CREATIVE MASTER BERMUDA LIMITED

Transcription

1 CIRCULAR DATED 28 JUNE 2010 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in doubt about its contents or the action you should take, you should consult your bank manager, stockbroker, solicitor, accountant or other professional adviser immediately. If you have sold all your ordinary shares in the capital of Creative Master Bermuda Limited, you should immediately hand this Circular and the Proxy Form to the purchaser or to the bank, stockbroker or agent through whom you effected the sale for onward transmission to the purchaser. The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular. CREATIVE MASTER BERMUDA LIMITED (Company Registration Number: 33040) (Incorporated in Bermuda on 6 December 2002) CIRCULAR TO SHAREHOLDERS in relation to A) APPROVAL OF THE PROPOSED DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF CREATIVE MASTER LIMITED AS AN INTERESTED PERSON TRANSACTION PURSUANT TO RULE 906 OF THE LISTING MANUAL OF SGX-ST; AND B) APPROVAL OF THE PROPOSED DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF CREATIVE MASTER LIMITED AS A MAJOR TRANSACTION PURSUANT TO RULE 1014 OF THE LISTING MANUAL OF SGX-ST. Independent Financial Adviser to the Independent Directors of Creative Master Bermuda Limited: DMG & PARTNERS SECURITIES PTE LTD (Incorporated in the Republic of Singapore) (Company Registration No E) IMPORTANT DATES AND TIMES Last date and time for lodgement of Proxy Form : 13 July 2010 at a.m. Date and time of Special General Meeting : 15 July 2010 at a.m. Place of Special General Meeting : The Board Room of Goodrich Global Pte Ltd, Goodrich Building, 8 Changi South Lane #05-01, Singapore

2 DEFINITIONS For the purpose of this Circular, the following definitions have, where appropriate, been used: Act Balance Consideration Board Business Business Days CDP CML Group Company Completion Completion Date Consideration Controlling Shareholder Deposit Director Disposal DMG or IFA EPS FY Group The Companies Act (Chapter 50) of Singapore, as amended or modified from time to time The net amount of S$4,760,450 (Singapore Dollars Four Million Seven Hundred and Sixty Thousand Four Hundred and Fifty only), being the Consideration less the Deposit The board of Directors of the Company business of (i) development and marketing of die-cast collectibles and (ii) manufacturing of moulds A day (other than a Saturday, Sunday or public holiday) on which commercial banks are generally open for business in Singapore and/or Hong Kong The Central Depository (Pte) Limited Creative Master Limited and its subsidiaries Creative Master Bermuda Limited Completion of the Disposal The date falling ten (10) Business Days after the day on which all the conditions precedent listed in the Sale Agreement have been fully satisfied and/or waived The consideration of S$5,011,000 (Singapore Dollars Five million and Eleven thousand only) comprising the Deposit and the Balance Consideration A person who has an interest in the Shares of an aggregate of not less than 15% of the total votes attached to all the Shares, or in fact exercises control over the Company The advance deposit of S$250,550 (Singapore Dollars Two Hundred and Fifty Thousand Five Hundred and Fifty only), representing five per cent (5%) of the Consideration A Director of the Company for the time being The sale by the Company to Creative Sky Engineering Limited of its entire interest in Creative Master Limited in accordance with the terms and conditions of the Sale Agreement DMG & Partners Securities Pte Ltd, the independent financial adviser appointed by the Company Earnings per Share Financial year ended or ending 31 December Company and its subsidiaries 2

3 HK$ Independent Directors Latest Practicable Date Listing Manual Market Day NTA Purchaser The lawful currency of Hong Kong The Directors who are deemed independent for the purposes of the Disposal, namely all the members of the Board of Directors, save for Carl Tong Ka Wing 18 June 2010, being the latest practicable date prior to the printing of this Circular The Listing Manual of the SGX-ST, as the same may be amended, varied or supplemented from time to time A day on which the SGX-ST is open for trading in securities Net tangible assets Creative Sky Engineering Limited Sale Agreement The sale and purchase agreement dated 29 March 2010 entered into between the Company and the Purchaser in relation to the Disposal SGM SGX-ST Shares Shareholders subsidiaries S$ and cents Special General Meeting, notice of which is set out in this Circular Singapore Exchange Securities Trading Limited Ordinary shares in the capital of the Company The registered holders of the Shares and in the case of Depositors, Depositors who have Shares entered against their names in the Depository Register The subsidiaries of a company (as defined in Section 5 of the Act) and subsidiary shall be construed accordingly Singapore dollars and cents respectively % Per centum or percentage The terms Depositor and Depository Register shall have the meanings ascribed to them respectively by Section 130A of the Act. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. Any reference to any enactment is a reference to that enactment as for the time being amended or reenacted. Any word defined under the Act or any statutory modification thereof and used in this Circular shall have the meaning assigned to it under the said Act. Any reference to a time of a day in this Circular is a reference to Singapore time. 3

4 CONTENTS Page DEFINITIONS... 2 LETTER TO SHAREHOLDERS OF CREATIVE MASTER BERMUDA LIMITED... 5 INTRODUCTION... 5 SHAREHOLDERS APPROVAL... 5 THE DISPOSAL... 7 ADVICE OF THE INDEPENDENT FINANCIAL ADVISOR INDEPENDENT DIRECTORS RECOMMENDATION INTEREST OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS SHAREHOLDING INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS SHAREHOLDERS WHO WILL ABSTAIN FROM VOTING SPECIAL GENERAL MEETING ACTION TO BE TAKEN BY SHAREHOLDERS CONSENTS DIRECTORS RESPONSIBILITY STATEMENT ADDITIONAL INFORMATION DOCUMENTS FOR INSPECTION APPENDIX 1 GENERAL AND STATUTORY INFORMATION APPENDIX 2 LETTER FROM DMG TO THE DIRECTORS NOTICE OF SPECIAL GENERAL MEETING

5 CREATIVE MASTER BERMUDA LIMITED (Company Registration Number: 33040) (Incorporated in Bermuda on 6 December 2002) Directors Chan Chong Beng (Non Executive Chairman) Carl Tong Ka Wing (Executive Director and Chief Executive Officer) Danny Lo Kan Yu (Independent Director) Peter Ng Loh Ken (Independent Director) Chan Yu Meng (Independent Director) Registered Office Canon s Court, 22 Victoria Street, Hamilton HM 12, Bermuda 28 June 2010 Dear Shareholder A) APPROVAL OF THE PROPOSED DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF CREATIVE MASTER LIMITED AS AN INTERESTED PERSON TRANSACTION PURSUANT TO RULE 906 OF THE LISTING MANUAL OF SGX-ST; AND B) APPROVAL OF THE PROPOSED DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF CREATIVE MASTER LIMITED AS A MAJOR TRANSACTION PURSUANT TO RULE 1014 OF THE LISTING MANUAL OF SGX-ST. INTRODUCTION On 29 March 2010, the Directors announced that the Company had entered into the Sale Agreement with the Purchaser for the sale of its entire interests in Creative Master Limited. The purpose of this Circular is to provide Shareholders with the relevant information pertaining to, and to seek Shareholders approval for, the proposed Disposal at the SGM to be held on 15 July SHAREHOLDERS APPROVAL Chapter 9 Interested Person Transaction Under Chapter 9 of the Listing Manual, where a listed company or any of its subsidiaries or associated companies that is an entity at risk proposes to enter into a transaction with its interested persons, shareholders approval and/or an immediate announcement is required in respect of that transaction if its value is equal to or exceeds certain financial thresholds. In particular, shareholders approval (in addition to an immediate announcement) is required where the value of such transaction equals to or exceeds 5% of the Group s latest audited NTA. In obtaining such approval, the interested person and his associates are required to abstain from voting on the resolution approving the transaction. In addition to requiring shareholders approval, the Independent Directors are also required to obtain an opinion in a separate letter from an independent financial adviser ( IFA ) acceptable to the SGX-ST stating whether the transaction is on normal commercial terms and is not prejudicial to the interest of the Company and its Shareholders. 5

6 Purchaser as an Interested Person The Purchaser is incorporated in Hong Kong and is an investment holding company. It is 53% owned by Double Triumph Consulting Limited, a company incorporated in the British Virgin Islands ( DTCL ). The shares of DTCL are beneficially held in trust for the immediate family of Mr Carl Tong Ka Wing ( Mr Tong ). The remaining 47% of the Purchaser is owned by Mr Kwok Sheck Pui ( Mr Kwok ). Mr Tong is the Chief Executive Officer and Executive Director of the Company and holds 1.07 million shares of the Company representing 0.42% of its entire issued and paid up share capital. Mr Kwok is the Chief Operating Officer of the Company and holds million shares of the Company representing 3.94% of its entire issued and paid up share capital. Mr Tong is therefore deemed to be an interested person within the meaning of Chapter 9 of the Listing Manual. The Consideration of S$5,011,000 (Singapore Dollars Five million and Eleven thousand only) represents 68.08% of the latest audited NTA of the Group of S$7,361,000. Hence the Disposal is an Interested Person Transaction and will attract the requirements under Rule 906 of the Listing Manual that requires shareholders approval where the value of such transaction equals to or exceeds 5% of the Group s latest audited NTA. Mr Tong will abstain from making any recommendation at any board meetings of the Company and to the Shareholders in respect of the Disposal. Mr Tong and Mr Kwok will also abstain from voting in respect of their shareholdings, if any, in the Company in relation to the Disposal. The Board has also sought the independent advice of the IFA as required under Chapter 9 of the Listing Manual. A copy of the letter dated 28 June 2010 from the IFA to the Independent Directors is set out in Appendix 2 of this Circular. Chapter 10 Major Transaction Under Chapter 10 of the Listing Manual, Shareholders approval must be obtained for major transactions of acquisitions or realisations. Rule 1006 sets out the computation for relative figures. Shareholders approval is required if any of the relative figures as computed on the basis set out in Rule 1006 exceeds twenty per cent (20%) and such a transaction is classified as a major transaction. The bases for the calculation of the relative figures are as follows: (a) (b) (c) (d) The net asset value of the assets to be disposed of, compared with the group s net asset value. This basis is not applicable to an acquisition of assets. The net loss attributable to the assets disposed of, compared with the group s net loss. The aggregate value of the consideration given or received, compared with the issuer s market capitalisation. The number of equity securities issued by the issuer as consideration for an acquisition, compared with the number of equity securities previously in issue. For illustrative purposes only and based on the latest audited financial statements of the Group for FY2009, the relative figures computed on the bases set out in Rule 1006 of the Listing Manual are as follows: (a) (b) Rule 1006(a) - The net asset value of the assets to be disposed of compared with the Group s net asset value. This basis is not applicable to an acquisition of assets. Rule 1006(b) - The net loss attributable to the assets acquired or disposed of compared with the Group s net loss. 38.3% 106.8% 6

7 (c) (d) Rule 1006(c) - The aggregate value of the consideration given or received compared with the issuer s market capitalisation. Rule 1006(d) - The number of equity securities issued by the issuer as consideration for an acquisition, compared with the number of equity securities previously in issue. The Consideration of S$5,011,000 constitutes approximately 16.3% of the Company s market capitalisation of approximately S$30,720,000, based on the weighted average market price of approximately S$0.12 per Share as at 26 March 2010, being the last trading day immediately preceding the date of the Sale Agreement. Not Applicable As the applicable relative figure computed under Rule 1006(a) exceeds 20%, the Disposal is classified as a major transaction and therefore requires the approval of Shareholders. THE DISPOSAL Under the Sale Agreement, the Company shall sell to the Purchaser the entire issued share capital of Creative Master Limited, Company Registration No.: ) ( CML ), a private company incorporated in Hong Kong having its registered office at Flat D, 3/F, Yeung Yiu Chung (No 8) Industrial Building, 20 Wang Hoi Road, Kowloon Bay, Hong Kong and is the wholly-owned subsidiary of the Company. CML is an investment holding company, holding the shares of various subsidiaries engaged in the Business as more particularly described in Appendix 1 (the CML Group ). Pursuant to the Disposal, all the assets and liabilities held by the Group shall be disposed, save for the available-for-sale financial assets of HK$14.3 million, being an investment in 25% of the issued and paid up share capital of Tronic International Pte Ltd, as well as cash balances of S$0.5 million ( Assets to be Disposed ). The Assets to be Disposed includes CML which holds the core business of the Group. Consideration The total Consideration for the sale of the entire issued share capital of CML shall be S$5,011,000 (Singapore Dollars Five million and Eleven thousand only) ( Consideration ) and was arrived at on a willing buyer and willing seller basis after arm s length negotiations and based on the NTA of the Assets to be Disposed, comprising: (a) (b) the Deposit; and the Balance Consideration of S$4,760,450 (Singapore Dollars Four Million Seven Hundred and Sixty Thousand Four Hundred and Fifty only), which shall be payable by the Purchaser to the Seller as at the Completion Date. The Purchaser shall pay to the Seller the Deposit, representing five per cent (5%) of the Consideration, within seven (7) days from the date of the Sale Agreement. In the event that the Completion takes place in accordance with the Sale Agreement, the Deposit shall be applied towards and set off against an amount of S$250,550 of the Consideration payable by the Purchaser to the Company. The Consideration represents a premium of approximately S$816,000 or 19.5% over the book value of the Assets to be Disposed (based on an exchange rate of HK$5.577 to S$1). As the Company has been making losses for the last 3 financial years and continued to make losses in 1Q 2010, the Board considered the net tangible assets as the most appropriate basis for the Consideration Amount. 7

8 Conditions Precedent The Disposal is conditional upon: (a) (b) (c) (d) the Company obtaining such approval(s) in connection with the Proposed Disposal from its board of Directors and/or shareholders of the Company, as may be necessary; approval in-principle being obtained by the Company from SGX-ST for the circular to shareholders of the Company in respect of the transactions contemplated in this Agreement and not having been revoked or amended and, where such approval is subject to conditions (which are not normally imposed by the SGX-ST Mainboard for a transaction of similar nature), to the extent that any conditions are required to be fulfilled on or before Completion Date, they are so fulfilled; the audit committee of the Company obtaining a separate letter from an independent financial adviser pursuant to the Listing Manual; and all consents, approvals, and other authorizations of any governmental or regulatory body or agencies and third parties where required for this transaction having been obtained without any conditions unsatisfactory to the Purchaser. Completion The disposal of CML shall be completed on the date falling ten (10) Business Days after the day on which the conditions precedent listed above have been fully satisfied or, if capable of being waived, waived. On Completion, the Company shall deliver/procure to the Purchaser: (a) (b) (c) evidence and documents to the reasonable satisfaction of the Purchaser of the due fulfilment of all the conditions specified above; duly completed and executed transfers of the shares of CML in favour of the Purchaser or its nominee, together with the original share certificate(s) in respect of all the shares of CML as required for the due stamping by the Purchaser of the share transfers; and the passing of board resolutions of the Company, inter alia, approving the registration of the transfer of the shares of CML to the Purchaser or its nominee (subject to the transfers being duly stamped) and the issuance of new share certificates for the shares of CML in the name of the Purchaser or its nominee. On Completion, the Purchaser shall: (a) (b) pay the Balance Consideration to the Company; and deliver to the Company evidence and documents to the reasonable satisfaction of the Company evidencing: (i) (ii) that the net cash balance in the bank account of the Company as at Completion Date is equal to an amount of S$375,000 (Singapore Dollars Three Hundred and Seventy Five Thousand only) after the provision of payment of directors fees and audit fees for FY2009; and the unconditional release and discharge of all financial guarantees executed by the Company, with respect to banking facilities granted to the Group amounting to approximately HK$34,478,000 as at 31 December 2009 and that there are no further undertakings and/or commitments on the part of the Company to any bank. 8

9 Rationale The Directors of the Company are of the view that it is in the best interest of the Company to undertake the Disposal for the following reasons: (i) (ii) (iii) (iv) The revenue of the Group has been declining due to the competitive environment of the business. Despite reductions in operating expenses, the Company has incurred losses for the last 3 consecutive financial years including FY2009. The Business as independent contract manufacturer of high quality die-cast collectibles has been facing difficult and challenging times due to reduced global demand and rising costs of raw material and increases in the wages of workers in the Peoples Republic of China. It is envisaged that in order to continue supporting and subsequently turn around the financial performance of the Group, significant fresh capital will be required to meet working capital requirements, such as increased investment in business development and sales and marketing expenses, which the Company is not currently in a position to provide. By disposing the CML Group, the Company will be able to substantially clear its liabilities, conserve its limited resources and be in a better position to identify and explore any new business that is expected to enhance shareholder value moving ahead. Upon completion of the Disposal, the Company s assets will comprise mainly the Consideration and its investment in Tronic International Pte Ltd. The Company shall thereafter carry on business as an investment holding company and the special committee of the Board shall endeavour to continue looking into the possibility of mergers and acquisitions to further improve the financial position of the Company and effective utilisation of the proceeds from the Disposal. Financial Effects of the Disposal on the NTA and EPS of the Company For illustration purposes only, the financial effects of the Disposal on the Company set out below were prepared based on the financial statements of the Group for the most recently completed financial year ended 31 December 2009 and subject to the following key assumptions:- (a) (b) For the purpose of computing the earnings and EPS of the Company after the Disposal, it is assumed that the Disposal was effected on 1 January 2009; and For the purpose of calculating the NTA of the Group after the Disposal, it assumed that the Disposal was completed on 31 December The financial effects set out below are theoretical in nature and are therefore not necessarily indicative of the results of the Company or the related effect on the financial position that would have been attained had the Disposal taken place in accordance with the key assumptions set out herein. Net Tangible Assets The pro forma financial effects of the Disposal on the NTA of the Group in S$ equivalent are as follows: Before the Disposal After the Disposal Consolidated NTA attributable to Shareholders as at (S$ 000) 7,361 7,986 Number of Shares ( 000) 256, ,000 Consolidated NTA per Share (cents)

10 Earnings per Share The pro forma financial effects of the Disposal on the EPS of the Company in S$ equivalent are as follows: Before the Disposal After the Disposal Net profi t (loss) of Group (S$ 000) (4,848) 365 Number of Shares ( 000) 256, ,000 EPS (cents): (Loss) Profi t (1.89) 0.14 ADVICE OF THE INDEPENDENT FINANCIAL ADVISOR DMG has been appointed as the independent financial adviser to the Independent Directors to advise on whether or not the Disposal is on normal commercial terms and is not prejudicial to the interests of the Company and its independent Shareholders. A copy of the letter dated 28 June 2010 from the IFA to the Independent Directors is set out in Appendix 2 of this Circular. Taking into consideration the factors set out in the letter dated 28 June 2010 from the IFA to the Independent Directors, the IFA is of the view that the Disposal is on normal commercial terms and is not prejudicial to the interests of Company and its independent Shareholders. INDEPENDENT DIRECTORS RECOMMENDATION As set out earlier in this Circular, by virtue of Mr Tong s interest in the Disposal, Mr Tong will abstain from making any recommendation to the Shareholders in respect of the Disposal. Having considered the terms, rationale and benefits of the Disposal and the advice of the IFA, the Independent Directors are of the opinion that the Disposal is on normal commercial terms and is not prejudicial to the interests of the Company and its independent Shareholders. Accordingly, the Directors recommend that the Shareholders VOTE FOR the Ordinary Resolutions set out in the Notice of SGM relating to the Disposal. However, as different Shareholders would have different investment objectives, the Directors recommend that any individual Shareholder who may require specific advice in relation to his investment portfolio should consult his stockbroker, bank manager, solicitor, accountant or other professional adviser. In this connection, the Directors recommend that Shareholders should read carefully in their entirety the letter from the IFA as reproduced as Appendix 2 of this Circular. INTEREST OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS Save as disclosed above in this Circular, none of the Controlling Shareholders or the Directors has any interest, direct or indirect, in the Disposal. SHAREHOLDING INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS The interests of the Directors and substantial Shareholders in the Shares as at the Latest Practicable Date are set out below: Directors Direct Interest % Deemed Interest % Chan Chong Beng 10,100, Carl Tong Ka Wing 1,070, Danny Lo Kan Yu 250, Peter Ng Loh Ken Chan Yu Meng 10

11 Directors Direct Interest % Deemed Interest % Substantial Shareholders (5% or more) other than Directors PPS Capital Pte Ltd 20,000, ,000, (1) Tronic International Pte Ltd 40,000, (2) Note:- (1) PPS Capital Pte Ltd has a deemed interest in 40,000,000 shares of the Company held by Tronic International Pte Ltd. (2) Tronic International Pte Ltd had entered into a sale and purchase agreement dated 31 December 2009 with Acma Strategic Holdings Limited, whereby, Tronic International Pte Ltd has agreed to purchase 40,000,000 shares of the Company ( SPA ). On 19 April 2010, Tronic International Pte Ltd completed the SPA and, as at the Latest Practicable Date, has a direct interest in 40,000,000 shares of the Company and no deemed interest. SHAREHOLDERS WHO WILL ABSTAIN FROM VOTING As set out earlier in this Circular, by virtue of Mr Tong s and Mr Kwok s interest in the Disposal, Mr Tong and Mr Kwok will abstain from voting in respect of their shareholdings, if any, in the Company in relation to the Disposal. SPECIAL GENERAL MEETING The SGM, notice of which is set out in this Circular, will be held at The Board Room of Goodrich Global Pte Ltd, Goodrich Building, 8 Changi South Lane #05-01, Singapore on 15 July 2010 at am for the purpose of considering and, if thought fit, passing, with or without modification the ordinary resolutions set out in the Notice of SGM. ACTION TO BE TAKEN BY SHAREHOLDERS Shareholders who are unable to attend the SGM and who wish to appoint a proxy or proxies to attend and vote on their behalf should complete, sign and return the Proxy Form as soon as possible and, in any event, so as to arrive at the Share Transfer Office of the Company at 138 Robinson Road #17-00, The Corporate Office, Singapore , not later than 48 hours before the time fixed for the SGM. The appointment of a proxy by a Shareholder does not preclude him from attending and voting in person at the SGM if he so wishes in place of the proxy if he finds that he is able to do so. A Depositor shall not be regarded as a member of the Company entitled to attend the SGM and to speak and vote thereat unless his name appears on the Depository Register maintained by CDP pursuant to Division 7A of Part IV of the Act at least 48 hours before the SGM. CONSENTS DMG has given and has not withdrawn its written consent to the issue of this Circular with the inclusion herein of its opinion in respect of the Disposal in the form and context in which it appears in this Circular and references to its name in the form and context in which it appears in this Circular and to act in such capacity in this Circular. DIRECTORS RESPONSIBILITY STATEMENT The Directors of the Company collectively and individually accept full responsibility for the accuracy of the information given herein and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated in this Circular are accurate and that there are no material facts the omission of which would make any statement in this Circular misleading. 11

12 ADDITIONAL INFORMATION The attention of Shareholders is drawn to the additional information set out in Appendix 1 of this Circular. DOCUMENTS FOR INSPECTION Copies of the following documents may be inspected at the principal place of business at 1 Robinson Road #18-00 AIA Tower Singapore during normal business hours from the date of this Circular up to and including the date of the SGM: (a) (b) (c) the Sale Agreement; the letter dated 28 June 2010 from the IFA to the Independent Directors set out in Appendix 2 to the Circular; and the letter of consent referred to in this Circular. Yours faithfully For and on behalf of the Board of Directors of Creative Master Bermuda Limited Chan Chong Beng Non Executive Chairman 12

13 APPENDIX 1 GENERAL AND STATUTORY INFORMATION 1. Information on the CML Group Name Date and place of incorporation / registration Principal business Issued and paid up capital % owned by CML Creative Master Overseas Holdings Limited Creative Master Special Holdings Limited Creative Master Special Holdings Inc Hong Kong 4 October 1999 Hong Kong 16 December 1998 British Virgin Islands 23 October 1998 Investment Holding HK$2 100 Dormant HK$ Dormant US$ Creative Master Northcord Limited Hong Kong 21 January 2000 Development and marketing of diecast collectibles HK$ Carison Engineering Limited Hong Kong 17 March 1987 Manufacturing of moulds HK$ Mastercraft Engineering Limited Hong Kong 19 September 1996 Manufacturing of moulds HK$30, Techtime Industries Limited Hong Kong 5 December 1995 Dormant HK$10, Excel Master Limited Hong Kong 10 November 1987 Development, manufacturing and trading of die-cast collectibles HK$8,000, Creative Master L&W Limited Hong Kong 28 February 2001 Manufacturing of moulds HK$5,000, Dongguan Chuangying Toys Factory Co. Ltd. Peoples Republic of China 10 September 1994 Manufacturing of die-cast collectibles HK$ 12,400, Dongguan Chuangying Lihua Mould Co. Ltd. Peoples Republic of China 8 February 2004 Manufacturing of moulds HK$42,757,

14 2. Material Contracts Save as disclosed below, neither the Company nor any of its Subsidiaries have entered into any material contracts (not being contracts entered into in the ordinary course of business during the two (2) years preceding the Latest Practicable Date: (a) (b) (c) As announced by the Company on 7 July 2008, the Company had entered into placement agreements dated 7 July 2008 with (i) Lim Chye Bobby Lim Chye Huat; (ii) Thang Yee Chin; (iii) Chan Chong Beng and (iv) Jonathan Lim Keng Hock (collectively known as Placees ), pursuant to which the Placees were allotted and issued a total of 36,000,000 Shares of the Company at 7.7 Singapore cents for each Share ( Share Placement ). The Company raised net proceeds of HK$14,900,000 from the Share Placement; As announced by the Company on 25 February 2009, the sale and purchase agreement dated 28 August 2008 ( SPA ) with TRS Investments Pte Ltd (the Seller ) was terminated. As announced by the Company on 28 August 2008, the Company entered into the SPA, to purchase 900,000 shares representing 32% of the issued and paid up share capital of Tronic International Pte Ltd from the Seller at a consideration of an amount of S$16,896,000 as per the terms of the SPA. The terms of the SPA were subsequently revised on 11 November 2008 and 16 December As announced by the Company on 24 July 2009, the Company entered into a sale and purchase agreement dated 24 July 2009 with PPS Capital Pte Ltd, Kucheryavy Igor, Lin Hung Yi and Huang Tuan Li-Erh (collectively Tronic Sellers ) to purchase 703,125 ordinary shares ( Tronic Shares ) representing 25% of the issued and paid-up share capital of Tronic International Pte Ltd ( Tronic ) from the Tronic Sellers. Tronic has wholly-owned subsidiaries in Russia, Taiwan, Malaysia and Singapore and is primarily engaged in the business of providing technical solutions for facility engineering solutions and also providing technical solutions to the semi conductor manufacturing and IT related industries. The total consideration for the sale of the Tronic Shares was S$3,600,000 and satisfied by the allotment and issue by the Company to the Tronic Sellers of 40,000,000 ordinary shares at an issue price of S$0.09. As announced by the Company on 26 October 2009, the acquisition of Tronic Shares was completed on 23 October Material Litigation Neither the Company nor any of its Subsidiaries is engaged in any material litigation either as plaintiff or defendant, and the Directors do not have any knowledge of any proceedings pending or threatened against the Company nor any of its Subsidiaries the outcome of which, in the Director s opinion, may have, or have had in the last 12 months before the Latest Practicable Date, material affect on the financial position, the profitability, or the business of the Group as at the Latest Practicable Date. 14

15 APPENDIX 2 LETTER FROM DMG & PARTNERS SECURITIES PTE LTD TO THE INDEPENDENT DIRECTORS 28 June 2010 The Independent Directors of Creative Master Bermuda Limited Canon s Court 22 Victoria Street Hamilton HM 12 Bermuda Dear Sirs, APPROVAL OF THE PROPOSED DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF CREATIVE MASTER LIMITED AS AN INTERESTED PERSON TRANSACTION PURSUANT TO RULE 906 OF THE LISTING MANUAL OF SGX-ST For the purpose of this letter, capitalised terms not otherwise defined shall have the meaning given to them in the Circular dated 28 June 2010 to the Shareholders of the Company. 1 INTRODUCTION On 29 March 2010, the Directors announced that Creative Master Bermuda Limited (the Company ) had entered into a sale agreement dated 29 March 2010 (the Sale Agreement ) with Creative Sky Engineering Limited (the Purchaser ) for the sale of its entire interest in Creative Master Limited (the Disposal ). The Proposed Disposal is considered to be an interested person transaction under Chapter 9 of the Listing Manual (the Interested Person Transaction ). Under Chapter 9 of the Listing Manual, where a listed company or any of its subsidiaries or associated companies that is an entity at risk proposes to enter into a transaction with its interested persons, shareholders approval and/or an immediate announcement is required in respect of that transaction if its value is equal to or exceeds certain financial thresholds. In particular, shareholders approval (in addition to an immediate announcement) is required where the value of such transaction equals to or exceeds 5% of the Group s latest audited NTA. In obtaining such approval, the interested person and his associates are required to abstain from voting on the resolution approving the transaction. In addition to requiring shareholders approval, the independent directors of the listed company are also required to obtain an opinion in a separate letter from an independent financial adviser acceptable to the SGX-ST stating whether the transaction is on normal commercial terms and is not prejudicial to the interest of the listed company and its shareholders. Accordingly, DMG & Partners Securities Pte Ltd ( DMG ) has been appointed by the Company as the independent financial adviser in respect of the Interested Person Transaction in relation to the Disposal, to advise the Independent Directors as to whether the Disposal is on normal commercial terms and is not prejudicial to the interest of the Company and its minority Shareholders who are independent of the Disposal (the Independent Shareholders ). Unless otherwise defined or the context otherwise requires, all terms defined in the Circular shall have the same meanings herein. 15

16 2 TERMS OF REFERENCE DMG has been appointed to advise the Independent Directors only in respect of whether the financial terms of the Disposal are on normal commercial terms and are not prejudicial to the interests of the Company and the Independent Shareholders. DMG is neither a party to the negotiations or discussions in relation to the Disposal, nor were we involved in the deliberations leading up to the decision on the part of the Directors to enter into Disposal, and we do not, by this letter, advise on the merits of the Disposal other than to form an opinion on whether the Disposal is on normal commercial terms and will not be prejudicial to the interests of the Company and its Independent Shareholders. Our terms of reference do not require us to evaluate or comment on the strategic, commercial, financial merits or risks (if any) of the Disposal or to compare its relative merits vis-à-vis alternative transactions previously considered by the Company (if any) or that may otherwise be available to the Company currently or in the future, and we do not express an opinion on any of the aforesaid. We are not required to and have not made any independent appraisal or valuation of the assets and liabilities of the Company, the Group and/or Creative Master Limited. Any such evaluation, comment, comparison, consideration, appraisal or valuation remains and is solely the responsibility of the Directors and the management of the Company, but we may draw upon their views or make comments in respect thereof (to the extent we deem necessary or appropriate at our sole discretion) in arriving at our opinion as set out in this letter. We have also relied on information on the Company, the Group and/or Creative Master Limited, including the disclosures and representations made by the Company on the values of the assets and liabilities of the Company, the Group and/or Creative Master Limited stated therein. For the purpose of our advice and opinion, we have relied on publicly available information collated by us, information set out in the Circular, and information (including representations, opinions, facts and statements) provided to us by the Directors, management and employees, and the advisers of the Company. We have relied on the assurances of the Directors and management of the Company that they jointly and severally accept full responsibility for the accuracy, truth, completeness and adequacy of such information and they have confirmed to us that, upon making all reasonable inquiries and to the best of their respective knowledge, information and belief, all material information in connection with the Disposal, the Circular and the Company has been disclosed to us, that such information is true, complete, accurate and fair in all material respects and that there is no other information or fact, the omission of which would cause any information disclosed to or relied upon by us or the facts of or in relation to the Disposal and/or the Company to be inaccurate, untrue, incomplete, unfair or misleading in any material respect. We have not independently verified any of the aforesaid information whether written or verbal, and have assumed its accuracy, truth, completeness and adequacy, including without limitation any information on the assets and liabilities of the Company, the Group and/or Creative Master Limited. Accordingly, we cannot and do not represent or warrant (expressly or impliedly), and do not accept any responsibility for the accuracy, truth, completeness or adequacy of such information. We have further assumed that all statements of fact, belief, opinion and intention made by the Directors and the management of the Company to us or in the Circular have been reasonably made after due and careful inquiry. Whilst care has been exercised in reviewing the information upon which we have relied, we have not independently verified such information but nevertheless have made such reasonable enquiry and exercised our judgment on the reasonableness of such information as we have deemed necessary and have found no reason to doubt the accuracy or reliability of the information. The scope of our appointment does not require us to conduct a comprehensive independent review of the business, operations or financial condition of the Company, the Group and/or Creative Master Limited, or to express, and we do not express, a view on the future growth prospects, value and earnings potential of the Company, the Group and/or Creative Master Limited. Such review or comment, if any, remains the responsibility of the Directors and the management of the Company, the Group and/or Creative Master Limited, although we may draw upon their views or make such comments in respect thereof (to the extent required by the Listing Manual and/or deemed 16

17 necessary or appropriate by us) in arriving at our advice as set out in this letter. We have not obtained from the Company, the Group and/or Creative Master Limited any projection of the future performance including financial performance of the Company, the Group and/or Creative Master Limited and further, we did not conduct discussions with the Directors and management of the Company, the Group and/or Creative Master Limited on, and did not have access to, any business plan and financial projections of the Company, the Group and/or Creative Master Limited. We also do not express an opinion herein as to the prices at which the shares of the Company may trade or the future value, financial performance or condition of the Company and/or the Group, upon or after completion of the Disposal. Our advice and opinion herein is based upon market, economic, industry, monetary and other conditions prevailing on, and the information provided to us as of 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, and this letter does not take into account, any subsequent development after the Latest Practicable Date that may affect our opinion herein. The Company has been separately advised by its 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). We have not regarded the general or specific investment objectives, financial situation, tax position, risk profile or unique needs and constraints of any individual Shareholder. As different Shareholders would have different investment portfolios and objectives, we would advise the Independent Directors to recommend that any individual Shareholder who may require specific advice in relation to his or her investment portfolio should consult his or her stockbroker, bank manager, solicitor, accountant, tax advisor or other professional advisers. As stated above, this letter is only for the use and benefit of the Independent Directors and the recommendations made by them to the Independent Shareholders are the responsibility of the Independent Directors. Shareholders should also take note of any announcements relevant to the Disposal which may be released by the Company after the Latest Practicable Date. 3 TERMS OF THE DISPOSAL 3.1 The Disposal Under the Sale Agreement, the Company shall sell to the Purchaser the entire issued share capital of Creative Master Limited, a wholly-owned subsidiary of the Company. Creative Master Limited is an investment holding company, holding the shares of various subsidiaries engaged in the business of (i) development and marketing of die-cast collectibles and (ii) manufacturing of moulds (the Business ). Details of the subsidiaries of Creative Master Limited and the Business are set out in Appendix 1 to the Circular. Pursuant to the Disposal, all the assets and liabilities held by the Group shall be disposed, save for the available-for-sale financial assets of HK$14.3 million, being an investment in 25% of the issued and paid up share capital of Tronic International Pte Ltd, as well as cash balances of S$0.5 million ( Assets to be Disposed ). The Assets to be Disposed includes CML which holds the core business of the Group. 3.2 The Consideration Information relating to the Consideration for the Disposal has been extracted from the Circular and is 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:- 17

18 The total Consideration for the sale of the entire issued share capital of CML shall be S$5,011,000 (Singapore Dollars Five million and Eleven thousand only) ( Consideration ) and was arrived at on a willing buyer and willing seller basis after arm s length negotiations and based on the NTA of the Assets to be Disposed comprising: (a) (b) the Deposit; and the Balance Consideration of S$4,760,450 (Singapore Dollars Four Million Seven Hundred and Sixty Thousand Four Hundred and Fifty only), which shall be payable by the Purchaser to the Seller as at the Completion Date. The Purchaser shall pay to the Seller the Deposit, representing five per cent (5%) of the Consideration, within seven (7) days from the date of the Sale Agreement. In the event that the Completion takes place in accordance with the Sale Agreement, the Deposit shall be applied towards and set off against an amount of S$250,550 of the Consideration payable by the Purchaser to the Company. The Consideration represents a premium of approximately S$816,000 or 19.5% over the book value of the Assets to be Disposed (based on an exchange rate of HK$5.577 to S$1). As the Company has been making losses for the last 3 financial years and continued to make losses in 1Q 2010, the Board considered the net tangible assets as the most appropriate basis for the Consideration Amount. 3.3 Conditions Precedent The conditions precedent for the Completion of the Disposal has been extracted from the Circular and is 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:- The Disposal is conditional upon: (a) the Company obtaining such approval(s) in connection with the Proposed Disposal from its board of Directors and/or shareholders of the Company, as may be necessary; (e) (f) (g) approval in-principle being obtained by the Company from SGX-ST for the circular to shareholders of the Company in respect of the transactions contemplated in this Agreement and not having been revoked or amended and, where such approval is subject to conditions (which are not normally imposed by the SGX-ST Mainboard for a transaction of similar nature), to the extent that any conditions are required to be fulfilled on or before Completion Date, they are so fulfilled; the audit committee of the Company obtaining a separate letter from an independent financial adviser pursuant to the Listing Manual; and all consents, approvals, and other authorizations of any governmental or regulatory body or agencies and third parties where required for this transaction having been obtained without any conditions unsatisfactory to the Purchaser. 4 INTERESTED PERSON TRANSACTION The Purchaser is incorporated in Hong Kong and is an investment holding company. It is 53% owned by Double Triumph Consulting Limited, a company incorporated in the British Virgin Islands ( DTCL ). The shares of DTCL are beneficially held in trust for the immediate family of Mr Carl Tong Ka Wing ( Mr Tong ). The remaining 47% of the Purchaser is owned by Mr Kwok Sheck Pui ( Mr Kwok ). Mr Tong is the Chief Executive Officer and Executive Director of the Company and holds 1.07 million shares of the Company representing 0.42% of its entire issued and paid up share capital. Mr Kwok is the Chief Operating Officer of the Company and holds million shares of the Company representing 3.94% of its entire issued and paid up share capital. 18

19 Mr Tong is therefore deemed to be an interested person within the meaning of Chapter 9 of the Listing Manual and the Disposal amounts to an Interest Person Transaction which will require the approval of Shareholders. The Consideration of S$5,011,000 (Singapore Dollars Five million and Eleven thousand only) represents 68.08% of the latest audited Net Tangible Assets ( NTA ) of the Group. Hence the Disposal is an Interested Person Transaction and will attract the requirements under Rule 906 of the Listing Manual that requires shareholders approval where the value of such transaction equals to or exceeds 5% of the Group s latest audited NTA. 5 EVALUATION OF THE DISPOSAL In our evaluation of the Disposal, we have given due consideration to, inter alia, the following factors: (a) (b) (c) (d) (e) (f) (g) value of assets to be disposed; financial performance and position of the Group; financial performance and position of Creative Master Limited; financial assessment of the Consideration; financial effects of the Disposal; rationale for the Disposal; and other relevant considerations. 5.1 Value of Assets to be Disposed Based on our discussion with the Directors, we understand that all the assets and liabilities held by the Group shall be disposed, save for the available-for-sale financial assets of HK$14.3 million, being an investment in 25% of the issued and paid up share capital of Tronic International Pte Ltd, as well as cash balances of S$0.5 million ( Assets to be Disposed ). Based on the above, we compute the value of the Assets to be Disposed as follows: HK$ 000 (1) S$ 000 (1) Equity attributable to Shareholders of the Company as at 31 40,484 7,211 December 2009 Less: available-for-sale financial assets (14,300) (2,547) Less: cash balances (2,807) (500) Value of Assets to be Disposed 23,377 4,164 Consideration 28,132 5,011 Based on the computation set out above, the Consideration of S$5,011,000 represents a premium of approximately S$847,000 or 20.34% over the value of the Assets to be Disposed. Please see Note (1) below. The Assets to be Disposed comprises the following: HK$ 000 (1) S$ 000 (1) Equity attributable to shareholders of Creative Master Limited as 26,819 4,777 at 31 December 2009 (2) Net liabilities of the Company (3,442) (613) Value of Assets to be Disposed 23,377 4,164 19

20 Notes: (1) Based on the conversion rate of HK$5.6141:S$1, as at the Latest Practicable Date. (2) Assuming the amount of approximately HK$67.7 million owed by Creative Master Limited to the Company is written off. Details relating to the provision of this amount by the Company is set out in section of this letter. 5.2 The Financial Performance and Position of the Group The table below provides a summary of the financial performance as well as the position of the Group for FY2007, FY2008 and FY2009. Shareholders are advised to refer to the respective annual reports and announcements posted on the SGX-ST s website for further information. Income Statement FY2007 FY2008 FY2009 HK$ 000 Audited Audited Audited Revenue 439, , ,634 Cost of sales (389,778) (383,376) (305,118) Gross profit 49,381 (4,011) 17,516 Loss before tax (7,853) (61,961) (23,751) Loss after tax (11,234) (63,678) (25,375) Loss for the year attributable to: Shareholders (16,884) (66,571) (26,666) Minority interests 5,650 2,893 1,291 (11,234) (63,678) (25,375) Balance Sheet FY2007 FY2008 FY2009 HK$ 000 Audited Audited Audited Non-current assets 60,011 54,151 64,067 Current assets 193, , ,684 Current liabilities 129, , ,324 Net current assets 64,339 26,056 8,360 Non-current liabilities 3,475 7,776 11,383 Net assets 120,875 72,431 61,044 Total equity attributable to: Shareholders 104,499 53,162 40,484 Minority interests 16,376 19,269 20, ,875 72,431 61,044 Total borrowings 43,804 34,061 34,668 Cash and cash equivalents 11,231 17,938 10,610 Gearing (times) Net Gearing (times)