OLD CHANG KEE LTD. PROSPECTUS DATED 4 JANUARY 2008 (Registered by the Monetary Authority of Singapore on 4 January 2008)

Transcription

1 PROSPECTUS DATED 4 JANUARY 2008 (Registered by the Monetary Authority of Singapore on 4 January 2008) 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. We have 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 Old Chang Kee Ltd. (the Company ) already issued and the new Shares (the New Shares ) which are the subject of this Invitation (as defined herein). Such permission will be granted when we have been admitted to the Official List of the Catalist. The dealing in and quotation of our shares will be in Singapore dollars. Our acceptance of applications for the New Shares will be conditional upon, inter alia, permission being granted by the SGX-ST to deal in, and for quotation of, all of the existing issued Shares and the New Shares. Monies paid in respect of any application accepted will, in the event such permission is not granted, 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 claim whatsoever against us, the Manager (as defined herein), the Underwriter (as defined herein) or the Placement Agent (as defined herein). The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this Prospectus. Admission to the Official List of the Catalist is not to be taken as an indication of the merits of the Invitation, the Company, its subsidiaries, the Shares or the New Shares. A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the Authority ). The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of the Shares or the New Shares, as the case may be, being offered for investment. We have not lodged or registered this Prospectus in any other jurisdiction. No Shares shall be allotted or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus by the Authority. Investing in the Shares involves risks which are described in the section entitled Risk Factors of this Prospectus. As part of the transitional arrangement announced by the SGX-ST on 26 November 2007, the Company has been approved to be listed on the Catalist. The Company has submitted its listing application under the listing rules of SGX-SESDAQ and the SGX-ST has reviewed the application based on the SGX-SESDAQ framework and listing rules. The offer will be accompanied by a prospectus registered by the Authority. The SGX-ST will publish a date from which our Company and all existing SGX-SESDAQ listed companies are required to comply with the listing rules of the Catalist (please refer to the section entitled Replacement of SGX-SESDAQ by Catalist and Appendix L of this Prospectus for more information). OLD CHANG KEE LTD. (Incorporated in the Republic of Singapore on 16 December 2004) (Company Registration Number: W) Invitation in respect of 25,000,000 New Shares comprising:- (a) 1,000,000 Offer Shares at S$0.20 for each Offer Share by way of public offer; and (b) 24,000,000 Placement Shares by way of placement, comprising:- (i) 22,500,000 Placement Shares at S$0.20 for each Placement Share by way of applications made via Placement Shares Application Forms; and (ii) 1,500,000 Reserved Shares at S$0.20 for each Reserved Share reserved for our Non-Executive Directors, management, employees, business associates and others who have contributed to the success of our Group, payable in full on application. Manager Westcomb Capital Pte Ltd Placement Agent and Underwriter Westcomb Securities Pte Ltd

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3 CONTENTS Page CORPORATE INFORMATION... 4 DEFINITIONS... 6 DETAILS OF THE INVITATION Listing on the Catalist Indicative Timetable for Listing REPLACEMENT OF SGX-SESDAQ BY CATALIST THE INVITATION USE OF PROCEEDS FROM THE INVITATION AND EXPENSES INCURRED MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS EXCHANGE CONTROLS CLEARANCE AND SETTLEMENT PLAN OF DISTRIBUTION CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS SELLING RESTRICTIONS PROSPECTUS SUMMARY INVITATION STATISTICS RISK FACTORS Risks relating to our Business or our Industry Risks relating to Ownership of our Shares MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Combined Profit and Loss Accounts Combined Balance Sheet Overview Review of Results of Operations Review of Past Financial Position Liquidity and Capital Resources Material Capital Expenditure, Divestment and Commitment DIVIDEND POLICY CAPITALISATION AND INDEBTEDNESS DILUTION

4 CONTENTS Page GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP Share Capital Significant Changes In Percentage of Ownership Changes in Issued and Paid-Up Share Capital of our Company and our Subsidiaries Shareholders Moratorium RESTRUCTURING EXERCISE GROUP STRUCTURE OUR SUBSIDIARIES AND ASSOCIATED COMPANIES OUR HISTORY OUR BUSINESS Introduction Our Products Production Facility and Capacity Retail Outlets Enterprise Resource Planning System Quality Control Marketing and Business Development Product Development Intellectual Property Properties and Fixed Assets Our Major Customers Our Major Suppliers Inventory Management Credit Policy Government Regulations Insurance Competition Our Competitive Strengths Awards and Accreditation PROSPECTS AND FUTURE PLANS Prospects Trend Information Future Plans DIRECTORS, MANAGEMENT AND EMPLOYEES Directors Management Management Reporting Structure Directors and Executive Officers Remuneration Service Agreements Our Employees Board Practices CORPORATE GOVERNANCE

5 CONTENTS Page INTERESTED PERSON TRANSACTIONS Past Interested Person Transactions Present and Ongoing Interested Person Transactions Review Procedures for Future Interested Person Transactions CONFLICTS OF INTEREST GENERAL AND STATUTORY INFORMATION APPENDIX A Report from the Auditors and the Audited Combined Financial Statements of Old Chang Kee Ltd. and its Subsidiary Companies for the Financial Years Ended 31 December 2004, 2005 and A-1 APPENDIX B Report from the Auditors and the Unaudited Combined Financial Statements of Old Chang Kee Ltd. and its Subsidiary Companies for the Financial Period from 1 January 2007 to 30 June B-1 APPENDIX C Extracts of our Articles of Association... C-1 APPENDIX D Description of Singapore Company Law relating to Shares... D-1 APPENDIX E Summary of Relevant Australian Laws and Regulations... E-1 APPENDIX F Summary of Relevant Malaysian Laws and Regulations... F-1 APPENDIX G Summary of Relevant PRC Laws and Regulations... G-1 APPENDIX H Summary of Relevant Thai Laws and Regulations... H-1 APPENDIX I Taxation... I-1 APPENDIX J Terms, Conditions and Procedures for Application and Acceptance... J-1 APPENDIX K Report from the Auditors and the Unaudited Proforma Combined Financial Statements of Old Chang Kee Ltd. and its Subsidiary Companies for the Financial Year Ended 31 December 2006 and the Financial Period from 1 January 2007 to 30 June K-1 APPENDIX L Key Changes under Catalist Rules... L-1 3

6 CORPORATE INFORMATION BOARD OF DIRECTORS : Han Keen Juan (Executive Chairman) Lim Tao-E William (Chief Executive Officer) Choong Buat Ken (Non-Executive Director) Lim Yen Heng (Non-Executive Director) Ong Chin Lin (Lead Independent Director) Wong Chak Weng (Independent Director) COMPANY SECRETARY : Chew Mei Li, CPA COMPANY REGISTRATION : W NUMBER REGISTERED OFFICE : 2 Woodlands Terrace Singapore SHARE REGISTRAR : Boardroom Corporate & Advisory Services Pte Ltd 3 Church Street #08-01 Samsung Hub Singapore MANAGER : Westcomb Capital Pte Ltd 5 Shenton Way #09-07 UIC Building Singapore UNDERWRITER AND : Westcomb Securities Pte Ltd PLACEMENT AGENT 5 Shenton Way #09-08 UIC Building Singapore SOLICITORS TO THE INVITATION : Shook Lin & Bok LLP AND LEGAL ADVISERS TO OUR 1 Robinson Road COMPANY ON SINGAPORE LAW #18-00 AIA Tower Singapore LEGAL ADVISERS TO OUR : Hardies Lawyers COMPANY ON AUSTRALIAN LAW 45 Ventnor Avenue West Perth WA 6005 Australia LEGAL ADVISERS TO OUR : Skrine COMPANY ON MALAYSIAN LAW Unit No , 8th Floor Wisma UOA Damansara 50, Jalan Dungun Damansara Heights Kuala Lumpur Malaysia LEGAL ADVISERS TO OUR : Royal Advocates International Limited COMPANY ON THAI LAW 2/4 Nai Lert Tower Building 5th Floor, Lumpini Patuwan Bangkok Thailand 4

7 CORPORATE INFORMATION LEGAL ADVISERS TO OUR : King & Wood COMPANY ON PRC LAW 22/F, The City Tower 86 Section One Renminnanlu Chengdu, Sichuan PRC AUDITORS AND REPORTING : Ernst & Young ACCOUNTANTS Certified Public Accountants One Raffles Quay North Tower, Level 18 Singapore Partner-in-charge: Max Loh Khum Whai (a member of the Institute of Certified Public Accountants of Singapore) RECEIVING BANKER : Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore PRINCIPAL BANKERS : Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore United Overseas Bank Limited 80 Raffles Place UOB Plaza 1 Singapore CORPORATE WEBSITE : (information contained on this Internet website does not constitute a part of this Prospectus) 5

8 DEFINITIONS In this Prospectus, the accompanying Application Forms and, in relation to the Electronic Applications, the instructions appearing on the screens of the ATMs of Participating Banks or the IB websites of the relevant Participating Banks, unless the context otherwise requires, the following definitions apply throughout where the context so admits:- Companies within our Group Company or Old Chang Kee : Old Chang Kee Ltd. Group : Our Company and its subsidiaries Old Chang Kee Australia : Old Chang Kee Australia Pty Ltd Old Chang Kee China : Ten & Han Food Management (Chengdu) Co., Ltd. Ten & Han : Ten & Han Trading Pte Ltd Associated Companies Old Chang Kee Malaysia : Old Chang Kee (M) Sdn. Bhd. Old Chang Kee Thailand : Old Chang Kee (Thailand) Co., Ltd. Other Companies, Organisations and Agencies 1901 Singapore : 1901 Singapore Pte. Ltd. Auditors : Ernst & Young Authority : Monetary Authority of Singapore AVA : Agri-Food & Veterinary Authority of Singapore Catalist : Sponsor-supervised board CDP or Depository : The Central Depository (Pte) Limited FIC : Foreign Investment Committee, under Malaysia s Prime Minister s Department, which regulates, inter alia, the acquisition of assets, mergers and takeovers by local and foreign interests HDB : Housing and Development Board Indonesian Franchisee : PT. Old Chang Kee Ina Placement Agent or : Westcomb Securities Pte Ltd Underwriter Manager : Westcomb Capital Pte Ltd MUIS : Majlis Ugama Islam Singapura (also known as the Islamic Religious Council of Singapore) NEA : National Environment Agency 6

9 DEFINITIONS Participating Banks : DBS Bank Ltd (including POSB) ( DBS Bank ), Oversea-Chinese Banking Corporation Limited ( OCBC ) and United Overseas Bank Limited and its subsidiary, Far Eastern Bank Limited (the UOB Group ) Philippines Franchisee : OCK Food Chain Philippines, Inc. Pure Options : Pure Options Pte. Ltd. Receiving Banker : Oversea-Chinese Banking Corporation Limited SGX-SESDAQ : SGX-ST Dealing and Automated Quotation System SGX-ST : Singapore Exchange Securities Trading Limited Share Registrar : Boardroom Corporate & Advisory Services Pte Ltd Valuer : Asian Appraisal Company Pte Ltd General Application Forms : The printed application forms to be used for the purpose of the Invitation and which form part of this Prospectus Application List : The list of applications for the subscription of the New Shares Articles of Association : The articles of association of our Company Associate : (a) in relation to an entity, means:- (i) (ii) in a case where the entity is a Substantial Shareholder, Controlling Shareholder, substantial interest-holder or controlling interest-holder, its related corporation, related entity, associated company or associated entity; or in any other case:- (aa) (bb) (cc) (dd) (ee) a director or an equivalent person; where the entity is a corporation, a Controlling Shareholder of the entity; where the entity is not a corporation, a controlling interest-holder of the entity; a subsidiary, a subsidiary entity, an associated company, or an associated entity; or a subsidiary, a subsidiary entity, an associated company, or an associated entity, of the Controlling Shareholder or controlling interestholder, as the case may be, of the entity; and 7

10 DEFINITIONS (b) in relation to an individual, means:- (i) (ii) his immediate family; a trustee of any trust of which the individual or any member of the individual s immediate family is, (aa) (bb) a beneficiary; or where the trust is a discretionary trust, a discretionary object, when the trustee acts in that capacity; or (iii) any corporation in which he and his immediate family (whether directly or indirectly) have interests in voting shares of an aggregate of not less than 30% of the total votes attached to all voting shares Associated Company : in relation to an entity, means:- (a) any corporation, other than a subsidiary of the entity, in which:- (i) (ii) (iii) (iv) (v) the entity or one or more of its subsidiaries or subsidiary entities has; the entity, one or more of its subsidiaries and one or more of its subsidiary entities together have; the entity and one or more of its subsidiaries together have; the entity and one or more of its subsidiary entities together have; or one or more of the subsidiaries of the entity and one or more of the subsidiary entities of the entity together have, a direct interest in voting shares of not less than 20% but not more than 50% of the total votes attached to all voting shares in the corporation; or (b) any corporation, other than a subsidiary of the entity or a corporation which is an associated company of the entity by virtue of paragraph (a), the policies of which:- (i) (ii) (iii) the entity or one or more of its subsidiaries or subsidiary entities; the entity together with one or more of its subsidiaries and one or more of its subsidiary entities; the entity together with one or more of its subsidiaries; 8

11 DEFINITIONS (iv) (v) the entity together with one or more of its subsidiary entities; or one or more of the subsidiaries of the entity together with one or more of the subsidiary entities of the entity, is or are able to control or influence materially ATM : Automated teller machine of a Participating Bank ATM Application : An application for the Offer Shares made through an ATM, subject to and on the terms and conditions of this Prospectus Audit Committee : The audit committee of our Company as at the date of this Prospectus Board : The board of Directors of our Company business trust : Has the same meaning as in Section 2 of the Business Trusts Act (Chapter 31A) of Singapore, as amended, supplemented or modified from time to time CEO : Chief executive officer Companies Act : Companies Act (Chapter 50) of Singapore, as amended, supplemented or modified from time to time Controlling Shareholder : In relation to a corporation, means a person who:- (a) (b) holds directly or indirectly interest in the voting shares of the corporation and where the total votes attached to such shares are 15% or more of the aggregate of the votes attached to all the voting shares in the corporation; or in fact exercises control over the corporation CPF : The Central Provident Fund Directors : The directors of our Company as at the date of this Prospectus Electronic Application : An ATM Application or an IB Application EPS : Earnings per Share ERP : Enterprise Resource Planning, a type of system which uses multiple components of computer software and hardware, including but not limited to a unified database, to integrate all data and processes of an organisation Executive Directors : The executive Directors of our Company Executive Officers : The executive officers of our Group as at the date of this Prospectus, who are also key executives as defined under the Securities and Futures Act (Offers of Investment) (Shares and Debentures) Regulations

12 DEFINITIONS F&B : Food and beverage FIE : Foreign Investment Enterprise FP : Financial period from 1 January to 30 June FY : Financial year ended or, as the case may be, ending 31 December HACCP : Hazard Analysis and Critical Control Point, a scientific, rational and systematic approach to identify, assess and control hazards during production, processing, manufacturing, preparation and use of food to ensure that food is safe for consumption Halal : Contains no pork, lard or other elements of impurities as defined under Islamic law IB : Internet banking IB Application : An application for the Offer Shares made through an IB website of one of the relevant Participating Banks, subject to and on the terms and conditions of this Prospectus Independent Directors : The independent Directors of our Company Invitation : The invitation by our Company to the public to subscribe for the New Shares, subject to and on the terms and conditions of this Prospectus IPO : Initial public offering Issue Price : S$0.20 for each New Share Latest Practicable Date : 12 November 2007, being the latest practicable date prior to the lodgment of this Prospectus with the Authority Listing Manual : Listing manual of the SGX-ST, as amended, supplemented or modified from time to time Market Day : A day on which the SGX-ST is open for trading in securities MRT : Mass rapid transit NAV : Net asset value New Shares : The 25,000,000 new Shares for which our Company invites applications to subscribe pursuant to the Invitation, subject to and on the terms and conditions of this Prospectus Non-Executive Directors : The non-executive Directors (including Independent Directors) of our Company Nominating Committee : The nominating committee of our Company as at the date of this Prospectus Offer : The offer by our Company of the Offer Shares to the public in Singapore for subscription at the Issue Price, subject to and on the terms and conditions of this Prospectus 10

13 DEFINITIONS Offer Shares : The 1,000,000 New Shares which are the subject of the Offer period under review : FY2004, FY2005, FY2006 and FP2007 Placement or : The placement by the Placement Agent of the Placement Shares Placement Tranche on behalf of our Company for subscription at the Issue Price, subject to and on the terms and conditions of this Prospectus Placement Shares : The 24,000,000 New Shares which are the subject of the Placement (including the Reserved Shares) PRC : People s Republic of China, excluding Hong Kong Special Administrative Region of PRC ( Hong Kong ), Macau Special Administrative Region of PRC ( Macau ) and the Republic of China for the purposes of this Prospectus and for geographical reference only Prospectus : This Prospectus dated 4 January 2008 issued by our Company in respect of the Invitation Relevant Period : FY2004, FY2005, FY2006, FP2007 and the period between 1 July 2007 to the Latest Practicable Date Remuneration Committee : The remuneration committee of our Company as at the date of this Prospectus Reserved Shares : The 1,500,000 Placement Shares reserved for our Non-Executive Directors, management, employees, business associates and those who have contributed to the success of our Group Restructuring Exercise : The restructuring exercise undertaken by our Group as described in the section entitled Restructuring Exercise of this Prospectus retail outlets : Retail shops and kiosks set up by our Group Securities Account : Securities account maintained by a Depositor with CDP but does not include a securities sub-account Securities and Futures Act : Securities and Futures Act (Chapter 289) of Singapore, as amended, supplemented or modified from time to time Service Agreements : The service agreements entered into between our Company and our Executive Directors, as described in the section entitled Service Agreements of this Prospectus Shares : Ordinary shares in the capital of our Company Shareholders : Registered holders of Shares, except where the registered holder is CDP, the term Shareholders shall, in relation to such Shares, mean the Depositors whose Securities Accounts are credited with Shares Sub-division of Shares : The sub-division of each Share into 12 Shares as described in the section entitled Share Capital of this Prospectus 11

14 DEFINITIONS Substantial Shareholder : A person who has an interest in voting shares of a corporation, and where the total votes attached to such shares are not less than 5% of the total votes attached to all the voting shares of the corporation William Lim : Lim Tao-E William Currencies, Units and Others AUD or A$ : Australian dollars RM or MYR : Malaysian Ringgit RMB : PRC Renminbi S$ and cents : Singapore dollars and cents, respectively THB : Thai Baht US$ or USD : United States dollars sq ft : Square feet % or per cent. : Per centum or percentage Any reference to our, ourselves, us, we or other grammatical variations thereof in this Prospectus is a reference to our Company, our Group or any member of our Group as the context requires. The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. The term entity shall have the same meaning ascribed to it in Section 2 of the Securities and Futures Act, while the terms associated entity, controlling interest-holder, related corporation, related entity, subsidiary, subsidiary entity and substantial interest-holder shall have the same meanings ascribed to them respectively in Paragraph 1 of the Fourth Schedule of the Securities and Futures Act (Offers of Investments) (Shares and Debentures) Regulations 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 Prospectus, the Application Forms or the Electronic Applications 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 in the Companies Act, the Securities and Futures Act or any statutory modification thereof or the Listing Manual and used in this Prospectus, the Application Forms and Electronic Applications shall, where applicable, have the meaning assigned to it under the Companies Act, the Securities and Futures Act or such statutory modification, or the Listing Manual, as the case may be. Any reference in this Prospectus, the Application Forms or the Electronic Applications to Shares being allotted to an applicant includes allotment to CDP for the account of that applicant. Any reference to a time of day or dates in this Prospectus, the Application Forms or the Electronic Applications shall be a reference to Singapore time or dates respectively, unless otherwise stated. 12

15 DEFINITIONS Certain names with Chinese characters have been translated into English names. These names can be identified by the Chinese characters indicated beside the English names. Such translations which are provided solely for the convenience of investors, may not have been registered with the relevant PRC authorities and should not be construed as representations that the English names actually represent the Chinese characters. Any discrepancies in the tables included in this Prospectus between the listed amounts and the totals thereof are due to rounding. Accordingly, figures shown in totals in certain tables may not be an arithmetic aggregation of the figures which precede them. 13

16 DETAILS OF THE INVITATION LISTING ON THE CATALIST As part of the transitional arrangement announced by the SGX-ST on 26 November 2007, the Company has been approved to be listed on the Catalist. The Company has submitted its listing application under the listing rules of SGX-SESDAQ and the SGX-ST has reviewed the application based on the SGX- SESDAQ framework and listing rules. We have made an application to the SGX-ST for permission to deal in, and for quotation of, all our Shares already issued and the New Shares. Such permission will be granted when our Company has been admitted to the Official List of the Catalist. Our acceptance of applications for the New Shares will be conditional upon, inter alia, permission being granted by the SGX-ST to deal in, and for quotation of, all of our existing issued Shares and the New Shares. If such permission is not granted for any reason, monies paid in respect of any application accepted will 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 claim whatsoever against us, the Manager, the Underwriter or the Placement Agent. The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this Prospectus. Admission to the Official List of the Catalist is not to be taken as an indication of the merits of the Invitation, the Company, its subsidiaries, the Shares or the New Shares. A copy of this Prospectus has been lodged with and registered by the Authority. The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act, or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of the Shares or the New Shares, as the case may be, being offered for investment. No Shares shall be allotted or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus by the Authority. We are subject to the provisions of the Securities and Futures Act and the Listing Manual regarding corporate disclosure. In particular, if after this Prospectus is registered by the Authority but before the close of the Invitation, we become aware of:- (a) (b) (c) a false or misleading statement or matter in this Prospectus; an omission from this Prospectus of any information that should have been included in it under Section 243 of the Securities and Futures Act; or a new circumstance that has arisen since this Prospectus was lodged with the Authority which would have been required by Section 243 of the Securities and Futures Act to be included in this Prospectus, if it had arisen before this Prospectus was lodged, that is materially adverse from the point of view of an investor, we may lodge a supplementary or replacement prospectus with the Authority pursuant to Section 241 of the Securities and Futures Act. Where prior to the lodgment of the supplementary or replacement prospectus, applications have been made under this Prospectus to subscribe for the New Shares, and:- (a) where the New Shares have not been issued to you, our Company shall either:- (i) within seven days from the date of lodgment of the supplementary or replacement prospectus give you the supplementary or replacement prospectus, as the case may be, and provide you with an option to withdraw your application; or 14

17 DETAILS OF THE INVITATION (ii) treat the applications as withdrawn and cancelled, in which case your application shall be deemed to have been withdrawn and cancelled and our Company shall, within seven days from the date of lodgment of the supplementary or replacement prospectus, return to you all monies which you have paid on account of your application for the New Shares, without interest or any share of revenue or other benefit arising therefrom and at your own risk; or (b) where the New Shares have been issued to you, our Company shall either:- (i) (ii) within seven days from the date of lodgment of the supplementary or replacement prospectus give you the supplementary or replacement prospectus, as the case may be, and provide you with an option to return to our Company the New Shares which you do not wish to retain title in; or treat the issue of the New Shares as void, in which case the issue shall be deemed void and our Company shall, within seven days from the date of lodgment of the supplementary or replacement prospectus, return to you all monies which you have paid on account of your application for the New Shares, without interest or any share of revenue or other benefit arising therefrom and at your own risk. If you wish to exercise your option under paragraph (a)(i) above to withdraw your application in respect of the New Shares, you shall, within 14 days from the date of lodgment of the supplementary or replacement prospectus, notify our Company of this, whereupon our Company shall, within seven days from the receipt of such notification, pay to you all monies paid by you on account of your application for such New Shares, without interest or any share of revenue or other benefit arising therefrom and at your own risk. If you wish to exercise your option under paragraph (b)(i) above to return the New Shares issued to you, you shall, within 14 days from the date of lodgment of the supplementary or replacement prospectus, notify our Company of this and return all documents, if any, purporting to be evidence of title to those Shares, to our Company, whereupon our Company shall, within seven days from the receipt of such notification and documents, if any, pay to you all monies paid by you for those New Shares, without interest or any share of revenue or other benefit arising therefrom and at your own risk. Under the Securities and Futures Act, the Authority may, in certain circumstances issue a stop order pursuant to Section 242 of the Securities and Futures Act (the Stop Order ) to our Company, directing that no New Share or no further Share to which this Prospectus relates, be allotted or issued. Such circumstances will include a situation where this Prospectus (i) contains a statement or matter, which in the opinion of the Authority, is false or misleading; (ii) omits any information that should be included in accordance with the Securities and Futures Act; or (iii) does not, in the opinion of the Authority, comply with the requirements of the Securities and Futures Act. In the event that the Authority issues a Stop Order and applications to subscribe for the New Shares have been made prior to the Stop Order, then:- (a) (b) where the New Shares have not been issued to you, your application for the New Shares shall be deemed to have been withdrawn and cancelled, and our Company shall, within 14 days from the date of the Stop Order, pay to you all monies which you have paid on account of your application for the New Shares, without interest or any share of revenue or other benefit arising therefrom and at your own risk; or where the New Shares have been issued to you, the Securities and Futures Act provides that the issue of the New Shares shall be deemed to be void, and our Company is required, within 14 days from the date of the Stop Order, to pay to you all monies which you have paid on account of your application for the New Shares, without interest or any share of revenue or other benefit arising therefrom and at your own risk. 15

18 DETAILS OF THE INVITATION In each of the above instances where monies are refunded to you, it shall be paid to you without interest or any share of revenue or other benefit arising therefrom and at your own risk, and you will not have any claims against our Company, the Manager, the Placement Agent or the Underwriter. This Prospectus has been reviewed and approved by our Directors and they individually and collectively accept full responsibility for the accuracy of the information given in this Prospectus and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and the opinions expressed in this Prospectus are fair and accurate in all material respects as at the date of this Prospectus and that there are no material facts the omission of which would make any statements in this Prospectus misleading, and that this Prospectus constitutes full and true disclosure of all material facts about the Invitation and our Group. Neither our Company, the Manager, the Underwriter, the Placement Agent nor any other party involved in the Invitation 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 Prospectus should be considered to be business, legal or tax advice regarding an investment in our Shares. You should consult your own legal, financial, tax or other professional adviser regarding an investment in our Shares. No person has been or is authorised to give any information or to make any representation not contained in this Prospectus in connection with the Invitation and, if given or made, such information or representation must not be relied upon as having been authorised by us, the Manager, the Placement Agent or the Underwriter. Neither the delivery of this Prospectus and the Application Forms nor the Invitation 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 Group or in any statement of fact or information contained in this Prospectus since the date of this Prospectus. Where such changes occur, we may make an announcement of the same to the SGX-ST and the public, and if required, lodge a supplementary document or replacement document pursuant to Section 241 of the Securities and Futures Act and take immediate steps to comply with Section 241 of the Securities and Futures Act. You should take note of any such announcement and/or documents issued by us in compliance with the Securities and Futures Act and, upon release of such announcement and/or documents, shall be deemed to have notice of such changes. Save as expressly stated in this Prospectus, nothing herein is, or may be relied upon as, a promise or representation as to our future performance or policies. This Prospectus has been prepared solely for the purpose of the Invitation and may not be relied upon by any persons other than yourself in connection with your application for the New Shares or for any other purpose. This Prospectus does not constitute an offer or invitation or solicitation to subscribe for the New Shares in any jurisdiction in which such offer, invitation or solicitation is unauthorised or unlawful nor does it constitute an offer or invitation or solicitation to any person to whom it is unlawful to make such an offer or invitation or solicitation. Copies of this Prospectus and the Application Forms may be obtained on request, subject to availability, during office hours from:- Westcomb Securities Pte Ltd 5 Shenton Way #09-08 UIC Building Singapore and from members of the Association of Banks in Singapore, members of the SGX-ST and merchant banks in Singapore. A copy of this Prospectus is also available on the SGX-ST website and the Authority s OPERA website at 16

19 DETAILS OF THE INVITATION The Application List will open at a.m. on 14 January 2008 and will remain open until noon on the same day or such other period or periods as our Company may, in consultation with the Manager, in their absolute discretion decide, subject to any limitations under all applicable laws. In the event a supplementary document or replacement document is lodged with the Authority, the Application List will remain open for at least 14 days after the lodgment of the supplementary document or replacement document. Details of the procedures for application for the New Shares are set out in Appendix J of this Prospectus. INDICATIVE TIMETABLE FOR LISTING The indicative timetable is set out below for your reference:- Indicative date/time Event 5 January 2008, a.m. Opening of Invitation 14 January 2008, noon Close of Application List 15 January 2008 Balloting of applications, if necessary (in the event of an over-subscription for the Offer Shares) 16 January 2008, 9.00 a.m. Commence trading on a ready basis 21 January 2008 Settlement date for all trades done on a ready basis. The above timetable is only indicative as it assumes that the closing of the Application List takes place on 14 January 2008, the date of admission of our Company to the Official List of the Catalist will be 16 January 2008, the SGX-ST s shareholding spread requirement will be complied with and the New Shares will be issued and fully paid-up prior to 16 January The actual date on which our Shares will commence trading on a ready basis will be announced when it is confirmed by the SGX-ST. The above timetable and procedure may be subject to such modifications as the SGX-ST may, in its discretion, decide, including the decision to permit trading on a ready basis and the commencement date of such trading. The commencement of trading on a ready basis will be entirely at the discretion of the SGX-ST. All persons trading in our Shares before their Securities Accounts with CDP are credited with the relevant number of Shares will do so at the risk of selling Shares which neither they nor their nominees, as the case may be, have been allotted or are otherwise beneficially entitled to. In the event of any changes in the closure of the Application List or the time period during which the Invitation is open, we will publicly announce the same:- (i) (ii) through a SGXNET announcement to be posted on the Internet at the SGX-ST website and in a local English newspaper. Results of the Invitation including the allotment of the New Shares and balloting (in the event of an oversubscription for the Offer Shares) will be provided through the channels in (i) and (ii) above. Investors should consult the SGX-ST announcement on the ready listing date on the Internet (at the SGX-ST website or the newspapers, or check with their brokers on the date on which trading on a ready basis will commence. 17

20 REPLACEMENT OF SGX-SESDAQ BY CATALIST As announced by the SGX-ST on 26 November 2007, the SGX-SESDAQ will be replaced by a sponsorsupervised board named Catalist on 17 December As our Company will be listed after 17 December 2007, it will be listed on Catalist. The SGX-ST will publish a date ( Transition Date ) from which our Company and all existing SGX-SESDAQ issuers are required to comply with the listing rules of Catalist (the Catalist Rules ). At least 12 months notice will be given and the SGX-ST may impose conditions. Our Company must meet the following requirements by the Transition Date:- (a) (b) (c) (d) submit an undertaking to, inter alia, comply with the Catalist Rules to the SGX-ST; comply with any conditions imposed by the SGX-ST; announce our intention to the market giving no less than one month s notice, including the name of our Sponsor (as defined below) and the date from which we will comply with the Catalist Rules as agreed with the SGX-ST; and send a copy of the announcement to each Shareholder on our register at the date of the announcement. Until the above requirements have been met, our Company must continue to comply with the SGX- SESDAQ rules. Our Company may be delisted if we fail to comply with the above requirements by the Transition Date. A key feature of Catalist is that intermediaries ( Sponsors ) will be authorised by the SGX-ST to act as either:- (a) (b) a full Sponsor, authorised to undertake activities set out in Catalist Rule 225 in preparing a listing applicant for admission or advising an existing issuer in a very substantial acquisition or reverse takeover as well as activities set out in Catalist Rule 226 in advising an existing issuer on compliance with the continuing obligations under the Catalist Rules; or a continuing Sponsor, authorised to undertake activities set out in Catalist Rule 226 in advising an existing issuer on compliance with the continuing obligations under the Catalist Rules. With effect from the day from which we shall comply with the Catalist Rules, we must retain a Sponsor at all times or face delisting. The Sponsor will review all documents to be released by us on Catalist to Shareholders or to the market (including announcements, resolutions contained in notices of meetings, circulars and corporate actions) before release, to ensure that our Company complies with the Catalist Rules and makes the appropriate disclosures. In its letter dated 16 November 2007, informing that our Company is conditionally eligible for listing on the SGX-SESDAQ, the SGX-ST has stated that notwithstanding that our Company meets the Mainboard requirements at the time of listing, it will only be considered for a transfer to the Mainboard if it records substantially higher profits for each of the financial years ending 31 December 2007 and Please refer to the Key Changes Under Catalist Rules in Appendix L of this Prospectus for information on the key changes which will affect our Company upon the Catalist Rules coming into effect. 18

21 THE INVITATION Invitation Size : 25,000,000 New Shares which will, upon allotment and issue, rank pari passu in all respects with our existing issued Shares. Issue Price : S$0.20 for each New Share. Purpose of the Invitation : The purpose of the Invitation is to secure admission of our Company to the Official List of the Catalist. Our Directors consider that the listing of our Company and the quotation of the Shares and the New Shares on the Official List of the Catalist will enhance the public image of our Group locally and overseas and enable us to tap the capital markets to fund the expansion of our operations and enlarge our capital base for the continued expansion of our business. The Invitation will also provide members of the public, the Non-Executive Directors, management, employees and business associates as well as those who have contributed to our success with an opportunity to participate in the equity of our Company. The Offer : The Offer comprises an invitation by our Company to the public in Singapore to subscribe for 1,000,000 Offer Shares at the Issue Price, subject to and on the terms and conditions of this Prospectus. The Placement : The Placement comprises a placement of 22,500,000 Placement Shares by way of Placement Shares Application Forms and 1,500,000 Reserved Shares by way of Reserved Shares Application Forms, subject to and on the terms and conditions of this Prospectus. Reserved Shares : 1,500,000 Reserved Shares (which form part of the Placement Shares) will be reserved for our Non-Executive Directors, management, employees, business associates and others who have contributed to the success of our Group. In the event that any of the Reserved Shares are not taken up, they will be made available to satisfy applications for the Placement Shares, or in the event of an under-subscription for the Placement Shares, to satisfy applications made by members of the public for the Offer Shares. Listing Status : Our Shares will be quoted in Singapore dollars on the Official List of the Catalist, subject to admission of our Company to the Official List of the Catalist and permission for dealing in, and for quotation of, our Shares and the New Shares being granted by the SGX-ST. Risk Factors : Investing in our Shares involves risks which are described in the section entitled Risk Factors of this Prospectus. 19

22 USE OF PROCEEDS FROM THE INVITATION AND EXPENSES INCURRED Net proceeds from the issue of the New Shares The net proceeds attributable to our Company from the issue of the New Shares (after deducting the estimated expenses in relation to the issue of the New Shares of approximately S$1.7 million to be borne by our Company) will be approximately S$3.3 million. Amount allocated for each dollar of the proceeds raised by our Company Estimated from the Invitation amount (as a % of the gross Purpose (S$ 000) proceeds) Use of proceeds (i) Expand our overseas operations 1, (ii) Increase and refurbish our Singapore retail outlets 1, (iii) Expansion through strategic alliances, acquisitions, joint ventures and franchises (iv) Working capital purposes Invitation expenses (i) Initial listing and processing fees (ii) Professional fees 1, (iii) Underwriting commission, placement commission and brokerage (1) (iv) Miscellaneous expenses TOTAL 5, The allocation of each principal intended use of proceeds and the major expenses are set out below:- Note:- (1) Please refer to the section entitled Management, Underwriting and Placement Arrangements of this Prospectus for more details. Please refer to the section entitled Prospects and Future Plans of this Prospectus for more information on our use of proceeds. In the opinion of our Directors, no minimum amount must be raised from the issue of the New Shares. Pending deployment of the net proceeds from the issue of the New Shares as aforesaid, the net proceeds may be added to our Group s working capital, placed as deposits with banks or financial institutions, or used for investment in short-term deposits, money market instruments or debt instruments, as our Directors may deem fit in their absolute discretion. 20

23 MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS Pursuant to a management and underwriting agreement dated 4 January 2008 (the Management and Underwriting Agreement ), our Company appointed the Manager, and the Manager has agreed, to manage the Invitation. The Manager will receive a management fee from our Company for its services rendered in connection with the Invitation as the Manager. Pursuant to the Management and Underwriting Agreement, the Underwriter agreed to underwrite the subscription of the Offer Shares on the terms and conditions therein, and our Company agreed to pay the Underwriter an underwriting commission of 2.75% of the aggregate Issue Price for the total number of Offer Shares successfully subscribed and the total number of Placement Shares successfully applied to satisfy excess applications for Offer Shares. Payment of the underwriting commission shall be made whether or not any allotment of the Offer Shares is made to the Underwriter or its nominees, including any portion of the Placement Shares which have been applied to satisfy excess applications for Offer Shares. Pursuant to the placement agreement dated 4 January 2008 (the Placement Agreement ), the Placement Agent agreed to subscribe for and/or procure subscribers for the Placement Shares at the Issue Price. In consideration of the agreement of the Placement Agent to subscribe for and/or procure subscribers for the Placement Shares, our Company agreed to pay to the Placement Agent a placement commission of 3.0% of the aggregate Issue Price for the total number of Placement Shares successfully subscribed and the total number of Offer Shares successfully applied to satisfy excess applications for Placement Shares. Payment of the placement commission shall be made whether or not any allotment of the Placement Shares is made to the Placement Agent or its nominees, including any portion of the Offer Shares which have been applied to satisfy excess applications for Placement Shares. Brokerage will be paid by our Company to the Underwriter, members of the SGX-ST, banks and merchant banks in Singapore in respect of accepted applications made on Application Forms bearing their respective stamps, or to Participating Banks in respect of successful applications made through ATM Applications or IB Applications, at the rate of 0.25% of the Issue Price for each Offer Share. In addition, DBS Bank levies a minimum brokerage fee of S$5,000 that will be paid by our Company. Subscribers of the Placement Shares (excluding the Reserved Shares) may be required to pay a brokerage of up to 1.0% of the Issue Price as well as applicable stamp duties and goods and services tax to the Placement Agent. If there shall have been, since the date of the Management and Underwriting Agreement and prior to or on the close of the Application List:- (a) (b) (c) (d) (e) any breach of the warranties or undertakings in the Management and Underwriting Agreement; or any occurrence of certain specified events which comes to the knowledge of the Manager or the Underwriter; 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, notice, policy, rule, guideline or directive (whether or not having the force of law and including, without limitation, any directive, notice or request issued by the Authority, the Securities Industry Council of Singapore, the SGX-ST or any other authority in Singapore) or in the interpretation or application thereof by any court, government body, regulatory authority or other competent authority in Singapore; or any change, or any development involving a prospective change or any crisis 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; or 21

24 MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS (f) (g) (h) any occurrence or any local, national or international outbreak or escalation of hostilities, insurrection or armed conflict (whether or not involving financial markets and including but not limited to any act of terrorism); 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 Manager likely to result in a material adverse fluctuation or adverse conditions in the stock market and/or stock markets overseas or in Singapore; or the success of the Invitation being materially prejudiced; or it becoming impracticable, inadvisable, inexpedient or not commercially viable or otherwise contrary to or outside the usual commercial customs or practices in Singapore for the Manager or the Underwriter to observe or perform or be obliged to observe or perform the terms of the Management and Underwriting Agreement or the Invitation; or the business, trading position, operations or prospects of our Group being materially and adversely affected, the Manager (for itself and for and on behalf of the Underwriter) may at any time prior to the close of the Application List by notice in writing to our Company rescind or terminate the Management and Underwriting Agreement. The Manager or the Underwriter may by notice in writing to our Company terminate the Management and Underwriting Agreement if:- (a) (b) at any time up to the commencement of trading of our Shares on the Catalist, a stop order shall have been issued by the Authority in accordance with Section 242 of the Securities and Futures Act; or at any time after the registration of this Prospectus by the Authority but before the close of the Application List, our Company fails and/or neglects to lodge a supplementary or replacement prospectus (as the case may be) if it becomes aware of:- (i) (ii) (iii) a false or misleading statement or matter in this Prospectus; an omission from this Prospectus of any information that should have been included in it under Section 243 of the Securities and Futures Act; or a new circumstance that has arisen since this Prospectus was lodged with the Authority and would have been required by Section 243 of the Securities and Future Act to be included in the Prospectus if it had arisen before this Prospectus was lodged, that is materially adverse from the point of view of an investor; or (c) the Shares have not been admitted to the Official List of the Catalist on or before 16 January 2008 (or such other date as our Company and the Manager may agree). In the event, the Placement Agent fails to receive valid subscriptions and payments for at least 90.0% of the Placement Shares by 6.00 p.m. on 9 January 2008 (or such other date as may be decided by the Manager), the Placement Agent shall be entitled to terminate the Placement Agreement. The obligations under the Placement Agreement are conditional upon the Management and Underwriting Agreement not being determined or rescinded pursuant to the provisions of the Management and Underwriting Agreement. In case of the non-fulfilment of any of the conditions in the Management and Underwriting Agreement or the release or discharge of the Manager and/or Underwriter (as the case may be) from their obligations under or pursuant to the Management and Underwriting Agreement, the Placement Agreement shall be terminated and the parties shall be released from their respective obligations under the Placement Agreement. Save as disclosed herein, there is no material relationship between our Company, the Manager, the Placement Agent or the Underwriter. 22

25 EXCHANGE CONTROLS Singapore There are no Singapore governmental laws, decrees, regulations or other legislation in force that may affect:- (a) (b) the import or export of capital, including the availability of cash and cash equivalents for use by our Group; and the remittance of dividends, interest or other payments to non-resident holders of our Company s securities. Australia With regards to the remittance of cash, Section 15 of the Australian Financial Transaction Reports Act 1998 (Cth) provides that it is an offence not to report to the Australian Transaction Reports Analysis Centre ( AUSTRAC ) or a customs officer a transfer of Australian or foreign currency (coin and paper money), in the amount of A$10,000 or more, into or out of Australia. The remittance of funds is governed by the Australian Banking (Foreign Exchange) Regulations 1959, which are made under the power conferred in Section 39 of the Australian Banking Act 1959 (Cth). Regulation 6 provides that a person shall not take or send out of Australia any Australian or foreign currency without the authority of the Reserve Bank of Australia (except for foreign currency obtained by purchase of a money order issued at any post office). Regulation 8 provides that a person shall not make any payment in Australia to a person who is not a resident or place any sum in Australia to the credit of such a person without the authority of the Reserve Bank of Australia. However under Regulation 38, the Reserve Bank of Australia may exempt any person, transaction, security or goods from the whole or any of the provisions of the Australian Banking (Foreign Exchange) Regulations 1959 (subject to directions from the Treasurer of the Commonwealth of Australia). Regulation 38A also provides that the Reserve Bank of Australia may issue a general authority authorising a person or all persons to do an act or thing specified in the authority, which would normally be prohibited by the Australian Banking (Foreign Exchange) Regulations A general authority was issued on 29 June 1990 (replacing the previous authority issued on 18 December 1984) which provided that any person in Australia may send Australian currency out of Australia and place currency to the credit of a non-resident. As noted in the Australian Commonwealth Gazette GN 27 dated 11 July 1990, all persons were exempted from the application of Regulations 6 and 8 of the Australian Banking (Foreign Exchange) Regulations Therefore, there is no barrier to funds transfers into or out of Australia, provided the reporting requirements of the Australian Financial Transaction Reports Act 1998 (Cth) are complied with. Malaysia There are no restrictions on the repatriation of capital, profits, dividends, interest, fees or rental by foreign direct investors or portfolio investors. PRC Major reforms have been introduced to the foreign exchange control system of PRC since On 1 October 1993, the State Council of PRC issued the Notice on Further Reform of the Foreign Exchange Control System and on 28 December 1993, the People s Bank of China ( PBOC ), issued the Notice of the PBOC on Further Reform of the Foreign Exchange Control System which came into effect on 1 January Other new regulations and implementation measures include the Regulations on the 23

26 EXCHANGE CONTROLS Foreign Exchange Settlement, Sale and Payments which took effect on 1 July 1996 and which contain detailed provisions regulating the settlement, sale and payment of foreign exchange by enterprises, individuals, foreign organisations and visitors in PRC and the Regulations of PRC on Foreign Exchange Control which took effect on 1 April 1996 and which contain detailed provisions in relation to foreign exchange control. On 21 July 2005, the PBOC issued the Public Announcement of the PBOC on Improving the Reform of the RMB Exchange Rate Regime, which states that from 21 July 2005, PRC will reform the exchange rate regime by moving into a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. RMB will no longer be pegged to the US$ and the RMB exchange rate regime will be improved with greater flexibility. Under these new regulations which contained detailed provisions regulating the holding, sale and purchase of foreign exchange by individuals, enterprises, economic bodies and social organizations in PRC, the previous dual exchange rate system for RMB was abolished and a unified floating exchange rate system based largely on supply and demand was introduced. The PBOC publishes the RMB exchange rate against the US$ and other major foreign currencies daily. The medial price of one foreign currency against RMB is to be set by reference to the US$/RMB and other major foreign currencies trading price on the inter-bank foreign exchange market announced by PBOC upon closing of business on the previous working day. In general, unless otherwise approved by the State Council, all organisations within PRC, including FIEs, are required to repatriate their foreign exchange earnings to PRC. In relation to FIEs (including sinoforeign equity joint ventures and sino-foreign co-operative enterprises as well as wholly foreign owned enterprises ( WFOE )), they may maintain their recurrent foreign exchange earnings within the highest sum determined by the State Administration of Foreign Exchange ( SAFE ) or its local branch and the part beyond the sum abovementioned shall be sold to the designated foreign exchange banks or be sold through the foreign exchange swap transaction center. At present, the enterprises within PRC which require foreign exchange for their ordinary trading and nontrading activities (such as payment of staff remuneration), import activities and repayment of foreign debts may purchase foreign exchange from designated banks if the application is supported by the relevant documents and governmental approvals/registrations as the case may be. FIEs may (subject to due payment of tax on such dividends) distribute profits to their foreign investors with funds in their foreign exchange bank accounts kept with designated banks. Should the amount of funds in such foreign exchange bank accounts be insufficient, the enterprises may purchase additional foreign exchange from designated foreign exchange banks upon the presentation of the resolutions of the directors on the profit distribution plan of that particular enterprise and other documents as required by the said banks in accordance with applicable PRC laws. On 14 January 1997, the Regulations of the People s Republic of China on Foreign Exchange Control ( Regulations ) was amended such that the payment in and transfer of foreign exchange for current international transactions will no longer be subject to PRC government control or restrictions. Under the Regulations, FIEs may buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business only upon providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from the SAFE. Capital investments by FIEs outside of PRC are also subject to limitations, which include approvals by the Ministry of Commerce, the SAFE, the National Development and Reform Commission and their respective branches. Despite the aforementioned relaxation of foreign exchange control over current account transactions, the approval of the SAFE or its local branch is still required before a PRC enterprise may provide any foreign exchange guarantee or make any investment outside of PRC or enter into any other capital account transaction involving the purchase of foreign exchange, except as otherwise provided by PRC regulations. As to a foreign exchange loan, FIEs are required to effect and complete the foreign exchange loan registration with the SAFE or its local branch and to put the foreign loan concerned on 24

27 EXCHANGE CONTROLS record. In addition, under certain notices promulgated by the PBOC and the SAFE in 1998, all PRC borrowers of foreign exchange loans are not permitted to purchase foreign currencies with RMB to prepay such borrowings. However, according to a notice published by the PBOC and the SAFE on 19 September 2001, in certain situations, a PRC borrower is allowed to purchase foreign currencies with RMB to prepay onshore foreign exchange loans subject to the approval of the SAFE. According to the Law of PRC on Sino-Foreign Equity Joint Ventures, the net profit that the foreign investors obtain from the FIEs may be remitted abroad in accordance with the foreign exchange regulations and in the currency or currencies specified in the contracts concerning the ventures or deposit in the Bank of China part of the foreign exchange which the foreign investors are entitled to remit abroad. Thailand Thailand s exchange controls are established by the Exchange Control Act B.E. 2485, 1942 of Thailand. The Bank of Thailand oversees all foreign exchange transactions. Commercial banks established in Thailand designated by the Bank of Thailand as its Authorised Agents handle and authorise outward remittances of currencies. Currency transactions by non-listed companies that fall within prescribed categories of transactions, such as outward remittances of foreign currencies for the purpose of making overseas investments in shareholding of less than 10% or loans extended to overseas business establishments or paying securities in overseas markets, are required to be approved by the Bank of Thailand before the remittances of funds can take place. Approval is not required for listed companies remitting foreign currencies if the total amount of remittance does not exceed US$100,000,000 per year. Nor is the approval required for non-listed companies remitting foreign currencies as investments or loans to subsidiaries (in which the companies sending funds hold at least 10%) for the amount not exceeding US$50,000,000 per year. In the event that our Thai associated company, Old Chang Kee Thailand, is required to make outward remittances of currency which do not fall within the prescribed categories of transactions, such as the remittance of dividends, investment funds, profits, loan repayment and interest payment thereon, such remittance shall, subject to the payment of all applicable taxes in Thailand, have to be approved by the Bank of Thailand through its Authorised Agents, provided that the requisite documentary evidence shall be furnished to the satisfaction of the remitting commercial bank prior to remittance. 25

28 CLEARANCE AND SETTLEMENT Upon listing and quotation on the Catalist, our Shares will be traded under the book-entry settlement system of the CDP, and all dealings in and transactions of our Shares through the Catalist will be effected in accordance with the terms and conditions for the operation of Securities Accounts with the CDP, as amended from time to time. Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalf of persons who maintain, either directly or through Depository Agents, Securities Accounts with CDP. Persons named as direct securities account holders and Depository Agents in the Depository Register maintained by the CDP, rather than CDP itself, will be treated, under our Articles of Association and the Companies Act, as members of our Company in respect of the number of Shares credited to their respective Securities Accounts. Persons holding our Shares in Securities Accounts with CDP may withdraw the number of Shares they own from the book-entry settlement system in the form of physical share certificates. Such share certificates will, however, not be valid for delivery pursuant to trades transacted on the Catalist, although they will be prima facie evidence of title and may be transferred in accordance with our Articles of Association. A fee of S$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for each withdrawal of more than 1,000 Shares is payable upon withdrawing our Shares from the book-entry settlement system and obtaining physical share certificates. In addition, a fee of S$2.00 or such other amount as our Directors may decide, is payable to the Share Registrar for each share certificate issued and a stamp duty of S$10.00 is also payable where our Shares are withdrawn in the name of the person withdrawing our Shares or S$0.20 per S$ or part thereof of the last-transacted price where it is withdrawn in the name of a third party. Persons holding physical share certificates who wish to trade on the Catalist must deposit with CDP their share certificates together with the duly executed and stamped instruments of transfer in favour of CDP, and have their respective Securities Accounts credited with the number of Shares deposited before they can effect the desired trades. A fee of S$10.00 and stamp duty of S$20.00 is payable upon the deposit of each instrument of transfer with CDP. The above fees may be subject to such changes as may be in accordance with CDP s prevailing policies or the current tax policies that may be in force in Singapore from time to time. Transactions in our Shares under the book-entry settlement system will be reflected by the seller s Securities Account being debited with the number of Shares sold and the buyer s Securities Account being credited with the number of Shares acquired. No transfer of stamp duty is currently payable for the Shares that are settled on a book-entry basis. A Singapore clearing fee for trades in our Shares on the Catalist is payable at the rate of 0.05% of the transaction value subject to a maximum of S$ per transaction. The clearing fee, instrument of transfer deposit fee and share withdrawal fee may be subject to Singapore goods and services tax of 7.0%. Dealings of our Shares will be carried out in Singapore dollars and will be effected for settlement on CDP on a scripless basis. Settlement of trades on a normal ready basis on the Catalist generally takes place on the third Market Day following the transaction date, and payment for the securities is generally settled on the following business day. CDP holds securities on behalf of investors in Securities Accounts. An investor may open a direct account with CDP or a subaccount with a CDP agent. The CDP agent may be a member company of the SGX-ST, bank, merchant bank or trust company. 26

29 PLAN OF DISTRIBUTION This section should be read in conjunction with, and is qualified in its entirety by reference to Appendix J of this Prospectus. The Issue Price was determined by us in consultation with the Manager, the Placement Agent and the Underwriter, after taking into consideration, inter alia, prevailing market conditions and the estimated market demand for our Shares through a book-building process. The Issue Price is the same for all New Shares and is payable in full on application. Applications for the New Shares You may apply to subscribe for any number of New Shares in integral multiples of 1,000 Shares. In order to ensure a reasonable spread of Shareholders, we have the absolute discretion to prescribe a limit to the number of New Shares to be allotted to any single applicant and/or to allot New Shares above or under such prescribed limit as we shall deem fit. Applications for the New Shares may be made using the following methods:- (1) Application for Offer Shares The Offer Shares are made available to the members of the public in Singapore for subscription at the Issue Price. The terms and conditions and procedures for application are described in Appendix J of this Prospectus. In the event of an under-subscription for the Offer Shares at the close of the Application List, the number of Offer Shares not subscribed for shall be made available to satisfy applications for the Placement Shares to the extent there is an over-subscription for the Placement Shares as at the close of the Application List. In the event of an over-subscription for the Offer Shares at the close of the Application List and the Placement Shares are fully subscribed or over-subscribed as at the close of the Application List, the successful applications for Offer Shares will be determined by ballot or otherwise as determined by our Directors and approved by the SGX-ST. Pursuant to the terms and conditions contained in the Management and Underwriting Agreement, the Underwriter has agreed to underwrite the Offer Shares. The Underwriter may, at its absolute discretion, appoint one or more sub-underwriters for the Offer Shares. (2) Application for Placement Shares (excluding Reserved Shares) Pursuant to the terms and conditions in the Placement Agreement, the Placement Agent agreed to subscribe for and/or procure subscribers for the Placement Shares. The Placement Agent may, at its absolute discretion, appoint one or more sub-placement agents for the Placement Shares. Subscribers of the Placement Shares (excluding the Reserved Shares) may be required to pay a brokerage (and if so required, such brokerage will be up to 1.0% of the Issue Price) as well as applicable stamp duties and goods and services tax of 7.0% to the Placement Agent. In the event of an under-subscription for the Placement Shares as at the close of the Application List, that number of Placement Shares not subscribed for shall be made available to satisfy excess applications for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at the close of the Application List. In the event, the Placement Agent fails to receive valid subscriptions and payments for at least 90.0% of the Placement Shares by 6.00 p.m. on 9 January 2008 (or such other date as may be decided by the Manager), the Placement Agent shall be entitled to terminate the Placement Agreement. 27

30 PLAN OF DISTRIBUTION Application for Placement Shares (other than Reserved Shares) The Placement Shares (other than Reserved Shares) are reserved for placement to members of the public and institutional investors in Singapore. Application for the Placement Shares (other than Reserved Shares) under the Placement Tranche may only be made by way of Placement Shares Application Forms. An applicant who applies for the Placement Shares (other than Reserved Shares) must complete a Placement Shares Application Form, and shall not make any separate application for the Placement Shares using another Placement Shares Application Form or for the Offer Shares (either using an Offer Shares Application Form or by way of an ATM Application or IB Application). Such separate applications will be deemed to be multiple applications and all applications shall be rejected. (3) Reserved Shares To recognise their contributions to our Group, we have reserved 1,500,000 Placement Shares for subscription by our Non-Executive Directors, management, employees, business associates and others who have contributed to the success of our Group at the Issue Price. These Reserved Shares (other than those subscribed for by our Non-Executive Directors) are not subject to any moratorium and may be disposed of after the admission of our Company to the Official List of the Catalist. In the event that any of the Reserved Shares are not subscribed for, they will be made available to satisfy applications for the Placement Shares to the extent that there is an oversubscription for the Placement Shares as at the close of the Application List, or in the event of an under-subscription of the Placement Shares as at the close of the Application List, to satisfy applications made by members of the public for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at the close of the Application List. You (not being an approved nominee company in this paragraph) are allowed to submit ONLY ONE application in your own name for:- (a) the Offer Shares by any one of the following:- (i) Offer Shares Application Form; or (ii) ATM Application; or (iii) IB Application, OR (b) the Placement Shares (other than Reserved Shares) by Placement Shares Application Form. If you submit or procure submissions of multiple share applications for Offer Shares, Placement Shares (other than Reserved Shares) or both Offer Shares and Placement Shares (other than Reserved Shares), ALL YOUR APPLICATIONS SHALL BE DEEMED TO BE MULTIPLE APPLICATIONS AND SHALL BE REJECTED. If you have made an application for Reserved Shares, you may submit ONE application for Offer Shares OR ONE application for Placement Shares (other than Reserved Shares) provided that you adhere to the terms and conditions of this Prospectus. Such applications shall not be treated as multiple applications. 28

31 PLAN OF DISTRIBUTION Subscription of the New Shares None of our Directors (other than our Non-Executive Directors) or Substantial Shareholders or their Associates intends to subscribe for the New Shares. In the event that any of our Directors or Substantial Shareholders or their Associates subscribes for any New Shares, we will announce the details of such subscription. To the best of our knowledge, we are not aware of any person who intends to subscribe for more than 5.0% of the New Shares. However, through a book-building process to assess market demand for our Shares, there may be person(s) indicating interest to subscribe for more than 5.0% of the New Shares. The final allotment of the New Shares will be in accordance with the shareholding spread and distribution guidelines as set out in Rule 210 of the Listing Manual. No Shares shall be allotted or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus by the Authority. 29

32 CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS All statements contained in this Prospectus, statements made in the press releases and oral statements that may be made by our Company or our officers, Directors or employees acting on our behalf, that are not statements of historical fact, constitute forward-looking statements. Some of these statements can be identified by words that have a bias towards, or are forward-looking such as anticipate, believe, could, estimate, expect, if, intend, may, plan, possible, probable, project, should, will and would or similar words. However, these words are not the exclusive means of identifying forwardlooking statements. All statements regarding our Group s expected financial position, business strategy, plans and prospects and future prospects of our Group s industry are forward-looking statements. These forward-looking statements, including but not limited to statements as to our Group s revenue and profitability, prospects, future plans, other expected industry trends and other matters discussed in this Prospectus regarding matters that are not historic facts, are only predictions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our Group s actual future results, performance or achievements to be materially different from any future results, performance or achievements expected, expressed or implied by such forward-looking statements. These factors include, amongst others, changes in the political, social and economic conditions and regulatory environment in Singapore, Malaysia, Thailand, Australia, PRC and other countries where we may conduct our business, changes in competitive conditions, and other factors beyond our control. Some of these risk factors are discussed in more detail in the section entitled Risk Factors of this Prospectus. All forward-looking statements made by or attributable to us, or persons acting on our behalf, contained in this Prospectus are expressly qualified in their entirety by such factors. Given the risks and uncertainties that may cause our Group s actual future results, performance or achievements to be materially different from that expected, expressed or implied by the forward-looking statements in this Prospectus, undue reliance must not be placed on these statements. Our actual results may differ materially from those anticipated in these forward-looking statements. Neither our Company, the Manager, the Underwriter, the Placement Agent, their respective advisers nor any other person represents or warrants that our Group s actual future results, performance or achievements will be as discussed in those statements. Further, our Company, the Manager, the Underwriter and the Placement Agent disclaim any responsibility to update any of those forward-looking statements or publicly announce any revisions to those forward-looking statements to reflect future developments, events or circumstances, even if new information becomes available or other events occur in the future. We are, however, subject to the provisions of the Securities and Futures Act and the Listing Manual regarding corporate disclosure. In particular, pursuant to Section 241 of the Securities and Futures Act, if after this Prospectus is registered by the Authority but before the close of this Invitation, our Company becomes aware of: (a) a false or misleading statement or matter in this Prospectus; (b) an omission from this Prospectus of any information that should have been included in it under Section 243 of the Securities and Futures Act; or (c) a new circumstance that has arisen since this Prospectus was lodged with the Authority and would have been required by Section 243 of the Securities and Futures Act to be included in this Prospectus, if it has arisen before this Prospectus was lodged and that is materially adverse from the point of view of an investor, we may lodge a supplementary or replacement prospectus with the Authority. 30

33 SELLING RESTRICTIONS This Prospectus does not constitute an offer, solicitation or invitation to subscribe for our Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. No action has been or will be taken under the requirements of the legislation or regulations of, or of the legal or regulatory authorities of, any jurisdiction, except for the lodgment and/or registration of this Prospectus in Singapore in order to permit a public offering of our Shares and the public distribution of this Prospectus in Singapore. The distribution of this Prospectus and the offering of our Shares in certain jurisdictions may be restricted by the relevant laws in such jurisdictions. Persons who may come into possession of this Prospectus are required by our Company, the Manager, the Underwriter and the Placement Agent to inform themselves about, and to observe and comply with, any such restrictions. 31

34 PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and is subject to, the more detailed information and financial statements (including the notes thereto) appearing elsewhere in this Prospectus. Terms defined elsewhere in this Prospectus have the same meanings when used herein. You should carefully consider all the information presented in this Prospectus, particularly the matters set out in the section entitled Risk Factors of this Prospectus before making an investment decision. OVERVIEW OF OUR GROUP Our Company was incorporated in Singapore under the Companies Act on 16 December 2004 as a private limited company under the name Old Chang Kee Singapore Pte. Ltd.. Pursuant to the Restructuring Exercise described in the section entitled Restructuring Exercise of this Prospectus, we became the holding company of our Group. We are principally engaged in the manufacture and sale of affordable food products of consistent quality under the brand name Old Chang Kee. Our signature product is the well-known Old Chang Kee curry puff, now complemented by a suite of more than 40 other food products such as fish balls, spring rolls and chicken wings. Most of our sales are on a takeaway basis. We sell our food products through our retail outlets to cater to a wide range of consumers. We also have dine-in operations at our Old Chang Kee Take 5 retail outlets located at Icon Village, Square 2, Ogilvy Centre, Golden Shoe Car Park, Eastpoint Mall and West Mall, which offer a suite of local delights such as curry chicken or beef stew in loaf/rice, sambal fish rice, curry noodles and nasi lemak as well as our food products. We also offer delivery services to the central business district and other selected areas in Singapore. As at the Latest Practicable Date, we had 54 retail outlets in Singapore and two retail outlets in Kuala Lumpur, Malaysia (through our 40.0%-owned Associated Company, Old Chang Kee Malaysia). As at the Latest Practicable Date, we had three retail outlets in Chengdu, PRC (through Old Chang Kee China). We have also established brand presence in Indonesia, by way of a franchise agreement entered into between Ten & Han, our subsidiary, and our Indonesian Franchisee. As at the Latest Practicable Date, our Indonesian Franchisee operates four retail outlets in Jakarta, Indonesia. In June 2007, we also established our brand presence in the Philippines, by way of a franchise agreement entered into between Ten & Han, our subsidiary, and our Philippines Franchisee. As at the Latest Practicable Date, our Philippines Franchisee has opened two retail outlets in Manila, the Philippines. The food products prepared and served by our Group in Singapore have been certified as Halal by MUIS since January In the last few years, we have received multiple awards in recognition of our brand name, including the prestigious Singapore Promising Brand Award Distinctive Brand Award in 2005 and the Lifelong Learner Award, Corporate Category in A detailed discussion of our business is set out in the sections entitled Our History and Our Business of this Prospectus. OUR COMPETITIVE STRENGTHS We believe that our competitive strengths are as follows:- We have an established household brand name with a distinctive Singaporean flavour. We operate an extensive network of retail outlets at strategic locations. We have a diversified customer base. We have dedicated key management personnel with extensive experience in the local food industry. We are committed to high quality standards. 32

35 PROSPECTUS SUMMARY A detailed discussion of our competitive strengths is set out in the section entitled Our Competitive Strengths of this Prospectus. OUR BUSINESS STRATEGIES AND FUTURE PLANS Our business strategies and future plans are as follows:- Expand our overseas operations. Increase and refurbish our Singapore retail outlets. Expansion through strategic alliances, acquisitions, joint ventures and franchises. For more details, please refer to the section entitled Prospects and Future Plans of this Prospectus. OUR CONTACT DETAILS Our registered office and principal place of business is 2 Woodlands Terrace, Singapore Our telephone and facsimile numbers are (65) and (65) respectively. Our website address is Information contained on our website does not constitute a part of this Prospectus. 33

36 INVITATION STATISTICS ISSUE PRICE PER NEW SHARE : S$0.20 NAV per Share NAV per Share, based on the audited balance sheet of our Group as at 31 December 2006:- Before adjusting for the estimated net proceeds from the Invitation : cents and based on the pre-invitation share capital of 68,400,000 Shares After adjusting for the estimated net proceeds from the Invitation and : cents based on the post-invitation share capital of 93,400,000 Shares Premium of Issue Price over NAV per Share:- Before adjusting for the estimated net proceeds from the Invitation : 79.1% and based on the pre-invitation share capital of 68,400,000 Shares After adjusting for the estimated net proceeds from the Invitation and : 70.4% based on the post-invitation share capital of 93,400,000 Shares EPS Historical EPS for FY2006 based on our profit after taxation for FY2006 : 4.44 cents and the pre-invitation share capital of 68,400,000 Shares PRICE EARNINGS RATIO Price earnings ratio based on our EPS for FY2006 : 4.5 times NET CASH GENERATED FROM OPERATING ACTIVITIES PER SHARE Historical net cash generated from operating activities per Share for FY2006 : 8.62 cents based on the pre-invitation share capital of 68,400,000 Shares PRICE TO NET CASH GENERATED FROM OPERATING ACTIVITIES RATIO Price to net cash generated from operating activities based on the net cash : 2.3 times generated from operating activities per Share for FY2006 MARKET CAPITALISATION Our market capitalisation based on our post-invitation share capital of : S$18.7 million 93,400,000 Shares and the Issue Price 34

37 RISK FACTORS You should evaluate carefully each of the following considerations and all other information set forth in this Prospectus before deciding to invest in our Shares. Some of the following considerations relate principally to the industry in which we operate and our business in general. Other considerations relate principally to general social, economic, political and regulatory conditions, the securities market and ownership of our Shares, including possible future dilution in the value of our Shares. If any of the following considerations and uncertainties develops into actual events, our business, financial condition or results of operations could be materially and adversely affected. In such a case, the trading price of our Shares could decline due to any of these considerations, and you may lose all or part of your investment. This Prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us as described below and elsewhere in this Prospectus. RISKS RELATING TO OUR BUSINESS OR OUR INDUSTRY We may be affected by any outbreak of food-related diseases and severe changes in climatic conditions Any outbreak of diseases associated with livestock, crops and other food scares in the region and around the world, such as avian influenza, may lead to a reduction in the consumption of the affected livestock or crop or food products. We are unable to predict the next occurrence of such food-related diseases. In the event of the occurrence of food-related diseases affecting ingredients used in our products, the demand for our products is likely to decline, thereby adversely affecting our business and financial performance. Further, sources of supply for the affected types of livestock or crops may also be reduced, or the Singapore government may ban the import of the affected livestock or crop. In such an event, we may not be able to offer the relevant products and our business and financial performance may be adversely affected. Alternatively, we may have to eliminate the use of the affected livestock or crop in our products. Such elimination could affect the taste of the relevant products and thereby adversely affect the demand for such products. The prices of our raw materials are also subject to fluctuations due to severe changes in climatic conditions and outbreak of food-related diseases, all of which may reduce supply and lead to increase in the cost of raw materials. In the event we are unable to pass on any increase in the cost of raw materials to our customers, our business and financial performance may be materially and adversely affected. For example, during the outbreak of the avian influenza in 2004, the supplies of eggs and chicken meat (which are the ingredients of some of our food products) were drastically reduced. This resulted in a sharp increase in the cost of such raw materials in FY2004. As we had not been able to pass the increase in cost to our customers, our financial performance for FY2004 was affected. In addition, in August and September 2004, as the outbreak of the avian influenza worsened, the Singapore government banned the import of chickens and eggs from Malaysia. As a result, we had to serve our food products without eggs and replace fresh chicken meat with frozen chicken meat during the period of the import ban. This had also affected our sales, and hence our revenue for FY2004. We may be affected by the spread or an outbreak of any contagious or virulent disease The spread or outbreak of any contagious or virulent disease in the countries in which we operate could have a material adverse effect on our operations as well as the operations of our suppliers. In the event that any of our employees in our production facilities or the facilities of our suppliers are infected with such diseases, we and/or our suppliers may be required to temporarily shut down the affected facility to prevent the spread of the disease. An outbreak of any contagious or virulent disease in Singapore may negatively affect consumer sentiments, leading to a reduced willingness by the general consumer in Singapore to socialise, hence reducing patronage to our retail outlets which are located at easily accessible locations with high human traffic flow. This will have a negative impact on our business and financial performance. 35

38 RISK FACTORS We may be affected by changes in governmental regulations We are subject to the laws and regulations governing the F&B industry, including but not limited to laws and regulations relating to food safety, handling and storage, hygiene standards, and the sale of F&B. We are required to obtain and maintain for our operations, certain licences, permits, approvals and certificates from relevant authorities. Please refer to the section entitled Government Regulations for a list of the licences, permits, approvals and certificates required for our business. The failure to obtain or renew such licences, permits, approvals and certificates or any changes to relevant laws and regulations may have a negative impact on our business. In the event that we are unable at any time to comply with the existing regulations, such as obtaining, maintaining or renewing the relevant licences, permits, approvals and certificates required for our business, or any changes in such laws and regulations, or any new regulations introduced by the relevant authorities, we may not be allowed to continue our business operations. In addition, any change in or introduction of new regulations that require our compliance may increase our cost of operations. All these will have an adverse effect on our business and financial performance. Our business will be adversely affected by the revocation of Halal certification issued to our production facility and retail outlets MUIS, which is constituted under the Administration of Muslim Law Act (Chapter 3) of Singapore, may issue a Halal certificate in relation to the operation of a retail food establishment and regulate the holder of such certificate to ensure that the requirements of the Islamic law are complied with in the operation of the establishment. As at the Latest Practicable Date, Halal certifications had been issued to our production facility located in Singapore at 2 Woodlands Terrace and 50 of our retail outlets in Singapore. Such Halal certification has enabled us to expand our customer base to include Muslim consumers. To maintain such Halal certification, we have implemented a system under which all the processes involved in the production of our food products are monitored closely to ensure that our food products are manufactured, packed, transported, stored and sold in compliance with the requirements of Islamic law. Specific corrective actions will be prescribed and implemented to rectify any aberration detected by the system. There can be no assurance that the Halal certification issued to our production facility or retail outlets will not be revoked or will be renewed. In the event such Halal certification is revoked or not renewed, our customer base will be reduced thus resulting in an adverse effect on our business and financial performance. Our business and financial performance will be affected by any increase in rental charges or the failure to procure the renewal of existing leases All our retail outlets are housed in leased premises. Rental expenses of our retail outlets accounted for 38.1%, 37.4%, 36.1% and 36.6% of our selling and distribution expenses for FY2004, FY2005, FY2006 and FP2007 respectively. Majority of our leases are entered for periods of between one and three years. We generally commence negotiations for new leases about six months prior to the expiry of the existing leases. The new lease agreements are usually signed within one month of the expiry of the existing leases. Upon the expiry of such leases, the lessors have the right to review and alter the terms and conditions of the leases. We face the risk of increases in rental charges or the inability to renew the leases on terms and conditions which are favourable to us. Any increase in the rental charges or changes in terms and conditions that are unfavourable to us would inevitably increase our operating expenses, thus affecting our profitability. In addition, failure to procure the renewal of leases at strategic locations may result in losses and disruptions to our business, and our financial performance will be adversely affected. 36

39 RISK FACTORS We may not be able to secure new strategic locations to expand our business Our growth is dependent on our extensive network of retail outlets at strategic locations which allows us to reach out to a wide base of customers. As described in the section entitled Our Competitive Strengths of this Prospectus, our retail outlets are located at easily accessible locations with high human traffic flow, thus facilitating high volume sales of our food products. To maintain our competitiveness in the F&B industry, our business development team constantly seeks new strategic locations to expand our business. However, there can be no assurance that we will continue to secure strategic locations for our new retail outlets. Any failure to secure strategic locations for new retail outlets may result in a loss of business and will present opportunities to competitors to increase their market share by opening their retail outlets at such strategic locations, thereby affecting our business and financial performance. Our business and financial performance will be affected if we are unable to compete with our competitors effectively Our industry is highly competitive and our competitors include individual operators as well as larger groups of chain outlet food operators. There is no assurance that we will be able to continue to compete effectively with our competitors. In the event that we are unable to compete with our competitors effectively, our business and financial performance will be adversely affected. We are susceptible to fluctuations in foreign exchange rates that could result in us incurring foreign exchange losses Our revenue is denominated in S$ while part of our purchases, including equipment, is denominated in THB and US$. Some of our equipment purchases are denominated in US$ and the amount was less than S$300,000 in each of the financial period under review. On the other hand, 46.8%, 48.2%, 45.8% and 44.2% of our total purchases in FY2004, FY2005, FY2006 and FP2007 respectively are denominated in THB. Hence, we are exposed to foreign exchange risks if there are significant fluctuations in currency exchange rates between the time of our purchases and payment in foreign currencies, especially the THB. We are also subject to translation risks as our consolidated financial statements are denominated in S$ while the financial statements of our foreign subsidiaries and Associated Companies are prepared in AUD, RM, RMB and THB. For the purposes of consolidating the results of our foreign subsidiaries and Associated Companies, the respective balance sheets of our foreign subsidiaries and Associated Companies are translated from AUD, RM, RMB and THB in which their financial statements are prepared, based on the prevailing exchange rates on the balance sheet date. The profit and loss accounts of our foreign subsidiaries and Associated Companies are translated using the average exchange rates for the relevant financial year or period. Any significant appreciation of the S$ against AUD, RM, RMB or THB may adversely affect our Group s results from operations as it will result in our Group having lower profits from our foreign subsidiaries and Associated Companies. We do not presently have any formal policy for hedging against foreign exchange exposure. Our business will be adversely affected by complaints from customers and negative publicity Like any operator in the F&B industry, we may be adversely affected by negative publicity concerning food quality, illness, injury, publication of government or industry findings concerning food products served by us, or other health concerns or operational issues of our retail outlets or production facility. At any instance, our retail outlets and production facility may be subject to negative allegations from our customers, complaints of illnesses due to lapses in food quality, injuries sustained on our premises and operational inefficiencies. These negative allegations, especially complaints of illnesses arising from the consumption of our food products, may result in the closure of our retail outlets and/or production facility. There have been instances of complaints from our customers in the past. They relate mainly to the quality of our food products, the quality of the service provided by our employees at the retail outlets, non-punctual delivery of customers orders and delivery of food products not in accordance with customers orders or requests. In the event any of these complaints escalate into legal proceedings against our Group, we will have to expend resources defending and/or counter-claiming against such claims. There can be no assurance that we will be able to defend ourselves successfully and our Group may suffer monetary losses as a result. In addition, such complaints may result in negative publicity or the closure of our retail outlets and/or our production facility which would materially and adversely affect our businesses and financial performance. 37

40 RISK FACTORS In addition, we may be the subject of malicious and groundless rumours which may be quickly transmitted and spread over the Internet and short message service ( SMS ) text messages. Such negative publicity will materially affect our business regardless of whether these allegations are genuine. Publicised instances of poor food or general hygiene may damage our image, reduce customers confidence in our products and result in reduced patronage of our retail outlets and thus have an adverse impact on our business, profitability and financial performance. Our business is reliant on our brand name The Old Chang Kee brand name has become an established and household brand name in Singapore, and is widely known by local consumers. The strong brand name of Old Chang Kee in Singapore serves as a suitable platform for us to launch our food products in other countries. We have set up retail outlets in Kuala Lumpur, Malaysia (through our 40.0%-owned Associated Company, Old Chang Kee Malaysia) and retail outlets in Chengdu, PRC (through Old Chang Kee China). We also have franchise operations in Jakarta, Indonesia (through our Indonesian Franchisee) and Manila, the Philippines (through our Philippines Franchisee). It is also intended that our business would be franchised to other overseas operators in future. Our brand name and reputation may be adversely affected by the manner in which our franchisees conduct their businesses overseas. This would indirectly affect our business, which is reliant on our brand name. Our business is labour intensive Our business is labour intensive and there is a shortage of manpower in Singapore s F&B industry. Employee benefits expense (excluding directors remuneration) expressed as a percentage of total revenue for FY2004, FY2005, FY2006 and FP2007 were approximately 20.6%, 19.7%, 20.8% and 21.3% respectively. Please refer to the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations of this Prospectus for further details. In the event of any substantial increase in employee benefits expense (excluding directors remuneration) at a higher percentage as compared to our revenue, our business and financial performance may be adversely affected. We are dependent on our management Our Group s performance and success have been largely due to the collective efforts of our Executive Directors and Executive Officers who have built the business of our Group under the guidance and leadership of our Executive Chairman, Han Keen Juan, and our CEO, William Lim. Our Executive Chairman, Han Keen Juan, and our CEO, William Lim, have more than 20 and 10 years of experience in the F&B industry, respectively. The continued success and growth of our Group is therefore dependent on our ability to retain the services of our Executive Directors and Executive Officers. Consequently, the loss of certain key personnel and the failure to attract qualified and timely replacements will have an adverse effect on our Group. We are dependent on our major suppliers and contract manufacturers 65.2% of our purchases in FY2006 was from our major suppliers. In particular, more than 30% of our annual purchases relate to certain food products from Siamchai International Food Co. Ltd., our contract manufacturer in Thailand. Please refer to the section entitled Major Suppliers of this Prospectus for further details. The involuntary or unexpected loss of any of our major suppliers or our contract manufacturers will disrupt our supplies and will adversely affect our business and financial performance. Furthermore, there can be no assurance that our major suppliers or contract manufacturers will be able to continue to fulfil our needs and expectations in terms of costs and/or product quality. In the event that our major suppliers or contract manufacturers are unable to fulfil our requirements or cease to supply raw materials and/or food products to us, we may have to incur time and monetary costs seeking alternative suppliers and/or contract manufacturers, or accept higher prices from our existing suppliers and contract manufacturers, which could result in disruptions to our business and may adversely affect our financial performance. 38

41 RISK FACTORS We may be adversely affected if our intellectual property rights are not protected We believe that our trademarks are an integral aspect of our Group s strategy on branding, and play a significant role in creating brand recognition for our food products. As such, we have registered or are in the process of registering our principal Old Chang Kee trademark and our other trademarks, both in Singapore and overseas. Please refer to the section entitled Intellectual Property of this Prospectus for further information on our registered trademarks and trademarks pending registration. There can be no assurance that our registered trademarks will not be infringed upon. There can also be no assurance that our trademarks pending registration will be registered by the respective authorities. Unauthorised use of our trademarks or variants of our trademarks may harm our reputation and consequently our business and financial performance. In addition, we may take action (including litigation) to stop infringement of our intellectual property rights or obtain adequate compensation or remedy. There is no assurance that we will be successful in protecting our intellectual property rights and we may incur substantial costs in the process. In addition, in the event that any third party alleges proprietary rights over such trademarks, we may be exposed to legal proceedings brought against us by such third party in respect of our use of the trademarks. These legal proceedings may result in monetary losses and may prevent us from further using our trademarks. Our business and financial performance will be adversely affected in such an event. We may be adversely affected if our contract manufacturers breach their confidentiality obligation owed to us We manufacture our curry puffs and prepare other various food products in-house. The recipes for our other food products are developed in-house and are produced by selected contract manufacturers approved by us according to our specifications. We have exclusive arrangements with our contract manufacturers for the manufacture of some of our food products. As we are materially dependent on the recipes of these food products, we have provided in the agreements with our contract manufacturers that the recipes we provide to them cannot be used for the manufacture of similar food products for third parties and our contract manufacturers are contractually obliged to keep all technical and commercial information provided by us to them for the manufacture of our food products confidential and to use them only for the manufacture of our food products ( Confidential Information ). We currently have two major contract manufacturers, namely Leong Hin Foods Pte. Ltd. in Singapore and Siamchai International Food Co. Ltd. in Thailand. In the event our contract manufacturers breach their confidentiality obligation owed to us and disclose the Confidential Information to our competitors or use the Confidential Information for the purpose of manufacturing food products for our competitors, the value of the Old Chang Kee brand may be diminished and our market share may decrease. If this event occurs, our business may be adversely affected. We may be affected by pilferage, theft and vandalism Our employees handle the cash sales and our food items on a daily basis. Lapses in internal controls may occur, resulting in pilferage. During the Relevant Period, we have not encountered any instances of cash pilferage. Further, as some of our retail outlets are situated in outdoor locations or locations that are accessible by the public on a 24-hour basis; theft and vandalism may occur. One of our retail outlets encountered a case of break-in theft in July 2007 but the amount lost was insignificant. Even though safes and close circuit cameras are installed in all our retail outlets, there is no assurance that cases of pilferage, theft and vandalism will not occur. Pilferage, theft and vandalism may not only adversely affect our financial performance, but also our reputation and branding. We face uncertainties associated with our overseas expansion plans We intend to broaden our business presence in overseas markets such as Australia, Malaysia, the Philippines, Indonesia, Thailand and PRC. Please refer to the section entitled Prospects and Future Plans of this Prospectus for further details on our overseas expansion plans. Our overseas expansion plans involve various risks, including the costs associated with setting up the overseas business, obtaining suitable plant and machinery, and renovation costs. We may also experience difficulty in securing strategic locations for our retail outlets. As we have limited experience in overseas operations, there is no certainty that we will be able to manage our overseas expansion plans effectively and successfully. If we are unable to do so, our business and financial performance will be materially and adversely affected. 39

42 RISK FACTORS Our business and financial performance may be affected by any change of tenant mix, revamp or closure of the shopping malls or complexes in which our retail outlets are located As at the Latest Practicable Date, 39 out of our 54 retail outlets in Singapore are based in shopping malls or complexes. Any change in the tenant mix of a shopping mall or complex in which our retail outlets are located may result in fewer customers visiting the shopping mall or complex and hence a reduction in the human traffic flow to our retail outlets. There is also no assurance that the shopping malls or complexes in which our retail outlets are located will not be revamped to create a larger number of retail outlets, resulting in greater competition from other food operators. Further, there is also no assurance that the shopping malls or complexes in which our retail outlets are located will not be closed or demolished. The closure or demolition of a shopping mall or complex in which our retail outlet is located may cause us to write off certain fixed assets located in such retail outlet. We may also not be able to source for and obtain other suitable alternative locations in time which may result in a loss and disruption to our business. Poor maintenance of the shopping malls or complexes may also result in less patronage at our retail outlets. All the above events will have a material adverse effect on our business and financial performance. We face the risk of food contamination and tampering Food contamination and tampering is a risk inherent to all F&B industry participants. There is always the possibility of contamination given the numerous processes involved in the production of our food products. Further, food products sold may be subject to tampering. Our business may be adversely affected by negative publicity resulting from such food contamination and tampering of our food products. In such event, the demand for our food products may decrease and our business and financial performance will be adversely affected. We are subject to changes in consumers tastes and preferences Our customers are the general consumers. Our continued growth and success is dependent on the popularity of our signature curry puffs which is complemented by a suite of more than 40 other food products such as fish balls, spring rolls and chicken wings. Any shift in consumers tastes and preferences away from our offered food products may affect our business and consequently our financial performance. Our production facility may be subject to disruptions Our production facility is located at 2 Woodlands Terrace. In the event of disruptions such as fire hazards, power failures or floods at our production facility, the supply of food products, especially our signature curry puff, to our retail outlets would be affected. This will have an adverse impact on our revenue and profitability. We are subject to foreign investment guidelines in Malaysia The FIC regulates and prescribes guidelines (the FIC Guidelines ) for the acquisition of assets or interests, mergers and take-overs of companies and businesses in Malaysia. Where the FIC Guidelines are applicable, FIC approval is required. The FIC is a committee of the Economic Planning Unit of the Malaysia s Prime Minister s Department. Strictly speaking, the FIC Guidelines do not have the force of law (in the sense that they have not been enacted as legislation or promulgated as regulations under any existing laws). However, non-compliance has practical consequences as the FIC liaises closely with other regulatory agencies in Malaysia, and compliance with conditions imposed by the FIC, if any, may be required before other approvals from the other regulatory authorities are given. For example, if a foreign investor needs to apply for a government licence, permit or approval or if a foreign investor wishes to participate in government contracts or attempts to register any land purchases at the relevant land office or registry in Malaysia, FIC approval and compliance with the FIC Guidelines may be required. The FIC Guidelines include requirements as to the shareholding spread of Malaysian and foreign interests in companies incorporated in Malaysia. The only equity condition imposed currently is that Bumiputera equity in a Malaysian company must amount in aggregate to at least 30%. The remaining 70% equity can be held either by a foreigner, a Malaysian or jointly by a foreigner and Malaysian. 40

43 RISK FACTORS Our Malaysian Associated Company, Old Chang Kee Malaysia has not obtained FIC approval in relation to our Company s shareholding in Old Chang Kee Malaysia. Our Company holds 40% of the issued and paid-up share capital of Old Chang Kee Malaysia. The remaining 60% of the issued and paid-up share capital of Old Chang Kee Malaysia is held by San Mun Choong, a Malaysian Chinese. Under the FIC Guidelines, any proposed acquisition or acquisition of 15% or more of the voting rights in a Malaysian company by any one foreign interest requires FIC approval, which is granted at the discretion of the FIC. In the event that we are required to comply with the FIC Guidelines, we and the other shareholder of Old Chang Kee Malaysia may have to, inter alia, procure the divestment of at least 30% of Old Chang Kee Malaysia s total issued and paid-up share capital to Bumiputera interest(s) within such time as may be stipulated by the FIC. In such an event, any profit contribution of Old Chang Kee Malaysia to our Company may be reduced and our operations and financial performance may be adversely affected. We may be affected by any changes in the general economic, regulatory, political and social conditions in the countries in which we operate We currently have operations in Singapore, Malaysia and PRC and our franchisees have commenced their operations in Indonesia and the Philippines. We also have plans to expand our operations into Australia. As a result, our businesses and future growth are dependent on the economic, regulatory, political, and social conditions of these countries. Any unfavourable changes in the political, economic, regulatory and social conditions in these countries or in the government policies of these countries may have a negative impact on our operations which could materially and adversely affect our results of operations, financial performance and future growth. Terrorist attacks and other acts of violence or wars may adversely affect the markets in which we operate and our profitability Following the occurrence of certain terrorist attacks and other acts of violence or wars, there has been an escalation of a general fear of increased terrorist activities around the world, which may have an adverse effect on the world economy. Given the general fear of economic fall-out around the world, the economic outlook of our markets may become uncertain and there is no assurance that such markets will not be affected by a worldwide economic downturn, or that recovery will happen in the near future. As this could have a negative impact on the demand for our food products and services, our sales, our business, future growth and profitability may be adversely affected. RISKS RELATING TO OWNERSHIP OF OUR SHARES There has been no prior public market for the Shares; liquidity may be low and the market price may be volatile The Issue Price was determined by us in consultation with the Manager, the Placement Agent and the Underwriter, after taking into consideration, inter alia, prevailing market conditions and the estimated market demand for our Shares through a book-building process. The Issue Price may therefore not be indicative of the market price for our Shares after the completion of the Invitation. Prior to the Invitation, there was no public market for our Shares. We have applied to the SGX-ST for the listing and quotation of our Shares on the Official List of the SGX-SESDAQ. As part of the transitional arrangement announced by the SGX-ST on 26 November 2007, the Company has been approved to be listed on the Catalist. The Company has submitted its listing application under the listing rules of SGX-SESDAQ and the SGX-ST has reviewed the application based on the SGX-SESDAQ framework and listing rules. There is no assurance that an active trading market for our Shares will develop or, if a market develops, that it will be sustained after the Invitation. There is also no assurance that the market price of our Shares will not decline below the Issue Price after the Invitation. The market price of our Shares may fluctuate significantly as a result of various factors, some of which are beyond our control. These factors include:- variations in our operating results; new products offered by us or our competitors; 41

44 RISK FACTORS liquidity of our Shares in the market; changes in securities analysts estimates of our financial performance; announcements by us of significant contracts, acquisitions, partnerships, joint ventures, franchises or capital commitments; additions or departures of key personnel; fluctuations in stock market prices and volume; changes in market valuations of similar companies; involvement in litigation; and general economic and market conditions. Control by our Executive Directors and their Associates could influence the outcome of actions which require the approval of Shareholders Upon the completion of the Invitation, our Executive Directors and their Associates, will own an aggregate of approximately 73.2% of our post-invitation share capital. Should these parties act together, they will be able to exercise significant influence over all matters requiring the Shareholders approval, including the appointment of directors and the approval of significant corporate transactions. They will also have veto power with respect to any shareholder action or approval requiring a majority vote. Such concentration of ownership could have the effect of delaying or preventing a change in control of our Company or otherwise discouraging a potential acquirer from attempting to obtain control of our Company through corporate actions such as merger or takeover attempts notwithstanding that the same may be synergistic or beneficial to our Group in a manner that may be in conflict with the interests of our public Shareholders. New investors will incur immediate dilution and may experience further dilution The Issue Price of the New Shares is higher than our Group s NAV as at 30 June 2007 based on the post-invitation issued share capital. If our Company were to be liquidated immediately following this Invitation, you, being an investor subscribing for the New Shares in this Invitation would receive less than the price you paid for your Shares. Details of the immediate dilution incurred by new investors are described under the section entitled Dilution of this Prospectus. We may not be able to obtain sufficient future funding for future expansion The actual amount of our future financing requirements will depend on factors such as our future performance and market conditions, many of which are beyond our control and cannot be predicted with absolute certainty. We may be required to raise additional funds to finance our expansion, meet unanticipated operating cash requirements, develop new or enhanced products or services, respond to competition, or invest in or acquire businesses. If additional funds are raised through additional issue(s) of Shares in the future, the existing Shareholders interests may be diluted. However, in the event that our Company is unable to raise such additional funds, we may not be able to further expand our operations or introduce new lines of food products. In such an event, our operations and financial performance may be adversely affected. Future sales of Shares could adversely affect the share price Except as described in the section entitled Moratorium of this Prospectus, there are no restrictions on the ability of our Shareholders to sell their Shares. Any future sales or availability of a significant amount Shares may exert downward pressure on our share price. The sale of a significant amount of Shares in the public market after the Invitation, 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. 42

45 RISK FACTORS Negative publicity may adversely affect the share price Any negative publicity or announcements relating to our Group and/or any of our Directors, Executive Officers and/or Substantial Shareholders may adversely affect the market perception or the stock performance of our Company, regardless of whether the allegations are justified or true. Examples include involvement in legal and/or insolvency proceedings, and reports of unsuccessful attempts at joint ventures or acquisitions. 43

46 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following information should be read in conjunction with the full text of this Prospectus, in particular, Appendices A and B of this Prospectus. COMBINED PROFIT AND LOSS ACCOUNTS Audited Unaudited S$ 000 FY2004 FY2005 FY2006 FP2006 FP2007 Revenue 20,893 29,045 33,784 16,074 19,039 Cost of sales (8,366) (11,276) (13,827) (6,493) (7,918) Gross profit 12,527 17,769 19,957 9,581 11,121 Other operating income Selling and distribution expenses (7,135) (8,881) (11,061) (5,106) (6,657) Administrative expenses (2,510) (4,171) (4,128) (1,680) (2,201) Other operating expenses (285) (494) (848) (454) (512) Finance costs (13) (27) (42) (19) (22) Share of results of associated companies (2) (27) Profit before taxation 2,597 4,235 4,150 2,404 2,014 Taxation (515) (1,028) (1,111) (673) (394) Net profit attributable to shareholders 2,082 3,207 3,039 1,731 1,620 EPS (cents) (3) EPS (as adjusted for the Invitation) (cents) (4) Notes:- (1) It is likely that our profit for FY2007 will be lower than our profit for FY2006 due to increasing costs and the disposal of 1901 Singapore at a loss. Please refer to the section entitled Trend Information of this Prospectus for more details. (2) These comprise results of Old Chang Kee Malaysia (40%) and Pure Options (40%) which were acquired in July 2006 and August 2006 respectively. (3) EPS is computed based on the net profit attributable to shareholders divided by the pre-invitation share capital of 68,400,000 Shares. (4) EPS (as adjusted for the Invitation) is computed based on the net profit attributable to shareholders divided by the post- Invitation share capital of 93,400,000 Shares. 44

47 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMBINED BALANCE SHEET Audited as at Unaudited as at S$ December June 2007 Non-Current Assets Property, plant and equipment 5,881 9,441 Intangible assets Investment in associated companies Amounts due from associated companies ,293 9,848 Current Assets Inventories Trade and other receivables 1, Deposits 1,393 1,553 Prepayments Amounts due from associated companies Cash and cash equivalents 6,565 4,092 9,922 7,029 Total Assets 16,215 16,877 Current Liabilities Trade and other payables 5,881 5,167 Other liabilities Bank overdrafts Amount due to a related party 2 Finance lease liabilities Club membership payable current Provision for taxation ,495 6,666 Net Current Assets 2, Non-Current Liabilities Financial lease liabilities Club membership payable long term Deferred tax liabilities ,081 1,071 Total Liabilities 8,576 7,737 Net Assets 7,639 9,140 Equity attributable to equity holders of the Company Share capital Share application money 100 Reserves 6,839 8,340 Total Equity 7,639 9,140 45

48 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This information should be read in conjunction with the full text of this Prospectus, including Appendices A and B of this Prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ significantly from those projected in the forward-looking statements include, but are not limited to, those discussed below and elsewhere in the Prospectus, particularly in the section entitled Risk Factors of this Prospectus. OVERVIEW We are principally engaged in the manufacture and sale of Halal-certified food products of consistent quality under the brand name Old Chang Kee. Our signature product is the well-known Old Chang Kee curry puff which was launched in We currently have more than 40 food products. Our food products are sold through our retail outlets in Singapore on a takeaway basis. In April 2004, we started delivery services to the central business district area. We also introduced the sale of breakfast items (such as braised bee hoon and nasi lemak) in December 2004 at selected retail outlets. In April 2005, we launched our Take 5 meals (which is a suite of local delights such as curry chicken or beef stew in loaf/rice, sambal fish rice and nasi lemak) and commenced provision of dine-in services at selected retail outlets. In August 2005, we commenced the operation of 1901 retail outlets in Singapore which sell takeaway hotdogs. The contribution from 1901 retail outlets during the said period is insignificant. On 15 November 2007, we entered into a sale and purchase agreement with Nineteen O One Sdn. Bhd. pursuant to which the entire issued and paid-up share capital of 1901 Singapore would be transferred to Nineteen O One Sdn. Bhd. for a consideration of S$180,000 (the Disposal ). Completion of the Disposal took place on 15 November Revenue We derive our revenue from the sale of F&B items through our chain of retail outlets in Singapore. As at the Latest Practicable Date, we had 54 retail outlets in Singapore and two retail outlets in Kuala Lumpur, Malaysia (through our 40.0%-owned Associated Company, Old Chang Kee Malaysia). As at Latest Practicable Date, we also had three retail outlets in Chengdu, PRC (through Old Chang Kee China). We have also established brand presence in Indonesia, by way of a franchise agreement entered into between Ten & Han, our subsidiary, and our Indonesian Franchisee. As at the Latest Practicable Date, our Indonesian Franchisee operates four retail outlets in Jakarta, Indonesia. In June 2007, we also established our brand presence in the Philippines, by way of a franchise agreement entered into between Ten & Han, our subsidiary, and our Philippines Franchisee. As at the Latest Practicable Date, our Philippines Franchisee has opened two retail outlets in Manila, the Philippines. Our customers are mainly the general public in Singapore. In January 2005, following the Halal certification for all our food products in Singapore, our customer base expanded to include Muslim consumers. We offer a wide range of food products to our customers. Please refer to the section entitled Our Products of this Prospectus for a list of our food products. Our revenues for FY2004, FY2005, FY2006 and FP2007 (the period under review ) was derived mainly from the sale of our food products, in particular, our signature curry puffs. Sales of our signature curry puffs, on average, accounted for about 30% of our revenue in each of the period under review. Sales of our other food products varied with changes in consumers tastes and preferences. Sales of Take 5 meals and 1901 F&B items, both commenced in FY2005, constituted 1.0% and 0.6% of our revenue in FY2005, 2.0% and 2.9% of our revenue in FY2006 and 3.0% and 3.3% of our revenue in FP2007 respectively. Save for our sales of certain raw materials to our overseas Associated Companies and franchisees, most of our sales are conducted on a cash basis and revenue is recognised upon the sale in the period under review. 46

49 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our revenue may be affected by, inter alia, the following key factors:- (a) (b) (c) (d) our ability to secure good locations for our retail outlets; our ability to compete successfully with our competitors in terms of product range, pricing, including price adjustments on our part, quality and services; changes in consumers tastes and preferences; and changes in economic conditions and governmental regulations in Singapore, which may affect consumer sentiments, their disposable income and discretionary spending. Please refer to the section entitled Risk Factors of this Prospectus for more information on other factors which may affect our business operations, sales and overall financial performance. Seasonality For the period under review, we registered higher sales in the last quarter of each financial year, in particular, in the month of December. We believe that this was mainly due to the festive celebrations of general consumers at year-end. Cost of sales Our cost of sales constituted 40.0%, 38.8%, 40.9% and 41.6% of our revenue for FY2004, FY2005, FY2006 and FP2007 respectively. Our cost of sales comprised mainly raw materials, such as flour, eggs, potatoes, margarine, chicken meat, spices and vegetables for the preparation of our food products. To reduce our production cost, we outsourced the manufacturing of certain food products to a contract manufacturer in Thailand from June For each of the period under review, purchases from Siamchai International Food Co. Ltd., our contract manufacturer in Thailand, accounted for more than 38% of our purchases. Please refer to the section entitled Major Suppliers of this Prospectus for further details. Cost of raw materials (including contract manufacturing costs) accounted for 84.2%, 85.3%, 83.9% and 84.3% of our cost of sales for FY2004, FY2005, FY2006 and FP2007 respectively. Most of our raw materials can be easily sourced from various suppliers in Singapore and Thailand, and accordingly, we do not generally experience significant price fluctuations in these raw materials. However, we registered higher costs for chicken meat and eggs in FY2004 due to the occurrence of avian influenza and have experienced slow but gradual increase in the prices of vegetable oil and flour in recent years. We did not encounter any significant fluctuation in the cost of contract manufacturing during the period under review. The other major contributor to our cost of sales is the direct labour cost of our production workers. Direct labour costs accounted for 11.6%, 10.4%, 10.7% and 10.5% of our cost of sales for FY2004, FY2005, FY2006 and FP2007 respectively. The balance of our cost of sales relates to overheads incurred in operating our production facilities, comprising mainly utilities charges, depreciation on our kitchen-related fixed assets (including our leasehold production facility at 2 Woodlands Terrace) and rental charges for coldroom facility. Overheads accounted for 4.2%, 4.3%, 5.4% and 5.2% of our cost of sales for FY2004, FY2005, FY2006 and FP2007 respectively. The increases in overheads in FY2006 and FP2007 was due to increases in electricity bill and depreciation. Our cost of sales may be affected by, inter alia, the following key factors:- (a) fluctuations in the cost of contract manufacturing and supplies which may be influenced by fluctuations in THB and RM; 47

50 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (b) (c) (d) (e) (f) (g) our ability to capitalise on volume to obtain favourable pricing from contract manufacturers and suppliers; increase in the cost of fuel and resultant increase in utilities charges; gradual increase in raw materials prices; rising raw material prices which may be influenced by an outbreak of disease in livestock and food scares regionally and around the world, such as avian influenza. Such an outbreak may affect the supply and consequently the price of such raw materials; our ability to control our costs by reducing material wastage through cost control measures implemented by our management; and changes in governmental regulations that may affect the prices of our raw materials and contract manufactured food items. Other operating income Other operating income represented 0.1%, 0.1%, 0.9% and 1.5% of our revenue for FY2004, FY2005, FY2006 and FP2007 respectively. It comprised mainly income from sale of used oil, short-term deposits, insurance compensation, grants received, gains on fair value adjustment of quoted investment and gains on disposal(s) of quoted investment and property, plant and equipment. Operating expenses Our operating expenses comprised selling and distribution expenses, administrative expenses and other operating expenses. Selling and distribution expenses Our selling and distribution expenses accounted for 71.8%, 65.6%, 69.0% and 71.0% of our total operating expenses for FY2004, FY2005, FY2006 and FP2007 respectively. These are expenses incurred for operating our retail outlets which is mainly constituted by employee benefits expense and rental expenses. Employee benefits expense, which comprised salary, incentive, welfare and other employeerelated expenses, accounted for 36.1%, 42.9%, 42.6% and 41.7% of our selling and distribution expenses for FY2004, FY2005, FY2006 and FP2007 respectively. Rental expenses for our retail outlets accounted for 38.1%, 37.4%, 36.1% and 36.6% of our selling and distribution expenses for FY2004, FY2005, FY2006 and FP2007 respectively. The other contributors of selling and distribution expenses are depreciation of retail outlet equipment, advertising and promotional expenses, packing material expenses, water and electricity expenses, and cleaning expenses which, in aggregate, accounted for 25.8%, 19.7%, 21.3% and 21.7% of our selling and distribution expenses for FY2004, FY2005, FY2006 and FP2007 respectively. Administrative expenses Our administrative expenses accounted for 25.3%, 30.8%, 25.7% and 23.5% of our total operating expenses for FY2004, FY2005, FY2006 and FP2007 respectively. These relate mainly to expenses incurred at our head office such as employee benefits expense, entertainment and travelling expenses, and office supplies and general maintenance expenses. 48

51 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Employee benefits expense comprised salary, welfare and other employee-related expenses of office personnel and directors remuneration. Employee benefits expense, excluding directors remuneration, accounted for 23.8%, 23.3%, 27.0% and 23.2% of our administrative expenses for FY2004, FY2005, FY2006 and FP2007 respectively. Directors remuneration and fees accounted for 33.9%, 39.9%, 29.7% and 17.8% of our administrative expenses for FY2004, FY2005, FY2006 and FP2007 respectively. The lower percentage of directors remuneration in FP2007 was mainly because directors fees were only determined at the end of the financial year. Entertainment and travelling expenses comprised mainly entertainment claims, travel related costs and transport claims by our sales and office personnel and accounted for 19.5%, 12.3%, 12.9% and 10.9% of our administrative expenses for FY2004, FY2005, FY2006 and FP2007 respectively. The balance of our administrative expenses comprised office supplies and general maintenance expenses which accounted for 22.8%, 24.5%, 30.4% and 48.1% of our administrative expenses for FY2004, FY2005, FY2006 and FP2007 respectively. Other operating expenses Other operating expenses, which comprised mainly depreciation of office equipment, and amortisation on our intangible assets (which include computer software licences acquired for our ERP system in FY2005 and franchise rights for 1901 ), accounted for 2.9%, 3.6%, 5.3% and 5.5% of our total operating expenses for FY2004, FY2005, FY2006 and FP2007 respectively. The higher percentage of other operating expenses in FY2006 was because it included costs for setting up Old Chang Kee Chengdu Co., Ltd., previously incorporated to be an Associated Company in PRC but currently in the process of being liquidated. These costs comprised S$77,000 bad debt written off of a loan due from a related party (an employee of the other shareholder), a provision of S$76,000 in relation to the reimbursement of start-up costs made by the other shareholder and the writing-off of our initial investment of S$66,000. The higher percentage in other operating expenses in FP2007 was mainly due to exchange loss due to appreciation of THB against S$. Please refer to the section entitled Foreign exchange exposure of this Prospectus for further details of our exchange gains/losses in the period under review. Finance costs Our finance costs were attributed to hire purchase charges for computer equipment and motor vehicles. We incurred finance costs of S$13,000, S$27,000, S$42,000 and S$22,000 in FY2004, FY2005, FY2006 and FP2007 respectively. The increase in finance costs was due to the purchase of new vehicles in both FY2004 and FY2005. In addition, in FY2005 and FY2006, we purchased approximately S$0.6 million of computer equipment under finance lease arrangements each payable by 36-month instalments, to set up our ERP system. Taxation All our operations are in Singapore during the period under review. Our statutory corporate tax rates and effective tax rates for FY2004, FY2005, FY2006 and FP2007 were as follows:- FY2004 FY2005 FY2006 FP2007 Statutory corporate tax rate 20.0% 20.0% 20.0% 18.0% Effective tax rate 19.8% 24.3% 26.8% 19.6% Our effective tax rates for FY2005, FY2006 and FP2007 were higher than the statutory corporate rate due mainly to non-deductible expenses. Our effective tax rate for FY2004 was slightly lower than the statutory corporate tax rate due mainly to partial tax exemption on exempt income. Inflation Our operation and performance was not materially affected by inflation during the period under review. 49

52 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Foreign exchange exposure Our revenue is denominated in S$. As a cost-control measure, we outsourced the production of certain food products to a contract manufacturer in Thailand. We also source for other raw materials from suppliers in Thailand and Malaysia. Our foreign currency purchases in the period under review are as follows:- FY2004 FY2005 FY2006 FP2007 Purchases denominated in foreign currency 3,303 4,648 5,209 2,985 (S$ 000) As a percentage of our cost of sales Prior to 1 January 2006, we recorded our purchases from the contract manufacturer and suppliers in Thailand and Malaysia based on the actual Singapore dollar amount paid. Accordingly, we did not have any foreign exchange gain or loss in FY2004 and FY2005. With effect from 1 January 2006, we changed our policy to book in the purchases at transaction rate and record any exchange gain or loss which arises when we make payments. For FY2006, we registered a total exchange loss of S$27,000, including S$3,000 incurred by re-translation of amounts due by Old Chang Kee Malaysia. For FP2007, we registered a total exchange loss of S$184,000, due mainly to realised loss on purchases from the contract manufacturer and suppliers in Thailand and Malaysia. This was due mainly to the appreciation of the THB against S$ in FP2007. In addition, we are exposed to foreign currency fluctuations due to purchases of some of our production equipment, which may be denominated in US$. We currently do not have any policy with respect to our foreign exchange transactions. We have not undertaken any hedging activities since inception. We will continue to monitor our foreign exchange exposure and where appropriate, will consider using financial instruments to hedge our exposure. We will seek the approval of our Board on the policy for entering into any foreign exchange hedging transaction and we will put in place adequate procedures for such transactions which must be reviewed and approved by our Audit Committee. REVIEW OF RESULTS OF OPERATIONS FY2005 vs FY2004 Revenue Our revenue increased by approximately S$8.1 million (or 39.0%) from S$20.9 million in FY2004 to S$29.0 million in FY2005. The increase in our revenue was mainly attributed to additional sales derived from the wider marketability and appeal of our food products after obtaining Halal certification in January The other factors which contributed to the increase in our revenue include firstly, the addition of four retail outlets between 31 December 2004 and 31 December 2005, bringing the total number of retail outlets to 40. In FY2005, we opened six new retail outlets and closed two retail outlets. The six new retail outlets (including two new retail outlets for 1901 ) accounted for 9.4% of our revenue in FY2005. Secondly, we also received revenue from the full year sales registered by the seven retail outlets opened in FY2004. And lastly, our Take 5 meals, which was launched in April 2005, also contributed positively to our revenue. Further, we had lower revenue in FY2004 as our sales were affected by the ban of import of chickens and eggs from Malaysia in August 2004 and September 2004 respectively due to the occurrence of the avian influenza. Our signature curry puff remained the major contributor to our revenue and accounted for 31.1% of our revenue in FY

53 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cost of sales and gross profit margin Our cost of sales increased by approximately S$2.9 million (or 34.8%) from S$8.4 million in FY2004 to S$11.3 million in FY2005. The increase can be attributed to an increase in cost of raw materials (including contract manufacturing costs) to meet the increase in sales. However, the overall rate of increase in our cost of sales was 4.2 percentage points lower than the rate of increase in our revenue. This lower rate of increase in our cost of sales can be attributed to economies of scale with optimum planning of our production workers in FY2005 and also because we had higher costs for chicken meat and eggs in FY2004 due to the occurrence of the avian influenza. Consequently, our gross profit increased by approximately S$5.3 million (or 41.8%) from S$12.5 million in FY2004 to S$17.8 million in FY2005, and our gross profit margin improved by 1.2 percentage points from 60.0% in FY2004 to 61.2% in FY2005. Other operating income Other operating income increased by approximately S$26,000 (or 200.0%) from S$13,000 in FY2004 to S$39,000 in FY2005. This was mainly attributable to the gain on fair value adjustment of quoted investment of S$23,000 in FY2005, compared to S$9,000 in FY2004. We also earned interest income of S$16,000 in FY2005. Operating expenses Our total operating expenses increased by approximately S$3.6 million (or 36.4%) from S$9.9 million in FY2004 to S$13.5 million in FY2005. Increased selling and distribution expenses accounted for 48.3% of the increase in our total operating expenses for FY2005. Selling and distribution expenses increased by approximately S$1.8 million (or 24.5%) from S$7.1 million in FY2004 to S$8.9 million in FY2005. The increase was mainly due to the increase in rental expenses for our retail outlets (for the six additional retail outlets in FY2005 and the full year rental of the seven retail outlets opened in FY2004) of approximately S$0.6 million and employee benefits expense of approximately S$1.2 million from S$2.6 million in FY2004 to S$3.8 million in FY2005 due to an increase in the number of employees. Increased administrative expenses accounted for 45.9% of the increase in our total operating expenses for FY2005. Administrative expenses increased by approximately S$1.7 million (or 66.2%) from S$2.5 million in FY2004 to S$4.2 million in FY2005. The increase was attributed to an increase in employee benefits expense amounting to S$1.2 million due to increases in directors remuneration and fees, in line with the improvement in results from FY2004 to FY2005, as well as salaries and related costs of administrative personnel resulting from an increase in the number of employees. We also saw a S$297,000 increase in professional fees as we engaged consultants to improve our financial, operating and administrative systems. Other operating expenses increased by approximately S$209,000 (or 73.3%) from S$285,000 in FY2004 to S$494,000 in FY2005, which accounted for 5.8% of the increase in our total operating expenses. The increase was due mainly to an increase in depreciation arising from the addition of office equipment in FY2005. In addition, we also had amortisation expenses of S$40,000 on computer software licences acquired for our ERP system in FY2005. We also wrote off an advance of S$61,000 due from Gain Up (M) Sdn Bhd in FY2005. Please refer to the section entitled Past Interested Person Transactions of this Prospectus for further details on the advance. Finance costs Finance costs increased by approximately S$14,000 (or 107.7%) from S$13,000 in FY2004 to S$27,000 in FY2005. The increase was mainly due to interest paid on five new finance leases taken up in FY2005 to finance the purchase of motor vehicles and computer equipment. 51

54 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Profit before taxation Our profit before taxation increased by approximately S$1.6 million (or 63.1%) from S$2.6 million in FY2004 to S$4.2 million in FY2005. The increase in profit before taxation can be attributed to the substantial increase in our gross profit caused by the increase in revenue. In addition, we were also able to better manage our operating expenses which resulted in a lower rate of increase in our operating expenses as compared to the rate of increase of our gross profit. Consequently, profit before taxation margin improved by 2.2 percentage points from 12.4% in FY2004 to 14.6% in FY2005. FY2006 vs FY2005 Revenue Our revenue increased by approximately S$4.8 million (or 16.3%) from S$29.0 million in FY2005 to S$33.8 million in FY2006. The increase in revenue was mainly attributed to the increase of 11 new retail outlets from 40 as at 31 December 2005 to 51 as at 31 December Included in the 11 new retail outlets were three new retail outlets for 1901 whose business accounted for 2.9% of our revenue in FY2006. We also had revenue from the full year sales registered by the six retail outlets opened in FY2005. There was also an increase in revenue from delivery sales partly due to the island wide football fever during the World Cup month in June Our signature curry puff remained the major contributor to our revenue and accounted for 33.2% of our revenue in FY2006. Cost of sales and gross profit margin Our cost of sales increased by approximately S$2.5 million (or 22.6%) from S$11.3 million in FY2005 to S$13.8 million in FY2006. Cost of sales, as a percentage of our revenue, increased from 38.8% in FY2005 to 40.9% in FY2006. The 2.1 percentage point increase was mainly attributable to higher costs of raw materials (in particular, vegetable oil, margarine, sugar, curry spice, frozen seafood, flour and chicken). Consequently, our gross profit increased by S$2.2 million (or 12.3%) from S$17.8 million in FY2005 to S$20.0 million in FY2006, and our gross profit margin decreased from 61.2% in FY2005 to 59.1% in FY2006. Other operating income Other operating income increased by approximately S$260,000 from S$39,000 in FY2005 to S$299,000 in FY2006. This was mainly attributed to interest income earned on short-term deposits of S$139,000 placed with financial institutions in FY2006 as compared to S$16,000 registered in FY2005. We also had government grants from the Standards, Productivity and Innovation Board (SPRING Singapore) and the Singapore Workforce Development Agency amounting to S$135,000 in FY2006. Operating expenses Our total operating expenses increased by approximately S$2.5 million (or 18.4%) from S$13.5 million in FY2005 to S$16.0 million in FY2006. Increased selling and distribution expenses accounted for 87.5% of the increase in our total operating expenses for FY2006. Selling and distribution expenses increased by approximately S$2.2 million (or 24.5%) from S$8.9 million in FY2005 to S$11.1 million in FY2006. The increase was mainly due to the increase in rental expenses for our retail outlets (for the 11 additional retail outlets in FY2006 and the full year rental of the six retail outlets opened in FY2005) of approximately S$0.7 million and employee benefits expense of approximately S$0.9 million from FY2005 to FY2006. Administrative expenses decreased by approximately S$43,000 (or 1.0%) from S$4.17 million to S$4.13 million, which offset the increase in total operating expenses for FY2006 by 1.7%. The decrease was attributable to decrease in certain expenses such as directors remuneration and fees and professional fees. The decrease in the total directors remuneration and fees of S$440,000 from FY2005 to FY2006 is due to the lower director s fees declared from S$500,000 in FY2005 to S$200,000 in FY2006 and lower bonus paid in FY2006 as compared to FY2005, which is in line with the lower profits accounted for in 52

55 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FY2006, as the directors bonus are pegged to the performance of our Group. The decrease in professional fees of S$266,000 from FY2005 to FY2006 was mainly due to some IPO expenses and consultancy fees (for the IPO and the implementation of the ERP system) incurred in FY2005. The decrease was partially offset by increase in repairs and maintenance and telephone costs for maintaining the ERP system which enable us to capture sales information on-line. Other operating expenses increased by approximately S$354,000 (or 71.7%) from S$494,000 in FY2005 to S$848,000 in FY2006, which accounted for 14.2% of the increase in our total operating expenses for FY2006. The increase was mainly attributed to increased depreciation expenses due to additional property, plant and equipment acquired and the expenses related to the setting up of a previous Associated Company in Chengdu, PRC, Old Chang Kee Chengdu Co., Ltd., which include a loan due from a related party (an employee of the other shareholder) of S$77,000 which was written off, being a bad debt, and S$76,000 provision for reimbursement of start-up costs for the said Associated Company. Finance costs Finance costs increased by approximately S$15,000 (or 55.6%) from S$27,000 in FY2005 to S$42,000 in FY2006. The increase was mainly due to interest paid on four new finance leases taken up in the second half of FY2005 and one new finance lease taken up in FY2006 to finance the purchase of motor vehicles and computer equipment. Profit before taxation Our profit before taxation decreased by approximately S$85,000 (or 2.0%) from S$4.24 million in FY2005 to S$4.15 million in FY2006. Our profit before taxation margin was reduced by 2.3 percentage points from 14.6% in FY2005 to 12.3% in FY2006. This was mainly attributable to higher costs of raw materials and operating expenses such as rental expenses and repairs and maintenance costs, as mentioned above. FP2007 vs FP2006 Revenue Our revenue increased by approximately S$2.9 million (or 18.4%) from S$16.1 million in FP2006 to S$19.0 million in FP2007. The increase in revenue was mainly attributed to the addition of eight Old Chang Kee retail outlets in Singapore from 41 as at 30 June 2006 to 49 as at 30 June Our signature curry puffs remained the major contributor to our revenue and accounted for 33.3% of our revenue in FP2007. We also had increased contribution from 1901 which accounted for 3.3% of our total revenue in FP2007. Cost of sales and gross profit margin Our cost of sales increased by approximately S$1.4 million (or 21.9%) from S$6.5 million in FP2006 to S$7.9 million in FP2007. The increase can be attributed to an increase in cost of raw materials (including contract manufacturing costs) to meet the increase in sales. However, the overall rate of increase in our cost of sales was 3.5 percentage points higher as compared to the rate of increase in our revenue. This was mainly due to increasing costs of raw materials. Consequently, although our gross profit increased by approximately S$1.5 million (or 16.1%) from S$9.6 million in FP2006 to S$11.1 million in FP2007, our gross profit margin decreased by 1.2 percentage points from 59.6% in FP2006 to 58.4% in FP2007. Other operating income Other operating income increased by approximately S$203,000 (or 247.6%) from S$82,000 in FP2006 to S$285,000 in FP2007. This was mainly due to a gain of S$150,000 from the disposal of two motor vehicles in FP2007. In addition, we commenced the selling of our used oil as scrap in FP2007. Income from sale of used oil amounted to S$89,000 in FP2007. We also had lower interest income of S$35,000 in FP2007 as compared to S$62,000 in FP

56 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Operating expenses Our total operating expenses increased by approximately S$2.2 million (or 29.4%) from S$7.2 million in FP2006 to S$9.4 million in FP2007. Increase in selling and distribution expenses accounted for 72.8% of the increase in our total operating expenses for FP2007. Selling and distribution expenses increased by approximately S$1.6 million (or 30.4%) from S$5.1 million in FP2006 to S$6.7 million in FP2007. The increase was mainly due to the increase in rental expenses for our retail outlets (for some existing retail outlets and the full six months rental of the eight additional retail outlets opened in FY2006) of approximately S$547,000 and employee benefits expense of approximately S$505,000. Increase in other selling and distribution expenses such as electricity, depreciation, packing materials, cleaning expenses and marketing expenses accounted for approximately S$499,000 in FP2007 due to higher sales, in line with the increase in the number of retail outlets. Increase in administrative expenses accounted for 24.5% of the increase in our total operating expenses for FP2007. Administrative expenses increased by approximately S$521,000 (or 31.0%) from S$1.7 million in FP2006 to S$2.2 million in FP2007. The increase was attributable to an approximately S$174,000 increase in professional fees as we engaged consultants for services to improve our financial, operating and administrative systems and for trademark registrations. There was also an increase in repairs and maintenance costs of approximately S$143,000 which includes computer maintenance costs for the eight additional retail outlets opened in FY2006 and other general maintenance of machinery and equipment. There was also an increase in administration employee benefits expense by approximately S$111,000 from S$350,000 in FP2006 to S$461,000 in FP2007. Other operating expenses increased by approximately S$58,000 (or 12.8%) from S$454,000 in FP2006 to S$512,000 in FP2007 which accounted for 2.7% of the increase in our total operating expenses. The increase was due mainly to exchange losses of approximately S$184,000 arising as a result of increased cost of buying THB (as THB appreciated against S$) and increased depreciation of approximately S$29,000 due to additions of office equipment in FP2007. This was offset by a provision for reimbursement of start-up costs for an Associated Company to be set up in Chengdu, PRC, and a bad debt written off relating to a loan due from a related party (an employee of the other shareholder) in FP2006 of S$155,000. Please refer to the section entitled Overview Other operating expenses of this Prospectus for further details. Finance costs Finance costs increased by approximately S$3,000 (or 15.8%) from S$19,000 in FP2006 to S$22,000 in FP2007. The increase was mainly due to higher interest expenses as we utilised more bank overdrafts in FP2007 as compared to FP2006 and had taken up additional finance lease in FY2006 to finance the purchase of computer equipment. Profit before taxation Our profit before taxation decreased by approximately S$390,000 (or 16.2%) from S$2.4 million in FP2006 to S$2.0 million in FP2007. Profit before taxation margin decreased by 4.4 percentage points from 15.0% in FP2006 to 10.6% in FP2007. The decrease was mainly due to higher raw material costs and higher selling and distribution expenses in FP

57 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS REVIEW OF PAST FINANCIAL POSITION Non-current assets Non-current assets comprised mainly property, plant and equipment, intangible assets and quoted investment. Our non-current assets had a net book value of S$6.3 million and S$9.8 million, accounting for 38.8% and 58.4% of our total assets, as at 31 December 2006 and 30 June 2007 respectively. Our property, plant and equipment had a net book value of S$5.9 million and S$9.4 million, accounting for 93.5% and 95.9% of our total non-current assets as at 31 December 2006 and 30 June 2007 respectively. Our property, plant and equipment comprised mainly our leasehold building, machinery and equipment, computer equipment for our ERP system, motor vehicles and electrical fittings. The net book value of our leasehold building at 2 Woodlands Terrace amounted to S$2.2 million as at 31 December 2006 and 30 June Machinery and equipment which relates to kitchen equipment for our production facility and retail outlets amounted to S$1.1 million and S$1.7 million as at 31 December 2006 and 30 June 2007 respectively. We had motor vehicles (comprising cars for our Executive Directors and managers and vans for delivery), capitalised renovation costs, electrical fittings, furniture and computer equipment of S$529,000, S$348,000, S$636,000, S$211,000 and S$905,000 respectively as at 31 December 2006 and S$600,000, S$1.6 million, S$1.3 million, S$1.2 million and S$818,000 respectively as at 30 June The significant increase in the capitalised renovation costs, electrical fittings, furniture and computer equipment is due mainly to the renovation and upgrading of our production facility at 2 Woodlands Terrace to include a full mezzanine floor to extend the built-in area of the building as well as the setting up of new retail outlets. Please also refer to the section entitled Material Capital Expenditure, Divestment and Commitment of this Prospectus for further details. Intangible assets comprised computer software licences, club memberships and franchise rights, and had a net book value of S$339,000 and S$304,000 as at 31 December 2006 and 30 June 2007 respectively. Computer software licences for our ERP system amounted to S$217,000 and S$189,000 as at 31 December 2006 and 30 June 2007 respectively. Club memberships, purchased for networking purposes, had a net book value of S$88,000 and S$85,000 as at 31 December 2006 and 30 June 2007 respectively. Franchise rights for 1901 were capitalised and amortised over a five-year period, with net book value of S$34,000 and S$30,000 as at 31 December 2006 and 30 June 2007 respectively. Our investment in associated companies amounted to S$16,000 as at 31 December 2006 and S$17,000 as at 30 June This was mainly because of the appreciation of THB against S$ which increased our investment in Old Chang Kee Thailand when expressed in S$ as at the balance sheet dates. This includes our investment in our 40.0%-owned Old Chang Kee Malaysia, our 40.0%-owned Old Chang Kee Thailand (which is currently dormant and with which we intend to engage in the trading of seafood products) and our 33.3%-owned Pure Options (which is currently in the process of being struck-off). We have recognised our share of losses in Old Chang Kee Malaysia and Pure Options up to a maximum of the investment costs in these Associated Companies. We also made advances to our Associated Companies and as at 31 December 2006 and 30 June 2007, the total outstanding amounts due from our Associated Companies were S$57,000 and S$86,000 respectively. As at the Latest Practicable Date, with the striking off of Pure Options, we have waived the outstanding amount of S$10,000 due from Pure Options. The balance, amounting to S$85,000, relate to amounts due from Old Chang Kee Malaysia which remained outstanding as at the Latest Practicable Date. 55

58 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Current assets Current assets comprised cash and cash equivalents, deposits, trade and other receivables and inventories. We had current assets of S$9.9 million and S$7.0 million, accounting for 61.2% and 41.6% of our total assets as at 31 December 2006 and 30 June 2007 respectively. The largest component of our current assets was cash and cash equivalents. Cash and cash equivalents stood at S$6.6 million and S$4.1 million, representing 66.2% and 58.2% of our current assets as at 31 December 2006 and 30 June 2007 respectively. Deposits refer to security deposits made in the course of leasing our retail outlets. Deposits for our retail outlets amounted to S$1.4 million and S$1.6 million as at 31 December 2006 and 30 June 2007 respectively. Trade and other receivables amounted to S$1.4 million and S$171,000 as at 31 December 2006 and 30 June 2007 respectively. While majority of our sales are conducted on cash basis only, we had trade and other receivables arising mainly from export sales to our overseas franchisees (which amounted to S$41,000 and S$124,000 as at 31 December 2006 and 30 June 2007 respectively) and revenue collected on our behalf by the landlord of a retail outlet (which amounted to S$30,000 and S$27,000 as at 31 December 2006 and 30 June 2007 respectively). In addition, trade and other receivables as at 31 December 2006 also include advance payments made for factory and office improvement works of S$1.3 million which was capitalised in FP2007. Prepayments, which include insurance expenses and expenses incurred for this listing exercise, increased from S$149,000 as at 31 December 2006 to S$665,000 as at 30 June Inventories comprising mainly raw materials amounted to S$446,000 and S$526,000 as at 31 December 2006 and 30 June 2007 respectively. Please refer to the section entitled Inventory Management of this Prospectus for further details. Current liabilities Current liabilities comprised trade and other payables, other liabilities, bank overdrafts, provision for taxation, finance lease liabilities and club membership payable within one year. We had current liabilities of S$7.5 million and S$6.7 million, accounting for 87.4% and 86.2% of our total liabilities as at 31 December 2006 and 30 June 2007 respectively. The largest component of our current liabilities was trade and other payables, which stood at S$5.9 million and S$5.2 million at 31 December 2006 and 30 June 2007 respectively. Trade and other payables consisted of mainly trade payables arising from the purchase of raw materials and contract manufacturing costs which amounted to S$2.2 million and S$2.1 million as at 31 December 2006 and 30 June 2007 respectively. Also included were other payables and accrued expenses of about S$1.1 million and S$1.5 million as at 31 December 2006 and 30 June 2007 respectively as well as a provision of S$77,000 for reimbursement of start-up costs for an Associated Company set up in Chengdu, PRC, as at 31 December As at 31 December 2006, monies due to Directors (being advances granted to our Group by our Directors) amounted to S$2.5 million. Please refer to the section entitled Past Interested Person Transactions of this Prospectus for further details of the advances from our Directors. Other liabilities which relate to foreign staff deposits and provision for leave not taken by employees accounted for S$180,000 and S$203,000 as at 31 December 2006 and 30 June 2007 respectively. We also had bank overdrafts of S$173,000 and S$140,000 as at 31 December 2006 and 30 June 2007 respectively. Provision for income tax amounted to S$900,000 and S$818,000 as at 31 December 2006 and 30 June 2007 respectively. Finance lease liabilities due within one year for the purchase of computer equipment and motor vehicles amounted to S$344,000 and S$323,000 as at 31 December 2006 and 30 June 2007 respectively. Club membership due within one year amounted to S$15,000 as at 31 December 2006 and 30 June As at 31 December 2006, a sum of S$2,000 was due to a related party, namely Han Jong Kwong Roland, in relation to the setting up of Old Chang Kee Australia. This amount has been settled in June

59 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Non-current liabilities Non-current liabilities comprised finance lease liabilities, deferred tax liabilities and club membership payable after one year. Non-current liabilities stood at S$1.1 million, accounting for 12.6% and 13.8% of our total liabilities as at 31 December 2006 and 30 June 2007 respectively. Finance lease liabilities for the purchase of computer equipment and motor vehicles amounted to S$485,000 and S$401,000 as at 31 December 2006 and 30 June 2007 respectively. Deferred tax liabilities amounted to S$576,000 and S$657,000 as at 31 December 2006 and 30 June 2007 respectively. Club membership payable after one year amounted to S$20,000 and S$13,000 as at 31 December 2006 and 30 June 2007 respectively. Shareholders equity As at 31 December 2006, our shareholders equity amounted to S$7.6 million. This comprised issued capital of S$700,000, share application money of S$100,000 and reserves of S$6.8 million. As at 30 June 2007, our shareholders equity increased to S$9.1 million, comprising issued capital of S$800,000 and reserves of S$8.3 million. The share application money was converted to ordinary shares in our Company on 3 April Please refer to the section entitled Share Capital of this Prospectus for further details. LIQUIDITY AND CAPITAL RESOURCES Our internal sources of cash comprised mainly cash generated from sales at our various retail outlets while our external source of financing is primarily from finance leases and credit extended to us by our suppliers. Our principal usage of cash is the purchase of raw materials, capital expenditure and operating expenses. As at 31 December 2006, we had a healthy working capital of S$2.4 million and our cash and cash equivalents (net of bank overdrafts) stood at S$6.4 million. As at 31 December 2006, we had total bank and finance lease facilities of S$5.0 million of which S$1.8 million were utilised and the balance of S$3.2 million remained unutilised. The interest rates for the S$173,000 bank overdrafts ranged from 6.0% to 6.5% per annum. These bank overdrafts are repayable on demand. The finance lease liabilities bear effective interest rates of 4.15% to 8.73% per annum, with a repayment period of between 11 and 69 months from 31 December As at 30 June 2007, we had a net working capital of S$363,000 and our cash and cash equivalents (net of bank overdrafts) stood at S$4.0 million. As at 30 June 2007, we had total bank and finance lease facilities of S$5.0 million of which S$1.8 million were utilised and the balance of S$3.2 million remained unutilised. The interest rates for the S$140,000 bank overdrafts ranged from 6.0% to 6.25% per annum. These bank overdrafts are repayable on demand and were fully settled in August The finance lease liabilities incurred effective interest rates of 4.15% to 6.68% per annum, with a repayment period of between five and 82 months from 30 June As at the Latest Practicable Date, we had a net working capital of S$1.5 million and our cash and cash equivalents stood at S$4.4 million. As at the Latest Practicable Date, we had total bank and finance lease facilities of S$8.4 million of which S$2.6 million were utilised and the balance of S$5.8 million remained unutilised. The finance lease liabilities incurred effective interest rates of 4.15% to 6.68% per annum, with a repayment period of between one and 80 months from the Latest Practicable Date. To the best of our Directors knowledge, our Group is not in breach of any of the terms or conditions or covenants associated with any credit arrangement or bank loan which could materially affect our financial position, results, business operations, or the investments by our Shareholders in our Company. In the reasonable opinion of our Directors, as at the date of lodgement of this Prospectus, the working capital available to our Group is sufficient for our present requirements. 57

60 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets out a summary of the combined cash flow statements of our Group for the period under review:- Audited Unaudited S$ 000 FY2004 FY2005 FY2006 FP2007 Net cash generated from operating activities 3,197 5,295 5,899 1,979 Net cash used in investing activities (1,056) (2,480) (1,232) (4,099) Net cash used in financing activities (662) (1,283) (2,875) (320) Net increase/(decrease) in cash and cash equivalents 1,479 1,532 1,792 (2,440) Cash and cash equivalents at the beginning of 1,589 3,068 4,600 6,392 the financial year/period Cash and cash equivalents at the end of the 3,068 4,600 6,392 3,952 financial year/period FY2004 In FY2004, we generated an operating profit before working capital changes of approximately S$3.4 million. We had cash outflow of S$123,000 from increases in trade and other receivables as well as inventories and cash inflow of S$340,000 from an increase in trade and other payables. These increases are mainly attributable to the increases in raw material purchases and contract manufacturing costs as our sales increased with the opening of seven new retail outlets in FY2004. During the year, we also made an advance of S$61,000 to Gain Up (M) Sdn Bhd (further details set out in the section entitled Past Interested Person Transactions of this Prospectus) and paid tax of S$401,000. Consequently, our net cash from operating activities amounted to S$3.2 million in FY2004. In FY2004, net cash used in investment activities amounted to S$1.1 million, of which S$1.0 million was attributable to additions to plant and equipment, including machinery and equipment as well as motor vehicles. We also had cash outflow of S$38,000 for the payment of club membership. Net cash used in financing activities amounted to S$662,000 in FY2004. This comprised repayment of finance lease liabilities of S$89,000, interest paid of S$13,000 and interim dividends paid in respect of FY2004 of S$560,000. FY2005 In FY2005, we generated an operating profit before working capital changes of approximately S$5.2 million. With the opening of six new retail outlets in FY2005, our raw material purchases increased and accordingly, our trade payables increased and we registered cash inflow of S$625,000 from the increase. We also registered cash inflow of S$738,000 from an increase in other payables and accruals due mainly to provisions for bonus and an increase in finance lease liabilities. These were offset by cash outflows from increases in inventories, deposits, as well as trade and other receivables of S$106,000, S$242,000 and S$242,000 respectively. The increase in inventories was a result of the increase in raw materials corresponding to the increase in the number of retail outlets. The increase in deposits was similarly attributable to the additional retail outlets opened in FY2005. The increase in trade and other receivables was due to amount owing by landlords for sales takings collected on our behalf. With income tax payments of S$700,000, our net cash from operating activities amounted to S$5.3 million in FY2005. In FY2005, net cash used in investment activities amounted to S$2.5 million, of which S$2.2 million was utilised to expand and upgrade our leasehold premises at 2 Woodlands Terrace and to implement our ERP system to automate our operations. We used S$290,000 to acquire computer software licences for our ERP system. We also received S$51,000 in proceeds from disposal of property, plant and equipment. 58

61 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net cash used in financing activities amounted to S$1.3 million in FY2005. This comprised repayment of finance lease liabilities of S$248,000, payment of interest on finance leases of S$27,000 and interim dividends paid in respect of FY2005 of S$1.0 million. FY2006 In FY2006, we generated an operating profit before working capital changes of approximately S$5.6 million. Together with net cash inflow of S$1.2 million from working capital changes and tax paid of S$903,000, we registered net cash generated from operating activities of S$5.9 million in FY2006. The net cash inflow from working capital changes related mainly to cash inflows from an increase in trade and other payables of S$555,000. The increase in trade payables and accruals of operating expenses was due to more retail outlets in FY2006. We also had cash inflow from an increase in advances from Directors of S$2.5 million in FY2006, which were repaid in January Please refer to the section entitled Past Interested Person Transactions of this Prospectus for further details. These cash inflows were offset by cash outflows due to an increase of S$1.8 million in trade and other receivables which were mainly attributable to advance payments made by us for factory and office improvement works as well as an increase in inventories of S$96,000 with the increase in number of retail outlets. In FY2006, net cash used in investing activities amounted to S$1.2 million. This was mainly attributed to a cash outflow of S$1.3 million relating to the acquisition of property, plant and equipment for our new retail outlets, purchase of computer software and payment for club membership. There was also a cash outflow of S$110,000 for investments in food related businesses in Singapore, Thailand, Malaysia and Chengdu, PRC. As a result of these investments, we have a 40.0% interest in Old Chang Kee Malaysia, a 40.0% interest in Old Chang Kee Thailand (which is currently dormant and with which we intend to engage in the trading of seafood products) and a 33.3% interest in Pure Options (which is currently in the process of being struck-off). We made advances of S$47,000 and S$10,000 to Old Chang Kee Malaysia and Pure Options respectively. Please refer to the section entitled Past Interested Person Transactions of this Prospectus for further details. These were offset by a cash inflow of S$119,000 from the disposal of property, plant and equipment and quoted investment as well as S$137,000 interest income from interest-bearing deposits. Share application money of S$99,998 were received during the year to partially finance the investments in the abovementioned associated companies. The share application money was converted to ordinary shares in our Company on 3 April Please refer to the section entitled Share Capital of this Prospectus for further details. Net cash used in financing activities amounted to S$2.9 million in FY2006. This comprised repayment of finance lease liabilities of S$338,000, interest payments of S$42,000 and final dividends paid in respect of FY2006 of S$2.5 million. FP2007 In FP2007, we generated an operating profit before working capital changes of approximately S$2.6 million. Together with net cash outflow of S$274,000 from working capital changes and tax paid of S$395,000, we registered net cash generated from operating activities of S$2.0 million in FP2007. The net cash outflow of S$274,000 from working capital changes arose mainly from cash outflow from a decrease of S$691,000 in trade payables and accruals of operating expenses. The decrease was mainly because we repaid advances of S$2.5 million due to our Directors in FP2007, offset by an increase of S$1.8 million in trade payables and accruals in FP2007. The cash outflow was offset by cash inflow from a decrease of S$506,000 in trade and other receivables, deposits and prepayments. This comprised mainly a decrease in trade and other receivables as we capitalised advance payments made for factory and office improvement works of S$1.3 million in FP2007 and offset by an increase in deposits of S$160,000 and prepayments of S$516,000. In FP2007, net cash used in investing activities amounted to S$4.1 million. This was mainly attributed to a cash outflow of S$4.3 million relating to the acquisition of property, plant and equipment for our new retail outlets and for improvement made to our production facilities and office. We also made advances of S$29,000 to an Associated Company. These were offset by cash inflow of sales proceeds of S$204,000 from the disposal of motor vehicles and computers as well as interest income of S$36,000 from interestbearing deposits. 59

62 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net cash used in financing activities amounted to S$320,000 in FP2007. This comprised repayment of finance lease liabilities of S$298,000 and interest paid of S$22,000. Audited Unaudited 1 July 2007 to the Latest Practicable S$ 000 FY2004 FY2005 FY2006 FP2007 Date Additions (1) Leasehold building (due to improvements at our production facility at 2 Woodlands Terrace) Machinery and equipment (2) 71 Motor vehicles Renovation (for our retail outlets and production facility at 2 Woodlands Terrace) ,433 (2) 381 Electrical fittings (2) 109 Furniture ,016 (2) 149 Computers (3) Computer software licences (3) Franchise rights 41 1,279 3,310 1,474 4,496 1,064 Disposals (4) Machinery and equipment 1 Motor vehicles Renovation 4 Electrical fittings 2 Furniture 1 Computers MATERIAL CAPITAL EXPENDITURE, DIVESTMENT AND COMMITMENT Our material capital expenditure and divestment in FY2004, FY2005, FY2006, FP2007 and for the period from 1 July 2007 up to the Latest Practicable Date are as follows:- Notes:- (1) This relates to the cost of property, plant and equipment and intangible assets acquired during the respective financial years/periods. (2) The significant increase in the additions of machinery and equipment, renovation, electrical fittings and furniture in FP2007 was due to the final billing for all the work done for the renovation and upgrading of our production facility at 2 Woodlands Terrace to include a full mezzanine floor to extend the built-in area of the building and the opening of three new retail outlets. (3) This relates to the implementation of our ERP system. (4) This relates to the net book value of property, plant and equipment and intangible assets disposed of during the respective financial years/periods. 60

63 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS We had a quoted investment through a unit trust fund. Our gain on fair value adjustment of quoted investment for the period under review was as follows:- Audited S$ 000 FY2004 FY2005 FY2006 Gain on fair value adjustment of quoted investment 9 23 We disposed our quoted investment for S$107,000 in FY2006 with a gain of S$7,000. In May 2007, after the completion of the renovation works, we conducted a valuation and registered a loss on fair value adjustment on our leasehold building at 2 Woodlands Terrace of S$119,000 which were offset against our asset revaluation reserve. On 15 November 2007, we entered into a sale and purchase agreement with Nineteen O One Sdn. Bhd. pursuant to which the entire issued and paid-up share capital of 1901 Singapore would be transferred to Nineteen O One Sdn. Bhd. for a consideration of S$180,000 (the Disposal ). Completion of the Disposal took place on 15 November Save as disclosed above and in the section entitled Restructuring Exercise of this Prospectus, our Group has no other material capital expenditure or divestment for the period from 1 July 2007 to the Latest Practicable Date. As at the Latest Practicable Date, we had capital commitments of S$82,000 to upgrade the production line with auto-stacker machine and auto-indexing machine, which will be paid by cash. The upgrade will be completed by end January As at the Latest Practicable Date, we had non-cancellable operating lease commitments in respect of lease of factory land and retail outlets as follows:- S$ 000 Within one year 4,037 After one year but not more than five years 3,890 After five years 1,994 61

64 DIVIDEND POLICY Our Company has not declared or paid any dividend since its incorporation. Save as disclosed below, none of our subsidiaries have declared or paid any dividends since 1 January 2004:- 1 July 2007 to the Latest Practicable Subsidiary Dividends FY2004 FY2005 FY2006 FP2007 Date Ten & Han Interim S$560,000 S$1,008,000 S$2,495,071 S$700,000 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, general financial condition, results of operations, capital requirements, cash flow, general business condition and other factors as our Directors may deem appropriate. We may, by ordinary resolution of our Shareholders, declare dividends at a general meeting, but we may not pay dividends in excess of the amount recommended by our Directors. The declaration and payment of dividends will be determined at the sole discretion of our Directors, subject to the approval of our Shareholders. Our Directors may also declare an interim dividend without the approval of our Shareholders. In making their recommendations, our Directors will consider, inter alia, our retained earnings and expected future earnings, operations, cash flow, capital requirements and general financing condition, as well as general business conditions and other factors which our Directors may deem appropriate. Future dividends will be paid by us as and when approved by our Shareholders, where necessary, and Directors. All dividends are paid pro-rata among the Shareholders in proportion to the amount paid up on each Shareholder s ordinary shares, unless the rights attaching to an issue of any ordinary share provide otherwise. Unless otherwise directed, dividends are paid by cheque(s) or by warrant(s) sent through the post to each Shareholder at his registered address. 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. For information relating to taxes payable on dividends, please refer to Appendix I of this Prospectus. 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 should or can be made from any of the foregoing statements as to our actual future profitability or our ability to pay dividends in any of the periods discussed. 62

65 CAPITALISATION AND INDEBTEDNESS The following table summarises the cash and bank balances as well as capitalisation and indebtedness:- (a) based on our unaudited combined balance sheet as at 30 June 2007; (b) (c) based on our unaudited management combined balance sheet as at 31 October 2007; and as adjusted to give effect to the issue of New Shares pursuant to the Invitation and the application of the net proceeds from the Invitation. our consolidated financial statements and the related notes included in this Prospectus; and the section entitled Management s Discussion and Analysis of Financial Condition and Result of Operations of this Prospectus. As adjusted for the net As at As at proceeds from 30 June 31 October the issue of S$ the New Shares Cash and cash equivalents 4,092 4,365 7,695 Indebtedness Bank overdrafts Unsecured and guaranteed by Ten & Han 140 Finance lease liabilities (current) Secured and guaranteed (1) (2) Finance lease liabilities (current) Secured and non-guaranteed (2) Finance lease liabilities (non-current) Secured and guaranteed (1) (2) Finance lease liabilities (non-current) Secured and non-guaranteed (2) Total indebtedness Capitalisation Shareholders equity 9,140 9,549 12,879 Total capitalisation and indebtedness 10,004 10,341 13,671 You should read this table in conjunction with:- Notes:- (1) Guaranteed by our Executive Chairman, Han Keen Juan and/or our CEO, William Lim. Please refer to the section entitled Present and Ongoing Interested Person Transactions of this Prospectus for further details. (2) The finance lease liabilities were taken up to finance the purchase of vehicles and computer equipment and were secured by such assets. Please also refer to the section entitled Liquidity and Capital Resources of this Prospectus for further discussion on our indebtedness. As at 31 October 2007, we had contingent liabilities of S$160,000 in relation to letters of guarantee issued to landlords of certain retail outlets. 63

66 CAPITALISATION AND INDEBTEDNESS Save as disclosed above, our Group had no other borrowings or indebtedness (direct or indirect) or liabilities under acceptances or acceptance credits, mortgages, charges, obligations under finance leases, guarantees or other material contingent liabilities. Save as disclosed above, since 31 December 2006 to 31 October 2007, there were no material changes in our total capitalisation and indebtedness. The increase in cash and cash equivalents of approximately S$3.3 million after the Invitation is due to the net proceeds from the issue of the New Shares pursuant to the Invitation. 64

67 DILUTION Dilution arises because the Issue Price per New Share is higher than our NAV per Share attributable to the existing holders of our issued Shares. Our NAV (which is the amount of our total assets, minus the amount of our total liabilities and minority interests) as at 30 June 2007 was S$9.1 million, or cents per Share (based on the pre-invitation share capital of 68,400,000 Shares). Our NAV, as adjusted for the effects of the Invitation as well as any disposal or acquisition which occurred between 30 June 2007 and the date of the registration of this Prospectus by the Authority, will be S$12.5 million or cents per Share (based on the post-invitation share capital of 93,400,000 Shares). This represents an immediate increase in NAV of 0.01 cents per Share to our existing Shareholders and an immediate dilution to you, as a new investor subscribing for the New Shares in the Invitation. The following table illustrates this per Share dilution:- Issue Price per New Share 20.0 Cents NAV per Share as adjusted for any disposal or acquisition which occurred between June 2007 and the date of the registration of this Prospectus by the Authority based on the pre-invitation share capital of 68,400,000 Shares Decrease in NAV per Share attributable to existing Shareholders pursuant to the Invitation (0.01) NAV per Share as adjusted for the effects of the Invitation as well as any disposal or acquisition which occurred between 30 June 2007 and the date of the registration of this Prospectus by the Authority based on the post-invitation share capital of 93,400,000 Shares Dilution to you, as a new investor subscribing for the New Shares in the Invitation 6.65 Dilution to you, as a new investor subscribing for the New Shares in the Invitation 33.3% (as a percentage of the Issue Price) Effective cash cost per Share/ Issue Price per Number of New Share Shares Consideration (cents) Directors Han Keen Juan (1) 68,399,892 S$5,699, William Lim (1) 6,840,000 S$763, Substantial Shareholder Ng Choi Hong (1) 6,840,000 S$763, New investors 25,000,000 S$5,000, The following table compares the effective cash cost per Share (after adjusting for the Restructuring Exercise and the Sub-division of Shares) paid by our Directors and our Substantial Shareholders at any time during the period of three years before the date of lodgment of this Prospectus and the Issue Price per Share to be paid by you, as a new investor subscribing the New Shares in the Invitation:- Note:- (1) Our CEO, William Lim, is a nephew of our Executive Chairman, Han Keen Juan. Ng Choi Hong is the spouse of our Executive Chairman, Han Keen Juan. 65

68 GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP SHARE CAPITAL Our Company was incorporated in Singapore on 16 December 2004 under the Companies Act as a private company limited by shares under the name of Old Chang Kee Singapore Pte. Ltd.. On 22 November 2007, our Company changed its name to Old Chang Kee Ltd. in connection with its conversion into a public company limited by shares. At the extraordinary general meetings held on 12 November 2007, 13 November 2007 and 21 November 2007, the Shareholders of our Company approved, inter alia, the following:- (a) (b) (c) (d) (e) (f) the allotment and issue of an aggregate of 5,600,000 new ordinary shares in our Company to our Executive Chairman, Han Keen Juan and our CEO, William Lim, pursuant to the Restructuring Exercise; the sub-division of each Share in the existing issued and paid-up share capital of our Company into 12 Shares (the Sub-division of Shares ); the conversion of our Company into a public limited company and the change of our name to Old Chang Kee Ltd. ; the adoption of a new set of Articles of Association of our Company; the allotment and issue of the New Shares pursuant to the Invitation, which when issued and fully paid-up, will rank pari passu in all respects with the existing issued Shares; and that authority be given to our Directors, pursuant to Section 161 of the Companies Act, to (i) allot and issue Shares in our Company; and (ii) issue convertible securities and any Shares in our Company pursuant to the convertible securities, (whether by way of rights, bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as our Directors shall in their absolute discretion deem fit, provided that the aggregate number of Shares to be issued pursuant to such authority shall not exceed 50 per cent. of the post-invitation issued share capital of our Company and that the aggregate number of Shares to be issued other than on a pro-rata basis to the then existing Shareholders of our Company shall not exceed 20 per cent. of the post-invitation issued share capital of our Company. Unless revoked or varied by our Company in a general meeting, such authority shall continue in full force until the conclusion of the next annual general meeting of our Company or the date by which the next annual general meeting is required by law or by our Articles of Association to be held, whichever is earlier, except that the Directors shall be authorised to allot and issue new Shares pursuant to the convertible securities notwithstanding that such authority has ceased. For the purposes of this resolution and pursuant to Rules 806(3) and 806(4) of the Listing Manual, post-invitation issued share capital shall mean the enlarged issued and paid-up share capital of our Company after the Invitation after adjusting for any (i) new Shares arising from the conversion or exercise of any convertible securities; (ii) new Shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time such authority is given, provided that the options or awards were granted in compliance with the Listing Manual; and/or (iii) subsequent consolidation or sub-division of shares. As at the Latest Practicable Date, our Company has only one class of shares, being our Shares which are in registered form. The rights and privileges of our Shares are stated in the Articles of Association of our Company, an extract of which is set out in Appendix C of this Prospectus entitled Extracts of our Articles of Association. There are no founder, management, deferred or unissued shares reserved for issuance for any purpose. The New Shares shall have the same interest and voting rights as our existing Shares which were issued prior to the Invitation and there are no restrictions on the free transferability of our Shares. 66

69 GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP No person has, or has the right to be given, an option to subscribe for or purchase any securities of our Company or any of our subsidiaries. No option to subscribe for or purchase Shares in our Company has been granted to, or was exercised by, any of our Directors or Executive Officers. No person has been granted or is entitled to be granted an option to subscribe for and/or purchase shares in, or debentures of, our Company or any of our subsidiaries. As at the date of incorporation, our Company s issued and paid-up capital was S$2.00, comprising two ordinary shares of S$1.00 each. The Companies (Amendment) Act 2005 came into effect on 30 January Among other things, the Companies Act was amended to abolish the concepts of par value, authorised share capital, share premium, capital redemption reserve and issuing shares at a discount to par value. As at the Latest Practicable Date and pursuant to the Restructuring Exercise, the share capital of our Company was S$5,700,000 comprising 5,700,000 issued and fully-paid Shares. Pursuant to the Sub-division of Shares, the share capital of our Company is S$5,700,000 comprising 68,400,000 Shares. Upon the allotment and issue of the New Shares pursuant to the Invitation, the resultant share capital of our Company will be increased to S$9,030,000 comprising 93,400,000 Shares. A summary of the changes in the issued and paid-up share capital of our Company since 16 December 2004, being the date of incorporation, and the resultant issued and paid-up share capital of our Company immediately after the Invitation is set out below:- Resultant number of issued Shares Resultant issued and paid-up share capital (S$) Issued and paid-up share capital as at 16 December 2004, 2 2 being the date of incorporation Issue of 99,998 new Shares pursuant to the conversion of 100, ,000 share application money of S$99,998 Issue of 5,600,000 new Shares pursuant to the acquisition 5,700,000 5,700,000 of Ten & Han, as further described in the section entitled Restructuring Exercise of this Prospectus Sub-division of one Share into 12 Shares pursuant to the 68,400,000 5,700,000 Sub-division of Shares New Shares to be issued pursuant to the Invitation 93,400,000 9,030,000 SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP Pursuant to share transfer agreements dated 15 November 2007 between Han Keen Juan and (i) William Lim; and (ii) Ng Choi Hong, Han Keen Juan made the following share transfers:- Number of Shares Consideration payable Name of transferees transferred to Han Keen Juan William Lim 6,839,892 S$763,888 Ng Choi Hong 6,840,000 S$763,900 67

70 GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP The changes in the percentage of ownership of Shares in our Company from the date of our incorporation up to the Latest Practicable Date are as follows:- Percentage of ownership of our Shares As at After the acquisition 3 April 2007 of Ten & Han as (allotment further described in After the and issue the section entitled transfer of Name of As at of 99,998 Restructuring Exercise Shares as shareholder incorporation new Shares) of this Prospectus described above Han Keen Juan 50.0% 100.0% 100.0% 80.0% William Lim 50.0% not meaningful not meaningful 10.0% Ng Choi Hong 10.0% Save as disclosed above, there were no changes in the ownership of Shares in our Company from the date of incorporation up to the Latest Practicable Date. 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 Invitation. CHANGES IN ISSUED AND PAID-UP SHARE CAPITAL OF OUR COMPANY AND OUR SUBSIDIARIES Save as disclosed in the section entitled Share Capital of this Prospectus and in the table below, there were no changes in the issued and paid-up share capital of our Company and our subsidiaries within the three years preceding the Latest Practicable Date:- Ten & Han Number Issue price Resultant Resultant issued of ordinary per ordinary number of and paid-up Date Event shares issued share ordinary shares share capital 17 September Capitalisation of 4,900,000 S$1.00 5,600,000 S$5,600, retained earnings Old Chang Kee Australia Number Issue price Resultant Resultant issued of ordinary per ordinary number of and paid-up Date Event shares issued share ordinary shares share capital 5 August 2005 Incorporation 3 AUD AUD3.00 Save as disclosed above, no shares in or debentures of our Company or any of its subsidiaries have been issued, or are proposed to be issued, as fully or partly paid-up for cash, or for a consideration other than cash, within the two years preceding the date of this Prospectus. Save for the acquisition of Ten & Han as described in the section entitled Restructuring Exercise of this Prospectus, there have not been any situations where more than ten per cent. of our Company s capital was paid for with assets other than cash, within the period of three years preceding the date of lodgment of this Prospectus with the Authority. 68

71 GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP Before the Invitation After the Invitation Direct interest Deemed interest Direct interest Deemed interest Number Number Number Number of of of of Shares % Shares % Shares % Shares % Directors Han Keen Juan (1) 54,720, ,840, ,720, ,840, William Lim (1) 6,840, ,840, Choong Buat Ken (2) Lim Yen Heng (2) Ong Chin Lin (2) Wong Chak Weng Substantial Shareholder Ng Choi Hong (1) 6,840, ,720, ,840, ,720, Public (including 25,000, Reserved Shares) Total 68,400, ,400, SHAREHOLDERS Our Shareholders as well as their respective direct and indirect shareholdings, immediately before the Invitation (as at the date of lodgement of this Prospectus with the Authority), and immediately after the Invitation, are set out below:- Notes:- (1) Our CEO, William Lim, is a nephew of our Executive Chairman, Han Keen Juan. Ng Choi Hong is the spouse of our Executive Chairman, Han Keen Juan. (2) Our Non-Executive Directors, Choong Buat Ken, Lim Yen Heng and Ong Chin Lin will be offered 100,000, 100,000 and 50,000 Reserved Shares respectively at the Issue Price. In the event that they accept any or all of the Reserved Shares offered to them, they have each voluntarily agreed not to dispose of or transfer any or all their respective Shares until at least one month has elapsed from the date of the admission of our Company to the Official List of the Catalist. Save as disclosed above, there are no other relationships among our Directors and our Substantial Shareholders. 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 Invitation. As at the Latest Practicable Date, to the best of our Directors knowledge, there is no known arrangement the operation of which may, at a subsequent date, result in a change in control of our Company. There are no Shares that are held by or on behalf of our Company or by our subsidiaries or Associated Companies. Save as disclosed above, our Company is not directly or indirectly owned or controlled, whether severally or jointly, by any person or government. 69

72 GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP MORATORIUM To demonstrate their commitment to our Group, our Executive Directors and their Associates, who will in aggregate hold 68,400,000 Shares, representing approximately 73.2% of our Company s enlarged issued share capital immediately after the Invitation, have each undertaken to the Manager not to sell, transfer, assign, realise or otherwise dispose of any part of their interests in our Company immediately after the Invitation for a period of six months from the date of our Company s admission to the Official List of the Catalist, and for a period of six months thereafter not to sell, transfer, assign, realise or otherwise dispose more than 50% of their respective shareholdings or interests (adjusted for any bonus issue or sub-division) in our Company. Each of our Non-Executive Directors, Choong Buat Ken, Lim Yen Heng and Ong Chin Lin will be offered 100,000, 100,000 and 50,000 Reserved Shares respectively at the Issue Price. In the event that such Non-Executive Directors accept any or all of the Reserved Shares offered to them, each of them has voluntarily agreed not to sell, transfer, realise, assign or otherwise dispose any part of their respective Shares until at least one month has lapsed from the date of our Company s admission to the Official List of Catalist. 70

73 RESTRUCTURING EXERCISE In preparation for the Invitation, we undertook a restructuring exercise (the Restructuring Exercise ) to rationalise the corporate structure of our Group, resulting in our Company becoming the holding company of our Group. The Restructuring Exercise involved the incorporation of our Company in Singapore on 16 December 2004 as the listing vehicle and holding company of our Group and the following:- 1. Incorporation of our Company On 16 December 2004, our Company was incorporated in Singapore as a private limited company. At incorporation, the shareholders of our Company were our Executive Chairman, Han Keen Juan, and our CEO, William Lim, who each held one ordinary share in our Company. 2. Acquisition of Old Chang Kee Australia Old Chang Kee Australia was incorporated in Australia as a proprietary company on 5 August At incorporation, the shareholders of Old Chang Kee Australia were our Executive Chairman, Han Keen Juan, our CEO, William Lim, and Han Jong Kwong Roland, who is a nephew of our Executive Chairman, Han Keen Juan. Each of the shareholders held one share in Old Chang Kee Australia. On 18 April 2006, our Company acquired one share each from our Executive Chairman, Han Keen Juan and our CEO, William Lim, for an aggregate purchase consideration of AUD2.00 (based on the issued and paid-up share capital of Old Chang Kee Australia as at 17 April 2006) payable in cash. Subsequently, on 30 May 2006, our Company acquired one share from Han Jong Kwong Roland for a purchase consideration of AUD1.00 (based on the issued and paid-up share capital of Old Chang Kee Australia as at 29 May 2006) payable in cash. Following the said acquisitions, Old Chang Kee Australia became our wholly-owned subsidiary. 3. Striking off Pure Options As at 13 November 2007, our Company owned 33.3% of the issued and paid-up share capital of Pure Options, which has been dormant since its incorporation. On 13 November 2007, an application to strike-off Pure Options was filed with the Accounting and Corporate Regulatory Authority of Singapore. 4. Disposal of equity interest in 1901 Singapore On 15 November 2007, we entered into a sale and purchase agreement with Nineteen O One Sdn. Bhd. pursuant to which the entire issued and paid-up share capital of 1901 Singapore would be transferred to Nineteen O One Sdn. Bhd. for a consideration of S$180,000 (the Disposal ). The shareholders of Nineteen O One Sdn. Bhd. are Ahmad Zakir Bin Ja afar, Malaysia International Franchise Sdn. Bhd. and Tengku Rozidar Binti Tengku Zainol Abidin. Completion of the Disposal took place on 15 November Acquisition of Ten & Han Ten & Han was incorporated in Singapore as a private limited company on 7 January Prior to 9 November 2007, the shareholders of Ten & Han were our Executive Chairman, Han Keen Juan, and our CEO, William Lim, holding 5,599,992 shares and eight shares in Ten & Han respectively. 71

74 RESTRUCTURING EXERCISE Pursuant to a share transfer agreement dated 9 November 2007 between our Company, our Executive Chairman, Han Keen Juan, and our CEO, William Lim, our Company acquired 100% of the issued and paid-up share capital of Ten & Han, comprising 5,600,000 ordinary shares, from Han Keen Juan and William Lim, in the following proportions for an aggregate purchase consideration of S$5,600,000 based on the issued and paid up share capital of Ten & Han as at 9 November 2007:- Number of shares in Ten & Han Purchase consideration Name of vendor transferred by the vendor payable to the vendor Han Keen Juan 5,599,992 S$5,599,992 William Lim 8 S$8 The purchase consideration was satisfied by the allotment and issuance of 5,599,992 and eight new Shares credited as fully paid to Han Keen Juan and William Lim respectively. Following the said acquisition, Ten & Han became our wholly-owned subsidiary. 72

75 GROUP STRUCTURE Our Group s structure following the Restructuring Exercise is as follows:- Old Chang Kee Ltd. 100% 100% 100% 40% (1) 40% (2) (3) Ten & Han Old Chang Kee Australia Old Chang Kee China Old Chang Kee Malaysia Old Chang Kee Thailand Notes:- (1) 60.0% of the issued and paid-up share capital of Old Chang Kee Malaysia is held by San Mun Choong, who is not related to any of our Directors or Substantial Shareholders. (2) 60.0% of the issued and paid-up share capital of Old Chang Kee Thailand is held in aggregate by the following persons (none of whom are related to any of our Directors or Substantial Shareholders):- Name of shareholder Percentage interest in Old Chang Kee Thailand Salim Tanacheevit 48.0% Tanarat Tanacheevit 10.0% Urai Sadhajit 1.0% Monthip Rakratanapaisarn 1.0% Tanarat Tanacheevit is a son of Salim Tanacheevit. Salim Tanacheevit and Tanarat Tanacheevit hold 94.0% and 1.5% direct interest in Siamchai International Food Co. Ltd. respectively. Salim Tanacheevit also holds 2.74% indirect interest in Siamchai International Food Co. Ltd. through Siamchaipokaphan Co., Ltd by virtue of her 76.0% shareholding in Siamchaipokaphan Co., Ltd. Siamchai International Food Co. Ltd. is one of our major suppliers set out in the section entitled Our Major Suppliers of this Prospectus. (3) Our Executive Chairman, Han Keen Juan, and our CEO, William Lim, each holds 100 shares (representing 1.0% interest in Old Chang Kee Thailand) on behalf of our Company. 73

76 OUR SUBSIDIARIES AND ASSOCIATED COMPANIES The details of our subsidiaries and Associated Companies as at the date of registration of this Prospectus by the Authority, none of which are listed on any stock exchange, are as follows:- Registered Effective Principal activities / capital / Issued equity Proportion Name of Date / Country Principal place of and paid-up interest held of voting company of incorporation business capital by our Group power Our subsidiaries Ten & Han 7 January 1988 Manufacturing of S$5,600, % 100% Singapore food and franchising / Singapore Old Chang Kee 5 August 2005 Dormant / Australia AUD3 100% 100% Australia Australia Old Chang Kee 23 May 2007 F&B management S$100,000/Nil 100% 100% China PRC and consultancy, manufacture and sale of snacks (operation by branches only) / PRC Our Associated Companies Old Chang Kee 1 October 2004 Dealer in foodstuff / RM100,000 40% 40% Malaysia Malaysia Malaysia Old Chang Kee 7 April 2006 Dormant / Thailand THB1,000,000 40% 40% Thailand Thailand 74

77 OUR HISTORY Our Company was incorporated in Singapore under the Companies Act on 16 December 2004 as a private limited company under the name of Old Chang Kee Singapore Pte. Ltd.. Our history can be traced back to 1956 when a tiny stall in the then Koek Road (presently the Centrepoint area) was set up by a Mr Chang, selling only one food item chicken curry puffs. Later, the business was moved to a roadside stall along Albert Street. In 1986, our Executive Chairman, Han Keen Juan, acquired the curry puff business from Mr Chang. Recognising the great opportunity for growth, Han Keen Juan withdrew his personal savings and invested the money in two sole-proprietorships, Old Chang Kee Trading and Ten & Han Trading, for the purpose of re-engineering the business. In the same year, in an effort to modernise the image of our business, we re-designed the brand name Old Chang Kee and created the slogan It s a better puff. In 1987, we leased factory premises in Ubi Avenue 2 as our then principal production facility with a floor area of approximately 1,400 sq ft. At that time, the production facility served five retail outlets. We also began selling complementary food products such as spring rolls and fish balls. In January 1988, Ten & Han Trading Pte Ltd was incorporated as a private limited company in Singapore to take over the manufacturing function of our business from Ten & Han Trading, which was a sole proprietorship. Ten & Han Trading Pte Ltd had two shareholders at the time of its incorporation. In December 1988, Ten & Han Trading Pte Ltd acquired the entire business of Ten & Han Trading. The sales function of our business was then undertaken by Old Chang Kee Trading, which was also a sole proprietorship. In September 1993, Ten & Han Trading Pte Ltd acquired the entire business of Old Chang Kee Trading. From the late 1980s to the early 1990s, we invested in machinery and embarked on an initiative to develop modern methods to standardise our manufacturing processes in order to ensure that the curry puffs we produced were of a consistent high quality. In 1992, Han Keen Juan was awarded the Small Scale Entrepreneur Award by Association of Small and Medium Enterprises in conjunction with the Rotary Club of Singapore in recognition of the success of our business. In 1994, we moved into our existing production facility at 2 Woodlands Terrace with an aggregate built-in floor area of approximately 16,092 sq ft which allowed us to increase our production volume. In the same year, we began to engage contract manufacturers to manufacture related food products according to our specifications, to complement our Old Chang Kee curry puffs. We were thus able to quickly expand the range of products sold at our retail outlets to include other food products such as nuggets, pies, carrot cake and breaded prawns. In 1995, our CEO, William Lim, joined us as a General Manager, to spearhead and implement future growth strategies. Prior to 1995, almost all of our retail outlets were stalls in coffee shops. We set up our first shopping mallbased retail outlet in Jurong Point Shopping Centre in With the success of this retail outlet, we gradually shifted almost all our retail outlets to shopping malls and complexes, and have since expanded our reach to include individual kiosks, petrol kiosks, retail spaces located in MRT stations and nearby bus interchanges. At the end of 2000, we had 20 retail outlets. In 2002, our Executive Chairman, Han Keen Juan became the sole shareholder of Ten & Han when he bought over the shares of the other shareholder. 75

78 OUR HISTORY In 2003, although the economy was affected by Severe Acute Respiratory Syndrome, we embarked on an intensive exercise to expand our retail network to include more retail outlets in shopping malls and complexes. In 2003, we opened six new retail outlets. In addition, we embarked on a branding exercise in 2003 to promote Old Chang Kee as a household name, synonymous with high quality curry puffs and related food products. In connection with this branding exercise, we developed a modernised Old Chang Kee logo. In 2004, we were awarded the Singapore Promising Brand Award (SPBA) by the Association of Small and Medium Enterprises and Lianhe Zaobao. In April 2004, we began our delivery services to the central business district area. In October 2004, our Associated Company, Old Chang Kee Malaysia, was incorporated. We hold 40% of the issued and paidup share capital of Old Chang Kee Malaysia. Old Chang Kee Malaysia commenced operations in October 2004 and has since undertaken the business of manufacturing and selling Old Chang Kee curry puffs and other food products in Malaysia. In December 2004, we commenced a new business to provide breakfast items at our retail outlets, such as braised bee hoon and nasi lemak. The purpose of this new business is to maximise the utilisation rate of our production facility and generate more revenue for our business. Capitalising on our strong brand name and established reputation for quality products, we expanded our network by setting up retail outlets in various strategic locations across Singapore. By the end of 2004, we had 36 retail outlets at several venues in Singapore s heartland to reach out to a broader spectrum of consumers in Singapore. In early 2005, all our food products obtained the Halal certification from MUIS. This certification gave our food products wider marketability and appeal and our business expanded thereafter. To cope with the increased demand, we extended our production facility at 2 Woodlands Terrace to include a full mezzanine floor. In August 2005, we commenced the operation of 1901 retail outlets in Singapore which sell takeaway hotdogs. On 15 November 2007, we entered into a sale and purchase agreement with Nineteen O One Sdn. Bhd. pursuant to which the entire issued and paid-up share capital of 1901 Singapore would be transferred to Nineteen O One Sdn. Bhd. for a consideration of S$180,000 (the Disposal ). Completion of the Disposal took place on 15 November In 2005, we were also awarded the SPBA-Heritage Brand Award and the SPBA-Distinctive Brand Award by the Association of Small and Medium Enterprises and Lianhe Zaobao. For the purpose of expanding our business overseas, we incorporated a subsidiary in Australia and an Associated Company in Thailand. Currently, the subsidiary in Australia and the Associated Company in Thailand are dormant. We also incorporated Old Chang Kee China, our wholly-owned subsidiary in PRC, in May As at the Latest Practicable Date, we had three retail outlets in Chengdu, PRC (through Old Chang Kee China). Riding on the success of our food products business, we commenced our food dine-in/takeaway business with the Old Chang Kee Take 5 retail outlets in The Old Chang Kee Take 5 retail outlets at Ogilvy Centre and HDB Hub at Toa Payoh were opened in Subsequently, we opened three other Old Chang Kee Take 5 retail outlets in Eastpoint Mall, West Mall and Golden Shoe Car Park in In February 2007, a new Old Chang Kee Take 5 retail outlet was opened in Square 2 and in July 2007, a new Old Chang Kee Take 5 retail outlet was opened in Icon Village. Our Old Chang Kee Take 5 retail outlets offer a suite of local delights such as curry chicken or beef stew in loaf/rice, sambal fish rice, curry noodles and nasi lemak as well as our food products. 76

79 OUR HISTORY In April 2007, we have extended our delivery services to selected areas in the northern, eastern and central parts of Singapore. Under the leadership of our Executive Chairman, Han Keen Juan, and our CEO, William Lim, we undertook new initiatives such as staff training, branding, retail management and quality control, resulting in improved growth for our Group. We continue to invest in research and development to align ourselves with constantly shifting consumers tastes and preferences. As at the Latest Practicable Date, we had 54 retail outlets and more than 40 types of food products. In preparation for our listing, we undertook a Restructuring Exercise. Subsequently, we were converted into a public company limited by shares on 22 November 2007 and changed our name to Old Chang Kee Ltd.. 77

80 OUR BUSINESS INTRODUCTION The principal business of our Group is the manufacture and sale of affordable food products of consistent quality, under the brand name Old Chang Kee. Our signature product is the well-known Old Chang Kee curry puff, now complemented by a suite of more than 40 other food products such as fish balls, spring rolls and chicken wings. Most of our sales are on a takeaway basis. We sell our products through retail outlets to cater to a wide range of consumers. Our dine-in services at Old Chang Kee Take 5 retail outlets located at Icon Village, Square 2, Ogilvy Centre, Golden Shoe Car Park, Eastpoint Mall and West Mall sell local delights such as curry chicken or beef stew in loaf/rice, curry noodles, nasi lemak and sambal fish rice, as well as our food products. We also offer delivery services to the central business district and other selected areas in Singapore. Currently, we have business operations in Malaysia and PRC through our Associated Company in Malaysia and our wholly-owned subsidiary in PRC. As at the Latest Practicable Date, we had 54 retail outlets in Singapore, two retail outlets in Kuala Lumpur, Malaysia and three retail outlets in Chengdu, PRC. Our Indonesian Franchisee has also set up four retail outlets in Jakarta, Indonesia and our Philippines Franchisee has set up two retail outlets in Manila, the Philippines. All the food products we sell in Singapore are certified Halal by MUIS. OUR PRODUCTS We are engaged in the manufacture and sale of food products. We currently have more than 40 food products that are sold under our Old Chang Kee brand. These food products are in turn, sold under their individual sub-brand names. Our food products may be categorised according to their sub-brand categories and names as follows:- Sub-Brand Category Sub-Brand Name Description O Curry O Curry puff Sardine O Sardine puff Pepper O Pepper puff Spring O Spring roll OnStik Fish Ball OnStik Fish balls on a stick Sotong Ball OnStik Squid balls on a stick Sotong OnStik Squid head fritters on a stick Sotong Wing OnStik Squid wing on a stick Crab Claw OnStik Crab claw fritters on a stick Breaded Prawn OnStik Breaded prawn fritters on a stick Gyoza OnStik Gyoza fritters on a stick Seafood Gyoza OnStik Seafood gyoza on a stick Chicken Nuggets OnStik Chicken nuggets on a stick Sotong Nuggets OnStik Squid nuggets on a stick Crab Nuggets OnStik Crab nuggets on a stick Prawn Nuggets OnStik Prawn nuggets on a stick Fish Fillet OnStik Fish fillet on a stick Chicken Wrap OnStik Chicken wrap on a stick Crab Meat Wrap OnStik Crab meat wrap on a stick Sotong Wrap OnStik Squid wrap on a stick K8 Yam K8 Yam cake Carrot K8 Carrot cake Pumpkin K8 Pumpkin cake 78

81 OUR BUSINESS Sub-Brand Category Sub-Brand Name Description Feel in Yam Feel in Yam pie Pineapple Feel in Pineapple pie Green Bean Feel in Green bean sesame ball Take 5 Curry Chicken Loaf/Rice Curry chicken served with bread or rice Beef Stew Loaf/Rice Beef stew served with bread or rice Chicken Stew Loaf/Rice (1) Chicken stew served with bread or rice Sambal Fish Rice Fish served with sambal chilli and rice Curry Noodle Noodles cooked with curry and served with egg, chicken and tau pok Nasi Lemak Rice cooked with coconut milk and served with ikan bilis, fried chicken wing, fish, egg and sambal sotong Chicken Chop Rice Fried chicken cutlet served with rice Laksa Rice noodles cooked in laksa gravy with egg, prawn, fish cake and tau pok Laksa Spaghetti (1) Rice noodles fried with laksa paste and served with prawn, egg and fish cake Sesame Chicken with rice (1) Chicken cooked with sesame oil and black soy sauce served with rice Wasabi fish with rice (1) Fried dory fish served with wasabi sauce and rice Mee Siam Bee hoon served with chilli, tau pok, prawn and egg Chicken Wing Fried chicken wing Tauhu Goreng Fried beancurd served with sweet sauce and grated peanuts garnished with carrots, cucumber and salted egg yolk White Fungus Lotus Seed Dessert cooked using white fungus and lotus seed Yam Sago Dessert cooked using yam and sago Cheng Tung Dessert cooked using longan and various nuts Note:- (1) These are special items which are only served on certain days of the month. We also provide breakfast items at selected retail outlets. Our breakfast items include braised bee hoon and nasi lemak. We manufacture our curry puffs and prepare other various food products in-house. The recipes for our other food products are developed in-house and are produced by selected contract manufacturers approved by us according to our specifications. We have exclusive arrangements with our contract manufacturers for the manufacture of some of our food products. As we are materially dependent on the recipes of these food products, we have provided in the agreements with our contract manufacturers that the recipes we provide to them cannot be used for the manufacture of similar food products for third parties and our contract manufacturers are contractually obliged to keep all technical and commercial information provided by us to them for the manufacture of our food products confidential and to use them only for the manufacture of our food products. We currently have two major contract manufacturers, namely Leong Hin Foods Pte. Ltd. in Singapore and Siamchai International Food Co. Ltd. in Thailand. 79

82 OUR BUSINESS PRODUCTION FACILITY AND CAPACITY We currently have one production facility located in Singapore at 2 Woodlands Terrace, which has obtained HACCP certification and is certified Halal. Our production facility at 2 Woodlands Terrace produces mainly our curry puffs and prepares breakfast items. This facility has an aggregate built-in floor area of approximately 16,092 sq ft. The approximate floor area utilised for production and storage is 8,176 sq ft and 4,574 sq ft is utilised as office and for administrative purposes. Our average annual productive capacity and annual utilisation rate for the production of our curry puffs for the period under review were as follows:- Productive capacity (million) (1) Utilisation rate (%) Products FY2004 FY2005 FY2006 FP2007 FY2004 FY2005 FY2006 FP2007 Curry puffs Note:- (1) Our capacity is calculated based on the average number of production workers in the respective year/period working on 10.5 hours production time per day. RETAIL OUTLETS Our retail outlets are located at easily accessible locations with high human traffic flow, such as in shopping malls, individual kiosks, petrol kiosks, retail spaces located in MRT stations and nearby bus interchanges. Our business development team, led by our General Manager, Chow Hui Shien, constantly seeks new strategic locations for our retail outlets. Each retail outlet is functionally designed, incorporating our main corporate colours of black, white and yellow, to appeal to customers of all ages. The size of our retail outlets ranges from 97 sq ft to 1,194 sq ft. Our Old Chang Kee Take 5 retail outlets have seating areas for dine-in customers. We station at least two employees at each retail outlet. The employees prepare the food products according to cooking procedures specified in our in-house operations manual, display the food products at the counter and transact sales with customers. Our service employees are trained in customer service, product knowledge and inventory control. All the retail outlets are managed by our General Manager, Chow Hui Shien, who is assisted by a team of 10 staff consisting of one manager, executives and supervisors. The retail outlets in Singapore are divided into five area groups based on their locations. Each area group is overseen by an area supervisor. A maintenance team, which consists of four members, performs regular maintenance work (simple repairs and hygiene maintenance) for the retail outlets. Each retail outlet has a team leader to oversee the operations. The number of employees at each retail outlet ranges from two to eight employees who work either one or two shifts, depending on the size and sales volume of the retail outlet. ENTERPRISE RESOURCE PLANNING SYSTEM We are currently in the process of implementing a comprehensive ERP system, which puts in place controls in our retail outlets and transmits real-time transaction data to our head office. We expect to complete the full implementation of the ERP system by June With the ERP system, each batch of food products can be traced from our production facility to the respective points of sale. Information pertaining to the stock levels at each retail outlet is immediately accessible by our head office, thus ensuring that stocks are efficiently replenished. Such real-time transmission of transaction data to our head office also ensures that the right amount of stock is kept at each retail outlet, thus maintaining the freshness and quality of our food products. 80

83 OUR BUSINESS QUALITY CONTROL We are committed to maintaining a high level of quality control and high standards in our products. Good Manufacturing Practices at our Production Facility We have on 16 May 2007 obtained HACCP certification for the manufacturing of curry puffs, starting from the receipt of raw materials, to the processing, storage and delivery of our curry puffs. We also implemented a quality assurance programme in accordance with HACCP methods, with effect from 16 May We have also instituted quality control procedures in our manufacturing processes for our other food products in order to ensure high standards of quality of all our food products. At our production facility, we have implemented quality control procedures relating to cleaning and sanitation, hygiene control, maintenance of equipment, raw material control and product quality control. (i) (ii) (iii) (iv) (v) Cleaning and sanitation We ensure that our production facility is clean and our equipment adequately sanitised in order to reduce microbial, physical and chemical impurities in our food products. All equipment and preparation surfaces are cleaned and sanitised. At the end of the day, all floors and equipment in our production facility are also cleaned and sanitised. Our production executive conducts checks of the cleaning and sanitation procedures at our production facility on a daily basis. Hygiene control Our production facility employees are required to practice good personal hygiene. They must be properly attired in uniforms and footwear provided by us, wash and sanitise their hands upon entering the processing areas and wear disposable gloves when handling our food products. Maintenance of equipment The equipment at our production facility is checked and serviced on a regular basis as part of our preventive maintenance programme. Our production facility employees inspect the equipment daily, during the clean-up process. Any damaged seals, joints and valves are immediately reported to the supervisor for repair or replacements, where necessary. Raw material control The quality of raw materials is important to the final quality and safety of the manufactured food products. Purchase, receipt and storage of raw materials are therefore crucial steps in the manufacturing process. We check and assess all raw materials received to ensure they are in good condition. Items that do not meet our requirements are rejected. The raw materials accepted will then be stored at an optimum temperature prior to use in our manufacturing processes, to ensure their freshness. Product quality control We ensure that the quality and safety of our food products are maintained by implementing quality control procedures from our point of production to all points of sale. At our 2 Woodlands Terrace production facility, food products that have been prepared for sale at our retail outlets are stored at optimum temperatures in the chiller or freezer rooms. When transported to our retail outlets, each batch of food products is transported in trucks with chilled storage space in order to maintain their freshness. Each retail outlet is also furnished with at least one chiller and one freezer to ensure that our food products stay fresh until they are cooked and sold to customers. Quality Control at our Retail Outlets We implement specific quality control procedures at our retail outlets to ensure that our food products sold are of consistent quality and freshness. Each of our employees at the retail outlets is required to undergo on-the-job training, to equip them with the skills of food handling, cooking and hygiene control. For further details on the training provided to our employees, please refer to the section entitled Staff Training of this Prospectus. Our in-house operations manual sets out strict procedures concerning food handling and management at our retail outlets. All food products at the retail outlets are required to be prepared according to the cooking procedures set out in our operations manual. 81

84 OUR BUSINESS We adopt strict oil management system at our retail outlets to maintain the quality of the oil in order to ensure the consistent high quality in the taste of our food products. The oil management procedures are supervised by our team of area supervisors. Used oil is required to be brought to our head office and disposed of subsequently. Food products that do not meet our requisite quality standards must first be returned to our head office for assessment before being discarded. Food products prepared on any particular day have to be sold on the same day they are prepared. Any products that are not sold on the day they are prepared will be returned to our head office and discarded. Based on our records, the wastage arising from unsold products accounted for less than 0.5% of our total revenue during the Relevant Period. Most of our retail outlets have received either an A or B grade from NEA for their food hygiene and food safety standards. Quality Control for our Halal Certification To maintain the Halal certification issued to our production facility and retail outlets, we have implemented a system under which all the processes involved in the production of our food products are monitored closely to ensure that our food products are manufactured, packed, transported, stored and sold in compliance with the requirements of Islamic law. Specific corrective actions will be prescribed and implemented to rectify any aberration detected by the system. Quality Control of our Contract Manufacturers The recipes for some of our food products are developed in-house and are produced by approved selected contract manufacturers according to our specifications. Our Operations Manager, Ng Lee Huang, will carry out quality control checks on our contract manufacturers on a quarterly basis to ensure that the food products are manufactured in compliance with our standards and specifications. In addition, every batch of food products manufactured and delivered to us by our Thai contract manufacturer, Siamchai International Food Co. Ltd., is verified by our Thai contract manufacturer to be safe for consumption and the laboratory report issued in connection with such verification will be provided to us by our Thai contract manufacturer upon our request. Further, our contract manufacturers are obliged to manufacture the food products in compliance with the HACCP methods in accordance with the contract manufacturing agreements. Quality Control of our Franchisees Our overseas franchisees are required to send their key staff to Singapore for training which includes training in retail, production and logistic procedures to ensure that they can execute such procedures in accordance with our operating manuals. Prior to the opening of the pilot outlet and the central kitchen, we will send our local staff to the country where the foreign franchisee is located to train, guide and prepare the franchisee s team for their business operations. Some of our staff may stay on to coach the franchisee s team until it is able to conduct the business operations independently. The foreign franchisees are required to report to our Singapore head office when they encounter any issues in its business operations and corrective measures and/or solutions will be offered to them after consultation with the relevant departments. To ensure regular contact with the foreign franchisees, we conduct online meeting sessions with them on a monthly basis to better understand the quality control issues which the foreign franchisees may be facing and to offer them solutions to such issues. The foreign franchisees are also required to report and seek our prior approval for any proposed deviation from our standard operating procedure arising from their local situation or their legal requirements. We will send our local staff to the foreign franchisee s operations at least twice a year to monitor and ensure that their operation processes are in compliance with our requirements. Our local staff will conduct any re-training or refresher training if required. 82

85 OUR BUSINESS MARKETING AND BUSINESS DEVELOPMENT Our food products are sold mainly in Singapore. As at the Latest Practicable Date, we had 54 retail outlets strategically located in shopping malls, individual kiosks, petrol kiosks, retail spaces located in MRT stations and nearby bus interchanges throughout Singapore. We set up our overseas retail outlets through direct investment, joint ventures or franchise arrangements. As at the Latest Practicable Date, we had three retail outlets in PRC, our Associated Company (Old Chang Kee Malaysia) had two retail outlets in Kuala Lumpur, Malaysia, our Indonesian Franchisee in Indonesia had four retail outlets in Jakarta, Indonesia and our Philippines Franchisee had two retail outlets in Manila, the Philippines. Our food products are sold directly to customers on a cash basis. Advertising and Promotion and Public Relations Our marketing activities are overseen by our CEO, William Lim. Our Group s marketing strategy mainly focuses on capitalising on our strong brand name, Old Chang Kee, and enhancing awareness of the brand. Our marketing team meets on a regular basis to develop advertising and promotional strategies to be undertaken by our Group. Our marketing team includes our CEO, William Lim, General Manager, Chow Hui Shien and several other executives. In addition, we appoint professional marketing and communication firms on an ad hoc basis to assist us in our marketing efforts. In order to continuously improve our product quality and service standard, our marketing team proactively reaches out to our customers by making regular visits to our retail outlets to obtain market feedback. We participate in joint promotions with shopping malls to showcase our food products. As a food sponsor, we are also joint participants in activities such as annual walk-a-jogs with the Handicapped Welfare Association. In 2004, our Group also sponsored school bags for the Yayasan Mendaki (Mendaki) and special food products such as Halal mooncakes to needy families under the care of Yayasan Mendaki (Mendaki). We are also active in promoting the performance arts. In 2006, we sponsored the Jinsha culture show from Chengdu, PRC. In 2007, we sponsored the Drama Box in staging the children s play, Mo Mo. In the same year, we act as main sponsor for the local play, If There re Seasons. In addition, we conduct marketing campaigns to promote our new food products through print advertisements in magazines and newspapers. Business Development Our General Manager, Chow Hui Shien, is responsible for overseeing our Group s business development activities. A primary business development strategy is to identify and procure strategic locations for new retail outlets in order to reach a wider spectrum of customers. Our Executive Directors and our General Manager also work to foster and maintain healthy relationships with various landlords to ensure smooth operations at our existing retail outlets and to improve our chances of securing strategic locations for our new retail outlets. Another business development strategy involves sourcing for new distribution channels. We currently provide a delivery service called Old Chang Kee Delivers to consumers in the central business district and other selected areas of Singapore. Old Chang Kee Delivers seeks to provide existing and potential customers with added convenience and offers a quick and easy way to cater finger food for office meetings and home parties. We constantly seek to develop new business concepts to complement our existing businesses, such as the takeaway cum dine-in meals business of Old Chang Kee Take 5. Our General Manager, Chow Hui Shien is responsible for conceptualising such new business concepts and integrating them into our Group operations. Branding is an integral part of our business development. Apart from capitalising on Old Chang Kee s status as a household name, we have sought to create sub-brands for different categories of our food products in order to generate greater appeal for our products. Please refer to the section entitled Our Products of this Prospectus for further information on our sub-brands. 83

86 OUR BUSINESS Franchises In an attempt to expand our business into the overseas market, we have franchised our businesses to overseas partners. We have entered into a franchise agreement with our Philippines Franchisee (the Philippines Franchise Agreement ) on 20 December We have also entered into a franchise agreement and a supplemental franchise agreement (collectively referred to as the Indonesian Franchise Agreement ) with the Indonesian Franchisee on 5 October 2007 and 26 December 2007 respectively. Legal advisers to our Company on the Philippines law, Villaraza & Angangco, had on 10 September 2007 submitted, on Ten & Han s behalf, a draft of the Philippines Franchise Agreement to the Documentation Information and Technology Transfer Bureau of the Intellectual Property Office of the Philippines for review. The Intellectual Property Office of the Philippines has confirmed in its letter to Villaraza & Angangco on 28 November 2007 that the draft Philippines Franchise Agreement complies with the Intellectual Property Code of the Philippines. Based on the above, Villaraza & Angangco had on 28 December 2007 advised our Company that the Philippines Franchise Agreement is valid and enforceable under the laws of the Philippines. This statement was prepared by Villaraza & Angangco for the purpose of incorporation in this Prospectus. Our Company has also been advised by its legal advisers on Indonesian law, Soebagjo, Jatim, Djarot, on 2 January 2008 that under the Government Regulation No. 42 of 2007 regarding franchises ( GR No.42 ), Ten & Han (the Franchisor ) is obliged to register a prospectus on the franchise to be granted by Ten & Han to the Indonesian Franchisee (the Indonesian Franchise ) prior to the signing of the Indonesian Franchise Agreement and the Indonesian Franchisee is obliged to register the Indonesian Franchise Agreement, both with the Ministry of Trade of Indonesia ( MOT ). Further, under Permendag 12/2006, the Indonesian Franchisee is required to register the Indonesian Franchise Agreement with the MOT within 30 days from the date of the commencement of the Indonesian Franchise Agreement in order for it to be valid and enforceable. In the course of preparing the application to MOT for the registration of the prospectus on the Indonesian Franchise and the Indonesian Franchise Agreement, MOT informed Soebagjo, Jatim, Djarot that following the issuance of GR No. 42, MOT will be promulgating new implementing regulations ( New Regulations ) with respect to such registrations and therefore MOT is unable to process any new applications to register prospectuses on franchises and franchise agreements until the New Regulations are passed. As at 2 January 2008, the New Regulations have not been passed. In view of the above, our Company has also been advised on 2 January 2008 by Soebagjo, Jatim, Djarot that the Indonesian Franchise Agreement is still valid and enforceable under the laws of Indonesia as between Ten & Han and the Indonesian Franchisee. This statement was prepared by Soebagjo, Jatim, Djarot for the purpose of incorporation in this Prospectus. Under these franchise agreements, we are entitled to an initial franchise fee and royalties based on a percentage of the turnover. We have plans to source for other suitable franchisees to set up retail outlets in other countries. Potential franchisees are carefully evaluated by our management, taking into account their financial standing, integrity and the ability to secure strategic locations for the purpose of setting up retail outlets. As franchisor, we assist our franchisees in selecting the appropriate store locations and providing the initial training support for such franchisees staff. We sell certain raw materials to our franchisee to ensure consistency in the quality of our food products. We also advise on the interior design plans for the renovation of the retail outlets, the materials to be used that are unique to our design and the concept for outfitting the franchisees retail outlets. We will also monitor the performance of the respective franchisees on an on-going basis. As at the Latest Practicable Date, our Indonesian Franchisee operates four retail outlets in Jakarta, Indonesia and our Philippines Franchisee has opened two retail outlets in Manila, the Philippines. These franchise operations have not contributed significantly to our revenue since they commenced operations. PRODUCT DEVELOPMENT We place great emphasis on product development. In order to meet consumers demand for new and high quality food products, we seek to constantly introduce new food products into the market. On average, we introduce about four new products annually. Our Group has evolved from selling a single product to offering a wide variety of food products including fish balls, spring rolls and chicken wings. 84

87 OUR BUSINESS In order to establish a loyal customer base, we have invested in technology to ensure the food products we produce are of a consistent high quality. We concentrate on production factors such as the temperature at which our food products are stored, cooked and delivered, and oil management techniques all of which contribute to the freshness and taste of our food products. We have formulated standard production procedures for each food product, to which our employees strictly adhere. In respect of products manufactured by our contract manufacturers, we typically collaborate with our contract manufacturers to formulate the recipes of these products in-house before producing them. Specific tests are conducted in-house in order to obtain the right taste and texture for our food products. After the initial batch of food products produced by our contract manufacturers, we conduct further tests to ensure the products are manufactured to our exact specifications before retailing the products. INTELLECTUAL PROPERTY Trademarks We believe that our trademarks are an integral part of our Group s focus on branding, and play a significant role in creating brand recognition for our products. As such, we have registered or are in the process of registering our principal Old Chang Kee trademark and our other trademarks, both in Singapore and overseas. As at the Latest Practicable Date, our Group owns the following trademarks:- Place of Description of trademark Trademark No. application Class No. Period of validity T H Singapore 30 Expiry date is on 8 June 2015 T H Singapore 43 Expiry date is on 22 December 2014 T D Singapore 29 Expiry date is on 4 April 2015 T Z Singapore 30 Expiry date is on 4 April 2015 T I Singapore 30 Expiry date is on 4 April 2015 T F Singapore 43 Expiry date is on 22 December 2014 T Z Singapore 30 Expiry date is on 4 April

88 OUR BUSINESS Place of Description of trademark Trademark No. application Class No. Period of validity T H Singapore 30 Expiry date is on 4 April 2015 T B Singapore 30 Expiry date is on 4 April 2015 T F Singapore 30 Expiry date is on 4 April 2015 T D Singapore 30 Expiry date is on 4 April 2015 T B Singapore 30 Expiry date is on 4 April 2015 T J Singapore 30 Expiry date is on 4 April 2015 T F Singapore 29 Expiry date is on 4 April 2015 T H Singapore 30 Expiry date is on 4 April 2015 OLD CHANG KEE T G Singapore 43 Expiry date is on 16 November

89 OUR BUSINESS Description of trademark Place of application Class No. T C Singapore 29 Expiry date is on 11 August 2016 T H Singapore 43 Expiry date is on 11 August 2016 T J Singapore 43 Expiry date is on 11 August 2016 T G Singapore 30 Expiry date is on 9 January 2017 T B Singapore 29 Expiry date is on 9 January 2017 T C Singapore 29 Expiry date is on 9 January 2017 T H Singapore 29 Expiry date is on 9 January 2017 T E Singapore 29 Expiry date is on 9 January 2017 Trademark No. 87 Period of validity

90 Shop Shop OUR BUSINESS Place of Description of trademark Trademark No. application Class No. Period of validity T G Singapore 43 Expiry date is on 24 July 2017 T I Singapore 30 Expiry date is on 24 July 2017 The Shop T H Singapore 43 Expiry date is on 24 July 2017 The The Shop T D Singapore 30 Expiry date is on 24 July 2017 The OLD CHANG KEE OLD CHANG KEE T J Singapore 30 Expiry date is on 11 August 2016 T D Singapore 29 Expiry date is on 11 August 2016 T F Singapore 29 Expiry date is on 11 August 2016 T E Singapore 29 Expiry date is on 11 August 2016 T A Singapore 30 Expiry date is on 11 August 2016 T Z Singapore 43 Expiry date is on 11 August Australia 30 and 43 Expiry date is on 31 January

91 OUR BUSINESS Place of Description of trademark Trademark No. application Class No. Period of validity Australia 30 and 43 Expiry date is on 31 January Republic of China 30 Expiry date is on 15 July Republic of China 43 Expiry date is on 15 July 2015 IDM Indonesia 30 Expiry date is on 17 July 2013 IDM Indonesia 43 Expiry date is on 17 July Malaysia 30 Expiry date is on 18 March Malaysia 43 Expiry date is on 30 July /00445 Republic of 30 Expiry date is on South Africa 17 January PRC 30 Expiry date is on 6 November

92 OUR BUSINESS Place of Description of trademark Trademark No. application Class No. Period of validity Hong Kong 30 and 43 Expiry date is on 16 November Japan 30 Expiry date is on 20 June CTM 30 and 43 Expiry date is on Countries (1) 29 November 2015 N/20295 Macau 42 Expiry date is on 8 May 2013 N/20294 Macau 30 Expiry date is on 8 May Thailand 30 Expiry date is on Kor January Thailand 43 Expiry date is on Bor January The 30 Expiry date is on Philippines 1 July 2014 Note:- (1) CTM Countries means Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden and United Kingdom. 90

93 OUR BUSINESS As at the Latest Practicable Date, our Group has applied for the following trademarks:- Place of Status / Description of trademark Trademark No. application Class No. Application date T A Singapore 30 Pending / 11 August 2006 T D Singapore 30 Pending / 11 August 2006 T Z Singapore 30 Pending / 9 January PRC 30 Pending / 30 November PRC 43 Pending / 30 November PRC 29 Pending / 31 January PRC 30 Pending / 31 January PRC 43 Pending / 31 January The Philippines 43 Pending / 24 January

94 OUR BUSINESS Place of Status / Description of trademark Trademark No. application Class No. Application date The Philippines 29, 30 Pending / and 43 5 February Malaysia 29 Pending / 5 January Malaysia 30 Pending / 5 January Malaysia 43 Pending / 5 January 2007 OLD CHANG KEE Malaysia 30 Pending / 28 July United Arab 30 Pending / Emirates 23 August United Arab 43 Pending / Emirates 23 August ,990 United States 30 and 43 Pending / of America 7 July 2006 OLD CHANG KEE 77/322,728 United States 29, 30 Pending / of America and 43 6 November 2007 J Indonesia 30 Pending / 15 August 2006 D Indonesia 43 Pending / 15 August