Placement of 35,800,000 New Shares at S$0.21 for each Share, payable in full on application. Sponsor, Issue Manager and Placement Agent

Transcription

1 OFFER DOCUMENT DATED 15 JULY 2016 (Registered by the Singapore Exchange Securities Trading Limited acting as agent on behalf of the Monetary Authority of Singapore on 15 July 2016) Placement of 35,800,000 New Shares at S$0.21 for each Share, payable in full on application. KATRINA GROUP LTD. (Incorporated in the Republic of Singapore on 31 March 2016) (Company Registration Number: N) 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). Hong Leong Finance Limited (the Sponsor and Issue Manager ) 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 ordinary shares (the Shares ) in the capital of the Company already issued 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 the Shares will be in Singapore dollars. Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the SGX-ST Mainboard. 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 and Issue Manager confirming that the Company is suitable to be listed on Catalist and complies with the rules of the SGX-ST Listing Manual (as defined herein). Neither the Authority nor the SGX-ST has, in any way, considered the merits of the Shares or units of Shares being offered for investment. 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 and the New Shares on Catalist. If the admission and listing do not proceed, monies paid in respect of any application accepted will be returned to you at your own risk, without interest or any share of revenue or other benefit arising therefrom and you will not have any claims against us, the Sponsor, Issue Manager and 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 securities, on the basis of this Offer Document; and no officer or equivalent person or promoter of the Company will authorise or permit the offer of any securities or the allotment, issue or sale of any securities, on the basis of this Offer Document. Investing in the Shares involves risks which are described in the RISK FACTORS section of this Offer Document. Sponsor, Issue Manager and Placement Agent HONG LEONG FINANCE LIMITED (Incorporated in the Republic of Singapore) (Company Registration Number: D)

2 AN ESTABLISHED AND RECOGNISED F&B GROUP WITH MULTI-CUISINE CONCEPTS We own and operate: 32 restaurants in Singapore 2 restaurants in the PRC 9 proprietary F&B brands 4 Halal-certified brands Each brand serves authentic cuisines of different ethnicity: Indonesian Yunnan Thai Northern Chinese Hong Kong Mexican Vietnamese CORPORATE PROFILE OUR CUISINES 32 2 restaurants in SINGAPORE Casual Dining (Generally located in the heartlands) restaurants in the PRC Indonesian and Thai cuisine 9 restaurants in Singapore and 2 in Beijing, PRC Specialties from Yunnan 2 restaurants in Singapore Authentic Indonesian cuisine 2 cafes in Singapore Popular Vietnamese street food 7 cafes in Singapore Contemporary Hong Kong cuisine 7 cafes in Singapore Contemporary Upmarket (Located within the central business district vicinity) Traditional Thai cuisine 1 restaurant in Singapore Authentic Balinese favourites 1 restaurant in Singapore Mexican cuisine 2 restaurants in Singapore Northern Chinese cuisine 1 restaurant in Singapore

3 PROPOSED Intends to distribute dividends of attributable to Sharehold COMPETITIVE STRENGTHS: FINANCIAL HIGHLIGHTS Proprietary brands with different F&B concepts catering to wide market segment Appeal to a wide range of customers with varying degrees of spending power Potentially better locations at preferential rental terms, with clustering of different brand restaurants in same shopping mall 4 Halal-certified brands allow access to larger market Growing demand for Singapore Halal-certified products and services from overseas High barriers of entry in attaining Halal certification due to stringent food safety requirements and standards Dedicated key management personnel and staff with extensive local F&B experience Led by Executive Chairman and Executive Director, each with more than 20 years of F&B experience Supported by dedicated, loyal and experienced staff, with most, including chefs, having been with the Group for more than 10 years Established reputation in our marketplace In operations since 1995 Growth over past 2 decades despite difficult F&B industry environments in the past Good relationships with suppliers and landlords Able to negotiate prices of food ingredients and reduce risks of late or non-delivery of supplies Enable retention of strategic locations where restaurants have been operating Revenue and adjusted gross profit margin 1 (Audited) S$ Adjusted gross profit margin refers to (revenue cost of beverage and food ingredients) / revenue CAGR: Compounded Annual Growth Rate FY: Financial year ended 31 December Profit before tax and profit before tax margin (Audited) S$ 000 THRIVING AND GROWING BUSINESS 79.2% 40,700 FY2013 FY2014 FY2015 Revenue 10.7% 4, % CAGR: 13.5% 45, % CAGR: 8.6% 4, % 52,443 Adjusted gross profit margin 9.8% 5,116 FY2013 FY2014 FY2015 Profit before tax Profit before tax margin CAGR: Compounded Annual Growth Rate FY: Financial year ended 31 December

4 DIVIDENDS not less than 60.0% of net profits ders in respect of FY2016 PROSPECTS Increase in popularity of food delivery services Trend of busy consumers who are more willing to pay for convenience 1 Reduces overheads and rental costs for physical dining spaces Huge potential within Singapore with the growth of online shopping Affluence growth and increase of households dining out in Singapore Rising hectic lifestyle and increase in consumer affluence Increasing trend of average monthly house expenditure on food 2 and median monthly household income 3 Change in dining preference with customers looking towards mid-range restaurants 4 Completion of new retail and F&B spaces and refurbishment of older shopping complexes Possibility of opening new establishments or expanding existing operations into new retail locations Regional growth opportunities Large domestic markets and growing middle income group in the ASEAN region Overseas expansion plans in Malaysia, Vietnam and Indonesia Halal certification enables us to cater to Muslim patrons within the ASEAN region STRATEGIES AND FUTURE PLANS Launch of online food ordering and delivery system Extends reach to a wider spectrum of customers and increases efficiency of delivery process Plan to expand services to all 9 F&B brands in 2016 from 3 currently Grow restaurants for 3 Halal certified brands Intensify expansion of Bali Thai, So Pho and Streats brands in Singapore, Malaysia and Indonesia Capitalise on potential demand for Halal certified Asian food other than Malay cuisine Geographical expansion into new regional markets Plan to open and operate at least 2 restaurants in Kuala Lumpur, Malaysia in the next 12 months under the So Pho and Streats brands Identified Malaysia, Vietnam and Indonesia as potential markets for expansion Expansion through strategic alliances, acquisitions and joint ventures Through such strategies, look to strengthen market position, expand operations and expand into new complementary businesses 1 Information extracted from a news article entitled More players jumping on the food delivery wagon published in The Straits Times found at 2 Information extracted from RHB Research Report entitled Confessions of a Shopaholic dated 6 August 2015 found at Sector%20-%20Great%20Singapore%20Sale_Sector%20Update_ _RHB.pdf 3 Information extracted from a news article entitled Median monthly household income from work in 2015 up 4.9% on year in Singapore found at 4 Information extracted from a report entitled Food Forward Trends Report 2014 Singapore published by Weber Shandwick found at FF-SINGAPORE-16April.pdf

5 CONTENTS CORPORATE INFORMATION DEFINITIONS 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 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 REVIEW OF PAST OPERATING PERFORMANCE REVIEW OF PAST FINANCIAL POSITION LIQUIDITY AND CAPITAL RESOURCES CAPITAL EXPENDITURES, DIVESTMENTS, COMMITMENTS AND CONTINGENT LIABILITIES FOREIGN EXCHANGE MANAGEMENT SIGNIFICANT ACCOUNTING POLICY CHANGE GENERAL INFORMATION ON OUR GROUP SHARE CAPITAL RESTRUCTURING EXERCISE GROUP STRUCTURE OUR SUBSIDIARIES SHAREHOLDERS MORATORIUM

6 CONTENTS BUSINESS OUR HISTORY BUSINESS OVERVIEW BRANDING AND MARKETING QUALITY ASSURANCE MAJOR CUSTOMERS MAJOR SUPPLIERS CREDIT MANAGEMENT RESEARCH AND DEVELOPMENT INTELLECTUAL PROPERTY INVENTORY MANAGEMENT PROPERTIES AND FIXED ASSETS STAFF TRAINING INSURANCE COMPETITION OUR COMPETITIVE STRENGTHS PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS PROSPECTS TREND INFORMATION ORDER BOOK BUSINESS STRATEGIES AND FUTURE PLANS GOVERNMENT REGULATIONS EXCHANGE CONTROLS DIRECTORS, EXECUTIVE OFFICER AND STAFF MANAGEMENT REPORTING STRUCTURE DIRECTORS EXECUTIVE OFFICER STAFF REMUNERATION OF DIRECTORS, EXECUTIVE OFFICER AND RELATED STAFF SERVICE AGREEMENTS CORPORATE GOVERNANCE BOARD PRACTICES INTERESTED PERSON TRANSACTIONS INTERESTED PERSONS PAST TRANSACTIONS PRESENT AND ON-GOING TRANSACTIONS REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS POTENTIAL CONFLICTS OF INTERESTS INTERESTS OF DIRECTORS, CONTROLLING SHAREHOLDERS OR THEIR ASSOCIATES INTERESTS OF EXPERTS INTERESTS OF SPONSOR, ISSUE MANAGER AND PLACEMENT AGENT CLEARANCE AND SETTLEMENT GENERAL AND STATUTORY INFORMATION

7 CONTENTS APPENDIX A APPENDIX B INDEPENDENT AUDITOR S REPORT AND THE AUDITED COMBINED FINANCIAL STATEMENTS OF KATRINA GROUP LTD. FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2013, 2014 AND A-1 INDEPENDENT PRACTITIONER S ASSURANCE REPORT AND THE UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR THE FINANCIAL YEAR ENDED 31 DECEMBER B-1 APPENDIX C SUMMARY OF CONSTITUTION OF OUR COMPANY C-1 APPENDIX D SUMMARY OF RELEVANT PRC LAWS AND REGULATIONS D-1 APPENDIX E DESCRIPTION OF OUR SHARES E-1 APPENDIX F TAXATION F-1 APPENDIX G TERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS.... G-1 3

8 CORPORATE INFORMATION BOARD OF DIRECTORS : Alan Goh Keng Chian (CEO and Executive Chairman) Madaline Catherine Tan Kim Wah (Executive Director) Goh Shen Shu Donovan (Non-Executive Director) Ang Miah Khiang (Lead Independent Director) Chow Wen Kwan (Independent Director) Eric Low Siak Meng (Independent Director) COMPANY SECRETARY : Kwan Hon Lawrence Kwan, FCS, FCIS REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS SHARE REGISTRAR AND SHARE TRANSFER OFFICE SPONSOR, ISSUE MANAGER AND PLACEMENT AGENT INDEPENDENT AUDITOR AND REPORTING ACCOUNTANT : 1 Sims Lane #05-05 Singapore : B.A.C.S. Private Limited 8 Robinson Road #03-00 ASO Building Singapore : Hong Leong Finance Limited 16 Raffles Quay #01-05 Hong Leong Building Singapore : Ernst & Young LLP One Raffles Quay North Tower, Level 18 Singapore Partner-in-charge: Tan Peck Yen (A practising member of the Institute of Singapore Chartered Accountants) SOLICITORS TO THE PLACEMENT LEGAL ADVISERS TO THE COMPANY ON PRC LAW : Opal Lawyers LLC 30 Raffles Place #19-04 Chevron House Singapore : Shanghai City Development Law Firm 31F, Hongkong Plaza 283 Huaihai Road (M) Shanghai RECEIVING BANKER : The Bank of East Asia, Limited Singapore Branch 60 Robinson Road BEA Building Singapore PRINCIPAL BANKER : DBS Bank Ltd 12 Marina Boulevard Level 3 Marina Bay Financial Centre Tower 3 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 Beijing BaliThai : Beijing BaliThai Restaurants Co., Ltd. Company : Katrina Group Ltd. Group : Our Company and our subsidiaries Katrina Singapore : Katrina Holdings Pte Ltd Renn Thai : Renn Thai Pte Ltd Other Corporations and Agencies ACRA : Accounting Corporate Regulatory Authority of Singapore Authority : The Monetary Authority of Singapore CDP : The Central Depository (Pte) Limited COMPASS : Composers and Authors Society of Singapore Limited CPF : The Central Provident Fund MOM : Ministry of Manpower MUIS : Majlis Ugama Islam Singapura (also known as the Islamic Religious Council of Singapore) NEA : National Environment Agency SGX-ST : Singapore Exchange Securities Trading Limited Sponsor, Issue Manager, Placement Agent, or HLF : Hong Leong Finance Limited 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 the subscription of the Placement Shares 5

10 DEFINITIONS ASEAN : Association of Southeast Asian Nations Associate : (a) in relation to any director, CEO, 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% 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% or more Associated Company : In relation to a corporation, means: (a) any corporation in which the corporation or its subsidiary has, or the corporation and its subsidiary together have, a direct interest of not less than 20% but not more than 50% of the aggregate of the nominal amount of all the voting shares; or (b) any corporation, other than a subsidiary of the corporation or a corporation which is an associated company by virtue of paragraph (a), the policies of which the corporation or its subsidiary, or the corporation together with its subsidiary, is able to control or influence materially Audit Committee : The audit committee of our Company as at the date of this Offer Document, unless otherwise stated Audited Combined Financial Statements Board or Board of Directors : The Audited Combined Financial Statements for the Financial Years Ended 31 December 2013, 2014 and 2015 as set out in Appendix A of this Offer Document : The board of Directors of our Company as at the date of this Offer Document, unless otherwise stated Catalist : The sponsor-supervised listing platform of the SGX-ST 6

11 DEFINITIONS Catalist Rules : Any or all of the rules in the Section B: Rules of Catalist of the Listing Manual of the SGX-ST, as may be amended, varied or supplemented from time to time CEO : Chief Executive Officer CFO : Chief Financial Officer China or PRC : The People s Republic of China, excluding Hong Kong Special Administrative Region and Macau Special Administrative Region for the purposes of this Offer Document Companies Act : The Companies Act (Chapter 50) of Singapore, as may be amended, varied or supplemented from time to time Constitution : The constitution of our Company Controlling Shareholder : A person who has an interest in our Shares of an aggregate of not less than 15% of the total votes attached to all our Shares, or in fact exercises control over our Company Copyright Act : The Copyright Act (Chapter 63) of Singapore, as may be amended, varied or supplemented from time to time Directors : The directors of our Company as at the date of this Offer Document, unless otherwise stated entity : Includes a corporation, an unincorporated association, a partnership and the government of any state, but does not include a trust EPS : Earnings per Share Executive Directors : The executive Directors of our Company as at the date of this Offer Document, unless otherwise stated Executive Officers : The executive officers of our Group as at the date of this Offer Document, unless otherwise stated F&B : Food and beverage 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 7

12 DEFINITIONS Latest Practicable Date : 17 June 2016, being the latest practicable date prior to the lodgement of this Offer Document with the SGX-ST acting as agent on behalf of the Authority Listing Manual : The listing manual of the SGX-ST, as may be amended, varied or supplemented from time to time Market Day : A day on which the SGX-ST is open for trading in securities New Shares : The 35,800,000 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 (including Independent Directors) as at the date of this Offer Document, unless otherwise stated NTA : Net tangible assets (after non-controlling interests) Offer Document : This offer document dated 15 July 2016 issued by our Company in respect of the Placement PAT : Profit after tax PBT : Profit before tax PER : Price earnings ratio periods under review : The period which comprises FY2013, FY2014 and FY2015 Placement : The placement by the Placement Agent of the Placement Shares on behalf of our Company for subscription at the Placement Price, subject to and on the terms and conditions of this Offer Document Placement Price : S$0.21 for each Placement Share Placement Shares : The 35,800,000 New Shares Relevant Period : The periods under review and the period from 1 January 2016 to the Latest Practicable Date Remuneration Committee : The remuneration committee of our Company as at the date of this Offer Document, unless otherwise stated 8

13 DEFINITIONS Restructuring Exercise : The corporate restructuring exercise undertaken in connection with the Placement, as described in the Restructuring Exercise section of this Offer Document Securities Account : The securities account maintained by a Depositor with CDP, but does not include a securities sub-account Service Agreements : The service agreements entered into between our Company and our CEO and Executive Chairman, Alan Goh and our Executive Director, Catherine Tan, as described in the Service Agreements section of this Offer Document SFA : The Securities and Futures Act (Chapter 289) of Singapore, as may be amended, varied or supplemented from time to time SGXNET : The corporate announcement system maintained by the SGX-ST for the submission of announcements by listed companies Shareholders : Registered holders of Shares, except where the registered holder is CDP, the term Shareholders shall, in relation to such Shares, mean the Depositors whose Securities Accounts are credited with Shares Shares : Ordinary shares in the capital of our Company Sub-division : The sub-division of 1,165,006 Shares in the capital of our Company into 195,721,008 Shares as described in the Restructuring Exercise section of this Offer Document Substantial Shareholder : A person who has an interest in the Shares the total votes attached to which is not less than 5% of the total votes attached to all the voting shares in our Company Unaudited Pro Forma Combined Financial Information : The unaudited pro forma combined financial information for the financial year ended 31 December 2015 Currencies, Units and Others RM : Ringgit Malaysia, being the lawful currency of Malaysia RMB : Renminbi, being the lawful currency of the PRC S$, $ and cents : Singapore dollar and cent, respectively sq ft : Square feet 9

14 DEFINITIONS sq m : Square metre % : Percentage nm : Not meaningful The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 81SF of SFA or any statutory modification thereof, as the case may be. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall include corporations. 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 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 their 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 total thereof are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. Any reference to Alan Goh in this Offer Document is a reference to Alan Goh Keng Chian. Any reference to Catherine Tan in this Offer Document is a reference to Madaline Catherine Tan Kim Wah. 10

15 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 expects, believes, plans, intends, estimates, anticipates, may, will, would and could or similar words. However, you should note that these words are not the exclusive means of identifying forward-looking statements. All statements regarding our expected financial position, business strategies, plans and prospects are forward-looking statements. These forward-looking statements, including without limitation, statements as to: (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 fact, are only predictions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expected, expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include, among others: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) 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 food we served in our restaurants; changes in the availability and prices of raw materials we need to operate our business; changes in customers preference; changes in competitive conditions and our ability to compete under these conditions; changes in our future capital needs and the availability of financing and capital to fund these needs; the factors described in the Risk Factors section 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. 11

16 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Given the risks and uncertainties that may cause our actual future results, performance or achievements to be materially different from those expected, expressed or implied by the forward-looking statements in this Offer Document, we advise you not to place undue reliance on those statements which apply only as at the date of this Offer Document. Neither our Company, the Sponsor, Issue Manager and 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 Company, the Sponsor, Issue Manager and 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 Catalist Rules regarding corporate disclosure. In particular, pursuant to Section 241 of the SFA, if after this Offer Document is registered but before the close of the Placement, we become aware of (a) a false or misleading statement in this Offer Document; (b) an omission from this Offer Document of any information that should have been included in it under Section 243 of the SFA; or (c) a new circumstance has arisen since the 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, Issue Manager and Placement Agent, lodge a supplementary or replacement offer document with the SGX-ST acting as agent on behalf of the Authority. 12

17 SELLING RESTRICTIONS This Offer Document does not constitute an offer, solicitation or invitation to subscribe for the Placement Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. No action has been or will be taken under the requirements of the legislation or regulations of, or of the legal or regulatory requirements of any jurisdiction, except for the lodgement and/or registration of this Offer Document in Singapore in order to permit a public offering of the Placement Shares and the public distribution of this Offer Document in Singapore. The distribution of this Offer Document and the offering of the Placement Shares in certain jurisdictions may be restricted by the relevant laws in such jurisdictions. Persons who may come into possession of this Offer Document are required by us, the Sponsor, Issue Manager and 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 Sponsor, Issue Manager and Placement Agent. Persons to whom a copy of this Offer Document has been issued shall not circulate to any other person, reproduce or otherwise distribute this Offer Document or any information herein for any purpose whatsoever nor permit or cause the same to occur. 13

18 DETAILS OF THE PLACEMENT LISTING ON CATALIST The Sponsor and Issue Manager has made an application to the SGX-ST for permission to deal in, and for quotation of, all our existing issued Shares already issued and the New Shares which are the subject of the Placement on Catalist. The dealing in, and quotation for, 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 Mainboard 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 and Issue Manager confirming that our Company is suitable to be listed on Catalist and complies with the Catalist Rules. 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 New Shares and the listing and quotation of all our existing issued 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 Sponsor, Issue Manager and Placement Agent or our advisers or agents. 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 Catalist Rules regarding corporate disclosure. In particular, pursuant to Section 241 of the SFA, if after this Offer Document is registered but before the close of the Placement, we become aware of: (a) (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 14

19 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. In the event that a supplementary or replacement offer document is lodged, the Placement shall be kept open for at least 14 days after the lodgement of such supplementary or replacement offer document. Where prior to the lodgement of the supplementary or replacement offer document, applications have been made under this Offer Document to subscribe for the Placement Shares and: (a) where the Placement Shares have not been issued to the applicants, we shall either: (i) (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 we shall, within seven days from the date of lodgement of the supplementary or replacement offer document, return the applicants all monies the applicants have paid on account of their applications for the Placement Shares; or (b) where the Placement Shares have been issued to the applicants, we shall either: (i) 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; 15

20 DETAILS OF THE PLACEMENT (ii) (iii) 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 of the Placement Shares as void, in which case the issue shall be deemed void and we shall within seven days from the date of lodgement of the supplementary or replacement offer document, return the applicants all monies the applicants have paid on account of their applications for the Placement Shares. 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 we shall, within seven days from the receipt of such notification, return to him all monies paid by him on account of his application for those Shares. An applicant who wishes to exercise his option under paragraph (b)(i) or (ii) to return the Placement Shares issued to him shall, within 14 days from the date of lodgement of the supplementary or replacement offer document, notify us of this and return all documents, if any, purporting to be evidence of title to those Placement Shares, to us, whereupon we shall, within seven days from the receipt of such notification and documents, if any, return to him all monies paid by him for those Placement Shares, and the issue 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 or no further Shares to which this Offer Document relates, be allotted or issued. Such circumstances will include a situation where this Offer Document (i) contains any statement or matter which, in the Authority opinion, is 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 the Placement Shares have been made prior to the Stop Order, then: (a) (b) where the Placement Shares have not been issued to the applicants, the applications for the Placement Shares shall be deemed to have been withdrawn and cancelled and our Company shall, within 14 days from the date of the Stop Order, return 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 to the applicants, the issue of the Placement Shares shall be deemed to be void and our Company shall, (i) if no documents purporting to evidence title to those Placement Shares have been issued to the applicants, within seven days from the date of the Stop Order, return the applicants all monies the applicants have paid on account of their applications for the Placement Shares, or (ii) if documents purporting to evidence title to those Placement Shares have been issued to the applicants, within seven days from the date of the Stop Order, inform the applicants to return such documents to our Company within 14 days from that date and within seven days from the date of receipt of such documents or the date of the Stop Order, whichever is the later, return the applicants all monies the applicants have paid on account of their applications for the Placement Shares. 16

21 DETAILS OF THE PLACEMENT Where monies are to be returned to applicants for the Placement Shares, it shall be paid to the applicants without any interest or share of revenue or benefit arising therefrom at the applicants own risk, and the applicants will not have any claim against our Company, the Sponsor, Issue Manager and Placement Agent. This Offer Document has been seen and approved by our Directors, and they individually and collectively accept full responsibility for the accuracy of the information given in this Offer Document and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, (i) the facts stated and the opinions, intentions and expectations expressed in this Offer Document are true, fair and accurate and not misleading in all material respects as at the date of this Offer Document, (ii) there are no material facts the omission of which would make any statement in this Offer Document misleading, and (iii) this Offer Document constitutes a full and true disclosure of all material facts about the Placement, our Group and our Shares. Neither our Company, the Sponsor, Issue Manager, and Placement Agent nor any other parties involved in the Placement is making any representation to any person regarding the legality of an investment in our Shares by such person under any investment or other laws or regulations. No information in this Offer Document should be considered as being business, legal or tax advice regarding an investment in our Shares. Each prospective investor should consult his own legal, financial, tax or other professional adviser regarding an investment in our Shares. The Placement Shares are offered for subscription solely on the basis of the information contained and the representations made in this Offer Document. No person has been or is authorised to give any information or to make any representation not contained in this Offer Document in connection with the Placement and, if given or made, such information or representation must not be relied upon as having been authorised by us, the Sponsor, Issue Manager and Placement Agent. Neither the delivery of this Offer Document and 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 subsidiaries or in any statements of fact or information contained in this Offer Document since the date of this Offer Document. Where such changes occur and are material or are required to be disclosed by law, we will 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 subsidiaries. This Offer Document has been prepared solely for the purpose of the Placement and may not be relied upon by any persons other than the applicants in connection with their application for the Placement Shares or for any other purpose. This Offer Document does not constitute an offer, solicitation or invitation to subscribe for the Placement Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. 17

22 DETAILS OF THE PLACEMENT Copies of this Offer Document may be obtained on request, subject to availability, during office hours from: HONG LEONG FINANCE LIMITED 16 Raffles Quay #01-05 Hong Leong Building Singapore An electronic copy of this Offer Document is also available on the SGX-ST website at The Application List will open immediately upon registration of the Offer Document by the SGX-ST acting as agent of the Authority and will remain open until noon on 22 July 2016 or for such further period or periods as our Directors may, in consultation with the Sponsor, Issue Manager and 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 behalf of the Authority, the Application List will remain open for at least 14 days after the lodgement of the supplementary or replacement offer document. Details of the procedures for applications to subscribe for the Placement Shares are set out in Appendix G of this Offer Document. INDICATIVE TIMETABLE FOR LISTING An indicative timetable is set out below for your reference: Indicative Date and Time Event 22 July 2016, noon Close of Application List 26 July 2016, 9.00 a.m. Commence trading on a ready basis 29 July 2016 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 22 July 2016, the date of admission of our Company to Catalist is 26 July 2016, the SGX-ST s shareholding spread requirement will be complied with and the New Shares will be issued and fully paid-up prior to 9.00 a.m. on 26 July The Placement will be open from 15 July 2016 (immediately upon registration of the Offer Document) to noon on 22 July 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: (i) (ii) through a SGXNET announcement to be posted on the internet at the SGX-ST website and in major English language newspaper(s) in Singapore. 18

23 DETAILS OF THE PLACEMENT We will provide details of the results of the Placement (including the level of subscription for the Placement Shares), as soon as practicable after the closure of the Application List through the channels described in (i) and (ii) above. We reserve the right to reject or accept, in whole or in part, or to scale down or ballot any application for the Placement Shares, without assigning any reason therefor, and no enquiry and/or correspondence on our decision will be entertained. In deciding the basis of allotment and/or allocation, due consideration will be given to, inter alia, the desirability of allotting and/or allocating the Placement Shares to a reasonable number of applicants with a view to establish an adequate market for our Shares. Investors should consult the SGX-ST announcement on 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 in the Risk Factors section of this Offer Document, before deciding to invest in our Shares. OVERVIEW OF OUR GROUP Our Company was incorporated in Singapore on 31 March 2016 under the Companies Act as a private company limited by shares under the name of Katrina Group Pte. Ltd.. On 9 July 2016, our Company was converted into a public company limited by shares and our name was changed to Katrina Group Ltd.. Our Business We are an operator of chains of restaurants and cafes under different F&B brands and concepts. Our Group owns and operates restaurants under nine different F&B brands that are developed and owned by us as at the Latest Practicable Date. Each brand provides different dining options in order to cater to a wide spectrum of patrons and different market segments. Each of our brands serves authentic cuisines of different ethnicity, namely Indonesian, Thai, Hong Kong, Yunnan, northern Chinese cuisine, Mexican and Vietnamese. In addition, each brand is accompanied by tailored décor and designs in our restaurants and cafes in order to provide patrons with comfortable ambience. Amongst our nine own proprietary brands, restaurants under four of our own proprietary brands namely Bali Thai, So Pho, Streats and Indobox, are certified Halal in Singapore, save for the Bali Thai restaurant at IMM Building as disclosed in the Government Regulations section of this Offer Document. Our restaurants are located in Singapore and overseas. Within Singapore, our casual dining brands are generally located in the heartlands of Singapore, such as Jurong East and Tampines. Meanwhile, the contemporary upmarket brands are located within the central business district vicinity of Singapore. We also operate restaurants outside Singapore, currently located in Beijing, PRC. In the PRC, our Group owns and operates two Bali Thai restaurants. Food served in our Bali Thai restaurants in the PRC has been tailored and fine-tuned to suit the tastes of the local consumers in the PRC. We have identified certain locations within Malaysia, Vietnam and Indonesia for our overseas expansion. Please refer to the Business Strategies and Future Plans section of this Offer Document for more details. As at the Latest Practicable Date, our Group owns and operates 32 restaurants in Singapore and two restaurants in the PRC under our nine own proprietary F&B brands. In addition, we provide catering service from one of our restaurants in Singapore for various private and corporate events. In seeking the opportunity to reach out to increasing needs of consumers ordering food online and requiring food delivery services, we have launched our own customised online food ordering and delivery system which allows customers to place orders and make payments directly on our website without going through a third party application or system. Following the placing of orders and payment online, customers may elect to collect their orders from their desired restaurant or to request food delivery to their doorstep. Through this online food ordering and delivery system, consumers have easier access to enjoyment of food served by our restaurants as the system allows consumers to have a cashless transaction by making direct payment to us via our website. Further details are set out in the Business Overview section of this Offer Document. 20

25 OFFER DOCUMENT SUMMARY Our Competitive Strengths Our Directors believe our competitive strengths are as follows: We have various proprietary brands with different F&B concepts catering to a wide market segment Our restaurants under four of our own proprietary brands are Halal-certified We have dedicated key management personnel and staff with extensive experience in the local F&B industry We have an established reputation in our marketplace We maintain good relationships with suppliers and landlords Further details are set out in the Competitive Strengths section of this Offer Document. Our Business Strategies and Future Plans Our business strategies and future plans are as follows: Launch of our online food ordering and delivery system Growing our restaurants for three Halal certified brands Geographical expansion into new regional markets Expansion through strategic alliances, acquisitions and joint ventures Further details are set out in the Business Strategies and Future Plans section of this Offer Document. Where you can find us Our registered office is located at 1 Sims Lane #05-05 Singapore Our telephone and facsimile numbers are and respectively. Our company registration number is N. Our internet address is 21

26 OFFER DOCUMENT SUMMARY 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 and the Management s Discussion and Analysis of Results of Operations and Financial Position section of this Offer Document. Selected items from the Combined Statements of Comprehensive Income (1) Audited (S$ 000) FY2013 FY2014 FY2015 Revenue 40,700 45,410 52,443 Gross profit 7,477 8,477 8,831 Profit before tax 4,338 4,169 5,116 Profit for the year, representing profit attributable to owners of the Company 3,701 3,292 4,262 EPS (cents) (2)(4) EPS (as adjusted for the Placement) (cents) (3)(4) Selected items from the Combined Statements of Financial Position (5) (S$ 000) As at 31 December 2014 Audited As at 31 December 2015 Current assets 9,564 12,618 Non-current assets 9,676 10,865 Current liabilities 6,738 6,741 Non-current liabilities Total equity 11,507 15,775 NTA per Share (cents) (6) 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) EPS is computed based on the net profit attributable to owners of the Company divided by the pre-placement share capital of 195,721,008 Shares. (3) EPS (as adjusted for the Placement) is computed based on the net profit attributable to owners of the Company divided by the post-placement share capital of 231,521,008 Shares. (4) Had the Service Agreements been in place with effect from 1 January 2015, the PAT for FY2015 would have been approximately S$3.5 million, and the EPS and EPS (as adjusted for the Placement) would be 1.78 cents and 1.51 cents, respectively. (5) Our combined statements of financial position as at 31 December 2014 and 31 December 2015 have been prepared on the basis that our Group has been in existence on the respective dates. (6) The NTA per Share as at 31 December 2014 and 31 December 2015 has been computed based on our pre-placement share capital of 195,721,008 Shares. 22

27 THE PLACEMENT Issue size : 35,800,000 New Shares. The New Shares will, upon issue and allotment, rank pari passu in all respects with the existing issued Shares. Placement Price : S$0.21 for each Placement Share. The Placement : The Placement comprises an offering by the Placement Agent on behalf of our Company of 35,800,000 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 into the capital markets to fund our business growth. The Placement will also provide members of the public, our business associates and employees, 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 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 Risk Factors section of this Offer Document. 23

28 PLAN OF DISTRIBUTION The Placement Price is determined by us in consultation with the Sponsor, Issue Manager and Placement Agent after taking into consideration, inter alia, 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 the 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 applications are described in Appendix G of this Offer Document. Subscribers of 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 or their immediate family intends to subscribe for the Placement Shares in the Placement. None of our members, management or employees intends to subscribe for more than 5% 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 more than 5% 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 more than 5% of the Placement Shares. If such person(s) were to make an application for more than 5% 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 Catalist Rules. No Shares shall be 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 net proceeds to be raised by our Company from the issue of the New Shares, after deducting the estimated expenses of approximately S$1.2 million, are approximately S$6.3 million. The allocation of each principal intended use of proceeds and the estimated listing expenses are set out below: Use of proceeds Business expansion through: Increasing the number of restaurants for the Halal certified brands Online food ordering and delivery business in Singapore; Geographical expansion into new regional markets; and Forming alliances, acquisition and joint ventures As a percentage of gross proceeds from the Placement S$ 000 (%) 5, % General working capital and corporate purposes 1, % Net proceeds from the Placement 6, % Expenses to be borne by our Company (1) Listing and processing fees % Professional fees and expenses (2) % Placement commission % Miscellaneous expenses % Gross proceeds from the Placement 7, Notes: (1) Of the total estimated listing expenses to be borne by our Company of approximately S$1.2 million, approximately S$0.4 million will be capitalised against share capital and the balance of the estimated listing expenses will be charged to profit or loss. (2) This includes the sponsor fee, audit fee and legal fee. In the reasonable opinion of our Directors, there is no minimum amount which must be raised from the Placement. Please refer to the Business Strategies and Future Plans section of this Offer Document for further details on our future plans. Pending the deployment of the net proceeds as aforesaid, the funds will be placed in short-term deposits with financial institutions and/or used to invest in short-term money market instruments and/or used for working capital requirements as our Directors may deem appropriate. 25

30 USE OF PROCEEDS FROM THE PLACEMENT AND EXPENSES INCURRED We will make periodic announcements on the use of the net proceeds from the Placement 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 Placement does not materialise or proceed as planned, our Directors will carefully evaluate the situation and may re-allocate the intended funding to other purposes and/or hold such funds on short-term deposits for so long as our Directors deem it to be in the interests of our Company and our Shareholders, taken as a whole. Any change in the use of the net proceeds will be subject to the Catalist Rules and appropriate announcements will be made by our Company on SGXNET. 26

31 MANAGEMENT AND PLACEMENT ARRANGEMENTS Pursuant to a full sponsorship and management agreement dated 15 July 2016 (the Management Agreement ) entered into between our Company and HLF, our Company appointed HLF to sponsor and manage the Placement. HLF will receive a fee from our Company for such services rendered in connection with the Placement. Pursuant to the placement agreement dated 15 July 2016 (the Placement Agreement ) entered into between our Company and HLF, HLF agreed to subscribe for and/or procure subscribers for the Placement Shares at the Placement Price for a placement commission of three and a half per cent (3.5)% of the aggregate Placement Price for the total number of Placement Shares successfully subscribed, payable by our Company. HLF may, at its absolute discretion, appoint one or more sub-placement agents for the Placement Shares. Subscribers 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 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 agreeing to subscribe or procuring or agreeing to procure subscriptions for any shares in, or debentures of, our Company and our subsidiaries. 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 in the Management Agreement which comes to the knowledge of HLF; or any occurrence of certain specified events which comes to the knowledge of HLF; or any adverse change, or any development involving a prospective adverse change, in the condition (financial or otherwise) of our Company or of our Group as a whole; 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 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 and 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 reasonable opinion of the Sponsor and Issue Manager 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 it becoming impracticable, inadvisable, inexpedient or uncommercial to proceed with any of the transactions contemplated under the Management Agreement or the Placement; or the business, trading position, operations or prospects of our Group being materially and adversely effected; results or is likely to result in the issue of a notice of refusal to an admission of our Company to the Official List of Catalist by the SGX-ST to the Sponsor and Issue Manager at any point prior to listing of our Shares; or makes it uncommercial or otherwise contrary to or outside the usual commercial practices in Singapore for the Sponsor and Issue Manager to observe or perform or be obliged to observe or perform the terms of the Management Agreement, the Sponsor and Issue Manager may at any time prior to the close of the Application List rescind or terminate the Management Agreement. The Sponsor and Issue Manager 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 the Official List of Catalist is issued by the SGX-ST to the Sponsor and Issue Manager; or at any time after the registration of this Offer Document with the SGX-ST but before the close of the Application List, our Company fails and/or neglects to lodge a supplementary or replacement offer document (as the case may be) if we 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 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 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) the Shares have not been admitted to Catalist on or before 26 July 2016 (or such other date as our Company and the Sponsor and Issue Manager may agree). 28

33 MANAGEMENT AND PLACEMENT ARRANGEMENTS The obligations under the Placement Agreement are conditional upon the Management Agreement not being determined or rescinded pursuant to the provisions of the Management Agreement. In the case of the non-fulfilment of any of the conditions in the Management Agreement or the release or discharge of the Sponsor and Issue Manager from its 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. In the event that the Management Agreement and/or the Placement Agreement is terminated, our Directors reserve the right, at their absolute discretion, to cancel the Placement. Save as disclosed above, we do not have any material relationship with the Sponsor, Issue Manager and Placement Agent. 29

34 RISK FACTORS Prospective investors should consider carefully and evaluate the following risk factors and all other information contained in this Offer Document, before deciding to invest in our Shares. You should also note that certain of the statements set forth below constitute forward-looking statements that involve risks and uncertainties. If any of the following risk factors and uncertainties develops into actual events, our business, financial condition or results of operations or cash flows or prospects may be adversely affected. In such circumstances, the trading price of our Shares could decline and investors may lose all or part of their investment in our Shares. To the best of our Directors belief and knowledge, all the risk factors that are material to investors in making an informed judgment in our Company have been set out below. RISKS RELATING TO OUR BUSINESS OR OUR INDUSTRY We are subject to regulatory requirements for our operations Our business in Singapore is subject to various laws, rules and regulations, including but not limited to the Environmental Public Health Act and the Sale of Food Act. We are also required to comply with the regulations and policies of relevant authorities, such as the NEA. Our business and operations in the PRC are subject to the laws and regulations in the PRC. Please refer to the Government Regulations section of this Offer Document for further details of these laws and regulations. We may be required to comply with any further and/or stricter requirements if there are changes to the applicable laws, regulations or policies in Singapore or PRC. This may restrict or hamper our business or result in higher operating costs which may adversely affect our business and financial performance. In addition, there can be no assurance that we are able to comply with the requirements of such new laws, regulations and policies in Singapore and/or PRC. Regulatory licences are required for the operations of our restaurants in Singapore and PRC. Such licences are granted for fixed periods of time and need to be renewed upon expiry. There can be no assurance that such licences will be processed, issued or renewed in time or at all. Any failure to obtain, maintain or renew any of such licences may materially and adversely affect our business, operations and financial performance. Further, if we are found to be in breach of any applicable laws, regulations, conditions or policies, the relevant government or regulatory authority may take action against us. Since the commencement of operations of our restaurants and prior to 1 May 2016, we have been providing music to the public in these premises without a copyright music licence from COMPASS. Under the Copyright Act, parties which provide music to the public without the requisite licence from COMPASS will be committing an offence and offenders are liable to penalties as set out under the Copyright Act. We applied for the copyright music licence on 28 April 2016 and our Group has been issued the necessary copyright music licences from COMPASS for the provision of music in our restaurants on 9 June 2016 for the duration from 1 May 2016 to 30 April On 10 May 2016, we also wrote in to notify COMPASS of the provision of music to the public in our restaurants prior to 1 May 2016 and to seek its understanding regarding any non-compliance of our Group prior to 1 May Our Group had on 1 June 2016 received an acknowledgement from COMPASS for their receipt of our letter dated 10 May 2016 and confirmed that our Group has obtained the copyright music licences for our restaurants. While we have obtained the licence from COMPASS, there is no absolute assurance that we will not be imposed with the penalties as set out in the Copyright Act for our possible past breaches. The Solicitors to the Placement has 30

35 RISK FACTORS advised that under the provisions of the Copyright Act, copyright infringement may amount to a criminal offence and owners of a copyright may also bring civil action for infringement of their copyrights. In general, a person who does any act that constitutes a wilful infringement of a copyright and the extent of such infringement is significant and/or the person does the act to obtain a commercial advantage, the person shall be guilty of an offence and shall be liable to a fine not exceeding S$20,000 or to imprisonment for a term not exceeding six months or to both. Further, if such offence was committed with the consent or wilful act of a director, manager, secretary or similar office of a body corporate, the officer as well as the body corporate is liable and a fine or a term of imprisonment of up to two years or both may be imposed. Under the provisions of the Copyright Act, in a civil action for an infringement brought by the owner of the copyright, the types of relief that the court may grant include injunction, damages, an account of profits, or statutory damages of not more than S$10,000 for each work but not more than S$200,000 in the aggregate (unless the plaintiff proves that his actual loss from such infringement exceeds S$200,000). The Solicitors to the Placement has also advised that the Copyright Act does not stipulate the minimum or maximum damages our Group may be liable to and however, the court generally takes the stance that the damages awarded under the Copyright Act in relation to civil actions are meant to be compensatory. Our CEO and Executive Chairman, Alan Goh, has provided an indemnity to indemnify our Group for all claims (both civil, statutory or criminal in nature), fines, penalties, damages, losses, liabilities, arising from or in connection with the breaches and infringement of copyright or the relevant provisions of the Copyright Act for providing music to the public for the period prior to 1 May 2016 without obtaining the necessary licence and the indemnity shall be valid and effective from 20 June 2016 for so long as our Group suffers any loss. As our Group has taken active steps to inform the relevant authorities on the aforementioned possible past breaches and has also rectified such matters where possible, our Directors are of the view that such possible breaches are unlikely to have any grave consequences on the business operations and financial performance of our Group. Our Group may be affected by any increase in the rental rates or the failure to renew our existing leases All our restaurants are housed in leased properties. For FY2013, FY2014, FY2015, rental expenses for the restaurants accounted for approximately 22.4%, 23.1%, and 22.7% of our Group s total revenue respectively. Majority of our leases are entered for periods of three years. Upon expiry of such leases, the landlords have the right to review and alter the terms and conditions of the leases. We face the risk of increases in rental charges or changes in terms and conditions that may turn unfavourable to us. If there is any increase in the rental charges or changes in terms and conditions that there are unfavourable to us, our operational expenses may inevitably increase, and our financial performance may be negatively affected. We face intense competition and may not be able to maintain our competitiveness The F&B industry is highly competitive, and barriers of entry are low. We face competition from a large and diverse group of restaurant chains and individual restaurants in the markets where we have a presence. Our competitors are well-established in the markets in which we operate and may have substantially greater financial, marketing and other resources than us. Further, entrance of new competitors into our markets could affect the business and profitability of our restaurants. We compete by offering different dining concepts, quality food, competitive pricing, good customer service and strategic locations for our restaurants. While we endeavour to distinguish our 31

36 RISK FACTORS restaurants from those of our competitors, we are aware that there are other restaurants that offer similar dining concepts and pricing. In the event we are unable to maintain our competitiveness, our financial performance may be negatively affected. Our Group may be affected by customer complaints and negative publicity Negative publicity concerning food quality and hygiene of food served at our restaurants and cafes or illness concerning food products served by our restaurants and cafes will result in an adverse impact on our business. Such negative allegations, particularly complaints of illnesses caused by the consumption of our food, may result in the closure of our restaurants. We may also be the subject of malicious and groundless rumours which may be quickly transmitted and spread over social media platforms. Publicised instances of poor food or general hygiene may damage our reputation, reduce customers confidence in our products leading to reduction in patronage of our restaurants. This may in turn have an adverse impact on our Group s profitability and financial performance. As at the Latest Practicable Date, our Group has not encountered any such incidents that had a material impact on our Group s operations and financial performance. Our business may be affected by macroeconomic factors and other factors beyond our control Macroeconomic factors, such as general economic conditions, market sentiment and consumer confidence, may affect our business. Various factors may influence these macroeconomic conditions, including without limitation, unemployment rates and real disposable income, inflation, recession, stock market performance, the interest rate environment, the availability of consumer credit, and regulatory (including fiscal and other governmental policies), social or political change, all of which are beyond our control. Any adverse macroeconomic conditions may lead customers to becoming more budget conscious which will result in a decrease in discretionary consumer spending. Further, unforeseeable circumstances and other factors such as changes in consumer preferences, labour disputes, severe weather conditions and natural disasters, may disrupt our operations and cause loss and damage to our restaurants. Terrorist attacks or other acts of violence, may also materially and adversely affect the global businesses and general consumer confidence. If any of these events occur, our business, operations and financial performance may be materially and adversely affected. Our business may be affected by the spread or an outbreak of any contagious or virulent disease in livestock or food scares Any outbreak of diseases in livestock, for instance, Avian Influenza or Nipah encephalitis virus, may lead to a disruption in supply and reduction in the consumption of the affected types of meat or food by the patrons. Where there is any outbreak of any contagious or virulent disease, for instance, severe acute respiratory syndrome (SARS), consumer sentiments may be adversely affected and the willingness of our patrons to dine at our restaurants will reduce. As a consequence, consumer confidence will drop leading to a decline in the patronage at our restaurants and thereby materially and adversely affecting our business. As at the Latest Practicable Date, our Group has not encountered any such incidents that had a material impact on our Group s operations and financial performance. 32

37 RISK FACTORS We are dependent on key management personnel for our continued success and growth The expertise of our key management personnel contributes to our success to-date. Our key management personnel, particularly, our CEO and Executive Chairman, Alan Goh and our Executive Director, Catherine Tan, each have extensive experience and knowledge of the F&B industry. Our continued success and growth will depend, to a large extent, on our ability to retain the services of our Executive Directors. The loss of services of any key management personnel without suitable and timely replacements may materially and adversely affect our business and financial performance. Further, in order to attract and/or retain any key management personnel, we may need to increase employee compensation levels substantially resulting in increase of costs and thus, affecting our financial performance. Our Group is exposed to the risk of manpower shortage in the F&B industry in Singapore Our industry requires large amount of labour, in particular skilled and experienced personnel, for our operations. There is a supply shortage of qualified individuals with requisite skills in the F&B industry in Singapore and thus, the competition for these personnel especially skilled master chefs is intense. Our continued success is dependent on our ability to attract, recruit, motivate and retain a sufficient number of suitable employees at competitive remuneration. Any material increase in employee turnover rates in any of our existing restaurants or failure to recruit suitable personnel and to retain our key employees may have an adverse impact on our operations and expansion plans. In addition, competition for qualified employees may require us to pay higher wages to attract and retain sufficient and capable employees. This could result in higher labour and related expenses and adversely affect our profitability. In addition, due to the nature of the industries we operate in, we are reliant on foreign workers to assist in the conduct of our business operations. As at 31 December 2015, we employ a total of 250 foreign workers. There is no guarantee that we will be able to continue attracting foreign workers at the current level of wages or that our existing foreign workers will continue to be employed by us. If there is an increase in the competition for foreign workers, in Singapore or globally, we may be required to increase our wages to attract or retain them. An increase in labour costs may in turn cause prices of our products and services to increase. If these costs cannot be passed on to our customers, our financial condition may be materially and adversely affected. In the event that there is a shortage of foreign or local workers to meet our operational requirements, we may not be able to fulfil our customers demands in a timely manner or our labour costs may increase. This is likely to lead to an adverse effect on our business, financial condition and prospects. We are subject to labour and immigration laws and policies that govern the employment of foreign workers Any changes in applicable laws, regulations or policies of Singapore or those of the foreigners countries of origin may result in labour shortages and/or increase our operating costs. In Singapore, the availability of foreign workers is regulated by MOM through policy instruments such as the imposition of levies and quotas. We are susceptible to any increase in such levies and any changes in the supply and/or quota of foreign workers that we are permitted to hire and thus, our labour costs may increase. Further, we may be restricted from hiring more foreign workers and could face difficulties in procuring alternative sources of foreign workers with the same or lower costs. If our labour costs increase substantially, our business, operations and financial performance may be materially and adversely affected. 33

38 RISK FACTORS In addition, we are required to comply with the conditions stipulated in work permits issued to our foreign workers, and may be liable if we contravene such conditions. If we contravene the conditions stipulated in the work permits issued to our foreign workers, such contravention may result in a statutory penalty, a curb in our foreign workers quota and/or a ban by the MOM on our applications and renewals of work permits for foreign workers. Such an event may result in the disruption of our operations and/or an increase in our labour costs, which may materially and adversely affect our business and financial performance. As at the Latest Practicable Date, our Group has not encountered any such events that had a material impact on our Group s operations and financial performance. Our business will be adversely affected by the revocation of Halal certification MUIS may issue a Halal certificate in relation to the operation of restaurants and regulate the holder of such certificate to ensure that the requirements to maintain the Halal certification issued to our restaurants are complied with in the operation of that restaurant. As at the Latest Practicable Date, save for one of our Bali Thai restaurants as disclosed below, our other restaurants operating under four F&B brands, Bali Thai, So Pho, Streats and Indobox in Singapore are certified Halal by MUIS. On 4 February 2016, we received a letter from MUIS on a breach of the MUIS Halal Certification Terms and Conditions in respect of the Bali Thai restaurant at IMM Building due to its kitchen staff being found to have consumed alcohol and the presence of empty beer cans in the kitchen storeroom. Pursuant to such breach, MUIS has suspended the Halal certificate for our Bali Thai restaurant at IMM Building for three months with effect from 2 May 2016 during which we are not allowed to display or use any Halal-related signages or make any Halal-related claims at the restaurant. Save as disclosed above, our Group has not received any other suspension by MUIS in the past. Please refer to the Government Regulations section of this Offer Document for further details. There can be no assurance that the Halal certification issued to our restaurants will not be revoked or will be renewed. In the event such Halal certification is revoked or not renewed for a substantial number of our restaurants, our customer base will be reduced thus resulting in an adverse effect on our business and financial performance. Our Group may not be able to secure new strategic locations to expand its business Our Group s growth is dependent on its network of restaurants at strategic locations which allows us to reach out to wide customer bases. Our business development team constantly seeks new strategic locations for the purposes of our business expansion. However, as the competition for strategic locations is very high in Singapore, there is no assurance that we will be able to continue to secure strategic locations for our new restaurants. Any failure to secure strategic locations for new restaurants may result in the slowdown of future business expansion and may present opportunities to our competitors to increase their market share, thereby affecting our Group s business and financial performance. In respect of new locations for restaurants secured by our Group, there is no assurance that we can generate the expected levels of revenue for such new restaurants. Notwithstanding so, our Group would have to incur the fixed costs and expenses for the setting up and operation of such restaurants, which will include rentals for the entire duration of the lease term for such premises and staff costs, regardless of the expected levels of revenue of each new restaurant. This will in turn negatively affect our Group s business and financial performance. 34

39 RISK FACTORS We face food contamination and tampering risks, and may be exposed to negative publicity, customer complaints and potential litigation Food contamination and tampering is a risk inherent to F&B operations. Our business mainly uses fresh ingredients purchased from various suppliers. Fresh ingredients are perishable and susceptible to contamination and tampering if not properly stored or packed. They may also be contaminated during the food preparation process as a result of lapses in food handling hygiene or cleanliness of our restaurants. Poor food handling and storage can also cause pest infestation. Such incidents have caused us to incur demerit points for some of our restaurants from time to time under the system administrated by NEA for regulating food establishments. Contaminated ingredients may result in customers falling ill and may give rise to bad publicity, and we may be ordered by the relevant authorities to suspend or cease all or part of our business operations, which will materially affect our business. As at the Latest Practicable Date, our Group has not encountered any such incidents that had a material impact on our Group s financial performance and operations. We may also be adversely affected by negative publicity or health concerns about certain food groups. Further, our restaurants may also be subject to customer complaints regarding food or service quality. Bad publicity, whether merited or not, may adversely affect our reputation and business. In the event of legal actions taken by customers, we would have to divert management resources and expend costs, thereby further affecting our business and financial performance. There is no assurance that material litigation will not be brought against us in future. Any loss, liability or expense incurred pursuant to such claims may adversely affect our financial position and results of operations. As at the Latest Practicable Date, our Group has not encountered any such events that had a material impact on our Group s operations and financial performance. Our business is subject to changes in consumer preferences and consumer spending The continued growth of our business depends on the popularity of our food, dining experience and our ability to innovate and adapt to the consumers preferences. There is no assurance that we will be able to anticipate and react quickly and effectively to changes in the consumer trends. If we fail to do so or if consumers are not receptive to our menus or brands, we may not be able to compete effectively. Our business is also subject to prevailing economic conditions in Singapore which may be aggravated by the uncertainties and financial crisis in the global market. Any adverse changes in Singapore s economic conditions may in turn affect consumers disposable income and consumer spending. We may be adversely affected by a shortage of ingredients and are susceptible to increases in the costs of ingredients We purchase key ingredients such as seafood, meats and vegetables on a daily basis from our approved suppliers to ensure the freshness of these ingredients. As such, we are highly dependent on a consistent and sufficient supply of ingredients that meet our quality standards. Please refer to the Major Suppliers section of this Offer Document for more details. If our suppliers are unable to supply us with sufficient key ingredients which meet our stringent quality standards, this may result in disruptions to our business and operations which may in turn materially and adversely affect our business and financial performance. 35

40 RISK FACTORS Our business may be negatively affected in the event of an infringement of our intellectual property rights We believe that our trademarks have significant value and are an integral part of our brand-building efforts and the marketing of our restaurants concept. Although we have registered our trademarks, we cannot ensure that our trademarks will not be infringed upon. Any unauthorised use of our trademarks may harm our Group s image and seriously impact our business. If any third party alleges proprietary rights over our trademarks or if we deem necessary to take action to stop infringement of our trademarks, we may be involved in legal proceedings brought against us or by us against a third party. These legal proceedings may result in monetary losses or may prevent us from further using such brands and trademarks. In these circumstances, there will be a negative impact on our Group s financial performance. Our Group may be affected by pilferage, theft and vandalism A substantial portion of our Group s sales is on a cash basis and our employees handle the cash sales on a daily basis. Lapses in internal controls may occur, resulting in pilferage. There is also a risk of misappropriation of cash in the event of any lapse of cash management or control measures by our Group. In the event of a material pilferage, theft and vandalism, there will be a negative impact on our business and financial performance. As at the Latest Practicable Date, our Group has not encountered any such events that had a material impact on our Group s operations and financial performance. Our insurance coverage may not be adequate We maintain insurance coverage for our material assets and operations, including all risks insurance for our properties and insurance for, inter alia, public liability risks. However, we do not or are not able to obtain insurance in respect of losses arising from certain operating risks such as acts of terrorism. Please refer to the Insurance section of this Offer Document for further details of our insurance coverage. Our Group faces uncertainties associated with our future plans Our Group intends to expand in accordance with our future plans as out in the Business Strategies and Future Plans section of this Offer Document. Our Group s expansion plans involve numerous risks, including but not limited to, our ability to secure good locations to operate our new restaurants, obtaining the relevant licences and/or permits required to operate in our overseas locations, the financial costs of setting up new restaurants and incurring working capital requirements. We cannot assure that our future plans will achieve sales that commensurate with our investment costs, or that we will be successful in securing more customers for our new restaurants. In the event we do not achieve a sufficient level of revenue, we will not be able to recover our investment and our future financial performance would be adversely affected. We are subject to the laws and regulations, economic and political conditions in the PRC Our Group operates restaurants in PRC and accordingly, we are subject to the laws and regulations, as well as the risks associated with business operations in PRC. Our business, operations, financial condition and prospects may be materially and adversely affected by a variety of factors in the PRC, including but not limited to: (a) inflation, interest rates and general conditions; 36

41 RISK FACTORS (b) (c) (d) (e) (f) (g) (h) civil unrest, military conflict, terrorism, change in political climate and general security concerns; changes in legal and regulatory conditions; import and export criteria; changes in duties payable and taxation rates; natural disasters; imposition of restrictions on foreign currency conversion or the transfer of funds; or expropriation or nationalisation of private enterprise or confiscation of private property or assets. In the event of an adverse development of any of the abovementioned factors and we are unable to adapt our business strategies or operations accordingly, our business, operations, financial condition, and prospects may be materially and adversely affected. RISKS RELATING TO OWNERSHIP OF OUR SHARES There has been no prior market for our Shares and this offering may not result in an active or liquid market Prior to the Placement, there has been no public market for our Shares. Although we have made an application to the SGX-ST to list our Shares on the Catalist, there is no assurance that an active trading market for our Shares will develop, or if it develops, be sustained. Active or liquid markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors. Liquidity in the market for a particular security is often a function of the volume of the underlying shares that are publicly held by unrelated parties. 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, difference between our actual financial or operating results and those expected by investors and analysts, the general market conditions and broad market fluctuations. Investments in securities quoted on the Catalist involve a higher degree of risk and can be less liquid than shares quoted on the Mainboard of the SGX-ST Our application is for our Shares to be admitted to the Catalist, a listing platform primarily designed for fast growing and emerging or smaller companies. An investment in shares quoted on the Catalist may carry a higher risk than an investment in shares quoted on the Mainboard of the SGX-ST. Pursuant to the Listing Manual, our Company will be required, inter alia, to retain a sponsor at all times after our admission to the Catalist. In particular, unless approved by the SGX-ST, the Sponsor and Issue Manager must act as our continuing sponsor for at least three years after our admission to the Catalist. 37

42 RISK FACTORS We may require additional funding for our future growth The net proceeds from the Placement may not be sufficient to fully implement all our business strategies as set out in the Business Strategies and Future Plans section of this Offer Document. We may also find other opportunities to grow which cannot be predicted at this juncture. Under such circumstances, we may require additional funding either by way of secondary issue of securities after the Placement or by way of borrowings to raise the required capital to develop these growth opportunities. If new Shares placed to new and/or existing Shareholders are issued after the Placement, they may be priced at a discount to the then prevailing market price of our Shares trading on the Catalist and existing Shareholders equity interest may also be diluted. If we fail to utilise the new equity to generate a commensurate increase in earnings, our EPS will be diluted, and this could lead to a decline in our share price. Any additional debt financing may, apart from increasing interest expense and gearing, contain restrictive covenants with respect to dividends, future fund raising exercises and other financial and operational matters. If we are unable to procure the additional funding that may be required, our growth or financial performance will be adversely affected. Future sales of Shares could adversely affect the share price Except as described in this Offer Document, there are no restrictions on the ability of our Shareholders to sell their Shares. Any future sales or availability of a significant amount of Shares may exert 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 materially affect the market price of our Shares. These factors may also affect our ability to attract subscription of additional equity securities in the future. Investors in our Shares will face immediate and substantial dilution in NTA per Share and may experience future dilution Our Placement Price of cents per Share is higher than our NTA per Share of 5.20 cents based on the unaudited pro forma NTA and the post-placement issued and paid-up share capital adjusted for the net proceeds from the issue of New Shares. If we were liquidated immediately following the Placement, each investor subscribing for the New Shares would receive less than the price he paid for the Shares. Please refer to the Dilution section of this Offer Document for further information. We may not be able to pay dividends in the future Our ability to declare dividends to our Shareholders in the future is dependent on, inter alia, our future financial performance, distributable reserves and cash flows. This may be affected by numerous factors including but not limited to general economic conditions, market sentiment, market competition and the success of our future plans and business strategies, many of which are beyond our control. As such, there is no assurance that we will be able to pay dividends to our Shareholders. 38

43 ISSUE STATISTICS PLACEMENT PRICE cents NTA NTA per Share based on the unaudited pro forma combined financial information of our Group as at 31 December 2015: (a) (b) 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 195,721,008 Shares 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 231,521,008 Shares 2.95 cents 5.20 cents Premium of Placement Price over the pro forma NTA per Share of our Group as at 31 December 2015: (a) (b) 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 195,721,008 Shares 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 231,521,008 Shares 611.9% 303.8% EPS Historical net EPS of our Group for FY2015 based on our Company s pre- Placement share capital of 195,721,008 Shares Historical net EPS of our Group for FY2015 based on our Company s pre- Placement share capital of 195,721,008 Shares, assuming that the Service Agreements had been in place from the beginning of FY cents 1.78 cents PER Historical PER based on the historical net EPS of our Group for FY2015 Historical PER based on the historical net EPS of our Group for FY2015, assuming that the Service Agreements had been in place from the beginning of FY times 11.8 times Net Cash Flow from Operations (1) Historical net cash flow from operations per Share for FY2015 based on our Company s pre-placement share capital of 195,721,008 Shares Historical net cash flow from operations per Share for FY2015 based on our Company s pre-placement share capital of 195,721,008 Shares, assuming that the Service Agreements had been in place from the beginning of FY cents 3.03 cents 39

44 ISSUE STATISTICS Price to Net Cash Flow from Operations Ratio Placement Price to historical net cash flow from operations per Share for FY2015 Placement Price to historical net cash flow from operations per Share for FY2015, assuming that the Service Agreements had been in place from the beginning of FY times 6.9 times Market Capitalisation Our market capitalisation based on the Placement Price and our Company s post-placement share capital of 231,521,008 Shares S$48.6 million Note: (1) Net cash flow from operations is defined as net cash generated from operating activities as referred to in the Audited Combined Financial Statements set out in Appendix A of this Offer Document. 40

45 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 unaudited pro forma NTA per Share as at 31 December 2015 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 195,721,008 Shares, was 2.95 cents. Taking into account the 35,800,000 New Shares at the Placement Price in connection with the Placement, 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 231,521,008 Shares, would be 5.20 cents. This represents an immediate increase in NTA per Share of 2.25 cents to our existing Shareholders and an immediate dilution in NTA per Share of cents to our New Investors. The following table illustrates such dilution on a per Share basis as at 31 December 2015: Cents Placement Price Unaudited pro forma NTA per Share as at 31 December 2015 based on our Company s Pre-Placement share capital and before adjusting for the Placement 2.95 Increase in NTA per Share attributable to existing Shareholders 2.25 NTA per Share after the Placement (1) 5.20 Dilution in NTA per Share to New Investors Dilution in NTA per Share to New Investors as a percentage of Placement Price 75.2% 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 after Placement may be higher or lower than the above computed NTA. The following table shows the average effective cost per Share paid by our existing Shareholders for Shares acquired by them 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: Existing Shareholders Number of Shares Acquired Total Consideration (S$) Average Effective Cost per Share (cents) Alan Goh (1) 97,860, , Catherine Tan (1) 97,860, , New Investors 35,800,000 7,518, Note: (1) Catherine Tan is the spouse of Alan Goh. Save as disclosed above and in the Restructuring Exercise and Share Capital sections of this Offer Document, none of our Directors, Substantial Shareholders or their Associates has acquired any Shares during the period of three years prior to the date of lodgement of this Offer Document. 41

46 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 2016: (a) (b) based on the unaudited management accounts of our Group as at 31 May 2016; and as adjusted for the net proceeds from the issue of the New Shares. You should read this in conjunction with the Audited Combined Financial Statements and the Management s Discussion and Analysis of Results of Operations and Financial Position section of this Offer Document. (S$ 000) As at 31 May 2016 As adjusted for the net proceeds from the issue of the New Shares Cash and cash equivalents 10,739 17,009 Indebtedness Current secured and guaranteed secured and non-guaranteed unsecured and guaranteed unsecured and non-guaranteed Non-current secured and guaranteed secured and non-guaranteed unsecured and guaranteed unsecured and non-guaranteed Total indebtedness Total shareholders equity 16,863 23,133 Total capitalisation and indebtedness 16,948 23,218 There were no material changes in our total capitalisation and indebtedness from 1 January 2016 to the Latest Practicable Date, save for the scheduled monthly repayments of our borrowings and changes in our retained earnings arising from the day-to-day operations in the ordinary course of business. 42

47 CAPITALISATION AND INDEBTEDNESS Borrowings Details of our borrowings and indebtedness as at 31 December 2015 are as follows: Financial institution United Overseas Bank Limited Type of facilities Commercial Property Loan Amount of facilities granted Amount owing (S$ 000) (S$ 000) (S$ 000) Amount unutilised Securities 1, (a) Mortgage over 1 Sims Lane #05-05 Singapore (b) Joint and several personal guarantees by our Executive Directors Total 1, As at 31 December 2015, we have total indebtedness of approximately S$169,000 relating to a bank term loan. The term loan is repayable over 60 monthly instalments commencing 7 November For FY2015, the bank term loan bears interest of 2.5% per annum over the bank s three months SWAP Offer Rate, and the effective interest rate of the term loan is 3.38% per annum. The term loan is secured by a legal mortgage and pledge over the Group s freehold property and is jointly and severally guaranteed by our Executive Directors. 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 in the Liquidity and Capital Resources section of this Offer Document, our Group does not have any material unused sources of liquidity. Please refer to the Interested Person Transactions section of this Offer Document for more details of the guarantees provided by our Executive Directors and Controlling Shareholders. 43

48 DIVIDEND POLICY Our Company was incorporated on 31 March 2016 and has not distributed any cash dividend on our Shares since incorporation. Our Group has declared and paid dividends of S$2.0 million and S$2.0 million in FY2013 and FY2014 respectively. On 30 June 2016, Katrina Singapore declared final tax exempt dividends of an aggregate of S$10.0 million to the then shareholders, Alan Goh and Catherine Tan. The sum of S$7.0 million out of S$10.0 million shall be paid within one month from the date of commencement of trading of our Shares on Catalist and the remaining balance being S$3.0 million will be paid as and when our Group has available funds provided such payment shall be subject to the approval of our Audit Committee and Board from time to time taking into consideration the liquidity and financial commitments of our Group as at the time of the proposed payment. Barring unforeseen circumstances, the remaining balance of S$3.0 million is intended to be settled by 31 May 2017, subject to the liquidity and cash flows of our Group at that time. Save as disclosed above, no dividends have been declared or paid by our Company or subsidiaries during the periods under review and the period from 1 January 2016 to the Latest Practicable Date. We currently do not have a fixed dividend policy. The form, frequency and amount of future dividends on our Shares will depend on our earnings, financial position, results of operations, cash flow, capital needs, the terms of the borrowing arrangements (if any), plans for expansion and other factors which our Directors may deem appropriate ( Dividend Factors ). Subject to our Constitution and in accordance with the Companies Act, our Company may declare an annual dividend subject to the approval of our Shareholders in a general meeting but no dividend or distribution shall be declared in excess of the amount recommended by our Directors. Subject to our Constitution and in accordance with the Companies Act, our Directors may also from time to time declare an interim dividend without the approval of our Shareholders. Our Company may pay all dividends out of our profits. For information relating to taxes payable on dividends, please refer to the Taxation section in Appendix F of this Offer Document. All dividends are paid pro-rata among the Shareholders in proportion to the amount paid up on each Shareholder s Shares, unless the rights attaching to an issue of any Share provides otherwise. Notwithstanding the foregoing, the payment by our Company to CDP of any dividend payable to a Shareholder whose name is entered in the Depository Register shall, to the extent of payment made to CDP, discharge our Company from any liability to that Shareholder in respect of that payment. Subject to the above, our Directors intend to recommend and distribute dividends of not less than 60.0% of our net profits attributable to our Shareholders in respect of FY2016 ( Proposed Dividend ). However, investors should note that all foregoing statements, including the statements on the Proposed Dividend, are merely statements of our present intention and do not constitute a legally binding obligation on the part of our Company in respect of the payment of any dividends, which may be subject to modification (including any reduction or non-declaration thereof) in our Directors sole and absolute discretion. The amount of dividends declared and paid by us should not be taken as an indication of the dividends payable in the future. No inference shall or can be made from any of the foregoing statements as to our actual future profitability or ability to pay dividends in any of the periods discussed. There can be no assurance that dividends will be paid in the future or of the amount or timing of any dividends that will be paid in the future. The form, frequency and amount of future dividends will depend on the Dividend Factors. 44

49 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 set out in Appendix A of this Offer Document. Combined Statements of Comprehensive Income (1) Audited (S$ 000) FY2013 FY2014 FY2015 Revenue 40,700 45,410 52,443 Cost of sales (33,223) (36,933) (43,612) Gross profit 7,477 8,477 8,831 Other income Selling and distribution costs (1,273) (1,086) (1,391) Administrative expenses (2,258) (2,359) (2,878) Interest expense (43) (11) (9) Other expenses (1,296) (16) Profit before tax 4,338 4,169 5,116 Income tax expense (637) (877) (854) Profit for the year, representing profit attributable to owners of the Company 3,701 3,292 4,262 Other comprehensive income: Foreign currency translation 53 (57) 6 Total comprehensive income for the year, representing total comprehensive income to the owners of the Company 3,754 3,235 4,268 EPS (cents) (2)(4) EPS (as adjusted for the Placement) (cents) (3)(4) 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) EPS is computed based on the net profit attributable to owners of the Company divided by the pre-placement share capital of 195,721,008 Shares. (3) EPS (as adjusted for the Placement) is computed based on the net profit attributable to owners of the Company divided by the post-placement share capital of 231,521,008 Shares. (4) Had the Service Agreements been in place with effect from 1 January 2015, the PAT for FY2015 would have been approximately S$3.5 million, and the EPS and EPS (as adjusted for the Placement) would be 1.78 cents and 1.51 cents, respectively. 45

50 SUMMARY OF OUR FINANCIAL INFORMATION Combined Statements of Financial Position (1) As at 31 December 2014 Audited As at 31 December 2015 Unaudited Pro Forma As at 31 December 2015 (S$ 000) Assets Non-current assets Property, plant and equipment 6,789 7,347 7,347 Intangible assets Refundable deposits 2,885 3,511 3,511 Deferred tax assets 5 5 Total non-current assets 9,676 10,865 10,865 Current assets Trade receivables Other receivables Refundable deposits 1,415 1,326 1,326 Prepayments Amount due from director 162 Fixed deposits pledged 265 Cash and cash equivalents 7,124 10,290 10,290 (2) Total current assets 9,564 12,618 12,618 Total assets 19,240 23,483 23,483 Equity and liabilities Current liabilities Trade and other payables 3,808 4,257 4,257 Other liabilities Provision Amount due to director 1,000 Dividends payable 10,000 Loans and borrowings Provision for taxation 1,003 1,019 1,019 Total current liabilities 6,738 6,741 16,741 Net current assets/(liabilities) 2,826 5,877 (4,123) Non-current liabilities Loans and borrowings 169 Other payables Provision Deferred tax liabilities 10 Total non-current liabilities Total liabilities 7,733 7,708 17,708 Net assets 11,507 15,775 5,775 46

51 SUMMARY OF OUR FINANCIAL INFORMATION As at 31 December 2014 Audited As at 31 December 2015 Unaudited Pro Forma As at 31 December 2015 (S$ 000) Equity attributable to the owners of the Company Share capital 1,771 1,771 1,771 Other reserves (6) Retained earnings 9,742 14,004 4,004 Total equity 11,507 15,775 5,775 Total equity and liabilities 19,240 23,483 23,483 NTA per Share (cents) (3) Notes: (1) Our combined statements of financial position as at 31 December 2014 and 31 December 2015 have been prepared on the basis that our Group has been in existence on the respective dates. (2) The amount of S$10,290,000 has not taken into account the declaration of an aggregate of S$10.0 million of final dividends. (3) The NTA per Share as at 31 December 2014 and 31 December 2015 has been computed based on our pre-placement share capital of 195,721,008 Shares. Basis of preparation of the Unaudited Pro Forma Combined Financial Information as included in Appendix B of this Offer Document The Unaudited Pro Forma Combined Financial Information of the Group has been prepared for illustrative purposes only, and is based on the assumption and after making certain adjustments to illustrate the impact of the declaration of an aggregate of S$10.0 million of final tax exempt dividends in respect of FY2015 by our subsidiary on the Group s combined statement of financial position as at 31 December The Unaudited Pro Forma Combined Financial Information has been compiled from the combined statement of financial position as at 31 December 2015 as extracted by management from the Audited Combined Financial Statements which have been included in Appendix A of this Offer Document. No unaudited pro forma combined statement of comprehensive income and combined statement of cash flows have been presented as the pro forma adjustments arising from the declaration of final tax exempt dividends does not impact the statement of comprehensive income and statement of cash flow. 47

52 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. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from those projected in the forwardlooking 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 Risk Factors section 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 Sponsor, Issue Manager, and 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 Cautionary Note Regarding Forward-Looking Statements section of this Offer Document. Except as otherwise indicated, the following discussion is based on our Audited Combined Financial Statements which have been prepared in accordance with the Singapore Financial Reporting Standards. OVERVIEW As at the Latest Practicable Date, we operate a chain of 34 restaurants; 32 in Singapore and two in the PRC under our own nine proprietary brands. We provide catering services from one of our restaurants, Bali Thai at West Mall. In addition, we have established our central kitchen facility within two of our restaurants, namely So Pho at Serangoon NEX and Streats at One KM, that prepares and distributes sauces and chilli pastes to our restaurants for consistency in our food quality. In December 2015, we launched our customised online ordering and delivery services for three eatery chains operating under the brands, Bali Thai, So Pho and Streats in Singapore to further reach out to our customers. Please refer to the Business Overview section of this Offer Document for further details. Revenue Our revenue is derived from the sale of F&B items through our chain of restaurants and is recognised upon the delivery of the food items to our customers. Revenue is denominated in S$ or RMB in the countries which we operate, with payments mainly on cash terms (including credit card and electronic payments) on completion of the sale of the F&B items. Our revenue is primarily affected by, inter alia, the following factors: (a) (b) (c) the number of restaurants we operate and our ability to source and secure strategic locations for our restaurants; our ability to compete successfully with our competitors in terms of food varieties, quality of food, services, pricing as well as brand image; negative publicity (genuine or otherwise) concerning quality and hygiene of food served at our restaurants or other operational issues relating to our restaurants; 48

53 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION (d) (e) (f) changes in macroeconomic factors in the countries which we operate, which may affect the sentiments of consumers, consumers disposable income and their level of discretionary spending; our ability to continually keep up with changing consumers tastes and preferences; and outbreak of any contagious or virulent disease in livestock or food scares. Please refer to the Risk Factors and Trend Information sections of this Offer Document for further information on the above factors and other factors that may affect our revenue. A breakdown of our revenue by geographical segments for the periods under review is as follows: FY2013 FY2014 FY2015 (S$ 000) % (S$ 000) % (S$ 000) % Singapore 38, , , PRC 2, , , Total 40, , , Cost of sales Our cost of sales accounted for 81.6%, 81.3% and 83.2% of revenue in FY2013, FY2014 and FY2015, respectively. Cost of sales as a proportion of revenue remained relatively consistent for the periods under review. The key components of cost of sales are salaries and employee benefits, cost of beverages and food ingredients, rental and other expenses. Salaries and employee benefits cover CPF contributions or national pension schemes as defined by the laws of the countries in which we have operations, allowances, bonuses, foreign workers levy, staff training, staff incentives, staff welfare and other labour-related expenses have been consistent for the periods under review. It accounted for 33.0%, 33.4% and 35.7% of our cost of sales for FY2013, FY2014 and FY2015, respectively. Another key contributor to our cost of sales is the cost of beverages and food ingredients required for the preparation of the food items sold at our restaurants (such as soup base, noodles, vegetables, meats, seafood, sauces, liquor and beverages). Cost of beverages and food ingredients accounted for 25.5%, 25.7% and 24.5% of our cost of sales for FY2013, FY2014 and FY2015, respectively. Rental expenses for our restaurants accounted for 27.4%, 28.5% and 27.3% of our cost of sales for FY2013, FY2014 and FY2015, respectively. Other expenses are primarily depreciation of furniture and fittings, renovation, kitchen and restaurant equipment, utilities, and other operating expenses. These costs accounted for 14.1%, 12.4% and 12.5% of our cost of sales for FY2013, FY2014 and FY2015, respectively. 49

54 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Our cost of sales may be affected by, inter alia, the following factors: (a) (b) (c) (d) (e) (f) (g) our ability to obtain favourable pricing from our suppliers and availability of food ingredients; our ability to control and reduce food wastage; an increase in prices of food ingredients generally (which may in turn be affected by outbreak of diseases in livestock, food scares, adverse changes in climate, natural disasters, oil prices or other circumstances that may affect global food supply and demand); our ability to retain and recruit employees at competitive remuneration; changes in government policies and regulations relating to foreign workers such as foreign workers levy and the permitted dependency ratio of local to foreign workers in our industry; availability and cost of recruiting contract, temporary and/or part-time workers; and our ability to negotiate for favourable rental terms for our restaurants and the central kitchen facility. Please refer to the Risk Factors section of this Offer Document for other factors that may affect our cost of sales. Please also refer to the Properties and Fixed Assets section of this Offer Document for details of our rental terms. Other income Other income comprises mainly (i) government grants and incentives relating to, inter alia, Capability Development Grant, Special Employment Credit and Wage Credit Scheme, staff training grants from the Workforce Development Agency, grants from SPRING Singapore; and (ii) one-off proceeds of S$45,000 from transfer of Greyhound Café trademark. Please refer to the Material Contracts section of this Offer Document. Selling and distribution costs Selling and distribution costs comprise (i) marketing, advertising and promotion, (ii) entertainment, (iii) sales discount allowed, (iv) credit cards and electronic payments charges; and (v) transportation and upkeep of motor vehicles. Selling and distribution costs accounted for 35.6%, 22.9% and 32.4% of our total operating expenses for FY2013, FY2014 and FY2015, respectively. Administrative expenses Administrative expenses comprise (i) salaries (including CPF contributions and bonuses) of our administrative staff, (ii) directors remuneration, (iii) depreciation of our corporate office fixed assets, (iv) office and general maintenance expenses, (v) professional fees; and (vi) other expenses. Our administrative expenses accounted for 63.2%, 49.6% and 67.0% of our total operating expenses for FY2013, FY2014, and FY2015, respectively. 50

55 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Interest expense Interest expense is related to a term loan to finance the purchase of our freehold property at 1 Sims Lane #05-05 Singapore , which is our corporate office, and is secured by a legal mortgage and pledge over the freehold property and is jointly and severally guaranteed by our CEO and Executive Chairman, Alan Goh and our Executive Director, Catherine Tan. Our interest expense accounted for 1.2%, 0.2% and 0.2% of our total operating expenses for FY2013, FY2014, and FY2015, respectively. Other expenses Other expense is a one-off bad debt due from Shanghai Katrina Restaurants Co., Ltd. written off in FY2014 as a result of losses incurred by the subsidiary which was voluntarily liquidated and de-registered by its shareholder as the restaurant in Shanghai was not doing well and was incurring loss. The subsidiary was approved by Shanghai governmental authority to be closed in February 2015 and was de-registered in May Our other expenses accounted for 0%, 27.3% and 0.4% of our total operating expenses for FY2013, FY2014 and FY2015, respectively. Please refer to the Interested Person Transactions section of this Offer Document for further information. Income tax expense Our Company and our subsidiaries are subject to income tax at the applicable tax rates of 17.0% in Singapore and 25.0% in the PRC. Our effective tax rates were approximately 14.7%, 21.0% and 16.7% in FY2013, FY2014 and FY2015, respectively. Effective tax rate in FY2014 was higher than the statutory tax rates mainly due to non-deductible expenses. Effective tax rates in FY2013 and FY2015 were lower than the statutory tax rate mainly due to certain tax exemptions in the respective tax years. REVIEW OF PAST OPERATING PERFORMANCE FY2014 vs FY2013 Revenue Revenue increased by 11.5% or S$4.7 million from S$40.7 million in FY2013 to S$45.4 million in FY2014. The increase in revenue was mainly attributed to the net addition of four restaurants between 31 December 2013 and 31 December 2014, bringing the total number of restaurants to 31. In FY2014, we opened five new restaurants and closed one restaurant in Singapore. We also received revenue from the full year sales registered by our two overseas restaurants opened in March 2013 and May 2013, respectively. Cost of sales Cost of sales increased by 11.1% or S$3.7 million from S$33.2 million in FY2013 to S$36.9 million in FY2014. The increase in cost of sales was in line with the increase in revenue. 51

56 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Gross profit Gross profit increased by 13.3% or S$1.0 million from S$7.5 million in FY2013 to S$8.5 million in FY2014. The gross profit margin remained relatively consistent at 18.7% of revenue in FY2014 as compared to 18.4% in FY2013. Other income Other income comprises mainly government grants and incentives including Capability Development Grant, Special Employment Credit and Wage Credit Scheme. Other income remained the same at S$0.4 million for FY2013 and FY2014. Selling and distribution costs Selling and distribution cost decreased by 15.4% or S$0.2 million from S$1.3 million in FY2013 to S$1.1 million in FY2014. The decrease was mainly due to a drop in our sales discount allowed by S$0.1 million as we ceased a promotion campaign in FY2014 and the absence of a one-off branding expense incurred and recognised in FY2013. Administrative expenses Administrative expenses increased by 4.3% or S$0.1 million from S$2.3 million in FY2013 to S$2.4 million in FY2014 mainly due to the professional fees incurred for consultancy services to improve our marketing system and staff training. Other expenses Other expenses of S$1.3 million was a one-off bad debts from Shanghai Katrina Restaurants Co., Ltd. as a result of losses incurred by the subsidiary which was voluntarily liquidated and de-registered by its shareholder as the restaurant in Shanghai was not doing well and was incurring loss. The subsidiary was approved by Shanghai governmental authority to be closed in February 2015 and was de-registered in May Please refer to the Interested Person Transactions section of this Offer Document for further information. Income tax expense Income tax expense increased by 50.0% or S$0.3 million from S$0.6 million in FY2013 to S$0.9 million in FY2014 due to higher profit and non-deductible expenses relating to the aforesaid one-off bad debt due from a subsidiary written off in FY2014. Net profit As a result of the above, our net profit attributable to shareholders declined by 10.8% or S$0.4 million from S$3.7 million in FY2013 to S$3.3 million in FY

57 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION FY2014 vs FY2015 Revenue Revenue increased by 15.4% or S$7.0 million from S$45.4 million in FY2014 to S$52.4 million in FY2015. The increase in revenue was mainly attributed to the net addition of one restaurant between 31 December 2014 and 31 December 2015, bringing the total number of restaurants to 32. In FY2015, we opened five new restaurants and closed four restaurants. We also received revenue from the full year sales registered by the five restaurants opened in FY2014 (one restaurant in January 2014, two restaurants in October 2014 and two restaurants in November 2014). Cost of sales Cost of sales increased by 18.2% or S$6.7 million from S$36.9 million in FY2014 to S$43.6 million in FY2015. The increase in cost of sales was in line with the increase in revenue and increase in operations and restaurants staff costs. Gross profit Gross profit increased by 3.5% or S$0.3 million from S$8.5 million in FY2014 to S$8.8 million in FY2015. Gross profit margin declined slightly from 18.7% in FY2014 to 16.8% in FY2015 primarily due to the increase in the operations and restaurants staff costs. Other income Other income comprises mainly government grants and incentives including Special Employment Credit and Wage Credit Scheme. Other income increased by 50.0% or S$0.2 million from S$0.4 million in FY2014 to S$0.6 million in FY2015 mainly due to increase in government grants from the Wage Credit Scheme, Temporary Employment Credit and Special Employment Credit. Selling and distribution costs Selling and distribution cost increased by 27.3% or S$0.3 million from S$1.1 million in FY2014 to S$1.4 million in FY2015. The increase was mainly due to an increase in sales discount allowed arising from new restaurants opened in FY2015, namely So Pho cafe at Novena Square, So Pho cafe at Parkway Parade, Streats Cafe at Serangoon NEX and Streats Cafe at Resorts World Sentosa, which was in line with the increase in revenue, as well as one-for-one beer and wine promotions at our restaurants at Clarke Quay and Plaza Singapura. There was also an increase in credit card and electronic payments charges as a result of the increase in revenue in FY2015. Administrative expenses Administrative expenses increased by 20.8% or S$0.5 million from S$2.4 million in FY2014 to S$2.9 million in FY2015. The increase was mainly due to an increase in administrative staff costs and professional fees incurred in connection with the initial public offering. 53

58 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Other expenses Other expenses decreased by 100.0% or S$1.3 million from S$1.3 million in FY2014 to nil in FY2015. The decrease was due to a one-off bad debts written-off due from Shanghai Katrina Restaurants Co., Ltd. as a result of losses incurred by the subsidiary which was voluntarily liquidated and de-registered by its shareholder as the restaurant in Shanghai was not doing well and was incurring loss. The subsidiary was approved by Shanghai governmental authority to be closed in February 2015 and was de-registered in May Please refer to the Interested Person Transactions section of this Offer Document for further information. Income tax expense Income tax expense remained consistent at S$0.9 million for FY2014 and FY2015. Net profit As a result of the above, our net profit attributable to shareholders increased by 30.3% or S$1.0 million from S$3.3 million in FY2014 to S$4.3 million in FY2015. REVIEW OF PAST FINANCIAL POSITION A review of the financial position of our Group as at 31 December 2014 and 31 December 2015 are set out below: Non-current assets Non-current assets are property, plant and equipment, intangible assets, refundable deposits and deferred taxation, which amounted to S$9.7 million and S$10.9 million and accounted for 50.5% and 46.4% of our total assets as at 31 December 2014 and 31 December 2015, respectively. Property, plant and equipment, comprising computer, freehold property, furniture and fittings, motor vehicle, office, kitchen and restaurant equipment and renovation amounted to S$6.8 million and S$7.4 million and accounted for 35.4% and 31.5% of our total assets as at 31 December 2014 and 31 December 2015, respectively. The increase in property, plant and equipment is due mainly to renovation of premises, additions to office, kitchen and restaurant equipment and furniture and fittings for new restaurants for So Pho and Streats. The non-current portion of refundable deposits, amounting to S$2.9 million and S$3.5 million which accounted for 15.1% and 14.9% of our total assets as at 31 December 2014 and 31 December 2015, respectively. The non-current portion of refundable deposits is related to rental deposits with the landlords for the leases of our restaurants which are due more than one year and recoverable upon the expiry of the lease tenure. Current assets Current assets comprise trade receivables, other receivables, refundable deposits, prepayments, amounts due from director, fixed deposits pledged and cash and cash equivalents, which amounted to S$9.6 million and S$12.6 million, accounting for 49.5% and 53.6% of our total assets as at 31 December 2014 and 31 December 2015, respectively. 54

59 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Trade receivables amounted to S$0.3 million and S$0.2 million and accounted for 1.6% and 0.9% of our total assets as at 31 December 2014 and 31 December 2015, respectively. Trade receivables are related to amounts receivable from credit card companies for our customers payments via credit cards or direct debit from bank accounts. Other receivables amounted to S$0.2 million and S$0.4 million and accounted for 1.0% and 1.7% of our total assets as at 31 December 2014 and 31 December 2015, respectively. Other receivables are mainly related to grants receivables from Wage Credit Scheme and Special Employment Credit. The current portion of refundable deposits, amounting to S$1.4 million and S$1.3 million which accounted for 7.3% and 5.5% of our total assets as at 31 December 2014 and 31 December 2015, respectively. The current portion of refundable deposits mainly relates to rental deposits placed with the landlords for the leases of our restaurants which are due within one year and recoverable upon the expiry of the lease tenure. Prepayments amounted to S$0.1 million and S$0.4 million and accounted for 0.5% and 1.7% of our total assets as at 31 December 2014 and 31 December 2015, respectively. Prepayments are primarily advance payments for rental space for our restaurants, renovations and purchase of kitchen and restaurant equipment for two of our new restaurants, Bali Thai Waterway Point and So Pho Waterway Point, which are capitalised upon completion of the renovations. Amount due from director amounted to S$0.1 million and accounted for 0.5% of our total assets as at 31 December This balance relates to advances provided by our Group to a director. There was no amount due from director as at 31 December Fixed deposits pledged amounted to S$0.3 million and accounted for 1.6% of our total assets as at 31 December There were no fixed deposits pledged as at 31 December Cash and cash equivalents, comprising cash and bank balances, amounted to S$7.1 million and S$10.3 million, accounting for 37.0% and 43.8% of our total assets as at 31 December 2014 and 31 December 2015, respectively. Current liabilities Current liabilities comprise trade and other payables, other liabilities, provision, amount due to director, loans and borrowings and provision for taxation, amounting to S$6.7 million and S$6.7 million and accounted for 87.0% and 87.0% of our total liabilities as at 31 December 2014 and 31 December 2015, respectively. Trade and other payables, comprise staff costs payables, trade payables, GST payable, other payables and deferred rental payables, amounted to S$3.8 million and S$4.2 million and accounted for 49.4% and 54.5% of our total liabilities as at 31 December 2014 and 31 December 2015, respectively. The increase in trade and other payables were mainly due to increase in staff costs payables and trade payables. Staff costs payables and trade payables are the two main components of trade and other payables, which amounted to S$2.5 million and S$3.1 million and accounted for 65.8% and 73.8% of trade and other payables as at 31 December 2014 and 31 December 2015, respectively. The 55

60 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION increase in both staff costs payables and trade payables were primarily due to new restaurants for So Pho and Streats opened in FY2015, which resulted in an increase in employee head counts and the increase is in line with the increase in revenue. Other liabilities, comprising accrued operating expenses which include accrued bonus, advances received from customers and accrued unconsumed leave, amounted to S$0.5 million and S$1.0 million and accounted for 6.5% and 13.0% of our total liabilities as at 31 December 2014 and 31 December 2015, respectively. The current portion of provision comprises provision for restoration costs, which relates to the estimated costs of reinstating our leased premises to their original state upon lease expiry, amounted to S$0.2 million and S$0.3 million, which accounted for 2.6% and 3.9% of our total liabilities as at 31 December 2014 and 31 December 2015, respectively. Amount due to director amounted to S$1.0 million and accounted for 13.0% of our total liabilities as at 31 December Amount due to director is related to dividend declared. There was no amount due to director as at 31 December The current portion of loans and borrowings to finance the acquisition of our corporate office at 1 Sims Lane #05-05 Singapore amounted to S$0.2 million as at 31 December 2014 and 31 December 2015 and accounted for 2.6% of our total liabilities as at 31 December 2014 and 31 December 2015, respectively. Please refer to the Capitalisation and Indebtedness section of this Offer Document for further information on our banking facilities. Provision for taxation amounted to S$1.0 million for FY2014 and FY2015, representing 13.0% of our total liabilities as at 31 December 2014 and 31 December 2015, respectively. Non-current liabilities Non-current liabilities comprise loans and borrowings, other payables, provision, and deferred taxation, which amounted to S$1.0 million for FY2014 and FY2015, representing 13.0% of our total liabilities as at 31 December 2014 and 31 December 2015, respectively. The non-current portion of loans and borrowings is to finance the purchase of our corporate office at 1 Sims Lane #05-05 Singapore amounted to S$0.2 million and 2.6% of our total liabilities as at 31 December There was no non-current portion of bank borrowing as at 31 December Please refer to the Capitalisation and Indebtedness section of this Offer Document for further information on our banking facilities. The non-current portion of other payables, comprises the non-current portion of deferred rental payables, amounted to S$0.2 million and S$0.4 million and accounted for 2.6% and 5.2% of our total liabilities as at 31 December 2014 and 31 December 2015, respectively. The non-current portion of provision comprises the non-current portion of provision for restoration costs, which relates to the estimated costs of reinstating our leased premises to their original state upon lease expiry and amounted to S$0.6 million for FY2014 and FY2015, representing 7.9% and 7.8% of our total liabilities as at 31 December 2014 and 31 December 2015, respectively. 56

61 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Total Equity Total equity amounted to S$11.5 million and S$15.8 million as at 31 December 2014 and 31 December 2015, respectively. Reconciliation of audited and unaudited pro forma combined statements of financial position as at 31 December 2015 Non-current assets Based on the unaudited pro forma combined statement of financial position as at 31 December 2015, no adjustments were made to our non-current assets. Current assets Based on the unaudited pro forma combined statement of financial position as at 31 December 2015, no adjustments were made to our current assets. Current liabilities Based on the unaudited pro forma combined statement of financial position, our Group s current liabilities amounted to S$16.7 million as at 31 December 2015, representing an increase of S$10.0 million. The net increase of S$10.0 million was amount due to director, as a result of the declaration of final dividends by our subsidiary, being dividend payable to Alan Goh and Catherine Tan. Non-current liabilities Based on the unaudited pro forma combined statement of financial position as at 31 December 2015, no adjustments were made to our non-current liabilities. Total equity Based on the unaudited pro forma combined statement of financial position, our Group s total equity amounted to S$5.8 million as at 31 December 2015, representing a net decrease of S$10.0 million. The net decrease of S$10.0 million was due to decrease in retained earnings as a result of the declaration of final dividends by our subsidiary. LIQUIDITY AND CAPITAL RESOURCES Our Group has nil gearing ratio for FY2013, FY2014 and FY2015, respectively. We financed our growth and operations through a combination of shareholders equity (share capital and retained profits) and net cash generated from operating activities with minimal bank borrowings. Our principal uses of cash have been for working capital requirements and to fund our capital investment in property, plant and equipment as we expand our network of restaurants in Singapore and overseas. As at 31 December 2014, we had cash and cash equivalents of approximately S$7.1 million and net current assets of S$2.8 million. Our shareholders equity amounted to S$11.5 million and our total borrowings amounted to S$0.4 million (comprising a bank term loan). 57

62 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION As at 31 December 2015, we had cash and cash equivalents of approximately S$10.3 million and net current assets of S$5.9 million. Our shareholders equity amounted to S$15.8 million and our total borrowings amounted to S$0.2 million (comprising a bank term loan). Based on our unaudited pro forma combined statement of financial position as at 31 December 2015, we would have been in a net current liabilities position of S$4.1 million which arose mainly due to the declaration of the final dividends of S$10.0 million. Please refer to the Review of Financial Position section of this Offer Document for more information. In assessing whether our Group has sufficient working capital (taking into consideration the declaration and payment of the final dividends), our Directors have considered the following: (i) (ii) (iii) (iv) (v) (vi) based on the unaudited pro forma combined statement of financial position as at 31 December 2015, our Group had cash and cash equivalents of approximately S$10.3 million. As at the Latest Practicable Date, our Group had cash and cash equivalents of approximately S$9.1 million and our total borrowings amounted to S$0.1 million (comprising a bank term loan). our Group had generated positive operating cash flows in FY2013, FY2014 and FY2015 amounting to S$6.0 million, S$5.8 million and S$6.7 million, respectively; our Group s sales transactions are substantially conducted on a cash basis (including credit card and electronic payments, which we typically receive from the banks within seven days from the transaction date). In comparison, our Group s suppliers generally extend credit terms of 30 to 45 days to our Group; our Group presently does not rely on banking facilities for our working capital requirements except for a banking facility taken during the periods under review, by way of a term loan for the purchase of our freehold property which is used as part of our corporate headquarters and will be fully repaid by November As at the end of FY2013, FY2014 and FY2015, our Group s loans and borrowings amounted to S$0.6 million, S$0.4 million and S$0.2 million, respectively, and our gearing ratio (defined as net debt divided by total capital plus net debt) was nil as at each of the respective dates; going forward, in considering the level of dividend payments, our Group will take into account various factors, such as our expected working capital requirements to support our future growth, financial position, cash flows and investment plans. Please refer to the Dividend Policy section of this Offer Document for further details; and our Group s future plans as set out in the Business Strategies and Future Plans section of this Offer Document will be partially funded by net proceeds from the Placement and the extent and timing of the future plans may be managed and based on the amount raised from the Placement. 58

63 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Our Directors are of the reasonable opinion that, as at the date of lodgement of this Offer Document, after taking into consideration our present cash position and cash generated from our operations, 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 and Issue Manager is of the reasonable opinion, that after having made due and careful enquiry and after taking into account the cash flows generated from our Group s operations and 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. We set out below a summary of our Group s net cash flows for FY2013, FY2014 and FY2015. 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 set out in Appendix A of this Offer Document. Audited FY2013 FY2014 FY2015 S$ 000 S$ 000 S$ 000 Net cash generated from operating activities 5,994 5,777 6,713 Net cash used in investing activities (3,938) (2,039) (2,772) Net cash used in financing activities (3,011) (1,623) (776) Net (decrease)/increase in cash and bank balances (955) 2,115 3,165 Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the beginning of the financial year 5,941 5,004 7,124 Cash and cash equivalents at the end of the financial year 5,004 7,124 10,290 FY2013 Net cash generated from operating activities In FY2013, we generated net cash from operating activities of S$6.0 million. This was a result of operating cash flow before working capital changes of S$5.6 million and working capital inflows of S$1.2 million, partially offset by income taxes paid and interest paid of S$0.8 million. The net working capital inflows were due to inflows from changes in trade and other payables, prepayments, trade and other receivables and other liabilities by S$0.9 million, S$0.3 million, S$0.2 million and S$0.2 million, respectively. The net working capital inflows were partially offset by outflows from changes in refundable deposits by S$0.4 million. 59

64 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Net cash used in investing activities In FY2013, net cash used in investing activities amounted to S$3.9 million were used to purchase plant and equipment for our restaurants. Net cash from financing activities In FY2013, our net cash used in financing activities of S$3.0 million was primarily dividends paid of S$2.0 million, settlement of amount due to directors of S$1.3 million (net of dividend and advances), repayment of loans and borrowings of S$0.2 million, and partially offset by proceeds from increase of share capital to a subsidiary accounted for on common control basis, amounting to S$0.3 million and decrease in fixed deposit pledged of S$0.2 million. FY2014 Net cash generated from operating activities In FY2014, net cash generated from operating activities was S$5.8 million. This was a result of operating cash flow before working capital changes of S$7.0 million, partially offset by working capital outflows of S$0.6 million, income taxes paid and interest paid totalling S$0.6 million. The net working capital outflows were due to outflows from changes in refundable deposits and trade and other receivables by S$0.8 million and S$0.5 million, respectively. The net working capital outflows were partially offset by inflows from changes in trade and other payables and other liabilities by S$0.6 million and S$0.1 million, respectively. Net cash used in investing activities In FY2014, net cash used in investing activities amounted to S$2.0 million were used to purchase plant and equipment for our restaurants. Net cash from financing activities In FY2014, our net cash used in financing activities of S$1.6 million was due to dividends paid of S$2.0 million, repayment of loans and borrowings of S$0.2 million and partially offset by an increase in amounts due to directors of S$0.5 million and decrease in fixed deposits pledged of S$0.1 million. FY2015 Net cash generated from operating activities In FY2015, we generated net cash from operating activities of S$6.7 million. This was a result of operating cash flow before working capital changes of S$7.4 million and working capital inflows of S$0.2 million, partially offset by income taxes and interest paid totalling S$0.9 million. The net working capital inflows were due to inflows from changes in trade and other payables and other liabilities by S$0.6 million and S$0.5 million, respectively. The net working capital inflows were partially offset by outflows from changes in refundable deposits, prepayments, trade and other receivables by S$0.5 million, S$0.2 million and S$0.2 million, respectively. 60

65 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Net cash used in investing activities In FY2015, our net cash used in investing activities amounted to S$2.8 million due mainly to the purchases of plant and equipment for our restaurants. Net cash from financing activities In FY2015, our net cash used in financing activities of S$0.7 million was due to net repayment of amount due to directors of S$0.8 million and repayment of loans and borrowings of S$0.2 million, partially offset by decrease in fixed deposit pledged of S$0.3 million. CAPITAL EXPENDITURES, DIVESTMENTS, COMMITMENTS AND CONTINGENT LIABILITIES Capital Expenditures and Divestments Capital expenditures and divestments made by us during the periods under review and for the period from 1 January 2016 to the Latest Practicable Date were as follows: Additions (1) FY2013 FY2014 FY January 2016 to the Latest Practicable Date S$ 000 S$ 000 S$ 000 S$ 000 Computers Furniture and fittings Kitchen and restaurant equipment Office equipment 1 1 Renovation (3) 3,067 1,426 2, Total 4,138 2,097 2,843 1,072 Disposals (2) FY2013 FY2014 FY January 2016 to the Latest Practicable Date S$ 000 S$ 000 S$ 000 S$ 000 Computers 1 14 Furniture and fitting Kitchen and restaurant equipment Renovation (3) Total

66 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Notes: (1) This relates to the cost of plant and equipment acquired during the respective financial years/periods. (2) This relates to the net book value of plant and equipment disposed of during the respective financial years/periods. (3) This amount includes provision for restoration costs. The above capital expenditures were funded by internally generated funds. Capital Commitments As at the Latest Practicable Date, there is no material capital or investment commitment. Operating lease commitment As at 31 December 2015 and Latest Practicable Date, we have operating lease payment commitments as follows: As at 31 December 2015 S$ 000 As at Latest Practicable Date S$ 000 No later than one year 11,861 11,604 Later than one year but not later than five years 12,960 13,523 24,821 25,127 Our operating lease commitments relate to rentals and service charges payable to the landlords of the premises of our restaurants. We intend to finance the payments of the operating lease commitments by internally generated funds. Contingent liabilities As at the Latest Practicable Date, we do not have any material contingent liabilities. SEASONALITY Our business is not subject to any seasonal fluctuations although generally we experience higher sales during festive seasons and school holidays. INFLATION Our operation and performance has not been materially affected by inflation during the periods under review. 62

67 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION FOREIGN EXCHANGE MANAGEMENT Accounting treatment of foreign currencies The accounting records for the companies within our Group will be maintained in their respective functional currencies of S$ and RMB, reflecting the primary economic environment in which the respective entities operate. The combined balance sheets of our Group are presented in S$, which is the functional currency of our Group and the presentation currency for the combined balance sheets. Transactions in currencies other than each entity s functional currency are measured and recorded in the functional currency at exchange rates approximating those ruling at the transactions dates. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Exchange differences arising on the settlement of monetary items, and on translation of monetary items at the end of reporting period are recognised in profit or loss for the period. For FY2013, our Group recorded an exchange loss of S$8,000 and an exchange gain of S$36,000 for FY2014. There was no exchange gain or loss for FY2015. For the purpose of presenting combined financial statements, the assets and liabilities of our Group s foreign operations are expressed in S$ using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity under foreign currency translation reserve. Foreign currency exposure Our reporting currency is in S$ and our operations are carried out in Singapore and overseas. The percentage of our revenue, cost of sales and expenses denominated in the different currencies for the periods under review were as follows: Percentage of revenue denominated in FY2013 FY2014 FY2015 (%) (%) (%) S$ RMB

68 MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Percentage of cost of sales denominated in FY2013 FY2014 FY2015 (%) (%) (%) S$ RMB Percentage of expenses denominated in FY2013 FY2014 FY2015 (%) (%) (%) S$ RMB At present, we do not have a formal policy for hedging against foreign exchange exposure. We will continue to monitor our foreign exchange exposure and may employ hedging instruments to manage our foreign exchange exposure should the need arise. Should we enter into any hedging transaction in the future, such transaction shall be subject to the review of our Board. In addition, should we establish any formal hedging policy in the future, such policy shall be subject to the review and approval by our Board prior to implementation. Our Audit Committee will review periodically the hedging policies, all types of instruments used for hedging as well as the foreign exchange policies and practices of our Group. SIGNIFICANT ACCOUNTING POLICY CHANGE There has been no significant change in the accounting policies of our Group in the periods under review. Please refer to the Audited Combined Financial Statements set out in Appendix A of this Offer Document for details of our Group s accounting policies. 64

69 GENERAL INFORMATION ON OUR GROUP SHARE CAPITAL Our Company was incorporated in Singapore on 31 March 2016 under the Companies Act as a private company limited by shares under the name of Katrina Group Pte. Ltd.. On 9 July 2016, our Company was converted into a public company limited by shares and our name was changed to Katrina Group Ltd.. As at the date of incorporation, the issued and paid-up share capital of our Company was S$2 comprising two Shares held by Alan Goh (one Share) and Catherine Tan (one Share). Our then Shareholders have approved at an extraordinary general meeting, inter alia, the following: (a) (b) (c) (d) (e) (f) (g) the allotment and issue of 1,165,004 Shares in the share capital of our Company pursuant to the Restructuring Exercise; the sub-division of 1,165,006 Shares in the issued and paid-up capital of our Company into 195,721,008 Shares; the conversion of our Company into a public company limited by shares; the adoption of a new set of Constitution; the issue of the New Shares pursuant to the Placement, which when allotted, issued and fully paid, will rank pari passu in all respects with the existing issued Shares; the approval of the listing and quotation of all the New Shares to be allotted and issued pursuant to the Placement on Catalist; and the authorisation for our Directors, pursuant to Section 161 of the Companies Act and the Catalist Rules to: (a)(i) issue (in addition to the New Shares) 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) options, 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 the Directors may in their absolute discretion deem fit; and (b) (notwithstanding this authorisation conferred may have ceased to be in force) issue Shares in pursuance of any Instruments made or granted by the Directors while this authorisation 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 authorisation) and Instruments to be issued pursuant to this authorisation shall not exceed 100% of the total number of issued Shares (excluding treasury shares) in the capital of the 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% of the total number of issued Shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below); 65

70 GENERAL INFORMATION ON OUR GROUP (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 post-placement issued Share capital of our Company (excluding treasury shares), after adjusting for: (a) new 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 subdivision of Shares; and (3) unless revoked or varied by the Company in a general meeting, such authority shall continue in force until (i) the conclusion of the next annual general meeting of the Company or (ii) the date by which the next annual general meeting of the Company is required by law to be held, whichever is 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 Constitution. There is 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 subsidiaries. As at the Latest Practicable Date, the issued and paid-up capital of our Company is S$2 comprising two Shares held by Alan Goh (one Share) and Catherine Tan (one Share). As at the date of this Offer Document, the issued and paid-up share capital of our Company is S$1,165,006 comprising 195,721,008 Shares. Upon the allotment and issue of the New Shares which are the subject of the Placement, the resultant issued and paid-up share capital of our Company will be S$8,683,006 comprising 231,521,008 Shares. Details of the changes in the issued and paid-up share capital of our Company since incorporation and immediately after the Placement are as follows: Number of Shares Resultant Issued and Paid-up Share Capital (S$) Issued and paid-up Shares as at our incorporation 2 2 Issue of Shares pursuant to the Restructuring Exercise 1,165,004 1,165,006 Sub-division 195,721,008 1,165,006 Pre-Placement issued and paid-up share capital 195,721,008 1,165,006 Issue of New Shares pursuant to the Placement 35,800,000 7,518,000 (1) Post-Placement issued and paid-up share capital 231,521,008 8,683,006 Notes: (1) Based on the gross proceeds from the issue of the New Shares pursuant to the Placement, before taking into account the capitalisation of approximately S$0.4 million being a portion of the listing expenses incurred in relation to the Placement. After taking into account such capitalisation, the adjusted resultant share capital will be S$7.1 million. 66

71 GENERAL INFORMATION ON OUR GROUP The Shareholders equity of our Company as at the date of incorporation (being 31 March 2016), as adjusted for the Restructuring Exercise, and final dividend declared by our subsidiary and after the Placement is set out below: Shareholders equity As at the date of incorporation After adjusting for the Restructuring Exercise After the Placement (S$ 000) (S$ 000) (S$ 000) Share capital * (1) 1,165 8,268 (2) Accumulated profits 4,004 3,171 Total Shareholders equity * (1) 5,169 11,439 Note: (1) * means less than S$1,000. (2) This takes into account a portion of the listing expenses incurred in relation to the Placement of approximately S$0.4 million being capitalised against share capital. 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 in Singapore on 31 March 2016 under the Companies Act as a private limited company by shares with an issued and paid-up share capital of S$2 comprising two Shares held by Alan Goh (one Share) and Catherine Tan (one Share). (b) Acquisition of Katrina Singapore by our Company Pursuant to a restructuring agreement dated 30 June 2016 (the Restructuring Agreement ) entered in between our Company and the then shareholders of Katrina Singapore, namely, Alan Goh (50%) and Catherine Tan (50%), our Company acquired the entire issued and paid-up share capital of Katrina Singapore for a consideration of S$1,165,004 which was determined based on the amount of issued and paid-up capital of Katrina Singapore as at the date of the Restructuring Agreement. The consideration was satisfied by the allotment and issue of 1,165,004 new Shares (before the Sub-division) credited as fully paid, by our Company to the then shareholders of Katrina Singapore as follows: Name Number of Shares Consideration (S$) Alan Goh 582, ,502 Catherine Tan 582, ,502 Total 1,165,004 1,165,004 67

72 GENERAL INFORMATION ON OUR GROUP Upon the completion of the Restructuring Agreement, Katrina Singapore became our wholly-owned subsidiary. The resultant shareholding in our Company (after taking into account the two subscriber shares held by Alan Goh and Catherine Tan) before the Sub-division was as follows: Name Number of Shares Shareholding (%) Alan Goh 582, Catherine Tan 582, Total 1,165, (c) Sub-division On 11 July 2016, 1,165,006 Shares in the capital of our Company were sub-divided into 195,721,008 Shares. Following the completion of the Sub-division, the shareholders of our Company were as follows: Name Number of Shares Shareholdings (%) Alan Goh 97,860, Catherine Tan 97,860, Total 195,721, GROUP STRUCTURE Our Group structure as at the date of this Offer Document is as follows: Company 100% Katrina Singapore (1) 100% 100% 100% 100% 100% 100% Renn Thai Bayang at the Quay Pte. Ltd. Beijing BaliThai (2) Bali Thai Food Catering Pte. Ltd. Katrina Online Pte. Ltd. Katrina Holdings Sdn. Bhd. (3) 68

73 GENERAL INFORMATION ON OUR GROUP Notes: (1) Katrina Singapore wholly owns the following businesses as the sole-proprietor: (a) (b) (c) (d) Indobox Cafe Muchos Mexican Bar & Restaurant So Pho Viet Cafe Streats Hong Kong Cafe The above businesses are currently dormant. These businesses were registered merely to protect the respective restaurant brands, whereas the restaurant operations under such restaurant brands are conducted by Katrina Singapore. We have subsequently applied for the relevant trademark registrations to protect our intellectual property rights under these restaurant brands and we intend to de-register these businesses after completion of the trademark registration. Please refer to the Intellectual Property section of this Offer Document for more information on our trademark applications. (2) Beijing BaliThai wholly owns a branch in Beijing, PRC. Prior to 1 January 2016, the entire equity interest in Beijing BaliThai was held on trust by Katrina Singapore in favour of Alan Goh and Catherine Tan equally. On 1 January 2016, Katrina Singapore acquired the entire equity interest in Beijing BaliThai from Alan Goh and Catherine Tan. Accordingly, the aforesaid trust arrangement was revoked. Please refer to the Interested Person Transaction section of this Offer Document for more information. (3) The entire equity interest of Katrina Holdings Sdn. Bhd. is held on trust by Alan Goh and Catherine Tan in favour of Katrina Singapore since incorporation of Katrina Holdings Sdn. Bhd. OUR SUBSIDIARIES The details of our subsidiaries as at the date of this Offer Document are as follows: Name Date and Place of Incorporation Katrina Singapore (1) 29 June 1995 Singapore Bayang at the Quay Pte. Ltd. Renn Thai Beijing BaliThai (2) Bali Thai Food Catering Pte. Ltd. Katrina Online Pte. Ltd. 19 January 2000 Singapore 19 December 2000 Singapore 11 September 2009 PRC 28 August 2002 Singapore 15 April 2016 Singapore Katrina Holdings 17 June 2016 Sdn. Bhd. (3) Malaysia Principal Place of Business Singapore Singapore Singapore PRC Principal Activity Restaurant management and operations Restaurant management and operations Restaurant management and operations Restaurant management Issued and Paid-up Share Capital Equity Interest Held by Our Group S$1,165, % S$180, % S$164, % RMB3,000, % Singapore Catering S$2 100% Singapore Malaysia Online ordering and food delivery Restaurant management S$1 100% RM % 69

74 GENERAL INFORMATION ON OUR GROUP None of our subsidiaries is listed on any stock exchange. We do not have any associated companies. Notes: (1) Please refer to footnote (1) of the Group Structure section of this Offer Document for more information. (2) Please refer to footnote (2) of the Group Structure section of this Offer Document for more information. (3) Please refer to footnote (3) of the Group Structure section of this Offer Document for more information. Our Group had several past subsidiaries, save for Lulu Restaurant Pte. Ltd., which were incorporated in Singapore mainly to operate food stalls in food courts, and these past subsidiaries were subsequently de-registered following the phasing out of food stalls as disclosed in the History section of this Offer Document. In respect of Lulu Restaurant Pte. Ltd., it was operating a restaurant offering Shanghainese cuisine in Raffles City, Singapore, which was closed after its initial lease had expired as that restaurant business could not be sustained due to the proposed increase of the rental for the premises by its landlord. 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 % Alan Goh (1)(2) 97,860, ,860, ,860, ,860, Catherine Tan (1)(2) 97,860, ,860, ,860, ,860, Goh Shen Shu Donovan (2) Ang Miah Khiang Chow Wen Kwan Eric Low Siak Meng Others Shareholders holding less than 5% Public 35,800, Total 195,721, ,521, Notes: (1) Catherine Tan is the spouse of Alan Goh. (2) Goh Shen Shu Donovan is the son of Alan Goh and Catherine Tan. Save as disclosed above, there are no other relationships among our Directors and Substantial Shareholders. 70

75 GENERAL INFORMATION ON OUR GROUP The Shares held by our Directors and Substantial Shareholders do not carry different voting rights from the New 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 2015 and the Latest Practicable Date. Significant Changes in the Percentage of Ownership Save as disclosed in the Restructuring Exercise section of this Offer Document, there were no significant changes in the percentage of ownership of the shares in our Company since 31 March 2016, being the date of incorporation of our Company and up to the Latest Practicable Date. MORATORIUM Our Controlling Shareholders, namely Alan Goh and Catherine Tan, who hold an aggregate of 195,721,008 Shares (representing 84.6% of our Company s issued share capital 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 commencing from the date of admission of our Company to Catalist, and for a period of six months thereafter, 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, more than 50% of their respective original shareholdings in our Company. 71

76 BUSINESS OUR HISTORY Katrina Singapore was incorporated in Singapore in June 1995, and founded by Alan Goh together with his wife, Catherine Tan. In the mid-nineties, Alan Goh and Catherine Tan started our F&B business by operating food stalls mainly under Katrina Nasi Padang, which served Indonesian and/or Malay cuisine in different food courts in Singapore to leverage on the popularity of air-conditioned food courts emerging in Singapore. Within few years, we were operating many food stalls in various food courts across Singapore. In the early 2000, due to the restrictions imposed on food stall licences and limited potential growth of food stalls, we shifted focus to developing restaurant businesses under our own proprietary brands and concepts. As we ventured into the restaurant business and started developing our own proprietary brands for different F&B concepts, we began to phase out and subsequently ceased our food stall business. The following sets out the history and development of our restaurant businesses under our own proprietary brands: Bali Thai: Indonesian and Thai cuisine Around 1997, demands for restaurant spaces in Singapore were generally higher in the east and in the city. Thus, rental prices for restaurant spaces in the west were generally lower at that time. We leveraged on this opportunity to introduce our first restaurant brand business, Bali Thai, and started the first Bali Thai restaurant in West Mall, located in the west of Singapore in Despite the Asian financial crisis in late nineties, Bali Thai performed well. Between 1998 and 2003, we opened two more Bali Thai restaurants, one in IMM Building and another in Tampines Mall. Within a year from December 2006, two more Bali Thai restaurants were opened near the central business district of Singapore, in Novena Square and Suntec City Mall. During mid-2009, we brought the Bali Thai concept to Beijing, PRC by opening our first overseas restaurant in Raffles City Beijing. In 2011, we opened two more Bali Thai restaurants, one in the east region in 112 Katong and another in the northeast region in Serangoon NEX. Between 2012 and 2013, we opened two more Bali Thai restaurants in Beijing, PRC. In October 2014, we completed the acquisition of the entire equity interest in Shanghai Katrina Restaurants Co., Ltd. ( Shanghai Katrina ) from our CEO and Executive Chairman, Alan Goh, at a consideration of RMB1.0 million, following which Shanghai Katrina became a wholly-owned subsidiary of Katrina Singapore. Please refer to the Interested Person Transactions section of this Offer Document for more information. At the time of acquisition, Shanghai Katrina operated one Bali Thai restaurant in Shanghai, which ceased operations in December One of the restaurants in Beijing was also closed in December 2014 due to pre-mature termination of the lease by the management of the mall. We have taken legal actions against the mall and have received the damages awarded to us, hence there is no adverse impact to our Group s operations and financial performance. Please refer to the Litigation section of this Offer Document for more information. The remaining two Bali Thai restaurants in Beijing, PRC are wholly-owned and managed directly by us. 72

77 BUSINESS In addition to the overseas restaurants, we also opened three more Bali Thai restaurants in Singapore from 2013 to 2014, one of which is located at Resorts World Sentosa. In January 2016, we further opened one more Bali Thai restaurant in the northeast region in Punggol. RENNthai: Thai cuisine In December 2000, Renn Thai, a wholly-owned subsidiary of Katrina Singapore, was incorporated as a step to venture into the upmarket dining fare. In 2001, Renn Thai opened its first restaurant under the brand RENNthai in Ngee Ann City. Due to a series of unforeseen events namely, the terrorist attacks on the New York World Trade Centre in September 2001, Bali bombing and the SARS epidemic which resulted in a sharp decline of tourists, RENNthai at Ngee Ann City was closed. In December 2004, the RENNthai restaurant was set up in Clarke Quay, where its business grew. Bayang: Indonesian cuisine With our continuing focus on introducing new brands and developing existing brands for restaurants concepts, we developed a new brand of Bayang to target for the higher end of restaurant patrons. Bayang is an Indonesian/Balinese concept restaurant which has been operating since May Streats: Hong Kong Cafe In November 2006, we developed a new chain of cafes under the F&B brand, Streats. The first Streats cafe is located in IMM Building. In the next three years, one Streats cafe is opened each year. In October 2014, we opened one more Streats cafe in One KM. Between June 2015 and July 2015, we further opened two more Streats cafes in Resorts World Sentosa and Serangoon NEX. Honguo ( ): Yunnan cuisine In December 2007, we developed our first chain of Chinese restaurants under the brand known as Honguo, whose signature dish is the Yunnan Cross Bridge Vermicelli ( ). Honguo was created to cater to the increasing number of affluent immigrant Chinese office workers and students from the PRC. We set up the first restaurant operating under the name of Honguo in Bugis Junction. In December 2010, we set up another Honguo restaurant in Serangoon NEX and in December 2012, we opened another Honguo restaurant in Chinatown Point which ceased operations in December Hutong ( ): Northern Chinese cuisine In April 2008, we introduced an additional upmarket brand under the name of Hutong to cater to the Chinese expatriates and tourists in Singapore. This restaurant sits along the Singapore River in Clarke Quay, offering a contemporary twist on traditional northern Chinese cuisine. Muchos: Mexican cuisine In 2010, we developed our first non-asian brand under the name of Muchos. Muchos is a Mexican bar and restaurant. We set up the first Muchos restaurant in Clarke Quay in February Two years later, we opened another Muchos restaurant in Plaza Singapura to attract the younger crowds in the city. 73

78 BUSINESS So Pho: Vietnamese Cuisine In 2013, we developed and introduced our first Vietnamese brand under the name of So Pho. The first So Pho cafe was opened in JEM in June Between 2013 and 2015, we opened five more So Pho cafes. In January 2016, we further opened one more So Pho cafe in the northeast region in Waterway Point, Punggol. Indobox: Indonesian Cuisine In 2013, we also developed a new Indonesian brand under the name of Indobox. We set up our first Indobox cafe in JEM in June Four months later, we opened another Indobox cafe in ION Orchard. We also established our central kitchen facility within two of our restaurants, namely Streats at One KM and So Pho at Serangoon NEX. The central kitchen facility prepares and distributes sauces and chilli pastes, for instance, assam paste, belachan and Thai chilli sauce to all our restaurants. This central kitchen helps to ensure consistency in our food quality and also increase efficiency and productivity in our restaurants. In December 2015, we launched our online food ordering and delivery services for three eatery chains operating under the brands Bali Thai, So Pho and Streats. Under this online food ordering system, consumers are able to enjoy their desired food simply by visiting our website to place an order and make payment online. We have plans to expand our online food ordering and delivery services to all our nine F&B brands in Please refer to the Business Strategies and Future Plans section of this Offer Document for more details. Awards and Accolades We have received the following awards and accolades in recognition of our achievements: Year Awards and Accolades Brands Awarded by 2002 Singapore s Best Restaurant Bali Thai Singapore Tatler, Gourmet Guide 2002 Singapore s Best Restaurant RENNthai Singapore Tatler, Gourmet Guide 2003 Singapore s Best Restaurant Bali Thai Singapore Tatler, Gourmet Guide 2003 Singapore s Best Restaurant RENNthai Singapore Tatler, Gourmet Guide 2004 Singapore s Best Restaurant Bali Thai Singapore Tatler, Gourmet Guide 2004 Singapore s Best Restaurant RENNthai Singapore Tatler, Gourmet Guide 2008 Wine & Dine Singapore s Top Restaurants 2008 Wine & Dine Singapore s Top Restaurants 2008 Wine & Dine Singapore s Top Restaurants Bayang Bali Thai RENNthai The Lexicon Group Limited The Lexicon Group Limited The Lexicon Group Limited 2010 Enterprise 50 Award Katrina Singapore Enterprise 50 Association 2011 Singapore Service Star Award Streats Singapore Tourism Board 74

79 BUSINESS Year Awards and Accolades Brands Awarded by 2011 Singapore Service Star Award 2011 Singapore Service Star Award 2011 Singapore Service Star Award 2011 Singapore Service Star Award RENNthai Bayang Hutong Honguo Singapore Tourism Board Singapore Tourism Board Singapore Tourism Board Singapore Tourism Board 2012 Enterprise 50 Award Katrina Singapore Enterprise 50 Association 2013 Certificate of Excellence in Singapore for Brand Strategy in Marketing Excellence Awards 2014 Bronze Singapore HEALTH Award Bali Thai Katrina Singapore Marketing Magazine Singapore Health Promotion Board 2015 Singapore s Top Restaurant Indobox Wine & Dine Experience Pte Ltd 2015 Singapore s Top Restaurant Bali Thai Wine & Dine Experience Pte Ltd 2015 Singapore s Top Restaurant Hutong Wine & Dine Experience Pte Ltd 2015 Singapore s Top Restaurant Muchos Wine & Dine Experience Pte Ltd 2015 Singapore s Top Restaurant RENNthai Wine & Dine Experience Pte Ltd BUSINESS OVERVIEW We are an operator of chains of restaurants and cafes under different F&B brands and concepts. Our Group owns and operates restaurants under nine different F&B brands that are developed and owned by us as at the Latest Practicable Date. Each brand provides different dining options in order to cater to a wider spectrum of patrons and different market segments. Each of our brands serves authentic cuisines of different ethnicity, namely Indonesian, Thai, Hong Kong, Yunnan, northern Chinese cuisine, Mexican and Vietnamese. In addition, each brand is accompanied by tailored décor and designs in our restaurants and cafes in order to provide patrons with comfortable ambience. Amongst our nine own proprietary brands, restaurants under four of our own proprietary brands namely Bali Thai, So Pho, Streats and Indobox, are certified Halal in Singapore, save for the Bali Thai restaurant at IMM Building as disclosed in the Government Regulations section of this Offer Document. Our restaurants are located in Singapore and overseas. Within Singapore, our casual dining brands are generally located in the heartlands of Singapore, such as Jurong East and Tampines. Meanwhile, the contemporary upmarket brands are located within the central business district vicinity of Singapore. We also operate restaurants outside Singapore, currently located in Beijing, PRC. In the PRC, our Group owns and operates two Bali Thai restaurants. Food served in our Bali Thai restaurants in the PRC has been tailored and fine-tuned to suit the tastes of the local consumers in the PRC. We have identified certain locations within Malaysia, Vietnam and Indonesia for our overseas expansion. Please refer to the Business Strategies and Future Plans section of this Offer Document for more details. 75

80 BUSINESS As at the Latest Practicable Date, our Group owns and operates 32 restaurants in Singapore and two restaurants in the PRC under our nine own proprietary F&B brands. In addition, we provide catering services from one of our restaurants in Singapore for various private and corporate events. Online Food Ordering and Delivery Services In seeking the opportunity to reach out to increasing needs of consumers ordering food online and requiring food delivery services, we have launched our own customised online food ordering and delivery system which allows customers to place orders and make payments directly on our website without going through a third party application or system. Following the placing of orders and payment online, customers may elect to collect their orders from their desired restaurant or to request food delivery to their doorstep. Through this online food ordering and delivery system, consumers have easier access to enjoyment of food served by our restaurants as the system allows consumers to have a cashless transaction by making direct payment to us via our website. Our F&B Concepts Our brands can be classified into two distinct restaurant concepts, as follows: Casual Dining Bali Thai Bali Thai is the first restaurant brand that our Company developed on its own. Bali Thai is a concept of housing two cuisines under one roof. Unlike fusion restaurants where different cuisines are merged into totally new dishes, Bali Thai offers perennial favourites of both Indonesian and Thai cuisines. Bali Thai serves popular delights from Thailand and Bali, Indonesia including the famous Crispy Whole Fish with Thai Chilli Sauce, Combi Bakar and Tauhu Telur. All Bali Thai restaurants are designed to be casual and modern with the intention to offer a cosy ambience to the patrons. In Beijing, food served in our Bali Thai restaurants are fine-tuned to suit the tastes of the local Chinese market. All our Bali Thai restaurants in Singapore are certified Halal by MUIS, save for the Bali Thai restaurant at IMM Building as disclosed in the Government Regulations section of this Offer Document. As at the Latest Practicable Date, we have nine Bali Thai restaurants in Singapore and two in Beijing, PRC. Streats The concept of Streats is that of a cha chan teng, also known as Hong Kong cafe in Chinese. Food in Streats cafe are served in relatively small portions to retain its Hong Kong origins. Streats cafe serves Hong Kong specialities including the Hot Coke with Ginger and other contemporary Hong Kong snacks, such as Pumpkin Fries with Salted Egg Yolk Batter and Hong Kong Shrimp Dumpling Noodles (Soup). The layout of our Streats cafe follows closely that of a cha chan teng which is casual and simple to create friendly and comfortable atmosphere for people of all ages. 76

81 BUSINESS All our Streats cafes are certified Halal in order to stand out amongst the plentiful Hong Kong cafes in Singapore. With the addition of the Halal certification, Streats cafe is able to accommodate the Malay-Muslim community, which traditionally has limited options for Chinese cuisines. As at the Latest Practicable Date, we have seven Streats cafes. Barring unforeseen circumstances, we plan to open four more Streats cafes, three in Singapore and one in Malaysia in the next 12 months. Honguo ( ) Honguo means red pot in Chinese. Honguo s signature dish is the Cross Bridge Vermicelli ( ), which is one of the best-known dishes of Yunnan, a province in southwestern PRC. This famous dish is served in a large bowl containing piping hot soup boiled for hours with duck, chicken and pork. The large bowl is accompanied by a bowl of noodles and at least nine other ingredients including mushroom, prawns, quail eggs, ham, vegetables and others. All our Honguo restaurants are decorated with paintings and posters of interesting places, people and things in Yunnan to complement the authentic Yunnan dish and to provide a taste of the Yunnan experience. As at the Latest Practicable Date, there are two Honguo restaurants in Singapore. So Pho Pho, pronounced as fur, means noodle soup in Vietnamese which is a famous street food in Vietnam. Beyond just noodle soup and other authentic Vietnamese cuisine, the concept offers popular Vietnamese street food in casual and contemporary settings at reasonable prices. Our So Pho cafes are decorated in simplicity with neutral colours of white and black furnishing. The white lanterns and the bursts of greenery spread across the restaurants provide a casual, bright and comfortable ambience. All our So Pho cafes are certified Halal by MUIS. As at the Latest Practicable Date, there are seven So Pho cafes in Singapore. Barring unforeseen circumstances, we plan to open two more So Pho cafes, one in Singapore and one in Malaysia in the next 12 months. Indobox Indobox serves a wide range of authentic Indonesian cuisines. The Indobox cafes are decorated with natural wood finishes with warm lighting giving the cafes a calm and classy layout. All our Indobox restaurants are certified Halal. As at the Latest Practicable Date, there are two Indobox cafes in Singapore. Contemporary Upmarket RENNthai RENNthai serves traditional Thai cuisine. RENNthai has both indoor and outdoor seating which offers two separate dining experiences under one roof. Its warm interior is furnished with exotic embellishments, while the alfresco area offers the waterfront view. 77

82 BUSINESS As at the Latest Practicable Date, there is one RENNthai restaurant in Singapore. Bayang The term Bayang means shadow in Indonesian language. This is illustrated by the restaurant s warm-balinese décor that features inlays inspired by traditional Balinese shadow puppets. Our Bayang restaurant serves authentic Balinese favourites like Bebek Betutu (baked duck in banana leaves). Bayang s chefs are hired from Indonesia to ensure authenticity of its cuisine. As at the Latest Practicable Date, there is one Bayang restaurant in Singapore. Muchos Muchos Mexican Bar and Restaurant caters classic Mexican dishes. There are two Muchos restaurants, one in Clarke Quay that caters to expatriates and tourists, while the other in Plaza Singapura which has more street food selections to cater to different target segments of the market. As at the Latest Practicable Date, there are two Muchos restaurants in Singapore. Hutong ( ) Hutong means back alley in Chinese. Hutong offers traditional northern Chinese cuisine, while its décor is based on element of the traditional Chinese culture. The restaurant is intended to exude the charm of old China, with antique dark-wooded screens and tables, billowing Chinese silk drapes and red lanterns creating a sentimental vibe of reminiscence of the beauty and ancient Beijing. Despite the traditional and ancient décor of Hutong, the restaurant offers a contemporary twist on traditional northern Chinese cuisines. As at the Latest Practicable Date, there is one Hutong restaurant in Singapore. The following table summarises the types of cuisine and location for each of our Group s restaurants as at the Latest Practicable Date: F&B brand Type of food Location of restaurants and cafes Bali Thai Indonesian and Thai cuisine Katong, East Coast Road 2. Causeway Point, Woodlands 3. IMM Building, Jurong East 4. NEX, Serangoon 5. Resorts World Sentosa, Sentosa Gateway 6. Suntec City Mall, Temasek Boulevard 7. West Mall, Bukit Batok 8. The Seletar Mall, Sengkang 9. Waterway Point, Punggol 10. Gemdale Plaza Chaoyang District, Beijing, PRC 11. Raffles City, Dongcheng District, Beijing, PRC 78

83 BUSINESS F&B brand Type of food Location of restaurants and cafes Streats Contemporary Hong Kong cuisine 1. IMM Building, Jurong East 2. NEX, Serangoon 3. Bukit Panjang Plaza, Bukit Panjang 4. City Square Mall, Kitchener Road 5. E!Hub Downtown East, Pasir Ris 6. One KM, Tanjong Katong Road 7. Resorts World Sentosa (Asian Cafe), Sentosa Gateway Honguo ( ) Specialities from Yunnan 1. Bugis Junction, Victoria Street 2. NEX, Serangoon So Pho Vietnamese cuisine 1. Novena Square, Thomson Road 2. Parkway Parade, Marine Parade Road 3. JEM, Jurong East 4. NEX, Serangoon 5. Paragon, Orchard 6. Tampines Mall, Tampines 7. Waterway Point, Punggol Indobox Indonesian cuisine 1. ION Orchard, Orchard 2. JEM, Jurong East Muchos Mexican cuisine 1. Clarke Quay RENNthai Thai cuisine Clarke Quay Bayang Hutong ( ) Traditional Indonesian cuisine Traditional northern Chinese cuisine 2. Plaza Singapura, Orchard Clarke Quay Clarke Quay In addition, barring unforeseen circumstances, the following restaurants will be opened in the next 12 months: F&B brand Location of restaurants and cafes So Pho MyTOWN, Kuala Lumpur, Malaysia Streats 1. Marina One The Heart, Marina Bay, Singapore 2. Clementi Mall, Clementi, Singapore 3. MyTOWN, Kuala Lumpur, Malaysia 79

84 BUSINESS BRANDING AND MARKETING Our marketing division spearheads our marketing strategies and is focused at promoting awareness of our own proprietary brands and restaurants which we operate. Our marketing division is headed by a senior marketing manager and assisted by a marketing executive. Our marketing strategies include: (a) (b) Promotional brochures, flyers and various online channels including collaboration with social media and food bloggers; and Advertisements and banners on social media platform, online websites, magazines and publications accessible by the general public in Singapore. QUALITY ASSURANCE We are committed to maintain high standards of food quality and service as we believe that quality of food and service are the fundamental factors to gain a competitive edge in the F&B business. The quality of food and service in our restaurants and cafes are primarily overseen by our CEO and Executive Chairman, Alan Goh and our Executive Director, Catherine Tan together with our operations team headed by our operations director. Quality of Food Our restaurants and cafes adopt quality food control measures to ensure the quality of our food and the measures adopted are briefly summarised as follows: (a) Incoming supplies Our key ingredients are purchased on a daily basis ensuring freshness of ingredients. Our personnel at our restaurants check each incoming ingredient to ensure they meet our quality standards. Ingredients which meet the standards will be stored in the refrigerator of an optimum temperature. (b) Food preparation All our chefs and kitchen crews involved in food preparation processes must maintain a high standard of personal hygiene. They are required to observe good hygiene practices at all times, including wearing protective coverings over clean clothes, hair restraints and aprons, and sanitising their hands before handling food. Quality of Service We aim to achieve a high level of responsiveness to our customers needs. Our employees are provided with training programmes which place emphasis on the importance of service standards and familiarity with the menus. We also require our employees to maintain high standards of personal hygiene, cleanliness of uniforms and overall appearances. We regularly encourage customers to provide feedback and suggestions through interaction with the customers or survey forms. We aim to respond efficiently to our customers feedback, regardless positive or negative. Based on the feedback, we will take steps to improve our customers dining experience and improve our service standards. 80

85 BUSINESS Quality Control for Halal Certification We closely monitor all food processing in our restaurants which are certified Halal including the manufacturing, packing, transporting and storage to ensure that we are in compliance with the prescribed requirements to maintain the Halal certification issued to our restaurants. MAJOR CUSTOMERS Due to the nature of our F&B business as operators of restaurants and cafes, none of our customers accounted for 5% or more of our revenue of each of the past three financial years. The majority of our sales are transacted via cash or credit card. MAJOR SUPPLIERS We generally do not enter into long-term or exclusive agreements with any of our suppliers. As such, we retain the flexibility to evaluate and select new suppliers, based on their abilities to provide us with the highest quality products at the most competitive pricing. Our Directors believe that we are not materially dependent on any of our suppliers, as the food ingredients are easily available in the markets. In addition, in order to ensure the continuity and sufficiency of supply, we maintain at least two approved suppliers for each ingredient. We set out below a list of our major suppliers which accounted for 5% or more of our purchases during the periods under review: Major supplier Main products supplied Percentage of total purchases (%) FY2013 FY2014 FY2015 Atlantic Coast Food Industries Seafood Chia & Thai Food Supplies Pte. Ltd. Dry goods Toh Thye San Farm Meat Choon Huat Trading Co. Vegetables Hua Kun Food Industry Pte. Ltd. Meat (1) 7.9 Note: (1) The increase in the total purchases from Hua Kun Food Industry Pte. Ltd. from 1.6% in FY2013 to 5.4% in FY2014 was mainly due to the expansion of our Vietnamese cafes under the brand So Pho. None of our Directors, Executive Officers or Substantial Shareholders has any interest, direct or indirect, in any of the above suppliers. 81

86 BUSINESS CREDIT MANAGEMENT Credit terms to our customers As the transactions in our restaurants and cafes are conducted on a cash basis (including credit card and electronic payments), we do not give any credit terms to our customers. There is no credit given to customers except for credit period of a few days for receipt of credit card payment from banks. We also provide catering from time to time. However, our catering business represents less than 1.0% of our business revenue. Payment for our catering service is usually settled by way of cash or cheque upon food delivery. There is no credit given to customers and where the customer elects to pay by credit card, such customer is required to make the payment at the restaurant or cafe before the event date. Credit term from our suppliers We receive invoices and delivery orders every day. Payment terms granted by our suppliers vary from supplier to supplier. Our suppliers generally grant us credit terms of between 30 and 45 days from the date of invoice. Our average trade payables turnover days during the periods under review were as follows: FY2013 FY2014 FY2015 Average trade payables turnover days (1) 49 (2) 46 (2) 47 (2) Notes: (1) Average trade payables turnover days were determined based on the average of trade payables divided by the relevant purchases for the financial year, multiplied by 365 days. (2) The average trade payables turnover days during the periods under review exceeded the credit terms of our suppliers due to delayed payments in the PRC. Settlements of our suppliers invoices during the periods under review were generally between 30 to 52 days. RESEARCH AND DEVELOPMENT In the context of our F&B business, our Directors believe that it is important to continuously innovate and keep ourselves up to date with the prevailing market trends and tastes. In this regard, we ensure that we constantly update our menus to cater to the latest trends and development of consumers preference. Our research and development includes the use of feedback forms at each restaurant and via social media and online surveys. In addition, our CEO and Executive Chairman, Alan Goh and our Executive Director, Catherine Tan, regularly attend food exhibition and hold regular discussions with our operations team, executive chefs and external consultants. The expenses incurred in relation to our research and development during the periods under review have not been significant. 82

87 BUSINESS INTELLECTUAL PROPERTY Trademarks Save as disclosed below, we do not own nor are we dependent on any registered trademark, patent or other intellectual property rights: Name of applicant Katrina Singapore Katrina Singapore Trademark Trademark/ Application number Registration class Country of registration Status T B Class 43 (1) Singapore Registered T J Class 43 (1) Singapore Registered Katrina Singapore S Class 43 (1) Singapore Registered Katrina Singapore U Class 43 (1) Singapore Pending Registration Katrina Singapore Y Class 43 (1) Singapore Registered Katrina Singapore P Class 43 (1) Singapore Registered Katrina Singapore S Class 43 (1) Singapore Registered Katrina Singapore Q Class 43 (1) Singapore Pending Registration 83