CHINA ANGEL FOOD LIMITED (Incorporated in the Republic of Singapore) (Company Registration Number: W)

Transcription

1 CIRCULAR DATED 13 JANUARY 2011 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt in relation to this Circular or as to the action that you should take, you should consult your stockbroker, bank manager, solicitor or other professional adviser immediately. If you have sold or transferred all your issued and fully paid ordinary shares in the capital of China Angel Food Limited, you should immediately forward this Circular together with the Notice of Extraordinary General Meeting and the attached proxy form to the purchaser or transferee or to the bank, stockbroker or agent through whom you effected the sale or transfer, for onward transmission to the purchaser or transferee. This Circular, the Exit Offer Letter and the Acceptance Forms (all as defined herein) shall not be construed as, may not be used for the purpose of, and do not constitute, a notice or proposal or advertisement or an offer or invitation or solicitation in any jurisdiction or in any circumstances in which such a notice or proposal or advertisement or such offer or invitation or solicitation is unlawful or not authorised, or to any person to whom it is unlawful to make such a notice or proposal or advertisement or an offer or invitation or solicitation. The Singapore Exchange Securities Trading Limited (the SGX-ST ) assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular. CHINA ANGEL FOOD LIMITED (Incorporated in the Republic of Singapore) (Company Registration Number: W) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED VOLUNTARY DELISTING OF CHINA ANGEL FOOD LIMITED PURSUANT TO RULES 1307 AND 1309 OF THE SGX-ST LISTING MANUAL Independent Financial Adviser to the Independent Directors of China Angel Food Limited DMG & PARTNERS SECURITIES PTE LTD (Incorporated in the Republic of Singapore) (Company Registration Number: E) IMPORTANT DATES AND TIMES Last date and time for lodgement of Proxy Form : 30 January 2011 at 9.30 a.m. Date and time of Extraordinary General Meeting : 1 February 2011 at 9.30 a.m. Place of Extraordinary General Meeting : M Hotel Shenton Room, Basement Level 1 81 Anson Road Singapore

2 CONTENTS Page DEFINITIONS... 4 INDICATIVE TIMETABLE... 7 LETTER TO SHAREHOLDERS 1. INTRODUCTION THE DELISTING PROPOSAL THE EXIT OFFER IRREVOCABLE UNDERTAKING INFORMATION ON THE OFFEROR INFORMATION ON THE COMPANY AND THE GROUP RATIONALE FOR THE DELISTING OFFEROR S INTENTIONS FOR THE GROUP FINANCIAL ASPECTS OF THE EXIT OFFER IMPLICATIONS OF DELISTING FOR SHAREHOLDERS COMPULSORY ACQUISITION POST-EGM PROCEDURES CONFIRMATION OF FINANCIAL RESOURCES ALTERNATIVE OFFER OVERSEAS SHAREHOLDERS INFORMATION IN RESPECT OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS EXEMPTION RELATING TO DIRECTORS RECOMMENDATION ADVICE OF IFA TO THE INDEPENDENT DIRECTORS INDEPENDENT DIRECTORS RECOMMENDATION EXTRAORDINARY GENERAL MEETING ACTION TO BE TAKEN BY SHAREHOLDERS DIRECTORS RESPONSIBILITY STATEMENT CONSENTS DOCUMENTS AVAILABLE FOR INSPECTION ADDITIONAL INFORMATION

3 CONTENTS APPENDICES I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS II ADDITIONAL INFORMATION ON THE OFFEROR III ADDITIONAL INFORMATION ON THE COMPANY AND THE GROUP IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY V PROCEDURES FOR ACCEPTANCE OF THE EXIT OFFER VI UNAUDITED THIRD QUARTER FINANCIAL STATEMENT FOR THE NINE MONTHS ENDED 30 SEPTEMBER NOTICE OF EXTRAORDINARY GENERAL MEETING PROXY FORM 3

4 DEFINITIONS Except where the context otherwise requires, the following definitions apply throughout this Circular: Acceptance Forms : FAA and/or FAT, as the case may be Announcement : The joint announcement dated 15 November 2010 issued by the Company and the Offeror on the Delisting Proposal Announcement Date : 15 November 2010, being the date on which the Announcement was made CDP : The Central Depository (Pte) Limited Circular : This circular to Shareholders issued by the Company in relation to the proposed voluntary delisting of the Company pursuant to Rules 1307 and 1309 of the Listing Manual Closing Date : 5.30 p.m. on 18 February 2011 or such later date as may be announced from time to time by or on behalf of the Offeror, being the last day for the lodgement of acceptances of the Exit Offer Code : The Singapore Code on Take-overs and Mergers Companies Act : The Companies Act, Chapter 50 of Singapore Company : China Angel Food Limited Concert Parties : Parties acting or deemed to be acting in concert with the Offeror in connection with the Exit Offer, namely, Liang Qiusheng, Leung Hon Fai and Leung Kwok Chun Controlling Shareholder : A Shareholder who (a) holds directly or indirectly 15% or more of the total number of issued Shares (excluding treasury shares) in the Company; or (b) in fact exercises control over the Company CPF : Central Provident Fund CPFIS : CPF Investment Scheme CPF Agent Banks : The banks approved by CPF to be its agent banks CPFIS Investors : Investors who purchased Shares using their CPF savings under the CPFIS Delisting : The voluntary delisting of the Company from the Official List of the SGX-ST under Rules 1307 and 1309 of the Listing Manual Delisting Proposal : The proposal by the Offeror dated 13 November 2010 to the Directors to seek the Delisting Delisting Resolution : The resolution to be proposed at the EGM to approve the Delisting Directors : The directors of the Company (including the Independent Directors) as at the date of this Circular EGM : The extraordinary general meeting of the Company to be held on 1 February 2011, notice of which is set out on page 98 of this Circular, or any adjournment thereof Encumbrances : Has the meaning ascribed to it in section 3.3 of the Letter to the Shareholders as set out in this Circular 4

5 DEFINITIONS EPS : Earnings per Share Exit Offer : The delisting exit offer to be made (subject to the approval of the Delisting Resolution by Shareholders) by Kim Eng, for and on behalf of the Offeror, to acquire the Offer Shares on the terms and subject to the conditions of the Exit Offer Letter (including the relevant Acceptance Forms) Exit Offer Letter : The letter dated 13 January 2011 from Kim Eng, for and on behalf of the Offeror, setting out the terms and conditions of the Exit Offer (including the relevant Acceptance Forms), despatched by the Offeror to Shareholders together with this Circular Exit Offer Period : The period of at least 14 days from the date of announcement of Shareholders approval of the Delisting Resolution Exit Offer Price : S$0.17 in cash for each Offer Share accepted under the Exit Offer FAA : Form of Acceptance and Authorisation FAT : Form of Acceptance and Transfer FY : Financial year ended or ending (as the case may be) on 31 December of a particular year as stated Group : The Company and its subsidiaries Independent Directors : Directors who are independent for the purposes of making the recommendation(s) to Shareholders in respect of the Delisting Proposal and the Exit Offer, being Wee Liang Hiam and Tay Yew Khem IFA : DMG & Partners Securities Pte Ltd, the independent financial adviser to the Independent Directors in respect of the Exit Offer Kim Eng : Kim Eng Corporate Finance Pte. Ltd., the financial adviser to the Offeror Latest Practicable Date : 6 January 2011, being the latest practicable date prior to the printing of this Circular Listing Manual : The listing manual of the SGX-ST Management : The key executives and executive Directors of the Company Market Day : A day on which the SGX-ST is open for trading in securities Minimum Acceptance : Has the meaning ascribed to it in section 3.2 of this Circular Condition NTA : Net tangible assets Offeror : Fine Ally Group Limited Offer Shares : All the Shares in issue other than those already owned, controlled or agreed to be acquired by the Offeror and its nominees and Concert Parties Overseas Shareholder : Has the meaning ascribed to it in section 15.1 of the Letter to the Shareholders as set out in this Circular 5

6 DEFINITIONS Securities Account : Securities account maintained by a depositor with CDP, but does not include a securities sub-account SGX-ST : Singapore Exchange Securities Trading Limited Shareholders : Registered holders of the Shares, except that where the registered holder is CDP, the term Shareholders shall, where the context admits, mean the depositors who have Shares entered against their names in the Depository Register Shares : Issued and paid-up ordinary shares in the capital of the Company SIC : Securities Industry Council of Singapore Undertaking : Has the meaning ascribed to it in section 4 of the Letter to the Shareholders as set out in this Circular Undertaking Shareholder : Has the meaning ascribed to it in section 4 of the Letter to the Shareholders as set out in this Circular VWAP : Volume weighted average price Currencies, Units and Others RMB or RMB cents : PRC Renminbi and cents respectively, being the lawful currency of the People s Republic of China SGD, S$, or cents : Singapore dollars and cents respectively, being the lawful currency of the Republic of Singapore US$ and US cents : US dollars and cents, respectively, being the lawful currency of the United States of America % or per cent. : Per centum or percentage The terms depositor, depository agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. The term related corporation shall have the meaning ascribed to it in Section 6 of the Companies Act. The terms acting in concert and associates shall have the meanings ascribed to them in the Code. 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, where applicable, include corporations. Any reference in this Circular to any enactment is a reference to the enactment as for the time being amended or re-enacted. Any word defined in the Companies Act, the Code or the Listing Manual (or any modification thereof) and used in this Circular shall have the meaning assigned to it under the Companies Act, the Code or the Listing Manual (or any modification thereof), as the case may be, unless the context otherwise requires. Any reference to a time of the day in this Circular shall be a reference to Singapore time unless otherwise stated. Differences may arise between amounts and the totals thereof due to rounding and figures shown as totals may not be an arithmetic aggregation of the figures that precede them. 6

7 INDICATIVE TIMETABLE Last date and time for lodgement of proxy form for : 30 January 2011 at 9.30 a.m. the EGM (1) Date and time of the EGM : 1 February 2011 at 9.30 a.m. Expected commencement date of the Exit Offer : 13 January 2011 Expected last date and time of trading in the : 11 February 2011 at 5.00 p.m. (or such later date Shares on SGX-ST prior to the Delisting and time as may be announced by the Company) Expected date and time of trading suspension in : 14 February 2011 at 9.00 a.m. (or such later date the Shares by the SGX-ST and time as may be announced by the Company) Expected Closing Date of the Exit Offer : 18 February 2011 at 5.30 p.m. (or such later date(s) as may be announced from time to time by or on behalf of the Offeror) Expected date for the Delisting of the Shares : 1 March 2011 (or such other date as may be announced by the Company) Expected date for the payment of the Exit Offer : Not later than ten (10) days after the later of: Price, in respect of valid acceptances of the Exit Offer (i) the date on which the Delisting Resolution is approved at the EGM; or (ii) the date of receipt of valid acceptances of the Exit Offer Note: (1) Proxy forms should be duly completed and deposited at the Company s registered office at 300 Beach Road, #33-04/06, The Concourse, Singapore not less than 48 hours before the time set for the EGM. Completion and return of a proxy form will not preclude a Shareholder from attending and voting in person at the EGM in place of his proxy. Shareholders should note that, save for the last date and time for lodgement of proxy forms for the EGM and the date and time of the EGM, the above timetable is indicative only and is subject to change. For events listed above which are described as expected, please refer to future announcement(s) by or on behalf of the Company to the SGX-ST for the exact dates and times of such events. PLEASE NOTE THAT THE EXIT OFFER IS CONDITIONAL UPON THE DELISTING RESOLUTION BEING PASSED AT THE EGM AND THE FULFILMENT OF THE MINIMUM ACCEPTANCE CONDITION. PLEASE ALSO NOTE THAT APPROVING THE DELISTING RESOLUTION AT THE EGM DOES NOT AUTOMATICALLY MEAN THAT YOU HAVE ACCEPTED THE EXIT OFFER. PLEASE REFER TO APPENDIX V TO THIS CIRCULAR AND APPENDIX I TO THE EXIT OFFER LETTER IF YOU WISH TO ACCEPT THE EXIT OFFER. 7

8 FORWARD-LOOKING STATEMENTS All statements other than statements of historical facts included in this Circular are or may be forwardlooking statements. Forward-looking statements include but are not limited to those using words such as seek, expect, anticipate, estimate, believe, intend, project, plan, strategy, forecast and similar expressions or future or conditional verbs such as will, would, should, could, may and might. These statements reflect the current expectations, beliefs, hopes, intentions or strategies of the party making the statements regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual results may differ materially from those described in such forward-looking statements. Shareholders and investors should not place undue reliance on such forward-looking statements, and neither the Company nor the Offeror undertakes any obligation to update publicly or revise any forward-looking statements. 8

9 LETTER TO SHAREHOLDERS CHINA ANGEL FOOD LIMITED (Incorporated in the Republic of Singapore) (Company Registration No.: W) Directors Registered Office Liang Qiusheng (Executive Chairman) 300 Beach Road Leung Hon Fai (Chief Executive Officer and Executive Director) #33-04/06 The Concourse Leung Kwok Chun (Non-Executive Director) Singapore Wee Liang Hiam (Independent Director) Tay Yew Khem (Independent Director) 13 January 2011 To: The Shareholders of CHINA ANGEL FOOD LIMITED Dear Sir / Madam PROPOSED VOLUNTARY DELISTING OF CHINA ANGEL FOOD LIMITED PURSUANT TO RULES 1307 AND 1309 OF THE LISTING MANUAL 1. INTRODUCTION On 15 November 2010, the Company and the Offeror jointly announced that the Directors had received the Delisting Proposal from the Offeror to seek a voluntary delisting of the Company from the Official List of the SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual. Under the terms of the Delisting Proposal, it was proposed that the Offeror will make the Exit Offer to acquire each Offer Share at the Exit Offer Price of S$0.17 in cash. A copy of the aforementioned announcement is available on the website of the SGX-ST at Having reviewed the Delisting Proposal, the Directors have resolved to convene the EGM to seek the approval of Shareholders for the Delisting Proposal and to apply to the SGX-ST for the approval of the Delisting. The purpose of this Circular is to provide Shareholders with information pertaining to the Delisting Proposal, the Exit Offer and the Delisting Resolution to be proposed at the EGM, notice of which is set out on page 98 of this Circular. 2. THE DELISTING PROPOSAL Under the terms of the Delisting Proposal, the Offeror is making the Exit Offer to acquire the Offer Shares. The Exit Offer is conditional on the Delisting Resolution being passed at the EGM and the fulfilment of the Minimum Acceptance Condition. The Delisting Resolution, if passed by Shareholders, will result in the delisting of the Company from the Official List of the SGX-ST. 2.1 Listing Manual Requirements Under Rule 1307 of the Listing Manual, the SGX-ST may agree to an application by the Company to delist from the Official List of the SGX-ST if: (a) (b) the Company convenes an EGM to obtain the approval of its Shareholders for the Delisting Resolution; the Delisting Resolution is approved by a majority of at least 75 per cent. of the total number of issued Shares, excluding treasury shares held by Shareholders present and voting, on a poll, either in person or by proxy at the EGM (please note that the Directors and Controlling Shareholders need not abstain from voting on the Delisting Resolution); and 9

10 LETTER TO SHAREHOLDERS (c) the Delisting Resolution has not been voted against by 10 per cent. or more of the total number of issued Shares, excluding treasury shares held by Shareholders present and voting, on a poll, either in person or by proxy at the EGM. In addition, Rule 1309 of the Listing Manual requires that if the Company is seeking to delist from the Official List of the SGX-ST: (a) (b) a reasonable exit alternative, which should normally be in cash, should be offered to Shareholders and holders of any other classes of listed securities to be delisted; and the Company should normally appoint an independent financial adviser to advise on the Exit Offer. 2.2 Code Requirements An application was made to the SIC to seek clarification regarding the extent to which the provisions of the Code apply to the Exit Offer. The SIC had on 3 December 2010 ruled that: (a) The Exit Offer is exempted from compliance with the following provisions of the Code: (i) (ii) Rule 20.1 on keeping the Exit Offer open for 14 days after it is revised; and Rules 22.1, 22.2 and 22.3 on the offer timetable; subject to the following conditions: (i) disclosure in the circular to be issued by the Company in connection with the Delisting of the following: (1) the consolidated net tangible assets ( NTA ) per Share of the group comprising the Company, its subsidiaries and associated companies based on the latest published accounts prior to the date of the Circular; and (2) particulars of all known material changes as at the latest practicable date which may affect the consolidated NTA per Share of the group comprising the Company, its subsidiaries and associated companies based on the latest published accounts prior to the date of the Circular, or a statement that there are no such known material changes; and (ii) the Exit Offer remaining open for at least: (1) 21 days after the date of the despatch of the Exit Offer Letter if the Exit Offer Letter is despatched after Shareholders approval for the Delisting has been obtained; or (2) 14 days after the date of the announcement of Shareholders approval of the Delisting if the Exit Offer Letter is despatched on the same date as the Circular; (b) (c) Certain of the Directors, namely Liang Qiusheng, Leung Hon Fai and Leung Kwok Chun, are exempted from the requirement to make a recommendation on the Exit Offer as they face irreconcilable conflicts of interests in doing so being parties acting in concert with the Offeror. However, such Directors must, nonetheless, accept responsibility for the accuracy of facts stated and opinions expressed in documents issued by, or on behalf of, the Company to its Shareholders in connection with the Exit Offer; and The Offeror and its Concert Parties need not abstain from voting on the Delisting Resolution at the EGM. 10

11 LETTER TO SHAREHOLDERS 3. THE EXIT OFFER Subject to the Delisting Resolution being approved by Shareholders at the EGM and the fulfilment of the Minimum Acceptance Condition, the Offeror will make the Exit Offer to acquire all the Offer Shares on the terms and subject to the conditions set out in this Circular, the Exit Offer Letter and the Acceptance Forms, and on the following basis: 3.1 Exit Offer Price The consideration for the Exit Offer will be: For each Offer Share: S$0.17 in cash The Offeror does not intend to revise the Exit Offer Price under any circumstances. The Exit Offer Price will be applicable to any number of Offer Shares held. Shareholders may choose to accept the Exit Offer in respect of all or part of their holdings of Offer Shares. Each Shareholder who accepts the Exit Offer will receive S$ for every 1,000 Offer Shares validly tendered for acceptance under the Exit Offer. Further details on the Exit Offer are set out in the Exit Offer Letter containing, inter alia, the terms and conditions of the Exit Offer and the relevant Acceptance Forms. 3.2 Conditions The Delisting and the Exit Offer will be conditional upon: (a) (b) (c) (d) SGX-ST s approval of the Delisting; the Delisting Resolution being passed at the EGM. Pursuant to Rule 1307 of the Listing Manual, the Delisting Resolution is considered passed if it is approved by a majority of at least 75% of the total number of issued Shares excluding treasury shares held by the Shareholders present and voting, on a poll, either in person or by proxy at the EGM to be convened for the Shareholders to vote on the Delisting Resolution (the Directors and Controlling Shareholders need not abstain from voting on the Delisting Resolution); the Delisting Resolution not being voted against by 10% or more of the total number of issued Shares excluding treasury shares held by the Shareholders present and voting, on a poll, either in person or by proxy at the EGM; and the receipt by the Offeror, by the close of the Exit Offer, valid acceptances in respect of such number of Offer Shares which, together with the Shares owned, controlled or agreed to be acquired by the Offeror either before or during the Exit Offer and pursuant to the Exit Offer or otherwise, will result in the Offeror and persons acting in concert with it holding such number of Shares carrying more than 50% of the voting rights attributable to the issued share capital of the Company as at the Closing Date (the Minimum Acceptance Condition ). Accordingly, the Exit Offer will not become or be capable of being declared unconditional as to acceptances until the close of the Exit Offer, unless at any time prior to the close of the Exit Offer, the Offeror has received valid acceptances in respect of such number of Offer Shares which will result in the Offeror and persons acting in concert with it holding such number of Shares carrying more than 50% of the total issued share capital of the Company. The Delisting Resolution, if approved by Shareholders at the EGM in accordance with Rule 1307 of the Listing Manual, will, subject to the Minimum Acceptance Condition being met, result in the Delisting. Shareholders are to note that if any of the above conditions listed in this section 3.2 is not met, the Delisting will not proceed and the Company will remain listed on the SGX-ST. 11

12 LETTER TO SHAREHOLDERS The Company had on 6 December 2010 made an application to the SGX-ST to delist the Company from the Official List of the SGX-ST. The SGX-ST had advised in its letter dated 4 January 2011 that it does not have any objection to the Delisting subject to the Shareholders approval of the Delisting Resolution. However, this is not to be taken as an indication of the merits of the Company, the Offeror, the Exit Offer, or the Delisting Proposal. Shareholders who wish to accept the Exit Offer should note that acceptances of the Exit Offer shall be irrevocable. 3.3 No Encumbrances The Offer Shares will be acquired fully paid and free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and any other third party rights or interests of any nature whatsoever ( Encumbrances ), and together with all rights, benefits and entitlements attached thereto as at the Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) which may be declared, paid or made by the Company, on or after the Announcement Date. 3.4 Warranty Acceptance of the Exit Offer by a Shareholder will be deemed to constitute an unconditional and irrevocable warranty by the accepting Shareholder that each Offer Share in respect of which the Exit Offer is accepted and sold by the accepting Shareholder, as or on behalf of the beneficial owner(s) thereof, is fully paid and free from all Encumbrances, and together with all rights, benefits and entitlements attached thereto as at the Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) which may be announced, declared, paid or made by the Company on or after the Announcement Date. 3.5 Duration If the Delisting Resolution is approved by Shareholders at the EGM, the Exit Offer will be open for acceptance by Shareholders for a period of at least 14 days after the date of announcement of Shareholders approval of the Delisting Resolution. The Closing Date for the Exit Offer is 5.30 p.m. on 18 February 2011 or such later date(s) as may be announced from time to time by or on behalf of the Offeror, as set out in section 2.6 of the Exit Offer Letter. Although no extension of the Exit Offer is currently contemplated, if the Exit Offer is extended, an announcement will be made of such extension, and the Exit Offer will remain open for acceptance for such period as may be announced. If the Exit Offer is extended, Shareholders who have validly accepted the Exit Offer in respect of part of their Shares will be entitled to tender additional Offer Shares in acceptance of the Exit Offer. 4. IRREVOCABLE UNDERTAKING Under Rule 1307(2) of the Listing Manual, all Shareholders (including the Directors and Controlling Shareholders of the Company) are entitled to vote on the Delisting Resolution. As at the Latest Practicable Date, the interests of the Offeror and its shareholders in the capital of the Company are as follows: Direct Interest Deemed Interest Number of Shares % (1) Number of Shares % (1) Fine Ally Group Limited 159,428, Liang Qiusheng (2) 165, ,428, Leung Hon Fai (2) 159,428, TOTAL 159,593,

13 LETTER TO SHAREHOLDERS Notes: (1) Computed based on the issued share capital of the Company comprising 320,000,000 Shares with voting rights as at the Latest Practicable Date. (2) Liang Qiusheng and Leung Hon Fai are deemed to be interested in 159,428,034 Shares held by Fine Ally Group Limited. Each of Liang Qiusheng, Leung Hon Fai and Leung Kwok Chun are parties acting in concert with the Offeror in respect of their shareholding interests in the Offeror for the purposes of the Delisting. As at the Latest Practicable Date, the Offeror and its Concert Parties own an aggregate of 159,593,034 Shares representing approximately 49.87% of the total issued Shares. The Offeror has irrevocably and unconditionally undertaken to the Company (i) not to transfer or dispose of any of its Shares at any time prior to the completion of the Exit Offer; and (ii) it will vote in favour of the Delisting Resolution at the EGM in respect of all of its Shares. The above undertaking shall expire if the Delisting Resolution is not approved at the EGM or if the Exit Offer is withdrawn, lapses or closes. The Offeror has also obtained an irrevocable undertaking (the Undertaking ) from Liang Qiusheng (the Undertaking Shareholder ) to undertake: (a) (b) (c) not to transfer or dispose his Shares at any time prior to the completion of the Exit Offer; to vote in favour of the Delisting Resolution at the EGM in respect of all of his Shares held by him; and not to accept the Exit Offer in respect of all his Shares. The Undertaking shall expire if the Delisting Resolution is not approved at the EGM or if the Exit Offer is withdrawn, lapses or closes. Save as set out above, as at the Latest Practicable Date, none of the Offeror or its Concert Parties has received any irrevocable undertaking from any party to vote for or against the Delisting Resolution and/or to accept or reject the Exit Offer. 5. INFORMATION ON THE OFFEROR The Offeror was incorporated in the British Virgin Islands on 3 May The principal activity of the Offeror is investment holding and it has an issued and paid-up share capital of US$50,000 comprising 50,000 ordinary shares of US$1 each. The director of the Offeror is Liang Qiusheng. The shareholders of the Offeror are Liang Qiusheng, Leung Hon Fai and Leung Kwok Chun, holding 46.50%, 46.50% and 7.00% of the total issued share capital of the Offeror respectively as at the Announcement Date. As at the Announcement Date, the Offeror and Liang Qiusheng, the Executive Chairman and a Director of the Company own, control or have agreed to acquire an aggregate of 159,593,034 Shares, representing approximately 49.87% of the total issued Shares. Additional information on the Offeror and its shareholdings in the Company is set out in Appendix II to this Circular. 13

14 LETTER TO SHAREHOLDERS 6. INFORMATION ON THE COMPANY AND THE GROUP The Company was incorporated in Singapore on 4 April 2006 under the Companies Act as a private limited company under the name China Angel Pte. Ltd.. The Company was converted into a public limited company on 1 June 2007 and its name was changed to China Angel Food Limited. It was listed on the SGX-ST Main Board on 13 July The principal activity of the Company is that of investment holding. The principal activities of the Group are as follows: (a) (b) (c) Production of mooncakes, cookies, assorted confectionery and bakery products; Manufacture and sale of bread, cakes, biscuits and pastries; and Processing and trading of agricultural products and by-products. As at the Latest Practicable Date, the Company: (a) (b) has 320,000,000 Shares in issue; and has not granted any options or issued any rights, warrants or other securities convertible into, exercisable for or redeemable into any Shares. Additional information on the Company and the Group is set out in Appendix III to this Circular. 7. RATIONALE FOR THE DELISTING 7.1 Low trading liquidity of Shares The trading liquidity of the Shares on the SGX-ST has generally been thin. The average daily trading volume and the respective percentage of the Company s issued Shares for the twelve (12) month, six (6) month, three (3) month period and one (1) month prior to and including the last trading day immediately prior to the Announcement Date are as follows: Approximate percentage of Average Daily Traded total number of issued Reference Periods Volume (1) Shares (2) Last twelve (12) months 224, % Last six (6) months 154, % Last three (3) months 164, % Last one (1) month 166, % Last trading day prior to the Announcement Date 150, % Source: Bloomberg L.P. Notes: (1) The average daily trading volume is computed based on the total trading volume for all the market days (including market days when no Shares were traded) for the relevant periods immediately prior to and including the last trading day prior to the Announcement Date, divided by the total number of market days during the respective periods. (2) Based on 320,000,000 Shares, being the total number of issued Shares as at the day preceding the Announcement Date. 14

15 LETTER TO SHAREHOLDERS Based on the historical trading patterns, it is the Offeror s view that the low liquidity of the Shares is likely to continue and accordingly, the purpose of maintaining the Company s listing status for trading liquidity of the Shares does not appear to have been achieved. The Exit Offer will provide an exit opportunity for those Shareholders who wish to realise the value of their investment in the Shares but find it difficult to do so as a result of the low trading liquidity of the Shares. 7.2 Attractive premium The premia of the Exit Offer Price to historical market prices of the Shares over various periods are set out below: Premium of Exit Share price Offer Price over (S$) Share price (1) Last traded price of the Shares on the SGX-ST on 12 November 2010, being the last market day prior to the Announcement Date VWAP for the last one (1) month prior to the Announcement Date VWAP for the last three (3) months prior to the Announcement Date VWAP for the last six (6) months prior to the Announcement Date VWAP for the last twelve (12) months prior to the Announcement Date % % % % % Source: Bloomberg L.P. Note: (1) The premia of the Exit Offer Price of S$0.17 per Offer Share to historical market prices of the Shares over various periods are computed based on information extracted from Bloomberg L.P.. The Delisting Proposal offers minority Shareholders an opportunity to realise the value of their investments in the Company at a premium over the historical trading prices of the Shares on the SGX-ST, an option which may not otherwise be readily available. 7.3 Compliance costs of maintaining a listing In maintaining its listed status on the Official List of the SGX-ST, the Company incurs additional compliance costs and resources as well as subjecting its corporate actions to various regulatory requirements associated with a SGX-ST listed company. The Delisting Proposal, if proceeded with, will allow the Offeror to exercise greater management flexibility in utilising and deploying the resources of the Group. In addition, the Company may also dispense with expenses relating to maintenance of a listing status and focus its resources on its business operations. 7.4 Greater management flexibility The Delisting will facilitate greater management flexibility in the utilisation and deployment of the resources of the Group. The Delisting will also allow the Company and the Offeror to rationalise the management, resources and cost structure of the Group s businesses for greater efficiency and competitiveness. 15

16 LETTER TO SHAREHOLDERS 7.5 Difficulty in accessing to equity capital markets A primary reason for companies to maintain a listing on the SGX-ST is to access the capital markets for fund-raising purposes. However, the Company has not conducted any fund-raising exercise since its listing in It also has not made any recent attempt to carry out any fund raising activities due to the low liquidity and low prices of the Company s shares traded on the SGX-ST. These factors were not conducive for the Company to raise funds through share placement as existing Shareholders will suffer dilution of their shareholdings at low valuation, which will not be in the interest of the minority Shareholders. In addition, the net profits of the Group have been declining year on year. Taking into account the aforesaid financial state of health of the Company, it would be difficult for the Company to access and tap funds from the equity capital markets in the foreseeable future. As such, it is not meaningful for the Company to maintain a listing on the SGX-ST. 8. OFFEROR S INTENTIONS FOR THE GROUP Following the completion of the Delisting, the Offeror intends to conduct a review of the operations and management of the Group and to also evaluate various strategic options, including, amongst others, a trade sale or an initial public offering at an opportune time. The Offeror may also conduct a restructuring of its shareholdings and/or the shareholdings of the Company after the completion of the Delisting. Pending the outcome of the review, the Offeror has no immediate plans to: (i) propose any changes to the existing businesses of the Group; (ii) redeploy the fixed assets of the Group; or (iii) discontinue the employment of the employees of the Group. The Offeror retains the flexibility at any time to consider options or opportunities which may present themselves, and which it regards to be in the interests of the Offeror and/or the Company. 9. FINANCIAL ASPECTS OF THE EXIT OFFER 9.1 Market Quotations of the Shares on the SGX-ST The Exit Offer Price represents the following premium over the historical market prices of the Shares: Premium of Exit Share price Offer Price over (S$) Share price (1) Last traded price of the Shares on the SGX-ST on 5 January 2011, being the last market day where there were trades done for the Shares on the Main Board of the SGX-ST prior to the Latest Practicable Date Last traded price of the Shares on the SGX-ST on 12 November 2010, being the last market day prior to the Announcement Date VWAP for the last one (1) month prior to the Announcement Date VWAP for the last three (3) months prior to the Announcement Date VWAP for the last six (6) months prior to the Announcement Date VWAP for the last twelve (12) months prior to the Announcement Date % % % % % % Source: Bloomberg L.P. 16

17 LETTER TO SHAREHOLDERS Note: (1) The premia of the Exit Offer Price of S$0.17 per Offer Share to historical market prices of the Shares over various periods are computed based on information extracted from Bloomberg L.P Earnings The Exit Offer Price represents a multiple of approximately times to the Group s audited EPS for FY2009 of RMB0.069, which is equivalent to approximately S$ (1) per Share. 9.3 NTA The Exit Offer Price represents: (a) (b) a discount of approximately 8.11% over the audited consolidated NTA per Share of RMB (equivalent to S$ (2) ) as at 31 December 2009; and a discount of approximately 8.55% over the unaudited consolidated NTA per Share of RMB (equivalent to S$ (3) ) as at 30 September The Group s audited NTA as at 31 December 2009 and unaudited NTA as at 30 September 2010 are approximately RMB 288,358,000 and RMB 302,866,000 respectively. Notes: (1) Based on the average exchange rate of RMB 1 : S$ for FY2009 (2) Based on the exchange rate of RMB 1 : S$ as at 31 December 2009 (3) Based on the exchange rate of RMB 1 : S$ as at 30 September 2010 Source: Bloomberg L.P. 10. IMPLICATIONS OF DELISTING FOR SHAREHOLDERS Shareholders should note that if the Delisting Resolution is approved in accordance with the requirements of the Listing Manual and the conditions listed in section 3.2 of this Circular are fulfilled, the Company will be delisted. Following the Delisting, Shareholders who do not accept the Exit Offer will continue to hold Shares in the Company, which will then be an unlisted company. Shareholders should note that shares of unlisted companies are generally valued at a discount to the shares of comparable listed companies due to the lack of marketability. Following the Delisting, it is likely to be difficult for Shareholders who do not accept the Exit Offer to sell their Shares in the absence of a public market for the Shares, as there is no arrangement for such Shareholders to exit. Even if such Shareholders were able to sell their Shares, they would likely receive a lower price as compared with the Exit Offer Price or the market prices of the shares of comparable listed companies. If the Company is delisted from the Official List of the SGX-ST, it will no longer be obliged to comply with the listing requirements of the SGX-ST, in particular, the continuing corporate disclosure requirements under Chapter 7 of the Listing Manual and Appendices to of the Listing Manual. Nonetheless, as a company incorporated in Singapore, the Company will still need to comply with the Companies Act and its memorandum and articles of association and the interests of Shareholders who do not accept the Exit Offer will be protected to the extent provided for by the Companies Act. If the Company is delisted from the Official List of the SGX-ST, each Shareholder who holds Shares that are deposited with CDP and does not accept the Exit Offer will be entitled to one share certificate representing his delisted Shares. The Company s share registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore , will arrange to forward the share certificates to such Shareholders (who are not 17

18 LETTER TO SHAREHOLDERS CPFIS Investors), by ordinary post and at the Shareholders own risk, to their respective addresses as such addresses appear in the records of CDP for their physical safekeeping. The share certificates belonging to CPFIS Investors will be forwarded to their respective CPF Agent Banks for their safe-keeping, details of which are set out in Appendix I to the Exit Offer Letter. If a Shareholder wishes to split his share certificate into other denominations, he will be required to pay for each share certificate so required, a fee at the prevailing rate of S$2.00 (exclusive of goods and services tax). Shareholders who are in doubt of their position should seek independent professional advice. 11. COMPULSORY ACQUISITION Pursuant to Section 215(1) of the Companies Act, if within 4 months of the making of the Exit Offer, the Offeror receives acceptances pursuant to the Exit Offer of not less than 90% of the Shares (other than those already held by the Offeror, its related corporations or their respective nominees as at the date of the Exit Offer), the Offeror will have the right to compulsorily acquire, at the Exit Offer Price, all the Shares of Shareholders who have not accepted the Exit Offer. In addition, pursuant to Section 215(3) of the Companies Act, if the Offeror acquires such number of Shares which, together with Shares held by it, comprise 90% or more of the Shares, Shareholders who have not accepted the Exit Offer have a right to require the Offeror to acquire their Shares at the Exit Offer Price. Shareholders who wish to exercise such a right are advised to seek their own independent legal advice. It is the intention of the Offeror to exercise such right of compulsory acquisition if the Offeror should acquire sufficient Offer Shares to be entitled to such right. In such an event and upon completion of the compulsory acquisition, the Company will then become a wholly-owned subsidiary of the Offeror. Shareholders who wish to exercise their rights under Section 215(3) of the Companies Act are advised to seek their own independent legal advice. 12. POST-EGM PROCEDURES 12.1 Exit Offer Letter and Acceptance Forms The Exit Offer Letter and the relevant Acceptance Form(s) have been despatched to Shareholders by ordinary post together with this Circular. Shareholders may choose to accept the Exit Offer before the EGM. However, such acceptance is conditional upon the Delisting Resolution being passed at the EGM. Shareholders should note that if the Delisting Resolution is not approved at the EGM and the Minimum Acceptance Condition is not fulfiled, the conditions to the Exit Offer will not be fulfilled and the Exit Offer will lapse Accepting the Exit Offer Subject to the Delisting Resolution being approved at the EGM, to accept the Exit Offer, you should complete, sign and return the relevant Acceptance Forms in accordance with the provisions and instructions stated in the Exit Offer Letter and the relevant Acceptance Forms. Additional information on the procedures for acceptance and settlement of the Exit Offer is set out in the Exit Offer Letter and in Appendix V to this Circular. 18

19 LETTER TO SHAREHOLDERS 12.3 No Acceptance If you decide not to accept the Exit Offer, you do not need to take any action. In the event that the Delisting Resolution is approved by Shareholders and the Company is delisted from the Official List of the SGX-ST, you will continue to hold unquoted Shares of the Company (as an unlisted company). The implications of delisting of the Company for Shareholders and the right of compulsory acquisition under Section 215 of the Companies Act are set out in section 10 of this Circular CPFIS Investors CPFIS Investors should refer to the separate letter from their respective CPF Agent Banks for information on how to accept or reject the Exit Offer under CPFIS. CPFIS Investors are advised to consult their respective CPF Agent Banks should they require further information. Additional information pertaining to CPFIS Investors is set out in the Exit Offer Letter. 13. CONFIRMATION OF FINANCIAL RESOURCES Sun Hung Kai Investment Services Limited, who is providing a margin loan facility of not less than S$27,300,000 to the Offeror for the purposes of satisfying the full acceptances of the Exit Offer by Shareholders, has confirmed to Kim Eng that sufficient financial resources are available to the Offeror to satisfy in full all acceptances of the Exit Offer by Shareholders on the basis of the Exit Offer Price (excluding Shares held by the Undertaking Shareholder). Accordingly, Kim Eng, as financial adviser to the Offeror in connection with the Exit Offer, confirms that sufficient financial resources are available to the Offeror to satisfy in full all acceptances of the Exit Offer by Shareholders on the basis of the Exit Offer Price (excluding Shares held by the Undertaking Shareholder). 14. ALTERNATIVE OFFER As at the Latest Practicable Date, there is no publicly available evidence of any alternative offer for the Shares. Further, the Directors have also confirmed that, as at the Latest Practicable Date, apart from the Delisting Proposal, they have not received any other offer from any other party. 15. OVERSEAS SHAREHOLDERS 15.1 Overseas Shareholders This Circular does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any security, nor is it a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this Circular in any jurisdiction in contravention of the applicable law. The Exit Offer will be made solely by the Exit Offer Letter and the relevant Acceptance Forms accompanying the Exit Offer Letter, which will contain the full terms and conditions of the Exit Offer, including details on how the Exit Offer may be accepted. The Exit Offer is made to all Shareholders holding Offer Shares, including those to whom this Circular, the Exit Offer Letter and the Acceptance Forms have not been or may not be sent. However, the availability of the Exit Offer to Shareholders whose addresses are outside Singapore, as shown on the Register of Members of the Company or, as the case may be, in the records of CDP (each an Overseas Shareholder ) may be affected by the laws of the relevant overseas jurisdictions, and Overseas Shareholders should exercise caution in relation to the Exit Offer, as this Circular, the Exit Offer Letter and the Acceptance Forms have not been reviewed by any regulatory authority in any overseas jurisdiction. Accordingly, Overseas Shareholders should inform themselves about and observe any applicable legal requirements in their own jurisdictions. Where there are potential restrictions on sending this Circular, the Exit Offer Letter and the Acceptance Forms to any overseas jurisdiction, the Company, the Offeror, Kim Eng and CDP each reserves the right not to send these documents to such overseas jurisdictions. 19

20 LETTER TO SHAREHOLDERS Copies of this Circular, the Exit Offer Letter, the relevant Acceptance Forms and any other formal documentation relating to the Exit Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any jurisdiction where the making of or the acceptance of the Exit Offer would potentially violate the applicable law of that jurisdiction ( Restricted Jurisdiction ) and will not be capable of acceptance by any such use, instrumentality or facility within any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. The Exit Offer (unless otherwise determined by the Offeror and permitted by applicable laws and regulations) will not be made, directly or indirectly, in or into, or by the use of mails of, or by any means or instruments (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, any Restricted Jurisdiction and the Exit Offer will not be capable of acceptance by any such use, means, instruments or facilities Copies of the Circular, Exit Offer Letter and Acceptance Forms Overseas Shareholders may, nonetheless, obtain copies of this Circular, the Exit Offer Letter, the relevant Acceptance Forms and any related documents, during normal business hours, from the date of this Circular and up to 5.30 p.m. on the Closing Date, from the office of the Company s share registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore , upon production of satisfactory evidence that they are Shareholders. Alternatively, an Overseas Shareholder may write in to Boardroom Corporate & Advisory Services Pte. Ltd. at the address listed above to request for this Circular, the Exit Offer Letter, the relevant Acceptance Forms and any related documents to be sent to an address in Singapore by ordinary post at the Overseas Shareholder s own risk (the last day for despatch in respect of such request shall be a date falling three (3) Market Days prior to the Closing Date) Overseas jurisdiction It is the responsibility of any Overseas Shareholder who wishes to (a) request for this Circular, the Exit Offer Letter, the relevant Acceptance Forms and any related documents and/or (b) accept the Exit Offer, to satisfy himself as to the full observance of the laws of the relevant jurisdictions in that connection, including the obtaining of any governmental or other consent which may be required, and compliance with all necessary formalities or legal requirements. In (a) requesting for this Circular, Exit Offer Letter, the relevant Acceptance Forms and any related documents and/or (b) accepting the Exit Offer, the Overseas Shareholder represents and warrants to the Company, the Offeror, Kim Eng and CDP that he is in full observance of the laws of the relevant jurisdictions in that connection, and that he is in full compliance with all necessary formalities or legal requirements and the payment of any taxes, imposts, duties or other requisite payments due in such jurisdiction. Such Overseas Shareholder shall be liable for any such taxes, imposts, duties or other requisite payments payable and the Company, the Offeror, Kim Eng, CDP and/or any person acting on its behalf shall be fully indemnified and held harmless by such Overseas Shareholder for any such taxes, imposts, duties or other requisite payments as the Company, the Offeror, Kim Eng, CDP and/or any person acting on its behalf may be required to pay. Any Overseas Shareholder who is in any doubt about his position should consult his professional adviser in the relevant jurisdiction. 20

21 LETTER TO SHAREHOLDERS 15.4 Notice The Offeror and Kim Eng each reserves the right to reject any acceptance of the Exit Offer where it believes, or has reason to believe, that such acceptance may violate the applicable laws of any jurisdiction. The Company, the Offeror and Kim Eng each reserves the right to notify any matter, including the despatch of this Circular, any formal documentation relating to the Exit Offer and the fact that the Exit Offer has been made, to any or all Shareholders (including Overseas Shareholders) by announcement on the website of the SGX-ST ( and if necessary, paid advertisement in a newspaper published and circulated in Singapore, in which case such notice shall be deemed to have been sufficiently given notwithstanding any failure by any Shareholder to receive or see such announcement or advertisement. 16. INFORMATION IN RESPECT OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS 16.1 Interests of Directors and Substantial Shareholders The tables below set out the interests of the Directors and substantial Shareholders in the Company as the Latest Practicable Date, based on the information in the Company s Register of Directors Shareholdings and Register of Substantial Shareholders, respectively. Direct Interest Deemed Interest Directors No. of Shares % (1) No. of Shares % (1) Liang Qiusheng (2) 165, ,428, Leung Hon Fai (2) 159,428, Wee Liang Hiam 5,400, Substantial Shareholders (other than Directors) Fine Ally Group Limited (3) 159,428, Jeremy Lee Sheng Poh (4) 18,011, Notes: (1) Computed based on the issued share capital of the Company comprising 320,000,000 Shares with voting rights as at the Latest Practicable Date. (2) Liang Qiusheng and Leung Hon Fai are deemed to be interested in 159,428,034 shares held by Fine Ally Group Limited. (3) The Offeror has obtained a margin loan facility of not less than S$27,300,000 from Sun Hung Kai Investment Services Limited for the purposes of satisfying the full acceptances of the Exit Offer by shareholders of the Company. As one of the collaterals for the grant of the aforesaid margin loan facility, the Offeror has pledged to Sun Hung Kai Investment Services Limited, all the Shares held by it in the Company. (4) Jeremy Lee Sheng Poh has no connection (directly or indirectly) with the Company, its Directors and other Substantial Shareholders. He is also not a party acting or deemed to be acting in concert with the Offeror in connection with the Exit Offer Intention of Directors in respect of their Shares Liang Qiusheng, a Director and Shareholder of the Company holding 165,000 Shares, has prior to the Latest Practicable Date given his irrevocable and unconditional undertaking to the Offeror that he will not be accepting the Exit Offer in respect of all the Shares held by him (as mentioned in section 4 of this Circular). Wee Liang Hiam, a Director and Shareholder of the Company holding 5,400,000 Shares, has indicated his present intention is to accept the Exit Offer in respect of all the Shares held by him. 21

22 LETTER TO SHAREHOLDERS 17. EXEMPTION RELATING TO DIRECTORS RECOMMENDATION The SIC had on 3 December 2010 ruled that Liang Qiusheng, Leung Hon Fai and Leung Kwok Chun are exempted from the requirement to make a recommendation on the Exit Offer as they face a conflict of interest in doing so being concert parties of the Offeror. However, each of Liang Qiusheng, Leung Hon Fai and Leung Kwok Chun will still be responsible for the accuracy of facts stated or opinions expressed in documents and advertisements issued by, or on behalf of, the Company to the Shareholders in connection with the Exit Offer. 18. ADVICE OF IFA TO THE INDEPENDENT DIRECTORS DMG & Partners Securities Pte Ltd has been appointed as the independent financial adviser to the Independent Directors in relation to the Exit Offer. The letter from the IFA setting out its advice to the Independent Directors is set out in Appendix I to this Circular. The recommendation of the IFA to the Independent Directors is summarised in italics below:- In arriving at our recommendation in respect of the Exit Offer, we have taken into account the factors which we consider to have a significant bearing on our assessment which includes our analyses set out in earlier sections of the following. In evaluating and assessing the financial terms of the Exit Offer, we have given due consideration to:- (a) (b) (c) (d) (e) (f) (g) assessed valuation of the Group; market quotation and trading activity of the Shares; Share price performance relative to selected market indices; comparison with financial valuation ratios of selected listed companies considered to be comparable to the Company; comparison with successful privatisations of other companies listed on the SGX-ST; dividend track record of the Company; and other considerations in relation to the Exit Offer which have a significant bearing on our assessment. Shareholders should note that in the event that the Delisting Resolution is passed and the Offeror is not entitled to exercise its right to compulsorily acquire all the Shares not tendered in acceptance of the Exit Offer pursuant to Section 215(1) of the Companies Act, the Company will be delisted and minority Shareholders who do not accept the Exit Offer will continue to hold Shares in the Company as an unlisted company. After carefully considering the information available to us as at the Latest Practicable Date, and based upon the monetary, industry, market, economic and other relevant conditions subsisting as at the Latest Practicable Date and based on our considerations above, we are of the opinion that the financial terms of the Exit Offer are fair and reasonable, and we advise the Independent Directors to advise Shareholders to vote in favor of the Delisting Resolution at the EGM and to accept the Exit Offer in respect of Shares owned by them. 22

23 LETTER TO SHAREHOLDERS 19. INDEPENDENT DIRECTORS RECOMMENDATION The Independent Directors have reviewed the terms of the Delisting Proposal (including the Exit Offer) and have carefully considered the advice of the IFA in their letter set out in Appendix I to this Circular. The Independent Directors concur with the assessment of the IFA and their recommendation thereon. Accordingly, the Independent Directors advise Shareholders to VOTE IN FAVOUR of the Delisting Resolution and ACCEPT THE EXIT OFFER in the event the Delisting Resolution is passed. The Independent Directors would like to draw the attention of Shareholders (and in particular, Shareholders who wish to retain their investments in the Shares) to the advice of the IFA with respect to certain implications which may arise in the event of the delisting of the Shares and note the various sections on the actions to be taken at this stage and on the risks in investing in unquoted shares. In rendering the above opinion and giving the above recommendations, the Independent Directors have not had regard to the specific investment objectives, financial situation, tax position or particular needs and constraints of any individual Shareholder. As each Shareholder would have different investment objectives and profiles, the Independent Directors recommend that any Shareholder who may require specific advice in relation to his investment portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. Accordingly, the Independent Directors advise that the opinion and advice of the IFA should not be relied upon by any Shareholder as the sole basis for deciding whether or not to accept the Exit Offer. 20. EXTRAORDINARY GENERAL MEETING The EGM, notice of which is set out on page 98 of this Circular, will be held on 1 February 2011 at 9.30 a.m. at M Hotel, Shenton Room, Basement Level 1, 81 Anson Road, Singapore for the purpose of considering and, if thought fit, passing with or without amendments, the ordinary resolution (on a poll) set out in the EGM notice. 21. ACTION TO BE TAKEN BY SHAREHOLDERS 21.1 Voting at the EGM Shareholders who are unable to attend the EGM and wish to appoint a proxy to attend and vote at the EGM on their behalf must complete, sign and return the Proxy Form attached to this Circular in accordance with the instructions printed thereon as soon as possible and in any event so as to arrive at the Company s registered office at 300 Beach Road, #33-04/06, The Concourse, Singapore not less than 48 hours before the time fixed for the EGM. The completion and return of a Proxy Form by a Shareholder does not preclude him from attending and voting in person at the EGM should he subsequently decide to do so, although the appointment of the proxy shall be deemed to be revoked by such attendance. A Depositor shall not be regarded as a shareholder of the Company and is not entitled to attend the EGM and to speak and vote thereat unless his name appears on the Depository Register at least 48 hours before the EGM Acceptance of the Exit Offer The Exit Offer Letter and the Acceptance Forms will be despatched together with this Circular. The Exit Offer may only be accepted by the relevant Shareholder to whom the Exit Offer Letter is addressed. If you hold Offer Shares that are deposited with CDP, you should receive a FAA together with the Exit Offer Letter. If you have not received the FAA, you may obtain a copy of the FAA from CDP, at 4 Shenton Way #02-01, SGX Centre 2, Singapore , upon production of satisfactory evidence that you are a Shareholder. 23

24 LETTER TO SHAREHOLDERS If you hold Offer Shares that are represented by share certificate(s) and are not deposited with CDP, you should receive a FAT together with the Exit Offer Letter. If you have not received a FAT, you may obtain a copy of the FAT from the office of the Company s Singapore share registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore , upon production of satisfactory evidence that you are a Shareholder. (a) If you wish to accept the Exit Offer, you should complete, sign and return the relevant Acceptance Form in accordance with the provisions and instructions on the relevant Acceptance Form and in the Exit Offer Letter during the period commencing from the date of despatch of the Exit Offer Letter and ending at 5.30 p.m. on the Closing Date. If you hold the share certificate(s) of the Offer Shares beneficially owned by you and wish to accept the Exit Offer in respect of such Offer Shares, you should not deposit the share certificate(s) with CDP during the period commencing on the date of the Exit Offer Letter and ending on the Closing Date (both dates inclusive) as your Securities Account may not be credited with the relevant number of Offer Shares in time for you to accept the relevant Exit Offer. (b) If you choose not to accept the Exit Offer, you do not have to take any action. In the event that the Delisting Resolution is approved by Shareholders at the EGM and the Company is delisted from the Official List of the SGX-ST, you will continue to hold unlisted Shares of the Company (as an unlisted company). If you hold Shares that are deposited with CDP, a share certificate in respect of your Shares will be delivered to your address as it appears in the records of CDP by ordinary post, and at your own risk, after the Delisting. The detailed procedures for acceptance are set out in Appendix V of this Circular and in Appendix I of the Exit Offer Letter. 22. DIRECTORS RESPONSIBILITY STATEMENT The issue of this Circular has been approved by all the Directors (including those who may have delegated detailed supervision of this Circular), who have taken all reasonable care to ensure that, to the best of their knowledge and belief, the facts stated and opinions expressed in this Circular (other than those relating to the Offeror, and Appendix I to this Circular for which the IFA has taken responsibility respectively) are fair and accurate in all material aspects and that no material fact has been omitted which would make any statement in this Circular misleading in any material respect, and they jointly and severally accept responsibility accordingly. The recommendation of the Independent Directors to Shareholders set out in section 19 of this Circular is the sole responsibility of the Independent Directors. Where any information in this Circular (other than that relating to the Offeror and Appendix I to this Circular) has been extracted from published or publicly available sources or obtained from the Offeror, the sole responsibility of the Directors has been to ensure through reasonable enquiries that such information has been accurately and correctly extracted from such sources or, as the case may be, accurately reflected or reproduced in this Circular. Neither the Company nor any of its Directors are aware of any information which has yet to be announced that will have a material bearing on investors decisions on the Delisting and the Exit Offer. 24

25 LETTER TO SHAREHOLDERS 23. CONSENTS 23.1 Kim Eng, as financial adviser to the Offeror in connection with the Exit Offer, has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of its name in this Circular, and all references thereto in the form and context in which they appear in this Circular in such capacity in relation to the Circular The independent financial adviser, DMG & Partners Securities Pte Ltd, has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of its name in this Circular, its advice to the Independent Directors, the Letter from IFA to the Independent Directors set out in Appendix I to this Circular and all references thereto in the form and context in which they appear in this Circular in such capacity in relation to the Circular. 24. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents will be available for inspection at the registered office of the Company at 300 Beach Road, #33-04/06, The Concourse, Singapore during normal business hours, from the date of this Circular until the date of the EGM: (a) (b) Memorandum and Articles of Association of the Company; Annual reports of the Company for FY2007, FY2008 and FY2009; (c) Unaudited third quarter financial statement for the nine months ended 30 September 2010 set out in Appendix VI to this Circular; (d) (e) (f) Letter from the Offeror to the Company dated 13 November 2010 in respect of the Delisting Proposal; Letter from the IFA to the Independent Directors set out in Appendix I to this Circular; Letters of consent referred to in section 23 above. 25. ADDITIONAL INFORMATION Your attention is drawn to the additional information set out in the Appendices which form part of this Circular. Yours faithfully For and on behalf of the Board of Directors of CHINA ANGEL FOOD LIMITED Tay Yew Khem Independent Director 25

26 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS 13 January 2011 The Independent Directors of China Angel Food Limited 300 Beach Road #33-04/06 The Concourse Singapore Dear Sirs PROPOSED VOLUNTARY DELISTING OF CHINA ANGEL FOOD LIMITED PURSUANT TO RULES 1307 and 1309 OF THE LISTING MANUAL For the purpose of this letter, capitalised terms not otherwise defined shall have the meanings given to them in the Circular. 1. INTRODUCTION On 15 November 2010, the Company and the Offeror jointly announced that the Directors had received the Delisting Proposal from the Offeror to seek a voluntary delisting of the Company from the Official List of the SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual. Under the terms of the Delisting Proposal, it was proposed that the Offeror will make the Exit Offer to acquire each Offer Share at the Exit Offer Price of S$0.17 in cash. Having reviewed the Delisting Proposal, the Directors have resolved to convene the EGM to seek the approval of Shareholders for the Delisting Proposal and to apply to the SGX-ST for the approval of the Delisting. DMG & Partners Securities Pte Ltd ( DMG ) has been appointed as the independent financial adviser to the Independent Directors in relation to the Exit Offer. This letter sets out, inter alia, our evaluation and assessment of the financial terms of the Exit Offer and our advice and recommendation thereon. It will form part of the Circular issued by the Company, providing, inter alia, the details of the Delisting Proposal and the recommendations of the Independent Directors in respect thereof. 2. TERMS OF REFERENCE DMG has been appointed to advise the Independent Directors on the Exit Offer pursuant to Rule 1309 of the Listing Manual and Rules 7.1 and 24.1(b) of the Code. We have confined our evaluation and assessment to the financial terms of the Exit Offer. Our terms of reference do not require us to evaluate, comment, advise or form a view on the commercial risks or merits of the Delisting Proposal or the future prospects and earnings potential of the Group. Such evaluation or comment, if any, remains the sole responsibility of the Directors and the management of the Company, although we may draw upon their views or make such comments in respect thereof to the extent deemed necessary or appropriate by us in arriving at our views as set out in this letter. We have not been instructed or authorised to solicit, and we have not solicited, any indications of interest from any third party with respect to the Shares. Accordingly, we do not compare nor express any opinion on the relative merits of the Delisting Proposal and/or the Exit Offer vis-à-vis any alternative transactions previously considered by the Company or that may otherwise be available to the Company in the future. 26

27 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS We were also not involved in the negotiations pertaining to the Delisting Proposal nor were we involved in the deliberation leading up to the decision to put forth the Delisting Proposal to the Shareholders. In evaluating the financial terms of the Exit Offer, we have held discussions with the Directors and management of the Company and have examined and relied on publicly available information collated by us as well as information provided and representations made, both written and verbal, by the Directors and the management of the Company. We have not independently verified such information or representations, whether written or verbal, and therefore cannot and do not make any representation or warranty, express or implied, in respect of, and do not accept any responsibility for the accuracy, completeness or adequacy of such information or representations. However, we have made reasonable enquiries and exercised our judgment on the reasonable use of such information and found no reason to doubt the accuracy or reliability of such information. The Directors have confirmed, having made all reasonable inquiries and to the best of their respective knowledge, information and belief, all material information in connection with the Delisting Proposal and/or the Exit Offer and/or the Company and/or the Group has been disclosed to us, that such information is true, complete and accurate in all material respects and that there is no other material information or fact, the omission of which would cause any information disclosed to us or the facts of or in relation to the Company and/or the Group stated in the Circular to be inaccurate, incomplete or misleading in any material respect. The Directors have jointly and severally accepted full responsibility for such information described herein. In evaluating the financial terms of the Exit Offer and in arriving at our opinion thereon, we have not relied upon any financial projections or forecasts in respect of the Company and/or the Group. We are not required to express and we do not express any view on the growth prospects and earnings potential of the Company and/or the Group in connection with our opinion herein. Accordingly, we are not expressing any view herein as to the prices at which the Shares may trade in the absence of the Exit Offer or if the Exit Offer was not effected. We have not made any independent evaluation and appraisal on the assets and liabilities of the Company and/or the Group (including without limitation, properties, plant and equipment and/or investment properties) and we have not been furnished with any such evaluation or appraisal. Our advice and opinion as set out herein is based upon market, economic, industry, monetary and other conditions prevailing on, and the information provided to us as at the Latest Practicable Date. Such conditions may change significantly over a relatively short period of time. We assume no responsibility to update, revise or reaffirm our opinion in light of any subsequent development after the Latest Practicable Date that may affect our opinion contained herein. Shareholders should take note of any announcements relevant to their consideration of the Delisting Proposal and/or the Exit Offer which may be released after the Latest Practicable Date. The Company has been separately advised by its own professional advisers in the preparation of the Circular (other than this letter). We have no role or involvement and have not provided any advice, financial or otherwise, whatsoever in the preparation, review and verification of the Circular (other than this letter). Accordingly, we take no responsibility for and express no views, express or implied, on the contents of the Circular (other than this letter). In rendering our advice and giving our recommendation, we have not had regard to the general or specific investment objectives, financial situation, risk profile, tax position or particular needs and constraints of any Shareholder. As different Shareholders have different investment profiles and objectives, we advise the Independent Directors to recommend that any Shareholder who may require specific advice in the context of his specific investment objectives or portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax advisor or other professional advisor immediately. 27

28 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS A copy of this letter may be reproduced in the Circular. However, neither the Company nor the Directors may reproduce, disseminate or quote this letter (or any part thereof) for any other purposes, other than the intended purpose in relation to the Delisting Proposal, at any time and in any manner without the prior written consent of DMG in each specific case. Our advice in relation to the Exit Offer should be considered in the context of the entirety of this letter and the Circular. 3. THE EXIT OFFER Subject to the Delisting Resolution being approved by Shareholders at the EGM and the fulfilment of the Minimum Acceptance Condition, the Offeror will make the Exit Offer to acquire all the Offer Shares on the terms and subject to the conditions set out in this Circular, the Exit Offer Letter and the Acceptance Forms, and on the following basis: 3.1 Exit Offer Price The consideration for the Exit Offer will be: For each Offer Share: S$0.17 in cash The Offeror does not intend to revise the Exit Offer Price under any circumstances. The Exit Offer Price will be applicable to any number of Offer Shares held. Shareholders may choose to accept the Exit Offer in respect of all or part of their holdings of Offer Shares. Each Shareholder who accepts the Exit Offer will receive S$ for every 1,000 Offer Shares validly tendered for acceptance under the Exit Offer. Further details on the Exit Offer are set out in the Exit Offer Letter containing, inter alia, the terms and conditions of the Exit Offer and the relevant Acceptance Forms. 3.2 Conditions The Delisting and the Exit Offer will be conditional upon: (a) (b) (c) (d) SGX-ST s approval of the Delisting; the Delisting Resolution being passed at the EGM. Pursuant to Rule 1307 of the Listing Manual, the Delisting Resolution is considered passed if it is approved by a majority of at least 75% of the total number of issued Shares excluding treasury shares held by the Shareholders present and voting, on a poll, either in person or by proxy at the EGM to be convened for the Shareholders to vote on the Delisting Resolution (the Directors and Controlling Shareholders need not abstain from voting on the Delisting Resolution); the Delisting Resolution not being voted against by 10% or more of the total number of issued Shares excluding treasury shares held by the Shareholders present and voting, on a poll, either in person or by proxy at the EGM; and the receipt by the Offeror, by the close of the Exit Offer, valid acceptances in respect of such number of Offer Shares which, together with the Shares owned, controlled or agreed to be acquired by the Offeror either before or during the Exit Offer and pursuant to the Exit Offer or otherwise, will result in the Offeror and persons acting in concert with it holding such number of Shares carrying more than 50% of the voting rights attributable to the issued share capital of the Company as at the Closing Date (the Minimum Acceptance Condition ). 28

29 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Accordingly, the Exit Offer will not become or be capable of being declared unconditional as to acceptances until the close of the Exit Offer, unless at any time prior to the close of the Exit Offer, the Offeror has received valid acceptances in respect of such number of Offer Shares which will result in the Offeror and persons acting in concert with it holding such number of Shares carrying more than 50% of the total issued share capital of the Company. The Delisting Resolution, if approved by Shareholders at the EGM in accordance with Rule 1307 of the Listing Manual, will, subject to the Minimum Acceptance Condition being met, result in the Delisting. Shareholders are to note that if any of the above conditions listed in this section 3.2 is not met, the Delisting will not proceed and the Company will remain listed on the SGX-ST. The Company had on 6 December 2010 made an application to the SGX-ST to delist the Company from the Official List of the SGX-ST. The SGX-ST had advised in its letter dated 4 January 2011 that it does not have any objection to the Delisting subject to Shareholders approval of the Delisting Resolution. However, this is not to be taken as an indication of the merits of the Company, the Offeror, the Exit Offer, or the Delisting Proposal. Shareholders who wish to accept the Exit Offer should note that acceptances of the Exit Offer shall be irrevocable. 3.3 No Encumbrances The Offer Shares will be acquired fully paid and free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and any other third party rights or interests of any nature whatsoever ( Encumbrances ), and together with all rights, benefits and entitlements attached thereto as at the Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) which may be declared, paid or made by the Company, on or after the Announcement Date. 3.4 Warranty Acceptance of the Exit Offer by a Shareholder will be deemed to constitute an unconditional and irrevocable warranty by the accepting Shareholder that each Offer Share in respect of which the Exit Offer is accepted and sold by the accepting Shareholder, as or on behalf of the beneficial owner(s) thereof, is fully paid and free from all Encumbrances, and together with all rights, benefits and entitlements attached thereto as at the Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) which may be announced, declared, paid or made by the Company on or after the Announcement Date. 3.5 Duration If the Delisting Resolution is approved by Shareholders at the EGM, the Exit Offer will be open for acceptance by Shareholders for a period of at least 14 days after the date of announcement of Shareholders approval of the Delisting Resolution. The Closing Date for the Exit Offer is 5.30 p.m. on 18 February 2011 or such later date(s) as may be announced from time to time by or on behalf of the Offeror, as set out in section 2.6 of the Exit Offer Letter. Although no extension of the Exit Offer is currently contemplated, if the Exit Offer is extended, an announcement will be made of such extension, and the Exit Offer will remain open for acceptance for such period as may be announced. If the Exit Offer is extended, Shareholders who have validly accepted the Exit Offer in respect of part of their Shares will be entitled to tender additional Offer Shares in acceptance of the Exit Offer. 29

30 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS 4. IRREVOCABLE UNDERTAKING We produce below extracts of the details relating to the irrevocable undertakings received by the Company as set out in section 4 of the Circular. Each of Liang Qiusheng, Leung Hon Fai and Leung Kwok Chun are parties acting in concert with the Offeror in respect of their shareholding interests in the Offeror for the purposes of the Delisting. As at the Latest Practicable Date, the Offeror and its Concert Parties own an aggregate of 159,593,034 Shares representing approximately 49.87% of the total issued Shares. The Offeror has irrevocably and unconditionally undertaken to the Company (i) not to transfer or dispose of any of its Shares at any time prior to the completion of the Exit Offer; and (ii) it will vote in favour of the Delisting Resolution at the EGM in respect of all of its Shares. The above undertaking shall expire if the Delisting Resolution is not approved at the EGM or if the Exit Offer is withdrawn, lapses or closes. The Offeror has also obtained an irrevocable undertaking (the Undertaking ) from Liang Qiusheng (the Undertaking Shareholder ) to undertake: (a) (b) (c) not to transfer or dispose his Shares at any time prior to the completion of the Exit Offer; to vote in favour of the Delisting Resolution at the EGM in respect of all his Shares held by him; and not to accept the Exit Offer in respect of all his Shares. The Undertaking shall expire if the Delisting Resolution is not approved at the EGM or if the Exit Offer is withdrawn, lapses or closes. Save as set out above, as at the Latest Practicable Date, none of the Offeror or its Concert Parties has received any irrevocable undertaking from any party to vote for or against the Delisting Resolution and/or to accept or reject the Exit Offer. 5. INFORMATION ON THE OFFEROR Information on the Offeror is set out in section 5 and Appendix II to the Circular. 6. INFORMATION ON THE COMPANY AND THE GROUP Information on the Company and the Group is set out in section 6 and Appendix III to the Circular. 7. RATIONALE FOR THE DELISTING We produce below extracts of the rationale for the Delisting as set out in section 7 of the Circular. 7.1 Low trading liquidity of Shares The trading liquidity of the Shares on the SGX-ST has generally been thin. Based on the historical trading patterns, it is the Offeror s view that the low liquidity of the Shares is likely to continue and accordingly, the purpose of maintaining the Company s listing status for trading liquidity of the Shares does not appear to have been achieved. The Exit Offer will provide an exit opportunity for those Shareholders who wish to realise the value of their investment in the Shares but find it difficult to do so as a result of the low trading liquidity of the Shares. 30

31 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS 7.2 Attractive premium The Delisting Proposal offers minority Shareholders an opportunity to realise the value of their investments in the Company at a premium over the historical trading prices of the Shares on the SGX-ST, an option which may not otherwise be readily available. 7.3 Compliance costs of maintaining a listing In maintaining its listed status on the Official List of the SGX-ST, the Company incurs additional compliance costs and resources as well as subjecting its corporate actions to various regulatory requirements associated with a SGX-ST listed company. The Delisting Proposal, if proceeded with, will allow the Offeror to exercise greater management flexibility in utilising and deploying the resources of the Group. In addition, the Company may also dispense with expenses relating to maintenance of a listing status and focus its resources on its business operations. 7.4 Greater management flexibility The Delisting will facilitate greater management flexibility in the utilisation and deployment of the resources of the Group. The Delisting will also allow the Company and the Offeror to rationalise the management, resources and cost structure of the Group s businesses for greater efficiency and competitiveness. 7.5 Difficulty in accessing to equity capital markets A primary reason for companies to maintain a listing on the SGX-ST is to access the capital markets for fund-raising purposes. However, the Company has not conducted any fundraising exercise since its listing in It also has not made any recent attempt to carry out any fund raising activities due to the low liquidity and low prices of the Company s shares traded on the SGX-ST. These factors were not conducive for the Company to raise funds through share placement as existing Shareholders will suffer dilution of their shareholdings at low valuation, which will not be in the interest of the minority Shareholders. In addition, the net profits of the Group have been declining year on year. Taking into account the aforesaid financial state of health of the Company, it would be difficult for the Company to access and tap funds from the equity capital markets in the foreseeable future. As such, it is not meaningful for the Company to maintain a listing on the SGX-ST. 8. ASSESSMENT OF THE FINANCIAL TERMS OF THE EXIT OFFER In evaluating and assessing the financial terms of the Exit Offer, we have given due consideration to:- (a) (b) (c) (d) (e) (f) (g) assessed valuation of the Group; market quotation and trading activity of the Shares; Share price performance relative to selected market indices; comparison with financial valuation ratios of selected listed companies considered to be comparable to the Company; comparison with successful privatisations of other companies listed on the SGX-ST; dividend track record of the Company; and other considerations in relation to the Exit Offer which have a significant bearing on our assessment. 31

32 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS 8.1 Assessed valuation of the Group The NTA-based valuation provides an estimate of the value of a company assuming the hypothetical sale of all its tangible assets over a reasonable period of time and would be more relevant for asset-based companies or where the subject company intends to realise or convert the uses of all or most of its assets. Such a valuation approach would be particularly appropriate when applied in circumstances where the business is to cease operations or where the profitability of the business being valued is not sufficient to sustain an earnings-based valuation. A NTA based approach is meaningful only in so far as it shows the extent to which the value of each Share is backed by tangible assets, and would be relevant in the event that the Group changes the nature of its business or realises or converts the uses of all or most of its assets. In this regard, we note that the Offeror has no immediate intention to propose any changes to the existing businesses of the Group or to redeploy the fixed assets of the Group. As such, we have deemed that the ensuing NTA-based analyses would not be the primary consideration in our overall evaluation of the Exit Offer Book NTA of the Group as at 30 September 2010 against the Exit Offer Price Based on the latest announced unaudited balance sheet of the Group as at 30 September 2010, the NTA of the Group was approximately RMB million, equivalent to approximately RMB0.946 per Share or S$0.186 per Share (based on the exchange rate of RMB1:S$ as at 30 September 2010). The Exit Offer Price of S$0.170 represents a discount of approximately 8.60% to the NTA per Share. We note from the unaudited balance sheet of the Group as at 30 September 2010, the Group was in a net cash position of approximately RMB77.43 million (being the difference between cash and cash equivalents of approximately RMB million and borrowings of approximately RMB million), representing approximately 25.57% of the NTA of the Group. Accordingly, the net cash per Share will be approximately RMB0.242 per Share or S$0.048 per Share (based on the exchange rate of RMB1:S$ as at 30 September 2010). Excluding the net cash of approximately RMB77.43 million, the NTA of the Group would be approximately RMB million, equivalent to approximately RMB0.704 per Share or S$0.138 per Share (based on the exchange rate of RMB1:S$ as at 30 September 2010) ( Ex-Cash NTA per Share ). The Exit Offer Price, excluding net cash per Share, of approximately S$0.122 represents a discount of approximately 11.59% discount to the Ex- Cash NTA per Share. In our evaluation of the financial terms of the Exit Offer, we have considered whether there are any factors which have not been otherwise disclosed in the financial statements of the Group that are likely to have a material impact on the unaudited book NTA of the Group as at 30 September In this respect, save as disclosed in the unaudited financial statements of the Group as at 30 September 2010, the Directors have confirmed that as at the Latest Practicable Date, to the best of their knowledge, there are no contingent liabilities which are likely to have a material impact on the NTA of the Group. We have also reviewed the unaudited balance sheet of the Group as at 30 September 2010 to determine whether there are any assets that are of an intangible nature and as such, would not appear in a valuation based on book NTA per Share as at 30 September The Directors have confirmed that, to the best of their knowledge, there are no other intangible assets which ought to be disclosed in the balance sheet of the Group in accordance with the Singapore Financial Reporting Standards and which have not been so disclosed and where such intangible assets would have had a material impact on the overall financial position of the Group as at the Latest Practicable Date. 32

33 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Adjusted NTA of the Group as at 30 September 2010 against the Exit Offer Price In our evaluation of the financial terms of the Exit Offer, we have considered whether there are any material events that impact the unaudited balance sheet of the Group from 30 September 2010 to the Latest Practicable Date to determine whether adjustments need to be made to the book NTA per Share as at 30 September In this respect, the Directors have confirmed to us that as at the Latest Practicable Date, to their best knowledge and belief, they are of the opinion that, there is no material event that has or will impact the unaudited balance sheet of the Group since 30 September Revalued NTA of the Group as at 30 September 2010 against the Exit Offer Price In our evaluation of the financial terms of the Exit Offer, we have also considered whether there are any tangible assets which should be valued at an amount that is materially different from that which is recorded in the unaudited balance sheet of the Group as at 30 September The Directors have confirmed that, to their best knowledge and belief, there are no material differences between the realisable value of the assets and their respective book values as at 30 September 2010 which would have a material impact on the revalued NTA of the Group. In addition, the Company has not conducted any valuation on its brands and trademarks, as it is in the opinion of the Directors and the Company s management that they form an integral part of the business, and hence the strength of its brands and trademarks would be reflected in the results and financial performance of the Company. 8.2 Market quotation and trading activity of the Shares We have compared the Exit Offer Price against the historical market price of the Shares. We set out below a chart showing the Exit Offer Price relative to the daily last transacted prices and trading volume of the Shares for the 12-month period prior to the Announcement Date to the Latest Practicable Date. Source: Bloomberg and SGX-ST announcements made by the Company 33

34 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Notes: 14-Nov-09 The Company announced its third quarter financial statement for the period ended 30 September 2009, reporting a third quarter net profit of RMB 30.6 million, representing a decrease of approximately RMB 10.0 million or 25% over the third quarter of FY2008. As a result, its net profit for the nine months ended 30 September 2009 decreased by approximately RMB 14.6 million or 35% over the same period ended 30 September 2008 to approximately RMB 27.0 million. 22-Feb-10 The Company announced its fourth quarter and full year financial statement for the period ended 31 December The Group reported a 27% lower net profit of RMB 23.2 million which was a result of lower gross profits and higher selling and distribution expenses for the financial year ended 31 December 2009 as compared to the comparative period in FY Apr Apr-10 The Company announced that the Group expects to register a net loss in the first quarter of FY2010 compared to a net profit in the comparative quarter ended 31 March The Company announced its first quarter financial statement for the period ended 31 March The Group reported a net loss of RMB 3.2 million as compared to a RMB 0.3 million net profit in the first quarter of FY Aug-10 The Company announced that the Group expects to register an unaudited net loss for the half year ended 30 June Aug-10 The Company announced its second quarter and half year financial statements for the period ended 30 June The Group reported a net loss of RMB10.9 million for the first half ended 30 June Nov-10 The Company announced its third quarter financial statement for the period ended 30 September 2010, reporting a third quarter net profit of RMB 24.6 million, representing a decrease of approximately RMB 6.0 million or 20% over the third quarter of financial year ended 31 December As a result, its net profit for the nine months ended 30 September 2010 decreased by approximately RMB 13.4 million or 50% over the same period ended 30 September 2009 to approximately RMB 13.6 million. 15-Nov Nov Jan-11 Joint Announcement made by Company and the Offeror on the Delisting Proposal. The Company announced the appointment of DMG & Partners Securities Pte Ltd as the independent financial adviser to the Independent Directors to advise on the Exit Offer. Receipt of letter from SGX-ST where it advised that it has no objection to the Delisting, subject to approval of the Delisting by the Shareholders in compliance with Rule 1307 of the Listing Manual. We have also compared the Exit Offer Price against the volume weighted average price ( VWAP ) of the Shares for selected reference periods both prior to and after the Announcement Date as set out in the table below. Premium of VWAP (1) / Last Exit Offer Reference Periods Highest Lowest Transacted Price (2) over Closing Price Closing Price Price VWAP (S$) (S$) (S$) (%) Periods prior to the Announcement Date Last 12 months Last 6 months Last 3 months Last 1 month Last Market Day on which the Shares were traded prior to the Announcement Date N.A. N.A (3)

35 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Premium of VWAP (1) / Last Exit Offer Reference Periods Highest Lowest Transacted Price (2) over Closing Price Closing Price Price VWAP (S$) (S$) (S$) (%) Periods after the Announcement Date Market Day immediately after the Announcement Date N.A. N.A (4) 3.03 Between the Market Day immediately after the Announcement Date and the Latest Practicable Date (both dates inclusive) Last Market Day on which the Shares were traded prior to the Latest Practicable Date N.A. N.A (5) 3.03 Source: Bloomberg Notes: (1) The VWAP is weighted based on the transacted prices of the Shares for the trading days in the respective periods. (2) Based on the Exit Offer Price of S$0.17 per Offer Share. (3) This is the closing price of the Shares as at 12 November 2010, being the last Market Day on which the Shares were traded prior to the Announcement Date. (4) This is the closing price of the Shares as at 16 November 2010, being the Market Day immediately after the Announcement Date. (5) This is the closing price of the Shares as at 5 January 2011, being the last Market Day on which the Shares were traded prior to the Latest Practicable Date. The key observations in respect of the above are highlighted below: (a) (b) (c) (d) (e) (f) Over the 12-month period prior to the Announcement Date, the Shares have closed between a low of S$0.090 and a high of S$0.150, which is below the Exit Offer Price; The Exit Offer Price represents a premium of 50.71%, 47.19%, 30.57% and 21.34% to the VWAP for the 12-month, 6-month, 3-month and 1-month periods prior to the Announcement Date respectively; The Exit Offer Price represents a premium of 13.33% to the last transacted price for the last Market Day on which the Shares were traded prior to the Announcement Date; The Exit Offer Price represents a premium of 3.03% to the last transacted price for the Market Day immediately after the Announcement Date; The Exit Offer Price represents a premium of 4.74% to the VWAP for the period between the Market Day immediately after the Announcement Date and the Latest Practicable Date; The Exit Offer Price represents a premium of 3.03% to the last transacted price for the last Market Day on which the Shares were traded prior to the Latest Practicable Date. 35

36 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS For illustration purposes only, we set out in the table below the average daily trading volume of the Shares and the average daily trading volume as a percentage of its Free Float (as defined below). Approximate percentage of Average Daily Free Float (2) Reference Periods Traded Volume (1) (%) Periods prior to the Announcement Date Last 12 months 223, Last 6 months 155, Last 3 months 164, Last 1 month 173, Last Market Day on which the Shares were traded prior to the Announcement Date (3) 150, Periods after the Announcement Date Market Day immediately after the Announcement Date 2,676, Between the Market Day immediately after the Announcement Date and the Latest Practicable Date (both dates inclusive) 661, Last Market Day on which the Shares were traded prior to the Latest Practicable Date (4) 80, Source: Bloomberg Notes: (1) The average trading volume is computed based on the total trading volume for all the Market Days (including Market Days when no Shares were traded) for the relevant periods prior to the last trading day of the Shares before the Announcement Date, divided by the total number of Market Days during the respective periods. (2) Based on a free float of approximately 155,010,000 Shares ( Free Float ), as extracted from Bloomberg. (3) This is the volume of the Shares traded on 12 November 2010, being the last Market Day on which the Shares were traded prior to the Announcement Date. (4) This is the volume of the Shares traded on 5 January 2011, being the last Market Day on which the Shares were traded prior to the Latest Practicable Date. The key observations in respect of the above are highlighted below: (a) The average daily trading volume of the Shares for the 12-month, 6-month, 3-month and 1- month periods prior to the Announcement Date represents approximately 0.14%, 0.10%, 0.11%, and 0.11% of the Free Float respectively; (b) (c) (d) (e) The average daily trading volume of the Shares on the last Market Day on which the Shares were traded prior to the Announcement Date represents 0.10% of the Free Float; The average daily trading volume of the Shares on the Market Day immediately after the Announcement Date represents 1.73% of the Free Float; The average daily trading volume of the Shares for the period between the Market Day immediately after the Announcement Date and the Latest Practicable Date represents 0.43% of the Free Float; The average daily trading volume of the Shares on last Market Day on which the Shares were traded prior to the Latest Practicable Date represents 0.05% of the Free Float. 36

37 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Based on the above observations, it would appear likely that the trading activity and market price of the Shares since the Announcement Date up to the Latest Practicable Date may be supported by the Delisting Proposal. We wish to highlight that the above analysis of the trading performance of the Shares serves only as an illustrative guide and is not an indication of the future trading performance of Shares. 8.3 Share price performance relative to selected market indices To assess the market price performance of the Shares vis-à-vis the general price performance of the Singapore equity market, we have compared the market movement of the Shares against the Straits Times Index ( STI ) and FTSE ST China Index ( FSTC ) for the 12-month period prior to the Announcement Date and the Latest Practicable Date, as illustrated below. Source: Bloomberg We note that prior to the Announcement Date, the Shares had generally underperformed STI and FSTC on a normalised basis. The movements in the last transacted prices of the Shares, STI and FSTC between the Market Day immediately prior to the Announcement Date and the Latest Practicable Date are as follows: % change between the Last price prior to the Closing price as at the Announcement Date and Announcement Date Latest Practicable Date the Latest Practicable Date (%) Company S$0.150 S$ STI 3, , FSTC (1.64) Source: Bloomberg 37

38 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Between the Announcement Date and the Latest Practicable Date, the market price of the Shares has increased by approximately 10% while the STI increased by 0.77% and FSTC decreased by approximately 1.64% respectively. Based on the above observations, it would appear likely that the market price of the Shares since the Announcement Date up to the Latest Practicable Date may be supported by the Exit Offer Price. Shareholders should note that the past trading performance of the Shares should not in any way be relied upon as an indication or a promise of the future trading performance of the Shares. 8.4 Comparison with financial valuation ratios of selected listed companies considered to be comparable to the Company We wish to highlight that the figures used in our financial assessment have been extracted where available and/or applicable, from Bloomberg, the Circular and other publicly available sources. We make no representations or warranties, express or implied, as to the accuracy or completeness of such information. For the purpose of assessing the Exit Offer Price, references can be made to companies which are listed and traded on the regional exchanges, whose business activities and industries are comparable to the Company ( Selected Comparable Companies ) to give an indication of the current market expectations with regards to the valuation of these businesses, implied by their respective closing market prices as at the Latest Practicable Date. We recognise, however, that our list of Selected Comparable Companies is not exhaustive and there may not be any companies listed on the regional exchanges or other stock exchanges that is directly comparable to the Company in terms of business activities, scale of operations, types of products, geographical markets, track record, future prospects, asset base, risk profile, customer base and other relevant criteria. As such, any comparison made with respect to the Selected Comparable Companies is therefore intended to serve as an illustrative guide only. For the purpose of our evaluation and for illustration, we have made comparisons between the Exit Offer Price and the valuation of the Selected Comparable Companies on a historical basis using the following: Valuation Ratio Price-to-Earnings ( P/E ) General Description P/E ratio or earnings multiple illustrates the valuation ratio of the current market value of a company s shares relative to its consolidated basic earnings per share as stated in its financial statements. The P/E ratio is affected by, inter alia, the capital structure of a company, its tax position as well as its accounting policies relating to depreciation and intangible assets. Price-to-Net Tangible Asset NTA or net tangible asset is defined to exclude, where ( P/NTA ) applicable, minority interests, deferred tax assets and liabilities, land use rights and goodwill. P/NTA ratio illustrates the ratio of the market price of a company s share relative to its historical NTA per share as recorded in its financial statements. The NTA figure provides an estimate of the value of a company assuming the sale of all its tangible assets, the proceeds which are first used to settle its liabilities and obligations with the balance available for distribution to its shareholders. Comparisons of companies using their NTAs are affected by differences in their respective accounting policies, in particular, their depreciation and asset valuation policies. 38

39 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Enterprise Value-to-Earnings Before Interest, Tax, Depreciation and Amortisation ( EV/EBITDA ) EV or Enterprise Value is the sum of a company s market capitalisation, preferred equity, independent interests, consolidated short and long term debts, inclusive of finance lease liabilities, less its consolidated cash and cash equivalents. EBITDA stands for historical consolidated earnings before interest, tax, depreciation and amortisation expenses, inclusive of share of associates and joint ventures income but excluding exceptional items. The EV/EBITDA ratio illustrates the ratio of the market value of a company s business relative to its historical pre-tax consolidated operating cashflow performance, without regard to its capital structure. The statistics for the Selected Comparable Companies are based on their closing prices as at the Latest Practicable Date and the publicly available financial results based on their respective financial year ends. Comparisons between the Company and the Selected Comparable Companies may be affected, inter alia, by differences in their accounting policies. Our analysis has not attempted to adjust for such differences. In view of the above, it should be noted that any comparison made with respect to the Selected Comparable Companies merely serves as an illustration and that the conclusions drawn from the comparisons may not necessarily reflect the perceived market valuation of the Company as at the Latest Practicable Date. We set out in the table below the list of Selected Comparable Companies, together with a brief description of their principal activities which are considered to be broadly comparable to the Company. Market Capitalisation as Selected Comparable at the Latest Companies Description Practicable Date (1) (S$ million) Apollo Food Holdings Berhad ( Apollo ) Hup Seng Industries Berhad ( Hup Seng ) London Biscuits Berhad ( London Biscuits ) Apollo is an investment holding company. Through its subsidiaries, it manufactures, trades, markets and distributes compound chocolates and chocolate confectionary products and cakes. Hup Seng is an investment holding company. Though its subsidiaries, it manufactures, sells, and distributes biscuits, confectionaries and other foodstuffs. London Biscuits manufactures and trades extruded corn snacks, cakes and other confectionaries and foodstuffs. Its products include corn based flavored snack food, dip cup chocolates, cup cakes, layer cakes and swiss roll. Through its subsidiaries, it also leases property (2) (2) (2) Oriental Food Industries Oriental Food is an investment holding Holdings Berhad company. Through its subsidiaries, it ( Oriental Food ) manufactures, markets and sells snack food and confectionaries. It also manufactures and wholesales candies, chocolate products, fish fillet, and other preserved foods (2) Source: Bloomberg 39

40 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Notes: (1) Market capitalisation of the Selected Comparable Companies is based on their respective closing prices as at the Latest Practicable Date. (2) Based on the conversion rate of MYR1:S$ We set out in the table below the financial ratios of the Company and the Selected Comparable Companies listed on SGX-ST as at the Latest Practicable Date. Historical Selected Comparable Historical P/E (2) Historical P/NTA (3) EV/EBITDA (4) Companies (1) (times) (times) (times) Apollo Hup Seng London Biscuits Oriental Food High Mean Median Low Company (implied by the Exit Offer Price) Source: Bloomberg Notes: (1) Historical P/E, historical P/NTA and historical EV/EBITDA of the Selected Comparable Companies are based on their respective closing prices as at the Latest Practicable Date. (2) Based on the historical consolidated earnings of the respective Selected Comparable Companies as set out in their latest available full-year results as at the Latest Practicable Date. (3) The P/NTA ratios of the respective Selected Comparable Companies were based on their respective NTA values as set out in their latest available published financial statements as at the Latest Practicable Date. (4) The EV of the respective Selected Comparable Companies were based on their market capitalisations as at the Latest Practicable Date (except for the Company where its market capitalisation was based on the Exit Offer Price) and the consolidated net debt and minority interest figures set out in their latest available published financial statements as at the Latest Practicable Date. EBITDA of the respective Selected Comparable Companies were based on the consolidated figures as set out in their latest available full-year results as at the Latest Practicable Date. Based on the above ratio analysis, we noted that the:- (a) (b) (c) Historical P/E ratio of the Company of 11.6 times as implied by the Exit Offer Price is above the range of the historical P/E ratios of the Selected Comparable Companies. P/NTA ratio of the Company of 0.9 times as implied by the Exit Offer Price is within the range but below the mean and median of the P/NTA ratios of the Selected Comparable Companies. EV/EBITDA ratio of the Company of 3.4 times as implied by the Exit Offer Price is below the range of the EV/EBITDA ratios of the Selected Comparable Companies. 40

41 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS 8.5 Comparison with successful privatisations of other companies listed on the SGX-ST We note that it is the intention of the Offeror to privatise the Company and delist the Company from the Official List of the SGX-ST. In assessing the reasonableness of the Exit Offer Price, we have compared the statistics implied by the Exit Offer Price with those of: (a) (b) selected completed delisting offers under Rule 1307 of the Listing Manual announced since January 2009 and up to the Latest Practicable Date, where the primary intention of the offeror is to delist the target company from the Official List of the SGX-ST ( Delisting Offers ); and selected completed privatisation transactions announced since January 2009 and up to the Latest Practicable Date, whether by way of scheme of arrangement under Section 210 of the Companies Act or general offer under the Code where the offeror has stated its intention to delist the target company from the Official List of the SGX-ST ( Privatisation Transactions ). We wish to highlight that the list of target companies set out under the Delisting Offers and Privatisation Transactions are not directly comparable with the Company in terms of market capitalisation, size of operations, business activities, accounting policies, financial performance, future prospects and other relevant criteria. Each transaction must be judged on its own commercial and financial merits. The premium (if any) that an offeror would pay to privatise or delist a listed company depends on various factors, inter alia, the offeror s intention with regard to the target company, the potential synergy that the offeror can gain from acquiring the target company, the presence of competing bids for the target company, prevailing market conditions and sentiments, attractiveness and profitability of the target s business and assets and existing and desired level of control in the target company. Therefore, the comparison of the Exit Offer with the Delisting Offers and Privatisation Transactions set out below is for illustrative purposes only. Conclusions drawn from the comparisons made may not reflect any perceived market valuation of the Company. 41

42 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Delisting Offers Premium of the exit offer price over Last transacted VWAP for the VWAP for the market price 1-month period 3-month period Date of prior to prior to prior to Companies announcement announcement announcement announcement P/NTA (%) (%) (%) (times) AGVA Corporation Ltd 21 Feb Chunghung Holdings Limited 5 May C. K. Tang Limited 8 May Man Wah Holdings Limited 5 Jun Giant Wireless Technology Limited 30 Jun 09 (26.0) (32.6) (41.6) 2.9 Evergro Properties Limited 12 Jul China Precision Technology Limited 3 Sep (1) Iconic Holdings Limited 26 Oct China Lifestyle Food and Beverages Group Limited 9 Dec Ionics EMS, Inc. 2 Mar (17.1) 1.9 Zhongguo Pengje Fabrics Limited 10 May Avaplas Ltd 23 Jun Eastern Asia Technology Limited 4 Aug MCL Land Limited 26 Aug (2) Soilbuild Group Holdings Ltd. 21 Sep High Mean Median Low (26.0) (32.6) (41.6) 0.3 Exit Offer 15 Nov Source: SGX-ST announcements and circulars to shareholders in relation to the respective Delisting Offers. Notes: (1) Based on adjusted NTA per share taking into consideration the acquisition of MAHK Co., Ltd and its subsidiaries by China Precision Technology Limited. (2) Based on NAV of MCL Land Limited. 42

43 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS The key observations in respect of the above are highlighted below: (a) (b) (c) (d) The premium of 13.3% implied by the Exit Offer Price over the last transacted price on the last Market Day prior to the Joint Announcement Date is within the range, but lower than the mean and median of premia for the Delisting Offers. The premium of 21.3% implied by the Exit Offer Price over the 1-month VWAP prior to the Joint Announcement Date is within the range, and higher than the mean and median of premia for the Delisting Offers. The premium of 30.6% implied by the Exit Offer Price over the 3-month VWAP prior to the Joint Announcement Date is within the range, and higher than the mean and median of premia for the Delisting Offers. The P/NTA ratio of 0.9 times implied by the Exit Offer Price is within the range, equivalent to the median, but lower than the mean of P/NTA ratios for the Delisting Offers. Privatisation Offers Premium/ (Discount) of exit offer price over Last transacted VWAP for the VWAP for the market price 1-month period 3-month period Date of prior to prior to prior to Companies announcement announcement announcement announcement P/NTA (%) (%) (%) (times) Singapore Petroleum Company Limited (1) 24 May Sihuan Pharmaceutical Holdings Group Ltd 24 Aug Chartered Semiconductor Manufacturing Ltd (2) 7 Sep Aqua-Terra Supply Co. Limited (3) 8 Dec SSH Corporation Ltd. (4) 8 Dec Furama Ltd. 15 Dec Jurong Cement Limited (5) 18 Dec Hongguo International Holdings Limited 18 Jan China Video Surveilliance Limited 2 Feb Eng Kong Holdings Limited 2-Jun (6) RSH Limited 23-Jul NA NA 1.9 Pine Agritech Limited 16-Aug High Mean Median Low Exit Offer 15 Nov Source: SGX-ST announcements and circulars to shareholders in relation to the respective Privatisation Offers. 43

44 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Notes: (1) On 24 May 2009, Petrochina International (Singapore) Pte. Ltd ( Petrochina ) announced that it had entered into a conditional sale and purchase agreement with Keppel Oil and Gas Services Pte Ltd for the sale and purchase of shares representing approximately 45.51% of the shares in Singapore Petroleum Company Limited. Subsequently, on 21 June 2009, Petrochina announced the mandatory unconditional cash offer at the offer price of S$6.25. The premia in the table above were computed based on periods preceding the pre-conditional offer announcement date of 24 May P/NTA was based on NTA value set out in published financial statement for the period ended 30 June (2) On 29 May 2009, the Singapore Business Times reported on a possible acquisition by Advanced Technology Investment Company LLC of the shares in Chartered Semiconductor Manufacturing Ltd ( Chartered Semiconductor ) held by Singapore Technologies Semiconductors Pte Ltd. The premium of the scheme consideration over the last transacted price on 28 May 2010 was 22.9%. On 7 September 2009, Chartered Semiconductor announced the proposed acquisition by scheme of arrangement. The premia in the table above were computed based on periods preceding 7 September (3) The scheme consideration is a combination of an amount of S$ in cash and KS Energy Services Limited s ( KS Energy ) shares and is based on the closing price per KS Energy share of S$ as at 7 December 2009, being the last trading day of KS Energy prior to the date of the announcement on 8 December (4) The scheme consideration is a combination of an amount of S$ in cash and KS Energy s shares and is based on the closing price per KS Energy share of S$ as at 7 December 2009, being the last trading day of KS Energy prior to the date of the announcement on 8 December (5) On 18 December 2009, Holcim Investments (Singapore) Pte. Ltd. ( Holcim ) announced the voluntary unconditional cash offer of Jurong Cement Limited ( Jurong Cement ) at the offer price of S$2.10 in cash. Subsequently on 25 January 2010, offer price was increased to S$2.50. On 6 April 2010, Holcim and Jurong Cement jointly announced the approval of its voluntary delisting from the SGX-ST at the exit offer price of S$2.50. The premia and P/NTA in the table above were computed based on revised exit offer price of S$2.50. The premia were computed based on periods preceding 18 December (6) Based on the NTA of Eng Kong Holdings Limited adjusted for dividends paid after FY2009. The key observations in respect of the above are highlighted below: (a) (b) (c) (d) The premium of 13.3% implied by the Exit Offer Price over the last transacted price on the last Market Day prior to the Joint Announcement Date is within the range, but lower than the mean and median of premia for the Privatisation Offers. The premium of 21.3% implied by the Exit Offer Price over the 1-month VWAP prior to the Joint Announcement Date is within the range, but lower than the mean and median of premia for the Privatisation Offers. The premium of 30.6% implied by the Exit Offer Price over the 3-month VWAP prior to the Joint Announcement Date is within the range, but lower than the mean and median of premia for the Privatisation Offers. The P/NTA ratio of 0.9 times implied by the Exit Offer Price is within the range, but lower than the mean and median of P/NTA ratios for the Privatisation Offers. We note that the Exit Offer is below the mean and median for the premium over the last transacted price, 1-month VWAP, 3-month VWAP and 6 month VWAP prices as well as the P/NTA ratio for the Privatisation Offers. However, we wish to highlight that privatisation exercises require acceptances of at least 90% of the voting rights of the Company, unlike a voluntary delisting pursuant to Rules 1307 and 1309 of the Listing Manual. In order for the Offeror to achieve the higher level of acceptances, generally a more attractive price must be offered to shareholders. Shareholders should note that the above comparison with Privatisation Offers is for illustrative purposes only. 44

45 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS 8.6 Dividend track record of the Company The Company has not declared any dividends for the last three financial years. We do not express any views with regard to the future dividend policy of the Company and the Directors have confirmed that the Company does not have a formal dividend policy. 8.7 Other considerations in relation to the Exit Offer which have a significant bearing on our assessment Outlook of the Group In the Company s results announcement for the financial period ended 30 September 2010, the following commentary was made on the significant trends and competitive conditions of the industry in which the Group operates in: The Mid Autumn Festival for 2010 had been an eventful period whereby our Mooncake sales had continued to enjoy growth. The increase in the demand of our mooncake products proves that the management had been on the right track in our marketing campaigns and strategies. With the completion of the Mid Autumn Festival, the Management will be focusing on the upcoming festive seasons and to their best endeavors, continue to be vigilant and adaptive to the market conditions and the overall environment. The Management continues to hold the view of rising raw material and labour costs in the coming months and until the end of the financial year. Under such economic climate and business conditions, the Management anticipates that it will continue to be challenging and remains cautiously optimistic for the rest of the financial year. The Management will be assessing all possible options going forward to enhance operational effectiveness and also shareholders value Condition of the Exit Offer The Delisting and the Exit Offer are each conditional on the approval of Shareholders for the Delisting Resolution. We note that the Delisting Resolution must be approved by a majority of at least 75%, and not voted against by 10% or more, of the total number of issued Shares held by the Shareholders present and voting, on a poll, either in person or by proxy at the EGM. Directors and Controlling Shareholders are not required to abstain from voting on the Delisting Resolution. As highlighted in section 4 of the Circular, the Offeror and its Concert Parties have provided irrevocable undertakings to vote their Shares in favour of the Delisting Resolution at the EGM. As at the Latest Practicable Date, the Offeror and its Concert Parties have an interest in 159,593,034 Shares, representing approximately 49.87% of the total issued Shares. Save as set out above, as at the Latest Practicable Date, none of the Offeror or its Concert Parties have received any irrevocable undertaking from any party to vote for or against the Delisting Resolution at the EGM and/or to accept or reject the Exit Offer. 45

46 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Implications of Delisting and Compulsory Acquisition Details relating to the implications of delisting and compulsory acquisition have been extracted from sections 10 and 11 of the Circular and set out in italics below. All terms and expressions used in the extract below shall have the same meaning as those defined in the Circular, unless otherwise stated:- Shareholders should note that if the Delisting Resolution is approved in accordance with the requirements of the Listing Manual and the conditions listed in section 3.2 of this Circular are fulfilled, the Company will be delisted. Following the Delisting, Shareholders who do not accept the Exit Offer will continue to hold Shares in the Company, which will then be an unlisted company. Shareholders should note that shares of unlisted companies are generally valued at a discount to the shares of comparable listed companies due to the lack of marketability. Following the Delisting, it is likely to be difficult for Shareholders who do not accept the Exit Offer to sell their Shares in the absence of a public market for the Shares, as there is no arrangement for such Shareholders to exit. Even if such Shareholders were able to sell their Shares, they would likely receive a lower price as compared with the Exit Offer Price or the market prices of the shares of comparable listed companies. If the Company is delisted from the Official List of the SGX-ST, it will no longer be obliged to comply with the listing requirements of the SGX-ST, in particular, the continuing corporate disclosure requirements under Chapter 7 of the Listing Manual and Appendices to of the Listing Manual. Nonetheless, as a company incorporated in Singapore, the Company will still need to comply with the Companies Act and its memorandum and articles of association and the interests of Shareholders who do not accept the Exit Offer will be protected to the extent provided for by the Companies Act. If the Company is delisted from the Official List of the SGX-ST, each Shareholder who holds Shares that are deposited with CDP and does not accept the Exit Offer will be entitled to one share certificate representing his delisted Shares. The Company s share registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore , will arrange to forward the share certificates to such Shareholders (who are not CPFIS Investors), by ordinary post and at the Shareholders own risk, to their respective addresses as such addresses appear in the records of CDP for their physical safekeeping. The share certificates belonging to CPFIS Investors will be forwarded to their respective CPF Agent Banks for their safe-keeping, details of which are set out in Appendix I to the Exit Offer Letter. If a Shareholder wishes to split his share certificate into other denominations, he will be required to pay for each share certificate so required, a fee at the prevailing rate of S$2.00 (exclusive of goods and services tax). Shareholders who are in doubt of their position should seek independent professional advice. Pursuant to Section 215(1) of the Companies Act, if within 4 months of the making of the Exit Offer, the Offeror receives acceptances pursuant to the Exit Offer of not less than 90% of the Shares (other than those already held by the Offeror, its related corporations or their respective nominees as at the date of the Exit Offer), the Offeror will have the right to compulsorily acquire, at the Exit Offer Price, all the Shares of Shareholders who have not accepted the Exit Offer. In addition, pursuant to Section 215(3) of the Companies Act, if the Offeror acquires such number of Shares which, together with Shares held by it, comprise 90% or more of the Shares, Shareholders who have not accepted the Exit Offer have a right to require the Offeror to acquire their Shares at the Exit Offer Price. Shareholders who wish to exercise such a right are advised to seek their own independent legal advice. 46

47 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS It is the intention of the Offeror to exercise such right of compulsory acquisition if the Offeror should acquire sufficient Offer Shares to be entitled to such right. In such an event and upon completion of the compulsory acquisition, the Company will then become a wholly-owned subsidiary of the Offeror. Shareholders who wish to exercise their rights under Section 215(3) of the Companies Act are advised to seek their own independent legal advice Alternative offers from third parties As at the Latest Practicable Date, there is no publicly available evidence of an alternative take-over offer for the Shares from any third party. The Directors have confirmed that, as at the Latest Practicable Date, save for the Exit Offer made by the Offeror, no alternative takeover offer from any third party has been received. As highlighted in section 4 of the Circular, the Offeror and its Concert Parties have provided an irrevocable undertaking to vote his Shares in favour of the Delisting Resolution at the EGM. As at the Latest Practicable Date, the Offer and its Concert Parties have an interest in 159,593,034 Shares, representing approximately 49.87% of the total issued Shares. Consequently, the likelihood of a competitive offer from any third party is remote. In addition, pursuant to Rule 33.2 of the Code, except with the consent of the SIC, neither the Offeror nor any person acting in concert with it may, within six (6) months of the closure of the Exit Offer, make a second offer to, or acquire any Shares from any Shareholder on better terms than those under the Exit Offer Reasonableness of the Exit Offer Price in view of the Discount to the NTA per Share We note that the Exit Offer Price of S$0.170 represents a discount of approximately 8.60% to the NTA per Share (P/NTA ratio of approximately 0.9 times). We also note that the Exit Offer Price excluding net cash per Share of approximately S$0.122 represents a discount of approximately 11.59% discount to the Ex-Cash NTA per Share (P/Ex-Cash NTA ratio of approximately 0.9 times). In our overall evaluation of the Exit Offer, we have deemed that the NTA-based approach would not be a material consideration as we are of the opinion that the NTA-based approach is not meaningful in this instance given that: (a) (b) The NTA-based valuation provides an estimate of the value of a company assuming the hypothetical sale of all its tangible assets over a reasonable period of time and would be more relevant for asset-based companies or where the subject company intends to realise or convert the uses of all or most of its assets. Such a valuation approach would be particularly appropriate when applied in circumstances where the business is to cease operations or where the profitability of the business being valued is not sufficient to sustain an earnings-based valuation. We note that the abovementioned circumstances do not apply to the Group; and A NTA based approach is meaningful only in so far as it shows the extent to which the value of each Share is backed by tangible assets, and would be relevant in the event that the Group changes the nature of its business or realises or converts the uses of all or most of its assets. In this regard, we note that the Offeror has no immediate plans for changes to the existing businesses or employees of the Group or to redeploy the fixed assets of the Group. An extract from section 8 of the Circular is set out below: 47

48 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Following the completion of the Delisting, the Offeror intends to conduct a review of the operations and management of the Group and to also evaluate various strategic options, including, amongst others, a trade sale or an initial public offering at an opportune time. The Offeror may also conduct a restructuring of its shareholdings and/or the shareholdings of the Company after the completion of the Delisting. Pending the outcome of the review, the Offeror has no immediate plans to: (i) propose any changes to the existing businesses of the Group; (ii) redeploy the fixed assets of the Group; or (iii) discontinue the employment of the employees of the Group. The Offeror retains the flexibility at any time to consider options or opportunities which may present themselves, and which it regards to be in the interests of the Offeror and/or the Company. We further note that: (i) (ii) (iii) the P/NTA ratio implied by the Exit Offer Price of 0.9 times is within the range of P/NTA ratios of the Comparable Companies of between 0.6 times and 1.5 times but is lower than the mean and median P/NTA ratio of the Comparable Companies of 1.0 times and 1.0 times respectively; The P/NTA ratio implied by the Exit Offer Price of 0.9 times is within the range of P/NTA of the Delisting Offers of between 0.3 times and 2.9 times, equivalent to the median of 0.9 times, but lower than the mean P/NTA ratio of the Delisting Offers of 1.1 times, and The P/NTA ratio implied by the Exit Offer Price of 0.9 times is within the range of P/NTA of the Privatisation Offers of between 0.8 times and 3.6 times, but lower than the mean and median P/NTA ratio of the Privatisation Offers of 1.6 times and 1.1 times respectively. In arriving at our opinion, we have taken an overall approach and have taken into account other factors as set out in section 8 of this Letter which we consider to have a significant bearing on our assessment. 9. OUR RECOMMENDATION In arriving at our recommendation in respect of the Exit Offer, we have taken into account the factors which we consider to have a significant bearing on our assessment which includes our analyses set out in earlier sections of the following. In evaluating and assessing the financial terms of the Exit Offer, we have given due consideration to:- (a) assessed valuation of the Group; (b) market quotation and trading activity of the Shares ; (c) (d) (e) (f) (g) Share price performance relative to selected market indices; comparison with financial valuation ratios of selected listed companies considered to be comparable to the Company; comparison with successful privatisations of other companies listed on the SGX-ST; dividend track record of the Company; and other considerations in relation to the Exit Offer which have a significant bearing on our assessment. 48

49 APPENDIX I LETTER FROM IFA TO THE INDEPENDENT DIRECTORS Shareholders should note that in the event that the Delisting Resolution is passed and the Offeror is not entitled to exercise its right to compulsorily acquire all the Shares not tendered in acceptance of the Exit Offer pursuant to Section 215(1) of the Companies Act, the Company will be delisted and minority Shareholders who do not accept the Exit Offer will continue to hold Shares in the Company as an unlisted company. After carefully considering the information available to us as at the Latest Practicable Date, and based upon the monetary, industry, market, economic and other relevant conditions subsisting as at the Latest Practicable Date and based on our considerations above, we are of the opinion that the financial terms of the Exit Offer are fair and reasonable, and we advise the Independent Directors to advise Shareholders to vote in favor of the Delisting Resolution at the EGM and to accept the Exit Offer in respect of Shares owned by them. Our recommendation is addressed to the Independent Directors for their benefit in connection with and for the purposes of their consideration of the Exit Offer. Any recommendation made by the Independent Directors in respect of the Exit Offer shall remain their responsibility. Our recommendation may not be used and/or relied on by any other person for any purpose at any time and in any manner except with our prior written consent in each specific case. Whilst a copy of this letter may be reproduced in the Circular, neither the Company nor the Directors may reproduce, disseminate or quote this letter (or any part thereof) for any other purpose at any time and in any manner without the prior written consent of DMG in each specific case, other than for the purpose of voting on the Delisting Resolution at the EGM. This opinion is governed by, and construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter. Nothing herein shall confer or be deemed or is intended to confer any right of benefit to any third party and the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore shall not apply. Yours faithfully For and on behalf of DMG & Partners Securities Pte Ltd Brendan Goh Director Head of Corporate Finance Jessica Teo Vice President Corporate Finance 49

50 APPENDIX II ADDITIONAL INFORMATION ON THE OFFEROR 1. REGISTERED OFFICE The registered office of the Offeror is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. 2. DIRECTORS The name, address and designation of the director of the Offeror, as at the Latest Practicable Date, are set out below:- Director Address Designation Liang Qiusheng Room 504, Unit 1, No. 26, Beidou Road Director Luohu District, Shenzhen City, Guangdong Province, PRC 3. PRINCIPAL ACTIVITIES AND SHARE CAPITAL The principal activity of the Offeror is investment holding and it has an issued and paid-up share capital of US$50,000 comprising 50,000 ordinary share of US$1 each. 4. FINANCIAL INFORMATION OF THE OFFEROR 4.1 Financial Summary As the Offeror is incorporated in British Virgin Islands, there is no requirement to prepare audited financial statements and accordingly, no audited financial statements have been prepared. 4.2 Material Changes in Financial Position To the knowledge of the Offeror, save in connection with the acquisition of the Shares currently held by the Offeror and as a result of the making and financing of the Exit Offer, there has not been any known material change in the financial position of the Offeror subsequent to its date of incorporation. 4.3 Significant Accounting Policies As no audited financial statements of the Offeror have been prepared to date, there are no significant accounting policies to be noted. 5. DISCLOSURE OF INTERESTS 5.1 Shareholdings and Dealings of the Offeror and its Concert Parties in the Company (a) As at the Latest Practicable Date, save as disclosed below, none of the Offeror and its Concert Parties owns, controls or has agreed to acquire any (i) Shares, (ii) securities which carry voting rights in the Company, or (iii) instruments convertible into, rights to subscribe for or options in respect of (i) or (ii). Direct Interest Deemed Interest Number Number of Shares % (1) of Shares % (1) Fine Ally Group Limited (2) 159,428, Liang Qiusheng (3) 165, ,428, Leung Hon Fai (3) 159,428, Total 159,593,

51 APPENDIX II ADDITIONAL INFORMATION ON THE OFFEROR Notes: (1) Computed based on the issued share capital of the Company of 320,000,000 ordinary Shares with voting rights as at the date hereof. (2) The Offeror has obtained a margin loan facility of not less than S$27,300,000 from Sun Hung Kai Investment Services Limited for the purposes of satisfying the full acceptances of the Exit Offer by shareholders of the Company. As one of the collaterals for the grant of the aforesaid margin loan facility, the Offeror has pledged to Sun Hung Kai Investment Services Limited, all the Shares held by it in the Company. (3) Liang Qiusheng and Leung Hon Fai are deemed to be interested in 159,428,034 Shares held by Fine Ally Group Limited. 5.2 Irrevocable undertaking As at the Latest Practicable Date, save as disclosed in section 4 of this Circular, neither the Offeror nor any of its Concert Parties has received any irrevocable undertaking from any person to vote for or against the Delisting Resolution and/or to accept or reject the Exit Offer. 5.3 Indemnity and other arrangements As at the Latest Practicable Date, neither the Offeror nor any of its Concert Parties has entered into any arrangement of the kind referred to in Note 7 on Rule 12 of the Code, including indemnity or option arrangements, and any agreement or understanding, formal or informal, of whatever nature, relating to the Offer Shares which may be an inducement to deal or refrain from dealing in the Offer Shares. 5.4 Disclosures of Special Arrangements (a) As at the Latest Practicable Date, there is no agreement, arrangement or understanding, including an irrevocable undertaking, between (i) the Offeror or any of the Concert Parties and (ii) any of the present or current directors of the Company or the present or recent Shareholders that has any connection with or dependence upon the Exit Offer. (b) (c) (d) (e) As at the Latest Practicable Date, there is no agreement, arrangement or understanding, including an irrevocable undertaking, whereby any of the Offer Shares acquired pursuant to the Exit Offer will or may be transferred to any other person. However, the Offeror reserves the right to transfer any of the Offer Shares to any of its related corporations (within the meaning of Section 6 of the Companies Act). Save as disclosed in this Circular, to the best knowledge of the director of the Offeror, as at the Latest Practicable Date, there is no agreement, arrangement or understanding whereby any Offer Shares will or may be transferred to any other person. As at the Latest Practicable Date, there is no agreement or arrangement for any payment or other benefit to be made or given to any Director or to any director of any corporation (within the meaning of Section 6 of the Companies Act) as compensation for loss of office or otherwise in connection with the Exit Offer. As at the Latest Practicable Date, there is no agreement or arrangement between the Offeror or any of the Concert Parties and any of the Directors or any other person in connection with or conditional upon the outcome of the Exit Offer or is otherwise connected to the Exit Offer. The Memorandum and Articles of Association of the Company do not contain any restriction on the right to transfer the Shares, which has the effect of requiring holders of such Shares, before transferring them, to offer them for purchase to members of the Company or to any person. 51

52 APPENDIX II ADDITIONAL INFORMATION ON THE OFFEROR 6. DIRECTOR S RESPONSIBILITY STATEMENT 6.1 The director of the Offeror (including those who may have delegated detailed supervision of this Circular) has taken all reasonable care to ensure that the facts stated and opinions expressed in this Circular in so far as they relate solely to the Offeror and the Exit Offer are fair and accurate and that no material facts relating solely to the Offeror and the Exit Offer have been omitted from this Circular, the omission of which would make any statement in this Circular relating to and the Exit Offer misleading in any material respect. The director of the Offeror accepts responsibility accordingly. 6.2 Where any information relating to the Offeror and the Exit Offer in this Circular (other than those set out in Appendix I of this Circular for which the IFA has taken responsibility) has been extracted from published or publicly available sources, the sole responsibility of the director of the Offeror has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in this Circular. 52

53 APPENDIX III ADDITIONAL INFORMATION ON THE COMPANY AND THE GROUP 1. REGISTERED OFFICE The registered office of the Company is 300 Beach Road, #33-04/06, The Concourse, Singapore DIRECTORS The names, addresses and designations of the Directors, as at the Latest Practicable Date, are as follows: Director Address Designation Liang Qiusheng Room 504, Unit 1, No. 26, Beidou Road Executive Chairman Luohu District, Shenzhen City, Guangdong Province, PRC Leung Hon Fai 9A, Block 5, Baijing Yuan, Chief Executive Officer Bao Shi Da Garden Luohu District, and Executive Director Shenzhen City, Guangdong Province, PRC Leung Kwok Chun 1315, Leighton Centre, 77 Leighton Road, Non-Executive Director Causeway Bay, Hong Kong Wee Liang Hiam 25 Hillview Avenue Independent Director #05-06 Singapore Tay Yew Khem Blk 132 Lorong Ah Soo, Independent Director # Singapore PRINCIPAL ACTIVITIES OF THE COMPANY AND THE GROUP The principal activity of the Company is that of an investment holding company. The principal activities of the Group are as follows: (a) (b) (c) Production of mooncakes, cookies, assorted confectionery and bakery products; Manufacture and sale of bread, cakes, biscuits and pastries; and Processing and trading of agricultural products and by-products. 4. SHARE CAPITAL 4.1 Issued and Paid-up Share Capital There is only one class of shares in the capital of the Company, which is ordinary Shares, each with equal rights in respect of capital, dividends and voting. As at the Latest Practicable Date, the Company has an issued and paid-up share capital of S$33,100,001 comprising 320,000,000 ordinary Shares. The Shares are quoted and listed on the Official List of the SGX-ST. 53

54 APPENDIX III ADDITIONAL INFORMATION ON THE COMPANY AND THE GROUP 4.2 Rights attached to the Shares The rights of Shareholders in respect of capital, dividends and voting are set out in the Articles of Association. The relevant provisions in the Articles of Associations relating to the rights of Shareholders in respect of capital, dividends and voting are set out in Appendix IV of this Circular. 4.3 Issued Shares since 31 December 2009 The Company has not issued any new Shares since 31 December 2009, being the end of the last financial year and up to the Latest Practicable Date. 4.4 Outstanding Options As at the Latest Practicable Date, the Company has no outstanding instruments convertible into, rights to subscribe for, and options in respect of, securities being offered for or which carry voting rights affecting Shares. 5. FINANCIAL INFORMATION OF THE GROUP 5.1 Profit and Loss Statements A summary of the consolidated profit and loss statements of the Group for the past 3 financial years for FY2007, FY2008, FY2009 and the unaudited consolidated profit and loss statements of the Group for the nine months ended 30 September 2010 ( 9M2010 ) is set out below. Audited Audited Audited Unaudited FY2007 FY2008 FY2009 9M2010 Revenue (RMB 000) 199, , , ,375 Net profit before tax and minority interests (RMB 000) 55,696 38,625 30,582 18,444 Net profit after tax and minority interests (RMB 000) 46,866 31,911 21,705 13,613 Earnings per Share (in RMB cents) Net Dividend per Share (in RMB cents) The summary financial information should be read together with the audited consolidated financial statements of the Group for the relevant years and announced unaudited interim results for the relevant financial period and the related notes thereto. 54

55 APPENDIX III ADDITIONAL INFORMATION ON THE COMPANY AND THE GROUP 5.2 Statement of Assets and Liabilities A summary of the audited consolidated balance sheet of the Group as at 31 December 2009 and unaudited consolidated balance sheet of the Group as at 30 September 2010 is set out below. Audited Unaudited 31 December 30 September (RMB 000) (RMB 000) Current assets 335, ,978 Non-current assets 94,910 79,842 Total assets 430, ,820 Current liabilities 134, ,223 Non-current liabilities 6,260 22,660 Total liabilities 141, ,893 NET ASSETS/ LIABILITIES 289, ,927 Equity attributable to shareholders of the Company 288, ,866 Minority shareholders 1,215 1,061 Based on the unaudited consolidated balance sheet as at 30 September 2010, the NTA was approximately RMB302.9 million or RMB94.65 cents per Share. As at the Latest Practicable Date, there has been, within the knowledge of the Directors, no material change in the unaudited consolidated NTA per Share since 30 September The summary financial information should be read together with the audited consolidated financial statements of the Group for FY2009 and announced unaudited interim results for the relevant financial period and the related notes thereto. 5.3 Material Changes in Financial Position Save as disclosed in this Circular, the audited consolidated financial statements of the Group for FY2009, the announcement by the Company on 14 November 2010 of the Company s unaudited financial results for 9M2010 as well as any other information on the Group which is publicly available (including without limitation the announcements released by the Company on the SGXNET), there has been no known material changes to the financial position of the Company since 31 December 2009, being the date of the last published audited financial statements of the Company. 5.4 Significant Accounting Policies Save as disclosed in the notes to the audited consolidated financial statements, there were no significant accounting policies nor any point from the notes of the financial statements of the Group which are of any major relevance for the interpretation of the last published audited financial statements of the Group. 55

56 APPENDIX III ADDITIONAL INFORMATION ON THE COMPANY AND THE GROUP 5.5 Changes in Accounting Policies Save as disclosed in this Circular, the audited consolidated financial statements of the Group for FY2009, the announcement by the Company on 14 November 2010 of the Company s unaudited financial results for 9M2010 as well as any other information on the Group which is publicly available (including without limitation the announcements released by the Company on the SGXNET), there are no changes in the accounting policies of the Company and its consolidated subsidiaries which will cause the figures disclosed in this Circular to be not comparable to a material extent. 6. DISCLOSURE OF INTERESTS 6.1 Shareholdings and dealings (a) Interest of the Company in shares of the Offeror The Company does not have any direct or deemed interest in the (i) shares of the Offeror or (ii) instruments convertible into, rights to subscribe for or options in respect of shares of the Offeror (collectively, Offeror Convertible Securities ) as at the Latest Practicable Date. (b) Dealings in shares of the Offeror by the Company The Company has not dealt for value in the (i) shares of the Offeror or (ii) Offeror Convertible Securities during the period commencing six (6) months prior to the Announcement Date and ending on the Latest Practicable Date. (c) Interests of the Directors in shares of the Offeror Save as disclosed in section 5 of this Circular, none of the Directors has any direct or indirect interest in the (i) shares of the Offeror or (ii) Offeror Convertible Securities as at the Latest Practicable Date. (d) Dealings in shares of the Offeror by the Directors None of the Directors has dealt for value in the (i) shares of the Offeror or (ii) Offeror Convertible Securities during the period commencing six (6) months prior to the Announcement Date and ending on the Latest Practicable Date. (e) Interest of the Directors in Shares Save as disclosed in section 16.1 of this Circular, none of the Directors has any interest, whether direct or indirect, in the (i) Shares or (ii) instruments convertible into, rights to subscribe for or options in respect of Shares (collectively, Convertible Securities ) as of the Latest Practicable Date. (f) Dealing in Shares by Directors None of the Directors has dealt for value in the (i) Shares or (ii) Convertible Securities during the period commencing six (6) months prior to the Announcement Date and ending on the Latest Practicable Date. (g) Shares owned or controlled by the IFA Neither the IFA nor any funds whose investments are managed by the IFA on a discretionary basis owns, controls or has agreed to acquire any (i) Shares or (ii) Convertible Securities as at the Latest Practicable Date. 56

57 APPENDIX III ADDITIONAL INFORMATION ON THE COMPANY AND THE GROUP (h) Dealings in Shares by the IFA Neither the IFA nor any funds whose investments are managed by the IFA on a discretionary basis has dealt for value in the (i) Shares or (ii) Convertible Securities during the period commencing six (6) months prior to the Announcement Date and ending on the Latest Practicable Date. 7. GENERAL DISCLOSURES 7.1 Directors Service Contracts On or about July 2010, the service contracts for Liang Qiusheng and Leung Hon Fai were renewed without any amendments in terms. Leung Kwok Chun s service contract was not renewed and he has been re-designated as non-executive director of the Company. Save as disclosed above, there is no service contract between any Directors with the Company or any of its subsidiaries which has more than twelve (12) months to run and which the employing company cannot, within the next twelve (12) months, terminate without payment of compensation. There is also no such service contract entered into or amended between any Directors with the Company or any of its subsidiaries during the period commencing six (6) months prior to the beginning of the Exit Offer Period and ending on the Latest Practicable Date. 7.2 No Payment or Benefit to Directors No payment or other benefit is proposed to be made or given to any Director or to any director of any other corporation which is, by virtue of Section 6 of the Companies Act, deemed to be related to the Company, as compensation for loss of office or otherwise in connection with the Exit Offer. 7.3 No Agreement Conditional upon Outcome of Offers There are no agreements or arrangements made between any Director and any other person in connection with or conditional upon the outcome of the Exit Offer. 7.4 Material Contracts entered into by Offeror Liang Qiusheng is a director of the Company and a director and controlling shareholder of the Offeror. Save for the Undertaking given by Liang Qiusheng (as mentioned in section 4 of this Circular), there are no material contracts entered into by the Offeror in which any Director has a material personal interest, whether direct or indirect. 8. MATERIAL CONTRACTS WITH INTERESTED PERSONS Save for the transactions conducted pursuant to the mandate under Chapter 9 of the Listing Manual from its Shareholders for recurrent transactions of a revenue or trading nature or those necessary for its day to day operations, neither the Company nor any of its subsidiaries has entered into material contracts (other than those entered into in the ordinary course of business) with persons who are Interested Persons (as defined in the Note on Rule of the Code) during the period beginning three years before the Announcement Date and up to the Latest Practicable Date. Interested Person is defined in Rule of the Code as: (a) (b) a director, chief executive officer or substantial shareholder of the Company; the immediate family of a director, the chief executive officer or a substantial shareholder (being an individual) of the Company; 57

58 APPENDIX III ADDITIONAL INFORMATION ON THE COMPANY AND THE GROUP (c) (d) (e) (f) the trustees, acting in their capacity as such trustees, of any trust of which a director, the chief executive officer or a substantial shareholder (being an individual) and his immediate family is a beneficiary; any company in which a director, the chief executive officer or a substantial shareholder (being an individual) and his immediate family together (directly or indirectly) have an interest of 30% or more; any company that is the subsidiary, holding company or fellow subsidiary of the substantial shareholder (being a company); or any company in which a substantial shareholder (being a company) and any of the companies listed in (e) above together (directly or indirectly) have an interest of 30% or more. 9. MATERIAL LITIGATION As at the Latest Practicable Date, neither the Company nor any of its subsidiaries are engaged in any material litigation as plaintiff or defendant which might materially and adversely affect the financial position of the Group as a whole, and the Directors are not aware of any proceedings pending or threatened against the Company or any of its subsidiaries which might materially and adversely affect the financial position of the Group taken as a whole or of any facts likely to give rise to any such proceedings. 10. MARKET QUOTATIONS 10.1 Closing Prices The following table sets out the highest, lowest and last closing prices of the Shares on the SGX- ST on a monthly basis from July 2010 (being six (6) calendar months preceding the Announcement Date) to the Latest Practicable Date: Closing price Highest Lowest as at the last closing price closing price Market Day Month/Period (S$) (S$) (S$) May June July August September October November December January Source: Bloomberg L.P. 58

59 APPENDIX III ADDITIONAL INFORMATION ON THE COMPANY AND THE GROUP 10.2 Highest and Lowest Prices The highest and lowest closing prices of the Shares on the SGX-ST during the period commencing six (6) calendar months prior to the Announcement Date and ending on the Latest Practicable Date are as follows: Prices (S$) Date(s) Highest Closing Price , 17 and 30 December 2010 Lowest Closing Price May 2010 Source: Bloomberg L.P. The closing price of the Shares on the SGX-ST on (a) 12 November 2010, being the last trading day prior to the Announcement Date was S$0.150 per Share; and (b) 5 January 2011, being the last trading day prior to the Latest Practicable Date was S$0.165 per Share. 59

60 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY The relevant provisions in the Articles of Associations relating to the rights of Shareholders in respect of capital, dividends and voting are set out in italics below:- ISSUE OF SHARES 3. (A) Subject to the Act and to these Articles, no shares may be issued by the Directors without the prior approval of the Company in General Meeting pursuant to Section 161 of the Act, but subject thereto and the terms of such approval, and to Article 5, and to any special rights attached to any shares for the time being issued, the Directors may allot and issue shares or grant options over or otherwise dispose of the same to such persons on such terms and conditions and for such consideration and at such time and whether or not subject to the payment of any part of the amount thereof in cash or otherwise as the Directors may think fit, and any shares may, subject to compliance with Sections 70 and 75 of the Act, be issued with such preferential, deferred, qualified or special rights, privileges, conditions or restrictions, whether as regards Dividend, return of capital, participation in surplus assets and profits, voting, conversion or otherwise, as the Directors may think fit, and preference shares may be issued which are or at the option of the Company are liable to be redeemed, the terms and manner of redemption being determined by the Directors in accordance with the Act, Provided Always that no options shall be granted over unissued shares except in accordance with the Act and the Designated Stock Exchange s listing rules. (B) The Directors may, at any time after the allotment of any share but before any person has been entered in the Register of Members as the holder, recognize a renunciation thereof by the allottee in favour of some other person and may accord to any allottee of a share a right to effect such renunciation upon and subject to such terms and conditions as the Directors may think fit to impose. (C) Except so far as otherwise provided by the conditions of issue or by these Articles, all new shares shall be issued subject to the provisions of the Statutes and of these Articles with reference to allotment, payment of calls, lien, transfer, transmission, forfeiture or otherwise. 4. The Company shall not exercise any right in respect of treasury shares other than as provided by the Act. Subject thereto, the Company may hold or deal with its treasury shares in the manner authorised by, or prescribed pursuant to, the Act. 5. (A) Subject to any direction to the contrary that may be given by the Company in General Meeting or except as permitted by the rules of the Designated Stock Exchange, all new shares shall before issue be offered to such persons who as at the date (as determined by the Directors) of the offer are entitled to receive notices from the Company of General Meetings in proportion, as far as the circumstances admit, to the number of the existing shares to which they are entitled. The offer shall be made by notice specifying the number of shares offered, and limiting a time within which the offer, if not accepted, will be deemed to be declined, and, after the expiration of that time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the Directors may dispose of those shares in such manner as they think most 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 5(A). (B) Notwithstanding Article 5(A) above, the Company may by Ordinary Resolution in General Meeting give to the Directors a general authority, either unconditionally or subject to such conditions as may be specified in the Ordinary Resolution, to: (a) (i) issue shares in the capital of the Company ( shares ) whether by way of rights, bonus or otherwise; and/or 60

61 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY (ii) make or grant offers, agreements or options (collectively, Instruments ) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares; and (b) (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: (1) the aggregate number of shares to be issued pursuant to the Ordinary Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to the Ordinary Resolution) shall be subject to such limits and manner of calculation as may be prescribed by the Designated Stock Exchange; (2) in exercising the authority conferred by the Ordinary Resolution, the Company shall comply with the provisions of the listing rules of the Designated Stock Exchange for the time being in force (unless such compliance is waived by the Designated Stock Exchange) and these Articles; and (3) (unless revoked or varied by the Company in General Meeting) the authority conferred by the Ordinary Resolution shall not continue in force beyond the conclusion of the Annual General Meeting of the Company next following the passing of the Ordinary Resolution, or the date by which such Annual General Meeting of the Company is required by law to be held, or the expiration of such other period as may be prescribed by the Act (whichever is the earliest). (C) The Company may, notwithstanding Articles 5(A) and 5(B) above, authorize the Directors not to offer 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 to sell the entitlements to the new shares on behalf of such Members on such terms and conditions as the Company may direct. 6. The Company may pay commissions or brokerage on any issue of shares at such rate or amount and in such manner as the Directors may deem fit. Such commissions or brokerage may be satisfied by the payment of cash or the allotment of fully or partly paid shares or partly in one way and partly in the other. 7. Where any shares are issued for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a lengthened period, the Company may pay interest on so much of that share capital as is for the time being paid up for the period and charge the same to capital as part of the cost of the construction of the works or buildings or the provision of the plant, subject to the conditions and restrictions mentioned in the Act. 8. (A) Preference shares may be issued subject to such limitation thereof as may be prescribed by the Designated Stock Exchange. 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, and preference shareholders shall also have the right to vote at any General Meeting convened for the purpose of reducing capital or winding-up or sanctioning a sale of the undertaking of the Company or where the proposal to be submitted to the General Meeting directly affects their rights and privileges or when the Dividend on the preference shares is more than six months in arrears. (B) The Company has power to issue further preference capital ranking equally with, or in priority to, preference shares already issued. 61

62 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY VARIATION OF RIGHTS 9. (A) Whenever the share capital of the Company is divided into different classes of shares, the variation or abrogation of the special rights attached to any class may, subject to the provisions of the Act, be made either with the consent in writing of the holders of three-quarters of the total number of the issued shares of the class or with the sanction of a Special Resolution passed at a separate General Meeting of the holders of the shares of the class (but not otherwise) and may be so made either whilst the Company is a going concern or during or in contemplation of a winding-up. To every such separate General Meeting all the provisions of these Articles relating to General Meetings of the Company and to the proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall be two or more persons holding at least one-third of the total number of the issued shares of the class present in person or by proxy or attorney and that any holder of shares of the class present in person or by proxy or attorney may demand a poll and that every such holder shall on a poll have one vote for every share of the class held by him where the class is a class of equity shares within the meaning of Section 64(1) of the Act or at least one vote for every share of the class where the class is a class of preference shares within the meaning of Section 180(2) of the Act, Provided Always that where the necessary majority for such a Special Resolution is not obtained at such General Meeting, the consent in writing, if obtained from the holders of three-quarters of the total number of the issued shares of the class concerned within two months of such General Meeting, shall be as valid and effectual as a Special Resolution carried at such General Meeting. (B) The provisions in Article 9(A) shall mutatis mutandis apply to any repayment of preference capital (other than redeemable preference capital) and any variation or abrogation of the rights attached to preference shares or any class thereof. (C) The special rights attached to any class of shares having preferential rights shall not unless otherwise expressly provided by the terms of issue thereof be deemed to be varied by the creation or issue of further shares ranking as regards participation in the profits or assets of the Company in some or all respects pari passu therewith but in no respect in priority thereto. 10. The Company may by Ordinary Resolution:- ALTERATION OF SHARE CAPITAL (a) (b) (c) (d) consolidate and divide all or any of its share capital; sub-divide its shares, or any of them, provided always that in such subdivision the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be same as it was in the case of the share from which the reduced share is derived; convert or exchange any class of shares into or for any other class of shares; and/or cancel the number of shares which at the date of the passing of the resolution in that behalf have not been taken or agreed to be taken by any person or which have been forfeited and diminish the amount of its share capital by the number of the shares so cancelled. 11. (A) The Company may reduce its share capital or any other undistributable reserve in any manner permitted, and with, and subject to, any incident authorized, and consent or confirmation required, by law. (B) The Company may purchase or otherwise acquire its issued shares subject to and in accordance with the provisions of the Statutes and any applicable rules of the Designated Stock Exchange hereafter, 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 shall, unless held in treasury in accordance with the Act, be 62

63 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY deemed to be cancelled immediately on purchase or acquisition by the Company. On the cancellation of any share as aforesaid, the rights and privileges attached to that share shall expire. In any other instance, the Company may 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 Relevant Laws. Without prejudice to the generality of the foregoing, upon cancellation of any share purchased or otherwise acquired by the Company pursuant to these Articles and the Statutes, the number of issued shares of the Company shall be diminished by the number of shares so cancelled, and, where any such cancelled share was purchased or acquired out of the capital of the Company, the amount of share capital of the Company shall be reduced accordingly. SHARE CERTIFICATES 12. (A) Every certificate shall be issued under the Seal and shall bear the facsimile signatures or the autographic signatures at least of any two Directors or one of the Director and the Secretary or such other person as may be authorised by the Directors, and shall specify the number and class of shares to which it relates and the amount paid up and the amount (if any) unpaid thereon. The facsimile signatures may be reproduced by mechanical or other means provided the method or system of reproducing signatures has first been approved by the Directors of the Company. No certificate shall be issued representing shares of more than one class. (B) The provisions in this Article and in Articles 13 to 16 (so far as they are applicable) shall not apply to transfer of book-entry securities. 13. (A) The Company shall not be bound to register more than three persons as joint holders of a share except in the case of executors, trustees or administrators of the estate of a deceased Member. (B) In the case of a share held jointly by several persons, the Company shall not be bound to issue more than one certificate therefor and delivery of a certificate to any one of the joint holders shall be sufficient delivery to all. 14. Every person whose name is entered as a Member in the Register of Members shall be entitled, within ten market days (or such period as the Directors may determine having regard to any limitation thereof as may be prescribed by the Designated Stock Exchange from time to time) after the closing date of any application for shares or (as the case may be) the date of lodgement of a registrable transfer, to one certificate for all his shares of any one class or to several certificates in reasonable denominations each for a part of the shares so allotted or transferred. 15. (A) Where a Member transfers part only of the shares comprised in a certificate or where a Member 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 (in the case of transfer) and the whole of such shares (in the case of sub-division) shall be issued in lieu thereof and the Member shall pay (in the case of sub-division) a maximum fee of S$2.00 (or such other fee as the Directors may determine having regard to any limitation thereof as may be prescribed by the Designated Stock Exchange from time to time) for each new certificate. Where some only of the shares comprised in a share certificate are transferred, the new certificate for the balance of such shares shall be issued in lieu thereof without charge. (B) Any two or more certificates representing shares of any one class held by any Member may at his request be cancelled and a single new certificate for such shares issued in lieu thereof without charge. 16. Subject to the provisions of the Statutes, if any share certificate shall be defaced, worn out, destroyed, lost or stolen, it may be renewed on such evidence being produced and a written indemnity (if required) being given by the shareholder, transferee, person entitled, purchaser, member firm or member 63

64 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY company of the Designated Stock Exchange or on behalf of its or their client or clients as the Directors shall require, and (in case of defacement or wearing out) on delivery up of the old certificate, and in any case on payment of such sum not exceeding S$2.00 (or such other fee as the Directors may determine having regard to any limitation thereof as may be prescribed by the Designated Stock Exchange from time to time) as the Directors may from time to time require. In the case of destruction, loss or theft, a shareholder or person entitled to, and to whom such renewed certificate is given shall also bear the loss and pay to the Company all expenses incidental to the investigations by the Company of the evidence of such destruction or loss. CALLS ON SHARES 17. The Directors may from time to time make calls upon the Members in respect of any moneys unpaid on their shares but subject always to the terms of issue of such shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorizing the call was passed and may be made payable by instalments. 18. Each Member shall (subject to receiving at least fourteen days notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified the amount called on his shares. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. A call may be revoked or postponed as the Directors may determine. 19. If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate (not exceeding ten per cent. per annum) as the Directors may determine but the Directors shall be at liberty in any case or cases to waive payment of such interest in whole or in part. 20. Any sum which by the terms of issue of a share becomes payable upon allotment or at any fixed date shall for all the purposes of these Articles be deemed to be a call duly made and payable on the date on which by the terms of issue the same becomes payable. In the case of non-payment, all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified. 21. The Directors may on the issue of shares differentiate between the holders as to the amount of calls to be paid and the times of payment. 22. The Directors may if they think fit receive from any Member willing to advance the same all or any part of the moneys uncalled and unpaid upon the shares held by him and such payment in advance of calls shall extinguish pro tanto the liability upon the shares in respect of which it is made and upon the moneys so received (until and to the extent that the same would but for such advance become payable) the Company may pay interest at such rate (not exceeding eight per cent. per annum) as the Member paying such sum and the Directors may agree. Capital paid on shares in advance of calls shall not, whilst bearing interest, confer a right to participate in profits. FORFEITURE AND LIEN 23. If a Member fails to pay in full any call or instalment of a call on the due date for payment thereof, the Directors may at any time thereafter serve a notice on him requiring payment of so much of the call or instalment as is unpaid together with any interest which may have accrued thereon and any expenses incurred by the Company by reason of such non-payment. 24. The notice shall name a further day (not being less than fourteen days from the date of service of the notice) on or before which and the place where the payment required by the notice is to be made, and shall state that in the event of non-payment in accordance therewith the shares on which the call has been made will be liable to be made forfeit. 64

65 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY 25. If the requirements of any such notice as aforesaid are not complied with, any share in respect of which such notice has been given may at any time thereafter, before payment of all calls and interest and expenses due in respect thereof has been made, be made forfeit by a resolution of the Directors to that effect. Such forfeiture shall include all Dividends declared in respect of the forfeit share and not actually paid before forfeiture. The Directors may accept a surrender of any share liable to be made forfeit hereunder. 26. A share so made forfeit or surrendered shall become the property of the Company and may be sold, re-allotted or otherwise disposed of either to the person who was before such forfeiture or surrender the holder thereof or entitled thereto or to any other person upon such terms and in such manner as the Directors shall think fit, and at any time before a sale, re-allotment or disposal, the forfeiture or surrender may be cancelled on such terms as the Directors shall think fit. The Directors may, if necessary, authorize some person to transfer a share so made forfeit or surrendered to any such other person as aforesaid. 27. A Member whose shares have been made forfeit or surrendered shall cease to be a Member in respect of such shares but shall notwithstanding the forfeiture or surrender remain liable to pay to the Company all moneys which at the date of forfeiture or surrender were presently payable by him to the Company in respect of such shares with interest thereon at eight per cent. per annum (or such lower rate as the Directors may determine) from the date of forfeiture or surrender until payment and the Directors may at their absolute discretion enforce payment without any allowance for the value of such shares at that time of forfeiture or surrender or waive payment in whole or in part. 28. The Company shall have a first and paramount lien on every share (not being a fully paid share) and Dividends from time to time declared in respect of such shares. Such lien shall be restricted to unpaid calls and instalments upon the specific shares in respect of which such moneys are due and unpaid, and to such amounts as the Company may be called upon by law to pay in respect of the shares of the Member or deceased Member. The Directors may waive any lien which has arisen and may resolve that any share shall for some limited period be exempt wholly or partially from the provisions of this Article The Company may sell in such manner as the Directors think fit any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of fourteen days after a notice in writing stating and demanding payment of the sum presently payable and giving notice of intention to sell in default shall have been given to the holder for the time being of the share or the person entitled thereto by reason of his death or bankruptcy. 30. The net proceeds of such sale after payment of the costs of such sale shall be applied in or towards payment or satisfaction of the debts or liabilities and any residue shall be paid to the person entitled to the shares at the time of the sale or to his executors, administrators or assigns, as he may direct. For the purpose of giving effect to any such sale, the Directors may authorize some person to transfer the shares sold to the purchaser. 31. A statutory declaration in writing that the declarant is a Director or the Secretary of the Company and that a share has been duly made forfeit or surrendered or sold to satisfy a lien of the Company on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. Such declaration and the receipt by the Company of the consideration (if any) given for the share on the sale, re-allotment or disposal thereof together with the share certificate delivered to a purchaser (or where the purchaser is a Depositor, the Depository Register) or allottee thereof shall (subject to the execution of a transfer if the same be required) constitute a good title to the share and the person to whom the share is sold, re-allotted or disposed of shall be registered as the holder of the share, or where such person is a Depositor, the Company shall procure that his name be entered in the Depository Register in respect of the share so sold, re-allotted or disposed of. Such person shall not be bound to see to the application of the purchase money (if any) nor shall his title to the share be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, surrender, sale, re-allotment or disposal of the share. 65

66 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY TRANSFER OF SHARES 32. All transfers of shares shall be effected by written instruments of transfer in the form for the time being approved by the Directors and the Designated Stock Exchange. The instrument of transfer of any share shall be signed by or on behalf of both the transferor and the transferee and be witnessed, provided always that an instrument of transfer in respect of which the transferee is the CDP shall be effective although not signed or witnessed by or on behalf of the CDP. The transferor shall be deemed to remain the holder of the shares concerned until the name of the transferee is entered in the Register of Members in respect thereof. 33. The Registers of Members and of Transfers may be closed at such times and for such periods as the Directors may from time to time determine, Provided Always that such Registers shall not be closed for more than thirty days in any year, and that the Company shall give prior notice of each such closure, as may be required, to the Designated Stock Exchange, stating the period and purpose or purposes for which such closure is made. 34. (A) 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 Designated Stock 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, Provided Always that in the event of the Directors refusing to register a transfer of shares, the Company shall within ten market days (or such period as the Directors may determine having regard to any limitation thereof as may be prescribed by the Designated Stock Exchange from time to time) after the date on which the application for a transfer of shares was made, serve a notice in writing to the applicant stating the facts which are considered to justify the refusal as required by the Statutes. (B) (a) (b) (c) (d) The Directors may decline to register any instrument of transfer unless:- such fee not exceeding S$2.00 (or such other fee as the Directors may determine having regard to any limitation thereof as may be prescribed by the Designated Stock Exchange from time to time) as the Directors may from time to time require is paid to the Company in respect thereof; the amount of proper duty (if any) with which each instrument of transfer is chargeable under any law for the time being in force relating to stamps is paid; the instrument of transfer is deposited at the Office or at such other place (if any) as the Directors may appoint accompanied by a certificate of payment of stamp duty (if stamp duty is payable on such instrument of transfer in accordance with any law for the time being in force relating to stamp duty,), the certificates of the shares to which it relates, and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer and, if the instrument of transfer is executed by some other person on his behalf, the authority of the person so to do; and the instrument of transfer is in respect of only one class of shares. 35. All instruments of transfer which are registered may be retained by the Company. 36. The Company shall be entitled to destroy all instruments of transfer which have been registered at any time after the expiration of six years from the date of registration thereof and all Dividend mandates and notifications of change of address at any time after the expiration of six years from the date of recording thereof and all share certificates which have been cancelled at any time after the expiration of six years from the date of the cancellation thereof and it shall conclusively be presumed in favour of the Company that every entry in the Register of Members purporting to have been made on the basis of an instrument of transfer or other document so destroyed was duly and properly made and every instrument 66

67 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY of transfer so destroyed was a valid and effective instrument duly and properly registered and every share certificate so destroyed was a valid and effective certificate duly and properly cancelled and every other document hereinbefore mentioned so destroyed was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the Company, Provided Always that:- (a) (b) (c) the provisions aforesaid shall apply only to the destruction of a document in good faith and without notice of any claim (regardless of the parties thereto) to which the document might be relevant; nothing herein contained shall be construed as imposing upon the Company any liability in respect of the destruction of any such document earlier than as aforesaid or in any other circumstances which would not attach to the Company in the absence of this Article; and references herein to the destruction of any document include references to the disposal thereof in any manner. TRANSMISSION OF SHARES 37. (A) In case of the death of a Member whose name is registered in the Register of Members, the survivors or survivor, where the deceased was a joint holder, and the executors or administrators of the deceased, where he was a sole or only surviving holder, shall be the only person(s) recognised by the Company as having any title to his interest in the shares. (B) In the case of the death of a Member who is a Depositor, the survivors or survivor, where the deceased is a joint holder, and the executors or administrators of the deceased, where he was a sole or only surviving holder and where such executors or administrators are entered into the Depository Register in respect of any shares to the deceased Member, shall be the only person(s) recognised by the Company as having any title to his interest in the shares. (C) Nothing herein contained shall release the estate of a deceased holder (whether sole or joint) from any liability in respect of any share held by him. 38. Any person becoming entitled to a share in consequence of the death or bankruptcy of a Member may (subject as hereinafter provided) upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share, elect either to be registered himself as holder of the share or to have another person nominated by him registered as the transferee thereof. If the person so becoming entitled elects to be registered himself, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects. If he elects to have another person registered he shall testify his election by executing to that person a transfer of the share. All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or bankruptcy of the Member had not occurred and the notice or transfer were a transfer executed by such Member. 39. Save as otherwise provided by or in accordance with these Articles, a person becoming entitled to a share in consequence of the death or bankruptcy of a Member (upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share) shall be entitled to the same Dividends and other advantages as those to which he would be entitled if he were the registered holder of the share except that he shall not be entitled in respect thereof (except with the authority of the Directors) to exercise any right conferred by membership in relation to General Meetings of the Company until he shall have been registered as a Member in respect of the share. 40. There shall be paid to the Company in respect of the registration of any probate or letters of administration or certificate of death or stop notice or power of attorney or other document relating to or affecting the title to any shares or otherwise for making any entry in the Register of Members affecting the title to any shares such fee not exceeding S$2.00 (or such other fee as the Directors may determine having regard to any limitation thereof as may be prescribed by the Designated Stock Exchange from time to time) as the Directors may from time to time require. 67

68 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY CENTRAL DEPOSITORY SYSTEM 41. A reference to a Member shall be a reference to a registered holder of shares in the Company, or where such registered holder is CDP, the Depositors on behalf of whom CDP holds the shares, Provided that:- (a) (b) (c) (d) a Depositor shall only be entitled to attend any General Meeting and to speak and vote thereat if his name appears on the Depository Register maintained by CDP forty-eight (48) hours before the General Meeting as a Depositor on whose behalf CDP holds shares in the Company, the Company being entitled to deem each such Depositor, or each proxy of a Depositor who is to represent the entire balance standing to the Securities Account of the Depositor, to represent such number of shares as is actually credited to the Securities Account of the Depositor as at such time, according to the records of CDP as supplied by CDP to the Company, and where a Depositor has apportioned the balance standing to his Securities Account between two proxies, to apportion the said number of shares between the two proxies in the same proportion as previously 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 proportion of Depositor s shareholding specified in the instrument of proxy, or where the balance standing to a Depositor s Securities Account has been apportioned between two proxies the aggregate of the proportions of the Depositor s shareholding they are specified to represent, and the true balance standing to the Securities Account of a Depositor as at the time of the General Meeting, if the instrument is dealt with in such manner as is provided above; the payment by the Company to CDP of any Dividend payable to a Depositor shall to the extent of the payment discharge the Company from any further liability in respect of the payment; the delivery by the Company to CDP 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; and the provisions in these Articles relating to the transfers, transmissions or certification of shares shall not apply to the transfer of book-entry securities (as defined in the Statutes). EXCLUSION OF EQUITIES 42. Except as required by the Statutes or law, no person shall be recognized by the Company as holding any share upon any trust, and the Company shall not be bound by or compelled in any way to recognize (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 the Statutes or law otherwise provided) any other right in respect of any share, except an absolute right to the entirety thereof in the registered holder and nothing in these Articles contained relating to CDP or to Depositors or in any depository agreement made by the Company with any common depository for shares shall in any circumstances be deemed to limit, restrict or qualify the above. STOCK 43. The Company may from time to time by Ordinary Resolution convert any paid-up shares into stock and may from time to time by like resolution reconvert any stock into paid-up shares of any denomination. 44. The holders of stock may transfer the same or any part thereof in the same manner and subject to the same Articles as and subject to which the shares from which the stock arose might previous to conversion have been transferred (or as near thereto as circumstances admit) but no stock shall be transferable except in such units as the Directors may from time to time determine. 68

69 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY 45. The holders of stock shall, according to the amount of stock held by them, have the same rights, privileges and advantages as regards Dividend, return of capital, voting and other matters, as if they held the shares from which the stock arose; but no such privilege or advantage (except as regards participation in the profits or assets of the Company) shall be conferred by an amount of stock which would not, if existing in shares, have conferred such privilege or advantage, and no such conversion shall affect or prejudice any preference or other special privileges attached to the shares so converted. GENERAL MEETINGS 46. An Annual General Meeting shall be held once in every year, at such time (within a period of not more than fifteen months after the holding of the last preceding Annual General Meeting) and place as may be determined by the Directors. All other General Meetings shall be called Extraordinary General Meetings. The interval between the close of a financial year of the Company and the date of the Company s Annual General Meeting shall not exceed such period as may be prescribed by the Designated Stock Exchange and the provisions of the Act from time to time. 47. The Directors may whenever they think fit, and shall on requisition in accordance with the Statutes, proceed with proper expedition to convene an Extraordinary General Meeting. NOTICE OF GENERAL MEETINGS 48. Any Annual General Meeting and any Extraordinary General Meeting at which it is proposed to pass a Special Resolution or (save as provided by the Statutes) a resolution of which special notice has been given to the Company, shall be called by twenty-one days notice in writing at the least and an Annual General Meeting or any other Extraordinary General Meeting, by fourteen days notice in writing at the least. The period of notice shall in each case be exclusive of the day on which it is served or deemed to be served and of the day on which the General Meeting is to be held and shall be given in manner hereinafter mentioned to all Members other than such as are not under the provisions of these Articles entitled to receive such notices from the Company, Provided that a General Meeting notwithstanding that it has been called by a shorter notice than that specified above shall be deemed to have been duly called if it is so agreed:- (a) (b) in the case of an Annual General Meeting by all the Members entitled to attend and vote thereat; and in the case of an Extraordinary General Meeting by a majority in number of the Members having a right to attend and vote thereat, being a majority together holding not less than 95 per cent. of the total voting rights of all the Members having a right to vote at thereat; Provided also that the accidental omission to give notice to or the non-receipt of notice by any person entitled thereto shall not invalidate the proceedings at any General Meeting. At least fourteen days notice of any General Meeting shall be given by advertisement in the daily press and in writing to the Designated Stock Exchange, Provided Always that in the case of any Extraordinary General Meeting at which it is proposed to pass a Special Resolution, at least twenty-one days notice in writing of such Extraordinary General Meeting shall be given to the Designated Stock Exchange. 49. (A) Every notice calling a General Meeting shall specify the place and the day and hour of the meeting, and there shall appear with reasonable prominence in every such notice a statement that a Member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him and that a proxy need not be a Member of the Company. (B) In the case of an Annual General Meeting, the notice shall also specify the meeting as such. (C) In the case of any General Meeting at which business other than routine business ( special business ) is to be transacted, the notice shall specify the general nature of such business, and if any resolution is to be proposed as a Special Resolution, the notice shall contain a statement to that effect. 69

70 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY 50. Routine business shall mean and include only business transacted at an Annual General Meeting of the following classes, that is to say:- (a) (b) (c) (d) (e) (f) declaring Dividends; receiving and adopting the accounts, the reports of the Directors and Auditors and other documents required to be attached or annexed to the accounts; appointing or re-appointing Directors to fill vacancies arising at the meeting on retirement whether by rotation or otherwise; re-appointing the retiring Auditors (unless they were last appointed otherwise than by the Company in General Meeting); fixing the remuneration of the Auditors or determining the manner in which such remuneration is to be fixed; and fixing the Directors fees. 51. Any notice of a General Meeting to consider special business shall be accompanied by a statement regarding the effect of any proposed resolution on the Company in respect of such special business. PROCEEDINGS AT GENERAL MEETINGS 52. The Chairman of the Board of Directors, failing whom the Deputy Chairman, shall preside as chairman at a General Meeting. If there be no such Chairman or Deputy Chairman, or if at any General Meeting neither be present within five minutes after the time appointed for holding the meeting and willing to act, the Directors present shall choose one of their number (or, if no Director be present or if all the Directors present decline to take the chair, the Members present shall choose one of their number) to be chairman of the General Meeting. 53. No business other than the appointment of a Chairman shall be transacted at any General Meeting unless a quorum is present at the time when the meeting proceeds to business. Save as herein otherwise provided, the quorum at any General Meeting shall be two Members present in person or by proxy, provided that (i) a proxy representing more than one Member shall only count as one Member for purpose of determining if the quorum aforesaid is present; and (ii) where a Member is represented by more than one proxy, such proxies of such Member shall only count as one Member for purposes of determining if the quorum aforesaid is present. 54. If within thirty minutes from the time appointed for a General Meeting (or such longer interval as the chairman of the meeting may think fit to allow) a quorum is not present, the meeting, if convened on the requisition of Members, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week (or if that day is a public holiday then to the next business day following that public holiday) at the same time and place or such other day, time or place as the Directors may by not less than ten days notice appoint. 55. The chairman of any General Meeting at which a quorum is present may with the consent of the meeting (and shall if so directed by the meeting) adjourn the meeting from time to time (or sine die) and from place to place, but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place. Where a General Meeting is adjourned sine die, the time and place for the adjourned meeting shall be fixed by the Directors. When a General Meeting is adjourned for thirty days or more or sine die, not less than seven days notice of the adjourned meeting shall be given in like manner as in the case of the original meeting. 70

71 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY 56. Save as hereinbefore expressly provided, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned General Meeting. 57. If an amendment shall be proposed to any resolution under consideration but shall in good faith be ruled out of order by the chairman of the General Meeting, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling. In the case of a resolution duly proposed as a Special Resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error) may in any event be considered or voted upon. 58. At any General Meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded by:- (a) (b) (c) (d) the chairman of the meeting; or not less than two Members present in person or by proxy and entitled to vote; or any Member present in person or by proxy, or where such a Member has appointed two proxies any one of such proxies, or any number or combination of such Members or proxies, holding or representing as the case may be not less than one-tenth of the total voting rights of all the Members having the right to vote at the General Meeting; or any Member present in person or by proxy, or where such a Member has appointed two proxies any one of such proxies, or any number or combination of such Members or proxies, holding shares conferring a right to vote at the General Meeting, of which an aggregate sum has been paid up equal to not less than 10 per cent. of the total sum paid up on all the share conferring that right, Provided Always that no poll shall be demanded on the choice of the chairman of the meeting or on a question of adjournment. A demand for a poll may be withdrawn only with the approval of the meeting. 59. Unless a poll is required, a declaration by the chairman of the General Meeting that a resolution has been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the minute book, shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded for or against such resolution. If a poll is required, it shall be taken in such manner (including the use of ballot or voting papers or tickets) as the chairman of the General Meeting may direct, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The chairman of the General Meeting may (and if so directed by the meeting shall) appoint scrutineers and may adjourn the meeting to some place and time fixed by him for the purpose of declaring the result of the poll. 60. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the General Meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a casting vote. 61. A poll demanded on any question shall be taken either immediately or at such subsequent time (not being more than thirty days from the date of the Meeting) and place as the chairman of the Meeting may direct. No notice need be given of a poll not taken immediately. The demand for a poll shall not prevent the continuance of the General Meeting for the transaction of any business other than the question on which the poll has been demanded. 71

72 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY VOTES OF MEMBERS 62. Subject to any special rights or restrictions as to voting attached by or in accordance with these Articles to any class of shares, and to Article 4, each Member entitled to vote may vote in person or by proxy. On a show of hands every Member who is present in person or by proxy shall have one vote (provided that in the case of a Member who is represented by two proxies, only one of the two proxies as determined by that Member or, failing such determination, by the Chairman of the General Meeting (or by a person authorised by him) in his sole discretion shall be entitled to vote on a show of hands) and on a poll every Member who is present in person or by proxy shall have one vote for every share of which he holds or represents. For the purposes of determining the number of votes which a Member, being a Depositor, or his proxy may cast at any General Meeting on a poll, the references to shares held or represented shall, in relation to shares of that Depositor, be the number of shares entered against his name in the Depository Register as at 48 hours before the time of the relevant General Meeting as certified by CDP to the Company. A Member who is bankrupt shall not, while his bankruptcy continues, be entitled to exercise his rights as a Member, or attend, vote or act at any General Meeting. 63. In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members or, as the case may be, the order in which the names appear in the Depository Register in respect of the joint holding. 64. Where in Singapore or elsewhere a receiver or other person (by whatever name called) has been appointed by any court claiming jurisdiction in that behalf to exercise powers with respect to the property or affairs of any Member on the ground (however formulated) of mental disorder, the Directors may in their absolute discretion, upon or subject to production of such evidence of the appointment as the Directors may require, permit such receiver or other person on behalf of such Member, to vote in person or by proxy at any General Meeting, or to exercise any other right conferred by Membership in relation to General Meetings. 65. No Member shall be entitled in respect of shares held by him to vote at a General Meeting either personally or by proxy or to exercise any other right conferred by membership in relation to General Meetings if any call or other sum payable by him to the Company in respect of such shares remains unpaid. 66. No objection shall be raised as to the admissibility of any vote except at the General Meeting or adjourned General Meeting at which the vote objected to is or may be given or tendered and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection shall be referred to the chairman of the General Meeting whose decision shall be final and conclusive. 67. On a poll, votes may be given either personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way. 68. (A) A Member shall not be entitled to appoint more than two proxies to attend and vote at the same General Meeting, provided that if the Member is a Depositor, the Company shall be entitled and bound:- (a) (b) to reject any instrument of proxy lodged if the Depositor, is not shown, to have any shares entered against his name in the Depository Register as at 48 hours before the time of the relevant General Meeting as certified by CDP to the Company; and to accept as the maximum number of votes which in aggregate the proxy or proxies appointed by the Depositor is or are able to cast on a poll a number which is the number of shares entered into against the name of that Depositor in the Depository Register as at 48 hours before the time of the relevant General Meeting as certified by CDP to the Company, whether that number is greater or smaller than the number specified in any instrument of proxy executed by or on behalf of that Depositor. 72

73 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY (B) Where a Member appoints more than one proxy, the Member shall specify the proportion of his shares to be represented by each such proxy, failing which the nomination shall be deemed to be alternative. (C) A proxy need not be a Member of the Company. 69. (A) An instrument appointing a proxy for any Member shall be in writing in any usual or common form or in any other form which the Directors may approve and:- (a) (b) in the case of an individual Member, shall be signed by the Member or his attorney duly authorised in writing; and in the case of a Member which is a corporation shall be either given under its common seal or signed on its behalf by an attorney duly authorised in writing or a duly authorized officer of the corporation. (B) The signatures on an instrument of proxy need not be witnessed. Where an instrument appointing a proxy is signed on behalf of a Member by an attorney, the letter or power of attorney or a duly certified copy thereof shall (failing previous registration with the Company) be lodged with the instrument of proxy pursuant to the next following Article, failing which the instrument of proxy may be treated as invalid. 70. An instrument appointing a proxy must be left at such place or one of such places (if any) as may be specified for that purpose in or by way of note to or in any document accompanying the notice convening the General Meeting (or, if no place is so specified, at the Office) not less than forty-eight hours before the time appointed for the holding of the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) for the taking of the poll at which it is to be used, and in default shall not be treated as valid. The instrument shall, unless the contrary is stated thereon, be valid as well for any adjournment of the General Meeting as for the meeting to which it relates, Provided that an instrument of proxy relating to more than one meeting (including any adjournment thereof) having once been so delivered for the purposes of any meeting shall not require again to be delivered for the purposes of any subsequent meeting to which it relates. 71. An instrument appointing a proxy shall be deemed to include the right to demand or join in demanding a poll and to speak at the General Meeting. 72. A vote cast by proxy shall not be invalidated by the previous death or insanity of the principal or by the revocation of the appointment of the proxy or of the authority under which the appointment was made provided that no intimation in writing of such death, insanity or revocation shall have been received by the Company at the Office at least one hour before the commencement of the General Meeting or adjourned General Meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) the time appointed for the taking of the poll at which the vote is cast. 73. Subject to these Articles and the Statutes, the Directors may, at their sole discretion, approve and implement, subject to such security measures as may be deemed necessary or expedient, such voting methods to allow Members who are unable to vote in person at any General Meeting the option to vote in absentia, including but not limited to voting by mail, electronic mail or facsimile. CORPORATIONS ACTING BY REPRESENTATIVES 74. Any corporation which is a Member of the Company may by resolution of its Directors or other governing body authorize such person as it thinks fit to act as its representative at any General Meeting. The person so authorized shall be entitled to exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual Member of the Company and such corporation shall for the purposes of these Articles (but subject to the Act) be deemed to be present in person at any such meeting if a person so authorized is present thereat. 73

74 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY DIVIDENDS 123. The Company may by Ordinary Resolution declare Dividends but no such Dividend shall exceed the amount recommended by the Directors If and so far as in the opinion of the Directors, the profits of the Company justify such payments, the Directors may declare and pay the fixed Dividends on any class of shares carrying a fixed Dividend expressed to be payable on fixed dates on the half-yearly or other dates prescribed for the payment thereof and may also from time to time declare and pay interim Dividends on shares of any class of such amounts and on such dates and in respect of such periods as they think fit Subject to any rights or restrictions attached to any shares or class of shares and except as otherwise permitted under the Act:- (a) (b) all Dividends in respect of shares must be paid in proportion to the number of shares held by a Member, but where shares are partly paid, all Dividends must be apportioned and paid proportionately to the amounts paid or credited as paid on the partly paid shares; and all Dividends must be apportioned and paid proportionately to the amounts so paid or credited as paid during any portion or portions of the period in respect of which the Dividend is paid. For the purposes of this Article, an amount paid or credited as paid on a share in advance of a call is to be ignored (A) No Dividend shall be paid otherwise than out of profits available for distribution under the provisions of the Statutes. 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 remaining unclaimed after one year from having been first payable may be invested or otherwise made use of by the Directors for the benefit of the Company, and any Dividend or any such moneys unclaimed after six (6) years from having been first payable shall be forfeited and shall revert to the Company provided always that 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. If CDP returns any such Dividend or moneys to the Company, the relevant Depositor shall not have any right or claim in respect of such Dividend or moneys against the Company if a period of six years has elapsed from the date of the declaration of such Dividend or the date on which such other moneys are first payable. (B) A payment by the Company to CDP of any Dividend or other moneys payable to a Depositor shall, to the extent of the payment made, discharge the Company from any liability to the Depositor in respect of that payment No Dividend or other monies payable on or in respect of a share shall bear interest as against the Company (A) The Directors may retain any Dividend or other monies payable on or in respect of a share on which the Company has a lien and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists. (B) The Directors may retain the Dividends payable upon shares in respect of which any person is under the provisions as to the transmission of shares hereinbefore contained entitled to become a Member, or which any person is under those provisions entitled to transfer, until such person shall become a Member in respect of such shares or shall transfer the same. 74

75 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY 129. The waiver in whole or in part of any Dividend on any share by any document (whether or not under seal) shall be effective only if such document is signed by the Member (or the person entitled to the share in consequence of the death or bankruptcy of the holder) and delivered to the Company and if or to the extent that the same is accepted as such or acted upon by the Company The Company may upon the recommendation of the Directors by Ordinary Resolution direct payment of a Dividend in whole or in part by the distribution of specific assets (and in particular of paidup shares or debentures of any other company) and the Directors shall give effect to such resolution. Where any difficulty arises with regard to such distribution, the Directors may settle the same as they think expedient and in particular, may issue fractional certificates, may fix the value for distribution of such specific assets or any part thereof, may determine that cash payments shall be made to any Member upon the footing of the value so fixed in order to adjust the rights of all parties and may vest any such specific assets in trustees as may seem expedient to the Directors Any Dividend or other moneys payable in cash on or in respect of a share may be paid by cheque or warrant sent through the post to the registered address appearing in the Register of Members or (as the case may be) the Depository Register of the Member or person entitled thereto (or, if two or more persons are registered in the Register of Members or (as the case may be) entered in the Depository Register as joint holders of the share or are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons) or to such person and such address as such Member or person or persons may by writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or to such person as the holder or joint holders or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and payment of the cheque or warrant by the banker upon whom it is drawn shall be a good discharge to the Company. Every such cheque or warrant shall be sent at the risk of the person entitled to the money represented thereby If two or more persons are registered in the Register of Members or (as the case may be) the Depository Register as joint holders of any share, or are entitled jointly to a share in consequence of the death or bankruptcy of the holder, any one of them may give effectual receipts for any Dividend or other moneys payable or property distributable on or in respect of the share Any resolution declaring a Dividend on shares of any class, whether a resolution of the Company in General Meeting or a resolution of the Directors, may specify that the same shall be payable to the persons registered as the holders of such shares in the Register of Members or (as the case may be) the Depository Register at the close of business on a particular date and thereupon the Dividend shall be payable to them in accordance with their respective holdings so registered, but without prejudice to the rights inter se in respect of such Dividend of transferors and transferees of any such shares. BONUS ISSUES AND CAPITALIZATION OF PROFITS AND RESERVES 134. (A) The Directors may, with the sanction of an Ordinary Resolution of the Company (including any Ordinary Resolution passed pursuant to Article 5(B)): (a) issue bonus shares for which no consideration is payable to the Company to the persons registered as holders of shares in the Register of Members or (as the case may be) the Depository Register at the close of business on: (i) (ii) the date of the Ordinary Resolution (or such other date as may be specified therein or determined as therein provided); or (in the case of an Ordinary Resolution passed pursuant to Article 5(B)) such other date as may be determined by the Directors, in proportion to their then holdings of shares; and/or 75

76 APPENDIX IV RELEVANT PROVISIONS IN THE ARTICLES OF ASSOCIATION OF THE COMPANY (b) capitalise any sum standing to the credit of any of the Company s reserve accounts or other undistributable reserve or any sum standing to the credit of profit and loss account by appropriating such sum to the persons registered as holders of shares in the Register of Members or (as the case may be) in the Depository Register at the close of business on: (i) (ii) the date of the Ordinary Resolution (or such other date as may be specified therein or determined as therein provided); or (in the case of an Ordinary Resolution passed pursuant to Article 5(B)) such other date as may be determined by the Directors, in proportion to their then holdings of shares and applying such sum on their behalf in paying up in full unissued shares (or, subject to any special rights previously conferred on any shares or class of shares for the time being issued, unissued shares of any other class not being redeemable shares) for allotment and distribution credited as fully paid up to and amongst them as bonus shares in the proportion aforesaid. (B) The Directors may do all acts and things considered necessary or expedient to give effect to any such bonus issue or capitalisation under this Article 134, with full power to the Directors to make such provisions as they think fit for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all the Members interested into an agreement with the Company providing for any such bonus issue or capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned. (C) In addition and without prejudice to the powers provided for by this Article 134, the Directors shall have power to issue shares for which no consideration is payable and to capitalise any undivided profits or other moneys of the Company not required for the payment or provision of any Dividend on any shares entitled to cumulative or non-cumulative preferential Dividends (including profits or other moneys carried and standing to any reserve or reserves) and to apply such profits or other moneys in paying up in full, in each case on terms that such shares shall, upon issue, be held by or for the benefit of participants of any share incentive or option scheme or plan implemented by the Company and approved by Members in General Meeting and on such terms as the Directors shall think fit. WINDING UP 145. The Directors shall have power in the name and on behalf of the Company to present a petition to the court for the Company to be wound up If the Company shall be wound up (whether the liquidation is voluntary, under supervision, or by the court) the Liquidator may, with the authority of a Special Resolution, divide among the Members in specie or in kind the whole or any part of the assets of the Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds, and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how such division shall be carried out as between the Members of different classes of Members. The Liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of Members as the Liquidator with the like authority shall think fit, and the liquidation of the Company may be closed and the Company dissolved, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability. 76

77 APPENDIX V PROCEDURES FOR ACCEPTANCE OF THE EXIT OFFER 1. POSTING OF ACCEPTANCE FORMS The Exit Offer Letter (including the relevant Acceptance Forms and any related documents) have been despatched, along with the Circular, by ordinary post to Shareholders with Singapore addresses as shown in the Register of Members of the Company. Shareholders may choose to accept the Exit Offer before the EGM. However such acceptance is conditional upon the Delisting Resolution being passed at the EGM. Shareholders should note that if the Delisting Resolution is not approved at the EGM and the Minimum Acceptance Condition is not fulfilled, the conditions to the Exit Offer will not be fulfilled and the Exit Offer will lapse. Depositors whose Securities Accounts are credited with Offer Shares can also collect the FAA during normal business hours within the Exit Offer Period from The Central Depository (Pte) Limited, 4 Shenton Way, #02-01 SGX Centre 2, Singapore , upon production of satisfactory evidence that you are a shareholder. Shareholders who hold Offer Shares represented by share certificate(s) can collect the FAT during normal business hours within the Exit Offer Period from the office of the Company s share registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore , upon production of satisfactory evidence that you are a shareholder. The Exit Offer may only be accepted by the relevant Shareholder to whom the Exit Offer Letter is addressed. This Circular, the Exit Offer Letter and the Acceptance Forms shall not be construed as, may not be used for the purpose of, and do not constitute, a notice or proposal or advertisement or an offer or invitation or solicitation in any jurisdiction or in any circumstances in which such a notice or proposal or advertisement or an offer or invitation or solicitation is unlawful or not authorised, or to any person to whom it is unlawful to make such a notice or proposal or advertisement or an offer or invitation or solicitation. Accordingly, persons receiving such documents (including, without limitation, custodians, nominees and trustees) should not distribute, send or mail them in or into any such overseas jurisdiction. The Offeror reserves the right to reject any acceptance of the Exit Offer where it believes, or has reason to believe, that such acceptance may violate the applicable laws of any jurisdiction. 2. PROCEDURES FOR ACCEPTANCE To accept the Exit Offer, Shareholders should complete, sign and return: (a) (b) the FAA in respect of Offer Shares that are deposited with CDP; and/or the FAT in respect of Offer Shares that are not deposited with CDP, as the case may be, in accordance with the instructions contained in the Exit Offer Letter, the FAA and/or the FAT, during the Exit Offer Period. The provisions and instructions contained in the Exit Offer Letter, the FAA and/or the FAT shall be deemed to form part of the terms of the Exit Offer. 77

78 APPENDIX V PROCEDURES FOR ACCEPTANCE OF THE EXIT OFFER (i) Depositors whose Securities Accounts are credited with Offer Shares If you have Offer Shares standing to the credit of the Free Balance of your Securities Account, you will be entitled to receive the FAA. If you wish to accept the Exit Offer, you should complete and sign the FAA in accordance with the provisions and instructions in the Exit Offer Letter, including the provisions and instructions printed on the FAA (which provisions and instructions shall be deemed to form part of the terms of the Exit Offer) and forward the completed and executed FAA in the enclosed pre-addressed envelope either by hand, to: Fine Ally Group Limited c/o The Central Depository (Pte) Limited 4 Shenton Way #02-01 SGX Centre 2 Singapore or by post, at your own risk, to: Fine Ally Group Limited c/o The Central Depository (Pte) Limited Robinson Road Post Office P.O. Box 1984 Singapore so as in either case to arrive not later than 5.30 p.m. on the Closing Date. An acknowledgement of receipt of the FAA will be given by CDP if the FAA is submitted by hand at CDP s counter. No acknowledgement of receipt will be given for the FAAs sent by post or deposited into boxes located at CDP s premises. It is your responsibility to ensure that the FAA is properly completed in all respects. The Offeror, Kim Eng and/or CDP will be entitled to reject any acceptance that does not comply with the provisions and instructions contained in the Exit Offer Letter and in the FAA. Any decision to reject the FAA on the grounds that it has been invalidly, incorrectly or incompletely signed, completed or submitted will be final and binding, and neither CDP, Kim Eng nor the Offeror accepts any responsibility or liability in relation to such a decision, including the consequences thereof. We understand that CDP will, upon receipt on behalf of the Offeror of the FAA and all other relevant documents, transfer the Offer Shares in respect of which you have accepted the Exit Offer from the Free Balance of your Securities Account to a suspense account pending your receipt of the consideration for the Offer Shares. For reasons of confidentiality, CDP will not entertain telephone enquiries relating to the number of Offer Shares credited to your Securities Account. You may verify the number of Offer Shares credited to your Securities Account by CDP Internet Access, if you have registered for the CDP Internet Access. Alternatively, you may proceed personally to CDP with your identity card or passport to verify the number of Offer Shares credited to your Securities Account. All communications, notices, documents and remittances to be delivered or sent to you will be sent by ordinary post to your address as it appears in the records of CDP, at your own risk. 78

79 APPENDIX V PROCEDURES FOR ACCEPTANCE OF THE EXIT OFFER (ii) Shareholders who hold Offer Shares which are not deposited with CDP If you hold Offer Shares which are not deposited with CDP, you will be entitled to receive the FAT. If you wish to accept the Exit Offer, you should complete and sign the FAT in accordance with the provisions and instructions in the Exit Offer Letter, including the provisions and instructions printed on the FAT (which provisions and instructions shall be deemed to form part of the terms of the Exit Offer) and forward either by hand or by post, at your own risk, the duly completed and signed FAT, together with the relevant share certificate(s), other document(s) of title and/or any other relevant document(s) required by the Offeror, in the enclosed pre-addressed envelope either by hand or by post to: Fine Ally Group Limited c/o Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore so as to arrive not later than 5.30 p.m. on the Closing Date. No acknowledgement of receipt of any FAT, share certificate(s), other document(s) of title, transfer form(s) and/or any other relevant document(s) required by the Offeror will be given. It is your responsibility to ensure that the FAT is properly completed in all respects. The Offeror will be entitled to reject any acceptance which does not comply with the provisions and instructions contained in the Exit Offer Letter and in the FAT, or which is not accompanied by the relevant share certificate(s) and/or other document(s) of title and/or any other relevant document(s) required by the Offeror, or which is otherwise incomplete, incorrect or invalid in any respect. Any decision to reject the FAT on the grounds that it has been incorrectly or incompletely signed, completed or submitted will be final and binding, and neither the Company, Kim Eng nor the Offeror accepts any responsibility or liability in relation to such a decision, including the consequences thereof. All communications, notices, certificates, documents and remittances to be delivered or sent to you will be sent to you (or your designated agent or, in the case of joint accepting Shareholders who have not designated any agent, to the one first named in the Register of Members of the Company) by ordinary post to your address as it appears in the Register of Members of the Company at your own risk (or, for the purpose of remittances only, to such different name and address as may be specified by you in the FAT and at your own risk). (iii) Other relevant information relating to procedures for acceptance If you hold share certificate(s) in respect of some of the Offer Shares beneficially owned by you and if you have deposited the rest of the Offer Shares beneficially owned by you with CDP, you will be required to complete an FAT in respect of the Offer Shares represented by share certificate(s) and an FAA in respect of the Offer Shares which are deposited with CDP, if you wish to accept the Exit Offer in respect of all such Offer Shares. Both the FAT and the FAA must be completed and accompanied by the relevant documents and sent to the Offeror in accordance with the respective procedures for acceptance set out in the Exit Offer Letter, the FAT and the FAA. If you hold the share certificate(s) of the Offer Shares beneficially owned by you and you wish to accept the Exit Offer in respect of such Offer Shares, you should not deposit the share certificate(s) with CDP during the period commencing on the date of the EGM and ending on the Closing Date (both dates inclusive), as your Securities Account may not be credited with the relevant number of Offer Shares in time for you to accept the Exit Offer. 79

80 APPENDIX V PROCEDURES FOR ACCEPTANCE OF THE EXIT OFFER Delivery of the duly completed and signed FAA and/or FAT to the Offeror and/or CDP shall be conclusive evidence in favour of the Offeror and CDP of the right and title of the person signing it to deal with the same and with the Offer Shares to which it relates. 3. SETTLEMENT (a) Depositors whose Securities Accounts are credited with Offer Shares Subject to the Delisting Resolution being passed at the EGM and the receipt by the Offeror from accepting Shareholders of all relevant documents required by the Offeror which are complete in all respects and in accordance with the instructions given in the Exit Offer Letter and the FAA (including, without limitation, confirmation satisfactory to the Offeror that the relevant number of Offer Shares tendered by the accepting Shareholders in acceptance of the Exit Offer are standing to the credit of the Free Balance of their respective Securities Accounts at the relevant time), the Offeror will arrange for remittances for the appropriate amounts to be sent to CDP. CDP will debit the respective Securities Accounts of the accepting Shareholders with the number of Offer Shares tendered by them in acceptance of the Exit Offer and will (i) in the case of accepting Shareholders who have registered for CDP s direct crediting service, credit such remittances to the designated bank account of such accepting Shareholders; and (ii) in the case of accepting Shareholders who have not registered for CDP s direct crediting service, despatch such remittances in the form of cheques made out in favour to such accepting Shareholders by ordinary post to such accepting Shareholders at their own risk as soon as practicable and in any event: (i) (ii) in respect of acceptances of the Exit Offer which are valid and complete in all respects and are received on or before the date on which the Exit Offer becomes or is declared to be unconditional in all respects, within 10 days of that date; or in respect of acceptances which are valid and complete in all respects and are received after the Exit Offer becomes or is declared to be unconditional in all respects, but on or before the Exit Offer closes, within 10 days of the date of such receipt. CDP will also send by ordinary post to the accepting Shareholders at their respective addresses as they appear in the records of CDP, and at their own risk, notification letters showing the number of Shares which have been debited against their respective Securities Accounts. (b) Shareholders who hold Offer Shares which are not deposited with CDP Subject to the Delisting Resolution being passed at the EGM and the receipt by the Offeror from accepting Shareholders of all relevant documents required by the Offeror which are complete in all respects and in accordance with the instructions given in the Exit Offer Letter and the FAT (including, without limitation, the share certificates relating to the Offer Shares tendered by accepting Shareholders in acceptance of the Exit Offer), remittances for the appropriate amounts will be despatched to the accepting Shareholders (or their designated agents, as they may direct) by ordinary post and at their own risk, at their respective addresses as they appear in the Register of Members of the Company (or to such names and addresses as may be specified by the accepting Shareholders in the FAT), as soon as practicable and in any event: (i) (ii) in respect of acceptances of the Exit Offer which are valid and complete in all respects and are received on or before the date on which the Exit Offer becomes or is declared to be unconditional in all respects, within 10 days of that date; or in respect of acceptances which are valid and complete in all respects and are received after the Exit Offer becomes or is declared to be unconditional in all respects, but before the Exit Offer closes, within 10 days of the date of such receipt. 80

81 APPENDIX V PROCEDURES FOR ACCEPTANCE OF THE EXIT OFFER 4. NO RIGHT OF WITHDRAWAL All acceptances of the Exit Offer shall be irrevocable. 5. INFORMATION PERTAINING TO CPFIS INVESTORS 5.1 No Action. There is no need for CPFIS Investors to take any action at this time CPFIS Investors should refer to the separate letter from their respective CPF Agent Banks for information on how to accept or reject the Exit Offer under CPFIS. CPFIS Investors are advised to consult their respective CPF Agent Banks should they require further information, and if they are in any doubt as to the action they should take, CPFIS Investors should seek independent professional advice. CPFIS Investors who accept the Exit Offer will receive the cash consideration paid to their CPF investment accounts. CPFIS Investors who reject the Exit Offer can continue to hold the delisted Shares in their CPF investment accounts, and the relevant provisions in the CPFIS on investment in securities by CPF members will continue to apply to the delisted Shares in their CPF investment accounts. However, CPFIS Investors will not be allowed to use funds from their CPF accounts for further purchases of delisted Shares because under the CPFIS, CPF funds may only be invested in the shares of companies incorporated in Singapore that are listed on the SGX-ST and which are traded in Singapore dollars. In addition, the shares of such companies must be included under the CPFIS. 5.2 The implications of holding Shares following the delisting of the Company are set out in section 10 of the Letter to Shareholders set out in the Circular. In addition, the following will be applicable if the Company is delisted from the Official List of the SGX-ST: Safe-keeping of share certificates Shares that are quoted on SGX-ST and held by CPFIS Investors are deposited with CDP through their respective CPF Agent Banks. However, unlisted shares cannot be deposited with CDP. If the Company is delisted from the Official List of the SGX-ST, the Company s share registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore , will arrange to forward the individual share certificates, representing the Shares held by individual CPFIS Investors who do not accept the Exit Offer, to their respective CPF Agent Banks for safe-keeping. CPF Agent Banks may levy a service fee to administer each share counter held on behalf of each CPFIS Investor. In addition to the existing fees, CPF Agent Banks may impose, inter alia, additional charges for the safe-keeping of share certificates and administrative charges for the splitting, withdrawal or depositing of such share certificates. CPFIS Investors who do not accept the Exit Offer should consult their respective CPF Agent Banks on the additional charges that may be imposed Buying and selling of shares represented by share certificates If the Company is delisted from the Official List of the SGX-ST, CPFIS Investors who do not accept the Exit Offer will likely find it difficult to sell their shares in the absence of a public market. CPFIS Investors will be allowed to sell their unquoted shares, assuming that they are able to find a buyer for these shares. 81

82 APPENDIX VI UNAUDITED THIRD QUARTER FINANCIAL STATEMENT FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2010 UNAUDITED THIRD QUARTER (Q3) FINANCIAL STATEMENT FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2010 (9 months). PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS 1(a)(i) A statement of comprehensive income (for the Group) together with a comparative statement for the corresponding period of the immediately preceding financial year. Consolidated Statement of Comprehensive Income Group Group Q3 9 months Unaudited Unaudited Unaudited Unaudited Jul to Sept Jul to Sept Jan to Sept Jan to Sept change change RMB'000 RMB'000 % RMB'000 RMB'000 % Revenue 157, ,096 * 4% 211, ,434 * -1% Cost of sales (75,433) (73,981) 2% (107,693) (112,168) -4% Gross profit 82,086 77,115 6% 103, ,266 2% 52.11% 51.04% 49.05% 47.45% Other income % 2,101 1,440 46% Selling and distribution expenses (38,543) (31,598) * 22% (47,938) (43,106) * 11% Administrative expenses (12,590) (8,886) 42% (34,057) (22,667) 50% Finance costs (1,772) (1,580) 12% (4,417) (3,624) 22% Other expenses (859) (587) 46% (927) (1,000) -7% Profit before tax 28,911 34,929-17% 18,444 32,309-43% Income tax (4,303) (4,308) 0% (4,831) (5,274) -8% Profit after tax 24,608 30,621-20% 13,613 27,035-50% Attributable to: Equity holders of the Company 24,752 31,040 13,767 27,538 Non-controlling interests (144) (419) (154) (503) 24,608 30,621-20% 13,613 27,035-50% Other comprehensive income/ (loss): Foreign currency translation % 741 (864) -186% Total comprehensive income for the financial period 25,363 31,065 14,354 26,171 * Sales discounts amounting to approximately RMB 5,987,000 had been reclassed to conform with current period s presentation. 82