the end
users of our clean room equipment are mainly from the electronics industry.
Our HVAC equipment include dampers, deflection grilles and air diffusers installed to channel and
regulate the airflow into the environment within a building to ensure an even distribution of air
within a confined space. These are sold mainly to contractors that undertake mechanical and
electrical engineering design and installation services for commercial, residential and industrial
buildings, and factories.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
69
Our others segment comprises the distribution and installation of cooling towers, which is
complementary to our HVAC equipment business in Singapore. These cooling towers are typically
used alongside our HVAC equipment as both are key components of a building’s air-conditioning
system.
Please refer to the section entitled “General Information on Our Group – Our Products” of this
Offer Document for more information about our products.
Revenue by geographical area
We have a diversified base of customers in Singapore and in various parts of Asia. Although some
of our products are sold to customers in Europe and the PRC, the majority of our customers are
located in Southeast Asia.
The following table sets out a breakdown of our revenue recognised from each geographical area
over the Period Under Review:
Revenue by
geographical area
Audited Unaudited
FY2012 FY2013 FY2014 1H2014 1H2015
S$’000 % S$’000 % S$’000 % S$’000 % S$’000 %
Singapore 10,879 60.8 9,144 63.6 8,675 60.8 4,529 68.4 4,880 73.9
Other ASEAN
Countries
5,360 30.0 3,111 21.6 3,324 23.3 1,294 19.6 753 11.4
Others 1,656 9.2 2,120 14.8 2,271 15.9 795 12.0 967 14.7
Total 17,895 100.0 14,375 100.0 14,270 100.0 6,618 100.0 6,600 100.0
Factors affecting our revenue
Our project-based revenue from the sale of our products is calculated based on the volume of
products sold and the prices at which these products are sold. Our sales volume and selling prices
may be affected by, inter alia, the following factors:
(i) the demand for our products;
(ii) our ability to deliver upon existing contracts and the non-cancellation of such projects;
(iii) our ability to secure new contracts and the terms of those contracts;
(iv) our ability to secure sufficient working capital financing;
(v) our ability to execute contracts on time; and
(vi) fluctuations in foreign exchange rates.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
70
The demand for our products is in turn dependent upon, inter alia, the following:
(i) the performance of the electronics and building industries;
(ii) the success of our customers in their bids for new installation and maintenance contracts for
manufacturing and other facilities for any of the abovementioned industries;
(iii) our ability to compete against existing competitors and future market entrants; and
(iv) changes in the economic, political, social and legal environment in jurisdictions in which we
and our customers operate.
Please refer to the section entitled “Risk Factors” of this Offer Document for other factors that may
affect our business, financial condition, results of operations and prospects.
Cost of sales
Our cost of sales comprises mainly cost of direct materials, direct labour expenses and other
overheads which include depreciation of machinery, utility charges and land rent, amongst others.
Our cost of sales amounted to approximately 61.7%, 61.2%, 65.2%, 61.8% and 65.1% of our
revenue in each of FY2012, FY2013, FY2014, 1H2014 and 1H2015, respectively.
The following table sets out a breakdown of our cost of sales incurred over the Period Under
Review:
Cost of sales
Audited Unaudited
FY2012 FY2013 FY2014 1H2014 1H2015
S$’000 % S$’000 % S$’000 % S$’000 % S$’000 %
Direct materials 8,100 73.4 6,100 69.3 6,723 72.2 2,773 67.8 2,900 67.5
Direct labour 1,568 14.2 1,479 16.8 1,425 15.3 703 17.2 817 19.0
Overheads 1,368 12.4 1,223 13.9 1,163 12.5 614 15.0 580 13.5
Total 11,036 100.0 8,802 100.0 9,311 100.0 4,090 100.0 4,297 100.0
Direct materials comprise mainly stainless steel, aluminium, blowers and electrical equipment.
Our cost of direct materials amounted to approximately S$8.10 million, S$6.10 million, S$6.72
million, S$2.77 million and S$2.90 million which accounted for approximately 73.4%, 69.3%,
72.2%, 67.8% and 67.5% of our cost of sales in each of FY2012, FY2013, FY2014, 1H2014 and
1H2015, respectively.
Direct labour expenses comprise wages, employer’s CPF contribution and bonuses paid to our
manufacturing workers in our Facilities in Singapore and Malaysia. Our direct labour expenses
amounted to approximately S$1.57 million, S$1.48 million, S$1.43 million, S$0.70 million and
S$0.82 million which accounted for approximately 14.2%, 16.8%, 15.3%, 17.2% and 19.0% of our
cost of sales in each of FY2012, FY2013, FY2014, 1H2014 and 1H2015, respectively.
Overheads comprise mainly depreciation relating to our Facilities, machinery and equipment;
repair and maintenance incurred on our machinery, related consumables and other related
manufacturing expenses such as utility charges and land rent. Overheads amounted to
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
71
approximately S$1.37 million, S$1.22 million, S$1.16 million, S$0.61 million and S$0.58 million
which accounted for approximately 12.4%, 13.9%, 12.5%, 15.0% and 13.5% of our cost of sales
in each of FY2012, FY2013, FY2014, 1H2014 and 1H2015, respectively.
Factors affecting our cost of sales
Our cost of sales may be affected by, inter alia, the following factors:
(i) our ability to manage any variation orders and cost overruns;
(ii) our ability to maintain our existing relationships with and the standard of quality and reliability
of our suppliers;
(iii) fluctuations in direct materials costs; and
(iv) increase in costs of direct labour due to tightening of regulations governing foreign labour.
Please refer to the section entitled “Risk Factors” of this Offer Document for other factors that may
affect our business, financial condition, results of operations and prospects.
Gross profit and gross profit margin
The following table sets out a breakdown of our gross profit for each of our business segments for
the Period Under Review:
Audited Unaudited
FY2012 FY2013 FY2014 1H2014 1H2015
S$’000 % S$’000 % S$’000 % S$’000 % S$’000 %
Clean room
equipment
3,563 51.9 2,918 52.4 2,628 53.0 1,223 48.4 1,024 44.5
HVAC equipment 3,131 45.7 2,446 43.8 2,099 42.3 1,202 47.5 1,137 49.3
Others 165 2.4 209 3.8 232 4.7 103 4.1 142 6.2
Total 6,859 100.0 5,573 100.0 4,959 100.0 2,528 100.0 2,303 100.0
The following table sets out a breakdown of our gross profit margin for each of our business
segments for the Period Under Review:
Audited Unaudited
FY2012 FY2013 FY2014 1H2014 1H2015
% % % % %
Clean room equipment 41.3 40.4 35.4 39.9 39.4
HVAC equipment 34.8 36.4 32.9 36.0 31.5
Others 60.9 47.9 49.5 48.1 36.7
Overall 38.3 38.8 34.8 38.2 34.9
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
72
Other operating income
Other operating income comprises mainly proceeds from the sale of scrap material, gain on
disposal of plant and machinery, interest income and government grant income. Other operating
income amounted to approximately S$0.11 million, S$0.09 million, S$0.08 million, S$0.02 million
and S$0.05 million in each of FY2012, FY2013, FY2014, 1H2014 and 1H2015, respectively.
Other operating expenses
Other operating expenses comprise mainly general and administration expenses and marketing
expenses.
General and administration expenses comprise mainly staff costs, professional fees, carriage and
transport costs, upkeep of plant and machinery and depreciation of property, plant and equipment.
General and administration expenses incurred amounted to approximately S$3.89 million, S$3.49
million, S$3.32 million, S$1.71 million and S$1.92 million, and accounted for approximately
21.7%, 24.3%, 23.3%, 25.8% and 29.0% of our revenue in each of FY2012, FY2013, FY2014,
1H2014 and 1H2015, respectively.
Marketing expenses comprise mainly advertising expenses. As the majority of our business arises
from repeat customers and referrals from existing customers, we do not aggressively market our
products via commercial means such as trade shows and advertisements. However, in order to
maintain visibility of our profile and brand name within the industry, we have, during the Period
Under Review, advertised selectively in industrial magazines and directories. Consequently,
marketing expenses arising out of direct advertisements have been minimal. Our marketing
expenses amounted to approximately S$0.03 million, S$0.03 million, S$0.03 million, nil and nil
and accounted for approximately 0.2%, 0.2%, 0.2%, nil and nil of our revenue in each of FY2012,
FY2013, FY2014, 1H2014 and 1H2015, respectively.
Finance costs
Finance costs comprise interest expenses on loans and borrowings. Finance costs amounted to
approximately S$0.21 million, S$0.14 million, S$0.06 million, S$0.05 million and S$0.02 million
and accounted for approximately 1.2%, 1.0%, 0.4%, 0.8% and 0.3% of our revenue in each of
FY2012, FY2013, FY2014, 1H2014 and 1H2015, respectively.
Income tax expense
We are subject to the prevailing tax regulations of the countries in which we operate, namely,
Singapore, Malaysia, Thailand and the PRC, for which the applicable statutory tax rates during the
Period Under Review were 17.0%, 25.0%, 20.0% and 25.0%, respectively.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
73
REVIEW OF PAST PERFORMANCE
FY2013 VS FY2012
Revenue
Our revenue decreased by approximately S$3.52 million or 19.7% from approximately S$17.90
million in FY2012 to approximately S$14.38 million in FY2013. Higher sales revenue was
generated in FY2012 as a result of several large-scale projects having been undertaken during
that period for both our clean room equipment and HVAC equipment business segments.
Our revenue from our clean room equipment segment decreased by approximately S$1.40 million
or 16.3% from approximately S$8.62 million in FY2012 to approximately S$7.22 million in FY2013.
Of the approximately S$1.40 million decrease:
(i) approximately S$1.01 million was attributable to exports to Taikisha (Thailand) Co., Ltd. for
Kuroda Precision Industries Ltd., TDK Corporation and NMB Technologies Corporation; and
(ii) approximately S$0.80 million was attributable to Takasago Singapore Pte. Ltd. for Western
Digital Corporation’s manufacturing facility extension,
all of which were completed in FY2012.
Our revenue from our HVAC equipment segment decreased by approximately S$2.28 million or
25.4% from approximately S$9.01 million in FY2012 to approximately S$6.72 million in FY2013.
Of the approximately S$2.28 million decrease, an aggregate of approximately S$1.57 million was
attributable to Taikisha (Singapore) Pte. Ltd. for extension works for the Singapore General
Hospital and construction work for the Gardens by the Bay, all of which were completed in
FY2012.
Cost of sales
Our cost of sales decreased by approximately S$2.23 million or 20.2% from approximately
S$11.04 million in FY2012 to approximately S$8.80 million in FY2013. This decrease is largely
commensurate with the decrease in revenue.
Our direct materials costs decreased by approximately S$2.00 million or 24.7% from
approximately S$8.10 million in FY2012 to approximately S$6.10 million in FY2013. This decrease
was mainly due to a reduction in direct materials used in manufacturing as a result of fewer
large-scale projects having been undertaken during this period.
Our direct labour costs decreased by approximately S$0.09 million or 5.7% from approximately
S$1.57 million in FY2012 to approximately S$1.48 million in FY2013. This decrease was mainly
due to a reduction in headcount of manufacturing workers from 133 as at the end of FY2012 to
96 as at the end of FY2013.
Our overheads decreased by approximately S$0.15 million or 10.6% from approximately S$1.37
million in FY2012 to approximately S$1.22 million in FY2013. This decrease was mainly due to a
reduction in manufacturing activity having been undertaken during this period.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
74
Gross profit and gross profit margin
Our gross profit decreased by approximately S$1.29 million or 18.7% from approximately S$6.86
million in FY2012 to approximately S$5.57 million in FY2013. Our gross profit margins improved
slightly from approximately 38.3% in FY2012 to approximately 38.8% in FY2013.
Other operating income
Other operating income decreased by approximately S$0.02 million or 15.9% from approximately
S$0.11 million in FY2012 to approximately S$0.09 million in FY2013 mainly due to lower proceeds
from sale of scrap material. In FY2013, other operating income comprised sale of scrap material
and gains from disposal of machinery.
Other operating expenses
Other operating expenses decreased by approximately S$0.40 million or 10.2% from
approximately S$3.92 million in FY2012 to approximately S$3.52 million in FY2013.
General and administration expenses decreased by approximately S$0.40 million or 10.3% from
approximately S$3.89 million in FY2012 to approximately S$3.49 million in FY2013. This decrease
was mainly due to a decrease of S$0.29 million incurred as a result of lower senior management
headcount in FY2013.
Finance costs
Our finance costs decreased by approximately S$0.06 million or 30.6% from approximately
S$0.21 million in FY2012 to approximately S$0.14 million in FY2013. This decrease was mainly
due to the repayment of term loans and hire purchase creditors during FY2013.
Profit before income tax
As a result of the foregoing, our profit before income tax decreased by approximately S$0.84
million or 29.5% from approximately S$2.85 million in FY2012 to approximately S$2.01 million in
FY2013.
Income tax expense
Income tax expense increased by approximately S$0.46 million from an approximately S$0.19
million income tax credit in FY2012 to an approximately S$0.27 million income tax expense in
FY2013. This increase was mainly due to a reversal of current and deferred tax expenses of
approximately S$0.32 million that was overprovided for in prior years and the utilisation of
previously unrecognised deferred tax assets of S$0.23 million in FY2012.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
75
FY2014 VS FY2013
Revenue
Our revenue decreased by approximately S$0.11 million or 0.7% from approximately S$14.38
million in FY2013 to approximately S$14.27 million in FY2014. This was mainly the result of a
decrease in revenue from our HVAC equipment segment of approximately S$0.35 million due to
intense market competition in Singapore, which was partially offset by an increase in revenue from
our clean room equipment segment of approximately S$0.21 million in FY2014.
Cost of sales
Our cost of sales increased by approximately S$0.51 million or 5.8% from approximately S$8.80
million in FY2013 to approximately S$9.31 million in FY2014. This increase was a result of higher
direct materials costs for a particular clean room project undertaken by Eindec Shanghai without
a corresponding increase in sales price due to intense market competition in the PRC then; as well
as inflationary increases in the costs of direct materials.
Gross profit and gross profit margin
Our gross profit decreased by approximately S$0.61 million or 11.0% from approximately S$5.57
million in FY2013 to approximately S$4.96 million in FY2014. Our gross profit margins decreased
from approximately 38.8% in FY2013 to approximately 34.8% in FY2014. This decrease was
mainly due to strong competition experienced in both our clean room equipment and HVAC
equipment business segments during FY2014.
Gross profit margins of our clean room equipment segment decreased from approximately 40.4%
in FY2013 to approximately 35.4% in FY2014, largely as a result of the abovementioned project
undertaken by Eindec Shanghai, as well as exports to Penang, Malaysia, contributing lower-than-
average gross profit margins due to strong competition.
Gross profit margins of our HVAC equipment segment decreased from approximately 36.4% in
FY2013 to approximately 32.9% in FY2014 due to intense market competition in Singapore.
Other operating income
Other operating income decreased by approximately S$0.01 million or 15.6% from approximately
S$0.09 million in FY2013 to approximately S$0.08 million in FY2014. This decrease was mainly
due to a reduction of S$0.03 million in government grant income from FY2013 to FY2014.
Other operating expenses
Other operating expenses decreased by approximately S$0.17 million or 4.8% from approximately
S$3.52 million in FY2013 to approximately S$3.35 million in FY2014.
General and administration expenses decreased by approximately S$0.17 million or 4.8% from
approximately S$3.49 million in FY2013 to approximately S$3.32 million in FY2014. This decrease
was mainly due to a decline of approximately S$0.06 million in professional fees and of
approximately S$0.04 million in entertainment expenses being incurred in FY2014.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
76
Finance costs
Our finance costs decreased by approximately S$0.08 million or 58.0% from approximately
S$0.14 million in FY2013 to approximately S$0.06 million in FY2014. This decrease was mainly
due to the repayment of term loans during FY2013.
Profit before income tax
As a result of the foregoing, our profit before income tax decreased by approximately S$0.38
million or 18.9% from approximately S$2.01 million in FY2013 to approximately S$1.63 million in
FY2014.
Income tax expense
Income tax expense decreased by approximately S$0.01 million or 4.4% from approximately
S$0.27 million in FY2013 to approximately S$0.26 million in FY2014, despite an approximate
18.9% decrease in profit before income tax. This was largely due to a decrease in non-taxable
income having been generated in FY2014.
1H2015 VS 1H2014
Revenue
Our revenue decreased marginally by approximately S$0.02 million or 0.3% from approximately
S$6.62 million in 1H2014 to approximately S$6.60 million in 1H2015. This was mainly due to a
decrease in revenue of approximately S$0.47 million from our clean room equipment segment due
to intense market competition experienced by Eindec Shanghai in 1H2015, which was partially
offset by an increase in revenue of approximately S$0.27 million and S$0.17 million from our
HVAC equipment and other equipment segments, respectively, largely due to an increase in sales
of dampers and cooling towers.
Cost of Sales
Our cost of sales increased by approximately S$0.21 million or 5.1% from approximately S$4.09
million in 1H2014 to approximately S$4.30 million in 1H2015. This increase was mainly due to an
increase of approximately S$0.13 million and S$0.11 million being incurred on direct materials and
direct labour expenses, respectively, and as a result of different product sales mix between
1H2014 and 1H2015.
Gross profit and gross profit margin
Our gross profit decreased by approximately S$0.23 million or 8.9% from approximately S$2.53
million in 1H2014 to approximately S$2.30 million in 1H2015. Our gross profit margins decreased
from approximately 38.2% in 1H2014 to approximately 34.9% in 1H2015. This decrease was
mainly due to a decrease in the gross profit margin of our HVAC segment, from approximately
36.0% in 1H2014 to approximately 31.5% in 1H2015 due to intense market competition.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
77
Other operating income
Other operating income increased by approximately S$0.02 million or 95.8% from approximately
S$0.02 million in 1H2014 to approximately S$0.05 million in 1H2015. This increase was mainly
due to gain on disposal of property, plant and equipment and increased sale of scrap material.
Other operating expenses
Other operating expenses increased by approximately S$0.21 million or 12.1% from
approximately S$1.71 million in 1H2014 to approximately S$1.92 million in 1H2015. This increase
was mainly due to increases in statutory CPF contribution, additional management staff, rental of
premises, agent fees, automobile expenses and carriage charges.
Finance costs
Our finance costs decreased by approximately S$0.03 million or 65.4% from approximately
S$0.05 million in 1H2014 to approximately S$0.02 million in 1H2015. This decrease was mainly
due to a repayment of term loans during 1H2015.
Profit before income tax
As a result of the foregoing, our profit before income tax decreased by approximately S$0.38
million or 47.5% from approximately S$0.79 million in 1H2014 to approximately S$0.42 million in
1H2015.
Income tax expense
Income tax expense increased marginally by approximately S$0.01 million or 9.6% from S$0.05
million in 1H2014 to S$0.06 million in 1H2015.
REVIEW OF PAST FINANCIAL POSITION
We set out below a description of our most recent statement of financial position as at 30 June
2015, which should be read in conjunction with the full text of this Offer Document, including the
“Audited Combined Financial Statements of Eindec Corporation Limited and its Subsidiaries for
the Financial Years Ended 31 December 2012, 2013 and 2014” and the “Unaudited Interim
Combined Financial Statements of Eindec Corporation Limited and its Subsidiaries for the
Six-Month Period Ended 30 June 2015” as set out in Appendices A and B respectively of this Offer
Document.
Non-current assets
Our non-current assets comprise property, plant and equipment (“PPE”) and intangible assets.
Non-current assets amounted to approximately S$5.42 million or 32.9% of total assets and
approximately S$5.44 million or 30.4% of total assets as at 31 December 2014 and 30 June 2015,
respectively. As at 30 June 2015, our non-current assets comprised PPE of approximately S$5.18
million and intangible assets of approximately S$0.26 million.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
78
PPE
PPE amounted to approximately S$5.23 million or 31.7% of total assets and approximately S$5.18
million or 29.0% of total assets as 31 December 2014 and 30 June 2015, respectively. PPE
comprised freehold land and building, furniture and fittings, motor vehicles, office equipment and
computers, plant and machinery, and factory equipment.
Intangible assets
Intangible assets amounted to approximately S$0.20 million or 1.2% of total assets and
approximately S$0.26 million or 1.5% of total assets as at 31 December 2014 and 30 June 2015,
respectively. Intangible assets comprise mainly development costs in relation to our new air
purifier products.
Current assets
Our current assets comprise inventories, trade and other receivables, income tax recoverable and
cash and cash equivalents. Current assets amounted to approximately S$11.07 million or 67.1%
of total assets and approximately S$12.44 million or 69.6% of total assets as at 31 December
2014 and 30 June 2015, respectively.
Inventories
Inventories amounted to approximately S$2.67 million or 16.2% of total assets and approximately
S$2.69 million or 15.0% of total assets as at 31 December 2014 and 30 June 2015, respectively.
Inventories comprise mainly raw materials.
Trade and other receivables
Trade and other receivables amounted to approximately S$5.24 million or 31.8% of total assets
and approximately S$7.27 million or 40.6% of total assets as at 31 December 2014 and 30 June
2015, respectively. Trade and other receivables as at 31 December 2014 comprised
approximately S$3.51 million in trade receivables and approximately S$1.20 million in amounts
due from Weiye. Trade and other receivables as at 30 June 2015 comprised approximately S$4.10
million in trade receivables and approximately S$1.96 million in amounts due from Weiye.
Please refer to the sections entitled “Interested Person Transactions” and “Restructuring
Exercise” of this Offer Document for further information.
Income tax recoverable
Income tax recoverable amounted to approximately S$0.06 million or 0.3% of total assets and
approximately S$0.08 million or 0.4% of total assets as at 31 December 2014 and 30 June 2015,
respectively.
Cash and cash equivalents
Cash and cash equivalents amounted to approximately S$3.10 million or 18.8% of total assets and
approximately S$2.41 million or 13.5% of total assets as at 31 December 2014 and 30 June 2015,
respectively.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
79
Current liabilities
Our current liabilities comprise loans and borrowings, trade and other payables and current tax
payable. Current liabilities amounted to approximately S$6.78 million or 90.6% of total liabilities
and approximately S$8.04 million or 93.0% of total liabilities as at 31 December 2014 and 30 June
2015, respectively.
Loans and borrowings
Loans and borrowings amounted to approximately S$0.25 million or 3.3% of total liabilities and
approximately S$0.56 million or 6.5% of total liabilities as at 31 December 2014 and 30 June 2015,
respectively. Loans and borrowings comprise mainly term loans, bank overdraft and finance lease
liabilities.
Trade and other payables
Trade and other payables amounted to approximately S$6.37 million or 85.1% of total liabilities
and approximately S$7.32 million or 84.6% of total liabilities as at 31 December 2014 and 30 June
2015, respectively. Trade and other payables as at 31 December 2014 comprised approximately
S$1.25 million in trade payables and approximately S$4.36 million in amounts due to Weiye. Trade
and other payables as at 30 June 2015 comprised approximately S$1.53 million in trade payables
and approximately S$4.95 million in amounts due to Weiye.
Please refer to the sections entitled “Interested Person Transactions” and “Restructuring
Exercise” of this Offer Document for further information.
Current tax payable
Current tax payable amounted to approximately S$0.17 million or 2.2% of total liabilities and
approximately S$0.16 million or 1.9% of total liabilities as at 31 December 2014 and 30 June 2015,
respectively.
Non-current liabilities
Our non-current liabilities comprise loans and borrowings and deferred tax liabilities. Non-current
liabilities amounted to approximately S$0.70 million or 9.4% of total liabilities and approximately
S$0.61 million or 7.0% of total liabilities as at 31 December 2014 and 30 June 2015, respectively.
Loans and borrowings
The non-current portion of our loans and borrowings amounted to approximately S$0.47 million or
6.3% of total liabilities and approximately S$0.38 million or 4.4% of total liabilities as at 31
December 2014 and 30 June 2015, respectively. These loans and borrowings comprise mainly
term loans and finance lease liabilities.
Deferred tax liabilities
Deferred tax liabilities amounted to approximately S$0.23 million or 3.1% of total liabilities and
approximately S$0.23 million or 2.7% of total liabilities as at 31 December 2014 and 30 June 2015,
respectively.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
80
Equity
Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences arising from the
translation of the financial statements of foreign operations whose functional currencies are
different from that of our Company’s functional currency. The foreign currency translation reserve
differences amounted to approximately S$0.61 million and S$0.75 million as at 31 December 2014
and 30 June 2015, respectively.
Accumulated profits
Accumulated profits amounted to approximately S$9.62 million and S$9.98 million as at 31
December 2014 and 30 June 2015, respectively.
LIQUIDITY AND CAPITAL RESOURCES
During the Period Under Review and up to the Latest Practicable Date, our growth and operations
have been funded by a combination of internal and external sources of funds, comprising a
combination of cash generated from our operating activities, bank borrowings and net amount
owing to Weiye. As at the Latest Practicable Date, the amount owing to Weiye is S$2.36 million.
Please refer to the section entitled “Interested Person Transactions – Present and On-going
Interested Person Transactions” for more details of the amount outstanding to Weiye.
Please refer to the section entitled “Capitalisation and Indebtedness” of this Offer Document for
details of our latest available credit facilities, cash and cash equivalents and level of borrowings.
As at the Latest Practicable Date, we have cash and cash equivalents of approximately S$4.86
million, net current assets of S$4.24 million and credit facilities of S$2.04 million which have not
been utilised.
Our Directors are of the opinion that, after having made due and careful enquiry and after taking
into account the cash flows generated from our operations, our available credit facilities, and our
existing cash and cash equivalents, the working capital available to our Group as at the date of
lodgement of this Offer Document is sufficient for our present requirements and for at least 12
months after the listing of our Company on Catalist.
The Sponsor and Issue Manager is of the reasonable opinion that, after having made due and
careful enquiry and after taking into account the cash flows generated from our operations, our
available credit facilities, and our existing cash and cash equivalents, the working capital available
to our Group as at the date of lodgement of this Offer Document is sufficient for our present
requirements and for at least 12 months after the listing of our Company on Catalist.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
81
Banking facilities
As at 30 June 2015, we had total banking facilities amounting to approximately S$3.70 million, of
which approximately S$0.87 million had been utilised. The following table sets out a breakdown
of our banking facilities as at 30 June 2015:
Name of
bank
Nature of
facilities/
purpose
Total
amount
available Utilised Unutilised
Maturity
Profile
Interest
rates
S$’000 S$’000 S$’000 %
Public Bank Overdraft 999 293 706 Upon demand 7.60 to
8.85
Public Bank Combined
bills line
925 – 925 Upon maturity –
Public Bank Term loan 1,776 581 1,195 By instalment 5.35
Total 3,700 874 2,826
Cash flows
The following table sets out a breakdown of our cash flows during the Period Under Review:
Audited Unaudited
S$’000 FY2012 FY2013 FY2014 1H2014 1H2015
Net cash generated from/
(used in) operating activities
3,005 2,228 1,716 1,446 (204)
Net cash used in investing
activities
(12) (132) (1,545) (4) (731)
Net cash used in financing
activities
(1,621) (1,744) (1,664) (1,672) (55)
Net increase/(decrease)
in cash and cash equivalents
1,372 352 (1,493) (230) (990)
Cash and cash equivalents at
beginning of financial period
2,879 4,255 4,605 4,605 3,095
Effect of exchange rate fluctuations
on cash held
4 (2) (17) (17) 16
Cash and cash equivalents at
end of financial period
4,255 4,605 3,095 4,358 2,121
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
82
For the purpose of the combined statements of cash flows, cash and cash equivalents comprised
the following amounts:
Audited Unaudited
S$’000 FY2012 FY2013 FY2014 1H2014 1H2015
Cash and cash on hand 4,765 4,605 3,095 4,358 2,414
Less: bank overdrafts (510) – – – (293)
Total cash and cash equivalents
in statement of cash flows
4,255 4,605 3,095 4,358 2,121
FY2012
Net cash generated from operating activities
In FY2012, net cash generated from operating activities amounted to approximately S$3.01
million, which comprised operating cash flows before changes in working capital of approximately
S$3.20 million, net of working capital outflow of approximately S$0.08 million and income tax paid
aggregating approximately S$0.11 million.
The net working capital outflow arose mainly from the following:
(a) decrease of approximately S$2.17 million in trade and other payables;
(b) decrease of approximately S$1.46 million in trade and other receivables; and
(c) decrease of approximately S$0.63 million in inventories.
Net cash used in investing activities
In FY2012, net cash used in investing activities amounted to approximately S$0.01 million and
was mainly due to purchase of machinery of approximately S$0.07 million, and partially offset by
approximately S$0.05 million in interest received.
Net cash used in financing activities
In FY2012, net cash used in financing activities amounted to approximately S$1.62 million and
was mainly due to repayments of amount owing to Weiye and repayment of loans and borrowings
amounting to approximately S$1.09 million and S$0.26 million, respectively, and interest paid of
approximately S$0.21 million.
FY2013
Net cash generated from operating activities
In FY2013, net cash generated from operating activities amounted to approximately S$2.23
million, which comprised operating cash flows before changes in working capital of approximately
S$2.48 million, net of working capital outflow of approximately S$0.06 million and income tax paid
aggregating approximately S$0.19 million.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
83
The net working capital outflow arose mainly from the following:
(a) increase of approximately S$0.05 million in trade and other payables;
(b) decrease of approximately S$0.14 million in trade and other receivables; and
(c) increase of approximately S$0.25 million in inventories.
Net cash used in investing activities
In FY2013, net cash used in investing activities amounted to approximately S$0.13 million and
was mainly due to purchase of machinery of approximately S$0.03 million and increase in
amounts due from Weiye of approximately S$0.14 million, and partially offset by approximately
S$0.04 million in proceeds from disposal of machinery.
Net cash used in financing activities
In FY2013, net cash used in financing activities amounted to approximately S$1.74 million and
was mainly due to repayments of amount owing to Weiye and repayments of loans and borrowings
amounting to approximately S$1.18 million and S$0.33 million, respectively, and interests paid of
approximately S$0.14 million.
FY2014
Net cash generated from operating activities
In FY2014, net cash generated from operating activities amounted to approximately S$1.72
million, which comprised operating cash flows before changes in working capital of approximately
S$1.98 million, net of working capital outflow of approximately S$0.05 million and income tax paid
aggregating to approximately S$0.22 million.
The net working capital outflow arose mainly from the following:
(a) increase of approximately S$0.28 million in trade and other payables;
(b) increase of approximately S$0.82 million in trade and other receivables; and
(c) decrease of approximately S$0.49 million in inventories.
Net cash used in investing activities
In FY2014, net cash used in investing activities amounted to approximately S$1.55 million and
was mainly due to an increase of approximately S$1.06 million in the amount due from Weiye,
increase of approximately S$0.25 million in the amount due from related corporation, purchase of
machinery of approximately S$0.10 million and payment for development expenditure capitalised
in intangible assets of approximately S$0.20 million, and partially offset by approximately S$0.05
million in proceeds received from disposal of machinery.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
84
Net cash used in financing activities
In FY2014, net cash used in financing activities amounted to approximately S$1.66 million and
was mainly due to repayments of amount owing to Weiye and repayments of loans and borrowings
amounting to approximately S$0.57 million and S$1.03 million, respectively, and interests paid of
approximately S$0.06 million.
1H2015
Net cash used in operating activities
In 1H2015, net cash used in operating activities amounted to approximately S$0.20 million, which
comprised operating cash flows before changes in working capital of approximately S$0.56
million, net of working capital outflow of approximately S$0.67 million and income tax paid
aggregating approximately S$0.10 million.
The net working capital outflow arose mainly from the following:
(a) increase of approximately S$0.38 million in trade and other payables;
(b) increase of approximately S$0.94 million in trade and other receivables; and
(c) increase of approximately S$0.10 million in inventories.
In 1H2015, net cash of approximately S$0.20 million was used in operations mainly due to higher
than usual sales achieved in the months of May and June 2015. The aggregate revenue in May
and June 2015 was approximately S$3.31 million, compared with approximately S$2.23 million in
May and June 2014.
Net cash used in investing activities
In 1H2015, net cash used in investing activities amounted to approximately S$0.73 million and
was mainly due to an increase of approximately S$0.76 million in the amount due from Weiye,
purchase of machinery of approximately S$0.16 million and payment for development expenditure
capitalised in intangible assets of approximately S$0.07 million, and partially offset by a decrease
of approximately S$0.23 million in the amount due from related corporations and proceeds from
disposal of machinery amounting to approximately S$0.03 million.
Net cash used in financing activities
In 1H2015, net cash used in financing activities amounted to approximately S$0.06 million and
was mainly due to an increase of approximately S$0.59 million in the amount owing to Weiye and
an increase of approximately S$0.01 million in amount due to a director, and partially offset by
repayment of loans and borrowings amounting to approximately S$0.10 million, interest paid of
approximately S$0.02 million and payment for initial public offering related expenses of
approximately S$0.54 million.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
85
MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS
The following table sets out a breakdown of material expenditures made by our Group during the
Period Under Review and up to the Latest Practicable Date:
Audited Unaudited
S$’000 FY2012 FY2013 FY2014 1H2015
As at Latest
Practicable Date
Freehold Building 2 – – – –
Plant and Machinery 14 13 46 14 18
Factory Equipment 10 5 3 6 12
Building and Factory
Improvements
– 3 – 102 240
Office Equipment and
Computers
26 9 27 18 111
Furniture and Fittings 13 1 – – 2
Motor Vehicles – – 19 99 96
Total 65 31 95 239 479
The above capital expenditure was financed by internally generated funds and hire purchase
creditors.
The following table sets out a breakdown of material divestments made by our Group during the
Period Under Review and up to the Latest Practicable Date:
Audited Unaudited
S$’000 FY2012 FY2013 FY2014 1H2015
As at Latest
Practicable Date
Plant and Machinery – – – 1 1
Factory Equipment – – – 4 8
Office Equipment and
Computers
– – – – 59
Furniture and Fittings – – – 2 42
Motor Vehicles – 25 222 57 184
Total – 25 222 64 294
CAPITAL COMMITMENTS
As at the Latest Practicable Date, we do not have any material capital commitments.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
86
OPERATING LEASE COMMITMENTS
As at the Latest Practicable Date, our Group had operating lease commitments for future minimum
lease payable under non-cancellable operating lease in respect of our corporate office and Facility
rental in Singapore as follows:
S$’000
Unaudited
As at
30 June 2015
Unaudited
As at the Latest
Practicable Date
Due within one financial year 206 206
Due between one and five financial years 344 258
Due after five financial years – –
550 464
We intend to finance the above operating lease commitments with internally generated funds.
Save as disclosed above and in the sections entitled “Prospects, Business Strategies and Future
Plans” and “Restructuring Exercise” of this Offer Document, we do not have other material plans
on capital expenditures, divestments and commitments as at the Latest Practicable Date.
FOREIGN EXCHANGE MANAGEMENT
Our functional currency is the S$. While we are headquartered in Singapore, we have a Facility
in Malaysia and also generate income from overseas customers. We also make purchases from
both local and overseas suppliers, and procure the services of overseas subcontractors for our
businesses. Our revenue and purchases are largely denominated and transacted in S$, RM, RMB
and THB. The following table sets out the percentage of our revenue and purchases denominated
in the various currencies for the Period Under Review:
Audited Unaudited
FY2012 FY2013 FY2014 1H2014 1H2015
% of revenue denominated in:
S$ 89.3 86.1 86.2 89.2 99.2
RMB 2.4 12.4 12.9 9.7 Nil
THB 8.3 1.5 0.9 1.1 0.8
Total 100.0 100.0 100.0 100.0 100.0
% of purchases denominated in:
S$ 80.0 78.9 66.7 75.0 56.8
RM 20.0 21.1 33.3 25.0 43.2
Total 100.0 100.0 100.0 100.0 100.0
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
87
To the extent that our revenue and purchases are not perfectly matched in the same currency and
to the extent that there are timing differences between invoicing of our customers and the payment
of our suppliers, we will be exposed to foreign exchange fluctuations against our functional
currency, the S$, which may adversely affect our results of operations.
Transactions in foreign currencies are translated to the respective functional currencies of Group
entities at exchange rates at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are translated to the functional currency
at the exchange rate at the reporting date. The foreign currency gain or loss on monetary items
is the difference between the amortised cost in the functional currency at the beginning of the
year, adjusted for effective interest and payments during the year, and the amortised cost in
foreign currency translated at the exchange rate at the end of the reporting year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair
value are translated to the functional currency at the exchange rate at the date on which the fair
value was determined. Non-monetary items in a foreign currency that are measured in terms of
historical cost are translated using the exchange rate at the date of the transaction. Foreign
currency differences arising on translation are recognised in profit or loss.
The table below sets out our net foreign exchange gains/(losses) for the Period Under Review:
Audited Unaudited
S$’000 FY2012 FY2013 FY2014 1H2014 1H2015
Net foreign exchange
(losses)/gains
(150) (26) 27 (13) 3
Currently, we do not have a formal foreign currency hedging policy with respect to our foreign
exchange exposure. As at the date of this Offer Document, we have not used any financial
hedging instruments to manage our foreign exchange risk. We will continue to monitor our foreign
exchange exposure and may employ hedging instruments to manage our foreign exchange
exposure should the need arise in future. If necessary, we will seek the approval of our Board on
the policy for entering into any foreign exchange hedging transactions and will put in place
adequate procedures which will be reviewed by our Audit Committee.
SEASONALITY
Due to the project-based nature of our business, we have not observed any significant seasonal
trends during the Period Under Review. Our Directors believe that there is no apparent
seasonality factor which affects our industry.
INFLATION
For the Period Under Review, inflation did not have a material impact on our financial
performance.
CONTINGENT LIABILITIES
As at the Latest Practicable Date, our Group does not have any contingent liabilities.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
88
CHANGES IN ACCOUNTING POLICIES
The accounting policies have been consistently applied by our Group during the Period Under
Review and there have been no changes in our accounting policies since the incorporation of our
Company. Please refer to the “Audited Combined Financial Statements of Eindec Corporation
Limited and its Subsidiaries for the Financial Years Ended 31 December 2012, 2013 and 2014”
and the “Unaudited Interim Combined Financial Statements of Eindec Corporation Limited and its
Subsidiaries for the Six-Month Period Ended 30 June 2015” as set out in Appendices A and B
respectively of this Offer Document.
MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL POSITION
89
The following table shows the cash and cash equivalents as well as capitalisation and
indebtedness of our Group,
(i) on an actual basis as at 30 June 2015 based on the Unaudited Interim Combined Financial
Statements of Eindec Corporation Limited and its Subsidiaries for the Six-Month Period
Ended 30 June 2015;
(ii) based on our management accounts as at the Latest Practicable Date; and
(iii) as adjusted for the estimated net proceeds from the Placement.
S$’000
As at
30 June 2015
As at the Latest
Practicable Date
As adjusted for the
estimated net
proceeds from the
Placement
Cash and cash equivalents 2,414 4,860 9,410
Indebtedness
Current
– secured and guaranteed – – –
– secured and non-guaranteed 561 1,050 1,050
– unsecured and guaranteed – – –
– unsecured and
non-guaranteed
– – –
Non-current
– secured and guaranteed – – –
– secured and non-guaranteed 379 253 253
– unsecured and guaranteed – – –
– unsecured and
non-guaranteed
– – –
Total indebtedness 940 1,303 1,303
Total shareholders’ equity 9,233 9,100 14,717 (1)
Total capitalisation and
indebtedness
10,173 10,403 16,020
Note:
(1) This takes into account the capitalisation of estimated listing expenses of approximately S$1.90 million.
As at the Latest Practicable Date, there were no material changes to our capitalisation and
indebtedness as disclosed above, save for changes in our reserves arising from the day-to-day
operations in the ordinary course of our business.
As at the Latest Practicable Date, our Group had available banking facilities of approximately
S$3.29 million, of which approximately S$2.04 million was unutilised. Our banking facilities of
approximately S$1.25 million were utilised under the term loan and overdraft facilities.
CAPITALISATION AND INDEBTEDNESS
90
Borrowings
As at the Latest Practicable Date, we had total banking facilities amounting to approximately
S$3.29 million, of which approximately S$1.25 million had been utilised. The following table sets
out a breakdown of our banking facilities as at the Latest Practicable Date:
Name of
bank
Nature of
facilities/
purpose
Total
amount
available Utilised Unutilised
Maturity
Profile
Interest
rates
S$’000 %
Public Bank Overdraft 888 805 83 Upon demand 7.60 to
8.85
Public Bank Combined
bills line
823 – 823 Upon maturity –
Public Bank Term loan 1,579 448 1,131 By instalment 5.35
Total 3,290 1,253 2,037
Save as disclosed above, we do not have any committed borrowing facilities.
As at the Latest Practicable Date, all our existing term loans and overdraft facilities were secured
by one or several of our freehold properties in Malaysia.
To the best of our Directors’ knowledge, as at the Latest Practicable Date, we are not in breach
of any of the terms and conditions or covenants associated with any credit arrangement or bank
loan which could materially affect our financial position and results of business operations, or the
investments of our Shareholders.
Save as aforesaid and as disclosed under the section entitled “Management’s Discussion and
Analysis of Results of Operations and Financial Position – Liquidity and Capital Resources” of this
Offer Document, our Group does not have any material unused sources of liquidity.
CAPITALISATION AND INDEBTEDNESS
91
OUR HISTORY
Our Company was incorporated in Singapore on 2 April 2015 as a private company limited by
shares under the Companies Act. On 10 December 2015, our Company was converted into a
public company limited by shares and renamed “Eindec Corporation Limited”. To facilitate the
listing of our Company on Catalist, the Restructuring Exercise was undertaken. Subsequent to the
Restructuring Exercise, our Company became the holding company of our Group. Please refer to
the section entitled “Restructuring Exercise” of this Offer Document for further details.
Our Group’s history dates back to 1984, when Kyodo-Allied Industries was initially established as
a manufacturer and supplier of HVAC equipment for the M&E engineering industries in Singapore.
Throughout the 1980s, our business and operations for HVAC equipment grew steadily as we
secured contracts with, amongst others, several major Japanese M&E engineering contractors. In
1986, we ventured into the supply and distribution of cooling towers when we successfully bid for
the sole and exclusive distributorship in Singapore of cooling towers manufactured by Liang Chi
Industry Co., Ltd, a contractual arrangement which still subsists today. In 1989, in view of the
rapidly growing demand for clean room equipment from global manufacturers in the high
technology, pharmaceutical and food product manufacturing industries, we expanded our
business into the manufacture and distribution of clean room equipment. In the same year and in
1990, we established Eindec Malaysia and Kyodo-Allied (Thailand), respectively, in order to better
serve our clients and increase our presence in these countries.
In the 1990s, we continued to grow and expand our manufacturing operations and facilities to
meet the growing demand for our clean room equipment and HVAC equipment. In 1993, we set
up a 3,268 sqm factory in Johor, Malaysia, which allowed us to increase our manufacturing
capacity. In 1994, we set up an acoustic testing laboratory at our Singapore plant to enhance our
R&D capabilities. In the same year, we entered into a service agreement with Underwriters
Laboratories, Inc. for the manufacture of some of their products in Singapore. Separately, we
entered into a distribution and licensing agreement with Ruskin Company, pursuant to which we
were appointed as an authorised distributor and licensee of Ruskin products in Singapore and
Malaysia. We also launched our first in-house developed FFU system in 1996, which represented
a major breakthrough in our R&D efforts. In December 1996, we were awarded ISO 9002
certification for quality system management in the manufacture of our clean room equipment and
HVAC equipment. In 1998, as part of our strategy to streamline our business operations, we
incorporated Kyodo-Allied Technology Pte Ltd (now known as Xie Tong Technology) to undertake
sales, marketing and after-sales services.
In the 2000s, in order to accommodate further expansion in our business, we implemented a
second expansion to our Facility in Malaysia. We continued to place strong emphasis on our R&D
efforts and in 2002, we successfully developed the LONWORKS® FFU network control system, a
centralised computer system capable of controlling thousands of FFUs at any one site. In the
same year, Kyodo-Allied Industries was listed on the SGX-Sesdaq, and was subsequently
transferred to the Main Board of the SGX-ST in 2004. Throughout the 2000s, we continued to grow
and strengthen our presence in the region by carrying out increased marketing and sales activities
in the region, and enhancing recognition of the “Kyodo” brand. In particular, we set up a
representation office in Shanghai and stepped up our marketing efforts in the PRC in order to tap
on the rapidly growing market there. In 2008, we expanded into the manufacture and distribution
of marine dampers, with a focus on the offshore oil and gas sectors in Singapore market.
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92
In 2011, Weiye undertook the Reverse Takeover, and appointed a new board of directors. The
Clean Room and HVAC Equipment Business of Kyodo-Allied Industries was retained as a
business segment within the Weiye group of companies, and continued to be separately operated
and managed in the Weiye group by the then existing management team of Kyodo-Allied
Industries prior to the Reverse Takeover.
In 2011, we initiated efforts to develop our existing capabilities and strengths by improving on our
manufacturing and distribution processes, and enhancing our R&D efforts in order to improve our
products. Since 2011, we also ventured into the Middle East markets for clean room equipment in
the semiconductor industry. In 2014, we developed a work plan to leverage on our existing
technological expertise in clean room equipment in our objective to venture into the consumer air
purifier market. We also continued to enhance our existing business relationships, including our
relationship with Liang Chi, the manufacturer of the cooling towers which we distribute. In the
same year, we expanded the manufacture and distribution of marine dampers into the offshore oil
and gas sectors of the PRC market.
In the fourth quarter of FY2014, we completed the design and prototype of our own brand of air
purifiers, representing a major milestone in our history. Our own brand of air purifiers has been
launched in the PRC and we are taking steps to assess the possibility of further expansion in the
PRC market and subsequently to regional countries. Please refer to the section entitled “General
Information on Our Group – Our Products” of this Offer Document for further details on our air
purifiers.
In March 2015, we shifted premises from 17 Kian Teck Road, Singapore 628771 to our current
premises at 8 Pandan Crescent, #01-06, Singapore 128464.
In July 2015, we carried out a rebranding exercise and changed our corporate identity to “Eindec”,
and adopted our Chinese name “英德”, to better reflect our Group’s business direction and future
growth. This was in line with our business expansion plan in the PRC market and product
diversification from industrial type products of the Clean Room and HVAC Business to other
products such as environmental and technological solutions products. As part of the corporate
identity rebranding exercise, we have unveiled the new “Eindec” logo, incorporated new entities
with names containing “Eindec” and changed the company names of existing entities within our
Group to also contain “Eindec”.
BUSINESS OVERVIEW
We are a regional clean air environmental and technological solutions group engaged in the
following activities:
(a) design, manufacture and distribution of clean room equipment;
(b) design, manufacture and distribution of HVAC equipment;
(c) distribution and installation of cooling towers; and
(d) design, manufacture and distribution of environmental and technological solutions products
such as air purifiers.
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93
OUR PRODUCTS
(1) Clean Room Equipment
We manufacture clean room equipment for use with clean rooms. A clean room provides an
environment where the humidity, temperature and particles in the air are precisely controlled.
This enables a controlled level of contamination that is specified by the number of particles
per cubic meter at a specified particle size. A clean room environment is essential in the
manufacturing and production processes of industries such as the electronics industry,
pharmaceutical and high precision equipment manufacturing industries as well as other
industries including food processing and manufacturing.
We design and manufacture FFUs and other clean room equipment for use with clean rooms.
FFUs are one of our Company’s key products and we have more than 10 years of experience
in manufacturing all sizes, materials and types of FFUs. We also offer computer software to
control FFUs – we believe that we were amongst the first in Asia to develop the LONWORKS®
FFU network control system, a centralised computer system capable of controlling
thousands of FFUs. Our software offers optional features such as data backup and
integration with fire alarm systems, and we are also able to customise the software to suit our
customers’ specifications.
In addition to FFUs, we manufacture other clean room equipment such as air showers, clean
benches, clean booths, clean hand dryers, clean supply units and pass boxes. These types
of equipment can be easily integrated into a clean room environment depending on our
customers’ requirements.
(2) HVAC Equipment
We are principally engaged in the design, manufacture and distribution of HVAC equipment.
HVAC equipment consists of four (4) main categories of products, namely, (a) grilles and
diffusers; (b) air control dampers; (c) fire dampers and (d) marine dampers.
We manufacture grilles and diffusers, which are used to effectively distribute and supply air
to, and extract air from, spaces being served by HVAC systems. A grille is a facing across a
duct opening, which generally contains multiple parallel slots through which air may be
delivered or withdrawn from a ventilated space. The grille directs the air flow in a particular
direction and prevents the passage of large items. Diffusers are used to introduce
conditioned air into a space in such a way that even distribution and mixing are achieved with
a minimum amount of noise. Diffusers are produced in a variety of sizes but typically feature
sets of louvres or fins that direct air flow in a preset pattern. Examples of grilles and diffusers
which we manufacture are exhaust air louvres, turbo nozzles and ball jet diffusers.
HVAC equipment essentially complements air conditioning or other air cooling facilities
within commercial and industrial buildings, and forms an indispensable part of any clean
room equipment.
Air control dampers enable users to control the rate of air flow into a particular area. They
are generally used in a clean room environment to regulate air flow into the clean room.
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94
We also manufacture and sell fire damper equipment, as well as fire and smoke damper
equipment. These products are mainly installed in industrial and commercial buildings to
comply with building and fire regulations. In the event of a fire, these products automatically
shut off ventilation systems to contain the fire within affected areas. Our smoke control
dampers comply with the UL555s standard, which is the industry safety test standard for
smoke control dampers. Under this standard, the smoke damper is required to go through a
series of tests to determine its ability to limit the flow of air or smoke through it, and its ability
to cycle during and after exposure to elevated temperature.
We also manufacture marine dampers, which are fire dampers used on, amongst others,
offshore platforms and vessels to prevent the spread of fire, smoke and gas between fire
zones. Marine dampers are largely similar to fire dampers used in buildings in terms of
specifications, but are built to comply with marine standards such as the European Council
and United States Coast Guard standards, which are higher than the standards for dampers
used in buildings. In 2014, we refocused our efforts on marketing our marine damper
products to the PRC market and the region. We have been successful in securing orders,
particularly from the companies in the oil and gas sector within the Shanghai, Jiangnan and
Shandong area in the PRC.
We have obtained ISO 9001:2008 certification for the sale, marketing and manufacturing of
our dampers. We are in the process of seeking an upgrade to our ISO certification for our
dampers.
(3) Cooling Towers
Cooling towers, which chill the water circulation of water-chilled centralised air conditioning
systems, are an integral and essential feature of such systems.
Since 1986, we have been a distributor of cooling towers in Singapore for Liang Chi Industry
Co., Ltd., under a sole and exclusive distributorship arrangement. To provide further
value-added services to our customers, we offer both cooling towers and our HVAC
equipment as a package to our customers. Our customers comprise mainly M&E engineering
companies, property developers and building contractors.
(4) Environmental and Technological Solutions Products
In the fourth quarter of FY2014, we completed the design and prototype of our own brand of
air purifiers, and have launched this product in the PRC. We intend to expand the marketing
of this new product to regional countries. The key features of our air purifier are its compact
size, its energy saving efficiency, its automatic temperature control system, its ability to allow
each consumer to remotely control the air purifiers through their smartphones, as well as its
ability to provide both fresh air intake ventilation and air purification through filters, which
overcomes the traditional drawbacks of air purification by filters that limit the circulation of
fresh air within an indoor space, as well as the comparative weakness in filtering impurities
through a purely fresh air intake ventilation system. Our air purifiers have undergone tests
conducted by Shenzhen China Textile Filters Non-Woven Fabric Co., Ltd, and has on 22
January 2015 been certified as being able to filter PM2.5 pollutants, formaldehyde and
benzene.
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95
We incorporated Eindec Shenzhen and established an office in Shenzhen to undertake the
commercialisation of our air purifiers in the PRC. Our office in Shenzhen also has
engineering and development capabilities. Eindec Shenzhen is currently managed by our
Vice President (Country Manager, PRC), Tang Sin, who is supported by 13 staff including a
sales manager, a finance manager, and an engineering and development manager. Eindec
Shenzhen is currently in the process of developing its marketing strategies and sales
distribution channels, as well as its network of subcontractors. We plan to partner with
subcontractors for the manufacturing of air purifiers in the initial stages of our
commercialisation of our brand of air purifiers in the PRC. We are currently in the process of
expanding our product range and product features for our air purifiers and intend to market
our air purifiers under, amongst others, the AJB brand in future. We plan to sell our air purifier
products to customers such as appointed local distributors, property developers and
corporations for installation in homes and offices for consumer end users, as well as through
e-commerce platforms. Once we have established a presence in the consumer market, we
also intend to expand our product range for the commercial and industrial markets. Please
refer to the section entitled “Prospects, Business Strategies and Future Plans – Business
Strategies and Future Plans” of this Offer Document for further details on our Group’s
business plans.
The key characteristics of the products which we design, manufacture and distribute are set
out below:
Name of product Illustrative Example Characteristics
Clean Room
Equipment
FFU • Self-contained ceiling unit for use
in turbulent mixing and laminar
flow clean room applications
• Used in the semiconductor,
electronics, optical, biological,
pharmaceutical and food
industries, and in laboratory
environments
Air shower • Prevents clean room
contamination by using air jets to
blow at and remove fine particles
attached to clothing, footwear and
other materials
• Easily integrated into any clean
room design
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96
Name of product Illustrative Example Characteristics
• Can be custom-built in different
designs and specifications to meet
customers’ specific requirements
• Features programmable
microprocessor control system,
touch panel and timer with LED
display
• Offers a high degree of flexibility
as the air shower can be
integrated with various sensors,
interlocking lifts, voice commands
or auto-door mechanism
Clean bench • Enables the creation of a low-cost
clean environment for a particular
area
• Prevents localised contamination
at a particular spot
• Creates unidirectional clean
laminar flow downstream on the
work bench
• Available in vertical or horizontal
flow
Clean booth • Facilitates the creation of a clean
environment of a higher level of
cleanliness within a clean room
area
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97
Name of product Illustrative Example Characteristics
Clean hand dryer • Enables users to dry and clean
their hands in a clean, bacteria-
free environment
• Suitable for use in all classes of
clean rooms
• Compact design for fast and easy
installation
• Low power consumption and low
noise level
Clean supply unit • Creates a clean, dust- and
bacteria-free environment
• Suitable for clean room with
turbulent flow
Pass box • Facilitates the swift transfer of
work items in and out of the clean
room, while minimising air-borne
particles brought about by human
traffic
HVAC Equipment
Grille and diffuser • Used mainly in commercial and
industrial buildings
• Channels and regulates airflow
into the environment within a
building to ensure an even
distribution of air within a confined
space
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98
Name of product Illustrative Example Characteristics
Exhaust air louvre • Used for outdoor purposes such
as fresh or exhaust air
applications
• Can be mounted on side wall or
ceiling
Turbo nozzle • High quality, anti-corrosion
• Fabricated using aluminium and
stainless steel
• Provides larger air volume, longer
distance air flow
Ball jet diffuser • Aesthetically appealing
• Used in large open areas such as
concert halls, airports, theatres
and museums
• Suitable for spot cooling or
heating as the direction of air can
be easily adjusted
• Maximum up or down adjustment
angle of +/–30 degrees in any
direction
• Low noise level
Low leakage air
damper
• Low leakage at high pressure
• Strong construction eliminates
casing distortion
• Operated electrically or manually
Volume control
damper
• Blades and frames are
constructed with high quality
corrosion resistant galvanised
steel
• Control operation is done
manually by using worm-gear
GENERAL INFORMATION ON OUR GROUP
99
Name of product Illustrative Example Characteristics
Pressure relief
damper
• Used to maintain the internal
pressure of a clean room
• Positive pressure is necessary in
clean rooms and bio-clean rooms
to prevent the intrusion of
contaminated air
Fire smoke damper • Used in ventilation systems to
prevent the spread of toxic gases
between divisions
• Reliable in emergency situations
• Able to withstand temperatures up
to 400 degrees Celcius without
deformation
Marine deck fire
damper
• Used in ventilation systems to
prevent the spread of fire, smoke
and gas between fire zones
• Used on oil rigs and in the offshore
oil and gas industry
• Approved for use in ducts
penetrating decks of Class H-120
(Class H)
Cooling Towers
Liang Chi Cooling
Tower – LBC series
• Round counter flow type cooling
tower
• Suitable for general application
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100
Name of product Illustrative Example Characteristics
Liang Chi Cooling
Tower – LRC series
• Larger cooling capacity
• Can be connected as multi-cell
installations
• Modularised – can be maintained
without affecting its normal
operation while machine is still
running
• Uniform water distribution and
large clearance
Environmental and
Technological
Solutions Products
Smart air purifier • Compact in size and suitable for
residential homes and offices
• Supplies fresh air by filtering
outdoor air through a three-layer
filter and simultaneously recycling
indoor air
• Able to filter PM2.5 pollutants,
formaldehyde and benzene
• Controls temperature by
automatically adjusting the
incoming air flow rate according to
the temperature difference
between the indoor temperature
and its fresh air inlet
• Energy-saving due to its ability to
automatically adjust supply air
volume, fan speed and other
features according to PM2.5
values
• Allows remote control through
smartphones
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101
FABRICATION AND INSTALLATION
A diagrammatic representation of our general fabrication and installation process for clean room
equipment and HVAC equipment is as follows:
Detailed discussion with customer on
product requirements
Preparation of construction
drawings
Receipt from customer of approved
detailed construction drawing
according to design specifications
Development of product layout design
drawing for fabrication and assembly
Begin product fabrication
and assembly
Input (raw
materials)
Metal
Processing
Assembly andinstallation of
electronic,electrical andmechanicalcomponents
Subject to
quality control
measures
Output
(product)
(a) Detailed discussion with customer on product requirements
In the first stage of our fabrication and installation process, we hold detailed discussions with
the customer and conduct on-site inspections and surveys of their premises in order to
understand their specific clean room requirements.
(b) Preparation of construction drawings
In designing our products, we take into consideration physical factors such as the size, layout
and design of the manufacturing facilities, based on the discussions, on-site inspections and
surveys carried out earlier. With our expertise, we assist the customer in formulating a design
which best suits their specifications, then provide them with our design blueprint and solution
for their approval.
(c) Receipt from customer of approved detailed construction drawing according to design
specifications
After developing the blueprint for the proposed equipment, we conduct various tests and
experiments to determine the feasibility of the solution based on the proposed design. We
then forward the proposed solution to the customer for their approval. The proposed solution
would include detailed design drawings of the required clean room equipment and relevant
GENERAL INFORMATION ON OUR GROUP
102
information such as test reports and performance charts, wiring diagrams, automation
sequence diagrams and dimension drawings. We may, upon request, produce a prototype of
the product for the customer.
Upon presenting the customer with a detailed construction drawing according to their needs
and design specifications, the customer will give their approval for the drawing.
(d) Development of product layout design drawing for fabrication and assembly
Upon approval being obtained from the customer, our engineers will translate all the design
drawings into in-house fabrication drawings for mass fabrication and assembly.
(e) Begin product fabrication and assembly
(i) Input (materials): Mass fabrication and assembly will commence based upon our
in-house fabrication drawings. We will first receive and inspect the materials required
for fabrication from our suppliers. Where necessary, such materials are sent for storage
and then issued for use as and when required in the fabrication and assembly process.
(ii) Metal processing: We commence fabrication by cutting the steel sheets and other
materials to the required dimensions, and carry out all other relevant processes, such
as punching, plating, grinding, bending and welding. Thereafter, these materials are
inspected and, where required, then painted and baked. The required accessories,
wiring and cables are then fitted and assembled.
(iii) Assembly and installation of electronic, electrical and mechanical components:
The relevant electronic, electrical and mechanical components of the products are
subsequently assembled and installed. This step of the process is generally more
relevant for dampers.
(iv) Subject to quality control measures: The semi-finished product will then be subject
to strict quality control measures to ensure that it meets our quality control standards.
(v) Output (product): Depending on the customer’s requirements, the equipment will
either be packed and delivered to the customer, or installed on-site at the customer’s
premises.
DESIGN, FABRICATION AND INSTALLATION FACILITIES
We have two (2) Facilities, one in Singapore and another in Kulai, Malaysia. Our Facility in
Malaysia occupies a land area of approximately 28,000.0 sqm, with a well-equipped factory area
of approximately 18,000.0 sqm. Our Facility in Singapore occupies an area of approximately 850.0
sqm.
We design, fabricate, install and test our products at these Facilities. The fabrication and
installation of our products do not require any production lines or utilities.
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103
Facility in Singapore located at 8 Pandan Crescent, #01-06
Facility in Malaysia located at Kulai, Johor
QUALITY ASSURANCE
We are committed to product and service quality. Our fabrication and installation processes are
subject to rigorous examination and testing to identify any product defects. Most of our clean room
equipment and HVAC equipment are entirely manufactured and assembled by us. Our entire
fabrication and installation process is closely monitored by experienced personnel. In respect of
components and parts not produced by us, we conduct tests on samples thereof to ascertain that
such components and the manufacturing processes of the suppliers for these components meet
our quality standards. This gives us full control over product quality and delivery time. Using
sophisticated tools, our quality control personnel also conduct regular checks and inspections on
our machinery and on our products. We also conduct tests on the various components and parts
at all phases of manufacturing to check for defects and other irregularities. As a result of our
stringent quality standards, we have not experienced any returns of defective products from our
customers during the Period Under Review. We also provide after-sales services to our
customers, and will seek to rectify any defects in our products supplied. We currently provide a
warranty period of one (1) year for our clean room equipment.
We continuously seek to improve our workflow and procedures so as to achieve total customer
satisfaction. In 2008, we applied for and received the ISO 9001: 2008 certification for our fabrication
and installation processes. Our management believes that this is testament to our commitment to
GENERAL INFORMATION ON OUR GROUP
104
and effort in maintaining an exceptional level of quality management in our manufacturing
operations. We believe that we are one of the leading companies in the world to produce Class H
fire smoke dampers.
In order to ensure that the proper quality control procedures and instructions are adhered to and
to ensure that our staff are informed of the latest procedures, we regularly circulate quality
instruction memoranda to our staff involved in manufacturing activities. In addition, we also
provide checklists to our manufacturing workers at various stages of the fabrication and
installation process to ensure strict compliance with our quality control procedures and
instructions.
Our air purifiers have undergone tests conducted by Shenzhen China Textile Filters Non-Woven
Fabric Co., Ltd, and has on 22 January 2015 been certified as being able to filter PM2.5 pollutants,
formaldehyde and benzene. As one of the key selling points of our air purifiers is their ability to
filter PM2.5 pollutants, formaldehyde and other harmful substances, the test results are testament
to their function and capability. On 28 October 2015, we obtained a Certification Body Test
Certificate under the International Electrotechnical Commission (“IEC”) System for Mutual
Recognition of Test Certificates for Electrical Equipment in respect of our air purifiers, which states
that a sample of our air purifier products was tested and found to be in conformity with IEC
60335-1(ed.5) and IEC 60335-2-65(ed.2);am1. IEC 60335 is a standard under the IEC relating to
the safety of electrical household appliances.
MARKETING AND SALES ACTIVITIES
Our Group’s overall marketing and sales activities are spearheaded by our Executive Director and
CEO, Paul Chia, who is supported by the respective Vice Presidents or general managers of each
product segment. We have local marketing and sales teams based in Singapore, Malaysia and the
PRC.
As at 30 June 2015, our marketing and sales team comprised 19 staff. Our marketing and sales
team is primarily responsible for the sale of products and monitoring of sales with the assistance
of our manufacturing staff and research engineers who also provide after-sales services to our
customers. Our marketing and sales team also undertakes business and market research, and
monitors business trends and the overall sales performance of our Group. This allows us to
pre-empt and respond to changes in the market or in customer demand.
We typically source for new customers via trade shows, tenders and company visits. However, an
important source of new clientele is referrals from our existing customers or through our network
of business contacts, including contractors in the building industry. We also procure new clientele
through participation in industrial exhibitions, advertising in industrial magazines and directories,
conducting seminars, product and design presentations to industrial participants, product
promotion and creating awareness through our website. Through our marketing network and
referrals made by Weiye, our Controlling Shareholder, we are in the process of reaching out to and
connecting with the building industry in the PRC for our air purifiers and other products. To the
best of our Directors’ knowledge, none of our subcontractors or distributors is related to Weiye or
to our Company, or to any of the directors, controlling shareholders and their respective
Associates of each of Weiye and our Company.
Apart from new customers, we also derive a substantial amount of our business from repeated
purchases from our existing customers. Hence, we recognise the importance of maintaining and
cultivating strong, long-term relationships with our existing customers. In order to stay in touch
with our customers and better understand their needs, our sales managers and engineers make
GENERAL INFORMATION ON OUR GROUP
105
frequent visits to our customers. We also commit ourselves to maintaining and enhancing our
product and service quality and we encourage regular feedback from our customers. In addition,
in an effort to assist our customers in promoting to their clients our products, technology and our
Group, we also conduct pre-sale presentations and seminars and Facility tours for our customers
and their clients. Where relevant, we also provide prompt and effective after-sale technical
support and services to our customers’ clients.
DISTRIBUTORSHIP AGREEMENTS
We have entered into a number of distributorship agreements with distributors in the USA and
Taiwan.
On 1 July 2015, we renewed our technology assembly agreement and trademark licensing
agreement with Ruskin Company, pursuant to which Ruskin Company granted our Group a
non-exclusive licence to assemble Ruskin products in Singapore and Malaysia. We are also
granted the licence to sell, use and install the Ruskin products which we assemble and to extend
to our customers the right to use such products. In conjunction with this licence to assemble, we
were also granted a non-exclusive licence to use the Ruskin trademarks in connection with
advertising the Ruskin products. The technology assembly agreement is effective for five (5) years
from 1 July 2015 unless extended by mutual written agreement. The term of the trademark
licensing agreement coincides with the term of the technology assembly agreement.
On 1 July 2015, we renewed our existing distribution agreement which had been entered into in
1986 with Liang Chi, a leading Taiwanese manufacturer of cooling towers, pursuant to which we
were granted exclusive distribution rights of Liang Chi’s cooling tower products and related
equipment in Singapore. The term of this distribution agreement with Liang Chi is three (3) years,
expiring on 1 July 2018. Pursuant to this agreement, Liang Chi will provide us with the necessary
support for product exhibitions and technical seminars which we may organise, and will provide
professional training for our employee(s).
On 25 August 2015, we renewed our existing follow-up service agreement which had been entered
into in 1994 with Underwriters Laboratories, Inc. for the manufacture of fire dampers for buildings
in Singapore. This service agreement will continue in force unless terminated by either party in
accordance with its terms.
RESEARCH AND DEVELOPMENT
Our business in clean room equipment requires us to possess specialised expertise, in-depth
knowledge and industrial know-how in order to remain competitive and be able to offer new
products with innovative or enhanced features to meet changes in customer requirements and
standards. Further, most of our customers require redesigning of the clean room equipment to
meet their specific needs and requirements. Our engineers therefore need to be equipped with the
requisite engineering design capability in order to satisfy the stringent requirements of our
customers. The different requirements from our customers can vary from the type and design of
clean room equipment to the different classes of cleanliness, noise level and amount of air flow.
In 1989, we set up our Engineering Division to support our clean room manufacturing operation.
Our research engineers in the Engineering Division are experienced and qualified professionals
who undertake product design and development activities, and research work within their
respective fields. Our engineers specialise in the various fields such as electrical design and
motor performance, ventilation research, air flow and noise level, mechanical design, preparation
and development of drawing for manufacturing and development of FFU control system software.
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106
In order to keep abreast with the latest trends and technological advancement, our Engineering
Division also works closely with external consultants and industry professionals. For example, we
have conducted joint research with the R&D departments of our component suppliers from
Germany, Japan, America, and UK to seek constant product improvements. As a result of our
intensive R&D efforts, we have been able to obtain patents in respect of some of our products.
Please refer to the section entitled “General Information on Our Group – Intellectual Property” of
this Offer Document for more details of our patents.
We set up an acoustically insulated testing laboratory as part of our R&D program to carry out all
aspects of performance testing of our FFUs, which include testing and measurement of air
velocity, sound power levels, power consumption and operating voltage. Our Directors believe that
this laboratory has been very valuable in speeding up our R&D program for our FFU system.
Our R&D efforts have also enabled us to manufacture our FFUs which can achieve low noise
levels during operation without the need for conventional sound insulation materials such as
sponge, gasket, silicon, or cloth lining. This feature reduces the risk of contamination of the clean
room environment which may arise from the disintegration of such conventional sound insulation
materials over time. As a result of our extensive R&D efforts, we have also produced unique
silicon-free air showers which prevent contamination.
Through collaborated efforts with a German business partner in 1998, we successfully developed
a computer software system which allows control of each individual FFU within a fan filter system
(which may consist of thousands of FFUs) by a centralised computer system within a building. As
the manufacturing and testing environment of high technology firms become more sophisticated,
different requirements for airflow and cleanliness for different stages of manufacturing and testing
also arise. This breakthrough in our software control system has given us the opportunity to
penetrate into the higher end of the technology market.
Subsequently, our engineers developed a less sophisticated and more economical computer-
controlled FFU system to cater to the needs of less demanding operations. With further R&D, we
were also able to develop more energy-saving features and user-friendly functions for our clean
room equipment which were subsequently introduced in 2001. Building on our R&D efforts in this
area between 1998 and 2001, in 2002, we successfully developed the LONWORKS® FFU network
control system, a centralised computer system capable of controlling thousands of FFUs while
incorporating these enhanced energy-saving features and user-friendly functions.
Through our R&D efforts over the years, we have obtained patents in respect of our FFU products.
We have also achieved breakthroughs in R&D in relation to our HVAC equipment. We believe that
we are one of the leading companies in the world to produce Class H fire smoke dampers. These
dampers are used on oil rigs and in the offshore oil and gas industry. Through the years, we have
also continually enhanced our existing products through our R&D efforts.
In 2014, we completed the design and prototype of our own brand of air purifiers, having leveraged
on our experience and expertise in clean room equipment and HVAC equipment. Our air purifiers
are a culmination of our engineering and development capabilities over the past decades, as they
represent the fruit of our efforts in our continuing pursuit of the relevant specialised expertise and
in-depth knowledge, and our efforts to keep abreast of customers’ needs and changes in
requirements of our products. The key features of our air purifier are its compact size, its energy
saving efficiency due to its ability to automatically adjust supply air volume, fan speed and other
features according to PM2.5 values, its ability to automatically control temperature according to
the temperature difference between the indoor temperature and its fresh air inlet, its ability to
allow each consumer to remotely control the air purifiers through their smartphones, as well as its
GENERAL INFORMATION ON OUR GROUP
107
dual ability to provide both fresh air intake ventilation as well as air purification through filters. This
overcomes the traditional drawbacks of air purification solely by filters, which limit the circulation
of fresh air within an indoor space, as well as the comparative weakness in filtering impurities
through a purely fresh air intake ventilation system. Our air purifiers have undergone tests
conducted by Shenzhen China Textile Filters Non-Woven Fabric Co., Ltd, and has been certified
as being able to filter PM2.5 pollutants, formaldehyde and benzene. We intend to market our air
purifiers under, amongst others, the AJB brand.
In addition, we have also developed an application programming interface for our air purifiers,
which will allow us to develop our own applications to be used on mobile devices to control our
air purifiers remotely. The use of such smart technology allows our air purifiers to be ‘smart home’
enabled and will also allow us to collect usage data of our air purifiers through a cloud platform.
During the Period Under Review, we recorded development costs for our air purifiers of
approximately S$0.2 million and S$0.07 million in each of FY2014 and 1H2015, respectively. This
constituted approximately 1.4% and 1.0% of our revenue in each of FY2014 and 1H2015,
respectively. We did not incur any development costs in FY2012 and FY2013.
INSURANCE
As at the Latest Practicable Date, we maintain insurance policies to cover our Group’s risks.
These include fire and machinery insurance, public liability insurance, accident insurance for our
employees, property insurance, work injury compensation insurance and equipment all risks
insurance.
Our Directors are of the view that the above insurance policies are adequate for our existing
operations. However, significant damage to our operations may still have a material adverse effect
on our results of operations or financial condition. In addition, we do not currently have product
liability insurance coverage. Please refer to the section entitled “Risk Factors” of this Offer
Document for more details. We have not experienced any difficulties obtaining or renewing our
insurance policies, or in realising claims under any of our insurance policies.
Our Directors will perform an annual review on our insurance coverage to ensure that it is
satisfactory in our view.
INTELLECTUAL PROPERTY
Our trademarks and patents assist in our branding and market recognition as a regional clean air
environmental and technological solutions group. Notwithstanding the foregoing, our business or
profitability is not materially dependent on any single licence, trademark, patent or any other
intellectual property rights. We have not paid or received royalties for any licence or use of an
intellectual property.
Pursuant to the Asset SPA, we acquired the Xie Tong Business, including the intellectual property
owned by Xie Tong Technology. Xie Tong Technology and Eindec Singapore have entered into
assignment agreements to transfer the ownership of the registered trademarks and patents, and
the trademarks pending registration owned by Xie Tong Technology as indicated in Tables I and
II below (“Intellectual Property”) to Eindec Singapore, pursuant to which Eindec Singapore has
the right to use the Intellectual Property.
GENERAL INFORMATION ON OUR GROUP
108
In addition, the necessary recordals to reflect the change in ownership of the Intellectual Property
from Xie Tong Technology to Eindec Singapore will be filed in the respective jurisdictions of each
trademark and patent at the appropriate time.
As at the Latest Practicable Date, our Group has the right to use the following trademarks and
patents:
Table I:
Trademark
Application/Registration
numberPlace of
registration Class Expiry date Category
* TMA594, 689 Canada 7(1), 11(2) 13 November 2018 Granted
* IDM000217482 Indonesia 11(2) 7 March 2020 Granted
* 4325442 Japan 11(2) 15 October 2019 Granted
* 4337708 Japan 11(2) 19 November 2019 Granted
* 4-1997-123188 Philippines 11(2) 15 January 2022 Granted
* 914132 PRC 11(2) 13 December 2016 Granted
AIBS* 5619101 PRC 9(3) 27 January 2020 Granted
T9708944H Singapore 11(2) 25 July 2017 Granted
T9404321H Singapore 7(1) 31 May 2024 Granted
* 871706 Taiwan 11(2) 15 October 2019 Granted
* 32917 Vietnam 11(2) 21 February 2018 Granted
* 16801514 PRC 11(2) Not applicable Pending
* 16801529 PRC 11(2) Not applicable Pending
40201516672U Singapore 11(2) Not applicable Pending
2015066042 Malaysia 11(2) Not applicable Pending
4-2015-29206 Vietnam 11(2) Not applicable Pending
42015506268 Philippines 11(2) Not applicable Pending
* These trademarks have been assigned by Xie Tong Technology to Eindec Singapore pursuant to the assignment
agreements entered into.
GENERAL INFORMATION ON OUR GROUP
109
Trademark
Application/Registration
numberPlace of
registration Class Expiry date Category
D002015048805 Indonesia 11(2) Not applicable Pending
1013081 Thailand 11(2) Not applicable Pending
Notes:
(1) Class 7 refers to the specification of goods in Class 7 of the International Classification of Goods and Services and
covers machine and machine tools; motors and engines (except for land vehicles); machine coupling and
transmission components (except for land vehicles); agricultural implements other than hand-operated; incubators
for eggs; automatic vending machines, all included in Class 7.
(2) Class 11 refers to the specification of goods in Class 11 of the International Classification of Goods and Services
and covers apparatus for lighting, heating, steam generating, cooking, refrigerating, drying, ventilating, water supply
and sanitary purposes, all included in Class 11.
(3) Class 9 refers to the specification of goods in Class 9 of the International Classification of Goods and Services and
covers scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signalling,
checking (supervision), life-saving and teaching apparatus and instruments; apparatus and instruments for
conducting, switching, transforming, accumulating, regulating or controlling electricity; apparatus for recording,
transmission or reproduction of sound or images; magnetic data carriers, recording discs; compact discs, DVDs and
other digital recording media; mechanisms for coin-operated apparatus; cash registers, calculating machines, data
processing equipment, computers; computer software; fire-extinguishing apparatus.
Table II:
Patent Jurisdiction Expiry date Status
Patent No. 3357377 for “method and
apparatus for minimising noise from fan
filter unit (S-shaped)”*
Japan 3 September 2017 Granted
Patent No. 6,030,186 for “method and
apparatus for minimising noise from fan
filter unit (S-shaped)”*
USA 3 September 2017 Granted
Patent No. 17756 for “method and
apparatus for minimising noise from fan
filter unit (S-shaped)”*
Thailand 2 September 2017 Granted
Patent No. I-2002-000-545 for “method
and apparatus for minimising noise from
fan filter unit (S-shaped)”*
Philippines 22 September 2026 Granted
Patent No. 0453851 for “method and
apparatus for minimising noise from fan
filter unit (S-shaped)”*
Korea 17 April 2018 Granted
Patent No. 8513 for “method and
apparatus for minimising noise from fan
filter unit (S-shaped)”*
Vietnam 5 August 2022 Granted
Patent No. 100104 for invention
“fan unit”
Singapore 26 February 2021 Granted
Patent No. 103888 for invention “method
and apparatus for the control of building
functional units”
Singapore 31 October 2022 Granted
GENERAL INFORMATION ON OUR GROUP
110
Patent Jurisdiction Expiry date Status
Patent No. 115492 for invention “a
method and apparatus for minimising
noise from fan unit”
Singapore 23 August 2022 Granted
Patent No. 141352 for invention “a
control system and an interface therefor”
Singapore 18 September 2027 Granted
Patent No. 194113 for “air flow control
means (modified S-shaped)”*
Taiwan 22 August 2022 Granted
Patent No. MY-128429-A for “air flow
control means (modified S-shaped)”*
Malaysia 23 August 2022 Granted
Patent No. MY-136510-A for “method
and apparatus for the control building
functional units”*
Malaysia 17 March 2024 Granted
Patent No. MY-139904-A for “a method
and apparatus for maintaining air
characteristics in an air ventilated facility
using fan filter units”*
Malaysia 2 June 2026 Granted
Patent No. 1398575 for “air flow control
means (modified S-shaped)”*
Europe
(granted –
validated in
France, Germany
and Italy)
23 August 2022 Granted
Patent No. ZL02122661.X for “an
apparatus for minimising noise from fan
filter unit”*
PRC 2 March 2018 Granted
Patent No. ZL98106068.4 for “a method
and apparatus for minimising noise from
fan filter unit”*
PRC 2 March 2018 Granted
Utility Model Patent No. ZL 2015 2
0308696.4 for “一種空氣淨化器”*
PRC 13 May 2025 Granted
* These patents have been assigned by Xie Tong Technology to Eindec Singapore pursuant to the assignment
agreements entered into.
Going forward, we expect our Group to focus more efforts on developing and building up our
intellectual property such as trademarks and patents to create barriers to entry into our markets
and a stronger competitive position.
PROPERTIES AND FIXED ASSETS
The following table sets out all the properties leased and used by our Group as at the Latest
Practicable Date. Save as disclosed below and in the section entitled “Restructuring Exercise” of
this Offer Document, our Group does not own or lease any properties.
GENERAL INFORMATION ON OUR GROUP
111
Description
and Location
Area
(sqm) Tenure
Use/
Activities Encumbrance Lessor Lessee
Unit #01-06,
8 Pandan
Crescent,
Singapore
128464
799 Leasehold –
three (3) years
commencing
on 1 March
2015 and
expiring on 28
February 2018
Industrial None HSBC
Institutional
Trust Services
(Singapore)
Limited (acting
in its capacity
as trustee of
AIMS AMP
Capital
Industrial
REIT)
Eindec
Singapore
Lot 854, Jalan
Sengkang,
81000 Kulai,
Johor, Malaysia
28,639.8 Freehold Factory and
office
Charge and
debenture in
favour of Public
Bank Berhad
None None
No 627, Jalan
Sri Putri 2/4,
Taman Putri
Kulai, 81000
Kulai Johor,
Malaysia
289 Freehold Terrace house None None None
No 628, Jalan
Sri Putri 2/5,
Taman Putri
Kulai, 81000
Kulai Johor,
Malaysia
289 Freehold Terrace house None None None
No 767, Jalan
Sri Putri 2,
Taman Putri
Kulai, 81000
Kulai Johor,
Malaysia
143,066 Freehold Shophouse None None None
No 768, Jalan
Sri Putri 2,
Taman Putri
Kulai, 81000
Kulai Johor,
Malaysia
143,066 Freehold Shophouse None None None
Room 2502,
25th Floor,
Tongmao
Building, No.357
Songlin Road,
Pudong New
Area Shanghai,
PRC
30 Leasehold –
one (1) year
commencing
on 1 March
2015 and
expiring on 28
February 2016
Office None Shanghai
Huibang
Investment
Management
Co. Ltd.
Eindec
Shanghai
GENERAL INFORMATION ON OUR GROUP
112
Description
and Location
Area
(sqm) Tenure
Use/
Activities Encumbrance Lessor Lessee
Floor 13, No.2
Office Building,
Longhua
Agency,
Shenzhen
Broadcast Film
Television Group
Culture
Originality
Industrial Park,
Longhua New
District,
Shenzhen
Municipality,
PRC
1300.83 Leasehold –
five (5) years
commencing
on 16 May
2015 and
expiring on 15
May 2020
Office None Shenzhen
Broadcast
Film and
Television
Cultural
Industry Co
Ltd
Eindec
Shenzhen
Except for laws and regulations generally applicable to similar companies and businesses
operating in each of the jurisdictions we operate in, there are no regulatory requirements or
environmental issues that may materially affect our utilisation of the above properties and fixed
assets.
LICENCES, PERMITS, REGISTRATIONS AND APPROVALS
The following are the main licences, permits, registrations and approvals issued and/or granted to
our Group which are essential for the business operations of our Group:
Entity
Licence/Permit/Registration/
Approval Description Licensing body Validity
EindecSingapore
Customsregistration
Registration pursuant toPart IVA of the Regulationof Imports and ExportsRegulations and Part XIVAof the CustomsRegulations
Singapore Customs From 2 July2015
EindecSingapore
Factory notification Notification of workplaceas a factory under theWorkplace Safety andHealth Act
Commissioner forWorkplace Safety andHealth
Not applicable
EindecMalaysia
Business/advertisement
Licence for business/advertisement for accountnumber L0702013
Kulai Municipal Council 4 January 2016to 31 December2016
EindecMalaysia
Manufacturinglicence
Manufacture of cleanroom equipment and partthereof
Ministry of InternationalTrade and IndustryMalaysia
From21 September1994
EindecMalaysia
Manufacturinglicence
Manufacture and storingof the relevant types ofdutiable/taxable goods(Licensed/ManufacturingWarehouse)
Royal Malaysian CustomDepartment
1 September2014 to31 August 2016
EindecMalaysia
Registrationcertificate ofinstallation
Registration of installationof standby generator atbusiness premises
Energy Commission 25 June 2015 to24 June 2016
GENERAL INFORMATION ON OUR GROUP
113
Entity
Licence/Permit/Registration/
Approval Description Licensing body Validity
EindecMalaysia
Visa Visa for the employmentof foreign factory workers
Immigration Departmentof Malaysia
Variableaccording to therelevant letter ofapproval
EindecMalaysia
Visit passes Visit passes for thetemporary employment offoreign factory workers
Immigration Departmentof Malaysia
Variableaccording to therelevant visitpass
EindecShanghai
Business licence Approval and registrationfor establishment of alimited liability company
Shanghai Administrationfor Industry & Commerce
23 November2005 to22 November2035
EindecShanghai
RecordCertification forForeign Investmentin China(Shanghai) PilotFree Trade Zone
Certification for foreigninvestment
Management Committeeof China (Shanghai) PilotFree Trade Zone
From18 August 2015
EindecShanghai
Certificate ofOrganization Code
Certificate of enterprise Shanghai MunicipalQuality and TechnicalSupervision Bureau
6 September2015 to2 September2019
EindecShanghai
Certificate of taxregistration
Tax registration The State Bureau ofShanghai; ShanghaiLocal Tax Bureau
From29 September2015
EindecShanghai
Licence for account Approval for establishingbasic deposit account
Shanghai Branch ofPeople’s Bank of China
From 3November 2015
EindecShanghai
Social insuranceregistrationcertificate
Approval for socialinsurance
Shanghai MunicipalHuman Resources andSocial Security Bureau
1 September2014 to31 August 2019
EindecShanghai
Financialregistrationcertificate forforeign-investedenterprise
Registration of foreign-invested enterprise
Pudong New AreaFinance Bureau
23 November2005 to22 November2035
EindecShanghai
Customsdeclarationregistrationcertificate
Approval for customsdeclaration
Customs Administrationof Pudong New Area
10 September2015 to9 September2016
EindecShenzhen
Business licence Approval and registrationfor establishment of alimited liability company
Shenzhen MarketSupervision Authority
9 July 2015 to9 July 2045
EindecShenzhen
Approval certificate Approval for theestablishment of aforeign-investedenterprise
People’s Government ofShenzhen
From10 September2015
EindecShenzhen
Licence for account Approval for establishingbasic deposit account
Shenzhen Central Branchof People’s Bank of China
From 31 July2015
GENERAL INFORMATION ON OUR GROUP
114
INVENTORY MANAGEMENT
We maintain an inventory of our commonly used materials such as blowers, electrical equipment,
steel sheets and aluminium for the fabrication and installation of clean room and HVAC
equipment. A minimum level has been set for such materials so as to prevent potential
manufacturing delays due to insufficient materials. We also keep cooling tower parts in our
warehouse for quicker turnaround times to meet our customers’ maintenance needs.
Stock-takes are conducted annually to monitor our stock levels and to check against the quantity
captured in our inventory records. We also perform random checks on selected high-value
inventory such as blowers which are essential components of our clean room equipment. To date,
we have no material adjustments arising from discrepancies between our physical stock and
inventory records.
We conduct monthly reviews on stock levels and stock obsolescence as part of our inventory
control practice.
Our inventory levels were approximately S$2.99 million, S$3.20 million, S$2.67 million and
S$2.69 million as at each of 31 December 2012, 31 December 2013, 31 December 2014 and 30
June 2015, respectively.
Our average inventory turnover days for the Period Under Review were as follows:
FY2012 FY2013 FY2014 1H2015
Average inventory turnover days(1) 118 125 122 113
Note:
(1) Average inventory turnover days = (Average inventory/purchases) x 365 days. Pro-rated 183 days for 1H2015.
CREDIT MANAGEMENT
Credit terms to our customers
We typically provide 30 to 60 days credit terms to our customers. Our average trade receivables’
turnover days are 70 days, 74 days, 81 days and 105 days for each of FY2012, FY2013, FY2014
and 1H2015, respectively.
Our average trade receivables’ turnover days for the Period Under Review were as follows:
FY2012 FY2013 FY2014 1H2015
Average trade receivables’ turnover
days(1)
70 74 81 105
Note:
(1) Average trade receivables’ turnover days = (Average trade receivables/revenue) x 365 days. Pro-rated 183 days for
1H2015.
GENERAL INFORMATION ON OUR GROUP
115
In 1H2015, our average trade receivables’ turnover days was higher than previous periods under
review mainly due to higher than usual sales achieved in the months of May and June 2015. The
aggregate revenue in May and June 2015 was approximately S$3.31 million, compared with
approximately S$2.23 million in May and June 2014.
The extended debt collection period can be attributed largely to two (2) main causes. Our Group’s
customers are typically sub-contractors of main contractors. The credit terms of 30 to 60 days
which we provide to customers typically commence upon delivery. However, equipment
installation and commissioning (for certain larger projects) by our customers’ clients may
occasionally be delayed. The postponement by our customers’ clients of such equipment
installation and commissioning has often resulted in our customers in turn delaying their payments
to us. Further, our Group’s decades-long operating history has over the years culminated in an
accumulation of regular long-time customers. The collection of trade receivables from some of
these customers has historically taken approximately 120 to 150 days from the date of invoice.
Notwithstanding the extended payment period, none of our customers who have amounts owing
to us as at 30 June 2015 have defaulted on any amounts due in the past.
We have in place credit control policies to review the financial standing of customers before the
appropriate credit terms and limits are decided upon. Regular meetings with the sales team are
conducted to review aged debts and collection statuses.
Our trade receivables as at 30 June 2015 amounted to approximately S$4.10 million (of which
approximately S$3.75 million, representing approximately 91.54% of the total trade receivables,
has been collected as at the Latest Practicable Date) and its ageing schedule was as follows:
Age of trade receivables
Percentage of total
trade receivables
(%)
0 – 30 days 74.6
31 – 60 days 8.1
61 – 90 days 3.5
More than 90 days 13.8
100.0
As the remaining outstanding trade receivables are mainly due from customers with whom our
Group has had regular business dealings, our Directors do not foresee issues with the collection
of such outstanding debt as at 30 June 2015.
The amount of allowance for impairment loss on trade receivables and impairment loss on trade
receivables written off for the Period Under Review are as follows:
FY2012 FY2013 FY2014 1H2015
(Reversal)/Allowance for impairment
loss on trade receivables (S$’000)
(76) 7 – –
Impairment loss on trade receivables
written off (S$’000)
– 391 28 –
GENERAL INFORMATION ON OUR GROUP
116
Our Group no longer transacts with any customers whose amounts owing to us have previously
been impaired and/or written off as set out above, and none of these customers constituted our
Group’s major customers in each of the corresponding financial periods.
Credit terms from our suppliers
Our suppliers typically supply us with the materials and parts we require in the fabrication and
installation of our products.
Our suppliers generally grant us credit terms of approximately 60 days. From time to time, some
of our suppliers require us to make payment upon delivery of the products to us, while others may
require pre-payment before delivery of such products.
Our average trade payables’ turnover days for the Period Under Review were as follows:
FY2012 FY2013 FY2014 1H2015
Average trade payables’ turnover days(1) 46 34 43 59
Note:
(1) Average trade payables’ turnover days = (Average trade payables/purchases) x 365 days. Pro-rated 183 days for
1H2015.
STAFF TRAINING AND DEVELOPMENT
Our management recognises the importance of educating and training our employees to meet the
increasing standards of quality expected of our products and our after-sales services. In order to
meet and exceed customers’ expectations, we place great emphasis on training and constantly
seek to upgrade the skills and expertise of our employees.
All our employees are given on-the-job training and are guided by our supervisors or managers.
We also send our employees for external skills training conducted by relevant bodies. In addition,
we improve productivity of our employees through regular productivity meetings.
Our staff attend external seminars to keep abreast of the latest developments in the industry. In
addition, our employees receive training from our suppliers of clean room equipment and cooling
towers.
GOVERNMENT REGULATIONS
Save as disclosed in the section entitled “Risk Factors” and Appendix C of this Offer Document,
we are not subject to any government regulations in the countries where we operate other than
those generally applicable to companies and businesses in such countries, which will have a
material effect on our business operations. For details on applicable laws and regulations, please
refer to Appendix C of this Offer Document.
GENERAL INFORMATION ON OUR GROUP
117
MAJOR CUSTOMERS
The table below sets forth our customers which accounted for 5.0% or more of our revenue in any
of FY2012, FY2013, FY2014 and 1H2015:
As a percentage of revenue (%)
FY2012 FY2013 FY2014 1H2015
Camfil Filtration Equipment (Kunshan)
Co., Ltd. (康斐爾過濾設備(昆山)有限公司)
6.3 9.2 9.1 –
Taikisha (Singapore) Pte. Ltd. 8.8 – – 2.4
Taikisha (Thailand) Co., Ltd. 5.7 3.4 5.9 1.1
Polycool HTE Engineering Sdn. Bhd. – – 6.9 1.0
UG M&E Pte. Ltd. – – – 9.2
Sumitomo Densetsu Co., Inc – – – 8.6
Takasago Singapore Pte. Ltd. 4.4 3.6 1.7 5.8
Our major customers are M&E engineering contractors, clean room facilities contractors,
construction companies, HVAC equipment manufacturers and distributors in Singapore and
various parts of Asia. The end users of our clean room equipment are well-known companies in
various industries including entities of the IBM, Seagate, Texas Instruments, Infineon, Fujitsu,
Fujitech, Fuji Electric, Epson, JVC, GlaxoSmithKline, Hitachi Chemical and Mitsubishi Chemical
groups of companies.
During the Period Under Review, revenue from our major customers as a percentage of our total
revenue varied primarily due to the fact that our sales to such major customers are, in turn, largely
dependent on their ability to bid for construction projects pertaining to the development of new
facilities by end users which are project-based and non-recurring in nature.
We do not enter into long-term or exclusive contracts with any of our major customers. Our
Directors are of the opinion that our Group is not dependent on any single customer.
To the best of their knowledge, our Directors are not aware of any information or arrangement
which would lead to a cessation or termination of our present relationship with any of the above
major customers.
Save as disclosed above, there is no other customer whose revenue contribution to us accounted
for 5.0% or more of our revenue in any of FY2012, FY2013, FY2014 and 1H2015.
As at the date of this Offer Document, none of our Directors, Substantial Shareholders or their
respective Associates has any interest, direct or indirect, in any of the above major customers.
To the best of our Directors’ knowledge and belief, there are no arrangements or understanding
with any customer pursuant to which any of our Directors and Executive Officers was appointed.
GENERAL INFORMATION ON OUR GROUP
118
MAJOR SUPPLIERS
The table below sets forth the suppliers which accounted for 5.0% or more of our purchases of
products and services in any of FY2012, FY2013, FY2014 and 1H2015:
Products/
services supplied
As a percentage of purchases (%)
FY2012 FY2013 FY2014 1H2015
Shanghai ShineLong
Air Conditioning Co.,
Ltd. (上海顯隆通風設備有限公司)
FFUs 6.5 9.2 9.3 –
ebm-papst SEA
Pte. Ltd.
Blowers 10.2 11.6 14.1 26.4
Zhejiang Chinabase
Impex Co., Ltd.
Parts for grilles and
diffusers
19.6 17.6 15.2 7.4
Selaco Aluminium
Berhad
Parts for grilles and
diffusers
5.2 5.2 3.1 5.3
Camfil Singapore
Pte. Ltd.
Filters for FFUs 5.2 – – –
TAIWAN NITTA Filter
Co., Ltd.
Filters for FFUs – – – 5.5
Hub Steel (Malaysia)
Sdn Bhd
Parts for grilles and
diffusers
– – – 6.9
During the Period Under Review, purchases from our major suppliers, as a percentage of our total
purchases, varied primarily due to the fact that our purchases from such major suppliers are
largely dependent on the projects which we have secured.
We do not enter into long-term or exclusive contracts with any of our major suppliers. Our
Directors are of the opinion that our Group is not dependent on any single supplier.
To the best of their knowledge, our Directors are not aware of any information or arrangement
which would lead to a cessation or termination of our present relationship with any of the above
major suppliers.
Save as disclosed above, there is no other supplier who provides products/services to us that
accounted for 5.0% or more of our purchases in any of FY2012, FY2013, FY2014 and 1H2015.
As at the date of this Offer Document, none of our Directors, Substantial Shareholders or their
respective Associates has any interest, direct or indirect, in any of the above major suppliers.
To the best of our Directors’ knowledge and belief, there are no arrangements or understanding
with any supplier pursuant to which any of our Directors and Executive Officers was appointed.
COMPETITORS
We compete with other manufacturers of clean room equipment, HVAC equipment and air
purifiers.
We believe that our clean room equipment competes with the clean room equipment
manufactured by companies such as AAF International, Nicotra Gebhardt S.p.A., Micron
Technology, Inc., SAPAI, Shinsung ENG Corporation and Envtech, Inc.
GENERAL INFORMATION ON OUR GROUP
119
We also believe that our HVAC equipment competes with the HVAC equipment manufactured by
companies such as Wearnes Brothers Corporation Limited, Connols-Air (S) Pte. Ltd., R. Glazen
Singapore Pte Ltd, Wong Brothers Pte Ltd, Hart Technologies Pte Ltd, Libra Engineering Pte Ltd
and Halton Group Ltd.
In addition, we believe that our air purifiers compete with air purifier brands such as Philips,
Panasonic, Sharp, Midea, Daikin, Yuanda, Yadu and Gree in the PRC market.
We believe that our competitive strengths as set out in the section entitled “General Information
on Our Group – Competitive Strengths” of this Offer Document set us apart from our existing and
potential competitors.
To the best of our Directors’ knowledge, our Directors are not aware of any companies which are
directly comparable with our Company or of any published statistics that can provide an accurate
measure of our market share.
To the best of our Directors’ knowledge, none of our Directors, Substantial Shareholders or their
Associates has any interest, direct or indirect, in any of our competitors listed above.
COMPETITIVE STRENGTHS
Although we operate in a highly competitive environment, we believe that our competitive
strengths will distinguish us from our competitors for the following reasons:
(a) We are a regional clean air environmental and technological solutions group providing
a wide range of customised air-cleaning technology products and value-added
services to various sectors
We offer a wide range of air-cleaning products to our customers, including 11 clean room
equipment product lines and 20 HVAC equipment product lines, all of which complement one
another. Our key products include grilles and diffusers, fire and smoke dampers, FFUs,
marine dampers and air purifiers, and are provided to our customers in various industries,
including the building industry, clean room industry and offshore oil and gas industry. We
have also completed the design and prototype of our own brand of air purifiers that has been
launched in the PRC. Please refer to the section entitled “General Information on Our Group
– Our Products” of this Offer Document for further details of our products.
Based on our expertise and experience, we are able to customise and adapt existing
products and designs to manufacture innovative and value-added products to meet our
customers’ needs and requirements. Our team of skilled and experienced technicians and
engineers allows us to provide value-added before- and after-sales services such as
technical support and maintenance services to ensure total customer satisfaction. In some
instances, we also provide value-added design services where we assist our customers in
improving the design of their clean room facilities. We believe that our ability to customise
and adapt existing products and provide value-added services gives us a competitive edge
over many of our competitors.
GENERAL INFORMATION ON OUR GROUP
120
(b) We have specialised engineering and design capabilities
With our expertise and experience accumulated over the years in the design and
manufacturing of clean room equipment and HVAC equipment, we possess the ability to
thoroughly review and accurately assess our customers’ specific requirements and to design
and manufacture customised products that conform to their requirements.
Our Group also carries out product design and development activities to improve our
fabrication and installation processes and products to better meet the needs of our
customers. Our management places strong emphasis on our R&D activities. By leveraging
on our engineering and design capabilities, we have completed the design and prototype of
our own brand of air purifiers. Our product design and development efforts and achievements
allow our Group to offer new products with innovative or enhanced features to meet changes
in customer and industry requirements and standards. Please refer to the section entitled
“General Information on Our Group – Research and Development” of this Offer Document for
more details on our product design and development efforts and achievements.
(c) We have an experienced and dedicated management team
Our key management and operations personnel have extensive knowledge and experience
in the manufacture and sale of clean room equipment and HVAC equipment. Our
experienced management team has played an instrumental role in promoting our growth in
the past few years, and is expected to continue to play an important role in the future. Our
key management and employees have also worked in our Group for many years, evidencing
our ability to retain our management and staff.
Paul Chia, our Executive Director and CEO, is responsible for the business operations and
performance of our Group and has focused on driving productivity in our business and
operations processes so as to make inroads into regional markets. He is assisted by two Vice
Presidents in engineering, R&D and business development both in the Southeast Asian and
PRC markets. We believe that the experience and expertise of our key management and
operations personnel accumulated in the past decades will enable our Group to operate
more effectively in the businesses that we are pursuing. Please refer to the section entitled
“Directors, Management and Staff” of this Offer Document for details of our management
team.
(d) We have an established customer network and track record
We have an established track record of providing reliable and innovative clean room
equipment, HVAC equipment and other equipment. Since we commenced operations in
1984, we have gradually increased our customer base and we believe that we have
established a significant presence internationally. During the Period Under Review, a
significant proportion of our customers comprised repeat customers, reflective of the strong
relationships we have forged and continue to maintain with our customers and the high
quality of our service.
Our expertise and experience acquired over the years has allowed us to consistently fulfil the
stringent quality and specific requirements set out by our customers. Our established track
record and repeat business from our customers are endorsements of the quality of our
products and services and reflects our customers’ confidence in us. We are confident that our
established track record will help us secure new customers in our existing market segments
and place us at an advantage when we enter into new geographical markets or seek to
expand our operations.
GENERAL INFORMATION ON OUR GROUP
121
The information and analyses given in this section entitled “Singapore Clean Room Equipment
Industry Overview” of this Offer Document are extracted from the Singapore Clean Room
Equipment Industry Report by Converging Knowledge Private Limited dated 10 September 2015.
All citations in this section entitled “Singapore Clean Room Equipment Industry Overview” of this
Offer Document have been extracted from the Singapore Clean Room Equipment Industry Report
as set out in Appendix I of this Offer Document. The Singapore Clean Room Equipment Industry
Report has been prepared by Converging Knowledge Private Limited for the purpose of
incorporation of information in this Offer Document.
While our Directors have taken reasonable action to ensure that the statements from the
Singapore Clean Room Equipment Industry Report have been reproduced in their proper form and
context, and that such statements have been extracted accurately from the Singapore Clean
Room Equipment Industry Report, none of the Issue Manager, Sponsor and Placement Agent or
our Company or their respective officers, agents, employees and advisers have conducted an
independent review of the contents or independently verified the accuracy thereof. Capitalised
terms which are used in this section shall have the meanings solely ascribed to them in this
section.
Singapore is a high-technology hub in Southeast Asia, with key specialisations in some industries
such as electronics and life sciences manufacturing. For these industries, clean rooms are crucial
to ensure high standards of production during the manufacturing process and for research work
in laboratories. Clean room equipment enables a controlled environment, where particles and
bacteria in the air, as well as air temperature, humidity, flow and pressure are kept at relevant
industrial standards.
Singapore’s Clean Room Equipment industry caters predominantly to the Semiconductor and
Electronics industry in the country, which accounts for approximately 50.0% of the domestic
market. The Pharmaceutical and Biomedical industry comprises 20.0% of clean room equipment
sales, whereas government and research organisations represent a rising segment that makes up
another 20.0% of the market. The remaining 10.0% consists of other industries that have
increasingly adopted clean room technology for production. These include industries like
high-precision engineering and renewable energy.
The Clean Room Equipment industry in Singapore is projected to grow up to 3.0% annually in the
next five years. With the rapid advancement in the miniaturisation of integrated circuits, alongside
shifts in consumer trends towards mobile devices, semiconductor companies have been
accelerating efforts to realign existing production facilities to keep up with demand for even
smaller device components. The need to expand or upgrade existing clean room facilities to
accommodate new production lines for mobile device components will form a key demand
segment. In 2014, the Semiconductor and Electronics industry’s total fixed asset investments
amounted to SGD1.7 billion. Meanwhile, research agencies and pharmaceutical companies are
beginning to intensify Research and Development (“R&D”) and production efforts in Singapore to
keep up with global demand for life sciences solutions. Gross Expenditure in R&D (“GERD”) in
Singapore has grown at a Compound Annual Growth Rate (“CAGR”) of 8.0% between 2003 and
2013. The growth of GERD in this industry is expected to have a positive effect on the market for
clean room equipment.
SINGAPORE CLEAN ROOM EQUIPMENT INDUSTRY OVERVIEW
122
The information and analyses given in this section entitled “PRC Consumer Air Purifier Industry
Overview” of this Offer Document are extracted from the PRC Consumer Air Purifier Industry
Report by Converging Knowledge Private Limited dated 10 September 2015. All citations in this
section entitled “PRC Consumer Air Purifier Industry Overview” of this Offer Document have been
extracted from the PRC Consumer Air Purifier Industry Report as set out in Appendix J of this Offer
Document. The PRC Consumer Air Purifier Industry Report has been prepared by Converging
Knowledge Private Limited for the purpose of incorporation of information in this Offer Document.
While our Directors have taken reasonable action to ensure that the statements from the PRC
Consumer Air Purifier Industry Report have been reproduced in their proper form and context, and
that such statements have been extracted accurately from the PRC Consumer Air Purifier Industry
Report, none of the Issue Manager, Sponsor and Placement Agent or our Company or their
respective officers, agents, employees and advisers have conducted an independent review of the
contents or independently verified the accuracy thereof. Capitalised terms which are used in this
section shall have the meanings solely ascribed to them in this section.
Air purifiers are electrical devices that remove solid and gaseous pollutants from the air1. They are
seen as an increasingly necessary household item, due to worsening air quality in the People’s
Republic of China (“PRC”). In recent years, the country has seen rapid industrialisation of its
economy, together with surging growth in urbanisation and energy consumption. On the other
hand, environmental policies and regulations have yet to keep up with the pace of economic
progress in the country. Urbanised regions of the PRC are facing challenges in keeping air
pollution in check, with 42.4% of surveyed cities in the PRC reporting higher-than-normal fine
particle readings2. Certain PRC cities also face seasonal sandstorms and bad weather conditions
that further worsen the air quality in the country. To alleviate the issue of poor air quality in the
country, an increasing number of households are purchasing and installing air purifiers at home.
The air purifier industry, focusing on the consumer market (the “Consumer Air Purifier industry”),
is part of the broader Consumer Electrical Appliances industry. The market size of this industry in
the PRC was estimated to be RMB10.3 billion to RMB12.6 billion in 2014. The prospects of the
PRC’s Consumer Air Purifier industry are buoyed by challenges in air pollution control, with an
expected compounded annual growth rate (“CAGR”) of 30.2% from 2014 to 2017.
Worsening Air Pollution and Rising Health Awareness Boost Air Purifier Demand
Compared to the other parts of the world, the PRC faces severe air pollution3, and the situation
has raised strong concerns amongst Chinese residents. Surrounded by heavy industrial factories,
provinces in the central and eastern parts of the country, such as Henan, Hubei and Hebei, are
amongst the most polluted provinces in the PRC. This is followed by Beijing and Shandong4. In
2014, major cities in the PRC had, on average, 124 bad-air days, which is approximately one-third
of the year5. Chinese consumers have increasingly recognised the adverse impacts of poor air
quality, and more willing to consider the purchase of a consumer air purifier6.
1 30 December 2008, General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ) &
Standardization Administration Committee (SAC) of the PRC, National Standard of the PRC – GB/T18801-2008
2 25 February 2013. Ministry of Environmental Protection, The People’s Republic of China-
http://english.sepa.gov.cn/News_service/media_news/201302/t20130225_248442.htm
3 Yale University, Environment – http://epi.yale.edu/epi/issue-ranking/air-quality
4 China National Environmental Monitoring Center, 2015年第一季京津冀、長三角、珠三角區域及直轄市、省會城市和計劃單列市空氣質量報告
5 2 February 2015, Ministry of Environmental Protection, 環境保護部發布2014年重點區域和74個城市空氣質量狀況-http://www.mep.gov.cn/gkml/hbb/qt/201502/t20150202_295333.htm
6 Interviews conducted with Industry Players
PRC CONSUMER AIR PURIFIER INDUSTRY OVERVIEW
123
Adverse Health Effects of Air Pollution on Children
From 1990 to 2010, the average asthma incidence amongst children in Chinese cities grew
tremendously from 0.91% to 6.80% in 2010, which is three times faster than the United States.
This is likely due to the deterioration of indoor air quality in the PRC. Other than asthma, children
in the PRC also experienced increased incidence of respiratory allergies such as rhinitis and
atopic dermatitis7. As the Chinese public pay more attention to air pollution and its negative
effects, strong demand for air purifiers is expected to continue, alongside rising health awareness
towards air pollution and health.
Increased Time Spent Indoors Presents Opportunities for the Consumer Air Purifier
Industry
The population in industrialised countries spend approximately 90.0% of their time indoors, mainly
in their homes8. With increasing economic activities in the country, and rising income and
development in Chinese cities, the amount of time spent indoors by PRC residents is expected to
rise, potentially driving further demand for air purifiers9.
Growing Urbanisation and Disposable Income Propels Demand for Air Purifiers
The urban population in the PRC has grown from 49.9% of the nation’s total population in 2010
to 54.8% in 2014. Rapid urbanisation in Chinese cities signifies increasing opportunities for
consumer air purifier players/sellers. A growing urban population implies that more people will be
exposed to air pollution. Moreover, average disposable incomes for urban households in the PRC
have been rising steadily and are expected to continue its uptrend, in line with economic growth.
Rising demand for air purifiers are being met by both international and local manufacturers with
different market positioning. Chinese consumers favour foreign brands, perceiving them to be of
better make than domestic ones. Foreign brands are estimated to take up approximately 50.0%
market share of the Consumer Air Purifier industry in the PRC, which is largely dominated by a few
renowned international players10.
Increased sales of consumer air purifiers in the PRC have drawn many players into this industry.
Some are new market entrants without manufacturing and Research & Development (“R&D”)
capabilities. They source their products from other producers, targeting the lower end of the
consumer market. Others may already be engaged in other similar businesses, which allow them
to leverage on their existing manufacturing facilities and technologies to produce high quality
products with innovative features. They often have a competitive edge over other industry players,
with their established brand names through other existing products.
7 Tongji University, 張寅平,室內PM2.5及復合污染與 健康風險研究進展.
8 27 January 2007, U.S. National Institute of Environmental Health Science, Environmental Health Perspectives,
Improving Indoor Environmental Quality for Public Health: Impediments and Policy Recommendations
9 1 February 2014, Guangdong Environmental Protection Department, Explosive Growth of Air Purifier Demand
Propelling the Revision of GB Standard
10 Interviews conducted with Industry Players
PRC CONSUMER AIR PURIFIER INDUSTRY OVERVIEW
124
PROSPECTS
The following discussion about our prospects and trends include forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from those that may have
been projected in these forward-looking statements.
Moving forward, barring unforeseen circumstances, our Directors believe that the outlook for our
business is positive due to the following factors:
(a) Increasing demand in Singapore and emerging markets for clean room equipment and
HVAC equipment arising from domestic growth of industries
With the burgeoning economic growth in emerging markets, there will be corresponding
growth of the domestic industries in these countries including the building, electronics,
pharmaceutical, biotechnology, chemical and food and beverage industries. All of these
industries require clean room equipment and HVAC equipment. During the Period Under
Review, the majority of our revenue from our Clean Room and HVAC Equipment Business
was generated from the building and electronics industry in Singapore. The Ministry of Trade
and Industry, Singapore, has forecasted Singapore’s gross domestic product growth to be
between 2.0% and 4.0% in each year from 2015 to 2020(1). According to the Building and
Construction Authority of Singapore, average annual construction demand is expected to be
sustained between S$27.0 billion and S$37.0 billion in 2016 and 2017, and between S$26.0
billion and S$37.0 billion in 2018 and 2019, in view of mega public sector infrastructure
projects required to meet the long-term needs of Singapore’s population and maintain the
competitive advantage of Singapore’s economy(2).
(b) Increasing need to upgrade or restructure sophisticated manufacturing facilities and
to equip production plants in various industries
There is an increasing need, in various industries including the food, chemical and
pharmaceutical manufacturing industries, to upgrade or restructure sophisticated
manufacturing facilities with clean rooms for production of more advanced products which
are more susceptible to particle contamination. At the same time, there are increasing
requirements for manufacturers of electronics and semiconductor products to equip their
own production plants with clean room equipment, thereby increasing the demand for such
clean room equipment. The clean room equipment industry in Singapore is projected to grow
at an average annual pace of up to 3.0% in the next five (5) years(3).
(c) Increasing demand for air purifiers in the PRC
The immense and sustained economic growth in the PRC has led to increasing levels of
hazardous smog and worsening air pollution in the PRC, particularly in large cities coupled
with increasing urban population. Meanwhile, the middle class in the PRC has continued to
become increasingly affluent and public awareness on air pollution has increased. This has
resulted in increased demand for air purifiers from urban household consumers. The demand
growth for air purifiers in the PRC is expected to grow at a compounded annual rate of 30.2%
from 2014 to 2017(4).
PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
125
(d) Increasing demand for fire and smoke dampers in the offshore oil and gas sector in
Singapore and the PRC
As the offshore oil and gas sector in Singapore and the PRC continues to grow, there has
been increasing demand for fire and smoke dampers to be used on board oil rigs.
Notes:
(1) Information is extracted from an article entitled Singapore’s Economic Growth Potential Up to 2020 (https://www.mti.gov.sg/
ResearchRoom/SiteAssets/Pages/Economic-Survey-of-Singapore-First-Quarter-2015/BA_1Q15.pdf)
(2) Information is extracted from a news release by the Building and Construction Authority dated 8 January 2015
(http://www.bca.gov.sg/Newsroom/pr08012015_BCA.html)
(3) Information is extracted from the Singapore Clean Room Equipment Industry Report as set out in Appendix I of this
Offer Document.
(4) Information is extracted from the PRC Consumer Air Purifier Industry Report as set out in Appendix J of this Offer
Document.
(5) Save for Converging Knowledge Private Limited, which prepared the Singapore Clean Room Equipment Industry
Report and the PRC Consumer Air Purifier Industry Report, the parties mentioned in the notes above have not
consented to the inclusion of the above information in this Offer Document for the purposes of section 249 of the
SFA and are therefore not liable for the relevant information under sections 253 and 254 of the SFA. While our
Directors have taken reasonable action to ensure that the information has been accurately and correctly extracted
from the sources above and reproduced in this Offer Document in its proper form and context, they have not
independently verified the accuracy of the relevant information.
BUSINESS STRATEGIES AND FUTURE PLANS
Our business strategies and future plans to drive the future growth and expansion of our business
are as follows:
Establishment of a new business for environmental and technological solutions products
in the PRC
We intend to widen our market reach in the PRC for our air purifier products.
We have incorporated Eindec Shenzhen and established an office in Shenzhen to undertake the
commercialisation of our air purifiers in the PRC. Our office in Shenzhen also has development
capabilities. As at the Latest Practicable Date, Eindec Shenzhen is managed by our Vice
President (Country Manager, PRC), Tang Sin, who is supported by 13 staff including a sales
manager, a finance manager, and an engineering and development manager. We have
established a marketing and sales team in the PRC, whose core focus is the marketing and sales
of our air purifiers. Our Vice President (Country Manager, PRC), Tang Sin, spearheads this
marketing and sales team. We intend to market our air purifier products under, amongst others,
the AJB brand.
Our marketing efforts are targeted at increasing our inroads in the PRC. In addition, we intend to
expand our product range and features for our air purifiers. We plan to sell our air purifier products
to customers such as appointed local distributors, property developers and corporations for
installation in homes and offices for consumer end-users, as well as through e-commerce
platforms. Once we have established a presence in the consumer market in the environmental and
technological solutions sector through our air purifiers, we intend to expand our product range to
other environmental and technological solutions products such as water filters, as well as for the
industrial market by developing new products that will be focused on reducing environmental
pollutant output at the industrial source.
PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
126
Subject to any applicable laws and regulations, we intend to tap on our application programming
interface to collect user data from our air purifiers, so as to monitor the usage of components that
require regular maintenance or replacement. Through the collection of such user data and through
the user smartphone applications, we will be able to notify our customers when their product
components require replacement, thereby increasing our revenue through sales of such
components to these existing customers.
Investment in the research and development of new and existing products
We intend to enhance our R&D efforts to develop new products and enhance our existing
products, in particular, for fire and smoke dampers, FFUs and air purifiers. In this regard, we plan
to invest in engineering capabilities and R&D as well as employ more engineers to enhance our
capabilities. We may also appoint consultants to provide us with expert knowledge and advice on
development of such new products. We have formed a task team to focus on product
enhancement. We may also apply for the registration of additional suitable trademarks and
patents for our products.
Establishment and enhancement of manufacturing capabilities
As at the Latest Practicable Date, we have manufacturing Facilities located in Singapore and
Malaysia. In addition to expanding our current manufacturing capabilities in Singapore and
Malaysia, we intend to establish manufacturing capabilities in the PRC, in particular, to
manufacture our air purifier products. To this end, we have established a marketing and sales
team in the PRC to focus on the sales and marketing of our air purifiers under, amongst others,
the AJB brand.
ORDER BOOK
Due to the nature of our Clean Room and HVAC Equipment Business, the concept of an order
book is not meaningful to us. Notwithstanding the above, as at the Latest Practicable Date, we
have secured signed purchase orders for the Clean Room and HVAC Equipment Business worth
in aggregate approximately S$1.41 million to be fulfilled in FY2015.
In relation to our environment and technological solutions products business, Eindec Shenzhen
has entered into various contracts, including a sale and purchase contract in relation to our air
purifier business for a total value of RMB25.0 million of which a deposit of RMB10.0 million has
been received.
TREND INFORMATION
Based on the operations of our Group as at the Latest Practicable Date and barring unforeseen
circumstances, our Directors expect our profitability to be affected in FY2015 for the following
reasons:
(i) revenue is anticipated to remain stable and in line with our historical revenue;
(ii) cost of sales is anticipated to remain stable and in line with our historical cost of sales; and
(iii) operating expenses are anticipated to increase significantly in line with our establishment
and expansion of a new environmental and technological solutions business in the PRC and
expenses incurred in connection with our listing on Catalist.
Save as discussed above and under the section entitled “Risk Factors” of this Offer Document, and
barring any unforeseen circumstances, our Directors are not aware of any significant recent trends or
any other known trends, uncertainties, demands, commitments or events that are reasonably likely to
have a material effect on our revenue, profitability, liquidity or capital resources, or that would cause the
financial information disclosed in this Offer Document to be not necessarily indicative of our future
operating results or financial condition. Please also refer to the section entitled “Cautionary Note
Regarding Forward-Looking Statements” of this Offer Document.
PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
127
In general, transactions between our Group and any of its interested persons (namely, our
Directors or Controlling Shareholders or the Associates of such persons) would constitute
interested person transactions as defined under Chapter 9 of the Catalist Rules. Details of
interested person transactions for the Period Under Review and the period from 1 July 2015 to the
Latest Practicable Date (the “Relevant Period”) are discussed below.
Save as disclosed below and in the sections entitled “Restructuring Exercise” and “General
Information on Our Group – Our History” of this Offer Document, our Group does not have any
other material transactions with any of its interested persons during the Relevant Period.
PAST INTERESTED PERSON TRANSACTIONS
Pursuant to the Restructuring Exercise, Xie Tong International (previously known as Kyodo Allied
International Pte. Ltd.) and Xie Tong Technology (previously known as Kyodo-Allied Technology
Pte Ltd) are now part of the group consisting of Weiye and its subsidiaries, for the purposes of this
section excluding our Group (“Weiye Group”). Please refer to the section entitled “Restructuring
Exercise” of this Offer Document for more details of the Restructuring Exercise.
In relation to the past interested person transactions, all of the interested entities were
wholly-owned by Weiye and there had been no minority shareholders holding shares in any of the
interested entities.
Sales to Weiye by Eindec Shanghai and Eindec Malaysia
After the Reverse Takeover, in the course of its manufacturing business which was previously
undertaken using its former name of Kyodo-Allied Industries, Weiye continued to manufacture
goods which were subsequently sold by its subsidiary, Xie Tong Technology. Consequently, Weiye
purchased parts such as air diffusers, centrifugal fans and fan controllers from Eindec Shanghai,
and clean room equipment and HVAC equipment from Eindec Malaysia in the ordinary course of
business.
Pursuant to a master reorganisation deed entered into among Weiye, Xie Tong International and
Xie Tong Technology in 2014, the assets and liabilities in connection with Weiye’s manufacturing
business, amongst others, were transferred to Xie Tong Technology (“Master Reorganisation”)
with effect from 30 November 2013. Pursuant to completion of the Master Reorganisation, such
purchase transactions by Weiye had ceased subsequent to FY2014, while Xie Tong Technology
assumed the purchase of parts such as air diffusers, centrifugal fans and fan controllers from
Eindec Shanghai, and clean room equipment and HVAC equipment from Eindec Malaysia.
The aggregate values of such transactions for the Relevant Period are as follows:
Sales to Weiye by Eindec Shanghai
FY2012
(S$’000)
FY2013
(S$’000)
FY2014
(S$’000)
1H2015
(S$’000)
1 July 2015 to
the Latest
Practicable Date
(S$’000)
25 1 13 – –
INTERESTED PERSON TRANSACTIONS
128
Sales to Weiye by Eindec Malaysia
FY2012
(S$’000)
FY2013
(S$’000)
FY2014
(S$’000)
1H2015
(S$’000)
1 July 2015 to
the Latest
Practicable Date
(S$’000)
7,962 5,067 – – –
Our Directors are of the view that the above transactions were not conducted on an arm’s length
basis and were not on normal commercial terms as the transactions were conducted on terms that
were more favourable to Weiye than those we extend to third parties. However, the transactions
were not prejudicial to the interests of our Group as the relevant transactions were eliminated in
the “Audited Combined Financial Statements of Eindec Corporation Limited and its Subsidiaries
for the Financial Years Ended 31 December 2012, 2013 and 2014” as set out in Appendix A and
the “Unaudited Interim Combined Financial Statements of Eindec Corporation Limited and its
Subsidiaries for the Six-Month Period Ended 30 June 2015” as set out in Appendix B of this Offer
Document. Such transactions have ceased since FY2014 and we do not intend to enter into such
transactions with Weiye in the future.
Purchases from Xie Tong Technology by Eindec Malaysia and Eindec Shanghai, and sales
to Xie Tong Technology by Eindec Malaysia and Eindec Shanghai
Pursuant to the Asset SPA, Eindec Singapore acquired the Xie Tong Business. Prior to the
completion of the Restructuring Exercise, the Xie Tong Business had been carried out by Xie Tong
Technology, a company which is not part of our Group.
As such, during the Relevant Period, Eindec Malaysia purchased raw materials from Xie Tong
Technology. In turn, Eindec Malaysia also sold clean room equipment and HVAC equipment to Xie
Tong Technology in the ordinary course of business during the Relevant Period.
In addition, during the Relevant Period and in the ordinary course of business, Eindec Shanghai
purchased raw materials from and sold parts to Xie Tong Technology.
The aggregate values of such transactions for the Relevant Period are as follows:
Purchases from Xie Tong Technology by Eindec Malaysia
FY2012
(S$’000)
FY2013
(S$’000)
FY2014
(S$’000)
1H2015
(S$’000)
1 July 2015 to
the Latest
Practicable Date
(S$’000)
2,586 2,153 1,539 1,347 –
INTERESTED PERSON TRANSACTIONS
129
Sales to Xie Tong Technology by Eindec Malaysia
FY2012
(S$’000)
FY2013
(S$’000)
FY2014
(S$’000)
1H2015
(S$’000)
1 July 2015 to
the Latest
Practicable Date
(S$’000)
– 258 5,445 3,050 –
Purchases from Xie Tong Technology by Eindec Shanghai
FY2012
(S$’000)
FY2013
(S$’000)
FY2014
(S$’000)
1H2015
(S$’000)
1 July 2015 to
the Latest
Practicable Date
(S$’000)
1 7 – – –
Sales to Xie Tong Technology by Eindec Shanghai
FY2012
(S$’000)
FY2013
(S$’000)
FY2014
(S$’000)
1H2015
(S$’000)
1 July 2015 to
the Latest
Practicable Date
(S$’000)
– – 15 – –
Our Directors are of the view that the above transactions were not conducted on an arm’s length
basis and were not on normal commercial terms as the transactions were conducted on terms that
were more favourable to Xie Tong Technology than those we extend to third parties. However, the
transactions were not prejudicial to the interests of our Group as the relevant transactions were
eliminated in the “Audited Combined Financial Statements of Eindec Corporation Limited and its
Subsidiaries for the Financial Years Ended 31 December 2012, 2013 and 2014” as set out in
Appendix A and the “Unaudited Interim Combined Financial Statements of Eindec Corporation
Limited and its Subsidiaries for the Six-Month Period Ended 30 June 2015” as set out in Appendix
B of this Offer Document. Such transactions have ceased since completion of the Asset SPA. As
the Xie Tong Business is now conducted by Eindec Singapore, we will not enter into such
transactions with Xie Tong Technology in the future.
Payments for and on behalf of Weiye Group by our Group, and for and on behalf of our
Group by Weiye Group
During the Relevant Period, for administrative convenience, Weiye Group had made payments for
and on behalf of our Group, and our Group had made payments for and on behalf of Weiye Group.
INTERESTED PERSON TRANSACTIONS
130
The aggregate value of the amounts due to Weiye Group from our Group, and from Weiye Group
to our Group, as at 31 December 2012, 31 December 2013, 31 December 2014, 30 June 2015 and
the Latest Practicable Date, and the largest amount outstanding during the Relevant Period are
as follows:
As at
31
December
2012
(S$’000)
As at
31
December
2013
(S$’000)
As at
31
December
2014
(S$’000)
As at
30
June
2015
(S$’000)
As at the
Latest
Practicable
Date
(S$’000)
Largest
amount
outstanding
during the
Relevant
Period
based on
month-end
balances
(S$’000)
Amounts
owing to
Weiye Group
by our Group
6,106 4,929 4,357 4,949 2,360 6,106
Amounts
owing to our
Group by
Weiye Group
– 139 1,196 1,959 – 2,388
Our Directors are of the view that the above transactions were not entered into on an arm’s length
basis and were not on normal commercial terms as no service fee was levied or interest charged
on these payments made for and on behalf of Weiye Group, or our Group, as the case may be.
However, the transactions were not prejudicial to the interests of our Group.
As at the Latest Practicable Date, all amounts owing to our Group by Weiye Group have been set
off against the amounts owing to Weiye Group by our Group.
Upon admission of our Company to Catalist, such arrangements between our Group and Weiye
Group shall cease and we do not intend to enter into such transactions with Weiye Group in the
future. Notwithstanding this, the amounts owing to Weiye Group of S$2.36 million will remain
outstanding after admission of our Company to Catalist. Please refer to the section entitled
“Interested Person Transactions – Present and On-going Interested Person Transactions” for
more details on such amounts owing.
Receipt of payments for and on behalf of Eindec Singapore by Xie Tong Technology
Pursuant to the Asset SPA, the Xie Tong Business, which included account receivables standing
to the account of Xie Tong Technology as at 30 June 2015 amounting to a total of S$3.56 million
(“Xie Tong AR”), was transferred to Eindec Singapore. However, subsequent to the Asset SPA,
certain customers continued to make payments to the bank account of Xie Tong Technology
instead of Eindec Singapore in settlement of such Xie Tong AR. As such, Xie Tong Technology
received such payments for and on behalf of Eindec Singapore.
INTERESTED PERSON TRANSACTIONS
131
The aggregate amounts received by Xie Tong Technology for and on behalf of Eindec Singapore
during the Relevant Period are as follows:
FY2012
(S$’000)
FY2013
(S$’000)
FY2014
(S$’000)
1H2015
(S$’000)
1 July 2015 to
the Latest
Practicable Date
(S$’000)
– – – – 2,773
As at the Latest Practicable Date, the receipt of such payments by Xie Tong Technology on behalf
of Eindec Singapore has ceased and the entire amount received by Xie Tong Technology for and
on behalf of our Group has been paid to Eindec Singapore. Xie Tong Technology will not receive
such payments on behalf of our Group in future. As at the Latest Practicable Date, the remaining
outstanding amount of the Xie Tong AR is S$0.35 million.
Our Group has also taken measures to ensure that such amounts will be paid directly to Eindec
Singapore. Customers have been informed that any cheques issued to Xie Tong Technology will
be returned to the customer for reissuance to Eindec Singapore.
Our Directors are of the view that the above transactions were not conducted on an arm’s length
basis and were not on normal commercial terms as no fee was levied or interest charged by Xie
Tong Technology for receiving payments for and on behalf of Eindec Singapore. However, the
transactions were not prejudicial to the interests of our Group.
OTHER TRANSACTIONS
Purchases and receipt of commission income from Weiye by Xie Tong Technology
Xie Tong Technology is part of Weiye Group. Pursuant to the Asset SPA, Eindec Singapore
acquired the Xie Tong Business. The past transactions between Xie Tong Technology and Weiye
are disclosed below for the purpose of completeness notwithstanding that these transactions do
not fall within the ambit of interested person transactions as defined under Chapter 9 of the
Catalist Rules.
Xie Tong Technology had purchased goods from Weiye and received commission income from
Weiye for the sale of goods by Weiye during the Relevant Period. The purchases of such goods
and receipt of commission income arose as after the Reverse Takeover, Weiye continued to
manufacture goods which were subsequently sold by its subsidiary, Xie Tong Technology.
Pursuant to completion of the Master Reorganisation, such purchase transactions had ceased.
The aggregate values of such transactions during the Relevant Period are as follows:
Purchase of goods from Weiye by Xie Tong Technology
FY2012
(S$’000)
FY2013
(S$’000)
FY2014
(S$’000)
1H2015
(S$’000)
1 July 2015 to
the Latest
Practicable Date
(S$’000)
18,916 13,859 – – –
INTERESTED PERSON TRANSACTIONS
132
Receipt of commission income from Weiye by Xie Tong Technology
FY2012
(S$’000)
FY2013
(S$’000)
FY2014
(S$’000)
1H2015
(S$’000)
1 July 2015 to
the Latest
Practicable Date
(S$’000)
480 356 – – –
Our Directors are of the view that the above transactions were not conducted on an arm’s length
basis as the transactions were conducted on terms that were more favourable to Xie Tong
Technology than those Weiye extends to third parties. Such transactions have ceased since
FY2014.
PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS
Provision of accounting and administrative services to Weiye Group by our Group
Our Group provided accounting and administrative services to Weiye Group during the Relevant
Period. The amount paid by Weiye Group to our Group was on a time-cost allocation basis for the
time spent by our employees in providing such services to Weiye Group.
The aggregate amounts paid by Weiye Group to our Group during the Relevant Period are as
follows:
FY2012
(S$’000)
FY2013
(S$’000)
FY2014
(S$’000)
1H2015
(S$’000)
1 July 2015 to
the Latest
Practicable Date
(S$’000)
– – 130 75 4
Our Directors are of the view that the above arrangements are not entered into on an arm’s length
basis and are not on normal commercial terms as there was no reference made to market prices
for such services provided.
Our Company and Weiye have entered into a shared services agreement (“Shared Services
Agreement”) for the provision of accounting and administrative services by our Group to Weiye,
pursuant to which, inter alia, Weiye shall pay our Company a monthly fee of S$1,000.00 for such
services, such fee to be reviewed on a quarterly basis to take into account any changes in the
scope, utilisation rate or costs of providing such services. Pursuant to the terms of the Shared
Services Agreement, in the event that Weiye ceases to be our Controlling Shareholder, our
Company has the right to terminate the agreement immediately in accordance with its terms. The
monthly fee of S$1,000.00 to be paid by Weiye to our Company pursuant to the Shared Services
Agreement was derived on a time-cost basis in that approximately 20.0% of a finance staff’s time
is expected to be spent on providing such services to Weiye. In FY2014 and 1H2015, the amounts
paid by Weiye included compensation on a time-cost basis for, apart from the provision of
accounting and administrative services, time spent by Eindec Singapore’s senior management in
attending to Weiye’s matters. Such involvement of Eindec Singapore’s senior management in
Weiye’s matters had ceased since 1H2015 and is not expected to recur in subsequent periods.
Our Directors are of the view that the provision of such services to Weiye Group is not prejudicial
INTERESTED PERSON TRANSACTIONS
133
to the interests of our Company and our minority Shareholders as the amount to be paid by Weiye
to our Company is derived on a time-cost allocation basis. In addition, such time spent by our
employees is immaterial and does not affect the operations of our Group.
Upon admission of our Company to Catalist, subject to concurrence from our Audit Committee on
a half-yearly basis, we intend to continue to provide such accounting and administrative services
to Weiye Group. The cost-allocation for such services that would be attributed to Weiye Group in
each financial year is not expected to exceed an aggregate of S$100,000.
The total amount of time spent by each of our employees in the provision of such accounting and
administrative services to Weiye Group will be recorded and reviewed by our Audit Committee on
a half-yearly basis before the Audit Committee determines whether our Group can continue with
the provision of such services to Weiye Group.
Amounts owing to Weiye Group by our Group
As at the Latest Practicable Date, arising from payments made by Weiye Group for and on behalf
of our Group, there are certain amounts owing by our Group to Weiye Group. We have entered
into a deed of undertaking (“Deed of Undertaking”) with Weiye on 22 September 2015 to govern
the terms and conditions of such amounts outstanding. As at the date of entry into the Deed of
Undertaking, the net outstanding amount owing by our Group to Weiye Group is S$2.36 million
(“Outstanding Amount”). Pursuant to the Deed of Undertaking, Weiye has agreed that Weiye
Group will continue to extend the Outstanding Amount to our Group on an unsecured basis with
no fixed repayment terms. Weiye has also agreed that Weiye Group shall not have the right to
demand for repayment of the Outstanding Amount at any time and any repayment of the
Outstanding Amount shall only be made after the date of admission of our Company to Catalist,
taking into account the financial position of our Group (including cash flow) and/or any other
factors which may potentially affect the position of our Group. We shall pay interest on the
Outstanding Amount to Weiye Group at a rate equivalent to the three (3)-month Swap Offer Rate
plus 3.5%, payable within five (5) business days from the last day of every calendar quarter. The
outstanding amount owing by our Group to Weiye Group as at the Latest Practicable Date is
S$2.36 million.
Our Directors are of the view that the above transaction is not entered into on an arm’s length
basis and is not on normal commercial terms as there is no fixed repayment term for the
Outstanding Amount. However, the above transaction is beneficial to our Group and is not
prejudicial to the interests of our Company and our minority Shareholders. Our Directors are
further of the view that the interest rate payable to Weiye Group in respect of the Outstanding
Amount was agreed on an arm’s length basis as it is based on the three (3)-month Swap Offer
Rate.
GUIDELINES AND REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON
TRANSACTIONS
To ensure that future transactions with Interested Persons (as defined under Chapter 9 of the
Catalist Rules) are undertaken on normal commercial terms and are consistent with our Group’s
usual business practices, which are generally no more favourable than those extended to
unrelated third parties, the following procedures will be implemented by our Group:
(i) when purchasing items from or engaging the services of Interested Persons, the prices and
terms of at least two (2) other comparative offers (where appropriate) from unrelated third
parties will be used as comparison wherever possible. The purchase price or fee for services
INTERESTED PERSON TRANSACTIONS
134
shall not be higher than the most competitive price or fee of the two (2) comparative offers
(where appropriate) from unrelated third parties. In determining the most competitive price or
fee, all pertinent factors, including but not limited to quantity, quality, delivery time and track
record will be taken into consideration;
(ii) save for the Shared Services Agreement, which will be reviewed by our Audit Committee on
a half-yearly basis in accordance with its terms, when selling items or providing services to
interested persons, the prices and terms of at least two (2) other completed transactions of
similar nature and size to unrelated third parties are to be used as comparison wherever
possible. The sale price or fee for the supply of services shall not be lower than the lowest
sale price or fee of the other two (2) completed transactions to unrelated third parties;
(iii) when leasing property from or to Interested Persons, our Directors shall take appropriate
steps to ensure that the amount of rent for such lease is commensurate with the prevailing
market rates, including adopting measures such as making relevant enquiries with landlords
of properties of similar location and size, or obtaining necessary reports or reviews published
by property agents (including an independent valuation report by a property valuer, where
appropriate). The rent payable shall be based on the most competitive market rate of similar
properties in terms of size and location, based on the results of the relevant enquiries; and
(iv) where it is not possible to compare against the terms of other transactions with unrelated
third parties and given that the products and/or services may be purchased only from an
Interested Person, the Interested Person Transaction will be approved by our Audit
Committee, in accordance with our Group’s usual business practices and policies. In
determining the transaction price payable to the Interested Person for such products and/or
service, factors such as, but not limited to, quantity, requirements and specifications will be
taken into account.
All Interested Person Transactions above S$100,000 are to be approved by a Director who shall
not be an Interested Person in respect of the particular transaction. Any contract to be made with
an interested person shall not be approved unless the pricing is determined in accordance with our
usual business practices and policies, consistent with the usual margin given or price received by
us for the same or substantially similar type of transactions between us and unrelated parties and
the terms are not more favourable to the Interested Person than those extended to or received
from unrelated parties. For the purposes above, where applicable, contracts for the same or
substantially similar type of transactions entered into between us and unrelated third parties will
be used as a basis for comparison to determine whether the price and terms offered to or received
from the Interested Person are not more favourable than those extended to unrelated third parties.
In addition, we shall monitor all Interested Person Transactions entered into by us by categorising
the transactions as follows:
(i) a “category 1” Interested Person Transaction is one where the value thereof is in excess of
3.0% of the NTA of our Group based on the latest audited accounts; and
(ii) a “category 2” Interested Person Transaction is one where the value thereof is below or equal
to 3.0% of the NTA of our Group based on the latest audited accounts.
“Category 1” Interested Person Transactions must be reviewed and approved by our Audit
Committee prior to entry. “Category 2” Interested Person Transactions need not be approved by
the Audit Committee prior to entry but must be approved by the Group Financial Controller prior
to entry and must be reviewed on a half-yearly basis by our Audit Committee. In its review, our
INTERESTED PERSON TRANSACTIONS
135
Audit Committee will ensure that all future Interested Person Transactions are conducted on
normal commercial terms and are not prejudicial to the interests of our Company and its minority
Shareholders.
In respect of all Interested Person Transactions, we shall adopt the following policies:
(i) our Audit Committee will review all Interested Person Transactions to ensure that the
prevailing rules and regulations of the SGX-ST (in particular, Chapter 9 of the Catalist Rules)
are complied with;
(ii) in the event that a member of our Audit Committee is interested in any Interested Person
Transactions, he will abstain from deliberating, reviewing and/or approving that particular
transaction;
(iii) we shall maintain a register to record all Interested Person Transactions which are entered
into by our Group, including any quotations obtained from unrelated parties to support the
terms of the Interested Person Transactions;
(iv) we shall incorporate into our annual internal audit plan a review of all Interested Person
Transactions entered into by our Group; and
(v) our Audit Committee shall review the internal audit reports at least on an annual basis to
ensure that all Interested Person Transactions are carried out on an arm’s length basis and
in accordance with the procedures outlined above. Furthermore, if during these periodic
reviews, our Audit Committee believes that the guidelines and procedures as stated above
are not sufficient to ensure that the interests of minority Shareholders are not prejudiced, we
will adopt new guidelines and procedures. The Audit Committee may request for an
independent financial adviser’s opinion as it deems fit.
In addition, we are subject to the rules prescribed in the Catalist Rules. Hence, we will also comply
with the provisions in Chapter 9 of the Catalist Rules in respect of all future Interested Person
Transactions, and if required under the Catalist Rules, we will seek independent Shareholders’
approval (where necessary) for such transactions.
POTENTIAL CONFLICTS OF INTERESTS
Generally, a conflict of interests arises when any of our Directors, Controlling Shareholders or
their Associates is carrying on the same business or dealing in similar products as our Group.
None of our Directors, Controlling Shareholders or their Associates is carrying on the same
business or dealing in similar products as our Group.
Save as disclosed in the sections entitled “Interested Person Transactions” and “Restructuring
Exercise” of this Offer Document, and save for personal investment (whether directly or through
nominees) in quoted investments which may include companies listed on the SGX-ST, none of our
Directors, Executive Officers, Substantial Shareholders or any of their Associates has any
interest, direct or indirect, in the following:
(a) any transactions to which our Company was or is to be a party;
(b) any entity carrying on the same business or a similar trade which competes materially and
directly with the existing business of our Group; and
(c) any entity that is our customer, principal or other supplier of goods and services.
INTERESTED PERSON TRANSACTIONS
136
INTERESTS OF EXPERTS
No expert is employed on a contingent basis by our Company or any of our subsidiaries; or has
a material interest, whether direct or indirect, in our Shares, equity interests or debentures, or the
shares, equity interests or debentures of our subsidiaries; or has a material economic interest,
whether direct or indirect, in our Company, including an interest in the success of the Placement.
INTERESTS OF THE ISSUE MANAGER, SPONSOR AND PLACEMENT AGENT
In the reasonable opinion of our Directors, save as disclosed below, the Issue Manager, Sponsor
and Placement Agent does not have a material relationship with our Company:
(a) UOBKH is the Issue Manager, Sponsor and Placement Agent of the Listing and the
Placement; and
(b) UOBKH will be the continuing Sponsor of our Company for a period of three (3) years from
the date our Company is admitted to and listed on Catalist.
INTERESTED PERSON TRANSACTIONS
137
DIRECTORS
Our Board of Directors is entrusted with the responsibility for the overall management of our
Group. The particulars of our Directors as at the date of this Offer Document are set out below:
Name Age Designation in our Company
Country of
principal residence
Zhang Wei 46 Non-Executive Chairman PRC
Paul Chia 60 Executive Director and CEO Singapore
See Yen Tarn 58 Independent Director Singapore
Lawrence Wong 48 Independent Director Singapore
Jeffrey Ong 39 Independent Director Singapore
The correspondence address for all our Directors is 8 Pandan Crescent, #01-06, Singapore
128464.
Information on our Directors’ career and academic history, business experience and general areas
of responsibility within our Group are set out below:
Zhang Wei is our Non-Executive Chairman and was appointed to our Board on 2 September 2015.
He is responsible for providing oversight to the development of our Group’s business plans.
Zhang Wei is currently the executive chairman of Weiye, our Controlling Shareholder. Zhang Wei
has over 20 years of experience in the real estate industry. From 1990 to 1993, he was the
operations manager in China Construction No. 7 Central Company (中國建設第七工程局中原公司),
which was a state-owned enterprise involved in construction and property development. From
1993 to 1994, he was the assistant manager at Henan Xinya Property Co., Ltd. (河南新亞置業公司). From 1994 to 1998, he was the general manager, and was later promoted to the managing
director of Henan Xinfeng Property Co., Ltd. (河南新豐置業有限公司), which was a joint venture
company between Henan Province Port Company (河南省口岸公司) and an American company,
U.S. Dong Xin Investments Co., Ltd. (美國東興投資公司), and involved in the business of real
estate development. Henan Province Port Company (河南省口岸公司) is a state-owned enterprise
which invests in different industries, including real estate development. Accordingly, Henan
Xinfeng Property Co., Ltd. (河南新豐置業有限公司) is a subsidiary of Henan Province Port
Company (河南省口岸公司). From 1998 to 2000, he was the general manager of Henan Province
Port Company (河南省口岸公司), which was owned by Henan Province Port Association (河南省口岸協會), an association administered by Henan Province Government. From 2000 to 2002, he was
the managing director of Henan Fenghua Industry Limited Company (河南豐華實業股份有限公司),
a state-owned conglomerate engaged in various businesses, including property development,
where he was responsible for the overall management of the company’s business. He joined
Weiye in 2002, where he was appointed as the executive chairman of the Weiye group of
companies, and was responsible for its overall strategic and business management. In February
2014, Zhang Wei stepped down as chief executive officer of Weiye in line with the internal
restructuring of its management team, but he remains as its executive chairman.
DIRECTORS, MANAGEMENT AND STAFF
138
Zhang Wei graduated from Zhongzhou University (中州大學) with a diploma in law in 1990. He was
certified as an economist by Henan Province Science Committee (河南省科技委員會) in 1996. He
also obtained a Master of Business Administration from Macau University of Science and
Technology (澳門科技大學) in 2003.
Paul Chia is our Executive Director and CEO and was appointed to our Board on 2 April 2015. He
is responsible for the overall business operations and performance of our Group.
Paul Chia was an independent director and the chairman of the audit committee of Weiye from
August 2011 to March 2014. He resigned and ceased to be a director of Weiye on 31 March 2014
and was then appointed as the president of Xie Tong International with effect from 1 April 2014.
He subsequently resigned from Xie Tong International with effect from 24 August 2015, pursuant
to the transfer of the Xie Tong Business from Xie Tong Technology to our Company in July 2015.
Please refer to the section entitled “Restructuring Exercise” of this Offer Document for more
details of the transfer of the Xie Tong Business.
Prior to joining Xie Tong International, he was the finance director of Gaylin Holdings Limited. He
has a unique background in general management and finance over the last 16 years, holding
senior regional appointments such as the chief operating officer, chief financial officer, finance
director and general manager posts with companies such as Compaq Computer Asia Pacific Pte
Ltd, Dell Computer Asia Pacific Sdn. Bhd., Maxtor Peripherals (Singapore) Pte Ltd, Citibank
(Technology Division), Tri-M Technologies (S) Ltd and Medtecs International Corporation Limited.
He holds a Master of Applied Finance from the University of Western Sydney, Australia and a
Bachelor of Arts (Economics major) from the former University of Singapore. He is also a Certified
Management Accountant with the Australian Institute of Certified Management Accountants and a
Senior Associate of the Australian Institute of Banking & Finance.
See Yen Tarn is our Independent Director and was appointed to our Board on 8 December 2015.
See Yen Tarn is currently the chief executive officer of CSC Holdings Limited, a company listed
on the Main Board of the SGX-ST. He was appointed to this position in 2006.
See Yen Tarn has more than 20 years of working experience at senior management level in
various industries and has served as chief financial officer, executive director and deputy
managing director for both listed and non-listed entities in Singapore. Prior to joining CSC
Holdings Limited, from 2004 to 2006, he was the chief financial officer of Longcheer Holdings
Limited. From 2001 to 2004, he was the chief financial officer of Amanda Group Holdings Pte. Ltd.,
a company which specialised in the processing and export of frozen seafood products. From 1993
to 2001, he was the executive director and chief financial officer, and subsequently deputy
managing director, of Tuan Sing Holdings Limited.
See Yen Tarn holds a Bachelor of Accountancy from the National University of Singapore. He is
qualified as a chartered accountant in England and Wales.
Lawrence Wong is our Independent Director and was appointed to our Board on 8 December
2015.
Lawrence Wong is currently the managing director of Equity Law LLC, a position he has held since
January 2014.
DIRECTORS, MANAGEMENT AND STAFF
139
From 1999 to 2006, Lawrence Wong practised as an advocate and solicitor as a sole proprietor
of Lawrence Wong & Co. From 2006 to 2007, he was a senior manager at Boardroom Corporate
and Advisory Pte. Ltd. (formerly known as Lim Associates (Pte) Ltd) where he performed
corporate secretarial and advisory work as well as provided in-house legal support. From 2007 to
2011, he was a partner of KhattarWong LLP in the corporate and securities law department. From
2011 to 2013, Lawrence Wong was one of the founding members and equity partners of RHTLaw
Taylor Wessing LLP, where he was the co-head of its corporate and securities practice and the
head of RHT Capital Pte. Ltd., an approved SGX continuing sponsor.
He holds a Bachelor of Laws from the National University of Singapore. He is an advocate and
solicitor in Singapore and a solicitor in the Hong Kong Special Administrative Region of the PRC.
Jeffrey Ong is our Independent Director and was appointed to our Board on 8 December 2015.
Jeffrey Ong is currently the head of new business development at ORIX Leasing Singapore
Limited, a position he has held since March 2012. He is responsible for developing new
businesses for the company through both product development and acquisitions.
From 2001 to 2003, Jeffrey Ong was an investment executive with Khong Guan Biscuits Factory
Pte. Ltd., where he was involved with feasibility studies and project management for the property
investment arm of the company. From 2003 to 2006, he was an investment manager with Apec
Investments Limited. From 2006 to 2008, he was a senior manager with Provenance Capital Pte.
Ltd., undertaking various aspects of corporate finance advisory work including initial public
offerings. From 2008 to 2012, he assumed the role of vice-president – investments at EV Capital
Pte Ltd, where his work included due diligence and feasibility studies for investments.
Jeffrey Ong holds a Bachelor of Science degree in Real Estate from the National University of
Singapore.
All our Directors possess the relevant experience and expertise to act as Directors of our
Company, as evidenced by their business and working experience as set out above. Pursuant to
Rule 406(3)(a) of the Catalist Rules, Jeffrey Ong does not have prior experience as a director of
public listed companies in Singapore. However, he has undertaken relevant training to familiarise
himself with the roles and responsibilities of a director of a public listed company in Singapore.
Such training includes a course conducted by the Singapore Institute of Directors on directors’
responsibilities and corporate governance of SGX-ST listed companies.
Our Non-Executive Chairman, Zhang Wei, is the brother-in-law of Chen Zhiyong, who is one of the
controlling shareholders of Weiye.
Save as disclosed above, none of our Directors is related by blood or marriage to one another or
any of our Substantial Shareholders, and to the best of our Director’s knowledge, there are no
arrangements, or understandings with any of our Substantial Shareholders, customers, suppliers,
or any other person, pursuant to which any of our Directors was appointed.
DIRECTORS, MANAGEMENT AND STAFF
140
None of our Independent Directors sit on the board of our subsidiaries. Save as disclosed below
and the directorships held in our Company, none of our Directors currently holds or has held
directorships in the past five (5) years preceding the date of this Offer Document:
Name Present Directorships Past Directorships
Zhang Wei Our Group
None
Other companies
Hainan Hongji Weiye Consulting
Management Co., Ltd.
(海南宏基偉業咨詢管理有限公司)
Hainan Hongji Weiye Property
Development Co., Ltd.
(海南宏基偉業房地產開發有限公司)
Great Spirit Management Limited
Max Fill International Limited
Well Fai International Limited
Weiye
Weiye Holdings (HongKong) Limited
Xie Tong International
Xie Tong Technology
Our Group
None
Other companies
Hainan Huibang Leisure Agricultural
Development Co., Ltd.
(海南薈邦休閒農業發展有限公司)
Henan Huibang Property Co., Ltd.
(河南薈邦置業有限公司)
Henan Weiye Construction
Investment Group Co., Ltd.
(河南偉業建設投資集團有限公司)
Sanya Dashang Real Estate
Development Co. Ltd.
(三亞大上房地產開發有限公司)
Weiye Group Hainan Yingde
Construction Investment Co., Ltd.
(偉業集團海南英德建設投資有限公司)
Paul Chia Our Group
Eindec Holdings
Eindec Malaysia
Eindec Singapore
Eindec Shanghai
Other companies
Investpro Pte Ltd
Our Group
None
Other companies
Medtecs (Asia Pacific) Pte. Ltd.
Medtecs International Corporation
Limited
Mercurius Capital Investment
Limited
Xie Tong International
Xie Tong Technology
Weiye
DIRECTORS, MANAGEMENT AND STAFF
141
Name Present Directorships Past Directorships
See Yen Tarn Our Group
None
Other companies
Asia East Investments Pte Ltd
CS Bored Pile System Pte Ltd
CS Construction & Geotechnic
Pte. Ltd.
CS Ground Engineering
(International) Pte. Ltd.
CS Industrial Properties Pte. Ltd.
CSC Holdings Limited
DW Foundation Pte. Ltd.
Ice Far East Offshore Pte. Ltd.
Ice Far East Pte. Ltd.
Kolette Pte Ltd
L&M Foundation Specialist Pte Ltd
Lejia (S) Pte. Ltd.
Longcheer Holdings Limited
NH Singapore Biotechnology
Pte. Ltd.
NHCS Investment Pte. Ltd.
Singhaiyi Group Ltd.
THL Engineering Pte. Ltd.
THL Foundation Equipment Pte.
Ltd.
Wisescan Engineering Services
Pte Ltd
Our Group
None
Other companies
Acesian Partners Limited
(formerly known as Linair
Technologies Limited)
Changjiang Fertilizer Holdings
Limited
CS Industrial Land Pte Ltd
Eagle Brand Holdings Limited
Excel Precast Pte Ltd
Ivy Lee Realty Pte Ltd
Lizhong Wheel Group Ltd.
Renewable Energy Asia Group
Limited
Seya Investments Pte. Ltd.
Swing Media Technology Group
Limited
U-Asia Pte Ltd
Lawrence Wong Our Group
None
Other companies
Artivision Technologies Ltd.
China Bearing (Singapore) Ltd.
EQ Advisory Pte. Ltd.
EQ Compliance Pte. Ltd.
Equity Law LLC
Sino Grandness Food Industry
Group Limited
Our Group
None
Other companies
Harry’s Holdings Pte. Ltd.
Juken Technology Limited
We Holdings Ltd.
Ziwo Holdings Ltd.
DIRECTORS, MANAGEMENT AND STAFF
142
Name Present Directorships Past Directorships
Jeffrey Ong Our Group
None
Other companies
None
Our Group
None
Other companies
TJZ Holdings Pte. Ltd.
EXECUTIVE OFFICERS
Our day-to-day operations are entrusted to our Executive Director and CEO, who is assisted by
our Executive Officers. The particulars of our Executive Officers are detailed below:
Name Age Designation in our Company
Andy Tan 38 Group Financial Controller
Eddie Tan 49 Vice President (Operations and Clean Room Equipment Sales)
Tang Sin 35 Vice President (Country Manager, PRC)
The correspondence address for all our Executive Officers is 8 Pandan Crescent, #01-06,
Singapore 128464.
Information on our Executive Officers’ career and academic history, business experience and
general areas of responsibility within our Group are set out below:
Andy Tan is our Group Financial Controller. He is responsible for the entire financial management
and statutory reporting of our Group.
Andy Tan joined our Group in March 2015. Prior to joining our Group, Andy Tan was the group
financial controller of HLH Group Limited from 2010 to 2012, and subsequently from 2013 to
March 2015. From June 2012 to October 2012, he was the senior finance manager of Sembcorp
Industries Limited. From 2009 to 2010, he was the finance manager of Kian Ho Bearings Ltd. From
2003 to 2009, Andy Tan was employed by KPMG LLP, where he was eventually promoted to the
position of audit manager. In 2002, Andy Tan was an accounts executive with Allied Telesis Asia
Pacific Pte Ltd. From 2000 to 2002, Andy Tan was a senior accounts assistant with City
Developments Limited, where he oversaw financial reporting matters for a portfolio of group
entities.
Andy Tan graduated with a Diploma in Accountancy from Ngee Ann Polytechnic in 1997. He is a
chartered accountant of the Institute of Singapore Chartered Accountants, and a fellow member
of the Association of Chartered Certified Accountants.
Eddie Tan is our Vice President (Operations and Clean Room Equipment Sales). He joined our
Group in 1995 and has provided key operational leadership for the regional sales growth of our
Group in the past decade. His primary responsibilities comprise the engineering and R&D,
procurement and manufacturing planning functions of our Group’s Facilities. He also leads the
engineering and sales of clean room equipment. Eddie Tan has more than 20 years of experience
in the marketing and sales of clean room equipment.
DIRECTORS, MANAGEMENT AND STAFF
143
Tang Sin is our Vice President (Country Manager, PRC). She is responsible for the overall
management of our Group’s operations in the PRC.
Tang Sin joined our Group in April 2015. Prior to joining our Group, she was general manager of
Dongguan C. RAY Automatic Technology Co., Ltd (東莞市希銳自動化科技股份公司) from 2009 to
March 2015, where she was responsible for the overall management of the company. From 2000
to 2015, she was general manager of Dongguan Xiegang Yuxing Plating Equipment Factory (東莞市謝崗鎮裕興電鍍設備廠), where she oversaw the overall operations of the company.
Tang Sin holds a Master of Business Administration from Sun Yat-Sen University. She is the
vice-president of the Shenzhen Surface Treatment Association (深圳市工業表面處理行業協會) and
a director of the Women Entrepreneurs Association of Guangdong Province (廣東省東莞市女企業家協會常平分會).
Save as disclosed below, none of our Executive Officers currently holds or has held directorships
in the past five (5) years preceding the date of this Offer Document:
Name Present Directorships Past Directorships
Andy Tan Our Group
None
Other companies
None
Our Group
None
Other companies
None
Eddie Tan Our Group
None
Other companies
None
Our Group
Eindec Shanghai
Other companies
Xie Tong International
Xie Tong Technology
Tang Sin Our Group
Eindec Shenzhen
Other companies
Dongguan C. RAY
Automatic Technology Co., Ltd
(東莞市希銳自動化科技股份公司)(1)
Xirui (International) Technology
Limited (希銳(國際)科技公司)
Our Group
None
Other companies
Dongguan C. RAY
Automatic Technology Co., Ltd
(東莞市希銳自動化科技股份公司)(1)
Dongguan Xiegang Yuxing Plating
Equipment Factory
(東莞市謝崗鎮裕興電鍍設備廠)
Note:
(1) Tang Sin resigned as executive director of Dongguan C. Ray Automatic Technology Co., Ltd (東莞市希銳自動化科技股份公司) in March 2015, and was reappointed as a non-executive director in October 2015.
DIRECTORS, MANAGEMENT AND STAFF
144
Save as disclosed in this section and the section entitled “Shareholders – Ownership Structure”
of this Offer Document, none of our Directors or Executive Officers has any family relationship with
one another or with our Substantial Shareholders.
To the best of our Directors’ knowledge, there is no arrangement or understanding with a
Substantial Shareholder, customer, principal or supplier of our Company or any other person,
pursuant to which any of our Directors or Executive Officers was selected as a Director or
Executive Officer of our Company.
MANAGEMENT REPORTING STRUCTURE
Board of Directors
Executive Director
and CEO
Paul Chia
Group Financial
Controller
Andy Tan
Vice President
(Operations and Clean
Room Equipment Sales)
Eddie Tan
Vice President
(Country Manager, PRC)
Tang Sin
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED EMPLOYEES
Directors and Executive Officers
The remuneration paid to our Directors and Executive Officers (which includes benefits-in-kind,
long service benefits and bonuses) for services rendered to us on an aggregate basis and in
remuneration bands of S$250,000(1) during FY2013 and FY2014 (being the two (2) most recent
completed financial years) and as estimated for FY2015, excluding bonuses under any profit-
sharing plan or any other profit-linked agreement(s), is as follows:
FY2013 FY2014
Estimated for
FY2015
Directors(1)
Zhang Wei –(3) –(3) A
Paul Chia –(3) A(2) B(4)
See Yen Tarn –(3) –(3) A
Lawrence Wong –(3) –(3) A
Jeffrey Ong –(3) –(3) A
DIRECTORS, MANAGEMENT AND STAFF
145
FY2013 FY2014
Estimated for
FY2015
Executive
Officers(1)
Andy Tan –(3) –(3) A(4)
Eddie Tan A(2) A(2) A(4)
Tang Sin –(3) –(3) A
Notes:
(1) Remuneration bands:
“Band A” refers to remuneration of up to S$250,000 per annum.
“Band B” refers to remuneration from S$250,001 to S$500,000 per annum.
“Band C” refers to remuneration from S$500,001 to S$750,000 per annum.
(2) The remuneration was paid by Xie Tong Technology in accordance with the relevant employment contract prior to
the Restructuring Exercise.
(3) Not appointed during the relevant period.
(4) A portion of the remuneration has been paid by Xie Tong Technology in accordance with the relevant employment
contract prior to the Restructuring Exercise.
No compensation was paid or is to be paid in the form of stock options to any of our Directors,
Executive Officers or any of our employees.
Related Employees
We do not have employees who are related to our Directors or Substantial Shareholders.
In the event of any new employment of employees who are related to our Directors or Substantial
Shareholders, the remuneration of such employees will be reviewed annually by our
Remuneration Committee to ensure that their remuneration packages are in line with our staff
remuneration guidelines and commensurate with their respective job scopes and level of
responsibilities. Any bonuses, pay increases and/or promotions for these related employees will
also be subject to the review and approval of our Remuneration Committee. In the event that a
member of our Remuneration Committee is related to the employee under review, he will abstain
from participating in such review.
EMPLOYEES
As at the Latest Practicable Date, we have 160 full-time employees. We do not experience any
significant seasonal fluctuations in our number of employees.
DIRECTORS, MANAGEMENT AND STAFF
146
The number of employees of our Group as at each of 31 December 2012, 31 December 2013, 31
December 2014, and 30 June 2015, segmented by function is as follows:
Number of Employees
Function
As at
31 December
2012
As at
31 December
2013
As at
31 December
2014
As at
30 June
2015
Management(1) 1 1 2 4
Manufacturing 133 96 98 93
Finance, Human Resources
and Administration
13 11 11 16
Purchasing and Store 7 7 7 7
Engineering 14 14 12 14
Marketing 20 18 17 21
Logistics and Security 9 9 9 9
Total 197 156 156 164
Note:
(1) Management includes our Executive Director and CEO, and Executive Officers.
The increase in the number of our employees is in line with the growth of our business operations.
We hire full-time general workers from time to time on a contract basis as may be required. We
do not employ a significant number of temporary workers.
None of our employees are unionised. There has not been any incidence of work stoppages or
labour disputes that affected our operations. Accordingly, we consider our relationship with our
employees to be good.
The geographical breakdown of our full-time employees is as follows:
Number of Employees
Location
As at
31 December
2012
As at
31 December
2013
As at
31 December
2014
As at
30 June
2015
Malaysia 123 87 94 94
PRC 1 1 3 14
Singapore 67 62 54 51
Thailand 6 6 5 5
Total 197 156 156 164
DIRECTORS, MANAGEMENT AND STAFF
147
Pension or retirement benefits
Other than amounts set aside or accrued in respect of mandatory employee funds, no amounts
have been set aside or accrued by our Company or subsidiaries to provide pension, retirement or
similar benefits to our employees.
SERVICE AGREEMENT
Our Company entered into the Service Agreement with Paul Chia (“Executive” for the purposes
of this section of this Offer Document) on 9 December 2015.
The Service Agreement will take effect from the date of admission of our Company to Catalist for
an initial period of three (3) years (“Initial Term”) and may be renewed at the end of the Initial
Term on such terms as may be agreed between our Company and the Executive, unless otherwise
terminated by either party giving at least two (2) months’ notice in writing or receiving two (2)
months’ salary in lieu of such notice to the other (“termination by mutual agreement”).
Pursuant to a termination by mutual agreement, the parties shall agree upon the quantum of the
gratuity and performance bonus payable to the Executive in good faith consultation with each
other, taking into consideration the contributions of the Executive during the term of his
employment, and such quantum of the gratuity and performance bonus to be subject to the
approval of our Board and/or our Remuneration Committee.
If he shall at any time be incapacitated or prevented by physical illness, physical injury caused by
accident or any other circumstances beyond his control (excluding becoming of an unsound mind)
(such incapacity or prevention being hereinafter referred to as the “incapacity”) from discharging
in full his duties under the provisions of the Service Agreement for a total of six (6) months
(“incapacity period”), our Company may, by notice in writing of three (3) months (“notice
period”) to the Executive given at any time so long as the incapacity shall continue, terminate his
employment provided always that the Executive shall be paid his monthly basic salary (inclusive
of Directors’ fees, if any) during the incapacity period and the notice period. The Service
Agreement will automatically determine upon the Executive’s death.
Our Company shall be entitled to terminate the appointment without prior notice (without prejudice
to and in addition to any other remedy), in any of the following cases:
(a) if the Executive commits any material or persistent breach of any of the provisions of the
Service Agreement;
(b) if the Executive is guilty of any grave or wilful misconduct or gross neglect or gross
negligence in the discharge of his duties under the provisions of the Service Agreement;
(c) if the Executive becomes bankrupt, applies for a bankruptcy petition or has a bankruptcy
order made against him, applies for or has made against him a receiving order or makes any
composition or enters into any deed of arrangement with his creditors;
(d) if the Executive is guilty of conduct tending to bring himself or our Company into disrepute
or to prejudice the business interest of our Group;
(e) if the Executive becomes of unsound mind;
(f) if the Executive is disqualified or prohibited from acting as a director in any jurisdiction by
reason of an order made by any competent court for reasons other than on technical
grounds;
DIRECTORS, MANAGEMENT AND STAFF
148
(g) if the Executive is guilty of dishonesty;
(h) if the Executive neglects or refuses, without reasonable cause, to attend to the business of
our Group to which he is assigned duties;
(i) if there is a termination by the Executive of any other contracts signed with any company in
our Group due to reasons other than termination by mutual agreement between the
Executive and such other company; and/or
(j) if the Executive ceases to hold the office of director pursuant to our Company’s Articles of
Association or is disqualified from holding the office of, or acting as, a director of any
company, pursuant to any applicable law, for whatever reason.
Under the Service Agreement, the Executive shall, for so long as he is an employee of our
Company and for the period of 12 months from the date he ceases to be an employee of our
Company, be subject to non-competition obligations.
Pursuant to the Service Agreement, the Executive will receive a monthly salary of S$20,000, an
annual wage supplement equivalent to one (1) month salary, a performance bonus the amount of
which shall be determined by our Company in our sole and absolute discretion, any other benefits
and/or participation in schemes provided for in our Company’s then current human resource
policies, and Directors’ fees as may be determined by the Shareholders of our Company. Our
Company will also reimburse the Executive for all reasonable travelling, accommodation,
entertainment and other out-of-pocket expenses reasonably incurred by him in or about the
discharge of his duties. The Executive will be provided with a motorcar of up to 3,000 cc and our
Company shall pay all associated road tax, insurance and maintenance costs in connection with
this motorcar. The Executive shall be reimbursed for all business-related parking fees. The salary,
annual wage supplement, performance bonus and other benefits in kind that the Executive is
entitled to shall be subject to annual review and approval by our Board and/or our Remuneration
Committee.
Any performance bonus payable to the Executive in relation to any one (1) financial year shall be
determined at the absolute discretion of our Board and shall be payable within two (2) months
after the consolidated financial statements of our Group for that financial year have been laid
before our Company at our annual general meeting and announced on SGXNET.
There are no profit-sharing plans or any other profit-linked agreements or arrangements between
our Company and any of our Directors, Executive Officers or employees.
Under the Service Agreement, the total remuneration of the Executive is subject to annual review
by our Remuneration Committee.
During the continuance of the Executive’s employment under the Service Agreement, the
Executive’s basic monthly salary shall be accruable on a daily basis and payable at the end of
each month.
Save as disclosed above, there are no other existing or proposed service contracts entered into
or to be entered into between our Company and our subsidiaries with any of our Directors or
Executive Officers. There are no existing or proposed service agreements entered into or to be
entered into by our Directors with our Company or any of its subsidiaries which provide for benefits
upon termination of employment.
DIRECTORS, MANAGEMENT AND STAFF
149
In conjunction with our listing on the SGX-ST, we have adopted a performance share plan known
as the “Eindec Performance Share Plan 2015”, which was approved by our Existing Shareholder
on 8 December 2015. The rules of our Plan are set out in Appendix F of this Offer Document.
These rules comply with the requirements set out in the Catalist Rules and the Companies Act.
Capitalised terms used throughout this section shall, unless otherwise defined in the section
entitled “Definitions” of this Offer Document, bear the meanings as defined in Appendix F of this
Offer Document.
The Plan will provide eligible participants with an opportunity to participate in the equity of our
Company and to motivate them towards better performance through increased dedication and
loyalty. The Plan forms an integral and important component of our compensation plan and is
designed primarily to reward and retain directors and employees whose services are vital to the
growth and performance of our Company and/or our Group.
The Plan is proposed on the basis that it is important to recognise the fact that the services of our
employees are important to the success and continued well-being of our Group. Our Company, by
implementing the Plan, will be able to give our employees a direct interest in our Company.
Objectives of the Plan
The Plan has been proposed in order to:
(a) foster an ownership culture within our Group which aligns the interests of Participants with
the interests of shareholders;
(b) motivate Participants to achieve key financial and operational goals of our Company and/or
their respective business divisions and encourage greater dedication and loyalty to our
Group; and
(c) make total employee remuneration sufficiently competitive to recruit new Participants and/or
retain existing Participants whose contributions are important to the long-term growth and
profitability of our Group, and whose skills are commensurate with our Company’s ambition
to become a world class company.
The Plan is designed to complement our Company’s efforts to reward, retain and motivate
employees to achieve better performance. The aim of implementing the Plan is to grant our
Company the flexibility in tailoring reward and incentive packages suitable for each group of
Participants by providing an additional tool to motivate, reward and retain staff members so that
our Company can offer compensation packages that are competitive.
The focus of the Plan is principally to target selected management in key positions who are able
to drive the growth of our Company through creativity, firm leadership and excellent performance.
Our Company believes that the Plan will be more effective than merely having pure cash bonuses
in place to motivate executives to work towards determined goals. The Awards given to a
particular Participant under the Plan and the number of Performance Shares will be determined
at the discretion of the Committee, which will take into account criteria such as his rank, job
performance, years of service and potential for future development, his contribution to the success
and development of our Group and the extent of effort and resourcefulness with which the
Performance Condition may be achieved within the Performance Period.
THE EINDEC PERFORMANCE SHARE PLAN 2015
150
In any event, the aggregate number of Performance Shares will be subject to the maximum limit
of 15.0% of our Company’s total issued and paid-up share capital. As the Plan is valid for a period
of 10 years, this maximum limit of 15.0% of our Company’s total issued and paid-up share capital
allows for a potential increase in the number of employees as our Company expands in the future.
Administration of the Plan
Our Remuneration Committee will be designated as the Committee responsible for the
administration of the Plan. The Committee will determine, inter alia, the following:
(i) the persons to be granted Awards;
(ii) the number of Shares which are the subject of the Awards; and
(iii) recommendations for modifications to the Plan.
In compliance with the requirements of the Catalist Rules, no member of the Committee shall
participate in any deliberation or decision in respect of Awards granted or to be granted to him.
Size of the Plan
The aggregate number of Shares which may be issued pursuant to Awards granted under the
Plan, when added to the number of Shares issued and/or issuable in respect of all Awards granted
under the Plan, shall not exceed 15.0% of the total issued and paid-up share capital of our
Company on the day immediately preceding the date of the relevant grant.
This 15.0% size is intended to accommodate the potential pool of participants arising from our
base of eligible participants. We also hope that with the significant portion of our issued share
capital set aside for our Plan, our employees and Executive Director will recognise that we are
making a good effort to reward them for their invaluable contributions to our Company by allowing
them greater opportunities to participate in our equity.
We are of the view that the size of our Plan is reasonable, taking into account the share capital
base of our Company, the contributions by our employees and Executive Director and the potential
number of employees as our business expands. Implementing our Plan with the maximum amount
of shares not exceeding 15.0% of the total issued share capital of our Company will enable us to
maintain flexibility and remain competitive in the industry.
Term of the Plan
The Plan shall continue in force at the discretion of our Remuneration Committee subject to a
maximum period of 10 years commencing on the date it is adopted by our Company in general
meeting, provided always that it may continue beyond the above stipulated period with the
approval of Shareholders by ordinary resolution in general meeting and of any relevant authorities
which may then be required.
THE EINDEC PERFORMANCE SHARE PLAN 2015
151
Maximum entitlements of the Plan
Subject to the size of our Plan as described above and any requirements of the SGX-ST, the
aggregate number of Shares in respect of which Awards may be offered shall be determined at the
discretion of our Remuneration Committee which will take into consideration criteria such as rank,
job performance, years of service and potential for future development and contribution to the
success and development of our Group of the Participant.
Summary of the rules of the Plan
Capitalised terms used herein bear the same meanings as defined in Appendix F of this Offer
Document.
The following is a summary of the rules of our Plan:
(1) Eligibility
Full time employees of our Group and Group Executive Directors who have attained the age
of 21 years and hold such rank as may be designated by the Committee from time to time,
shall be eligible to participate in the Plan. The Participant must also not be an undischarged
bankrupt and must not have entered into a composition with his creditors.
Employees who are Controlling Shareholders and Associates of Controlling Shareholders
shall not participate in the Plan unless (i) their participation and (ii) the terms of each grant
and the actual number of Awards to be granted to them have been approved by the
independent Shareholders in general meeting in separate resolutions for each such person,
and in respect of each such person, in separate resolutions for each of (i) his participation
and (ii) the terms of each grant and the actual number of Awards to be granted to him,
provided always that it shall not be necessary to obtain the approval of the independent
Shareholders of our Company for the participation in the Plan of a Controlling Shareholder
or an Associate of a Controlling Shareholder who is, at the relevant time already a
Participant.
(2) Grant of Awards
The Committee may grant Awards to Group Executives as the Committee may select, in its
absolute discretion, at any time during the period when the Plan is in force, provided that no
Participant who is a member of the Committee shall participate in any deliberation or
decision in respect of Awards granted or to be granted to him.
The number of Shares which are the subject of each Award to be granted to a Participant in
accordance with the Plan shall be determined at the absolute discretion of the Committee,
which shall take into account criteria such as his rank, job performance, years of service and
potential for future development, his contribution to the success and development of our
Group and the extent of effort and resourcefulness with which the Performance Condition
may be achieved within the Performance Period.
An Award or Released Award shall be personal to the Participant to whom it is granted and,
prior to the allotment and/or transfer to the Participant of the Shares to which the Released
Award relates, shall not be transferred, charged, assigned, pledged or otherwise disposed of,
in whole or in part, except with the prior approval of the Committee.
THE EINDEC PERFORMANCE SHARE PLAN 2015
152
(3) Operation of the Plan
On vesting of the Award, after the end of each Performance Period, the Committee has the
discretion to determine whether to issue new Shares or to procure the market purchase of
existing Shares, or the payment of its equivalent in cash to the Participant.
New Shares allotted and issued, and existing Shares procured by our Company for transfer,
on the release of an Award shall rank in full for all entitlements, including dividends or other
distributions declared or recommended in respect of the then existing Shares, the Record
Date for which is on or after the relevant Vesting Date, and shall in all other respects rank
pari passu with other existing Shares then in issue. For this purpose, “Record Date” means
the date fixed by our Company for the purposes of determining entitlements to dividends or
other distributions to or rights of holders of Shares.
(4) Alteration of Capital
If a variation in the issued ordinary share capital of our Company (whether by way of a
capitalisation of profits or reserves or rights issue or reduction) shall take place, then:
(a) the class and/or number of Shares which is/are the subject of an Award to the extent not
yet Vested; and/or
(b) the class and/or number of Shares in respect of which future Awards may be granted
under the Plan,
shall be adjusted in such manner as the Committee may determine to be appropriate,
provided that no adjustment shall be made if as a result, the Participant receives a benefit
that a Shareholder does not receive.
(5) Modifications to the Plan
The Plan may be modified and/or altered at any time and from time to time by a resolution
of the Committee. However, no modification or alteration shall alter adversely the rights
attached to any Award granted prior to such modification or alteration except with the consent
in writing of such number of Participants who, if their Awards are Released to them upon the
Performance Conditions for their Awards being satisfied in full, would thereby become
entitled to not less than three quarters of all the Shares which would fall to be Vested upon
Release of all outstanding Awards upon the Performance Conditions of all outstanding
Awards being satisfied in full.
No alteration shall be made to certain particular rules of the Plan to the advantage of
Participants, except with the prior approval of Shareholders in a general meeting.
No modification or alteration shall be made without the prior approval of the SGX-ST and
such other regulatory authorities as may be necessary.
Participation of Executive Directors and employees of our Group
The extension of the Plan to Executive Directors and employees of our Group allows us to have
a fair and equitable system to reward Executive Directors and employees who have made and will
continue to make significant contributions to the long-term growth of our Group.
THE EINDEC PERFORMANCE SHARE PLAN 2015
153
We believe that the Plan will also 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 our Company to give recognition to past contributions and services as well
as motivating Participants to contribute towards the long-term growth of our Group.
Cost of the Plan
FRS 102 Share-based Payment is effective for the financial statements of our Company for the
financial year beginning 1 January 2015. Participants will receive Shares in settlement of the
Awards, and the Awards would be accounted for as equity-settled Share-based Payment
transactions, as described in the following paragraphs.
The fair value of employee services received in exchange for the grant of the Awards would be
recognised as an expense in profit or loss over the vesting period of an Award and a
corresponding increase in equity. The amount recognised as an expense of an Award over the
vesting period is based on the market price at the date of grant adjusted to take into account the
terms and conditions (see the following paragraph where there are non-market conditions
attached) upon which the Awards were granted. Before the end of the vesting period, at each
accounting year end, the estimate of the number of Awards that are expected to vest by the
vesting date is revised, and the impact of the revised estimate is recognised in profit or loss with
a corresponding adjustment to equity. After the Vesting Date, no adjustment to the expense is
made.
The expense recognised in profit or loss would be the same whether our Company settles the
Awards using New Shares or existing Shares. In the case of Awards, the expense recognised in
profit or loss also depends on whether or not the performance target attached to an Award is
“market condition”, that is, a condition which is related to the market price of the Shares. If the
performance target is not a market condition, the fair value of the Shares at the date of grant is
used to compute the expense to be charged to profit or loss at each accounting date, based on
an assessment at that date of whether the non-market conditions would be met to enable the
Awards to Vest. Thus, if the Awards do not ultimately Vest, the expense recognised in profit or loss
would be reversed at the end of the vesting period.
THE EINDEC PERFORMANCE SHARE PLAN 2015
154
Our Directors recognise the importance of corporate governance and the offering of high
standards of accountability to our Shareholders.
Our Board has formed three (3) committees: (i) the Nominating Committee; (ii) the Remuneration
Committee; and (iii) the Audit Committee.
Nominating Committee
Our Nominating Committee comprises See Yen Tarn, Lawrence Wong and Jeffrey Ong. The
Chairman of our Nominating Committee is Jeffrey Ong.
Our Nominating Committee will be responsible for:
(a) reviewing and recommending the nomination or re-nomination of our Directors having regard
to such Director’s contribution and performance;
(b) determining on an annual basis whether or not a Director is independent;
(c) in respect of a Director who has multiple board representations on various companies,
reviewing and deciding whether or not such Director is able to carry out and has been
adequately carrying out his duties as Director, having regard to the competing time
commitments that are faced by the Director when serving on multiple boards;
(d) deciding whether or not a Director is able to and has been adequately carrying out his duties
as a director; and
(e) reviewing and approving any new employment of related persons and the proposed terms of
their employment.
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. Each member of our Nominating Committee shall abstain from voting on any resolutions
in respect of the assessment of his performance or re-nomination as Director.
Remuneration Committee
Our Remuneration Committee comprises See Yen Tarn, Lawrence Wong and Jeffrey Ong. The
Chairman of our Remuneration Committee is Lawrence Wong.
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
Executive Director. The recommendations of our Remuneration Committee should be submitted
for endorsement by the entire Board. All aspects of remuneration, including but not limited to
directors’ fees, salaries, allowances, bonuses and other benefits-in-kind, shall be covered by our
Remuneration Committee. Each member of our Remuneration Committee shall abstain from
voting on any resolutions in respect of his own remuneration package.
CORPORATE GOVERNANCE
155
The remuneration of related employees will be reviewed annually by our Remuneration Committee
to ensure that their remuneration packages are in line with our staff remuneration guidelines and
commensurate with their respective job scopes and level of responsibilities. Any bonuses, pay
increases and/or promotions for these related employees will also be subject to the review and
approval of our Remuneration Committee. In the event that a member of our Remuneration
Committee is related to the employee under review, he will abstain from participating in the review.
Audit Committee
Our Audit Committee comprises See Yen Tarn, Lawrence Wong and Jeffrey Ong. The Chairman
of our Audit Committee is See Yen Tarn.
Our Audit Committee does not have any existing business or professional relationship of a
material nature with our Group, our Directors or Substantial Shareholders.
Our Audit Committee will assist our Board of Directors in discharging their responsibilities to
safeguard our assets, maintain adequate accounting records and develop and maintain effective
systems of internal control, with the overall objective of ensuring that our management creates
and maintains an effective control environment in our Group.
Our Audit Committee will provide a channel of communication between our Board of Directors, our
management and our external auditors on matters relating to audit.
Our Audit Committee shall meet periodically to perform the following functions:
(a) review with the external auditors the audit plans, their evaluation of the system of internal
controls, their audit report, their management letter and our management’s response;
(b) review with the internal auditors the internal audit plans and their evaluation of the adequacy
of our internal control and accounting system before submission of the results of such review
to our Board for approval prior to the incorporation of such results in our annual report (where
necessary);
(c) review the internal control and procedures and ensure co-ordination between the external
auditors and our management, and review the assistance given by our management to the
auditors, and discuss problems and concerns, if any, arising from the interim and final audits,
and any matters which the auditors may wish to discuss (in the absence of our management
where necessary);
(d) review the co-operation given by our Company’s officers to the external auditors;
(e) review the half-yearly and annual, and quarterly if applicable, financial statements and
results announcements before submission to our Board for approval, focusing, in particular,
on changes in accounting policies and practices, major risk areas, significant adjustments
resulting from the audit, the going concern statement, compliance with accounting standards
as well as compliance with any stock exchange and statutory/regulatory requirements;
(f) review and discuss with the external auditors any suspected fraud or irregularity, or
suspected infringement of any relevant laws, rules or regulations, which has or is likely to
have a material impact on our Group’s operating results or financial position, and our
management’s response;
CORPORATE GOVERNANCE
156
(g) consider the appointment or re-appointment of the external auditors and matters relating to
resignation or dismissal of the auditors;
(h) review transactions falling within the scope of Chapter 9 and Chapter 10 of the Catalist Rules
(if any);
(i) review potential conflicts of interest (if any) and to set out a framework to resolve or mitigate
any potential conflicts of interests;
(j) review the effectiveness and adequacy of our administrative, operating, internal accounting
and financial control procedures;
(k) review our key financial risk areas, with a view to providing an independent oversight on our
Group’s financial reporting, the outcome of such review to be disclosed in the annual reports
or the findings are material, immediately announced via SGXNET;
(l) undertake such other reviews and projects as may be requested by our Board and report to
our Board its findings from time to time on matters arising and requiring the attention of our
Audit Committee;
(m) generally to undertake such other functions and duties as may be required by statute or the
Catalist Rules, and by such amendments made thereto from time to time;
(n) review arrangements by which our staff may, in confidence, raise concerns about possible
improprieties in matters of financial reporting and to ensure that arrangements are in place
for the independent investigations of such matter and for appropriate follow-up; and
(o) review our Group’s compliance with such functions and duties as may be required under the
relevant statutes or the Catalist Rules, including such amendments made thereto from time
to time.
Apart from the duties listed above, our Audit Committee shall commission and review the findings
of internal investigations into matters where there is any suspected fraud or irregularity, or failure
of internal controls or suspected infringement of any law, rule or regulation of the jurisdictions in
which our Group operates, which has or is likely to have a material impact on our Company’s
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
and deliberating on that particular transaction or voting on that particular resolution.
Our Audit Committee, after having conducted an interview with Andy Tan, our Group Financial
Controller, and having considered:
(a) the qualifications and past working experiences of Andy Tan (as described in the section
entitled “Directors, Management and Staff – Executive Officers” of this Offer Document)
which are compatible with his position as Group Financial Controller of our Group;
CORPORATE GOVERNANCE
157
(b) his demonstration of the requisite competency in finance-related matters in connection with
the preparation of the listing of our Company; and
(c) the absence of negative feedback on Andy Tan from the representatives of our Group’s
Auditors and Reporting Accountants, KPMG LLP, and our internal auditors, Nexia TS Risk
Advisory Pte. Ltd.,
is of the view that Andy Tan is suitable for the position of Group Financial Controller of our Group.
Our Audit Committee confirms that, after making all reasonable enquiries, and to the best of their
knowledge and belief, nothing has come to their attention to cause them to believe that Andy Tan
does not have the competence, character and integrity expected of a Group Financial Controller
of a listed issuer.
In addition, Andy Tan shall be subject to performance appraisals by our Audit Committee on an
annual basis to ensure satisfactory performance.
Our Audit Committee shall also commission an annual internal control audit until such time as our
Audit Committee is satisfied that our Group’s internal controls are robust and effective enough to
mitigate our Group’s internal control weaknesses (if any). Prior to the decommissioning of such an
annual audit, our Board is required to report to the SGX-ST and the Sponsor on how the key
internal control weaknesses have been rectified, and the basis for the decision to decommission
the annual internal control audit. Thereafter, such audits may be initiated by the Audit Committee
as and when it deems fit to satisfy itself that our Group’s internal controls remain robust and
effective. Upon completion of the internal control audit, appropriate disclosure must be made via
SGXNET on any material, price-sensitive internal control weaknesses and any follow-up actions
to be taken by our Board. In addition to an annual internal control audit, our Audit Committee will
also consider the implementation of an enterprise risk management system within our Group,
taking into account factors such as the scale of our operations, the costs of implementing such a
system, and the findings of the internal control audit.
Based on the foregoing, our Board, to the best of its knowledge and belief, with the concurrence
of our Audit Committee, based on the internal controls established and maintained by our Group,
work performed by the external and internal auditors, and reviews by our Board and our Audit
Committee, is of the opinion that our internal controls of our Group are adequate to address our
financial, operational and compliance risks.
BOARD PRACTICES
Each of our Directors has served in office in our Company since the following dates:
Name Date of commencement
Zhang Wei 2 September 2015
Paul Chia 2 April 2015
See Yen Tarn 8 December 2015
Lawrence Wong 8 December 2015
Jeffrey Ong 8 December 2015
CORPORATE GOVERNANCE
158
Our Directors are appointed by our Shareholders at a general meeting, and an election of
Directors takes place annually. One-third (or the number nearest to one-third) of our Directors are
required to retire from office at each annual general meeting. Further, all our Directors are
required to retire from office at least once in every three (3) years. However, a retiring Director is
eligible for re-election at the meeting at which he retires. Further details on the appointment and
retirement of Directors are set out in Appendix E of this Offer Document.
LEGAL REPRESENTATIVES
Tang Sin is the legal representative of Eindec Shanghai and Eindec Shenzhen. The legal
representative is able to act on behalf of the company in exercising the company’s functions and
powers.
Eindec Shanghai and Eindec Shenzhen are not principal subsidiaries of our Company within the
definition of the Catalist Rules. Hence, Rule 407(4)(d) of the Catalist Rules is not applicable to
Eindec Shanghai or Eindec Shenzhen.
Notwithstanding this, based on the articles of association of each of Eindec Shanghai and Eindec
Shenzhen, each of their respective shareholders are able to, either directly or indirectly, control
the appointment and dismissal of their respective legal representatives. Further, pursuant to the
Registration Administration of Legal Representatives of Legal Entities in the PRC, in order to
effect the change of the legal representative of a company, the existing legal representative is not
required to execute or provide any documents and/or consent to his replacement.
Each of Eindec Shanghai and Eindec Shenzhen has also implemented safeguarding controls over
the company seals and bank signatories.
CORPORATE GOVERNANCE
159
The following is a description of the exchange controls that exist in the jurisdictions which our
Group operates in.
Singapore
There are no Singapore governmental laws, decrees, regulations or other legislation that may
affect:
(i) the import or export of capital, including the availability of cash and cash equivalents for use
by our Group; and
(ii) the remittance of dividends, interest or other payments to non-resident holders of our
Company’s securities.
Malaysia
There are foreign exchange policies in Malaysia which support the monitoring of capital flows into
and out of the country in order to preserve its financial and economic stability. The foreign
exchange control framework in Malaysia is governed by the Financial Services Act 2013 and the
Malaysian foreign exchange policies and rules administered by the Central Bank of Malaysia,
Bank Negara Malaysia. These regulations regulate both residents and non-residents of Malaysia.
Under the current Notices and Foreign Exchange Administration Policies issued by Bank Negara
Malaysia, non-residents of Malaysia are free to repatriate any amount of their own funds in
Malaysia at any time, including capital, divestment proceeds, profits, dividends, rental, fees and
interest arising from investment in Malaysia, provided that such repatriation is made in foreign
currency except in the currency of Israel. The repatriation of funds is subject to the applicable
reporting requirements, and any withholding tax.
In respect of borrowings, a resident company is free to borrow in foreign currency (other than the
currency of Israel) as follows (a) any amount from licensed onshore banks; (b) any amount from
its resident or non-resident entities within its group of entities; (c) any amount from its resident or
non-resident direct shareholder; (d) any amount through the issuance of foreign currency debt
securities to another resident; or (e) up to RM100 million equivalent in aggregate from other
non-residents (the RM100 million equivalent is based on the aggregate borrowing of the resident
entity and other resident entities within its group of entities with parent-subsidiary relationship).
Items (b) and (c) above do not apply to borrowings in foreign currency by a resident entity from
a non-resident financial institution or a non-resident special purpose vehicle which is set-up to
obtain borrowing from any person which is not part of the resident entity’s group of entities.
For the purpose of the Notices, “group of entities” means a resident entity’s: (a) ultimate holding
entity; (b) parent or head office; (c) branch; (d) subsidiary where the resident entity owns more
than 50% of shares in the subsidiary; (e) associate company where the resident entity owns
between 10% and 50% of shares in the associate company; or (f) sister company where the
resident entity and its sister company have a common shareholder.
EXCHANGE CONTROLS
160
PRC
Pursuant to the Regulations on Foreign Exchange Control of the PRC (中華人民共和國外匯管理條例) promulgated on 29 January 1996, which became effective on 1 April 1996 and amended on 5
August 2008 and its relevant implemental regulations, including the Regulations on the Sale,
Purchase of and Payment In Foreign Exchange (結匯、售匯及付匯管理暫行規定), RMB payments
under current account items, such as trade related payments, and interest and dividend payment,
can be converted into foreign currencies through providing valid documents to relevant financial
institutions engaging in settlement and sale of foreign exchange pursuant to relevant rules and
regulations of the PRC. Foreign exchange proceeds under the current account items may either
be retained or sold to financial institutions engaging in settlement and sale of foreign exchange
pursuant to relevant rules and regulations of the PRC. For foreign exchange proceeds under the
capital account items, the conversion of foreign currencies into RMB and remittance of the
converted foreign currency outside the PRC under capital account items, such as direct equity
investments, loans and repatriation of investments, requires the prior approval from the SAFE or
its local office, except where such approval is not required under the rules and regulations of the
PRC. Payments for transactions that take place within the PRC must be made in RMB, except
otherwise stipulated by the state. Unless otherwise approved, PRC companies may repatriate
foreign currency payments received from abroad or retain the same abroad. Foreign-invested
enterprises may retain foreign exchange in accounts with designated foreign exchange banks
subject to a cap set by the SAFE or its local office.
EXCHANGE CONTROLS
161
Upon listing and quotation on Catalist, our Shares will be traded under the book-entry settlement
system of the CDP, and all dealings in and transactions of the Shares through Catalist will be
effected in accordance with the terms and conditions for the operation of Securities Accounts with
the CDP, as amended, modified or supplemented 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 of Association and the Companies Act, as members of our Company in respect of the
number of Shares credited to their respective Securities Accounts.
Persons holding our Shares in Securities 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 Catalist
although they will be prima facie evidence of title and may be transferred in accordance with our
Articles of Association. A fee of S$10.00 for each withdrawal of 1,000 Shares or less and a fee of
S$25.00 for each withdrawal of more than 1,000 Shares is payable upon withdrawing the Shares
from the book-entry settlement system and obtaining physical share certificates. In addition, a fee
of S$2.00 or such other amount as our Directors may decide, is payable to the share registrar for
each share certificate issued and a stamp duty of S$10.00 is also payable where our Shares are
withdrawn in the name of the person withdrawing our Shares or S$0.20 per S$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 Catalist 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 S$10.00 is payable upon the deposit of each
instrument of transfer with CDP. The above fees may be subject to such changes as may be in
accordance with CDP’s prevailing policies or the current tax policies that may be in force in
Singapore from time to time. Pursuant to announced rules effective from 2 May 2014, transfers
and settlements pursuant to on-exchange trades will be charged a fee of S$30.00 and transfers
and settlements pursuant to off-exchange trades will be charged a fee of 0.015% of the value of
the transaction, subject to a minimum of S$75.00.
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 payable
for the Shares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on Catalist is payable at the rate of 0.0325% of
the transaction value. The clearing fee, instrument of transfer deposit fee and share withdrawal
fee may be subject to Singapore goods and services tax at 7.0% (or such other rate prevailing
from time to time).
Dealings of our Shares will be carried out in Singapore dollars and will be effected for settlement
on CDP on a scripless basis. Settlement of trades on a normal “ready” basis on Catalist generally
takes place on the third Market Day following the transaction date, and payment for the securities
is generally settled on the following business day. CDP holds securities on behalf of investors in
Securities Accounts. An investor may open a direct account with CDP or a sub-account with a
depository agent. The depository agent may be a member company of the SGX-ST, bank,
merchant bank or trust company.
CLEARANCE AND SETTLEMENT
162
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS
1. Save as disclosed below, none of our Directors, Executive Officers and Controlling
Shareholders:
(a) has, at any time during the last 10 years, had an application or a petition under any
bankruptcy laws of any jurisdiction filed against him or against a partnership of which
he was a partner at the time when he was a partner or at any time within two (2) years
from the date he ceased to be a partner;
(b) has, at any time during the last 10 years, had an application or a petition under any law
of any jurisdiction filed against an entity (not being a partnership) of which he was a
director or an equivalent person or a key executive, at the time when he was a director
or an equivalent person or a key executive of that entity or at any time within two (2)
years from the date he ceased to be a director or an equivalent person or a key
executive of that entity, for the winding up or dissolution of that entity or, where that
entity is the trustee of a business trust, that business trust, on the ground of insolvency;
(c) has any unsatisfied judgment against him;
(d) has ever been convicted of any offence, in Singapore or elsewhere, involving fraud or
dishonesty which is punishable with imprisonment, or has been the subject of any
criminal proceedings (including any pending criminal proceedings of which he is aware)
for such purpose;
(e) has ever been convicted of any offence, in Singapore or elsewhere, involving a breach
of any law or regulatory requirement that relates to the securities or futures industry in
Singapore or elsewhere, or has been the subject of any criminal proceedings (including
any pending criminal proceedings of which he is aware) for such breach;
(f) has, at any time during the last 10 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, nor has he been the
subject of any civil proceedings (including any pending civil proceedings of which he is
aware) involving an allegation of fraud, misrepresentation or dishonesty on his part;
(g) has ever been convicted in Singapore or elsewhere of any offence in connection with
the formation or management of any entity or business trust;
(h) has ever been disqualified from acting as a director or an equivalent person of any entity
(including the trustee of a business trust), or from taking part directly or indirectly in the
management of any entity or business trust;
(i) has 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;
GENERAL AND STATUTORY INFORMATION
163
(j) has ever, to his knowledge, been concerned with the management or conduct, in
Singapore or elsewhere, of the affairs of:
(i) any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere;
(ii) any entity (not being a corporation) which has been investigated for a breach of
any law or regulatory requirement governing such entities in Singapore or
elsewhere;
(iii) any business trust which has been investigated for a breach of any law or
regulatory requirement governing business trusts in Singapore or elsewhere; or
(iv) any entity or business trust which has been investigated for a breach of any law
or regulatory requirement that relates to the securities or futures industry in
Singapore or elsewhere,
in connection with any matter occurring or arising during the period when he was so
concerned with the entity or business trust; or
(k) has been the subject of any current or past investigation or disciplinary proceedings, or
has been reprimanded or issued any warning, by the Authority or any other regulatory
authority, exchange, professional body or governmental agency, whether in Singapore
or elsewhere.
Disclosure
In 1996, our Independent Director, Jeffrey Ong, was indicted by the Singapore Armed Forces
while serving national service in Singapore. As far as he is aware, the indictment was made
pursuant to section 19 of the Singapore Armed Forces Act (Chapter 295) of Singapore, for
insubordinate behaviour. As a consequence of this indictment, he was imposed detention for
a period of 10 days. No further action was taken against him for this matter and he completed
his national service in January 1997.
2. There is no shareholding qualification for Directors under the Articles of Association of our
Company.
3. 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.
SHARE CAPITAL
4. As at the Latest Practicable Date, there is only one (1) class of shares in the capital of our
Company. There is no founder, management or deferred shares. Our existing Shares do not
carry voting rights different from the Placement Shares. The Substantial Shareholders of our
Company are not entitled to any different voting rights from the other Shareholders. The
rights and privileges attached to our Shares are stated in our Articles of Association.
GENERAL AND STATUTORY INFORMATION
164
5. Save as disclosed below and in the sections entitled “Share Capital”, “Restructuring
Exercise” and “General Information on Our Group – Our History” of this Offer Document,
there were no changes in the issued and paid-up share capital of our Company and our
subsidiaries within the last three (3) years preceding the Latest Practicable Date.
Date of issue
Number of
Shares Issued
Consideration
per share
Purpose of
Issue
Resultant Issued
Share Capital
Our Company
2 April 2015 1 S$1.00 Incorporation S$1.00
20 July 2015 1,000,000 S$2.93 Restructuring S$2,930,001.00
5 November 2015 1,000,000 S$6.37 Restructuring S$9,300,001.00
Eindec Holdings
13 May 2015 1 S$1.00 Incorporation S$1.00
5 November 2015 1,000,000 S$9.30 Restructuring S$9,300,001.00
Eindec
Singapore
19 May 2015 1 S$1.00 Incorporation S$1.00
20 July 2015 1,000,000 S$2.93 Restructuring S$2,930,001.00
Eindec
Shenzhen
9 July 2015 20,000,000, of
which 3,000,000
is paid up
RMB1.00 Incorporation RMB20,000,000.00,
of which
RMB3,000,000.00
is paid up
6. Save as disclosed above and in the section entitled “Restructuring Exercise” of this Offer
Document, no shares in, or debentures of, our Company or any of our subsidiaries have been
issued, or are proposed to be issued, as fully or partly paid for cash or for a consideration
other than cash, during the last three (3) years preceding the date of lodgement of this Offer
Document.
7. Save as disclosed in the section entitled “Share Capital” of this Offer Document, as at the
Latest Practicable Date, no person has been, or is entitled to be, given an option to subscribe
for any shares in or debentures of our Company or any of our subsidiaries.
MEMORANDUM AND ARTICLES OF ASSOCIATION
8. Our Company (Company registration number 201508913H) is incorporated in Singapore.
The nature of our Company’s business has been stated earlier in this Offer Document. Our
objects can be found in our Memorandum of Association which is available for inspection at
our registered office in accordance with paragraph 35 in the section entitled “General and
Statutory Information – Documents Available for Inspection” of this Offer Document.
9. An extract of our Articles of Association relating to, inter alia, Directors’ powers to vote on
contracts in which they are interested, Directors’ remuneration, Directors’ borrowing powers,
Directors’ retirement, Directors’ share qualification, rights pertaining to shares, convening of
general meetings and alteration of capital are set out in Appendix E of this Offer Document.
GENERAL AND STATUTORY INFORMATION
165
The Articles of Association of our Company is available for inspection at our registered office
in accordance with paragraph 35 in the section entitled “General and Statutory Information
– Documents Available for Inspection” of this Offer Document.
MATERIAL CONTRACTS
10. 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 (2) years
preceding the date of this Offer Document and are or may be material:
(a) the Share Purchase Agreement dated 1 July 2015 and the Share Supplemental SPA
dated 15 July 2015 entered into by our Company and Xie Tong International, details of
which are set out in the section entitled “Restructuring Exercise” of this Offer Document;
(b) the Asset SPA dated 1 July 2015 and the Asset Supplemental SPA dated 15 July 2015
entered into by our Company and Xie Tong Technology, details of which are set out in
the section entitled “Restructuring Exercise” of this Offer Document;
(c) the Shared Services Agreement dated 1 July 2015 entered into between our Company
and Weiye, details of which are set out in the section entitled “Interested Person
Transactions – Present and On-going Interested Person Transactions” of this Offer
Document;
(d) the Deed of Undertaking dated 22 September 2015 entered into between our Company
and Weiye, details of which are set out in the section entitled “Interested Person
Transactions – Present and On-going Interested Person Transactions” of this Offer
Document;
(e) the sale and purchase agreement in relation to the sale and purchase of the land owned
by Kyodo-Allied (Thailand) and the office building located thereon, details of which are
set out in the section entitled “Restructuring Exercise” of this Offer Document;
(f) the Service Agreement dated 9 December 2015 entered into between our Company and
Paul Chia, details of which are set out in the section entitled “Directors, Management
and Staff – Service Agreement” of this Offer Document;
(g) the Management Agreement dated 6 January 2016 entered into between our Company
and UOBKH as the Issue Manager and Sponsor, details of which are set out in the
section entitled “General and Statutory Information – Management, Sponsorship and
Placement Arrangements” of this Offer Document; and
(h) the Placement Agreement dated 6 January 2016 entered into between our Company
and UOBKH as the Placement Agent, details of which are set out in the section entitled
“General and Statutory Information – Management, Sponsorship and Placement
Arrangements” of this Offer Document.
MANAGEMENT, SPONSORSHIP AND PLACEMENT ARRANGEMENTS
11. Pursuant to the Management Agreement, our Company has appointed UOBKH as the Issue
Manager and Sponsor to manage and sponsor the Listing. UOBKH will receive a
management fee from our Company for such services rendered.
GENERAL AND STATUTORY INFORMATION
166
12. Subject to the consent of the SGX-ST being obtained, the Management Agreement may be
terminated by UOBKH at any time before the close of the Application List on the occurrence
of certain events including the following:
(a) UOBKH becomes aware of any breach by our Company and/or its agent(s) of any of the
warranties, representations, covenants or undertakings given by our Company to
UOBKH in the Management Agreement;
(b) there shall have been, since the date of the Management Agreement, any change or
prospective change in or any introduction or prospective introduction of any legislation,
regulation, policy, directive, guideline, rule or byelaw by any relevant government or
regulatory body, whether or not having the force of law, or any other occurrence of
similar nature that would materially change the scope of work, responsibility or liability
required of UOBKH; or
(c) there is a conflict of interest for UOBKH, or any dispute, conflict or disagreement with
our Company or our Company wilfully fails to comply with any advice from or
recommendation of UOBKH.
13. Pursuant to the Placement Agreement, our Company has appointed UOBKH as the
Placement Agent to subscribe for and/or procure subscribers for the Placement Shares for
a placement commission of 3.25% of the aggregate Placement Price for the total number of
Placement Shares successfully subscribed, to be paid by our Company. Subject to any
applicable laws and regulations, UOBKH shall be at liberty at its own expense to appoint one
or more sub-placement agents under the Placement Agreement upon such terms and
conditions as UOBKH may deem fit.
14. Subscribers of the Placement Shares may be required to pay brokerage or selling
commission of up to 1.0% of the Placement Price for each Placement Share (and the
prevailing GST thereon, if applicable) to the Placement Agent or any sub-placement agent(s)
that may be appointed by the Placement Agent.
15. Save as aforesaid and/or disclosed in this Offer Document, no commission, discount or
brokerage has been paid or other special terms have been granted within the two (2) years
preceding the Latest Practicable Date or is payable to any Director, promoter, expert,
proposed Director or any other person for subscribing and/or purchasing or procuring or
agreeing to procure subscriptions and/or purchases for any shares in, or debentures of, our
Company or our subsidiaries.
16. Other than pursuant to the Placement Agreement, there are no contracts, agreements or
understandings between our Company and any other person or entity that would give rise to
any claim for brokerage commission or other payments in connection with the subscription
of the Placement Shares.
17. Subject to the consent of the SGX-ST being obtained, the Placement Agreement may be
terminated by UOBKH at any time before the close of the Application List on the occurrence
of certain events including the following:
(a) UOBKH becomes aware of any material breach by our Company and/or its agents(s) of
any warranties, representations, covenants or undertakings given by our Company to
UOBKH in the Placement Agreement; or
GENERAL AND STATUTORY INFORMATION
167
(b) there shall have been, since the date of the Placement Agreement, any change or
prospective change in or any introduction or prospective introduction of any legislation,
regulation, policy, directive, guideline, rule or byelaw by any relevant government or
regulatory body, whether or not having the force of law, or any other occurrence of
similar nature, which event or events shall in the reasonable opinion of UOBKH (i) result
or be likely to result in a material adverse fluctuation or adverse conditions in the stock
market in Singapore or overseas or (ii) be likely to materially prejudice the success of
the offer or subscription of the Placement Shares (whether in the primary market or in
respect of dealings in the secondary market) or (iii) make it impracticable, inadvisable,
inexpedient or uncommercial to proceed with any of the transactions contemplated in
the Placement Agreement or (iv) be likely to have a material adverse effect on the
business, trading position, operations or prospects of our Company or of our Group as
a whole or (v) be such that no reasonable placement agent would have entered into the
Placement Agreement or (vi) make it uncommercial or otherwise contrary to or outside
the usual commercial practices of placement agents in Singapore for UOBKH to
observe or perform or be obliged to observe or perform the terms of the Placement
Agreement.
18. The Placement Agreement and the Management Agreement are each conditional upon the
other not being terminated or rescinded pursuant to the provisions of the Placement
Agreement or Management Agreement (as the case may be), and may be terminated on the
occurrence of certain events, including those specified above. In the event that the
Management Agreement or the Placement Agreement is terminated, our Company reserves
the right, at the absolute discretion of our Directors, to cancel the Placement.
19. In the reasonable opinion of our Directors, save as disclosed in paragraphs 11 to 18 of this
section of this Offer Document and in the section entitled “Plan of Distribution” of this Offer
Document, UOBKH does not have a material relationship with our Group.
LITIGATION
20. As at the Latest Practicable Date, none of our Company or any of our subsidiaries is engaged
in any legal or arbitration proceedings as plaintiff or defendant including those which are
pending or known to be contemplated which may have or have had in the last 12 months
before the date of lodgement of this Offer Document, a material effect on the financial
position or the profitability of our Company or any of our subsidiaries.
MISCELLANEOUS
21. The corporations which by virtue of Section 6 of the Companies Act are deemed to be related
to our Company are set out in the section entitled “Group Structure” of this Offer Document.
22. There has been no previous issue of Shares by our Company or offer for sale of our Shares
to the public within the two (2) years preceding the date of this Offer Document.
23. There has not been any public take-over by a third party in respect of our Company’s shares
or by our Company in respect of shares of another corporation or units of a business trust
which has occurred between 1 January 2015 and the Latest Practicable Date.
24. Application monies received by our Company in respect of successful applications (including
successful applications which are subsequently rejected) will be placed in a separate
non-interest bearing account with the Receiving Bank. In the ordinary course of business, the
Receiving Bank will deploy these monies in the inter-bank money market. All profits derived
GENERAL AND STATUTORY INFORMATION
168
from the deployment of such monies will accrue to the Receiving Bank. Any refund of all or
part of the application monies to unsuccessful or partially successful applicants will be made
without any interest or any share of revenue or any other benefit arising therefrom.
25. Save as disclosed in this Offer Document, 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.
26. Save as disclosed in this Offer Document, the financial condition and operations of our Group
are not likely to be affected by any of the following:
(a) known trends or demands, commitments, events or uncertainties that will result in or are
reasonably likely to result in our Group’s liquidity increasing or decreasing in any
material way;
(b) material commitments for capital expenditure;
(c) unusual or infrequent events or transactions or any significant economic changes that
may materially affect the amount of reported income from operations; and
(d) the business and financial prospects and any significant recent trends in manufacturing,
sales and inventory, and in the costs and selling prices of products and services and
known trends or uncertainties that have had or that we reasonably expect will have a
material favourable or unfavourable impact on revenues, profitability, liquidity, capital
resources or operating income or that would cause financial information disclosed to be
not necessarily indicative of the future operating results or financial condition of our
Company.
27. Save as disclosed in this Offer Document, our Directors are not aware of any event which has
occurred since the end of 1H2015 to the Latest Practicable Date which may have a material
effect on the financial position and results of our Group or the financial information provided
in this Offer Document.
28. Details, including the name, address and professional qualifications including membership in
a professional body of the auditors of our Company for the Period Under Review are as
follows:
Name, professional
qualification and address Professional Body
Partner-in-charge /
Professional qualification
KPMG LLP
16 Raffles Quay #22-00
Hong Leong Building
Singapore 048581
Institute of Singapore
Chartered Accountants
Tay Puay Cheng / A
practising member of the
Institute of Singapore
Chartered Accountants
We currently have no intention of changing our auditors after the admission to, and listing of,
our Company on Catalist.
GENERAL AND STATUTORY INFORMATION
169
CONSENTS
29. The Auditors and Reporting Accountants, KPMG LLP, have given and have not withdrawn
their written consent to the issue of this Offer Document with the inclusion herein of the
“Audited Combined Financial Statements of Eindec Corporation Limited and its Subsidiaries
for the Financial Years Ended 31 December 2012, 2013 and 2014” as set out in Appendix A
and the “Unaudited Interim Combined Financial Statements of Eindec Corporation Limited
and its Subsidiaries for the Six-Month Period Ended 30 June 2015” as set out in Appendix
B in the form and context in which they are included and references to their name in the form
and context in which it appears in this Offer Document and to act in such capacity in relation
to this Offer Document.
30. The Issue Manager, Sponsor and Placement Agent, UOBKH, has given and has not
withdrawn its written consent to the issue of this Offer Document with the inclusion herein of
its names and references thereto in the form and context in which it appears in this Offer
Document and to act in such capacity in relation to this Offer Document.
31. Each of the Solicitors to the Placement and Legal Adviser to our Company on Singapore law,
Bird & Bird ATMD LLP, the Legal Adviser to our Company on Malaysian Law, Tay & Partners,
the Legal Adviser to our Company on PRC law, Grandall Law Firm (Shanghai) and the
Solicitors to the Issue Manager, Sponsor and Placement Agent, Colin Ng & Partners LLP, has
given and has not withdrawn its written consent to the issue of this Offer Document with the
inclusion herein of its name and references thereto in the form and context in which it
appears in this Offer Document and to act in such capacity in relation to this Offer Document.
32. The Independent Market Researcher, Converging Knowledge Private Limited, has given and
has not withdrawn its written consent to the issue of this Offer Document with the inclusion
herein of the information and analysis found in the sections entitled “Singapore Clean Room
Equipment Industry Overview” and “PRC Consumer Air Purifier Industry Overview” of this
Offer Document which had been extracted from the Singapore Clean Room Equipment
Industry Report and the PRC Consumer Air Purifier Industry Report, respectively, in the form
and context in which they appear in this Offer Document, the inclusion herein of the
Singapore Clean Room Equipment Industry Report as set out in Appendix I and the PRC
Consumer Air Purifier Industry Report as set out in Appendix J of this Offer Document and
references to its name in the form and context in which it appears in this Offer Document and
to act in such capacity in relation to this Offer Document.
33. Each of the Solicitors to the Placement and Legal Adviser to our Company on Singapore Law,
the Legal Adviser to our Company on Malaysian law, the Legal Adviser to our Company on
PRC Law, the Solicitors to the Issue Manager, Sponsor and Placement Agent, the Share
Registrar, the Principal Banker and the Receiving Banker does not make, or purport to make,
any statement in this Offer Document or any statement upon which a statement in this Offer
Document is based and, to the maximum extent permitted by law, expressly disclaims and
takes no responsibility for any liability to any persons which is based on, or arises out of, any
statements, information or opinions in, or omission from, this Offer Document.
GENERAL AND STATUTORY INFORMATION
170
RESPONSIBILITY STATEMENT BY OUR DIRECTORS
34. This Offer Document has been seen and approved by our Directors and they collectively and
individually accept full responsibility for the accuracy of the information given in this Offer
Document and confirm after making all reasonable enquiries, that to the best of their
knowledge and belief, this Offer Document constitutes full and true disclosure of all material
facts about the Listing, the Placement and our Group, and our Directors are not aware of any
facts the omission of which would make any statement in this Offer Document misleading.
Where information in this Offer Document has been extracted from published or otherwise
publicly available sources or obtained from a named source, the sole responsibility of our
Directors has been to ensure that such information has been accurately and correctly
extracted from those sources and/or reproduced in this Offer Document in its proper form and
context.
DOCUMENTS AVAILABLE FOR INSPECTION
35. The following documents or copies thereof may be inspected at our registered office during
normal business hours for a period of six (6) months from the date of registration of this Offer
Document by the SGX-ST acting as agent on behalf of the Authority:
(a) the Memorandum and Articles of Association of our Company;
(b) the Audited Combined Financial Statements of Eindec Corporation Limited and its
Subsidiaries for the Financial Years Ended 31 December 2012, 2013 and 2014;
(c) the Unaudited Interim Combined Financial Statements of Eindec Corporation Limited
and its Subsidiaries for the Six-Month Period Ended 30 June 2015;
(d) the material contracts referred to in this Offer Document;
(e) the Singapore Clean Room Equipment Industry Report;
(f) the PRC Consumer Air Purifier Industry Report;
(g) the letters of consent referred to in this Offer Document; and
(h) the Service Agreement referred to in this Offer Document.
GENERAL AND STATUTORY INFORMATION
171
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The Board of Directors
Eindec Corporation Limited
(formerly known as Eindec Corporation Pte. Ltd.)
8 Pandan Crescent
#01-06
Singapore 128464
Dear Sirs,
Independent Auditors’ Report on the Combined Financial Statements
We have audited the accompanying combined financial statements of Eindec Corporation Limited
(the Company) and its subsidiaries (the Group), which comprise the combined statements of
financial position as at 31 December 2012, 2013 and 2014 and the combined statements of
comprehensive income, combined statements of changes in equity and combined statements of
cash flows of the Group for the years then ended, and a summary of significant accounting policies
and other explanatory notes, as set out on pages A-3 to A-44.
Management’s responsibility for the combined financial statements
Management is responsible for the preparation and fair presentation of these combined financial
statements in accordance with Singapore Financial Reporting Standards, and for such internal
control as management determines is necessary to enable the preparation of the financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these combined financial statements based on our
audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance whether the combined financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the combined
financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the combined financial statements.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-1
Opinion
In our opinion, the combined financial statements of the Group present fairly, in all material
respects, the combined financial position of the Group as at 31 December 2012, 2013 and 2014,
and the combined financial performance, changes in equity and cash flows for the years then
ended, in accordance with Singapore Financial Reporting Standards.
This report has been prepared for inclusion in the Offer Document to be issued by Eindec
Corporation Limited. No audited financial statements of the Group have been prepared for any
period subsequent to 31 December 2014.
KPMG LLP
Public Accountants and
Chartered Accountants
Singapore
6 January 2016
Tay Puay Cheng
Partner-in-charge
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-2
Combined Statements of Financial Position
As at 31 December 2012, 2013 and 2014
Group
Note 2012 2013 2014
$’000 $’000 $’000
Assets
Non-current assets
Property, plant and equipment 4 6,072 5,548 5,228
Intangible assets 5 – – 196
6,072 5,548 5,424
Current assets
Inventories 6 2,992 3,195 2,672
Trade and other receivables 7 3,181 3,137 5,243
Income tax recoverable – 1 57
Cash and cash equivalents 4,765 4,605 3,095
10,938 10,938 11,067
Total assets 17,010 16,486 16,491
Equity attributable to owners of
the Company
Share capital – – –
Foreign currency translation reserve 8 (379) (520) (612)
Accumulated profits 6,522 8,254 9,620
Total equity 6,143 7,734 9,008
Liabilities
Non-current liabilities
Loans and borrowings 9 1,014 750 473
Deferred tax liabilities 10 197 242 230
1,211 992 703
Current liabilities
Loans and borrowings 9 1,801 1,036 245
Trade and other payables 11 7,819 6,661 6,368
Current tax payable 36 63 167
9,656 7,760 6,780
Total liabilities 10,867 8,752 7,483
Total equity and liabilities 17,010 16,486 16,491
The accompanying notes form an integral part of these financial statements.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-3
Combined Statements of Comprehensive Income
Years ended 31 December 2012, 2013 and 2014
Group
Note 2012 2013 2014
$’000 $’000 $’000
Revenue 12 17,895 14,375 14,270
Cost of sales (11,036) (8,802) (9,311)
Gross profit 6,859 5,573 4,959
Other operating income 13 107 90 76
Other operating expenses (3,915) (3,515) (3,348)
Results from operating activities 3,051 2,148 1,687
Finance costs 14 (206) (143) (60)
Profit before income tax 15 2,845 2,005 1,627
Income tax credit/(expense) 16 187 (273) (261)
Profit for the year 3,032 1,732 1,366
Other comprehensive loss
Items that may be reclassified to
profit or loss:
Foreign currency translation differences
from foreign operations (125) (141) (92)
Total other comprehensive loss for
the year, net of income tax (125) (141) (92)
Total comprehensive income for
the year 2,907 1,591 1,274
Basic and diluted earnings per share
(cents) 17 4.22 2.41 1.90
The accompanying notes form an integral part of these financial statements.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-4
Combined Statements of Changes in Equity
Years ended 31 December 2012, 2013 and 2014
Group
Share
capital
Foreign
currency
translation
reserve
Accumulated
profits Total
$’000 $’000 $’000 $’000
At 1 January 2012 – (254) 3,490 3,236
Total comprehensive income for
the year
Profit for the year – – 3,032 3,032
Other comprehensive loss
Foreign currency translation
differences – foreign operations – (125) – (125)
Total comprehensive (loss)/income for
the year – (125) 3,032 2,907
At 31 December 2012 – (379) 6,522 6,143
At 1 January 2013 – (379) 6,522 6,143
Total comprehensive income for
the year
Profit for the year – – 1,732 1,732
Other comprehensive loss
Foreign currency translation
differences – foreign operations – (141) – (141)
Total comprehensive (loss)/income for
the year – (141) 1,732 1,591
At 31 December 2013 – (520) 8,254 7,734
At 1 January 2014 – (520) 8,254 7,734
Total comprehensive income for
the year
Profit for the year – – 1,366 1,366
Other comprehensive loss
Foreign currency translation
differences – foreign operations – (92) – (92)
Total comprehensive (loss)/income for
the year – (92) 1,366 1,274
At 31 December 2014 – (612) 9,620 9,008
The accompanying notes form an integral part of these financial statements.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-5
Combined Statements of Cash Flows
Years ended 31 December 2012, 2013 and 2014
Group
2012 2013 2014
$’000 $’000 $’000
Cash flows from operating activities
Profit before tax 2,845 2,005 1,627
Adjustments for:
Allowance for impairment loss (reversed)/made on
trade and other receivables (76) 7 –
Depreciation of property, plant and equipment 402 372 317
Gain on disposal of property, plant and equipment – (35) (47)
Property, plant and equipment written off – 3 4
Interest expense 206 143 60
Interest income (53) (3) (3)
Effects of exchange rate changes (127) (13) 26
3,197 2,479 1,984
Changes in working capital:
– Inventories 625 (252) 493
– Trade and other receivables 1,464 141 (822)
– Trade and other payables (2,167) 51 279
Cash generated from operations 3,119 2,419 1,934
Income tax paid (114) (191) (218)
Net cash generated from operating activities 3,005 2,228 1,716
Cash flows from investing activities
Purchase of property, plant and equipment (65) (31) (95)
Increase in amount due from ultimate holding
company (non-trade) – (139) (1,057)
Increase in amount due from related corporation
(non-trade) – – (247)
Interest received 53 3 3
Proceeds from disposal of property, plant and
equipment – 35 47
Payment for development expenditure capitalised in
intangible assets – – (196)
Net cash used in investing activities (12) (132) (1,545)
The accompanying notes form an integral part of these financial statements.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-6
Combined Statements of Cash Flows (continued)
Years ended 31 December 2012, 2013 and 2014
Group
2012 2013 2014
$’000 $’000 $’000
Cash flows from financing activities
Repayment of finance lease obligations (68) (94) (7)
Repayment of loans and borrowings (258) (330) (1,025)
Interest paid (206) (143) (60)
Decrease in amount due to ultimate holding
company (non-trade) (1,089) (1,177) (572)
Net cash used in financing activities (1,621) (1,744) (1,664)
Net increase/(decrease) in cash and cash
equivalents 1,372 352 (1,493)
Cash and cash equivalents at 1 January 2,879 4,255 4,605
Effect of exchange rate fluctuations on cash held 4 (2) (17)
Cash and cash equivalents at 31 December 4,255 4,605 3,095
For the purpose of the combined statements of cash flows, cash and cash equivalents comprised
the following amounts as at 31 December:
Cash at bank and on hand 4,765 4,605 3,095
Less: bank overdrafts (510) – –
Total cash and cash equivalents in statements of
cash flows 4,255 4,605 3,095
The accompanying notes form an integral part of these financial statements.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-7
Notes to the Combined Financial Statements
These notes form an integral part of the combined financial statements.
1 Background
(a) Introduction
These combined financial statements of Eindec Corporation Limited (formerly known as
Eindec Corporation Pte. Ltd.) (the “Company”) and its subsidiaries (together referred to as
the “Group” and individually as “Group entities”) have been prepared in accordance with the
basis of preparation and accounting policies set out in Notes 2 and 3 to the combined
financial statements, respectively, for inclusion in the Offer Document to be issued by the
Company for listing on the Catalist of Singapore Exchange Securities Trading Limited
(“SGX-ST”).
The combined financial statements comprise the financial statements of the Group. The
combined financial statements were authorised for issue by the directors of the Company on
6 January 2016.
(b) Incorporation and principal activities
The Company was incorporated in the Republic of Singapore on 2 April 2015 as a private
limited company. The principal activity of the Company is that of an investment holding
company. Its registered address is at 8 Pandan Crescent #01-06, Singapore 128464.
The ultimate holding company is Weiye Holdings Limited (“Weiye Holdings”), a company
incorporated in the Republic of Singapore.
The principal activities of the subsidiaries are set out in Note 1(d) to the combined financial
statements.
(c) The Restructuring Exercise
For the purpose of listing on the Catalist of SGX-ST, the Group underwent a restructuring
exercise (the “Restructuring Exercise”).
Pursuant to a share sale and purchase agreement (the “Share SPA”) dated 1 July 2015
entered into between the Company and Xie Tong International Pte. Ltd. (formerly known as
Kyodo Allied International Pte. Ltd.) (“Xie Tong International”), the Company acquired the
entire issued and paid-up share capital of Eindec Technology (Malaysia) Sdn. Bhd. (formerly
known as Kyodo-Allied (Malaysia) Sdn. Bhd.) (“Eindec Malaysia”) and Eindec (Shanghai)
Co. Ltd. (“Eindec Shanghai”), and 49% of the issued and paid up share capital of
Kyodo-Allied (Thailand) Co. Ltd. (“Kyodo-Allied (Thailand)”) (collectively, the “Sale Shares”)
for a total purchase consideration of $6,370,000 (“Purchase Consideration”) based on the
respective net asset values of the companies as at 30 June 2015.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-8
On 15 July 2015, the Company and Xie Tong International entered into a supplemental
agreement whereby it was agreed that the Purchase Consideration was to be satisfied by the
allotment and issue of 1,000,000 shares at the issue price of $6.37 per share credited as fully
paid in capital of the Company to Xie Tong International.
Pursuant to the Share SPA, the Company subsequently nominated Eindec Holdings Pte. Ltd.
(“Eindec Holdings”), a wholly-owned subsidiary incorporated on 19 May 2015, to hold the
Sale Shares. The Share SPA was completed on 5 November 2015.
On 1 July 2015, the Company and Xie Tong Technology Pte Ltd (formerly known as
Kyodo-Allied Technology Pte Ltd) (“Xie Tong Technology”) entered into an asset sale and
purchase agreement (the “Asset SPA”). Under the Asset SPA, the Company acquired Xie
Tong Technology’s business undertakings, comprising the design, manufacture and
distribution of clean room equipment and air distribution and ventilation products, the related
intellectual property rights and licences, and the related assets and liabilities (collectively,
the “Xie Tong Technology Business”), save for a term loan from Bank of China Limited,
Singapore Branch, and all tax obligations of Xie Tong Technology, for a total purchase
consideration of $2,930,000.
On 15 July 2015, the Company and Xie Tong Technology entered into a supplemental
agreement (“Asset Supplemental SPA”) whereby it was agreed that all tax obligations of Xie
Tong Technology were to be assumed by the Company, effective as of 15 July 2015.
Pursuant to the Asset SPA and the Asset Supplement SPA, the purchase consideration of
$2,930,000 was agreed between the parties at the net asset value of the Xie Tong
Technology business (including the tax obligations of Xie Tong Technology) as at 30 June
2015 and was to be satisfied by the allotment and issue of 1,000,000 shares at the issue
price of $2.93 per share credited as fully paid in the capital of the Company to Xie Tong
Technology.
According to the Asset SPA and Asset Supplemental SPA, the Company nominated Eindec
Singapore Pte. Ltd. (“Eindec Singapore”), a wholly-owned subsidiary of Eindec Holdings, to
take-over the Xie Tong Business and to be responsible for the satisfaction of all the liabilities
of Xie Tong Technology existing at the date of completion of the Asset SPA, being 1 July
2015.
On 9 July 2015, Eindec Holdings incorporated a wholly-owned subsidiary, Eindec
(Shenzhen) Environmental Technology Co., Ltd. (“Eindec Shenzhen”), in Shenzhen,
People’s Republic of China. The registered capital of Eindec Shenzhen was RMB20 million.
On 3 September 2015, the shareholders of Kyodo-Allied (Thailand) resolved to approve the
dissolution and liquidation of Kyodo-Allied (Thailand) and the appointment of its liquidators
to assist in the liquidation process. On the same date, the resolution was registered with the
Ministry of Commerce of Thailand. On 2 November 2015, Kyodo-Allied (Thailand) entered
into an agreement for the sale and purchase of the land owned by Kyodo-Allied (Thailand)
and the office building located thereon for a purchase consideration of THB13.0 million.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-9
(d) Subsidiaries
The combined financial statements of the Group have been prepared to reflect the operations
of the Company and the subsidiaries as a single economic enterprise and consist of the
financial statements of those companies under common control during the financial year
ended 31 December 2012, 2013 and 2014.
The significant subsidiaries of the Group are as follows:
Name of subsidiaries
of the Group Principal activities
Country of
incorporation
and place of
business
Effective interest
held by the Group
2012 2013 2014
% % %
Eindec Holdings Investment holding
company
Singapore – – –
Held through Eindec Holdings
Eindec Singapore Manufacturers and traders
in air-conditioning and
clean room equipment
Singapore – – –
Eindec Malaysia+ Manufacturers and traders
in air-conditioning and
clean room equipment
Malaysia 100 100 100
+ Audited by a member firm of KPMG International
2 Basis of preparation
For the purposes of the combined financial statements, the entities of the Group consist of
companies under common control during the financial years ended 31 December 2012, 2013
and 2014 (the “relevant period”), and continue to be under common control after 31
December 2014.
Entities under common control are entities which are ultimately controlled by the same
parties and that control is not transitory. Control exists when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. The financial statements of common
controlled entities are included in the combined financial statements from the date that
control commences until the date that control ceases.
The combined financial statements of the Group for the relevant period were prepared in a
manner similar to the “pooling-of-interest” method, as if the entities within the Group were
operating as a single economic enterprise from the beginning of the earliest comparative
period covered by the relevant period within the Group. Such manner of presentation reflects
the economic substance of the combining companies, which were under common control
throughout the relevant period.
The identifiable assets and liabilities of all common controlled entities are accounted for at
their historical costs. The accounting policies of common controlled entities have been
changed where necessary to align them with the policies adopted by the Group.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-10
These combined financial statements of the Group are the combination or aggregation of all
the financial statements of the entities of the Group and have been prepared based on:
– the separate audited statutory financial statements of Xie Tong Technology for the
financial years ended 31 December 2012, 2013 and 2014 prepared in accordance with
Singapore Financial Reporting Standards (“FRS”). The audited statutory financial
statements of Xie Tong Technology was audited by KPMG LLP Singapore, a firm of
Chartered Accountants registered with the Accounting and Corporate Regulatory
Authority, Singapore, in accordance with Singapore Standards on Auditing. These
audited statutory financial statements were not subject to any audit qualifications,
modifications or disclaimers;
– the separate audited financial statements of Eindec Malaysia prepared in accordance
with FRS for the financial years ended 31 December 2012, 2013 and 2014. These
financial statements were audited by another member firm of KPMG International, for
the purpose of the consolidated financial statements of Weiye Holdings; and
– the separate unaudited financial statements of Eindec Shanghai and Kyodo-Allied
(Thailand) for the financial years ended 31 December 2012, 2013 and 2014. Eindec
Shanghai and Kyodo-Allied (Thailand) are not significant subsidiaries of the Group.
All material intra-group transactions and balances have been eliminated on combination.
(a) Statement of compliance
The combined financial statements are prepared in accordance with FRS.
(b) Basis of measurement
The combined financial statements have been prepared on the historical cost basis except
as otherwise described below.
(c) Functional and presentation currency
The financial statements of the Group entities are measured in the currency of the primary
environment in which the entity operates. The combined financial statements are presented
in Singapore dollars. All financial information presented in Singapore dollars has been
rounded to the nearest thousand, unless otherwise stated.
(d) Use of estimates and judgements
The preparation of the combined financial statements in conformity with FRSs requires
management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimates are revised and in
any future periods affected.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-11
Information about critical judgements in applying accounting policies that have the most
significant effect on the amounts recognised in the combined financial statements, and about
assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment within the next financial year is included in note 23.
3 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods
presented in these combined financial statements, and has been applied consistently by the
Group entities.
3.1 Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is
exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. The financial statements of
subsidiaries are included in the combined financial statements from the date that control
commences until the date that control ceases.
The accounting policies of subsidiaries have been changed when necessary to align them
with the policies adopted by the Group.
3.2 Acquisition from entities under common control
Business combinations arising from transfer of interests in entities that are under the control
of the shareholder that controls the Group are accounted for as if the acquisition had
occurred at the beginning of the earliest comparative year presented or, if later, at the date
that common control was established; for this purpose comparatives are restated. The assets
and liabilities acquired are recognised at the carrying amounts recognised previously in the
Group controlling shareholder’s combined financial statements. The components of equity of
the acquired entities are added to the same components within Group equity and any gain
or loss arising is recognised directly in equity.
Transactions eliminated in combination
Intra-group balances and transactions, and any unrealised income and expenses arising
from intra-group transactions, are eliminated in preparing the combined financial statements.
3.3 Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of
the Group entities at the exchange rates at the dates of the transactions. Monetary assets
and liabilities denominated in foreign currencies at the reporting date are translated to the
functional currency at the exchange rate at the reporting date. The foreign currency gain or
loss on monetary items is the difference between the amortised cost in the functional
currency at the beginning of the year, adjusted for effective interest and payments during the
year, and the amortised cost in foreign currency translated at the exchange rate at the end
of the reporting year.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-12
Non-monetary assets and liabilities denominated in foreign currencies that are measured at
fair value are translated to the functional currency at the exchange rate at the date on which
the fair value was determined. Non-monetary items in a foreign currency that are measured
in terms of historical cost are translated using the exchange rate at the date of the
transaction.
Foreign currency differences arising on translation are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated to Singapore dollars at
exchange rates at the end of the reporting period. The income and expenses of foreign
operations are translated to Singapore dollars at exchange rates prevailing at the dates of
the transactions.
Foreign currency differences are recognised in other comprehensive income, and presented
in the foreign currency translation reserve in equity. When a foreign operation is disposed of
such that control, significant influence or joint control is lost, the cumulative amount in the
foreign currency translation reserve related to that foreign operation is reclassified to profit
or loss as part of the gain or loss on disposal.
3.4 Financial instruments
Non-derivative financial assets
The Group initially recognises loans and receivables on the date that they are originated. All
other financial assets are recognised initially on the trade date at which the Group becomes
a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from
the asset expire, or it transfers the rights to receive the contractual cash flows on the
financial asset in a transaction in which substantially all the risks and rewards of ownership
of the financial asset are transferred, or it neither transfers nor retains substantially all of the
risks and rewards of ownership and does not retain control over the transferred asset. Any
interest in transferred financial assets that is created or retained by the Group is recognised
as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Group has a legal right to offset the amounts and
intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
The Group’s non-derivative financial assets comprise loans and receivables.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not
quoted in an active market. Such assets are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, loans and receivables are
measured at amortised cost using the effective interest method, less any impairment losses.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-13
Loans and receivables comprise trade and other receivables, excluding prepayments, and
cash and cash equivalents.
Cash and cash equivalents comprise cash balances.
Non-derivative financial liabilities
All other financial liabilities are recognised initially on the trade date at which the Group
becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged,
cancelled or when they expire.
The Group’s non-derivative financial liabilities comprise trade and other payables, and loans
and borrowings.
Such financial liabilities are recognised initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, these financial liabilities are measured at
amortised cost using the effective interest method.
Financial assets and liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Group has a legal right to offset the amounts and
intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
3.5 Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation
and accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost
of self-constructed assets includes the cost of materials and direct labour, any other costs
directly attributable to bringing the assets to a working condition for their intended use, the
cost of dismantling and removing the items and restoring the site on which they are located
and capitalised borrowing costs.
When parts of an item of property, plant and equipment have different useful lives, they are
accounted for as a separate item (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment (calculated as the
difference between the net proceeds from disposal and the carrying amount of the item) is
recognised in profit or loss.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-14
Subsequent costs
The cost of replacing component of an item of property, plant and equipment is recognised
in the carrying amount of the item if it is probable that the future economic benefits embodied
within the component will flow to the Group and its cost can be measured reliably. The
carrying amount of the replaced component is derecognised. The costs of the day-to-day
servicing of property, plant and equipment are recognised in profit or loss as incurred.
Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components
of individual assets are assessed and if a component has a useful life that is different from
the remainder of that asset, that component is depreciated separately.
Depreciation of other assets is recognised in profit or loss on a straight-line basis over the
estimated useful lives of each component of an item of property, plant and equipment.
Leased assets are depreciated over the shorter of the lease term and their useful lives unless
it is reasonably certain that the Group will obtain ownership by the end of the lease term.
The estimated useful lives for the current and comparative years are as follows:
• Freehold building 50 years
• Plant and machinery 5 to 12 years
• Factory equipment 5 to 20 years
• Building and factory improvements 5 to 20 years
• Office equipment and computers 3 to 10 years
• Furniture and fittings 3 to 10 years
• Motor vehicles 5 years
Depreciation methods, useful lives and residual values are reviewed at the end of each
reporting period and adjusted as appropriate.
3.6 Intangible assets
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or
technical knowledge and understanding, is recognised in profit or loss as incurred.
Development activities involve a plan or design for the production of new or substantially
improved products and processes. Development expenditure is capitalised only if
development costs can be measured reliably, the product or process is technically and
commercially feasible, future economic benefits are probable, and the Group intends to and
has sufficient resources to complete development and to use or sell the asset. The
expenditure capitalised includes the cost of materials, direct labour, overhead costs that are
directly attributable to preparing the asset for its intended use, and capitalised borrowing
costs. Other development expenditure is recognised in profit or loss as incurred.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-15
Capitalised development expenditure is measured at cost less accumulated amortisation and
accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure, including expenditure
on internally generated goodwill and brands, is recognised in profit or loss as incurred.
Amortisation
Amortisation is calculated based on the cost of the asset less its residual value.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful
lives of intangible assets, from the date that they are available for use. The estimated useful
lives for the current year for capitalised development costs are 5 – 7 years.
Amortisation methods, useful lives and residual values are reviewed at the end of each
reporting period and adjusted if appropriate.
3.7 Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of
ownership are classified as finance leases. Upon initial recognition, the leased asset is
measured at an amount equal to the lower of its fair value and the present value of the
minimum lease payments. Subsequent to initial recognition, the asset is accounted for in
accordance with the accounting policy applicable to that asset.
Other leases are operating leases and are not recognised in the Group’s statement of
financial position.
3.8 Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of
inventories is calculated on the first-in first-out principle, and includes all costs incurred in
acquiring the inventories, production or conversion costs and other costs incurred in bringing
them to their present location and condition. In the case of manufactured inventories and
work in progress, cost includes an appropriate share of production overheads based on
normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and estimated costs necessary to make the sale.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-16
3.9 Impairment
Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at the end of each
reporting period to determine whether there is any objective evidence that it is impaired. A
financial asset is impaired if objective evidence indicates that a loss event has occurred after
the initial recognition of the asset, and that the loss event has a negative effect on the
estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets are impaired can include default or delinquency by
a debtor, restructuring of an amount due to the Group on terms that the Group would not
consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse
changes in the payment status of borrowers or issuers, economic conditions that correlate
with defaults or the disappearance of an active market for a security.
Loans and receivables
The Group considers evidence of impairment for loans and receivables at both a specific
asset and collective level. All individually significant loans and receivables are assessed for
specific impairment. All individually significant loans and receivables found not to be
specifically impaired are then collectively assessed for any impairment that has been
incurred but not yet identified. Loans and receivables that are not individually significant are
collectively assessed for impairment by grouping together receivables with similar risk
characteristics.
In assessing collective impairment, the Group uses historical trends of the probability of
default, timing of recoveries and the amount of loss incurred, adjusted for management’s
judgement as to whether current economic and credit conditions are such that the actual
losses are likely to be greater or less than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated
as the difference between its carrying amount and the present value of the estimated future
cash flows discounted at the asset’s original effective interest rate. Losses are recognised in
profit or loss and reflected in an allowance account against loans and receivables. Interest
on the impaired asset continues to be recognised through the unwinding of the discount.
When the Group considers that there are no realistic prospects of recovery of the asset, the
relevant amounts are written off. If the amount of impairment loss subsequently decreases
and the decrease can be related objectively to an event occurring after the impairment was
recognised, then the previously recognised impairment loss is reversed through profit or
loss.
Non-financial assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting
date to determine whether there is any indication of impairment. If any such indication exists,
the asset’s recoverable amount is estimated. For intangible assets that have indefinite useful
lives or that are not yet available for use, the recoverable amount is estimated each year at
the same time. An impairment loss is recognised if the carrying amount of an asset or its
related cash-generating unit (CGU) exceeds its estimated recoverable amount.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-17
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value
less costs to sell. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset or CGU. For the purpose of
impairment testing, assets that cannot be tested individually are grouped together into the
smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or CGUs. Subject to an operating segment
ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has
been allocated are aggregated so that the level at which impairment testing is performed
reflects the lowest level at which goodwill is monitored for internal reporting purposes.
The Group’s corporate assets do not generate separate cash inflows and are utilised by more
than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent
basis and tested for impairment as part of the testing of the CGU to which the corporate asset
is allocated.
Impairment losses are recognised in profit or loss. Impairment loss recognised in respect of
CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU
(group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU
(group of CGUs) on a pro rata basis.
Impairment losses recognised in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine the recoverable amount. An
impairment loss is reversed only to the extent that the asset’s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
3.10 Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays
fixed contributions into a separate entity and will have no legal or constructive obligation to
pay further amounts. Obligations for contributions to defined contribution schemes are
recognised as an employee benefit expense in profit or loss in the periods during which
services are rendered by employees.
3.11 Revenue recognition
Sale of goods
Revenue from the sale of goods in the course of ordinary activities is measured at the fair
value of the consideration received or receivable, net of returns, trade discounts and volume
rebates. Revenue is recognised when significant risks and rewards of ownership have been
transferred to the customer, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, there is no continuing management
involvement with the goods, and the amount of revenue can be measured reliably. If it is
probable that discounts will be granted and the amount can be measured reliably, then the
discount is recognised as a reduction of revenue as the sales are recognised.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-18
The timing of the transfer of risks and rewards varies depending on the individual terms of
the sales agreement. The Group assesses its revenue arrangements to determine if it is
acting as principal or agent.
Revenue from sale of goods is recognised upon the transfer of significant risk and rewards
of ownership of the goods to the customers, usually on delivery of goods. Revenue is not
recognised to the extent where there are significant uncertainties regarding recovery of the
consideration due, associated costs or the possible return of goods.
3.12 Rental income
Rental income receivable under operating leases is recognised in profit or loss on a
straight-line basis over the term of the lease. Lease incentives granted are recognised as an
integral part of the total rental income to be received. Contingent rentals are recognised as
income in the accounting period in which they are earned.
3.13 Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line
basis over the term of the lease. Lease incentives received are recognised as an integral part
of the total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance
expense and the reduction of the outstanding liability. The finance expense is allocated to
each period during the lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease payments over
the remaining term of the lease when the lease adjustment is confirmed.
3.14 Finance income and costs
Interest income is recognised as it accrues in profit or loss, using the effective interest
method.
All borrowing costs are recognised in profit or loss using the effective interest method, except
to the extent that they are capitalised as being directly attributable to the acquisition,
construction or production of a qualifying asset which necessarily takes a substantial period
of time to be prepared for its intended use or sale.
3.15 Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are
recognised in profit or loss except to the extent that they relate to a business combination,
or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the
year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-19
Deferred tax is recognised in respect of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for the following temporary differences:
• the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss;
• differences relating to investments in subsidiaries to the extent that it is probable that
they will not reverse in the foreseeable future; and
• differences arising on the initial recognition of goodwill.
The measurement of deferred taxes reflects the tax consequences that would follow the
manner in which the Group expects, at the end of the reporting period, to recover or settle
the carrying amount of its assets and liabilities. Deferred tax is measured at the tax rates that
are expected to be applied to temporary differences when they reverse, based on the laws
that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset
current tax liabilities and assets and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and liabilities will be
realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credit and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against
which they can be utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
In determining the amount of current and deferred tax, the Group takes into account the
impact of uncertain tax positions and whether additional taxes and interest may be due. The
Group believes that its accruals for tax liabilities are adequate for all open tax years based
on its assessment of many factors, including interpretations of tax law and prior experience.
This assessment relies on estimates and assumptions and may involve a series of judgement
about future events. New information may become available that causes the Group to
change its judgement regarding the adequacy of existing tax liabilities; such changes to tax
liabilities will impact tax expense in the period that such a determination is made.
3.16 Earnings per share
The Group presents basic and diluted earnings per share data for its ordinary shares. Basic
earnings per share is calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted-average number of ordinary shares
outstanding during the year, adjusted for own shares held. Diluted earnings per share is
determined by adjusting the profit or loss attributable to ordinary shareholders and the
weighted-average number of ordinary shares outstanding, adjusted for own shares held, for
the effects of all dilutive potential ordinary shares.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-20
3.17 Segment reporting
An operating segment is a component of the Group that engages in business activities from
which it may earn revenues and incur expenses, including revenues and expenses that relate
to transactions with any of the Group’s other components. All operating segments’ operating
results are reviewed regularly by the Group’s Chief Executive Officer (the chief operating
decision maker) to make decisions about resources to be allocated to the segment and
assess its performance, and for which discrete financial information is available.
Segment results that are reported to the Group’s Chief Executive Officer include items
directly attributable to a segment as well as those that can be allocated on a reasonable
basis. Unallocated items comprise mainly corporate assets, head office expenses, and tax
assets and liabilities.
Segment capital expenditure is the total cost incurred during the year to acquire property,
plant and equipment and intangible assets other than goodwill.
3.18 New accounting standards and interpretations not yet adopted
A number of new financial reporting standards, amendments to standards and interpretations
are effective for annual period beginning after 1 January 2014, and have not been applied in
preparing these combined financial statements. None of these are expected to have a
significant effect on the combined financial statements of the Group. The Group does not
plan to adopt these standards early.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-21
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3
Assets held under finance lease
The carrying amount of property, plant and equipment of the Group held under finance leases
as at 31 December 2012: $268,000; 31 December 2013: $232,000 and 31 December 2014:
$nil.
Security
Property, plant and equipment amounting to 2012: $5,201,000; 2013: $4,826,000 and 2014:
$4,888,000 were pledged as collaterals for the Group’s borrowings (see note 9).
5 Intangible asset
Development
costs
$’000
Cost
At 1 January 2012, 31 December 2012 and 2013, and 1 January 2014 –
Additions 196
At 31 December 2014 196
Accumulated amortisation
At 1 January 2012, 31 December 2012 and 2013, 1 January 2014 and
31 December 2014 –
Carrying amount
At 1 January 2012, 31 December 2012 and 2013, and 1 January 2014 –
At 31 December 2014 196
Intangible assets comprise development expenditure capitalised in relation to a new product
developed by the Group.
6 Inventories
2012 2013 2014
$’000 $’000 $’000
Finished goods 160 307 141
Work in progress 106 97 232
Raw materials 2,726 2,791 2,299
2,992 3,195 2,672
Raw materials, changes in finished goods and work in progress included in cost of sales of
the Group amounted to $7,960,000, $5,750,000 and $6,381,000 during the financial years
ended 31 December 2012, 2013 and 2014, respectively.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-24
7 Trade and other receivables
2012 2013 2014
$’000 $’000 $’000
Trade receivables 3,439 2,841 3,511
Allowance for impairment loss (412) (28) –
3,027 2,813 3,511
Amounts due from:
– ultimate holding company (non-trade) – 139 1,196
– related corporation (non-trade) – – 247
Deposits 20 10 87
Other receivables 81 106 114
Loans and receivables 3,128 3,068 5,155
Prepayments 53 69 88
3,181 3,137 5,243
The non-trade amounts due from ultimate holding company and related corporation are
unsecured and interest-free, and are repayable on demand. There is no allowance for
impairment loss arising from these outstanding balances.
Trade receivables of the Group are non-interest bearing and are normally settled on 30 to 60
days credit terms. They are recognised at their original invoiced amounts which represent
their fair values on initial recognition.
Impairment losses
The ageing analysis of loans and receivables at the end of each reporting year are as follows:
Gross
Impairment
loss Gross
Impairment
loss Gross
Impairment
loss
2012 2012 2013 2013 2014 2014
$’000 $’000 $’000 $’000 $’000 $’000
Not past due 1,274 – 1,122 – 3,180 –
Past due 0 – 30 days 776 – 938 – 1,378 –
Past due 31 – 60 days 445 – 413 – 302 –
Past due 61 – 90 days 81 – 63 – 103 –
Past due more than
90 days 964 (412) 560 (28) 192 –
3,540 (412) 3,096 (28) 5,155 –
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-25
The movements in the allowance for impairment loss in respect of loans and receivables
during each of the reporting years are as follows:
2012 2013 2014
$’000 $’000 $’000
At 1 January 488 412 28
Impairment loss (reversed)/made (76) 7 –
Written off – (391) (28)
At 31 December 412 28 –
Receivables that were past due but not impaired relate to a wide range of customers for
whom there has not been a significant change in the credit quality. Based on their past
experience, management believes that no additional impairment allowance is necessary and
the balances are still considered fully recoverable.
8 Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences arising from the
translation of the financial statements of foreign operations whose functional currencies are
different from that of the Company’s functional currency.
Movements in the reserves are shown in the statements of changes in equity.
9 Loans and borrowings
2012 2013 2014
$’000 $’000 $’000
Non-current liabilities
Secured bank loans 1,004 750 473
Finance lease liabilities 10 – –
1,014 750 473
Current liabilities
Secured bank loans 1,707 1,029 245
Finance lease liabilities 94 7 –
1,801 1,036 245
Total loans and borrowings 2,815 1,786 718
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-26
Terms and debt repayment schedule
Terms and conditions of outstanding loans and borrowings are as follows:
Currency
Nominal
interest
rate
Year of
maturity
Face
value
Carrying
amount
% $’000 $’000
31 December 2012
Bank overdrafts (secured) RM (0.75 –
2.00) +
BLR#
2013 510 510
Bankers’ acceptance (secured) RM 3.47 – 6.08 2013 986 986
Term loans (secured) RM 7.35 2013 211 211
Term loans (secured) RM 7.35 2017 1,004 1,004
Finance lease liabilities SGD 2.85 2014 10 10
Finance lease liabilities RM 2.55 – 3.20 2013 94 94
Total interest-bearing liabilities 2,815 2,815
31 December 2013
Bankers’ acceptance (secured) RM 3.47 – 3.50 2014 809 809
Term loans (secured) RM 7.35 2014 220 220
Term loans (secured) RM 7.35 2017 750 750
Finance lease liabilities RM 2.90 2014 7 7
Total interest-bearing liabilities 1,786 1,786
31 December 2014
Term loans (secured) RM 5.35 2015 245 245
Term loans (secured) RM 5.35 2017 473 473
Total interest-bearing liabilities 718 718
# BLR represents bank lending rate
The loans and borrowings of the Group at the respective reporting dates are secured by the
property, plant and equipment of a subsidiary (see note 4), a deed of debenture provided by
a subsidiary for RM 10 million and a corporate guarantee from the ultimate holding company.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-27
Finance lease obligations
Future minimum lease payments under finance leases together with the present value of the
net minimum lease payments are as follows:
Future
minimum
lease
payments Interest
Present
value of
payments
Future
minimum
lease
payments Interest
Present
value of
payments
2012 2012 2012 2013 2013 2013
$’000 $’000 $’000 $’000 $’000 $’000
Within one year 98 4 94 7 –* 7
After one year but
within five years 10 –* 10 – – –
108 4 104 7 –* 7
* less than $1,000
The finance lease liabilities are secured by a charge over the leased assets.
There were no finance lease liabilities as at 31 December 2014.
10 Deferred tax liabilities
Movements in temporary differences during each of the reporting years are as follows:
At
1 January
2012
Recognised
in profit
or loss
(Note 16)
At
31 December
2012
Recognised
in profit
or loss
(Note 16)
At
31 December
2013
Recognised
in profit
or loss
(Note 16)
At
31 December
2014
$’000 $’000 $’000 $’000 $’000 $’000 $’000
Property, plant
and equipment 351 (122) 229 3 232 5 237
Unutilised
reinvestment
allowance – (42) (42) 42 – – –
Others – 10 10 – 10 (17) (7)
351 (154) 197 45 242 (12) 230
Deferred tax assets have not been recognised in respect of the following item:
2012 2013 2014
$’000 $’000 $’000
Unutilised tax losses – 9 15
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-28
The tax losses are subject to agreement by the tax authorities and compliance with tax
regulations in the respective countries in which certain subsidiaries operate. The deductible
temporary differences do not expire under current tax legislation. Deferred tax assets have
not been recognised in respect of unutilised tax losses due to the uncertainty of the
availability of future taxable profits against which the Group can utilise the benefits.
11 Trade and other payables
2012 2013 2014
$’000 $’000 $’000
Trade payables 863 828 1,251
Advance receipts from customers 182 169 209
Amount due to ultimate holding company
(non-trade) 6,106 4,929 4,357
Accrued operating expenses 540 627 453
Other payables 128 108 98
7,819 6,661 6,368
The non-trade amount due to ultimate holding company is unsecured and interest-free, and
is repayable on demand.
12 Revenue
Revenue represents income from sale of goods.
13 Other income
Group
2012 2013 2014
$’000 $’000 $’000
Gain on disposal of property, plant and
equipment – 35 47
Interest income 53 3 3
Rental income – 6 2
Others 54 46 24
Total 107 90 76
14 Finance costs
Group
2012 2013 2014
$’000 $’000 $’000
Interest expenses on loans and borrowings 206 143 60
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-29
15 Profit before income tax
The following items have been included in arriving at profit before income tax:
Group
2012 2013 2014
$’000 $’000 $’000
Allowance for impairment loss (reversed)/made
on trade and other receivables (76) 7 –
Depreciation of property, plant and equipment 402 372 317
Employee benefits expense (see below) 3,731 3,553 3,461
Foreign exchange losses/(gains), net 150 26 (27)
Property, plant and equipment written off – 3 4
Operating lease expenses 80 118 122
Employee benefits expense
Salaries, bonuses and other costs 3,317 3,210 3,176
Contributions to defined contribution plans 414 343 285
3,731 3,553 3,461
16 Income tax (credit)/expense
Group
2012 2013 2014
$’000 $’000 $’000
Current tax expense
Current year 162 221 251
(Over)/Under provided in respect of prior
years (195) 7 22
(33) 228 273
Deferred tax expense
Origination and reversal of temporary
differences (27) 29 7
(Over)/Under provided in respect of prior
years (127) 16 (19)
(154) 45 (12)
Income tax (credit)/expense (187) 273 261
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-30
Group
2012 2013 2014
$’000 $’000 $’000
Reconciliation of effective tax rate
Profit before income tax 2,845 2,005 1,627
Tax using the Singapore tax rate of 2012:
(17%); 2013: (17%); 2014: (17%) 484 341 277
Effect of different tax rate in different
jurisdictions 42 76 28
Non-taxable income (191) (243) (26)
Non-deductible expenses 36 56 2
Effect of tax relief (12) (4) (19)
Deferred tax assets not recognised – 2 1
Utilisation of previously unrecognised
deferred tax assets (232) – –
(Over)/Under provided in respect of prior
years (322) 23 3
Others 8 22 (5)
(187) 273 261
17 Earnings per share
Basic and diluted earnings per share are calculated based on the following:
Group
2012 2013 2014
$’000 $’000 $’000
Profit for the year 3,032 1,732 1,366
The calculation of the basic and diluted earnings per share for each of the years ended 31
December 2012, 2013 and 2014 is based on the profit for the respective years and the
pre-placement number of shares of the Company of 71,900,000 shares.
There were no dilutive potential ordinary shares in existence for the years ended 31
December 2012, 2013 and 2014.
18 Significant related parties transactions
For the purposes of these financial statements, parties are considered to be related to the
Group if the Group has the ability, directly or indirectly, to control the party or exercise
significant influence over the party in making financial and operating decisions, or vice versa,
or where the Group and the party are subject to common control or common significant
influence. Related parties may be individuals or other entities.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-31
Key management personnel compensation
Key management personnel of the Group are those persons having the authority and
responsibility for planning, directing and controlling the activities of the Group. The Group
considered the directors of the Company and those of its subsidiaries as key management
personnel.
Key management personnel compensation comprises:
Group
2012 2013 2014
$’000 $’000 $’000
Salaries, bonuses and other costs 351 144 352
CPF and other defined contributions 21 12 18
372 156 370
Other related party transactions
Other than as disclosed elsewhere in the financial statements, there was the following
transaction carried out in the normal course of business on terms agreed with related parties:
Group
2012 2013 2014
$’000 $’000 $’000
Ultimate holding company
Shared services expense paid/payable – – 130
19 Financial risk management and financial instruments
The Group has exposure to the following risks from its use of financial instruments:
• credit risk
• liquidity risk
• market price risk
This note presents information about the Group’s exposure to each of the above risks, and
the Group’s objectives, policies and processes for measuring and managing risk.
Risk management framework
The management has overall responsibility for the establishment and oversight of the
Group’s risk management framework.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-32
Risk management is integral to the whole business of the Group. The management
continually monitors the Group’s risk management process to ensure that an appropriate
balance between risk and control is achieved. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities.
Credit risk
Credit risk is the risk of financial loss resulting from the failure of a customer or counterparty
to meet its contractual obligations, and arises principally from the Group’s customers to
whom goods are sold.
The Group has policies in place to evaluate credit risk when accepting new customers.
Where necessary, the Group establishes an allowance for impairment loss that represents its
estimate of incurred losses in respect of trade and other receivables. The main component
of this allowance is a specific loss component that relates to individually significant
exposures.
Cash and cash equivalents are placed with financial institutions which are regulated.
At 31 December 2012, 2013 and 2014, there was no concentration of credit risk. The
maximum exposure to credit risk is represented by the carrying amount of each financial
asset in the statement of financial position.
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the country and industry
sector profile of its trade receivables on an on-going basis. The credit risk concentration
profile of the Group’s trade receivables at the respective reporting dates are as follows:
2012 2013 2014
$’000 % $’000 % $’000 %
By country
Singapore 2,312 67.2 2,182 76.8 1,658 47.2
Other ASEAN countries 446 13.0 482 17.0 936 26.7
Others 681 19.8 177 6.2 917 26.1
3,439 100.0 2,841 100.0 3,511 100.0
By industry sectors
Clean room equipment 1,782 51.8 1,190 41.9 1,957 55.7
Heating, ventilation and
air-conditioning products 1,657 48.2 1,651 58.1 1,491 42.5
Others – – – – 63 1.8
3,439 100.0 2,841 100.0 3,511 100.0
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-33
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations
associated with its financial liabilities that are settled by delivering cash or another financial
asset.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Group’s
reputation.
The Group’s objective is to maintain a balance between continuity of funding and flexibility
through the use of bank loans.
Analysis of financial instruments by remaining contractual maturities
The following are the contractual maturities of financial liabilities, including estimated interest
payments and excluding the impact of netting arrangements:
Contractual cash flows
Carrying
amount
Contractual
cash flows
Within
1 year
Between
2 to 5 years
$’000 $’000 $’000 $’000
2012
Non-derivative financial
liabilities
Loans and borrowings 2,815 (3,308) (1,947) (1,361)
Trade and other payables^ 7,637 (7,637) (7,637) –
10,452 (10,945) (9,584) (1,361)
2013
Non-derivative financial
liabilities
Loans and borrowings 1,786 (2,094) (1,136) (958)
Trade and other payables^ 6,492 (6,492) (6,492) –
8,278 (8,586) (7,628) (958)
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-34
Contractual cash flows
Carrying
amount
Contractual
cash flows
Within
1 year
Between
2 to 5 years
$’000 $’000 $’000 $’000
2014
Non-derivative financial
liabilities
Loans and borrowings 718 (805) (259) (546)
Trade and other payables^ 6,159 (6,159) (6,159) –
6,877 (6,964) (6,418) (546)
^ Excludes advance receipts from customers
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest
rates and equity prices, will affect the Group’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return.
Foreign currency risk
Foreign currency risk of the Group arises from subsidiaries operating in foreign countries,
which generate revenue and incur costs denominated in foreign currencies.
The Group does not hedge its exposures to these foreign currency risks. The management
considers that a natural hedge exists between the assets and liabilities in each of its
subsidiaries.
The Group manages its transactional exposure by having a policy of matching, as far as
possible, receipts and payments in each individual currency.
Exposure to currency risk
The Group’s exposure to foreign currency risk as provided to the management of the Group
is summarised as follows:
US dollar
Japanese
Yen
Chinese
Renminbi
$’000 $’000 $’000
2012
Trade and other receivables 229 – 270
Cash and cash equivalents 528 313 342
Trade and other payables (143) (77) (197)
614 236 415
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-35
US dollar
Japanese
Yen
Chinese
Renminbi
$’000 $’000 $’000
2013
Trade and other receivables 381 – 219
Cash and cash equivalents 426 215 692
Trade and other payables – – (477)
807 215 434
2014
Trade and other receivables 412 44 866
Cash and cash equivalents 957 157 293
Trade and other payables (168) – (398)
1,201 201 761
Sensitivity analysis
A 5% strengthening of Singapore dollars against the following currencies at the reporting
date would have increased/(decreased) profit before tax by the amounts shown below. This
analysis assumes that all other variables, in particular interest rates, remain constant.
Profit
before tax
$’000
31 December 2012
US dollar (31)
Japanese Yen (12)
Chinese Renminbi (21)
31 December 2013
US dollar (40)
Japanese Yen (11)
Chinese Renminbi (22)
31 December 2014
US dollars (60)
Japanese Yen (10)
Chinese Renminbi (38)
A 5% weakening of Singapore dollar against the above currencies would have had the equal
but opposite effect to the amounts shown above, on the basis that all other variables remain
constant.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-36
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial
instruments will fluctuate because of changes in market interest rates.
The Group’s exposure to interest rate risk arises primarily from its floating rate loans and
borrowings. The Group’s policy is to obtain the most favourable interest rates available.
Exposure to interest rate risk
At the reporting date, the interest rate profile of the Group’s interest-bearing financial
instruments, as reported to the management, was as follows:
2012 2013 2014
$’000 $’000 $’000
Fixed rate instruments
Loans and borrowings 1,090 816 –
Variable rate instruments
Loans and borrowings 1,725 970 718
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial liabilities at fair value through profit
or loss. Therefore, a change in interest rates at the reporting date would not affect profit or
loss.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have
increased/(decreased) profit before tax by the amounts shown below. This analysis assumes
that all other variables remain constant.
100 bp
Increase
100 bp
Decrease
$’000 $’000
2012
Loans and borrowings (17) 17
2013
Loans and borrowings (10) 10
2014
Loans and borrowings (7) 7
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-37
Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair
values for both financial and non-financial assets and liabilities.
Fair value is defined as the amount at which the instrument or asset could be exchanged in
a current transaction between knowledgeable willing parties in an arm’s length transaction,
other than in a forced or liquidation sale. The methodologies and assumptions used in the
estimation of fair values depend on the terms and characteristics of the various assets and
liabilities.
Other financial assets and liabilities
The carrying amounts of financial assets and liabilities with a maturity of less than one year
(including trade and other receivables, cash and cash equivalents, and trade and other
payables) approximate their fair values because of the short period to maturity. All other
financial assets and liabilities are discounted to determine their fair values.
Fair value and classification of financial instruments
Loans and
receivables
Other
financial
liabilities
within the
scope of
FRS 39
Total
carrying
amount Fair value
$’000 $’000 $’000 $’000
31 December 2012
Loans and receivables 3,128 – 3,128 3,128
Cash and cash equivalents 4,765 – 4,765 4,765
7,893 – 7,893 7,893
Loan and borrowings – (2,815) (2,815) (2,815)
Trade and other payables# – (7,637) (7,637) (7,637)
– (10,452) (10,452) (10,452)
31 December 2013
Loans and receivables 3,068 – 3,068 3,068
Cash and cash equivalents 4,605 – 4,605 4,605
7,673 – 7,673 7,673
Loan and borrowings – (1,786) (1,786) (1,786)
Trade and other payables# – (6,492) (6,492) (6,492)
– (8,278) (8,278) (8,278)
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-38
Loans and
receivables
Other
financial
liabilities
within the
scope of
FRS 39
Total
carrying
amount Fair value
$’000 $’000 $’000 $’000
31 December 2014
Loans and receivables 5,155 – 5,155 5,155
Cash and cash equivalents 3,095 – 3,095 3,095
8,250 – 8,250 8,250
Loan and borrowings – (718) (718) (718)
Trade and other payables# – (6,159) (6,159) (6,159)
– (6,877) (6,877) (6,877)
# Excludes advance receipts from customers
Capital management
The Group defines capital as its share capital and reserves. The primary objective of the
Group’s capital management is to ensure that it maintains a strong capital base in order to
support its business and maximise shareholder value. The directors and the management of
the Group monitor the revenue, profit before tax and the return on capital.
The Group manages its capital structure and makes adjustment to it, in the light of changes
in economic conditions. To maintain or adjust the capital structure, the Group may adjust the
dividend payment to shareholders.
There were no changes made to the objectives, policies or processes during the financial
years ended 31 December 2012, 2013 and 2014.
The Group is not subject to externally imposed capital requirements.
20 Operating lease commitments
As at the respective reporting dates, the Group has commitments for future minimum lease
payable under non-cancellable operating lease as follows:
2012 2013 2014
$’000 $’000 $’000
Within 1 year 3 18 199
After 1 year but within 5 years – 10 452
3 28 651
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-39
21 Business and geographical segments
For management purposes, the Group is organised into business units based on the
products and services offered, and has three reportable operating segments as follows:
(a) Clean room equipment
A clean room provides an environment where the humidity, temperature and particles in
the air are precisely controlled. Clean room equipment include fan filter units, air
showers, clean booths, pass boxes, clean hand dryers and clean benches, amongst
others.
(b) Heating, ventilation and air-conditioning products
Heating, ventilation and air-conditioning products are essentially deflection grilles and
air diffusers installed to channel and regulate the airflow into the environment within the
building to ensure an even distribution of air within the confined space.
(c) Others
Others include cooling towers which is complementary to the heating, ventilation and
air-conditioning products in Singapore.
The Group’s Chief Executive Officer monitors the operating results of its business units
separately for the purpose of making decisions about resource allocation and performance
assessment. Segment performance is evaluated based on operating profit or loss which in
certain respects, as explained in the table below, is measured differently from operating profit
or loss in the combined financial statements.
Income taxes are managed on a group basis and are not allocated to operating segments.
Transfer prices between operating segments are on an arm’s length basis in a manner similar
to transactions with third parties.
There are no inter-segment sales within the Group.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-40
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A-4
1
Geographical segment
The Group’s geographical segments are based on the location of the Group’s assets. Sales
to external customers disclosed in geographical segments are based on the geographical
location of its customers.
The following table presents revenue, capital expenditure and certain assets information
regarding the Group’s geographical segments as at and for the years ended 31 December
2012, 2013 and 2014.
Singapore
Other
ASEAN
countries Others Total
$’000 $’000 $’000 $’000
31 December 2012
Revenue 10,879 5,360 1,656 17,895
Total assets 8,248 7,950 812 17,010
Capital expenditure 27 34 4 65
31 December 2013
Revenue 9,144 3,111 2,120 14,375
Total assets 7,790 7,372 1,324 16,486
Capital expenditure 16 11 4 31
31 December 2014
Revenue 8,675 3,324 2,271 14,270
Total assets 8,038 7,181 1,272 16,491
Capital expenditure 21 73 1 95
22 Subsequent events
Subsequent to the completion of the Restructuring Exercise on 5 November 2015, the issued
and paid-up share capital of the Company was increased to $9,300,001 comprising
2,000,001 shares.
Pursuant to the written resolutions passed by the shareholder of the Company on
8 December 2015 and 28 December 2015, the shareholder approved the following:
(a) the sub-division of the issued share capital of the Company comprising 2,000,001
shares into 71,900,000 shares;
(b) the allotment and issue of 35,800,000 shares (the “Placement Shares”) in connection
with the placement of shares on Catalist, which when allotted, issued and fully paid-up,
will rank pari passu in all respects with the existing issued and fully paid-up shares;
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-42
(c) the listing and quotation of all the issued and paid-up share capital of the Company,
including the Placement Shares, and transfer of or issue of new shares pursuant to the
vesting of a contingent award of shares granted under the Eindec Performance Share
Plan 2015 (the “Performance Shares”) on Catalist;
(d) the conversion of the Company into a public limited company and name change to
“Eindec Corporation Limited”;
(e) the adoption of a new set of Articles of Association; and
(f) the adoption of the Eindec Performance Share Plan 2015 and the authorisation of the
directors of the Company, pursuant to Section 161 of the Companies Act, to allot and
issue performance shares pursuant to the grant of Awards under the Eindec
Performance Share Plan 2015.
On 10 December 2015, in connection with the listing and quotation of all the issued and
paid-up share capital of the Company, the Company was converted into a public limited
company and changed its name from “Eindec Corporation Pte. Ltd.” to “Eindec Corporation
Limited”. The Company became the holding company of the Group following the completion
of the Restructuring Exercise.
23 Accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.
The Group believes the following critical accounting policies involve significant judgements
and estimates used in the preparation of the financial statements.
Depreciation of and impairment loss on property, plant and equipment
Property, plant and equipment are depreciated on a straight-line basis over their useful lives
which are estimated to be between 3 to 50 years. The Group reviews the estimated useful
lives of these assets annually in order to determine the amount of depreciation expense to
be recorded during any reporting period. The estimation of useful lives is based on
assumptions about wear and tear, ageing, asset utilisation, anticipated use of the assets,
technical standards and changes in demand as well as the Group’s historical experience with
similar assets. It is possible that future results of operations could be materially affected by
changes in these estimates brought about by changes in the factors mentioned above. A
reduction in the estimated useful lives of property, plant and equipment would increase
depreciation expense and decrease non-current assets.
The Group assesses at each reporting date whether there is objective evidence that its
property, plant and equipment are impaired. To determine whether there is objective
evidence of impairment, the Group considers factors such as general economic conditions,
development in the property market, government policies and other factors which could
affect the carrying value of these assets.
The estimates of recoverable amounts are based on either the fair value of the property, plant
and equipment determined by a firm of independent professional valuers or management, or
using comparable property valuation or the value-in-use of the assets determined by
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-43
management. The fair value is based on market value, being the estimated amount for which
a property could be exchanged on the date of the valuation between a willing buyer and a
willing seller in an arm’s length transaction after proper marketing wherein the parties had
each acted knowledgeably, prudently and without compulsion. The recoverable amounts
could change significantly as a result of changes in market conditions.
Impairment loss on trade receivables
The Group evaluates whether there is any objective evidence that trade receivables are
impaired, and determine the amount of impairment loss as a result of the inability of the
debtors to make the required payments. The Group bases the estimates on the ageing of the
trade receivable balance, credit-worthiness of the debtors and historical write-off experience.
If the financial conditions of the debtors were to deteriorate, actual write-offs would be higher
than estimated.
Income taxes
Significant judgement is required in determining the taxability of certain income and
deductibility of certain expenses during the estimation of the provision for income taxes and
deferred tax liabilities/assets.
The Group exercises significant judgement to determine that the deferred tax assets are
recognised to the extent that it is probable that future taxable profits will be available against
which temporary differences can be utilised.
Allowance for inventory obsolescence
Where necessary, allowance for inventory obsolescence would be set up for estimated
losses which may result from obsolete inventories held. The Group estimates the level of
allowance based on the prevailing market conditions and historical provisioning experience.
The required level of allowance could change significantly as a result of changes in market
conditions.
APPENDIX A – AUDITED COMBINED FINANCIAL STATEMENTS OFEINDEC CORPORATION LIMITED AND ITS SUBSIDIARIES FOR
THE FINANCIAL YEARS ENDED 31 DECEMBER 2012, 2013 AND 2014
A-44
The Board of DirectorsEindec Corporation Limited(formerly known as Eindec Corporation Pte. Ltd.)8 Pandan Crescent#01-06Singapore 128464
Dear Sirs
Review of Interim Combined Financial Statements for the Six-Month Period Ended 30 June
2015
We have reviewed the accompanying interim combined financial statements of EindecCorporation Limited (the Company) and its subsidiaries (the Group) which comprise the interimcombined statement of financial position as at 30 June 2015 and the related interim combinedstatement of comprehensive income, interim combined statement of changes in equity and interimcombined statement of cash flows of the Group for the six-month period then ended, and asummary of significant accounting policies and other explanatory notes (the Interim CombinedFinancial Statements), as set out on pages B-2 to B-29 Management is responsible for thepreparation and fair presentation of these Interim Combined Financial Statements in accordancewith Singapore Financial Reporting Standard (“FRS”) 34 Interim Financial Reporting. Ourresponsibility is to express a conclusion on these Interim Combined Financial Statements basedon our review.
Scope of review
We conducted our review in accordance with Singapore Standard on Review Engagements 2410Review of Interim Financial Information Performed by the Independent Auditor of the Entity. Areview of interim financial information consists of making inquiries, primarily of personsresponsible for financial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted in accordance withSingapore Standards on Auditing and consequently does not enable us to obtain assurance thatwe would become aware of all significant matters that might be identified in an audit. Accordingly,we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that theaccompanying Interim Combined Financial Statements do not present fairly, in all materialrespects, the financial position of the Group as at 30 June 2015, and the combined financialperformance, changes in equity and cash flows for the six-month period then ended, inaccordance with FRS 34 Interim Financial Reporting.
This report has been prepared for inclusion in the Offer Document to be issued by EindecCorporation Limited.
KPMG LLPPublic Accountants andChartered Accountants
Singapore6 January 2016
Tay Puay ChengPartner-in-charge
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-1
Interim Combined Statement of Financial Position
As at 30 June 2015
Group
Note 30/6/2015 31/12/2014
$’000 $’000
Assets
Non-current assets
Property, plant and equipment 3 5,181 5,228
Intangible assets 4 262 196
5,443 5,424
Current assets
Inventories 5 2,686 2,672
Trade and other receivables 6 7,266 5,243
Income tax recoverable 76 57
Cash and cash equivalents 2,414 3,095
12,442 11,067
Total assets 17,885 16,491
Equity attributable to owners of
the Company
Share capital 7 –* –
Foreign currency translation reserve 8 (745) (612)
Accumulated profits 9,978 9,620
Total equity 9,233 9,008
Liabilities
Non-current liabilities
Loans and borrowings 9 379 473
Deferred tax liabilities 10 230 230
609 703
Current liabilities
Loans and borrowings 9 561 245
Trade and other payables 11 7,321 6,368
Current tax payable 161 167
8,043 6,780
Total liabilities 8,652 7,483
Total equity and liabilities 17,885 16,491
* less than $1,000
The accompanying explanatory notes form an integral part of these interim combined financial statements.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-2
Interim Combined Statement of Comprehensive Income
Six-month period ended 30 June 2015
Group
Six-month
period ended
Six-month
period ended
Note 30/6/2015 30/6/2014
$’000 $’000
Revenue 12 6,600 6,618
Cost of sales (4,297) (4,090)
Gross profit 2,303 2,528
Other operating income 13 47 24
Other operating expenses (1,917) (1,710)
Results from operating activities 433 842
Finance costs 14 (18) (52)
Profit before income tax 15 415 790
Income tax expense 16 (57) (52)
Profit for the period 358 738
Other comprehensive (loss)/income
Items that may be reclassified to profit or loss:
Foreign currency translation differences from
foreign operations (133) 9
Total other comprehensive (loss)/income
for the period, net of income tax (133) 9
Total comprehensive income for the period 225 747
Basic and diluted earnings per share (cents) 17 0.50 1.03
The accompanying explanatory notes form an integral part of these interim combined financial statements.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-3
Interim Combined Statement of Changes in Equity
Six-month period ended 30 June 2015
Group Note
Share
capital
Foreign
currency
translation
reserve
Accumulated
profits Total
$’000 $’000 $’000 $’000
At 1 January 2014 – (520) 8,254 7,734
Total comprehensive income
for the period
Profit for the period – – 738 738
Other comprehensive income
Foreign currency translation
differences – foreign
operations – 9 – 9
Total comprehensive income
for
the period – 9 738 747
At 30 June 2014 – (511) 8,992 8,481
At 1 January 2015 – (612) 9,620 9,008
Total comprehensive income
for the period
Profit for the year – – 358 358
Other comprehensive loss
Foreign currency translation
differences – foreign
operations – (133) – (133)
Total comprehensive
(loss)/income for the period – (133) 358 225
Transactions with owners,
recognised directly in equity
Issue of subscriber’s share 7 –* – – –*
Total transactions with
owners –* – – –*
At 30 June 2015 –* (745) 9,978 9,233
* less than $1,000
The accompanying explanatory notes form an integral part of these interim combined financial statements.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-4
Interim Combined Statement of Cash Flows
Six-month period ended 30 June 2015 and 30 June 2014
Group
Six-month
period ended
Six-month
period ended
30/6/2015 30/6/2014
$’000 $’000
Cash flows from operating activities
Profit before tax 415 790
Adjustments for:
Depreciation of property, plant and equipment 167 172
Gain on disposal of property, plant and equipment (28) (13)
Interest expense 18 52
Effects of exchange rate changes (12) 57
560 1,058
Changes in working capital:
– Inventories (98) 258
– Trade and other receivables (944) 297
– Trade and other payables 376 (104)
Cash (used in)/generated from operations (106) 1,509
Income tax paid (98) (63)
Net cash (used in)/generated from operating activities (204) 1,446
Cash flows from investing activities
Purchase of property, plant and equipment (164) (17)
Increase in amount due from ultimate holding company
(non-trade) (763) –
Decrease in amount due from related corporation
(non-trade) 231 –
Proceeds from disposal of property, plant and equipment 31 13
Payment for development expenditure capitalised in
intangible assets (66) –
Net cash used in investing activities (731) (4)
The accompanying explanatory notes form an integral part of these interim combined financial statements.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-5
Interim Combined Statement of Cash Flows (continued)
Six-month period ended 30 June 2015 and 30 June 2014
Group
Six-month
period ended
Six-month
period ended
30/6/2015 30/6/2014
$’000 $’000
Cash flows from financing activities
Repayment of finance lease obligations (8) (7)
Repayment of loans and borrowings (98) (955)
Increase/(Decrease) in amount due to ultimate holding
company (non-trade) 592 (658)
Increase in amount due to a director (non-trade) 12 –
Interest paid (18) (52)
Payment for initial public offering related expenses (535) –
Net cash used in financing activities (55) (1,672)
Net decrease in cash and cash equivalents (990) (230)
Cash and cash equivalents at 1 January 3,095 4,605
Effect of exchange rate fluctuations on cash held 16 (17)
Cash and cash equivalents at 30 June 2,121 4,358
For the purpose of the interim combined statement of cash flows, cash and cash equivalents
comprised the following amounts as at 30 June:
Cash at bank and on hand 2,414 4,358
Less: bank overdrafts (293) –
Total cash and cash equivalents in statement of cash flows 2,121 4,358
Non-cash transaction:
During the financial period ended 30 June 2015, the Group acquired property, plant and
equipment with an aggregate cost of $239,000 (30 June 2014: $17,000), of which $75,000 (30
June 2014: $nil) was acquired under finance leases.
The accompanying explanatory notes form an integral part of these interim combined financial statements.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-6
Notes to the Interim Combined Financial Statements
These notes form an integral part of the interim combined financial statements.
1 Background
(a) Introduction
These interim combined financial statements of Eindec Corporation Limited (formerly known
as Eindec Corporation Pte. Ltd.) (the “Company”) and its subsidiaries (together referred to
as the “Group” and individually as “Group entities”) have been prepared in accordance with
the basis of preparation set out in Note 2 to the interim combined financial statements for
inclusion in the Offer Document to be issued by the Company for listing on the Catalist of
Singapore Exchange Securities Trading Limited (“SGX-ST”).
These interim combined financial statements of the Group were authorised for issue by the
directors of the Company on 6 January 2016.
(b) Incorporation and principal activities
The Company was incorporated in the Republic of Singapore on 2 April 2015 as a private
limited company. The principal activity of the Company is that of an investment holding
company. Its registered address is at 8 Pandan Crescent #01-06, Singapore 128464.
The immediate and ultimate holding company is Weiye Holdings Limited, a company
incorporated in the Republic of Singapore.
2 Basis of preparation
The interim combined financial statements of the Group is prepared in accordance with
Singapore Financial Reporting Standard (“FRS”).
The interim combined financial statements does not indicate all of the information required
for a complete set of annual financial statements and should be read in conjunction with the
audited combined financial statements for the financial years ended 31 December 2012,
2013 and 2014, which have been prepared in accordance with FRS.
The accounting policies applied by the Group in this interim combined financial statements
are the same as those applied by the Group in its combined financial statements as at and
for the financial years ended 31 December 2012, 2013 and 2014.
(a) Basis of measurement
The interim combined financial statements have been prepared on the historical cost basis
except as otherwise described below.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-7
(b) Functional and presentation currency
The financial statements of the Group’s entities are measured in the currency of the primary
environment in which the entity operates. The interim combined financial statements are
presented in Singapore dollars. All financial information presented in Singapore dollars has
been rounded to the nearest thousand, unless otherwise stated.
(c) Use of estimates and judgements
The preparation of the interim combined financial statements in conformity with FRSs
requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimates are revised and in
any future periods affected.
Information about critical judgements in applying accounting policies that have the most
significant effect on the amounts recognised in the interim combined financial statements,
and about assumptions and estimation uncertainties that have a significant risk of resulting
in a material adjustment within the next financial year is included in note 23.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-8
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Assets held under finance lease
As at 30 June 2015, the carrying amount of property, plant and equipment of the Group held
under finance leases was $93,000 (31 December 2014: $nil).
Security
As at 30 June 2015, property, plant and equipment amounting to $4,779,000 (31 December
2014: $4,888,000) were pledged as collaterals for the Group’s borrowings (see note 9).
4 Intangible asset
Development
costs
$’000
Cost
At 1 January 2014 –
Additions 196
At 31 December 2014 196
Additions 66
At 30 June 2015 262
Accumulated amortisation
At 1 January 2014, 31 December 2014 and 30 June 2015 –
Carrying amount
At 1 January 2014 –
At 31 December 2014 196
At 30 June 2015 262
Intangible assets comprise development expenditure capitalised in relation to a new product
developed by the Group.
5 Inventories
30/6/2015 31/12/2014
$’000 $’000
Finished goods 128 141
Work in progress 383 232
Raw materials 2,175 2,299
2,686 2,672
During the period, raw materials, changes in finished goods and work in progress included
in cost of sales of the Group amounted to $2,617,000 (31 December 2014: $6,381,000).
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-11
6 Trade and other receivables
30/6/2015 31/12/2014
$’000 $’000
Trade receivables
Amounts due from: 4,098 3,511
– ultimate holding company (non-trade) 1,959 1,196
– related corporation (non-trade) 16 247
Deposits 70 87
Other receivables 308 114
Loans and receivables 6,451 5,155
Prepayments 815 88
7,266 5,243
The non-trade amounts due from ultimate holding company and related corporation are
unsecured and interest-free, and are repayable on demand. There is no allowance for
impairment loss arising from these outstanding balances.
Trade receivables of the Group are non-interest bearing and are normally settled on 30 to 60
days credit terms. They are recognised at their original invoiced amounts which represent
their fair values on initial recognition.
As at 30 June 2015, prepayments include legal and professional fees amounting to $501,000
paid for the proposed listing and quotation of all the Company’s issued and paid-up share
capital.
Impairment losses
The ageing analysis of loans and receivables at the end of each reporting period is as
follows:
Gross
Impairment
loss Gross
Impairment
loss
30/6/2015 30/6/2015 31/12/2014 31/12/2014
$’000 $’000 $’000 $’000
Not past due 4,965 – 3,180 –
Past due 0 – 30 days 443 – 1,378 –
Past due 31 – 60 days 332 – 302 –
Past due 61 – 90 days 145 – 103 –
Past due more than 90 days 566 – 192 –
6,451 – 5,155 –
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-12
The movements in the allowance for impairment loss in respect of loans and receivables
during each of the reporting period are as follows:
30/6/2015 31/12/2014
$’000 $’000
At 1 January – 28
Written off – (28)
At 30 June/31 December – –
Receivables that were past due but not impaired relate to a wide range of customers for
whom there has not been a significant change in the credit quality. Based on past
experience, management believes that no additional impairment allowance is necessary and
the balances are still considered fully recoverable.
7 Share capital
Number of shares
30/6/2015 31/12/2014
Company
At 2 April 2015 (date of incorporation) – –
– Issue of subscriber’s share 1 –
At 30 June 2015/31 December 2014 1 –
The Company was incorporated on 2 April 2015 with one subscriber’s share issued at $1 for
cash.
The holder of ordinary share is entitled to receive dividends as declared from time to time and
is entitled to one vote per share at meetings of the Company. All shares rank equally with
regard to the Company’s residual assets.
8 Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences arising from the
translation of the financial statements of foreign operations whose functional currencies are
different from that of the Company’s functional currency.
Movements in the reserves are shown in the statements of changes in equity.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-13
9 Loans and borrowings
30/6/2015 31/12/2014
$’000 $’000
Non-current liabilities
Secured bank loans 336 473
Finance lease liabilities 43 –
379 473
Current liabilities
Secured bank loans 538 245
Finance lease liabilities 23 –
561 245
Total 940 718
Terms and debt repayment schedule
Terms and conditions of outstanding loans and borrowings are as follows:
Currency
Nominal
interest
rate
Year of
maturity
Face
value
Carrying
amount
% $’000 $’000
30 June 2015
Bank overdrafts
(secured) RM 1.50 + BLR# 2016 293 293
Term loans (secured) RM 5.35 2016 245 245
Term loans (secured) RM 5.35 2017 336 336
Finance lease liabilities RM 1.10 2018 66 66
Total interest-bearing
liabilities 940 940
31 December 2014
Term loans (secured) RM 5.35 2015 245 245
Term loans (secured) RM 5.35 2017 473 473
Total interest-bearing
liabilities 718 718
# BLR represents bank lending rate
The loans and borrowings of the Group as at the respective reporting dates are secured by
the property, plant and equipment of a subsidiary (see note 3), a deed of debenture provided
by a subsidiary for RM 10 million and a corporate guarantee from the ultimate holding
company.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-14
Finance lease obligations
Future minimum lease payments under finance leases together with the present value of the
net minimum lease payments are as follows:
Future
minimum
lease
payments Interest
Present
value of
payments
Future
minimum
lease
payments Interest
Present
value of
payments
30/6/2015 30/6/2015 30/6/2015 31/12/2014 31/12/2014 31/12/2014
$’000 $’000 $’000 $’000 $’000 $’000
Within one year 27 4 23 – – –
After one year but within
five years 45 2 43 – – –
72 6 66 – – –
The finance lease liabilities are secured by a charge over the leased assets.
10 Deferred tax liabilities
Movements in temporary differences during the year are as follows:
At
1 January
2014
Recognised
in profit or
loss
At
31 December
2014
Recognised
in profit or
loss
(Note 16)
At
30 June
2015
$’000 $’000 $’000 $’000 $’000
Property, plant and
equipment 232 5 237 – 237
Others 10 (17) (7) – (7)
242 (12) 230 – 230
Deferred tax assets have not been recognised in respect of the following item:
30/6/2015 31/12/2014
$’000 $’000
Unutilised tax losses 125 15
The tax losses are subject to agreement by the tax authorities and compliance with tax
regulations in the respective countries in which certain subsidiaries operate. The deductible
temporary differences do not expire under current tax legislation. Deferred tax assets have
not been recognised in respect of unutilised tax losses due to the uncertainty of the
availability of future taxable profits against which the Group can utilise the benefits.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-15
11 Trade and other payables
30/6/2015 31/12/2014
$’000 $’000
Trade payables 1,531 1,251
Advance receipts from customers 15 209
Amounts due to:
– ultimate holding company (non-trade) 4,949 4,357
– a director (non-trade) 12 –
Accrued operating expenses 676 453
Other payables 138 98
7,321 6,368
The non-trade amounts due to ultimate holding company and a director are unsecured and
interest-free, and are repayable on demand.
12 Revenue
Revenue represents income from sale of goods.
13 Other income
Six-month
period ended
Six-month
period ended
30/6/2015 30/6/2014
$’000 $’000
Gain on disposal of property, plant and equipment 28 13
Others 19 11
Total 47 24
14 Finance costs
Six-month
period ended
Six-month
period ended
30/6/2015 30/6/2014
$’000 $’000
Interest expenses on loans and borrowings 18 52
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-16
15 Profit before income tax
The following items have been included in arriving at profit before income tax:
Six-month
period ended
Six-month
period ended
30/6/2015 30/6/2014
$’000 $’000
Depreciation of property, plant and equipment 167 172
Employee benefits expense (see below) 1,907 1,739
Foreign exchange (gains)/losses, net (3) 13
Operating lease expenses 131 61
Employee benefits expense
Salaries, bonuses and other costs 1,741 1,617
Contributions to defined contribution plans 166 122
1,907 1,739
16 Income tax expense
Six-month
period ended
Six-month
period ended
30/6/2015 30/6/2014
$’000 $’000
Current tax expense
Current year 58 48
(Over)/Under provided in respect of prior years (1) 4
Income tax expense 57 52
Reconciliation of effective tax rate
Profit before income tax 415 790
Tax using the Singapore tax rate of 17%
(30 June 2014: 17%) 71 134
Effect of different tax rate in different jurisdictions 11 19
Non-taxable income (25) (41)
Non-deductible expenses 13 14
Effect of tax relief (30) (30)
Deferred tax assets not recognised 19 1
(Over)/Under provided of tax in respect of
prior years (1) 4
Others (1) (49)
57 52
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-17
17 Earnings per share
Basic and diluted earnings per share are calculated based on the following:
Six-month
period ended
Six-month
period ended
30/6/2015 30/6/2014
$’000 $’000
Profit for the year 358 738
The calculation of the basic and diluted earnings per share for each of the six-month periods
ended 30 June 2014 and 2015 is based on the profit for the respective periods and the
pre-placement number of shares of the Company of 71,900,000 shares.
There were no dilutive potential ordinary shares in existence for the six-month periods ended
30 June 2014 and 2015.
18 Significant related parties transactions
For the purposes of these financial statements, parties are considered to be related to the
Company if the Company has the ability, directly or indirectly, to control the party or exercise
significant influence over the party in making financial and operating decisions, or vice versa,
or where the Company and the party are subject to common control or common significant
influence. Related parties may be individuals or other entities.
Key management personnel compensation
Key management personnel of the Group are those persons having the authority and
responsibility for planning, directing and controlling the activities of the Group. The Group
considered the directors of the Company and those of its subsidiaries as key management
personnel.
Key management personnel compensation comprises:
Six-month
period ended
Six-month
period ended
30/6/2015 30/6/2014
$’000 $’000
Salaries, bonuses and other costs 350 109
CPF and other defined contributions 13 8
363 117
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-18
Other related party transactions
Other than as disclosed elsewhere in the financial statements, there was the following
transaction carried out in the normal course of business on terms agreed with related parties:
Six-month
period ended
Six-month
period ended
30/6/2015 30/6/2014
$’000 $’000
Ultimate holding company
Shared services expense paid/payable 75 55
19 Financial risk management and financial instruments
The Group has exposure to the following risks from its use of financial instruments:
• credit risk
• liquidity risk
• market price risk
This note presents information about the Group’s exposure to each of the above risks, and
the Group’s objectives, policies and processes for measuring and managing risk.
Risk management framework
The management has overall responsibility for the establishment and oversight of the
Group’s risk management framework.
Risk management is integral to the whole business of the Group. The management
continually monitors the Group’s risk management process to ensure that an appropriate
balance between risk and control is achieved. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities.
Credit risk
Credit risk is the risk of financial loss resulting from the failure of a customer or
counterparties to meet its contractual obligations, and arises principally from the Group’s
customers.
The Group has policies in place to evaluate credit risk when accepting new customers.
Where necessary, the Group establishes an allowance for impairment loss that represents its
estimate of incurred losses in respect of trade and other receivables. The main component
of this allowance is a specific loss component that relates to individually significant
exposures.
Cash and cash equivalents are placed with financial institutions which are regulated.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-19
At 30 June 2015 and 31 December 2014, there was no concentration of credit risk. The
maximum exposure to credit risk is represented by the carrying amount of each financial
asset in the statement of financial position.
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the country and industry
sector profile of its trade receivables on an on-going basis. The credit risk concentration
profile of the Group’s trade receivables at the respective reporting dates are as follows:
30/6/2015 31/12/2014
$’000 % $’000 %
By country
Singapore 3,010 73.5 1,658 47.2
Other ASEAN countries 170 4.1 936 26.7
Others 918 22.4 917 26.1
4,098 100.0 3,511 100.0
By industry sectors
Clean room equipment 2,175 53.1 1,957 55.7
Heating, ventilation &
air-conditioning products 1,834 44.8 1,491 42.5
Others 89 2.1 63 1.8
4,098 100.0 3,511 100.0
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations
associated with its financial liabilities that are settled by delivering cash or another financial
asset.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Group’s
reputation.
The Group’s objective is to maintain a balance between continuity of funding and flexibility
through the use of bank loans.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-20
Analysis of financial instruments by remaining contractual maturities
The following are the contractual maturities of financial liabilities, including estimated interest
payments and excluding the impact of netting arrangements:
Cash flows
Carrying
amount
Contractual
cash flows
Within
1 year
Between
2 to 5 years
$’000 $’000 $’000 $’000
30 June 2015
Non-derivative financial
liabilities
Loans and borrowings 940 (1,021) (618) (403)
Trade and other payables^ 7,306 (7,306) (7,306) –
8,246 (8,327) (7,924) (403)
31 December 2014
Non-derivative financial
liabilities
Loans and borrowings 718 (805) (284) (521)
Trade and other payables^ 6,159 (6,159) (6,159) –
6,877 (6,964) (6,443) (521)
^ Excludes advance receipts from customers
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest
rates and equity prices, will affect the Group’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return.
Foreign currency risk
Foreign currency risk of the Group arises from subsidiaries operating in foreign countries,
which generate revenue and incur costs denominated in foreign currencies.
The Group does not hedge its exposures to these foreign currency risks. The management
considers that a natural hedge exists between the assets and liabilities in each of its
subsidiaries.
The Group manages its transactional exposure by having a policy of matching, as far as
possible, receipts and payments in each individual currency.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-21
Exposure to currency risk
The Group’s exposure to foreign currency risk as provided to the management of the Group
is summarised as follows:
US Dollar
Japanese
Yen
Chinese
Renminbi
$’000 $’000 $’000
30 June 2015
Trade and other receivables 381 – 620
Cash and cash equivalents 192 225 65
Trade and other payables – – (5)
573 225 680
31 December 2014
Trade and other receivables 412 44 866
Cash and cash equivalents 957 157 293
Trade and other payables (168) – (398)
1,201 201 761
Sensitivity analysis
A 5% strengthening of Singapore dollars against the following currencies at the reporting
date would have increased/(decreased) profit before tax by the amounts shown below. This
analysis assumes that all other variables, in particular interest rates, remain constant.
Profit
before tax
$’000
30 June 2015
US dollar (29)
Japanese Yen (11)
Chinese Renminbi (34)
31 December 2014
US dollars (60)
Japanese Yen (10)
Chinese Renminbi (38)
A 5% weakening of Singapore dollar against the above currencies would have had the equal
but opposite effect to the amounts shown above, on the basis that all other variables remain
constant.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial
instruments will fluctuate because of changes in market interest rates.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-22
The Group’s exposure to interest rate risk arises primarily from its floating rate loans and
borrowings. The Group’s policy is to obtain the most favourable interest rates available.
Exposure to interest rate risk
At the reporting date, the interest rate profile of the Group’s interest-bearing financial
instruments, as reported to the management, was as follows:
30/6/2015 31/12/2014
$’000 $’000
Fixed rate instruments
Loans and borrowings 66 –
Variable rate instruments
Loans and borrowings 874 718
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial liabilities at fair value through profit
or loss. Therefore, a change in interest rates at the reporting date would not affect profit or
loss.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have
increased/(decreased) profit before tax by the amounts shown below. This analysis assumes
that all other variables remain constant.
100 bp 100 bp
Increase Decrease
$’000 $’000
30 June 2015
Loans and borrowings (9) 9
31 December 2014
Loans and borrowings (7) 7
Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair
values for both financial and non-financial assets and liabilities.
Fair value is defined as the amount at which the instrument or asset could be exchanged in
a current transaction between knowledgeable willing parties in an arm’s length transaction,
other than in a forced or liquidation sale. The methodologies and assumptions used in the
estimation of fair values depend on the terms and characteristics of the various assets and
liabilities.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-23
Other financial assets and liabilities
The carrying amounts of financial assets and liabilities with a maturity of less than one year
(including trade and other receivables, cash and cash equivalents, and trade and other
payables) approximate their fair values because of the short period to maturity. All other
financial assets and liabilities are discounted to determine their fair values.
Fair value and classification of financial instruments
Loans and
receivables
Other
financial
liabilities
within the
scope of
FRS 39
Total
carrying
amount Fair value
$’000 $’000 $’000 $’000
30 June 2015
Loans and receivables 6,451 – 6,451 6,451
Cash and cash equivalents 2,414 – 2,414 2,414
8,865 – 8,865 8,865
Loan and borrowings – (940) (940) (940)
Trade and other payables# – (7,306) (7,306) (7,306)
– (8,246) (8,246) (8,246)
31 December 2014
Loans and receivables 5,155 – 5,155 5,155
Cash and cash equivalents 3,095 – 3,095 3,095
8,250 – 8,250 8,250
Loan and borrowings – (718) (718) (718)
Trade and other payables# – (6,159) (6,159) (6,159)
– (6,877) (6,877) (6,877)
# Excludes advance receipts from customers
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-24
20 Operating lease commitments
As at the respective reporting dates, the Group has commitments for future minimum lease
payable under non-cancellable operating lease as follows:
30/6/2015 31/12/2014
$’000 $’000
Within 1 year 206 199
After 1 year but within 5 years 344 452
550 651
21 Business and geographical segments
For management purposes, the Group is organised into business units based on the
products and services offered, and has three reportable operating segments as follows:
(a) Clean room equipment
A clean room provides an environment where the humidity, temperature and particles in
the air are precisely controlled. Clean room equipment include fan filter units, air
showers, clean booths, pass boxes, clean hand dryers and clean benches, amongst
others.
(b) Heating, ventilation and air-conditioning products
Heating, ventilation and air-conditioning products are essentially deflection grilles and
air diffusers installed to channel and regulate the airflow into the environment within the
building to ensure an even distribution of air within the confined space.
(c) Others
Others include cooling towers which is complementary to the heating, ventilation and
air-conditioning products in Singapore.
The Group’s Chief Executive Officer monitors the operating results of its business units
separately for the purpose of making decisions about resource allocation and performance
assessment. Segment performance is evaluated based on operating profit or loss which in
certain respects, as explained in the table below, is measured differently from operating profit
or loss in the combined financial statements.
Income taxes are managed on a group basis and are not allocated to operating segments.
Transfer prices between operating segments are on an arm’s length basis in a manner similar
to transactions with third parties.
There are no inter-segment sales within the Group.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-25
Reconciliations of reportable segment revenues, profit or loss, assets and liabilities
and other material items
Clean room
equipment
Heating,
ventilation &
air-conditioning
products Others Total
30/6/2015 30/6/2014 30/6/2015 30/6/2014 30/6/2015 30/6/2014 30/6/2015 30/6/2014
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Revenue:
External customers 2,602 3,067 3,611 3,337 387 214 6,600 6,618
Segments results 287 440 114 353 32 49 433 842
Finance costs (18) (52)
Profit before
income tax 415 790
Income tax
expense (57) (52)
Profit for the year 358 738
Segment assets 17,885 15,416
Segment liabilities 7,712 7,252
Loans and
borrowings 940 859
Total liabilities 8,652 8,111
Other segment
information
Capital expenditure 94 8 131 8 14 1 239 17
Depreciation of
property, plant and
equipment 65 80 91 87 11 5 167 172
Geographical segment
The Group’s geographical segments are based on the location of the Group’s assets. Sales
to external customers disclosed in geographical segments are based on the geographical
location of its customers.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-26
The following table presents revenue, capital expenditure and certain assets information
regarding the Group’s geographical segments as at and for the six-month periods ended
30 June 2015 and 2014.
Singapore
Other
ASEAN
countries Others Total
$’000 $’000 $’000 $’000
30 June 2015
Revenue 4,880 753 967 6,600
Total assets 9,646 7,449 790 17,885
Capital expenditure 135 104 – 239
30 June 2014
Revenue 4,529 1,294 795 6,618
Total assets 6,803 7,486 1,127 15,416
Capital expenditure 9 8 – 17
22 Subsequent events
Subsequent to 30 June 2015, the Group placed one of its subsidiaries, Kyodo-Allied
(Thailand) Company Limited (“Kyodo-Allied (Thailand)”), into liquidation. Kyodo-Allied
(Thailand) is not a significant subsidiary of the Group as at 30 June 2015.
On 3 September 2015, the shareholders of Kyodo-Allied (Thailand) resolved to approve the
dissolution and liquidation of Kyodo-Allied (Thailand) and the appointment of its liquidation
to assist in the liquidation process. On the same date, the resolution was registered with the
Ministry of Commerce of Thailand. On 2 November 2015, Kyodo-Allied (Thailand) entered
into an agreement for the sale and purchase of the land owned by Kyodo-Allied (Thailand)
and the office building located thereon for a purchase consideration of THB13.0 million.
Subsequent to the completion of the Restructuring Exercise on 5 November 2015, the issued
and paid-up share capital of the Company was increased to $9,300,001 comprising
2,000,001 shares.
Pursuant to the written resolutions passed by the shareholder of the Company on
8 December 2015 and 28 December 2015, the shareholder approved the following:
(a) the sub-division of the issued share capital of the Company comprising 2,000,001
shares into 71,900,000 shares;
(b) the allotment and issue of 35,800,000 shares (the “Placement Shares”) in connection
with the placement of shares on Catalist, which when allotted, issued and fully paid-up,
will rank pari passu in all respects with the existing issued and fully paid-up shares;
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-27
(c) the listing and quotation of all the issued and paid-up share capital of the Company,
including the Placement Shares, and transfer of or issue of new shares pursuant to the
vesting of a contingent award of shares granted under the Eindec Performance Share
Plan 2015 (the “Performance Shares”) on Catalist;
(d) the conversion of the Company into a public limited company and name change to
“Eindec Corporation Limited”;
(e) the adoption of a new set of Articles of Association; and
(f) the adoption of the Eindec Performance Share Plan 2015 and the authorisation of the
directors of the Company, pursuant to Section 161 of the Companies Act, to allot and
issue performance shares pursuant to the grant of Awards under the Eindec
Performance Share Plan 2015.
On 10 December 2015, in connection with the listing and quotation of all the issued and
paid-up share capital of the Company, the Company was converted into a public limited
company and changed its name from “Eindec Corporation Pte. Ltd.” to “Eindec Corporation
Limited”. The Company became the holding company of the Group following the completion
of the Restructuring Exercise.
23 Accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.
The Group believes the following critical accounting policies involve significant judgements
and estimates used in the preparation of the financial statements.
Depreciation of and impairment loss on property, plant and equipment
Property, plant and equipment are depreciated on a straight-line basis over their useful lives
which are estimated to be between 3 to 50 years. The Group reviews the estimated useful
lives of these assets annually in order to determine the amount of depreciation expense to
be recorded during any reporting period. The estimation of useful lives is based on
assumptions about wear and tear, ageing, asset utilisation, anticipated use of the assets,
technical standards and changes in demand as well as the Group’s historical experience with
similar assets. It is possible that future results of operations could be materially affected by
changes in these estimates brought about by changes in the factors mentioned above. A
reduction in the estimated useful lives of property, plant and equipment would increase
depreciation expense and decrease non-current assets.
The Group assesses at each reporting date whether there is objective evidence that its
property, plant and equipment are impaired. To determine whether there is objective
evidence of impairment, the Group considers factors such as general economic conditions,
development in the property market, government policies and other factors which could
affect the carrying value of these assets.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-28
The estimates of recoverable amounts are based on either the fair value of the property, plant
and equipment determined by a firm of independent professional valuers or management, or
using comparable property valuation or the value-in-use of the assets determined by
management. The fair value is based on market value, being the estimated amount for which
a property could be exchanged on the date of the valuation between a willing buyer and a
willing seller in an arm’s length transaction after proper marketing wherein the parties had
each acted knowledgeably, prudently and without compulsion. The recoverable amounts
could change significantly as a result of changes in market conditions.
Impairment loss on trade receivables
The Group evaluates whether there is any objective evidence that trade receivables are
impaired, and determine the amount of impairment loss as a result of the inability of the
debtors to make the required payments. The Group bases the estimates on the ageing of the
trade receivable balance, credit-worthiness of the debtors and historical write-off experience.
If the financial conditions of the debtors were to deteriorate, actual write-offs would be higher
than estimated.
Income taxes
Significant judgement is required in determining the taxability of certain income and
deductibility of certain expenses during the estimation of the provision for income taxes and
deferred tax liabilities/assets.
The Group exercises significant judgement to determine that the deferred tax assets are
recognised to the extent that it is probable that future taxable profits will be available against
which temporary differences can be utilised.
Allowance for inventory obsolescence
Where necessary, allowance for inventory obsolescence would be set up for estimated
losses which may result from obsolete inventories held. The Group estimates the level of
allowance based on the prevailing market conditions and historical provisioning experience.
The required level of allowance could change significantly as a result of changes in market
conditions.
APPENDIX B – UNAUDITED INTERIM COMBINED FINANCIALSTATEMENTS OF EINDEC CORPORATION LIMITED AND
ITS SUBSIDIARIES FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2015
B-29
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Our business operations are subject to certain Singapore and international guidelines, laws and
regulations. Save as disclosed below and in the section entitled “Risk Factors” of this Offer
Document, as at the Latest Practicable Date, our business and operations are not subject to any
special legislation or regulatory controls which have a material impact on our business operations
other than those generally applicable to companies and businesses incorporated and/or operating
in the jurisdictions in which we operate.
SINGAPORE
The following is a summary of the main laws and regulations of Singapore that are relevant to our
business as at the Latest Practicable Date.
We have identified the main laws and regulations that materially affect our operations and the
relevant regulatory bodies in Singapore (apart from those pertaining to general business
requirements) as follows:
(a) Regulation of Import and Export
Pursuant to the Regulation of Imports and Exports Act (Chapter 272A) of Singapore (“RIEA”),
regulations for the registration, regulation and control of all or any class of goods imported
into, exported from, transshipped in or in transit through Singapore may be made. We
engage freight forwarders to undertake the import and export of our products and who will
also make the necessary permit applications for our imports and exports on a transactional
basis.
We have obtained approval of registration pursuant to Part IVA of the Regulation of Imports
and Exports Regulations and Part XIVA of the Customs Regulations as a “declaring entity”.
(b) Factory Notification
Any person who desires to occupy or use any premises where, amongst others, any building
operation or works of engineering construction is or are being carried out by way of trade or
for purposes of gain is required to apply to the Commissioner for Workplace Safety and
Health (“CWSH”) to register the premises as a “factory” pursuant to the Workplace Safety
and Health (Registration of Factories) Regulations 2008 (“WSH Factories Regulations”).
Any person who desires to occupy or use any premises as a factory not falling within the
classes of factories described within the First Schedule of the WSH Factories Regulations,
shall, before the commencement of operation of the factory, submit a notification to the
CWSH informing the CWSH of his intention to occupy or use those premises as a factory.
However, in the event that the CWSH is of the view that the factory in respect of which a
notification has been submitted poses or is likely to pose a risk to the safety, health and
welfare of persons at work in the factory, the CWSH may, by notice in writing, (i) specify the
date from which the notification shall cease to be valid; and (ii) direct the occupier of the
factory to register the factory notwithstanding that the factory does not fall within any of the
classes of the factories described in the First Schedule of the WSH Factories Regulations.
Our Facility in Singapore, which is located at 8 Pandan Crescent, #01-06, Singapore 128414,
does not fall within any of the classes of the factories described in the First Schedule of the
WSH Factories Regulations and accordingly, a notification to the CWSH will suffice. We have
submitted the relevant notification to the CWSH.
APPENDIX C – GOVERNMENT REGULATIONS
C-1
(c) Workplace Safety and Health Act
The Workplace Safety and Health Act (Chapter 354A) (the “WSHA”) provides that every
employer has the duty to take, so far as is reasonably practicable, such measures as are
necessary to ensure the safety and health of his employees at work. These measures
include:
(i) providing and maintaining for the employees a work environment which is safe, without
risk to health, and adequate as regards facilities and arrangements for their welfare at
work;
(ii) ensuring that adequate safety measures are taken in respect of any machinery,
equipment, plant, article or process used by the employees;
(iii) ensuring that the employees are not exposed to hazards arising out of the arrangement,
disposal, manipulation, organisation, processing, storage, transport, working or use of
things in their workplace or near their workplace and under the control of the employer;
(iv) developing and implementing procedures for dealing with emergencies that may arise
while those employees are at work; and
(v) ensuring that the employees at work have adequate instruction, information, training
and supervision as is necessary for them to perform their work.
The relevant regulatory body is the Ministry of Manpower (“MOM”).
Any person who breaches his duty shall be guilty of an offence and shall be liable on
conviction, in the case of a body corporate, to a fine not exceeding S$500,000 and if the
contravention continues after the conviction, the body corporate shall be guilty of a further
offence and shall be liable to a fine not exceeding S$5,000 for every day or part thereof
during which the offence continues after conviction. For repeat offenders, where a person
has on at least one (1) previous occasion been convicted of an offence under the WSHA that
causes the death of any person and is subsequently convicted of the same offence that
causes the death of another person, the court may, in addition to any imprisonment if
prescribed, punish the person, in the case of a body corporate, with a fine not exceeding S$1
million and, in the case of a continuing offence, with a further fine not exceeding S$5,000 for
every day or part thereof during which the offence continues after conviction.
Under the WSHA, the CWSH may serve a remedial order or a stop-work order in respect of
a workplace if he is satisfied that (i) the workplace is in such condition, or is so located, or
any part of the machinery, equipment, plant or article in the workplace is so used, that any
process or work carried on in the workplace cannot be carried on with due regard to the
safety, health and welfare of the persons at work; (ii) any person has contravened any duty
imposed by the WSHA; or (iii) any person has done any act, or has refrained from doing any
act which, in the opinion of the CWSH, poses or is likely to pose a risk to the safety, health
and welfare of persons at work.
The remedial order shall direct the person served with the order to take such measures, to
the satisfaction of the CWSH, to, amongst others, remedy any danger so as to enable the
work or process in the workplace to be carried on with due regard to the safety, health and
welfare of the persons at work, whilst the stop-work order shall direct the person served with
the order to immediately cease to carry on any work or process indefinitely or until such
APPENDIX C – GOVERNMENT REGULATIONS
C-2
measures as are required by the CWSH have been taken, to the satisfaction of the CWSH,
to remedy any danger so as to enable the work or process in the workplace to be carried on
with due regard to the safety, health and welfare of the persons at work.
The Workplace Safety and Health Council has approved codes of practice for the purpose of
providing practical guidance with respect to the requirements of the WSHA relating to safety,
health and welfare at the workplace.
(d) Work Injury Compensation Act
Work injury compensation is governed by the Work Injury Compensation Act (Chapter 354)
(“WICA”), and is regulated by the MOM. The WICA applies to employees in respect of injuries
suffered by them in the course of their employment and sets out, amongst others, the amount
of compensation they are entitled to and the method(s) of calculating such compensation.
The WICA provides that if in any employment, personal injury by accident arising out of and
in the course of the employment is caused to a workman, the employer is liable to pay
compensation in accordance with the provisions of the WICA.
Further, the WICA provides that, amongst others, where any person (referred to as the
principal) in the course of or for the purpose of his trade or business contracts with any other
person (referred to as the employer) for the execution by the employer of the whole or any
part of any work undertaken by the principal, the principal shall be liable to pay to any
employee employed in the execution of the work any compensation which he would have
been liable to pay if that employee had been immediately employed by the principal.
Employers are required to maintain work injury compensation insurance for two (2)
categories of employees engaged under contracts of service, unless exempted. The first
category includes all employees doing manual work. The second category includes all
non-manual employees earning S$1,600 or less a month. Failure to do so is an offence
punishable by a maximum fine of S$10,000 and/or imprisonment of up to 12 months.
We have in place workmen’s compensation insurance to cover the statutory obligations and
liabilities of our Group under the WICA.
(e) Employment Act
The Employment Act (Chapter 91) of Singapore (“EA”) is administered by the MOM and sets
out the basic terms and conditions of employment and the rights and responsibilities of
employers as well as employees who are covered under the EA.
In particular, Part IV of the EA sets out requirements for rest days, hours of work and other
conditions of service for workmen who receive salaries not exceeding S$4,500 a month and
employees (other than workmen) who receive salaries not exceeding S$2,500 a month.
Section 38(8) of the EA provides that an employee is not allowed to work for more than 12
hours in any one day except in specified circumstances, such as where the work is essential
to the life of the community, defence or security. In addition, Section 38(5) of the EA limits the
extent of overtime work that an employee can perform to 72 hours a month.
APPENDIX C – GOVERNMENT REGULATIONS
C-3
Employers must seek the prior approval of the Commissioner for Labour (the “CL”) for
exemption if they require an employee or class of employees to work for more than 12 hours
a day or more than 72 hours a month. The CL may, after considering the operational needs
of the employer and the health and safety of the employee or class of employees, by order
in writing exempt such employees from the overtime limits subject to such conditions as the
CL thinks fit. Where such exemptions have been granted, the employer shall display the
order or a copy thereof conspicuously in the place where such employees are employed.
An employer who breaches the above provisions shall be guilty of an offence and shall be
liable on conviction to a fine not exceeding S$5,000, and for a second or subsequent offence
to a fine not exceeding S$10,000 or to imprisonment for a term not exceeding 12 months or
to both.
Certain of our employees are covered under Part IV of the EA. As at the Latest Practicable
Date, our Group has not breached any of the provisions set out above.
(f) Employment of Foreign Manpower Act
The employment of foreign workers in Singapore is governed by the Employment of Foreign
Manpower Act (Chapter 91A) of Singapore (“EFMA”) and is regulated by the MOM. In
Singapore, under Section 5(1) of the EFMA, no person shall employ a foreign employee
unless he has obtained in respect of the foreign employee a valid work pass, which allows
the foreign worker to work for him. Any person who fails to comply with or contravenes
Section 5(1) of the EFMA shall be guilty of an offence and shall (a) be liable on conviction
to a fine not less than S$5,000 and not more than $30,000 or to imprisonment for a term not
exceeding 12 months or to both; and (b) on a second or subsequent conviction, (i) in the case
of an individual, be punished with a fine of not less than $10,000 and not more than $30,000
and with imprisonment for a term of not less than one (1) month and not more than 12
months; or (ii) in any other case, be punished with a fine not less than S$20,000 and not more
than $60,000.
An employer of foreign workers is also subject to, amongst others, the provisions set out in
the EA, the EFMA, the Immigration Act (Chapter 133) of Singapore and the regulations
issued pursuant to the Immigration Act.
As at the Latest Practicable Date, we have obtained work passes for all our foreign workers.
MALAYSIA
The following is a summary of the main laws and regulations of Malaysia that are relevant to our
business as at the Latest Practicable Date.
We have identified the main laws and regulations that materially affect our operations and the
relevant regulatory bodies in Malaysia (apart from those pertaining to general business
requirements) as follows:
(a) Customs Act 1967 (“CA”)
Section 65 of the CA provides that the Director General of Customs and Excise (“Director
General”) may grant a licence to any person (“Licensee”) for warehousing goods liable to
customs duties. In respect of a warehouse licensed under Section 65 of the CA, Section 65A
of the CA provides that the Director General may grant an additional licence to the Licensee
APPENDIX C – GOVERNMENT REGULATIONS
C-4
to carry on any manufacturing process and other operation in respect of the goods liable to
customs duties and any other goods. Any such licence granted under Section 65 and 65A of
the CA shall be for such period and subject to such conditions as the Director General may
specify in the licence.
No goods which have undergone any manufacturing process in the warehouse may be
released for home consumption or export without the prior approval of the Director General.
No goods other than goods specified in the licence may be stored in any licensed warehouse,
duty free shop or inland clearance depot.
The licence of Eindec Malaysia to manufacture warehousing goods liable to customs duties
is valid and subsisting.
Section 78 of the CA provides that every importer of dutiable goods, warehoused under
Section 66 of the CA shall, before removal of such goods from customs control, make
personally or by his agent (as permitted under Section 90 of the CA) to the customs officer
at such warehouse, a declaration, in Customs Form 1, of the goods imported, and in any
particular case the proper customs officer may, by notice in writing, require the importer
either personally or by his agent to submit such declaration within three (3) days of the
receipt of such notice, and the importer shall be required to comply with such notice provided
that in the case of goods imported by road such declaration shall be made on arrival of such
goods at the place of import. In the event the declaration is not submitted within the three (3)
days’ time period, such customs officer is empowered to seize the goods under Section 114
of the CA and to forfeit the goods seized under Section 126 of the CA and to auction the
goods seized under Section 128 of the CA and the proceeds of the auction will be placed in
a consolidated funds. Declaration can be made by using convenience store EDI or
SMK-DagangNetinterface system. In general, all goods save for those as stipulated in the
following legislations are absolutely and/or conditionally prohibited from exportation and/or
importation:
• The Customs (Prohibition of Imports) Order 2012 First Schedule: Absolute Prohibition
• The Customs (Prohibition of Imports) Order 2012 Second Schedule (Part I): Conditional
prohibition except under an Import Licence
• The Customs (Prohibition of Imports) Order 2012 Second Schedule (Part II):
Conditional prohibition except under an Import Licence and does not apply to the
specified free zones
• The Customs (Prohibition of Imports) Order 2012 Second Schedule (Part III): except
under an Import Licence and shall not apply to Labuan, Langkawi and Tioman and the
specified free zones
• The Customs (Prohibition of Imports) Order 2012 Third Schedule (Part I): Conditional
prohibition except in the manner provided
• The Customs (Prohibition of Imports) Order 2012 Third Schedule (Part II): Conditional
prohibition except in the manner provided and shall not apply to the free commercial
zones
APPENDIX C – GOVERNMENT REGULATIONS
C-5
• The Customs (Prohibition of Imports) Order 2012 Third Schedule (Part III): Conditional
prohibition except in the manner provided and applicable to goods in transit controlled
under the International Trade In Endangered Species Act 2008
• The Customs (Prohibition of Imports) Order 2012 Fourth Schedule (Part I): Conditional
prohibition except conforming to the Malaysian Standard and/or other standards
approved by the Malaysian Authorities and in the manner provided
• The Customs (Prohibition of Imports) Order 2012 Fourth Schedule (Part II): Conditional
prohibition except conforming to the Malaysian Standard and/or other standards
approved by the Malaysian Authorities and in the manner provided and does not apply
to the free commercial zones
Pursuant to Customs Duties (Exemption) Order 2013, the manufacturers licensed under
Section 65/65A of the CA are exempted from payment of customs duty on (i) the machinery
and equipment including accessories and spare parts used directly in the manufacture of
finished goods in a licensed manufacturing warehouse and (ii) raw materials or components
used directly in the manufacture of finished or semi-finished goods in premises of
manufacturers undertaking subcontract work in Malaysia excluding Labuan, Langkawi and
Tioman. A certificate under the Customs Duties (Exemption) Order 2013 signed by the
manufacturer in respect of goods specified in (i) above and by the person approved by the
Director General in respect of goods specified in (ii) above shall be produced to the proper
customs officer.
Section 80 of the CA provides that every exporter of dutiable goods shall immediately before
export, personally or by his agent make, a declaration in Customs Form 2 of the goods to be
exported. The declaration shall be made to the proper customs officer at the place of export
if export is by road, but the Director General may allow the declaration to be made to a proper
customs officer at an inland clearance depot or at an inland customs station if such export
by road is on their route to a customs port or airport or any other place approved by him.
As at the Latest Practicable Date, we have submitted all the relevant and required Customs
Forms in relation to goods imported from and exported to Singapore.
(b) Factories and Machinery Act 1967 (“FMA”) and Industrial Co-ordination Act 1975 (“ICA”)
Under Section 34(2) of the FMA, no person shall except with the written permission of the
Inspector of Factories and Machinery begin to use any premises as a factory until one (1)
month after he has served a written notice save for person who takes over a factory from
another person if there is no change in the nature of the work carried on in the factory
provided that the first person shall within one (1) month of such taking over having served on
the Inspector written notice.
The ICA provides for the co-ordination and orderly development of manufacturing activities
in Malaysia. Under Section 3 of the ICA, no person shall engage in any manufacturing activity
unless he is issued a licence in respect of such manufacturing activity. Under the guidelines
and procedures for issuance of manufacturing licence issued by Malaysian Industrial
Development Authority (“MIDA”), manufacturing companies with shareholders’ funds of
RM2.5 million and above or engaging 75 or more full time paid employees are required to
apply for a manufacturing licence from the Ministry of Trade and Industry (“MITI”).
Applications for manufacturing licences are to be submitted to the MIDA, an agency under
MITI in charge of the promotion and coordination of industrial development in Malaysia. Any
APPENDIX C – GOVERNMENT REGULATIONS
C-6
person who fails to comply with Section 3 of the ICA is guilty of an offence and is liable on
conviction to a fine not exceeding RM2,000.00 or to a term of imprisonment not exceeding
6 months and to a further fine not exceeding RM1,000.00 for every day during which such
default continues.
(c) Occupational Safety and Health Act 1994 (“OSHA”)
The OSHA regulates the safety, health and welfare of persons at work. Under the OSHA, all
employers with 40 or more employees at the place of work (or as the Director General of
Occupational Safety and Health directs) must establish a safety and health committee,
consult the committee regarding arrangements to enable him and his employees to
cooperate effectively to promote and develop safety and health measures for employees at
the place of work, and check the effectiveness of such measures. More specific duties of the
employers are laid out in the Occupational Safety and Health (Safety and Health Officer)
Regulation 1997. For example, the employer must invite persons at the place of work to
nominate their representatives to the safety and health committee and the employee
representatives in the committee must represent the various sections at the place of work.
A company is also required under the OSHA to appoint a safety and health officer who is
required to possess such qualifications or have received such training as prescribed under
the Occupational Safety and Health (Safety and Health Officer) Regulations 1997. The safety
and health officer is required to submit a monthly report pertaining to his activities to the
employer.
The OSHA also requires a company to notify the nearest Occupational Safety and Health
office of any accident, dangerous occurrence, occupational poisoning or occupational
disease which has occurred or is likely to occur at the place of work.
Failure to comply with the requirements of OSHA is an offence which may result in liability
in fines, terms of imprisonment or both, whereas failure to comply with the requirements of
the regulations of OSHA is an offence which may result in liability in fines or terms of
imprisonment.
(d) Employees’ Social Security Act 1969 (“ESSA”) and Workmen’s Compensation Act 1952
(“WCA”)
The work injury compensation is generally governed by the ESSA and WCA.
The ESSA is applicable to all industries in the private sector in Malaysia employing one or
more employees and is administered and enforced by the Social Security Organisation
(“SOCSO”). The ESSA provides benefits to the insured employees and/or their families (in
the case of death) against economic and social distress in situations where the employees
sustain injury, disability or death. Generally, SOCSO administers and provides coverage
under two social insurance schemes namely, the Employment Injury Insurance Scheme
(“EIIS”) and the Invalidity Pension Scheme (“IPS”). EIIS provides payment of certain benefits
to an employee who suffers employment injury, being a personal injury caused by accident
or an occupational disease arising out of and in the course of his employment in an industry
to which the ESSA applies. The insured persons who suffer from disablement as a result of
an employment injury, or the dependants of the insured persons who die as a result of an
employment injury, as the case may be, shall be entitled to benefits, namely, medical
treatment to and attendance on the insured persons, periodical payments, payments for
funeral benefits and expenses.
APPENDIX C – GOVERNMENT REGULATIONS
C-7
IPS provides for payment of certain benefits where an employee becomes invalid by reason
of specific morbid condition of permanent nature and he is incapable of engaging in any
substantially gainful activity. An insured person suffering from invalidity shall, unless he has
attained 60 years of age, be entitled to receive invalidity pension if he has completed a full
or a reduced qualifying period. An employee earning RM3,000.00 and below per month is
covered under the ESSA and required to register and the employer shall pay both the
employer’s contribution and the employee’s contribution in respect of the whole or part of
which wages are payable to the employee to SOCSO under both the EIIS and IPS. An
employee receiving a monthly wage of more than RM3,000.00 is not eligible under the ESSA,
but can still be covered upon mutual agreement between employer and the employee by
submitting a notice. Pursuant to the ‘Once-In-Always-In’ principle, employees who have
already contributed and whose monthly wages exceed RM3,000.00 thereafter, are required
to continue contributing.
The WCA is applicable to foreign workers whose earnings are not more than RM500.00 per
month or who work under contract of services as manual labour. The WCA provides that if
in any employment, personal injury by accident arising out of and in the course of the
employment is caused to a workman arising out of and in the course of their employment or
if occupational disease is contracted by the workman and shown to be related to that
occupation, the employer is liable to pay compensation in accordance with the provisions of
the WCA. Under the Workmen’s Compensation (Foreign Worker’s Compensation Scheme)
(Insurance) Order 2005, the premium payable by an employer to the insurer shall be an
amount which is not exceeding RM72.00 (RM86.00 inclusive of goods and services tax and
stamp duty) per annum for each workman and shall not be varied without the written approval
of the Minister for Human Resources. An employer shall not be allowed to deduct the
earnings of a workman for the payment of the insurance premium, failing which the employer
shall be guilty of an offence and shall be liable. On conviction, to a fine of RM5,000.00 or to
imprisonment for one year term or to both. Any employer who fails to insure the workmen
under the approved insurance scheme shall be guilty of an offence and shall be liable, on
conviction, to a fine not exceeding RM20,000 or to imprisonment for a term not exceeding
two years or both.
As at the Latest Practicable Date, we have duly paid to SOCSO both the employer’s
contribution and the employee’s contribution in respect of the part of which wages are
payable to the employee. We have not taken up any insurance under WCA for our foreign
workers who earn more than RM500.00 per month.
(e) Employment
The Industrial Relations Act 1965 (“IRA”) provides a legal avenue for all workmen who have
been unfairly dismissed by their employers to seek redress in the Industrial Court of
Malaysia. Generally, workmen who are unfairly dismissed by an employer may seek
reinstatement to their former position or compensation in lieu of reinstatement.
The Employment Act 1955 (“EA Malaysia”) essentially provides for the minimum work
benefits for certain categories of employees (local as well as foreign), including an employee
who, irrespective of his occupation, has entered into a contract of service with an employer
under which he earns a monthly wage of RM2,000.00 and below and an employee who,
irrespective of the amount of wages he earns in a month, has entered into a contract of
service with an employer in pursuance of which he (i) is engaged in manual labour, (ii) is
engaged in the operation or maintenance of any mechanically propelled vehicle operated for
the transport of passengers or goods or for reward or for commercial purposes; (iii)
APPENDIX C – GOVERNMENT REGULATIONS
C-8
supervises or oversees other employees engaged in manual labour employed by the same
employer in and throughout the performance of their work, (iv) is engaged in any capacity in
any vessel registered in Malaysia and who is not an officer certificated under the Merchant
Shipping Acts of the United Kingdom, not the holder of a local certificate as defined in Part
VII of the Merchant Shipping Ordinance 1952 or has not entered into an agreement under
Part III of the Merchant Shipping Ordinance, or (v) is engaged as a domestic servant. For
such employees covered by the EA Malaysia, the EA Malaysia provides as statutory
minimum, amongst others, the employee’s working hours, overtime payment, annual leave,
sick leave, maternity leave, public holidays, payment of wages, notice of termination as well
as termination and lay-off benefits.
In the event there is any inconsistency between the terms of the contract of employment of
an employee covered under the EA Malaysia and the minimum work benefits conferred under
the EA, the more favourable terms for the employee will apply. In respect of those employees
who are not covered by the EA Malaysia, their terms of employment and benefits are
governed by their respective contracts of employment.
The Employees Provident Fund Act 1991 requires both the employer and the employee to
make respective statutory contributions amounting to a prescribed percentage of the
employee’s wages to the employee’s account maintained with the Employees Provident
Fund.
As at the Latest Practicable Date, we have duly paid to the Employees Provident Fund both
the employer’s contribution and the employee’s contribution in respect of part of which wages
are payable to the employees.
(f) Immigration Act 1959/63 (“Immigration Act”) and Immigration Regulations 1963
(“Immigration Regulations”)
The employment of foreign workers in Malaysia is governed by the Immigrations Act and the
Immigration Regulations. The regulatory body for employment of foreign employees or
workers is the Immigration Department of Malaysia.
Under Section 55B of the Immigration Act, no person shall employ any foreign employee
unless he has obtained in respect of the foreign employee a valid pass. Any person who
employs any foreign employee who is not in possession of a valid pass shall be guilty of an
offence and shall, on conviction, be liable to a fine not less than RM10,000.00 but not more
than RM50,000.00 or to imprisonment for a term not exceeding 12 months or to both for each
such employee.
An employer of foreign employees or workers is also subject to, amongst others, the
provisions set out in the Employment Act 1955, the Immigration Act, the Immigration
Regulations and the Employment (Restriction) Act 1968.
As at the Latest Practicable Date, we have obtained work passes for all our foreign workers.
(g) Electricity Supply Act 1990 (“Electricity Supply Act”)
Section 21 of the Electricity Supply Act provides that before the completion of a new
installation, the owner shall apply to the Energy Commission for registration. The Energy
Commission shall cause inspection and tests to be made within the prescribed period and,
APPENDIX C – GOVERNMENT REGULATIONS
C-9
if the installation satisfies the requirements of the Electricity Supply Act, shall issue or cause
to be issued a Certificate of Registration. No person shall possess or operate an installation,
unless the installation is registered on a valid Certificate of Registration.
The installation of standby generator at the business premise of Eindec Malaysia has been
registered with the Energy Commission under the Electricity Supply Act.
(h) Personal Data Protection Act
The Personal Data Protection Act 2010 (“PDPA”) which came into force on 1 January 2013
regulates, amongst others, the collection, holding, processing and use of personal data in
commercial transactions and the prevention of any unlawful and malicious use of any such
personal data collected. ‘Commercial transactions’ defined under the PDPA includes any
transaction of a commercial nature, whether contractual or not, which relates to the supply
or exchange of goods or services, agency, investments, financing, banking and insurance,
but does not include a credit reporting business carried out by a credit reporting agency
under the Credit Reporting Agencies Act 2009. PDPA plays a crucial role in safeguarding the
interest of individuals and makes it illegal for anyone, whether corporate entities or
individuals, to use or sell personal information or allow such use of the data by third parties
without the proper consent of individuals or data subjects.
Under the PDPA, data users have to comply with the following seven (7) inter-related data
protection principles when collecting and processing personal data of data subjects:
(1) General Principle – Data users are prohibited from processing any personal data unless
the data subject has given his consent to the processing of the personal data. Any
personal data collected shall not be processed unless for a lawful purpose directly
related to the activity of the data user and must not be excessive in relation to the
purpose.
(2) Notice and Choice Principle – Data users are duty bound to inform the data subject that
his personal data is being obtained, purposes for which the personal data is being
collected, information available to the data user as to the source of the data, state the
data subject’s right to request access to and to request correction of personal data and
method of communication in the event of inquiries or complaints in respect of the usage
of personal data. Furthermore, it will be within the data subject’s choice as to the
offering and limitation of the usage of such data. Notice shall be given as soon as
practicable by the data user when the data subject is first asked by the data user to
provide his personal data.
(3) Disclosure Principle – In the absence of consent by the data subject, data users are
prohibited from disclosing the personal data of data subjects for any purpose other than
the purpose for which the personal data is supplied for or to any third party.
(4) Security Principle – Data users are required to protect and safeguard the personal data
of the data subject from any loss, misuse, modification, unauthorised or accidental
access or disclosure, alteration or destruction by taking practical steps to implement
security measures.
APPENDIX C – GOVERNMENT REGULATIONS
C-10
(5) Retention Principle – Personal data collected and processed shall not be kept for longer
than is necessary for the fulfilment of that purpose. Once the data is no longer required
for the purpose for which it was processed, the same must be destroyed or permanently
deleted.
(6) Data Integrity Principle – Data users shall take reasonable steps to ensure that the
personal data collected is accurate, complete, not misleading and kept up to date.
(7) Access Principle – Data subjects must be given access to their personal data held by
the data users and can request for the data to be corrected if the data is inaccurate,
incomplete, misleading or not up-to-date.
PRC
The following is a summary of the main laws and regulations of the PRC that are relevant to our
business as at the Latest Practicable Date.
PRC LAWS RELATING TO TAXATION
ENTERPRISE INCOME TAX
According to the Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法) (the “EIT
Law”), enacted on 16 March 2007 and effective on 1 January 2008, and the Implementing Rules
of the Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法實施條例) (the “EIT
Rules”), enacted on 6 December 2007 and effective on 1 January 2008, a uniform income tax rate
of 25% is applied towards PRC enterprises, and foreign investment and foreign enterprises which
have set up institutions or facilities in the PRC.
According to the Notice of the State Administration of Taxation on Issues regarding the
Administration of the Dividend Provision in Tax Treaties (國家稅務總局關于執行稅收協定股息條款有關問題的通知) promulgated on 20 February 2009, to apply the dividend provision in relevant tax
treaties, certain requirements shall be satisfied, among which: (i) the taxpayer shall be the taxable
resident of the counterparty of the tax treatment; (ii) the taxpayer shall be the beneficial owner of
relevant dividends; and (iii) the relevant dividends shall be the equity investment benefits set out
by relevant PRC laws and regulations for taxation for corporate recipients that enjoy the tax
treatment under the relevant tax treaties as direct owners of a certain proportion of the share
capital of a PRC enterprise (usually such certain proportion shall be 25.0% or 10.0%). Such
corporate recipients must satisfy the direct ownership thresholds at all times during the 12
consecutive months preceding the receipt of the dividends. Furthermore, the State Administration
of Taxation (國家稅務總局) (“SAT”) promulgated the Notice on How to Understand and Recognise
the Beneficial Owner in Tax Treaties (國家稅務總局關于如何理解和認定稅收協定中‘受益所有人’的通知) on 27 October 2009, which defines the “beneficial owner” as individuals, enterprises or other
organisations normally engaged in substantive operations and sets forth certain adverse factors
on the recognition of such “beneficial owner”.
On 27 August 2015, the SAT enacted the Administrative Measures for Non-resident Taxpayer to
Enjoy Treatments under Tax Treaties (非居民納稅人享受稅收協定待遇管理辦法) which became
effective on 1 November 2015. Pursuant to this Administrative Measure, a non-resident who
meets the relevant requirements under the relevant tax treaties may enjoy such applicable tax
treatment automatically when filing tax returns or through the withholding agents when submitting
the withholding declaration. The non-resident tax-payer will then be subject to subsequent
regulation by the tax authorities.
APPENDIX C – GOVERNMENT REGULATIONS
C-11
VALUE-ADDED TAX
The Provisional Regulations of the People’s Republic of China concerning Value Added Tax
(“VAT”) (中華人民共和國增值稅暫行條例) promulgated by the State Council came into effect on 1
January 1994 and were amended on 10 November 2008. Under these regulations and the
Implementing Rules of the Provisional Regulations of the People’s Republic of China concerning
Value Added Tax (中華人民共和國增值稅暫行條例實施細則), VAT is imposed on goods sold in or
imported into PRC and on processing, repair and replacement services provided within PRC.
VAT payable in PRC is charged on an aggregated basis at a rate of 13.0% or 17.0% (depending
on the type of goods involved) on the full price collected for the goods sold or, in the case of
taxable services provided, at a rate of 17% on the charges for the taxable services provided but
excluding, in respect of both goods and services, any amount paid in respect of VAT included in
the price or charges, and less any deductible VAT already paid by the taxpayer on purchases of
goods and services in the same financial year.
TAX REFUND (EXEMPTION) OF EXPORTED GOODS
Pursuant to the Measures for the Administration of Tax Refund (Exemption) of Exported Goods (For Trial
Implementation) (出口貨物退(免)稅管理辦法(試行)) promulgated by the State Administration of Taxation
which came into effect on 16 March 2005, in relation to goods as exported by an exporter on his own
or by means of entrustment, unless otherwise prohibited by PRC laws and regulations the exporter
thereof may, after the declaration of export goods and the conclusion of financial settlement for sales,
make a report to the local state taxation bureau (hereinafter referred to as the tax authority) for the
approval of refund or exemption of his VAT or consumption tax on the strength of the relevant certificates.
PRC LAWS RELATING TO THE FOREIGN INVESTMENT IN THE HVAC EQUIPMENT, CLEAN
ROOM EQUIPMENT AND AIR PURIFIER INDUSTRIES
Pursuant to the Catalogue for the Guidance of Foreign Investment Industries (amended in 2015)
(外商投資產業指導目錄(2015年修訂)), which came into effect on 10 March 2015, foreign investment
in the HVAC equipment industry is categorised as an encouraged investment. Foreign
investments in the clean room equipment industry and the air purifiers industry are not categorised
as restricted or prohibited investments.
PRC LAWS RELATING TO LABOUR
Pursuant to the PRC Labour Law (中華人民共和國勞動法) promulgated on 5 July 1994 and
effective on 1 January 1995 and the PRC Employment Contract Law (中華人民共和國勞動合同法)
promulgated on 29 June 2007, amended on 28 December 2012 and effective on 1 July 2013, if
an employment relationship is established between an entity and its employees, written
employment contracts shall be prepared. The relevant laws stipulate the maximum number of
working hours per day and per week. Furthermore, the relevant laws also set forth the minimum
wages. The entities shall establish and develop systems for occupational safety and sanitation,
implement the rules and standards of the State on occupational safety and sanitation, educate
employees on occupational safety and sanitation, prevent accidents at work and reduce
occupational hazard.
Pursuant to the Social Insurance Law of PRC (中華人民共和國社會保險法) promulgated on 28 October
2010 and effective on 1 July 2011, employees shall participate in basic pension insurance, basic medical
insurance schemes and unemployment insurance. Basic pension, medical and unemployment
insurance contributions shall be paid by both employers and employees. Employees shall participate in
work-related injury insurance and maternity insurance schemes. Work-related injury insurance and
APPENDIX C – GOVERNMENT REGULATIONS
C-12
maternity insurance contributions shall be paid by employers. Employers shall make registration with the
local social insurance agency in accordance with the provisions of the Social Insurance Law of PRC.
Moreover, an employer shall declare and make social insurance contributions in full and on time. Except
for mandatory exceptions such as force majeure, social insurance premiums may not be paid late,
reduced or be exempted.
Pursuant to the Regulations on the Administration of Housing Fund (住房公積金管理條例)
promulgated and effective on 3 April 1999, as amended on 24 March 2002, PRC companies must
register with the applicable housing fund management centre and establish a special housing fund
account in an entrusted bank. Each of the PRC companies and their employees are required to
contribute to the housing fund and their respective deposits shall not be less than 5.0% of an
individual employee’s monthly average wage during the preceding year.
FOREIGN INVESTMENT
A wholly foreign-owned enterprise (“WFOE”) is governed by the Law of the People’s Republic of
China Concerning Enterprises with Sole Foreign Investments (中華人民共和國外資企業法), which
was promulgated on 12 April 1986 and revised on 31 October 2000, and its Implementation
Regulations (中華人民共和國外資企業法實施細則) promulgated on 12 December 1990 and revised
on 12 April 2001.
Procedures for establishment of a WFOE
The establishment of a WFOE will have to be approved by the Ministry of Commerce (“MOC”) (or
its delegated authorities). In the case of a WFOE whereby two (2) or more foreign investors jointly
apply for the establishment of a WFOE, a copy of the contract between the parties must also be
submitted to MOC (or its delegated authorities) for its approval and record. A WFOE must also
obtain a business licence from the State Administration for Industry and Commerce (“SAIC”) (or
its delegated authorities) before it can commence business.
Nature of WFOE
A WFOE is a limited liability company under the Foreign Enterprises Law as well as a legal person.
A legal person may independently assume civil obligations, enjoy civil rights and has the right to
own, use and dispose of property. It is required to have a registered capital contributed by the
foreign investor(s). The liability of the foreign investor(s) is limited to the amount of registered
capital contributed. A foreign investor may make its contributions by instalments and the
registered capital must be contributed within the period as approved by MOC (or its delegated
authorities) in accordance with relevant regulations.
Profit Distribution
The Foreign Enterprises Law and other related PRC laws provides that after payment of taxes, a
WFOE must make contributions to a reserve fund at a rate of not less than 10.0% of its after tax
profits and an employee bonus and welfare fund at a rate determined by the WFOE. If the
cumulative total of allocated reserve funds reaches 50.0% of an enterprise’s registered capital,
the enterprise will not be required to make any additional contribution. The enterprise is prohibited
from distributing dividends unless the losses (if any) of previous years have been made up.
The net profit that an investor receives after fulfilling its obligations under the laws and the
agreement and the contract, the funds it receives at the time of the enterprise’s scheduled
expiration or its early termination, and such other funds may be remitted abroad in accordance
with the PRC foreign exchange regulations and in the currency specified in the contract.
APPENDIX C – GOVERNMENT REGULATIONS
C-13
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The Company was converted from a private limited company into a public limited company on 10
December 2015. Our corporate affairs are governed by our Articles. The following statements are
brief summaries of our capital structure and the more important rights and privileges of our
Shareholders as conferred by the laws of Singapore and our Articles of Association. 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 registered offices
during normal business hours for a period of six (6) months from the date of the registration of this
Offer Document with the SGX-ST. The summary below does not purport to be complete and is
qualified in its entirety by reference to our Articles.
Shares
We have only one (1) class of shares, namely, our Shares, which have identical rights in all
respects and rank equally with one another. Our Articles provide that we may issue shares of a
different class with preferential, deferred, qualified or special rights, privileges or conditions as our
Directors 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. Our Shares
do not have a par value.
As at the date of this Offer Document, 71,900,000 Shares have been issued and fully paid. All of
our Shares are in registered form. No Shares are held by, or on behalf of, us or our subsidiaries.
We may, subject to the provisions of the Companies Act and the Catalist Rules, 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 Shares.
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 100.0%
(or such other limit as may be prescribed by the SGX-ST) of our issued share capital for the time
being, of which the aggregate number of Shares to be issued other than on a pro-rata basis to the
then existing Shareholders of our Company shall not exceed 50.0% (or such other limit as may be
prescribed by the SGX-ST) of our issued share capital for the time being. The approval, if granted,
will lapse at the conclusion of the annual general meeting following the date on which the approval
was granted unless otherwise revoked or varied by Shareholders in a general meeting. Subject to
the foregoing, the provisions of the Companies Act and any special rights attached to any class
of shares presently issued, all new Shares are under the control of our Directors who may allot and
issue the same with such rights and restrictions as they may think fit.
Shareholders
We maintain a register of Shareholders which contains the particulars of our Shareholders. Only
persons who are registered on 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. Except as required by law, no person
shall be recognised by the Company as holding any share upon any trust and we will not be bound
by or required in any way to recognise (even when having notice thereof) any equitable,
contingent, future or partial interest in any Share or any fractional part of a Share or (except only
as provided by our Articles or by law) any other rights for any Share other than the absolute right
to the entirety thereof in the person (other than the Depository) entered in the Register of
Members as the registered holder thereof or (where the person entered in the Register of
Members as the registered holder of a Share is the Depository) the person whose name is entered
APPENDIX D – DESCRIPTION OF ORDINARY SHARES
D-1
in the Depository Register in respect of that Share. If any Share stands jointly in the names of two
(2) or more persons, the person first named in the Register of Members as one (1) of the joint
holders of any Share shall as regards service of notices and, subject to the provisions of the
Articles, all or any other matters connected with our Company except with respect to the transfer
of Shares, be deemed the sole holder thereof.
We may close the Register of Members and the Depository Register at such time and for such
period as our Directors may, from time to time, determine. However, the registers may not be
closed for more than 30 days in aggregate in any calendar year, and prior notice of closure shall
be given to the SGX-ST, stating the period and purpose(s) for which the closure is made. We
typically close the Register of Shareholders to determine our Shareholders’ entitlement to receive
dividends and other distributions.
Transfer of Shares
There is no restriction on the transfer of fully paid Shares except where required by law or the
Catalist Rules or the rules or by-laws of the SGX-ST. Our Directors may in their discretion decline
to register any transfer of Shares which are not fully paid up, to a transferee of whom they do not
approve, or Shares on which we have a lien. Subject to our Articles, Shares may be transferred
by any Shareholder by a duly signed instrument of transfer in a form approved by our Directors
and the SGX-ST. Our Directors 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 require. We will replace lost or
destroyed certificates for Shares if we are properly notified and the applicant pays a fee which will
not exceed S$2.00 and furnishes any evidence and indemnity that our Directors may require.
General Meetings of Shareholders
We are required to hold an annual general meeting every year. Under our Articles, the annual
general meeting shall be held in each year (within a period of not more than 15 months after the
holding of the last preceding annual general meeting unless a longer period would not infringe the
rules and regulations of the SGX-ST, if any). In addition, for so long as the Shares of our Company
are listed on Catalist, the interval between the close of our Company’s financial year and the date
of our Company’s annual general meeting shall not exceed four (4) months or such period as may
be prescribed or permitted by the Companies Act and the SGX-ST.
Our Directors may convene an extraordinary general meeting whenever they think fit and must do
so if our Shareholders, representing not less than 10.0% of the total voting rights of all our
Shareholders, request in writing that such a meeting be held. In addition, two (2) or more of our
Shareholders holding not less than 10.0% of our issued share capital may call a 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 75.0% 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 our Articles, a change of our corporate name and a reduction in our share
capital 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 has supplied us with an address in Singapore for the giving of notices
and must set forth the place, the day and the hour of the meeting and, in the case of special
business, the general nature of that business.
APPENDIX D – DESCRIPTION OF ORDINARY SHARES
D-2
Voting Rights
A holder of our ordinary Shares is entitled to attend, speak and vote at any general meeting, in
person or by proxy. A proxy does not need to be a Shareholder. A person who holds ordinary
Shares through the SGX-ST book-entry settlement system will only be entitled to vote at a general
meeting as a Shareholder if his name appears on the Depository Register before the general
meeting, as certified by CDP. Except as otherwise provided in our Articles, two (2) or more
Shareholders must be present in person or by proxy to constitute a quorum at any general
meeting. Under our Articles, subject to any special rights or restrictions as to voting for the time
being attached to any shares by or in accordance with the Articles, at any general meeting all
resolutions shall be decided by way of poll, and every Shareholder present in person or by proxy
shall have one (1) vote for each fully paid Share which he holds or represents and in respect of
partly paid shares where calls are not due and unpaid. In the case of a tie vote, the Chairman of
the meeting shall be entitled to a casting 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. Our Board may
also declare an interim dividend without the approval of our Shareholders.
We must pay all dividends out of our profits. We may satisfy dividends by the issue of Shares to
our Shareholders. Please refer to the section entitled “Bonus and Rights Issues” below.
All dividends are paid to our Shareholders in proportion to the amount paid-up on each
Shareholder’s Shares, unless the rights attaching to an issue of any Share or class of shares
provide otherwise.
Unless otherwise directed, dividends are paid by cheque or warrant sent through the post to 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 the payment made to CDP, discharge us from any liability to that Shareholder in respect
of that payment.
Bonus and Rights Issues
Our Board may, with the approval of our Shareholders at a general meeting, capitalise any sums
standing to the credit of any of our Company’s reserve accounts or other undistributable reserve
or any sum standing to the credit of profit and loss 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 other Shareholders in proportion
to their shareholdings. Such rights are subject to any conditions attached to such issue and the
regulations of any stock exchange on which we are listed.
Our Board may also issue bonus Shares to participants of any share incentive or option scheme,
performance plan or any other plan implemented by our Company and approved by our
Shareholders in such manner and on such terms the Board shall think fit.
APPENDIX D – DESCRIPTION OF ORDINARY SHARES
D-3
Take-overs and Substantial Shareholdings
Obligations under The Singapore Code on Take-overs and Mergers
There are requirements under Singapore laws on take-over offers for our Shares that apply to us.
We will be subject to Sections 138, 139 and 140 of the SFA and the Singapore Code on Take-overs
and Mergers (the “Take-over Code”) issued by the Authority pursuant to Section 321 of the SFA
for so long as our Shares are listed for quotation on the SGX-ST. The Take-over Code regulates
the acquisition of ordinary shares of public companies or corporations, all or any of the Shares of
which are listed for quotation on a securities exchange, and contains certain provisions that may
delay, deter or prevent a take-over or change in control of such a public company. Any person
acquiring an interest, either on his own or together with parties acting in concert with him, in 30.0%
or more of voting shares in such a public company, or if such person holds, either on his own or
together with parties acting in concert with him, between 30.0% and 50.0% (both inclusive) of the
voting shares in that company and acquires additional voting shares representing more than 1.0%
of the voting shares in that company in any six (6)-month period, must, except with the consent
of the Securities Industry Council, extend a take-over offer for the remaining voting shares in
accordance with the provisions of the Take-over Code. Under the Take-over Code, “parties acting
in concert” comprise individuals or companies who, pursuant to an arrangement or understanding
(whether formal or informal), co-operate, through the acquisition by any of them of shares in a
company, to obtain or consolidate effective control of that company. Certain persons are
presumed, unless the contrary is established, to be acting in concert with each other as follows:
(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 (i), (ii), (iii) or (iv); and
(vi) companies whose associated companies include any of (i), (ii), (iii), (iv) or (v); and
(vii) any person who has provided financial assistance (other than a bank in the ordinary
course of business) to any of the above for the purchase of voting rights;
(b) a company with any of its directors (together with their close relatives, related trusts as well
as companies controlled by any of the directors, their close relatives and related trusts);
(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 client in respect of
the shareholdings of:
(i) the adviser and persons controlling, controlled by or under the same control as the
adviser; and
APPENDIX D – DESCRIPTION OF ORDINARY SHARES
D-4
(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 client total 10.0% or more of
the client’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); and
(vi) any person who has provided financial assistance (other than a bank in the ordinary
course of business) to any of the above for the purchase of voting rights.
Under the Take-over Code, a take-over offer for consideration other than cash must, subject to
certain exceptions, be accompanied by a cash alternative at not less than the highest price paid
by the offeror or parties acting in concert with the offeror during the offer period and within the six
(6) months preceding the acquisition of shares that triggered the take-over offer obligation.
Under the Take-over Code, where effective control of a public company incorporated in Singapore
is acquired or consolidated by a person, or persons acting in concert, a general offer to all other
shareholders of the company is normally required. An offeror must treat all shareholders of the
same class in an offeree company equally. A fundamental requirement is that our Shareholders
subject to the take-over offer must be given sufficient information, advice and time to consider and
decide on the offer.
Obligation to notify substantial shareholdings and changes thereto
For so long as our Shares are listed on the SGX-ST, each member shall, (a) upon becoming a
Substantial Shareholder of our Company, (b) for so long as he remains a Substantial Shareholder
of our Company, upon a change in the percentage level of his interest or interests in our Company
and (c) upon ceasing to be a Substantial Shareholder of our Company, give our secretary a notice
in writing of (i) the particulars of the Shares beneficially owned by him, or (ii) the particulars of the
change in interests (including the date of change and the circumstances by reason of which that
change has occurred), or (iii) the particulars of the date and circumstances of the cessation of
substantial shareholding, as the case may be, within two (2) business days after (aa) becoming
a Substantial Shareholder, (bb) the date of change in the percentage level of his interests, or (cc)
the date of cessation, as the case may be. The requirement to give notice shall not apply to CDP.
APPENDIX D – DESCRIPTION OF ORDINARY SHARES
D-5
“Percentage level”, in relation to a Substantial Shareholder means the percentage figure
ascertained by expressing the total votes attached to all the voting Shares in which the Substantial
Shareholder has an interest (or interests) immediately before or (as the case may be) immediately
after the relevant time as a percentage of the total votes attached to all the voting Shares in our
Company and, if it is not a whole number, rounding that figure down to the next whole number.
Pursuant to the Catalist Rules, our Company will immediately announce on SGXNET, any notices
of Substantial Shareholders’ interests or Directors’ interests in our Shares received by us.
While the definition of “interest” in our voting Shares for the purposes of substantial shareholder
disclosure requirements under the SFA is similar to that under the Companies Act, the SFA
provides that a person who has authority (whether formal or informal, or express or implied) to
dispose of, or to exercise control over the disposal of, a voting Share is regarded as having an
interest in such Share, even if such authority is, or is capable of being made, subject to restraint
or restriction in respect of particular voting Shares.
Liquidation or Other Return of Capital
If we are liquidated 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 all costs, charges, losses, expenses
and liabilities incurred in (a) the execution and discharge of their duties in their respective offices
unless such costs, charges, losses, expenses or liabilities arises through any negligence, wilful
default, breach of duty or breach of trust on their part in relation to us, and (b) defending any
proceedings, whether civil or criminal, relating to the affairs of our Company and in which
judgment is given in their favour or in which they are acquitted or in connection with any
application under the Companies Act in which relief is granted by the court unless such
proceedings arise through their own negligence, wilful default, breach of duty or breach of trust.
Limitations on Rights to Hold Shares or Vote in respect of the Shares
Except as described in “Voting Rights” and “Take-overs and Substantial Shareholdings” above,
there are no limitations imposed by Singapore law or by our Articles on the rights of non-resident
Shareholders to hold or vote in respect of our Shares.
Minority Rights
The rights of minority shareholders of Singapore-incorporated companies are protected under
Section 216 of the Companies Act, which gives the Singapore courts a general power to make any
order, upon application by any of our Shareholders, as they think fit to remedy any of the following
situations where:
(a) our affairs are being conducted or the powers of our Directors are being exercised in a manner
oppressive to, or in disregard of the interests of, one or more of the Shareholders; or
(b) we take an action, or threaten to take an action, or our Shareholders pass a resolution, or
propose to pass a resolution, which unfairly discriminates against, or is otherwise prejudicial
to, one or more of our Shareholders, including the applicant.
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Singapore courts have a wide discretion as to the reliefs they may grant and those reliefs are in
no way limited to those listed in the Companies Act itself. Without prejudice to the foregoing, the
Singapore courts may:
(a) direct or prohibit any act or cancel or vary any transaction or resolution;
(b) regulate the conduct of our affairs in the future;
(c) 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;
(d) provide for the purchase of a minority Shareholder’s Shares by our other Shareholders or by
us and, in the case of a purchase of Shares by us, a corresponding reduction of our share
capital;
(e) provide that our Memorandum of Association or our Articles be amended; or
(f) provide that we be wound up.
Treasury Shares
Our Articles of Association expressly permits our Company to acquire our issued shares and to
hold such shares as treasury shares in accordance with requirements of Section 76 of the
Companies Act. Our Company may make a purchase or acquisition of our own shares (i) on a
securities exchange if the purchase or an acquisition has been authorised in advance by our
Company in general meeting; (ii) or otherwise than on a securities exchange if the purchase or
acquisition is made in accordance with an equal access scheme authorised in advance by our
Company in general meeting. The aggregate number of ordinary Shares held as treasury shares
shall not at any time exceed 10.0% of the total number of Shares of our Company at that time. Any
excess shares shall be disposed or cancelled before the end of a period of six (6) months
beginning with the day on which that contravention of limit occurs, or such further period as the
Registrar may allow. Where ordinary Shares or stocks are held as treasury shares by our
Company through purchase or acquisition by our Company, our Company shall be entered in the
register as the member holding those shares or stocks.
Our Company shall not exercise any right in respect of the treasury shares and any purported
exercise of such a right is void. Such rights include any right to attend or vote at meetings and our
Company shall be treated as having no right to vote and the treasury shares shall be treated as
having no voting rights.
In addition, no dividend may be paid, and no other distribution (whether in cash or otherwise) of
our Company’s assets (including any distribution of assets to members on a winding up) may be
made, to our Company in respect of the treasury shares. However, this would not prevent an
allotment of shares as fully paid bonus shares in respect of the treasury shares or the subdivision
or consolidation of any treasury share into treasury share of a smaller amount, if the total value
of the treasury shares after the subdivision or consolidation is the same as the total value of the
treasury shares before the subdivision or consolidation, as the case may be.
Where shares are held as treasury shares, our Company may at any time (i) sell the shares (or
any of them) for cash; (ii) transfer the shares (or any of them) for the purposes of or pursuant to
an employees’ share scheme; (iii) transfer the shares (or any of them) as consideration for the
acquisition of shares in or assets of another company or assets of a person; or (iv) cancel the
shares (or any of them).
APPENDIX D – DESCRIPTION OF ORDINARY SHARES
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The discussion below provides information about certain provisions of our Articles of Association.
This description is only a summary and is qualified by reference to our Articles of Association, a
copy of which will be displayed at our registered office at 8 Pandan Crescent, #01-06, Singapore
128464. The following are extracts of the provisions in our Articles relating to:
(a) A director’s power to vote on a proposal, arrangement or contract in which he is
interested
Article 90(1) – Powers of Directors to contract with Company
No Director or intending Director shall be disqualified by his office from contracting or
entering into any arrangement with the Company either as vendor, purchaser or otherwise
nor shall such contract or arrangement or any contract or arrangement entered into by or on
behalf of the Company in which any Director shall be in any way interested be avoided nor
shall any Director so contracting or being so interested be liable to account to the Company
for any profit realised by any such contract or arrangement by reason only of such Director
holding that office or of the fiduciary relation thereby established but every Director shall
observe the provisions of Section 156 of the Act relating to the disclosure of the interests of
the Directors in transactions or proposed transactions with the Company or of any office or
property held by a Director which might create duties or interests in conflict with his duties
or interests as a Director and any transactions to be entered into by or on behalf of the
Company in which any Director shall be in any way interested shall be subject to any
requirements that may be imposed by the Exchange or the Act. No Director shall vote in
regard to any contract, arrangement or transaction, or proposed contract, arrangement or
transaction in which he has directly or indirectly a personal material interest as aforesaid or
in respect of any allotment of shares in or debentures of the Company to him and if he does
so vote his vote shall not be counted.
Article 90(2) – Relaxation of restriction on voting
A Director, notwithstanding his interest, may be counted in the quorum present at any
meeting where he or any other Director is appointed to hold any office or place of profit under
the Company, or where the Directors resolve to exercise any of the rights of the Company
(whether by the exercise of voting rights or otherwise) to appoint or concur in the
appointment of a Director to hold any office or place of profit under any other company, or
where the Directors resolve to enter into or make any arrangements with him or on his behalf
pursuant to the Articles or where the terms of any such appointment or arrangements as
herein before mentioned are considered, and he may vote on any such matter other than in
respect of the appointment of or arrangements with himself or the fixing of the terms thereof.
Article 91(2) – Exercise of voting power
The Directors may exercise the voting power conferred by the shares in any company held
or owned by the Company in such manner and in all respects as the Directors think fit in the
interests of the Company (including the exercise thereof in favour of any resolution
appointing the Directors or any of them to be directors of such company or voting or providing
for the payment of remuneration to the directors of such company) and any such Director of
the Company may vote in favour of the exercise of such voting powers in the manner
aforesaid notwithstanding that he may be or be about to be appointed a director of such other
company.
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(b) A director’s power to vote on remuneration (including pension or other benefits) for
himself or for any other director, and whether the quorum at a meeting of the board of
directors to vote on directors’ remuneration may include the director whose
remuneration is the subject of the vote
Article 86(1) – Fees
The fees of the Directors shall be determined from time to time by the Company in general
meetings and such fees shall not be increased except pursuant to an ordinary resolution
passed at a general meeting where notice of the proposed increase shall have been given
in the notice convening the meeting. Such fees shall be divided among the Directors in such
proportions and manner as they may agree and in default of agreement equally, except that
in the latter event any Director who shall hold office for part only of the period in respect of
which such fee is payable shall be entitled only to rank in such division for the proportion of
fee related to the period during which he has held office.
Article 86(2) – Extra remuneration
Any Director who is appointed to any executive office or serves on any committee or who
otherwise performs or renders services, which, in the opinion of the Directors, are outside his
ordinary duties as a Director, may be paid such extra remuneration as the Directors may
determine, subject however as is hereinafter provided in this Article.
Article 86(3) – Remuneration of Director
The fees (including any remuneration under Article 86(2) above) in the case of a Director
other than an Executive Director shall be payable by a fixed sum and shall not at any time
be by commission on or percentage of the profits or turnover, and no Director whether an
Executive Director or otherwise shall be remunerated by a commission on or percentage of
turnover.
Article 87 – Expenses
The Directors shall be entitled to be repaid all travelling or such reasonable expenses as may
be incurred in attending and returning from meetings of the Directors or of any committee of
the Directors or general meetings or otherwise howsoever in or about the business of the
Company in the course of the performance of their duties as Directors.
Article 88 – Pensions to Directors and dependants
Subject to the Act, the Directors on behalf of the Company may pay a gratuity or other
retirement, superannuation, death or disability benefits to any Director or former Director
who had held any other salaried office or place of profit with the Company or to his widow or
dependants or relations or connections or to any persons in respect of and may make
contributions to any fund and pay premiums for the purchase or provision of any such
gratuity, pension or allowance.
APPENDIX E – SUMMARY OF SELECTED ARTICLES OFASSOCIATION OF OUR COMPANY
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Article 89 – Benefits for employees
The Directors may procure the establishment and maintenance of or participate in or
contribute to any non-contributory or contributory pension or superannuation fund or life
assurance scheme or any other scheme whatsoever for the benefit of and pay, provide for
or procure the grant of donations, gratuities, pensions, allowances, benefits or emoluments
to any persons (including Directors and other officers) who are or shall have been at any time
in the employment or service of the Company or of the predecessors in business of the
Company or of any subsidiary company, and the wives, widows, families or dependants of
any such persons. The Directors may also procure the establishment and subsidy of or
subscription and support to any institutions, associations, clubs, funds or trusts calculated to
be for the benefit of any such persons as aforesaid or otherwise to advance the interests and
well-being of the Company or of any such other company as aforesaid or of its Members and
payment for or towards the insurance of any such persons as aforesaid, and subscriptions
or guarantees of money for charitable or benevolent objects or for any exhibition or for any
public, general or useful object.
Article 94 – Remuneration of Chief Executive Officer/Managing Director
The remuneration of a Chief Executive Officer/Managing Director (or any Director holding an
equivalent appointment) shall from time to time be fixed by the Directors and may subject to
the Articles be by way of salary or commission or participating in profits or by any or all of
these modes but he shall not under any circumstances be remunerated by a commission on
or a percentage of turnover.
Article 103(1) – Alternate Directors
Any Director of the Company may at any time appoint any person who is not a Director or
alternate Director and who is approved by a majority of his co-Directors to be his alternate
Director for such period as he thinks fit and may at any time remove any such alternate
Director from office. An alternate Director so appointed shall be entitled to receive from the
Company such proportion (if any) of the remuneration otherwise payable to his appointor as
such appointor may by notice in writing to the Company from time to time direct, but save as
aforesaid he shall not in respect of such appointment be entitled to receive any remuneration
from the Company. Any fee paid to an alternate Director shall be deducted from the
remuneration otherwise payable to his appointor.
(c) The borrowing powers exercisable by the directors and how such borrowing powers
may be varied
Article 118 – Directors’ borrowing powers
The Directors may at their discretion exercise all the powers of the Company to borrow or
otherwise raise money, to mortgage, charge or hypothecate all or any property or business
of the Company including any uncalled or called but unpaid capital and to issue debentures
or give any other security, whether outright or as collateral security, for any debt, liability or
obligation of the Company or of any third party.
APPENDIX E – SUMMARY OF SELECTED ARTICLES OFASSOCIATION OF OUR COMPANY
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(d) The retirement or non-retirement of a director under an age limit requirement
Article 93 – Chief Executive Officer/Managing Director to be subject to retirement by rotation
Any Director who is appointed as a Chief Executive Officer/Managing Director (or an
equivalent appointment) shall be subject to the same provisions as to retirement by rotation,
resignation and removal as the other Directors of the Company notwithstanding the
provisions of his contract of service in relation to his executive office and if he ceases to hold
the office of Director from any cause he shall ipso facto and immediately cease to be a Chief
Executive Officer/Managing Director.
Article 98 – Retirement of Directors by rotation
Subject to the Articles and to the Act, at each Annual General Meeting at least one-third of
the Directors for the time being (or, if their number is not a multiple of three (3), the number
nearest to but not less than one-third) shall retire from office by rotation. For the avoidance
of doubt, each Director shall retire from office at least once every three (3) years.
Article 99 – Selection of Directors to retire
The Directors to retire by rotation shall include (so far as necessary to obtain the number
required) any Director who wishes to retire and not to offer himself for re-election but shall
not include any Director who is due to retire at the meeting by reason of age. Any further
Directors so to retire shall be those of the other Directors subject to retirement by rotation
who have been longest in office since their last re-election or appointment or have been in
office for the three (3) years since their last election. However as between persons who
became or were last re-elected Directors on the same day, those to retire shall (unless they
otherwise agree among themselves) be determined by lot. A retiring Director shall be eligible
for re-election.
Article 100 – Deemed re-elected
The Company at the meeting at which a Director retires under any provision of the Articles
may by ordinary resolution fill up the vacated office by electing a person thereto. In default
the retiring Director shall be deemed to have been re-elected, unless:
(i) at such meeting it is expressly resolved not to fill up such vacated office or a resolution
for the re-election of such Director is put to the meeting and lost; or
(ii) such Director is disqualified under the Act from holding office as a Director or has given
notice in writing to the Company that he is unwilling to be re-elected;
(iii) such Director has attained any retiring age applicable to him as a Director; or
(iv) the nominating committee appointed has given notice in writing to the directors that
such director is not suitable for re-appointment, having regard to the Director’s
contribution and performance.
The retirement of any Director who is deemed to have been re-elected shall not have effect
until the conclusion of the meeting and such Director will continue in office without a break.
APPENDIX E – SUMMARY OF SELECTED ARTICLES OFASSOCIATION OF OUR COMPANY
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(e) The number of shares, if any, required for the qualification of a director
Article 85 – Qualifications
A Director need not be a Member and shall not be required to hold any share qualification in
the Company and shall be entitled to attend and speak at general meetings but subject to the
provisions of the Act he shall not be of or over the age of seventy (70) years at the date of
his appointment.
(f) The rights, preferences and restrictions attaching to each class of shares
Article 4 – Issue of new shares
Subject to the Act and the Articles, no shares may be issued by the Directors without the prior
sanction of an ordinary resolution of the Company in general meeting pursuant to section 161
of the Act but subject thereto and to Article 47, and to any special rights attached to any
shares for the time being issued, the Directors may issue, allot or grant options over or
otherwise deal with or dispose of the same to such persons on such terms and conditions
and for such consideration (or, where permitted under the Act and the listing rules of the
Exchange, for no consideration) and at such time and subject or not to the payment of any
part of the amount thereof in cash as the Directors may think fit, and any shares may be
issued in such denominations or with such preferential, deferred, qualified or special rights,
privileges or conditions 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.
Article 5(1) – Rights attached to certain shares
Preference shares may be issued subject to such limitations thereof as may be prescribed
by the Exchange upon which shares in the Company may be listed and the rights attaching
to shares other than ordinary shares shall be expressed in the Memorandum of Association
or the Articles. 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. The total number of issued preference shares shall not exceed the total
number of issued ordinary shares issued at any time. Preference shareholders shall also
have the right to vote at any meeting convened for the purpose of reducing the capital or
winding up or sanctioning a sale of the undertaking of the Company or where the proposal
to be submitted to the meeting directly affects their rights and privileges or when the dividend
on the preference shares is more than six (6) months in arrears.
Article 5(2)
The Company has power to issue further preference capital ranking equally with, or in priority
to, preference shares from time to time already issued or about to be issued.
Article 7(2) – Rights of preference shareholders
The repayment of preference capital other than redeemable preference capital or any other
alteration of preference shareholder rights may only be made pursuant to a special resolution
of the preference shareholders concerned. Provided always that where the necessary
APPENDIX E – SUMMARY OF SELECTED ARTICLES OFASSOCIATION OF OUR COMPANY
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majority for such a special resolution is not obtained at the general meeting, consent in
writing if obtained from the holders of three-fourths of the preference shares concerned
within two (2) months of the general meeting, shall be as valid and effectual as a special
resolution carried at the general meeting.
Article 16(1) – Entitlement to certificate
Shares must be allotted and certificates despatched within ten (10) market days of the final
closing date for an issue of shares unless the Exchange shall agree to an extension of time
in respect of that particular issue. The Depository must despatch statements to successful
investor applicants confirming the number of shares held under their Securities Accounts.
Persons entered in the Register of Members as registered holders of shares shall be entitled
to certificates within ten (10) market days after lodgement of any transfer. Every registered
shareholder shall be entitled to receive share certificates in reasonable denominations for his
holding and where a charge is made for certificates, such charge shall not exceed S$2 (or
such other fee as the Directors may determine having regard to any limitation thereof as may
be prescribed by any stock exchange upon which the shares of the Company may be listed).
Where a registered shareholder transfers part only of the shares comprised in a certificate
or where a registered shareholder requires the Company to cancel any certificate or
certificates and issue new certificates for the purpose of subdividing his holding in a different
manner the old certificate or certificates shall be cancelled and a new certificate or
certificates for the balance of such shares issued in lieu thereof and the registered
shareholder shall pay a fee not exceeding S$2 (or such other fee as the Directors may
determine having regard to any limitation thereof as may be prescribed by any stock
exchange upon which the shares of the Company may be listed) for each such new certificate
as the Directors may determine. Where the Member is a Depositor, the delivery by the
Company to the Depository of provisional allotments or share certificates in respect of the
aggregate entitlements of Depositors to new shares offered by way of rights issue or other
preferential offering or bonus issue shall to the extent of the delivery discharge the Company
from any further liability to each such Depositor in respect of his individual entitlement.
Article 21(1) – Directors’ power to decline to register
Subject to the Articles, there shall be no restriction on the transfer of fully paid up shares
except where required by law or by the rules, bye-laws or listing rules of the Exchange but
the Directors may in their discretion decline to register any transfer of shares upon which the
Company has a lien and in the case of shares not fully paid up may refuse to register a
transfer to a transferee of whom they do not approve. If the Directors shall decline to register
any such transfer of shares, they shall give to both the transferor and the transferee written
notice of their refusal to register as required by the Act and the listing rules of the Exchange.
Article 47 – Rights and privileges of new shares
Subject to any special rights for the time being attached to any existing class of shares, the
new shares shall be issued upon such terms and conditions and with such rights and
privileges annexed thereto as the general meeting resolving upon the creation thereof shall
direct and if no direction be given as the Directors shall determine; subject to the provisions
of the 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.
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Article 71(1) – Voting rights of Members
Subject and without prejudice to any special privileges or restrictions as to voting for the time
being attached to any special class of shares for the time being forming part of the capital
of the Company and to Article 6, each Member entitled to vote may vote in person or by proxy
or attorney, and (in the case of a corporation) by a representative. A person entitled to more
than one (1) vote need not use all his votes or cast all the votes he uses in the same way.
Article 71(3)
Notwithstanding anything contained in the Articles, a Depositor shall not be entitled to attend
any general meeting and to speak and vote thereat unless his name is certified by the
Depository to the Company as appearing on the Depository Register not later than forty-eight
(48) hours before the time of the relevant general meeting (the “cut-off time”) as a Depositor
on whose behalf the Depository holds shares in the Company. For the purpose of
determining the number of votes which a Depositor or his proxy may cast on a poll, the
Depositor or his proxy shall be deemed to hold or represent that number of shares entered
in the Depositor’s Securities Account at the cut-off time as certified by the Depository to the
Company, or where a Depositor has apportioned the balance standing to his Securities
Account as at the cut-off time between two (2) proxies, to apportion the said number of
shares between the two (2) proxies in the same proportion as specified by the Depositor in
appointing the proxies; and accordingly no instrument appointing a proxy of a Depositor shall
be rendered invalid merely by reason of any discrepancy between the number of shares
standing to the credit of that Depositor’s Securities Account as at the cut-off time, and the
true balance standing to the Securities Account of a Depositor as at the time of the relevant
general meeting, if the instrument is dealt with in such manner as aforesaid.
Article 72 – Voting rights of joint holders
Where there are joint holders of any share any one (1) of such persons may vote and be
reckoned in a quorum at any meeting either personally or by proxy or by attorney or in the
case of a corporation by a representative as if he were solely entitled thereto but if more than
one (1) of such joint holders is so present at any meeting then the person present whose
name stands first in the Register of Members or the Depository Register (as the case may
be) in respect of such share shall alone be entitled to vote in respect thereof. Several
executors or administrators of a deceased Member in whose name any share stands shall for
the purpose of this Article be deemed joint holders thereof.
Article 73 – Voting rights of Members of unsound mind
If a Member be a lunatic, idiot or non-compos mentis, he may vote by his committee, curator
bonis or such other person as properly has the management of his estate and any such
committee, curator bonis or other person may vote by proxy or attorney, provided that such
evidence as the Directors may require of the authority of the person claiming to vote shall
have been deposited at the registered office of the Company for the time being not less than
forty-eight (48) hours before the time appointed for holding the meeting.
APPENDIX E – SUMMARY OF SELECTED ARTICLES OFASSOCIATION OF OUR COMPANY
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Article 74 – Right to vote
Subject to the provisions of the Articles, every Member either personally or by proxy or by
attorney or in the case of a corporation by a representative shall be entitled to be present and
to vote at any general meeting and to be reckoned in the quorum thereat in respect of shares
fully paid and in respect of partly paid shares where calls are not due and unpaid. In the event
a Member has appointed more than one (1) proxy, only one (1) proxy is counted in
determining the quorum.
(g) Any change in capital
Article 50(1) – Power to consolidate, cancel and subdivide shares
The Company may by ordinary resolution alter its share capital in the manner permitted
under the Act including without limitation:
(i) consolidate and divide all or any of its shares;
(ii) cancel the number of shares which, at the date of the passing of the resolution, have
not been taken or agreed to be taken by any person or which have been forfeited and
diminish its share capital in accordance with the Act;
(iii) subdivide its shares or any of them (subject to the provisions of the Act), provided
always that in such subdivision the proportion between the amount paid and the amount
(if any) unpaid on each reduced share shall be the same as it was in the case of the
share from which the reduced share is derived, and so that the resolution whereby any
share is sub-divided may determine that, as between the holders of the shares resulting
from such sub-division, one or more of the shares may, as compared with the others,
have any such preferred, deferred or other special rights, or be subject to any such
restrictions, as the Company has power to attach to new shares; and
(iv) subject to the provisions of the Articles and the Act, convert any class of shares into any
other class of shares.
Article 50(2) – Repurchase of Company’s shares
The Company may purchase or otherwise acquire its issued shares subject to and in
accordance with the provisions of the Act and any other relevant rule, law or regulation
enacted or promulgated by any relevant competent authority from time to time (collectively,
the “Relevant Laws”), on such terms and subject to such conditions as the Company may
in general meeting prescribe in accordance with the Relevant Laws. Any shares purchased
or acquired by the Company as aforesaid may be cancelled or held as treasury shares and
dealt with in accordance with the Relevant Laws. On the cancellation of any share as
aforesaid, the rights and privileges attached to that share shall expire. In any other instance,
the Company may hold or deal with any such share which is so purchased or acquired by it
in such manner as may be permitted by, and in accordance with, the Act.
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Article 51 – Power to reduce capital
The Company may by special resolution reduce its share capital or any other undistributable
reserve in any manner subject to any requirements and consents required by law. Without
prejudice to the generality of the foregoing, upon cancellation of any share purchased or
otherwise acquired by the Company pursuant to these presents and the Act, the number of
issued shares of the Company shall be diminished by the number of shares so cancelled, and
where any such cancelled shares were purchased or acquired out of the capital of the
Company, the amount of the share capital of the Company shall be reduced accordingly.
(h) Any change in the respective rights of the various classes of shares including the
action necessary to change the rights, indicating where the conditions are different
from those required by the applicable law
Article 7(1) – Variation of rights
If at any time the share capital is divided into different classes, the repayment of preference
capital other than redeemable preference capital and the rights attached to any class (unless
otherwise provided by the terms of issue of the shares of that class) may, subject to the
provisions of the Act, whether or not the Company is being wound up, only be made, varied
or abrogated with the sanction of a special resolution passed at a separate general meeting
of the holders of shares of the class and to every such special resolution, the provisions of
Section 184 of the Act shall, with such adaptations as are necessary, apply. To every such
separate general meeting, the provisions of the Articles relating to general meetings shall
mutatis mutandis apply; but so that the necessary quorum shall be two (2) persons at least
holding or representing by proxy or by attorney one-third of the issued shares of the class.
Provided always that where the necessary majority for such a special resolution is not
obtained at the general meeting, consent in writing if obtained from the holders of
three-fourths of the issued shares of the class concerned within two (2) months of the general
meeting shall be as valid and effectual as a special resolution carried at the general meeting.
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 whereof are to be varied.
Article 8 – Creation or issue of further shares with special rights
The rights conferred upon the holders of the shares of any class issued with preferred or
other rights shall, unless otherwise expressly provided by the terms of issue of the shares of
that class or by the Articles, be deemed to be varied by the creation or issue of further shares
ranking equally therewith.
(i) Any time limit after which a dividend entitlement will lapse and an indication of the
party in whose favour this entitlement operates
Article 130(1) – Unclaimed dividends
The payment by the Directors of any unclaimed dividends or other moneys payable on or in
respect of a share into a separate account shall not constitute the Company a trustee in
respect thereof. All dividends unclaimed after being declared may be invested or otherwise
made use of by the Directors for the benefit of the Company and any dividend unclaimed
APPENDIX E – SUMMARY OF SELECTED ARTICLES OFASSOCIATION OF OUR COMPANY
E-9
after a period of six (6) years from the date of declaration of such dividend may be forfeited
and if so shall revert to the Company but the Directors may at any time thereafter at their
absolute discretion annul any such forfeiture and pay the dividend so forfeited to the person
entitled thereto prior to the forfeiture. For the avoidance of doubt no Member shall be entitled
to any interest, share of revenue or other benefit arising from any unclaimed dividends,
howsoever and whatsoever. If the Depositor returns any such dividend or money to the
Company, the relevant Depositor shall not have any right or claim in respect of such dividend
or money against the Company if a period of six (6) years has elapsed from the date of the
declaration of such dividend or the date on which such other money was first payable.
(j) Any limitation on the right to own shares including limitations on the right of
non-resident or foreign shareholders to hold or exercise voting rights on the shares
Article 11 – No trust recognised
Except as required by law, no person shall be recognised by the Company as holding any
share upon any trust and the Company shall not be bound by or compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future or partial
interest in any share or any interest in any fractional part of a share or (except only as by
these Articles or by law otherwise provided) any other rights in respect of any share, except
an absolute right to the entirety thereof in the person (other than the Depository) entered in
the Register of Members as the registered holder thereof or (where the person entered in the
Register of Members as the registered holder of a share is the Depository) the person whose
name is entered in the Depository Register in respect of that share.
Article 20 – Person under disability
No share shall in any circumstances be transferred to any infant, bankrupt or person of
unsound mind but nothing herein contained shall be construed as imposing on the company
any liability in respect of the registration of such transfer if the company has no actual
knowledge of the same.
Article 48(1) – Issue of new shares to Members
Subject to any direction to the contrary that may be given by the Company in general
meeting, or except as permitted under the Exchange’s listing rules, all new shares shall
before issue be offered to the Members in proportion, as far as the circumstances admit, to
the number of the existing shares to which they are entitled or hold. The offer shall be made
by notice specifying the number of shares offered, and limiting a time within which the offer,
if not accepted, will be deemed to be declined. After the expiration of the aforesaid time, or
on the receipt of an intimation from the person to whom the offer is made that he declines to
accept the shares offered, the Directors may dispose of those shares in such manner as they
think most beneficial to the Company. The Directors may likewise so dispose of any new
shares which (by reason of the ratio which the new shares bear to shares held by persons
entitled to an offer of new shares) cannot, in the opinion of the Directors, be conveniently
offered under this Article.
APPENDIX E – SUMMARY OF SELECTED ARTICLES OFASSOCIATION OF OUR COMPANY
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Article 48(2)
Notwithstanding Article 48(1) above but subject to the Act and the byelaws and listing rules
of the Exchange, the Company may by ordinary resolution in general meeting give to the
Directors a general authority, either unconditionally or subject to such conditions as may be
specified in the ordinary resolution to:
(i) issue shares in the capital of the Company (whether by way of rights, bonus or
otherwise); and/or
(ii) make or grant Instruments; and/or
(iii) (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:
(a) the aggregate number of shares or Instruments to be issued pursuant to the ordinary
resolution (including shares to be issued in pursuance of Instruments made or granted
pursuant to the ordinary resolution but excluding shares which may be issued pursuant
to any adjustments effected under any relevant Instrument) does not exceed any
applicable limits and complies with the manner of calculation prescribed by the
Exchange;
(b) in exercising the authority conferred by the ordinary resolution, the Company shall
comply with the listing rules for the time being in force (unless such compliance is
waived by the Exchange) and the Articles; and
(c) (unless revoked or varied by the Company in general meeting) the authority conferred
by the ordinary resolution shall not continue in force beyond the conclusion of the
Annual General Meeting next following the passing of the ordinary resolution, or the
date by which such Annual General Meeting is required by law to be held, or the
expiration of such other period as may be prescribed by the Act (whichever is the
earliest).
Article 48(3)
Notwithstanding Article 48(1) above but subject to the Act, the Directors shall not be required
to offer any new shares to Members to whom by reason of foreign securities laws such offers
may not be made without registration of the shares or a prospectus or other document, but
may sell the entitlements to the new shares on behalf of such Members in such manner as
they think most beneficial to the Company.
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1. NAME OF THE PLAN
The Plan shall be called the “Eindec Performance Share Plan 2015”.
2. DEFINITIONS
2.1 In the Plan, 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 or modified from time to time.
“Adoption Date” The date on which the Plan is adopted by resolution of
the Shareholders of the Company.
“Articles” The Articles of the Company, as amended or modified
from time to time.
“Auditors” The auditors of the Company for the time being.
“Award” A contingent award of Shares granted under Rule 5.
“Award Date” In relation to an Award, the date on which the Award
is granted pursuant to Rule 5.
“Award Letter” A letter in such form as the Committee shall approve
confirming an Award granted to a Participant by the
Committee.
“Board” The Board of Directors of the Company for the time
being.
“CDP” The Central Depository (Pte) Limited.
“Catalist” The Catalist Board of the SGX-ST.
“Committee” The committee comprising Directors of the Company
duly authorized and appointed by the Board of
Directors pursuant to Rule 10, to administer the Plan.
“Company” Eindec Corporation Limited, a company incorporated
in Singapore.
“Control” The capacity to dominate decision-making, directly or
indirectly, in relation to the financial and operating
policies of the Company.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
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“Controlling Shareholder” A person who holds directly or indirectly 15.0% or
more of the nominal amount of all voting shares in the
Company; or in fact exercises Control over the
Company.
“Depositor” A person being a Depository Agent or holder of a
securities account maintained with CDP but not
including a holder of a sub-account maintained with a
Depository Agent.
“Group” The Company and its Subsidiaries.
“Group Executive” Any employee of the Group (including any Group
Executive Director who meets the relevant age and
rank criteria and who shall be regarded as a Group
Executive for the purposes of the Plan) selected by
the Committee to participate in the Plan in accordance
with Rule 4.1(a).
“Group Executive Director” A director of the Company and any of its Subsidiaries,
as the case may be, who performs an executive
function.
“Listing Manual” Section B: Rules of Catalist of the Listing Manual of
the SGX-ST, as amended, modified or supplemented
from time to time.
“Market Value” In relation to a Share, on any day:
(a) the average price of a Share on the Singapore
Exchange over the five (5) immediately
preceding Trading Days; or
(b) if the Committee is of the opinion that the Market
Value as determined in accordance with (a)
above is not representative of the value of a
Share, such price as the Committee may
determine, such determination to be confirmed
in writing by the Auditors (acting only as experts
and not as arbitrators) to be in their opinion, fair
and reasonable.
“Participant” Any eligible person selected by the Committee to
participate in the Plan in accordance with the rules
hereof.
“Performance Condition” In relation to an Award, the condition specified on the
Award Date in relation to that Award.
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“Performance Period” In relation to an Award, a period, the duration of which
is to be determined by the Committee on the Award
Date, during which the Performance Condition is to be
satisfied.
“Plan” The Eindec Performance Share Plan 2015, as the
same may be modified or altered from time to time.
“Release” In relation to an Award, the release at the end of the
Performance Period relating to that Award of all or
some of the Shares to which that Award relates in
accordance with Rule 7 and, to the extent that any
Shares which are the subject of the Award are not
released pursuant to Rule 7, the Award in relation to
those Shares shall lapse accordingly, and “Released”
shall be construed accordingly.
“Release Schedule” In relation to an Award, a schedule in such form as the
Committee shall approve, setting out the extent to
which Shares which are the subject of that Award
shall be Released on the Performance Condition
being satisfied (whether fully or partially) or exceeded
or not being satisfied, as the case may be, at the end
of the Performance Period.
“Released Award” An Award which has been released in accordance
with Rule 7.
“Retention Period” In relation to an Award, such period commencing on
the Vesting Date in relation to that Award as may be
determined by the Committee on the Award Date.
“SGX-ST” The Singapore Exchange Securities Trading Limited.
“Shares” Ordinary shares in the capital of the Company.
“Shareholders” The registered holders for the time being of the
shares (other than the CDP) or in the case of
Depositors, Depositors who have Shares entered
against their names in the Depository Register.
“Sponsor” The sponsor of the Company from time to time, as
required by the Listing Manual.
“Subsidiary” A company (whether incorporated within or outside
Singapore and wheresoever resident) being a
subsidiary for the time being of the Company within
the meaning of Section 5 of the Act.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
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“Trading Day” A day on which the Shares are traded on Catalist.
“Vesting” In relation to Shares which are the subject of a
Released Award, the absolute entitlement to all or
some of the Shares which are the subject of a
Released Award and “Vest” and “Vested” shall be
construed accordingly.
“Vesting Date” In relation to Shares which are the subject of a
Released Award, the date (as determined by the
Committee and notified to the relevant Participant) on
which those Shares have Vested pursuant to Rule 7.
2.2 For purposes of the Plan, the Company shall be deemed to have control over another
company if it has the capacity to dominate decision-making, directly or indirectly, in
relation to the financial and operating policies of that company.
2.3 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.
2.4 Any reference to a time of a day in the Plan is a reference to Singapore time.
2.5 Any reference in the Plan 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 not otherwise defined in the Plan and used in the Plan shall have
the meaning assigned to it under the Act or any statutory modification thereof, as the case
may be.
2.6 The term “Associate” shall have the meaning ascribed to it by the SGX-ST Listing Manual
as set out below:
(a) in relation to any Director, CEO, Substantial Shareholder or Controlling Shareholder
(being an individual) means:
(i) his immediate family;
(ii) the trustees of any trust of which he or his immediate family is a beneficiary or,
in the case of a discretionary trust, is a discretionary object; and
(iii) any corporation in which he and his immediate family together (directly or
indirectly) have an interest of 30.0% or more.
(b) in relation to a Substantial Shareholder or a Controlling Shareholder (being a
corporation) means any other corporation which is its Subsidiary or holding company
or is a Subsidiary of such holding company or one in the equity of which it and/or such
other company or companies taken together (directly or indirectly) have an interest
of 30.0% or more.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
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2.7 The terms “Depository Register” and “Depository Agent” shall have the same meanings
ascribed to them by Section 130A of the Act.
3. OBJECTIVES OF THE PLAN
The Plan has been proposed in order to:
(a) foster an ownership culture within the Group which aligns the interests of Participants
with the interests of shareholders;
(b) motivate Participants to achieve key financial and operational goals of the Company
and/or their respective business divisions and encourage greater dedication and
loyalty to the Group; and
(c) make total employee remuneration sufficiently competitive to recruit new Participants
and/or retain existing Participants whose contributions are important to the long-term
growth and profitability of the Group, and whose skills are commensurate with the
Company’s ambition to become a world class company.
4. ELIGIBILITY OF PARTICIPANTS
4.1 The following persons shall be eligible to participate in the Plan at the absolute discretion
of the Committee:
(a) Group Executives
Full-time employees of the Group and Group Executive Directors who have attained
the age of 21 years and hold such rank as may be designated by the Committee from
time to time. The Participant must also not be an undischarged bankrupt and must
not have entered into a composition with his creditors.
(b) Controlling Shareholders and Associates of Controlling Shareholders
Subject to Rule 4.2, persons who are qualified under 4.1(a) above and who are also
Controlling Shareholders or Associates of Controlling Shareholders.
4.2 Employees who are Controlling Shareholders or Associates of Controlling Shareholders
shall (notwithstanding that they may meet the eligibility criteria in Rule 4.1(a) above) not
participate in the Plan unless:
(a) their participation; and
(b) the terms of each grant and the actual number of Awards to be granted to them,
have been approved by the independent Shareholders in general meeting in separate
resolutions for each such person, and in respect of each such person, in separate
resolutions for each of (i) his participation and (ii) the terms of each grant and the actual
number of Awards to be granted to him, provided always that it shall not be necessary to
obtain the approval of the independent Shareholders of our Company for the participation
in the Plan of a Controlling Shareholder or an Associate of a Controlling Shareholder who
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
F-5
is, at the relevant time already a Participant. For the purposes of obtaining such approval
from the independent Shareholders, our Company shall procure that the circular, letter or
notice to the shareholder in connection therewith shall set out the following:
(a) clear justifications for the participation of such Controlling Shareholders or
Associates of Controlling Shareholders; and
(b) clear rationale for the terms of the Awards to be granted to such Controlling
Shareholders or Associates of Controlling Shareholders.
4.3 Save as prescribed by Rule 853 of the Listing Manual, there shall be no restriction on the
eligibility of any Participant to participate in any other share option or share incentive
scheme, whether or not implemented by any other companies within our Group.
4.4 Subject to the Act and any requirement of the SGX-ST or any other stock exchange on
which the Shares may be listed or quoted, the terms of eligibility for participation in the
Plan may be amended from time to time at the absolute discretion of the Committee.
5. GRANT OF AWARDS
5.1 Except as provided in Rule 8, the Committee may grant Awards to Group Executives as
the Committee may select, in its absolute discretion, at any time during the period when
the Plan is in force, provided that no Participant who is a member of the Committee shall
participate in any deliberation or decision in respect of Awards granted or to be granted to
him.
5.2 The number of Shares which are the subject of each Award to be granted to a Participant
in accordance with the Plan shall be determined at the absolute discretion of the
Committee, which shall take into account criteria such as his rank, job performance, years
of service and potential for future development, his contribution to the success and
development of the Group and the extent of effort and resourcefulness with which the
Performance Condition may be achieved within the Performance Period, provided that in
relation to Controlling Shareholders and Associates of Controlling Shareholders:
(a) the aggregate number of Shares which may be offered by way of grant of Awards to
Participants who are Controlling Shareholders or Associates of Controlling
Shareholders under this Plan shall not exceed 25.0% of the total number of Shares
available under this Plan, and such aggregate number of Shares which may be
offered to such Participants under this Plan has been approved by the independent
shareholder of our Company in a separate resolution. For the purposes of obtaining
such approval of the independent Shareholders of our Company, the Committee shall
procure that the circular, letter or notice to the shareholder in connection therewith
shall set out clear rationale for the participation of and grant of Awards to which
Participants who are Associates of Controlling Shareholders, provided always that it
shall not be necessary to obtain the approval of the independent Shareholders of our
Company for the participation in this Plan of Associates of Controlling Shareholders
who at the relevant time were already Participants; and
(b) the number of Shares available to each Associate of a Controlling Shareholder shall
not exceed 10.0% of the Shares available under this Plan.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
F-6
5.3 The Committee shall decide in relation to an Award:
(a) the Participant;
(b) the Award Date;
(c) the Performance Period;
(d) the number of Shares which are the subject of the Award;
(e) the Performance Condition;
(f) the Release Schedule; and
(g) any other condition(s) which the Committee may determine in relation to that Award.
5.4 The Committee may amend or waive the Performance Period, the Performance Condition
and/or the Release Schedule in respect of any Award:
(a) in the event of a take-over offer being made for the Shares or if (i) Shareholders of
the Company or (ii) under the Act, 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 or in the
event of a proposal to liquidate or sell all or substantially all of the assets of the
Company; or
(b) if anything happens which causes the Committee to conclude that:
(i) a changed Performance Condition and/or Release Schedule would be a fairer
measure of performance, and would be no less difficult to satisfy; or
(ii) the Performance Condition and/or Release Schedule should be waived,
and shall notify the Participants of such change or waiver.
5.5 As soon as reasonably practicable after making an Award the Committee shall send to
each Participant an Award Letter confirming the Award and specifying in relation to the
Award:
(a) the Award Date;
(b) the Performance Period;
(c) the number of Shares which are the subject of the Award;
(d) the Performance Condition;
(e) the Release Schedule; and
(f) any other condition which the Committee may determine in relation to that Award.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
F-7
5.6 Participants are not required to pay for the grant of Awards.
5.7 An Award or Released Award shall be personal to the Participant to whom it is granted
and, prior to the allotment and/or transfer to the Participant of the Shares to which the
Released Award relates, shall not be transferred, charged, assigned, pledged or otherwise
disposed of, in whole or in part, except with the prior approval of the Committee and if a
Participant shall do, suffer or permit any such act or thing as a result of which he would
or might be deprived of any rights under an Award or Released Award without the prior
approval of the Committee, that Award or Released Award shall immediately lapse.
6. EVENTS PRIOR TO THE VESTING DATE
6.1 An Award shall, to the extent not yet Released, immediately lapse without any claim
whatsoever against the Company:
(a) in the event of misconduct on the part of the Participant as determined by the
Committee in its discretion;
(b) subject to Rule 6.2(b), where the Participant is a Group Executive, upon the
Participant ceasing to be in the employment of the Group for any reason whatsoever;
or
(c) in the event of an order being made or a resolution passed for the winding-up of the
Company on the basis, or by reason, of its insolvency.
For the purpose of Rule 6.1(b), the Participant shall be deemed to have ceased to be so
employed as at the date the notice of termination of employment is tendered by or is given
to him, unless such notice shall be withdrawn prior to its effective date.
6.2 In any of the following events, namely:
(a) 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 Award;
(b) where the Participant being a Group Executive ceases to be in the employment of the
Group by reason of:
(i) ill health, injury or disability (in each case, evidenced to the satisfaction of the
Committee);
(ii) redundancy;
(iii) retirement at or after the legal retirement age;
(iv) retirement before the legal retirement age with the consent of the Committee;
(v) the company by which he is employed or to which he is seconded, as the case
may be, 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;
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
F-8
(vi) (where applicable) his transfer of employment between companies within the
Group;
(vii) his transfer to any government ministry, governmental or statutory body or
corporation at the direction of any company within the Group; or
(viii) any other event approved by the Committee;
(c) the death of a Participant; or
(d) any other event approved by the Committee,
the Committee may, in its absolute discretion, preserve all or any part of any Award and
decide as soon as reasonably practicable following such event either to Vest some or all
of the Shares which are the subject of any Award or to preserve all or part of any Award
until the end of the Performance Period and subject to the provisions of the Plan. In
exercising its discretion, the Committee will have regard to all circumstances on a
case-by-case basis, including (but not limited to) the contributions made by that
Participant and the extent to which the Performance Condition has been satisfied.
6.3 Without prejudice to the provisions of Rule 5.4, if before the Vesting Date, any of the
following occurs:
(a) a take-over offer for the Shares becomes or is declared unconditional;
(b) 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 being approved by shareholders of the Company and/or
sanctioned by the court under the Act; or
(c) an order being made or a resolution being passed for the winding up of the Company
(other than as provided in Rule 6.1(c) or for amalgamation or reconstruction),
the Committee will consider, at its discretion, whether or not to Release any Award, and
will take into account all circumstances on a case-by-case basis, including (but not limited
to) the contributions made by that Participant. If the Committee decides to Release any
Award, then in determining the number of Shares to be Vested in respect of such Award,
the Committee will have regard to the proportion of the Performance Period which has
lapsed and the extent to which the Performance Condition has been satisfied. Where
Awards are Released, the Committee will, as soon as practicable after the Awards have
been Released, procure the allotment or transfer to each Participant of the number of
Shares so determined, such allotment or transfer to be made in accordance with Rule 7.
If the Committee so determines, the Release of Awards may be satisfied in cash as
provided in Rule 7.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
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7. RELEASE OF AWARDS
7.1 Review of Performance Condition
(a) As soon as reasonably practicable after the end of each Performance Period, the
Committee shall review the Performance Condition specified in respect of each
Award and determine at its discretion whether it has been satisfied and, if so, the
extent to which it has been satisfied, and provided that the relevant Participant has
continued to be a Group Executive from the Award Date up to the end of the
Performance Period, shall Release to that Participant all or part (as determined by
the Committee at its discretion in the case where the Committee has determined that
there has been partial satisfaction of the Performance Condition) of the Shares to
which his Award relates in accordance with the Release Schedule specified in
respect of his Award on the Vesting Date. If not, the Awards shall lapse and be of no
value.
If the Committee determines in its sole discretion that the Performance Condition has
not been satisfied or (subject to Rule 6) if the relevant Participant has not continued
to be a Group Executive from the Award Date up to the end of the relevant
Performance Period, that Award shall lapse and be of no value and the provisions of
Rules 7.2 to 7.4 shall be of no effect.
The Committee shall have the discretion to determine whether the Performance
Condition has been satisfied (whether fully or partially) or exceeded and in making
any such determination, the Committee shall have the right to make computational
adjustments to the audited results of the Company or the Group to take into account
such factors as the Committee may determine to be relevant, including changes in
accounting methods, taxes and extraordinary events, and further the right to amend
the Performance Condition if the Committee decides that a changed performance
target would be a fairer measure of performance.
(b) Shares which are the subject of a Released Award shall be Vested to a Participant
on the Vesting Date, which shall be a Trading Day falling as soon as practicable after
the review by the Committee referred to in Rule 7.1(a) and, on the Vesting Date, the
Committee will procure the allotment or transfer to each Participant of the number of
Shares so determined.
(c) Where new Shares are allotted upon the Vesting of any Award, the Company shall,
as soon as practicable after such allotment, apply to the Sponsor and/or the SGX-ST
and any other stock exchange on which the Shares are quoted or listed for
permission to deal in and for quotation of such Shares.
7.2 Release of Award
On vesting of the Award, after the end of each Performance Period, the Committee has the
discretion to determine whether to issue new Shares or to procure the market purchase of
existing Shares, or the payment of its equivalent in cash to the Participant. Shares which
are allotted or transferred on the Release of an Award to a Participant shall be issued in
the name of, or transferred to, CDP to the credit of the securities account of that
Participant maintained with CDP or the securities sub-account of that Participant
maintained with a Depository Agent, in each case, as designated by that Participant.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
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7.3 Ranking of Shares
New Shares allotted and issued, and existing Shares procured by the Company for
transfer, on the Release of an Award shall:
(a) be subject to all the provisions of the Articles and the Memorandum of Association of
the Company (including provisions relating to the liquidation 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 for which is on
or after the relevant Vesting Date, and shall in all other respects rank pari passu with
other existing Shares then in issue.
“Record Date” means the date fixed by the Company for the purposes of determining
entitlements to dividends or other distributions to or rights of holders of Shares.
7.4 Cash Awards
The Committee, in its absolute discretion, may determine to make a Release of an Award,
wholly or partly, in the form of cash rather than Shares, in which event the Participant shall
receive on the Vesting Date, in lieu of all or part of the Shares which would otherwise have
been allotted or transferred to him on Release of his Award, the aggregate Market Value
of such Shares on the Vesting Date.
7.5 Moratorium
Shares which are allotted and issued or transferred to a Participant pursuant to the
Release of an Award shall not be transferred, charged, assigned, pledged or otherwise
disposed of, in whole or in part, during the Retention Period, except to the extent set out
in the Award Letter or with the prior approval of the Committee. The Company may take
steps that it considers necessary or appropriate to enforce or give effect to this disposal
restriction including specifying in the Award Letter the conditions which are to be attached
to an Award for the purpose of enforcing this disposal restriction.
8. LIMITATION ON THE SIZE OF THE PLAN
8.1 The aggregate number of new Shares which may be issued pursuant to Awards granted
under the Plan on any date, when added to (i) the number of new Shares issued and
issuable in respect of all Awards granted under the Plan; and (ii) all Shares issued and
issuable and/or transferred or transferable in respect of all options granted or awards
granted under any other share incentive schemes or share plans adopted by the Company
for the time being in force, shall not exceed 15.0% of the issued and paid-up share capital
(excluding treasury shares) of the Company on the day preceding that date.
8.2 In addition, the number of Shares available to Controlling Shareholders or Associates of
a Controlling Shareholder under this Plan are subject to the limits stated in Rule 5.2 above.
8.3 Shares which are the subject of Awards which have lapsed for any reason whatsoever may
be the subject of further Awards granted by the Committee under the Plan.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
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9. ADJUSTMENT EVENTS
9.1 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 or reduction) shall take place, then:
(a) the class and/or number of Shares which is/are the subject of an Award to the extent
not yet Vested; and/or
(b) the class and/or number of Shares in respect of which future Awards may be granted
under the Plan,
shall be adjusted in such manner as the Committee may determine to be appropriate,
provided that no adjustment shall be made if as a result, the Participant receives a benefit
that a Shareholder does not receive.
9.2 Unless the Committee considers an adjustment to be appropriate, the issue of securities
as consideration for an acquisition or a private placement of securities, or the cancellation
of issued Shares purchased or acquired by the Company by way of a market purchase of
such Shares undertaken by the Company on the SGX-ST during the period when a share
purchase mandate granted by shareholders of the Company (including any renewal of
such mandate) is in force, shall not normally be regarded as a circumstance requiring
adjustment.
9.3 Notwithstanding the provisions of Rule 9.1, 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.
9.4 Upon any adjustment required to be made pursuant to this Rule 9, the Company shall
notify the Participant (or his duly appointed personal representatives where applicable) in
writing and deliver to him (or his duly appointed personal representatives where
applicable) a statement setting forth the class and/or number of Shares thereafter to be
issued or transferred on the Vesting of an Award. Any adjustment shall take effect upon
such written notification being given.
10. ADMINISTRATION OF THE PLAN
10.1 The Plan shall be administered by the Committee in its absolute discretion with such
powers and duties as are conferred on it by the Board of Directors of the Company,
provided that no member of the Committee shall participate in any deliberation or decision
in respect of Awards granted or to be granted to him.
10.2 The Committee shall have the power, from time to time, to make and vary such
arrangements, guidelines and/or regulations (not being inconsistent with the Plan) for the
implementation and administration of the Plan, to give effect to the provisions of the Plan
and/or to enhance the benefit of the Awards and the Released Awards to the Participants,
as they may, in their absolute discretion, think fit. Any matter pertaining or pursuant to the
Plan and any dispute and uncertainty as to the interpretation of the Plan, any rule,
regulation or procedure thereunder or any rights under the Plan shall be determined by the
Committee.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
F-12
10.3 Neither the Plan nor the grant of Awards under the Plan shall impose on the Company or
the Committee or any of its members any liability whatsoever in connection with:
(a) the lapsing of any Awards pursuant to any provision of the Plan;
(b) the failure or refusal by the Committee to exercise, or the exercise by the Committee
of, any discretion under the Plan; and/or
(c) any decision or determination of the Committee made pursuant to any provision of
the Plan.
10.4 Any decision or determination of the Committee made pursuant to any provision of the
Plan (other than a matter to be certified by the Auditors) shall be final, binding and
conclusive (including for the avoidance of doubt, any decisions pertaining to disputes as
to the interpretation of the Plan or any rule, regulation or procedure hereunder or as to any
rights under the Plan). The Committee shall not be required to furnish any reasons for any
decision or determination made by it.
11. NOTICES AND COMMUNICATIONS
11.1 Any notice required to be given by a Participant to the Company shall be sent or made to
the registered office 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.
11.2 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.
11.3 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 other notice or
communication from the Company to a Participant shall be deemed to be received by that
Participant, when left at the address specified in Rule 11.2 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.
12. MODIFICATIONS TO THE PLAN
12.1 Any or all the provisions of the Plan may be modified and/or altered at any time and from
time to time by a resolution of the Committee, except that:
(a) no modification or alteration shall alter adversely the rights attached to any Award
granted prior to such modification or alteration except with the consent in writing of
such number of Participants who, if their Awards were Released to them upon the
Performance Conditions for their Awards being satisfied in full, would become
entitled to not less than three quarters of all the Shares which would fall to be Vested
upon Release of all outstanding Awards upon the Performance Conditions for all
outstanding Awards being satisfied in full;
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
F-13
(b) the definitions of “Group Executive”, “Group Executive Director”, “Participant”,
“Performance Period” and “Release Schedule” and the provisions of Rules 4, 5, 6, 7,
8, 9, 10, 16 and this Rule 12 shall not be altered to the advantage of Participants
except with the prior approval of the Company’s shareholders in general meeting;
and
(c) no modification or alteration shall be made without the prior approval of the SGX-ST
and such other regulatory authorities as may be necessary.
For the purposes of Rule 12.1(a), the opinion of the Committee as to whether any
modification or alteration would adversely affect the rights attached to any Award shall be
final, binding and conclusive. For the avoidance of doubt, nothing in this Rule 12.1 shall
affect the right of the Committee under any other provision of the Plan to amend or adjust
any Award.
12.2 Notwithstanding anything to the contrary contained in Rule 12.1, the Committee may at
any time by resolution (and without other formality, save for the prior approval of the
SGX-ST) amend or alter the Plan in any way to the extent necessary or desirable, in the
opinion of the Committee, to cause the Plan to comply with, or take into account, any
statutory provision (or any amendment or modification thereto, including amendment of or
modification to the Act) or the provision or the regulations of any regulatory or other
relevant authority or body (including the SGX-ST).
12.3 Written notice of any modification or alteration made in accordance with this Rule 12 shall
be given to all Participants.
13. TERMS OF EMPLOYMENT UNAFFECTED
The terms of employment of a Participant shall not be affected by his participation in the
Plan, which shall neither form part of such terms nor entitle him to take into account such
participation in calculating any compensation or damages on the termination of his
employment for any reason.
14. DURATION OF THE PLAN
14.1 The Plan shall continue to be in force at the discretion of the Committee, subject to a
maximum period of ten (10) years commencing on the Adoption Date, provided always that
the Plan may continue beyond the above stipulated period with the approval of the
Company’s shareholders by ordinary resolution in general meeting and of any relevant
authorities which may then be required.
14.2 The Plan may be terminated at any time by the Committee or, at the discretion of the
Committee, by resolution of the Company in general meeting, subject to all relevant
approvals which may be required and if the Plan is so terminated, no further Awards shall
be granted by the Committee hereunder.
14.3 The expiry or termination of the Plan shall not affect Awards which have been granted prior
to such expiry or termination, whether such Awards have been Released (whether fully or
partially) or not.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
F-14
15. TAXES
All taxes (including income tax) arising from the grant or Release of any Award granted to
any Participant under the Plan shall be borne by that Participant.
16. COSTS AND EXPENSES OF THE PLAN
16.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with
the issue and allotment or transfer of any Shares pursuant to the Release of any Award
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 CDP Depository
Agent.
16.2 Save for the taxes referred to in Rule 15 and such other costs and expenses expressly
provided in the Plan to be payable by the Participants, all fees, costs and expenses
incurred by the Company in relation to the Plan including but not limited to the fees, costs
and expenses relating to the allotment and issue, or transfer, of Shares pursuant to the
Release of any Award, shall be borne by the Company.
17. DISCLAIMER OF LIABILITY
Notwithstanding any provisions herein contained, the Committee and the Company shall
not under any circumstances be held liable for any costs, losses, expenses and damages
whatsoever and howsoever arising in any event, including but not limited to the Company’s
delay in issuing, or procuring the transfer of, the Shares or applying for or procuring the
listing of new Shares on Catalist in accordance with Rule 7.1(c).
18. DISCLOSURES IN ANNUAL REPORTS
The following disclosures (as applicable) will be made by the Company in its annual report
for so long as the Plan continues in operation:
(a) the names of the members of the Committee administering the Plan;
(b) in respect of the following Participants:
(i) Directors of our Company;
(ii) Controlling Shareholders and their Associates; and
(iii) Participants who have received Shares pursuant to the Release of Awards
granted under the Plan which, in aggregate, represent 5.0% or more of the
aggregate of the total number of new Shares available under the Plan;
the following information:
(1) the name of the Participant;
(2) the number of new Shares issued to such Participant during the financial year
under review;
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
F-15
(3) the aggregate number of Shares comprised in Awards granted under the Plan
during the financial year under review;
(4) the number of existing Shares purchased for delivery pursuant to Release of
Awards to such Participant during the financial year under review;
(5) the aggregate number of Shares comprised in Awards which have not been
released as at the end of the financial year under review;
(6) the aggregate number of Shares comprised in Awards granted under the Plan
since the commencement of the Plan to the end of the financial year under
review;
(7) the number of new Shares allotted to such Participant since the commencement
of the Performance Share Plan to the end of financial year under review;
(8) the number of existing Shares transferred to such Participant since the
commencement of the Plan to the end of the financial year under review;
(c) In relation to the Plan:
(i) the aggregate number of Shares comprised in Awards which have Vested under
the Plan since the commencement of the Plan to the end of the financial year
under review;
(ii) the aggregate number of new Shares issued which are comprised in the Awards
Vested during the financial year under review; and
(iii) the aggregate number of Shares comprised in Awards granted under the Plan
which have not yet Released, as at the end of the financial year under review;
and
(d) such other information as may be required by the Listing Manual or the Act.
If any of the above is not applicable, an appropriate negative statement shall be included
therein.
19. DISPUTES
Any disputes or differences of any nature arising hereunder shall be referred to the
Committee and its decision shall be final and binding in all respects.
20. GOVERNING LAW
The Plan shall be governed by, and construed in accordance with, the laws of the Republic
of Singapore. The Participants, by accepting grants of Awards in accordance with the
Plan, and the Company submit to the exclusive jurisdiction of the courts of the Republic
of Singapore.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
F-16
21. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT, CHAPTER 53B
No person other than the Company or a Participant shall have any right to enforce any
provision of the Plan or any Award by the virtue of the Contracts (Rights of Third Parties)
Act, Chapter 53B of Singapore.
22. ELIGIBLE SHAREHOLDERS
Shareholders who are eligible to participate in the scheme must abstain from voting on any
resolution relating to the Plan (other than a resolution relating to the participation of, or
grant of options to, directors and employees of the issuer’s parent company and its
Subsidiaries). In particular, all Shareholders who are eligible to participate in the Plan shall
abstain from voting on resolutions of the Shareholders relating to (a) the implementation
of the Plan; and (b) the participation of, or grant of Awards to Controlling Shareholders and
their Associates.
APPENDIX F – RULES OF THE EINDEC PERFORMANCE SHARE PLAN 2015
F-17
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The statements made herein regarding taxation are general in nature and is not intended to be
and does not constitute legal or tax advice. These statements are based on certain aspects of the
tax laws of Singapore and administrative guidelines issued by the relevant authorities in force as
at the Latest Practicable Date and are subject to any changes in such laws or administrative
guidelines, or in the interpretation of these laws or guidelines, occurring after such date, which
changes could be made on a retrospective basis. These laws and guidelines are also subject to
various interpretations and the relevant tax authorities or the courts could later disagree with the
explanations or conclusions set out below. The statements below are not to be regarded as advice
on the tax position of any holder of our Shares or of any person acquiring, selling or otherwise
dealing with our Shares or on any tax implications arising from the acquisition, sale or other
dealings in respect of our Shares. The statements made herein do not purport to be a
comprehensive or exhaustive description of all of the tax considerations that may be relevant to
a decision to purchase, own or dispose of our Shares and do not purport to deal with the tax
consequences applicable to all categories of investors some of which (such as dealers in
securities) may be subject to special rules. Prospective shareholders are advised to consult their
own tax advisers as to the Singapore or other tax consequences of the acquisition, ownership or
disposal of our Shares. The statements below are based on the assumption that our Company is
tax resident in Singapore for Singapore income tax purposes. It is emphasised that neither our
Company nor any other persons involved in this Offer Document accepts responsibility for any tax
effects or liabilities resulting from the subscription for, purchase, holding or disposal of our Shares.
SINGAPORE TAXATION
Income Tax
General
Scope of Tax
Corporate taxpayers (whether Singapore tax resident or non-Singapore tax resident) are generally
subject to Singapore income tax on all Singapore source income, and on foreign source income
received or deemed received in Singapore (unless specified conditions for exemption are
satisfied). Foreign income in the form of dividends, branch profits and service fee income received
or deemed received in Singapore by a Singapore tax resident corporate taxpayer may however be
exempt from Singapore tax if specified conditions are met.
Individual taxpayers (both Singapore tax resident and non-Singapore tax resident) are subject to
Singapore income tax on income accruing in or derived from Singapore, subject to certain
exceptions and conditions. Foreign-sourced income received or deemed received in Singapore on
or after 1 January 2004 by a Singapore tax resident individual (except for income received through
a partnership in Singapore) is exempt from Singapore income tax if the Comptroller of Income Tax
in Singapore (“Comptroller”) is satisfied that the tax exemption would be beneficial to the
individual.
Rates of tax
The prevailing corporate income tax rate is 17.0% with partial tax exemption for normal
chargeable income of up to S$300,000 as follows:
• 75.0% exemption of up to the first S$10,000 and
• 50.0% exemption of up to the next S$290,000.
APPENDIX G – TAXATION
G-1
If a newly incorporated Singapore tax resident company (whose principal activity is not that of
investment holding or that of developing properties for sale, investment, or both) is not limited by
guarantee, its total share capital is beneficially held directly by no more than 20 individual
shareholders throughout the basis period for that year of assessment and at least one individual
is holding at least 10.0% of the total number of issued ordinary shares throughout the basis period
for that year of assessment, then the following exemptions for normal chargeable income will
apply for the first three (3) years of assessment:
• 100.0% exemption of up to the first S$100,000; and
• 50.0% exemption of up to the next S$200,000.
An individual is regarded as a tax resident in Singapore for a year of assessment if in the calendar
year preceding the year of assessment, he resides in Singapore, or 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.
Singapore tax-resident individuals are generally subject to tax on a progressive scale. The present
top marginal rate of tax is 20.0%, which will be increased to 22.0% from the Year of Assessment
2017.
Non-Singapore tax resident individuals are generally subject to tax at 20.0% (22.0% from Year of
Assessment 2017), at concessionary tax rates or the income may be exempt if specified
conditions are satisfied. For example, Singapore employment income derived by non-Singapore
resident individuals is taxed at a flat rate of 15.0% or at the progressive resident tax rates,
whichever yields a higher amount of tax.
Dividend Distributions
Dividends paid by a Singapore tax resident company would be considered as sourced from
Singapore. Dividends received from a Singapore tax resident company by either Singapore tax
resident or non-Singapore tax resident shareholders are not subject to Singapore withholding tax.
Under the one-tier corporate tax system in Singapore, the tax paid by a Singapore tax resident
company is a final tax and the after-tax profits of the company can be distributed to its
shareholders as tax exempt (one-tier) dividends.
As our Company is a Singapore tax resident company, the dividends distributed by our Company
will be tax exempt (one-tier) dividends. The dividends will be exempt from Singapore income tax
in the hands of our shareholders, regardless of whether the shareholder is a company or an
individual and whether or not the shareholder is a Singapore tax resident. However, foreign
shareholders are advised to consult with their own tax advisers to take into account the tax laws
of their respective countries of residence and the existence of any double taxation agreement
which their country of residence may have with Singapore.
Gains on Disposals of Ordinary Shares
Singapore does not impose tax on capital gains. There are no specific laws or regulations which
deal with the characterisation of whether a gain is revenue or capital in nature. The
characterisation would usually depend on the facts and circumstances surrounding the purchase
APPENDIX G – TAXATION
G-2
and sale of a particular asset. In general, gains or profits derived from the disposal of our Shares
acquired for long-term investment purposes should be considered as capital gains and not subject
to Singapore tax.
On the other hand, gains may be construed to be of an income nature and subject to Singapore
income tax if they arise from or are otherwise connected with activities which the Comptroller
regards as the carrying on of a trade or business of dealing in shares in Singapore.
For any disposal of our ordinary Shares from 1 June 2012 to 31 May 2017 (both dates inclusive)
by a company, upfront “non-taxation” certainty may however be granted on any gains derived by
the divesting company if immediately prior to the date of share disposal, the divesting company
has held at least 20% of our Shares for a continuous period of at least 24 months.
For share disposals that do not satisfy the above conditions, the tax treatment on any gains/losses
that may arise from the disposal of shares (i.e. whether the gains/losses are capital or revenue in
nature) would continue to be determined based on a consideration of the specific facts and
circumstances of the case and by reference to established case law principles.
In addition, corporate shareholders who apply, or who are required to apply, the Singapore
Financial Reporting Standard 39 Financial Instruments – Recognition and Measurement (“SFRS
39”) for the purposes of Singapore income tax may be required to recognise revenue gains or
losses (i.e. excluding capital gains or losses) in accordance with the provisions of SFRS 39 (as
modified by the applicable provisions of Singapore income tax law) even though no sale or
disposal of our Shares have been made.
Because the precise tax status will vary from shareholder to shareholder, Shareholders should
consult their own accounting and tax advisers regarding the Singapore income tax consequences
of their acquisition, holding and disposal of our Shares.
Stamp Duty
No stamp duty is 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 the Shares at the rate of S$0.20 for every S$100.00 or
any part thereof of the consideration for or market value of, the Shares, whichever is higher. The
purchaser is liable for the stamp duty charge, unless otherwise agreed by the parties to the
transaction.
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 an instrument of transfer to be executed) or if the
instrument of transfer is executed outside of Singapore. However, stamp duty may be payable if
the instrument of transfer which is executed outside Singapore is subsequently brought into
Singapore.
Estate Duty
Singapore estate duty was abolished with effect from 15 February 2008.
APPENDIX G – TAXATION
G-3
Goods and Services Tax (“GST”)
The sale of our Shares by a GST-registered investor belonging in Singapore through a SGX-ST
member or to another person belonging in Singapore is an exempt supply not subject to GST.
Any GST (for example, GST on brokerage) incurred by the GST-registered investor in connection
with the making of this exempt supply will generally become an additional cost to the investor
unless the investor satisfies certain conditions prescribed under the GST legislation or by the
Comptroller of GST.
Where our Shares are sold by a GST-registered investor to a person belonging outside Singapore
(and who is outside Singapore at the time of supply), the sale is a taxable supply subject to GST
at zero rate. Consequently, any GST (for example, GST on brokerage) incurred by him in the
making of this zero-rated supply for the purpose of his business will, subject to the provisions of
the GST legislation, be recoverable as an input tax credit in his GST returns.
Investors should seek their own tax advice on the recoverability of GST incurred on expenses in
connection with the purchase and sale of our Shares.
Services such as brokerage and handling services rendered by a GST-registered person to an
investor belonging in Singapore in connection with the investor’s purchase or sale of our Shares
will be subject to GST at the prevailing rate (currently 7.0%). Similar services rendered
contractually to an investor belonging outside Singapore are subject to GST at zero-rate provided
that the investor is not physically present in Singapore at the time the services are performed and
the services do not directly benefit a person who belongs in Singapore.
APPENDIX G – TAXATION
G-4
You are invited to apply and subscribe for the Placement Shares at the Placement Price for each
Placement Share, subject to the following terms and conditions:
1. YOUR APPLICATION MUST BE MADE IN LOTS OF 100 PLACEMENT SHARES OR
INTEGRAL MULTIPLES THEREOF SUBJECT TO A MINIMUM OF 1,000 PLACEMENT
SHARES. YOUR APPLICATION FOR ANY OTHER NUMBER OF SHARES WILL BE
REJECTED.
2. Your application for the Placement Shares may only be made by way of printed BLUE
Placement Shares Application Forms or other such forms of application as the Issue
Manager, Sponsor and Placement Agent deem appropriate.
YOU MAY NOT USE CPF FUNDS TO APPLY FOR THE PLACEMENT SHARES.
3. You are allowed to submit only one (1) application in your own name for the Placement
Shares. Any separate application by you for the Placement Shares shall be deemed to
be multiple applications and may be rejected at the discretion of our Company and the
Issue Manager, Sponsor and Placement Agent.
If you, being other than an approved nominee company, have submitted an application
for Placement Shares in your own name, you should not submit any other application
for Placement Shares for any other person. Such separate applications shall be
deemed to be multiple applications and may be rejected at the discretion of our
Company and the Issue Manager, Sponsor and Placement Agent.
Joint applications for the Placement Shares shall be rejected. Multiple applications for
the Placement Shares shall be liable to be rejected at the discretion of our Company
and the Issue Manager, Sponsor and Placement Agent. If you submit or procure
submissions of multiple share applications for Placement Shares, you may be deemed
to have committed an offence under the Penal Code (Chapter 224) of Singapore and
the SFA, and your applications may be referred to the relevant authorities for
investigation. Multiple applications or those appearing to be or suspected of being
multiple applications may be rejected at the discretion of our Company and the Issue
Manager, Sponsor and Placement Agent.
4. We will not accept applications from any person under the age of 18 years, undischarged
bankrupts, sole proprietorships, partnerships or non-corporate bodies, joint Securities
Account holders of CDP and from applicants whose addresses (as furnished in their
Application Forms) bear post office box numbers. No person acting or purporting to act on
behalf of a deceased person is allowed to apply under the Securities Account with CDP in the
name of the deceased at the time of application.
5. We will not recognise the existence of a trust. Any application by a trustee or trustees must
therefore be made in his/her/their own name(s) and without qualification or, where the
application is made by way of an Application Form by a nominee, in the name(s) of an
approved nominee company or approved nominee companies after complying with
paragraph 6 below.
APPENDIX H – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATIONS AND ACCEPTANCE
H-1
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
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 have an existing
Securities Account with CDP but fail to provide your Securities Account number or provide an
incorrect Securities Account number in Section B of the Application Form, 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 differ from those particulars in your Securities
Account as maintained with CDP. If you possess more than one (1) individual direct
Securities Account with CDP, your application shall be rejected.
8. If your address as stated in the Application Form 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 and other correspondence from
CDP will be sent to your address last registered with CDP.
9. Our Company, in consultation with the Issue Manager, Sponsor and Placement Agent,
reserves the right to reject any application which does not conform strictly to the
instructions set out in the Application Form and in this Offer Document or which is
illegible, incomplete, incorrectly completed or which is accompanied by an improperly
drawn remittance or improper form of remittance or remittances which are not
honoured upon their first presentation.
10. Our Company, in consultation with the Issue Manager, Sponsor and Placement Agent,
further reserves the right to treat as valid any applications not completed or submitted
or effected in all respects in accordance with the instructions set out in the Application
Forms or the terms and conditions of this Offer Document, and also to present for
payment or other processes all remittances at any time after receipt and to have full
access to all information relating to, or deriving from, such remittances or the
processing thereof.
11. Without prejudice to the rights of our Company, the Issue Manager, Sponsor and
Placement Agent, as agent of our Company, has been authorised to accept, for and on
behalf of our Company, such other forms of application as the Issue Manager, Sponsor
and Placement Agent deems appropriate.
12. Our Company, in consultation with the Issue Manager, Sponsor and Placement Agent,
reserves the right to reject or accept, in whole or in part, any application, without assigning
any reason therefor, and no enquiry and/or correspondence on the decision of our Company
will be entertained. In deciding the basis of allotment which shall be at our discretion, due
consideration will be given to the desirability of allotting the Placement Shares to a
reasonable number of applicants with a view to establishing an adequate market for our
Shares.
APPENDIX H – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATIONS AND ACCEPTANCE
H-2
13. 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 Placement Shares allotted to you, if your application is
successful. This will be the only acknowledgement of application monies received and is not
an acknowledgement by our Company or the Issue Manager, Sponsor and Placement Agent.
You irrevocably authorise CDP to complete and sign on your behalf, as renouncee, any
documents required for the issue of the Placement Shares allotted to you.
14. In the event that our Company lodges a supplementary or replacement offer document
(“Relevant Document”) pursuant to the SFA or any applicable legislation in force from time
to time prior to the close of the Placement and the Placement Shares have not been issued,
we will (as required by law), at our Company’s sole and absolute discretion and subject to the
SFA, either:
(i) within two (2) days (excluding any Saturday, Sunday or public holiday) from date of
lodgement of the Relevant Document, give you notice in writing of how to obtain, or
arrange to receive, a copy of the Relevant Document, and provide you with an option
to withdraw your application and take all reasonable steps to make available within a
reasonable period the Relevant Document to you if you have indicated that you wish to
obtain, or have arranged to receive, a copy of the Relevant Document;
(ii) within seven (7) days of the lodgement of the Relevant Document give you a copy of the
Relevant Document and provide you with an option to withdraw your application; or
(iii) treat your application as withdrawn and cancelled, in which case the application shall
be deemed to have been withdrawn and cancelled, and we shall refund your application
monies (without interest or any share of revenue or other benefit arising therefrom and
at your own risk) to you.
Where you have notified us within 14 days from the date of lodgement of the Relevant
Document of your wish to exercise your option under paragraph 14(i) or (ii) above to
withdraw your application, we shall refund to you all monies paid by you on account of your
application for the Placement Shares without interest or any share of revenue or other benefit
arising therefrom and at your own risk, within seven (7) days from the receipt of such
notification, and you shall have no claim against our Company or the Issue Manager,
Sponsor and Placement Agent.
In the event that at any time at the time of the lodgement of the Relevant Document, the
Placement Shares have already been issued and/or sold but trading has not commenced, we
will (as required by law), at our Company’s sole and absolute discretion and subject to the
SFA, either:
(iv) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date of
lodgement of the Relevant Document, give you notice in writing of how to obtain, or
arrange to receive, a copy of the Relevant Document and provide you with an option to
return to us the Placement Shares which you do not wish to retain title in and take all
reasonable steps to make available within a reasonable period, the Relevant Document
to you if you have indicated that you wish to obtain, or have arranged to receive, a copy
of the Relevant Document;
APPENDIX H – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATIONS AND ACCEPTANCE
H-3
(v) within seven (7) days from the lodgement of the Relevant Document give you a copy of
the Relevant Document and provide you with an option to return the Placement Shares,
which you do not wish to retain title in; or
(vi) treat the issue of the Placement Shares as void, in which case the issue of the
Placement Shares shall be deemed void and we shall, subject to the SFA, return all
monies paid in respect of your application, without interest or any share of revenue or
other benefit arising therefrom and at your own risk.
Any applicant who wishes to exercise his option under paragraphs 14(iv) or (v) above to
return the Placement Shares issued to him shall, within 14 days from the date of lodgement
of the Relevant Document, notify us of this and return all documents, if any, purporting to be
evidence of title of those Placement Shares, whereupon we shall, subject to the SFA, within
seven (7) days from the receipt of such notification and documents, return to him all monies
paid by him for the Placement Shares without interest or any share of revenue or other
benefit arising therefrom and at his own risk, and the Placement Shares issued to him shall
be void and he will not have any claim against our Company or the Issue Manager, Sponsor
and Placement Agent.
Additional terms and instructions applicable upon the lodgement of the Relevant Document,
including instructions on how you can exercise the option to withdraw, may be found in such
Relevant Document.
15. You consent to the collection, use and disclosure of your name, NRIC/passport number or
company registration number, address, nationality, permanent resident status, Securities
Account number (if applicable), share application amount, share application details and other
personal data (“Personal Data”) by the Share Registrar, CDP, Securities Clearing and
Computer Services (Pte) Ltd, SGX-ST, the Participating Banks, our Company, the Issue
Manager, Sponsor and Placement Agent and/or other authorised operators (the “Relevant
Persons”) for the purpose of facilitating your application for the Placement Shares, (ii)
consent that the Relevant Persons may disclose or share Personal Data with third parties
who provide necessary services to the Relevant Persons, such as service providers working
for them and providing services such as hosting and maintenance services, delivery
services, handling of payment transaction, and consultants and professional advisers, (iii)
consent that the Relevant Persons may transfer your Personal Data to any location outside
of Singapore in order for them to provide the requisite support and services in connection
with the Placement Shares, and (iv) warrant that where you, as an approved nominee
company, disclose the Personal Data of the beneficial owner(s) to the Relevant Persons, you
have obtained the consent of the beneficial owners to paragraphs (i), (ii) and (iii) and that any
disclosure of Personal Data to our Company is in compliance with applicable law
(collectively, the “Personal Data Privacy Terms”). Where any Personal Data is transferred
to a country or territory outside of Singapore, the Relevant Persons will ensure that the
recipient of the Personal Data provides a standard of protection that is comparable to the
protection which Personal Data enjoys under the laws of Singapore, and where these
countries or territories do not have personal data protection laws which are comparable to
that in Singapore, the Relevant Persons will enter into legally enforceable agreements with
the recipients to ensure that they protect the Personal Data to the same standard as required
under the laws of Singapore.
APPENDIX H – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATIONS AND ACCEPTANCE
H-4
16. Any reference to “you” or the “Applicant” in this section shall include a person applying for
the Placement Shares by way of an Application Form or such other forms of application as
the Issue Manager, Sponsor and Placement Agent deem appropriate.
17. By completing and delivering an Application Form in accordance with the provisions of this
Offer Document, you:
(a) irrevocably offer, agree and undertake to subscribe for the number of Placement Shares
specified in your application (or such smaller number for which the application is
accepted) at the Placement Price for each Placement Share and agree that you will
accept such Placement Shares as may be allotted to you, in each case on the terms of,
and subject to the conditions set out in this Offer Document and the Memorandum and
Articles of Association of our Company;
(b) agree that the aggregate Placement Price for the Placement Shares applied for is due
and payable to our Company upon application;
(c) warrant the truth and accuracy of the information contained, and representations and
declarations made, in your application, and acknowledge and agree that such
information, representations and declarations will be relied on by our Company in
determining whether to accept your application and/or whether to allot any Placement
Shares to you; and
(d) 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 or
the Issue Manager, Sponsor and Placement Agent will infringe any such laws as a result
of the acceptance of your application.
18. Our acceptance of applications will be conditional upon, inter alia, our Company and the
Issue Manager, Sponsor and Placement Agent being satisfied that:
(a) permission has been granted by the SGX-ST to deal in and for quotation of all our
existing Shares, the Placement Shares and the Performance Shares on Catalist;
(b) the Management Agreement and the Placement Agreement referred to in the section
entitled “General and Statutory Information – Management, Sponsorship and
Placement Arrangements” of this Offer Document, have become unconditional and
have not been terminated; and
(c) the SGX-ST, acting as agent on behalf of the Authority, has not served a Stop Order
under the SFA which directs that no further shares to which this Offer Document relates
be allotted.
19. In the event that a Stop Order in respect of the Placement Shares is served by the SGX-ST,
acting as an agent on behalf of the Authority or other competent authority, and:
(a) in the case where the Placement Shares have not been issued, we will (as required by
law), and subject to the SFA, deem all applications withdrawn and cancelled and our
APPENDIX H – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATIONS AND ACCEPTANCE
H-5
Company shall refund (at your own risk) all monies paid on account of your application
for the Placement Shares (without interest or any share of revenue or other benefit
arising therefrom) to you within 14 days from the date of the Stop Order; or
(b) where the Placement Shares have already been issued but trading has not
commenced, the issue of the Placement Shares shall (as required by law) be deemed
to be void and our Company shall refund (at your own risk) all monies paid on account
of your application for the Placement Shares (without interest or any share of revenue
or other benefit arising therefrom) to you within 14 days from the date of the Stop Order.
Such monies 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 Issue Manager, Sponsor and Placement Agent.
This shall not apply where only an interim Stop Order has been served.
20. In the event that an interim Stop Order in respect of the Placement Shares is served by the
SGX-ST, acting as agent on behalf of the Authority or other competent authority, no
Placement Shares shall be issued during the time when the interim Stop Order is in force.
21. The SGX-ST, acting as an agent on behalf of the Authority, is not able to serve a Stop Order
in respect of the Placement Shares if the Placement Shares have been issued and/or sold
and listed on a securities exchange and trading in the Placement Shares has commenced.
22. In the event of any changes in the closure of the Application List or the time period during
which the Placement is open, we will publicly announce the same through a SGXNET
announcement to be posted on the Internet at the SGX-ST website (http://www.sgx.com) and
through a paid advertisement in a generally circulating daily press.
23. We will not hold any application in reserve.
24. We will not allot Shares on the basis of this Offer Document later than six (6) months after
the date of registration of this Offer Document by the SGX-ST, acting as agent on behalf of
the Authority.
25. Additional terms and conditions for applications by way of Application Forms are set out in
the section entitled “Additional Terms and Conditions for Applications Using Application
Forms” of this Appendix H.
26. All payments in respect of any application for Placement Shares and any refund, shall be
made in Singapore dollars.
27. Where monies are to be returned to you for the Placement Shares, it shall be paid to you
without any interest or share of revenue or other benefit arising therefrom and at your own
risk, and you will not have any claim against us or the Issue Manager, Sponsor and
Placement Agent.
28. No person in any jurisdiction outside Singapore receiving this Offer Document or its
accompanying documents (including Application Forms) may treat the same as an offer or
APPENDIX H – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATIONS AND ACCEPTANCE
H-6
invitation to subscribe for or purchase any Placement Shares unless such offer or invitation
could lawfully be made without compliance with any regulatory requirements in those
jurisdictions.
29. You irrevocably authorise CDP to disclose the outcome of your application, including the
number of Placement Shares allotted to you pursuant to your application, to us, and the Issue
Manager, Sponsor and Placement Agent, and any other parties so authorised by the
foregoing persons.
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING APPLICATION FORMS
Applications by way of an Application Form shall be made on, and subject to, the terms and
conditions of this Offer Document including but not limited to the terms and conditions appearing
below as well as those set out under the section entitled “Terms, Conditions And Procedures For
Applications and Acceptance” as set out in this Appendix H of this Offer Document, as well as the
Memorandum and Articles of Association of our Company.
1. Your application must be made using the BLUE Placement Shares Application Forms for
Placement Shares accompanying and forming part of this Offer Document. ONLY ONE
APPLICATION should be enclosed in each envelope.
We draw your attention to the detailed instructions contained in the respective Application
Forms and this Offer Document for the completion of the Application Forms which must be
carefully followed. Our Company, in consultation with the Issue Manager, Sponsor and
Placement Agent, reserves the right to reject applications which do not conform
strictly to the instructions set out in the Application Forms and this Offer Document or
to the terms and conditions of this Offer Document or which are illegible, incomplete,
incorrectly completed or which are accompanied by improperly drawn remittances or
improper forms of remittances or remittances which are not honoured upon the first
presentation.
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. If you are an individual, you must make your application using your full name as it
appears in your identity card (if you have such an identification document) or in your passport
and, in the case of corporations, in your full name as registered with a competent authority.
If you are not an individual, you must complete the Application Form under the hand of an
official who must state the name and capacity in which he signs the Application Form. If you
are a corporation completing the Application Form, you are required to 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 our Company’s Share Registrar. Our Company reserves the right to
require you to produce documentary proof of identification for verification purposes.
APPENDIX H – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATIONS AND ACCEPTANCE
H-7
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.
6. You (whether you are an individual or corporate applicant, whether incorporated or
unincorporated and wherever incorporated or constituted) will be required to declare whether
you are a citizen or permanent resident of Singapore or a corporation in which citizens or
permanent residents of Singapore or any body corporate constituted under any statute of
Singapore having an interest in the aggregate of more than 50.0% 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 Placement Shares is a citizen or
permanent resident of Singapore or a corporation, whether incorporated or unincorporated
and wherever incorporated or constituted, in which citizens or permanent residents of
Singapore or any body corporate whether incorporated or unincorporated and wherever
incorporated or constituted under any statute of Singapore have an interest in the aggregate
of more than 50.0% of the issued share capital of or interests in such corporation.
7. The completed and signed BLUE Placement Shares Application Form and the correct
remittance in full in respect of the number of Placement Shares applied for (in accordance
with the terms and conditions of this Offer Document) with your name and address written
clearly on the reverse side, must be enclosed and sealed in an envelope to be provided by
you. You must affix adequate postage (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 Eindec Corporation Limited, c/o UOB Kay Hian Private Limited, 8
Anthony Road, #01-01, Singapore 229957 to arrive by 12 noon on 13 January 2016 or
such other time as our Company may decide, in consultation with the Issue Manager,
Sponsor and Placement Agent. Local urgent mail or registered post must NOT be used.
Your application must be accompanied by a remittance in Singapore currency for the full
amount payable, in respect of the number of Placement Shares applied for in the form of a
BANKER’S DRAFT or CASHIER’S ORDER drawn in Singapore currency on a bank in
Singapore and made out in favour of “EINDEC CORPORATION SHARE ISSUE ACCOUNT”
crossed “A/C PAYEE ONLY”, and with your name, CDP Securities Account Number and
address written clearly on the reverse side. APPLICATIONS NOT ACCOMPANIED BY ANY
PAYMENT OR ACCOMPANIED BY ANY OTHER FORM OF PAYMENT WILL NOT BE
ACCEPTED. We will reject remittances bearing “NOT TRANSFERABLE” or “NON
TRANSFERABLE” crossings. We reserve the right to reject any application which is
accompanied by combined Banker’s Draft or Cashier’s Order for different CDP Securities
Accounts. No acknowledgement or receipt will be issued by our Company or the Issue
Manager, Sponsor and Placement Agent for applications and application monies received.
8. Where your application is rejected or accepted in part only, the full amount or the balance of
the application monies, as the case may be, will be refunded (without interest or any share
of revenue or other benefit arising therefrom) to you by ordinary post at your own risk within
14 days after the close of the Application List provided that the remittance accompanying
such application that has been presented for payment or other processes has been honoured
APPENDIX H – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATIONS AND ACCEPTANCE
H-8
and the application monies have been received in the designated share issue account. In the
event that the Placement is cancelled by us following the termination of the Management
Agreement and/or the Placement Agreement, the application monies received will be
refunded (without interest or any share of revenue or other benefit arising therefrom) to you
by ordinary post or telegraphic transfer at your own risk within five (5) days from the date of
the termination of the Placement. In the event that the Placement is cancelled by us following
the issuance of a Stop Order by the Authority, the SGX-ST (acting as an agent on behalf of
the Authority) or other competent authority, the application monies received will be refunded
(without interest or any share of revenue or other benefit arising therefrom) to you by
ordinary post at your own risk within 14 days from the date of the Stop Order.
9. Capitalised terms used in the Application Forms and defined in this Offer Document shall
bear the meanings assigned to them in this Offer Document.
10. You irrevocably agree and acknowledge that your application is subject to risks of fires, acts
of God and other events beyond the control of our Company, our Directors, the Issue
Manager, Sponsor and Placement Agent and/or any party involved in the Placement, and in
any such event, our Company and/or the Issue Manager, Sponsor and Placement Agent
does not receive your Application Form, you shall have no claim whatsoever against our
Company, the Issue Manager, Sponsor and Placement Agent and/or any other party involved
in the Placement for the Placement Shares applied for or for any compensation, loss or
damage.
11. By completing and delivering the Application Form, you agree that:
(a) in consideration of our Company having distributed the Application Form to you and
agreeing to close the Application List at 12.00 noon on 13 January 2016 or such other
time or date as our Company may, in consultation with the Issue Manager, Sponsor and
Placement Agent, decide 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 application
monies returnable may be held pending clearance of your payment without interest
or any share of revenue or other benefit arising therefrom;
(b) neither our Company, the Issue Manager, Sponsor and Placement Agent nor any other
party involved in the Placement shall be liable for any delays, failures or inaccuracies
in the recording, storage or in the transmission or delivery of data relating to your
application to us or CDP due to breakdown or failure of transmission, delivery or
communication facilities or any risks referred to in paragraph 10 above or to any course
beyond their respective controls;
(c) all applications, acceptances and contracts resulting therefrom under the Placement
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;
APPENDIX H – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATIONS AND ACCEPTANCE
H-9
(d) in respect of the Placement 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;
(e) you will not be entitled to exercise any remedy of rescission for misrepresentation at
any time after acceptance of your application;
(f) in making your application, reliance is placed solely on the information contained in this
Offer Document and that none of our Company, the Issue Manager, Sponsor and
Placement Agent or any other person involved in the Placement shall have any liability
for any information not so contained;
(g) you accept and agree to the Personal Data Privacy Terms set out in this Offer
Document; and
(h) you irrevocably agree and undertake to subscribe for and to accept the number of
Placement Shares applied for as stated in the Application Form or any smaller number
of such Placement Shares that may be allotted to you in respect of your application. In
the event that we decide to allot a smaller number of Placement Shares or not to allot
any Placement Shares to you, you agree to accept such decision as final.
APPENDIX H – TERMS, CONDITIONS AND PROCEDURES FORAPPLICATIONS AND ACCEPTANCE
H-10
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APPENDIX I – SINGAPORE CLEAN ROOM EQUIPMENT INDUSTRY REPORT
Singapore Malaysia Hong Kong
Information. Insights. Integrity.
The Clean Room Equipment Industry in Singapore
This report is prepared for
Eindec Singapore Pte Ltd 10 September 2015
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Converging Knowledge The Clean Room Equipment Industry in Singapore | Page 2
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DISCLAIMER
Converging Knowledge has prepared this report in an independent and objective manner and has taken adequate care to ensure the accuracy and completeness of the report. We believe that this report represents a true and fair view of the industry within the boundaries and limitations of secondary statistics, primary research and continued industry movements. We note that the opinions expressed are opinions of human sources and caution as to the subjective nature of such information. This material should not be construed as an offer to sell or the solicitation of an offer to buy in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this material. It is for the general information of clients of Converging Knowledge. It does not take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. Converging Knowledge and/or any of its affiliates and/or any persons related thereto do not accept any liability whatsoever for direct or consequential losses or damages that may arise from the use of information contained in this report. No part of this material may be (i) copied, photocopied, or duplicated in any form by any means or (ii) redistributed without Converging Knowledge prior written consent.
CONVERGING KNOWLEDGE CONTACTS
Singapore Headquarters Tel: +65 6225 8781 Fax: +65 6323 0132 43 B&C Tras Street, Singapore 078982 Email: [email protected] Malaysia Tel: +603 2333 8950 Fax: +603 2333 8899 E-8-6 Megan Avenue 1, No. 189 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia Email: [email protected] Hong Kong Tel: +852 8197 8261 Fax: +852 3118 6161 Suite A, 12/F Ritz Plaza, 122 Austin Road, TST Kowloon, Hong Kong Email: [email protected]
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APPENDIX I – SINGAPORE CLEAN ROOM EQUIPMENT INDUSTRY REPORT
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RESEARCH SCOPE
The Client would like to conduct an independent market research on the Clean Room Equipment Industry in Singapore. This is in preparation for an Initial Public Offering (“IPO”). Our objective is to assist the Client in conducting primary and secondary research to gain insights into the above focus areas and sector. The research will be compiled in the form of a report, covering an overview of the Clean room Equipment Industry in Singapore. The report will include the following:
1. Introduction of Clean Room Equipment Industry a. General introduction of clean room equipment in Singapore (no market
sizing) b. Definition of terms
2. Customers and Suppliers a. Overview of customers, what industries/ sectors are using clean room
equipment in Singapore? b. To mention names of up to five leading suppliers based on opinion of industry
players (Note that no profiling or market share will be conducted) 3. Trends and Prospects
a. Current trends and prospects of clean room equipment in Singapore
The deliverables will be in Microsoft Word format and is limited to a maximum of five pages,
excluding cover page and contents page.
RESEARCH APPROACH
The research will be conducted on a best effort basis through a combination of primary and desktop (published resources) research, to address the scope of research. Primary research involves discreet interviews tapping on the knowledge, experience and opinions of relevant companies, industry associations, technical institutions, government bodies and academic institutions. Desktop research includes, but is not limited to, a review of the following:
Local newspapers and news wires/agencies; Leading industry and trade publications; Websites of regulatory authority as well as relevant government agencies; and Websites of companies.
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APPENDIX I – SINGAPORE CLEAN ROOM EQUIPMENT INDUSTRY REPORT
Converging Knowledge The Clean Room Equipment Industry in Singapore | Page 4
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CONTENTS
1. EXECUTIVE SUMMARY .....................................................................................................5
2. INTRODUCTION OF THE CLEAN ROOM EQUIPMENT INDUSTRY ...............................6
3. CUSTOMERS AND SUPPLIERS .......................................................................................7
3.1 Overview of Customers and Users of Clean Room Equipment ........................................7 3.2 Leading Suppliers of Clean Room Equipment ..................................................................9
4. TRENDS AND PROSPECTS ........................................................................................... 10
LIST OF TABLES
Table 1: Examples of Clean Room Users in Singapore by Industries and Processes ..............8
LIST OF FIGURES
Figure 1: Estimated Composition of Clean Room Equipment Demand in Singapore by User
Industry .....................................................................................................................7 Figure 2: Growth of GERD and BERD from 1998 to 2013, and Breakdown of GERD in 2013
............................................................................................................................... 12
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1. EXECUTIVE SUMMARY
Singapore is a high-technology hub in Southeast Asia, with key specialisations in some
industries such as electronics and life sciences manufacturing. For these industries, clean
rooms are crucial to ensure high standards of production during the manufacturing process
and for research work in laboratories. Clean room equipment enables a controlled
environment, where particles and bacteria in the air, as well as air temperature, humidity, flow
and pressure are kept at relevant industrial standards.
Singapore’s Clean Room Equipment industry caters predominantly to the Semiconductor and
Electronics industry in the country, which accounts for approximately 50.0% of the domestic
market. The Pharmaceutical and Biomedical industry comprises 20.0% of clean room
equipment sales, whereas government and research organisations represent a rising
segment that makes up another 20.0% of the market. The remaining 10.0% consists of other
industries that have increasingly adopted clean room technology for production. These
include industries like high-precision engineering and renewable energy.
The Clean Room Equipment industry in Singapore is projected to grow up to 3.0% annually in
the next five years. With the rapid advancement in the miniaturisation of integrated circuits,
alongside shifts in consumer trends towards mobile devices, semiconductor companies have
been accelerating efforts to realign existing production facilities to keep up with demand for
even smaller device components. The need to expand or upgrade existing clean room
facilities to accommodate new production lines for mobile device components will form a key
demand segment. In 2014, the Semiconductor and Electronics industry's total fixed asset
investments amounted to SGD1.7 billion. Meanwhile, research agencies and pharmaceutical
companies are beginning to intensify Research and Development (“R&D”) and production
efforts in Singapore to keep up with global demand for life sciences solutions. Gross
Expenditure in R&D ("GERD") in Singapore has grown at a Compound Annual Growth Rate
("CAGR") of 8.0% between 2003 and 2013. The growth of GERD in this industry is expected
to have a positive effect on the market for clean room equipment.
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2. INTRODUCTION OF THE CLEAN ROOM EQUIPMENT INDUSTRY
Many high-technology industries require precise control of air quality in its manufacturing and
research environment. A clean room enables an environment where particles and bacteria in
the air, as well as air temperature, humidity, flow and pressure are kept at relevant industrial
standards (please refer to Section 2 for details of the standards). In Southeast Asia,
Singapore is a high-technology hub with key specialisations in some industries such as
electronics and life sciences manufacturing. For these industries, clean rooms are crucial to
ensure high standards of production during the manufacturing process. Apart from
manufacturing, controlled environments are also critical for research laboratories in
Singapore. Hence, clean room equipment is necessary to create and maintain a site with a
controlled level of environmental pollutants, which is critical for high-technology production
and research.
The Clean Room Equipment industry covers a wide range of products. In this report, the
Clean Room Equipment industry is separated into two key categories – clean room
consumables and clean room appliances. Clean room consumables refer to items like gloves,
masks and gowns, which are disposed after use. Clean room appliances refer to those that
work towards controlling the air in the enclosed environment, such as limiting fine
contaminants and regulating air flow. Such clean room appliances also include non-
consumable equipment that maintains or is used in a cleanroom environment, such as Fan
Filter Unit (“FFU”), Heating, Ventilating, and Air Conditioning ("HVAC") systems, Electrostatic
Discharge (“ESD”) ionizers, pass boxes, air showers, cleanroom tables, chairs as well as
ovens. This report on the Clean Room Equipment industry in Singapore is focused on the
cleanroom appliances segment. Any reference to “clean room equipment” hereafter is in
reference to clean room appliances.
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3. CUSTOMERS AND SUPPLIERS
3.1 Overview of Customers and Users of Clean Room Equipment
Singapore’s Clean Room Equipment industry caters predominantly to the Semiconductor
industry in the country, given that a large section of its high-volume manufacturing processes
is highly sensitive to airborne particles. The Pharmaceutical and Biomedical industry also
accounts for approximately 20.0% of clean room equipment sales (see figure 1), while
government and research organisations requiring clean room facilities are on the rise. With
the advancement in production techniques and materials, clean room technology is
increasingly being adopted in the fields of high-precision engineering and renewable energy,
amongst a host of other industries.
Figure 1: Estimated Composition of Clean Room Equipment Demand in Singapore by User Industry
Note:
"Others" include High Precision Engineering, Food Processing and Renewable Energy, amongst others.
Source: Converging Knowledge and Interviews conducted with Industry Players
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Requirements for clean room systems vary across the different processes in each industry1.
The Semiconductor industry sets some of the strictest standards on allowable microparticles
in the air, while only certain activities within the Electronics industry, namely Liquid Crystal
Display ("LCD") & Thin Film Transistor ("TFT") production, can be operated under a higher
degree of tolerance. For example, clean rooms for the Semiconductor industry operate in
environments deemed to be between ISO 1 (or FED STD 209E Class 1)2 and ISO 4 (or FED
STD 209E Class 10) standards, while manufacturing of LCDs should be carried out in ISO 5
(or FED STD 209E Class 100) standard. In contrast, manufacturing for other industries such
as High Precision Engineering can be done in an ISO 7 (or FED STD 209E Class 10,000)
environment.
Table 1: Examples of Clean Room Users in Singapore by Industries and Processes
Industry Examples of Clean Room
Processes Organisations
Semiconductors and Electronics
Integrated circuit manufacturing Disk drive manufacturing Microchip packaging
Seagate Technology International Micron Semiconductors Asia Pte Ltd GlobalFoundries Singapore Pte Ltd
Pharmaceutical and Biomedical
Sterilised medications manufacturing
Cell therapy production
Schering-Plough Ltd Pfizer Asia Pacific Ltd GlaxoSmithKline Pte Ltd Lonza Bioscience Singapore Pte Ltd
Government and Research Institutes
Operating room & pharmacies Various research
National University Hospital Singapore Polytechnic Institute of Materials Research Engineering
Agency for Science, Technology and Research
Others Food processing & packaging Specialty gas blending Precision screen manufacturing
Wyeth Nutritionals (S) Pte Ltd National Oxygen Pte Ltd Koenen Asia Ltd
Source: Converging Knowledge
1 Kossives, D. (September 2007). Clean Room requirements for Advanced Packaging. National Electronics Manufacturing Center of Excellence, USA and Interviews conducted with industry players 2 ISO 3 (STD 209E Class 1) refers to a maximum of 1 particle with diameter smaller or equal to 0.5 m in 1ft3 of air. ISO 4 (STD 209E Class 10) refers to a maximum of 10 particles with diameter smaller or equal to 0.5 m in 1ft3 of air. ISO 5 (STD 209E Class 100) refers to a maximum of 100 particles with a diameter smaller or equal to 0.5 m in 1ft3 of air, as defined in the ISO 14644-1 Cleanroom Standards by the International Standards Organisation
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3.2 Leading Suppliers of Clean Room Equipment
Within the Clean room industry, the following companies are viewed as amongst the leading
local suppliers of clean room equipment3:
Airtech Equipment Pte Ltd / Utopia-Aire Pte Ltd4
Camfil Singapore Pte Ltd
Cleantec Engineering (S) Pte Ltd
Escro Micro Pte Ltd
Kyodo-Allied Technology Pte Ltd
3 The names were derived from interviews conducted with industry players, and arranged in alphabetical order. It does not indicate any form of ranking amongst the five companies 4 Airtech Equipment Pte Ltd is a Joint Venture between Utopia-Aire Pte Ltd and Airtech Japan Ltd
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4. TRENDS AND PROSPECTS
The prospects of the Clean Room Equipment industry are expected to be optimistic, as a
result of the following trends in the Semiconductor and Electronics industries as well as in Life
Sciences and Research. Demand for clean room equipment from the Pharmaceutical and
Biomedical industry will form a key growth market in the near future. The Clean Room
Equipment industry in Singapore is projected to grow up to 3.0% annually in the next five
years5.
Restructuring of the Semiconductor Industry
The number of circuits on semiconductor chips has been doubling every two years, paving
the way for increasingly powerful multifunctional mobile devices such as smartphones and
tablets. With the rapid advancement in the miniaturisation of integrated circuits, alongside
shifts in consumer trends towards mobile devices, semiconductor companies have been
accelerating efforts to realign existing production facilities to keep up with demand for even
smaller device components. Consequently, local manufacturing facilities are shifting
production from personal computer chips to components for mobile devices.
Such trends in the production of smaller and more profitable semiconductor chips are more
pronounced in Singapore, where there is a constant push towards high-technology, high
value production. Furthermore, the Semiconductor industry accounted for one of the largest
contributors to the economy, with a total output of SGD82.7 billion in 20146. The Government
of Singapore, through the effort of the Economic Development Board and JTC Corporation,
have been encouraging growth in high technology industries, with policies on land allocation
and tax incentives, amongst others. Moreover, the combination of land scarcity, a highly
educated workforce and world-class infrastructure in a technology-savvy nation has provided
a natural impetus for local semiconductor production activities to stay ahead of the technology
curve.
While manufacturing of low-value components will continue to move towards low-cost
countries, it is expected to be gradually replaced by higher-value mobility components.
5 Interviews conducted with industry players 6 Department of Statistics Singapore, Principal Statistics of Manufacturing by Industry Cluster, 2014
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Companies like STATS ChipPAC Ltd and GlobalFoundries Singapore Pte Ltd have already
begun to realign their production line towards mobile devices. In 2014, the Semiconductor
and Electronics industries have seen additional fixed asset investments of SGD1.7 billion7,
and this upward investment trend is expected to continue. As of 2Q2015, the Semiconductor
and Electronics industry 8 has already accumulated an estimated SGD1.8 billion of fixed
assets investment commitments in that year9. The need to expand or upgrade existing clean
room facilities to accommodate new production lines for mobile device components will form a
key prospective segment in the order-books of equipment suppliers.
Intensification in Life Sciences and Research In more recent years, Singapore has been providing support and funding for an increasing
number of Research and Development ("R&D") activities, successfully attracting the
involvement of both the private and public sectors. Singapore's R&D industry is spearheaded
by the Agency for Science, Technology and Research ("A*STAR"), which undertakes and
promotes collaborative R&D between public institutions 10 as well as companies across a
broad range of research fields. Most of these R&D activities require a clean room
environment.
In 2013, the Gross Expenditure on R&D ("GERD") in Singapore amounted to SGD7.6 billion,
out of which approximately 59.0%11 were made by private sector companies. The GERD in
Singapore has grown at a Compound Annual Growth Rate ("CAGR") of 8.0% between 2003
and 2013. Total Capital Expenditure ("CAPEX"), including those on clean room equipment,
accounted for 13.3% (or SGD1.0 billion) of GERD, whereas CAPEX from the private sector
totalled SGD662.4 million.12
Engineering and technology R&D, which includes research on electronics, as well as
infocomm and media technology, amongst others, made up 61.0% of GERD in 2013. Life
Sciences (which include the fields of Pharmaceutical and Biomedical, as well as Food
Sciences) accounted for another 32.5% of GERD. Research in the fields of Energy, which
7 Department of Statistics Singapore, Investment Commitments in Manufacturing and Services by Industry, Statistical Table from Yearbook. extracted 21 August 2015 Based on Fixed Asset Investments in Manufacture of Computer, Electronic and Optical Products activities, as defined according to SSIC2010 classification of activities 8 This is based on the aggregated data for the Semiconductor and Electronics industries. 9 Singapore Department of Statistics. Investment Commitments in Manufacturing and Services by Industry Cluster, Economic Survey of Singapore. Extracted 21 August 2015 10 Such as the National University of Singapore, Nanyang Technological University or foreign universities 11 Business Expenditure on R&D, :"BERD" 12 December 2014. National Survey of R&D in Singapore 2013, Agency for Science, Technology and Research Singapore - http://www.a-star.edu.sg/Portals/0/media/RnD_Survey/RnD_2013.pdf
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may include photovoltaic or wind-harnessing technology, represented 1.4% in the same
year.13
Figure 2: Growth of GERD and BERD from 1998 to 2013, and Breakdown of GERD in 2013
Notes:
GERD: Gross Expenditure on Research & Design
BERD: Business Expenditure on Research & Design
* excludes Biological Science
Source: Agency for Science, Technology and Research Singapore
Global Pharmaceutical and Biomedical companies such as Lonza Group, Novartis AG, Pfizer
Inc and GlaxoSmithKline plc have located their global manufacturing base in Singapore, and
many of these companies continue to diversify their operations in the country. This trend is
expected to continue, with rising global demand for better and more effective drugs,
medicines and medical devices. In 2014, total output from this industry added SGD15.9
billion to the economy and employed more than 16,000 workers 14 . These companies
represent a growing market for clean room equipment in the country.
13 December 2014. National Survey of R&D in Singapore 2013, Agency for Science, Technology and Research Singapore - http://www.a-star.edu.sg/Portals/0/media/RnD_Survey/RnD_2013.pdf 14 Department of Statistics Singapore, Principal Statistics of Manufacturing by Industry Cluster, 2014
Breakdown of research spending in 2013
Total research spending,
2013: SGD7.6 billion
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Offshoring of Manufacturing Activities
Although Singapore’s Manufacturing industry has seen a gradual slowdown, with companies
moving their production-type activities to neighbouring countries to cut costs, the industry has
also matured in depth of scope, transitioning into higher value activities. This leads to
opportunities and growth for clean room equipment suppliers in the regional market.
Throughout the years of serving multinational companies and global manufacturing
conglomerates, local clean room companies have the advantage, in terms of experience and
technical expertise, to support projects in the region and move up the value chain. Interviews
with industry players have indicated that many have the resources to support projects in the
region.
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Converging Knowledge Pte Ltd has prepared this report in an independent and objective
manner and has taken adequate care to ensure the accuracy and completeness of the report.
We believe that this report represents a true and fair view of the industry within the
boundaries and limitations of secondary statistics, primary research and continued industry
movements. Our research has been conducted to present a view of the overall industry and
may not necessarily reflect the performance of individual companies in this industry. We are
not responsible for the decisions and/ or actions of the readers of this report. This report
should also not be considered as a recommendation to buy or not to buy the shares of any
company or companies.
Eddy Tan Kong Yiam
Director
Converging Knowledge Pte Ltd
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Singapore Malaysia Hong Kong
Information. Insights. Integrity.
The Consumer Air Purifier Industry in the People's Republic of China
This report is prepared for
Eindec Corporation Pte Ltd 10 September 2015
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DISCLAIMER
Converging Knowledge has prepared this report in an independent and objective manner and has taken adequate care to ensure the accuracy and completeness of the report. We believe that this report represents a true and fair view of the industry within the boundaries and limitations of secondary statistics, primary research and continued industry movements. We note that the opinions expressed are opinions of human sources and caution as to the subjective nature of such information. This material should not be construed as an offer to sell or the solicitation of an offer to buy in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this material. It is for the general information of clients of Converging Knowledge. It does not take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. Converging Knowledge and/or any of its affiliates and/or any persons related thereto do not accept any liability whatsoever for direct or consequential losses or damages that may arise from the use of information contained in this report. We understand that this report is for inclusion, in whole or in part, in the offer document for an initial public offering of Eindec Corporation Pte. Ltd. on the Catalist board of the Singapore Exchange Securities Trading Limited in 2015. We consent to the inclusion of our name and all references thereto, and this report (in whole or in part) in the form and context in which they are included in the offer document.
CONVERGING KNOWLEDGE CONTACTS
Singapore Headquarters Tel: +65 6225 8781 Fax: +65 6323 0132 43 B&C Tras Street, Singapore 078982 Email: [email protected] Malaysia Tel: +603 2333 8950 Fax: +603 2333 8899 E-8-6 Megan Avenue 1, No. 189 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia Email: [email protected] Hong Kong Tel: +852 8197 8261 Fax: +852 3118 6161 Suite A, 12/F Ritz Plaza, 122 Austin Road, TST Kowloon, Hong Kong Email: [email protected]
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RESEARCH SCOPE
The Client would like to conduct an independent market research (“IMR”) on the Air Purifier Industry in the People’s Republic of China (“PRC”). This is in preparation for an Initial Public Offering (“IPO”) in Singapore. Converging Knowledge Pte Ltd is to undertake a comprehensive industry assessment and its prospect, supported by in-depth market research and analysis. Our objective is to assist our Client and the Advisor in conducting a fully substantiated secondary and primary research to gain insights into the above focus areas and sector. Research Scope
1. Overview of the Air Purifier Industry in the PRC
a. Brief Background of the Air Purifier Industry, with Focus on the Consumer
Market
i. Definitions
ii. Key Statistics, where available
Statistics will be based on latest reported figures from
government and industry associations. This will be limited to
statistics that will affect the Air Purifier Industry.
b. Industry Structure
i. Description of differing segments in the industry
ii. Description of the company (Client) within the industry sector
2. Major Trends in the Industry
a. Trends that will Impact the Air Purifier Industry in the PRC
b. Issues and Challenges
i. For example:
Price of raw materials
Regulations and licensing
Safety regulations
3. Competitive Landscape
a. Overview of Client’s Closest Competitors
i. Brief description of the key players in the Air Purifier Industry in the
PRC
ii. Segmentation of key players based on price points of less than
RMB5,000, RMB5,000 to RMB8,000, and greater than RMB8,000
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b. Estimated Market Size of the Consumer Air Purifier Industry in the PRC
4. Prospects of the Industry
a. Industry Outlook in General
b. Estimated Growth Rate
RESEARCH APPROACH
The research will be conducted on a best effort basis through a combination of primary and desktop (published resources) research, to address the scope of research. Primary research involves discreet interviews tapping on the knowledge, experience and opinions of relevant companies, industry associations, technical institutions, government bodies and academic institutions. Desktop research includes, but is not limited to, a review of the following:
Local newspapers and news wires/agencies; Leading industry and trade publications; Websites of regulatory authority as well as relevant government agencies; and Websites of companies.
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CONTENTS
1. EXECUTIVE SUMMARY ...............................................................................................7
2. OVERVIEW OF THE AIR PURIFIER INDUSTRY IN THE PEOPLE'S REPUBLIC OF CHINA ......................................................................................................................... 10
2.1 Brief Background of the Air Purifier Industry, with Focus on the Consumer Market .. 10 2.1.1 Definitions .................................................................................................................... 11 2.1.2 Key Statistics ............................................................................................................... 11 2.2 Industry Structure........................................................................................................ 14 2.2.1 Description of Differing Segments in the Industry ....................................................... 15 2.2.2 Description of Eindec Corporation Pte Ltd within the Consumer Air Purifier Industry 17
3. MAJOR TRENDS IN THE INDUSTRY ....................................................................... 19 3.1 Trends that will Impact the Consumer Air Purifier Industry in the PRC ...................... 19 3.1.1 Worsening Air Pollution Boosts Air Purifier Demand .................................................. 19 3.1.2 Rising Health Awareness Promotes Need for Air Purifiers ......................................... 20 3.1.3 Increased Time Spent Indoors Presents Opportunities for the Consumer Air Purifier
Industry ....................................................................................................................... 21 3.1.4 Growing Urbanisation Propels Demand for Air Purifiers ............................................. 22 3.1.5 Increasing Disposable Income for Urban Households ................................................ 23 3.1.6 Consumers Buying More Units ................................................................................... 24 3.2 Issues and Challenges ............................................................................................... 24 3.2.1 Lack of a National Standard for Consumer Air Purifiers ............................................. 24 3.2.2 Low Barriers to Entry ................................................................................................... 25 3.2.3 Seasonality .................................................................................................................. 26 3.2.4 Government’s Effort in Improving Air Quality .............................................................. 26
4. COMPETITIVE LANDSCAPE .................................................................................... 28
4.1 Overview of Client’s Closest Competitors .................................................................. 30 4.1.1 Brief Description of the Key Players in the Consumer Air Purifier Industry in the PRC
.................................................................................................................................... 30 4.1.2 Segmentation of Key Players Based on Price Points of Less than RMB5,000,
RMB5,000 to RMB8,000 and Greater than RMB8,000 .............................................. 31 4.2 Estimated Market Size of the Consumer Air Purifier Industry in the PRC .................. 32
5. PROSPECTS OF THE INDUSTRY ............................................................................ 33
5.1 Industry Outlook in General ........................................................................................ 33
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LIST OF TABLES
Table 1: List of Key Players in the Consumer Air Purifier Industry in the PRC ......................... 30 Table 2: Popular Consumer Air Purifier Brands in the PRC and Their Market Positioning ....... 31
LIST OF FIGURES
Figure 1: Sales of Air Purifiers in the PRC, in Terms of Volume from 2010 to 2014 ................ 11 Figure 2: Top 10 Countries with the Largest Total Carbon Dioxide Emissions from
Consumption of Energy in 2012, and their Annual Average PM10 and PM2.5 ......... 12 Figure 3: Monthly Average PM2.5 Concentration Levels of Selected Cities in the PRC from
April 2014 to April 2015 .............................................................................................. 13 Figure 4: The Consumer Air Purifier Industry within the Consumer Electrical Appliances
Industry ....................................................................................................................... 14 Figure 5: Segments of the Consumer Air Purifier Industry in the PRC ..................................... 15 Figure 6: PM2.5 Air Quality of the PRC’s 74 Cities in Q1 2015 ................................................ 20 Figure 7: Overview of the PRC’s Urban Population and Urban Household Disposable Income
from 2010 to 2014 ...................................................................................................... 23 Figure 8: Monthly Average PM2.5 Concentration Levels of Selected Regions in the PRC, from
January 2014 to January 2015 ................................................................................... 27 Figure 9: Sales of Air Purifiers in the PRC, in terms of Volume and Value, from 2010 to 201432 Figure 10: Estimated Consumer Air Purifier Sales (Value) in the PRC from 2014 to 2017 ...... 34 Figure 11: Floor Space of Residential Property under Construction, from 2010 to 2014 ......... 36
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1. EXECUTIVE SUMMARY
Air purifiers are electrical devices that remove solid and gaseous pollutants from the air1.
They are seen as an increasingly necessary household item, due to worsening air quality in
the People’s Republic of China (“PRC”). In recent years, the country has seen rapid
industrialisation of its economy, together with surging growth in urbanisation and energy
consumption. On the other hand, environmental policies and regulations have yet to keep up
with the pace of economic progress in the country. Urbanised regions of the PRC are facing
challenges in keeping air pollution in check, with 42.4% of surveyed cities in the PRC
reporting higher-than-normal fine particle readings2. Certain PRC cities also face seasonal
sandstorms and bad weather conditions that further worsen the air quality in the country. To
alleviate the issue of poor air quality in the country, an increasing number of households are
purchasing and installing air purifiers at home.
The air purifier industry, focusing on the consumer market (the “Consumer Air Purifier
industry”), is part of the broader Consumer Electrical Appliances industry. The market size of
this industry in the PRC was estimated to be RMB10.3 billion to RMB12.6 billion in 2014. The
prospects of the PRC’s Consumer Air Purifier industry are buoyed by challenges in air
pollution control, with an expected compounded annual growth rate (“CAGR”) of 30.2% from
2015 to 2017.
Worsening Air Pollution and Rising Health Awareness Boost Air Purifier Demand
Compared to the other parts of the world, the PRC faces severe air pollution 3, and the
situation has raised strong concerns amongst Chinese residents. Surrounded by heavy
industrial factories, provinces in the central and eastern parts of the country, such as Henan,
Hubei and Hebei, are amongst the most polluted provinces in the PRC. This is followed by
1 30 December 2008, General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ) & Standardization Administration Committee (SAC) of the PRC, National Standard of the PRC – GB/T18801-2008 2 25 February 2013. Ministry of Environmental Protection, The People's Republic of China – http://english.sepa.gov.cn/News_service/media_news/201302/t20130225_248442.htm 3 Yale University, Environment – http://epi.yale.edu/epi/issue-ranking/air-quality
2014 to 2017.
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Beijing and Shandong4. In 2014, major cities in the PRC had, on average, 124 bad-air days,
which is approximately one-third of the year 5 . Chinese consumers have increasingly
recognised the adverse impacts of poor air quality, and more willing to consider the purchase
of a consumer air purifier6.
Adverse Health Effects of Air Pollution on Children From 1990 to 2010, the average asthma incidence amongst children in Chinese cities grew
tremendously from 0.91% to 6.80% in 2010, which is three times faster than the United
States. This is likely due to the deterioration of indoor air quality in the PRC. Other than
asthma, children in the PRC also experienced increased incidence of respiratory allergies
such as rhinitis and atopic dermatitis. 7 As the Chinese public pay more attention to air
pollution and its negative effects, strong demand for air purifiers is expected to continue,
alongside rising health awareness towards air pollution and health.
Increased Time Spent Indoors Presents Opportunities for the Consumer Air Purifier Industry
The population in industrialised countries spend approximately 90.0% of their time indoors,
mainly in their homes8. With increasing economic activities in the country, and rising income
and development in Chinese cities, the amount of time spent indoors by PRC residents is
expected to rise, potentially driving further demand for air purifiers9.
Growing Urbanisation and Disposable Income Propels Demand for Air Purifiers
The urban population in the PRC has grown from 49.9% of the nation’s total population in
2010 to 54.8% in 2014. Rapid urbanisation in Chinese cities signifies increasing opportunities
for consumer air purifier players/ sellers. A growing urban population implies that more people
will be exposed to air pollution. Moreover, average disposable incomes for urban households
in the PRC have been rising steadily and are expected to continue its uptrend, in line with
economic growth.
Rising demand for air purifiers are being met by both international and local manufacturers
with different market positioning. Chinese consumers favour foreign brands, perceiving them 4 China National Environmental Monitoring Center, 2015
5 2 February 2015, Ministry of Environmental Protection, 2014 74
http://www.mep.gov.cn/gkml/hbb/qt/201502/t20150202_295333.htm 6 Interviews conducted with Industry Players 7 Tongji University, , PM2.5 . 8 27 January 2007, U.S. National Institute of Environmental Health Science, Environmental Health Perspectives, Improving Indoor Environmental Quality for Public Health: Impediments and Policy Recommendations 9 1 February 2014, Guangdong Environmental Protection Department, Explosive Growth of Air Purifier Demand Propelling the Revision of GB Standard
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to be of better make than domestic ones. Foreign brands are estimated to take up
approximately 50.0% market share of the Consumer Air Purifier industry in the PRC, which is
largely dominated by a few renowned international players.10
Increased sales of consumer air purifiers in the PRC have drawn many players into this
industry. Some are new market entrants without manufacturing and Research & Development
(“R&D”) capabilities. They source their products from other producers, targeting the lower end
of the consumer market. Others may already be engaged in other similar businesses, which
allow them to leverage on their existing manufacturing facilities and technologies to produce
high quality products with innovative features. They often have a competitive edge over other
industry players, with their established brand names through other existing products.
10 Interviews conducted with Industry Players
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2. OVERVIEW OF THE AIR PURIFIER INDUSTRY IN THE PEOPLE'S REPUBLIC OF CHINA
2.1 Brief Background of the Air Purifier Industry, with Focus on the Consumer Market
Air purifiers are seen as an increasingly necessary household item, due to worsening air
quality in the People’s Republic of China (“PRC”). In recent years, the country has seen rapid
industrialisation of its economy, together with surging growth in urbanisation and energy
consumption. On the other hand, environmental policies and regulations have yet to keep up
with the pace of economic progress in the country. As a consequence, urbanised regions of
the PRC are facing challenges in keeping air pollution in check. Studies indicate that 42.4% of
surveyed cities in the PRC reported higher-than-normal fine particle (PM2.5 – particulate
matter that is less than 2.5 micrometers in diameter and is believed to pose health risks
greater than PM1011) readings12. In addition, certain PRC cities face seasonal sandstorms
and bad weather conditions that further worsen the air quality in the country.
To alleviate the issue of poor air quality in the country, an increasing number of households
are purchasing and installing air purifiers at home. Rising demand for air purifiers are being
met by both international and local manufacturers with different market positioning. This
report will highlight key aspects of the air purifier industry, focusing on the consumer market
(the “Consumer Air Purifier industry”), in the PRC. Information on air purifiers for commercial/
industrial use is not covered in this report.
11 United States Environmental Protection Agency, Fine Particle (PM2.5) Designations – http://www.epa.gov/pmdesignations/faq.htm. Retrieved 22 June 2015 12 25 February 2013. Ministry of Environmental Protection, The People's Republic of China – http://english.sepa.gov.cn/News_service/media_news/201302/t20130225_248442.htm
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2.1.1 Definitions
Air purifiers (also referred to as air cleaners) are electrical devices that remove solid and
gaseous pollutants from the air13. Prolonged exposure to contaminants and fine particles,
such as formaldehyde and PM2.5, may pose adverse health risks that include breathing
difficulties, asthma and allergies. Through the function of air filters or sterilising systems built
into each air purifier, these products reduce the concentration of dust, contaminants, fine
particles and volatile organic compounds (“VOC”) in the air to the benefit of individuals within
the immediate vicinity.
2.1.2 Key Statistics
Increased sales of air purifiers in the PRC have been triggered by worsening air quality in the
country, with sales growing at an unprecedented rate over the last five years. In terms of
volume, the number of air purifiers sold in the PRC grew at a compound annual growth rate
("CAGR") of approximately 42.0% from 2010 to 2014, with an estimated 3.6 to 4.4 million
units sold in 2014, as compared to 774,000 to 946,000 units in 2010. From 2013 to 2014,
there was a sharp spike of 35.6% growth in volume.14
Figure 1: Sales of Air Purifiers in the PRC, in Terms of Volume from 2010 to 2014
Source: Tabulated by Converging Knowledge
13 30 December 2008, General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ) & Standardization Administration Committee (SAC) of the PRC, National Standard of the PRC – GB/T18801-2008 14 Interviews conducted with Industry Players
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The worsening air quality in the PRC has been attributed to a number of factors. Amongst
these factors include industrial emissions, use of coal for power generation, and the rising
number of private vehicle usage. In the years following its policy reforms, the economy went
through rapid industrialisation, leading to become one of the most energy-intensive countries
in the world. The PRC economy has been relying on cheap and abundant coal to fuel the
energy needs of its industries and growing cities. According to the World Health Organization
(“WHO”)15, the PRC has the world’s highest total carbon dioxide ("CO2") emissions for energy
generation, with 8,106.4 million metric tons produced in 201216. With the exception of Iran and
India, the PRC also has the highest PM10 (particulate matter up to 10 micrometers in
diameter) and PM2.5, with an emission annual average of 89.9 (world average = 71)
microgram per cubic meter (“ug/m3”) for PM10, and 41.3 ug/m3 (world average = 22) for
PM2.5 in 201217.
Figure 2: Top 10 Countries with the Largest Total Carbon Dioxide Emissions from Consumption of Energy in 2012, and their Annual Average PM10 and PM2.5
Note:
Latest Available data for CO2 emissions is 2012. PM10 and PM2.5 concentration levels based on latest data
released by the World Health Organization.
Source: US Energy Information Administration, World Health Organisation and Converging Knowledge
15 World Health Organization, Ambient (Outdoor) Air Pollution in Cities Database 2014, 16 US Energy Information Administration, International Energy Statistics – http://www.eia.gov/cfapps/ipdbproject/IEDIndex3 17 World Health Organisation, Ambient (outdoor) air pollution in cities database 2014 – http://www.who.int/phe/health_topics/outdoorair/databases/cities/en/
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According to a study conducted by the Ministry of Environmental Protection (“MEP”) of the
PRC, the top 10 most polluted cities in the PRC (not in any particular order) in 2014 were
those located within heavy industrial areas such as Baoding, Xingtai, Shijiazhuang,
Tangshan, Handan, Hengshui, Jinan, Langfang, Zhengzhou and Tianjin. In 2013, 45.2% of
respondents surveyed throughout the PRC said that the cities they were living in are suffering
from some form of air pollution. Of those, 19.8% reported moderate to serious levels of air
pollution.18
Residents of Beijing, Shanghai and Guangzhou, the largest cities in the PRC, suffer from air
pollution resulting from smog, dust and fine particles, particularly from the months of October
to March. The PM2.5 concentration levels in these cities are relatively high, compared to the
WHO’s guidelines on PM2.5.
Figure 3: Monthly Average PM2.5 Concentration Levels of Selected Cities in the PRC from April 2014 to April 2015
Source: China National Environmental Monitoring Center (“CNEMC”) and Converging Knowledge
18 2 August 2013. Ministry of Environmental Protection, The PRC – http://english.mep.gov.cn/News_service/news_release/201308/t20130822_257919.htm
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2.2 Industry Structure
The Consumer Air Purifier industry in the PRC is part of the broader Consumer Electrical
Appliances industry (see Figure 4).
Majority of air purifier players in the PRC have shifted their focus from industrial towards the
consumer market. This is due to the rising demand for air purifiers from the consumer market,
as well as larger emphasis being placed by each household on the health of its members,
amongst others19.
Figure 4: The Consumer Air Purifier Industry within the Consumer Electrical Appliances Industry
Source: Converging Knowledge
The Consumer Air Purifier industry consists of players such as Geili, Blueair and Allen, which
specialise in air purifiers and air treatment products, and players that produce a broad range
of appliances such as Phillips, Panasonic and Sharp.
19 Interviews conducted with Industry Players.
Consumer Electrical Appliances Industry
Other
Appliances
Air Treatment
Air
Purifiers
Air
Conditioners
(De)humi-
difiers
Fans Air coolers/
Heaters
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2.2.1 Description of Differing Segments in the Industry
The Consumer Air Purifier industry in the PRC can be segmented based on branding, as well
as the type of filters/ systems used in the products. An overview of differing segments in the
industry is presented in Figure 5 below.
Figure 5: Segments of the Consumer Air Purifier Industry in the PRC
Note:
--------- indicates the segment that Eindec Corporation Pte Ltd will operate in.
Source: Converging Knowledge
Consumer air purifiers that are being marketed in the PRC can be categorised as either being
made and/ or marketed by international players such as Panasonic, Phillips and Sharp, or by
local players such as Yadu, Geili and SKG. International players are defined as companies
largely owned by foreign shareholders and recognised as having foreign origins, regardless of
the place of product manufacture. Local players, on the other hand, are those with largely
local shareholders, and have domestic beginnings.
Major international brands in the PRC’s Consumer Air Purifier industry include Sharp, Philips,
Honeywell, Panasonic and Daikin, while major local brands include Haier, Gree and Midea.
Many small-scale firms have also entered the market, being attracted by the potential of this
industry. An in-depth discussion on the competitive landscape of the air purifier industry, with
focus on the consumer market, is included in Section 4: Competitive Landscape.
International Players
Local Players
Consumer Air Purifier Industry
Filter-based
Ion/ Ozone
Generator
Others
Filter-based
Ion/ Ozone
Generator
Others
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The industry is segmented further into three broad types of air purifiers, namely filter-based,
ion or ozone generators, and other types of air purifiers. These three broad types of air
purifiers are further described below.
Filter-based: Filter-based air purifiers contains High Efficiency Particulate Arrestance
("HEPA") or activated carbon air filters that trap and/ or neutralise fine particles and
contaminants from the surrounding air. This segment includes newer generation of air filters
such as charged media filters, ionized filters, electrostatic precipitator filters and other catalytic
filters.
Ion/ Ozone Generators: Ion generating air purifiers produce ionic discharge that imparts
negative or positive charges to molecules and fine particles in the ambient air20. Charged
molecules are then attracted to metal plates with opposite charges placed within the air
purifier, where they eventually clump up and become too heavy to float in the air. Ozone
generators turn oxygen molecules into ozone, to remove unwanted odours and other
contaminants. Research shows that ozone can potentially cause many health issues when
inhaled. Common symptoms include chest pain, coughing, shortness of breath, and, throat
irritation. Large amounts of inhaled ozone can even damage the lungs21. Despite the health
effects, studies shows that ozone generators are generally ineffective in controlling indoor air
pollution22.
Other Types of Air Purifiers: This category of air purifiers includes, amongst others, those
that utilise UV radiation to sterilise microorganisms, thermodynamic sterilisation processes, or
nanoparticles to neutralise contaminants in the air. Manufacturers are constantly
experimenting with new technologies to remove dust, contaminants, microscopic particles and
VOCs from the air23.
This report focuses on air purifiers that are intended for consumer use. They include filter-
based air purifiers, ionizing purifiers, ozone generators and Ultra Violet ("UV") light purifiers,
amongst others. In general, residential devices that have the primary function of removing or
neutralising dust, fine particles, contaminants and VOCs are considered as constituents of the
air purifier industry in this report.
20 According to United States Environment Protection Agency, Ambient air is defined as – "that portion of the atmosphere, external to buildings, to which the general public has access." 21 United States Environment Protection Agency, Ozone Generators that are Sold as Air Cleaners – http://www.epa.gov/iaq/pubs/ozonegen.html. Retrieved 22 June 2015 22 United States Environment Protection Agency, Ozone Generators that are Sold as Air Cleaners – http://www.epa.gov/iaq/pubs/ozonegen.html. Retrieved 22 June 2015 23 18 February 2015, Stanford University, Stanford engineers develop new air filter that could help Beijing residents breathe easily – http://news.stanford.edu/news/2015/february/filter-air-pollution-021815.html
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The report does not include analysis on specialised air purifying systems for industrial or
commercial use.
2.2.2 Description of Eindec Corporation Pte Ltd within the Consumer Air Purifier Industry
Eindec Corporation Pte Ltd ("Eindec") specialises in clean air technologies and solutions.
Capitalising on the company’s 30 odd years of experience and track record in designing,
manufacturing and distributing clean room equipment as well as heating ventilation and air-
conditioning equipment under the former umbrella of the Kyodo-Allied group, Eindec has
ventured into the development of air purifiers for consumer use, making its maiden inroads
into the PRC.
Through the application of the latest technological know-how and leveraging on its cleanroom
expertise, Eindec has developed several product series of air purifiers, which meet various
customer needs. These product series of air purifiers are incorporated with green
technologies, smart features and air ventilation capabilities, which include, amongst others,
the following:
1. Fresh air ventilation
Provides fresh outdoor air and clean indoor air through the three-layer filter (coarse,
activated carbon and formaldehyde)
2. Temperature control
Automatically adjusts incoming air flow according to the temperature difference
between indoor temperature and fresh air inlet
3. Low energy consumption
Automatically adjusts fan speed according to indoor PM2.5 levels
4. Smart Control System
The control of the air purifier can be done through the multifunction touch screen on
the air purifier, or via a remote control. In addition, it can also display the indoor
pollution levels and prompt users when the filters need to be replaced.
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Eindec’s ‘cabinet style air purifier with ventilation’ series consists of a real time oxygen
monitoring system, and automatically adjusts the optimal humidity between indoor and
outdoor environments. Installation of this series is eased through its tower design. Eindec’s
‘heat exchanger’ series saves energy and power through the transfer of heat between indoor
and outdoor air. It also controls indoor temperatures.
Marketing of Eindec’s air purifiers will be carried out in a few ways - through online sales, a
distributorship network to be established by Eindec, and tapping on property developers’
platforms, which will provide access to large projects sales.
Testing of Eindec’s air purifiers has been conducted in the PRC, with added plans to carry out
further testing and certification with TÜV SÜD PSB Pte. Ltd. in Singapore.
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3. MAJOR TRENDS IN THE INDUSTRY
3.1 Trends that will Impact the Consumer Air Purifier Industry in the PRC
This section highlights some of the key trends and developments of the Consumer Air Purifier
industry in the PRC.
3.1.1 Worsening Air Pollution Boosts Air Purifier Demand
Rapid industrialisation and urbanisation in the PRC have taken a toll on its air quality. The
ongoing air quality degradation in the country has raised strong concerns amongst Chinese
residents. In early 2013, growing anger over the poor air quality has pressured the Chinese
government to report real time air quality readings for major Chinese cities. As a result, the
demand for consumer air purifiers has increased and is expected to continue, as consumers
recognise the severity of the impact of air pollution to health and are taking more
precautionary steps.24
The PRC is one of the most polluted countries in the world. According to the 2014
Environmental Performance Index, jointly conducted by Yale and Columbia Universities, the
PRC ranked 176 out of 178 (or second lowest ranked) countries for air quality25, making it one
of the worst countries in the world in terms of air quality. In terms of average exposure to
PM2.5, the PRC scored only 2.44 out of 100.0, which is the lowest amongst all 178 countries
studied. This indicates that the population in the PRC is more exposed to PM2.5 and
exposure to high levels particle pollution can affect both lungs and heart. In addition, 40.5% of
cities in the PRC failed to meet the country’s own air quality standards in the first three
24 Interviews conducted with Industry Players 25 Hsu, A., J. Emerson, M. Levy, A. de Sherbinin, L. Johnson, O. Malik, J. Schwartz, and M. Jaiteh. (2014). The 2014 Environmental Performance Index. New Haven, CT: Yale Center for Environmental Law and Policy. – http://epi.yale.edu/epi/issue-ranking/air-quality
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months of 201526. Provinces surrounded by heavy industrial factories such as Henan, Hubei
and Hebei are amongst the most polluted provinces in the PRC, followed by Beijing and
Shandong27. Note that these provinces are located in the central and eastern parts of the
country.
Figure 6: PM2.5 Air Quality of the PRC’s 74 Cities in Q1 2015
Source: CNEMC, tabulated by Converging Knowledge
3.1.2 Rising Health Awareness Promotes Need for Air Purifiers
Widespread coverage by the media on poor air quality in the PRC has further increased the
public’s awareness on air pollution. This is further stimulated by the growing prevalence of
social media usage. Air pollution is a severe problem in the PRC, and poses a major
environmental risk to health. As a result, more Chinese consumers are considering the
purchase of a consumer air purifier, upon recognising the health impacts of air pollution28.
26 China National Environmental Monitoring Center, 2015
27 , 2015 28 Interviews conducted with Industry Players
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It is estimated that air pollution causes 4,000 deaths in the PRC a day29. Moreover, based on
the report released by the Ministry of Environmental Protection, it is estimated that on
average, major cities in the PRC had, in 2014, 124 bad-air days (days that the air quality
index exceeded 101 and were categorised as unhealthy), which is approximately one-third of
the year30.
Adverse Health Effects of Air Pollution on Children
Air pollution poses serious health risks to children, contributing to asthma, emphysema, heart
disease, and other potentially lethal respiratory ailments31.
From 1990 to 2010, the average asthma incidence amongst children in Chinese cities has
grown tremendously from 0.91% to 6.80% in 2010, which is three times faster than the United
States. This is likely due the deterioration of indoor air quality in the PRC. Other than asthma,
children in the PRC experienced increased incidence of respiratory allergies such as rhinitis
and atopic dermatitis.32
As Chinese public continuously paying more attention to air pollution and its negative effects,
the demand for air purifiers is expected to pick up, alongside rising health awareness towards
air pollution and health.
3.1.3 Increased Time Spent Indoors Presents Opportunities for the Consumer Air Purifier Industry
Other than outdoor air pollution, indoor air pollution is also a concern faced by the Chinese
consumers. Studies indicate that people in industrialised countries spend approximately
90.0% of their time indoors, mainly in their homes33. With increasing economic activities in the
country, and rising income and development in Chinese cities, the amount of time spent
indoors by PRC residents is expected to rise, potentially driving further demand for air
purifiers34.
29 July 2015, University of California, Berkeley, Berkeley Earth, Air Pollution in China: Mapping of Concentrations and Sources 30 2 February 2015, Ministry of Environmental Protection, 2014 74
http://www.mep.gov.cn/gkml/hbb/qt/201502/t20150202_295333.htm 31 December 2011, National Center for Biotechnology Information, U.S. National Library of Medicine, The Clean Air Act Deserves Our Full Support 32 20 March 2015, Tongji University, , PM2.5 . 33 27 January 2007, U.S. National Institute of Environmental Health Science, Environmental Health Perspectives, Improving Indoor Environmental Quality for Public Health: Impediments and Policy Recommendations 34 1 February 2014, Guangdong Environmental Protection Department, Explosive Growth of Air Purifier Demand Propelling the Revision of GB Standard
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A number of pollutants, including carbon monoxide, formaldehyde and radon, are present
indoors35. Indoor air pollution is constituted by various causes, including poor ventilation,
inside/ outside contamination, microbial contamination and new building materials. Synthetic
building materials such as particleboards are used extensively in new homes and buildings.
These materials often contain formaldehyde, which causes health problems such as irritation
of the skin, eyes, nose, and throat. High levels of exposure to formaldehyde may even cause
some types of cancers36. Other than synthetic building materials, formaldehyde is also widely
used as an adhesive in new furniture.
Research conducted by the Chinese Society for Environmental Sciences in 2011 showed that
the indoor levels of formaldehyde in cities like Nanjing, Hangzhou and Shanghai exceeded
safety threshold by as much as 40.0%37.
3.1.4 Growing Urbanisation Propels Demand for Air Purifiers
Air pollution in cities is more serious than that of rural areas, due to higher concentrations of
industrial activities and motor vehicles38. Thick smog has been clouding many cities in the
PRC. As these cities continue to urbanise, the increasing urban population is likely to drive
the demand for air purifiers39.
The PRC’s urban population grew by a CAGR of 2.8% from 2010 to 2014, reaching 749.2
million urban residents by 2014 (see Figure 7). The urban population for 2014 constituted
54.8% of the nation’s total population, as compared to 49.9% in 2010. This is in line with the
Chinese government’s plan of urbanisation. The recently released “National New-type
Urbanisation Plan (2014 – 2020)” by the government aims to lift the proportion of Chinese
living in cities to 60.0% by 202040. Urban dwellers are knowledgeable consumers who tend to
be health conscious and demand higher living standards 41 . A growing urban population
35 U.S. National Center for Environmental Health, Chapter 5: Indoor Air Pollutants and Toxic Materials – http://www.cdc.gov/nceh/publications/books/housing/cha05.htm. Retrieved 3 August 2015 36 U.S. Department of Health and Human Services, National Institutes of Health, National Cancer Institute, Formaldehyde and Cancer Risk – http://www.cancer.gov/about-cancer/causes-prevention/risk/substances/formaldehyde/formaldehyde-fact-sheet. Retrieved 28 July 2015 37 4 May 2012, Peking University, , , - 38 December 2012, Ministry of Environmental Protection of the PRC, “ ” 39 Interviews conducted with Industry Players 40 2014-2020 - http://www.gov.cn/zhuanti/xxczh/ Retrieved 24 December 2014 41 6 March 2015, , ? – http://tech.qq.com/a/20150309/010893.htm
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implies that more people will be exposed to air pollution, thus, signifying increasing
opportunities for air purifier players/ sellers.
The growing urban population in the PRC will continue to spur demand for new residential
buildings in Chinese cities, which, in turn, will potentially create demand for consumer air
purifiers.
3.1.5 Increasing Disposable Income for Urban Households
The average disposable incomes for urban households in the PRC have been following an
upward trend. This increases the spending propensity of Chinese consumers, who will be
more inclined to invest in air purifiers. From 2010 to 2014, the average disposable income for
urban households showed a CAGR of 10.8%, posting at RMB28,844.0 in 2014. Please refer
to Figure 7.
Figure 7: Overview of the PRC’s Urban Population and Urban Household Disposable Income from 2010 to 2014
Source: National Bureau of Statistics of China
The “Income Doubling Plan”, which was announced during the 18th National Congress of the
Communist Party of China in 2012, aims to double the PRC’s 2010 GDP and per capita
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income by 202042. Chinese consumers will, thus, benefit from this, and with higher incomes,
their propensity to spend will rise. This will potentially drive demand for air purifiers, as
consumers demand a comfortable and healthier lifestyle.
3.1.6 Consumers Buying More Units
First-time buyers of air purifiers can be sceptical of the effectiveness of the product that they
purchase. For example, they may doubt the air cleansing abilities of the consumer air
purifiers. However, after using the air purifiers for a period of time, the intangible benefits of
the air purifiers are felt. As a result, these consumers will be more inclined to purchase more
air purifier units to cover other areas in their homes.43
3.2 Issues and Challenges
While the Consumer Air Purifier industry in the PRC shows a great potential for growth and
development, this industry is faced with its own set of issues and challenges. Some of the key
issues and challenges encountered by players in this industry are discussed in the following
sections.
3.2.1 Lack of a National Standard for Consumer Air Purifiers
There is an absence of a binding standard in the Consumer Air Purifier industry that may lead
to inflated product claims amongst industry players. The fact that the benefits of an air purifier
is not immediately apparent and cannot be readily measured may encourage
misrepresentation of their products, which will eventually lead to mistrust among consumers.
The current standard for indoor air purifiers, which is known as GB/T 18801-2008, was
implemented in 2008, and provided guidelines in the areas of design, safety, noise, energy
consumption, labelling and cleaning abilities of air purifiers44. However, this standard does not
428 September 2012, Xinhua, – http://news.xinhuanet.com/18cpcnc/2012-11/08/c_113642875.htm. Retrieved 22 December 2014 43 Interviews conducted with Industry Players 44 11 September 2014, ,
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take into account of PM2.5 filtration efficiency– the effectiveness of an air purifier in filtering
PM2.5 particles.
Moreover, manufacturers are not required to send their products for testing under this
standard, as it is not enforced.45 As such, air purifier players often market their products using
different benchmarks, for example, PM2.5 filtration efficiency and Clean Air Delivery Rate
(“CADR”), with different coverage areas, and this causes confusion amongst Chinese
consumers. Research indicates that the market is flooded with substandard air purifiers with
exaggerated product claims46.
Realising the need to regulate the air purifier industry, the PRC government is currently
working on a revision of GB/T 18801, which aims to enforce mandatory labelling of
specifications such as filtration efficiency, lifespan and coverage area. The revision is
expected for completion by the first half of 2015.47 However, as at the date of this report,
information on the revision of air purifier standards has yet been released.
Major players such as Sharp, Philips, Daikin, Yadu, Haier and Gree have participated in the
drafting of the latest national standards. This exemplifies the collaborative effort between the
government and the private sector to improve the air purifier industry in the country.
3.2.2 Low Barriers to Entry
The barriers to entry into the Consumer Air Purifier industry is relatively low, as the technology
required to manufacture a consumer air purifier is perceived to be simpler than that of other
electrical appliances such as refrigerators and air conditioners. Coupled with lax regulation
and strong consumer demand, many are drawn to this industry and started to offer similar
products. As a result, the Consumer Air Purifier industry in the PRC is associated with low
product diversity.
Industry players are pressed to invest more into research and development (“R&D”), in order
to differentiate their products and stay ahead of competition. Some of the product
differentiation strategies are highlighted in Section 4: Competitive Landscape.
45 30 December 2012, General Administration of Quality Supervision Inspection and Quarantine of the People's Republic of China, Air Cleaner GB/T 18801-2008. 46 Interviews conducted with Industry Players 4721 November 2014, , http://www.gov.cn/xinwen/2014-11/21/content_2781967.htm.
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3.2.3 Seasonality
Sales of consumer air purifiers usually pick up during the second half of the year. This is the
time when the PRC transitions into cold season, and experiences worsening outdoor air
pollution, as a result of increased coal burning to generate power and heat48.
During winter, windows are sealed up to conserve energy, and this affects indoor ventilation.
Without adequate ventilation from clean outdoor air, indoor air pollutants can accumulate to
levels that can pose health and comfort problems. As a result, many consumers have turned
to consumer air purifiers to improve the indoor air quality in their homes.49
Research shows that consumer air purifier sales spiked in the months of November and
December 2013, when air pollution levels were at its peak50.
3.2.4 Government’s Effort in Improving Air Quality
The Chinese government has realised the importance of environment protection. In late 2013,
the PRC’s top leaders “declared war” against pollution and released a five-year national plan
to improve the country’s air quality51. The plan aims to reduce coal burning by half, limit the
number of cars on the road, implement a cap-and-trade programme and make it compulsory
for factories to declare their emissions52. We note that the plan is targeted towards long-term
air quality improvements, and the full impact of the plan is unlikely to be realised in the short
to medium term. In addition, environment experts have highlighted the difficulties in fully
enforcing the plan, since environment protection plans were introduced as early as 1982, and
had limited impact on the environment.
As illustrated in Figure 8, the air quality in the three largest metropolitan regions, namely
Beijing-Tianjin-Hebei, Changjiang River Delta and Pearl River Delta, improved slightly during
the winter season from January 2014 to January 2015, as a result of the government’s strict
48 Interviews conducted with Industry Players 49 Interviews conducted with Industry Players 50 Interviews conducted with Industry Players 5112 September 2013, The Central People’s Government of the PRC, http://www.gov.cn/zwgk/2013-09/12/content_2486773.htm 5212 September 2013, The Central People’s Government of the PRC, http://www.gov.cn/zwgk/2013-09/12/content_2486773.htm
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pollution control. However, the overall air quality in the PRC is still poor. Data shows that the
monthly average PM2.5 concentration levels in these regions exceeded MEP’s own daily
average limit, which is 35.0 micrograms per cubic metre.
Figure 8: Monthly Average PM2.5 Concentration Levels of Selected Regions in the PRC, from January 2014 to January 2015
Source: CNEMC and Converging Knowledge
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4. COMPETITIVE LANDSCAPE
The Consumer Air Purifier industry in the PRC is fragmented. Many players were drawn to
this industry due to strong demand from Chinese consumers, with early market entrants
benefitting and profiting from the rapid market growth. Since then, many more players have
entered the market, and this has intensified competition53. This trend is expected to continue,
and may potentially lead to price pressures on consumer air purifiers. Currently, it is estimated
that there are 500 consumer air purifier brands in the PRC.54
In general, Consumer Air Purifier industry players can be grouped into two categories. The
first category of players is those who are already engaged in other similar businesses such as
HVAC control systems and/ or other electrical appliances like air conditioners and
refrigerators. Those players who are already familiar with air treatment products can leverage
on their existing manufacturing facilities and technologies to produce high quality products.
They often have a competitive edge over other industry players, with their established brand
names through other existing products.
The second category of players sources their products from other generic consumer air
purifier producers. These players are usually new market entrants, and do not possess
manufacturing or R&D capabilities. They are mainly involved in marketing and distribution,
with little control over the quality of the products that they source. Products from this group of
industry players are usually cheaper and targeted at the lower end of the consumer market.
Chinese Consumers’ Preference towards Foreign Brands
Chinese consumers have strong brand awareness and tend to favour foreign brands,
perceiving them to be of better make than domestic ones. Foreign brands are estimated to
take up approximately 50.0% market share of the Consumer Air Purifier industry in the PRC,
which is largely dominated by established international players such as Panasonic and
Philips, amongst others.55
53 Interviews conducted with Industry Players 54 Interviews conducted with Industry Players 55 Interviews conducted with Industry Players
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Majority of the consumer air purifier buyers in the PRC are new to this product, and they are
inclined to trust established foreign brands rather than local brands. This inclination is likely
influenced by the many years of marketing that most foreign players have invested in, and the
familiarity/ popularity of electrical appliances by the same foreign brands.56
Intelligent Product Features In anticipation of higher customer expectations, the Consumer Air Purifier industry players are
increasingly placing more focus on the development of air purifiers with intelligent features
that promote a more user-friendly experience. In early 2014, Haier, a Chinese consumer
electronics company, announced the release of an intelligent system, which integrates the
control of all Haier electronic appliances, including the consumer air purifier, through a mobile
phone application. The incorporation of such intelligent features, which Eindec has also
planned for, will provide a competitive edge over other industry players.
Besides consumer electronics companies, Internet companies such as Xiaomi and Baomi
have also released their air treatment products, trying to win over Chinese consumers with
affordable and intelligent consumer air purifiers. Xiaomi Inc, a Chinese startup known for its
innovative products, unveiled its first consumer air purifier in late 2014, priced at RMB899.
Similarly, Baomi, an Internet and software company based in Beijing, has also released a
range of consumer air purifiers under RMB1,200. These affordable consumer air purifiers can
be controlled remotely by a mobile phone application. Further to this, the mobile application
can also be used to monitor indoor air quality and alert users to change their air filters.
Consumer Air Purifier with Fresh Air Ventilation
Most consumer air purifiers available in the Chinese market are ‘standalone’ air purifiers that
only clean indoor air and do not provide ventilation from outdoor air. Without the exchange of
fresh outdoor air, the levels of carbon dioxide tend to build up in rooms over time. With the
decline of oxygen levels, the indoor environment becomes stale and stuffy. Building
occupants living under such an environment often face comfort problems, ill health and
sickness-absenteeism57. As such, industry players such as Eindec, Honeywell and Daikin are
introducing ventilation functions to enhance the effectiveness of their consumer air purifiers.
Such consumer air purifiers clean the indoor air, whilst providing purified fresh outdoor air to
replenish oxygen. The installation of an air purifier with fresh air ventilation system is relatively
simpler and cheaper than the installation of a centralised air ventilation system, as it does not
require any piping.
56 Interviews conducted with Industry Players 57 October 1997, United States Environment Protection Agency, An Office Building Occupant’s Guide to Indoor Air Quality
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Production of this type of air purifier requires a higher command of technical expertise, as it
involves knowledge in the design of fresh air ventilation systems as well as know-how in
incorporating such features into an air purifier. Industry players with such capabilities will have
technological advantages over their peers.
4.1 Overview of Client’s Closest Competitors
4.1.1 Brief Description of the Key Players in the Consumer Air Purifier Industry in the PRC
The Consumer Air Purifier industry in the PRC is fragmented, without a clear-cut leader.
However, we note that foreign players take up majority of the market share.
Other than selling through brick and mortar stores, research shows that consumer air purifier
players are increasingly receiving orders from the Internet, as Chinese consumers embrace
online-shopping. Low to mid range air purifier brands are getting increased sales from online
channels, whereas high end air purifiers (more than RMB8,000) depend almost entirely on
traditional sales channels 58 . The following lists some of the known key players in the
Consumer Air Purifier industry in the PRC.
Table 1: List of Key Players in the Consumer Air Purifier Industry in the PRC
Brand Foreign/
Local Pure Play Residential Commercial Manufacturing Location
Philips Foreign No Yes Yes Zhuhai, Guangdong
Panasonic Foreign No Yes Yes Shunde, Guangdong
Sharp Foreign No Yes Yes Shanghai
Midea Local No Yes No Zhongshan, Guangdong
Daikin Foreign No Yes Yes OEM by Gree
Yuanda Local No Yes Yes Changsha, Hunan
Yadu Local No Yes Yes Beijing
Gree Local No Yes Yes Zhuhai/ Zhongshan,
Guangdong and Hefei,
58 Interviews conducted with Industry Players
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Brand Foreign/
Local Pure Play Residential Commercial Manufacturing Location
Anhui
Notes:
The list is not exhaustive.
It is not listed in any order of preference.
Pure Play refers to industry players that solely deal in air purifier products.
Source: Desk Research and Interviews Conducted with Industry Players
4.1.2 Segmentation of Key Players Based on Price Points of Less than RMB5,000, RMB5,000 to RMB8,000 and Greater than RMB8,000
Interviews with industry players indicate that popular air purifier brands in the PRC include
Philips, Panasonic, Sharp, Midea, Daikin, Yuanda, Yadu and Gree.
Table 2: Popular Consumer Air Purifier Brands in the PRC and Their Market Positioning
Brand Market Position
Low End Mid Range High End
Philips
Panasonic
Sharp
Midea
Daikin
Yuanda
Yadu
Gree
Notes:
The list is not exhaustive.
Low end = Below RMB5,000
Mid end = RMB5,000 – RMB 8,000
High end = Above RMB8,000
Source: Compiled from Desk Research and Interviews Conducted with Industry Players
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4.2 Estimated Market Size of the Consumer Air Purifier Industry in the PRC
The Consumer Air Purifier industry in the PRC, based on annual total sales, was estimated to
be RMB10.3billion to RMB12.6billion in 2014.
From 2010 to 2014, the sales of consumer air purifiers in the PRC recorded a CAGR of
59.9%, as consumers rushed to buy air purifiers in shopping malls and electronics stores,
following a widespread fear of aggravated outdoor air pollution in Chinese cities59.
Figure 9: Sales of Air Purifiers in the PRC, in terms of Volume and Value, from 2010 to 2014
Source: Tabulated by Converging Knowledge
59 Interviews conducted with Industry Players
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5. PROSPECTS OF THE INDUSTRY
The prospects of the Consumer Air Purifier industry in the PRC are expected to follow an
upward trend in the short to mid-term, driven by growing awareness of air pollution,
particularly indoor air pollution. The outdoor air pollution issue in the PRC is unlikely to be
resolved in the short term, as the impact of government measures on air pollution will take
time. With rising disposable incomes of urban households in the PRC (as shown in Figure 7),
Chinese consumers can better afford to invest in air purifiers in their homes, thus, improving
their quality of life.
The current household penetration rate for air purifiers in the PRC is approximately 1.0%60,
which is significantly lower than other countries such as the United States (27.0%), South
Korea (71.0%) and Japan (17.0%)61. This indicates that there is large market potential for the
Consumer Air Purifier industry in the PRC to grow.
5.1 Industry Outlook in General
In the near future, competition in the Consumer Air Purifier industry is expected to intensify,
as a result of robust growing demand. The entry barrier for the Consumer Air Purifier industry
is low, due to the relatively simpler technologies required to manufacture air purifiers,
compared to other electrical appliances such as air conditioners. Many small domestic players
have followed the trend, hoping to get a share of this fast growing and lucrative market.
Moreover, the prevalence of Internet retailing has also offered new market entrants a channel
to market their products with low costs.
Estimated Growth The demand growth for consumer air purifiers in the PRC is expected to moderate to a CAGR
of 30.2% from 2014 to 2017, as consumers make informed purchase decisions62.
60 Interviews conducted with Industry Players 61 6 March 2015, , ? – http://tech.qq.com/a/20150309/010893.htm 62 Interviews conducted with Industry Players
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Figure 10: Estimated Consumer Air Purifier Sales (Value) in the PRC from 2014 to 2017
Notes:
e = Estimate
f = Forecast
Source: Converging Knowledge
Low Product Knowledge Air purifiers are relatively new to Chinese consumers, as the use of these air purifiers was
popularised only in the recent years. Chinese consumers, in general, have low product
knowledge of air purifiers, relying often on online sources, for example, web forums and social
media, when making purchase decisions. Chinese consumers value product reviews written
by other Internet users, and are influenced by them. These consumers are also becoming
increasingly dependent on word-of-mouth recommendations from family and friends.63
Industry Reshuffle Likely After the Introduction of Revised National Standard An industry reshuffle is likely to take place this year, especially with the introduction of the
revised national standard, which aims to address current consumer confusion on consumer
air purifiers. Under the new revision of GB/T 18801, industry players may be expected to label
the filtration effectiveness of their products using a standardised benchmark, in order for
consumers to compare similar products and make informed purchase decisions64. As such,
63 Interviews conducted with Industry Players 64 6 May 2015, , .
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industry players without core manufacturing or R&D capabilities are expected to struggle to
stay ahead of the competition.
The revision of the national standard on consumer air purifiers is expected to encourage
further growth in the industry, especially amongst smaller companies seeking to expand their
market share with better price-performance ratio product offerings.
Improving Outdoor Air Quality, Growing Indoor Air Pollution Awareness
Growing awareness of indoor air pollution amongst Chinese consumers will continue to drive
demand for consumer air purifiers. This can be observed through the sales of consumer air
purifiers in 2014. Although outdoor air quality in major Chinese cities has shown slight
improvements in 2014, sales of residential air purifiers did not decline in tandem65.
New Distribution Channel for Consumer Air Purifiers with Fresh Air Ventilation Strong demand for residential housing in Chinese cities creates new windows of opportunity
for players in the Consumer Air Purifier industry. Those industry players who incorporate
ventilation functions into their consumer air purifiers may potentially work with property
developers to distribute their products. These air purifiers will come pre-installed in new
residential developments, at the convenience of homebuyers, so as to attract Chinese
consumers looking for high quality homes. Moreover, property developers purchase these air
purifiers in bulk to benefit from the economies of scale and lowered installation costs.
The residential floor space under construction in the PRC has been growing at a CAGR of
13.1% from 2010 to 2014, which presents growth opportunities for industry players
manufacturing consumer air purifiers with fresh air ventilation features.
65 Interviews conducted with Industry Players
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Figure 11: Floor Space of Residential Property under Construction, from 2010 to 2014
Source: National Bureau of Statistics of China
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Converging Knowledge Pte Ltd has prepared this report in an independent and objective
manner and has taken adequate care to ensure the accuracy and completeness of the report.
We believe that this report represents a true and fair view of the industry within the
boundaries and limitations of secondary statistics, primary research and continued industry
movements. Our research has been conducted to present a view of the overall industry and
may not necessarily reflect the performance of individual companies in this industry. We are
not responsible for the decisions and/ or actions of the readers of this report. This report
should also not be considered as a recommendation to buy or not to buy the shares of any
company or companies.
Eddy Tan Kong Yiam
Director
Converging Knowledge Pte Ltd
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HVAC EQUIPMENT
PRESSURE RELIEF DAMPER Used to maintain the positive internal pressure of clean rooms and bio-clean rooms to prevent the intrusion of contaminated air
FIRE SMOKE DAMPER Used in ventilation systems to prevent the spread of toxic gases between divisions
Reliable in emergency situations and able to withstand temperatures of up to 400 degrees Celsius without deformation
MARINE DECK FIRE DAMPER (CLASS H) Used in the ventilation systems of oil rigs and in the offshore oil and gas (“O&G”) industry to prevent the spread of fire, smoke and gas between fire zones
GRILLES AND DIFFUSERS Used mainly in commercial and industrial buildings to ensure even distribution of air within a confined space
BALL JET DIFFUSER Aesthetically appealing and used in large open areas, such as concert halls, airports, theatres and museums for spot cooling or heating
Placement of 35,800,000 Placement Shares at S$0.21 for each Placement Share, payable in full on application. OFFER DOCUMENT DATED 6 JANUARY 2016
(Registered by the Singapore Exchange Securities Trading Limited (the “SGX-ST” or “Exchange”) acting as agent on behalf of the Monetary Authority of Singapore (the “Authority”) on 6 January 2016)
This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax or other professional adviser(s).
UOB Kay Hian Private Limited (the “Issue Manager, Sponsor and Placement Agent”, “Sponsor” or “UOBKH”) has on behalf of Eindec Corporation Limited (the “Company”), made an application to the SGX-ST for permission to deal in, and for quotation of, all the ordinary shares (the “Shares”) in the capital of the Company already issued, the Placement Shares (as defined herein) and the new Shares which may be issued pursuant to the Awards to be granted under the Eindec Performance Share Plan 2015 (the “Performance Shares”), on Catalist (as defined herein).
Acceptance of applications will be conditional upon, inter alia, the issue of the Placement Shares and permission being granted by the SGX-ST for the listing and quotation of all our existing issued Shares, the Placement Shares and the Performance Shares on Catalist. Monies 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 and the Sponsor if the admission and listing does not proceed. The dealing in and quotation of the Shares will be in Singapore Dollars.
Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the Main Board of the SGX-ST. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing
in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s).
A copy of this Offer Document has been lodged with and registered by the SGX-ST, acting as agent on behalf of the Authority, on 11 December 2015 and 6 January 2016 respectively. Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor confirming that our Company is suitable to be listed and complies with the Catalist Rules (as defined herein). Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares, the Placement Shares or the Performance Shares, as the case may be, being offered for investment. The registration of this Offer Document by the SGX-ST, acting as agent on behalf of the Authority, does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, or requirements under the SGX-ST’s listing rules, have been complied with.
We have not lodged this Offer Document in any other jurisdiction.
Investing in our Shares involves risks which are described in the section entitled “Risk Factors” of this Offer Document.
After the expiration of six (6) months from the date of registration of this Offer Document, no person shall make an offer of our Shares, or allot, issue or sell any of our Shares, on the basis of this Offer Document; and no officer or equivalent person or promoter of our Company will authorise or permit the offer of any of our Shares or the allotment, issue or sale of any of our Shares, on the basis of this Offer Document.
Issue Manager, Sponsor and Placement Agent
UOB KAY HIAN PRIVATE LIMITED(Incorporated in the Republic of Singapore)
(Company Registration Number: 197000447W)
EIN
DE
C C
OR
PO
RA
TIO
N L
IMIT
ED
CORPORATE PROFILE
We are a regional clean air environmental and technological solutions group with diversified product lines spanning the commercial, industrial and consumer market segments.
With an operating history since 1984, we have an established track record in the design, manufacture and distribution of clean room and heating, ventilation and air-conditioning (“HVAC”) equipment across a diversified customer base.
Leveraging on our technological expertise in clean room equipment, we have ventured into the consumer air purifier market with our own brand of smart air purifiers. We have completed the design and prototype of a new line of AJB air purifiers for distribution to the consumer market in the PRC.
We operate two manufacturing facilities in Singapore and Malaysia, with our facility in Singapore serving as our headquarters and research and development (“R&D”) centre. We have also established offices in Malaysia, Singapore and the PRC.
EINDEC CORPORATION LIMITED(Company Registration No.: 201508913H)
(Incorporated in the Republic of Singapore on 2 April 2015)
8 Pandan Crescent#01-06
Singapore 128464
EINDEC CORPORATION LIMITED(Company Registration No.: 201508913H)
(Incorporated in the Republic of Singapore on 2 April 2015)
A REGIONAL CLEAN AIR ENVIRONMENTAL AND TECHNOLOGICAL SOLUTIONS PROVIDER
DIVERSIFIED RANGE OF PRODUCTSENVIRONMENTAL AND TECHNOLOGICAL SOLUTIONS PRODUCTS
SMART AIR PURIFIERCertified to filter PM2.5 pollutants, formaldehyde and benzene
Dual ability to provide both fresh air intake ventilation and air purification through filters
Compact size suitable for residential homes and offices
Energy saving efficiency
Automatic temperature control system
Allows remote control through smartphones
* commercial office floor plan
CLEAN ROOM EQUIPMENT
FAN FILTER UNIT Self-contained ceiling unit used in clean room applications in the semiconductor, electronics, optical, biological, pharmaceutical and food industries, and in laboratory environments
AIR SHOWER Prevents clean room contamination by using air jets to blow at and remove fine particles attached to clothing, footwear and other materials
Easy integration with any clean room design, can be custom-built to specific requirements and offers high degree of flexibility