CORPORATE PROFILE - Converging Knowledgeconvergingknowledge.com/UploadedImg/files/Eindec Corporation...

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)

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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



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

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


“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


“Executive Officers” : The executive officers of our Group as at the date of this Offer


“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


“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


“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


“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


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


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


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.


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


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


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.


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

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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,

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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.

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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.

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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

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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

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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.

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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


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


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

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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.

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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.

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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:



Shares

67.6%



Shares

66.8%

NTA

NTA per Share based on the audited combined statement of financial position

of our Group as at 31 December 2014:



Shares

12.26 cents



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:



Shares

71.3%



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


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.


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




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.


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.


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.


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


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


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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.


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.


74


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 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 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


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


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.


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.



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 decreased by approximately S$0.01 million or 15.6% from approximately


due to a reduction of S$0.03 million in government grant income from FY2013 to FY2014.


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


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.


76

Finance costs



due to the repayment of term loans during FY2013.



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.



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.


77


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 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


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.



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.


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


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


respectively.

Cash and cash equivalents

Cash and cash equivalents amounted to approximately S$3.10 million or 18.8% of total assets and


respectively.


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


respectively.


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


respectively.


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.


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


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







83


(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.



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.



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


FY2014





aggregating to approximately S$0.22 million.



(b) increase of approximately S$0.82 million in trade and other receivables; and

(c) decrease of approximately S$0.49 million in inventories.



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.


84



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


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




(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.


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.


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



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.


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


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.


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




respectively of this Offer Document.


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.

GENERAL INFORMATION ON OUR GROUP

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.


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.


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.


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


96


• 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


97


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


98


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


99


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


100


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


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


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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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


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


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.


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


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.


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.


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



USA 3 September 2017 Granted




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




Korea 17 April 2018 Granted




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


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


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.


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


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


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


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


EindecShenzhen

Licence for account Approval for establishingbasic deposit account

Shenzhen Central Branchof People’s Bank of China

From 31 July2015


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.


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 –


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.


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.


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


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


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.


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.


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.


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


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.


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.


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 –


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 – –


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.


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.


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.


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 – – –


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 – – –


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


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


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


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.


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.


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.


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.


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 Technology

Weiye


141


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.


142


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.


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:


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 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.


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


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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.


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


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;


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.


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.


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.


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.


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.


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;


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;


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


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.


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.


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.


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.


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


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


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


We currently have no intention of changing our auditors after the admission to, and listing of,

our Company on Catalist.


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.


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.


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


Singapore

6 January 2016

Tay Puay Cheng

Partner-in-charge



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


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.



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




A-4

Combined Statements of Changes in Equity


Group

Share

capital

Foreign

currency

translation

reserve

Accumulated

profits Total

$’000 $’000 $’000 $’000

At 1 January 2012 – (254) 3,490 3,236


the year

Profit for the year – – 3,032 3,032


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


the year






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


the year






the year – (92) 1,366 1,274

At 31 December 2014 – (612) 9,620 9,008




A-5

Combined Statements of Cash Flows


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)




A-6

Combined Statements of Cash Flows (continued)


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




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.



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.



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.



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.



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.



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.



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.



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.



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.



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.



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.



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.



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.



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.



A-21

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A-2

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 –


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.



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 –



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



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


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



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



Finance lease liabilities RM 2.90 2014 7 7

Total interest-bearing liabilities 1,786 1,786

31 December 2014



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.



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



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



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


years (127) 16 (19)

(154) 45 (12)

Income tax (credit)/expense (187) 273 261



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) – –


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.



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.



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



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


liabilities

Loans and borrowings 1,786 (2,094) (1,136) (958)


8,278 (8,586) (7,628) (958)



A-34

Contractual cash flows

Carrying

amount

Contractual

cash flows

Within

1 year

Between

2 to 5 years

$’000 $’000 $’000 $’000

2014


liabilities

Loans and borrowings 718 (805) (259) (546)


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



A-35

US dollar

Japanese

Yen

Chinese

Renminbi

$’000 $’000 $’000

2013



Trade and other payables – – (477)

807 215 434

2014

Trade and other receivables 412 44 866


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)


31 December 2014

US dollars (60)

Japanese Yen (10)


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.



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


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



7,673 – 7,673 7,673

Loan and borrowings – (1,786) (1,786) (1,786)


– (8,278) (8,278) (8,278)



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



8,250 – 8,250 8,250

Loan and borrowings – (718) (718) (718)


– (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



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.



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


31 December 2014

Revenue 8,675 3,324 2,271 14,270

Total assets 8,038 7,181 1,272 16,491


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;



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



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.


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.



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


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.



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




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


differences – foreign

operations – 9 – 9


for

the period – 9 738 747

At 30 June 2014 – (511) 8,992 8,481

At 1 January 2015 – (612) 9,620 9,008


for the period

Profit for the year – – 358 358



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




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)




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.




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.



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.



B-8

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0

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


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 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).



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 –



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



different from that of the Company’s functional currency.

Movements in the reserves are shown in the statements of changes in equity.



B-13

9 Loans and borrowings

30/6/2015 31/12/2014

$’000 $’000


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



Finance lease liabilities RM 1.10 2018 66 66

Total interest-bearing

liabilities 940 940

31 December 2014



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.



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.



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



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



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



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.



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.



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


liabilities

Loans and borrowings 940 (1,021) (618) (403)


8,246 (8,327) (7,924) (403)

31 December 2014


liabilities

Loans and borrowings 718 (805) (284) (521)


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.



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 payables – – (5)

573 225 680

31 December 2014

Trade and other receivables 412 44 866


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)


31 December 2014

US dollars (60)

Japanese Yen (10)


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.



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


31 December 2014


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.



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



8,865 – 8,865 8,865



– (8,246) (8,246) (8,246)

31 December 2014



8,250 – 8,250 8,250



– (6,877) (6,877) (6,877)

# Excludes advance receipts from customers



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.



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.



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;



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.



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.


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.



B-29

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


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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.


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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


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


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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


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• 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


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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.


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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)


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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,


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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.


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(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


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.


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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


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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.


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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

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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.


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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.


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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


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(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.


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.


D-6

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).


D-7

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.

APPENDIX E – SUMMARY OF SELECTED ARTICLES OFASSOCIATION OF OUR COMPANY

E-1

(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.


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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.


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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.


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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


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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.


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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


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.


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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.


F-3

“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.


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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


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.


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.


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;


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.


F-9

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.


F-10

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.


F-11

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.


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;


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.


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;


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.


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.


F-17

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


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.


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.


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.


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.


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.


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;


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.


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


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


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.


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


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;


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.


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

Private and Confidential

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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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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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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APPENDIX J – PRC CONSUMER AIR PURIFIER INDUSTRY REPORT

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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Converging Knowledge The Consumer Air Purifier Industry in the People’s Republic of China | Page 2


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.


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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


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.


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,


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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


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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


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.


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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 The Consumer Air Purifier Industry in the People’s Republic of China


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

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.

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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)

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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.



8 Pandan Crescent#01-06

Singapore 128464



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

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