OFFER DOCUMENT DATED 13 SEPTEMBER (Incorporated in the Republic of Singapore on 12 August 2011) (Company Registration Number: Z)

Transcription

1 (Incorporated in the Republic of Singapore on 12 August 2011) (Company Registration Number: Z) OFFER DOCUMENT DATED 13 SEPTEMBER 2012 Registered by the Singapore Exchange Securities Trading Limited acting as agent on behalf of the Monetary Authority of Singapore on 13 September 2012 Placement of 33,800,000 Placement Shares (comprising 18,000,000 New Shares and 15,800,000 Vendor Shares) at S$0.225 for each Share, payable in full on application. 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). Canaccord Genuity Singapore Pte. Ltd. (the Sponsor ) has made an application to the Singapore Exchange Securities Trading Limited (the SGX-ST ) for permission to deal in, and for quotation of, all the existing issued ordinary shares (the Shares ) in the capital of Jason Parquet Holdings Limited (the Company ) already issued (including the Vendor Shares, as defined herein) and the new Shares (the New Shares ) which are the subject of the Placement (as defined herein) on Catalist. The dealing in, and quotation of, our Shares and the New Shares will be in Singapore dollars. Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the Main Board of the SGX-ST. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s). This Placement is made in or accompanied by this Offer Document that has been registered by the SGX-ST acting as agent on behalf of the Monetary Authority of Singapore (the Authority ). We have not lodged or registered this Offer Document in any other jurisdiction. 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 Catalist and complies with 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 the Shares being offered for investment. The registration of this Offer Document by the SGX-ST does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, or requirements under the SGX-ST s listing rules, have been complied with. Acceptance of applications will be conditional upon the issue of the New Shares and the listing and quotation of all our existing issued Shares (including the Vendor Shares) and the New Shares. Monies paid in respect of any application accepted will be returned to you at your own risk, without interest or any share of revenue or other benefit arising therefrom, if the admission and listing do not proceed, and you will not have any claims against us, the Vendor, the Sponsor or the Placement Agent (as defined herein). 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 of our Shares, on the basis of this Offer Document; and no officer or equivalent person or promoter of our Company will authorise or permit the offer of any of our Shares or the allotment, issue or sale of any of our Shares, on the basis of this Offer Document. Investing in our Shares involves risks which are described in the section entitled Risk Factors of this Offer Document. Sponsor and Placement Agent CANACCORD GENUITY SINGAPORE PTE. LTD. (Incorporated in the Republic of Singapore) (Company Registration No D)

2 ABOUT US Established in 1987, we are one of the leading Singapore-based providers of timber flooring services with an established reputation and track record for quality and reliability. We are principally engaged in the supply and installation of a comprehensive range of timber flooring under our Tech-Wood brand as well as the sale and distribution of timber products and flooring accessories. As at the Latest Practicable Date, we have supplied and installed over 30.0 million sq ft of timber flooring for more than 280 projects of various sizes. We offer our customers over 30 types of timber species to cater to their preferences and budgets. Since 2010, as we steered towards environmentally sustainable growth, we have also been offering our customers more environmentally-friendly flooring products such as wood-plastic composite products. Our head office and showroom are located at 16 Tampines Street 92, JP Building, Singapore Our warehousing facilities are located at 16 Tampines Street 92, JP Building, Singapore and 46 Sungei Kadut Street 1, Singapore Our head office, showroom and two warehouses occupy an aggregate built-in area of approximately 38,816.5 sq ft. Our customer base is broadly categorised as follows: Projects Projects customers comprise two categories of customers, namely, (i) main contractors who operate primarily in the property development industry in Singapore and are involved in both private and public residential and commercial property development projects; and (ii) retail customers comprising home-owners and the general public in Singapore who make ad-hoc purchases for small projects such as home renovation or small property developments. To complement our Projects business, we provide value-added services, such as the supply and installation of timber handrails, staircases, external trellises and other timber-related products; and the provision of maintenance services, including repairing, sanding and re-varnishing of timber flooring, to our Projects customers. Revenue from our Projects business accounted for 88.6% of our revenue in FY2011. Distribution We sell and distribute our timber products comprising solid timber strips and planks, engineered wood and wood-plastic composite products as well as flooring accessories which include nails, air guns, glues, varnishes and grinding and buffing machines to other local contractors as well as for export to primarily Indonesia, Malaysia and the PRC. Revenue from our Distribution business accounted for 11.4% of our revenue in FY2011. Revenue (FY2011) Projects 88.6% 11.4% Distribution PRC Malaysia Singapore Indonesia

3 NOTABLE PROJECTS Completed Projects Somerset Marina Bay Residences The Capella Ardmore II One Shenton The Metropolitan Belle Vue Residences Orchard Central The Sentosa Cove ION Orchard Scotts Highpark The Orchard Residences Jurong Point 2 Reflections at Keppel Bay The Duxton Pipeline Projects Altez Foresque Residences Minton Rise The Interlace D LEEDON Ardmore Three Sky Suites Concourse Skyline COMPETITIVE STRENGTHS We have an experienced management team We have good working relationships with our customers We have an established track record and reputation We offer a wide range of high quality products and services We have an established sourcing and procurement network

4 FINANCIAL HIGHLIGHTS S$ , ,946 29, ,936 8, ,043 5,603 3,042 2,703 0 FY2009 FY2010 FY2011 FY: Financial Year Ended 31 December PAT Gross Profit Revenue PROSPECTS Our business is dependent on the construction industry in Singapore, and based on the factors disclosed in the section entitled Prospects, Business Strategies and Future Plans Prospects of this Offer Document, our Directors believe that barring a global recession or other unforeseen circumstances, construction demand in Singapore is likely to remain healthy. ORDER BOOK From 1 January 2012 to the Latest Practicable Date, our Group has secured Projects contracts amounting to approximately S$41.3 million and our order book based on confirmed orders from our Distribution customers was approximately S$1.0 million, of which approximately S$1.0 million had been fulfilled. FUTURE PLANS To expand our range of green products and adopt environmentally-friendly practices To explore investments, acquisitions and/or joint ventures

5 CONTENTS CORPORATE INFORMATION DEFINITIONS GLOSSARY OF TECHNICAL TERMS CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS SELLING RESTRICTIONS DETAILS OF THE PLACEMENT LISTING ON 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 POSITION 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

6 CONTENTS GENERAL INFORMATION ON OUR GROUP SHARE CAPITAL RESTRUCTURING EXERCISE GROUP STRUCTURE OUR SUBSIDIARY SHAREHOLDERS VENDOR SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP MORATORIUM HISTORY AWARDS AND CERTIFICATIONS BUSINESS BUSINESS OVERVIEW MAIN TYPES OF TIMBER FLOORING PRODUCTS SUPPLIED OUR PROJECTS BUSINESS PROCESS STAFF TRAINING SALES AND MARKETING RESEARCH AND DEVELOPMENT CORPORATE SOCIAL RESPONSIBILITY INTELLECTUAL PROPERTY INSURANCE QUALITY ASSURANCE PROPERTIES AND FIXED ASSETS PRODUCTION CAPACITY MAJOR SUPPLIERS MAJOR CUSTOMERS CREDIT MANAGEMENT INVENTORY MANAGEMENT COMPETITION COMPETITIVE STRENGTHS PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS PROSPECTS TREND INFORMATION ORDER BOOK OUR BUSINESS STRATEGIES AND FUTURE PLANS

7 CONTENTS 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 AGREEMENT CORPORATE GOVERNANCE BOARD PRACTICES INTERESTED PERSON TRANSACTIONS INTERESTED PERSONS PAST INTERESTED PERSON TRANSACTIONS PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS OTHER TRANSACTIONS REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS POTENTIAL CONFLICTS OF INTERESTS INTERESTS OF DIRECTORS, CONTROLLING SHAREHOLDERS OR THEIR ASSOCIATES INTERESTS OF EXPERTS INTERESTS OF SPONSOR OR PLACEMENT AGENT CLEARANCE AND SETTLEMENT GENERAL AND STATUTORY INFORMATION APPENDIX A AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2009, 2010 AND A-1 APPENDIX B SUMMARY OF ARTICLES OF ASSOCIATION OF OUR COMPANY..... B-1 APPENDIX C DESCRIPTION OF ORDINARY SHARES C-1 APPENDIX D TAXATION D-1 APPENDIX E TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE E-1 3

8 CORPORATE INFORMATION BOARD OF DIRECTORS : Jason Sim (Executive Chairman and CEO) Derrick Tan (Non-Executive Director) Phua Sian Chin (Lead Independent Director) Karam Singh Parmar (Independent Director) COMPANY SECRETARIES : Teo Meng Keong (ACIS) Andrew Loke (CPA Singapore) REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS SHARE REGISTRAR AND SHARE TRANSFER OFFICE SPONSOR AND PLACEMENT AGENT INDEPENDENT AUDITORS AND REPORTING ACCOUNTANTS : 16 Tampines Street 92 JP Building Singapore : Tricor Barbinder Share Registration Services (A division of Tricor Singapore Pte. Ltd.) 80 Robinson Road #02-00 Singapore : Canaccord Genuity Singapore Pte. Ltd. 77 Robinson Road #21-02 Singapore : BDO LLP Public Accountants and Certified Public Accountants 21 Merchant Road #05-01 Royal Merukh S.E.A. Building Singapore SOLICITORS TO THE PLACEMENT Partner-in-charge: Leong Hon Mun Peter (a member of the Institute of Certified Public Accountants of Singapore) : Drew & Napier LLC 10 Collyer Quay #10-01 Ocean Financial Centre Singapore PRINCIPAL BANKERS : DBS Bank Ltd. 6 Shenton Way DBS Building Tower One Singapore Australia and New Zealand Banking Group Limited 10 Collyer Quay #30-00 Ocean Financial Centre Singapore RECEIVING BANKER : Australia and New Zealand Banking Group Limited 10 Collyer Quay #30-00 Ocean Financial Centre Singapore VENDOR : Radwell Pte. Ltd. 61 Tai Seng Avenue #05-07 Crescendas Print Media Hub Singapore

9 DEFINITIONS In this Offer Document and the accompanying Application Forms, unless the context otherwise requires, the following definitions apply throughout where the context so admits: Companies within our Group Company : Jason Parquet Holdings Limited Group : Our Company and our subsidiary Jason Parquet Specialist : Jason Parquet Specialist (Singapore) Pte Ltd Other Corporations and Agencies ASME : Association of Small and Medium Enterprises Authority : The Monetary Authority of Singapore BCA : The Building and Construction Authority of Singapore Canaccord Genuity, Sponsor or Placement Agent : Canaccord Genuity Singapore Pte. Ltd. (formerly known as Collins Stewart Pte. Limited) CDP : The Central Depository (Pte) Limited CPF : The Central Provident Fund DBS : DBS Bank Ltd. HDB : Housing & Development Board IRAS : Inland Revenue Authority of Singapore ISO : International Organisation for Standardisation MOM : Ministry of Manpower of Singapore Radwell : Radwell Pte. Ltd. Receiving Banker : Australia and New Zealand Banking Group Limited SCCS : Securities Clearing and Computer Services (Pte) Limited SGX-ST or Exchange : Singapore Exchange Securities Trading Limited Share Registrar and Share Transfer Office : Tricor Barbinder Share Registration Services (A division of Tricor Singapore Pte. Ltd.) Sirius Growth : Sirius Growth Partners I Pte. Ltd. Solicitors to the Placement : Drew & Napier LLC URA : Urban Redevelopment Authority Board of Directors and Executive Officers Andrew Loke : Andrew Loke Yew Kong, our Financial Controller Derrick Tan : Tan Lai Heng, our Non-Executive Director Jason Sim : Jason Sim Chon Ang, our Executive Chairman and CEO Nelson Sim : Sim Choon Joo, our Project Director 5

10 DEFINITIONS General 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 and/or purchase of the Placement Shares Articles or 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) (iii) his immediate family; the trustees of any trust of which he or his immediate family is a beneficiary or, in the case of a discretionary trust, is a discretionary object; or any company in which he and his immediate family together (directly or indirectly) have an interest of 30.0% 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 any such holding company or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30.0% or more associated company : In relation to a corporation, means: (a) (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 20.0% but not more than 50.0% 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 6

11 DEFINITIONS business trust : Has the same meaning as in Section 2 of the Business Trusts Act (Chapter 31A) of Singapore Catalist : The Catalist Board of the SGX-ST CEO : Chief Executive Officer Companies Act : The Companies Act (Chapter 50) of Singapore, as amended, modified or supplemented from time to time Controlling Shareholder : In relation to a corporation, (a) (b) a person who has an interest in the voting shares of a corporation and who exercises control over the corporation; or a person who has an interest of 15.0% or more of the aggregate of the nominal amount of all the voting shares in a corporation, unless he does not exercise control over the corporation Directors : The directors of our Company as at the date of this Offer Document, unless otherwise stated Distribution : The sale and distribution of timber products comprising solid timber strips and planks, engineered wood and woodplastic composite products as well as flooring accessories, as described in the section entitled Business Business Overview Distribution of this Offer Document 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 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 31 December, as the case may be GST : Goods and Services Tax Independent Directors : The non-executive independent Directors of our Company as at the date of this Offer Document, unless otherwise stated Latest Practicable Date : 17 June 2012, being the latest practicable date prior to the lodgement of this Offer Document with the SGX-ST acting as agent on behalf of the Authority Lead Independent Director : The lead Independent Director of our Company as at the date of this Offer Document, unless otherwise stated 7

12 DEFINITIONS 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 18,000,000 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 Non-Executive Director : The non-executive Director of our Company as at the date of this Offer Document, unless otherwise stated NTA : Net tangible assets Offer Document : This offer document dated 13 September 2012 issued by our Company in respect of the Placement PAT : Profit attributable to owners of the Company PBT : Profit before income tax PER : Price earnings ratio periods under review : The financial periods which comprise FY2009, FY2010 and FY2011 Placement : The placement by the Placement Agent of the Placement Shares on behalf of our Company and the Vendor for subscription and/or purchase at the Placement Price, subject to and on the terms and conditions of this Offer Document Placement Price : S$0.225 for each Placement Share Placement Shares : The 33,800,000 Shares, comprising 18,000,000 New Shares and 15,800,000 Vendor Shares, which are the subject of the Placement PRC or China : The People s Republic of China, excluding Macau and Hong Kong, for the purposes of this Offer Document and for geographical reference only Projects : The provision of timber flooring services pursuant to projects undertaken by our Group, as described in the section entitled Business Business Overview Projects 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 party who has made purchase(s) from our Group at least once in any two years during the periods under review 8

13 DEFINITIONS Restructuring Exercise : The corporate restructuring exercise undertaken in connection with the Placement as described in the section entitled General Information on Our Group Restructuring Exercise of this Offer Document Securities Account : The securities account maintained by a Depositor with CDP, but does not include a securities sub-account Service Agreement : The service agreement entered into between our Company and our Executive Chairman and CEO, Jason Sim, as described in the section entitled Directors, Executive Officers and Staff Service Agreement of this Offer Document SFA : Securities and Futures Act (Chapter 289) of Singapore, as amended, modified or supplemented from time to time SFR : Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 SGXNET : The corporate announcement system maintained by the SGX-ST for the submission of announcements by listed companies Shares : Ordinary shares in the capital of our Company Shareholders : Registered holders of Shares, except where the registered holder is CDP, the term Shareholders shall, in relation to such Shares, mean the Depositors whose Securities Accounts are credited with Shares SME : Small-to-medium size enterprises Sub-Division : The sub-division of 5,362,915 Shares in the capital of our Company into 90,000,000 Shares as described in the section entitled General Information on Our Group Share Capital of this Offer Document Substantial Shareholder : A person who has an interest in voting shares of our Company, the total votes attached to which is not less than 5.0% of the total votes attached to all the voting shares in our Company TOP : Temporary Occupation Permit USA : United States of America Vendor : Radwell Pte. Ltd. Vendor Shares : The 15,800,000 existing Shares for which the Vendor invites applications to purchase pursuant to the Placement, subject to and on the terms and conditions of this Offer Document Currencies, Units and Others AUD : Australian dollars EUR : Euro 9

14 DEFINITIONS m : Metres mm : Millimetres MYR : Malaysian ringgit sq ft : Square feet sq m : Square metres S$ or $ and cents : Singapore dollars and cents, respectively US$ : United States dollars % or per cent. : Per centum or percentage The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. 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/or the Application Forms to any statute or enactment is a reference to that statute or enactment as for the time being amended or re-enacted. Any word defined under the Companies Act, the SFA or any statutory modification thereof and used in this Offer Document and/or the Application Forms shall, where applicable, have the meaning ascribed to it under the Companies Act, the SFA or any statutory modification thereof, as the case may be. Any reference in this Offer Document and/or the Application Forms to Shares being allotted and/or allocated to an applicant includes allotment and/or allocation to CDP for the account of that applicant. Any reference to a time of day in this Offer Document and/or the Application Forms shall be a reference to Singapore time, unless otherwise stated. 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 discrepancies in the tables included herein between the listed amounts and the totals thereof are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. 10

15 GLOSSARY OF TECHNICAL TERMS The glossary contains an explanation of certain terms used in this Offer Document in connection with our Group and our business. 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. batten : Strong internal beam or structure ISO9001:2008 : The standard by the ISO that promotes the adoption of a process approach when developing, implementing and improving the effectiveness of a quality management system, to enhance customer satisfaction by meeting customer requirements Janka hardness scale : The Janka hardness test measures the hardness of wood. It determines the ability of a type of wood to withstand denting and wear. It is also a good indicator of how resistant the wood is to sawing and nailing. The higher the wood is rated on the Janka hardness scale, the harder it is OHSAS : Occupational Health and Safety Assessment Series OHSAS : An international occupational health and safety management system specification OHSAS : A version of OHSAS developed to help an organisation to control occupational and safety risks screed : A thin, top layer of concrete, poured on top of the structural concrete, on top of which other finishing materials can be applied skirting : A baseboard or wooden board covering the uneven edge of flooring next to the wall, and can serve as a decorative molding sub-floor : A structural layer of floor underneath the uppermost decorative layer of floor vapour barrier : Materials that resist diffusion of moisture through wall and floor of buildings wood putty : A substance used to fill imperfections in wood prior to finishing, composed of wood dust combined with a binder that dries, a diluent and pigment 11

16 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 or our Directors, Executive Officers or employees acting on our behalf that are not statements of historical fact, constitute forward-looking statements. You can identify some of these forward-looking statements by terms such as expect, believe, plan, intend, estimate, anticipate, may, will, would and could or similar words and phrases. However, you should note that these words are not the exclusive means of identifying forward-looking statements. All statements regarding our expected financial position, business strategies, plans and prospects are forward-looking statements. These forward-looking statements, including 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 that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expected, expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include, among others: (a) (b) (c) (d) (e) (f) (g) (h) (i) changes in political, social, economic and stock or securities market conditions and the regulatory environment in the countries in which we conduct business; changes in currency exchange or interest rates; our anticipated growth strategies and expected growth; changes in the availability and prices of products we sell; changes in customer preferences; changes in competitive conditions and our ability to compete under such conditions; changes in our future capital needs and the availability of financing and capital to fund these needs; the factors described in the section entitled Risk Factors of this Offer Document; and other factors beyond our control. All forward-looking statements made by or attributable to us, or persons acting on our behalf, contained in this Offer Document are expressly qualified in their entirety by such factors. Given the risks and uncertainties that may cause our actual future results, performance or achievements to be materially different from those expected, expressed or implied by the forwardlooking 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 Vendor, the Sponsor, the Placement Agent nor 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 12

17 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Company, the Vendor, 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. 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, we become aware of (a) a false or misleading statement in this Offer Document; (b) an omission from this Offer Document of any information that should have been included in it under Section 243 of the SFA; or (c) a new circumstance that has arisen since this Offer Document was lodged with the SGX-ST acting as agent on behalf of the Authority 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, we may, in consultation with the Sponsor and the Placement Agent, lodge a supplementary or replacement offer document with the SGX-ST acting as agent on behalf of the Authority. 13

18 SELLING RESTRICTIONS This Offer Document does not constitute an offer, solicitation or invitation to subscribe for and/or purchase the Placement Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. No action has been or will be taken under the requirements of the legislation or regulations of, or of the legal or regulatory requirements of any jurisdiction, except for the lodgement and/or registration of this Offer Document in Singapore in order to permit a public offering of the Placement Shares and the public distribution of this Offer Document in Singapore. The distribution of this Offer Document and the offering of the Placement Shares in certain jurisdictions may be restricted by the relevant laws in such jurisdictions. Persons who may come into possession of this Offer Document are required by us, the Vendor, 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 us, the Vendor, 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. 14

19 DETAILS OF THE PLACEMENT LISTING ON CATALIST The Sponsor has made an application to the SGX-ST for permission to deal in, and for quotation of, all our existing issued Shares already issued (including the Vendor Shares) and the New Shares which are the subject of the Placement on Catalist. The dealing in, and quotation of, our existing issued Shares (including the Vendor Shares) and the New Shares will be in Singapore dollars. Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the Main Board of the SGX-ST. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. 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). The Placement is made in or accompanied by this Offer Document that has been registered by the SGX-ST acting as agent on behalf of the Authority. We have not lodged or registered this Offer Document in any other jurisdiction. Neither the Authority nor the 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 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 being offered for investment. The registration of this Offer Document by the SGX-ST acting as agent on behalf of the Authority does not imply that the SFA, or any other legal or regulatory requirements, or requirements under the SGX-ST s listing rules, has been complied with. Acceptance of applications will be conditional upon the issue of the New Shares and the listing and quotation of all our existing issued Shares (including the Vendor Shares) and the New Shares. Monies paid in respect of any application accepted will be returned to you at your own risk, without interest or any share of revenue or other benefit arising therefrom, if the admission and listing do not proceed, and you will not have any claims against us, the Vendor, the Sponsor or the Placement Agent. 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 of our Shares, on the basis of this Offer Document; and no officer or equivalent person or promoter of our Company will authorise or permit the offer of any of our Shares or the allotment, issue or sale of our Shares, on the basis of this Offer Document. 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) a false or misleading statement 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 15

20 DETAILS OF THE PLACEMENT (c) a new circumstance that has arisen since this Offer Document was lodged which 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, we may lodge a supplementary or replacement offer document pursuant to Section 241 of the SFA. Where prior to the lodgement of the supplementary or replacement offer document, applications have been made under this Offer Document to subscribe for and/or purchase the Placement Shares and: (a) where the Placement Shares have not been issued and/or sold to the applicants, our Company (as well as on behalf of the Vendor) shall either: (i) (ii) (iii) within two days (excluding any Saturday, Sunday or public holiday) from the date of lodgement of the supplementary or replacement offer document, give the applicants notice in writing of how to obtain, or arrange to receive, a copy of the same and provide the applicants with an option to withdraw their applications, and take all reasonable steps to make available within a reasonable period the supplementary or replacement offer document 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; within seven days from the date of lodgement of the supplementary or replacement offer document, give the applicants the supplementary or replacement offer document, as the case may be, and provide the applicants with an option to withdraw their applications; or treat the applications as withdrawn and cancelled, in which case the applications shall be deemed to have been withdrawn and cancelled, and shall, within seven days from the date of lodgement of the supplementary or replacement offer document, pay the applicants all monies the applicants have paid on account of their applications for the Placement Shares; or (b) where the Placement Shares have been issued and/or sold to the applicants, our Company (as well as on behalf of the Vendor) shall either: (i) (ii) (iii) within two days (excluding any Saturday, Sunday or public holiday) from the date of lodgement of the supplementary or replacement offer document, give the applicants notice in writing of how to obtain, or arrange to receive, a copy of the same and provide the applicants with an option to return to us the Placement Shares which they do not wish to retain title in, and take all reasonable steps to make available within a reasonable period the supplementary or replacement offer document 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; within seven days from the date of lodgement of the supplementary or replacement offer document, give the applicants the supplementary or replacement offer document, as the case may be, and provide the applicants with an option to return to us the Placement Shares which they do not wish to retain title in; or treat the issue and/or sale of the Placement Shares as void, in which case the issue and/or sale shall be deemed void and shall within seven days from the date of lodgement of the supplementary or replacement offer document, pay the applicants all monies the applicants have paid on account of their applications for the Placement Shares. 16

21 DETAILS OF THE PLACEMENT An applicant who wishes to exercise his option under paragraph (a)(i) or (ii) to withdraw his application shall, within 14 days from the date of lodgement of the supplementary or replacement offer document, notify us of this, whereupon our Company (as well as on behalf of the Vendor) shall, within seven days from the receipt of such notification, pay to him all monies paid by him on account of his application for the Placement Shares. An applicant who wishes to exercise his option under paragraph (b)(i) or (ii) to return the Placement Shares issued and/or sold to him shall, within 14 days from the date of lodgement 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 Placement Shares, to our Company, whereupon our Company (as well as on behalf of the Vendor) shall, within seven days from the receipt of such notification and documents, if any, repurchase our Shares and/or pay to him all monies paid by him for those Placement Shares, and the issue and/or sale of those Placement Shares shall be deemed to be void. Pursuant to Section 242 of the SFA, the Authority may, in certain circumstances issue a stop order (the Stop Order ) to our Company, directing that no Shares or no further Shares to which this Offer Document relates, be allotted and/or allocated or issued and/or sold. Such circumstances will include a situation where this Offer Document contains any statement or matter which, in the Authority s opinion, is (i) false or misleading, (ii) omits any information that should have been included in it under the SFA, or (iii) does not, in the Authority s opinion, comply with the requirements of the SFA. In the event that the Authority issues a Stop Order and applications to subscribe for and/or purchase the Placement Shares have been made prior to the Stop Order, then: (a) (b) where the Placement Shares have not been issued and/or sold to the applicants, the applications for the Placement Shares shall be deemed to have been withdrawn and cancelled and our Company (as well as on behalf of the Vendor) 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 the Placement Shares; or where the Placement Shares have been issued and/or sold to the applicants, the issue and/or sale of the Placement Shares shall be deemed to be void and our Company (as well as on behalf of the Vendor) shall, within 14 days from the date of the Stop Order, pay to the applicants all monies paid by them for the Placement Shares. Where monies are to be returned to applicants for the Placement Shares, they shall be paid to the applicants without any interest or share of revenue or benefit arising therefrom at the applicants own risk, and the applicants will not have any claim against our Company, the Vendor, the Sponsor or the Placement Agent. This Offer Document has been seen and approved by our Directors and the Vendor and they collectively and individually accept full responsibility for the accuracy of the information given in this Offer Document and confirm after making all reasonable enquiries, that to the best of their knowledge and belief, this Offer Document constitutes full and true disclosure of all material facts about the Placement and our Group, and our Directors and the Vendor are not aware of any facts the omission of which would make any statement in this Offer Document misleading. Where information in this Offer Document has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of our Directors and the Vendor has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Offer Document in its proper form and context. 17

22 DETAILS OF THE PLACEMENT Neither our Company, the Vendor, 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. The Placement Shares are offered for subscription and/or purchase solely on the basis of the information contained and the representations made in this Offer Document. No person has been or is authorised to give any information or to make any representation not contained in this Offer Document in connection with the Placement and, if given or made, such information or representation must not be relied upon as having been authorised by us, the Vendor, the Sponsor or the Placement Agent. Neither the delivery of this Offer Document, the Application Forms nor any document relating to the Placement shall, under any circumstances, constitute a continuing representation or create any suggestion or implication that there has been no change in the affairs of our Company or our subsidiary or in any statement of fact or information contained in this Offer Document since the date of this Offer Document. Where such changes occur and are material or are required to be disclosed by law, we will promptly make an announcement of the same to the 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 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 an announcement and/or supplementary or replacement offer document, shall be deemed to have notice of such changes. Save as expressly stated in this Offer Document, nothing herein is, or may be relied upon as, a promise or representation as to the future performance or policies of our Company or our subsidiary. This Offer Document has been prepared solely for the purpose of the Placement and may not be relied upon by any persons other than the applicants in connection with their application for the Placement Shares or for any other purpose. This Offer Document does not constitute an offer, solicitation or invitation to subscribe for and/or purchase the Placement Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. Copies of this Offer Document may be obtained on request, subject to availability, during office hours, from: Canaccord Genuity Singapore Pte. Ltd. 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 at a.m. on 21 September 2012 and will remain open until noon on the same day or for such further period or periods as our Directors and the Vendor 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 agent on 18

23 DETAILS OF THE PLACEMENT behalf of the Authority, the Application List will remain open for at least 14 days after the lodgement of the supplementary or replacement offer document. Details of the procedures for applications to subscribe for and/or purchase the Placement Shares are set out in Appendix E of this Offer Document. INDICATIVE TIMETABLE FOR LISTING An indicative timetable is set out below for your reference: Indicative date and time Event 21 September 2012, noon Close of Application List 25 September 2012, 9.00 a.m. Commence trading on a ready basis 28 September 2012 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 21 September 2012, the date of admission of our Company to Catalist is 25 September 2012, the SGX-ST s shareholding spread requirement will be complied with and the Placement Shares will be issued and allotted or allocated (as the case may be) and fully paid-up prior to 25 September The above timetable and procedures may be subject to such modification 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: (a) (b) through an SGXNET announcement to be posted on the internet at the SGX-ST website and in a major English language newspaper in Singapore. We will publicly announce the level of subscription and the results of the distribution of the Placement Shares pursuant to the Placement, as soon as it is practicable after the closure of the Application List through the channels described in (a) and (b) 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. 19

24 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 this entire Offer Document carefully, especially the matters set out under the section entitled Risk Factors of this Offer Document, before deciding to invest in our Shares. OVERVIEW OF OUR GROUP Our Company was incorporated in Singapore on 12 August 2011 under the Companies Act as a private company limited by shares under the name of Jason Parquet Holdings Pte. Ltd.. On 30 August 2012, we converted to a public company limited by shares and changed our name to Jason Parquet Holdings Limited. Pursuant to the Restructuring Exercise, our Company became the holding company of our subsidiary, Jason Parquet Specialist. Our Business We are one of the leading Singapore-based providers of timber flooring services with an established reputation and track record for quality and reliability. We are principally engaged in the supply and installation of a comprehensive range of timber flooring under our Tech-Wood brand as well as the sale and distribution of timber products and flooring accessories. We offer our customers over 30 types of timber species to cater to their preferences and budgets. Our Directors believe that the four most popular types of solid timber used in the supply and installation for our Projects business in Singapore are teak, American walnut, American oak and European oak. Our timber products are purchased directly from our suppliers mainly in Australia, Indonesia, the PRC, the Republic of Paraguay and Singapore. Since 2010, as we steered towards environmentally sustainable growth, we have also been offering our customers more environmentally-friendly flooring products such as wood-plastic composite products. Please refer to the section entitled Business Main Types of Timber Flooring Products Supplied of this Offer Document for further details. The products that we sell and distribute are mainly timber products comprising solid timber strips and planks, engineered wood and wood-plastic composite products as well as flooring accessories which include nails, air guns, glues, varnishes and grinding and buffing machines. Our head office and showroom are located at 16 Tampines Street 92, JP Building, Singapore Our warehousing facilities are located at 16 Tampines Street 92, JP Building, Singapore and 46 Sungei Kadut Street 1, Singapore Our head office, showroom and two warehouses occupy an aggregate built-in area of approximately 38,816.5 sq ft. Please refer to the section entitled Business Business Overview of this Offer Document for further details. Our Competitive Strengths Our Directors believe our competitive strengths are as follows: We have an experienced management team We have good working relationships with our customers 20

25 OFFER DOCUMENT SUMMARY We have an established track record and reputation We offer a wide range of high quality products and services We have an established sourcing and procurement network Please refer to the section entitled Business Competitive Strengths of this Offer Document for further details. Our Business Strategies and Future Plans Our business strategies and future plans are as follows: To expand our range of green products and adopt environmentally-friendly practices To explore investments, acquisitions and/or joint ventures Please refer to section entitled Prospects, Business Strategies and Future Plans Our Business Strategies and Future Plans of this Offer Document for further details. Where you can find us Both our principal place of business and registered office are located at 16 Tampines Street 92, JP Building, Singapore Our telephone and facsimile numbers are (65) and (65) respectively. Our Company s Registration Number is Z. Our internet address is Information contained in our website does not constitute part of this Offer Document. FINANCIAL HIGHLIGHTS You should read the following summary financial information in conjunction with the full text of this Offer Document, including the Audited Combined Financial Statements for the Financial Years Ended 31 December 2009, 2010 and 2011 set out in Appendix A of this Offer Document and the section entitled Management s Discussion and Analysis of Results of Operations and Financial Position of this Offer Document. Selected items from the Combined Statements of Comprehensive Income (1) Audited (S$ 000) FY2009 FY2010 FY2011 Revenue 25,946 33,759 29,922 Gross profit 5,603 8,936 8,342 PBT 1,396 3,653 3,127 PAT 1,043 3,042 2,703 EPS (cents) (2) EPS (fully diluted) (cents) (3)

26 OFFER DOCUMENT SUMMARY Selected items from the Combined Statement of Financial Position (4) (S$ 000) Audited as at 31 December 2011 Non-current assets 3,033 Current assets 34,092 Non-current liabilities 2,314 Current liabilities 22,542 Total equity attributable to owners of the Company 12,269 NTA 12,159 NTA per Share (cents) (5) 13.5 Notes: (1) Our combined statements of comprehensive income for the periods under review have been prepared on the basis that our Group had been in existence throughout the periods under review. (2) For comparative purposes, EPS for the periods under review have been computed based on the PAT and our pre-placement share capital of 90,000,000 Shares. (3) For comparative purposes, EPS (fully diluted) for the periods under review have been computed based on the PAT and our post-placement share capital of 108,000,000 Shares. (4) Our combined statement of financial position as at 31 December 2011 has been prepared on the basis that our Group has been in existence on this date. (5) The NTA per Share as at 31 December 2011 has been computed based on our pre-placement share capital of 90,000,000 Shares. 22

27 THE PLACEMENT Issue size : 33,800,000 Placement Shares comprising 18,000,000 New Shares and 15,800,000 Vendor Shares. The New Shares, upon issue and allotment, and the Vendor Shares, upon allocation, will rank pari passu in all respects with the existing issued Shares. Placement Price : S$0.225 for each Placement Share. The Placement : The Placement comprises a placement by the Placement Agent on behalf of our Company and the Vendor of 33,800,000 Placement Shares at the Placement Price by way of placement, subject to and on the terms and conditions of this Offer Document. Purpose of the Placement : Our Directors believe that the listing of our Company and the quotation of our Shares on Catalist will enhance our public image locally and internationally and enable us to tap the capital markets to fund our business growth. The Placement will also provide members of the public, our employees, our business associates and others who have contributed to the success of our Group with an opportunity to participate in the equity of our Company. Listing status : Our Shares will be quoted on Catalist in Singapore dollars, subject to the admission of our Company to Catalist and permission for dealing in, and for quotation of, our Shares being granted by the SGX-ST. Risk factors : Investing in our Shares involves risks which are described in the section entitled Risk Factors of this Offer Document. 23

28 PLAN OF DISTRIBUTION The Placement Price is determined by us and the Vendor in consultation with the Sponsor and the Placement Agent after taking into consideration, inter alia, the prevailing market conditions and estimated market demand for the Placement Shares determined through a book-building process. The Placement Price is the same for all Placement Shares and is payable in full on application. Placement Shares Application for the Placement Shares may only be made by way of Placement Shares Application Forms. The terms, conditions and procedures for application and acceptance are described in Appendix E of this Offer Document. Subscribers and/or purchasers of the Placement Shares may be required to pay a brokerage of up to 1.0% of the Placement Price (plus GST thereon, if applicable) to the Placement Agent or any sub-placement agent that may be appointed by the Placement Agent. None of our Directors or Substantial Shareholders intends to subscribe for and/or purchase the Placement Shares in the Placement. None of the members of our Group s management or employees intends to subscribe for and/or purchase more than 5.0% of the Placement Shares in the Placement. To the best of our knowledge and belief, we are not aware of any person who intends to subscribe for and/or purchase more than 5.0% of the Placement Shares. However, through a book-building process to assess market demand for our Shares, there may be person(s) who may indicate his interest to subscribe for and/or purchase more than 5.0% of the Placement Shares. If such person(s) were to make an application for more than 5.0% of the Placement Shares pursuant to the Placement and are subsequently allotted and/or allocated such number of Shares, we will make the necessary announcements at the appropriate time. The final allotment and/or allocation of Shares will be in accordance with the shareholding spread and distribution guidelines as set out in the Listing Manual. No Shares shall be issued and allotted and/or allocated on the basis of this Offer Document later than six months after the date of registration of this Offer Document by the SGX-ST acting as agent on behalf of the Authority. 24

29 USE OF PROCEEDS FROM THE PLACEMENT AND EXPENSES INCURRED The estimated expenses in relation to the Placement, including professional fees and expenses, placement commission and other incidental expenses in relation to the Placement, are approximately S$1.6 million, of which approximately S$1.1 million will be borne by our Company and approximately S$0.5 million will be borne by the Vendor. Net proceeds from the Placement The net proceeds to be raised from the Placement (comprising both the New Shares and the Vendor Shares) after deducting estimated expenses in relation to the Placement of approximately S$1.6 million, are approximately S$6.0 million. Net proceeds from the issue of the New Shares The net proceeds attributable to us from the issue of the New Shares (after deducting our Company s share of the estimated expenses in relation to the Placement of approximately S$1.1 million) will be approximately S$2.9 million. The following table sets out the principal intended uses of proceeds from the issue of the New Shares and the major listing expenses borne by our Company: Use of proceeds from the issue of the New Shares Amount (S$ 000) As a percentage of gross proceeds raised by our Company from the issue of the New Shares (%) To fund possible acquisitions, joint ventures and/or strategic alliances when opportunities arise For general working capital purposes of our Group 2, Net proceeds from the issue of the New Shares 2, Estimated listing expenses (1) Listing and processing fees Professional fees and expenses Placement commission Miscellaneous expenses Gross proceeds from the issue of the New Shares 4, Note: (1) Of the total estimated listing expenses to be borne by our Company of approximately S$1,130,000, S$279,000 will be capitalised against share capital and the balance of the estimated listing expenses will be charged to profit or loss. In the reasonable opinion of our Directors, there is no minimum amount which must be raised from the Placement. Please refer to the section entitled Prospects, Business Strategies and Future Plans Our Business Strategies and Future Plans of this Offer Document for further details of our future plans. 25

30 USE OF PROCEEDS FROM THE PLACEMENT AND EXPENSES INCURRED Pending the deployment of the net proceeds as aforesaid, the funds will be placed in short-term deposits with financial institutions, used to invest in short-term money market instruments and/or used for working capital requirements as our Directors may deem appropriate. We will make periodic announcements on the use of the net proceeds from the issue of the New Shares as and when the funds are materially disbursed, and provide a status report on the use of the proceeds in our annual report. In the event that any part of our proposed uses of the net proceeds from the issue of the New Shares does not materialise or proceed as planned, our Directors will carefully evaluate the situation and may reallocate the intended funding to other purposes and/or hold such funds on short-term deposits for so long as our Directors deem it to be in the interest of our Company and our Shareholders, taken as a whole. Any change in the use of the net proceeds will be subject to the requirements of the Listing Manual and appropriate announcements will be made by our Company on the SGXNET. Net proceeds from the sale of the Vendor Shares We will not receive any of the proceeds from the Vendor Shares sold by the Vendor in the Placement. The net proceeds attributable to the Vendor for the sale of the Vendor Shares (after deducting the Vendor s share of the estimated expenses incurred in relation to the Placement of approximately S$0.5 million) will be approximately S$3.1 million. 26

31 MANAGEMENT AND PLACEMENT ARRANGEMENTS Pursuant to a management agreement dated 13 September 2012 (the Management Agreement ) entered into between our Company, the Vendor and Canaccord Genuity, our Company and the Vendor appointed Canaccord Genuity to manage the Placement. Canaccord Genuity will receive a fee from our Company and the Vendor for its services rendered in connection with the Placement. Pursuant to the placement agreement dated 13 September 2012 (the Placement Agreement ) entered into between our Company, the Vendor and Canaccord Genuity as the Placement Agent, Canaccord Genuity agreed to subscribe for and/or purchase and/or procure subscribers or purchasers for the Placement Shares at the Placement Price for a placement commission of 2.5% of the aggregate Placement Price for the total number of Placement Shares, payable by our Company and the Vendor in the proportion in which the number of Placement Shares offered by each of our Company and the Vendor pursuant to the Placement bears to the total number of Placement Shares. Canaccord Genuity may, at its absolute discretion, appoint one or more sub-placement agents for the Placement Shares. Subscribers and/or purchasers of the Placement Shares may be required to pay a brokerage of up to 1.0% of the Placement Price (plus GST thereon, if applicable) to the Placement Agent or any sub-placement agent that may be appointed by the Placement Agent. Save as aforesaid, no commission, discount or brokerage has been paid or other special terms granted by our Company or the Vendor within the two years preceding the date of this Offer Document or is payable to any Director, promoter, expert, proposed Director or any other person for subscribing or purchasing, or agreeing to subscribe or purchase, or procuring or agreeing to procure subscribers or purchasers for any shares in, or debentures of, our Company or our subsidiary. If there shall have been, since the date of the Management Agreement and prior to the close of the Application List: (a) (b) (c) (d) (e) any breach of the warranties or undertakings by our Company or the Vendor in the Management Agreement which comes to the knowledge of Canaccord Genuity; or any occurrence of certain specified events which comes to the knowledge of Canaccord Genuity; or any adverse change, or any development involving a prospective adverse change, in the condition (financial or otherwise) of our Company and/or our subsidiary; or any introduction or prospective introduction of or any change or prospective change in any legislation, regulation, order, policy, rule, guideline or directive in Singapore or elsewhere (whether or not having the force of law) and including, without limitation, any directive or request issued by the Authority, the Securities Industry Council of Singapore or the SGX-ST or relevant authorities elsewhere, in the interpretation or application thereof by any court, government body, regulatory authority or other competent authority in Singapore or elsewhere; or any change, or any development involving a prospective change, in local, national, regional or international financial (including stock market, foreign exchange market, inter-bank market or interest rates or money market), political, industrial, economic, legal or monetary conditions, taxation or exchange controls (including without limitation, the imposition of any moratorium, suspension or restriction on trading in securities generally on the SGX-ST due to exceptional financial circumstances or otherwise, adverse changes in foreign exchange controls in Singapore or overseas or any combination of any such changes or developments or crisis, or any deterioration of any such conditions); or 27

32 MANAGEMENT AND PLACEMENT ARRANGEMENTS (f) (g) (h) any imminent threat or occurrence of any local, national or international outbreak or escalation of hostilities, insurrection, terrorist attacks or armed conflict (whether or not involving financial markets) in any jurisdiction; or any regional or local outbreak of disease that may have an adverse effect on the financial markets; or any other occurrence of any nature whatsoever, which has resulted or is in the good faith opinion of the Sponsor likely to result in a material adverse fluctuation or material adverse conditions in the stock market in Singapore or overseas; or is likely to materially prejudice the success of the Placement; or makes it impracticable, inadvisable, inexpedient or uncommercial to proceed with any of the transactions contemplated under the Management Agreement; or is likely to have a material adverse effect on the business, trading position, operations or prospects of our Group; results or is likely to result in the issue of a notice of refusal to an admission of our Company to Catalist by the SGX-ST to the Sponsor at any point prior to the listing of our Shares; or makes it uncommercial for the Sponsor to observe or perform or be obliged to observe or perform the terms of the Management Agreement, the Sponsor may at any time prior to the close of the Application List rescind its obligations under the Management Agreement. The Sponsor may terminate the Management Agreement if: (a) (b) at any time up to the close of the Application List, a notice of refusal to an admission to Catalist is issued by the SGX-ST to the Sponsor; or at any time after the lodgement of this Offer Document with the SGX-ST acting as agent on behalf of the Authority but before the close of the Application List, our Company and the Vendor fail and/or neglect to lodge a supplementary or replacement offer document (as the case may be) if they become aware of: (i) (ii) (iii) a false or misleading statement in this Offer Document; an omission from this Offer Document of any information that should have been included in it under the Listing Manual or the SFA; or a new circumstance that has arisen since this Offer Document was lodged with the SGX-ST acting as agent on behalf of the Authority and would have been required by the Listing Manual or 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; or (c) (d) the Shares (including the New Shares and the Vendor Shares) have not been listed on Catalist on or before 25 September 2012 (or such other date as our Company, the Vendor and the Sponsor may agree, subject to the approval of the SGX-ST); or at any time our Company and the Vendor release or discharge the Sponsor from its obligations under or pursuant to the mandate letter appointing the Sponsor in relation to preparing our Company for admission to Catalist (the Mandate Letter ). The obligations under the Placement Agreement are conditional upon the Management Agreement not being terminated or rescinded pursuant to the provisions of the Management Agreement. In the case of the non-fulfilment of any of the specified conditions in the Management Agreement or the release or 28

33 MANAGEMENT AND PLACEMENT ARRANGEMENTS discharge of the Sponsor from their obligations under or pursuant to the Management Agreement, the Placement Agreement shall be terminated and the parties shall be released from their respective obligations under the Placement Agreement. Save as disclosed above, our Company and the Vendor do not have any material relationship with the Sponsor and the Placement Agent. 29

34 RISK FACTORS Prospective investors should carefully consider and evaluate each of the following considerations and all other information contained in this Offer Document, before deciding to invest in our Shares. To the best of our Directors knowledge and belief, all risk factors which are material to investors in making an informed judgement of our Group have been set out below. If any of the following considerations, uncertainties or material risks develop into actual events, our business, financial position and/or results of operations could be materially and adversely affected. In such cases, the trading price of our Shares could decline due to any of these considerations, uncertainties or material risks, and investors may lose all or part of their investment in our Shares. This Offer Document also contains forward-looking statements having direct and/or indirect implications on our future performance. Our actual results may differ materially from those anticipated by these forward-looking statements due to certain factors, including the risks and uncertainties faced by us, as described below and elsewhere in this Offer Document. RISKS RELATING TO OUR BUSINESS AND INDUSTRY We are dependent on the construction industry in Singapore We are dependent on the construction industry in Singapore. The performance of the construction industry in Singapore is in turn dependent on the state of the general economy, general sentiments of the property market, consumer spending habits, unemployment rates, interest rates, inflation and government policies. A downturn in the construction industry or a dampening of the general sentiments in the property market may result in fewer projects which require our services and products being made available for tender. This may lead to greater competition and erosion of profit margins. Accordingly, our Group s business, results of operations and financial performance may be materially and adversely affected. The Singapore government has in recent years implemented a series of measures to cool the Singapore residential property market and to ensure a stable and sustainable property market where prices move in tandem with economic fundamentals. For example, in January 2011, the Singapore government extended the holding period for the imposition of stamp duty on sellers for residential properties from three years to four years, and increased the rates of such stamp duty so as to provide a strong disincentive for investors looking to make short-term gains. At the same time, the Singapore government also lowered the loan-to-value limit on housing loans granted by financial institutions regulated by the Authority for residential property purchasers who are not individuals and for residential property purchasers who are individuals with one or more outstanding housing loans to 50.0% and 60.0% respectively. Further, in December 2011, the Singapore government implemented additional buyer s stamp duty (imposed over and above the then prevailing buyer s stamp duty) to be paid by certain categories of persons who buy or acquire residential properties. For example, foreigners and non-individuals are required to pay an additional buyer s stamp duty of 10.0% of the purchase price or market value of the property (whichever is higher). Singapore permanent residents who already own one or more residential properties and Singapore citizens who already own two or more residential properties are required to pay an additional buyer s stamp duty of 3.0%. Such measures may affect the purchasing power of potential buyers of residential properties and dampen the general sentiments of the residential property market, resulting in reduced demand for construction activities. We cannot assure you that these measures introduced by the Singapore government will not continue to adversely affect the residential property market, or that the Singapore government will not introduce further measures to regulate the growth of the Singapore residential property market. We also cannot assure you that the Singapore government will not introduce new measures to regulate the growth of the Singapore commercial property market. Such measures and the introduction of any new measures may have a material adverse effect on our Group s business, results of operations and financial performance. 30

35 RISK FACTORS Our revenue may be volatile A substantial portion of our revenue is derived from our Projects business which accounted for 98.0%, 98.0% and 88.6% of our revenue in FY2009, FY2010 and FY2011 respectively. Revenue from our Projects business is recognised using the percentage of completion method. The amount of revenue to be recognised in a financial year is dependent on the number, value and stage of completion of projects undertaken by our Group, which in turn depend on various factors such as the availability of our resources, market sentiment, market competition and general economic conditions. Thus, there is no assurance that the amount of revenue from our Projects business will be at comparable levels with prior years every year. Should there be any reasons that cause us to undertake fewer or no new projects or should there be any delay in the progress of any of the projects in our order books, our revenue recognised in a particular year will be adversely affected. The historical financial performance and financial position of our Group are therefore not indicative of our future financial performance and financial position. Our financial performance is dependent on our continued ability to secure new projects and the non-cancellation of secured projects As a substantial portion of our business is undertaken on a project basis and such projects are non-recurring, our revenue may therefore fluctuate from year to year. It is critical that we are able to continually and consistently secure new projects of similar value and volume. There is no assurance that we will be able to do so. In the event that we are not able to continually and consistently secure new projects of similar or higher value, size and margins, this would have an adverse impact on our financial performance. In addition, there may be a lapse of time between the completion of our projects and the commencement of subsequent projects. As such, our results of operations and financial performance during such periods may be adversely affected. Cancellation of secured projects due to factors such as lack of funds on the part of our customers or project owners and poor market conditions will adversely affect our business and profitability. Any cancellation of projects could lead to our Group s inability to recover costs associated with the purchase of materials, idle or excess capacity, and may adversely affect our business and financial position. Potential investors should therefore inform themselves that the historical financial performance and financial position of our Group are not to be taken as an indication of the future financial performance and financial position of our Group. Our business may be affected by competition by existing industry players and new entrants We operate in a competitive industry. There is no assurance that we will not face competition from our existing industry peers or new entrants. Some of our competitors may have greater financial, marketing or other resources than we do. Any increase in competition could result in a negative impact on our pricing (thus eroding our profit margins), erode our market share or make it more difficult for us to achieve any significant market penetration. In the event that we are unable to compete effectively with our existing and future competitors and adapt quickly to changing market conditions and trends, our business and financial performance will be adversely affected. Please refer to the section entitled Business Competition of this Offer Document for further details of the competition we may face. Our continued success is dependent on our key management personnel We are dependent on the continued services of our management team, in particular, our Executive Chairman and CEO, Jason Sim, who has been instrumental in the development and execution of our corporate strategy and the establishment of business relationships with our suppliers and customers. 31

36 RISK FACTORS There is no assurance that we will be able to retain the aforesaid key management personnel. The loss of any key management personnel without suitable or timely replacement may have an adverse impact on our operations and financial performance, notwithstanding that we have taken key-man insurance for our Executive Chairman and CEO, Jason Sim. We may need to incur additional costs or liquidated damages in the event of disputes, claims, defects or delays We typically provide defects liability period ranging from 12 to 24 months. During this period, we are required to rectify defects or replace our products at no cost to our customers. If we are required to rectify defects or replace our products during the defects liability period which result in substantial additional costs being borne by us, the profitability of the relevant project and hence our Group s profitability will be reduced. Customers may require us to perform certain works not specified in the contract or to carry out changes not in the specifications agreed upon. In order to facilitate the completion of a project within stipulated deadlines, these variation orders may need to be carried out before the additional charges for these variation works are agreed upon between our customers and us. In the event that disputes or litigation occur over the additional charges to be levied for the variation works, and should our Group have to bear a portion of the additional costs incurred, our profits will be materially and adversely affected. Contracts for projects usually contain provisions for payment of liquidated damages by us in the event that the completion of our projects is delayed. Should our projects encounter any delays, whether attributable to us, our suppliers or our subcontractors or events beyond our control, we may be liable to pay liquidated damages. Liquidated damages are typically calculated based on the period of delay subject to a limit of 5.0% to 10.0% of the contract value. If there is a significant delay in the completion of a project, our Group would accordingly be liable for a substantial amount of liquidated damages. This in turn would adversely and materially affect our profitability and financial position. We may be involved in legal and other proceedings arising from our operations from time to time We may be involved from time to time in disputes with various parties involved in the projects that we undertake. These parties include contractors, subcontractors, suppliers and construction companies. These disputes may lead to legal and other proceedings. In the event that such legal proceedings are not concluded in our favour and we are made liable for damages and incur legal costs, or we accept settlement terms that are unfavourable to us, our financial performance and financial position will be adversely affected. In September 2011, Jason Parquet Specialist was named as a third party to a suit between The Management Corporation Strata Title Plan No (as the plaintiff) and Mer Vue Developments Pte. Ltd., Tiong Aik Construction Pte Ltd ( Tiong Aik ), RSP Architects Planners & Engineers (Pte) Ltd and Squire Mech Private Limited (as the defendants). On 31 October 2011, Jason Parquet Specialist entered into a letter of indemnity in favour of Tiong Aik to indemnify them against all demands, claims, liabilities, losses or damages they may sustain by reason of the claims under the suit, whether arising from any judgment, order, settlement agreement or otherwise, for defects and/or outstanding works which fall within the scope of Jason Parquet Specialist s works (as determined by Tiong Aik) in the construction of The Seaview Condominium situated at 41 Amber Road Singapore. In consideration of the letter of indemnity given by Jason Parquet Specialist, the proceedings against Jason Parquet Specialist were discontinued on 4 January Based on the assessment by our Directors, the maximum exposure of our Group pursuant to the letter of indemnity will not exceed S$20,

37 RISK FACTORS We face risk of incorrect estimation of our project costs and cost overruns In our preparation for quotation submissions for projects, we carry out internal costing and budgeting estimates based on the scope of work, cost of materials and labour costs (including subcontract costs). The accuracy of the internal costing and budgeting estimates is subject to our experience and expertise in understanding and assessing the complexity and challenges of each project. However, unforeseen circumstances such as unanticipated price fluctuations of raw materials, changes or damages during the installation processes, increases in labour costs and omissions in estimation in our internal costing may arise. As these circumstances may require additional costs and work which were not factored in the contract value, they may lead to cost overruns which may erode our profit margin for the project. If these develop into actual events, our financial performance will be adversely affected. In the event that any of the above circumstances shall occur and if we are unable to manage such cost overruns, then our profitability and financial results will be adversely affected. We require various licences and permits to operate our business We are required to obtain various licences and permits to operate our business in Singapore. The licences and permits are generally subject to conditions stipulated in the licences and permits and/or relevant laws or regulations under which such licences and permits are issued. Failure to comply with such conditions could result in the revocation or non-renewal of the relevant licence or permit. As such, we have to constantly monitor and ensure our compliance with such conditions. Should there be any failure to comply with such conditions resulting in the revocation or non-renewal of any of the licences and permits, we will not be able to carry out our operations. In such an event, our operations and financial performance will be materially and adversely affected. We are dependent on foreign workers and any shortage in the supply of foreign workers or changes in labour policies in both the countries of origin and Singapore may adversely affect our operations and financial performance Our business is labour-intensive. As we rely largely on foreign workers (including skilled workers) from Bangladesh, China, India, Malaysia, Myanmar and Thailand to meet our labour requirements, we are vulnerable to changes in the availability and costs of employing foreign workers. Any changes in the labour policies of these countries of origin may affect the supply and/or cost of foreign workers and cause disruption to our operations, which may result in delays in the completion of our projects. As at 31 December 2011, foreign workers accounted for approximately 84.9% of our workforce. We are currently dependent on our customers, particularly the main contractors, for our quota entitlement to bring in foreign workers to undertake the projects for which we have been commissioned. There is no certainty that our customers will continue to allocate the necessary labour quota entitlements to us. Neither can we be certain that we will be able to obtain the requisite number of foreign workers to meet our labour requirements on our own. With the increasing demand for foreign workers worldwide, there is also no assurance that we will be able to continue attracting foreign workers at the current level of wages or that our current foreign workers will continue to be employed by us. Any increase in competition for foreign workers, especially skilled workers from outside Singapore, will increase our labour wages. Consequently, if we are not able to pass on the increase in labour costs to our customers, our results of operations and financial performance will be adversely affected. 33

38 RISK FACTORS The supply of foreign workers is also subject to the policies (including those governing levies on employment of foreign workers) imposed by the MOM. Any increase in levies or security bond payments imposed will affect our profitability. In the event that there are shortages in foreign labour, unfavourable policy changes or disciplinary proceedings undertaken by the regulatory authorities in Singapore or elsewhere relating to our use of foreign labour, and there are no suitable and timely replacements obtainable, our operations will be adversely affected. We and/or our suppliers may be subject to environmental laws and regulations Our business operations are subject to the applicable government regulations or policies on environmental protection such as industrial waste control, noise pollution and air pollution. Please refer to the section entitled Government Regulations of this Offer Document for further details. However, in the course of our development and expansion, environmental standards may be raised significantly, or new environmental protection regulations may be promulgated. In such an event, we may incur costs to comply with the new regulatory standards or face an increase in our operating costs. In addition, should we fail to comply with any applicable environmental laws and regulations, we or any persons including our Directors could be subject to substantial fines or penalties and to civil and criminal liabilities. In such an event, our business and financial performance, cash flow and financial position may be adversely affected. In sourcing for our timber and timber products, we cannot guarantee that our suppliers have obtained all necessary licences, permits or other regulatory approvals. We also cannot guarantee that they have complied with all applicable laws and regulations or that they will not be subject to any new laws and regulations, whether in Singapore or in the relevant countries of origin for the manufacture, harvesting and/or the supply (including the export and import) of timber and timber products. In the event that our suppliers have not obtained all necessary licences, permits or approvals, have not complied with all applicable laws and regulations or are subject to new laws and regulations, we may be required to cease our purchases of timber and timber products from them, or they may be required to cease their sales to us. If we are unable to find alternative sources of such timber and timber products, we may have to cease supplying certain types of timber flooring, which may adversely affect our business and financial performance. We are exposed to foreign exchange transaction risks Our revenue is predominantly denominated in S$ which constituted approximately 98.6% of our revenue over the periods under review with the balance denominated in US$ and EUR. Our purchases are predominantly denominated in S$ which constituted approximately 82.8% of our purchases over the periods under review with the balance denominated in AUD, EUR, MYR and US$. Our expenses are denominated in S$ which constituted 100.0% of our expenses over the periods under review. Foreign exchange risks arise mainly from a mismatch between the currency of our sales and the currency of our purchases. We may suffer foreign currency losses if there are significant adverse fluctuations in currency exchange rates between the time of our purchases and payments in foreign currencies and the time of our sales and receipts. This may adversely affect our financial results. We do not currently have any formal policy for hedging against foreign exchange exposure. We will continue to monitor our foreign exchange exposure and may employ forward currency contracts to manage our foreign exchange exposure should the need arise. Prior to implementing any formal hedging policies, we will seek the approval of our Board on the policy and put in place adequate procedures which shall be reviewed and approved by our Audit Committee. Thereafter, all hedging transactions entered into by our Group will be in accordance with the set policies and procedures. 34

39 RISK FACTORS Please refer to the section entitled Management s Discussion and Analysis of Results of Operations and Financial Position Foreign Exchange Management of this Offer Document for further details. We are exposed to credit risk and defaults in payments by our customers Our financial position and profitability are dependent, to a certain extent, on the creditworthiness of our customers. Any material default by our customers will affect our financial position, profitability and cash flow. In FY2009, FY2010 and FY2011, the allowance for doubtful third parties trade receivables amounted to approximately S$102,000, S$99,000 and S$150,000 respectively. Allowance for doubtful third parties trade receivables constituted approximately 7.3%, 2.7% and 4.8% of our PBT for FY2009, FY2010 and FY2011 respectively. As at 31 December 2011, our trade receivables (net of allowance for doubtful third parties trade receivables, retention sum and accrued income) amounted to S$3.1 million and average trade receivables turnover in FY2011 was 37 days. Please refer to the section entitled Business Credit Management of this Offer Document for further details of our credit policy. There is no assurance that our customers will not default in their payments. In the event that our customers default in their payments, bad debts written off will increase, and this will in turn have an adverse impact on our financial performance and financial position. We are dependent on obtaining adequate financing to fund our operations The contract sums for our residential and commercial development projects are payable by our customers to us progressively, according to the percentage of completion of the relevant project. To perform a contract in our business, we will require adequate funding either from internal resources or borrowings to fund the working capital of the project. In addition, we may be required to secure the requisite performance bonds or guarantees from insurance companies or financial institutions to secure our performance under the relevant contract. There can be no assurance that we will be able to secure adequate financing. In the event that we are unable to secure adequate financing, our business and growth will be adversely affected. Our insurance coverage may not be adequate We have insured against, inter alia, claims arising from fire, theft, public liability as well as workmen s injury compensation in connection with our business and operations. We have also taken up a key man insurance for Jason Sim (our Executive Chairman and CEO). However, in the event that the amount of such claims exceed the coverage of the insurance policies which we have taken up, we may be liable for shortfalls of the amounts claimed. We are not insured against, for example, business interruption. If such events were to occur, our business, financial performance and financial position may be materially and adversely affected. Please refer to the section entitled Business Insurance of this Offer Document for further details. We are subject to subcontracting risks We are dependent on subcontractors to install timber flooring for some of our projects. Subcontract costs accounted for 9.5%, 12.4% and 11.7% of our cost of sales in FY2009, FY2010 and FY2011 respectively. These subcontractors are selected based on, inter alia, their competitiveness in terms of pricing, our past working experience with them and their past track record. We cannot assure you that the services rendered by these subcontractors will be satisfactory or that they will meet our requirements for quality at all times. 35

40 RISK FACTORS In the event of any loss or damage which arises from the default of the subcontractors engaged by us, we, being the main contractor for timber flooring works, will nevertheless be liable for our subcontractors default. Furthermore, these subcontractors may experience financial or other difficulties that may affect their ability to carry out the work for which they were contracted, thus delaying the completion of or failing to complete our projects, resulting in additional costs for us. Any of these factors could have a material adverse effect on our business, results of operations and financial position. We are exposed to the risk of significant increase in prices of materials The prices of the materials that we use, in particular, the prices of timber, may be subject to price fluctuations due to various factors beyond our control, including severe climatic conditions and governmental regulations, which might reduce supply, leading to increases in supply costs. There is no assurance that such prices will not fluctuate materially in the future. Should there be any significant fluctuations in these prices, and we are unable to pass on any increase in costs to our customers, our operating results may be adversely affected. There is no assurance that our future plans will be successful In order to grow our business, we intend to expand our product offerings and expand our business through investments, acquisitions and/or joint ventures in companies or businesses that are similar or complementary to our business. The expansion of our existing business into overseas markets involves numerous risks, such as political, economic, regulatory and social conditions as well as the costs of setting up overseas operations. There can be no assurance that our overseas operations will achieve a sufficient level of revenue which will cover our operational costs. Participation in investments, acquisitions and/or joint ventures similarly involves risks, including but not limited to difficulties in integrating management, operations, services, products and personnel. The successful integration of such growth strategies depends on our ability to identify suitable partners and the successful integration of operations. There can be no assurance that we will be able to execute such growth strategies successfully. If any of the aforesaid events were to occur, our profitability may be adversely affected. Any adverse changes in the political, economic, legal, regulatory, taxation or social conditions in Singapore and in the countries in which we may expand our business could materially and adversely affect our operations, financial performance and future growth We are governed by the laws, regulations and government policies in Singapore and in each of the countries that we may expand our business and operations. Our business and future growth is dependent on the political, economic, legal, regulatory, taxation and social conditions in these countries. Any economic downturn or changes in policies implemented by the governments in these countries, investment restrictions, currency and interest rate fluctuations, capital controls or capital restrictions, changes in labour laws, changes in environmental protection laws and regulations, duties, taxation and limitations on imports and exports could materially and adversely affect our operations, financial performance and future growth. 36

41 RISK FACTORS An outbreak of communicable diseases, severe weather conditions, natural disaster or other incidents may affect our business and financial performance An outbreak of various communicable diseases such as severe acute respiratory syndrome, the avian influenza and the H1N1 influenza could materially and adversely affect our business. In the event that any of our employees or those of our customers, suppliers or subcontractors are infected or suspected of being infected with any communicable disease, we may be required by health authorities to temporarily shut down our premises or the affected project sites and quarantine the relevant workers to prevent the spread of the disease. This will result in project delays and have an adverse impact on our business and financial performance. Severe weather conditions, natural disasters such as earthquakes and other incidents such as outbreak of fire, could cause damage to or a temporary shutdown of our suppliers manufacturing facilities. As we obtain most of our products from our suppliers, if the manufacturing facilities or employees of our suppliers are affected by any of the aforesaid events, it will interrupt the supply of our products, thereby causing our business and financial performance to be adversely affected. We may require additional funding for our future growth Although we have identified our future growth plans as set out in the section entitled Prospects, Business Strategies and Future Plans Our Business Strategies and Future Plans of this Offer Document, the proceeds from the Placement may not be sufficient to cover the estimated costs to implement all these plans. In such an event, we may need to obtain debt and/or equity financing to implement these growth opportunities. Additional debt and/or equity financing may result in dilution to our Shareholders. If such financing does not generate a commensurate increase in earnings, our EPS will be diluted, and this could lead to a decline in our Share price. Additional debt financing may, apart from increasing interest expense and gearing, result in all or any of the following: limit our ability to pay dividends; increase our vulnerability to general adverse economic and industry conditions; require us to dedicate a substantial portion of our cash flows from operations to payments on our debt, thereby reducing the availability of our cash flows to fund capital expenditure, working capital and other requirements; and/or limit our flexibility in planning for, or reacting to, changes in our business and our industry. There is no assurance that we will be able to obtain additional debt and/or financing on terms that are acceptable to us or at all. Any inability to secure additional debt and/or financing may materially and adversely affect our business, the implementation of our business strategies and future plans and financial position. 37

42 RISK FACTORS RISKS RELATING TO INVESTMENT IN OUR SHARES Investments in securities quoted on Catalist involve a higher degree of risk and can be less liquid than shares quoted on the Main Board of the SGX-ST We have made an application for our Shares to be admitted to Catalist, a listing platform primarily designed for fast growing and emerging or smaller companies to which a higher investment risk tends to be attached as compared to larger or more established companies listed on the Main Board of the SGX-ST. An investment in shares quoted on Catalist may carry a higher risk than an investment in shares quoted on the Main Board of the SGX-ST and the future success and liquidity in the market of our Shares cannot be guaranteed. Our Controlling Shareholder and his Associate will retain significant control over our Group after the Placement which will allow them to influence the outcome of matters submitted to Shareholders for approval Upon the completion of the Placement, our Controlling Shareholder and his Associate, namely Jason Sim and Nelson Sim, will beneficially own in aggregate approximately 50.4% of our Company s post-placement share capital. As a result, they will be able to exercise significant influence over matters requiring Shareholders approval, including the election of directors and the approval of significant corporate transactions. Jason Sim and Nelson Sim will also effectively have veto power with respect to any Shareholders action or approval requiring a majority vote except where they are required by the rules of the Listing Manual or other applicable regulations to abstain from voting. Such concentration of ownership may also have the effect of delaying, preventing or deterring a change in control of our Group which may benefit Shareholders. Future sale of our Shares could adversely affect our Share price Any future sale of our Shares can have a downward pressure on our Share price. The sale of a significant amount of Shares in the public market after the Placement, or the perception that such sales may occur, could adversely affect the market price of our Shares. These factors also affect our ability to sell additional equity securities. Except as otherwise described in the section entitled General Information on Our Group Moratorium of this Offer Document, there will be no restrictions imposed on our Shareholders to dispose of their shareholdings. Our Share price may fluctuate following the Placement The market price of our Shares may fluctuate significantly and rapidly after the Placement as a result of, among others, the following factors, some of which are beyond our control: variations in our operating results; changes in securities analysts recommendations, perceptions or estimates of our financial performance; changes in market valuations and share prices of companies with business similar to that of our Company that may be listed in Singapore; announcements by us of significant acquisitions, strategic alliances or joint ventures; fluctuations in stock market prices and volume; 38

43 RISK FACTORS our involvement in material litigation; additions or departures of our key management personnel; material changes or uncertainty in the political, economic and regulatory environment in the markets that we operate; success or failure of our efforts in implementing business and growth strategies; and changes in conditions affecting the industry, the general economic conditions or stock market sentiments or other events or factors. New investors will incur immediate dilution and may experience further dilution Our Placement Price of 22.5 cents per Share is substantially higher than our NTA per Share of 14.0 cents (based on the NTA per Share as referred to in the section entitled Dilution of this Offer Document and as adjusted for the net proceeds from the issue of the New Shares). If we were liquidated immediately following the Placement, each investor subscribing to the Placement would receive less than the price he paid for the Shares. Please refer to the section entitled Dilution of this Offer Document for further details. There has been no prior market for our Shares and the Placement may not result in an active or liquid market and there is a possibility that our Share price may be volatile Prior to the Placement, there has been no public market for our Shares. Although we have made an application to the SGX-ST for our Shares to be listed for quotation on Catalist, there is no assurance that an active trading market for our Shares will develop, or if it develops, be sustained. There is also no assurance that the market price for our Shares will not decline below the Placement Price. The market price of our Shares could be subject to significant fluctuations due to various external factors and events including the liquidity of our Shares in the market, differences between our actual financial or operating results and those expected by investors and analysts, the general market conditions and broad market fluctuations. Negative publicity including those relating to any of our Directors, Executive Officers or Controlling Shareholder may materially and adversely affect our Share price Negative publicity or announcements including those relating to any of our Directors, Executive Officers or Controlling Shareholder may materially and adversely affect the market perception or the performance of our Shares, whether or not they are justified. Examples of negative publicity include publicity on our unsuccessful attempts in joint ventures, acquisitions or take-overs, or involvement in insolvency proceedings. The actual performance of our Company may differ materially from the forward-looking statements in this Offer Document This Offer Document contains forward-looking statements, which are based on a number of assumptions which are subject to significant uncertainties and contingencies, many of which are outside our control. Furthermore, our revenue and financial performance are dependent on a number of external factors, including demand for our services which may decrease for various reasons, 39

44 RISK FACTORS including increased competition within the industry or changes in applicable laws and regulations. We cannot assure you that these assumptions will be realised and our actual performance will be as projected. We may not be able to pay dividends in the future Our ability to declare dividends to our Shareholders will depend on our future financial performance and distributable reserves of our Company, which, in turn, depends on us successfully implementing our strategies and on financial, competitive, regulatory, technical and other factors, general economic conditions, demand for and selling prices of our products and services and other factors specific to our industry or specific projects, many of which are beyond our control. As such, there is no assurance that our Company will be able to pay dividends to our Shareholders. In the event that our Company enters into any loan agreements in the future, covenants therein may also limit when and how much dividends we can declare and pay. 40

45 ISSUE STATISTICS PLACEMENT PRICE 22.5 cents NTA NTA per Share based on the audited combined statement of financial position of our Group as at 31 December 2011: (a) (b) before adjusting for the estimated net proceeds from the Placement and based on our Company s pre-placement share capital of 90,000,000 Shares after adjusting for the estimated net proceeds from the Placement and based on our Company s post-placement share capital of 108,000,000 Shares 13.5 cents 14.0 cents Premium of Placement Price over the NTA per Share based on the audited combined statement of financial position of our Group as at 31 December 2011: (a) (b) before adjusting for the estimated net proceeds from the Placement and based on our Company s pre-placement share capital of 90,000,000 Shares after adjusting for the estimated net proceeds from the Placement and based on our Company s post-placement share capital of 108,000,000 Shares 66.7% 60.7% EPS Historical EPS based on the audited combined statement of comprehensive income of our Group for FY2011 and our Company s pre-placement share capital of 90,000,000 Shares Historical EPS based on the audited combined statement of comprehensive income of our Group for FY2011 and our Company s pre-placement share capital of 90,000,000 Shares, assuming that the Service Agreement had been in place from the beginning of FY cents 2.8 cents PER Historical PER based on the historical EPS for FY2011 Historical PER based on the historical EPS for FY2011, assuming that the Service Agreement had been in place from the beginning of FY times 8.0 times Net Cash Flow from Operations (1) Historical net cash flow from operations per Share for FY2011 based on our Company s pre-placement share capital of 90,000,000 Shares Historical net cash flow from operations per Share for FY2011 based on our Company s pre-placement share capital of 90,000,000 Shares, assuming that the Service Agreement had been in place from the beginning of FY cents 3.3 cents 41

46 ISSUE STATISTICS Price to Net Cash Flow from Operations Ratio Placement Price to historical net cash flow from operations per Share for FY2011 Placement Price to historical net cash flow from operations per Share for FY2011, assuming that the Service Agreement had been in place from the beginning of FY times 6.8 times Market Capitalisation Our market capitalisation based on the Placement Price and our Company s post-placement share capital of 108,000,000 Shares S$24.3 million Note: (1) Net cash flow from operations is defined as the PAT with depreciation and amortisation expenses added back. 42

47 DILUTION Dilution is the amount by which the Placement Price to be paid by investors for our Placement Shares ( New Investors ) exceeds the NTA per Share immediately after the Placement. Our audited NTA per Share as at 31 December 2011 before adjusting for the estimated net proceeds from the issue of the New Shares and based on our Company s pre-placement share capital of 90,000,000 Shares, was 13.5 cents. Pursuant to the Placement in respect of 18,000,000 New Shares at the Placement Price, our NTA per Share after adjusting for the estimated net proceeds from the issue of the New Shares and based on our Company s post-placement share capital of 108,000,000 Shares, would be 14.0 cents. This represents an immediate increase in NTA per Share of 0.5 cents to our existing Shareholders and an immediate dilution in NTA per Share of 8.5 cents to our New Investors. The following table illustrates such dilution on a per Share basis as at 31 December 2011: Cents Placement Price 22.5 NTA per Share as at 31 December Increase in NTA per Share attributable to existing Shareholders 0.5 NTA per Share after the Placement (1) 14.0 Dilution in NTA per Share to New Investors 8.5 Note: (1) The computed NTA per Share after the Placement does not take into account our actual financial performance from 1 January Depending on our actual financial results, our NTA per Share may be higher or lower than the above computed NTA per Share. The following table shows the average effective cost per Share paid by our existing Shareholders for Shares acquired by them prior to the Placement during the period of three years prior to the date of lodgement of this Offer Document and the price per Share to be paid by our New Investors pursuant to the Placement: Number of Shares acquired Total consideration (S$) Average effective cost per Share (cents) Director Jason Sim 51,704,000 3,080, Executive Officer Nelson Sim 2,700, , Other Existing Shareholders Sirius Growth 4,070, , Radwell 31,526,000 1,878, New Investors 33,800,000 7,605, Save as disclosed above and in the sections entitled General Information on Our Group Restructuring Exercise and General Information on Our Group Share Capital of this Offer Document, none of our Directors, Substantial Shareholders or their respective Associates has acquired any Shares during the period of three years prior to the date of lodgement of this Offer Document. 43

48 CAPITALISATION AND INDEBTEDNESS The following table shows the cash and cash equivalents as well as capitalisation and indebtedness of our Group as at 31 May 2012: (i) (ii) based on our management accounts as at 31 May 2012; and as adjusted for the net proceeds from the Placement. You should read this in conjunction with the Audited Combined Financial Statements for the Financial Years Ended 31 December 2009, 2010 and 2011 set out in Appendix A of this Offer Document and the section entitled Management s Discussion and Analysis of Results of Operations and Financial Position of this Offer Document. (S$ 000) As at 31 May 2012 As adjusted for the net proceeds from the Placement Cash and cash equivalents 1,038 3,958 Indebtedness Current secured and guaranteed 14,656 14,656 secured and non-guaranteed unsecured and guaranteed 1,116 1,116 unsecured and non-guaranteed Non-current secured and guaranteed 1,189 1,189 secured and non-guaranteed unsecured and guaranteed unsecured and non-guaranteed Total indebtedness 17,599 17,599 Total shareholders equity 12,269 15,189 Total capitalisation and indebtedness 29,868 32,788 There were no material changes in our total capitalisation and indebtedness from 1 June 2012 to the date of this Offer Document, save for the scheduled monthly repayments on our bank borrowings and changes in our retained earnings arising from the day-to-day operations in the ordinary course of our business. 44

49 CAPITALISATION AND INDEBTEDNESS Borrowings Details of our borrowings and indebtedness as at 31 December 2011 are as follows: Financial institution/ Lender Type of facilities/ Tenure Amount of facilities granted Amount utilised Amount owing (S$) (S$) (S$) Securities (1) DBS Overdraft facility 50,000 (i) Existing first legal mortgage over the property at 16 Tampines Street 92, JP Building, Singapore ; and (ii) Existing joint and several personal guarantees from Jason Sim and Nelson Sim. Letters of guarantee 500,000 (2) 498,351 (i) Existing first legal mortgage over the property at 16 Tampines Street 92, JP Building, Singapore ; and (ii) Existing joint and several personal guarantees from Jason Sim and Nelson Sim. Trade facilities II comprising letters of credit, trust receipts, bills receivable purchase, shipping guarantees and airway bill guarantees Bills receivable sales 2,000, , ,746 (i) Existing first legal mortgage over the property at 16 Tampines Street 92, JP Building, Singapore ; and (ii) Existing joint and several personal guarantees from Jason Sim and Nelson Sim. 1,000,000 (2) 1,000,000 1,000,000 (i) Existing first legal mortgage over the property at 16 Tampines Street 92, JP Building, Singapore ; and (ii) Existing joint and several personal guarantees from Jason Sim and Nelson Sim. 45

50 CAPITALISATION AND INDEBTEDNESS Financial institution/ Lender Type of facilities/ Tenure Amount of facilities granted Amount utilised Amount owing (S$) (S$) (S$) Securities (1) Inventory/stock financing facility comprising letters of credit, trust receipts, bills receivable purchase, shipping guarantees, airway bill guarantees and loan insurance scheme plus Property loan/ 20 years from April 2002 to March ,000,000 (2) 2,000,000 2,000,000 (i) Existing first legal mortgage over the property at 16 Tampines Street 92, JP Building, Singapore ; and (ii) Existing joint and several personal guarantees from Jason Sim and Nelson Sim. 2,100,000 2,100,000 1,370,079 (i) Existing first legal mortgage over the property at 16 Tampines Street 92, JP Building, Singapore ; and (ii) Existing joint and several personal guarantees from Jason Sim and Nelson Sim. Bridging loan (Local Enterprise Finance Scheme)/ four years from July 2009 to June 2013 Foreign exchange spot and forward 2,000,000 2,000, ,635 Existing joint and several personal guarantees by Jason Sim and Nelson Sim. 1,500,000 (i) Existing first legal mortgage over the property at 16 Tampines Street 92, JP Building, Singapore ; and (ii) Existing joint and several personal guarantees by Jason Sim and Nelson Sim. United Overseas Bank Limited Overdraft facility 344,000 (3) Existing joint and several guarantees for S$1,624,000 (3) executed by Jason Sim and Nelson Sim. Letters of credit and trust receipts 800,000 (3) 686, ,107 Existing joint and several guarantees for S$1,624,000 (3) executed by Jason Sim and Nelson Sim. 46

51 CAPITALISATION AND INDEBTEDNESS Financial institution/ Lender Type of facilities/ Tenure Amount of facilities granted Amount utilised Amount owing (S$) (S$) (S$) Securities (1) The Bank of East Asia, Limited The Hong Kong and Shanghai Banking Corporation Limited Standard Chartered Bank Forward foreign exchange contracts Letters of credit, trust receipts, receivables purchase financing and invoice financing Bridging loan (Local Enterprise Finance Scheme)/ four years from August 2009 to September 2013 Documentary credit line comprising loan against import with trust receipt line and clean import loan Letters of credit, trust receipts, import loans, financing of invoices and shipping guarantees Financing of invoices 400,000 (3) Existing joint and several guarantees for S$1,624,000 (3) executed by Jason Sim and Nelson Sim. 1,000,000 Existing joint and several continuing personal guarantees for all monies owing from time to time executed by Jason Sim and Nelson Sim. 2,000,000 2,000, ,389 Personal continuing joint and several guarantees for S$2,000,000 owing by the borrower outstanding from time to time, executed by Jason Sim and Nelson Sim. 1,000, , ,509 Joint and several guarantees for an unlimited amount by Jason Sim and Nelson Sim. 2,200,000 1,505,863 1,505,863 (i) All monies guarantee provided by Jason Sim and Nelson Sim; and (ii) Fresh legal assignment to be executed by the borrower in favour of the bank over proceeds from the Keppel Bay project. 1,000,000 (i) All monies guarantee provided by Jason Sim and Nelson Sim; and (ii) Fresh legal assignment to be executed by the borrower in favour of the bank over proceeds from the Keppel Bay project. 47

52 CAPITALISATION AND INDEBTEDNESS Financial institution/ Lender Type of facilities/ Tenure Amount of facilities granted Amount utilised Amount owing (S$) (S$) (S$) Securities (1) Australia and New Zealand Banking Group Limited, Singapore Branch DBS Bridging loan (Local Enterprise Finance Scheme)/ three years from April 2009 to March 2012 Documentary credit, advances against trust receipt, import open account financing, export open account financing and shipping guarantee Finance lease/ 60 months commencing on 26 February 2007 Finance lease/ 60 months commencing on 26 February 2007 Finance lease/ 60 months commencing on 26 February 2007 Finance lease/ 60 months commencing on 26 February 2007 Finance lease/ 60 months commencing on 26 February 2007 Finance lease/ 60 months commencing on 2 March 2007 Finance lease/ 60 months commencing on 2 March , ,000 92,565 All monies guarantee provided by Jason Sim and Nelson Sim. 3,500,000 (4) 2,869,464 2,869,464 Irrevocable and unconditional joint and several personal guarantees from Jason Sim and Nelson Sim. 34,380 34, ,380 34, ,380 34, ,380 34, ,380 34, ,380 34, ,380 34,

53 CAPITALISATION AND INDEBTEDNESS Financial institution/ Lender Type of facilities/ Tenure Amount of facilities granted Amount utilised Amount owing (S$) (S$) (S$) Securities (1) Finance lease/ 60 months commencing on 2 March ,380 34, Finance lease/ 60 months commencing on 8 March ,400 50,400 1,688 Finance lease/ 60 months commencing on 8 March ,400 50,400 1,688 Malayan Banking Berhad ORIX Capital Limited Finance lease/ 60 months commencing on 11 September 2007 Finance lease/ 120 months commencing on 25 March 2008 Finance lease/ 84 months commencing on 4 September 2010 Finance lease/ 84 months commencing 21 October 2011 Finance lease/ 72 months commencing on 2 September ,400 (5) 113,400 15,363 Joint and several guarantees by Jason Sim and Nelson Sim. 64,000 64,000 40, , , , , , ,006 Personal guarantee by Jason Sim. 42,000 42,000 7,892 Total 25,235,840 17,813,880 13,041,893 Notes: (1) Jason Sim is our Executive Chairman and CEO while Nelson Sim is our Executive Officer. (2) In August 2012, our Group s credit facilities with DBS increased from S$11,150,000 to S$15,150,000 comprising overdraft facility of S$50,000, letters of guarantee of S$2,500,000, trade facilities II comprising letters of credit, trust receipts, bills receivable purchase, shipping guarantees and airway bill guarantees of S$2,000,000, bills receivable sales of S$2,000,000, loan insurance scheme of S$3,000,000, property loan of S$2,100,000, bridging loan (Local Enterprise Finance Scheme) of S$2,000,000 and foreign exchange spot and forward of S$1,500,000. The securities provided in respect of these facilities remained unchanged. 49

54 CAPITALISATION AND INDEBTEDNESS (3) In March 2012, our Group s credit facilities with United Overseas Bank Limited increased from S$1,544,000 to S$4,344,000, comprising overdraft facility of S$344,000, letters of credit and trust receipts of S$2,000,000 and forward foreign exchange contracts of S$2,000,000. The securities provided in respect of these facilities had been changed to existing joint and several guarantees for S$2,800,000 executed by Jason Sim and Nelson Sim. (4) In June 2012, our Group s credit facilities with Australia and New Zealand Banking Group Limited, Singapore Branch increased from S$3,500,000 to S$4,500,000. The securities provided in respect of these facilities remained unchanged. (5) As at the date of this Offer Document, the finance lease of S$113,400 has been fully repaid. In February 2012, Malayan Banking Berhad granted our Group letters of credit and trust receipts facilities of S$1,000,000 and an open account trading facility of S$1,000,000, secured by an all monies joint and several guarantee by Jason Sim and Nelson Sim. As at the Latest Practicable Date, we have not utilised our credit and trust receipts facilities, and we have utilised S$1.0 million of and owe S$1.0 million under our open account trading facility. In August 2012, DBS granted our Group a non-revolving hire purchase facility of S$1,000,000, secured by an all monies joint and several personal guarantee provided by Jason Sim and Nelson Sim. As at the date of this Offer Document, our Group has not utilised this facility. Our Group has in FY2010 and FY2011 received advances from Shareholders (namely, Radwell and Sirius Growth) and a Director (namely, Jason Sim) for working capital purposes. These advances were interest-free, unsecured and with no fixed terms of repayment. As at the Latest Practicable Date, the outstanding amounts owed by our Group to Jason Sim, Radwell and Sirius Growth are S$1.1 million, S$1.4 million and approximately S$29,000 respectively. Please refer to the sections entitled Interested Person Transactions Present and On-going Interested Person Transactions and Interested Person Transactions Other Transactions of this Offer Document for further details of the advances from Jason Sim and Radwell to our Group. The average effective interest rates charged by the relevant financial institutions for the above banking facilities ranged from 2.0% to 7.3% per annum or such other rates as the respective financial institutions may from time to time determine. The effective interest rates charged by the relevant lenders for the above finance lease liabilities ranged from 3.7% to 6.3% per annum. To the best of our Directors knowledge, as at the Latest Practicable Date, we are not in breach of any of the terms and conditions or covenants associated with any credit arrangement or bank loan which could materially affect our financial position and results or business operations, or the investments by our Shareholders. Save as aforesaid and as disclosed under the section entitled Management s Discussion and Analysis of Results of Operations and Financial Position Liquidity and Capital Resources of this Offer Document, our Group does not have any material unused sources of liquidity. Please refer to the section entitled Interested Person Transactions of this Offer Document for further details of the guarantees provided by our Executive Director and his Associates. 50

55 DIVIDEND POLICY Jason Parquet Specialist declared and paid a one-tier tax-exempt interim dividend amounting to S$3.0 million in respect of FY2010 to its then shareholders, namely Jason Sim, Nelson Sim and Radwell. In FY2011, Jason Parquet Specialist declared and paid a one-tier tax-exempt interim dividend amounting to S$636,800 to its then shareholders, namely, Jason Sim, Nelson Sim, Radwell and Sirius Growth. Save as disclosed above, no dividends have been declared or paid by our Company or our subsidiary during the periods under review. We currently do not have a formal dividend policy. The form, frequency and amount of declaration and payment of future dividends on our Shares that our Directors may recommend or declare in respect of any particular financial year or period will be subject to the factors outlined below as well as other factors deemed relevant by our Directors: (a) (b) (c) (d) (e) the level of our cash and retained earnings; our actual and projected financial performance; our projected levels of capital expenditure and expansion plans; our working capital requirements and general financing conditions; and restrictions on payment of dividends imposed on us (if any). We may, by ordinary resolution of our Shareholders, declare dividends at a general meeting, but we may not pay dividends in excess of the amount recommended by our Directors. The declaration and payment of dividends will be determined at the sole discretion of our Directors subject to the approval of our Shareholders. There can be no assurance that dividends will be paid in the future or of the amount or timing of any dividends that may be paid in the future. Our Directors may also declare an interim dividend without the approval of our Shareholders. In making their recommendations, our Directors will consider, inter alia, our retained earnings and expected future earnings, operations, cash flows, capital requirements and general financing condition, as well as general business conditions and other factors which our Directors may deem appropriate. Future dividends will be paid by us as and when approved by our Shareholders (if necessary) and Directors. Information relating to taxes payable on dividends is set out in the section entitled Taxation in Appendix D of this Offer Document. 51

56 SUMMARY OF OUR FINANCIAL INFORMATION The following selected financial information should be read in conjunction with the full text of this Offer Document, including the Audited Combined Financial Statements for the Financial Years Ended 31 December 2009, 2010 and 2011 set out in Appendix A of this Offer Document. Combined Statements of Comprehensive Income (1) Audited (S$ 000) FY2009 FY2010 FY2011 Revenue 25,946 33,759 29,922 Cost of sales (20,343) (24,823) (21,580) Gross profit 5,603 8,936 8,342 Other items of income Interest income Other income Other items of expense Selling and distribution expenses (45) (72) (103) Administrative expenses (2,506) (2,781) (3,089) Other expenses (1,513) (1,737) (1,558) Finance costs (702) (978) (738) Profit before income tax 1,396 3,653 3,127 Income tax expense (353) (611) (424) Profit for the financial year, representing total comprehensive income for the financial years 1,043 3,042 2,703 Profit attributable to owners of the Company 1,043 3,042 2,703 (4) EPS (cents) (2) EPS (fully diluted) (cents) (3) Notes: (1) Our combined statements of comprehensive income for the periods under review have been prepared on the basis that our Group had been in existence throughout the periods under review. (2) For comparative purposes, EPS for the periods under review have been computed based on the PAT and our pre-placement share capital of 90,000,000 Shares. (3) For comparative purposes, EPS (fully diluted) for the periods under review have been computed based on the PAT and our post-placement share capital of 108,000,000 Shares. (4) Had the Service Agreement been in place with effect from 1 January 2011, the PAT for FY2011 would have been approximately S$2,555,000, and the EPS and EPS (fully diluted) would have been 2.8 cents and 2.4 cents, respectively. 52

57 SUMMARY OF OUR FINANCIAL INFORMATION Combined Statement of Financial Position (1) (S$ 000) Non-current assets Audited as at 31 December 2011 Property, plant and equipment 2,923 Intangible asset 110 Total non-current assets 3,033 Current assets Inventories 9,017 Trade and other receivables 22,139 Prepayments 417 Cash and cash equivalents 2,519 Total current assets 34,092 Current liabilities Trade and other payables 8,745 Amount due to corporate shareholders 1,415 Amount due to a director 1,124 Interest-bearing liabilities 10,742 Current income tax payable 516 Total current liabilities 22,542 Net current assets 11,550 Non-current liabilities Interest-bearing liabilities 2,299 Deferred tax liabilities 15 Total non-current liabilities 2,314 Net assets 12,269 Capital and reserves Share capital 5,363 Retained earnings 6,906 Total equity attributable to owners of the Company 12,269 NTA per Share (cents) (2) 13.5 Notes: (1) Our combined statement of financial position as at 31 December 2011 has been prepared on the basis that our Group has been in existence on this date. (2) The NTA per Share as at 31 December 2011 has been computed based on our pre-placement share capital of 90,000,000 Shares. 53

58 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION The following discussion of our results of operations and financial position has been prepared by our management and should be read in conjunction with the Audited Combined Financial Statements for the Financial Years Ended 31 December 2009, 2010 and 2011 set out in Appendix A of this Offer Document. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ significantly from those projected in the forward-looking statements include, but are not limited to, those discussed below and elsewhere in this Offer Document, particularly in the section entitled Risk Factors of this Offer Document. Under no circumstances should the inclusion of such forward-looking statements herein be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions by our Company, the Vendor, the Sponsor, the Placement Agent or any other person. Investors are cautioned not to place undue reliance on these forward-looking statements that speak only as at the date hereof. Please refer to the section entitled Cautionary Note Regarding Forward-Looking Statements of this Offer Document. OVERVIEW We are one of the leading Singapore-based providers of timber flooring services with an established reputation and track record for quality and reliability. We are principally engaged in the supply and installation of a comprehensive range of timber flooring under our Tech-Wood brand as well as the sale and distribution of timber products and flooring accessories. We offer our customers over 30 types of timber species to cater to their preferences and budgets. Our Directors believe that the four most popular types of solid timber used in the supply and installation for our Projects business in Singapore are teak, American walnut, American oak and European oak. Our timber products are purchased directly from our suppliers mainly in Australia, Indonesia, the PRC, the Republic of Paraguay and Singapore. Since 2010, as we steered towards environmentally sustainable growth, we have also been offering our customers more environmentally-friendly flooring products such as wood-plastic composite products. Please refer to the section entitled Business Main Types of Timber Flooring Products Supplied of this Offer Document for further details. The products that we sell and distribute are mainly timber products comprising solid timber strips and planks, engineered wood and wood-plastic composite products as well as flooring accessories which include nails, air guns, glues, varnishes and grinding and buffing machines. Our head office and showroom are located at 16 Tampines Street 92, JP Building, Singapore Our warehousing facilities are located at 16 Tampines Street 92, JP Building, Singapore and 46 Sungei Kadut Street 1, Singapore Our head office, showroom and two warehouses occupy an aggregate built-in area of approximately 38,816.5 sq ft. Revenue Revenue is largely derived from the supply and installation of timber flooring to our (i) Projects customers (comprising main contractors and retail customers), and the sale of timber products and flooring accessories to our (ii) Distribution customers. Revenue from our Projects business accounted for 98.0%, 98.0% and 88.6% of our revenue in FY2009, FY2010 and FY2011 respectively. The balance of our revenue is derived from our Distribution business. 54

59 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Revenue from our Projects business is recognised based on the percentage of completion method. Total contract revenue also includes an estimation of the variation works that are recoverable from the customers. Generally, our projects are awarded through requests for quotation and referrals from our customers. For any given installation project, our customers enter into contracts (which specify indicative delivery schedule, quantity and pricing) with us for the supply and installation of our products, which may last up to two years. Our products are then delivered and installed based on the different stages of completion of the projects. Revenue from our Distribution business is recognised upon delivery of our products and when significant risks and rewards of ownership have been transferred to customers. Our Distribution customers orders are based on confirmed orders and we do not typically enter into long-term contracts with them. Hence, the lead-time to fulfil an order for our products generally ranges from one day up to two months subject to stock availability. Geographically, our Projects and Distribution customers are predominantly located in Singapore. For our Distribution business, we also export mainly timber products to customers in Indonesia, Malaysia and the PRC. An average of approximately 98.6% of our revenue over the periods under review was denominated in S$, with the balance denominated in US$ and EUR. The major factors that affect our revenue include: (a) (b) (c) (d) (e) Our ability to expand our existing range of products for our consumers and adapt to their changing requirements; Our ability to compete effectively in the markets we operate. We currently operate in Singapore; Our ability to continually attract, secure and retain customers. The demand for our products is mainly influenced by product range, price, quality and timely completion of installation of our products; The state of the economy and the growth and development of the property market and construction industry in Singapore, where we operate and where our products are sold predominantly; and Changes in Singapore government policies which could affect the property market and construction industry such as specific government action or financing restrictions for property purchases. Please refer to the section entitled Risk Factors of this Offer Document for further details. Cost of Sales Cost of sales comprises cost of materials and labour costs. The main component of our cost of sales is the cost of materials, which we purchase directly from our suppliers mainly in Australia, Indonesia, the PRC, the Republic of Paraguay and Singapore, comprising different types of timber products such as teak, oak, plywood and wood-plastic composite products, and flooring accessories such as nails, air guns, glues and varnishes. Our suppliers comprise mainly manufacturers who either are forestry concessions owners or they source for raw materials from other 55

60 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION forestry concessions owners for the manufacture of our products. We generally do not enter into long-term or exclusive contracts with our suppliers as this would provide us the flexibility in terms of pricing, quality and timeliness of delivery of our products. Cost of materials accounted for 73.2%, 77.6% and 80.1% of our cost of sales for FY2009, FY2010 and FY2011 respectively. Labour costs accounted for the balance of our cost of sales. To improve our operating flexibility and ensure timely completion of our projects, we may subcontract the provision of installation services of our products at our customers sites. Subcontract costs accounted for 9.5%, 12.4% and 11.7% of our cost of sales in FY2009, FY2010 and FY2011 respectively. An average of approximately 82.8% of our purchases over the periods under review was denominated in S$, with the balance denominated in AUD, EUR, MYR and US$. The major factors that affect our cost of sales include: (a) (b) (c) (d) Fluctuations in prices of timber which is the main raw material used in the manufacturing of our timber products by our suppliers; Our ability to source for and purchase products at competitive prices that meet our customers requirements and specifications; Our ability to purchase in bulk and negotiate for rebates and discounts from our suppliers; and Our ability to manage our exposure to fluctuations in foreign exchange rates in relation to our purchases. On average, our major foreign currency denominated purchases (in AUD, EUR, MYR and US$) in aggregate accounted for 5.5%, 1.4%, 1.3% and 9.0% of our purchases during the periods under review respectively. Please refer to the section entitled Risk Factors of this Offer Document for further details. Interest Income Interest income relates mainly to interest income from bank deposits. Other Income Other income relates mainly to net foreign exchange gain, rental income, government grant arising from the Jobs Credit Scheme and gain on disposal of plant and equipment. Rental income is derived from our property at 16 Tampines Street 92, JP Building, Singapore where we sublet part of our premises to an unrelated party, namely, Yongway Contract & Construction Pte Ltd. The Jobs Credit Scheme was introduced by the government in the Singapore Budget 2009 to encourage businesses to preserve projects in the economic downturn in 2009 and came to a close in June Selling and Distribution Expenses Selling and distribution expenses relate mainly to advertising and promotion costs, and sales commission paid to third parties for referrals. 56

61 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Administrative Expenses Administrative expenses consist mainly of Director s remuneration, salary-related expenses of general and administrative staff, staff-related expenses (such as staff welfare, transport and foreign workers levy and accommodation), freight charges, rental charges and upkeep of office equipment. Other Expenses Other expenses include allowance for doubtful third parties trade receivables, amortisation of intangible asset, depreciation charges on property, plant and equipment, entertainment and refreshment expenses, insurance costs, legal and professional fees, loss on disposal of plant and equipment, telephone charges and network services, upkeep of motor vehicles and utilities charges. Finance Costs Finance costs relate to interests incurred on borrowings (namely, finance lease liabilities, trust receipts, trade receivable financing, term loans, property loan and bank overdrafts). Income Tax Expense Our Company and our subsidiary are subject to income tax at the applicable statutory tax rates in Singapore. FY2009 FY2010 FY2011 Income tax expense (S$ 000) PBT (S$ 000) 1,396 3,653 3,127 Effective income tax rate (income tax expense as a percentage of PBT) (%) During the periods under review, provisions for income tax were made on income derived from our operations in Singapore. The prevailing statutory income tax rates in Singapore were 17.0% during the periods under review. In FY2009, our effective income tax rate of 25.3% was higher than the prevailing statutory income tax rate in Singapore due mainly to the under provision of current income tax in prior financial years and certain expenses which were not deductible for income tax purposes, partly offset by income tax exemption on taxable income. In FY2010, our effective income tax rate of 16.7% was marginally lower than the prevailing statutory income tax rate in Singapore due mainly to income tax exemption on taxable income, enhanced tax deduction for approved donations, certain income which were not subjected to income tax and the over provision of current income tax in prior financial years, partly offset by certain expenses which were not deductible for income tax purposes. In FY2011, our effective income tax rate of 13.6% was lower than the prevailing statutory income tax rate in Singapore due mainly to enhanced tax deduction for approved equipment, certain income which were not subjected to income tax, income tax exemption on taxable income and the over provision of deferred tax liabilities in prior financial years, partly offset by certain expenses which were not deductible for income tax purposes and the under provision of current income tax in prior financial years. 57

62 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION SEASONALITY Generally, our business is not subject to any significant seasonal fluctuations that will affect the demand for our products and services. However, revenue from our Projects business is generally higher during the three months prior to the Chinese New Year festive period and lower during the Chinese New Year festive period. INFLATION Over the periods under review, inflation did not have a material impact on our performance. REVIEW OF RESULTS OF OPERATIONS For the purpose of discussion, we have segmented our revenue and gross profit by business segments for the periods under review. Currently, our Group operates predominantly in Singapore and hence we have only one geographical segment (being Singapore) for the periods under review. The analysis provided below should be read in conjunction with the Audited Combined Financial Statements for the Financial Years Ended 31 December 2009, 2010 and 2011 set out in Appendix A of this Offer Document. Review of Past Performance by Business Segments Revenue FY2009 FY2010 FY2011 S$ 000 % S$ 000 % S$ 000 % Projects 25, , , Distribution , Total 25, , , Gross Profit FY2009 FY2010 FY2011 S$ 000 % S$ 000 % S$ 000 % Projects 5, , , Distribution Total 5, , , Gross Profit Margin FY2009 FY2010 FY2011 % % % Projects Distribution Overall

63 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION FY2010 vs FY2009 Revenue Revenue increased by S$7.8 million or 30.1%, from S$25.9 million in FY2009 to S$33.7 million in FY2010 due to an increase in revenue contribution of S$7.6 million from our Projects business and S$0.2 million from our Distribution business. In FY2010, S$9.0 million of our revenue from our Projects business was attributable to revenue recognised from 18 new projects while S$20.0 million was attributable to revenue recognised from the then 26 existing projects under our main contractors. The balance of our revenue from our Projects business of S$4.1 million was attributable to revenue recognised from the projects under our retail customers. The increase in revenue from our Projects business in FY2010 was due to (i) the increase in revenue of S$8.5 million recognised from our existing projects which were contributed mainly from three existing projects (namely, Reflections at Keppel Bay, The Orchard Residences and Marina Collection ) amounting to an aggregate of S$11.0 million; and (ii) the increase in revenue of S$0.6 million recognised from the projects under our retail customers due to the increase in renovation works required by private residential property owners, partly offset by the decrease in revenue of S$1.5 million recognised from new projects. In FY2009, S$10.5 million of our revenue from our Projects business was attributable to revenue recognised from 22 new projects while S$11.5 million was attributable to revenue recognised from the then 25 existing projects under our main contractors. The balance of our revenue from our Projects business of S$3.4 million was attributable to revenue recognised from the projects under our retail customers. In FY2009, revenue contribution was mainly from two of our new projects (namely, St Thomas Suites and The Trillium ) amounting to an aggregate of S$2.2 million and three of our existing projects at The Thomson, One Amber and eleven amounting to an aggregate of S$4.1 million. The increase in revenue contribution from our Distribution business was mainly attributable to the increase in demand from local contractors, who made ad hoc purchases of our timber products and flooring accessories. Gross Profit Gross profit increased by S$3.3 million or 59.5%, from S$5.6 million in FY2009 to S$8.9 million in FY2010. The increase was due mainly to higher revenue and a 4.9 percentage point increase in our gross profit margin from 21.6% in FY2009 to 26.5% in FY2010. Gross profit margin from our Projects business increased from 21.8% in FY2009 to 26.6% in FY2010 mainly due to contracts completed which yielded higher margins as a result of higher value-added products used in our projects which command better margins. Gross profit margin from our Distribution business increased from 10.8% in FY2009 to 20.6% in FY2010 mainly due to the sale of products which yielded higher margins. Interest Income Interest income decreased by approximately S$2,000, from approximately S$7,000 in FY2009 to S$5,000 in FY2010 due to lower interest rates on our bank deposits. 59

64 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Other Income Other income decreased by S$0.3 million or 49.3%, from S$0.6 million in FY2009 to S$0.3 million in FY2010 due mainly to a decrease in net foreign exchange gain of S$0.2 million and government grant arising from the Jobs Credit Scheme of approximately S$0.1 million. Selling and Distribution Expenses Selling and distribution expenses increased by approximately S$27,000 or 60.0%, from approximately S$45,000 in FY2009 to S$72,000 in FY2010 due mainly to the increase in advertising and promotion costs. Administrative Expenses Administrative expenses increased by S$0.3 million or 11.0%, from S$2.5 million in FY2009 to S$2.8 million in FY2010 due mainly to higher salary-related expenses of general and administrative staff, staff-related expenses and rental charges. The increase in salary-related expenses of general and administrative staff by S$0.1 million was a result of the increment of our employees salaries and the increase of foreign workers headcount to support the increase in our business activities. The increase in staff-related expenses by S$0.2 million was a result of the higher foreign workers levy due to the increase of foreign workers headcount to support the increase in our business activities and higher staff welfare costs. Other Expenses Other expenses increased by S$0.2 million or 14.8%, from S$1.5 million in FY2009 to S$1.7 million in FY2010 due mainly to an increase in (i) upkeep of motor vehicles of approximately S$55,000 due to the purchase of an additional motor vehicle in FY2010; (ii) insurance costs of approximately S$51,000 due to the additional insurance policies taken up by our Group to support the increase in our business activities; (iii) utilities charges of approximately S$42,000 due to the increase in our business activities and higher utility rates charged by Singapore Power Ltd. and (iv) legal and professional fees of approximately S$29,000 due to fees incurred in relation to our business development consultancy work. Finance Costs Finance costs increased by S$0.3 million or 39.3%, from S$0.7 million in FY2009 to S$1.0 million in FY2010 due mainly to the interests incurred for the bridging loans from SPRING Singapore under the Local Enterprise Finance Scheme being paid up over the full 12 months in FY2010 as compared to FY2009 when the bridging loans commenced only in mid FY2009 and the increase in utilisation of trust receipts to support the increase in our business activities. PBT Our profit before income tax increased by S$2.2 million or 161.7%, from S$1.4 million in FY2009 to S$3.6 million in FY2010 due mainly to higher revenue and gross margin, partly offset by higher operating expenses and lower other income. 60

65 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION FY2011 vs FY2010 Revenue Revenue decreased by S$3.8 million or 11.4%, from S$33.7 million in FY2010 to S$29.9 million in FY2011 due to a decrease in revenue contribution of S$6.5 million from our Projects business, partly offset by an increase in revenue contribution of S$2.7 million from our Distribution business. In FY2011, S$15.0 million of our revenue from our Projects business was attributable to revenue recognised from 28 new projects while S$8.3 million was attributable to revenue recognised from the then 34 existing projects under our main contractors. The balance of our revenue from our Projects business of S$3.2 million was attributable to revenue recognised from the projects under our retail customers. The decrease in revenue from our Projects business in FY2011 was due mainly to the implementation by the Singapore government of a series of measures to cool the Singapore residential property market. The increase in revenue contribution from our Distribution business was mainly attributable to the commencement of our international distribution business activities in the PRC in early FY2011. Gross Profit Gross profit decreased by S$0.6 million or 6.6%, from S$8.9 million in FY2010 to S$8.3 million in FY2011. The decrease was due mainly to lower revenue, partly offset by a 1.4 percentage point increase in our gross profit margin from 26.5% in FY2010 to 27.9% in FY2011. Gross profit margin from our Projects business increased from 26.6% in FY2010 to 27.8% in FY2011 mainly due to contracts completed which yielded higher margins as a result of higher value-added products used in our projects which command better margins. Gross profit margin from our Distribution business increased from 20.6% in FY2010 to 28.4% in FY2011 mainly due to the sale of products which yielded higher margins. Interest Income Interest income decreased by approximately S$4,000, from approximately S$5,000 in FY2010 to S$1,000 in FY2011 due to a decrease in our bank deposits balance with banks. Other Income Other income decreased by approximately S$8,000 or 2.9%, from approximately S$280,000 in FY2010 to S$272,000 in FY2011 due mainly to the decrease in net foreign exchange gain and no government grant received from the Jobs Credit Scheme in FY2011 as this scheme came to a close in June Selling and Distribution Expenses Selling and distribution expenses increased by approximately S$31,000 or 43.1%, from approximately S$72,000 in FY2010 to S$103,000 in FY2011 due to the increase in advertising and promotion costs as well as sales commission paid to third parties for referrals of approximately S$19,000 and S$12,000 respectively. 61

66 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Administrative Expenses Administrative expenses increased by S$0.3 million or 11.1%, from S$2.8 million in FY2010 to S$3.1 million in FY2011 due mainly to higher salary-related expenses of general and administrative staff, staff-related expenses and Director s remuneration. The increase in salary-related expenses of general and administrative staff by S$0.1 million was a result of the increment of our employees salaries and the increase of foreign workers headcount to support the increase in our business activities. The increase in staff-related expenses by S$0.1 million was a result of the higher foreign workers levy and higher costs of foreign workers accommodation due to the increase of foreign workers headcount to support the increase in our business activities. Director s remuneration increased by S$0.1 million due to the increase in the basic salary and CPF contribution of our Executive Chairman and CEO. Other Expenses Other expenses decreased by S$0.2 million or 10.3%, from S$1.7 million in FY2010 to S$1.5 million in FY2011 due mainly to a decrease in (i) legal and professional fees of S$0.1 million due to fees incurred in relation to our business development consultancy work; (ii) insurance costs of approximately S$49,000 as we changed to using banker s guarantee instead of insurance bond for security of our projects, and (iii) depreciation charges on property, plant and equipment of approximately S$38,000 due mainly to certain plant and equipment being fully depreciated. Finance Costs Finance costs decreased by S$0.3 million or 24.5%, from S$1.0 million in FY2010 to S$0.7 million in FY2011 due mainly to the decrease in utilisation of trust receipts in line with the decline in our revenue. PBT Our profit before income tax decreased by S$0.5 million or 14.4%, from S$3.6 million in FY2010 to S$3.1 million in FY2011 due mainly to lower revenue as well as higher selling and distribution expenses and administrative expenses, partly offset by higher gross margin and lower other expenses and finance costs. REVIEW OF FINANCIAL POSITION Non-Current Assets Non-current assets comprise property, plant and equipment and an intangible asset in relation to the purchase of an enterprise resource planning software for our Group s inventory management system in May As at 31 December 2011, the net carrying value of our property, plant and equipment amounted to S$2.9 million or 7.9% of our total assets, comprising leasehold land and building, motor vehicles, office equipment, computers, and tools and equipment. Intangible asset amounted to S$0.1 million. Current Assets Current assets comprise inventories, trade and other receivables, prepayments, and cash and cash equivalents. 62

67 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION As at 31 December 2011, current assets amounted to S$34.1 million or 91.8% of our total assets. Trade and other receivables were the largest component of our current assets, accounting for 64.9%. Trade receivables (net of allowance for doubtful third parties trade receivables) of S$19.5 million comprised mainly (i) amounts due from our customers of S$3.1 million; (ii) retention sum (ranging from 5.0% to 10.0% of the contract value) of S$4.9 million which relates to the amount retained by our customers to secure the fulfilment of our obligations under the contract, and (iii) accrued income for work completed by our Group which has not been invoiced to our customers of S$11.5 million. Other receivables of S$2.6 million comprised (i) advances to suppliers of S$2.4 million which relates to advance payments made to suppliers for the purchase of products; (ii) deposits related to payments made to suppliers as security for the purchase of products of S$0.1 million, and (iii) loans extended to our staff of S$0.1 million. Inventories accounted for 26.4% of our current assets. The remaining balance of current assets comprises prepayments of S$0.4 million which relate to deferred expenses incurred in relation to the Placement and cash and cash equivalents of S$2.5 million. Non-Current Liabilities Non-current liabilities comprise interest-bearing liabilities and deferred tax liabilities. As at 31 December 2011, our non-current liabilities amounted to S$2.3 million or 9.3% of our total liabilities. Interest-bearing liabilities of S$2.3 million relates to (i) a property loan of S$1.2 million from a financial institution to finance the purchase of the leasehold property at 16 Tampines Street 92, JP Building, Singapore ; (ii) bridging loans of S$0.7 million from SPRING Singapore under the Local Enterprise Finance Scheme, and (iii) finance lease liabilities of S$0.4 million for motor vehicles purchased in each financial year since FY2007. Deferred tax liabilities amounted to approximately S$15,000. Current Liabilities Current liabilities comprise trade and other payables, amount due to corporate shareholders, amount due to a director, interest-bearing liabilities and current income tax payable. As at 31 December 2011, our current liabilities amounted to S$22.5 million or 90.7% of our total liabilities. Trade and other payables accounted for 38.8% of our current liabilities. Trade payables of S$5.3 million related to purchases of timber products and flooring accessories from third parties. Other payables of S$3.4 million comprised mainly (i) deposits received from our customers of S$2.0 million; (ii) accrued operating expenses of S$0.8 million, and (iii) amounts owing to other third parties of S$0.6 million. Amount due to corporate shareholders and amount due to a director amounted to S$1.4 million and S$1.1 million respectively and these amounts relate to advances from our Shareholders and our Executive Chairman and CEO for working capital purposes. Please refer to the section entitled Interested Person Transactions Present and On-going Interested Person Transactions of this Offer Document for further details of the amount due to our Shareholders and our Executive Chairman and CEO. Interest-bearing liabilities accounted for S$10.7 million or 47.7% of our current liabilities, which comprised mainly (i) trust receipts of S$6.0 million and trade receivable financing of S$3.3 million for working capital purposes; (ii) bridging loans of S$1.2 million; (iii) a property loan of S$0.1 million due within the next financial year, and (iv) finance lease liabilities of S$0.1 million for motor vehicles purchased in each financial year since FY2007. The remaining balance of current liabilities comprises current income tax payable of S$0.5 million. Capital and Reserves As at 31 December 2011, total equity attributable to owners of the Company amounted to S$12.3 million. 63

68 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION LIQUIDITY AND CAPITAL RESOURCES We financed our growth and operations through a combination of capital and reserves (including retained earnings), net cash generated from operating activities, advances from Shareholders (namely, Radwell and Sirius Growth) and a Director (namely, Jason Sim), and borrowings from financial institutions. Our principal uses of cash have been for working capital requirements and capital expenditures. Based on the audited combined statement of financial position as at 31 December 2011, our shareholders equity amounted to S$12.3 million and indebtedness amounted to S$13.0 million (comprising interest-bearing liabilities such as bridging loans, a property loan, trust receipts, bank overdrafts, finance lease liabilities and trade receivable financing). Our gearing ratio (defined as the sum of indebtedness divided by shareholders equity) was 1.1 times. Our gearing ratio including the outstanding Shareholders and Director s advances of S$2.5 million as at 31 December 2011 was 1.3 times. Our net current assets amounted to S$11.6 million and our working capital ratio (defined by current assets divided by current liabilities) was 1.5 times. As at 31 December 2011, we had an aggregate net cash surplus position of S$2.5 million and available credit facilities granted of S$25.2 million, of which S$17.8 million were utilised and S$7.4 million were unutilised. These available credit facilities comprise a property loan of S$2.1 million, bridging loans of S$4.8 million, bank overdrafts of S$0.4 million, trade facilities of S$16.9 million and finance lease liabilities of S$1.0 million. For the property loan and bridging loans, S$1.3 million and S$1.8 million respectively remained outstanding. The property loan was used for the acquisition of the leasehold property at 16 Tampines Street 92, JP Building, Singapore for a purchase consideration of S$2.6 million in August The average effective interest rate for the property loan was at 2.0% per annum. The bridging loans from SPRING Singapore under the Local Enterprise Finance Scheme were used for working capital purposes. The interest rate for the bridging loans was fixed at 5.0% per annum. For the trade facilities and finance lease liabilities, S$9.4 million and S$0.5 million respectively remained outstanding. As at 31 December 2011, there was no outstanding amount for the bank overdraft facilities. As at the Latest Practicable Date, we had an aggregate net cash surplus position of S$0.4 million and available credit facilities granted of S$28.0 million, of which S$22.6 million were utilised and S$5.4 million were unutilised. These available credit facilities comprise a property loan of S$2.1 million, bridging loans of S$4.8 million, bank overdrafts of S$0.4 million, trade facilities of S$19.7 million and finance lease facilities of S$1.0 million. For the property loan and bridging loans, S$1.3 million and S$1.2 million respectively remained outstanding. For the trade facilities, finance lease facilities and bank overdrafts, S$14.3 million, S$0.5 million and S$0.4 million respectively remained outstanding. Our Directors are of the reasonable opinion that, after taking into account the cash flows generated from our operations, our banking facilities and our existing cash and cash equivalents, the working capital available to us as at the date of lodgement of this Offer Document is sufficient for present requirements and for at least 12 months after the listing of our Company on Catalist. The Sponsor is of the reasonable opinion that, after having made due and careful enquiry and after taking into account the cash flows generated from our Group s operations, our Group s banking facilities and our Group s existing cash and cash equivalents, the working capital available to our Group as at the date of lodgement of this Offer Document is sufficient for present requirements and for at least 12 months after the listing of our Company on Catalist. 64

69 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION We set out below a summary of our audited combined statements of cash flows for the periods under review. The following net cash flow summary should be read in conjunction with the full text of this Offer Document, including the Audited Combined Financial Statements for the Financial Years Ended 31 December 2009, 2010 and 2011 set out in Appendix A of this Offer Document. Audited (S$ 000) FY2009 FY2010 FY2011 Net cash (used in)/from operating activities (2,605) 5,784 1,847 Net cash (used in)/from investing activities (61) (204) 1,648 Net cash from/(used in) financing activities 2,116 (5,594) 366 Net change in cash and cash equivalents (550) (14) 3,861 Cash and cash equivalents at beginning of financial year (778) (1,328) (1,342) Cash and cash equivalents at end of financial year (1,328) (1,342) 2,519 Cash and cash equivalents comprise: Cash and bank balances ,216 Fixed deposits with banks 1,501 1, Cash and cash equivalents as per combined statements of financial position 1,783 2,024 2,519 Fixed deposits pledged with banks (1,501) (1,706) Bank overdrafts (1,610) (1,660) Cash and cash equivalents as per combined statements of cash flows (1,328) (1,342) 2,519 FY2009 In FY2009, we generated net cash from operating activities before changes in working capital of S$2.6 million. Net cash used in working capital amounted to S$4.4 million. This was due mainly to an increase in inventories by S$3.5 million, and trade and other receivables by S$2.0 million, and a decrease in the amount due to a corporate shareholder (namely, Radwell) for working capital purposes by S$1.0 million, partly offset by an increase in trade and other payables by S$2.1 million. In FY2009, we paid income tax of S$0.2 million and interest of S$0.7 million, while interest received amounted to approximately S$7,000. The net cash used in operating activities amounted to S$2.6 million. The negative operating cash flow from operating activities of S$2.6 million in FY2009 was due mainly to the increase in our inventories from S$6.1 million as at 31 December 2008 to S$9.6 million as at 31 December We increased the quantity of our purchases of inventories towards the end of FY2009 in view of the contracts which were due for delivery in early FY2010 (namely, Reflections at Keppel Bay, The Quayside, ION Orchard, St Thomas Suites, Belle Vue Residences, Duchess Residences and Livia ) to ensure prompt and timely delivery in completing the installation of timber flooring for these projects. Net cash used in investing activities of approximately S$61,000 was due mainly to the purchase of computers, and tools and equipment of approximately S$86,000 and the fixed deposits pledged with banks of approximately S$7,000, partially offset by the proceeds from the disposal of motor vehicle of approximately S$33,

70 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Net cash generated from financing activities of S$2.1 million was due mainly to the net proceeds from bank borrowings of S$2.5 million, partly offset by the repayments of finance lease obligations of S$0.4 million. As a result of the above, there was a net decrease of S$0.5 million in our cash and cash equivalents, from a cash deficit of S$0.8 million as at 1 January 2009 to S$1.3 million as at 31 December FY2010 In FY2010, we generated net cash from operating activities before changes in working capital of S$5.1 million. Net cash generated from working capital amounted to S$1.8 million. This was due mainly to a decrease in inventories by S$1.4 million and an increase in amount due to a Director, namely, Jason Sim, and corporate shareholders by S$1.9 million and S$0.1 million respectively, partly offset by a decrease in trade and other payables by S$1.0 million and an increase in trade and other receivables, and prepayments by S$0.5 million and S$0.1 million respectively. In FY2010, we paid income tax of S$0.2 million and interest of S$1.0 million, while interest received amounted to approximately S$5,000. The net cash generated from operating activities amounted to S$5.8 million. Net cash used in investing activities of S$0.2 million was due mainly to the fixed deposits pledged with banks of S$0.2 million and the purchase of office equipment, computers, and tools and equipment of S$0.1 million, partly offset by the proceeds from the disposal of motor vehicles of S$0.1 million. Net cash used in financing activities of S$5.6 million was due mainly to the dividends paid of S$3.0 million, the net repayments of bank borrowings of S$2.7 million and the repayments of finance lease obligations of S$0.4 million, partly offset by the proceeds from issuance of shares of S$0.5 million. As a result of the above, our Group maintained a cash deficit position of S$1.3 million as at 31 December FY2011 In FY2011, we generated net cash from operating activities before changes in working capital of S$4.4 million. Net cash used in working capital amounted to S$1.2 million. This was due mainly to the increase in trade and other receivables, inventories and prepayments by S$3.4 million, S$0.8 million and S$0.4 million respectively and a decrease in amount due to a Director, namely, Jason Sim, by S$0.6 million, partly offset by an increase in trade and other payables and amount due to corporate shareholders by S$3.8 million and S$0.2 million respectively. In FY2011, we paid income tax of S$0.7 million and interest of S$0.7 million, while interest received amounted to approximately S$600. The net cash generated from operating activities amounted to S$1.8 million. Net cash generated from investing activities of S$1.6 million was due mainly to the fixed deposits pledged with banks of S$1.7 million and the proceeds from the disposal of motor vehicles of S$0.1 million, partly offset by the purchase of an intangible asset of S$0.1 million in relation to an enterprise resource planning software for our Group s inventory management system and the purchase of office equipment, computers, and tools and equipment of S$0.1 million. Net cash generated from financing activities of S$0.4 million was due mainly to the net proceeds from bank borrowings of S$1.3 million, partly offset by the dividends paid of S$0.6 million and the repayments of finance lease obligations of S$0.3 million. As a result of the above, there was a net increase of S$3.8 million in our cash and cash equivalents, from a cash deficit of S$1.3 million as at 1 January 2011 to a cash surplus of S$2.5 million as at 31 December

71 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION CAPITAL EXPENDITURES, DIVESTMENTS, COMMITMENTS AND CONTINGENT LIABILITIES Capital Expenditures and Divestments Capital expenditures and divestments made by us during the periods under review and for the period from 1 January 2012 up to the Latest Practicable Date are as follows: (S$ 000) FY2009 FY2010 FY2011 Expenditures 1 January 2012 up to the Latest Practicable Date Motor vehicles Office equipment 2 1 Computers Tools and equipment Total expenditures Divestments Motor vehicles Total divestments The above capital expenditures were financed by finance leases and internally generated funds. Commitments Capital Commitments As at the Latest Practicable Date, we do not have any material capital commitments. Operating Lease Commitments As at the Latest Practicable Date, we have operating lease commitments for rental payable as follows: (S$ 000) Not later than one financial year 67 After one financial year but within five financial years We intend to finance the above operating lease commitments for rental payable by internally generated funds. 67

72 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION As at the Latest Practicable Date, we have operating lease commitments for rental of premises receivable as follows: (S$ 000) Not later than one financial year 31 Contingent Liabilities As at the Latest Practicable Date, we do not have any material contingent liabilities. FOREIGN EXCHANGE MANAGEMENT Accounting Treatment of Foreign Currencies The accounting records for the companies in our Group are maintained in Singapore dollars. Transactions in foreign currencies during the year are recorded in Singapore dollars using exchange rates approximating those ruling at the transaction dates. Foreign currency monetary assets and liabilities at the end of the reporting period are translated into Singapore dollars at exchange rates approximating those prevailing at that date. All resultant exchange differences are dealt with through profit or loss. Foreign Exchange Exposure Our reporting currency is in Singapore dollars and our operations are primarily carried out in Singapore. Other than Singapore dollars, we also transact in AUD, EUR, MYR and US$. The percentage of our revenue, purchases and expenses denominated in different currencies for the periods under review are as follows: Percentage of revenue denominated in FY2009 FY2010 FY2011 Average S$ US$ EUR Percentage of purchases denominated in S$ US$ AUD EUR MYR Percentage of expenses denominated in S$

73 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION To the extent that (i) our revenue, purchases and expenses are not naturally matched in the same currency; and (ii) there are timing differences between invoicing and collection/payment, we will be exposed to adverse fluctuations of the various currencies against the Singapore dollar, which would adversely affect our earnings. At present, we do not have any formal policy for hedging against foreign exchange exposure. We will continue to monitor our foreign exchange exposure and may employ forward currency contracts to manage our foreign exchange exposure should the need arise. Prior to implementing any formal hedging policies, we will seek the approval of our Board on the policy and put in place adequate procedures which shall be reviewed and approved by our Audit Committee. Thereafter, all hedging transactions entered into by our Group will be in accordance with set policies and procedures. Our net foreign exchange gains for the periods under review are as follows: FY2009 FY2010 FY2011 Net foreign exchange gain (S$ 000) As a percentage of revenue (%) As a percentage of PBT (%)

74 GENERAL INFORMATION ON OUR GROUP SHARE CAPITAL Our Company was incorporated in Singapore on 12 August 2011 under the Companies Act as a private company limited by shares under the name Jason Parquet Holdings Pte. Ltd.. On 30 August 2012, our Company converted to a public company limited by shares and changed its name to Jason Parquet Holdings Limited. As at the date of incorporation, the issued and paid-up share capital of our Company was S$1.00 comprising one Share held by Jason Sim. Pursuant to the Restructuring Exercise, the issued and paid-up share capital of our Company was increased to S$5,362,915 comprising 5,362,915 Shares. Please refer to the section entitled General Information on Our Group Restructuring Exercise of this Offer Document for further details. Pursuant to the written resolutions passed on 29 August 2012, our then Shareholders approved, inter alia, the following: (a) (b) (c) (d) (e) the Sub-Division; the conversion of our Company to a public company limited by shares and the consequential change of our name to Jason Parquet Holdings Limited ; the adoption of a new set of Articles of Association; the issue of the New Shares pursuant to the Placement, which when allotted, issued and fully paid-up, will rank pari passu in all respects with the existing issued Shares; and the authorisation for our Directors, pursuant to Section 161 of the Companies Act and the Listing Manual to (i) issue Shares whether by way of rights, bonus or otherwise; and/or (ii) make or grant offers, agreements or options (collectively, Instruments ) that might or would require Shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into Shares, at any time and upon such terms and conditions and for such purposes and to such persons as our Directors may in their absolute discretion deem fit; and (iii) (notwithstanding the authority conferred by this resolution may have ceased to be in force) issue Shares in pursuance of any Instruments made or granted by our Directors while this resolution was in force, provided that: (1) the aggregate number of Shares (including Shares to be issued in pursuance of the Instruments, made or granted pursuant to this resolution) and Instruments to be issued pursuant to this resolution shall not exceed 100.0% of the total number of issued Shares (excluding treasury shares) in the capital of our Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Shares to be issued (including Shares to be issued pursuant to the Instruments) other than on a pro rata basis to existing Shareholders shall not exceed 50.0% of the total number of issued Shares (excluding treasury shares) in the capital of our Company (as calculated in accordance with subparagraph (2) below); (2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of Shares (including Shares to be issued pursuant to the Instruments) that may be issued under sub-paragraph (1) above, the percentage of Shares that may be issued shall be based on the total number of issued Shares of our Company (excluding treasury shares) immediately after the Placement, after adjusting for: (a) new 70

75 GENERAL INFORMATION ON OUR GROUP Shares arising from the conversion or exercise of the Instruments or any convertible securities; (b) new Shares arising from exercising share options or vesting of share awards outstanding and subsisting at the time of the passing of this authority; and (c) any subsequent bonus issue, consolidation or sub-division of Shares; (3) in exercising such authority, our Company shall comply with the provisions of the Listing Manual for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of our Company; and (4) unless revoked or varied by our Company in a general meeting, such authority shall continue in force until (i) the conclusion of the next annual general meeting of our Company or (ii) the date by which the next annual general meeting of our Company is required by law to be held, whichever is the earlier. As at the date of this Offer Document, our Company has only one class of shares, being ordinary shares. The rights and privileges of our Shares are stated in our Articles of Association. There are no founder, management or deferred shares. No person has been, or is entitled to be, given an option to subscribe for or purchase any securities of our Company or our subsidiary. As at the date of this Offer Document, the issued and paid-up share capital of our Company is S$5,362,915 comprising 90,000,000 Shares. Upon the allotment and issue of the New Shares, the resultant issued and paid-up share capital of our Company will be S$9,133,915 comprising 108,000,000 Shares. Details of the changes in the issued and paid-up share capital of our Company since incorporation and immediately after the Placement are as follows: Number of Shares Resultant issued and paid-up share capital (S$) Issued and paid-up share capital as at our incorporation 1 1 Issue of Shares pursuant to the Restructuring Exercise 5,362,914 5,362,915 Sub-Division 90,000,000 5,362,915 Number of Shares Issued and paid-up share capital (S$) Pre-Placement issued and paid-up share capital 90,000,000 5,362,915 Issue of New Shares pursuant to the Placement 18,000,000 3,771,000 (1) Post-Placement issued and paid-up share capital 108,000,000 9,133,915 Note: (1) After deducting expenses incurred in relation to the Placement of approximately S$279,000 which is capitalised against share capital as described in the section entitled Use of Proceeds from the Placement and Expenses Incurred of this Offer Document. 71

76 GENERAL INFORMATION ON OUR GROUP The Shareholders equity of our Company as at the date of incorporation on 12 August 2011, as adjusted for the Restructuring Exercise and after the Placement is set out below: Shareholders equity As at the date of incorporation on 12 August 2011 After adjusting for the Restructuring Exercise After the Placement (S$) (S$) (S$) Share capital 1 5,362,915 9,133,915 Accumulated losses (3,318) (854,318) Total shareholders equity 1 5,359,597 8,279,597 RESTRUCTURING EXERCISE We undertook the following Restructuring Exercise to streamline and rationalise our Group structure in connection with the Placement: (a) Incorporation of our Company Our Company was incorporated on 12 August 2011 in Singapore in accordance with the Companies Act as a private company limited by shares with an issued and paid-up share capital of S$1.00 comprising one Share held by our Executive Chairman and CEO, Jason Sim. (b) Sale of Shares to Sirius Growth Pursuant to an investment agreement dated 10 November 2010 entered into between Sirius Growth and Jason Parquet Specialist, Sirius Growth subscribed for 180,000 new ordinary shares representing approximately 4.5% of the enlarged total number of issued shares of Jason Parquet Specialist, for a cash consideration of S$500,000. The consideration was arrived at on a willing-buyer willing-seller basis, and represented a premium of 9.0% to the audited NTA per share of Jason Parquet Specialist as at 31 December The said shares were allotted and issued to Sirius Growth in December (c) Sale of Shares to Nelson Sim On 20 July 2011, Jason Sim (our Executive Chairman and CEO) sold 119,399 ordinary shares representing approximately 3.0% of the total number of issued shares of Jason Parquet Specialist to Nelson Sim (our Project Director), for a cash consideration of S$331,929. The consideration was arrived at on a willing-buyer willing-seller basis, and represented a premium of 8.6% to the audited NTA per share of Jason Parquet Specialist as at 31 December In July 2011, the transfer of such shares was completed. (d) Sale of Shares to Jason Sim On 25 June 2012, Jason Sim (our Executive Chairman and CEO) acquired 50,000 ordinary shares representing approximately 1.3% of the total number of issued shares of Jason Parquet Specialist from Radwell for a cash consideration of S$250,000. The consideration was arrived at 72

77 GENERAL INFORMATION ON OUR GROUP on a willing-buyer willing-seller basis, and represented a premium of 62.3% to the audited NTA per share of Jason Parquet Specialist as at 31 December On 25 June 2012, the transfer of such shares was completed. (e) Acquisition of Jason Parquet Specialist Pursuant to a share swap agreement dated 25 June 2012 entered into between our Company (as the purchaser) and Jason Sim, Nelson Sim, Radwell and Sirius Growth (as the vendors), our Company acquired the entire issued and paid-up share capital of Jason Parquet Specialist, comprising 3,980,000 ordinary shares, for a consideration of S$5,362,914 based on the amount of issued and paid-up share capital of Jason Parquet Specialist as at 31 December The purchase consideration was satisfied by the allotment and issue of 5,362,914 Shares (before the Sub-Division) credited as fully paid, by our Company to Jason Sim, Nelson Sim, Radwell and Sirius Growth as follows: Name Number of Shares % shareholding Jason Sim 3,080, Nelson Sim 160, Radwell 1,878, Sirius Growth 242, Total 5,362, Upon the completion of the share swap agreement, our Company owns the entire issued and paid-up share capital of Jason Parquet Specialist. (f) Sub-Division On 29 August 2012, our Shareholders approved the sub-division of 5,362,915 Shares in the issued and paid-up share capital of our Company into 90,000,000 Shares. Following the completion of the Restructuring Exercise and immediately before the Sub-Division and the Placement, the Shareholders of our Company and their respective shareholdings were as follows: Name Number of Shares % shareholding Jason Sim 3,080, Nelson Sim 160, Radwell 1,878, Sirius Growth 242, Total issued and paid-up share capital 5,362,

78 GENERAL INFORMATION ON OUR GROUP GROUP STRUCTURE Our Group structure as at the date of this Offer Document is as follows: Our Company 100% Jason Parquet Specialist OUR SUBSIDIARY The details of our subsidiary as at the date of this Offer Document are as follows: Name Date and place of incorporation Principal place of business Issued and paid-up share capital Equity interest held by our Group Jason Parquet Specialist 22 December 1993/ Singapore Singapore S$5,362, % Our subsidiary is not listed on any stock exchange. We do not have any associated companies. SHAREHOLDERS Our Shareholders and their respective shareholdings immediately before and after the Placement are set out below: Directors Before the Placement After the Placement Direct Interest Deemed Interest Direct Interest Deemed Interest Number of Shares % Number of Shares % Number of Shares % Number of Shares % Jason Sim (1),(2) 51,704, ,704, Derrick Tan Phua Sian Chin Karam Singh Parmar Executive Officers Nelson Sim (1) 2,700, ,700, New Sze Wei (2) Chan Mei Lin Andrew Loke 74

79 GENERAL INFORMATION ON OUR GROUP Before the Placement After the Placement Direct Interest Deemed Interest Direct Interest Deemed Interest Number of Shares % Number of Shares % Number of Shares % Number of Shares % Substantial Shareholders (other than Directors) Radwell (3) 31,526, ,726, Lee Ai Leng (3) 31,526, ,726, Others Sirius Growth (4) 4,070, ,070, Public 33,800, Total 90,000, ,000, Notes: (1) Jason Sim (our Executive Chairman and CEO) and Nelson Sim (our Project Director) are brothers. (2) New Sze Wei (our Operations Director) is the brother-in-law of Jason Sim (our Executive Chairman and CEO). (3) Radwell is an investment holding company incorporated in Singapore. Its sole director and shareholder is Lee Ai Leng, who is not related to any of our Directors or Substantial Shareholders (excluding Radwell) or their respective Associates. Lee Ai Leng is thus deemed to be interested in the Shares held by Radwell by virtue of Section 7 of the Companies Act. (4) Sirius Growth is a private equity firm incorporated in Singapore. None of the directors or shareholders of Sirius Growth is related to any of our Directors or Substantial Shareholders or their respective Associates. Please refer to the section entitled General Information on Our Group Restructuring Exercise of this Offer Document for details of the allotment of shares to Sirius Growth. Save as disclosed above, there are no other relationships among our Directors, Substantial Shareholders and their respective Associates. The Shares held by our Directors and Substantial Shareholders do not carry different voting rights from the Placement Shares which are the subject of the Placement. Save as disclosed above, our Company is not directly or indirectly owned or controlled, whether severally or jointly, by any person or government. There is no known arrangement, the operation of which may, at a subsequent date, result in a change in the control of our Company. There has not been any public take-over offer by a third party in respect of our Shares or by our Company in respect of shares of another corporation or units of a business trust which has occurred between 1 January 2011 and the Latest Practicable Date. 75

80 GENERAL INFORMATION ON OUR GROUP VENDOR The name of the Vendor and the number of Vendor Shares which the Vendor will offer pursuant to the Placement are set out below: Vendor Shares held immediately before the Placement Vendor Shares offered pursuant to the Placement Shares held after the Placement Number of Shares % of pre- Placement share capital Number of Shares % of pre- Placement share capital % of post- Placement share capital Number of Shares % of post- Placement share capital Radwell 31,526, ,800, ,726, The Vendor is not related to our Directors or Controlling Shareholder. None of our Directors or Controlling Shareholder has any direct or indirect interest in the Vendor Shares. Save as disclosed under the sections entitled Interested Person Transactions Other Transactions and Potential Conflicts of Interests Interests of Directors, Controlling Shareholders or their Associates of this Offer Document, the Vendor has no position, office or other material relationship with our Group, our Directors and/or Controlling Shareholder within the last three years before the date of the lodgement of this Offer Document. SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP Save as disclosed under the section entitled General Information on Our Group Restructuring Exercise of this Offer Document, there were no significant changes in the percentage of ownership of Shares in our Company during the last three financial years ended 31 December 2011 and up to the Latest Practicable Date. MORATORIUM Substantial Shareholders and their Associates Our Substantial Shareholders and their Associates, namely Jason Sim, Nelson Sim and Radwell, who will hold an aggregate of 70,130,000 Shares (representing 64.9% of our Company s post-placement share capital) immediately after the Placement, have each undertaken not to, directly or indirectly, sell, contract to sell, offer, realise, transfer, assign, pledge, grant any option to purchase, grant any security over, encumber or otherwise dispose of, any part of their respective shareholdings in the share capital of our Company immediately after the Placement (adjusted for any bonus issue or sub-division of Shares) for a period of six months from the date of our Company s admission to Catalist and for a period of six months thereafter, not to reduce their respective interests in our Company to below 50.0% of their original shareholdings in our Company (collectively, the Moratorium Period ). In conjunction with such undertaking, Lee Ai Leng, being the sole shareholder of Radwell, has also undertaken not to, directly or indirectly, sell, contract to sell, offer, realise, transfer, assign, pledge, grant any option to purchase, grant any security over, encumber or otherwise dispose of, any part of her shareholdings in the share capital of Radwell during the Moratorium Period. 76

81 HISTORY Our history dates back to 1987 when our founder, Executive Chairman and CEO, Jason Sim, established a sole proprietorship by the name of Jason Interior Decor at 9010 Tampines Street 93 #02-123, Singapore to carry on general renovation contracting works, which included timber flooring works. In 1988, Jason Sim established a sole proprietorship by the name of Jason Parquet Specialist to specialise in the supply and installation of timber (primarily teak parquet) flooring for private residential and commercial property developments in Singapore. In December 1993, Jason Parquet Specialist was incorporated to carry on the business of supplying and installation of timber flooring. At its inception, we carried on our business at 3002 Bedok North Industrial Park E # , Singapore with a built-in area of approximately 1,200 sq ft for use as our office cum warehouse. As our business expanded, in or about 1998, we shifted to 27 Tampines Street 92, Singapore with a built-in area of approximately 5,000 sq ft for use as our office cum warehouse. In the early 1990s, we were awarded our first contract to supply and install teak parquet flooring for a residential project in Singapore, D Grove Villas at Orange Grove Road. Leveraging on the experience gained from the D Grove Villas project, we proceeded to tender for and were awarded several contracts to supply and install timber flooring for other residential property developments in Singapore. Some of the notable projects undertaken by us in the 1990s include: Four Seasons Park at Cuscaden Walk; Spring Grove at Grange Road; Northoaks at Woodlands Crescent; Heritage View at Dover Rise; and Kew Green at Kew Crescent. In line with our growing reputation in the industry during this period, we became members of the National Wood Flooring Association (USA) in In 2001, Jason Sim was invited by the BCA to sit on the Industrial Good Practices Works for Timber Works steering committee. Since 2001, Jason Sim has been invited to conduct training sessions for the HDB, the BCA, developers and main contractors on standards and guidelines for parquet installation. In the 2000s, we continued to tender for and were awarded several contracts to supply and install quality timber flooring for residential projects. Whilst we focused most of our efforts on private sector residential projects, in an attempt to increase our revenue and customer base, we also tendered for and were awarded several contracts to supply and install timber flooring for public sector, commercial and sports complex projects. To stay ahead of our competition, we began supplying more exotic and high-end timber such as American oak and American walnut. These products, which require special methods of installation, have increased aesthetic appeal and yielded higher profit margins. 77

82 HISTORY Some of the notable projects undertaken by us in the 2000s are as follows: Private residential property development projects Commercial projects Public sector projects Keppel Bay The Duxton The Icon Marina Bay Residences Scotts Highpark The Sentosa Cove Reflections at Keppel Bay The Marina Bay The Orchard Residences The St Regis Residences Sentosa Island condominium developments such as Marina Collection and Seascape Orchard Central ION Orchard Jurong Point Somerset Chinese High Boarding School Woodlands Sports Stadium Embassy of China Republic Polytechnic Nanyang Academy of Fine Arts Headquarters of the Ministry of Foreign Affairs Headquarters of the Jurong Town Corporation We have also been awarded contracts to supply and install timber flooring for hotels, including the Capella Singapore, a six-star hotel on Sentosa Island. In 2001, we successfully launched our Air-Thrust Floor, a timber sports flooring system, which features cushioning material installed under timber parquetry or strips as its surface finish. Our Air-Thrust Floor has shock absorbing and cushioning properties for underfoot comfort and the reduction of muscle strain and sports injuries caused by jarring impact. Our Air-thrust Floor was used in some of the projects undertaken by us. Our completed projects include the flooring for the Republic Polytechnic Sports Complex, SIA Clubhouse, Yio Chu Kang Sports Hall, Woodland Sports Stadium, Sembawang Camp, Henry Park Primary School and Sun Yat Sen Villa. In 2002, to accommodate our increasing business volume, we purchased an office building, JP Building, at 16 Tampines Street 92, Singapore with a gross land area of approximately 33,668 sq ft. In addition to using it to serve our office and warehousing needs, we also opened our showroom there in early 2004 with a built-in area of approximately 5,000 sq ft to showcase our products. In the same year, we diversified into the distribution of timber products and flooring accessories (such as nails, air guns, glues and varnishes) as a value-added service to our customers. Since 2002, we have been a distributor in Singapore of Berger-Seidle Aqua-Seal water-based varnish, which is manufactured in Germany. Unlike solvent-based varnishes, water-based varnishes are non-toxic and non-flammable. The use of water-based varnishes have become increasingly popular in recent years as they are environmentally-friendly and provide a safer working environment for workers. On 4 December 2003, Jason Parquet Specialist was awarded Grade L6 (the highest grade) by the BCA in the Finishing and Building Products (SY06) category, which allows us to tender for Singapore public sector projects of unlimited contract value. Although the BCA grading is only compulsory for public sector projects, some private developers require such BCA grading as an assurance of a minimum level of standard from us. In 2004, Jason Parquet Specialist applied for and was awarded Grade L1 by the 78

83 HISTORY BCA in the Interior Decoration and Finishing Works (CR06) category, which allows us to tender for Singapore public sector projects of up to S$650,000 in contract value 1. In 2006, Lawrence Leow Chin Hin ( Lawrence Leow ), the spouse of Lee Ai Leng, decided to invest in Jason Parquet Specialist through Radwell, of which he was a director and sole shareholder at that time. Radwell subscribed for 1,292,128 ordinary shares in Jason Parquet Specialist, representing approximately 34.0% of the total number of issued shares of the company at that time, for a total consideration of S$1,292,128. In 2007, to meet the demands of increasingly eco-conscious consumers, we began supplying wood-plastic composite products from the USA to expand our timber product offerings to our customers. These wood-plastic composite products mimic the aesthetics of real wood but are made of recycled products and timber sawdust, and are mainly for outdoor use. Since 2009, we have been the exclusive distributor in Singapore of Mapei s ADESILEX LC/RP glue, a water-based glue manufactured in Italy. In September 2009, Jason Sim transferred 152,000 shares in Jason Parquet Specialist to Radwell for a cash consideration of S$152,000. Following this, the total number of shares held by Radwell in Jason Parquet Specialist was 1,444,128, representing approximately 36.3% of the total number of issued shares of Jason Parquet Specialist prior to the Restructuring Exercise. In early 2011, Lawrence Leow ceased to be a director and sole shareholder of Radwell, and Lee Ai Leng became the sole director and shareholder of Radwell. In line with our strategy to focus on luxurious and high-end private residential property development projects, from 2010 to the Latest Practicable Date, we have tendered for and were awarded several contracts to supply and install timber flooring for prestigious private residential property projects such as: Silversea; The Trizon; Sinaran; The Wharf Residence; Holland Residences; and The Interlace. In March 2011, as a testimony of our leading position in our industry, we were appointed an Approved Training and Testing Centre by the BCA for a period of three years to conduct courses and tests for workers and senior staff in the area of timber flooring. In 2011, we were appointed as the exclusive distributor in Singapore of Berger-Seidle Aqua-Seal water-based varnish. In the same year, we were appointed the authorised distributor of Huzhou Xinfeng Wood Plastic Composite Co., Ltd to distribute their wood-plastic composite decking planks in Singapore, Malaysia and Indonesia for a period of three years from 1 June BCA adjusts the tendering limits of registered contractors once a year. The tendering limit for Grade L1 in the Interior Decoration and Finishing Works (CR06) category for the period from 1 July 2012 to 30 June 2013 is S$650,000 in contract value. 79

84 HISTORY As at the Latest Practicable Date, we have supplied and installed over 30.0 million sq ft of timber flooring for more than 280 projects of various sizes. Please refer to the section entitled Business Our Projects of this Offer Document for a list of major projects for which we have been awarded contracts for the supply and installation of timber flooring since 1 January 2009 up to the Latest Practicable Date. Our Company was incorporated in Singapore on 12 August 2011 under the Companies Act under the name Jason Parquet Holdings Pte. Ltd. as a private company limited by shares. On 30 August 2012, our Company was converted to a public company limited by shares and changed its name to Jason Parquet Holdings Limited. On 25 June 2012, we completed the Restructuring Exercise whereby Jason Parquet Specialist became our wholly-owned subsidiary. Please refer to the section entitled General Information on Our Group Restructuring Exercise of this Offer Document for further details. AWARDS AND CERTIFICATIONS As testament to our commitment to quality, our Group has received several awards and certifications over the years, some of which are set out below: Year Award/Certificate Awarding/Certifying institution(s) 2004/2005 Singapore SME 500 Company DP Information Group 2006 Singapore SME 500 Company DP Information Group 2009 ISO 9001:2008 (Registration Certification) (Quality Management System) for supply and installation of timber flooring AJA Registrars Pte Ltd 2009 Singapore Prestige Brand Award 2009 Established Brand 2010 Singapore Prestige Brand Award 2010 Established Brand ASME and Lianhe Zaobao, Singapore Press Holdings Ltd ASME and Lianhe Zaobao, Singapore Press Holdings Ltd 2011 bizsafe STAR Certificate Workplace Safety and Health Council 2011 OHSAS 18001:2007 (Registration Certificate) (Occupational Health & Safety Management Systems) for supply and installation of timber flooring AJA Registrars Pte Ltd 2011 Singapore SME 1000 Company DP Information Group Enterprise 50 Awards Winner The Business Times, KPMG 2011 Singapore Prestige Brand Award 2011 Established Brand ASME and Lianhe Zaobao, Singapore Press Holdings Ltd 2012 Singapore SME 1000 Company DP Information Group 80

85 BUSINESS BUSINESS OVERVIEW We are one of the leading Singapore-based providers of timber flooring services with an established reputation and track record for quality and reliability. We are principally engaged in the supply and installation of a comprehensive range of timber flooring under our Tech-Wood brand as well as the sale and distribution of timber products and flooring accessories. We offer our customers over 30 types of timber species to cater to their preferences and budgets. Our Directors believe that the four most popular types of solid timber used in the supply and installation for our Projects business in Singapore are teak, American walnut, American oak and European oak. Our timber products are purchased directly from our suppliers mainly in Australia, Indonesia, the PRC, the Republic of Paraguay and Singapore. Since 2010, as we steered towards environmentally sustainable growth, we have also been offering our customers more environmentally-friendly flooring products such as wood-plastic composite products. Please refer to the section entitled Business Main Types of Timber Flooring Products Supplied of this Offer Document for further details. The products that we sell and distribute are mainly timber products comprising solid timber strips and planks, engineered wood and wood-plastic composite products as well as flooring accessories which include nails, air guns, glues, varnishes and grinding and buffing machines. Our head office and showroom are located at 16 Tampines Street 92, JP Building, Singapore Our warehousing facilities are located at 16 Tampines Street 92, JP Building, Singapore and 46 Sungei Kadut Street 1, Singapore Our head office, showroom and two warehouses occupy an aggregate built-in area of approximately 38,816.5 sq ft. Our customer base is broadly categorised as follows: Projects Projects customers comprise two categories of customers, namely, (i) main contractors; and (ii) retail customers. Main contractors are customers who operate primarily in the property development industry in Singapore and are involved in both private and public residential and commercial property development projects. Retail customers comprise home-owners and the general public in Singapore who make ad-hoc purchases for small projects such as home renovation or small property developments. Retail customers may walk-in directly through our showroom located at 16 Tampines Street 92, JP Building, Singapore , where we display a variety of our timber flooring. Generally, our projects are awarded through requests for quotation and referrals from our Projects customers. Please refer to the section entitled Business Our Projects of this Offer Document for further details of the notable projects undertaken by our Group since 1 January 2009 up to the Latest Practicable Date. To complement our Projects business, we provide the following value-added services to our Projects customers: the supply and installation of timber handrails, staircases, external trellises and other timberrelated products; and the provision of maintenance services, including repairing, sanding and re-varnishing of timber flooring. Revenue from our Projects business accounted for 98.0%, 98.0% and 88.6% of our revenue in FY2009, FY2010 and FY2011 respectively. 81

86 BUSINESS Distribution We sell and distribute our timber products comprising solid timber strips and planks, engineered wood and wood-plastic composite products as well as flooring accessories which include nails, air guns, glues, varnishes and grinding and buffing machines to other local contractors as well as for export to primarily Indonesia, Malaysia and the PRC. Local contractors generally make small ad-hoc purchases for timber products and flooring accessories from our Group. Our exports are primarily to Indonesia, Malaysia and the PRC and comprise mainly timber products. Revenue from our Distribution business accounted for 2.0%, 2.0% and 11.4% of our revenue in FY2009, FY2010 and FY2011 respectively. MAIN TYPES OF TIMBER FLOORING PRODUCTS SUPPLIED Broadly, we classify timber used for flooring as parquet, timber strips or timber planks. Parquet refers to short timber strips that are less than or equal to 300 mm in length, with a standard thickness and width (normally two inches). Timber having a standard thickness and width (usually three to four inches) with random lengths are known as timber strips. Timber with width equal to or more than five inches and random lengths are known as timber planks. We offer a comprehensive range of timber species of varying sizes. The main types of timber flooring products supplied and installed by us are: Type of timber Country of origin Primary usage (Indoor/ Outdoor) Characteristics Teak Indonesia Indoor Colour Range: Indonesian teak has a characteristic golden-brown colour, darkening with time, sometimes with irregular dark grains and markings that enhance the appearance of the wood. The timber has a distinct oily feel. Hardness: Rated 1155 on the Janka hardness scale. While it is not the highest of the woods available, teak is still considered a fine durable wood. Stability/Durability: Indonesian teak is highly resistant to fungal and insect attack, including termites, and is classified as being very durable. It is impermeable to liquids and is a timber which requires no preservative treatment. It is one of the world s most stable woods. American walnut USA Indoor Colour Range: The sapwood of American walnut is creamy white, while the heartwood is light brown to dark chocolate brown, occasionally with a purplish cast and darker streaks. Hardness: Rated 1010 on the Janka hardness scale. 82

87 BUSINESS Type of timber Country of origin Primary usage (Indoor/ Outdoor) Characteristics Stability/Durability: Moderately dense, very strong, good shock resistance. It is not as dent-resistant as oak. American oak USA Indoor Colour Range: Heartwood is light brown, some boards may have a pinkish tint or a slight grayish cast. Sapwood is white to cream. Hardness: Rated 1360 on the Janka hardness scale. Stability/Durability: American oak is average in stability. More durable than red oak. Tannic acid in the wood protects it from fungi. Jarrah Australia Indoor and outdoor Colour Range: Jarrah offers a wide range of colours from light pink to deep burgundy-red with darker graining. Hardness: Jarrah is rated as hard, 1910 on the Janka hardness scale. Durability: Jarrah possesses a high natural resistance to decay, termite and borer attack and is expected to give long service life under normal conditions. If exposed in ground conditions, a typical service life of 15 to 25 years without the use of preservatives can be expected. Jarrah is also highly resistant to rot, fire, termites, marine borers and most acids. Tasmanian oak Australia Indoor Colour Range: The sapwood of Tasmanian oak is pale brown, while the heartwood is light brown to a faint pink in colour. The species has a straight, sometimes wavy grain and is open and coarse in nature. Hardness: Rated 1350 on Janka hardness scale. Stability: Being mostly quarter sawn, Tasmanian oak has a distinct advantage in shrinkage and expansion factors where variations in atmospheric conditions occur. It is dense and hardwearing. 83

88 BUSINESS Type of timber Country of origin Primary usage (Indoor/ Outdoor) Characteristics European oak Europe/Russia Indoor Colour Range: European oak offers colour variability from lighter tan tones highlights to darker brown. It undergoes a medium degree of colour change with a slight amber colour over time. Hardness: European oak in many ways is similar on the Janka hardness scale to American oak at Stability: European oak is popular not only for its appearance but also for its hard-wearing nature, durability and stability. Ipe Brazil/South Central America Indoor and outdoor Colour Range: The heartwood is olive-brown with lighter or darker streaks. The grain is straight to irregular with a low to medium lustre. The pores, appearing as fine yellow dots, or, on longitudinal surfaces as yellow lines, contain yellowish lapachol powder, which turns deep red in alkaline solutions. The material is fine textured and appears oily; fine ripple marks may be present. Hardness: With a Janka hardness of 3680, it is one of the hardest woods on earth. Stability: Ipe has a very high resistance to all insect and fungal attacks and is very durable. It is extremely resistant to preservative treatment. Patagonian walnut South America Indoor Colour Range: The quartered wood displays a beautiful dark brown colour with a blackish striped figure. The sapwood is white or whitish in colour. The heartwood is olive-brown in colour, with lighter or darker streaks. Hardness: Patagonian walnut is 220.0% as hard as red oak, at 2800 on the Janka hardness scale compared to 1260 for red oak. Stability: Moderately durable. The heartwood is very resistant to decay and attack by termites. It is rated as resistant to attack by dry wood insects but susceptible to marine borer attack. The wood is resistant to preservative treatment and biodegradation. 84

89 BUSINESS Type of timber Country of origin Primary usage (Indoor/ Outdoor) Characteristics Chengai/ Chengal Indonesia/ Malaysia/ Thailand Outdoor Colour Range: The sapwood is moderately well defined. The colour of freshly cut heartwood is yellow-brown, weathering ultimately to a dark tan brown. Hardness: Janka hardness: It is a heavy hardwood, rated one on a six class scale in relation to resistance to indentation and ease of working with hand tools. Stability: The timber is classified as naturally durable and is normally very resistant to termite attack and fungal infestation. Balau Malaysia Outdoor Colour Range: The sapwood is moderately well-defined and lighter in colour than the heartwood. The colour of freshly cut heartwood is yellow-brown, brown or brown with reddish tinge weathering ultimately to a deeper shade of brown or reddish dark brown. Hardness: Janka hardness: It is a heavy hardwood, rated one on a six class scale in relation to resistance to indentation and ease of working with hand tools. Stability: It is very durable and immune from insect or fungal attack. It is extremely resistant to preservation treatment. We also offer engineered wood and wood-plastic composite products. Engineered wood is a derivative wood product made by binding 1.5 to 3.0 mm of pre-finished, solid wood veneer to unfinished plywood underneath with adhesives. Wood-plastic composite products mimic the aesthetics of real wood but are made of recycled products and timber sawdust, and are mainly for outdoor use. OUR PROJECTS We have been awarded contracts for the supply and installation of timber flooring for the following notable projects since 1 January 2009 up to the Latest Practicable Date: Project name (a) Residential developments RiverGate Scotts Highpark Names of developer/ Main contractor Riverwalk Promenade Pte Ltd Shimizu Corporation Leonie Court Pte Ltd Dragages Singapore Pte Ltd Location Actual/Expected completion date Martin Road 2009 Scotts Road

90 BUSINESS Project name The Centris The Metropolitan The Sentosa Cove Marina Bay Residences One Shenton eleven St Thomas Suites The Duxton The Trillium Ardmore II Belle Vue Residences Marina Collection Nassim Park Residences The Orchard Residences Reflections at Keppel Bay Silversea Urban Resort Jean Nouvel Residences Names of developer/ Main contractor Prime Point Realty Development Pte Ltd Woh Hup (Private) Limited Capitaland Limited Nakano Singapore (Pte) Ltd TC Development Pte Ltd Ssangyong Engineering & Construction Co., Ltd. Keppel Land Ltd Woh Hup (Private) Limited City Developments Limited Hyundai Engineering & Construction Co. Ltd Times Development Pte Ltd (Singapore Press Holdings Ltd) Tiong Seng Contractors (Pte) Ltd FCL Tower Pte. Ltd. Nakano Singapore (Pte) Ltd HDB Chip Eng Seng Contractors (1988) Pte Ltd Lippo Land Corporation Poh Lian Construction Pte Ltd Wheelock Properties (Singapore) Limited Poh Lian Construction (Pte.) Ltd Winquest Investment Pte Ltd Tiong Aik Construction Pte. Ltd. Lippo Marina Collection Pte Ltd Kim Seng Heng Engineering Construction (Pte) Ltd UOL Group Limited & Kheng Leong Co Shimizu Corporation Orchard Turn Holdings Pte Ltd Penta Ocean Construction Co. Ltd Keppel Bay Pte Ltd Woh Hup (Private) Limited Marina Green Limited China Construction (South Pacific) Development Co Pte Ltd Capitaland Residential Ltd. Shimizu Corporation Summer Vale Properties Pte. Ltd Tiong Aik Construction Pte. Ltd. Location Actual/Expected completion date Jurong West Central 2009 Alexandra Road/ Tiong Bahru Road 2009 Sentosa Cove 2009 Marina Boulevard 2010 Shenton Way 2010 Thomson Road 2010 St. Thomas Walk 2010 Cantonment Road 2010 Kim Seng Road 2010 Ardmore Park 2011 Oxley Walk 2011 Sentosa Cove 2011 Nassim Road 2011 Orchard 2011 Keppel Bay 2012 Amber Road 2012 Cairnhill Road 2012 Anderson Road

91 BUSINESS Project name Goodwood Residence The Interlace Altez Sky Suites Minton Rise D LEEDON Foresque Residences Ardmore Three Boathouse Residences Eight Courtyards Waterfront Gold Concourse Skyline (b) Commercial ION Orchard Jurong Point 2 Orchard Central Names of developer/ Main contractor Guocoland Limited Poh Lian Construction (Pte.) Ltd Ankerite Pte Ltd Woh Hup (Private) Limited Bishan Properties Pte. Ltd. Woh Hup (Private) Limited Allgreen Properties Ltd. Woh Hup (Private) Limited Peak Garden Pte. Ltd. QingJian Group Co., Ltd Singapore Branch Capitaland Residential Limited Woh Hup (Private) Limited Wincheer Investment Pte Ltd Tiong Aik Construction Pte Ltd Wheelock Properties (Singapore) Limited Kim Seng Heng Engineering Construction (Pte) Ltd Frasers Centrepoint Ltd, Far East Organization and Sekisui House, Ltd. Nakano Singapore (Pte) Ltd Frasers Centrepoint Ltd and Far East Organization Kim Seng Heng Engineering Construction (Pte) Ltd FCL Peak Pte Ltd. Nakano Singapore (Pte) Ltd Hong Fok Land Ltd. Maincon (Building) Pte. Ltd. Orchard Turn Developments Pte Ltd Penta Ocean Construction Co., Ltd Prime Point Realty Development Private Limited Woh Hup (Private) Limited Orchard Central Pte Ltd Woh Hup (Private) Limited Somerset Lend Lease Retail Investments 1 Pte Ltd Bovis Lend Lease Pte Ltd Location Actual/Expected completion date Bukit Timah Road 2012 Alexandra/ Depot Road 2013 Enggor Street 2013 Enggor Street 2013 Hougang Street Farrer Road/Leedon Heights/King s Road 2014 Petir Road 2014 Ardmore Park 2014 Upper Serangoon 2014 Yishun 2014 Bedok Reservoir Road 2014 Beach Road 2014 Orchard 2009 Jurong West Central 2009 Killiney Road 2009 Orchard Road

92 BUSINESS Project name (c) Hotel The Capella Names of developer/ Main contractor Pontiac Land (Pte) Ltd Tiong Seng Contractors Pte Ltd Location Actual/Expected completion date Sentosa 2009 BUSINESS PROCESS Projects A diagrammatic depiction of the business process for our Projects business is as follows: Sourcing for Project Award of Project Project Planning Project Execution Project Handover (1) Sourcing for Project We typically source for our projects through requests for quotation and referrals from our customers. Main contractors who are interested in procuring our services for the supply and installation of timber flooring for their developments will send us their requests for quotation. A request for quotation is an invitation sent to potential subcontractors to submit their price quotations to the main contractor, and contains all relevant details necessary for a potential subcontractor to evaluate the contract offered by the main contractor and formulate an appropriate price quotation. Such details may include drawings or specifications of the floor area, the type(s), quality and/or amount of timber required, delivery requirements, the duration of the contract, the warranty period (if any) as well as any other material contractual terms and conditions. Upon receiving a request for quotation, our contract department together with our senior management will evaluate the details presented and derive at our price quotation, taking into account, among other things, the amount and type of timber required, the resources required to 88

93 BUSINESS carry out the projects, the quotations obtained from our suppliers and subcontractors (where necessary), the duration of the warranty period required (if any) and the urgency of the project. Our contract department will then submit our quotation to the main contractor, who will analyse our quotation and compare it with other quotations that they have received according to their own criteria, which may include the absolute price quoted, the track record of the subcontractor as well as any previous working relationship with the subcontractor. If we are selected by the main contractor, they will inform us accordingly and award us the contract to supply and install timber flooring for their development projects. (2) Award of Project After the contract documents are received from the main contractor, our Contract Manager will review them to ensure that the project specifications and scope of work to be performed by us are clearly set out in these documents, and the contract terms are consistent with the terms set out in the request for quotation previously received. If the contract terms are acceptable, our Executive Chairman and CEO and our Contract Manager will jointly approve the contract. If required, we will source for a performance bond or obtain an insurance guarantee representing a specified percentage of the contract sum and submit it to the main contractor. (3) Project Planning A project manager or project director from one of our project teams will be appointed to head the project. He will be the overall project coordinator and his main duties include preparing an execution plan before the commencement of the project. The execution plan will set out the scope of work for the project, the project schedule highlighting the important stages of the project, a manpower projection plan, a materials and machinery utilisation plan, the project budget for cost monitoring, quality control measures as well as all necessary procedures and controls to ensure the timely execution of the project in accordance with the contractual requirements. Generally, the project planning process will take approximately two weeks after the award of the contract. We may also revise our project planning during the course of our supply and installation work, if necessary. (4) Project Execution The installation process of our timber flooring varies depending on the type of flooring systems chosen by our customers, which is in turn dependent on the type of timber selected and the budgetary requirements of our customers. We offer different flooring systems for our residential and commercial projects. For our residential projects, the flooring systems offered are: (a) Parquet flooring system; (b) Parquet (Plus) flooring system; (c) Cush flooring system; (d) Cush (Plus) flooring system; (e) Classic flooring system; (f) Classic (Plus) flooring system; (g) Premium flooring system; and (h) Premium (Plus) flooring system. For our commercial projects, the flooring systems offered are: (a) Tech-Wood Sports-Cush-I system; (b) Tech-Wood Sports-Cush-II system; (c) Tech-Wood Sports Foam system; and (d) Tech-Wood Sports-Aire system. 89

94 BUSINESS We set out below the key stages of our installation process. Although each flooring system requires different materials and techniques depending on our customers requirements and the timber used, the installation process for each flooring system is broadly similar. Preparation of sub-floors Cleaning of screed Application of adhesive to screed Installation of plywood or padded base (for certain flooring systems only) Laying of timber strips or parquet Checking for loose timber strips or parquet Sanding Varnishing Installation of skirting Final sanding and varnishing 90

95 BUSINESS (a) Preparation of sub-floors and cleaning of screed Prior to the commencement of installation, our on-site employees conduct an inspection of the sub-floor over which the timber flooring is to be laid. The cement screed must be smooth, hard and free from grease and oil, and the moisture content of the screed (measured using a concrete moisture metre) should not be more than 6.0% and the sand to cement mixing ratio should range from 1:3 to 1:4.5. It is the responsibility of the main contractor of every project to ensure that the sub-floor conforms to the requirements above. If not, we will inform them and request that the main contractor carry out rectification works before we commence the installation process. Dirt and dust on the screed are cleaned away before we proceed to the next step. (b) Installation of plywood or padded base This step is available for certain flooring systems only. For our residential projects and for our Premium, Premium (Plus), Cush and Cush (Plus) flooring systems only, we install a plywood base by laying preservative-treated plywood over the screed and further fasten the plywood with concrete nails. For our commercial projects, we offer the following options to our customers: (i) Installation of padded battens For our Tech-Wood Sports-Cush-I system, we cover the sub-floor with a 150 micron-thick vapour barrier followed by resilient pads attached to the underside of the tanalised hardwood batten. (ii) Installation of padded sleepers and plywood For our Tech-Wood Sports-Cush-II system, we install a layer of padded battens as well as an additional layer of plywood. The plywood is installed on top of the tanalised hardwood batten. (iii) Installation of foam and plywood For our Tech-Wood Sports Foam system, instead of padded battens, a 10 mm thick closed cell foam is installed over the vapour barrier. This is followed by the installation of a plywood layer on top of the foam. (iv) Installation of plywood base For our Tech-Wood Sports-Aire system, the laying of the vapour barrier is followed by the attachment of the resilient pads and finally followed by two layers of plywood. (c) Application of adhesive to screed We use a variety of adhesives as different adhesives have different properties, such as holding strength, bonding time, water content and storage life. The type of adhesive used depends on the type of flooring system chosen by our customers. 91

96 BUSINESS (d) Laying of timber strips or parquet The parquet is directly installed onto the screed whilst the timber strips are installed onto the plywood using power nails or blind nails. The floor is then left uncovered for 14 to 21 days for curing to take place. (e) Checking for loose timber strips or parquet During the curing period, we conduct checks for any loose timber strips or parquet. If rectification works are necessary, adhesive is injected into drill holes created in the joints of the timber strips or parquet and wood putty is used to patch up the drill holes. (f) Sanding Sanding of the timber floor is done using sanding machines fitted with sandpaper. Sanding is done at least three times, each time using a paper grit of different roughness. A disc polisher may be used to buff the floors in addition to sanding. In between the sanding process, a mixture of wood putty and varnish is applied to ensure overall smoothness of the floor. (g) Varnishing When sanding is completed, the floor is cleaned and vacuumed in preparation for the varnishing process. A first layer of sealant, known as the spit coat, is applied followed by another coat of varnish. Again, the type of varnish used depends on the type of flooring system chosen by our customers. (h) Installation of skirting Before the installation of skirting, we will conduct another round of checking for loose timber strips or parquet (if any) and carry out rectification works (if necessary). The skirting, which is pre-finished at our factory, is installed onto the wall and all gaps and nail-heads on the floor and skirting are patched up with wood putty. (i) Final sanding and varnishing The floor is then sanded and/or buffed for the final time. After the floor is cleaned and vacuumed, the final coat of varnish is applied to the floor and skirting. (5) Project Handover Prior to the issuance of the TOP for the development, our project manager or project director in charge of the project, together with our customer s representatives will carry out an inspection to ensure that the flooring system installed by us meets the requirements of our customer. Once this is ascertained, the handing over of the project to our customer will be formally documented. The handover will be followed by the defects liability period, usually lasting 12 to 24 months from the date the TOP is obtained, during which we will be required to rectify any defects found in the completed project. Typically, a sum ranging from 5.0% up to 10.0% of the contract value will be retained by our customers as retention monies to secure the fulfilment of our obligations under the 92

97 BUSINESS contract. In addition, our customers will continue to retain the performance bond or insurance guarantee, as the case may be, that was provided to them at the commencement of the project (if any) until the expiry of the defects liability period. Some of our contracts may also require us to provide a warranty period for our flooring systems, during which we are required to rectify certain defects found in the completed project. Such warranty, if given, is typically for a period of five years from the date the TOP is obtained. After the project has been completed, we will obtain feedback from the developers and end-users to enable us to evaluate our performance on the project and to identify areas in which we can improve ourselves for future projects. Distribution Our Distribution customers orders are based on confirmed orders and we do not typically enter into long-term contracts with them. Generally, we do not require our Distribution customers to make any deposits. Upon delivery of our timber products and/or flooring accessories, we will invoice our Distribution customers and grant them a credit term ranging from 30 to 90 days from the date of our invoice. STAFF TRAINING We believe that our employees are one of our most valuable resources and have contributed to the success of our Group. We place strong emphasis on staff training to equip our employees with the requisite skills and knowledge so that they will be able to perform according to their scope of work on an optimal level. Our training programmes can be classified into the following four main categories: (a) Orientation training All new employees are required to undergo orientation programmes conducted by our human resource department to familiarise themselves with our Group s corporate policies and practices. These induction programs are conducted in-house with emphasis on matters relating to employee conduct and discipline, housekeeping, quality and safety awareness. (b) Technical training Technical training is aimed at providing our operations staff with the necessary skills and knowledge for their respective job functions to ensure that their performance attains our desired standards. We believe that the technical competence and product knowledge of our employees are instrumental in maintaining our competitive position. We provide regular in-house trainings for our operation staff on different methods of installing different types of timber, equipment operation and to keep them abreast with industry trends and development. (c) On-the-job training On-the-job training reinforces the training our employees undergo and is managed by their immediate supervisors. Immediate supervisors will closely monitor individual employees and 93

98 BUSINESS impart practical skills and working knowledge necessary for them to perform their tasks according to the required performance standards. Such on-the-job training includes product knowledge, equipment operation and quality assurance for our employees. For example, where nonconformity or problems with quality are detected, remedial training on problem areas will be given immediately to avoid future occurrences. (d) Continuing education To stay competitive at all times, we support selected employees (including finance and administration staff) in external trainings in their respective functional areas from time to time. During the periods under review, our expenses incurred in relation to staff training were insignificant. SALES AND MARKETING Our sales and marketing activities are spearheaded by Jason Sim (our Executive Chairman and CEO), who is supported by Nelson Sim (our Project Director) and nine marketing staff. Our approach to marketing is based on fostering long-term business relationships with our customers and business associates such as developers, main contractors, architects and interior designers. Our strategy is based on identifying the specific needs of our prospective customers and proposing suitable and cost-effective solutions to meet those needs. Our marketing strategies include the following: (a) Referrals We develop strong, long-term relationships with our customers, which often lead to referrals and requests for quotation from both existing and new customers. Our close business relationships with our business associates also allow us to obtain business via referrals. (b) Corporate website and magazines We operate and maintain our website at Our website contains details of our services and products and our track record. Our website also provides an avenue for our customers to make enquiries. Information contained in our website does not constitute part of this Offer Document. From time to time, we also advertise our services in industry magazines and sponsor industry publications to raise our corporate profile. RESEARCH AND DEVELOPMENT Due to the nature of our business, being the supply and installation of timber flooring products and supply of miscellaneous accessories, we do not undertake any research and development activities. CORPORATE SOCIAL RESPONSIBILITY Our Group is strongly committed to conserving the environment. We support initiatives by our customers to design and construct green, sustainable buildings by offering environmentally-friendly 94

99 BUSINESS products such as wood-plastic composite products which are made of recycled products, and using environmentally-friendly finishes such as water-based solvents in the process of installation. We intend to further expand our range of products to include more environmentally-friendly products, such as timber sourced from sustainable forests. We also intend to adopt more environmentally-friendly practices such as recycling previously installed wooden floors. Our Group believes in reaching out to and motivating young people. Our Executive Chairman and CEO, Jason Sim, has given motivational talks at educational institutions and conferences for trade associations and SME, and has represented our Group at several such events. INTELLECTUAL PROPERTY Save as disclosed below, we do not own nor are we dependent on any registered trade mark, patent or other intellectual property rights. Trademark Class (1) registration Country of Registration number 19 and 37 Singapore T D and T F Registration date/ Effective date Expiry date 30 April April Singapore T Z 4 September September 2019 Note: (1) The classes of specification of goods and services under the International Classification of Goods and Services by the World Intellectual Property Organisation that are relevant to us are described as follows: (a) Class 19: Non-metallic flooring including wooden floors and parquet floors, non-metallic materials for making floors, non-metallic materials for use in making floors and non-metallic timber connectors; and (b) Class 37: Installation of flooring, advisory services relating to flooring, maintenance and repair of flooring. As at the Latest Practicable Date, our business or profitability is not materially dependent on any registered trade mark, patent or other intellectual property rights. We have not paid or received any royalties for any licence or use of any intellectual property. INSURANCE As at the Latest Practicable Date, we have taken out insurance policies in respect of the following: (a) (b) (c) (d) (e) (f) (g) workmen s injury compensation for our employees; motor vehicle insurance for our transport vehicles; public liability insurance; fire insurance for our building, inventories and machineries; theft insurance for our inventories and machineries; insurance for money-in-transit and money kept at our premises; key man insurance for Jason Sim (our Executive Chairman and CEO); 95