OFFER DOCUMENT DATED 26 NOVEMBER 2009

Transcription

1 (Incorporated in the Republic of Singapore on 6 October 2009) (Company Registration No C) Placement of 32,500,000 New Shares at $0.20 for each Share, payable in full on application. OFFER DOCUMENT DATED 26 NOVEMBER 2009 THIS OFFER IS MADE IN OR ACCOMPANIED BY THE OFFER DOCUMENT THAT HAS BEEN REGISTERED BY THE SINGAPORE EXCHANGE SECURITIES TRADING LIMITED (THE SGX- ST ) ACTING AS AN AGENT ON BEHALF OF THE MONETARY AUTHORITY OF SINGAPORE (THE AUTHORITY ) ON 26 NOVEMBER THE REGISTRATION OF THIS OFFER DOCUMENT BY THE SGX-ST ACTING AS AN AGENT ON BEHALF OF THE AUTHORITY DOES NOT IMPLY THAT THE SECURITIES AND FUTURES ACT (CHAPTER 289) OF SINGAPORE, OR ANY OTHER LEGAL OR REGULATORY REQUIREMENTS, OR REQUIREMENTS UNDER THE SGX-ST S LISTING MANUAL, HAVE BEEN COMPLIED WITH. This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax, or other professional adviser(s). Collins Stewart Pte. Limited (the Sponsor ) has made an application to the SGX-ST for permission to deal in, and for quotation of, all the ordinary shares (the Shares ) in the capital of Hafary Holdings Limited already issued and the new Shares (the New Shares ) on the Catalist. The Sponsor has submitted this Offer Document to the SGX-ST. Acceptance of applications will be conditional upon the issue of the New Shares and permission being granted by the SGX-ST for the listing and quotation of all our existing issued Shares and the New Shares on the Catalist. Monies paid in respect of any application accepted will be returned if the admission and listing do not proceed. The dealing in and quotation of the Shares will be in Singapore dollars. Companies listed on the Catalist may carry higher investment risk when compared with larger or more established companies listed on the SGX-ST Main Board. In particular, companies may list on the Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on the Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s). Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor confirming that our Company is suitable to be listed on the Catalist and complies with the rules of the Listing Manual (as defined herein). Neither the Authority nor the SGX-ST has, in any way, considered the merits of the Shares or units of Shares being offered for investment. We have not lodged or registered this Offer Document in any other jurisdiction. After the expiration of six months from the date of registration of this Offer Document, no person shall make an offer of securities, or allot, issue or sell any securities, on the basis of this Offer Document; and no officer or equivalent person or promoter of the Company will authorise or permit the offer of any securities or the allotment, issue or sale of any securities, on the basis of this Offer Document. Investing in our Shares involves risks which are described in the RISK FACTORS section of this Offer Document. Sponsor and Placement Agent COLLINS STEWART PTE. LIMITED (Incorporated in the Republic of Singapore) (Company Registration No D)

2 ABOUT US Established in 1980, we are a supplier of tiles to customers in the Singapore market. We have two categories of customers, namely, (a) General; and (b) Project. Through our strong sourcing and procurement network, we carry a wide variety of tiles from the PRC and Europe (mainly Spain and Italy) and supply to our customers at competitive prices. Our head office and main showroom is located at 15 Defu Avenue 1 Singapore , while our other showroom is located at 560 Balestier Road Singapore Our warehousing facilities are located at 5A Defu Lane 8 Singapore , 3 Defu Lane 9 Singapore and 58 Sungei Kadut Street 1 Singapore Our head office, two showrooms and three warehouses occupy an aggregate built-in area of approximately 139,199 sqft. OUR BUSINESS General: General customers accounted for 65.0% of revenue in FY2009 Retail walk-in customers who purchase their requirements directly from our showrooms Customers such as architecture, interior design and renovation firms who make ad-hoc purchases for small projects such as home renovation or small property development We display a variety of individual tiles and mock-ups of kitchens and bathrooms using our tiles for the viewing by these customers at our showrooms Project: Project customers accounted for 35.0% of revenue in FY2009 Customers who are usually involved in major property development projects and may make bulk purchases from us, usually for specific major property development projects, whether residential, commercial, public or industrial Customers include architecture firms, property developers and construction companies Public sector: HDB upgrading, construction or upgrading of public buildings such as schools, hospitals, sports complexes, military camps and other government buildings Private sector residential, commercial and industrial projects such as condominiums, shopping centres and hotels We provide value-added services to both our General and Project customers such as:- i. layout proposals to assist in the visualisation of the application of selected tiles and finishing; ii. detailed design drawings to assist in installation of the tiles, including estimating the quantities of tiles required for the various proposed designs; and iii. technical advice on product installation and maintenance. COMPETITIVE STRENGTHS We have an established reputation and track record with customers We carry a comprehensive range and wide variety of tiles We have an experienced and committed management team We have a strong sourcing and procurement network PROSPECTS Our prospects are dependent on the general economic outlook and property market in Singapore. We believe the following to be factors affecting the growth of our business:- State of the economy in Singapore Growth of the residential property market in Singapore Consumer trend of frequent redesigning, renovation and upgrading of homes Potential of the Vietnam market FUTURE PLANS Expanding our product range Expanding our geographical coverage Expanding our storage capacity Expansion through acquisitions, joint ventures and/or strategic alliances DIVIDEND PAYOUT For FY2010, our Directors intend to recommend and distribute at least 20% of our net profit attributable to Shareholders as dividends (subject to the factors outlined in the Dividend Policy section of this Offer Document). FINANCIAL HIGHLIGHTS Audited ($ million) FY2007 FY2008 FY2009 Revenue Profit before income tax Net profit for the year Net profit attributable to equity holders of the parent

3 CONTENTS CORPORATE INFORMATION... 4 DEFINITIONS... 5 GLOSSARY OF TECHNICAL TERMS SELLING RESTRICTIONS CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS DETAILS OF THE PLACEMENT LISTING ON THE CATALIST INDICATIVE TIMETABLE FOR LISTING OFFER DOCUMENT SUMMARY OVERVIEW OF OUR GROUP FINANCIAL HIGHLIGHTS THE PLACEMENT PLAN OF DISTRIBUTION USE OF PROCEEDS FROM THE PLACEMENT AND EXPENSES INCURRED MANAGEMENT AND PLACEMENT ARRANGEMENTS RISK FACTORS RISKS RELATING TO OUR BUSINESS AND INDUSTRY RISKS RELATING TO INVESTMENT IN OUR SHARES ISSUE STATISTICS DILUTION CAPITALISATION AND INDEBTEDNESS DIVIDEND POLICY SUMMARY OF OUR FINANCIAL INFORMATION MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION OVERVIEW SEASONALITY INFLATION REVIEW OF RESULTS OF OPERATIONS REVIEW OF FINANCIAL POSITION LIQUIDITY AND CAPITAL RESOURCES CAPITAL EXPENDITURES, DIVESTMENTS, COMMITMENTS AND CONTINGENT LIABILITIES FOREIGN EXCHANGE MANAGEMENT

4 CONTENTS GENERAL INFORMATION ON OUR GROUP SHARE CAPITAL RESTRUCTURING EXERCISE GROUP STRUCTURE SUBSIDIARIES SHAREHOLDERS MORATORIUM HISTORY BUSINESS BUSINESS OVERVIEW SALES AND MARKETING STAFF TRAINING RESEARCH AND DEVELOPMENT INTELLECTUAL PROPERTY INSURANCE QUALITY CONTROL AND ASSURANCE MAJOR SUPPLIERS MAJOR CUSTOMERS CREDIT POLICY AND MANAGEMENT INVENTORY MANAGEMENT PROPERTIES AND FIXED ASSETS COMPETITION COMPETITIVE STRENGTHS PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS PROSPECTS TREND INFORMATION BUSINESS STRATEGIES AND FUTURE PLANS GOVERNMENT REGULATIONS EXCHANGE CONTROLS DIRECTORS, EXECUTIVE OFFICERS AND STAFF MANAGEMENT REPORTING STRUCTURE DIRECTORS EXECUTIVE OFFICERS STAFF REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED EMPLOYEES SERVICE AGREEMENTS CORPORATE GOVERNANCE BOARD PRACTICES INTERESTED PERSON TRANSACTIONS PAST TRANSACTIONS PRESENT AND ON-GOING TRANSACTIONS REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS POTENTIAL CONFLICTS OF INTERESTS INTERESTS OF DIRECTORS, CONTROLLING SHAREHOLDERS OR THEIR ASSOCIATES INTERESTS OF EXPERTS

5 CONTENTS CLEARANCE AND SETTLEMENT GENERAL AND STATUTORY INFORMATION APPENDIX A INDEPENDENT AUDITORS REPORT ON THE AUDITED COMBINED FINANCIAL STATEMENTS OF HAFARY HOLDINGS LIMITED... A-1 APPENDIX B INDEPENDENT AUDITORS REPORT ON THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS OF HAFARY HOLDINGS LIMITED FOR THE FINANCIAL YEAR ENDED 30 JUNE B-1 APPENDIX C SUMMARY OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF OUR COMPANY... C-1 APPENDIX D DESCRIPTION OF OUR SHARES... D-1 APPENDIX E TAXATION... E-1 APPENDIX F TERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS... F-1 3

6 CORPORATE INFORMATION BOARD OF DIRECTORS : Low Kok Ann Executive Chairman Low See Ching Executive Director and CEO Ong Beng Chye Lead Independent Director Terrance Tan Kong Hwa Independent Director Chow Wen Kwan Marcus Independent Director COMPANY SECRETARIES : Wong Yoen Har, ACIS Tay Eng Kiat Jackson, CPA (Singapore) REGISTERED OFFICE : 15 Defu Avenue 1 Singapore SHARE REGISTRAR AND SHARE : Boardroom Corporate & Advisory Services Pte. Ltd. TRANSFER OFFICE 3 Church Street #08-01 Samsung Hub Singapore SPONSOR AND PLACEMENT AGENT : Collins Stewart Pte. Limited 77 Robinson Road #21-02 Singapore AUDITORS AND REPORTING : RSM Chio Lim LLP ACCOUNTANTS 8 Wilkie Road #03-08 Wilkie Edge Singapore SOLICITORS TO THE PLACEMENT : TSMP Law Corporation 6 Battery Road #33-01 Singapore RECEIVING BANKER : DBS Bank Ltd. 6 Shenton Way DBS Building Tower One Singapore PRINCIPAL BANKERS : DBS Bank Ltd. 6 Shenton Way DBS Building Tower One Singapore Partner-in-charge: Chan Weng Keen (A member of the Institute of Certified Public Accountants of Singapore) Standard Chartered Bank 6 Battery Road Singapore

7 DEFINITIONS In this Offer Document and the accompanying Application Forms, the following definitions apply throughout where the context so admits:- Companies within our Group Company : Hafary Holdings Limited Group : Our Company and our subsidiaries Hafary : Hafary Pte Ltd Hafary Group : Hafary and its subsidiaries, Surface Project and Surface Stone Surface Project : Surface Project Pte. Ltd. Surface Stone : Surface Stone Pte. Ltd. Other Corporations and Organisations Authority : The Monetary Authority of Singapore CDP : The Central Depository (Pte) Limited Collins Stewart, Sponsor : Collins Stewart Pte. Limited and Placement Agent CPF : The Central Provident Fund HDB : Housing and Development Board JTC : Jurong Town Corporation SCCS : Securities Clearing & Computer Services (Pte) Ltd SGX-ST : Singapore Exchange Securities Trading Limited General Act : The Companies Act (Chapter 50) of Singapore, as amended, supplemented or modified from time to time Application Forms : The printed application forms to be used for the purpose of the Placement and which form part of this Offer Document Application List : The list of applications for subscription of the New Shares Articles of Association : The articles of association of our Company Associate : (a) in relation to any director, chief executive officer, substantial shareholder or controlling shareholder (being an individual) means:- (i) (ii) his immediately family; the trustees, acting in their capacity as such trustees, of any trust of which he or his immediate family is a beneficiary or, in the case of a discretionary trust, is a discretionary object; or 5

8 DEFINITIONS (iii) any company in which he and his immediate family together (directly or indirectly) have an interest of 30% or more of the aggregate of the nominal amount of all the voting shares; (b) in relation to a substantial shareholder or a controlling shareholder (being a company) means any other company which is its subsidiary or holding company or is a fellow subsidiary of such holding company or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30% or more associated company : In relation to a corporation, means:- (a) (b) any corporation in which the corporation or its subsidiary has, or the corporation and its subsidiary together have, a direct interest of not less than 20% but not more than 50% of the aggregate of the nominal amount of all the voting shares; or any corporation, other than a subsidiary of the corporation or a corporation which is an associated company by virtue of paragraph (a), the policies of which the corporation or its subsidiary, or the corporation together with its subsidiary, is able to control or influence materially Audit Committee : The audit committee of our Company as at the date of this Offer Document, unless otherwise stated Board or Board of Directors : The board of Directors of our Company as at the date of this Offer Document, unless otherwise stated business trust : Has the same meaning as in Section 2 of the Business Trusts Act (Chapter 31A) of Singapore Catalist : The Sponsor-supervised listing platform of the SGX-ST CEO : Chief Executive Officer Controlling Shareholder : A person who has an interest in our Shares of an aggregate of not less than 15% of the total votes attached to all our Shares, or in fact exercises control over our Company Director : A director of our Company as at the date of this Offer Document, unless otherwise stated entity : Includes a corporation, an unincorporated association, a partnership and the government of any state, but does not include a trust EPS : Earnings per Share Executive Directors : The executive Directors of our Company as at the date of this Offer Document, unless otherwise stated 6

9 DEFINITIONS Executive Officers : The executive officers of our Group as at the date of this Offer Document, unless otherwise stated FY : Financial year ended or ending 30 June, as the case may be GST : Goods and Services Tax (Singapore) Independent Directors : The non-executive independent Directors of our Company as at the date of this Offer Document, unless otherwise stated Issue Price : $0.20 for each New Share Latest Practicable Date : 31 October 2009, being the latest practicable date prior to the lodgment of this Offer Document with the SGX-ST acting as an agent on behalf of the Authority Listing Manual : The SGX-ST Listing Manual Section B: Rules of Catalist, as amended, modified or supplemented from time to time Market Day : A day on which the SGX-ST is open for trading in securities New Shares : The 32,500,000 new Shares for which our Company invites applications to subscribe pursuant to the Placement, subject to and on the terms and conditions of this Offer Document Nominating Committee : The nominating committee of our Company as at the date of this Offer Document, unless otherwise stated NTA : Net tangible assets Offer Document : This offer document dated 26 November 2009 issued by our Company in respect of the Placement PBT : Profit before income tax PER : Price earnings ratio periods under review : The period which comprises FY2007, FY2008 and FY2009 Placement : The placement by the Placement Agent of the New Shares on behalf of our Company for subscription at the Issue Price, subject to and on the terms and conditions of this Offer Document Placement Shares : The 32,500,000 New Shares which are the subject of the Placement PRC or China : The People s Republic of China, excluding the Hong Kong Special Administrative Region and the Macau Special Administrative Region for the purposes of this Offer Document Remuneration Committee : The remuneration committee of our Company as at the date of this Offer Document, unless otherwise stated repeat customer : A repeat customer is a party who has made purchase(s) at least once in any two years over the periods under review (excluding cash sales to customers) 7

10 DEFINITIONS Restructuring Exercise : The corporate restructuring exercise undertaken in connection with the Placement, as described in the Restructuring Exercise section of this Offer Document Securities Account : The securities account maintained by a Depositor with CDP, but does not include a securities sub-account Service Agreements : The service agreements entered into between our Company and our Executive Directors as described in the Service Agreements section of this Offer Document SFA : The Securities and Futures Act (Chapter 289) of Singapore, as amended, modified or supplemented from time to time SGXNET : The corporate announcement system maintained by the SGX-ST for the submission of announcements by listed companies Shareholders : Registered holders of Shares, except where the registered holder is CDP, the term Shareholder shall, in relation to such Shares, mean the Depositors whose Securities Accounts are credited with Shares Shares : Ordinary shares in the capital of our Company SIBOR : Singapore Interbank Offered Rate Substantial Shareholder : A person who has an interest in voting shares of our Company, the total votes attached to which is not less than 5% of the total votes attached to all the voting shares in our Company UK : United Kingdom USA : United States of America Currencies, Units and Others EUR : Euro Dollars S$ or $ and cents : Singapore Dollars and Cents, respectively sqft : Square feet US$ : United States Dollars % : Percentage The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Act. Any discrepancies in the tables included herein between the total sum of amounts listed and the totals shown are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. 8

11 DEFINITIONS Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall include corporations. Any reference in this Offer Document and the Application Forms to any statute or enactment is a reference to that statute or enactment as for the time being amended or re-enacted. Any word defined under the Act, the SFA or any statutory modification thereof and used in this Offer Document and the Application Forms shall, where applicable or the context so requires, have the meaning assigned to it under the Act, the SFA or any statutory modification thereof, as the case may be. Any reference in this Offer Document and the Application Forms to Shares being allotted to an applicant includes allotment to CDP for the account of that applicant. Any reference to a time of day in this Offer Document and the Application Forms shall be a reference to Singapore time, unless otherwise stated. Any reference to we, us, our, ourselves or other grammatical variations thereof in this Offer Document is a reference to our Company, our Group or any member of our Group, as the context requires. Any reference to Low See Ching in this Offer Document is a reference to Low See Ching (Liu Shijin). Any reference to Yeo Ah Khim in this Offer Document is a reference to Yeo Ah Tay Poh Hong. 9

12 GLOSSARY OF TECHNICAL TERMS The glossary contains explanations of certain terms used in this Offer Document in connection with our Group. The terms and their assigned meanings may not correspond to standard industry or common meanings, as the case may be, or usage of these terms. ceramic tile : A tile made from clay or a mixture of clay and other ceramic materials, having either a glazed or unglazed face, and fired above red heat in the course of manufacture to a temperature sufficiently high to produce specific physical properties and characteristics. Ceramic tiles can be broadly classified into two categories, namely, porcelain (also known as homogeneous) tiles and nonporcelain tiles. epoxy : Epoxy or polyepoxide is a thermosetting polymer formed from the reaction of an epoxide resin with a polyamine hardener. Epoxy has a wide range of applications, including fiber-reinforced plastic materials and general purpose adhesives. stone : A tile made from naturally occurring stone such as marble, granite, slate, limestone and sandstone, used in the renovation and construction industry. tile : A manufactured piece of hard-wearing material such as clay, ceramic, stone, metal or glass, including ceramic tiles and stone tiles. It is a surfacing unit, used for covering roofs, floors, walls and countertops. 10

13 SELLING RESTRICTIONS This Offer Document does not constitute an offer, solicitation or invitation to subscribe for the New Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. No action has been or will be taken under the requirements of the legislation or regulations of, or of the legal or regulatory authorities of any jurisdiction, except for the lodgment and registration of this Offer Document in Singapore in order to permit a public offering of the New Shares and the public distribution of this Offer Document in Singapore. The distribution of this Offer Document and the offering of the New Shares in certain jurisdictions may be restricted by the relevant laws in such jurisdictions. Persons who may come into possession of this Offer Document are required by our Company, the Sponsor and the Placement Agent to inform themselves about, and to observe and comply with, any such restrictions at their own expense and without liability to our Company, the Sponsor or the Placement Agent. Persons to whom a copy of this Offer Document has been issued shall not circulate to any other person, reproduce or otherwise distribute this Offer Document or any information herein for any purpose whatsoever nor permit or cause the same to occur. 11

14 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS All statements contained in this Offer Document, statements made in press releases and oral statements that may be made by us, our Directors, Executive Officers, employees or other persons acting on our behalf, that are not statements of historical fact, constitute forward-looking statements. You can identify some of these statements by terms such as expects, believes, plans, intends, estimates, anticipates, may, will, would and could or similar words and phrases. However, you should note that these words are not exclusive means of identifying forward-looking statements. All statements regarding our expected financial position, business strategy, plans and prospects are forward-looking statements. These forward-looking statements, including statements as to:- (a) (b) (c) (d) (e) our revenue and profitability; expected growth in demand; expected industry trends; anticipated expansion plans; and other matters discussed in this Offer Document regarding matters that are not historical facts, are only predictions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forwardlooking statements. These risks, uncertainties and other factors include, among others:- (a) (b) (c) (d) (e) (f) (g) (h) (i) changes in political, social, economic, stock or securities market conditions and the regulatory environment in Singapore and other countries in which we conduct business; changes in currency exchange or interest rates; our anticipated growth strategies and expected internal growth; changes in the availability and prices of products we sell; changes in customer demand or preference; changes in competitive conditions and our ability to compete under these conditions; changes in our future capital needs and the availability of financing and capital to fund these needs; other factors beyond our control; and the factors described in the Risk Factors section of this Offer Document. All forward-looking statements made by or attributable to us, our Directors, our Executive Officers, our employees, or other persons acting on our behalf, contained in this Offer Document are expressly qualified in their entirety by such factors. 12

15 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Given the risks and uncertainties that may cause our actual future results, performance or achievements to be materially different from that expected, expressed or implied by the forward-looking statements in this Offer Document, we advise you not to place undue reliance on those statements which apply only as at the date of this Offer Document. Neither our Company, the Sponsor, the Placement Agent or any other person represents or warrants to you that our actual future results, performance or achievements will be as discussed in those statements. Further, our Company, the Sponsor and the Placement Agent disclaim any responsibility to update any of those forward-looking statements to reflect future developments, events or circumstances for any reason, even if new information becomes available or other events occur in the future. Our actual future results may differ materially from those anticipated in these forward-looking statements as a result of the risks faced by us. Our Company, the Sponsor and the Placement Agent disclaim any responsibility to update any of those forward-looking statements or publicly announce any revisions to those forward-looking statements to reflect further developments, events or circumstances. We are, however, subject to the provisions of the SFA and the Listing Manual regarding corporate disclosure. In particular, pursuant to Section 241 of the SFA, if after this Offer Document is registered but before the close of the Placement, our Company becomes aware of (a) a false or misleading statement or matter in this Offer Document; (b) an omission from this Offer Document of any information that should have been included in it under Section 243 of the SFA; or (c) a new circumstance that has arisen since this Offer Document was lodged with the SGX-ST acting as an agent on behalf of the Authority and would have been required by Section 243 of the SFA to be included in this Offer Document, if it had arisen before this Offer Document was lodged and that is materially adverse from the point of view of an investor, our Company may lodge a supplementary or replacement Offer Document with the SGX-ST acting as an agent on behalf of the Authority. 13

16 DETAILS OF THE PLACEMENT LISTING ON THE CATALIST Our Sponsor has submitted to the SGX-ST a pre-admission notification for permission to deal in, and for the listing and quotation on the Catalist, of all our Shares already issued, as well as the New Shares. Such permission will be granted when our Company has been admitted to the Catalist. Our acceptance of applications will be conditional upon, inter alia, the issue of the New Shares and permission being granted by the SGX-ST to deal in, and for quotation of, all our existing issued Shares and the New Shares. If such permission is not granted for any reason, monies paid in respect of any application accepted will, subject to applicable laws, be returned to the applicants at their own risk, without interest or any share of revenue or other benefit arising therefrom, and the applicants will not have any claim whatsoever against our Company, the Sponsor or the Placement Agent. No shares shall be allotted on the basis of this Offer Document later than six months after the date of registration of this Offer Document with the SGX-ST acting as an agent on behalf of the Authority. Companies listed on the Catalist may carry higher investment risk when compared with larger or more established companies listed on the SGX-ST Main Board. In particular, companies may list on the Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on the Catalist. Applicants should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with their professional adviser(s). Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor confirming that our Company is suitable to be listed on the Catalist and complies with the rules of the Listing Manual. Neither the Authority nor the SGX-ST has, in any way, considered the merits of the Shares or units of Shares being offered for investment. Admission to the Catalist is not to be taken as an indication of the merits of the Placement, our Company, our subsidiaries, our existing issued Shares or the New Shares. A copy of this Offer Document has been lodged with and registered by the SGX-ST acting as an agent on behalf of the Authority. The registration of this Offer Document by the SGX-ST acting as an agent on behalf of the Authority does not imply that the SFA, or any other legal or regulatory requirements, have been complied with. The SGX-ST has not, in any way, considered the merits of our existing issued Shares or the New Shares, as the case may be, being offered or in respect of which an invitation is made, for investment. We have not lodged or registered this Offer Document in any other jurisdiction. We are subject to the provisions of the SFA and the Listing Manual regarding corporate disclosure. In particular, pursuant to Section 241 of the SFA, if after this Offer Document is registered but before the close of the Placement, we become aware of:- (a) (b) (c) a false or misleading statement or matter in this Offer Document; an omission from this Offer Document of any information that should have been included in it under Section 243 of the SFA; or a new circumstance which has arisen since this Offer Document was lodged with the SGX-ST acting as an agent on behalf of the Authority and would have been required under Section 243 of the SFA to be included in this Offer Document, if it had arisen before this Offer Document was lodged, that is materially adverse from the point of view of an investor, our Company may lodge a supplementary or replacement offer document with the SGX-ST acting as an agent on behalf of the Authority. 14

17 DETAILS OF THE PLACEMENT Where, prior to the lodgment of the supplementary or replacement offer document, applications have been made under this Offer Document to subscribe for the New Shares and:- (a) where the New Shares have not been issued to the applicants, our Company shall either:- (i) within two days (excluding any Saturday, Sunday or public holiday) from the date of lodgment of the supplementary or replacement offer document, give the applicants notice in writing how to obtain, or arrange to receive, a copy of the same and provide the applicants with an option to withdraw their applications, and take all reasonable steps to make available within a reasonable period the supplementary or replacement offer document to the applicants who have indicated they wish to obtain, or who have arranged to receive, a copy of the supplementary or replacement offer document; (ii) (iii) within seven days from the date of lodgment of the supplementary or replacement offer document, give the applicants the supplementary or replacement offer document, as the case may be, and provide the applicants with an option to withdraw their applications; or treat the applications as withdrawn and cancelled, in which case the applications shall be deemed to have been withdrawn and cancelled, and our Company shall, within seven days from the date of lodgment of the supplementary or replacement offer document, pay the applicants all monies the applicants have paid on account of their applications for the New Shares; or (b) where the New Shares have been issued to the applicants, our Company shall either:- (i) within two days (excluding any Saturday, Sunday or public holiday) from the date of lodgment of the supplementary or replacement offer document, give the applicants notice in writing of how to obtain, or arrange to receive, a copy of the same and provide the applicants with an option to return to our Company the New Shares which they do not wish to retain title in, and take all reasonable steps to make available within a reasonable period the supplementary or replacement offer document to the applicants who have indicated they wish to obtain, or have arranged to receive, a copy of the supplementary or replacement offer document; (ii) (iii) within seven days from the date of lodgment of the supplementary or replacement offer document, give the applicants the supplementary or replacement offer document, as the case may be, and provide the applicants with an option to return to our Company the New Shares which they do not wish to retain title in; or treat the issue of the New Shares as void, in which case the issue shall be deemed void and our Company shall within seven days from the date of lodgment of the supplementary or replacement offer document, pay the applicants all monies the applicants have paid on account of their applications for the New Shares. An applicant who wishes to exercise his option under paragraph (a)(i) or (a)(ii) to withdraw his application for the New Shares shall, within 14 days from the date of lodgment of the supplementary or replacement offer document, notify our Company of this, whereupon our Company shall, within seven days from the receipt of such notification, pay to him all monies paid by him on account of his application for those Shares. An applicant who wishes to exercise his option under paragraph (b)(i) or (b)(ii) to return the New Shares issued to him shall, within 14 days from the date of lodgment of the supplementary or replacement offer document, notify our Company of this and return all documents, if any, purporting to be evidence of title to those New Shares, to our Company, whereupon our Company shall, within seven days from the receipt of such notification and documents, if any, pay to him all monies paid by him for those Shares, and the issue of those Shares shall be deemed to be void. 15

18 DETAILS OF THE PLACEMENT Where the Authority or other competent authority issues a stop order (the Stop Order ), and (a) (b) where the New Shares have not been issued to the applicants, the applications for the New Shares shall be deemed to have been withdrawn and cancelled and our Company shall, within 14 days from the date of the Stop Order, pay to the applicants all monies the applicants have paid on account of their applications for those Shares; or where the New Shares have been issued to the applicants, the issue of the New Shares shall be deemed to be void and our Company shall, (i) if no documents purporting to evidence title to those New Shares have been issued to the applicants, within seven days from the date of the Stop Order, pay to the applicants all monies paid by them for those New Shares, or (ii) if documents purporting to evidence title to those New Shares have been issued to the applicants, within seven days from the date of the Stop Order, inform the applicants to return such documents to our Company within 14 days from that date and within seven days from the date of receipt of such documents or the date of the Stop Order, whichever is the later, pay to the applicants all monies paid by them for those Shares. If we are required by applicable Singapore laws to cancel issued New Shares and repay application monies to applicants (including instances where the Stop Order is issued), we shall purchase the New Shares which have been issued at the Issue Price. Where monies are to be returned to applicants for the New Shares, it shall be paid to the applicants without any interest or share of revenue or benefit arising therefrom at the applicants own risk, and the applicants will not have any claim against our Company, the Sponsor or the Placement Agent. This Offer Document has been seen and approved by our Directors and they individually and collectively accept full responsibility for the accuracy of the information given in this Offer Document and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, (i) the facts stated and the opinions, intentions and expectations expressed in this Offer Document are true, fair and accurate and not misleading in all material respects as at the date of this Offer Document, (ii) there are no material facts the omission of which would make any statements in this Offer Document misleading, and (iii) this Offer Document constitutes full and true disclosure of all material facts about the Placement, our Group and our Shares. Neither our Company, the Sponsor, the Placement Agent nor any other parties involved in the Placement is making any representation to any person regarding the legality of an investment in our Shares by such person under any investment or other laws or regulations. No information in this Offer Document should be considered as being business, legal or tax advice regarding an investment in our Shares. Each prospective investor should consult his own legal, financial, tax or other professional adviser regarding an investment in our Shares. No person has been or is authorised to give any information or to make any representation not contained in this Offer Document in connection with the Placement and, if given or made, such information or representation must not be relied upon as having been authorised by our Company, the Sponsor or the Placement Agent. Neither the delivery of this Offer Document and the Application Forms nor anything relating to the Placement shall, under any circumstances, constitute a continuing representation or create any suggestion or implication that there has been no change in the affairs of our Company or our subsidiaries or in any statements of fact or information contained in this Offer Document since the date of this Offer Document. Where such changes occur and are material or are required to be disclosed by law, we will comply with the relevant provisions of the SFA and promptly make an announcement of the same to the SGX-ST and if required under the SFA, a supplementary or replacement offer document will be issued and made available to the public after a copy thereof has been lodged with the SGX-ST acting as an agent on behalf of the Authority. All applicants should take note of any such announcement, and/or supplementary or replacement offer document and, upon the release of such announcement, and/or supplementary or replacement offer document, shall be deemed to have notice of such changes. 16

19 DETAILS OF THE PLACEMENT Save as expressly stated in this Offer Document, nothing herein is, or may be relied upon as, a promise or representation as to the future performance or policies of our Company or our subsidiaries. This Offer Document has been prepared solely for the purpose of the Placement and may not be relied upon by any persons other than the applicants in connection with their application for the New Shares or for any other purpose. This Offer Document does not constitute an offer, solicitation or invitation to subscribe for the New Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such an offer, solicitation or invitation. Copies of this Offer Document may be obtained on request, subject to availability, during office hours from:- Collins Stewart Pte. Limited 77 Robinson Road #21-02 Singapore An electronic copy of this Offer Document is also available on the SGX-ST website at The Application List will open immediately upon the registration of this Offer Document by the SGX-ST acting as an agent on behalf of the Authority and will remain open until noon on 3 December 2009 or for such further period or periods as our Directors may, in consultation with the Sponsor and the Placement Agent, in their absolute discretion decide, subject to any limitation under all applicable laws. In the event a supplementary or replacement offer document is lodged with the SGX-ST acting as an agent on behalf of the Authority, the Application List will remain open for at least 14 days after the lodgment of the supplementary or replacement offer document. Details of the procedures for application to subscribe for the New Shares are set out in Appendix F of this Offer Document. 17

20 DETAILS OF THE PLACEMENT INDICATIVE TIMETABLE FOR LISTING An indicative timetable is set out below for your reference:- Indicative date and time Event 3 December 2009, noon Close of Application List 7 December 2009, 9.00 a.m. Commence trading on a ready basis 10 December 2009 Settlement date for all trades done on a ready basis The above timetable is only indicative as it assumes that the date of closing of the Application List is 3 December 2009, the date of admission of our Company to the Catalist is 7 December 2009, the SGX- ST s shareholding spread requirement will be complied with and the New Shares will be issued and fully paid-up prior to 7 December The above timetable and procedure may be subject to such modifications as the SGX-ST may in its discretion decide, including the commencement date of trading on a ready basis. In the event of any changes in the closure of the Application List or the time period during which the Placement is open, we will publicly announce the same:- (i) (ii) through a SGXNET announcement to be posted on the Internet at the SGX-ST website and in a major Singapore English newspaper. We will provide details of the level of subscription and the results of the distribution of the New Shares pursuant to the Placement, as soon as practicable after the closure of the Application List through the channels described in (i) and (ii) above. Investors should consult the SGX-ST announcement of the ready trading date on the Internet (at the SGX-ST website or newspapers, or check with their brokers on the date on which trading on a ready basis will commence. 18

21 OFFER DOCUMENT SUMMARY The information contained in this summary is derived from and should be read in conjunction with the full text of this Offer Document. As it is a summary, it does not contain all the information that potential investors should consider before investing in the Shares of our Company. Potential investors should read the entire Offer Document carefully, especially the matters set out under the Risk Factors section of this Offer Document, before deciding to invest in our Shares. OVERVIEW OF OUR GROUP Our Company was incorporated in Singapore on 6 October 2009 under the Act as a private company limited by shares under the name of Hafary Holdings Pte. Ltd.. On 10 November 2009, our Company was converted into a public company limited by shares and changed its name to Hafary Holdings Limited. Our Group comprises our Company and our subsidiaries, Hafary, Surface Project and Surface Stone. Hafary has been in existence since May Surface Project and Surface Stone were incorporated in January 2005 and April 2009 respectively. Our Business We are a supplier of tiles to customers in the Singapore market. We have two categories of customers, namely, (a) General; and (b) Project. General customers include retail walk-in customers who purchase their requirements from our showrooms or customers (such as architecture, interior design and renovation firms) who make ad-hoc purchases for small projects such as home renovation or small property development. The quantities purchased are typically small. Project customers are usually customers who are involved in major property development projects and may make bulk purchases from us, usually for specific major property development projects, whether residential, commercial, public or industrial. Project customers include architecture firms, property developers and construction companies. Tiles are manufactured pieces of hard-wearing material such as clay, ceramic, stone, metal or glass. They are surfacing units used for covering roofs, floors, walls and countertops. The most common tiles, porcelain and ceramic tiles, are manufactured by pressing clay and other materials (such as glass) into a desired shape and firing them at high temperatures in the kiln, resulting in the hardness they are known for. The tile may then be glazed or left unglazed, depending on the intended use. Porcelain and ceramic tiles are known for their resistance to various elements and their long-wearing properties. They are manufactured in an extensive range of usages, shapes, finishes, sizes and colours. Stones are quarried from rock deposits. The blocks of stone are cut into shapes and sizes of a tile. These stones are then polished until the desired finishing, high gloss or matte, is attained. The waste products from stone quarrying are used to create agglomerate stone tiles such as terrazzo, conglomerates, reconstituted stone, or cast stone panels. Manufacturers use either cement-based products or epoxy to bond the stones into the required blocks or slabs. These blocks or slabs are then cut to the desired tile shapes. Our head office and main showroom is located at 15 Defu Avenue 1 Singapore , while our other showroom is located at 560 Balestier Road Singapore Our warehousing facilities are located at 5A Defu Lane 8 Singapore , 3 Defu Lane 9 Singapore and 58 Sungei Kadut Street 1 Singapore Our head office, two showrooms and three warehouses occupy an aggregate built-in area of approximately 139,199 sqft. 19

22 OFFER DOCUMENT SUMMARY Our customer base is broadly categorised as follows:- (a) General Retail customers may purchase our products directly through our two showrooms located at 15 Defu Avenue 1 Singapore and 560 Balestier Road Singapore , where we display a variety of individual tiles and mock-ups of kitchens and bathrooms using our tiles for viewing by these customers. Other customers include architecture, interior design and renovation firms, who make ad-hoc purchases for small projects such as home renovation or small property development. Revenue from General customers accounted for 74.6%, 71.8% and 65.0% of our revenue in FY2007, FY2008 and FY2009 respectively. (b) Project We also supply tiles to customers who are involved in major public and private property development projects in Singapore. Public sector projects that we supply to include HDB upgrading, construction or upgrading of public buildings such as schools, hospitals, sports complexes, military camps and other government buildings. We also supply tiles for property development projects in the private sector, including residential, commercial and industrial projects such as condominiums, shopping centres and hotels. Our Project customers include architecture firms, property developers and construction companies, who may make bulk purchases from us for large projects. Revenue from Project customers accounted for 25.4%, 28.2% and 35.0% of our revenue in FY2007, FY2008 and FY2009 respectively. Further details are set out in the Business section of this Offer Document. Our Competitive Strengths Our Directors believe our competitive strengths are as follows:- We have an established reputation and track record with customers We carry a comprehensive range and wide variety of tiles We have an experienced and committed management team We have a strong sourcing and procurement network Further details are set out in the Competitive Strengths section of this Offer Document. Our Business Strategies and Future Plans Our business strategies and future plans are as follows:- Expanding our product range Expanding our geographical coverage Expanding our storage capacity Expansion through acquisitions, joint ventures and/or strategic alliances Further details are set out in the Business Strategies and Future Plans section of this Offer Document. 20